TaxTMI Updates e-Newsletter
Nov 19,2024

Summary order. The Special Leave Petition under Article 136 is dismissed; pending application disposed of.

Due communication of notice - service of notice via GST portal - defective uploading of notices - benefit of doubt - quashing of orders for defective service - remand for fresh notice and proceedings

Due communication of notice - service of notice via GST portal - defective uploading of notices - benefit of doubt - quashing of orders for defective service - remand for fresh notice and proceedings - Impugned demand orders were quashed for defective service because notices/orders were uploaded under the 'Additional Notices and Orders' tab on the GST portal instead of the 'View Notices and Orders' tab, warranting fresh service and proceedings. - HELD THAT: - The Court accepted the petitioner's contention, supported by the record and earlier coordinate-bench authority, that the notices under Section 73 were uploaded on the GST portal under the 'Additional Notices and Orders' tab and therefore did not constitute effective communication as they did not reflect under the tab where an assessee would view notices. The State did not dispute the portal-uploading position and the Court noted that, in similar cases, this defect entitled the assessee to the benefit of doubt. In light of the defective mode of service and the absence of any material to reject the contention that the orders did not show under 'View Notices and Orders', the Court found it appropriate to set aside the impugned orders and direct that fresh notice be issued in the prescribed manner, allowing the assessee opportunity to reply and for the assessing officer to pass a reasoned speaking order after providing at least fifteen days' clear notice. [Paras 4, 5, 6, 7]

Impugned orders dated 27.12.2023 and 02.02.2023 quashed; assessing officer directed to issue a fresh notice with at least fifteen days' clear notice and proceed in accordance with law.

Final Conclusion: Writ petition allowed; orders creating the demand quashed and set aside for defective service via the GST portal, with direction for fresh service of notice and further proceedings in accordance with law.

Limitation on assessment to the scope of the show-cause notice under Section 75(7) of the Central Goods and Services Tax Act, 2017 - Assessment order set aside for making findings and levying amounts beyond the allegations in the show-cause notice - Direction for re-hearing and fresh decision after considering objections

Limitation on assessment to the scope of the show-cause notice under Section 75(7) of the Central Goods and Services Tax Act, 2017 - Assessment order set aside for making findings and levying amounts beyond the allegations in the show-cause notice - Direction for re-hearing and fresh decision after considering objections - Validity of the Assessment Order dated 29.08.2024 which imposed a higher amount and contained findings beyond the scope of the show-cause notice dated 30.05.2024 - HELD THAT: - The petitioner urged that the final Assessment Order proceeded beyond the allegations in the show-cause notice, imposed an amount greater than that stated in the notice and made findings outside the scope of the notice; reliance was placed on Sub-section (7) of Section 75 of the Act. The State did not dispute that the amount in the Assessment Order exceeded that in the show-cause notice. In view of the statutory mandate in Section 75(7), the Court found the impugned Assessment Order to be impermissible insofar as it exceeded the scope and quantum set out in the show-cause notice. The Court therefore set aside the Assessment Order and directed that the competent authority re-hear the petitioner, consider all objections afresh and pass a fresh order in accordance with law, expressly without adjudicating the merits of the underlying tax liability. [Paras 3, 4, 5]

Impugned Assessment Order dated 29.08.2024 set aside for exceeding the scope of the show-cause notice; matter remitted for re-hearing and fresh decision after considering objections.

Final Conclusion: The Assessment Order dated 29.08.2024 is set aside for being beyond the scope of the show-cause notice; the competent authority is directed to re-hear the petitioner, consider its objections and pass a fresh order in accordance with law; no opinion expressed on merits.

Availability of efficacious alternative statutory remedy - maintainability of writ petition under Article 226 - extension of time-limits under Section 73(10) by notification under Section 168A - appeal remedy under Section 107 - challenge to validity of notification for absence of GST Council recommendation - clubbing of multiple causes of action

Availability of efficacious alternative statutory remedy - maintainability of writ petition under Article 226 - appeal remedy under Section 107 - extension of time-limits under Section 73(10) by notification under Section 168A - Writ petition challenging Order-in-Original dated 30.12.2023 for Financial Year : 2017-2018 is not entertained and is to be challenged by way of statutory appeal. - HELD THAT: - The Court found that the time-limit for issuing an order under Section 73(9) for Financial Year : 2017-2018 stood extended by Notification no. 09/2023 and that the petitioner has an adequate, efficacious and statutory remedy of appeal under Section 107 of the CGST/AGST Act, 2017. Consistent with settled precedent, a writ under Article 226 will not be entertained where such an alternative remedy exists unless exceptional grounds (enforcement of a fundamental right, breach of natural justice, want of jurisdiction, or challenge to vires of legislation) are made out. No such exceptional grounds were established by the petitioner in relation to the Order-in-Original dated 30.12.2023; accordingly the Court refused to interfere with that order and left the petitioner to pursue the statutory appellate remedy. [Paras 8]

Writ petition not entertained against the Order-in-Original dated 30.12.2023; petitioner relegated to appeal under Section 107.

Clubbing of multiple causes of action - challenge to validity of notification for absence of GST Council recommendation - extension of time-limits under Section 73(10) by notification under Section 168A - Petitioner's challenge to Order-in-Original dated 26.04.2024 for Financial Year : 2018-2019 was not decided on merits and petitioner granted liberty to file a separate writ petition. - HELD THAT: - The Court observed that the writ petition had combined challenges to two distinct Orders-in-Original for different financial years. In respect of the Order dated 26.04.2024 (FY 2018-2019), the Court did not adjudicate the merits and instead granted the petitioner liberty to prefer a separate writ petition if so advised. The Court noted ongoing litigation concerning Notification no. 56/2023 (and related contentions about absence of GST Council recommendation) but abstained from making any determination on that issue in the present petition. [Paras 9]

Liberty granted to the petitioner to file a separate writ in respect of the Order-in-Original dated 26.04.2024; no decision on merits.

Final Conclusion: Writ petition disposed: challenge to the Order dated 30.12.2023 (FY 2017-18) not entertained and relegated to appeal under Section 107; petitioner granted liberty to file a separate writ in respect of the Order dated 26.04.2024 (FY 2018-19); no costs.

Assessment u/s 153C - jurisdictional defect - void ab initio - transfer of assessment under Section 127 - substantive illegality versus procedural defect - prospective operation of amendment affecting jurisdictional challenge

HC [2021 (10) TMI 1058 - KARNATAKA HIGH COURT] answered the substantial question in favour of the assessee, holding that the Section 153C notices issued before the transfer conferring jurisdiction were without jurisdiction and void ab initio for assessment years 2003-04 to 2008-09; consequently the appeal of the assessee is allowed and the revenue appeals are dismissed.

HELD THAT:- We have heard learned senior counsel appearing for the respective parties.

The Special Leave Petitions are dismissed.

Tax Deduction at Source u/s 192 - Salary taxable under the head "Salaries" - Diversion of income by overriding title - Application of income versus diversion at source - Contemporanea expositio and administrative circulars - Prospective application of judgment

Writ appeals by Union of India and the Income Tax Department allowed [2019 (3) TMI 1253 - MADRAS HIGH COURT] - Single Judge's orders granting relief from deduction of tax at source on salaries of members of religious congregations are set aside. The obligation to deduct TDS under Section 192 on salary payments to such teachers stands affirmed, but the Court's decision is directed to operate prospectively.

HELD THAT:- We are not inclined to entertain the Special Leave Petitions under Article 136 of the Constitution.

The Special Leave Petitions are accordingly dismissed.

Unexplained cash credits under section 68 - taxability under section 115BBE - deposits during demonetisation - ad hoc disallowance to prevent revenue leakage - condonation of delay in filing appeal

Condonation of delay in filing appeal - Delay of 74 days in filing the appeal to the Tribunal from the date of the CIT(A)'s order was condoned. - HELD THAT: - The assessee explained non-receipt of physical copy or e mail intimation of the CIT(A)'s order and lack of regular checking of the ITBA portal; upon discovering the order the assessee promptly downloaded it and filed the appeal with an application for condonation. Considering the surrounding facts, the Tribunal found the delay neither deliberate nor unreasonable and exercised discretion to condone the delay. [Paras 7]

Delay condoned and appeal admitted.

Unexplained cash credits under section 68 - deposits during demonetisation - ad hoc disallowance to prevent revenue leakage - Addition of Rs. 27,14,000 treated as unexplained cash credits arising from deposits during demonetisation was sustained but the appeal was partly allowed by applying an ad hoc relief. - HELD THAT: - The Assessing Officer disbelieved the assessee's explanation and cash book entries and treated deposits in SBNs during the demonetisation window as unexplained, making an addition. The Tribunal noted that there was no independent investigation into the assessee's agricultural holding and that receipts of agricultural produce were not discarded. To avoid possible revenue leakage while recognising the factual shortcomings in documentary proof, the Tribunal applied a pragmatic, adjudicatory solution by allowing an ad hoc adjustment. The Tribunal held that a 10% ad hoc disallowance of the addition would be sufficient to meet revenue protection without completely negating the assessee's explanations. [Paras 9]

Addition under section 68 upheld but reduced by allowing an ad hoc relief of 10% of the addition (ground partly allowed).

Taxability under section 115BBE - Enhanced tax rate under section 115BBE was held not to be applicable for the assessment year 2017-18. - HELD THAT: - Relying on consistent decisions of coordinate benches of the Tribunal (divisional and single-member benches) and other Benches, the Tribunal concluded that the enhanced rate prescribed by section 115BBE does not apply to AY 2017-18. Accordingly, the Tribunal allowed the ground to that extent. [Paras 10]

Addition shall not be taxed under the enhanced rate prescribed by section 115BBE for AY 2017-18 (ground partly allowed).

Final Conclusion: The appeal is partly allowed: the delay in filing the appeal is condoned; the addition of Rs. 27,14,000 as unexplained cash credit is sustained but subject to an ad hoc relief of 10%; and the enhanced tax rate under section 115BBE is held not to apply for AY 2017-18.

Jurisdiction under Section 153C - deemed search assessment year - six-year antecedent years limitation under Section 153C - validity of notice issued under Section 153C - assumption of jurisdiction upon receipt of seized material

Jurisdiction under Section 153C - deemed search assessment year - six-year antecedent years limitation under Section 153C - validity of notice issued under Section 153C - Assessment proceedings for AY 2009-10 initiated under Section 153C were beyond jurisdiction and the assessment was set aside. - HELD THAT: - The Tribunal found that the search in the related Sunstar Group case was conducted on 19.12.2013 while the notice under Section 153C to the assessee was issued on 20.01.2016. The jurisdictional satisfaction therefore relates to the deemed searched assessment year AY 2016-17, and the six-year window available under Section 153C extends only to AYs 2010-11 to 2015-16. Since AY 2009-10 falls outside that six-year period, the notice and consequential assessment for AY 2009-10 were held to be without jurisdiction. The Tribunal followed the precedent of the Delhi High Court in CIT-14 vs. Shree Jasjit Singh and the guidance in the CBDT circular (para 2.5) concerning assumption of jurisdiction upon receipt of seized material and recording of satisfaction, and accordingly set aside the assessment for the impugned year. [Paras 4, 5]

Assessment for AY 2009-10 under Section 153C is beyond jurisdiction and is set aside; the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that notice and assessment for AY 2009-10 issued under Section 153C were beyond the six-year jurisdictional window linked to the deemed searched assessment year (AY 2016-17), and accordingly set aside the assessment for AY 2009-10.

Deduction under section 80IB/80IC and 10B - allocation of common head office income and expenses - income from sale of scraps and by-products as profits "derived from" industrial undertaking - inclusive versus exclusive method of accounting for CENVAT - allowability of disaster relief/distribution of goods as business expenditure under section 37(1) - written down value adjustment and "moneys payable" on destruction of assets - treatment of state capital subsidy for computation of WDV (Explanation 10 to section 43(1)) - admission of additional grounds of appeal by appellate authority - application of entity-level TNMM for transfer pricing benchmarking - chargeability of Dividend Distribution Tax on non-resident shareholders vis-a-vis treaty rate

Deduction under section 80IB/80IC and 10B - allocation of common head office income and expenses - Allocation of head office common expenses and common income to eligible manufacturing units for computing deductions under sections 80IB/80IC and 10B. - HELD THAT: - The Tribunal noted consistent earlier practice and directions in the assessee's prior years and directed the Assessing Officer to allocate both common expenses and common income to eligible units while computing deduction under sections 80IB/80IC and 10B, following the ITAT's earlier directions. The matter is restored to the AO for compliance with those directions and appropriate recomputation. [Paras 3]

Matter remanded to the AO with direction to allocate both common expenses and common income to eligible units for computing deductions under 80IB/80IC and 10B as per ITAT directions.

Income from sale of scraps and by-products as profits "derived from" industrial undertaking - deduction under section 80IB/80IC - Whether sales proceeds of scraps and by-products generated by eligible units are includible as profits eligible for deduction under sections 80IB/80IC. - HELD THAT: - The Tribunal accepted that scrap and by-products are generated out of the manufacturing process and are inextricably connected with the industrial undertaking; their sale proceeds reduce material cost and therefore constitute "profits and gains derived from" the industrial undertaking. Following co-ordinate Bench and High Court authorities, the Tribunal directed the AO to allow the deductions under sections 80IB/80IC in respect of sales value of scraps/by-products. [Paras 4]

Allow deduction under 80IB/80IC in respect of sales value of scraps and by-products generated in eligible units.

Inclusive versus exclusive method of accounting for CENVAT - Treatment of unutilised CENVAT under inclusive or exclusive method of accounting and its impact on income under section 145A. - HELD THAT: - The Tribunal observed that the matter involves method of accounting and that a co-ordinate Bench had restored an identical issue to the AO for fresh examination in an earlier year. Noting the assessee's contention that net profit remains unaffected under either method, the Tribunal restored the issue to the file of the AO for fresh examination of the claim under section 145A and accounting method implications. [Paras 5]

Issue remitted to AO for fresh examination of the CENVAT accounting method and its impact under section 145A.

Allowability of disaster relief/distribution of goods as business expenditure under section 37(1) - Whether distribution of relief materials (nutritional and hygiene products) to Tsunami victims is deductible as business expenditure under section 37(1). - HELD THAT: - The Tribunal applied section 37(1)'s test of expenditure being "wholly and exclusively for the purposes of business." It found the dominant objective of the distributions to be philanthropic and voluntary, with no demonstrated business compulsion or relevant business connection; the assessee could not substantiate a sales-promotion nexus. CSR characterization was also not established under Companies Act requirements. Accordingly, the disallowance by the AO and confirmation by the CIT(A) were upheld. [Paras 7]

Disallowance of the expenditure on relief materials is confirmed; claim under section 37(1) rejected.

Written down value adjustment and "moneys payable" on destruction of assets - written down value (wdv) rules - Whether WDV of the block can be increased by amounts of insurance claim not received and treatment of earlier reduction of WDV by claimed insurance proceeds. - HELD THAT: - Interpreting clause (A) and (B) of section 43(6)(c), the Tribunal held that WDV may be increased only by actual cost of assets acquired in the year and thus cannot be increased merely by an insurance claim not constituting acquisition. Conversely, reduction under clause (B) is by "moneys payable" in respect of destroyed assets and refers to amounts in respect of which the assessee had a right to receive. The assessee erred in reducing WDV by the entire claimed amount when no right to receive had crystallised. Since the parent received part payment (the amount ultimately payable as determined by insurer) and refunded that amount to the assessee, that amount (the sum actually payable/received) constitutes the correct "moneys payable" to be reduced from WDV. The Tribunal directed increasing the WDV of AY 2001-02 by the net amount (i.e., reversing the incorrect reduction) and recomputing WDV and depreciation for subsequent years, resulting in an effective increase in WDV by the specified net sum in AY 2001-02 and recomputation through AY 2005-06. [Paras 8]

Modify CIT(A)'s order: direct AO to increase WDV of the block in AY 2001-02 by the net amount (reflecting the correct "moneys payable"), recompute WDV for AY 2005-06 by adjusting depreciation for AY 2001-02 to 2004-05, and allow depreciation in AY 2005-06 on the recomputed WDV.

Treatment of state capital subsidy for computation of WDV (Explanation 10 to section 43(1)) - Whether state capital investment subsidy under West Bengal Incentive Scheme must be reduced from WDV for computation of depreciation. - HELD THAT: - Following the co-ordinate Kolkata Bench and relevant High Court authority, the Tribunal held that the subsidy aimed at promoting industrialization in backward areas is not intended to fund part of the cost of specific assets and is not required to be deducted from WDV under Explanation 10 to section 43(1). Accordingly, the AO's reduction of WDV was set aside and the AO directed not to reduce the subsidy from WDV while computing depreciation. [Paras 9]

Set aside CIT(A); direct AO not to reduce the state capital subsidy from WDV when computing depreciation.

Admission of additional grounds of appeal by appellate authority - Validity of CIT(A)'s admission of an additional ground raised by the assessee. - HELD THAT: - The Tribunal found the CIT(A) recorded reasons for admission, had forwarded the additional ground to the AO for comments, and that the ground was neither entirely new nor unrelated to matters already disputed before the CIT(A). The additional ground had been admitted in earlier years and was based on Tribunal decisions in the assessee's own case. On this basis the Tribunal declined to interfere with the CIT(A)'s admission. [Paras 14]

CIT(A)'s admission of the additional ground upheld.

Application of entity-level TNMM for transfer pricing benchmarking - Whether entity-level application of TNMM benchmarks the assessee's international transactions and subsumes specific transfer pricing adjustments. - HELD THAT: - The Tribunal accepted the assessee's reliance on its own co-ordinate Bench decision for AY 2006-07, which applied entity-level TNMM and found the assessee's margin within the +/-5% safe harbour; that decision and subsequent affirmance in higher fora attained finality on the limited point contested by the department. The CIT(A) followed that precedent, remitted for verification of computations, and the Tribunal found no reason to disturb that approach for the year under consideration, holding that specific adjustments (royalty, intra-group services, TDS/service tax/R&D cess allocations, advertisement and promotional adjustments, etc.) stood subsumed once entity-level benchmarking at arm's length was established. [Paras 15]

Transfer pricing adjustments deleted; CIT(A)'s order following entity-level TNMM affirmed and no interference warranted.

Chargeability of Dividend Distribution Tax on non-resident shareholders vis-a-vis treaty rate - Whether DDT on dividends paid to non-resident shareholders should be at the rate provided in applicable tax treaties. - HELD THAT: - The Tribunal rejected the assessee's additional ground seeking to charge DDT at treaty rates, noting the matter had been decided against the assessee by the Special Bench in Total Oil India P Ltd and following that precedent the ground was dismissed. [Paras 11]

Assessee's contention rejected; DDT issue decided against the assessee following the Special Bench.

Procedural disposition of unpressed grounds - Grounds not pressed before the Tribunal. - HELD THAT: - Ground Nos. 6 (section 14A) and 14 & 15 were not pressed by the assessee at hearing; accordingly those grounds were dismissed as not pressed and need no adjudication. [Paras 6, 10]

Grounds not pressed are dismissed as not pressed.

Cross objection procedural effect - Effect of Tribunal's dismissal of Revenue's transfer pricing grounds on the assessee's cross objection. - HELD THAT: - The Tribunal observed the assessee's cross objection would be relevant only if Revenue's appeal on transfer pricing succeeded; as the Tribunal dismissed Revenue's TP grounds, the assessee's cross objection became infructuous. [Paras 16]

Cross objection dismissed as infructuous.

Final Conclusion: For AY. 2005-06 the Tribunal partly allowed the appeals: it remitted allocation of headoffice common income/expenses and CENVAT accounting issues to the AO for fresh consideration per earlier ITAT directions; allowed deduction for sales of scraps/byproducts under 80IB/80IC; confirmed disallowance of tsunami relief distributions under section 37(1); modified WDV treatment by directing recomputation to reflect only amounts which constituted "moneys payable" and ordered adjustment of WDV and depreciation accordingly; held state capital subsidy not to be deducted from WDV; upheld admission of additional ground by CIT(A); sustained deletion of transfer pricing adjustments by applying entitylevel TNMM as followed in the assessee's earlier final decisions; rejected the treatyrate DDT plea; and dismissed the assessee's cross objection as infructuous.

Capital gains exemption under section 54 - definition of 'transfer' under section 2(47) - deemed income under section 56(2)(x) of the Act - re-development agreement and exchange of old flat for new flat - treatment of excess/additional carpet area as consideration/compensation

Capital gains exemption under section 54 - re-development agreement and exchange of old flat for new flat - definition of 'transfer' under section 2(47) - Entitlement of the assessee to deduction under section 54 in respect of new flats received on re-development in exchange for old flats. - HELD THAT: - The Tribunal examined the re-development agreement and treated the transaction as an exchange of capital assets (old flats for new flats) falling within the ambit of 'transfer' as defined in section 2(47). Relying on the coordinate ITAT decision in Shri Dilip P. Ahuja (ITA No.6419/Mum/2012) and applying the same reasoning to the facts, the Tribunal held that the new flats received in consequence of the transfer of the old flats constitute acquisition of new residential property for the purposes of section 54. Consequently, the assessee is entitled to claim deduction under section 54 in respect of the cost of the new flats obtained on transfer of the old flats under the re-development arrangement. The Tribunal directed the assessing officer to allow the section 54 claim as indicated in the cited ITAT decision. [Paras 7, 8]

Claim under section 54 allowed; assessing officer directed to give effect as per ITAT decision referred.

Deemed income under section 56(2)(x) of the Act - treatment of excess/additional carpet area as consideration/compensation - Sustainability of addition treated as income under section 56(2)(x) on account of excess carpet area being valued and treated as deemed income. - HELD THAT: - The assessing officer had treated the excess carpet area allotted on re-development as deemed income by valuing the additional area at stamp-duty market value and computing income under section 56(2)(x). The Tribunal, having accepted the assessee's alternative claim of exemption under section 54 (that the transaction constituted transfer and the new flats are acquisitions qualifying for section 54 relief), held that the grounds challenging the original addition under section 56(2)(x) became infructuous. The Tribunal therefore did not uphold the addition but disposed the matter by granting the section 54 relief and directing the AO to give effect accordingly. [Paras 8]

Addition under section 56(2)(x) rendered infructuous in view of allowance of section 54 claim; appeal partly allowed.

Final Conclusion: The appeal is partly allowed: the Tribunal directed allowance of the assessee's claim under section 54 in respect of the new flats received under the re-development agreement, and consequently the challenge to the addition under section 56(2)(x) was rendered infructuous; the assessing officer is directed to give effect to the section 54 relief as per the referred ITAT decision.

Disallowance under section 14A read with Rule 8D - Interaction of section 14A and book profit under section 115JB - Requirement of Assessing Officer's satisfaction under section 14A(2) before invoking Rule 8D - Presumption that investments are made from own funds where interestfree funds exceed investments - Depreciation on goodwill arising on amalgamation - Finality of a scheme of amalgamation sanctioned by NCLT

Disallowance under section 14A read with Rule 8D - Interaction of section 14A and book profit under section 115JB - Whether disallowance computed under section 14A read with Rule 8D can be added back to book profit computed under section 115JB and whether Rule 8D may be invoked where no exempt income has been earned in the relevant year. - HELD THAT: - The Tribunal considered binding decisions including the Special Bench in Vireet Investments (Delhi ITAT), and jurisdictional and other High Court authorities, and concluded that disallowances computed under section 14A read with Rule 8D cannot be mechanically added back to book profit under section 115JB. The Tribunal held that the two computation regimes are distinct and, following the authorities cited (including the Gujarat and Bombay High Courts and the Special Bench precedents), the provisions of section 14A/Rule 8D are not to be applied for computing book profit under section 115JB for the assessment years before the 2022 amendment. Consequently the department's appeal to sustain addition to book profit was rejected. The Tribunal also examined the CBDT circular and the post2022 legislative amendment and held reliance on the circular and retrospective application of the 2022 Explanation was not tenable for these assessment years. [Paras 9, 10]

Addition to book profit under section 115JB based on calculations under section 14A/Rule 8D deleted; department's appeal dismissed.

Disallowance under section 14A read with Rule 8D - Requirement of Assessing Officer's satisfaction under section 14A(2) before invoking Rule 8D - Whether the Assessing Officer lawfully invoked Rule 8D without recording the statutory satisfaction required under section 14A(2). - HELD THAT: - The Tribunal followed binding jurisdictional authorities holding that Rule 8D can be applied only after the AO records a substantive satisfaction under section 14A(2) that the assessee's claim regarding expenditure is incorrect. A mere statement of dissatisfaction in the assessment order, without reasons based on an examination of accounts, does not satisfy the statutory precondition. Having regard to the record, the AO did not record the required satisfaction prior to invoking Rule 8D; accordingly the disallowance computed under Rule 8D could not be sustained. [Paras 16]

Disallowance made by invoking Rule 8D without recording satisfaction under section 14A(2) deleted; assessee's Grounds 1-4 allowed.

Disallowance under section 14A read with Rule 8D - Presumption that investments are made from own funds where interestfree funds exceed investments - Whether interest/other expenditure disallowance under section 14A is warranted where the assessee's interestfree own funds exceed the investments made. - HELD THAT: - The Tribunal applied Supreme Court and High Court precedents (including South Indian Bank Ltd. and related authorities) establishing that when interestfree own funds exceed investments in exemptyielding instruments, a presumption arises that investments were made out of own funds and proportionate disallowance of interest is not warranted. On the facts, the assessee's interestfree funds exceeded the investments and the Revenue did not dispute that factual position; accordingly the disallowance on account of interest expenditure was not sustainable. [Paras 15]

Disallowance on account of interest attributable to investments rejected; related grounds allowed.

Depreciation on goodwill arising on amalgamation - Finality of a scheme of amalgamation sanctioned by NCLT - Whether depreciation is allowable on goodwill that arose as a result of a scheme of amalgamation sanctioned by NCLT, where the goodwill came into existence pursuant to the amalgamation and was not an item in the transferor's books. - HELD THAT: - The Tribunal held that where goodwill is the result of an NCLTsanctioned amalgamation (and not an asset transferred by the transferor in its books at a cost), the transferee may claim depreciation on such goodwill if it meets the statutory conditions applicable at the relevant time. The Tribunal noted that the Revenue did not challenge the NCLT order (which had attained finality), and relied on authoritative precedent including the Supreme Court's decision in Smifs Securities Ltd. and subsequent High Court and Tribunal decisions recognizing goodwill arising on amalgamation as an intangible asset eligible for depreciation. The Tribunal also observed that later legislative amendments (Finance Act 2021) excluding goodwill from depreciation are prospective to assessment years 202122 and later and therefore do not affect the assessee's claims for 201617 and 201718. [Paras 23, 24]

Depreciation on goodwill arising from the NCLTsanctioned amalgamation allowed for the assessment years under consideration; Grounds 5 and 6 of the assessee allowed.

Final Conclusion: For AYs 2016-17 and 2017-18 the Tribunal (i) deleted the addition to book profit under section 115JB based on section 14A/Rule 8D and found the Revenue's appeal to be without merit; (ii) held that invocation of Rule 8D without recording the satisfaction required by section 14A(2) was improper and deleted the disallowance; (iii) held that no proportionate disallowance was warranted where own interestfree funds exceeded investments; and (iv) allowed depreciation on goodwill arising out of the NCLTsanctioned amalgamation, the NCLT order being final and the 2021/2022 statutory amendments not affecting the assessment years before them. Appeals of the Revenue dismissed and appeals of the assessee allowed.

Article 8 of the India US Double Taxation Avoidance Agreement - profits from operation of aircraft in international traffic - charterer includes slot/space charter - code sharing treated as analogous to slot charter - inextricable linkage / direct nexus

Article 8 of the India US Double Taxation Avoidance Agreement - profits from operation of aircraft in international traffic - code sharing treated as analogous to slot charter - charterer includes slot/space charter - inextricable linkage / direct nexus - Whether receipts from code sharing arrangements are exempt from Indian taxation under Article 8 of the India US DTAA - HELD THAT: - The Tribunal held that receipts derived by the assessee from transporting passengers under code sharing arrangements are to be treated as "profits from operation of aircraft in international traffic" and hence fall within Article 8 of the India US DTAA. Applying the jurisprudence on slot/space chartering in shipping (including the decisions of the jurisdictional High Court in Balaji Shipping and subsequent Tribunal authorities), the Tribunal found that: (i) chartering may include chartering of space or slot and need not involve charter of the whole aircraft; (ii) code sharing where the assessee issues the ticket for the entire journey under its unique code and the third party carrier transports passengers on behalf of the assessee is analogous to slot charter and operates on a principal to principal basis; and (iii) in the facts of the year under appeal the requisite direct nexus or inextricable linkage between the third party leg and the assessee's operation is established by the materials (including sample agreements and ticketing codes) before the Tribunal. The Tribunal further observed that OECD commentary and aspects of the US Model support treating code sharing/slot charter arrangements as activities directly connected with international traffic, and noted that the US competent authority agreed that such receipts should be exempt (MAP response). In view of these legal and factual findings the Tribunal allowed the assessee's claim for exemption under Article 8 and held that related arguments on alternative computation methods and consequential interest/penalty became academic. [Paras 30]

Receipts from code sharing arrangements are covered by Article 8 of the India US DTAA and are not taxable in India; the assessee's grounds on this issue are allowed.

Final Conclusion: The appeal is allowed: the Tribunal holds that the assessee's receipts from code sharing arrangements qualify as profits from the operation of aircraft in international traffic under Article 8 of the India US DTAA and therefore are exempt from Indian tax for AY 2018 19; consequential issues of computation, interest and penalty are rendered academic or consequential.

Reopening of assessment beyond four years - application of proviso to section 147 regarding failure to truly and fully disclose material facts - assessing officer's satisfaction must be independent and not borrowed - disclosure of shareholders and share capital in return of income

Reopening of assessment beyond four years - application of proviso to section 147 regarding failure to truly and fully disclose material facts - disclosure of shareholders and share capital in return of income - Validity of reopening the assessment after expiry of four years from the end of the relevant assessment year - HELD THAT: - The Tribunal held that the second notice under section 148/147 issued on 22.03.2019 was beyond the four year period reckoned from the end of the relevant assessment year and therefore the proviso to section 147 applied. The assessee had, in its return and in the financial statements filed at original assessment, disclosed the identity of the shareholders and particulars of share capital received from the three entities relied upon by the AO. The AO did not demonstrate any failure on the part of the assessee to truly and fully disclose material facts; nor did he show independent satisfaction disentitling the proviso's protection. Relying on the principles in the Bombay High Court decisions cited in the order, the Tribunal concluded that reopening beyond four years without recorded lapses in disclosure is invalid. [Paras 6, 7, 8]

Reopening of assessment after expiry of four years was invalid and the grounds availing the assessee on that point are allowed.

Assessing officer's satisfaction must be independent and not borrowed - power to reopen: own satisfaction not borrowed satisfaction - Disposition of the additions made under section 68 on merits - HELD THAT: - The Tribunal expressly left open the merits of the additions made by the AO under section 68, noting that its decision to allow the grounds on invalidity of reopening disposed of the appeal on that procedural ground. The factual and substantive contentions raised by the assessee regarding unexplained cash credits/share capital were not adjudicated and were reserved for further consideration if necessary. [Paras 8]

Merits of the additions were not decided and are left open for consideration.

Final Conclusion: The assessee's appeal is allowed on the ground that reopening the assessment beyond four years was invalid because the assessee had truly and fully disclosed the relevant shareholder and share capital information; the Tribunal set aside the reassessment insofar as it was barred by the proviso to section 147 and left the substantive merits of the additions under section 68 undetermined.

Stay of demand - transfer pricing addition - associated enterprises under section 92A - Explanation to section 92B - applicability to AMP expenditure - bright line test for benchmarking AMP expenditure - balance of convenience - deposit as condition for grant of stay

Stay of demand - deposit as condition for grant of stay - balance of convenience - Application for stay of the tax demand raised pursuant to assessment under section 143(3) read with section 144C - HELD THAT: - The Tribunal noted that the assessment involved a transfer pricing addition relating to alleged AMP expenditure and that the assessee had filed its return showing a loss and had appealed the assessment to the ITAT. Reliance placed by the assessee on High Court authorities and the contention that AMP adjustment did not fall within international transactions under the Explanation to section 92B and that the assessee and overseas entity were not associated enterprises under section 92A were recorded. The Tribunal observed that the matter was substantially covered by decisions of the Delhi High Court and other High Courts and that the assessee had already deposited 20% of the outstanding demand with the requisite bank challan on record. Weighing the balance of convenience in favour of the assessee and having regard to the deposit and precedents, the Tribunal was inclined to grant stay, subject to a condition preventing unnecessary adjournments to prolong the appeal and limited the stay by time or till disposal of the appeal. The Tribunal also recorded that the hearing date had been announced in open court. [Paras 6, 8]

Stay granted for 180 days from the date of the order or until disposal of the appeal, whichever is earlier, subject to the condition that the assessee shall not seek unnecessary adjournments; deposit of 20% already recorded.

Final Conclusion: The stay application is allowed: the tax demand is stayed for 180 days from the order or until the appeal is disposed of, whichever is earlier, on the terms recorded (20% deposit made and restraint against unnecessary adjournments).

Disallowance under section 40(a)(i) for failure to deduct tax at source - fees for technical services versus business profits - "make available" clause in DTAA - Permanent Establishment - marketing/commission agent characterization of payments - application of DTAA or domestic law whichever is more beneficial

Disallowance under section 40(a)(i) for failure to deduct tax at source - fees for technical services versus business profits - marketing/commission agent characterization of payments - "make available" clause in DTAA - Permanent Establishment - application of DTAA or domestic law whichever is more beneficial - Whether the payments made to Natronix Singapore and SPEL America are subject to disallowance under section 40(a)(i) for want of TDS as being 'fees for technical services' or are taxable as business profits (not taxable in India) in light of the agreements, DTAA provisions and existence of Permanent Establishment - HELD THAT: - The Tribunal examined the agreements and noted that the payments were for marketing and sales services: the agreements empowered the payees to develop and carry out marketing campaigns, prepare materials and customer profiles and provide advice and assistance. On the material before it, the Tribunal observed that the 'make available' condition of the DTAA would not be applicable to the services in question. However, the Tribunal held that the ultimate characterisation of the payments depends on detailed examination of the terms of the agreements, the precise nature and place of services rendered and the factual question whether the payees have a Permanent Establishment in India. The Tribunal further recorded that the provisions of the DTAA or the Income-tax Act, whichever are more beneficial to the assessee, should apply. Because these factual and documentary aspects were decisive and required fresh scrutiny, the Tribunal set aside the orders under appeal and remitted the issue to the Assessing Officer for de novo adjudication, permitting the assessee to substantiate its case and directing reconsideration of: (a) whether the payments constitute 'fees for technical services' or are business profits taxable only in the payees' resident State under Article 7 of the relevant DTAAs; and (b) whether the payees have a Permanent Establishment in India such as to attract taxation here. [Paras 6, 7, 8]

Set aside and remanded to the Assessing Officer for de novo adjudication on the nature of payments, applicability of the DTAA (including the 'make available' issue) and existence of PE; all issues kept open and the assessee directed to substantiate its case.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes, set aside the CIT(A)'s order, and remitted the matter to the Assessing Officer for fresh adjudication on whether the impugned marketing payments are chargeable as fees for technical services or as business profits and whether the payees have a Permanent Establishment in India; the assessee to substantiate its case.

Penalty under section 270A for misreporting and under reporting of income - requirement to specify limb of section 270A in show cause notice - separate and distinct nature of assessment and penalty proceedings - strict interpretation of penalty provisions - principles of natural justice and non application of mind in penalty proceedings

Penalty under section 270A for misreporting and under reporting of income - requirement to specify limb of section 270A in show cause notice - separate and distinct nature of assessment and penalty proceedings - Whether the penalty levied under section 270A was unsustainable because the show cause notices failed to specify the particular limb of section 270A (misreporting v. under reporting) under which penalty proceedings were initiated. - HELD THAT: - The Tribunal examined the show cause notices and observed that they did not specify which limb or sub clause of section 270A was attracted; the notices merely referred to 'under reporting' while the final penalty order imposed penalty for both 'under reporting' and 'misreporting' under section 270A(8) read with section 270A(9)(e). The Bench applied the principle that penalty provisions must be strictly construed and that assessment and penalty proceedings are separate and distinct, so the AO must clearly state the charge on which explanations are sought. The Tribunal relied on its co ordinate decisions, including Jaina Marketing & Associates and Saltwater Studio LLP , and considered the reasoning in Schneider Electric South East Asia (HQ) Pte Ltd. , which emphasised that in the absence of particularisation of the limb of section 270A and the satisfaction of subsection (9) in the notice, the imposition of higher penalty for misreporting is arbitrary and cannot sustain. Applying these authorities and the statutory scheme, the Tribunal held that issuing a vague notice without specifying the applicable limb resulted in denial of a proper opportunity to answer the precise charge and amounted to non application of mind and violation of principles of natural justice, rendering the penalty invalid. [Paras 8]

Penalty levied under section 270A deleted for want of a notice specifying the applicable limb of section 270A; appeal allowed.

Final Conclusion: The Tribunal deleted the penalty imposed under section 270A (for misreporting and under reporting) because the AO issued vague notices that failed to specify which limb of section 270A was invoked, thereby warranting deletion of the penalty; the appeal is allowed.

Search and seizure assessments under Section 153A - unexplained investment under Section 69 - unexplained cash expenditure under Section 69C - loose sheets as dumb documents and evidentiary value - retraction of statements and requirement of corroborative evidence - allowability of expenses where provision reversed to avoid double disallowance

Allowability of expenses where provision reversed to avoid double disallowance - search and seizure assessments under Section 153A - Deletion of addition of Rs. 424.49 lacs representing wages payable - HELD THAT: - The Tribunal, applying reasoning adopted in an earlier pari materia decision for AY 2017-18, found that the impugned addition related to provisions for wages which were reversed in the return filed under the notice issued u/s 153A and subsequently paid in the next year. The payments were thus allowable in the year of actual payment and disallowing them would amount to double disallowance. Ledger extracts and the assessee's reconciliation demonstrated that provisions were reversed and corresponding actual payments were reflected in subsequent years. On these facts the addition by the AO was deleted and the corresponding grounds allowed.

Addition of Rs. 424.49 lacs on account of wages payable deleted.

Unexplained investment under Section 69 - loose sheets as dumb documents and evidentiary value - retraction of statements and requirement of corroborative evidence - Deletion of addition of Rs. 85 lacs as unexplained investment - HELD THAT: - The addition rested on loose excel sheets recovered during search which, on analysis, did not furnish particulars of source or flow of funds and were contradicted by statements on record. The Tribunal relied on the absence of independent corroborative evidence and on precedent treating loose undated papers not forming part of regular books as having little evidentiary value. Contradictory statements of persons examined and lack of verification of accountants' assertions led the Tribunal to conclude that the AO's reliance on the loose sheets alone was insufficient to fasten unexplained investment on the assessee-firm; the addition was therefore deleted and the AO directed to recompute income consistent with this view.

Addition of Rs. 85 lacs under Section 69 deleted.

Unexplained cash expenditure under Section 69C - loose sheets as dumb documents and evidentiary value - retraction of statements and requirement of corroborative evidence - Deletion of addition of Rs. 2,033 lacs as unexplained cash expenses under Section 69C - HELD THAT: - The AO's addition was founded solely on a loose 'sheet 7' showing round-figure project-wise amounts without dates, payees or source details. The Tribunal held that such bald notings are 'dumb documents' lacking the basic particulars necessary to infer cash payments and, in the absence of corroborative evidence, cannot sustain an addition under Section 69C. Contradictory statements recorded during search and subsequent retraction by the managing partner further eroded evidentiary value. Applying the same reasoning as in co-pending years and existing authorities, the Tribunal deleted the addition and directed recomputation of income.

Addition of Rs. 2,033 lacs under Section 69C deleted.

Final Conclusion: The appeal is partly allowed: the Tribunal deleted the additions made by the Assessing Officer for AY 2019-20 relating to wages payable, unexplained investment and unexplained cash expenditure, directing recomputation of income in accordance with its findings; no jurisdictional defect was found in the assessment proceedings.

Sham transaction - genuineness of share transactions and claim of exempt long term capital gains - burden of proof and preponderance of probabilities - admissibility and reliance on ex-parte statements and requirement of opportunity for cross-examination - reliance on regulatory findings of SEBI as corroborative evidence - application of deeming provision for unexplained money under section 69A (unexplained money) - addition for unexplained expenditure under section 69C (unaccounted commission)

Sham transaction - genuineness of share transactions and claim of exempt long term capital gains - burden of proof and preponderance of probabilities - admissibility and reliance on ex-parte statements and requirement of opportunity for cross-examination - reliance on regulatory findings of SEBI as corroborative evidence - Whether the transactions in shares leading to claimed exempt long term capital gains were sham and liable to be taxed. - HELD THAT: - The Tribunal examined documentary contemporaneous evidence produced by the assessee (preferential allotment records, demat entries, contract notes, bank payments routed through banking channels and payment of STT) and the factual matrix relied on by the AO/CIT(A), including SEBI's later investigation and certain ex-parte statements alleged to show a wider modus operandi. It held that the Assessing Officer's case rested largely on conjecture and uncorroborated ex-parte material which was not confronted or subjected to cross-examination, and that the assessee had discharged the initial onus by producing regular documentary evidence. The Tribunal further found that SEBI's order, insofar as it did not name or proceed against the assessee and was issued after assessment, could not be treated as conclusive against the assessee without independent corroboration. Applying settled principles that suspicion cannot take the place of proof and that the onus to prove that the apparent is not real lies on the party alleging it, the Tribunal concluded that the AO/CIT(A) failed to bring independent, tangible material to displace the contemporaneous evidence of genuineness and therefore the transactions could not be treated as sham. [Paras 10, 34, 39, 43, 51]

The finding that the share transactions were sham and the LTCG claim was bogus is reversed; the transactions are held to be genuine for AY 2015-16.

Application of deeming provision for unexplained money under section 69A (unexplained money) - recording of proceeds in books/bank and applicability of section 69A - burden of proof and onus shifting - Whether the addition made by CIT(A) under section 69A (instead of section 68 as invoked by the AO) was sustainable. - HELD THAT: - Section 69A can be invoked only where the assessee is found to be owner of money not recorded in the books. The Tribunal noted that the capital gains and proceeds were recorded and credited to the assessee's bank accounts and contemporaneous documentary evidence was produced; accordingly, section 69A's deeming fiction was not attracted. The Tribunal emphasised settled law that once the assessee discharges the primary onus by producing cogent contemporaneous evidence, the Revenue must bring independent material to prove undisclosed income; that burden was not discharged here. Reliance on precedents was made to underscore that additions under section 69A cannot be sustained where monies are recorded in books and adequately explained. [Paras 45, 46, 49, 51]

Addition confirmed under section 69A is unsustainable and is set aside.

Addition for unexplained expenditure under section 69C (unaccounted commission) - requirement of corroborative evidence for presumed commission payments - McDowell principle and need for substantial concrete evidence to brand a transaction as camouflage - Whether the addition made under section 69C, estimating unaccounted commission at 6.5%, was justified. - HELD THAT: - The Tribunal held that the addition under section 69C was based on assumption and estimation without corroborative material showing that such commission payments were actually made from undisclosed sources. Applying the principle that branding a legitimate transaction as a camouflage requires substantial and cogent evidence (as reiterated in McDowell and subsequent decisions), the Tribunal found the AO/CIT(A) did not produce independent evidence to substantiate the presumed commission payments and thus could not sustain an addition on mere surmise. [Paras 50, 51]

Addition under section 69C on account of presumed unaccounted commission is deleted.

Final Conclusion: The appeals are allowed for AY 2015-16: the Tribunal reversed the findings that the LTCG transactions were sham, held that section 69A did not apply to the recorded sale proceeds, and deleted the estimated addition under section 69C for alleged unaccounted commission.

Amendment of shipping bills under Section 149 of the Customs Act - Transmission of amended shipping bills from ICEGATE to DGFT - Entitlement to MEIS benefits despite original 'N' reward flag - Obligation of DGFT to process backend-transmitted records and not deny benefits for technical/systemic reasons - Inter-departmental coordination between Customs (CBIC) and DGFT for electronic data exchange - Technology as an aid not a bar to substantive legal rights

Obligation of DGFT to process backend-transmitted records and not deny benefits for technical/systemic reasons - Entitlement to MEIS benefits despite original 'N' reward flag - DGFT and the concerned Union authorities must process the petitioner's application for MEIS scrips and, if eligible, release the scrips within 15 days, and they cannot withhold or deny relief solely on the ground that their electronic systems are not geared to recognise or process manually amended shipping bills. - HELD THAT: - The Court found that the petitioner's entitlement to MEIS was not disputed on merits and that the only impediment was the DGFT's refusal to accept manually corrected or specially transmitted records because of system limitations. The Customs authorities had accepted and amended the shipping bills under their statutory power and, subsequently, the amended records were transmitted electronically from ICEGATE. In light of prior directions in Technocraft and the CBIC Advisory No.7 of 2023, the DGFT could not refuse to consider the bona fide corrected shipping bills or continue to deny release of scrips on the specious plea of technological incapacity. The Court therefore directed DGFT and the Union to process the petitioner's application and release the MEIS scrips within a stipulated short period. [Paras 23, 27, 28]

Process the petitioner's MEIS application and, if eligible, release the MEIS scrips within 15 days; ineligibility shall not be claimed on grounds of DGFT system incapacity or lack of coordination.

Amendment of shipping bills under Section 149 of the Customs Act - Transmission of amended shipping bills from ICEGATE to DGFT - Inter-departmental coordination between Customs (CBIC) and DGFT for electronic data exchange - Shipping bills amended by Customs under Section 149 are legitimate and must be recognised for scheme benefits, and the DGFT must align its systems to accept records transmitted from ICEGATE (including those with the original 'N' flag transmitted as per CBIC advisory). - HELD THAT: - The Court noted the statutory power under Section 149 to amend shipping bills and emphasised that such amendments, once lawfully made by Customs, cannot be rendered nugatory by DGFT's procedural or technological constraints. The Directorate General of Systems and Data Management (CBIC) issued Advisory No.7/2023 to handle post-EGM amendments and prescribed transmission from ICEGATE to DGFT even where the original self-declaration remains unchanged. Given this advisory and prior judicial direction, DGFT must accept backend-transmitted records and not insist on a manual override that would penalise exporters for bona fide errors corrected by Customs. [Paras 16, 18, 19, 21, 23]

Amendments effected by Customs under Section 149 are valid for MEIS claims and DGFT must accept records transmitted from ICEGATE in accordance with CBIC Advisory No.7 of 2023.

Inter-departmental coordination between Customs (CBIC) and DGFT for electronic data exchange - Technology as an aid not a bar to substantive legal rights - DGFT is directed to update and tune its electronic systems to align with the Court's directions in Technocraft and CBIC Advisory No.7 of 2023, with assistance from the Directorate General of Systems and Data Management (CBIC), to prevent recurrence of such systemic glitches; this exercise to be completed within 60 days. - HELD THAT: - The Court observed a persistent lacuna arising from lack of integration and coordination between Customs and DGFT systems, causing bona fide claimants to be denied benefits. Relying on earlier directions and the CBIC advisory, the Court mandated that DGFT tune its systems and cooperate with CBIC to ensure backend acceptance and processing of amended shipping bills, so that technology facilitates, rather than frustrates, statutory entitlements. The Court set a specific timeframe for implementation and directed assistance from DG Systems (CBIC). [Paras 16, 20, 29]

DGFT to align and update its electronic handling systems in accordance with prior directions and CBIC Advisory No.7 of 2023, with CBIC assistance, within 60 days.

Technology as an aid not a bar to substantive legal rights - Costs awarded to the petitioner for the delay and inconvenience caused by the systemic failure; the second Respondent directed to pay costs within four weeks. - HELD THAT: - Having found that the petitioner endured avoidable hardship due to systemic and administrative failures and bureaucratic lethargy, the Court considered it appropriate to award litigation costs. The petitioner's counsel proposed payment to a charitable institution, and the Court directed payment accordingly within a stipulated period. [Paras 30]

Second Respondent to pay the petitioner costs as directed, to be paid within four weeks.

Final Conclusion: The writ petition is allowed. DGFT and the Union respondents must process the petitioner's MEIS claim and, if eligible, release the scrips within 15 days; DGFT must update its systems and coordinate with CBIC to accept backend-transmitted amended shipping bills within 60 days; costs awarded as directed.

Limitation under Section 27 of the Customs Act - double/excess payment treated as customs duty when paid in discharge of levy - refunds arising from mistake of law or fact to be pursued under the statute (Mafatlal Industries principle) - doctrine of unjust enrichment inapplicable to the State - exception for refund claims arising from unconstitutionality of the levy (jurisdiction under Article 226/32)

Limitation under Section 27 of the Customs Act - double/excess payment treated as customs duty when paid in discharge of levy - refunds arising from mistake of law or fact to be pursued under the statute (Mafatlal Industries principle) - exception for refund claims arising from unconstitutionality of the levy (jurisdiction under Article 226/32) - Whether the amount paid on 17.01.2020 is in the nature of customs duty or a deposit and whether the refund claim is governed by the limitation under Section 27 of the Customs Act or by the general law of limitation. - HELD THAT: - The Tribunal found that the second payment was made and treated by the parties and authorities as discharge of customs liability and therefore was in the nature of customs duty even though in excess. Applying the majority principle in Mafatlal Industries Ltd, all refund claims other than those arising from a provision being declared unconstitutional must be preferred and adjudicated under the statutory mechanism, and the limitation prescribed by the relevant enactment (here, Section 27) applies. The appellants' contentions that the payment was a deposit or made under protest, or that the Limitation Act should govern because of a bona fide mistake, were rejected: there is no evidence of payment under protest and the claim was filed before the customs authority in the prescribed refund format as a refund of duty. The Tribunal also noted that exclusion of the COVID period was considered but even after such exclusion the refund application was filed beyond the statutory period. Consequently, general law of limitation cannot be invoked to supplant the statutory time bar where the departmental proceedings are under the Customs Act, and the statutory limitation must be complied with unless the refund arises from unconstitutionality of the levy. [Paras 17, 28, 31, 32]

The payment on 17.01.2020 was in the nature of customs duty and the refund claim is governed by Section 27 of the Customs Act; the belated claim is timebarred and the appeal is dismissed.

Final Conclusion: Appeal dismissed: refund claim for the double payment is governed by Section 27 of the Customs Act and was filed beyond the statutory limitation; no interference with the Commissioner (Appeals) order.

Amendment of shipping bills under section 149 of Customs Act, 1962 - letter of permission (LoP) - in principle debonding and final exit (final debonding) - claim for drawback - Circular No. 36/2010-Cus dated 23rd September 2010 - absence of empowering provision for Board's stipulations under section 149 before Finance Act, 2019 - remand for fresh decision in accordance with section 149

Amendment of shipping bills under section 149 of Customs Act, 1962 - Circular No. 36/2010-Cus dated 23rd September 2010 - absence of empowering provision for Board's stipulations under section 149 before Finance Act, 2019 - Validity of rejection of applications to convert/ amend shipping bills from EOU scheme to drawback claim on the ground of non-compliance with Circular No.36/2010-Cus. - HELD THAT: - The Tribunal held that the rejection grounded solely on non-compliance with the deadline or stipulation contained in CBEC Circular No.36/2010-Cus could not be sustained where the circular's deadline is irrelevant in light of settled precedent. The Tribunal relied on its earlier decision in Seco Tools India Pvt Ltd (para.15 of that order) and the legal position elaborated in Haldiram Foods International Pvt Ltd to conclude that, prior to the Finance Act, 2019, section 149 did not confer on the Board an empowerment to impose such a fetter by circular. Consequently, the impugned rejection was set aside and the matter was directed to be decided afresh by the original authority within the statutory framework of section 149, considering the propriety of the changes sought in the shipping bills rather than the circular's deadline. [Paras 6, 8]

Impugned rejection set aside; application restored to original authority for fresh disposal in accordance with law and section 149.

Letter of permission (LoP) - in principle debonding and final exit (final debonding) - remand for fresh decision in accordance with section 149 - Alleged inconsistent treatment of export consignments and consequent direction to the original authority. - HELD THAT: - The Tribunal noted that similar export bills through other ICDs had been allowed while 155 bills through Nhava Sheva were rejected on the same facts, indicating inconsistent treatment. In view of this disparity and the legal defects in relying on the circular's deadline, the Tribunal set aside the impugned order and directed restoration of the applications to the original authority for reconsideration afresh under the correct legal framework applicable at the relevant time. [Paras 7, 8]

Applications remitted to the original authority for uniform and lawful reconsideration.

Final Conclusion: The Tribunal set aside the rejection of applications to amend shipping bills (sought to convert EOU exports to drawback claims), held that reliance on the deadline in CBEC Circular No.36/2010-Cus was legally impermissible in the circumstances, noted inconsistent treatment of consignments, and remitted the matters to the original authority for fresh disposal under section 149 of the Customs Act, 1962.

Revocation of customs broker licence - forfeiture of security deposit - imposition of penalty under Customs Broker Licensing Regulations - procedure under Regulation 20(1) of CBLR 2013 (time limit for issuing notice) - obligations of customs broker under Regulation 11(n) of CBLR 2013 - liability for acts/omissions of employees under Regulation 17(9) of CBLR 2013 - requirement of specific charges in a show cause notice - foundational importance of a show cause notice to sustain an adverse order

Procedure under Regulation 20(1) of CBLR 2013 (time limit for issuing notice) - Whether the Commissioner of Customs violated the 90 day time limit in Regulation 20(1) in issuing the show cause notice. - HELD THAT: - Regulation 20(1) requires the Commissioner to issue a notice within 90 days from the date of receipt of an offence report. The appellant contended that the show cause notice constituted the offence report and that the Commissioner received it within the same premises, invoking the 90 day rule. The Tribunal held that to establish breach of the time limit the appellant was required to specify the exact date on which the Commissioner received the purported offence report. Mere inference or presumption of receipt from co location of offices was insufficient. In the absence of any specific pleading or proof of the date of receipt, the contention of non compliance with Regulation 20(1) could not be accepted. [Paras 18, 19, 20]

Provisions of Regulation 20(1) were not shown to have been violated.

Requirement of specific charges in a show cause notice - foundational importance of a show cause notice to sustain an adverse order - Whether the show cause notice contained sufficiently specific allegations to found the revocation, forfeiture and penalty order. - HELD THAT: - The show cause notice reproduced the Additional Commissioner's order at length and broadly stated that the broker appeared to have violated several Regulations, but it did not articulate specific reasons or particularized allegations explaining how each Regulation was contravened. The Tribunal observed that a show cause notice is the foundation of an adjudicatory order and must set out the grounds with sufficient particularity. Because the show cause notice failed to state specific charges in respect of the alleged contraventions, the impugned order based on that notice was vitiated on this ground alone. [Paras 22, 23]

The show cause notice was inadequate for failing to specify the charges; the order is liable to be set aside on that basis.

Obligations of customs broker under Regulation 11(n) of CBLR 2013 - Whether the appellant breached Regulation 11(n) by not verifying IEC/GSTIN/declared address or by not obtaining KYC directly from the exporter and by billing a third party. - HELD THAT: - The Commissioner relied on two facts to find contravention of Regulation 11(n): that KYC was not obtained directly from the exporter and that billing was done to a third party. The record, including the Additional Commissioner's order, showed that KYC documents, purchase invoice and bank statements were submitted by the appellant. The Tribunal held that submission of KYC documents defeated the premise that Regulation 11(n) was violated and that lack of direct procurement of KYC or the identity of the party billed were not legally relevant bases to sustain a finding of breach of Regulation 11(n). Accordingly, the Tribunal could not uphold the Commissioner's finding of contravention of Regulation 11(n). [Paras 24, 25, 26, 27]

Finding of violation of Regulation 11(n) cannot be sustained.

Liability for acts/omissions of employees under Regulation 17(9) of CBLR 2013 - Whether the appellant breached Regulation 17(9) by failing to supervise employees, thereby being held responsible for their acts or omissions. - HELD THAT: - The Tribunal noted that the show cause notice did not set out specific allegations concerning supervision or misconduct by employees and that the Commissioner's finding on Regulation 17(9) was principally drawn from reproduction of the appellant's reply and the Additional Commissioner's order rather than from tailored allegations in the notice. The appellant's reply was not meaningfully engaged with, and the conclusion as to breach was not supported by specific charges or reasoning in the notice. On that basis the Tribunal found the Commissioner was not justified in holding that Regulation 17(9) had been contravened. [Paras 28, 29, 30]

Finding of violation of Regulation 17(9) cannot be sustained.

Final Conclusion: The revocation of the customs broker licence, forfeiture of security deposit and penalty imposed by the Commissioner of Customs were unsustainable. The order is set aside and the appeal is allowed.

Appointment of independent director to resolve board deadlock - oversight for statutory and legal compliances - casting vote of independent director in case of deadlock - powers of appellate tribunal to intervene in the interest of the company

Appointment of independent director to resolve board deadlock - oversight for statutory and legal compliances - casting vote of independent director in case of deadlock - Direction to nominate an independent director to break the deadlock and supervise limited Board meetings for statutory and legal compliances - HELD THAT: - The Tribunal recorded that the company was failing to meet statutory and legal obligations because the two equal-shareholder directors were in deadlock; the parties agreed that differences between them had resulted in non-compliance. Having considered precedents where intervention was permitted to protect the company's interests, the Tribunal concluded that intervention was warranted to ensure urgent compliance. The Tribunal therefore requested the learned NCLT to nominate an independent director whose role would be limited to supervising a Board meeting confined to agenda items concerning statutory and legal compliances, to be remunerated in the usual statutory manner, and to exercise a casting vote in the event of a deadlock so as to enable necessary action for compliance. The Tribunal directed that the independent director be appointed by the NCLT within three days in view of the urgency.

The appeal was disposed by directing the NCLT to appoint an independent director within three days to supervise a Board meeting limited to statutory and legal compliances, with usual remuneration and a casting vote in case of deadlock.

Final Conclusion: The Tribunal disposed the appeal by directing the NCLT to nominate an independent director within three days to oversee and enable resolution of board deadlock limited to statutory and legal compliance matters, the independent director to be paid usual remuneration and to have a casting vote in case of deadlock.

Jurisdiction to determine whether an asset forms part of CIRP - finality of an arbitral termination order under Section 32(2)(c) of the Arbitration & Conciliation Act, 1996 - development rights as "property" within Section 3(27) of the IBC - scope of duties and powers of the Resolution Professional in preparing the Information Memorandum - exclusion of third party assets under the Explanation to Section 18(1)(f) of the IBC - intervention by the Successful Resolution Applicant in CIRP proceedings

Jurisdiction to determine whether an asset forms part of CIRP - scope of duties and powers of the Resolution Professional in preparing the Information Memorandum - development rights as "property" within Section 3(27) of the IBC - Adjudicating Authority's competence to decide whether the subject land is an asset of the corporate debtor for purposes of CIRP - HELD THAT: - The Tribunal held that determination of whether an asset is to be reflected in the Information Memorandum or forms part of the corporate debtor's assets arises 'out of or in relation to' the insolvency resolution process and falls within the adjudicatory jurisdiction under Section 60(5)(c). The court relied on the statutory duties of the Resolution Professional to identify and record assets and on the settled principle that development rights constitute 'property' under Section 3(27) (as affirmed in Victory Iron Works). Consequently, the NCLT did not lack jurisdiction and parties need not be relegated to a civil court merely because complex factual questions or title issues are involved; the Adjudicating Authority may examine and decide whether the asset is includable in the CIRP and Information Memorandum. [Paras 21, 22, 28, 29]

Adjudicating Authority had jurisdiction to decide whether the subject land is an asset of the corporate debtor and parties were not required to be relegated to a civil court.

Finality of an arbitral termination order under Section 32(2)(c) of the Arbitration & Conciliation Act, 1996 - Whether the orders dated 27.05.2014 and 15.07.2015 of the Sole Arbitrator amounted to an arbitral award binding on the parties - HELD THAT: - The Tribunal examined the arbitration record and statutory scheme. Section 32 distinguishes between a final arbitral award and an order for termination of proceedings under sub section (2). Orders terminating proceedings under Section 32(2) (including clause (c)) are not arbitral awards amenable to Section 34 challenge and do not attract the finality and binding effect of an award under Section 35. Both the Trial Court and the High Court had classified the 15.07.2015 order as termination under Section 32(2)(c); accordingly the order could not be treated as an arbitral award that conclusively determines parties' rights for subsequent proceedings under the IBC. [Paras 31, 32, 43, 59, 60]

Proceedings and orders of the Sole Arbitrator dated 27.05.2014 and 15.07.2015 do not amount to an arbitral award under the Arbitration & Conciliation Act, 1996 and do not bind the parties in subsequent proceedings.

Development rights as "property" within Section 3(27) of the IBC - exclusion of third party assets under the Explanation to Section 18(1)(f) of the IBC - scope of duties and powers of the Resolution Professional in preparing the Information Memorandum - Whether the Interim Resolution Professional/Resolution Professional could include the subject land in the Information Memorandum/CIRP despite ownership remaining with the appellants - HELD THAT: - The Tribunal concluded that the corporate debtor's asserted development rights over the land fall within the statutory concept of 'property' under Section 3(27) and therefore constitute an asset for purposes of Sections 18 and 29. The Explanation to Section 18(1)(f) excludes third party assets that are merely in possession of the corporate debtor under contractual arrangements, but in the present factual matrix the corporate debtor claimed development rights (not title) and those rights were properly reflected by the RP in the Information Memorandum. Prior termination notices and the arbitration termination order did not conclusively oust the RP's claim, particularly because the arbitral termination was not an award finally determining rights. The Adjudicating Authority therefore did not err in rejecting the prayer to exclude the asset from CIRP. [Paras 62, 64, 67, 69, 71]

IRP/RP rightly included the subject land in the Information Memorandum/CIRP and the Adjudicating Authority did not err in refusing to exclude the land under IA No.4648 of 2020.

Intervention by the Successful Resolution Applicant in CIRP proceedings - Whether the Adjudicating Authority committed error in allowing the intervention application filed by the Successful Resolution Applicant - HELD THAT: - The SRA's resolution plan had been approved by the Committee of Creditors by an overwhelming majority. The Tribunal noted that the intervener (the SRA) was a major stakeholder in the corporate debtor's resolution process and that permitting intervention to make submissions in related proceedings was appropriate. No error was found in the Adjudicating Authority's exercise of discretion to allow the intervention. [Paras 72, 73]

Adjudicating Authority did not commit any error in allowing IA No.58 of 2023 filed by the Successful Resolution Applicant.

Final Conclusion: The appeals are dismissed. The NCLT's order of 30.04.2024 is upheld to the extent that IA No.4648 of 2020 was not allowed and IA No.58 of 2023 (intervention by the SRA) was permitted; the NCLT had jurisdiction to determine whether the land formed part of the CIRP, the arbitral termination order was not an award binding on parties, the RP was entitled to include the development rights in the Information Memorandum, and both appeals are therefore dismissed with parties to bear their own costs.

Financial debt - limitation for money lent payable on demand (Article 21 of the Limitation Act) - effect of written acknowledgment/ promise in writing under Section 25(3) of the Indian Contract Act on limitation - application under Section 7 of the IBC and determination of date of default - operation of Section 10A of the IBC - duty of the Interim Resolution Professional to issue demand notice and ascertain default

Financial debt - The amount claimed by the Applicant under Section 7 was a financial debt. - HELD THAT: - Ledgers filed by the financial creditor and those produced by the corporate debtor show disbursement, entries of interest and TDS and a closing balance reflecting liability, and the corporate debtor's own letter of 20.08.2020 admits the loan. On these materials the Tribunal concluded there was no doubt that the amount constituted a financial debt and that the financial debt was proved. [Paras 10, 11, 12]

Financial debt established; Section 7 petition founded on a proved financial debt.

Limitation for money lent payable on demand (Article 21 of the Limitation Act) - effect of written acknowledgment/ promise in writing under Section 25(3) of the Indian Contract Act on limitation - novations and fresh period of limitation commencing from written promise - The Section 7 application was not barred by limitation despite the loan having been disbursed on 16.12.2016. - HELD THAT: - Although Article 21 provides a three year limitation for money lent payable on demand, the corporate debtor's written letter dated 20.08.2020 constituted a clear promise in writing to repay. Section 25(3) of the Indian Contract Act makes such a written promise effective to revive or create a new cause of action where the debt might otherwise have been barred by limitation. Applying that principle, the written undertaking of 20.08.2020 restarted the limitation period so that the petition filed in 2023 could not be held time barred. [Paras 13, 15, 16, 17]

Limitation defence rejected; written acknowledgment revived the claim and Section 7 application is not time barred.

Operation of Section 10A of the IBC - application under Section 7 of the IBC and determination of date of default - duty of the Interim Resolution Professional to issue demand notice and ascertain default - The Section 7 application was not barred by Section 10A. - HELD THAT: - The corporate debtor could not choose a prior date of default (01.12.2020) which suited a Section 10A bar, when the financial creditor's case (as set out in Part IV and supported by the IRP's demand notice dated 29.11.2022) treats the date of default as 07.12.2022. The IRP, after perusal of the books, issued the demand notice which was not replied; seven days later the IRP treated default as having occurred. Given this factual matrix and the principle that a debtor cannot unilaterally fix an earlier date of default to attract Section 10A, the Adjudicating Authority correctly held Section 10A inapplicable. [Paras 18, 19, 20, 21]

Section 10A bar not attracted; Section 7 petition not barred on that ground.

Final Conclusion: The Adjudicating Authority's admission of the Section 7 application was upheld; the financial debt was proved, the limitation and Section 10A objections were rejected and the appeal is dismissed.

Moratorium under section 14 - Reversal of transactions during moratorium - Appropriation by secured creditor - Pari passu charge - Interim protection - Notice and interim directions

Interim protection - Notice and interim directions - Interim direction to preserve funds withdrawn by the appellants pending final adjudication and procedural directions for expeditious hearing. - HELD THAT: - The Tribunal found that substantial issues were raised by the appeals warranting notice and early hearing. In order to protect the interests of the corporate debtor and other parties pending final disposal, the Tribunal directed that the amounts which are subject of the impugned reversal order be kept by the appellants in a separate interest-bearing account. The Tribunal observed that appellants being banks and financial institutions could be trusted to preserve and, if required by a final order, restore the sums; the separate account will safeguard the corporate debtor's interest and preserve the status quo until adjudication. The Tribunal issued notice, directed filing of pleadings on an expedited timetable, and listed the appeals for final hearing on the specified date. [Paras 10, 11, 14, 15]

Notice issued, pleadings ordered on an expedited timetable, and appellants directed to keep the amounts to be reversed in a separate interest-bearing account until final disposal; appeals listed for hearing on 03.12.2024.

Moratorium under section 14 - Reversal of transactions during moratorium - Appropriation by secured creditor - Pari passu charge - Substantive controversies regarding the legality of appropriations by lenders during the stay/moratorium period and the correctness of the NCLT's directions to reverse such transactions remain pending for adjudication. - HELD THAT: - The Tribunal recorded that substantial questions arise as to whether the interim stay obtained by the suspended management affected the operation of the moratorium and whether appropriations by Axis Bank and other lenders during the relevant period were lawful or must be reversed. Parties advanced competing contentions: appellants asserting contractual rights and that the moratorium ceased to operate on interim stay, and respondents (including ARCIL and the suspended management) contending that moratorium continued and appropriations violated the Code and pari passu charging arrangements. The Tribunal did not resolve these substantive contentions on merits; instead it issued notice and directed expeditious adjudication of the appeals, preserving the disputed funds by interim direction. [Paras 4, 6, 7, 10]

Substantive issues on the legality of the appropriations and the correctness of the NCLT's reversal directions are left for final determination in the appeals.

Final Conclusion: The Tribunal issued notice and expedited the appeals, directed appellants to preserve the amounts subject to the NCLT's reversal order in a separate interest-bearing account to safeguard parties' interests pending final adjudication, and listed the matters for final hearing on the fixed date; the substantive questions on validity of the appropriations and reversal directions remain to be decided.

Condonation of delay - proviso to Section 35 of the Foreign Exchange Management Act, 1999 restricting power to condone delay - exclusion of Section 5 of the Limitation Act by an express proviso - jurisdiction to condone delay in excess of statutory outer limit

Condonation of delay - proviso to Section 35 of the Foreign Exchange Management Act, 1999 restricting power to condone delay - jurisdiction to condone delay in excess of statutory outer limit - Maintainability of the application seeking condonation of 138 days' delay in filing the appeal beyond the statutory outer limit prescribed in the proviso to Section 35 of the FEMA Act. - HELD THAT: - The Court examined the proviso to Section 35 of the Foreign Exchange Management Act, 1999 which prescribes that the High Court may, if satisfied that the appellant was prevented by sufficient cause, allow an appeal to be filed within a further period not exceeding 60 days. Applying the principle in Singh Enterprises (as relied upon by the parties) - that an express proviso excluding the operation of Section 5 of the Limitation Act leaves no power to extend time beyond the statutory outer limit - the Court concluded that it lacks jurisdiction to condone any delay beyond the 60-day outer limit contained in the proviso. The applicant sought condonation for a delay of 138 days, which exceeds that outer limit; the applicant's counsel was unable to distinguish the authorities relied upon by the respondents. In view of the express statutory curtailment of the power to enlarge time, the application is not maintainable and must be dismissed. [Paras 5, 6]

Application for condonation of 138 days' delay is not maintainable and is dismissed.

Final Conclusion: The application for condonation of delay in filing the appeal, being for a period exceeding the 60-day outer limit prescribed by the proviso to Section 35 of the FEMA Act, is held not maintainable and is dismissed.

Abetment of contravention of foreign exchange law - restriction on use of acquired foreign exchange - liability of bankers under Exchange Control Manual and UCPDC - deemed contravention and attempt/abetment - offences by companies and liability of officers

Abetment of contravention of foreign exchange law - deemed contravention and attempt/abetment - Whether the appellant banks aided and abetted contraventions of Sections 8(3) and 8(4) read with Section 64(2) of the FERA, 1973 by opening LCs and effecting remittances despite repeated non-submission of Exchange Control copies of Bills of Entry and other suspicious circumstances. - HELD THAT: - The Tribunal found that the banks repeatedly opened Letters of Credit and effected remittances for the Hamco group between 1995-1998 despite knowledge that Exchange Control copies of Bills of Entry were not being furnished and after issuing reminders and quarterly reports to RBI. The material on record showed persistent non-submission of Bills of Entry, absence of container numbers and other deficiencies in Bills of Lading, receipt of inward remittances in the guise of insurance claims which were not processed through the banks and which insurance companies later disowned as forged. The Tribunal held that while a bank must follow UCPDC and normally deals with documents and not goods, those obligations include reasonable scrutiny of documents and compliance with the Manual of 1993; continued remittances in the face of recurring defaults and manifest discrepancies amounted to negligent acts that facilitated the contraventions and therefore constituted abetment within the scope of Section 64(2). The Tribunal rejected the contention that mere procedural compliance with L/C terms absolved the banks where the pattern of conduct and repeated defaults persisted over years (see reasoning at paras 38-41, 44, 51). [Paras 38, 39, 41, 44, 51]

The Tribunal upheld the finding that the appellant banks abetted contraventions of Sections 8(3) and 8(4) read with Section 64(2) and did not interfere with the penalties imposed.

Liability of bankers under Exchange Control Manual and UCPDC - duty to scrutinise documents - Whether the banks' reliance on UCPDC principles and the contention that they merely dealt with documents, not goods, absolved them of liability. - HELD THAT: - The Tribunal examined Paragraphs 7A.1, 7A.20, 7A.21 and Chapter 7 (7C.1-7C.2) of the Exchange Control Manual, 1993 alongside the UCPDC provisions (Articles 13, 15, 23) cited by the appellants. It held that the Manual and UCPDC require authorised dealers to exercise due care in examining import documents, to monitor defaults in submission of Bills of Entry, and to take steps (reminders, quarterly reporting to RBI) where import evidence is not produced. The Tribunal concluded that compliance with L/C formalities does not licence blind acceptance of documents where there are material discrepancies and a continuing pattern of defaults; therefore the plea that banks acted only on documents and were bound to remit irrespective of surrounding circumstances was rejected (see paras 17-23, 30-36, 42-46). [Paras 21, 23, 30, 36, 44]

The Tribunal rejected the banks' argument that mere documentary compliance under UCPDC absolved them; it held they were required to exercise due care under the Manual and UCPDC and their failure to do so supported the finding of liability.

Offences by companies and liability of officers - deemed contravention and attempt/abetment - Whether officers of the appellant banks are punishable under Section 68 of the Act for facilitating the contraventions and whether the orders imposing penalty on responsible officers were sustainable. - HELD THAT: - The Tribunal recorded that certain officers were discharged after considering replies, while others were found responsible. On the material showing repeated remittances, inward amounts in the guise of insurance claims (later shown to be forged), and continued issuance of LCs despite reminders and non-submission of Bills of Entry, the Tribunal held that the offences attributable to organisations could be imputed to persons in charge under the Act and that officers who participated in sanctioning LCs and remittances were properly penalised. The Tribunal found the Special Director's scrutiny of employee involvement to be proper and did not interfere with penalty imposition where culpability was established (see paras 28, 51-53, 61). [Paras 28, 51, 53, 61]

The Tribunal sustained the imposition of penalties on those officers found responsible under Section 68 and declined to interfere with the Special Director's selective discharge and conviction decisions.

Final Conclusion: Appeals dismissed. The Tribunal affirmed that the appellant banks and those officers found responsible abetted the contraventions of Sections 8(3) and 8(4) read with Section 64(2) of the FERA, 1973, and upheld the penalty orders insofar as they applied to the banks and the culpable officers; the banks' contentions based on mere documentary compliance under UCPDC and on shifting responsibility to RBI were rejected.

Contravention of foreign exchange regulations relating to realization of export proceeds - directors' liability for contraventions under Section 42 of the Foreign Exchange Management Act, 1999 - reasonableness of steps taken by exporter to realize outstanding export proceeds - effect of RBI caution-listing and refusal of extension for realization of export proceeds - reduction of penalty in the interest of justice

Contravention of foreign exchange regulations relating to realization of export proceeds - directors' liability for contraventions under Section 42 of the Foreign Exchange Management Act, 1999 - Findings that the two appellant directors contravened obligations under FEMA and the Export of Goods and Services Regulations for non-realization of export proceeds - HELD THAT: - The Tribunal recorded that the noticee company failed to realize export proceeds for G.R.No.AU701578 dated 10.08.2000 for US$ 9,03,000 negotiated through the bank, that RBI had refused further extension and had placed the company on the caution list, and that the directors were responsible for management of the company during the relevant period. The appellants failed to produce evidence of a suit in London or of correspondence with the High Commission of India as directed by the RBI. The Tribunal therefore upheld the Adjudicating Authority's conclusion that the directors had contravened the foreign exchange provisions in relation to realization of export proceeds and were liable under the provisions invoked against directors. [Paras 5, 6]

The findings of contravention by the two appellant directors are upheld.

Reasonableness of steps taken by exporter to realize outstanding export proceeds - effect of RBI caution-listing and refusal of extension for realization of export proceeds - Whether the appellants had taken reasonable and sufficient steps to realise the outstanding export proceeds so as to absolve them from liability - HELD THAT: - The appellants asserted they made efforts (letters, reminders, visits), informed RBI, obtained RBI extension, and pursued legal proceedings; however, the record did not substantiate these claims. The Tribunal found no evidence of filing of proceedings in London or of compliance with RBI's direction to approach the High Commission, and observed that withdrawal of earlier writs did not demonstrate adequate steps. While the Tribunal noted appellants kept RBI informed and that buyers faced global recession, these factors did not satisfy the evidentiary burden to negate contravention. [Paras 3, 5]

The appellants' claimed efforts were not sufficiently proved and do not absolve them of liability.

Reduction of penalty in the interest of justice - Appropriate quantum of penalty to be imposed on the two appellant directors - HELD THAT: - Although the Tribunal declined to interfere with the finding of contravention, it exercised discretion to mitigate the monetary consequences by reducing the penalty on each director. Having regard to the overall circumstances (including some efforts to inform RBI and the global recession faced by buyers) and the pre-deposit already made by the appellants pursuant to earlier orders, the Tribunal found it appropriate in the interests of justice to reduce the penalty. [Paras 6]

Penalty on each appellant director reduced to Rs. 2,00,000 and their pre-deposits to be adjusted against the reduced penalty; appeals partly allowed and disposed of.

Final Conclusion: The Tribunal upheld the finding that the two directors contravened FEMA/regulations for non-realisation of export proceeds but, in the exercise of its discretion, reduced the penalty on each director to Rs. 2,00,000 and ordered adjustment of the pre-deposits, thereby partly allowing the appeals.

Non-submission of Form FC-GPR - Report by the Indian company under Schedule I Paragraph 9(1)(B) of FEMA Regulations, 2000 - Penalty for contravention under FEMA - Mens rea not required for imposition of penalty under FEMA - Discretion in quantum of penalty and enhancement on appeal - Maximum monetary ceiling of penalty under Section 13(1) of FEMA

Non-submission of Form FC-GPR - Report by the Indian company under Schedule I Paragraph 9(1)(B) of FEMA Regulations, 2000 - Respondents failed to comply with the reporting requirements of Paragraph 9(1)(B) by not submitting Form FC-GPR within the prescribed time. - HELD THAT: - Paragraph 9(1)(B) of Schedule I requires submission of Form FC-GPR within 30 days of issue of shares along with specified certificates (company secretary and statutory auditor/chartered accountant) to inform RBI about compliance with Companies Act, any government approval, eligibility to issue shares, receipt of consideration via authorised dealers and fair pricing. The Tribunal found that the respondents did not produce evidence of having filed Form FC-GPR; the adjudicating authority recorded attempts to comply but noted absence of proof, and the Director admitted non-submission citing unawareness of the requirement. Failure to file FC-GPR resulted in deprivation of timely information to RBI about compliances attendant on issuance of shares against foreign remittance. [Paras 9, 10, 14]

Failure to comply with Paragraph 9(1)(B) established; Form FC-GPR was not filed and the contravention stands proved.

Mens rea not required for imposition of penalty under FEMA - Penalty for contravention under FEMA - Maximum monetary ceiling of penalty under Section 13(1) of FEMA - Liability to penalty under FEMA does not depend on mens rea and the adjudicating authority has discretion (to be exercised judiciously) as to the quantum of penalty within statutory maxima. - HELD THAT: - The Tribunal applied the ratio that penalty under regulatory statutes attracts upon establishment of contravention irrespective of guilty intention, as explained with reference to relevant authorities. Section 13(1) of FEMA prescribes the ceiling (up to thrice the amount involved where quantifiable, or up to two lakh rupees where not quantifiable) but does not prescribe a minimum; hence quantum is discretionary. That discretion must be exercised judiciously after considering facts and evidence - including absence of disproportionate gain, absence of loss of foreign exchange, declared purpose and utilisation, and the procedural nature of the breach - but absence of mens rea does not preclude imposition of penalty. [Paras 11, 12, 13]

Penalty is attracted by the contravention irrespective of mens rea; the Adjudicating Authority's discretion governs quantum subject to statutory maxima and judicially relevant considerations.

Discretion in quantum of penalty and enhancement on appeal - Penalty for contravention under FEMA - The penalties originally imposed required enhancement and were increased by the Tribunal to Rs. 20 lakhs on the company and Rs. 10 lakhs on the director. - HELD THAT: - Having found non-compliance with Paragraph 9(1)(B) and having considered factors relied upon by the adjudicating authority (no disproportionate gain, no loss of foreign exchange, utilisation for stated purpose, and procedural nature of contravention), the Tribunal nevertheless concluded that the penalties imposed were inadequate in relation to the contravention and intervened to enhance the amounts. The exercise reflects correction of the adjudicating authority's quantum within the discretionary ceiling provided by statute. [Paras 15]

Penalties enhanced and fixed at the sums specified by the Tribunal; appeal disposed accordingly.

Final Conclusion: The Tribunal held that Form FC-GPR was not filed as required by Paragraph 9(1)(B), affirmed that penalty under FEMA is attracted irrespective of mens rea while quantum is discretionary within statutory limits, and enhanced the penalties imposed on the company and the director; the appeal is disposed of accordingly.

Contravention of Section 9(1)(b) and (d) of the Foreign Exchange Regulation Act, 1973 - proving receipt or payment by or on behalf of a person resident outside India - reliance on confessional statements discarded by the Supreme Court - requirement of independent material evidence apart from discarded statements - condonation of delay in filing appeal

Contravention of Section 9(1)(b) and (d) of the Foreign Exchange Regulation Act, 1973 - proving receipt or payment by or on behalf of a person resident outside India - The appellant Directorate failed to establish contravention of Section 9(1)(b) and (d) of the Act of 1973 against the respondent. - HELD THAT: - The Tribunal examined the statutory test that Section 9(1)(b) and (d) is attracted only where a person in or resident in India receives or makes a payment by order or on behalf of a person resident outside India, including deeming provisions where no corresponding inward remittance exists. The appellant Directorate did not demonstrate that any payment was received from or made for the benefit of a person resident outside India, nor did it establish that Tiger Memon or any other principal in the alleged Hawala transactions was resident outside India at the relevant time. The pleadings themselves did not aver that Tiger Memon was resident outside India; at best the material showed a shift of base to Dubai which was controverted and, in any event, the passport seized in the criminal proceeding indicated residency in India. In the absence of proof of the residency element or of corresponding inward remittances, the ingredients of Section 9(1)(b) and (d) were not satisfied and the Adjudicating Authority's decision in favour of the respondent on this score cannot be interfered with. [Paras 10, 11, 12]

No contravention of Section 9(1)(b) and (d) of the Act of 1973 was made out; the Adjudicating Authority's finding in favour of the respondent is sustained.

Reliance on confessional statements discarded by the Supreme Court - requirement of independent material evidence apart from discarded statements - The Directorate could not rely on statements recorded under TADA that the Supreme Court had discarded as obtained by coercion; no other material was produced to prove the case. - HELD THAT: - The Supreme Court had held that the respondent's statements recorded under TADA were obtained under duress and therefore could not be relied upon. The Tribunal held that where confessional or other statements have been discarded by the Apex Court on grounds of coercion, the enforcement authority must produce independent and admissible material to establish contravention under the fiscal/statutory regime; mere reliance on the discarded statements is impermissible. The appellant failed to place such independent corroborative material on record and did not plead or prove the critical facts necessary for the statutory offence independent of the discarded statements. Consequently, the Adjudicating Authority rightly declined to sustain the penalty. [Paras 12]

Statements discarded by the Supreme Court cannot be relied upon; in absence of independent material the penalty could not be sustained.

Condonation of delay in filing appeal - The application for condonation of delay in filing the appeal was rejected and the appeal dismissed as time barred. - HELD THAT: - The appeal was filed with an unexplained delay of 838 days. Although administrative or governmental delays sometimes warrant liberal treatment, the appellant did not furnish cogent reasons to justify such a prolonged unexplained delay. Because the Tribunal found no merit in the appeal on its substantive grounds and the reasons for delay were not satisfactorily explained, condonation of delay could not be granted. [Paras 13]

Application for condonation of delay refused; appeal dismissed.

Final Conclusion: The Adjudicating Authority's order setting aside the penalty in favour of the respondent is upheld for lack of proof of contravention of Section 9(1)(b) and (d) and for absence of independent admissible material after the Supreme Court discarded the TADA statements; the application for condonation of delay is refused and the appeal is dismissed.

Proceeds of crime - financier-key operator modus operandi - provisional attachment under PMLA - SEBI disgorgement not a substitute for PMLA adjudication - discriminatory treatment in attachment

Proceeds of crime - financier-key operator modus operandi - Entire amounts advanced and used to procure multiple IPO applications, including refunds of unsuccessful applications, constitute proceeds of crime. - HELD THAT: - The Tribunal accepted the factual finding that the appellants acted as financiers who provided funds for subscribing to IPOs through key operators who opened fictitious/benami bank and demat accounts and placed multiple applications in the retail category. Given that the finance was provided for an illegal purpose - to corner retail allotments by fraudulent means - the Tribunal held that the entire amount used for that fraudulent scheme, including sums returned as refunds of unsuccessful applications, formed part of the tainted fund and thus amounted to 'proceeds of crime'. The Tribunal relied on the established sequence of events, admissions and ledger entries showing funds provided around IPO closure, transfers of allotted shares to the appellants, and earlier findings in the Tribunal's and SEBI-related orders to conclude that the transactions were not genuine principal-to-principal loans and that the financers were the beneficial owners of the operation. The Tribunal distinguished a narrow view that only sale proceeds are tainted and rejected the contention that refunds to unsuccessful applicants were untainted, observing the funds were used with criminal intent as part of the overall fraud. [Paras 20, 21, 73, 75]

Claim that only sale proceeds (and not refund amounts) are 'proceeds of crime' is rejected; the entire amount used in the fraudulent IPO scheme is treated as proceeds of crime.

Provisional attachment under PMLA - SEBI disgorgement not a substitute for PMLA adjudication - Provisional attachment under PMLA could continue despite SEBI having determined and recovered unlawful gains; SEBI satisfaction does not absolve commission of scheduled offence under PMLA. - HELD THAT: - The Tribunal observed that SEBI's determination of unlawful gains and recovery under the SEBI Act addressed a distinct statutory regime and scope (disgorgement of illegal gain) and did not discharge or negate criminal proceedings or the PMLA-based finding of 'proceeds of crime'. The ECIR/FIR and PMLA provisions contemplate separate inquiries and consequences; thus satisfaction of SEBI's order does not preclude continuation of PMLA attachment where the respondent has found that funds were used for criminal purpose. Consequently, prior SEBI recovery did not obviate the provisional attachment under PMLA. [Paras 23, 24]

Continuation of attachment despite SEBI disgorgement is justified; SEBI recovery does not negate PMLA proceedings or require lifting of attachment.

Provisional attachment under PMLA - Alleged discrepancies in stated amounts in impugned orders do not vitiate the attachment where the final amount was clearly disclosed in the impugned order. - HELD THAT: - The Tribunal examined the contention about varying amounts mentioned across documents and found no material discrepancy or contradiction that would invalidate the impugned order. The Tribunal noted that the final amount relied upon was set out in the impugned order and, therefore, the argument of inconsistent figures did not survive scrutiny. [Paras 25]

Claim of discrepancy in amounts is without substance and does not undermine the attachment.

Discriminatory treatment in attachment - provisional attachment under PMLA - Allegation of discriminatory treatment in deciding which refund amounts to treat as proceeds of crime was not established. - HELD THAT: - The appellants failed to produce evidence showing disparate treatment of similarly placed persons or orders of provisional attachment against others to substantiate a claim of discrimination. The Tribunal invited particulars and documents; none were furnished that could demonstrate inconsistent enforcement. On the record, the respondent's approach did not amount to discriminatory treatment warranting interference. [Paras 27]

Allegation of discrimination in attachment not proved; contention rejected.

Final Conclusion: All grounds of challenge to the provisional attachment were rejected; the Tribunal held that the amounts used by the appellants in the fraudulent IPO scheme (including refunds) constitute proceeds of crime, that SEBI disgorgement does not preclude PMLA attachment, and dismissed the appeals.

Reasons to believe - notice under Section 8(1) of the Prevention of Money Laundering Act, 2002 - service of reasons to believe with notice - attachment and its confirmation by the Adjudicating Authority - remand for de novo proceedings - right to know the basis of adverse action and opportunity to reply

Reasons to believe - notice under Section 8(1) of the Prevention of Money Laundering Act, 2002 - service of reasons to believe with notice - attachment and its confirmation by the Adjudicating Authority - Validity of the attachment-confirmation order where the Adjudicating Authority did not serve the written "reasons to believe" along with the notice issued under Section 8(1) of the Act of 2002. - HELD THAT: - The Tribunal found that the Adjudicating Authority had relied upon "reasons to believe" but did not supply a copy of those reasons to the appellants when issuing the Section 8(1) notice. Having regard to precedent considered by the Tribunal (including its decision in Neeraj Singal and the Delhi High Court judgment in J. Sekar), the Tribunal drew a distinction between the requirement of recording "reasons to believe" under Section 5(1) and the requirement to provide reasons when issuing a notice under Section 8(1). The Tribunal held that, because confirmation of an attachment by the Adjudicating Authority may have a decisive adverse effect on the party, the party must be given the opportunity to know the Adjudicating Authority's "reasons to believe" so as to enable a meaningful reply. For that reason the impugned order could not be sustained where the written "reasons to believe" were not conveyed with the Section 8(1) notice. The Tribunal accordingly set aside the confirmation order and remanded the matter to the Adjudicating Authority to proceed de novo from the stage of serving the notice together with the written "reasons to believe", allowing the appellant to file a proper reply and directing that the remanded proceedings be completed within the statutory time under Section 8(3). [Paras 2, 3, 7, 8, 9]

Impugned order set aside; matter remanded to the Adjudicating Authority to proceed de novo from service of the Section 8(1) notice together with the written "reasons to believe" and to complete proceedings within 180 days as provided by Section 8(3) of the Act of 2002.

Final Conclusion: The appeal is allowed to the extent that the confirmation of attachment is set aside for failure to serve the Adjudicating Authority's written "reasons to believe" with the Section 8(1) notice; the matter is remanded for fresh proceedings from the stage of service of the notice with reasons and to be completed within the statutory period.

Interest on refund of pre-deposit - Section 35FF of the Central Excise Act - Section 11B / Section 11BB not applicable to non-duty deposits - CBEC instructions on prompt refund of pre-deposit - entitlement to interest from date of payment till date of refund - Article 300A - protection of property

Interest on refund of pre-deposit - Section 35FF of the Central Excise Act - Section 11B / Section 11BB not applicable to non-duty deposits - CBEC instructions on prompt refund of pre-deposit - entitlement to interest from date of payment till date of refund - Article 300A - protection of property - Appellant entitled to interest on the refunded amount (pre-deposit) from the date of payment till the date of refund - HELD THAT: - The Tribunal examined relevant statutory provisions and administrative instructions and held that the amount retained by the department was a revenue deposit/pre deposit and not an amount of duty attracting the refund regime under Section 11B/11BB. Section 35FF governs interest on refund of amounts deposited under Section 35F and, more broadly, the law and Board circulars recognise that pre deposits (and other non duty deposits) refunded consequent to an appellate order attract interest from date of deposit to date of refund. The CBEC master circular and earlier judicial decisions (including the Supreme Court and High Court precedents relied upon by the Tribunal) establish that withholding of such deposits without lawful authority violates the proprietor's property right under Article 300A and that interest cannot be denied merely for absence of an express provision in Section 11B. Applying this jurisprudence and the Board's instructions, the Tribunal found the denial of interest by the adjudicating authority to be unjustified and set aside that finding, holding that the appellant is entitled to interest on the refunded amount for the period the sum remained with the department. [Paras 5]

Denial of interest on the refunded pre-deposit set aside; appellant entitled to interest from date of payment till date of refund.

Section 35FF of the Central Excise Act - rate of interest fixed by notification - Rate of interest to be applied on the refunded amount - HELD THAT: - While Section 35FF prescribes that interest shall be paid at a rate not below 5% and not exceeding 36% per annum, the Tribunal noted that the Central Government has fixed the applicable rate by notification. Having found entitlement to interest, the Tribunal applied the rate fixed by the Government in Notification No. 12/2023 Central Tax (Rate) dated 19.10.2023, and directed that interest be paid at that notified rate for the period from payment to refund. [Paras 6]

Interest to be paid at the rate of 6% per annum as fixed by the Government notification.

Final Conclusion: The appeal is allowed: the order denying interest on the refunded pre deposit is set aside; the appellant is entitled to interest on the refunded amount from the date of initial payment until the date of disbursement, to be paid at the notified rate of 6% per annum.

Franchise service - Declared service under Section 66E(e) - Service provider-service recipient relationship - Consideration as value for services - Vagueness of show cause notice - Extended period of limitation - Remand for de novo adjudication

Franchise service - Declared service under Section 66E(e) - Service provider-service recipient relationship - Consideration as value for services - Impugned order did not satisfactorily establish that DTMPL rendered a taxable service (as franchise service or as a declared service) or identify a service provider-recipient relationship and consideration for services. - HELD THAT: - The Tribunal found that the Adjudicating Authority merely reproduced allegations from the show cause notice without applying its mind to whether the essential features of a taxable service were present. The order fails to identify what service, if any, DTMPL performed for members, who the service provider and recipient were, and whether the membership fee constituted consideration for rendering services. The Tribunal observed that while receipts may constitute income, they were not shown to be consideration for services. For these reasons the Tribunal concluded that the findings were insufficient to sustain the levy of service tax and that the matter requires fresh, reasoned adjudication on whether the activity qualifies as a franchise service or a declared service under the Act. [Paras 12, 13, 14, 15]

Set aside the impugned findings on taxability and remand the question of whether DTMPL's activities constitute a taxable service to the Adjudicating Authority for fresh decision with reasons.

Vagueness of show cause notice - Remand for de novo adjudication - The plea that the show cause notice is vague was not finally adjudicated and must be examined afresh by the Adjudicating Authority. - HELD THAT: - The Tribunal noted that the Adjudicating Authority responded to the contention of vagueness by reference to the existence of an extensive investigation rather than by linking specific allegations to statutory provisions and facts. The Tribunal directed that on remand the Adjudicating Authority should examine the appellants' submissions on vagueness de novo and record substantial reasons in support of its conclusion. [Paras 15, 16]

Remand for re examination of the contention that the show cause notice is vague; Adjudicating Authority to decide afresh with detailed reasons.

Extended period of limitation - Computation, interest and penalty - Remand for de novo adjudication - Incidental issues of valuation, limitation (including invocation of extended period), interest and penalty were not finally adjudicated and are to be reconsidered on remand. - HELD THAT: - Because the primary question of taxability was not satisfactorily determined, the Tribunal directed that related aspects - valuation of consideration, applicability of extended limitation, computation of tax, and imposition of interest and penalty on the company and its directors - be re examined by the Adjudicating Authority in the course of its fresh adjudication. The Tribunal expressly declined to express any opinion on the merits of these issues and confined itself to ordering reconsideration. [Paras 16]

Direct remand for reconsideration of valuation, limitation, interest and penalty by the Adjudicating Authority in the fresh adjudication.

Final Conclusion: The impugned order is set aside and the appeals are allowed by way of remand: the matter is directed to be decided afresh by the Adjudicating Authority with detailed reasons on (a) whether DTMPL's activities amount to a taxable service (franchise or declared service) and whether a service provider-recipient relationship and consideration for services exist, (b) the contention that the show cause notice is vague, and (c) attendant issues of valuation, limitation, interest and penalty; no opinion is expressed on the merits.

Refund of CENVAT credit for input services used in export of output services - requirement of registration of specific service category as condition precedent for refund - nexus between input services and exported output services - finality of de novo adjudication and acceptation of refund order - power to revoke an adjudicated refund under Section 11A vis-a -vis an order of refund passed after adjudication under Section 11B

Requirement of registration of specific service category as condition precedent for refund - refund of CENVAT credit for input services used in export of output services - Validity of denial of refund on ground that assessee did not hold registration in the specific service category - HELD THAT: - The Tribunal upheld the Commissioner (Appeals)'s conclusion that absence of registration for each specific service category cannot be a ground in law to deny refund of CENVAT credit when the assessee held centralized registration and exported services from registered premises. Reliance on precedents was accepted to the effect that the Cenvat Credit Rules do not prescribe registration in a specific service category as a pre-condition for claiming refund, and non-registration of a particular service cannot operate to deprive an assessee of the statutory refund entitlement. The appellate authority's view that registration on a centralized basis sufficed for the export transactions was held to be sustainable on the facts and law considered by it. [Paras 6, 10, 12]

The appellate authority correctly held that lack of registration in a specific service category is not a valid legal ground to refuse the refund; that part of the adjudication is sustained.

Nexus between input services and exported output services - refund of CENVAT credit for input services used in export of output services - Whether the refund claim failed for want of nexus between input services and exported output services - HELD THAT: - The Tribunal accepted the Commissioner (Appeals)'s finding that the adjudicating authority's grounds regarding absence of documentary correlation (such as FIRC, invoices, rent agreements) were unsustainable in the light of the material placed before the first appellate authority and consistent judicial pronouncements on establishing nexus. The judgment refers to relevant circulars and a body of tribunal and High Court decisions addressing nexus and the manner of proving use of input services in export, and treats the appellate authority's acceptance of the presented documents as justified. [Paras 7, 9, 12]

The finding that there was sufficient nexus and that the refund could not be denied on nexus grounds is affirmed.

Finality of de novo adjudication and acceptation of refund order - refund of CENVAT credit for input services used in export of output services - Effect of subsequent de novo adjudication and payment of sanctioned refund on the departmental appeals - HELD THAT: - The Tribunal noted that following the Commissioner (Appeals) order, the matter was adjudicated de novo by the jurisdictional adjudicating officer who passed a common Order-in-Original dated 09.06.2014 allowing the refund (in revised amounts) and cash refunds were paid accordingly. The departmental appeals impugning the appellate order therefore stood rendered infructuous by the subsequent unchallenged de novo order and payment. In view of acceptance of that Order-in-Original and the payments made, the Tribunal treated the present appeals as devoid of subsistence and dismissed them. [Paras 3, 4, 5, 12, 13]

The appeals are dismissed as infructuous and there is no infirmity in the impugned appellate orders in light of the de novo adjudication and payment.

Final Conclusion: The Tribunal affirmed the Commissioner (Appeals)'s allowance of the refund claims, held that non-registration in a specific service category and the alleged lack of nexus were not valid grounds to refuse refund, and dismissed the Department's appeals as infructuous because the refund was subsequently adjudicated de novo and paid pursuant to the unchallenged Order-in-Original dated 09.06.2014.

Distinction between 'gold bar' and 'gold dore bar' - strict interpretation of exemption notification - burden of proving applicability of exemption on the assessee - common parlance test for commodity description - classification of goods under Chapter 71 and relevance of Chapter Notes - limitation and extended period of limitation in excise demands - penalty under Section 11AC for suppression with intent to evade

Distinction between 'gold bar' and 'gold dore bar' - strict interpretation of exemption notification - classification of goods under Chapter 71 and relevance of Chapter Notes - common parlance test for commodity description - Appellants are not eligible for concessional rate under Sl. No.189 of Notification No.12/2012-CE (17.03.2012) on Gold Dore Bars of purity less than 95% for the period 01.07.2012 to 30.06.2017. - HELD THAT: - The Tribunal upheld the adjudicating authority's conclusion that the Notification draws a distinction between 'gold bars' and 'gold dore bars' and that the Explanation to Sl. No.189, which defines 'gold dore bar' as dore bars having gold content not exceeding 95%, must be given effect. Applying established principles that exemption notifications are to be strictly construed and that the assessee bears the burden of proving entitlement, the Tribunal rejected the appellant's contention that common parlance compels treating dore bars (87-92% gold) as 'gold bars' eligible for the exemption. The Tribunal observed that the appellant had previously treated its product as primary gold in earlier proceedings and that the Explanation's explicit reference to dore bars as input/raw material precludes equating the two commodities for the purpose of the Notification. Reliance on general dictionary or market usages did not override the statutory scheme and the distinct expressions used in the Notification; if the legislature intended both to be identical, it would not have mentioned them separately. Accordingly, benefit of Sl. No.189 could not be extended to the appellant's dore bars of less than 95% purity. [Paras 12, 13, 15, 16, 19]

Benefit of Sl. No.189 of Notification No.12/2012-CE denied in respect of appellant's Gold Dore Bars having gold content below 95%.

Limitation and extended period of limitation in excise demands - burden of proving applicability of exemption on the assessee - The demand issued by the Department invoking the extended period of limitation cannot be sustained; differential duty and interest are collectible only for the normal period of limitation. - HELD THAT: - The Tribunal examined the chronology of investigations and earlier proceedings beginning in 2010, and noted that there was no change in the process of manufacture, marketing or the nature of the final product cleared from the factory; the appellant had filed ER-1 returns and availed notifications as amended over time. Given the continuity of disclosures and absence of suppression of facts or change in material facts, the Tribunal held that invocation of the extended period of limitation in the second show-cause notice dated 05.08.2017 was not justified. Consequently, while the demand (to the extent Sl. No.189 is inapplicable) is upheld, recovery is limited to amounts collectible within the normal period of limitation; the adjudicating authority was directed to determine differential duty and interest for the normal limitation period. [Paras 20]

Extended period invocation set aside; demand sustained only for normal period and remanded for computation of duty and interest for the normal period.

Penalty under Section 11AC for suppression with intent to evade - strict interpretation of exemption notification - Penalty under Section 11AC imposed by the adjudicating authority is not sustainable and is set aside. - HELD THAT: - Because the Tribunal found the dispute to be one of interpretation of the exemption notification and concluded there was no suppression of facts or dishonest concealment by the appellant, it held that the essential requirement for imposing penalty under Section 11AC - deliberate suppression with intent to evade duty - was not made out. In view of the legal interpretation issue and absence of willful default, the Tribunal modified the impugned order by setting aside the penalty and remitted the matter to determine only the quantum of differential duty and interest for the normal limitation period. [Paras 20, 21]

Penalty under Section 11AC set aside; matter remitted for quantification of duty and interest for the normal period.

Final Conclusion: Appeal partly allowed. Denial of exemption under Sl. No.189 of Notification No.12/2012-CE for Gold Dore Bars with gold content below 95% is upheld; extended period invocation is rejected and recovery limited to the normal period; penalty under Section 11AC is set aside. Matter remanded for determination of differential duty and interest for the normal limitation period.

Discretion under Section 438 CrPC to grant anticipatory bail - reason to believe that he may be arrested - maintainability of anticipatory bail while in custody in a different case - Prisoner Transit Warrant under Section 267 CrPC and formal arrest - power of investigating agency to seek remand for investigation - prohibition by omission - no implied restriction where Parliament has not expressly excluded - protection of personal liberty under Article 21 - deemed/limited custody and its relevance to evidence and interrogation

Maintainability of anticipatory bail while in custody in a different case - Discretion under Section 438 CrPC to grant anticipatory bail - Anticipatory bail application filed under Section 438 CrPC by an accused already in custody in relation to a different offence is maintainable. - HELD THAT: - The Court held that neither the text of Section 438 nor the scheme of the CrPC contains an express or implied bar preventing a person who is in custody in respect of one offence from applying for anticipatory bail in respect of a different offence. The legislative design confines the only specific exclusion to the offences enumerated in Section 438(4); courts must not read additional blanket restrictions by way of judicial legislation. Each anticipatory bail application filed while the applicant is in custody for a different offence must be adjudicated on its own facts and merits by the competent forum. (Reasons reflected at paragraphs 53, 54 and summarized in conclusion at paragraph 60(ii)). [Paras 53, 54, 60]

Maintainable; High Court/Session Court may entertain and decide such applications on merits.

Reason to believe that he may be arrested - Prisoner Transit Warrant under Section 267 CrPC and formal arrest - A person already in custody can have a "reason to believe" that he may be arrested in relation to a different cognizable offence. - HELD THAT: - The Court rejected the view that physical touch or fresh confinement is a prerequisite to a 'reason to believe' under Section 438. It explained two lawful scenarios in which an accused in custody may be arrested in respect of another offence: (a) arrest immediately upon release from the earlier custody; and (b) formal arrest while in existing custody followed by procurement of a P.T. Warrant under Section 267 CrPC and production before the jurisdictional magistrate for remand. Because law permits such processes, the apprehension of future arrest in another case can be real and reasonable even while the accused remains in custody for a prior offence. (Reasoning at paragraphs 37-44, 52-55; conclusion reflected in paragraph 60(vi)). [Paras 37, 44, 52, 60]

Such apprehension can constitute the statutory "reason to believe" required for invoking Section 438.

Prisoner Transit Warrant under Section 267 CrPC and formal arrest - power of investigating agency to seek remand for investigation - Effect of formal/on-paper arrest and P.T. Warrant on right to apply for anticipatory bail; and the investigating agency's right to seek remand. - HELD THAT: - The Court explained that a mere formal (on-paper) arrest of a person already in custody does not by itself extinguish the right to seek anticipatory bail; the right is extinguished if the police procure a P.T. Warrant under Section 267 CrPC and thereby produce the accused before the jurisdictional magistrate and obtain remand. Conversely, while no order granting anticipatory bail in the subsequent case exists, the investigating agency may apply for remand of the accused (including by P.T. Warrant) to enable interrogation or investigation; if remand is ordered before anticipatory bail is obtained, the accused's remedy is then regular bail under Sections 437/439. If anticipatory bail is obtained before remand, the agency cannot thereafter use Section 267 to remand the accused for the same purpose. (Reasoning at paragraphs 41-56; conclusion reflected in paragraph 60(iv)). [Paras 52, 54, 55, 60]

Formal arrest alone does not defeat Section 438 remedy; procurement and execution of a P.T. Warrant followed by remand will preclude anticipatory bail and leave regular bail as the remedy.

Prohibition by omission - no implied restriction where Parliament has not expressly excluded - protection of personal liberty under Article 21 - Courts must not read a judicially created blanket restriction into Section 438 CrPC where Parliament has omitted any such exclusion; personal liberty considerations support allowing access to the remedy. - HELD THAT: - Relying on precedents and legislative history, the Court held that where Parliament has expressly excluded certain categories (e.g., Section 438(4)), omissions elsewhere should not be construed as general prohibitions. The right to seek anticipatory bail is a statutory right that furthers Article 21 values; denial of access to the statutory remedy without valid procedural basis would be inconsistent with fairness and equality. Therefore, absent an express statutory bar, the remedy remains available and must be exercised judicially in each case. (Reasoning at paragraphs 34-36, 60(v) and 60(ii)). [Paras 34, 36, 60]

No implied prohibition; access to Section 438 remedy must be preserved subject to judicial discretion and statutory exceptions.

Final Conclusion: The appeal is dismissed. The Court holds that an accused who is in custody in one case may maintain an anticipatory bail application under Section 438 CrPC in respect of a different offence so long as he has not been arrested and remanded in respect of that offence; the Bombay High Court is directed to decide the anticipatory bail petition on its merits.

Concession recorded in a judicial/administrative order - resiling from a concession before an Appellate Forum - requirement to seek correction from the same forum that recorded the concession - entertainment of an oral plea not pleaded in the appeal memo - jurisdictional error in entertaining an appeal - appeal under Section 44 of the Real Estate (Regulation and Development) Act, 2016

Concession recorded in a judicial/administrative order - resiling from a concession before an Appellate Forum - requirement to seek correction from the same forum that recorded the concession - Respondents who made a concession before the Regulatory Authority could not seek relief in appeal beyond that concession. - HELD THAT: - The Regulatory Authority's order (paras 7-11) records that the complainants initially sought interest on the entire amount but, after the Authority explained that penalising a project facing liquidity difficulties would affect completion, the complainants 'then insisted' only on interest for amounts collected after implementation of RERA. The High Court reads this sequence as a recorded concession by the complainants. Established law requires that where a concession is recorded by the Court/Authority, the party who claims the concession was wrongly recorded must first seek correction before the same forum; only in rare and appropriate cases may an appellate court permit resiling on narrow grounds. The respondents did not move the Regulatory Authority to rectify the recorded concession and, having obtained the order, could not in appeal seek relief over and above the concession recorded by the Authority. The Appellate Tribunal therefore erred in permitting such relief. [Paras 16, 21, 25]

Respondents who made the concession before the Regulatory Authority could not seek relief over and above that concession in appeal; the concession recorded in the Authority's order stands.

Entertainment of an oral plea not pleaded in the appeal memo - jurisdictional error in entertaining an appeal - appeal under Section 44 of the Real Estate (Regulation and Development) Act, 2016 - The Appellate Tribunal erred in entertaining an oral plea that the concession was not made when no such ground was pleaded in the appeal memo and the respondents had not sought correction from the Regulatory Authority. - HELD THAT: - The respondents' appeal memo did not specifically plead that the concession recorded in paragraph 9 of the Regulatory Authority's order was never made; only a general ground (ground 6(iii)) complained of the Authority's approach. The Appellate Tribunal accepted oral submissions during hearing that the respondents had not made the concession, relying also on perceived omissions in the Authority's order and on technical non-audibility of the appellant's counsel. The High Court found this impermissible: in the absence of a specific pleading and without the preceding step of seeking rectification from the Authority, the Appellate Tribunal had no jurisdiction to entertain the belated oral retraction of the recorded concession. The Appellate Tribunal's reliance on conjecture and oral retraction amounted to a jurisdictional error warranting interference. [Paras 17, 20, 23, 24, 25]

The Appellate Tribunal should not have entertained the oral plea disavowing the concession when the appeal memo contained no such ground and no application for correction was made to the Regulatory Authority; doing so was a jurisdictional error.

Final Conclusion: The High Court allowed the second appeal, set aside the Appellate Tribunal's order dated 17 March 2023, and confirmed the Regulatory Authority's order dated 25 November 2020; parties to bear their own costs.