TaxTMI Updates e-Newsletter
Nov 01,2022

Refund of unutilized Input Tax Credit under inverted duty structure - refund under Section 54(3)(ii) of the CGST Act, 2017 - quashing of administrative refund rejection order - persuasive effect of administrative Circulars on claim of refund - availability of alternative remedy by appeal and scope for writ relief in extraordinary cases

Refund under Section 54(3)(ii) of the CGST Act, 2017 - quashing of administrative refund rejection order - persuasive effect of administrative Circulars on claim of refund - The impugned refund rejection orders dated 08.03.2022 in respect of the periods January 2020 to March 2020 and April 2020 to June 2020 are quashed and the petitioner is entitled to seek refund under Section 54(3)(ii) of the CGST Act, 2017 in the light of the subsequent Circular dated 06.07.2022 and the Gauhati High Court decision in BMG Informatics Pvt. Ltd.'s case. - HELD THAT: - The Court found that the earlier Circular dated 31.03.2020 did not bar the petitioner from claiming refund under Section 54(3)(ii), as held by the Gauhati High Court in BMG Informatics Pvt. Ltd.'s decision, and that the respondents themselves issued a clarificatory Circular dated 06.07.2022 during the pendency of the petition which supports the petitioner's position. In view of these developments and the material on record, the rejection orders are contrary to the clarified administrative position and therefore liable to be set aside. Although an appeal remedy exists, the Court exercised jurisdiction in the peculiar facts of the case to grant relief. [Paras 5, 6]

Impugned refund rejection orders dated 08.03.2022 are quashed and the petitioner is entitled to pursue refund under Section 54(3)(ii) of the CGST Act, 2017 in light of the Circular dated 06.07.2022 and the cited High Court decision.

Reconsideration of refund claim on remand - direction to administrative authority to act expeditiously - The respondents are directed to reconsider the petitioner's refund claim afresh in accordance with law, bearing in mind the Court's observations, the Circular dated 06.07.2022 and the Gauhati High Court judgment, and to do so expeditiously within two months. - HELD THAT: - Rather than adjudicating the refund quantum or detailed merits, the Court set aside the rejection orders and remitted the matter to the respondents for fresh consideration in accordance with the clarified administrative position and legal precedent. The Court mandated expeditious action by directing reconsideration within a specified timeline and that the respondents take necessary steps to consider the claim in accordance with law and the observations made in the order. [Paras 6, 7]

Respondents to reconsider the petitioner's refund claim in accordance with law and the observations in the order, taking into account the Circular dated 06.07.2022 and the Gauhati High Court judgment, and complete reconsideration within two months.

Final Conclusion: Writ petition allowed; refund rejection orders dated 08.03.2022 quashed and respondents directed to reconsider the petitioner's claim for refund under Section 54(3)(ii) of the CGST Act, 2017 in light of the Circular dated 06.07.2022 and the cited High Court decision, to be completed expeditiously and within two months.

Violation of principles of natural justice (failure to afford fair opportunity of hearing) - non-speaking order / absence of reasons - quashing of assessment order - remand for fresh adjudication subject to conditions - interim protection - stay of coercive steps and de-freezing of bank accounts - deposit as condition for interim relief

Violation of principles of natural justice (failure to afford fair opportunity of hearing) - non-speaking order / absence of reasons - quashing of assessment order - Impugned assessment order dated 30.11.2021 set aside for violation of natural justice and for being non-speaking/lacking decipherable reasons. - HELD THAT: - The Court found that the order under challenge was passed without affording sufficient time or adequate opportunity to the petitioner to represent its case, thereby infringing the principles of natural justice. Further, the order did not assign reasons sufficient or decipherable from the record to show how the amount claimed was determined. An order passed in such circumstances, having civil consequences, is susceptible to judicial interference notwithstanding availability of statutory remedies. On this short but dispositive ground the impugned order was quashed.

Impugned order dated 30.11.2021 quashed and set aside.

Remand for fresh adjudication subject to conditions - speaking order - opportunity to place on record documents - Matter remitted to Assessing Authority for fresh decision on merits after compliance with principles of natural justice and directions to pass a speaking order. - HELD THAT: - The Court directed that the Assessing Authority shall decide the case afresh on merits after affording adequate opportunity of hearing to all concerned and permitting parties to place on record essential documents and materials. The authority must pass a speaking order assigning reasons, supply copies to the parties, and decide the matter expeditiously, preferably within two months of the petitioner's appearance. The Court expressly left all issues of fact and law open and did not express any opinion on merits.

Matter remitted to the Assessing Authority for fresh adjudication in accordance with the directions given.

Deposit as condition for interim relief - interim protection - stay of coercive steps and de-freezing of bank accounts - Interim relief granted subject to deposit; coercive steps restrained and bank accounts to be de-frozen. - HELD THAT: - As a condition of interim relief, the petitioner undertook to deposit twenty per cent of the demand raised within four weeks; if twenty per cent was already deposited it would be set off, and any excess ultimately found would be refunded. During the pendency of the assessment proceedings no coercive steps shall be taken against the petitioner, and any bank account(s) attached in reference to the impugned proceedings shall be de-frozen immediately. The petitioner undertook to appear before the Assessing Authority on the specified date and to cooperate in the proceedings.

Petitioner ordered to deposit twenty per cent; coercive action stayed and bank account(s) to be de-frozen immediately.

Final Conclusion: Writ petition disposed by quashing the assessment order dated 30.11.2021; matter remanded to the Assessing Authority for fresh adjudication after compliance with principles of natural justice and on conditions including a twenty per cent deposit, immediate de-freezing of bank accounts (if attached), and a stay on coercive measures during the reassessment. All substantive issues left open for determination by the Assessing Authority.

Limitation for filing refund - refund under Section 54 of the CGST Act and corresponding State GST Act - exclusion of period for computation of limitation (1-3-2020 to 28-2-2022) - extension of timelines by the Supreme Court and its applicability to GST proceedings

Limitation for filing refund - exclusion of period for computation of limitation (1-3-2020 to 28-2-2022) - refund under Section 54 of the CGST Act and corresponding State GST Act - Whether the petitioner's consolidated refund application for November, 2018 to March, 2019 was barred by limitation. - HELD THAT: - The Court examined the rejection dated 03.09.2021 which refused the refund on the ground of limitation. The Court noted Notification No.13/2022-Central Tax dated 05.07.2022 which provides that the period from 1-3-2020 to 28-2-2022 shall be excluded while computing limitation for filing refund applications under the CGST/State GST provisions. Applying that exclusion, the Court held that the petitioner's consolidated refund application for November, 2018 to March, 2019 could not be said to be beyond the period of limitation. Consequently, the rejection on limitation grounds could not stand and the matter was sent back for fresh consideration in accordance with law. [Paras 6, 7]

Rejection on limitation grounds set aside; matter remanded to respondent No.1 for fresh consideration in accordance with law.

Extension of timelines by the Supreme Court and its applicability to GST proceedings - limitation for filing refund - Whether the extension of timelines granted by the Supreme Court (in relation to appeals) applied to proceedings under the GST laws. - HELD THAT: - The Court noted the reasoning recorded by the authority that the Supreme Court's extension related to appeals and not to proceedings under GST. The Court recorded that the earlier administrative view taken at the time of rejection confined the Supreme Court extension to appeals before courts/quasi judicial authorities and held that such extension was not a ground to validate time barred GST proceedings. However, in view of Notification No.13/2022 which expressly excludes a specified period for computation of limitation under the GST Acts, the Court proceeded to allow the petitioner's challenge on limitation grounds and remanded the matter. The Court thereby accepted the administrative distinction but remedied the limitation consequence by applying the statutory notification. [Paras 5, 6]

Held that the Supreme Court extension was confined to appeals and not GST proceedings; nevertheless Notification No.13/2022 applies to exclusion of the specified period when computing limitation, leading to remand for fresh consideration.

Final Conclusion: Writ petition allowed; the refund rejection order dated 03.09.2021 is set aside and the matter is remanded to respondent No.1 for fresh consideration in accordance with law; no order as to costs.

Relevant date - limitation for refund under Section 54 - exclusion of period for computation of limitation - zero-rated supplies to SEZ

Relevant date - limitation for refund under Section 54 - exclusion of period for computation of limitation - zero-rated supplies to SEZ - Validity of rejection of the petitioner's refund applications as time barred. - HELD THAT: - The petitioner filed refund applications on 15.09.2021 for the tax periods July, 2017 to March, 2018 and April, 2018 to March, 2019 which were rejected on 05.10.2021 as barred by limitation under Section 54(14) read with the Circular dated 20.07.2021. The Court examined the Explanation to Section 54 and noted that the concept of relevant date as drawn in the Explanation specifically relates to exports and that the scheme does not prescribe the same determinative relevant date for supplies to SEZ units treated as zero rated supplies under the IGST Act. The Court further took into account the subsequent Notification dated 05.07.2022 which postulates exclusion of the period 1 March 2020 to 28 February 2022 for computation of limitation under Section 54/55. In view of these considerations the Court concluded that it could not be said that the petitioner's refund applications were made beyond the period of limitation and therefore the impugned rejection could not stand. The Court set aside the order rejecting the refund applications and remitted the matter to the respondent for fresh consideration in accordance with law. [Paras 6, 7]

Order dated 05.10.2021 rejecting the refund applications set aside; matter remanded to respondent No.1 for fresh consideration in accordance with law.

Final Conclusion: Writ petition allowed; impugned order rejecting refund applications as time barred set aside and matter remanded for fresh consideration in accordance with law; no order as to costs.

Refund of IGST on supply to SEZ as zero-rated supply - extension of limitation period due to COVID-19 (orders in Suo Motu Writ Petition (Civil) No.3 of 2020) - condonation of delay under Section 107(4) of the CGST Act

Extension of limitation period due to COVID-19 (orders in Suo Motu Writ Petition (Civil) No.3 of 2020) - condonation of delay under Section 107(4) of the CGST Act - Validity of rejection of the appeal as time barred - HELD THAT: - The Court found that the petitioners had delayed in filing the appeal against rejection of their refund claim, but the period from 15.03.2020 to 28.02.2022 was excluded for computation of limitation by the orders of the Hon'ble Supreme Court in Suo Motu Writ Petition (Civil) No.3 of 2020 (as restored and continued). Applying that exclusion, the appeal filed on 21.04.2021 fell within the extended limitation period and therefore could not be treated as barred. Consequently, the Appellate Authority's rejection of the appeal on the sole ground of limitation was unsustainable and was quashed. The Court noted Section 107(4) permits condonation only within statutory bounds, but held the Supreme Court's exclusion of the period was determinative of timeliness in this case. [Paras 7]

Impugned order rejecting the appeal as time barred quashed and set aside.

Refund of IGST on supply to SEZ as zero-rated supply - appeal against rejection of refund under Section 54 of the CGST Act read with Section 16 of the IGST Act - Disposition of the refund appeal on merits left open and remitted for fresh consideration - HELD THAT: - The High Court expressly declined to decide the merits of the refund claim or the other contentions raised before the Appellate Authority. Having quashed the limitation based rejection, the Court remanded the matter to the respondent No.2-Appellate Authority to decide the appeal on merits after giving the petitioners an opportunity of hearing. The appellate authority is to treat the appeal as filed within the period of limitation and decide the merits afresh. [Paras 8, 9]

Matter remitted to the Appellate Authority to decide the appeal on merits within twelve weeks; merits kept open.

Final Conclusion: The order of the Appellate Authority dated 12.07.2021 rejecting the appeal as time barred is quashed and set aside in view of the Supreme Court's exclusion of the period 15.03.2020 to 28.02.2022; the appeal is remitted to the Appellate Authority to be decided on merits after hearing the parties within twelve weeks.

Faceless Assessment - principles of natural justice - service of draft assessment order - Section 144B procedure - reopening of assessment - extraordinary remedy under Article 226

Section 144B procedure - service of draft assessment order - principles of natural justice - Faceless Assessment - Whether the impugned assessment order dated 26th September, 2021 is invalid for non-compliance with the procedure prescribed under Section 144B, including failure to serve the draft assessment order and afford personal hearing, thereby violating principles of natural justice. - HELD THAT: - The Court held that the Faceless Assessment scheme under Section 144B prescribes a mandatory procedure which embeds the opportunity of hearing and service of the draft assessment order; non-adherence to that procedure renders an assessment non est and vulnerable. It was not in dispute that the draft assessment order was not forwarded to the petitioner as required, and the petitioner had sought adjournment and furnished replies within the time frame granted but was not afforded the personal hearing or served the draft order. The Court relied upon its previous decisions and decisions of other High Courts to conclude that any order passed in violation of the statutory procedure under Section 144B, and thereby in breach of principles of natural justice, cannot be sustained. The Court expressly did not examine the merits of the assessment but quashed the impugned order for procedural non-compliance and remanded the matter for fresh exercise in accordance with the statutory procedure. [Paras 6, 7, 10]

Impugned assessment order dated 26th September, 2021 and the demand notice are quashed and set aside for failure to follow the procedure under Section 144B; matter remanded to Assessing Officer to issue show-cause notice with draft assessment order and grant personal hearing as per Section 144B within 12 weeks.

Extraordinary remedy under Article 226 - alternative remedy - Whether the petitioner could invoke writ jurisdiction under Article 226 despite the availability of alternative appellate remedies before the Commissioner (Appeals) and the Tribunal. - HELD THAT: - The Court found that where an assessment order is passed in violation of the mandatory procedure and principles of natural justice prescribed under the Faceless Assessment provisions, the availability of alternative appellate remedies does not preclude the exercise of extraordinary writ jurisdiction. Citing principle that procedural illegality affecting fundamental rights of hearing permits invocation of Article 226, the Court held that the petitioner was justified in approaching the High Court and that maintainability could not be defeated by the alternative remedy in the facts of the case. [Paras 5, 9, 10]

Writ petition maintainable; alternative appellate remedies do not bar jurisdiction under Article 226 in view of the procedural violation.

Final Conclusion: The assessment order dated 26th September, 2021 and the consequent demand notice are quashed for non-compliance with the Faceless Assessment procedure and principles of natural justice; the matter is remitted to the Assessing Officer to follow Section 144B procedure (including service of draft order and personal hearing) within 12 weeks. The petition under Article 226 is maintainable despite availability of alternative appellate remedies.

Breach of principles of natural justice - faceless assessment procedure - opportunity of personal hearing under Section 144B - quashing of assessment order for failure to consider respondent's reply - remand for fresh show-cause and personal hearing

Breach of principles of natural justice - opportunity of personal hearing under Section 144B - faceless assessment procedure - Whether the assessment order dated 2nd June, 2021 was vitiated by violation of principles of natural justice for failing to consider the reply dated 19th April, 2021 containing 16 annexures and for not granting an opportunity of personal hearing as mandated under Section 144B of the Act. - HELD THAT: - The Court found that the Assessing Officer did not consider the petitioner s reply dated 19th April, 2021 which contained 16 annexures furnished in response to the draft assessment and show-cause notice. Paragraph 7.3 of the assessment order records that the petitioner merely reiterated earlier stand and no new documentary evidence was produced, a finding contrary to the record which showed new documents were submitted and had not been earlier supplied. The absence of any opportunity of personal hearing under Section 144B and the failure to consider the new documentary material amounted to a gross violation of the principles of natural justice in the faceless assessment process. Having quashed the impugned order on this procedural ground, the Court did not examine the merits of the assessment. The matter was remitted to the Assessing Officer with directions to issue a fresh show-cause notice together with the draft assessment order and to grant the petitioner an opportunity of personal hearing in accordance with Section 144B; the exercise to be completed within 12 weeks from receipt of the copy of the order. [Paras 6, 7, 8, 9]

Impugned assessment order and demand notice quashed and set aside; matter remanded to Assessing Officer for fresh show-cause, draft assessment and personal hearing under Section 144B within 12 weeks.

Final Conclusion: The petition is allowed; the faceless assessment order dated 2nd June, 2021 and the demand notice are quashed on grounds of violation of natural justice for failure to consider the reply and for not granting personal hearing under Section 144B, and the matter is remitted for fresh proceedings compliant with Section 144B within 12 weeks.

Bogus purchases - reliance on third party statements without confrontation or cross examination - requirement of independent verification by the Assessing Officer - violation of principles of natural justice by non supply of third party statement - assessment under section 147/notice under section 148 - initiation based on information from investigation wing

Reliance on third party statements without confrontation or cross examination - violation of principles of natural justice by non supply of third party statement - Sustenance of addition treating purchases as bogus where the AO relied solely on a statement recorded by the Investigation Wing and did not supply that statement to the assessee or afford opportunity for cross examination. - HELD THAT: - The Tribunal found that the Assessing Officer made the disallowance of alleged purchases relying principally on the statement of the supplier recorded under the investigation proceedings. That statement was not supplied to the assessee and no opportunity to cross examine the deponent was afforded despite the assessee's request. The Tribunal held that reliance on such a solitary third party statement, untested in the assessment proceedings and not used to carry out further verification, cannot overturn documentary evidence produced by the assessee. Denial of the opportunity to confront and cross examine the maker of the statement amounted to a breach of natural justice. The factual matrix was compared with precedents where disallowances founded solely on unverified third party information were disapproved, and on this basis the addition was set aside. [Paras 11, 12]

Addition treated as bogus purchases deleted as assessment relied solely on an un supplied third party statement and violated principles of natural justice.

Bogus purchases - requirement of independent verification by the Assessing Officer - Whether the responses from toll plaza authorities and the solitary negative reply were sufficient to controvert documentary evidence of purchase produced by the assessee. - HELD THAT: - The Tribunal observed that the assessee furnished purchase bills, goods receipt notes, weighbridge slips, entries in sales tax returns and bank payment records. The AO had issued notices to toll plazas and received mixed or limited replies (one authority silent, one retaining CCTV only for 15 days, one stating no records). The Tribunal held that such limited responses may give rise to suspicion but do not constitute credible, demonstrable evidence to rebut the verifiable documents produced by non related entities. The AO ought to have conducted further enquiries with the supplier, transporters and weighbridge authorities whose details were available, before concluding that purchases were bogus. [Paras 9, 10]

Toll plaza responses alone were insufficient to controvert the assessee's documentary proof; AO was required to carry out further verification.

Final Conclusion: The appeal is allowed: the addition on account of alleged bogus purchases is set aside and deleted because the assessment rested solely on an unverified third party statement not supplied to the assessee and on limited toll plaza replies without further independent verification, resulting in breach of natural justice.

Revisionary jurisdiction under Section 263 - erroneous and prejudicial to the interests of the revenue - lack of inquiry versus inadequate inquiry - Explanation 2 to Section 263 - onus under first proviso to Section 68 - acceptance of one of two possible views by the Assessing Officer

Revisionary jurisdiction under Section 263 - erroneous and prejudicial to the interests of the revenue - acceptance of one of two possible views by the Assessing Officer - Validity of the Principal Commissioner's exercise of revisionary jurisdiction under Section 263 in setting aside the assessment order dated 31.03.2016. - HELD THAT: - The Tribunal held that the Assessing Officer (AO) had carried out specific and substantial enquiries in the limited-scrutiny assessment concerning large share-application money, including requiring the assessee to furnish details, issuing a notice under Section 133(6) to the investor company, obtaining documentary evidence (bank statements, audited financials, ITR, affidavit) and securing personal confirmation from the investor's director. On that basis the AO accepted a possible and plausible view that the receipts were genuine. Where an AO has adopted one of the courses permissible in law after examination and verification, the Commissioner cannot substitute his opinion merely because he prefers a different view; revision under Section 263 is permissible only if the AO's order is unsustainable in law or there is no inquiry. The Tribunal, applying these principles and relevant precedents, concluded that the Principal Commissioner improperly invoked Section 263 to substitute his view for that of the AO and that the AO's order could not be treated as erroneous and prejudicial to revenue merely because a different appraisal might have produced another view. [Paras 9, 10, 11, 14]

The Principal Commissioner's exercise of jurisdiction under Section 263 was not justified; the order dated 30.03.2018 is set aside and the AO's assessment order dated 31.03.2016 is restored.

Explanation 2 to Section 263 - lack of inquiry versus inadequate inquiry - onus under first proviso to Section 68 - Whether "Explanation 2(a)" to Section 263 broadened the scope to permit revision where the AO's inquiry was merely inadequate rather than nonexistent. - HELD THAT: - The Tribunal observed that Explanation 2(a) was intended to render orders passed without inquiries or verifications that should have been made amenable to revision, but it is only an interpretative aid and does not erase the pre-conditions for invoking Section 263. The AO in this case had conducted enquiries and obtained corroborative material from the investor company; the primary onus under the first proviso to Section 68 (to prove the source) was discharged by the assessee through documents procured in assessment proceedings. Mere inadequacy of inquiry, or a view that further or different verification could have been made, does not suffice to invoke Section 263. Therefore Explanation 2(a) could not be applied to justify revision where the AO had made inquiries and adopted a possible and plausible view. [Paras 12, 13]

Explanation 2(a) does not permit the Principal Commissioner to revise an assessment where the AO has carried out enquiries and formed a tenable view; Clause (a) is inapplicable to justify the impugned revision.

Final Conclusion: The Tribunal allowed the appeal, set aside the Principal Commissioner's revisionary order dated 30.03.2018 under Section 263, and restored the assessment order dated 31.03.2016 passed by the Assessing Officer.

Disallowance under Section 40(a)(ia) for non-deduction of TDS on freight payments - distinction between hire of vehicles and contract for carrying out work under Section 194C - treatment of unexplained cash deposits in bank accounts as income - onus of assessee under section 68 to prove identity, genuineness and creditworthiness of lenders - treatment of investments recorded in books as not unexplained

Disallowance under Section 40(a)(ia) for non-deduction of TDS on freight payments - distinction between hire of vehicles and contract for carrying out work under Section 194C - Deletion of addition made under Section 40(a)(ia) in respect of freight payments - HELD THAT: - The Tribunal followed its coordinate-bench precedent in the assessee's father's case which held that payments to outside vehicle owners, where the appellant retained overall risk and responsibility for performance of transport contracts and there was no material showing that payees undertook risk or stood in privity of contract with the principal, do not fall within the scope of Section 194C(1). Applying that reasoning to the present facts, and noting absence of any documentary evidence that payees had undertaken the contractual risk, the Tribunal concluded that the lower authorities erred in treating such payments as contractual payments attracting Section 194C and consequently attracting disallowance under Section 40(a)(ia). The disallowance confirmed by the CIT(A) was therefore deleted. [Paras 5]

Disallowance under Section 40(a)(ia) on freight payments deleted.

Treatment of unexplained cash deposits in bank accounts as income - Addition on account of unexplained cash deposits: partial deletion and partial confirmation of addition - HELD THAT: - The CIT(A) examined bank statements and tax audit records and found that cash deposits in the Kotak Mahindra account were reflected in books, reconciled with freight receipts and explainable by the nature of transport business and cash withdrawals (telescoping). The ICICI bank account, however, was not disclosed in the books and no source or bank statement was furnished. In absence of any explanation or record for the undisclosed ICICI account, the addition relating to that account was rightly sustained as unexplained. The Tribunal found no infirmity in these conclusions. [Paras 6]

Addition on account of cash deposits deleted to the extent of deposits in the disclosed Kotak Mahindra account and sustained to the extent of deposits in the undisclosed ICICI account (held unexplained).

Onus of assessee under section 68 to prove identity, genuineness and creditworthiness of lenders - Addition on account of unexplained unsecured loans: partial confirmation and partial deletion - HELD THAT: - The CIT(A) evaluated the tax audit report and annexures showing unsecured loan creditors. Loans from certain creditors were supported or reflected as proper liabilities (including a City Bank loan and amounts from related concern), but loans from two creditors lacked address and PAN and remained unexplained. The assessee failed to discharge the onus in respect of those two creditors; no evidence was produced before the Tribunal to establish their identity or the genuineness of transactions. Accordingly, the addition was upheld to the extent attributable to those unexplained creditors and deleted in respect of the remainder. [Paras 7]

Addition on account of unsecured loans upheld to the extent shown against unidentified creditors and deleted for the balance.

Treatment of investments recorded in books as not unexplained - Deletion of addition made on account of investment in gold ornaments - HELD THAT: - The gold purchase was recorded in the assessee's books and reflected in the block of assets; no depreciation was claimed. The Tribunal held that an investment recorded in the books cannot be treated as unexplained merely because original bills were not produced to the AO, and therefore the addition as unexplained investment was not justified. Consequently the addition was deleted. [Paras 8]

Addition on account of investment in gold deleted.

Final Conclusion: The appeal is partly allowed: the Section 40(a)(ia) disallowance on freight payments and the addition for investment in gold are deleted; cash deposits in the disclosed Kotak account are accepted while deposits in an undisclosed ICICI account are added as unexplained; unsecured loans are accepted in part but upheld to the extent attributable to unidentified creditors.

Eligibility of incidental/interest income for deduction under Section 10A - profits of the eligible undertaking for computing deduction under Sections 10A/10B - interest income from fixed deposits derived from export proceeds treated as business income of the eligible undertaking - independence of Chapter VIA provisions vis-a -vis Sections 10A/10B

Eligibility of incidental/interest income for deduction under Section 10A - interest income from fixed deposits derived from export proceeds treated as business income of the eligible undertaking - Incidental interest income earned by the assessee is eligible for deduction under Section 10A as part of the profits of the eligible undertaking. - HELD THAT: - The Court held that the question is no longer res integra and followed the binding reasoning of this Court in Principal Commissioner of Income Tax-1 v. American Express India Pvt. Ltd. and the decisions summarized in Riviera Home Furnishing v. ACIT. Those authorities establish that incomes such as interest earned on fixed deposits arising out of export business constitute part of the business income of the eligible undertaking and therefore fall within the computation of profits eligible for deduction under Sections 10A/10B. The Court rejected the Revenue's contention that such incidental income is excludable, noting the established view that Section 80A(4) and other provisions of Chapter VIA operate independently and do not curtail the scope of Sections 10A/10B as argued by the Revenue. Applying that precedent to the facts of the present appeal, the Court found no substantial question of law to entertain.

Appeal dismissed; no substantial question of law arises and the ITAT order holding the interest income eligible under Section 10A is sustained.

Final Conclusion: The High Court dismissed the Revenue's appeal against the ITAT order for AY 2009-10, holding that incidental interest income arising from export-related fixed deposits forms part of the profits of the eligible undertaking and is eligible for deduction under Section 10A, in view of binding precedent.

Assessment proceedings against a deceased person - nullity of notice issued to dead assessee - participation of legal representative as validation of proceedings - inapplicability of Section 292BB to notices issued to a dead person - notice under section 148

Assessment proceedings against a deceased person - nullity of notice issued to dead assessee - participation of legal representative as validation of proceedings - notice under section 148 - Validity of the notice dated 22.07.2022 issued under section 148 in the name of the deceased assessee and whether any assessment could be sustained against the legal heir where the notice was issued to the dead person - HELD THAT: - The Court held that a notice issued under section 148 to a person who is dead is a nullity and proceedings initiated against a dead assessee cannot be sustained. Prior decisions of this Court were examined and followed to the effect that an assessment cannot be made against a dead person. The Court recognised an exception where the legal representatives actively participate in the assessment or re-assessment proceedings; in such cases proceedings may be maintained. However, mere intimation by the legal heir of the death does not amount to participation. On the facts, the petitioner (legal heir) had informed the department of the death by communication dated 6.6.2022 and there was no material to show that the legal representative submitted to the jurisdiction of, or otherwise participated in, the assessment proceedings such as would validate proceedings initiated by a notice addressed to the deceased. Consequently, the impugned notice issued to the deceased could not be sustained and was held illegal and set aside. [Paras 5, 6]

The notice dated 22.07.2022 issued in the name of the deceased assessee is a nullity and is set aside; no assessment could be sustained against the legal heir where there was no participation by the legal representative.

Inapplicability of Section 292BB to notices issued to a dead person - Whether Section 292BB of the Income Tax Act operates to validate a notice issued to a deceased person - HELD THAT: - The Court considered the contention that Section 292BB, which deems a notice to be valid where the assessee has appeared or cooperated in proceedings, could validate notices despite defects. The Court held that Section 292BB cannot be invoked to validate a notice issued to a dead person because the provision applies to curing defects where the proceedings conform to the intent and purpose of the Act; a notice to a dead person is outside that scope and must be treated as a nullity. Thus Section 292BB does not operate to sustain proceedings commenced by a notice addressed to a deceased assessee. [Paras 5]

Section 292BB does not validate notices issued to a deceased person; it is inapplicable where proceedings are started against a dead assessee.

Final Conclusion: The petition is allowed: the notice dated 22.07.2022 issued under section 148 in the name of the deceased assessee for Assessment Year 2014-2015 is illegal and is set aside; Section 292BB cannot be invoked to validate a notice issued to a dead person, and there was no participation by the legal representative sufficient to sustain proceedings.

Principles of natural justice - opportunity to be heard - show cause notice - extension of time for filing appeal - stay of coercive steps - equitable relief

Principles of natural justice - opportunity to be heard - show cause notice - Whether issuance of the show cause notice and the assessment order violated the principles of natural justice. - HELD THAT: - The court noted that although only a short time was given by the authorities to file a response to the show cause notice dated 26.3.2022, the appellant did in fact submit a reply on 28.3.2022 within the period permitted by the authorities. Consequently the appellant could not legitimately complain of a denial of the opportunity to be heard. The Single Judge's conclusion that there was no breach of natural justice was affirmed, the determinative reasoning being that the appellant availed the limited opportunity given and therefore suffered no procedural prejudice. [Paras 6, 7]

No violation of the principles of natural justice was made out; the appellant having filed a reply within the time permitted.

Extension of time for filing appeal - stay of coercive steps - equitable relief - Whether the appellant should be granted additional time to prefer the statutory appeal and whether coercive steps pursuant to the assessment and demand orders should be restrained. - HELD THAT: - While agreeing with the finding that natural justice was not breached, the court took into account the brevity of time initially allowed for the appellant to respond and exercised its discretion to afford equitable relief. The court granted the appellant liberty to file the statutory appeal within a specified extended period by enclosing a copy of the judgment, and directed that all coercive steps pursuant to the assessment order and demand notice be kept in abeyance in the meanwhile. The order was intended to enable the appellant to avail the appellate remedy without being prejudiced by immediate enforcement action. [Paras 7]

Liberty granted to file an appeal on or before 17.10.2022 with a copy of the judgment; all coercive steps pursuant to the assessment and demand orders to be kept in abeyance until then.

Final Conclusion: The Single Judge's conclusion that there was no breach of natural justice is affirmed, but in view of the short time initially allowed the appellant is granted time to prefer the statutory appeal (by 17.10.2022) and coercive measures under the assessment and demand orders are stayed pending compliance.

Violation of principles of natural justice - best judgment assessment - reopening of assessment - faceless assessment proceedings - opportunity to file documents and respond to notices - appeal under Section 246-A - condonation of delay in appeal

Violation of principles of natural justice - opportunity to file documents and respond to notices - faceless assessment proceedings - Whether the assessment order dated 30.03.2022 was passed in violation of the principles of natural justice and whether the matter should be remanded for fresh consideration. - HELD THAT: - The Court found that multiple notices under the Income Tax Act (including notices under the provisions for reopening and for obtaining information) were issued to the petitioner by electronic means and by post long before the period of the petitioner's illness. The petitioner had in fact responded promptly to the draft assessment sent by e-mail on 15.03.2022, which undermines his contention that he habitually did not check e-mails. The period of hospitalization was limited and occurred between dates after several notices had already been issued. In these circumstances the Court concluded there was no total denial of opportunity amounting to a breach of natural justice that would warrant remand. The existence of faceless assessment procedures and the petitioner's responsibility to monitor the designated e mail for e-filing communications were noted as relevant to the assessment process and to the expectation of participation. [Paras 7]

Allegation of violation of principles of natural justice rejected; request for remand denied.

Appeal under Section 246-A - condonation of delay in appeal - Whether the petitioner has an alternative statutory remedy and what directions should be given in that regard. - HELD THAT: - The Court observed that the petitioner has a statutory remedy by way of filing an appeal under Section 246-A to the National Faceless Appellate Authority (the Commissioner of Appeals). Considering the factual matrix and the petitioner's request for time to furnish information, the Court directed that the petitioner be permitted to prefer such appeal and that the Commissioner of Appeals shall consider the appeal, including any application for condonation of delay, in accordance with law and having regard to the facts of the case. The Court therefore declined to set aside the assessment order and instead provided the avenue of appellate remedy with a direction to consider condonation where warranted. [Paras 8]

Petitioner directed to file appeal under Section 246-A; Commissioner of Appeals directed to consider the appeal and any condonation of delay in accordance with law.

Final Conclusion: Writ petition disposed of at admission: allegation of breach of natural justice and request for remand rejected; petitioner directed to file an appeal under Section 246-A, which the Commissioner of Appeals shall consider, including any application for condonation of delay, in accordance with law; no order as to costs.

Revision u/s 263 by CIT - Capital gains versus business income - stock-in-trade characterization - jurisdiction under Section 263 of the Income Tax Act - requirement of inquiry or verification under Explanation 2(a) to Section 263 - exercise of revisional power where two plausible views exist

Jurisdiction under Section 263 of the Income Tax Act - exercise of revisional power where two plausible views exist - requirement of inquiry or verification under Explanation 2(a) to Section 263 - Invocation of revisional jurisdiction under Section 263 was erroneous in the facts of this case. - HELD THAT: - The Tribunal's affirmation of the revision under Section 263 was set aside because the Assessing Officer had recorded and considered material factual aspects - namely that the land was purchased for development but no construction or development activity was carried out and the land was sold for want of funds. The court applied the principle that Section 263 should not be invoked merely because the commissioner prefers a different view where the Assessing Officer has examined the facts and made a considered decision; where two plausible views exist the revisional power cannot be exercised to substitute the AO's judgment. Given the admitted factual position and the absence of failure to make enquiries or verification, invocation of Section 263 was erroneous. [Paras 13, 15, 16, 17]

Section 263 was wrongly invoked and the ITAT's finding upholding revision is set aside.

Capital gains versus business income - stock-in-trade characterization - Assessing Officer had made sufficient inquiry and recorded factual findings to treat the transaction for assessment purposes; no finding of lack of enquiry was warranted. - HELD THAT: - The court noted that the Assessing Officer had recorded the assessee's intention to develop the land, the subsequent non-development for want of funds, and particulars of expenditures (interest, professional charges and brokerage). Those factual findings were not disputed by the Revenue. In light of the admitted facts that the land was purchased and sold without any development activity, the court held that no elaborate additional enquiry was required and the AO's approach could not be branded as lacking inquiry. Consequently the Tribunal's conclusion that no enquiry was made was incorrect. [Paras 13, 15, 18]

The AO conducted sufficient enquiry; the Tribunal's finding of no enquiry is interfered with in favour of the assessee.

Final Conclusion: Appeal allowed; questions (i) and (ii) answered in favour of the assessee and against the Revenue; ITAT order dated 21.04.2017 in ITAs No.596/Bang/2013 & 42(Bang)2015 is set aside; questions (iii) and (iv) do not require answer.

Satisfaction note is sine qua non for invoking Section 153C of the Income tax Act - jurisdiction to initiate proceedings under Section 153C of the Income tax Act - remand to adjudicatory forum for verification of recorded satisfaction

Satisfaction note is sine qua non for invoking Section 153C of the Income tax Act - jurisdiction to initiate proceedings under Section 153C of the Income tax Act - Whether proceedings under Section 153C could be validly initiated and sustained in the absence of a recorded satisfaction by the searching officer and, on the record, whether such satisfaction was recorded - HELD THAT: - The Court applied the principle laid down in Commissioner of Income tax - III v. Calcutta Knitwears that a satisfaction note is a condition precedent to transmitting seized material to the jurisdictional assessing officer and to initiation of proceedings under the provision pari materia with Section 153C. The assessees asserted that no satisfaction was recorded and sought that the Tribunal inspect the records to verify compliance; the Revenue did not dispute the legal requirement but relied on statements attributed to the donor. The High Court found that the question whether the required satisfaction was recorded was not examined by the authorities below and that, in view of the settled law, the matter therefore requires fresh consideration by the Tribunal. Consequently the appellate orders are set aside and the matter is remitted to the ITAT with a direction to call for the records and determine whether the statutory satisfaction was in fact recorded before proceedings under Section 153C were proceeded with. All other contentions were left open for adjudication by the Tribunal. [Paras 9, 10, 11]

ITAT orders set aside; appeals allowed; matter remitted to the ITAT to call for records and examine whether the satisfaction required under Section 153C was recorded; other contentions kept open.

Final Conclusion: The High Court allowed the appeals, set aside the ITAT orders for assessment years 2006 07, 2007 08 and 2008 09, and remitted the matter to the ITAT with directions to call for the records and examine whether the searching officer had recorded the statutory satisfaction required to invoke Section 153C; other contentions left open and two related appeals rendered infructuous.

Principles of natural justice - remand for de novo assessment - failure to supply evidence directed by appellate authority - application of mind in framing of assessment - annulment of assessment for procedural infirmity - stay of demand subject to deposit condition

Principles of natural justice - failure to supply evidence directed by appellate authority - application of mind in framing of assessment - annulment of assessment for procedural infirmity - remand for de novo assessment - Validity of the de novo assessment framed for AY 2011-12 in light of the Tribunal's directions and the procedure followed by the Assessing Officer - HELD THAT: - The Tribunal set aside the original assessment and directed the Assessing Officer to provide to the petitioner all evidence he proposed to use and to re-adjudicate the issues de novo. The High Court examined the post-remand proceedings and found that the Assessing Officer neither furnished the evidences as directed nor afforded a proper de novo hearing; docket notings and communications do not support the respondents' later assertion that documents were ready on an earlier date. The impugned assessment largely reproduces the reasoning of the assessment that the Tribunal had quashed for violation of natural justice, showing scant application of mind and a mechanical reaffirmation of prior conclusions. Given the failure to comply with the Tribunal's specific procedural directions, the Court held that the assessment was vitiated by breach of natural justice and lack of proper adjudicatory application of mind and therefore annulled the assessment for AY 2011-12. The Court clarified that annulment was for procedural reasons only and did not amount to an acceptance on merits; the assessing authorities and appellate forum may examine subsequent events in relation to the other years as appropriate.

Assessment for AY 2011-12 annulled for procedural infirmity and breach of natural justice; annulment is without prejudice to merits being examined by appropriate authorities.

Stay of demand subject to deposit condition - payment as condition for stay - Challenge to the stay order in respect of assessments for AY 2009-10 and 2010-11 which required the assessee to remit 10% of the demand - HELD THAT: - The Court considered the stay order made by the Assistant Commissioner of Income Tax (Appeals) pursuant to earlier proceedings and the petitioner's challenge to the condition directing payment of 10% of the disputed demand. Having regard to the circumstances and the officer's exercise of discretion, the Court found no ground to interfere with the direction to remit 10% prior to the stipulated date. The Court further directed that any refund arising from the annulment in AY 2011-12 shall be taken into account when computing the balance payable under the demands for AY 2009-10 and 2010-11.

Direction to remit 10% of the demand as condition of stay for AY 2009-10 and 2010-11 is upheld; petition challenging that direction dismissed.

Final Conclusion: The writ petition challenging the de novo assessment for AY 2011-12 is allowed and the assessment is annulled for failure to comply with the Tribunal's directions and breach of natural justice; the challenge to the stay condition for AY 2009-10 and 2010-11 is dismissed and the requirement to remit 10% is confirmed. Any refund arising from AY 2011-12 shall be adjusted against the outstanding demand for the earlier years.

Bogus purchases - addition under section 68 - concurrent findings of fact - restriction of addition to a percentage - appellate interference - distinguishing precedent on search-based evidence

Bogus purchases - addition under section 68 - restriction of addition to a percentage - concurrent findings of fact - Whether the Tribunal and the CIT(A) were justified in restricting the addition made on account of alleged bogus purchases to 10% of the alleged purchases instead of treating the entire purchases as income. - HELD THAT: - The Assessing Officer made the addition solely on the basis of information received from the Maharashtra Sales Tax Department without conducting any internal inquiry or producing independent corroborative material to establish that the assessee benefited from bogus billing. The assessee produced documentary evidence before the CIT(A) (audit report, ledger accounts) to support the genuineness of purchases. The CIT(A) and the Tribunal recorded concurrent findings that while the billing parties' involvement in bogus bills was not ruled out, there was insufficient dependable material to treat the entire purchases as bogus. Having regard to the material on record, including the assessee's gross profit ratio of 3.98% for the year, the appellate authorities exercised their fact-finding power and estimated the addition at 10% of the alleged bogus purchases. The High Court distinguished the decision relied upon by Revenue (N. K. Industries Ltd.) on the ground that that case involved search-based material which exposed falsity of entries - a factual matrix absent here. In these circumstances, there was no legal basis for interference with the concurrent factual conclusions reached by the CIT(A) and the Tribunal. [Paras 5, 6, 7]

The concurrent finding of the CIT(A) and the Tribunal sustaining the addition limited to 10% of the alleged bogus purchases is upheld; no substantial question of law arises warranting interference.

Final Conclusion: The Revenue's appeal is dismissed; the High Court upholds the Tribunal's and CIT(A)'s concurrent factual conclusion restricting the addition on account of alleged bogus purchases to 10% and finds no error of law requiring interference.

Condonation of delay in filing Form 10B - Claim of exemption under section 11 - Applicability of CBDT Circular No. 10/2019 for AY 2016-17 - Requirement to file Form 10B with return of income and effect of subsequent filing - Admission of additional grounds under Rule 11 of ITAT Rules - Condonation of delay in filing appeal saved by Supreme Court decision during National Lockdown

Condonation of delay in filing Form 10B - Applicability of CBDT Circular No. 10/2019 for AY 2016-17 - Claim of exemption under section 11 - Requirement to file Form 10B with return of income and effect of subsequent filing - Denial of exemption under section 11 for not filing Form 10B with the original return where Form 10B was obtained before filing but furnished online subsequently. - HELD THAT: - The assessee obtained the audit report in Form 10B prior to filing the return and, after receiving the CPC defect communication, uploaded the Form 10B and filed a corrected return. CBDT Circular No. 10/2019 condones delay in filing Form 10B for assessment years prior to A.Y. 2018-19 (including A.Y. 2016-17) where the audit report was obtained before filing the return and furnished subsequently before the due date under section 139. The Tribunal found that the assessee had obtained the audit report before filing the original return and that the subsequent digital upload and corrected return complied with the resolution suggested in the CPC defect notice. The Circular thus applies and is binding on the CPC; the CIT(A) erred in confirming denial of exemption without applying the Circular. [Paras 6, 7]

Delay in filing Form 10B is condoned under CBDT Circular No. 10/2019 and the confirmation of denial of exemption under section 11 is set aside.

Admission of additional grounds under Rule 11 of ITAT Rules - Allowing additional grounds of appeal as preliminary grounds where no fresh examination of facts was required. - HELD THAT: - The assessee sought to introduce additional grounds under Rule 11 by letter; the Revenue did not object to taking up additional grounds Nos. 1 and 2 as preliminary since they required no fresh factual inquiry. The Tribunal accepted and adjudicated those additional grounds on their merits (relating to delayed filing of Form 10B and the CIT(A)'s consideration). [Paras 3, 7]

Additional grounds Nos. 1 and 2 are admitted and allowed.

Condonation of delay in filing appeal saved by Supreme Court decision during National Lockdown - Condonation of 16-day delay in filing the appeal to the Tribunal. - HELD THAT: - The appeal was filed 16 days late. Having heard both parties, the Tribunal held that delay of 16 days is saved by the Supreme Court decision rendered during the National Lockdown imposed on account of the COVID-19 pandemic and accordingly condoned the delay. [Paras 2]

The delay of 16 days in filing the appeal is condoned.

Final Conclusion: The appeal is allowed: the delay in filing the appeal is condoned; additional grounds under Rule 11 admitted and allowed; denial of exemption under section 11 is set aside as the delay in filing Form 10B is condoned by CBDT Circular No. 10/2019 for A.Y. 2016-17.

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - addition under section 68 on unexplained cash credit / share application money - bona fide disclosure and burden of proof in respect of share application money - inapplicability of precedent on distinguishing facts

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - addition under section 68 on unexplained cash credit / share application money - bona fide disclosure and burden of proof in respect of share application money - inapplicability of precedent on distinguishing facts - Whether penalty under section 271(1)(c) could be sustained in respect of the cash-deposit component of share application money added under section 68. - HELD THAT: - The Tribunal examined the material placed before the Assessing Officer and the Commissioner (Appeals) and the submissions of the assessee that identity, genuineness and source were disclosed by way of confirmations, bank passbook, identity proof, source of funds and recorded statements of the directors. The Tribunal found that the case before it did not involve a claim incorrect in law analogous to the precedent relied upon by the Commissioner and that the facts of the precedent were materially dissimilar. The Tribunal further observed that there was no material on record to show conscious or mala fide default by the assessee, or that the assessee had acted other than bona fide; mere non pursuit of the quantum order did not by itself constitute furnishing of inaccurate particulars or concealment attracting section 271(1)(c). In the absence of a finding of deliberate or dishonest conduct, the statutory penal provision could not be invoked. Applying these conclusions to the present facts, the Tribunal held that penalty could not be sustained in respect of the addition made on account of the cash component of share application money. [Paras 5, 6]

Penalty under section 271(1)(c) in respect of the cash-deposit component of the share application money is deleted and the appeal is allowed.

Final Conclusion: The Tribunal set aside the penalty upheld by the Commissioner (Appeals) in relation to the cash-deposit component of the share application money added under section 68, holding that the assessee had made adequate disclosure and there was no conscious or mala fide default; the appeal is allowed.

Validity of reduction of attempts for licensing examination - no vested right to continued number of attempts under superseded regulation - regulatory power under Section 146(2) of the Customs Act - prospective application of new regulations - arbitrariness and Article 14 challenge rejected

Validity of reduction of attempts for licensing examination - no vested right to continued number of attempts under superseded regulation - prospective application of new regulations - regulatory power under Section 146(2) of the Customs Act - arbitrariness and Article 14 challenge rejected - Challenge to Clause 6 of Regulation 6 of CBLR, 2018 which limits an applicant to six attempts for the Customs Broker Licensing examination and the claim of a vested right to seven attempts under CBLR, 2013. - HELD THAT: - The Court accepted the reasoning of the predecessor bench in Manish Rishishwar v. Union of India & Anr., holding that no vested right accrued to the petitioner under the 2013 regulations merely because the earlier regulation permitted a greater number of attempts. The Central Board is empowered by Sub section (2) of Section 146 of the Customs Act to frame regulations, and it may prospectively amend or supersede earlier regulations having regard to prevailing circumstances. The restriction to six attempts in CBLR, 2018 is therefore a permissible exercise of regulatory power and is not arbitrary; the Article 14 challenge alleging arbitrariness was rejected. The Court further observed that the 2013 regulation prescribed a maximum period (seven years) whereas the 2018 regulation prescribes a maximum number of attempts (six), and that the 2018 regulation in fact affords temporal flexibility since the six attempts need not be confined to the earlier seven year window. Having not passed the examinations when the 2013 regulations were in force, the petitioner cannot claim an accrued or vested entitlement to the regime that was superseded, and the 2018 regulations apply prospectively. [Paras 10, 11, 12, 13, 14]

The challenge to Clause 6 of Regulation 6 of CBLR, 2018 is dismissed; the reduction to six attempts is valid and does not confer any protected vested right under the superseded 2013 regulations.

Speculative challenge to prospective examination notification - maintainability and timing of petition - Maintainability of the petition filed on the eve of the application window and seeking permission for a speculative seventh attempt. - HELD THAT: - The Court noted that the petitioner had participated in multiple examinations under CBLR, 2018 and had not earlier challenged the regulation. The notification inviting applications issued on 24th August, 2022 with applications to be filed from 18th October, 2022, and the writ petition was filed immediately prior to that date. The petition was therefore treated as a speculative attempt to secure permission to undertake a prospective seventh attempt, lacking a fresh legal basis beyond reliance on a previously rejected contention. In light of the binding precedent of the predecessor Bench and the factual timing, the petition is not maintainable. [Paras 14, 15, 16]

The writ petition and the pending application are dismissed as speculative and untenable in view of the precedent and the facts.

Final Conclusion: The petition challenging Clause 6 of Regulation 6 of CBLR, 2018 (limiting attempts to six) and the pending interim application are dismissed; the 2018 regulations are upheld as a valid, prospective exercise of regulatory power and no vested right to seven attempts under the 2013 regulations was found to have accrued to the petitioner.

Revocation of courier registration - forfeiture of security deposit - imposition of penalty under the Regulations - vicarious liability of principal for acts of its employee - mis-declaration and benami import to evade statutory requirements - breach of Regulation 12(1) obligations of authorised courier - power to revoke and forfeit under Regulation 13 - power to impose penalty under Regulation 14

Breach of Regulation 12(1) obligations of authorised courier - mis-declaration and benami import to evade statutory requirements - Whether the appellant violated Regulation 12(1)(i), (iii), (iv), (v), (vii) and (x) of the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 by filing 37 courier bills of entry with mis-declared description and wrong consignee/consignor details. - HELD THAT: - The Tribunal accepted the findings of the Commissioner that the 37 courier bills of entry declared household goods though the consignments were commercial food supplements and ladies suits imported without IEC and FSSAI clearance. The recorded statements of the Assistant Manager who filed the bills, of Shri Mukesh Rana and of Shri Anmol Krishna Murthy are consistent: the real owner arranged import through false consignor/consignee details supplied by the appellant's employee; higher-than-usual clearance charges were paid; and delivery was to be made to the mastermind rather than the named consignees. The names and KYC details of the purported consignors/consignees were misused and the appellant, being the authorised courier required to obtain authorisations, verify identity and exercise due diligence, facilitated circumvention of statutory import requirements. On these facts the Tribunal found that the appellant failed to obtain/verify authorisations, did not advise compliance with law, withheld/withheld correct information from assessing officers and generally breached the due diligence obligations in Regulation 12(1). [Paras 20, 21, 22, 23, 24]

Findings that the appellant violated Regulation 12(1)(i), (iii), (iv), (v), (vii) and (x) are upheld.

Vicarious liability of principal for acts of its employee - revocation of courier registration - Whether the appellant can be absolved of responsibility for the misconduct because the offences were carried out by its employee and whether revocation of registration under Regulation 13 was justified. - HELD THAT: - The Tribunal rejected the appellant's contention that mere misconduct by an employee absolves the licensed courier. Licences are granted to the courier entity which must supervise and is responsible for acts performed by its employees when acting on behalf of the appellant. Moreover, the proprietor himself admitted knowledge that commercial goods were part of the Master Airway Bill and that the appellant provided the names used to import the consignments. The Tribunal distinguished Aramex on its facts where lack of knowledge was not in dispute. Given the appellant's participation in selecting consignor/consignee details and in filing bills of entry, revocation under Regulation 13 was held to be warranted. [Paras 16, 17, 26]

The appellant is liable for actions of its employee and revocation of registration under Regulation 13 is proper.

Forfeiture of security deposit - power to revoke and forfeit under Regulation 13 - Whether forfeiture of the security deposit was permissible under the Regulations in the present case. - HELD THAT: - The Tribunal noted that Regulation 13 authorises the Commissioner to revoke registration and to order forfeiture of security for failure to comply with the Regulations or bond conditions. The bond under Regulation 11 required compliance with statutory provisions; having upheld violations of several Regulations, the Tribunal found no error in the Commissioner forfeiting the security deposited by the appellant. [Paras 25, 26]

Forfeiture of the security deposit in terms of Regulation 13 is sustained.

Imposition of penalty under the Regulations - power to impose penalty under Regulation 14 - Whether imposition of penalty under Regulation 14 was justified for the contraventions found. - HELD THAT: - Regulation 14 permits imposition of penalty for contraventions of the Regulations. Having concluded that the appellant actively violated multiple Regulation 12(1) obligations and facilitated mis-declaration and benami imports, the Tribunal held that the Commissioner was justified in imposing the prescribed penalty. The Tribunal found no infirmity in the exercise of the penalty power on the facts of the case. [Paras 25, 27]

Penalty under Regulation 14 is justified and is upheld.

Final Conclusion: The appeal is rejected. The Tribunal upholds the finding that the appellant violated multiple obligations under Regulation 12(1), and affirms revocation of registration, forfeiture of security and imposition of penalty by the Commissioner; no interference is called for with the impugned order.

Condonation of delay - remand for fresh adjudication on merits - treatment of limitation when remitting for merits - early hearing application - opportunity of hearing to the appellant

Early hearing application - Miscellaneous Application for early hearing was allowed and the appeal was taken up for hearing. - HELD THAT: - The Tribunal recorded absence of the appellant at the listed hearings but noted the early hearing application had been filed; with the consent of the authorised representative for the Department the Miscellaneous Application for early hearing was allowed and the appeal was taken up for hearing despite non-appearance of the appellant. [Paras 1]

Miscellaneous Application for early hearing allowed and appeal taken up for hearing.

Condonation of delay - Delay in filing the first appeal was condoned to the extent of two days. - HELD THAT: - The Tribunal examined the dates recorded in the file. While the Commissioner(Appeals) treated the date of communication as 11.05.2021 and concluded a longer delay, the Tribunal found that even if 11.05.2021 is treated as the date of receipt, the net delay was only two days and therefore condoned that delay. The Tribunal observed uncertainty in the lower authority's calculation and expressly condoned the short delay to enable adjudication on merits. [Paras 4]

Delay of two days condoned.

Remand for fresh adjudication on merits - treatment of limitation when remitting for merits - opportunity of hearing to the appellant - The appeal was remitted to the Commissioner(Appeals) for fresh decision on merits with direction to grant the appellant a reasonable opportunity of hearing; limitation aspect to remain unvisited. - HELD THAT: - Noting that the Commissioner(Appeals) rejected the appeal as time barred without deciding on merits, the Tribunal remitted the matter for de novo consideration on merits and directed that the Commissioner(Appeals) decide the appeal afresh without further re-opening the limitation issue. Both parties were left free to place evidence, and the appellant was to be given a reasonable opportunity of hearing. All other issues were kept open for adjudication by the Commissioner(Appeals). [Paras 2, 4]

Appeal allowed by remand to the Commissioner(Appeals) for fresh decision on merits; appellant to be given reasonable opportunity of hearing.

Final Conclusion: The Miscellaneous Application for early hearing was allowed and the appeal was taken up; the Tribunal condoned a two day delay and remitted the appeal to the Commissioner(Appeals) for fresh adjudication on merits with liberty to both sides to place evidence and with a direction to grant the appellant a reasonable opportunity of hearing.

Limitation - date of communication - time barred appeal - appeal preferred against the impugned communication - remand for fresh decision on merits

Date of communication - limitation - appeal preferred against the impugned communication - remand for fresh decision on merits - Whether the Commissioner (Appeals) was correct in dismissing the appeal as time barred instead of deciding it on the basis of the letter dated 03.05.2018 (communicated on 10.05.2018). - HELD THAT: - The appeal form (CA 1) identifies the impugned communication as the letter dated 03.05.2018 and records the date of communication as 10.05.2018. Where an appeal is framed against a specific communication and the date of communication is stated in the appeal, the limitation period must be reckoned from that communicated date in relation to the impugned letter. The Commissioner (Appeals) treated earlier departmental letters dated 11.01.2016 and 01.08.2016 as the operative orders and dismissed the appeal as filed beyond 90 days. Given that the appeal was expressly against the 03.05.2018 letter and the appeal form records 10.05.2018 as the date of communication, the appeal was not time barred on that basis. Consequently the dismissal on the ground of limitation was not proper. The matter is therefore remanded for the Commissioner (Appeals) to decide the appeal on merits treating the letter dated 03.05.2018 as the impugned communication; the Commissioner (Appeals) remains free to consider facts and earlier correspondence (including the letters dated 11.01.2016 and 01.08.2016) while adjudicating the appeal on merits and to consider all related proceedings.

Impugned order setting aside; matter remanded to the Commissioner (Appeals) to decide the appeal on merits treating the letter dated 03.05.2018 (communicated on 10.05.2018) as the impugned communication.

Final Conclusion: The order dismissing the appeal as time barred is set aside and the matter is remanded to the Commissioner (Appeals) to decide the appeal on merits treating the letter dated 03.05.2018 (communicated on 10.05.2018) as the impugned communication; the Commissioner (Appeals) may consider earlier letters and all proceedings related to the case.

Order XII Rule 6 of the Code of Civil Procedure - judgment on admissions - discretionary exercise of summary decree jurisdiction - genuineness of instrument / sham transaction - family company / quasi-partnership doctrine - lifting the corporate veil

Order XII Rule 6 of the Code of Civil Procedure - judgment on admissions - discretionary exercise of summary decree jurisdiction - Application under Order XII Rule 6 seeking decree of possession on the basis of admissions - HELD THAT: - The Court examined whether there were clear, unambiguous and unconditional admissions by the defendant which would justify a decree without trial. Relying on the established principle that Order XII Rule 6 is an enabling, discretionary provision and that a judgment on admission permanently denies the defendant a trial, the Court found that the necessary categorical admission was absent. Relevant factors included inconsistencies in accounting entries, absence of evidence of payment of the contractual rent at the agreed rate, and conflicting pleadings which raised triable issues. In view of these factual discrepancies and the settled law that summary relief under Order XII Rule 6 should be granted only on clear admissions, the Court declined to exercise the discretion to pass a judgment on admissions. [Paras 13, 30, 31]

Application under Order XII Rule 6 dismissed for want of a clear, categorical admission justifying a decree without trial.

Genuineness of instrument / sham transaction - judgment on admissions - Whether the Lease Agreement dated 1st April, 2007 is genuine and whether a landlord-tenant relationship subsists - HELD THAT: - The Court observed that the Memorandum of Understanding dated 20th December, 2007, executed soon after the Lease Agreement, records that the leases were entered into primarily to obtain financial loans and that no other financial liabilities in respect of rent were intended to be imposed. The accounting records placed on file did not demonstrate payment of rent at the contractual rate and the defendant produced the MoU and other material creating a credible triable challenge to the genuineness of the lease. Given these material disputes of fact, the Court held that the issue of the genuineness of the Lease Agreement and existence of landlord-tenant relationship cannot be resolved on an application under Order XII Rule 6 and must be determined at trial. [Paras 15, 16, 17, 18]

Issue not finally adjudicated; genuineness of the lease and existence of landlord-tenant relationship to be tried by the Court at trial.

Family company / quasi-partnership doctrine - lifting the corporate veil - Whether the plaintiff company is a family-owned/quasi partnership vehicle and whether its corporate character should be examined in the suit - HELD THAT: - The Court noted documentary and pleading material indicating that the plaintiff company was incorporated and functioned as a family asset holding entity, that major shareholding and directorships remained within the family, and that related proceedings before the NCLT concerning transfer of shares and alleged fraud were pending. Applying the principles that permit scrutiny of the true character of a company in appropriate cases (including the concept of quasi partnership and limited lifting of the corporate veil), the Court took a prima facie view that the plaintiff may be a family company and that these questions bear directly on title and entitlement to possession. These matters involve contested facts and external proceedings and therefore require full trial adjudication. [Paras 21, 22, 26, 28]

Prima facie conclusion that issues of the plaintiff's character as a family/quasi partnership company and related transfer disputes are triable; these matters to be examined at trial and are not amenable to determination under Order XII Rule 6.

Final Conclusion: The application under Order XII Rule 6 for a decree of possession is dismissed because there are material and triable disputes-including the genuineness of the lease and the true character of the plaintiff as a family/quasi partnership company-which preclude summary adjudication; those issues will have to be adjudicated at trial.

Interference with grant of bail - exercise of supervisory jurisdiction in Special Leave Petition - exemplary costs for filing frivolous or misconceived litigation - recovery of costs from the salary of a public officer - distribution of court-awarded costs to National Legal Services Authority and Mediation and Conciliation Project Committee

Interference with grant of bail - exercise of supervisory jurisdiction in Special Leave Petition - Whether the Special Leave Petition should be entertained to interfere with the bail granted to the respondent who is suffering from malignancy and cancer. - HELD THAT: - The Court, having regard to the peculiar facts and the respondent's serious medical condition and the fact that he had already been released on bail, declined to interfere with the bail order by entertaining the Special Leave Petition. The Court treated the respondent's illness and his release on bail as determinative in exercising its supervisory jurisdiction under the Special Leave Petition and therefore dismissed the petition.

Special Leave Petition dismissed; no interference with the bail granted to the respondent.

Exemplary costs for filing frivolous or misconceived litigation - recovery of costs from the salary of a public officer - distribution of court-awarded costs to National Legal Services Authority and Mediation and Conciliation Project Committee - Whether exemplary costs should be imposed on the Department/officer for filing the Special Leave Petition and the manner of recovery and distribution of such costs. - HELD THAT: - The Court found that the Department ought not to have filed the Special Leave Petition, thereby wasting court time and resources. The petition was dismissed with exemplary costs fixed at Rs.1,00,000/-, to be borne by the concerned officer who granted permission to file the petition. The costs were ordered to be recovered from that officer's salary and deposited by the Department in the Registry within four weeks. On deposit, the Court directed that Rs.50,000/- be transferred to the National Legal Services Authority, New Delhi, and Rs.50,000/- to the Mediation and Conciliation Project Committee, Supreme Court of India.

Exemplary costs of Rs.1,00,000/- imposed on the concerned officer; to be recovered from salary, deposited within four weeks, and split equally between the National Legal Services Authority and the Mediation and Conciliation Project Committee.

Final Conclusion: The Special Leave Petition was dismissed; the bail granted to the respondent was not interfered with in view of his serious illness and release on bail. The Department was ordered to pay exemplary costs of Rs.1,00,000/-, recoverable from the salary of the officer who authorised filing the petition, with the amount to be deposited in the Court Registry and divided equally between the National Legal Services Authority and the Mediation and Conciliation Project Committee.

Reasonable belief - criminal activity (alleged vs proved) - provisional attachment under Section 5 of the PMLA - adjudicating authority's power under Section 8 of the PMLA - judicial review of satisfaction recorded by investigating authority - forum non conveniens and maintainability of writ under Article 226 - alternative statutory remedy

Criminal activity (alleged vs proved) - reasonable belief - Scope of 'criminal activity' and whether initiation of PMLA proceedings requires a prior judicial finding of guilt for the scheduled offence - HELD THAT: - The Court held that the phrase 'criminal activity' in Section 2(u) of the PMLA denotes alleged involvement in offences punishable under law and does not mean proof of guilt by a court. The legislative scheme contemplates initiation of PMLA action on the basis of a reasonable belief formed by the authority, not on proof of commission of the scheduled offence. This interpretation harmonises Sections 3, 5 and 6 and permits preventive action under Section 5 to protect proceeds of crime. Consequently the investigating authority had jurisdiction to initiate the PMLA proceeding in the facts of the case. [Paras 13, 14, 15]

Initiation of proceedings under the PMLA does not require a prior judicial adjudication of the scheduled offence; alleged criminal activity and reasonable belief suffice for jurisdiction to act.

Provisional attachment under Section 5 of the PMLA - adjudicating authority's power under Section 8 of the PMLA - judicial review of satisfaction recorded by investigating authority - Whether the provisional attachment order passed under Section 5(1) was susceptible to interference by the High Court and whether there was material supporting the authority's subjective satisfaction - HELD THAT: - The Court observed that Section 5 permits provisional attachment where the authority has a written subjective satisfaction, based on material in its possession, that the property is proceeds of crime and likely to be concealed or dealt with so as to frustrate confiscation. While the content of the material must exist, the subjective satisfaction is for the authority and the sufficiency of those grounds is primarily for the adjudicating authority to examine under Section 8. The Court declined to substitute its view for the investigating authority's satisfaction at the interim stage and emphasised that the adjudicating authority can probe whether the twin conditions of clauses (a) and (b) of Section 5(1) were met and whether urgency existed. [Paras 17, 18, 19, 20, 21]

The High Court will not interfere with the provisional attachment at this stage; the adjudicating authority must examine the material basis and correctness of the attachment under Section 8.

Alternative statutory remedy - forum non conveniens and maintainability of writ under Article 226 - Maintainability of the writ petition in view of alternative remedies and plea of forum non conveniens - HELD THAT: - The Court held that when jurisdiction of the authority itself is in question, alternative statutory remedies (such as adjudication under Section 8) are not an officious bar to writ relief under Article 226. The State's plea of forum non conveniens, raised by a formal party which did not demonstrate specific inconvenience, was rejected. The Court found that cause of action in part arose within its jurisdiction and that the balance of convenience did not justify dismissal on forum grounds. [Paras 10, 11, 12]

Writ petition is maintainable; alternative statutory remedies do not preclude judicial review and the plea of forum non conveniens is rejected.

Final Conclusion: The writ petition is dismissed on merits: the Court upholds the investigating authority's jurisdiction to initiate proceedings under the PMLA on the basis of alleged criminal activity and reasonable belief, refuses to interfere with the provisional attachment at this stage, and leaves the petitioners free to raise all objections before the adjudicating authority under Section 8 and thereafter by the statutory appellate remedies.

Competence of the Assistant Director to file complaint under the PMLA - authority for the purposes of this Act - money laundering as a continuing offence - proceeds of crime - liability under PMLA despite prior commission of predicate offence - cognizance and prosecution under the PMLA where laundering occurs after inclusion of predicate offence - dispensation of personal attendance of accused at trial - bond under Cr.P.C. for non arrested accused

Competence of the Assistant Director to file complaint under the PMLA - authority for the purposes of this Act - Assistant Director's competence to file the impugned complaint under the PMLA - HELD THAT: - The Court held that Section 48(c) of the PMLA classifies the Assistant Director as an "authority for the purposes of this Act", and therefore no further special authorisation is required for the Assistant Director to lay a complaint and for the Special Court to take cognizance under Section 44(b) of the PMLA. The statutory classification itself confers competence on the Assistant Director to file the complaint impugned in this petition. [Paras 6]

The Assistant Director was competent to file the complaint; no additional authorisation was necessary.

Money laundering as a continuing offence - proceeds of crime - liability under PMLA despite prior commission of predicate offence - cognizance and prosecution under the PMLA where laundering occurs after inclusion of predicate offence - Whether prosecution under the PMLA is barred because the predicate offence (Section 420 IPC) was committed or registered before it was notified as a scheduled offence - HELD THAT: - Relying on the Supreme Court's reasoning in Vijay Madanlal Choudhary, the Court observed that money laundering consists of the processes or activities connected with the proceeds of crime and may be a continuing offence. The determinative date for PMLA liability is the date on which a person indulges in the process or activity connected with such proceeds of crime. Consequently, even if the predicate offence was committed before its inclusion as a scheduled offence, if dealing with the proceeds of crime continued or occurred after the predicate offence was notified as scheduled (and after PMLA applicability), prosecution under Sections 3 r/w 4 of the PMLA is maintainable. In the present matter the Enforcement Directorate registered its case after Section 420 IPC had been included as a scheduled offence, and thus prosecution under the PMLA was not barred. [Paras 7, 8, 9]

Inclusion of Section 420 IPC as a scheduled offence after the date of the predicate act did not bar PMLA prosecution where laundering activity occurred after such inclusion; the ED's prosecution was maintainable.

Dispensation of personal attendance of accused at trial - bond under Cr.P.C. for non arrested accused - Relaxation of personal attendance for one accused and procedural directions regarding security bond for the accused not under arrest - HELD THAT: - The Court, exercising its discretion, directed that the accused Manjula need be personally present before the trial Court only for answering charges, for questioning under Section 313 Cr.P.C., and on the date of judgment; for other hearings the trial Court may entertain applications under Section 317 Cr.P.C. liberally and dispense with her presence, while insisting on her presence for specific identification hearings if the Public Prosecutor so notifies. Further, if the petitioners were not arrested or released on anticipatory bail, the trial Judge was directed to obtain a bond under Section 88 Cr.P.C. for each of them with two sureties. [Paras 11, 12]

Manjula's attendance dispensed with except for specified stages; trial Court to consider Section 317 Cr.P.C. applications liberally; bond under Section 88 Cr.P.C. to be obtained where applicable.

Final Conclusion: The criminal petition to quash C.C.No.14 of 2018 is dismissed. The Assistant Director was competent to file the complaint and prosecution under the PMLA is maintainable notwithstanding that the predicate offence was committed before its inclusion as a scheduled offence, subject to the temporal requirement that laundering activity occurred after such inclusion; directions given regarding attendance of one accused and obtaining bonds are to be followed.

Extended period of limitation under Section 73(1) of the Finance Act, 1994 - suppression of facts and wilful mis-statement - bona fide belief - service tax liability of providers of Business Auxiliary Services/commission agents - penalty and invocation of extended limitation where mens rea to evade tax is absent

Extended period of limitation under Section 73(1) of the Finance Act, 1994 - suppression of facts and wilful mis-statement - mens rea to evade tax - service tax liability of Business Auxiliary Services - Whether the proviso to Section 73(1) could be invoked to extend the period of limitation on the ground of suppression, fraud, collusion or wilful misstatement in respect of commission received for providing Business Auxiliary Services. - HELD THAT: - The Tribunal analysed the proviso to Section 73(1) and the settled Supreme Court jurisprudence that the words 'suppression', 'mis-statement', 'fraud' and 'collusion' in the proviso are to be construed strictly and require a deliberate, wilful intent to evade duty. Mere omission or incorrect statement without knowledge that it is incorrect does not amount to suppression; the Revenue bears the burden of proving suppression with intent to evade. Applying these principles, the Tribunal found that appellants honestly believed their services were not liable to service tax (a confusion that existed prior to the larger Bench decision in Pagariya Auto Center), did not collect service tax from the recipient, and disclosed the commissions in income-tax returns. Those facts, coupled with the absence of registration or ST-3 filings being explained by the bona fide belief, demonstrate lack of mens rea to evade payment. The Tribunal therefore concluded that the requirements for invoking the extended five-year period were not satisfied and that the extended period was wrongly invoked by the department. [Paras 7, 8, 9, 10]

Invocation of the extended period under the proviso to Section 73(1) is unsustainable; demands for periods beyond the normal limitation are set aside.

Normal period of limitation - confirmation of demand for the normal period - Whether any demand for the normal limitation period survives after setting aside demands based on the extended period. - HELD THAT: - Having held that the extended period could not be invoked, the Tribunal clarified that any demand confined to the normal limitation period remains unaffected. The adjudicating authorities' confirmations insofar as they relate to the extended period are set aside, while demands relating to the normal period, if any, stand confirmed. [Paras 11]

Orders set aside insofar as they relate to demands for the extended period; demands for the normal period (if any) are confirmed.

Final Conclusion: Appeals allowed to the extent that demands founded on invocation of the extended period under Section 73(1) are quashed for lack of wilful suppression or intent to evade; demands confined to the normal period remain operative and are confirmed where applicable.

Refund of service tax paid on ocean freight - Cenvat credit - cash refund under Section 142(3) read with Section 11B - remand for fresh consideration - illegality of levy of service tax on ocean freight - reference to Larger Bench

Refund of service tax paid on ocean freight - Cenvat credit - cash refund under Section 142(3) read with Section 11B - illegality of levy of service tax on ocean freight - Whether the appellant's claim for refund of service tax paid on ocean freight, asserted on the basis that Cenvat credit was available and therefore a cash refund is claimable under Section 142(3) read with Section 11B, should be adjudicated by the original authority or remanded for fresh consideration. - HELD THAT: - The Tribunal declined to adjudicate the cash-refund claim on the merits and followed an earlier Division Bench order in Galaxy Poly Plast Industries which had remanded a similar claim for reconsideration. The Division Bench had referred the broader question (including the correctness of treating Cenvat credit and cash refund under Section 142(3) read with Section 11B) to a Larger Bench in the Bosch Electrical Drive matter. Additionally, the Tribunal noted that the earlier authorities had not examined the contention that the levy of service tax on ocean freight was itself illegal (reliance placed on a High Court judgment in SAL Steels), and that such judgment was not before the lower authorities. In view of these circumstances and the pending reference to the Larger Bench, the Tribunal considered it appropriate to remit the matter to the original authority for fresh examination rather than decide the refund claim in the present proceedings. [Paras 3]

Matter remanded to the original authority for fresh consideration of the refund claim relating to service tax on ocean freight.

Final Conclusion: Following precedent and because the levy and related refund issues require fresh examination (and in view of a pending Larger Bench reference), the Tribunal remanded the appellant's refund claim of service tax on ocean freight to the original authority for reconsideration.

Cross-sectoral utilization of CENVAT credit - no requirement of one-to-one correlation between input credit and output tax - inter-sectoral CENVAT credit on goods and services - permissibility of cross-utilisation between excise duty and service tax - Rule 3(1) of the CENVAT Credit Rules, 2004 - CENVAT credit common pool - CBEC clarification dated 30-03-2010 on CENVAT utilisation

Cross-sectoral utilization of CENVAT credit - no requirement of one-to-one correlation between input credit and output tax - Rule 3(1) of the CENVAT Credit Rules, 2004 - CENVAT credit common pool - Whether CENVAT credit availed by a manufacturer on inputs, capital goods and input services could be utilized for payment of Service Tax on output services provided by the assessee, or whether such utilisation is impermissible for lack of one-to-one correlation. - HELD THAT: - The Tribunal held that Rule 3(1) of the CENVAT Credit Rules, 2004 permits a manufacturer to take credit of service tax paid on input services and does not impose a requirement of one-to-one correlation between the credit availed and the specific output against which it is utilised. The Finance Minister's Budget speech of 8 July 2004, which announced extension of credit across goods and services, was treated as an aid to statutory interpretation to ascertain legislative intent. The decision observes that the CENVAT scheme contemplates a common pool for credits available to manufacturers and service providers and that the CBEC clarification dated 30-03-2010 recognises cross-utilisation for payment of excise duty and/or service tax. Prior authorities relied upon by the appellant, including K.P. Verghese , the Tribunal decision in Tally Solutions Pvt. Ltd. , and S.S. Engineers , were noted as supporting the principle that cross-utilisation is permissible and that absence of one-to-one nexus is not a ground to deny credit. Applying these principles to the facts for the period October 2011 to March 2012, the Tribunal concluded that denial and recovery of the credit and imposition of penalty were unsustainable. [Paras 6, 7, 8]

Impugned orders disallowing CENVAT credit and imposing penalty set aside; appeal allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeal, holding that cross-sectoral utilisation of CENVAT credit is permissible under Rule 3(1) of the CENVAT Credit Rules, 2004 and that there is no statutory requirement of one-to-one correlation between the credit availed and the output against which it is used; impugned orders of disallowance and penalty were set aside for the period October 2011 to March 2012.

Transaction value under Section 4(1)(a) - valuation of non-sale clearances under Section 4(1)(b) - Rule 4 of the Central Excise Valuation Rules (transaction value method) - Rule 8 of the Central Excise Valuation Rules (valuation for captively consumed goods) - sequential application of valuation rules - amendment to Rule 8 w.e.f. 01.12.2013 (narrowing of applicability) - application of the Gunapradhan principle in construing subordinate rules

Transaction value under Section 4(1)(a) - Rule 4 of the Central Excise Valuation Rules (transaction value method) - Rule 8 of the Central Excise Valuation Rules (valuation for captively consumed goods) - sequential application of valuation rules - Valuation method for goods cleared to the assessee's sister units for the period up to November, 2013 - HELD THAT: - The Tribunal examined whether clearances of POY, Polyester Chips and FDY to the appellant's sister units for the period August, 2009 to November, 2013 ought to be valued under Rule 8 (applying a percentage of cost) or under Rule 4 as transaction value in terms of Section 4(1)(a). The Tribunal applied settled precedent, including its own earlier decisions and the Supreme Court's endorsement, holding that Rule 8 (as it stood prior to 01.12.2013) is confined to situations where the excisable goods are not sold and are wholly captively consumed or used on behalf of the assessee in manufacture. Where part of production is sold to independent buyers and transaction value is available, the transaction value applicable to unrelated sales should be adopted for valuation of goods transferred to other units. The Tribunal further observed that the valuation rules should be read sequentially and in harmony with Section 4; applying Rule 4 where its conditions are met yields a value consistent with the parent statute and avoids an unreasonable, artificial valuation under Rule 8. The amendment to Rule 8 effective 01.12.2013, which broadened Rule 8 prospectively, cannot be applied retrospectively to the period in dispute. Applying these principles to the facts, and following the tribunal's earlier final order in the appellant's own case, the Tribunal held that the assessee's adopted transaction value under Rule 4 deserves acceptance for the period up to November, 2013. [Paras 4, 5, 9, 10]

For the period August, 2009 to November, 2013 the valuation of goods cleared to the appellant's sister units is to be determined under Rule 4 (transaction value) and not under Rule 8; the impugned order is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that for the period up to November, 2013 the assessee was entitled to valuation under Rule 4 (transaction value) for goods transferred to sister units; Rule 8 (cost based valuation) did not apply to part sales with available transaction value and the amendment to Rule 8 w.e.f. 01.12.2013 is not retrospective.

CENVAT credit - Input Service Distributor - Rule 7 of the CENVAT Credit Rules, 2004 - outsourced/contract manufacturing unit - pro rata distribution on turnover - retrospective effect of rule amendment

CENVAT credit - Input Service Distributor - Rule 7 of the CENVAT Credit Rules, 2004 - outsourced/contract manufacturing unit - pro rata distribution on turnover - retrospective effect of rule amendment - Entitlement of the appellant to CENVAT credit distributed by Parle for the period prior to 01.04.2016 - HELD THAT: - The Tribunal considered rule 2(m) and rule 7 of the CENVAT Rules as they stood prior to and after substitution w.e.f. 01.04.2016 and applied the Larger Bench decision in M/s. Krishna Food Products. The Larger Bench noted that rule 7 allowed distribution of credit to "manufacturing units" and did not restrict the phrase to "its own manufacturing units", and that Parle's office, registered as an Input Service Distributor, distributed credit pro rata on the basis of turnover to its own plants and to contract manufacturing units producing for Parle. The Larger Bench further observed that the post-01.04.2016 amendments merely rectified a lacuna and thus have retrospective effect. Relying on those findings, the Tribunal concluded that the Commissioner (Appeals) was not justified in denying CENVAT credit distributed by Parle to the appellant for the period prior to 01.04.2016. [Paras 16, 17]

The denial of CENVAT credit to the appellant for the period prior to 01.04.2016 was set aside and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal insofar as the Commissioner (Appeals) denied CENVAT credit distributed by Parle for the period prior to 01.04.2016, setting aside that portion of the impugned order.

Dismissal for default under Rule 20 of the CESTAT (Procedure) Rules, 1982 - non-prosecution - discretion to dismiss or decide on merits - refusal to admit appeal under Section 35B(1) of the Central Excise Act, 1944 where disputed amount is below threshold - maintainability of appeal where disputed amount is less than threshold

Dismissal for default under Rule 20 of the CESTAT (Procedure) Rules, 1982 - non-prosecution - Appeal dismissed for non-prosecution under Rule 20 of the CESTAT (Procedure) Rules, 1982. - HELD THAT: - The Bench recorded that the appellant failed to appear for hearing on multiple listed dates despite service of notice and was earlier granted a last chance. Rule 20 confers discretion on the Tribunal to dismiss an appeal for the appellant's default where the appellant does not appear when the appeal is called on for hearing. Applying that provision and having regard to the repeated non-appearance and the earlier adjournment recorded as a last chance, the Tribunal exercised its discretion to dismiss the appeal for non-prosecution. [Paras 1, 2, 4]

Appeal dismissed for non-prosecution under Rule 20 of the CESTAT (Procedure) Rules, 1982.

Refusal to admit appeal under Section 35B(1) of the Central Excise Act, 1944 where disputed amount is below threshold - maintainability of appeal where disputed amount is less than threshold - Appeal held to be not maintainable and refused admission under Section 35B(1) of the Central Excise Act, 1944 as the disputed amount is below the statutory threshold. - HELD THAT: - The Tribunal found that the value of the disputed amount in the appeal was below the threshold specified in Section 35B(1). The proviso to that section permits the Tribunal in its discretion to refuse to admit appeals where the difference in duty or the penalty does not exceed the prescribed limit. In view of the very petty amount involved and the statutory discretionary power to refuse admission in such cases, the Tribunal concluded that the appeal was not maintainable and proceeded to dismiss it on that ground as well. [Paras 3, 4]

Appeal not maintainable and refused admission under Section 35B(1) of the Central Excise Act, 1944 as the disputed amount is below the threshold limit.

Final Conclusion: The appeal was dismissed in the exercise of the Tribunal's discretion both for non-prosecution under Rule 20 of the CESTAT (Procedure) Rules, 1982 and as not maintainable under Section 35B(1) of the Central Excise Act, 1944 because the disputed amount was below the statutory threshold.

Input service - CENVAT credit - nexus with manufacture - deemed aggregation of registration (Large Tax Paying Unit) - cross-utilisation of CENVAT credit - remand for application of precedent

Input service - CENVAT credit - nexus with manufacture - deemed aggregation of registration (Large Tax Paying Unit) - Whether the credit of service tax paid on rent of lease-hold land used for storage at Pir Pau Pier was admissible as CENVAT credit in relation to manufacture, and whether deemed aggregation as an LTU affects entitlement. - HELD THAT: - The Tribunal noted that the appellant had availed CENVAT credit of tax paid on the rental/lease of land and related storage facilities and had utilized that credit for discharge of duty on cleared goods. The Tribunal observed that the impugned proceedings did not consider the decision of the High Court of Bombay in Deepak Fertilizers which adopts a broad construction of the term input service and recognises services used 'directly or indirectly, in or in relation to' manufacture as eligible for credit. Given that the original authority and first appellate authority did not apply that precedent, and because the facts (including use of the storage facility and accounting treatment) require re-examination in light of the legal position articulated by the High Court and subsequent Tribunal decisions, the Tribunal set aside the impugned order and remanded the matter to the original authority for fresh adjudication applying the said judicial precedents and testing the factual nexus and applicability of deemed aggregation (LTU) principles to the claim. [Paras 6]

Impugned order set aside and matter remanded to the original authority for fresh consideration and decision applying the legal principles in the cited High Court and Tribunal authorities.

Cross-utilisation of CENVAT credit - Whether cross-utilisation of CENVAT credit by a head office for discharge of duties of a separate registered manufacturing premises is permissible. - HELD THAT: - The Tribunal recorded the respondent's contention that cross-utilisation of CENVAT credit, if available to the head office, cannot be used to discharge duties at a separate registered manufacturing premises and noted that this factual-legal contention was not finally adjudicated by the lower authorities in the light of the High Court's ruling. Because the question involves application of legal principles to the specific facts (including accounting and utilisation practices), the Tribunal remanded the issue for fresh adjudication by the original authority to examine whether cross-utilisation is permissible in the appellant's circumstances. [Paras 6]

Issue remanded to the original authority for determination in accordance with applicable precedent and factual verification.

Final Conclusion: The Tribunal set aside the impugned order and remitted the dispute to the original authority for fresh adjudication of the appellant's entitlement to CENVAT credit (including the relevance of deemed aggregation and the permissibility of cross-utilisation), to be decided in light of the High Court of Bombay's decision and related Tribunal precedents.

Condonation of delay in filing appeal - requirement of advising the aggrieved person before setting aside assessment and remitting the matter under Section 76(8) of the DVAT Act - remand to the Assessing Authority for further assessment after setting aside an assessment - power of the Appellate Tribunal to review under Section 76(13) of the DVAT Act

Condonation of delay in filing appeal - Application for condonation of delay in re filing the appeal was allowed. - HELD THAT: - The application sought condonation of a 12 day delay in re filing the appeal. The respondent did not oppose the prayer. The Court recorded the delay and, noting the absence of opposition, exercised its discretion to condone the delay and dispose of the application accordingly. [Paras 2, 3]

Delay of 12 days in re filing the appeal condoned and the condonation application disposed of.

Requirement of advising the aggrieved person before setting aside assessment and remitting the matter under Section 76(8) of the DVAT Act - remand to the Assessing Authority for further assessment - power of the Appellate Tribunal to review under Section 76(13) of the DVAT Act - Appeal dismissed as withdrawn with liberty to seek review before the Tribunal; the Tribunal to determine whether the remand complied with the requirements of Section 76(8). - HELD THAT: - The appellant challenged the Tribunal's directions which set aside impugned assessments but permitted the Assessing Authority to proceed to ascertain alleged loss to the exchequer and to reassess. The appellant contended that before setting aside and remitting, the Tribunal was obliged by Section 76(8) to advise the aggrieved person of the proposed order and offer an opportunity to adduce further evidence. The Court observed there was no material on record affirming the appellant's contention but noted that the appellant could have moved the Tribunal by way of review. The appellant sought and was granted liberty to withdraw the appeal and to file a review application. The Court declined to express any view on the merits and directed that the Tribunal entertain the review and rule whether the procedural pre conditions for remand under Section 76(8) were satisfied. [Paras 9, 10, 12, 13]

Appeal dismissed as withdrawn with liberty to file a review application; Tribunal to consider and rule on whether remand complied with Section 76(8); no opinion expressed by this Court on how the review should be decided.

Final Conclusion: Condonation of the 12 day delay in re filing the appeal was allowed. The appeal was dismissed as withdrawn with liberty to the appellant to move the Tribunal by way of review; the Tribunal is to determine whether the remand effected by it complied with the procedural requirements of Section 76(8) of the DVAT Act, and the High Court has expressed no view on the merits of that question.

Input tax credit - return of goods within 90 days - reversal of input tax credit - turnover exemption on returned goods - application of Section 11(7) of the KVAT Act and Rule 15 of KVAT Rules - judicial review under Section 63 of the KVAT Act

Input tax credit - return of goods within 90 days - reversal of input tax credit - turnover exemption on returned goods - Entitlement of the dealer to claim input tax credit in respect of goods returned to the seller after the 90-day period prescribed under the KVAT Rules, and correctness of the Tribunal's rejection of the dealer's appeal. - HELD THAT: - The Tribunal's finding, adopted by the High Court, is that input tax credit can be availed only against an output tax liability. The KVAT scheme permits adjustment and reversal where goods are returned within 90 days so that the selling dealer obtains a deduction from taxable turnover and the tax collected is refunded. Where the goods are returned after the prescribed 90-day period, the selling dealer loses the benefit of turnover exemption and is not entitled to a refund of tax or reversal of the tax component. Consequentially, the purchaser-dealer cannot avail input tax credit on such returned goods when the seller is not entitled to reverse the tax; the tax paid at purchase cannot be retained as input credit in the event of a return beyond the statutory period. The High Court found no illegality or jurisdictional error in the Tribunal's reasoning and declined to interfere under Section 63 of the KVAT Act.

Claim for input tax credit in respect of goods returned after the 90-day period is disallowed; the Tribunal's rejection of the appeal is affirmed and the revision is dismissed.

Final Conclusion: The High Court affirmed the Tribunal's conclusion that returns made after 90 days do not permit reversal of the seller's tax or confer input tax credit on the purchaser; no interference was warranted and the revision was dismissed.

Pre-deposit of tax in appeals - discretion of tribunal in pre-deposit - non-production of statutory forms (Form C) - availment of concessional rate under Section 8 of the CST Act - cancellation of dealer registration - summary dismissal for lack of substantial question of law

Pre-deposit of tax in appeals - discretion of tribunal in pre-deposit - non-production of statutory forms (Form C) - cancellation of dealer registration - Tribunal's direction requiring 100% pre-deposit of the tax demand - HELD THAT: - The tribunal required the appellant to make 100% pre-deposit of the tax demand on the basis that the demand related to non-production of statutory forms (Form C) for the financial year 2015-16, the purchasers from whom concessional rate was claimed had their registrations cancelled before the commencement of the year, and after more than seven years the appellant had not been able to produce any statutory forms before any authority. The High Court recognised that the extent of pre-deposit is a matter of the tribunal's discretion to be exercised on facts and the prima facie view of merits. The court found that the tribunal recorded sufficient factual and legal reasons - including the long delay in producing forms, the claim of concessional rate under the CST regime without valid registration of vendors, and absence of forms despite lapse of time - to justify the exercise of its discretion directing full pre-deposit, and that there was no basis for the High Court to substitute its own view for the tribunal's considered discretion. [Paras 3, 4, 5]

Tribunal's direction for 100% pre-deposit is upheld as a valid exercise of discretion on the material before it.

Summary dismissal for lack of substantial question of law - Existence of any substantial question of law in the appeal - HELD THAT: - The appellant contended the tribunal was not justified in requiring full pre-deposit. The High Court examined the tribunal's reasons and concluded that the matter did not raise any substantial question of law; the tribunal had addressed factual and legal aspects relevant to pre-deposit and exercised its discretionary power with stated reasons. Consequently, the High Court found no substantial question of law warranting interference and proceeded to dismiss the appeal summarily. [Paras 6, 7]

No substantial question of law is raised; appeal summarily dismissed.

Final Conclusion: The High Court dismissed the appeal summarily, upholding the tribunal's order directing 100% pre-deposit of the tax demand for the financial year 2015-16; consequential civil application is disposed of.

Power of Attorney holder filing complaint - company as complainant represented by authorised person - issuance of process under Section 138 of the Negotiable Instruments Act - requirement of production of original Power of Attorney at cognizance - verification and examination under Section 200 of the Code of Criminal Procedure - irregularity not vitiating proceedings

Power of Attorney holder filing complaint - company as complainant represented by authorised person - requirement of production of original Power of Attorney at cognizance - Validity of a complaint filed and prosecuted by a Power of Attorney holder on behalf of the Bank and whether production of original Power of Attorney is necessary at the stage of taking cognizance. - HELD THAT: - The Court held that when the complainant is a corporate entity the complaint must be in the name of the payee (the company) but may be represented by an authorised employee or an authorised agent. An averment in the complaint that the person presenting and verifying the complaint is an authorised Attorney/representative and annexure of a copy of the Power of Attorney is prima facie sufficient for the Magistrate to take cognizance and issue process. Authorities including A. C. Narayanan, Samrat Shipping, National Small Industries Corporation and M/s TRL Krosaki were applied to the effect that production of the original Power of Attorney at the cognizance stage is not an absolute requirement; challenges to the authority or to the knowledge of the person prosecuting the complaint are matters for trial and cannot justify dismissal of the complaint at the threshold. The ratio in the decisions relied upon by the petitioner to the contrary was held not to represent the correct position of law in the context of a corporate complainant. [Paras 12, 13]

Complaint filed through the Bank's authorised Attorney and supported by a copy of the Power of Attorney was adequate for the Magistrate to take cognizance and issue process; absence of production of original Power of Attorney did not vitiate cognizance.

Verification and examination under Section 200 of the Code of Criminal Procedure - irregularity not vitiating proceedings - Whether failure to record the statement of the complainant's Attorney on oath under Section 200 CrPC vitiates the proceedings. - HELD THAT: - The Court observed that the omission to record the Attorney-holder's statement on oath as contemplated by Section 200 CrPC is an irregularity but does not go to the root of the matter. Reliance was placed on the Court's earlier decision in Rahul Kanwal which held such lapses to be irregularities not vitiating the proceedings. Further, even if the Attorney's statement is excluded, the complaint was supported by sufficient material on record (the cheque, memo of dishonour, demand notice and receipt), which independently justified issuance of process. [Paras 15, 16]

Failure to record the Attorney's statement on oath was an irregularity not vitiating the proceedings; sufficient material existed to issue process even without that statement.

Final Conclusion: The petition challenging the complaint and orders taking cognizance and issuing process was dismissed; the Magistrate was justified in issuing process and the procedural lapses alleged do not warrant quashing of the proceedings.

Maintainability of single complaint for multiple dishonoured cheques - stale cheque and its effect on prosecution under Section 138 of the Negotiable Instruments Act - presentment within period of validity / exclusion of day of presentment - discretionary power to award interim compensation under Section 143-A of the Negotiable Instruments Act - requirement to record reasons when exercising judicial discretion - inadvertent clerical error in order date does not vitiate the order

Maintainability of single complaint for multiple dishonoured cheques - stale cheque and its effect on prosecution under Section 138 of the Negotiable Instruments Act - Whether a single complaint in respect of several dishonoured cheques is maintainable when one of the cheques is stale. - HELD THAT: - The Court held that where multiple cheques issued by the drawer are presented and dishonoured and a single demand notice is served, a single cause of action arises and a single complaint is maintainable. The fact that one of the cheques was stale and could not sustain prosecution on its own does not render the entire complaint incompetent or false. The bundle of cheques constitutes a package of facts giving rise to the cause of action; if one alleged fact (a stale cheque) is incorrect, that does not defeat the broader cause of action founded on the other validly presented and dishonoured cheques. However, the complaint must be confined to and proceeded with only in respect of those cheques that were presented within the period of their validity, and the trial court must bear this limitation in mind while trying the complaint. [Paras 11, 12, 13, 14]

Single complaint is maintainable notwithstanding one stale cheque, but proceedings are to be confined to cheques presented within their period of validity.

Presentment within period of validity / exclusion of day of presentment - stale cheque and its effect on prosecution under Section 138 of the Negotiable Instruments Act - Validity of the specific cheques dated 04.01.2019 and 01.02.2019 for the purpose of prosecution. - HELD THAT: - On the record the cheque dated 04.01.2019 (Axis Bank) was presented on 02.05.2019 and, given the three months validity, was held to have become stale before presentment. The cheque dated 01.02.2019 (YES Bank) was presented on 02.05.2019 but, applying Section 24 of the NI Act and excluding the day of presentment, the Court found it was presented within its term of validity and therefore not stale. There was no dispute about the validity of the remaining four cheques. [Paras 7, 8, 9]

Cheque of 04.01.2019 is stale; cheque of 01.02.2019 is within validity and not stale; other four cheques valid as presented.

Inadvertent clerical error in order date does not vitiate the order - Whether the fact that the impugned order bears an earlier date (when presiding officer was on leave) vitiates the order or shows tampering/non-application of mind. - HELD THAT: - The Court examined the file and proceedings minutes which showed arguments were heard and the matter was reserved for orders to be pronounced on the stated date, but the presiding officer was on leave on that date and the order was in fact announced on the next fixed date. The Court concluded that the incorrect date on the order arose from an inadvertent failure to change the date when the order was announced, causing confusion but amounting to clerical inadvertence rather than deliberate tampering or non-application of mind. [Paras 15, 16]

The date discrepancy is an inadvertent clerical error and does not render the impugned order illegal.

Discretionary power to award interim compensation under Section 143-A of the Negotiable Instruments Act - requirement to record reasons when exercising judicial discretion - Whether the interim compensation order awarding 20% without reasons and including the stale cheque is sustainable. - HELD THAT: - Section 143-A confers discretion on the trial court to direct interim compensation up to 20% of the cheque amount, but this discretionary exercise must be supported by reasons and logic. The Court observed that although the statute prescribes the maximum quantum, it does not lay down specific guidelines as to when to exercise the power; settled principles of judicial discretion require recording of reasons for both grant and quantum of interim compensation so that the exercise can be tested on appeal. In the present case the learned Magistrate's order merely narrated the complaint allegations and mechanically awarded 20% of the total amount while including the stale cheque in calculation, without articulating reasons why interim compensation was warranted or why the chosen quantum was appropriate. That non-application of mind made the order unsustainable. [Paras 19, 20, 21, 22, 23]

Impugned interim compensation order is quashed for lack of reasons and for including the stale cheque; Magistrate directed to pass a fresh reasoned order after hearing the parties and confining the complaint to validly presented cheques.

Final Conclusion: Petition partly allowed: complaint is maintainable as a single complaint confined to the cheques presented within their validity; the interim compensation order is quashed for want of reasons and for including a stale cheque; the trial Magistrate is directed to hear the parties and pass a fresh reasoned order in accordance with Section 143-A, excluding the stale cheque; proceedings otherwise to continue.