TaxTMI Updates e-Newsletter
Nov 03,2023

Principles of natural justice - service of notice at registered principal place of business - opportunity of personal hearing - quashing of order for failure of service

Principles of natural justice - service of notice at registered principal place of business - quashing of order for failure of service - Validity of the Order in Original dated 30th November 2022 in view of service of the show cause notice at the assessee's old address and absence of opportunity of hearing. - HELD THAT: - The Court found that the show cause notice and the Order in Original were issued and sent to the petitioner's old address and were returned undelivered, while the respondents' own records (the GST registration certificate dated 28th July 2018) contained the petitioner's new principal place of business. Because the petitioner had not been served at the address appearing on the respondents' records and therefore had not been granted an opportunity of hearing, the impugned order was passed in breach of the principles of natural justice. The Court held that where service is effected at an address inconsistent with the respondent's own registration record resulting in non service and denial of hearing, the order based thereon must be quashed. [Paras 5]

The Order in Original dated 30th November 2022 is quashed and set aside for want of service and denial of opportunity of hearing.

Service of notice at registered principal place of business - opportunity of personal hearing - Further procedure to be followed by the respondents after quashing the impugned order. - HELD THAT: - Having quashed the order for failure of service and denial of hearing, the Court directed the respondents to issue the show cause notice afresh to the new address as recorded in the GST registration and to afford the petitioner a personal hearing. The matter was remitted to the respondents for fresh adjudication after giving the petitioner an opportunity of personal hearing, with liberty to the respondents to decide the matter on merits thereafter. All contentions of the parties were left open for adjudication at that stage. [Paras 6]

Respondents to issue the show cause notice at the new address and, after giving personal hearing, decide the matter within twelve weeks from the date of personal hearing; all contentions kept open.

Final Conclusion: Impugned Order in Original dated 30th November 2022 quashed for breach of natural justice due to non service at the assessee's registered address; matter remitted to respondents to issue fresh show cause notice to the address on record, afford personal hearing and decide the case within twelve weeks, with all contentions kept open.

Exemption of educational services supplied by an educational institution - interpretation of Circular No. 177/09/2022-TRU dated 03.08.2022 - scope of 'educational institution' for GST exemption - exemption under Sl. No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - remand for reconsideration in light of Circular

Exemption of educational services supplied by an educational institution - interpretation of Circular No. 177/09/2022-TRU dated 03.08.2022 - exemption under Sl. No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - Impugned order quashed and matter remanded for fresh consideration whether coaching fees charged to enrolled students fall within the exemption for services supplied by an educational institution under Sl. No. 66 of Notification No. 12/2017 in the light of Circular No. 177/09/2022-TRU dated 03.08.2022. - HELD THAT: - The High Court found that the third respondent misconstrued the Circular by relying on its later paragraphs concerning entrance/application/migration fees (paragraph 4.4 and later parts of paragraph 4.3) while overlooking the determinative first sentence of paragraph 4.3 which states that all services supplied by an 'educational institution' to its students are exempt under the Notification. Because the issue in dispute concerns coaching fees (services provided to enrolled students) the third respondent was required to examine the exemption by applying the relevant part of the Circular which exempts services supplied by an educational institution to its students. The Court did not decide on the substantive question of exemption on merits but held that the impugned order must be reconsidered after affording the petitioner opportunity to file a detailed response and relying upon the correct interpretive thrust of the Circular.

Impugned order dated 17.06.2023 quashed; proceedings remitted to the third respondent to decide afresh whether coaching fees are exempt under Sl. No. 66 of Notification No. 12/2017 in light of Circular dated 03.08.2022, after giving opportunity to the petitioner.

Scope of 'educational institution' for GST exemption - remand for reconsideration in light of Circular - Whether ancillary offerings such as the abacus course (offered with assistance of an external agency and not a qualification recognised by law) must be re-examined for exemption under the Notification when remanding the matter. - HELD THAT: - The Court declined to foreclose consideration of whether courses not recognised as formal qualifications (for example the abacus course) fall within the exemption. Noting precedent relied on by the petitioner and the rule that exemption provisions are to be construed liberally, the Court directed the third respondent to examine this aspect as part of the fresh adjudication. The Court thereby preserved the petitioner's liberty to raise grounds and authorities (including the Gujarat High Court decision referred to by the petitioner) in support of exemption claims for such courses.

Third respondent must also consider, on reconsideration, whether ancillary courses such as the abacus course are exempt under the Notification; petitioner granted liberty to raise all grounds and file a detailed response.

Final Conclusion: Petition allowed in part; the impugned order dated 17.06.2023 is quashed and the matter is remitted to the third respondent for fresh consideration in the light of the correct interpretive portion of Circular No. 177/09/2022-TRU (03.08.2022), with liberty to the petitioner to file detailed responses and including re-examination of ancillary courses such as the abacus course.

Input tax credit - mismatch between GSTR 2A and GSTR 3B - denial of credit solely on mismatch - assessment under Section 73 of the State Goods and Services Tax Act - opportunity to produce documents and verification - revenue recovery notice

Input tax credit - mismatch between GSTR 2A and GSTR 3B - denial of credit solely on mismatch - Denial of input tax credit to the assessee solely because of a mismatch between GSTR 3B and GSTR 2A is not automatically correct where the assessee can show, by evidence, that the tax was collected/paid and is reflected in GSTR 2A. - HELD THAT: - The Court noted the assessee claimed input tax credit in GSTR 3B based on valid invoices and contended that suppliers' uploading errors (zeros) caused the mismatch. Relying on the principle that mere discrepancy between GSTR 3B and GSTR 2A is not a conclusive ground to deny credit, the Court observed that if the tax for which credit is claimed is reflected in GSTR 2A (even with delay) or can otherwise be proved to have been collected/paid by the supplier, denial of credit on the sole basis of mismatch is incorrect. The Court referred to earlier authority of this Court on the same proposition and accepted the petitioner's contention that this was not a case of supplier non payment to the revenue but a technical/temporal discrepancy in returns. [Paras 5, 6, 7]

Denial of the input tax credit in Exhibit P1 on the ground of mismatch between GSTR 3B and GSTR 2A was held not to be justified in the circumstances pleaded by the petitioner.

Assessment under Section 73 of the State Goods and Services Tax Act - opportunity to produce documents and verification - revenue recovery notice - The matter was remanded to the assessing authority for document examination and fresh decision on the bonafides of the claimed credit; consequential recovery proceedings set aside pending such verification. - HELD THAT: - Instead of deciding the factual question on the documents, the Court granted the petitioner one opportunity to place all relevant documents before the assessing authority. The assessing authority was directed to examine the documents and, if satisfied that the claim for input tax credit was bona fide, to grant the benefit and issue a revised order. In the interim the impugned assessment order and the recovery notice were set aside to enable the assessment authority to re consider the claim on merits after verification. [Paras 7, 8]

Petitioner directed to appear before the assessing authority within seven days with all relevant documents; Exhibit P1 and Exhibit P2 set aside and the assessing authority to re examine and, if satisfied, grant the claimed input tax credit and pass a revised order.

Final Conclusion: Writ petition allowed; impugned assessment order and recovery notice set aside and the petitioner given seven days to produce documents before the assessing authority, which is directed to verify the claim and pass a revised order granting the input tax credit if the claim is found bona fide.

Interim release of detained goods and conveyance - Exercise of powers under Section 129 vis-a -vis Section 130 of the CGST Act - Confiscation of goods in transit - Bond and deposit as condition for release of goods and vehicle

Interim release of detained goods and conveyance - Bond and deposit as condition for release of goods and vehicle - Interim release of the petitioner's goods and vehicle subject to specified deposits and bond. - HELD THAT: - The Court granted interim relief directing release of the goods conveyed in truck No.GJ-27-TT-7795 and the vehicle itself on conditions. The petitioner was ordered to deposit the specified amounts as penalty and fine in lieu of confiscation and to furnish a bond for the amount assessed in lieu of confiscation of goods. Upon compliance with these conditions by the petitioner, the authorities were directed to release the goods and conveyance. Direct service was permitted and the petition was ordered to be listed with related matters for further consideration. [Paras 6, 7]

Goods and vehicle to be released on petitioner's compliance with deposit and bond conditions; authorities to release upon such compliance.

Exercise of powers under Section 129 vis-a -vis Section 130 of the CGST Act - Confiscation of goods in transit - Merits of contention regarding the authorities switching from exercise of powers under Section 129 to Section 130 without release under Section 129 were not finally adjudicated and are to be considered along with connected matters. - HELD THAT: - The petitioner contended that the authorities intercepted goods under powers for in-transit detention and thereafter proceeded under the provisions for confiscation, raising a question about the correctness of invoking Section 130 after detention under Section 129. The Court did not decide the substantive legal controversy on the merits in this order; instead the petition was directed to be listed with Special Civil Application No.8353 of 2022 for further hearing, thereby leaving the dispute on the proper application of the statutory provisions to be adjudicated in due course.

Substantive question on the proper exercise of powers under Section 129 and Section 130 not decided; matter to be heard with connected proceedings.

Final Conclusion: Interim relief granted: goods and vehicle released on compliance with stipulated deposits and bond; substantive dispute over exercise of powers and confiscation left open for adjudication and listed with related proceedings.

Bail under Section 439 Cr.P.C. - illegal detention - summons versus formal arrest - cooperation with investigation - flight risk and tampering with evidence - custodial safeguards under Section 70 read with Section 41/41A principles - conditions of bail

Illegal detention - summons versus formal arrest - custodial safeguards under Section 70 read with Section 41/41A principles - The detention of the applicant could not be characterised as illegal and the case diary shows appearance on summons and cooperation with the investigation. - HELD THAT: - The court examined the case diary and found that the applicant had been given summons on different dates and had responded by making himself available; his statement was recorded even while in jail. The respondents had not sought police remand, nor had they asserted apprehension of flight or risk of tampering with evidence. In these circumstances, the detention complained of could not be termed illegal at this stage. The court noted the Apex Court's observation regarding custodial safeguards-that principles under Section 41/41A of the Cr.P.C. inform arrests under the GST scheme-but applied the factual finding that summons had been complied with and no remand application or flight/tampering concerns were urged by the prosecution.

Detention not shown to be illegal on the material before the Court; applicant had complied with summons and cooperated with investigation.

Bail under Section 439 Cr.P.C. - cooperation with investigation - flight risk and tampering with evidence - conditions of bail - The applicant was entitled to bail on furnishing specified bond and subject to enumerated conditions, without prejudice to the merits of the prosecution. - HELD THAT: - Balancing the factual matrix-applicant's cooperation, lack of prosecution request for remand, and absence of asserted flight risk or danger of tampering-the court, while expressly reserving opinion on merits, concluded that bail was appropriate. The court directed release on a personal bond with two local solvent sureties for the specified amount, and imposed standard conditions: compliance with bond terms; cooperation in investigation/trial; no inducement, threat or promise to witnesses; abstention from committing other offences of the same nature during trial; avoidance of unnecessary adjournments and availability for investigation; restriction on leaving India without prior permission and surrender of passport (or affidavit if none). The court also directed verification of sureties and transmission of the order to the police station and trial court for compliance.

Bail allowed on the directed bond and conditions; release to be effected after verification of sureties and subject to the stated conditions.

Final Conclusion: Bail application allowed; applicant directed to be released on furnishing the prescribed bond and two local solvent sureties, subject to the enumerated conditions, without any expression of opinion on the merits of the case.

Principles of natural justice - Notice and opportunity to be heard - Service of notice through online portal - Speaking order - Obligation to record reasons - Consideration of reply/evidence - Remand for fresh consideration - Mandamus to afford hearing and pass speaking order

Principles of natural justice - Notice and opportunity to be heard - Service of notice through online portal - The opportunities of hearing afforded to the petitioner were not fair and amounted to violation of principles of natural justice. - HELD THAT: - The Court found that although three hearing opportunities were nominally granted, the notices did not afford sufficient time to enable the petitioner to file an effective reply. The last hearing notice was uploaded on the e-Portal on 21.06.2023 at 9.52 p.m. and fixed a personal hearing within about 36 hours, with documents sought for the first time. The notice was not served by any physical mode and fell within two working days when the petitioner did not have access to the portal; on noticing the upload the petitioner attended on the next working day and sought time to produce documents. A window of less than two days to assemble and produce the specified documents cannot be regarded as a fair opportunity under the Act, and therefore the procedure adopted did not satisfy the requirements of natural justice. [Paras 7, 8]

The notices and hearing opportunities were inadequate and amounted to a breach of natural justice.

Speaking order - Obligation to record reasons - Consideration of reply/evidence - The assessment order is non-speaking and the Assessing Officer failed to set out reasons for rejecting the petitioner's explanations and documentary submissions. - HELD THAT: - On review of the assessment order, the Court observed that the Assessing Officer merely recorded that the petitioner's tabulated reply without supporting documents could not be accepted and that it could not be synchronized with Departmental alerts, but did not explain in what respect the explanations were unacceptable or why the submitted material (or repeated replies) were insufficient. The impugned order is largely a verbatim reproduction of the petitioner's tabulated reply and lacks a clear articulation of the reasons for confirmation of the proposals in the show cause notice, thereby failing the requirement of a speaking order and the duty to consider replies and evidence put forth by the assessee. [Paras 4, 9, 10]

The assessment order is not a speaking order and does not properly record consideration of the petitioner's reply and documents.

Remand for fresh consideration - Mandamus to afford hearing and pass speaking order - The assessment order dated 29.06.2023 is set aside and the matter is remanded for fresh adjudication with specific directions. - HELD THAT: - Balancing the interests of the assessee and the Revenue and in view of the procedural infirmities identified, the Court directed that the impugned assessment be set aside and remitted to the second respondent for re-adjudication. The Court ordered that one more personal hearing be afforded to the petitioner (to be fixed on 16.11.2023), at which the petitioner shall file its reply together with all documents in support of its claim, including those listed in the notice dated 21.06.2023; thereafter the second respondent is to peruse the documents, conduct a full-fledged hearing and pass a fresh speaking assessment order addressing all issues raised by the petitioner by 12.12.2023. [Paras 10, 11]

The assessment order is set aside and the matter is remanded for fresh consideration with directions to afford a further hearing and to pass a speaking order within the specified time.

Final Conclusion: Writ petition allowed; assessment order dated 29.06.2023 set aside and matter remanded to the Assessing Officer for fresh adjudication with a further personal hearing and directions to consider the petitioner's documents and to pass a speaking order within the time stipulated by the Court.

Principles of natural justice - adverse inference - production of documents after show cause notice and before seizure - seizure and penalty under GST - remand for fresh consideration

Production of documents after show cause notice and before seizure - adverse inference - seizure and penalty under GST - Validity of the penalty and seizure orders where corrected tax invoice and e-way bill were produced after issuance of show cause notice but before passing of seizure order, and an adverse inference of issuing duplicate invoices was drawn in the appellate order without prior notice to the petitioner. - HELD THAT: - The court examined the record and found that when the goods were intercepted a discrepancy in weight between the e-way bill and actual weighment was noted. The petitioner produced a corrected e-way bill and tax invoice cancelling the earlier e-way bill after issuance of the show cause notice and before a seizure order could be passed. The Court held that mere production of corrected documents in such circumstances precludes drawing an adverse inference from the fact that an earlier e-way bill recorded a higher weight. Further, the appellate authority drew an adverse inference that two tax invoices of the same number were issued, treating that inference as determinative without having put the petitioner on notice to rebut that specific conclusion. The authorities therefore acted without affording the petitioner an opportunity to meet the adverse inference, which rendered the orders unsustainable. [Paras 9, 10, 11, 12]

Penalty and seizure orders set aside as unsustainable because corrected documents were produced before seizure and an adverse inference was drawn and acted upon without giving the petitioner an opportunity to rebut.

Principles of natural justice - remand for fresh consideration - Relief to be granted and further course of action after quashing the impugned orders. - HELD THAT: - Having quashed the impugned orders for violation of natural justice and improper adverse inference, the Court directed that the matter be remitted to the Additional Commissioner for fresh consideration. The remand is conditional: the Additional Commissioner is to decide the issue afresh after giving full opportunity of hearing to all stakeholders in accordance with law. A time frame of approximately three months from production of the certified copy of this order was stipulated for disposal. [Paras 12, 14]

Matter remanded to the Additional Commissioner to decide afresh after affording full opportunity of hearing to the parties, preferably within three months from production of certified copy of the order.

Final Conclusion: The impugned orders of penalty and confirmation are quashed for want of compliance with the principles of natural justice and for drawing an adverse inference without notice; the matter is remanded to the Additional Commissioner for fresh adjudication after affording the petitioner full opportunity of hearing.

Deemed conclusion of proceedings where tax paid with interest within thirty days of show cause notice under Section 73(8) - penalty for non-payment of tax collected from others within thirty days from the due date under non obstante provision of Section 73(11) - penalty determination equivalent to ten per cent. of tax or ten thousand rupees under Section 73(9)

Deemed conclusion of proceedings where tax paid with interest within thirty days of show cause notice under Section 73(8) - penalty for non-payment of tax collected from others within thirty days from the due date under non obstante provision of Section 73(11) - penalty determination equivalent to ten per cent. of tax or ten thousand rupees under Section 73(9) - Whether an assessee who had collected tax from others but did not remit it to Government within thirty days from the due date is entitled to escape penalty by paying the tax with interest within thirty days of issue of show cause notice. - HELD THAT: - The Court examined the interplay between Sub-sections (6), (8) and (9) of Section 73 and the non obstante provision in Sub section (11). Sub section (8) provides that where a person chargeable with tax pays the tax along with interest within thirty days of issue of the show cause notice, no penalty shall be payable and proceedings shall be deemed concluded. However, where tax has been collected from others and not remitted to the Government within thirty days from the due date of payment, Sub section (11) - which operates by way of a non obstante clause - overrides the benefit of Sub section (8) and renders penalty under Sub section (9) payable. The Assessing Authority found that the petitioner had remitted the collected tax only after issuance of the show cause notice and that the collected tax had not been paid within thirty days from the due date; accordingly the authority applied Section 73(9) read with Section 73(11) and imposed penalty. The High Court held that this construction is correct and that Sub section (8) does not apply where the tax collected was not remitted within the statutory thirty day period, thus justifying imposition of penalty under Sub section (9) as saved by Sub section (11). [Paras 3, 5, 6, 7]

Benefit of Section 73(8) is not available where tax collected was not remitted within thirty days from the due date; penalty under Section 73(9), supported by Section 73(11), is payable.

Final Conclusion: Writ petition dismissed; the Assessing Authority correctly held that payment of tax with interest after issuance of show cause notice does not preclude penalty where the tax collected was not remitted within thirty days from the due date, and imposition of penalty under Section 73(9) read with Section 73(11) is upheld.

Provisional attachment of bank account - initiation of proceedings under Section 67 - scope of Section 83 after amendment - protection of the interest of Government revenue - statutory remedy of objection under rule 159(5) - writ relief under Article 226 without exhausting statutory remedies

Provisional attachment of bank account - initiation of proceedings under Section 67 - scope of Section 83 after amendment - protection of the interest of Government revenue - Validity of provisional attachment of the petitioner's bank account under Section 83 in view of proceedings initiated under Section 67. - HELD THAT: - The Court held that Section 83 permits provisional attachment of property, including bank accounts, after initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV. The search and consequent proceedings initiated under Section 67 were found to fall within the Chapters contemplated by Section 83, and therefore the Commissioner was entitled to provisionally attach the petitioner's bank account to safeguard Government revenue. The attachment made in the present case was accordingly held to be lawful and capable of remaining in force for the prescribed period. [Paras 12, 16, 17]

The provisional attachment under Section 83 is valid and there is no infirmity in the impugned order of attachment.

Statutory remedy of objection under rule 159(5) - writ relief under Article 226 without exhausting statutory remedies - Whether the petitioner was entitled to invoke writ jurisdiction without availing the statutory objection remedy against provisional attachment. - HELD THAT: - The Court noted that the petitioner had remedies under the statute and rules (including filing objections in the prescribed form under Rule 159(5)/Form DRC-22A) which were available in respect of provisional attachment. The petitioner's failure to pursue the statutory objection procedure and the availability of an effective remedy under the CGST scheme militated against entertaining the writ as a substitute remedy. Reliance was placed upon the principle that writ jurisdiction should not ordinarily be invoked where efficacious statutory remedies exist in matters of public revenue. [Paras 11, 13]

The writ petition was not maintainable as a substitute for the statutory remedy and, in any event, was dismissed on merits.

Final Conclusion: Writ petition dismissed; provisional attachment of the petitioner's bank account under Section 83 upheld as lawful in view of proceedings initiated under Section 67 and the petitioner's failure to seek/avail the statutory objection remedy.

Quashing of notices to file pending GSTR-3B returns - extension of time to file returns - filing of revised invoices and its effect on return filing - restoration of registration - proceedings under section 46 of the GST Act - assessment under the goods and services tax regime

Quashing of notices to file pending GSTR-3B returns - assessment under the goods and services tax regime - Validity of Ext.P5 and Ext.P6 notices seeking filing of pending GSTR-3B returns - HELD THAT: - The writ petition seeking quashment of Ext.P5 and Ext.P6 was considered in light of the petitioner's admitted failure to file returns and the history of cancellation and subsequent restoration of registration. The Court observed that the petitioner had been an unregistered dealer between 29.11.2022 and 31.05.2023 and had taken supply on 08.03.2023. The petitioner sought revised invoices from the supplier after receipt of the notices; however, a substantial period elapsed between the request (13.06.2023) and the supplier's communication (06.09.2023). Given this delay, the Court declined to quash the notices outright but exercised judicial restraint by offering a final opportunity to comply. The notices therefore stand and will be processed in accordance with law if returns are not filed within the time directed. [Paras 4, 5]

Petition to quash Ext.P5 and Ext.P6 not allowed; petitioner given final opportunity to file returns within three weeks and notices to be processed in accordance with law.

Extension of time to file returns - filing of revised invoices and its effect on return filing - Whether further time should be granted to the petitioner to file returns to enable the supplier to issue revised invoices - HELD THAT: - The Court examined the request for extension founded on the supplier's undertaking to issue revised invoices. While acknowledging the supplier's communication that revised invoices were being processed, the Court noted that the petitioner had sought such invoices only after the deadline for filing had expired and that more than three months had passed since the petitioner's request. In view of the delay and the need for administrative finality, the Court declined an open-ended extension but granted a limited, final extension as an equitable accommodation. The Court directed that if the petitioner files the returns within three weeks from the order, those returns shall be processed in accordance with law. [Paras 2, 3, 5]

Limited extension granted: petitioner to file returns within three weeks; returns to be processed in accordance with law if filed within that period.

Proceedings under section 46 of the GST Act - authority to proceed with assessment - Whether the respondents should be restrained from initiating or continuing proceedings under section 46 of the GST Act pending issuance of revised invoices - HELD THAT: - The petitioner sought restraint on the authorities from proceeding under section 46 to allow time for issuance of revised invoices. The Court rejected this preventive relief, reasoning that the petitioner's delay did not justify staying statutory proceedings and that administrative powers to assess or proceed under the GST statute cannot be restrained merely to await commercial documents when adequate opportunity to comply was already afforded. Consequently, the Court refused to stay proceedings under section 46 while granting the petitioner a final limited opportunity to file returns. [Paras 4, 5]

Prayer for restraint of proceedings under section 46 refused; authorities are not restrained from proceeding, subject to the limited opportunity granted to the petitioner to file returns.

Final Conclusion: Writ petition dismissed insofar as quashment and restraint were sought; petitioner granted a final opportunity of three weeks to file the pending GSTR-3B returns (for February 2022 to March 2022), failing which the authorities may proceed and process the matter in accordance with law.

Ownership of benami assets- company in liquidation - as appellant submits that in this case, the company which is under liquidation is not the owner of any benami property. Purchase of the shares in a company under liquidation does not make the company itself the owner of the benami property.

HELD THAT:- Issue notice Notice will be served by all modes, including dasti.

We clarify that we have not stayed the appellate proceedings, which will continue in accordance with law.

Interpretation of "slump sale" under Section 2(42C) - transfer of an undertaking as a going concern - effect of transfer of right to use immovable property on characterisation of slump sale - computation of capital gains on slump sale under Section 50B

Interpretation of "slump sale" under Section 2(42C) - transfer of an undertaking as a going concern - effect of transfer of right to use immovable property on characterisation of slump sale - computation of capital gains on slump sale under Section 50B - Whether the transfer of the hospital business was a "slump sale" attracting capital gains computation under Section 50B of the Income tax Act. - HELD THAT: - The Court examined the Business Agreement and observed that, although the agreement described the transaction as a "slump sale" and effected transfer of the hospital business on a going concern basis, the Seller did not transfer the immovable property but only granted the Buyer a right to use such immovable properties pursuant to a Lease Deed. The definition of "slump sale" in Section 2(42C) requires transfer of one or more undertakings by sale for a lump sum consideration without values being assigned to individual assets and liabilities. Since the immovable assets were not transferred and the whole undertaking was therefore not transferred in the requisite sense, the essential condition for treating the transaction as a slump sale under Section 2(42C) was not satisfied. Consequently, the mechanism for computing capital gains under Section 50B did not apply. On these findings, the Tribunal's conclusion that the lump sum consideration could not be treated as a slump sale capital gain was upheld. [Paras 10, 11, 12]

The transfer was not a "slump sale" as defined in Section 2(42C); Section 50B did not apply and the ITAT's order in favour of the assessee was correct.

Final Conclusion: Appeal dismissed; questions of law answered in favour of the assessee and the ITAT's order dated 27.06.2018 confirmed.

Disallowance of engineering fees - debit notes as evidence of expenditure - Arm's Length Price - final fact-finding authority

Disallowance of engineering fees - debit notes as evidence of expenditure - Arm's Length Price - final fact-finding authority - Deletion of the disallowance of engineering fees paid by the assessee to its head office was upheld. - HELD THAT: - The Tribunal found that the assessee had incurred expenses while executing a DMRC project and had furnished debit notes identifying employees, nature of duties and hours apportioned to the work. The Transfer Pricing Officer concluded that transactions between the assessee and its head office were at Arm's Length Price. Given these findings, the Tribunal held there was no material basis to discredit the debit notes and deleted the disallowance. The High Court agreed, noting the assessee's involvement in the project and the sufficiency of the debit notes as evidence of services rendered and time spent. As the Tribunal is the final fact-finding authority and the revenue did not demonstrate that the Tribunal's findings were perverse, the High Court declined to interfere and found no substantial question of law for consideration. [Paras 15, 16, 17, 18, 19]

Tribunal's deletion of the disallowance of engineering fees is sustained and the appeal is dismissed.

Final Conclusion: The High Court dismissed the revenue's appeal against the Tribunal's deletion of the disallowance of engineering fees; the Tribunal's factual findings, including acceptance of the debit notes and the TPO's ALP conclusion, were upheld and no substantial question of law arises.

Service of notice under Section 148 - reassessment proceedings require issuance and service of notice - validity of reassessment where notice served at wrong address - appellate interference with findings of fact

Service of notice under Section 148 - validity of reassessment where notice served at wrong address - Notice issued under Section 148 dated 25.03.2013 was not served on the correct address of the assessee and therefore service was ineffective. - HELD THAT: - The Court accepted the concurrent findings of the CIT(A) and the Tribunal that the notice was returned with an endorsement that the person concerned had sold the house three years earlier and that the assessee's returns consistently disclosed a different address. The record before the AO showed the assessee's return with the alternate address and the AO was aware that the assessee was not available at the address where the notice was sent. On these facts the Court treated service as not effected and upheld the factual conclusion that the notice under Section 148 was not validly served. [Paras 5, 6, 7]

Service under Section 148 was not effected and the notice was invalid as served at the wrong address.

Reassessment proceedings require issuance and service of notice - appellate interference with findings of fact - Assessment order passed despite absence of valid service; consequently reassessment proceedings could not be sustained and no interference with the Tribunal's factual finding was warranted. - HELD THAT: - The Court held that reassessment proceedings can be initiated only upon issuance and valid service of a notice under Section 148. The AO proceeded to pass the assessment order despite having been made aware that the notice had not been served. Because the Tribunal's conclusion on this factual matrix was definitive, the High Court declined to disturb the concurrent factual findings. The Court further observed that the appellant/revenue did not place before the Court the record it had undertaken to produce and, in any event, the finding being one of fact does not raise any substantial question of law. [Paras 7, 8, 9, 10]

Reassessment could not be sustained in absence of valid service of the Section 148 notice; the Tribunal's factual finding is upheld and no substantial question of law arises.

Final Conclusion: The appeal is dismissed; the Tribunal's order dated 21.08.2022 (relating to AY 2007-08) upholding that the Section 148 notice was not served and quashing the reassessment is maintained, and no substantial question of law is held to arise.

Re-opening of assessment under Section 147/148 of the Income Tax Act - Proceedings under Section 148A(d) of the Income Tax Act - Escapement of income - Notional expenditure claimed in subsequent assessment years and capital gains computation - Remand for reconsideration - Liberty to file additional reply in reassessment proceedings

Proceedings under Section 148A(d) of the Income Tax Act - Escapement of income - Notional expenditure claimed in subsequent assessment years and capital gains computation - Re-opening of assessment under Section 147/148 of the Income Tax Act - Validity of the order dated 31.03.2023 passed under Section 148A(d) and whether the assessing officer justifiably concluded that income had escaped assessment for AY 2016-17 without considering the assessee's contention of no receipt in that year and of notional expenditure claimed in later years. - HELD THAT: - The Court found that the assessing officer's reasons for opining that income had escaped assessment in AY 2016-17 proceeded on the premise that the assessee had receipts in that year which were applied towards expenditure, but failed to consider the assessee's specific reply that no income/receipt was received in AY 2016-17 and that the amounts claimed as cost of construction were the builder's expenditure claimed in subsequent assessment years against capital gains. The order under Section 148A(d) mirrors the reasons for issuance of the notice but does not deal with this material circumstance. The Court held that such a contention-if established-could negate the foundation for concluding escapement of income and for reopening under Sections 147/148; accordingly, the merits of the claimed notional expenditure and its effect on the escapement conclusion must be considered before sustaining reopening. The Court did not adjudicate the substantive correctness of the assessee's claims on merits, nor did it decide time bar or other defence contentions, leaving those to be raised in appropriate appeal proceedings if assessment follows.

The impugned order dated 31.03.2023 under Section 148A(d) is quashed and the reassessment proceedings are restored for fresh consideration in the light of the Court's observations; the petitioner is granted liberty to file an additional reply within four weeks.

Final Conclusion: The petition is allowed: the order under Section 148A(d) dated 31.03.2023 and the consequent notice under Section 148 are quashed, and the matter is remitted for reconsideration of whether there was any escapement of income in AY 2016-17 after taking into account the assessee's contention regarding absence of receipt in that year and the notional expenditure claimed subsequently; liberty granted to file additional reply.

Revival of appeal - rectification of order - inherent powers of the Tribunal - liberty to reinstate appeal under the Vivad Se Vishwas Scheme - effect of issuance of Form No.3 under the Vivad Se Vishwas Scheme

Rectification of order - revival of appeal - Whether Section 254(2) (rectification) applied to the petition seeking revival of the appeal and whether rectification and revival are the same. - HELD THAT: - The Bench held that Section 254(2), which permits the Tribunal to amend its order to rectify any mistake apparent from the record within the stipulated period, has no application to an application seeking revival of an appeal. Rectification of an order and revival of an appeal are distinct remedies and cannot be equated. Although there was delay in approaching the Tribunal, the nature of the petitioner's application (seeking revival in light of inability to complete the Vivad Se Vishwas Scheme payment) was not properly addressable under Section 254(2). The Court therefore rejected the Tribunal's reasoning that treated the application as one for rectification under Section 254(2) and held that the statutory time-limit for rectification did not govern the petition for revival. [Paras 15]

Section 254(2) is not applicable to the petition for revival; rectification and revival are different and cannot be equated.

Inherent powers of the Tribunal - liberty to reinstate appeal under the Vivad Se Vishwas Scheme - revival of appeal - Whether the Tribunal ought to have treated the application as one for revival of the appeal and whether the appeal should be restored. - HELD THAT: - The Court observed that the Tribunal, having earlier granted the assessee liberty to reinstate the appeal if the DTVSV application was rejected, ought to have, in exercise of its inherent powers, treated the improperly framed application under Section 254(2) as one seeking revival. In the interests of justice and to avoid rendering the petitioner remediless, the Bench set aside the Tribunal's order dismissing the application and directed that the application be treated as one for revival of the appeal. Consequentially, the appeal was ordered to be restored and directed to be disposed of expeditiously on its merits. [Paras 16, 17]

The Tribunal's order is set aside; the application is to be treated as one for revival and the appeal restored for adjudication on merits.

Final Conclusion: The order dated 11.07.2023 passed by the Tribunal is set aside; the application filed before the Tribunal shall be treated as one for revival of the appeal, the appeal is restored, and the Tribunal is directed to dispose of the appeal expeditiously in accordance with law.

Quasi-judicial power - principles of natural justice - speaking order - opportunity of personal hearing - condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961

Quasi-judicial power - principles of natural justice - opportunity of personal hearing - Power exercised under Section 119(2)(b) of the Act is quasi-judicial and must be exercised in conformity with principles of natural justice. - HELD THAT: - The Court examined earlier decisions holding that the Board's power under clause (b) of sub section (2) of Section 119 is not merely administrative but has all traits of judicial power and therefore must take into account relevant facts and circumstances and be informed by reasons. When a quasi judicial authority discharges that function it must afford an opportunity of hearing-either oral or by written submissions-and decide after considering materials placed before it. The Court applied these principles and concluded that orders under Section 119(2)(b) which may result in adverse civil consequences must be passed in compliance with natural justice. [Paras 5, 6]

The power under Section 119(2)(b) is quasi judicial and must be exercised in compliance with principles of natural justice, including grant of a reasonable opportunity of hearing.

Speaking order - condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961 - Impugned order rejecting condonation was non speaking, unsustainable and liable to be set aside with direction for fresh consideration after hearing. - HELD THAT: - The impugned order merely recorded a conclusion that the reasons for delay were not acceptable without assigning any supporting reasons, rendering it non speaking. Following the requirement that quasi judicial decisions be reasoned, the Court found the impugned order in violation of natural justice and therefore unsustainable. The Court set aside the order and directed the respondents to reconsider the petitioner's application under Section 119(2)(b) after granting a reasonable opportunity of hearing and to pass a speaking order within a stipulated period. [Paras 4, 7]

Impugned non speaking order set aside; respondents directed to grant a reasonable hearing and pass a speaking order on the condonation application within eight weeks.

Final Conclusion: Impugned order under Section 119(2)(b) of the Income Tax Act, 1961 is set aside for being non speaking; respondents to reconsider the condonation petitions in respect of assessment years 2012 13 and 2013 14 after granting a reasonable opportunity of hearing and to pass a speaking order within eight weeks; writ petition disposed of.

Entitlement to refund pursuant to an order giving effect to appellate/DRP directions - absence of statutory basis for anticipatory adjustment or retention of refundable amounts - prohibition on readjustment of refunds without notice and requisite set-off procedure - obligation on Assessing Officer to give effect to orders and refund within a reasonable time

Entitlement to refund pursuant to an order giving effect to appellate/DRP directions - obligation on Assessing Officer to give effect to orders and refund within a reasonable time - The petitioner is entitled to refund determined by the Assessing Officer by order dated 28.02.2023 and the first respondent must pay the refund within a reasonable time. - HELD THAT: - The Court observed that the petitioner obtained the benefit of the Tribunal's order and consequential exercise by the Assessing Officer and DRP culminating in the order dated 28.02.2023 which determined that a refundable sum is due for Assessment Year 2013-14. In the absence of any statutory provision enabling retention of that refundable amount, and given that there was no subsisting recoverable demand against the petitioner as of the date of the order, denial or delay of the refund could not be justified. The Court held that the Assessing Officer is obliged to identify and take steps to refund the sum determined in the order dated 28.02.2023 and specified a reasonable time-frame (six weeks from receipt of certified copy) for compliance. [Paras 2, 6, 7]

Refund determined by the order dated 28.02.2023 for AY 2013-14 must be paid to the petitioner within six weeks from receipt of certified copy of this order.

Absence of statutory basis for anticipatory adjustment or retention of refundable amounts - prohibition on readjustment of refunds without notice and requisite set-off procedure - Adjusting or retaining the refundable amount in anticipation of a possible demand for other assessment years without statutory authority or notice to the petitioner is impermissible. - HELD THAT: - The respondents had adjusted the refund in 2023 purportedly towards a potential demand for earlier assessment years, including AY 2010-11, and did so without giving notice to the petitioner. The Court found that there was no enforceable demand against the petitioner at that time and the readjustment was made in anticipation of the outcome of other proceedings. In the absence of statutory enablement or due process for such anticipatory set-off, retention of the refundable amount could not be sustained. The Court therefore disallowed the respondents' retention/readjustment of the refund and directed the refund to be released. [Paras 3, 5, 6]

The anticipatory readjustment/retention of the refund towards possible demands for other years, effected without statutory basis or notice, is not permissible and the respondents must release the refund.

Final Conclusion: The petition is allowed; the first respondent is directed to identify and take all steps to refund the amount determined by the order dated 28.02.2023 for AY 2013-14 to the petitioner within six weeks from the date of receipt of a certified copy of this order.

Reopening of assessment under section 148 - Change of opinion doctrine - Reason to believe must rest on fresh tangible material - Deemed dividend under section 2(22)(e) - Link between reasons recorded and formation of belief - Reopening invalid if based on records already scrutinised

Reopening of assessment under section 148 - Reason to believe must rest on fresh tangible material - Change of opinion doctrine - Link between reasons recorded and formation of belief - Validity of the notice dated 27.03.2021 issued under section 148 and the order disposing of objections - HELD THAT: - The Court found that the reasons recorded for reopening stated that they arose from scrutiny of the case records, balance-sheet, profit & loss account and computation of income. There was no fresh or new tangible material in the possession of the revenue which could form a valid 'reason to believe' that income had escaped assessment. Where the assessing officer merely re-examines or relies upon the same material already considered during the original scrutiny assessment, the action amounts to impermissible change of opinion. The principles in Kelvinator and subsequent authorities require a real link between the recorded reasons and the formation of belief based on fresh material; that link is absent here. Consequently, reopening founded solely on re-appreciation of records already examined is invalid. [Paras 6, 7]

Notice dated 27.03.2021 under section 148 and the order disposing of objections are quashed and set aside.

Deemed dividend under section 2(22)(e) - Reopening invalid if based on records already scrutinised - Applicability of section 2(22)(e) to classify the loan/advance as deemed dividend in the hands of the petitioner - HELD THAT: - The Court observed that it was an admitted fact that the petitioner was not a shareholder of GSEC Aviation Ltd. Authorities referred to (including Daisy Packers, Ankitech and Supreme Court pronouncements) establish that subsection (e) operates where the concern receiving the loan is a shareholder or where a shareholder of the payer company holds requisite voting power in the recipient; loans given in the normal course of business benefiting both parties are not to be treated as deemed dividend. The reasons recorded did not disclose fresh material to establish that the loan should be treated as deemed dividend; the reopening could not be sustained on that ground. [Paras 4, 6]

The contention that the loan/advance should be treated as deemed dividend under section 2(22)(e) was not supportable on the material relied upon for reopening; therefore the reopening cannot be sustained on that basis.

Final Conclusion: The petition is allowed; the reassessment notice dated 27.03.2021 under section 148 and the order disposing of objections are quashed and set aside.

Condonation of delay under Section 119(2)(b) of the Income Tax Act - Admissibility of deductions under Chapter VIA/Section 80P vis-a -vis delayed filing and Section 80AC - Computation of limitation for reassessment under Section 143(2) after condonation of delay

Condonation of delay under Section 119(2)(b) of the Income Tax Act - Circular No. 13/2023 on condonation of delay and treatment of co-operative societies - Delay of 61 days in filing the ITR for Assessment Year 2018-19 is condoned and the impugned order rejecting condonation is quashed. - HELD THAT: - The Court examined the petitioner's explanation that electoral processes and related preparations under the Karnataka Co-operative Societies Act contributed to the delay in filing the return, and noted that ITR was filed on 31.12.2018 (61 days delayed). While the Assessing Officer's report did not find the explanation sufficient, the Court took into account the Board's Circular dated 26.07.2023 (No. 13/2023) authorising consideration of condonation applications for co-operative societies for assessment years including 2018-19. The Court found that the delay was caused by circumstances beyond the petitioner's control in the particular factual matrix of electoral preparations and that sufficient hardship and reasons for condonation were established. On that basis the Court quashed the third respondent's order dated 23.05.2023 and condoned the delay in filing the ITR.

Impugned order of 23.05.2023 quashed; delay of 61 days in filing ITR for AY 2018-19 condoned and consequential demand dated 31.05.2019 set aside.

Computation of limitation for reassessment under Section 143(2) - Effect of condonation on assessment timeline - Limitation for the purposes of Section 143(2) is to be reckoned from 31.12.2023 and the period of three months for completion of assessment from that date (i.e., till 31.03.2024). - HELD THAT: - Having condoned the delay and quashed the earlier demand, the Court directed that respondents' entitlement for limitation under Section 143(2) shall commence from 31.12.2023. The Court clarified that the timeline for completion of assessment must be reckoned from the end of three months now provided, resulting in the practical date by which assessment proceedings should be completed. This preserves the respondents' limitation period while giving effect to the condonation order.

Limitation for assessment under Section 143(2) shall be reckoned from 31.12.2023; timeline for completion of assessment accordingly to be computed (noting completion by 31.03.2024).

Final Conclusion: Writ petition allowed; the order refusing condonation dated 23.05.2023 is quashed, the 61-day delay in filing the ITR for AY 2018-19 is condoned and the consequential demand dated 31.05.2019 is set aside; respondents' limitation for reassessment under Section 143(2) to be reckoned from 31.12.2023 with the consequential three-month assessment timeline (till 31.03.2024).

Penalty under section 271(1)(c) of the Income Tax Act, 1961 - failure to specify limb in show-cause notice vitiates penalty proceedings - concealment of particulars of income - furnishing inaccurate particulars of income

Penalty under section 271(1)(c) of the Income Tax Act, 1961 - failure to specify limb in show-cause notice vitiates penalty proceedings - Validity of the penalty imposed under section 271(1)(c) where the Assessing Officer's show-cause notice did not specify whether the case related to concealment of particulars of income or to furnishing inaccurate particulars of income. - HELD THAT: - The Assessing Officer's penalty show-cause notice dated 30.03.2005 failed to indicate or strike out the specific limb under section 271(1)(c) - i.e., whether the proceedings were founded on concealment of particulars of income or on furnishing inaccurate particulars of income. The Tribunal applied the precedent relied upon in the impugned order, observing that such a defect in the notice vitiates the penal proceedings. On that legal basis the Tribunal concluded that the penalty could not be sustained and was liable to be deleted. The reasoning is confined to the legal effect of the procedural defect in the show-cause notice and does not re-adjudicate the underlying merits of concealment or inaccuracy. [Paras 3, 4]

The penalty under section 271(1)(c) is deleted and the appeal is allowed.

Final Conclusion: Penalty under section 271(1)(c) set aside because the Assessing Officer's show-cause notice failed to specify the relevant limb (concealment or inaccuracy), thereby vitiating the penalty proceedings; appeal allowed.

Validity of assessment order issued without Document Identification Number (DIN) - CBDT Circular No.19/2019 - mandatory quoting of DIN in communications - Invalidity of communications not conforming to CBDT Circular No.19/2019 - Exceptions for manual communications and requirement of prior written approval - CBDT circulars issued under Section 119 are binding on revenue authorities - Regularisation by generation/uploading of DIN within specified period is mandatory

Validity of assessment order issued without Document Identification Number (DIN) - CBDT Circular No.19/2019 - mandatory quoting of DIN in communications - Invalidity of communications not conforming to CBDT Circular No.19/2019 - Exceptions for manual communications and requirement of prior written approval - CBDT circulars issued under Section 119 are binding on revenue authorities - Impugned assessment order dated 04.12.2019 is invalid for not quoting a computer-generated DIN in the body of the communication and not complying with CBDT Circular No.19/2019. - HELD THAT: - The Tribunal examined CBDT Circular No.19/2019 which mandates that, on or after 1 October 2019, no communication relating to assessment or orders shall be issued unless a computer-generated Document Identification Number (DIN) is allotted and quoted in the body of the communication. The circular carves out limited exceptions permitting manual communications only upon recording reasons in the file and with prior written approval of the Chief Commissioner/Director General and requires that such communications expressly state the reasons and the approval reference. Paragraph 4 of the circular declares any communication not conforming with paragraphs 2 and 3 to be invalid and deemed never to have been issued. Applying these provisions, and following the reasoning in the Delhi High Court decision cited, the Tribunal found that the assessment order does not bear a DIN nor records the exceptional circumstances or requisite approvals; subsequent separate communication of a DIN does not cure the defect. Coordinated bench authorities were relied upon to hold that generation of DIN after signing/uploading is immaterial and the communication itself must carry the DIN at the time of issuance. In view of the binding character of CBDT circulars issued under Section 119, the Tribunal concluded that the impugned assessment order is non-est and must be quashed. [Paras 9, 11]

The assessment order is invalid for non-compliance with CBDT Circular No.19/2019 and is quashed; the appeal is allowed.

Final Conclusion: The Tribunal allowed the additional ground challenging jurisdictional validity: the assessment order for AY 2012-13 dated 04.12.2019 is quashed for non-compliance with CBDT Circular No.19/2019 (absence of DIN and failure to satisfy exception requirements); remaining grounds rendered academic.

Income deemed to accrue or arise in India under section 9(1)(ii) - inapplicability of section 5(2)(a) where services are rendered outside India - taxability of salary credited to NRE account - application of CBDT Circular No. 13/2017 to non-resident employees on on shore assignments

Income deemed to accrue or arise in India under section 9(1)(ii) - inapplicability of section 5(2)(a) where services are rendered outside India - taxability of salary credited to NRE account - application of CBDT Circular No. 13/2017 to non-resident employees on on shore assignments - Whether the salary received by the non-resident assessee, employed and rendering services in Nigeria but credited to his NRE account in India, is taxable in India - HELD THAT: - The Tribunal found as an admitted fact that the assessee was employed in Nigeria as a Senior Drilling Engineer and rendered services on on shore projects outside India. From the statutory scheme, income under the head 'Salaries' is deemed to accrue or arise in India under section 9(1)(ii) only when services are rendered in India; accordingly, the provisions invoked by the Revenue under section 5(2)(a) cannot be applied where services are rendered abroad. The Tribunal accepted the assessee's submission that the salary became due pursuant to services rendered outside India and that mere crediting of the salary to an NRE account in India does not convert the income into income earned in India. The Tribunal further held that the clarification in CBDT Circular No. 13/2017-which addresses hardship where non resident employees or seafarers receive salary in NRE accounts-applies by analogy to the facts of this case and is meant to mitigate tax consequences arising solely from credits to Indian bank accounts when employment is not performed in India. On these bases the Tribunal quashed the DRP's directions sustaining the addition and held that the salary is not taxable in India. [Paras 4, 5]

Addition of salary credited to the NRE account disallowed; directions of the DRP quashed and appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal for AY 2016-17, holding that salary for services rendered abroad and credited to an NRE account is not taxable in India; the DRP's directions sustaining the addition were quashed.

Penalty under section 271(1)(b) of the Income Tax Act, 1961 - non-compliance of statutory notice issued under section 142(1) - ex-parte assessment consequent to non-response to notice - reopening of assessment under section 148 and consequences of non-filing of return - liability of assessee despite representation by authorised representative - admissibility of additional evidence in penalty proceedings

Penalty under section 271(1)(b) of the Income Tax Act, 1961 - non-compliance of statutory notice issued under section 142(1) - ex-parte assessment consequent to non-response to notice - liability of assessee despite representation by authorised representative - Validity of levy of penalty under section 271(1)(b) for failure to comply with statutory notices leading to ex parte assessment - HELD THAT: - The Tribunal upheld the finding that the assessee neither filed the original return nor responded to the notices issued pursuant to reopening, including notices dated 12.09.2019 and 16.10.2019 under section 142(1). The Assessing Officer issued a separate show cause notice for penalty and afforded hearing dates which were not complied with. The assessee's contention that submissions and documents were uploaded on a quantum appeal portal or that an authorised representative attended in related family cases did not rebut the finding of non compliance in her own proceedings. The appellate authority correctly held that pendency of similar issues in other assessments or actions of the authorised representative does not excuse the assessee from statutory obligations and that belated production of documents irrelevant to penalty proceedings could not cure the prior non compliance. On these facts, the non cooperation was treated as deliberate and continuous and warranted imposition of penalty under section 271(1)(b).

Penalty levied under section 271(1)(b) was affirmed; appeal dismissed.

Admissibility of additional evidence in penalty proceedings - principle of natural justice in appellate proceedings - Whether matter should be remitted for fresh hearing or additional evidence admitted in penalty appeal - HELD THAT: - The Tribunal found that the assessee's request to remit the matter on the ground of inadvertent uploading of submissions to the quantum file and for admission of additional documents was untenable. The lower authority had considered the explanations and the belated materials, and observed that the additional bank passbook filed was not relevant to the penalty proceedings. Given the assessee's admitted failure to respond to statutory notices and not filing returns, there was no merit in setting aside the appellate order for further hearing in the interest of natural justice.

Request to remit the matter or admit additional evidence was rejected; no interference with the appellate order.

Final Conclusion: The Tribunal dismissed the appeal and affirmed the Commissioner (Appeals) and Assessing Officer's orders confirming penalty under section 271(1)(b) for A.Y. 2012-13 on the ground of deliberate and continuous non compliance with statutory notices, refusing to remit the matter or admit the belated documents.

Revenue expenditure versus capital expenditure - royalty/license fees payable as percentage of turnover treated as revenue expenditure - no acquisition of enduring proprietary right or asset by payment of periodic royalties - binding weight of coordinate-bench tribunal decisions in assessee's own case

Revenue expenditure versus capital expenditure - royalty/license fees payable as percentage of turnover treated as revenue expenditure - no acquisition of enduring proprietary right or asset by payment of periodic royalties - Whether the payments characterized as royalty and management service fees are capital in nature and disallowable, or revenue expenditure allowable as deduction - HELD THAT: - The Tribunal examined the contractual matrix and found that the assessee had only a limited right to use the trade name and proprietary trademarks of the licensor; ownership of the intellectual property remained with the licensor and the payments were annual, percentage-based remuneration linked to net sales turnover. The agreements provided that upon termination all rights and benefits would lapse and the assessee had to return manuals and reports without retaining copies. There was no transfer of ownership or creation of an enduring asset in favour of the assessee. The ld. CIT(A) had correctly followed earlier Tribunal decisions in the assessee's own case for adjacent years which held that such periodic franchise/royalty payments are license fees and revenue in nature. The Tribunal noted and relied upon precedents cited by the ld. CIT(A) in support of treating analogous payments as revenue expenditure, including decisions referred to as Alembic Chemicals Works Co. Ltd., Jubilant Foodwork Pvt. Ltd., Hero Honda Motors Ltd., CIT v. Hitech Arai Ltd. and CIT v. Panasonic Carbon India Co. Ltd.. Applying those principles to the facts of the present year, and observing that the facts are pari materia with the earlier favourable decisions, the Tribunal concluded there was no infirmity in deletion of the addition made by the Assessing Officer on account of royalty payments. [Paras 6]

The addition disallowing royalty and management service payments as capital expenditure is deleted; the payments are held to be revenue expenditure.

Final Conclusion: Revenue's appeal is dismissed; the Tribunal upholds the deletion of the addition made on account of royalty/management fees for AY 2013-14, following earlier tribunal decisions in the assessee's own case that such periodic percentage-based payments are revenue in nature.

Substantial question of law - concurrent appreciation of evidence and interference only if perverse/no evidence/wrong inference - duties under Customs Broker License Regulations (verification of IEC/GSTIN; obtaining authorization; advising client to comply) - retraction of statement and effect on evidentiary value - licence revocation and suspension procedure under CBLR (immediate suspension v. detailed revocation inquiry) - appeal to High Court under Section 130 of the Customs Act - limited to questions of law

Duties under Customs Broker License Regulations (verification of IEC/GSTIN; obtaining authorization; advising client to comply) - retraction of statement and effect on evidentiary value - Whether the respondent/CHA violated regulation 10(a), 10(d) and 10(n) of the Customs Broker License Regulations, 2018. - HELD THAT: - The Appellate Tribunal found on appreciation of oral testimony, cross-examination and documentary record that the respondent had valid authorisations from the companies in whose names Bills of Entry were filed and that the IEC and GSTIN of those importers were genuine and the importers were functioning at declared addresses. The Tribunal recorded that earlier statements implicating the CHA were retracted and that cross-examination supported the retraction; concurrent evidence (including deposition of a freight forwarder) contradicted the department's inference of connivance. The High Court held that the CESTAT conducted a meticulous appreciation of evidence and there was no material on record showing personal or pecuniary interest of the CHA in the imports or any role in under-valuation; mere receipt of documents from a person appearing on behalf of the importer and facilitation of clearance for firms that had authorised the CHA was insufficient to establish breach of duties under the cited regulations. The Court emphasised that the adjudicating authority had ignored retraction and cross-examination and had based findings on presumptions and third party evidence, which the Tribunal properly rejected. [Paras 12, 13, 14, 16, 17]

Findings of CESTAT that violations of regulation 10(a), 10(d) and 10(n) were not made out are affirmed; the revocation and penalty were correctly set aside.

Substantial question of law - concurrent appreciation of evidence and interference only if perverse/no evidence/wrong inference - appeal to High Court under Section 130 of the Customs Act - limited to questions of law - Whether the appeal to the High Court under Section 130 raised a substantial question of law warranting interference with the CESTAT's concurrent factual findings. - HELD THAT: - The Court analysed the threshold in Section 130 and the principles expounded by the Supreme Court (including the tests for when concurrent findings may be disturbed: ignored material evidence, decision based on no evidence, wrong inference or wrongly cast burden). Applying those principles to the record, the High Court concluded that the CESTAT's conclusions resulted from a proper appreciation of evidence, including consideration of retraction and cross-examination, and were not perverse or manifestly erroneous. There was no demonstrable legal error in the Tribunal's approach that would constitute a substantial question of law; the High Court cannot re-appreciate evidence merely because a different inference could be drawn absent perversity. [Paras 9, 10, 11, 17, 18]

The appeal did not raise any substantial question of law; the High Court declines to interfere and dismisses the appeal.

Final Conclusion: The High Court finds no merit in the Commissioner's appeal; CESTAT's setting aside of the revocation of the CHA's licence and the penalty imposed was based on a proper appreciation of evidence and does not involve any substantial question of law under Section 130, and the appeal is dismissed.

Classification of vessels under the Customs Tariff - use of end-use in classification - re-determination of assessable value under customs valuation - time-barred demands and extended period of limitation in customs adjudication - penalty liability of Customs House Agent contingent on importer's liability

Penalty liability of Customs House Agent contingent on importer's liability - classification of vessels under the Customs Tariff - time-barred demands and extended period of limitation in customs adjudication - Whether the personal penalty imposed on the Customs House Agent under the Order in Original is sustainable in view of this Tribunal's prior decision setting aside the departmental demand and classification/valuation adjustments against the importer and its director. - HELD THAT: - The Tribunal recorded that the principal charges of misclassification, misdeclaration and consequential demand against the importer and its director were earlier considered and rejected by this Tribunal in its order dated 12.03.2014, which held the vessel to be correctly classified as a passenger ship (CTH 8901), treated the demand invoking extended period as not maintainable in the absence of evidence of fraud or wilful suppression, and concluded that there was no justification for reopening the assessment. In the present appeal the learned departmental representative conceded that the earlier decision stands. Given that the foundational liability against the importer/director has been finally negatived, the causa causans for imposing the personal penalty on the Customs House Agent ceases to exist. Relying on the earlier adjudication on classification, valuation and limitation, the Tribunal set aside the penalty order against the appellant Customs House Agent and allowed the appeal. [Paras 3, 4]

Order in Original imposing personal penalty on the appellant Customs House Agent set aside and appeal allowed.

Final Conclusion: The penalty imposed on the Customs House Agent is quashed because the departmental demand and the underlying findings of misclassification/undervaluation against the importer and its director have been previously set aside by this Tribunal, thereby removing the basis for imposing personal penalty on the appellant.

Confiscation of non-notified goods - onus on Revenue to prove illegal importation/smuggling - reliability of forensic/ laboratory opinion - opinion of local traders as evidence - confiscation of conveyance used for alleged smuggling

Confiscation of non-notified goods - onus on Revenue to prove illegal importation/smuggling - Validity of confiscation of betel nuts and consequential penalties where goods are not notified and Revenue's case rests on proof of illegal importation. - HELD THAT: - The Tribunal agreed with the Commissioner (Appeals) that betel nuts are not notified under the Customs Act and therefore the burden to establish that the consignment was illegally imported lies on the Revenue. The adjudicating authority relied on opinions and a laboratory report but did not produce positive evidence of improper importation or specify any unauthorized route of entry. The Tribunal found that, in absence of such evidence and having regard to documentary material produced by the respondent indicating local purchase and government material showing domestic production, confiscation and penalties were not justified. The Tribunal also observed that concurrent decisions of the bench and higher courts have treated origin as a question of fact and refused to uphold confiscation where the Revenue failed to discharge the requisite onus. [Paras 4]

Confiscation of the betel nuts and imposition of penalties set aside; impugned order upholding that relief is sustained.

Reliability of forensic/ laboratory opinion - opinion of local traders as evidence - Whether the report of Arecanut Research & Development Foundation (ARDF) and opinions of local traders could, by themselves, establish foreign origin of the betel nuts and support confiscation. - HELD THAT: - The Tribunal accepted the Appellate Authority's conclusion that the ARDF report cannot be treated as a conclusive scientific test as the institution itself (by way of RTI reply) stated that place of origin of betel nut cannot be determined through laboratory testing; consequently the ARDF product is only an opinion. Similarly, opinions of local traders were held to be insufficient to substitute for legal evidence establishing foreign origin or smuggling. Precedents of the Tribunal and High Courts were noted where non-accreditation of ARDF and absence of corroborative material led to rejection of reliance on its certificate. In short, neither the ARDF opinion nor local traders' statements discharged the Revenue's burden to establish illegal importation. [Paras 4]

ARDF report and local traders' opinions are not sufficient evidence to prove foreign origin or illegal importation; reliance thereon to uphold confiscation is unwarranted.

Confiscation of conveyance used for alleged smuggling - onus on Revenue to prove illegal importation/smuggling - Lawfulness of confiscation of the vehicle used to transport the seized betel nuts where illegal importation was not proved. - HELD THAT: - Confiscation of the truck was predicated on the alleged illegal importation of the betel nuts. Since the Tribunal upheld the finding that the Revenue failed to establish that the goods were smuggled into India, the ancillary measure of confiscating the conveyance under Section 115(2) could not be sustained. The Tribunal therefore affirmed the Appellate Authority's setting aside of the vehicle confiscation. [Paras 2, 4]

Confiscation of the vehicle is not justified and is set aside.

Final Conclusion: Revenue appeal dismissed; the Commissioner (Appeals) order setting aside confiscation of the betel nuts and the vehicle (and related penalties) in respect of Shri Vijay Kumar Gupta is upheld.

Procedural lapse / technical violation - condonation of delayed realization of export proceeds - substantive benefit versus procedural requirement - drawback recovery under rule for non-realisation within prescribed period - export oriented rebate/drawback schemes - liberal construction

Condonation of delayed realization of export proceeds - procedural lapse / technical violation - substantive benefit versus procedural requirement - Whether the Commissioner (Appeals) was justified in dropping the demand for duty drawback on account of delayed realization of export proceeds when the entirety of the sale proceeds was ultimately realized. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) had examined the Bank Realisation Certificates and admitted that complete sale proceeds covered by the shipping bill were realized, although two of the six BRCs recorded realizations beyond the prescribed period. The Tribunal held that the delay was a procedural lapse or technical violation and that once realization of entire export proceeds is not disputed, such procedural breaches do not defeat entitlement to the substantive benefit of drawback. The Tribunal relied on the consistent administrative and judicial approach, as reflected in the decisions and governmental instructions reproduced in the impugned order, favouring a liberal construction of export incentive schemes and condonation of procedural infractions where exports have in fact occurred - including reference to Global Sugar Ltd. , Sun Pharmaceutical Industries Ltd. and Sanket Industries Ltd. as cited in the impugned order. Applying that principle to the facts (the admitted full realization of proceeds and verification of the BRCs by the Commissioner (Appeals)), the Tribunal concluded there was no legal reason to withhold the drawback benefit or to sustain the demand merely on account of delayed remittances which were beyond the exporter's control. [Paras 4, 5]

The demand was correctly dropped by the Commissioner (Appeals); the appeal by Revenue is without merit and is dismissed.

Final Conclusion: Revenue's appeal against the Commissioner (Appeals) order was dismissed; the Tribunal upheld the condonation of delayed realization and the dropping of the drawback demand since the entire export consideration was ultimately realized and the delay was a procedural/technical lapse not warranting denial of the substantive drawback benefit.

Interim stay having pan-India effect - operation of administrative notification stayed pending adjudication - provisional release of perishable goods on furnishing bank guarantee - availability of alternative remedy under Section 128 not an absolute bar to writ relief - principles of natural justice in interim orders

Interim stay having pan-India effect - operation of administrative notification stayed pending adjudication - Effect of interim stay orders against DGFT Notification No.5/2023 and its consequence for confiscation of imported apples - HELD THAT: - The Court held that interim stay orders granted by other High Courts in respect of Notification No.5/2023 operate beyond territorial limits and that the stay of the notification was in force at the relevant time. Having regard to the stay granted in WP(C) No.22281 of 2023 by the Kerala High Court and subsequent interim stays in related matters, the confiscation order based on the notification lacked legal sanctity while the stay subsisted. The court relied upon established precedents recognising that a writ order addressing the validity or operation of an enactment or notification will have effect throughout India subject to territorial applicability considerations, and concluded that the stay on the notification justified interfering with the confiscation, at least provisionally, pending final adjudication. [Paras 11, 12]

The confiscation based on Notification No.5/2023 could not be sustained while the notification was stayed; release of the goods was appropriate subject to conditions to safeguard the Department's interest.

Provisional release of perishable goods on furnishing bank guarantee - principles of natural justice in interim orders - Whether perishable imported apples should be provisionally released and on what terms - HELD THAT: - The Court considered the perishable nature of the goods and precedent of the Supreme Court allowing provisional release of goods in similar circumstances. Weighing the competing interests, the Court directed provisional release of the imported fresh apples on the condition that the respondent furnish a bank guarantee for the differential duty, to preserve departmental interests while avoiding loss of perishable consignments. The Court modified the earlier interim direction by specifying the security to be furnished and by keeping the guarantee alive until the validity of the notification is finally determined. The Court also declined the contention that the interim order violated natural justice on the facts, given the urgency and the existence of stays on the notification. [Paras 12, 14]

Goods to be released provisionally upon respondent furnishing a bank guarantee for the differential duty; guarantee to remain until final determination of the notification's validity.

Availability of alternative remedy under Section 128 not an absolute bar to writ relief - Whether availability of appeal under Section 128 of the Customs Act precluded grant of interim writ relief - HELD THAT: - The Court rejected the appellant's submission that the existence of an appellate remedy under Section 128 precluded the writ court from granting interim relief. The Court observed that interim relief was directed in the backdrop of stay orders against the notification and the perishable nature of the goods; accordingly, the existence of an alternative remedy did not operate as an automatic bar to provisional relief in the circumstances of the case. [Paras 5, 11]

Availability of appeal under Section 128 did not preclude grant of interim relief releasing the goods on terms in the present facts.

Final Conclusion: The appellate challenge is disposed by modifying the interim order: the confiscation could not be sustained while Notification No.5/2023 was stayed, and the perishable imported apples are to be provisionally released subject to a bank guarantee for the differential duty (directed at Rs.2,25,000), the guarantee to remain until final adjudication of the notification; writ appeal disposed with no costs.

Allegation of suppression in filing of ANF 5A - ANF 5A para 4B declaration requirement - application of amendment to Foreign Trade Policy with effect from 05.06.2012 - simultaneous availment of Status Holder Incentive Scheme and Zero Duty EPCG - recovery of duty foregone under Zero Duty EPCG Licence - treatment of erroneous issuance as bonafide error in Public Notice - extended period of limitation for demand

Allegation of suppression in filing of ANF 5A - ANF 5A para 4B declaration requirement - application of amendment to Foreign Trade Policy with effect from 05.06.2012 - simultaneous availment of Status Holder Incentive Scheme and Zero Duty EPCG - recovery of duty foregone under Zero Duty EPCG Licence - extended period of limitation for demand - Whether demand for recovery of duty foregone under Zero Duty EPCG Licences could be sustained on the ground of suppression by the appellant where the ANF 5A did not contain para 4B prior to 05.06.2012 and the licences were issued before that date. - HELD THAT: - The Tribunal found that both Zero Duty EPCG licences were issued before 05.06.2012 and that the undertaking now contained in para 4B of ANF 5A was introduced only with effect from 05.06.2012. Since there was no requirement to give the para 4B declaration at the time the ANF 5A forms were filed, the allegation that the appellant suppressed information by not declaring non-availment of SHIS is not proved. The Tribunal noted the Public Notice dated 08.09.2016 in which authorities treated erroneous issuances as bonafide errors and that proposals for penalties were dropped by the original authority. In light of the absence of a pre-existing obligation to make the para 4B declaration and the acceptance in the public notice of bonafide error, there was no irregularity warranting recovery of the duty foregone even under extended limitation. [Paras 4, 5]

Demand for recovery of duty foregone under the Zero Duty EPCG licences set aside and the appeal allowed.

Final Conclusion: The Tribunal held that the demand based on alleged suppression was unsustainable because ANF 5A did not contain para 4B prior to 05.06.2012 and the licences were issued before the amendment; having regard to the Public Notice treating erroneous issuance as bonafide error, the impugned order demanding recovery of duty is set aside and the appeal is allowed.

Provisional release under Section 110A of the Customs Act, 1962 - bond and bank guarantee as security for provisional release - inspection and accounting safeguards for released goods - prohibited goods and consequential risk of confiscation - balance of convenience in interlocutory relief

Provisional release under Section 110A of the Customs Act, 1962 - bond and bank guarantee as security for provisional release - inspection and accounting safeguards for released goods - balance of convenience in interlocutory relief - Application for provisional release of crude gold bullion seized from the appellant's premises. - HELD THAT: - The Tribunal held that the question of the seized gold's foreign provenance and licit origin is a matter for adjudication and declined to decide those issues at the interlocutory stage. Noting the long pendency of adjudication and the competing interests of Revenue and the appellant, the Tribunal applied the balance of convenience in favour of granting provisional release subject to adequate safeguards for the Revenue. Reliance was placed on the approach in the judgment referred to as Its My Name, where provisional release was ordered on furnishing a bond and a bank guarantee; the Tribunal noted that the Supreme Court has enhanced the security in that line of cases but, on the facts before it, directed release on specified terms. The Tribunal therefore ordered release of the seized goods on condition that the appellant furnishes a bond for the full value of the seized goods and a bank guarantee with an auto-renewal clause for 30% of the value, keeps the premises open for Revenue inspection at reasonable hours, duly accounts for all utilization or sale, and furnishes weekly account statements to the Revenue. These conditions were considered sufficient to protect Revenue's interest while permitting the appellant to continue its business pending adjudication.

The impugned refusal to provisionally release the seized gold is set aside and the goods are directed to be released subject to a full-value bond, a bank guarantee for 30% with auto-renewal, open premises for inspection and weekly accounting by the appellant.

Final Conclusion: Appeal allowed in part; provisional release of seized crude gold bullion ordered on the stated security and compliance conditions, and the impugned order refusing release set aside.

Violation of export obligation and installation requirement under exemption notification (condition No.6) - recovery of duty forgone on duty free importation - prohibition on re export or destruction without compliance with prescribed time limit and proper officer's authority - interest and penalty liability arising from non installation or non re export within prescribed period - remand for quantification of penalty, redemption fine and interest

Violation of export obligation and installation requirement under exemption notification (condition No.6) - recovery of duty forgone on duty free importation - interest and penalty liability arising from non installation or non re export within prescribed period - Duty free imported machinery was not installed or used within the prescribed period and the charges in the show cause notice for recovery of duty and allied liabilities are sustained. - HELD THAT: - The exemption Notification No.53/97 Cus imposes an obligation (condition No.6) that capital goods imported duty free must be installed or otherwise used within the bonded premises or re exported within one year (or extended period) failing which duty and interest become payable. The adjudicatory finding that the imported textile machinery was neither installed nor used for manufacture of export goods is accepted. The consequence is that the duty forgone (and interest as provided by the notification) is leviable and the departmental charges framed in the show cause notice are upheld on merits. The Tribunal accordingly sets aside the impugned order in original which had dropped the proceedings and allowed re export/destruction without lawful basis. [Paras 6, 7]

Charges in the show cause notice upheld; adjudicating authority's order dropping proceedings is set aside; matter remanded for re adjudication on quantification of penalty, redemption fine and allied liabilities after giving the respondent a proper hearing.

Prohibition on re export or destruction without compliance with prescribed time limit and proper officer's authority - remand for quantification of penalty, redemption fine and interest - The impugned grant of permission to re export the duty free machinery and the alternative liberty to destroy the goods was unlawful. - HELD THAT: - The Tribunal holds that permission to re export could only lawfully be granted if the importer had followed the prescribed procedure and time schedule under the exemption notification and made a timely request to the proper officer; the impugned decision to permit re export without such compliance exceeded the scope of the show cause notice and the authority of the adjudicating officer. Further, allowing destruction of goods imported duty free would effect an arbitrary abatement of leviable customs duty and lacks authority under customs law. For these reasons the Tribunal finds the re export/destruction directions in the order in original unsustainable and sets aside that relief, while preserving the department's right to recover duty, interest and impose penalties as appropriate. [Paras 7]

Order permitting re export or destruction declared illegal and set aside; relief of re export/destruction withdrawn and reference remitted to the original adjudicating authority for appropriate quantification and adjudication.

Final Conclusion: The appeal is allowed: the order in original is set aside, the departmental charges are sustained, and the matter is remitted to the original adjudicating authority to re adjudicate quantification of duty, interest, penalty and redemption fine after affording the assessee a proper hearing.

Quantity actually received in India as the basis for levy of customs duty - Ship's Ullage Survey / shore tank quantity for assessment of bulk liquid imports - invalidity of relying on Bill of Lading quantity where import is not complete - application of the Hon'ble Supreme Court decision in Mangalore Refinery and Petrochemicals Limited - consequential effect of Board circulars clarifying assessment protocol for bulk liquid cargo

Quantity actually received in India as the basis for levy of customs duty - Ship's Ullage Survey / shore tank quantity for assessment of bulk liquid imports - application of the Hon'ble Supreme Court decision in Mangalore Refinery and Petrochemicals Limited - Whether customs duty for imported crude petroleum oil must be assessed on the quantity actually received in India (shore tank/Ship's Ullage Survey) rather than on the Bill of Lading quantity, and whether the adjudicating and appellate orders conform to the law laid down by the Hon'ble Supreme Court and Board circulars. - HELD THAT: - The Tribunal held that the question is no longer res integra in view of the Hon'ble Supreme Court's ruling in Mangalore Refinery and Petrochemicals Limited, which declared that the quantity of crude oil actually received into a shore tank in India is the proper basis for levy of customs duty and that reliance on Bill of Lading quantities (or a contrary circular) is contrary to the statutory scheme. The appellate authority had applied the MRPL ratio and subsequent Board clarification directing that shore tank quantities (or, where goods are directly cleared without shore tanking, the Ship's Ullage Survey at discharge port) govern assessment of bulk liquid cargo. The Tribunal found that the adjudicating authority and Commissioner (Appeals) correctly applied MRPL and the Board's circulars in finalizing the refunds and adjustments, including recognition that certain short payment and erroneous refund aspects were being pursued separately by issue of an SCN. Having applied the Supreme Court principle and the Board guidance, the impugned appellate order was held to be legally tenable. [Paras 6, 7]

The Tribunal upholds the view that assessment must be based on quantity received in India (shore tank/Ship's Ullage Survey) in line with MRPL and Board circulars, and finds the impugned order-in-appeal correct.

Final Conclusion: The appeal is dismissed; the impugned order-in-appeal upholding assessment and refund adjustments in conformity with the Hon'ble Supreme Court's decision and Board circulars is affirmed.

Conjunctive construction of 'and' in exemption clauses - exclusionary clause in exemption notification to be strictly and narrowly construed - interpretation of tariff/notification language to determine scope of excluded goods - entitlement to exemption under the Information Technology Agreement (ITA)-derived notification - classification under Customs Tariff Item 8517 62 90

Conjunctive construction of 'and' in exemption clauses - interpretation of tariff/notification language to determine scope of excluded goods - Whether the exclusion at Serial No. 13(iv) - "Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products" - excludes products having only MIMO technology or only those products which have both MIMO and LTE. - HELD THAT: - The Tribunal accepted the respondent's contention that the conjunction 'and' in clause (iv) is to be given its ordinary conjunctive meaning and, read in the textual and contextual matrix of the notification, denotes products which contain both MIMO and LTE. The word 'products' does not appear after 'MIMO' and the entry must be read as drafted; if the Government intended to exclude products having MIMO technology alone, the term 'products' would have been used after 'MIMO' as well. Reliance was placed on the ordinary dictionary meaning of 'and' and on earlier decisions holding that a conjunctive 'and' is to be given its conjunctive sense in tariff/notification language. The Tribunal further noted that exclusionary parts of exemption notifications must be construed narrowly so as not to frustrate the object of the exemption. Having regard to these principles and the earlier Tribunal decision in Ingram Micro confirming classification of identical WAP under CTI 8517 62 90, the conclusion was reached that clause (iv) applies only to goods combining both MIMO and LTE technologies and does not capture WAPs having MIMO technology but not supporting LTE. [Paras 25, 27, 28, 29, 31]

Clause (iv) of Serial No.13 excludes products which contain both MIMO and LTE; products having only MIMO technology are not covered by the exclusion.

Entitlement to exemption under the Information Technology Agreement (ITA)-derived notification - classification under Customs Tariff Item 8517 62 90 - strict construction of exclusionary clause in an exemption notification - Whether the imported Wireless Access Points (WAP) of Beetal Teletech, which are MIMO-enabled but do not support LTE, are entitled to exemption from the whole of customs duty under Serial No.13 of the notification and whether demands, penalties and confiscation proposals could be sustained. - HELD THAT: - Applying the interpretation that clause (iv) requires both MIMO and LTE, the Tribunal found that the imported WAPs work on MIMO technology without LTE and are classifiable under CTI 8517 62 90. The Tribunal observed that India's entry into the ITA and the original intent of the exemption support extending the benefit to such networking equipment. As exclusionary clauses must be narrowly construed, the Department's proposals to deny exemption, invoke extended limitation, confiscate goods or impose penalties were not sustainable on the facts. The Tribunal also relied on the prior Ingram Micro decision granting identical relief, which the Department had accepted, and concluded there was no infirmity in the adjudicating authority's order dropping duty demands and penalties. [Paras 28, 29, 31, 32, 33]

WAPs imported by Beetal Teletech (MIMO-enabled but not LTE-capable) are entitled to exemption under Serial No.13 and the demand, confiscation proposals and penalties were correctly dropped; departmental appeals are dismissed.

Final Conclusion: The appeals by the Department are dismissed: clause (iv) of Serial No.13 excludes only products having both MIMO and LTE, WAPs with MIMO but without LTE are entitled to exemption under the notification (classified under CTI 8517 62 90), and the demand and penalties were rightly dropped.

Classification of routers under Heading 8517 and sub-heading 8517 62 90 - Application of HSN Explanatory Notes to tariff classification - General Rules for Interpretation (GIR) - Rule 1 - Admissibility of advance ruling where prior show cause notices relate to an earlier tariff regime - Eligibility for exemption under Notification No. 24/2005-Customs (Sr. No. 13N) for goods classifiable as routers

Admissibility of advance ruling where prior show cause notices relate to an earlier tariff regime - Section 28-I(2)(a) proviso - bar on admission if question already pending - Application for advance ruling is admissible despite earlier show cause notices which relate to a period when a different tariff item existed - HELD THAT: - The Authority examined whether the CAAR application was barred under the proviso to Section 28-I(2)(a) because of pending show cause notices. The SCNs related to alleged misclassification for periods prior to 1-1-2020 when a specific tariff item for routers (8517 69 30) existed and when the exemption under Sr. No. 13N had not been introduced. With the elimination of tariff item 8517 69 30 effective 1-1-2020, the legal framework has changed and there is no longer a pending question in the applicant's case under the current tariff/notification regime. On that basis the Authority allowed admission of the applications for advance ruling under Section 28-I(2)(a). [Paras 5]

Applications admitted for advance ruling as the prior SCNs pertain to a pre-1-1-2020 legal regime and do not bar the present application

Classification of routers under Heading 8517 and sub-heading 8517 62 90 - Application of HSN Explanatory Notes to tariff classification - GIR Rule 1 - titles are for reference; classification by terms of headings and notes - The imported routers are classifiable under sub-heading 8517 62 90 of the Customs Tariff Act, 1975 - HELD THAT: - The Authority applied the Harmonized System principles and GIR Rule 1, and relied on the HSN Explanatory Notes to Heading 85.17 which expressly list 'routers' among 'other communication apparatus'. The devices under consideration perform the characteristic functions of routers - receiving and forwarding data packets between packet-switched networks and enabling connection to wired or wireless communication networks - and thus satisfy the criteria for inclusion under sub-heading 8517 62 which covers machines for reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus. As routers are not otherwise specifically described within the enumerated tariff items of 8517 62, they fall within the residual entry 8517 62 90. [Paras 5]

Routers covered by the application are classifiable under sub-heading 8517 62 90

Eligibility for exemption under Notification No. 24/2005-Customs (Sr. No. 13N) for goods classifiable as routers - The routers classifiable under sub-heading 8517 62 90 are eligible for duty exemption under Sr. No. 13N of Notification No. 24/2005-Customs, as amended - HELD THAT: - Having held that the subject goods fall within sub-heading 8517 62 90, the Authority examined the notification and found that Sr. No. 13N exempts 'Routers' falling under Heading 8517 62 90 from customs duty. Therefore, the impugned goods, being classifiable under that sub-heading, qualify for the exemption provided by the notification. [Paras 6]

The impugned routers are entitled to the duty exemption under Sr. No. 13N of Notification No. 24/2005-Customs

Final Conclusion: The Authority admitted the advance ruling application (as the earlier SCNs related to a prior tariff regime) and ruled that the specified router models are classifiable under sub-heading 8517 62 90 of the Customs Tariff Act, 1975, and eligible for customs duty exemption under Sr. No. 13N of Notification No. 24/2005-Customs, as amended.

Manipulative and unfair trade practices - disgorgement - acting in concert - open offer obligation under the SAST Regulations - perverse finding / want of evidence - interest on disgorged amount and double interest

Manipulative and unfair trade practices - perverse finding / want of evidence - Validity of the WTM's finding that Arvind Babulal Goyal adopted a modus operandi to accumulate shares and disposed of them pursuant to a false SMS, and that he effected manipulative trades (self-trades, synchronized and reversal trades) creating artificial volume. - HELD THAT: - The Tribunal held that the finding in paragraph 4.11 of the impugned order that Arvind Goyal had a modus operandi to accumulate shares and dispose them pursuant to the SMS was patently erroneous and based on surmises and conjectures; there is no evidence to establish such modus operandi (paras 12, 17). Tables relied on in the impugned order show no trades by Arvind Goyal after the SMS of January 11, 2011, and thus the finding that he sold pursuant to the SMS is contrary to the material on record (para 13). The impugned order also misidentified the SMS sender (Prem Agarwal instead of Prem Gudiya) and no nexus between the sender and Arvind Goyal was established; available material indicates the SMS originated from persons linked to noticee no.1 (paras 14-16). Given the absence of trades by Arvind Goyal or Pooja Goyal after the SMS, the Tribunal concluded that the finding of manipulative trading and violation of Regulations 3 and 4 of the PFUTP Regulations could not be sustained (paras 22-23). [Paras 15, 16, 17, 22, 23]

The WTM's findings that Arvind Goyal adopted a modus operandi to accumulate and dispose of shares pursuant to the SMS and that he engaged in manipulative trades are set aside for being unsupported by evidence.

Disgorgement - interest on disgorged amount and double interest - perverse finding / want of evidence - Sustainability of the disgorgement direction and the interest ordered by the WTM. - HELD THAT: - The Tribunal observed that the impounding order figure could not supplant the disgorgement amount crystallised by the show cause notice. The show cause notice had crystallised disgorgement at a lower amount, and the WTM could not rely on the impounding-order figure (para 24). Further, the direction to pay interest at 12% per annum was impermissible insofar as the disgorged amount already included a component of interest, and thus would amount to double interest (para 24). In view of the Tribunal's conclusion that there was no violation of the PFUTP Regulations by Arvind Goyal, the disgorgement order could not be sustained. [Paras 24]

Disgorgement order against Arvind Goyal is set aside; the WTM erred in considering the impounding-order figure instead of the show-cause crystallised amount and in directing interest that led to double interest.

Acting in concert - open offer obligation under the SAST Regulations - perverse finding / want of evidence - Whether the finding that the noticees were acting in concert and thereby triggered the obligation to make an open offer under Regulations 10 and 11 of the SAST Regulations is sustainable. - HELD THAT: - The Tribunal found that the WTM's conclusion that Arvind Goyal had traded from Abhay Javlekar's account was not supported by a sound appreciation of documentary evidence (paras 18-21). Material on record-letters from the broker, disputed trade communications, call records and admissions-indicate that Abhay Javlekar was aware of trades from his account and had placed orders, and there were internal inconsistencies in his statements; consequently, it is difficult to accept that Arvind Goyal was using Abhay Javlekar's account as alleged (paras 19-21). Because the finding of trading from Abhay Javlekar's account is set aside, the basis for treating the parties as acting in concert fails. However, the Tribunal noted that the parties did acquire shares in their individual capacities and that whether any of them (individually or, as husband and wife, jointly) crossed the thresholds under Regulations 10 and 11 requires fresh determination. The Tribunal directed that the AO consider afresh whether Arvind and Pooja Goyal (as husband and wife) and Abhay Javlekar individually triggered the open offer obligation, and if so, to impose penalty commensurate with the acquisition. [Paras 19, 20, 21, 25, 26]

The finding of acting in concert is not proved and cannot be sustained; the question whether individual or joint holdings triggered the open offer obligation is remitted to the AO for fresh consideration and determination.

Final Conclusion: The WTM orders insofar as they relate to Arvind Babulal Goyal and Pooja Arvind Goyal are set aside; the disgorgement and debarment/penalty findings against them are quashed for lack of supporting evidence and for errors in computation of disgorgement/interest. The remaining issues relating to whether the acquisitions by Arvind and Pooja Goyal (as husband and wife) and Abhay Javlekar individually triggered open offer obligations under Regulations 10 and 11 are remitted to the Adjudicating Officer for fresh consideration and, if required, levy of penalties proportionate to any acquisitions found to trigger those obligations. Parties to bear their own costs.

Front running - misuse of confidential information - synchronised trades and matching of orders as indicator of prior information - facilitation and lending of trading accounts - disgorgement and debarment as remedial measures - penalty under Section 15HB of the SEBI Act - principles of natural justice and delay - breach of interim restraint order - settlement of proceedings

Front running - misuse of confidential information - synchronised trades and matching of orders as indicator of prior information - Findings that front running by the identified front runners and by Manish Chaturvedi were established on the material on record. - HELD THAT: - The Tribunal accepted the WTM/AO analysis that trading patterns - including a high proportion of common scrip days, overwhelmingly matching percentages of shares and trades, precise price matching, and significantly higher profits on common scrip days - demonstrate trading on the basis of prior non-public information of the Sterling group. Call records and voice recordings contemporaneous with order timings, together with meticulous sample analyses of trades (including the detailed Idea/18.11.2010 tranche) corroborated the inference that Manish Chaturvedi possessed and used vital information and placed orders through the front runners, and that the front runners executed synchronised trades ahead of or in tandem with the Sterling group. The appellants did not rebut these findings before the Tribunal. On this basis the Tribunal held the fraudulent scheme of front running clearly established. [Paras 25, 26, 27, 28, 29]

The finding of front running by Manish Chaturvedi and the front runners is upheld.

Facilitation and lending of trading accounts - misuse of confidential information - disgorgement and debarment as remedial measures - Liability of dealers/facilitators (including Madhu Chanda, Anandilal Chanda and Anandilal Chanda HUF) for facilitating front running and deriving unlawful gains was established and the consequential directions were justified. - HELD THAT: - The WTM/AO made specific findings that the dealer at Sharekhan (Madhu Chanda) passed information about orders of Manish Chaturvedi to her husband, and that Anandilal Chanda (and his HUF) traded ahead of the clients of Sharekhan by virtue of that information. The authorities' sample analyses showed orders by Anandilal Chanda/HUF were placed seconds before or at marginally better prices than client orders, produced substantially greater profits on common scrip days and matched with Sterling group trades - consistent with use of specific information. These peculiar and synchronised trade patterns went unexplained by the appellants. The Tribunal found the WTM/AO correctly concluded that these appellants defrauded investors, obtained unlawful gains and caused loss to other investors, thereby justifying disgorgement and debarment directions. [Paras 32, 33, 34, 35, 36]

The findings of facilitation, liability of Madhu and Anandilal Chanda (including HUF), and the consequential disgorgement and debarment directions are sustained.

Penalty under Section 15HB of the SEBI Act - breach of interim restraint order - facilitation and lending of trading accounts - Liability of Praveen Kumar Jain for providing and lending trading accounts, contravention of an earlier restraint order, and the imposition of monetary penalty were upheld. - HELD THAT: - Praveen admitted that he provided multiple trading accounts to be used by Manish Chaturvedi and that he distributed profits to Manish after retaining commission; the Tribunal recorded that he thereby granted control of accounts enabling front running. The Tribunal further found that such lending/usage overlapped with a prior interim restraint order applicable to him, amounting to dealing in securities despite restraint. Given these admissions and the overlap of account usage with the restraint period, the Tribunal held the imposition of monetary penalty under the SEBI Act to be justified. [Paras 42, 43, 44]

Praveen Kumar Jain's facilitation, breach of restraint and the penalty imposed therefor are affirmed.

Principles of natural justice and delay - delay/non-supply of evidence - settlement of proceedings - Contentions of undue delay, denial of natural justice (non-supply of investigation material, inability to cross-examine, and reliance on voice recordings), and related procedural objections were rejected. - HELD THAT: - The Tribunal observed no substantive attack on merits had been advanced and noted the appellants had largely abstained from participation before the WTM/AO, failed to seek documents or take available opportunities, and in some instances had sought settlement which contributed to delay. The Tribunal accepted the authorities' explanation that collation and analysis of extensive trading data took time and found no prejudice caused by the timeline. Requests and objections not raised before the WTM/AO could not be entertained for the first time on appeal. The Tribunal therefore rejected the procedural/contention-of-delay and natural justice pleas. [Paras 37, 38, 39, 40, 41]

Procedural objections and pleas of undue delay or breach of natural justice are dismissed.

Settlement of proceedings - disgorgement and debarment as remedial measures - Effect of settlement by Sharekhan on proceedings against other noticees. - HELD THAT: - The Tribunal recorded that proceedings against Sharekhan had been settled and Sharekhan had deposited the ill-gotten gains and settlement amount as per the settlement order. That settlement did not vitiate the findings against other noticees; the WTM/AO and the Tribunal proceeded to determine and uphold liability of the other parties on the basis of the material relevant to them. [Paras 18]

Settlement by Sharekhan was recorded; it did not negate or undermine the findings against other noticees.

Final Conclusion: In view of the overwhelming and unrebutted material, the Tribunal upheld the WTM/AO findings of front running, facilitation and lending of trading accounts, affirmed disgorgement, debarment and monetary penalties (including the penalty under Section 15HB in respect of Praveen Kumar Jain), rejected procedural and delay-based objections, and dismissed the appeals.

Liability of non executive independent director for disclosure violations - misleading corporate announcement and non disclosure of pledge and loan arrangements - application of fiduciary/monitoring duties of audit committee members - temporal inapplicability of Companies Act, 2013 provisions to transactions predating the statute - penalty and debarment under securities law for fraudulent scheme and market manipulation

Liability of non executive independent director for disclosure violations - penalty and debarment under securities law for fraudulent scheme and market manipulation - Whether the appellant, a non executive independent director, could be held liable and subjected to penalty and debarment by SEBI/WTM for the alleged fraudulent GDR scheme, non disclosure of pledge and loan agreements, and misleading corporate announcement. - HELD THAT: - The Tribunal examined the AO's and WTM's findings that the GDR issue was effectively subscribed by a single entity and that the company and its directors had executed and failed to disclose a pledge and a loan arrangement, thereby misleading investors and violating securities laws. However, as regards the appellant, the Tribunal found no material on record to show that the GDR matter was placed before the audit committee or that the appellant participated in day to day management. The WTM/AO's reliance on the appellant's membership and later chairmanship of the audit committee and on Section 177(4)(viii) of the Companies Act, 2013 to fasten responsibility was unsupported by evidence and legally misplaced because the relevant Board resolution and the GDR issuance occurred in 2010 11, prior to the enactment of the 2013 Act. The Tribunal also relied on its earlier decisions holding that independent directors who are not part of day to day affairs cannot be held liable for such disclosure violations. On these findings, the Tribunal concluded that the impugned orders of penalty and debarment could not be sustained insofar as they related to the appellant and therefore must be quashed. [Paras 13, 14, 16]

Impugned orders of the WTM and AO imposing penalty and debarment are quashed insofar as they relate to the appellant.

Application of fiduciary/monitoring duties of audit committee members - temporal inapplicability of Companies Act, 2013 provisions to transactions predating the statute - Whether Section 177(4)(viii) of the Companies Act, 2013 or the audit committee membership could be invoked to fasten responsibility on the appellant for the GDR transactions executed in 2010 11. - HELD THAT: - The Tribunal held that Section 177(4) of the Companies Act, 2013 could not be applied to events and resolutions that occurred in 2010 11 because the provision did not exist at that time. Further, there was no evidence that the GDR issue was placed before the audit committee under the earlier regime; absent such a factual foundation, mere attendance at board meetings or subsequent association with the company cannot be equated with participation in day to day affairs or a duty to monitor the end use of funds. The finding that the appellant had a 'long association' with the company was based on surmise and conjecture and therefore unsustainable. [Paras 14]

Section 177(4) of the Companies Act, 2013 and audit committee membership cannot be invoked to hold the appellant liable for the 2010 11 GDR transactions.

Final Conclusion: The appeals are allowed; the orders of debarment and penalty passed by the WTM and the AO are quashed insofar as they pertain to the appellant, because there is no evidence that the appellant, a non executive independent director, was involved in day to day affairs or that the post 2013 statutory duties could be applied retroactively to the 2010 11 transactions.

Non-disclosure of pledge and loan agreements - misleading corporate announcement - violation of Section 12A of the Securities and Exchange Board of India Act, 1992 - Regulations 3 and 4 of the PFUTP Regulations - Listing Agreement - non-disclosure and disclosure obligations - proportionality in imposition of penalty (Article 14) - liability of independent directors for non disclosure

Non-disclosure of pledge and loan agreements - misleading corporate announcement - violation of Section 12A of the Securities and Exchange Board of India Act, 1992 - Regulations 3 and 4 of the PFUTP Regulations - Listing Agreement - non-disclosure and disclosure obligations - Findings that the company and its directors engaged in a scheme whereby GDR proceeds were pledged and a single subscriber funded through a loan were fraudulent and in breach of disclosure obligations and PFUTP provisions. - HELD THAT: - The Tribunal accepted the Adjudicating Officer's conclusion that the GDR subscription was essentially by a single entity and that the company executed a pledge/account charge and there was a loan arrangement which was not disclosed to the stock exchange or investors. The corporate announcement that the issue was fully subscribed was held to be misleading because it did not disclose that the subscription was facilitated by a subsisting pledge and loan, thereby creating a distorted representation to the market. On these findings the actions were held to violate the disclosure obligations under the Listing Agreement and to fall within the misrepresentations and unfair/fraudulent trade practices proscribed by the PFUTP Regulations and Section 12A of the SEBI Act. The Tribunal observed that these conclusions are consistent with its prior decisions on the same modus operandi and therefore required no interference. [Paras 7, 8, 13, 14, 15]

Findings of violation of disclosure obligations, PFUTP Regulations and Section 12A of the SEBI Act against the company and its managing director are upheld.

Proportionality in imposition of penalty (Article 14) - quantum of penalty - Whether the penalties imposed were excessive or required reduction in exercise of the doctrine of proportionality. - HELD THAT: - The Tribunal applied the doctrine of proportionality as expounded by higher courts, observing that penalties must be rational and not disproportionate. Having regard to consistent precedents in similar GDR related cases and the need for parity among co delinquents, the Tribunal concluded that the penalty fixed against the company is appropriate and in line with reductions made in comparable matters. The Tribunal also found the penalty imposed on the managing director to be commensurate given his role as signatory to the account charge/pledge agreement. The Tribunal therefore declined to interfere with the penalties for the company and the managing director. [Paras 16, 20, 21]

Penalties as fixed against the company and the managing director are proportionate and are not interfered with.

Liability of independent directors for non disclosure - parity among co delinquents - Whether non executive and independent directors (noticees 3-6) are liable to monetary penalty for the violations found. - HELD THAT: - The Tribunal examined involvement of the non executive and independent directors and found no evidence that they were part of the day to day management, aware of or monitoring the GDR issuance beyond being signatories to the board resolution. Applying its earlier decisions that independent directors not involved in management or aware of the infractions should not be penalized, the Tribunal held that penalties imposed on noticees 3 to 6 lacked evidentiary basis and amounted to disproportionate treatment. Consequently, the monetary penalties imposed on these noticees were set aside. [Paras 21, 22, 23, 24]

Penalties imposed on noticees 3 to 6 (non executive/independent directors) are set aside.

Final Conclusion: The Tribunal upholds the finding of fraudulent/non disclosed pledge and loan arrangements and the resultant violations by the company and its managing director, affirms the penalties against them as proportionate, but sets aside the penalties imposed on the non executive and independent directors; appeals of the company and MD are dismissed, appeals of noticees 3-6 are allowed.

Admission of Section 9 application under the Insolvency and Bankruptcy Code - pre-existing dispute - due date of debt having regard to agreed credit period - parallel proceedings under the Negotiable Instruments Act and treatment of security cheques in insolvency proceedings

Admission of Section 9 application under the Insolvency and Bankruptcy Code - Validity of the Adjudicating Authority's admission of the Section 9 application filed by the Operational Creditor. - HELD THAT: - The Appellate Tribunal examined the record and the Adjudicating Authority's findings and found no error in admitting the Section 9 petition. The Tribunal noted that the Adjudicating Authority had considered the materials on record, including the demand notice and the annexed computations, and had concluded that no substantive pre-existing dispute emerged from the Corporate Debtor's reply to the demand notice. Having regard to those conclusions and the absence of a substantive dispute on the record before the Adjudicating Authority, the admission under Section 9 was sustained. [Paras 6, 7, 8, 13]

Order of the Adjudicating Authority admitting the Section 9 application is upheld and the appeal is dismissed.

Pre-existing dispute - Whether the reply to the demand notice raised a substantive pre-existing dispute preventing admission of the Section 9 application. - HELD THAT: - The Tribunal considered the reply dated 09.09.2019 and the Adjudicating Authority's observation. The Adjudicating Authority had recorded that the Corporate Debtor's reply merely alleged misuse of security cheques and alleged withholding of some bills of lading, but did not establish a substantive pre-existing dispute as to the debt. The Appellate Tribunal agreed with that conclusion, holding that the matters raised in the reply did not amount to a substantive pre-existing dispute sufficient to defeat the Section 9 petition. [Paras 7, 8]

No substantive pre-existing dispute was established in reply to the demand notice; the Adjudicating Authority correctly treated the reply as not constituting a bar to admission.

Due date of debt having regard to agreed credit period - Whether any of the claimed debt had become due prior to expiry of the agreed 45-day credit period, and whether the demand notice was premature. - HELD THAT: - The Tribunal examined the demand notice and the annexed statement of invoices and due dates. The statement showed that the invoices were dated in June and early July 2019 and that the 45-day credit period had expired in respect of those invoices before issuance of the demand notice dated 31.08.2019. On that basis the Tribunal rejected the appellant's contention that no amount had become due prior to the Section 9 proceedings and held that the demand notice was issued after expiry of the credit period in respect of the invoices relied upon. [Paras 10, 11]

The debt claimed had become due after expiry of the agreed 45-day credit period and the demand notice was not premature.

Parallel proceedings under the Negotiable Instruments Act and treatment of security cheques in insolvency proceedings - Whether the existence of cheques characterised as security and pending Section 138 proceedings barred admission of the Section 9 petition. - HELD THAT: - The Tribunal observed that issues relating to characterization of cheques as security and the consequent criminal proceedings under Section 138 of the Negotiable Instruments Act are matters to be adjudicated in the separate NI Act proceedings. The Adjudicating Authority and the Tribunal declined to entertain those contentions in the Section 9 admission process, holding that the existence of parallel Section 138 proceedings did not per se prevent the Adjudicating Authority from admitting the Section 9 petition when no substantive pre-existing dispute on the debt was shown in the demand notice reply. [Paras 12]

Contentions regarding security cheques and pending Section 138 proceedings are to be dealt with in the appropriate NI Act proceedings and do not preclude admission of the Section 9 petition on the record before the Adjudicating Authority.

Final Conclusion: The Appellate Tribunal found no infirmity in the Adjudicating Authority's admission of the Section 9 application: the reply to the demand notice did not establish a substantive pre-existing dispute, the demand notice was issued after expiry of the agreed 45 day credit period so the debt was due, and issues relating to security cheques and pending Section 138 proceedings were to be handled in those proceedings; the appeal is dismissed.

Amendment of Part IV of Form-1 (date of default) - Section 7 application under the Insolvency and Bankruptcy Code - Condonation of delay in filing appeal - Interim observations not to pre-judge limitation - Leave to file additional reply to amended application

Condonation of delay in filing appeal - Condonation of 15 days' delay in filing the appeal was allowed. - HELD THAT: - The application for condonation of delay (I.A. No.5026 of 2023) was considered on the explanation that collating records, including DRT proceedings at Nagpur, caused the delay. The Court found the cause shown to be sufficient and granted condonation, disposing of the application accordingly. [Paras 1]

Delay of 15 days in filing the appeal is condoned and I.A. No.5026 of 2023 stands disposed of.

Amendment of Part IV of Form-1 (date of default) - Section 7 application under the Insolvency and Bankruptcy Code - The Adjudicating Authority correctly allowed the amendment to Part IV of Form-1 to alter the date of default and took the amended Part IV on record. - HELD THAT: - The appeal against the Adjudicating Authority's order allowing I.A. No.127/CB/2023 to amend the date of default was examined. The Tribunal found no error in permitting the State Bank of India to amend Part IV of Form-1 in respect of the date of default. The allowance of the amendment was upheld as valid for the limited purpose of taking the amended Part IV on record. [Paras 6]

The order permitting amendment of the date of default in Part IV of Form-1 is sustained.

Interim observations not to pre-judge limitation - Interim observations recorded while allowing the amendment (notably paragraph 12 of the Adjudicating Authority's order) were for the purpose of allowing the amendment and must not influence the final adjudication on limitation when the Section 7 application is heard on merits. - HELD THAT: - Although the Adjudicating Authority made observations on limitation while allowing the amendment, the Tribunal clarified that those observations were made for the limited purpose of disposing of the amendment application. The Tribunal directed that at the time of hearing the main Section 7 application, the Adjudicating Authority shall consider submissions on the question of limitation afresh and uninfluenced by the earlier observations. This preserves the parties' rights to argue limitation when the Section 7 matter is finally heard. [Paras 6]

The Adjudicating Authority's interim observations shall not pre-judge the question of limitation; the question of limitation is to be considered afresh when the Section 7 application is finally heard.

Leave to file additional reply to amended application - The Appellant was permitted to file an additional reply to the amended portion of Form-1 before the Adjudicating Authority within a specified short period. - HELD THAT: - In view of the amendment being allowed, the Tribunal accepted the Appellant's submission that it should be allowed to file an additional reply addressing the amended portion of Form-1. To preserve fair trial rights and facilitate adjudication on merits, the Tribunal granted a limited time to file the additional reply. [Paras 8]

The Appellant may file an additional reply to the amended portion of Form-1 before the Adjudicating Authority within one week.

Final Conclusion: The Tribunal condoned the delay in filing the appeal, upheld the Adjudicating Authority's order allowing amendment of the date of default in Part IV of Form-1, directed that interim observations on limitation shall not pre-judge the question and must be ignored at the final hearing of the Section 7 application, and permitted the Appellant to file an additional reply to the amended application within one week.

Condonation of delay - impleadment - assignment of not readily realisable assets - liquidator's right to assign - Regulation 37A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations - questions of law left open for future adjudication

Condonation of delay - Two days' delay in e-filing the appeal and whether it should be condoned. - HELD THAT: - Sufficient cause was shown for the two-day delay in e-filing the appeal. The Appellate Tribunal considered the explanation and exercised its discretion to condone the delay before proceeding to the merits of the appeal.

Delay of two days in e-filing is condoned.

Impleadment - appeal against rejection of impleadment applications - Whether the appeal against the Adjudicating Authority's order rejecting applications for impleadment should succeed. - HELD THAT: - The appeals arise from the Adjudicating Authority's rejection of applications by the alleged 'Assignee' seeking impleadment. The Appellate Tribunal observed that the persons refused impleadment (the 'Assignee') did not bring the appeal; instead the liquidator is the appellant. The Tribunal found no ground to entertain and decide the substantive contention raised by the liquidator in this appeal and proceeded to reject the challenge to the impugned order.

Appeal dismissed.

Assignment of not readily realisable assets - liquidator's right to assign - Regulation 37A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations - questions of law left open for future adjudication - Whether the observations in paragraph 24 of the Adjudicating Authority's order, that the liquidator cannot assign the debt under specified provisions of the IBC before adjudication of avoidance/PUFE proceedings, should be decided in this appeal. - HELD THAT: - The Appellate Tribunal noted that the Adjudicating Authority recorded a conclusion in paragraph 24 that a liquidator cannot assign debts under certain provisions of the Code prior to adjudication of avoidance/PUFE proceedings, and that this conclusion may be contrary to Regulation 37A. However, the Tribunal considered that the question raised by the appellant (the liquidator) need not be entertained and determined in the present appeal brought by the liquidator on behalf of the assignee. The Tribunal expressly left the particular questions of law recorded in paragraph 24(b) and (f) open for decision in an appropriate case rather than deciding them in this proceeding.

Questions of law recorded in paragraph 24(b) and (f) are left open for adjudication in an appropriate case; they are not decided in this appeal.

Final Conclusion: The Tribunal condoned the two-day delay in filing the appeal, declined to entertain and decide the substantive contention raised by the liquidator in place of the assignee, left the specific legal questions recorded in paragraph 24(b) and (f) open for determination in an appropriate case, and dismissed the appeal.

Admission of claim after approval of the resolution plan - time bar for filing claims under Regulation 12 of the IBBI(IPCP) Regulations, 2016 - finality of Committee of Creditors' approval of a resolution plan - preservation of CIRP timelines and information memorandum

Admission of claim after approval of the resolution plan - time bar for filing claims under Regulation 12 of the IBBI(IPCP) Regulations, 2016 - preservation of CIRP timelines and information memorandum - Whether a claim filed after approval of the resolution plan by the Committee of Creditors can be admitted by the Adjudicating Authority. - HELD THAT: - The Tribunal held that the claim was filed after the Resolution Plan had been approved by the Committee of Creditors and therefore could not be admitted. The Adjudicating Authority correctly observed that no claim was lodged within the timelines prescribed by the Regulations (publication under Regulation 6 and the last date under Regulation 12), and that allowing a belated claim after CoC approval would undermine the time bound CIRP process and the completeness of the Information Memorandum. The Tribunal relied on and applied the principle in the Supreme Court decisions cited by the Adjudicating Authority that post CoC approval claims cannot be entertained as they would introduce uncertainty for the successful resolution applicant and derail the resolution process. The fact that the application for approval of the plan was pending before the Adjudicating Authority did not permit admission of a claim filed after CoC approval. [Paras 4, 7, 8]

Application to admit the belated claim was rightly rejected and the appeal is dismissed.

Final Conclusion: Appeal dismissed; no error in the Adjudicating Authority's rejection of the belated claim filed after approval of the resolution plan by the Committee of Creditors.

Entertaining interlocutory application after matter reserved for judgment - admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - acknowledgement of debt for the purposes of limitation - assignment of debt and standing of assignee as financial creditor

Entertaining interlocutory application after matter reserved for judgment - Whether IA No.253/CB/2023 filed after the main petition was reserved for orders ought to have been entertained - HELD THAT: - The Tribunal held that pleadings and facts which existed and were available during the hearing of the main company petition could not be belatedly raised by an interlocutory application filed after final arguments were concluded and the matter was reserved for judgment. The Adjudicating Authority correctly applied the settled principle that the stages of reserving and pronouncing judgment form a continuum and, for reasons of procedural propriety, normally do not permit fresh applications to re-open issues already heard. The record showed that the assignment agreement and the circumstances relied upon in the I.A. were in existence and could have been agitated during the main hearing; no satisfactory explanation was furnished for the delay. On these grounds the Adjudicating Authority did not commit error in rejecting IA No.253/CB/2023. [Paras 12, 13]

IA No.253/CB/2023 was rightly dismissed as it was filed after the matter was reserved for orders and raised issues available during the main hearing.

Admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - assignment of debt and standing of assignee as financial creditor - acknowledgement of debt for the purposes of limitation - Whether the Section 7 petition by the assignee (Respondent No.1) was maintainable and whether the claim was barred by limitation - HELD THAT: - The Tribunal affirmed the Adjudicating Authority's conclusion that the twin requirements for admission under Section 7-existence of debt and default-were established on the record. Although the loan was originally from the bank, the Corporate Debtor had itself sent an OTS proposal to the assignee, which demonstrated awareness of and acknowledgment of the assignment. The Assignment Agreement was annexed to the Section 7 application, and the Corporate Debtor had not contested its existence during the main hearing. The Tribunal further accepted the Adjudicating Authority's view that the Corporate Debtor's balance sheets and the OTS proposal constituted clear and unambiguous acknowledgement of the debt for the purposes of limitation, precluding the plea that the petition was time-barred. Technical objections to stamping or form of the assignment raised belatedly were insufficient to vitiate the admission where the debtor had acted on the basis of the assignment. [Paras 15, 16, 17]

The Section 7 application was maintainable; the debt and default were established and the petition was not barred by limitation.

Final Conclusion: The Tribunal affirmed both impugned orders: the interlocutory application was properly dismissed for being filed after reservation of the main petition, and the Section 7 petition was correctly admitted on the basis that debt and default were established and the assignee had locus; the appeal is dismissed.

Vacant possession - breach of undertaking - willful disobedience of Tribunal order - settlement of statutory creditors - pre deposit does not extinguish departmental claim - time bound liquidation under IBC - liquidator's power to proceed with liquidation

Vacant possession - breach of undertaking - willful disobedience of Tribunal order - settlement of statutory creditors - time bound liquidation under IBC - The Respondent was directed to vacate and hand over the subject property to the liquidator for failing to comply with the Tribunal's settlement timetable and for breaching the undertaking. - HELD THAT: - This Tribunal had given the Respondent a limited and stringent timeline to submit a full and final settlement proposal and explicitly made vacatur of the subject property a consequence if any statutory creditor did not agree or failed to respond within the stipulated period. Despite two extensions, the Respondent pursued an appeal route rather than effecting settlement; such conduct was held to amount to taking unfair advantage of the reprieve and to be inconsistent with the time bound objectives of the IBC. The Tribunal found no cogent reason to grant further time, observed that speed is the essence of the liquidation process and that delay prejudices stakeholders, and therefore reiterated that the liquidator may proceed with liquidation and directed the Respondent to vacate the property forthwith within seven days of uploading of the order. [Paras 9, 12]

The Respondent is directed to vacate the subject property within seven days and the liquidator is authorised to proceed with liquidation in accordance with the earlier orders.

Pre deposit does not extinguish departmental claim - settlement of statutory creditors - The Respondent's contention that the GST Department's claim stood extinguished by filing a 7.5% pre deposit was rejected. - HELD THAT: - The Tribunal held that the circular relied upon by the Respondent (Circular No. 984/08/2014 CX) treats pre deposit for filing an appeal as not being payment of duty and entitles the appellant to refund if the appeal succeeds; consequently, filing a pre deposit does not operate as a full and final settlement or extinguish the departmental claim. Reliance on a Supreme Court decision concerning scaling of pre deposit under different statutes was held inapplicable. The Tribunal therefore concluded that the appeal and pre deposit did not relieve the Respondent of the obligation to comply with the settlement/ vacatur regime ordered earlier. [Paras 11]

Filing of the pre deposit in the CESTAT appeal does not extinguish the GST Department's claim and is not a substitute for acceptance of a settlement proposal.

Liquidator's power to proceed with liquidation - settlement of statutory creditors - The liquidator was authorised to determine the future course of action in relation to the CESTAT appeal and to claim fees and adjust the pre deposit in accordance with the IBBI (Liquidation Process) Regulations, 2016. - HELD THAT: - Given that the GST Department did not accept the settlement proposals and the Respondent did not effectuate a full and final settlement within the timelines, the Tribunal left it open to the liquidator to decide how to treat the pending CESTAT appeal for purposes of the liquidation process. The liquidator was directed to claim his fees and expenses and to provide for adjustment of any pre deposit made in relation to the appeal in terms of the applicable liquidation regulations. [Paras 12]

The liquidator may decide the course of action regarding the CESTAT appeal and shall claim fees/expenses and adjust the pre deposit as per IBBI (Liquidation Process) Regulations, 2016.

Final Conclusion: The application is disposed of: the Respondent is directed to vacate the subject property within seven days; the Tribunal rejected the argument that a pre deposit extinguishes the GST claim; and the liquidator is authorised to proceed with liquidation, claim fees and adjust the pre deposit in accordance with the liquidation regulations.

Suspension of initiation of corporate insolvency resolution process - Effect of Section 10-A of the IBC, 2016 on initiation of CIRP - Corporate guarantee invocation - Date of invocation determining time of default - Maintainability of application under Section 7 of the IBC, 2016 - Form I, Part IV statement as determinative of invocation date

Corporate guarantee invocation - Date of invocation determining time of default - Effect of Section 10-A of the IBC, 2016 on initiation of CIRP - Maintainability of application under Section 7 of the IBC, 2016 - Form I, Part IV statement as determinative of invocation date - Application under Section 7 of the IBC, 2016 was not maintainable because the corporate guarantee was invoked on 25.08.2020, placing the default within the period suspended by Section 10A and its notifications. - HELD THAT: - The Adjudicating Authority and this Tribunal proceeded on the recorded date of invocation of the Deed of Guarantee. The Appellant, in Part IV of Form I filed before the Adjudicating Authority, expressly stated that the guarantee was invoked on 25.08.2020. The earlier letter dated 11.06.2019 was addressed in personal names to two individuals who were not directors of the Corporate Guarantor on that date and was not referred to in the formal notice of invocation. The formal notice for invocation addressed to the Corporate Guarantor is dated 25.08.2020 (pages 180-185 of the paper book) and the claim calculations were made up to 24.08.2020, corroborating the invocation date relied upon by the Adjudicating Authority. Section 10A of the IBC, 2016 suspended initiation of CIRP for defaults arising on or after 25.03.2020 for the period notified (extended by notifications to a cumulative period of twelve months from 25.03.2020). Because the guarantee was invoked on 25.08.2020, the resulting default falls within the excluded period under Section 10A and, therefore, an application under Section 7 could not be maintained. The Tribunal has not examined the merits of the underlying claim and the decision does not prejudice the Appellant's rights before any other forum or authority. [Paras 7, 8, 9]

The Appeal is dismissed; the Adjudicating Authority rightly held the Section 7 application non maintainable as the invocation on 25.08.2020 placed the default within the period suspended by Section 10A of the IBC, 2016.

Final Conclusion: The impugned order dismissing the Section 7 petition as not maintainable is upheld because the corporate guarantee was invoked on 25.08.2020 and the default thus falls within the suspension period under Section 10A of the IBC, 2016; the Tribunal has not adjudicated the merits of the claim.

Bail under Section 45 of the PML Act - tentative finding on bail based on broad probabilities - right to speedy trial under Article 21 and Section 436A of Cr.P.C. - constructive possession and dominion/control - offence under Section 3 of the PML Act as process/activity connected with proceeds of crime - offences under the Prevention of Corruption Act relating to undue advantage to public servant

Bail under Section 45 of the PML Act - tentative finding on bail based on broad probabilities - right to speedy trial under Article 21 and Section 436A of Cr.P.C. - Whether the appellant Manish Sisodia is entitled to bail at this stage - HELD THAT: - The Court applied the principle that Section 45 of the PML Act does not require a trial court to arrive at a full positive finding of innocence before granting bail; a tentative finding based on broad probabilities is sufficient for bail consideration. Having examined the contentions and material placed by both sides and in light of Vijay Madanlal Choudhary (supra), the Court formed a tentative view on the allegations. While noting the prolonged custody and the importance of speedy trial under Article 21 and Section 436A of the Cr.P.C., the Court found that there exists a clear ground/charge in the PMLA complaint and corresponding allegations in the CBI chargesheet that are tentatively supported by material. The Court also observed that allegations such as destruction of phones would not be a determinative factor given the period of detention already undergone. Weighing the seriousness of the allegations, the evidence as tentatively appraised and the prosecution's assurance regarding trial timeline, the Court declined to grant bail at this stage but made procedural observations safeguarding the appellant's right to seek bail afresh if trial is unduly protracted. [Paras 8, 25, 29, 30]

Prayer for bail refused at this stage; liberty granted to move fresh bail application in specified circumstances (protracted trial or change in circumstances), and interim bail applications for medical reasons to be considered on merits

Constructive possession and dominion/control - offence under Section 3 of the PML Act as process/activity connected with proceeds of crime - Whether the DoE's contentions that (i) generation of proceeds constitutes 'possession' or 'use', and (ii) specific involvement of the appellant in transfer/use of alleged proceeds, are sufficiently established for bail purposes - HELD THAT: - The Court observed that the DoE's contention equating 'generation' with 'possession' is not free from doubt in light of Vijay Madanlal Choudhary (supra) and noted the twofold test of possession (corpus and animus) as discussed in Mohan Lal (supra). Constructive possession requires dominion and control; mere generation without demonstrable dominion/control over proceeds is prima facie unclear. The Court further noted absence of specific allegation directly connecting the appellant to the transfer of the sum alleged to have been used for election funding. These aspects raise questions requiring threadbare examination at trial; they were not finally adjudicated here. [Paras 10, 13, 15]

DoE's contentions on 'generation' equating to 'possession' and specific involvement of the appellant in transfer/use of alleged proceeds remain doubtful on the material before the Court and require trial-level adjudication

Right to speedy trial under Article 21 and Section 436A of Cr.P.C. - Whether prolonged pre-trial incarceration justifies grant of bail in absence of trial progress - HELD THAT: - The Court reaffirmed that the right to speedy trial, as a facet of Article 21, may justify bail where the trial is protracted for reasons not attributable to the accused. Section 436A supplies statutory protection for undertrial prisoners and may be applied to offences under the PML Act; however, it does not operate as an absolute bar to denial of bail before the statutory period elapses. The Court emphasised case-by-case assessment and recorded that if the prosecution fails to progress the trial within a foreseeable time, the accused may be entitled to seek bail. In view of the prosecution's assurance that the trial would be concluded within six to eight months, the Court declined immediate bail but granted liberty to seek bail if the trial proceeds at a snail's pace. [Paras 26, 28, 29]

Prolonged incarceration can justify bail; current refusal is subject to liberty to reapply if trial is unduly protracted or circumstances change

Final Conclusion: Appeals dismissed; bail refused at this stage after tentative evaluation of allegations and material. Observations on legal questions and factual disputes are provisional and left open for trial; liberty granted to the appellant to move for bail again if the trial is not concluded within a reasonable time or circumstances materially change, and interim medical bail applications will be considered on merits.

Offence of money-laundering - concealment, possession, acquisition, use and projecting proceeds as untainted property - presumption as to records or property found in possession (Section 22) - presumption in inter-connected transactions and burden of proof (Section 24) - quashment under Section 482 of the Code of Criminal Procedure

Offence of money-laundering - concealment, possession, acquisition - presumption as to records or property found in possession (Section 22) - presumption in inter-connected transactions and burden of proof (Section 24) - quashment under Section 482 of the Code of Criminal Procedure - Quashment of the prosecution complaint against the applicant under the PML Act. - HELD THAT: - The Court examined the definition of the offence in Section 3 of the PML Act together with its Explanation and observed that the offence attracts liability where a person directly or indirectly attempts to indulge in or knowingly assists or is a party to processes connected with proceeds of crime, including concealment, possession, acquisition, use or projecting as untainted property. The prosecution's case, at the prima facie stage, is that proceeds of crime were utilised to purchase immovable property and one such property was transferred to the applicant by way of a sham sale deed. The Court noted that under the PML Act there are statutory presumptions: where records or property are found in a person's possession (Section 22) and in inter-connected transactions (Section 24), the burden shifts to the accused to prove the contrary. Applying these principles, the Court held that on the material before it a prima facie case under Section 3 (and allied provisions) is made out against the applicant and that the statutory presumptions operate to place the onus on him to establish innocence at trial. In that factual and legal backdrop, the Court concluded that it was not appropriate to exercise inherent jurisdiction under Section 482 Cr.P.C. to quash the proceedings and that no ''clean chit'' could be given at this stage; the applicant must discharge the burden in the trial. [Paras 5, 6, 7, 8]

M.Cr.C. dismissed; prosecution complaint not quashed and the applicant must face trial.

Final Conclusion: The petition for quashment is dismissed; the Special Court's cognizance under the PML Act is sustained and the applicant must meet the statutory presumptions and discharge the burden at trial.

Determination of the rate of Service Tax or the value of any service for the purposes of assessment - classification of services - coverage by an exemption notification - whether an activity is a taxable service - jurisdiction under Section 35G of the Central Excise Act and exclusivity of Section 35L

Determination of the rate of Service Tax or the value of any service for the purposes of assessment - classification of services - coverage by an exemption notification - jurisdiction under Section 35G of the Central Excise Act and exclusivity of Section 35L - Maintainability of the appeal under Section 35G of the Central Excise Act against the Tribunal's order concerning the classification/coverage of activities as taxable service or under an exemption notification. - HELD THAT: - The Court held that the dispute before the Tribunal concerned whether the assessee's activity fell within a category of taxable service (or was covered by an exemption) and thus was a classification/coverage controversy directly and proximately related to the rate of Service Tax or the value of the service for assessment. Applying the settled interpretive approach - that the expression 'determination of the rate of duty or value for purposes of assessment' includes questions whether a service is taxable, whether it falls under a particular heading or is covered by an exemption, and whether the rate is nil - the Court concluded that such controversies are excluded from the High Court's appellate jurisdiction under Section 35G and lie to the Supreme Court under the corresponding provision. Consequently, the substantial questions of law framed (relating to coverage under "Business Support Service" and the nature of the contractual relationship) amount to classification/coverage issues which fall within the exclusion; the High Court therefore lacks jurisdiction to entertain the appeal under Section 35G. [Paras 5]

The appeal under Section 35G is not maintainable and is dismissed.

Final Conclusion: The High Court dismissed the appeal under Section 35G as not maintainable, holding that the controversy is a classification/coverage question relating to the rate/value of service and therefore falls outside the High Court's jurisdiction.

Reimbursable expenses excluded from taxable value - operational surplus not consideration for service - tax liability of sub contracting Custom House Agent prior to 2007 Trade Notice - freight brokerage/mark up from shipping lines not consideration for CHA/steamer agent service - extended period/invocation of extended period and suppression

Reimbursable expenses excluded from taxable value - operational surplus not consideration for service - Demand of Service Tax on amounts shown as 'operational surplus' is unsustainable. - HELD THAT: - The Tribunal found that amounts collected as ad hoc advances to meet third party expenses and later reflected as 'operational surplus' in the profit and loss account are reimbursements and not consideration for CHA/steamer agent services. The department itself excluded reimbursable expenses in framing the demand and relied on aggregate figures from financial statements rather than service invoices. The Board's Trade Notice No.39 CE/97 (11.06.1997) and the Supreme Court's decision in Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd. establish that reimbursable expenditures are not includable in taxable value prior to the 2015 amendment; accordingly the demand on operational surplus was set aside. [Paras 7]

Demand of Service Tax on operational surplus set aside.

Tax liability of sub contracting Custom House Agent prior to 2007 Trade Notice - Demand of Service Tax on amounts received as a sub contracting CHA for the period prior to 2007 is unsustainable. - HELD THAT: - For the period in dispute (01.04.2003 to 31.03.2004) the Board's Trade Notice (in force until 2007) explicitly provided that a sub contracting CHA raising bills on the main CHA was not required to pay service tax and the tax was payable by the CHA who billed the client. Although later circulars and a Larger Bench decision changed the position, the Tribunal held that the pre 2007 Trade Notice is binding for the relevant period and therefore demands based on the contrary position cannot be sustained. [Paras 7]

Demand of Service Tax on amounts received as a sub contracting CHA for the relevant period set aside.

Freight brokerage/mark up from shipping lines not consideration for CHA/steamer agent service - Demand of Service Tax on freight brokerage/mark up/incentives received from shipping lines is unsustainable. - HELD THAT: - The Tribunal accepted the appellant's contention, supported by earlier decisions of tribunals, that brokerage or discounts/incentives received from shipping lines represent an element of profit/mark up arising from principal to principal transactions and are not consideration for CHA/steamer agent services provided to the client. The department had not shown these amounts to be consideration for taxable services, and therefore the demand premised on such brokerage/mark up was set aside. [Paras 7]

Demand of Service Tax on freight brokerage/mark up set aside.

Extended period/invocation of extended period and suppression - Invocation of extended period and penalties is not sustainable; no suppression established. - HELD THAT: - The Tribunal held there was no positive act of suppression by the appellant; the figures relied upon by the Department were disclosed in the appellant's financial statements and the appellant had discharged service tax on agency commissions. Given that the disputed amounts related to reimbursable expenses, subcontracting under a binding pre 2007 Trade Notice, and freight mark ups held not to be taxable, the Tribunal concluded the extended period invocation was unjustified and the penalties could not be sustained. [Paras 7]

Invocation of extended period and penalties set aside; appellant succeeds on limitation/suppression ground.

Final Conclusion: All impugned demands, interest and penalties set aside; appeals allowed with consequential relief.

Limitation and bar to successive show cause notices where relevant facts are already in departmental knowledge - classification of supply of goods with operators as supply of tangible goods service and not business auxiliary service - taxability of hiring of vehicles: distinction from rent a cab service where possession, control and maintenance remain with owner - acceptance of documentary value certificates as relevant material

Limitation and bar to successive show cause notices where relevant facts are already in departmental knowledge - Validity of the show cause notice dated 29.09.2008 (period April 2003 to Dec. 2005) insofar as it invokes extended period of limitation after earlier notices issued in respect of similar facts - HELD THAT: - The Tribunal found that the department had prior knowledge of the appellant's activities by reason of earlier show cause notices dated 22.11.2001 (for April 2000-March 2001) and 19.03.2007 (for 01.01.2006-30.09.2006) and that one of those earlier notices was set aside by the Tribunal. Applying the principle in Nizam Sugar Factory (as relied upon) and the Tribunal's own reasoning in J.K. Enterprises, the Bench held that where all relevant facts were in the knowledge of the authorities when earlier notices were issued, a subsequent show cause notice invoking extended limitation on the same facts cannot be sustained as it is barred by limitation. [Paras 11]

The show cause notice dated 29.09.2008 insofar as it invokes the extended period of limitation is barred and the demand is liable to be set aside on limitation grounds.

Classification of supply of goods with operators as supply of tangible goods service and not business auxiliary service - acceptance of documentary value certificates as relevant material - Whether provision of low bed trollies, tractor trollies and tractor cranes with drivers to Nestle for use within the factory falls under "Business Auxiliary Service" or under the later introduced "Supply of Tangible Goods service" - HELD THAT: - The Tribunal examined the contracts and agreements on record and noted that the low bed trollies and cranes were supplied along with operators under arrangements which did not amount to rendering services on behalf of Nestle. Relying on the High Court of Calcutta decision in CCE & ST, Haldia v. Industrial Handling and the Tribunal decision in Devanchand Ramsaran, the Bench held that where tangible goods are supplied with operators on a hire basis without transfer of right of possession and effective control to the recipient, the activity falls within the category of "Supply of Tangible Goods service" introduced w.e.f. 16.05.2008 and not within the definition of "Business Auxiliary Service"; consequently, levy of service tax under Business Auxiliary Service for the period in question was unsustainable. The Tribunal also observed that Nestle's value certificates evidencing the nature and amount of payments were on record and had not been considered by the authorities below. [Paras 11, 12]

The demand framed under Business Auxiliary Service is incorrect on merits; the activity is covered by the supply of tangible goods service (as introduced w.e.f. 16.05.2008), and the authorities below erred in not considering the value certificate.

Taxability of hiring of vehicles: distinction from rent a cab service where possession, control and maintenance remain with owner - Whether providing pickup Van Tata 407 and Maruti Van to Nestle for carrying purchases is taxable as Rent a Cab service for the period in question - HELD THAT: - On the facts, the Tribunal found that possession and control of the vehicles, as well as repair and maintenance, remained with the appellant during hiring for purchase trips. Relying on the Tribunal's decision in Rahul Travels, it held that where vehicles are given on hire/contract carriage with possession and maintenance retained by the owner, the activity is not taxable as Rent a Cab service prior to 01.01.2007, and accordingly such hiring could not sustain service tax for the relevant period. [Paras 13]

The activity of providing the pickup Van and Maruti Van is not taxable as Rent a Cab service for the period in question and the demand is unsustainable on merits.

Final Conclusion: The appeal is allowed: the impugned order is set aside both on limitation (the 29.09.2008 show cause notice is barred) and on merits (the equipment with operators is not a Business Auxiliary Service but falls under supply of tangible goods service as introduced w.e.f. 16.05.2008, and the hiring of pickup/Maruti vans is not chargeable as Rent a Cab for the relevant period); consequential relief, if any, to be granted as per law.

Manpower Recruitment or Supply Agency service - Contract manufacturing / job work - Determination of control and responsibility over workers - Per piece / per kg contract payments as indicia of job-work - Binding effect of earlier Tribunal decisions (res judicata/precedential application)

Manpower Recruitment or Supply Agency service - Contract manufacturing / job work - Per piece / per kg contract payments as indicia of job-work - Determination of control and responsibility over workers - Binding effect of earlier Tribunal decisions (res judicata/precedential application) - Whether the appellants provided 'Manpower Recruitment or Supply Agency service' or performed contract manufacturing/job work for the service recipient. - HELD THAT: - The Tribunal examined the terms of the contract and the factual matrix and held that the appellants were engaged to perform specific manufacturing-related work at the principal's premises on a per kg/per piece basis, supplied their own skilled and unskilled labour who remained their employees, maintained statutory records and complied with labour laws, and were paid on the basis of quantity of work performed. The contract expressly allocated recruitment, control, liability and statutory compliances in favour of the appellants as employers of the workers. These features, together with the payment being per unit of output and the service recipient supplying raw materials and plant, indicated contract manufacturing/job work rather than supply of manpower. The Tribunal further relied on and applied earlier consistent decisions of the Tribunal on identical facts, treating the issue as no longer res integra and holding those precedents squarely applicable to the present periods. On these grounds the demand under the category of Manpower Recruitment or Supply Agency service was held unsustainable and the impugned orders were set aside. [Paras 7, 8, 9]

Appellants' activities do not constitute Manpower Recruitment or Supply Agency service; the demand under that service category is unsustainable and the impugned orders are set aside.

Final Conclusion: Appeals allowed; impugned orders demanding service tax as Manpower Recruitment or Supply Agency service for the stated periods set aside in view of contract terms, factual findings and existing Tribunal precedents.

Management, Maintenance and Repair Services - definition of 'goods' to include computer software - proviso to Section 73(1) of Finance Act, 1994 (extended period) - retrospective application of explanatory/amending provision - penalties under Sections 76, 77 and 78 of Finance Act, 1994

Management, Maintenance and Repair Services - definition of 'goods' to include computer software - retrospective application of explanatory/amending provision - Taxability of the appellant's software-related services for the period 2006-07 under the category Management, Maintenance and Repair Services. - HELD THAT: - The Tribunal examined whether activities admitted by the appellant (installation, customization, development of patches, upgradation and enhancement of software) amounted to maintenance/repair chargeable as Management, Maintenance & Repair Services for 2006-07. Multiple CESTAT benches and authorities were considered which have consistently held that maintenance/repair of software of the kind in issue became chargeable only with effect from 01.06.2007 after the explanatory amendment which explicitly included computer software within 'goods' for the purpose of maintenance/repair. The impugned order relied on pre-2007 circulars and the interpretation that software was goods; but the Tribunal found that later decisions and the legislative calibration (including separate treatment of 'information technology software' from 16.05.2008 and the explanatory amendment effective 01.06.2007) demonstrate that taxation of the appellant's services for 2006-07 is not sustainable. The appellant had in fact begun paying service tax with effect from 01.06.2007. In view of the consistent precedents cited and the legislative timeline, the demand for the 2006-07 period was held not maintainable and the appeal on this substantive point was allowed. [Paras 4]

Demand for service tax for 2006-07 under Management, Maintenance & Repair Services set aside; appellant's appeal allowed on this ground.

Proviso to Section 73(1) of Finance Act, 1994 (extended period) - penalties under Sections 76, 77 and 78 of Finance Act, 1994 - Validity of invocation of extended limitation and imposition of combined penalties where the substantive demand is not maintainable. - HELD THAT: - The adjudicating authority invoked the proviso to Section 73(1) alleging suppression to justify extended period and confirmed penalties under Sections 76, 77 and 78. The Tribunal observed that, having held the substantive demand for 2006-07 to be not maintainable, no question of sustaining recovery or imposing penalties survives. Consequently the revenue's contention regarding separate or combined imposition of penalties became academic. The Tribunal therefore dismissed the revenue's appeal on penalties for want of a subsisting demand. [Paras 5]

Revenue appeal against the setting aside of penalties dismissed; penalties cannot survive once substantive demand is quashed.

Final Conclusion: The appeal of the assessee is allowed in respect of the demand for service tax for 2006-07 (demand held not maintainable as software maintenance services were taxable only from 01.06.2007) and the revenue's appeal against imposition/structure of penalties is dismissed because no penalty can survive when the substantive demand is set aside.

Best judgment assessment - Relevant date for limitation under section 73 - Extended period of limitation invocable for fraud, collusion, wilful mis-statement, suppression of facts or intent to evade - Penalty for failure to produce documents/appear in response to summons (section 77(1)(c)) - Penalty for contravention where no separate penalty provided (section 77(2)) - Penalty under section 78 requiring elements identical to extended limitation proviso

Best judgment assessment - Validity of resort to best judgment assessment in the impugned order - HELD THAT: - Section 72 permits best judgment assessment where an assessee fails to furnish return or fails to assess tax correctly; the officer may require production of accounts/documents, take into account available material and make a written assessment after giving an opportunity of being heard. The power may be exercised suo moto and need not await a request by the assessee. Reliance on Form 26AS for assessment is permissible where it shows payments made to the assessee and tax deducted thereon; the assessee could have furnished Form 26AS itself. The impugned order was in writing and issued after issuance of SCN, and the reasons in the SCN and order for invoking best judgment assessment were fair and reasonable. The assessee's objection that best judgment assessment was not proposed in the SCN is contradicted by the record. [Paras 14, 15, 16, 17, 35]

Best judgment assessment in the impugned order was valid and the assessee's objections thereto are dismissed.

Relevant date for limitation under section 73 - Proper date for reckoning limitation under section 73 and the normal period of limitation applicable - HELD THAT: - Section 73(6) prescribes the 'relevant date' as (a) the date on which a periodical return is filed where such return is filed, and (b) where no periodical return is filed, the last date on which such return is to be filed. If a return is not filed by the due date, the relevant date is the due date and subsequent belated filing does not change the relevant date. Treating a belated filing as the relevant date would produce anomalous and absurd results by making an assessee worse off for filing late. The normal period of limitation was 18 months up to 13.5.2016 and 30 months thereafter; the enlarged period applies prospectively to claims not already time-barred on 13.5.2016. [Paras 22, 23, 24, 25, 35]

Where a return is not filed by the due date, the due date is the relevant date for limitation and the Commissioner was correct in so reckoning; normal limitation was 18 months up to 13.5.2016 and 30 months thereafter with retrospective operation only for claims not already time-barred.

Extended period of limitation invocable for fraud, collusion, wilful mis-statement, suppression of facts or intent to evade - Whether extended period of limitation (five years) could be invoked in the facts of the case - HELD THAT: - The proviso to section 73 permits extension of limitation where short payment is on account of fraud, collusion, wilful mis-statement or suppression of facts or violation of the Act/Rules with intent to evade. Revenue relied on alleged suppression, lack of cooperation and instances of collection without deposit. Assessee contended returns were filed and tax for normal period paid, and non-cooperation resulted from alleged harassment and complaint to CBI. The Tribunal finds that the shortfall was discovered from the assessee's own records (and material from Income Tax Dept.) and that such scrutiny could and should have been carried out by the Range officer or audit; on the facts the requisite elements for invoking the extended period are not established. Consequently, demand beyond the normal period cannot be sustained. [Paras 26, 27, 28, 29, 35]

Extended period of limitation cannot be invoked on the facts; demand sustained only for the normal period of limitation.

Penalty for failure to produce documents/appear in response to summons (section 77(1)(c)) - Penalty for contravention where no separate penalty provided (section 77(2)) - Penalty under section 78 requiring elements identical to extended limitation proviso - Validity of penalties imposed under sections 77(1)(c), 77(2) and 78 and late fee under section 70 - HELD THAT: - Penalty under section 78 requires the same elements as invocation of extended limitation; since extended limitation is not sustainable, penalty under section 78 is set aside. The assessee did fail to appear in response to summons and failed to produce invoices (admitted by assessee), and there is no justification for non-production; section 77(1)(c) prescribes a penalty of Rs.10,000 or Rs.200 per day whichever is higher, and there is no upper cap at Rs.10,000, so the penalty under section 77(1)(c) is maintainable. The imposition of penalty under section 77(2) is cryptic in the order as it does not specify the provisions contravened, rendering that penalty unsustainable. Late fee under section 70 is statutory and remained unchallenged. [Paras 32, 33, 34, 35, 36]

Penalty under section 77(1)(c) and late fee under section 70 are upheld; penalties under section 77(2) and section 78 are set aside.

Final Conclusion: Revenue's appeal against dropping part of the demand is dismissed; assessee's appeal is partly allowed-demand and interest for the normal period of limitation, late fee under section 70 and penalty under section 77(1)(c) are sustained, while demand for the extended period and penalties under sections 77(2) and 78 are set aside; consequential relief to the assessee granted if any.

Power of appellate authority to condone delay limited to the statutorily prescribed further period - Exclusion of Section 5 of the Limitation Act for condonation beyond the statutory proviso - Mandatory limitation for presentation of appeal to Commissioner (Appeals) - Non-entertainability of time-barred appeals beyond the condonable period

Power of appellate authority to condone delay limited to the statutorily prescribed further period - Exclusion of Section 5 of the Limitation Act for condonation beyond the statutory proviso - Non-entertainability of time-barred appeals beyond the condonable period - Whether the Tribunal could condone delay in filing the appeal before the first appellate authority beyond the additional condonable period - HELD THAT: - The Tribunal held that the Commissioner (Appeals) and the Tribunal are creatures of statute and their jurisdiction to condone delay is confined to the period expressly provided by the statute. Relying on the reasoning in Singh Enterprises CCE, Jamshedpur, the proviso to the statutory appeal provision permits the appellate authority to allow presentation of the appeal only within the specified further period (the condonable period) and thereby excludes recourse to Section 5 of the Limitation Act to extend time beyond that period. Consequently, an appeal filed after the expiry of the statutory condonable period is not entertainable by the appellate authority or the Tribunal. Applying this principle to the facts, since the appeal to the Commissioner (Appeals) was filed beyond the condonable period, the learned Commissioner (Appeals) correctly dismissed the appeal as time-barred and the Tribunal had no competence to condone that delay. [Paras 2, 3]

Tribunal lacks competence to condone delay beyond the statutorily prescribed condonable period; appeal dismissed as time-barred.

Final Conclusion: Appeal dismissed as time-barred; delay beyond the statutory condonable period could not be condoned and the Tribunal had no power to extend the limitation.

Works Contract Service - Composite contract / composite supply of goods and services - Taxability of composite/works contract services prior to 01.06.2007 - Demand unsustainable where contract is a works contract not taxable before 01.06.2007 - Penalty and interest not leviable where demand is held unsustainable

Works Contract Service - Composite contract / composite supply of goods and services - Taxability of composite/works contract services prior to 01.06.2007 - The services rendered under the contract are works contract in nature and not taxable prior to 01.06.2007; therefore the demand for service tax is unsustainable. - HELD THAT: - The Tribunal examined the special conditions of the tender which required the bidder to execute civil and electrical work along with supply of all material and noted that no separate consideration was indicated for purportedly distinct services. On this factual and contractual basis the job was held to be composite and to fall within the category of works contract service. Having regard to the law laid down by the Hon'ble Apex Court in L&T, works contract service is leviable only from 01.06.2007; as the period in dispute is before that date the levy could not be sustained. The Department did not dispute the composite nature of the contract; accordingly the demand based on classifying the activity as a taxable service before 01.06.2007 was unsustainable. [Paras 5]

Demand for service tax set aside as the contract is a works contract not taxable before 01.06.2007.

Penalty and interest not leviable where demand is held unsustainable - Interest and penalties cannot be sustained once the primary demand has been held unsustainable. - HELD THAT: - The Tribunal held that where the foundational demand for service tax is not maintainable (being premised on an incorrect classification of the contract), consequential claims for interest and imposition of penalties have no basis and therefore do not survive. The appellate finding that the demand itself is unsustainable leads to the corollary relief that interest and penalties must also be set aside. [Paras 5]

Interest and penalties relating to the demand are not leviable and are set aside.

Final Conclusion: Appeal allowed; the service-tax demand is set aside as the contract is a works contract not taxable before 01.06.2007, and consequential interest and penalties are also quashed; parties to receive consequential reliefs as per law.

Validity of show cause notice - requirement of specificity in show cause notice - vagueness and indefiniteness in adjudicatory allegations - taxability of services under specified categories - appropriateness of consolidated tax demand without category-wise allegation

Validity of show cause notice - requirement of specificity in show cause notice - vagueness and indefiniteness in adjudicatory allegations - Whether the demand confirmed in the impugned order is sustainable where the Show Cause Notice did not specify the category of service attracting Service Tax and a consolidated tax liability was worked out. - HELD THAT: - The Tribunal found that the Show Cause Notice did not allege any specific category of taxable service rendered by the appellant and that a consolidated tax liability had been computed without identifying the precise service head under which tax was claimed. Applying the principle that a show cause notice is the foundation of the department's case and must contain clear, intelligible and specific allegations so as to give the noticee an opportunity to meet the charge, the Tribunal held that a vague or non-specific notice rendering a consolidated demand is indefensible. The Tribunal expressly relied on the ratio of the Hon'ble Supreme Court in Commissioner of Central Excise, Bangalore v. Brindavan Beverages as authoritatively requiring specificity in the allegations of a show cause notice, and noted that a subsequent bench of this Tribunal had decided an identical issue in M/s. T.M.P. Manoharan & Co. v. Commissioner of Central Excise, Puducherry. Having regard to those precedents and the absence of category-wise allegations in the notice, the demand confirmed by the lower authorities could not be sustained. [Paras 10, 11, 12]

The demand confirmed in the impugned order is set aside as unsustainable on account of the non specific and consolidated nature of the Show Cause Notice.

Final Conclusion: The appeal is allowed; the demand confirmed by the adjudicating and appellate authorities is set aside for the period April 2008 to March 2009, with consequential benefits, if any, as per law.

Mandatory pre-deposit under Section 35-F of the Central Excise Act, 1944 - appellate tribunal's power to entertain appeal - undue financial hardship as ground for dispensing with pre-deposit - requirement to plead and prove hardship in the application to the Tribunal

Mandatory pre-deposit under Section 35-F of the Central Excise Act, 1944 - appellate tribunal's power to entertain appeal - The Tribunal was justified in directing compliance with the mandatory pre-deposit requirement before entertaining the appeal. - HELD THAT: - The Court upheld the Tribunal's direction that the petitioner must comply with the pre-deposit obligation as mandated by Section 35-F of the Act read with the Finance Act provisions, noting that the Tribunal relied on this Court's earlier decision in M/s G.D. Goenka World Institute. The Tribunal's insistence on pre-deposit was held to be in furtherance of the legislative intent and within its competence; the petitioner bore the onus to make a detailed application before the Tribunal to demonstrate why the pre-deposit should be dispensed with. Since the application filed before the Tribunal did not contain the requisite detailed averments on hardship, the Tribunal acted correctly in insisting on the statutory pre-deposit. [Paras 2, 5]

Tribunal's direction for mandatory pre-deposit affirmed and upheld.

Undue financial hardship as ground for dispensing with pre-deposit - requirement to plead and prove hardship in the application to the Tribunal - The petitioner's claim of undue financial hardship was not made out before the Tribunal and could not be raised for the first time before this Court. - HELD THAT: - The Court observed that the application dated 27.02.2023 lacked detailed averments explaining how the pre-deposit would cause undue hardship; the application contained only bare statements regarding financial difficulty and loan liabilities without supporting particulars. The Court held that it was incumbent on the petitioner to place full particulars and supporting material before the Tribunal so that the Tribunal could exercise its discretion to dispense with or modify the pre-deposit requirement. The attempt to furnish additional documents and submissions before this Court was held to be impermissible; accordingly, there was no ground to interfere with the Tribunal's order. [Paras 4, 5]

Claim of undue hardship rejected for want of pleaded and proved particulars; cannot be entertained belatedly before the High Court.

Final Conclusion: Writ petition dismissed; Tribunal's order directing compliance with the mandatory pre-deposit upheld, but time to make the deposit extended by four weeks from the date of the High Court order.

Attribution of manufacture between co located corporate entities - application and scope of Rule 6(3) of the Cenvat Credit Rules, 2004 - remedial power under Rule 14 of the Cenvat Credit Rules, 2004 as alternative to Rule 6 - burden on Department to negate documentary evidence of non manufacture - invocation of extended period of limitation rendered redundant where substantive claim succeeds

Attribution of manufacture between co located corporate entities - burden on Department to negate documentary evidence of non manufacture - Whether the appellants or M/s Panheber (PanEra) were the manufacturers of the Hemophilus vaccine and whether the Department discharged the onus of negating the appellants' evidence - HELD THAT: - The adjudicatory record and remand direction required a determination whether the exempted vaccine was manufactured by M/s Panheber/PanEra or by the appellants. The appellants produced an agreement for provision of manufacturing facility and services, books of account of Panheber indicating operating lease of assets from the appellant, drug licences issued separately to each entity, RG 1/RG 23A entries, and an affidavit stating Panheber manufactured the vaccine. The Commissioner accepted the RG 1 entries of the appellant as decisive without conducting independent verification with Drug Authorities or examining records of Panheber. The Tribunal found this approach simplistic and noted the Drug Controller's communication, the licence history and the lease/operations evidence which the Department did not controvert by sound legal reasoning. Given the absence of any verification negating the appellants' documentary case, the Department failed to discharge the burden to establish that the appellants had manufactured the exempted product. The Tribunal therefore concluded that the claim that the appellants were not the manufacturers was not negatived and no case was made to invoke Rule 6(3). [Paras 9, 10, 11]

The Department failed to establish that the appellants manufactured the vaccine; the appellants' claim that M/s Panheber/PanEra manufactured the exempted vaccine stands proved for the purposes of these proceedings.

Application and scope of Rule 6(3) of the Cenvat Credit Rules, 2004 - remedial power under Rule 14 of the Cenvat Credit Rules, 2004 as alternative to Rule 6 - Whether Rule 6(3) of CCR, 2004 authorises the Department to choose an option and demand payment of 10% of the value of exempted goods where separate accounts are not maintained, or whether recovery of wrongly availed credit must be sought under Rule 14 - HELD THAT: - The Tribunal applied authoritative decisions holding that Rule 6(3) offers options to the assessee and does not empower the authorities to select an option on the assessee's behalf; where CENVAT credit is found to have been wrongly availed the proper remedy is recovery under Rule 14. The impugned proceedings, although invoking Rule 14 in form, resulted in a demand computed as 10% of the value of exempted goods under Rule 6(3). Having found on the merits that the Department could not establish manufacture by the appellants, and having regard to the legal principle that the statutory scheme does not permit the authority to make the choice under Rule 6(3) for the assessee, the Tribunal held that the demand under Rule 6(3) could not be sustained and the alternate remedial route under Rule 14 alone is available to the Department. [Paras 12, 13]

Demand founded on exercising an option under Rule 6(3) on behalf of the assessee is unsustainable; recovery, if any, must proceed under Rule 14 and the impugned 10% demand cannot be sustained.

Final Conclusion: The appeal is allowed: the Department failed to establish that the appellants manufactured the exempted Hemophilus vaccine and, independently, the demand based on exercising an option under Rule 6(3) is unsustainable; consequential relief to follow as per law.

Cenvat credit - inputs cleared 'as such' - Rule 3(5) of Cenvat Credit Rules, 2004 - use of input in process of manufacture (testing and inspection) - inclusion of input value in assessable value - distinguishing earlier tribunal decision on facts

Cenvat credit - inputs cleared 'as such' - use of input in process of manufacture (testing and inspection) - Rule 3(5) of Cenvat Credit Rules, 2004 - Respondent is not required to reverse the cenvat credit availed on transformer oil cleared along with the final product. - HELD THAT: - The Tribunal found on the material placed (including the process flow and the adjudicating authority's findings) that the transformer oil received as input is used inside the factory for inspection and testing of transformers during manufacture: oil is filled for Hot Oil Circulation and testing, later drained and, for logistical convenience, the balance is transported in barrels along with the finished transformers. That use in inspection and testing forms part of the manufacturing process and therefore the oil was not 'cleared as such'. The impugned order's conclusion was not based solely on inclusion of the oil's value in the assessable value; it was founded on the factual conclusion that the oil was used in manufacture. The earlier Tribunal decision in the assessee's other unit was distinguishable because it was a single member order that did not consider or advert to the use of the oil for inspection and testing. On these grounds Rule 3(5) CCR 2004 requiring reversal of credit on inputs cleared 'as such' was held inapplicable. [Paras 5, 6, 8]

Appeal dismissed; impugned order sustained and no reversal of cenvat credit required.

Final Conclusion: The departmental appeal is dismissed; the Tribunal upholds the finding that transformer oil was used in the manufacturing process for testing/inspection and was not cleared 'as such', hence reversal of cenvat credit under Rule 3(5) CCR, 2004 is not warranted.

CENVAT credit of Countervailing Duty (CVD) on imported inputs - interaction between Customs Notification No.12/2012 and the Cenvat Credit Rules, 2004 (Rule 3) - applicability of Excise Notification No.12/2012 to imported coal - availability of concessional CVD on imported coal

CENVAT credit of Countervailing Duty (CVD) on imported inputs - interaction between Customs Notification No.12/2012 and the Cenvat Credit Rules, 2004 (Rule 3) - applicability of Excise Notification No.12/2012 to imported coal - Whether the appellant was entitled to avail CENVAT credit of the 2% CVD paid on imported steam coal assessed under Customs Notification No.12/2012-Cus. - HELD THAT: - The Tribunal held that the embargo in Rule 3 of the Cenvat Credit Rules, 2004 operates only with reference to the Excise Notification and its specified serial entries and does not extend to restrictions contained in the Customs Notification granting concessional CVD on imported coal. The decision reasons that Excise Notification No.12/2012 applies to domestically manufactured coal and the condition denying CENVAT in that notification is therefore inapplicable to imports. Relying on earlier decisions (including SRF Ltd. and the Tribunal's decision in TNPL), the Tribunal concluded that denial of credit by invoking the Excise notification against a Customs notification was legally unsustainable and that the appellant was entitled to retain the CENVAT credit of CVD paid on the imported steam coal. [Paras 9, 11]

Demand set aside and appeal allowed; CENVAT credit of 2% CVD on imported steam coal under Customs Notification No.12/2012-Cus. held admissible.

Final Conclusion: The impugned demand, interest and penalties premised on denial of CENVAT credit of 2% CVD paid on imported steam coal are set aside; the appellant is entitled to the credit and the appeal is allowed with consequential relief if any.

Scope of de novo adjudication on remand - limitation of remand to quantification of demand - exemption under Notification No.108/95 CE as amended - requirement that goods must be removed before completion of the project to deny exemption - interpretation of Explanation 2 to Notification No.108/95 CE - presumption absent supporting evidence

Scope of de novo adjudication on remand - limitation of remand to quantification of demand - Whether the adjudication authority on de novo remand could examine the allegation of removal of goods before completion of the project - HELD THAT: - This Tribunal had earlier held that the demand could be sustained only for a one year period and remanded the matter for quantification. The present adjudication was limited by that remand order. The Tribunal and the Supreme Court have confined the controversy to the period of one year prior to issuance of the show cause notice. Accordingly, the question whether goods were removed from the project before its completion was held to be beyond the scope of the remand, insofar as the remand was for quantification of duty for the limited one year period. The adjudication authority could not expand the scope of remand to decide matters which the Tribunal had not reopened for fresh adjudication. [Paras 7]

Adjudication on remand was confined to quantification for the one year period; the adjudicating authority could not go beyond the scope of the remand to decide the alleged premature removal of goods.

Exemption under Notification No.108/95 CE as amended - requirement that goods must be removed before completion of the project to deny exemption - interpretation of Explanation 2 to Notification No.108/95 CE - presumption absent supporting evidence - Whether benefit of the exemption could be denied in the absence of evidence that goods were removed from the project before its completion - HELD THAT: - On merits the Tribunal examined the notification and the Explanation construing the scope of the exemption. The correct legal position is that denial of the exemption requires proof that the goods were withdrawn from the project during the course of execution; withdrawal after completion of the project does not attract denial. The adjudication relied on presumptions of possible removal rather than admissible evidence. The show cause notice and the impugned order contain no averments of dates of sale, dates of removal or dates of project completion to establish that any withdrawal occurred prior to completion within the one year for which duty was sustained. In the absence of such evidence, mere conjecture or presumption cannot be the basis for denying the benefit of the notification. [Paras 8, 9]

Benefit of the exemption cannot be denied where there is no evidence that the goods were removed from the project before completion; demand confirmed on mere presumption is unsustainable.

Final Conclusion: Appeal allowed; in absence of evidence of premature removal of goods the exemption cannot be denied and the demand confirmed on presumption is set aside, with consequential relief if any.

Treatment of packaging charges as part of assessable value - CENVAT credit reversal where records under Rule 16 of CER, 2002 are not maintained - definition of "manufacture" under Section 2(f) of the Central Excise Act, 1944 - once duty on final product is accepted, CENVAT credit need not be reversed

Treatment of packaging charges as part of assessable value - Demand of duty on packaging charges of Rs. 24,586/- confirmed - HELD THAT: - The adjudicating authority examined invoices and found that although the appellant claimed the amounts as transport charges, no supporting transport receipt or other evidence was produced either before the lower authorities or before the Tribunal. In absence of evidence to substantiate the claim that the charges were not part of the assessable value, the Tribunal upheld the conclusion that the packaging charges formed part of the value on which duty was payable and confirmed the demand. [Paras 6]

Demand of Rs. 24,586/- on packaging charges confirmed.

CENVAT credit reversal where records under Rule 16 of CER, 2002 are not maintained - Recovery of CENVAT credit of Rs. 44,469/- on rejected/returned goods upheld - HELD THAT: - The demand was sustained because the appellant failed to produce evidence of proper accounts of receipt, processing and disposal of rejected/returned goods as required by Rule 16 of the CER, 2002. The Tribunal noted the absence of any supporting evidence or records before the authorities and the Tribunal, and therefore upheld the confirmation of the credit reversal. [Paras 7]

Demand of Rs. 44,469/- on account of CENVAT credit on rejected/returned goods confirmed.

Definition of "manufacture" under Section 2(f) of the Central Excise Act, 1944 - once duty on final product is accepted, CENVAT credit need not be reversed - Differential duty of Rs. 2,30,887/- set aside as processes qualified as manufacture and final goods were cleared on payment of duty - HELD THAT: - The Tribunal considered the nature of processes (foil wash, application of nitro cellulose, slitting) performed on Aluminum Foils and held these were not mere cutting but processes that satisfy the definition of "manufacture" under Section 2(f) of the Central Excise Act, 1944. The Tribunal further relied on the established principle that where duty on the final product has been accepted/paid, CENVAT credit availed need not be reversed even if an authority contends the activity is not manufacture. Applying that principle, and noting the appellant had been discharging duty on the finished goods, the Tribunal set aside the demand for differential duty equivalent to CENVAT credit. [Paras 8, 9]

Demand of Rs. 2,30,887/- set aside; appeal partly allowed on this ground.

Final Conclusion: The Tribunal confirmed the demands relating to packaging charges and CENVAT credit on rejected/returned goods, and set aside the demand for differential duty on inputs because the processes constituted manufacture and duty on finished goods had been accepted.

Scope of review under Order XLVII CPC - error apparent on the face of the record - finality of Supreme Court judgments - coordinate Bench decision not a ground for review - priority of claims under Section 53 IBC vis-a -vis statutory dues under the GVAT Act - secured creditor under the IBC includes a government interest created by operation of law

Scope of review under Order XLVII CPC - error apparent on the face of the record - finality of Supreme Court judgments - Whether the Review Petitions disclose any ground for review within the limited jurisdiction of Order XLVII of the Supreme Court Rules read with Order XLVII CPC - HELD THAT: - The Court restated the settled principles governing review jurisdiction: a review is permissible only for mistakes or errors apparent on the face of the record and not for rehearing or reargument; an error justifying review must be self-evident and not require a long-drawn process of reasoning. A change in law or a subsequent coordinate-bench decision alone is not a ground for review. Applying these principles to the petitions before it, the Court found that the Review Petitioners merely sought reconsideration of issues already addressed, relied on co-ordinate Bench observations, or urged re-appraisal of facts and law - none of which fall within the narrow ambit of review. The Court therefore held that no mistake or error apparent on the face of the record was made out and that the petitions amounted to attempts to reargue the matter rather than point to a reviewable error. [Paras 15, 16, 17, 27, 28]

Review Petitions do not satisfy the limited grounds for review and are dismissed.

Coordinate Bench decision not a ground for review - priority of claims under Section 53 IBC vis-a -vis statutory dues under the GVAT Act - secured creditor under the IBC includes a government interest created by operation of law - Whether the impugned judgment erred in law in its treatment of the interplay between Section 48 of the GVAT Act and Section 53 of the IBC and whether any such error is a ground for review - HELD THAT: - The Court examined the contention that the impugned judgment failed to consider the waterfall mechanism under Section 53 and other IBC provisions. It concluded that this contention was factually incorrect: the impugned judgment had reproduced and considered Section 53 and related IBC provisions, relevant regulations and precedents, and had reached a considered conclusion that Section 48 of the GVAT Act is not inconsistent with Section 53 of the IBC. The Court affirmed the legal position that a secured creditor, as defined in the IBC, may include a government interest arising by operation of law and that debts owed to such secured creditors rank in the order contemplated by Section 53(1)(b)(ii). The Court further held that criticisms based on observations of a coordinate Bench cannot, by themselves, warrant review of an earlier decision of equal strength; disagreement between coordinate Benches should be resolved by a larger Bench rather than by review. [Paras 25, 26, 55, 56, 57]

The impugned judgment correctly addressed the waterfall mechanism and the interplay between Section 48 of the GVAT Act and Section 53 of the IBC; no reviewable error is made out.

Final Conclusion: All Review Petitions are dismissed as devoid of any error apparent on the face of the record; the impugned judgment stands affirmed and the petitions do not disclose grounds under Order XLVII to reopen the decision.

Acceptance of Forms E-1 and C as additional evidence - late filing of documentary evidence in appellate proceedings - benefit of concessional inter-State tax rate on production of declaration forms - liberal approach to prevent unnecessary taxation - remand for verification and reconsideration by tribunal

Acceptance of Forms E-1 and C as additional evidence - late filing of documentary evidence in appellate proceedings - benefit of concessional inter-State tax rate on production of declaration forms - Whether the Tribunal was justified in rejecting Forms E-1 and C filed with the application for additional evidence and denying the concessional inter-State tax treatment - HELD THAT: - The Court held that where inter-State transactions are claimed to attract concessional tax rates and the requisite declaration forms (Forms E-1 and C) exist but were not produced at assessment due to unavoidable circumstances, those forms may be accepted at the appellate stage. Reliance was placed on the Court's earlier decisions which adopt a liberal approach to prevent unnecessary taxation and to ensure taxation is imposed only in accordance with law. Accordingly, the Tribunal erred in rejecting the forms filed with the application for additional evidence without considering their admissibility and the effect of the forms on tax liability.

Forms E-1 and C filed as additional evidence should be accepted and considered for determining entitlement to concessional inter-State tax treatment

Remand for verification and reconsideration by tribunal - Whether the matter should be remanded to the Tribunal for consideration of the forms and for passing appropriate orders in accordance with law - HELD THAT: - Given the admitted inter-State transactions and the late production of declaration forms up to the Tribunal stage, the High Court directed that the Tribunal must accept the forms and decide the claim in accordance with law. The Court remanded the matter to the Tribunal for verification of the forms and for reconsideration of the appeal consistent with the accepted principle that late-filed forms, if genuine and supported by sufficient cause, can be admitted to prevent unjust enhancement of tax liability.

Matter remanded to the Tribunal with directions to accept the submitted forms and decide the issue after verification in accordance with law

Final Conclusion: Revisions allowed to the extent that the impugned Tribunal orders rejecting Forms E-1 and C are set aside; the Tribunal is directed to accept the forms, verify them and decide the appeals in accordance with law, and the matters are restored to their original numbers before the Tribunal.

Quashing of criminal complaint under Section 482 CrPC - Maintainability of complaint under Section 138 of the Negotiable Instruments Act - Authority letter and agency in cheque dishonour proceedings - Certification of bank memo/return slip under Section 146 of the Negotiable Instruments Act - Joinder of offences/complaints and Section 219 CrPC - Scope of inherent jurisdiction and prohibition on holding a mini trial - Imposition of costs for frivolous or dilatory petitions

Quashing of criminal complaint under Section 482 CrPC - Scope of inherent jurisdiction and prohibition on holding a mini trial - Whether the summoning order in Complaint Case No. 7398/2019 under Section 138 NIA should be quashed by exercise of inherent jurisdiction under Section 482 CrPC. - HELD THAT: - The Court held that the contentions raised by the petitioner - including challenges to execution of the Promissory Note, issuance of the cheques, and other factual aspects - involve disputed questions of fact which require trial by the learned Magistrate. Interference at this nascent stage would amount to holding a mini trial, which is impermissible in exercise of powers under Section 482 CrPC when the trial court is seized of the complaint. The petitioner failed to demonstrate any special or exceptional grounds warranting quashing; pleadings do not aver absence of liability or dispute critical factual matters. Having regard to the limited scope of invocation of inherent powers and the stage of proceedings, the petition for quashing was not maintainable. [Paras 14, 16, 17, 20]

Petition under Section 482 CrPC seeking quashing of the summoning order is dismissed; interference would be improper as disputed factual issues must be tried by the learned Trial Court.

Authority letter and agency in cheque dishonour proceedings - Maintainability of complaint under Section 138 of the Negotiable Instruments Act - Certification of bank memo/return slip under Section 146 of the Negotiable Instruments Act - Whether the complaint by respondent No.2 (relying on an Authority Letter executed by his wife) and related challenges (authority letter's execution/phraseology, payee/holder status, and non certification of bank memo) are matters for summary adjudication at the petition stage. - HELD THAT: - The Court observed that the Authority Letter, the status of respondent No.2 as payee or holder in due course, and the contention regarding non certified bank memo are factual/contentious questions and cannot be conclusively determined on a petition under Section 482 CrPC. These matters arise out of the same transaction and require evidence and trial; therefore they must be adjudicated by the learned Magistrate during trial. The Court declined to examine these issues on merits to avoid substituting its function for that of the Trial Court. [Paras 15, 16, 17]

Challenges to the Authority Letter, payee/holder status and certification of bank memo are to be tried and adjudicated by the Trial Court; they are not susceptible to summary determination in the present petition.

Imposition of costs for frivolous or dilatory petitions - Whether costs should be imposed on the petitioner for filing the petition. - HELD THAT: - Having found that the petition was filed on technical grounds and was calculated to delay or derail the trial before the learned Magistrate, the Court exercised its discretion to impose costs. The Court noted earlier parallel proceedings by co accused and that the petitioner had not pursued the remedy of review before challenging the summoning order under Section 482 CrPC. [Paras 18, 20, 21]

Petition dismissed with costs; petitioner ordered to pay costs to the Delhi State Legal Services Committee as directed by the Court.

Final Conclusion: The petition under Section 482 CrPC seeking quashing of the summoning order in Complaint Case No. 7398/2019 is dismissed. Disputed factual issues relating to the Authority Letter, payee/holder status and certification of bank memos are left to trial before the learned Magistrate. The petitioner is directed to pay costs to the Delhi State Legal Services Committee as ordered by the Court.