TaxTMI Updates e-Newsletter
Nov 13,2024

Summary order. Civil Appeal dismissed; question of law kept open.

Doctrine of separation of powers - executive instruction affecting adjudicatory authorities - executive power under Article 73 and Article 77 of the Constitution - judicial and quasi-judicial authority to classify goods - validity of administrative press release as binding guidance

Doctrine of separation of powers - executive instruction affecting adjudicatory authorities - validity of administrative press release as binding guidance - Impugned Press Release dated 15.07.2020 quashed as an impermissible executive fiat that intrudes upon the judicial and quasi-judicial function of classification under the statute. - HELD THAT: - The Court held that the question whether products are classifiable as "medicaments" or "disinfectants" is for adjudicatory authorities to decide on facts and law and cannot be pre-determined by an executive Press Release. The Press Release did not indicate it was issued in exercise of executive powers under Article 73 or in accordance with Article 77, and the respondents failed to discharge the burden of showing such compliance. Even assuming executive action, the Union cannot direct judicial or quasi-judicial authorities to decide classification in a particular manner because interpretation and classification post-enactment fall within the province of judicial/quasi-judicial bodies; the executive cannot usurp that role. Reliance on precedents establishing that administrative circulars/press notes cannot override statutory interpretation reinforced the conclusion that the Press Release was not binding and impermissibly interfered with adjudicatory functions. For these reasons the Press Release was set aside. [Paras 18, 24, 27, 36, 38]

Impugned Press Release dated 15.07.2020 is quashed and set aside.

Judicial and quasi-judicial authority to classify goods - executive instruction affecting adjudicatory authorities - Impugned show cause notice cum demand notice dated 17.04.2023 was not quashed; respondents directed to decide it on merits independently without being influenced by the quashed Press Release. - HELD THAT: - The Court declined to decide the substantive question of classification and tax rate, observing that adjudication involves disputed factual enquiries and that the petitioner has alternate remedies. While the Press Release was quashed, a show cause notice could validly have been issued independently; consequently the Court left the show cause notice intact but ordered that any further adjudication must be conducted on its own merits uninfluenced by the quashed Press Release. [Paras 17, 33, 38, 39]

Show cause notice dated 17.04.2023 is not quashed; if pursued, it must be decided on merits independently and without regard to the quashed Press Release.

Final Conclusion: Petition partly allowed: Press Release dated 15.07.2020 quashed for impermissible executive intrusion into judicial/quasi judicial classification; the show cause notice dated 17.04.2023 remains and must, if pursued, be adjudicated on its own merits without influence from the quashed Press Release.

Condonation of delay - Interim release of seized goods pending writ petition - Seizure and release under Sections 129 and 130 of the Karnataka Goods and Services Act, 2017 - Security by bank guarantee and personal bond as condition for release - Safeguards for recovery of detaxation liability

Condonation of delay - Application for condonation of delay in filing the appeal - HELD THAT: - The application for condonation of a delay of 14 days in filing the appeal was supported by an affidavit setting out reasons for delay. The Court, after considering the affidavit, allowed I.A. No. 2/2024 and condoned the delay of 14 days, thereby permitting the appeal to be heard on merits. [Paras 1]

I.A. No. 2/2024 allowed and delay of 14 days in filing the appeal condoned.

Interim release of seized goods pending writ petition - Seizure and release under Sections 129 and 130 of the Karnataka Goods and Services Act, 2017 - Security by bank guarantee and personal bond as condition for release - Safeguards for recovery of detaxation liability - Validity of the interim direction to release goods and conveyance on deposit and additional security to safeguard recovery of determined liability - HELD THAT: - The Single Judge had directed release of the seized goods and conveyance upon deposit of Rs.4,00,000/-, as an interim measure. The appellants contended that a larger liability (determined at Rs.22,35,932/-) rendered that deposit inadequate to protect recovery. The respondent contested the liability and disputed the value of goods. Having considered the competing contentions and the interim order, the High Court upheld the Single Judge's direction for release but imposed additional safeguards to protect the revenue. The Court directed respondent No.1 to furnish a Bank Guarantee from a nationalised bank for the shortfall (an amount specified in the order) and to furnish a personal bond in the prescribed format by the proprietor within two days, and kept these securities valid during the pendency of the writ petition. The release and securities were held to be subject to the ultimate outcome of the writ petition. [Paras 3, 4, 5, 6]

Order of the Single Judge upheld; respondent No.1 to furnish a bank guarantee and a personal bond as additional security within two days to enable release of goods and conveyance, subject to final outcome of the writ petition.

Final Conclusion: Delay in filing the appeal of 14 days is condoned; the Single Judge's interim direction for release of goods on deposit is upheld, with the additional requirement that respondent No.1 furnish a bank guarantee from a nationalised bank and a personal bond by the proprietor as security during the pendency of the writ petition; appeal disposed of and interim stay application stands disposed.

Input Tax Credit - Section 16(4) and Section 16(5) amendment - entitlement to input tax credit for invoices pertaining to Financial Years 2017-18 to 2020-21 - Remand for reassessment - Revival of impugned order if no reply filed - Right to personal hearing

Section 16(4) and Section 16(5) amendment - entitlement to input tax credit for invoices pertaining to Financial Years 2017-18 to 2020-21 - Input Tax Credit - Assessment order disallowing input tax credit solely on the ground that claims were lodged beyond the period prescribed under subsection (4) of section 16. - HELD THAT: - The Court observed that Section 16 of the Central Goods and Services Tax Act has been amended by insertion of subsection (5) (with retrospective effect from 1 July 2017) entitling registered persons to avail input tax credit in returns filed up to 30 November 2021 in respect of invoices or debit notes pertaining to the Financial Years 2017-18 to 2020-21. In view of this statutory amendment, the reasoning in the impugned assessment insofar as it disallowed credit only on the ground of delay under subsection (4) could no longer sustain. The Court therefore set aside the impugned order to enable the assessing authority to re-do the assessment taking into account the newly inserted provision and any other relevant subsections referred to in the amendment. [Paras 5]

Impugned order set aside and matter remitted to the assessing authority to re-do the assessment in light of the amendment to section 16, permitting the petitioner to file objections within three weeks and requiring the authority to afford a reasonable opportunity of personal hearing.

Remand for reassessment - Revival of impugned order if no reply filed - Right to personal hearing - Procedure to be followed on remand including timeline for petitioner's reply and consequence of failure to file the reply. - HELD THAT: - The Court directed that the petitioner may submit their objections by way of reply within three weeks from receipt of a copy of the order along with the amendment and other details. If such reply is filed, the assessing authority must consider it and pass orders after affording a reasonable opportunity of personal hearing to the petitioner. If no reply is filed within the prescribed three-week period, the impugned order shall stand revived. The Court left all other issues recorded in the impugned order undisturbed. [Paras 5]

Petitioner given three weeks to file reply; assessing authority to consider reply and afford personal hearing; failure to reply revives the impugned order; other issues remain undisturbed.

Final Conclusion: The assessment order is set aside and remitted for fresh consideration in light of the amendment to section 16 (inserting subsection (5)) concerning entitlement to input tax credit for invoices/debit notes pertaining to FY 2017-18 to 2020-21; the petitioner may file objections within three weeks, the authority must afford a personal hearing and pass fresh orders, and failure to file the reply will revive the impugned order.

Cancellation of registration under Central Goods and Services Tax Act, 2017 - Jurisdiction of the proper officer to initiate inquiry - Show cause notice as a pre-litigation procedural step - Opportunity of being heard before cancellation - Premature interference by writ court in pending administrative proceedings - Trade name dispute in GST registration

Jurisdiction of the proper officer to initiate inquiry - Cancellation of registration under Central Goods and Services Tax Act, 2017 - Respondent No.2 possesses jurisdiction as the proper officer to inquire into and initiate proceedings for cancellation of GST registration under Section 29(2). - HELD THAT: - The Court examined Section 29(2) and found that the authority vested in the proper officer to cancel registration, including inquiries into alleged contraventions, is available to respondent No.2. Although the notice may allege contraventions under a particular provision, the fact that an inquiry or a show cause notice has been issued does not, by itself, render the authority incompetent. The petitioners retain the right to raise jurisdictional or legal objections in their reply before the proper officer and to seek appropriate relief if it transpires that proceedings were initiated under an incorrect provision. The Court therefore upheld the respondent's competence to issue the impugned notice and to conduct the inquiry. [Paras 6]

The challenge to respondent No.2's jurisdiction is rejected; respondent No.2 is the proper officer empowered to inquire into cancellation under Section 29(2).

Show cause notice as a pre-litigation procedural step - Premature interference by writ court in pending administrative proceedings - Opportunity of being heard before cancellation - Trade name dispute in GST registration - The writ petition seeking to quash the show cause notice is premature; petitioners must be permitted to reply and the proper officer must consider the reply and pass orders in accordance with law. - HELD THAT: - The Court observed that what has been issued is a show cause notice seeking clarification and supporting documents regarding alleged violations; it is a stage for administrative consideration where the petitioners may contest jurisdictional and substantive contentions, including any need to amend the registered trade name. Interference by the High Court at this interlocutory stage would be premature. Consequently, the petitioners were directed to appear and file their reply, and respondent No.2 was directed to consider the reply and decide the matter expeditiously in accordance with law. The matter is thereby remitted to the proper officer for adjudication on merits after giving opportunity of hearing. [Paras 6, 7]

The writ petition is disposed of as premature; petitioners to file reply before respondent No.2 and respondent No.2 to consider the reply and pass appropriate orders; administrative proceedings are remitted for fresh consideration.

Final Conclusion: The High Court declined to quash the show cause notice. It upheld respondent No.2's jurisdiction to inquire into cancellation under Section 29(2) and directed the petitioners to file their reply while remitting the matter to respondent No.2 to consider the reply and pass orders in accordance with law; the writ petition is disposed of.

Consolidation of multiple tax periods in a single show cause notice - quashing of show cause notice - limitation period applies separately to each assessment year - Section 73 of the CGST Act - requirement of separate show cause notices for each assessment year

Consolidation of multiple tax periods in a single show cause notice - Section 73 of the CGST Act - requirement of separate show cause notices for each assessment year - limitation period applies separately to each assessment year - quashing of show cause notice - Impugned notices dated 05.08.2024 purporting to group demands for multiple financial years (July 2017-2023) are vitiated and liable to be quashed. - HELD THAT: - The Court examined whether the notices at Annexures-A and B dated 05.08.2024, which consolidate tax periods from 2017 to 2023, are flawed. Relying on the co-ordinate bench decision in M/s. Bangalore Golf Club (W.P.No.16500/2024 dated 07.08.2024) and the legal principle that actions and limitation under Section 73 must be applied separately to each assessment year, the Court held that issuing a single consolidated show cause notice for multiple assessment years contravenes the statutory scheme. The Court noted that the limitation and procedure envisaged under Section 73 require distinct adjudication for each year and that established precedent supports treating assessment years independently. Consequently, the impugned consolidated notices are fundamentally flawed. The Court preserved the respondents' liberty to issue separate and independent notices for each assessment year in accordance with law. [Paras 3, 4, 5]

Impugned Notices at Annexures-A and B dated 05.08.2024 are quashed; respondents may issue separate notices for each assessment year in terms of Section 73 of the CGST Act, 2017.

Final Conclusion: Writ petition allowed; the consolidated show cause notices dated 05.08.2024 (Annexures-A and B) and consequent proceedings are quashed, with liberty to the respondents to issue separate notices for each assessment year under Section 73 of the CGST Act, 2017.

Condonation of delay - proviso to Rule 23 of the Odisha Goods and Services Tax Rules - revocation of cancellation of registration - acceptance of Form GSTR-3B - payment of taxes, interest, late fee and penalty as condition precedent - direction to open portal for filing GST return

Condonation of delay - proviso to Rule 23 of the Odisha Goods and Services Tax Rules - revocation of cancellation of registration - payment of taxes, interest, late fee and penalty as condition precedent - acceptance of Form GSTR-3B - direction to open portal for filing GST return - Delay in invoking the proviso to Rule 23 OGST Rules condoned and directions issued for consideration of the revocation application and acceptance of GSTR-3B upon compliance with payment and formalities. - HELD THAT: - The Court, on the statement made by the Revenue's counsel, recorded that if the delay in filing the revocation application is condoned and the petitioner complies with payment of taxes, interest, late fee and penalty and other formalities, the Form GSTR-3B filed by the petitioner will be accepted. The Court accordingly condoned the delay in invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules and directed that, subject to deposit of all taxes, interest, late fee and penalty and fulfilment of the requisite formalities, the petitioner's application for revocation shall be considered in accordance with law. The Court further directed that a copy of the order be produced before the proper officer and, upon compliance with the stated conditions, the proper officer shall open the portal to enable filing of the GST return. The directions leave the substantive adjudication of the revocation application to the proper officer in accordance with law after the stated conditions are met. [Paras 2, 3, 4]

Delay condoned; petitioner to deposit all taxes, interest, late fee and penalty and comply with formalities; on compliance the revocation application to be considered and portal opened to accept Form GSTR-3B.

Final Conclusion: Writ petition disposed of by condoning the delay in invoking the proviso to Rule 23 OGST Rules and directing that, upon payment of all taxes, interest, late fee and penalty and completion of other formalities, the revocation application shall be considered and the portal opened to accept the return.

Statutory remedy of appeal - non-constitution of the Appellate Tribunal - Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 - prescribed time limit for filing appeal to the Appellate Tribunal to be counted from the date the President or State President enters office - statutory stay under sub-section (9) of Section 112 - condition of deposit equal to twenty percent of the remaining tax in dispute for grant of stay

Statutory remedy of appeal - non-constitution of the Appellate Tribunal - statutory stay under sub-section (9) of Section 112 - condition of deposit equal to twenty percent of the remaining tax in dispute for grant of stay - entitlement to the statutory stay under sub-section (9) of Section 112 in circumstances where the Appellate Tribunal has not been constituted - HELD THAT: - The Court recorded that the impugned order is appealable under the CGST/OGST Acts and that the petitioner is deprived of its statutory right of appeal due to non-constitution of the Appellate Tribunal by the authorities. Applying the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 and the subsequent CBIC clarification, the Court granted the petitioner the benefit of stay under sub-section (9) of Section 112. The stay was made conditional: subject to verification of deposit of an amount equal to twenty percent of the remaining tax in dispute (in addition to any earlier deposit under sub-section (6) of Section 107), the recovery of the balance and any steps taken are to be stayed. The Court explained that the petitioner cannot be denied the statutory benefit merely because the Tribunal has not been constituted by the respondents, but the relief cannot be open-ended and must be balanced by the specified deposit condition. [Paras 3, 6]

The petitioner is granted the stay under sub-section (9) of Section 112, subject to verification of deposit equal to twenty percent of the remaining disputed tax (in addition to any earlier deposit); recovery and steps in respect of the balance shall be stayed.

Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 - prescribed time limit for filing appeal to the Appellate Tribunal to be counted from the date the President or State President enters office - statutory remedy of appeal - temporal effect and filing requirement for the appeal in view of non-constitution of the Tribunal and the Removal of Difficulties Order - HELD THAT: - Relying on the Removal of Difficulties Order and the CBIC circular, the Court held that the limitation for filing an appeal to the Appellate Tribunal must be reckoned from the later of the date of communication of the order or the date on which the President/State President of the Tribunal enters office. The Court directed that the petitioner should file the appeal under Section 112 once the Tribunal is constituted and functional and the President or State President enters office, observing statutory requirements then applicable. The Court further clarified that if the petitioner elects not to file an appeal within the period that may be specified upon constitution of the Tribunal, the revenue would be free to proceed in accordance with law. [Paras 4, 6]

The petitioner must file the appeal under Section 112 after the Appellate Tribunal is constituted and the President or State President enters office, with the time-limit to be reckoned in accordance with the Removal of Difficulties Order; failure to file within the period so specified will permit the authorities to proceed.

Final Conclusion: Writ petition disposed by extending the statutory stay under sub-section (9) of Section 112 subject to specified deposit and by directing the petitioner to file the appeal under Section 112 once the Appellate Tribunal is constituted and its President/State President enters office; non-filing within the period to be specified will leave the respondents free to proceed in accordance with law.

Service by electronic posting on GST portal - opportunity of personal hearing - quashing and remand for fresh consideration - pre-deposit requirement for statutory appeal

Service by electronic posting on GST portal - pre-deposit requirement for statutory appeal - Validity of service by posting notices and orders on the GST Network portal and the practical consequences where an assessee was unaware of such postings - HELD THAT: - The Court acknowledged that the statutory regime permits service of notices and orders by modes including posting on the GST portal, and therefore the respondent could not be faulted merely for using the prescribed electronic mode. At the same time the Court recognized that a small business person who is not conversant with computers and who remained unaware of the initiation of proceedings was deprived of an opportunity to participate in the assessment process. The petitioner had remitted 10% of the disputed tax under each assessment order, which the Court noted corresponds to the pre-deposit requirement ordinarily applicable for preferring a statutory appeal. Balancing the statutory validity of electronic service with the factual reality of non-reception and absence of participation, the Court found equitable grounds to set aside the assessment orders and to direct fresh consideration with an opportunity to be heard.

Posting on the GST portal is a valid mode of service, but where the assessee was unaware and deprived of opportunity to contest, the assessment orders cannot stand and require reconsideration.

Quashing and remand for fresh consideration - opportunity of personal hearing - Relief to be afforded on remand and directions for fresh proceedings - HELD THAT: - The Court quashed the impugned assessment orders and remanded the matters for fresh consideration. The petitioner was permitted to file a reply to the show cause notice within three weeks from receipt of a copy of the order. On receipt of the reply, the respondent was directed to provide a reasonable opportunity, including a personal hearing, and thereafter to pass fresh assessment orders within two months. The directions are intended to cure the denial of opportunity and to ensure adjudication afresh in accordance with law.

Assessment orders quashed and matters remanded; petitioner allowed to file reply within three weeks, to be given reasonable opportunity including personal hearing, and fresh assessment orders to be passed within two months.

Final Conclusion: The writ petitions are allowed by quashing the impugned assessment orders for AY 2017-18 and AY 2018-19 and remanding the matters for fresh adjudication with the petitioner permitted to file a reply within three weeks, to be afforded a reasonable opportunity including personal hearing, and fresh assessment orders to be issued within two months.

Review petition - error apparent on the face of the record - limited scope of review jurisdiction - finality of litigation - turnover tax concession for Covid lockdown period

Review petition - error apparent on the face of the record - limited scope of review jurisdiction - finality of litigation - Whether the judgment dated 30.11.2023 required review on the ground of an error apparent on the face of the record. - HELD THAT: - The Court examined the contentions and documents relied upon by the review petitioners and the respondent and recorded that the earlier judgment had already considered the materials placed before it while holding that FL3 licensees who filed returns by 31.03.2022 and cleared turnover tax by 30.04.2022 were not liable to pay interest for delayed filing and payment in respect of parcel sales during the Covid lockdown periods. The Court reiterated the well-established narrow ambit of review jurisdiction, emphasising that review is not a rehearing or an appeal and must be confined to correcting an error apparent on the face of the record. The additional cabinet documents and submissions invoked by the petitioners were not shown to disclose any such error or to displace the earlier conclusion; some documents were also not part of the pleadings. In the absence of any demonstrable error apparent on the record, the Court found no basis to reopen or reconsider its prior adjudication. [Paras 3, 6]

Review petition dismissed for lack of any error apparent on the face of the record.

Final Conclusion: The review petition challenging the Court's judgment dated 30.11.2023 is dismissed; the earlier decision stands and will not be reopened in the absence of any error apparent on the face of the record.

Provisional attachment under Section 83 of the CGST Act - Temporal limitation of provisional attachment under Section 83(2) of the CGST Act - Validity of repeated provisional attachment orders - Right to challenge fresh statutory orders

Temporal limitation of provisional attachment under Section 83(2) of the CGST Act - Previous provisional attachment order ceased to operate after expiry of one year under Section 83(2) of the CGST Act. - HELD THAT: - The Court recorded the admitted statutory position that an order passed under Section 83(1) of the CGST Act, which provisionally attaches cash credit accounts, has a life of one year and ceases to operate upon expiry of that period. This legal position was accepted by the respondents and noted by the Court in disposing the petition insofar as the earlier attachment order is concerned. [Paras 2, 3]

The earlier attachment order has ceased to operate after one year under Section 83(2).

Provisional attachment under Section 83 of the CGST Act - Right to challenge fresh statutory orders - Petition disposed of while preserving petitioners' right to impugn the fresh attachment order dated 13.12.2023. - HELD THAT: - Having recorded that the earlier order ceased to operate, the Court disposed of the petition but expressly reserved the petitioners' right to challenge the subsequent attachment order dated 13.12.2023. The Court thereby declined to adjudicate the validity of the new order in the present proceedings and left open the remedy of the petitioners to invoke appropriate legal proceedings to contest the fresh order. [Paras 6]

Petition disposed of; petitioners' right to challenge the fresh order dated 13.12.2023 is reserved.

Validity of repeated provisional attachment orders - Validity of repeated issuance of provisional attachment orders under Section 83 was left open for determination. - HELD THAT: - The Court refrained from expressing any view on whether repeated attachments in exercise of powers under Section 83, following the expiry of a prior one-year order, are permissible. That question was specifically left undecided for future adjudication, thereby leaving the legal controversy unresolved in these proceedings. [Paras 6]

Question of validity of repeated attachment orders under Section 83 left open.

Final Conclusion: The Court accepted that a provisional attachment under Section 83(1) lasts one year under Section 83(2) and that the earlier order has ceased to operate; the petition is disposed of while preserving the petitioners' right to challenge the subsequent attachment dated 13.12.2023, and the legality of repeatedly issuing attachment orders under Section 83 is left open for future adjudication.

Cancellation of registration - Availability of alternative remedy by statutory appeal - Condonation of delay in statutory appeals - Extraordinary jurisdiction under Article 226 - Amnesty scheme for restoration of registration - Principle that law favours the diligent and not the indolent

Availability of alternative remedy by statutory appeal - Condonation of delay in statutory appeals - Extraordinary jurisdiction under Article 226 - Principle that law favours the diligent and not the indolent - Maintainability of writ petition challenging cancellation of registration where a statutory appeal lay but was filed with gross delay. - HELD THAT: - The court recorded that a statutory appeal under the BGST Act was available to the petitioner and that the appeal period under Section 107 permitted filing within three months with an additional one month for seeking condonation of delay. The impugned order dated 14.03.2022 required the appeal to be filed by 13.06.2022 (and condonation, if necessary, within one further month), but the appeal was filed only on 03.12.2023 after about one year and five months. In these circumstances the Court found no reason to exercise its extraordinary jurisdiction under Article 226 to entertain the challenge, emphasising that such jurisdiction is not to be used where alternate statutory remedies exist and have not been diligently pursued by the petitioner. The determinative principle applied was that the law favours the diligent and not the indolent. [Paras 2, 3, 5]

Writ petition not maintainable on merits for want of diligent availing of the statutory appeal; extraordinary jurisdiction under Article 226 declined.

Cancellation of registration - Amnesty scheme for restoration of registration - Effect of petitioner not availing the Government's Amnesty Scheme for restoration of registration. - HELD THAT: - The Court noted that the petitioner did not contend non-receipt of the show cause notice and did not produce evidence to that effect. The Government had issued an Amnesty Scheme (Circular No. 3 of 2023) permitting cancelled registrants to restore registration on payment of dues between 31.03.2023 and 31.08.2023, a remedy which the petitioner also failed to avail. The failure to pursue the available administrative relief under the amnesty informed the Court's conclusion against invoking extraordinary relief. [Paras 4, 5]

Failure to avail the amnesty scheme was a factor militating against granting writ relief; no relief granted.

Final Conclusion: Writ petition dismissed: the High Court declined to exercise Article 226 jurisdiction because the petitioner failed to diligently avail the statutory appeal within the permitted period (nor seek timely condonation) and also did not utilise the Government's amnesty scheme for restoration of registration.

Reverse charge mechanism - seigniorage - adjudication on merits after opportunity of being heard - orders kept in abeyance pending Nine Judge Constitution Bench decision - stay on recovery of GST pending authoritative decision - submission of objections/representations within fixed time

Reverse charge mechanism - seigniorage - stay on recovery of GST pending authoritative decision - Petition challenging intimation imposing GST under reverse charge on seigniorage disposed in terms of the Division Bench directions in A. Venkatachalam. - HELD THAT: - The High Court disposed of the petition by adopting paragraph 9 of the Division Bench judgment in A. Venkatachalam. The petitioner is directed to submit objections or representations within the period stipulated by that order. On receipt of such objections, the taxing authority is to proceed with adjudication on merits after affording a reasonable opportunity of being heard, but any orders of adjudication shall be kept in abeyance until the Nine Judge Constitution Bench decides the question concerning the nature of royalty. Pending that authoritative decision, there shall be no recovery of GST on royalty/seigniorage. The directions leave all substantive contentions open for the petitioner to raise in appropriate proceedings, including appeals, after the decision of the Constitution Bench.

Writ petition disposed in terms of paragraph 9 of A. Venkatachalam; objections to be submitted and adjudication stayed with no recovery until the Nine Judge Constitution Bench delivers its decision.

Final Conclusion: The writ petition is disposed by applying the Division Bench directions in A. Venkatachalam: petitioner to file objections; adjudication to be undertaken on merits but kept in abeyance; no recovery of GST on seigniorage/royalty until the Nine Judge Constitution Bench decides; all contentions left open for further proceedings.

Provisional attachment of cash credit accounts under the Central Goods and Services Tax Act - temporal limit of one year for provisional attachment - repeated provisional attachments - right to impugn fresh attachment orders

Provisional attachment of cash credit accounts under the Central Goods and Services Tax Act - temporal limit of one year for provisional attachment - Order dated 23.08.2022 provisionally attaching the petitioners' cash credit accounts has ceased to operate after expiry of one year. - HELD THAT: - The Court recorded the parties' concession and applied the statutory position that an order passed under the provision for provisional attachment has a life of one year from the date it is made and ceases to operate thereafter. On that basis, the operative effect of the order dated 23.08.2022 has ended and there is no impediment to the petitioners operating the cash credit accounts to the extent that order remains expired. [Paras 3]

Order dated 23.08.2022 has ceased to operate after one year.

Right to impugn fresh attachment orders - Petition disposed of while preserving petitioners' right to challenge the fresh attachment order dated 13.12.2023. - HELD THAT: - Although the earlier attachment has expired, the respondents have issued a fresh provisional attachment order dated 13.12.2023. The Court disposed of the present petition without adjudicating upon that subsequent order and expressly reserved the petitioners' right to impugn the fresh order in accordance with law. [Paras 4, 6]

Petition disposed of; petitioners' right to challenge the 13.12.2023 order is preserved.

Repeated provisional attachments - Question regarding validity of repeated issuance of provisional attachment orders under the Act is left open for adjudication. - HELD THAT: - The Court did not decide whether successive or repeated provisional attachments in the circumstances are permissible or in breach of the statutory limitation; that legal question was expressly left open for future consideration. No determination on the merits of the legality of repeated attachments was made in these proceedings. [Paras 5, 6]

Validity of repeated issuance of attachment orders is left open for adjudication.

Final Conclusion: The writ petition was disposed of on the basis that the provisional attachment order dated 23.08.2022 had ceased to operate after one year; the petitioners' right to challenge the fresh attachment order dated 13.12.2023 was preserved, and the broader question of the lawfulness of repeated provisional attachments under the statute was left open.

Reverse charge mechanism - seigniorage - show cause notice - adjudication kept in abeyance pending authoritative determination on the nature of royalty - no recovery of tax pending decision of constitution bench

Reverse charge mechanism - seigniorage - show cause notice - adjudication kept in abeyance pending authoritative determination on the nature of royalty - no recovery of tax pending decision of constitution bench - Challenge to the intimation issued under Section 74(5) of the Tamil Nadu GST Act seeking imposition of GST under reverse charge on seigniorage paid to the Government disposed in accordance with the directions in A. Venkatachalam v. Assistant Commissioner. - HELD THAT: - The High Court applied the binding directions set out at paragraph 9 of the Division Bench decision in A. Venkatachalam v. Assistant Commissioner. Petitioners are directed to submit objections/representations within four weeks from receipt of the order. On receipt, the tax authority must adjudicate the matter on merits after affording a reasonable hearing, but any order of adjudication is to be kept in abeyance until the Nine Judge Constitution Bench decides the question on the nature of royalty. There shall be no recovery of GST on the royalty/seigniorage until the Constitution Bench delivers its decision. Challenges to notifications or circulars and other contentions are left open for pursuance after the authoritative determination, and aggrieved parties may seek appropriate remedies thereafter.

Writ petition disposed in terms of paragraph 9 of A. Venkatachalam v. Assistant Commissioner: objections to be filed, adjudication on merits to proceed but kept in abeyance pending the Nine Judge Constitution Bench, and no recovery till that decision; other contentions left open.

Final Conclusion: The petition is disposed of by following the Division Bench directions in A. Venkatachalam: the petitioner to file objections; adjudication to be undertaken but kept in abeyance pending the Nine Judge Constitution Bench's decision on the nature of royalty; no recovery of GST until that decision; other contentions reserved.

Additions under Section 68 - treatment of receipts as capital gains versus loans - scope of search assessments under Section 153A - requirement of incriminating material in search proceedings

High Court [2022 (4) TMI 1643 - ORISSA HIGH COURT] upheld the ITAT's deletion of the additions for AY 2008-09 and agreed that, in the absence of incriminating material from the search and having regard to disclosure and assessment of the capital gains in AY 2009-10, the additions could not be sustained.

HELD THAT:- Special Leave Petition is dismissed on the ground of low tax effect.

Disallowance of business expenses relating to business of money lending merely on the ground that no interest income has been earned in this year - Engagement of the assessee in the business of money lending -

High Court [2024 (7) TMI 1551 - DELHI HIGH COURT] dismissed the appeal, upholding the Tribunal's findings that the principle of consistency did not apply to AY 2015 16 and that the claim of a money lending business (and attendant business expenditure) was not established on the facts; the Assessing Officer's disallowance is thereby sustained

HELD THAT:- The findings arrived at in this matter for the Financial Years 2014-2015 shall be restricted only to the said financial years. In the circumstances, we do not find it necessary to interfere with the impugned order.

Special Leave Petition is disposed of with the aforesaid observations. Pending application(s), if any, shall stand disposed of.

Addition under Section 69A read with Section 115BBE - burden of proof to explain source of seized cash - seizure of cash during search under Section 132 - document identification number on assessment order is a question of fact - appellate interference standard - perversity

Burden of proof to explain source of seized cash - addition under Section 69A read with Section 115BBE - appellate interference standard - perversity - Whether the source of cash seized during search was satisfactorily explained so as to preclude addition under Section 69A read with Section 115BBE and whether appellate fora erred in confirming the addition - HELD THAT: - The court examined the material placed before the AO, CIT(A) and ITAT, including the assessee's reply to the show cause notice and the additional affidavit with bank statements. The authorities recorded that Rs.73,10,000/- was seized and the assessee declared a lesser amount in his return; the assessee alleged portions belonged to his mother and wife but failed to produce cogent, convincing evidence of the source such as clear bank withdrawals or contemporaneous substantiation. The court analysed the bank statements and cash-flow statements placed for the mother, observing that initial deposits were themselves in cash (hence not explained by subsequent withdrawals), the ledger did not clearly evidence withdrawals of the quantum claimed, and household expenses did not justify retention of unusually large cash balances. The petitioner also did not produce the wife's bank accounts to substantiate the amount claimed to belong to her. On these facts the court held that the question whether the source was explained is essentially one of fact and that the findings of the ITAT and CIT(A) - declining to accept the asserted sources and confirming the addition - were not perverse. Consequently there was no merit to interfere with the concurrent factual conclusions upholding the addition under the impugned provisions. [Paras 16, 18, 20, 21, 22]

The concurrent factual findings that the source of the seized cash was not satisfactorily proved are upheld and the addition under Section 69A read with Section 115BBE is sustained; no interference is called for.

Document identification number on assessment order is a question of fact - Whether omission of a Document Identification Number (DIN) on the assessment order raises a substantial question of law - HELD THAT: - The court observed prima facie that whether a DIN was transcribed on the assessment order is essentially a question of fact. Further, the issue had not been raised before the CIT(A) or the ITAT. On that basis the court found no merit in treating the absence of a DIN as a substantial question of law warranting interference. [Paras 9]

The contention that absence of a DIN on the assessment order raises a substantial question of law is rejected as being factual and not properly raised earlier.

Final Conclusion: The writ appeal is dismissed: the High Court finds no substantial question of law for its consideration, upholds the concurrent factual findings of the lower authorities that the source of seized cash was not satisfactorily explained (thereby sustaining the addition under the impugned provisions), and rejects the DIN contention as a question of fact.

Transfer pricing reference - arm's length price - opportunity of being heard - show cause notice - remand for fresh consideration - determination of income on reconsideration

Opportunity of being heard - show cause notice - remand for fresh consideration - Whether the assessment order could be sustained without providing the appellant adequate opportunity of being heard and without considering the documentary evidence produced by the appellant - HELD THAT: - The Tribunal examined the grounds asserting that the AO made additions without issuing a show cause notice and that documentary evidence and additional material submitted by the appellant were not considered. Having regard to the appellant's comprehensive factual paper book and the nature of the disputes (including transfer pricing adjustments and alleged disallowances), the Tribunal found it proper that these matters be reconsidered. The Tribunal directed that the assessing officer consider the details submitted by the appellant, give the appellant adequate opportunity of being heard, and decide the issues afresh so as to determine the correct income of the appellant. [Paras 5, 7, 8]

Matter remanded to the Assessing Officer for fresh consideration after providing the appellant an adequate opportunity of being heard; appeal allowed for statistical purposes.

Transfer pricing reference - arm's length price - determination of income on reconsideration - Whether the transfer pricing adjustments and related international transaction issues require fresh adjudication by the AO in light of the appellant's submissions - HELD THAT: - The Tribunal noted that the Transfer Pricing Officer had made substantial adjustments to the appellant's international transactions and that the appellant had challenged the reference, the methodology adopted and the rejection of its benchmarking and documentary evidence. Given the factual matrix and the additional evidence placed before the Tribunal, the Tribunal concluded that the transfer pricing and associated international transaction issues should be reconsidered by the AO. The reassessment must take into account the material submitted by the appellant and follow the statutory procedure, including hearing the assessee before finalizing any adjustment to income. [Paras 6, 7]

Transfer pricing related adjustments remitted to the Assessing Officer for fresh adjudication after considering the appellant's evidence and providing a hearing.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes and remitted the matter to the Assessing Officer with directions to consider the appellant's submissions and evidence and to afford the appellant an adequate opportunity of being heard before determining the correct income for Assessment Year 2018-19.

Transfer of capital asset - development agreement-cum-GPA - handing over of physical possession - registration of agreement - accrual of income - registered document prevailing over affidavit - hypothetical income not taxable

Development agreement-cum-GPA - transfer of capital asset - handing over of physical possession - registration of agreement - Income arising from the registered development agreement-cum-GPA is taxable in the assessment year 2016-17. - HELD THAT: - The Tribunal held that the development agreement-cum-GPA dated 27.06.2015 was a registered document which, by its terms (Clause 8), recorded delivery of vacant physical possession to the developer at the time of execution. On the facts, possession having been handed over and the document being registered, the requirements for a transfer in the year of the agreement were satisfied as per the applicable legal tests relied upon by the jurisdictional High Court. Therefore the Assessing Officer and the CIT(A) were justified in bringing the capital gain to tax in AY 2016-17. [Paras 8]

Addition on account of capital gains arising from the development agreement-cum-GPA sustained for AY 2016-17.

Registered document prevailing over affidavit - accrual of income - hypothetical income not taxable - The assessee's reliance on a subsequent affidavit by the developer disclaiming delivery of possession does not negate the effect of the registered development agreement and cannot overturn the finding of transfer. - HELD THAT: - The Tribunal observed that a registered document carries primacy over a self-serving affidavit or oral statements. The third party affidavit filed at the instance of the assessee could not be allowed to override the clear contractual provision that possession was delivered. Consequently, the AO was entitled to disbelieve the affidavit and treat the income as having accrued in the year of the registered agreement rather than as a hypothetical income that never materialised. [Paras 8]

The affidavit is not sufficient to displace the registered agreement; the addition stands.

Accrual of income - grant of permissions - transfer of capital asset - Subsequent grant of permissions by local authorities in 2021 does not determine the year of transfer or the taxability of capital gain arising from the registered development agreement. - HELD THAT: - The Tribunal held that grant of municipal or local permissions for construction is collateral to the legal question of transfer under the development agreement. The year of taxation is governed by whether the transfer (possession coupled with registered agreement) occurred, not by later permissions; hence the permission dated 05.01.2021 did not alter the finding that transfer for tax purposes occurred in AY 2016-17. [Paras 8]

The later grant of permissions does not affect the year of taxation; addition sustained.

Relevance of precedents - transfer of capital asset - Supreme Court decisions cited by the assessee (CIT v. Balbir Singh Maini and Seshasayee Steels) were not found applicable to the facts before the Tribunal. - HELD THAT: - The Tribunal distinguished the cited decisions on their facts: Maini involved an unregistered JDA and was decided on that legal ground, whereas in the present case the development agreement-cum-GPA was registered and recorded delivery of possession. For similar factual distinctions, the Tribunal found the Supreme Court authorities relied upon by the assessee not germane to overturn the findings of the lower authorities. [Paras 8]

Authorities cited by the assessee do not apply; no interference with the lower orders.

Final Conclusion: The Tribunal dismissed the appeals and upheld the additions made by the Assessing Officer and confirmed by the CIT(A): the registered development agreement cum GPA (dated 27.06.2015) evidencing delivery of possession brought about a taxable transfer in AY 2016 17; the subsequent affidavit and later permissions did not displace the registered document or alter the year of taxation.

Validity of reopening assessment under section 147/148 - Reopening based on information from Investigation Wing - Change of opinion doctrine - Burden of proof for creditworthiness of lender and genuineness of loan transactions - Treatment of unexplained investment as unexplained income - Assessment on basis of market value versus actual investment in books

Validity of reopening assessment under section 147/148 - Reopening based on information from Investigation Wing - Change of opinion doctrine - Reopening of assessment for A.Y.2011-12 was invalid and the notice under section 148 (read with section 147) was quashed. - HELD THAT: - The Tribunal found that the reasons recorded for reopening were based on presumptions and hypotheses arising from an analysis of market value of property, gross total income declared by the assessee and an assumed incapacity of the lending company, without any independent inquiry or tangible post-assessment material. The Investigation Wing's information was not followed by any verification from the lending company nor was there any new adverse material discovered after completion of assessment u/s 143(3)/153A. The AO failed to apply mind to distinguish actual investment made in the relevant year from market value and failed to consider that major part of the investment in one property was made in an earlier year and had been examined during original assessment. On these facts the recorded reason did not confer jurisdiction to reopen an assessment already completed and amounted to a change of opinion; accordingly the reopening was quashed. [Paras 11]

Reopening under section 147/148 quashed; cross objection allowing challenge to reopening is allowed.

Burden of proof for creditworthiness of lender and genuineness of loan transactions - Treatment of unexplained investment as unexplained income - Assessment on basis of market value versus actual investment in books - Addition of the alleged unexplained income arising from purchase of property was deleted on merits; assessee had discharged onus to prove genuineness of loans and source of funds. - HELD THAT: - On merits the Tribunal upheld the CIT(A)'s findings that the assessee had produced loan confirmations, bank statements, ledger entries and the lending company's audited financial statements, which showed reserves, unsecured loans and disclosure of loan given to the assessee. The AO based the addition on the market valuation of the property rather than the actual amounts invested in the books in the relevant year and failed to examine records filed before him. Where the lending company had demonstrated transactions through banking channels and the company's accounts reflected capacity and disclosure of the loan, the assessee discharged the burden to prove source and genuineness. Consequently the addition treating investment as unexplained income could not be sustained. [Paras 12]

Addition of alleged unexplained income deleted; order of the CIT(A) in favour of the assessee upheld.

Final Conclusion: Revenue's appeal dismissed; cross objection of the assessee allowed - reopening under section 147/148 quashed and the addition for alleged unexplained investment deleted on merits for A.Y.2011-12.

Disallowance of interest under section 36(1)(iii) of the Income-tax Act - sufficiency of interest-free own funds as a defence to disallowance - reasonableness of interest rate paid on unsecured loans - rule of consistency in successive assessments

Disallowance of interest under section 36(1)(iii) of the Income-tax Act - sufficiency of interest-free own funds as a defence to disallowance - Validity of disallowance of interest of Rs. 6,25,496 on interest-free loans/advances - HELD THAT: - The Tribunal examined the assessee's balance sheet which showed opening capital materially exceeding the aggregate interest-free loans/advances. Reliance was placed on higher judicial authority holding that where an assessee has sufficient own interest-free funds greater than the investments/advances, proportionate disallowance of interest is not warranted. Applying that principle, and noting that the assessee's own capital was sufficient to meet the advances, the Tribunal concluded that the disallowance under the challenged provision could not be sustained. [Paras 12]

Disallowance of Rs. 6,25,496 u/s 36(1)(iii) deleted; ground allowed.

Reasonableness of interest rate paid on unsecured loans - rule of consistency in successive assessments - Sustainability of addition of Rs. 4,55,190 as excess interest on unsecured borrowings - HELD THAT: - The Assessing Officer limited interest to a notional market rate and made an addition. The Tribunal noted that in earlier assessment orders for relevant prior years no such disallowance had been made despite similar high interest payments, and that the Assessing Officer had not doubted the genuineness of the unsecured loans. Applying the rule of consistency in treatment across assessment years and having regard to the absence of prior disallowances, the Tribunal found no basis to uphold the addition for excess interest. [Paras 13]

Addition of Rs. 4,55,190 as excess interest deleted; ground allowed.

Final Conclusion: Both impugned additions were reversed and the appeal was allowed.

Commission or brokerage under Section 194H - Tax deduction obligation on payments to distributors - Prepaid coupon/distributor discounts - Binding effect of Supreme Court precedent

Commission or brokerage under Section 194H - Prepaid coupon/distributor discounts - Tax deduction obligation on payments to distributors - Whether the discount offered by the assessee to its distributor for prepaid services amounted to commission or brokerage attracting deduction of tax at source under Section 194H - HELD THAT: - The Tribunal held that the discount given to the distributor for prepaid services did not constitute commission or brokerage as envisaged under Section 194H. The High Court upheld the ITAT's conclusion, relying on the Supreme Court's decision in Bharti Cellular Limited which held that assessees were not legally obliged to deduct tax at source under Section 194H on the income/profit component in payments received by distributors or while selling/transferring prepaid coupons or starter-kits to distributors. Applying that binding precedent, the Court concluded that Section 194H was not attracted to the facts of these appeals and there was no obligation to treat the discounts as commission or brokerage for TDS purposes. [Paras 2, 3, 4]

ITAT's finding that the distributor discount is not commission or brokerage under Section 194H is upheld; appeals dismissed.

Final Conclusion: The appeals are dismissed and the ITAT order allowing the assessee is upheld, with reliance on the Supreme Court precedent that Section 194H does not apply to discounts to distributors for prepaid coupons; no further directions are required.

Bar of limitation under Section 275(1)(c) - initiation of penalty proceedings - penalty under Section 271C - date of initiation versus date of issuance of show cause notice - reference by Assessing Officer as initiation of penalty action - ordinary meaning of 'initiate'

Initiation of penalty proceedings - bar of limitation under Section 275(1)(c) - reference by Assessing Officer as initiation of penalty action - date of initiation versus date of issuance of show cause notice - Penalty proceedings under Section 271C were initiated on 25.09.2014 (date of reference by the Assessing Officer) and the penalty order dated 25.02.2016 was barred by limitation. - HELD THAT: - The Court held that the expression 'action for imposition of penalty is initiated' must be given its ordinary meaning as the commencement or first introductory step in the penalty process. The Assessing Officer's reference to the JCIT on 25.09.2014, recording that the assessee had admitted default in deduction of TDS in the tax audit report, constituted the first step for initiation of penalty proceedings. The subsequent issuance of a show cause notice by the JCIT nearly a year later was an opportunity for the assessee to be heard but did not mark the initiation of proceedings. The decision in Principal Commissioner of Income Tax-5 v. JKD Capital & Finlease Ltd. supports the principle that initiation cannot be delayed arbitrarily and that where the AO's reference marks the commencement, limitation under Section 275(1)(c) runs from that date. Applying these principles, the Court found the JCIT's delay in issuing the show cause notice immaterial to the date of initiation; consequently, the penalty order passed on 25.02.2016 fell outside the limitation period and was rightly deleted by the lower authorities. [Paras 11, 19, 20, 21]

The penalty under Section 271C was time-barred because proceedings had been initiated on 25.09.2014 and the penalty order dated 25.02.2016 was beyond the limitation prescribed by Section 275(1)(c).

Final Conclusion: The appeal is dismissed; no substantial question of law arises. The High Court upholds that penalty proceedings were initiated on 25.09.2014 (the AO's reference) and the penalty imposed subsequently was barred by limitation.

Waiver of interest under Sections 234-B and 234-C - deduction under Section 80P(2)(a)(iii) - advance tax liability - retrospective amendment and its effect - overruling of precedent - liberal construction of benevolent provision

Waiver of interest under Sections 234-B and 234-C - deduction under Section 80P(2)(a)(iii) - advance tax liability - overruling of precedent - Validity of rejection of the petitioner's waiver applications of interest charged for assessment years 1996-97, 1997-98 and 1998-99 - HELD THAT: - The Court held that the respondents rejected the waiver petitions on the basis that the petitioner should have discharged advance tax liability in view of the earlier Supreme Court decision in Assam Cooperative Apex Marketing Society Ltd. That decision has since been overruled and the settled position, including principles affirming a liberal construction of Section 80P, is that apex cooperative societies like the petitioner are entitled to the deduction under Section 80P(2)(a)(iii) and consequently were not liable to pay advance tax for the years in question. In these circumstances the respondents' reliance on the earlier decision to deny waiver of interest was unsustainable. The order dated 15.07.2002 rejecting waiver of interest under Sections 234-B and 234-C was therefore quashed and set aside, and the petitioner is entitled to claim waiver for the stated assessment years. [Paras 9, 10]

Order dated 15.07.2002 rejecting waiver of interest is quashed; petitioner entitled to claim waiver of interest for AYs 1996-97, 1997-98 and 1998-99.

Final Conclusion: Writ petition allowed; impugned order rejecting waiver of interest set aside and petitioner entitled to waiver for the assessment years 1996-97, 1997-98 and 1998-99. All pending applications disposed of; no costs.

Correction of PAN in Form 16A - deduction and deposit obligation under Section 194C - entitlement to interest under Section 244A - private contractual liability of the deductor - refund entitlement as prerequisite for interest

Correction of PAN in Form 16A - deduction and deposit obligation under Section 194C - Deposit of the deducted tax in favour of the correct PAN and survival of the petitioner's primary prayer - HELD THAT: - The Court records that the Border Roads Organization deposited Rs. 71,83,788 in favour of the petitioner's correct PAN (AAYFS9156R) in late September 2024 and produced Form 16A and related instructions as proof. The petitioner had claimed a marginally higher amount due to a shortfall which the department did not deduct. Having been satisfied on the material placed on record that the deducted amount has been deposited in respect of the disputed years, the Court held that the principal relief seeking correction of records and deposit no longer survives. [Paras 5, 6, 7, 9]

Principal prayer seeking correction of PAN records and deposit stood answered as the deducted amount was deposited in favour of the correct PAN; that part of the writ petition is disposed of.

Entitlement to interest under Section 244A - refund entitlement as prerequisite for interest - private contractual liability of the deductor - Claim for interest under Section 244A in respect of delayed deposit - HELD THAT: - The Court found that the petitioner only informed the department of the incorrect PAN in 2019 and that there was no material on record to show that, had the amounts been deposited earlier, the petitioner would have been entitled to refunds such as to invoke Section 244A. The Court observed that Section 244A typically applies where the Department delays payment of refunds, and concluded that the delay in depositing deducted tax by the deductor is essentially a private contractual dispute between the parties. On these bases the Court declined to grant interest under Section 244A. [Paras 10, 11, 12]

Claim for interest under Section 244A rejected; no writ for payment of interest issued.

Final Conclusion: Writ petition disposed: the deposited amount in favour of the correct PAN moots the primary relief; claim for interest under Section 244A is refused as inapplicable on the facts, without prejudice to the petitioner pursuing compensation before the appropriate forum for any loss caused by the deductor's delay.

Arm's length price - comparability analysis in transfer pricing - Transactional Net Margin Method - functional dissimilarity as basis for exclusion of comparables - inclusion of foreign exchange fluctuation and operating revenue in benchmarking - no substantial question of law

Comparability analysis in transfer pricing - functional dissimilarity as basis for exclusion of comparables - Transactional Net Margin Method - Exclusion of certain entities from the comparable set for determining ALP was upheld. - HELD THAT: - The learned Tribunal's decision to exclude Infosys Limited, Zylog Systems Limited, Larsen & Toubro Infotech Limited and Acropetal Technologies Limited as comparables was upheld. The Tribunal found Infosys functionally dissimilar because it provided a broad variety of services, had a significantly higher turnover and did not share the narrow functional profile of the assessee. Zylog was held functionally dissimilar on account of substantial intangibles (goodwill and product development costs) and a predominance of on-site revenue, unlike the assessee which earned income from off-shore activities and lacked such intangibles. Larsen & Toubro was excluded on the basis of diversified business activities making it functionally dissimilar. Acropetal was excluded because its operations spanned distinct segments (engineering design, IT services, health care) and its acquisition-driven sales increase rendered it non-comparable. The Tribunal's comparability findings were supported by precedent relied upon by the Court and were not shown to be perverse or without basis.

Tribunal's exclusion of the four named entities as comparables for ALP computation is affirmed.

Inclusion of foreign exchange fluctuation and operating revenue in benchmarking - Inclusion of foreign exchange currency fluctuation and operating revenue in computing the profit level indicator was upheld. - HELD THAT: - The learned Tribunal accepted the inclusion of foreign exchange fluctuation and operating revenue for benchmarking purposes. That conclusion was held to be consistent with the decision of this Court in Rampgreen Solutions Pvt. Ltd. v. CIT and was not open to interference. The Court found no infirmity in the Tribunal's approach to these adjustments.

Tribunal's acceptance of inclusion of foreign exchange fluctuation and operating revenue is affirmed.

Final Conclusion: The appeal is dismissed; the Income Tax Appellate Tribunal's exclusion of the four entities as comparables and its acceptance of inclusion of foreign exchange fluctuation and operating revenue are affirmed, and no substantial question of law arises.

Condonation of delay in filing appeals - reopening of assessment under Section 147 of the Incometax Act, 1961 - validity of notice under Section 143(2) - failure to issue and fatality of reassessment - Section 292BB - deemed service and effect of assessee's participation - quashing reassessment proceedings for noncompliance with mandatory notice requirement

Condonation of delay in filing appeals - The applications for condonation of delay in filing the appeals were allowed. - HELD THAT: - The Court considered the applications for condonation of delay and, for the reasons stated in those applications, found it appropriate to condone the delay in filing the present appeals. The applications were allowed and disposed of accordingly. [Paras 1, 2]

Delay in filing the appeals is condoned; the applications are allowed and disposed of.

Reopening of assessment under Section 147 of the Incometax Act, 1961 - The Court declined to interfere with the Tribunal's view quashing the reopening of assessment insofar as it concerned AY 199798, AY 199899 and AY 19992000. - HELD THAT: - The Revenue had raised common questions challenging the Tribunal's order setting aside reassessments. This Court, by its earlier order dated 12.08.2024, had considered the issue of reopening under Section 147 and found no reason to interfere with the Tribunal's conclusions. In light of that earlier determination, the Revenue's other framed questions relating to those assessment years did not survive for adjudication on merits. [Paras 3, 4, 6, 7]

No interference with the Tribunal's setting aside of the reopening for the first three assessment years; related questions do not survive.

Validity of notice under Section 143(2) - failure to issue and fatality of reassessment - Section 292BB - deemed service and effect of assessee's participation - quashing reassessment proceedings for noncompliance with mandatory notice requirement - For AY 200001, the Tribunal's quashing of the reassessment for lack of valid issuance and service of notice under Section 143(2) is upheld; Section 292BB could not be invoked because no notice under Section 143(2) was issued. - HELD THAT: - The Tribunal found, on the materials and admissions at the hearing, that no notice under Section 143(2) had been issued to the assessee and that the Department produced no evidence to establish valid issuance and service. The Tribunal followed the jurisdictional High Court's ratio that omission to issue the notice within the prescribed period is fatal and quashed the reassessment notice and all consequent proceedings. The Court observed that because no notice under Section 143(2) had been issued in the present case, the Revenue's contention that participation by the assessee would validate the notice under Section 292BB did not arise. [Paras 8, 10, 11, 24, 25]

Tribunal's quashing of the reassessment for AY 200001 on account of absence of valid Section 143(2) notice is sustained; Section 292BB inapplicable.

Final Conclusion: The applications for condonation of delay are allowed. Having upheld the Tribunal's conclusions - including the quashing of reassessment for lack of a valid Section 143(2) notice in AY 200001 and the prior decision declining interference with reopening in the earlier years - the Revenue's appeals are dismissed.

Proceedings against deceased assessee - proceedings against Official Assignee - declaration of insolvency - non est in law - attachment under Section 226(3) - revision under Section 263 - reassessment under Section 147 - remedy against Official Assignee before Insolvency Court

Proceedings against deceased assessee - proceedings against Official Assignee - declaration of insolvency - revision under Section 263 - reassessment under Section 147 - Validity of notices and assessment orders issued in the name of the deceased original assessee after his declaration as an insolvent and takeover of assets by the Official Assignee - HELD THAT: - The Court found that the original assessee died on 11.07.2013 and was thereafter declared an insolvent by order dated 09.08.2017, with the Official Assignee having taken charge of the entire estate. Once assets have been taken over by the Official Assignee pursuant to the insolvency proceeding, notices, revision orders and assessments issued by the income-tax authorities in the name of the deceased original assessee are not sustainable. The proper course, where there is any claim against the estate, is for the revenue to proceed against the Official Assignee or seek appropriate relief from the Insolvency Court; issuing and sustaining proceedings in the name of the dead person is impermissible in the circumstances. Applying these principles, the Court quashed the impugned revision and assessment orders made in the name of the deceased. [Paras 11, 12, 15, 16]

Impugned revision and assessment orders issued in the name of the deceased are quashed; revenue must proceed, if at all, against the Official Assignee or obtain directions from the Insolvency Court.

Attachment under Section 226(3) - proceedings against deceased assessee - proceedings against Official Assignee - non est in law - Sustainability of bank account attachments effected under Section 226(3) pursuant to the assessment order passed in the name of the deceased - HELD THAT: - The Court observed that the attachments under Section 226(3) arose from an assessment order passed in the name of the deceased. Given that the deceased had been declared insolvent and the Official Assignee had taken charge of the estate, attachments premised on assessments in the name of the dead person could not be sustained. The appropriate remedy for the revenue is to press its claim against the Official Assignee, who is to consider and distribute proceeds in accordance with law. In view of these conclusions, the impugned order refusing to lift the attachments (and related orders) were quashed. [Paras 11, 12, 15, 16]

Impugned orders maintaining attachment of bank accounts are quashed; respondents must seek remedy, if any, against the Official Assignee.

Final Conclusion: Writ petitions allowed; impugned orders (revision, assessment and orders sustaining bank attachments issued in the name of the deceased) are quashed and respondents directed to proceed, if required, against the Official Assignee or obtain appropriate directions from the Insolvency Court.

Bogus purchases - addition by applying a percentage of alleged bogus purchases - rejection of books of accounts - genuineness of purchases where sales accepted - assessment reopening on information

Bogus purchases - addition by applying a percentage of alleged bogus purchases - rejection of books of accounts - genuineness of purchases where sales accepted - Extent of addition to be made in respect of alleged bogus purchases - HELD THAT: - The Tribunal examined whether the addition made by the Assessing Officer and enhanced by the first appellate authority was justified in view of the factual and legal position. The AO had made an addition of 25% of the alleged bogus purchases, and the CIT(A) enhanced this to 100% on the basis that purchases were bogus. The Tribunal observed that neither the AO nor the first appellate authority had rejected the assessee's books of accounts nor specified the statutory provision under which books were rejected. The assessment was reopened on information and notices under verification were issued to the suppliers but no replies were received. The Tribunal accepted the factual position that while the bills issued by the suppliers may be forged or accommodation in nature, the purchases recorded in the books had given rise to accepted sales. In these circumstances, treating the entire purchase value as disallowable (100%) was not warranted. Applying the principle that where books are not rejected and sales are accepted, only the profit element (not the entire purchase) should be added, the Tribunal held that a limited addition would meet the ends of justice. Having considered the authorities relied upon by the parties and the Coordinate Bench decision cited on behalf of the assessee, the Tribunal concluded that restricting the addition to 12.5% of the alleged bogus purchases was appropriate. [Paras 7]

Addition restricted to 12.5% of the alleged bogus purchases; appeal partly allowed.

Final Conclusion: The Tribunal set aside the enhancement to 100% made by the CIT(A) and directed the Assessing Officer to restrict the addition in respect of the alleged bogus purchases to 12.5% of such purchases for AY 2010-11, allowing the assessee's appeal in part.

Cess on export of mica products - limitation for issuance of show cause notice under Section 28 - non-applicability of reassessment procedure under Section 17(4) and consequential requirement under Section 17(5) - recovery of interest where show cause notice does not propose interest

Cess on export of mica products - Demand of export cess on the appellant's shipments of fabricated mica during the stated period - HELD THAT: - The Tribunal found as an admitted fact that the appellant exported fabricated mica during the period specified and was liable to pay cess which was not paid. The adjudicating authority issued a show cause notice under Section 28 for short payment/non-payment of the cess and confirmed the demand after adjudication. The Tribunal upheld the confirmation of the cess demand on the merits, noting the appellant's failure to pay the leviable cess at the time of export.

Demand of cess payable by the appellant is confirmed.

Limitation for issuance of show cause notice under Section 28 - Whether the show cause notice alleging non-payment of cess was barred by limitation - HELD THAT: - The Tribunal observed that with effect from 2.4.2011 the period for issuance of a show cause notice under Section 28 was one year. The notice in the present case (issued on 30.04.2015 for exports made between 05.05.2014 and 14.08.2014) was held to be within the time period allowed under the statute, and the contention that the notice was time-barred was rejected. [Paras 14, 15]

Show cause notice is within time; the limitation objection fails and the demand is sustainable.

Non-applicability of reassessment procedure under Section 17(4) and consequential requirement under Section 17(5) - Whether proceedings were vitiated for want of an order under Section 17(5) following reassessment under Section 17(4) - HELD THAT: - The Tribunal found that there was no question of enhancement or reassessment of duty under Section 17(4) in the present case. Because the reassessment provisions were not invoked, the procedural requirement for passing a consequential order under Section 17(5) did not arise. The argument that absence of a Section 17(5) order rendered the proceedings unsustainable was therefore dismissed. [Paras 16, 17, 18]

Section 17(4)/17(5) provisions are not attracted; absence of a Section 17(5) order does not invalidate the proceedings.

Recovery of interest where show cause notice does not propose interest - interest under Section 28AA - Whether interest could be demanded when the show cause notice did not propose recovery of interest - HELD THAT: - Although interest is generally payable where duty/cess is found unpaid, the Tribunal examined the form and contents of the show cause notice and observed that it did not propose recovery of interest from the appellant. Relying on that omission, the Tribunal held that interest could not be levied in the present proceedings despite confirmation of the cess. Consequently, the demand for interest was set aside. [Paras 20, 21]

Demand of interest is set aside as the show cause notice did not propose interest.

Final Conclusion: The appeal is partly allowed: the Tribunal confirms the demand of export cess on the appellant for the shipments made during 05.05.2014 and 14.08.2014 and holds the show cause notice to be within time; however, the demand for interest is set aside because the show cause notice did not propose interest. Appeal disposed accordingly.

Obligations of Customs Broker under Customs Broker Licencing Regulation - verification of Importer Exporter Code, GSTIN and client identity using reliable independent documents - presumption of genuineness of public documents under Section 79 of the Indian Evidence Act, 1872 - reasonableness of KYC steps and periodic verification - revocation of customs broker licence

Obligations of Customs Broker under Customs Broker Licencing Regulation - revocation of customs broker licence - reasonableness of KYC steps and periodic verification - Validity of the revocation of the respondent's Customs Broker licence for alleged failure to comply with the verification obligations under Regulation 10(n) of the Customs Broker Licencing Regulation, 2018. - HELD THAT: - The Tribunal (CESTAT) found that the respondent had taken reasonable steps to verify that the exporter (M/s Shree Enterprises) was functioning at the declared address and that the documents produced by the respondent were not forged or fabricated. The High Court accepted the Tribunal's appreciation that KYC documents need to be obtained at onboarding and periodically verified, and that continuous physical surveillance of the business premises is not required. On this basis the Tribunal set aside the order-in-original revoking the licence. The High Court found no error in that conclusion and therefore declined to disturb the Tribunal's factual and evaluative finding. [Paras 10, 13, 14]

The revocation of the customs broker licence was set aside by the Tribunal and the High Court dismissed the Revenue's appeal, upholding that conclusion.

Presumption of genuineness of public documents under Section 79 of the Indian Evidence Act, 1872 - verification of Importer Exporter Code, GSTIN and client identity using reliable independent documents - Whether reliance on government-issued documents (IEC, GSTIN) and contemporaneous KYC documents justified the respondent's verification of the exporter. - HELD THAT: - The Tribunal referred to the statutory presumption under Section 79 of the Indian Evidence Act that documents certified by a Central Government officer are genuine. The High Court accepted that IECs issued by DGFT and GST registrations (GSTIN) issued under the CGST/SGST Acts are government-originated documents which the broker could legitimately rely upon. The Court also accepted that the rent agreement and electricity bill produced were genuine and that their dates did not render them necessarily stale in the context of onboarding and periodic verification obligations. [Paras 11, 12]

Reliance on the government-issued IEC and GST registration and the KYC documents produced by the exporter was held to be justified; the documents attract the presumption of genuineness and do not, by their dates alone, invalidate the broker's verification.

Final Conclusion: The High Court found no substantial question of law and dismissed the Revenue's appeal, thereby upholding the Tribunal's setting aside of the order-in-original that had revoked the customs broker's licence.

Repeated adjournments and last opportunity - denial of further adjournment - decision on merits in absence of appellant - dismissal for want of prosecution - forged 'Out of Charge' order and fraudulent removal of goods - unauthorized removal from warehouse despite detention under Section 49 - admissions as evidence

Repeated adjournments and last opportunity - denial of further adjournment - decision on merits in absence of appellant - dismissal for want of prosecution - Whether the appellant's request for adjournment should be allowed and whether the appeal should proceed or be dismissed for want of prosecution - HELD THAT: - The Tribunal recorded that the appellant sought adjournment without stating any reason and that the Departmental Representative opposed it on the ground of multiple earlier adjournments. The Tribunal relied on its earlier order granting one last opportunity and warning that further absence would lead to adjudication on merits. In view of these circumstances and the absence of any justification, the adjournment request was denied. Proceedings were conducted and the appeal was disposed of on merits. The Tribunal also treated the appellant's repeated seeking of adjournments and failure to produce supporting evidence as conduct amounting to want of prosecution, justifying dismissal on that ground in addition to the merits-based decision. [Paras 2, 4]

Adjournment denied; appeal proceeded and was dismissed on merits and for want of prosecution.

Forged 'Out of Charge' order and fraudulent removal of goods - unauthorized removal from warehouse despite detention under Section 49 - admissions as evidence - Whether the goods were improperly released on the basis of a forged/out-of-charge order and whether the findings of the adjudicating authority and Commissioner (Appeals) upholding fraud and unauthorized removal are sustainable - HELD THAT: - The Tribunal examined the record including the show cause reply, the statements of the appellant's director and warehouse employees, and the documentary history. It noted that a portion of the consignment (75 packets) was detained following an IPR complaint and that an 'Out of Charge' document was generated for the entire consignment though only part release was authorised. The detained packets were subsequently removed on the basis of an 'Out of Charge' order which, on the facts, was manipulated/back-dated and used to effect unauthorized removal in connivance with CHA and warehouse personnel. Admissions in the statements of the appellant's Assistant Manager and warehouse officer acknowledged unauthorized release and failures to check dates on the documents; the director's explanation of clerical mistake was unsupported by evidence. The Tribunal accepted these admissions as reliable evidence and found no material to rebut the adjudicating authority's conclusion of fraud and improper removal. Consequently the findings of the original authority and Commissioner (Appeals) were upheld. [Paras 3]

Findings of fraudulent/reckless release based on a forged/unauthorized 'Out of Charge' order and unauthorized removal from the warehouse are upheld; appeal dismissed on merits.

Final Conclusion: The Tribunal denied the adjournment request, proceeded in the absence of the appellant, upheld the adjudicating findings that the detained goods were improperly released on the basis of a forged/unauthorized 'Out of Charge' order and that admissions by the appellant's personnel supported the finding of fraud, and dismissed the appeal both on merits and for want of prosecution.

Detagging of proceedings and remand to Company Court - disposal of public interest litigation on account of intervening statutory/regulatory framework - duty to file investigative and compliance reports - role and duties of Official Liquidator in winding up - continuation of court directions in remitted proceedings

Disposal of public interest litigation on account of intervening statutory/regulatory framework - Writ Petition No. 1337 of 1998 disposed of in view of the availability of regulations addressing the subject-matter raised by SEBI. - HELD THAT: - The petition, instituted by SEBI to seek directions against entities issuing unregulated financial schemes, was filed when an effective statutory/regulatory framework was absent. The Court noted that the Securities and Exchange Board of India (Collective Investment Scheme) Regulations, 1999, now address the concerns raised and that parties agreed the main petition could be disposed of in view of those regulations. Consequently, the Court disposed of the writ petition without costs while preserving the substantive issues for determination in the detagged Company Petition where appropriate. [Paras 4, 7, 8, 16, 17]

Writ Petition No. 1337 of 1998 disposed of in the terms stated, without costs.

Detagging of proceedings and remand to Company Court - continuation of court directions in remitted proceedings - Company Petition No. 226/1998 is detagged from the writ petition and remitted to the Company Court for independent disposal, with the directions and orders in the joint proceedings to continue operating in the Company Petition. - HELD THAT: - The Court accepted the parties' suggestion that, having regard to the regulatory framework now in place, the Company Petition should be heard and disposed of by the Company Court applying company law principles and the 1999 regulations. The Company Petition was not disposed of but detagged so that the Company Court may consider the winding up, the Official Liquidator's reports, attachment and disposition of assets, and claims procedure afresh; the orders and directions issued in the joint proceedings will continue to operate in the Company Petition. [Paras 8, 9, 10, 16, 17]

Company Petition No. 226/1998 detagged and placed before the Company Court for independent hearing and disposal; existing directions to continue in that petition.

Duty to file investigative and compliance reports - Deputy Commissioner of Police directed to file the reports, including compliance reports, before the Company Court within eight weeks. - HELD THAT: - The Court recorded that earlier orders had appointed the Deputy Commissioner of Police as Investigating Officer and directed sealed reports to be filed, but no such reports were located on record. The Court rejected the explanation of difficulty in compliance arising from lapse of time and directed the concerned Deputy Commissioner of Police to file the necessary investigative and compliance reports before the Company Court in Company Petition No. 226/1998 within eight weeks from the date of the order. [Paras 11, 12]

Deputy Commissioner of Police to file the required investigative and compliance reports in Company Petition No. 226/1998 within eight weeks.

Duty to file investigative and compliance reports - Reserve Bank of India directed to cause the inquiry report by appointed auditors to be filed before the Company Court within eight weeks. - HELD THAT: - The Court noted the earlier direction for the Reserve Bank of India to appoint three auditors to investigate the affairs of the first respondent company and that one auditor had submitted a report to the police, but no inquiry report had been filed as directed. The Court ordered compliance with the earlier direction by filing the inquiry report before the Company Court in Company Petition No. 226/1998 within eight weeks from the date of the order. [Paras 13]

Reserve Bank of India to ensure filing of the auditor/inquiry report in Company Petition No. 226/1998 within eight weeks.

Role and duties of Official Liquidator in winding up - Official Liquidator to act in the best interest of investors, make reports to the Company Court, and act under the orders and guidance of the Company Court; matters of attachment, sale and repayment to be dealt with by the Company Court. - HELD THAT: - The Court observed that the Official Liquidator controls the assets and is overseeing the winding-up process. It directed the Official Liquidator to take steps in the interests of investors, to make appropriate reports to the Company Court, and henceforth to act under the orders and guidance of the Company Court. Questions concerning attachment, sale of assets, and repayment or distribution to investors, including claims solicitation and adjudication, were remitted to the Company Court to be dealt with according to the prescribed winding-up procedure. [Paras 6, 14]

Official Liquidator to act under the Company Court's orders, report to the Company Court, and matters of assets and repayment to be addressed by the Company Court in the winding-up process.

Continuation of court directions in remitted proceedings - Pending notices of motion and civil applications in the writ petition are disposed of, with liberty to file fresh applications in the Company Petition; the petitioner's interim applications do not survive the disposal. - HELD THAT: - The Court disposed of all pending notices of motion and civil applications in the writ petition as they do not survive the disposal and detagging, but expressly granted liberty to any party to file similar or fresh motions or interim applications in Company Petition No. 226/1998. The Court clarified that Company Petition No. 226/1998 itself remains pending and is not disposed of. [Paras 15, 17]

Pending motions in the writ petition disposed of; parties have liberty to file fresh applications in Company Petition No. 226/1998.

Final Conclusion: The writ petition filed by SEBI is disposed of in view of the SEBI (Collective Investment Scheme) Regulations, 1999; Company Petition No. 226/1998 is detagged and remitted to the Company Court for independent disposal, with directions that investigative and inquiry reports be filed within eight weeks and the Official Liquidator act under the Company Court's guidance; pending motions in the writ petition are disposed of with liberty to be refiled in the Company Petition.

Summary order. Special Leave Petition dismissed without issuance of notice; pending applications, if any, disposed of.

Maintainability of writ petition in presence of pending DRT proceedings - right of redemption and requirement of thirty days' notice under Section 13(8) read with Rule 8(6) - publication of sale proclamation under Rule 9(1) - agricultural land exemption from enforcement under the SARFAESI regime - effect of an approved resolution plan on rights of secured, assenting and dissenting financial creditors and guarantors - overriding effect of insolvency proceedings under Section 238 of the IBC

Maintainability of writ petition in presence of pending DRT proceedings - Writ petitions not maintainable insofar as they seek reliefs that are to be adjudicated by the DRT and must be raised before that forum. - HELD THAT: - The Court observed that objections relating to SARFAESI proceedings and compliance with statutory requirements are matters which the Debt Recovery Tribunal (DRT), being seized of the securitisation application, is the appropriate forum to decide. The petitioners' contentions concerning notice under Section 13(8)/Rule 8(6), publication of sale notice under Rule 9(1), and the characterisation of the mortgaged land require adjudication by the DRT. In view of the pending proceedings before the learned DRT and available orders of that forum, the High Court declined to entertain the writ petitions and directed that the DRT consider the objections raised by the petitioners while deciding the securitisation application in accordance with law. [Paras 12, 14, 16]

Writ petitions disposed; petitioners directed to have their objections adjudicated by the learned DRT, which is the competent forum.

Right of redemption and requirement of thirty days' notice under Section 13(8) read with Rule 8(6) - publication of sale proclamation under Rule 9(1) - Compliance with the statutory notice requirements and publication formalities is a matter to be examined and decided by the DRT in the pending securitisation proceedings. - HELD THAT: - The Court noted petitioners' contention that the bank failed to comply with the notice requirement for right of redemption and with the prescribed rules governing publication of the sale proclamation. Although reference was made to binding authority on notice requirements, the Court held that these factual and legal contentions fall to be determined by the DRT which is seized of the securitisation application, and therefore directed that the DRT consider such objections while deciding the application. [Paras 10, 14]

Issues of compliance with Section 13(8) and Rules 8(6)/9(1) remitted to the DRT for adjudication.

Agricultural land exemption from enforcement under the SARFAESI regime - Whether the mortgaged property is agricultural land and thereby outside the scope of SARFAESI is to be determined by the DRT. - HELD THAT: - Petitioners asserted that the properties mortgaged are agricultural in nature and thus exempt from SARFAESI enforcement. The Court held that the question of characterization of the property and applicability of the exemption is a matter for the DRT to decide in the course of adjudicating the securitisation application and directed that the DRT consider this plea while deciding the objections. [Paras 14]

Characterisation of the mortgaged property as agricultural and its exemption from SARFAESI remitted to the DRT.

Effect of an approved resolution plan on rights of secured, assenting and dissenting financial creditors and guarantors - overriding effect of insolvency proceedings under Section 238 of the IBC - The implications of the NCLT-approved resolution plan on the rights of assenting and dissenting creditors, and whether the bank can proceed under SARFAESI in view of the IBC and its overriding effect, are matters to be examined by the DRT. - HELD THAT: - The Court recorded that a resolution plan restructuring the corporate debtor's debts has been approved by the NCLT and that the plan contains specific provisions regarding treatment of assenting and dissenting creditors, extinguishment of prior claims, and obligations of creditors. While noting precedent on guarantor liability, the Court held that the interplay between the approved resolution plan, Section 238 of the IBC and the bank's rights to proceed under SARFAESI raises mixed questions of law and fact which should be decided by the DRT. Accordingly, these issues are required to be considered by the DRT in the securitisation proceedings. [Paras 6, 15]

Questions regarding the effect of the approved resolution plan and the interface with SARFAESI/IBC remitted to the DRT for determination.

Adjudication of objections in securitisation application by the Debt Recovery Tribunal - The DRT is directed to consider the objections raised by the petitioners while deciding the securitisation application in accordance with law. - HELD THAT: - Having found that the substantive legal and factual disputes about compliance, property characterisation and the effect of the resolution plan are matters for the DRT, the Court ordered that the learned DRT, Delhi shall consider the objections raised by the petitioners and decide the securitisation application in accordance with law, thereby disposing of the writ petitions without expressing a view on the merits of those objections. [Paras 16]

Direction issued that the DRT shall decide the petitioners' objections in the securitisation application in accordance with law.

Final Conclusion: Writ petitions dismissed as not maintainable before this Court in view of pending DRT proceedings; petitions disposed with directions that the Debt Recovery Tribunal, Delhi shall determine the petitioners' objections (including compliance with SARFAESI formalities, characterization of the mortgaged land, and the effect of the NCLT approved resolution plan/IBC) while deciding the securitisation application in accordance with law.

Maintenance of application under Section 60(5) of the Insolvency and Bankruptcy Code - enforceability of settlement/MoU and refund of deposits held in a no-lien account - effect of withdrawal under Section 12A and finality of closure of CIRP - arbitration clause in MoU and its bearing on adjudicatory remedy - doctrine of own wrong / collusive application

Maintenance of application under Section 60(5) of the Insolvency and Bankruptcy Code - Whether the application filed by the appellant under Section 60(5) (read with Rule 11 NCLT Rules) was maintainable before the Adjudicating Authority/Tribunal. - HELD THAT: - The Tribunal held that the appellant's application was maintainable under Section 60(5)(c) of the Code because the questions arose out of and related to the insolvency resolution processes of the corporate debtors UCL and JDECL. The presence of contractual dispute resolution mechanisms in the MoU did not render the application wholly non maintainable before the insolvency forum where issues were connected to the CIRP proceedings. [Paras 15, 16, 17]

Application was maintainable under Section 60(5)(c) of the Code.

Effect of withdrawal under Section 12A and finality of closure of CIRP - enforceability of settlement/MoU and refund of deposits held in a no-lien account - Whether the amount of Rs.3 Crores paid towards settlement of JDECL (which led to allowance of the Section 12A application and closure of JDECL's CIRP) was refundable to the appellant. - HELD THAT: - The Tribunal found as an admitted fact that payment of the settlement amount led to the filing and allowance of the Section 12A application and consequent closure of JDECL's CIRP. Once the CIRP of JDECL stood closed on the payment of the full debt, that payment could not be legally undone or refunded. Allowing a refund would amount to permitting a party - here brought into existence by promoters/directors - to reap double benefit after securing closure of the CIRP. The Adjudicating Authority's finding that refund of the Rs.3 Crores was impermissible was affirmed. [Paras 10, 12, 19, 23]

Rs.3 Crores paid for closure of JDECL's CIRP is not refundable; that part of the appellant's claim was rightly rejected.

Enforceability of settlement/MoU and refund of deposits held in a no-lien account - doctrine of own wrong / collusive application - Whether the Rs.25 Lakhs paid on signing the MoU towards the proposed resolution plan of UCL (Corporate Debtor) is refundable where the resolution plan was not approved. - HELD THAT: - The revised MoU contained an undertaking that the deposited amount in the no lien account would be refunded if the resolution plan for UCL was not approved and withdrawal of CIRP in respect of JDECL was not allowed before the stipulated date. The Rs.25 Lakhs was paid on execution of the MoU and the balance payments for UCL never fell due because the plan was not approved. The Tribunal held that while the Rs.3 Crores relating to JDECL was non refundable (owing to closure of that CIRP), the Rs.25 Lakhs paid specifically for the UCL plan was refundable to the appellant. The Adjudicating Authority's dismissal was modified to direct refund of Rs.25 Lakhs by the financial creditors within one month. [Paras 21, 22, 23, 24]

Rs.25 Lakhs paid on signing the MoU for UCL's resolution plan to be refunded to the appellant; the impugned order is modified accordingly.

Arbitration clause in MoU and its bearing on adjudicatory remedy - Whether the dispute resolution clause in the MoU (arbitration) ousted the jurisdiction of the insolvency forum to entertain the appellant's application. - HELD THAT: - The MoU contained Clause XII providing for arbitration in respect of disputes arising out of the MoU. Notwithstanding this contractual dispute resolution provision, the Tribunal recognised that questions arising in relation to the insolvency resolution processes of the corporate debtors could be brought under Section 60(5) before the insolvency forum. Consequently, the existence of an arbitration clause did not preclude maintainability of the application under Section 60(5) in the facts of the case. [Paras 15, 16, 17]

Arbitration clause in the MoU did not preclude maintainability of the application under Section 60(5) in the present proceedings.

Final Conclusion: The appeal was partly allowed. The Tribunal ruled that the I.A. was maintainable under Section 60(5); it affirmed the Adjudicating Authority's rejection of any refund of the Rs.3 Crores paid that led to closure of JDECL's CIRP, but modified the order to direct refund of the Rs.25 Lakhs paid on signing the MoU for the UCL resolution plan; the balance of the impugned order was affirmed and parties were directed to bear their own costs.

Replacement of resolution professional - Independence of resolution professional - Opinion under Section 98 - Vested right to initiate insolvency resolution under Section 94

Replacement of resolution professional - Opinion under Section 98 - Independence of resolution professional - Application by the financial creditor for replacement of the Resolution Professional was maintainable and validly allowed. - HELD THAT: - The Adjudicating Authority acted under Section 98 which permits a debtor or creditor to apply for replacement of an RP when they are of the opinion that replacement is required. Although the statute does not enumerate specific grounds, the subjective opinion of the applicant must have a rational and objective basis. The record showed that the RP had earlier represented the Corporate Debtor (and was engaged in proceedings arising out of the same debt), which could reasonably found an opinion that his independence might be impaired and that he may be biased. Given this factual background, the Adjudicating Authority did not err in treating the Financial Creditor's application as a valid basis for replacement and in allowing the same. [Paras 7, 8, 10]

Replacement application was properly entertained and allowed by the Adjudicating Authority.

Vested right to initiate insolvency resolution under Section 94 - Replacement of resolution professional - Filing of the Section 94 application through a chosen resolution professional does not confer an indefeasible right to prevent that RP's later replacement under Section 98. - HELD THAT: - Section 94(1) permits a debtor to initiate the insolvency process personally or through an RP, but appointment of the RP and subsequent replacement are governed by distinct stages of the Code. Once the RP was appointed under Section 97, the mechanism under Section 98 for replacement could be invoked. The fact that the debtor had filed the application through the RP does not immunise that RP from replacement on permissible grounds at the later stage; therefore the claimed 'vested right' to retain the nominated RP was not tenable. [Paras 9, 10]

The submission that Section 94 confers a vested right preventing replacement was rejected.

Final Conclusion: The impugned order replacing the Resolution Professional was upheld and the appeal is dismissed.

Condonation of delay - sufficient cause under Section 5 of the Limitation Act - liberal approach in condoning delay - discretion to condone delay under the proviso to Section 61(2) of the IBC

Condonation of delay - sufficient cause under Section 5 of the Limitation Act - discretion to condone delay under the proviso to Section 61(2) of the IBC - Whether the five days' delay in filing the appeal should be condoned - HELD THAT: - The application for condonation of delay stated that the appellant (the Resolution Professional) resided in Mumbai, suffered health ailments which impeded timely legal consultation, first accessed the impugned order only after some delay following its upload, and expended time in attempting to obtain a legible copy of a bank statement annexed to the Company Petition. The Tribunal observed that under the IBC its power to condone delay after expiry of limitation is limited to 15 days and that principles governing 'sufficient cause' under Section 5 of the Limitation Act and the Supreme Court's pronouncements require a pragmatic, justice oriented yet principled exercise of discretion. Applying these principles to the facts, and having regard to the short span of delay (five days) together with the explanation furnished about health issues and difficulties in obtaining a clear annexure, the Tribunal concluded that sufficient cause had been established for condoning the delay. The condonation was granted and the appeal was listed for admission. [Paras 9, 10]

Application for condonation of five days' delay is allowed and the appeal is listed for admission.

Final Conclusion: The Tribunal allowed the application condoning five days' delay in filing the appeal, finding that sufficient cause was shown (health-related inability to obtain timely legal advice and time taken to secure a legible annexure), and directed listing of the appeal for admission.

Pre-existing dispute under Section 8(2)(a) - Section 9(5)(ii)(d) - rejection where notice of dispute received - admission of operational debt by corporate debtor - scope of Adjudicating Authority's summary jurisdiction to investigate forgery/fabrication - cut-off date for recognising pre-existing dispute - Mobilox Innovations standard on plausible dispute

Pre-existing dispute under Section 8(2)(a) - Section 9(5)(ii)(d) - rejection where notice of dispute received - Mobilox Innovations standard on plausible dispute - Existence of a genuine pre existing dispute which bars initiation of CIRP under Section 9. - HELD THAT: - The Corporate Debtor replied to the operational creditor's demand(s) by categorically denying liability and describing the claimed debt as false, frivolous and baseless in its combined Notice of Dispute dated 24.04.2019 and reiterated the dispute in the Notice of Dispute dated 20.01.2020. Those communications pointed to audited balance sheet entries showing amounts receivable by the Corporate Debtor and identified self contradictory positions in the Operational Creditor's ledger, and invited reconciliation. Applying the Mobilox standard, the Tribunal held that the notices constituted a plausible, genuine pre existing dispute (not a spurious or illusory defence) which satisfied Section 8(2)(a). Once such a dispute is shown to exist, Section 9(5)(ii)(d) requires rejection of the Section 9 application; the Adjudicating Authority erred in admitting the application despite these notices. The Tribunal therefore concluded that initiation of CIRP was barred by the established pre existing dispute and set aside the admission order. [Paras 21, 22, 25]

The Section 9 application was vulnerable to rejection under Section 9(5)(ii)(d) on account of the pre existing dispute; the admission of CIRP was set aside and the Corporate Debtor released from CIRP.

Scope of Adjudicating Authority's summary jurisdiction to investigate forgery/fabrication - Extent to which the Adjudicating Authority may investigate allegations of forgery or fabricated invoices in Section 9 proceedings. - HELD THAT: - The Tribunal accepted that the Adjudicating Authority's powers are summary and do not extend to a full scale inquiry into allegations of forgery, falsification or collusion requiring detailed evidence and re calculation of ledger entries. Such matters ordinarily fall outside the procedural ambit of IBC adjudication at the admission stage. However, that limited competence to refrain from deep investigation did not excuse the Adjudicating Authority from giving proper weight to the statutory notices of dispute which, on their face, met the Mobilox threshold. [Paras 16]

The Adjudicating Authority cannot conduct a full civil court style investigation into forgery at the admission stage, but that limitation did not permit it to ignore the Notices of Dispute which demonstrated a plausible pre existing dispute.

Cut-off date for recognising pre-existing dispute - Mobilox Innovations standard on plausible dispute - Whether the Adjudicating Authority correctly treated the date of the first demand notice as the cut off date for recognising a pre existing dispute in the facts of this case. - HELD THAT: - The Adjudicating Authority relied on a precedent to treat the first demand notice date as the cut off for recognition of a pre existing dispute and rejected the reply dated 24.04.2019 for being subsequent to the first demand notice. The Tribunal found that reliance misplaced on the facts: in this matter no Section 9 application had been filed immediately after the first demand notice, and the combined Notice of Dispute dated 24.04.2019 (given in response to the first and second demand notices) legitimately conveyed existence of a dispute. On the record, that communication and the later Notice of Dispute met the statutory requirement and could not be ignored by pegging an inflexible cut off; the Adjudicating Authority's application of the cited precedent was inapposite and resulted in error. [Paras 17, 18, 23]

The Adjudicating Authority erred in applying the first demand notice cut off in the circumstances; the notices of dispute submitted by the Corporate Debtor were valid for the purposes of Section 8(2)(a).

Final Conclusion: The Tribunal held that the Corporate Debtor had raised a genuine pre existing dispute which met the Mobilox threshold; the Adjudicating Authority therefore erred in admitting the Section 9 application. While the Adjudicating Authority may not undertake a full investigation into alleged forgery at the admission stage, it could not ignore the Notices of Dispute. The impugned admission order initiating CIRP was set aside and the Corporate Debtor released from CIRP; the Resolution Professional's fees/expenses are to be paid by the Operational Creditor.

Default under Section 9 of the Insolvency and Bankruptcy Code - requirement of Third Party Auditor (TPA) certification for release of payment - non-appointment of TPA not amounting to default by the corporate debtor - contractual dispute as bar to admission of Section 9 - availability of contractual dispute-resolution / alternate remedies under the agreement

Requirement of Third Party Auditor (TPA) certification for release of payment - non-appointment of TPA not amounting to default by the corporate debtor - default under Section 9 of the Insolvency and Bankruptcy Code - Whether the Section 9 application could be admitted when payment under the RFP and Agreement was conditional upon certification by a TPA and no TPA had been appointed - HELD THAT: - The Adjudicating Authority correctly interpreted the contractual matrix: Clause 4.7(19) of the RFP and Clause 3 of the Agreement make release of quarterly payments subject to certification/reports of a Third Party Auditor. It is undisputed that the Government of Goa had not appointed the TPA. The Corporation's communications seeking permission to release 75% of outstanding amounts were requests to the Department and did not constitute certified acceptance of debt or an unconditional admission of liability. In these circumstances, non-payment was traceable to the absence of TPA certification as prescribed by the RFP and Agreement; that contractual requirement and the resulting dispute over compliance precluded a finding of default by the corporate debtor for purposes of initiating insolvency under Section 9. The fact that the Government may have been remiss in appointing a TPA does not, in itself, convert the corporate debtor into a defaulting party liable to insolvency proceedings under Section 9. [Paras 6, 7, 8, 12, 13]

Section 9 application rightly rejected because payment was conditional on TPA certification and no default by the corporate debtor was established.

Contractual dispute as bar to admission of Section 9 - availability of contractual dispute-resolution / alternate remedies under the agreement - Whether the appellant was precluded from pursuing contractual remedies and whether alternate remedies existed to recover outstanding dues - HELD THAT: - The RFP and Agreement contemplate an internal dispute resolution mechanism (Clause 19: Informal Dispute Resolution / Arbitration). The appellant had earlier filed and subsequently withdrawn a writ petition with liberty to pursue alternate remedies. The Tribunal noted that the appellant remains free to prosecute its contractual and other legal remedies to recover dues in accordance with the agreement and law; observations in the insolvency proceedings shall not impede such remedies. Given the existence of a specific contractual mechanism and the factual dispute over compliance with the TPA-based payment process, resort to those alternate remedies was appropriate. [Paras 11, 12, 13]

Appellant is not barred from availing contractual or other legal remedies to recover outstanding dues; insolvency proceedings were not the appropriate route in the facts of this case.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority did not err in rejecting the Section 9 application because payment under the RFP and Agreement was contingent upon TPA certification which was not obtained, and the appellant retains the right to pursue contractual and other legal remedies for recovery of its dues.

Operational debt - Constructive trust - CIRP costs - Overriding effect of the IBC (Section 238) - Financial disincentive as operational debt - Telecommunication Consumers Education and Protection Fund Regulations

Operational debt - Constructive trust - Telecommunication Consumers Education and Protection Fund Regulations - Whether security deposits of post paid subscribers and unspent balances of prepaid subscribers are held on trust (and thus excluded from the CIRP corpus) or are liabilities admissible as operational debt in the CIRP - HELD THAT: - The Tribunal held that the security deposit balances refundable to post paid subscribers and unspent balances in prepaid plans were accounted for as outstanding liabilities in the books of the Corporate Debtor and were not shown to be held in a segregated trust account or otherwise impressed with a trust. The Adjudicating Authority correctly treated those amounts as money collected in excess of prescribed rates and, being unpaid on the insolvency commencement date, admitted them as operational debt and directed their inclusion in the Resolution Plan and payment into the Telecommunication Consumers Education and Protection Fund in accordance with the Regulations. Earlier High Court and other precedents relied on by the Appellant were held to be distinguishable on facts and not applicable to the present accounting and factual matrix. The prayer in the IA seeking only ascertainment and provision in the Resolution Plan was addressed by the directions made; the Appellant's broader contention that the amounts never formed part of the Corporate Debtor's assets was rejected for want of material showing a trust arrangement. [Paras 18, 19, 21, 24, 25]

Security deposit balances and unspent prepaid balances are operational debt reflected as liabilities and are not shown to be held in trust; they are to be dealt with in the CIRP and provided for in the Resolution Plan.

Financial disincentive as operational debt - Overriding effect of the IBC (Section 238) - Whether the financial disincentive levied by TRAI is a statutory claim outside the IBC process or is an operational debt payable under the Resolution Plan; and whether TRAI Act/regulations prevail over the IBC - HELD THAT: - The Tribunal accepted the Adjudicating Authority's finding that the financial disincentives imposed by TRAI for pre CIRP non compliance constituted liabilities of the Corporate Debtor that remained outstanding on the insolvency commencement date and, therefore, are operational debts to be dealt with under the Code and the Resolution Plan. The Appellant's submission that the TRAI Act is a special enactment overriding the IBC was rejected in view of the IBC's non obstante and overriding provision; the IBC regime prevails in case of inconsistency. Consequently the Adjudicating Authority's refusal to allow direct payment of the disincentive outside the IBC process was sustained. [Paras 6, 14, 15, 17, 26]

Financial disincentives imposed by TRAI are operational debt attributable to the pre CIRP period and must be claimed and paid pursuant to the IBC process and the Resolution Plan; TRAI Act does not override the IBC in this context.

CIRP costs - Operational debt - Whether the amounts representing security deposits and unspent prepaid balances could be classified as CIRP costs payable as part of the RP's costs of running the business - HELD THAT: - The Tribunal found no material or foundation in the Appellant's filings to treat the security deposit balances or unspent prepaid balances as CIRP costs under Section 5(13)(c). The record did not establish that these amounts were costs incurred by the Resolution Professional in running the corporate debtor as a going concern, nor was there evidence to support reclassification away from operational liability. The Adjudicating Authority therefore correctly declined to treat those amounts as CIRP costs. [Paras 19, 28, 29]

No basis to treat security deposits or unspent prepaid balances as CIRP costs; they remain operational liabilities to be dealt with in the Resolution Plan.

Final Conclusion: The Tribunal dismissed the Appeals. The Adjudicating Authority's directions admitting the subscriber security deposits and prepaid unspent balances as operational debt to be provided for in the Resolution Plan, and treating TRAI's financial disincentives as operational debt claimable under the IBC process, are upheld; there is no interference with the Adjudicating Authority's orders and the alternative relief of treating the amounts as CIRP costs was rejected.

Principles of Natural Justice - Personal hearing - Duty to give reasons - Quasijudicial decisionmaking - Reconstitution of committee and fresh hearing requirement - FIPB power to grant ex post facto approval

Principles of Natural Justice - Personal hearing - Reconstitution of committee and fresh hearing requirement - Validity of ex post facto approval where the committee that heard parties was reconstituted and the reconstituted committee did not afford a fresh personal hearing before recommending approval - HELD THAT: - The court found as an undisputed factual matrix that an initial Committee chaired by Ms. L. M. Vas heard the parties on 17.03.2010, but a reconstituted Committee chaired by Sh. Bimal Julka made the recommendation on 04.08.2010. Although several members were common, the chairperson and some members differed. The respondents did not contend that the parties were heard again by the reconstituted Committee. The court held that once a personal hearing was afforded by the earlier Committee, the reconstituted Committee which took the decision ought to have afforded a fresh, meaningful opportunity of being heard; failure to do so amounted to gross violation of the principles of natural justice. Relying on established authorities emphasizing audi alteram partem and the requirement that the authority exercising quasijudicial functions give a real and effective hearing, the court concluded that the recommendation dated 04.08.2010 (and the consequent approval) could not stand without fresh consideration by a Committee that hears the parties afresh. [Paras 9, 11, 12]

Grant of ex post facto approval requires fresh consideration by a newly constituted Committee which must afford a fresh personal hearing to the petitioners and the respondent; the matter is to be reconsidered by such Committee within the time directions given by the court.

Duty to give reasons - Quasijudicial decisionmaking - FIPB power to grant ex post facto approval - Whether the ex post facto approval dated 29.09.2010 was issued without reasons or in breach of the duty to give reasons - HELD THAT: - The court observed that the impugned approval was the result of deliberations by FIPB based on a Committee's recommendation and related proceedings, and that the petitioners had been afforded an opportunity to make written and oral submissions before the Committee. The court held that it could not be said that the approval of 29.09.2010 was passed without any reason, noting that reasons need not be elaborate but must indicate due consideration of points in controversy. The court therefore rejected the contention that the approval was entirely reasonless. The court did not, however, uphold the impugned approval on this basis alone because of the procedural defect requiring fresh consideration by a properly constituted Committee. [Paras 16]

Approval dated 29.09.2010 was not passed wholly without reasons; nevertheless, it must be reconsidered pursuant to the direction for fresh hearing by the newly constituted Committee.

Final Conclusion: The writ petition is disposed of by directing the Department of Economic Affairs/FIPB to constitute a fresh Committee to hear the petitioners and the respondent afresh on the ex post facto approval application (Ref. No. 210/2009FC.1) within six weeks and to decide the proposal within eight weeks thereafter; there is no stay on operation of the existing approval pending such reconsideration.

Summary order. Application for condonation of delay (237 days) dismissed; consequently the Special Leave Petition dismissed; question of law, if any, kept open; pending applications disposed of.

Limitation and reasonable period for adjudication - Section 73(4B) Finance Act, 1994 - time limits for determination of service tax - inordinate delay and Call Book procedure - re-initiation of adjudication barred by limitation

Limitation and reasonable period for adjudication - inordinate delay and Call Book procedure - Section 73(4B) Finance Act, 1994 - time limits for determination of service tax - Adjudication pursuant to the Show Cause Notice dated 24.10.2008 is barred by limitation because the respondents did not conclude proceedings within a reasonable period. - HELD THAT: - The Court found that no steps were taken after the last recorded hearing on 21.10.2009 until the file was placed in the Call Book on 16.12.2015, and there is no satisfactory explanation for the intervening delay. Although Sub-section (4B) was introduced into Section 73 with effect from 06.08.2014 prescribing six months or one year timeframes for determination, the absence of a specified period prior to that date does not permit proceedings to remain pending indefinitely; they must be concluded within a reasonable period. Applying settled principles that administrative authorities must exercise jurisdiction within a reasonable time, and having regard to the long lapse (more than 14 years since issuance of the Show Cause Notice and parts of the demand relating to much earlier periods), the Court concluded the adjudication was inordinate and unreasonable. Reliance was placed on earlier authorities holding that delay may render proceedings bad and that larger public interest requires expeditious adjudication. The consequence is that the attempt to revive or reinitiate the proceedings after such delay is impermissible as being barred by limitation. [Paras 9, 11, 15, 16]

Proceedings under the Show Cause Notice dated 24.10.2008 are barred by limitation and must be set aside.

Re-initiation of adjudication barred by limitation - inordinate delay and Call Book procedure - The Notice dated 21.08.2023 re-initiating adjudication proceedings is quashed and respondents are restrained from proceeding further. - HELD THAT: - Given the Court's finding that the original adjudication had not been concluded within a reasonable period and was therefore time-barred, the subsequent notice dated 21.08.2023 issued to revive the earlier proceedings was set aside. The Court recorded that even if the Call Book procedure were permissible, the excessive delay in this case defeated any justification for reinitiation. Consequently, the impugned notice for re-opening the 2008 proceedings could not stand and the respondents were restrained from taking further action pursuant to that notice. [Paras 9, 17]

Notice dated 21.08.2023 is set aside and respondents are restrained from proceeding with the impugned Show Cause Notice.

Final Conclusion: The petition is allowed: the adjudication under the Show Cause Notice dated 24.10.2008 is held to be barred by limitation for want of adjudication within a reasonable period, the Notice dated 21.08.2023 reviving those proceedings is quashed, and respondents are restrained from proceeding further; all pending applications are disposed of.

Confirming demand under a head not alleged in the show cause notice - classification of services as OIDAR vis-a-vis business support services (BSS) - appropriation and adjustment of amounts paid against confirmed demands - remand to adjudicating authority for verification and rectification - penalty under section 78 of the Finance Act - penalty under section 77 of the Finance Act - examination of entitlement to waiver under section 80 of the Finance Act - exemption for services to SEZ units

Classification of services as OIDAR vis-a-vis business support services (BSS) - confirming demand under a head not alleged in the show cause notice - Whether the demand confirmed under Business Support Services in respect of services received from Verio USA could be sustained where the show cause notice alleged OIDAR service - HELD THAT: - The Tribunal accepted the appellant's factual position that Verio USA provided server space and infrastructure without transferring or supplying data or information belonging to Verio USA, and therefore such services did not fall within the OIDAR description in the show cause notice. However, the Commissioner proceeded to confirm the demand under BSS although BSS was not the category alleged in the first show cause notice. Reliance was placed on the Tribunal's decision in Inox Leisure (upheld by the Supreme Court) that a demand cannot be confirmed under a head not alleged in the show cause notice. Applying that principle, the confirmation under BSS could not be sustained. [Paras 19, 20, 21, 22, 23]

Demand at issue no. 1 set aside; consequential penalties under sections 78 and 77 set aside.

Appropriation and adjustment of amounts paid against confirmed demands - exemption for services to SEZ units - remand to adjudicating authority for verification and rectification - Whether the confirmed demands relating to advertising services and services from Minik Enterprises were correctly appropriated and whether related claims and cess computations required correction - HELD THAT: - The Tribunal noted inconsistencies asserted by the appellant: alleged mismatches in Education Cess figures and a claimed short appropriation of payments already made; and the appellant's contention of excess payment on advertising services seeking adjustment or refund. Rather than deciding these accounting and appropriation disputes on appeal, the Tribunal directed the appellant to move an appropriate application before the Commissioner, and remitted the demands in respect of issues nos. 2 and 3 to the Commissioner for fresh examination and rectification. The Tribunal also recorded that exemption for services to SEZ units and denial of exemption on procedural grounds had been addressed by the Commissioner in earlier findings (some demands dropped), but appropriations and cess computations required fresh consideration. [Paras 29, 30, 39, 40, 41]

Demands confirmed at issues nos. 2 and 3 remitted to the Commissioner for examination of the pointed out errors, appropriation, adjustment or refund and for passing appropriate orders.

Penalty under section 78 of the Finance Act - penalty under section 77 of the Finance Act - examination of entitlement to waiver under section 80 of the Finance Act - Validity of penalties imposed in relation to the demands and the scope of reconsideration as to waiver under section 80 - HELD THAT: - Because the primary demand at issue no. 1 was set aside, the Tribunal held that the penalties imposed under section 78 and section 77 in respect of that demand must be set aside. The penalty of Rs.1,68,440 under section 78 relating to Education and SHE Cess was not finally upheld; the Tribunal remitted that issue to the Commissioner for reconsideration, directing that penalty imposition will depend on the Commissioner's fresh decision. The Tribunal further observed that the appellant's claim for waiver under section 80 could be examined by the Commissioner. [Paras 35, 36, 37, 40, 41]

Penalties under sections 78 and 77 set aside in respect of issue no. 1; penalty of Rs.1,68,440 under section 78 remitted for fresh decision by the Commissioner; entitlement to waiver under section 80 to be considered by the Commissioner.

Final Conclusion: The appeal is allowed in part: the demand confirmed under BSS in respect of services from Verio USA (issue no. 1) is set aside with the related penalties under sections 78 and 77 vacated; demands and appropriation/cess computation issues in respect of advertising services and services from Minik Enterprises (issues nos. 2 and 3) are remitted to the Commissioner for fresh examination and appropriate orders, including consideration of penalty under section 78 and waiver under section 80.

Renting of immovable property service - rent-a-cab service - service tax liability - extended period of limitation - penalty for service tax

Renting of immovable property service - service tax liability - movable versus immovable property - Service tax is not leviable on generator charges under the category of renting of immovable property service. - HELD THAT: - The tribunal found that the appellant owned the generator and supplied electricity to tenants during power failures. The generator, being movable and capable of being placed anywhere in the building, cannot be characterised as immovable property. The charges recovered for providing electricity from the appellant's own movable generator therefore do not fall within renting of immovable property service and are not liable to service tax under that category. [Paras 6]

Generator charges are not taxable as renting of immovable property service; no service tax is leviable on those charges.

Rent-a-cab service - service tax liability - business of renting of cabs - Service tax is not leviable under the rent-a-cab category on amounts recovered by the appellant in respect of cars owned by them. - HELD THAT: - The tribunal held that the appellant was not engaged in the business of renting out cabs. The amounts recovered from the related firm were for day-to-day maintenance of vehicles owned by the appellant and used in the firm's affairs; there was no evidence of hiring on monthly, weekly or daily basis by a rent-a-cab operator. Accordingly, the receipts did not constitute taxable services under rent-a-cab service and no service tax is payable under that head. [Paras 6]

No service tax is leviable as rent-a-cab service on the car rent/maintenance charges recovered by the appellant.

Penalty for service tax - service tax liability - Penalty cannot be imposed where the demand of service tax is not sustainable. - HELD THAT: - Since the tribunal set aside the demands for service tax in respect of both generator charges and car rent/maintenance, the consequential imposition of penalty could not be sustained. The absence of a taxable liability on the amounts in question precludes penal liability arising from those demands. [Paras 7]

Penalty imposed in relation to the set-aside service tax demands is not sustainable and is thus quashed.

Final Conclusion: The impugned order confirming service tax demands for the period 2007-08 to 2010-11 is set aside: generator charges are not taxable as renting of immovable property, the car rent/maintenance receipts do not attract rent-a-cab service tax, and the consequential penalty is quashed; the appeal is allowed with consequential relief, if any.

Violation of principles of natural justice - remand for fresh adjudication - copy pasted or non speaking order vitiating adjudication - direction to pass a reasoned order after affording opportunity of hearing

Violation of principles of natural justice - copy pasted or non speaking order vitiating adjudication - remand for fresh adjudication - direction to pass a reasoned order after affording opportunity of hearing - Adjudication order set aside for non consideration of the appellant's reply and for being apparently copied from another order, and matter remanded to the original authority for fresh decision after affording hearing and reasons. - HELD THAT: - The Tribunal found that the Order in Original was passed without considering the reply filed by the appellant, thereby breaching the principles of natural justice. The adjudication also bore indicia of being copy pasted from another order (reference to a different demand figure), indicating the order was non speaking and not based on the record in this case. Since an order passed in violation of natural justice is non est, the Tribunal concluded that the impugned order could not stand. In the interests of justice the matter is remitted to the original authority with a clear injunction to comply with natural justice by considering the appellant's submission, affording an adequate opportunity of hearing, and thereafter passing a reasoned order in accordance with law within the stipulated time frame. [Paras 7, 8]

Impugned order set aside and matter remanded to the Original Authority to decide afresh after considering the appellant's reply and affording an opportunity of hearing; fresh reasoned order to be passed within three months.

Final Conclusion: The Tribunal set aside the adjudication order for breach of natural justice and remitted the matter to the original authority to decide the claims relating to financial years 2014-15 and 2015-16 after hearing the appellant and passing a reasoned order within three months.

Declared services under Section 66E(e) - definition of service and consideration - compensation for breach of contract not consideration for declared service - value of taxable service and scope of Section 65B(44) - extended period of limitation and time-bar of show cause notice

Declared services under Section 66E(e) - definition of service and consideration - compensation for breach of contract not consideration for declared service - Whether amounts received as compensation on cancellation of sale agreements constitute consideration for a declared service under Section 66E(e) of the Finance Act, 1994 - HELD THAT: - The Tribunal examined the statutory definition of "service" in Section 65B(44) and the scope of declared services under Section 66E(e), which requires an agreement to refrain from an act, to tolerate an act or situation, or to do an act, accompanied by a flow of consideration for that specific activity. The cancellation agreements arose from pre-existing agreements to sell immovable property and provided for compensation on mutual cancellation or breach. The compensation was contractual damages/liquidated damages payable on breach or rescission and did not represent payment for any independent act of toleration or obligation undertaken by the appellant. Applying precedent (including the Tribunal's decision in South Eastern Coalfields Ltd.) and principles of contract law on compensation, the Tribunal held that recovery of such damages is not consideration for rendering a declared service and thus does not fall within the taxable ambit of Section 66E(e). The Tribunal also relied on the legal distinction between contractual penal clauses and consideration for a taxable activity, and on authorities holding that amounts not paid for a service cannot be included in the value of taxable services. [Paras 13, 16, 19]

The compensation received on cancellation of the sale agreements is not consideration for a declared service under Section 66E(e) and is not liable to service tax.

Extended period of limitation and time-bar of show cause notice - value of taxable service and scope of Section 65B(44) - Whether the show cause notice and demand (including invocation of the extended period) are valid or barred by limitation - HELD THAT: - Having held that no taxable declared service was rendered, the Tribunal found there was no evidence of suppression or evasion that would justify invocation of the extended period. The demand based on treating the compensation as taxable consideration was therefore unsustainable. The Tribunal referred to the Departmental Circular explaining that mere receipt of money does not ipso facto indicate payment for toleration or abstention, and concluded there was no positive material to support extension of limitation. Consequently the Show Cause Notice was held to be time-barred. [Paras 14, 20]

The Show Cause Notice and the demand (including invocation of the extended period) are barred by limitation and the order based thereon is set aside.

Final Conclusion: Appeal allowed; the Tribunal set aside the impugned order and held that amounts received as compensation on cancellation of sale agreements are not taxable as declared services under Section 66E(e), and the Show Cause Notice issued (including invocation of the extended period) is time barred.

Classification of pipeline laying as Erection, Commissioning and Installation Service versus Commercial or Industrial Construction Service - sub-contractor liability for service tax under ECIS - remand for fresh adjudication - principles of natural justice in adjudication

Classification of pipeline laying as Erection, Commissioning and Installation Service versus Commercial or Industrial Construction Service - sub-contractor liability for service tax under ECIS - Demand of service tax raised under the head 'Erection, Commissioning and Installation Service' (ECIS) in respect of laying of water supply and drainage pipelines for public authorities is unsustainable. - HELD THAT: - The Tribunal applied its earlier reasoning in Skyway Construction and authorities cited therein (including Indian Hume Pipe and the Larger Bench in Lanco Infratech) to hold that long distance pipeline laying for public bodies (Surat Municipal Corporation, GWSSB, Canal Division, NHAI, Surat Urban Development Authority) does not fall within the scope of ECIS. The Tribunal accepted that the expressions 'erection', 'installation' and 'commissioning' refer to setting up machinery or plant and making it operational, which is conceptually distinct from earthworks, trenching and laying of pipelines. The authorities establish that such pipeline/conduit construction, particularly when executed for government or public undertakings as part of water supply or sewerage projects, is classifiable as Commercial or Industrial Construction Service (CICS) and, where excluded by the statutory exclusion for services not primarily for commercial or industrial purposes, is not exigible to service tax under the ECIS head. Since the impugned demand was made solely under ECIS, the Tribunal found no merit in sustaining the demand against the appellants who acted as subcontractors for the pipeline works and set aside the impugned orders in respect of those works. [Paras 4, 5]

Demand under ECIS in respect of laying of pipelines for the listed public authorities is set aside; the appeals in respect of those works are allowed.

Remand for fresh adjudication - principles of natural justice in adjudication - Claims in respect of services provided by the appellant to various private parties were not finally adjudicated and are remanded to the original Adjudicating Authority for fresh consideration. - HELD THAT: - The Tribunal noted that the impugned original order did not adequately discuss the nature and classification of services provided to certain private parties (listed in the order). Consequently, those aspects were not decided on merits in the present proceedings. The Tribunal directed that the original Adjudicating Authority shall decide these matters afresh in light of the Tribunal's reasoning in Skyway Construction (supra) and observe the principles of natural justice while conducting the fresh adjudication. [Paras 6, 7]

Matters concerning services to specified private parties are remanded to the original Adjudicating Authority for fresh adjudication in accordance with the Tribunal's guidance and after affording opportunity under principles of natural justice.

Final Conclusion: The appeals are allowed in part: the demand under ECIS in respect of laying of water supply and drainage pipelines for the public authorities is set aside; issues relating to services provided to certain private parties are remitted to the original Adjudicating Authority for fresh decision in accordance with this Tribunal's reasoning and after observing natural justice.

Declared service under Section 66E(e) - consideration as nexus between amount charged and taxable service - provision of service by an employee to the employer (exclusion) - value of taxable service and Section 67 nexus requirement

Declared service under Section 66E(e) - consideration as nexus between amount charged and taxable service - value of taxable service and Section 67 nexus requirement - Penalty recovered from contractors for delay in completing contract is not taxable as a declared service under Section 66E(e). - HELD THAT: - The Tribunal held that sub-clause (e) of Section 66E applies only where an agreement contemplates that, for a consideration, one party agrees to refrain from an act, to tolerate an act or situation, or to do an act, and there is a flow of consideration specifically for that obligation. Reliance was placed on authoritative decisions holding that the value of taxable service must have a nexus with the service rendered and that only amounts which constitute consideration for the service form part of the taxable value under Section 67. Penal recoveries, liquidated damages, forfeiture of earnest money or compensation for breach do not represent consideration for a toleration or forbearance service where the contractual intention and consideration relate to supply of goods or performance of service and the penal clause merely safeguards commercial interests. The Tribunal distinguished situations where parties expressly contract for forbearance with consideration (which would attract Section 66E(e)) from ordinary penalty clauses triggered by breach, and held that mere recovery of penalty/compensation on breach lacks the requisite nexus to constitute consideration for a declared service under Section 66E(e).

Demand of service tax on penalties recovered from contractors is set aside.

Provision of service by an employee to the employer (exclusion) - declared service under Section 66E(e) - Amounts recovered from employees as 'notice pay' for not serving the contractual notice period are not taxable under Section 66E(e). - HELD THAT: - The Tribunal followed precedent holding that payments relating to the employer-employee relationship, including amounts paid or recovered in lieu of notice, do not constitute rendition of taxable service because provision of service by an employee to the employer in the course of employment is excluded from the definition of 'service'. The employer's acceptance of payment in lieu of notice does not amount to toleration or the rendition of a declared service under Section 66E(e); it merely facilitates termination upon compensation and lacks the character of a reciprocal taxable service. The Tribunal relied upon the Madras High Court decision and CBEC guidance treating such notice-pay arrangements as falling outside the service tax net.

Demand of service tax on notice pay recovered from employees is set aside.

Final Conclusion: Both demands-service tax on penalties recovered from contractors and on notice-pay recovered from employees-are unsustainable and the impugned order is set aside; the appeal is allowed.

Condonation of delay - time-bar - equal treatment under law - prejudice in administrative decision - remand for fresh decision on merit

Condonation of delay - time-bar - equal treatment under law - Legality of rejecting the application for condonation of delay solely because the appellant is a professional company. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) rejected the appeal only on the ground that the appellant, being a professional company, ought not to have delayed in filing the appeal. The Tribunal held that such reasoning is legally impermissible and demonstrates prejudice, because the statutory power to condone delay must be applied without regard to the status of the appellant. Law relating to condonation of delay is equal for all classes of litigants and cannot be denied on the basis that the appellant is a professional entity. Consequently, the impugned order's stated ground for refusing condonation was rejected as absurd and contrary to the statute. [Paras 4]

The rejection of condonation of delay on the sole ground of the appellant's professional status is invalid and is set aside.

Remand for fresh decision on merit - condonation of delay - Direction as to further proceedings following setting aside of the impugned order. - HELD THAT: - Having set aside the impugned order, the Tribunal remitted the matter to the Commissioner (Appeals) with a clear instruction to decide the appeal on merits. The Tribunal expressly directed that the Commissioner (Appeals) should determine the appeal on its substantive merits without going into the question of delay in filing the appeal before him. The remand requires the Commissioner (Appeals) to entertain and adjudicate the appeal on merits afresh, uninfluenced by the earlier time-bar rejection. [Paras 5]

Matter remanded to the Commissioner (Appeals) to decide the appeal on merits, without addressing the delay in filing.

Final Conclusion: Impugned order rejecting the appeal as time barred on the basis of the appellant's professional status is set aside; appeal remitted to the Commissioner (Appeals) for fresh adjudication on merits, without considering delay.

Input service - Cenvat credit - services availed to fulfil statutory obligation - Rule 6(3B) of the Cenvat Credit Rules, 2004 - negative list clause 66D(n) - payment of tax with interest prior to show-cause notice (Section 73(3) of the Finance Act, 1994) - finality of Larger Bench decision

Input service - Cenvat credit - Deposit Insurance Corporation / DICGC premium - Rule 2(l) of the Cenvat Credit Rules, 2004 - Cenvat credit of service tax paid on insurance premium to DICGC is admissible as input service - HELD THAT: - The Tribunal held that the insurance service provided by the Deposit Insurance and Credit Guarantee Corporation to banks falls within the main part of the definition of 'input service' (any service used by a provider of output service for providing an output service) under the Cenvat Credit Rules. The Larger Bench's decision in South Indian Bank, upheld by the Kerala and Bombay High Courts, established that the premium payment (and the service tax on it) is linked to the banks' rendering of taxable 'banking and other financial services' and is not excluded by the negative list. Having regard to the statutory requirement to insure deposits and the functional nexus between the insurance service and the banks' output services, the banks are entitled to avail Cenvat credit of the service tax paid on such insurance premium (conclusion reflected in the impugned appeals). [Paras 16]

Credit of service tax paid on DICGC insurance premium qualifies as input service and is admissible to the banks.

Services availed to fulfil statutory obligation - Statutory Liquidity Ratio (SLR) - brokerage / commission for underwriting and investments - Cenvat credit of service tax paid on brokerage/commission for underwriting government securities and for investments to maintain SLR is admissible - HELD THAT: - The Tribunal applied the Larger Bench's principle that activities without which the existence of the assessee as provider of taxable service is jeopardised constitute an essential input service. Maintenance of CRR/SLR and related investment/underwriting activities are statutory obligations linked to banking operations; brokerage and commission services obtained to effect such investments/underwriting therefore have the requisite nexus with the banks' output services. In view of settled precedents (including Bank of Baroda and the Larger Bench in South Indian Bank), such services are input services and the service tax paid on them is eligible for Cenvat credit. [Paras 17]

Credit of service tax paid on brokerage/commission for underwriting and SLR-related investments is admissible as input service.

Rule 6(3B) of the Cenvat Credit Rules, 2004 - reversal of credit - Effect of Rule 6(3B) in relation to entitlement to credit where part of input services may relate to exempted/interest income activities - HELD THAT: - The Tribunal noted that Rule 6(3B) provides for reversal of 50% of total Cenvat credit by banks to account for input/input services attributable to interest/investment income, recognising the practical difficulty of apportionment. Once reversal under Rule 6(3B) is made, banks are entitled to the remaining credit on input services that have nexus with the provision of taxable output services; it is irrelevant which portion of the input service is used for taxable or exempted outputs after complying with the reversal obligation. [Paras 17]

Compliance with reversal under Rule 6(3B) preserves banks' entitlement to Cenvat credit on input services having nexus with taxable output services.

Finality of Larger Bench decision - referability to five member Bench - Whether the Larger Bench decision in South Indian Bank requires re consideration and whether the Division Bench's reference to constitute another Larger Bench was justified - HELD THAT: - The Tribunal recorded that a Larger Bench constituted for these appeals examined the point and held that the three member Larger Bench decision in South Indian Bank did not require reconsideration. The Division Bench's doubts were misplaced because the Supreme Court decision cited (Dilip Kumar) was not applicable to the specific issue and no specific misinterpretation was pointed out. Moreover, the Larger Bench's view has been upheld by the Kerala and Bombay High Courts, rendering the South Indian Bank decision final for the issues before this Tribunal. Consequently, the question of re reference to a five member Bench was negatived. [Paras 12, 16]

South Indian Bank Larger Bench decision does not require reconsideration; the reference for constitution of another Larger Bench was not required.

Payment of tax with interest prior to show-cause notice (Section 73(3) of the Finance Act, 1994) - penalty - Whether penalty is leviable where service tax and interest were paid before issuance of show cause notice - HELD THAT: - The Tribunal found (and the facts were undisputed) that the appellant had deposited the service tax along with applicable interest before issuance of the show cause notice. In terms of Section 73(3) of the Finance Act, 1994, no penalty is to be imposed where tax shortfall is deposited with interest prior to initiation of adjudication. Applying this principle, the Tribunal set aside the penalty imposed on the appellant. [Paras 18]

Penalty imposed is not leviable and is set aside where service tax and interest were paid before issuance of the show cause notice.

Final Conclusion: Appeals allowed: impugned orders set aside; Cenvat credit of service tax on DICGC insurance premium and on brokerage/commission for underwriting and SLR investments held admissible as input services (subject to statutory reversal under Rule 6(3B)); Larger Bench decision in South Indian Bank affirmed as not requiring re consideration and treated as final; penalty set aside where tax and interest were paid prior to show cause notice.

Binding precedent - Application of precedent to identical controversy - Dismissal of appeals on authority of earlier decision

Binding precedent - Application of precedent to identical controversy - Whether the appeals survive in view of the decision in Jayanti Food Processing (P) Ltd. v. Commissioner of Central Excise, Rajasthan - HELD THAT: - The Court recorded that the legal question raised in these appeals is covered by its earlier decision in Jayanti Food Processing (P) Ltd. v. Commissioner of Central Excise, Rajasthan. No fresh question of law or distinguishing feature was found to warrant departure from that precedent. Consequently, the Court applied the binding authority of the prior decision to the present controversy and declined to re-examine the issue on merits.

Appeals dismissed as covered by the decision in Jayanti Food Processing (P) Ltd. v. Commissioner of Central Excise, Rajasthan.

Final Conclusion: The appeals are dismissed by the Court because the issue raised is covered by its earlier decision in Jayanti Food Processing (P) Ltd. v. Commissioner of Central Excise, Rajasthan.

Right to refund for payments made under an unconstitutional / ultra vires provision - Article 265 - unjust collection and obligation on State to refund - refund claim not to be governed by statutory refund machinery where provision is ultra vires - equitable considerations in restitution / Section 72 of the Contract Act - maintainability of writ petition for refund despite alternative statutory remedy

Right to refund for payments made under an unconstitutional / ultra vires provision - Article 265 - unjust collection and obligation on State to refund - equitable considerations in restitution / Section 72 of the Contract Act - Entitlement to refund of excess interest deposited pursuant to Rule 8(3) of the Central Excise Rules, 2002 after that provision was declared ultra vires. - HELD THAT: - The Court applied the principle in Mafatlal that where a provision under which duty or charge was collected is declared unconstitutional or ultra vires, the collection is in contravention of Article 265 and gives rise to a right to claim refund. That right is not automatic; equitable considerations (including whether the claimant passed on the burden) are relevant. The Court found that Rule 8(3) having been declared ultra vires, the excess interest deposited by the petitioner was unjustified and the Department could not retain it. The revenue's contention that the amount need not be refunded because it was self-assessed was rejected; receipt of monies under a provision subsequently declared ultra vires creates an obligation on the State to refund such amount to the person from whom it was received. [Paras 8, 10, 11]

Petitioner entitled to refund of the excess interest deposited as Rule 8(3) was ultra vires and the amount retained by the Department was unjustified.

Refund claim not to be governed by statutory refund machinery where provision is ultra vires - maintainability of writ petition for refund despite alternative statutory remedy - Whether the refund claim was barred by limitation or by having been dealt with under Section 11B / by orders of CESTAT, and whether the petition was maintainable in writ jurisdiction. - HELD THAT: - The Court distinguished paragraph 99(ii) of Mafatlal because the petitioner had not itself challenged constitutional validity earlier; accordingly that paragraph did not bar the present claim. Relying on paragraph 69 of Mafatlal, the Court held that refund arising from declaration of unconstitutionality is not to be governed by the statutory refund procedure (Section 11B/Rule 11) which presupposes the validity of the enactment. The application by the petitioner had been wrongly treated as one under Section 11B; that did not prevent redress by writ petition once the rule was declared ultra vires. The Court therefore rejected the departmental plea that finality of earlier appellate orders precluded refund in writ jurisdiction. [Paras 8, 11]

Refund claim was not to be treated as governed by Section 11B; writ petition was maintainable and the departmental plea of time bar/finality was rejected for the purpose of withholding the excess amount.

Interest on refund - obligation of State to refund monies received under an invalid provision - Relief to be granted - whether refund should carry interest and from what date. - HELD THAT: - Having held that the excess amount was unlawfully retained, the Court exercised its equitable jurisdiction to direct refund with interest. The Court directed payment of the refunded amount along with interest at the rate of 6% per annum from the date the amount was deposited. The direction follows the Court's conclusion that the Department was obliged to return monies collected under an ultra vires provision. [Paras 12]

Respondents directed to refund the excess amount with interest at 6% per annum from the date of deposit.

Final Conclusion: Writ petition allowed; amount paid as excess interest pursuant to Rule 8(3) (declared ultra vires) to be refunded by the respondents with interest at 6% per annum from the date of deposit; pending applications disposed of.

Penalty on co-noticees - settlement under SVLDRS-2019 - waiver/erasure of penalties under the legacy dispute resolution scheme - precedential effect of Division Bench over Single Member Bench

Penalty on co-noticees - settlement under SVLDRS-2019 - waiver/erasure of penalties under the legacy dispute resolution scheme - Whether penalties imposed on co-noticees can be sustained where the main noticee's duty demand has been settled under SVLDRS-2019. - HELD THAT: - The Tribunal held that SVLDRS-2019, being a legacy dispute resolution scheme, contemplates relief by way of waiver or erasure of interest, penalty and other consequences against tax dues covered by the scheme. When the principal noticee's duty demand was settled under SVLDRS-2019 and the scheme relief granted, continuation of personal or co-noticee penalties is inconsistent with the intent and operation of the scheme. The Bench relied upon earlier Division Bench decisions which applied the scheme to set aside penalties on co-noticees even where those co-noticees had not themselves filed declarations under SVLDRS-2019, reasoning that the scheme's purpose of collecting duty and forgoing interest and penalty extends to erase such penal consequences. The Tribunal further observed that the Division Bench precedents carry greater precedential weight than a contrary Single Member Bench decision and accordingly followed the coordinate Division Bench view overruling the Single Member authority on this point. [Paras 4, 5]

Penalties imposed on the appellants (co-noticees) are not sustainable where the main noticee's duty demand was settled under SVLDRS-2019; the penalties are set aside and the appeals are allowed.

Final Conclusion: The Tribunal allowed the appeals and set aside the penalties on the co-noticees, applying Division Bench authority that SVLDRS-2019 settlement of the main noticee effects waiver/erasure of penalties on co-noticees; Division Bench precedent was preferred over the Single Member Bench decision.

Cenvat credit - suo motu credit - debited cenvat credit not adjudicated or assessed - correction/reversal of entries - manner of utilization under Rule 3(4) of the Cenvat Credit Rules, 2004 - refund under Section 11B of the Central Excise Act, 1944

Cenvat credit - suo motu credit - debited cenvat credit not adjudicated or assessed - refund under Section 11B of the Central Excise Act, 1944 - Whether the assessee was entitled to take suo motu credit of the amount debited in the cenvat account (in addition to appropriate duty paid) without filing an application for refund under Section 11B - HELD THAT: - The appellant had paid the appropriate central excise duty on clearances for the period 01.03.2005 to 12.05.2005. Subsequently, officers of the Department orally directed a debit of Rs.5,48,144/- in the appellant's cenvat account; that debit was not adjudicated upon, was not assessed to duty, nor appropriated to revenue. The debit therefore represented an additional entry beyond the regularly assessed duty and was not utilization under the processes envisaged by sub rule (4) of Rule 3 of the Cenvat Credit Rules, 2004. The Tribunal noted the decision of the Hon'ble Rajasthan High Court holding that where cenvat credit has been debited in addition to payment of the proper duty, the assessee may suo motu reverse or take credit of such entry (correction/reversal of entries) rather than being compelled to seek refund under Section 11B. Applying that principle to the present facts, and distinguishing the situation from cases where debits correspond to utilization permitted by Rule 3(4) or where the amount was adjudicated/appropriated, the Tribunal held that the appellant was entitled to take the suo motu cenvat credit and was not required to file an application under Section 11B.

The appellant was entitled to take suo motu cenvat credit of the debited amount and need not have filed for refund under Section 11B; the impugned appellate order was set aside.

Final Conclusion: Appeal allowed; the Tribunal held that where a cenvat account was debited at the instance of revenue but the debit was not adjudicated, assessed or appropriated and was in addition to appropriately paid duty for the period 01.03.2005 to 12.05.2005, the assessee could take suo motu credit of that debit and was not required to seek refund under Section 11B.

Benefit under Notification No. 23/2003-CE - condition No. 4 of Notification No. 23/2003-CE - condition No. 3 of Notification No. 23/2003-CE - inclusion of Special Additional Duty in aggregate duties of customs - Explanation II to Notification No. 23/2003-CE and its prospective operation - maintenance of records to establish consumption of imported versus indigenous inputs - interpretation of exemption notifications versus procedural concessions (e.g., C-form/deemed export) - extended period of limitation under proviso to Section 11A(1)

Benefit under Notification No. 23/2003-CE - condition No. 4 of Notification No. 23/2003-CE - maintenance of records to establish consumption of imported versus indigenous inputs - Notification No. 30/2004-CE and its operation where no Cenvat credit taken - Entitlement to Sr. No. 4 of Notification No. 23/2003-CE for clearances made during 01.07.2006 to 28.02.2007 - HELD THAT: - Condition No. 4 requires (i) goods produced wholly from raw materials manufactured in India, (ii) clearance in accordance with FTP sub-paragraphs, and (iii) that the goods if made by a non-EOU unit be wholly exempt or chargeable to nil rate of duty. Notification No. 30/2004-CE covered the tariff headings of the finished goods and applied where no credit of duty on inputs was taken; the appellants had not availed Cenvat credit. The adjudicating authority assumed use of imported inputs in DTA clearances without adducing concrete evidence. The appellants produced production, input-output ratios and records showing that quantities potentially produced from imported inputs were fully exported. On the materials produced and Board circular guidance permitting common machinery/lines subject to satisfying authorities by records, the Tribunal found the conditions of Sr. No. 4 fulfilled and that denial to the whole quantity was not justified; at worst denial could be limited to extent traceable to imported inputs, but facts showed none of the imported-input production was cleared to DTA.

Benefit under Sr. No. 4 of Notification No. 23/2003-CE was allowable for the period 01.07.2006 to 28.02.2007; denial to entire DTA quantity was incorrect.

Benefit under Notification No. 23/2003-CE - condition No. 3 of Notification No. 23/2003-CE - Explanation II to Notification No. 23/2003-CE and its prospective operation - maintenance of records to establish consumption of imported versus indigenous inputs - Entitlement to Sr. No. 3 of Notification No. 23/2003-CE for clearances during 01.03.2007 to 29.02.2008 (including waste/scrap) - HELD THAT: - Condition No. 3 is materially identical to Condition No. 4 as to being manufactured wholly from domestic raw materials, clearance under FTP and exemption/nil rate if made by non-EOU. Explanation II (treating supplies from EOUs or deemed exports as imported) was inserted w.e.f. 06.07.2007 and is prospective; it cannot be applied retrospectively to deny benefit prior to that date. The appellants produced input-output calculations and records showing imported/EOU-sourced raw material quantities could only have produced goods that were exported; therefore there was no evidentiary basis to conclude imported/EOU inputs were used in DTA clearances. On these facts, denial of Sr. No. 3 was legally unsustainable.

Benefit under Sr. No. 3 of Notification No. 23/2003-CE cannot be denied for 01.03.2007 to 29.02.2008; Explanation II is prospective and documentary evidence established no imported/EOU-derived production was cleared to DTA.

Benefit under Notification No. 23/2003-CE - inclusion of Special Additional Duty in aggregate duties of customs - interpretation of exemption notifications versus procedural concessions (e.g., C-form/deemed export) - Dadra and Nagar Haveli VAT Regulation, 2005 and non-exemption from VAT - Whether SAD (Special Additional Duty) is to be included in aggregate customs duties for computing exemption under Sr. No. 2 of Notification No. 23/2003-CE for periods 01.03.2008 to 24.08.2009, Sept.-Dec. 2009 and 01.06.2011 to 30.11.2015 - HELD THAT: - Sr. No. 2 exempts goods in excess of amount equal to aggregate of customs duties, with a proviso that additional duty under s.3(5) is to be included 'if the goods cleared into DTA are exempt from payment of sales tax or VAT.' The Tribunal examined the Dadra and Nagar Haveli VAT Regulation and found the goods in question were not specified as exempt and thus not exempted by the State/UT. Concessions under Central Sales Tax (e.g., sales against CForm) are procedural and conditional and do not convert goods into 'exempt' goods for purposes of the proviso. Consequently SAD could not be taken into account for computing the aggregate duties in these cases and the department's re-quantification including SAD was unsustainable.

SAD was not to be included in computing aggregate customs duties under Sr. No. 2 for the stated periods because the goods were not exempted by the State/UT; re-quantification by including SAD is incorrect.

Benefit under Notification No. 23/2003-CE - maintenance of records to establish consumption of imported versus indigenous inputs - Board Circular No.85/2001 clarifying common manufacturing lines - Entitlement to Sr. No. 3 (and 4 where applicable) for clearances during 25.08.2009 to 31.05.2011, and entitlement to Sr. No. 3 for 01.06.2011 to 30.11.2015 and 01.04.2016 to 28.02.2017 - HELD THAT: - For periods after 20.08.2009 the department accepted that appellants maintained records from which consumption by source (imported v. indigenous) could be ascertained. Board Circular No.85/2001 reiterates that benefit may be allowed where authorities are satisfied by records that DTA goods are manufactured from wholly indigenous raw materials and that common machinery/lines do not preclude benefit. The appellants produced issue slips, production registers and other documentary evidence; the adjudicating authority did not properly verify these records before denying benefit. On the record, denial of Sr. No. 3/4 for these periods was unsustainable.

Benefit of the relevant Sr. No. of Notification No. 23/2003-CE was allowable for the stated post-2009 periods; denial based on common manufacturing lines or unverified on-floor segregation was not sustainable.

Explanation II to Notification No. 23/2003-CE and its prospective operation - treatment of supplies from EOUs/deemed exports as imported only w.e.f. 06.07.2007 - Applicability of Explanation II (treating EOU or deemed export supplies as 'imported') to periods prior to 06.07.2007 - HELD THAT: - Explanation II was inserted w.e.f. 06.07.2007 and is a substantive amendment; it cannot be applied retrospectively. Therefore, demands premised on treating pre-06.07.2007 supplies as 'imported' under Explanation II are not legally sustainable. Documentary record and statutory prospectivity principles support this conclusion.

Explanation II operates prospectively from 06.07.2007; it cannot be invoked to deny benefits for periods prior to that date.

Extended period of limitation under proviso to Section 11A(1) - disclosure in ER-2 returns and audits negating suppression - Invocability of extended period of limitation (proviso to Section 11A(1)) for demands covering 01.07.2006 to 31.05.2011 - HELD THAT: - Extended limitation requires proof of suppression, fraud or wilful mis-statement. The appellants regularly filed ER2 returns, submitted duty computations and were subject to audits; the department had knowledge of relevant facts including non-inclusion of SAD. The Show Cause Notice did not demonstrate fraud, suppression or malafide intent; moreover the core disputes were legal interpretations. Where the issue is essentially one of law and facts were disclosed, extended limitation is inapplicable.

Extended period of limitation under the proviso to Section 11A(1) was not invokable; demands for the extended period are barred by limitation.

Final Conclusion: The Tribunal set aside the adjudicating order, held that the appellant was entitled to the exemption under Notification No. 23/2003-CE (subject to quantification only to the extent traceable to imported inputs, which evidence showed was nil for several periods), rejected the department's inclusion of SAD where the goods were not state-exempt, ruled that Explanation II is prospectively effective from 06.07.2007, and found the extended period of limitation inapplicable; appeals allowed with consequential relief as per law.

Arbitration agreement - appointment of arbitrator under Section 11(6) read with Section 11(6-A) of the Arbitration and Conciliation Act, 1996 - assignment of contractual rights - novation - privity of contract - arbitrability and merits reserved for arbitral tribunal

Arbitration agreement - appointment of arbitrator under Section 11(6) read with Section 11(6-A) of the Arbitration and Conciliation Act, 1996 - Referral to an arbitral institution for appointment of a sole arbitrator under the arbitration agreement - HELD THAT: - The Court confined its enquiry under Section 11(6) to the existence of an arbitration agreement and noted that existence of arbitration clauses in the licence agreement and the share subscription agreement was not in dispute. While factual and legal disputes as to rights flowing from the agreements (including assignment) were pleaded, the Court held that at the Section 11 stage it would not undertake a detailed adjudication of those disputes and that such matters could be considered by the arbitrator on the evidence. In view of this limited scope, the petition was referred to the Delhi International Arbitration Centre for appointment of a sole arbitrator to adjudicate the disputes between the parties. The Court expressly refrained from expressing any opinion on the merits or on arbitrability, leaving all contentions open for the arbitral tribunal. [Paras 11, 12, 13, 14]

Matter referred to the Delhi International Arbitration Centre for appointment of a sole arbitrator; petition disposed of subject to that referral and without expressing any opinion on merits or arbitrability.

Assignment of contractual rights - novation - privity of contract - Whether the petitioner, having purchased assets of Cryobank USA, has stepped into the shoes of Cryobank USA and is entitled to invoke the arbitration clauses - HELD THAT: - The Court noted the respondents' contention that the licence agreement was non-assignable and that the respondents had not accepted the petitioner as assignee, raising issues of privity and consent. It referred to the distinction in Khardah Company Ltd. v. Raymon & Co (India) Pvt. Ltd. that rights under a contract are generally assignable while obligations require consent and may amount to novation. However, the Court declined to resolve these disputed factual and legal questions at the Section 11 stage, observing that a deeper inquiry into assignment, acceptance by respondents, and related evidence was more appropriately undertaken by the arbitral tribunal. Consequently, these contentions were left open for determination by the arbitrator. [Paras 7, 8, 9, 11, 13]

Contentions on assignment, privity and novation not decided by the Court and to be adjudicated by the arbitral tribunal; all pleas kept open.

Final Conclusion: The petition for appointment of a sole arbitrator is disposed of by referring the matter to the Delhi International Arbitration Centre for appointment of a sole arbitrator; the Court has not adjudicated the merits, arbitrability or questions of assignment, novation or privity, and all contentions are left open for the arbitral tribunal.

Payment of occupation charges at contractual rate - common area maintenance charges - payment on actual consumption basis - statutory liabilities including GST - without prejudice to rights and contentions of the parties - eviction suit and interim relief - expedited hearing of related suits

Payment of occupation charges at contractual rate - common area maintenance charges - without prejudice to rights and contentions of the parties - Modification of the impugned order to direct payment of rent/occupation charges and CAM at the contractual rates from March 2024. - HELD THAT: - The impugned judgment reduced the contractual monthly rent and CAM charges below the contractual rates operative at the alleged expiry of the lease. The Court found this reduction to be infirm and held that, notwithstanding any reason that led the lower court to grant a concession (including the COVID-19 pandemic), the respondent must, from March 2024, pay rent/occupation charges and CAM at the contractual rate, by the 7th of each month in advance. This direction is given subject to and without prejudice to the rights and contentions of the parties in the pending proceedings.

From March 2024 the respondent shall pay rent/occupation charges and CAM at the contractual rate, in advance by the 7th of each month, without prejudice to the parties' rights.

Payment on actual consumption basis - statutory liabilities including GST - Direction that electricity and AC charges be paid on actual consumption and that all statutory liabilities, including GST, be discharged by the respondent from March 2024. - HELD THAT: - The Court found the stipulation in the impugned order for fixed electricity and AC charges to be flawed and held such charges should be payable on actual consumption. The Court directed that, from March 2024, electricity and AC charges shall be paid on actuals. In addition, the respondent is directed to pay all statutory liabilities, specifically including GST, that are required to be discharged by them.

Electricity and AC charges to be paid on actual consumption from March 2024; respondent to discharge all statutory liabilities including GST.

Eviction suit and interim relief - without prejudice to rights and contentions of the parties - expedited hearing of related suits - Clarification that the modified payment directions do not bar the appellant from prosecuting an eviction suit or seeking interim relief, and direction to the parties to approach the trial court for expedition of hearings of related suits. - HELD THAT: - The Court made explicit that the order modifying the impugned judgment as to payment would not impede the appellant from continuing prosecution of its separate eviction suit or from applying for any interim relief in aid of that suit. The parties were directed to approach the learned court below so that hearing of both suits may be expedited. The Court also recorded that the parties remain at liberty to seek vacation or further variation of the impugned judgment or of the present arrangement as circumstances may warrant.

The modified payment order does not affect the appellant's right to pursue eviction proceedings or seek interim relief; parties to seek expedition of hearings and may apply for further variation.

Final Conclusion: The appeal and connected applications are allowed in part by modifying the impugned order: rent/occupation charges and CAM to be paid at contractual rates from March 2024 in advance; electricity and AC charges to be paid on actual consumption from March 2024; respondent to discharge statutory liabilities including GST; these directions are without prejudice to the parties' rights and do not preclude pursuit of eviction proceedings or further variation, and the parties are directed to approach the trial court for expedition of related suits.