TaxTMI Updates e-Newsletter
Oct 29,2022

Show cause notice for cancellation of GST registration - suspension of GST registration - issuance of invoice without supply and wrongful availment of input tax credit - duty to disclose foundational facts and material in a show cause notice - judicial interference where statutory notice has not been replied to - opportunity to reply and requirement of fresh consideration by competent authority

Show cause notice for cancellation of GST registration - duty to disclose foundational facts and material in a show cause notice - Whether the writ court should quash or interfere with the show cause notice dated 18.08.2022 suspending GST registration on the ground that the notice lacks material particulars enabling a proper reply. - HELD THAT: - The Court noted that the show cause notice records suspension of registration and states the reason in brief as issuance of invoices without supply leading to wrongful availment or utilisation of input tax credit. The petitioner contended that the notice omits foundational facts and material necessary to frame a response. While recognising the contention and citing the requirement that a notice should disclose foundational facts, the Court declined to exercise writ jurisdiction to quash the notice because the petitioner had not furnished any reply to the notice before approaching the Court. The Court therefore refrained from adjudicating the sufficiency of particulars in the notice on merits in the absence of an opportunity having been availed by the statutory authority to consider the petitioner's reply.

No interference with the show cause notice; writ petition dismissed insofar as challenge to the notice is concerned because the petitioner had not first filed a reply.

Suspension of GST registration - issuance of invoice without supply and wrongful availment of input tax credit - opportunity to reply and requirement of fresh consideration by competent authority - Whether the competent authority must consider the petitioner's reply to the show cause notice and decide afresh. - HELD THAT: - The Court directed that if the petitioner files a substantive reply to the show cause notice within two weeks accompanied by a certified copy of the order, the competent authority shall consider and decide the reply in accordance with law. The direction is prospective and procedural: it requires the authority to examine the points raised by the petitioner and determine the appropriateness of cancellation or continuation of suspension having regard to law and material on record. The Court thus left the merits to be considered by the statutory authority upon receipt of the petitioner's reply.

Petitioner permitted to file reply within two weeks; competent authority directed to consider and decide the reply in accordance with law.

Final Conclusion: Writ petition dismissed for non-interference with the show cause notice as the petitioner had not replied; petitioner granted two weeks to file a reply and the competent authority directed to consider and decide the same in accordance with law.

Refund under Section 54 - relevant date - two year limitation for refund claims - electronic filing on common portal as date of filing - Circular cannot override statutory prescription - re-credit to electronic credit ledger - interest for delayed re-credit

Refund under Section 54 - relevant date - two year limitation for refund claims - electronic filing on common portal as date of filing - Circular cannot override statutory prescription - Date of filing of a refund claim for zero-rated supplies to SEZ is the date of electronic submission on the common portal (ARN generation) and not the later date of physical submission of the printout and documents prescribed by the Circular. - HELD THAT: - Section 54(1) prescribes that a refund application must be made before expiry of two years from the relevant date in the form and manner prescribed. The petitioners had filed the refund application on the common portal on 28.12.2018 and received an ARN; respondents treated the claim as filed only on physical submission on 17.10.2019 relying on Circular dated 15.11.2017 which requires submission of a printout with documents to the jurisdictional officer within the time stipulated. The Court held that the procedural requirement in the Circular cannot operate to the detriment of the assessee and cannot override the statutory scheme; consequently the date of filing on the common portal, acknowledged by ARN, must be treated as the date of filing for computing the two-year limitation under Section 54 read with Rule 89, and the Circular cannot be read as imposing a delimiting condition inconsistent with the statute. The Court relied on the settled principle that an executive circular cannot alter statutory provisions to the detriment of the taxpayer and referenced the Division Bench recognition of electronic filing as mode of compliance. Having found that the refund claim was filed on the portal within time and otherwise satisfied statutory requirements, the rejection on the ground of limitation founded on the date of physical submission was set aside. [Paras 5, 6]

The date of filing is the date of electronic submission on the common portal (ARN date); the Circular cannot be applied so as to treat the later physical submission date as the filing date for limitation purposes, and the rejection as time-barred on that basis is set aside.

Re-credit to electronic credit ledger - interest for delayed re-credit - Rule 93 - Entitlement to re-credit of the rejected portion of the refund claim in the electronic credit ledger and payment of interest for delay was directed. - HELD THAT: - Having held that the refund claim was filed within time on the portal and was otherwise eligible, the Court directed respondents to re-credit the amount treated as rejected into the petitioner's electronic credit ledger. The Court further directed payment of interest at 9% per annum from the date of the order of rejection (19.11.2019) until realisation. The Court ordered completion of the re-credit exercise within two weeks from receipt of the judgment. The direction is consistent with Rule 93 which provides for re-credit where refund is rejected or deemed rejected and with the statutory remedy under Section 54 once entitlement is established. [Paras 6, 7]

Respondents directed to re-credit the disputed amount to the electronic credit ledger and to pay interest at 9% p.a. from 19.11.2019 until realisation, with the exercise to be completed within two weeks.

Final Conclusion: The petition is allowed: the court held that electronic filing on the common portal (ARN date) is the operative date for computing the two-year limitation under Section 54, set aside the rejection as time-barred, and directed re-credit of the disputed amount into the petitioner's electronic credit ledger with interest at 9% p.a., to be completed within two weeks.

Section 129 of the CGST Act - detention and seizure of goods during transit - levy of tax and penalty cannot be based on presumption - e-way bill requirement for goods in transit - alternate mode of release on payment under Section 129 - Chapter 19 of the CGST Act - recourse to Chapter 15 and Section 122 for assessment and penalty

Section 129 of the CGST Act - detention and seizure of goods during transit - levy of tax and penalty cannot be based on presumption - Validity of the appellate authority's setting aside of the detention, seizure and the order under Section 129(3) on the ground that there was no material to justify detention and that levy could not rest on presumption. - HELD THAT: - The appellate authority found absence of material justifying detention and seizure of the goods intercepted in transit and held that the tax and penalty levied under Section 129(3) could not be sustained on a presumption. The High Court noted that Chapter 19, including Section 129, prescribes the conditions and procedure for detention and provides an alternate route for release on payment. Given that the appellate authority concluded the foundational material for initiating proceedings was non-existent, the Court declined to interfere with that factual and legal conclusion. The Court observed that the alternate machinery under Section 129 is voluntary for the assessee and, if not availed, the department may proceed under Chapter 15 read with Section 122; however, that prospect did not negate the appellate authority's finding of lack of material for detention in the present case.

The appellate authority's order setting aside the detention, seizure and the demand under Section 129(3) was upheld; no interference was warranted.

E-way bill requirement for goods in transit - alternate mode of release on payment under Section 129 - recourse to Chapter 15 and Section 122 for assessment and penalty - Whether the requirement of accompanying E-way bills and the availability of Section 129's release mechanism affected the appellate authority's decision and the Court's willingness to interfere. - HELD THAT: - The Court acknowledged the statutory requirement that goods in transit be accompanied by E-way bills under the Rules framed under the CGST Act and reiterated that Section 129 provides an alternate, self-help mechanism for release of intercepted goods on payment of tax and penalty as quantified under Section 129(3). In the present matter, however, there was no material on record showing non-compliance in a manner that justified detention, nor was there any basis to upset the appellate authority's conclusion. The Court further noted that non-availment of Section 129 remedies by the assessee does not preclude the department from resorting to assessment and penalty proceedings under Chapter 15 and Section 122, but that consequential possibility did not supply a ground to set aside the appellate finding.

The Court declined to disturb the appellate authority's reliance on the absence of material regarding E-way bills and affirmed that the Section 129 scheme and alternative departmental remedies did not warrant interference with the impugned order.

Final Conclusion: Writ petition dismissed and the interim order vacated; the High Court upheld the appellate authority's finding that there was no material to justify detention and seizure or to sustain the demand under Section 129(3), and refused to interfere with the release direction made by the appellate authority.

Detention, seizure and release of goods in transit under Section 129 - Procedure for determination of tax under Sections 73 and 74 - Penalty determination under Section 122 - Requirement to upload Part B of the e way bill under Rule 138 - Remedy under Article 226 for absence of Tribunal

Detention, seizure and release of goods in transit under Section 129 - Procedure for determination of tax under Sections 73 and 74 - Penalty determination under Section 122 - Requirement to upload Part B of the e way bill under Rule 138 - Legality of determining tax liability and imposing penalty under Section 129 proceedings instead of proceeding under Sections 73/74 read with Section 122. - HELD THAT: - The Court held that Section 129 provides a special, summary mechanism for detention, seizure and release of goods in transit and for obtaining payment (or security) under clauses (a), (b) or (c) to give a quick quietus to the matter. Section 129, however, does not provide for adjudication or determination of the tax due; that function is vested in the proceedings under Chapter XV-principally Sections 73 and 74 (for determination of tax) and Section 122 (for fixation of penalty). If the owner does not come forward to pay the amounts specified under Section 129(1), the department is required to initiate adjudicatory proceedings under Sections 73/74 read with Section 122 to determine tax and penalty. In the present case the authorities proceeded to determine tax and impose penalty solely under Section 129, without initiating the statutory adjudicatory process under Sections 73/74/122; that exercise was not contemplated by Section 129 and is not legally sustainable. Although non uploading of Part B of the e way bill under Rule 138 was admitted, that admitted breach did not empower the authority to determine tax and penalty under Section 129 in place of the statutory adjudication under Sections 73/74 and Section 122. For these reasons the impugned orders passed only under Section 129 were held invalid and unsustainable. [Paras 28, 29]

Orders dated 17.10.2018 and 31.10.2020 (which determined tax and imposed penalty under Section 129) set aside; amount deposited for release of goods to be refunded to the petitioner with expedition (preferably within two months).

Final Conclusion: Writ petition allowed: departmental determination of tax and penalty solely under Section 129 was held impermissible; impugned orders set aside and the amount deposited for release of goods directed to be refunded.

Detention and confiscation of goods in transit - release of goods and conveyance on furnishing bond and payment of penalty and fine - interim release pending adjudication - exercise of powers under section 130 of the CGST Act - detention and confiscation under section 129 of the CGST Act

Interim release pending adjudication - release of goods and conveyance on furnishing bond and payment of penalty and fine - Release of the petitioner's goods and conveyance detained/confiscated in Form GST MOV-11 pending disposal of the petition subject to conditions. - HELD THAT: - The High Court, noting earlier admitted petitions involving similar controversy and the petitioner's willingness to comply with conditions, directed interim release of the detained/confiscated goods and conveyance pursuant to the order in Form GST MOV-11 dated 24.09.2022. The court recorded that the respondent-State did not dispute the stated facts and granted interim relief on the petitioner furnishing specified security and payments. The release was made conditional on (i) deposit of the penalty on the goods, (ii) deposit of the fine in lieu of confiscation of the conveyance, and (iii) furnishing of a bond to secure the value of the goods; upon compliance the respondent-authority was directed to release the goods and conveyance, and the interim order was to form part of the main matter. The court also permitted direct service on specified respondents and listed the petition. This order grants interlocutory relief only and does not decide the merits of the confiscation proceedings. [Paras 7, 8, 9, 10]

Goods and conveyance to be released on deposit of the specified penalty and fine and on furnishing the specified bond; interim release to remain part of the main matter.

Final Conclusion: Interim relief granted: upon deposit of the penalty and fine and furnishing of the bond as directed, the respondent-authority shall release the petitioner's goods and conveyance detained/confiscated under the impugned order; petition listed for further hearing.

Interest under Section 50 of the Central Goods and Services Tax Act, 2017 - Re-determination of tax demand - Computation of interest - Right to be heard before fixation of interest - Attachment in Form GST DRC-13 - Judicial guidance from M/s. Maansarovar Motors

Computation of interest - Interest under Section 50 of the Central Goods and Services Tax Act, 2017 - Right to be heard before fixation of interest - Judicial guidance from M/s. Maansarovar Motors - Whether the demand of interest under Section 50 is correctly computed and requires re-determination after hearing the petitioner in light of precedent. - HELD THAT: - The Court found that the petitioner contends the computation of the interest demand is incorrect and that no reply has been filed to the notice. Rather than deciding the correctness on merits, the Court directed the petitioner to file a reply setting out the proper interest payable and ordered the assessing authority to re-determine the amount after hearing the petitioner. The authority's re-determination is to be carried out in the light of the Court's earlier decision in M/s. Maansarovar Motors, ensuring that the computation and fixation of interest conform to the stated judicial guidance. The re-determination is to be completed within four weeks from the date of the order after affording the petitioner an opportunity to be heard. [Paras 3, 4]

The demand is remanded for re-determination by the authority after the petitioner files a reply and after hearing, to be completed within four weeks in light of the cited decision.

Attachment in Form GST DRC-13 - Re-determination of tax demand - Whether the bank account attachment effected in Form GST DRC-13 should continue pending re-computation of the demand. - HELD THAT: - The Court noted that, in view of the alleged interest demand, the respondent had attached the petitioner's bank account in Form GST DRC-13. The Court ordered that the attachment shall continue until the re-computation directed earlier is effected, subject to the re-determination process and timeline specified. Thus, the continuation of the attachment was endorsed as an interim measure pending the completion of re-determination. [Paras 5]

The bank account attachment in Form GST DRC-13 shall continue until the authority completes the re-computation as directed.

Final Conclusion: Writ petitions disposed by directing the petitioner to file a reply and by remanding the interest demand for re-determination by the authority within four weeks in light of the cited decision; the attachment in Form GST DRC-13 to remain in force until such re-computation is effected; no costs.

Provisional attachment under Section 83 of the Central Goods and Services Tax Act, 2017 - Provisional attachment ceasing to have effect after one year - Effect of expiry of provisional attachment on operation of bank account - Writ petition rendered infructuous by expiry of attachment

Provisional attachment under Section 83 of the Central Goods and Services Tax Act, 2017 - Provisional attachment ceasing to have effect after one year - Effect of expiry of provisional attachment on operation of bank account - Whether the provisional attachment of the petitioner's bank account continued to operate or had ceased by efflux of time under Section 83(2), and the consequential effect on the writ petition. - HELD THAT: - Section 83(1) authorises provisional attachment of property, including bank accounts, to protect revenue, and Section 83(2) provides that every such provisional attachment shall cease to have effect after the expiry of one year from the date of the order of attachment. The impugned order of provisional attachment dated 06.09.2019, passed in Form GST DRC-22, therefore ceased to have effect by efflux of time as noted by the Court. Because the attachment had thus lapsed during the pendency of the writ petition, there remained no subsisting embargo under that order on the operation of the petitioner's bank account.

The provisional attachment has ceased to have effect and there is no embargo on the operation of the bank account; the writ petition is rendered infructuous and is disposed.

Final Conclusion: The order of provisional attachment dated 06.09.2019 lapsed by efflux of time under Section 83(2) and, accordingly, the petitioner's bank account is free to operate; the writ petition is disposed as infructuous with no order as to costs.

Arbitrariness - discrimination between registered and unregistered borrower - valuation of supply of second-hand goods - repossessed goods - proviso to Rule 32(5) of the Central Goods and Services Tax Rules, 2017 - marginal valuation under Notification No. 8/2018-Central Tax (Rate)

Proviso to Rule 32(5) of the Central Goods and Services Tax Rules, 2017 - discrimination between registered and unregistered borrower - valuation of supply of second-hand goods - repossessed goods - Interim restraint on taking further steps pursuant to show-cause notice dated 12.01.2022 and prima facie consideration of challenge to the proviso to Rule 32(5). - HELD THAT: - The Court noted that the petitioner, a registered banking company which repossesses and sells vehicles, challenged the proviso to Rule 32(5) as creating an arbitrary distinction between registered and unregistered defaulting borrowers in computing the purchase value of repossessed goods. Having heard submissions and examined the Rule and the relevant notification dealing with valuation of second-hand motor vehicles, the Court found prima facie substance in the petitioner's contentions that the proviso operates irrationally and discriminately by treating unregistered borrowers differently when determining the deemed purchase value of repossessed goods. The Court did not decide the merits of the challenge; instead it issued notice returnable on 16.11.2022 and granted ad interim relief to prevent irreversible action pending adjudication.

Respondents restrained from taking any further steps pursuant to the show-cause notice dated 12.01.2022; notice issued and matter posted to 16.11.2022.

Final Conclusion: The petition was admitted for consideration on merits; prima facie substance found in the challenge to the proviso to Rule 32(5) as discriminatory, and an interim injunction was granted restraining action on the show-cause notice dated 12.01.2022 pending further orders.

Failure to consider representations/replies - remand for de novo consideration - right to personal hearing - quashing of administrative order for non-application of mind - no adjudication on merits

Failure to consider representations/replies - quashing of administrative order for non-application of mind - Respondent failed to consider the petitioner's earlier replies to the verification letter and show cause notice, rendering the impugned order unsustainable. - HELD THAT: - The High Court examined the record and the documents annexed to the petition and was satisfied that the petitioner had filed a reply dated 9th December 2019 (with annexures) and had reiterated that reply in correspondence dated 29th December 2020 and 18th June 2021. The impugned order proceeded on the erroneous premise that no reply had been submitted. Because the authority did not address or consider the petitioner's responses, the order demonstrates non-application of mind. The Court therefore concluded that the impugned order could not stand. [Paras 3]

Impugned order set aside for failure to consider the petitioner's replies.

Remand for de novo consideration - right to personal hearing - no adjudication on merits - The appropriate remedy is remand for fresh consideration with specified procedural directions rather than decision on merits by the Court. - HELD THAT: - The Court quashed the impugned order and remanded the matter to Respondent No.2 for de novo consideration. The authority was directed to afford the petitioner a personal hearing with at least seven working days' notice and to allow the petitioner to file written submissions within three working days of that hearing. The Court expressly refrained from expressing any opinion on the substantive merits of the case, limiting its intervention to correcting the procedural defect and ensuring fresh adjudication within eight weeks. [Paras 3, 5]

Matter remitted for fresh consideration with directions for personal hearing and opportunity to file written submissions; no observations made on merits.

Final Conclusion: The writ petition is allowed: the impugned order is quashed and the matter is remanded for de novo consideration by Respondent No.2 within eight weeks, with directions to grant the petitioner a personal hearing (seven working days' notice) and a short opportunity to file written submissions; the Court makes no observation on the merits.

Revocation of cancellation of registration - cancellation of GST registration under Rule 22(1) of the CGST Rules, 2017 - mandamus to decide pending statutory application - reasonable opportunity of hearing - speaking and reasoned order

Revocation of cancellation of registration - mandamus to decide pending statutory application - speaking and reasoned order - reasonable opportunity of hearing - Direction to respondents to decide the petitioner's pending applications for revocation of orders cancelling registration by a reasoned and speaking order after affording opportunity of hearing. - HELD THAT: - The respondents have admitted in the counter affidavit that the petitioner's applications for revocation of cancellation of registration are pending. The record shows earlier cancellation orders and a prior non-speaking order rejecting revocation. More than ten months elapsed without a decision on the fresh revocation application, despite a show cause notice having been replied to. In these circumstances and in exercise of writ jurisdiction the Court directed the concerned respondent to decide the pending revocation applications in accordance with law, by a reasoned and speaking order, expeditiously. The Court required that the petitioner be afforded a reasonable opportunity of hearing and fixed a preferential timeline of four weeks from presentation of a certified copy of the order for completion of the decision-making process. [Paras 4, 5]

Writ petition disposed directing respondents to decide the pending revocation applications by a reasoned and speaking order after hearing the petitioner, preferably within four weeks from presentation of a certified copy of this order.

Final Conclusion: The writ petition is disposed of by directing the respondents to decide the petitioner's pending applications for revocation of cancellation of registration by a reasoned and speaking order after affording a reasonable opportunity of hearing, preferably within four weeks from presentation of a certified copy of this order; no coercive action meanwhile is recorded in the order.

Competitive bidding - tender evaluation - uniform GST rate in tenders - pre-bid clarification and estoppel - interim injunction - public interest

Interim injunction - competitive bidding - tender evaluation - uniform GST rate in tenders - public interest - pre-bid clarification and estoppel - Grant of interim relief restraining further action under the Letter of Intent and continuation of work pending adjudication of challenge to the tender evaluation on account of differing GST rates quoted by bidders - HELD THAT: - The Court considered rival contentions that (a) the petitioner alleged illegality in the evaluation process because differing GST rates quoted by bidders were taken into account, thereby affecting the integrity of competitive bidding; (b) respondents urged that the Letter of Intent had been issued and mobilization occurred and that the petition may be non-maintainable; and (c) respondent no. 3 pleaded estoppel since no clarification was sought at the pre-bid meeting. Balancing the equities and having regard to the public nature and magnitude of the contract, the Court concluded that interests of justice and public interest warranted an interim restraint. The Court therefore stayed further action by the employer in furtherance of the LOI and directed respondent no. 3 not to advance the subject work until the returnable date, while noting that records must be produced so the matter can be expeditiously decided on the returnable date. [Paras 11, 12]

No further action to be taken by respondents in furtherance of the LOI dated 01.07.2022 and respondent no. 3 is directed not to further advance the subject work until the returnable date; records to be produced and matter listed after four weeks.

Final Conclusion: Interim restraint granted: the respondents are restrained from proceeding further under the LOI dated 01.07.2022 and respondent no. 3 is directed not to advance the work subject to the petition until the matter is heard after four weeks; records to be produced on the returnable date for expeditious disposal.

Re-opening of assessment under Section 147/148 based on tangible material - Explanation 1 to Section 147 - change of opinion doctrine - allowability of provision for compensation as business expenditure/ascertained liability

Re-opening of assessment under Section 147/148 based on tangible material - Explanation 1 to Section 147 - change of opinion doctrine - Validity of reopening the assessment by issuing notice under Section 148 read with Section 147 - HELD THAT: - The Tribunal and CIT(A) found, and the High Court concurs, that the Assessing Officer recorded reasons for reopening on material that was already on record at the time of original scrutiny assessment. No fresh or new tangible material was brought into possession of the Assessing Officer before recording the reasons. The Court held that the re-opening within four years, without fresh tangible material and merely viewing the same material from a different angle, amounted to a change of opinion which is not a permissible ground for reassessment. In these facts Explanation 1 to Section 147 did not assist the Revenue because the impugned issue had been specifically queried and answered during the original assessment proceedings and thus was within the original officer's knowledge when the assessment under Section 143(3) was completed. [Paras 9, 16, 17]

Re-opening under Section 148/147 quashed as based on change of opinion; no fresh tangible material was available and Explanation 1 to Section 147 was inapplicable.

Allowability of provision for compensation as business expenditure/ascertained liability - Allowability of the provision of Rs. 6,50,00,000 for compensation debited by the assessee - HELD THAT: - The Court accepted the concurrent factual findings of the CIT(A) and the Tribunal that the claimed provision related to specific disputes with identified parties and was based on actual occurrence of financial incidence connected to business activities. The assessee furnished party-wise working and supporting documentation (including a working by the Senior Legal Manager) showing the basis for the liability, and the Revenue did not controvert these factual findings. The amounts were shown in the accounts and the liability was to be paid as and when settled by courts, with any amounts not paid being restored in the subsequent year. On these concurrent findings of fact the Assessing Officer's disallowance, founded on the view that the provisioning was merely contingent and created a distorted profit and loss account, was not sustainable. [Paras 12, 14, 15]

Disallowance of the claimed provision of Rs. 6,50,00,000 deleted; the provision was held to be an allowable business liability/ascertained in the facts of the case.

Final Conclusion: Concurrent factual findings of the CIT(A) and the Tribunal that the provision for compensation was based on actual business liabilities and that no fresh tangible material justified reassessment were upheld; Revenue's appeal dismissed and no substantial question of law arises.

International transaction - arm's length price (ALP) - market and business promotion (AMP) expenses - Explanation to section 92B - sub-clause (d) of clause (i) - absence of machinery provision under Chapter X - principle of consistency in tax matters

International transaction - market and business promotion (AMP) expenses - Explanation to section 92B - sub-clause (d) of clause (i) - absence of machinery provision under Chapter X - Whether services of market development (AMP) constitute an international transaction between the Assessee and its Associated Enterprise for AY 2010-11 under the Explanation to section 92B. - HELD THAT: - The Tribunal concluded, on the facts of the assessment year under consideration, that AMP expenditures incurred by the Assessee were not shown to be incurred for and on behalf of the Associated Enterprise and therefore did not amount to an "international transaction". The Tribunal relied upon earlier findings in the Assessee's own AY 2009-10 (upheld by this Court) and subsequent consistent Tribunal orders for AY 2011-12. The Court noted authorities holding that AMP spending is not listed in the illustrative Explanation to section 92B and emphasised that, in the absence of a machinery provision under Chapter X to bring an imagined transaction to tax, the Chapter X provisions cannot be invoked where the existence of an international transaction with an ascertainable price is not established. The Tribunal's factual finding that there was no agreement, arrangement or understanding obliging the Assessee to incur AMP for the benefit of the AE and that the TPO failed to prove AMP expenses were not for the Assessee's own business was accepted. The Court further observed that, while res judicata does not strictly apply in tax matters, the principle of consistency and certainty warrants treating materially identical facts in the same manner across assessment years unless distinguishable facts or a change in law justify otherwise. The Court found no change of facts or law warranting a different approach for AY 2010-11 and therefore upheld the Tribunal's conclusion that AMP expenses do not constitute an international transaction under the cited Explanation to section 92B. [Paras 17, 18, 19, 20, 21]

The Tribunal correctly held that AMP services are not an "international transaction" for AY 2010-11 and the transfer-pricing adjustment was rightly deleted.

Final Conclusion: The Revenue's appeal is dismissed and the ITAT order deleting the transfer-pricing adjustment for AMP expenses for AY 2010-11 is upheld; the final result between the parties will, however, abide by the outcome of the pending SLP before the Supreme Court.

Depreciation on intangible assets under Section 32(1)(ii) - goodwill not being an intangible right for depreciation - ownership/dominion as criterion for allowance of depreciation - claim to depreciation notwithstanding non-registration of trademark/IPR - application of Mysore Minerals principle to depreciable assets

Depreciation on intangible assets under Section 32(1)(ii) - goodwill not being an intangible right for depreciation - ownership/dominion as criterion for allowance of depreciation - Entitlement to depreciation in respect of consideration paid for purchase of exclusive business rights and for amount attributed to goodwill under the agreement with UIL. - HELD THAT: - The appellate authorities found that the total consideration under the UIL agreement comprised three components: consideration for exclusive business rights, an amount treated as goodwill, and transferable deposits. The Tribunal accepted that the portion attributable to exclusive business rights constitutes an intangible right within the meaning of Section 32(1)(ii) and is therefore depreciable, whereas an amount shown as goodwill cannot be treated as a right for depreciation purposes. The court applied the statutory construct that depreciation under Section 32(1)(ii) is available for rights which can be used to run the business and generate income, and not for goodwill which is not a right in that sense. Having considered the agreements, the usage and the characterisation made by the authorities, the Tribunal's direction to allow depreciation on the component representing exclusive business rights and to confirm disallowance of depreciation on the component treated as goodwill was upheld. [Paras 6, 9, 15]

Depreciation allowed on the portion of consideration attributed to exclusive business rights; depreciation disallowed on the amount treated as goodwill.

Claim to depreciation notwithstanding non-registration of trademark/IPR - ownership/dominion as criterion for allowance of depreciation - application of Mysore Minerals principle to depreciable assets - Entitlement to depreciation in respect of intellectual property rights (brand, logo, patents, trademarks) purchased from SAL despite absence of registration of trademarks in the assessee's name in the records. - HELD THAT: - The Tribunal and CIT(A) concluded, following the principles in Mysore Minerals and Dalmia Cements, that the assessee became the owner of the intellectual property rights on payment of valuable consideration and that ownership/dominion and use in business are the touchstones for allowing depreciation. The court noted that the agreement contemplated delivery of executed instruments of transfer upon completion and that the assessee had in fact used the IP in its business without any claim against such use. The Revenue's challenge limited itself to recordal of payment in the agreement; the High Court treated that contention as a factual question not supported by the record, observed that the transaction was effected under BIFR supervision and that no dispute on payment was taken before the appellate authorities. On this basis, the appellate conclusion that the IP rights are intangible assets under Section 32(1)(ii) and depreciable was affirmed. [Paras 8, 10, 16]

Depreciation allowed on the intellectual property rights acquired from SAL despite absence of registration in the assessee's name in the records.

Final Conclusion: The High Court affirmed the Tribunal and CIT(A): depreciation under Section 32(1)(ii) is allowable for the exclusive business rights acquired from UIL (except the component treated as goodwill) and for the intellectual property rights acquired from SAL; appeals by Revenue dismissed.

Penalty under Section 271(1)(c) of the Income tax Act - defective penalty notice for failure to strike off irrelevant portion under Section 274 - mere confirmation of addition does not mandate automatic imposition of penalty - bona fide/inadvertent error and absence of contumacious conduct as defence to penalty - no prejudice principle in procedural defects in penalty proceedings - condonation of delay by reliance on orders extending limitation

Condonation of delay by reliance on orders extending limitation - Delay in filing the appeal of 603 days was condoned. - HELD THAT: - On perusal of the chronology the Court found that the appellant/revenue was entitled to the benefit of the Hon'ble Supreme Court's orders extending the period of limitation for filing appeals under various statutes. Having accepted that entitlement, the application for condonation of delay was allowed and the delay in filing the present appeal was condoned.

Application for condonation of delay allowed and delay of 603 days condoned.

Penalty under Section 271(1)(c) of the Income tax Act - defective penalty notice for failure to strike off irrelevant portion under Section 274 - mere confirmation of addition does not mandate automatic imposition of penalty - bona fide/inadvertent error and absence of contumacious conduct as defence to penalty - no prejudice principle in procedural defects in penalty proceedings - Whether the penalty imposed under Section 271(1)(c) was sustainable in law. - HELD THAT: - The Court examined the orders of the CIT(A) and the Tribunal and recorded that the CIT(A) correctly noted that confirmation of an addition does not automatically warrant imposition of penalty. On the facts the CIT(A) found that the assessee had offered interest income on an income tax refund due to an inadvertent and bona fide error and that contumacious conduct was not established by the assessing officer. The Tribunal further found the penalty notice defective because the irrelevant portion referring to an "inaccurate particular of income" was not struck off under Section 274, thereby denying the assessee adequate opportunity to respond. Having considered the legal position and the authorities relied upon by the parties, the Court found no substantial question of law arose from the orders below.

Appeal dismissed; penalty set aside - the orders of the CIT(A) and Tribunal upholding absence of sustainable penalty and noting defect in the notice were affirmed.

Final Conclusion: The application for condonation of delay was allowed. On merits no substantial question of law arises: the penalty under Section 271(1)(c) was not sustainable in view of the factual finding of bona fide inadvertence and the defective penalty notice, and the revenue's appeal is dismissed.

Transfer of assessment under section 127 of the Income Tax Act, 1961 - opportunity of hearing - principles of natural justice - centralisation of assessment following search under section 132 - remand for fresh decision

Transfer of assessment under section 127 of the Income Tax Act, 1961 - opportunity of hearing - principles of natural justice - Validity of the order transferring the petitioner's assessment from Rajkot to DCIT/ACIT, Central Circle, Varanasi under section 127 of the Act in absence of an effective opportunity to be heard. - HELD THAT: - Section 127 of the Act requires that an assessee be afforded an opportunity of being heard before the competent authority exercises its power to transfer an assessment. The show cause notice was issued through the Department's ITBA portal but the petitioner did not receive it at his registered email address and only became aware of the notice when he logged into the e-filing website; objections were thereafter filed. The authorities proceeded on the basis that no reply was furnished by the date specified and concluded that the assessee had no objection. That conclusion, without ensuring effective service or hearing, amounted to a breach of the statutory requirement and the principles of natural justice. The impugned transfer order was therefore arbitrary and procedurally flawed.

Impugned order dated 23.2.2021 under section 127(2) is set aside and the matter is remitted to the competent authority to decide afresh after giving the petitioner an opportunity of being heard.

Final Conclusion: The petition is allowed to the extent that the transfer order is set aside and the competent authority is directed to reconsider the proposed centralisation and transfer afresh after affording the petitioner an effective opportunity of hearing; the reconsideration to be completed in four weeks. No opinion is expressed on the merits of the case.

Revision under Section 263 of the Income-tax Act - erroneous and prejudicial to the interests of the Revenue - inadequacy of enquiry / verification by the Assessing Officer - fresh assessment / direction to remake assessment - genuineness and verification of unsecured loans, sundry creditors, expenses and brokerage

Revision under Section 263 of the Income-tax Act - erroneous and prejudicial to the interests of the Revenue - inadequacy of enquiry / verification by the Assessing Officer - genuineness and verification of unsecured loans, sundry creditors, expenses and brokerage - Validity of the Principal Commissioner of Income Tax's revisionary order under Section 263 holding that the assessment order was erroneous and prejudicial to the interests of the Revenue and directing a fresh assessment. - HELD THAT: - The Tribunal examined the material on record including the notice under Section 142(1), the enquiries made by the Assessing Officer, documents and confirmations placed in the scrutiny folder and uploaded on ITBA, the report of the Assessing Officer called by the PCIT, and the parties' responses. The Assessing Officer had sought party-wise details of loans, interest, creditors, debtors and major expenditures, had obtained and perused bank statements, confirmations, PAN details and income-tax returns (including confirmations subsequently supplied and e-proceedings acknowledgements), and had issued notices under Section 133(6) where required. The PCIT's revision rested upon an assertion that the AO had not examined whether interest-bearing loans were utilized for business, and had not tested genuineness of creditors, expenses and brokerage; however the PCIT did not identify specific further enquiries which a reasonably prudent officer should have made nor point to any instance where the material available suggested incorrectness or impropriety. The Tribunal held that while omission to make reasonable enquiries can render an assessment order erroneous, the revisionary authority must show what additional enquiries were necessary and that the AO failed to undertake them. On the facts, the record demonstrated that requisite enquiries had been made and documentary material (including confirmations and ITBA acknowledgements) was placed on record; the PCIT did not controvert the acknowledgement or show deficiency in the AO's verification. Accordingly, the Tribunal found no basis to hold the assessment order to be erroneous or prejudicial to revenue. [Paras 12, 14, 15, 16]

Order under Section 263 quashed; assessment order held not erroneous or prejudicial to revenue and the assessee's appeal allowed.

Final Conclusion: The revisionary order passed by the Principal Commissioner of Income Tax under Section 263 was unsustainable on the record; the Assessing Officer had made the necessary enquiries and verifications and there was no demonstration of failure to carry out enquiries a reasonably prudent officer should have made. The Section 263 order is quashed and the assessee's appeal is allowed.

Unexplained cash credit under section 68 - genuineness of share subscription and identity and creditworthiness of investors - double addition / prohibition on double taxation of same receipt - use of statements recorded during survey and requirement of cross-examination

Unexplained cash credit under section 68 - genuineness of share subscription and identity and creditworthiness of investors - Whether the addition made under section 68 in respect of share capital and share premium received from seven subscribers was justified where documentary evidence and responses to enquiries were on record - HELD THAT: - The Tribunal examined the material placed before the AO and the CIT(A), noting that the assessee had filed extensive documentation during assessment proceedings and that notices under section 133(6) were issued to the subscribing companies which furnished replies. The Tribunal found that the AO and the CIT(A) proceeded to uphold the addition principally on the ground that the directors of subscribing companies were not produced, without pointing to any defect in the documentary evidence. The Tribunal held that where identity, creditworthiness and genuineness are established by documentary evidence and by sworn affidavits of subscribers, mere non appearance of directors cannot be the sole basis for making an addition under section 68. Applying the authorities cited, the Tribunal concluded that the lower authorities had not adequately considered or answered the documentary material proving the transactions and therefore their conclusion sustaining the addition was unsustainable. [Paras 7, 9]

Addition under section 68 in respect of the share capital and share premium was deleted as the assessee had proved identity, creditworthiness and genuineness of the subscriptions by documentary evidence and affidavits and non production of directors alone could not justify the addition.

Double addition / prohibition on double taxation of same receipt - use of statements recorded during survey and requirement of cross-examination - Whether the AO could sustain addition notwithstanding that a subscribing company had itself been assessed and additions made in its hands, and whether survey statements against a person not confronted and cross examined could be used to make addition in assessee's hands - HELD THAT: - The Tribunal noted that one of the subscribing companies had been subjected to additions in its assessment in respect of the same funds, and accepted the assessee's contention that making an addition again in the hands of the recipient would amount to double addition. The Tribunal further observed that survey statements implicating an entry operator (and his network) were not placed before the assessee during assessment nor was the person who gave the statement examined or made available for cross examination. Relying on binding and persuasive precedents, the Tribunal held that statements recorded during survey cannot be used to make additions against the assessee unless the assessee is afforded an opportunity to cross examine the declarant; absence of such opportunity renders reliance on such statements impermissible. [Paras 8, 9]

No addition could be sustained where the subscribing company had already been assessed in respect of the same receipts (avoiding double addition), and survey statements not tested by cross examination could not be used to uphold the addition.

Final Conclusion: The appeal is allowed: the Tribunal set aside the orders of the lower authorities and directed deletion of the addition sustained under section 68 for AY 2012-13, finding that identity, creditworthiness and genuineness of the share subscriptions were proved and that reliance on untested survey statements and double addition was impermissible.

Tax deduction at source under section 195 - Cost Sharing Agreement and reimbursement versus taxable income - Fees for technical services (FTS) and Explanation 2 to section 9(1)(vii) - Double Taxation Avoidance Agreement (India-Germany) - treatment and characterization - Remand for de novo adjudication to Assessing Officer

Tax deduction at source under section 195 - Cost Sharing Agreement and reimbursement versus taxable income - Fees for technical services (FTS) and Explanation 2 to section 9(1)(vii) - Double Taxation Avoidance Agreement (India-Germany) - treatment and characterization - Whether the Assessing Officer's view that payments made to BASF SE are liable to TDS under section 195 requires fresh examination in light of the Cost Sharing Agreement, auditor's certificate and the India-Germany DTAA. - HELD THAT: - The Tribunal found that the assessee's claim that payments were pure reimbursements on a cost to cost basis (without markup) was not adequately examined or substantiated by the authorities below. The cost sharing agreement describes composite services and, as recorded, it was not possible on the record before the Tribunal to conclusively characterise the payments as taxable fees for technical services or as non taxable reimbursement. The Tribunal noted that relevant documents, including the auditor's certificate and other evidences, had not been properly analysed by the AO/CIT(A), and that Coordinate Benches had remitted similar disputes in the group for de novo adjudication. In these circumstances the Tribunal concluded that the factual and legal aspects (including application of Explanation 2 to section 9(1)(vii) and the India-Germany DTAA) must be re examined by the Assessing Officer with opportunity to the parties and consideration of the authorities to be cited. [Paras 8, 9, 10]

Issue remitted to the Assessing Officer for fresh adjudication on applicability of TDS under section 195, to be decided in accordance with law after considering the cost sharing agreement, auditor's certificate, DTAA and other relevant evidence.

Final Conclusion: All appeals are allowed for statistical purposes and the matter is restored to the Assessing Officer for de novo consideration of the applicability of tax deduction at source on payments to the non resident, to be decided in accordance with law after due opportunity and examination of the cost sharing agreement, auditor's certificate, DTAA and other material.

Allowability of loss on chit - treatment of chit fund transactions as business income/loss - application of precedent of the jurisdictional High Court - explanation of unexplained cash credit under section 68 - admissibility and probative value of confirmation letters produced at appellate stage - onus of proof on assessee for unsecured loans

Allowability of loss on chit - treatment of chit fund transactions as business income/loss - application of precedent of the jurisdictional High Court - Deletion of addition made by the Assessing Officer disallowing the claimed loss on chit. - HELD THAT: - The CIT(A) deleted the addition in respect of chit loss by following the decision of the Madras High Court in V. Raj Kumar, which held that profit or loss arising from chit subscription activity is taxable/allowable as the case may be. The factual findings recorded by the CIT(A) regarding the nature of the chit subscription and the assessee's claim were not controverted by the Revenue before this Tribunal. In view of the binding jurisdictional precedential approach adopted by the CIT(A) and the absence of any challenge to the factual findings, the Tribunal concurs with the appellate authority's conclusion that the chit loss is allowable.

The deletion of the addition disallowing the chit loss is upheld.

Explanation of unexplained cash credit under section 68 - admissibility and probative value of confirmation letters produced at appellate stage - onus of proof on assessee for unsecured loans - Deletion of addition made by the Assessing Officer treating unsecured loan entries as unexplained credits under section 68. - HELD THAT: - The assessee produced confirmation letters from the alleged creditors before the CIT(A), and those documents were furnished to the Assessing Officer for comments. The AO chose not to file a remand report or to comment on the additional evidence. The CIT(A) recorded categorical factual findings that the assessee had proved the unsecured loans by relying on the submitted confirmations. Those findings were not disputed by the Revenue before the Tribunal. Given the AO's failure to controvert the additional evidence and the uncontroverted factual findings of the CIT(A), the Tribunal finds no infirmity in the appellate authority's deletion of the addition under section 68.

The deletion of the addition treating the alleged unsecured loans as unexplained credit is upheld.

Final Conclusion: Both impugned deletions - in respect of the claimed chit loss and the deletion of addition under section 68 relating to unsecured loans - are affirmed and the Revenue's appeal is dismissed.

Power to impose conditions while granting approval under section 80G - Distinction between clause (i) and clauses (ii) & (iii) of the proviso to sub section (5) of section 80G - Role of PCIT in registration under section 12A and approval under section 80G - Assessment proceedings as forum for compliance with section 11 & 12

Power to impose conditions while granting approval under section 80G - Distinction between clause (i) and clauses (ii) & (iii) of the proviso to sub section (5) of section 80G - Role of PCIT in registration under section 12A and approval under section 80G - Assessment proceedings as forum for compliance with section 11 & 12 - Whether the Principal Commissioner of Income Tax could grant approval under section 80G subject to the conditions set out in paragraph 10(a)-(j) of the impugned order. - HELD THAT: - The Tribunal found that the PCIT's jurisdiction when granting approval under section 80G is limited to being satisfied about the genuineness of the assessee's activities and compliance with law material to its objects, following registration under section 12A/12AA. Where an assessee applies for approval under clause (i) of the first proviso to sub section (5) of section 80G (by filing Form No.10AC as in this case), the PCIT is not empowered to impose the conditional restrictions available under clauses (ii) and (iii) of the proviso. Compliance with the requirements of sections 11 and 12 and related conditions is to be examined in assessment proceedings by the Assessing Officer. Consequently, imposing the specific conditions in paragraph 10(a)-(j) of the impugned order was beyond the PCIT's power when approval was sought under clause (i) and is unsustainable in law.

The conditions in paragraph 10(a)-(j) were struck down and the approval under section 80G was made absolute.

Final Conclusion: Both appeals are allowed; the approvals under section 80G granted to the trusts are made absolute without the conditions imposed in the impugned orders.

Genuineness of charitable expenditure - proof of distribution of free medicines - natural justice - opportunity to cross examine adverse witnesses - reliance on statements recorded under section 131 - scrapping/disposal of obsolete assets - treatment of residual/scrap value - application of principle regarding residual value in absence of sale evidence

Genuineness of charitable expenditure - proof of distribution of free medicines - natural justice - opportunity to cross examine adverse witnesses - reliance on statements recorded under section 131 - Deletion of addition made by AO and confirmed by CIT(A) disallowing claimed expenditure on free distribution of medicines - HELD THAT: - The Tribunal examined the material on record including the Annual Flood Report for 2013, photographs of medical camps, written requests from social organizations, and confirmations from suppliers under section 133(6), and found that floods did occur in the district and that the assessee undertook medical camps and purchases in furtherance of its charitable objects. The AO had disallowed the expenditure largely on the basis of denials recorded from office bearers of certain social organizations under section 131 and drew adverse inferences without permitting the assessee to cross examine those witnesses despite a specific request. The Tribunal noted conflicts in statements (notably Dr. T.N. Chatterjee's inconsistent accounts) and held that relying on such untested statements against the assessee, without affording opportunity of cross examination, offended principles of natural justice as laid down by the Supreme Court in Andaman Timber Industries. In these circumstances the Tribunal concluded the addition was unsustainable and directed deletion. [Paras 8]

Ground allowed; addition deleted and the assessment reduced accordingly.

Scrapping/disposal of obsolete assets - treatment of residual/scrap value - application of principle regarding residual value in absence of sale evidence - Deletion of addition made by AO treating original cost of scrapped assets as income and overturning CIT(A)'s partial addition @5% of original cost - HELD THAT: - The Tribunal accepted that the trust legitimately scrapped obsolete and unusable medical equipment on the recommendation of a consultant and that disposal was effected through nominated employees realizing a gross amount of Rs.85,000/ . Neither the AO nor CIT(A) produced material to show that higher sale proceeds had been realized. The Tribunal found the CIT(A)'s imposition of an addition equal to 5% of original cost was founded on conjecture rather than evidential basis. In absence of credible evidence of sale realizations or market value at the time of disposal, the AO's treating the entire original cost as income was unsustainable. The Tribunal therefore set aside the addition and directed deletion. [Paras 12]

Ground allowed; addition deleted and the assessment adjusted accordingly.

Final Conclusion: The appeal is allowed in full: the additions disallowing claimed charitable expenditure on free distribution of medicines and treating scrapped assets as income are set aside and deleted.

Revision under section 263 - deductibility of employees' contribution to PF and ESI - applicability of section 36(1)(va) read with section 43B - due date of filing of return - binding precedents of the jurisdictional High Court - prospective operation of Finance Act, 2021 amendment

Revision under section 263 - deductibility of employees' contribution to PF and ESI - applicability of section 36(1)(va) read with section 43B - due date of filing of return - binding precedents of the jurisdictional High Court - Whether the Principal Commissioner was justified in invoking section 263 to revise the assessment on the ground that employees' contributions to PF and ESI were not disallowed by the Assessing Officer though not paid by the statutory due date. - HELD THAT: - The Tribunal examined the dates of payment of the employees' contributions and found they were made after the statutory due dates under the PF and ESI Acts but before the due date for filing the return. Relying on the coordinate decisions of this Tribunal and the binding view of the jurisdictional High Court that payments made before the due date of filing the return are allowable as deduction, the Tribunal held that the Assessing Officer, on merits, would allow the claim and thus the impugned assessment order was not prejudicial to the interests of revenue. The Tribunal noted subsequent legislative amendment by Finance Act, 2021 was prospective in operation and therefore did not affect the assessment year under consideration. In these circumstances, invoking revisionary jurisdiction under section 263 was not justified; there being no prejudice to revenue, the section 263 order was quashed and the assessment framed under section 147 read with section 143(3) was restored. [Paras 7, 8, 9, 10]

The section 263 order dated 24.03.2020 is quashed; the assessment order dated 19.03.2018 under section 147 read with section 143(3) is restored and the appeal of the assessee is allowed.

Final Conclusion: The Tribunal allowed the appeal, quashed the revisionary order under section 263, restored the assessment for AY 2015-16 and directed that the Assessing Officer may give effect to the claim of deduction as payments were made before the due date of filing the return.

Reopening under section 147/148 of the Income tax Act - sanction under section 151 requiring independent application of mind - addition under section 68 on account of unexplained cash deposits - onus on assessee to prove identity, creditworthiness and genuineness

Reopening under section 147/148 of the Income tax Act - sanction under section 151 requiring independent application of mind - Validity of reopening the assessment in view of the approvals accorded by higher authorities. - HELD THAT: - The Tribunal examined the reasons recorded for initiating reassessment and the approvals given by the JCIT and the Pr. CIT. The approvals consisted of brief endorsements such as "Yes, I am satisfied" or "Fit Case" and there was no material on record to show that the sanctioning authorities applied independent mind to the proposal. Relying on Coordinate Bench decisions and the legal principle that the power to grant sanction under the statutory mandate is coupled with a duty to apply mind (and cannot be a mere ritualistic or mechanical approval), the Tribunal held that sanction recorded in a routine manner is vitiated. Where sanction is mechanical, reopening under section 147/148 cannot be sustained and therefore the reassessment based on such sanction had to be quashed. [Paras 6]

Reopening of assessment quashed for want of proper sanction; approval held to be mechanical and invalid.

Addition under section 68 on account of unexplained cash deposits - onus on assessee to prove identity, creditworthiness and genuineness - Sustainability of the addition made under section 68 in respect of cash deposits, having regard to the quashing of reassessment. - HELD THAT: - The Assessing Officer made an addition under section 68 in respect of unexplained cash deposits after reopening the assessment. The substantive addition was founded on the reassessment proceedings initiated pursuant to the impugned sanction. Having held the reopening invalid for want of proper sanction, the Tribunal did not enter upon the merits of the addition; rather, as a legal consequence of quashing the reassessment, the addition confirmed by the CIT(A) was deleted. The Tribunal recorded that the AO had not applied independent inquiry before reopening and therefore the consequences of that invalid reopening had to follow. [Paras 6, 7]

Addition under section 68 deleted as consequential on quashing of the reassessment.

Final Conclusion: The appeal is allowed: the sanction for reopening was held to be mechanical and without independent application of mind, the reassessment under section 147/148 is quashed and the addition under section 68 confirmed by the lower authorities is deleted.

Temporary lull in business - allowability of business expenses during suspension of production - requirement to produce vouchers/evidence for claimed expenses - proportionate disallowance for non-production of evidence - expenses incurred to keep a company alive

Temporary lull in business - allowability of business expenses during suspension of production - requirement to produce vouchers/evidence for claimed expenses - proportionate disallowance for non-production of evidence - Extent of disallowance of business expenses claimed by the assessee when production was suspended due to labour strike. - HELD THAT: - The Tribunal accepted that production was suspended during the year under appeal on account of labour strike and that the suspension constituted a temporary lull in business, not abandonment of business. The Tribunal observed that most expenses were incurred through banking channels and that similar expenses had been allowed in earlier years. Relying on the principle that expenses incurred to keep a business or corporate entity alive during a temporary lull are not to be summarily disallowed, the Tribunal referred to the decision in Micro Turners (P) Ltd. vs. JCIT to support the proposition that temporary inactivity does not negate the genuineness of expenditures incurred to preserve the enterprise. While noting that the Assessing Officer was justified in seeking vouchers, the Tribunal held that an across-the-board disallowance of 50% by the CIT(A) for non-production of vouchers was excessive in the facts of the case. Having regard to the lapse of time since the year under consideration, the prior allowance of similar expenses in earlier years, the banking channel evidence, and the director's explanation about difficulties in preserving records during labour troubles, the Tribunal exercised its discretion to settle the matter by restricting the disallowance to a modest proportion. The Tribunal concluded that limiting the disallowance to 10% of the expenses claimed would meet the ends of justice and put the dispute to rest. [Paras 9, 10, 11, 12]

Disallowance for non-production of vouchers restricted to 10% of the expenses claimed; order of the CIT(A) set aside and Assessing Officer directed to give effect to this reduction.

Final Conclusion: The appeal is partly allowed: the Tribunal held that stoppage of production due to labour strike amounted to a temporary lull and that substantial portion of the claimed business expenses were allowable; disallowance is limited to 10% and the matter is directed to be settled accordingly.

Deductibility of employees' provident fund contribution - payment before due date of filing return under section 139(1) - applicability of Finance Act, 2021 amendment to section 36(1)(va) - retrospective effect of tax amendment

Deductibility of employees' provident fund contribution - payment before due date of filing return under section 139(1) - applicability of Finance Act, 2021 amendment to section 36(1)(va) - retrospective effect of tax amendment - Whether employees' contribution to Provident Fund paid after the statutory due date under the Provident Fund law but before the due date of filing return under section 139(1) for A.Y.2018-19 is allowable for deduction and whether the Finance Act, 2021 amendment to section 36(1)(va) applies to A.Y.2018-19 - HELD THAT: - The Tribunal found that the assessee deposited the employees' contribution to PF before the due date for filing the return under section 139(1) for the relevant year. The Finance Act, 2021 amendments to section 36(1)(va) (and related provision) were introduced with effect from 01.04.2021 and alter the pre-existing position of law; therefore they cannot be given retrospective effect to the assessment year under consideration. Relying on consistent judicial decisions which held that payment before the due date of filing the return entitled the employer to deduction, and observing that the amendment operates from A.Y.2021-22 onwards, the Tribunal set aside the orders below and remitted directions to the Assessing Officer to allow the deduction for employees' PF contribution for A.Y.2018-19. [Paras 5, 8, 10]

Disallowance under section 36(1)(va) for A.Y.2018-19 is deleted and deduction is to be allowed as the employees' PF contribution was paid before the due date for filing return under section 139(1); the Finance Act, 2021 amendment does not apply to A.Y.2018-19.

Principles of natural justice and opportunity of hearing - procedure under Notification No.60/2020 for draft assessment - Whether the CIT(A) erred in confirming the disallowance without granting fair opportunity of hearing and whether the procedure in Notification No.60/2020 was followed - HELD THAT: - The Tribunal did not adjudicate the appellant's contentions regarding denial of opportunity of hearing before the CIT(A) or the question whether the procedure prescribed in Notification No.60/2020 was complied with. These grounds were left open for adjudication and are not finally decided in this order. [Paras 9]

Grounds challenging adequacy of opportunity of hearing and compliance with Notification No.60/2020 are kept open for adjudication and not decided.

Final Conclusion: The appeal is partly allowed: the disallowance under section 36(1)(va) for A.Y.2018-19 is set aside and the Assessing Officer is directed to allow the deduction as the employees' PF contribution was paid before the due date of filing the return under section 139(1); issues relating to denial of opportunity of hearing and procedural compliance under Notification No.60/2020 remain open for adjudication.

Penalty under Section 114 of the Customs Act - wrongly pleaded penal provision - applicability of a specific penal provision - prohibited goods - absence of claim for drawback

Penalty under Section 114 of the Customs Act - wrongly pleaded penal provision - applicability of a specific penal provision - Validity of the penalty imposed where the show cause notice referred to alternate sub clauses of Section 114 and Revenue could not establish which sub clause actually applied - HELD THAT: - The Court considered the Revenue's contention that a mere wrong mentioning of the Section in the show cause notice would not vitiate the penalty if the facts brought the case within another sub clause of Section 114. The Revenue, however, failed to satisfy the Court that the facts brought the case within Section 114(i) as now urged. No material was pointed out to show that the goods were prohibited goods, which would have been necessary to bring the case within Section 114(i). The Tribunal had recorded a clear finding, affirmed by the High Court, that the respondent did not claim any drawback benefit. In the absence of any persuasive material or argument demonstrating applicability of an alternate sub clause, the Court declined to overturn the concurrent findings of the Tribunal and the High Court.

Revenue's appeal on the validity of the penalty failed; the impugned orders of the Tribunal and High Court were not interfered with.

Final Conclusion: The appeal is dismissed. The Court declined to interfere with the Tribunal's and High Court's concurrent findings because the Revenue could not establish that a different sub clause of Section 114 applied or that the goods were prohibited, and the finding that no drawback was claimed remains intact.

Application of contemporaneous price - comparability of imports - transaction value - when multiple contemporaneous prices are available the lowest price is to be adopted

Application of contemporaneous price - comparability of imports - when multiple contemporaneous prices are available the lowest price is to be adopted - Whether the departmental enhancement of declared CIF value on the basis of imports by another importer could be sustained by applying a single contemporaneous price. - HELD THAT: - The Tribunal found that the imports relied upon by the department (by Tower Overseas) took place in February 2006 while the appellant's imports were effected in April to July 2006; one condition for applying a contemporaneous price is that the imports be of the same time. The Tribunal also accepted the appellant's plea that the market for the subject PVC Flex Sheet was volatile during the period, undermining comparability. Further, record showed an alternative contemporaneous import at a lower price (by Yash Enterprise at 0.27 USD/SQM) during the appellant's import period. It is settled that where more than one contemporaneous price is available, the lowest of such prices should be adopted for assessment. Applying these principles, the Tribunal held that the price relied upon by the department was not comparable and that enhancement of the appellant's declared value could not be sustained on that basis. The Tribunal expressly declined to adjudicate other contentions since the decision on contemporaneous pricing was dispositive of the appeal. [Paras 5, 6]

The departmental enhancement of value was unsustainable; the impugned order is set aside and the appeal is allowed.

Final Conclusion: The appeal was allowed: the Tribunal set aside the orders enhancing the declared value on the basis of the departmental contemporaneous price comparison and directed that the impugned order stand quashed.

Endorsement on sales invoices as per para 2(b) of Notification No. 102/2007 - refund of Special Additional Duty (SAD) / 4% additional duty - remand for verification and reprocessing of refund claim - entitlement to refund despite absence of endorsement (Larger Bench precedent) - proof of buyer availing CENVAT credit

Endorsement on sales invoices as per para 2(b) of Notification No. 102/2007 - refund of Special Additional Duty (SAD) / 4% additional duty - remand for verification and reprocessing of refund claim - entitlement to refund despite absence of endorsement (Larger Bench precedent) - proof of buyer availing CENVAT credit - Validity of the Commissioner (Appeals)'s remand directing verification and reprocessing of the refund claim on the ground that two invoices lacked the endorsement required by para 2(b) of the Notification. - HELD THAT: - The original authority found that the sales invoices contained endorsements indicating that the buyer was not eligible to take CENVAT credit and that condition in para 2(b) was fulfilled. The review cell relied on two sample invoices allegedly lacking the endorsement, but there is no proof these were the original invoices issued by the appellant nor evidence that the buyer had availed CENVAT credit on those invoices. The Tribunal applied the Larger Bench decision in Chowgule & Company holding that failure to endorse invoices cannot by itself justify denial of refund. In the absence of proof that the inspected documents were original invoices or that credit was availed by the buyer, the grounds given for remand lacked merit. Accordingly the remand for verification and reprocessing was unwarranted and the original sanction of refund must be restored. [Paras 5, 6]

The remand ordered by the Commissioner (Appeals) is set aside; the original order sanctioning the refund is restored and the appeal is allowed with consequential relief, if any.

Final Conclusion: The Tribunal found no merit in remanding the refund claim for further verification where the original authority had found the requisite endorsements and there was no evidence that the sample invoices were original or that the buyer availed CENVAT credit; the remand was set aside and the original refund order restored.

Penalty under Section 112(b) of the Customs Act, 1962 - availability of material evidence to fasten penalty - penalty under Section 114AA of the Customs Act, 1962 - confiscation of imported goods under the Customs Act read with the Intellectual Property (Imported Goods) Enforcement Rules, 2007

Penalty under Section 112(b) of the Customs Act, 1962 - availability of material evidence to fasten penalty - penalty under Section 114AA of the Customs Act, 1962 - Whether the penalty under Section 112(b) of the Customs Act, 1962 imposed on the appellant was justified. - HELD THAT: - The Tribunal examined the material relied upon by the adjudicating authority and the first appellate authority and found that the adjudicating authority itself recorded that involvement of the appellant was not proved by solid evidence but was based on the statement of a single witness (Shri R. Suresh) and police investigation. The adjudicating authority also expressly held that there was no material to prove that the appellant had submitted a fake gate pass and therefore did not impose penalty under Section 114AA. The Tribunal noted that no goods were confiscated, the container was under SIIB custody because no Bill of Entry was filed, and the alleged removal (if any) would constitute a matter for the police (theft) for which the status and accused were not placed on record. Further, the alleged intermediary (Chandrasekhar) denied knowledge and was not a co-noticee, undermining the sole testimonial link. In that factual matrix, the Tribunal concluded that there was insufficient material to fasten penal liability under Section 112(b) and that the imposition of penalty was arbitrary and unsustainable. [Paras 7]

The penalty under Section 112(b) of the Customs Act, 1962 imposed on the appellant is unsustainable and is set aside; appeal allowed.

Final Conclusion: The appeal is allowed: the penalty under Section 112(b) of the Customs Act, 1962 imposed on the appellant is set aside for lack of solid evidence to fasten penal liability.

Punishment for fraud under Section 447 of the Companies Act, 2013 - Non-cognizability of offences under the Companies Act and limited right of complaint - Cognizability and special procedure under Section 212(6) relating to Serious Fraud Investigation Office (SFIO) - Tribunal investigation remedy under Section 213 as route for shareholder grievances alleging fraud - Prohibition on private criminal prosecution by shareholder for offences triable only after SFIO complaint

Prohibition on private criminal prosecution by shareholder for offences triable only after SFIO complaint - Non-cognizability of offences under the Companies Act and limited right of complaint - A shareholder, whether minority or otherwise, cannot initiate criminal proceedings before a Magistrate for an alleged offence under Section 447 of the Companies Act, 2013. - HELD THAT: - The Court examined Section 447 in conjunction with Section 439 and Sub section (6) of Section 212. While Section 439 ordinarily deems offences under the Act non cognizable and permits complaints by the Registrar or a shareholder, Sub section (6) of Section 212 specifically designates offences covered by Section 447 as cognizable and prescribes the exclusive mode of taking cognizance - namely by complaint of the Director, SFIO or an authorised Central Government officer. That special procedure displaces the ordinary route for private complaints in respect of offences under Section 447. Applying these provisions, the Court held that a shareholder cannot independently initiate proceedings before the Magistrate for an offence under Section 447 of the Act. [Paras 12]

A shareholder cannot initiate proceedings before the Magistrate for an alleged offence under Section 447.

Punishment for fraud under Section 447 of the Companies Act, 2013 - Cognizability and special procedure under Section 212(6) relating to Serious Fraud Investigation Office (SFIO) - The offence under Section 447 of the Companies Act, 2013 is a cognizable offence for the purposes of criminal procedure. - HELD THAT: - Sub section (6) of Section 212 expressly provides that offences covered by Section 447 shall be cognizable and prescribes the manner in which cognizance is to be taken (complaint by Director, SFIO or authorised Central Government officer and related bail restrictions). The Court relied on this specific provision to conclude that Section 447 offences are cognizable notwithstanding the general non cognizability regime in Section 439. [Paras 13]

An offence under Section 447 is cognizable under the Act and subject to the procedure in Section 212(6).

Tribunal investigation remedy under Section 213 as route for shareholder grievances alleging fraud - Cognizability and special procedure under Section 212(6) relating to Serious Fraud Investigation Office (SFIO) - A shareholder alleging fraud must resort to the investigative mechanisms under Section 213 (Tribunal) and, where appropriate, referral to SFIO under Section 212, rather than filing a private criminal complaint under Section 447. - HELD THAT: - The Court explained that Section 213 enables the Tribunal to order investigation into a company's affairs on statutorily prescribed thresholds or on satisfaction of circumstances suggesting fraud or misconduct. If an inspector's report indicates fraud, the matter can be referred to SFIO which then follows the procedure under Section 212 leading to criminal proceedings under Section 447. Thus the statutory scheme contemplates investigation and SFIO referral as the remedy available to shareholders alleging fraud, and only thereafter can criminal cognizance under the special procedure be taken. [Paras 14]

The appropriate remedy for a shareholder alleging fraud is invocation of Section 213 leading to investigation and, if warranted, referral to SFIO under Section 212 prior to criminal prosecution under Section 447.

Prohibition on private criminal prosecution by shareholder for offences triable only after SFIO complaint - Non-cognizability of offences under the Companies Act and limited right of complaint - The Magistrate's order taking cognizance on a private complaint filed by the shareholder in C.C.No.561/2016 was contrary to law and suffers from legal infirmity. - HELD THAT: - Having held that Section 447 offences are cognizable only by the procedure prescribed in Section 212(6) and that a shareholder cannot personally initiate such criminal proceedings, the Court found that the Magistrate failed to appreciate and apply Sections 212, 213, 439 and 447. The cognizance recorded on a private complaint by the shareholder therefore conflicted with the statutory scheme and warranted interference. [Paras 15]

The Magistrate's cognizance on the private complaint was legally infirm.

Final Conclusion: The petition is allowed; the proceedings in C.C.No.561/2016 and all orders passed therein are quashed, as the statutory scheme requires investigation under Section 213 and SFIO procedure under Section 212 for offences under Section 447, and a shareholder cannot independently initiate criminal proceedings under Section 447.

Summary order. Appeal disposed with direction to the National Company Law Tribunal, Cuttack Bench, to expedite disposal of CP No. 108/CTB/2021 and to consider all issues raised by the parties, including the validity of the Annual General Meeting held on 23.11.2021.

Operational Debt - Default under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Limitation for initiation of CIRP - Admission of petition and initiation of Corporate Insolvency Resolution Process (CIRP) - Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Appointment of Interim Resolution Professional

Operational Debt - Default under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Limitation for initiation of CIRP - Admission of petition and initiation of Corporate Insolvency Resolution Process (CIRP) - Whether the Petitioner established a debt and default entitling admission of the petition under Section 9 of the IBC and initiation of CIRP. - HELD THAT: - The Tribunal found that the Petitioner paid a refundable security deposit which was received and acknowledged by the Corporate Debtor, demonstrating valid disbursal. The Tribunal treated the security deposit as an Operational Debt, relying on precedent that payments characterized as refundable/security deposits or advance license fee may constitute operational debt where recovery is due. The Corporate Debtor had an obligation to conclude the appointment/retailership agreement after receipt of the deposit and, having neither entered into the agreement nor refunded the deposit, was held to be in clear default. The date of default as pleaded falls within the three-year limitation period for filing the application. The Petition was therefore complete and the default in payment of an outstanding debt was established, warranting admission under Section 9 and initiation of CIRP. [Paras 14, 15, 16, 17, 18]

Petition under Section 9 is admitted and CIRP is ordered to be initiated against the Corporate Debtor.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Appointment of Interim Resolution Professional - Directions consequent to admission, including imposition of moratorium, appointment of IRP, public announcement and interim operational directions. - HELD THAT: - On admission, the Tribunal ordered the statutory moratorium to operate from the date of the order until completion of CIRP, or approval of a resolution plan or liquidation, restraining institution or continuation of suits, transfer or disposal of assets, and enforcement of security, subject to permitted exceptions. The Tribunal directed immediate public announcement of the CIRP, appointment of the named Interim Resolution Professional to perform functions under the Code, vesting of management in the IRP for the CIRP period and furnishing of documents by officers, and directed deposit by the Operational Creditor to meet initial CIRP expenses. Registry directions for communication of the order and updating of ROC records were also issued. [Paras 23, 24, 25, 26, 27]

Moratorium imposed; Ms. Deepa Kabra Rathi appointed as Interim Resolution Professional; public announcement and other consequential directions ordered.

Final Conclusion: The Tribunal admitted the Section 9 petition, holding that the refundable security deposit constituted an operational debt and that the Corporate Debtor was in default within the limitation period; CIRP was ordered, moratorium imposed, an Interim Resolution Professional appointed and consequential steps directed.

Service Tax exemption for government canal works - interpretive effect of Ministry of Finance notification and circular - invalidity of departmental endorsement contrary to central exemption - non-recoverability of tax deductions made pursuant to such endorsement - protection of subordinate officers from departmental/prosecutorial liability

Service Tax exemption for government canal works - interpretive effect of Ministry of Finance notification and circular - non-recoverability of tax deductions made pursuant to such endorsement - Whether amounts towards Service Tax could be recovered or deducted from the petitioners' running account bills for canal works carried out for the Government in view of Notification No. 41/2009-Service Tax and Circular No. 116/10/2009-S.T. - HELD THAT: - The Central Government's Notification No. 41/2009 exempts service tax on works contracts in respect of canals not primarily used for commerce or industry, and Circular No. 116/10/2009 clarifies that canal systems built by Government projects are not chargeable to service tax. The petitioners undertook canal works for the Kaleshwaram Project on behalf of the Government and therefore fall within the exemption. An endorsement by the Director of Works Accounts directing that service tax loaded in the estimate be credited to the work, and that reimbursement to the agency cannot be permitted, is contrary to and cannot override the exemption granted by the Central Government. Once the exemption applies, deduction or recovery of service tax from the petitioners cannot be sustained and the benefit of the exemption must be extended without condition. [Paras 8, 10, 12]

Impugned recovery/deduction of Service Tax pursuant to the departmental endorsement is set aside and respondents are directed not to recover or deduct Service Tax from the petitioners for the exempt canal works.

Invalidity of departmental endorsement contrary to central exemption - protection of subordinate officers from departmental/prosecutorial liability - Whether subordinate officers can be held liable or subjected to departmental action/prosecution for not effecting recovery of Service Tax in accordance with the Director of Works Accounts' endorsement when such recovery conflicts with the Central exemption, and the liability of the petitioners if a tax demand is raised by revenue authorities. - HELD THAT: - The Court held that endorsements or orders of departmental heads cannot override statutory exemptions granted by the Central Government. To safeguard subordinate officers who may have complied with the exemption and not effected recovery, the Court clarified that if any demand is subsequently raised by GST authorities, the petitioners alone will be liable to pay the demanded tax and the officers of the respondent departments cannot be made liable or prosecuted for not recovering the Service Tax sums in issue in these petitions. [Paras 12, 13]

Subordinate officers are protected from liability or prosecution for not recovering the Service Tax under the impugned endorsement; any demand by tax authorities will be for recovery from the petitioners alone.

Final Conclusion: Writ petitions allowed; impugned orders seeking recovery of Service Tax from petitioners for Government canal works set aside and respondents directed not to deduct such amounts; subordinate officers protected from liability while petitioners remain liable to any future demand by tax authorities.

Reverse charge mechanism - service tax on services received from outside India - vagueness of show cause notice and breach of principles of natural justice - requirement to specify the taxable service in notice and order - strict construction of the charging provision - non-existence of the invoked charging provision for the relevant period

Vagueness of show cause notice and breach of principles of natural justice - requirement to specify the taxable service in notice and order - strict construction of the charging provision - The show cause notice for the period 01.04.2012 to 30.06.2012 was vague for not specifying the category of taxable service and therefore the demand confirmed for that period could not be sustained. - HELD THAT: - The Tribunal accepted the appellant's submission that during the said period service tax could be charged only under section 66 read with the sub-clauses of section 65(105), and that a show cause notice and adjudication must indicate which category of service is alleged to be taxable. A charging provision in a taxation statute must be strictly construed and the Department bears the burden of establishing applicability. The impugned notice and order failed to specify the category of service under which reverse charge was invoked and confirmed, and relied merely on discrepancies between balance sheet figures and ST-3 returns. In these circumstances the confirmation of demand based on a vague notice violated principles of natural justice and could not be sustained; the Tribunal applied its earlier decision in the appellant's own matter to reach this conclusion. [Paras 6, 7]

Demand for the period 01.04.2012 to 30.06.2012 set aside for vagueness of the show cause notice; confirmation unsustainable.

Reverse charge mechanism - non-existence of the invoked charging provision for the relevant period - strict construction of the charging provision - The demand for the period 01.07.2012 to 31.03.2013, having been made under a charging provision that did not exist for that period, could not be sustained. - HELD THAT: - The Tribunal accepted the submission that the demand for the later part of the tax year was predicated on section 66A (read with a sub-clause of section 65(105)), provisions which were not on the statute for the relevant post-1 July 2012 period. A charging section must exist and be strictly construed; where the Department invokes a provision that does not exist for the period in question there is no basis for the demand. The Tribunal relied on the reasoning in M/s Frisco Foods Private Limited to hold that invocation of a non-existent charging provision defeats the departmental case. [Paras 8, 9]

Demand for the period 01.07.2012 to 31.03.2013 set aside because the charging provision invoked did not exist for that period.

Final Conclusion: The impugned adjudication dated 28.07.2015 is set aside in respect of the entire period April 01, 2012 to March 31, 2013: demands for 01.04.2012-30.06.2012 were quashed for vagueness of the show cause notice and failure to specify the taxable service, and demands for 01.07.2012-31.03.2013 were quashed as they were founded on a charging provision not in force for that period; the appeal is allowed.

Commencement of commercial production - calculation of exemption period under notification dated 10.06.2003 - reliance on documentary evidence to prove commencement of production - EM 2 acknowledgment as evidentiary record of commencement - MFR/BMR as standard template records and not conclusive proof of commercial production - Batch Packing Record and Quality Assurance approval as proof of first commercial batch

Commencement of commercial production - reliance on documentary evidence to prove commencement of production - EM 2 acknowledgment as evidentiary record of commencement - MFR/BMR as standard template records and not conclusive proof of commercial production - Batch Packing Record and Quality Assurance approval as proof of first commercial batch - Date of commencement of commercial production was 12.06.2006 and not 01.06.2006 - HELD THAT: - The Tribunal accepted the Commissioner (Appeals) finding that documentary evidence establishes that ingredients for the first batch were received on 05.06.2006, so commercial production could not have commenced earlier. The first batch was physically manufactured on 12.06.2006 as shown by the Batch Packing Record dated 12.06.2006, the batch was approved by Quality Assurance on 24.06.2006 and the first sale was effected against an invoice dated 29.06.2006. The MFR and BMR entries showing 01.06.2006 reflect standard formats under the respondent's operating procedures and Drugs and Cosmetic Rules and do not constitute conclusive proof that commercial production began on 01.06.2006. The EM 2 acknowledgement issued by the District Industries Centre recording commencement as 12.06.2006 further supports the respondent's case. In light of these records, the adjudicating authority's reliance on the Range Superintendent's verification to fix 01.06.2006 as the commencement date was unsustainable and the demand premised on that earlier date could not be sustained. [Paras 9, 10, 11]

The recorded date of commencement of commercial production is 12.06.2006; there is no infirmity in the order setting aside the demand based on 01.06.2006.

Final Conclusion: The Department's appeal is dismissed; the Tribunal upholds the Commissioner (Appeals) finding that commercial production commenced on 12.06.2006 and that the demand premised on an earlier commencement date is unsustainable.

Admissibility of CENVAT credit where processes do not amount to manufacture - Restoration of credit in respect of inputs used in duty-paid clearances - Refund in cash under Section 142(3) of the CGST Act - Remand for computation to determine quantify of credit to be restored

Admissibility of CENVAT credit where processes do not amount to manufacture - Restoration of credit in respect of inputs used in duty-paid clearances - Whether the demand to recover Cenvat credit in respect of processed imported wires which were subsequently cleared on payment of central excise duty could be sustained. - HELD THAT: - The Tribunal followed the decision of the jurisdictional High Court in Ajinkya Enterprises and held that where the department has accepted duty on the final products cleared by the assessee, Cenvat credit availed in respect of inputs contained in those final products, which were actually cleared on payment of duty, cannot be summarily treated as recoverable. Applying that principle to the facts, the Tribunal set aside the demand insofar as it related to those processed goods actually cleared on payment of central excise duty. The Tribunal rejected the conclusion that all credit wrongly taken must be equated with subsequent payments sourced from that credit where the final product duty has been accepted by the department, and accordingly directed that the demand insofar as it concerns duty-paid clearances be set aside. [Paras 4]

Demand to recover Cenvat credit in respect of processed goods actually cleared on payment of central excise duty is set aside.

Remand for computation to determine quantify of credit to be restored - Refund in cash under Section 142(3) of the CGST Act - Quantification of the portion of reversed credit that pertains to inputs used for manufacture and clearance of dutiable goods, and the manner of refund. - HELD THAT: - The Tribunal observed that part of the imported inputs had been used in manufacture and cleared on payment of duty while the remaining inputs had been traded. It directed that a detailed computation be undertaken by the original authority to determine how much of the amount already reversed (Rs.3,08,58,313/- as per record) related to inputs actually used in manufacture and cleared on payment of duty, and that such amount be restored to the appellants. The Tribunal expressly required the lower authority to follow Section 142(3) of the CGST Act and consider granting any amount found due as a cash refund. The matter was therefore remanded to the original authority for computation and appropriate disbursement, with the remand to be decided within three months. [Paras 5, 6]

Matter remanded for detailed computation; amount found due in respect of inputs used in duty-paid clearances to be restored and paid in cash in accordance with Section 142(3) of the CGST Act.

Final Conclusion: The appeals are partly allowed: the demand to recover Cenvat credit in respect of processed goods actually cleared on payment of central excise duty is set aside; the matter is remanded to the original authority to compute the portion of reversed credit attributable to inputs used in duty-paid clearances and to restore and pay any amount found due in cash in accordance with Section 142(3) of the CGST Act, the remand to be completed within three months.

Levy of additional sales tax under the Tamil Nadu Additional Sales Tax Act, 1970 - Effect of the amendment to Section 2 w.e.f. 01.08.1996 on taxable dealers - Binding effect of co ordinate Bench decisions - Remand for fresh consideration in light of binding precedents - Direction to complete reassessment within fixed time with hearing

Levy of additional sales tax under the Tamil Nadu Additional Sales Tax Act, 1970 - Effect of the amendment to Section 2 w.e.f. 01.08.1996 on taxable dealers - Binding effect of co ordinate Bench decisions - Whether the impugned Tribunal orders holding the petitioners liable to pay additional sales tax under the amended provisions of Section 2 should be sustained - HELD THAT: - The Court examined the competing contentions regarding the 1996 amendment to Section 2 and noted earlier decisions of coordinate Benches in Philips India Limited and National Time Company. Relying upon those decisions, the Court held that the question is no longer open for a different view and accordingly set aside the impugned Tribunal orders. The Court did not itself re adjudicate the substantive correctness of the amendment in isolation but applied the law as declared by the earlier coordinate Bench decisions to the present cases and found reason to interfere with the Tribunal's conclusions. [Paras 3, 16, 17]

Impugned orders set aside and matter remitted for reconsideration in accordance with the law declared by the specified coordinate Bench decisions.

Remand for fresh consideration in light of binding precedents - Direction to complete reassessment within fixed time and hearing requirement - Procedure to be followed on remand for determination of the demand of additional sales tax - HELD THAT: - The Court directed that the matters be remitted to the original authority for reconsideration of the demand of additional sales tax under the Tamil Nadu Additional Sales Tax Act, 1970 in the light of the law declared by the coordinate Bench decisions referred to in the order. The authority was directed to complete reassessment and pass appropriate orders within three months from receipt of the judgment, after hearing the petitioner and the respondents. The Court thereby remitted the substantive assessment for fresh decision rather than disposing the claim on merits itself. [Paras 17, 18]

Remand to the original authority for reassessment in accordance with the specified precedents; reassessment to be completed within three months with opportunity of hearing.

Final Conclusion: Writ petitions allowed; impugned appellate orders set aside and matters remanded to the original authority to reconsider the demand for additional sales tax for assessment year 1996-97 in accordance with the coordinate Bench decisions, with reassessment to be completed within three months after hearing the parties.

Cancellation of GST registration for non-filing of returns - revival of registration on compliance - prohibition on utilization of Input Tax Credit for payment of past-due tax - scrutiny and approval of Input Tax Credit before utilization - requirement to file prior and post-cancellation returns and payment in cash - directions for amendment of GST portal by GSTN

Cancellation of GST registration for non-filing of returns - revival of registration on compliance - Writ petition challenging cancellation of GST registration allowed on terms similar to earlier precedent; registration to be revived on compliance with specified conditions. - HELD THAT: - The Court, noting that it has consistently followed the directions in Tvl.Suguna Cutpiece Centre (W.P.Nos.25048, 25877, 12738 of 2021 etc.), accepted the petitioner's contention of inability to file appeal timely due to medical incapacity and held that the same relief will be extended. The petition is allowed on the terms set out in paragraph 229 of the Suguna Cutpiece order: the petitioner must file returns for the period prior to cancellation (if not already filed) and pay the tax, interest, fine and fee for belated filing within the prescribed period; on such payment and uploading of returns the registration shall stand revived forthwith. The Court expressly followed its prior reasoning and applied those remedial conditions to the petitioner's case. [Paras 4, 5, 6]

Writ petition allowed on the terms contained in paragraph 229 of the Suguna Cutpiece order; registration to be revived on compliance with those conditions.

Prohibition on utilization of Input Tax Credit for payment of past-due tax - scrutiny and approval of Input Tax Credit before utilization - requirement to file prior and post-cancellation returns and payment in cash - Conditions of revival include that past-due tax, interest, fine and fee shall not be paid or adjusted from unutilized Input Tax Credit; any Input Tax Credit to be scrutinized and approved before utilization; returns for period subsequent to cancellation to be filed with tax payment in cash. - HELD THAT: - Adopting the terms laid down in the Suguna Cutpiece order, the Court required that payment of tax, interest, fine and fee in discharge of liabilities prior to revival shall not be made from any unutilized or unclaimed Input Tax Credit. Where Input Tax Credit has been utilized, further utilization shall not be permitted until it is scrutinized and approved by a competent officer; only approved Input Tax Credit may thereafter be used for future liabilities. The petitioners are also directed to file returns and discharge GST for periods subsequent to cancellation by paying tax in cash, thereby guarding against improper passing of Input Tax Credit or bill-trading. [Paras 6]

Revival conditioned on filing antecedent and subsequent returns with payment as directed; ITC cannot be used for past dues and may be utilized thereafter only after departmental scrutiny and approval.

Directions for amendment of GST portal by GSTN - Respondents directed to take steps to enable filing of returns and payment of tax/penalty/fine on the GST portal within thirty days. - HELD THAT: - The Court directed that respondents should take suitable steps by instructing the GST Network, New Delhi to modify the GST web portal architecture so as to permit the petitioners to file the required returns and make the mandated payments, and that this exercise shall be carried out within thirty days from receipt of a copy of the order. The direction follows the analogous remedy prescribed in the Suguna Cutpiece order and is intended to operationalize the revival process. [Paras 6]

Respondents to instruct GSTN to effect necessary changes in the GST portal within thirty days to facilitate compliance and revival.

Final Conclusion: The writ petition is allowed on the terms of paragraph 229 of the Suguna Cutpiece order: the petitioner may regularise prior default and file returns, pay tax/interest/penalty and thereafter have the registration revived subject to the specified safeguards regarding Input Tax Credit; respondents are directed to enable portal facilitation within thirty days; no costs.

Pre-deposit - discretionary power of tribunal to direct pre-deposit - prima facie merits - production of statutory forms (Form C) - availment of concessional rate under Section 8 of the CST Act - cancellation of registration

Pre-deposit - discretionary power of tribunal to direct pre-deposit - prima facie merits - production of statutory forms (Form C) - availment of concessional rate under Section 8 of the CST Act - cancellation of registration - Validity of the Tribunal's direction requiring 100% pre-deposit of the tax demand - HELD THAT: - The Tribunal directed payment of 100% pre-deposit on the basis that the tax demand related to non production of statutory forms for concessional rate claimed under Section 8 of the CST Act, the buyers whose invoices were relied upon had their registrations cancelled prior to the relevant year, and the appellant had not produced any statutory forms even after more than seven years. The High Court held that the extent of pre-deposit is a matter of judicial discretion for the Tribunal to be exercised after considering the facts and the prima facie view of merits. The Tribunal's reasoning - recording the demand, the time barred/non production of Form C, the cancellation of the sellers' registrations before the financial year in question, and the appellant's failure to produce statutory forms despite lapse of time - satisfied the requirements for exercise of that discretion. The Court declined to substitute its own view for the Tribunal's assessment of the facts and the prima facie merits. [Paras 3, 5]

Tribunal's direction to require 100% pre-deposit upheld and not interfered with.

Substantial question of law - Whether the appeal raised any substantial question of law - HELD THAT: - The High Court concluded that the present appeal did not raise any substantial question of law. Given the Tribunal's exercise of discretion on pre-deposit grounded in the factual matrix and the prima facie view of merits, there was no legal principle warranting interference. The Court therefore treated the matter as fit for summary dismissal. [Paras 6, 7]

Appeal dismissed summarily for lack of any substantial question of law; ancillary civil application disposed of.

Final Conclusion: The Tribunal's order directing payment of 100% pre-deposit was validly exercised on the facts and prima facie merits; the High Court declined to interfere, held that no substantial question of law arose, and summarily dismissed the appeal, disposing of the connected civil application.

Relevant product market - relevant geographic market - dominant position - abuse of dominant position - imposition of unfair or discriminatory conditions - denial of market access - limitation of technical or scientific development - leveraging dominance into adjacent markets - anti steering / link out restrictions - mandatory and exclusive use of platform billing - intent flow v. collect flow integration - data access and use from platform transactions - remedies under Section 27 - penalty under Section 27(b)

Relevant product market - relevant geographic market - Delineation of the following relevant markets: market for licensable OS for smart mobile devices in India; market for app stores for Android OS in India; market for apps facilitating payment through UPI in India. - HELD THAT: - On a combined examination of demand and supply side substitutability, product characteristics, network effects, technical differences and stakeholder submissions, the Commission adopts the DG's market delineation. Smart mobile OSs are distinct from feature phone and desktop OSs; licensable smart mobile OSs form a single product market distinct from non licensable (captive) OSs. App stores are platform specific and app stores for Android OS constitute a distinct market given lack of substitutability with app stores of non Android OSs, sideloading, web apps and preinstallation. Apps facilitating payments through UPI are a distinct product market because of UPI's unique features (VPA, push/pull flows, interoperability, real time settlement) and their rapid adoption in India. The Commission determines the relevant geographic market as India for each market. [Paras 393, 394]

The three relevant markets are delineated as: (a) licensable OS for smart mobile devices in India; (b) app stores for Android OS in India; and (c) apps facilitating payments through UPI in India.

Dominant position - indirect network effects - barriers to entry - Assessment that Google enjoys dominant position in the market for licensable mobile OS for smart mobile devices in India and in the market for app stores for Android OS in India. - HELD THAT: - On the evidence of sustained and overwhelming market shares for Android, Google's control over Android development and compatibility regimes (CDD/CTS/MADA/AFA), entrenched indirect network effects between OS users and app developers, high switching costs, availability and breadth of apps on Google Play, and material barriers to entry and expansion for rivals, the Commission concurs with the DG that Google occupies a position of strength enabling it to operate independently of competitive forces in the two identified markets. [Paras 395]

Google is held dominant in the market for licensable mobile OS for smart mobile devices in India and in the market for app stores for Android OS in India.

Mandatory and exclusive use of platform billing - imposition of unfair or discriminatory conditions - anti steering / link out restrictions - denial of market access - limitation of technical or scientific development - data access and use from platform transactions - Whether Google's policy mandating exclusive use of Google Play Billing System (GPBS) for paid apps and certain in app purchases, together with anti steering restrictions and related practices, amounts to abuse of dominant position under Section 4(2) of the Act. - HELD THAT: - The Commission finds that Google's Payments Policy (as part of DDA/DPP/GPTS) required developers distributing paid apps or offering in app digital purchases on Play to use GPBS, prohibited in app steering to alternative payment methods, and imposed service fees (15-30%) and settlement practices that disadvantage app developers. Given Google's dominant role and Play Store's gatekeeper function, making Play access contingent on exclusive use of GPBS imposes an unfair and unilateral condition on developers, restrains their contractual freedom, forecloses payment processors from processing IAPs on Play, disincentivises development of alternative in app payment solutions, and enables Google to access competitively sensitive transaction data while providing developers only aggregated/truncated data. These practices distort incentives, impair innovation by third parties, and amount to unfair/discriminatory conditions, denial of market access and limitation of technical development. The Commission therefore upholds the DG's conclusions and finds contraventions of Section 4(2)(a)(i), 4(2)(a)(ii), 4(2)(b)(ii), 4(2)(c) and 4(2)(e). [Paras 312, 313, 315, 392]

Google's mandatory/exclusive GPBS requirement, anti steering provisions, discriminatory application of fees and related practices constitute abuse of dominant position in contravention of Section 4(2)(a)(i), 4(2)(a)(ii), 4(2)(b)(ii), 4(2)(c) and 4(2)(e) of the Act.

Intent flow v. collect flow integration - self preferencing - denial of market access - leveraging dominance into adjacent markets - Whether Google's differential technical integration that enabled a superior intent flow payment experience for Google Pay while third party UPI apps on Play were limited to the more cumbersome collect flow amounted to unlawful discrimination and leveraging of dominance. - HELD THAT: - The Commission accepts the DG's finding that intent flow integration provides a materially superior, lower latency, fewer step user experience compared with collect flow, and that Google enabled intent flow for its own UPI app while other UPI apps were integrated via collect flow on Play. Given Play's gatekeeper role and network effects, this differential treatment advantaged Google Pay on Play and increased transactions, data access and downstream commercial value for Google. The discrimination lacks objective technical justification in the record and has the effect of foreclosing rivals and leveraging Google's dominance in OS/app store markets into the UPI app market. The conduct is therefore held to contravene Section 4(2)(a)(ii), 4(2)(c) and 4(2)(e). [Paras 354, 355, 357, 359]

Google's intent flow/collect flow differential integration amounted to discriminatory conduct and leveraging of dominance in breach of Section 4(2)(a)(ii), 4(2)(c) and 4(2)(e).

Remedies under Section 27 - cessation and desist directions - data access transparency - nondiscrimination - Remedial directions issued to Google to cease and desist from the abusive practices found and to adopt specific conduct changes. - HELD THAT: - Pursuant to Section 27, the Commission directs Google immediately not to enforce anti competitive clauses identified in this order and, within three months, to (inter alia) allow app developers to use third party billing/payment processors for paid apps and IAPs; remove anti steering restrictions; not restrict users' in app access to developer features; publish a clear data policy and provide developers competitively relevant transaction/consumer data generated by their apps subject to safeguards; refrain from imposing unfair or disproportionate conditions or fees and ensure transparency on services and pricing; and desist from discriminating between Google's UPI app and other UPI apps. The Commission sets timelines for compliance and establishes a confidentiality regime for case records. [Paras 395, 396, 397]

Google is directed to cease the specified anti competitive measures with immediate effect, implement remedial changes within three months, and report compliance to the Commission.

Penalty under Section 27(b) - relevant turnover - provisional penalty - Imposition of a provisional monetary penalty on Google and the basis for its computation and revision. - HELD THAT: - After considering statutory factors, Google's submissions, and the evidence on relevant turnover presented by Google, the Commission provisionally imposes a penalty of 7% on the average relevant turnover for FY 2018 19, 2019 20 and 2020 21 as submitted by Google. The Commission computes the provisional penalty and directs Google to deposit the amount within 60 days, while making clear that the penalty is provisional and subject to revision on Google furnishing the requisite audited financial details within 30 days. [Paras 416, 417, 418]

A provisional penalty of 7% on the average relevant turnover for the three preceding financial years is imposed; Google to deposit the amount and furnish supporting financial particulars for finalisation.

Preinstallation and placement agreements - default status - Preinstallation and prominence of Google Pay on devices: no conclusive finding on abuse; selected aspects left open for further examination. - HELD THAT: - The DG found that Google has RSAs and placement bonus arrangements with OEMs that result in pre installation and prominent placement of Google Pay on some devices, and that other UPI apps also secure preinstallation arrangements. The Commission notes the DG did not find sufficient evidence to conclude abuse concerning preinstallation per se, but observed that default status and tying aspects (including implications of default payment app settings and RSAs) were not fully explored. The Commission therefore declines to make a definitive finding on preinstallation/default status at this stage and leaves these aspects open for further examination. [Paras 364, 366, 367]

No final finding of abuse is made regarding preinstallation; matters concerning default status and tying in RSAs/placement agreements are left open for further consideration.

Final Conclusion: The Commission delineates three relevant markets (licensable smart mobile OS in India; Android app stores in India; UPI apps in India), holds Google dominant in the first two, and finds that Google abused its dominance by mandating exclusive use of Google Play Billing, imposing unfair/discriminatory terms and fees, restricting steering, denying market access to payment processors, limiting technical development and self preferencing its UPI product via superior integration; it directs immediate cessation of the identified practices, prescribes specific remedies and data/transparency obligations, and levies a provisional monetary penalty (subject to finalisation on submission of audited financial particulars).