TaxTMI Updates e-Newsletter
Oct 25,2024

Constitutional validity of exclusion (iii) to the Explanation to Section 17 of the CGST Act - application of Explanation to Section 17(5) limited to sub clause (c) and not to sub clause (d) - functionality test for determining whether a building/structure is a 'plant' under Section 17(5) - remand for fact finding by the Authority for Advance Ruling - scope of judicial review of findings of fact

Constitutional validity of exclusion (iii) to the Explanation to Section 17 of the CGST Act - No relief granted challenging constitutional validity or seeking read down of exclusion (iii) to the Explanation to Section 17 of the CGST Act. - HELD THAT: - The High Court recorded that the question of constitutional validity of exclusion (iii) to the Explanation to Section 17 had been considered and upheld by the Hon'ble Supreme Court by its judgment dated 3 October 2024. In view of that binding pronouncement, the petitioner's challenge under prayer clauses (a) and (b) could not be sustained and did not call for interference by this Court. [Paras 9]

Prayer clauses (a) and (b) dismissed in view of the Supreme Court's decision dated 3 October 2024.

Application of Explanation to Section 17(5) limited to sub clause (c) and not to sub clause (d) - functionality test for determining whether a building/structure is a 'plant' under Section 17(5) - remand for fact finding by the Authority for Advance Ruling - scope of judicial review of findings of fact - Impugned orders of the AAR and Appellate Authority set aside and matter remanded to the AAR to apply the correct legal tests (as indicated by the Supreme Court) and undertake fact finding by applying the functionality test. - HELD THAT: - The Court found that the AAR and the Appellate Authority had decided the matter without the benefit of the Supreme Court's ruling that the Explanation to Section 17(5) applies to sub clause (c) (which uses 'plant and machinery') and not to sub clause (d) (which uses 'plant or machinery'), and that whether a building or structure is a 'plant' is a question of fact requiring application of the functionality test. The impugned authorities had largely relied on dictionary definitions and had not subjected the case to the focused functionality analysis now required. While recognising the limited scope of judicial interference with findings of fact, the Court held that in light of the Supreme Court's observations and because the petitioner may now have additional material, the proper course was to set aside the earlier orders and remit the matter to the AAR for fresh consideration and fact finding under the correct legal approach. The petitioner was granted liberty to file additional material and the AAR was directed to decide within a specified timeframe. [Paras 11, 12, 15, 16]

Order dated 22 February 2019 of the AAR and order dated 7 December 2019 of the Appellate Authority set aside; matter remanded to the AAR for fresh ruling applying the functionality test and the Supreme Court's legal observations; petitioner permitted to file further material within four weeks and AAR to decide within four months.

Final Conclusion: The challenge to the constitutional validity of exclusion (iii) is rejected in view of the Supreme Court's decision; however, the High Court has set aside the earlier AAR and appellate orders and remanded the matter to the AAR for fresh fact finding and application of the functionality test (with liberty to the petitioner to file additional material and time directions for the AAR).

Mandatory opportunity of hearing under Section 107(8) of the CGST Act - dismissal for want of prosecution - remand for fresh adjudication after hearing

Mandatory opportunity of hearing under Section 107(8) of the CGST Act - dismissal for want of prosecution - Impugned order dismissing the appeal without hearing set aside and remitted to the appellate authority for fresh decision after affording hearing. - HELD THAT: - The Court examined Section 107(8) read with the relevant rules and found that the appellate authority is required to give an opportunity of hearing before deciding an appeal. There being no provision permitting summary dismissal of an appeal for want of prosecution, the order dated 20.01.2024 which dismissed the appeal on the ground that required documents were not filed and the appellant was not present was inconsistent with that mandate. The Court followed its earlier decision in Trade Tax Revision No.31 of 2023 (M/s Rajdhani Arms Corporation Lucknow vs. Commissioner of Commercial Tax) and accordingly set aside the impugned order. The matter is remitted to the appellate authority to pass a fresh order in accordance with law after giving the petitioner an opportunity of hearing. [Paras 5]

Impugned order dated 20.01.2024 set aside; appeal remitted to the appellate authority to decide afresh after affording hearing to the petitioner.

Remand for fresh adjudication after hearing - Direction fixing date for personal/representative appearance and consequence of non-appearance. - HELD THAT: - To avoid further delay the Court directed that the petitioner shall appear in person or through an authorised representative before the Tribunal on 06.11.2024 at 12:00 Noon. The appellate authority was permitted, in the event of the petitioner's non-appearance on the fixed date, to proceed to decide the appeal on merits in accordance with law. This direction was issued to ensure opportunity of hearing is effectively provided while permitting the appellate authority to proceed if the petitioner fails to avail the hearing. [Paras 6]

Petitioner directed to appear on 06.11.2024 at 12:00 Noon; if petitioner does not appear, appellate authority may decide the appeal on merits.

Final Conclusion: Writ petition allowed in part: impugned dismissal without hearing set aside and matter remitted for fresh consideration after affording hearing; appearance directed on 06.11.2024 with liberty to appellate authority to decide on merits if the petitioner fails to appear.

Prohibition against double assessment for same tax period - priority of authority initiating investigation - concurrent jurisdiction of Central and State GST authorities - composite show cause notice

Prohibition against double assessment for same tax period - concurrent jurisdiction of Central and State GST authorities - priority of authority initiating investigation - Both Central and State GST authorities cannot concurrently proceed to assess the petitioner for the same assessment years; the authority which first initiates action shall continue and the other shall refrain. - HELD THAT: - The Court considered the factual matrix and the contention based on the circular of 15th October, 2018 relied upon by Central GST Authority. Rather than laying down a new interpretative test, the Court applied the pragmatic rule that where both State and Central GST authorities are proceeding for the same tax periods, the authority which initiated action first is entitled to continue and complete the investigative/assessment process while the other authority must not take concurrent action for those years. The Court directed implementation of this principle on the facts of the petition without addressing broader questions of jurisdictional overlap beyond the present dispute.

Directed that the authority which initiated action shall continue and the other shall not take action for the same assessment years.

Composite show cause notice - priority of authority initiating investigation - Application of the above principle to the present facts: State GST completed assessment for Financial Year 2017-2018; Central GST had initiated action for other years including 2023-2024. - HELD THAT: - On the facts, the Court found that respondent no.3 (State GST) had already completed assessment under Section 74 for Financial Year 2017-2018, whereas actions for the remaining years were initiated by Central GST. Applying the established direction, the Court ordered Central GST to continue with its investigation in respect of the show cause notice except in relation to Financial Year 2017-2018, and directed State GST not to take action for years where Central GST has taken action.

Central GST permitted to continue for years it initiated (excluding Financial Year 2017-2018); State GST restrained from acting for years where Central GST has taken action.

Final Conclusion: Writ petition disposed by directing the authority which first initiated action to continue investigations and restraining the other authority from proceeding for the same assessment years; specifically, State GST's completed assessment for Financial Year 2017-2018 stands and Central GST shall not proceed for that year, while Central GST may continue for the other years it initiated.

Input Tax Credit - Section 17(5)(c) and (d) of the CGST Act - functionality test for "plant" under Section 17(5)(d) - requirement of factual determination and documentary proof - remedy by statutory appeal - maintainability of writ after adjudication

Maintainability of writ after adjudication - remedy by statutory appeal - Writ petition seeking quashing of show-cause notice/impugned proceedings dismissed as the adjudicating authority had passed a final order and statutory remedy by appeal exists. - HELD THAT: - The Court declined interim relief and admission because the adjudicating authority had already passed a final adjudication order on 30.9.2024 and the petitioner has the statutory remedy of appeal against that order. Having an effective alternative remedy of appeal rendered the writ petition inappropriate for interference at this stage. The petitioner was therefore directed to avail the appellate remedy and the writ petition was dismissed while leaving the petitioner free to file an appeal and place necessary documents before the appellate forum. [Paras 6, 10, 11]

Writ petition dismissed with liberty to file appeal against the adjudication order.

Input Tax Credit - Section 17(5)(c) and (d) of the CGST Act - functionality test for "plant" under Section 17(5)(d) - requirement of factual determination and documentary proof - Entitlement to ITC on inputs and services used in construction could not be summarily admitted; factual satisfaction whether the building qualifies as a "plant" under Section 17(5)(d) was required and the petitioner failed to place documentary evidence or appear before the authority. - HELD THAT: - The Court noted the petitioner claimed ITC on goods and services used in construction of a building to be leased and relied on the Apex Court's decision in the Safari Retreats matter. However, the Apex Court requires a case-specific factual enquiry whether the immovable property qualifies as a "plant" for exclusion under Section 17(5)(d). The adjudicating authority had recorded that the petitioner did not appear for personal hearing and did not furnish documents such as lease deeds to establish the factual matrix. Consequently, entitlement to ITC could not be upheld in the writ without the necessary factual and documentary foundation, and the petitioner was directed to pursue the issue before the appellate authority where such evidence and the Safari Retreats precedent can be relied upon. [Paras 4, 8, 9, 10]

Petitioner's claimed entitlement to ITC not sustained in this petition for lack of factual proof; petitioner may place documents and rely on the Apex Court's law in appeal.

Final Conclusion: The writ petition challenging the show-cause notice/impugned proceedings is dismissed; the petitioner is left free to file an appeal against the adjudication order and to produce requisite documents and rely on the Apex Court's decision regarding Section 17(5)(c)/(d) in the appellate proceedings.

Refund under Section 54 of CGST Act, 2017 - demand under Section 73 of CGST Act, 2017 - remand to Adjudicating Authority for production of original documents - stay of operation of order - right to file fresh refund application - claim for interest and consequential benefits reserved

Stay of operation of order - demand under Section 73 of CGST Act, 2017 - Interim suspension of the portion of the impugned order upholding the demand, interest and penalty - HELD THAT: - The Court stayed operation of the impugned order to the limited extent that it upholds the revenue's demand under Section 73 of the CGST Act, 2017 together with interest and penalty. The stay is interlocutory and preserves the petitioner's position while the matter proceeds; the Adjudicating Authority remains free to proceed on the merits of the refund claim without being influenced by the pendency of this petition. [Paras 11]

Operation of the order upholding the demand under Section 73 along with interest and penalty is stayed pending further orders.

Remand to Adjudicating Authority for production of original documents - refund under Section 54 of CGST Act, 2017 - Remand for reconsideration of the refund claim and production of original documents - HELD THAT: - The Appellate Authority had remitted the matter to the original Adjudicating Authority on the ground that original documents were not produced. The High Court recorded that the remand permits the Adjudicating Authority to adjudicate the petitioner's refund claim (including consideration of export-related eligibility and accumulated ITC) afresh and expressly directed that such adjudication should not be influenced by the pendency of the present petition. [Paras 11]

The matter is remitted to the Adjudicating Authority for reconsideration, with liberty to the petitioner to produce the relevant original documents.

Right to file fresh refund application - claim for interest and consequential benefits reserved - Permitted filing of a fresh refund application and reservation of entitlement to interest and consequential benefits - HELD THAT: - The Court allowed the petitioner, in the meantime, to file a fresh application claiming refund in terms of the appellate order. The permission to file a fresh application is without prejudice to the parties' rights and contentions. The question of entitlement to interest for the interregnum and any consequential benefits was left open for determination by this Court at a later stage. [Paras 12]

Petitioner may file a fresh refund application; entitlement to interest for the interregnum and consequential benefits is reserved for further order.

Final Conclusion: Interim relief granted: the portion of the impugned order upholding demand, interest and penalty is stayed; the matter is remitted for fresh adjudication with liberty to produce original documents; petitioner may file a fresh refund application, while claims to interest and consequential benefits are reserved.

Complete bar on parallel proceedings by State where Central GST has already initiated proceedings - time limit for availment of input tax credit in reverse charge cases governed by financial year of issuance of recipient's invoice - entitlement to input tax credit subject to payment of tax and fulfilment of conditions; interest leviable only for delayed payment - binding effect of CBIC circular on administrative authorities

Complete bar on parallel proceedings by State where Central GST has already initiated proceedings - Validity of State GST Show Cause Notices issued after initiation of proceedings by Central GST Authorities - HELD THAT: - The Court found on the material on record that the Central GST Authorities had initiated proceedings prior to the issuance of the impugned Show Cause Notices by the State GST Authorities. In view of the statutory embargo envisaged by the KGST Act where the Central Authority has already commenced proceedings in respect of the same subject matter, the State Authorities were precluded from initiating parallel proceedings. The Court therefore held that the Show Cause Notices issued by the State GST Authorities after the Central proceedings are illegal and without jurisdiction. [Paras 9]

The impugned State GST Show Cause Notices at Annexures A, A1 and A2 are quashed.

Time limit for availment of input tax credit in reverse charge cases governed by financial year of issuance of recipient's invoice - entitlement to input tax credit subject to payment of tax and fulfilment of conditions; interest leviable only for delayed payment - binding effect of CBIC circular on administrative authorities - Treatment of the Central GST Show Cause Notice challenging availment of ITC and demand of interest, in light of Circular and relevant precedent - HELD THAT: - Relying on the Circular reproduced from the Court's earlier decision in M/s. Bosch Ltd., the Court accepted the legal position that in RCM cases from unregistered suppliers the relevant financial year for the time limit under the ITC provision is the financial year in which the recipient issues the invoice, and that ITC cannot be denied merely because the claim was filed belatedly if the recipient has issued the invoice and paid the tax and otherwise satisfies conditions of the provisions. The Circular was held binding on the authorities. Rather than adjudicating the merits, the Court directed the petitioner to file a reply with documents and directed the Central GST Authorities to consider the same in accordance with law, bearing in mind the Circular, statutory provisions and relevant judgments, and to pass appropriate orders after hearing within a limited time. [Paras 6, 10, 11, 12]

Petitioner granted liberty to file reply; Central GST Authorities to consider submissions in accordance with law and the Circular and decide afresh within four weeks.

Final Conclusion: Writ petition allowed in part: State GST show cause notices quashed; Central GST notice permitted to be contested by filing reply and documents, with the Central Authorities directed to decide in accordance with the Circular, statutory provisions and applicable judgments within four weeks.

Expiry of e-way bill and tax evasion threshold for detention - detention and seizure under Section 129 read with machinery provisions - penalty discretion and proportionality under the CGST/SGST scheme - harmonious reading of non-obstante clause with other penal and procedural provisions

Expiry of e-way bill and tax evasion threshold for detention - detention and seizure under Section 129 read with machinery provisions - Expiry of the e-way bill alone does not automatically justify imposition of the maximum penalty under the detention/seizure provisions where there is no finding of an attempt to evade tax. - HELD THAT: - The Court found that, on the facts, the e-way bill had technically expired before interception but there was no finding that the transport was undertaken with intent to evade tax. The scheme and purpose of detention under Section 129 are machinery provisions to check evasion; detention and the concomitant levy of severe penalties can be justified only if there is a possibility of tax evasion. Where a plausible explanation is offered and no attempt to evade tax is found, the detaining authority must apply its mind to the explanation and should not automatically impose the maximum penalties prescribed by Section 129. The Court relied on its own precedents and the reasoning in Satyam Shivam Papers and Sanskruthi Motors to hold that non-extension of an e-way bill, without evidence of evasion, is a minor/technical lapse which does not ipso facto attract the maximum penalties of Section 129. [Paras 5, 10, 12]

The mere lapse of validity of an e-way bill is not by itself a ground for applying the full penal consequences under Section 129 when there is no finding of tax evasion; authorities must consider explanations and the possibility of evasion before imposing the penalties under Section 129.

Harmonious reading of non-obstante clause with other penal and procedural provisions - penalty discretion and proportionality under the CGST/SGST scheme - The non-obstante clause in Section 129 does not render the provision immune from harmonious reading with Sections 122 and 126; Section 129 must be construed in a manner that preserves proportionality and the duty to consider explanations where no evasion is shown. - HELD THAT: - Although Section 129 begins with a non-obstante clause, settled principles require that an overriding provision be construed in harmony with the rest of the statute and confined to the extent intended by the legislature. The Court invoked A.G. Varadarajulu and other authorities to hold that the enacting part and purpose of the provision constrain the scope of the non-obstante clause. Consequently, where only a technical discrepancy exists and no evasion is shown, the penal regime and the general disciplines in Sections 122 and 126 informing proportionality, mitigation and discretion must guide the authority rather than an automatic application of the maximum penalties prescribed in Section 129. [Paras 7, 11, 12]

Section 129 must be read harmoniously with Sections 122 and 126; the non-obstante clause does not mandate automatic application of Section 129 penalties in cases of mere technical or minor breaches absent evidence of evasion.

Penalty discretion and proportionality under the CGST/SGST scheme - Appropriate relief and quantification of penalty where no evasion is found. - HELD THAT: - Applying the principles above to the present facts, the Court held that although there was a technical violation (expiry of e-way bill), there was no finding of tax evasion. In such circumstances the officer ought to have imposed only the minimum penalty contemplated by the statutory provision covering carriage without prescribed documents. Exercising judicial review under Article 226, the High Court reduced the penal consequences of Ext. P10 and directed imposition of the penalty contemplated by the provision dealing with carriage without cover of documents, treating it as the proportionate remedy in the absence of evasion. [Paras 5, 12]

Ext. P10 is quashed; the petitioner is liable to pay the lesser penalty as contemplated by the provision penalising transport without prescribed documents, and on payment the bank guarantee shall be released.

Final Conclusion: Writ petition allowed; Ext. P10 quashed. Where only minor or technical discrepancies (such as expiry of an e-way bill) are present and there is no finding of an attempt to evade tax, authorities must consider explanations and impose penalties in a proportionate manner guided by Sections 122 and 126 rather than automatically applying the maximum penalties under Section 129; in the present case a reduced penalty was directed and the bank guarantee ordered released on payment.

Limitation for filing appeal - date of filing of appeal - condonation of delay - opportunity to seek condonation - remand for fresh decision

Limitation for filing appeal - date of filing of appeal - remand for fresh decision - Whether the appeal was filed within limitation and the correctness of dismissal as time barred - HELD THAT: - The High Court set aside the impugned order which dismissed the appeal as time barred and remitted the matter to the Appellate Authority for fresh adjudication. The Appellate Authority is directed to determine the correct date of filing of the appeal and decide the question of limitation afresh in accordance with law. The Court expressly refrained from adjudicating the merits and required the Appellate Authority to resolve the factual and legal controversy regarding the filing date before proceeding further. [Paras 6]

Impugned order set aside and matter remitted to the Appellate Authority to determine the date of filing and decide limitation afresh.

Condonation of delay - opportunity to seek condonation - Whether the petitioner should be afforded an opportunity to seek condonation of delay where applicable - HELD THAT: - The Court directed that if the Appellate Authority finds a delay of less than thirty days in filing the appeal, it shall afford the petitioner an opportunity to apply for condonation of such delay. The High Court noted the statutory or discretionary power to condone short delays and required that no decision be taken without giving the petitioner a chance to seek condonation where the delay falls within the thirty-day window. [Paras 6]

If delay found to be less than thirty days, Appellate Authority shall give petitioner opportunity to seek condonation of delay and decide the same in accordance with law.

Final Conclusion: Writ petitions allowed in part; impugned order dated 21.02.2024 is set aside and the matters are remitted to the Appellate Authority for fresh decision on the date of filing and, if applicable, grant of opportunity to seek condonation for delay under thirty days.

Principles of natural justice - service by upload on portal versus effective communication - personal hearing - remand for fresh consideration subject to conditions - interim conditional quashing

Principles of natural justice - service by upload on portal versus effective communication - personal hearing - interim conditional quashing - Impugned order dated 28.12.2023 was set aside on the ground that the petitioner did not participate in proceedings allegedly because notices were only uploaded on the GST portal and not otherwise communicated, warranting reconsideration in the interest of natural justice. - HELD THAT: - The Court found that the tax proposals in the impugned order were confirmed because the petitioner neither filed written objections to the show cause notice nor attended the personal hearing. The petitioner asserted non-participation resulted from lack of awareness since communications had been uploaded only under the "view additional notices and orders" tab on the GST portal. In light of that assertion, and in the interest of justice, the Court concluded that reconsideration was warranted but subject to terms to put the petitioner on notice. The petitioner agreed to remit 10% of the disputed tax demand as a condition for remand. The Court therefore set aside the impugned order conditionally, permitted the petitioner to submit a reply within the stipulated time, and directed that upon receipt of the reply and verification of the conditional remittance the authority must provide a reasonable opportunity including a personal hearing before passing a fresh order within three months.

Impugned order set aside conditionally; petitioner permitted to submit reply within fifteen days and to remit 10% of disputed tax demand; authority directed to afford reasonable opportunity including personal hearing and to pass a fresh order within three months.

Remand for fresh consideration subject to conditions - personal hearing - Scope and terms of remand for fresh adjudication by the tax authority. - HELD THAT: - The Court remanded the matter to the third respondent for fresh consideration of the tax proposals after compliance with the specified conditions. The procedural steps directed were: (a) the petitioner to remit 10% of the disputed tax demand within fifteen days and to submit a reply to the show cause notice within the same period; (b) upon receipt of the reply and satisfaction that the conditional remittance was made, the authority must provide a reasonable opportunity to the petitioner, including a personal hearing; and (c) the authority must thereafter pass a fresh order within three months from receipt of the petitioner's reply. The remand is therefore for full reconsideration on merits subject to these procedural conditions.

Matter remanded to the assessing authority for fresh consideration on merits subject to the petitioner remitting 10% of the disputed demand and being afforded a reasonable opportunity including personal hearing; fresh order to be passed within three months.

Final Conclusion: Writ petition allowed in part: impugned order dated 28.12.2023 conditionally set aside and matter remitted to the assessing authority for fresh adjudication on compliance with the prescribed conditions; petition disposed accordingly and connected miscellaneous petitions closed.

Classification of transaction as supply of goods versus supply of services - treatment of lease, tenancy, easement and license to occupy land under Schedule II - activities not treated as supply under Schedule III - interim relief

Classification of transaction as supply of goods versus supply of services - treatment of lease, tenancy, easement and license to occupy land under Schedule II - activities not treated as supply under Schedule III - Grant of ad interim relief and issuance of notice in challenge to tax authorities' characterization of the transaction - HELD THAT: - The petitioner contended that, while Schedule II treats lease, tenancy, easement and license to occupy land as supply of services, the tax authority has effectively treated the petitioner's transaction as a sale of land-an activity outside supply of services under Schedule III. The High Court entertained the petition on that contention, issued notice returnable on 3rd July, 2024, and granted ad interim relief in terms of Paragraph 10(B) of the petition order. No final adjudication on the substantive classification was made; the order preserves the parties' positions for final hearing. [Paras 3, 4]

Notice issued returnable 3rd July, 2024; ad interim relief granted in terms of Para 10(B).

Final Conclusion: Petition admitted for hearing; notice issued and interim protection granted as recorded, with final resolution of the classification dispute reserved for further hearing on the returnable date.

Condonation of delay - revocation under proviso to Rule 23 of the Odisha Goods and Services Tax Rules - acceptance of Form GSTR-3B upon compliance of tax, interest, late fee and penalty - opening of GST portal for filing returns upon compliance

Condonation of delay - revocation under proviso to Rule 23 of the Odisha Goods and Services Tax Rules - Delay in invoking the proviso to Rule 23 OGST Rules was condoned and the petitioner's application for revocation was directed to be considered. - HELD THAT: - The Court, on the statement of the Revenue and after hearing the parties, condoned the delay in the petitioner invoking the proviso to Rule 23 of the OGST Rules. The condonation is subject to the petitioner complying with statutory obligations, namely depositing all taxes, interest, late fee and penalty and fulfilling other formalities. Upon such compliance the petitioner's revocation application is to be considered in accordance with law. The order records a judicial direction to the proper officer to proceed with consideration of the revocation application once the stipulated conditions are satisfied. [Paras 3]

Delay condoned and revocation application to be considered subject to compliance with tax and allied obligations.

Acceptance of Form GSTR-3B upon compliance of tax, interest, late fee and penalty - opening of GST portal for filing returns upon compliance - The petitioner's Form GSTR-3B will be accepted and the GST portal will be opened to enable filing provided the petitioner deposits taxes, interest, late fee and penalty and produces the order before the proper officer. - HELD THAT: - The Revenue, through its counsel, stated that so long as the delay is condoned and the petitioner complies with payment of all dues and other requirements, the Form GSTR-3B filed by the petitioner will be accepted. The Court directed that the petitioner shall produce a copy of the order before the proper officer and, upon compliance with the stated conditions, the proper officer shall open the portal to enable filing of the return. This is a conditional administrative direction to facilitate statutory compliance and submission of returns. [Paras 2, 4]

Form GSTR-3B to be accepted and portal access to be granted upon petitioner's compliance and production of the order before the proper officer.

Final Conclusion: Writ petition disposed of by condoning the delay in invoking the proviso to Rule 23 OGST Rules and directing that the revocation application be considered and the GSTR-3B accepted, subject to the petitioner depositing all taxes, interest, late fee, penalty and complying with other formalities; the proper officer to open the portal upon production of this order.

Condonation of delay - proviso to Rule 23 of the Odisha Goods and Services Tax Rules - acceptance of Form GSTR-3B upon payment of tax, interest, late fee and penalty - revocation application to be considered in accordance with law - direction to proper officer to open portal for filing return

Condonation of delay - proviso to Rule 23 of the Odisha Goods and Services Tax Rules - Delay in invoking the proviso to Rule 23 OGST Rules was condoned. - HELD THAT: - The Court, on the statement made by the Revenue's Standing Counsel and having regard to the petitioner's compliance with statutory obligations, condoned the delay in invoking the proviso to Rule 23 of the OGST Rules. The condonation was granted subject to the petitioner depositing all taxes, interest, late fee and penalty and complying with other formalities required by law. [Paras 3]

Delay in invoking the proviso to Rule 23 OGST Rules is condoned subject to the petitioner fulfilling payment and formal compliance requirements.

Acceptance of Form GSTR-3B upon payment of tax, interest, late fee and penalty - direction to proper officer to open portal for filing return - The petitioner's Form GSTR-3B will be accepted and the portal opened if the petitioner deposits dues and complies with formalities; the revocation application will be considered in accordance with law. - HELD THAT: - The Revenue's counsel stated that upon condonation of delay and subject to the petitioner paying outstanding taxes, interest, late fees and penalties and completing other formalities, the petitioner's filed Form GSTR-3B would be accepted. The Court ordered that a copy of its order be produced to the proper officer and directed the proper officer to open the portal to enable filing of the GST return and to consider the petitioner's application for revocation in accordance with law. [Paras 2, 4]

Proper officer shall accept the Form GSTR-3B and open the portal for filing, and consider the revocation application in accordance with law, subject to payment of dues and compliance with formalities.

Final Conclusion: The writ petition is disposed of by condoning the delay in invoking the proviso to Rule 23 OGST Rules and directing that, upon the petitioner's payment of all taxes, interest, late fee, penalty and compliance with formalities, the Form GSTR-3B be accepted, the portal be opened by the proper officer and the petitioner's revocation application be considered in accordance with law.

Input tax credit - burden under Section 155 of the applicable GST enactments - rejection of documentary evidence as fabricated - remand for reconsideration - pre-deposit as condition for interim relief - opportunity of personal hearing

Rejection of documentary evidence as fabricated - input tax credit - Validity of the impugned order insofar as it rejects documentary evidence submitted by the petitioner and confirms denial of input tax credit. - HELD THAT: - The court found that the petitioner had furnished six volumes of documents including purchase orders, tax invoices, e-way bills, weighment slips and bank statements. The impugned order contains a discussion only on the e-way bills but does not set out reasons for rejecting the other documentary material or for concluding that those documents were fabricated. In the absence of reasons addressing the documents actually filed, the order is vitiated by non-consideration of material evidence and cannot stand. The matter therefore requires fresh consideration by the assessing authority with regard to the documentary evidence relied upon by the petitioner and its entitlement to input tax credit.

Impugned order set aside and matter remanded for reconsideration of the documentary evidence and claim to input tax credit.

Remand for reconsideration - pre-deposit as condition for interim relief - opportunity of personal hearing - burden under Section 155 of the applicable GST enactments - Terms and procedure for remand including interim conditions to protect revenue and directions for fresh decision-making. - HELD THAT: - To protect revenue interest while permitting reconsideration, the court conditioned the remand on the petitioner making a pre-deposit of 5% of the disputed tax demand within two weeks and permitted the petitioner to file an additional reply within that period. On receipt of the additional reply and after satisfaction that the pre-deposit was made, the assessing authority is directed to afford a reasonable opportunity to the petitioner, including a personal hearing, and to pass a fresh order within three months. The court recorded that the assessing authority had relied upon the petitioner's failure to discharge the evidential burden under Section 155 but did not finally decide that question; the remand is for fresh consideration of entitlement to input tax credit and related burden issues. The 5% pre-deposit shall abide the outcome of the remanded proceedings.

Remand ordered on specified conditions: 5% pre-deposit by the petitioner, allowance to file additional reply, personal hearing, and fresh order within three months; pre-deposit to abide the result.

Final Conclusion: Writ petition allowed in part: the impugned order dated 02.04.2024 is set aside and the matter is remanded for fresh consideration of the documentary evidence and the petitioner's entitlement to input tax credit, subject to the petitioner making a 5% pre-deposit, filing any additional reply, being afforded a personal hearing, and the authority passing a fresh order within three months; the pre-deposit shall abide the outcome.

Natural justice - opportunity to be heard - personal hearing - show cause notice - conditional remand - remand for fresh consideration

Natural justice - opportunity to be heard - show cause notice - Impugned order set aside on the ground that the petitioner was not given a reasonable opportunity to contest the tax demand and the matter requires reconsideration. - HELD THAT: - The court found that the tax proposal related to non-payment of reverse charge mechanism and accepted the petitioner's contention that participation was not possible because communications were uploaded on the portal under a tab to which the petitioner was unaware. Applying principles of natural justice, the interest of justice warranted re-consideration rather than outright dismissal. The court therefore set aside the impugned order to enable the petitioner to be heard on merits. [Paras 4]

Impugned order dated 26.12.2023 set aside to permit reconsideration so that the petitioner may contest the tax demand on merits.

Conditional remand - remand for fresh consideration - personal hearing - Matter remanded to the respondent on specified conditions requiring payment of 10% of the disputed demand, submission of reply, provision of hearing and fresh decision within a stipulated period. - HELD THAT: - The court imposed terms to balance equity and finality: the petitioner was directed to remit 10% of the disputed tax demand within two weeks of receipt of the order and was permitted to submit a reply to the show cause notice within that period. On being satisfied that the payment was received, the respondent must provide a reasonable opportunity, including a personal hearing, and thereafter pass a fresh order. The fresh adjudication is to be completed within three months from receipt of the petitioner's reply. These conditions convert the setting aside into a conditional remand rather than a summary quashing without terms. [Paras 5]

Proceedings remitted to the respondent on terms: remittance of 10% within two weeks, receipt of reply, grant of hearing and a fresh order within three months.

Final Conclusion: Writ petition allowed by setting aside the impugned order and remitting the matter to the assessing authority on specified conditions (10% remittance, submission of reply, opportunity of personal hearing) with directions to decide afresh within three months; connected miscellaneous petitions closed; no costs.

Detention and confiscation under Section 129 and Section 130 of the Central Goods & Services Tax Act, 2017 - challenge to jurisdiction of detaining authority to initiate confiscation proceedings - interim release of detained goods and conveyance on payment and bond - provisional relief pending adjudication of similar matters - service by email

Detention and confiscation under Section 129 and Section 130 of the Central Goods & Services Tax Act, 2017 - interim release of detained goods and conveyance on payment and bond - provisional relief pending adjudication of similar matters - Ad-interim release of goods and conveyance detained by the revenue on specified conditions pending adjudication of the challenge to the impugned notice and order. - HELD THAT: - The Court, on the petitioner's challenge to the legality and validity of the notice dated 07th June, 2024 in Form GST MOV-10 and the order of confiscation dated 15th June, 2024 under the GST Act, issued notice and directed that the petition be heard along with Special Civil Application No.8353 of 2022 and allied matters. Having considered the submissions and noting that similar matters are pending before the Court, ad-interim relief was granted releasing the detained goods and conveyance subject to the petitioner paying a specified amount and furnishing a bond of stipulated value. The order records that provisional release is granted in the nature of interim relief only, to be without prejudice to the rights of the parties at the final hearing. The Court also permitted service by email for the proceedings to follow. [Paras 3, 4]

Goods and conveyance detained by the respondent authority are released ad-interim on payment of the specified sum and on submission of the specified bond; matter posted for further hearing and to be heard with Special Civil Application No.8353 of 2022.

Final Conclusion: Notice issued; ad-interim release of detained goods and conveyance permitted on payment and bond as directed, with the petition to be heard along with Special Civil Application No.8353 of 2022; service by email permitted.

Extension of time by Board under section 119 - limitation in filing Form 10AB for regular 80G registration - provisional registration under the first proviso to section 80G(5) - non-compliance with show-cause/rectification notice and effect of misdirected communication - remand for fresh adjudication with opportunity to be heard

Extension of time by Board under section 119 - limitation in filing Form 10AB for regular 80G registration - provisional registration under the first proviso to section 80G(5) - Whether the appellant's application dated 30/09/2023 for regular 80G registration was barred by limitation and whether the Board's circular extending the time applied to an assessee granted provisional registration under clause (iv) of the first proviso to section 80G(5). - HELD THAT: - The Tribunal found it undisputed that provisional registration was granted on 16/02/2022 under clause (iv) of the first proviso to section 80G(5) and that the statutory time for filing Form 10AB had expired before the appellant's application dated 30/09/2023. The CBDT had earlier exercised power under section 119 to extend the filing date to 30/09/2022 by Circular No. 8/2022 and subsequently, in response to system-related hardships, extended the deadline to 30/09/2023 by Circular No. 06/2023. Paragraph 5(i) read with paragraph 1(c) of the latter circular expressly covered cases of registration under 12A/10(23) and those falling under clause (i) of the first proviso to section 80G(5); by necessary reading the circular also operated to benefit institutions granted provisional registration under clause (iv) of the proviso where provisional registration had been granted by an order under clause (vi). Coordinate Benches had applied the circular in similar factual contexts. Having regard to the circular's terms and the fact of provisional registration, the Tribunal held that rejection solely on limitation grounds failed to appreciate the circular and consequently set aside the limitation-based rejection. [Paras 6, 8, 9, 11]

Rejection of the application on the ground of limitation is set aside and the appellant is entitled to the benefit of the extended time under the Board's circulars; the matter is restored for adjudication on merits.

Non-compliance with show-cause/rectification notice and effect of misdirected communication - remand for fresh adjudication with opportunity to be heard - opportunity of hearing - Whether the assessee's failure to comply with the rectification notice and produce the 12AB registration certificate warranted outright rejection, or required remand where notices were sent to a tax consultant's email and not communicated to the assessee. - HELD THAT: - The Tribunal observed that the rectification notices were sent to an email address belonging to the assessee's tax consultant and that the consultant failed to inform the assessee, making the non-compliance accidental and undeliberate. Given this factual matrix, the Tribunal declined to decide the merits of eligibility and instead directed that the application be treated as having been filed within the extended time and remanded the matter to the CIT(E) for fresh adjudication. The remand expressly requires the CIT(E) to adjudicate the application on merits in accordance with law after affording the assessee two effective opportunities to comply and be heard. [Paras 12]

Non-compliance treated as accidental; application to be considered within time and matter remanded to CIT(E) for fresh adjudication on merits after two effective opportunities.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes, set aside the rejection insofar as it was based on limitation by applying the Board's extension circulars, treated the application as within time, and remanded the matter to the CIT(E) for fresh adjudication on merits after providing two effective opportunities to the assessee.

Quashing of FIR under Section 482 CrPC - prima facie ingredient test for criminal offences - mens rea requirement for offences under the Indian Penal Code - criminal liability of a juristic person - scope of inherent powers to prevent abuse of process - categories for exercise of quashing power in Bhajan Lal

Prima facie ingredient test for criminal offences - mens rea requirement for offences under the Indian Penal Code - criminal liability of a juristic person - Whether the FIR, on its face, discloses prima facie offences against the appellant bank under the cited provisions of the IPC - HELD THAT: - The Court examined the complaint and FIR and applied the settled prima facie test required when considering a petition under Section 482 CrPC. The judgment holds that the FIR and accompanying complaint, taken at face value, do not disclose the essential ingredients of the offences alleged against the appellant bank. For Section 420 IPC, the FIR fails to show any dishonest inducement or mens rea on the part of the bank or its staff. As the appellant bank is a juristic person, mens rea must be established from the material; no such mens rea is shown. For Sections 409/406 (criminal breach of trust) there is no allegation of entrustment of property by the complainant to the bank and no allegation of misappropriation or conversion to the bank's use. Section 462 (receiving stolen property), and Sections 206, 217 and 201 likewise require mens rea which is not pleaded. The FIR also does not allege any common intention or concerted action to attract Sections 34, 37 or 120B. On this basis the Court concluded that the ingredients of the offences, as alleged, are not prima facie made out against the appellant bank. [Paras 23, 24, 25, 26, 27]

The FIR does not, on its face, prima facie disclose the offences alleged against the appellant bank under the cited provisions of the IPC.

Quashing of FIR under Section 482 CrPC - scope of inherent powers to prevent abuse of process - categories for exercise of quashing power in Bhajan Lal - Whether continuation of criminal proceedings against the appellant bank should be quashed in the exercise of inherent jurisdiction - HELD THAT: - Applying the principles in Bhajan Lal [1990 (11) TMI 386 - SUPREME COURT] the Court found the present matter falls within categories where quashing is warranted because the allegations do not disclose a cognizable offence and the uncontroverted allegations and accompanying materials do not make out a case against the appellant bank. The Court noted that the High Court must conduct a prima facie evaluation under Section 482 and should not abdicate that role. Given the absence of ingredients of the offences and that continuation of proceedings would cause undue hardship to the appellant bank, the Court exercised its inherent powers to set aside the impugned High Court order and quash the FIR insofar as it relates to the appellant bank, while preserving the statutory right to investigate cognizable offences in appropriate cases in general. [Paras 28, 29, 30, 31]

Continuation of criminal proceedings against the appellant bank would cause undue hardship and the FIR is quashed and set aside qua the appellant bank.

Final Conclusion: Appeal allowed; impugned High Court order set aside and the FIR (Case No. 549 of 2021) quashed and set aside insofar as it pertains to the appellant bank.

Maintainability of appeal in High Court - substantial question of law or not? - income tax officer disallowing expenses and determining income at a higher amount - as decided by HC [2024 (1) TMI 1336 - BOMBAY HIGH COURT] a reasoned order has been passed for allowing or disallowing the claim of the appellant. There is no question of substantial question of law when all the facts have been considered.

HELD THAT:- Delay in refiling the special leave petition is condoned.

No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is accordingly dismissed.

Arm's length price - comparability analysis in transfer pricing - functional comparability - exclusion of comparables for brand-related profitability and economic upscale - use of segmental information in comparable selection

Arm's length price - comparability analysis in transfer pricing - exclusion of comparables for brand-related profitability and economic upscale - functional comparability - use of segmental information in comparable selection - Inclusion of TCS E-Serve International Ltd., TCS E-Serve Ltd. and Infosys BPO Ltd. as comparables for determining the ALP for AY 2010-11. - HELD THAT: - The Tribunal had upheld the TPO/DRP's decision to include the three entities as comparables by finding functional similarity with the assessee's IT back-office and BPO activities and rejecting grounds of exclusion such as absence of segmental information. The High Court examined the record and subsequent authorities, noting that these entities operated with high brand value and on an economic upscale which could materially affect profitability. The Court relied on the approach taken in a subsequent decision which treated the brand-related advantages and economic positioning of such entities as legitimate bases for excluding them from the comparable set. Having regard to those findings and the precedents, the Court concluded that the three entities should not have been retained as comparables for the appellant's ALP determination for AY 2010-11. [Paras 11, 12, 13]

The Tribunal's inclusion of TCS E-Serve International Ltd., TCS E-Serve Ltd. and Infosys BPO Ltd. as comparables is set aside and those entities are excluded from the comparable set for ALP determination for AY 2010-11.

Final Conclusion: Appeal allowed. The question framed is answered in the affirmative for the appellant; TCS E-Serve International Ltd., TCS E-Serve Ltd. and Infosys BPO Ltd. are directed to be excluded from the list of comparables for ALP determination for AY 2010-11.

Income from House Property vs. Profits and Gains of Business - Characterisation of income by reference to objects and nature of activities - Doctrine of consistency in tax assessment - Application of East India Housing and Chennai Properties precedents

Income from House Property vs. Profits and Gains of Business - Characterisation of income by reference to objects and nature of activities - Application of East India Housing and Chennai Properties precedents - Whether the rent income derived by the assessee from leasing its properties is assessable as income from house property or as income from profits and gains of business. - HELD THAT: - The Court examined the assessee's memorandum of association and the factual matrix and applied the settled principle that classification of income depends on the source and the nature of the assessee's activities rather than mere ownership. While the Tribunal relied on East India Housing to treat rental receipts as income from house property, the Court held that Chennai Properties (supra) and earlier authorities require focus on the company's main objects and the nature of operations. Where letting out of properties is the principal business activity (as shown by the memorandum and by consistent conduct), the income retains the character of business income and is not to be re-characterised as income from house property merely because it arises from property. Applying that test to the facts, the Court concluded that letting was the assessee's business and the income was correctly disclosed and assessable as business income. [Paras 21, 23, 24]

Rent income from the assessee's leasing activity is assessable as income from profits and gains of business and not as income from house property.

Doctrine of consistency in tax assessment - Application of East India Housing and Chennai Properties precedents - Whether the Revenue's prior consistent treatment of the assessee's income as business income precluded it from adopting a contrary view in later years. - HELD THAT: - The Court recognised the settled rule that, although res judicata strictly does not apply across assessment years, where a fundamental aspect permeating different years has been consistently treated and allowed to continue without challenge, it is inappropriate to change that position absent material change. The record showed that for multiple assessment years the Assessing Officer had treated the assessee's receipts as business income. The Court held that the principle of consistency weighed in favour of the assessee and that the Revenue could not legitimately reverse its position without new material justifying such change. [Paras 26, 27]

The Revenue's prior consistent treatment of the income as business income prevents it from adopting the contrary characterisation in the absence of material change.

Final Conclusion: Appeals allowed. The Tribunal's orders holding the rent income to be assessable as income from house property are set aside; the rent income from the assessee's leasing activity is held to be income from profits and gains of business for the listed assessment years, and the Revenue's inconsistent change of stance is not accepted.

Bar on demand against deductee where tax deducted at source - Liability for non-deposit of TDS lies on the deductor and cannot be shifted to employee - Non-enforcement of demand on account of TDS credit mismatch - Administrative directions of CBDT for non-enforcement of demands in TDS non-payment cases

Bar on demand against deductee where tax deducted at source - Liability for non-deposit of TDS lies on the deductor and cannot be shifted to employee - Non-enforcement of demand on account of TDS credit mismatch - Impugned demand notices issued to the petitioners for non-deposit of TDS by their employer are in breach of Section 205 of the Income Tax Act and are not maintainable against the employees - HELD THAT: - The Court held that Section 205 precludes calling upon the assessee to pay tax to the extent tax has been deducted from his income; the statutory scheme places the obligation to deposit TDS on the employer (deductor) and does not permit shifting that liability to the employee (deductee). The Court noted that the departmental practice of creating and coercively enforcing demands on deductees for TDS not deposited by the deductor is impermissible and that the CBDT's office memorandum reiterating non-enforcement in cases of credit mismatch supports this position. Applying these principles to the facts, the Court found the demands to be contrary to Section 205 and quashed them. [Paras 8, 9]

Impugned demand notices dated 28 March 2022 and 29 March 2022 quashed and set aside as being in breach of Section 205.

Administrative directions of CBDT for non-enforcement of demands in TDS non-payment cases - Remedial recourse for credit and assessment-stage proceedings - Petitioners' claim for credit and any other tax demands were not adjudicated and are left open for appropriate proceedings - HELD THAT: - The Court expressly confined its decision to the validity of the demand notices relating to TDS amounts not deposited by the employers. It declined to adjudicate on the grant of credit, interest/penalty consequences, or any other tax demands, leaving petitioners free to pursue appropriate statutory or assessment remedies. The Court similarly kept open all contentions regarding credit and other tax liabilities, permitting the petitioners to place material before the assessing officer or take such steps as permissible in law. [Paras 9]

All issues other than the specific demand notices (including claim for credit) are left open for determination in the appropriate forum or assessment proceedings; petitioners may take appropriate steps in law.

Final Conclusion: The writ petitions are partly allowed: the demand notices issued to the petitioners for non-deposit of TDS by their employer are quashed as being in breach of Section 205; all other issues, including claims for credit and any other tax demands, are left open for appropriate adjudication.

Disallowance under Section 14A for expenditure relating to exempt income - No disallowance where no exempt income in the relevant assessment year - Prospective application of the Explanation to Section 14A - Precedential application of Cheminvest and Alchemist - Substantial question of law

Disallowance under Section 14A for expenditure relating to exempt income - No disallowance where no exempt income in the relevant assessment year - Precedential application of Cheminvest and Alchemist - Deletion of addition under Section 14A where the assessee had no exempt income in the assessment year - HELD THAT: - The Court accepted the view that Section 14A disallowance cannot be sustained where the assessee's total income for the relevant assessment year does not include any exempt income. The decision accords with this Court's earlier ruling in Cheminvest Limited and the subsequent decision in Principal Commissioner of Income Tax, Central-3 v. Alchemist Ltd., which support that no disallowance under Section 14A arises in the absence of exempt income in the relevant year. Applying these precedents to the material before the Tribunal and CIT(A), the Court found no basis to uphold the AO's addition made by proportionate disallowance of expenditure when no exempt income was shown to have arisen or been received in AY 2016-17. [Paras 7]

The addition of Rs. 6,13,17,433/- on account of disallowance under Section 14A was correctly deleted.

Prospective application of the Explanation to Section 14A - No disallowance where no exempt income in the relevant assessment year - Applicability of the Explanation to Section 14A (inserted by Finance Act, 2022) to AY 2016-17 - HELD THAT: - The Court observed that the Explanation introduced by the Finance Act, 2022 clarifying that Section 14A shall apply even where exempt income has not accrued, arisen or been received would operate only prospectively and is therefore inapplicable to AY 2016-17. The Court noted its earlier conclusion in Principal Commissioner of Income-tax v. Era Infrastructure (India) Ltd. that the Explanation has no retrospective operation. Further, on the facts of this case there was no allegation of expenditure incurred in relation to exempt income expected in future years; consequently, even a hypothetical retrospective application of the Explanation would not affect the outcome for AY 2016-17. [Paras 8, 9, 10]

The Explanation to Section 14A is not applicable to AY 2016-17 and, in any event, does not alter the result on the facts.

Final Conclusion: The Revenue's appeal is dismissed; no substantial question of law arises and the deletion of the Section 14A addition for AY 2016-17 is upheld.

Validity of notice under section 148 - Reassessment proceedings under section 147 - Notice issued to deceased - Liability of legal representative under section 159 - Curative provision in section 292B - Waiver by participation - Quashing of assessment and penalty

Validity of notice under section 148 - Notice issued to deceased - Liability of legal representative under section 159 - Curative provision in section 292B - Waiver by participation - Quashing of assessment and penalty - Notice under section 148 issued in the name of a person who had died prior to issuance and continuation of reassessment proceedings arising therefrom. - HELD THAT: - The Court held that issuance of a notice under section 148 to a deceased person is not a mere procedural defect but vitiates the initiation of reassessment proceedings where the notice was not issued to the legal representative. Section 159(2)(b) permits proceedings which could have been taken against the deceased to be taken against his legal representative, and hence, for a reassessment initiated by section 148 the requisite notice must be addressed to the legal representative. The Court distinguished cases where the legal representative had participated in proceedings or filed returns in response to the impugned notice (constituting waiver), observing that here the petitioner (legal heir) consistently objected and did not participate; therefore section 292B could not be invoked to cure the defect. Applying the reasoning in the Coordinate Benches' decisions cited by the Court, the notice issued to the deceased was held invalid and consequent actions founded on that notice could not be sustained. [Paras 14, 15, 16, 17]

Impugned notice dated 27.03.2019 under section 148 and consequential assessment order dated 29.11.2019 under sections 144/147 and penalty order dated 03.01.2022 under section 271F are quashed and set aside.

Final Conclusion: Petition allowed: reassessment notice issued to the deceased and the consequent assessment, demand and penalty are quashed; rule made absolute to that extent, with no order as to costs.

Extinguishment of pre-resolution plan claims - effect of NCLT-approved resolution plan on statutory dues - bar on initiation or continuation of proceedings in respect of pre-resolution claims - reopening of assessment and notice validity - moratorium under the Insolvency and Bankruptcy Code and its effect on claims

Extinguishment of pre-resolution plan claims - effect of NCLT-approved resolution plan on statutory dues - reopening of assessment and notice validity - Assessment order and demand for Assessment Year 2013-14 set aside on account of extinguishment of pre-resolution liabilities by NCLT-approved resolution plan. - HELD THAT: - The court noted that a resolution plan in respect of the petitioner was approved by the NCLT and claims lodged in the CIRP were considered and admitted prior to approval. Relying on the principle articulated in Ghanashyam Mishra & Sons Pvt. Ltd. (as reproduced), once a resolution plan is approved and the moratorium under the Code has operated, liabilities and claims relating to the period prior to approval stand extinguished and parties are not entitled to initiate or continue proceedings in respect of such pre-resolution claims. Applying that legal position to the facts, the court held that the respondent could not validly proceed with reassessment and demand for the year under consideration after approval of the resolution plan, and that the assessment framed under Section 147 read with Section 144B and the consequent demand were contrary to the effect of the approved resolution plan and the bar arising therefrom. [Paras 7, 8]

Assessment order dated 29.03.2022 under Section 147 read with Section 144B and the demand notice for Assessment Year 2013-14 are quashed and set aside.

Final Conclusion: The petition is allowed; the assessment order and demand for Assessment Year 2013-14 are quashed in view of the extinguishment of pre-resolution claims by the NCLT-approved resolution plan. Rule made absolute; no order as to costs.

Penalty under section 271(1)(c) - inaccurate particulars - claim not sustainable in law not amounting to inaccurate particulars - slump sale under section 50B - slump exchange - colourable device

Penalty under section 271(1)(c) - inaccurate particulars - claim not sustainable in law not amounting to inaccurate particulars - Validity of penalty levied under section 271(1)(c) for furnishing inaccurate particulars consequent to disallowance of claimed long term capital loss - HELD THAT: - The Tribunal examined whether the addition of the long term capital loss by the Assessing Officer and the consequent penalty under section 271(1)(c) was justified. The AO treated the transaction as a colourable device and held that the loss could not be allowed, concluding that funds had merely been moved between the assessee and the company. The Tribunal found on the material on record that the claimed loss was not set off in subsequent years and there was no evidence that the assessee gained tax advantage by claiming the loss. The Tribunal applied the legal principle from the Hon'ble Supreme Court in CIT v. Reliance Petroproducts (P) Ltd., that a mere claim which is unsustainable in law does not, by itself, constitute furnishing of inaccurate particulars in the return; there was no finding of incorrect, erroneous or false particulars supplied in the return. On these facts, the Tribunal concluded that the basis for invoking section 271(1)(c) was without merit and the penalty could not be sustained. [Paras 7, 8]

Penalty under section 271(1)(c) set aside and deleted

Final Conclusion: The appeal is allowed; the penalty levied under section 271(1)(c) for the assessment year 2013-14 is deleted as the claim of long term capital loss did not constitute furnishing of inaccurate particulars in the return.

Exemption under section 54 - Utilisation of capital gains for construction as qualifying investment - Completion of construction not a precondition for section 54 - Distinction between wealth tax jurisprudence and section 54 of the Income tax Act

Exemption under section 54 - Utilisation of capital gains for construction as qualifying investment - Completion of construction not a precondition for section 54 - Distinction between wealth tax jurisprudence and section 54 of the Income tax Act - Claim for exemption under section 54 allowed though the new house was under construction and not fully completed, based on amount of capital gains actually invested. - HELD THAT: - The Tribunal examined whether the assessee's investment of capital gains in construction of a residential house (including deposit into capital gains account scheme and payments evidenced by bank withdrawals and construction agreements) entitled him to deduction under section 54 despite the construction not being complete. The Assessing Officer rejected the assessee's valuation and restricted the exemption on the ground that the building was not completed, relying on Giridhar G. Yadalam (Supreme Court) concerning wealth tax. The Tribunal, however, followed the binding view of the Karnataka High Court in Sambandam Uday Kumar and its consideration in C. Gopalaswamy, which distinguished Giridhar G. Yadalam as addressing wealth tax vocabulary and principles, not the legislative scheme of section 54. Applying those precedents, the Tribunal held that the sine qua non for section 54 is that the capital gain realised has been invested in acquiring or constructing a residential house; completion or occupation is not a statutory precondition. Given the assessee produced valuation, bank evidence of withdrawals, construction agreements and a BBMP completion certificate before the appellate authority, the Tribunal found no infirmity in the CIT(A)'s acceptance of the claimed investment and deletion of the AO's disallowance. The Tribunal therefore sustained allowance of the exemption under section 54 on the basis of the amounts actually utilised towards construction. [Paras 7, 8, 9]

The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s allowance of the exemption under section 54 based on the capital gains invested in construction despite the house being under construction.

Final Conclusion: Following the Karnataka High Court authorities (Sambandam Uday Kumar and C. Gopalaswamy) and distinguishing the Supreme Court's wealth tax decision in Giridhar G. Yadalam, the Tribunal held that section 54 exemption is allowable where capital gains have been invested in construction even if construction is not complete; Revenue's appeal is dismissed.

Section 50C - deeming of stamp duty value as full consideration - Reference to Valuation Officer under Section 50C - Time limit for Valuation Officer's report - Section 142A(6) as guiding factor - Generalia specialibus non derogant - special provisions prevail over general - Assessment completed despite pending Valuation Officer report - provisional assessment and finality - Relief where Valuation Officer's delayed report is time-barred

Section 50C - deeming of stamp duty value as full consideration - Reference to Valuation Officer under Section 50C - Assessment completed despite pending Valuation Officer report - provisional assessment and finality - Whether the Assessing Officer could substitute the sale consideration by adopting the stamp duty value under Section 50C when a reference to the Valuation Officer had been made but no report was received - HELD THAT: - The Tribunal found that the AO had referred the matter to the Valuation Officer under Section 50C(2) after the assessee disputed the stamp duty valuation, but completed the assessment by adopting the stamp authority's value in the absence of any DVO report. Sub-section (3) of Section 50C makes the stamp value decisive only subject to the outcome of a valid reference to the Valuation Officer; where a reference is made the AO is required to act in conformity with the Valuation Officer's estimate. Given that no report was received and the assessee had raised specific factual objections to the stamp value which were not addressed by the AO or the stamp authority, the Tribunal held that the AO could not treat the stamp value as final while the reference remained unresolved. Under the peculiar facts - prolonged non-receipt of the DVO report and the AO's failure to secure timely compliance - the assessment founded on the stamp value amounted to charging tax on a provisional figure which had not attained finality. Consequently, the Tribunal directed that the sale consideration as declared in the registered deeds be taken for computing capital gains. [Paras 6, 10, 13]

Addition made by the AO by adopting the stamp duty value is deleted and the declared sale consideration in the registered sale deeds is to be taken for computing capital gains.

Time limit for Valuation Officer's report - Section 142A(6) as guiding factor - Generalia specialibus non derogant - special provisions prevail over general - Relief where Valuation Officer's delayed report is time-barred - Whether the six month time limit in Section 142A(6) can be applied as a guiding timeframe to references made under Section 50C and whether an inordinate delay by the Valuation Officer renders any subsequent report time barred - HELD THAT: - The Tribunal analysed Sections 50C, 43CA, 55A and 142A and noted that 50C and 55A are special provisions for valuation of capital assets, while 142A is a general provision for valuation references. Applying the maxim generalia specialibus non derogant, the Tribunal held that references for computing capital gains should be made under 50C/55A (as applicable) rather than under 142A. Although Sections 50C/55A do not themselves prescribe a time limit for the DVO to file the report, Section 142A(6) expressly requires submission within six months from the end of the month in which reference is made. In view of the Valuation Officer's unexplained and prolonged delay of several years in the present case, the Tribunal held that the six month timeline in Section 142A(6) may be treated as a guiding and mandatory benchmark for determining whether a DVO report is timely; an inordinate delay will render any belated report time barred and not to be acted upon. The Tribunal also recorded that the AO failed to follow up the reference and that the assessee must not be prejudiced by such delay. [Paras 11, 12, 13]

The six month period as envisaged in Section 142A(6) is a relevant guiding factor; an inordinate delay by the Valuation Officer disentitles the revenue from relying on a belated report and no cognizance should be taken of such time barred report.

Final Conclusion: The appeal is allowed: the addition made by adopting the stamp authority's value is deleted and the declared sale consideration in the registered deeds is directed to be taken for computing capital gains for AY 2018 2019; where a Valuation Officer's report is inordinately delayed, the six month benchmark in Section 142A(6) is a guiding factor and a belated report will not be acted upon.

Bogus purchases - Bogus subcontractor expenses - Use of seized incriminating material - Burden of verification in assessment framed under section 143(3) - Estimation of addition to plug leakage of revenue - Consequential addition - Deletion of consequential addition where foundational finding is vacated

Bogus purchases - Use of seized incriminating material - Burden of verification in assessment framed under section 143(3) - Estimation of addition to plug leakage of revenue - Addition of Rs. 11,68,34,443 as bogus purchases - HELD THAT: - The Assessing Officer based the addition largely on excel sheets seized from an employee's computer and on findings recorded for AY 2020-21; some admissions in sworn statements indicated wholly bogus parties for limited instances. However, the assessment for AY 2021-22 was completed under section 143(3) and not under search-related provisions, and the AO did not undertake independent verification by examining alleged suppliers for the year under consideration. The Tribunal held that the AO could not simply rely on earlier-year findings without making requisite enquiries for the present year, especially since the search occurred mid-year and complete evidence of bogus purchases throughout the year was not on record. To address revenue protection while recognising evidentiary gaps, the Tribunal applied a limited estimation approach and restricted the impugned addition to 5% of the alleged bogus purchases for the year, thereby partially allowing the ground. [Paras 2]

Addition restricted to 5% of the alleged bogus purchases (impugned addition partly allowed and reduced to the estimated amount).

Bogus subcontractor expenses - Burden of verification in assessment framed under section 143(3) - Estimation of addition to plug leakage of revenue - Disallowance of Rs. 1,31,20,755 as payments to sub-contractors treated as bogus - HELD THAT: - The AO's disallowance relied on search findings and admissions in earlier proceedings, but for AY 2021-22 no independent enquiries of the alleged sub-contractors were made and the assessment was under section 143(3). The Tribunal applied the same reasoning as for bogus purchases: because full corroborative evidence for the year under appeal was not on record and the AO could not rely solely on earlier-year findings, a proportional estimation was applied to protect revenue while recognising evidentiary insufficiency. Considering the nature of the assessee's business and incomplete material, the Tribunal restricted the addition by estimating 25% against the impugned amount. [Paras 3]

Addition restricted to 25% of the impugned subcontractor payments (impugned addition partly allowed and reduced to the estimated amount).

Consequential addition - Deletion of consequential addition where foundational finding is vacated - Addition of Rs. 14,01,00,000 as undisclosed interest income - HELD THAT: - The impugned interest addition for AY 2021-22 was computed as consequential to an addition made in AY 2020-21 which alleged undisclosed loans. The Tribunal has earlier deleted the primary addition concerning alleged loans for AY 2020-21 in ITA No.1024/Chny/2024. As the foundational finding in the earlier year has been vacated, the consequential interest addition for the present year lacks a basis and therefore cannot stand. [Paras 4]

Consequential addition deleted (ground allowed).

Final Conclusion: Appeal partly allowed: additions for bogus purchases and bogus subcontractor expenses are restricted by estimated percentages (partly allowed), and the consequential addition of interest is deleted; other legal and jurisdictional grounds not pressed are dismissed.

Requirement of notice under section 143(2) before framing assessment under section 147/148 - Validity of reassessment where no notice under section 143(2) is issued - Jurisdictional prerequisite for assumption of jurisdiction under section 147

Requirement of notice under section 143(2) before framing assessment under section 147/148 - Validity of reassessment where no notice under section 143(2) is issued - Jurisdictional prerequisite for assumption of jurisdiction under section 147 - Assessment framed under section 143(3) read with section 147/148 without issuance of notice under section 143(2) is invalid - HELD THAT: - The Tribunal admitted the additional ground raised by the assessee as it was a pure question of law touching the jurisdiction of the Assessing Officer (paras 10). The notice under section 148 dated 30.03.2015 required the assessee to file a return within 30 days; the assessee filed an application on 25.08.2015 requesting that the original return be treated as the return in response to the section 148 notice, and that application was neither rejected nor treated as invalid by the Assessing Officer (para 10). The revenue did not place on record any material to show that a notice under section 143(2) was issued before passing the assessment order; the assessee's requests (including RTI applications) to obtain such material remained unrefuted (para 12). The Tribunal relied on precedents of High Courts and Tribunals which hold that issuance of notice under section 143(2) is a prerequisite for assuming jurisdiction under section 147/148 and that non-issuance is not cured by participation in proceedings (para 11). In view of the absence of proof of issuance of the mandatory notice under section 143(2), the Tribunal concluded that the reassessment order is invalid (para 12). Having allowed the jurisdictional/legal ground, the Tribunal treated remaining grounds as academic and did not adjudicate them (para 12). [Paras 10, 11, 12]

Additional ground admitted; assessment framed under section 143(3) read with section 147/148 quashed for non-issuance of mandatory notice under section 143(2); other grounds rendered academic

Final Conclusion: The assessee's appeal is allowed: the reassessment for AY 2008-09 is quashed because the Assessing Officer did not furnish evidence of issuing the mandatory notice under section 143(2) before completing assessment under section 147/148; consequent grounds were not adjudicated as academic.

Levy of fee under Section 234E - Processing of TDS statement under Section 200A - Prospective effect of statutory amendment - Condonation of delay in filing appeal - Quashing of consequential interest

Condonation of delay in filing appeal - Delay in filing appeals before the CIT(A) was condoned. - HELD THAT: - The Tribunal found that the appeals raised a substantial legal question about the applicability of Section 234E for periods prior to amendment of Section 200A and that the delay could not be presumed to be deliberate or mala fide. Balancing technical objections against substantial justice and having regard to supporting judicial precedents, the Tribunal exercised discretion in favour of the assessee and condoned the delay so that the merits could be examined. [Paras 10]

Delay in filing the appeals before the CIT(A) is condoned.

Levy of fee under Section 234E - Processing of TDS statement under Section 200A - Prospective effect of statutory amendment - Quashing of consequential interest - Late fee under Section 234E could not be imposed by processing TDS statements under the pre-amendment Section 200A for defaults occurring prior to 01.06.2015; the demands and consequential interest were quashed. - HELD THAT: - Section 234E was inserted effective 01.07.2012 to create a fee for defaults in furnishing TDS/TCS statements. However, the provision in Section 200A enabling computation/adjustment of fee under Section 234E on processing of statements was introduced only by amendment effective 01.06.2015. For TDS statements relating to the period before 01.06.2015 (the relevant quarters in these appeals), the pre-amended Section 200A did not permit recovery of fee under Section 234E by processing under Section 200A. Following the reasoning of a Coordinate Bench (Karnataka Grameen Bank v. ACIT) that the 200A amendment has prospective effect, the Tribunal held that levy of Section 234E fee by invoking pre-amendment Section 200A was not permissible and accordingly quashed the demands and any consequential interest. [Paras 11, 12]

Demands under Section 234E for the periods prior to 01.06.2015 cannot be recovered by processing under pre-amended Section 200A; the fee and consequential interest are quashed and the appeals are allowed.

Final Conclusion: The Tribunal condoned the delay in filing the appeals and on merits held that Section 234E fees could not be levied by processing under the pre-amendment Section 200A for periods prior to 01.06.2015; the demands and consequential interest were quashed and all appeals were allowed.

Grant of bail for prolonged incarceration - pre-trial detention and right to bail - discharge application pending - conditions of bail and sureties - trial court's supervisory power to enforce bail conditions - offences under the NDPS Act and Customs Act

Grant of bail for prolonged incarceration - pre-trial detention and right to bail - discharge application pending - Petitioner released on bail in view of prolonged incarceration and pendency of trial and discharge application. - HELD THAT: - The Court noted that the petitioner has been in custody since 14.09.2019 and that the trial is pending, with a discharge application of another accused awaiting consideration. Having regard to the period of incarceration, which exceeds five years, and the prospect of further delay in conclusion of the trial, the Court was inclined to grant bail. The grant is directed notwithstanding the nature of the offences registered under the relevant provisions of the N.D.P.S. Act and Section 135A of the Customs Act, given the prolonged pre-trial detention and the pendency of interlocutory proceedings which may extend the trial.

Special Leave Petition allowed and petitioner directed to be released on bail.

Conditions of bail and sureties - trial court's supervisory power to enforce bail conditions - Release is subject to furnishing bail bonds and sureties and compliance with conditions to be imposed by the trial court; petitioner must attend trial and violations permit action by the trial court. - HELD THAT: - The Court directed release of the petitioner on furnishing suitable bail bonds and sureties and on such other terms and conditions as the trial court may deem fit. The petitioner is required to abide by all conditions imposed and to regularly attend the trial until lawfully exempted. The order preserves the trial court's authority to take appropriate measures, including cancellation of bail or other recourse, in the event of any violation of the bail conditions.

Bail ordered on specified conditions; attendance at trial mandated and trial court at liberty to act on any violation.

Final Conclusion: Special Leave Petition allowed; petitioner to be released on bail on furnishing suitable bonds and sureties and subject to conditions as may be imposed by the trial court, with the petitioner required to attend trial and the trial court empowered to act on any violation.

Verification of Country-of-Origin Certificates under CAROTAR - Prima facie inference from identical FOB values - Requirement to furnish explanation with self-assessed Bill of Entry - Compatibility of administrative public notice with statutory origin-determination rules (2009 Rules) - Early clearance against bond and bank guarantee - Assessment of entitlement under Preferential Trade Agreements in accordance with applicable rules and notifications

Prima facie inference from identical FOB values - Requirement to furnish explanation with self-assessed Bill of Entry - Compatibility of administrative public notice with statutory origin-determination rules (2009 Rules) - Validity and legality of Clause 3(ii) of Public Notice No.55 of 2024 insofar as it requires an importer to furnish an explanation when FOB on the third country invoice is identical to FOB on the FTA COO, and whether this conflicts with the Customs Tariff (Determination of Origin) Rules, 2009. - HELD THAT: - The Court examined Clause 3(ii) which states that identical FOB values on the third country invoice and the FTA COO prima facie indicate inclusion of value addition not permitted under preferential trade agreements, and therefore requires the importer to include an explanation with the self assessed bill of entry. The Court held that Clause 3(ii) applies only to cases of identical FOB values and is a measure to enable the proper officer to assess compliance with the 2009 Rules and other applicable origin rules. There is no provision in the 2009 Rules that interdicts seeking such an explanation; calling for an explanation in this narrow circumstance does not derogate from an importer's statutory entitlement under the 2009 Rules or the relevant notifications if the importer, upon due consideration, is found to satisfy the requirements. The clause is administrative guidance to assist verification and is not ultra vires the statutory scheme. [Paras 12, 13, 15, 16, 17]

Clause 3(ii) is lawful and not ultra vires the 2009 Rules; it permissibly requires an explanation only where identical FOB values appear and does not deny statutory benefits if the requirements are met.

Assessment of entitlement under Preferential Trade Agreements in accordance with applicable rules and notifications - Early clearance against bond and bank guarantee - Whether the petitioner could obtain an omnibus direction to assess specific bills of entry and grant the benefit of Notification No.46/2011 Customs dated 01.06.2011 by challenging the public notice. - HELD THAT: - The Court declined to entertain a prayer seeking a blanket or omnibus direction to assess the bills of entry and grant the notification benefit merely by challenging the public notice. Assessment of each bill of entry must proceed on its own facts and merits and in accordance with the law, relevant notifications and rules; any explanation furnished under Clause 3(ii) will be considered in that evaluative process. The public notice does provide an option for early clearance against bond and bank guarantees where more time is required to furnish information under CAROTAR 2020, but substantive entitlement must be determined through the prescribed statutory processes and, if denied, can be agitated through available statutory remedies. [Paras 4, 14, 18, 19, 20]

No omnibus assessment or grant of benefit is permitted by way of challenge to the public notice; each transaction must be assessed under the applicable law and notifications, with statutory remedies available against any adverse decision.

Final Conclusion: The writ petition challenging Public Notice No.55 of 2024 (24 June 2024) and Clause 3(ii) is dismissed. Clause 3(ii) is lawful as administrative guidance to assist origin verification and does not preclude lawful entitlement under the 2009 Rules; assessments of individual bills must proceed on their merits in accordance with the rules and notifications, and early clearance against bond/bank guarantee remains available where permitted.

Exhaustion of alternate remedies - Writ against show cause notice - exceptional grounds - Export control of Schedule-B substances - No Objection Certificate for export in Schedule-B - Power under Section 9-A of the NDPS Act - Interpretation of Schedule-B entries - Factual investigation into chemical composition (salts, preparations, mixtures) - Relegation to statutory adjudicatory mechanism

Exhaustion of alternate remedies - Writ against show cause notice - exceptional grounds - Relegation to statutory adjudicatory mechanism - Whether the writ petition should be entertained to quash the show cause notice and to grant a declaration that no NOC is required for export. - HELD THAT: - The Court held that the challenge to the show cause notice does not disclose any exceptional circumstance warranting departure from the settled rule of exhaustion of alternate remedies. Absent an absolute want of jurisdiction or infringement of fundamental rights or breach of principles of natural justice, writ relief at the notice stage is not appropriate. Reliance is placed on settled authorities that writ petitions challenging show cause notices should be entertained only in exceptional cases; ordinarily the recipient must respond to the notice and raise all contentions before the adjudicating authority, with liberty to approach the Court against any adverse order. The petitioner's prior institution of the writ before issuance of the notice is immaterial; on the pleadings the High Court would likely have relegated the petitioner to the statutory process in any event. Consequently, the petition seeking to quash the show cause notice and for a declaration was declined and the petitioner was permitted to file a reply to the notice within a specified period, with all contentions left open for adjudication by the authority. [Paras 26, 27, 30, 34, 36]

Petition dismissed; petitioner directed to exhaust statutory adjudicatory remedies and granted limited liberty to file reply to the show cause notice within four weeks; all merits contentions left open.

Interpretation of Schedule-B entries - No Objection Certificate for export in Schedule-B - Factual investigation into chemical composition (salts, preparations, mixtures) - Power under Section 9-A of the NDPS Act - Whether ADCOTE 545S falls within Schedule-B (specifically Entry 10: Methyl Ethyl Ketone) and whether a NOC is required for its export. - HELD THAT: - The Court found that determination of whether ADCOTE 545S is covered by Entry 10 of Schedule-B involves questions of fact and technical/chemical analysis (distinguishing between a compound, a salt, a preparation or a mixture and whether MEK is extractable/severable). Clause 10 of the 2013 Order and Section 9-A of the NDPS Act show the regulatory purpose; however, the question whether the product is itself MEK or only contains MEK as a component cannot be resolved by pure textual interpretation without factual inquiry. Communications from the Assistant Narcotics Commissioner and laboratory remarks indicating extractability of MEK underscore the need for fact-finding. Accordingly, the matter is to be addressed through the statutory adjudicatory process rather than by this Court at the interlocutory stage. [Paras 15, 18, 20, 21, 22]

Issue not decided on merits by this Court; left for factual investigation and determination by the adjudicating authority under the statutory scheme.

Final Conclusion: Writ petition challenging requirement of NOC and the show cause notice is declined; petitioner must exhaust the statutory adjudicatory remedy and is granted four weeks to file a reply to the show cause notice; the question whether ADCOTE 545S falls within Schedule-B (Entry 10) requires factual/technical inquiry and is to be determined by the appropriate statutory authority, with all merits left open.

Relevancy of statements under certain circumstances - Right to cross-examination in quasi-judicial proceedings - Admissibility of expert opinion/test report without disclosure of tests - Section 138B - conditions for dispensing with cross-examination - Requirement to record reasons and give opportunity before treating statement as relevant

Relevancy of statements under certain circumstances - Section 138B - conditions for dispensing with cross-examination - Requirement to record reasons and give opportunity before treating statement as relevant - Whether statements and testimonial material relied upon by the adjudicating authority could be treated as relevant without compliance with Section 138B and without affording the noticees an opportunity to cross-examine - HELD THAT: - The Court affirmed that Section 138B permits treating a statement as relevant only in narrowly prescribed circumstances and that those circumstances must be objectively established on the record. The quasi judicial authority must confront the affected party and give an opportunity to make submissions before concluding that the specified grounds for dispensing with cross examination exist, and must record reasons based on sufficient material. In the present case the adjudicating authority did not follow the procedure envisaged by Section 138B, did not record objective reasons on the file justifying non availability of witnesses or other specified grounds, and did not afford the exporter the opportunity to cross examine makers of statements. Consequently the statements could not be relied upon by the adjudicating authority. [Paras 12, 14]

Statements relied upon without establishing the circumstances in Section 138B, without giving opportunity to the affected party and without recording reasons, are not admissible and could not sustain the adjudicatory order.

Right to cross-examination in quasi-judicial proceedings - Admissibility of expert opinion/test report without disclosure of tests - Whether the Chemical Examiner's brief report (stating only the conclusion) could be relied upon in the absence of disclosure of tests and refusal to permit cross examination - HELD THAT: - The Court observed that the Chemical Examiner's report in this case was a bare conclusion stating the sample was urea and did not disclose the tests performed or the basis for the conclusion. Given the evidentiary posture and that no circumstances existed to dispense with cross examination, the exporter was entitled to an opportunity to cross examine the Chemical Examiner. Because that opportunity was denied and the report lacked analytical particulars, the test report could not be treated as reliable material to uphold confiscation or penalties. [Paras 7, 8, 13]

A conclusory expert/test report that does not disclose tests or reasoning and where cross examination has been denied cannot be relied upon to sustain the adjudicatory order.

Relevancy of statements under certain circumstances - Right to cross-examination in quasi-judicial proceedings - Whether any substantial question of law arises warranting interference with the Tribunal's order allowing cross examination and setting aside the adjudicatory order - HELD THAT: - Applying the principles in J and K Cigarettes Ltd. and analogous precedents, the Court found that where the record does not disclose the exceptional circumstances contemplated by Section 138B and where the report relied upon is conclusory, the Tribunal was justified in excluding those materials and allowing cross examination. On the facts of this case there were no circumstances shown that would permit dispensing with cross examination, and therefore no substantial question of law arose to sustain Revenue's challenge. [Paras 13, 14]

No substantial question of law arises; the Tribunal's order was appropriately based on denial of requisite procedure and exclusion of the impugned material.

Final Conclusion: The appeals are dismissed; the Court upheld the Tribunal's approach that statements and a conclusory chemical report could not be relied upon where Section 138B procedure was not followed, cross examination was denied and no objective reasons were recorded to dispense with it.

Classification of solar modules under CTH 8501 vis-a-vis CTH 8541 - HSN explanatory notes on photovoltaic panels and modules - CBIC clarification on bypass diodes and blocking diodes - burden of proof on the Revenue for classification - finalization of provisional assessment before issuance of demand - uniformity in classification by the Department

Classification of solar modules under CTH 8501 vis-a-vis CTH 8541 - HSN explanatory notes on photovoltaic panels and modules - CBIC clarification on bypass diodes and blocking diodes - burden of proof on the Revenue for classification - uniformity in classification by the Department - Imported Poly Crystalline Silicon solar photovoltaic modules are classifiable under CTH 8541 and not under CTH 8501. - HELD THAT: - The Tribunal determined classification by reference to the HSN explanatory notes and binding CBIC communications which distinguish complete photovoltaic generators (heading 8501) from solar cells/modules not equipped with elements that supply power directly to an external load (heading 8541). CBIC clarified that modules with bypass diodes fall under 8541, whereas modules with blocking diodes (or both blocking and bypass) fall under 8501. The Revenue relied on an IIT Kanpur test report which did not and could not determine whether the samples had blocking or bypass diodes; the expert laboratory itself stated the requisite test was not possible in its mechanical engineering department and the electrical engineering department could not perform the test for lack of representative panels. Given the inconclusive nature of that report, the Department failed to discharge the burden of proof to show presence of blocking diodes or other elements enabling the module to supply power directly to an external load. By contrast, the appellants produced a Chartered Engineer's certificate and a manufacturer/inspector certificate stating the modules contained only bypass diodes and did not supply power directly to an external load. The Tribunal further noted that the Department had earlier accepted identical classification in a related case (Wardha Solar) and was bound to maintain uniformity. In the absence of positive evidence from the Revenue to establish characteristics attracting heading 8501, the materials on record support classification under CTH 8541 and the adjudicating authority's contrary conclusion could not be sustained. [Paras 14, 18, 22, 24, 26]

The impugned orders are set aside and the imported solar modules are held classifiable under CTH 8541; appeals are allowed with consequential relief as per law.

Final Conclusion: The Tribunal allowed the appeals, holding that the imported solar photovoltaic modules are classifiable under CTH 8541 (modules with bypass diodes not supplying power directly to an external load), set aside the adjudicating authority's orders reclassifying them under CTH 8501 and confirming duty, confiscation and penalties, and granted consequential relief as per law.

Burden of proof under Section 123 of the Customs Act - principles of natural justice - requirement of a speaking order - remand for fresh adjudication - evidentiary value of assayer's report

Principles of natural justice - requirement of a speaking order - burden of proof under Section 123 of the Customs Act - evidentiary value of assayer's report - Whether the adjudicating authorities properly considered the appellant's defence and evidence and whether the matter required remand for fresh adjudication - HELD THAT: - The Tribunal found that the Original Adjudicating Authority and the Commissioner (Appeals) disposed of the matter by cryptic conclusions without adequately evaluating the defence and documentary assertions made by the appellant, including the statement recorded under Section 108 of the Customs Act describing source of procurement and commercial transaction. The adjudicating authorities failed to examine the authenticity of documents alleged to have been given to the courier, and ignored the assayer's disclaimer that it could not conclusively state whether the gold was of foreign origin. In these circumstances, despite the statutory shift of evidential burden under burden of proof under Section 123 of the Customs Act, when a serious charge of smuggling is leveled the evidence must be carefully evaluated and the person afforded reasonable opportunity to defend; the order must be a speaking order explaining why the claimed documents and statements are rejected. The Tribunal emphasised that a common, generalized order without consideration of individual factual matrices and without addressing documentary and testimonial material may amount to non-application of mind and breach of principles of natural justice. Accordingly the Tribunal declined to express any view on the merits and directed fresh adjudication. [Paras 8, 9, 10, 11, 12]

The matter is remanded to the Original Adjudicating Authority for fresh adjudication by a speaking order within three months, after affording the appellants opportunity to produce documents and be heard; the order of the Commissioner (Appeals) insofar as it deals with the present appellant is set aside.

Final Conclusion: Appeal allowed by way of remand: the Tribunal set aside the Commissioner (Appeals) order to the extent it relates to the appellant and directed fresh, speaking adjudication by the Original Authority within three months, after giving the appellant opportunity to produce documents and be heard.

Exemption for goods required for petroleum operations - certificate from Directorate General of Hydrocarbons as proof of requirement - interpretation of "required for" versus actual "use" or end use - depreciated value calculated by straight line method for disposal of imported goods - disposal as triggering event for payment of duty on leftover goods - confiscation and penalty where no violation of statutory condition is found

Exemption for goods required for petroleum operations - certificate from Directorate General of Hydrocarbons as proof of requirement - interpretation of "required for" versus actual "use" or end use - Validity of demand of customs duty in respect of imports made under Bill of Entry dated 24.01.2017 - HELD THAT: - Notification No.12/2012 Cus as it stood prior to 02.02.2017 did not contain Clause (e) and must be construed in light of precedents holding that an exemption which applies to goods "required for" specified operations is satisfied by certification of requirement by the prescribed authority and does not mandate proof of physical end use. The Tribunal applied the reasoning in Clough Engineering (approved by the Apex Court) and earlier decisions to conclude that where DGHC certified that the imported pipes were required for the petroleum project and the project was completed (confirming intended use), confiscation, duty demand and penalty in respect of the Bill of Entry dated 24.01.2017 were not sustainable and the demand was set aside. [Paras 6, 9]

Demand in respect of Bill of Entry dated 24.01.2017 set aside and exemption upheld.

Depreciated value calculated by straight line method for disposal of imported goods - disposal as triggering event for payment of duty on leftover goods - certificate from Directorate General of Hydrocarbons as proof of non requirement - Effect of Notification No. 06/2017 dated 02.02.2017 inserting Clause (e) in Condition 40A and entitlement to depreciation on leftover goods - HELD THAT: - Clause (e) was introduced to address disposal of imported goods left over after petroleum operations and expressly prescribes that where goods are sought to be disposed of the importer/transferee may pay duty on the depreciated value calculated by the straight line method "from the date of clearance of the goods" on production of a certificate from DGHC that the goods are no longer required. The Tribunal found that Clause (e) activates on disposal (meaning transfer/sale), not merely on removal from offshore to onshore, and that depreciation must be calculated from the date of clearance as provided. The impugned order wrongly confined depreciation to the date of removal from offshore; that part of the impugned order was therefore set aside. [Paras 3, 7, 10]

Denial of depreciation under Clause (e) was quashed; depreciation is available as prescribed in Clause (e) calculated from date of clearance where disposal is established and DGHC certificate produced.

Confiscation and penalty where no violation of statutory condition is found - exemption for goods required for petroleum operations - Sustainability of confiscation and penalty in the absence of breach of the notification conditions - HELD THAT: - The Tribunal observed that the notification itself anticipates the possibility of leftover goods and the present facts do not disclose any violation of Section 111 of the Customs Act or the notification conditions. Given the availability of exemption (for pre amendment imports) and the prescribed mechanism for valuation on disposal (post amendment), there was no justification for confiscation of goods or imposition of penalties. Accordingly, confiscation and penalty were set aside. [Paras 11]

Confiscation and penalties set aside for lack of violation.

Depreciated value calculated by straight line method for disposal of imported goods - disposal as triggering event for payment of duty on leftover goods - Remand of matter to original adjudicating authority for fresh decision in accordance with Tribunal's observations - HELD THAT: - While the Tribunal determined the legal principles governing entitlement to exemption (for pre amendment imports), applicability of Clause (e) (for post amendment imports) and the non sustainability of confiscation/penalty, it observed that factual and consequential determinations (including computation of duty on depreciated value, verification of DGHC certificates and whether disposal has occurred) require fresh consideration by the adjudicating authority. Therefore the matter was set aside and remanded for fresh decision consistent with the legal conclusions recorded by the Tribunal. [Paras 12]

Matter remanded to original adjudicating authority for fresh decision in terms of Tribunal's observations.

Final Conclusion: Pre amendment imports (Bill of Entry dated 24.01.2017) held entitled to exemption and demand set aside; Clause (e) introduced by Notification No.06/2017 provides for duty on depreciated value calculated from date of clearance where goods are disposed of and DGHC issues certificate of non requirement - denial of such depreciation was quashed; confiscation and penalties were set aside; the matter is remanded to the original authority for fresh adjudication consistent with these legal findings.

Unjust enrichment in customs refund claims - Presumption that incidence of duty has been passed on (section 28D) - Proof to rebut presumption of passing on duty - Provisioning of disputed amount as receivables in accounts - Scope of sanctioning authority under section 27 for refund - Limits of appellate review of refund sanction - Appropriate remedy for recovery of erroneously granted refund (section 28)

Provisioning of disputed amount as receivables in accounts - Proof to rebut presumption of passing on duty - Unjust enrichment in customs refund claims - Validity of first appellate authority's rejection of the sanctioning authority's grant of refund on the ground that the CA certificate was deficient for not showing provisioning from the year of import - HELD THAT: - The Tribunal held that the sanctioning authority under section 27 had lawfully accepted the certificate of the chartered accountant which attested that the disputed amount was shown as receivable, and that the first appellate authority erred in insisting that such provisioning must date from the year of import. The Court observed that the presumption against the claimant operates in trading contexts and does not apply where imported goods are used in manufacture; that there is no statutory requirement that provisioning as receivables must commence in the year of import; and that certification that the amount has been transferred to receivables provides reasonable assurance that the duty incidence has not been passed on. The appellate authority further erred in setting aside the sanction without specifying the precise documentary deficiencies or affording the assessee an opportunity to cure them. On these grounds the impugned appellate order was held to lack validity and the original order sanctioning the refund was restored. [Paras 6, 7, 9, 10]

Order of the original sanctioning authority allowing the refund restored; order of the first appellate authority directing recovery/deposit set aside.

Presumption that incidence of duty has been passed on (section 28D) - Scope of sanctioning authority under section 27 for refund - Limits of appellate review of refund sanction - Applicability of the statutory presumption in section 28D and the permissible scope of appellate interference in a refund sanction under section 27 - HELD THAT: - The Tribunal held that section 28D's presumption that duty incidence is passed on applies to trading in imported goods and is not apt to an appellant who uses imported goods for manufacture (captive consumption). Consequently, invoking section 28D to displace the sanctioning authority's finding was inappropriate. Further, an appellate authority reviewing a sanction under section 27 must confine itself to the record and identify specific deficiencies; it cannot, by general assertion of insufficiency, substitute its own evaluation without indicating what additional proof would have sufficed or giving the claimant an opportunity to remedy deficiencies. The decision also noted that while section 28 provides an executive remedy for recovery, the question whether an appellate authority may itself order recovery was not agitated and therefore not decided. [Paras 3, 7]

Section 28D held not relevant to the appellant's case of captive consumption; appellate authority's broad rejection of the sanction without specific basis was impermissible and set aside.

Final Conclusion: The Tribunal restored the sanctioning authority's order allowing the refund (subject to the partial retention already made by that authority) and set aside the first appellate authority's order directing recovery/deposit into the Consumer Welfare Fund, holding that the CA certificate showing transfer to receivables sufficed to rebut unjust enrichment and that the appellate authority had exceeded its proper scope of review.

Withdrawal of corporate insolvency resolution process - Settlement of claims after admission of CIRP - Inherent powers under Rule 11 - Section 12A read with Regulation 30A - Proceedings in rem after admission - Locus standi of creditors

Locus standi of creditors - Proceedings in rem after admission - Appellant's locus to challenge the NCLAT order - HELD THAT: - The Court held that the phrase "any person aggrieved" in Section 62 includes a creditor such as the appellant and there is no rigid locus requirement to institute an appeal. Once CIRP is initiated on admission, the proceedings become collective (in rem) and all creditors become stakeholders; the appellant had its claim verified by the IRP and had been impleaded and heard before the NCLAT. Consequently, the appellant had standing to file the present appeal before this Court. [Paras 73, 74, 75, 76]

Appellant has locus to maintain the appeal.

Section 12A read with Regulation 30A - Withdrawal of corporate insolvency resolution process - Inherent powers under Rule 11 - Validity of NCLAT's invocation of Rule 11 to approve settlement when Section 12A and Regulation 30A prescribe the procedure - HELD THAT: - The Court concluded that the statute and regulations now provide an exhaustive framework for withdrawal/settlement post-admission at the different stages (before admission, after admission but before constitution of CoC, after constitution of CoC, and after issuance of invitation for EOIs). Where such an exhaustive procedure exists, inherent powers under Rule 11 cannot be invoked to subvert the prescribed process. In the present case the settlement was approved before (i) any formal application under Regulation 30A was filed through the IRP, (ii) the matter was placed before the NCLT as mandated, and (iii) the procedure under Section 12A/Regulation 30A was followed. The NCLAT offered no justification for departing from the statutory procedure. Therefore recourse to Rule 11 of the NCLAT Rules was not warranted. [Paras 77, 78, 79, 80, 81]

NCLAT erred in invoking its inherent powers under Rule 11 to approve the settlement in lieu of the procedure prescribed by Section 12A and Regulation 30A.

Settlement of claims after admission of CIRP - Proceedings in rem after admission - Whether NCLAT adequately addressed the appellant's objections regarding source of funds and other factual concerns - HELD THAT: - The Court observed that the NCLAT relied primarily on the undertaking/affidavit of Riju Raveendran and summarily dismissed the appellant's detailed objections (including alleged round tripping, the Delaware Court orders, contempt findings and other investigative proceedings) without adequate inquiry or evidence to rebut those objections. Given that once CIRP is admitted the proceedings are collective, objections by other stakeholders required careful consideration. The Supreme Court declined to adjudicate these objections on merits in this appeal, noting ongoing parallel proceedings and pending investigations, but found that the NCLAT did not adequately deal with the appellant's contentions. [Paras 81, 86]

NCLAT did not adequately address the appellant's objections; the approval was unsustainable on the recorded approach.

Final Conclusion: The appeal is allowed; the NCLAT judgment dated 2 August 2024 is set aside on the ground that its invocation of Rule 11 to approve the settlement bypassed the statutory procedure under Section 12A and Regulation 30A and failed adequately to address the appellant's objections. The Court did not decide the merits of the factual objections, directed that parties may seek withdrawal or settlement only in compliance with the prescribed framework, and ordered the escrowed amount to be deposited with the CoC.

Acknowledgement of debt under Section 18 of the Limitation Act - applicability of the Limitation Act to proceedings under the IBC via Section 238A - entries in balance sheet and auditor's note as evidence of acknowledgement - one-time settlement (OTS) proposal as acknowledgement of subsisting liability - initiation of CIRP under Section 7 of the IBC upon default - competency of authorised bank officer to sign Section 7 application

Acknowledgement of debt under Section 18 of the Limitation Act - applicability of the Limitation Act to proceedings under the IBC via Section 238A - entries in balance sheet and auditor's note as evidence of acknowledgement - Whether entries in the corporate debtor's balance sheets and accompanying auditor's note constitute an acknowledgement in writing under Section 18 of the Limitation Act thereby extending the period of limitation for filing a Section 7 IBC application. - HELD THAT: - The Court applied the settled principle that Section 238A makes the Limitation Act applicable to IBC proceedings and that Section 18 operates to commence a fresh limitation period when there is an acknowledgement of liability in writing. Having examined the balance-sheet entries and Note 3.4 for the year ending 31.03.2017, which recorded defaults in repayment of term loans and continuing defaults and referred to long-term borrowings, the Adjudicating Authority and the NCLAT were held to have correctly concluded that these entries amounted to an unequivocal acknowledgement of liability. The Supreme Court followed the reasoning in Bishal Jaiswal, Laxmi Pat Surana and Dena Bank to hold that such statutory-format financial statements and auditor's note can, on the facts, demonstrate a present subsisting liability sufficient to attract Section 18 and thereby extend the limitation period for the Section 7 claim. [Paras 4, 10, 11]

Entries in the balance sheet and the auditor's note amounted to an acknowledgement in writing under Section 18, extending the limitation period and rendering the Section 7 application timely.

One-time settlement (OTS) proposal as acknowledgement of subsisting liability - acknowledgement of debt under Section 18 of the Limitation Act - Whether the corporate debtor's One Time Settlement (OTS) proposal constituted an acknowledgement of present and subsisting liability attractable under Section 18 of the Limitation Act. - HELD THAT: - Applying precedents that an offer of one-time settlement or an offer acknowledging a live claim can amount to an acknowledgment for the purposes of Section 18, the Court agreed with NCLAT and the Adjudicating Authority that the OTS letter dated 07.06.2016 acknowledged prior debts owed to the bank, was not on a 'without prejudice' basis, and indicated the jural relation between the parties. The Court held that such an unequivocal acknowledgement, made within the relevant period, brings Section 18 into play and supports the extension of limitation for instituting proceedings under Section 7. [Paras 11, 12]

The OTS proposal constituted an acknowledgement of liability under Section 18 and contributed to the extension of the limitation period for the Section 7 petition.

Competency of authorised bank officer to sign Section 7 application - initiation of CIRP under Section 7 of the IBC upon default - Whether the Section 7 application was validly signed by a competent officer of the bank and whether there existed a debt/default enabling initiation of CIRP under Section 7. - HELD THAT: - The Adjudicating Authority found that the General Manager was legally authorised as the bank's attorney to sign the Section 7 application. The Authority and NCLAT examined the sanction letters, credit agreements and concluded that loans were disbursed and the corporate debtor had defaulted on repayment of principal and interest. The Supreme Court found these concurrent findings on competency to sign and existence of debt/unpaid dues to be unimpeachable and upheld admission of the Section 7 application. [Paras 4, 5]

The Section 7 petition was validly signed by an authorised bank officer and there was a constituted debt/default permitting initiation of CIRP; the admission was lawful.

Final Conclusion: The concurrent findings of the Adjudicating Authority and NCLAT that the balance-sheet entries and the OTS proposal constituted acknowledgements under Section 18 (with the Limitation Act being applicable to IBC proceedings via Section 238A), together with the validity of the bank's signatory and existence of default, are upheld; the appeal is dismissed.

Extinguishment of claims upon approval of resolution plan - clean slate principle in insolvency resolution - requirement to file claims in CIRP and consequences of non-resubmission - adjudicatory limits of the resolution professional - eligibility for bidding and clearance of past dues

Requirement to file claims in CIRP and consequences of non-resubmission - adjudicatory limits of the resolution professional - The legal consequence of the appellant having its claim returned for re-submission during CIRP but not re-filing the claim before approval of the Resolution Plan. - HELD THAT: - The court found that the appellant submitted the PBG-related claim as a Financial Creditor which the Resolution Professional returned advising re-submission in an appropriate form, but the appellant did not re-submit the claim during the CIRP. Because no substantive claim remained before the Resolution Professional or Committee of Creditors for inclusion in the Resolution Plan, there was nothing for the adjudicating authority to consider in relation to that claim. The court emphasised that the Resolution Professional has no adjudicatory power beyond collating and placing claims before the CoC, and that the appellant's failure to take steps to re-file or to challenge the Resolution Plan amounted to permitting the right to claim to be extinguished by the approval of the Plan. [Paras 22, 23, 27, 28]

The appellant's failure to re-submit its returned claim during the CIRP resulted in no actionable claim being placed before the resolution process, and the appellant cannot resurrect that claim after approval of the Resolution Plan.

Extinguishment of claims upon approval of resolution plan - clean slate principle in insolvency resolution - eligibility for bidding and clearance of past dues - Whether the claim in respect of the PBG survived the approval of the Resolution Plan and whether the respondent could be disqualified from participating in coal mine auctions on that basis. - HELD THAT: - Relying on the principle that an approved Resolution Plan binds the corporate debtor and stakeholders and is intended to freeze claims so the successful Resolution Applicant can start on a 'clean slate', the court held that claims not forming part of the approved Plan stand extinguished. The court noted that one of the appellant's other claims was admitted and paid pursuant to the Plan, but the PBG-related claim was not included because it was not re-filed; mere denial of a waiver sought in the Plan's negotiations does not revive an unasserted or unpursued claim. Applying Ghanashyam Mishra, the court reasoned that permitting surprise or resurrected claims after Plan approval would undermine the statutory purpose of enabling the corporate debtor to be revived as a going concern. Consequently, the clause in the tender requiring clearance of past dues could not be invoked to disqualify the respondent in respect of a claim extinguished by the approved Resolution Plan. [Paras 21, 24, 25, 26, 29]

The PBG-related claim did not survive the approval of the Resolution Plan and the respondent could not be disqualified from participating in auctions on that basis; the 'clean slate' principle applies.

Final Conclusion: The appeal is dismissed; the High Court order setting aside the debarment is upheld as the disputed PBG claim did not survive the CIRP and approval of the Resolution Plan, and the respondent is entitled to proceed without that past liability impeding its eligibility.

Money held in trust - operational debt - assets of the corporate debtor - moratorium under Section 14 - IBC overriding other laws - corporate insolvency resolution process (CIRP) costs - non-discriminatory treatment of creditors - public trust doctrine - personal liability of the resolution professional - integrity of approved resolution plan

Money held in trust - operational debt - assets of the corporate debtor - moratorium under Section 14 - CIRP costs - non-discriminatory treatment of creditors - Validity of the Adjudicating Authority's direction treating pre CIRP Annual Mine Closure Cost (AMCC) as money not belonging to the Corporate Debtor and directing that it be kept aside outside the CIRP - HELD THAT: - The Tribunal held that the Adjudicating Authority erred in treating pre CIRP AMCC as money held in trust and outside the CIRP. There is no documentary foundation for a trust: no separate trust account or contractual arrangement was placed on record to show that the AMCC deposit was held by the Corporate Debtor or others in trust for third parties (paras 21, 24). The Escrow Agreement itself contemplates periodic release and ultimately return of balances to the lessee upon compliance with the closure plan, which indicates that the sums were not intended to be irrevocably segregated from the lessee's estate (para 24). Further, once the Corporate Debtor was admitted into CIRP (12.08.2022) the moratorium under Section 14 operates and pre CIRP claims are to be filed and dealt with under the IBC framework; permitting unilateral recovery of pre CIRP AMCC outside the resolution process would be discriminatory and frustrate the statutory scheme and waterfall mechanism of the IBC (paras 29-31, 36). The Tribunal concluded that AMCC cannot be allowed to be taken out of the CIRP process merely by invoking public interest or trust doctrines and that such a course would enable preferential recovery contrary to the IBC code (paras 30-31, 36). [Paras 24, 29, 30, 31, 36]

Direction to treat pre CIRP AMCC as money not belonging to the Corporate Debtor and to keep it aside is set aside; AMCC claims must be addressed within the IBC/CIRP framework

IBC overriding other laws - public trust doctrine - moratorium under Section 14 - Whether provisions of CMSPA/MMDR Act/Colliery Control Rules can override or exclude the application of IBC with respect to recovery of pre CIRP AMCC - HELD THAT: - The Tribunal applied the principle that the IBC, being a later comprehensive enactment with an overriding clause, prevails over inconsistent provisions of earlier statutes. While acknowledging the public trust doctrine and the environmental objectives of MMDR/CMSPA, the Tribunal found no legislative or contractual basis to exclude AMCC from the IBC estate or to create a statutory first charge on AMCC that would fall outside the IBC waterfall (paras 26-28, 34-35). Absent a specific statutory provision creating a first and paramount charge over AMCC, government or statutory authorities must file their claims and participate in the resolution process like other creditors (paras 27, 30-31, 34). [Paras 26, 27, 34]

IBC prevails; CMSPA/MMDR/Colliery Rules do not justify excluding pre CIRP AMCC from the CIRP or permitting recovery outside the IBC regime

Personal liability of the resolution professional - integrity of approved resolution plan - Validity of the Adjudicating Authority's observation fixing personal responsibility on the Resolution Professional (RP) for disposal of mined coal and any deviation from the Mine Agreement - HELD THAT: - The Tribunal expunged the Adjudicating Authority's observation that fixed personal liability on the RP for any deviation in disposal of mined coal. The expungement is subject to the RP acting within the statutory provisions of the IBC and the regulations; Section 233 protections for insolvency professionals acting in good faith were noted in submissions (para 4), and the Tribunal removed the personal liability direction as overreaching beyond pleaded reliefs while preserving the statutory duties of the RP and the Adjudicating Authority's ability to consider compliance when approving a resolution plan (para 37). The Tribunal did not express any view on the merits of the resolution plan itself but directed the Adjudicating Authority to bear these conclusions in mind when considering plan approval (para 37). [Paras 32, 33, 37]

Observations imposing personal liability on the RP are expunged; RP remains bound to act within IBC and regulations and is not to be personally fixed beyond statutory duties

Jurisdiction of adjudicating authority - withdrawal of withdrawal letter - Whether the Adjudicating Authority had jurisdiction to direct withdrawal of the mine opening permission withdrawal letter and whether that part of the relief was rightly granted - HELD THAT: - The Tribunal recorded that the Adjudicating Authority had jurisdiction to entertain relief seeking quashing/withdrawing of the withdrawal letter dated 05.09.2023 and that the Adjudicating Authority directed Respondent No.2 to withdraw the withdrawal letter; that relief satisfied the appellant's prayer in IA No. 4460 of 2023 (paras 11, 9, 33). The Tribunal left intact the Adjudicating Authority's direction to withdraw the Withdrawal Letter, subject to other directions in the order. [Paras 11, 33]

Adjudicating Authority's direction to withdraw the withdrawal letter is upheld and remains effective

Final Conclusion: Appeal allowed in part: the Tribunal set aside the Adjudicating Authority's directions treating pre CIRP AMCC as money not belonging to the Corporate Debtor and to keep it aside, and expunged observations fixing personal liability on the Resolution Professional; the direction to withdraw the withdrawal letter of mine opening permission is upheld. AMCC claims are to be dealt with within the IBC/CIRP framework and not by unilateral recovery outside the resolution process.

Implementation period of resolution plan - exclusion of time for reckoning the implementation period - distribution of amounts in accordance with the approved resolution plan - entitlement to liquidator's fees and liquidation expenses - legislative intent to resolve the corporate debtor rather than liquidate

Implementation period of resolution plan - exclusion of time for reckoning the implementation period - legislative intent to resolve the corporate debtor rather than liquidate - Extension/exclusion of the one-year period for implementing the approved resolution plan was to be allowed and the Adjudicating Authority's rejection set aside. - HELD THAT: - The Tribunal recorded that the appellant had deposited the balance amount under the approved resolution plan and that the financial creditor with 67% voting share had filed an affidavit expressing no objection to exclusion of the roughly one-year period when this Tribunal had pending proceedings. The Tribunal noted the expressed willingness of other financial creditors to accept the amount and observed that, in the circumstances and in furtherance of the legislative intent to resolve a corporate debtor rather than proceed to liquidation, the time sought for implementation ought to have been extended. The Tribunal therefore did not enter into detailed merits of other contentions but allowed the appeal to ensure revival of the corporate debtor and resolution pursuant to the approved plan. [Paras 6, 11, 12]

Appeal allowed; the Adjudicating Authority's order rejecting exclusion/extension was set aside and time for implementation was treated as required to be extended.

Distribution of amounts in accordance with the approved resolution plan - entitlement to liquidator's fees and liquidation expenses - The amounts deposited by the appellant were to be distributed in accordance with the approved resolution plan; the liquidator's claimed liquidation expenses were to be paid and the liquidator was granted liberty to seek determination of any further fee entitlement before the Adjudicating Authority. - HELD THAT: - The Tribunal recorded that the entire balance under the plan had been deposited in the corporate debtor's account. The liquidator stated that liquidation expenses had been incurred and claimed entitlement to a fee. The Tribunal directed payment of the stated liquidation costs within two weeks and ordered that the liquidator shall distribute the deposited amount to creditors as per the resolution plan. For any further entitlement of fee, the Tribunal granted liberty to the liquidator to file an application before the Adjudicating Authority for adjudication in accordance with law, leaving the question of fee entitlement to be determined by the Adjudicating Authority. [Paras 8, 9, 10]

Deposited amounts to be distributed as per the resolution plan; liquidator to be paid stated liquidation costs and permitted to seek adjudication of any fee entitlement before the Adjudicating Authority.

Final Conclusion: The appeal was allowed and the Adjudicating Authority's order dated 28.02.2024 was set aside to enable extension/exclusion of time for implementing the approved resolution plan; the balance amount deposited shall be distributed in accordance with the resolution plan, liquidation costs were directed to be paid, and the liquidator was granted liberty to seek determination of any additional fees before the Adjudicating Authority.

Export of services - Advertising Agency Service - intermediary service - Place of Provision of Service rules - doctrine of unjust enrichment - inconsistent stand by Revenue - remand for de novo adjudication

Advertising Agency Service - export of services - intermediary service - Place of Provision of Service rules - Whether the services provided by the appellant to overseas group companies qualify as export of service or are intermediary services and whether the refund claims should be allowed - HELD THAT: - The Tribunal noted that the lower authorities treated the services as intermediary services and rejected refund claims, but also observed that identical services for earlier periods had been treated as "Advertising Agency Service" and refunds had been granted by the Department. The Tribunal held that the authorities below failed to address the appellant's submission regarding prior grants of refund and did not explain any change in law or circumstances to justify a different conclusion. Given the complexity arising from amendments and new rules (including the Place of Provision of Service rules) and the absence of a reasoned consideration of earlier consistent departmental treatment, the Tribunal declined to decide the substantive classification and remit the matter for fresh adjudication. The Adjudicating Authority is directed to re-examine whether the services qualify as export of services or as intermediary services, taking into account the earlier orders granting refunds, the parties' submissions, and the law applicable for the relevant periods, and to provide the appellant a proper opportunity of hearing. The Adjudicating Authority is free to decide the issue on merits without being influenced by observations in this order. [Paras 6, 8, 9]

Remanded to the Adjudicating Authority for de novo adjudication on the classification of services and refund claims.

Doctrine of unjust enrichment - inconsistent stand by Revenue - remand for de novo adjudication - Whether the refunds claimed are barred by the doctrine of unjust enrichment and whether the earlier departmental grants affect the present claims - HELD THAT: - The Tribunal observed that the Adjudicating Authority had recorded a finding of recovery from clients and concluded unjust enrichment without adequately dealing with the appellant's contention or with the prior refund orders for identical services. The Tribunal emphasised that Revenue cannot adopt an inconsistent stance where facts are identical unless a material change in law or facts is shown. Because the lower authorities failed to consider the prior grants and did not give reasoned findings on unjust enrichment in light of those grants, the Tribunal remanded the question of unjust enrichment to the Adjudicating Authority to decide afresh after considering the earlier orders, the appellant's submissions and applicable law, and after affording hearing. [Paras 6, 8, 9]

Remanded to the Adjudicating Authority to determine unjust enrichment after fresh consideration and hearing, having regard to earlier refunds and the law.

Final Conclusion: Impugned order set aside; appeals allowed by way of remand to the Adjudicating Authority for de novo adjudication on classification of services (export v. intermediary) and on unjust enrichment, with directions to consider earlier departmental refund orders, all submissions and applicable law, and to afford the appellant a proper hearing.

Cenvat credit - technical defect in invoice - Rule 9(2) of CENVAT Credit Rules, 2004 - denial of credit for defective documents - requirement of registration number in tax invoice - receipt and use of services as core criterion for credit - extended period / limitation

Cenvat credit - technical defect in invoice - Rule 9(2) of CENVAT Credit Rules, 2004 - requirement of registration number in tax invoice - receipt and use of services as core criterion for credit - Denial and recovery of Cenvat credit availed on input services solely on the ground that tax-paying documents either omitted or showed incorrect registration number. - HELD THAT: - The Tribunal held that omission or incorrectness of registration number in invoices is a technical defect which, by itself, does not justify denial of Cenvat credit where there is no allegation or finding that the taxable services were not rendered or that service tax was not paid. Applying the principle that the essential conditions for allowing credit are receipt and use of the services and discharge of tax, the appellant's claim could not be rejected merely for documentary inadequacy attributable to the service provider. The Tribunal relied on the approach in Mafatlal Industries Ltd and related reasoning that Rule 9(2) should not be construed to defeat credit where the invoice otherwise establishes the nature of service, payment of tax and identity of parties, and where the defect is technical. The consequence was that the demand based solely on the stated documentary defect could not be sustained. The Tribunal also observed that aspects of limitation raised in the cited authority supported not sustaining the impugned demand, but the determinative reasoning remained that absence or error in the registration number was a technical infirmity not warranting denial of credit on the facts before it. [Paras 5]

Impugned order of denial and recovery of Cenvat credit was set aside and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that denial of Cenvat credit solely for missing or incorrect registration number in invoices - a technical defect - is not sustainable where services were received and service tax was discharged; the recovery directed by the lower authority was set aside.

Interest on delayed refund - refund of pre-deposit - pre-deposit under stay direction of appellate tribunal - entitlement to interest under Section 35F of the Central Excise Act, 1944 - pari materia application of precedents (Sandvik Asia Ltd.)

Interest on delayed refund - refund of pre-deposit - pre-deposit under stay direction of appellate tribunal - Claim for interest on refund of pre-deposit made pursuant to the Tribunal's stay direction - HELD THAT: - The appellant paid the pre-deposit pursuant to the CESTAT's stay order and the Tribunal ultimately set aside the adjudication orders in the appellant's favour. The appellant claimed refund of the pre-deposit with interest under the Central Excise legislative scheme, relying on entitlement under Section 35F and on Tribunal and High Court authority in Riba Textiles Ltd. The Tribunal applied the legal principle in Sandvik Asia Ltd., recognising that where a refund is due and the department has withheld the amount, the assessees are entitled to interest on delayed refunds; the pari materia nature of Income-tax and Central Excise provisions renders the principle applicable. On these grounds the Tribunal held that the appellant is entitled to interest on the pre-deposit paid on 11.11.2014 until its realization, and directed disposal accordingly. [Paras 6, 7]

The appellant's claim for interest on the refunded pre-deposit is allowed; interest is payable from the date of pre-deposit (11.11.2014) until its realization.

Final Conclusion: Appeal allowed to the extent that interest on the pre-deposit paid pursuant to the Tribunal's stay direction is payable from the date of payment until realization; the appeal is disposed of on those terms.

Transaction value - additional consideration - discounts as part of transaction value - valuation under amended Section 4 of Central Excise Act - principal-to-principal sale - principal-agent relationship - characterisation of supply to oil marketing companies (OMCs) - distinction between sale and service/commission

Transaction value - discounts as part of transaction value - valuation under amended Section 4 of Central Excise Act - characterisation of supply to oil marketing companies (OMCs) - distinction between sale and service/commission - Whether discounts given to bulk purchasers (OMCs) must be treated as additional consideration and included in the assessable transaction value for the periods in dispute - HELD THAT: - The Tribunal applied the amended valuation principle under Section 4 (post July 2000) which permits different transaction values for different customers where prices are commercial, parties are unrelated and price is the sole consideration. The appellate bench noted documentary evidence-daily Central Excise invoices issued to OMCs, joint dispenser meter tickets signed by both parties, monthly tax invoices with payment terms and interest for late payment, and VAT/sales tax being paid by MGL and by OMCs on their respective sale prices-showing bona fide sales between MGL and OMCs rather than paper transactions or service arrangements. The contract terms recorded that retail price was fixed by MGL, OMCs paid MGL the retail price less agreed margin/discount, invoices were raised based on joint meter readings and payments remitted, and OMCs sold to end-users under their own bills. These features demonstrate principal-to-principal sale with differing commercial pricing, distinguishing such transactions from agency arrangements (where PPs act as agents and receive commission/service charges and pay service tax). Reliance on decisions treating analogous arrangements as barter or service did not advance Revenue because the factual and contractual matrix here established genuine sale and permitted differential transaction values under the amended valuation regime. For these reasons the demand treating discounts as additional consideration was not sustained.

Impugned demand and orders upholding inclusion of the discounts as additional consideration are set aside and the appeals are allowed.

Final Conclusion: Appeals allowed; the Tribunal's earlier reasoning in favour of treating supplies to OMCs as principal-to-principal sales under the post-2000 valuation regime is followed and the demand based on treating discounts as additional consideration is set aside.

Power of review under a settlement statute - self-contained code - adjustment of refund under Section 50 of the MVAT Act - error apparent from the record - separate year principle in taxation - absence of an order under Section 50 disentitles review

Power of review under a settlement statute - self-contained code - adjustment of refund under Section 50 of the MVAT Act - Authorities under the Settlement Act cannot, while exercising powers under that Act, invoke and exercise the adjustment powers conferred by Section 50 of the MVAT Act. - HELD THAT: - The Settlement Act designates the Commissioner as the designated authority for settlement and constitutes a self-contained code specifying how arrears and requisite amounts are to be determined and paid. Although the same officer may hold office under the MVAT Act, he wears distinct statutory hats and cannot intermingle powers across enactments. An order under Section 50 of the MVAT Act for adjustment of refund must be passed under the MVAT Act by the authority empowered thereunder; the Settlement Act does not confer power to import Section 50 for recalculating requisite amounts. Consequently, invoking Section 50 in review proceedings under the Settlement Act was beyond jurisdiction. [Paras 25, 26, 27, 28]

Impugned review orders are without jurisdiction insofar as they invoke Section 50 of the MVAT Act while exercising powers under the Settlement Act.

Separate year principle in taxation - self-contained code - adjustment of refund under Section 50 of the MVAT Act - The Settlement Act does not permit calculation of arrears for a particular year by adjusting refunds due for other years unless the Settlement Act itself provides for such adjustment. - HELD THAT: - Sections 6 and 8 of the Settlement Act, read with Annexures A and B, prescribe how the requisite amount for settlement is to be computed-by reference to outstanding amounts for the particular statutory order for each year. The legislature chose not to provide for inter-year adjustment of refunds within the Settlement Act; thus amounts to be considered for settlement must be the outstanding arrears for the year to which the application relates. Absent a statutory provision in the Settlement Act authorising cross-year adjustment, authorities cannot recalculate settlement amounts by applying Section 50 of the MVAT Act. [Paras 29, 30, 31]

Recalculation of outstanding arrears for a year by adjusting refunds of another year is contrary to the scheme of the Settlement Act and cannot be undertaken in review by importing Section 50 of the MVAT Act.

Absence of an order under Section 50 of the MVAT Act disentitles review - error apparent from the record - adjustment of refund under Section 50 of the MVAT Act - In the absence of any order under Section 50 of the MVAT Act (and without the assessee's request for adjustment under Rule 60), there was no 'error' in the settlement orders that could justify review under Section 15 of the Settlement Act. - HELD THAT: - Section 50 permits refund by cash or by adjustment, but an adjustment requires an order of the Commissioner and, when exercised, must follow the procedure (including Rule 60) and, where applicable, issuance of notices under Section 32(4). No order under Section 50 was in existence or pending on the date of the settlement applications or the settlement orders. An 'error' under Section 15 means an apparent mistake in the settlement order; where no order adjusting the refund existed, there was no error prejudicial to revenue in the settlement orders. Further, respondents had earlier issued show cause notices under Section 13(3) and did not rectify the orders, indicating lack of an apparent error. Thus review proceedings invoking Section 50 were without jurisdiction. [Paras 34, 35, 36, 37, 38]

The authorities were not justified in invoking Section 15 to adjust the refund in the absence of any Section 50 order; there was no error apparent from the record to warrant review.

Final Conclusion: The High Court quashed the review orders dated 17 July 2023 and the subsequent communication dated 13 October 2023; the court held that the Settlement Act is a self-contained code and authorities under it cannot invoke Section 50 of the MVAT Act to adjust refunds of one year against settlement dues of other years in review proceedings, and directed refund of the amount due for 2016-2017 with interest to the petitioner within four weeks.

Prima facie case - pre-deposit - entertainment of appeal without full pre-deposit - discretion of appellate authority to entertain appeal - stay pending appeal - adjustment of tax liability under Section 8 of the VAT Act - quashing and remand for reconsideration

Pre-deposit - entertainment of appeal without full pre-deposit - prima facie case - discretion of appellate authority to entertain appeal - Tribunal failed to consider the appellant's prima facie case before fixing or insisting on pre-deposit when admitting second appeals. - HELD THAT: - The Court held that the statutory scheme ordinarily requires pre-deposit but the proviso to the provision confers discretion on the appellate authority to entertain an appeal without full payment or on payment of a smaller sum, and that such discretion must be exercised after examining the prima facie case. The Tribunal in the present matters determined pre-deposit amounts without addressing the appellant's prima facie case (including reliance on Southern Motors and related submissions) and therefore misapplied the statutory discretion. In consequence the Tribunal's order fixing pre-deposit was held to be erroneous and unsustainable. The Court quashed the impugned order and directed the Tribunal to consider the prima facie case afresh while deciding the quantum of pre-deposit, if any, and to hear the stay application in accordance with the legal principles and guidelines referred to in Kavya Marketing. [Paras 13, 14]

Tribunal's order fixing pre-deposit without considering the prima facie case is quashed; matter remitted to the Tribunal to decide pre-deposit after considering the prima facie case.

Pre-deposit - quashing and remand for reconsideration - stay pending appeal - Second appeals that were dismissed for non-payment of pre-deposit included assessment periods for which the Tribunal had not directed any pre-deposit and thus could not validly be dismissed on that ground. - HELD THAT: - The Court observed that the Tribunal had, by its earlier order, made no pre-deposit direction for assessment years 2010-11 to 2012-13, yet subsequently dismissed the appeals for non-compliance of pre-deposit directions. That dismissal was therefore inconsistent with the Tribunal's own prior directions. Given this procedural defect and the Tribunal's failure to follow the requirement of addressing prima facie case before insisting on pre-deposit, the impugned dismissal was quashed and the appeals were ordered to be restored for fresh consideration by the Tribunal. [Paras 5, 6, 14]

Dismissal of appeals for periods where no pre-deposit was directed was quashed; appeals restored and remitted to the Tribunal for fresh consideration.

Final Conclusion: Impugned Tribunal orders are quashed and set aside; the second appeals relating to assessment years 2010-11 to 2016-17 are restored and remitted to the Tribunal to expeditiously reconsider the question of pre-deposit and stay, taking into account the appellant's prima facie case and the legal guidelines referred to by this Court.