TaxTMI Updates e-Newsletter
Nov 18,2022

Reimbursement of differential tax arising from change of regime from VAT to GST - works contract treated as composite supply under GST - revised guidelines relating to works contract under GST - competent authority to determine GST-inclusive work value for balance work - reimbursement where revised GST-inclusive work value exceeds original agreement value - representation to competent authority and fresh consideration

Reimbursement of differential tax arising from change of regime from VAT to GST - revised guidelines relating to works contract under GST - competent authority to determine GST-inclusive work value for balance work - representation to competent authority and fresh consideration - Petition challenging non-reimbursement of differential tax due to shift from VAT to GST disposed by directing petitioner to file representation and the authority to consider it in light of the revised guidelines dated 10.12.2018. - HELD THAT: - The writ petition raised grievance that contractors are required to pay tax arising from implementation of GST effective 01.07.2017 which was not envisaged in the original agreement. The Court noted that the State has issued revised guidelines dated 10.12.2018 dealing with works contracts under GST, prescribing a procedure to determine the tax-exclusive/revised estimated work value for balance work, enhancement/reduction by tender premium/discount, addition of applicable GST rate, and reimbursement where the revised GST-inclusive value exceeds the original agreement value. In view of identity with an earlier matter, the Court directed the petitioner to make a comprehensive representation to the appropriate authority within two weeks, and directed the authority to consider and dispose of the representation expeditiously and in the light of the revised guidelines, preferably by 02.01.2023. The Court preserved the petitioner's right to challenge the authority's decision if aggrieved. [Paras 8, 9, 10]

Petition disposed by directing the petitioner to file a representation and the competent authority to consider and dispose of it in accordance with the revised guidelines dated 10.12.2018 within the stated timeframe; right to challenge the authority's decision retained.

Final Conclusion: Writ petition disposed by mandating fresh representation by the petitioner and expeditious consideration by the competent authority in accordance with the State's revised guidelines of 10.12.2018; liberty to challenge the authority's decision if aggrieved.

Seizure and release of goods under Section 129 - Time limit for passing order under Section 129(3) - Penalty under Section 129(1) - 200% of tax - Release on payment of one-time tax and adjustment towards pre-deposit on appeal

Time limit for passing order under Section 129(3) - Seizure and release of goods under Section 129 - Impugned order dated 02.11.2022 was passed beyond the seven-day period contemplated by Section 129(3) and was prima facie contrary to the limitation prescribed under that provision. - HELD THAT: - The petitioner responded to the show cause notice on 26.10.2022. The learned Senior Counsel contended that, in terms of Section 129(3), the order should have been passed within seven days from that date. The Court noted the chronology of interception (19.10.2022), show cause notice (22.10.2022), reply (26.10.2022) and the order (02.11.2022), and recorded that the impugned order was beyond the statutory period. In view of the admitted purpose of the provisions as an anti-evasion measure and the respondents' own concession that the impugned order was prima facie contrary to the limitation, the Court treated the delay as material for interim relief while leaving the ultimate adjudication open to appellate remedy. [Paras 4, 5]

Impugned order found to be passed beyond the period prescribed by Section 129(3); this infirmity justified interim relief without deciding the ultimate merits.

Penalty under Section 129(1) - 200% of tax - Release on payment of one-time tax and adjustment towards pre-deposit on appeal - Consignment to be released on payment of one-time tax (100% of tax) and such payment to be adjusted towards 25% pre-deposit if the petitioner files an appeal. - HELD THAT: - Acknowledging the statutory scheme permitting release subject to payment and the respondents' willingness to treat payment as a one-time tax for interim release, the Court directed release on payment of 100% tax forthwith. The Court further recorded the agreement that, should the petitioner pursue appellate remedy, the amount so paid would be credited towards the statutory 25% pre-deposit required for filing the appeal. The directions operate as interim relief preserving the petitioner's right to challenge the order in appeal while ensuring statutory compliance for release. [Paras 6, 7]

Consignment to be released on payment of 100% tax; that payment to be adjusted towards 25% pre-deposit in the event of an appeal.

Final Conclusion: Writ petition disposed of by directing release of the seized consignment on payment of one-time tax equal to 100% of the tax; payment so made to be adjusted towards the 25% pre-deposit if an appeal is filed; no costs.

Refund under Section 54 of the Central Goods and Services Tax Act, 2017 - rejection of refund claim as time-barred - computation of period of limitation for filing refund applications - exclusion of period 01.03.2020 to 28.02.2022 from limitation - Notification No.13 of 2022 - Central Tax dated 05.07.2022 - Circular No.157/13/2021-GST dated 20.07.2021

Refund under Section 54 of the Central Goods and Services Tax Act, 2017 - rejection of refund claim as time-barred - Circular No.157/13/2021-GST dated 20.07.2021 - Notification No.13 of 2022 - Central Tax dated 05.07.2022 - computation of period of limitation for filing refund applications - Impugned order rejecting the petitioner's refund claim as barred by limitation was set aside and the claim remitted for fresh consideration in light of the subsequent notification excluding the pandemic period from limitation. - HELD THAT: - The Court observed that the rejection dated 21.01.2022 rested on the view that the refund application was filed beyond the period prescribed under Section 54(1) and on reliance upon Circular No.157/13/2021-GST dated 20.07.2021. Both parties accepted that the Circular has since been superseded by Notification No.13 of 2022 - Central Tax dated 05.07.2022, which directs that the period from 01.03.2020 to 28.02.2022 shall be excluded for computing the period of limitation for filing refund applications under Sections 54 and 55 of the Act. In view of that Notification, the basis for holding the claim time barred no longer subsists. The impugned order was therefore set aside and the respondent directed to reconsider the refund application afresh in accordance with Sections 54 and 55 and taking into account the Notification.

Impugned order dated 21.01.2022 set aside; respondent to reconsider the refund claim under Sections 54 and 55 applying Notification No.13 of 2022.

Exclusion of period 01.03.2020 to 28.02.2022 from limitation - extent of relief where part of claim already extended - Direction limited to that portion of the refund which was rejected solely on the ground of limitation; parts already extended were not disturbed. - HELD THAT: - The Court noted that in W.P.(MD) No.13191 of 2022 a portion of the refund request had already been extended. The present direction to reconsider relates only to that portion which was rejected on limitation grounds. The respondent is to act accordingly, leaving intact any portion already extended.

Relief confined to the portion rejected as time barred; previously extended portion remains unaffected.

Final Conclusion: The writ petitions are disposed by setting aside the order rejecting the refund as barred by limitation and directing the revenue to reconsider the refund application under Sections 54 and 55 of the Act in light of Notification No.13 of 2022 excluding 01.03.2020 to 28.02.2022 from limitation; relief is confined to the portion rejected on limitation grounds.

Composite supply - Works contract - Supply of services - Mixed supply - Exemption under Notification No. 12/2017-CT (Rate) entry 3A - Function of water supply under Article 243W - Immovable property - permanently fastened or attached to the earth - Determination of liability to pay tax

Composite supply - Works contract - Supply of services - Immovable property - permanently fastened or attached to the earth - Whether the Operation & Maintenance contract for Mansi Wakai Dam is a works contract and therefore a composite supply of services. - HELD THAT: - The Authority examined the contract scope (improvement, replacement, installation, operation and maintenance of pumps, pipelines, switchyards, dam works and allied permanent structures) and concluded these activities fall within the definition of works contract and the Schedule II entry treating works contract as a supply of services. Applying the General Clauses Act definition of immovable property and CBEC guidance, the Authority found that the items and works are permanently fastened to the earth and cannot be shifted without substantial damage; hence the supply relates to immovable property. The ESCO and O&M activities are closely linked, with ESCO improvements as the main service and O&M as ancillary, culminating into a single indivisible works contract which is a composite supply treated as a service under GST. [Paras 8, 9, 10, 11, 18]

The O&M of Mansi Wakai Dam is a works contract and therefore a composite supply treated as a supply of services.

Exemption under Notification No. 12/2017-CT (Rate) entry 3A - Function of water supply under Article 243W - Determination of liability to pay tax - Mixed supply - Whether the applicant is entitled to nil GST under entry 3A of Notification No.12/2017-CT (Rate), and the applicable tax where the goods component exceeds 25%. - HELD THAT: - Entry 3A exempts composite supplies to a government entity where the value of goods does not exceed 25% and the supply is in relation to a function entrusted to a Municipality under Article 243W. The Authority found the contract is to PHED (a State government department) and concerns water supply, a function listed under Article 243W. The applicant's material-cost breakup showed the goods component to be 11.50%, below 25%. The Authority rejected the jurisdictional officer's view that the contract is a mixed supply and held that it is a composite works contract eligible for the notification. Accordingly, where the goods component is below 25% the composite supply attracts nil GST under entry 3A; if the goods component exceeds 25%, the applicable rate is 12% (CGST 6% + SGST 6%) as per the relevant entries. [Paras 15, 16, 18, 19, 20]

The applicant is eligible for nil GST under entry 3A as the goods component is below 25%; if goods exceed 25% of the composite supply value, GST would apply at 12%.

Final Conclusion: The Authority ruled that the ESCO cum O&M contract for Mansi Wakai Dam is a works contract constituting a composite supply (treated as a service), and that where the value of goods in such composite supply to the government does not exceed 25% the supply is exempt under entry 3A of Notification No.12/2017-CT (Rate); otherwise GST@12% applies.

TDS u/s 194H - Commission / brokerage on Air Tickets - Supplementary Commission - Non deduction of tax at source (“TDS”) at 10% plus surcharge from payments falling under the definition of “Commission” or “Brokerage” - Penalty proceedings against the airlines u/s 271C - reasonable cause for the air carriers to have not deducted TDS at the relevant period - Interpretation of Section 194H as introduced by the Finance Act, 2001, with effect from 01.04.2000 - characterization of the income earned by the agent besides the Standard Commission of 7% and whether this additional portion would be subject to TDS requirements under Section 194H

HELD THAT:- If we view the ambit of Section 194H in an expansive manner, the factum of the exact source of the payment would be of no consequence to the requirement of deducting TDS. Even on an indirect payment stemming from the consumer, the Assessees would remain liable under the IT Act. Consequently, the contention of the airlines regarding the point of origination for the amounts does not impair the applicability of Section 194H of the IT Act.

Our conclusion in terms of the application of Section 194H of the IT Act to the Supplementary Commission amounts earned by the travel agent is unequivocally in favour of the Revenue. Section 194H is to be read with Section 182 of the Contract Act. If a relationship between two parties as culled out from their intentions as manifested in the terms of the contract between them indicate the existence of a principal agent relationship as defined under Section 182 of the Contract Act, then the definition of “Commission” under Section 194H of the IT Act stands attracted and the requirement to deduct TDS arises. The realities of how the airline industry functioned during the period in question bolsters our conclusion that it was practical and feasible for the Assessees to utilize the information provided by the BSP and the payment machinery employed by the IATA to make a consolidated deduction of TDS from the Supplementary Commission to satisfy their mandatory duties under Chapter XVIIB of the IT Act.

In light of the consensus between the parties that the travel agents have already paid income tax on the Supplementary Commission, there can be no further recovery of the shortfall in TDS owed by the Assessees. However, interest may be levied under Section 201(1A) of the IT Act. As an epilogue to this aspect of the matter, the Assessing Officer is directed to compute the interest payable by the Assessees for the period from the date of default by them in terms of failure to deduct TDS, till the date of payment of income tax by the travel agents. It will be open to the Assessing Officer to look into any details that are necessary for completion of this exercise, including verification of whether tax was actually paid at all by the agents on the amounts from which TDS was supposed to be subtracted. Given that no documentary evidence was placed before us, we are conscious that there may be certain anomalies which the Assessing Officer is best positioned to iron out.

In the eventuality that any of the agents have not yet paid taxes on the Supplementary Commission, the Revenue will be at liberty to proceed in accordance with law under the IT Act for recover of shortfall in TDS from the airlines. However, we limit the ability to levy penalties against the Assessees in light of Section 273B of the IT Act.

While we reject the arguments of the Assessees on merits in terms of their liability under Section 194H of the IT Act, we hold in their favour on the count of the matter having been rendered revenue neutral due to the apparent payment of income taxes on the amounts in question by the travel agents. The Assessing Officer is directed to expeditiously complete the assignment of determining the interest payable in accordance with the guidelines laid down above, so as to bring a quietus to the litigation. Appeal allowed in part.

Business expenditure incidental to and wholly and exclusively for the purposes of business - commercial expediency and direct and intimate connection test for deduction - expenditure in the nature of loans or advances to subsidiaries treated as business expenditure - allowability of compensation paid to subsidiaries as revenue expenditure

Business expenditure incidental to and wholly and exclusively for the purposes of business - commercial expediency and direct and intimate connection test for deduction - allowability of compensation paid to subsidiaries as revenue expenditure - Expenditure by the assessee described as 'compensation' paid to its subsidiaries is deductible as business expenditure. - HELD THAT: - The Court held that the payments made to the subsidiaries were to recoup irrecoverable business losses of those subsidiaries and were in substance moneys advanced for business purposes. Applying the established test that deductible expenditure must be incidental to the business, necessitated by commercial expediency and directly and intimately connected with the business, the Court found such connection present here. The nomenclature 'compensation' did not alter the substance that the outlay was an irrecoverable expenditure akin to loans/advances and was justified for the overall promotion of the assessee's business activities. The Court further observed that this conclusion is consistent with the reasoning in the coordinate ITAT decision in the assessee's earlier years and is not in conflict with the principles in Travancore Titanium Products Ltd. where the test of intimate connection and commercial expediency was articulated. [Paras 14]

Payment of compensation to subsidiaries was held to be incidental to and necessitated by the assessee's business and therefore allowable as deduction.

Expenditure in the nature of loans or advances to subsidiaries treated as business expenditure - allowability of compensation paid to subsidiaries as revenue expenditure - The ITAT's reliance on its earlier decision treating irrecoverable loans/advances to subsidiaries as business expenditure is applicable and not distinguishable on facts so as to negate allowability. - HELD THAT: - The Court examined the ITAT's earlier order concerning the assessee's loans and advances to subsidiaries which were written off and noted that, although the present expenditures were described differently, the essential character-irrecoverable payments to related subsidiaries to support their business-was the same. Given that those earlier findings treated such outlays as within the objects of the assessee and allowable as revenue expenditure, the Court held that the ITAT did not err in applying that approach to the present years; the factual distinction urged by the Revenue did not displace the fundamental analysis of substance over form. [Paras 12, 14]

The coordinate-bench authority treating irrecoverable advances to subsidiaries as business expenditure was held applicable; the ITAT did not err in following it.

Commercial expediency and direct and intimate connection test for deduction - business expenditure incidental to and wholly and exclusively for the purposes of business - Deduction for interest or interest-like claims in relation to loans advanced to subsidiaries (including interest-free loans) was allowed where the assessee failed to show any distinction undermining the intimate connection of the outlay with its business. - HELD THAT: - The Court answered the question framed about interest claimed on loans by noting that, on the facts of these appeals, the assessee had advanced funds to its subsidiaries and the payments were effectively irrecoverable and made to ensure viability of the subsidiaries' operations. In that factual matrix the allowance of the related claims was consistent with the principle that expenditure necessitated by commercial expediency and directly connected with the taxpayer's business is deductible. The Court therefore sustained the ITAT's direction to allow the relevant claims. [Paras 3, 14, 16]

The ITAT was correct in directing allowance of the claimed interest-related deduction; the claim was allowable in view of the intimate connection with the assessee's business.

Final Conclusion: The appeals by the Revenue were dismissed. The questions framed were answered in favour of the assessee: the payments to subsidiaries were held deductible as business expenditure being incidental to and necessitated by the assessee's business; the ITAT's orders allowing the claims were upheld. No order as to costs.

Concurrent findings of fact - no substantial question of law under Section 100 CPC - appellate interference limited to substantial question of law - re-appreciation of evidence not permissible - principles of natural justice - adequacy of opportunity of hearing

Concurrent findings of fact - documentary evidence on record - principles of natural justice - adequacy of opportunity of hearing - Validity of addition of Rs. 10,20,64,174 made by the Assessing Officer on account of difference between bank credits and receipts in books - HELD THAT: - The High Court recorded that both the CIT(A) and the ITAT after perusal of evidence returned concurrent factual findings accepting the assessee's explanation for the difference and noting documentary evidence on record. The CIT(A) had held that the AO made the addition on the basis of doubt and surmise and had failed to afford proper opportunity of hearing, in breach of natural justice, and that documentary evidence substantiated the assessee's position. The ITAT concurred and observed that Revenue did not controvert the CIT(A)'s findings nor produce additional evidence. In these circumstances the High Court treated the matter as a concurrent finding of fact on the reliability of books and sufficiency of explanation and evidence, which does not warrant interference. [Paras 3, 4]

Addition deleted; concurrent factual findings of CIT(A) and ITAT accepting the assessee's explanation and documentary evidence upheld.

No substantial question of law under Section 100 CPC - appellate interference limited to substantial question of law - re-appreciation of evidence not permissible - Whether the Revenue's appeal disclosed any substantial question of law warranting interference by the High Court under Section 100 CPC - HELD THAT: - Applying the principle that the High Court's jurisdiction under Section 100 CPC is confined to substantial questions of law and that it must not re-appreciate evidence where concurrent findings of fact exist, the Court observed that Revenue failed to place any material to contradict the concurrent findings returned by the CIT(A) and ITAT. Reliance was placed on the settled principle that interference is not justified where determination would require re-appreciation of evidence. Consequently, the appeal did not raise any substantial question of law for adjudication. [Paras 5]

No substantial question of law is raised; appeal dismissed.

Final Conclusion: The High Court dismissed the Revenue's appeal, upholding the concurrent factual findings of the CIT(A) and the ITAT that the addition was not sustainable in view of documentary evidence and that no substantial question of law arose for interference under Section 100 CPC.

Faceless assessment - Principles of natural justice - Right to personal hearing on request - Mandatory compliance with the procedure under Section 144B

Right to personal hearing on request - Principles of natural justice - Faceless assessment - Mandatory compliance with the procedure under Section 144B - Assessment order quashed for failure to grant personal hearing requested by the assessee during faceless assessment, constituting violation of principles of natural justice and mandatory procedure under Section 144B(6)(vii)&(viii). - HELD THAT: - The Court found on the material on record that the petitioner had timely requested a personal hearing by video conferencing and that the request was received by the Department, but no hearing was granted and the final assessment order was passed without assigning any reason for non-grant of the requested hearing. A plain reading of the provisions governing faceless assessment requires that where a request for personal hearing is received it shall be allowed through video conferencing; the scheme and the settled judicial authorities construe the procedure under Section 144B as mandatory and hold that the use of the word 'may' in the provision must be read in context so as to require the authority to consider and, ordinarily, grant a hearing request to give effect to natural justice. Reliance of the Court on consistent High Court precedents established that non-compliance with the statutory hearing procedure renders the assessment vulnerable to judicial review. In the circumstances the impugned assessment order was held to have violated principles of natural justice and the statutory procedure and therefore had to be set aside. The Court did not adjudicate the merits of the assessment and remitted the matter to the assessing authority to afford a reasonable opportunity of personal hearing and thereafter pass a fresh order in accordance with law. [Paras 7, 14, 15, 16, 17]

Impugned assessment order set aside for failure to grant the requested personal hearing; matter remitted to the assessing authority for fresh consideration after affording a personal hearing in accordance with Section 144B(6)(vii)&(viii).

Final Conclusion: Writ petition allowed to the extent that the assessment order dated 29.09.2022 is quashed for non-compliance with the faceless assessment procedure and principles of natural justice; matter remitted for fresh assessment after providing a personal hearing to the petitioner.

Addition under section 69A read with section 115BBE - acceptance of cashbook and cash flow statement as proof of source of cash deposits - appellate authority cannot substitute verified opening cash balance without justification - onus on revenue to controvert contemporaneous cash records

Addition under section 69A read with section 115BBE - acceptance of cashbook and cash flow statement as proof of source of cash deposits - appellate authority cannot substitute verified opening cash balance without justification - Whether the addition of Rs.7,65,000 confirmed by the CIT(A) could be sustained where the Assessing Officer had accepted the opening cash balance and the assessee produced cashbook, cash flow statement and statement of affairs explaining bank deposits - HELD THAT: - The Tribunal found that the Assessing Officer had verified and accepted the opening cash in hand (Rs.8,34,821) as recorded in the cashbook and that the assessee furnished contemporaneous supporting documents - cash flow statement, cashbook entries and statement of affairs - explaining the source of bank deposits. No defect in those records was pointed out by either the Assessing Officer or the CIT(A). Despite this, the CIT(A) reduced the accepted opening balance to an estimated figure of Rs.1 lakh and made an unexplained addition by displacing the AO's finding without any contrary material or specific rebuttal of the cash flow evidence. The Tribunal held that where the cash flow statement based on entries in the cashbook is not controverted by the revenue, the authorities cannot discard it and make additions under the impugned provisions. Reliance was placed on the reasoning in the referred High Court decision to the same effect. Consequently, the addition confirmed by the CIT(A) lacked merit and was ordered to be deleted. [Paras 15, 16, 17, 19]

Impugned addition of Rs.7,65,000 confirmed by the CIT(A) is deleted and the appeal is allowed to that extent.

Final Conclusion: The Tribunal set aside the addition of Rs.7,65,000 sustained by the CIT(A) for A.Y. 2017-18, directing deletion thereof because the cashbook, cash flow statement and statement of affairs explaining the bank deposits were verified and not controverted by the revenue.

Admission of additional evidence on appeal - remand for verification of evidence - right to opportunity to examine, cross examine and rebut - treatment of unexplained investment under section 69A - burden of proof and genuineness of source of funds

Admission of additional evidence on appeal - remand for verification of evidence - right to opportunity to examine, cross examine and rebut - treatment of unexplained investment under section 69A - burden of proof and genuineness of source of funds - Whether the matter should be remitted to the Assessing Officer for verification of additional documents produced before the CIT(A) in respect of the alleged unexplained advance of Rs.1,50,00,000/- - HELD THAT: - The Tribunal noted that the assessee produced before the CIT(A.) ledger entries, repayment statements, confirmation and bank statements of the alleged payer and his ITRs, documents which were not placed before the Assessing Officer during assessment. The Assessing Officer therefore had no opportunity to test the veracity, genuineness or correctness of those documents or to examine or cross examine witnesses in respect thereof. Given that the deletion of the addition by the CIT(A) was founded on documentary evidence that was not available to the AO at the assessment stage, the Tribunal held that the proper course is to remit the matter to the AO so that the AO may consider the additional material, afford the assessee an opportunity of being heard, and, if necessary, examine witnesses or seek verification of documents before arriving at a fresh conclusion on the claim that the advance was received and thereafter repaid. The Tribunal limited its direction to verification and rehearing by the AO and did not itself decide the merits of the genuineness of the advance or the correctness of the CIT(A)'s deletion. [Paras 9, 10]

Matter remitted to the Assessing Officer with direction to allow the assessee to produce and prove the documents relied upon before the CIT(A), to test their veracity including by examination or cross examination if necessary, and to pass an appropriate order after hearing the assessee; appeal partly allowed for statistical purposes.

Final Conclusion: The Tribunal remitted the issue relating to the alleged unexplained advance of Rs.1,50,00,000/- to the Assessing Officer for verification of additional evidence produced before the CIT(A), directing the AO to consider the material afresh after affording the assessee an opportunity of being heard; appeal partly allowed for statistical purposes.

Limitation under section 201(3) of the Income-tax Act - retrospective effect of legislative amendment - effect of Finance Act No.2 of 2014 w.e.f. 01.10.2014 - time of filing of TDS statement and limitation - order deeming payer to be assessee in default under section 201(1)

Limitation under section 201(3) of the Income-tax Act - effect of Finance Act No.2 of 2014 w.e.f. 01.10.2014 - time of filing of TDS statement and limitation - retrospective effect of legislative amendment - order deeming payer to be assessee in default under section 201(1) - Assessment order dated 30.03.2018 holding the assessee liable under section 201(1) for A.Y.2011-12 is barred by limitation because the extension of limitation in section 201(3) by Finance Act No.2 of 2014 took effect from 01.10.2014 and was not made retrospective. - HELD THAT: - The assessee filed quarterly TDS returns (Form 26Q) for the relevant periods, the last of which (26Q4) fell in FY 2011-12. Under the unamended law a deductor who filed the TDS statement was subject to a two-year limitation from the end of the financial year in which the statement was filed; therefore orders under section 201(1) should have been passed by 31.03.2014. The Finance Act No.2 of 2014 expressly states an effective date of 01.10.2014 for the amendment extending the limitation; unlike earlier amendments which were expressly made retrospective, the 2014 amendment contains no retrospective application. Consequently the extended seven-year limitation could not be applied to revive or validate orders in respect of years for which the period had already expired before 01.10.2014. The Tribunal also noted consistent judicial treatment where Parliament had provided express retrospective effect when intended. Having held the assessment time-barred, the Tribunal did not examine the merits of the demand. [Paras 11, 12, 22, 24]

Impugned order dated 30.03.2018 is time-barred and set aside.

Final Conclusion: The assessee's appeal is allowed; the order under section 201(1) dated 30.03.2018 for A.Y.2011-12 is quashed as barred by limitation and the merits of the assessment are not adjudicated.

Deemed assessee in default for failure to deduct tax at source - first proviso to section 201(1) and its retrospective operation - non-deduction of tax at source and effect on disallowance under section 40(a)(ia) - certificate in Annexure A to Form 26A as compliance for exemption from deeming provision - judicial precedent in Hindustan Coca Cola Beverage (supra) as declaring non-liability of payer where payee has declared income and paid tax

First proviso to section 201(1) and its retrospective operation - judicial precedent in Hindustan Coca Cola Beverage (supra) as declaring non-liability of payer where payee has declared income and paid tax - non-deduction of tax at source and effect on disallowance under section 40(a)(ia) - Whether the payer (assessee) could be treated as an assessee in default and suffer disallowance under section 40(a)(ia) for interest paid during 01-04-2012 to 30-06-2012 when the payee had included the amount in its return and paid tax thereon. - HELD THAT: - The Tribunal held that the position declared by the Hon'ble Supreme Court in Hindustan Coca Cola Beverage (supra) - that where the recipient has paid tax on the income received without deduction by the payer, recovery cannot be made from the payer - embodies the legal position even for the period prior to the formal insertion of the first proviso to section 201(1). The Finance Act, 2008 (substitution of the Explanation to section 191) and the subsequent insertion of the first proviso to section 201(1) by the Finance Act, 2012 are affirmations of that legal position and operate retrospectively. Consequently, where the payee has included the receipt in its return and paid tax thereon, the payer is not to be treated as an assessee in default and, therefore, the disallowance mechanism under section 40(a)(ia) cannot be invoked against such payer. Applying this principle to the facts, denial of relief for the first quarter of FY 2012-13 on the ground that the proviso was inserted later would run counter to the declared law and is therefore unsustainable. [Paras 6, 7, 8]

The payer cannot be treated as an assessee in default and the disallowance under section 40(a)(ia) is not sustainable where the payee has included the receipt in its return and paid tax thereon; the statutory amendments merely affirmed the pre-existing position.

Certificate in Annexure A to Form 26A as compliance for exemption from deeming provision - deemed assessee in default for failure to deduct tax at source - Whether submission of the requisite certificate in Annexure A to Form 26A during the course of first appellate proceedings satisfied the condition for excluding the payer from being an assessee in default and entitled the assessee to deletion of disallowance under section 40(a)(ia). - HELD THAT: - The Tribunal observed there is no qualitative distinction between the certificates in Form 26A filed before the appellate authority in respect of the first three lenders and the certificate filed for Muthoot Mini Finance Corporation Ltd. Although the certificate for the fourth lender was not filed before the AO, it was placed on record during the appellate proceedings (and on remand). The requirement envisaged by the proviso to section 201(1) is satisfied once the certificate in the prescribed form is obtained and produced before the appellate authority and the AO in remand proceedings; refusal to recognize the Form 26A produced first during appeal, while accepting similar documentation filed at the same appellate stage for other lenders, was unwarranted. Consequently, the condition for excluding the payer from being an assessee in default stood fulfilled. [Paras 9]

The Form 26A certificate furnished during appellate proceedings satisfied the requirement and the assessee could not be treated as an assessee in default; the disallowance sustained in first appeal is deleted.

Final Conclusion: The Tribunal allowed the appeal, holding that (i) the legal position declared in Hindustan Coca Cola Beverage (supra) and affirmed by subsequent statutory amendments precludes treating the payer as an assessee in default where the payee has declared the receipt and paid tax (including for the period 01-04-2012 to 30-06-2012), and (ii) the Form 26A certificate produced during appellate proceedings satisfied the statutory requirement; accordingly the disallowance under section 40(a)(ia) in respect of the interest payment to Muthoot Mini Finance Corporation Ltd. was deleted.

Deduction under section 80P - Eligibility of cooperative societies for deduction - Interest income from deposits with co-operative banks - Section 80P(4) does not affect section 80P(2)(d)

Deduction under section 80P - Interest income from deposits with co-operative banks - Section 80P(4) does not affect section 80P(2)(d) - Deduction under section 80P(2)(d) granted on interest income from deposits with co-operative banks - HELD THAT: - The assessee is a cooperative society registered under the Maharashtra Cooperative Societies Act and earned interest from deposits with various co-operative banks. The Assessing Officer disallowed the interest as taxable under 'Income from other sources' relying on the exclusionary provision in section 80P(4). The Tribunal, following the Division Bench decision of the Pune Bench in Rena Sahakari Sakhar Karkhana Ltd. v. Pr. CIT, held that insertion of section 80P(4) excluding certain co-operative banks does not derogate from the eligibility of a co-operative society to claim deduction under section 80P(2)(d) on interest income from deposits with a co-operative bank which itself qualifies as a co-operative society under the definition. Applying that precedent, the Tribunal overturned the findings of the AO and the appellate authority and directed grant of deduction under section 80P(2)(d) in respect of the interest earned from the co-operative banks. [Paras 4]

Appeal allowed; deduction under section 80P(2)(d) to be granted on interest earned from the co-operative banks.

Final Conclusion: The assessee's appeal is allowed and deduction under section 80P(2)(d) is directed to be granted in respect of interest income earned from deposits with co-operative banks for AY 2018-19.

Revision under section 263 - Limitation under section 263(2) - Assessment under section 153C read with 143(3) - Revised return under section 139(5) - Characterisation of compensation for shortfall in guaranteed performance as revenue or capital receipt - Eligibility for deduction under section 80IA - Notwithstanding clause in section 153C and independence of search-assessment proceedings

Limitation under section 263(2) - Revision under section 263 - Validity of invoking revisional jurisdiction u/s 263 in respect of assessment framed u/s 153C r.w.s. 143(3) for A.Y.2009-10 on limitation grounds. - HELD THAT: - The Tribunal held that the assessee had treated the compensation receipt in a revised return filed on 31/03/2011 and the original assessment dated 30/12/2011 was framed after taking cognisance of that revised return. Any error, if at all, therefore arose in the assessment completed on 30/12/2011. Reliance was placed on the principle in CIT v. Alagendran Finance Ltd that where an issue was not the subject-matter of reassessment, the period for section 263(2) runs from the date of the original assessment. Applying that principle, the Tribunal held that the revisional proceedings initiated by the Principal CIT in March 2018 were time-barred as the limitation for invoking section 263 must be reckoned from the date of the assessment which had dealt with the revised return, and not from the subsequent search assessment dated 29/03/2016. Consequently the section 263 order was quashed as barred by limitation.

Revision order passed u/s 263 quashed as barred by limitation.

Assessment under section 153C read with 143(3) - Notwithstanding clause in section 153C and independence of search-assessment proceedings - Whether the assessment framed u/s 153C r.w.s. 143(3) on 29/03/2016 was erroneous or prejudicial to the revenue because the Assessing Officer did not examine the compensation receipt. - HELD THAT: - The Tribunal found that at the time of framing the search assessment for A.Y.2009-10 the only incriminating material handed over related to a petty cash book containing entries pertaining to A.Y.2011-12 and not to A.Y.2009-10; therefore the Assessing Officer was justified in not making an addition for the compensation while framing the search assessment. The Tribunal also observed that proceedings under section 153C are separate and governed by the non-obstante clause in section 153C; however, on facts no incriminating material relating to the disputed receipt was available to the AO for A.Y.2009-10. For these reasons the Tribunal held that the twin conditions for exercise of section 263 (that the order is erroneous and prejudicial) were not cumulatively satisfied in the instant case.

Assessment u/s 153C r.w.s. 143(3) was not shown to be erroneous or prejudicial on the available incriminating material; section 263 invocation on this ground unsustainable.

Characterisation of compensation for shortfall in guaranteed performance as revenue or capital receipt - Eligibility for deduction under section 80IA - Whether the compensation received from Suzlon Energy Ltd is a capital receipt (as claimed by the assessee) or a revenue receipt and, if revenue, whether it is eligible for deduction under section 80IA (making it revenue-neutral). - HELD THAT: - The Tribunal noted that the assessee had claimed the receipt as capital in a revised return but that coordinate decisions (including a Jaipur Tribunal decision and authorities relied upon therein) treat such compensation as revenue. Crucially, those authorities also held that such compensation, being directly connected to the power-generation activity, qualifies for deduction under section 80IA. The Tribunal accepted that even if the receipt is held to be a revenue receipt, it would be eligible for 80IA deduction and thus revenue-neutral, meaning no prejudice to the revenue would arise from its treatment as revenue. On this basis the Tribunal concluded that allowing the assessee's classification in the assessment did not render the order prejudicial to the revenue for the purposes of section 263.

Even if the compensation is a revenue receipt, it would qualify for deduction under section 80IA and be revenue-neutral; therefore its treatment does not make the assessment prejudicial to revenue.

Final Conclusion: The Tribunal allowed the assessee's appeal, quashing the Principal CIT's order under section 263 as time-barred and, on merits, held that the preconditions for exercise of revisional power were not cumulatively satisfied since (i) no incriminating material for A.Y.2009-10 supported reopening in the search assessment and (ii) the compensation in question, even if treated as revenue, would be eligible for deduction under section 80IA and thus not prejudicial to the revenue.

Deduction under section 80IA - timely filing under section 139(1) - ineligibility under section 80AC for late return - reasonable and sufficient cause for delay - precedential conflict and rule favouring assessee (CIT vs Vegetable Products)

Deduction under section 80IA - timely filing under section 139(1) - ineligibility under section 80AC for late return - precedential conflict and rule favouring assessee (CIT vs Vegetable Products) - reasonable and sufficient cause for delay - Deduction claimed under section 80IA allowed despite return being filed 26 days after the due date under section 139(1). - HELD THAT: - The Tribunal examined that there was a minor delay of 26 days in filing the return and that the assessee furnished explanations and documentary material in support of circumstances preventing timely filing. The Assessing Officer disallowed the deduction relying on section 80AC, but the Commissioner (Appeals) allowed the deduction after placing reliance on decisions favourable to the assessee. Noting divergent decisions of various High Courts and the absence of a contrary decision of the jurisdictional High Court, the Tribunal applied the principle in CIT v. Vegetable Products that where conflicting precedents exist and no binding jurisdictional High Court ruling is present, the view favourable to the assessee should be followed. On that basis the Tribunal approved the CIT(A)'s conclusion that the deduction under section 80IA should be allowed despite the delayed filing and found no infirmity in the appellate order. [Paras 5, 11]

Tribunal confirms CIT(A)'s allowance of deduction under section 80IA and dismisses Revenue's appeal on this issue.

Reopening under section 147 - infructuous cross-objection - Cross Objection challenging reopening under section 147 is dismissed as infructuous. - HELD THAT: - The assessee's cross objection sought quashing of the reassessment framed under section 143(3) read with section 147. However, because the Tribunal has confirmed the CIT(A)'s order in favour of the assessee on the substantive deduction issue and dismissed the Revenue's appeal, the Cross Objection no longer called for adjudication. The Tribunal therefore treated the cross objection as infructuous and did not proceed to decide the reopening issue on merits. [Paras 14, 15]

Cross Objection is dismissed as infructuous.

Final Conclusion: The Revenue's appeal is dismissed and the CIT(A)'s allowance of the section 80IA deduction is confirmed; the assessee's cross objection is dismissed as infructuous.

Percentage completion method of revenue recognition - project completion method of revenue recognition - assessment under Section 153A linked to search/requisition - incriminating material as condition for disturbing completed assessments - consistency in method of accounting - double taxation impermissible - admissions recorded under Section 132(4) not conclusive evidence - opportunity of personal hearing in appellate proceedings

Admission of additional grounds - reasonable cause for belated grounds - Admission of the additional grounds of appeal - HELD THAT: - The Tribunal admitted the additional grounds because the facts were already on record and no fresh investigation was necessary, and there existed sufficient reasons for not raising them earlier. The Tribunal relied on the principle in NTPC v. CIT to permit admission for adjudication.

Additional grounds admitted for consideration.

Assessment under Section 153A linked to search/requisition - incriminating material as condition for disturbing completed assessments - Validity of proceedings under Section 153A and of the search for the impugned assessment years - HELD THAT: - The Tribunal held that it cannot adjudicate the general validity of a search where barred by precedent (Proman Ltd. and subsequent authorities) and statutory law; however, it examined the link between the search/seized material and the assessments for the facts on record. Applying the statutory scheme and judicial authorities, the Tribunal found that for A.Y. 2016-17 the time for issuance of a notice under section 143(2) had lapsed before the search and the original assessment had attained finality; since no incriminating material relevant to that year was found or relied upon to disturb the completed assessment, the assumption of jurisdiction under section 153A for A.Y. 2016-17 was improper and the assessment was quashed. For A.Y. 2017-18 the assessment proceedings were pending on the date of search, so issue of notice under section 153A and reassessment for that year was valid. A.Y. 2018-19 was the year of search and the regular assessment under section 143(3) was validly framed.

Assessment for A.Y. 2016-17 quashed for lack of incriminating material to disturb a completed assessment; notices and assessments for A.Y. 2017-18 and A.Y. 2018-19 upheld as valid.

Percentage completion method of revenue recognition - project completion method of revenue recognition - consistency in method of accounting - Whether the Assessing Officer was justified in substituting percentage completion method for the assessee's project completion method - HELD THAT: - The Tribunal analysed the contractual arrangements, accounting disclosures and the consistent historical practice of the assessee. It noted that the assessee, a land owner, had disclosed its revenue recognition policy in audited financial statements and had followed project completion (completed contract) method in earlier years, which the department had accepted in scrutiny assessments. The Tribunal reviewed applicable accounting guidance and a substantial body of case law (including decisions of the Karnataka High Court and other tribunals and courts) holding that a land owner/developer can follow project completion method where appropriate and that Accounting Standard 7 (percentage completion) is not invariably applicable to developers or land owners. Absent any finding that the assessee's books were defective or that the method distorted profits, the Assessing Officer was not justified in rejecting the consistently followed method mid project and imposing percentage completion accounting. The Tribunal emphasised that the assessee and the developer are distinct taxable entities and the developer's accounting method cannot be mechanically imposed on the land owner.

Addition made by applying percentage completion method is unsustainable; the assessee's project completion method is to be accepted.

Double taxation impermissible - revenue neutrality where income offered in subsequent years - Whether adopting percentage completion method resulted in double taxation and whether revenue was prejudiced - HELD THAT: - The Tribunal recorded that the income in question had been offered and assessed in subsequent years (post search years) and taxes paid; the retrospective imposition of tax in earlier years on the same income would cause double taxation. The Tribunal found that the exercise by the Assessing Officer amounted to pre collecting tax rather than demonstrating any loss to the revenue, and that revenue neutrality arises where the same income is ultimately taxed when it actually accrues under the assessee's consistent accounting. Given acceptance of the assessee's method in earlier and later years and absence of a distortion of profits, re taxing the same income in the impugned years would be impermissible.

Finding of double taxation upheld as a ground against the addition; no addition to stand on that basis.

Admissions recorded under Section 132(4) not conclusive evidence - Reliance on the Managing Director's statement recorded during search when that statement was retracted - HELD THAT: - The Tribunal reviewed authorities establishing that a statement or admission recorded during search is an important piece of evidence but not conclusive; it is open to the declarant to show the admission was incorrect. The seized loose sheet and the statement did not, on the facts, furnish independent incriminating material sufficient to sustain the addition for A.Y. 2016-17. The Tribunal held that a sworn statement cannot substitute for seized material as foundation to disturb a completed assessment, particularly where audited books and prior consistent disclosures exist.

Admission recorded under section 132(4) not treated as conclusive to sustain the impugned additions without supporting seized material; retraction is permissible and relevant.

Opportunity of personal hearing in appellate proceedings - Alleged breach of natural justice by CIT(A) in not granting personal hearing - HELD THAT: - The Tribunal noted the assessee's contention that the CIT(A) issued notices for written submissions and did not provide a date for personal hearing. However, having allowed the principal substantive reliefs (acceptance of project completion method and quashing of the A.Y. 2016-17 assessment), the Tribunal treated this procedural grievance as academic and did not order separate relief on that ground.

Ground on failure to grant personal hearing noted but rendered academic by substantive findings; no separate relief granted on this procedural ground.

Set off of brought forward losses - interest consequential on assessment - Ancillary directions on computation consequences - HELD THAT: - The Tribunal directed the Assessing Officer to give effect to set off of any brought forward losses in accordance with law. It also held that interest under relevant provisions (being consequential) is to be computed as mandatory, once assessments are finalized in accordance with the Tribunal's directions.

AO directed to allow set off of brought forward losses as per law; interest to be computed consequentially.

Challenge to validity of search before Tribunal - Whether the Tribunal may adjudicate the general validity of the search - HELD THAT: - The Tribunal explained relevant precedents and statutory constraints, including that issues concerning the reasons recorded for search are in many circumstances not traversable before the Tribunal (citing Proman Ltd., N.K. Jewellers and related authorities). Accordingly, the assessee cannot pursue a broad challenge to the legality of the search before this forum; nevertheless the Tribunal assessed whether seized material supported disturbing completed assessments for the specific years.

Broad challenge to the validity of the search dismissed before this Tribunal; consideration confined to whether seized material justified disturbing particular completed assessments.

Final Conclusion: Additional grounds admitted. The assessment for A.Y. 2016-17 under section 153A r.w.s.143(3) is quashed for lack of incriminating material to disturb the completed assessment; assessments for A.Y. 2017-18 and A.Y. 2018-19 are upheld as valid. The Assessing Officer was not justified in applying the percentage completion method to the assessee (a land owner) in place of the consistently followed project completion method; the additions based on percentage completion are unsustainable and give rise to impermissible double taxation. Admissions recorded during search are not conclusive without supporting seized material. Appellate procedural grievance rendered academic by substantive relief. AO to allow set off of brought forward losses and compute interest consequentially.

Mistake apparent from record - rectification under section 154 - intimation under section 200A - late fee under section 234E - prospective effect of statutory amendment - cleavage of opinion between High Courts

Mistake apparent from record - rectification under section 154 - intimation under section 200A - Whether the levy of late fee under section 234E in intimations issued under section 200A amounted to a "mistake apparent from record" permitting rectification under section 154 and whether filing rectification was a permissible remedy instead of a direct appeal against the intimation. - HELD THAT: - The Tribunal found that the assessing authority levied late fee under section 234E in intimations issued under section 200A for periods prior to 01.06.2015 when the enabling clause in section 200A did not exist. By levying an amount not leviable in law, the intimations contained an apparent mistake. The scheme of the Act provides the assessee remedies against an intimation under section 200A, including rectification under section 154; this route is not absolutely barred. Although rectification may be a different channel than a direct appeal, the Tribunal held that substantial justice requires that an assessee not be fastened with a levy that is legally untenable. Relying on co ordinate decisions (including ITAT Jodhpur) the Tribunal concluded that the CIT(A) erred in dismissing the appeals on the ground that rectification could not be entertained; Ground No.1 was allowed and the appeals could not be rejected for adopting the rectification route. [Paras 10]

Rectification under section 154 was a permissible remedy where late fee under section 234E was levied without authority of law; the CIT(A)'s dismissal on that ground was not justified and Ground No.1 is allowed.

Late fee under section 234E - intimation under section 200A - prospective effect of statutory amendment - cleavage of opinion between High Courts - Whether late fee under section 234E could be validly charged by issuance of intimation under section 200A for TDS statements relating to periods prior to 01.06.2015. - HELD THAT: - The Tribunal held that clause (c) was inserted in section 200A with effect from 01.06.2015 and, as a matter of statutory interpretation and settled precedent, such substitution is to be read as prospective unless clearly made retrospective. In the appeals before it the late fee under section 234E was levied by processing under section 200A for periods prior to 01.06.2015 when the statutory power to raise such demand under section 200A did not exist; therefore the levy was without authority of law. The Tribunal noted and followed co ordinate Bench decisions (including ITAT Indore and ITAT Jodhpur) holding the levy invalid and observed that the CIT(A) and Revenue accepted the merits of this aspect. Having reached this conclusion the Tribunal directed the assessing officer to rectify the intimations and delete the late fee charged. [Paras 11, 13]

The levy of fee under section 234E in intimations issued under section 200A for periods prior to 01.06.2015 is illegal; intimations are to be rectified and the late fee deleted, and Grounds No.2 to No.5 are allowed.

Final Conclusion: The appeals are allowed: the Tribunal held that the late fee under section 234E charged in intimations issued under section 200A for TDS statements relating to periods prior to 01.06.2015 was without authority of law (a mistake apparent on record), directed rectification of the intimations and deletion of the late fee, and allowed the assessees' appeals.

Jurisdiction under section 263 - prejudicial to the interests of the revenue - exemption under section 10(23C)(iiiad) - annual receipts versus advance fees - treatment of advance fees as current liability - application of mind by the Assessing Officer - possible view doctrine

Jurisdiction under section 263 - prejudicial to the interests of the revenue - annual receipts versus advance fees - treatment of advance fees as current liability - application of mind by the Assessing Officer - possible view doctrine - exemption under section 10(23C)(iiiad) - Validity of the Commissioner's exercise of revisional jurisdiction under section 263 to set aside the assessment on the ground that advance fees received in the year exceeded the threshold for exemption under section 10(23C)(iiiad). - HELD THAT: - The Tribunal found that the Assessing Officer had considered the assessee's accounting treatment and documentary explanations and had taken a view treating the unutilised student fees as 'advance' booked as a current liability to be included in turnover in the subsequent year. That view is reflected in the assessment order and supported by records relied upon by the AO. The Commissioner, disagreeing with that view, treated the advance receipts as part of annual receipts for the year under appeal and concluded the exemption threshold was exceeded. The Tribunal applied the settled principle that section 263 cannot be invoked merely because the Commissioner holds a different opinion where the Assessing Officer has applied his mind and adopted a possible view; an order is prejudicial to revenue only if the view taken by the AO is unsustainable in law. The revisional authority did not place material showing the AO's view was legally unsustainable. Reliance was placed on the legal tests articulated in the cited precedents to conclude that the AO's treatment was a possible view based on application of mind, and therefore the exercise of revisional jurisdiction was not justified. [Paras 6, 7]

The CIT(E)'s invocation of section 263 was not justified; the AO had applied his mind and taken a possible view on treatment of advance fees, hence the directions under section 263 were quashed and the appeals allowed.

Final Conclusion: The Tribunal allowed the appeals, quashed the directions issued under section 263, and held that the Assessing Officer's view treating the advance fees as current liability (to be taken into account in the subsequent year) was a possible view based on application of mind and therefore not vitiated as prejudicial to the interests of the revenue.

Reopening of assessment under section 147/148 - Recorded reasons for reopening - requirement of correct and cogent reasons - Reliance on documents seized from a third party for making additions - Burden on Revenue to corroborate entries found in third party records before making additions - Acceptance of additional evidence under Rule 46A - Addition under section 69C based on third party material

Reopening of assessment under section 147/148 - Recorded reasons for reopening - requirement of correct and cogent reasons - Validity of reopening the assessment for A.Y. 2011-12 - HELD THAT: - The Tribunal found that the reasons recorded by the Assessing Officer for reopening were erroneous and infected by factual lacunae (including incorrect PAN and an incorrect statement that return was not filed). Relying on the settled principle that reopening must be founded on cogent and correct reasons, the recorded reasons as placed on record did not satisfy the statutory requirement and the reassessment order was therefore held to be invalid. The grounds challenging reopening were accordingly allowed. [Paras 5]

Reopening under section 147/148 quashed as the recorded reasons were erroneous and insufficient.

Reliance on documents seized from a third party for making additions - Burden on Revenue to corroborate entries found in third party records before making additions - Acceptance of additional evidence under Rule 46A - Addition under section 69C based on third party material - Sustainability of addition of Rs.16,03,000 made on the basis of ledger entries found in third party records and whether the assessee's documentary evidence (registered sale deeds and affidavit) rebutted the addition - HELD THAT: - The addition was founded solely on entries found in the books recovered from a third party. The assessee produced registered sale deeds and an affidavit of the seller (Sh. Kaku Singh) before the appellate forum, which were admitted under Rule 46A. The seller's affidavit and registered documents specifically confirmed the transaction and stated that the assessee acted only as a broker. The Tribunal noted that the Assessing Officer did not make enquiries of the third party, the seller or other persons whose names appeared in the seized record to corroborate the entries. Applying the well established principle that additions cannot be sustained merely on 'dumb' documents found at a third party without independent corroboration or enquiry, and having regard to the admitted documentary evidence, the Tribunal held that the addition could not be sustained and was required to be deleted. [Paras 6, 7, 8]

Addition of Rs.16,03,000 based on third party ledger entries deleted; assessee's evidence accepted and addition quashed.

Final Conclusion: The appeal is allowed: the reopening under section 147/148 was quashed for lack of cogent recorded reasons, and the addition based solely on third party seized documents was deleted after the assessee's registered sale deeds and seller's affidavit were accepted.

Previous sanction for taking cognizance under the Customs Act - sanction for prosecution vs. sanction for taking cognizance - effect of sanction issued by the Collector of Customs under Section 137(1) - maintainability of a joint complaint under the Import and Export (Control) Act and the Customs Act - discharge at the preliminary stage

Previous sanction for taking cognizance under the Customs Act - effect of sanction issued by the Collector of Customs under Section 137(1) - sanction for prosecution vs. sanction for taking cognizance - Validity of taking cognizance of offences under the Customs Act on the basis of sanction issued by the Collector of Customs and whether such sanction suffices for the Court to take cognizance. - HELD THAT: - The Court examined competing authorities on whether a sanction issued by the Collector of Customs for prosecution can be treated as the requisite previous sanction enabling a Court to take cognizance of offences under the Customs Act. While earlier single-judge decisions treated sanction for prosecution as distinct and insufficient for taking cognizance, the Division Bench decision in SAYED MOHAMMAD HASAN was held to be determinative: the form of the sanction is not material so long as the sanction order or other materials set out the facts in respect of which sanction is given, and there is previous sanction for the Court to take cognizance. The learned Judge considered the distinction drawn in Ram Kumar and S.N. Bhowmik but found them distinguishable on facts and held that the Collector's sanction under Section 137(1) can validate the Magistrate taking cognizance when the order sets out the facts in respect of which sanction is granted. Applying that principle, no illegality in the Trial Court's taking cognizance was found. [Paras 13]

The sanction issued by the Collector of Customs under Section 137(1) was held sufficient to support the Magistrate taking cognizance; the challenge to cognizance on this ground fails.

Maintainability of a joint complaint under the Import and Export (Control) Act and the Customs Act - discharge at the preliminary stage - Whether the complaint jointly alleging offences under the Import and Export (Control) Act and the Customs Act was maintainable and whether the Trial Court committed illegality by not discharging the accused at the preliminary stage. - HELD THAT: - The petitioners contended that offences under distinct statutes could not be joined and that the Trial Court ought to have discharged them at the preliminary stage. The Court found those contentions unpersuasive in light of the record and applicable authorities; the Division Bench view that a Collector's sanction is effective for enabling cognizance weakened the petitioners' challenge to the proceedings as an abuse of process. The Court also noted prior opportunities to raise objections before the Trial Court and that the question of discharge was kept open for argument at the appropriate stage. On these bases the impugned order was not found to be legally objectionable. [Paras 14, 15]

The joinder of offences and the Trial Court's refusal to discharge the accused at the preliminary stage do not warrant interference; these objections fail and the challenge is rejected.

Final Conclusion: Revision dismissed; impugned order upheld and petition devoid of merit, without costs; Trial Court to be informed and proceedings to continue.

Effective date of a notification published in the electronic Gazette - publication in the Official Gazette/electronic Gazette under Section 25(4) of the Customs Act - self-assessment and crystallisation of rate of duty at the time of presentation of bill of entry - re-assessment under Section 17(4) of the Customs Act - publication in e-Gazette under Section 8 of the Information Technology Act

Effective date of a notification published in the electronic Gazette - publication in the Official Gazette/electronic Gazette under Section 25(4) of the Customs Act - publication in e-Gazette under Section 8 of the Information Technology Act - self-assessment and crystallisation of rate of duty at the time of presentation of bill of entry - Whether Notification No.29/2018-CUS dated 01.03.2018 was effective from 01.03.2018 or from the date on which it was digitally signed and published in the e-Gazette - HELD THAT: - Having regard to the statutory scheme and the jurisprudence of the Apex Court, the Court held that in the electronic era the decisive event for a notification issued under Section 25 is its publication in the Official Gazette in electronic mode. Section 8 of the IT Act and the Government's Office Memorandum switching to exclusive e-publishing render e-publication the relevant mode of bringing notifications into force. Authorities including the Apex Court in G.S. Chatha Rice Mills and precedents following the e-Gazette regime establish that the time and date of e-publication (including digital signing and upload) determine when a notification becomes operative. Applying these principles to Notification No.29/2018-CUS, which was digitally signed and uploaded on 06.03.2018 at 19:15 hours, the Court concluded that that date (not 01.03.2018) was the effective date of the Notification. Consequently, the rate of duty applicable is that crystallised at the moment of presentation of the bills of entry (self-assessment), and a subsequent notification uploaded later cannot alter that crystallised rate. [Paras 9, 14, 15]

Notification No.29/2018-CUS came into force on 06.03.2018 (date of digital signing and e-publication); the rate of duty crystallised at the time of presentation of the bills of entry and the subsequent notification could not lawfully alter that rate.

Re-assessment under Section 17(4) of the Customs Act - self-assessment and crystallisation of rate of duty at the time of presentation of bill of entry - Whether the reassessment of the petitioner's bills of entry to the enhanced rate and the appellate order refusing to condone delay were sustainable and what relief should follow - HELD THAT: - Since the revised notification was not in force at the time the bills of entry were presented and the duty was correctly self-assessed at the then prevailing rate, exercise of power under Section 17(4) to reassess to the enhanced rate was unsustainable. The reassessments and the consequent demand lacked a valid statutory foundation because the Notification became effective only upon e-publication on 06.03.2018. In view of the above, the reassessment orders and the appellate order which did not consider merits (being dismissed on condonation grounds) have no operative basis and are liable to be quashed. The Court therefore granted the consequential relief of refund of differential amounts deposited under protest and set aside the order in appeal. [Paras 15, 16]

Orders of reassessment and the appellate order dated 21.01.2019 were quashed and set aside; petitioner entitled to refund of the differential duty paid on the bills of entry, with interest.

Final Conclusion: Writ petitions allowed: Notification No.29/2018-CUS is effective only from the date of its digital signing and e-publication (06.03.2018); reassessments of the specified bills of entry were quashed and set aside, the appeal order was quashed, and the respondents directed to refund the differential duty deposited with interest within eight weeks.

Remand for re-test of sample - reliance on chemical test reports - classification of imported coal as coking coal or other than coking coal - acceptance of load port and discharge port certificates - obligation to comply with tribunal directions - opportunity of personal hearing on remand

Remand for re-test of sample - obligation to comply with tribunal directions - Whether the adjudicating authority complied with the Tribunal's remand direction to re-test the remnant sample before adjudication. - HELD THAT: - Tribunal had expressly remanded the matter for re-test of the sample because of contradicted chemical reports. The adjudicating authority requested re-testing, but was informed that the remnant sample was not available. Despite the remand direction, the adjudicating authority proceeded to decide the matter on the basis of existing reports and old evidence without conducting the re-test. The Tribunal found that the mandated step (re-testing as directed) was not effectively followed and that the adjudicating authority adjudicated without addressing essential aspects of the remand direction. In view of non-compliance with the remand purpose and the need for fresh consideration on that basis, the impugned order could not stand. [Paras 5, 7]

Impugned order set aside and matter remanded to the adjudicating authority for fresh decision in accordance with the remand; adjudicating authority to pass fresh order within three months.

Reliance on chemical test reports - classification of imported coal as coking coal or other than coking coal - acceptance of load port and discharge port certificates - Whether, in absence of re-testing, the adjudicating authority properly considered material evidence bearing on classification of the imported coal (including load/discharge certificates and finalisation of assessments for other portions of the same consignment). - HELD THAT: - The appellants produced material facts and documents indicating the cargo formed part of a common bulk consignment and that other importers who received portions of the same vessel's cargo had their assessments finalised accepting the goods as coking coal. The adjudicating authority's order does not record any finding on these vital facts and did not address whether the load port/discharge port certificates and the information about finalised assessments at Kandla warranted acceptance or further inquiry. Given these unexamined materials and the earlier direction for re-test, the Tribunal concluded that these aspects require reconsideration by the adjudicating authority with opportunity of personal hearing to the appellants. [Paras 6, 7]

Issue left open and remanded for fresh adjudication after affording personal hearing and reconsideration of the load/discharge certificates and related assessment information.

Final Conclusion: Impugned adjudication is set aside and the matter is remitted to the adjudicating authority for fresh decision after affording the appellants personal hearing and re-examining the contested classification and evidence (including pursuing re-test if possible); fresh order to be passed within three months.

Transaction value - rejection of declared value after examination - customs valuation - Rule 12 doubts and procedure - waiver of show cause notice and its effect - estoppel by acceptance of enhanced value - application of import restrictions to actual goods imported

Rejection of declared value after examination - customs valuation - Rule 12 doubts and procedure - The reassessment rejecting the declared invoice value and enhancing the assessable value after 100% examination was valid under the Valuation Rules. - HELD THAT: - The Tribunal applied Rule 3 read with Rule 12 of the Valuation Rules and Section 14 of the Customs Act to hold that transaction value is the starting point but is subject to the Rules where the proper officer has reason to doubt the truth or accuracy of the declared value. The court relied on authoritative exposition that when contemporaneous data or examination gives reason to doubt the declared value the proper officer may ask for further information and, where the importer requests, must intimate grounds in writing and provide an opportunity. Here a 100% second check revealed a significant mismatch between declared polished marble slabs and the actual consignment composition; contemporaneous examination report formed the basis for rejection of the declared value and reassessment. The Tribunal found that a speaking order was passed based on the examination report and the importer's own explanations, and there was no procedural infirmity in the officer's action in enhancing the value. [Paras 9, 10, 11]

Rejection of the declared value and reassessment of assessable value after examination was proper and sustainable.

Waiver of show cause notice and its effect - estoppel by acceptance of enhanced value - The appellant's written acceptance and waiver of a show cause notice, followed by payment of differential duty, estopped it from later challenging the enhanced value. - HELD THAT: - The Tribunal relied on precedent recognizing that where an importer expressly accepts the enhanced value and states that it does not want a show cause notice or personal hearing, the consented enhanced value becomes the transaction value and no further justification is required. The appellant's letter of 13.06.2017 admitted the presence of undeclared granite slabs, accepted the mistake, sought waiver of show cause notice and paid the differential duty. In these circumstances, consistent with earlier decisions cited, the importer cannot subsequently dispute the enhanced valuation. [Paras 10, 12, 13, 14]

Appellant was estopped from challenging the enhanced value after accepting it and paying the differential duty without protest.

Application of import restrictions to actual goods imported - Restrictions and licensing requirements under DGFT (and customs) apply to the goods actually imported as found on examination, not to the description in the invoice. - HELD THAT: - The Tribunal held that customs duty and restriction provisions operate on the goods actually imported into India and not on the goods as described in import documents. Since the consignment contained granite slabs which were subject to DGFT restriction for imports below the notified per unit value and no licence was produced, the proper officer applied the restriction and minimum value for those granite slabs in reassessment. The appellant's submission that assessment should follow the invoice description was rejected as contrary to statutory duty to charge on the actual goods imported. [Paras 3, 11]

Prohibitions and restrictions were correctly applied to the actual goods found on examination rather than to the invoice description.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals) order: the declared value was lawfully rejected after examination and reassessed; the appellant's waiver of show cause notice and payment of differential duty estopped it from challenge; and import restrictions were properly applied to the goods actually imported. The appeal is dismissed.

Restoration of company name - power to strike off register for non operation under Section 248 of the Companies Act, 2013 - restoration by NCLT under Section 252 of the Companies Act, 2013 - requirement of being carrying on business or in operation for restoration - compliance with notice and publication procedure for striking off

Requirement of being carrying on business or in operation for restoration - restoration of company name - The Tribunal correctly found that the company was not carrying on business or in operation and therefore restoration of the company's name was not warranted. - HELD THAT: - The Appellate Tribunal noted that although the financial statements for the years ending 31.03.2013 to 31.03.2018 were on record, those statements showed no revenue from operations since incorporation, no profits and no fixed assets. On that factual basis the Tribunal concluded the company was not carrying on business or in operation. The present Tribunal agreed with that factual conclusion and the legal consequence that restoration under the statutory scheme requires satisfaction that the company is carrying on business or in operation before ordering restoration. [Paras 9]

The finding that the company was not carrying on business or in operation is upheld and restoration is not justified.

Power to strike off register for non operation under Section 248 of the Companies Act, 2013 - compliance with notice and publication procedure for striking off - The Registrar of Companies complied with the statutory procedure for striking off and the Tribunal correctly affirmed the striking off of the company's name. - HELD THAT: - The record shows issuance of the prescribed notices (STK-5 and STK-7) and publication in the Official Gazette reflecting striking off w.e.f. 09.06.2017 after expiry of the prescribed periods. The Tribunal reviewed those steps and the absence of response or filings by the company, and concluded that the Registrar had reasonable cause to believe the company was not functioning and had followed the removal procedure under the Act. The Appellate Tribunal accepted the Tribunal's reasoning and affirmed the validity of the striking off. [Paras 9]

The Registry's striking off procedure was validly exercised and the Tribunal's affirmation of that action is sustained.

Final Conclusion: The impugned order of the NCLT is affirmed; the appeal is dismissed.

Applicability of IBBI (Liquidation Process) Regulations, 2016 to liquidations under the Companies Act, 2013 - Tribunal's power to fix fee of liquidator - Companies (Winding up) Rules, 2020 - Rule 188 - fixation of remuneration - Remand for fresh consideration by adjudicating forum

Applicability of IBBI (Liquidation Process) Regulations, 2016 to liquidations under the Companies Act, 2013 - Companies (Winding up) Rules, 2020 - Rule 188 - fixation of remuneration - Whether the National Company Law Tribunal was justified in fixing the liquidator's remuneration by applying the schedule of fees from the IBBI (Liquidation Process) Regulations, 2016 without considering the Companies (Winding up) Rules, 2020. - HELD THAT: - The Appellate Tribunal found that the Tribunal relied primarily upon the IBBI (Liquidation Process) Regulations, 2016 (as amended in 2019) in fixing the liquidator's remuneration but did not consider the Companies (Winding up) Rules, 2020 made by the Ministry of Corporate Affairs, in particular the provisions dealing with the Tribunal's power to fix fees. The appeal arose from a winding up initiated under Sections 271 and 272 of the Companies Act, 2013 and the appointment of the liquidator under Chapter-XX of that Act. Given this statutory matrix, the Appellate Tribunal held that the Tribunal should have taken into account the Companies (Winding up) Rules, 2020 while deciding the fee, rather than proceed solely on the basis of IBBI regulations. The absence of consideration of the 2020 Rules rendered the impugned order incomplete and susceptible to reconsideration by the adjudicating forum after hearing parties with reference to the applicable winding up rules. [Paras 9]

The Tribunal's reliance on IBBI regulations without considering the Companies (Winding up) Rules, 2020 was erroneous; the matter requires reconsideration by the NCLT in light of the 2020 Rules.

Remand for fresh consideration - Tribunal's power to fix fee of liquidator - Whether the impugned order fixing the liquidator's fee should be set aside and the matter remitted to the NCLT for fresh, reasoned consideration. - HELD THAT: - Having identified the Tribunal's failure to consider the Companies (Winding up) Rules, 2020, the Appellate Tribunal set aside the impugned order and remitted the matter to the National Company Law Tribunal, Cuttack Bench for fresh hearing and reasoned disposal. The remand directs the NCLT to hear the parties and to pass reasoned orders after considering the provisions of the Companies (Winding up) Rules, 2020 within eight weeks from receipt of the judgment. The Appellate Tribunal's order therefore does not decide the correct quantum or method of remuneration on merits but requires the adjudicating authority to revisit the question in accordance with the applicable winding up rules. [Paras 10]

Impugned order set aside and matter remitted to the NCLT, Cuttack Bench, to hear parties and pass reasoned orders in accordance with Companies (Winding up) Rules, 2020 within eight weeks.

Final Conclusion: The NCLT's order fixing the liquidator's remuneration by reference to IBBI liquidation regulations was set aside because the Tribunal did not consider the Companies (Winding up) Rules, 2020; the matter is remitted to the NCLT, Cuttack Bench to hear the parties and pass reasoned orders under the 2020 Rules within eight weeks.

Appeal under Section 421 of the Companies Act, 2013 - consent order - person aggrieved - admissions made by counsel on instructions - statutory exclusivity of remedy

Appeal under Section 421 of the Companies Act, 2013 - consent order - person aggrieved - admissions made by counsel on instructions - Whether the appeal against the NCLT order directing deposit is maintainable when the impugned direction was recorded as a consent of the parties through counsel's on instruction admission. - HELD THAT: - The Tribunal examined para 42 of the NCLT order which records that the counsel for the respondent (Appellant herein before this Tribunal) stated on instructions that the respondent would deposit the specified amount and a time extension was granted accordingly (para 8). The Appellants' present contention - that the counsel acted without proper instruction and therefore the consent recorded should not bar appeal - was not raised before the NCLT and no application was filed in the Tribunal to challenge the counsel's statement (para 9). Section 421 permits appeal only by a person aggrieved and expressly precludes appeals from orders made with the consent of parties. The Tribunal held that an authorization to counsel and a submission made on instructions cannot be impugned in appellate proceedings before this Appellate Tribunal; the statutory scheme must be followed and a consent order cannot be assailed in appeal under Section 421 (paras 10-12). The judgments relied upon by the Appellant under Article 136 were distinguished on the ground that those arose in the exercise of constitutional jurisdiction, whereas the Appellate Tribunal must act within the statutory framework prescribed by the Act (para 12). [Paras 8, 9, 10, 11, 12]

The appeal is not maintainable because the impugned direction was a consent order recorded on counsel's instruction and, accordingly, the appeal under Section 421 is barred; the appeal is dismissed.

Final Conclusion: The Appellate Tribunal dismissed the appeal on the ground that the impugned order was a consent order recorded on counsel's on instruction admission and, therefore, not amenable to appeal under Section 421 of the Companies Act, 2013.

Scheme of Amalgamation - Sanction under Sections 230-232 of the Companies Act, 2013 - Dispensing with meetings of shareholders and creditors - Statutory compliance and objections of Registrar of Companies/Regional Director - Responses of Income Tax Department - Transfer of assets and liabilities - Set-off of fees on authorized capital - Appointed Date - Filing of certified copy and dissolution without winding up

Scheme of Amalgamation - Sanction under Sections 230-232 of the Companies Act, 2013 - Sanction of the Scheme of Amalgamation between the petitioner companies. - HELD THAT: - The Tribunal examined the Scheme attached as Annexure-A1, the affidavits of compliance, the statutory auditors' certificate on accounting treatment under Ind AS and the reports/communications from statutory authorities. Having considered the material on record and heard counsel, the Tribunal found the Scheme to be prima facie in compliance with the requirements of the Companies Act, 2013 and sanctioned the Scheme. The sanction is subject to the reservations that statutory or regulatory action, if any, in accordance with law shall remain open. [Paras 2, 9, 10, 11, 12]

The Scheme of Amalgamation is sanctioned.

Dispensing with meetings of shareholders and creditors - Statutory compliance and objections of Registrar of Companies/Regional Director - Validity of earlier dispensation of meetings and satisfaction of observations raised by RoC/RD. - HELD THAT: - The Tribunal recorded that the first motion application (CA (CAA) No.7/Chd/Pb/2021) had dispensed with the meetings of equity shareholders, secured and unsecured creditors of the applicant companies and noted that the main objects, capital structure and rationale were elaborated in the first motion order. The Regional Director/RoC had raised observations regarding non-filing of affidavits under specified provisions and about authorized capital/fee treatment; the petitioners replied that no transactions attracted those provisions and undertook compliance concerning authorized capital and payment of any differential fees. On perusal, the Tribunal held that the observations of RD/RoC stood duly satisfied. [Paras 3, 4, 7]

The dispensation of meetings stands recorded and the RoC/RD observations have been satisfied.

Responses of Income Tax Department - Effect of Income Tax Department's report and treatment of outstanding demands and proceedings. - HELD THAT: - The Income Tax Department reported pending demands in respect of certain petitioner companies. The petitioners pointed to the Scheme provision that all liabilities, outstanding demands and pending proceedings of the transferor companies will stand transferred to the transferee company and undertook that such liabilities and demands will be dealt with by the transferee company in accordance with law. The Tribunal found that the observations of the Income Tax Department were addressed and stood satisfied. [Paras 7]

The Income Tax Department's concerns have been addressed and satisfied by the petitioners' undertakings.

Transfer of assets and liabilities - Appointed Date - Set-off of fees on authorized capital - Filing of certified copy and dissolution without winding up - Legal consequences and operative directions consequent to sanctioning the Scheme. - HELD THAT: - On sanction, the Tribunal directed that all property, rights and powers of the transferor companies shall, without further act or deed, stand transferred and vested in the transferee company and that all liabilities and duties shall similarly transfer to the transferee company. The Appointed Date is fixed as 01.04.2020. The transferee company is to allot shares to existing members as per the Scheme, employees are to be transferred, and pending proceedings by or against transferor companies shall continue against the transferee company. The Tribunal ordered that fees paid by transferor companies on their authorized capital shall be set off against any fees payable by the transferee company and directed filing of revised memorandum and articles and payment of any differential fee; upon filing a certified copy of the order the transferor companies shall be dissolved without undergoing winding up. Formal orders in Form CAA-7 are to follow after filing the Schedule of Properties. [Paras 13, 14]

Directions incidental to the sanction are issued, including transfer of assets/liabilities, fixation of Appointed Date, fee set-off, filing requirements and dissolution of transferor companies.

Final Conclusion: The Tribunal allowed and disposed of Company Petition CP (CAA) No.27/Chd/Pb/2021 by sanctioning the Scheme of Amalgamation between the petitioner companies, subject to statutory reservations; ancillary directions (appointed date, transfer of assets/liabilities, employee transfer, share allotment, fee set-off, filing and dissolution) are issued and statutory authorities are to act on a certified copy of the order.

Void for non-approval by committee of creditors - related party transaction - prior approval of the committee of creditors under Section 28 - resolution professional's powers during CIRP

Prior approval of the committee of creditors under Section 28 - void for non-approval by committee of creditors - Actions taken by the resolution professional during CIRP without prior approval of the committee of creditors under Section 28 are void. - HELD THAT: - The Court examined Section 28 and noted it operates with a non-obstante clause prohibiting the resolution professional from undertaking specified actions during the corporate insolvency resolution process without prior CoC approval. Section 28(1)(f) expressly bars related party transactions absent CoC approval; Section 28(2)-(3) prescribes convening the CoC and a 66% voting threshold; and Section 28(4) declares actions taken without such approval to be void. The Adjudicating Authority found, and this Court approved, that no prior approval of the CoC was obtained for the impugned transactions and therefore the actions taken by the erstwhile RP fall within the category of actions rendered void by Section 28(4). The contention that placing accounts before the CoC without objection amounted to approval was rejected as not authorised by Section 28. The Court affirmed the Adjudicating Authority's legal conclusion that the statutory mechanism of prior approval was not complied with and that non-compliant actions must be discarded as void. [Paras 8, 9]

The Court upheld the Adjudicating Authority's finding that actions taken by the RP without prior CoC approval are void under Section 28.

Related party transaction - resolution professional's powers during CIRP - Recipients of payments made pursuant to related party transactions during CIRP without CoC approval are liable to reimburse amounts thereby received. - HELD THAT: - The application before the Adjudicating Authority sought reversal of specified related party transactions and restitution of amounts paid by the erstwhile RP in the absence of CoC ratification. The Court observed that the question whether recipients rendered services or whether the fault lay with the erstwhile RP was not determinative of the statutory issue under Section 28. Having concluded the payments were made without the requisite CoC approval and are therefore void, the Adjudicating Authority's direction for reimbursement of the amounts as claimed was sustained. The appellate court accordingly dismissed the appeal against the direction to the appellants to repay the sums ordered by the Adjudicating Authority. [Paras 10, 11]

The Court affirmed the Adjudicating Authority's order directing reimbursement by the recipients of related party payments made without CoC approval.

Final Conclusion: Appeal dismissed; the Adjudicating Authority's order declaring related party transactions made without prior CoC approval to be void and directing reimbursement by the recipients is affirmed. No costs.

Locus standi of a financial creditor to file a section 7 application under the Insolvency and Bankruptcy Code, 2016 - declaration of an Event of Default by an individual consortium lender versus collective procedure - security trustee mechanism and enforcement of securities through a Security Trustee Agreement - inter-se agreement procedure for coordinated decision making, recall of facilities and enforcement - continuing guarantee and guarantor's liability

Locus standi of a financial creditor to file a section 7 application under the Insolvency and Bankruptcy Code, 2016 - declaration of an Event of Default by an individual consortium lender versus collective procedure - security trustee mechanism and enforcement of securities through a Security Trustee Agreement - inter-se agreement procedure for coordinated decision making, recall of facilities and enforcement - Whether IDBI Bank, a participating lender in the consortium, was entitled to unilaterally declare an Event of Default and file a section 7 petition against the guarantor Fivebro International Private Limited. - HELD THAT: - The Security Trustee Agreement and the Inter se Agreement prescribe a coordinated procedure to be followed before taking actions such as declaration of an Event of Default, recall of facilities and enforcement of securities. Clause (4) of the Security Trustee Agreement and clauses 7.1-7.3 and 7.2 of the Inter se Agreement require an individual lender proposing such action to intimate the Security Trustee, which must inform other lenders and trigger a meeting of the consortium led by the Lead Bank, with enforcement to be carried out by the Security Trustee on instructions of the Majority Lenders. IDBI Bank's recall notice to the borrower and the demand on the guarantor were issued without any intimation to or instruction from the Security Trustee or the Lead Bank and therefore did not comply with the agreed procedures. Clause 7.5, relied upon below, must be read conjointly with clauses 7.1-7.3 and does not permit sidestepping the specific procedure for declaration of default and enforcement. In consequence, the Event of Default declared by IDBI Bank was not validly declared in accordance with the Inter se Agreement and Security Trustee Agreement, and IDBI Bank lacked the entitlement to act unilaterally in the manner it did. [Paras 27, 28, 29, 32, 33]

The unilateral declaration of Event of Default by IDBI Bank and its consequent section 7 petition were not in accordance with the Inter se Agreement and Security Trustee Agreement; IDBI Bank was not entitled to act independently and the admission under the impugned order is set aside.

Continuing guarantee and guarantor's liability - effect of non disbursement by a consortium member on the validity of a restructured package and discharge of surety - Whether non disbursement by Standard Chartered Bank after the restructuring materially altered the restructuring package and discharged the guarantor Fivebro International Private Limited (left undecided for the purposes of the section 7 adjudication). - HELD THAT: - The contention that Standard Chartered Bank's failure to disburse its share vitiated the restructuring package and discharged the guarantor was raised by the appellant. The Tribunal observed that the question of non disbursement and its consequences relate to matters that are not relevant to the narrow adjudicatory exercise under section 7 as regards existence of debt and default by proper procedure, and therefore elected not to adjudicate this contention at the section 7 stage. The Tribunal also noted that arguments based on sections 129 and 133 of the Indian Contract Act and the alleged breach of clause 7.6(e) concerning substitution of lenders were not necessary to decide the section 7 petition and are left open for consideration elsewhere as appropriate. [Paras 30, 31]

The contention regarding non disbursement by Standard Chartered Bank and discharge of the guarantee is not decided in the present section 7 adjudication and is left open for consideration in the appropriate forum or at the appropriate stage.

Final Conclusion: Impugned admission order dated 10.5.2022 is set aside on the ground that IDBI Bank acted unilaterally in declaring an Event of Default contrary to the Inter se Agreement and Security Trustee Agreement; consequently Fivebro International Private Limited is relieved from CIRP and moratorium under the impugned order. There is no order as to costs.

Offence of money-laundering - Proceeds of crime - Scheduled offence as predicate for PMLA - Investigating Agency's duty to establish nexus between predicate offence and proceeds - Grant of bail in cases under PMLA and effect of Section 45 - Medical condition as a ground for bail - Arrest and detention under Section 19 of PMLA

Scheduled offence as predicate for PMLA - Proceeds of crime - Investigating Agency's duty to establish nexus between predicate offence and proceeds - Validity of initiating prosecution under Sections 3 and 4 of PMLA without established predicate offence or demonstrable nexus of proceeds of crime to the accused. - HELD THAT: - The Court held that the offence under Section 3 of PMLA is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence and that Authorities under the Act cannot prosecute on a notional basis or mere assumption that a scheduled offence has been committed. The judgment relies on the principles encapsulated in Vijay Mandal and subsequent High Court authority to the effect that the predicate offence is the foundation of a money-laundering charge and that proceeds must be shown to be derived from such criminal activity before the PMLA offence can be made out. Applying these principles to the facts, the Court noted that the genesis of the ECIR was FIR No. 252 of 2021 in which the petitioner was not named and that no concluded finding against the petitioner in the predicate offence existed at the time ED recorded the ECIR. The Court observed that although ED claimed incriminating material was found during raids, the prosecution under PMLA requires establishment that the accused possessed or used proceeds of crime obtained from a scheduled offence; absent such established nexus, proceeding under Sections 3 and 4 would be premature. The Court recorded reservations about the manner and haste of ED's action in the factual matrix before it, observing that some of the monetary estimates relied upon appeared presumptive and that mining department procedures had not been followed in full. [Paras 14, 15, 16]

Authorities cannot proceed under Sections 3 and 4 of PMLA on a notional basis; investigation under PMLA must be founded on evidence linking the accused to proceeds derived from a scheduled offence.

Grant of bail in cases under PMLA and effect of Section 45 - Medical condition as a ground for bail - Arrest and detention under Section 19 of PMLA - Whether the petitioner should be released on bail despite charges under PMLA, having regard to the stage of investigation, medical condition, and safeguards against tampering or absconding. - HELD THAT: - Balancing competing factors and applying settled principles on bail, the Court found that the petitioner had made out a case for bail. The Court noted that investigation had progressed to the stage where nothing further remained to be recovered from the petitioner, the entire record seized, and that the petitioner had been in judicial custody for over a month. The petitioner's serious medical conditions (diabetes, prior heart surgery, first-stage liver cirrhosis, and obesity) were considered within the exception envisaged by the proviso to Section 45 and as a relevant factor in exercising discretion. The Court rejected the submission that Section 45 precludes routine grant of bail under PMLA, observing that the provision does not constitute a complete bar and that bail may be granted subject to satisfaction of the court that the accused has been falsely implicated or that other conditions justify release. Concerns about tampering or absconding were addressed by imposing stringent conditions (bail bonds, local sureties, obligations to attend for interrogation and trial, prohibition on tampering or inducement of witnesses, surrender of passport and restriction on foreign travel). The Court emphasised that its observations were confined to disposal of the bail petition and not to the merits of the prosecution. [Paras 17, 18, 20, 25]

Petitioner enlarged on bail subject to stringent conditions (execution of bonds and sureties and specified restrictive and attendance conditions).

Final Conclusion: The petition is allowed: while underscoring that prosecution under PMLA must be founded on an established predicate offence and demonstrable nexus of proceeds, the High Court granted regular bail to the petitioner on medical and other balancing considerations, subject to specified conditions; observations are confined to this bail disposal and not to the merits of the case.

Regular bail under the Prevention of Money Laundering Act - rigour of Section 45 of PMLA and twin-conditions for grant of bail - reasonable grounds for believing and broad probabilities standard in bail adjudication - proceeds of crime and its relation to scheduled offence - judicial discretion to grant bail despite special statute restrictions

Regular bail under the Prevention of Money Laundering Act - rigour of Section 45 of PMLA and twin-conditions for grant of bail - reasonable grounds for believing and broad probabilities standard in bail adjudication - Grant of regular bail to the petitioner in ECIR Case No. 05 of 2022 under the PML Act. - HELD THAT: - The Court applied the settled principle that while Section 45 of PMLA prescribes mandatory twin conditions, the court considering bail must form a view based on broad probabilities and reasonable material on record rather than weigh evidence as in trial. The record included the ED's report and chargesheet which disclosed that the alleged trap was orchestrated by the complainant (Amit Kumar Agrawal), that the petitioner had earlier been granted bail in the related Hare Street P.S. case, and that there was no material to show the petitioner is a flight risk or likely to tamper with evidence. Having regard to the duration of custody, the nature of the investigation materials and the fact that the petitioner is a practicing advocate who had already obtained bail in the predicate FIR, the Court concluded that the twin-conditions under Section 45 were not a bar to admitting the petitioner to regular bail. The Court emphasised that this conclusion is tentative for bail purposes and does not express any opinion on merits of the case or the trial evidence. [Paras 11, 14, 15, 17, 18]

Petitioner granted regular bail on furnishing bond and sureties, subject to passport deposit, restrictions on travel, availability for interrogation and non-tampering conditions.

Proceeds of crime and its relation to scheduled offence - judicial discretion to grant bail despite special statute restrictions - Court's order on bail is confined to the petitioner and shall not prejudice or bind adjudication qua other accused persons. - HELD THAT: - The Court recorded that its findings in the bail order are limited to the petitioner and will have no bearing on other accused, each of whom must have their cases considered independently on merits and materials. [Paras 19, 20]

Findings in this order shall not affect or prejudice proceedings against other accused.

Final Conclusion: On the material before it and applying the settled standard for bail under PMLA, the High Court directed grant of regular bail to the petitioner in ECIR Case No. 05 of 2022 subject to specified conditions, while leaving all merits and the position of other accused open for trial and independent adjudication.

Regular bail under PMLA - Section 45 PMLA - conditions for grant of bail - Proceeds of crime - Modus operandi - use of bank accounts, conversion to demand drafts and insurance policies - Risk of tampering with evidence due to official influence - Departmental exoneration vis-a -vis criminal prosecution

Regular bail under PMLA - Section 45 PMLA - conditions for grant of bail - Proceeds of crime - Modus operandi - use of bank accounts, conversion to demand drafts and insurance policies - Risk of tampering with evidence due to official influence - Application for regular bail of the petitioner in proceedings under the Prevention of Money Laundering Act, 2002 - HELD THAT: - The Court examined the prosecution material annexed to the bail petition and found prima facie allegations that the petitioner, while serving as Deputy Commissioner, deposited large sums of cash in various bank accounts, converted cash into demand drafts and insurance policies, and prematurely encashed policies to effect investments. The complaint and seized material alleged substantial cash recoveries and transactions treated as linked to scheduled offences and as "proceeds of crime" under section 2(1)(u) of the Act. The Court held that the conditions of section 45 PMLA - including that the court be satisfied there are reasonable grounds for believing the accused is not guilty and is not likely to commit an offence while on bail - must be complied with when considering bail. Having regard to the gravity of the allegations, the disclosed modus operandi, the ongoing investigation (with a six-month timeline indicated for completion) and the petitioner's official position and influence, the Court found a real apprehension that she may tamper with evidence or impede investigation. The medical report produced did not establish a compelling ground to dispense with those concerns. On these combined factual and statutory considerations the Court declined to grant regular bail.

Regular bail was refused and the bail petition was dismissed.

Departmental exoneration vis-a -vis criminal prosecution - Departmental exoneration and criminal prosecution - Effect of the petitioner's departmental exoneration on the criminal bail application - HELD THAT: - The Court noted that the petitioner had been exonerated in departmental proceedings but expressly refrained from making any comment on that exoneration in the context of the bail application. While recognizing authority that departmental findings are not necessarily binding in criminal prosecution, the Court observed that the present bail application could not be allowed merely because of departmental exoneration where the criminal investigation and the material on record prima facie indicate involvement with proceeds of crime. Thus the departmental exoneration did not persuade the Court to grant regular bail in the circumstances of this case.

The departmental exoneration was not treated as decisive for granting bail and did not result in release.

Medical condition and bail - Whether the petitioner's asserted medical ailments warrant grant of bail - HELD THAT: - The petitioner relied on medical grounds and precedents where medical condition weighed in favour of bail. The Court noted the medical report placed on record by the respondent indicating the petitioner was oriented, stable and fit medically and psychologically. In the factual matrix of alleged large-scale money laundering, the Court held that the medical material before it did not justify overriding the statutory concerns under section 45 PMLA or the apprehension of interference with investigation.

Medical condition did not justify grant of regular bail.

Final Conclusion: The petition for regular bail under ECIR 03 of 2018 (PMLA) was dismissed; the Court refused to grant regular bail having regard to the prima facie material of laundering proceeds of crime, the mandatory requirements of section 45 PMLA, ongoing investigation and the risk of tampering with evidence.

Reverse charge mechanism - banking and other financial services - refund by foreign financial institution affecting tax liability - Cenvat credit making the transaction revenue neutral - invocation of Section 80 of the Finance Act, 1994 - penalty under Section 77 and Section 78 of the Finance Act, 1994 - simultaneous penalties under Section 76 and Section 78

Reverse charge mechanism - refund by foreign financial institution affecting tax liability - Service tax demand of Rs. 2,26,213/- raised on appellant in respect of services procured from foreign entities is not sustainable to the extent refunded by the foreign financial institution. - HELD THAT: - The appellant had not contested the bulk of the service tax demand and had already deposited the large part of the liability during the investigation. The appellant disputed only the smaller demand on the ground that corresponding amounts were refunded by the foreign financial institution and services were not received to that extent. The Tribunal examined the documents filed by the appellant and accepted the claim of refund, holding that the specific portion of demand so disputed could not be sustained. [Paras 5]

Service tax demand of Rs. 2,26,213/- is set aside.

Cenvat credit making the transaction revenue neutral - invocation of Section 80 of the Finance Act, 1994 - penalty under Section 77 and Section 78 of the Finance Act, 1994 - Penalties under Sections 77 and 78 are not imposable where service tax liability together with interest was discharged before issuance of show cause notice and the liability was revenue neutral by reason of admissible Cenvat credit. - HELD THAT: - Records show the appellant discharged the service tax liability and interest as soon as the liability came to light and long before issuance of the show cause notice. The appellant did not dispute liability on merits, the transactions were reflected in the balance sheets, and there was no evidence of deliberate suppression or mala fide intention to evade tax. Given availability of Cenvat credit rendering the exercise revenue neutral, the Tribunal applied the principle of Section 80 to set aside penalties, following earlier Tribunal and High Court decisions to the same effect. [Paras 6]

Penalties under Sections 77 and 78 are set aside by invoking Section 80.

Simultaneous penalties under Section 76 and Section 78 - Penalty imposed under Section 76 concurrently with penalty under Section 78 is not sustainable. - HELD THAT: - Relying on the view of the Gujarat High Court that simultaneous imposition of penalties under Sections 76 and 78 cannot be sustained, the Tribunal held that the penalty under Section 76 must be set aside. This conclusion is independent of the Section 80 reasoning and addresses the incompatibility of concurrent penalties under the two provisions. [Paras 7]

Penalty under Section 76 is not sustainable and is set aside.

Final Conclusion: The appeal is allowed in part: the disputed service tax demand of Rs. 2,26,213/- is quashed; penalties under Sections 77 and 78 are set aside by invoking Section 80; and the penalty under Section 76 is held unsustainable and set aside. The impugned order is modified accordingly.

Refund under Rule 5 of the Cenvat Credit Rules read with Notification No. 27/2012-CE(NT) - Condition 2(h) of Notification No. 27/2012-CE(NT) - debit from cenvat credit account as a condition precedent to refund - effect of implementation of GST w.e.f. 01.07.2017 on cenvat credit registers - entitlement to refund on merits subject to compliance of conditions

Condition 2(h) of Notification No. 27/2012-CE(NT) - debit from cenvat credit account as a condition precedent to refund - cenvat credit account - Whether debit of the amount claimed as refund in the assessee's cenvat credit account during the GST regime satisfies Condition 2(h) of the Notification. - HELD THAT: - The Tribunal examined the statutory condition that the amount claimed as refund must be debited by the claimant from his cenvat credit account at the time of making the claim. Noting that the adjudicating authority itself recorded that the claimed amount was less than the cenvat balance and that the appellant had debited the claimed amount in its cenvat credit ledger, the Tribunal found that a further entry in the obsolete cenvat credit register (which became redundant after implementation of GST w.e.f. 01.07.2017) could not be required. Given that credits as on 30.06.2017 could not be carried forward or utilized in the GST regime, the ledger debit effected by the appellant during the GST regime constitutes sufficient compliance with Condition 2(h). The Tribunal therefore rejected the contention that non-reflection in the pre-GST register or ST-3 return amounted to non-compliance when the ledger showed the debit and the claimed amount did not exceed available credit.

Debit of the refund amount in the assessee's cenvat credit account during the GST regime is sufficient compliance with Condition 2(h).

Refund under Rule 5 of the Cenvat Credit Rules read with Notification No. 27/2012-CE(NT) - entitlement to refund on merits - interest on delayed refund - Whether the refund claims should be allowed and directed to be paid with interest. - HELD THAT: - The Tribunal accepted that on merits the appellant was entitled to the refund under Rule 5 read with the Notification and that the sole ground for rejection related to alleged non-compliance of Condition 2(h). Having held that Condition 2(h) was complied with, the Tribunal set aside the orders rejecting the refund and directed the adjudicating authority to grant the refund along with interest within sixty days from receipt of the Tribunal's order.

Refund claims allowed; adjudicating authority directed to grant refund with interest within sixty days.

Final Conclusion: The Tribunal allowed the appeal, holding that ledger debit effected by the appellant after the advent of GST satisfied the debit requirement of Condition 2(h), set aside the rejection orders and directed grant of the refund with interest within sixty days.

Interest for delayed refund - interest under Section 11BB of the Central Excise Act - entitlement to interest from the end of three months from the date of receipt of application for refund - refund of proportionate input service tax for export by an Export Oriented Unit - date of receipt of original refund application governs period of delay

Interest under Section 11BB of the Central Excise Act - entitlement to interest from the end of three months from the date of receipt of application for refund - date of receipt of original refund application governs period of delay - Whether interest for delayed refund was to be computed from the end of three months from the date of the original refund applications filed during October 2014-August 2015, or from the date of the reminder after the Tribunal's order. - HELD THAT: - The appellant undisputedly filed refund claims on dates between 09.10.2015 and 23.03.2016 in respect of the specified refund periods. Section 11BB provides for grant of interest on delayed refunds from the end of three months from the date of the application for refund. The Commissioner (Appeals) granted interest but treated the date of the reminder (07.08.2019) as the date of application. The Tribunal examined the record, verified the original filing dates, and held that the correct commencement for interest is the end of three months from the date the original refund applications were received by the Department. Interest is therefore payable from that point up to the date of sanction of refund, namely 04.06.2020. The impugned order was modified accordingly and the Adjudicating Authority was directed to grant the interest within 45 days of receipt of the Tribunal's order. [Paras 8]

Appeal allowed; interest to be computed from end of three months from receipt of the original refund applications (filed between 09.10.2015 and 23.03.2016) up to 04.06.2020, and to be paid by the Adjudicating Authority within 45 days.

Final Conclusion: The Tribunal allowed the appeal, holding that interest under Section 11BB is payable from the end of three months from the date of receipt of the original refund applications (filed between October 2014 and August 2015) until sanction of refund on 04.06.2020, and directed payment of interest within 45 days.

Liability of recipient for tax on cross-border services - taxable service provided by non-resident from outside India - chargeability of service tax prior to 01.01.2005 - Notification No. 12/2004 and Notification No. 36/2004 - precedent and judicial discipline

Taxable service provided by non-resident from outside India - chargeability of service tax prior to 01.01.2005 - Notification No. 12/2004 and Notification No. 36/2004 - Whether the recipient-assessee was liable to pay service tax on consulting engineer services received from a foreign firm not having any office in India for the quarter Jan to March 2004 (i.e., prior to 01.01.2005). - HELD THAT: - The Tribunal examined the Commissioner (Appeals) order which allowed the assessee's appeal by following the Larger Bench decision in Hindustan Zinc Ltd. that services provided by a non-resident from outside India, who does not maintain an office in India, were not chargeable to service tax prior to 01.01.2005 in view of the notifications relied upon. The revenue did not dispute the Larger Bench precedent or that the Supreme Court had dismissed the Department's SLP against that decision. Applying that binding precedent, the Tribunal found that the Assistant Commissioner's demand for service tax on the consulting engineer services for Jan-Mar 2004 was not sustainable and that the Commissioner (Appeals) rightly set aside the original order. [Paras 3, 4, 6]

The Commissioner (Appeals) was correct in holding that the assessee was not liable to pay service tax on the foreign consulting engineer service for the period Jan to March 2004; the demand was set aside.

Precedent and judicial discipline - liability of recipient for tax on cross-border services - Whether the Commissioner (Appeals) erred in following the Tribunal's Larger Bench and Supreme Court dismissal of SLP merely because the Department was considering a review petition against the SLP dismissal. - HELD THAT: - The Tribunal rejected Revenue's contention that pending consideration of a review petition by the Department justified disregarding binding precedent. The court held that the possibility of filing a review against the Supreme Court's dismissal does not furnish a legal basis to disobey established precedent. Judicial discipline requires adherence to the settled position until altered by a competent court; therefore the Commissioner (Appeals) acted rightly in following the Larger Bench decision upheld by the Supreme Court's dismissal of the SLP. [Paras 5, 6]

The Commissioner (Appeals) did not err in following the binding precedent; the Revenue's argument based on prospective review action was rejected.

Final Conclusion: The appeal filed by the Revenue is dismissed and the Commissioner (Appeals) order setting aside the demand for service tax on consulting engineer services received from a foreign firm for Jan-Mar 2004 is upheld; the assessee's cross-objection is disposed of.

Admissibility of Cenvat credit of service tax on outward transportation (GTA) beyond place of removal - Interpretation of 'input service' under the Cenvat Credit Rules, 2004 - Application of Board circulars and judicial precedents to credit on outward freight - Remand for fresh consideration of documentary evidence and precedents

Admissibility of Cenvat credit of service tax on outward transportation (GTA) beyond place of removal - Interpretation of 'input service' under the Cenvat Credit Rules, 2004 - Application of Board circulars and judicial precedents to credit on outward freight - Whether the issue of eligibility of Cenvat credit of service tax paid on outward transportation of finished goods beyond the place of removal requires fresh adjudication by the Commissioner (Appeals). - HELD THAT: - The Tribunal recorded that the appellant produced documents including purchase orders, invoices, agreements, consignment notes and a Chartered Accountant's certificate and relied upon Board circulars and earlier judgments in support of claiming credit on outward freight. The Commissioner (Appeals) failed to deal with these documents, details and the cited circulars and decisions. Although the appellant relied on an earlier Tribunal judgment in its own case, the present appeal involved material documents and submissions which were not properly considered by the Commissioner (Appeals). In view of these omissions, the Tribunal found the impugned order to be not in accordance with law and concluded that the matter should be reconsidered afresh by the Commissioner (Appeals) after taking into account the documents, Board circulars and the judicial authorities placed before him. [Paras 5, 6]

Impugned order set aside and the matter remitted to the Commissioner (Appeals) for fresh adjudication after considering the documents, Board circulars and judgments relied upon by the appellant.

Final Conclusion: The appeal is allowed by way of remand: the impugned order dated 15-11-2019 is set aside and the Commissioner (Appeals) is directed to decide the appellant's claim for Cenvat credit on outward transportation afresh in light of the documents, Board circulars and judicial precedents placed on record.

Cenvat credit admissibility - valid document under Rule 9 of the Cenvat Credit Rules, 2004 - Input Service Distributor distribution and Rule 4A compliance - ISD registration as procedural requirement - denial of credit for procedural irregularity - onus of proof for duplicate credit availing

Cenvat credit admissibility - valid document under Rule 9 of the Cenvat Credit Rules, 2004 - Input Service Distributor distribution and Rule 4A compliance - onus of proof for duplicate credit availing - Photocopies of service invoices and the statement issued by the Head Office satisfy the documentary requirements for taking distributed Cenvat credit where originals are available at Head Office and the statement contains details required under Rule 4A; mere use of photocopies at the Head Office does not by itself disentitle the recipient unit. - HELD THAT: - The Tribunal found that the denial of credit was premised on a speculative possibility that the same invoices might have been used by other units, a contention not raised in the show cause notice and unsupported by evidence. The Head Office had transferred credit to the appellant unit by a statement incorporating details required under Rule 4A, and the appellant asserted that the Head Office possessed the original invoices. In these circumstances the photocopies relied on at the Head Office were not a ground to deny the distributed credit. The Tribunal treated the statement (which incorporated the requisite particulars) as a valid document under Rule 9 for the purpose of taking credit and held that procedural irregularity in issuance/possession of photocopies did not defeat the substantive entitlement to credit, particularly where there was no evidence of excess distribution or duplicate availing of the same credit. [Paras 5]

Credit allowed to the appellant unit on the basis of the Head Office statement and available original invoices; impugned denial on the photocopy ground set aside.

ISD registration as procedural requirement - denial of credit for procedural irregularity - Non-obtainment of ISD registration for the period prior to mandatory registration does not disentitle the recipient unit to distributed Cenvat credit where payment of tax on input services and distribution of credit by the Head Office is established. - HELD THAT: - The Tribunal observed that the requirement of ISD registration was introduced later and that the department had not shown that credit distributed by the Head Office was in excess or had been transferred to other units. Reliance was placed on earlier decisions recognizing ISD registration as a procedural requirement; accordingly, a lapse in obtaining ISD registration for the earlier period could not be used to deny substantive Cenvat credit that had been paid and properly distributed. The Tribunal therefore concluded that lack of prior ISD registration did not justify denial of the credit. [Paras 6]

Credit admitted notwithstanding the Head Office's earlier non-registration as ISD; impugned denial on registration ground set aside.

Final Conclusion: The appeals are allowed: the denial of Cenvat credit by the adjudicating authority is set aside and the appellant is entitled to the distributed credit; consequential relief granted.

Limitation for refund under Notification No. 12/2013 - date of payment as triggering event for refund claim - advance payment versus payment of premium - remand for fresh consideration and opportunity of personal hearing

Limitation for refund under Notification No. 12/2013 - date of payment as triggering event for refund claim - advance payment versus payment of premium - remand for fresh consideration and opportunity of personal hearing - Whether the refund applications for the periods January 2017 to March 2017 and April 2017 to June 2017 are time barred or require fresh examination of the date of payment of premium/advance by the original authority. - HELD THAT: - The Tribunal found that the authorities below did not record any finding treating the date of advance payment as the date of payment of premium for the purpose of limitation under the Notification. The appellant produced a working sheet before the Tribunal asserting that payments to the insurance company were ad hoc/advance and that refund claims were filed within one year from the relevant date. Given that this factual contention and the date of payment issue were not considered or decided by the lower authority, the Tribunal held that the matter requires examination at the original stage. The Tribunal therefore set aside the impugned order and remanded the matter to the original authority to record a fresh finding on the time bar aspect by examining the actual date(s) of payment and the nature of the payments, and to adjudicate other issues raised in the refund applications after affording the appellant an opportunity of personal hearing. [Paras 5, 6]

Impugned order set aside; matter remanded to the original authority to examine the date of payment and limitation, to decide other issues afresh, and to afford the appellant personal hearing; appeal allowed by way of remand.

Final Conclusion: The appeal is allowed by way of remand: the impugned order is set aside and the matter is remitted to the original authority to determine, after personal hearing, whether the refund claims for January 2017 to March 2017 and April 2017 to June 2017 are within the limitation period by examining the date and nature of payments and to decide other related issues afresh.

Exemption from additional toll on components, plant and machinery for substantial expansion - statutory primacy of SRO issued under Section 5 of the Jammu and Kashmir Levy of Tolls Act - reading of Industrial Policy subject to delegated legislation - time limited exemption granted by SRO 85 of 2008 (01.04.2008 to 31.03.2009) - interdepartmental communications cannot create tax exemptions - Article 265 of the Constitution

Exemption from additional toll on components, plant and machinery for substantial expansion - reading of Industrial Policy subject to delegated legislation - Whether the petitioner is entitled to exemption from additional toll on items imported for substantial expansion under the Industrial Policy, 2004 and SRO 22 of 2004. - HELD THAT: - The Industrial Policy, 2004 (Clause 3.11 and Clause 3.14) declared concessions including exemption from additional toll for specified categories and periods, but such policy promises required statutory effect through notifications under the Levy of Tolls Act. SRO 22 of 2004, issued under Section 5 of the Act, expressly limited exemption for components, plant and machinery, building material and other equipment to a period of five years from the date of registration of the unit. The petitioner was registered in 1966 and therefore falls outside the five year window created by Clause 3 of SRO 22. Because SRO 22 is delegated legislation made under the Act, it governs the availability of exemption to the exclusion of any inconsistent or broader expectation arising from the Industrial Policy. For these reasons the Court held that the petitioner was not entitled to toll exemption for its 2006 expansion under SRO 22 or the Industrial Policy read alone. [Paras 6, 7, 8, 11, 12]

The petitioner is not entitled to exemption under the Industrial Policy, 2004 or SRO 22 of 2004 for the additional toll on items imported for the 2006 expansion.

Time limited exemption granted by SRO 85 of 2008 (01.04.2008 to 31.03.2009) - exemption from additional toll on capital goods for substantial capacity expansion - Whether SRO 85 of 2008 conferred retrospective entitlement to exemption for expansions undertaken prior to its issuance. - HELD THAT: - SRO 85 of 2008, issued 24.03.2008, expressly provided a limited exemption from additional toll chargeable on capital goods imported by existing industrial units for substantial capacity expansion for the period 01.04.2008 to 31.03.2009, subject to conditions. The Court accepted the respondents' position that this notification introduced the benefit for the first time and applied only for the specified financial year. Consequently, the exemption under SRO 85 could not be invoked in respect of the petitioner's expansion carried out in 2006 which predated that notification. [Paras 13, 14]

SRO 85 of 2008 grants a time limited exemption only for 01.04.2008 to 31.03.2009 and does not entitle the petitioner to exemption for its 2006 expansion.

Interdepartmental communications cannot create tax exemptions - Article 265 of the Constitution - authority of law for levy and exemption of taxes - Whether departmental communications or executive assurances could confer a right to toll exemption in the absence of statutory or delegated legislative authority. - HELD THAT: - The Court observed that taxes and exemptions can be imposed or granted only by authority of law - i.e., an Act of the legislature or delegated legislation. Interdepartmental communications relied upon by the petitioner are executive or administrative in nature and cannot substitute for statutory notification issued under the Levy of Tolls Act. In view of Article 265, such communications do not confer a legal right to exemption where the statutory scheme (SRO 22, and later SRO 85) does not provide it. [Paras 15]

Interdepartmental communications do not confer entitlement to toll exemption; exemption must be by authority of law.

Final Conclusion: The writ petition is dismissed. The Court held that the petitioner, being registered in 1966, is not entitled to exemption under SRO 22 of 2004 or the Industrial Policy for the 2006 expansion; the limited exemption for substantial expansion was introduced only by SRO 85 of 2008 for 01.04.2008 to 31.03.2009 and cannot be applied to the 2006 expansion; and departmental communications cannot create a statutory right to tax exemption under Article 265.

Jurisdictional fact - nexus between illegal earnings and acquisition of property - illegally acquired property - burden of proof under a special enactment - presumption and burden to disprove

Jurisdictional fact - nexus between illegal earnings and acquisition of property - illegally acquired property - Whether the Competent Authority established the requisite nexus between the detenue's alleged illegal earnings and the properties sought to be forfeited, such that Sections 6 and 7 of the Act of 13 of 1976 could be validly invoked. - HELD THAT: - The Court held that the core requirement for invoking Sections 6 and 7 is the establishment of the jurisdictional fact - a connecting link between the acquisition of the property and the illegal income of the detenue. Section 3(1)(c) defines what constitutes illegally acquired property, and the Competent Authority must record reasons for its belief demonstrating that nexus. Mere proof of relationship between the noticee and the detenue, or the noticee's failure to prove sources, is insufficient by itself to establish that the property was acquired from illegal earnings. A perusal of the show-cause notice and the order under Section 7 in the present case discloses no material or reasoning connecting the properties to the detenue's illegal earnings; the notice proceeded on the incorrect footing that relationship alone sufficed. Because the requisite nexus was not made out, the Competent Authority lacked jurisdiction to order forfeiture and the Writ Court correctly quashed the forfeiture proceedings (the appellate challenge is therefore dismissed). [Paras 15, 16, 17, 18, 19]

The forfeiture was quashed because the Competent Authority failed to establish the necessary nexus between the detenue's illegal earnings and the properties; invocation of Sections 6 and 7 was therefore unlawful.

Burden of proof under a special enactment - presumption and burden to disprove - The correct legal position regarding burden of proof under Section 8 of the Act of 13 of 1976 and the Writ Court's reliance on Section 102 of the Evidence Act. - HELD THAT: - Section 8 of the Act of 13 of 1976 places the burden on the person affected to prove that any property specified in a Section 6 notice is not illegally acquired. A special enactment on burden prevails over the general rule in the Evidence Act; therefore the Writ Court ought not to have relied on Section 102 of the Evidence Act to reallocate the initial burden to the Competent Authority. However, the appellate Court stressed that the question of burden is subsidiary to the primary requirement that the Authority must first make out the jurisdictional fact (nexus). While the Writ Court's observations on burden of proof do not accord with the intendment of the statute and are set aside, that correction does not alter the outcome because the nexus was absent in the present case. [Paras 6, 12, 19]

Section 8 creates a special burden on the noticee which displaces the general rule in the Evidence Act; the Writ Court's invocation of Section 102 was incorrect and is set aside, but the absence of the jurisdictional nexus independently justifies quashing the forfeiture.

Final Conclusion: The appeal is dismissed. The forfeiture proceedings were quashed because the Competent Authority failed to establish the necessary nexus between the detenue's alleged illegal earnings and the properties; the Writ Court's remarks applying Section 102 of the Evidence Act are set aside as incorrect, but that correction does not alter the dismissal of forfeiture in the absence of the required link.