TaxTMI Updates e-Newsletter
Oct 17,2020

Detention of goods and conveyance pending assessment under the Goods and Services Tax regime - discrepancy between e-way bill portal entry and hard copy e-way bill - release of detained goods and vehicle on furnishing bank guarantee - opportunity of hearing before passing final order under Section 129(3) of the GST Act

Release of detained goods and vehicle on furnishing bank guarantee - detention of goods and conveyance pending assessment under the Goods and Services Tax regime - Direction for provisional release of detained goods and vehicle upon furnishing a bank guarantee for the amount demanded in the detention notice. - HELD THAT: - The petitioner pleaded that a discrepancy between the value shown in the e-way bill portal and the hard copy arose due to an inability to upload a revised e-way bill before commencement of transportation. The Court found that this explanation was one which ought to be considered by the respondents before passing a final order under Section 129(3) of the GST Act. In the interim, balancing the interest of the petitioner and the revenue, the Court directed provisional release of the goods and vehicle on the petitioner furnishing a bank guarantee for the amount demanded in the notice. The order for release is conditional and interlocutory, leaving the question of liability to be finally adjudicated by the respondents after due process.

Goods and vehicle to be released to the petitioner on furnishing a bank guarantee for the amount demanded in the detention notice.

Opportunity of hearing before passing final order under Section 129(3) of the GST Act - discrepancy between e-way bill portal entry and hard copy e-way bill - Requirement that the respondents consider the petitioner's explanation and afford an opportunity of hearing before passing the final order in Form GST MOV-9 under Section 129(3) of the GST Act. - HELD THAT: - The Court recorded that the petitioner's explanation regarding the cause of the discrepancy in e-way bill values was a matter to be examined by the respondents. Accordingly, the Court directed that the objections raised by the petitioner shall be duly considered and that the petitioner be afforded an opportunity of hearing prior to the issuance of any final order in Form GST MOV-9 under Section 129(3). This constitutes a remand to the respondents for fresh consideration of the merits and does not preclude them from examining the correctness of the detention or quantifying liability in accordance with law.

Respondents to consider the petitioner's objections and grant an opportunity of hearing before passing the final order in Form GST MOV-9 under Section 129(3) of the GST Act.

Final Conclusion: Writ petition disposed: provisional release of goods and vehicle directed on furnishing a bank guarantee for the amount demanded; respondents directed to consider the petitioner's explanation and afford a hearing before passing the final order under Section 129(3) of the GST Act.

Grant of bail - custodial period as ground for bail - completion of investigation and its effect on need for custody - maximum sentence as factor in bail consideration - conditions of bail

Grant of bail - custodial period as ground for bail - maximum sentence as factor in bail consideration - completion of investigation and its effect on need for custody - conditions of bail - Petitioners entitled to regular bail subject to conditions. - HELD THAT: - The petitioners, accused in an economic offence, were in custody since 03.08.2018 and investigation was completed in July, 2020 with the matter at the stage of pre-charge evidence. The Court applied the established principle that grant of bail is a discretionary relief to be governed by facts and circumstances of each case and observed that prolonged custody after completion of investigation, coupled with the fact that the maximum sentence attractable is five years, weighed in favour of bail. While noting the seriousness of the allegations, the Court held that continued detention was not necessary for further investigation and, without expressing any opinion on merits, found it just and expedient to release the petitioners on bail on stringent conditions to allay prosecution apprehensions. The bail was ordered on furnishing of bonds and specified conditions including restriction on leaving the country without prior permission of the Court.

Petitions allowed; petitioners admitted to bail on executing bonds and compliance with conditions imposed by the Trial Court.

Final Conclusion: Bail granted to the petitioners on stringent conditions, having regard to prolonged custody after completion of investigation and the maximum punishability, without expressing any opinion on merits.

Profiteering - challenge to National Anti-Profiteering Authority order - deposit of principal amount in installments - stay of interest and penalty proceedings - constitutional challenge to Section 171 of the CGST Act and Chapter XV of the CGST Rules - administration of interim directions and filing of affidavits

Deposit of principal amount in installments - profiteering - Direction for payment of the principal profiteered amount in instalments was ordered. - HELD THAT: - The Court, while entertaining the writ petition challenging the final order of the National Anti-Profiteering Authority, directed that the principal profiteered amount (after adjusting the GST component already deposited) shall be paid by the petitioner in six equated monthly instalments commencing 15th October, 2020. The direction to permit payment by instalments was issued having regard to the pendency of the petition and earlier orders of this Court in similar matters; the order records that only the principal component is required to be deposited as interim measure.

Petitioner directed to deposit the principal profiteered amount in six monthly instalments beginning 15th October, 2020.

Stay of interest and penalty proceedings - challenge to National Anti-Profiteering Authority order - Interim stay granted qua interest and penalty proceedings arising from the impugned NAPA order. - HELD THAT: - Concomitantly with the direction for deposit of the principal amount, the Court stayed the recovery of interest and any penalty proceedings pursuant to the impugned order until further orders. The stay preserves the petitioner's challenge to the NAPA findings on merits while permitting limited interim compliance by way of depositing the principal amount.

Interest and penalty proceedings stayed until further orders.

Challenge to National Anti-Profiteering Authority order - administration of interim directions and filing of affidavits - Procedural directions were issued for notice, filing of counter-affidavits and written submissions; amendment/substitution of the court record was allowed. - HELD THAT: - The Court issued notice to respondents and directed filing of counter-affidavits within four weeks with rejoinder, if any, before the next date. Parties were directed to file short written submissions not exceeding five pages at least one week prior to the next hearing. The Court allowed the interlocutory application to read and substitute the operative order as recorded by the Bench and directed uploading and circulation of the order.

Notice issued; timelines for affidavits and written submissions fixed; application for amendment/substitution of the order allowed and order to be uploaded and served.

Final Conclusion: The application was allowed: the operative order was substituted as recorded; the petitioner was directed to deposit the principal profiteered amount (after adjustment) in six monthly instalments commencing 15 October 2020; recovery of interest and penalty proceedings pursuant to the impugned NAPA order were stayed; interlocutory timelines for pleadings and submissions were fixed and the matter listed for further hearing.

Judicial review under Article 226 - Search and seizure powers under Section 67 - Summons and arrest powers under Section 70 and Section 69 - Audit procedure under Section 65 and Chapter 15 - Determination of tax liability and Section 74 (short payment/willful misstatement) - Prematurity of interference with ongoing audit

Search and seizure powers under Section 67 - Audit procedure under Section 65 and Chapter 15 - Prematurity of interference with ongoing audit - Determination of tax liability and Section 74 (short payment/willful misstatement) - Whether the Court should interfere with the respondents' summons, seizure and audit proceedings and quash the same. - HELD THAT: - The Court held that the statutory powers of inspection, summons and seizure are incorporated to prevent evasion of GST and that interference in the process of auditing and seizure at this stage would be premature. The judgment notes that the procedures for determination of tax liabilities, including short payment or willful suppression, are provided under Chapter 15 and Section 74 of the Act, and that the seizure and subsequent audit are measures which enable the Department to correlate entries and determine tax liability. There was no material placed before the Court to prima facie establish that the respondents acted beyond the authority conferred by the statute or that the exercise of power amounted to a misuse warranting exercise of writ jurisdiction. On the available record the Court declined to form an opinion against the respondents' conduct absent supporting material.

Petition to quash the summons, seizure and audit proceedings is refused; interference is premature and not warranted.

Summons and arrest powers under Section 70 and Section 69 - Judicial review under Article 226 - Whether the petitioners are entitled to quash the alleged detention, obtain refund of the alleged amount collected and claim compensation for alleged harassment and extortion. - HELD THAT: - The Court observed that the petitioners did not place material to demonstrate that any payment alleged to have been taken by officers was presented to, or encashed by, the Department; the counsel's statement that there was no information about encashment remained unrebutted. The Court recorded that there was no prima facie material to establish illegal detention, extortion or misuse of power by the officers sufficient to attract relief under Article 226. In the absence of cogent evidence showing violation of statutory limits or malafide conduct, claims for quashing the impugned action, refund with interest, declaration of no liability or compensation could not be sustained.

Claims for refund, quashing of detention-related action and compensation are dismissed for want of sufficient material to warrant interference.

Final Conclusion: Writ petition dismissed; the High Court declined to interfere with the search, seizure and audit processes or to grant the claimed remedies in the absence of material establishing misuse of statutory powers or malafide conduct.

Service of show-cause notice - Section 74(1) of the CGST Act, 2017 - Right to be heard - Remand for compliance - Interim restraint on enforcement

Section 74(1) of the CGST Act, 2017 - Service of show-cause notice - Right to be heard - Validity of proceeding based on a summary of a show-cause notice issued without prior issuance and service of a show-cause notice under Section 74(1) and consequent entitlement to opportunity to reply. - HELD THAT: - The Court recorded that Section 74(1) and the Rules require that a show-cause notice must be issued and served on the assessee and that the assessee must be given an opportunity to submit a detailed reply which must be considered before any adjudicatory action. The State did not dispute the statutory requirement and accepted that if a notice has not been issued it must be issued and if issued it must be served. In view of this, the Court did not decide the merits of the underlying tax liability but found that continuation of action on the impugned summary without ensuring the mandatory issuance/service and opportunity to reply would be improper. Consequently, the matter was remitted to respondent No.2 to ensure compliance with Section 74(1) by issuing and duly serving the show-cause notice (if not already issued/served), granting the petitioner reasonable time to respond, and thereafter proceeding in accordance with law. The Court further directed that if a notice had already been issued it must be ensured that it is served so as to enable the petitioner to respond before any further action on the summary dated 07.08.2020. [Paras 5, 6, 7]

Matter remitted to respondent No.2 for issuance/service of show-cause notice in compliance with Section 74(1) and for granting reasonable time to reply; respondents restrained from further pursuing Annexure P/1 dated 07.08.2020 pending compliance.

Final Conclusion: The writ petition is disposed by remitting the matter to respondent No.2 to ensure issuance and service of the show-cause notice as required by Section 74(1) of the CGST Act, 2017, to grant the petitioner reasonable time to reply and to proceed thereafter; further, the respondents are restrained from acting upon the summary dated 07.08.2020 until such compliance.

Power to transfer cases u/s 127 - Stay on transfer of case -Period of limitation for passing an assessment - intra-Court appeal - This is a case where the assessment files are being transferred from one city to a neighbouring city hardly 158 kms. away, in the same State. What inconvenience can this cause to V.V. Minerals No.2, especially when they have business and offices in several cities? -

The intra Court appeal is dismissed. The High Court [2020 (7) TMI 161 - MADRAS HIGH COURT] sustained the transfer of the assessment files from the Tirunelveli Circle to Central Circle 2, Madurai, holding that the show cause notice gave sufficient reasons, the Principal Commissioner independently applied his mind, the assessees were not entitled to search/seizure documents in the transfer proceeding, and the interim stay of transfer did not impede continuation or limitation of Section 153A proceedings - HELD THAT:- SLP dismissed.

Reopening of assessment - validity of reasons to believe - Reopening beyond four years under the first proviso to Section 147 - petitioner's claim for expenses in respect of “Colour Idea Store” as a part of its advertisement and sales promotion expenses - Review petition - HELD THAT:- There is a delay of 299 days in filing this Review Petition and we find no justifiable reason to condone this huge delay.

Even on merits, we have perused the Review Petition and record of the Special Leave Petition and are convinced that the order, of which review has been sought, does not suffer from any error apparent warranting its reconsideration.

Review Petition is, accordingly, dismissed on the ground of delay as well as on merits.

Non-speaking order - remand for fresh consideration - requirement of reasoned order by a tribunal - treatment of loss of an 80 IC unit for set off against profits of other units - deductions under Chapter VI A limited by gross total income computed before such deductions

Non-speaking order - requirement of reasoned order by a tribunal - The Tribunal's order dated 27.04.2016 is a non speaking order and is therefore liable to be set aside. - HELD THAT: - The Tribunal reversed the CIT(A)'s decision solely by citing a decision of the Delhi High Court without recording why that decision applied to the facts of the assessee's case or explaining why the CIT(A)'s reasoning was erroneous. A quasi judicial tribunal must stand or fall by the reasons given in its order; fresh reasons cannot be supplied thereafter to sustain an order. In the absence of any recorded findings demonstrating how the KEI Industries Ltd. decision governed the present case or why the CIT(A)'s conclusion was incorrect, the Tribunal's order is devoid of reasons and cannot be permitted to stand. The court therefore held that the impugned order lacked the requisite reasoning and must be set aside. [Paras 7, 8]

Tribunal's order set aside on the ground that it is non speaking; the impugned order is annulled for want of reasons.

Remand for fresh consideration - treatment of loss of an 80 IC unit for set off against profits of other units - deductions under Chapter VI A limited by gross total income computed before such deductions - The substantive question whether the loss of an 80 IC unit can be set off against profits of non 80 IC units, and related contentions under Sections 70, 71, 80 IC and the scheme of Chapter VI A, is not decided on merits but remanded to the Tribunal for fresh consideration with reasons. - HELD THAT: - The High Court did not resolve the competing legal contentions (including reliance on precedents such as SIDCO, Synco, Yokogawa and KEI Industries Ltd.) because the Tribunal failed to record any reasoning; given the conflicting authorities and factual nuances, the matter requires adjudication on merits. Accordingly, the Court remanded the issue to the Tribunal, granting liberty to both parties to place all factual and legal contentions afresh, and directing the Tribunal to pass a reasoned order after considering the scheme of Chapter VI A (including the role of gross total income and applicable non obstante clauses) and authorities relied upon by the parties. [Paras 16, 17]

Matter remitted to the Tribunal for fresh consideration on merits; substantial questions of law left open.

Final Conclusion: The tax case appeal is allowed; the Tribunal's order dated 27.04.2016 is set aside as non speaking and the matter is remanded to the Tribunal for fresh and reasoned consideration of the issues, with liberty to the parties to advance all factual and legal contentions; substantial questions of law are left open.

Determinate trust under Section 161(1) - representative assessee / pass through status - charge where shares of beneficiaries unknown under Section 164 - assessment of trust income in hands of beneficiaries - penalty for furnishing inaccurate particulars under Section 271(1)(c) - powers of the Tribunal under Section 254(2)

Determinate trust under Section 161(1) - charge where shares of beneficiaries unknown under Section 164 - representative assessee / pass through status - assessment of trust income in hands of beneficiaries - Whether the assessee Trust is a determinate Trust and, if so, whether income (including interest from fixed deposits) is to be assessed in the hands of identifiable beneficiaries under the representative assessee doctrine. - HELD THAT: - The Court held that the Tribunal correctly concluded that the Trust is a determinate Trust because the shares of beneficiaries are determinable on the basis of the terms of the trust deed and related instruments and need not be fixed as at the date of execution of the deed. Section 164 is attracted only where shares are indeterminate or unknown; determinability of shares may be established by the scheme of the deed and surrounding facts. Once shares are determinable, Section 161(1) operates to make the trustee a representative assessee and the tax liability is to be levied in the like manner and to the same extent as it would be on the beneficiaries; accordingly income, including interest earned on fixed deposits, is to be assessed in the hands of the beneficiaries and not in the hands of the Trust. The Tribunal's reliance on precedents and factual interpretation of the deed was upheld as within permissible factual evaluation and not liable to be disturbed on appeal. [Paras 18, 19, 20]

The Trust is a determinate Trust; interest and other income are to be assessed in the hands of the beneficiaries under Section 161(1), not in the hands of the Trust.

Penalty for furnishing inaccurate particulars under Section 271(1)(c) - Whether penalty under Section 271(1)(c) could be sustained where the substantive assessment finding that the Trust was indeterminate was reversed. - HELD THAT: - The Tribunal had quashed the penalty after deciding the substantive issue in favour of the assessee (that the Trust is determinate). The High Court found no error in that approach: where the underlying substantive assessment basis for the penalty is negatived, no substantial question of law arises to sustain the penalty. The penalty orders flowed from the assessment treating the Trust as indeterminate; having upheld the Tribunal's substantive conclusion in favour of the assessee, the deletion of penalty was held to be proper. [Paras 22, 23, 24]

Penalty under Section 271(1)(c) deleted as the substantive assessment basis was overturned.

Powers of the Tribunal under Section 254(2) - Whether the Tribunal had jurisdiction/power under Section 254(2) to reappraise and readjudicate issues in the miscellaneous petitions (as raised in T.C.A.Nos.569 & 570 of 2019). - HELD THAT: - The Court observed that the questions on the Tribunal's powers under Section 254(2) became academic because the substantial questions of law in the substantive appeals were decided against the Revenue. Consequently, the Court declined to decide those jurisdictional questions and left them open, since resolution of the appeals on merits rendered determination of the Section 254(2) issues unnecessary. [Paras 21]

Jurisdictional questions under Section 254(2) left open as academic; no adjudication on those questions was undertaken.

Final Conclusion: All appeals by the Revenue dismissed: the Tribunal's finding that the Trust is determinate and that income (including interest from bank deposits) is assessable in the hands of identified beneficiaries under Section 161(1) is upheld; consequential deletion of penalties under Section 271(1)(c) is sustained; questions on the Tribunal's powers under Section 254(2) are left open as academic.

Arm's Length Price - Transactional Net Margin Method - functional comparability - comparability of government companies - selection and benchmarking of comparables - treatment of provision for doubtful debts in profit level indicator

Comparability of government companies - functional comparability - Apitco Ltd. and Global Procurement Consultants Ltd. are not comparable to the assessee and are to be excluded from the final list of comparables. - HELD THAT: - The Tribunal accepted the assessee's contention that Apitco Ltd. and GPCL are government-established entities formed to provide specialized services to government bodies and public-sector projects and therefore differ materially in business model, objectives and revenue profile from the private marketing and ancillary management support services provider that the assessee is. The Tribunal followed the reasoning of the Hon'ble Delhi High Court in Philip Morris (paras 13-16 and 26-28) and earlier Tribunal decisions holding that government enterprises, operating largely to serve government policy objectives and public undertakings, are not good comparables for private business support service providers. On that basis the TPO was directed to exclude Apitco Ltd. and GPCL from the comparable set for benchmarking the assessee's provision of ancillary management support services. [Paras 15, 16, 17, 18]

Apitco Ltd. and GPCL excluded from the final list of comparables.

Functional comparability - selection and benchmarking of comparables - TSR Darashaw Ltd. is not functionally comparable and is to be excluded from the final list of comparables. - HELD THAT: - The Tribunal accepted the assessee's submission that TSR Darashaw Ltd. operates primarily as a registrar and transfer agent and in unrelated segments (record management, payroll and trust activities), which are not functionally similar to the assessee's marketing and ancillary management support services. Absence of relevant segmental information and the dissimilarity of core functions led the Tribunal, following the approach in Philip Morris and related precedent, to direct exclusion of TSR Darashaw Ltd. from the comparable set. [Paras 19]

TSR Darashaw Ltd. excluded from the final list of comparables.

Treatment of provision for doubtful debts in profit level indicator - Transactional Net Margin Method - The margin of HSCC (India) Ltd. requires recomputation by treating provision for doubtful debts as an operating item; the matter is remitted to the Assessing Officer/TPO for recalculation and adjustment of the mean margin. - HELD THAT: - The Tribunal noted a dispute between the parties on whether provision for doubtful debts should be classified as an operating item for computation of the OP/OC PLI. The assessee contended that treating the provision as an operating expense reduces HSCC's margin materially (claimed 8.96% instead of 18.32%). The Revenue accepted that the TPO should re-examine the computation. The Tribunal therefore directed the AO/TPO to recompute HSCC's margins including provision for doubtful debts as an operating item and to recompute the mean margin of the comparables accordingly, leaving the quantitative recalculation to the AO/TPO. [Paras 20, 22]

HSCC (India) Ltd.'s margin to be recomputed by AO/TPO with doubtful debts treated as an operating item; mean margin to be recalculated.

Functional comparability - selection and benchmarking of comparables - Spectrum Business Solutions Ltd. is functionally comparable to the assessee and is to be included in the final list of comparables. - HELD THAT: - On comparison of functional profiles, the Tribunal found that Spectrum Business Solutions Ltd. performs marketing and sales support, administrative support, marketing research and related services similar to the assessee's marketing and reservation, market communication, market research and sales support activities. Given this functional similarity, the Tribunal directed inclusion of Spectrum Business Solutions Ltd. in the comparable set for determining the arm's length margin of the ancillary management support services. [Paras 23, 24]

Spectrum Business Solutions Ltd. included in the final list of comparables.

Arm's Length Price - selection and benchmarking of comparables - Miscellaneous grounds: the general ground is not adjudicated; grounds not pressed are dismissed; interest under section 234B is dismissed as consequential; penalty initiation is premature and dismissed. - HELD THAT: - The Tribunal recorded that Ground No.1 was general and required no separate adjudication. Grounds Nos.2, 6 and 7 were not pressed by the assessee and accordingly dismissed. The challenge to interest under section 234B was held to be consequential and therefore dismissed. The plea against initiation of penalty proceedings under section 271(1)(c) was held to be premature and dismissed. These determinations dispose of the remaining procedural and ancillary contentions raised by the assessee. [Paras 26]

General ground not adjudicated; unpressed grounds dismissed; interest challenge dismissed as consequential; penalty challenge dismissed as premature.

Final Conclusion: The appeal is partly allowed: Apitco Ltd., GPCL and TSR Darashaw Ltd. are excluded from the comparable set; Spectrum Business Solutions Ltd. is included; HSCC (India) Ltd.'s margin is to be recomputed by the AO/TPO treating provision for doubtful debts as an operating item and the mean margin recalculated; remaining grounds disposed as recorded.

Comparability of international transactions - arm's length price - Transactional Net Margin Method (TNMM) - selection and exclusion of comparable companies - functional comparability (captive vs independent service provider) - related party transaction tolerance filter - working capital adjustment in transfer pricing

Selection and exclusion of comparable companies - functional comparability (captive vs independent service provider) - arm's length price - Exclusion of specified comparable companies from the final set of comparables for determining arm's length margin of the assessee's provision of software development services to its associated enterprise. - HELD THAT: - The Tribunal, following earlier coordinate-bench decisions, found that several of the companies selected by the TPO/DRP were functionally dissimilar to the assessee which operated as a captive software development service provider to its parent. The bench accepted that companies engaged in software product development, owning IPR or branded products, or operating at a significantly different risk profile (giant independent service providers assuming full commercial risk) cannot be treated as comparables for a captive service provider. Reliance was placed on prior Tribunal orders and a High Court decision to hold that M/s Bodhtree Consulting Ltd., M/s Tata Elxsi Ltd., M/s Persistent Systems Ltd. and M/s Infosys Ltd. are functionally not comparable and therefore to be excluded. Further, following coordinate-bench reasoning, M/s Sasken Communication Technologies Ltd. and M/s Larsen & Toubro Infotech Ltd. were directed to be excluded-Sasken on grounds of significant R&D/IP and exceptional business circumstances and L&T Infotech on the basis that its related party transactions exceeded the accepted tolerance (requiring exclusion where RPT > 15%). The Tribunal observed that the Department could not point out distinguishing factual differences which would justify retaining these companies as comparables in the present case and, therefore, directed their exclusion from the comparable set used for determining the arm's length margin. [Paras 11, 13]

Directed exclusion of M/s Bodhtree Consulting Ltd., M/s Tata Elxsi Ltd., M/s Persistent Systems Ltd., M/s Infosys Ltd., M/s Sasken Communication Technologies Ltd. and M/s Larsen & Toubro Infotech Ltd. from the final list of comparables.

Final Conclusion: Appeal allowed by excluding the specified comparables; transfer pricing adjustment based on the retained comparable set set aside accordingly.

Penalty under section 271(1)(c) - Concealment of income and furnishing inaccurate particulars - Imposition of penalty not automatic - Bona fide belief / plausible view defence - Deeming provisions and requirement of recorded satisfaction for initiation of penalty

Penalty under section 271(1)(c) - Concealment of income and furnishing inaccurate particulars - Imposition of penalty not automatic - Bona fide belief / plausible view defence - Validity of the penalty imposed under section 271(1)(c) for A.Y 2005-06 on account of treating trading loss as business/speculation loss and allowing set off against income from other sources. - HELD THAT: - The Tribunal found that the Assessing Officer treated sale and purchase of shares as speculation activity and disallowed set off of the trading loss against income from other sources, thereafter initiating penalty proceedings under section 271(1)(c). The Court applied the settled principles that penalty under section 271(1)(c) is not automatic and can be imposed only where the conditions in the section (or facts constituting the deeming provisions) are discernible and satisfaction to initiate penalty is recorded; mere disagreement with a tax treatment or disallowance in assessment cannot ipso facto justify levy of penalty. The assessee had disclosed the relevant items in the financial statements and adopted a view that set off was permissible; such a position amounted to a bonafide or plausible view. Reliance was placed on authority holding that an incorrect claim in law, without factual inaccuracy or concealment of particulars, does not attract the section. The CIT(A)'s confirmation of penalty was held to have overlooked the nature of the assessee's operations and the existence of a bonafide explanation; therefore penal consequences could not be sustained on the basis of the assessment addition alone. [Paras 3, 5, 6]

The penalty imposed under section 271(1)(c) was deleted and the appeal of the assessee was allowed.

Final Conclusion: The Tribunal set aside the CIT(A)'s order confirming penalty under section 271(1)(c) for A.Y. 2005-06, directing deletion of the penalty because the claim was a bonafide, plausible view and mere disallowance in assessment did not furnish grounds for automatic imposition of penalty.

Deduction under Section 54 (capital gains on transfer of residential house) - Construction within three years as fulfilment of investment condition - Requirement of occupation/completion certificate - Construction or purchase satisfies 'constructed'/'purchased' requirement - Characterisation of excess investment as income from other sources

Deduction under Section 54 (capital gains on transfer of residential house) - Construction or purchase satisfies 'constructed'/'purchased' requirement - Assessee's entitlement to deduction under Section 54 for AY 2010-11 in respect of capital gains on sale of residential property. - HELD THAT: - The Tribunal examined whether the assessee, having sold the original residential house on 30.10.2009, had invested the capital gains in a new residential house within the statutory period (construction to be completed within three years). The assessee produced the site purchase deed, sanctioned building plan, BDA Khata certificate, property tax receipts, electricity meter invoice and electricity usage records for Sept. 2012 to Feb. 2013, and photographs showing a structure on the site. The Tribunal held that these documents, taken together, demonstrate that a building had come up on the purchased site within the stipulated period and that the total outlay on purchase and construction exceeded the capital gain. Relying on authorities construing the pari materia provision (Section 54F) liberally in favour of encouraging investment in construction, the Tribunal concluded that completion of construction in an occupiable sense or execution of sale deed is not a precondition where evidence shows investment in construction. The CIT(A)'s contrary conclusion, premised on a narrow reading of the photographic and certificate evidence, was found to be vague and unsustainable. [Paras 10, 11]

Assessee entitled to deduction under Section 54; consequently no long-term capital gain is chargeable to tax for the assessment year.

Requirement of occupation/completion certificate - Construction within three years as fulfilment of investment condition - Whether absence of an occupation/completion certificate is a valid ground to deny deduction under Section 54. - HELD THAT: - The Tribunal considered the CIT(A)'s reliance on absence of an occupation/completion certificate and the photograph's deficiencies to deny the claim. It held that absence of a completion/occupation certificate by itself is not a valid ground to deny Section 54 relief where other documentary evidence establishes that the assessee had invested the capital gain in construction within the statutory period. The Tribunal referred to judicial precedent treating the provision as beneficial and construing 'constructed'/'purchased' to require demonstration of investment rather than formal completion/occupation. [Paras 10, 11]

Absence of occupation/completion certificate does not disentitle the assessee to deduction under Section 54 where other evidence shows construction within the prescribed period.

Characterisation of excess investment as income from other sources - Deduction under Section 54 (capital gains on transfer of residential house) - Validity of the addition made by the Assessing Officer treating the difference between investment in the new house and the AO's computed capital gains as income from other sources. - HELD THAT: - The AO had recomputed consideration and capital gains and then treated the shortfall between the investment and his computed capital gains as income from other sources. The CIT(A) deleted the AO's addition but denied Section 54 relief; the Tribunal found on the evidence that the assessee was entitled to Section 54 deduction. Having allowed the deduction, the basis for treating any portion as income from other sources ceased to exist. The Tribunal therefore held the addition unsustainable and deleted it. [Paras 6, 11, 12]

Addition under the head 'Income from Other Sources' is deleted; no part of the investment is taxable once Section 54 deduction is allowed.

Final Conclusion: Appeal allowed. The assessee is entitled to deduction under Section 54 for AY 2010-11; absence of a completion/occupation certificate is not a ground to deny relief where other evidence shows investment in construction within three years; the addition treating excess investment as income from other sources is deleted and no long-term capital gain is taxable.

Revisional jurisdiction under section 263 - Erroneous assessment order - Prejudicial to the interests of the revenue - Long Term Capital Gains exemption under section 10(38) - Income Declaration Scheme 2016 - Evidence of genuine purchase by banking transaction

Revisional jurisdiction under section 263 - Erroneous assessment order - Prejudicial to the interests of the revenue - Whether the Principal Commissioner of Income Tax was justified in invoking section 263 to revise the assessment order. - HELD THAT: - Section 263 can be invoked only if the order sought to be revised is both erroneous and prejudicial to the interests of the revenue. The Assessing Officer issued a specific questionnaire on the share transaction, received a detailed reply including disclosure of a declaration under the Income Declaration Scheme 2016, and after examining the records accepted the assessee's position without making additions. The Tribunal held that the Assessing Officer had taken a plausible view after examining the documents and that mere dissatisfaction of the PCIT with that view did not render the assessment order erroneous or prejudicial. Because one of the twin conditions for exercise of revisional jurisdiction under section 263 is absent, the PCIT's invocation of section 263 was improper. [Paras 6, 7]

PCIT wrongly assumed revisional jurisdiction under section 263; the order under section 263 is quashed.

Long Term Capital Gains exemption under section 10(38) - Income Declaration Scheme 2016 - Evidence of genuine purchase by banking transaction - Whether the purchase of shares was a genuine transaction and whether the purchase consideration could be treated as part of a bogus transaction for denying the declared long term capital gains treatment. - HELD THAT: - The assessee produced bank statements showing payment by cheque, a share application form and the transaction-cum-holding statement from the depository, which together demonstrated that the shares were purchased through banking transactions. The Revenue did not show that the purchase amount had been returned to the assessee or that the transactions were otherwise tainted. On the materials, the Tribunal found that the purchase was substantiated and that the PCIT's approach to treat the purchase consideration as a bogus transaction was not supported by record. Consequently, the AO's acceptance of the assessee's declared long term capital gains (with declaration under IDS 2016) could not be treated as erroneous. [Paras 5, 7]

Purchase of shares held to be genuine; AO's acceptance sustained and not to be reopened as a bogus transaction.

Final Conclusion: The appeal is allowed: the order passed under section 263 is quashed as the twin conditions for revisional jurisdiction were not satisfied and the assessee's purchase of shares was held to be genuine, validating the AO's acceptance of the declared long term capital gains.

Penalty under section 271C - Reasonable cause and non-imposition under section 273B - Deduction of tax at source under section 195 vis-a -vis section 194IA - Bonafide belief and voluntary compliance as defence to penalty - Ignorance of law and presumption of knowledge of law

Penalty under section 271C - Reasonable cause and non-imposition under section 273B - Deduction of tax at source under section 195 vis-a -vis section 194IA - Bonafide belief and voluntary compliance as defence to penalty - Whether penalty under section 271C could be levied on the assessee for having initially deducted TDS at 1% under section 194IA instead of at the rate applicable under section 195, when the shortfall was made good with interest before conclusion of proceedings. - HELD THAT: - The Tribunal examined facts that the purchasers jointly paid consideration and initially deducted TDS at 1% under section 194IA, relying on the sale deed and available PAN details; thereafter, on being put to notice that the vendor had a foreign address and might be non-resident, the purchasers deposited the balance tax required under section 195 along with interest before conclusion of proceedings under sections 201(1)/201(1A). The Tribunal applied the principle in which bona fide belief in a particular TDS provision, coupled with immediate rectification by depositing the shortfall and interest on becoming aware of the correct position, can constitute a reasonable cause under section 273B so as to negate the levy of penalty under section 271C. It placed weight on (a) absence of documentary proof provided to buyers establishing the vendor's non-resident status at the time of transaction, (b) the fact that the buyers acted through a broker and dealt with the vendor at the registrar's office, and (c) absence of mens rea to evade tax. The Tribunal found the coordinate Mumbai Bench decision in DCIT v. SMS India Ltd. applicable on analogous facts, observing that voluntary compliance immediately on discovery of mistake supports reasonable cause. Consequently, the requirements for imposing penalty under section 271C were not satisfied in view of section 273B, and the penalty was set aside. [Paras 12, 15, 16, 17]

Penalty imposed under section 271C deleted as assessee proved reasonable cause under section 273B by bona fide deduction under section 194IA and subsequent deposit of correct tax under section 195 with interest prior to conclusion of proceedings.

Ex parte dismissal and non-prosecution - Whether the appellants' ground challenging the CIT(A)'s ex parte dismissal for non-prosecution should be entertained. - HELD THAT: - The Tribunal noted that the appellants did not press this ground before it and that the lower appellate authority's ex parte dismissal remained unchallenged in practice by the parties during hearing. Having regard to the appellants' omission to press this contention, the Tribunal declined to adjudicate further on that ground. [Paras 18]

Ground challenging ex parte dismissal by CIT(A) dismissed as not pressed.

Final Conclusion: For Assessment Year 2015-16 the Tribunal deleted the penalty levied under section 271C against the three assessees, holding that bona fide reliance on section 194IA and prompt deposit of the correct tax under section 195 with interest before conclusion of proceedings constituted reasonable cause under section 273B; the challenge to the CIT(A)'s ex parte dismissal was dismissed as not pressed and the appeals were partly allowed.

Taxability of reversal of provision - treatment of Bad and Doubtful Debts Reserve (BDDR) written back - effect of adding back provisions in computation of total income - deduction under section 36(1)(viia) is independent of book provision created/reversed - interaction of historic deduction under section 80P with subsequent provisions

Taxability of reversal of provision - treatment of Bad and Doubtful Debts Reserve (BDDR) written back - effect of adding back provisions in computation of total income - deduction under section 36(1)(viia) is independent of book provision created/reversed - Whether the reversal (write back) of earlier years' BDDR forming part of net BDDR credit in the profit and loss account is taxable in the assessment year 2013 14 where the assessee had not claimed any deduction in earlier years by virtue of adding back the provision in the computation of total income. - HELD THAT: - The Tribunal found on examination of the profit and loss account and the computations of total income for earlier assessment years that the assessee had created BDDR in the books but, in computing total income each year, added back those BDDR amounts so that no deduction in respect of those provisions was reflected in the taxable income for those years. For AY 2013 14 the assessee credited a net figure (write back of earlier BDDR less current year provision) to P&L but did not separately offer the earlier years' write back as income because the starting net profit already included the net effect and the computation reduced the same amount labelled as "Income considered separately." The Tribunal held that where no deduction was ever taken in computing prior years' taxable income (because provisions were contemporaneously added back), the subsequent reversal of such provisions cannot be treated as taxable income. The Tribunal also noted that the separate statutory deduction under section 36(1)(viia) is independent of the book keeping of RBI norm provisions and that historic availability of deduction under section 80P (and its subsequent amendment) does not alter the conclusion that no deduction was claimed earlier. On these findings the addition made by the AO was not justified and was to be deleted. [Paras 4, 5, 6]

The addition of the earlier years' BDDR write back to taxable income for AY 2013 14 is deleted; the reversal is not taxable as no deduction in earlier years had been claimed in the computation of total income.

Final Conclusion: The appeal is allowed: the impugned addition of the earlier years' BDDR write back is deleted and the alternate ground on interest has become infructuous.

Condonation of delay - deemed consideration under s.50C - valuation by Valuation Officer - weightage to comparable sales - computation of long term capital gains - exemption under s.54F

Condonation of delay - Whether the delay of 13 days in filing the appeal before the Tribunal should be condoned. - HELD THAT: - The Tribunal recorded that the assessee filed an application with an affidavit explaining the delay and that the Revenue did not seriously oppose condonation. Being satisfied with the reasons, the Tribunal exercised its discretion to condone the marginal delay and proceeded to decide the appeal on merits. [Paras 1]

Delay of 13 days in filing the appeal is condoned and the appeal is admitted for hearing.

Deemed consideration under s.50C - valuation by Valuation Officer - weightage to comparable sales - computation of long term capital gains - exemption under s.54F - What value should be adopted for the plot for computation of long term capital gains and consequent tax treatment. - HELD THAT: - The AO had invoked the SRO value as deemed consideration under the provisions relating to deemed consideration and the CIT(A) directed reference to the Valuation Officer (VO). The VO's report adopted guideline value (SRO) and did not engage with the comparable sale instances relied on by the assessee. The Tribunal observed that the assessee's sale instances related to transactions two to three years prior to the date of sale and therefore did not fully reflect the market value on the sale date, but nonetheless warranted consideration. Balancing these factors, the Tribunal exercised its valuation judgment and, giving weight to the comparable sales while accounting for temporal differences, fixed the market value at Rs. 2,000 per sq. yard. The Tribunal directed the Assessing Officer to recompute the long term capital gain adopting this value, after allowing indexed cost, transfer expenses and relevant deductions, and to apply the exemption available under s.54F where eligible. [Paras 4, 6]

Adopt market value at Rs. 2,000 per sq. yard for the property; AO to recompute long term capital gain accordingly and allow relevant expenditures and exemption under s.54F; appeal partly allowed.

Final Conclusion: The Tribunal condoned the filing delay and partly allowed the appeal by directing adoption of a market value of Rs. 2,000 per sq. yard for the plot; the Assessing Officer is directed to recompute long term capital gains after allowing indexed costs, transfer expenses and applicable exemption under s.54F.

Interest on fixed deposits during construction period - capital receipt v. income from other sources - receipts inextricably linked to project - capitalization and adjustment against pre operative expenses - share application money pending allotment - treatment and linkage to project funding - remand to assessing officer for verification of utilization, corporate law compliance and classification

Interest on fixed deposits during construction period - capital receipt v. income from other sources - receipts inextricably linked to project - capitalization and adjustment against pre operative expenses - Whether interest earned on FDRs and flexi deposits during the construction period is a capital receipt (to be capitalised against pre operative expenses) or taxable as income from other sources - remanded to AO for fresh adjudication. - HELD THAT: - The Tribunal examined the factual matrix including the assessee being an SPV formed to construct the Haridaspur-Paradip railway line, the existence of large share application money pending allotment shown in the balance sheet, and the assessee's contention that such funds were parked in bank deposits and the interest so earned was used for project expenses and therefore inextricably linked to the project. The Bench noted that several relevant factual and legal aspects remained unanswered on the record - inter alia, dates of receipt and allotment of share application money, compliance with companies law and deposit rules, the precise use of the share application money while pending allotment, the nature and terms of the fixed deposits (short term/auto renewal), and the actual utilisation of interest proceeds. In view of these lacunae and competing contentions, the Tribunal declined to decide the issue on merits and directed a detailed factual verification by the Assessing Officer so that the taxability/classification of the interest income can be determined in accordance with law and relevant precedents. [Paras 6, 7, 8]

Matter remitted to the Assessing Officer for fresh adjudication and verification of the questions listed by the Tribunal; AO to decide taxability of the interest income after detailed examination.

Remand to assessing officer for verification of utilization, corporate law compliance and classification - appeal allowed for statistical purposes - Disposition of the present appeal in view of the remand to the Assessing Officer. - HELD THAT: - Having remitted the principal substantive controversy for fresh adjudication by the AO, and with the parties' consent, the Tribunal did not adjudicate the competing legal submissions on the merits. Instead, it required the AO to examine the enumerated factual and legal points and to determine the taxability/classification of the interest income in accordance with law. Given the remand, the Tribunal recorded its operative outcome for the present proceedings. [Paras 8, 9]

Appeal of the assessee is allowed for statistical purposes and the matter is remitted to the Assessing Officer for fresh adjudication.

Final Conclusion: The Tribunal remitted the principal question-whether interest on FDRs/flexi deposits is capital in nature or taxable as income from other sources-to the Assessing Officer for detailed factual and legal examination (including verification of share application money treatment, utilisation of funds, and compliance with company/deposit rules); consequentially the appeal is disposed of as allowed for statistical purposes.

Condonation of delay for filing appeal - admissibility and evidentiary value of statement recorded under section 132(4) - requirement of corroborative evidence for additions based on search disclosures - retracted confession and rule of prudence against relying solely on it

Condonation of delay for filing appeal - Application for condonation of delay in filing appeals was allowed. - HELD THAT: - The Tribunal applied the liberal approach to the expression "sufficient cause" under Section 253(5) (paralleling jurisprudence under Section 5 of the Limitation Act and Section 249), noting the salutary principle that courts should prefer substantial justice over technical forfeiture. Having considered the affidavit explaining the bona fide reasons for delay (the expectation that Department would file appeals in the group matters, discovery that appeals were not filed for two appellants, and prompt steps thereafter), and finding no evidence of deliberate or mala fide delay, the Tribunal held that the appellants were prevented by sufficient reasons from filing within time. The Tribunal relied on Supreme Court authorities emphasising a pragmatic, justice-oriented construction of "sufficient cause" and observed that the appellants would not gain by delay and that the explanation did not smack of mala fides. [Paras 7]

Delay of 163 days in filing the appeals is condoned and the appeals are admitted for adjudication.

Admissibility and evidentiary value of statement recorded under section 132(4) - requirement of corroborative evidence for additions based on search disclosures - retracted confession and rule of prudence against relying solely on it - Additions made on the basis of disclosures in the seized "Bhakti Pocket Diary" and statements recorded under section 132(4) were deleted for lack of corroborative evidence. - HELD THAT: - The Tribunal analysed the scope of section 132(4), recognising that statements recorded under that provision are admissible but not conclusive, and that a retracted confession cannot safely be the sole foundation for an addition unless corroborated by independent material. The authorities and CBDT circular (discouraging confessional reliance without supporting evidence) were noted. On facts, the only material relied on by Revenue were diary entries (pages 7-9) and the statement of the principal family member; there was no identification of vendors, no particulars of land, no contemporaneous documentary evidence of transactions, no bank/account-payee trail, and no corroboration from registration or local records. Independent witnesses and joint affidavits alleged fabrication and coercion; the Tribunal also took into account the appellants' limited education and the possibility of psychological pressure. Given absence of a "live link" between the diary entries and any demonstrable investment or transaction, and considering the prudential rule against relying solely on retracted confessions, the Tribunal found Revenue's evidence superficial and insufficient to sustain the additions. [Paras 16, 18, 21, 22]

Additions attributed to undisclosed advances of Rs. 9.05 crores proportionately in the hands of the appellants are unsustainable and are deleted; the appeals and cross-objections are allowed.

Final Conclusion: The Tribunal condoned the delay in filing the appeals and on merits directed deletion of the additions made on the basis of the seized diary and statements under section 132(4) for Asstt.Year 2013-14, allowing the appeals and cross-objections for lack of corroborative evidence.

Fees for technical services - managerial services - consultancy services - technical services - business connection - income deemed to accrue or arise in India - noscitur a sociis

Fees for technical services - managerial services - consultancy services - technical services - noscitur a sociis - Receipts from international freight and logistics services and reimbursement of Global Account Management expenses are not fees for technical services under Explanation 2 to section 9(1)(vii). - HELD THAT: - The Tribunal accepted the factual position that the assessee performed discrete logistics and freight-forwarding activities outside India (packing, pick-up, loading/unloading, customs clearance, warehousing, transportation) and that GAM reimbursements reflected allocated actual costs. Applying the statutory definition of 'fees for technical services' (consideration for managerial, technical or consultancy services), the Tribunal followed the DRP's analysis that 'managerial' and 'consultancy' services involve planning/advice and direct human involvement beyond mere execution, and that 'technical' services must be construed in the company of those words (noscitur a sociis). The incidental or remote use of computers or technology in executing logistics services did not transform executional freight services into 'technical services', nor was any supply of equipment or distinct consultancy shown. On these findings the receipts were held not to be consideration for managerial, technical or consultancy services and therefore not taxable as fees for technical services under section 9(1)(vii). [Paras 25, 28]

Payment for freight, logistics and GAM reimbursements do not constitute fees for technical services and are not taxable under section 9(1)(vii).

Business connection - income deemed to accrue or arise in India - The receipts are not income deemed to accrue or arise in India through a business connection under section 9(1)(i). - HELD THAT: - Relying on Explanation 1(a) to section 9(1)(i), the Tribunal reiterated that where a non-resident's business operations are not carried on in India, only the portion reasonably attributable to operations in India can be deemed to accrue or arise here. The undisputed finding was that the assessee's services were performed outside India and that no operations carried out by the assessee in India gave rise to the disputed receipts. Consequently, there was no basis to treat the income as accruing or arising in India through a business connection, and section 9(1)(i) did not apply. [Paras 25, 28]

No part of the disputed receipts was held to accrue or arise in India through a business connection; section 9(1)(i) is not attracted.

Final Conclusion: The Tribunal upheld the Dispute Resolution Panel's conclusion: the amounts received by the non-resident for international freight and logistics services and reimbursement of GAM expenses are neither fees for technical services under section 9(1)(vii) nor income deemed to accrue or arise in India under section 9(1)(i). The revenue's appeal is dismissed.

Voluntary Disclosure Scheme - exotic live species - immunity under voluntary disclosure - Section 108 of the Customs Act, 1962 - intra vires - protection against use of disclosure for prosecution - scope of Customs enforcement at import/export

Section 108 of the Customs Act, 1962 - intra vires - misuse of investigative power - Validity of Section 108 of the Customs Act, 1962 - HELD THAT: - The Court held that Section 108 is an important investigative power conferred on Customs officers for recording voluntary statements and for inquiry into offences under the Act. While recognising that provisions like Section 108 can be misused (as noted in precedents cited in the judgment), the possibility of abuse is not a sufficient ground to declare the provision unconstitutional. Accordingly, the vires of Section 108 is upheld and the challenge to its validity is declined. [Paras 20, 23]

Section 108 of the Customs Act, 1962 is intra vires and not struck down.

Voluntary Disclosure Scheme - exotic live species - immunity under voluntary disclosure - protection against use of disclosure for prosecution - Effect of the Government's Voluntary Disclosure Scheme on proceedings and use of disclosed information - HELD THAT: - The Court accepted that the Voluntary Disclosure Scheme and accompanying advisory were issued to collect stock information of "exotic live species" and to provide limited immunity to declarants who file within the six month window. The Court held that if a person makes a declaration under the scheme within the stipulated period, the immunity promised under the scheme cannot be nullified by initiating proceedings based on the information so provided; use of such declaration to commence prosecution or confiscation would lack bona fides. Officers (including Customs/DRI/WCCB/police) must not compel a declarant to divulge acquisition details or initiate action in respect of declared domestic stock during the period allowed for voluntary declaration. [Paras 17, 18, 19, 24]

A declarant who files within the prescribed period is entitled to the immunity promised by the Voluntary Disclosure Scheme; information in such declaration shall not be used to initiate proceedings against the declarant during the scheme period.

Voluntary Disclosure Scheme - scope of Customs enforcement at import/export - Applicability of the Voluntary Disclosure Scheme to import/export seizures and enforcement at entry/exit points - HELD THAT: - The Court clarified that the Voluntary Disclosure Scheme applies only to domestic stock declarations of "exotic live species" and does not affect enforcement at ports of entry or exit. Seizure or confiscation of exotic live species being smuggled into or out of India at entry/exit points may continue unhindered even during the six month disclosure period, since the scheme does not extend to goods in the course of import or export. [Paras 22]

Enforcement, seizure or confiscation at entry/exit points remains unaffected by the Voluntary Disclosure Scheme.

Final Conclusion: The petition challenging the vires of Section 108 is dismissed; Section 108 is held intra vires. Persons who file declarations under the Government's Voluntary Disclosure Scheme within the prescribed six month period are entitled to the immunity promised by that scheme and shall not be subjected to proceedings based on their declarations during the scheme period, while enforcement at import/export points remains unaffected. The court declines to issue the proposed administrative circular and leaves departmental action to the appropriate authorities.

Merchanting Trade Transactions - compliance with Foreign Trade Policy for MTT - foreign exchange regulation and RBI powers under FEMA s.10(4) and s.11(1) - nexus of MTT with country's foreign exchange reserves - reasonableness of restriction under Article 19(1)(g) - judicial non-interference in fiscal and foreign trade policy

Merchanting Trade Transactions - compliance with Foreign Trade Policy for MTT - reasonableness of restriction under Article 19(1)(g) - Validity of Clause 2(iii) of RBI Circular No.20 dated 23/01/2020 restricting MTT to goods permitted under the prevailing Foreign Trade Policy and its compatibility with Article 19(1)(g). - HELD THAT: - The Court held that Clause 2(iii) which restricts Merchanting Trade Transactions to goods permitted for export/import under the prevailing Foreign Trade Policy is not a novel or arbitrary prohibition but a long standing condition of RBI policy. Merchanting Trade Transactions, though involving goods not physically entering India, entail a clear nexus with India because the Indian intermediary effects foreign exchange outlay and repatriation through authorised dealers; hence regulation tied to the country's Foreign Trade Policy and export/import restrictions legitimately furthers management of foreign exchange and public interest. In the context of the COVID 19 pandemic and notifications by the Central Government placing certain PPE items in prohibited/restricted categories, the restriction bears a rational nexus to the objective of ensuring adequate domestic supplies. The limitation is a permissible restriction under Article 19(6) and does not amount to an unconstitutional total prohibition of trade or occupation under Article 19(1)(g). The petitioner's reliance on the decision striking down RBI's ban on virtual currencies was found distinguishable on facts and law. [Paras 42, 48, 49, 60, 61]

Clause 2(iii) of the impugned circular is intra vires and the restriction imposed is reasonable; challenge under Article 19(1)(g) is dismissed.

Foreign exchange regulation and RBI powers under FEMA s.10(4) and s.11(1) - nexus of MTT with country's foreign exchange reserves - judicial non-interference in fiscal and foreign trade policy - Whether Reserve Bank of India had statutory authority to issue the revised MTT guidelines and to enforce compliance with the Foreign Trade Policy. - HELD THAT: - The Court observed that regulation and management of the country's foreign exchange are entrusted to the Reserve Bank under the Foreign Exchange Management Act, 1999. Sections invoked empower the RBI to give directions to authorised dealers and to require compliance with such directions. Merchanting Trade Transactions necessarily involve foreign exchange outlay and repatriation through authorised dealers in India, creating a close nexus with the country's foreign exchange reserves and bringing the activity within the regulatory competence of the RBI. Absent any pleading or proof of mala fides or fraud, courts should not ordinarily intervene in bona fide fiscal or foreign trade policy decisions taken in the public interest. [Paras 34, 41, 42, 46, 47]

RBI acted within its statutory powers under FEMA in issuing and enforcing the MTT guidelines; no interference warranted.

Final Conclusion: Writ petition dismissed; Clause 2(iii) of RBI Circular No.20 dated 23/01/2020 upheld as intra vires and a reasonable regulatory restriction linked to the Foreign Trade Policy and the management of foreign exchange.

Validity of amendments to Essentiality Certificate - jurisdiction of adjudicating authority to question executive certification - appealability under section 128 of the Customs Act, 1962 - imposition of customs duty, interest and penalty - interim stay of adjudication order

Validity of amendments to Essentiality Certificate - jurisdiction of adjudicating authority to question executive certification - imposition of customs duty, interest and penalty - interim stay of adjudication order - appealability under section 128 of the Customs Act, 1962 - Whether the adjudicating authority was justified in discarding the amendments to the Essentiality Certificate and sustaining consequential demands, and whether interim relief should be granted. - HELD THAT: - After considering the impugned order in original and the authorities cited, the High Court took a prima facie view that the adjudicating authority was not justified in discarding the amendments made to the Essentiality Certificate. The Court noted that such rejection resulted in imposition of customs duty, interest and penalty on the petitioner, a subcontractor engaged in offshore services for ONGC. Although the respondents contended that the order is appealable under section 128 and that factual determinations are open to appellate review, the Court found on the limited prima facie consideration before it that the adjudicating authority's action vitiated the impugned order and warranted protection pending final adjudication. In light of the parties being represented and affidavits filed, the Court admitted the petition and granted interim relief by staying the impugned order, while keeping the matter for final hearing on a listed date. [Paras 5, 6, 8]

Petition admitted; prima facie view recorded that the adjudicating authority was not justified in discarding the amendments to the Essentiality Certificate; stay of the impugned order granted and matter listed for final hearing.

Final Conclusion: Writ petition admitted; on a prima facie consideration the High Court stayed the adjudicating authority's order dated 27/2/2017 setting aside the amendments to the Essentiality Certificate and imposing customs duty, interest and penalty; matter posted for final hearing.

Remand for fresh consideration - compensation for delay in transshipment - liability for demurrage/detention charges pending adjudication - custodian's duty and liability for transshipment delay - right to reasonable opportunity of hearing before adverse order

Liability for demurrage/detention charges pending adjudication - custodian's duty and liability for transshipment delay - Whether the appellant is required to pay demurrage/detention charges immediately in terms of the Single Judge's direction pending reconsideration on remand. - HELD THAT: - The High Court held that the demand for payment arising from refusal to issue the Detention Certificate cannot be sustained for the time being while the matter stands remanded for fresh consideration. The Court observed that payment to the Airport Authority (respondents 3 and 4) should not be enforced until the Commissioner re-decides the issue on remand and, if necessary, confirms the demand after affording the appellant a due and reasonable opportunity of hearing to ascertain whether the delay in issuance of transshipment permission was attributable to customs officials or to the appellant as custodian. Accordingly paragraph 91 of the Single Judge's order was modified to suspend the directive to pay demurrages pending the outcome of the remand adjudication. [Paras 5]

Payment of demurrage/detention charges directed by the Single Judge is stayed for the time being until the Commissioner re-decides the matter on remand after affording the appellant an opportunity of hearing.

Remand for fresh consideration - compensation for delay in transshipment - right to reasonable opportunity of hearing before adverse order - Whether the matter must be remitted to the Commissioner for verification and fresh adjudication of whether delay in transshipment was caused by alleged arrest/disruption of customs officers and whether compensation is payable to the appellant. - HELD THAT: - The High Court affirmed the Single Judge's remand of the matter to the Commissioner of Customs for appropriate orders after verifying factual contentions concerning disruption of operations at the Air Cargo Complex (including the appellant's allegation of arrest of customs officers) and determining whether such disruption rendered the appellant entitled to compensation. The Court directed that the Commissioner re-decide the issue expeditiously, preferably within six weeks, and to do so after taking all relevant official information into account and after giving the appellant a proper opportunity to substantiate its allegations and be heard. [Paras 5, 6]

The case is remitted to the Commissioner for fresh consideration of the disruption and compensation claims, to be decided expeditiously (preferably within six weeks) after taking evidence and affording the appellant a reasonable hearing.

Final Conclusion: The High Court modified the Single Judge's direction to the extent of suspending immediate payment of demurrage/detention charges pending the Commissioner's fresh adjudication on remand, and affirmed the remand for verification of whether delay in transshipment was caused by disruption of customs operations and whether compensation is payable, directing expeditious disposal after hearing the appellant.

Condonation of delay - Sufficient cause under Section 5 of the Limitation Act - Liberal construction of 'sufficient cause' - Service of order and effect of failure to serve/returned postal communication - Imposition of costs as condition for condonation

Condonation of delay - Sufficient cause under Section 5 of the Limitation Act - Service of order and effect of failure to serve/returned postal communication - Liberal construction of 'sufficient cause' - Imposition of costs as condition for condonation - Application for condonation of delay in filing the appeal against Order-in-Original No. CAO/No.73/2005 dated 22.06.2005. - HELD THAT: - The Tribunal examined the applicant's affidavit and the departmental communication and found that the applicant had informed the department of a change of address and produced an acknowledged copy of that communication, while the department's original dispatch to the old address was returned marked 'Not known'. The certified copy of the impugned order was served on the applicant by hand only on 26.07.2018, and the appeal was filed promptly thereafter. Applying the principle that the expression "sufficient cause" in Section 5 of the Limitation Act should be given a liberal and pragmatic construction to advance substantial justice, the Tribunal held that, in the peculiar facts of the case, the delay was largely attributable to the department's failure to serve the order at the correct address. The Tribunal also noted some negligence on the part of the applicant for not making inquiries for many years, and that the delay was not shown to be due to mala fide or deliberate inaction. Taking these factors together, the Tribunal exercised discretion to condone the delay but imposed a cost as a condition of condonation. [Paras 2, 3]

Delay of about 4,700 days is condoned; applicant to pay costs of Rs. 5,000 to the PM CARES Fund within eight weeks; appeal to be listed after proof of payment.

Final Conclusion: The application for condonation of delay is allowed on merits: the Tribunal, applying a liberal construction of "sufficient cause" in the factual matrix of defective service by the department, condoned the delay subject to payment of costs, and directed listing of the appeal upon receipt of proof of payment.

Paramount lien and its scope - lien as a mere right of retention (no power of sale) - shares as movable property and goods - requirement of contractual/documentary basis for recovery of rental dues - due process under articles for transfer/auction of shares - rectification of Register of Members

Paramount lien and its scope - lien as a mere right of retention (no power of sale) - shares as movable property and goods - The Company cannot, by exercising a paramount lien, unilaterally sell a shareholder's fully paid shares to recover alleged dues. - HELD THAT: - The Tribunal examined the company's articles and Model Articles (Table F) and found that the respondent's articles permit a paramount lien but do not prescribe any process for sale. Shares fall within the definition of "movable property" and are covered as "goods" under the Sale of Goods Act, 1930; the Act gives an unpaid seller certain remedies such as lien and, in limited circumstances, resale rights. Applying settled law, including the principle that a lien is a right of retention (not a right of sale), the Tribunal held that, in the absence of a contractual or statutory power to effect a sale, the company may retain shares to the extent of its lien but cannot unilaterally auction or transfer fully paid shares held by the shareholder without consent. [Paras 24, 25, 26, 27, 28]

The company's unilateral sale of the petitioner's shares by exercising purported paramount lien was impermissible; the lien permits retention but not unilateral sale.

Requirement of contractual/documentary basis for recovery of rental dues - The respondents had no contractual or documentary basis (such as a written lease) to support the claimed recovery of rental dues by auctioning the petitioner's shares. - HELD THAT: - The Tribunal found no written lease or registered agreement between the petitioner and the company; the company accepted collecting only service charges and did not produce documentary evidence of any lease or registered instrument that would justify the asserted lessor-lessee relationship or the steps taken to recover rent. Allegations regarding benami holdings and tax notices were unsupported by any credible notice or regularisation steps taken by the company. In these circumstances the company's action to vest and sell shares for alleged rental arrears lacked a contractual foundation. [Paras 29, 30]

There was no agreement or documentary basis justifying the company's recovery of alleged rental dues by auctioning the petitioner's shares.

Due process under articles for transfer/auction of shares - The company did not follow due process in auctioning and allotting the petitioner's shares to a third party. - HELD THAT: - The articles of association were silent as to the procedure to effect a sale pursuant to lien, and the Tribunal rejected the company's contention that model clauses flowing from a disapplied provision applied. Precedent distinguishing lien from pledge/pledge-sale was applied to conclude that a lien does not confer a right of sale. The company auctioned shares without the shareholder's consent, without possession of original share certificates or valid transfer instruments, and without adhering to any prescribed procedural mechanism; therefore the auction and allotment to a third party were illegal and tainted by mala fides. [Paras 30, 31]

The process adopted by the company in auctioning and allotting the petitioner's shares was not in accordance with the articles or applicable law and was unlawful.

Final Conclusion: The petition succeeds: the petitioner is declared the legitimate holder of the disputed equity shares, the Register of Members is to be rectified to restore the petitioner's shareholding, the company is restrained from transferring or allotting the petitioner's shares without express consent until rectification, the company must file the rectified register with the Registrar of Companies within one month, and costs and damages are awarded to the petitioner.

Scheme of Amalgamation - Sanction under Sections 230-232 of the Companies Act, 2013 - Convening/dispensation of meetings of shareholders and creditors - Fairness, justness and reasonableness - Transfer and vesting of assets and liabilities - Continuation of pending proceedings - Transfer of employees on existing terms - Compliance with statutory requirements and Registrar of Companies filing - Protection of Revenue and recovery of income-tax dues

Sanction under Sections 230-232 of the Companies Act, 2013 - Scheme of Amalgamation - Fairness, justness and reasonableness - Sanction of the proposed Scheme of Amalgamation between the two transferor companies and the transferee company. - HELD THAT: - Having considered the approvals obtained from unsecured creditors, the reports of the Regional Director and Official Liquidator, the absence of any material objection from the Income Tax Department and other authorities, and the statutory right of the companies to apply for sanction, the Tribunal applied the limited jurisdiction of a company court-to ascertain the fairness, justness and reasonableness of the Scheme and ensure no law or public interest is compromised-and found no impediment to sanctioning the Scheme. Certificates of statutory auditors confirming conformity of the proposed accounting treatment with notified Accounting Standards were also placed on record. On these bases the Tribunal granted sanction to the Scheme under Sections 230 to 232 of the Companies Act, 2013. [Paras 16, 17, 18, 21, 22]

Sanction granted to the Scheme under Sections 230 to 232 of the Companies Act, 2013.

Convening/dispensation of meetings of shareholders and creditors - Validity of dispensation of meetings of equity shareholders and secured creditors and convening of meetings of unsecured creditors. - HELD THAT: - The Tribunal recorded that, on application, the Principal Bench previously dispensed with meetings of equity shareholders and secured creditors and directed convening of meetings of unsecured creditors. The convened meetings of unsecured creditors were held and the Scheme was unanimously approved by participating members; chairperson and scrutinizer reports were placed on record. These procedural compliances were accepted by the Tribunal as part of the foundation for sanctioning the Scheme. [Paras 5, 6]

Dispensation and convening directions complied with; unsecured creditors' meetings duly convened and approval recorded.

Role of Tribunal limited to ascertaining fairness, justness and reasonableness - Compliance with statutory requirements and Registrar of Companies filing - Requirement of statutory compliances and safeguards coupled with the Tribunal's supervisory role. - HELD THAT: - The Tribunal emphasised its limited judicial role-not to substitute commercial judgment of shareholders-and accepted that applicants have a statutory right to seek sanction. It recorded the petitioners' affirmation that no inspection, inquiry or investigation under the Companies Act was pending, and noted auditors' certificates on accounting treatment. The Tribunal sanctioned the Scheme subject to petitioners remaining bound to comply with statutory requirements and expressly reserved the right for action in accordance with law in case of any deficiency or violation of enactments, rules or regulations. [Paras 15, 16, 19, 23, 24]

Sanction granted subject to compliance with statutory requirements and without prejudice to action for any subsequent violation.

Protection of Revenue and recovery of income-tax dues - Effect of sanction on the Income Tax Department's rights and recovery of tax dues. - HELD THAT: - Although no reply was filed by the Income Tax Department within the statutory period and none objected at final hearing, the Tribunal clarified that sanctioning the Scheme does not limit or bar the Income Tax Department from recovering any pending tax dues or imposing penalties as provided by law. The order therefore preserves the Department's statutory powers of assessment and recovery notwithstanding the Scheme's sanction. [Paras 12, 13, 24, 25]

Sanction does not affect the Income Tax Department's power to recover tax dues or take action as provided by law.

Transfer and vesting of assets and liabilities - Transfer of employees on existing terms - Continuation of pending proceedings - Compliance with statutory requirements and Registrar of Companies filing - Operative consequences of the sanctioned Scheme: dissolution of transferor companies, vesting of assets and liabilities, continuation of proceedings, transfer of employees, and filing with Registrar of Companies. - HELD THAT: - In exercise of the sanction, the Tribunal ordered that both transferor companies shall stand dissolved without winding-up; that all properties, rights and powers and all liabilities and duties shall, without further act or deed, be transferred to and vest in the transferee company; that all pending proceedings by or against the transferor companies shall continue by or against the transferee company; and that employees in service immediately before the effective date shall become employees of the transferee company on terms not less favourable than existing. The Tribunal further directed petitioners to deliver a certified copy of the order to the Registrar of Companies within thirty days for registration and consolidation of files. [Paras 6, 26]

Orders made for dissolution of transferor companies, vesting of assets and liabilities, continuation of proceedings, transfer of employees on existing terms, and Registrar of Companies filing.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation between the two transferor companies and the transferee company under Sections 230-232 of the Companies Act, 2013 after recording requisite procedural compliances, statutory auditor certificates and absence of material objections, while preserving statutory rights of revenue and regulatory authorities and directing operational steps for vesting, dissolution and Registry filing.

Inoperative/void Memorandum of Understanding - restoration of pre-MoU shareholding and directorship - ratification of corporate filings by AGM/EGM - status quo pending convening of AGM/EGM - ROC to facilitate and observe AGM/EGM - marking E-Forms as NTBR pending ratification - appointment and participation of Independent Director and Observer without voting rights - power under Section 242(2) of the Companies Act, 2013 (relief analogous to earlier sections)

Inoperative/void Memorandum of Understanding - restoration of pre-MoU shareholding and directorship - The MoU dated 21.06.2010 has been declared inoperative and filings made pursuant to that MoU cannot be acted upon until a properly convened AGM/EGM ratifies them; the position of management and shareholding prior to the MoU is to be maintained. - HELD THAT: - The Tribunal reiterated its earlier findings that the MoU of 21.06.2010 is frustrated, not fully performed and not signed by an authorised signatory on behalf of the company, and therefore is inoperative so far as the corporate entity is concerned. In consequence, decisions or resolutions said to be taken in implementation of that MoU lack legal validity and cannot be treated as operative. The Tribunal directed restoration of the management and shareholding pattern as existed immediately prior to the MoU and directed reinstatement of the petitioners in directorships, subject to the convening of a proper AGM/EGM which alone can validly ratify subsequent filings or changes. [Paras 6, 8, 10]

MoU declared inoperative; pre-MoU status to be maintained and any changes or filings pursuant to the MoU are ineffective until ratified by a properly convened AGM/EGM.

Ratification of corporate filings by AGM/EGM - marking E-Forms as NTBR pending ratification - status quo pending convening of AGM/EGM - Documents, E-Forms, annual and financial statements filed after the MoU shall not be taken on record or acted upon by the ROC unless and until they are approved and ratified by an AGM/EGM convened pursuant to this Tribunal's directions; in the interim the ROC may mark such e-filings as 'NTBR'. - HELD THAT: - The Tribunal considered the administrative difficulty faced by the ROC owing to multiple filings made after the MoU and held that those filings are subject to the Tribunal's earlier determination about the MoU's inoperativeness. To avoid further complications, the Tribunal authorised the ROC to treat the impugned e-forms and filings as not to be taken on record ('NTBR') until such time as a properly convened AGM/EGM ratifies them with the requisite majority. If the AGM/EGM subsequently approves and ratifies those filings, they shall be treated as valid and accepted by the ROC. [Paras 6, 8]

ROC may mark post-MoU filings as NTBR and shall not act on them unless ratified by a proper AGM/EGM.

ROC to facilitate and observe AGM/EGM - appointment and participation of Independent Director and Observer without voting rights - appointment of facilitators, auditors and valuers - The ROC is directed to facilitate (but not convene in place of the company) the AGM/EGM; the ROC shall depute an Observer to attend, and the Independent Director, Advocate Observer and facilitators appointed by the Tribunal shall participate in meetings without voting rights and shall submit reports to the ROC and this Tribunal. - HELD THAT: - The Tribunal clarified that convening of the AGM/EGM remains the responsibility of the company through the petitioner and the Advocate Observer, but the ROC must facilitate the process and may depute an officer or an independent professional as an Observer. The Tribunal specified that the Observer, the Independent Director (to be nominated by the Bank of Baroda), the Advocate Observer and appointed facilitators/chartered accountants are to participate in the discussions at the meetings although they shall not have voting rights. The Advocate Observer and others are to prepare and submit independent reports to the Tribunal and to the ROC within prescribed timelines to enable further action. [Paras 8, 9, 10]

ROC to facilitate AGM/EGM and depute an Observer; tribunal-appointed participants may attend and report but shall not vote; reports to be submitted to ROC and the Tribunal.

Final Conclusion: IA No. 728 of 2019 is allowed. The Tribunal clarified that filings made after the MoU of 21.06.2010 shall not be acted upon until ratified by a properly convened AGM/EGM; the ROC may mark such e-forms as NTBR in the interim and shall facilitate the AGM/EGM and depute an Observer. Tribunal-appointed Independent Director, Advocate Observer and facilitators may attend meetings without voting and must submit reports to the ROC and the Tribunal.

Condonation of delay - service of notice - ex parte hearing - financial debt - third party payment - natural justice - remand for fresh consideration - release from Corporate Insolvency Resolution Process - costs and fees borne by financial creditor

Condonation of delay - Application for condonation of delay of 16 days in filing the appeal (I.A. No. 1343 of 2020). - HELD THAT: - The Tribunal accepted the appellant's explanation that the free copy of the impugned NCLT order was not communicated in terms of Section 7(7) of the Code and that the appellant became aware of the order only on 04.03.2020. Taking a practical, purposive and result-oriented view, the Tribunal condoned the delay and disposed of the interlocutory application. No costs were imposed in respect of the condonation application. [Paras 2]

Delay of 16 days condoned; I.A. No. 1343 of 2020 disposed of.

Service of notice - ex parte hearing - natural justice - Whether the Adjudicating Authority committed jurisdictional error by reserving and passing the impugned order without issuing notice to the Corporate Debtor and thereby conducting an ex parte decision contrary to rules of service and natural justice. - HELD THAT: - The Tribunal examined NCLT Rules (Rule 38, Rule 44 and Rule 49) governing service of notices and processes and ex parte hearings. It held that serving only an advance copy of the application could not be equated with proper service of notice under the Rules and that if notice was not duly served or a party was prevented by sufficient cause, the Adjudicating Authority must set aside any ex parte hearing on appropriate terms. On the facts, the Tribunal found that the Adjudicating Authority had reserved and thereafter passed the impugned judgment without issuing notice to the Corporate Debtor, which amounted to an error of jurisdiction and was unsustainable in law. [Paras 21, 22, 23, 25, 26]

Impugned order set aside for lack of proper notice and breach of natural justice; matter remitted for fresh consideration after issuing due notice.

Financial debt - third party payment - remand for fresh consideration - Whether the NCLT properly found existence of financial debt where the pleaded transactions involved payments by a third party and the impugned order did not explain how third-party payments constituted a financial debt or how the petitioner became a financial creditor. - HELD THAT: - The Tribunal noted that the impugned order was silent on crucial aspects: the third party (Taj Consultancy) was not a party before the Adjudicating Authority, and there was no finding explaining how payments made by a third party or instructions from an individual not shown to be director/shareholder turned into a financial debt owed by the Corporate Debtor to the Financial Creditor. Given this absence of reasoning and the material lacunae, the Tribunal held that the matter required fresh and objective adjudication on merits so that the character and privity of the alleged debt could be examined. [Paras 27, 28]

Findings on existence of financial debt set aside; matter remitted to the Adjudicating Authority for fresh consideration of the controversy concerning third-party payments and the existence of financial debt.

Release from Corporate Insolvency Resolution Process - costs and fees borne by financial creditor - Consequential reliefs flowing from setting aside the impugned order including release of the Corporate Debtor from CIRP, setting aside actions by Interim Resolution Professional/Committee of Creditors, handing over records and assets, and allocation of CIRP costs. - HELD THAT: - Upon allowing the appeal and setting aside the impugned NCLT order, the Tribunal directed that the Corporate Debtor be released from the rigours of the CIRP. All actions taken by the Interim Resolution Professional/Resolution Professional and the Committee of Creditors, if any, were declared illegal and set aside. The Resolution Professional was directed to hand over records and assets to the promoters/directors forthwith. The Adjudicating Authority was directed to determine the fee and cost of the CIRP incurred by the Resolution Professional, which was to be borne and paid by the Financial Creditor. [Paras 29, 30]

Appeal allowed; Corporate Debtor released from CIRP; actions by IRP/CoC set aside; records/assets to be handed to promoters/directors; CIRP costs to be borne by Financial Creditor.

Condonation of delay - Application (I.A. No. 1342/2020) seeking exemption to file certified copy of impugned order. - HELD THAT: - The Tribunal closed I.A. No. 1342/2020 with a direction that the appellant shall file the certified copy of the impugned order within two weeks from the date of the order. [Paras 31]

I.A. No. 1342/2020 closed with direction to file certified copy within two weeks.

Final Conclusion: The Tribunal condoned the delay in filing the appeal, set aside the NCLT order dated 31.01.2020 for lack of proper notice and for failure to address material issues regarding third-party payments and existence of financial debt, allowed the appeal, released the Corporate Debtor from the CIRP, declared actions by the IRP/CoC illegal, directed handover of records and assets to the promoters/directors and ordered the CIRP costs to be borne by the Financial Creditor; the matter is remitted to the Adjudicating Authority for fresh consideration after issuing due notice and adhering to principles of natural justice.

Alternative remedy of appeal - entertainment of writ petition when alternative remedy exists - pre-deposit requirement - discretion to grant waiver of pre-deposit - interim relief pending appeal

Alternative remedy of appeal - entertainment of writ petition when alternative remedy exists - Whether the writ petition should be entertained despite the availability of an alternative statutory remedy in appeal. - HELD THAT: - The High Court declined to entertain the writ petition because the petitioner has an alternative efficacious remedy by way of appeal to the Commissioner (Appeals) against the Order-in-Original dated 29.12.2017 and the consequential notice dated 14.07.2020. The court emphasised that the existence of the pre-deposit requirement or the prospect of the appeal being time-barred does not justify bypassing the statutory appellate forum. In the exercise of supervisory jurisdiction, the court therefore granted liberty to the petitioner to pursue the statutory appeal instead of adjudicating the matter by writ.

Writ petition not entertained; petitioner granted liberty to file appeal before the Commissioner (Appeals).

Pre-deposit requirement - discretion to grant waiver of pre-deposit - interim relief pending appeal - Directions to the appellate authority concerning consideration of pre-deposit waiver and interim relief once the appeal is filed. - HELD THAT: - Recognising the petitioner's contention that the demanded tax had been paid and that the appeal window may be constricted, the court directed that the petitioner be permitted to file the appeal within ten days and accompanying it with a certified copy of the High Court order. The Commissioner (Appeals) was directed to consider the appeal on merits and decide it within 60 days from filing, and to consider applications for waiver of pre-deposit and for interim relief within the same timeframe. The court made clear that the appellate authority must consider such prayers in accordance with law while deciding the appeal on merits.

Petitioner to file appeal within ten days; appellate authority to decide the appeal on merits and consider waiver of pre-deposit and interim relief within 60 days.

Final Conclusion: Writ petition dismissed for non-entertainment on grounds of availability of alternate statutory remedy; petitioner granted liberty to file appeal before the Commissioner (Appeals) within ten days and the appellate authority directed to decide the appeal, and any applications for waiver of pre-deposit and interim relief, on merits within 60 days.

Withdrawal of appeal - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Miscellaneous application for withdrawal - Restoration of appeal on failure of settlement

Withdrawal of appeal - Miscellaneous application for withdrawal - Prayer for withdrawal of the appeal was allowed. - HELD THAT: - The appellant filed a Miscellaneous Application seeking withdrawal of its appeal after opting to avail relief under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and produced Form SVLDRS-1 and its acknowledgement. The Tribunal considered submissions of both parties and, notwithstanding the respondent's note that Form SVLDRS-4 had not been received by the Commissionerate and was not filed by the appellant, permitted withdrawal of the appeal. The Tribunal treated the application as properly presented for withdrawal and allowed the same.

Miscellaneous Application for withdrawal of the appeal allowed and appeal disposed of accordingly.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Restoration of appeal on failure of settlement - Right to seek restoration of the appeal preserved in case settlement under the Scheme fails. - HELD THAT: - While permitting withdrawal, the Tribunal expressly recorded that if the settlement under the Sabka Vishwas Scheme ultimately fails, the appellant/assessee retains the right to apply to the Tribunal for restoration of the withdrawn appeal. This preserves the appellant's remedy conditional on the outcome of the Scheme without adjudicating the Scheme's acceptance or settlement status.

Appellant may apply for restoration of the appeal if settlement under the Scheme fails.

Final Conclusion: The Tribunal allowed the Miscellaneous Application and permitted withdrawal of the appeal filed by the appellant who had opted for the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, while preserving the appellant's right to apply for restoration of the appeal if the Scheme settlement fails.

Communication of appellate order - address for service in memorandum of appeal - statutory duty to communicate order under Section 35A(5) of the Central Excise Act - right to receive certified copy and extension of time to prefer further appeal

Communication of appellate order - address for service in memorandum of appeal - statutory duty to communicate order under Section 35A(5) of the Central Excise Act - right to receive certified copy and extension of time to prefer further appeal - Whether the petitioner was entitled to a fresh certified copy of the Commissioner (Appeals) order dated 21.12.2017 and a consequential extension of time to prefer further appeal where the order was not communicated to the address given in the memorandum's column for notices. - HELD THAT: - The memorandum of appeal filed by the petitioner contained two different addresses: the appellant's address in column 2 and a separate address in column 5 specifically for "Address to which notices may be sent to the appellant." The Commissioner (Appeals) is under a duty to communicate the order on disposal to the appellant. Although the opposite party asserted that the order was sent to the Gaganpur address, the petitioner had a bona fide belief that the appeal remained pending before the Commissioner (Appeals), as reflected in its defence before the adjudicating authority. Given the importance of the dispute and the recurring consequences for the petitioner, the Court found it appropriate to remedy the lack of communication by directing supply of a fresh certified copy of the appellate order to the petitioner, and to permit the petitioner a limited period to institute its appellate remedy before the appropriate tribunal. This direction implements the statutory requirement of communication and preserves the petitioner's right of appeal where non-receipt of the order caused bona fide unawareness of the appellate decision. [Paras 5]

Writ petition allowed to the extent that the opposite party is directed to supply a fresh certified copy of the Commissioner (Appeals) order dated 21.12.2017 to the petitioner within fifteen days, and the petitioner is granted liberty to file its appeal against that order within 30 days of receipt before the Central Excise, Service Tax Appellate Tribunal, Kolkata.

Final Conclusion: The Court allowed the petition limited to directing supply of a fresh certified copy of the appellate order to the petitioner within fifteen days and granted the petitioner thirty days from receipt to prefer appeal to the Central Excise, Service Tax Appellate Tribunal, Kolkata.

Rectification of mistake - error apparent on the face of the record - reappreciation of evidence not permissible in rectification - admissibility of judicial decisions filed after conclusion of hearing

Rectification of mistake - error apparent on the face of the record - reappreciation of evidence not permissible in rectification - Whether the application for rectification of mistake against the Tribunal's final order merits interference - HELD THAT: - The Tribunal considered the appellant's contention that contradictions existed in the impugned order and that a subsequent decision (filed after written submissions) ought to have been considered. The Tribunal recorded that hearing had concluded and written submissions were on record; the later decision was filed only after the written submissions and was not placed at the first available opportunity. The Tribunal held that rectification requires an error apparent on the face of the record-an error so manifest that it is apparent on mere inspection and does not call for elaborate reasoning. The grounds advanced did not demonstrate such an apparent error and instead sought reassessment of evidence and conclusions already reached. The Tribunal reiterated that it cannot reappreciate evidence or review its decision under the guise of rectification. Applying these principles to the material, the Tribunal found no mistake apparent on the face of the record warranting rectification.

ROM application dismissed for want of any error apparent on the face of the record; no reappraisal of evidence permitted under rectification

Admissibility of judicial decisions filed after conclusion of hearing - Whether the decision in M/s. Sparkon Engineering filed after written submissions would have altered the Tribunal's conclusion and therefore required rectification - HELD THAT: - The Tribunal noted that the decision relied upon was passed before but was filed after written submissions and that the appellant had not relied upon or produced it at the hearing or with the written submissions. The Tribunal observed that the Sparkon decision did not adopt a contrary view to the one reached in the instant appeal-both decisions treated the other party as an independent unit rather than a dummy entity-and therefore referring to that decision would not have affected the conclusion. Consequently, the late filing of that decision did not disclose any omission or mistake in the impugned order requiring correction.

Late-filed decision did not necessitate rectification as it would not have altered the Tribunal's conclusion

Final Conclusion: The application for rectification of mistake is dismissed: no error apparent on the face of the record was shown, reappreciation of evidence cannot be undertaken under the guise of rectification, and the subsequently filed decision would not have changed the Tribunal's conclusion.

Rectification of mistake - error apparent on the face of the record - binding precedent - rectification versus review

Rectification of mistake - error apparent on the face of the record - binding precedent - rectification versus review - Ext.P7 order rejecting the assessee's application for rectification of mistake was legally flawed and liable to be quashed; the matter was remanded for fresh consideration on merits. - HELD THAT: - The assessing authority, in Ext.P7, treated the rectification application as a disguised review and declined rectification. The High Court held that the assessing authority had ignored a binding judgment of this Court (Ext.P2) while completing the assessment. Such disregard of a binding precedent constituted an apparent error on the face of the record that is correctible by a rectification application rather than impermissible review. Because the mistake was patent and did not require protracted argument, the appropriate course was to set aside Ext.P7 and remit the rectification application to the assessing authority for fresh decision on merits, taking note of the observations in this judgment and after hearing the petitioner.

Ext.P7 is quashed; the 3rd respondent is directed to pass fresh orders on the rectification application on merits after hearing the petitioner, within two months of receipt of the judgment; petitioner to produce copies of the writ petition and judgment before the 3rd respondent.

Final Conclusion: The order refusing rectification was set aside as legally untenable; the matter is remitted for fresh adjudication on the rectification application in accordance with this judgment within the prescribed time.

Interstate works contract - interstate sale - taxability of transfer by accretion in a works contract - place of transfer of property in goods - situs of goods prior to accretion irrelevant where goods sourced outside the State - reading down taxing provision to exclude sales under Sections 3, 4 & 5 of the Central Sales Tax Act - exemption of movement of imported goods after clearance from port

Interstate works contract - taxability of transfer by accretion in a works contract - situs of goods prior to accretion irrelevant where goods sourced outside the State - exemption of movement of imported goods after clearance from port - Whether the respondent's contract for delivery and erection of the plant amounted to an interstate works contract and therefore was not exigible to tax within the State of Kerala. - HELD THAT: - The Court examined the contract and invoices and held that the goods used in the execution of the contract were sourced from outside the State (Calcutta and Singapore). Purchases from Calcutta had already suffered tax on interstate movement and materials imported from Singapore, after clearance from the Port, were exempt from tax on their subsequent movement. Applying the principle that where property in goods is transferred in accordance with the provisions governing inter-state sales the taxing provision cannot be applied to reach such sales, the Court followed the Division Bench decision in Siemens Ltd. v. State of Kerala which read down the State provision so as not to include sales falling under the central inter-state sale provisions. Consequently, the situs of the goods immediately prior to accretion in the works was held to be immaterial for taxability where the goods were sourced from outside the State or imported; the transfer in the works contract was properly characterised as inter-state and not exigible to State tax.

The transaction was an interstate works contract and not exigible to tax within the State of Kerala.

Final Conclusion: The revision is rejected; the Tribunal's order is approved and the question is answered in favour of the assessee and against the Revenue. Parties to bear their respective costs.