TaxTMI Updates e-Newsletter
Oct 24,2024

Summary order. Notice issued to respondent and the petition tagged with SLP (C) No. 3112 of 2024.

Summary order. Delay condoned; notice issued; matter tagged with SLP (C) 3112 of 2024.

Requirement to record reasons - rule of natural justice - reasoned and speaking order - judicial review of administrative orders - remand for de novo consideration

Requirement to record reasons - rule of natural justice - judicial review of administrative orders - Order rejecting the petitioner's electronic appeal without assigning reasons is unsustainable. - HELD THAT: - The Court found that the petitioner had filed an appeal which was rejected by the impugned order dated 31.3.2023, and that no reason had been assigned for the rejection (paras. 3, 6). The appellate authority's brief reference to delay, without application of mind or articulation of reasons, demonstrated absence of a reasoned decision (para. 6). The Court reiterated the settled principle that reasons are essential to administrative and judicial conclusions and that giving reasons is a facet of the rule of natural justice; absence of reasons renders an order liable to be quashed (para. 7). Reliance was placed on authoritative precedents that administrative authorities and tribunals are obliged to give reasons, and that orders lacking reasons are amenable to judicial review (para. 8). Applying these principles, the Court held that the impugned order could not be sustained and therefore had to be quashed (para. 9). [Paras 6, 7, 8, 9]

Impugned order dated 31.3.2023 quashed for failure to assign reasons; order unsustainable.

Remand for de novo consideration - reasoned and speaking order - Proceedings remanded to the appellate authority for de novo decision-making with a reasoned, speaking order and opportunity of hearing. - HELD THAT: - Having quashed the impugned order for lack of reasons, the Court remitted the matter to the appellate authority to proceed de novo. The appellate authority is directed to give the petitioner an opportunity of hearing and to pass an appropriate reasoned and speaking order within three months from the date of the judgment (para. 11). The remand is for fresh decision-making rather than mere quantification or ministerial action, requiring application of mind and adherence to natural justice. [Paras 11]

Matter remanded for de novo consideration; appellate authority to pass a reasoned and speaking order after hearing the petitioner within three months.

Final Conclusion: Writ petition allowed; impugned order dated 31.3.2023 quashed and matter remanded to appellate authority to decide afresh by a reasoned, speaking order after hearing the petitioner within three months.

Zero rated supply - refund under Section 54 of CGST Act, 2017 - refund of tax paid on zero rated supplies - limitation for refund claim - deficiency memo in Form GST RFD-03 - opportunity of hearing

Zero rated supply - refund under Section 54 of CGST Act, 2017 - refund of tax paid on zero rated supplies - Petitioner's entitlement to claim refund of IGST paid on supplies to an SEZ unit made in October, 2017 - HELD THAT: - The Court accepted that supplies made to an SEZ unit are treated as zero rated supply and that a taxpayer making such supplies can claim refund under Section 54 of CGST Act, 2017. The petitioner filed the refund application in form RFD-01 on 22.02.2018 for the supplies of October, 2017 and pursued the matter by a reminder dated 29.03.2019. Having filed the refund application within the statutory period, the petitioner's substantive entitlement to seek refund was recognised as a matter for appropriate adjudication by the respondent rather than being defeated at the threshold by administrative inaction. [Paras 4, 5, 8]

The petitioner's claim for refund of tax paid on zero rated supplies (October, 2017) is to be processed by the respondent in accordance with law.

Deficiency memo in Form GST RFD-03 - limitation for refund claim - opportunity of hearing - Effect of respondent's delayed issuance/communication of Deficiency Memo and whether limitation can be insisted so as to bar processing of the refund application - HELD THAT: - The respondent issued a Deficiency Memo dated 12.04.2019 more than a year after receipt of the refund application; the petitioner asserts it never received that memo and only became aware of it in 2023. The Court observed that the refund application had been pending unprocessed for an extended period due to respondent inaction and held that, in the circumstances, it would be appropriate to direct the respondent to process the refund application without insisting on the limitation aspect arising from the delayed deficiency communication. The Court required the respondent to give the petitioner an opportunity of hearing and decide the application afresh in accordance with law. [Paras 6, 7, 8, 9]

The respondent is directed to process the refund application afresh, without insisting on limitation because of the delay in communicating the Deficiency Memo, and after giving the petitioner an opportunity of hearing.

Final Conclusion: Writ petition allowed in part; respondent directed to process the refund application dated 22.02.2018 relating to supplies of October, 2017 and pass appropriate orders in accordance with law after affording the petitioner an opportunity of hearing within four weeks from receipt of the order.

Appeal dismissed on ground of limitation - condonation of delay under the appellate provision of the GST law - Section 107 of the GST Act as a self-contained code excluding Section 5 of the Limitation Act - executive relaxation/notification on limitation for appeals

Appeal dismissed on ground of limitation - Section 107 of the GST Act as a self-contained code excluding Section 5 of the Limitation Act - condonation of delay under the appellate provision of the GST law - Validity of dismissal of the appeal for want of limitation and whether delay could be condoned - HELD THAT: - The Court recorded that the appeal was dismissed solely on the ground of limitation. It applied the principle that the GST Act contains a self-contained code for appeals under Section 107 and that Section 5 of the Limitation Act cannot be applied to enlarge the time prescribed by Section 107. The Court noted that Section 107 permits only a limited extension (one month under the proviso to sub-section (4)) and that the appeal in the present case was filed beyond the total period that could be condoned under Section 107. Reliance was placed on this Court's earlier decisions which hold that taxing statutes like the GST Act prescribe strict limitation periods and that the appellate forum cannot extend limitation beyond what the statute allows. On these legal grounds the Court found no merit in the petitioner's contention seeking condonation of delay. [Paras 9, 10, 11]

The dismissal of the appeal on the ground of limitation was valid and the delay could not be condoned beyond the period permitted under Section 107 of the GST Act.

Executive relaxation/notification on limitation for appeals - Applicability of the notification dated 02.11.2023 relied upon by the petitioner - HELD THAT: - The Court examined the notification relied upon by the petitioner which afforded relaxation only where the order against which appeal lay had been passed on or before 31.03.2023 and where the appeal was filed on or before 31.01.2024. The impugned order in this matter was passed on 20.07.2023, which is after 31.03.2023; accordingly the notification did not extend relief to the petitioner and could not assist in overcoming the limitation bar. [Paras 6]

The notification dated 02.11.2023 is not applicable to the present case and does not cure the delay.

Final Conclusion: The writ petition is dismissed; the appellate order was rightly dismissed on the ground of limitation and the petitioner is not entitled to condonation or benefit of the executive notification relied upon.

Rule 86A of the CGST Rules - blocking of Electronic Credit Ledger (ECL) - pre-decisional hearing / audi alteram partem - reasons to believe - independent satisfaction versus borrowed satisfaction - draconian nature of provisional disabling measures and doctrine of proportionality - requirement of speaking/unambiguous reasons for invoking restrictive fiscal power

Rule 86A of the CGST Rules - blocking of Electronic Credit Ledger (ECL) - reasons to believe - independent satisfaction versus borrowed satisfaction - pre-decisional hearing / audi alteram partem - Validity of the impugned order blocking the petitioner's Electronic Credit Ledger under Rule 86A - HELD THAT: - The Court applied the Division Bench's reasoning in K-9-Enterprises and concluded that Rule 86A is an extraordinary power which can be exercised only after the authority forms an independent 'reason to believe' based on objective material and after proper application of mind. The impugned order neither records independent cogent reasons nor afforded any pre-decisional hearing to the petitioner; it proceeded on reports of another enforcement officer, amounting to borrowed satisfaction. Given the draconian effect of blocking ECL and the requirement that reasons be clearly recorded and based on tangible material (as explained in the cited authorities and CBIC guidance), the impugned order is arbitrary, non-speaking and unlawful and therefore liable to be set aside. [Paras 6]

Impugned order dated 23.01.2020 blocking the Electronic Credit Ledger quashed.

Relief by unblocking ECL and interim operational direction - liberty to proceed in accordance with law - Immediate unblocking of the petitioner's Electronic Credit Ledger and preservation of respondents' right to proceed - HELD THAT: - Having quashed the impugned order, the Court directed immediate restoration of the petitioner's Electronic Credit Ledger to enable compliance with return-filing obligations. The Court simultaneously preserved the respondents' statutory right to proceed against the petitioner in accordance with law and the Division Bench's decision in K-9-Enterprises, making clear that the quashing relates to the defective exercise of Rule 86A rather than to the merits of any future proceedings. [Paras 7]

Respondents directed to unblock the Electronic Credit Ledger immediately; liberty reserved to proceed against the petitioner in accordance with law.

Final Conclusion: The petition is allowed: the order blocking the petitioner's Electronic Credit Ledger under Rule 86A dated 23.01.2020 is quashed; the ECL is to be unblocked forthwith, subject to respondents' liberty to initiate or continue proceedings in accordance with law and the principles laid down by the Division Bench in K-9-Enterprises.

Power of Government to extend time limit in special circumstances under Section 168A - force majeure - extension of limitation for issuance of show cause notices and passing of orders - recommendations of the GST Council and effect of Government acceptance - applicability of judicially ordered suspension of limitation to tax authorities' assessment proceedings

Power of Government to extend time limit in special circumstances under Section 168A - force majeure - extension of limitation for issuance of show cause notices and passing of orders - Validity of Notification No.9/2023 dated 31.03.2023 which extended the time limit for issuance of show cause notices and passing of orders. - HELD THAT: - The Court examined Section 168A which empowers the Government, on recommendation of the Council, to extend time limits in cases of force majeure defined to include epidemic and other calamities. The GST Council's Law Committee recorded delays in scrutiny and audit attributable to the COVID-19 pandemic and recommended a three month extension for the relevant financial years; that recommendation was accepted by the Government and formalised by Notification No.9/2023. The Court found that the decision to extend the limitation period was taken after consideration of material including dissenting views and therefore the notification cannot be said to be without basis or without application of mind. Consequently, the notification is not vitiated on the grounds urged by the petitioner and the extension stands valid. [Paras 11, 12, 17, 18, 19]

Notification No.9/2023 is valid and cannot be quashed on the grounds urged by the petitioner.

Recommendations of the GST Council and effect of Government acceptance - Whether the petitioner can attack the extension on the basis that recommendations of the GST Council are not binding on the Union. - HELD THAT: - The Court acknowledged the legal proposition that recommendations of the GST Council are not per se binding on the Union. However, the Court emphasised that acceptance by the Government of a Council recommendation and issuance of a notification pursuant thereto makes the resultant executive action binding and open to challenge only on conventional grounds such as absence of application of mind or lack of material. In the present case the Government accepted the Council's recommendation and issued the impugned notification after due consideration; therefore the petitioner cannot successfully contest the notification on the ground that Council recommendations are not intrinsically binding. [Paras 13, 14, 18]

The petitioner's challenge based on non-binding nature of GST Council recommendations is untenable where the Government has accepted the recommendation and issued a notification.

Applicability of judicially ordered suspension of limitation to tax authorities' assessment proceedings - extension of limitation for issuance of show cause notices and passing of orders - Whether the Apex Court's orders in suo motu proceedings suspending limitation (Misc. Application No.21/2022 etc.) applied to limitation for tax authorities' actions such as issuance of show cause notices and passing of assessment orders. - HELD THAT: - The Court observed that the Apex Court's orders extending or suspending limitation in the suo motu proceedings concerned judicial and tribunal processes and expressly related to proceedings before Courts/Tribunals. That scheme does not, on its face, operate to enlarge limitation periods for administrative tax proceedings such as issuance of show cause notices or passing of assessment orders by tax authorities. Accordingly, the petitioner cannot rely on the cited suo motu order to contend that the period of limitation for tax assessments was extended for the purposes of Section 73 time limits. [Paras 15, 16]

The Apex Court's suo motu extension of limitation does not apply to the tax authorities' limitation for issuance of show cause notices and passing of orders in the present context.

Final Conclusion: Writ petition dismissed; Notification No.9/2023 held to be validly issued on the basis of the GST Council's recommendation accepted by the Government and the petitioners are granted 21 days to file an appeal which will be considered without regard to limitation in the peculiar facts of the case.

Ex-parte decision - dismissal for non-prosecution under Order XLI Rule 17 CPC - appellate authority's duty to make further inquiry and pass just order under Section 107(11) UP GST Act - requirement to record points for determination and reasons in appellate order under Section 107(12) UP GST Act - power to adjourn and refuse adjournment - audi alteram partem - rectification/recall of ex-parte orders

Ex-parte decision - dismissal for non-prosecution under Order XLI Rule 17 CPC - audi alteram partem - Legality of the appellate authority deciding the appeal on merits ex-parte in absence of the appellant. - HELD THAT: - The appellate authority's decision to determine the appeal on merits in the absence of the appellant was held to be impermissible. Reliance on Order XLI Rule 17 CPC and the Supreme Court's exposition shows that where an appellant does not appear the proper course is dismissal for non-prosecution, not disposal on merits. Further, adjudicatory bodies and tribunals must observe the rule of audi alteram partem and cannot decide merits without giving reasonable opportunity to the parties. The court emphasised that the statutory scheme under Section 107 empowers the authority to adjourn and to refuse adjournment in specified circumstances, but does not licence deciding an appeal on merits in the appellant's absence; doing so amounts to abdication of the statutory duty to hear and to make further inquiry where necessary. [Paras 6, 8, 9, 11]

Impugned order deciding the appeal on merits in the appellant's absence is illegal and set aside.

Appellate authority's duty to make further inquiry and pass just order under Section 107(11) UP GST Act - requirement to record points for determination and reasons in appellate order under Section 107(12) UP GST Act - power to adjourn and refuse adjournment - rectification/recall of ex-parte orders - Remedial course and further direction after setting aside the ex-parte order. - HELD THAT: - The Court held that in view of the statutory mandate in Section 107(11) and (12) the matter must be reheard: the Appellate Authority is required to afford opportunity of hearing, make such further inquiry as necessary and pass a reasoned written order stating points for determination and reasons. The Court observed that where an appeal has been decided ex-parte, remedial relief such as rectification/recall may be available under analogous provisions. Accordingly, the matter was remitted to the appellate authority for fresh decision after affording hearing to the parties, with a direction to expedite disposal. [Paras 9, 10, 14]

Matter remitted to the appellate authority to decide afresh after hearing the parties; appeal to be decided within three months from production of certified copy of this order.

Final Conclusion: The appellate order dated 18.12.2023, which decided the petitioner's appeal on merits in the appellant's absence, is set aside as illegal; the matter is remitted to the Appellate Authority for fresh adjudication after affording hearing and making such inquiry as necessary, and to pass a reasoned order stating points for determination and reasons, with the appeal to be decided within three months from production of a certified copy of this judgment.

Interim protection under Section 112(8) of the Rajasthan Goods and Services Tax Act, 2017 - constitution of the Tribunal and consequent timeline for filing appeal - stay on recovery subject to deposit and availing statutory appeal remedy

Interim protection under Section 112(8) of the Rajasthan Goods and Services Tax Act, 2017 - stay on recovery subject to deposit and availing statutory appeal remedy - constitution of the Tribunal and consequent timeline for filing appeal - Petition disposed with protective directions under Section 112(8) of the Act, permitting payment and providing limited immunity from recovery, coupled with liberty to file appeal within a stipulated period after constitution of the Tribunal. - HELD THAT: - The Court noted that the Tribunal has not yet been constituted and, on consent, disposed of the petition by granting protection available under Section 112(8) of the Rajasthan GST Act. The petitioner is directed to make payment as per the provisions of Sub section (8) of Section 112; if such payment is made, further proceedings for recovery of the balance amount shall not be initiated. This protection is conditional upon the petitioner availing the statutory remedy of appeal within three months from the date the Tribunal is constituted. The disposal is accordingly by way of a conditional direction preserving the petitioner's right to appeal once the Tribunal comes into existence. [Paras 4]

Petition disposed with direction that on payment as per Section 112(8) further recovery proceedings shall not be drawn, provided the petitioner files an appeal within three months from constitution of the Tribunal.

Final Conclusion: The petition is finally disposed of by consent; conditional protection under Section 112(8) granted on deposit, with liberty to file appeal within three months from the date of constitution of the Tribunal.

Condition of furnishing bank guarantee as pre-condition for bail - Illegality of bank guarantee condition imposed while granting bail - Modification of bail conditions under Section 439(1)(b) Cr.P.C. - Preservation of other legally tenable bail conditions

Condition of furnishing bank guarantee as pre-condition for bail - Illegality of bank guarantee condition imposed while granting bail - Direction to furnish a bank guarantee as a condition for grant or continuance of bail is illegal and unsustainable. - HELD THAT: - The Court considered whether a condition requiring the accused to furnish a bank guarantee (irrespective of quantum) could be imposed as a prerequisite for grant or continuance of bail. Relying upon and following the reasoning of the Supreme Court in Subhash Chouhan v. Union of India and another, Anatbhai Ashokbhai Shah v. State of Gujarat and another, Makhijani Pushpak Harish v. State of Gujarat and Karandeep Singh v. CBI, the Court held that a direction to deposit money or to furnish a bank guarantee as a pre condition for bail is not sustainable. The Court observed that such conditions have been repeatedly held by the Apex Court to be illegal and that trial courts should not insist on furnishing bank guarantees for release on bail; other legally tenable conditions may, however, be imposed. [Paras 5, 7]

The requirement to furnish a bank guarantee as a condition of bail is set aside as illegal.

Modification of bail conditions under Section 439(1)(b) Cr.P.C. - Preservation of other legally tenable bail conditions - Application under Section 439(1)(b) Cr.P.C. to remove the bank guarantee condition was allowed and the specific direction to furnish a bank guarantee of Rs. 50 lakhs was set aside; all other bail conditions continue to operate. - HELD THAT: - On the petitioner's application to modify the bail order, the High Court found that the impugned direction for furnishing a bank guarantee (originally Rs. one crore, later modified to Rs. 50 lakhs) offended the legal position declared by the Apex Court and therefore warranted setting aside. The Court noted that the petitioner had already furnished the personal bond and surety as ordered, and consequently allowed the petition under Section 439(1)(b) Cr.P.C., set aside the order dated 17.05.2024 rejecting the modification application, and specifically set aside the order directing furnishing of the bank guarantee. The Court expressly left intact all other conditions of the bail order which are legally tenable. [Paras 8]

The petition for modification is allowed; the direction to furnish the bank guarantee of Rs. 50 lakhs is set aside and other bail conditions remain in force.

Final Conclusion: The criminal petition is allowed: the order refusing modification is set aside, the bank guarantee condition in the bail order is quashed as illegal, and all other legally tenable bail conditions remain operative.

One-time amnesty: waiver of late fee in excess of Rs.10,000 - belated filing of GSTR-9/GSTR-9C - application of notifications granting relief to filings made before 01.04.2023 - setting aside demand to the extent of waived late fee

One-time amnesty: waiver of late fee in excess of Rs.10,000 - belated filing of GSTR-9C - application of notifications granting relief to filings made before 01.04.2023 - Ext.P3 demand for late fee for delay in filing GSTR-9C insofar as it seeks to collect amounts waived by the notifications - HELD THAT: - The Court applied the notifications cited by the petitioner which waive late fee in excess of Rs.10,000 for taxpayers who filed annual returns/GSTR-9 and GSTR-9C before 01.04.2023 as part of the one-time amnesty scheme. Relying on the reasoning in Anishia Chandrakanth v. Superintendent, the Court found no justification to continue notices seeking late fee for belated GSTR-9C filed prior to the commencement of the amnesty on 01.04.2023. Accordingly, the demand order (Ext.P3) is set aside to the extent it attempts to recover late fee covered by the waiver under the notifications. [Paras 2, 3]

Ext.P3 set aside to the extent it sought to collect late fee for delay in filing GSTR-9C which is waived by the notifications for filings made before 01.04.2023.

Refund of late fee already paid - scope of remedy where waiver applies - Whether the petitioner is entitled to refund of late fee already paid over and above Rs.10,000 - HELD THAT: - Although the Court held that the demand notices are unsustainable insofar as they seek recovery of amounts waived by the notifications, it expressly followed the prior decision in which petitioners were denied refunds of late fee already paid. The Court therefore declined to permit recovery of amounts paid in excess of Rs.10,000. [Paras 3]

Petitioner is not entitled to claim refund of late fee already paid in excess of Rs.10,000.

Final Conclusion: Demand order (Ext.P3) is quashed insofar as it seeks recovery of late fee waived by the one-time amnesty for returns/GSTR-9C filed before 01.04.2023; no refund shall be permitted for late fee already paid by the petitioner over and above Rs.10,000, and the writ petition is disposed of accordingly.

Transitional input tax credit under Section 140(3) of the CGST Act - proviso to Section 140(3) permitting credit where invoice is not available - procedural nature of time limits for filing FORM GST TRAN-1/TRAN-2 - validity of Rule 117(4)(b)(iii) of the CGST Rules as a ground to deny transitional credit - technical glitch and re-opening of GST portal for rectification - quashing of show-cause notice

Transitional input tax credit under Section 140(3) of the CGST Act - proviso to Section 140(3) permitting credit where invoice is not available - procedural nature of time limits for filing FORM GST TRAN-1/TRAN-2 - Petitioner entitled to rectify and re-submit FORM GST TRAN-1 and to file FORM GST TRAN-2 for claiming transitional credit despite earlier defective filing and inability to file within original portal period - HELD THAT: - The Court applied the principle that the right to carry forward transitional credit under the proviso to Section 140(3) is a substantive entitlement where conditions are otherwise satisfied, and that time limits for filing TRAN-1/TRAN-2 are procedural. Relying on the reasoning in Siddharth Enterprise, the Court found that where a taxpayer made genuine efforts and was impeded by portal/system behaviour or inadvertent omission in TRAN-1, fairness and non-arbitrariness require permitting rectification so as not to deprive the taxpayer of a legally admissible credit. The petitioner had, during the period the portal was opened pursuant to the Supreme Court's directions, attempted to rectify and to file TRAN-2 but was prevented by system restrictions; the jurisdictional officers were asked to assist and could not effect the upload. In view of these circumstances and the established precedent that procedural deadlines for TRAN forms should not operate to extinguish substantive credit where there is a legitimate inability to comply, the Court directed respondents to permit filing of rectified TRAN-1 and filing of TRAN-2 within the period ordered by the Court. [Paras 24, 29, 30]

Respondents directed to permit petitioner to file rectified FORM GST TRAN-1 and to file FORM GST TRAN-2 within eight weeks to enable claiming transitional credit.

Validity of Rule 117(4)(b)(iii) of the CGST Rules as a ground to deny transitional credit - quashing of show-cause notice - Show-cause-notice issued relying upon Rule 117(4)(b)(iii) was quashed to the extent it sought to deny the petitioner the opportunity to rectify TRAN-1/TRAN-2 and thereby extinguish the claimed transitional credit - HELD THAT: - The Court observed that the impugned show-cause-notice was premised on the petitioner having not declared appropriate details in TRAN-1 and on the statutory/formal time-limits under the Rules. Given the petitioner's entitlement to transitional credit subject to fulfillment of conditions and in light of the Court's conclusion permitting rectification, the show-cause-notice could no longer operate to demand reversal of credit without permitting the corrective steps directed. The Court therefore set aside the show-cause-notice to the extent it precluded the petitioner from availing the remedial filing ordered. [Paras 14, 31]

Impugned show-cause-notice dated 19.11.2019 quashed and set aside to the extent indicated; rule made absolute accordingly.

Final Conclusion: Petition allowed to the extent that respondents are directed to permit the petitioner to file rectified FORM GST TRAN-1 and to file FORM GST TRAN-2 within eight weeks; the show-cause-notice dated 19.11.2019 is quashed and set aside to that extent. No order as to costs.

Extinguishment of pre-resolution claims under an approved resolution plan - binding nature of an approved resolution plan on creditors and authorities - overriding effect of the Insolvency and Bankruptcy Code over other laws - prohibition on initiation or continuation of proceedings in respect of dues prior to approval of resolution plan

Extinguishment of pre-resolution claims under an approved resolution plan - binding nature of an approved resolution plan on creditors and authorities - prohibition on initiation or continuation of proceedings in respect of dues prior to approval of resolution plan - Validity of reassessment proceedings, notices and assessment order issued for Assessment Year 2018-19 after approval of a resolution plan by the NCLT. - HELD THAT: - The petition records that a resolution plan in respect of the petitioner was approved by the NCLT on 16.03.2021 and that the Income-tax Department had lodged and admitted its claim in the insolvency proceedings. Relying on the law in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss ARC, the Court notes that once a resolution plan is approved under Section 31 of the Code, claims in respect of periods prior to approval are extinguished and the approved plan is binding on creditors and governmental authorities. In that light, no person or authority is entitled to initiate or continue proceedings in respect of any claim for dues relating to periods prior to the approval of the resolution plan. Applying that principle to the present facts, the reassessment notices issued under Sections 148A(b), 148 and the assessment order under Section 147 read with Sections 144 and 144B, together with the demand under Section 156, relate to pre-approval dues and therefore are without jurisdiction. The Court accordingly quashed the impugned notices and the assessment order. [Paras 7, 8]

Assessment order dated 12.03.2023 and notices dated 13.03.2022, 31.03.2022 and 12.03.2023 relating to Assessment Year 2018-19 are quashed as barred by the approved resolution plan.

Final Conclusion: Petition allowed; the reassessment proceedings, the assessment order and the connected notices for Assessment Year 2018-19 are quashed in view of the approved resolution plan; no order as to costs.

Timeliness of application under proviso to section 80G(5) - provisional approval under section 80G(5) - interpretation of "within six months of commencement of its activities" in the proviso - jurisdiction to cancel provisional approval and requirement of show-cause - remand for verification of fulfilment of conditions for grant of approval

Timeliness of application under proviso to section 80G(5) - provisional approval under section 80G(5) - interpretation of "within six months of commencement of its activities" in the proviso - Assessee's application filed on 26/09/2023 was within the statutory time prescribed by the proviso to section 80G(5) in view of an existing provisional approval valid up to AY 2024-25. - HELD THAT: - The Tribunal found as an admitted fact that the assessee had valid provisional approval under section 80G(5) which continued up to AY 2024-25 and that the application in Form 10AB was filed on 26/09/2023. Reading sub-clause (iii) of the proviso harmoniously with the legislative intent behind provisional registration introduced by the Finance Bill 2020, the phrase "or within six months of commencement of its activities, whichever is earlier" applies to newly formed institutions that receive provisional approval before commencing activities. For an existing institution holding provisional approval, the applicable time-limit is to apply at least six months prior to expiry of the provisional approval. A literal contrary interpretation would deny ever-existing institutions any opportunity to apply, which is inconsistent with the statute and the Budget speech and Memorandum accompanying the Finance Bill 2020. On these grounds the Tribunal held that the application filed on 26/09/2023 was within the prescribed period and the CIT(E)'s rejection as time-barred was erroneous. [Paras 4]

Application in Form 10AB filed on 26/09/2023 is to be treated as filed within the statutory time under the proviso to section 80G(5).

Remand for verification of fulfilment of conditions for grant of approval - jurisdiction to cancel provisional approval and requirement of show-cause - Whether the Commissioner of Income Tax (Exemption) was entitled to reject the application without examining fulfillment of statutory conditions - remitted for fresh consideration. - HELD THAT: - The Tribunal observed that the CIT(E) rejected the application on the technical ground of delay without considering whether the assessee satisfied the other statutory conditions under section 80G(5). The provisional approval could only be cancelled by the CIT(E) upon specific violations and after affording a reasonable opportunity of being heard. Accordingly, the Tribunal directed the CIT(E) to treat the application as timely filed, to afford the assessee an opportunity to produce necessary documents, and to verify the assessee's eligibility and fulfilment of conditions under the Act before passing a reasoned order. [Paras 4, 5]

Matter remitted to the CIT(E) to verify fulfillment of conditions, grant opportunity to the assessee and decide the application on merits.

Final Conclusion: The Tribunal allowed the appeal, holding the Form 10AB application filed on 26/09/2023 to be within time in view of the provisional approval valid up to AY 2024-25, set aside the rejection dated by the CIT(E) as time-barred, and remitted the matter to the CIT(E) to examine eligibility and fulfilment of conditions after affording the assessee an opportunity; appeal allowed for statistical purposes.

Validity of proceedings u/s 153C - whether the assessee should be treated as a “Searched Person” or “Other Person”? - Whether ‘Loose Sheets’ and ‘Diary’ have any evidentiary value? - As decided by HC [2024 (2) TMI 116 - KARNATAKA HIGH COURT] impugned notices issued u/s 153C based on the loose sheets/diaries are contrary to law, which require to be set aside in these writ appeals, as the same are void and illegal. As satisfaction note is required to be recorded under Section 153C of the IT Act for each Assessment Year and in the impugned proceedings, a consolidated satisfaction note has been recorded for different Assessment Years, which also vitiates the entire assessment proceedings. In view of all these findings, it is said that the appeals do not have any substance for seeking intervention as sought for by the appellant / Revenue.

HELD THAT:- Delay condoned. Heard the learned counsel appearing for the petitioners.

We are not inclined to interfere with the impugned judgment passed by the High Court. Hence, the Special Leave Petitions are dismissed.

Deemed registration under Section 12AA(2) - interpretation of Section 12A and Section 12AA(2) - doctrine of precedent where Supreme Court orders conflict - merits of reading a deeming fiction into a taxing statute

Deemed registration under Section 12AA(2) - interpretation of Section 12A and Section 12AA(2) - judicial precedents: Society for Promotion of Education; Muzafar Nagar Development Authority; Harshit Foundation Sehmalpur - Non-disposal of an application for registration within six months under Section 12AA(2) does not result in a deemed grant of registration. - HELD THAT: - The Court examined competing authorities including the Division Bench decision in Society for Promotion of Education (which read a deeming fiction into Section 12AA(2)), the Allahabad Full Bench in Muzafar Nagar Development Authority (which rejected such deeming), and the Supreme Court's order in Harshit Foundation Sehmalpur (which approved the Full Bench view). Applying precedent rules where conflicting decisions arise, the Court found no irreconcilable conflict necessitating following the earlier view; rather, the Supreme Court in Harshit Foundation Sehmalpur upheld the Full Bench conclusion that Parliament did not enact a deeming fiction in Section 12AA(2). The Court held that a court cannot introduce a deeming provision into a taxing statute where the Legislature has not provided one, and that available remedies (including writ jurisdiction) address administrative delay. On these grounds the Tribunal's reliance on a deemed registration was rejected and the revenue's contention accepted. [Paras 32, 33, 36, 37]

Section 12AA(2) does not contemplate a deemed grant of registration on non-disposal within six months; the revenue's appeal is allowed.

Final Conclusion: The appeal is allowed: non-disposal of the registration application within six months under Section 12AA(2) does not result in deemed registration; the Tribunal's order granting deemed registration is set aside.

Condonation of delay under Section 119(2)(b) of the Income tax Act - power to condone delay - bona fide delay - non application of mind - humane/empathetic approach in condoning delay - processing of return under Section 143(1) of the Income tax Act is not a ground to reject condonation - rectification/ modification of intimation under Section 143(1) to give effect to allowable deduction - deduction under Section 80P(2)(d) of the Income tax Act

Condonation of delay under Section 119(2)(b) of the Income tax Act - bona fide delay - non application of mind - humane/empathetic approach in condoning delay - Validity of the Principal Commissioner's rejection of the petitioner's application for condonation of one day delay in filing return - HELD THAT: - The Court found that the impugned order rejecting condonation was founded on a misconceived premise - namely that the mere processing of the return under Section 143(1) with a demand justified refusal of the condonation application - and that such reasoning demonstrated a complete non application of mind. The Court relied on the established principle that the power to condone delay must be exercised with sensitivity to bona fide human causes preventing timely compliance, including reliance on a professional such as a Chartered Accountant. A one day bona fide delay caused by technical glitch on the portal, promptly explained and supported, warranted condonation. The Court held that technical processing of the return could not be used mechanically to deny relief and that the PCIT ought to have considered the petitioner's explanation rather than reject the application on the basis that the return had been processed. [Paras 4, 5, 6]

Impugned order rejecting the condonation application quashed; delay of one day condoned and petitioner entitled to relief sought on that ground.

Rectification/ modification of intimation under Section 143(1) to give effect to allowable deduction - deduction under Section 80P(2)(d) of the Income tax Act - power to grant consequential relief following condonation - Whether the respondents should be directed to modify the intimation under Section 143(1) to allow the claimed deduction and grant refund - HELD THAT: - Having allowed the petition on the ground of condonation, the Court directed consequential relief: the respondents were ordered to modify/rectify the intimation issued under Section 143(1) so as to allow the deduction claimed under Section 80P(2)(d) and to grant the refund claimed in the return filed on 08.11.2022. The Court treated the relief as incidental to permitting the assessee to regularise its return after condonation of delay and remitted the matter to the respondents for modification of the intimation to give effect to the allowed deduction and refund, while keeping contentions on the merits of the return open. [Paras 8, 9]

Respondents directed to modify/rectify the intimation under Section 143(1) to allow the deduction under Section 80P(2)(d) and to grant the refund as claimed; matter disposed of with no costs.

Final Conclusion: Writ petition allowed: the order dated 25.01.2024 rejecting condonation of the one day delayed return is quashed for non application of mind; delay condoned and respondents directed to modify the Section 143(1) intimation to allow the claimed deduction under Section 80P(2)(d) and grant the refund, with other contentions left open.

Reassessment proceedings under section 148 - order under section 148A(d) - procedure under section 148A - exemption for income remitted to NRE account under Section 10(4)(ii) - proof of source and remittance from NRE account

Reassessment proceedings under section 148 - order under section 148A(d) - exemption for income remitted to NRE account under Section 10(4)(ii) - proof of source and remittance from NRE account - Whether initiation of reassessment proceedings and the order under section 148A(d) were justified when the assessee, a Non-Resident Indian, had explained that the amounts in issue were remittances and maturity proceeds in his NRE account and were therefore exempt under Section 10(4)(ii). - HELD THAT: - The Court found that the assessee's status as a Non-Resident Indian settled in Uganda was not in dispute and that it was not alleged that the amounts were deposited in any account other than the assessee's NRE account. The assessee responded to the section 148A(a) notice and furnished particulars (reply dated 25.01.2024) explaining that the questioned deposits were renewals or maturity proceeds of earlier fixed deposits and remittances from overseas savings into his NRE account, and provided bank statements and annexures supporting remittance and source. In objections to the section 148A(b) notice (reply dated 14.03.2024) the assessee also explained amounts received as loans and their remittance from his foreign account; bank details at Annexure "F" corroborated these explanations. Relying on the court's earlier view in Nitin Mavji Vekariya that funds received from non-resident external accounts fall beyond the reach of Indian tax authorities and such receipts fall under the exemption in section 10(4)(ii), the Court held that the Department had no justification to treat the explained receipts as escapement of income. Given the satisfactory explanation and corroborative bank evidence, the prerequisites for reopening under section 148 were not satisfied and the order under section 148A(d) lacked justification. [Paras 6, 7]

Reopening of assessment and the order under section 148A(d) quashed as unjustified where amounts were shown to be remittances/maturity proceeds in the assessee's NRE account and thus exempt under Section 10(4)(ii).

Final Conclusion: The petition is allowed. The Notice under section 148 dated 09.04.2024 and the order under section 148A(d) dated 09.04.2024 are quashed and set aside; no order as to costs.

Extinguishment of claims on approval of resolution plan under the Insolvency and Bankruptcy Code - effect of moratorium under the Insolvency and Bankruptcy Code on invocation of guarantees and admission of claims - power to initiate revision of assessment under Section 263 of the Income tax Act - finality of claims admitted and verified in Corporate Insolvency Resolution Process

Extinguishment of claims on approval of resolution plan under the Insolvency and Bankruptcy Code - power to initiate revision of assessment under Section 263 of the Income tax Act - Whether a notice under Section 263 of the Income tax Act could be validly issued after the NCLT had approved a resolution plan which extinguished pre plan claims of the Income Tax Department for the assessment year in question. - HELD THAT: - The Court found that upon approval of the resolution plan under Section 30(6) of the Insolvency and Bankruptcy Code the admitted claims and liabilities in respect of the period prior to approval of the plan stand extinguished. Reliance was placed on the reasoning in Ghanashyam Mishra & Sons Pvt Ltd (supra) that once moratorium under the Code applied and a claim (or guarantee) remained uninvoked or was dealt with in the CIRP, such claims could not be treated as matured for enforcement against the corporate debtor and the claim admission process in the CIRP governed the fate of such claims. Applying that principle, the Court held that no person, including a statutory authority, was entitled to initiate or continue proceedings in respect of any pre plan dues after approval of the resolution plan. Consequently, initiation of revision proceedings under Section 263 of the Income tax Act in respect of Assessment Year 2017 18, by issuing the notice dated 13.01.2022 after approval of the resolution plan, was incompatible with the extinguishment of liabilities effected by the approved plan and was liable to be quashed. [Paras 7, 8]

Notice dated 13.01.2022 under Section 263 of the Income tax Act quashed as the approved resolution plan extinguished pre plan claims relating to Assessment Year 2017 18.

Final Conclusion: Petition allowed; the notice initiating revision proceedings under Section 263 of the Income tax Act dated 13.01.2022 is quashed on the ground that approval of the resolution plan under the Insolvency and Bankruptcy Code extinguished pre plan claims of the Income Tax Department for Assessment Year 2017 18.

Filing objections before Distribution Resolution Panel under Section 144C(2) - effect of uploading Form 35A on the Income Tax Portal as filing of objections - power of Assessing Officer to pass final assessment under Section 144C(3) where objections are not filed in time - jurisdiction and functions of the Distribution Resolution Panel under Section 144C(5) - provisional attachment under Section 281B and its temporal validity

Filing objections before Distribution Resolution Panel under Section 144C(2) - effect of uploading Form 35A on the Income Tax Portal as filing of objections - Whether the petitioner had filed objections within the 30-day period by uploading Form 35A and sending physical documents on 18.04.2023 - HELD THAT: - The Court recorded that the draft assessment order was served on 20.03.2023 and that the petitioner uploaded Form 35A on the Income Tax Portal and sent physical copies by courier on 18.04.2023. The court accepted that uploading on 18.04.2023 satisfied the statutory requirement of filing objections within 30 days under Section 144C(2)(b). The fact that the physical copy was delivered to the DRP on 20.04.2023 did not negate that the objections had been filed within the prescribed period by electronic submission and dispatch; consequently the Assessing Officer was not justified in treating the objections as time-barred. [Paras 9, 11]

The objections were filed within the 30-day period and must be treated as timely.

Power of Assessing Officer to pass final assessment under Section 144C(3) where objections are not filed in time - filing objections before Distribution Resolution Panel under Section 144C(2) - Whether the Assessment Order dated 29.05.2023 passed under Section 144C(3) is sustainable where objections had been filed on 18.04.2023 - HELD THAT: - The Court found that because the objections had been filed within the 30-day period, the basis for the Assessing Officer invoking Section 144C(3) (i.e., that no objections were filed within time) was incorrect. The impugned final assessment was therefore contrary to the statutory scheme of Section 144C and could not stand. [Paras 11, 12]

The Assessment Order dated 29.05.2023 is quashed and set aside.

Jurisdiction and functions of the Distribution Resolution Panel under Section 144C(5) - filing objections before Distribution Resolution Panel under Section 144C(2) - Whether the DRP order dated 29.12.2023 rejecting objections as barred by time and declining to give directions is tenable - HELD THAT: - The DRP declined to pass directions on the ground that the Assessing Officer had already passed the final assessment order and that objections were not filed within 30 days. Since the Court held the objections were timely filed and the final assessment order unsustainable, the DRP's refusal to consider the objections was consequent upon and tainted by that error. The Court accordingly quashed the DRP order and remanded the matter to the DRP to consider the objections afresh after giving the petitioner an opportunity of hearing, in accordance with Section 144C. [Paras 5, 12, 13]

The DRP order dated 29.12.2023 is quashed and the matter is remanded to the DRP for fresh consideration and directions after hearing the petitioner.

Provisional attachment under Section 281B and its temporal validity - Whether the provisional attachment order under Section 281B survives in view of the quashing of the assessment order and elapsed period - HELD THAT: - The Court noted that the provisional attachment was placed under Section 281B and that six years had elapsed; there was no record of any valid extension by the Assessing Officer after the assessment order. Given that the assessment order itself was quashed and the attachment had run its statutory period without shown extension, the provisional attachment could not be sustained. [Paras 6, 12]

The provisional attachment order dated 17.02.2023 is quashed and set aside.

Final Conclusion: The petition is allowed: the Assessment Order dated 29.05.2023, the DRP order dated 29.12.2023 and the provisional attachment dated 17.02.2023 are quashed and set aside; the matter is remitted to the DRP to consider the objections filed on 18.04.2023 and pass appropriate orders after hearing, with consequential direction to the Assessing Officer to act in accordance with the DRP's decision. The Court has not examined the merits of the underlying tax issues.

Reopening of assessment under Section 148 read with Section 147 - reason to believe - prohibition against reopening based on mere change of opinion - fully and truly disclosure of material facts - reassessment jurisdiction

Reopening of assessment under Section 148 read with Section 147 - prohibition against reopening based on mere change of opinion - fully and truly disclosure of material facts - reason to believe - Validity of notice to reopen assessment for AY 2016-17 where original assessment under Section 143(3) had been framed after specific queries on the deduction claimed and replies were furnished. - HELD THAT: - The Court found on the record that the Assessing Officer had issued a notice under Section 142(1) specifically calling for details supporting the assessee's claim of deduction and that the assessee had furnished the requested particulars prior to the framing of the assessment under Section 143(3). The reasons recorded for reopening relied upon the view that the merged undertaking was ineligible for deduction; however, the materials show that the claim had been placed before the AO and processed at the original assessment. Applying the settled principle that Section 147/148 cannot be used to effect a mere change of opinion, as explained in Kelvinator and followed by this Court, the recorded reasons amounted to no more than a change of opinion rather than disclosure of new material demonstrating escapement of income. Consequently, the pre-condition of non-disclosure of material facts necessary for reassessment was not satisfied and the jurisdiction to reopen was absent. The Court expressly held that it was unnecessary to examine the substantive merits of the deduction once reopening was found invalid as being based on change of opinion. [Paras 9, 10]

Notice dated 28.03.2021 under Section 148 for AY 2016-17, and consequential assessment and demand orders, quashed as reopening amounted to mere change of opinion and jurisdiction to reopen was not established.

Final Conclusion: Petition allowed; notice under Section 148 dated 28.03.2021 and consequent assessment order under Section 147 read with Section 144B and demand notice dated 31.03.2022 for AY 2016-17 quashed and set aside.

Condonation of delay under the exercise of powers under Section 119(2)(b) of the Income Tax Act - e-verification requirement for validation of return and invalidation on non e-verification - genuine hardship and technical glitches as sufficient cause for condonation

Condonation of delay under the exercise of powers under Section 119(2)(b) of the Income Tax Act - genuine hardship and technical glitches as sufficient cause for condonation - e-verification requirement for validation of return and invalidation on non e-verification - Order rejecting application for condonation of delay in e-verifying the return and treating the belated return as valid was unlawful and required reconsideration - HELD THAT: - The Court found that the petitioner, an elderly non-resident, had filed a belated return for AY 2022-23 and thereafter failed to e-verify it within the statutory 30-day period due to alleged technical glitches. The petitioner's non-availability in India from 17.06.2020 to 09.08.2022 was supported by documents and remained undisputed. The Court accepted that proving a technical glitch is inherently difficult and that the respondent's assertion of absence of evidence of technical problems did not constitute a valid ground to refuse relief. Having regard to the petitioner's age, non-resident status, undisputed non-availability during the relevant period and the genuine hardship asserted, the Court concluded there was sufficient cause to exercise the discretionary power under Section 119(2)(b) to condone the delay. The Court therefore quashed the respondent's order dated 28.03.2024 and directed reconsideration of the application on merits within a stipulated timeframe. [Paras 7, 8]

The order dated 28.03.2024 rejecting the application under Section 119(2)(b) is quashed and set aside and the respondent is directed to decide the application on merits within 12 weeks.

Final Conclusion: Writ petition partly allowed: the impugned order rejecting condonation of delay under Section 119(2)(b) is quashed and the respondent directed to reconsider the petitioner's application on merits and pass an appropriate order within 12 weeks.

Reopening of assessment under Section 147/148 - Formation of belief and application of mind by Assessing Officer - Reliance on survey reports and need for independent verification - Distinction between change of opinion and discovery of new material - Pre-conditions for valid reassessment

Reopening of assessment under Section 147/148 - Formation of belief and application of mind by Assessing Officer - Reliance on survey reports and need for independent verification - Distinction between change of opinion and discovery of new material - Pre-conditions for valid reassessment - Reopening of assessment for AY 2005-06 and AY 2006-07 was invalid as the AO failed to apply independent mind and verification before issuing notice under Section 148. - HELD THAT: - The Tribunal and this Court found that the AO initiated reassessment proceedings solely on the basis of the Sales Tax survey report without independently enquiring into or verifying the factual matrix and without ascertaining the status of the Sales Tax proceedings. On the relevant date there were no subsisting demands or final assessments arising from the survey (the earlier ex parte assessment had been set aside and the matter remitted), a fact which the AO failed to consider. The CIT(A) rested on a 'prima facie' formation of belief, which the Court held to be insufficient: the legality of reassessment requires satisfaction of the pre-conditions in Section 147 and an actual application of mind by the AO, not mere mechanical reliance on material received from another authority. Having used the survey report in 'letter and spirit' without independent verification and when subsequent Sales Tax proceedings were pending, the reasons recorded could not properly sustain a belief of escapement of income. The Tribunal's conclusion that the reassessment was invalid for want of proper application of mind and verification was upheld. [Paras 9, 11, 12]

Reassessment under Section 147/148 in respect of the specified years is invalid and the appeal is dismissed.

Final Conclusion: The appeal is dismissed: the reassessment initiated under Section 147/148 (AY 2005-06 and AY 2006-07) was held invalid because the Assessing Officer relied solely on the Sales Tax survey report without independent verification or proper application of mind, and the Tribunal's order quashing the reassessment is upheld.

Admission of additional grounds by appellate tribunal - charge of short-term capital gains under Section 45(4) - computation of capital gains under Section 48 as modified by Section 50(1) - remand for computation of tax consequences

Admission of additional grounds by appellate tribunal - The Income Tax Appellate Tribunal was justified in permitting and considering the additional ground raised by the Revenue before the second appellate forum. - HELD THAT: - The Department raised an additional ground in appeal to the Appellate Tribunal contending that the charge of capital gains should be under Section 45(4). The Tribunal accepted the additional ground and adjudicated the question of chargeability accordingly. The High Court, on consideration of the rival contentions, upheld the Tribunal's acceptance of the additional ground and its proceeding to decide the case on that basis.

Tribunal's allowance of the Revenue's additional ground is upheld.

Charge of short-term capital gains under Section 45(4) - computation of capital gains under Section 48 as modified by Section 50(1) - The charge of short-term capital gains in the facts of the case is governed by Section 45(4), and such charge must be computed in the manner prescribed by Section 48 as modified by Section 50(1). - HELD THAT: - The Court observed that, on the facts, the charging provision for short-term capital gains is Section 45(4). The computation methodology consequent to application of Section 45(4) follows Section 48, as modified by Section 50(1). Although the Tribunal held that the chargeability is under Section 45(4), it did not proceed to compute the tax effect. The High Court affirmed the Tribunal's conclusion on the nature of the charge but noted that the computation required by Sections 48 and 50(1) was not undertaken by the Tribunal.

Finding that the charge is under Section 45(4) is upheld; computation must follow Section 48 as modified by Section 50(1).

Remand for computation of tax consequences - computation of capital gains under Section 48 as modified by Section 50(1) - The question of the extent of short-term capital gains assessable to the firm was remitted to the Appellate Tribunal for fresh determination and computation. - HELD THAT: - Because the Tribunal, while holding that chargeability is under Section 45(4), did not determine the quantum or computation of short-term capital gains, the High Court remanded the matter. The Tribunal is directed to compute the extent of short-term capital gains, if any, taking into account the totality of transactions in the relevant previous year and applying Section 48 as modified by Section 50(1). The Court imposed an outer time limit of six months from receipt of the judgment for completion of this exercise after hearing the assessee.

Matter remitted to the Appellate Tribunal for computation of short-term capital gains under Section 48 as modified by Section 50(1), to be completed within six months.

Final Conclusion: The appeal is allowed in part: the Tribunal's admission of the Revenue's additional ground and its holding that short-term capital gains are chargeable under Section 45(4) are upheld; questions concerning alternative applicability of Section 50 and Sections 50A/45(4) are left undecided and the matter is remanded to the Appellate Tribunal to compute the extent of short-term capital gains in accordance with Section 48 as modified by Section 50(1), to be completed within six months.

Moratorium under Insolvency and Bankruptcy Code - Effect of moratorium on enforcement of demands - Inclusion of revenue as a creditor in insolvency proceedings - Section 156A - modification of demand pursuant to orders of the Adjudicating Authority - Notwithstanding clause in Section 178(6) - Binding effect of a resolution plan

Moratorium under Insolvency and Bankruptcy Code - Effect of moratorium on enforcement of demands - Inclusion of revenue as a creditor in insolvency proceedings - Section 156A - modification of demand pursuant to orders of the Adjudicating Authority - Remand to the Assessing Officer to take steps under Section 156A and before the NCLT rather than adjudicating the appeal on merits at this stage - HELD THAT: - The Tribunal recorded that the NCLT has admitted the corporate debtor and imposed a moratorium which prohibits institution or continuation of proceedings and the execution of orders against the corporate debtor. Given the moratorium and appointment of an Insolvency Resolution Professional, enforcement of the demand issued under section 156 cannot be proceeded with unless the revenue takes steps consistent with insolvency proceedings, including seeking to be included appropriately in the insolvency process. The Tribunal noted the operation of Section 156A which contemplates modification of demand in conformity with an order of the Adjudicating Authority under the IBC and provides for revision where such order is modified on appeal. Since the resolution plan has not been finalised and the claim of creditors may be affected by the insolvency process (the Tribunal also referred to the binding nature of an approved resolution plan as explained by the Supreme Court), the appeal could not be decided on merits at this stage. For these reasons the Tribunal remanded the matter to the Assessing Officer to take necessary steps as per Section 156A of the Act and before the NCLT so that the tax demand and the revenue's position are determined in the context of the ongoing insolvency proceedings. [Paras 2, 3, 5, 6]

The appeal is remanded to the Assessing Officer to take necessary action under Section 156A and before the NCLT; appeal partly allowed.

Final Conclusion: Because the corporate debtor is under NCLT-ordered moratorium and the resolution plan is yet to be finalised, the Tribunal remanded the appeal to the Assessing Officer to take steps under Section 156A of the Income-tax Act and in the insolvency proceedings; the appeal was partly allowed without adjudication on merits.

Requirement of prior intimation before making adjustments under section 143(1) - proviso to section 143(1) mandating intimation in writing or electronic mode - processing of return under section 143(1) after insertion of clauses w.e.f. 1.4.2017 - disallowance of deduction claimed under Chapter VIA (sections 80IA/80IE/80IC) - role of CPC in issuing intimations under section 143(1)

Requirement of prior intimation before making adjustments under section 143(1) - proviso to section 143(1) mandating intimation in writing or electronic mode - disallowance of deduction claimed under Chapter VIA (sections 80IA/80IE/80IC) - role of CPC in issuing intimations under section 143(1) - Whether the disallowance of the deduction claimed under Chapter VIA made in the intimation processed under section 143(1) is sustainable where no prior intimation was given to the assessee as required by the proviso to section 143(1). - HELD THAT: - The Tribunal noted that the proviso to section 143(1) prohibits making adjustments in processing of returns unless an intimation of such adjustment is given to the assessee in writing or electronic mode and that the second proviso to section 143A requires consideration of any response. The assessee contended, and the Revenue failed to produce evidence, that any intimation was issued by the CPC prior to making the adjustment which denied the deduction claimed under Chapter VIA. The Tribunal relied on its earlier coordinate decision in Smt. Neelam Pachisia (Bangalore) where, on identical facts for AY 201617, it was held that when the return is processed after the insertion of the relevant clauses w.e.f. 1.4.2017 the proviso mandating intimation must be followed and absence of such intimation renders the adjustment invalid. Applying that reasoning and noting absence of any proof of prior intimation, the Tribunal concluded that the disallowance made in the section 143(1) intimation could not stand and directed deletion of the disallowance. [Paras 5, 6, 7]

The disallowance made in the intimation under section 143(1) is set aside for want of the mandatory prior intimation and the ground is allowed; the Assessing Officer is directed to delete the disallowance.

Final Conclusion: The Tribunal allowed the restored ground for AY 201617, holding that absence of the statutorily mandated prior intimation vitiated the disallowance made in the section 143(1) processing; the appeal is partly allowed and the AO is directed to delete the disallowance.

Bogus purchases - evidentiary value of seized documents - corroborative evidence requirement - search assessments under Section 153A - unexplained investment u/s 69 - GST component adjustment - double taxation principle

Bogus purchases - incriminating seized material - corroborative evidence requirement - Addition on account of bogus purchases - HELD THAT: - The Tribunal examined seized excel sheets and statements recorded during search and found that only purchases from four suppliers were established to be wholly bogus while a portion of purchases from other suppliers were only partially suspect. The Assessing Officer had treated an unspecified amount categorized as 'others' as bogus without providing party-wise particulars to the assessee. In absence of party-wise identification and findings, the CIT(A) rightly deleted the addition relatable to the 'others' category. For partially bogus purchases from identified suppliers the Tribunal, to plug leakage, applied a reasonable estimate of 10% on the partially bogus quantum and sustained the complete bogus purchases established against the four suppliers. After accounting for additional income already offered by the assessee, the net balance addition sustained was limited and the AO was directed to restrict impugned additions accordingly. No relief was allowed in respect of the GST component. The revenue's challenge to deletion of the 'others' portion was dismissed. [Paras 2]

Part of the addition sustained after estimation; deletion of unspecified 'others' purchases upheld and AO directed to restrict additions to the balance sustained.

GST component adjustment - bogus expenses - Disallowance of sub contractor expenses (GST component) - HELD THAT: - The Tribunal noted that the assessee had admitted substantial part of the sub contractor expenses as additional income, leaving only the GST component unaccounted. The payments were treated as bogus and the GST element had been adjusted against output GST liability, resulting in avoidance of GST payment. In these circumstances, the lower authorities' disallowance of the residual GST component was sustained and no interference was called for. [Paras 3]

Disallowance of the GST component on sub contractor payments sustained and grounds dismissed.

Unexplained investment u/s 69 - evidentiary value of seized documents - corroborative evidence requirement - double taxation principle - Addition as unexplained investment under section 69 based on seized loose excel sheets - HELD THAT: - The addition was founded solely on loose, undated excel sheets and inconsistent statements; the sheets lacked dates, parties were not identified and no independent enquiries or primary corroborative records (promissory notes, securities or confirmations) were placed on record to establish actual lending by the assessee during the year. Statements of the GM and the managing partner were contradictory as to whether loans were advanced by the firm or by individual partners, and many incriminating items for earlier years had already been offered as additional income. Applying the principle that dumb or loose seized papers require independent corroboration before sustaining an addition, and to avoid double taxation, the Tribunal held that the AO's addition could not be sustained and deleted the unexplained investment addition, directing recomputation of income. [Paras 5, 6, 7, 8, 10]

Addition under section 69 deleted for lack of corroborative evidence and on other cumulative considerations; income to be recomputed.

Final Conclusion: Revenue appeal dismissed; assessee's appeal partly allowed - unspecified 'others' bogus purchases deleted while balance bogus purchases were sustained subject to estimation and adjustment, GST disallowance sustained, and unexplained investment addition under section 69 deleted; AO directed to recompute income in terms of the order.

Summary order. Delay in refiling condoned; appeal disposed of on the ground that the appellant succeeded on limitation and the Court declines to interfere on that score; all other contentions left open to be raised in an appropriate case; pending applications disposed of.

Summary order. Application for condonation of delay dismissed for insufficiency of grounds; appeal dismissed on merits; pending applications disposed of.

Pre-import condition - IGST liability on imports under Advance Authorization - exemption qua the goods and not qua the authorization - revenue neutrality (availability of ITC/refund) - confiscation and redemption fine when goods not available - waiver of interest and penalty in view of tribunal precedent

Pre-import condition - IGST liability on imports under Advance Authorization - exemption qua the goods and not qua the authorization - revenue neutrality (availability of ITC/refund) - Whether the appellant complied with the pre-import condition so as to be entitled to exemption from payment of IGST on imports made under Advance Authorisations - HELD THAT: - The Tribunal examined whether imported inputs were used in manufacture of exported goods and held that the pre-import condition is a test of utilization of inputs for exports and the exemption under Notification No.18/2015-Cus (as amended) is available qua the goods. On factual scrutiny of Bills of Entry and Shipping Bills, the Tribunal found that in almost all challenged Advance Authorisations the first imports preceded the exports or that post-export imports were subsequently reconciled and Export Obligation Discharge Certificates obtained. The adjudicating authority had issued the SCN and confirmed demand without verifying use of the imported inputs in exported goods; that approach was vitiated. The Supreme Court in Cosmo Films establishes that failure to satisfy pre-import condition makes IGST payable, but also entitles the importer to ITC or refund upon export. Applying these principles, the Tribunal concluded that where the appellants have in fact used the imported inputs in exported goods (or have regularised imports and paid IGST which they do not contest), the pre-import condition stands complied with and the IGST demand is not sustainable; where non-compliance is established, IGST would be payable but is subject to ITC/refund remedies. [Paras 4]

IGST demand is not sustainable on the factual matrix where pre-import condition is found complied with; in principle IGST is payable if pre-import condition is not met, subject to entitlement to ITC/refund.

Confiscation and redemption fine when goods not available - Sustainability of confiscation and redemption fine imposed under Section 125 where goods were not available for confiscation - HELD THAT: - The Tribunal observed that there was no allegation or evidence of diversion or sale of imported inputs in the domestic market and that the goods were not seized or available for confiscation. In absence of availability of goods for confiscation, confiscation cannot be ordered and consequential redemption fine cannot be imposed. The Tribunal relied on its larger bench precedent to the effect that redemption fine is not imposable where confiscation is not sustainable for want of availability of goods. [Paras 4]

Confiscation and consequent redemption fine are not sustainable where goods are not available for confiscation; redemption fine set aside.

Waiver of interest and penalty in view of tribunal precedent - Whether interest, penalties and redemption fine confirmed in the impugned order should be sustained or waived - HELD THAT: - The Tribunal noted that the point has been independently considered in the Tribunal's decision in Chiripal Poly Films Ltd. and, applying that reasoning, held that the appellant is entitled to waiver of interest, penalty and redemption fine. Where IGST was paid and is available as ITC (revenue neutrality), imposition of penalty corresponding to amounts not contested is not sustainable. On the factual findings rejecting the demand, the ancillary interest and penalty claims also do not survive. [Paras 4]

Interest, penalties and redemption fine are waived in the appellant's favour in view of the Tribunal precedent and the factual conclusions.

Limitation and extended period for issuance of show cause notice - Whether the demand is time barred under Section 28 of the Customs Act - HELD THAT: - The appellant contended that the SCN dated 19.10.2022 is barred by the two year normal limitation period and that extended period under Section 28(4) would not apply in absence of wilful suppression or collusion. The Tribunal observed that the bills of entry were assessed and cleared and that the issue was available on record at the time of assessment; the appellant also relied on the then existing Gujarat High Court view in Cosmo Films to show bona fide belief. The Tribunal found that extended period is prima facie not invokable and that the appellant has made out a strong prima facie case on limitation, but expressly kept the limitation issue open for final adjudication. [Paras 4]

Limitation issue is left open for final determination and not decided in the appeal (kept for further consideration).

Final Conclusion: The impugned adjudication order confirming IGST, interest, penalties and redemption fine is set aside on the factual findings that the pre import condition was satisfied in the majority of challenged cases (and where IGST was paid has been regularised); confiscation and redemption fine are unsustainable where goods were not available; interest and penalties are waived in view of Tribunal precedent. The limitation point has been left open for final adjudication. Consequential relief granted to the appellant and appeal allowed.

Penalty under section 112(a) of the Customs Act, 1962 - transferability of DFRC license - liability for failure to register transferred DFRC before import - obligation of transferee to register DFRC and apply for Telegraphic Release Advice - absence of adverse finding of deliberate act to cause loss to revenue - maintainability of departmental appeals below prescribed monetary threshold

Penalty under section 112(a) of the Customs Act, 1962 - transferability of DFRC license - liability for failure to register transferred DFRC before import - absence of adverse finding of deliberate act to cause loss to revenue - obligation of transferee to register DFRC and apply for Telegraphic Release Advice - Whether the Commissioner was justified in imposing penalty under section 112(a) on the appellants in respect of the alleged manipulation/forging of the DFRC - HELD THAT: - The Tribunal found that the DFRC in question was freely transferable and that the first appellant had sold the DFRC to another party. The record does not establish that the appellants participated in, or were instrumental to, any tampering or alteration of the DFRC annexures nor that they deliberately acted to cause injury to revenue. Registration of the DFRC at the port and application for Telegraphic Release Advice fell on the transferee and buyer who held the license at the time of import. In absence of any specific adverse finding that the appellants conspired or masterminded the alleged manipulation, the imposition of penalty under section 112(a) was not warranted. The Tribunal also placed reliance on earlier decisions of the same Bench addressing similar facts where, in absence of proof of deliberate wrongdoing by the appellant, penalties were set aside. Applying these conclusions to the material before it, the Tribunal set aside the impugned penalty orders and deleted the penalty imposed on the appellants. [Paras 7, 9, 11, 12, 13]

Impugned penalty under section 112(a) set aside and deleted for want of any finding that the appellants deliberately caused loss to revenue or participated in manipulation of the DFRC.

Maintainability of departmental appeals below prescribed monetary threshold - Whether the appeals filed by the Department are maintainable despite the disputed demands falling below the monetary limit fixed by CBIC instructions - HELD THAT: - The Tribunal noted that the disputed demands in the departmental appeals are below the monetary limit prescribed in the CBIC instructions (F. No. 390/Misc./163/2010-JC dated 17.8.2011, as amended). Consequently, the departmental appeals are not maintainable on monetary grounds. [Paras 14, 15]

Departmental appeals dismissed as not maintainable on monetary grounds.

Final Conclusion: The Tribunal allowed the appellants' appeals by setting aside and deleting the penalty imposed under section 112(a) for lack of any finding of deliberate manipulation attributable to them, and dismissed the departmental appeals as not maintainable since the disputed demands fall below the monetary threshold prescribed by CBIC instructions.

Substantial compliance - certificate of origin - alteration/correction on COO - operational certification procedures (ASEAN FTA) - Procedure 9 - benefit under Notification No. 153/2009 (ASEAN FTA Preferential Tariff) - doubt is not a substitute for proof

Certificate of origin - alteration/correction on COO - operational certification procedures (ASEAN FTA) - Procedure 9 - substantial compliance - doubt is not a substitute for proof - benefit under Notification No. 153/2009 (ASEAN FTA Preferential Tariff) - Validity of denial of ASEAN FTA preferential rate on ground of alleged alteration/correction in the CountryofOrigin certificate and consequent rejection of COO by customs authority. - HELD THAT: - The Tribunal examined whether the amended CountryofOrigin (COO) bearing an endorsement stamp 'issued retroactively' could be rejected and the preferential rate under Notification No. 153/2009 denied on the sole ground of that alteration. The authority relied upon Procedure 9 of the operational certification procedures under the ASEAN Rules, 2009 which prescribes how corrections/alterations in the COO must be authenticated. The Tribunal found that, although an alteration was pointed out, the impugned order did not record any concrete material other than the presence of the correction and the COO date being after shipment to justify doubting authenticity. The procedure available under the Rules to address doubts regarding the COO was not followed by the authority. Applying the equitable doctrine of substantial compliance, recognised by higher courts as intended to prevent miscarriage of justice where only minor or inconsequential formal defects exist, the Tribunal held that mere doubt is not a substitute for proof and that denial of substantial benefits for such a technical defect would be unjust. Consequently, the Tribunal set aside the impugned order and allowed the appeals, granting the consequential reliefs claimed. [Paras 6, 7]

Impugned order rejecting the COO and denying ASEAN FTA benefit was set aside; appeals allowed.

Final Conclusion: The Tribunal allowed the appeals, set aside the orders rejecting the CountryofOrigin certificate and denying the concessional ASEAN FTA tariff benefit, applying the doctrine of substantial compliance and observing that doubt without proof and without following the prescribed verification procedure cannot justify denial of the benefit.

Doctrine of unjust enrichment - maintainability of refund claims without modification of assessment orders - finality of adjudication and bar on raising issues not challenged on appeal - acceptability of auditor's/chartered accountant's certificate as evidence of non-passing of duty incidence - sanction of refund and credit to Consumer Welfare Fund under section 27(2) of the Customs Act

Maintainability of refund claims without modification of assessment orders - finality of adjudication and bar on raising issues not challenged on appeal - Whether the department could raise, in these appeals, the legal plea that refund applications were not maintainable because the assessment orders had not been modified. - HELD THAT: - The Tribunal held that the department, having not appealed the Deputy Commissioner's orders that sanctioned the refunds (even though some sanctioned amounts were directed to the Consumer Welfare Fund), allowed those orders to attain finality and cannot be permitted to raise the maintainability objection in these appeals. The court applied established precedent that a party cannot reopen or raise for the first time in a later forum an issue which it did not challenge in the immediate appellate proceedings; principles in Toyo Engineering, Indian Farmers Fertilizers, Neelima Srivastava and subsequent Tribunal/High Court decisions were followed to conclude that final adjudications between the parties must be assailed only by remedies known to law and that mere subsequent judicial developments do not nullify an earlier final order inter partes. Consequently the maintainability plea based on the ITC decision could not be entertained in the present appeals. [Paras 46]

The department is precluded from raising the maintainability objection in these appeals because the Deputy Commissioner's orders sanctioning refund had attained finality.

Doctrine of unjust enrichment - acceptability of auditor's/chartered accountant's certificate as evidence of non-passing of duty incidence - sanction of refund and credit to Consumer Welfare Fund under section 27(2) of the Customs Act - Whether the sanctioned refund amounts should be paid to the appellant or credited to the Consumer Welfare Fund on the ground of alleged unjust enrichment (i.e. that the incidence of additional duty was passed on to buyers). - HELD THAT: - The Tribunal examined the auditor's certificate dated 29.12.2015 and the fact that identical certificates by the same chartered accountant had been accepted by the Hyderabad Bench of the Tribunal and, on remand, by the Deputy Commissioner at Ahmedabad; those decisions/orders have attained finality. In view of the department having allowed those orders to become final, it could not be permitted to now repudiate an identical certificate for the Delhi imports. The Tribunal further held that the Commissioner (Appeals) was not justified in disbelieving the certificate merely because additional corroborative material was not produced when identical evidence had been accepted in parallel fora and had become final. Applying the doctrine that the Revenue cannot accept a position in one case and repudiate it in another (Marsons Fan Industries, Amar Bitumen principles), the Tribunal found the appellant had discharged the burden to rebut unjust enrichment and that the Commissioner (Appeals) erred in directing the sanctioned amounts to be credited to the Consumer Welfare Fund. [Paras 54, 55, 58, 59]

The Chartered Accountant's certificate is to be accepted in the circumstances; the orders directing credit of the sanctioned refunds to the Consumer Welfare Fund are set aside and the appellant is entitled to payment of the sanctioned refund amounts.

Final Conclusion: The appeals are allowed; the Commissioner (Appeals) orders directing the sanctioned refund amounts to be credited to the Consumer Welfare Fund are set aside and the appellant is entitled to payment of the sanctioned refund amounts, with consequential reliefs.

Requirement of a speaking order where assessment is contrary to importer's claim under Section 17(5) of the Customs Act, 1962 - appealability of an assessment order including self-assessment - preference of a specific tariff entry over a general entry under the General Rules of Interpretation - payment of duty under protest does not amount to acceptance of re-assessment

Requirement of a speaking order where assessment is contrary to importer's claim under Section 17(5) of the Customs Act, 1962 - payment of duty under protest does not amount to acceptance of re-assessment - Whether the Commissioner (Appeals) was justified in rejecting the appeals without deciding classification on merits by observing that the appellant had accepted the re-assessment. - HELD THAT: - The Tribunal found that after rejection of the classification declared in the bills of entry the appellant paid duty under protest and filed appeals. In such circumstances the Commissioner (Appeals) should have adjudicated the classification issue on merits instead of holding that the appellant had accepted the reassessment. Section 17(5) contemplates that where an assessment is contrary to the importer's claim a speaking order is required; moreover payment under protest does not equate to an acceptance foreclosing appellate remedy. Having regard to these principles, the Tribunal held that the Commissioner (Appeals) erred in refusing to examine the classification on its merits and that the appeals could not be summarily rejected on the basis that the appellant had accepted the assessment. [Paras 6, 7]

Impugned orders of the Commissioner (Appeals) set aside and matter remanded for fresh decision on classification after opportunity of hearing.

Appealability of an assessment order including self-assessment - Whether the assessment order is appealable by a person aggrieved. - HELD THAT: - Relying on the Supreme Court's reasoning in ITC Ltd. (cited), the Tribunal observed that an order of assessment, including an order of self-assessment, is an order under the Act and is appealable by any person aggrieved thereby. The Tribunal noted that Section 128 permits appeals against "any order" under the Act and that absence of a speaking order does not preclude the appellate forum from entertaining an appeal against the assessment. [Paras 6]

Assessment order is appealable; appellant entitled to have classification adjudicated on appeal.

Final Conclusion: Appeal allowed by way of remand: impugned Commissioner (Appeals) orders set aside and matter remitted for decision on classification on merits after hearing the appellant; remand to be completed within three months from communication of this order; all other issues kept open.

Condonation of delay - sufficient cause - limitation under Section 421(3) of the Companies Act, 2013 - discretionary power to condone delay - per incuriam and nullity of order - entertainment of appeal on merits only after delay condoned

Condonation of delay - sufficient cause - limitation under Section 421(3) of the Companies Act, 2013 - discretionary power to condone delay - Whether the delay of 68 days in filing the company appeal is liable to be condoned under the proviso to Section 421(3). - HELD THAT: - The Appellate Tribunal examined the appellant's averments that the impugned order was communicated only on 22.02.2024 and that an interlocutory application filed on 18.02.2024 (CA No.49 of 2024) seeking recall was pending until its dismissal on 14.03.2024. Section 421(3) allows a further condonable period of 45 days only if the appellant was "prevented by sufficient cause" from filing within the initial 45 days. The Tribunal found that the appellant was aware of the 15.12.2023 order (it was pronounced in his presence, uploaded on 17.12.2023 and the order was annexed to CA No.49 of 2024), and had earlier sought extension of time for payment of costs (CA No.22 of 2024 filed 08.01.2024) expressly "without prejudice to appeal". The condonation application did not explain what prevented filing the appeal after CA No.49 was dismissed on 14.03.2024 until the appeal was filed on 01.05.2024. Reliance on this Tribunal's authority establishes that a showing of sufficient cause is a sine qua non; further, even if sufficient cause is shown, condonation remains discretionary. On the material on record the Tribunal was not satisfied that the appellant was prevented by sufficient cause from filing within the extended period and therefore the condition in the proviso was not established. [Paras 14, 19, 32]

Application for condonation of 68 days' delay is dismissed and the memo of appeal is rejected for want of condonation.

Per incuriam and nullity of order - entertainment of appeal on merits only after delay condoned - Whether the Tribunal could consider the appellant's contention that the impugned order was per incuriam and void ab initio without first condoning the delay. - HELD THAT: - The appellant sought to characterise the 15.12.2023 order as per incuriam and a nullity, urging that delay consideration would thus be inconsequential. The Tribunal held that that contention goes to the merits of the appeal and cannot be entertained until the delay is condoned. Citing precedents, the Tribunal observed that while a void order may be attacked, the court deciding an application for condonation must not go into the merits of the appeal; the appeal can be heard on merits only after the condonation application is allowed. Consequently, the Tribunal declined to decide the asserted jurisdictional nullity of the impugned order in the absence of condonation of delay. [Paras 21, 25]

Merits-based contention that the order is per incuriam/nullity cannot be entertained unless and until delay in filing the appeal is condoned.

Final Conclusion: The application for condonation of delay is dismissed for failure to demonstrate sufficient cause under the proviso to Section 421(3); consequently the appeal is rejected and the Tribunal did not and will not examine the merits (including the per incuriam/nullity plea) in the absence of condonation.

Formation of opinion under Section 241(2) - affairs of the company conducted in a manner prejudicial to the public interest - inspection under Section 206 - powers under Sections 241 and 242 - interim order under Section 242(4) - final order under Section 242 - judicial review of existence of circumstances for governmental satisfaction - status and obligations of a non-profit / Section 8 company

Formation of opinion under Section 241(2) - judicial review of existence of circumstances for governmental satisfaction - Whether the Central Government formed the requisite opinion to file a petition under Section 241(2) and the standard for review of that opinion - HELD THAT: - The Tribunal held that the Government had formed the subjective opinion required by Section 241(2) and that formation of opinion need not follow any prescribed form, but must be based on material. The Court examined the statutory inspection report dated 31.07.2019, the supplementary inspection report dated 03.03.2020, the recommendations of the Regional Director and related material, and concluded that the Ministry's order dated 18.03.2020 (issued with approval of the competent authority) evidenced formation of opinion. Applying settled precedents, the Court reiterated that while the Government's opinion is subjective, the existence of circumstances on which that opinion is founded is open to judicial review; the record here supplied sufficient material to demonstrate those circumstances. The Court therefore rejected appellants' contention that no opinion was formed or that it lacked application of mind. [Paras 33, 41]

Central Government formed the requisite opinion under Section 241(2) on the basis of statutory inspection and supplementary reports; existence of supporting circumstances is amenable to review and were present here.

Affairs of the company conducted in a manner prejudicial to the public interest - status and obligations of a non-profit / Section 8 company - Whether the affairs of Delhi Gymkhana Club were being conducted in a manner prejudicial to the public interest - HELD THAT: - The Tribunal analysed the object clause of the Memorandum (promotion of sports and related activities), the company's status under earlier law corresponding to Section 8, and the financial and membership material in the inspection and supplementary inspection reports. The reports showed minimal expenditure on sports (c. 2.7-3%), divergent accounting treatment of registration fees, creation of membership categories and practices (green cards, UCPs, special categories) not authorised by the Articles, and other irregularities. The NCLT's findings, reproduced by the Appellate Tribunal, concluded that these facts amounted to mismanagement and conduct prejudicial to the company's objects and public interest. The Court rejected submissions that the Club's affairs affected only private interests, holding that companies formed for objects listed in Section 8/26 engage public-purpose considerations and their impairment can prejudice public interest. [Paras 65, 72, 85]

The affairs of the Company were being conducted in a manner prejudicial to public interest, thereby justifying the Union's petition under Section 241(2).

Powers under Sections 241 and 242 - interim order under Section 242(4) - final order under Section 242 - Whether the NCLT's order dated 01.04.2022 is an interim order or a final order under Sections 241/242 and whether it recorded findings sufficient to exercise jurisdiction - HELD THAT: - The Tribunal examined the history of interim reliefs (including the NCLT order of 26.06.2020 and this Tribunal's modification of interim relief), the Supreme Court directions for expeditious disposal, the petition and the voluminous inspection material. It concluded that the NCLT's decision of 01.04.2022 was a final order disposing of the petition (given compliance with the Supreme Court timelines and the NCLT's considered findings), not merely an interim order under Section 242(4). The Appellate Tribunal found that the NCLT had identified and recorded the matters complained of, set out findings on violations of the Memorandum and Articles and financial irregularities, and therefore had sufficiently recorded the basis for exercising jurisdiction under Section 242. [Paras 81, 82, 84]

Order dated 01.04.2022 is a final order under Sections 241/242 and contains sufficient findings to exercise jurisdiction.

Powers under Sections 241 and 242 - judicial review of existence of circumstances for governmental satisfaction - Whether the NCLT unlawfully delegated or abdicated its jurisdiction to the Government nominated committee by appointing 15 government nominees to the General Committee - HELD THAT: - The Tribunal construed the operative directions permitting the Central Government to nominate persons as directors and requiring those directors to report periodically and take corrective/restructuring measures in terms of the Memorandum and Articles. The Court held that entrusting implementation of remedial measures to the committee did not amount to unlawful delegation of the NCLT's adjudicatory power: the committee was to act under the NCLT's order and report to the Tribunal, which retained supervisory authority. The Court rejected the contention that the NCLT had abdicated jurisdiction, noting the requirement of periodic reporting and the NCLT's continued superintendence. [Paras 96]

Appointment of Government nominated committee to implement remedial measures did not amount to impermissible delegation; NCLT retained supervisory jurisdiction.

Powers under Sections 241 and 242 - interim order under Section 242(4) - Whether the Government nominated committee may continue indefinitely and what timetable, if any, should be imposed to bring the matters complained of to an end - HELD THAT: - Recognising that the statutory scheme and precedents require orders under Sections 241/242 to be directed to bringing to an end the matters complained of, the Tribunal observed that an indefinite supersession of the elected management is not permissible. Having reviewed the remediations already undertaken and the elapsed time since 01.04.2022, the Court found it appropriate to fix a concrete timetable to secure completion of remedial measures and restoration of an elected General Committee. The Tribunal directed the committee to complete remedial actions by 31.03.2025 and to conduct elections in accordance with Clause 20 of the Articles within three months after 31.03.2025, thereby ensuring the remedial purpose of Sections 241/242 is achieved within specified timelines. [Paras 101, 102, 112]

Committee must complete remedial measures by 31.03.2025 and hold elections under Article 20 within three months thereafter; indefinite continuation is not permitted.

Final Conclusion: The NCLT order of 01.04.2022 appointing Government nominated directors to the General Committee is upheld: the Central Government formed the requisite opinion on the basis of inspection and supplementary reports, sufficient materials existed showing affairs prejudicial to public interest, and the NCLT's order was a final order under Sections 241/242. The Government nominated committee may implement corrective measures subject to the Tribunal's supervision, but must complete remedial actions by 31.03.2025 and hold elections under Clause 20 of the Articles within three months thereafter; parties to bear their own costs.

Nil Award - scope of reference - extraneous consideration - academic question doctrine - arbitral tribunal as master of evidence - patent illegality - fundamental policy of Indian law - Section 34 Arbitration and Conciliation Act, 1996 - Section 23(3) Arbitration and Conciliation Act, 1996 - Order 23 Rule 3 CPC

Nil Award - scope of reference - academic question doctrine - Validity of the Arbitral Tribunal's Nil Award given after CESTAT quashed the service-tax demand - HELD THAT: - The Court held that once the CESTAT conclusively adjudicated that no service tax was leviable on the Non-Compete Agreement, the core controversy on which arbitration was instituted - viz., who was liable to pay that service tax - had become academic. The Arbitral Tribunal therefore did not act beyond its jurisdiction in rendering a Nil Award; reliance on the CESTAT order and declining to decide the now nugatory questions were within the Tribunal's ambit. The Court rejected the petitioners' contention that the Tribunal abdicated its duty by not delivering a declaratory interpretation of the contracts when the operative tax demand no longer survived. [Paras 55, 56, 65, 66, 68]

The Tribunal was justified in giving a Nil Award after the CESTAT quashed the tax demand; the arbitration claims premised on that demand became academic.

Section 23(3) Arbitration and Conciliation Act, 1996 - arbitral tribunal as master of evidence - patent illegality - Whether the Tribunal's dismissal of the petitioners' applications to supplement claims and its treatment of the documentary material constituted patent illegality or breach of natural justice - HELD THAT: - The Court observed that the Arbitrator is the ultimate judge of the quality and quantum of evidence to be relied upon in an award. The petitioners failed to establish that the Tribunal's finding - that they had not proved by evidence that the amounts claimed represented expenses incurred in pursuing the service tax proceedings - amounted to patent illegality or a breach of fundamental policy of Indian law. The Court noted that the petitioners themselves had accepted that certain claims had become nugatory after the CESTAT order, that applications to supplement were filed late in the arbitral process, and that mere production of documents does not ipso facto dispense with proof. In these circumstances the Court declined to re appreciate the factual evaluation made by the Tribunal. [Paras 57, 60, 61, 63, 67]

The Tribunal's dismissal of the supplementary claims and its evidentiary assessment did not disclose patent illegality or violation of natural justice warranting interference under Section 34.

Section 34 Arbitration and Conciliation Act, 1996 - limitation - Limitation for filing the petition under Section 34 and timeliness of the challenge to the Award - HELD THAT: - The Court considered the parties' contentions about receipt of the Award and the date for computation of the limitation period. The petitioners explained that the signed copy was collected on 01.03.2019 and that the petition was filed within the prescribed period thereafter. The Court did not rest its decision on a limitation bar and proceeded to decide the merits of the challenge. [Paras 16, 36]

Limitation was not treated as a basis to dismiss the petition; the Court addressed and rejected the substantive grounds of challenge.

Final Conclusion: The petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the Arbitral Nil Award is dismissed - the Arbitral Tribunal lawfully relied on the CESTAT's quashing of the tax demand, the supplementary claim rulings and evidentiary assessments do not disclose patent illegality or breach of natural justice, and no interference under Section 34 was warranted.

Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Show cause notice for penalty/late fee pending adjudication - Validity of declaration in Form SVLDRS-1 where proposed penalty amount is stated - Treatment of declarations as incorrect and consequences therefor - Remand for fresh adjudication of SVLDRS-1 and issuance of Form SVLDRS-4

Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Show cause notice for penalty/late fee pending adjudication - Applicability of SVLDRS to a show cause notice for penalty/late fee pending adjudication as on the cut-off date - HELD THAT: - The Court found that it was not in dispute that the show cause notice was pending adjudication as on 30.06.2019, the scheme's cut-off date. Having regard to the Scheme's FAQs relied upon by the petitioner (notably Questions 1 and 48), the Court held that the Scheme is applicable to any show cause notice for penalty/late fee irrespective of whether the matter is under adjudication or appeal. Accordingly, an SCN for penalty pending adjudication as on the cut-off date falls within the class of persons eligible to file a declaration under SVLDRS. [Paras 20, 21]

The petitioner's show cause notice for penalty pending adjudication as on 30.06.2019 was eligible to be covered by SVLDRS.

Validity of declaration in Form SVLDRS-1 where proposed penalty amount is stated - Treatment of declarations as incorrect and consequences therefor - Whether mentioning the proposed penalty amount in the declaration renders the declaration incorrect and ineligible for the Scheme - HELD THAT: - The Court rejected the respondents' contention that the declaration was rendered incorrect and therefore ineligible merely because the petitioner stated the amount of proposed penalty (as quantified in Para 12 of the SCN). The Court accepted the petitioner's submission, based on the Scheme's scope expressed in the FAQs, that disclosure of the proposed penalty amount does not disentitle an otherwise eligible declarant from the benefits of SVLDRS. Consequently, the Designated Committee's rejection on the ground that the declaration was incorrect for mentioning the penalty amount was found to be contrary to record and to the Scheme's applicability. [Paras 15, 21]

The fact that the petitioner stated the proposed penalty amount in the declaration did not render the declaration incorrect or ineligible under SVLDRS.

Remand for fresh adjudication of SVLDRS-1 and issuance of Form SVLDRS-4 - Disposition of the impugned rejection and further action to be taken by respondent authorities - HELD THAT: - The Court quashed and set aside the impugned order rejecting the declaration and remitted the matter to the respondent authorities for adjudication of the Form SVLDRS-1 in accordance with law, noting that the SCN was pending adjudication on the cut-off date. The Court further directed that, after adjudication in accordance with law, the respondent authorities shall issue Form SVLDRS-4 in accordance with the Scheme within a stipulated period. The relief ordered was corrective and procedural: removal of the improper rejection and a mandate for fresh consideration and compliance with Scheme provisions. [Paras 22]

Impugned rejection quashed and set aside; matter remanded for adjudication of Form SVLDRS-1 and respondent directed to issue Form SVLDRS-4 in accordance with the Scheme within 12 weeks.

Final Conclusion: The petition is allowed: the Designated Committee's rejection of the petitioner's Form SVLDRS-1 is quashed and set aside; the matter is remanded for fresh adjudication in accordance with the Scheme and the respondent authorities are directed to issue Form SVLDRS-4 within 12 weeks from receipt of the order.

Management, maintenance or repair service - works contract service - benefit of abatement under Notification No. 12/2003-ST - Cenvat credit and reversal - reconciliation of ST-3 returns and differential tax demand - prima facie admissibility subject to verification

Management, maintenance or repair service - works contract service - Whether management, maintenance or repair service was covered under works contract service for the period up to 30.06.2012 - HELD THAT: - The Tribunal examined the characterisation of the appellant's activity and observed that it does not find that management, maintenance or repair service fell within the definition of Works Contract Service for the period up to 30.06.2012. The panel therefore rejected the contention that the demand for service tax on the total gross value (on the basis that the activity was not works contract) was correct. The Tribunal nevertheless proceeded, without making a final conclusive finding on that issue, to consider the appellant's alternative claim for abatement under the relevant notification.

The Tribunal did not accept that the activity was covered by works contract service up to 30.06.2012.

Benefit of abatement under Notification No. 12/2003-ST - prima facie admissibility subject to verification - Whether the appellant is prima facie entitled to abatement under Notification No. 12/2003-ST if the value of goods used is excluded - HELD THAT: - Considering the appellant's alternative plea, the Tribunal noted a certificate endorsed by the Commercial Tax Officer evidencing payment of VAT on the value of goods used in providing the service. On that basis the Tribunal found that, if the value of goods is excluded, the remaining value indicates that the service tax was discharged and that the benefit of the abatement under Notification No. 12/2003-ST is prima facie admissible. The Tribunal qualified this finding as subject to verification of the materials and computations by the adjudicating authority.

Prima facie admissibility of the abatement under Notification No. 12/2003-ST is recognised, subject to departmental verification.

Cenvat credit and reversal - works contract service - Whether denial of works contract benefit for the period post 30.06.2012 on the ground of availing Cenvat credit was sustainable - HELD THAT: - The Tribunal observed that the lower authority denied the concessional treatment under works contract service solely because the appellant had availed Cenvat credit. The appellant stated that Cenvat credit has been reversed and undertook to reverse any shortfall. On this basis the Tribunal found that the appellant is prima facie eligible for the benefit of Works Contract Service post 30.06.2012, but that the matter requires reconsideration and verification by the adjudicating authority to ascertain whether reversal is complete and if any shortfall remains.

Prima facie entitlement to works contract benefit post 30.06.2012 if Cenvat credit is duly reversed; matter remanded for verification.

Reconciliation of ST-3 returns and differential tax demand - Correctness of the differential service tax demand arising from reconciliation of income with ST-3 returns - HELD THAT: - The Tribunal observed that according to the reconciliation submitted by the appellant they had discharged service tax correctly and that no differential demand arises on the face of that reconciliation. However, the Tribunal directed that the correctness of the appellant's calculation and reconciliation must be verified by the department, indicating that the question remains to be examined afresh.

Differential demand not upheld on prima facie reading of the reconciliation; verification of calculations directed and matter remanded.

Final Conclusion: Impugned order set aside and the entire matter remanded to the adjudicating authority for de-novo consideration to verify the value of goods used (and entitlement to abatement), the status of Cenvat credit reversal (and entitlement to works contract treatment post 30.06.2012), and the correctness of reconciliation and any differential demand.

Taxability of security deposit - value of taxable services and nexus with consideration - inclusion under Section 67(3) of amounts received before, during or after provision of service - refundable deposit not consideration for service - distinction between connection charges and security deposit

Taxability of security deposit - value of taxable services and nexus with consideration - inclusion under Section 67(3) of amounts received before, during or after provision of service - refundable deposit not consideration for service - distinction between connection charges and security deposit - Whether refundable security deposits collected by the assessee are includable in the value of taxable services and liable to service tax. - HELD THAT: - The Tribunal found that two distinct transactions existed: (i) gas connection charges on which service tax was already paid by the respondent w.e.f. 01.04.2012; and (ii) refundable security deposits collected for safe custody of material installed at customers' premises. Section 67 requires a nexus between the amount received and the consideration for the taxable service; only amounts that constitute consideration for the service are taxable. Reliance on judicial precedent (including Moriroku and subsequent tribunal decisions) and Board guidance supports the principle that refundable security deposits, which are refundable on termination subject to conditions and held as security against damages or defaults, do not constitute consideration for the service and therefore are not includable in the taxable value. The Supreme Court decision on connection charges in the appellant's own case concerned connection charges and not separately collected refundable deposits; its ratio was held inapplicable on facts. Applying these principles to the agreement (refund conditioned on meter/equipment being undamaged) and the admitted factual position that the deposits are refundable, the Tribunal concluded that the security deposits are not part of the value of taxable services and not liable to service tax. [Paras 4, 5]

Security deposits are not includable in taxable value and no service tax is payable thereon; the order dropping the demand is upheld.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the adjudicating authority's order dropping the service tax demand in respect of refundable security deposits for the period 2012-2013.

Includibility of reimbursed expenses - consideration - assessable value - taxability under Section 67 - reverse charge mechanism - extended period of limitation - penalty under Section 76 - interest under Section 75

Includibility of reimbursed expenses - consideration - taxability under Section 67 - assessable value - reverse charge mechanism - Value of free accommodation and other facilities provided by the service recipient to CISF personnel is includible in the taxable value for reverse charge service tax - HELD THAT: - The Tribunal held that the value of free housing, transport and similar facilities provided by the appellant to CISF personnel is not includible in the assessable value for service tax under the reverse charge mechanism. The decision rests on the principle that only consideration which flows to and accrues for the benefit of the service provider can be included in taxable value under Section 67; reimbursed or notional benefits that do not constitute consideration received by the service provider are not taxable. The Tribunal relied on its earlier decision in NTPC Ltd. v. CCE & ST- Surat-I and on precedents including the Allahabad Bench and the Principal Bench at New Delhi which held that expenses such as accommodation, vehicles, telephone and other similar facilities provided by the service recipient to CISF are not includible. In view of these authorities and the presence of a specific MOU and actual reimbursement on an actual basis, the demand on merits was found unsustainable and set aside. [Paras 4]

Demand insofar as it seeks to include the value of accommodation, transport and similar facilities in the taxable value for reverse charge is set aside.

Extended period of limitation - Validity of invocation of extended period of limitation - HELD THAT: - The Tribunal found that extended period of limitation was not invocable because there was no case of suppression or fraud on the part of the appellant. The appellants had a bona fide belief, supported by earlier decisions, that the notional value of free facilities was not taxable and they furnished information as required. Relying on the Tribunal's prior findings in identical matters, the Tribunal concluded that the extended period could not be invoked. [Paras 4]

Invocation of the extended period of limitation is not sustainable.

Penalty under Section 76 - interest under Section 75 - Sustainability of penalty and interest demands consequent to the service tax demand - HELD THAT: - Since the primary demand for inclusion of the value of free facilities was found to be unsustainable, the Tribunal held that consequential imposition of penalty under Section 76 and interest under Section 75 could not be sustained. The Tribunal observed that where demand on merits is without basis, corresponding penalty and interest cannot survive. Further, the existence of a bona fide belief not to include such facilities militated against penalty under the relevant provisions. [Paras 4, 5]

Penalties and interest levied consequential to the disallowed demand are set aside.

Final Conclusion: The impugned order confirming demands (including extended period invocation, penalty and interest) for the periods in question is set aside; the appeal is allowed and the demands are annulled.

Service tax liability on government supply of water - assignment of right to use natural resources - allocation/auction of natural resources - reverse charge mechanism - reavailment of Cenvat Credit after change of option under Rule 6(3) - Rule 4(7) Cenvat Credit Rules - one year limitation for credit - extended period of limitation - suppression requirement

Service tax liability on government supply of water - assignment of right to use natural resources - allocation/auction of natural resources - Supply of water by Government of Odisha is not exigible to service tax for the impugned period - HELD THAT: - The Tribunal applied its earlier decision in Paradeep Phosphates (following Sasan Power Limited) holding that agreements for supply of water by the government, where charges are payable based on volume drawn and the government does not assign rights to the natural resource, constitute supply of water and not an assignment of rights to use natural resources. On that basis the payment made for water charges does not attract service tax under the category of allocation/auction of natural resources for the period in question. The Tribunal therefore found no service-tax liability on the appellant for the water drawn from April 2016 to 30 June 2017 and set aside the demand on merits. [Paras 25, 26, 29]

Demand of service tax on supply of water by the Government of Odisha is not sustainable and is set aside.

Reavailment of Cenvat Credit after change of option under Rule 6(3) - extended period of limitation - suppression requirement - Reavailment of previously reversed Cenvat credit after change of option under Rule 6(3) cannot be denied where the appellant had intimated the department and there was no suppression; demand is barred - HELD THAT: - The appellant had intimated the department by letters dated 01.12.2016 and 12.01.2017 about the change of option and reavailment of credit, and the department had actual knowledge. The Tribunal found no suppression of facts by the appellant and therefore held that invocation of the extended period of limitation was not justified. Consequently the demand seeking denial of reavailed Cenvat credit under Rule 6(3) was set aside. [Paras 27, 29]

Demand for denial of reavailed Cenvat credit under Rule 6(3) is not sustainable and is set aside.

Rule 4(7) Cenvat Credit Rules - one year limitation for credit - extended period of limitation - suppression requirement - Cenvat credit shown in ER1 returns after one year cannot be denied where credit was availed in books within one year and there was no suppression; demand barred by limitation - HELD THAT: - The Tribunal noted that the appellant had recorded the credits in its books and Cenvat register and had reported them in the ER1 return filed on 12.01.2017, which was within the department's knowledge. Rule 4(7) does not prescribe a statutory record which would render the credit ineligible merely because it was reflected in the ER1 return after one year. In the absence of suppression, the extended period of limitation could not be invoked and the denial of credit solely on account of ER1 timing was unsustainable. The Tribunal therefore set aside the demand and, as no demand stood, held that no interest or penalty was payable or imposable. [Paras 28, 29, 30]

Denial of Cenvat credit on account of ER1 return showing after one year is not sustainable; demand, interest and penalty are set aside.

Final Conclusion: The impugned order is set aside in entirety; the appeal is allowed - no service tax liability on water supply, the reavailment of Cenvat credit under Rule 6(3) and credit reflected after one year are not sustainble, and consequently no interest or penalty is payable.

Quashing and setting aside of administrative order - remand for de novo consideration - application of Central Excise Rules, 2001 - non-application of Central Excise Rules, 1944 - interpretation and application of Notification No.19/2004 - Condition Nos. 2(e) and 2(h) - right to adequate opportunity of hearing

Non-application of Central Excise Rules, 1944 - application of Central Excise Rules, 2001 - Impugned revisional order was legally untenable insofar as it applied Rules 187, 187A and 187B of the Central Excise Rules, 1944 instead of the Central Excise Rules, 2001 and subsequent Rules. - HELD THAT: - The High Court found that the Revisional Authority in its order dated 13.12.2021 referred to and applied provisions of the Central Excise Rules, 1944 which had been superseded by the Central Excise Rules, 2001 (and subsequent rules). Counsel for the respondents did not dispute that the Revisional Authority had relied on the 1944 Rules. Given that the applicable statutory regime for deciding the revision was the Central Excise Rules, 2001 and subsequent Rules, reliance on the obsolete 1944 Rules rendered the reasoning and conclusion of the Revisional Authority unsustainable. The court therefore held that the revisional conclusion based on the 1944 Rules could not stand. [Paras 6]

The revisional order was quashed insofar as it rested on the Central Excise Rules, 1944.

Remand for de novo consideration - interpretation and application of Notification No.19/2004 - Condition Nos. 2(e) and 2(h) - right to adequate opportunity of hearing - Revision Applications were directed to be decided afresh by the Revisional Authority in accordance with the Central Excise Rules, 2001 (and subsequent Rules) and Notification No.19/2004, after affording opportunity of hearing. - HELD THAT: - Having quashed the impugned order for applying the wrong statutory regime, the court directed that the Revisional Authority shall reconsider the Revision Applications de novo arising out of the order-in-appeal, giving the petitioners adequate opportunity of hearing and applying the correct legal provisions - namely the Central Excise Rules, 2001 and subsequent Rules and the Notification No.19/2004 (including Condition Nos. 2(e) and 2(h)). The High Court explicitly refrained from expressing any view on the merits of the rebate claims and confined its intervention to ensuring that the revisional exercise is undertaken under the correct legal framework. [Paras 7, 8]

Revision Applications remanded for fresh consideration in accordance with the Central Excise Rules, 2001 and Notification No.19/2004, after giving the petitioners an opportunity of hearing; merits not decided by the court.

Final Conclusion: The revisional order dated 13.12.2021 is quashed for having applied the Central Excise Rules, 1944; the Revisional Authority is directed to decide the Revision Applications afresh de novo in accordance with the Central Excise Rules, 2001 and subsequent Rules and Notification No.19/2004, after affording adequate hearing; the High Court has not adjudicated the merits of the rebate claims.

Deemed manufacture under Chapter Note 9 to Chapter 38 - repacking from bulk packs to retail packs - adoption of any other treatment to render the product marketable - definition of "manufacture" under Section 2(f) of the Central Excise Act, 1944 - CBEC clarification on labelling and repacking (Circular No. 342/58/97 CX) - mixing/filling of gases and preservation of individual characteristics (Vadilal/Goyal principle)

Deemed manufacture under Chapter Note 9 to Chapter 38 - repacking from bulk packs to retail packs - adoption of any other treatment to render the product marketable - CBEC clarification on labelling and repacking (Circular No. 342/58/97 CX) - Filling imported Hepta Propane / FM 200 from bulk mother containers into empty seamless cylinders and super pressurising with nitrogen is not a process of manufacture under Note 9 to Chapter 38. - HELD THAT: - The Tribunal analysed the three limbs of Chapter Note 9 (labelling/re labelling, repacking from bulk to retail packs, and any other treatment to render the product marketable) read with the definition of "manufacture" in Section 2(f). The factual matrix did not establish labelling or repacking in the sense of creating prepacked retail units with predetermined quantity or marketing particulars; the activity was a mere transfer of imported FM 200 into customer specified seamless cylinders. The authorities below had not shown that nitrogen treatment effected any perceptible change in the imported FM 200 or created a new marketable commodity. The CBEC circular was held instructive: simple transfer from one container to another may not constitute repacking attracting the chapter note and the question depends on facts. Reliance on precedents (including the principle in Vadilal/Goyal that mixing/filling gases which retain their individual character does not create a new product) supported the conclusion that the filling/super pressurising did not amount to manufacture. Consequently, the impugned finding of manufacture was unsupported by factual or technical evidence and unsustainable. [Paras 8, 9, 10, 11, 12]

Activity of refilling FM 200 into cylinders and super pressurising with nitrogen does not amount to manufacture under Note 9 to Chapter 38.

Definition of "manufacture" under Section 2(f) of the Central Excise Act, 1944 - deemed manufacture under Chapter Note 9 to Chapter 38 - mixing/filling of gases and preservation of individual characteristics (Vadilal/Goyal principle) - Clearances of the refilled cylinders are not liable to central excise duty and consequential penal action cannot be sustained. - HELD THAT: - Having held that the refilling and super pressurising did not amount to "manufacture" under the Chapter note and Section 2(f), the Tribunal concluded that demands of central excise duty, interest and penalties premised on deemed manufacture could not be sustained. The reasoning adopted the consequence that if the principal legal predicate for duty and penalty (deemed manufacture) is absent on the facts, there is no basis for the adjudged demands or penal consequences. [Paras 12, 13]

Demands of central excise duty, interest and penalties based on the finding of manufacture are set aside; appeal allowed in favour of the appellants.

Final Conclusion: The impugned order holding that refilling of imported FM 200 into cylinders with nitrogen treatment amounted to manufacture under Chapter Note 9 to Chapter 38 was set aside; the Tribunal held the activity not to be manufacture and allowed the appeal, thereby negating the demand of excise duty and consequential penal action for the period 30.12.2006 to 30.12.2009.

Bar of limitation under Section 11B of the Central Excise Act, 1944 - conclusion of proceedings under Section 11A of the Central Excise Act, 1944 - finality of assessment and prohibition on reopening by way of refund - payment under protest and requirement of contemporaneous evidence - self-assessment is appealable but refund proceedings cannot effect re-assessment - cannot claim refund on basis of a decision in another person's case

Bar of limitation under Section 11B of the Central Excise Act, 1944 - conclusion of proceedings under Section 11A of the Central Excise Act, 1944 - payment under protest and requirement of contemporaneous evidence - Refund claims filed by the appellant are time-barred and liable to be rejected where the amounts were deposited and the proceedings stood concluded without any contemporaneous protest. - HELD THAT: - The Tribunal accepted the factual findings of the lower authorities that the appellant had deposited the amounts in consequence of audit objections and had requested the department to deem the audit paras settled, with no show cause notices subsequently pursued. In that factual matrix Section 11A operates to conclude the proceedings and the refund claims filed later (on 20.12.2019) were held barred by limitation under Section 11B. The Tribunal upheld the finding that the challans and record did not indicate payment under protest and noted that mere reliance now on a retrospective claim of payment under protest, without contemporaneous evidence or statutory provision permitting payment under protest for the relevant period, was insufficient to escape the time bar. [Paras 4]

Refund claims dismissed as time barred; payments treated as concluding the proceedings and not made under protest.

Cannot claim refund on basis of a decision in another person's case - cannot reopen assessment by relying on decisions in other proceedings - A taxpayer cannot seek refund of amounts paid after the assessment in its own case has become final by relying on judicial decisions rendered in other parties' cases. - HELD THAT: - Applying the principle in Mafatlal Industries Ltd., the Tribunal held that a decision in another taxpayer's case cannot be the basis for reopening a final assessment and claiming refund. The Tribunal found no favourable order in the appellant's own proceedings for the specific audit paras to justify refund; accordingly reliance on third party decisions did not confer a right to refund where the taxpayer's own assessment had been concluded. [Paras 4]

Claims based on judicial decisions in other parties' cases are not maintainable to reopen the appellant's finalized assessments for refund.

Self-assessment is appealable but refund proceedings cannot effect re-assessment - finality of assessment and prohibition on reopening by way of refund - Refund proceedings cannot be used to re open or re assess self assessment orders; a refund claim is not a substitute for appeal or re assessment. - HELD THAT: - Relying on the Supreme Court's exposition in ITC Ltd., the Tribunal noted that while self assessment orders are appealable, refund proceedings are in the nature of execution and are not an instrument for adjudicating or re assessing the substantive correctness of an assessment. The Tribunal endorsed the principle that conditions for entitlement (including exemption claims) cannot be adjudicated in refund proceedings and that re assessment is permissible only under the statutory mechanisms provided for reassessment, not through a refund application. [Paras 4]

Refund application cannot be used to re open or re assess final self assessment orders; such remedy lies only through the statutory appeal or reassessment provisions.

Final Conclusion: Appeals dismissed; the Tribunal upheld the rejection of the refund claims on the grounds of concluded proceedings, absence of payment under protest, limitation under Section 11B, and the impermissibility of reopening final assessments by way of refund or by relying on decisions in other cases.

Input tax credit - bogus claim - transactions with non-existing or bogus entities - entitlement to input tax credit where there are no actual transactions - application of precedent Ecom Gill Coffee Trading Private Limited

Input tax credit - bogus claim - transactions with non-existing or bogus entities - application of precedent Ecom Gill Coffee Trading Private Limited - Assessee is not entitled to claim input tax credit in respect of transactions found to be with bogus or non-existing entities; appeal allowed for the Revenue in light of applicable precedent. - HELD THAT: - The Court, noting that notice was duly served and that there was no appearance or contest by the assessee, applied the ratio of State of Karnataka v. Ecom Gill Coffee Trading Private Limited . That precedent treats claims of input tax credit based on transactions with non-existing or bogus entities as invalid because such purported transactions do not satisfy the statutory criterion for entitlement to input tax credit. In the absence of any contrary material or contest from the assessee, the present claim of input tax credit was disposed of by applying that ratio. The Court therefore allowed the appeal filed by the Revenue and rejected the assessee's claim on the same principle.

Appeal allowed; assessee's claim to input tax credit in respect of transactions with non-existing/bogus entities rejected and matter disposed of in terms of the cited precedent.

Final Conclusion: The appeal is allowed in favour of the Revenue; the assessee cannot claim input tax credit for transactions with non-existing or bogus entities and the matter is disposed of in light of the ratio in Ecom Gill Coffee Trading Private Limited .

Inter-state sale under Section 3(a) of the Central Sales Tax Act - Agreement to sell versus inter state stock transfer - Order for Supply (OFS) as the contract of sale - Master Agreement as a standing offer, not an agreement to sell - Branch/stock transfers not constituting sale in course of inter State trade

Inter-state sale under Section 3(a) of the Central Sales Tax Act - Agreement to sell versus inter state stock transfer - Order for Supply (OFS) as the contract of sale - Master Agreement as a standing offer, not an agreement to sell - Branch/stock transfers not constituting sale in course of inter State trade - Whether the movements of beer from the appellants' manufacturing units in Rajasthan to their depots in Bihar and Jharkhand amounted to inter state sales under Section 3(a) of the Central Sales Tax Act or were inter state stock transfers - HELD THAT: - The Tribunal examined the Liquor Policy, the Master Agreement and the Form 19 C license and concluded that the Master Agreement is a standing framework under which the Corporation may, but is not obliged to, procure specified quantities. Clause 10.1 of the Liquor Policy and the practice under the arrangements show that an OFS issued by the Corporation, with its specified quantity and validity, is the instrument that concludes the contract of sale. The Master Agreement leaves time and place of delivery and quantities to be determined subsequently and contains no binding obligation on the Corporation to purchase specified quantities; accordingly it does not itself constitute an agreement to sell. The movements from the factories in Rajasthan to the appellants' depots were effected to maintain buffer/required stock and to ensure prompt fulfilment of future OFS; such transfers represent inter branch/stock transfers in contemplation of possible future orders and were not occasioned by any prior contract of sale. The two limbs of movement - factory to appellant depot and depot to Corporation depot pursuant to OFS - are distinct and cannot be treated as a single inter state movement occasioned by a prior contract of sale. The material features relied on by the revenue (such as labelling or the Master Agreement's delivery clauses) do not establish that the Master Agreement itself occasioned the interstate movement. On these grounds the Tribunal set aside the Tax Board's finding of inter state sale and held the movements to be stock transfers until concluded into sale by issuance and acceptance of OFS. [Paras 54, 55, 57, 59]

Movements from the appellants' manufacturing units in Rajasthan to their depots in Bihar and Jharkhand are inter state stock transfers (not inter state sales under Section 3(a)); the Rajasthan Tax Board order is set aside and the appeals are allowed.

Final Conclusion: The order of the Rajasthan Tax Board upholding demand of central sales tax is set aside; movements from appellants' factories to their depots were inter state stock transfers and sales were concluded only upon issuance/acceptance of OFS, hence the appeals are allowed.

Interplay between Public Premises Act, 1971 and Arbitration and Conciliation Act, 1996 - Arbitrability of disputes arising out of a lease agreement - Validity and applicability of arbitration agreement - Scope of enquiry under Section 11(6-A) - prima facie existence of arbitration agreement - Referral court's limited role in appointment of arbitrator

Interplay between Public Premises Act, 1971 and Arbitration and Conciliation Act, 1996 - Arbitrability of disputes arising out of a lease agreement - Public Premises Act, 1971 does not override the Arbitration and Conciliation Act, 1996 in respect of disputes arising from the parties' lease agreement for the period of the subsisting contract. - HELD THAT: - The Court held that the disputes for which arbitration was sought relate to promises and reciprocal obligations emanating from the lease dated 26.09.2012 - specifically the right of renewal and the legality of revised storage charges during the contract period. Those questions turn on interpretation and construction of the agreement and therefore fall within the scope of the arbitration clause. The Public Premises Act is directed to ejectment of unauthorized occupants and consequential directions and does not affect rights and obligations under the subsisting lease up to its expiry; it neither bars nor overlaps with proceedings under the Arbitration and Conciliation Act in respect of disputes arising during the contract term. The Court therefore rejected the submission that the Public Premises Act overrides the Arbitration Act in the present factual matrix. (Reasoning at para 13.) [Paras 13]

Submission that the Public Premises Act overrides the Arbitration Act is rejected; the disputes arising under the lease are arbitrable and not displaced by the Public Premises Act.

Validity and applicability of arbitration agreement - Scope of enquiry under Section 11(6-A) - prima facie existence of arbitration agreement - Referral court's limited role in appointment of arbitrator - High Court did not err in appointing an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. - HELD THAT: - Applying the principles laid down in SBI General Insurance Co. Ltd. v. Krish Spinning, the Court emphasised that the referral court's role under Section 11(6-A) is confined to a prima facie scrutiny of the existence of an arbitration agreement (including formal requirements such as writing) and does not extend to a detailed enquiry into the merits or contested validity of the arbitration agreement. The disputes about rate revision and renewal plainly arise out of the agreement and are covered by Clause 16. Given the existence of a valid arbitration clause and the limited scope of enquiry at the appointment stage, the High Court was justified in referring the parties to arbitration. (Reasoning at paras 14 and extracted paras 110-114 of the cited authority and applied at para 14.) [Paras 14]

Appointment of an arbitrator by the High Court under Section 11 is upheld; the referral court's prima facie scrutiny was appropriately applied.

Final Conclusion: The special leave petition is dismissed; the High Court's reference to arbitration is maintained, the arbitral proceedings are to resume and the appellant is directed to pay costs of the litigation.

Definition of "workman" under section 2(s) of the Industrial Disputes Act, 1947 - Nature of duties/principal duties test for determination of "workman" status - Application of pre-amendment salary threshold excluding supervisory employees - Effect of acceptance of salary in lieu of notice on wrongful termination remedy - Reinstatement and back wages as the normal remedy for illegal termination

Definition of "workman" under section 2(s) of the Industrial Disputes Act, 1947 - Nature of duties/principal duties test for determination of "workman" status - Application of pre-amendment salary threshold excluding supervisory employees - Employee does not fall within the definition of "workman" under section 2(s) of the I.D. Act as on the date of termination - HELD THAT: - The determinative factor is the principal duties and functions performed and not the designation. Evidence showed the employee supervised two junior engineers and the employment orders and confirmation letters indicated administrative categorisation. The onus to prove "workman" status lies on the person claiming it. Since the termination occurred on 08.10.2003, the pre-amendment salary exclusion (Rs.1,600/-) is applicable; the employee was drawing more than that amount. In the absence of concrete materials to rebut supervisory character, the Court held that the employee was a supervisory employee drawing wages above the threshold and therefore excluded from the definition of "workman" under section 2(s). [Paras 16]

Finding of the High Court and Labour Court that the employee was a "workman" is set aside and the employee is held not to be a "workman" within section 2(s).

Effect of acceptance of salary in lieu of notice on wrongful termination remedy - Reinstatement and back wages as the normal remedy for illegal termination - Reinstatement and award of compensation in lieu of back wages were inappropriate in the facts of the case - HELD THAT: - Clause 14 of the appointment order provided for termination by one month's notice or one month's salary in lieu. The management relieved the employee forthwith and issued a cheque towards one month's salary in lieu of notice which the employee accepted and encashed without objection. There was therefore no procedural violation in the termination. Further, because the employee is not a "workman" within section 2(s), the protections and remedies under the I.D. Act (including reinstatement and back wages under sections dealing with unfair termination) are not attracted. Consequently the Labour Court's award of reinstatement and lump-sum compensation in lieu of back wages cannot be sustained. [Paras 17, 18]

Order of the Labour Court directing reinstatement and payment of compensation in lieu of back wages is set aside; High Court's interference in that respect is affirmed.

Final Conclusion: The appeals are disposed by holding that the employee was not a "workman" under section 2(s) of the I.D. Act as on the date of termination and therefore the Labour Court's award of reinstatement and compensation in lieu of back wages is set aside; the employee's appeal is dismissed and the management's appeal is allowed.

Presumption under Section 139 of the Negotiable Instruments Act - Presumption of consideration under Section 118 of the Negotiable Instruments Act - Rebuttal by accused - standard of probable defence / preponderance of probabilities - Presumption as to correctness of memo of dishonour under Section 146 of the Negotiable Instruments Act - Service of notice and presumption under Section 27 of the General Clauses Act - Scope and limits of revisional jurisdiction under Section 397 Cr.P.C. - Sentence and compensation principles in prosecution under Section 138 - deterrent object and award of compensation (consistent approach)

Presumption under Section 139 of the Negotiable Instruments Act - Presumption of consideration under Section 118 of the Negotiable Instruments Act - Rebuttal by accused - standard of probable defence / preponderance of probabilities - Whether the presumption that the cheque was issued for discharge of a legally enforceable debt arose and whether the accused rebutted that presumption. - HELD THAT: - The accused admitted taking the loan, issuing the cheque for Rs.70,000 and his signature thereon (statement under Section 313 Cr.P.C.). Once issuance/signature was admitted, a presumption under Section 139 (and Section 118 as to consideration) arose that the cheque was issued towards discharge of liability. The presumption is rebuttable but the accused must raise a probable defence on the preponderance of probabilities. The accused contended payments were made earlier, but the trial record shows those deposits could not be connected to the loan so as to discharge the presumption; no evidence was led by the accused to prove that the full amount due was paid or that the cheque was merely a security. Authorities were applied to show the accused bears the evidentiary burden to rebut the statutory presumption and, on the facts, he failed to do so. [Paras 16, 17, 21, 25, 26]

Presumption under Section 139/118 arose and the accused failed to rebut it; the cheque was held to have been issued in discharge of legal liability.

Presumption as to correctness of memo of dishonour under Section 146 of the Negotiable Instruments Act - Whether the cheque was dishonoured for insufficiency of funds as shown by the memo of dishonour. - HELD THAT: - The memo of dishonour (Ext. P3) records dishonour due to 'insufficient funds'. Section 146 creates a presumption as to the correctness of such memo. The accused led no evidence to rebut that presumption and therefore the finding that the cheque was dishonoured for insufficient funds stands. [Paras 27]

The memo of dishonour is presumed correct and the cheque was dishonoured due to insufficient funds.

Service of notice and presumption under Section 27 of the General Clauses Act - Whether the notice of demand was duly served and, if so, whether the accused failed to make payment despite receipt. - HELD THAT: - The notice (Ext. P-4) was sent to the address furnished by the accused in his Section 313 statement and Notice of Accusation. Section 27 of the General Clauses Act gives rise to a presumption of service in such circumstances. The accused did not lead evidence to rebut the presumption. In addition, the accused did not make payment within the statutory period; case law was applied to hold that failure to pay after receipt of summons disentitles one from later claiming non-service of notice. [Paras 28, 29]

The notice of demand was deemed served and the accused failed to pay despite receipt of a valid notice.

Scope and limits of revisional jurisdiction under Section 397 Cr.P.C. - Whether the High Court in revisional jurisdiction should interfere with concurrent findings of fact recorded by the trial and appellate courts. - HELD THAT: - The Court applied settled law that revisional jurisdiction under Section 397 Cr.P.C. is limited to correcting patent error, jurisdictional defect, perversity or legal error and is not equivalent to appellate scrutiny of evidence. Given the concurrent detailed findings of the courts below and absence of any patent legal error or perversity, interference was unwarranted. [Paras 12, 13, 14, 36]

Revisional court declined to disturb concurrent findings; revision dismissed.

Sentence and compensation principles in prosecution under Section 138 - deterrent object and award of compensation (consistent approach) - Whether the sentence of six months' simple imprisonment and compensation awarded by the trial court is excessive or requires interference. - HELD THAT: - The Court noted the penal and deterrent purpose of Section 138 and applied precedents prescribing a consistent approach to compensation (including fines up to twice the cheque amount and interest as a guide). Considering the delay, legal expenses and loss of interest suffered by the complainant, the sentence of six months and compensation awarded were found not to be excessive and did not merit interference. [Paras 31, 32, 33, 34]

Sentence and compensation upheld; no interference.

Final Conclusion: Concurrent findings of the trial and appellate courts that the accused issued the cheque, the cheque was dishonoured for insufficiency of funds, the notice was duly served and the accused failed to rebut statutory presumptions were upheld; the revisional court declined to interfere and the revision is dismissed.