TaxTMI Updates e-Newsletter
Oct 21,2022

Advance Ruling - eligibility for advance ruling - requisite fee for filing advance ruling application - filing without any ruling for non-payment of fee

Requisite fee for filing advance ruling application - filing without any ruling for non-payment of fee - Whether the Advance Ruling application could be finally adjudicated despite non-payment of the requisite CGST fee - HELD THAT: - The application required payment of Rs.10,000 as filing fee (Rs.5,000 each for CGST and SGST). The applicant deposited only the SGST portion and failed to deposit the CGST portion despite notices dated 28.02.2022, 02.03.2022 and 01.09.2022. The Authority recorded that multiple opportunities were afforded but the outstanding CGST fee remained unpaid. In consequence, the application could not be proceeded with to render an advance ruling. [Paras 7]

Application filed without any ruling for non-payment of the requisite CGST fee.

Final Conclusion: The Advance Ruling Authority declined to pronounce any ruling because the applicant did not deposit the required CGST portion of the filing fee despite repeated notices; the application is therefore filed without any ruling.

Transition of CENVAT credit in respect of capital goods - unavailed CENVAT credit - Section 140(2) transition entitlement - Guidance Note on CGST transition credit - opportunity to be heard and remand for fresh consideration

Transition of CENVAT credit in respect of capital goods - unavailed CENVAT credit - Section 140(2) transition entitlement - Claim for transition of unavailed CENVAT credit on capital goods remitted to Assessing Authority for fresh consideration and decision. - HELD THAT: - The petitioner sought input tax credit in respect of certain imports of capital goods but had not claimed any portion of CENVAT credit before the appointed day. The first appellate authority rejected the claim, apparently without reference to Section 140(2) which provides for transition of unavailed CENVAT credit in respect of capital goods. The revenue relies on the Guidance Note for CGST Transition Credit indicating that Table 6(a)/Column 11 (relating to Section 140(2)) is intended for taxpayers who had availed a portion of capital goods credit earlier and now seek the remaining unavailed portion. Recognising that the Assessing Authority did not have an opportunity to address a claim for transition (the alternate claim being first made in appeal), the court did not decide the substantive entitlement under Section 140(2). Instead the court granted the petitioner leave to present the transition claim before the Assessing Authority, directed that the Authority hear the petitioner and decide the claim afresh within two weeks of receipt, and directed that the Authority take an independent view uninfluenced by the appellate conclusion or the prima facie observations of this order. [Paras 6, 8, 9, 10]

Petitioner's claim for transition remanded to the Assessing Authority for hearing and fresh decision within two weeks; substantive entitlement under Section 140(2) left open.

Final Conclusion: Writ petition disposed by directing the petitioner to place the transition claim before the Assessing Authority, which shall hear and decide the claim within two weeks on an independent consideration; the impugned order is not interfered with.

Transition of accumulated unutilized CENVAT/ITC by Input Service Distributors under Section 140 - quashing administrative instructions prohibiting transition of ISD credit - setting aside administrative communication rejecting transition of ISD credit - prohibition on enforcement of recovery of transitioned accumulated credit

Quashing administrative instructions prohibiting transition of ISD credit - transition of accumulated unutilized CENVAT/ITC by Input Service Distributors under Section 140 - The validity of instructions dated 05.07.2018 issued by respondent no.3 which prohibited Input Service Distributors from transitioning accumulated unutilized CENVAT credit. - HELD THAT: - The High Court, taking note of recent High Court precedents relied upon by the petitioner and after hearing the respondents who did not contest the effect of those decisions, held that the impugned instruction issued by respondent no.3 could not be sustained. The Court quashed the instruction insofar as it operated to prohibit ISDs from transitioning accumulated unutilized CENVAT/ITC in terms of the transitional provisions under Section 140 of the Central Goods & Services Tax Act, 2017. The Court's order proceeded on the basis that the respondents accepted that the judgments referenced covered the issue and therefore the administrative prohibition must be set aside. [Paras 2, 3]

Instruction dated 05.07.2018 issued by respondent no.3 is quashed.

Setting aside administrative communication rejecting transition of ISD credit - transition of accumulated unutilized CENVAT/ITC by Input Service Distributors under Section 140 - The validity of the letter dated 04.02.2019 issued by the office of the Commissioner of Central GST Audit-II rejecting the petitioner's request to allow credit of unutilized ISD. - HELD THAT: - In consequence of quashing the impugned instruction and having regard to the judicial authorities relied upon, the Court found no basis to sustain the communication dated 04.02.2019 which refused the petitioner's request. The communication was therefore declared ineffective and no effect was to be given to it, permitting the petitioner to seek the transitional relief it had claimed. [Paras 1, 3]

Communication dated 04.02.2019 is set aside and no effect shall be given to it.

Prohibition on enforcement of recovery of transitioned accumulated credit - transition of accumulated unutilized CENVAT/ITC by Input Service Distributors under Section 140 - Whether the respondents could be restrained from recovering accumulated credit transitioned by the petitioner as an ISD under Section 140. - HELD THAT: - Following the quashing of the administrative instruction and the setting aside of the communication rejecting the petitioner's claim, the Court restrained the respondents from enforcing any recovery of the accumulated credit transitioned by the petitioner in respect of its ISD registration. The restraint flows from the Court's determination that the administrative measures preventing transition and denying the petitioner's claim were unsustainable in the light of the authorities relied upon and the respondents' concessions. [Paras 3]

Respondents are restrained from enforcing recovery of the accumulated credit transitioned by the petitioner.

Final Conclusion: Writ petition allowed; impugned administrative instruction quashed, the communication rejecting transition set aside, recovery restrained, and the petitioner permitted to seek consequential relief from the respondents.

Scrutiny of returns and procedure under Section 61 - Requirement of issuance of Form ASMT-10 prior to initiating proceedings under GST DRC-01/GST DRC-07 - Validity of assessment under Section 73/Section 74 when statutory procedure is not followed - Service and principles of natural justice in GST proceedings - Remand for fresh assessment for procedural non-compliance

Scrutiny of returns and procedure under Section 61 - Requirement of issuance of Form ASMT-10 prior to initiating proceedings under GST DRC-01/GST DRC-07 - Service and principles of natural justice in GST proceedings - Failure to issue Form ASMT-10 in respect of the discrepancies which formed the basis of GST DRC-01 and the Order in GST DRC-07 vitiated the proceedings initiated pursuant to scrutiny under Section 61. - HELD THAT: - The Court examined Section 61 read with Section 74 and Rule 100(2) and concluded that where proceedings arise out of scrutiny of returns the officer must inform the taxable person of discrepancies by issuing Form ASMT-10 and afford opportunity to explain; if the explanation is unsatisfactory only then may the officer proceed to initiate action under Sections 65/66/67 or determine tax under Sections 73/74 and issue notices and orders in the prescribed forms (GST DRC-01/GST DRC-07). In the present case ASMT-10 dated 22.12.2021 addressed certain discrepancies, but the GST DRC-01 dated 15.02.2022 and the impugned GST DRC-07 dated 09.05.2022 proceeded on wholly different issues which had not been the subject of ASMT-10. The Court held that the issuance of ASMT-10 in respect of the matters forming the subject matter of the impugned proceedings is mandatory and that initiating and concluding assessment proceedings without issuing that form and affording the statutorily prescribed opportunity amounted to non-compliance with the method and manner prescribed by the statute and thereby vitiated the proceedings. The Court further noted the petitioner's unawareness of the uploaded notice and order and treated the failure of the statutory procedure as also impinging on principles of natural justice. Having found procedural failure, the Court allowed the respondent to issue the appropriate Form ASMT-10 and, after affording a reasonable opportunity in the manner contemplated by law, to proceed afresh in accordance with the Act. [Paras 5, 6, 7]

Impugned order dated 09.05.2022 set aside; matter remitted to the Assessing Officer to issue Form ASMT-10 in respect of the discrepancies, afford the petitioner a reasonable opportunity as per law and thereafter proceed to determine tax, interest and penalty in accordance with the Act.

Final Conclusion: The writ petition is allowed insofar as the impugned order dated 09.05.2022 is quashed for procedural non-compliance; the matter is remitted to the Assessing Officer to reissue proceedings in accordance with the statutory procedure (including issuance of Form ASMT-10 and affording opportunity) and to proceed thereafter in accordance with law. No costs.

Quashing of adjudication order - Fresh adjudication de novo and issuance of a fresh show cause notice - Application of Circular dated 20.09.2022 - Jurisdiction of the adjudicating authority - Interpretation of jurisdiction under Section 6(2)(b) of the Central Goods and Services Tax Act, 2017

Quashing of adjudication order - Fresh adjudication de novo and issuance of a fresh show cause notice - Application of Circular dated 20.09.2022 - Adjudication order dated 20.05.2022 set aside and the matter remitted for fresh adjudication. - HELD THAT: - Having regard to an earlier order in a similar petition and the respondent's Circular dated 20.09.2022, and in view of the respondent's concession that the fate of this petition would be the same, the Court quashed the impugned adjudication order. The Court directed that the concerned officer shall commence proceedings de novo, which entails issuance of a fresh show cause notice by a proper officer, with express regard to the Circular dated 20.09.2022. The writ petition is disposed of in those terms. [Paras 3, 4, 5]

Adjudication order dated 20.05.2022 set aside; fresh proceedings to be initiated and a fresh show cause notice issued by a proper officer bearing in mind Circular dated 20.09.2022.

Jurisdiction of the adjudicating authority - Interpretation of jurisdiction under Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 - Questions as to jurisdiction remitted to the adjudicating authority for consideration. - HELD THAT: - The petitioner was granted liberty to raise jurisdictional objections before the adjudicating officer. The Court observed the adjudicating officer will, inter alia, bear in mind Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 when considering such objections. The Court did not decide the jurisdictional question on merits but left it to be examined afresh by the authority in the remitted proceedings. [Paras 7]

Liberty granted to the petitioner to raise jurisdictional issues before the adjudicating authority; the adjudicating officer to consider Section 6(2)(b) of the CGST Act, 2017.

Final Conclusion: The writ petition is disposed of by setting aside the adjudication order dated 20.05.2022 and directing de novo proceedings with a fresh show cause notice in light of Circular dated 20.09.2022; jurisdictional issues may be raised before and considered by the adjudicating authority; pending applications are closed.

Challenge to amendment of notification - reverse-charge mechanism - exclusion of body corporates from reverse-charge - maintainability of writ filed by a third-party association - judicial review of taxation policy - treatment of writ petition as representation

Treatment of writ petition as representation - judicial review of taxation policy - Writ petition to be treated as a representation and directed to be considered by the executive. - HELD THAT: - The Court declined to adjudicate the petition on the merits and, at the request of the petitioner, converted the writ petition into a representation to be considered by respondent nos.1 and 2. The Court observed that the notification under challenge embodies a policy decision in the field of taxation and that the executive is equipped to examine facets of the policy. In view of the petitioner's concession, the Court found it appropriate to dispose of the petition by directing the respondents to treat the petition as a representation and pass appropriate orders as deemed fit, thus leaving substantive adjudication to the administrative respondents. [Paras 4, 5]

Writ petition disposed of by directing respondent nos.1 and 2 to treat the petition as a representation and to pass appropriate orders.

Exclusion of body corporates from reverse-charge - maintainability of writ filed by a third-party association - reverse-charge mechanism - Remand for executive consideration of the grievance concerning exclusion of body corporates from the reverse-charge mechanism; judicial abstention from deciding the substantive taxation claim. - HELD THAT: - The petitioner complained that the amendment (Entry No.14) excluding body corporates from the reverse-charge mechanism did not account for closely held smaller body corporates. The Court, however, declined to decide this taxation controversy and instead remitted the grievance to the respondents for consideration as a representation. The Court also recorded an editorial observation that ordinarily in taxation matters the affected assessee should approach the Court and not a third-party society, but this observation did not preclude treating the petition as a representation for administrative disposal. [Paras 1, 4, 5]

Issue remitted to respondent nos.1 and 2 for fresh consideration of the petitioner's grievance about exclusion of body corporates from the reverse-charge mechanism; Court refrained from adjudicating the substantive claim.

Final Conclusion: The writ petition is disposed of by directing respondent nos.1 and 2 to treat the petition as a representation and to consider and decide the grievance regarding the amendment to Entry No.14 (reverse-charge mechanism and exclusion of body corporates) as they deem fit; pending applications are closed.

Rectification of TRAN-I - filing of rectified TRAN-I after initial submission - binding effect of a Coordinate Bench/Division Bench decision - res integra

Rectification of TRAN-I - filing of rectified TRAN-I after initial submission - binding effect of a Coordinate Bench/Division Bench decision - The Single Judge's order permitting the assessee to file a rectified TRAN-I form again (electronically or manually) within 30 days, as guided by the Division Bench decision in Asiad Paints Limited, is upheld. - HELD THAT: - The learned Additional Government Advocate acknowledged that the controversy is no longer res integra in view of the Co ordinate Bench/Division Bench ruling in Asiad Paints Limited. Having regard to that precedent and the multiplicity of identical cases disposed of following the said ruling, the Division Bench's principle was applied and there was no reason to interfere with the Single Judge's order which allowed the respondent to file the rectified TRAN I within the stipulated period.

Writ appeal dismissed; the Single Judge's order permitting filing of a rectified TRAN I within 30 days is affirmed.

Final Conclusion: The intra Court appeal is dismissed and the order allowing the assessee to file a rectified TRAN I form within 30 days, rendered by the Single Judge following the Division Bench precedent, is maintained.

Services provided by a training partner approved by the National Skill Development Corporation - any other Scheme implemented by the National Skill Development Corporation - GST exemption under Notification No. 12/2017 - Serial No. 69 - Scheme for market led fee-based services - exemption not available for services received from non-approved subcontractors

Services provided by a training partner approved by the National Skill Development Corporation - any other Scheme implemented by the National Skill Development Corporation - GST exemption under Notification No. 12/2017 - Serial No. 69 - Scheme for market led fee-based services - Services provided by the applicant as an NSDC-approved training partner in relation to the Scheme for market-led fee-based services fall under Entry No.69(d)(iii) of Notification No.12/2017 and are eligible for exemption from CGST and SGST. - HELD THAT: - The applicant produced an attested Certificate of Partnership showing approval as an NSDC Training Partner and an agreement dated 23.06.2022 registering the applicant under the Scheme for market led fee-based services (non-funded affiliation). The Scheme's terms and the applicant's approved proposal establish that the applicant delivers fee-based training services as a Partner under the Scheme. Entry No.69(d)(iii) of Notification No.12/2017 exempts services provided by a training partner approved by NSDC in relation to "any other Scheme implemented by the National Skill Development Corporation." On the material on record the Authority finds that the applicant's services are in relation to the Scheme and therefore satisfy the conditions of Entry No.69(d)(iii), entitling those services to exemption from CGST and SGST. [Paras 8]

Yes; services offered by the applicant as an approved NSDC training partner under the Scheme qualify for exemption under Entry No.69(d)(iii) of Notification No.12/2017.

Exemption not available for services received from non-approved subcontractors - services provided by a training partner approved by the National Skill Development Corporation - GST exemption under Notification No. 12/2017 - Serial No. 69 - Services supplied to the applicant by third parties or subcontractors who are not NSDC-approved training partners are not covered by the exemption under Entry No.69. - HELD THAT: - Entry No.69 confers exemption on services provided by specified categories, including a training partner approved by NSDC, in relation to NSDC schemes. The Authority distinguished between services supplied by the applicant in its capacity as an approved Training Partner (which qualify) and services received by the applicant from others. Where a subcontractor supplying services to the applicant is not an NSDC-approved training partner or Sector Skill Council, those services do not fall within Entry No.69 and hence are not exempt. The exemption is therefore not extendable to receipts from non-approved subcontractors. [Paras 8]

No; services received from subcontractors who are not NSDC-approved training partners are not eligible for the Entry No.69 exemption.

GST exemption under Notification No. 12/2017 - Serial No. 69 - services provided by a training partner approved by the National Skill Development Corporation - Exemption under Entry No.69 is available only for those supplies by the company that meet the conditions of the entry (i.e., supplies made as an approved NSDC training partner in relation to an NSDC scheme) and is not a blanket exemption for all supplies of the company or limited to Telangana alone. - HELD THAT: - The Authority held that when the applicant supplies services in its capacity as an NSDC-approved Training Partner in relation to an NSDC scheme, those supplies are exempt from both CGST and SGST under Entry No.69. Conversely, services of the applicant that do not meet the conditions of Entry No.69 are not covered by the exemption. The ruling therefore confines the exemption to qualifying supplies and applies the exemption under both Central and State GST statutes where the conditions are met, rather than treating it as a company-wide or territorially limited concession. [Paras 8]

Only those services supplied by the applicant that satisfy Entry No.69 (i.e., supplied as an NSDC-approved training partner in relation to an NSDC scheme) are exempt from both CGST and SGST; other supplies by the company are not exempt under this entry.

Final Conclusion: The Authority rules that the applicant's services delivered as an NSDC-approved Training Partner under the Scheme for market-led fee-based services qualify for exemption under Entry No.69(d)(iii) of Notification No.12/2017 (CGST) and corresponding SGST provisions; services received from non-approved subcontractors are not exempt; and the exemption applies only to those supplies meeting the entry's conditions and is not a blanket exemption for all supplies of the company.

Sewage and waste collection, treatment and disposal and other environmental protection services - composite supply - pure services - exemption under Notification No. 12/2017 - serials 3 and 3A - local authority (definition under section 2(69) of the GST Act)

Sewage and waste collection, treatment and disposal and other environmental protection services - composite supply - Classification of the supply agreed to be provided by the applicant under the work order - HELD THAT: - On the material produced, the supply to be provided by the applicant is in the nature of waste management services comprising waste collection, treatment and disposal and related activities. The Authority found these services to fall within SAC 9994 (Group entries for waste collection and waste treatment/disposal). Although the project includes constructional and goods-related elements (e.g., construction of sanitary landfill, sale and packaging of by products), the overall service is classifiable as sewage and waste collection, treatment and disposal and other environmental protection services under SAC 9994. The Authority therefore classifies the supply under that SAC heading.

Supply is classifiable under SAC 9994 as 'sewage and waste collection, treatment and disposal and other environmental protection services'.

Exemption under Notification No. 12/2017 - serials 3 and 3A - pure services - local authority (definition under section 2(69) of the GST Act) - Whether the supply qualifies for exemption under serial number 3 or 3A of Notification No. 12/2017 (as amended) and thereby nil rate of GST - HELD THAT: - The Authority analysed both entries. Serial number 3 exempts pure services provided to government or a local authority in relation to functions entrusted to a Municipality; serial 3A exempts certain composite supplies where value of goods does not exceed 25% and the supply is to government or local authority in relation to municipal functions. The Authority held the instant supply is not a 'pure service' because it involves construction, supply/sale/packaging of by products and other goods-related elements. The value of goods threshold under serial 3A could not be ascertained on the record and was thus left unestablished. Separately, the Authority concluded that SUDA is a registered society and, on the material before it (including SUDA's official website), does not qualify as a 'local authority' as defined in clause (69) of section 2 of the GST Act. In view of these findings, the supply does not satisfy the conditions of serial 3 or 3A of the exemption notification and cannot be accorded nil rate treatment under those entries.

Supply does not qualify for exemption under serial number 3 or 3A of Notification No. 12/2017 and cannot be treated as nil-rated on that basis.

Sewage and waste collection, treatment and disposal and other environmental protection services - Applicable GST rate on the classified supply - HELD THAT: - Having classified the supply under SAC 9994 and having rejected applicability of the exemption entries relied upon, the Authority applied the rate provided in Notification No. 11/2017 (serial number 32) which taxes 'sewage and waste collection, treatment and disposal and other environmental protection services' at the prescribed rate. Accordingly, the taxable rate was determined on that basis.

Supply is taxable at 18% under the entry applicable to sewage and waste collection, treatment and disposal and other environmental protection services.

Final Conclusion: The Authority rules that the applicant's supply is classifiable under SAC 9994 as sewage and waste collection, treatment and disposal and other environmental protection services; it does not qualify for exemption under Notification No.12/2017 (serials 3 or 3A) because it is not a pure service, the value of goods condition under 3A is unestablished, and SUDA is not a 'local authority' under the GST Act; consequently the supply is taxable at 18%.

Summary order. Application for advance ruling is closed/dismissed and no advance ruling is issued as the applicant failed to deposit the requisite CGST fee (pending Rs. 5,000) despite multiple opportunities; application treated as not filed for CGST component.

Summary order. Application not admitted and no advance ruling issued as the requisite fee for CGST and SGST was not deposited.

Exemption under Notification No.12/2017-Central Tax (Rate) - Definition of "agricultural produce" in exemption notification - Scope of processing and exclusion from agricultural produce - Goods Transport Agency services classification and levy under Notification No.11/2017-Central Tax (Rate) - Strict construction of exemption notifications

Definition of "agricultural produce" in exemption notification - Scope of processing and exclusion from agricultural produce - Exemption under Notification No.12/2017-Central Tax (Rate) - Strict construction of exemption notifications - Cotton Seed (Banaula) does not qualify as "agricultural produce" for the purpose of exemption from GST on GTA services under Notification No.12/2017-Central Tax (Rate) dated 28.06.2017. - HELD THAT: - The Authority compared the definition of "agricultural produce" in Notification No.12/2017 with the definition under the Punjab Agricultural Produce Markets Act, 1961 and held that the two enactments have different scopes. The GST notification confines "agricultural produce" to products that are the direct result of cultivation/rearing and either undergo no further processing or only such processing as is usually done by the cultivator/producer which does not alter essential characteristics. Cotton seed (Banaula) is obtained after industrial ginning (separation of lint from seed) carried out in mills and not merely by processing performed by the cultivator; therefore it does not meet the GST notification's condition. The Authority applied the principle that exemption notifications must be strictly construed and that a claimant must satisfy the conditions of the exemption; since the condition regarding further processing is not fulfilled, the exemption does not apply to cotton seed for GTA services.

Cotton Seed (Banaula) is not covered by the exemption in Notification No.12/2017 and is not "agricultural produce" for that purpose.

Goods Transport Agency services classification and levy under Notification No.11/2017-Central Tax (Rate) - Applicability of GST rate on GTA services where input tax credit has/has not been taken - The GST rate applicable to GTA services in relation to transportation of Cotton Seed (Banaula). - HELD THAT: - Having held that cotton seed is not exempt as "agricultural produce" under Notification No.12/2017, the Authority proceeded to classification and rate. Services by a goods transport agency for transportation of goods fall under the relevant GTA tariff heading. Under Sr. No. 9 of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, the tax on GTA services is leviable at a composite rate; the Authority observed that where input tax credit on goods and services used in supplying the GTA service has not been taken, the applicable CGST rate is 2.5% (and correspondingly SGST 2.5%), otherwise the applicable combined rate is 6%. The ruling therefore specifies the applicable incidence depending on availability of input tax credit.

GST is chargeable on GTA services for transporting Cotton Seed (Banaula) at 5% (2.5% CGST and 2.5% SGST) where no input tax credit has been availed, otherwise @6% as per Notification No.11/2017.

Final Conclusion: The Advance Ruling Authority held that Cotton Seed (Banaula) does not fall within the definition of "agricultural produce" for the purposes of exemption under Notification No.12/2017 and accordingly GTA services for transporting such cotton seed are taxable: CGST 2.5% and SGST 2.5% (total 5%) where input tax credit has not been taken, otherwise taxable at the combined rate of 6% under the applicable notification.

Summary order. The Authority for Advance Ruling recorded divergent opinions of its Members on applicability of GST to electricity and water charges collected at actuals by the lessor from the lessee and accordingly the application is referred to the Appellate Authority for Advance Ruling for the State of Telangana under Section 98(5) of the CGST/TGST Act, 2017 for hearing and decision.

Exemption under Notification No.12/2017 for services relating to admission to, or conduct of, examination - treatment of Central and State Educational Boards as educational institutions for conduct of examination - scope of "educational institution" to include universities and open universities for exemption purpose - availability of exemption to a taxable person including sub contractor - reference to Appellate Authority for Advance Ruling under Section 98(5) for non uniform views

Exemption under Notification No.12/2017 for services relating to admission to, or conduct of, examination - treatment of Central and State Educational Boards as educational institutions for conduct of examination - scope of "educational institution" to include universities and open universities for exemption purpose - GST exemption applicability in respect of pre and post examination services supplied to State Educational Boards, Universities and Open Universities - HELD THAT: - The Authority considered Sl. No.66(b)(iv) of Notification No.12/2017-Central Tax (Rate) and its Explanation clarifying that Central and State Educational Boards are to be treated as educational institutions for the limited purpose of conduct of examinations. The Authority noted the definition of "educational institution" in the notification and the effect of amendment (omission of the phrase 'upto higher secondary education') which extended the entry to institutions beyond school level. Having examined the contracts and scope of services (data processing, hall ticket generation, OMR/ICR scanning, result processing, printing of marks memos, supply of result data etc.), the Authority held these services are services relating to conduct of examination by the educational institutions. Both members who addressed this question concurred that the two conditions in Sl. No.66(b)(iv) - (i) supply to an educational institution and (ii) services relating to admission to, or conduct of, examination by such institution - are satisfied in respect of supplies made to State Boards, Universities and Open Universities. Consequently, the services in question are exempt under the notification.

Yes; pre and post examination services supplied to State Educational Boards, Universities and Open Universities are exempt under Sl. No.66(b)(iv) of Notification No.12/2017.

Availability of exemption to a taxable person including sub contractor - privity of contract and supply to non educational intermediary - reference to Appellate Authority for Advance Ruling under Section 98(5) for non uniform views - Whether the exemption under Sl. No.66(b)(iv) extends to supplies made by the applicant as a sub contractor to a main contractor (where the contract is with the main contractor and not directly with the educational institution) - HELD THAT: - The two members of the Authority expressed conflicting views on this question. One view, applying the notification and CBIC clarification, concluded that the exemption is available to any taxable person including a sub contractor because the exempted service itself (services relating to conduct of examination) is being supplied ultimately for the benefit of an educational institution. The contrary view observed that entry 66(b) requires the supply to be made to an "educational institution"; where the privity of contract is between the sub contractor and a main contractor (who is not an educational institution), the supply is not strictly made to an educational institution and therefore the entry would not apply to the sub contractor. Given this divergence, the Authority did not resolve the question on merits and referred the specific question for hearing and decision to the Appellate Authority for Advance Ruling under Section 98(5).

Referred to the Appellate Authority for Advance Ruling under Section 98(5) for determination.

Final Conclusion: The Authority ruled that pre and post examination services supplied to State Educational Boards, Universities and Open Universities fall within the exemption at Sl. No.66(b)(iv) of Notification No.12/2017 and are exempt from GST. The question whether the exemption is available where those services are supplied by the applicant as a sub contractor to a main contractor (and not directly to the educational institution) was not uniformly decided by the members and has been referred to the Appellate Authority for Advance Ruling, Telangana, under Section 98(5) for hearing and final decision.

Construction of residential apartments as a supply of service - time of supply of services - value of supply - transaction value and deeming of one-third value for land or undivided share - ongoing project - option to continue old rate of tax - concessional rate for specified affordable housing schemes - applicability of 18% tax for ongoing projects not covered by concessional schemes

Ongoing project - option to continue old rate of tax - applicability of 18% tax for ongoing projects not covered by concessional schemes - Rate of tax applicable to the construction services supplied by the applicant - HELD THAT: - The applicant's project satisfies the definition of an "ongoing project" and the applicant exercised the prescribed one-time option within the manner and time prescribed. The concessional 12% rate is available only for constructions under the specified affordable housing schemes; the applicant's project does not fall under those schemes. The services of construction of residential apartments supplied by the applicant therefore fall within the entry prescribing the non-concessional rate for ongoing projects and are taxable at 18% (9% CGST + 9% SGST). [Paras 7]

Applicant liable to pay GST at 18% on construction services of residential apartments.

Value of supply - transaction value and deeming of one-third value for land or undivided share - Section 15 - valuation of supply - Taxable value of the construction services supplied by the applicant - HELD THAT: - Valuation is governed by Section 15 of the CGST Act read with Paragraph 2 of Notification No.11/2017-CT(R). For supplies covered by the relevant entry involving transfer of land or undivided share, the taxable value of the service is the total amount charged less the deemed value of land or undivided share. Paragraph 2 prescribes that the value of land or undivided share shall be deemed to be one-third of the total amount charged for such supply, irrespective of the actual land valuation. Accordingly the applicant is entitled to deduct one-third of the total amount charged as the deemed land value in arriving at the taxable value. [Paras 7]

Taxable value to be determined under Section 15 read with Para 2 of Notification No.11/2017-CT(R); one-third of total amount charged to be deemed value of land/undivided share.

Time of supply of services - Section 13 - time of supply - Notification No.06/2019 - supply arising on issuance of completion certificate for certain considerations - Time at which liability to pay tax on the construction services arises - HELD THAT: - The time of supply of the services is to be determined in accordance with Section 13 of the CGST Act; the earliest of the dates specified in that section applies. Where specific categories of consideration or arrangements are covered by the later notification, the date for supply for those categories (where applicable) is the date of issuance of completion certificate or first occupation as prescribed. The applicant must accordingly apply Section 13 (and the specific provisions of the relevant notifications where applicable) to determine the precise time of supply for transactions in the project. [Paras 7]

Time of supply governed by Section 13 of the CGST Act; where Notification No.06/2019 is applicable, supply may arise on issuance of completion certificate or first occupation as specified.

Construction of residential apartments as a supply of service - Schedule II - treatment of construction for sale as service - Classification of the applicant's activity as supply of goods or supply of services - HELD THAT: - Paragraph 5(b) of Schedule II treats construction of a building or part thereof intended for sale to a buyer (except where entire consideration is received after issuance of completion certificate or after first occupation) as a supply of service. The applicant's activity - constructing apartments and entering into agreements for undivided land share and construction consideration where construction is for sale prior to completion certificate/first occupation - falls within this description and is therefore a supply of service. [Paras 7]

The applicant's activity qualifies as a supply of service.

Final Conclusion: The Authority rules that the applicant's construction services are taxable as services: the applicant validly exercised the option for ongoing projects and must apply the 18% rate; taxable value is determined under Section 15 read with Para 2 of Notification No.11/2017-CT(R) with one-third of total consideration deemed as land value; time of supply is governed by Section 13 (and relevant notifications where applicable).

First appeal against penalty under Chapter XXI - Appealability under Section 246A(1)(q) - Penalty under section 271FA for default under section 285BA(1) - Maintainability before Tribunal - Remand to CIT(A) with direction to condone delay

First appeal against penalty under Chapter XXI - Appealability under Section 246A(1)(q) - Maintainability before Tribunal - Whether the first appeal against a penalty imposed under section 271FA is maintainable before the Tribunal or lies to the Commissioner (Appeals). - HELD THAT: - The Tribunal examined the scheme of appealability and held that penalties imposed under Chapter XXI fall within the residuary appellate provision which vests first appellate jurisdiction in the Commissioner (Appeals) as provided by Section 246A(1)(q). Section 271FA, being a penalty provision under Chapter XXI imposed for non-compliance of the reporting obligation under section 285BA(1), therefore attracts the appellate forum specified in Section 246A(1)(q). Consistent decisions of coordinate benches and clarificatory administrative pronouncements were noted. In consequence, an appeal filed directly before the Tribunal against a penalty order under section 271FA is not maintainable and is to be dismissed as non-est. [Paras 3]

Appeals under challenge dismissed as not maintainable before the Tribunal; first appeal against penalty under section 271FA lies with the Commissioner (Appeals).

Remand to CIT(A) with direction to condone delay - Penalty under section 271FA for default under section 285BA(1) - Relief and procedural directions on dismissal for non-maintainability - whether the assessee may approach the Commissioner (Appeals) and whether delay in filing before CIT(A) arising from filing before the Tribunal should be condoned. - HELD THAT: - The Tribunal, having dismissed the appeals as not maintainable, granted the appellants liberty to file first appeals before the Commissioner (Appeals) against the penalty orders. The Tribunal directed that the Commissioner (Appeals) should condone the delay attributable to the period during which the assessee pursued the matter before the Tribunal; any other delay will require explanation and adjudication by the Commissioner (Appeals) on merits. The Tribunal also recorded that the Commissioner (Appeals) shall afford opportunity of hearing and decide the appeals de novo in accordance with law. [Paras 3, 5]

Liberty granted to file appeal before the Commissioner (Appeals); Commissioner (Appeals) directed to condone delay arising from prosecution of appeal before the Tribunal and to decide the appeal afresh after giving opportunity of hearing.

Final Conclusion: Both appeals under ITA Nos.250-251/Lkw/2018 challenging penalty orders under section 271FA are dismissed as not maintainable before the Tribunal; appellants are permitted to file first appeals before the Commissioner (Appeals), who is directed to condone the delay caused by pursuit of the Tribunal proceedings and to adjudicate the appeals afresh in accordance with law.

Reopening of assessment - assumption of jurisdiction under Section 147 - exemption under Section 10(23C)(iiiad) - applicability of 85% application requirement - registration under Section 12A and retrospective effect - quashing of reassessment for want of valid jurisdiction

Assumption of jurisdiction under Section 147 - reopening of assessment - exemption under Section 10(23C)(iiiad) - applicability of 85% application requirement - registration under Section 12A and retrospective effect - quashing of reassessment for want of valid jurisdiction - Validity of reopening the assessment under Section 147 for A.Y. 2007-08 on the grounds recorded by the Assessing Officer. - HELD THAT: - The Tribunal found that the two reasons recorded by the Assessing Officer to form a "reason to believe" were legally incorrect and factually misconceived. First, the AO proceeded on the premise that the assessee was required to apply 85% of its gross receipts to claim exemption under Section 10(23C)(iiiad); the Tribunal held that no such obligation arises under that clause and the AO had wrongly read into it the requirement contained in the "3rd proviso" which applies to other sub-clauses of Section 10(23C) and not to clause (iiiad). Second, the AO's reliance on the timing of registration under Section 12A (application filed on 28.11.2007 and registration granted w.e.f. 01.04.2007 for A.Y.2008-09) as negating the assessee's claim was misplaced because the return for A.Y.2007-08 expressly claimed exemption under Section 10(23C)(iiiad) and the assessee had not claimed exemption under Section 11(1)(a); thus there was no bona fide basis to believe that income chargeable to tax had escaped assessment on that score. Because both recorded reasons were incorrect, the Tribunal concluded that the AO lacked a valid assumption of jurisdiction under Section 147; accordingly the reassessment framed pursuant to that reopening was vitiated and had to be quashed. The Tribunal therefore did not adjudicate the merits of the exemption claim and left those issues open. [Paras 8, 9, 10, 11]

The reopening under Section 147 was invalid for want of valid reasons; the assessment framed thereunder dated 28.03.2014 is quashed.

Final Conclusion: The appeal is allowed: the reassessment initiated under Section 147 for A.Y. 2007-08 is quashed for lack of valid assumption of jurisdiction; substantive contentions on exemption are left open.

Treatment as unexplained investment under Section 69A - re-characterisation as unexplained cash credit under Section 68 - onus to explain nature and source of cash deposits

Re-characterisation as unexplained cash credit under Section 68 - onus to explain nature and source of cash deposits - Validity of CIT(A)'s re-characterisation of simplicitor cash deposits as unexplained cash credit under Section 68 where assessee had not maintained books of account - HELD THAT: - The Tribunal accepted the assessee's contention that mere cash deposits could not be recharacterised as unexplained cash credit under Section 68 in the absence of supporting books or entries, relying on precedents cited by the assessee. However, the Tribunal held that quashing the re-characterisation would not affect the consequence of addition made by the Assessing Officer under Section 69A, because that addition related to ownership of money not recorded in books and the failure to satisfactorily explain its nature and source. [Paras 9]

CIT(A)'s re-characterisation under Section 68 is not sustainable, but this does not negate the addition under Section 69A.

Treatment as unexplained investment under Section 69A - onus to explain nature and source of cash deposits - Lawfulness of addition of cash deposits as unexplained income under Section 69A of the Act - HELD THAT: - Section 69A applies where an assessee is found to be owner of money not recorded in books and offers no satisfactory explanation as to its nature and source. The record showed cash deposits of the impugned amount in the assessee's bank account and the assessee failed to substantiate the claimed land-brokerage origins with cogent documentary evidence or details of ultimate purchasers and profit shares. The Assessing Officer's conclusion treating the deposits as unexplained and taxable under Section 69A was therefore supported by the material on record and the Tribunal found no infirmity in the addition. [Paras 10, 12]

Addition of the cash deposits as unexplained income under Section 69A is upheld.

Final Conclusion: The appeal is dismissed: the CIT(A)'s re-characterisation to Section 68 is not sustained but the Assessing Officer's addition treating the bank cash deposits as unexplained income under Section 69A for A.Y.2013-14 is upheld due to failure to satisfactorily prove the nature and source of the deposits.

Reopening of assessment after four years under proviso to section 147 (explanation 2 to clause (c)) - Consistency between reasons to believe and subject-matter of assessment - Disposal of objections to notice under section 148 by a speaking order (GKN Driveshaft principle) - Proof under section 68 - identity, creditworthiness and genuineness of loan - Treatment of alleged accommodation entries/unexplained cash credit versus genuine inter corporate loan - Obligation to make independent inquiry before rejecting documentary evidence

Reopening of assessment after four years under proviso to section 147 (explanation 2 to clause (c)) - Consistency between reasons to believe and subject-matter of assessment - Disposal of objections to notice under section 148 by a speaking order (GKN Driveshaft principle) - Validity of reopening of assessment under Section 147/148 in view of the reasons recorded and subsequent assessment action - HELD THAT: - The Assessing Officer's reasons to believe recited that the assessee had taken accommodation entries by way of bogus purchases from entities controlled by certain entry operators and therefore income of Rs.40,00,000 escaped assessment. The assessment order, however, proceeded on a different factual premise - the genuineness of a loan of Rs.40,00,000 from M/s. New Wave Commercial Pvt. Ltd. - and made additions treating it as unexplained cash credit. The Tribunal found this to be a material inconsistency: the subject matter on which the belief to reopen was recorded did not correspond with the item added in assessment. This demonstrated non application of mind and factual misconception in reopening after four years under the proviso to section 147. The objection to the notice under section 148 was not disposed of by a reasoned order addressing these discrepancies; in these circumstances the reopening was held invalid and unsustainable. [Paras 15]

Reopening of assessment was invalid as the reasons to believe did not align with the subject matter of the assessment and the reopening was founded on factual misconception and non application of mind; addition based on such reopening is unsustainable.

Proof under section 68 - identity, creditworthiness and genuineness of loan - Obligation to make independent inquiry before rejecting documentary evidence - Treatment of alleged accommodation entries/unexplained cash credit versus genuine inter corporate loan - Whether, on the merits, the loan of Rs.40,00,000 could be treated as unexplained cash credit or required deletion in view of documentary evidence - HELD THAT: - On the merits the assessee produced documents to satisfy the three ingredients of section 68: confirmation of the lender with PAN and address, ITR V and audited financials of the lender, bank statements, ledger entries, proof of interest and TDS, MCA master data and evidence of repayment through banking channels. The Assessing Officer did not undertake any independent enquiries (for example under section 133(6) or from the jurisdictional officer of the lender) nor produced contrary material to rebut these records, and merely relied on generalized information about entry operators. In absence of any such enquiry or contradictory material, and given repayment and TDS compliance, the Tribunal found the rejection of the loan's genuineness to be conjectural and unsustainable and therefore deleted the addition. [Paras 16, 17]

Addition of the loan amount (and related commission) was deleted as the assessee established identity, creditworthiness and genuineness of the transaction and the Assessing Officer failed to make independent inquiries or produce contrary evidence.

Final Conclusion: The appeal is allowed: the reopening under the proviso to section 147/notice under section 148 was invalid for being founded on facts different from those recorded in the reasons to believe and the addition treating the loan as unexplained cash credit is deleted on merits for lack of contrary enquiry or material.

Validity of notice under Section 148A(b) of the Income Tax Act - Requirement of foundational allegation for reassessment proceedings - Supplementary notice cannot be used to supply a missing foundational allegation - Quashing of proceedings under Section 148A(d) and Section 148 where notice is vitiated

Validity of notice under Section 148A(b) of the Income Tax Act - Requirement of foundational allegation for reassessment proceedings - The show cause notice issued under Section 148A(b) was invalid for want of a foundational allegation that income had escaped assessment or any specific allegation regarding source of investment. - HELD THAT: - The Court found that the impugned Section 148A(b) notice only recited transactions of purchase and sale of shares without any allegation that income had escaped assessment or any specific charge regarding the source of funds used by Manu Garments to purchase shares. The petitioner was not put to notice of the foundational concern relied upon in the subsequent order under Section 148A(d), and therefore was deprived of an effective opportunity to reply to the material basis of reassessment proceedings. In these circumstances the notice failed to satisfy the statutory requirement of setting out the foundational material that would give the assessee a proper occasion to answer the allegation of escapement of income. [Paras 2, 3, 4, 7]

The Section 148A(b) show cause notice was quashed as being vague and lacking the requisite foundational allegation.

Supplementary notice cannot be used to supply a missing foundational allegation - Distinction from cases where foundational allegation exists in original notice - A supplementary Section 148A(b) notice cannot be used to introduce or supply a foundational allegation that was entirely absent in the original notice; the case is distinguishable from instances where the original notice contained a specific foundational charge. - HELD THAT: - On instructions the Revenue conceded vagueness in the original notice and sought liberty to issue a supplementary notice. The Court held that where the foundational allegation is missing in the original notice, it cannot be cured by subsequently issuing a supplementary notice to supply that foundational material. The Court distinguished Mahashian Di Hatti (where a specific allegation was present in the original notice) as inapposite because there the foundational allegation existed and the supplementary particulars merely amplified it. [Paras 6, 8, 9]

The Assessing Officer was not permitted to cure the defect by issuing a supplementary notice to introduce the foundational allegation absent from the original notice.

Quashing of proceedings under Section 148A(d) and Section 148 where notice is vitiated - The order passed under Section 148A(d) and the notice under Section 148 were quashed because they proceeded on grounds not disclosed in the Section 148A(b) notice. - HELD THAT: - Because the Section 148A(b) notice did not put the petitioner on notice of the foundational concern (source of funds of Manu Garments), the subsequent order under Section 148A(d) and the notice under Section 148 could not validly stand. The Court therefore set aside the order and notice for the assessment year in question. The Court, however, preserved the Revenue's right to take further steps if permissible under law. [Paras 4, 10]

The order under Section 148A(d) and the notice under Section 148 were quashed; liberty granted to the Revenue to take further lawful steps.

Final Conclusion: Writ petition allowed; the Section 148A(b) show cause notice, the order under Section 148A(d) and the Section 148 notice for AY 2018-19 are quashed on the ground that the original notice lacked the requisite foundational allegation; Revenue may, if permitted by law, take further steps and the petitioner retains remedies in law.

Validity of notice issued under Section 153C of the Income Tax Act - Time barred notice under Section 143(2) of the Income Tax Act - Applicability of directions by Commissioner of Income Tax (Appeals) to issuance of notices under Section 153C - Effect of assessment orders being recorded as 'nil' on collateral objections to notices - Maintainability of writ petition where statutory appellate remedy is available

Validity of notice issued under Section 153C of the Income Tax Act - Applicability of directions by Commissioner of Income Tax (Appeals) to issuance of notices under Section 153C - Effect of assessment orders being recorded as 'nil' on collateral objections to notices - Objections to notices under Section 153C for AY 2011-12 to 2015-16 do not survive where assessment orders for those years have been finalised as 'nil'. - HELD THAT: - The Court recorded that assessment orders dated 31st January, 2022 have been placed on record and show that for AY 2011-12 to 2015-16 the assessment orders are 'nil'. In view of the finalisation of those assessments, the legal objections premised on absence of directions from the CIT(A) and on the petitioner's minority for those years are rendered academic and do not call for further consideration. The correctness of those assessments having been reflected in final orders negates the need to entertain collateral attacks to the notices for these years. [Paras 6]

Objections to notices for AY 2011-12 to 2015-16 dismissed as not surviving in light of 'nil' assessment orders.

Validity of notice issued under Section 153C of the Income Tax Act - Maintainability of writ petition where statutory appellate remedy is available - Challenge to assessment orders (demand assessed) for AY 2016-17 and AY 2017-18 is not adjudicated in the writ petition; petitioner must seek relief by filing the statutory appeal. - HELD THAT: - The Court noted that demand has been assessed against the petitioner for AY 2016-17 and AY 2017-18 under Section 153C and that those assessment orders are not the subject of adjudication in the present writ petition. The challenge to such assessment orders involves contested factual issues and a statutory remedy by way of appeal is available. Citing the principle that where adequate remedial machinery exists under the Act the High Court will not supplant that remedy by entertaining a writ, the Court declined to examine the merits and left the petitioner free to pursue appellate proceedings. [Paras 7, 8]

Writ petition will not decide merits of assessments for AY 2016-17 and AY 2017-18; petitioner to pursue statutory appeal.

Final Conclusion: Writ petition disposed of: objections to notices for AY 2011-12 to 2015-16 found academic in view of 'nil' assessment orders; assessments for AY 2016-17 and AY 2017-18 not adjudicated and petitioner directed to seek relief through the statutory appellate forum; other contentions left open for determination on appeal.

Faceless Assessment Scheme - principles of natural justice - pre-assessment show cause notice - opportunity of personal hearing - time-barred assessment - summons under Section 131

Faceless Assessment Scheme - principles of natural justice - pre-assessment show cause notice - opportunity of personal hearing - Whether the procedure adopted under the Faceless Assessment Scheme complied with principles of natural justice in issuing the show cause notice and providing opportunity of hearing. - HELD THAT: - The Court found that the procedure under the Faceless Assessment Scheme, as applied in this case, did not adhere to principles of natural justice. Although a show cause notice was uploaded and a summons under Section 131 was issued, the notice was signed on the same day it was dated and fixed a hearing for that evening, leaving only about three hours for the petitioner to prepare and attend. No separate intimation by message or otherwise was sent and the petitioner credibly asserted it was unaware of the notice and hearing. The fact that the assessment was time barred and required completion by the end of the year did not justify the inadequate opportunity afforded to the petitioner to present a proper defence. The Court thus concluded that the pre assessment procedure and the opportunity to be heard were vitiated by procedural unfairness. [Paras 2, 3, 4, 5, 6]

The impugned assessment order is set aside on the ground of failure to comply with principles of natural justice in the faceless pre assessment process.

Opportunity of personal hearing - portal enablement - time barred assessment - Remedial directions and scope of further proceedings following setting aside of the assessment. - HELD THAT: - Having set aside the assessment, the Court directed that the show cause notice, which has already been served, be responded to by the petitioner and that the respondents open/enable the portal to receive the petitioner's reply. Upon receipt of the reply, a link for personal hearing must be provided and the petitioner heard. The assessment is to be reopened and orders passed de novo. The Court recognised the time bound nature of the assessment process but imposed a clear timetable for completion of the entire exercise from portal opening to passing of orders. [Paras 7, 8]

Respondents shall enable the portal, accept the petitioner's response, provide a link for personal hearing, hear the petitioner and pass assessment orders de novo within twelve weeks from receipt of a copy of the Court's order.

Final Conclusion: Writ petition allowed; assessment order for 2017-18 set aside for violation of principles of natural justice under the Faceless Assessment Scheme; respondents to enable portal, receive reply, grant personal hearing and pass fresh assessment orders de novo within twelve weeks; no costs.

Minimum seven days' notice under Section 148A(b) - mandatory duty to consider reply under Section 148A(c) - reasoned order under Section 148A(d) - reopening notice under Section 148

Minimum seven days' notice under Section 148A(b) - Validity of the show cause notice dated 19th March, 2022 requiring reply within six days in view of the statutory requirement of not less than seven days under Section 148A(b). - HELD THAT: - The Court found that the impugned show cause notice required the petitioner to file a reply by 25th March, 2022, i.e., within six days. Section 148A(b) mandates that the assessee must be given a period of not less than seven days to file a reply to the notice. By giving a shorter period the respondents failed to meet the statutory requirement in clause (b) of Section 148A. The defect in the notice therefore rendered it contrary to the mandatory timeline prescribed by Section 148A(b). [Paras 5]

The notice dated 19th March, 2022 was invalid for not affording the statutory minimum period of seven days and the requirement of Section 148A(b) was not satisfied.

Mandatory duty to consider reply under Section 148A(c) - reasoned order under Section 148A(d) - reopening notice under Section 148 - Whether the order dated 30th March, 2022 under Section 148A(d) and the subsequent notice under Section 148 were passed after considering the petitioner's reply dated 29th March, 2022, as required by Section 148A(c). - HELD THAT: - The Court recorded that the petitioner filed a detailed reply with supporting documents on 29th March, 2022, prior to the passing of the order dated 30th March, 2022. Section 148A(c) uses the word 'shall' and therefore casts a mandatory duty on the Assessing Officer to consider the assessee's reply to the notice under Section 148A(b) before making an order under Section 148A(d). The impugned order erroneously stated that no response had been submitted and did not consider the reply available on record. For these reasons the mandate of Section 148A(c) was violated. In consequence the order under Section 148A(d) and the notice under Section 148 were set aside and the matter was remitted for fresh consideration. The court directed that the submission filed on 29th March, 2022 be taken on record and that a reasoned order be passed in accordance with law within eight weeks. [Paras 6, 7]

The order dated 30th March, 2022 under Section 148A(d) and the notice dated 30th March, 2022 under Section 148 are set aside; the Assessing Officer must take the 29th March, 2022 reply on record and pass a reasoned order in accordance with law within eight weeks.

Final Conclusion: Writ petition allowed in part; impugned order under Section 148A(d) and notice under Section 148 set aside and matter remitted with directions to consider the petitioner's reply and pass a reasoned order within eight weeks.

Deduction available to cooperative societies under section 80P in respect of interest income from bank deposits - Interpretation and application of precedents by coordinate Benches - Conflict of authority between High Courts on availability of section 80P deduction for interest from banks

Deduction available to cooperative societies under section 80P in respect of interest income from bank deposits - Conflict of authority between High Courts on availability of section 80P deduction for interest from banks - Assessee entitled to deduction under section 80P for interest earned on deposits with banks for Assessment Year 2017-18. - HELD THAT: - The Tribunal considered the question whether interest income from deposits with financial institutions other than cooperative societies is eligible for deduction under section 80P claimed by a cooperative society. Noting divergent views of High Courts (including a view permitting the deduction and another denying it) and reliance placed on decisions of the Pune Benches of the Tribunal which had followed the view favourable to assessee, the Tribunal found no binding contrary decision of the jurisdictional High Court. Applying the coordinate-Bench precedent approach and following the favorable view adopted in earlier Tribunal and the Hon'ble Karnataka High Court decision relied upon, the Tribunal set aside the denial of the deduction by the authorities and allowed the claim.

Impugned order denying section 80P deduction on interest from bank deposits is overturned and the deduction is allowed; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal of the assessee for AY 2017-18, holding that interest earned on bank deposits is eligible for deduction under section 80P as adopted by the Tribunal and the favorable High Court authority relied upon, and set aside the denial by the revenue.

Assessment under search and seizure proceedings under section 153A - unexplained expenditure under section 69C - principles of natural justice - reliance on seized documents recovered from third party premises - onus of production and failure to rebut assessments based on seized material

Assessment under search and seizure proceedings under section 153A - principles of natural justice - reliance on seized documents recovered from third party premises - Validity of assessment proceedings initiated under search and seizure and whether the assessee was denied principles of natural justice or opportunity to represent his case. - HELD THAT: - The Tribunal considered the identical procedural grounds raised for both assessment years that assessment was bad in law because no pending assessment existed on date of search and that natural justice was violated by inadequate opportunity. The authorities recorded factual findings and the assessee failed to produce any material to substantiate these procedural objections. The Tribunal, on perusal of the record and the orders below, found no merit in the contentions and affirmed the findings of the lower authorities. As the assessee did not adduce evidence to rebut or demonstrate prejudice from any procedural lapse, the pleas were rejected. [Paras 9, 19]

Procedural grounds and plea of violation of principles of natural justice dismissed and assessment proceedings upheld.

Unexplained expenditure under section 69C - reliance on seized documents recovered from third party premises - onus of production and failure to rebut assessments based on seized material - Sustenance of additions treated as unexplained expenditure under section 69C on the basis of seized documents and whether the assessee furnished a credible explanation. - HELD THAT: - The Tribunal examined the assessment officer's factual findings assessing unexplained expenditure by reference to seized loose papers showing a uniform pattern of entries and the AO's confrontation of the assessee with those documents. The assessee did not bring forward any material to rebut the AO's analysis or to explain the entries; the lower authorities' reasoning (including the reproduction of AO's findings regarding the pattern in seized documents and the assessee's inadequate reply) was accepted. For the second assessment year the Tribunal followed the same consistent view. In the absence of any contrary evidence or acceptable explanation from the assessee, the additions were rightly sustained as unexplained expenditure under section 69C. [Paras 10, 12, 13, 19]

Additions on account of unexplained expenditure under section 69C affirmed.

Final Conclusion: Both appeals by the assessee for Assessment Years 2007-08 and 2011-12 are dismissed; the orders of the authorities below upholding assessments and additions under section 69C are affirmed.

Reopening of assessment under section 148 - reason to believe - non-application of mind - accommodation entries - reopening quashed for lack of material

Reopening of assessment under section 148 - reason to believe - non-application of mind - Validity of reopening assessment for AY 2007-08 - HELD THAT: - The Tribunal examined the reasons recorded by the Assessing Officer and the material available at the time of issuance of notice under section 148. The recorded reasons consisted essentially of a letter and a list of names forwarded by the CIT (Central) indicating alleged accommodation entries; the AO did not possess statements, assessment orders or other contemporaneous material to form an independent belief that income had escaped assessment. The Tribunal applied the established test that 'reason to believe' requires an honest and reasonable belief based on relevant material and an application of mind by the AO, and relied on binding and persuasive precedents where reopenings were quashed for being founded on vague information or mechanical acceptance of directions from investigation authorities. On the facts, the AO's reasons did not disclose the process of reasoning, lacked nexus with material in his possession and showed non-application of mind; consequently the initiation of proceedings under section 147/148 was invalid and the reassessment was quashed. [Paras 10, 11, 12, 13, 16]

Reopening for AY 2007-08 quashed for want of application of mind and inadequate reasons; reassessment held invalid.

Accommodation entries - addition under section 69C - Treatment of purchases as bogus and consequent addition under section 69C (merits not adjudicated due to quash of reassessment) - HELD THAT: - The Assessing Officer made additions treating certain purchases as accommodation/bogus entries and assessed under section 69C. However, having quashed the reopening itself on jurisdictional grounds, the Tribunal did not adjudicate the substantive correctness of those additions. The order follows earlier decisions of the Tribunal on similar fact patterns which had set aside reassessments and, where applicable, deleted analogous additions; nonetheless, in the present appeal the Tribunal expressly stated that it need not and did not examine the merits after quashing the reassessment. [Paras 17, 18]

Substantive question of genuineness of purchases and additions under section 69C not decided as reassessment was quashed; merits left unadjudicated.

Final Conclusion: The reassessment proceedings for Assessment Year 2007-08 were quashed for lack of application of mind and inadequate reasons to form 'reason to believe' under section 147/148; consequentially the appeal is allowed and the substantive additions were not adjudicated.

Pecuniary jurisdiction - CBDT Instruction No.1/2011 binding on the department - invalidity of assessment for lack of jurisdiction - territorial jurisdiction under Section 124(3) is distinct from pecuniary jurisdiction - requirement to record reasons for transfer under Section 127(1)

Pecuniary jurisdiction - CBDT Instruction No.1/2011 binding on the department - invalidity of assessment for lack of jurisdiction - requirement to record reasons for transfer under Section 127(1) - Assessment framed by Income Tax Officer, Ward 2(2), Bhilai u/s.143(3) dated 30.03.2015 was validly passed despite CBDT Instruction No.1/2011 assigning pecuniary jurisdiction to ACs/DCs - HELD THAT: - The Tribunal found that the assessee, a non corporate resident of a mofussil area, filed return declaring income of Rs.19,07,440 for A.Y.2012 13, and that CBDT Instruction No.1/2011 (effective 01.04.2011) vests pecuniary jurisdiction for non corporate returns with returned income above Rs.15 lakhs in ACs/DCs. Although initial notices were issued by the Dy. CIT who had jurisdiction, the final assessment was framed by ITO, Ward 2(2), Bhilai who, on the admitted facts, was divested of pecuniary jurisdiction by the said instruction. The Tribunal held that departmental authorities are bound by CBDT instructions and cannot act contrary thereto; consequently assumption of jurisdiction by an officer not empowered under the instruction renders the assessment invalid. The Tribunal rejected the Revenue's reliance on Section 124(3) (which pertains to territorial jurisdiction) as inapplicable to objections based on pecuniary jurisdiction and observed that no transfer having been shown under Section 127(1) with recorded reasons, the change of officer could not be justified. Accordingly, the assessment framed by the non jurisdictional officer was quashed for want of valid assumption of jurisdiction. [Paras 13, 14, 15, 16, 17]

Assessment order u/s.143(3) dated 30.03.2015 is quashed as having been framed by an officer who lacked pecuniary jurisdiction under CBDT Instruction No.1/2011.

Other grounds left open - Whether the other substantive grounds on merits were adjudicated by the Tribunal - HELD THAT: - Having quashed the assessment for lack of jurisdiction, the Tribunal refrained from adjudicating the assessee's remaining grounds (relating to allocation of share in sold property, computation of sale consideration, disallowance of stamp duty, claims of cost of acquisition/improvement, claim under section 54F, house loan interest, and house property income allocation) and left them open for consideration in further proceedings following valid assessment. The Tribunal therefore did not decide these substantive issues on merits. [Paras 18]

Other grounds raised by the assessee are left open and not adjudicated.

Final Conclusion: The appeal is allowed: the assessment order dated 30.03.2015 passed by the Income Tax Officer, Ward 2(2), Bhilai is quashed for want of pecuniary jurisdiction in light of CBDT Instruction No.1/2011; other substantive grounds remain open for adjudication in further proceedings.

Rejection of books of account u/s.145(3) - substitution of yield for computing suppressed production - disallowance under section 14A read with Rule 8D - independence of assessment year and annual variation in yield - requirement of incriminating material for imputing unaccounted production

Disallowance under section 14A read with Rule 8D - interest-bearing funds and interest-free funds presumption - Whether disallowance under section 14A read with Rule 8D was warranted for A.Y.2013-14 - HELD THAT: - The Tribunal upheld the CIT(Appeals) in holding that no disallowance under section 14A read with Rule 8D was called for because the assessee had not earned any exempt income during the year under consideration. The Bench relied on settled judicial authority recognising that in absence of exempt income disallowance u/s 14A is not warranted, and alternatively accepted the appellant's contention that available interest-free funds exceeded investments yielding exempt income so as to preclude disallowance. The reasoning was reinforced by reference to precedents dealing with allocation of interest-bearing and interest-free funds and the principle that no disallowance arises where exempt income is nil or where interest-free funds suffice to cover exempt-income-producing investments. [Paras 13]

Disallowance u/s.14A r.w. Rule 8D of Rs.10,44,025/- vacated; Ground No.3 dismissed.

Rejection of books of account u/s.145(3) - substitution of yield for computing suppressed production - independence of assessment year and annual variation in yield - requirement of incriminating material for imputing unaccounted production - Whether the Assessing Officer could reject the assessee's books u/s.145(3) and adopt a higher yield (89%) to quantify suppressed production for A.Y.2013-14 - HELD THAT: - The Tribunal concurred with the CIT(Appeals) that the AO was not justified in rejecting the assessee's audited books of account solely because the reported yield (85%) and profitability for the year were lower than yields adopted in earlier block assessments. The Bench emphasised that each assessment year must be considered on its own facts and that no defect or irregularity in books, vouchers or excise/VAT returns had been pointed out by the AO to warrant rejection u/s.145(3). Further, the adoption of 89% yield by the AO for A.Y.2013-14 was traced to his predecessor's view in earlier block assessments which had been vacated on appeal; identical additions in group companies had also been set aside. In absence of incriminating seized material establishing unaccounted production for the year under consideration, substituting the assessee's declared yield with the previously adopted 89% was held to be unsustainable and the addition quantified on that basis was vacated. [Paras 15, 16, 17, 18]

Rejection of books u/s.145(3) set aside and the addition made by substituting yield at 89% vacated; Grounds Nos.1 & 2 dismissed.

Final Conclusion: The departmental appeal is dismissed: the disallowance under section 14A r.w. Rule 8D is vacated and the AO's rejection of books and addition by adopting 89% yield for SMS/CCM for A.Y.2013-14 is set aside; the general ground is dismissed as not pressed.

Dependent Agent Permanent Establishment - Attribution of profits to Permanent Establishment - Arm's length remuneration and transfer pricing extinguishing further attribution - Royalty for use of commercial or scientific equipment - Fees for technical services - "make available" clause - Notional income and taxability in absence of adverse transfer pricing determination - Base erosion

Arm's length remuneration and transfer pricing extinguishing further attribution - Attribution of profits to Permanent Establishment - Whether, where the associated enterprise (AE) has been remunerated at arm's length (no adverse transfer pricing adjustment survives), any further attribution of profit to the alleged PE of the non-resident is permissible - HELD THAT: - The Tribunal accepted the assessee's undisputed position that either no transfer pricing adjustment was made in the assessment of the Indian AE or any adjustment was deleted by the TPO/ITAT. Relying on the principle in the cited precedents, once transactions between the AE and the non-resident are found to be at arm's length by the transfer pricing process (or adjustments do not survive), there is no scope for additional attribution to the alleged PE of the non-resident. In that factual matrix the need for attribution is extinguished and attribution of income to the alleged PE cannot be sustained. [Paras 21, 22, 23]

Attribution to the alleged PE was disallowed because the AE's transactions stood at arm's length and no transfer pricing adjustment survived.

Royalty for use of commercial or scientific equipment - Fees for technical services - "make available" clause - Whether the receipts of the assessee from Ariba India fall within 'royalty' under Article 12(3)(b) of the India US DTAA and Explanation 2(iva) to section 9(1)(vi), or within fees for technical services under the DTAA - HELD THAT: - The Tribunal examined the nature of the contractual relationship and the service rendered. It held that the assessee provided standardized online auction services and merely granted access to its platform; at no time did Ariba India or its clients obtain control, possession or an exclusive right to use the assessee's equipment. The Tribunal applied the principle that where the contract is primarily for services and the payer does not obtain control of equipment or an enduring transfer of know how, consideration is not equipment royalty nor FTS under the 'make available' requirement. The Tribunal rejected the CIT(A)'s view that provision of userid/password amounted to control of equipment and accepted that no technical knowledge or know how was made available to the payor. [Paras 26, 27, 28, 29, 30]

Receipts from Ariba India are not taxable as 'royalty' under Article 12(3)(b) nor as fees for technical services under the DTAA/Act.

Notional income and taxability in absence of adverse transfer pricing determination - Dependent Agent Permanent Establishment - Whether the Revenue can tax notional income in the hands of the non-resident (i.e., ignore the amended agreement and assess on a notional percentage) where there is no adverse determination by the transfer pricing authority - HELD THAT: - The Tribunal noted that for several assessment years the CIT(A) had held that the AO was not justified in taxing notional income in the absence of an adverse transfer pricing determination by the TPO and that the Revenue did not appeal those orders. Applying that position consistently, and having regard to precedents that a legitimately executed amended agreement cannot be disregarded unless shown to be colourable, the Tribunal held that notional income cannot be taxed in the hands of the non resident where actual payments and the absence of an adverse TP finding are on record. [Paras 32, 33]

Taxation of notional income in the hands of the assessee was disallowed; only actual payments could be taxed in the absence of an adverse TP determination or proof that agreements were a sham.

Base erosion - Whether non taxability of the non-resident in India resulted in base erosion of the Indian tax base - HELD THAT: - The Tribunal accepted the assessee's factual submission that Ariba India retained the majority of revenues, offered those to tax in India, and remitted only a small percentage to the non resident. On these facts the Tribunal held there was no base erosion attributable to non taxability of the non resident. [Paras 17, 31]

There was no base erosion on the facts of the case.

Final Conclusion: All appeals were partly allowed: attribution of additional profits to the alleged PE was rejected because the AE's transactions stood at arm's length and no TP adjustments survived; receipts from Ariba India were held not to be 'royalty' nor FTS under the DTAA/Act; taxation of notional income in the hands of the assessee was disallowed in the absence of an adverse TP determination and where the amended agreement was not shown to be a sham; and there was no base erosion. Remaining or academic grounds were not adjudicated.

Deemed income u/s 69A - application of section 115BBE - explanation of cash deposits as source - benefit under CBDT instruction for cash retained during demonetisation

Deemed income u/s 69A - explanation of cash deposits as source - benefit under CBDT instruction for cash retained during demonetisation - Validity of addition of Rs.10,65,000 as unexplained cash deposits in bank account and related explanation of source - HELD THAT: - The Tribunal examined the assessee's bank statements, Jamabandi and Girdawari, records of prior withdrawals and a gold loan disbursement offered to explain the cash deposited during the demonetisation period. The Assessing Officer had accepted only Rs.2,15,000 as explained and taxed the balance as unexplained deposit under the deeming provision. On review of the documentary material and written submissions - including reliance on CBDT instruction(s) permitting specified amounts to be retained during demonetisation and prior withdrawals shown in the bank records - the Tribunal found that the assessee had satisfactorily explained the source of the deposits. The Revenue did not controvert the documentary facts before the Tribunal. Consequently the addition treated as unexplained cash deposit was held unsustainable and quashed.

The addition of Rs.10,65,000 treated as unexplained cash deposit under section 69A is deleted.

Application of section 115BBE - deemed income u/s 69A - Applicability of section 115BBE to the addition made under section 69/69A - HELD THAT: - The Tribunal considered the contention on attraction of the special tax provision but noted that invocation of section 115BBE requires specific findings on applicability of the relevant deeming provisions. Relying on persuasive treatment in allied decisions, the Tribunal observed that section 115BBE was not a relevant consequence in the facts of the present case once the addition under the deeming provisions was not sustained. No separate or specific factual finding justified application of section 115BBE.

Section 115BBE was held not relevant and not applied.

Final Conclusion: The appeal is allowed: the addition of Rs.10,65,000 as unexplained cash deposit is quashed and the provision of section 115BBE is not attracted.

Appeal maintainability under Section 129A - appeal against suspension or revocation of customs broker licence - regulatory restriction on person aggrieved under Regulation 21 - rule-making power under Section 146(2)(g) - limited scope of "any person aggrieved" in context of licensing

Appeal maintainability under Section 129A - appeal against suspension or revocation of customs broker licence - regulatory restriction on person aggrieved under Regulation 21 - Whether the revenue could prefer an appeal under Section 129A of the Customs Act, 1962 against the Commissioner's order setting aside the suspension of a customs broker's licence, having regard to Regulation 21 of the Customs Broker Licensing Regulations, 2013 and Section 146(2)(g) of the Act. - HELD THAT: - The Court held that Regulation 21, made under the Board's rule making power in Section 146(2)(g), confines appeals in licensing matters to appeals by a Customs Broker against orders of suspension or revocation of licence and expressly links such appeals to Section 129A. Reading Section 129A together with Section 146(2)(g) and Regulation 21 shows that the right to appeal in this regulatory context is restricted to the licence holder who is aggrieved by suspension or revocation. Consequently, the expression "any person aggrieved" in Section 129A cannot be read expansively to permit the revenue to challenge, before the Tribunal, an order of the Commissioner revoking or setting aside a suspension of a broker's licence. The Court endorsed the reasoning of the coordinate bench in Falcon India and the Division Bench of the Bombay High Court in DHL Express that statutory provisions may validly restrict the class of persons entitled to appeal and that Regulation 21 constitutes such a restriction; therefore the revenue's appeal was not maintainable. [Paras 13, 16, 17]

Appeal by the revenue under Section 129A against the Commissioner's order revoking the suspension of the customs broker's licence is not maintainable; the Tribunal's dismissal was correct.

Final Conclusion: The appeal is dismissed. The Tribunal correctly held that, read with Section 146(2)(g) and Regulation 21 of the 2013 Regulations, appeals under Section 129A in matters of customs broker licences are confined to appeals by the broker against suspension or revocation; the revenue cannot prefer such an appeal. An SLP against the coordinate bench decision noted in the judgment is pending.

Confiscation and redemption fine - adjustment of redemption fine against sale proceeds - vesting of confiscated goods in the Government - sale of confiscated goods during pendency of appeal - imposition and adjustment of penalty under Section 112 of the Customs Act - right to redeem confiscated goods

Sale of confiscated goods during pendency of appeal - vesting of confiscated goods in the Government - Lawfulness of the revenue's sale of confiscated goods while the assessee's appeal before the Commissioner (Appeals) was pending. - HELD THAT: - The court found that the revenue sold the marble blocks in May-June 2013 while the appeal filed on 25.03.2013 remained pending before the Commissioner of Customs (Appeals). That sale, occurring prior to final disposal of the appeal, was contrary to law. Although confiscation vests title in the Government, the timing of the sale-during the pendency of the appellate proceedings-was improper and is a material factor in assessing consequent rights and adjustments. [Paras 18]

Sale of the confiscated goods by the revenue during the pendency of the appeal was contrary to law.

Adjustment of redemption fine against sale proceeds - confiscation and redemption fine - right to redeem confiscated goods - Whether redemption fine can be adjusted against the sale proceeds after the revenue has sold the confiscated goods. - HELD THAT: - The court held that redemption fine is a mode to redeem the goods and presupposes availability of the goods (or sale proceeds upon a request for redemption). In the present case the goods had already been sold and, in the circumstances (including that the sale occurred while the appeal was pending), there is no good reason to permit adjustment of the redemption fine against the sale proceeds. Consequently, the larger bench's view permitting such adjustment was not accepted. [Paras 24, 26, 27]

Redemption fine cannot be adjusted against the sale proceeds once the goods have been sold; the Tribunal's contrary view is set aside.

Imposition and adjustment of penalty under Section 112 of the Customs Act - Whether penalty and auction-related charges could be adjusted from the sale proceeds. - HELD THAT: - The court recognised that imposition of penalty under Section 112 of the Customs Act is independent of a request for redemption and that adjustment of penalty and legitimate charges connected to sale (such as auction costs) against sale proceeds was a logical outcome. The record shows the revenue adjusted penalty and auction charges before remitting the balance to the appellant, which the court found to be appropriate in the circumstances. [Paras 21, 23]

Adjustment of penalty and sale-related charges against sale proceeds is permissible; such adjustments made by the revenue were appropriate.

Final Conclusion: The Tribunal's larger bench decision permitting adjustment of the redemption fine against the sale proceeds is set aside. The sale of the confiscated goods by the revenue during pendency of the appellant's appeal was contrary to law; redemption fine cannot be adjusted against sale proceeds in these circumstances, although adjustment of penalty and legitimate sale-related charges is permissible.

Classification of goods as toys versus collectibles - Import policy compliance under Policy Condition No. 2 of ITC (HS), 2017 - Requirement of Bureau of Indian Standards certification and testing for toys - Scope and effect of revised Policy Condition No.2(iii) - random sampling

Classification of goods as toys versus collectibles - Imported scale models classified as toys and not as collectibles for exclusion from toy standards. - HELD THAT: - The authorities below found from the product manual and the physical characteristics (movable wheels, ability to be detached from stand and used without supervision) that the car models could be used by children under 14 years and were labelled/intended as toy cars. The High Court upheld the conclusion that the items are toys and not collectible items excluded from the toy standards, declining the appellant's contention that ISO 8124 exclusion for collectibles applied.

The classification as toys was sustained and the claim of 'collectible' exemption was rejected.

Import policy compliance under Policy Condition No. 2 of ITC (HS), 2017 - Requirement of Bureau of Indian Standards certification and testing for toys - Import of the goods was subject to satisfaction of all elements of Policy Condition No.2, including BIS conformity and testing certificates, and the Tribunal's remand to ensure compliance was upheld. - HELD THAT: - Chapter 95, Schedule-1 (Import Policy) prescribes that toys under the specified EXIM codes must be accompanied by certificates of conformity to the BIS standards and a certificate linking tested representative samples. The CESTAT remanded the matter on the ground that Policy Condition No.2 had not been fulfilled in the present case. The High Court found no error in the Tribunal's conclusion that the policy conditions must be complied with and that remand for satisfaction of those conditions did not call for interference.

Requirement to comply with Policy Condition No.2 (BIS conformity and testing obligations) was affirmed and the remand was held justified.

Scope and effect of revised Policy Condition No.2(iii) - random sampling - Revised Policy Condition No.2(iii) contemplates random pick of a single sample from each consignment for NABL testing, alleviating concern of mass destruction of imported models. - HELD THAT: - The revised Policy Condition No.2(iii) (Notification No.33/2015-2020) replaces a manufacturer certificate requirement with a procedure for random sampling from each consignment to be sent to NABL-accredited labs. The Court observed that the language envisages a randomly picked 'sample' (singular) from each consignment rather than sampling each type/model, and therefore the appellant's apprehension about wholesale destruction of the consignment was unfounded. This interpretation supports the Tribunal's approach requiring testing under the revised procedure.

The revised sampling procedure contemplates a single random sample per consignment and does not justify the appellant's claim of unavoidable substantial destruction; the authorities' insistence on testing under the revision was sustained.

Final Conclusion: The High Court dismissed the appeal, upholding the Tribunal's remand and the conclusion that the imported scale models are toys subject to Policy Condition No.2 (including BIS conformity and testing); the revised sampling regime contemplates a single random sample per consignment and the appellant's objection to testing was rejected.

Deemed conclusion of proceedings under Section 28(2) of the Customs Act - classification as Rubber Processing Oil versus Plasticizer (Customs Tariff headings) - confiscation and redemption fine in lieu of confiscation - imposition of penalty under Section 112(a) and Section 114A - applicability of departmental circulars vis-a -vis statutory provision - provisions of Sections 135, 135A and 140 preserved without prejudice

Deemed conclusion of proceedings under Section 28(2) of the Customs Act - provisions of Sections 135, 135A and 140 preserved without prejudice - Effect of payment of duty, interest and penalty on conclusion of proceedings under Section 28(2) of the Customs Act - HELD THAT: - The Tribunal examined sub-section (2) of Section 28 and held that it is a beneficial provision which deems proceedings to be conclusive where the person on whom a notice is served has paid the duty together with interest and penalty. The provision applies even where the demand arises from collusion, wilful mis-statement or suppression, provided the person accepts and pays the amount. The adjudicating authority recorded that the appellant had paid duty, interest and penalty; therefore the authority erred in not treating the proceedings as concluded under Section 28(2). The Tribunal also noted that the ''without prejudice'' saving of Sections 135, 135A and 140 does not operate to defeat the deemed conclusion where those provisions were not invoked in the show cause notices. The legislative intent to give a litigant the benefit of the deemed-conclusion mechanism must be given effect rather than negated by a narrow construction. [Paras 8]

Proceedings are deemed concluded under Section 28(2) as the appellant paid duty with interest and penalty and the impugned order is set aside on that ground.

Applicability of departmental circulars vis-a -vis statutory provision - confiscation and redemption fine in lieu of confiscation - Whether the departmental circular relied upon by the adjudicating authority could override the statutory deemed-conclusion or exclude the main importer from its scope - HELD THAT: - The Tribunal held that the departmental circular relied upon by the adjudicating authority was merely clarificatory concerning co-noticees and cannot supplant or override the statutory scheme. The circular's exclusion of certain categories does not avail the Department in the face of an express statutory provision; circulars cannot be used to frustrate the beneficial legislative intent. As the circular did not displace the statutory operation of Section 28(2) in respect of the main importer, reliance on the circular did not justify denying deemed conclusion. The Tribunal further observed that legislative prescriptions govern the manner and effect of deeming and cannot be supplemented so as to deprive the assessee of the statutory benefit. [Paras 8]

The circular relied upon is not applicable to negate the statutory deemed-conclusion under Section 28(2) in respect of the main importer; it cannot override the statute.

Final Conclusion: The impugned adjudication order is set aside and the appellants are granted the benefit of deemed conclusion of proceedings under Section 28(2) of the Customs Act, 1962, since they had paid the duty, interest and penalty as required; both appeals are allowed with consequential benefits in accordance with law.

Pre-deposit under Section 35F of the Central Excise Act, 1944 - automatic dismissal for non-compliance of pre-deposit condition - extension of pre-deposit time by higher courts - contumacious non-compliance as ground for dismissal - balancing undue hardship and interest of revenue

Pre-deposit under Section 35F of the Central Excise Act, 1944 - automatic dismissal for non-compliance of pre-deposit condition - extension of pre-deposit time by higher courts - contumacious non-compliance as ground for dismissal - Whether the appeal should be dismissed for non-compliance with the Tribunal's pre-deposit direction confirmed by the High Court and Supreme Court. - HELD THAT: - The Tribunal's original order dated 03.06.2011 required a pre-deposit of Rs.50 lakhs as a condition for hearing the appeal, and specifically warned that non-deposit would result in automatic dismissal. That direction was maintained by the High Court and the Special Leave Petition dismissed by the Supreme Court, which nevertheless extended time for deposit until 31.10.2013. Despite these orders and repeated opportunities, the appellant failed to make the pre-deposit over a period exceeding eleven years. The Tribunal recorded that the appellant's deliberate refusal to comply, including multiple unsuccessful attempts to avoid deposit and subsequent litigation, manifested contumacious conduct. Given the confirmed pre-deposit requirement, the recorded warning of automatic dismissal, the higher courts' refusal to disturb the condition (subject to extended time), and persistent non-compliance, the Tribunal concluded that dismissal was the only available course. [Paras 2, 6, 7, 8, 9]

Appeal dismissed for non-compliance with the confirmed pre-deposit direction.

Final Conclusion: The appeal was dismissed for failure to comply with the Tribunal's pre-deposit condition of Rs.50 lakhs, a requirement upheld by the High Court and the Supreme Court; persistent non-deposit and contumacious conduct justified dismissal without further adjudication on the merit of the appeal.

Classification of telecommunication antenna - parts versus complete apparatus - binding nature of Board circulars - precedent and coordinate bench rule - customs classification under Heading 85.17

Classification of telecommunication antenna - parts versus complete apparatus - customs classification under Heading 85.17 - Antenna for base station imported by the appellant are classifiable as parts under CTH 8517 70 90 and not as machines/apparatus under CTH 8517 62 90. - HELD THAT: - The Tribunal examined the technical character of the imported antennas and the applicable HSN/Chapter Notes and found that the goods are passive elements which cannot perform independently and only transmit or receive signals when connected to a base station. The panel noted precedent in favour of classification as parts by a coordinate CESTAT bench in Reliance Jio Infocomm and observed absence of persuasive technical evidence from Revenue to establish that the impugned antennas perform functions of conversion, regeneration, switching or routing independently. The Tribunal also considered the Board circular relied upon by the Revenue but held that the coordinate bench decisions and the factual demonstration of the passive nature of the imported items dictated classification as parts; the pendency of Revenue's appeal to the Supreme Court did not attract a stay or admission that would require deferring the present decision. Applying Section/Note rules governing parts in Section XVI and the HSN explanatory notes for Heading 85.17, the Tribunal concluded that the antennas fall within the "Parts" entry of the heading and not within the sub-heading for machines/apparatus capable of independent operation. [Paras 4, 5]

Appeal allowed; assessment reclassification reversed and antennas held classifiable under CTH 8517 70 90 as parts.

Final Conclusion: The appeal is allowed: the Tribunal held that the imported antennas for base stations are passive parts classifiable under CTH 8517 70 90 and not as independent machines under CTH 8517 62 90, and directed in accordance with that classification.

Dispensation of shareholders' meeting - merger of wholly owned subsidiary with holding company - effect on shareholders' rights and dilution - net-worth and creditors' protection as ground for dispensation - precedent binding on coordinate Benches - prima-facie interference with NCLT order

Dispensation of shareholders' meeting - merger of wholly owned subsidiary with holding company - effect on shareholders' rights and dilution - Whether the convening of the meeting of shareholders of the Transferee Company could be dispensed with in a scheme of arrangement involving merger of wholly owned subsidiaries into their holding company where no new shares are issued, shareholders' rights are not affected and the transferee's net worth remains positive. - HELD THAT: - The Tribunal examined the admitted facts that both Transferor Companies are wholly owned subsidiaries of the Transferee Company, no new shares are to be issued, the scheme does not reorganise the share capital or affect shareholders' rights, the transferee's net worth would remain highly positive post amalgamation, and affidavits evidencing consent of more than 90% of shareholders were on record. Relying on earlier decisions of this Tribunal and the High Courts treating identical fact situations, the Tribunal held that where a merger involves a wholly owned subsidiary and the holding company and there is no dilution of shareholding or adverse effect on creditors or members, the convening of meetings of shareholders and creditors may be dispensed with. The Tribunal further held that the NCLT erred in refusing dispensation without addressing the consistent precedents and that a coordinate Bench must follow established bench to bench precedent or refer the matter to a larger Bench. Applying these principles to the facts, the Tribunal found a prima facie case for interference and set aside the NCLT order directing convening of the shareholders' meeting. [Paras 14, 15, 16, 26, 27]

Order of NCLT dated 08.06.2022 is set aside and convening of the meeting of shareholders of the Transferee Company is dispensed with.

Final Conclusion: Appeal allowed; the NCLT order directing convening of the Transferee Company's shareholders' meeting is set aside and the meeting is dispensed with; no order as to costs and pending applications are closed.

Fraudulent trading - requirement of specific material facts to plead fraudulent intention - claim of ownership subject to full payment of contract price - maintainability of post-approval applications against the resolution professional - limited role and mandate of the resolution professional during CIRP and effect of approval of resolution plan - direction to deliver goods/assets during insolvency process

Fraudulent trading - requirement of specific material facts to plead fraudulent intention - Whether the application invoking the doctrine of fraudulent trading could succeed against the respondents - HELD THAT: - The Tribunal upheld the Adjudicating Authority's finding that to invoke the mischief of fraudulent trading specific material facts showing that the persons knowingly carried on the business with the corporate debtor with a dishonest intention to defraud creditors must be pleaded and proved. The Resolution Professional/Applicant had only made allegations about sums payable and had failed to adduce documentary material or particularize facts demonstrating dishonest intent. On that basis the Adjudicating Authority correctly held that the ingredients necessary for Section 66(1) were not established and dismissed the application. The Tribunal noted the distinction between preferential/undervalued transactions and fraudulent/wrongful trading and that different enquiries and consequences follow each head, reinforcing that mere allegations without specific material are insufficient to attract fraudulent trading liability. [Paras 24, 25]

Application seeking relief under fraudulent trading was dismissed for failure to plead and prove dishonest intention; Section 66(1) could not be invoked on the material before the Adjudicating Authority.

Claim of ownership subject to full payment of contract price - maintainability of post-approval applications against the resolution professional - limited role and mandate of the resolution professional during CIRP and effect of approval of resolution plan - direction to deliver goods/assets during insolvency process - Whether the application directing the Resolution Professional to deliver one WEC to the appellant was maintainable after approval of the resolution plan and where the respondent alleged outstanding contractual dues - HELD THAT: - The Tribunal agreed with the Adjudicating Authority that the appellant's claim to immediate delivery rested on ownership which was conditional upon full payment under the contract. The Resolution Professional's case, supported by the accounts, was that full contractual payment had not been made and a substantial sum remained due and was chargeable to creditors; accordingly the RP asserted a right to recover that sum, including contractual interest. Further, the Tribunal observed that the RP's mandate is confined to the CIRP period and that, post approval of the resolution plan, the RP's capacity to direct or effect transfer inconsistent with the rights of the corporate debtor or of the newly constituted management is limited. Given the appellant's failure to establish an unqualified ownership free of the contractual payment condition and in view of the stand that dues remained unpaid, the relief seeking a direction to hand over the WEC was not maintainable and the application was liable to be dismissed. [Paras 20, 24, 26]

Application for direction to the Resolution Professional to deliver the WEC was dismissed as not maintainable because ownership was conditional on full payment and the RP had a right to recover outstanding contractual dues; post-approval realities and the RP's limited mandate further precluded the relief.

Final Conclusion: The appeal is dismissed. IA/1147/IB/2020 in IBA/1099/2019 filed by the appellant is devoid of merit and is dismissed; the appellant failed to prove fraudulent trading or an unconditional ownership entitling immediate delivery of the WEC, and the Resolution Professional's rights in respect of outstanding contractual dues and the limits of his mandate were upheld. No costs.

Failure to furnish performance guarantee - republishing of Form-G and calling fresh Expression of Interest (EOI) - exclusion of time from CIRP period - scope of exclusion order in permitting completion of CIRP process - belated deposit by a resolution applicant and loss of entitlement - approval of resolution plan by CoC and consequent sanction by Adjudicating Authority

Failure to furnish performance guarantee - republishing of Form-G and calling fresh Expression of Interest (EOI) - approval of resolution plan by CoC and consequent sanction by Adjudicating Authority - Validity of the CoC's decision to republish Form G, to proceed with fresh EOI and to approve a different resolution plan after the appellant failed to furnish the performance guarantee - HELD THAT: - The Tribunal found that the CoC minutes of the 16th meeting record the appellant (through its representative) admitting inability to provide the performance guarantee of 10% as required by the RFRP. The CoC thereupon adjourned, obtained legal advice and decided to republish Form G and call fresh EOIs, a course later approved in the 17th meeting and followed by receipt and approval of a new plan. Those minutes and subsequent proceedings demonstrate that the CoC and the Resolution Professional acted within the process of CIRP in republishing Form G and considering other plans after the appellant failed to meet RFRP conditions. The Adjudicating Authority's order excluding time for 58 days and directing the RP to complete the process was held to encompass completion steps such as issuance of Form G; the absence of an express mention of Form G in the exclusion order was therefore immaterial. In these circumstances, no error was found in the Adjudicating Authority permitting the process to continue and in approving the other resolution plan. [Paras 5, 6, 7, 8, 9]

The CoC's decision to republish Form G, to call fresh EOIs and to approve a different resolution plan after the appellant failed to furnish the performance guarantee was valid and the Adjudicating Authority's sanction of the process does not merit interference.

Belated deposit by a resolution applicant and loss of entitlement - approval of resolution plan by CoC and consequent sanction by Adjudicating Authority - Whether the appellant could be permitted, after the approved plan, to deposit the requisite amount and revive its earlier entitlement or to challenge approval on account of a higher earlier bid value - HELD THAT: - The Tribunal recorded that the appellant conceded inability to deposit the required amount within the relevant time and thereafter sought to deposit belatedly. The Court held that an applicant who failed to comply with RFRP requirements during the relevant period cannot be permitted, after another plan has been approved, to make belated compliance and reclaim entitlement. Further, the fact that the approved plan is of lesser value than the appellant's earlier bid was held not to be a ground to interfere with the approval; the successful plan approved had itself been part of the adjudicative process and the appellant, having been H 1 earlier, lost entitlement by non compliance. [Paras 10, 11, 12]

Belated deposit by the appellant cannot be permitted after approval of another resolution plan; the approval stands and the appeal is dismissed.

Final Conclusion: The appeal is dismissed. The CoC's decision to republish Form G and approve an alternative resolution plan after the appellant failed to furnish the performance guarantee, and the Adjudicating Authority's sanction of the process (including exclusion of time) are upheld; the appellant cannot be permitted to make belated deposit or to displace the approved plan.

Auction sale on "As is where is", "As is what is" and "No recourse" basis - forfeiture of earnest/bid amount for failure to perform - liquidator's duty to conduct fresh auction upon cancellation - obligation of successful bidder to deposit balance bid amount within stipulated time - no power of the Adjudicating Authority to review its final order

Auction sale on "As is where is", "As is what is" and "No recourse" basis - forfeiture of earnest/bid amount for failure to perform - Validity of cancellation of auction in favour of the purchaser 'Chhota' and forfeiture of part of deposited amount. - HELD THAT: - The purchaser 'Chhota' was the highest bidder in the fifth e-auction, paid the required amounts and was issued Sale Certificate and Letter of Possession dated 02.02.2021. The purchaser raised complaints about missing parts only on 19.02.2021, after possession documents were issued and after having participated with due diligence. The e-auction terms expressly provided sale on "As is where is" and "No recourse" basis and the Sale Certificate placed risk of loss on the purchaser. The purchaser failed to remove the plant and machinery despite reminders and directions of the Liquidator and the Adjudicating Authority, including the order dated 11.08.2021 which gave a final limited period for lifting the machinery and warned of forfeiture and re-auction. In these circumstances the Adjudicating Authority's cancellation of the auction in favour of the purchaser and consequent forfeiture of part of the deposited amount was justified.

Cancellation of the auction in favour of 'Chhota' upheld and forfeiture of 10% of the bid amount affirmed.

Liquidator's duty to conduct fresh auction upon cancellation - Permissibility of directing handing over plant and machinery to an intervenor (Sunhill) who offered a higher price without conducting fresh auction. - HELD THAT: - Following cancellation of the earlier sale, the Liquidation Regulations require a fresh auction. An intervenor's private offer, even if higher than the earlier bid, cannot be accepted in lieu of conducting a fresh auction unless the statutory process permits it. The Tribunal therefore held that no direction could be given to hand over the assets to the intervenor and directed the Liquidator to conduct a fresh auction in accordance with law.

Prayer to direct handing over of plant and machinery to the intervenor denied; fresh auction directed.

Obligation of successful bidder to deposit balance bid amount within stipulated time - forfeiture of earnest/bid amount for failure to perform - Treatment of the deposited amounts of 'Chhota' and the manner of refund after fresh auction. - HELD THAT: - The Tribunal directed that 10% of the bid amount deposited by 'Chhota' be forfeited. The balance of amounts deposited by him were to be refundable from the proceeds of the fresh auction subject to a condition: if the fresh auction yields a higher 90% bid amount than that attributable to 'Chhota', then the entire balance shall be refunded; if the fresh auction yields a lower amount, the purchaser shall receive only a proportionate refund. This approach balances forfeiture for non-performance with entitlement to refund in case the assets fetch an equal or higher realisation on re-sale.

10% of 'Chhota's' deposited bid stands forfeited; balance refundable subject to the result of the fresh auction and proportionate adjustment if the fresh bid is lower.

Obligation of successful bidder to deposit balance bid amount within stipulated time - Direction to 'Singhi Infrapower' to deposit the balance bid amount for land and building and consequence of non-deposit. - HELD THAT: - The Adjudicating Authority had directed 'Singhi Infrapower' to deposit the balance within 30 days; this Tribunal, in the interests of justice, directed that the balance amount be deposited within one month from the date of this order. Failure to deposit would attract forfeiture of the amount already deposited and the Liquidator would proceed with a fresh auction for the land and building in accordance with law. The direction enforces the statutory expectation that a successful bidder must complete payment within the stipulated period or face forfeiture and re-auction.

'Singhi Infrapower' directed to deposit balance within one month; failure will lead to forfeiture and fresh auction.

No power of the Adjudicating Authority to review its final order - Whether the Adjudicating Authority could review its order dated 28.01.2022. - HELD THAT: - The Adjudicating Authority correctly held that it had no jurisdiction to review its order dated 28.01.2022. Applications seeking recall/review of that order were dismissed and the Tribunal found no error in that conclusion.

Applications for recall/review of the Adjudicating Authority's order were rightly rejected; the Adjudicating Authority has no power to review that final order.

Final Conclusion: Both appeals disposed: orders rejecting recall/review and cancelling the auction in favour of 'Chhota' are upheld with forfeiture of 10% of his bid and conditional refund from proceeds of fresh auction; intervenor's prayer to be directly handed assets rejected and fresh auction directed; 'Singhi Infrapower' directed to deposit balance within one month or face forfeiture and fresh auction.

First charge on property for tax dues - priority of statutory dues in liquidation under the Insolvency and Bankruptcy Code - secured creditor status of the State created by operation of law - effect of filing claim and Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016 - overriding/non-obstante clauses in the IBC vis-a -vis State statutory charges

First charge on property for tax dues - priority of statutory dues in liquidation under the Insolvency and Bankruptcy Code - overriding/non-obstante clauses in the IBC vis-a -vis State statutory charges - Validity of the Adjudicating Authority's order directing issue of No Objection Certificates in view of the State's claimed first charge under the HP VAT Act and the priority of statutory dues under the IBC. - HELD THAT: - The Tribunal examined the Adjudicating Authority's reliance on the liquidation process and its conclusion that the assets being part of the liquidation estate had to be governed solely by the IBC. Relying on the Hon'ble Supreme Court's decision in State Tax Officer (1) v. Rainbow Papers Limited, the Tribunal accepted that statutory provisions creating a first charge for tax dues render the State a secured creditor and that such secured status is not excluded by the IBC. Section 53(1)(b)(ii) of the IBC (distribution in liquidation) and the definition of secured creditor recognize security interests that may arise by operation of law; consequently Section 53 and the IBC do not automatically negate a State's first charge. The Adjudicating Authority failed to consider these aspects and the authoritative pronouncement of the Supreme Court on the interplay between statutory first charges and IBC priorities. For these reasons the impugned direction to issue NOCs could not be sustained. [Paras 13]

Impugned order directing issuance of No Objection Certificates set aside for failing to give effect to the State's statutory first charge and to the applicable Supreme Court precedent on priority of statutory dues in liquidation.

Effect of filing claim and Regulation 21A of the IBBI (Liquidation Process) Regulations, 2016 - secured creditor status of the State created by operation of law - Whether admission of a claim by the Liquidator and non-compliance with Regulation 21A justified the Adjudicating Authority's conclusion that the State had relinquished its security interest and could not exercise charge over the property. - HELD THAT: - The Adjudicating Authority observed that the State's claim had been filed and admitted and noted Regulation 21A which requires a secured creditor to intimate its decision to relinquish or realise its security interest. The Tribunal noted, however, that the Adjudicating Authority did not adequately address the legal significance of the State's statutory first charge nor reconcile the admitted claim and Regulation 21A with Supreme Court guidance that delay alone cannot be the sole ground for rejecting statutory claims. The Adjudicating Authority's conclusion that the State, having submitted to the liquidation process, could not exercise its charge was not sustained because it did not sufficiently examine whether statutory secured status created by law persisted and how Regulation 21A operated in that context. [Paras 13]

Findings premised on admission of claim and Regulation 21A were held inadequate; the Adjudicating Authority's direction precluding exercise of the State's charge set aside for failure to consider statutory secured status and controlling precedent.

Final Conclusion: The impugned order dated 12.10.2020 of the Adjudicating Authority directing issuance of No Objection Certificates is set aside; the Appellate Tribunal allowed the appeal on the ground that the Adjudicating Authority failed to give effect to the State's statutory first charge and to relevant Supreme Court authority concerning priority of statutory dues in liquidation.

Corporate Insolvency Resolution Process - Operational Creditor - Corporate Debtor - debt and default - limitation and acknowledgment of debt - memorandum of understanding as fresh cause of action - appointment of Interim Resolution Professional - moratorium - public announcement of CIRP

Limitation and acknowledgment of debt - memorandum of understanding as fresh cause of action - Computation of limitation: whether the Company Petition filed on 19.02.2019 was barred by limitation or a fresh period began from the MOU dated 15.09.2017. - HELD THAT: - The Tribunal observed that though the original cause of action arose on 20.10.2015 (dishonour of cheques), the petitioner established that the parties executed a Memorandum of Understanding on 15.09.2017 which reset the limitation for enforcement. The petitioner also relied on the corporate debtor's financial statements for years ending 31.03.2016 and 31.03.2018 which, according to the petitioner, recorded acknowledgement of liability. On being satisfied that a fresh computation of limitation could begin from the date of the MOU, the Tribunal held the petition filed on 19.02.2019 to be within limitation. [Paras 11, 12]

The petition is not barred by limitation; fresh limitation is computed from the MOU dated 15.09.2017 and the petition is within time.

Debt and default - Operational Creditor - Whether the petitioner proved existence of debt and default by the corporate debtor to warrant admission under Section 9 of the Code. - HELD THAT: - The petitioner filed invoices, delivery challans, post-dated cheques, a running account statement with interest computation, and a demand notice dated 31.12.2018. The corporate debtor did not file any reply and did not controvert the claim despite being given opportunity and being directed to appear. Having regard to the unchallenged documentary material and absence of any response from the corporate debtor, the Tribunal concluded that the petitioner had successfully demonstrated existence of the claimed debt and default. [Paras 3, 6, 7, 10, 13]

Existence of debt and default established; claim of the Operational Creditor remains unchallenged.

Corporate Insolvency Resolution Process - admission of Section 9 petition - Whether the Company Petition (IB) 749 of 2019 should be admitted and CIRP initiated against the corporate debtor. - HELD THAT: - After considering the material on record, the petitioner's submissions and the absence of any reply or appearance by the corporate debtor, and having been satisfied on limitation and proof of debt/default, the Tribunal found that the statutory requirements for admission under the Code were met. The Tribunal therefore admitted the petition and ordered initiation of the CIRP against the corporate debtor. [Paras 11, 13, 14]

Company Petition (IB) 749 of 2019 is admitted and CIRP is ordered against the corporate debtor.

Appointment of Interim Resolution Professional - moratorium - public announcement of CIRP - Consequential directions on appointment of IRP, costs, moratorium and related obligations following admission of the petition. - HELD THAT: - The Tribunal appointed an Interim Resolution Professional from the IBBI list as no IRP was proposed by the operational creditor. The petitioner was directed to deposit initial CIRP costs, and the Tribunal imposed the statutory moratorium prohibiting institution or continuation of suits, recovery actions, transfer or disposal of assets and related enforcement proceedings against the corporate debtor. The Tribunal also directed immediate public announcement of the CIRP, observance of exceptions notified under section 14(1), and that management vests in the IRP during the CIRP with suspended directors and employees required to cooperate. Registry was directed to inform the Registrar of Companies and communicate the order to parties and the IRP. [Paras 14]

IRP appointed; petitioner to deposit initial CIRP costs; moratorium and other statutory directions issued; public announcement to be made and registry to communicate the order.

Final Conclusion: The Tribunal admitted the Section 9 Company Petition filed by the Operational Creditor, holding the petition within limitation (fresh computation from the MOU dated 15.09.2017), finding debt and default proved on the unchallenged record, ordering initiation of CIRP against the Corporate Debtor, appointing an Interim Resolution Professional, directing deposit of initial CIRP costs, and imposing the statutory moratorium with directions for public announcement and registry communication.

Extinguishment of pre-CIRP tax and levy liabilities - waiver of tax liabilities arising on implementation of a resolution plan (notional income on write-back) - requirement to file claims with the resolution professional before approval of the resolution plan - extension of time for implementation of resolution plan and temporary protection from enforcement for pre-closing non-compliances - administrative consideration by Registrar of Companies for fees and stamp duty relief under the Companies Act

Extinguishment of pre-CIRP tax and levy liabilities - requirement to file claims with the resolution professional before approval of the resolution plan - All past liabilities arising out of any levies/tax dues to government authorities which are not part of the Resolution Plan and pertain to the Corporate Insolvency Resolution Process period stand extinguished from the date of approval of the Resolution Plan, and authorities must file claims before the Resolution Professional prior to approval by the Committee of Creditors. - HELD THAT: - The Tribunal upheld that liabilities which arose during the CIRP period and are not included in the approved Resolution Plan cannot be fastened on the Resolution Applicant after approval. The order records that statutory authorities claiming such dues are expected to present their claims to the Resolution Professional before the Resolution Plan is approved by the CoC; absent such claims being part of the Plan, those liabilities stand extinguished from the date of approval. Applying that principle, the Tribunal granted reliefs sought in respect of income-tax and GST liabilities accrued during the CIRP and prior-to-closing periods as pleaded in the application.

Reliefs (i), (ii), (iii) and (iv) granted; past tax and levy liabilities pertaining to the CIRP period and not part of the Resolution Plan are extinguished from date of Plan approval; authorities required to file claims before the RP prior to Plan approval.

Waiver of tax liabilities arising on implementation of a resolution plan (notional income on write-back) - Income-tax liability on notional income arising on implementation of the Resolution Plan due to writing back of unpaid dues to creditors in the books of the Corporate Debtor is to be waived. - HELD THAT: - The Tribunal observed that such notional tax consequences, resulting from accounting write-backs effectuated by implementation of the approved Resolution Plan, would unfairly burden the Resolution Applicant and frustrate the commercial intent of the Plan. In the exercise of powers under section 60(5) IBC read with the Plan approval, the Tribunal directed that such notional income tax liabilities be waived.

Waiver of income-tax on notional income arising from write-backs granted.

Extension of implementation period and moratorium from enforcement for pre-closing non-compliances - Applicant is granted six months after the Closing Date to assess and regularise permits, approvals and consents that may have lapsed or been non-compliant up to the Closing Date, without initiation of investigations, actions or proceedings by Government Authorities for that pre-closing period; implementation period of the Resolution Plan extended by six months. - HELD THAT: - The Tribunal provided a limited, time-bound protective window to enable the Resolution Applicant to determine the status of regulatory permissions and to bring the Corporate Debtor into compliance, thereby avoiding immediate enforcement or initiation of proceedings that would impede implementation. In consequence, the Tribunal extended the time for Plan implementation by six months and barred authorities from initiating actions in respect of non-compliances existing up to the Closing Date during that window.

Six-month time granted after Closing Date for assessment and compliance; implementation period of the Resolution Plan extended by six months; authorities restrained from initiating proceedings for pre-closing non-compliances during that period.

Administrative consideration by Registrar of Companies for fees and stamp duty relief under the Companies Act - Request for waiver of fees and stamp duty for filing Form SH-7 with the Ministry of Corporate Affairs was not granted by the Tribunal; the Applicant may approach the concerned Registrar of Companies who will consider the request under the Companies Act in light of the IBC's spirit. - HELD THAT: - While the Tribunal recognised the commercial intent behind seeking relief from such statutory fees and duties on implementation, it declined to grant direct waiver of SH-7 filing fees and associated stamp duty itself and instead left the matter for administrative consideration by the Registrar of Companies under the Companies Act, observing that such authorities are best placed to consider the request in view of the IBC framework.

Application for waiver of SH-7 filing fees and stamp duty not directly granted; applicant directed to approach the concerned RoC for consideration.

Final Conclusion: IA/887/2022 and IA/1606/2022 disposed of as partly allowed: the Tribunal extinguished pre-approval CIRP-period tax and levy liabilities not included in the Resolution Plan (granting the applicant reliefs sought in respect of income-tax and GST for the periods pleaded), waived notional income-tax on write-backs, granted a six-month protective window after Closing Date and extended the Plan implementation period by six months, and directed the applicant to seek RoC consideration for SH-7 fees/stamp duty relief; applications otherwise disposed.

Insolvency resolution process costs - payment of gratuity where no gratuity fund is created - duties of interim resolution professional to take custody and preserve assets - limits of NCLT jurisdiction where ownership is undisputed

Payment of gratuity where no gratuity fund is created - insolvency resolution process costs - Whether the Resolution Professional can be directed to pay gratuity, salary and leave encashment claimed by an employee terminated during CIRP where no gratuity fund was created by the corporate debtor, and whether salary and leave encashment during CIRP form part of insolvency resolution process costs. - HELD THAT: - The Tribunal held that where the corporate debtor has not created any gratuity fund, the Resolution Professional cannot be directed to make payment of gratuity out of the liquidation estate because gratuity fund, if it exists, is not part of the liquidation estate and, in any event, the liquidator/RP has no domain to deal with properties which are not part of the liquidation estate. Reliance was placed on the NCLAT decision cited by the parties for the proposition that provident, pension and gratuity funds are not distributable as liquidation estate and that absence of a created fund precludes direction to the liquidator/RP to pay gratuity. Conversely, amounts payable to employees for services actually rendered during the CIRP (salary and leave encashment for the CIRP period) fall within the definition of "insolvency resolution process costs" as costs incurred by the RP in running the business as a going concern. The Tribunal further noted the Supreme Court authority that wages/salaries during CIRP can be included in CIRP costs only if the RP managed operations as a going concern and the employees actually worked during CIRP. Accordingly, the RP was directed to take on record necessary information, provide for payment of salary and leave encashment as per entitlement, and modify the resolution plan with approval of the CoC to give priority for such payments, reporting compliance at the time of consideration of the resolution plan. [Paras 5, 6, 7, 8]

RP cannot be directed to pay gratuity in absence of a gratuity fund; RP must provide for and arrange payment of salary and leave encashment for services during CIRP as insolvency resolution process costs and modify the resolution plan with CoC approval.

Duties of interim resolution professional to take custody and preserve assets - limits of NCLT jurisdiction where ownership is undisputed - Whether the Resolution Professional is entitled to possession and custody of vehicles belonging to the corporate debtor which are in possession of suspended directors, and whether claims for rental/compensation for use of such vehicles fall within the Adjudicating Authority's jurisdiction. - HELD THAT: - The Tribunal recorded that the corporate debtor's ownership of the vehicles was not disputed and that the Code mandates the interim resolution professional and resolution professional to take immediate custody and control of assets of the corporate debtor and to preserve and protect those assets. Section 18(f) and Section 25 obligations require the RP to take control of assets over which the corporate debtor has recorded ownership, including tangible movable assets. The Tribunal distinguished the cited Supreme Court authority to observe that where ownership is undisputed the RP need not litigate title and is entitled to possession. Accordingly, respondents were directed to hand over possession of the specified vehicles to the RP within 15 days (in IA No. 586/2020) and to deliver the refrigeration vehicle with documents and tools (in IA No. 942/2020). However, the Tribunal held that claims for car rental/payment up to delivery (i.e., recovery of rent or analogous relief) do not pertain to the Tribunal's jurisdiction as they are not directly related to insolvency proceedings and the aggrieved party may pursue such claims in the appropriate forum. [Paras 5, 6, 7, 8]

Respondents must hand over possession of the corporate debtor's vehicles to the RP; claims for car rental or payment up to delivery fall outside the Tribunal's jurisdiction and must be pursued before appropriate fora.

Final Conclusion: The applications are allowed in part: the RP is not directed to pay gratuity where no gratuity fund exists but must provision for and secure payment of salary and leave encashment for services during CIRP by modifying the resolution plan with CoC approval; respondents are directed to hand over possession and documents of the corporate debtor's vehicles to the RP, while claims for rental or compensation are outside the Tribunal's jurisdiction and may be pursued in the appropriate forum.

Look out circular - prior permission of the trial court for travel abroad - suspension of look out circular for limited period - prosecuting agency's right to raise existence or subsistence of LOC as an objection - trial court to decide objections regarding LOC on merits and in accordance with law

Prior permission of the trial court for travel abroad - look out circular - Petitioner seeking to travel abroad must first obtain prior permission of the appropriate trial court where she is charged; existing trial court conditions continue to apply to the interim bail granted by the Supreme Court. - HELD THAT: - The Court noted that the petitioner was originally enlarged on bail by the trial courts subject to specific conditions which include deposit of passport and seeking prior permission of the trial courts before leaving India, and that the Supreme Court's interim bail order applied those same terms. Consequently, if the petitioner desires to travel abroad she is at liberty to make an application to the appropriate/concerned trial court and must comply with the conditions as imposed by the trial courts and reflected in the Supreme Court order. The Court therefore clarified that the procedural requirement of seeking prior permission from the trial court governs the petitioner's travel. [Paras 9, 14]

Petitioner must seek prior permission of the appropriate trial court to travel abroad; the trial court's bail conditions continue to apply.

Prosecuting agency's right to raise existence or subsistence of LOC as an objection - trial court to decide objections regarding LOC on merits and in accordance with law - Prosecution/prosecuting agencies are at liberty to press any ground, including existence or subsistence of a LOC, when the petitioner applies for permission to travel, and the trial court shall decide such objections on merits and in accordance with law. - HELD THAT: - The Court expressly authorised the prosecution or prosecuting agency to raise objections to any travel application, including to assert that a LOC exists or continues to subsist. It directed that the trial court is competent to adjudicate such objections on their merits and in strict accordance with law, thereby preserving the prosecuting agencies' right to place material before the trial court and leaving the ultimate determination to that court. [Paras 13]

Prosecution may raise LOC-related objections to any travel application; the trial court will decide such objections on merits in accordance with law.

Suspension of look out circular for limited period - look out circular - Court may, and the trial court in appropriate circumstances may, consider directing suspension of a LOC for a limited period as permissible under rules; the High Court did not order production, recall, rescission or cancellation of any LOC but left consideration to the trial court. - HELD THAT: - Rather than ordering production, cancellation or suspension of any LOC, the High Court clarified the procedural pathway: the petitioner should apply to the trial court for permission to travel; the prosecution can raise LOC-related objections; and the trial court may, while deciding the application, consider directing suspension of any LOC for a limited period insofar as permissible under applicable rules. The High Court therefore declined to independently direct production or quash of LOCs and reserved determination to the competent trial court. [Paras 13, 15]

No direction issued to produce, recall, rescind or cancel any LOC; trial court may, when deciding a travel application, consider suspension of a LOC for a limited period if permissible.

Final Conclusion: Writ petition disposed with clarification that the petitioner must seek prior permission of the trial court before travelling abroad; prosecuting agencies may raise objections including existence/subsistence of any LOC, and the trial court shall decide such objections on merits and may consider suspending any LOC for a limited period if permissible; no independent order was made directing production, cancellation or suspension of LOCs by this Court.

Provisional attachment under Section 5(1) of the PMLA - proceeds of crime - third party property - maintainability of writ under Article 226 where statutory remedy exists but patent jurisdictional error is alleged - effect of quashing of a Section 5 order on consequent adjudication under Section 8 of the PMLA - corporate veil and shareholders' rights in company assets

Maintainability of writ under Article 226 where statutory remedy exists but patent jurisdictional error is alleged - The writ petition challenging the provisional attachment and the show cause notice is maintainable insofar as a patent jurisdictional error is alleged. - HELD THAT: - The Court applied established principles that an alternative statutory remedy does not bar writ jurisdiction where a patent jurisdictional contravention is shown prima facie. The distinction between an 'alternative' remedy and a 'statutory' remedy was rejected as artificial; statutory remedies are a species of alternative remedies. The test is whether the petitioners have made out a strong prima facie case of patent jurisdictional error to justify interference under Article 226. On the material before it, the Court found a prima facie case at least in respect of the immovable property of petitioner no.1 and therefore entertained the writ petition for interim relief. [Paras 27, 54]

Writ petition maintainable to the extent a prima facie patent jurisdictional error is alleged in respect of the immovable property of petitioner no.1; interim relief granted accordingly.

Provisional attachment under Section 5(1) of the PMLA - proceeds of crime - third party property - corporate veil and shareholders' rights in company assets - A third party immovable property belonging to a company cannot be provisionally attached under Section 5(1) of the PMLA on the basis of mere shareholding of accused persons where no nexus with proceeds of crime is established. - HELD THAT: - The Court construed the inclusive definition of "proceeds of crime" and its Explanation, noting that property must be shown to be derived directly or indirectly from criminal activity relatable to a scheduled offence. Reliance was placed on settled company law that shareholders, irrespective of shareholding, have no rights in the assets of the company; therefore mere shareholding of accused persons does not convert company assets into their property. Precedents permitting third party attachment were examined and distinguished on the factual absence of any nexus here: the immovable property and relevant shares were acquired long before the alleged offence and no material links or allegations of involvement of the petitioners in the criminal activity were shown. The provisional attachment of a fraction of the company's immovable property calculated in proportion to shares held by accused persons was held to be, prima facie, beyond jurisdiction. [Paras 40, 41, 42, 43, 44]

Prima facie, the provisional attachment of the company's immovable property (being third party property) is not sustainable under Section 5(1) of the PMLA in the absence of any nexus with proceeds of crime; interim protection granted for that immovable property.

Effect of quashing of a Section 5 order on consequent adjudication under Section 8 of the PMLA - Where the Section 5(1) provisional attachment order (in respect of immovable property) is shown to be patently without jurisdiction on merits, the connected adjudication under Section 8 of the PMLA insofar as it concerns that immovable property stands vitiated and may be quashed. - HELD THAT: - The Court distinguished the limited observation in M/s Kaushalya Infrastructure where quashing of a Section 5 order on technical grounds and remand did not per se nullify Section 8 proceedings. Here, however, the Court found that the executive action in respect of the immovable property was vitiated on merits (patent lack of jurisdiction), not merely on procedural insufficiency. The Court also analysed the differing triggers and standards of Sections 5(5), 17(4) and 18(10), observing that a substantive setting aside of the Section 5(1) attachment on merits nullifies the factual premise of any consequent Section 8 adjudication in respect of the same property. [Paras 51, 52, 53, 54, 55]

Quashing or prospective setting aside of the Section 5 provisional attachment order on merits in respect of the immovable property would vitiate and justify quashing of the connected Section 8 adjudication insofar as it concerns that immovable property; interim restraint ordered accordingly.

Final Conclusion: Interim relief granted partly: respondents restrained from taking coercive action pursuant to the provisional attachment and show cause notice insofar as they concern the immovable land of petitioner no.1 at Fuleshwar until disposal of the writ petition; restraint does not extend to specified shares and certain office property, and the petitioners must maintain status quo in respect of the protected land pending final determination.

Refund of CENVAT credit under Rule 5 of CENVAT Credit Rules, 2004 - requirement of nexus between input services and exported output under substituted Rule 5 - scope of adjudication in refund proceedings - recovery / cancellation of wrongly availed CENVAT credit must follow Rule 14 procedure - effect of amendment to definition of input service in Rule 2(l)

Refund of CENVAT credit under Rule 5 of CENVAT Credit Rules, 2004 - requirement of nexus between input services and exported output under substituted Rule 5 - scope of adjudication in refund proceedings - Entitlement to refund under Rule 5 is a self-contained scheme and the authorities cannot insist on proving a nexus between input services and exported output beyond the formula prescribed in the substituted Rule 5. - HELD THAT: - The Tribunal held that the substituted Rule 5 prescribes a formula for refund based on export turnover relative to total turnover and does not require the department to examine correlation or nexus between particular input services and exported output when adjudicating refund claims. The appellate authority erred in traversing beyond the statutory confines of Rule 5 by applying a nexus test and by filtering eligibility through the amended definition of input service in Rule 2(l). The substituted rule and contemporaneous clarifications establish a simplified refund scheme not contingent on demonstration of direct consumption of specific input services for the exported service. Consequently, denial of refund on the ground of lack of nexus, without addressing compliance with the Rule 5 formula, was not sustainable.

Finding that refund under Rule 5 cannot be refused on the ground that specific input services lack nexus with exported services; the appellate authority's additional nexus enquiry was beyond Rule 5 and set aside.

Recovery / cancellation of wrongly availed CENVAT credit must follow Rule 14 procedure - scope of adjudication in refund proceedings - Order denying refund which also operates to disallow previously availed CENVAT credit is impermissible in refund proceedings unless the procedure under Rule 14 is invoked for recovery or cancellation of credit. - HELD THAT: - The Tribunal observed that the original authority, by questioning eligibility of certain input services and setting aside the availment of CENVAT credit to that extent, effectively proceeded beyond the remedy available under Rule 5. Rule 14 is the specific provision that mandates the procedure for recovery of irregularly availed or utilized CENVAT credit and requires invocation of the corresponding adjudicatory process. In the absence of initiation of proceedings under Rule 14, denial of refund cannot be treated as a surrogate for cancelling or recovering credit already taken; such outcome exceeds the jurisdiction of refund adjudication under Rule 5 and is legally untenable. The appellate authority's partial upholding of that approach was therefore not in accordance with law.

Denial of refund which results in disallowance or recovery of availed CENVAT credit was held impermissible in the refund proceeding; such action must await invocation of Rule 14 procedures, and the impugned orders were set aside on this ground.

Final Conclusion: The impugned order was set aside and the appeals allowed: refund denial based on requiring nexus or on cancelling availed CENVAT credit without invoking Rule 14 was held beyond the scope of Rule 5 adjudication and therefore unsustainable.

Service tax on ocean freight under reverse charge - CIF value includes ocean freight - no separate service tax liability on importer - withdrawal of exemption to ocean freight by notification and consequent levy under reverse charge - point of taxation for ocean freight linked to date of bill of lading - invalidity of show cause notice founded on wrong factual premises

Service tax on ocean freight under reverse charge - CIF value includes ocean freight - no separate service tax liability on importer - Demand of service tax on ocean freight under reverse charge where importer paid IGST on ocean freight and goods were imported at CIF value including freight was not sustainable. - HELD THAT: - The appellant imported goods at CIF value, which by its nature includes the ocean freight element. Although exemption to ocean freight was amended and the importer was made liable under reverse charge with effect from 23.04.2017, the Tribunal found that where the importer has discharged IGST on the ocean freight as part of the CIF import transaction, no separate service tax demand under reverse charge on the import transaction can be sustained. Applying this principle to the facts, the appellant's payment of IGST on ocean freight as part of customs clearance and CIF valuation precluded a further service tax demand under RCM on the same element. The Tribunal therefore held the demand to be not attracted on the facts of the case and set aside the demand confirmed below.

Demand of service tax on ocean freight under reverse charge was set aside and held not attracted where ocean freight formed part of CIF and IGST had been paid.

Point of taxation for ocean freight linked to date of bill of lading - invalidity of show cause notice founded on wrong factual premises - Show cause notice was erroneous for alleging incorrect dates of filing of Bills of Entry and was liable to be set aside on that ground. - HELD THAT: - Revenue's show cause notice alleged that Bills of Entry were filed in May and June 2017, thereby invoking the service tax regime for the stated period. The record, however, showed that the Bills of Entry were filed on 06/07/2017 and 14/07/2017. Because the factual premise underpinning the demand (the alleged filing dates) was incorrect, the notice was defective. The Tribunal relied on this factual error in addition to the substantive finding regarding CIF/IGST to allow the appeal and set aside the impugned order. No separate factual or legal consequence of the point-of-taxation rule was applied to sustain the demand once the SCN was found to be erroneous on dates.

Show cause notice was vitiated by wrong factual allegations as to dates of Bills of Entry and was accordingly set aside.

Final Conclusion: Appeal allowed; impugned order set aside. The demand of service tax on ocean freight under reverse charge was held unsustainable on the facts (IGST paid on CIF imports) and the show cause notice was found to be erroneous on factual grounds; appellant entitled to consequential benefits in accordance with law.

Non-levy of service tax on marine insurance premium - adjudicatory evaluation of show cause notices and principles of natural justice - inter-departmental audit objections and reliance on CERA/CAG correspondence - acceptance of Chartered Accountant certificates and duty of equal treatment irrespective of PSU status - remand for fresh adjudication

Non-levy of service tax on marine insurance premium - inter-departmental audit objections and reliance on CERA/CAG correspondence - adjudicatory evaluation of show cause notices and principles of natural justice - Validity of the adjudicating authority's disposal of show cause notices concerning alleged non-payment of service tax on marine insurance premiums for the periods covered, and whether the notices were properly adjudicated on merits. - HELD THAT: - The Tribunal found that the adjudicating authority did not discharge its obligation to evaluate the merits of the primary show cause notice(s). The order dropped the demand for the 2006-11 period primarily on the premise that CERA/CAG appeared to have accepted the departmental view, without independent adjudicatory examination. The impugned order contains no detailed evaluation of the exemptions claimed, no adequate explanation applying the 2011-12 finding to subsequent periods, and insufficient scrutiny of the asserted break-ups and sample policies relied upon by the assessee. Inter-departmental correspondence from CERA does not substitute for the adjudicating authority's duty to apply statutory adjudicatory procedures and the principles of natural justice by independently examining the evidence and responses to the show cause notices. In consequence, the Tribunal concluded that the adjudicatory process was incomplete and the impugned order was unsustainable to the extent it disposed of the notices without fresh adjudication on merits; the matter was therefore remanded to the original authority for appropriate remedial action and fresh adjudication. [Paras 6, 7, 9]

Impugned order set aside insofar as it disposed of the show cause notices on the ground of apparent audit acceptance; notices to be adjudicated afresh by the original authority.

Acceptance of Chartered Accountant certificates and duty of equal treatment irrespective of PSU status - adjudicatory evaluation of show cause notices and principles of natural justice - Permissibility of conclusory acceptance of Chartered Accountant certificates and special treatment on account of the assessee being a public sector unit. - HELD THAT: - The Tribunal held that blanket acceptance of CA certificates solely because the assessee is a public sector undertaking is not legally tenable. While a PSU's errors may not necessarily indicate deliberate evasion, conferring special treatment on that basis is discriminatory and inconsistent with the requirement of equal treatment under tax laws. Certificates and assertions by the assessee and its auditors must be subjected to appropriate verification in adjudication rather than being accepted uncritically. This failure contributed to the finding that the adjudication was incomplete and warranted remand. [Paras 8]

Adjudicating authority must not accord unexamined credibility to CA certificates on the ground of PSU status; such certificates require verification in the course of fresh adjudication.

Final Conclusion: The impugned order is set aside and the show cause notices concerning premiums received on marine insurance for the periods indicated are remitted to the original adjudicating authority for fresh, independent adjudication in accordance with statutory procedures and principles of natural justice; reliance on CERA correspondence or unverified CA certificates is not a substitute for such adjudication.

Cenvat credit - Goods Transport Agency service - FOR destination basis - place of removal - input service - Reverse Charge Mechanism - Board Circular No. 1065/4/2018-CX

Cenvat credit - Goods Transport Agency service - FOR destination basis - place of removal - input service - entitlement of the appellant to Cenvat credit of service tax paid on GTA for outward transportation of goods cleared on FOR destination basis - HELD THAT: - The Tribunal found that the finished goods were cleared by the appellant on FOR destination basis and the transportation charges were incurred by the appellant from the factory gate to the customers' premises. Applying the principle that where goods are sold on FOR destination basis the effective "place of removal" for the purpose of Cenvat credit is the buyer's premises, the Tribunal held that the GTA service related to outward transportation up to the buyer's premises is an input service eligible for credit. The Tribunal noted the competing approach treating the factory gate as the place of removal but, on the facts of this case, concluded that the transportation was used up to the place of removal (buyer's premises) and therefore credit on service tax paid under reverse charge on such GTA service was admissible. The Tribunal allowed the appeal and set aside the orders disallowing credit and imposing penalty, granting consequential benefits in accordance with law. [Paras 4, 9]

Appeal allowed; appellant entitled to Cenvat credit of service tax paid on GTA for outward transportation of goods cleared on FOR destination basis and impugned order set aside.

Final Conclusion: The Tribunal allowed the appeal, holding that where excisable goods are cleared on FOR destination basis the place of removal is the buyer's premises and the appellant is entitled to Cenvat credit of service tax paid on the GTA outward transportation for the period July, 2016 to June, 2017; the impugned order disallowing credit and imposing penalty is set aside with consequential relief.

Amounting to manufacture - identifiable resultant goods known in the market - acceptance of earlier adjudicatory decision / finality and preclusion - judicial discipline and consistency in departmental stand

Amounting to manufacture - identifiable resultant goods known in the market - Whether the process undertaken by the respondent to produce Sulphur-90% WG (Casvet Fertis-WG) from raw sulphur amounted to manufacture and rendered the product liable to central excise duty - HELD THAT: - The Tribunal found that the question whether the disputed product is liable to duty had already been decided in favour of the respondent by an earlier Tribunal order dated 06.08.2012 in the assessee's own case. The material facts - composition of inputs (including Sulphur 99%), processes undertaken, chemicals added, and the nature, composition and use of the resultant product - are the same as in the earlier decision. There has been no change in the statutory definitions of 'manufacture' or 'excisable goods', nor any intervening judicial or quasi-judicial pronouncement altering the legal position. In these circumstances the Commissioner correctly followed judicial discipline and dropped the show cause proceedings rather than recharacterise the same facts as amounting to manufacture. The Tribunal accordingly upheld the Commissioner's order and declined to sustain demands based on the show cause notices. [Paras 5, 6]

Impugned order dropping the demand was upheld; the disputed product was not treated as dutiable manufacture in the present proceedings.

Acceptance of earlier adjudicatory decision / finality and preclusion - judicial discipline and consistency in departmental stand - Whether the Revenue could re-open and contest in the present appeal the same question already finally decided in the assessee's favour by an earlier Tribunal order - HELD THAT: - Relying on Supreme Court precedent, the Tribunal observed that where the Revenue has not appealed an earlier Tribunal order and that order has attained finality and been accepted by the department, the Revenue is precluded from adopting a contrary stance in subsequent proceedings involving the same question and same facts. The present case was held to be factually identical to the earlier decision accepted by the department; permitting the Revenue to take a different stand would undermine consistency and create confusion. On this basis the Tribunal held the Revenue was not justified in contesting the same issue in the present appeal and dismissed the appeal. [Paras 5]

Revenue precluded from re-litigating the identical issue; appeal dismissed on grounds of finality and departmental acceptance of earlier Tribunal decision.

Final Conclusion: The impugned order of the Commissioner dropping the show cause proceedings is upheld and the Revenue's appeal is dismissed.

Reversal of Cenvat credit treated as non-availment of credit - conditional exemption under Notification No. 30/2004-CE - compliance with Rule 6(3) of the Cenvat Credit Rules, 2004 - deeming provision in Rule 6(3D) that payment under sub-rule (3) is to be treated as credit not taken - penalty under section 11AC consequential on unsustainable demand

Reversal of Cenvat credit treated as non-availment of credit - conditional exemption under Notification No. 30/2004-CE - Whether subsequent reversal of Cenvat credit (by payment or debiting) satisfies the condition of Notification No. 30/2004-CE that no credit should have been availed - HELD THAT: - The Tribunal held that where credit initially availed is subsequently reversed, the legal position is to treat the situation as if no credit was ever availed. Relying on the settled ratio in Chandrapur Magnet Wires Ltd. and a series of Tribunal and High Court decisions, the court applied this principle to the facts: the appellant had reversed the entire credit either by payment or by debiting the Cenvat account and therefore met the notification's condition of 'no credit having been availed' in respect of inputs used for the exempted goods. The Tribunal rejected the adjudicating authority's contrary conclusion and found that reversal operates to put the assessee in a no-credit position for purposes of the exemption notification. [Paras 4]

Reversal of the Cenvat credit is to be treated as non-availment and satisfies the condition of Notification No. 30/2004-CE; the appellants are eligible for the exemption.

Compliance with Rule 6(3) of the Cenvat Credit Rules, 2004 - deeming provision in Rule 6(3D) that payment under sub-rule (3) is to be treated as credit not taken - Whether payment of the prescribed percentage under Rule 6(3) and the deeming provision of Rule 6(3D) operate to satisfy the notification condition and render the exemption available - HELD THAT: - The Tribunal found sub-rule (3D) of Rule 6 to be directly applicable: it contains a deeming provision that payment in terms of sub-rule (3) is to be regarded as the credit not having been taken for the purposes of an exemption notification. The adjudicating authority's reliance on the explanation to Rule 3 was held to be inapt in view of the specific deeming language in Rule 6(3D). Applying Rule 6(3) together with the deeming provision of Rule 6(3D), the Tribunal concluded that the appellant's reversal/payment in terms of Rule 6(3) satisfied the statutory requirement and entitled it to the benefit of Notification No. 30/2004-CE. [Paras 4]

Payment under Rule 6(3) read with the deeming provision of Rule 6(3D) must be treated as equivalent to non-availment of credit for purposes of the exemption; therefore the exemption applies.

Penalty under section 11AC consequential on unsustainable demand - Whether the penalty imposed under section 11AC survives when the duty demand on which it is predicated is unsustainable - HELD THAT: - The Tribunal observed that the penalty under section 11AC is consequential upon the confirmed duty demand. Having held that the demand itself is unsustainable because the appellant satisfied the notification condition by reversal/payment of credit, the Tribunal concluded that the consequential penalty could not be sustained. [Paras 4, 5]

The penalty being consequential to the demand does not survive once the demand is set aside.

Final Conclusion: The impugned adjudication order is set aside: the assessee's appeal is allowed (exemption under Notification No. 30/2004-CE held available after reversal/payment of Cenvat credit in terms of Rule 6 and Rule 6(3D)) and the departmental appeal is dismissed; consequential penalty is also not sustainable.

Remand for fresh consideration - Opportunity to produce evidence / audi alteram partem - Alternative statutory remedy and relegation to appeal - Assessment under TNVAT Act - reassessment and show cause procedure - Deemed assessment and detailed scrutiny

Alternative statutory remedy and relegation to appeal - Judicial review under Article 226 - Whether the availability of an alternative statutory remedy by way of appeal precluded exercise of writ jurisdiction in the present cases. - HELD THAT: - The Court noted that the revisional/reassessment orders impugned were appealable and that the learned Single Judge had dismissed the writ petitions on the ground that the petitioner ought to have availed the statutory appellate remedy. While recognising that alternative remedy exists, this Court proceeded to consider the substantive fairness of the reassessment procedure and the appellant's explanation for non-submission of documents. The availability of an alternative remedy did not result in an absolute bar to judicial intervention where, on the material placed before it, corrective relief was warranted to meet the ends of justice. The Court therefore did not insist on dismissal on the sole ground of existence of an alternative remedy but remitted the matters for fresh consideration consistent with the appellate remedy remaining available to the appellant. [Paras 9, 10]

Existence of an alternative statutory remedy did not preclude the Court from remanding the matters for fresh consideration in the interest of justice.

Remand for fresh consideration - Opportunity to produce evidence / audi alteram partem - Assessment under TNVAT Act - reassessment and show cause procedure - Whether the reassessment orders should be set aside and the matters remitted to the assessing authority to permit the appellant to produce documentary evidence in view of the appellant's explanation. - HELD THAT: - The Court accepted the appellant's explanation that the documents were not filed because the appellant's accountant, to whom the matter was entrusted, was medically incapacitated (Open Heart Surgery and COVID-19) and that the appellant was unaware of the non-submission until after the revised assessment orders were passed. Considering that the appellant had since engaged a new accountant and was willing to produce the required documents, and that there was no serious objection from the revenue to further examination of the material, the Court concluded that justice required another opportunity. Accordingly, the impugned revised orders of assessment were set aside and the matters remitted to the respondent for fresh consideration. The appellant was directed to produce the documentary evidence on a specified date, and the respondent was directed to decide the matter afresh after affording hearing within six weeks of receipt; failure to comply would result in restoration of the revised assessment orders. [Paras 10, 11]

Revised orders of assessment set aside and matters remanded for fresh consideration with specific directions to permit production of documents and to decide afresh within six weeks.

Final Conclusion: The appellate court set aside the revised reassessment orders for the assessment years 2012-2013 to 2014-2015 and remitted the matters to the assessing authority for fresh consideration; the appellant was granted a final opportunity to produce documentary evidence and the authority was directed to decide the issues on merits within a stipulated time, failing which the revised assessments would be restored.

Section 138 of the Negotiable Instruments Act - proviso to Section 138 (requirement of notice and 15 day period) - exclusion of period of limitation by orders in SMW(C) No.3/2020 - effect of Supreme Court orders on computation of limitation - distinction from Sagufa Ahmed judgment

Proviso to Section 138 (requirement of notice within 30 days) - exclusion of period of limitation by orders in SMW(C) No.3/2020 - effect of Supreme Court orders on computation of limitation - Whether the trial court was correct in declining cognizance of complaint under Section 138 of the Negotiable Instruments Act on the ground that the legal demand notice was issued beyond 30 days of the cheque return memo without regard to the exclusion of time ordered by the Supreme Court in SMW(C) No.3/2020. - HELD THAT: - The proviso to Section 138 requires the payee to give notice in writing to the drawer within thirty days of receipt of information from the bank about the cheque return and the drawer then has fifteen days to make payment. The cheque was returned on 17.03.2020 and the notice was issued on 20.10.2020. The Supreme Court in SMW(C) No.3/2020, by orders referred to in the judgment, directed exclusion of the period from 15.03.2020 for the purposes of computing limitation, and subsequent orders clarified and extended the excluded period and confirmed that the exclusion applies to provisos (b) and (c) of Section 138. The trial court erred in refusing the benefit of exclusion on the ground that electronic means or postal services were available and in relying on Sagufa Ahmed, which was decided prior to the later SMW(C) No.3/2020 orders and is distinguishable on its facts and timing. Applying the exclusion mandated by the Supreme Court, the computation of the 30 day period for issuing the legal notice must exclude the period covered by SMW(C) No.3/2020, and on that basis the notice sent on 20.10.2020 falls within the extended/excluded computation and the subsequent complaint was filed within the prescribed time. [Paras 5, 9, 11, 13, 14]

Trial court's order refusing cognizance was erroneous; benefit of exclusion under the Supreme Court's SMW(C) No.3/2020 orders must be applied when computing the period for issuance of the notice and the trial court is directed to recompute limitation excluding the period as indicated and proceed in accordance with law.

Final Conclusion: Appeal allowed. Order dated 25.02.2021 refusing cognizance under Section 138 NI Act is set aside; trial court directed to compute limitation after excluding the period as per the cheque return memo till 20.10.2020 in terms of the Supreme Court's SMW(C) No.3/2020 directions and to proceed accordingly.