TaxTMI Updates e-Newsletter
Oct 18,2024

Principles of natural justice - vagueness of show-cause notice - writ against show cause notice - jurisdictional challenge to show cause notice - alternate remedy of appeal - entertainment of writ petitions against show cause notices - exemplary costs

Vagueness of show-cause notice - principles of natural justice - The impugned show cause notice dated 07 December 2023 was not vague and did not violate the principles of natural justice. - HELD THAT: - On perusal of the impugned show cause notice (Exhibit-I) the Court found it contained material particulars, reference to intelligence inputs, detailed factual aspects, legal provisions, notifications, circulars, and relied-upon judgments, with specific grounds set out in paragraphs 6.1 to 6.11. The petitioners filed a detailed reply on 18 April 2024 addressing multiple allegations and raising substantive defences, demonstrating they were not prejudiced in understanding or meeting the case. The contention that the adjudicating order admitted vagueness was rejected; the order must be read holistically and contains no such admission. The challenge on vagueness was held to be an afterthought and frivolous, raised to avoid invoking the alternate statutory remedies. [Paras 6, 7, 8, 9, 12]

Allegation of vagueness and consequent breach of natural justice is negatived; the show cause notice is not void on that ground.

Writ against show cause notice - entertainment of writ petitions against show cause notices - alternate remedy of appeal - jurisdictional challenge to show cause notice - The writ petition challenging the show cause notice at the pre-adjudication stage is not maintainable in the circumstances and the petitioners are relegated to alternate statutory remedies. - HELD THAT: - Relying on established principles and precedents elucidated by the Supreme Court, the Court held that writ petitions against show cause notices should not be entertained unless the notice is wholly without jurisdiction or there is a clear violation of natural justice. Since the impugned notice was neither non est in law nor shown to be jurisdictionally infirm and the petitioners had the opportunity to and did respond, the High Court declined to entertain the petition at the stage of notice. The Court observed petitioners ought to raise objections before the adjudicating authority and, if aggrieved by the final order, avail the appellate remedies under the CGST Act. [Paras 14, 15, 16, 17, 19]

Writ petition dismissed for want of maintainability at notice stage; petitioners directed to pursue alternate statutory remedies.

Exemplary costs - The petition is dismissed with exemplary costs payable to the Maharashtra Legal Services Authority. - HELD THAT: - Having found the petition to be a belated and frivolous challenge raised to circumvent statutory remedies and to delay adjudication, the Court imposed exemplary costs to deter such litigation. The order directs payment of the specified costs within the time stipulated and requires filing of proof of payment with the Registry. [Paras 18, 19, 20]

Petition dismissed with exemplary costs to be paid by the petitioners and proof of payment to be filed within the prescribed time.

Final Conclusion: The writ petition challenging the show cause notice dated 07 December 2023 and the adjudicating order dated 22 July 2024 is dismissed; the show cause notice is held not to be vague, the petitioners are relegated to alternate statutory remedies, and exemplary costs are imposed.

Principles of natural justice - Maintainability versus entertainability of writ petitions - Availability of alternative statutory remedy and rule of exhaustion - Discretion to refuse entertainment despite maintainability - Appeal under Section 107 of the Central Goods and Services Tax Act, 2017 - Counting of limitation period where High Court entertains petition

Principles of natural justice - Availability of alternative statutory remedy and rule of exhaustion - Maintainability versus entertainability of writ petitions - Whether the writ petition should be entertained despite availability of an efficacious statutory appeal remedy, on the ground of alleged violation of principles of natural justice and delay/limitation objections. - HELD THAT: - The Court recognised that a writ petition may be entertained notwithstanding existence of an alternative statutory remedy in exceptional circumstances, including a demonstrable breach of principles of natural justice. However, the petitioner failed to plead or establish that the departmental statement relied upon was supplied only on the date of personal hearing or that he was thereby denied an opportunity to file a revised reply and advance effective arguments. The Court cited established precedents holding that the High Court ordinarily should not entertain Article 226 petitions where an effective remedy exists and that entertainability is discretionary even where maintainability is established. Applying those principles, the Court concluded there was no shown circumstance going to the root of jurisdiction or amounting to palpable injustice which would justify bypassing the statutory remedy of appeal. The Court therefore declined to exercise its discretion to entertain the petition, while noting the petitioner is free to raise the asserted defects (including limitation) before the appellate forum. [Paras 5, 6, 7, 8, 9]

Petition not entertained; petitioner to pursue statutory appeal under the CGST scheme.

Counting of limitation period where High Court entertains petition - Appeal under Section 107 of the Central Goods and Services Tax Act, 2017 - Incidental directions relating to limitation and filing of appeal consequent to the refusal to entertain the writ petition. - HELD THAT: - Although the Writ Court declined to entertain the petition, it directed that the time consumed before the High Court shall not be counted by the Appellate Authority for the purpose of limitation in filing the statutory appeal. The Court also directed that the respondents shall entertain the appeal if filed physically by the petitioner, thereby affording the petitioner an opportunity to invoke the appellate remedy without prejudice on limitation grounds. [Paras 9]

Time spent in High Court will not be counted for limitation; respondents to entertain a physically filed appeal.

Final Conclusion: Writ petition dismissed on discretionary grounds of non-entertainment despite maintainability; petitioner permitted to file statutory appeal under Section 107 of the CGST Act, 2017, with the time spent in these proceedings excluded for the purpose of limitation and respondents directed to admit a physically filed appeal.

Refund under Section 54 of the CGST Act - principles of natural justice / opportunity of personal hearing - setting aside administrative refund rejection - remand for fresh consideration

Refund under Section 54 of the CGST Act - setting aside administrative refund rejection - principles of natural justice / opportunity of personal hearing - Impugned refund rejection orders dated 01.07.2022 and 26.10.2022 are liable to be set aside and the matter remanded for fresh consideration. - HELD THAT: - The petitioner filed a refund claim under Section 54 of the CGST Act for Financial Year 2018-19 which was acknowledged but thereafter a Show Cause Notice was issued and the refund was rejected by an order in FORM GST RFD-06. The court observed that the rejection order proceeded without affording an adequate opportunity of personal hearing and without properly considering the petitioner's explanations regarding deposits made through FORM GST DRC-03. The petitions were heard as part of a batch and the questions raised were held to be covered by the reasoning and observations recorded in the lead petition W.P.(C) No.1298/2023. In light of the lead decision, the court found it appropriate to set aside the impugned rejection orders and remit the matter to the appropriate authority for fresh consideration, directing that the authority consider the petitioner's submissions and grant any hearing required by law.

Impugned refund rejection orders set aside; matter remanded to the appropriate authority for fresh consideration with directions to consider the petitioner's submissions and provide opportunity of hearing in accordance with law.

Final Conclusion: The writ petition is disposed of by setting aside the impugned refund rejection orders and remanding the refund claim for fresh consideration by the appropriate authority in accordance with the observations recorded in the lead petition W.P.(C) No.1298/2023.

Classification of goods under the First Schedule to the Customs Tariff Act - manufacture resulting in emergence of a new product having distinct name, character and use - distinction between manufactured tobacco and unmanufactured tobacco - classification as chewing tobacco under CTH 2403 99 10 - applicability of Notification No. 1/2017 (Central Tax (Rate)) and Notification No.1/2017 (Compensation Cess) for rates

Classification of goods under the First Schedule to the Customs Tariff Act - manufacture resulting in emergence of a new product having distinct name, character and use - distinction between manufactured tobacco and unmanufactured tobacco - classification as chewing tobacco under CTH 2403 99 10 - applicability of Notification No. 1/2017 (Central Tax (Rate)) and Notification No.1/2017 (Compensation Cess) for rates - Product 'tobacco pre-mixed with lime' is classifiable as manufactured chewing tobacco under HSN 2403 99 10 and attracts GST and Compensation Cess accordingly. - HELD THAT: - The Authority applied the First Schedule to the Customs Tariff Act and the rules of interpretation thereto for GST classification. The statutory definition of 'manufacture' (processing of raw material resulting in a new product having a distinct name, character and use) was applied to the processes described by the applicant (mixing lime paste, drying/evaporation, segregation, addition of aroma/menthol and moisturiser). Relying on precedent that cumulative processing of tobacco can constitute manufacture, the Authority held that the described cumulative processes effect a transformation of raw tobacco into a distinct marketable product. Consequently, the product is not unmanufactured tobacco under Chapter 2401 but falls within Chapter 2403 as 'chewing tobacco'. Having so classified the product under CTH 2403 99 10, the applicable GST rate was determined by reference to Notification No. 1/2017-C.T. (Rate) (Schedule IV Sl. No.15) and the applicable Compensation Cess by Notification No. 1/2017-Compensation Cess (Rate) (Serial No.26), resulting in GST at 28% and Compensation Cess at 160%. The Authority also considered earlier advance rulings relied upon by the applicant but distinguished them on the basis that those matters involved chemical analysis and investigation which had concluded the product was a preparation containing tobacco; here the factual description of processing warranted classification as manufactured chewing tobacco. [Paras 17, 20, 21]

Tobacco pre-mixed with lime is classifiable under HSN 2403 99 10 (Chewing Tobacco without Lime Tube); GST at 28% and Compensation Cess at 160% apply.

Final Conclusion: The Authority rules that the applicant's product 'tobacco pre-mixed with lime' is a manufactured chewing tobacco (HSN 2403 99 10) and is taxable at 28% GST with Compensation Cess at 160%.

Continuous supply of services - time of supply under reverse charge - import of services - value of supply between related persons - deemed value of corporate guarantee (1%) under Rule 28(2)

Import of services - time of supply under reverse charge - continuous supply of services - Whether GST under reverse charge on issuance of corporate guarantee is payable one time or periodically - HELD THAT: - The corporate guarantee provided by a foreign related enterprise to the Indian applicant is an import of service and, in the absence of consideration, the 2nd proviso to Section 13(3) of the CGST Act governs the time of supply for associated enterprises located outside India. The Authority found that the benefit of the guarantee accrues when the contract is executed and, where no consideration is charged, the time of supply is the earlier of entry in the books of account or payment; accordingly, for the facts before it the time of supply is the date of entry in the books of account of the recipient. Since the tax liability for import of service under reverse charge crystallises at that point, GST under reverse charge is required to be discharged one time at the time of supply and not periodically; the supply of guarantee is not treated as a continuous supply within the meaning of continuous supply of services because the guarantee is granted once (without periodic renewal) even though it subsists over a specified period. [Paras 6]

GST under reverse charge is payable one time at the time of supply (date of entry in books of account) and not periodically.

Value of supply between related persons - deemed value of corporate guarantee (1%) under Rule 28(2) - If valuation is to be determined, whether valuation is under Rule 28(1) (pre 26.10.2023) or as deemed 1% under Rule 28(2) (post 26.10.2023) and whether such valuation is to be applied one time or annually - HELD THAT: - The Authority observed that valuation depends on the relevant regulatory regime. For guarantees executed prior to 26.10.2023, valuation for supplies between related persons without consideration would follow the mechanisms in Rule 28(1). For guarantees executed after 26.10.2023, Rule 28(2) expressly deems the value of such related party corporate guarantees to be one per cent of the amount of the guarantee (or the actual consideration, if higher). Given the finding that GST under reverse charge for the import of such guarantee is payable one time at the time of supply, the deemed 1% valuation under Rule 28(2) is to be applied on a one time basis at execution of the contract for guarantees executed post 26.10.2023; the pre 26.10.2023 valuation follows Rule 28(1) at the time of execution. [Paras 9]

Valuation: (a) guarantees executed prior to 26.10.2023 - valuation as per Rule 28(1) at time of contract; (b) guarantees executed after 26.10.2023 - deemed 1% under Rule 28(2) applied one time at time of contract.

Final Conclusion: The Advance Ruling concludes that where a foreign related enterprise provides a corporate guarantee to an Indian recipient without consideration, the transaction is an import of service and GST under reverse charge is payable one time at the time of supply (date of entry in books of account). Valuation follows the applicable regime: pre 26.10.2023 cases per Rule 28(1); post 26.10.2023 cases the deemed 1% valuation under Rule 28(2), applied one time at execution of the guarantee.

Applicability of GST on royalty under reverse charge - Classification as licensing services for right to use minerals - Time of supply and characterisation of upfront payments as consideration - Compulsory registration where tax is payable under reverse charge in the State of receipt - Eligibility for input tax credit subject to conditions of section 16

Applicability of GST on royalty under reverse charge - Classification as licensing services for right to use minerals - GST is payable on mining lease payments including royalty to the State Government under reverse charge. - HELD THAT: - The Authority examined Serial No.17 of Notification No.11/2017 (heading 9973) which covers licensing services for the right to use minerals and concluded such services attract GST. Further, Serial No.5 of Notification No.13/2017 makes services supplied by State Government to a business entity (except specified exceptions) liable to tax under reverse charge by the recipient. Applying these entries, the payments to Government of Rajasthan in respect of the mining lease/royalty fall within taxable licensing/lease services and the applicant, as recipient, is liable to discharge tax under the reverse charge mechanism. [Paras 7]

The applicant is liable to pay GST on mining lease payments including royalty under RCM.

Classification as licensing services for right to use minerals - The applicable rate of GST on the mining lease payments is the same as on supply of like goods, i.e. 18% (9% CGST + 9% SGST). - HELD THAT: - Having classified the supply as licensing/leasing of the right to use minerals under the relevant rate entry, the Authority applied the rate provision in the notification which prescribes the same rate as applicable to supply of like goods involving transfer of title. Consequently, the combined rate determined is 18% (9% CGST and 9% SGST). [Paras 8]

GST payable at the rate of 18% (9% CGST + 9% SGST).

Time of supply and characterisation of upfront payments as consideration - Consideration includes payments made in respect of supply - Upfront payments made under the tender (paid before execution of the mining lease deed) are assessable to GST under RCM as advance payments/consideration and not mere refundable deposits. - HELD THAT: - The Authority analysed the tender clauses (notably point 13.1) which provide that the upfront payment shall be adjusted in full against amounts payable on commencement of production under the Auction Rules. Given this adjustment mechanism and absence of a refund clause, the upfront sums operate as advance consideration rather than mere security deposits. Under the definition of consideration and the time-of-supply rules for reverse charge supplies, such advance payments are thus liable to tax under RCM. [Paras 9]

GST is liable on the upfront payments made under the tender documents.

Compulsory registration where tax is payable under reverse charge in the State of receipt - The applicant must obtain registration in the State of Rajasthan and discharge GST under RCM there; they cannot pay from Telangana in respect of services received in Rajasthan. - HELD THAT: - Section 24(1)(iii) requires compulsory registration for persons required to pay tax under reverse charge, and the corresponding state-law position mandates registration in the State where services are received. As the mining-lease/royalty services are received in Rajasthan, the applicant is obliged to register in Rajasthan and pay the tax under RCM in that State rather than from Telangana. [Paras 10]

Registration and payment of GST under RCM must be effected in the State of Rajasthan.

Eligibility for input tax credit subject to conditions of section 16 - GST paid by the applicant under RCM on the mining lease payments is eligible as input tax credit subject to compliance with the conditions in section 16. - HELD THAT: - The Authority noted that the tax payable under the reverse charge provisions is included within the definition of input tax. Consequently, a registered person may avail input tax credit of such tax provided the statutory conditions and restrictions in section 16 (possession of tax invoice, receipt of services, supplier furnishing details where applicable, and other prescribed conditions) are satisfied. [Paras 11]

Input tax credit of GST paid under RCM is available subject to fulfillment of section 16 conditions.

Final Conclusion: The Authority ruled that (i) GST is payable under reverse charge on mining lease payments (royalty) to the Government of Rajasthan, (ii) the applicable combined rate is 18% (9% CGST + 9% SGST), (iii) upfront payments under the tender are taxable as advance consideration under RCM, (iv) the applicant must register and pay GST in Rajasthan, and (v) GST paid under RCM is eligible as input tax credit subject to the conditions of section 16.

High-Pitched scrutiny assessment - Role and powers of Local Committee under the Standard Operating Procedure - Right to opportunity of hearing before an administrative grievance committee - Local Committee not an alternative forum to appellate or dispute resolution proceedings

High-Pitched scrutiny assessment - Role and powers of Local Committee under the Standard Operating Procedure - Validity of the Local Committee's conclusion that the assessment was not a 'High-Pitched' scrutiny assessment. - HELD THAT: - The court examined the revised Standard Operating Procedure governing Local Committees and found that the Committee's mandate is to examine grievance petitions to ascertain whether there is a prima facie case of High-Pitched Assessment, non-observance of principles of natural justice, non-application of mind or gross negligence by the Assessing Officer, and to submit a reasoned report classifying the order as High-Pitched or not. The impugned communication of 02.11.2023 conveyed the Local Committee's conclusion that the petitioner's case was not one of High-Pitched assessment. The Court noted the SOP contemplates examination and reporting by the Committee and does not convert the Committee into an appellate or adjudicatory forum; its role is investigatory and recommendatory in the grievance framework established by the CBDT. Given the SOP's scheme and the Committee's function, the Court found no basis to interfere with the Committee's conclusion that the assessment did not fall within the ambit of High-Pitched scrutiny assessment.

The Local Committee's conclusion that the assessment was not a High-Pitched scrutiny assessment is not interfered with.

Right to opportunity of hearing before an administrative grievance committee - Role and powers of Local Committee under the Standard Operating Procedure - Whether the petitioner was entitled to an opportunity of hearing before the Local Committee under the SOP. - HELD THAT: - On construing the SOP, the Court observed there is no provision which mandates that the petitioner must be accorded a personal hearing by the Local Committee. The SOP prescribes procedures for receipt, examination, calling for records and submission of a report by the Committee, but does not require oral hearing of the taxpayer before arriving at its classification. Accordingly, the petitioner's contention that the Local Committee erred in not affording an opportunity of hearing was rejected as without basis.

There was no obligation under the SOP to provide the petitioner a hearing before the Local Committee; the claim of denial of hearing is without basis.

Local Committee not an alternative forum to appellate or dispute resolution proceedings - High-Pitched scrutiny assessment - Whether the Local Committee can be treated as an alternative forum to contest the assessment in place of statutory appellate remedies. - HELD THAT: - The Court emphasised the CBDT's stated purpose for constituting Local Committees is to efficiently deal with genuine grievances and to support an environment where assessments are fair, but expressly the SOP and related administrative communications do not make the Committee a substitute for statutory appellate or dispute-resolution mechanisms. The Committee's determination that a matter is not High-Pitched does not preclude the assessee from pursuing the statutory appellate process, and an assessee cannot compel that the Local Committee itself adjudicate the assessment in lieu of appeals.

The Local Committee is not an alternative forum to appellate or dispute-resolution proceedings and its decision does not supplant statutory appeals.

Final Conclusion: Writ petition dismissed. The Court declined to interfere with the Local Committee's finding that the assessment is not a High-Pitched scrutiny assessment and held there was no entitlement to a hearing under the SOP; the petitioner remains at liberty to pursue its remedy before the statutory appellate authorities.

Re-opening of assessment - reason to believe - absence of nexus between material and formation of belief - supplementation of recorded reasons - best judgment assessment - principles of natural justice - notice of charge and specification of legal provision relied upon - quashing of reassessment, demand and penalty

Re-opening of assessment - reason to believe - absence of nexus between material and formation of belief - Validity of reopening assessment on the recorded reasons and whether a reasonable belief of escapement was formed - HELD THAT: - The Court held that formation of a reasonable belief is a condition precedent to jurisdiction for reopening under Section 147/148 and must have a direct nexus or live link with the material before the assessing authority. The recorded reasons in this matter relied on a generalized statement attributed to a third party and information from an 'Insight module' without dates or linkage to the assessment year; they used conclusory terms such as 'accommodation entry' and 'bogus financial transaction' without disclosing the basis. In consequence the belief was found vague, far fetched and lacking bona fides and thus the reopening was held to be without jurisdictional foundation. [Paras 11, 13, 14, 16, 19]

Reopening was invalid for want of a rational nexus between material and belief and is liable to be quashed.

Supplementation of recorded reasons - Whether the recorded reasons could be supplemented or cured by subsequent material or the assessment order - HELD THAT: - The Court reiterated that recorded reasons for reopening cannot be supplemented by the assessment order or by affidavit to cure want of particulars; reliance on post hoc or different sources in the assessment order (including shifting characterization from recipient to provider of entries) does not validate the initial recorded reasons. The recorded reasons must themselves disclose sufficient material to form the requisite belief. [Paras 12, 13, 18]

Recorded reasons could not be supplemented; supplementation in the assessment order did not validate the reopening.

Best judgment assessment - Validity of the impugned assessment made as a best judgment assessment under Section 144 - HELD THAT: - The Court found the impugned assessment to be founded on conjecture and guesswork rather than material - the assessing officer did not specify the character of the addition (cash credit, unexplained investment, unexplained money etc.) and there was no evidence that the petitioner had received or paid cash to the alleged accommodation entry provider. A best judgment assessment must be based on something more than bare suspicion; here the order was non speaking and without authority of law. [Paras 17]

Impugned assessment is unsustainable as a proper exercise of power under Section 144 and is quashed.

Principles of natural justice - notice of charge and specification of legal provision relied upon - Whether the petitioner was given adequate notice of the charge and the provisions of law under which additions were proposed - HELD THAT: - The Court emphasized that show cause notices must inform the assessee of the specific charges and the provisions of law relied upon so as to enable effective defense. The recorded reasons and subsequent proceedings failed to state under which statutory heads (e.g., cash credit, unexplained investments, unexplained money, unexplained expenditure) the additions were sought, thereby violating principles of natural justice and the requirement to put the assessee on notice of the legal basis of the claim. [Paras 18]

Proceedings were in gross violation of natural justice for failure to specify the legal provisions relied upon; such defects vitiate the assessment process.

Quashing of reassessment, demand and penalty - Relief - whether the impugned notice, assessment, demand and penalty orders should be quashed - HELD THAT: - Applying the conclusions reached on jurisdictional infirmity, absence of nexus, inability to supplement reasons, defects in the best judgment assessment, and breach of natural justice, the Court held that the initiation of proceedings and the consequential orders were void. The cumulative infirmities went to the root of the proceedings and justified quashing of the notices, assessment order, demand notices and penalty orders relating to the petitioner for the assessment period in dispute. [Paras 6, 20, 21]

Impugned notice under Section 148/147, the assessment order, demand notices and penalty orders are quashed and set aside; writ is allowed.

Final Conclusion: Writ petition allowed; impugned notice of re opening, assessment order, demand notices and penalty orders relating to Assessment Year 2014-2015 are quashed and set aside, and pending interlocutory applications, if any, are closed.

Protective addition - unexplained investment in cash loans - additions under unexplained sources (classification as section 69/69C/68) - order and report under section 245D and final order of Settlement Commission - double addition / avoidance of double taxation - opportunity of hearing / ex-parte appellate order - invocation of special tax rate under section 115BBE

Protective addition - unexplained investment in cash loans - order and report under section 245D and final order of Settlement Commission - double addition / avoidance of double taxation - Validity of protective additions of Rs. 82,37,000 (u/s 69), Rs. 41,100 (u/s 68) and Rs. 50,000 (u/s 69C) in assessee's hands when identical entries were accepted in the Settlement Commission proceedings of the firm - HELD THAT: - The assessing officer made additions on a protective basis after search, while recording that the entries reflected in the seized papers were covered in the peak working enclosed with the report under section 245D(3). The firm (M/s Ramesh Mahesh & Co.) had filed an ITSC application and subsequently the Settlement Commission passed a final order which reproduced the peak working (entries Nos. 1-2402) that incorporate the entries for which protective additions were made. The revenue did not dispute the Settlement Commission order or the fact that the entries were covered by the firm's settlement when the matter was placed before the Tribunal. Where the identical transactions have been considered and accepted in the firm's ITSC order and the assessing officer himself had verified those entries from the 245D(3) report, sustaining the same additions in the individual partner's assessment would amount to double taxation and was not permissible. Consequently, the protective additions confirmed by the first appellate authority could not be sustained and were to be deleted.

Protective additions under sections 69, 68 and 69C deleted; grounds challenging those additions allowed.

Opportunity of hearing / ex-parte appellate order - Complaint that the Commissioner (Appeals) passed an ex parte order without granting adequate opportunity - HELD THAT: - The Tribunal noted the assessee's explanation for non appearance before the CIT(A) (medical reasons and COVID 19 period) and considered the appeal on merits despite the appellate authority having passed an ex parte order. However, since the Tribunal has decided the substantive controversy in favour of the assessee on merits, the procedural grievance about lack of opportunity was treated as academic/educative and did not require separate adjudication.

Ground on alleged denial of opportunity treated as educative; no separate relief required.

Technical challenge to assessment order - Technical challenge to assessment order (jurisdictional/statutory objections to order under section 143(3)/153A) - HELD THAT: - The Tribunal observed that, having dealt with the merit issue and allowed the appeal on substantive grounds, the technical objection to the assessment order becomes academic. The point therefore was not adjudicated on merits but rendered of educative value in view of the disposition on substantive issues.

Technical ground rendered educative; no separate adjudication called for.

Invocation of special tax rate under section 115BBE - Applicability of special rate under section 115BBE to the additions - HELD THAT: - Because the Tribunal granted relief by deleting the impugned additions on merits, the question of applying the special tax rate under section 115BBE to those additions fell away and was rendered infructuous.

Challenge regarding invocation of section 115BBE rendered infructuous.

Final Conclusion: The appeal is allowed: protective additions made under sections 69, 68 and 69C are deleted because the identical entries were accepted in the firm's Settlement Commission proceedings (report under section 245D(3) and ITSC order), while the procedural and technical grounds were treated as educative or infructuous in view of the substantive allowance.

Remand for decision on merits - unexplained cash credit under section 68 - investments explained under section 69B - allowability of business expenditure under section 37(1) - appellate reliance on remand report and admissibility of additional evidence - burden of proof on assessee for source of funds

Appellate reliance on remand report and admissibility of additional evidence - Admissibility of revenue's additional grounds challenging CIT(A)'s consideration of the remand report and whether the third remand report required fresh consideration. - HELD THAT: - The Tribunal examined the three remand reports on record and found the second remand report dated 27-04-2009 to be a detailed document addressing the assessee's explanations and documentary evidence, whereas the first and third remand reports merely reiterated the original assessment findings. In those circumstances the CIT(A) rightly relied on the detailed remand report and there was no substance in the revenue's grievance that the third remand report was not considered. The additional grounds filed by the revenue, even if admitted, did not warrant interference and were dismissed. [Paras 3]

Revenue's additional grounds challenging CIT(A)'s reliance on the remand report dismissed; CIT(A) correctly considered the detailed remand report dated 27-04-2009.

Unexplained cash credit under section 68 - burden of proof on assessee for source of funds - Deletion of addition on account of increase in share capital and unsecured loans treated as unexplained credit. - HELD THAT: - The assessee furnished journal entries, Form No.2 from ROC, ledger extracts and explanations during remand proceedings. The AO's detailed remand report accepted these explanations and evidences as satisfactory. The Tribunal found no infirmity in the CIT(A)'s deletion of the additions since the transactions were journal entries satisfactorily explained and validated in the remand report. [Paras 3]

Addition relating to increase in share capital and unsecured loans deleted; CIT(A)'s deletion upheld.

Allowability of business expenditure under section 37(1) - Deletion of disallowance of stamp charges (electronic transfer charges) claimed as business expense. - HELD THAT: - The stamp expenses related to purchase of share transfer stamps used in the assessee's trading of shares. The expenditures were supported by purchase of stamps and were integral to the assessee's business of sale and purchase of shares. The Tribunal held that such expenditure is allowable and directed deletion of the disallowance. [Paras 3]

Disallowance of stamp charges deleted; expenditure allowed.

Allowability of business expenditure under section 37(1) - Allowability of brokerage payments claimed by the assessee. - HELD THAT: - The payments were contractual brokerage paid to a corporate entity through banking channels with tax deducted at source. The AO had accepted the claim in the remand report. The CIT(A) had limited the claim on a view regarding the rate; however, in absence of any adverse finding and given acceptance in the remand report, the Tribunal directed allowance of the full brokerage claim. [Paras 3]

Full brokerage claim allowed; partial restriction set aside.

Allowability of business expenditure under section 37(1) - Deletion of disallowance of service charges and related payments. - HELD THAT: - Service, valuation, installation and computer charges were paid to organized vendors through banking channels for procuring services. The remand report accepted these payments as genuine business expenses and the Tribunal found they meet the requirements of allowability under relevant law, directing deletion of the disallowance. [Paras 3]

Disallowance of service charges deleted; expenditures allowed.

Allowability of business expenditure under section 37(1) - Allowability of professional fees paid in connection with obtaining loans. - HELD THAT: - The professional fees were contractual, paid to a Chartered Accountant, substantiated by deduction of TDS and accepted by the AO in the remand report. The CIT(A) had restricted the claim to 1% but, in absence of any adverse finding and given the remand report acceptance, the Tribunal accepted the full claim. [Paras 3]

Professional fees relating to loan arrangements allowed in full; CIT(A)'s restriction set aside.

Investments explained under section 69B - Deletion of addition made under section 69B in respect of undisclosed investments. - HELD THAT: - The AO, after examining evidences including share transfer applications, bank accounts and confirmation letters, accepted the assessee's explanations in the remand report. The CIT(A) deleted the addition and the Tribunal found no reason to interfere with that deletion where the remand report supported the explanations. [Paras 3]

Addition under section 69B deleted; investments treated as satisfactorily explained.

Allowability of business expenditure under section 37(1) - Allowability of office maintenance expenses except for an unpressed amount. - HELD THAT: - Most office maintenance expenditures were supported and accepted as per the remand report; however an amount of Rs. 1.52 Lacs remained for want of explanation. The assessee did not press that particular ground before the Tribunal, and thus the Tribunal did not entertain that sub-claim. Other office maintenance expenses were allowed. [Paras 3]

Office maintenance expenditures allowed except for the unpressed item; corresponding ground of assessee's appeal dismissed as not pressed.

Final Conclusion: Pursuant to the High Court's direction to decide on merits, the Tribunal upheld CIT(A)'s reliance on the detailed remand report and allowed substantial relief to the assessee: deletions sustained in respect of share capital/unsecured loans, interest, investments, stamp charges, brokerage, service charges, professional fees and most office maintenance expenses. Revenue's cross-appeal dismissed and the assessee's appeal partly allowed as recorded in the order.

Powers of the first appellate authority under section 251 to confirm, reduce, enhance, annul or remand - remand for fresh adjudication - best judgment assessment - obligation to furnish return of income - reasonable opportunity of hearing before enhancement or reduction - CBDT instruction on deposits of Specified Bank Notes during demonetisation

Obligation to furnish return of income - best judgment assessment - Liability of the assessee to file return and validity of assessment completed under best judgment in absence of return and non-cooperation - HELD THAT: - The Tribunal examined the statutory requirements of filing return under the relevant provisions and the scope of inquiries under section 142. Considering that the assessee had not filed any return for the year, had been issued notices under section 142(1) and failed to produce bank statements or substantive documentary evidence to substantiate the cash deposits, the contention that her income was below taxable limit was held legally untenable. In those circumstances the Assessing Officer was justified in completing assessment under the best judgment provisions. [Paras 6]

Assessee was under obligation to file return; non-filing and failure to substantiate deposits made the best judgment assessment sustainable on merits.

Powers of the first appellate authority under section 251 to confirm, reduce, enhance, annul or remand - remand for fresh adjudication - Whether the Commissioner (Appeals) exceeded jurisdiction by setting aside the assessment to the Assessing Officer - HELD THAT: - The Tribunal considered the amended scope of powers of the first appellate authority and the ratio in Arun Kumar Bose relied upon by the assessee. Having found that the Commissioner (Appeals) had set aside the matter to the AO in a manner exceeding the powers vested under section 251 as amended, the Tribunal held that the CIT(A)'s order in that respect was beyond statutory authority. Accordingly the Tribunal declared that portion of the CIT(A) order to be beyond powers and directed restoration of the matter for proper exercise of appellate jurisdiction. The Tribunal therefore remanded the matter to the file of the Ld. CIT(A) with a direction to call for a remand report from the AO and then adjudicate the appeal, treating ground no. 5 as allowed for statistical purposes. [Paras 8]

Ground no. 5 allowed; CIT(A)'s act of setting aside to AO held beyond powers; matter restored to CIT(A) with direction to obtain remand report and adjudicate afresh.

CBDT instruction on deposits of Specified Bank Notes during demonetisation - reasonable opportunity of hearing before enhancement or reduction - Other grounds raised (including alleged void assessment for want of notice under sections 147/148, failure to consider legal submissions, denial of personal hearing, and contention that whole appeal should be allowed after deletion of SBN deposit addition) - HELD THAT: - The Tribunal reviewed the pleadings, the AO's and CIT(A)'s orders and the appellant's submissions including reliance on CBDT Instruction No. 03/2017 and certain judicial decisions. It observed that the CIT(A) had considered the CBDT instruction and had deleted the addition in respect of deposits of Specified Bank Notes, while sustaining other additions. The Tribunal found that the assessee had not furnished necessary evidence and that the remaining grounds lacked merit. The Tribunal therefore did not accept contentions that the assessment was void for want of notice or that the entire appeal should succeed merely because one addition was deleted. The Tribunal also noted procedural protections regarding opportunity of hearing and that the first appellate authority must act within statutory powers. [Paras 5, 8, 9]

All other grounds raised by the assessee are rejected; the deletion of the addition relating to SBN deposits as given by the CIT(A) is noted but does not entitle the assessee to allow the entire appeal.

Final Conclusion: Appeal partly allowed for statistical purposes: the Tribunal affirmed that the assessee was under obligation to file return and sustained the validity of best judgment assessment where supported by non-cooperation, but held that the Commissioner (Appeals) exceeded his powers in setting aside the matter; the matter is restored to the CIT(A) with directions to call for a remand report from the Assessing Officer and to adjudicate afresh. All other grounds are rejected.

Treatment of cash deposits as unexplained money under section 69A - taxation under section 115BBE - burden of proof for source of bank deposits and evidentiary requirement of books of account - acceptance of cash sales recorded in audited books as explanation for bank deposits - verification of TDS payment by production of challan - admissibility of comparative cash-deposit pattern across years in assessing credibility of deposits

Treatment of cash deposits as unexplained money under section 69A - burden of proof for source of bank deposits and evidentiary requirement of books of account - acceptance of cash sales recorded in audited books as explanation for bank deposits - admissibility of comparative cash-deposit pattern across years in assessing credibility of deposits - Addition treating certain cash deposits during the demonetisation period as unexplained money under section 69A was not sustainable and was deleted. - HELD THAT: - The Tribunal found that the assessee was engaged in a cash-intensive trade and had audited books showing large turnover and corresponding purchases. The Assessing Officer accepted the majority of cash deposits for the year without querying their source, while singling out deposits during the demonetisation window without giving specific reasons or analysis for disbelieving those deposits. The assessee produced tabulated comparative deposits for the same calendar period in an earlier year, demonstrating a consistent pattern of cash deposits. The Tribunal held that where deposits are recorded in the books and explained as business sales, and where the revenue does not validly distinguish or rebut those explanations for the specific period, section 69A cannot be invoked merely because the deposits occurred during the demonetisation window. The addition was therefore found to be arbitrary and deleted on merits. [Paras 11, 12]

Addition on account of unexplained cash deposits deleted.

Verification of TDS payment by production of challan - burden of proof for TDS liability and Assessing Officer's duty to verify payment evidence - Addition disallowing claimed TDS for want of proof was deleted upon production of the challan. - HELD THAT: - The assessee identified the BSR code and payment details and subsequently placed a copy of the challan on record before the Tribunal. The Tribunal observed that once the assessee provided the challan showing deposit, the Assessing Officer ought to have verified the payment. In view of the challan produced, the addition made for alleged non-payment of TDS could not be sustained and was deleted. [Paras 16]

Addition for alleged non-payment of TDS deleted.

Final Conclusion: The appeal is allowed; the additions confirmed by the revenue for demonetisation-period bank deposits and for alleged non-payment of TDS are deleted on merits. The request to admit a new ground of jurisdiction was not entertained.

Treatment of share application money as loan versus share capital - transfer pricing adjustment on notional interest - onus on Revenue to prove default causing inordinate delay in allotment - applicability of transfer pricing provisions where no income has accrued from the international transaction - rectification under Section 154 of the Income Tax Act

Treatment of share application money as loan versus share capital - transfer pricing adjustment on notional interest - onus on Revenue to prove default causing inordinate delay in allotment - applicability of transfer pricing provisions where no income has accrued from the international transaction - Transfer pricing addition of notional interest on share application money remitted to the overseas associated enterprise set up in SAIF Zone. - HELD THAT: - The Tribunal examined the factual matrix and earlier decisions in the assessee's own cases where identical additions for earlier assessment years were deleted. The assessee consistently maintained that funds remitted were share application money and allotment was delayed because approval of the SAIF Zone Authority was required; the shares were ultimately allotted. The TPO and DRP treated the remittances as interest free loans on account of alleged inordinate delay but did not bring material to show that the delay was attributable to the assessee or to contradict the assessee's evidence that an application for approval was made. No inquiry was made of the AE or SAIF Authority, and the DRP rejected the application dated 07/02/2017 for lack of an acknowledgement without producing evidence to disprove its veracity. On the preponderance of probabilities, and having regard to earlier appellate findings and the absence of material from Revenue to show default by the assessee, the Tribunal held that the transaction was remittance of share application money (converted into equity later) and could not be treated as a loan giving rise to notional interest. Consequently, the transfer pricing addition based on the incorrect premise of inordinate delay and loan characterisation could not be sustained and was deleted. [Paras 8]

Transfer pricing addition of INR.1,03,26,939/- on account of notional interest on share application money is deleted.

Rectification under Section 154 of the Income Tax Act - Effect of the Assessing Officer's rectification order on computation of total income and tax liability. - HELD THAT: - It was recorded that the Assessing Officer passed a rectification order revising total income. The Tribunal directed the Assessing Officer to recompute the income and tax liability of the assessee after taking into consideration the rectification order referred to in the order, thereby giving effect to the rectification. The grounds challenging treatment linked to the intimation under Section 143(1) are allowed for statistical purposes to the extent necessary to implement the recomputation. [Paras 9]

Assessing Officer to recompute income and tax liability after giving effect to the rectification order dated 16/06/2024; Grounds 2 and 3 allowed for statistical purpose.

General grounds raised by the assessee which do not require separate adjudication. - HELD THAT: - The Tribunal found grounds 4 and 5 to be general in nature and not requiring separate consideration. [Paras 10]

Grounds 4 and 5 dismissed as general in nature.

Final Conclusion: The appeal is allowed: the transfer pricing addition of INR.1,03,26,939/- on account of notional interest on share application money remitted to the SAIF Zone AE is deleted; the Assessing Officer is directed to recompute income and tax liability after giving effect to the stated rectification order; general grounds 4 and 5 are dismissed.

Reopening of assessment as time-barred - Period of limitation - notice under Section 148 of the Income tax Act, 1961 - order under Section 148A(d) of the Income tax Act, 1961 - Validity of notice dated 30.07.2022 under Section 148 and order dated 30.07.2022 under Section 148A(d) insofar as assessment year 2013-14

HELD THAT: - The Special Leave Petitions are disposed of in terms of the judgment of this Court in Union of India v Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)]

The assessing officers will dispose of the objections in terms of the law laid down by this Court in Rajeev Bansal (supra).

Interest income derived from short-term fixed deposit made in a Bank - eligibility for deduction for under Section 10-A or 10-B -treatment of interest income as business income or income from other sources - consideration of purpose of short-term fixed deposits - nature of assessee's business

HELD THAT: - The Court noted that the ITAT in respect of Assessment Year 2010-2011 had remanded the identical question to the Assessing Officer for a factual enquiry and finding (paragraph 42 of the ITAT order). Observing that the Assessing Officer has not yet given a finding on that remand and that the earlier High Court order for 2009-2010 held the interest to be income from other sources without the factual determination directed by the ITAT, the Court set aside the impugned order and remanded the 2009-2010 issue. The Assessing Officer is to consider, with reference to the nature of the assessee's business and the purpose for which the short-term fixed deposits were maintained, whether the interest income should be treated as business income or as income from other sources, and to give a finding expeditiously. The Court expressly refrained from adjudicating the merits of the issue itself.

Appeal allowed; impugned order set aside and matter remanded to the Assessing Officer for determination of the character of the interest income for AY 2009-2010, with a direction to decide expeditiously; no expression on merits.

Final Conclusion: The appeal is allowed: the High Court order is set aside and the question whether interest on short-term fixed deposits is business income or income from other sources for AY 2009-2010 is remanded to the Assessing Officer for fresh consideration in light of the assessee's business and the purpose of the deposits; the Court has not expressed any view on the merits.

Appropriation of profit - deductibility of business expenditure - interpretation of Clause 3 and Clause 5A of the Sugar Cane (Control) Order, 1966 - Section 40A(2) unreasonable payment

HELD THAT: - The Supreme Court, on hearing the appellant and noting absence of respondent, held that the present appeal is covered by the Court's earlier decision in Tasgaon Taluka S.S.K. Ltd. [2019 (3) TMI 321 - SUPREME COURT] - The Court applied the ratio of that decision and disposed of the appeal accordingly, answering the question of law as indicated in the cited judgment and adopting its reasoning and directions.

Appeal disposed of by applying the earlier decision; matter determined in accordance with that precedent.

Bogus purchases - genuineness of purchases - cogent and convincing evidence - burden on the Revenue to prove transactions bogus - requirement of independent enquiry by the Assessing Officer - inadmissibility of ad hoc/partial disallowance without reasoning - finality of ITAT's findings of fact

Bogus purchases - genuineness of purchases - cogent and convincing evidence - burden on the Revenue to prove transactions bogus - inadmissibility of ad hoc/partial disallowance without reasoning - finality of ITAT's findings of fact - Whether the ITAT was justified in upholding a 10% disallowance of purchases where it had concurrently found that the Assessing Officer's disallowance was not based on cogent and convincing evidence and that the assessee's sales were genuine. - HELD THAT: - The Court held that the ITAT had itself recorded decisive findings that the AO's wholesale disallowance was unsupported by cogent and convincing evidence and that the assessee's sales were established by indirect tax compliance (sales tax returns and VAT audit report). Once the last fact-finding forum concluded that the AO's foundational case was untenable, the ITAT could not sustain an unexplained, ad hoc 10% disallowance merely as an equitable compromise. The Revenue bore the onus of proving transactions bogus by cogent evidence and by conducting or procuring independent enquiries; mere inputs or suspicion from investigative or sales tax authorities, without specific corroborative material and without affording the assessee an opportunity to meet such specific material, could not justify discarding the claimed purchases. The Impugned Order contained no analysis explaining why a 10% adjustment was a reasonable, necessary or legally permissible measure after positive findings on genuineness; therefore the mechanical endorsement of the CIT-A's 10% reduction amounted to imposing a requirement on the assessee to prove a negative and to permitting half hearted or convenience based additions contrary to the proper investigatory and legal standards. Applying these principles to the facts of the three assessment years, the Court concluded that the substratum of the AO's adverse findings having been undermined, the limited, unexplained disallowance could not stand. [Paras 7, 8, 13, 15, 21]

The ITAT's endorsement of a 10% disallowance was set aside; the appeals were allowed in favour of the assessee for the assessment years in question.

Final Conclusion: The Impugned Order is set aside and the appeals are allowed; the assessment adjustments disallowing 10% of the alleged bogus purchases are quashed for the Assessment Years 2009-10, 2010-11 and 2011-12.

Comparability of uncontrolled comparable companies - Transactional Net Margin Method (TNMM) - Profit Level Indicator (operating profit to costs) - functional comparability and business model - on site versus offshore revenue filter - use of information under Section 133(6) replies - remand for fresh consideration

Comparability of uncontrolled comparable companies - functional comparability and business model - use of information under Section 133(6) replies - The inclusion of Avani Cimcon Technologies Ltd. as a comparable was wrongly sustained by the Tribunal and TPO without adequate inquiry into whether Avani derived revenues from sale/licence of products, rendering it functionally non comparable on the record available. - HELD THAT: - The Court examined the TPO's reliance on Avani's reply to the notice under Section 133(6) and the TPO/Tribunal finding that 97% of Avani's revenue was from software development. It found that the TPO had ignored contemporaneous public domain material (Avani's website) indicating sales/licensing of software products (DXchange, CARMA, CMS etc.), and did not seek specific clarification from Avani whether such products generated revenue in FY 2006 07. The Court noted existing coordinate Tribunal decisions (Infogain, Softbrands and others) which excluded Avani where entity level figures included product sales without segmental break up, and held that on the materials before the Revenue the inclusion of Avani as a comparable was erroneous. The Tribunal's failure to apply those precedents and to investigate whether product revenues were reflected in the entity level profitability rendered its conclusion unsustainable. [Paras 28, 31, 33, 36, 38]

Avani Cincom Technologies Ltd. must be excluded as a comparable; the Tribunal's inclusion of Avani is set aside in favour of the appellant.

Comparability of uncontrolled comparable companies - functional comparability and business model - comparability filters (employee cost / related party transactions) - The Tribunal erred in upholding inclusion of Ishir Infotech Ltd. as a comparable without addressing the appellant's contention that Ishir's business model (heavy outsourcing/subcontracting) made it functionally dissimilar. - HELD THAT: - The Court observed that although the TPO retained Ishir after accepting its Section 133(6) reply on the employee cost filter and other numerical filters, the Tribunal did not consider whether Ishir's outsourcing led business model affected functional comparability and profitability structure. The Court referred to precedents where differing business models warranted exclusion as comparables and held that the Tribunal's brief treatment-limited to noting the filter pass-failed to adjudicate the appellant's substantive contention on business model dissimilarity. Consequently the Tribunal's conclusion on Ishir was found to be erroneous. [Paras 39, 42, 43, 44]

The finding upholding inclusion of Ishir Infotech Ltd. as a comparable is set aside in favour of the appellant and remitted for fresh consideration.

On site versus offshore revenue filter - comparability of uncontrolled comparable companies - remand for fresh consideration - The Tribunal's exclusion of Akshay Software Technologies Ltd. was not sustained: the Tribunal failed to consider the appellant's specific challenge to Akshay's exclusion on the basis of the onsite revenue filter and erred in its factual treatment. - HELD THAT: - The Court reviewed the TPO's application of an onsite revenue filter (rejecting companies with onsite revenues exceeding 75% of export revenues) and noted conflicting factual material on record as to whether Akshay met the revenue and export turnover filters. The appellant had contested exclusion chiefly on the onsite revenue criterion, but the Tribunal's reasoning addressed different factual grounds and did not properly consider the appellant's articulated basis. Given this lacuna and the Tribunal's apparent failure to consider the precise challenge, the Court held that the matter required fresh consideration and remanded the question for adjudication on merits. [Paras 45, 47, 48]

The question of including Akshay Software Technologies Ltd. as a comparable is remitted to the Tribunal for fresh adjudication.

Comparability of uncontrolled comparable companies - functional comparability and business model - remand for fresh consideration - The Tribunal did not adjudicate the appellant's objections to inclusion of Tata Elxsi Ltd. and Sasken Communication Technologies Ltd.; those non adjudicated grounds constitute an error requiring reconsideration. - HELD THAT: - The Court noted that the appellant filed specific contentions and comparable charts challenging functional dissimilarity, presence of significant intangibles, R&D/IP, and extraordinary transactional events (acquisitions) in respect of Tata Elxsi and Sasken, and that the Tribunal's order omitted adjudication on these contentions. The miscellaneous applications seeking rectification were not finally decided on merit and the Tribunal's silence on these grounds amounted to non adjudication. The Court therefore directed that these specific contentions be decided afresh by the Tribunal. [Paras 49, 50, 51, 54]

Inclusion/exclusion of Tata Elxsi Ltd. and Sasken Communication Technologies Ltd. as comparables is remitted to the Tribunal for fresh adjudication.

Final Conclusion: The appeals are allowed in part: the Tribunal's acceptance of Avani and Ishir as comparables is set aside and the inclusion/exclusion disputes in respect of Ishir, Tata Elxsi, Sasken and Akshay are remitted to the Tribunal for fresh consideration on merits; all other contentions are reserved and the appeals are disposed accordingly.

Condonation of delay - bona fide delay - Form 10-IC filing - power under Section 119 - mandamus under Article 226 - technical difficulties on the Income Tax portal as sufficient cause

Condonation of delay - bona fide delay - technical difficulties on the Income Tax portal as sufficient cause - Delay of two days in filing the Return of Income for Assessment Year 2021-22 be condoned. - HELD THAT: - The Court found the delay to be short (two days) and supported by contemporaneous material and explanations: efforts by the Chartered Accountant to file within time, a grievance/affidavit describing technical difficulties on the Income Tax portal, and an incident of fire causing power interruption at the CA's office which affected the server and work resumption. The Court applied the jurisprudential principle, as elucidated in Jyotsna M. Mehta, that bona fide reasons beyond the assessee's control, including the professional difficulties of an engaged Chartered Accountant, warrant a sympathetic exercise of the power to condone delay. Given that the delay was satisfactorily explained and bona fide, the interests of justice required condonation. [Paras 7, 8]

Delay of two days in filing the Return of Income for AY 2021-22 is condoned; petition allowed in respect of this relief.

Form 10-IC filing - power under Section 119 - condonation of delay - Delay in filing Form 10-IC be condoned and benefit of relevant administrative instruction considered. - HELD THAT: - The petitioner had filed a delay-condonation application supported by a CA's affidavit and a screenshot of portal difficulties; a complaint about the building's electricity stoppage was also placed before the Assessing Officer. The Court noted Circular No.19 of 2023 issued under Section 119 (read with relevant provisions) which provides administrative guidance on condoning delay in filing Form 10-IC for AY 2021-22, and observed that the petitioner fell within the scope of circumstances warranting condonation. Applying the same humane and jurisprudential approach (as in Jyotsna M. Mehta) to bona fide professional and technical impediments, the Court directed condonation of delay in filing Form 10-IC. [Paras 5, 8]

Delay in filing Form 10-IC is condoned; petitioner entitled to benefit and relief as directed.

Final Conclusion: Petition allowed. Delay of two days in filing the Return of Income for AY 2021-22 and the delay in filing Form 10-IC are condoned; Respondent No.5 is directed to delete the variation in the intimation dated 28 December 2022. No costs.

Restrictive interpretation of 'belongs to' under Section 153C - applicability of the Finance Act, 2015 amendment to searches conducted before 1-6-2015 - scope of Section 153C - 'pertains to' replacing 'belongs to' - remand for consideration of remaining grounds by the Tribunal

Restrictive interpretation of 'belongs to' under Section 153C - scope of Section 153C - 'pertains to' replacing 'belongs to' - The Tribunal's conclusion that the Land Aggregation Agreement discovered during search did not 'belong to' the assessee and therefore could not be the basis for proceedings under Section 153C is not tenable in view of the legislative amendment and subsequent authoritative pronouncement. - HELD THAT: - The Court held that the Tribunal proceeded on the restrictive interpretation of the words 'belongs to' as adopted in earlier decisions such as Pepsico India Holdings, but that approach is displaced by the amendment effected by the Finance Act, 2015 and by the Supreme Court's decision in Income-tax Officer v. Vikram Sujitkumar Bhatia which overruled the restrictive construction. Accordingly, the Tribunal's reliance on the pre-amendment restrictive test to deny the Revenue's reliance on documents found during search is unsustainable. [Paras 3, 4]

Tribunal's restrictive interpretation set aside and held not to be applicable in the light of the 2015 amendment and the Supreme Court ruling.

Applicability of the Finance Act, 2015 amendment to searches conducted before 1-6-2015 - The amendment to Section 153C effected by the Finance Act, 2015 applies to searches conducted prior to 1-6-2015. - HELD THAT: - Relying on the Supreme Court's authoritative conclusion in Income-tax Officer v. Vikram Sujitkumar Bhatia, the Court recorded that the legislative replacement of 'belongs to' with 'pertains to' is applicable even to searches carried out before the date of amendment, thereby validating the Revenue's larger scope to proceed against 'other persons' where discovered material 'pertains to' them. [Paras 3, 4]

Amendment enacted by Finance Act, 2015 held applicable to pre-1-6-2015 searches; question answered in favour of the Revenue.

Remand for consideration of remaining grounds by the Tribunal - Remaining grounds raised by the assessee which were not decided by the Tribunal in view of its earlier conclusion are to be considered afresh by the Tribunal. - HELD THAT: - Since the Tribunal's primary conclusion (that the documents did not 'belong to' the assessee) has been set aside, the Court restored the appeals to the Tribunal for adjudication of the other grounds pleaded by the parties. The Court directed that the Tribunal shall consider the remaining contentions on merits in accordance with law. [Paras 5, 6]

Impugned order set aside and appeals restored to the Tribunal for fresh consideration of the remaining grounds.

Final Conclusion: Appeals allowed in part: Tribunal's order set aside to the extent it rested on a restrictive view of 'belongs to'; the Finance Act, 2015 amendment applies to searches before 1-6-2015; appeals remanded to the Tribunal for determination of the remaining grounds; no order as to costs.

Tax Deducted at Source (TDS) - Adjustment of outstanding demand - Intimation under Section 245 - Recovery of TDS from employee - Refund and consequential orders - Binding effect of Coordinate Bench precedent

Tax Deducted at Source (TDS) - Adjustment of outstanding demand - Intimation under Section 245 - Binding effect of Coordinate Bench precedent - Refund and consequential orders - Adjustment of outstanding demands reflected in the impugned intimation dated 10.01.2019 in respect of AY 2009-10, AY 2010-11 and AY 2011-12 was not permissible and was set aside. - HELD THAT: - The petitioner had TDS deducted by the employer and the amounts were reflected in Form 16A. The Revenue issued an intimation under Section 245 recording adjustments across multiple assessment years, including 2009-10, 2010-11 and 2011-12. The Court observed that the question of adjustment in respect of those assessment years is covered in favour of the petitioner by the earlier decision of the Coordinate Bench in Sanjay Sudan v. The Assistant Commissioner of Income Tax & Another, and accordingly the impugned notices and order were set aside insofar as they effected adjustments for AY 2009-10, AY 2010-11 and AY 2011-12. The Court directed the Revenue to pass necessary consequential orders and to process refunds of amounts due if already adjusted. The petitioner did not challenge, and had accepted, the adjustment in respect of AY 2017-18. [Paras 10, 11]

Impugned intimation and notices set aside in respect of adjustments for AY 2009-10, AY 2010-11 and AY 2011-12; Revenue to pass consequential orders and process refunds if applicable.

Final Conclusion: The petition is allowed by setting aside the adjustments of demand in the impugned intimation dated 10.01.2019 insofar as they relate to AY 2009-10, AY 2010-11 and AY 2011-12; consequent orders and refunds, if any, shall follow.

Provisional release of goods - provisional assessment - interim relief - stay of notification - perishable goods - furnishing of bond - limited/interim order restricted to imported stock

Provisional release of goods - provisional assessment - perishable goods - furnishing of bond - Stock of imported apples lying in customs warehouse/CFS to be provisionally released on petitioner furnishing a bond and subject to provisional assessment. - HELD THAT: - The Court, having noted the Division Bench order of the Bombay High Court directing provisional assessment and release of the goods and the stay of Notification No. 5/2023 by the Kerala High Court, directed that apples already imported and lying in customs warehouse/CFS be provisionally released forthwith. The direction is premised on the court's understanding of the interim position in related High Court proceedings, the perishable nature of the goods and the petitioners' willingness to comply with terms and conditions for provisional assessment. The release is made conditional upon the petitioners furnishing a bond and subject to provisional assessment by the respondents. [Paras 2, 5]

Goods to be provisionally assessed and released on furnishing of a bond.

Limited/interim order restricted to imported stock - interim relief - Interim order confined to the stock of apples already imported and lying in the CFS; no broader modification of law or future imports. - HELD THAT: - The Court expressly limited its direction to the existing consignment of apples already in customs custody/CFS and clarified that the interim relief does not extend beyond that stock. This qualification confines the effect of the order to the immediate factual matrix and preserves consideration of other or future consignments for later adjudication. [Paras 6]

Order restricted to already imported stock lying in the CFS.

Interim relief - jurisdiction of High Courts to adjudicate similar matters - Pendency of these petitions in the Supreme Court does not preclude High Courts from adjudicating similar matters on their merits. - HELD THAT: - The Court observed that the pendency of the petitions before this Court should not impede High Courts from deciding similar cases on their own merits, thereby permitting continued adjudication in parallel subject to appellate rights. This observation frames the interim nature of the relief and preserves the competence of High Courts to entertain and decide like petitions. [Paras 4]

High Courts may adjudicate similar matters notwithstanding pendency before this Court.

Final Conclusion: Pending disposal of the petitions, the Supreme Court directed provisional release and assessment of the apples already imported and lying in customs warehouse/CFS on furnishing of a bond, clarified the order is limited to that stock, and observed that High Courts remain free to decide similar matters on their merits.

Interest on delayed refunds - Section 27A of the Customs Act - deemed date of receipt of complete application - Explanation to Section 27A - unjust enrichment - personal liability of officer for delay - enhanced interest for non-compliance and contempt

Interest on delayed refunds - Section 27A of the Customs Act - deemed date of receipt of complete application - Explanation to Section 27A - unjust enrichment - Entitlement to interest under Section 27A and the appropriate start date for calculation of interest on the delayed refund claim. - HELD THAT: - The Court held that the petitioner was entitled to interest under Section 27A from the date three months after the original refund application dated 04 August 2014 and not from the date of a later follow-up communication. The explanation to Section 27A does not apply where the Commissioner (Appeals) only remanded the matter and the final refund order is made by the original adjudicating authority; in any event the statutory scheme treats the date of the application as the relevant starting point for interest. The Regulations treat an application as 'received' when a complete application is acknowledged by the proper officer, but here there was no allegation or finding that the 04 August 2014 application was defective or that deficiencies were pointed out within the prescribed time. The letter dated 08 August 2022 was a follow-up to implement the Commissioner (Appeals) remand and could not be treated as a fresh application restarting the limitation for interest. The Court endorsed the view that retention of amounts by the Revenue without authority gives rise to liability for interest so as to avoid unjust enrichment, and relied on relevant precedents to support that the statutory entitlement to interest accrues from the date the application became due for refund. [Paras 19, 20, 21, 22, 23]

Interest under Section 27A shall be calculated from three months after 04 August 2014 (and not from 08 November 2022); the petitioner is entitled to interest on the delayed refund.

Enhanced interest for non-compliance and contempt - personal liability of officer for delay - Relief and consequential directions for payment, default and recovery from responsible officer. - HELD THAT: - The Court directed payment of the interest amount as quantified in the petition within two months. For willful or deliberate non-compliance, the Court ordered that interest would run at an enhanced rate and indicated the possibility of contempt proceedings. Further, if the directed interest is not paid within the stipulated period, additional interest would be recovered from the officer responsible for the delay instead of burdening the public exchequer. Costs were also awarded to the petitioner. [Paras 31, 32, 33, 34, 35]

Respondent directed to pay the ordered interest within two months (failing which enhanced interest at 8% and potential contempt consequences); additional recovery from the responsible officer if payment is not made; costs awarded to the petitioner.

Final Conclusion: Writ petition allowed: respondent directed to pay interest on the delayed SAD refund from three months after 04 August 2014 (as quantified) within two months, failing which enhanced interest and other consequences follow; costs awarded.

Refund of 4% Additional Duty of Customs (4% CVD) - consignment sale and stockist endorsement requirement - requirement of agreement between importer and consignment agent - documentary evidence and corroboration for refund claims - Circular No.16/2008 clarification on consignment agents

Refund of 4% Additional Duty of Customs (4% CVD) - consignment sale and stockist endorsement requirement - documentary evidence and corroboration for refund claims - Whether the appellant is eligible for refund of the 4% CVD under Notification No.102/2007-Cus. when the conditions prescribed by the Notification and Circular No.16/2008 for consignment sales are not satisfied. - HELD THAT: - The Notification grants refund of the 4% CVD subject to fulfillment of conditions including payment of appropriate sales tax/VAT and production of documentary evidence such as invoices indicating sale by the consignment agent on behalf of the importer, and corroborative documents. Circular No.16/2008 requires an agreement authorising the consignment agent to sell on behalf of the importer, endorsement on each sale invoice to that effect, and a Chartered Accountant's certificate correlating ST/VAT payment by the agent with the CVD paid. The appellant produced an agency agreement dated 1 November 2014, whereas the imports in dispute occurred between May 2014 and August 2014, rendering the agreement irrelevant to the period of import. The sale invoices required by the Notification were not placed on record and there was no evidence that invoices bore the requisite endorsement that the stockist sold on behalf of the importer. A Chartered Accountant certificate was produced in one appeal but was absent in the other. In these circumstances the Customs authority and the Commissioner (Appeals) rightly found that the statutory and procedural prerequisites for refund were not met. The Tribunal also rejected the reliance on an earlier decision where, unlike the present case, sufficient corroborative evidence had been produced to establish consignment sales. The Supreme Court dicta cited emphasises that courts cannot expand refund entitlements beyond the statutory scheme; accordingly the prescribed conditions cannot be dispensed with merely on equitable grounds. [Paras 6, 7, 8, 9]

The appellant is not entitled to the refund as the conditions of Notification No.102/2007-Cus. read with Circular No.16/2008 were not satisfied; the impugned orders rejecting the refund claims are upheld.

Final Conclusion: Appeals dismissed; impugned orders rejecting the refund claims under Notification No.102/2007-Cus. are upheld for failure to satisfy the Notification's and Circular's documentary and procedural conditions.

Refund of interest on delayed IGST payment - Liability to pay interest on delayed payment of IGST is automatic - IGST is not an additional duty of customs - Pre-import condition and entitlement to IGST exemption - Bonafide mistake does not obviate statutory interest on delayed IGST

Refund of interest on delayed IGST payment - Liability to pay interest on delayed payment of IGST is automatic - IGST is not an additional duty of customs - Bonafide mistake does not obviate statutory interest on delayed IGST - Pre-import condition and entitlement to IGST exemption - Refund claim for interest paid on delayed payment of IGST was not allowable and was rightly rejected. - HELD THAT: - The Tribunal found as admitted that the appellant had initially availed IGST exemption for imports under Advance Authorizations but later self assessed that the statutory pre-import condition was not fulfilled and voluntarily paid IGST on re assessment. The Tribunal held that IGST is part of the GST and not an additional duty of customs; the charging provisions for IGST on imports operate under the IGST Act read with the Customs Tariff Act, and the taxable event for IGST is supply (including supply in the course of importation). As a consequence, interest on delayed payment of IGST is governed by the IGST/CGST provisions and is payable automatically on delayed payment. Liability to pay interest arises irrespective of absence of mala fides or existence of a bonafide mistake in interpreting the exemption notification. Since the appellant admitted non fulfilment of pre import conditions and paid IGST belatedly, the statutory obligation to pay interest attached to that delayed payment and the refund of interest could not be allowed. The Tribunal therefore upheld the rejection of the refund claim. [Paras 13, 14, 15, 16]

Appeal dismissed; refund of interest on delayed IGST payment rightly rejected.

Final Conclusion: The Tribunal upheld the order rejecting refund of interest paid with belated IGST, holding that IGST on imports is not an additional customs duty and that interest on delayed IGST payment is automatically payable even where non payment arose from a bonafide misinterpretation of the exemption; the appeal is dismissed.

Rectification of mistake (ROM) - mistake apparent on the record - limitation of ROM power (no rehearing) - recall of order - non-appearance and grant of opportunity - monetary limit for filing appeals

Rectification of mistake (ROM) - mistake apparent on the record - limitation of ROM power (no rehearing) - Whether the contradiction in paragraphs 6 and 7 of the Final Order dated 18.01.2018 could be rectified under the ROM power and whether the Tribunal correctly modified the Final Order to allow the Revenue's appeal. - HELD THAT: - The Tribunal found an apparent contradiction between para 6 (holding the Commissioner(A)'s order based on NIDB data was not maintainable) and para 7 (stating the Revenue's appeal was dismissed). Having regard to the restricted scope of ROM - which permits correction of patent errors apparent from the record but does not permit a rehearing on debatable questions of fact or law - the Bench concluded that the correct consequence of para 6 would be that the Revenue's appeal ought to be allowed. The Tribunal therefore rectified the error by modifying para 7 to state that the appeal is allowed. The Tribunal relied on settled authorities holding that ROM corrects only obvious, patent mistakes and does not enable reappreciation of evidence or merits. [Paras 2, 3, 8, 10]

Rectification under ROM was correctly invoked to correct the patent contradiction and the Final Order was modified to allow the Revenue's appeal.

Recall of order - non-appearance and grant of opportunity - Whether the order dated 18.03.2024 disposing of the appeal could be recalled on account of the respondent's counsel's non-appearance and subsequent explanation. - HELD THAT: - The respondent's counsel claimed brief attendance on the date and urgent family reasons for leaving; no particulars or bona fides were supplied and the practice of obtaining time by mentioning was available. The Tribunal observed that overlooking an interim order of its own while deciding an appeal does not render the judgment void and, at best, may amount to an irregularity which is not a ground for recalling a final order. The Tribunal emphasised that the ROM order had limited scope and that the final disposal on 18.03.2024 followed from correcting the apparent mistake; consequently the recalled application was misconceived. [Paras 3, 6, 11, 13]

Application for recall was dismissed; the order dated 18.03.2024 is not liable to be recalled for the respondent's counsel's non-appearance or the explanation offered.

Monetary limit for filing appeals - recall of order - Whether the Tribunal should recall the final order on the basis that subsequent CBIC instructions raising the monetary threshold rendered the Revenue's appeal non-maintainable. - HELD THAT: - The Tribunal held that invoking a change in monetary limits by way of recalling a final order would be inappropriate and would open numerous concluded matters; the appeal had already been finally disposed of and the stage was not appropriate to entertain such a contention seeking recall. The Tribunal therefore refused to reopen the matter on the basis of the CBIC instruction relied upon by the respondent. [Paras 4, 12, 13]

The plea to recall the order on the ground of changed monetary limits was rejected.

Final Conclusion: The Tribunal dismissed the respondent's applications; it rectified the apparent contradiction in the Final Order dated 18.01.2018 under ROM and allowed the Revenue's appeal, and refused to recall or re-open the final order on grounds of counsel's non-appearance or changed monetary limits.

Scope of judicial review of disciplinary action - proportionality in disciplinary punishment - power of the Insolvency and Bankruptcy Board of India Disciplinary Committee - constitution of a statutory committee as a one member committee - requirement of hearing/joining of complainant in inquisitorial regulatory proceedings - validity of appointment of a resolution professional and effect on CIRP proceedings

Constitution of a statutory committee as a one member committee - power of the Insolvency and Bankruptcy Board of India Disciplinary Committee - Validity of constitution of the IBBI Disciplinary Committee as a single member Committee - HELD THAT: - Section 220(1) IBC requires the Board to constitute a disciplinary committee and provides that its members shall consist of whole time members of the Board. The IBC does not expressly prohibit a one member Disciplinary Committee. The Board's implementation approach, historical working group recommendations and judicial precedents support interpreting 'committee' to include a one member committee. No mala fides or procedural irregularity in constitution was shown and the Disciplinary Committee considered relevant provisions and authorities before deciding the matter. Hence, constitution of a single member Disciplinary Committee did not vitiate the impugned order. [Paras 29, 30, 31]

Constitution of a single member Disciplinary Committee was valid; no infirmity in the Committee's constitution was found.

Requirement of hearing/joining of complainant in inquisitorial regulatory proceedings - power of the Insolvency and Bankruptcy Board of India Disciplinary Committee - Whether the complainant (suspended director) was entitled to be joined and afforded a hearing in the IBBI disciplinary/investigatory proceedings - HELD THAT: - Proceedings under Section 217 and 220 IBC and the Inspection and Investigation Regulations create an inquisitorial complaint handling mechanism. The complainant does not become a party to those proceedings. Regulatory proceedings of this nature do not require giving the complainant a personal hearing; doing so in every case would defeat the regulatory purpose. The Court found authority and precedent reflecting that regulators need not provide a hearing to each complainant and that IBBI's procedure is a self contained mechanism for grievance disposal. The petitioners failed to demonstrate any illegality or denial of natural justice warranting interference. [Paras 31, 32]

No obligation to join or grant personal hearing to the complainant in IBBI's disciplinary proceedings; absence of such joining/hearing did not vitiate the order.

Scope of judicial review of disciplinary action - proportionality in disciplinary punishment - Whether the Court should interfere with IBBI's decision to take a lenient view instead of imposing harsher disciplinary punishment on the Resolution Professional - HELD THAT: - Judicial review of the quantum of disciplinary action is limited to instances where the sanction is disproportionate, irrational, shows lack of good faith or shocks the conscience of the Court. Merely preferring a different punishment is not a ground for interference. The Disciplinary Committee examined facts-finding delays and technical lapses, but no prejudice to stakeholders and no demonstrated loss-and therefore took a lenient view, cautioning the RP. The petitioners could not point to facts showing the punishment to be disproportionate or arbitrary under the applicable standard of review. [Paras 24, 27, 32]

IBBI's decision to take a lenient view and issue a caution was within the scope of its discretion and not amenable to interference.

Validity of appointment of a resolution professional and effect on CIRP proceedings - Whether CWP 19562 of 2022 remained maintainable after NCLT's order of 25.04.2023 and whether that petition was rendered infructuous - HELD THAT: - NCLT on 25.04.2023 dismissed/revived and decided the applications which were the subject matter of CWP 19562/2022. As those applications stood decided and an appeal was available to the petitioners before the NCLAT, the High Court found CWP 19562/2022 to be rendered infructuous. Issues as to validity of acts performed in CIRP and consequences of appointment remain within the appellate process before NCLAT, and parallel re adjudication by this Court was not appropriate. [Paras 12, 34]

CWP 19562/2022 is disposed of as infructuous in view of subsequent NCLT orders; petitioners may pursue their appeal before NCLAT.

Final Conclusion: CWP 19562 of 2022 is disposed of as infructuous; CWP 8750 of 2023 is dismissed. The IBBI Disciplinary Committee's one member constitution, its procedure excluding joining/hearing of the complainant, and its decision to take a lenient view do not warrant judicial interference; petitioners remain at liberty to pursue the statutory appeal against the NCLT order before the NCLAT.

Duty of the resolution professional to receive, collate and verify claims under the IBC and CIRP Regulations - timebound nature of CIRP and finality of an approved resolution plan - permissibility of admitting belated claims under Regulation 12 of the CIRP Regulations - effect of approval of a resolution plan in freezing and extinguishing claims not part of the plan - status of government authorities as secured creditors - scope and limits of Rainbow Papers decision

Duty of the resolution professional to receive, collate and verify claims under the IBC and CIRP Regulations - permissibility of admitting belated claims under Regulation 12 of the CIRP Regulations - Whether the RP complied with IBC and CIRP Regulations in inviting, collating and verifying the Appellant's claim and whether the Appellant exercised due diligence in filing its claim within prescribed timelines. - HELD THAT: - The Tribunal found that the IRP/RP complied with statutory obligations of public announcement and uploading/updating the list of creditors as required by Sections 13, 15 and Regulation 6 and 13 of the CIRP Regulations, and that the RP was entitled to call for further evidence under Regulation 10. The Appellant did not file its claim within the public announcement deadline nor within the 90day extended period under Regulation 12(1). The Appellant filed on 13.05.2022, beyond the extended period, and failed to follow up or provide substantiating documents when requested; the RP's limited time to respond was not unreasonable in the timebound CIRP context. The RP uploaded lists on multiple dates which showed the Appellant's claim status (including rejection), constituting constructive notice. On these facts the Appellant had not shown due diligence or a sufficient ground to treat its belated submission as timely or to fault the RP for verification steps. [Paras 14, 15, 16, 17, 18]

RP acted in accordance with IBC/CIRP Regulations; the Appellant failed to exercise due diligence in submitting proof of claim within prescribed timelines and has no entitlement to have its belated claim admitted on these facts.

Timebound nature of CIRP and finality of an approved resolution plan - effect of approval of a resolution plan in freezing and extinguishing claims not part of the plan - Whether the belated claim of the Appellant can be admitted or the approved resolution plan reopened after approval by the CoC and the Adjudicating Authority. - HELD THAT: - The Tribunal applied settled Supreme Court authority that once a resolution plan is approved by the Adjudicating Authority the claims provided in the plan stand frozen and claims not part of the plan stand extinguished; permitting new or belated claims after approval would undermine the object of a timebound CIRP and prejudice the successful resolution applicant and other stakeholders. The Adjudicating Authority had held the plan complied with Section 30(2); the Appellant waited until after approval and did not challenge rejection within the CIRP process or before the Adjudicating Authority despite notice and hearings, and therefore has no basis to reopen the plan at this stage. [Paras 21, 22, 23, 24, 25]

Belated claims cannot be entertained after approval of the resolution plan; the resolution plan stands final and binding and the appeal on the ground of nonadmission of the belated claim is without merit.

Status of government authorities as secured creditors - scope and limits of Rainbow Papers decision - Whether the Income Tax Department was a secured creditor despite filing Form B indicating 'NIL' security, and whether Rainbow Papers entitles the Appellant to secured status here. - HELD THAT: - The Appellant filed Form B (for operational creditors) and expressly declared 'NIL' under security details. The Tribunal held that Rainbow Papers must be confined to its facts and that secured status for a government authority depends on the express provisions of the relevant statute creating a charge; the Income Tax Act does not create a statutory charge or security interest in favour of the Income Tax Department in the present facts. Accordingly, the Appellant could not be treated as a secured creditor merely by virtue of being a government authority. [Paras 26, 27]

Appellant is not a secured creditor on the basis of the Income Tax Act in the facts of this case; Rainbow Papers does not assist the Appellant here.

Final Conclusion: Appeal dismissed. The Tribunal affirmed that the RP complied with IBC/CIRP Regulations, the Appellant failed to submit and pursue its claim within prescribed timelines, belated claims cannot be admitted after approval of the resolution plan, and the Income Tax Department is not a secured creditor on the facts; the approved resolution plan may be implemented.

Interim moratorium under Section 96 of the Insolvency and Bankruptcy Code - interim moratorium operates in respect of a debt and not the debtor - application under Section 95 initiating insolvency resolution against a personal guarantor - security interest enforcement under SARFAESI Act - assets of a partnership firm distinct from personal assets of partners - effect of dissolution of partnership on devolution of liabilities - priority of the Insolvency and Bankruptcy Code over other laws (Section 238) - priority of distribution of partnership debts under Section 178 of the IBC

Interim moratorium under Section 96 of the Insolvency and Bankruptcy Code - interim moratorium operates in respect of a debt and not the debtor - application under Section 95 initiating insolvency resolution against a personal guarantor - security interest enforcement under SARFAESI Act - Whether the interim moratorium under Section 96, triggered by a Section 95 application against the appellant in his capacity as a personal guarantor, bars the respondent from proceeding with SARFAESI sale of properties belonging to the partnership firm. - HELD THAT: - The Tribunal held that the interim moratorium under Section 96 is intended to operate "in respect of a debt" and not broadly against a debtor's unrelated assets. The moratorium commences on filing the Section 95 application and restrains legal action "in respect of any debt" of the debtor; its protective purpose is to stay proceedings concerning the debt for which the application has been filed. In the present facts the Section 95 petition was filed against the appellant as personal guarantor for a debt owed to White Line Enterprises; the partnership firm's properties were not the subject matter of that Section 95 application. The properties put to auction are mortgage assets of the partnership firm and not properties held by the appellant in his personal capacity. Therefore the interim moratorium in respect of the appellant's personal-guarantee debt does not extend to bar SARFAESI action against properties of the partnership firm which are independent of the personal guarantee. [Paras 18, 19, 21, 22, 25]

Interim moratorium under Section 96 applies to the debt for which the Section 95 application was filed (the appellant's personal guarantee) and does not prohibit the respondent from proceeding with SARFAESI sale of properties belonging to the partnership firm.

Assets of a partnership firm distinct from personal assets of partners - effect of dissolution of partnership on devolution of liabilities - priority of distribution of partnership debts under Section 178 of the IBC - priority of the Insolvency and Bankruptcy Code over other laws (Section 238) - Whether the appellant's notice of dissolution of the partnership on 06.02.2024 operated to transfer the partnership firm's liabilities so as to make the partnership assets subject to the interim moratorium arising from the appellant's Section 95 proceedings. - HELD THAT: - The Tribunal examined the partnership deed and the dissolution notice and found that the personal guarantee given by the appellant was personal to him and not a guarantee by the partnership firm. Established principles, including the binding authority relied upon by the respondent, distinguish partnership assets from individual partners' assets: partners are entitled only to profits and, upon dissolution, to the surplus after meeting firm liabilities. A unilateral dissolution notice by a partner does not equate to making partnership assets liable for a personal-guarantee debt in respect of which Section 95 was invoked. While Section 238 gives IBC priority over inconsistent laws and Section 178 prescribes priority in distribution for partnership debts, those provisions do not alter the conclusion that the Section 96 moratorium triggered by a personal-guarantee application does not extend to partnership assets that were not the subject of the Section 95 petition. [Paras 23, 24, 25]

The dissolution notice does not render the partnership firm's properties subject to the interim moratorium arising from the appellant's personal-guarantee Section 95 proceedings; partnership assets remain distinguishable and are not covered by that moratorium.

Security interest enforcement under SARFAESI Act - application under Section 95 initiating insolvency resolution against a personal guarantor - Whether the Adjudicating Authority erred in dismissing the appellant's application seeking withdrawal of SARFAESI sale notices and injunction against further action. - HELD THAT: - Applying the statutory scope of Section 96 and the factual finding that the Section 95 application was confined to the appellant's personal-guarantee debt and did not concern the partnership firm's properties, the Tribunal found no basis on which the Adjudicating Authority should have directed withdrawal of SARFAESI notices. The properties being mortgage assets of the partnership firm (not the appellant personally) and the existing decrees and recovery proceedings before the DRT further supported respondent's entitlement to proceed under SARFAESI. The Tribunal found no cogent grounds to interfere with the impugned order which had dismissed the appellant's application. [Paras 25, 26]

No interference with the impugned order; the application to withdraw SARFAESI sale notices and restrain further action was rightly dismissed.

Final Conclusion: The appeal is without merit and is dismissed. The interim moratorium under Section 96, triggered by a Section 95 application against the appellant as a personal guarantor, does not extend to bar SARFAESI proceedings against properties of the partnership firm which were not the subject of the Section 95 petition; consequently the Adjudicating Authority's order dismissing the appellant's application was not interfered with.

Assignment of debt - recognition of assignee by the resolution professional - related party disqualification under the first proviso to Section 21(2) - bona fide and arm's length transaction - power of the resolution professional to re-constitute the Committee of Creditors - malafide attempt to circumvent exclusion from the Committee of Creditors - prematurity of application for pre confirmation of assignment - application of Phoenix ARC v. Spade (paras 103-104)

Assignment of debt - recognition of assignee by the resolution professional - prematurity of application for pre confirmation of assignment - The Adjudicating Authority correctly found that no effective assignment had taken place and that the Resolution Professional was not obliged or empowered to grant the pre confirmation sought by the proposed assignee. - HELD THAT: - The Agreement between the parties expressly made payment of the purchase consideration contingent upon the Resolution Professional's confirmation that the assignee would be recognized as a non related secured financial creditor with full voting rights. The Resolution Professional responded that there is no provision in the Code or CIRP Regulations empowering the RP to give advance confirmation or to reconstitute the Committee of Creditors, and that an assignee merely steps into the shoes of the assignor. Given that the assignment was conditional on the RP's confirmation, the Adjudicating Authority correctly treated the arrangement as not being an effective assignment and rejected the premature application seeking recognition. [Paras 6, 8, 9, 12]

Application was rightly rejected as no effective assignment had occurred and the RP was not required or empowered to grant the pre confirmation sought.

Related party disqualification under the first proviso to Section 21(2) - malafide attempt to circumvent exclusion from the Committee of Creditors - application of Phoenix ARC v. Spade (paras 103-104) - The Adjudicating Authority rightly concluded that the assignment arrangement was a mala fide device by the related party assignor to secure representation in the CoC and fell within the caution contemplated by the Supreme Court in Phoenix ARC v. Spade. - HELD THAT: - The admitted claim of the assignor is by a related party which is disqualified from the CoC under the proviso to Section 21(2). The Assignment Agreement and ensuing communications show that the true object was to obtain re categorisation and a seat in the CoC (the purchase consideration being payable only upon such confirmation). The Adjudicating Authority correctly relied on the Supreme Court's exposition (paras 103-104) that related parties who cease to be related parties with the sole intention of entering the CoC to influence the process should be treated as covered by the exclusion. The factual matrix (suspended board being privy to amounts in resolution plans and nil provision for related party payment) supported the finding of mala fides. [Paras 10, 11, 12, 13]

The assignment was a mala fide attempt to circumvent the related party exclusion and thus not to be recognized for conferring CoC rights.

Power of the resolution professional to re-constitute the Committee of Creditors - prematurity of application for pre confirmation of assignment - The Appellate Tribunal found no error in the Adjudicating Authority's exercise of discretion in dismissing the application and upheld the impugned order. - HELD THAT: - The Adjudicating Authority furnished reasons that the assignment was conditional, the RP had no statutory power to grant the advance confirmation sought, and the transaction had indicia of mala fides aimed at affecting the CIRP. Having examined the Agreement, the communications to the RP and the stage of the resolution process, the Appellate Tribunal concluded that the Adjudicating Authority's findings were supportable and that there was no merit in the appeal. [Paras 4, 14]

Appeal dismissed; impugned order rejecting the application is upheld.

Final Conclusion: The Tribunal upheld the Adjudicating Authority's rejection of the application: the purported assignment was conditional and ineffective, the RP had no power to grant the pre confirmation sought, the arrangement bore hallmarks of a mala fide attempt by a related party to circumvent exclusion from the CoC, and reliance on the Supreme Court's Phoenix ARC principles was appropriate; the appeal is dismissed.

Financial debt - time value of money - commercial effect of borrowing - acknowledgement of debt and limitation - treatment in financial statements as admission - security deposit with interest

Financial debt - time value of money - commercial effect of borrowing - security deposit with interest - treatment in financial statements as admission - Whether the claim for the interest component on the additional amount advanced by the developer (over and above the non interest refundable security deposit) constitutes a "financial debt" under Section 5(8) of the Code. - HELD THAT: - The Development Agreement distinctly treated the base refundable deposit and the additional advance differently: the additional advance (up to the stipulated maximum) was expressly agreed to "carry interest at agreed rate of 18% p.a. compounded and payable quarterly", indicating a time value of money. Clause (f) of Section 5(8) captures transactions having the commercial effect of borrowing. The agreement and subsequent conduct (including the Corporate Debtor booking interest and classifying the amount as long term borrowings in its financial statements, and the Corporate Debtor's letter acknowledging the interest obligation) demonstrate the commercial effect of borrowing. The Supreme Court's reasoning in Global Credit Capital Ltd. (as applied by the Tribunal) supports determining the real nature of the transaction from the agreement and books. Consequently, the interest claim on the additional advance falls within the definition of "financial debt". [Paras 18, 19, 21, 22, 26]

The amount advanced beyond the non interest refundable security deposit, together with the agreed interest, constitutes a financial debt under Section 5(8).

Acknowledgement of debt and limitation - treatment in financial statements as admission - Whether the Section 7 petition filed in 2019 was barred by limitation given the alleged first default in 2010. - HELD THAT: - The adjudicating authority found, and this Tribunal agreed, that the Corporate Debtor made subsequent acknowledgements of the debt: an acknowledgement dated 01.04.2013 and entries in financial statements for 2013-14, 2014-15 and 2017-18 showing interest or the debt. Such acknowledgements operate for the purpose of limitation under the Code and render the petition filed on 30.09.2019 within time. The Adjudicating Authority's reasoning on limitation was specifically recorded and accepted. [Paras 27, 28]

The petition is not barred by limitation due to the Corporate Debtor's subsequent acknowledgements reflected in correspondence and financial statements.

Treatment in financial statements as admission - financial debt - Whether classification of the sum as inventory in the Financial Creditor's books precludes treating the claim as a financial debt. - HELD THAT: - The court held that classification by the creditor in its own books does not alter the true nature of the transaction as evidenced by the Development Agreement and the Corporate Debtor's own accounting and admissions. The Agreement specified interest on the additional advance and the Corporate Debtor treated the amount and accrued interest as long term borrowings in its financial statements, which is determinative of the commercial character of the transaction. [Paras 29]

The Financial Creditor's internal classification does not change the nature of the transaction; the claim remains a financial debt.

Related party - financial debt - Whether the fact that the Financial Creditor is a related party and holds majority voting share in the CoC (in CIRP) affects the admission of the Section 7 application. - HELD THAT: - The Tribunal noted that the Financial Creditor's position in the CoC or its being a related/operational creditor with voting shares in the CIRP does not affect the question whether a valid financial debt and default have been established for the purpose of admitting a Section 7 petition. The Adjudicating Authority correctly proceeded on the merits of debt and default without attaching consequence to the CoC voting composition. [Paras 6, 28]

The Financial Creditor's related party status and its voting share in the CoC do not vitiate admission of the Section 7 application once debt and default are established.

Final Conclusion: The Adjudicating Authority correctly held that the claim for the agreed interest on the additional advance is a financial debt, that the petition was within limitation by virtue of subsequent acknowledgements, and that the creditor's internal classification or related party/CoC voting position did not affect admission; the appeal is dismissed and the order admitting the Section 7 application is upheld.

Deeming provision in Section 5(2) of the SARFAESI Act, 2002 - power of assignee to prosecute pending proceedings after assignment - admissibility of inadequately stamped registered documents - presumption of adequate stamping in a registered document - curability of non-stamping or inadequate stamping as recognised by the Supreme Court

Deeming provision in Section 5(2) of the SARFAESI Act, 2002 - power of assignee to prosecute pending proceedings after assignment - presumption of adequate stamping in a registered document - Entitlement of the assignee (Phoenix Arc Pvt. Ltd.) to prosecute the Section 7 application filed earlier by L&T Finance Ltd. after assignment. - HELD THAT: - The Tribunal held that when an asset reconstruction company acquires financial assets under Section 5(1) of the SARFAESI Act, the deeming clause in Section 5(2) applies and the assignee is to be treated as the lender with all attendant rights. Applying the settled principles on deeming provisions and following the Tribunal's earlier decision in Pawan Kumar Manguturam Bairagra and the analysis reproduced from authorities, the assignee is entitled to continue, prosecute and enforce proceedings that were pending on the date of assignment. The fact that the Assignment Agreement is a registered document reinforces the assignee's capacity to prosecute the pending Section 7 application. The Tribunal found no error in the Adjudicating Authority allowing substitution and permitting Phoenix Arc Pvt. Ltd. to prosecute the application. [Paras 6, 7, 8, 9, 11]

Phoenix Arc Pvt. Ltd. is entitled, by virtue of the deeming clause in Section 5(2) of the SARFAESI Act, 2002 and the registration of the Assignment Agreement, to prosecute the Section 7 application originally filed by L&T Finance Ltd.

Admissibility of inadequately stamped registered documents - presumption of adequate stamping in a registered document - curability of non-stamping or inadequate stamping as recognised by the Supreme Court - role of registering authority and Collector on stamp deficiency - Whether the Assignment Agreement ought to have been impounded or rejected by the Adjudicating Authority on the ground of alleged inadequate stamping. - HELD THAT: - The Tribunal noted that the Assignment Agreement was a registered document and that the Registering Authority, when registering, is required to satisfy itself regarding stamp duty and may refer the document to the Collector if inadequacy is suspected; in the present case the document was registered without objection. The Tribunal also referred to the Supreme Court's conclusions summarised in the larger Bench decision (Bhaskar Raju and Brothers), observing that non-stamping or inadequate stamping is a curable defect and that inadequately stamped agreements are inadmissible under Section 35 of the Stamp Act but not void; objections to stamping are to be dealt with in the appropriate forum. On the facts, the Adjudicating Authority did not err in rejecting the Corporate Debtor's application to impound the Assignment Agreement and in relying on the registered Assignment Agreement to permit substitution. [Paras 10, 12, 14]

The Adjudicating Authority correctly rejected the Corporate Debtor's application to impound the Assignment Agreement and was entitled to rely on the registered Assignment Agreement without impounding it.

Final Conclusion: The appeals are dismissed; the Adjudicating Authority's orders allowing substitution of Phoenix Arc Pvt. Ltd. and rejecting the impounding application are upheld.

Condonation of delay - commencement of limitation when order not pronounced - sufficient cause - communication of order by liquidator

Condonation of delay - commencement of limitation when order not pronounced - communication of order by liquidator - sufficient cause - Whether the delay in filing the appeal was liable to be condoned in view of the fact that no order was pronounced in open court on the date of hearing and the order was communicated to the appellant by the liquidator on a later date. - HELD THAT: - The Tribunal accepted the appellant's consistent case that arguments in IA No.4434 of 2023 concluded on 22.11.2023 but no order was pronounced in open court. Reliance on Sanjay Pandurang Kalate was held appropriate: where no pronouncement is made, limitation does not commence on the date hearings conclude but from the date when the order becomes known. Although the appellant conceded that the order was communicated by the liquidator by email on 25.01.2024, the Tribunal held that limitation must be reckoned from that communication in the absence of an upload date on record. Applying the foregoing principle and the settled jurisprudence that condonation is discretionary and depends on the sufficiency and acceptability of the explanation (with reference to the principles in Lingeswaran and Sheo Raj Singh as discussed in the judgment), the Tribunal found that filing the appeal on 02.03.2024 fell within the condonable period measured from 25.01.2024 and that sufficient cause had been made out for the short delay. The Tribunal therefore allowed the application for condonation of delay and directed listing of the appeal for admission. [Paras 6, 7, 14]

Delay Condonation Application allowed; appeal restored for admission.

Final Conclusion: The Tribunal allowed the application for condonation of delay, holding that limitation did not begin to run on the date the matter was heard since no order was pronounced; limitation was to be reckoned from the date the order was communicated by the liquidator (25.01.2024), and the appeal filed on 02.03.2024 fell within the condonable period.

Withdrawal of admitted insolvency petition prior to constitution of CoC - effect of One Time Settlement (OTS) on admission under Section 7 - application under Section 12A and Regulation 30A - entertainability before constitution of CoC - proceedings in rem and rights of other creditors - recovery/quantification of IRP's costs

Withdrawal of admitted insolvency petition prior to constitution of CoC - application under Section 12A and Regulation 30A - entertainability before constitution of CoC - Order of admission in CP (IB) No. 1089 of 2022 set aside and the petition allowed to be withdrawn in view of settlement (OTS) effected prior to constitution of CoC. - HELD THAT: - The Tribunal found the facts of the present case to be squarely covered by the Supreme Court decision in Abhishek Singh (noting that Regulation 30A and Section 12A permit withdrawal even before constitution of the CoC). Although CIRP proceedings are in rem, the Court observed that where a settlement has been arrived at and the consideration paid and received by the creditor, the admission need not survive. The Court further noted that other creditors retain their legal remedies and that Regulation 30A provides for safeguards and for dealing with IRP expenses. In consequence, the admission order dated 30.03.2023 was set aside and the petition was ordered to be withdrawn subject to procedural compliance by the creditor (filing Form FA with bank guarantee) and adjudication of any claims for IRP costs by the Adjudicating Authority. [Paras 24, 25, 26]

CA (AT) (Ins) No. 478 of 2023 allowed; order dated 30.03.2023 set aside; financial creditor to file Form FA with bank guarantee and IRP may file claim for CIRP costs before the Adjudicating Authority which shall decide it.

Effect of One Time Settlement (OTS) on admission under Section 7 - proceedings in rem and rights of other creditors - Settlement (OTS) with the admitting financial creditor, duly paid and acknowledged, entitles the corporate debtor/settling party to seek withdrawal of the CIRP notwithstanding that CoC was not constituted. - HELD THAT: - The Court applied the reasoning in Abhishek Singh to hold that a bona fide settlement reached and honoured with the financial creditor who obtained admission can justify setting aside the admission. The Court emphasized that other creditors' rights are preserved and they may pursue their claims; the existence of claims filed in the interim does not preclude acceptance of a valid settlement where the procedural safeguards under Regulation 30A and Section 12A are satisfied. Consequently, the petition admitted on 30.03.2023 does not survive the settlement and payment acknowledged by the creditor. [Paras 22, 24, 25]

CA (AT) (Ins) No. 711 of 2023 allowed; admission in CP (IB) No. 1089 of 2022 set aside on account of the OTS and payment; resultant directions given to implement withdrawal.

Recovery/quantification of IRP's costs - proceedings in rem and rights of other creditors - The claim of the Interim Resolution Professional for CIRP costs is not finally adjudicated by this Court and is left to the Adjudicating Authority to decide upon application; the Adjudicating Authority may deal with IRP's claim when Form FA is filed. - HELD THAT: - The Court observed that Regulation 30A and the statutory framework permit the IRP to claim expenses and for the Adjudicating Authority to adjudicate such claims. Given the settlement and the order for withdrawal, the Court directed that the IRP may file his claim on Form FA and the Adjudicating Authority shall consider and decide the claim; if such application is filed within one month from this order, it shall be decided as early as possible and preferably within two months of filing. [Paras 21, 25, 26]

IRP's claim for CIRP costs remitted to the Adjudicating Authority for adjudication on application (Form FA); timeline directions given for expeditious decision.

Revival of proceedings dismissed as infructuous due to antecedent admission - CP (IB) No. 439 of 2022, which had been disposed of as infructuous following admission of CP (IB) No. 1089 of 2022, may be revived so that its parties may pursue their remedy against the corporate debtor now that the admission in CP (IB) No. 1089 has been set aside. - HELD THAT: - By setting aside the admission in CP (IB) No. 1089, the Court held that the earlier petition dismissed as infructuous could be reactivated. The parties to that petition were directed to appear before the Tribunal on the specified date and the Tribunal was directed to decide the petition expeditiously and preferably within three months from appearance. [Paras 25, 27]

CP (IB) No. 439 of 2022 can be revived; parties directed to appear before the Tribunal and the Tribunal directed to decide expeditiously.

Final Conclusion: Both appeals allowed: admission of CP (IB) No. 1089 of 2022 set aside in view of a valid OTS and payment; procedures directed for withdrawal (Form FA and bank guarantee) and for the IRP to claim CIRP costs before the Adjudicating Authority; CP (IB) No. 439 of 2022 may be revived and shall be decided expeditiously by the Tribunal.

Interest on delayed refund of pre-deposit - Application of amended Section 35F and Section 35FF to pre-deposits - Saving proviso for amounts related to appeals pending before commencement of amendment - Effect of stay orders and timing of deposit for determination of interest - Applicability of Board circular clarifying refund of pre-deposits with interest

Interest on delayed refund of pre-deposit - Saving proviso for amounts related to appeals pending before commencement of amendment - Effect of stay orders and timing of deposit for determination of interest - Applicability of Board circular clarifying refund of pre-deposits with interest - Whether interest under Section 35FF is payable on the pre-deposit refunded to the appellant - HELD THAT: - The Tribunal examined the proviso to the amended Section 35FF which provides that amounts deposited under Section 35F prior to commencement of the Finance (No.2) Act, 2014 shall continue to be governed by the provisions of Section 35FF as they stood before that commencement. It noted that the stay application and direction to make pre-deposit were in respect of an appeal pending before the Appellate Tribunal as on 06.08.2014, the date of commencement of the amendment, although the actual payment by the appellant occurred after that date in compliance with the earlier stay order. The impugned order had taken a restrictive view, treating the timing of actual deposit as determinative and denying interest on the ground that the deposit was post-06.08.2014. The Tribunal held that the proviso must be read in light of the stay/appeal having been pending prior to the amendment and that the appellant's entitlement to interest is to be determined by the legal regime applicable to such pre-amendment stay/appeal cases. Further, the Tribunal observed that Board Circular No. 1053/02/2017-CX dated 10.03.2017 unambiguously clarifies that where an appeal is decided in favour of the assessee, refund of the amount deposited shall include interest from the date of deposit to the date of refund in terms of Section 35FF, and that subordinate authorities cannot introduce qualifications contrary to the circular. Applying these principles, the Tribunal found no merit in the revenue's contention and concluded that the adjudicating authority's grant of refund along with interest was legal and proper. [Paras 4, 5]

Order of the adjudicating authority granting refund of the pre-deposit with interest is reinstated; impugned order setting aside that grant is set aside and the appeal is allowed.

Final Conclusion: Appeal allowed. The Tribunal held that the appellant was entitled to refund of the pre-deposit with interest in terms of Section 35FF and Board Circular No. 1053/02/2017-CX; the impugned order of the revenue setting aside the adjudicating authority's grant of interest was set aside.

Pre-deposit requirement - mandatory condition precedent for entertaining appeal - no power to waive pre-deposit after statutory amendment - entertainment of appeal barred unless pre-deposit complied - application of section 35F of the Central Excise Act to service tax appeals via section 83 of the Finance Act

Pre-deposit requirement - mandatory condition precedent for entertaining appeal - no power to waive pre-deposit after statutory amendment - Appeal dismissed for non-compliance with mandatory pre-deposit requirement under section 35F as applied to service tax; no waiver permissible. - HELD THAT: - The appellant filed the appeal without making the pre-deposit mandated by section 35F of the Central Excise Act as applied to service tax by section 83 of the Finance Act and candidly conceded inability to make the pre-deposit. After the amendment effected on 06.08.2014, the statutory scheme removed any discretionary power in the Tribunal or the Commissioner (Appeals) to waive or dispense with the pre-deposit; the provision now operates as a condition precedent to the entertaining of appeals. The Court applied the settled principle that when a statute confers a right of appeal it may subject that right to conditions and that an appellate forum cannot entertain an appeal unless the statutory precondition is fulfilled. The reasoning of the Supreme Court in Narayan Chandra Ghosh vs. UCO Bank and Others (and subsequent decisions of the Supreme Court and High Courts cited in the judgment) was followed to hold that the appellate body cannot grant a waiver beyond what the statute itself permits. Decisions of various High Courts and the Supreme Court (as referred to in the order) confirming that the amended statutory regime precludes judicial waiver of the pre-deposit were applied to the facts. In view of the appellant's failure to make the mandatory pre-deposit and the absence of any statutory power to permit waiver, the appeal could not be entertained and had to be dismissed. [Paras 2, 4, 12, 13]

Appeal dismissed for non-compliance with the mandatory pre-deposit requirement; no power to waive the pre-deposit under the amended provision.

Final Conclusion: The appeal is dismissed because the appellant did not make the mandatory pre-deposit required by section 35F as applied to service tax, and the Tribunal has no power to waive that statutory precondition.

Admissibility of Cenvat credit where credit is availed after the invoice date - Prospective operation of amendment prescribing time limit for claiming Cenvat credit - Sections 11A and 11B of the Central Excise Act do not prescribe time limit for availment of Cenvat credit - Non-retrospective effect of amendment to Cenvat Credit Rules, 2004 - Nexus test for input service: service used "in or in relation to" manufacture of final product - Input service received outside factory premises admissible if related to manufacture - Rule 2(1) and Rule 4(1) of the Cenvat Credit Rules, 2004 - definition and conditions for input services and credit

Admissibility of Cenvat credit where credit is availed after the invoice date - Sections 11A and 11B of the Central Excise Act do not prescribe time limit for availment of Cenvat credit - Non-retrospective effect of amendment to Cenvat Credit Rules, 2004 - Rule 4(1) of Cenvat Credit Rules, 2004 - Credit availed after more than one year of issuance of invoices for the period 03.12.2005 to 31.03.2012 is admissible - HELD THAT: - The Tribunal found that the denial of Cenvat credit of Rs.46,27,417/- was based solely on the ground that credit was taken after one year from the date of invoice. The Court held that Sections 11A and 11B of the Central Excise Act do not prescribe any time limit for availment of Cenvat credit, and therefore reliance on those provisions to deny credit was incorrect. The amendment to the Cenvat Credit Rules, 2004 prescribing a time limit (inserted by notification in 2014) is prospective and inapplicable to invoices issued prior to the amendment. On that basis, and following consistent precedents of this Tribunal and higher forums, the limitation of six months/one year does not apply to invoices issued prior to the effective date of the amendment; consequently the Cenvat credit in respect of the stated period is admissible. [Paras 5]

Credit denied on the sole ground of belated availment is allowable for invoices issued prior to the amendment; the Cenvat credit is admissible.

Nexus test for input service: service used "in or in relation to" manufacture of final product - Input service received outside factory premises admissible if related to manufacture - Rule 2(1) and Rule 4(1) of the Cenvat Credit Rules, 2004 - definition and conditions for input services and credit - Cenvat credit for services used at salt pans (outside factory premises) for procurement of salt used in manufacture of soda ash is admissible - HELD THAT: - The Tribunal held that the renting and other input services provided and used at salt pans for procuring salt - the raw material for soda ash manufacture - have a direct nexus with the manufacture of the final product. Under Rule 2(1) and Rule 4(1) of the Cenvat Credit Rules, 2004 an input service is defined broadly as any service used by the manufacturer directly or indirectly in or in relation to manufacture; the Rules do not require that services be availed within factory premises. Applying the established line of authority, a service used outside the factory but connected to manufacture cannot be denied credit merely for its location; therefore the credit claimed in respect of services at salt pans is allowable. [Paras 5]

Cenvat credit in respect of input services used at salt pans for procurement of salt is admissible.

Final Conclusion: The Tribunal allowed the assessee's appeal and disallowed the revenue's contention: Cenvat credit taken for the period 03.12.2005 to 31.03.2012 is admissible notwithstanding belated availment for invoices issued before the 2014 amendment, and input services used at salt pans outside factory premises are allowable where they have nexus with the manufacture of soda ash.

Job work - liability to Central Excise duty for goods manufactured by a job-worker - service tax payment and estoppel against excise demand - extended period of limitation - remand for quantification of duty and interest - concessional rate and admissible exemptions

Job work - liability to Central Excise duty for goods manufactured by a job-worker - definition of job-worker under Cenvat/Valuation rules - Appellant's manufacture of Ready Mix Concrete (RMC) on raw materials supplied by the builder constitutes job work but does not absolve the job-worker from liability to assessment and payment of Central Excise duty on clearances of goods manufactured on behalf of the principal. - HELD THAT: - The Tribunal found as an undisputed fact that RMC was manufactured at the builder's site out of raw material supplied by the builder and as per builder's requirement. Ownership of plant and machinery by the processor is not determinative; the relationship between material supplier and processor governs job-work status. The Cenvat Credit Rules and the Explanation to Rule 10A of the Valuation Rules define job-worker in terms of processing inputs supplied by the principal, without reference to ownership of machinery. Consequently, although the appellant is correctly characterised as a job-worker, where clearances of goods manufactured on behalf of the principal occur, duty assessment and payment by the appellant are required. [Paras 4]

Appellant was a job-worker but was liable to have duty assessed and paid on the goods manufactured and cleared by it.

Extended period of limitation - limitation - Demand by invoking the extended period of limitation was not maintainable in the facts of this case and the demand was confined to the normal period of limitation. - HELD THAT: - The Tribunal held that the change of opinion following the Supreme Court decision (Larsen & Tubro Ltd.) could not justify invocation of the extended period retrospectively for the entire dispute. Commissioner (Appeals) correctly restricted the demand to the normal period of limitation and directed recalculation of duty and interest only for that period. [Paras 4]

Extended period could not be invoked; demand limited to the normal limitation period.

Service tax payment and estoppel against excise demand - Prior payment of service tax by the appellant on the activity of job work does not preclude or estop the revenue from demanding Central Excise duty where judicially the goods are held excisable. - HELD THAT: - Reliance placed by the appellant on earlier Tribunal decisions where activities were held non-excisable was considered; however, those decisions turned on factual findings that no manufacture occurred. In the present case, the Supreme Court's decision treating RMC as excisable governs, and payment of service tax earlier does not prevent a subsequent adjudication holding the activity subject to excise duty. [Paras 4]

Payment of service tax does not bar an excise demand where the activity is judicially held to be manufacture attracting excise.

Remand for quantification of duty and interest - concessional rate and admissible exemptions - The matter of computing the exact duty and interest payable, and consideration of claim for concessional rate or admissible exemptions/adjustments (including Cenvat/service tax adjustment), was remitted to the original adjudicating authority for fresh calculation and verification. - HELD THAT: - While upholding the Commissioner (Appeals) order confining the demand to the normal period, the Tribunal observed that the appellant had alleged entitlement to concessional rate and adjustment for service tax paid, but there was no material on record to verify those claims. Accordingly, the Tribunal directed the Original Adjudicating Authority to re-calculate duty and interest for the normal period, to consider admissible exemptions or concessional rates, and to communicate the computed demand to the appellant for compliance. [Paras 4]

Original Adjudicating Authority to re-calculate duty and interest for the normal period and consider concessions/exemptions on verification.

Final Conclusion: Appeal dismissed insofar as the Commissioner (Appeals) order upholding duty liability for the normal limitation period is concerned; extended period invocation set aside and penalty set aside by Commissioner (Appeals). The matter of quantification of duty and interest and consideration of concessional rate or admissible exemptions is remitted to the Original Adjudicating Authority for recalculation and compliance.

Breach of principles of natural justice - non-application of mind - legal mala fides - limitation under proviso to Section 23(4) of the MVAT Act - backdating of orders - remand versus quashing where statutory limitation and mala fides are shown

Breach of principles of natural justice - Section 23(4) of the MVAT Act - Impugned assessment order vitiated for failure to issue notice and afford opportunity of hearing. - HELD THAT: - The Court found on the admitted material that no show cause notice was served on the Petitioners and they were not given any opportunity to be heard before the assessing authority purportedly made the assessment. Section 23(4) requires issuance of notice and a reasonable opportunity before making a best judgment assessment. The absence of notice and hearing constitutes a breach of the statutory procedure and principles of natural justice, rendering the order unsustainable. [Paras 34]

Set aside the impugned assessment order for breach of Section 23(4) and failure of natural justice.

Non-application of mind - legal mala fides - backdating of orders - Impugned order suffers from non-application of mind and legal mala fides; prima facie backdating indicated. - HELD THAT: - The impugned order contained glaring factual errors, mis described parties and transactions, and appears to have reproduced material from an unrelated file without applying mind. Further, the order dated 14 March 2022 purports to record a personal hearing on 23 May 2023 and was communicated to the Petitioners only on 1 July 2023, which together create a strong prima facie inference of manipulative dating and mala fides. Malice in law is engaged where public power is exercised contrary to statutory limits or for unauthorised purposes. [Paras 35, 37, 43, 45]

Order quashed for non-application of mind and legal mala fides; prima facie backdating supports setting aside.

Limitation under proviso to Section 23(4) of the MVAT Act - remand versus quashing where statutory limitation and mala fides are shown - Remand was declined; quashing without remand appropriate where assessment appears to be time barred and vitiated by mala fides. - HELD THAT: - The proviso to Section 23(4) prescribes an eight year limit for assessments. The Court concluded that a strong prima facie case exists that the assessment was made after the expiry of that period and was backdated to appear within time. In the peculiar and gross facts-manifest breach of statutory procedure, non application of mind, and evidence suggesting manipulation-the Court held that remanding for fresh assessment would unjustly reward the assessing authority and extend limitation, and therefore refused remand. [Paras 44, 45, 50, 53, 60]

No remand; impugned assessment order quashed and set aside without ordering fresh adjudication.

Final Conclusion: Writ petition allowed; the assessment order dated 14 March 2022 (relating to FY 2013-2014) is quashed and set aside on grounds of breach of Section 23(4) of the MVAT Act, failure of natural justice, non-application of mind and legal mala fides, and remand is refused in the facts; costs awarded to Petitioners.

Deemed stay of proceedings in respect of any debt - interim moratorium under the Insolvency and Bankruptcy Code - proceedings under Section 138 of the Negotiable Instruments Act - duty to notify trial court of insolvency proceedings

Deemed stay of proceedings in respect of any debt - proceedings under Section 138 of the Negotiable Instruments Act - interim moratorium under the Insolvency and Bankruptcy Code - Effect of insolvency proceedings under the Insolvency and Bankruptcy Code on criminal proceedings under Section 138/141 of the Negotiable Instruments Act - HELD THAT: - The court considered the interplay between insolvency proceedings instituted under the Insolvency and Bankruptcy Code and criminal proceedings under Section 138/141 of the Negotiable Instruments Act. Relying on the principles reflected in the cited decision of the Punjab and Haryana High Court, the court observed that once insolvency proceedings against a personal guarantor/corporate debtor are registered under the Code, an interim moratorium operates such that legal actions or proceedings in respect of any debt would be deemed to be stayed. The court applied that reasoning to the facts before it and accepted that the pendency of proceedings under Section 95(1) of the Code before the NCLT could have the consequence of staying the Section 138/141 proceedings, subject to the facts and the notice of such proceedings being brought to the trial court's attention.

Revisional application admitted and court accepted that insolvency proceedings under the Code can result in a deemed stay of Section 138/141 proceedings, subject to appropriate notice being given to the trial court.

Duty to notify trial court of insolvency proceedings - interim relief - stay of criminal proceedings and warrant - Procedural obligation to inform the trial court and grant of limited interim relief - HELD THAT: - The court held that if an accused is aware of insolvency proceedings before the NCLT, the complainant (or party aware of the insolvency order) should bring that fact to the notice of the trial magistrate. Exercising its revisional jurisdiction and on the facts of the present petition, the court directed interim measures limited in time: a stay of further proceedings in the trial complaint for three weeks from reopening after vacation, confined to the petitioner, and a stay of the warrant of arrest for five weeks from reopening after vacation. Service on the opposite party was dispensed with as that party had already appeared, and the matter was listed as a contested application after the vacation.

Trial court to be informed of insolvency proceedings; pending hearing, further proceedings in the complaint stayed for three weeks (confined to the petitioner) and the warrant of arrest stayed for five weeks.

Final Conclusion: The revisional application was admitted; the court recognised that insolvency proceedings under the Code may result in a deemed stay of Section 138/141 NI Act proceedings where applicable and directed that the trial court be informed. In the interim, the court granted a limited stay of the complaint proceedings for three weeks (as to the petitioner) and stayed the warrant of arrest for five weeks, with the matter listed after vacation for contested hearing.