TaxTMI Updates e-Newsletter
Nov 11,2023

Bail under Section 439 of the Code of Criminal Procedure - Arrest without assigning reason to believe or satisfaction - Compoundable offences triable by Magistrate - Grant of bail balancing nature of accusation, nature of evidence and severity of punishment - Non-issuance of notice for recovery of tax and non-ascertainment of penalty/taxes - Conditions of bail including prohibition on tampering with witnesses and surrender of passport - Expeditious conclusion of trial after grant of bail

Bail under Section 439 of the Code of Criminal Procedure - Arrest without assigning reason to believe or satisfaction - Compoundable offences triable by Magistrate - Grant of bail balancing nature of accusation, nature of evidence and severity of punishment - Non-issuance of notice for recovery of tax and non-ascertainment of penalty/taxes - Conditions of bail including prohibition on tampering with witnesses and surrender of passport - Expeditious conclusion of trial after grant of bail - Applicant Vikas Jain released on bail in Case No. 2924 of 2023 subject to specified conditions - HELD THAT: - On consideration of the materials and submissions the court recorded prima facie findings that the applicant was arrested without assignment of reasons to believe or any recorded satisfaction justifying arrest; the offences alleged are punishable with imprisonment up to five years; no notice for recovery of GST has been issued and penalty/taxes have not been ascertained; and the offences are compoundable and triable by a Magistrate. Applying settled principles governing grant of bail - including nature of accusation, nature of evidence, severity of punishment, character of the accused, his role and involvement, and risk of tampering with witnesses - and having regard to relevant precedents, the court concluded that, without expressing any opinion on merits, the balance favoured grant of bail. The court therefore allowed the bail application and framed conditions intended to prevent tampering with witnesses, ensure attendance at key stages of trial, prohibit further criminality, require surrender of passport and provide for verification of the computerized copy of the order. The trial court was directed to endeavour expeditious trial without being influenced by observations made for bail determination.

Bail allowed on furnishing personal bond and two sureties, subject to enumerated conditions and with liberty for the trial court to cancel bail on breach.

Final Conclusion: Bail application allowed; applicant to be released on bail in the specified case subject to strict conditions, with trial court free to verify compliance, ensure expeditious trial and take action on any breach of conditions.

Intention to evade tax - detention, seizure and penalty under Section 129 - confiscation and penalty under Section 130 - e-way bill as evidence of movement of goods - failure to cancel/withdraw e-way bill

Intention to evade tax - detention, seizure and penalty under Section 129 - Penalty imposed under Section 129 was not justified where there was no finding of intention to evade tax and the delay in transit arose from a vehicular breakdown. - HELD THAT: - The Court held that proceedings under Section 129 (and cognate provisions) require a finding of intent to evade payment of tax. The authorities below imposed penalty though they did not record any finding that the petitioner intended to evade tax; the delay was explained by the petitioner through the driver's affidavit as caused by the vehicle being stuck and subsequent breakdown beyond the petitioner's control. Reliance was placed upon this Court's and other High Court/Apex Court precedents which treat intent to evade tax as a sine qua non for initiation of penalty proceedings under Sections 129/130. In the absence of any recorded intention to evade tax, initiation and confirmation of penalty under Section 129 were unlawful and the orders imposing penalty were quashed. [Paras 11, 12, 16, 17]

Impugned orders imposing penalty under Section 129 quashed for want of any finding of intent to evade tax; writ petition allowed.

E-way bill as evidence of movement of goods - failure to cancel/withdraw e-way bill - Generation of an e-way bill and its non-cancellation on the GST portal establishes movement and genuineness of transaction such that mere expiry of the e-way bill due to unforeseen breakdown does not justify treating the movement as evasive. - HELD THAT: - The Court observed that the e-tax invoice and e-way bill were generated and not cancelled within the statutory period, and these records on the GST portal put the department on notice of the movement. The purpose of the e-way bill is to inform the department of movement; once generated and not withdrawn, the genuineness of the transaction and movement cannot be lightly disputed. The vehicle's inability to reach destination within the e-way bill validity period was satisfactorily explained as due to circumstances beyond control (vehicle stuck and subsequent repair), and mere technical expiry of the e-way bill on that account did not support imposition of penalty. [Paras 11, 12]

Expiry of the e-way bill due to the recorded breakdown does not, by itself, justify penalty where e-way and invoice remained generated and the movement was genuine; authorities erred in disregarding the portal records and the explanation.

Final Conclusion: Writ petition allowed; impugned orders dated 9.6.2023 and 17.6.2023 quashed. Authorities directed to refund any amounts deposited by the petitioner within one month on production of certified copy of this order.

Consideration of GST liability on royalty payments - jurisdictional challenge to parallel proceedings for the same tax period - interim relief by way of stay of coercive action - listing for filing of counter affidavit and rejoinder

Interim relief by way of stay of coercive action - consideration of GST liability on royalty payments - jurisdictional challenge to parallel proceedings for the same tax period - Whether coercive action pursuant to the impugned orders should be stayed pending further orders and pleadings, while the substantive questions regarding GST liability on royalty and any jurisdictional error in parallel proceedings are kept for determination. - HELD THAT: - The Court noted that identical and similar questions regarding whether royalty payments for mining activity attract GST, and whether parallel proceedings for the same tax period involve jurisdictional error, are engaging its attention in other pending matters. Relying on earlier interim orders and pending higher court consideration of related issues, the Court entertained the writ petition and directed limited procedural steps: the State was granted six weeks to file a counter affidavit and the petitioner two weeks thereafter to file a rejoinder. In the interim, and until further order, the Court restrained coercive action in pursuance of the impugned orders dated 31.07.2023 and 25.03.2023, keeping those orders in abeyance, so that the substantive questions can be considered on the basis of the pleadings and pending precedents.

The Court stayed any coercive action under the impugned orders and directed exchange of affidavits, while reserving consideration of the substantive questions on GST liability on royalty and any jurisdictional error.

Final Conclusion: Petition entertained; counter affidavit to be filed by respondents within six weeks and rejoinder within two weeks thereafter; coercive action under the impugned orders stayed and kept in abeyance until further order; matter listed for further hearing.

Cancellation of GST registration for non-payment of tax - rejection of appeal on ground of delay - renewal of GST registration upon payment of tax and interest - direction to communicate outstanding dues and opportunity to pay

Cancellation of GST registration for non-payment of tax - renewal of GST registration upon payment of tax and interest - Direction to renew the petitioner's GST registration in view of payment of tax and interest and subject to payment of any other outstanding amounts communicated to the petitioner. - HELD THAT: - The Assistant Commissioner cancelled the petitioner's GST registration on the ground of non-payment of tax and the Appellate Authority rejected the appeal for delay. The petitioner thereafter filed returns and paid the tax and interest. Having considered the petitioner's payment and the counsel's submissions, the court directed the respondent authority to take steps to renew the GST registration within ten days of communication of the order. The court also required that if any other amount is found due, the authority shall communicate such outstanding dues to the petitioner, who is to pay them within seven days of such communication. The relief granted is procedural and contingent upon satisfaction of any remaining dues communicated to the petitioner.

The respondent authority is directed to renew the petitioner's GST registration within ten days and to communicate any other dues which the petitioner shall pay within seven days.

Rejection of appeal on ground of delay - direction to communicate outstanding dues and opportunity to pay - Effect of appellate rejection for delay on relief sought and the court's conditional remedy. - HELD THAT: - Although the appellate authority rejected the petitioner's appeal as barred by delay, the court exercised its supervisory jurisdiction under Article 226 to grant a limited, conditional remedy because the petitioner had submitted returns and paid tax and interest after the impugned orders. Rather than adjudicating the delay issue on merits, the court provided a practical direction to restore registration subject to payment of any further dues, thus balancing procedural infirmity at the appellate stage with the statutory purpose of registration continuity where tax liability has been discharged.

The court did not set aside the appellate order on delay but directed renewal of registration on the basis of subsequent payment and any further communicated dues.

Final Conclusion: Writ petition disposed by directing respondent authority to renew the petitioner's GST registration within ten days of communication of this order, with any other outstanding amounts to be communicated to and paid by the petitioner within seven days.

Right to personal hearing before rejecting refund application - proviso to Rule 92(3) of the Central Goods and Services Tax Rules, 2017 - principles of natural justice - remand for fresh consideration after affording personal hearing

Right to personal hearing before rejecting refund application - proviso to Rule 92(3) of the Central Goods and Services Tax Rules, 2017 - principles of natural justice - remand for fresh consideration after affording personal hearing - Whether the refund applications were validly rejected without affording an opportunity of personal hearing in terms of the proviso to Rule 92(3) of the CGST Rules, 2017 and the appropriate remedy. - HELD THAT: - The Court examined Rule 92(3) of the Central Goods and Services Tax Rules, 2017, including its proviso which mandates that no application for refund shall be rejected without giving the applicant an opportunity of being heard. The admitted factual position was that the second respondent rejected the two refund applications without granting any personal hearing and the first respondent, on appeal, confirmed that rejection while failing to consider the absence of the hearing. The failure to afford the opportunity required by the proviso constituted a breach of the principles of natural justice. In view of this legal infirmity, the Court found it necessary to set aside both the appellate order and the original rejection and to remit the matter to the second respondent for fresh adjudication. The remand is limited to reconsideration of the refund applications on merits after affording the petitioner a personal hearing and passing fresh orders in accordance with law. [Paras 6, 7, 8]

Orders dated 20.01.2020 and 26.07.2022 set aside; matter remitted to the second respondent for fresh consideration after affording the petitioner a personal hearing and deciding the refund applications on merits and in accordance with law.

Final Conclusion: Writ petition allowed; orders rejecting the refund applications and the confirming appellate order set aside and remitted for fresh consideration after providing the petitioner an opportunity of personal hearing; no costs.

Regular bail under the Code of Criminal Procedure - discretionary grant of bail in economic offences - completion of investigation and filing of charge-sheet - absence of parallel GST departmental proceedings - application of Sanjay Chandra principles on bail - conditional release and supervisory powers of trial court

Regular bail under the Code of Criminal Procedure - completion of investigation and filing of charge-sheet - absence of parallel GST departmental proceedings - discretionary grant of bail in economic offences - application of Sanjay Chandra principles on bail - conditions of bail and supervisory powers of trial court - Applicant enlarged on regular bail in FIR C.R.No.11210015220162 of 2022 - HELD THAT: - The Court exercised its discretionary power to grant regular bail after recording that the applicant has been in custody since 05.11.2022 and that investigation is complete with filing of the charge-sheet. The Court noted the absence of any departmental action under the GST enactments against the applicant, observed that co-accused have been released by coordinate benches, and applied the principles of sanctioning bail as explained in Sanjay Chandra [as relied upon by the Court]. Having considered the nature of allegations and the stage of proceedings, and without delving into the merits of evidence, the Court found it fit to enlarge the applicant on bail while imposing specified conditions to prevent misuse of liberty and to preserve the investigatory and trial process. The Court made clear that the trial court remains free to act upon any breach and that its preliminary observations should not influence the trial on merits.

Application allowed; applicant ordered released on regular bail subject to execution of personal bond with one surety and compliance with enumerated conditions (including surrender of passport, restrictions on travel, furnishing address, monthly police station attendance and other conditions), with liberty to the trial court to modify conditions and to act on any breach.

Final Conclusion: Bail granted: in view of custody period, completion of investigation and charge-sheet, absence of GST proceedings against the applicant and release of co-accused, the High Court exercised discretion under the CrPC to enlarge the applicant on regular bail subject to conditions and supervisory safeguards.

Right to be heard - Natural justice - Opportunity to file reply before fixation of tax liability - Reasoned order - Remand for fresh consideration - Setting aside an order for lack of opportunity of hearing

Right to be heard - Natural justice - Opportunity to file reply before fixation of tax liability - Remand for fresh consideration - Whether the petitioner was denied opportunity of hearing and, if so, whether the impugned order must be set aside and the matter remitted to the authority for fresh consideration after affording hearing. - HELD THAT: - The Court found that the petitioner, owing to serious medical condition, had not been afforded an opportunity to appear before the authority or to file a reply to the show cause notice and therefore was deprived of the opportunity to substantiate his case before any liability was imposed. In consequence, the impugned order dated 24th August, 2021 was set aside and the matter remitted to the concerned tax authority for reconsideration. The authority was directed to afford the petitioner a reasonable opportunity of hearing, permit submission of relevant documents, and pass a reasoned order in accordance with law within six weeks from communication of this order. The Court expressly refrained from adjudicating the merits of the tax liability and left the authority free to decide the matter on merits without being influenced by observations in the order.

Impugned order set aside; matter remitted to the authority for fresh consideration after affording opportunity of hearing and for passing a reasoned order within six weeks.

Final Conclusion: The writ petition is disposed of by setting aside the impugned order and remitting the matter to the first respondent to reconsider the show cause and related liability after affording the petitioner a reasonable opportunity of hearing and allowing production of relevant documents; the Court has not decided the merits.

Right to be heard before disposal of an appeal - condonation of delay under Section 5 of the Limitation Act - limitations as ground for dismissal of appeals - principal not to suffer for default of agent - reconsideration of appeal on merits

Right to be heard before disposal of an appeal - principal not to suffer for default of agent - condonation of delay under Section 5 of the Limitation Act - reconsideration of appeal on merits - Order dismissing the appellant's appeal as barred by limitation was set aside and the matter remitted for fresh consideration on merits after affording opportunity of hearing. - HELD THAT: - The High Court accepted the petitioner's plea that she had entrusted her accounts and tax matters to a Chartered Accountant who had provided the petitioner's contact details to the authority and thereafter absconded, leading to the petitioner's ignorance of the departmental order and delay in prosecuting the appeal. Relying upon the principle that a party who selects and places trust in his agent (or professional) should not be made to suffer for the agent's default, the Court held that the appellant was entitled to a hearing on the merits before the appellate authority and should not be finally prejudiced by dismissal solely on the ground of limitation. Applying that principle to the facts, the Court set aside the order of dismissal dated 27th June, 2023 and directed the appellate authority to afford a reasonable opportunity of hearing to all interested persons, reconsider the appeal on merits (including consideration of any application under Section 5 of the Limitation Act), and pass a reasoned order within the prescribed time-frame.

Order dismissing the appeal on limitation set aside; appeal remitted to the appellate authority for reconsideration on merits after hearing, with a directive to decide within one month and communicate the decision within one week thereafter.

Final Conclusion: The writ petition succeeds: the order dismissing the appeal as time-barred is set aside and the matter is remitted to the appellate authority for fresh, reasoned consideration on merits after affording the petitioner a hearing; the authority is directed to decide within one month and communicate the decision within a week.

Time-limit for completion of assessment under Section 144C(13) - binding nature of Dispute Resolution Panel directions under Section 144C(10) - e-Assessment Scheme (Faceless Assessment Mechanism) and deemed receipt through NeAC - acceptance of return of income upon failure to pass order within statutory period - vitiation of proceedings for non adherence to mandatory statutory procedure

Time-limit for completion of assessment under Section 144C(13) - e-Assessment Scheme (Faceless Assessment Mechanism) and deemed receipt through NeAC - acceptance of return of income upon failure to pass order within statutory period - vitiation of proceedings for non adherence to mandatory statutory procedure - Whether the assessment order dated 31st August 2023 is time barred because the Assessing Officer failed to complete the assessment within the period prescribed by Section 144C(13) after the DRP directions dated 25th March 2021, and the consequence thereof. - HELD THAT: - The Court found that DRP directions were uploaded on the ITBA portal on 25th March 2021 with a DIN and were thereby visible and accessible to the Faceless Assessing Officer (FAO) since the e Assessment Scheme provides that communications received by the National e Assessment Centre are deemed received by the assessment unit. The respondents' contention that the FAO 'received' the directions only on 23rd August 2023 (as reflected in CHN) was rejected because the scheme and the ITBA visibility meant the limitation under Section 144C(13) ran from the date of upload/receipt by NeAC. The Court emphasised the mandatory and self contained nature of Section 144C and that failure by the AO/FAO to pass the final order in conformity with DRP directions within the statutory time is not a mere procedural irregularity but vitiates the proceedings. In view of settled principles and prior decisions relied upon, once the statutory period expired without the AO completing the assessment, the return of income as filed had to be accepted and the remedy of the Revenue to reopen remains subject to due process under law. [Paras 5, 15, 17, 21, 24]

The assessment order dated 31st August 2023 is time barred; the return of income filed for AY 2016 2017 is to be accepted and the petitioner is entitled to refund of the excess tax paid with interest in accordance with law.

Final Conclusion: Writ petition allowed. The assessment completed on 31st August 2023 was held to be barred by limitation under Section 144C(13) as DRP directions dated 25th March 2021 were deemed received through the e Assessment system; the return of income for Assessment Year 2016 2017 is to be accepted and refund with interest shall be granted. Stay refused.

Legality of reassessment proceedings against an amalgamated / non existent entity - amalgamating company ceases to exist and cannot be regarded as a person under Section 2(31) of the Income tax Act - reopening under Section 147 read with Section 148/148A - orders passed without jurisdiction - writ jurisdiction under Article 226/227 and no estoppel against law - availability of alternative remedy not a bar where order is without jurisdiction

Legality of reassessment proceedings against an amalgamated / non existent entity - amalgamating company ceases to exist and cannot be regarded as a person under Section 2(31) of the Income tax Act - reopening under Section 147 read with Section 148/148A - Impugned notices and orders under Sections 148A/148 read with Section 147 issued in the name of the amalgamated company for AY 2018-19 were without jurisdiction and void. - HELD THAT: - The court found that Jhansi Baran Pathways Pvt. Ltd. had ceased to exist with effect from 01.04.2017 pursuant to an approved scheme of amalgamation and corresponding ROC certification. Relying on settled law, including the principle that an amalgamating company loses its separate existence and cannot be treated as a person for assessment proceedings, the High Court held that issuance of jurisdictional notices and an order under Section 148A(d) in the name of the transferor/amalgamated company was fundamentally at odds with that legal position. Mere activation or use of the PAN of the transferor after the appointed date did not confer jurisdiction to issue notices to a non existent entity. In view of those conclusions, the reassessment notices and consequential orders issued in the name of the amalgamated entity were held to be null and void. [Paras 13, 14, 15, 16, 17]

Notices and orders issued against the amalgamated/non existent company for AY 2018-19 are quashed and set aside; all actions in furtherance thereof are prohibited.

Availability of alternative remedy not a bar where order is without jurisdiction - orders passed without jurisdiction - writ jurisdiction under Article 226/227 and no estoppel against law - Writ jurisdiction was rightly exercised notwithstanding existence of statutory appellate remedy, because the impugned proceedings were without jurisdiction. - HELD THAT: - The court applied the established principle that when an order is wholly without jurisdiction or contrary to natural justice, the availability of an alternative statutory remedy does not preclude exercise of constitutional writ jurisdiction. Given that the notices and order impugned were issued against a non existent/amalgamated entity and thus devoid of jurisdiction, the objection as to the availability of remedy under Section 246 was overruled and the writ petitions were entertained. [Paras 12]

Objection based on existence of alternative statutory remedy rejected; writ petitions maintainable and decided on merits.

Final Conclusion: The writ petitions are allowed. The notices dated 15.03.2022 (and consequential notices/orders in the connected petitions), the orders under Section 148A(d) and the Section 148 notices issued in the name of the amalgamated company for AY 2018-19 are quashed and set aside; all further proceedings in reliance thereon are prohibited.

Intermediate order - revisional jurisdiction under Section 397 Cr.P.C. - non-application of mind - reasonable cause - sanction for prosecution - cognizance and issuance of process - offence under section 276B of the Income Tax Act - section 278B and principal officer liability

Intermediate order - revisional jurisdiction under Section 397 Cr.P.C. - Maintainability of the Revision challenging the order taking cognizance and issuing summons. - HELD THAT: - The Court applied the test from Girish Kumar Suneja and Madhu Limaye to classify orders as final, interlocutory or intermediate. An order taking cognizance and issuing process, if set aside, would culminate the proceedings and thus is an intermediate order. Such intermediate orders fall within the scope of revisional jurisdiction under Section 397(1) Cr.P.C. and are amenable to revision. The bar in Section 397(2) against revision of interlocutory orders does not preclude revisional interference with intermediate orders. Consequently the objection to maintainability based on interlocutory character is repelled and the Revision is held maintainable. [Paras 13]

Revision is maintainable as the impugned order is an intermediate order amenable to revisional jurisdiction.

Reasonable cause - non-application of mind - sanction for prosecution - offence under section 276B of the Income Tax Act - cognizance and issuance of process - section 278B and principal officer liability - Whether the order taking cognizance is vitiated by non-application of mind for failing to appreciate the admitted factual plea of reasonable cause arising from the COVID-19 pandemic and by mechanical sanction. - HELD THAT: - The Court examined the material placed before the sanctioning authority and the admitted factual matrix that the delays in depositing TDS (ranging 31 to 214 days) occurred during the COVID-19 pandemic and that the amounts with interest were ultimately deposited. The Court construed 'reasonable cause' as an objective test to be applied liberally and observed legislative intent to protect bona fide situations (section 278AA read with penal provisions). The sanction order was found to have rejected the pandemic-related explanations without adequate consideration and to have proceeded mechanically, emphasising that pandemic measures and contemporaneous governmental steps (including extensions of limitation and reliefs) were material. For these reasons the sanction and the consequent cognizance were held to suffer from non-application of mind; the complaint was vitiated and cognizance could not have been taken. [Paras 29, 30, 31]

Sanction for prosecution and the order taking cognizance are quashed for non-application of mind; the impugned cognizance/order is set aside.

Final Conclusion: The Revision is allowed. The High Court held the order taking cognizance to be an intermediate, revisable order and concluded that the sanction and cognizance were vitiated by non-application of mind to the admitted plea of reasonable cause arising from the COVID-19 pandemic; the impugned order dated 02.02.2023 is set aside.

Revision under Section 263 - erroneous and prejudicial to the interest of revenue - reopening under Section 147 - acceptance of explanation after inquiry - Explanation 2 to Section 263

Revision under Section 263 - erroneous and prejudicial to the interest of revenue - acceptance of explanation after inquiry - Validity of the Tribunal's setting aside of the revision order passed under Section 263 where the assessing officer had reopened assessment under Section 147 and, after enquiries, accepted the assessee's explanation regarding cash deposits. - HELD THAT: - The Tribunal found on facts that during assessment proceedings the AO had conducted enquiries (by issuing notices under Sections 148/142(1)), considered the assessee's written submissions and documentary evidence explaining the source of the cash deposit, and framed the assessment under section 143(3)/147 accepting the return. Given that the AO had made specific enquiries and accepted the explanation and evidence placed on record, the High Court concluded that the assessment could not be said to be erroneous or prejudicial to the revenue so as to justify exercise of revisionary power under Section 263. The Court expressly refrained from considering the question arising under Explanation 2 to Section 263. [Paras 5, 7]

The Tribunal's allowance of the assessee's appeal against the revision under Section 263 is not impeachable on any substantial question of law; no question of law arises and the appeal is dismissed.

Final Conclusion: Challenge under Section 260-A to the Tribunal's order allowing the assessee's appeal against the revision under Section 263 is dismissed; the Court did not examine Explanation 2 to Section 263.

Revisionary jurisdiction under section 263 - erroneous and prejudicial to the interests of Revenue - mandatory audit requirement under section 44AB - presumptive taxation under section 44AD - deduction of remuneration to partners not allowable under section 44AD - res judicata in income-tax assessments

Revisionary jurisdiction under section 263 - erroneous and prejudicial to the interests of Revenue - Assessee's challenge to the PCIT's exercise of jurisdiction under section 263 and the finding that the assessment was erroneous and prejudicial to the interest of the Revenue was rejected. - HELD THAT: - The Tribunal upheld the PCIT's invocation of section 263 because the Assessing Officer framed assessment under section 143(3) without making any enquiry or verification into material facts that were apparent on record. The PCIT found, and the Tribunal agreed, that the AO had simply accepted the returned income without examining why the assessee had not got its accounts audited despite turnover exceeding the threshold, or whether the provisions relied upon by the assessee were in fact applicable. Such omission rendered the assessment erroneous and prejudicial to the interests of the Revenue and justified revisionary action under section 263. [Paras 3, 6]

Order passed by the PCIT under section 263 was upheld and the assessee's appeal on this ground dismissed.

Mandatory audit requirement under section 44AB - presumptive taxation under section 44AD - deduction of remuneration to partners not allowable under section 44AD - res judicata in income-tax assessments - Applicability of section 44AB (audit) and non-availability of presumptive deductions under section 44AD where audit was mandatory, and the relevance of a different treatment in a subsequent year. - HELD THAT: - The Tribunal held that where turnover exceeded the statutory threshold, the requirement to get accounts audited under section 44AB is mandatory and cannot be evaded by merely invoking the presumptive scheme under section 44AD. The assessee had not only failed to obtain the audit but also, while applying section 44AD, deducted remuneration paid to partners which is not permissible under the presumptive regime; this further demonstrated incorrect application of law. The fact that the Department accepted a similar position in the subsequent assessment year did not operate as res judicata; income-tax proceedings are to be adjudicated year by year and a prior year's treatment does not bind evaluation of the year under consideration. [Paras 3, 6]

The Tribunal affirmed that section 44AB's audit obligation applied, the presumptive scheme under section 44AD and its disallowance of partner remuneration could not be invoked to avoid audit, and prior acceptance in another year did not preclude revision for the year in issue.

Final Conclusion: The PCIT's revision under section 263 was sustained; the assessment was held erroneous and prejudicial to Revenue for A.Y. 2014-15 for failure to comply with the audit obligation and misapplication of the presumptive provisions, and the assessee's appeal is dismissed.

Deduction under Section 54B - Investment in agricultural land in name of spouse - Binding effect of dismissal of Special Leave Petition simpliciter - Follow High Court precedent where conflict exists

Deduction under Section 54B - Investment in agricultural land in name of spouse - Follow High Court precedent where conflict exists - Assessee entitled to deduction under Section 54B despite replacement agricultural land being purchased in the name of assessee's wife. - HELD THAT: - The Tribunal considered rival authorities, including ITAT decision in Ashok Kumar and several High Court decisions holding that investments in purchase of agricultural land in the name of the wife are eligible for deduction under Section 54B (and analogous provisions). The Tribunal observed that dismissal of a Special Leave Petition simpliciter does not merge a High Court decision into a Supreme Court precedent and therefore does not displace contrary High Court authorities relied on by the assessee. Where High Court decisions are in conflict, the Tribunal followed the line favourable to the assessee, applying the precedents relied upon by the assessee and directing the Assessing Officer to allow the deduction under Section 54B. [Paras 7, 8, 9]

The deduction under Section 54B is allowed though the replacement agricultural land was purchased in the wife's name; the Assessing Officer is directed to allow the deduction.

Final Conclusion: The Tribunal allowed the appeal, setting aside the orders of the revenue authorities and directing allowance of deduction under Section 54B for the Assessment Year 2011-12.

No addition can be made in respect of completed assessments in the absence of incriminating material unearthed during search - Reassessment under Section 153A in respect of completed assessments requires incriminating material discovered during search - Additions cannot be based solely on book entries or material already disclosed to the department - Precedential binding effect of higher court decisions on the requirement of seized incriminating material

No addition can be made in respect of completed assessments in the absence of incriminating material unearthed during search - Reassessment under Section 153A in respect of completed assessments requires incriminating material discovered during search - Additions cannot be based solely on book entries or material already disclosed to the department - Whether the assessing officer could make additions in completed assessments in the absence of any incriminating material seized during the search - HELD THAT: - The Tribunal found that the additions impugned were not founded on any material found and seized during the search but were based on book entries already disclosed to the department. Applying the legal principle laid down by the Hon'ble Delhi High Court in CIT v. Kabul Chawla and followed in subsequent High Court decisions, the Tribunal held that completed assessments can be reopened under the search provisions only on the basis of incriminating material unearthed during search or requisition which relates to the assessment year sought to be reopened. The Tribunal further relied on the Hon'ble Delhi High Court's reasoning in Pr. CIT v. Meeta Gutgutia distinguishing cases where clandestine concealment justified estimates, and on the Hon'ble Apex Court's decision in M/s. Abhisar Buildwell P. Ltd., which held that in the absence of incriminating material seized during search the Assessing Officer cannot reassess completed assessments by relying on other material. Applying these precedents to the facts, and noting that no assessment was pending and no seized incriminating material existed for the relevant assessments, the Tribunal held the additions to be legally unsustainable. [Paras 2, 5, 6, 8, 9]

The additions made in respect of completed assessments are set aside as no incriminating material was unearthed during the search; the appeal is allowed.

Final Conclusion: Following binding decisions of the Delhi High Court and the Apex Court, the Tribunal held that in the absence of incriminating material seized during the search the Assessing Officer could not make additions in respect of completed assessments; the appeal is allowed and the additions set aside.

Disallowance of expenditure not wholly and exclusively for the purpose of business - allocation of non-operating and non-allocable expenses - addition under section 68 for unexplained credits - admissibility of subsequent payments and documentary evidence to prove genuineness of creditors - scope of appellate power to enhance assessment on issues not subjected to assessment

Disallowance of expenditure not wholly and exclusively for the purpose of business - allocation of non-operating and non-allocable expenses - scope of appellate power to enhance assessment on issues not subjected to assessment - admissibility of additional evidence under rule 46A - Validity of enhancement of disallowance of Rs. 10,18,44,938/- by CIT(A) out of other expenses and related component-wise disallowances - HELD THAT: - The Tribunal held that the CIT(A) was not justified in enhancing the ad-hoc disallowance by disallowing the entire non-operating and non-allocable expenses without proper foundation, because (i) the Assessing Officer had not made disallowances in respect of personnel expenses, finance cost and depreciation and the CIT(A) cannot initiate a new matter not determined at assessment; (ii) the assessee furnished segmental allocation, agreements, invoices, bank payments and other documents during appellate proceedings (admitted under Rule 46A), and the TPO had drawn no adverse inference in relation to international transactions; (iii) non-allocable expenses (administrative, marketing, depreciation, finance cost etc.) are incurred for overall operations and can legitimately exist alongside operating costs, and historical percentages for prior years showed a consistent presence of non-allocable costs; (iv) specific disallowances of personnel expenses, administrative expenses, finance cost and depreciation were considered on their merits and found not sustainable: the personnel disallowance ignored the need for manpower and bid preparation for transport contracts and subsequent revenues from BRT Indore; administrative expenses included fees for bidding and expansion into transport/metro projects; finance costs related to inter corporate deposits and finance leases used for business; and depreciation as per books did not justify the disallowance since tax depreciation claimed was lower. Applying these findings, the Tribunal set aside the enhanced disallowance and deleted the component disallowances made by the CIT(A). [Paras 48, 50, 52, 53, 54]

Enhancement of disallowance of Rs. 10,18,44,938/- by the CIT(A) is not sustainable and is deleted; component disallowances are rejected.

Addition under section 68 for unexplained credits - admissibility of subsequent payments and documentary evidence to prove genuineness of creditors - Sustenance of addition of Rs. 11,73,19,373/- u/s 68 on account of unexplained increase in sundry creditors (trade payables) - HELD THAT: - The Tribunal found that the assessee furnished party wise details of sundry creditors, including major inter company payables to Serco UK, provisions for expenses, and subsequent payments evidenced by bank statements and Form 15CA. The payables to Serco UK arose from a salary reimbursement arrangement under which Serco UK paid part salaries of expatriate employees and were reimbursable by the assessee; these transactions were disclosed in transfer pricing reports and examined by the TPO without adverse finding. The share purchase agreement and bank remittance evidence established subsequent discharge of the liability. Provisions were shown on accrual basis and substantiated by subsequent payments and TDS certificates. Given the documentary evidence and subsequent settlement, the Tribunal held that the creditors were genuine and no addition under section 68 was justified. [Paras 64, 65, 66, 67, 68]

Addition of Rs. 11,73,19,373/- under section 68 is deleted as the sundry creditors were satisfactorily proved to be genuine.

Final Conclusion: The Tribunal allowed the appeal: the enhanced disallowance of Rs. 10,18,44,938/- was deleted and the addition of Rs. 11,73,19,373/- under section 68 was deleted, resulting in allowance of the assessee's appeal for F.Y. 2012-13 (A.Y. 2013-14).

Foreign tax credit - claim made during assessment proceedings - filing of Form 67 - Rule 128(9) of the Income-tax Rules - DTAA overriding domestic law

Foreign tax credit - claim made during assessment proceedings - filing of Form 67 - DTAA overriding domestic law - Rule 128(9) of the Income-tax Rules - Entitlement to foreign tax credit for additional withholding tax paid and claimed during assessment proceedings though not included in the original or revised return and the relevance of Rule 128(9)/Form 67. - HELD THAT: - The Tribunal accepted that the assessee had offered the corresponding royalty income to tax in India for the relevant year and had already been allowed credit for the initial withholding at 10%. A later revision by the Australian tax authorities resulted in an additional withholding of 5% which was deducted and the withholding certificate and revised Form 67 were filed during the ongoing assessment proceedings after the time for filing a revised return had expired. The Tribunal held that the claim related only to credit for additional foreign tax on income already declared and did not alter the assessee's taxable income for the year; consequently, allowing the additional credit was appropriate. The Tribunal observed that Rule 128 was inserted w.e.f. 1.4.2017 and therefore technically did not apply to the year under consideration, and in any event precedent of the ITAT benches treated filing of Form 67 as directory and not a condition for disallowance of FTC. In view of the DTAA entitlement and the documentation produced during assessment (withholding certificate and revised Form 67), the Tribunal found no reason to deny credit for the additional withholding tax and directed the Assessing Officer to allow it. [Paras 6]

Credit for the additional withholding tax of Rs. 69,63,628/- paid and claimed during assessment proceedings is allowable; the CIT(A)'s direction to the Assessing Officer to grant the credit is upheld and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s direction to allow foreign tax credit for the additional withholding tax paid and claimed during assessment proceedings for AY 2016-17.

Deduction under section 80P(2)(d) - Co-operative society - Investment in co-operative banks - Interpretation of section 80P(4) - exclusion of co-operative banks holding RBI licence - Scope of processing of returns under section 143(1)

Deduction under section 80P(2)(d) - Co-operative society - Investment in co-operative banks - Interpretation of section 80P(4) - exclusion of co-operative banks holding RBI licence - Deduction under section 80P(2)(d) is allowable in respect of interest income earned by the assessee from deposits with Saraswat Co-operative Bank Ltd and Maharashtra State Co-operative Bank Ltd. - HELD THAT: - Section 80P(2)(d) permits deduction of income by way of interest or dividends derived by a co-operative society from its investments with any other co-operative society; both conditions in subsection (2) must be satisfied. The assessee is a co-operative housing society and placed deposits in Saraswat Co-operative Bank Ltd and Maharashtra State Co-operative Bank Ltd and earned interest thereon. There is no prohibition in section 80P(2)(d) against claiming the deduction where the recipient co-operative society (bank) operates in more than one State. Section 80P(4) is a limited proviso directed to excluding from the benefit cooperative banks which, in addition to being co-operative societies, possess an RBI licence and function essentially as commercial banks; it does not operate to deny the benefit to multi-state co-operative societies generally. The Tribunal relies on the analysis in Mavilayi Service Co-operative Bank Ltd. v. CIT as correctly explaining the limited ambit of section 80P(4). The learned CIT(A)'s denial of the deduction on the ground that the banks are multi state scheduled banks is therefore not sustainable, and the grounds challenging that denial are allowed. [Paras 5, 6, 7, 8, 11]

Deduction under section 80P(2)(d) in respect of the interest income from the two co-operative banks is allowed and the assessee's appeal is allowed on this aspect.

Scope of processing of returns under section 143(1) - The question whether the adjustment made to total income by the Centralised Processing Centre, Bangalore falls within the scope of section 143(1) is left open for further consideration. - HELD THAT: - The assessee raised a challenge to the adjustment effected by CPC under section 143(1). The learned AR requested that this issue be left open and the Tribunal, in the facts of the present order, has not adjudicated the matter on merits but has left it open as per those submissions. No adjudicatory finding on this controversy is recorded in the impugned order of the Tribunal. [Paras 10]

Issue left open for fresh consideration as per the assessee's submissions.

Final Conclusion: The appeal is allowed insofar as the deduction under section 80P(2)(d) is concerned (interest from deposits with the two co-operative banks is deductible); the challenge to the CPC adjustment under section 143(1) is left open for further consideration.

Genuineness of share transactions - burden of proof - accommodation entries / bogus long term capital gains - reliance on third-party statements and right to cross-examine - use of circumstantial evidence and human probability - exemption under section 10(38) of the Income Tax Act - addition under section 68 of the Income Tax Act

Genuineness of share transactions - exemption under section 10(38) of the Income Tax Act - addition under section 68 of the Income Tax Act - burden of proof - Validity of the authorities' conclusion that the long-term capital gains claimed by the assessee were bogus and the consequent addition under section 68 - HELD THAT: - The Tribunal examined whether the assessee had discharged the onus to prove that the long-term capital gains claimed on sale of shares of Sunrise Asian Ltd. were genuine and exempt under section 10(38). The assessee produced independently verifiable documentary material including share application/allotment evidence, bank payments by cheque, demat account entries, contract notes for sale on the stock exchange and bank credits of sale proceeds. The authorities below relied on investigation reports and general findings about a network providing accommodation entries in respect of certain penny stocks, and treated the assessee's transactions as sham. The Tribunal accepted the coordinate Bench (Jaipur ITAT) approach that, where an assessee places on record verifiable documents of allotment, dematerialization, sale on the exchange and receipt of sale consideration through banking channels, mere generalizations or modus operandi described in other investigations do not constitute specific contrary material to displace that evidence. In the absence of any direct documentary evidence brought on record to controvert the assessee's proofs or to show collusion/connectivity of the assessee with entry providers, the assessee satisfied the necessary conditions for exemption under section 10(38) and discharged the initial burden of proof. [Paras 10, 11]

Set aside the findings of the CIT(A) and deleted the addition; the claim of exemption under section 10(38) is allowed.

Reliance on third-party statements and right to cross-examine - use of circumstantial evidence and human probability - burden of proof - Whether reliance on statements recorded by the Investigation Wing and denial of opportunity to cross-examine those third parties justified treating the assessee's transactions as bogus - HELD THAT: - The Tribunal considered the authorities' reliance on third-party statements and investigation findings. While the CIT(A) and AO relied on such material and applied principles of circumstantial evidence and human probability to conclude sham transactions, the Tribunal followed the coordinate Bench's reasoning that reliance on general statements about a broader racket or modus operandi is not a substitute for specific evidence implicating the assessee. The Jaipur ITAT had observed that assessment based solely on third-party statements without confronting the assessee or making the statements available for cross-examination is susceptible to challenge; where those statements do not specifically connect to the assessee's transaction, denial of opportunity to test such material is fatal. Applying that approach, and noting absence of any specific documentary/material link showing the assessee's collusion with entry providers, the Tribunal found that the authorities' reliance on investigation material did not justify rejecting the assessee's evidence. [Paras 10]

Held that reliance on general third-party investigation material, without specific contrary evidence against the assessee and without confronting the assessee with such material so as to afford opportunity of testing it, cannot sustain the finding of bogus transactions.

Final Conclusion: Following the coordinate Bench decisions (and subsequent confirmation by the Rajasthan High Court) on identical facts, the Tribunal found that the assessee had produced verifiable documentary evidence of purchase, dematerialization, sale on the stock exchange and receipt of sale proceeds; absent any specific contrary material or link with entry providers, the authorities could not sustain the addition under section 68 by treating the claimed long-term capital gains as bogus. The CIT(A)'s order is set aside and the assessee's claim under section 10(38) is allowed; the AO is directed to delete the addition.

Capital receipt - revenue receipt - entertainment tax subsidy - purpose test and irrelevance of mode of payment in characterising subsidy - Explanation 10 to Sec. 43(1) - reduction of actual cost of asset - allowability of ESOP/ESPS expenditure as revenue expenditure under section 37(1) - disallowance under Section 14A read with Rule 8D - computation of book profit under section 115JB - limits on Assessing Officer

Entertainment tax subsidy - capital receipt - purpose test and irrelevance of mode of payment in characterising subsidy - Explanation 10 to Sec. 43(1) - reduction of actual cost of asset - Entertainment tax subsidy granted as incentive for setting up multiplexes is a capital receipt and not reducible from actual cost of assets under Explanation 10 to Sec. 43(1). - HELD THAT: - The Tribunal followed a coordinate-bench decision applying the tests in Ponni Sugars & Chemicals Ltd. and relevant High Court precedents. The scheme's object was to promote long term establishment and operation of multiplexes (purpose test). The fact that the subsidy was released linked to entertainment tax collection or viewership (mode of payment) does not alter its character. Consequently, the subsidy is capital in nature. Further, because the scheme did not require utilisation for any specified asset and the subsidy was not intended to meet the cost of any particular asset, the amount cannot be treated as reducing the "actual cost" of assets for the purposes of Explanation 10 to Sec. 43(1). This determinative reasoning led the Tribunal to allow the assessee's grounds on this point. [Paras 6]

Grounds 1-4 allowed; entertainment tax subsidy held to be capital receipt and not to be reduced from actual cost of fixed assets under Explanation 10 to Sec. 43(1).

Allowability of ESOP/ESPS expenditure as revenue expenditure under section 37(1) - Expenditure/loss recorded in P&L on account of ESOP/ESPS is an ascertained business liability and allowable as revenue expenditure under section 37(1). - HELD THAT: - The Tribunal followed the jurisdictional High Court decision overturning the Tribunal's contrary view. ESOPs vest over the stipulated vesting period giving employees a definite right and creating an ascertainable business liability in the relevant accounting year. The difference between issue price and market value, being an expenditure incurred to secure employees' services, qualifies as expenditure for section 37(1) and is not a contingent or capital liability. On this basis the additions/disallowances on account of ESOP/ESPS were directed to be deleted. [Paras 10, 11]

Grounds 7 and 8 allowed; ESOP/ESPS expenditure treated as allowable revenue expenditure.

Disallowance under Section 14A read with Rule 8D - Disallowance under Rule 8D is not applicable as computed by the Assessing Officer; only investments yielding exempt income are to be considered for disallowance. - HELD THAT: - The Tribunal held that Rule 8D did not apply for the year in issue following the Supreme Court decision referenced by the Bench. Further, relying on the Delhi High Court approach, only those investments which actually yield exempt income (dividends) ought to be considered while computing any disallowance. The assessee had computed the disallowance suo moto and, in view of these legal positions, the AO was directed to delete the impugned disallowance. [Paras 13, 15]

Ground 9 allowed; disallowance under section 14A read with Rule 8D deleted.

Computation of book profit under section 115JB - limits on Assessing Officer - depreciation and adjustments for MAT purposes - Assessing Officer cannot adjust items beyond net profit shown in profit & loss account for computing book profit under section 115JB except as specified in the Explanation; therefore impugned disallowances (including depreciation and Section 14A adjustments) are not to be considered for MAT computation. - HELD THAT: - Relying on Supreme Court authority, the Tribunal reiterated that the AO's jurisdiction in computing book profit under section 115JB is confined to the adjustments enumerated in the Explanation to that section and he cannot go beyond the net profit as per the profit and loss account. Consequently, the disallowance of depreciation and related adjustments made by the AO for MAT computation were directed not to be considered. [Paras 17, 18]

Grounds 10 and 11 allowed (read with Ground 9); impugned disallowances are not to be considered for computation of book profit under section 115JB.

Final Conclusion: The appeal is allowed: the entertainment tax subsidy for multiplexes is held to be a capital receipt not reducible from asset cost; ESOP/ESPS expenditure is allowable as revenue expenditure; the Section 14A/Rule 8D disallowance is deleted; and the AO is directed not to make the impugned adjustments for computation of book profit under section 115JB.

Revisionary jurisdiction under section 263 - order passed in the name of a non-existent/entity ceased to exist is void ab initio - reopening of assessment under section 147/notice under section 148 requires prior sanction under section 151 - failure to obtain statutory sanction renders reassessment null and void - natural justice - requirement of opportunity of hearing under section 263 - void order cannot give rise to valid collateral proceedings

Revisionary jurisdiction under section 263 - order passed in the name of a non-existent/entity ceased to exist is void ab initio - natural justice - requirement of opportunity of hearing under section 263 - Validity of the revisionary order under section 263 when the order and show-cause notices were issued in the name of an entity which had ceased to exist - HELD THAT: - The Tribunal found as an established fact that the assessee-company had been converted into an LLP with effect from 13.04.2015 and that the Assessing Officer had been intimated of this fact before commencement of the revisionary proceedings. The revisional notices and the original order under section 263 were, however, issued and framed in the name of the erstwhile company which had ceased to exist. Applying the principle that an order passed against a non-existent juristic person is a nullity, and having regard to the reasoning in Maruti Suzuki India Ltd. and Spice Infotainment Ltd. as discussed in the judgment, the Tribunal held that the impugned section 263 order was void ab initio. The Tribunal further recorded that while notice is not in every case a condition precedent to exercise of section 263, the absence of substitution of the successor entity and the passing of the order in the name of the non existent entity rendered the revisional order legally unsustainable and violative of the requirement of a meaningful opportunity to the correct entity.

Revisionary order under section 263 passed in the name of the non-existent company is a nullity and is quashed.

Reopening of assessment under section 147/notice under section 148 requires prior sanction under section 151 - failure to obtain statutory sanction renders reassessment null and void - void order cannot give rise to valid collateral proceedings - Validity of the reassessment framed under sections 147/148 in the absence of prior approval required under section 151 and the consequence of that defect on consequent revisionary proceedings under section 263 - HELD THAT: - The Tribunal examined the record produced by the assessee (via RTI) showing that the sanction/approval proforma required by section 151 was not signed by the competent Addl./Jt. CIT. The Tribunal held that obtaining prior sanction in the relevant circumstances was a mandatory condition precedent and its absence vitiated the jurisdiction of the Assessing Officer to issue the section 148 notice and frame reassessment under section 147. Relying on the settled proposition that a decree or order passed without jurisdiction is a nullity (Kiran Singh v. Chaman Paswan principle) and on earlier decisions applying that principle to tax reassessments, the Tribunal concluded that the reassessment order suffered from a fundamental jurisdictional defect which could not be cured by consent or subsequent proceedings. Consequently, any revisionary action taken under section 263 pursuant to such a jurisdictionally defective reassessment could not stand.

Reassessment under sections 147/148 without the mandatory sanction under section 151 is null and void; all consequential revisionary action under section 263 based on such void reassessment is also invalid and quashed.

Final Conclusion: The appeal is allowed. The Tribunal quashes the impugned orders under section 263 as void ab initio because (i) the revisional proceedings and order were framed in the name of a company that had ceased to exist and (ii) the underlying reassessment was vitiated for lack of mandatory sanction under section 151; consequential proceedings are therefore invalid.

Addition on account of suppressed receipts - Zero Receipt Patients-OPD - Assessments arising from search and seizure - Requirement of show cause notice before making additions - Presumption versus corroborative seized material - Principle of parity in tax adjudication - Admissibility of electronic evidence under Section 65B(4) of Evidence Act

Addition on account of suppressed receipts - Zero Receipt Patients-OPD - Requirement of show cause notice before making additions - Presumption versus corroborative seized material - Principle of parity in tax adjudication - Deletion of addition made by the Assessing Officer in respect of 'Zero Receipt Patients-OPD' for the assessment years 2013-14 and 2014-15. - HELD THAT: - The Assessing Officer added income by treating 5,797 OPD entries as 'zero receipt' and applied an assumed average consultancy fee (Rs.150) to compute unaccounted receipts. The Tribunal found this approach to be premised on conjecture: the AO adopted assumed minimum and maximum fees to arrive at an average, did not confront the assessee with the information relied upon, and treated 'probable reasons' as proof. The ld. CIT(A) had restricted the addition to 30% as profit element, but this Bench had earlier deleted similar additions in respect of 'Zero Receipt' IPD patients after holding that the additions were based on presumption, the information was not properly confronted, and hospitable practices (free treatment to relatives, staff, follow-up visits) explained the zero entries. Following that decision and applying the principle of parity, the Tribunal held that the OPD additions, being founded on similar reasoning and without adequate corroboration, could not be sustained and were liable to be deleted. The assessee's alternative contentions (including objections to admissibility of electronic records under Section 65B(4)) were rendered academic by the Tribunal's acceptance of the primary ground of infirmity in the additions. [Paras 9, 10, 11, 12]

Impugned additions in respect of 'Zero Receipt Patients-OPD' for AYs 2013-14 and 2014-15 are deleted and the appeals are allowed.

Final Conclusion: Both appeals are allowed: additions made by the Assessing Officer on account of 'Zero Receipt Patients-OPD' for AY 2013-14 and AY 2014-15 are deleted, following the Tribunal's earlier deletion of similar IPD-related additions and on account of the additions being based on presumption and not adequately confronted or corroborated.

Stock-in-trade vs capital asset distinction - chargeability under section 56(2)(vii) for immovable property received for inadequate consideration - valuation by stamp duty/circle rate as triggering clause for deemed income - burden of proof to establish property as stock-in-trade - relevance of contemporaneous acts and independent evidence (MOU, site inspection, approvals) to prove business intention

Stock-in-trade vs capital asset distinction - chargeability under section 56(2)(vii) for immovable property received for inadequate consideration - relevance of contemporaneous acts and independent evidence (MOU, site inspection, approvals) to prove business intention - Whether the addition under section 56(2)(vii) was rightly made by treating the excess of circle rate over consideration as deemed income because the land was a capital asset and not stock-in-trade. - HELD THAT: - The Tribunal upheld the AO's addition on the ground that the assessee failed to discharge the burden of proving that the land was held as stock-in-trade. The Memorandum of Understanding executed prior to purchase, being a self-drafted document recording future intention, was insufficient by itself to establish trading character. Independent evidence was lacking: the ITI/site inspection showed only boundary wall and land filling and no signs of trading operations; there was no approval from the development authority for the alleged project; nor were there efforts to market or sell portions of the land over the ensuing years. Medical records of the co-owner, relied on to explain inaction, related to a later period and were not shown to demonstrate continuous incapacity immediately after purchase; they were brought during assessment proceedings largely as an explanation for delay. The Tribunal distinguished the cited coordinate-bench decision where the property was shown as stock-in-trade in books and active steps to develop/sell were evident. On the totality of facts and absence of contemporaneous corroboration, the land was held to be a capital asset and section 56(2)(vii) rightly applied to tax the difference between stamp duty/circle rate and consideration. [Paras 6, 7, 8, 9, 10]

Addition under section 56(2)(vii) confirmed; land held to be capital asset and not stock-in-trade; appeal dismissed.

Final Conclusion: The Tribunal dismissed the appeal, upholding the addition under section 56(2)(vii) on the basis that the assessee failed to establish that the purchased land was stock-in-trade; the impugned difference between circle rate and consideration was taxable as deemed income.

Principles of natural justice - right to cross-examination - personal hearing - alternate remedy and restraint on writ jurisdiction - statutory cap on adjournments under Section 112A - appellate authority to consider appeal without raising limitation

Alternate remedy and restraint on writ jurisdiction - principles of natural justice - Whether the writ petition was maintainable in view of disputed questions of fact and the availability of an alternate remedy - HELD THAT: - The Court agreed that aspects of the dispute - including whether personal hearings were in fact granted and availed - involved disputed questions of fact. Examination of such factual disputes ordinarily lies beyond the scope of writ jurisdiction, particularly where an alternate statutory remedy is available. The learned Judge had declined to entertain the writ petition on that basis and the High Court, exercising appellate restraint, declined to interfere with that discretion. Accordingly, the Court did not adjudicate the factual controversies on merits but upheld the principle that the existence of an alternate remedy and disputed factual issues justify refusal to entertain the writ. The determinative reasoning is that courts should exercise restraint in writ jurisdiction where contested questions of fact can be and should be resolved by the designated statutory forum. [Paras 9]

Writ petition not entertained on merits; High Court declines to interfere with learned Judge's exercise of discretion in view of alternate remedy and disputed facts.

Right to cross-examination - principles of natural justice - Whether there is an absolute right to cross-examination as a facet of natural justice in the adjudication under the Customs Act - HELD THAT: - The Court recognised that cross-examination is a facet of the principles of natural justice but held that there is no absolute or unfettered right to cross-examination; entitlement depends on the facts and circumstances of each case. The learned Judge's finding that cross-examination is not an absolute right and that its availability is fact-specific was accepted. Because the factual question whether cross-examination or personal hearing were granted remained in dispute, the Court refrained from deciding the matter on merits in the writ appeal. [Paras 9]

No absolute right to cross-examination; its availability depends on case-specific facts and thus could not be finally adjudicated in the writ appeal.

Statutory cap on adjournments under Section 112A - Whether the provision permitting three adjournments mandates that three adjournments must be granted - HELD THAT: - The Court accepted the learned Judge's construction that the statutory reference to three adjournments functions as an outer limit or cap, and does not impose a duty on the adjudicating officer to grant exactly three adjournments in every case. The adjudicator may conclude proceedings in fewer hearings if appropriate. This interpretation treats the statutory provision as permissive by way of ceiling rather than as conferring a minimum entitlement. [Paras 7]

The statutory provision prescribing three adjournments is an outer limit and does not mandate that three adjournments be necessarily granted.

Appellate authority to consider appeal without raising limitation - personal hearing - Direction to appellate authority on reconsideration of appeal and grant of hearing - HELD THAT: - Although the writ remedy was declined, the Court granted liberty to the appellant to file the statutory appeal within 30 days and directed the appellate authority to consider the appeal on merits without raising any plea of limitation. The appellate authority was also directed to afford an opportunity of personal hearing to the appellant and decide the appeal expeditiously and in accordance with law. This amounts to an instruction to the statutory forum to re-examine the matters, including questions of fact and compliance with principles of natural justice, rather than a final adjudication by this Court. [Paras 11]

Appellant permitted to file appeal within 30 days; appellate authority directed to consider the appeal on merits without raising limitation and to afford personal hearing.

Final Conclusion: The High Court declined to entertain the writ petition on merits because disputed questions of fact and the availability of an alternate statutory remedy warranted resolution by the designated forum; it held that cross-examination is not an absolute right and that the statutory three-adjournments provision is an outer limit, and permitted the appellant to file the statutory appeal within 30 days with directions to the appellate authority to consider it on merits without raising limitation and after affording personal hearing.

Mandamus - ROSCTL scheme - electronic duty credit ledger - judicial direction to reconsider representation - opportunity of hearing

Judicial direction to reconsider representation - opportunity of hearing - Representation dated 29.07.2023 by the petitioner to the second respondent to permit use of the ROSCTL scrip and to retrieve the allegedly illegally utilized portion was to be considered afresh by the authority. - HELD THAT: - The Court, noting the limited scope of the petition and absence of appearance for respondents, declined to decide the merits of the claim regarding utilization and retrieval of the ROSCTL scrips. Instead, the writ petition was disposed of by issuing a judicial direction to the second respondent to consider the petitioner's representation dated 29.07.2023 on merits and in accordance with law. The Court required that the second respondent afford the petitioner an opportunity of hearing before passing final orders. The disposal did not adjudicate entitlement to relief on the merits or resolve the factual dispute concerning alleged illegal use of the scrips, but mandated fresh consideration by the competent authority within a specified timeframe. [Paras 4, 5]

The second respondent is directed to consider the petitioner's representation dated 29.07.2023, after affording an opportunity of hearing, and pass orders on merits and in accordance with law within eight weeks from receipt of this order.

Final Conclusion: Writ petition disposed by directing the second respondent to reconsider the petitioner's representation dated 29.07.2023, afford a hearing, and pass a reasoned order on merits and in accordance with law within eight weeks; no costs.

Absolute confiscation under Section 111(d) and 111(l) of the Customs Act - penalty under Section 112(b) and 112(i) of the Customs Act - smuggled goods - ownership evidenced by invoice and bank payments - identification by engraved serial numbers and markings - return of goods or payment of value with interest

Absolute confiscation under Section 111(d) and 111(l) of the Customs Act - smuggled goods - identification by engraved serial numbers and markings - Whether the absolute confiscation of the 22 gold biscuits was justified as smuggled goods. - HELD THAT: - The Tribunal found on the material on record that the engraved serial numbers of the 22 seized gold biscuits fall within the range of serial numbers of gold purchased by DP Gold Pvt. Ltd. from MMTC-PAMP, and that DP Gold had thereafter sold bars to other dealers. The show cause notice and adjudication did not establish that the seized biscuits were of smuggled origin; the serial-number evidence and the chain of sale indicated the biscuits matched legitimately recorded consignments. The proprietor-appellant produced the GST invoice and bank payment records showing purchase from Sai Tirumala Jewellers, and the carrier and seller statements did not prove smuggling. On this basis the Tribunal concluded the allegation of smuggled nature did not stand and the confiscation was not justified.

Confiscation set aside; gold held not to be smuggled.

Penalty under Section 112(b) and 112(i) of the Customs Act - ownership evidenced by invoice and bank payments - Whether penalties imposed on the appellants under the Customs Act were justified. - HELD THAT: - The penalties were imposed by the adjudicating authority alongside the finding of smuggling. Having held that the gold was not smuggled and that the appellant produced GST invoice and bank payment evidence supporting legitimate purchase, the Tribunal found the foundational premise for imposing penalties absent. In view of the reversal of the confiscation on merits, the concomitant penalties could not be sustained.

Penalties imposed on the appellants set aside.

Return of goods or payment of value with interest - Relief available after setting aside confiscation. - HELD THAT: - The Tribunal noted the seized gold had been sent for resale/melting by the Government. It directed Revenue to either return the gold to the proprietor-appellant or to pay the value of the gold as assessed on the date of sale/melting together with interest as per rules, thereby providing restitution where physical return is not possible.

Revenue to return the gold or pay its value with interest.

Final Conclusion: Both appeals allowed: the Tribunal held the 22 gold biscuits were not smuggled, set aside the order of absolute confiscation and the penalties imposed, and directed Revenue to return the gold or pay its value with interest.

Confiscation of conveyances under Section 115 of the Customs Act, 1962 - liability for confiscation under Section 111 of the Customs Act, 1962 - penalty for improper importation under Section 112 of the Customs Act, 1962 - import manifest (IGM) filing obligations and consequences - characterisation of a barge as a vessel/foreign-going vessel and effect on duty liability - conversion of a vessel for coastal run and territorial jurisdiction for collection of duty

Characterisation of a barge as a vessel/foreign-going vessel and effect on duty liability - conversion of a vessel for coastal run and territorial jurisdiction for collection of duty - Whether the dumb barge Century Star-3002 could be treated as imported goods liable to confiscation or duty on its subsequent movements after conversion for coastal run and payment at time of conversion. - HELD THAT: - The Tribunal held that the barge had been permitted entry, assessed and converted for coastal run pursuant to approvals (including DG Shipping and Deputy Commissioner, Paradip) and payment made at the time of conversion. Once such a vessel has been assessed and cleared, it ceases to be "imported goods" and acquires the character of a vessel; subsequent movements do not render it liable to duty as if newly imported. The decision in Nobel Asset (as explained) supports that vessels, once cleared and operating as foreign going/coastal vessels, are not to be treated as imported goods for later movements. Any question of duty at conversion or of jurisdiction to collect such duty rests with the authority that permitted conversion (Paradip) and cannot be agitated by assuming territorial jurisdiction later. Applying these principles, the barge could not be treated as liable to confiscation on the ground of being improperly imported or dutiable during the subsequent movements.

The barge Century Star-3002 is not to be treated as imported goods for the purpose of confiscation or fresh duty liability on its subsequent movements after conversion; confiscation on that basis is unsustainable.

Confiscation of conveyances under Section 115 of the Customs Act, 1962 - liability for confiscation under Section 111 of the Customs Act, 1962 - Whether confiscation of the dumb barge Century Star-3002 and the tug Century Star-1 under Sections 111/115 of the Customs Act, 1962 was sustainable. - HELD THAT: - Applying precedent (including Nobel Asset and A.P. Moller), the Tribunal found no material to justify confiscation. For the barge, clauses of Section 111 relied upon were not shown to be attracted (no evidence of unloading at a non customs place, prohibition, or dutiability). For the tug, Section 115(2) requires that the conveyance be used in smuggling or carriage of smuggled goods and, after the 1988 amendment, cannot be confiscated merely for failure to take precautionary steps absent knowledge or connivance; there was no finding of knowledge or connivance by owner/agent/captain. Permissions from port and marine authorities were on record and no nexus to smuggling was established. The non-filing of IGM was found to be an inadvertent omission without fraudulent intent and cannot be stretched to justify confiscation.

Confiscation of both the barge and the tug under Sections 111/115 is not sustainable and is set aside.

Penalty for improper importation under Section 112 of the Customs Act, 1962 - import manifest (IGM) filing obligations and consequences - Whether penalties under Section 112 could be imposed on the owners, charterers, protecting agents and customs house agents for the non-filing of IGM or related omissions. - HELD THAT: - The Tribunal held that penalties under Section 112 require culpability such as knowledge, connivance or being 'in any way concerned' with improper importation. Precedents (Essar Oil, Shahi Containers, Ramesh Amritlal Shah) require a clear nexus of role and malicious intent or knowledge for imposition of penalty. Here, the IGM was filed based on information provided by the CHA/agents, there was no Bill of Lading produced, permissions from statutory authorities were in place, and omissions were found to be inadvertent or due to communication gaps. Further, Section 2(31) places the primary responsibility for manifest on the master of the vessel; other parties cannot be substituted into the master's role for penal purposes. In absence of evidence of malicious intent or knowledge, Section 112 penalties could not be sustained.

Penalties imposed under Section 112 on the appellants are unsustainable and are set aside.

Import manifest (IGM) filing obligations and consequences - liability for confiscation under Section 111 of the Customs Act, 1962 - Whether non-filing or incomplete filing of IGM in the circumstances rendered the barge or tug liable to confiscation or the other parties liable to penal consequences. - HELD THAT: - The Tribunal examined the scope of Section 30 and manifest obligations and rejected an expansive construction that non-filing of IGM converts a vessel or barge into prohibited or smuggled goods attracting confiscation. The law does not support treating non-filing as a basis for confiscation absent dutiable cargo or evidence of smuggling. Given the factual matrix - statutory permissions, prior conversion and payment, lack of Bill of Lading, and the nature of omission - the failure to file a manifest was at best inadvertent and does not merit confiscation or penalties against the parties who were not the master or proved to have acted with fraudulent intent.

Non filing or incomplete filing of IGM in the given facts does not justify confiscation or imposition of penalties on the appellants.

Final Conclusion: The Tribunal allowed the appeals, set aside the confiscation orders and penalties imposed on the barge Century Star-3002, the tug Century Star-1 and the associated appellants, and granted consequential relief in accordance with law.

Reasonable belief - town seizure - seizure under Section 110 of the Customs Act, 1962 - presumption under Section 123 of the Customs Act, 1962 - burden of proof where claim of ownership is made - confiscation and penalty for smuggling - admissibility and effect of retracted statement

Reasonable belief - town seizure - seizure under Section 110 of the Customs Act, 1962 - presumption under Section 123 of the Customs Act, 1962 - Whether the officers had a reasonable belief at the time of seizure that the seized gold bar was smuggled and liable to seizure/confiscation - HELD THAT: - The Tribunal examined the material available at the time of town seizure and applied the established principle that reasonable belief must exist at the time of seizure and cannot rest on later presumption or conjecture. The seized bar bore no foreign embossing and purity testing showed 99.5% purity; there was no contemporaneous corroborative evidence that the gold was of foreign origin or illegally imported. The Tribunal relied on the reasoning in earlier town-seizure authorities that mere absence of accounting does not itself establish smuggling and that reasonable belief requires external indicia or reliable information indicating illicit import. On the facts, the revenue failed to establish such reasonable belief anterior to seizure and therefore the presumption under Section 123 could not be invoked. [Paras 17, 18, 19]

No reasonable belief existed at the time of seizure that the gold was smuggled; therefore seizure/confiscation under Section 110/123 cannot be sustained.

Confiscation and penalty for smuggling - burden of proof where claim of ownership is made - admissibility and effect of retracted statement - Whether confiscation and penalties imposed on the respondents were sustainable in absence of proof of smuggling and in view of claim of ownership and retracted statements - HELD THAT: - Having held that reasonable belief of smuggling was not established, the Tribunal addressed the consequential measures. The claim of ownership supported by invoices, item register entries and investigation into suppliers was considered against the revenue's case; retracted custodial statement of the person from whose possession the article was seized could not supply the missing foundation of reasonable belief. Because the foundational requirement for confiscation was absent, the order of confiscation and imposition of penalties could not stand. The Tribunal therefore found no infirmity in the appellate authority's exoneration and setting aside of penalties. [Paras 19]

Confiscation and penalties are unsustainable and were rightly set aside by the Commissioner (Appeals).

Final Conclusion: On the facts of a town seizure where the barred gold bore no foreign marking and the evidence did not establish a reasonable belief of illicit import, the Tribunal upheld the appellate authority's finding that the gold was not liable to confiscation and that penalties could not be imposed; the revenue's appeals are dismissed.

Liability of Customs Broker and G-Card holder for smuggling - Mens rea and knowledge requirement for imposition of penalty - Penal liability for failure to inform authorities - Penalties under Section 114(i) and Section 114AA of the Customs Act - Consistency in treatment of identically placed persons

Liability of Customs Broker and G-Card holder for smuggling - Mens rea and knowledge requirement for imposition of penalty - Penal liability for failure to inform authorities - Penalties under Section 114(i) and Section 114AA of the Customs Act - Consistency in treatment of identically placed persons - Sustainability of penalties imposed under Section 114(i) and Section 114AA on the customs broker and its G-Card holder where there was no direct involvement in smuggling and the appellants informed the authorities only after becoming aware. - HELD THAT: - The Tribunal examined the findings of the Commissioner (Appeals) that the appellants had no direct involvement or malafide in the attempt to export prohibited red sander, and that the appellants had stated they became aware of the stuffing in the evening while away and informed customs the next day. The Commissioner (Appeals) had reduced the penalties because there was no evidence of direct involvement, although he maintained reduced penalties on the ground that the appellants failed to promptly inform authorities. The Tribunal noted an earlier order of this Tribunal in respect of an identically placed person where penalties were set aside because that appellant was unaware of the concealment and had no ulterior motive; the Tribunal found the present appellants to be identically placed. Applying the principle of consistent treatment of identically placed persons and holding that penal provisions requiring knowledge or involvement cannot be sustained where the adjudicating findings are that there was no direct involvement or malafide, the Tribunal concluded that the reduced penalties were not maintainable and therefore must be set aside. The determinative reasoning is that absence of knowledge or direct involvement defeats the basis for penal liability under the impugned provisions, and consistency requires the same result be applied to appellants in materially identical circumstances. [Paras 4, 5]

Penalties imposed under Section 114(i) and Section 114AA on M/s MSK Shipping & Logistics Pvt Ltd and Shri Rajesh Khimani set aside; appeals allowed.

Final Conclusion: Where the adjudicatory findings establish no direct involvement or malafide on the part of a customs broker and its G Card holder, and the appellants acted as found (became aware while away and informed authorities thereafter), penalties under Section 114(i) and Section 114AA are not sustainable; applying consistent treatment with an identically placed person, the Tribunal set aside the penalties and allowed the appeals.

Pre-deposit requirement under Section 129E of the Customs Act, 1962 - entertainment of appeal conditional on pre-deposit - distinction between deposit of duty and deposit of penalty

Pre-deposit requirement under Section 129E of the Customs Act, 1962 - distinction between deposit of duty and deposit of penalty - entertainment of appeal conditional on pre-deposit - Appeal dismissed for non-compliance with the pre-deposit requirement where the appellant deposited a portion of the penalty instead of the percentage of duty mandated under Section 129E. - HELD THAT: - The Commissioner (Appeals) recorded that the adjudicating authority re-determined the applicable duty at Rs.3,41,984.11 and imposed penalty. Section 129E mandates deposit of seven and a half percent of the duty where duty or duty and penalty are in dispute. The appellant had deposited seven and a half percent of the penalty rather than the required percentage of the duty. The Commissioner (Appeals) therefore held that the pre-deposit requirement was not fulfilled and dismissed the appeal. The Tribunal, noting absence of any explanation or compliance by the appellant despite directions and opportunities to clarify, proceeded to dispose of the matter and affirmed dismissal on account of non-fulfillment of the statutory pre-deposit condition. [Paras 3, 4]

The appeal is dismissed for failure to make the statutory pre-deposit required under Section 129E; the deposit of penalty did not satisfy the obligation to deposit the requisite percentage of duty.

Final Conclusion: The appeal is dismissed for non-compliance with the statutory pre-deposit requirement under Section 129E of the Customs Act, 1962, the appellant having deposited an amount calculated on the penalty instead of the required percentage of the re-determined duty and offering no explanation despite repeated directions.

Duties of resolution professional to preserve and protect the assets and to run the corporate debtor as a going concern - admission of operational claim in CIRP and entitlement to treatment under the Code - resolution professional's discretion to deal with corporate debtor's inventory and refuse delivery during CIRP - no right to specific performance or appropriation of corporate debtor's assets by an operational creditor after prolonged delay - prohibition of preferential treatment and necessity to deal with claims under the CIRP framework

Duties of resolution professional to preserve and protect the assets and to run the corporate debtor as a going concern - resolution professional's discretion to deal with corporate debtor's inventory and refuse delivery during CIRP - Whether the Resolution Professional was entitled to refuse handing over 26 WTGs lying in the corporate debtor's inventory to the operational creditor during the CIRP. - HELD THAT: - The Court held that under Section 25(1) of the Code the RP is charged with preserving and protecting the assets of the corporate debtor and to continue its business as a going concern. The WTGs in inventory are assets in the control and possession of the RP and their utilisation or disposal falls within the RP's commercial wisdom aimed at maximising asset value. The RP had given reasons for refusal, including outstanding dues claimed from the operational creditor and the existence of arbitration proceedings, and the Court found that such a decision not to hand over inventory items was within the scheme of the Code and not contrary to any provision or to the appellant's rights. Consequently the Adjudicating Authority did not err in rejecting the application seeking delivery of the WTGs. [Paras 8, 10, 11, 12]

The RP was entitled to refuse handing over the 26 WTGs; the Adjudicating Authority's rejection of the IA in this respect is upheld.

Admission of operational claim in CIRP and entitlement to treatment under the Code - no right to specific performance or appropriation of corporate debtor's assets by an operational creditor after prolonged delay - prohibition of preferential treatment and necessity to deal with claims under the CIRP framework - Whether the appellant's admitted operational claim entitled it to immediate appropriation of assets or specific performance during CIRP, or to any preferential relief outside the CIRP process. - HELD THAT: - The Court noted that the appellant's claim for the advance had been admitted in the CIRP and therefore must be dealt with in accordance with the Code. The appellant sought, after several years from commencement of CIRP, specific performance or appropriation of assets allegedly corresponding to its advance; the Court observed that the agreement had obligations up to an earlier period and that the appellant had no right to circumvent the CIRP process to secure preferential treatment. The existence of counter-claims and pending arbitration for dues payable by the appellant further supported the RP's decision to refuse the requested relief. The admitted claim therefore does not entitle the operational creditor to extraneous relief that would disrupt the CIRP or give it preferential status. [Paras 9, 11, 12]

The admitted operational claim must be dealt with under the CIRP and does not confer a right to specific performance or appropriation of assets outside the CIRP; no preferential relief granted.

Final Conclusion: The National Company Law Appellate Tribunal found no infirmity in the Adjudicating Authority's rejection of IA No.525 of 2022: the Resolution Professional lawfully refused to hand over the 26 WTGs and the appellant's admitted claim must be addressed through the CIRP without any extraneous or preferential relief; the appeal is dismissed.

Exemption of services provided by an educational institution under Notification No. 25/2012 ST (Sr. 9) - Definition of educational institution introduced by Notification No. 6/2014 and its effect on taxability of commercial coaching - Commercial Training or Coaching Services vs. services of an educational institution

Exemption of services provided by an educational institution under Notification No. 25/2012 ST (Sr. 9) - Definition of educational institution introduced by Notification No. 6/2014 and its effect on taxability of commercial coaching - Commercial Training or Coaching Services vs. services of an educational institution - Whether the coaching services imparted by the Trust to its own students fall within the exemption accorded to services provided by an educational institution under Sr. No. 9 of Notification No. 25/2012 ST. - HELD THAT: - The Tribunal held that the appellant's activities are covered by the exemption provided to services by an educational institution under Sr. No. 9 of Notification No. 25/2012 ST as amended. The decision follows the Larger Bench precedent in M/s. Shri Chaitanya Educational Committee, which concluded that with the introduction of the definition of "educational institution" by Notification No. 6/2014 and the omission of the earlier "auxiliary educational services" definition, activities by an educational institution fall outside the purview of service tax. The Bench noted that the amendment removed the prior emphasis on issue of certificate/diploma as a determinative factor and broadened the exemption to services provided to students, faculty and staff without restricting the nature of the service. Applying that precedent and reasoning, the Tribunal found the Commissioner's classification of the appellant's coaching for its enrolled students as taxable "Commercial Training or Coaching Services" to be unsustainable.

The Tribunal allowed the appeal on this ground and set aside the demand confirmed by the Commissioner in respect of the coaching services.

Renting of immovable property service and small scale exemption threshold - Whether the demand in respect of renting of immovable property sustained by the Commissioner is maintainable. - HELD THAT: - The Tribunal found that the demand made for renting of immovable property related to an amount below the threshold applicable for small scale exemption and therefore cannot be sustained. No further factual inquiry was necessary once the threshold position was established.

The demand in respect of renting of immovable property was held unsustainable.

Final Conclusion: The appeal is allowed; the Commissioner's Order in Original dated 30.10.2018 is set aside with consequential relief. Service tax demand for coaching to the appellant's enrolled students is exempt under Sr. No. 9 of Notification No. 25/2012 ST as interpreted in the Tribunal's Larger Bench precedent, and the renting demand is not sustainable being below the small scale exemption threshold.

Refund of accumulated CENVAT credit in export of services - Availability of input/CENVAT credit accrued prior to service-tax registration - Computation of limitation for refund of export of services-date of receipt of convertible foreign exchange - Admissibility of invoices issued in a previous name where corporate continuity is shown - Permissibility of claiming refunds for multiple quarters in a single refund application notwithstanding restriction of one claim per quarter - Minor procedural irregularities not defeating substantive refund claims

Availability of input/CENVAT credit accrued prior to service-tax registration - Refund claim could include unutilized CENVAT credit accumulated prior to the appellant's Service Tax registration. - HELD THAT: - The Tribunal held that Notification No. 27/2012-CE(NT) requires the refund application to be filed before the jurisdictional authority where the registered premises of the provider of output service is situated, but does not bar inclusion of input/CENVAT credits accumulated before the date of registration. By the time the refund applications were filed the appellant possessed Service Tax registration, and therefore credits accumulated earlier are admissible provided they are utilized for exported output services. The tribunal therefore rejected the finding that pre-registration credits are not refundable. [Paras 6, 8]

Pre-registration accumulated CENVAT credit is refundable where the refund application is filed under the jurisdictional authority after the applicant has obtained registration.

Permissibility of claiming refunds for multiple quarters in a single refund application notwithstanding restriction of one claim per quarter - Claiming refund for more than one quarter in a single refund application is permissible despite the restriction that not more than one claim shall be filed for every quarter. - HELD THAT: - The Tribunal read Para 2(a) of Notification No. 27/2012-CE(NT) and concluded that the restriction of filing not more than one refund claim for every quarter does not prohibit claiming refunds for multiple quarters in a single application. The earlier approach of treating each quarter as requiring a separate application was rejected as untenable, and the appellate authority's contrary finding was set aside. [Paras 6]

Refunds for multiple quarters may be claimed in one application; the restriction of one claim per quarter does not preclude a consolidated claim.

Computation of limitation for refund of export of services-date of receipt of convertible foreign exchange - Limitation for filing refund in respect of export of services is to be computed from the date of receipt of payment in convertible foreign exchange, not from the date of raising export invoices. - HELD THAT: - Relying on the Larger Bench precedent and the subsequent amendment to Notification No. 27/2012-CE(NT), the Tribunal held that export is not completed for the purpose of limitation until receipt of convertible foreign exchange. Thus, denial of refund on the ground that the application was time-barred by reference to invoice dates was unsustainable. Observations by the appellate authority regarding non-serial numbering of invoices prior to a certain date were held to be irrelevant where no refund was claimed for that earlier period. [Paras 4, 6, 7]

Limitation runs from the date of receipt of convertible foreign exchange; rejection based on invoice dates is not tenable.

Admissibility of invoices issued in a previous name where corporate continuity is shown - CENVAT credit cannot be denied merely because some input invoices were issued in the appellant's earlier name where incorporation/change-of-name documents show corporate continuity. - HELD THAT: - The Tribunal noted that the certificate of incorporation and other documents established that the present appellant is the same legal person as the entity under its previous names. Therefore, invoices issued in the earlier name do not invalidate entitlement to credit. The appellate authority's denial on this ground was characterised as palpably erroneous, particularly in the absence of any show-cause notice proposing recovery of inadmissible credit. [Paras 4, 7]

Invoices in a prior name are admissible where corporate continuity is demonstrated; credits cannot be withheld on that ground alone.

Minor procedural irregularities not defeating substantive refund claims - Minor procedural infractions, such as non-corresponding amendments in Service Tax registration, do not bar grant of refund for unutilized CENVAT credit in exports of services. - HELD THAT: - The Tribunal emphasised the policy objective of promoting exports and earning foreign exchange, and held that minor procedural lapses should not obstruct substantive refund claims. Consequently, except for amounts excluded on account of domestic turnover and amounts abandoned by the appellant, the refund should be allowed with interest. [Paras 8, 9]

Minor procedural irregularities will not prevent grant of refund; appellant entitled to refund (subject to exclusions) with interest.

Final Conclusion: Appeals allowed; the appellate order rejecting refund was set aside and the appellant is entitled to the refund of unutilized CENVAT credit for October 2013 to March 2015 except amounts excluded for domestic turnover and the amount abandoned by the appellant; refund to be paid with interest within three months.

Abatement of appeal upon initiation of Corporate Insolvency Resolution Process and approval of Resolution Plan - Rule 22 of the CESTAT (Procedure) Rules, 1982 - Tribunal becoming functus officio upon abatement - Binding nature of NCLT-approved Resolution Plan

Abatement of appeal upon initiation of Corporate Insolvency Resolution Process and approval of Resolution Plan - Rule 22 of the CESTAT (Procedure) Rules, 1982 - Tribunal becoming functus officio - Binding nature of NCLT-approved Resolution Plan - Whether the appeals before the Tribunal survive after initiation of CIRP and approval of the Resolution Plan by the NCLT and whether reliefs claimed can be adjudicated thereafter. - HELD THAT: - The Tribunal held that Rule 22 of the CESTAT (Procedure) Rules, 1982 applies when a successor-in-interest with sufficient rights is appointed under the Insolvency and Bankruptcy Code, 2016, and that, upon such appointment and approval of the Resolution Plan by the NCLT, the appeals before the Tribunal abate. The Tribunal noted that from the date of approval of the Resolution Plan the Tribunal becomes functus officio in respect of those appeals and cannot sit in judgment over the NCLT's order approving the plan. Reliance was placed on earlier Tribunal decisions applying Rule 22 to similar facts, and it was observed that the judgments cited by the appellant did not address or alter the applicability of Rule 22 in these circumstances. Consequently, matters merged in the NCLT-approved Resolution Plan and the statutory limits on the Tribunal's powers lead to the abatement of the appeals, precluding further adjudication or grant of the reliefs sought before this Forum. [Paras 9, 11, 12, 13, 17]

The appeals abate with effect from the date of approval of the Resolution Plan by the NCLT and the Tribunal is functus officio; therefore no further order on the appeals is permissible before this Forum.

Final Conclusion: Appeals dismissed as having abated on the approval of the NCLT-sanctioned Resolution Plan under Rule 22 of the CESTAT (Procedure) Rules, 1982; Tribunal rendered functus officio and cannot entertain the reliefs claimed.

Continuance of proceedings after adjudication as an insolvent - Applicability of Rule 22 of CESTAT (Procedure) Rules, 1982 - Abatement of appeal upon appointment of Interim Resolution Professional and approval of resolution plan by NCLT - Functus officio of the Tribunal after NCLT approval of resolution plan - Binding nature of NCLT-approved resolution plan

Continuance of proceedings after adjudication as an insolvent - Applicability of Rule 22 of CESTAT (Procedure) Rules, 1982 - Abatement of appeal upon appointment of Interim Resolution Professional and approval of resolution plan by NCLT - Functus officio of the Tribunal after NCLT approval of resolution plan - Whether the appeal could be continued after initiation of CIRP, appointment of IRP and subsequent approval of the resolution plan by the NCLT - HELD THAT: - Rule 22 of the CESTAT (Procedure) Rules, 1982 provides that where a party is adjudicated as an insolvent or, in the case of a company, is being wound up, the appeal shall abate unless an application for continuance is made by or against the successor-in-interest within the prescribed period. When the NCLT admits a petition under the IBC and appoints an IRP, and subsequently approves a resolution plan, the successor in interest with sufficient representational rights is in effect appointed by the NCLT. In such circumstances Rule 22 becomes applicable and it is for the successor in interest to apply for continuance of the proceedings. In the absence of any application for continuance by the successor in interest, the appeal stands abated from the date of approval of the resolution plan. Once the NCLT approves the resolution plan the Tribunal becomes functus officio in respect of matters subsumed by that approval and the impugned orders merge in the NCLT order; the tribunal cannot sit in judgment over the NCLT's approval. The Tribunal's conclusion is supported by earlier Benches which have applied the same principle that appointment of IRP and approval of a resolution plan results in abatement of pending appeals under Rule 22. [Paras 7, 8, 10]

The appeal abates with effect from the date of approval of the resolution plan by the NCLT and therefore cannot be continued before this Tribunal.

Final Conclusion: Appeal abated under Rule 22 of the CESTAT (Procedure) Rules, 1982 from the date of NCLT approval of the resolution plan; Tribunal rendered functus officio and the appeal cannot be proceeded with.

Clandestine manufacture and clearance - penalty under Rule 209A of Central Excise Rules, 1944 - end use certificate - proof requirement for clandestine clearance

Penalty under Rule 209A of Central Excise Rules, 1944 - clandestine manufacture and clearance - proof requirement for clandestine clearance - end use certificate - Validity of the penalty of Rs.5,50,000/- imposed on the appellant under Rule 209A of the Central Excise Rules, 1944 - HELD THAT: - The Tribunal examined whether the department established clandestine manufacture and clearance of MS Ingots by the assessee, which was the foundation for imposing the personal penalty under Rule 209A. The adjudication relied primarily on documents recovered from M/s Sujana and accounts showing purchases by the assessee, but there is no evidence of manufacture or clandestine sale of finished products: no enquiries or proof of buyers, no transport or lorry receipts indicating clandestine clearances, and no material on power consumption or realisation of sale proceeds. The demand was quantified by assumed conversion and loss factors rather than direct proof of clandestine clearances. Although end use certificates were produced for quantities exceeding the alleged unaccounted quantity, the adjudicating authority declined to accept them on temporal reconciliation grounds; notwithstanding that, the record shows substantial documentation relating only to procurement from M/s Sujana and regularisation in related Customs proceedings. On the facts, the departmental case remains confined to unaccounted procurement from Sujana and does not establish clandestine manufacture or clearance by the assessee. In consequence, the foundational requirement for imposing the personal penalty under Rule 209A-linking the appellant to clandestine clearing of dutiable goods-was not satisfied. [Paras 9, 11, 12, 13, 14]

Penalty imposed on the appellant under Rule 209A is set aside because the department failed to establish clandestine manufacture and clearance necessary to justify the personal penalty.

Final Conclusion: The appeal is allowed; the penalty of Rs.5,50,000/- imposed on the appellant under Rule 209A of the Central Excise Rules, 1944 is set aside for lack of evidence of clandestine manufacture and clearance, and consequential reliefs, if any, follow.

Eligibility of CENVAT credit for inputs used in repair of exported goods - definition of "inputs" under rule 2(k) of the CENVAT Credit Rules, 2004 - treatment of repairs as taxable service and export of service for credit eligibility - restoration/refund of reversed CENVAT credit and disposal under section 11B of the Central Excise Act, 1944 - precedential application of Tribunal decision in Transformers & Electricals Kerala Ltd

Eligibility of CENVAT credit for inputs used in repair of exported goods - definition of "inputs" under rule 2(k) of the CENVAT Credit Rules, 2004 - treatment of repairs as taxable service and export of service for credit eligibility - Whether inputs deployed in repair of exported transformers qualify as 'inputs' under rule 2(k) and whether CENVAT credit availed thereon is maintainable - HELD THAT: - The Tribunal held that goods deployed in repair of exported transformers fall within the concept of 'inputs' for the purposes of the CENVAT Credit framework. Even if the activity undertaken is repair and not manufacture, the repair amounts to rendering of a service; where the service is taxable or constitutes an export of service, the inputs used in rendering that service are eligible for credit. The decision aligns with the Tribunal's earlier view in Transformers & Electricals Kerala Ltd and with the CBEC clarification that inputs used in repairs of export goods may be treated as having been cleared 'as such' and covered by rebate/credit provisions. On this basis the Revenue's contention that such goods are not 'inputs' within rule 2(k) was rejected and the appeal of the Revenue was dismissed. [Paras 5]

Inputs used in repair of exported transformers qualify as 'inputs' under rule 2(k) and CENVAT credit availed thereon is maintainable; Revenue's appeal dismissed.

Restoration/refund of reversed CENVAT credit and disposal under section 11B of the Central Excise Act, 1944 - precedential application of Tribunal decision in Transformers & Electricals Kerala Ltd - Whether the rejection of the assessee's claim for restoration/refund of CENVAT credit was tenable and what consequential relief should follow - HELD THAT: - Having found that the goods used in repairs constitute 'inputs' and that credit was therefore legitimately availed, the Tribunal concluded that the prior rejection of applications for restoration of the reversed credit could not stand. The Tribunal relied on its earlier ruling in Transformers & Electricals Kerala Ltd to support the conclusion that inputs used in repairs of re-exported goods are contained in the exported goods and eligible for relief. Consequently, the applications for restoration/refund were restored to the original authority for adjudication and disposal in accordance with section 11B of the Central Excise Act, 1944 and the Tribunal's findings. [Paras 7]

Rejection of claim for restoration/refund is not tenable; applications restored to the original authority for disposal under section 11B in accordance with the Tribunal's findings.

Final Conclusion: The Tribunal dismissed Revenue's appeal, held that inputs used in repair of exported transformers are 'inputs' under rule 2(k) and eligible for CENVAT credit (including where repairs constitute taxable or exported service), and directed restoration of the assessee's applications for refund/restoration to the original authority for disposal under section 11B in accordance with this finding.

Special purpose motor vehicles - principally designed for the transport of persons or goods - HSN Explanatory Notes - classification by reference to statutory certificates/registrations - ejusdem generis - eligibility for exemption under Notification No.06/2006-CE dated 01.03.2006

Special purpose motor vehicles - principally designed for the transport of persons or goods - HSN Explanatory Notes - ejusdem generis - eligibility for exemption under Notification No.06/2006-CE dated 01.03.2006 - Classification of the Vajra Vahan (Tata-207) as a motor vehicle falling under CETH 8705 9000 (special purpose vehicles) and entitlement to notification exemption. - HELD THAT: - The Tribunal found on the material on record that the Vajra Vahan was specially adopted, equipped and designed for riot control with numerous purpose-built fittings and that transportation of personnel is incidental to, and not the primary purpose of, the vehicle. Relying upon the HSN Explanatory Notes, the Tribunal held that heading 8705 covers motor vehicles whose primary purpose is non-transport functions and includes vehicles specially constructed or equipped to perform such functions. The chassis commonality with series 207 does not alter the character of the body built by the respondents, since the design and fittings conceptualized by VRDE/DRDO render the vehicle specially constructed for riot-control functions. The Tribunal rejected the Revenue's reliance on ejusdem generis to classify the vehicle alongside ambulances/prison vans under CETH 8703, noting that many vehicles in heading 8705 also carry personnel who man the equipment but remain special-purpose. The Tribunal also treated precedent where similar policing/defence vehicles were classified under CETH 8705 as persuasive. Applying these principles, the Tribunal concluded that the impugned vehicle is not principally designed for transport of persons or goods and is correctly classifiable under CETH 8705 and eligible for the exemption under the Notification. [Paras 6, 9, 10, 12]

The Vajra Vahan is a special purpose vehicle classifiable under CETH 8705 9000 and is eligible for the exemption claimed under Notification No.06/2006-CE; the appeal on classification is dismissed.

Classification by reference to statutory certificates/registrations - Admissibility and weight of certificates/registrations (VRDE/DRDO and Transport Commissioner) in determining tariff classification and effect of prior classifications/changes. - HELD THAT: - The Tribunal held that certificates issued by VRDE (DRDO) and registration by the Transport Commissioner classifying the vehicle as a special purpose (multi-role riot control) vehicle are material and cannot be ignored unless shown to be wrong or inconsistent with statute. The Tribunal accepted that Motor Vehicles Act/registration classifications and chapter 87 of the Central Excise Tariff Act are pari materia for classification purposes, and therefore such authoritative certificates are a guide to tariff classification. The Tribunal also rejected the contention that past classification by the appellants precludes claiming the exemption, observing there is no estoppel in revenue matters and an assessee may re-classify if prior classification was incorrect. [Paras 11]

Certificates from VRDE/DRDO and the Transport Commissioner are admissible and persuasive for tariff classification and cannot be disregarded absent proof of error; past classifications do not estop re-classification.

Final Conclusion: The appeal by Revenue is dismissed: the Vajra Vahan (Tata-207) is correctly classifiable as a special purpose motor vehicle under CETH 8705 9000 and eligible for the Notification No.06/2006-CE exemption; statutory certificates supporting that classification are entitled to weight and prior classification by the assessee does not estop claim of exemption.

Service of orders under Section 37C(1) - Requirement of prior attempt by registered post/speed post or personal tendering - Affixture on factory gate as secondary mode where personal service is impossible - Date of communication and commencement of limitation - Remand for decision on merits with opportunity of hearing

Service of orders under Section 37C(1) - Requirement of prior attempt by registered post/speed post or personal tendering - Affixture on factory gate as secondary mode where personal service is impossible - Date of communication and commencement of limitation - Validity of service by affixing the order on the factory gate where no attempt was made to tender the order or send it by registered post/speed post - HELD THAT: - The Tribunal held that clause (a) of Section 37C(1) requires the department to first tender the order personally or send it by registered post with acknowledgment due, or by speed post with proof of delivery, or by an approved courier, to the person concerned or his authorised agent. Clause (b) permits affixture on the factory gate only if service in the manner prescribed by clause (a) cannot be effected. In the present case the report of the Jurisdictional Assistant Commissioner (dated 22.07.2014) records that the order was neither tendered nor sent by registered post or speed post and was only affixed on the factory gate. Since the mandatory prior attempts under clause (a) were not made, service by affixture was illegal and the date of affixure could not be treated as the date of service. The Tribunal therefore treated the date on which the appellant actually received the order copy from their bank as the date of communication, and held that the appeal to the Commissioner (Appeals) was filed within the statutory period measured from that date. [Paras 4, 5]

Service by mere affixure on the factory gate without prior compliance with clause (a) of Section 37C(1) is invalid; the appeal was not time-barred and the matter is remanded to the Commissioner (Appeals) for decision on merits after hearing the appellant.

Final Conclusion: The impugned order rejecting the appeal as time-barred is set aside. The matter is remanded to the Commissioner (Appeals) to decide the appeal on merits after affording the appellant opportunity of hearing.

Cenvat credit on supplementary invoice - ineligibility under Rule 7(1)(b) of Cenvat Credit Rules - requirement of fraud, suppression or willful misstatement for denial of Cenvat credit - extended period provisions - finality of demand

Ineligibility under Rule 7(1)(b) of Cenvat Credit Rules - extended period provisions - Cenvat credit on supplementary invoice - Whether Cenvat credit taken on supplementary invoices raised by the Dankuni unit was contrary to Rule 7(1)(b) of the Cenvat Credit Rules. - HELD THAT: - The Tribunal examined the basis of the demand and the Show Cause Notices issued to the Dankuni unit. The Table in the OIO shows 16 Show Cause Notices for the period July 1998 to June 2001, all issued for the normal period without invoking extended period provisions or alleging suppression, fraud or wilful mis-statement. Rule 7(1)(b) operates only where the additional amount became recoverable from the provider on account of non-levy, non-payment, short-levy or short-payment by reason of fraud, collusion, wilful mis-statement, suppression of facts or contravention with intent to evade tax. In the absence of any such findings or invocation of extended period provisions in the proceedings against the Dankuni unit, the condition precedent for denial under Rule 7(1)(b) is not satisfied. The confirmed demand founded solely on supplementary invoices for the normal period therefore could not sustain denial of Cenvat credit under Rule 7(1)(b). [Paras 4]

Demand confirmed on the ground of Rule 7(1)(b) set aside because Show Cause Notices were for the normal period and did not invoke suppression or extended period provisions.

Finality of demand - requirement of fraud, suppression or willful misstatement for denial of Cenvat credit - Cenvat credit on supplementary invoice - Whether Cenvat credit could be denied where the underlying demand for the Dankuni unit was not final but was being contested at the Tribunal. - HELD THAT: - The Tribunal noted the settled position that denial of Cenvat credit under Rule 7(1)(b) is sustainable only where the demand has attained finality on account of fraud, suppression or willful mis-statement. In the present case the confirmed demands against the Dankuni unit (for the normal period) were being contested before the Tribunal and therefore had not attained finality. Since the alleged suppression and resultant demand were not finally adjudicated, the legal foundation for refusing credit on the basis that the duty element had been passed on by supplementary invoices was absent. Accordingly, the action to disallow credit could not be sustained on the ground of non-finality of the underlying proceedings. [Paras 6]

Appeal allowed on the additional ground that the demands against the Dankuni unit had not attained finality; Rule 7(1)(b) thus inapplicable.

Final Conclusion: The Tribunal allowed the appeal, set aside the demand confirmed for denial of Cenvat credit taken on supplementary invoices because the Show Cause Notices against the Dankuni unit related to the normal period without findings of suppression or fraud and those demands had not attained finality; consequential relief granted as per law.

Substantial expansion - increase in installed capacity - cut off date (7th January 2003) - benefit of exemption under Notification No.50/2003 CE (clause 2(b)) - interpretation of Notification clause 2(b) - evidentiary value of expert/chartered engineer reports - Annexure II inclusion of Khasra numbers / industrial area criterion

Substantial expansion - increase in installed capacity - cut off date (7th January 2003) - evidentiary value of expert/chartered engineer reports - Installed capacity of the appellant's unit increased by not less than twenty five per cent on or after 07.01.2003 entitling it to benefit under clause 2(b) of Notification No.50/2003 CE. - HELD THAT: - Clause 2(b) of Notification No.50/2003 CE grants exemption to units existing before 07.01.2003 which have undertaken substantial expansion by way of increase in installed capacity by not less than 25% on or after that date. The Circular No.772/5/2004 CX clarifies that substantial expansion is to be measured by factual increase in installed capacity arising from installation of additional plant and machinery and not by value of investment or mere procurement. The Tribunal examined the appellants' Chartered Engineer certificates, Chartered Accountant's certificate and the IIT Roorkee appraisal prepared by two professors which provided stage wise pre and post expansion capacity calculations and commissioning dates. The IIT report treated commissioning/installation (not mere procurement) as the operative event and showed segment wise enhancements leading to an overall increase of 33% effective from dates in 2003 (July-September) after the cut off. The departmental engineer's report was found to rest only on procurement dates and gave conclusions without adequate reason or contradiction of the technical findings; it did not show that pre cutoff procurements were installed or contributed to a >25% increase. On the settled interpretative approach, literal reading of clause 2(b) and precedents were applied to hold that the enhancement of installed capacity occurred on and after 07.01.2003 and thereby fulfils the requirement of substantial expansion under the notification. Accordingly, the departmental reliance on the report of Shri D.K. Jain was rejected and the expert evidence produced by the appellant accepted. [Paras 10]

Benefit under clause 2(b) of Notification No.50/2003 CE is available as the installed capacity was substantially expanded by more than 25% on or after 07.01.2003.

Annexure II inclusion of Khasra numbers / industrial area criterion - benefit of exemption under Notification No.50/2003 CE (clause 2(b)) - The appellants' factory location (specified Khasra numbers) falls within the area included in Annexure II and therefore the unit satisfies the location/industrial area requirement of the notification. - HELD THAT: - The Tribunal considered the material showing that the unit at Ranipur, Haridwar was included in the integrated industrial park and that the Government Order dated 02.04.2004 had effect from the date of the impugned notification. The adjudicating authority's acceptance in one part of its order that the Khasra number is included in Annexure II was contradicted by a subsequent finding denying location eligibility. That contradiction and reliance on an inapposite precedent were held unsustainable. Given the admission and the Government Order, the unit is covered by Annexure II and the denial of benefit on location grounds was set aside. [Paras 10]

The unit is located within the area covered by Annexure II of the notification and the location requirement for exemption is satisfied.

Final Conclusion: The order under challenge is set aside; the Tribunal allows the appeals, holding that the appellants fulfilled both the substantial expansion (post 07.01.2003) and location criteria under Notification No.50/2003 CE and are entitled to the exemption for the period in dispute.

CENVAT credit admissibility - input service exclusion for outdoor catering services - Extended period of limitation - suppression of facts as justification for invoking extended period - Interest and penalty - unsustainable where department had knowledge / issue was litigated - Remand for re quantification of demand for the normal period

CENVAT credit admissibility - input service exclusion for outdoor catering services - Claimed CENVAT credit in respect of service tax paid on outdoor catering services is not admissible for the disputed period. - HELD THAT: - The Tribunal held that the definition of 'input service' was amended with effect from 01.04.2011 to specifically exclude 'outdoor catering services', and relied on the Larger Bench decision in Wipro Ltd. confirming that outdoor catering service is not eligible for input service credit post the amendment. The appellants themselves conceded that the issue has been finally settled against them; consequently the claim of CENVAT credit in respect of outdoor catering services for the period in question cannot be sustained. The original authority's computation of inadmissible credit (as reflected in the Order in Original) relates to voucher entries covering the period January, 2016 to June, 2017 and the Tribunal accepted that the inadmissibility principle applies to that period. [Paras 7]

CENVAT credit on outdoor catering services is inadmissible for the period January, 2016 to June, 2017.

Extended period of limitation - suppression of facts as justification for invoking extended period - Interest and penalty - unsustainable where department had knowledge / issue was litigated - Extended period invocation, interest and penalty imposed on account of alleged suppression are not sustainable. - HELD THAT: - Applying settled precedents on 'suppression of facts' (Pushpam Pharmaceuticals and Anand Nishikawa principles), the Tribunal found that the department was aware of the appellants' position and had previously litigated the same issue in the appellants' own case (Tribunal Order dated 29.11.2017). Because facts were known to the department and the controversy involved an interpretational question with divergent views until final clarification by higher fora, the Tribunal concluded there was no deliberate suppression warranting invocation of the extended period. In view of the prolonged litigation and eventual pronouncement by the Supreme Court confirming the interpretative position, the Tribunal held that interest and penalty related to extended period are not sustainable. [Paras 8, 10]

Demand based on extended period, and interest and penalty imposed/confirmed, are set aside.

Remand for re quantification of demand for the normal period - Quantification of recoverable CENVAT credit for the normal (non extended) period requires reassessment and is remanded to the original authority. - HELD THAT: - While disallowing the extended period demand, the Tribunal affirmed that the demand of inadmissible CENVAT credit for the normal period remains sustainable. The matter is therefore remitted to the original adjudicating authority for limited redetermination/quantification of the recoverable credit for the normal period (i.e., excluding any extended period demands), so that the demand is recalculated consistently with the Tribunal's findings on limitation, interest and penalty. [Paras 10]

Matter remanded to the original authority to re quantify the demand for the normal period; appeal partly allowed.

Final Conclusion: Appeal partly allowed: inadmissible CENVAT credit on outdoor catering services for January, 2016 to June, 2017 upheld; invocation of extended period and imposition/confirmation of interest and penalty set aside; matter remanded to the original authority for redetermination of the demand limited to the normal period.

Eligibility of CENVAT credit on outward transportation up to the place of removal - Availability of CENVAT credit on goods transport agency services - Effect of judicial precedent on pre-1st March 2008 credit claims (Vasavadatta Cements Ltd) - CENVAT credit and services attributable to exempted trading activity - Scope of CENVAT Credit Rules, 2004 in relation to input services - Remand for fresh determination where adjudicating authority failed to examine documents

Eligibility of CENVAT credit on outward transportation up to the place of removal - Effect of judicial precedent on pre-1st March 2008 credit claims (Vasavadatta Cements Ltd) - CENVAT credit on outward transportation up to the place of removal for the period prior to 1st March 2008 is allowable. - HELD THAT: - The Tribunal accepted that the question of eligibility of credit on outward transportation prior to 1st March 2008 is settled by the High Court of Karnataka decision in Commissioner of Central Excise, Bangalore v. ABB Ltd, as upheld by the Hon'ble Supreme Court in Commissioner of Central Excise, Belgaum v. Vasavadatta Cements Ltd. Applying that precedent, the demand for recovery of credit attributable to outward transportation for the period prior to 1st March 2008 cannot be sustained. [Paras 5]

Demand for the period prior to 1st March 2008 will not sustain.

Availability of CENVAT credit on goods transport agency services - Remand for fresh determination where adjudicating authority failed to examine documents - Recovery of CENVAT credit claimed on goods transport agency services for the period from 1st March 2008 is set aside for fresh determination by the original authority. - HELD THAT: - The Tribunal noted that for the post-1st March 2008 period the Revenue's contrary position emerged in later orders and that the original authority had not scrutinized the appellant's documents with due diligence. Given these defects and subsequent divergent decisions, the Tribunal concluded that the demand for credit on goods transport agency service from 1st March 2008 requires fresh adjudication on the merits and factual matrix. [Paras 5]

Demand pertaining to recovery of credit on goods transport agency service from 1st March 2008 is set aside for fresh determination.

Applicability of CENVAT credit on outdoor catering service - Scope of CENVAT Credit Rules, 2004 in relation to input services - The question of eligibility of CENVAT credit on outdoor catering service, including the extent to which costs were recovered from employees, is remanded for factual evaluation and determination in accordance with law. - HELD THAT: - The Tribunal observed that the extent to which catering charges were recovered from employees is a relevant factual consideration that the original proceedings did not properly address. Although the appellant contended that this ground was not in the show cause notice, the Tribunal held that the settled law's applicability must be ascertained on the facts, and therefore directed factual re-examination and application of the CENVAT Credit Rules, 2004. [Paras 6]

Issue remanded to the original authority for evaluation of facts and application of law.

CENVAT credit and services attributable to exempted trading activity - Scope of CENVAT Credit Rules, 2004 in relation to input services - The claim of CENVAT credit on charges levied by Mumbai International Airport Ltd in connection with vending machines and kiosks (where the activity may pertain to trading/exempt service) is remanded for fresh determination after examination of the contractual context and scope of Rule-based entitlement. - HELD THAT: - The Tribunal noted the adjudicating authority concluded that the relevant activity pertained to trading, an exempt service, and therefore ineligible for input service credit; however, the appellant produced authorizations detailing its responsibilities and pointed to favourable Tribunal decisions in other jurisdictions. The impugned order did not examine the context or scope of availability of credit under the CENVAT Credit Rules, 2004. Consequently, the Tribunal directed a fresh factual and legal determination by the original authority. [Paras 7]

Matter remanded for fresh determination of eligibility after proper examination of documents and applicable law.

Final Conclusion: The impugned order is set aside and the matters remanded to the original authority for fresh adjudication; the demand for outward transportation prior to 1st March 2008 is rejected in view of binding precedent, while the claims relating to the period from 1st March 2008 and other disputed input-service credits are to be reconsidered on facts and law.

Limitation under section 8(5) of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 - definition of "motor vehicle" - exclusion for vehicles adapted for use only in a factory or in enclosed premises - levy of tax contingent on liability for registration under the Motor Vehicles Act, 1988

Limitation under section 8(5) of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 - assessment in absence of filed return - Assessment for the tax period 2005-2006 issued in 2011 was barred by limitation under section 8(5) of the Act where no return had been filed by the assessee. - HELD THAT: - The Court accepted that section 8(5) bars any order of assessment after expiry of three years from the last date prescribed for filing returns and noted that the petitioner had not filed returns declaring the purchase. Relying on the binding Division Bench precedent in Sri Balakrishna Transport (and subsequent coordinated confirmations by the Madras High Court), the Court held that where the Act does not provide a specific provision to assess an importer who failed to furnish a return, the assessing authority lacks jurisdiction to make a belated assessment beyond the statutory three-year period. The respondent's contention that limitation should run from the date the purchase was discovered was rejected in light of the precedent and the statutory bar in section 8(5). [Paras 5, 6]

The assessment for AY 2005-2006 made by the respondent in 2011 is barred by limitation and cannot be sustained.

Definition of "motor vehicle" - exclusion for vehicles adapted for use only in a factory or in enclosed premises - levy of tax contingent on liability for registration under the Motor Vehicles Act - The Fork Lift in question is not a "motor vehicle" liable for registration and therefore not subject to entry tax under section 3 of the Act; consequently the respondent lacked jurisdiction to levy the tax. - HELD THAT: - The Court examined the brochures and photographs of the equipment and concluded that the Fork Lift is of a type adapted for use only within enclosed premises and cannot be used on public roads, bringing it within the exclusion in the definition of "motor vehicle". Section 3 of the Entry Tax Act conditions the levy of tax on the vehicle being liable for registration under the Motor Vehicles Act; since the Fork Lift was not liable for registration, the respondent had no statutory authority to levy the tax. The Court applied Article 265 principles that taxation must have legislative authority and held that absence of liability for registration defeats the statutory basis for the tax. [Paras 9, 10]

The Fork Lift is not a motor vehicle liable for registration and the levy under section 3 is without jurisdiction; the assessment thereon cannot stand.

Final Conclusion: Writ petition allowed; the impugned assessment order dated 02.09.2021 is quashed for being time-barred and for want of jurisdiction to levy tax on the Fork Lift; no order as to costs.

Validity of pre-deposit condition in an arbitration clause - arbitral party autonomy versus constitutional limits - Article 14 - arbitrariness of contractual pre conditions - jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996 to examine existence and validity of arbitration agreement - prima facie review at the pre referral stage - neutrality, independence and impartiality of arbitrators - effect of amended Section 12(5) - ineligibility of certain appointees notwithstanding prior agreement - power of court to depart from contractual appointment procedure to secure an independent arbitrator

Validity of pre-deposit condition in an arbitration clause - Article 14 - arbitrariness of contractual pre conditions - ICOMM Tele Ltd. v. Punjab State Water Supply and Sewerage Board - Pre deposit of 7% of the claim as a condition precedent to invoke arbitration is liable to be ignored as arbitrary under Article 14 in the facts of this case. - HELD THAT: - The Court examined whether the Clause 55 requirement of a 7% pre deposit to invoke arbitration had any mechanism for adjustment or refund and found it vague and susceptible to arbitrariness. It applied the principles in ICOMM Tele Ltd., distinguishing earlier decisions (notably S.K. Jain) on the basis that clauses which provide for post award adjustment and refund differ materially from clauses that mandate fixed deposits with potential forfeiture or no clear adjustment mechanism. The Court observed that arbitral tools (costs under Section 31A and awards on frivolous claims) suffice to deter baseless claims and that a pre deposit condition, when vague or disproportionate, can render the arbitration clause arbitrary and violative of Article 14. Consequently the pre deposit condition in Clause 55 was treated as offending constitutional norms and ignored for the purpose of constituting the tribunal.

The 7% pre deposit condition in Clause 55 is vulnerable to being arbitrary and, on the facts, is to be disregarded when taking measures under Section 11(6).

Conflict between ICOMM Tele and S.K. Jain - distinguishing precedent on pre deposit clauses - There is no direct conflict between S.K. Jain and ICOMM Tele; the decisions are distinguishable on the wording and consequences of the respective pre deposit clauses. - HELD THAT: - The Court analysed both precedents and held that S.K. Jain upheld a pre deposit clause which provided for adjustment and refund after the arbitration award, whereas ICOMM Tele struck down a clause that required a fixed deposit with refund only proportionate to the award and possible forfeiture, leading to arbitrary consequences. Thus, the ratio in ICOMM Tele does not overrule S.K. Jain but explains why certain forms of pre deposit clauses are unconstitutional while others with refund/adjustment mechanisms may be upheld.

S.K. Jain and ICOMM Tele are not in direct conflict; the clauses under review must be tested on their own terms and effects.

Jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996 to examine existence and validity of arbitration agreement - prima facie review at the pre referral stage - Vidya Drolia - scope of pre referral scrutiny - A court exercising jurisdiction under Section 11(6) may examine the validity of an arbitration agreement, including whether a contractual condition offends Article 14, by applying a limited prima facie review. - HELD THAT: - Relying on the post 2015 statutory framework and the principles in Duro Felguera and Vidya Drolia, the Court reiterated that the scope of pre referral scrutiny is limited and is to be conducted by a prima facie test. That enquiry includes contractual validity and obvious constitutional infirmities. The Court held that it is competent at the Section 11(6) stage to examine and, where necessary to prevent manifestly arbitrary clauses from depriving parties of access to arbitration, to ignore offending provisions without conducting a full merits inquiry.

The Court has jurisdiction under Section 11(6) to conduct a prima facie examination of the arbitration agreement and to disregard provisions that are manifestly arbitrary or violative of fundamental rights.

Neutrality, independence and impartiality of arbitrators - power of court to depart from contractual appointment procedure - Section 12(5) - ineligibility notwithstanding prior agreement - Perkins Eastman - unilateral appointment clauses - The clause empowering the Principal Secretary/Secretary (Irrigation), Government of Uttarakhand to unilaterally appoint a sole arbitrator was set aside in favour of appointing an independent arbitrator to secure impartiality and neutrality. - HELD THAT: - The Court observed that amended Section 12 and the Seventh Schedule guard the independence and impartiality of arbitrators and that party autonomy cannot prevail over constitutional and statutory requirements of neutrality. Where a designation procedure gives exclusive appointment power to one contracting party and circumstances warrant, the court may ignore the prescribed procedure to secure an independent and impartial tribunal. Applying Perkins Eastman and related authorities, the Court found it appropriate to set aside the persona designata appointment mechanism in Clause 55 and exercise its Section 11(6) powers to appoint an independent sole arbitrator.

The contractual stipulation vesting sole appointment in the Principal Secretary is to be disregarded; the Court appointed an independent sole arbitrator.

Final Conclusion: The petition under Section 11(6) is allowed: the Court ignored the Clause 55 conditions requiring a 7% pre deposit and the unilateral appointment mechanism by the Principal Secretary as being vulnerable to arbitrariness or inconsistent with statutory and constitutional requirements, and appointed Mr. V.K. Bist, Former Chief Justice of the Sikkim High Court, as sole arbitrator, leaving modalities and fees to be fixed in consultation with the parties.