TaxTMI Updates e-Newsletter
Nov 16,2023

Valid show-cause notice - principles of natural justice - opportunity of hearing - cancellation of GST registration - waiver of statutory alternative remedy - directions for fresh adjudication on a speaking order

Waiver of statutory alternative remedy - maintainability of writ petition - Whether the writ petition was maintainable despite existence of statutory alternative remedy of appeal - HELD THAT: - The Court found that in the peculiar facts of the case - namely gross and fundamental defects in the impugned proceedings relating to cancellation of registration - the bar of the statutory alternative remedy was waived. Having regard to the procedural omissions and defects which went to the root of the matter, the Court declined to insist on exhaustion of the statutory remedy and entertained the writ petition to prevent enforcement of rules of natural justice being frustrated. The Court therefore proceeded to decide reliefs without relegating the petitioner to the appellate forum. [Paras 3, 4, 14]

The statutory alternative remedy was waived and the writ petition was entertained.

Valid show-cause notice - principles of natural justice - opportunity of hearing - cancellation of GST registration - Whether the show-cause notice and the procedure adopted for cancellation of registration complied with requirements of a valid notice and principles of natural justice - HELD THAT: - The Court held that the show-cause notice dated 04/08/2022 was non-speaking and failed to specify factual allegations upon which cancellation was sought, and that the authority did not grant a real opportunity of hearing - fixing the hearing for the next day and thereafter remaining silent for a long period. The authority also passed the order cancelling registration on a ground (non-existence of principal place of business) which had not been the subject of a properly particularised show-cause and against which the petitioner had not been afforded an opportunity to rebut. These procedural defects were held to be fundamental and vitiated the impugned order. [Paras 9, 10, 11, 12, 13]

The show-cause notice and the procedure adopted were defective and violative of principles of natural justice; the impugned cancellation order was therefore tainted by fundamental procedural infirmities.

Directions for fresh adjudication on a speaking order - opportunity of hearing - What relief and remedial course should follow from the procedural defects in the cancellation proceedings - HELD THAT: - The Court declined to quash the show-cause notice entirely because suspension had persisted for over a year, but directed remedial steps to cure the procedural infirmity. The petitioner was permitted to treat the impugned order as the show-cause notice and to file a reply within two weeks. Thereafter the respondent-authority was directed to fix a proper hearing date with fourteen days' notice and to pass a reasoned and speaking order in accordance with law. The rights of the parties were stayed to be determined by the fresh adjudication under these directions. [Paras 15]

The matter was remitted for fresh adjudication subject to directions: petitioner to file reply within two weeks; respondent to give 14 days' notice of hearing and pass a reasoned speaking order.

Final Conclusion: Writ petition entertained and disposed of: statutory alternative remedy waived in view of fundamental procedural defects in the cancellation proceedings; impugned cancellation order declared procedurally vitiated and the matter remitted for fresh adjudication - petitioner to file reply within two weeks, respondent to give 14 days' notice and pass a reasoned speaking order; parties' rights to be determined by that order; no order as to costs.

Show cause notice - cancellation of registration - absence of reasons / no application of mind - principles of natural justice - attachment of bank accounts - remedy under sub-rule (5) of Rule 159 - formation of opinion for attachment - restoration of registration - power to suspend registration

Show cause notice - cancellation of registration - absence of reasons / no application of mind - principles of natural justice - restoration of registration - power to suspend registration - Validity of the show cause notice dated 18th September 2023 and the consequential order dated 5th October 2023 cancelling the petitioner's GST registration. - HELD THAT: - The court found that the impugned show cause notice and the cancellation order do not set out any reasons and are therefore ex facie devoid of application of mind. An order cancelling registration must contain reasons; absence of such reasons renders the action arbitrary and in breach of principles of natural justice. The petitioner's reliance on the decision in Makesburry India Pvt. Ltd. (supra) was held to be justified. The court accordingly quashed the show cause notice and the cancellation order, while clarifying that the revenue is not precluded from exercising any other powers available in law, including issuing a fresh order to suspend registration if permissible. [Paras 7, 8]

The show cause notice dated 18th September 2023 and the consequential cancellation order dated 5th October 2023 are quashed and set aside; the petitioner's registration stands restored, subject to the revenue's lawful rights to act further including suspension.

Attachment of bank accounts - remedy under sub-rule (5) of Rule 159 - formation of opinion for attachment - Whether the court should interfere with the attachment of the petitioner's bank accounts. - HELD THAT: - The parties agreed that the statutory remedy under sub-rule (5) of Rule 159 of the CGST Rules is available for challenging the attachment. The court declined to exercise its discretionary jurisdiction under Article 226 to set aside the attachment, and directed that the petitioner may invoke sub-rule (5) of Rule 159. The petitioner was permitted to file an objection within one week of uploading the order, and the Commissioner is directed to decide the objection in accordance with law without raising any limitation objection; all contentions remain open for consideration by the authority. [Paras 9]

No interference with the attachment; petitioner permitted to invoke sub-rule (5) of Rule 159 within one week and the Commissioner to decide the objection on merits without objection as to limitation.

Final Conclusion: The court quashed the show cause notice and the cancellation order for want of reasons and restored the petitioner's registration, while leaving open the revenue's lawful powers; the challenge to attachment of bank accounts was not entertained by writ and the petitioner is directed to seek remedy under sub-rule (5) of Rule 159 of the CGST Rules within the period granted for consideration by the Commissioner.

Opportunity of hearing under Section 75(4) of the U.P. GST Act, 2017 - requirement of personal hearing before passing an adverse assessment order - principles of natural justice in tax assessment proceedings - remand for fresh hearing and adjudication - validity of assessment order passed without affording hearing

Opportunity of hearing under Section 75(4) of the U.P. GST Act, 2017 - requirement of personal hearing before passing an adverse assessment order - principles of natural justice in tax assessment proceedings - Whether the assessment order dated 18.08.2023 raising demand against the petitioner is vitiated for want of an opportunity of personal hearing as required by law. - HELD THAT: - The Court examined Section 75(4) of the U.P. GST Act, 2017 which mandates that an opportunity of hearing be granted where an adverse decision is contemplated. Relying on the reasoning in the coordinate-bench decision in Bharat Mint & Allied Chemicals, the Court held that the Assessing Authority is obliged to afford an opportunity of personal hearing before passing any adverse order and that the assessee is not required to make a written request to invoke that entitlement. The fact that the assessee may have indicated 'No' in a column relating to choice to avail personal hearing does not negate the statutory obligation of the authority. In the present case the impugned order was passed after the assessee's reply had been entertained, without first granting the minimal opportunity of hearing; this omission offended the principles of natural justice and prevented a proper appreciation of the assessee's stand. Affording such hearing would enable the authority to pass an appropriate, reasoned order and assist appellate scrutiny if required. For these reasons the Court set aside the assessment order and remitted the matter for fresh proceedings consistent with the obligation to provide a hearing. [Paras 8, 9, 10, 11, 12]

Impugned order dated 18.08.2023 is set aside and the matter is remitted to the Deputy Commissioner, State Tax, Sector-9, Meerut to issue a fresh notice and afford the petitioner an opportunity of hearing before concluding proceedings.

Final Conclusion: Writ petition allowed; assessment order set aside for failure to afford mandatory opportunity of personal hearing and matter remitted for fresh notice and adjudication with directions to proceed expeditiously.

Show cause notice - proceedings under Section 74 of the Central Goods and Services Tax Act, 2017 - FORM GST DRC-01 - FORM GST DRC-02 - FORM GST DRC-01A - denial of opportunity for cross-examination - personal hearing - void ab initio

Show cause notice - FORM GST DRC-01 - FORM GST DRC-02 - FORM GST DRC-01A - denial of opportunity for cross-examination - personal hearing - Challenge to the impugned show cause notice dated 14.7.2023 and the consequent proceedings on the ground of non-compliance with prescribed formats and denial of opportunity of cross-examination - HELD THAT: - The Court did not adjudicate the merits of the contentions that the show cause notice is defective for not being in FORM GST DRC-01 or for non-issuance of the summary in FORM GST DRC-02 and details in FORM GST DRC-01A, nor did it decide whether the petitioner was denied the right of cross-examination. Instead the writ petition was disposed of by directing a procedural course: the petitioner was granted an opportunity to file objections to the show cause notice; on receipt of objections the respondent authority is required to consider them after granting personal hearing and to pass an appropriate order strictly in accordance with law. The court thus remitted the controversy for fresh consideration by the authority without expressing any view on the correctness or validity of the show cause notice or the alleged procedural infirmities. [Paras 7]

Writ petition disposed; petitioner to file objections within two weeks and respondent to grant personal hearing and decide the matter strictly in accordance with law within 15 days.

Final Conclusion: The High Court did not decide the substantive validity of the show cause notice or the alleged denial of cross-examination; the petition is disposed by directing the petitioner to file objections and the authority to hear the petitioner personally and decide afresh in accordance with law within the stipulated time.

Vicarious liability of directors - liquidation and Official Liquidator's exclusive locus to represent the company in liquidation - requirement to file claim before the Official Liquidator and to exhaust company assets before invoking personal liability of ex-directors - invalidity of ex parte tax demand served on a director after commencement of liquidation

Invalidity of ex parte tax demand served on a director after commencement of liquidation - liquidation and Official Liquidator's exclusive locus to represent the company in liquidation - Impugned demand orders passed in the name of the company in liquidation and served on the petitioner (a director) are not sustainable. - HELD THAT: - The Court found that the company had been ordered to be liquidated and an Official Liquidator was appointed. Once liquidation commenced the Official Liquidator is the proper representative of the company; the petitioner, as a former director, no longer had locus to represent the company. The adjudicating authority proceeded ex parte because the Official Liquidator did not respond, but the orders of demand were nevertheless passed in the name of the company in liquidation and served on the petitioner. Having regard to the liquidation status and the role of the Official Liquidator, the action of passing and serving the impugned demands on the petitioner was held to be unsustainable. [Paras 2, 3, 5, 7]

Impugned orders dated 28.09.2020 set aside as not sustainable against the petitioner when the company was in liquidation.

Vicarious liability of directors - requirement to file claim before the Official Liquidator and to exhaust company assets before invoking personal liability of ex-directors - Respondents must first file claim before the Official Liquidator and, if company assets are insufficient, only then may they invoke Section 88(3) to proceed against ex-directors. - HELD THAT: - The Court recognised that Section 88(3) of the CGST Act embodies the principle that directors may be held jointly and severally liable where tax, interest or penalty determined remains unrecovered. However, that personal liability arises only after the dues of the company in liquidation cannot be met from the company's assets. The correct course for tax authorities is to present their claim to the Official Liquidator; if the Official Liquidator determines that there are insufficient funds and a fresh cause of action arises, the authorities may then proceed against ex-directors in accordance with law. As the question of availability of funds with the Official Liquidator was undecided, no present cause of action existed to proceed against the petitioner personally. [Paras 4, 6, 8]

Respondents relegated to file claim before the Official Liquidator; only upon conclusion that company funds are insufficient may Section 88(3) be invoked against ex-directors.

Final Conclusion: Writ petitions allowed; impugned orders dated 28.09.2020 set aside. Respondents may approach the Official Liquidator and, if he concludes that the company in liquidation lacks sufficient funds to satisfy the claims, a fresh cause of action will arise permitting proceedings against ex-directors under Section 88(3) of the CGST Act; no costs.

Appellate remedy under section 107 of the MGST Act - determination of value of development/tenements - inadequacy of writ remedy where contested valuation and agreement require factual examination - condonation/waiver of limitation for filing appeal - protection from coercive action pending filing of appeal

Appellate remedy under section 107 of the MGST Act - determination of value of development/tenements - inadequacy of writ remedy where contested valuation and agreement require factual examination - Writ petition dismissed and petitioner directed to avail the statutory appellate remedy instead of litigating valuation and related factual issues in writ jurisdiction. - HELD THAT: - The Court held that the challenge to the impugned tax demand, which raises questions about calculation, the agreement, applicable rates and valuation of the development/tenements, requires examination of material and facts not amenable to resolution in writ jurisdiction. Accordingly, the appropriate remedy is to pursue the appellate route under section 107 of the MGST Act; the Court declined to adjudicate the merits of those contentions and disposed of the writ petition while leaving the substantive contentions open for determination on appeal. [Paras 3, 4, 6]

Petition disposed with liberty to invoke the appellate remedy; substantive contentions left open for the appellate authority to decide.

Condonation/waiver of limitation for filing appeal - protection from coercive action pending filing of appeal - Interim directions granted permitting the petitioner to file an appeal within four weeks without objection as to limitation, permitting offline filing if portal unavailable, and restraining coercive action until the appeal is filed. - HELD THAT: - The Court recorded that if the petitioner files the appeal within four weeks it shall be considered on its merits without any objection as to limitation, acknowledging the petitioner s bona fide pursuit of the writ. The Court further permitted filing offline if the electronic portal is unavailable and directed that no coercive action shall be taken against the petitioner until the appeal is filed, thereby providing interim protective relief to enable the statutory remedy to be pursued. [Paras 5, 8, 9]

Appeal may be filed within four weeks and will be entertained without objection to limitation; offline filing allowed if necessary; no coercive action to be taken till appeal is filed.

Final Conclusion: Writ petition disposed; petitioner directed to challenge the impugned tax demand by preferring an appeal under section 107 of the MGST Act within four weeks, which will be entertained without objection to limitation; interim protection and facilitation for filing granted until the appeal is filed.

Cancellation of GST registration for non-functioning at principal place of business - Revocation of cancellation of GST registration - Amendment of principal place of business in GST records - Requirement of a speaking order - Unreasoned administrative order unsustainable

Cancellation of GST registration for non-functioning at principal place of business - Revocation of cancellation of GST registration - Requirement of a speaking order - Validity of the cancellation of the petitioner's GST registration and direction for fresh consideration of an application for revocation of cancellation. - HELD THAT: - The Court observed that the petitioner's registration was cancelled on the ground that the business was not found to be functioning at the principal place of business, but that the respondents had not permitted the petitioner to update its records to reflect a changed place of business. The field visit report post-dated issuance of the SCN and noted the petitioner's manager at the premises though not functioning from the principal place of business. In view of the procedural deficiencies and the factual position, the Court did not adjudicate the merits of cancellation on the papers but permitted the petitioner to file an application for revocation of cancellation within two weeks supported by relevant documents. The Proper Officer is directed to consider that application and pass a speaking order within one week of receipt, uninfluenced by earlier orders. [Paras 6, 7]

The Court remanded the matter for fresh consideration by the Proper Officer: the petitioner may file an application for revocation within two weeks and the officer shall decide it by a speaking order within one week.

Amendment of principal place of business in GST records - Unreasoned administrative order unsustainable - Requirement of a speaking order - Sustainability of the earlier order dated 11.11.2020 rejecting the petitioner's application to amend its place of business, and direction to reconsider the amendment request. - HELD THAT: - The Court noted that the order dated 11.11.2020 rejecting the petitioner's application to add/amend the place of business did not disclose any reasons and left the reasons section blank. Such an unreasoned order was treated as unsustainable. Consequently, the Proper Officer is directed to consider the petitioner's request to alter records to amend its current place of business notwithstanding the earlier order, and to do so on merits when addressing the revocation/amendment application as directed. [Paras 3, 4, 8]

The Court held the unreasoned prior order unsustainable and directed the Proper Officer to consider afresh the petitioner's request to amend its place of business.

Final Conclusion: Petition disposed by directing the petitioner to file an application for revocation of GST registration within two weeks and by directing the Proper Officer to consider that application and any request to amend the principal place of business afresh, and to pass speaking orders within the timeframes specified; the earlier unreasoned order rejecting the amendment is held unsustainable.

Rectification of GSTR-3B - read down of administrative circular - scope of judicial review under Article 226 in disputes of fact - appeal under Section 107 of the GST Act - assessment under Section 74 of the CGST Act - interest under Section 50 of the CGST Act

Rectification of GSTR-3B - scope of judicial review under Article 226 in disputes of fact - appeal under Section 107 of the GST Act - Writ petition seeking direction to permit correction of uploading mistake in GSTR-3B and challenge to assessment was not entertained on merits and petitioner was directed to pursue remedy by appeal. - HELD THAT: - The Court noted that the controversy involves disputed questions of fact concerning admitted differences between GSTR-3B, GSTR-1 and later reconciliations in GSTR-9/GSTR-9C. In view of those factual disputes and the availability of an appellate remedy, the Court declined to decide factual or assessment issues under Article 226 and 227. The petitioner was granted liberty to approach the appellate authority under Section 107 of the GST Act and the appellate authority was directed to consider all documents submitted by the petitioner and decide the appeal in accordance with law. The Court observed existing High Court decisions have read down paragraph 4 of Circular No. 26/26/2017-GST but refrained from adjudicating the issue in writ jurisdiction where facts are disputed. [Paras 12, 13, 14]

Writ petition disposed of; petitioner granted liberty to file appeal under Section 107 and have the appellate authority examine submissions and decide in accordance with law.

Read down of administrative circular - rectification of GSTR-3B - assessment under Section 74 of the CGST Act - Challenge to Circular No. 26/26/2017-GST and entitlement to rectify past GSTR-3B entries was not finally adjudicated by this Court; the Court noted precedents reading down paragraph 4 of the Circular but left the matter to be considered in appeal. - HELD THAT: - The Court recorded that paragraph 4 of Circular No. 26/26/2017-GST has been read down in other High Court decisions to the extent that rectification for the period in which the error occurred is permissible, and observed that such legal developments would be relevant before the appellate authority. However, the Court did not pronounce on the ultra vires challenge to the Circular or decide entitlement to rectification on merits in the present writ because the resolution requires examination of disputed factual records and assessment computations; accordingly the issue was left for determination by the appellate forum when the petitioner pursues the statutory appeal. [Paras 8, 11, 12]

No final adjudication on the Circular's vires or rectification entitlement; matter to be considered by appellate authority in appeal.

Final Conclusion: The writ petition is disposed of by permitting the petitioner to pursue remedy before the appellate authority under Section 107 of the GST Act; factual disputes and assessment issues (including any contention regarding Circular No. 26/26/2017-GST) were not decided and are to be examined afresh by the appellate authority in accordance with law.

Dismissal of appeal solely on ground of limitation - condonation of delay in filing appeal and exercise of discretion - time limit for preferring appeal and condonable period under Section 107(1) read with Section 107(4) of the GST Act - judicial review under Article 226 to examine factual circumstances and grant relief beyond statutory condonable period - reconsideration of appeal on merits by appellate authority

Dismissal of appeal solely on ground of limitation - reconsideration of appeal on merits by appellate authority - The appellate order dated 15th February, 2023 dismissing the petitioner's appeal solely on the ground of limitation is set aside and the matter is remitted for reconsideration on merits. - HELD THAT: - The writ petition challenged the appellate authority's dismissal of the appeal as barred by limitation without any adjudication on merits. The Court noted the appellate order rejected the appeal on the basis that the application for condonation exceeded the statutory grace period and therefore could not be considered. Having regard to the Division Bench's reasoning that the statute prescribes a condonable period but does not oust the court's power under Article 226 to examine factual circumstances and grant relief where delay was not deliberate, the High Court found it appropriate to set aside the impugned order. In consequence, the appellate authority's order is vacated and the appeal is to be heard on merits after condoning the delay and affording a reasonable opportunity of hearing to the parties.

Impugned order dismissing the appeal on limitation set aside; appeal remitted for merits rehearing after condoning delay and giving opportunity of hearing.

Condonation of delay in filing appeal and exercise of discretion - judicial review under Article 226 to examine factual circumstances and grant relief beyond statutory condonable period - Direction to the appellate authority to condone the delay and reconsider the appeal on merits within a stipulated period. - HELD THAT: - Relying on the Division Bench's observation that the statutory grace period does not preclude the exercise of jurisdiction by the High Court under Article 226 to examine the factual matrix and grant relief where delay was not deliberate, the Court directed the appellate authority to condone the approximately 50 day delay and to afford the petitioner and other interested persons a reasonable hearing. The authority is required to pass a reasoned order on the merits in accordance with law within one month from communication of this order, and to communicate its decision to the petitioner within one week thereafter.

Appellate authority directed to condone the delay, rehear the appeal on merits with hearing to interested parties, and pass a reasoned order within one month; decision to be communicated within one week.

Final Conclusion: The High Court set aside the appellate authority's order dismissing the appeal as barred by limitation, directed condonation of the delay and remitted the matter for fresh consideration on merits with a reasonable opportunity of hearing, and required a reasoned order to be passed within one month and communicated promptly.

Re-opening of assessment - information with the Assessing Officer - First Explanation to section 148 - objection of the Comptroller and Auditor General of India - change of opinion - applicability of Section 50C

Information with the Assessing Officer - First Explanation to section 148 - objection of the Comptroller and Auditor General of India - Validity of re-opening the assessment when the purported 'information' arose from an internal audit objection rather than an objection of the Comptroller and Auditor General of India - HELD THAT: - The Court found as an admitted fact that the audit memo which formed the basis for re-opening was raised by an internal audit and not by the Comptroller and Auditor General of India. The First Explanation to clause (ii) of Section 148 defines the information with the Assessing Officer to include a final objection raised by the CAG. Since the recorded 'information' did not emanate from the CAG, it did not qualify as the statutory 'information' enabling re-opening under Section 148. On this basis the impugned re-opening was held impermissible. [Paras 11]

Re-opening based on an internal audit objection (and not an objection of the CAG) is not permissible and does not constitute 'information' under the First Explanation to Section 148.

Re-opening of assessment - change of opinion - applicability of Section 50C - Whether the reassessment amounted to an impermissible change of opinion where the Assessing Officer had earlier considered and accepted the non-applicability of Section 50C in the original assessment - HELD THAT: - The Court recorded that the Assessing Officer had dealt with the long-term capital gains issue and had accepted non-applicability of Section 50C in the original assessment. The subsequent acceptance of the audit objection and revisiting of the earlier conclusion amounted to a deviation from the view already taken in the original assessment. Absent any qualifying 'information' as required by law, such a revision was characterised as a 'change of opinion', which the Court held cannot justify reopening of assessment. The Court relied on settled principles that reopening cannot be sustained as a mere change of opinion and that tangible material justifying reopening must conform to the reasons contemplated by Section 148. [Paras 12, 13, 14]

The reassessment amounted to an impermissible change of opinion and therefore could not sustain the re-opening.

Final Conclusion: Writ petition allowed; the impugned order under Section 148A(d), the approval under Section 151, the notices under Section 148/148A(b) and the related communication for AY 2015-16 are quashed as the re-opening was founded on an internal audit objection not qualifying as 'information' under the First Explanation to Section 148 and amounted to an impermissible change of opinion. No order as to costs.

Limitation for reassessment where income represented as asset and exceeds threshold - deposits in bank accounts constituting assets for the purpose of extended reassessment period - scope of judicial review of notices under Section 147/148 is narrow - subjective satisfaction of the Assessing Officer must be based on tangible, concrete and new information - suppression of material facts disentitles invocation of equitable writ jurisdiction

Limitation for reassessment where income represented as asset and exceeds threshold - deposits in bank accounts constituting assets for the purpose of extended reassessment period - Whether reassessment proceedings could be initiated within ten years having regard to the nature of the alleged escaped income and the explanation to Section 149. - HELD THAT: - The Court held that the explanation to Section 149 treats deposits in bank accounts as part of an assessee's assets. The AO possessed books of accounts showing voluntary deposits in bank accounts exceeding the statutory monetary threshold and the alleged escaped income exceeded that threshold; consequently the limitation for initiation of reassessment extended to ten years for the Assessment Year 16-17. The petitioner's contention that the expanded limitation under the Finance Act, 2022 could not apply was not sustained insofar as the AO relied on assets (bank deposits) to invoke the extended period for reassessment. [Paras 6]

Reassessment within ten years was permissible as the alleged escaped income was represented as assets (bank deposits) exceeding the threshold.

Scope of judicial review of notices under Section 147/148 is narrow - subjective satisfaction of the Assessing Officer must be based on tangible, concrete and new information - Whether the Assessing Officer had requisite material to form subjective satisfaction of escapement of income so as to sustain issuance of the reassessment notice. - HELD THAT: - Applying the settled principle that the High Court's review of a notice under Section 147/148 is limited to whether the AO's subjective satisfaction is based on tangible, concrete and new information, the Court found that the AO relied on the trust deed and the statement of the managing trustee indicating that certain foreign contributions were applied for purposes divergent from the trust objects. Those materials constituted tangible information capable of supporting the AO's prima facie satisfaction that exemption under Sections 11/12 was wrongly availed and that income had escaped assessment, and therefore the issuance of the notice could not be struck down on writ review. [Paras 7, 8]

The AO had tangible and concrete information to form subjective satisfaction of escapement of income; the reassessment notice survives writ scrutiny.

Suppression of material facts disentitles invocation of equitable writ jurisdiction - Whether suppression of cancellation of registrations under Sections 12A/12AA/12AB by the petitioner warranted dismissal of the writ petition on that ground. - HELD THAT: - The Court noted the well established principle that applicants seeking extraordinary relief must make full and candid disclosure of material facts. The petitioner had not disclosed that its registration under Sections 12A/12AA/12AB had been cancelled for relevant periods. Although the Court observed that this non disclosure would have justified dismissal of the petition on that ground alone, the Court proceeded to decide the merits in the interest of justice. The suppression was therefore a material factor adverse to the petitioner's entitlement to equitable relief. [Paras 9, 10]

The petitioner had suppressed material facts; this disentitled it to equitable writ relief though the Court proceeded to adjudicate the merits.

Final Conclusion: The writ petition was dismissed: the reassessment notice was held to be within the extended limitation period and based on tangible material supporting the AO's subjective satisfaction, and the petitioner's suppression of material facts further militated against granting equitable relief.

Assessment completed under Section 144 for non-receipt of notices - Reopening/assessment under Section 147 and limitation-driven completion - Quashing of non-speaking order and remand for fresh adjudication with personal hearing - Treatment of One Time Settlement as unexplained income

Assessment completed under Section 144 for non-receipt of notices - Reopening/assessment under Section 147 and limitation-driven completion - Quashing of non-speaking order and remand for fresh adjudication with personal hearing - Validity of the assessment order dated 30th December 2016 passed under Section 144 read with Section 147 when notices were returned undelivered and the A.O. completed assessment citing impending limitation. - HELD THAT: - The Court found that notices sent to the petitioner were returned with endorsement "Left" and that the Assessing Officer passed the impugned order essentially because the matter was getting time-barred. In these circumstances the Court quashed the impugned order as non-speaking and unsuitable for being allowed to stand without affording the petitioner an opportunity to be heard. The Court directed the jurisdictional Assessing Officer to supply copies of all notices to petitioner's advocate, to afford the petitioner an opportunity to reply and to give a personal hearing after at least five working days' notice, and to pass a reasoned order dealing with all submissions. The Court expressly declined to express any opinion on the merits.

Impugned order quashed and set aside; matter remanded to the Assessing Officer for fresh consideration in accordance with law after service of notices, reply by petitioner and a personal hearing, and a reasoned order.

Treatment of One Time Settlement as unexplained income - Quashing of non-speaking order and remand for fresh adjudication with personal hearing - Whether the addition of the One Time Settlement amount as income of the petitioner can be sustained in the impugned order. - HELD THAT: - The impugned assessment proceeded to add a large One Time Settlement amount as income on the basis that complete details were not before the A.O. The Court noted the petitioner's contention that the OTS amount was materially different from what was recorded in the order and that the petitioner only came to know of the order much later. Rather than adjudicating the correctness of the addition on merits, the Court remitted the issue to the Assessing Officer to examine afresh after the petitioner produces details and documents and after hearing the petitioner, directing that the fresh order be reasoned and based on the materials placed before the A.O.

Addition set aside by virtue of quashing of the impugned order; issue remanded to the Assessing Officer for fresh consideration and adjudication on merits after receipt of material and personal hearing.

Final Conclusion: The impugned assessment order dated 30th December 2016 for Assessment Year 2009-10 and all consequential notices/demands are quashed and set aside; the matter is remitted to the jurisdictional Assessing Officer to serve notices, receive the petitioner's reply, afford a personal hearing and pass a reasoned order in accordance with law. The Court has not expressed any view on the merits.

Allowance of depreciation where capital expenditure treated as application of income - no double deduction principle - prospective operation of a statutory amendment affecting deductions (Section 11(6) - Finance Act No. 2/2014)

Allowance of depreciation where capital expenditure treated as application of income - no double deduction principle - prospective operation of a statutory amendment affecting deductions (Section 11(6) - Finance Act No. 2/2014) - Whether depreciation can be claimed in respect of assets the acquisition of which was treated as application of income in earlier years for the assessment years before the amended Section 11(6) came into effect. - HELD THAT: - The Tribunal examined whether depreciation claimed for AY 2006-07 and AYs 2011-12 to 2014-15 could be disallowed on the ground that the assets' acquisition had earlier been treated as application of income. It noted the principle against double deduction relied upon by the AO but applied the Supreme Court's decision in Commissioner of Income Tax v. Rajasthan & Gujarati Foundation that, in the absence of a specific statutory bar, depreciation may be allowed even where capital expenditure had earlier been treated as application of income. The Tribunal observed that Parliament inserted Section 11(6) by Finance Act No. 2/2014 to remove that uncertainty, but that amendment is prospective and operates from AY 2015-16. Consequently, the amendment cannot be applied to assessment years prior to its effective date. Following the apex court's reasoning that the amendment merely clarified and did not have retrospective effect, the Tribunal held that depreciation is allowable for the years in issue and, if allowed, may be carried forward as appropriate. [Paras 9]

Depreciation claimed for the assessment years prior to AY 2015-16 is allowable; the appeals are allowed.

Final Conclusion: The appeals are allowed: depreciation claimed on assets whose acquisition was treated as application of income is permissible for AY 2006-07 and AYs 2011-12 to 2014-15, the amendment by Section 11(6) (Finance Act No.2/2014) being prospective and effective only from AY 2015-16.

Taxation of worldwide income of resident - Effect of Section 90(3) and Central Government notification No.91/2008 - Interpretation of phrase "may be taxed" in DTAA - Conflict between source taxation under DTAA and residence taxation under domestic law - Method of elimination of double taxation (credit vs exemption)

Interpretation of phrase "may be taxed" in DTAA - Effect of Section 90(3) and Central Government notification No.91/2008 - Taxation of worldwide income of resident - Method of elimination of double taxation (credit vs exemption) - Whether rental income from immovable property situated in Australia, on which tax was paid in Australia, could be included and taxed in India of a person resident in India despite Article 6 of the India-Australia DTAA - HELD THAT: - The Tribunal considered the meaning of the expression "may be taxed" in Article 6 of the DTAA and the legislative changes effected by insertion of sub section (3) in section 90 together with notification No. 91/2008 dated 28.08.2008. Earlier coordinate decisions holding that income taxable in the source State under a treaty is excluded from taxation in India were examined in light of the statutory amendment. The Tribunal followed detailed appellate precedent (including Essar Oil Ltd. and subsequent decisions discussed at length) and the reasoning in Bank of India v. ACIT which holds that, after insertion of section 90(3) and issuance of the notification, where a treaty provides that income "may be taxed" in the other contracting State, such income shall nonetheless be included in the resident's total income in India and relief is to be given by the method of elimination or avoidance of double taxation provided in the treaty (normally by credit). The Tribunal declined the assessee's reliance on decisions (e.g., Natasha Chopra, Pooja Bhatt) that read "may be taxed" to preclude residence State taxation, finding those authorities inapplicable in view of the change in statutory position and relevant notifications. Applying that legal position to the facts, the Tribunal sustained the inclusion of the Australian rental income in the assessee's Indian total income and upheld the orders below. [Paras 8]

The addition of the rental income from properties in Australia to the assessee's total income in India is upheld; the appeal is dismissed.

Final Conclusion: The Tribunal held that, in view of section 90(3) and notification No.91/2008, income which a DTAA states "may be taxed" in the source State may still be included in the total income of an Indian resident and relief is to be given as per the treaty; applying this, the Tribunal dismissed the assessee's appeal and upheld the inclusion of Australian rental income in India.

Revision under section 263 - Deduction under section 80IA - Infrastructure facility as integral part of highway/toll road - Assessing Officer's satisfaction and speaking order - Quashing of revisional order for want of jurisdictional error

Revision under section 263 - Deduction under section 80IA - Infrastructure facility as integral part of highway/toll road - Assessing Officer's satisfaction and speaking order - Whether the Principal Commissioner of Income Tax was justified in exercising revisionary jurisdiction under section 263 to set aside the assessment order which allowed deduction under section 80IA in respect of construction and operation of motor vehicle weighbridge and adjoining toll road. - HELD THAT: - The Tribunal examined the material on record including the concession agreement, the assessment proceedings and the scope of the Explanation to section 80IA(4). The return had been selected for scrutiny only on the claim under section 80IA; the assessee furnished detailed information and the Assessing Officer conducted enquiries under section 142(1) and passed a speaking assessment order dated 09-02-2021 accepting the claim on the basis that the motor vehicle weighbridge together with a connecting toll road of about one kilometre formed an integral part of the highway/toll road project. The PCIT set aside the assessment on the ground that the weighbridge, being constructed under Motor Vehicle Rules for collection of fees, was not an integral part of the national highway project and therefore not an "infrastructure facility" under the Explanation. The Tribunal found that the PCIT misconstrued the purpose and factual matrix of the concession agreement and the infrastructure developed thereunder. The weighbridge and the connecting road operate as part and parcel of the highway/toll road project to monitor movement of heavy vehicles and to collect tolls by weight, and would be of no independent utility detached from the highway; accordingly they fall within the scope of infrastructure facilities as an integral part of the highway/toll road. Because the Assessing Officer had made inquiries, formed a reasoned satisfaction and passed a speaking order accepting the claim, the PCIT's contrary view amounted to reappreciation of facts and a misconception of the legal character of the infrastructure rather than correction of any jurisdictional error warranting exercise of revisional power. The Tribunal therefore held that the PCIT's order setting aside the assessment was unsustainable and quashed it. [Paras 5, 6]

The PCIT's revisional order under section 263 was quashed and the assessment order allowing deduction under section 80IA was restored.

Final Conclusion: The appeal is allowed: the revisional order under section 263 setting aside the assessment that allowed deduction under section 80IA in respect of the motor vehicle weighbridge and its connecting toll road is quashed, the Assessing Officer's order stands restored.

Validity of communication issued without computer-generated Document Identification Number (DIN) - Binding effect of CBDT Circular No.19/2019 issued under Section 119 - Exceptions permitting manual communication and mandatory format for recording reasons and prior approval - Consequences of non-compliance with DIN requirements - communication deemed never issued

Validity of communication issued without computer-generated Document Identification Number (DIN) - Binding effect of CBDT Circular No.19/2019 issued under Section 119 - Consequences of non-compliance with DIN requirements - communication deemed never issued - Whether the DRP directions and consequent assessment orders issued without quoting the DIN in the body of the communication, and without complying with the format and prior-approval requirements of CBDT Circular No.19/2019, are valid or are to be treated as never issued - HELD THAT: - The Tribunal examined CBDT Circular No.19/2019 which mandates that, from 1 October 2019, communications relating to assessments and similar proceedings must quote a computer-generated Document Identification Number (DIN) in the body of the communication. Paragraph 3 of the Circular carves out limited exceptions permitting manual issuance only with recorded reasons in the file, prior written approval of the Chief Commissioner/Director General and a prescribed statement in the communication itself identifying the relevant exception and the approval reference. Paragraph 4 provides that any communication not conforming to paragraphs 2 and 3 shall be treated as invalid and deemed never to have been issued. Applying these mandates, the Tribunal found that the impugned DRP orders bear no DIN in their body and do not state the prescribed reasons or approval details required where manual issuance is claimed. Reliance was placed on the binding character of CBDT circulars under Section 119 and on authoritative decisions including the Delhi High Court's exposition that non-compliant final orders are non-est in law. The Tribunal also considered departmental explanations that a DIN was generated and communicated subsequently via ITBA 'Manual to System' upload and intimation, but held that subsequent generation or separate intimation of a DIN is ineffectual where the communication itself does not quote the DIN or contain the prescribed statement and approvals. On that basis the DRP directions and consequential assessment proceedings were held invalid and to be deemed never issued. [Paras 7, 8, 9]

Impugned DRP directions and resultant assessment orders are invalid for non-compliance with CBDT Circular No.19/2019 and are to be treated as never issued; DRP/AO orders quashed and appeals allowed.

Final Conclusion: The Tribunal, applying CBDT Circular No.19/2019 and relevant judicial authority, held that DRP directions and assessment orders which do not quote the computer-generated DIN in the body of the communication and do not comply with the Circular's format and approval requirements are invalid and deemed never issued; accordingly the impugned DRP/AO orders for AYs 2015-16, 2016-17 and 2017-18 are quashed and the appeals are allowed.

Additional depreciation under Section 32(1)(iia) - clarificatory amendment to Section 32(1)(iia) - balance fifty per cent of additional depreciation to be allowed in the succeeding year - manufacture or production of an article or thing - plant and machinery - classification of electrical installations as integral part

Additional depreciation under Section 32(1)(iia) - balance fifty per cent of additional depreciation to be allowed in the succeeding year - clarificatory amendment to Section 32(1)(iia) - Allowance of the balance 50% additional depreciation in A.Y. 2015-16 for plant and machinery acquired and put to use for less than 180 days in A.Y. 2014-15. - HELD THAT: - The Tribunal held that the restriction on claiming only 50% in the year of acquisition (when assets were used for less than 180 days) does not extinguish the statutory right to the balance 50% in the immediately succeeding year. Relying on coordinate-bench decisions and the explanatory memorandum underlying the amendment with effect from 1-4-2016, the Tribunal treated the legislative change as clarificatory of the statutory position and applied a purposive and liberal construction to give effect to the one-time incentive envisaged by the provision. The Tribunal observed that the additional allowance is earned on acquisition and that the statute, read as a whole, permits the balance 50% to be allowed in the following year; accordingly the balance amount claimed for A.Y. 2015-16 was allowed. [Paras 7]

Balance 50% of additional depreciation claimed in A.Y. 2015-16 is allowable and Grounds 1 and 2 are allowed.

Manufacture or production of an article or thing - additional depreciation under Section 32(1)(iia) - Whether the assessee's milk processing and related activities amount to 'manufacture or production' so as to attract additional depreciation. - HELD THAT: - On the facts and having considered the flow diagrams and authorities, the Tribunal concluded that the assessee's processes transform raw milk into commercially distinct milk products (buttermilk, lassi, butter, ghee, milk powder, ice-cream, sweets, etc.), resulting in new and different articles. Following the reasoning of the jurisdictional High Court and Supreme Court authorities on the test of manufacture (identity change, new commodity, irreversible transformation and market distinctness), the Tribunal held that the activities constitute manufacture or production and therefore entitle the assessee to additional depreciation under the provision. [Paras 11, 12]

Enhancement denying additional depreciation on the ground that the assessee only processed milk is deleted; Grounds 3 and 4 are allowed.

Plant and machinery - classification of electrical installations as integral part - depreciation and additional depreciation on integral electrical installations - Whether electrical items (substation, DG set, exhaust and pedestal fans, street lighting, transformers and similar electrical equipment) are integral to the plant and machinery eligible for depreciation and additional depreciation. - HELD THAT: - The Tribunal accepted the assessee's evidence (including the engineering certificate) that due to location and nature of operations these electrical installations are essential for functioning of the manufacturing plant. Relying on precedents recognising AC plants, electrical installations and transformers as integral to plant and machinery, the Tribunal held that such items cannot be treated as mere electrical fittings separable from the manufacturing plant and are eligible for depreciation and additional depreciation accordingly. [Paras 16, 17]

Disallowance of depreciation on the electrical items is reversed; Grounds 5 and 6 are allowed.

Final Conclusion: The Tribunal allowed the appeal in favour of the assessee: (i) the balance 50% additional depreciation pertaining to assets used for less than 180 days in A.Y. 2014-15 is allowable in A.Y. 2015-16; (ii) the assessee's activities amount to manufacture or production entitling it to additional depreciation; and (iii) the specified electrical installations qualify as integral part of plant and machinery for depreciation and additional depreciation purposes.

Revision under Section 263 - application of mind - erroneous and prejudicial to the interests of revenue - allowability of business expenditure under Section 37 - reimbursement of bank guarantee commission

Revision under Section 263 - application of mind - erroneous and prejudicial to the interests of revenue - allowability of business expenditure under Section 37 - reimbursement of bank guarantee commission - Whether the Principal Commissioner of Income Tax was justified in revising the assessment under Section 263 on the ground that the Assessing Officer erred in allowing bank guarantee commission reimbursement claimed by the assessee. - HELD THAT: - The Tribunal found that the Assessing Officer had specifically raised a query about the bank guarantee commission in the notice under section 142(1) and the assessee furnished detailed particulars, including Annexure-C showing BG numbers, banks and commission entries. The PCIT initiated revision relying on the alleged absence of declaration of the reimbursement in the books of the JV partner, but failed to consider the assessee's reply and the material on record. Where the Assessing Officer has made enquiries and taken a view after considering the material, a different view by the Commissioner does not ipso facto render the assessment order "erroneous and prejudicial to the interests of revenue" within the meaning of Section 263. The Tribunal applied settled principles that section 263 cannot be invoked merely because a revisional authority entertains a different opinion; jurisdictional error or lack of application of mind by the Assessing Officer must be shown. Having regard to the documents produced and the enquiry made by the AO, the PCIT's conclusion was held to be factually and legally unsustainable. The Tribunal relied on precedents that restrict the scope of revisional power where the AO has considered and decided the issue on evidence produced. [Paras 7, 9]

Revision order under Section 263 quashed; appeal allowed and assessment restored.

Final Conclusion: The Tribunal allowed the appeal, quashed the Principal Commissioner of Income Tax's revisional order under Section 263 in respect of the bank guarantee commission claim for A.Y. 2018-19, holding that the Assessing Officer had applied his mind and the revisional jurisdiction was not properly invocable.

Capital asset under section 2(14)(iii) - measurement of distance for determining urban agricultural land - development authority vis-a -vis municipality for section 2(14)(iii) - remand to the Assessing Officer for obtaining distance certificate - exemption under section 54B - application of section 50C - additions under section 68 - burden of proof and creditworthiness for cash deposits

Capital asset under section 2(14)(iii) - measurement of distance for determining urban agricultural land - development authority vis-a -vis municipality for section 2(14)(iii) - application of section 50C - Determination whether the lands sold qualify as capital asset under section 2(14)(iii) was not finally adjudicated and is remitted to the Assessing Officer for fresh verification of distance from the appropriate municipal limit. - HELD THAT: - The parties disputed whether the impugned lands fall within the exception in section 2(14)(iii). The Tribunal noted precedents holding that a development authority (such as AUDA/GUDA) cannot be equated with a municipality for the purpose of section 2(14)(iii), and that the Revenue's distance measurement based on inclusion in AUDA was therefore not in accordance with law. The assessee's proofs of distance (Google maps and a Deputy Engineer's certificate) were held inadequate because the proper authority keeping land records should furnish the distance certificate. In absence of an authoritative distance certificate, the Tribunal could not determine the issue on merits and directed restoration to the AO to obtain the necessary certificate from the appropriate authority and then adjudicate the question in accordance with law. The related claim of applicability of section 50C for computation of capital gains is tied to the capital asset determination and accordingly also requires fresh consideration after the AO's verification. [Paras 11, 12, 13, 14, 15]

Issue remanded to the Assessing Officer to obtain an authoritative distance certificate and to decide afresh whether the lands are capital assets under section 2(14)(iii), with consequential reconsideration (if any) of the application of section 50C.

Exemption under section 54B - Claim for exemption under section 54B was restored to the Assessing Officer for adjudication after verification of the distance/capital asset issue. - HELD THAT: - The Tribunal observed that the allowance of exemption under section 54B is consequential on the determination whether the land sold qualifies as rural agricultural land within the meaning of section 2(14)(iii). Given the remand for obtaining an authoritative distance certificate and fresh adjudication on whether the lands are capital assets, the assessee's claim of exemption under section 54B was restored for fresh consideration by the AO in accordance with law. [Paras 15]

Claim under section 54B restored to the AO for fresh adjudication after the distance/capital-asset determination.

Additions under section 68 - burden of proof and creditworthiness for cash deposits - Deletions of additions made under section 68 by the Commissioner (Appeals) were upheld and the Assessing Officer's additions were set aside to the extent deleted by the CIT(A). - HELD THAT: - The AO had added unexplained cash deposits to income under section 68. On appeal the assessee produced confirmations, bank statements, returns and other corroborative material before the CIT(A), who, after a remand report from the AO, examined each credit entry and deleted the additions except as noted. The Tribunal noted that the AO had accepted explanations to the extent of certain deposits and that the CIT(A)'s detailed factual findings (confirmations, bank evidence and returns demonstrating creditworthiness and repayment) were uncontroverted by the Revenue. Applying the established principle that where assessee discharges onus with corroborative evidence the addition is not sustainable, the Tribunal declined to interfere with the CIT(A)'s deletions and upheld deletion of the additions under section 68. [Paras 22, 23, 24, 25, 26]

The deletions of additions under section 68 by the CIT(A) are upheld; the Revenue's ground challenging those deletions is dismissed.

Final Conclusion: The question whether the lands are capital assets under section 2(14)(iii) (and consequential application of section 50C and the claim under section 54B) is remanded to the Assessing Officer for obtaining authoritative distance certification and fresh adjudication; the Tribunal upheld the Commissioner (Appeals)'s deletions of additions under section 68 and dismissed the Revenue's challenge to those deletions.

Nullity of assessment without issue of notice under section 143(2) - rectification under section 154 and limits on correcting change of opinion - time of accrual of capital gains for claim of exemptions under section 54F and section 54EC - application of section 68 to cash credits credited in earlier years - notional income attributable to rent-controller orders and effective date of revised rent for assessment - estimation of income on the basis of rejected books and requirement of evidentiary material

Notional income attributable to rent-controller orders and effective date of revised rent for assessment - treatment of co-owner's accepted rent for uniform tax treatment - Deletion of notional addition on account of rent receivable held to be not sustainable and directed AO to delete the addition - HELD THAT: - The Tribunal examined the AO's notional addition made by applying the Rent Controller's order with effect from 28.07.2012. The assessee, a half co-owner, had an agreement executed on 28.12.2015 fixing revised rent w.e.f. 1.12.2012 and declared income accordingly; another co-owner's identical addition was deleted by the CIT(A) and that decision was not challenged. The Tribunal followed the accepted treatment in the co-owner's case, noted that the assessee actually received rent accepted by the CIT(A) from 30.11.2012 and found the confirmation of the notional income by the CIT(A) unsustainable. On that basis the Tribunal set aside the CIT(A)'s order and directed deletion of the addition.

Addition confirmed by the CIT(A) on account of notional rent is deleted; appeal allowed.

Rectification under section 154 and limits on correcting change of opinion - mistake apparent from record - requirement of notice under section 143(2) - Upholding the CIT(A)'s quashing of the AO's section 154 rectification which attempted to change the provision under which assessment was framed - HELD THAT: - The AO issued a rectification under section 154 to alter the section cited in the assessment from 'section 143(3) r.w.s 147' to 'section 144 r.w.s 147' alleging a mistake apparent from the records. The Tribunal agreed with the CIT(A) that the assessment was in fact framed after issuing notice under section 142(1) and on merits under section 143(3) r.w.s. 147, and that the AO could not use section 154 to substitute a different provision or remedy alleged non-issuance of section 143(2) notice by changing the character of the assessment. The Tribunal found no infirmity in the CIT(A)'s view and dismissed the revenue's appeal against the quashing of the rectification order.

Order under section 154 quashing the AO's rectification is upheld; revenue's appeal dismissed.

Nullity of assessment without issue of notice under section 143(2) - reopening under section 147 and notice under section 148 - Assessment framed under section 143(3) r.w.s. 147 without issuance of notice under section 143(2) held to be invalid and quashed - HELD THAT: - The AO reopened the case under section 147 by issuing notice under section 148 and received a return in response, but did not generate or serve notice under section 143(2), treating the return as invalid. The Tribunal, following the CIT(A) and authoritative precedents, held that issuance of notice under section 143(2) is mandatory for framing an assessment under section 143(3) and absence thereof renders the assessment null and void. The Tribunal found that the AO had also issued a detailed section 142(1) notice and proceeded on the basis of the return, but the statutory requirement of section 143(2) remained unfulfilled; accordingly the assessment was quashed. The Tribunal also accepted the appellate finding on merits that the purported sale did not materialise and no capital gain arose in the earlier year.

Assessment of AY 2012-13 quashed for lack of notice under section 143(2); appeal allowed.

Application of section 68 to cash credits credited in earlier years - scope of section 68 limited to cash credits in the year of credit - Deletion of addition made under section 68 in respect of unsecured loans shown as opening balances brought forward from earlier years - HELD THAT: - The AO added unsecured loans to income under section 68 for AY 2016-17, alleging lack of evidence for sources. The Tribunal accepted that the sums were opening balances brought forward from earlier years and relied on precedents holding that section 68 applies only to cash credits credited in the year under consideration. The assessee submitted bank statements, ledger accounts, balance sheet and confirmations substantiating that the loans were taken in earlier years. In view of this, the Tribunal held that section 68 could not be invoked for those amounts in the year under appeal and directed deletion of the addition.

Addition under section 68 deleted; appeal allowed.

Time of accrual of capital gains for claim of exemptions under section 54F and section 54EC - requirement of actual transaction and realization for accrual of capital gain - Upholding the CIT(A)'s allowance of deductions under section 54F and section 54EC on finding that capital gain accrued in AY 2016-17 upon realization - HELD THAT: - The revenue contended that long-term capital gain accrued in AY 2012-13 on registration of the sale deed, but the CIT(A) found that cheques towards sale consideration were dishonoured, possession reverted and the effective consummation of the sale and realization occurred in AY 2016-17. The Tribunal agreed that the transaction did not result in realized consideration in the earlier year and that capital gain arose only when consideration was actually realized in AY 2016-17; therefore the assessee's claim of exemption under section 54F for acquisition of residential property and investment under section 54EC was correctly allowed by the CIT(A). The Tribunal accordingly upheld those deletions.

Deductions under section 54F and section 54EC allowed; revenue's grounds dismissed.

Estimation of income on the basis of rejected books and requirement of evidentiary material - inadmissibility of ad-hoc additions based on suspicion, surmise or conjecture - Deletion of addition made by estimating business income where AO produced no cogent material to substantiate income from dormant concerns - HELD THAT: - The AO rejected books under section 145(3) and made an ad-hoc estimate of income for AY 2016-17 by imputing monthly profits from concerns which the assessee demonstrated were dormant; the assessee produced balance sheet and P&L for the active concern. The Tribunal agreed with the CIT(A) that the AO failed to produce material to justify attributing additional income and that the addition was founded on suspicion and conjecture. Reliance was placed on coordinate decisions condemning ad hoc disallowances in absence of verifiable material. The Tribunal therefore confirmed deletion of the estimated addition.

Ad-hoc addition deleted; CIT(A)'s order upheld.

Final Conclusion: The Tribunal allowed the assessee's appeals and dismissed the revenue's appeals: the notional rent addition and the additions under sections 68 and ad hoc estimated business income were deleted; the AO's rectification under section 154 was quashed; the assessment for AY 2012-13 was held void for want of notice under section 143(2); deductions under sections 54F and 54EC for AY 2016-17 were upheld. Cross objections were dismissed as infructuous.

Anonymous donations - religious purpose - charitable purpose - Section 115BBC(2)(b) - registration under Section 80G and its relevance - accumulation under Section 11(2) - condonation of delay in filing Form No. 10 - accumulation under Section 11(1)(a) - gross receipts versus net receipts - interest on corpus funds - voluntary contribution with specific direction - Section 11(1)(d) - application of income from corpus interest - remand for verification

Anonymous donations - religious purpose - charitable purpose - Section 115BBC(2)(b) - registration under Section 80G and its relevance - Whether the assessee Trust existed for both religious and charitable purposes and was therefore excluded from tax on anonymous donations under Section 115BBC(2)(b). - HELD THAT: - The Tribunal examined the objects and statutory scheme and concluded that the Trust's activities (maintenance of temples, conduct of rituals, provision for darshan, propagation of Shri Sai Baba's teachings, festivals and hundi collections) fall within the ordinary and broad understanding of 'religious purpose', which may overlap with charitable purposes. The legislative intent of Section 115BBC and the explanatory circular was held to exclude anonymous hundi/donation-box collections at institutions existing for religious or mixed religious-and-charitable purposes from tax. The Tribunal rejected Revenue's contention that 80G registration (which involves a quantum test under Section 80G(5B)) precludes a finding of mixed purpose for Section 115BBC; Section 80G and Section 115BBC were held to operate independently and compatibly. Reliance on precedents (including the jurisdictional Bombay High Court's decision in DIT v. Bombay Panjrapole Trust and Supreme Court and High Court authorities recognising overlap between charitable and religious activities) supported the conclusion that the Trust is a mixed-purpose institution and entitled to exclusion under Section 115BBC(2)(b). The Tribunal therefore upheld the CIT(A)'s deletion of the addition made u/s 115BBC. [Paras 21, 22, 26, 31, 36]

The assessee is held to be existing for both religious and charitable purposes; anonymous donations in the hundi are excluded from tax under Section 115BBC(2)(b). Revenue's appeals dismissed on this issue.

Condonation of delay in filing Form No. 10 - accumulation under Section 11(2) - Whether the assessee was entitled to claim accumulation under Section 11(2) despite filing Form No.10 belatedly, where the competent authority has subsequently condoned the delay. - HELD THAT: - The AO and CIT(A) had denied the claim because Form No.10 was not filed within the statutory time and no condonation order was on record at that stage. During tribunal proceedings the assessee produced an order under section 119(2)(b) by the CIT(Exemptions), Mumbai dated 16.03.2023 condoning the delay in filing Form No.10 for AY 2015-16. Revenue did not dispute this subsequent condonation. The Tribunal directed recomputation of total income and allowance of admissible exemption under Section 11(2) in view of the condonation by the competent authority. [Paras 39, 40]

Delay in filing Form No.10 has been condoned by the competent authority; AO directed to recompute and allow accumulation under Section 11(2) as claimed by the assessee.

Accumulation under Section 11(1)(a) - gross receipts versus net receipts - Bai Sonabai Hirji Agency Trust precedent - Whether the prescribed percentage of accumulation under Section 11(1)(a) is to be calculated on gross receipts or on net receipts after deduction of revenue expenditure. - HELD THAT: - The Tribunal followed binding precedent of the Special Bench (Bai Sonabai Hirji Agency Trust) and subsequent coordinate Bench decisions holding that the statutory test for accumulation under Section 11(1)(a) requires taking the income derived from property (or gross receipts) prior to application/expenditure. Expenditures that are application of income are not to be deducted before computing the statutory percentage. Applying this principle, the Tribunal directed that the accumulation (15% as applicable) be allowed on gross receipts as claimed by the assessee. [Paras 43, 45]

Accumulation under Section 11(1)(a) to be computed on gross receipts; assessee's claim allowed.

Interest on corpus funds - voluntary contribution with specific direction - Section 11(1)(d) - Whether interest earned on invested corpus funds qualifies as voluntary contributions with a specific direction and is therefore exempt under Section 11(1)(d). - HELD THAT: - The AO and CIT(A) found no evidence (written or oral directions acted upon) from donors that interest earned on corpus funds was directed by donors to form part of corpus. The proximate source of the interest was investment income (fixed deposits); no specific donor instruction was produced to characterise the interest as voluntary corpus contributions. The Tribunal concurred with the lower authorities that the twin requirements for exemption under Section 11(1)(d) (voluntary contribution and specific donor direction that it shall form part of corpus) were not satisfied on the facts, and therefore the interest could not be treated as corpus donations exempt u/s 11(1)(d). [Paras 48, 50, 51]

Interest on corpus funds is not exempt under Section 11(1)(d); addition upheld.

Application of income out of corpus interest - remand for verification of expenses - Remand to the Assessing Officer to examine and allow application-of-income deductions in respect of amounts spent out of interest on corpus funds. - HELD THAT: - Although the Tribunal upheld that the interest itself did not qualify as corpus donation, the financial schedules indicated that amounts from corpus (including interest) were spent for the Trust's objects and, on the face of accounts, expenditures exceeded the interest in question. The assessee had not specifically placed these details before lower authorities. The Tribunal held that amounts actually applied from the interest/corpus towards charitable objects should be examined and allowed as application of income where substantiated. Accordingly, the issue was remanded to the AO for verification of the details of expenditures from the corpus interest and allowance in accordance with law. [Paras 53]

Issue remanded to the Assessing Officer to verify and allow deductions for amounts actually applied out of interest on corpus funds; AO to recompute accordingly.

Final Conclusion: The Tribunal affirmed the CIT(A)'s finding that the Trust is of mixed religious and charitable character and is entitled to exclusion of anonymous hundi/donation-box collections under Section 115BBC(2)(b) (Revenue appeals dismissed). The assessee's appeal was partly allowed: condonation of delay in filing Form No.10 accepted and accumulation under Section 11(2) directed to be allowed; 15% accumulation under Section 11(1)(a) to be computed on gross receipts; interest on corpus not exempt under Section 11(1)(d) but the AO is directed to verify and allow, where substantiated, application-of-income deductions out of such interest (remanded for verification).

Arm's length price - transfer pricing - CUP method - transactional net margin method (TNMM) - comparables search and benchmarking - arbitrary selection of royalty rate - use of judicial precedent without fresh analysis - segregation approach - associated enterprises

CUP method - transactional net margin method (TNMM) - comparables search and benchmarking - arbitrary selection of royalty rate - use of judicial precedent without fresh analysis - arm's length price - segregation approach - associated enterprises - Whether the adoption of CUP and imposition of a 3% royalty rate without undertaking a fresh comparables search or proper analysis was sustainable, and whether TNMM/segregation approach should have been applied for determining ALP of payments to associated enterprises. - HELD THAT: - The Tribunal found that the TPO/DRP adopted an adhoc royalty rate of 3% by relying on earlier orders and selected comparables (Federal Mogul, Climate Systems India Ltd.) without undertaking a fresh exercise of comparables search or making any analysis on relevant FAR and other benchmarking parameters. The order indicates that the 3% rate was followed from the assessee's earlier assessment year directions rather than being justified for the year under consideration. On similar facts a Coordinate Bench had set aside comparable adjustments where the revenue had not brought correct comparables on record and where TNMM/segregation approach was held to be the appropriate method in the circumstances. The Tribunal observed no material distinction in facts for the present year and concluded that reliance on precedent alone, without application of the prescribed methodological analysis and without proper search for and identification of comparables, rendered the CUP-based adjustment and the fixation of 3% arbitrary. Consequently the addition confirmed by the AO/DRP under transfer pricing for royalty/technical fee payments could not be sustained. [Paras 10, 11, 12]

The appeal is allowed and the impugned transfer pricing adjustment based on a 3% royalty rate and CUP application, made without appropriate comparables search or analysis, is not sustained.

Final Conclusion: The Tribunal allowed the appeal for AY 2017-18, holding that the adoption of a 3% royalty rate and CUP-based adjustment by the revenue was arbitrary and unjustified in the absence of a proper comparables search and fresh analytical exercise; accordingly the addition confirmed by the AO/DRP was set aside.

Reopening of assessment u/s 147 - Reason to believe - Escapement of income - Assessee in default u/s 201(1) - TDS obligation on redemption premium / interest on FCCBs - Source rule for interest and exclusion under section 9(1)(v) - Removal of foundational information (Sublato fundamento) - Quashment of reopening notice

Reopening of assessment u/s 147 - Reason to believe - Escapement of income - TDS obligation on redemption premium / interest on FCCBs - Source rule for interest and exclusion under section 9(1)(v) - Removal of foundational information (Sublato fundamento) - Validity of reopening assessment of the non-resident trustee for AY 2014-15 on the basis of information that the payer was an assessee in default for non-deduction of tax - HELD THAT: - The Assessing Officer reopened the non-resident trustee's assessment on the basis of information from the payer's AO that the payer (Bharat Forge Ltd.) was an assessee in default and that interest/redemption premium payable to the trustee was deemed to accrue or arise in India. Subsequently the payer successfully challenged the TDS liability: the Tribunal held that the redemption premium, though akin to interest, did not accrue or arise in India in the hands of the non-resident recipient by virtue of the exclusion in section 9(1)(v), and therefore the payer was not obliged to deduct tax at source. That subsequent adjudication removed the foundational material on which the trustee's AO had recorded his "reason to believe". Where the foundational information is displaced, the superstructure of the reopening collapses (Sublato fundamento). Applying this principle and having regard to authority that acts founded on a removed basis fall, the Tribunal held that the AO's reasons for reopening were legally unsustainable and the reopening notice must be quashed. [Paras 10, 11]

The reopening of assessment u/s 147 was quashed and the legal challenge to the reopening allowed.

Final Conclusion: The appeal is allowed: the AO's reopening of the assessment for AY 2014-15 is quashed because the foundational information on which the "reason to believe" was recorded was subsequently found legally incorrect, removing the basis for the reopening.

Cash credits under section 68 - burden of proof under Section 68 - identity, genuineness and creditworthiness of creditor - onus shifting to revenue - addition as unexplained income

Cash credits under section 68 - burden of proof under Section 68 - identity, genuineness and creditworthiness of creditor - onus shifting to revenue - Validity of addition of Rs. 4,50,68,325 made by AO under section 68 and correctness of CIT(A)'s deletion of that addition - HELD THAT: - The AO added the alleged loan amount under section 68 on the basis that the assessee failed to produce a loan agreement, did not furnish financial statements of the purported Dubai lender to establish its creditworthiness, the lender's bank statement showed various cash deposits immediately prior to transfer to the assessee which cast doubt on genuineness, and there was no evidence of payment of interest or repayment of principal despite multiple opportunities. The CIT(A) deleted the addition after accepting the assessee's documentary proof of transfer through banking channels (FIRC, remittance advices), confirmation letter, commercial licence and passport to establish identity, and a year-long bank statement of the lender to show volume of transactions; relying on precedent that once the assessee discharges the initial onus under section 68 the onus shifts to revenue to disprove the explanation. The Tribunal, however, found that the CIT(A) did not satisfactorily confront or dislodge the AO's specific findings: no loan agreement was produced, no financial statements of the lender were filed to substantiate its capacity to grant an interest-free loan which remains unpaid, and on enquiry the assessee's representative could not show any interest payment or repayment. In those circumstances the Tribunal held that the CIT(A) had granted relief without addressing the core infirmities noted by the AO, and that the AO was justified in treating the credit as unexplained and making the addition under section 68. Consequently the CIT(A) order was reversed and the AO's addition restored. [Paras 10, 11, 12, 13, 14]

The revenue's appeal is allowed; the addition of Rs. 4,50,68,325 made by the Assessing Officer under section 68 is restored.

Final Conclusion: The Tribunal allows the revenue appeal for AY 2016-17, holds that the Assessing Officer was justified in treating the loan amount as unexplained credit under section 68 due to absence of loan agreement, lack of lender financials and no evidence of interest/repayment, and restores the addition made by the AO.

Interpretation of contractual clause governing change in customs duties (distinction between Basic Customs Duty and Countervailing Duty) - Relevance and effect of executive circulars as clarificatory instruments in contract interpretation - Scope of reference under Section 11 and arbitrability of claims pleaded in notice of invocation - Application of contractual tolerance clause for quantity (+/-2%) to diverted supplies - Liquidated damages and proof of loss under Section 74 of the Indian Contract Act - Limitation in arbitration: effect of part-payments and joint reconciliation on accrual of cause of action - Judicial review under Section 34 of the Arbitration and Conciliation Act - limited scope and deference to possible views of the Arbitral Tribunal - Arbitrability of disputes alleged to involve serious fraud

Interpretation of contractual clause governing change in customs duties (distinction between Basic Customs Duty and Countervailing Duty) - Relevance and effect of executive circulars as clarificatory instruments in contract interpretation - Judicial review under Section 34 of the Arbitration and Conciliation Act - limited scope and deference to possible views of the Arbitral Tribunal - Clause 5.2 applies only to Basic Customs Duty (BCD) and not to Countervailing Duty (CVD); the Circular relied upon by the Petitioner was clarificatory and irrelevant to attract Clause 5.2, and the Arbitral Tribunal's interpretation is a possible view not open to interference under Section 34. - HELD THAT: - The Arbitral Tribunal construed Clause 5.2 in light of Clause 5.1 and the scheme of the contract to treat BCD as distinct from CVD; Clause 5.2 was intended to operate only in relation to changes in BCD. The notifications extant at contract formation showed the parties priced the contract on 2% BCD and 2% CVD; there was no change in BCD during the contractual period to invoke Clause 5.2. The Circular dated 03.10.2013 was held to be merely clarificatory and concerned the position of CVD; therefore it did not alter the applicability of Clause 5.2. As the Tribunal's interpretation is a possible and reasonable construction of the contract, the court, applying the limited supervisory jurisdiction under Section 34, declined to disturb that view. [Paras 54, 55, 56]

The Arbitral Tribunal's finding that Clause 5.2 applies only to BCD and that the Circular is clarificatory and irrelevant is upheld; no interference under Section 34.

Scope of reference under Section 11 and arbitrability of claims pleaded in notice of invocation - Judicial review under Section 34 of the Arbitration and Conciliation Act - limited scope and deference to possible views of the Arbitral Tribunal - Claims Nos. 2 to 5 were not beyond the scope of reference and were arbitrable; the Section 11 order did not restrict the Respondent from making claims set out in its notice of invocation. - HELD THAT: - The High Court examined the Section 11 order of 30.10.2018 and found its operative part referred 'all disputes' to arbitration and did not restrict the Respondent's claims made in the notice of invocation. The Arbitral Tribunal correctly interpreted Section 11 as not requiring the Court to identify and confine the disputes and therefore was within jurisdiction to adjudicate Claim Nos. 2 to 5. The Tribunal's exercise of jurisdiction on these claims is a possible view and not susceptible to interference under Section 34. [Paras 58]

The award on Claims Nos. 2 to 5 is sustained; those claims are within the scope of reference and are arbitrable.

Application of contractual tolerance clause for quantity (+/-2%) to diverted supplies - Interpretation of clauses governing diversion of rakes and ordered/contracted quantity - Judicial review under Section 34 of the Arbitration and Conciliation Act - limited scope and deference to possible views of the Arbitral Tribunal - The +/-2% tolerance under Clause 8.7 must be applied with reference to the contracted/ordered quantity as a whole and cannot be applied independently to the diverted 80,000 MT; the Arbitral Tribunal's interpretation in favour of the Respondent is a possible view and is upheld. - HELD THAT: - The Tribunal interpreted 'ordered quantity/contracted quantity' to mean the tolerance applies against the contracted quantity if fully ordered or against the ordered quantity, not on a stand-alone diverted sub-quantity. The amendment effecting diversion did not create a separate independent contract for 80,000 MT; parties were required to follow the contract amendment procedure. Applying Clause 8.7 to the total Chandrapur ordered quantity, there was no shortfall warranting the Petitioner's deduction. As this interpretation is tenable, the Court declined to disturb the Tribunal's conclusion under Section 34. [Paras 59, 60, 61, 62]

The Arbitral Tribunal's conclusion that the tolerance is to be calculated on the total contracted quantity (and not separately on the diverted quantity) is upheld; the Petitioner's deduction on this basis cannot be sustained.

Liquidated damages and proof of loss under Section 74 of the Indian Contract Act - Requirement to prove actual loss where possible and applicability of contractual pre-estimate - Judicial review under Section 34 of the Arbitration and Conciliation Act - limited scope and deference to possible views of the Arbitral Tribunal - Deductions made as liquidated damages were impermissible because the Arbitral Tribunal found no shortfall beyond permissible limits and the Petitioner failed to prove any actual loss; therefore the Tribunal's finding on liquidated damages stands. - HELD THAT: - The Tribunal held that there was no breach in quantity exceeding contractual tolerance; consequently the liquidated damages issue did not arise. Even assuming the issue were considered, the Petitioner produced no evidence of damage or loss; under Section 74 the existence of loss remains relevant where actual loss can be proved, and the Petitioner failed on that score. The Court agreed with the Tribunal's approach and declined to interfere, observing that the Petitioner did not lead evidence to establish loss. [Paras 63]

The finding that the liquidated damages deduction was impermissible for lack of proven loss (and in light of no breach) is affirmed.

Limitation in arbitration: effect of part-payments and joint reconciliation on accrual of cause of action - Judicial review under Section 34 of the Arbitration and Conciliation Act - limited scope and deference to possible views of the Arbitral Tribunal - The Respondent's claims were within limitation as the relevant balance claims crystallised only after part-payments and completion of joint reconciliations in 2017; the notice of arbitration dated 31.08.2017 was therefore timely. - HELD THAT: - The Tribunal noted part-payments by the Petitioner in October-November 2015 and that the Chief Engineer had earlier rejected certain claims; the net amounts became due only after joint reconciliations completed on 22.03.2017 (Chandrapur) and 24.05.2017 (Bhusawal). Given those reconciliations and the subsequent notice of arbitration, the Tribunal concluded the claims were within limitation. The High Court found no error in this factual and legal appreciation and, applying the restricted scope of review under Section 34, declined to re-appreciate evidence. [Paras 51, 64]

The Arbitral Tribunal's conclusion that the claims are within limitation is upheld.

Arbitrability of disputes alleged to involve serious fraud - Judicial review under Section 34 of the Arbitration and Conciliation Act - limited scope and deference to possible views of the Arbitral Tribunal - The Arbitral Tribunal correctly held that the dispute involves contractual issues and at most allegations of simple fraud, not serious fraud rendering the matter non-arbitrable; the Tribunal's preliminary order on arbitrability is sustained. - HELD THAT: - On the preliminary objection, the Tribunal examined the material including the DRI proceedings (whose order had been set aside by CESTAT and subsequent proceedings) and concluded the highest case in the defence was of simple fraud. That characterisation preserved arbitrability. The High Court accepted the Tribunal's appraisal and held that the finding that the matter is arbitrable cannot be faulted under Section 34. [Paras 65]

The impugned order holding the disputes arbitrable (not involving serious fraud) is maintained.

Final Conclusion: The Court found no merit in the challenge to the Arbitral Tribunal's interpretations and factual conclusions on the contested issues (BCD/CVD clause, applicability of the Circular, scope of reference, quantity tolerance on diversion, liquidated damages and limitation). The Commercial Arbitration Petition is dismissed and the Arbitral Award and preliminary order are upheld; no order as to costs.

Release of detained goods pending adjudication - payment of duty under protest - claim for exemption under duty preference scheme - time bound adjudication

Release of detained goods pending adjudication - payment of duty under protest - Petitioner entitled to release of imported goods on condition of payment of 100% duty pending adjudication. - HELD THAT: - The Court, without adjudicating the merits of the exemption claim, accepted the petitioner's offer to pay 100% duty under protest and directed the authority to consider the request for release of the goods. The direction was given as an interim measure to alleviate hardship (warehouse charges and market fluctuation) while preserving the petitioner's right to pursue the exemption claim. The Court did not rule on the question whether the goods qualified for duty exemption under the claimed preference scheme.

Goods to be released subject to payment of 100% duty by the petitioner within one week from such payment, as an interim measure.

Liberty to apply after payment - release of detained goods pending adjudication - Petitioner granted liberty to apply for release after making payment of duty, and such application to be considered by the authority. - HELD THAT: - The Court permitted the petitioner, having paid the 100% duty under protest, to make an appropriate application seeking release of the goods; the authority was directed to consider that application. This preserves the administrative process and does not foreclose the petitioner's right to claim refund or contest the levy in subsequent proceedings.

Petitioner may apply for release after payment and the authority shall consider the application.

Adjudication of exemption claim - time bound adjudication - Authority directed to adjudicate the petitioner's claim for duty exemption expeditiously and within a specified period. - HELD THAT: - The Court remitted the substantive claim for determination by the competent authority, directing that the issue of exemption under the relevant notifications and the claimed country of origin certificate be adjudicated in accordance with law after affording the petitioner adequate opportunity. The Court prescribed a preferred outer limit of three months from receipt of the order for completion of adjudication, thereby imposing a time bound mandate for administrative decision making while leaving the merits to the authority.

Respondents to adjudicate the exemption claim as expeditiously as possible, preferably within three months from receipt of the order.

Final Conclusion: Writ petition disposed by directing interim release of goods on payment of 100% duty under protest, liberty to apply for release after payment, and remand of the substantive exemption claim to the authorities for time bound adjudication (preferably within three months).

Provisional attachment of bank account under Section 110(5) of the Customs Act - Expiry of statutory period of six months and requirement of extension by the Principal Commissioner or Commissioner - Requirement to inform person and bank of extension and duty to lift attachment upon expiry - Extension of provisional attachment for further period upon reasons to be recorded

Provisional attachment of bank account under Section 110(5) of the Customs Act - Expiry of statutory period of six months and requirement of extension by the Principal Commissioner or Commissioner - Duty to lift attachment upon expiry - Whether the provisional attachment of the petitioner's bank account dated 28th November 2022 remained in force after the expiry of six months in the absence of any extension communicated under the proviso to Section 110(5). - HELD THAT: - The provisional attachment dated 28th November 2022 was valid for a period not exceeding six months unless extended in accordance with the proviso to Section 110(5) by the Principal Commissioner or Commissioner, who must record reasons in writing and inform the person before expiry. The respondents did not dispute that the six month period had expired on 28th May 2023 and that no extension had been communicated. Having regard to the statutory scheme, once the fixed period expired without an authorized extension, the provisional attachment ceased to operate by operation of law. The respondents were under a duty to defreeze and inform the bank and petitioner, and their failure to do so despite the petitioner's requests was contrary to the statutory requirement and inconsistent with the policy of facilitating ease of doing business. Consequently the provisional attachment has expired and required withdrawal. [Paras 5, 7, 8, 9, 10]

The provisional attachment dated 28th November 2022 expired on 28th May 2023 for want of extension and is quashed; respondents are directed to withdraw the attachment and inform the bank within one week of uploading the order.

Final Conclusion: The petition is allowed: the provisional attachment of the petitioner's bank account dated 28th November 2022 is quashed as having expired on 28th May 2023 for want of statutory extension, and the respondents are directed to withdraw the attachment and inform the bank within one week.

Condonation of delay - error apparent on the face of the record - alternative statutory remedy and writ jurisdiction - violation of principles of natural justice - unreasonable delay in adjudication and limitation

Condonation of delay - Application for condonation of delay in filing the review petition - HELD THAT: - The petitioners explained that delay in filing the review arose from their earlier prosecution of a Special Leave Petition before the Supreme Court, which led to liberty being granted to file review before this Court. The delay was held to be sufficiently explained and the interlocutory application for condonation of delay was allowed. [Paras 6]

I.A. for condonation of delay allowed.

Alternative statutory remedy and writ jurisdiction - violation of principles of natural justice - error apparent on the face of the record - unreasonable delay in adjudication and limitation - Whether the High Court should have dismissed the writ petitions in limine on the ground of availability of an alternative statutory remedy, despite claimed violations of natural justice and excessive delay in adjudication - HELD THAT: - The Court found that the writ petitions had been dismissed solely on the ground of availability of an alternative remedy without examining the contention that delay of over 11 years in adjudication amounted to violation of principles of natural justice. Applying the exceptions recognised by higher precedent, the Court held that a prima facie case was made out that the exception for violation of principles of natural justice applied and that the earlier order contained a patent omission in not considering that contention. Consequently, the order dismissing the writ petitions in limine was set aside to enable consideration of the merits. [Paras 16, 17]

Order dated 09.01.2023 dismissing the writ petitions on account of alternative remedy set aside; review petition allowed and the matters directed to be listed for hearing on admission.

Final Conclusion: The application for condonation of delay is allowed; the High Court's earlier dismissal of the writ petitions on the sole ground of alternative remedy is set aside because a prima facie exception arising from alleged violation of principles of natural justice and excessive delay was established; the matters are restored for further consideration and listed for hearing on admission.

Lack of application of mind - principles of natural justice - remand for fresh consideration - classification of replica firearms under chapter 93 - re-determination of assessable value under Customs Valuation Rules - confiscation under Section 111(d) and Section 111(m) of the Customs Act - penalties under Section 112(a) and Section 114AA of the Customs Act - requirement of certificate of innocuousness and DGFT permission for import of replica firearms - relevance of Forensic Science Laboratory ballistic report

Lack of application of mind - principles of natural justice - Impugned order of the Commissioner (Appeals) is unsustainable for being verbatim repetition of the adjudicating authority's order and lacking application of mind. - HELD THAT: - The Tribunal examined the Commissioner (Appeals) order and found it to be a reproduction of the adjudicating authority's order without independent reasoning. The appellate order did not address the applicability of legal provisions, notifications, or the parties' contentions and therefore failed to discharge the appellate authority's duty to consider the appeal on merits in a reasoned manner. For these reasons the impugned order does not reflect application of mind and is liable to be set aside. [Paras 11]

Impugned appellate order set aside for lack of application of mind; matter remanded to Commissioner (Appeals) for fresh decision after giving due consideration and reasons.

Remand for fresh consideration - classification of replica firearms under chapter 93 - re-determination of assessable value under Customs Valuation Rules - confiscation under Section 111(d) and Section 111(m) of the Customs Act - penalties under Section 112(a) and Section 114AA of the Customs Act - requirement of certificate of innocuousness and DGFT permission for import of replica firearms - relevance of Forensic Science Laboratory ballistic report - Merits-classification, valuation, confiscation and penalties-to be reconsidered by the Commissioner (Appeals) on fresh consideration. - HELD THAT: - The Tribunal did not adjudicate the substantive questions of law or fact concerning classification of the imported items, correctness of re-determined assessable value, confiscation orders, imposition of penalties, requirement of licence/certificate or the legal importability of replica firearms. Instead, having found the appellate order devoid of independent reasoning, the Tribunal remanded these substantive issues to the Commissioner (Appeals) for fresh adjudication. On remand the Commissioner (Appeals) is to examine and record reasons on matters including the applicability of Arms Act provisions and notifications, the requirement under the Foreign Trade Policy and Rules for certificate of innocuousness and DGFT permission, the probative value of FSL ballistic report(s), and the basis for valuation and confiscation/penalty orders, giving the parties opportunity to be heard. [Paras 11, 12]

Appeal allowed by way of remand; Commissioner (Appeals) directed to decide the appeal afresh on merits with proper and substantive reasoning.

Final Conclusion: The Tribunal set aside the Commissioner's appellate order for want of application of mind and remanded the appeal to the Commissioner (Appeals) for fresh adjudication on the merits (classification, valuation, confiscation, penalties and related statutory requirements), without expressing any view on those substantive issues.

Refund of SAD under Notification No.102/2007-Cus. - procedural endorsement requirement - liberal construction of exemption - distinction between substantive and procedural conditions - trader-importer entitlement despite absence of invoice endorsement

Refund of SAD under Notification No.102/2007-Cus. - procedural endorsement requirement - trader-importer entitlement despite absence of invoice endorsement - liberal construction of exemption - Entitlement to refund of Special Additional Duty (SAD) under Notification No.102/2007-Cus. despite absence of the endorsement required by para 2(b) on commercial invoices - HELD THAT: - The Tribunal held that the question whether non-endorsement of invoice as prescribed by para 2(b) of Notification No.102/2007-Cus. precludes a trader-importer from claiming refund of SAD is settled by the Larger Bench decision in Chowgule & Company Pvt. Ltd. That decision distinguished substantive and procedural conditions, applied a liberal construction to the exemption, and concluded that the invoice endorsement was procedural in nature. Where the object of the condition is satisfied by non-specification of the duty element on commercial invoices, the mere absence of the prescribed endorsement does not defeat the purpose of the exemption. Applying that ratio, the Tribunal found the rejection of the refund claim solely for want of the endorsement to be unjustified and set aside the impugned order, subject to satisfaction of the other conditions of the notification. [Paras 5, 6]

Rejection of the refund claim solely for non-compliance with the endorsement requirement is not justified; the appeal is allowed and the impugned order is set aside, with consequential relief as applicable.

Final Conclusion: The impugned rejection of the SAD refund claim was set aside and the appeals allowed, the Tribunal applying the Larger Bench ratio that the invoice endorsement in para 2(b) is a procedural requirement and absence thereof does not, by itself, disentitle a trader-importer to refund under Notification No.102/2007-Cus., subject to other conditions being met.

Acceptance of transaction value - rejection of declared value - requirements under Customs Valuation Rules, 2007 (Rule 12(2) and Explanation (1)) - use of contemporaneous/import database and adoption of lowest value in bandwidth - prohibition on resort to computed value/Rule 7A (Rule 8) except in related party cases - inadmissibility of domestic (Indian market) sale prices for valuation of imports - illegality of re enhancement/re assessment after assessment has become final

Acceptance of transaction value - rejection of declared value - requirements under Customs Valuation Rules, 2007 (Rule 12(2) and Explanation (1)) - Validity of rejection of the declared transaction value and adequacy of reasons given for such rejection - HELD THAT: - The adjudicating authority rejected the transaction value declared under Section 14 and re determined value under the Customs Valuation Rules, 2007 without setting out the reasons required by sub rule (2) of Rule 12 and without indicating any of the ingredients specified in Explanation (1) of Rule 12. The Tribunal held that the transaction value, as declared, ought not to have been arbitrarily rejected in the absence of extraordinary or special reasons and sustainable evidence justifying rejection. The order of the Commissioner therefore failed to comply with the mandatory requirement to record reasons for rejecting transaction value and was held to be unlawful. [Paras 6, 9]

Rejection of the declared transaction value set aside for lack of the required reasons and sustainable evidence; the transaction value must ordinarily be accepted unless extraordinary reasons are shown.

Use of contemporaneous/import database and adoption of lowest value in bandwidth - Validity of the department's market enquiry and selection of comparative values from contemporaneous import data - HELD THAT: - The department had no database of identical or similar contemporaneous imports and undertook a market enquiry which produced a range of values. The Tribunal recalled that, where a bandwidth of contemporaneous values exists, the lowest value in that bandwidth is to be taken in terms of the Rules. The adjudicating authority did not adopt this principle, and its selection of comparative values departed from the prescribed approach under the Customs Valuation Rules, rendering the re determination incorrect. [Paras 4, 7]

Adoption of comparative values by the department was improper because the prescribed approach of taking the lowest value in the bandwidth was not followed.

Prohibition on resort to computed value/Rule 7A (Rule 8) except in related party cases - Appropriateness of applying computed/constructed value methodology (Rule 7A/Rule 8) in the absence of a finding of buyer-seller relatedness - HELD THAT: - The Tribunal noted that recourse to computed or constructed value under Rule 7A/Rule 8 is permissible only where buyer and seller are related. The adjudication made no finding of such relatedness, yet applied computed value methodologies for various items. Following the precedent that limits computed value to related party cases, the Tribunal found such recourse unjustified and legally unauthorized in the present matter. [Paras 9]

Use of computed/constructed value methodologies without any finding of relatedness was unlawful; such methods are inapplicable here.

Inadmissibility of domestic (Indian market) sale prices for valuation of imports - Permissibility of adopting Indian domestic sale prices as basis for valuation of imported goods - HELD THAT: - The Commissioner adopted values of Indian goods as sold in the Indian market for re determination of import value. The Tribunal held that domestic sale prices cannot form the basis for valuation of imported goods under the Customs Valuation Rules, and that reliance on such domestic comparisons is legally impermissible for determining import value. [Paras 9]

Adoption of Indian domestic sale prices as a basis for import valuation was void in law.

Illegality of re enhancement/re assessment after assessment has become final - Legitimacy of re enhancing value and reassessing goods after an earlier enhancement assessment had become final - HELD THAT: - The Tribunal referred to precedent that re enhancement of value is not permissible once the value has been enhanced and duty paid, and an earlier assessment has become final absent any appeal or review. In the present case the department undertook re enhancement after earlier enhancement and payment; the Tribunal found such reassessment patently illegal and unjustified. [Paras 6]

Re enhancement/re assessment after finalisation of earlier enhancement is unlawful and the re enhancement was set aside.

Final Conclusion: The original order rejecting the declared transaction value and re determining the import value was set aside on multiple grounds: absence of mandated reasons under Rule 12(2)/Explanation (1), incorrect use of comparative values instead of the lowest bandwidth value, impermissible resort to computed value without related party findings, reliance on domestic market prices, and unlawful re enhancement after final assessment; appeal allowed with consequential relief.

Obligations of Customs Broker under Regulation 10 of CBLR, 2018 - Due diligence and KYC verification by Customs Broker - Validity of authorization obtained by Customs Broker - Customs valuation: transaction value and Rules 3 & 11 - Principles of natural justice in disciplinary inquiry - Reasonableness of delay in inquiry and directory nature of time-limits - Suspension and revocation of Customs Broker licence

Validity of authorization obtained by Customs Broker - Obligations of Customs Broker under Regulation 10(a) of CBLR, 2018 - Due diligence and KYC verification by Customs Broker - Appellants breached Regulation 10(a) of CBLR, 2018 by not being sufficiently proactive in verifying the authenticity of authorization received through an intermediary - HELD THAT: - The Tribunal accepted that the appellants had an authorization letter and KYC documents supplied through an intermediary logistics operator, but held that a Customs Broker must exercise proactive due diligence when documents are procured through intermediaries. Reliance was placed on precedent emphasising the important fiduciary role of CHAs/CBs and the need for vigilance to prevent misuse of IECs. The Tribunal found that appellants did not take adequate steps to satisfy themselves as to genuineness of signatures and authenticity of documents received via the intermediary, and therefore failed to discharge the obligation under Regulation 10(a). The breach warranted imposition of a proportionate penalty rather than revocation of licence. [Paras 14, 15]

Regulation 10(a) was contravened; appellate relief was limited to imposition of a reduced penalty of Rs.10,000/- while revocation and forfeiture were set aside.

Customs valuation: transaction value and Rules 3 & 11 - Obligations of Customs Broker under Regulation 10(d) of CBLR, 2018 - Due diligence and limitations of CHAs in valuation - Violation of Regulation 10(d) for failure to advise importer regarding compliance or for alleged participation in undervaluation was not established - HELD THAT: - The Tribunal observed that appellants declared value in the Bills of Entry consistent with the commercial invoices supplied by the importer, which is the transaction value under Section 14 and Rule 11. The re-determination of value requires the sequential application of valuation rules and evidence justifying rejection of transaction value; here the department's belief of higher value arose only after later physical examination and a test report in subsequent consignments. There was no documentary evidence showing mis-declaration in the B/Es or GATT declaration at the time of clearance, and no basis to impute knowledge or an obligation on the CB to challenge the transaction value at that stage. Consequently, the finding of violation of Regulation 10(d) in the impugned order was unsustainable. [Paras 6, 7, 8, 15]

Findings of breach of Regulation 10(d) were set aside and not sustained.

Obligations of Customs Broker under Regulation 10(f) of CBLR, 2018 - Principles of causation and evidential basis for withholding information - Allegation that appellants withheld information in violation of Regulation 10(f) was not proved - HELD THAT: - The Tribunal held that non-meeting of the importer in person does not, by itself, establish withholding of orders, instructions or public notices. There was no specific documentary or factual evidence showing that appellants suppressed information required for customs compliance. The Commissioner's conclusion lacked evidential foundation and no causal link was shown between the appellants' conduct and forfeiture-worthy misconduct under Regulation 10(f). Hence the charge could not be sustained. [Paras 6, 9, 15]

Finding of violation of Regulation 10(f) was quashed.

Due diligence and KYC verification by Customs Broker - Obligations of Customs Broker under Regulation 10(n) of CBLR, 2018 - CBIC KYC guidelines (Circular dated 08.04.2010) - Alleged failure to verify IEC, identity and functioning of client contrary to Regulation 10(n) was not established - HELD THAT: - The Tribunal examined the KYC requirement and the CBIC circular prescribing acceptable documents and noted that any two specified documents suffice. The appellants had obtained and submitted IEC certificate, bank letter, PAN and other KYC documents dated 15.05.2016. Precedents were cited holding that CHAs are not expected to act as valuers or to undertake exhaustive background checks beyond prescribed KYC norms. On the record, appellants met the documentary KYC requirements and there was no legal basis to uphold breach of Regulation 10(n). [Paras 6, 10, 15]

Finding of violation of Regulation 10(n) was set aside.

Reasonableness of delay in inquiry and directory nature of time-limits - Suspension and revocation of Customs Broker licence - Principles of fairness in completion of disciplinary inquiry - There was inordinate delay in completion of inquiry and continuation of suspension which required consideration in mitigation of punishment - HELD THAT: - The Tribunal applied the High Court of Bombay's guidance that prescribed time-limits are directory and delays must be justified with reasons, accountability and tested for reasonableness. In this case, the suspension continued for about 27 months with only a generic reference to 'unavoidable administrative delay' and without detailed reasons attributing stages of delay to officers. The appellants suffered prolonged deprivation of livelihood. The Tribunal concluded that delay was not satisfactorily explained and should weigh in mitigation. Accordingly, extreme sanction of revocation and forfeiture as imposed in the impugned order could not stand in view of the delay. [Paras 11, 12, 13, 15]

Delay in inquiry was held to be unjustified in the record and was a factor in moderating the relief; revocation and forfeiture were not sustained.

Final Conclusion: Appeal allowed in part. The Tribunal set aside the findings and consequences in the impugned order insofar as violations of Regulations 10(d), 10(f) and 10(n) of CBLR, 2018, revocation of licence and forfeiture of security; upheld a limited breach of Regulation 10(a) and imposed a reduced penalty of Rs.10,000/-. The impugned order was modified accordingly and the appeal was otherwise allowed.

Classification of clear float glass - absorbent, reflecting or non-reflecting layer (Chapter Note 2(c) of Chapter 70) - manufacturing process of float glass and presence of tin side - entitlement to benefit under Notification No.046/2011-CUS (Sr. No.934(I)) - burden of proof in classification

Classification of clear float glass - absorbent, reflecting or non-reflecting layer (Chapter Note 2(c) of Chapter 70) - manufacturing process of float glass and presence of tin side - Clear Float Glass imported is classifiable under CTH 7005 10 90 (other non-wired glass having an absorbent, reflecting or non-reflecting layer) and not under CTH 7005 29 90. - HELD THAT: - The Tribunal examined the manufacturing process of float glass and accepted that the float process results in a microscopically thin metal layer (tin) on one side (the tin side). Chapter Note 2(c) defines an "absorbent, reflecting or non-reflecting layer" as a microscopically thin coating of metal or chemical compound which, inter alia, absorbs infra-red light or improves reflecting qualities while retaining transparency. Applying that definition to the manufacturing facts, the Tribunal concluded that the tin layer produced by the float process falls within the scope of Chapter Note 2(c). The Tribunal rejected the adjudicating authority's approach that the mere presence of tin excludes classification under 7005 10 90, noting that the chapter note and tariff heading read together support classification under 7005 10 90 where an absorbent layer is present. The Tribunal also relied on advance rulings and appellate decisions treating identical goods as having an absorbent layer and classifiable under 7005 10 90, and observed that some test reports and an RTI reply supported the view that the layer is absorbent (UV). On this basis the Tribunal held that the impugned Clear Float Glass merits classification under sub-heading 7005 10 90. [Paras 16, 20, 24]

Correct classification of the imported Clear Float Glass is under CTH 7005 10 90.

Entitlement to benefit under Notification No.046/2011-CUS (Sr. No.934(I)) - burden of proof in classification - Consequent to classification under CTH 7005 10 90, the appellant is entitled to the benefit of Serial No.934(I) of Notification No.046/2011-CUS dated 01.06.2011; the adjudication changing classification on audit basis was set aside. - HELD THAT: - Having held that the imported goods fall within sub-heading 7005 10 90 as non-wired float glass with an absorbent layer, the Tribunal determined that the appellant qualifies for the exemption benefit at Sr. No.934(I) of Notification No.046/2011-CUS, subject to any conditions in the notification. The Tribunal noted that classification changes premised on audit objections were incorrect in law where the chapter note and test reports support the declared classification. The decision also reflects the settled proposition that the burden of proof on classification lies on the department, a principle invoked in the proceedings and considered in the appellate material reviewed by the Tribunal. [Paras 16, 24, 25]

Impugned orders are set aside; appeals allowed and the appellant is granted consequential relief, including entitlement to the Notification benefit.

Final Conclusion: The Tribunal held that the Clear Float Glass imported by the appellant contains an absorbent (tin) layer within the meaning of Chapter Note 2(c) and is therefore classifiable under CTH 7005 10 90; the impugned orders classifying the goods otherwise are set aside and the appellant is entitled to the benefit of Sr. No.934(I) of Notification No.046/2011-CUS dated 01.06.2011, with consequential relief.

Assessment of bulk liquid cargo based on actual quantity received in the shore tank - importation completed at the time and place of importation (taxable event of import) - transaction value and customs valuation at the time and place of importation - ocean loss / pilferage not leviable for customs duty until import is complete - administrative circular inconsistent with statutory scheme is contrary to law

Assessment of bulk liquid cargo based on actual quantity received in the shore tank - importation completed at the time and place of importation (taxable event of import) - ocean loss / pilferage not leviable for customs duty until import is complete - administrative circular inconsistent with statutory scheme is contrary to law - Whether assessment and levy of customs duty on imported bulk liquid cargo must be made on the quantity shown in import documents or on the actual quantity received in the shore tank at importation - HELD THAT: - The Tribunal applied the principle laid down by the Hon'ble Supreme Court in Mangalore Refinery and Petrochemicals Ltd., which holds that the taxable event for customs duty is the importation of goods, completed at the time and place of importation when goods become part of the mass of goods within the country (i.e., at customs barriers). A bill of lading or invoice quantity may reflect the purchase transaction but does not necessarily represent the quantity at the time and place of importation. Where goods are lost, pilfered or damaged before importation is complete, duty is not leviable on such shortfall. Consequently, valuation under the Customs Valuation Rules and assessment of customs duty must be anchored to the actual quantity received into the shore tank at importation. An administrative circular inconsistent with this statutory scheme (as was the position in earlier circular reliance) cannot override the statutory position. The Tribunal also noted that the Board subsequently issued Circular No.34/2016 (26.7.2016) and that this approach has been followed in later Tribunal decisions. Applying these principles to the appeals, the impugned assessments made on the basis of quantities shown in import documents (rather than actual shore-tank receipt) were found unsustainable. [Paras 5, 6, 7]

Impugned orders confirming differential duty on the basis of imported document quantities are set aside; appeals allowed with consequential relief as per law.

Final Conclusion: The Tribunal followed the Supreme Court's declaration that customs duty on imported bulk liquid cargo must be computed on the quantity actually received into the shore tank at the time and place of importation; assessments based on invoice/bill of lading quantities were set aside and the appeals allowed with consequential relief.

Classification under Heading 3302 (mixtures of odoriferous substances) - Residuary heading 2106 and its scope as 'food preparations not elsewhere specified' - Chapter Note 2 to Chapter 33 - "odoriferous substances" includes synthetic aromatics - HSN Explanatory Notes - exclusion of preparations based on odoriferous substances from 2106 - Principle that a residuary entry cannot be invoked where a specific heading applies

Classification under Heading 3302 (mixtures of odoriferous substances) - Chapter Note 2 to Chapter 33 - "odoriferous substances" includes synthetic aromatics - HSN Explanatory Notes - mixtures of synthetic aromatics - Impugned goods (Cheese Polvaromas / Cheese Parmesan Polvaromas / Butter Cream Polvaromas) are classifiable under CTH 3302 1090 - HELD THAT: - The Tribunal held that the imported products are mixtures of odoriferous substances which include synthetic aromatics as per Chapter Note 2 to Chapter 33 and the HSN Explanatory Notes to heading 3302. The goods are used as industrial raw materials to impart flavour and cannot be consumed directly; laboratory reports and the importer's own materials show presence of aroma components (fatty acids/ketones) and a carrier (maltodextrin), supporting the characterization as mixtures of synthetic aroma compounds. The Note 2 categories (substances of heading 3301, isolated constituents, and synthetic aromatics) are independent; the requirement that substances in one category be of plant origin cannot be read across to synthetic aromatics. Consequently the Tribunal affirmed the adjudicating authority's classification under CTH 3302 1090.

Classification affirmed under CTH 3302 1090; appeal on classification rejected.

Residuary heading 2106 and its scope as 'food preparations not elsewhere specified' - HSN Explanatory Notes - exclusion of preparations based on odoriferous substances from 2106 - Heading 2106 is not the appropriate classification for the impugned goods - HELD THAT: - The Tribunal examined the scope of heading 2106 and the HSN Explanatory Notes, which cover preparations for human consumption either directly or after minimal processing. The impugned goods are not ready-for-consumption food preparations but industrial flavouring materials used as raw materials in manufacture of dry mix seasoning; they therefore do not satisfy the conditions for 2106. Moreover, the HSN Notes expressly exclude preparations based on odoriferous substances (which fall under heading 3302) from heading 2106. Even if the goods have origin from cheese, their character as mixtures of odoriferous/synthetic aroma substances precludes classification under 2106.

Heading 2106 is inapplicable; 2106 cannot displace 3302 for these goods.

Principle that a residuary entry cannot be invoked where a specific heading applies - Consequences for demand, extended period, confiscation and penalty when classification determined - No merit in Department's appeal seeking reclassification, differential duty, confiscation or penalties once classification under 3302 is sustained - HELD THAT: - Having held that the goods are rightly classifiable under CTH 3302, the Tribunal found the Department's challenge to the original adjudication unsustainable. The decision that 3302 applies obviated the need to sustain the proposals in the show cause notice for reclassification to 2106, invocation of extended limitation, confiscation and penalties. The Tribunal also relied on established authority that a residuary entry cannot be invoked where a specific heading is applicable, reinforcing that the Department could not re-categorise the imports under 2106 once 3302 was found to be the specific entry.

Department's appeal rejected; proposals for differential duty, confiscation and penalties not sustained.

Final Conclusion: The Tribunal affirmed classification of the imported Cheese Polvaromas under CTH 3302 1090 (mixtures of odoriferous substances, including synthetic aromatics), held heading 2106 inapplicable, and dismissed the Department's appeal seeking reclassification, differential duty, confiscation and penalties.

Liquidation upon failure to receive a resolution plan - finality of orders dismissing challenge to admission under Section 7 - eligibility under Section 29A of the Insolvency and Bankruptcy Code - entitlement of suspended management to submit proposal subject to eligibility - role and duties of the resolution professional in pursuing litigation - decision of the committee of creditors to liquidate

Liquidation upon failure to receive a resolution plan - decision of the committee of creditors to liquidate - Validity of the Adjudicating Authority's order allowing liquidation of the Corporate Debtor - HELD THAT: - The Adjudicating Authority allowed the Resolution Professional's application for liquidation after the Committee of Creditors had resolved to liquidate because no resolution plan was received in the CIRP. The Tribunal notes that the Appellant's earlier challenges to the admission order were dismissed by this Tribunal and the Supreme Court, and there being no resolution plan, liquidation was the available option. The Adjudicating Authority's acceptance of the CoC resolution and direction for liquidation was therefore not in error. [Paras 7]

Order allowing liquidation upheld and the Adjudicating Authority did not err in allowing the Resolution Professional's application for liquidation.

Finality of orders dismissing challenge to admission under Section 7 - Maintainability of the Appellant's I.A. seeking to set aside the CIRP after earlier dismissals of challenges to admission - HELD THAT: - The Appellant had earlier challenged admission under Section 7 before this Tribunal and the Supreme Court, both of which dismissed the challenge. The Tribunal held that the Appellant's prayer in I.A. No. 25/AHM/2023 to set aside the entire CIRP was misconceived in view of those adverse final orders, and therefore there was no reason to entertain submissions questioning the CIRP at this stage. [Paras 7]

The application to set aside the CIRP was misconceived and rejected.

Eligibility under Section 29A of the Insolvency and Bankruptcy Code - entitlement of suspended management to submit proposal subject to eligibility - Whether the suspended management is entitled to propose a scheme in liquidation - HELD THAT: - The Tribunal observed that the suspended management (including the suspended director) may submit a proposal or scheme in the liquidation process, but such entitlement is subject to compliance with the statutory eligibility criteria, specifically eligibility under Section 29A of the Code and Regulation 2B of the Liquidation Process Regulations, 2016. The statement recognises a conditional right to participate, contingent on meeting the prescribed eligibility requirements. [Paras 8]

Suspended management may submit a proposal in liquidation provided they meet the eligibility criteria under Section 29A and Regulation 2B of the Liquidation Process Regulations, 2016.

Role and duties of the resolution professional in pursuing litigation - Obligation of the Resolution Professional to pursue pending litigation initiated by the suspended director or on behalf of the Company - HELD THAT: - The Tribunal found that the Resolution Professional had no occasion to pursue litigation instituted by the suspended director against the bank. As for litigation on behalf of the Company, the Tribunal noted that leave of the Adjudicating Authority was required to pursue such suits, which had not been obtained. Consequently, there was no substance in the contention that the RP was obliged to pursue those litigations. [Paras 9]

Resolution Professional was not required to pursue the suspended director's litigation; litigation on behalf of the Company could not be pursued without leave and no fault was found with the RP in this regard.

Final Conclusion: Appeals dismissed; the Adjudicating Authority's order directing liquidation is upheld as appropriate in the absence of any resolution plan and in view of earlier final orders on admission; the suspended management may propose a scheme only if they fulfil statutory eligibility; the Resolution Professional was not obliged to pursue the noted litigations.

Suspension of initiation of corporate insolvency resolution process under Section 10A - Event of default causing entire loan to become forthwith due under agreement clause - Obligation to give notice on occurrence of event of default under Clause 8.3 - Continuing default prior to and during the Section 10A period and its effect on maintainability of Section 7 application - Threshold requirement for initiation of insolvency proceedings under Section 7

Suspension of initiation of corporate insolvency resolution process under Section 10A - Continuing default prior to and during the Section 10A period and its effect on maintainability of Section 7 application - Whether Section 10A bars filing of the Section 7 application when defaults had occurred prior to the Section 10A period and continued thereafter. - HELD THAT: - The Tribunal held that Section 10A bars initiation of proceedings only for defaults that arise on or after 25 March 2020 within the notified suspension period. Where default occurred prior to the Section 10A period and continued into that period, the bar does not apply. The admitted defaults up to February 2020 (as recorded in the adjudicating authority's chart) established that the Corporate Debtor had defaulted well before the commencement of Section 10A; therefore the Section 7 application was not hit by the statutory suspension. The Tribunal relied on the authority and reasoning that an ongoing default commencing before the suspension period is not immunised by Section 10A, and observed that the admitted pre-10A default exceeded the statutory threshold for maintaining a Section 7 petition. [Paras 12, 14, 16]

Section 10A did not bar the Section 7 application because the default commenced prior to the Section 10A period and continued thereafter; the petition was maintainable.

Event of default causing entire loan to become forthwith due under agreement clause - Threshold requirement for initiation of insolvency proceedings under Section 7 - Whether two consecutive defaults in payment of interest (PEMI) prior to Section 10A triggered the contractual event of default making the entire principal due and thereby justifying the Section 7 petition for the full loan amount. - HELD THAT: - The loan agreement's Clause 8.1 stipulates that default in payment of interest or principal for two consecutive months constitutes an event of default upon which the whole loan becomes forthwith due and payable. The adjudicating authority recorded multiple instances of unpaid PEMIs beginning July 2018 and an admitted outstanding default amount up to February 2020. The Tribunal held that occurrence of such consecutive defaults before Section 10A meant the principal also became due under the contractual clause, and consequently the Financial Creditor was entitled to file a Section 7 application for the outstanding loan amount. Given the pre-10A defaults exceeded the Section 7 threshold, there was no infirmity in admission of the petition. [Paras 8, 9, 12, 14]

Two consecutive PEMI defaults prior to Section 10A constituted an event of default under Clause 8.1, making the entire loan due and supporting admission of the Section 7 application for the outstanding amount.

Obligation to give notice on occurrence of event of default under Clause 8.3 - Whether Clause 8.3 imposed an obligation on the Financial Creditor to give notice of event of default before treating the loan as due. - HELD THAT: - Clause 8.3 was considered in context. The clause's language requires that 'the Borrower shall forthwith give to DHFL a notice thereof in writing specifying such event of default', indicating that the contractual obligation to give notice lies with the Borrower, not the Financial Creditor. The Tribunal therefore rejected the Appellant's contention that the Financial Creditor was obliged to issue a prior notice under Clause 8.3 before the event of default could be acted upon. The absence of such notice did not preclude the Financial Creditor from treating the pre-existing consecutive defaults as events of default attracting the contractual consequence that the loan became due. [Paras 10, 15]

Clause 8.3 does not impose a duty on the Financial Creditor to give notice; it does not vitiate the occurrence of event of default or the creditor's entitlement to proceed.

Final Conclusion: The appeals were dismissed. The Tribunal affirmed the adjudicating authority's admission of the Section 7 applications: the defaults occurred prior to the Section 10A suspension and, by operation of the loan agreement's event-of-default clause, the entire loan became due; Clause 8.3 did not impose a notice obligation on the Financial Creditor that would defeat the petition's maintainability.

Applicability of SAFEMA to persons against whom COFEPOSA detention orders were made - scope and proviso to section 2(2)(b) of SAFEMA - effect of subsequent revocation of COFEPOSA detention on SAFEMA proceedings - independence of forfeiture proceedings under SAFEMA from criminal proceedings under the Customs Act and Gold (Control) Act

Applicability of SAFEMA to persons against whom COFEPOSA detention orders were made - scope and proviso to section 2(2)(b) of SAFEMA - effect of subsequent revocation of COFEPOSA detention on SAFEMA proceedings - Whether revocation of a detention order under COFEPOSA after earlier judicial rejection of challenge disentitles application of SAFEMA and mandates quashing of forfeiture orders. - HELD THAT: - The Court analysed Section 2(2)(b) of SAFEMA and its proviso and held that SAFEMA applies to every person in respect of whom an order of detention under COFEPOSA has been made unless one of the four contingencies in the proviso is attracted. The detention order against the appellant was made and the representation was rejected and a writ petition challenging it was dismissed on merits; that order attained finality. The subsequent revocation of detention was effected pursuant to an undertaking given before this Court to prosecute by way of complaint and not under any of the four situations contemplated in the proviso to Section 2(2)(b). The Court therefore concluded that the revocation in the present facts did not fall within clauses (i)-(iv) of the proviso and could not disentitle the authorities from proceeding under SAFEMA. The Court rejected the submission that any later revocation, unless covered by the proviso, renders SAFEMA proceedings untenable, and affirmed the forfeiture orders. [Paras 16, 17, 21, 22, 23]

Revocation of detention in the circumstances of this case does not attract the proviso to Section 2(2)(b) of SAFEMA and does not vitiate the SAFEMA forfeiture proceedings; appeal dismissed.

Independence of forfeiture proceedings under SAFEMA from criminal proceedings under the Customs Act and Gold (Control) Act - Whether discharge in the criminal complaint under the Customs Act, 1962 and revocation of penalties under the Gold (Control) Act, 1968 preclude or invalidate SAFEMA forfeiture proceedings. - HELD THAT: - The Court observed that proceedings and outcomes under the Act 1962 and the Act 1968 are independent of proceedings under SAFEMA. The appellant's discharge in the criminal complaint and the setting aside of penalties under the Customs and Gold (Control) enactments do not affect the applicability or maintainability of forfeiture proceedings under SAFEMA where the statutory prerequisites for SAFEMA's application are satisfied. [Paras 20]

Closure of criminal complaint and withdrawal of penalties under the Customs Act and the Gold (Control) Act do not preclude SAFEMA proceedings; that contention rejected.

Final Conclusion: The appeals are dismissed. The Court held that SAFEMA applied to the appellants notwithstanding subsequent revocation of COFEPOSA detention in the particular circumstances and that the results of independent criminal proceedings under the Customs Act and Gold (Control) Act did not invalidate the SAFEMA forfeiture orders.

Summary order. Civil Appeal dismissed; delay condoned and pending applications disposed of, having regard to this Court's earlier order in Commissioner of Central Tax vs. M/s. Shelf Drilling F G Mcclintock Ltd. dated 16.10.2023.

Natural justice in refund proceedings - deficiency memo versus show-cause notice - self-assessment and its finality - scope of adjudicatory power in refund claims - export of services - challenge in refund proceedings - estoppel/consistency in recurring tax treatment - alternative remedy and writ jurisdiction

Natural justice in refund proceedings - deficiency memo versus show-cause notice - deficiency memos issued by the Department did not satisfy requirements of natural justice and could not substitute for a show-cause notice confronting the petitioner with the proposed view to be taken - HELD THAT: - The deficiency communications dated 05 November 2019 and subsequent notices were found to be interrogatory requests for additional documentation and did not place the petitioner on notice of the departmental view that the services were not 'export of services' or that the petitioner was an 'intermediary'. For a notice to comply with principles of natural justice it must embody the material/grounds prompting the proposed action and indicate the consequence or action contemplated; the deficiency memos failed on both counts and therefore could not serve as a substitute for a show-cause notice. Reliance on Gorkha Security Services supports the requirement that a notice must disclose the grounds and proposed action so as to enable meaningful opportunity to be heard. The impugned order was therefore vitiated for want of proper notice and hearing. [Paras 44, 45, 46, 47, 48]

Deficiency memos did not fulfil rudimentary natural justice requirements and the impugned order is unsustainable on this ground

Self-assessment and its finality - scope of adjudicatory power in refund claims - export of services - challenge in refund proceedings - an adjudicating authority considering a claim for refund cannot re-open, review or question a self-assessed return on merits unless the self-assessment has been validly challenged, reassessed or reopened under statutory provisions - HELD THAT: - The Court held that a self-assessed return stands on a pedestal equivalent to an assessment (Rule 2(b) of the Service Tax Rules and Supreme Court precedents cited). Refund proceedings are akin to execution of an entitlement and do not permit the authority to sit in appeal over or re-adjudicate the correctness of a self-assessed return. The Department's power under Rule 5 and the Board's notification (including the requirement that the sanctioning authority be 'satisfied') is limited to verifying compliance with procedural safeguards and quantification under the refund formula; it does not permit merit reassessment of the taxability (for example, whether services were 'export of services'). In the present case the petitioner's self-assessed returns were not questioned under Sections 72/73 and therefore the respondents exceeded their jurisdiction by denying the refund after undertaking merit scrutiny. [Paras 66, 67, 68, 69, 70]

Refund could not be denied by re-opening or reconsidering the self-assessed returns; respondents acted beyond permissible jurisdiction

Estoppel/consistency in recurring tax treatment - certainty in taxation matters - respondents could not take a contrary view for the subject periods without any material change where earlier refunds for identical services had been granted - HELD THAT: - Although res judicata in its strict form does not apply to successive assessment periods, where a fundamental aspect (nature of services) remains unchanged across periods and earlier identical treatment had been allowed, the Revenue cannot arbitrarily adopt a contrary position without justification. The respondents did not identify any material change to warrant a different conclusion for the quarters in question; therefore the impugned contrary determination could not be sustained. [Paras 71, 72, 73]

Impugned order unsustainable for failing to account for prior consistent treatment and absence of material change

Alternative remedy and writ jurisdiction - objection based on existence of an alternative remedy under Section 85 is rejected because the impugned action violated natural justice and exceeded jurisdiction - HELD THAT: - A violation of natural justice and an exercise of power beyond statutory jurisdiction constitute exceptions to the rule requiring exhaustion of alternative remedies; given the findings that deficiency memos were inadequate and that the Department impermissibly re-opened a self-assessment, the Court declined to remit the petitioner to the alternative appellate forum and proceeded to exercise writ jurisdiction. [Paras 74]

Alternative remedy objection overruled

Final Conclusion: Writ petition allowed; impugned order dated 04 October 2021 is quashed and set aside. The respondents are directed to process the petitioner's refund claims for the stated quarters in accordance with law and effect refunds as appropriate.

Show cause notice quashed and remanded for fresh consideration - administrative circular to be considered in adjudication - exclusion of time for limitation - service tax on capacity charges and late payment surcharge - service tax on ocean freight

Show cause notice quashed and remanded for fresh consideration - The show cause cum demand notice dated 29.12.2020 issued to the petitioner was set aside and the matter was remitted to the adjudicating authority for fresh consideration. - HELD THAT: - The Court observed that the impugned show cause notice was issued before the Departmental circular of 03.08.2022 was issued and therefore the adjudicating authority had not had the benefit of that circular. In view of this subsequent development and the petitioner's concession that it would be satisfied if the SCN were set aside and fresh proceedings issued, the Court set aside the SCN and directed that respondent no.1 may, after considering the circular and relevant decisions, issue a fresh show cause notice if deemed appropriate. The order does not decide the merits of the tax demand but only requires fresh consideration by the authority in light of the circular and judicial decisions referred to in the order. [Paras 6, 7, 8]

SCN dated 29.12.2020 set aside and matter remitted to respondent no.1 for fresh consideration and, if necessary, issuance of a fresh show cause notice after taking into account the circular and relevant judicial decisions.

Administrative circular to be considered in adjudication - service tax on capacity charges and late payment surcharge - The adjudicating authority must consider the Department of Revenue circular dated 03.08.2022 and the question of applicability of service tax to capacity charges and late payment surcharge while reconsidering the matter. - HELD THAT: - The Court extracted and relied on the circular's explanation that late payment surcharges/fees are ancillary and naturally bundled with the principal supply and that fixed capacity charges and variable charges relate to supply of electricity (which is exempt from GST), indicating that these aspects are material to the determination. Because the circular post dates the original SCN, the authority is required to re examine the claims of service tax on capacity charges and late payment surcharge in light of the circular and relevant judicial pronouncements, rather than the Court adjudicating those substantive questions at this stage. [Paras 3, 4, 8]

Respondent no.1 to consider the import of the circular (and relevant judicial decisions) on the question of levy of service tax on capacity charges and late payment surcharge when reconsidering the matter.

Service tax on ocean freight - administrative circular to be considered in adjudication - The authority must have regard to the judicial decisions striking down service tax/GST on ocean freight when reconsidering the demand relating to ocean freight. - HELD THAT: - The Court noted that the levy of service tax/GST on ocean freight has been struck down by the Gujarat High Court and that the Supreme Court rejected an appeal against a Gujarat High Court decision concerning GST on ocean freight. While the Court did not decide the substantive merit of the ocean freight demand, it directed that respondent no.1 may consider these judicial decisions along with the circular while deciding whether to issue a fresh notice or proceed further. [Paras 2, 8]

Respondent no.1 to consider the relevant judicial decisions on ocean freight while reconsidering any demand in a fresh show cause notice.

Exclusion of time for limitation - The period from 29.12.2020 until the date of the order is excluded for the purpose of limitation in the event a fresh show cause notice is issued. - HELD THAT: - The Court directed that if respondent no.1 issues a fresh show cause notice, the time period commencing from the date of the original SCN (29.12.2020) until the date of the present order shall be excluded for limitation purposes, thereby preventing the authority from relying on the intervening period to defeat limitation once fresh proceedings are initiated. [Paras 9]

Time from 29.12.2020 to date excluded for limitation purposes if a fresh SCN is issued.

Final Conclusion: The petition succeeds to the limited extent of setting aside the show cause cum demand notice dated 29.12.2020 and remitting the matter to respondent no.1 for fresh consideration; the authority may, after taking into account the Departmental circular dated 03.08.2022 and the cited judicial decisions, issue a fresh show cause notice if justified, and the period from 29.12.2020 till date is excluded for limitation purposes.

Refund of unutilised CENVAT credit on export of services - nexus between input services and exported output services - pre requisite of proceedings under Rule 14 for denial of CENVAT credit - admissibility of CENVAT credit where invoice address differs from registered premises - exclusion of claims for invoices not submitted or lacking Service Tax number

Nexus between input services and exported output services - refund of unutilised CENVAT credit on export of services - Whether a one to one correlation or directed nexus between input services and exported output services is required for claiming refund under Rule 5 of the CENVAT Credit Rules, 2004 - HELD THAT: - The Tribunal reaffirmed its earlier finding in the appellant's own case that Rule 5 does not mandate establishment of a one to one correlation between the input services and the exported output services. The CBEC circular dated 16.03.2012 and prior Tribunal precedents were held to support the view that no directed nexus is required and that where input services were used in or in relation to provision of exported services, refund benefit under Rule 5 is available. Applying that principle to the present appeals, the denial of refund solely on the ground of non establishment of such nexus was set aside. [Paras 6, 7]

Denial of refund on the ground of non establishment of nexus between input and exported output services set aside; refund allowed on this ground.

Pre requisite of proceedings under Rule 14 for denial of CENVAT credit - refund of unutilised CENVAT credit on export of services - Whether revenue can deny encashment/refund of CENVAT credit in a refund proceeding without first initiating proceedings under Rule 14 of the CENVAT Credit Rules, 2004 - HELD THAT: - Relying on the statutory scheme and Tribunal authority, the Tribunal held that where credit has been availed in the relevant quarter, any allegation of erroneous or wrongful taking of credit must be addressed by initiating the procedure under Rule 14. Absent such proceedings, revenue could not alter the quantum of net CENVAT credit and deny encashment in a refund proceeding. The Tribunal applied this settled principle to set aside the denial made without invoking Rule 14. [Paras 6, 7]

Denial of refund without initiation of Rule 14 proceedings held impermissible; refund ordered to the extent such denial rested on that ground.

Admissibility of CENVAT credit where invoice address differs from registered premises - refund of unutilised CENVAT credit on export of services - Whether CENVAT credit/refund can be denied solely because invoices were raised showing an address different from the assessee's registered premises - HELD THAT: - The Tribunal noted precedents holding that mere discrepancy in invoice address does not justify denial of CENVAT credit so long as it is not established that the services were not utilised. Applying those decisions, the Tribunal held that invoice address mismatch, without proof that services were not used for the exported output, cannot sustain rejection of refund claims. [Paras 6, 7]

Denial of refund on the ground of invoice address not matching registered premises set aside; credit/refund allowed except as otherwise specified.

Exclusion of claims for invoices not submitted or lacking Service Tax number - Whether refund claims based on invoices not submitted or those lacking Service Tax registration number are admissible - HELD THAT: - The Tribunal examined the record and found that certain invoices either were not submitted or did not bear Service Tax registration numbers. The appellant expressly abandoned claims in respect of specified amounts relating to such invoices. On that basis the Tribunal excluded those amounts from the relief granted while allowing the balance refund claims. [Paras 6, 7]

Claims relating to invoices not submitted or lacking Service Tax number excluded from refund; rest of the refund allowed.

Final Conclusion: Appeals allowed. Orders of the Commissioner (Appeals) insofar as they denied refund of unutilised CENVAT credit for the stated periods are set aside and refund granted except for amounts claimed in respect of invoices not submitted or lacking Service Tax number, which were excluded; consequential relief to follow.

Transfer of Right to Use - Rent-a-cab service - deemed sale liable to sales tax - supply of tangible goods for use not a service - classification of hiring of vehicles - rent-a-cab scheme operator

Transfer of Right to Use - Rent-a-cab service - deemed sale liable to sales tax - supply of tangible goods for use not a service - Whether hiring of buses by the appellants to APSRTC is a taxable 'rent-a-cab' service or constitutes a 'transfer of right to use' (deemed sale) and not liable to service tax - HELD THAT: - The Tribunal examined the tender terms and attendant documents and found that during the contract the effective control over the vehicles lay with APSRTC: vehicles were to be used exclusively for APSRTC, painted in APSRTC livery, APSRTC obtained permits, reimbursed insurance and road tax and bore related statutory obligations, and the owner/hirer was required only to supply driver and maintain the vehicle. The Tribunal relied on the Central Government clarification in D.O.F No. 344/1/2008-TRU dated 29-02-2008 that supply of tangible goods for use, leviable to VAT/sales tax as deemed sale, is not within the scope of service. Applying that principle to the contractual terms, the Tribunal concluded that the arrangement is in the nature of transfer of right to use the tangible goods (deemed sale) and therefore does not fall within the definition of 'rent-a-cab' taxable service. The Tribunal considered judgments and orders cited by the parties but found the contract terms and the TRU clarification determinative. [Paras 11, 12]

The hiring arrangement is a 'Transfer of Right to Use' (deemed sale) and not a 'rent-a-cab' service; the impugned demand for service tax is set aside.

Final Conclusion: Appeals allowed; impugned adjudication and penalties set aside as the activity is held to be transfer of right to use (deemed sale) and not rent-a-cab service; appellants entitled to consequential relief in accordance with law.

Abatement of appeal upon approval of resolution plan - continuance of proceedings after adjudication as an insolvent - functus officio of the Tribunal on approval of resolution plan - binding nature of NCLT-approved resolution plan - application of Rule 22 of CESTAT (Procedure) Rules, 1982

Abatement of appeal upon approval of resolution plan - application of Rule 22 of CESTAT (Procedure) Rules, 1982 - functus officio of the Tribunal on approval of resolution plan - Whether the appeal before the CESTAT survives after initiation and finalisation of CIRP and approval of the resolution plan by the NCLT, or whether it abates under Rule 22. - HELD THAT: - The Tribunal found that proceedings under the Insolvency and Bankruptcy Code were initiated against the appellant, an IRP was appointed and ultimately a resolution plan was approved by the NCLT, with the NCLAT upholding that order. Rule 22 of the CESTAT (Procedure) Rules, 1982 provides for abatement of appeals where a party is adjudicated as insolvent or a company is being wound up unless the successor-in-interest applies for continuance within the prescribed period. The Tribunal applied its consistent precedents and reasoning that once a successor-in-interest with sufficient rights is appointed and the resolution plan is approved, Rule 22 becomes applicable and it is for the successor-in-interest to seek continuance; absent such an application the appeal abates. The Tribunal observed that the resolution plan approved by the NCLT is binding and that orders in the appeal merge in the NCLT order; consequently the Tribunal becomes functus officio and cannot adjudicate further. Reliance on earlier Benches was noted and the Tribunal agreed with the view that appeals abate with effect from the date of approval of the resolution plan by the NCLT. [Paras 9, 10, 11, 14]

The appeal abates by operation of Rule 22 of the CESTAT (Procedure) Rules, 1982 upon approval of the resolution plan by the NCLT; the Tribunal is functus officio.

Final Conclusion: Appeal dismissed as abated: the CESTAT holds that following initiation of CIRP and approval of the resolution plan by the NCLT (upheld by NCLAT) the appeal abates under Rule 22 and the Tribunal is functus officio.

Validity of show cause notice - inference from discrepancy between ST returns and ITR - prima facie examination of transactions - value under Section 67 of the Finance Act, 1994 - definition of service under Section 65B(44) of the Finance Act, 1994 - recovery under Section 73(1) of the Finance Act, 1994

Validity of show cause notice - inference from discrepancy between ST returns and ITR - prima facie examination of transactions - value under Section 67 of the Finance Act, 1994 - definition of service under Section 65B(44) of the Finance Act, 1994 - recovery under Section 73(1) of the Finance Act, 1994 - Show cause notice premised solely on difference between income-tax return and service tax returns without prima facie examination is not sustainable. - HELD THAT: - The demand was raised under sub-section (1) of Section 73 of the Finance Act, 1994, which authorises recovery of service tax not levied, not paid or short levied. Before invoking that provision in a show cause notice, Revenue must first establish that the amount sought to be recovered is service tax properly leviable - i.e., that the value is the value contemplated by Section 67 and that such value is derived from consideration received for an activity falling within the definition of 'service' in sub-section (44) of Section 65B. The show cause notice in the present case proceeded only from a numerical discrepancy between the figures in the ST-3 returns and the income-tax return for 2014-15 and did not set out any prima facie examination of records, nature of transactions, or facts to indicate that the difference represented consideration for taxable services. In absence of such foundational averments and a prima facie view that the transactions constituted provision of service, the notice failed to discharge the threshold requirement for invoking Section 73(1) and therefore is unsustainable in law.

Show cause notice dated 26.06.2020 is unsustainable and set aside; appeal allowed.

Final Conclusion: The Tribunal held that a demand based solely on discrepancy between ST returns and income-tax return, without prima facie examination to establish that the difference is value of taxable services under Section 67 and within the definition of service, is untenable; the show cause notice is set aside and the appeal is allowed.

Denial of CENVAT Credit - Requirement of assessment at the service provider's end before denying recipient's credit - Incorrect description in invoices and compliance with Rule 4A(1) of the Service Tax Rules - Classification of service post 01.07.2012

Denial of CENVAT Credit - Requirement of assessment at the service provider's end before denying recipient's credit - Incorrect description in invoices and compliance with Rule 4A(1) of the Service Tax Rules - Classification of service post 01.07.2012 - Whether CENVAT credit availed by the appellant can be denied on the ground of incorrect description in invoices without opening assessment of the service providers. - HELD THAT: - The Tribunal examined the factual and legal matrix and noted that the dealers had acted as agencies providing services to the appellant and had raised invoices and discharged service tax. The agreements and conduct indicated provision of infrastructure and business-support type services, even though invoice descriptions were not in the exact nomenclature. Relying on consistent precedents and the principle that the recipient's entitlement to credit cannot be negatived at the receiver's end without initiating adjudication or assessment proceedings against the service provider, the Tribunal held that incorrect invoice description alone, in the absence of assessment of the service provider's liability, did not justify denial of credit to the appellant. The Tribunal also recorded that classification issues, particularly after the change in definition post 01.07.2012, did not warrant denial of input credit to the recipient where the tax had been discharged by the service provider and the transaction was otherwise within the ambit of input services used in the appellant's business. Applying these principles to the periods under dispute, the Tribunal concluded that the orders denying CENVAT credit were unsustainable and directed their setting aside with consequential relief. [Paras 5, 6]

Both appeals are allowed; the orders-in-original denying CENVAT credit for the periods April 2010 to March 2015 and April 2015 to June 2017 are set aside with consequential relief.

Final Conclusion: The Tribunal allowed the appeals and set aside the orders denying CENVAT credit for the specified periods, holding that credit cannot be denied at the recipient's end solely on account of invoice description without adjudication of the service provider's liability; consequential relief granted if any.

Export of services - use of service in India - consideration received in convertible foreign exchange - binding effect and applicability of Board circulars - refund / rebate under Export of Services Rules

Export of services - use of service in India - consideration received in convertible foreign exchange - Board circulars and their applicability - Whether advisory services given to clients located abroad, for which consideration was received in convertible foreign exchange, qualify as export of services for the period October 2009 to March 2010. - HELD THAT: - The Tribunal examined the Commissioner (Appeals) finding that investment advisory services provided to foreign clients, paid for in convertible foreign exchange, constituted export of services. The Tribunal held that the ultimate decision by the foreign client to accept or act upon the advice does not convert the tax character of the advisory service into a service "used in India" merely because the client may invest in India. The Commissioner (Appeals) had considered the relevant Board circulars (including the 2009 and the subsequent 2011 circular) and given reasoning accepting the claim for rebate under the Export of Services Rules. The Tribunal found that the Commissioner (Appeals)'s reasoning was proper, that the subsequent circular did not invalidate the analysis, and that the sanction of refund was legal and did not require interference. [Paras 8]

Advisory services to foreign clients, with consideration in convertible foreign exchange, were held to be export of services and eligible for the rebate; the Commissioner (Appeals) order sanctioning refund is sustained.

Final Conclusion: The department's appeal is dismissed and the Commissioner (Appeals) order sanctioning the refund is sustained; the assessee's appeal is allowed and the refund sanction set aside in the departmental challenge is overturned, with consequential reliefs, as recorded by the Tribunal.

SSI exemption - clandestine removal/clearance without payment of duty - burden of proof - corroborative evidence - use of electricity consumption as evidence of manufacture - personal penalty - evidentiary warrant for demand

SSI exemption - clandestine removal/clearance without payment of duty - burden of proof - corroborative evidence - use of electricity consumption as evidence of manufacture - evidentiary warrant for demand - Sufficiency of evidence to sustain demands for duty on alleged clandestine clearances exceeding SSI exemption. - HELD THAT: - The Tribunal examined the departmental case which rested principally on two pages of a notebook recovered from an employee, a solitary statement of that employee, entries not corroborated by supplier statements, no inquiries made of the alleged writer of the entries, absence of transporters' or purchasers' evidence, and unilateral reliance on electricity consumption figures. The notebook's entries were disputed by the partner and the department did not verify supplier details or summon the purported author, nor place independent documentary or testimonial evidence on record to establish manufacture and clandestine clearance. The audited balance sheet and Chartered Accountant's certificate produced by the appellants were not contradicted by cogent material from Revenue. In these circumstances the record lacked the necessary corroborative evidence and proof required to sustain the demands for duty on alleged clandestine removals despite the SSI exemption having been exceeded on the department's case. [Paras 8]

Demands confirmed in the original and appellate orders could not be sustained and were set aside.

Personal penalty - evidentiary warrant for demand - corroborative evidence - Validity of imposition of personal penalties on the partners in absence of established clandestine clearance. - HELD THAT: - The imposition of personal penalties was founded on the same material as the duty demands. Given the Tribunal's conclusion that the foundational evidence for clandestine manufacture and clearance was not credible or corroborated, the ancillary proposal and imposition of personal penalties on the partners could not be sustained. The partners' statements and the absence of independent verification undermined the basis for fixing personal liability. [Paras 3, 9]

Personal penalties imposed in the impugned orders were set aside along with the demands.

Final Conclusion: The appeals are allowed; the impugned original and appellate orders confirming demands and imposing personal penalties are set aside and the appellants are given consequential relief as per law.

Eligibility of Cenvat credit on input services - place of removal for export - credit of service tax on CHA (Customs/Shipping/CHA) and GTA services up to port of export - interpretation of "place of removal" for determining input services - penalty unsustainable where underlying demand is not sustained - maintainability of departmental appeal under Government litigation policy

Eligibility of Cenvat credit on input services - place of removal for export - credit of service tax on CHA (Customs/Shipping/CHA) and GTA services up to port of export - Admissibility of Cenvat credit of service tax paid on Custom House Agent (CHA) services and Goods Transport Agency (GTA)/outward transportation services in relation to export goods up to the port of export. - HELD THAT: - The Tribunal found no dispute that the goods were removed for export and that CHA and outward transportation services were availed in relation thereto. Relying on the principle that the "place of removal" for export goods can be the port/airport from where goods are finally exported, the Court held that services availed up to that place qualify as input services for the purpose of Cenvat credit. The reasoning adopted notes statutory recognition that "place of removal" may be a place other than the factory and that in exports transfer of property and realization of payment generally occur when goods leave the shores of India; administrative guidance (Board Circulars) and earlier tribunal and High Court decisions were held to support the view that credit of service tax on CHA and GTA services used up to the port of export is admissible. On that basis the Tribunal set aside the adjudicating order which had denied such credit and allowed the assessee's appeal with consequential relief, observing that the settled position of law entitles the manufacturer-exporter to Cenvat credit on the impugned services up to the port of export. [Paras 10, 11, 12, 13, 14]

Cenvat credit of service tax paid on CHA and outward GTA services used for export up to the port of export is admissible; impugned order denying credit is set aside and the appellant's appeal is allowed.

Penalty unsustainable where underlying demand is not sustained - maintainability of departmental appeal under Government litigation policy - Validity and maintainability of Revenue's appeal challenging the adjudicating authority's order, including the imposition of penalty. - HELD THAT: - The Tribunal held that because the substantive demand for Cenvat credit was not sustained, any penalty predicated on that demand could not stand. Separately, the Tribunal noted that the quantum of penalty claimed by Revenue fell below the departmental threshold for filing appeals under the Government's litigation policy (as reflected in the relevant circular), rendering the Revenue's appeal not maintainable on policy grounds. Consequently, the Revenue's appeal was dismissed both on merits (since the demand was not sustained) and for lack of maintainability under the litigation policy. [Paras 15]

Revenue's appeal dismissed; penalty held not to survive and Revenue's appeal is not maintainable under the Government litigation policy.

Final Conclusion: The Tribunal allowed the assessee's appeal holding that Cenvat credit of service tax on CHA and outward GTA services used up to the port of export is admissible, set aside the impugned order, and dismissed the Revenue's appeal both on merits and as not maintainable under the Government litigation policy.

Cenvat credit on inputs and capital goods - eligibility of credit where establishment performs research and development and transfers technology - proof required to deny credit - absence of evidence and inadmissibility of unproduced statements - limitation and extended period - proviso to Section 11A and Section 73(1) requiring suppression of facts with intent to evade

Cenvat credit on inputs and capital goods - eligibility of credit where establishment performs research and development and transfers technology - proof required to deny credit - absence of evidence and inadmissibility of unproduced statements - Entitlement of the respondent to avail CENVAT credit on inputs and capital goods when the Mohali unit engaged in research and development and also undertook manufacturing-related activity. - HELD THAT: - The Tribunal examined the material placed on record and the findings recorded by the adjudicating authority. Revenue relied primarily on an alleged statement of a Senior Scientist to contend that the Mohali unit was only for R&D and not manufacturing; that statement was not produced on record nor supplied to the respondent despite requests. The Tribunal noted that pharmaceutical development necessarily involves extensive tests and processes prior to market clearance and that the department produced no technical report or other evidence to prove the machinery were incapable of manufacturing. The respondent produced a Chartered Engineer's certificate relied upon by the adjudicating authority. In the absence of positive evidence to displace the finding that the unit also carried out manufacturing-related activity, denial of credit was not justified. The Tribunal therefore upheld the conclusion that CENVAT credit on inputs and capital goods had been rightly availed. [Paras 6, 7, 8]

CENVAT credit on inputs and capital goods rightly availed by the respondent; demand on merits rejected.

Limitation and extended period - proviso to Section 11A and Section 73(1) - requirement of suppression of facts with intent to evade - Whether the show cause notice and recovery could be sustained beyond the normal period by invoking the extended period of limitation. - HELD THAT: - The Tribunal reproduced and accepted the adjudicating authority's reasoning that the extended period can be invoked only where situations envisaged in the proviso (fraud, collusion, wilful misstatement or suppression of facts, contravention of provisions) concomitantly exist with an intention to evade payment of duty. The department must first bring positive material to prove such situations; mere inaction or failure to raise objections over time does not establish suppression with intent. The respondent had declared availing and utilization of CENVAT credit in statutory returns which were scrutinized; there was no evidence that the respondent knew it was not entitled to the credit and deliberately suppressed that fact. The show cause notice dated 20.07.2010 was therefore held to be barred by limitation and bad in law both on merits and on limitation. [Paras 9]

Extended period of limitation not attracted; show cause notice barred by limitation and liable to be dropped.

Final Conclusion: The appeal by Revenue is dismissed. The impugned order vacating the show cause notice and dropping proceedings is upheld: the respondent was entitled to the CENVAT credit on inputs and capital goods, and the demand was time-barred as the extended period was not attracted.

Recovery of CENVAT credit wrongly taken or erroneously refunded - Interest on wrongly availed CENVAT credit - Requirement of utilisation for interest liability - Extended period of limitation and requirement of mens rea for suppression - Penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC

Interest on wrongly availed CENVAT credit - Requirement of utilisation for interest liability - Recovery of CENVAT credit wrongly taken or erroneously refunded - Interest is not demandable where irregularly availed CENVAT credit was reversed before utilisation. - HELD THAT: - The Tribunal examined Rule 14 which provides for recovery of CENVAT credit "taken or utilized wrongly" along with interest. While the Rule on its face uses the disjunctive, the Tribunal followed precedents-including High Court and Tribunal decisions-which held that mere book entry of credit, subsequently reversed before utilisation, does not amount to taking the benefit that attracts compensatory interest. The reasoning emphasises that interest is compensatory for withholding payment of duty and attaches to a real withholding of tax liability; where the wrong entry is reversed before the credit matures into a set off (i.e., before utilisation), there is no deprivation of revenue and hence no interest liability. Applying that principle to the facts, the appellant had reversed the irregular credits (and the interest amounts) before they were utilised and before issuance of the show cause notice; accordingly recovery of interest on those unutilised, reversed credits was held not maintainable. [Paras 7]

Demand of interest on the ineligible CENVAT credit availed but not utilised is set aside.

Extended period of limitation and requirement of mens rea for suppression - Penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC - Extended period of limitation and the penalty under Rule 15(2) read with Section 11AC cannot be invoked where irregular credit was reversed before utilisation and there is no evidence of wilful suppression or intent to evade duty. - HELD THAT: - The Tribunal found on the material that the appellant reversed the irregular credits (and interest) upon detection during audit, prior to issue of the show cause notice, and had sufficient closing CENVAT balances so that no duty was unpaid as a result of the irregular entries. Citing authority that invocation of extended limitation and imposition of penalty require a positive suppression or mens rea to evade duty, the Tribunal held that mere clerical error or negligence by an employee, promptly remedied by reversal and disciplinary action, does not amount to deliberate suppression. On these facts the extended period could not be invoked and the penalty was unsustainable. [Paras 7]

Invocation of the extended period and the penalty imposed under Rule 15(2) read with Section 11AC is set aside.

Final Conclusion: The appeal is partly allowed: the adjudicated demand for ineligible CENVAT credit and its appropriation is upheld, but the recovery of interest on credits that were availed irregularly but reversed before utilisation, and the penalty and invocation of the extended period, are set aside.

Abatement of appeal on approval of resolution plan under IBC - continuance of proceedings after adjudication as insolvent / application by successor in interest - Tribunal becomes functus officio upon NCLT order approving resolution plan - merger of impugned orders in the order approving the resolution plan

Abatement of appeal on approval of resolution plan under IBC - continuance of proceedings after adjudication as insolvent / application by successor in interest - Tribunal becomes functus officio upon NCLT order approving resolution plan - Appellant's entitlement to continue the appeal after the NCLT approved the resolution plan and the effect of Rule 22 of the CESTAT (Procedure) Rules, 1982 on the appeal. - HELD THAT: - The Tribunal held that once the NCLT approved the Resolution Plan under the IBC and a successor interest/IRP was appointed, Rule 22 of the CESTAT (Procedure) Rules, 1982 becomes operative and the appeal abates unless an application for continuance is filed by or against the successor in interest within the prescribed period. The Tribunal relied on its earlier decisions and other Benches which interpreted Rule 22 to require the successor in interest (appointed by the NCLT) to make the requisite application for continuance; in the absence of such an application the appeal stands abated. The Tribunal further observed that an NCLT order approving a resolution plan is binding and, as a consequence, the Tribunal becomes functus officio in matters covered by that order and cannot pronounce upon or set aside the approval; impugned orders stand merged in the NCLT order approving the resolution plan. On these grounds the Tribunal agreed with the cited precedents and the view of the Gujarat High Court in the appellant's own case that the appeal abates from the date of approval of the resolution plan. [Paras 10, 11, 16]

The appeal abates with effect from the date of approval of the resolution plan by the NCLT; the CESTAT is functus officio and the remedy, if any, lies in proceedings before or as contemplated by the NCLT/Resolution Plan or by an application for continuance by the successor in interest under Rule 22.

Final Conclusion: The appeal is held to have abated on account of the NCLT's approval of the resolution plan; accordingly the appeal cannot be proceeded with before this Tribunal and is treated as abated under Rule 22 of the CESTAT (Procedure) Rules, 1982.

Inadmissible cenvat credit - attribution of common input service credit to exempted activity - options under Rule 6 of Cenvat Credit Rules, 2004 for reversal or distribution of credit - remand for quantification of attributable cenvat credit

Inadmissible cenvat credit - options under Rule 6 of Cenvat Credit Rules, 2004 for reversal or distribution of credit - Whether the show cause notice and order established that inadmissible cenvat credit of Rs.51,45,637/- had been availed by the appellant - HELD THAT: - The Tribunal found a material discrepancy in the show cause notice between describing the amount as 'recoverable' and subsequently as 'inadmissible cenvat credit availed'. The show cause notice and the order-in-original did not specify the quantum of service tax credit actually availed on common input services nor establish that inadmissible credit of the stated amount had been availed. The Tribunal also noted the legal principle in Tiara Advertising that Revenue cannot select an option under Rule 6 on behalf of the assessee and that an assessee may reverse the credit attributable to exempted activity. In view of these defects and the absence of a specified quantum attributed to trading in the impugned proceedings, the Tribunal concluded that the claim of an established inadmissible credit in the show cause notice was not sustained. [Paras 4]

The Tribunal held that the show cause notice did not establish that inadmissible cenvat credit of the stated amount had been availed and the demand could not be sustained on the record before the original authority.

Attribution of common input service credit to exempted activity - remand for quantification of attributable cenvat credit - Whether and in what manner the quantum of cenvat credit attributable to the exempted trading activity should be determined - HELD THAT: - Although the Tribunal set aside the impugned order for the reasons stated, it accepted that some portion of cenvat credit on common input services may be attributable to the exempt trading activity and is therefore recoverable. Given that the show cause notice and order did not specify the quantum, and relying on the appellant's willingness to reverse the credit attributable to trading, the Tribunal directed remand to the original authority to determine and recover the portion of cenvat credit availed on common input services that is attributable to the exempt trading activity. The appellant was directed to cooperate and furnish necessary data for this computation. The Tribunal applied the principle that Revenue cannot unilaterally choose an option under Rule 6 and remand was limited to quantification and recovery of the attributable credit. [Paras 4, 5]

Matter remanded to the original authority to quantify and recover the portion of cenvat credit on common input services attributable to the exempted trading activity; impugned order set aside and appeal allowed by way of remand.

Final Conclusion: Impugned order set aside; appeal allowed by way of remand to the original authority to determine and recover the quantum of cenvat credit on common input services attributable to the exempt trading activity, with the appellant directed to cooperate and supply necessary data.

Invalidity of Rule 8(3A) of the Central Excise Rules, 2002 - CENVAT credit utilisation during a period of default in monthly duty payment - effect of High Court decisions on Tribunal when appeals are pending before the Supreme Court - setting aside of demand and penalty consequent to declaration of rule as ultra vires

Invalidity of Rule 8(3A) of the Central Excise Rules, 2002 - CENVAT credit utilisation during a period of default in monthly duty payment - Demand for recovery of duty and imposition of penalty for utilisation of CENVAT credit during the period of default under Rule 8 was sustainable - HELD THAT: - The Tribunal examined whether the demand for amounts debited by using CENVAT credit during the default period under Rule 8 could be sustained. Multiple High Courts (Gujarat, Bombay, Punjab & Haryana, and Madras) have struck down Rule 8(3A) as ultra vires. Having regard to those decisions and the Tribunal's earlier reasoning in Indus Tropics Ltd., where the Tribunal followed the consistent High Court view and held that the demand based on Rule 8(3A) was unsustainable, the present appeal must follow that ratio. The Tribunal noted that although appeals against those High Court judgments are pending in the Supreme Court, several High Courts have invalidated the provision and there is no contrary High Court precedent upholding it; consequently the demand and penalties founded on the struck-down provision cannot be sustained. Applying that determinative legal principle to the facts (default in May 2008 and subsequent utilisation of CENVAT credit), the impugned demand and the penalty imposed were set aside. [Paras 5, 6]

The demand for recovery of duty and the penalty imposed for utilisation of CENVAT credit during the default period are set aside.

Final Conclusion: The appeal is allowed; the impugned order is set aside and the demand and penalty confirmed by the Commissioner are quashed, with consequential relief, if any, to be given as per law.

Interpretation of Notification No.17/2009 with respect to refund claims - refund of service tax on services used for export of goods - Form A-1 filing requirements and shipping bill particulars - minimum refund threshold of rupees five hundred - reliance on verification report of jurisdictional Range Officer

Interpretation of Notification No.17/2009 with respect to refund claims - Form A-1 filing requirements and shipping bill particulars - minimum refund threshold of rupees five hundred - refund of service tax on services used for export of goods - reliance on verification report of jurisdictional Range Officer - Whether Notification No.17/2009 requires refund claims to be filed shipping bill-wise such that refunds corresponding to individual shipping bills below Rs.500 must be rejected. - HELD THAT: - A conjoint reading of Notification No.17/2009 and Form A-1 shows that the Notification requires details of each shipping bill to be furnished in the Form but does not mandate that separate refund claims be filed for each shipping bill. Condition 2(b) prescribes use of Form A-1 by registered manufacturer-exporters and Sl. No.10 of Form A-1 requires shipping-bill-wise particulars; Condition 2(h) provides a minimum threshold that no refund shall be allowed if the claim amount is less than Rs.500. The Tribunal held that these provisions are harmonious when read together: the requirement to give shipping bill details is for verification and record-keeping and does not convert into a rule that each shipping bill must give rise to a separate refund application. Interpreting the Notification to compel shipping bill-wise claims would cause unnecessary duplication and administrative burden and is inconsistent with the text of the Notification. The adjudicating authority erred in rejecting parts of the processed refund because the amounts attributable to particular shipping bills were below Rs.500 where the overall claim complied with the Notification. Further, the refund claims here were processed after a categorical verification report from the jurisdictional Range Officer certifying admissibility and technical correctness; the adjudicating authority did not controvert that report but proceeded on its own restrictive interpretation. The Tribunal also noted precedent where similar objections were rejected by the Tribunal, and observed that the Department's appeal in that precedent had been dismissed on monetary limits, but the primary basis for decision remains the textual and harmonious construction of the Notification and Form A-1. [Paras 5, 6, 7, 8]

Notification No.17/2009 does not require refund claims to be filed shipping bill-wise; furnishing shipping-bill particulars in Form A-1 is for record and verification, and refunds cannot be rejected solely because amounts attributable to individual shipping bills are below Rs.500 when the claim otherwise complies with the Notification and has been verified.

Final Conclusion: Appeals allowed; impugned orders rejecting parts of refund claims on the ground that amounts attributable to individual shipping bills were less than Rs.500 are set aside, with consequential relief as per law.

Proportionate incentives - pro-rata exemption - entitlement certificate granted on the basis of investment - eligibility certificate and certificate of entitlement - exemption under a Package Scheme of Incentives - notification under Section 8(5) of the CST Act - applicability of Section 93(1) of the MVAT Act

Pro-rata exemption - applicability of Section 93(1) of the MVAT Act - entitlement certificate granted on the basis of investment - exemption under a Package Scheme of Incentives - notification under Section 8(5) of the CST Act - Whether the respondent was entitled to full exemption under the package scheme and CST notification or only to a pro-rata exemption under Section 93(1) of the MVAT Act. - HELD THAT: - The Tribunal correctly held that the respondent was entitled to 100% exemption. Section 93(1) of the MVAT Act mandates pro-rata benefits only where the Eligibility Certificate and Certificate of Entitlement were granted on account of increase in production capacity or acquisition of new fixed capital assets. The entitlement certificate held by the respondent was granted on the basis of investment and not on account of increased production capacity or acquisition of new fixed capital assets, so the conditions for invocation of Section 93(1) are not satisfied. Further, neither the 1993 Package Scheme of Incentives nor the notification issued under Section 8(5) of the CST Act contains any provision for reduction of the exemption, and the cited CST notification of 1980 was not amended, modified or withdrawn. For these reasons the pro-rata adjustment made in the assessment was incorrect and the respondent was rightly held to be entitled to full exemption.

Tribunal's allowance of the respondent's appeal and grant of 100% exemption affirmed; pro-rata exemption under Section 93(1) MVAT Act held inapplicable.

Final Conclusion: The High Court dismissed the appeal, upholding the Tribunal's decision that the respondent is entitled to full exemption under the package scheme and CST notification and that Section 93(1) MVAT Act (pro-rata reduction) does not apply on the facts.

Liability for delay in carriage - agent's ostensible authority and principal's liability - measure of damages for delay under the Carriage by Air Act - relief limited to the prayers in the complaint

Liability for delay in carriage - measure of damages for delay under the Carriage by Air Act - There was negligent delay in delivery of the consignments and the consignee is entitled to damages for that delay under the Carriage by Air Act, 1972. - HELD THAT: - The Court found on the material on record that consignments booked on 24.07.1996 were delivered only between 03.09.1996 and 12.09.1996, i.e., after one and a half months, and that the NCDRC's finding of delay was not illegal or perverse (paras 16-19). By reference to Section 19 and Section 13(3) of the Carriage by Air Act, 1972 the Court accepted that the carrier is liable for damage occasioned by delay and that the consignee may enforce rights where goods have not arrived after seven days of their expected arrival (para 21). The Court therefore upheld the award of compensation for delay as made by the NCDRC. [Paras 16, 19, 21]

Delay in delivery was established and the consignee is entitled to damages under the Carriage by Air Act.

Agent's ostensible authority and principal's liability - liability for delay in carriage - Respondent No.1 (carrier) is bound by the delivery-time commitment made by its agent (respondent No.2) and liable for the delay. - HELD THAT: - The agent admitted issuing a tentative date of arrival and a revised schedule to the complainant; respondent No.1 did not deny that respondent No.2 was its agent or that the agent had authority to give the delivery schedule (paras 17, 20-23). Applying principles of agency (Sections 186, 188 and 237 of the Contract Act as explained in Dilawari Exporters v. Alitalia Cargo), the Court held that, in absence of denial of agency or lack of authority, the principal is bound by the agent's promise and hence respondent No.1 is liable for the negligent delay caused contrary to the time schedule given by its agent (paras 20-23). [Paras 17, 20, 22, 23]

The carrier is bound by its agent's delivery commitment and liable for the delay in delivery.

Relief limited to the prayers in the complaint - The NCDRC correctly limited the award to the amount claimed in the complaint; the appellant cannot be granted a larger sum than prayed for. - HELD THAT: - Although the calculation under the applicable rule would have produced a sum in excess of the Rs. 20 lakhs claimed, the Court affirmed the NCDRC's approach that a party is not entitled to relief beyond what it has prayed for in the complaint under Section 21(a)(i) of the Consumer Protection Act (para 24). The Court relied on settled precedent that relief cannot be granted beyond the pleadings and prayer, and therefore upheld the limitation of the award to the claimed amount. [Paras 16, 24]

Compensation award properly limited to the amount claimed in the complaint; excess cannot be granted.

Final Conclusion: The appeals are dismissed; the NCDRC's award that respondent no.1 pay the complainant compensation (limited to the claimed Rs. 20 lakhs with interest), litigation costs and additional compensation as ordered is upheld. Parties shall bear their own costs.

Mandatory inquiry under Section 202 CrPC - evidence on affidavit under Section 145 of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act - prima facie satisfaction for issuance of summons in proceedings under Section 138 NI Act - magistrate may examine documents and pre-summoning evidence for satisfaction under Section 202

Mandatory inquiry under Section 202 CrPC - prima facie satisfaction for issuance of summons in proceedings under Section 138 NI Act - Whether the Magistrate had conducted the mandatory inquiry under Section 202 CrPC before issuing summons in the complaints under Section 138 NI Act. - HELD THAT: - The Court held that in complaints under Section 138 NI Act the inquiry envisaged by Section 202 CrPC can be conducted by considering pre summoning evidence and documents and need not always involve taking evidence on oath. Applying the guidance in Re: Expeditious Trial of Cases under Section 138 of the NI Act and the Practice Directions, the Magistrate may examine affidavits and documents to be satisfied whether basic ingredients of Section 138 are prima facie made out. On the record before the learned MM, pre summoning evidence established issuance and dishonour of the cheque, service of statutory notice and non payment within fifteen days, and the learned MM recorded prima facie satisfaction. Accordingly, the learned MM had conducted the requisite inquiry under Section 202 CrPC and lawfully issued summons. [Paras 13, 20, 21, 24, 25]

The learned MM conducted the inquiry required by Section 202 CrPC and the summoning orders meet the requirement of prima facie satisfaction under Section 138 NI Act.

Evidence on affidavit under Section 145 of the Negotiable Instruments Act - magistrate may examine documents and pre-summoning evidence for satisfaction under Section 202 - Whether the Magistrate was required to examine witnesses on oath or to conduct a full trial like appreciation of documents (including the Share Sale Agreement) before issuing summons. - HELD THAT: - Relying on the Supreme Court's interpretation, Section 145 permits the complainant's evidence to be given by affidavit and, read with Section 202, the Magistrate need not insist on oral evidence on oath; documents and affidavits may suffice. The Court rejected the contention that the MM was obliged to engage in full trial level appreciation of the Share Sale and Purchase Agreement to determine accrual of legally enforceable debt at the summons stage. Determination whether contractual conditions were fulfilled is a matter for trial where the accused may seek to rebut the statutory presumption under Section 139. Requiring a detailed adjudication on the Agreement at the Section 202 stage would frustrate the expeditious procedure contemplated by the law. [Paras 18, 19, 20, 26, 27]

The learned MM was not required to conduct a trial like examination of the Agreement or to record oral evidence of witnesses on oath; affidavit evidence and document appreciation sufficed at the Section 202 stage.

Presumption under Section 139 of the Negotiable Instruments Act - rebuttal of presumption at trial - Whether the existence of a legally enforceable debt had to be negatived by the Magistrate at the stage of issuing summons. - HELD THAT: - The Court reiterated that Section 139 creates a rebuttable presumption that a cheque was issued in discharge of a legally enforceable debt. That presumption cannot be finally displaced at the stage of taking cognizance and issuing summons; the accused may rebut it by leading evidence at trial. Consequently, the MM need only be satisfied prima facie that the ingredients of Section 138 are made out on the complainant's pre summoning material; detailed resolution of conflicting contentions on enforceability of debt is for trial. [Paras 19, 20, 22, 23]

It was not incumbent on the Magistrate to negativate the existence of a legally enforceable debt at the summons stage; such matters are to be tested at trial where the presumption under Section 139 can be rebutted.

Final Conclusion: The High Court set aside the ASJ's remand order and upheld the summoning order dated 9.1.2020 in CC No. 380/2020; the petition challenging the summoning order dated 27.1.2020 in CC No. 886/2020 was dismissed. Both learned Magistrates were held to have lawfully conducted the inquiry under Section 202 CrPC by relying on pre summoning evidence and affidavits, and the matters as to enforceability of the debt are left open for trial.

Appointment of Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 - Arbitration clause - Existence of dispute - Section 11(8) - disclosure by arbitrator - Arbitrator entitled to fee as per Fourth Schedule

Appointment of Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 - Arbitration clause - Existence of dispute - Section 11(8) - disclosure by arbitrator - Arbitrator entitled to fee as per Fourth Schedule - Appointment of an arbitrator to adjudicate the claim in respect of GST and related disputes between the parties - HELD THAT: - The agreement between the parties contains an arbitration clause (Clause 25) and a dispute exists between the parties concerning entitlement to GST and related final bill claims, as evidenced by the legal notice dated 9th December, 2021. The respondents in their reply contested the merits of the GST claim but did not object to the appointment of an arbitrator. In the absence of any objection to the appointment, and having regard to the existence of an arbitration agreement and the invocation of the arbitration clause, the court exercised its power under Section 11(6) to appoint an arbitrator. The appointment is made subject to the arbitrator providing the disclosure required by Section 11(8) and taking consent to act; the appointment shall come into force only after receipt of that disclosure and consent. Upon giving consent, the arbitrator shall enter into the reference and decide the dispute in accordance with law. The arbitrator will be entitled to fees as per the Fourth Schedule to the Act. [Paras 5, 6, 7, 8]

Application under Section 11(6) is allowed; Mr. L.N. Sharma (Retd. District & Sessions Judge) is appointed as Arbitrator subject to his written disclosure under Section 11(8) and his consent; arbitrator to enter reference and pass award and is entitled to fees as per the Fourth Schedule.

Final Conclusion: The petition for appointment of an arbitrator is allowed; Mr. L.N. Sharma is appointed as arbitrator subject to statutory disclosure and consent, and the arbitrator shall adjudicate the parties' dispute and is entitled to fees under the Fourth Schedule. The application is disposed of.

Presumption under Section 139 of the Negotiable Instruments Act - Presumptions under Section 118 of the Negotiable Instruments Act - Reverse onus clause - Rebuttal on preponderance of probabilities - Condonation of delay in filing appeal - Statement under Section 313 CrPC not substantive evidence - Effect of material alteration

Condonation of delay in filing appeal - Application for condonation of delay in filing the criminal appeal allowed by the appellate court was liable to be set aside. - HELD THAT: - Complainant was not afforded an opportunity to oppose the condonation application. The overall conduct of the accused was examined: he absconded despite process and notice, was declared a proclaimed person, was produced later by police, and after conviction did not file the appeal within the suspended sentence period but remained at large until arrest. The accused's explanation that his previous counsel had not informed him and that he filed the appeal after obtaining the certified copy was held not to be a justifiable ground for condoning a delay of over one year. In view of these facts, the appellate court's allowance of the condonation application was unsustainable and is reversed. [Paras 15, 16, 17, 18]

Order allowing condonation of delay is set aside.

Presumption under Section 139 of the Negotiable Instruments Act - Presumptions under Section 118 of the Negotiable Instruments Act - Reverse onus clause - Rebuttal on preponderance of probabilities - Statement under Section 313 CrPC not substantive evidence - Effect of material alteration - Whether conviction and sentence under Section 138 NI Act recorded by the trial Court should be restored despite appellate acquittal. - HELD THAT: - The trial Court's findings that the cheque, return memo, legal notice and postal acknowledgment were proved by the complainant were accepted. The accused repeatedly admitted his signature on the cheque at various stages (suggestion to complainant, statement under Section 313 CrPC, and in his defence), thereby attracting the statutory presumption under Section 139 read with Section 118. Judicial precedents were applied to state that the presumption is rebuttable but the accused need only probabilise his defence on preponderance of probabilities. The appellate court erred in treating the accused's reply to the legal notice as a valid prior denial, because that reply was sent after the complaint was filed. Statements in reply and under Section 313 CrPC are not substantive evidence capable, by themselves, of rebutting the presumption; the accused's oral defence when he did not confront the complainant in cross-examination further undermined his case. Allegations of money lending business and of material alteration (overwriting to complete signature) were found to be irrelevant or unestablished: Section 58 was inapplicable on these facts and no case of material alteration against the accused's consent was made out. The appellate court's reliance on conjecture and misappreciation of evidence warranted reversal. Considering also the accused's conduct (abscondence and delay), no leniency was found fit on sentence. [Paras 28, 31, 41, 42, 43]

Judgment of conviction and sentence passed by the trial Court is restored.

Final Conclusion: Impugned appellate judgment dated 26.02.2016 allowing condonation of delay and acquitting the accused is set aside; the conviction and sentence recorded by the trial Court on 16.01.2014 under Section 138 NI Act are restored, and the accused is directed to surrender within 15 days, failing which coercive steps shall be taken.