TaxTMI Updates e-Newsletter
Nov 20,2020

Summary order. Court recorded petitioner's contention regarding inability to submit FORM GST TRAN-1 due to technical glitches, directed respondents to obtain and place on record instructions whether the Council recommended and the Commissioner extended the TRAN-1 filing date under Rule 117(1)/(1A) of the CGST Rules/UPGST Rules, granted three days to respondents for instructions, listed the matter on 23.11.2020, and requested the Additional Solicitor General to assist; petitioner to inform the ASG of this order within 24 hours.

Best judgment assessment under Section 62 of the GST Act - communication of assessment order by uploading on the common GST portal - service of demand-cum-recovery notice - filing of returns within the period prescribed for Section 62 purposes - suo motu recall of judicial order

Communication of assessment order by uploading on the common GST portal - filing of returns within the period prescribed for Section 62 purposes - Earlier finding that the assessment orders had been communicated to the petitioner by uploading on the common GST portal was erroneous and the consequence drawn therefrom (that the petitioner had not filed returns within the time permitted under Section 62) could not be sustained. - HELD THAT: - The court examined the factual foundation of its earlier dismissal of the writ petition which rested on the State's averment that assessment orders were communicated by uploading on the common GST portal. Subsequent interaction with GST department officers revealed that the orders were uploaded only on the State's back-end portal and not simultaneously on the common GST Network portal. Since the earlier decision relied upon the incorrect factual premise that statutory communication had occurred via the common portal, the legal consequence drawn - that the petitioner had not availed the time for filing returns under Section 62 - could not stand. The court concluded that a litigant should not suffer by virtue of that mistaken factual finding and that the mistake warranted correction by recalling the earlier order.

The court held that the factual basis for rejecting the petitioner's contention was erroneous and that the earlier conclusion on communication and time for filing returns could not be sustained.

Suo motu recall of judicial order - The court exercised its power to recall its earlier order and allowed the review petition order to be set aside. - HELD THAT: - On recognition of the erroneous factual premise underlying the prior dismissal, the court chose to correct the mistake in the interest of justice by recalling its order dated 21.10.2020 in R.P. No.747/2020. The recall was effected suo motu by the judge who considered that the court itself had committed the error and that relief to the petitioner was therefore appropriate.

Order dated 21.10.2020 in R.P. No.747/2020 is recalled and the review petition is allowed.

Final Conclusion: The court found that its earlier dismissal rested on an erroneous factual finding that assessment orders had been uploaded on the common GST portal; having corrected that error, it suo motu recalled its earlier order dated 21.10.2020 in R.P. No.747/2020 and allowed the review petition.

Release of seized goods pending adjudication - Section 129(1)(a) of U.P. GST Act - confiscation proceedings - compliance with statutory conditions for release - expeditious decision by authority

Release of seized goods pending adjudication - Section 129(1)(a) of U.P. GST Act - compliance with statutory conditions for release - Petitioner entitled to seek release of seized goods under the statutory mechanism in Section 129(1)(a) of the U.P. GST Act and the authority must consider such an application in accordance with law. - HELD THAT: - The petition alleges seizure of the petitioner's vehicle and goods and that confiscation proceedings are pending. The court accepted the petitioner's submission that, if the petitioner complies with the requirements specified under Section 129(1)(a) of the U.P. GST Act, the petitioner is entitled to release of the goods pending adjudication. The respondents conceded that if an application is filed demonstrating that the petitioner falls within Section 129(1)(a), the concerned authority will decide the application in accordance with law. The court therefore granted liberty to the petitioner to file a fresh application for release under Section 129(1)(a) and directed the authority to consider the documents filed and decide expeditiously, applying the statutory test for release.

Liberty granted to petitioner to apply for release under Section 129(1)(a); respondent authority to decide the application in accordance with law and expeditiously.

Expeditious decision by authority - compliance with statutory conditions for release - Timeframe for decision on a fresh application for release was fixed. - HELD THAT: - The court directed that upon filing of a fresh application for release under Section 129(1)(a) and submission of relevant documents, respondent no.3 shall take a decision in accordance with law. The exercise of considering and deciding the application was ordered to be completed positively within two weeks from the date of filing of the application, ensuring prompt adjudication of the claim for release while confiscation proceedings remain pending.

Respondent no.3 to decide the petitioner's application for release within two weeks of filing, in accordance with law.

Final Conclusion: The petition is disposed of by granting the petitioner liberty to file a fresh application for release of the seized goods under Section 129(1)(a) of the U.P. GST Act; respondent no.3 is directed to consider the application and decide in accordance with law within two weeks of filing; a copy of the order downloaded from the Court website shall be treated as a certified copy.

Grant of bail - parity with co-accused - pre-arrest notice / prior notice before arrest - fraudulent availing and passing of input tax credit / circular trading - non-cooperation with investigation - economic offences constitute a class apart - prima facie satisfaction for bail

Parity with co-accused - grant of bail - Parity with co-accused does not entitle the applicant to bail. - HELD THAT: - The court rejected the plea for bail on parity because the applicant, unlike some co-accused, did not cooperate with the investigation, refused to give his statement and failed to provide telephonic data and other documents. The accused's firms were alleged repeatedly to have acted at Level 1/Level 2 without any cash payment of tax, to have been involved in circular trading and to have circulated forged or fabricated documents; the applicant was described as the main offender whose companies passed on large inadmissible ITC. Given this conduct and role, parity with other accused was not available as a ground for bail. [Paras 7, 8]

Bail on the ground of parity with co-accused was refused.

Fraudulent availing and passing of input tax credit / circular trading - non-cooperation with investigation - prima facie satisfaction for bail - The nature, manner and alleged scale of fraudulent ITC claims and the applicant's non cooperation justified refusal of bail. - HELD THAT: - The court treated the alleged offence as grave in view of the structured circular trading, lack of genuine manufacturing, non existent suppliers, and large amounts of inadmissible ITC allegedly passed by companies controlled by the applicant. The accused's failure to cooperate with the investigation increased the court's apprehension of tampering with evidence or witnesses. Applying principles that economic offences with wide conspiracies and substantial public loss require a stricter approach at bail stage, the court held that prima facie satisfaction against the accused existed and bail was not warranted. [Paras 2, 3, 6, 10]

Bail was refused because the alleged large scale fraudulent ITC scheme and non cooperation created prima facie satisfaction against the applicant.

Pre-arrest notice / prior notice before arrest - grant of bail - Requirement of prior notice or adjudication before arrest is not an absolute bar to arrest in cases of alleged large scale fraudulent ITC claims. - HELD THAT: - The court considered divergent authorities including Makemytrip and the Telangana High Court decisions and observed that superior courts have recognised the seriousness of fraudulent ITC schemes and the threat they pose to implementation of the law. On the facts alleged, the court held that the contention that notice and adjudication must precede arrest was answered by the authorities and by the special circumstances of GST frauds; therefore the contention did not operate to grant bail in this case. [Paras 9]

The plea that prior notice or adjudication was a precondition to arrest was not accepted as a basis for granting bail in the present case.

Willingness to reverse blocked and unutilized credit - discharge of tax liability - The applicant's asserted willingness to reverse part of the blocked/unutilized credit did not suffice to secure bail. - HELD THAT: - Although counsel for the applicant represented readiness to reverse blocked and unutilized credit of a specified amount, the court found the alleged overall liability in the case to be much higher and noted absence of documents to substantiate manufacturing or tax payments. Given the magnitude of alleged irregularities and the applicant's failure to produce supporting evidence, the offered undertaking was insufficient to mitigate the court's concerns. [Paras 8, 9]

The offer to reverse certain blocked/unutilized credit was held inadequate to justify bail.

Final Conclusion: Considering the alleged large scale circular trading and fraudulent availing/passing of input tax credit, the applicant's non cooperation with investigation, and the potential for tampering with evidence, the application for bail was dismissed.

Refund of unutilized input tax credit on zero-rated exports - rectification of returns under the self-correction provision - interaction of FORM GSTR-3B and FORM GSTR-1 for correction of outward supplies - withholding or denial of refund for failure to furnish or reconcile returns

Refund of unutilized input tax credit on zero-rated exports - Section 54(3) and Section 54(10) of the CGST Act, 2017 - Entitlement of the appellant to refund of accumulated input tax credit for exports made without payment of integrated tax for the period October to December, 2017. - HELD THAT: - The appellant exported goods under Letter of Undertaking and claimed refund of unutilized input tax credit for the stated period. The adjudicating authority rejected the claim on the basis that FORM GSTR-3B showed zero in the column for zero-rated outward supplies. The appellate authority examined the statutory provision permitting withholding or deduction of refund where returns are not furnished or tax/interest/penalty remains unpaid and observed that the refund claim was contingent upon proper compliance and reconciliation of returns. The authority accepted that exports were made without payment of integrated tax but found that the appellant did not produce records showing reconciliation between GSTR-1 and GSTR-3B or any corrected/modified GSTR-1 for the relevant period, as envisaged by the procedure laid down in the circulars and Section 39(9). In absence of rectification/reconciliation documentation, the appellant failed to establish entitlement to the refund despite the underlying export transactions. [Paras 6, 7, 8]

Refund claim for unutilized input tax credit for October to December, 2017 is rejected for failure to rectify the error in returns and for non-production of reconciliation/corrected GSTR-1.

Rectification of returns under the self-correction provision - interaction of FORM GSTR-3B and FORM GSTR-1 for correction of outward supplies - Circular No. 7/7/2017-GST and Circular No. 26/26/2017-GST - Whether the appellant's contention that the reporting error in FORM GSTR-3B could be rectified by correct reporting in FORM GSTR-1 (as per the circulars and Section 39(9)) absolved it from requirements to produce corrected returns/reconciliation. - HELD THAT: - The appellant relied on departmental circulars permitting rectification of errors in FORM GSTR-3B by correctly reporting details in FORM GSTR-1 and on Section 39(9) which permits rectification of omissions or incorrect particulars subject to prescribed manner and payment of interest. The authority noted the circulars but required documentary proof of reconciliation or filing of corrected/modified GSTR-1 for the relevant period. The appellant did not furnish any such corrected GSTR-1 or reconciliation report demonstrating that the system had auto-adjusted the returns as per the circulars. Consequently, the appellate authority held that mere assertion of having filed GSTR-1 correctly without production of corrected returns or reconciliation reports was insufficient to invoke the rectification route and to entitle the appellant to refund. [Paras 6, 7, 8]

The claimed rectification under Section 39(9) and the cited circulars is not accepted in absence of corrected GSTR-1 filing or reconciliation documents; therefore the rectification contention does not rescue the refund claim.

Final Conclusion: The appeal is dismissed: the refund claim for unutilized input tax credit for October to December, 2017 is rejected because the appellant failed to rectify the misclassification in FORM GSTR-3B by producing corrected/modified GSTR-1 or reconciliation evidence as required by the applicable provisions and departmental circulars.

Valid e-way bill and its physical availability at time of interception - detention of goods under Section 129 for non furnishing of prescribed documents - technical/clerical error in Part B (vehicle details) of the e way bill - Explanation (2) to Rule 138(3) - effect of non furnishing of Part B on validity of e way bill - penalty under Section 125 for failure to produce/document required particulars - absence of tax evasion as determinative of enforcement action

Valid e-way bill and its physical availability at time of interception - detention of goods under Section 129 for non furnishing of prescribed documents - Explanation (2) to Rule 138(3) - effect of non furnishing of Part B on validity of e way bill - technical/clerical error in Part B (vehicle details) of the e way bill - absence of tax evasion as determinative of enforcement action - Whether detention of the goods and conveyance was justified because a valid e way bill was not available with the vehicle at the time of interception. - HELD THAT: - The adjudicatory finding records that an e way bill (No. 741043010569) was generated at 04:37 PM prior to commencement of movement and accompanying documents (tax invoice, consignment note/packing list) were present. At the time of interception (05:18 PM) the e way bill on the portal showed the vehicle number not matching the intercepted vehicle; the vehicle details were updated on the portal at 05:28 PM. The authority noted that non furnishing of Part B renders an e way bill not a valid document under Explanation (2) to Rule 138(3) except in limited intra State movement. However, on the material before the Commissioner (Appeals) the discrepancy arose from a last minute change of vehicle by the transporter and was rectified soon after detection. There is no finding of tax evasion; all other statutory particulars were in order and the e way bill had been generated before dispatch. Taking these facts together, the detention and the consequential imposition of tax and 100% penalty were found not to be warranted and the impugned order was set aside. [Paras 6, 7, 9, 10, 11]

Impugned detention and demand set aside and appeal allowed on merits insofar as detention and the demand with 100% penalty are concerned.

Penalty under Section 125 for failure to produce/document required particulars - technical/clerical error in Part B (vehicle details) of the e way bill - Whether the appellant is nevertheless liable to any penalty for the admitted error in not updating the vehicle number prior to interception. - HELD THAT: - The appellant admitted that the vehicle number recorded initially did not correspond to the vehicle actually carrying the goods due to an unanticipated change by the transporter and that the vehicle details were corrected only after the discrepancy came to notice. The Commissioner (Appeals) treated the omission as an admitted mistake in compliance formalities and not as evasion, but concluded that liability to a penalty under Section 125 arises from the failure to have correct particulars with the conveyance at the time of interception. Applying this view, the Commissioner (Appeals) exercised discretion to substitute the levy imposed by the adjudicating authority with a reduced, specific monetary penalty. [Paras 10, 11]

A penalty under Section 125 is imposed on the appellant (reduced to Rs. 15,000) for the admitted failure to have correct vehicle details at the time of interception.

Final Conclusion: The Commissioner (Appeals) allowed the appeal, set aside the adjudicating authority's order of detention and the demand with 100% penalty imposed thereunder, but imposed a reduced penalty of Rs. 15,000 under Section 125 for the admitted omission in vehicle details.

Transaction value - valuation of supply - determination of value on the basis of MRP - confiscation of goods and conveyance under confiscation provisions

Transaction value - determination of value on the basis of MRP - valuation of supply - Whether the adjudicating authority was justified in treating the detained goods as undervalued by adopting MRP as the taxable value and in sustaining consequent tax, penalty and confiscation. - HELD THAT: - The adjudicating authority proceeded on the premise that the goods were significantly undervalued because the invoice value was lower than the MRP and therefore arrived at a higher taxable value based on MRP. Under the GST valuation framework the taxable value is the transaction value, i.e. the price actually paid or payable where supplier and recipient are not related and price is the sole consideration; the CGST Act and Rules provide specific provisions for valuation where deviations are necessitated. In the present case the adjudicating authority did not place on record any material to demonstrate that the invoice value was not the true transaction value, nor was any inquiry undertaken to establish that the supplier and recipient were related or that the price was not the sole consideration. There is no provision in GST law mandating determination of value on the basis of MRP. Since the findings of undervaluation were made solely on the basis of MRP without any substantiation or application of valuation rules, the adjudicating authority's reliance on MRP to compute tax, penalty and confiscation was contrary to the valuation principles under the CGST Act. For these reasons the impugned order lacked legal basis and was not sustainable. [Paras 6, 8, 9]

The impugned order is set aside and the appeal is allowed.

Final Conclusion: The appellate authority held that taxable value must be the transaction value and that the adjudicating authority was not justified in determining value on the basis of MRP without any material or inquiry; the impugned order imposing tax, penalty and confiscation was set aside and the appeal allowed.

Review petition - fresh evidence in review - challenge to factual finding - availability of material at hearing - appellate remedy

Review petition - fresh evidence in review - availability of material at hearing - Whether the Review Petition seeking reconsideration of the judgment dated 29.09.2020 could be entertained on the basis of material concerning the date of posting of assessment orders on the Department's web portal which was available prior to final hearing. - HELD THAT: - The court noted that the respondents' statement relied upon in the original judgment was filed on 19.08.2020, the petitioner had filed a reply, and the final hearing occurred on 29.09.2020. The contention that the dates shown in the respondents' statement did not reflect the actual dates of posting on the web portal depended on material that was available to the petitioner before the final hearing but was not produced at that stage. The court held that raising such factual material for the first time in a Review Petition is impermissible. The appropriate course for the petitioner is to place any such material before the appellate court to challenge the factual findings of the impugned judgment rather than seek review on that basis.

Review Petition dismissed; no reason to review the judgment dated 29.09.2020.

Final Conclusion: The Review Petition is dismissed for seeking to introduce factual material available before final hearing; the petitioner may approach the appellate court with such material to challenge the impugned judgment.

Taxation of international shipping income - Article 8 of India-Singapore DTAA - Article 24 (Limitation of Benefits) of India-Singapore DTAA - accrual versus remittance basis of taxation - Doctrine of treaty interpretation (Vienna Convention Article 31) - chargeability under Section 172/44B of the Income tax Act, 1961 - principle of consistency / promissory estoppel in tax proceedings

Taxation of international shipping income - Article 8 of India-Singapore DTAA - accrual versus remittance basis of taxation - Whether the assessee's international shipping income is taxable only in Singapore under Article 8 of the India-Singapore DTAA - HELD THAT: - The Tribunal held that Article 8 confers an exclusive right of taxation on the country of residence for profits from operation of ships in international traffic and is an enabling provision rather than an exemption clause. The assessee, a tax resident of Singapore, therefore enjoys taxation of its global shipping income only in Singapore on an accrual basis. The Tribunal applied the ordinary meaning/contextual interpretation of the treaty (per Article 31 of the Vienna Convention) and observed that by entering into the DTAA India has ceded its right to tax such shipping income. On these findings the Tribunal concluded that shipping income earned from Indian operations by the Singapore resident is taxable only in Singapore and not in India, and directed deletion of the additions made by the AO under domestic provisions. [Paras 13, 14, 20, 21]

Article 8 applies: the shipping income of the Singapore resident is taxable only in Singapore (on accrual basis) and not taxable in India; additions to tax are to be deleted.

Article 24 (Limitation of Benefits) of India-Singapore DTAA - accrual versus remittance basis of taxation - chargeability under Section 172/44B of the Income tax Act, 1961 - Whether Article 24 of the India-Singapore DTAA can be invoked to deny treaty benefit and permit taxation in India of the shipping income - HELD THAT: - The Tribunal found that Article 24 operates only where the income is exempt or taxed at a reduced rate in one Contracting State and, under the laws of the other Contracting State, is taxable only by reference to amounts remitted or received there. Two cumulative conditions must be satisfied: (i) the income must be exempt or taxed at reduced rate under the DTAA in the source State and (ii) the resident state's law must tax that income on a remittance/receipt basis. On the facts, Article 8 does not constitute an exemption in India but an exclusive allocation of taxing rights to Singapore; moreover Singapore taxes the shipping income on an accrual basis (as confirmed by IRAS). Therefore both conditions for Article 24 are not satisfied and Article 24 cannot be invoked to deny Article 8 benefits or to justify taxation in India under domestic law (Section 172/44B). The AO's reliance on Singapore's Section 13F to invoke Article 24 was rejected. [Paras 15, 16, 17]

Article 24 is not applicable on the facts; it cannot be invoked to deny the Article 8 benefit or to tax the shipping income in India.

Principle of consistency / promissory estoppel in tax proceedings - Doctrine of treaty interpretation (Vienna Convention Article 31) - Whether the Tribunal may entertain the Revenue's preliminary objection on its jurisdiction (raised before the Bench but not pleaded by the Revenue in the assessee's appeal) and whether the Assessing Officer could depart from the earlier DIT relief certificate without change of fact or law - HELD THAT: - The Tribunal declined to entertain the Revenue's preliminary contention on the Bench's jurisdiction because the objection was not raised in the grounds filed by the assessee and the Revenue had not filed a separate appeal or cross objection on that point; accordingly the Tribunal refused to decide an issue not before it. Separately, the Tribunal noted that the AO had issued DIT relief certificates earlier and, absent any change in fact or law, consistency (and promissory estoppel principles) militated against taking a contrary position in the assessment; the AO's later contrary approach was criticised. [Paras 12, 18]

Revenue's preliminary jurisdictional objection not entertained; the AO could not take a contrary view to an earlier DIT relief certificate without change in fact or law.

Final Conclusion: The assessee's appeal is allowed. The Tribunal held that Article 8 of the India-Singapore DTAA applies so that the international shipping income of the Singapore resident is taxable only in Singapore (on accrual basis); Article 24 cannot be invoked on the facts to deny treaty benefit or justify taxation in India, and the additions made under domestic law are to be deleted. The Revenue's preliminary jurisdictional objection was not entertained.

Deduction for provision for leave encashment - Section 43B(f) restriction: deduction only on actual payment - Accounting Standard 15 and actuarial valuation vis-a -vis tax deduction - Legislative amendment and its consistency with original object of Section 43B

Deduction for provision for leave encashment - Section 43B(f) restriction: deduction only on actual payment - Deduction in respect of provision for leave encashment for the assessment year 2007-08 is not allowable unless the amount is actually paid in that year in terms of Section 43B(f). - HELD THAT: - The Court applied the appellate precedent cited from the Union of India v. Exide Industries Limited proceeding and concluded that the statutory amendment embodied in clause (f) of Section 43B operates to restrict tax deduction for leave encashment to amounts actually paid in the relevant year. The legislative measure was treated as a valid exercise of power to limit deductions and to alter the tax consequences of provisions shown in accounts; consequently, a provision, however determined or quantified, does not itself entitle the assessee to a deduction for tax purposes unless payment has been made in the relevant year. The appellate decision was followed and the substantial questions challenging the Tribunal's conclusion on this point were answered against the assessee.

Tribunal's conclusion that deduction for provision for leave encashment is not allowable unless actually paid is affirmed; appeal dismissed on this ground.

Accounting Standard 15 and actuarial valuation vis-a -vis tax deduction - Accounting Standard 15 and actuarial valuation do not, by themselves, create entitlement to a tax deduction for provision for leave encashment in the absence of actual payment. - HELD THAT: - The Court rejected the contention that scientific actuarial valuation or compliance with Accounting Standard 15 compels allowance of the deduction for tax purposes. The statutory provision governs tax deductibility and overrides accounting treatment; therefore, recognition of a liability in books pursuant to AS-15 or a government notification does not displace the requirement under Section 43B(f) that the expenditure be actually paid to be deductible. The Tribunal's disallowance on this legal premise was held to be correct.

Contentions based on AS-15 and actuarial valuation are not sufficient to secure a tax deduction where payment has not been made; such contentions are rejected.

Final Conclusion: The tax case appeal is dismissed and the substantial questions of law are answered against the assessee: provisions for leave encashment, though reflected in accounts by actuarial valuation and AS-15, are not deductible for AY 2007-08 unless actually paid in terms of Section 43B(f).

Disallowance under Section 14A read with Rule 8D - limitation of disallowance to the amount of exempt income - precedential effect of higher court decisions on identical questions

Disallowance under Section 14A read with Rule 8D - limitation of disallowance to the amount of exempt income - Whether the Tribunal was incorrect in restricting the disallowance under Section 14A read with Rule 8D to the extent of the exempt income of Rs.50,000/- - HELD THAT: - The High Court observed that the question raised by the Revenue had been authoritatively considered in earlier decisions of this Court and the Supreme Court as well as other High Courts. Having regard to those precedents, the Court found the proposition that the disallowance under Section 14A read with Rule 8D can be restricted to the amount of exempt income to be no longer res integra. In view of the binding effect of those decisions on the identical question, there was no merit in the Revenue's challenge to the Tribunal's limitation of the disallowance to the exempt income figure.

Appeals dismissed; the Tribunal's restriction of the disallowance to the amount of exempt income is upheld in view of existing precedents.

Final Conclusion: Revenue's appeals under Section 260A challenging the Tribunal's restriction of the Section 14A/Rule 8D disallowance to the exempt income (A.Y.2013-14) are dismissed; the Tribunal's orders are sustained in light of binding precedents.

Reopening of assessment under section 147/148 - Applicability of section 153A/153C to seized documents - Disclosure under section 132(4) - Statement recorded under section 131 as basis for reassessment - Notwithstanding clause and priority of section 153C

Reopening of assessment under section 147/148 - Applicability of section 153A/153C to seized documents - Disclosure under section 132(4) - Statement recorded under section 131 as basis for reassessment - Validity of reassessment proceedings initiated by issue of notice under section 148 in view of seized documents and whether proceedings should have been under section 153C/153A - HELD THAT: - The Tribunal upheld the reopening. The assessee had made a voluntary disclosure by letter under section 132(4) and was subsequently summoned and her statement recorded under section 131. There was no material on record to show that the investigation wing had requisitioned or seized books, documents or assets under section 132/132A so as to invoke the scheme of sections 153A/153C. The AO formed belief of escapement of income because the disclosure made by the assessee was not reflected in the return for the year under consideration; accordingly notice under section 148 was sustainable. The Tribunal further noted that the assessee had not objected to reopening before the AO and had participated in the proceedings, and that the contention that proceedings should have been under section 153C was not tenable on the facts where the documents were not shown to have been requisitioned/seized for initiating 153C proceedings. On these bases grounds 1-6 and 8 challenging reopening were dismissed. [Paras 6]

Reopening notice under section 148 was valid and grounds challenging the reassessment proceedings (grounds 1-6 and 8) are dismissed.

Addition of unexplained income - Addition of Rs. 1 crore as unexplained income was not adjudicated and is remanded to the CIT(A) - HELD THAT: - The Tribunal observed that the assessee had challenged the addition before the CIT(A) but that the CIT(A) did not decide the substantive issue on merits. Consequently, the Tribunal considered it appropriate to remit the matter to the CIT(A) for fresh adjudication in accordance with law. [Paras 7]

Ground challenging the addition (ground 7) is allowed for the limited purpose of remand and the issue is sent back to the CIT(A) for consideration.

Final Conclusion: The appeal is partly allowed: the reassessment proceedings under section 147/148 are upheld and grounds 1-6 and 8 are dismissed, while the addition of Rs. 1 crore is remitted to the CIT(A) for fresh consideration.

Transfer pricing adjustment - Transactional Net Margin Method (TNMM) - operating profit as profit level indicator - comparability - application of turnover filter - working capital adjustment in transfer pricing comparability - treatment of provision for doubtful debts as operating expenditure - additional depreciation under section 32(1)(iia) - disallowance for failure to deduct tax at source under section 40(a)(i) - remand for fresh examination of MAT credit and interest under section 234C

Transfer pricing adjustment - comparability - application of turnover filter - Exclusion of four large-turnover comparables from the TPO's list by applying the turnover filter. - HELD THAT: - The Tribunal followed earlier coordinate-bench authority and excluded four comparables whose turnovers substantially exceeded the assessee's turnover. The Tribunal accepted the principle that turnover is a relevant criterion in determining comparability for transfer-pricing analysis and, in circumstances where two views exist, applied the view favourable to the assessee as reflected in the coordinate-bench precedents. Having found that the four companies failed the turnover filter, they were directed to be excluded from the comparable set. [Paras 11]

Four specified comparables are excluded from the comparable set on the basis of turnover.

Treatment of provision for doubtful debts as operating expenditure - operating profit as profit level indicator - Provision for doubtful debts is to be treated as an operating expense for computation of the profit level indicator. - HELD THAT: - Relying on coordinate-bench precedents (including Rolls-Royce and Brocade), the Tribunal held that provisions for doubtful debts are made in the ordinary course of business governed by prudence and affect operating results; therefore they must be included as operating expenditure when computing the PLI. The Tribunal directed the AO/TPO to rework PLI treating provision for doubtful debts as operating in nature, noting that comparable companies must be treated on the same basis. [Paras 16]

Provision for doubtful debts shall be considered part of operating expenditure and the PLI reworked accordingly.

Working capital adjustment in transfer pricing comparability - Transactional Net Margin Method (TNMM) - Working capital adjustment allowed; the DRP's rejection of the working capital adjustment is set aside. - HELD THAT: - Applying Rule 10B and OECD guidance and following coordinate-bench authority, the Tribunal held that differences in working capital materially affect margins and that reasonably accurate adjustments improve reliability of comparables. The Tribunal rejected the DRP's reasoning that balance-sheet date figures or absence of daily balances preclude adjustment, noting precedents that permit use of opening and closing or average figures and that the exercise involves estimation. Consequently the AO/TPO was directed to allow the working capital adjustment as worked out by the TPO/assessee. [Paras 20]

Working capital adjustment is to be allowed and the DRP's direction disallowing it is set aside.

Risk adjustment in transfer pricing - Risk adjustment claim not adjudicated by the Tribunal. - HELD THAT: - The Tribunal noted that the assessee had not objected before the DRP to the denial of risk adjustment. In absence of such a challenge at the DRP stage, the Tribunal declined to adjudicate the question on merit.

Claim for risk adjustment not adjudicated.

Additional depreciation under section 32(1)(iia) - manufacture or production of an article or thing - Assessee not entitled to additional depreciation under section 32(1)(iia) because software development does not amount to "manufacture or production of an article or thing." - HELD THAT: - The Tribunal examined the statutory requirement that additional depreciation under section 32(1)(iia) is available only to an assessee engaged in manufacture or production of an article or thing. Applying the statutory definition of 'manufacture' and Supreme Court authority on the scope of 'manufacture/production', and noting subsequent legislative references that distinguish software development from manufacture, the Tribunal agreed with the DRP that development of computer software does not satisfy the condition of manufacture or production. Earlier decisions allowing similar claims arose under different historical provisions and do not alter the present statutory test. Consequently the claim for additional depreciation on computers was rejected. [Paras 34]

Claim for additional depreciation under section 32(1)(iia) is disallowed.

Disallowance for failure to deduct tax at source under section 40(a)(i) - Ground challenging disallowance under section 40(a)(i) in respect of certain payments is not admitted before the Tribunal. - HELD THAT: - Although the DRP had directed disallowance of certain payments for non-deduction of tax at source, the assessing officer did not include those additions in the final assessment order; they were later made by a separate rectification under section 154. Because the contested addition did not arise from the impugned final assessment order under appeal, the Tribunal declined to admit the ground in this appeal. [Paras 37]

Ground challenging the disallowance under section 40(a)(i) is not admitted.

Remand for fresh examination of MAT credit and interest under section 234C - MAT credit and interest under section 234C are remitted to the Assessing Officer for fresh examination in accordance with law. - HELD THAT: - The Tribunal did not decide these two corporate issues on merits and instead restored them to the file of the AO for reconsideration and determination in accordance with law. [Paras 38]

MAT credit and interest under section 234C remanded to the AO for fresh examination.

Final Conclusion: The appeal is partly allowed: transfer-pricing reliefs were granted in part by excluding four large-turnover comparables, treating provisions for doubtful debts as operating expenditure, and allowing the working capital adjustment; the claim for additional depreciation under section 32(1)(iia) was rejected; the challenge to the 40(a)(i) disallowance was not admitted; and issues of MAT credit and interest under section 234C were remanded to the Assessing Officer for fresh consideration.

Reopening of assessment under income-tax law - reason to believe test for reassessment - nexus between material and escapement of income - application of mind by Assessing Officer - borrowed satisfaction - admission of additional grounds/evidence - addition under section 68 as unexplained credit - quashing reassessment for lack of reason to believe

Reopening of assessment under income-tax law - reason to believe test for reassessment - nexus between material and escapement of income - application of mind by Assessing Officer - borrowed satisfaction - Validity of reopening assessment under section 147/148 for AY 2009-10 - HELD THAT: - The Tribunal applied the fourfold test derived from Rajesh Jhaveri-existence of material, nexus between material and escapement, application of mind by the AO to such material, and an inference that income has escaped. The AO relied on an STR showing a Rs.4 crore RTGS credit-route through third-party accounts, alleged directorship/position of the assessee in related companies, non-filing of balance-sheet and inability to explain sources in response to summons. The Tribunal found that (a) the AO had specific information (STR) about fund transfers, (b) however the AO's reasons mis-stated or ignored material facts available on record: the assessee had in fact disclosed the sale receipt and indexed capital loss in a revised return filed on 29/9/2009; directorship dates relied upon by the AO were factually incorrect; and non-filing of a balance-sheet was not a legal ground where the assessee is an individual not required to maintain one. The Tribunal concluded the AO failed to demonstrate a live nexus between the material and escapement of income and did not apply independent mind to the available material, rendering the satisfaction vitiated and amounting to borrowed/incorrect satisfaction. For these reasons the reopening was quashed. [Paras 24, 26, 27, 28, 30]

Reopening under section 147/148 quashed for AY 2009-10 for lack of valid reason to believe; grounds challenging reopening allowed.

Addition under section 68 as unexplained credit - admission of additional grounds/evidence - Correctness of addition of Rs.4 crores as unexplained credit under section 68 (merits) - HELD THAT: - Although the primary relief granted was quashing of reassessment, the Tribunal considered merits for completeness. The assessee produced documentary evidence: share sale agreement (1/4/2008), acknowledgement of delivery of share certificates (17/12/2008), annual returns and statutory records showing shareholding and transfers, banking trail and sale deed showing realization of Rs.4 crores by the transferor company and subsequent transfers through related companies into the buyer's account and then to the assessee. The buyer's control over the target company and the source-of-source (receipt by the company, transfers to Willey Agrotech and thence to the buyer) were supported by company records and banking documents; the buyer's later contrary statements were countered by contemporaneous corporate acts (sale deed, cheque instruments, assignment of receivables) and cross FIRs. On the totality, the Tribunal found the assessee had satisfactorily explained identity, genuineness and creditworthiness of the payor and traced source of funds through banking and corporate records. Consequently the addition u/s 68 was not sustainable and was deleted. [Paras 32, 33, 34, 35]

Addition of Rs.4 crores under section 68 set aside; grounds on merits allowed.

Final Conclusion: The appeal is partly allowed: the reassessment initiated under section 147/148 for AY 2009-10 is quashed for want of valid 'reason to believe', and, on merits, the addition under section 68 is deleted.

Special audit under section 142(2A) - Extension of time under proviso to section 142(2C) - Rejection of books under section 145(3) - Estimation of income by applying net profit rate on disclosed and undisclosed turnover - Use of peak bank balance for addition as unexplained investment - Comparative/precedential assessment of net profit rates

Special audit under section 142(2A) - Extension of time under proviso to section 142(2C) - Validity of reference to special audit and the extension of time for submission of special audit report leading to a timely assessment. - HELD THAT: - The Tribunal upheld the Assessing Officer's decision to refer the case for special audit having regard to complexity and unrecorded transactions, and accepted that the Assessing Officer lawfully extended the period for submission of the special audit report under the proviso to Section 142(2C). The power to extend up to 180 days vests with the Assessing Officer and may be exercised suo motu; the special audit report was accepted and the assessment was completed within two months of receipt of that report. On these facts the assessment dated 07.07.2014 was not barred by limitation. [Paras 11, 12, 13]

Reference to special audit and the extension for submission of the special audit report were valid; Ground No.1 of the assessee's appeal is dismissed.

Estimation of income by applying net profit rate on disclosed and undisclosed turnover - Comparative/precedential assessment of net profit rates - Rejection of books under section 145(3) - Appropriate net profit rates to be applied on disclosed and undisclosed turnover for estimation of income. - HELD THAT: - The Tribunal found that the Assessing Officer had not pointed to specific defects in the regular books (apart from undisclosed bank accounts) sufficient to reject the book results; consequently the regular book net profit (0.29% on disclosed turnover) should be accepted. For the undisclosed turnover, the assessee calculated net profit at 1.33% by adding the finance cost element to the book net profit, and the Tribunal, applying its earlier reasoning in a coordinate Bench decision (Shri Sitaram Agrawal), held that the net profit offered by the assessee on undisclosed turnover was acceptable. Having regard to comparable accepted net profit percentages in the assessee's own succeeding year and of similar concerns, the Tribunal allowed the assessee's ground permitting net profit of 0.29% on disclosed turnover and 1.33% on undisclosed turnover (effectively directing application of 1% on consolidated turnover as adopted by the CIT(A) but ultimately accepting the assessee's offered treatment), thus allowing the assessee's challenge and dismissing the revenue's challenge to the relief granted by the CIT(A). [Paras 20, 21, 24]

Ground No.2 of the assessee's appeal is allowed and Ground No.1 of the Revenue's appeal is dismissed; the net profit rates as accepted by the Tribunal are to be applied.

Use of peak bank balance for addition as unexplained investment - Rejection of books under section 145(3) - Whether addition for unexplained investment based on a fraction of unrecorded turnover or on peak bank balances is justified where cash, stock and offered undisclosed profits in regular books cover the peak. - HELD THAT: - The Assessing Officer computed unexplained investment by applying a ratio of funds employed to turnover to unrecorded turnover; the CIT(A) restricted the addition to the peak balance in undisclosed bank accounts. The Tribunal, relying on its earlier decision in Shri Sitaram Agrawal and considering the facts on 27.10.2010, held that total cash and stock in the regular books exceeded the peak undisclosed bank balances, and that undisclosed profits already offered also form part of the funds covering the peak. Given that the regular books showed sufficient cash and stock to meet the peak balances, there was no justification for sustaining an addition for unexplained investment; consequently the addition sustained by the CIT(A) was set aside. [Paras 26, 31, 33]

Ground No.3 of the assessee's appeal is allowed and Ground No.2 of the Revenue's appeal is dismissed; addition for unexplained investment/peak balance is deleted.

Final Conclusion: The Tribunal dismissed the assessee's challenge to the special audit and time-extension, allowed the assessee's challenge on computation of taxable income by accepting the net profit treatment for disclosed and undisclosed turnover, deleted the addition for unexplained investment based on peak bank balances, and accordingly partly allowed the assessee's appeal (ITA No.284/Ind/2018) and dismissed the revenue's appeal (ITA No.334/Ind/2018).

Jurisdiction under section 153C of the Income tax Act, 1961 - Year of search determined by date of recording satisfaction/receipt of seized material - Block assessment period under section 153A read with section 153C - Validity of regular assessment where assessment year falls within block period

Jurisdiction under section 153C of the Income tax Act, 1961 - Year of search determined by date of recording satisfaction/receipt of seized material - Block assessment period under section 153A read with section 153C - Validity of regular assessment where assessment year falls within block period - Assessment for AY 2010-11 should have been framed under section 153A read with section 153C as it formed part of the block of six assessment years determined with reference to the date of recording satisfaction (21/12/2010) and not as a regular assessment under section 143(3)/144. - HELD THAT: - The Assessing Officer recorded satisfaction for invoking section 153C on 21/12/2010 and issued notices the same day. The Tribunal in connected proceedings observed that the relevant seized material was handed over or deemed received in Financial Year 2010-11 (relevant to AY 2011-12), and directed limited verification; on giving effect the Assessing Officer admitted that AY 2004-05 fell outside the block and that the relevant date was in FY 2010-11. Applying the principle that for a person other than the searched person the reference date for the 'year of search' is the date of recording satisfaction/receipt of seized material, AY 2010-11 falls within the six year block (2005-06 to 2010-11). Reliance on authoritative decisions treating the date of satisfaction/receipt as the determinative date supports that assessments for years within that block must be completed under section 153A read with section 153C. Since the impugned assessment for AY 2010-11 was completed under the regular provisions, it suffers from jurisdictional infirmity and is liable to be quashed. [Paras 6, 8, 9, 11]

Assessment order for AY 2010-11 is quashed as the year forms part of the block period and should have been assessed under section 153A read with section 153C.

Final Conclusion: The assessee's appeal is allowed: the assessment for AY 2010-11 is quashed because AY 2010-11 falls within the six year block determined with reference to the satisfaction recorded on 21/12/2010 (FY 2010-11 relevant to AY 2011-12), and therefore ought to have been completed under section 153A read with section 153C; consequential grounds on merits are rendered academic.

Denial of exemption under section 11 - application of section 13(1)(c) read with section 13(3) - reasonableness of rent determined by comparison with market/comparables - onus on assessing officer to controvert contemporaneous comparables and past assessments - use of trust property for charitable purpose and relevance to alleged benefit

Denial of exemption under section 11 - application of section 13(1)(c) read with section 13(3) - reasonableness of rent determined by comparison with market/comparables - Whether the rent of Rs. 69 lacs paid to a trustee was unreasonable and therefore liable to be treated as benefit to a specified person denying exemption under section 11 by invoking section 13(1)(c) read with section 13(3). - HELD THAT: - The assessee established the reasonableness of the rent by adducing contemporaneous comparables in the vicinity showing substantially higher per sq. ft. rates than the rate paid to the trustee (Rs. 10.53 per sq. ft. per month). The assessing officer recorded a conclusion that the rent was on the higher side but did not address or rebut the comparables or otherwise furnish cogent material to justify that conclusion. The CIT(A) upheld the addition on an alternative factual premise - that the trust's acquisition of other land implied an intent to benefit the lessor - but that reasoning ignored the uncontroverted material demonstrating that both the leased and owned lands were actively used for the trust's educational purposes. The Tribunal noted earlier favourable findings in identical issues for AY 2003-04 and 2004-05 and absence of similar additions in subsequent scrutiny assessments, and observed that the Revenue did not point to distinguishing facts for the impugned year. In these circumstances the record did not support a finding that the payment conferred an indirect benefit on a person specified in section 13(3), and the denial of exemption was not sustainable. [Paras 15, 16, 17]

Addition denying exemption under section 11 by invoking section 13(1)(c) read with section 13(3) is deleted and the assessee's appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, directed deletion of the denial of exemption under section 11 insofar as the rent paid to the trustee was concerned, and restored the assessee's claim for the assessment year 2015 - 16.

Condonation of delay - treatment of bank deposits as unexplained income - presumption of source as business turnover - burden of proof and failure to produce books of account - judicial discretion to quantify unaccounted income

Condonation of delay - Whether the delay of 544 days in filing the appeal before the Tribunal should be condoned. - HELD THAT: - The assessee filed an affidavit explaining that the order of the Commissioner was handed over to an employee of the Chartered Accountant and was misplaced, and that the assessee had relied on the Authorized Representative to take action. The explanation was supported by affidavits from the employee and the Chartered Accountant. The Tribunal found the delay to be not attributable to the assessee and, in the interest of justice, exercised its discretion to condone the delay and admit the appeal for adjudication on merits. [Paras 3]

Delay of 544 days condoned and appeal admitted for hearing on merits.

Treatment of bank deposits as unexplained income - presumption of source as business turnover - burden of proof and failure to produce books of account - judicial discretion to quantify unaccounted income - Whether the cash deposits of Rs. 12,83,408/- in the assessee's bank account are assessable as unexplained income and, if so, the appropriate quantification of such addition. - HELD THAT: - The assessee claimed the deposits were sale proceeds of the partnership firm M/s. Shri Shakthi Wines. Both the assessee and the firm had not maintained proper books of account, and the assessee failed to reconcile the bank account or produce bank statements or other cogent evidence before the AO, the CIT(A) and the Tribunal. The AO and CIT(A) treated the deposits as unexplained and made an addition. The Tribunal accepted that the assessee had no substantial source of income other than the partnership business and, given the Revenue's failure to obtain bank statements and the absence of cogent documentary proof, considered it inappropriate to treat the entire deposit as unaccounted income. Exercising judicial discretion, the Tribunal held that a reasonable proportion (17%) of the undisclosed turnover represented the assessee's unaccounted income and accordingly sustained an addition on that basis to meet the ends of justice. [Paras 8]

Addition reduced and sustained at 17% of the undisclosed turnover; addition of Rs. 2,18,000/- treated as the assessee's unaccounted income.

Final Conclusion: Delay in filing the appeal was condoned and the appeal admitted; on merits the Tribunal declined to uphold the entire addition of bank deposits as unexplained income, holding that in view of the assessee's sole business source, the Revenue's procedural lapse and absence of cogent proof, 17% of the undisclosed turnover (amounting to the addition sustained) fairly represents the assessee's unaccounted income; appeal partly allowed.

Condonation of delay - admission of additional evidence - remand for fresh adjudication - dismissal as not pressed

Dismissal as not pressed - Ground no.1 challenging the validity of reopening under sections 147/148 was not pressed by the assessee and dismissed as not pressed. - HELD THAT: - The assessee's authorised representative expressly stated that ground no.1 was not pressed at the hearing and the Department raised no objection to treating the ground as not pressed. The Tribunal recorded this concession and declined to adjudicate the substantive validity of the reopening because the point was not pursued by the appellant. [Paras 2]

Ground no.1 is dismissed as not pressed.

Condonation of delay - natural justice - Whether the delay of 20 days in filing the appeal before the CIT(A) should be condoned. - HELD THAT: - The assessee, a 72 year old widow living alone, attributed the delay to infirmity and inability to hand over documents to her authorised representative. The CIT(A) had refused condonation, observing that the assessee had a qualified authorised representative. The Tribunal, having considered the personal circumstances and that the explanations were not controverted by the Revenue, found the reasons sufficient in the interest of justice and exercised its discretion to condone the 20 day delay, observing that the appellant's age and living circumstances warranted relief. [Paras 3, 5]

Delay of 20 days in filing the appeal before the CIT(A) is condoned.

Admission of additional evidence - remand for fresh adjudication - Admissibility of additional documents (registered development agreement, bank statements, and affidavit) and the consequent course to be adopted. - HELD THAT: - The assessee produced a registered development agreement showing receipt of consideration and bank statements indicating prior withdrawals consistent with the asserted receipts. The Tribunal found these documents to have existed at the time of assessment, not susceptible to manipulation, and directly relevant to the source of the deposits which formed the basis of the additions. In the interest of justice the Tribunal admitted the additional evidence and, because the Assessing Officer had not considered these documents, set aside the matter to the AO for fresh adjudication after verification and after affording the assessee an opportunity of hearing. As a result, grounds challenging the additions and interest were not finally adjudicated on merits but remitted for fresh examination. [Paras 6]

Additional evidence is admitted; matter is remanded to the Assessing Officer for fresh adjudication after verification and hearing, and the related grounds are set aside.

Final Conclusion: Ground No.1 dismissed as not pressed; delay of 20 days before the CIT(A) condoned; additional evidence (registered development agreement, bank statements, affidavit) admitted; case remitted to the Assessing Officer for fresh adjudication after verification and hearing; appeal allowed for statistical purposes.

Natural justice - right to fair hearing - acceptance or non-acceptance of enquiry report - enquiry officer's report - quashing and remand for fresh decision - Customs Brokers Licensing Regulations, 2018

Natural justice - right to fair hearing - acceptance or non-acceptance of enquiry report - enquiry officer's report - Ext.P9 order revoking the petitioner's customs broker licence and imposing penalty was passed without issuing a notice indicating non-acceptance of the Enquiry Officer's report and thereby violated principles of natural justice. - HELD THAT: - The Court found that the Enquiry Officer submitted a report in favour of the petitioner and that the subsequent notice issued to the petitioner did not clearly indicate that the respondent proposed to reject the Enquiry Officer's findings. The absence of a specific notice informing the petitioner that the respondent did not accept the Enquiry Report deprived the petitioner of the opportunity to know the proposed course of action and to respond to reasons for non-acceptance. Given that the notice did not communicate any intention to disagree with the Enquiry Officer's conclusions, the petitioner was justified in assuming that the favourable report would be accepted. The impugned order therefore took the petitioner by surprise and was held to be in gross violation of the rules of natural justice. The Court directed that a fresh order be passed only after issuing a notice stating reasons for non-acceptance of the Enquiry Report, affording the petitioner an opportunity to reply and a personal hearing, and completing the fresh decision within the prescribed timeframe.

Ext.P9 is quashed; respondent directed to issue a fresh notice stating reasons for non-acceptance of the Enquiry Officer's report, afford the petitioner an opportunity to reply and personal hearing, and pass a fresh order within three months.

Final Conclusion: The revocation order and penalty contained in Ext.P9 are quashed for breach of natural justice; the respondent must issue a reasoned notice of non-acceptance of the Enquiry Officer's report, grant opportunity to reply and for personal hearing, and pass a fresh order within three months.

Seizure under section 110(1) of the Customs Act - Reason to believe for confiscation - Confiscation under section 113(i) of the Customs Act - Transaction value and Export Valuation Rules - Stage-wise application of valuation provisions (seizure v. confiscation) - Inventory / panchnama and local market survey as material for forming belief

Seizure under section 110(1) of the Customs Act - Reason to believe for confiscation - Inventory / panchnama and local market survey as material for forming belief - Whether the proper officer had 'reason to believe' to seize the goods under section 110(1) of the Customs Act. - HELD THAT: - The Tribunal held that the proper officer had material on record - panchnama recording shortage, samples taken and a local market enquiry indicating gross overvaluation - which furnished a reason to believe that the goods may be liable to confiscation under section 113(i). The Court emphasised that the threshold at the seizure stage is formation of a reasoned belief based on direct or circumstantial evidence and not proof of eventual confiscation; therefore seizure under section 110(1) was permissible where such material existed. The Tribunal rejected the Commissioner (Appeals)'s approach of treating the stage of seizure as equivalent to adjudication of confiscation, noting that determination of actual confiscability is for proceedings under section 124 after issuance of show-cause notice and opportunity to the exporter. [Paras 13, 19, 29, 30, 35]

Seizure under section 110(1) was justified; the Commissioner (Appeals) committed error in setting aside the seizure memo.

Transaction value and Export Valuation Rules - Stage-wise application of valuation provisions (seizure v. confiscation) - Whether the provisions of section 14 and the Export Valuation Rules could be applied at the seizure stage to discard declared transaction value. - HELD THAT: - The Tribunal held that assessment of transaction value under section 14 and the Export Valuation Rules is part of the adjudicatory exercise to determine confiscation or correct valuation and is to be undertaken in proceedings under section 124. It is neither practicable nor permissible at the seizure stage to finally determine the correctness of declared transaction value; seizure requires only a reasoned belief which may legitimately be based on material such as a local market survey. Consequently, the Commissioner (Appeals) erred in examining and deciding valuation issues at the stage of seizure as if adjudicating confiscation. [Paras 31, 33, 34]

Valuation and application of section 14 / Export Valuation Rules are for adjudication under section 124; they cannot be determinatively applied at the seizure stage.

Final Conclusion: The order of the Commissioner (Appeals) dated June 10, 2020 setting aside the seizure memo dated June 3, 2020 was set aside; the appeal by the Commissioner of Customs is allowed and the seizure order is restored.

Confiscation for misdeclaration under section 111(m) of the Customs Act, 1962 - penalty under section 112(a) of the Customs Act, 1962 - disproportionality of fine and penalty - finality of revised classification by failure to challenge

Confiscation for misdeclaration under section 111(m) of the Customs Act, 1962 - finality of revised classification by failure to challenge - Whether confiscation of the imported goods under section 111(m) was justified on the facts - HELD THAT: - The Tribunal found that the importer admitted in the investigation statement that the description and tariff item in the bill of entry were erroneous and that the revised tariff classification had not been challenged and therefore attained finality. The Court held that section 111(m) applies to misdeclaration of value or any other particular in bills of entry and is not confined to particulars that affect differential duty. On the material before it, the invocation of confiscation under section 111(m) could not be faulted. [Paras 5]

Confiscation under section 111(m) upheld.

Penalty under section 112(a) of the Customs Act, 1962 - precedential weight of obiter observations - Whether imposition of penalty under section 112(a) consequent to the confiscation was sustainable - HELD THAT: - The Tribunal rejected the appellant's reliance on an earlier decision in which restoration of declared classification led to set aside of confiscation and penalty, noting that incidental observations in that decision not necessary to the relief granted were obiter and not binding precedent. Given the finding of misdeclaration and the finality of the revised classification, the imposition of penalty flowing from the confiscation was sustainable in principle. [Paras 6]

Penalty under section 112(a) held sustainable in principle.

Disproportionality of fine and penalty - Whether the quantum of fine for redemption and penalty imposed required modification - HELD THAT: - Although confiscation and penalty were sustained in principle, the Tribunal observed there was no finding of undervaluation and that the amounts fixed by the adjudicating authority were disproportionate to the circumstances. Exercising its discretionary power to achieve just ends, the Tribunal reduced both the fine for redemption and the penalty imposed to a lower, specified quantum. [Paras 7]

Fine for redemption and penalty reduced for being disproportionate.

Final Conclusion: Appeal allowed in part: confiscation and penalty sustained in principle, but the fine for redemption and the penalty under section 112(a) are reduced to the lesser amounts directed by the Tribunal.

Rectification of mistake apparent on the face of the record - power under Section 129B(2) of the Customs Act, 1962 - interest liability under Section 28AA - treatment of amounts debited from EPCG licences for computation of interest - reliance on precedent and requirement to explain applicability of cited decisions

Rectification of mistake apparent on the face of the record - power under Section 129B(2) of the Customs Act, 1962 - interest liability under Section 28AA - treatment of amounts debited from EPCG licences for computation of interest - reliance on precedent and requirement to explain applicability of cited decisions - Application under Section 129B(2) seeking rectification of the Tribunal's final order on the ground of an alleged mistake apparent on the face of the record was maintainable and whether such a mistake existed in respect of the treatment of interest and amounts debited from EPCG licences. - HELD THAT: - The Tribunal examined the impugned order and the rectification application and concluded that paragraph 4.7 of the impugned order records a finding of fact and law that the interest under Section 28AA is payable on the quantum adjudged as short/non-payment, irrespective of the mode of payment. Such a finding is neither perverse nor a patent error that can be corrected under Section 129B(2). The Tribunal had recorded and considered the parties' submissions (see para 3.3) including the contention that certain authorities related to warehousing interest were distinguishable; it also referred to the Bombay High Court decision relied upon by the revenue in concluding the matter. The power of rectification is confined to obvious, manifest mistakes not requiring long-drawn reasoning; an erroneous or debatable view of law or a contested finding of fact does not constitute an error apparent on the face of the record. Reliance on judicial decisions without extended factual discussion does not, by itself, render the order rectifiable where the Tribunal has addressed and recorded the relevant submissions and reached a considered finding. The authorities cited by the applicants were held distinguishable and not sufficient to establish a patent error. Applying these principles, the Tribunal found no ground to limit interest to only the cash component and to exclude amounts debited from EPCG licences as contended by the applicant. [Paras 7, 8]

Application for rectification under Section 129B(2) dismissed; no error apparent on the face of the record in the Tribunal's order and the finding in paragraph 4.7 is not amenable to rectification.

Final Conclusion: The rectification application under Section 129B(2) was dismissed: the Tribunal's finding that interest under Section 28AA applies to the quantum adjudged as short/non-payment (including amounts debited from EPCG licences) is a recorded finding of fact and law, not a patent error susceptible to rectification.

Refusal to register transfer of shares - mandatory compliance with transfer formalities under Section 56 - issuance of duplicate share certificate under Rule 6(2) - register of members as prima facie evidence - directorial discretion to refuse registration to be exercised bona fide and not arbitrarily - power of Tribunal to direct registration and rectification of register - Articles of Association as contractual limitation on directors' powers

Refusal to register transfer of shares - power of Tribunal to direct registration and rectification of register - directorial discretion to refuse registration to be exercised bona fide and not arbitrarily - Validity of the Tribunal's order setting aside the company's refusal to register transfer of shares and directing registration and rectification of the register in favour of the purchaser - HELD THAT: - The Appellate Tribunal upheld the National Company Law Tribunal's finding that the company's letter refusing registration (dated 30.10.2015) was unsustainable. The Court reviewed the factual matrix - sale agreements, indemnity/affidavits by transferors stating original share certificates were lost, requests for registration and reminders - and concluded that the reasons recorded by the Board (personal disputes, non-attendance at board meetings and non-production of original certificates) did not justify arbitrary refusal. The Tribunal reiterated that while directors may have power under the Articles to refuse registration, such discretion must be exercised in good faith and for legitimate reasons; otherwise it is amenable to interference. Given the material before the NCLT and the absence of bona fide reasons to sustain refusal, the direction to register the transfers and rectify the register was held to be legally correct. [Paras 43, 45, 46, 47, 53]

The Tribunal's order setting aside the refusal and directing registration and rectification of the register is affirmed and the appeal is dismissed.

Mandatory compliance with transfer formalities under Section 56 - issuance of duplicate share certificate under Rule 6(2) - register of members as prima facie evidence - Articles of Association as contractual limitation on directors' powers - Whether absence of original share certificates or alleged deficiencies in the transfer form justified refusal to register when transferors furnished affidavits/indemnities and sought duplicate certificates - HELD THAT: - The Tribunal examined the contention that transfer could not be registered without original certificates or completed particulars in the transfer form. It noted that the transferors had executed affidavits/indemnity bonds declaring loss of original certificates and had requested issuance of duplicate certificates; the Company had not issued duplicate certificates despite such requests. The Court observed that the register of members is only prima facie evidence and may be contradicted by other relevant documents. While compliance with statutory/formal requirements is important, a company may, and frequently does, require indemnity or other safeguards before issuing duplicates; however, mere non-production of originals or alleged defects in form did not, on the facts, justify the Board's refusal which appeared to be improperly exercised. The Tribunal therefore found the company's reliance on non-enclosure of original certificates and on procedural deficiencies to be insufficient to sustain refusal. [Paras 39, 40, 49, 51, 52]

The company's insistence on original certificates and the alleged deficiencies in the transfer form did not justify refusal to register the transfers in the circumstances; the NCLT's directions to require the petitioner to produce documents and for the company to comply thereafter are upheld.

Final Conclusion: The appeal is dismissed. The respondent/petitioner is directed to furnish required documents to the company within three weeks, and the company is directed to comply with the Tribunal's order (registration and rectification) within three weeks thereafter; no costs.

Reduction of share capital - confirmation under section 66 of the Companies Act, 2013 - special resolution - compliance with accounting standards under section 133 of the Companies Act, 2013 - protection of creditors and stakeholders - RBI/FEMA compliance - income tax consequences of capital reduction

Reduction of share capital - confirmation under section 66 of the Companies Act, 2013 - special resolution - compliance with accounting standards under section 133 of the Companies Act, 2013 - protection of creditors and stakeholders - RBI/FEMA compliance - income tax consequences of capital reduction - Whether the Tribunal should confirm the petitioner company's proposed reduction of paid up share capital and related reduction of securities premium, and under what conditions. - HELD THAT: - The Tribunal examined the petition under the framework of section 66 of the Companies Act, 2013 and the company's articles (Table F/Article 38) which permit reduction of capital. The board and members had passed the requisite resolutions dated November 4 and November 29, 2019 respectively. The Registrar of Companies' observations were considered and answered by the petitioner; the financial statements and auditor certificates were placed on record confirming conformity with the accounting standards required under section 133 and the Companies (Accounts) Rules. The Tribunal found that the proposed reduction is for repayment of excess capital not required for the company's objects, does not diminish any liability in respect of unpaid share capital, and does not prejudice creditors or other stakeholders because there is no reduction in amounts payable to them, no compromise or arrangement with creditors, and no diminution of any security so far as the record shows. The Tribunal noted the need for compliance with RBI/FEMA and income tax regulations when payments are remitted to foreign shareholders and made clear that its order would not prevent other statutory authorities from taking appropriate action in respect of any regulatory violations. On the material before it, the petitioner satisfied the conditions of section 66 and the accounting requirements, and the Tribunal was therefore inclined to and did approve the reduction subject to the specified conditions and directions. [Paras 6, 7, 8, 9, 10]

The Tribunal approved and confirmed the proposed reduction of paid up share capital and the reduction of the securities premium account as set out in the petitioner's resolutions, subject to directions including publication of the reduction, filing the minute under section 66(5), compliance with RBI/FEMA and income tax laws, and without prejudice to any action by other statutory authorities; creditors retain liberty to approach the Tribunal if aggrieved.

Final Conclusion: Company petition C.P. No. 43/BB/2020 disposed by granting confirmation of the reduction of share capital and reduction of securities premium as proposed, with directions for publication, filing of the minute, compliance with RBI/FEMA and income tax consequences, and without prejudice to other statutory authorities or creditors' remedies.

Locus standi of an unsuccessful resolution applicant - maintainability of an application under Section 60(5) of the Insolvency and Bankruptcy Code - implementation of an approved resolution plan - effect of dismissal of appeal against approval of a resolution plan - variation or extension of time for implementation of a resolution plan in light of COVID-19

Locus standi of an unsuccessful resolution applicant - implementation of an approved resolution plan - Appellant's entitlement to challenge actions taken for implementation of the approved resolution plan after its own plan was rejected and its appeal dismissed. - HELD THAT: - The Tribunal held that once the appellant, as an unsuccessful resolution applicant, was out of the fray and its appeal against approval of the successful resolution applicant's plan had been dismissed, it lacked locus to question subsequent actions taken to implement the approved plan. The order directing implementation of the approved plan on or before the extended date followed as a corollary to dismissal of the appeal. The appellant could not claim prejudice from post-approval steps or contend that implementation measures affected its prospects once the plan approval had been finally upheld. [Paras 2]

Appellant has no locus to challenge implementation of the approved resolution plan and the challenge is barred following dismissal of its appeal.

Maintainability of an application under Section 60(5) of the Insolvency and Bankruptcy Code - variation or extension of time for implementation of a resolution plan in light of COVID-19 - Whether the Committee of Creditors' application under Section 60(5) to direct implementation with an extended date and any consensual variations in terms could be entertained after approval of the resolution plan. - HELD THAT: - The Tribunal found no illegality in the Adjudicating Authority entertaining the Committee of Creditors' application under Section 60(5) to direct implementation and fix an extended date for performance. The court observed that modifications or time extensions to facilitate implementation, agreed to or acquiesced in by the stakeholders and not shown to prejudice the creditors, could be permissible - particularly where unforeseen circumstances such as the COVID-19 pandemic had adversely impacted operations and implementation. The matter did not involve alleged material irregularity in the Corporate Insolvency Resolution Process that would warrant interference at the implementation stage. [Paras 2]

The application under Section 60(5) and the direction to implement the approved plan by the extended date were properly entertained and the extension/variations were not susceptible to challenge by the appellant on the facts.

Final Conclusion: Appeal dismissed in limine; the unsuccessful resolution applicant lacked locus to challenge implementation or consensual variations/extensions of the approved resolution plan following dismissal of its appeal, and the Adjudicating Authority rightly directed implementation by the extended date.

Limitation under Article 137 of the Limitation Act, 1963 - commencement of limitation from date of default - acknowledgement and revival communications (One Time Settlement proposal) and their effect on limitation - applicability of the Limitation Act to proceedings under the I&B Code - condonation of delay under Section 5 of the Limitation Act

Limitation under Article 137 of the Limitation Act, 1963 - commencement of limitation from date of default - applicability of the Limitation Act to proceedings under the I&B Code - Whether the application under Section 7 of the I&B Code was barred by limitation and from which date limitation commenced. - HELD THAT: - The Tribunal held that applications under Sections 7 and 9 of the I&B Code are governed by the residuary provision in Article 137 of the Limitation Act, 1963 prescribing a three-year period which commences from the date of default. The Court observed that the Limitation Act applied to proceedings under the I&B Code from its inception and later enactments (such as Section 238A) are clarificatory. The Tribunal relied on the settled rulings of the Apex Court, including the decision in B.K. Educational Services Private Limited , to the effect that limitation for a Section 7 application is three years from the date of default and is extendable only by an application of Section 5 of the Limitation Act where condonation of delay is justified. In the present case the date of default was recorded in the Section 7 application as 10th June, 2014; the Section 7 application was filed on 19th September, 2018, i.e., well beyond three years from the date of default. Consequently the application was held to be time barred. [Paras 3, 4]

The Section 7 application was barred by limitation as Article 137's three year period commenced on 10th June, 2014 and the Section 7 petition filed on 19th September, 2018 was beyond that period.

Acknowledgement and revival communications (One Time Settlement proposal) and their effect on limitation - condemnation of invoking Section 18 of the Limitation Act to restart limitation - Whether the One Time Settlement (OTS) communications from the Corporate Debtor operated as an acknowledgment reviving or extending the period of limitation for filing the Section 7 application. - HELD THAT: - The Tribunal considered the OTS proposal dated 13th June, 2015 and its reiteration and held that those communications did not operate to shift or extend the date of default for the purposes of limitation under Article 137. It was noted that the Financial Creditor had earlier approached the Debts Recovery Tribunal on 20th October, 2015 based on the same default and that the date of default was unambiguously recorded as 10th June, 2014 in the Section 7 application filed before the Adjudicating Authority. The Tribunal concluded that there cannot be two different dates of default for the same debt-one for the DRT claim and another for the I&B Code claim resting on the OTS communications-and that the appellant could not rely on Section 18 of the Limitation Act to trigger the Corporate Insolvency Resolution Process after the limitation period had expired. [Paras 2, 4]

The OTS communications did not amount to an acknowledgment sufficient to revive or extend the limitation period; reliance on Section 18 of the Limitation Act to restart limitation for a Section 7 filing was rejected.

Final Conclusion: Appeal dismissed; the Section 7 application was held hopelessly time barred as limitation commenced from the date of default recorded as 10th June, 2014 and the One Time Settlement communications did not revive or extend the limitation period.

Operational Debt - Operational Creditor - Financial Debt - pre-existing dispute - lease of immovable property not supply of goods or services - importing definitions under Section 3(37) - lease liabilities treated as financial debt under Section 5(8)(d)

Operational Debt - lease of immovable property not supply of goods or services - Financial Debt - Arrears of rent for lease of immovable commercial premises are not Operational Debt under the IBC. - HELD THAT: - The Tribunal reaffirmed its earlier three member decision in Mr. M. Ravindranath Reddy v. Mr G. Kishan & Ors., holding that lease of immovable property cannot be regarded as a supply of goods or rendering of services and therefore does not fall within the definition of Operational Debt. The Bench noted the Insolvency Law Reforms Committee's observations but emphasised that the Legislature did not adopt the Committee's recommendation insofar as rent is concerned and that the Code's definitions do not permit treating rent dues as operational debt. The Tribunal further observed that specific reference in the definition of Financial Debt to certain lease liabilities (as envisaged in Section 5(8)(d)) indicates legislative consciousness about lease liabilities and weighs against construing ordinary rent as Operational Debt. The Tribunal also rejected reliance on definitions from other statutes (such as the Consumer Protection Act and CGST Act) because Section 3(37) permits importing definitions only from specified enactments, and those Acts are not included. For these reasons the earlier view was maintained and the impugned order was not faulted. [Paras 7, 13, 15]

Rents due under a lease of immovable property cannot be treated as Operational Debt; the Adjudicating Authority's finding on this point is upheld.

Pre-existing dispute - Operational Debt - There existed a pre existing dispute regarding termination of the lease which, alternatively, precluded admission of the Section 9 application. - HELD THAT: - The Tribunal accepted the Adjudicating Authority's finding that the corporate debtor had communicated termination/changed circumstances in correspondence preceding the Section 8 notice. The Bench observed that even if rent were treated as Operational Debt, the emailed communications (including the termination claimed after financial stress and changed circumstances) evidenced a bona fide pre existing dispute as to the lease's continuation and legality of termination - matters which require trial. The Tribunal also examined the Mobilox judgment and found it does not hold that rent is Operational Debt; it reiterated that the pre existing dispute finding was a valid basis for dismissal of the Section 9 application. [Paras 16, 17]

The Adjudicating Authority rightly concluded that a pre existing dispute existed; alternatively, the pre existing dispute bars admission of the Section 9 petition.

Final Conclusion: The impugned order dismissing the Section 9 application was upheld: rents under a lease of immovable property do not qualify as Operational Debt, and in any event a pre existing dispute existed; the appeal is dismissed with no order as to costs.

Exclusion of lockdown period from CIRP time-line - extension of CIRP beyond 180 days - binding effect of Supreme Court suo motu order extending limitation under Article 142/141 - exclusion of period of lockdown under Regulation 47A of IBBI regulations

Exclusion of lockdown period from CIRP time-line - extension of CIRP beyond 180 days - binding effect of Supreme Court suo motu order extending limitation under Article 142/141 - exclusion of period of lockdown under Regulation 47A of IBBI regulations - Extension and exclusion of 116 days from the 180-day statutory period for completion of the CIRP was allowed. - HELD THAT: - The Resolution Professional sought exclusion/extension of 116 days from the statutory 180-day period for completion of the Corporate Insolvency Resolution Process on account of inability to complete valuation and finalization of financial statements due to the COVID-19 lockdown. The Tribunal noted that material facts were not in dispute and relied upon the Supreme Court's suo motu order extending limitation with effect from 15 March 2020 and the IBBI insertion of Regulation 47A excluding the lockdown period for computation of time-lines. Applying those authorities and the settled position of law, the Tribunal held the applicant justified in seeking exclusion and therefore allowed the application, directing the Resolution Professional to take expeditious steps and file necessary applications before the Adjudicating Authority within the extended period. [Paras 5, 6]

Application allowed; exclusion of 116 days from the 180-day CIRP period granted and RP directed to finalize CIRP expeditiously and file requisite application before the Adjudicating Authority within the extended period.

Final Conclusion: The Tribunal allowed I.A. No. 321/2020, granted exclusion of 116 days from the statutory 180-day CIRP period on account of the COVID-19 lockdown (as supported by the Supreme Court's order on limitation and IBBI Regulation 47A), and directed the Resolution Professional to complete the CIRP and file necessary applications within the extended time.

Settlement recorded and consent dismissal - Handover of assets upon payment to Liquidator - Withdrawal of mediation with Chartered Accountant/Statutory Auditor - Mediation to continue for Liquidator's separate claim - Possession of corporate assets handed over to Corporate Debtor

Settlement recorded and consent dismissal - The Tribunal recorded the parties' amicable settlement and disposed of IA/640/2020. - HELD THAT: - The parties informed the Tribunal that they had arrived at an amicable settlement and placed a joint memorandum on record. Learned Counsel for the applicant stated no objection to the terms of the joint memo filed by the respondents, which reflected prior communications between the parties. Having noted these representations and the joint memo, the Tribunal treated IA/640/2020 as withdrawn and dismissed it accordingly.

IA/640/2020 stands dismissed as withdrawn and the joint memo is taken on record.

Handover of assets upon payment to Liquidator - The balance of the applicant's claim is to be paid to the Liquidator and possession of the dredger will be handed over to the Scheme Proponent upon receipt/credit of that payment. - HELD THAT: - Counsel for the applicant represented the claim amount and identified the balance sum required to be paid by the Scheme Proponent to the Liquidator's account. The Tribunal recorded that upon the payment being received/credited to the Liquidator's account, the applicant will hand over the dredger then in its possession to the Scheme Proponent. This arrangement was recorded as part of the joint memorandum accepted by the parties and noted by the Tribunal.

Balance payment to the Liquidator to be made and, upon receipt/credit, the dredger in the applicant's possession shall be handed over to the Scheme Proponent.

Withdrawal of mediation with Chartered Accountant/Statutory Auditor - The mediation referred to the Chartered Accountant/Statutory Auditor of the Corporate Debtor in relation to the applicant's claim is to be withdrawn as per the joint memo. - HELD THAT: - The applicant represented that under the terms of the joint memo the applicant's period of manning the dredger is only up to 30.09.2020 and, in consequence, the mediation involving the Corporate Debtor's Chartered Accountant/Statutory Auditor regarding the applicant's claim should be withdrawn. The Tribunal recorded this representation and the corresponding term of the joint memo.

The mediation before the Corporate Debtor's Chartered Accountant/Statutory Auditor in respect of the applicant's claim is to be withdrawn as reflected in the joint memo.

Mediation to continue for Liquidator's separate claim - The Liquidator's separate claim will proceed to mediation before the Chartered Accountant. - HELD THAT: - Counsel for the Liquidator and the respondents represented that the balance claim made by the Liquidator will continue to be addressed through mediation with the Chartered Accountant. The Tribunal recorded that this aspect of the dispute will go on for mediation as represented by the parties.

The Liquidator's claim shall proceed for mediation before the Chartered Accountant as represented.

Possession of corporate assets handed over to Corporate Debtor - The Tribunal recorded that possession of the corporate debtor's assets has been handed over to the Corporate Debtor, and directed the Scheme Proponent to file a memo regarding instructions on this point. - HELD THAT: - Learned Counsel for the Liquidator informed the Tribunal that, as directed earlier and notwithstanding the Liquidator's application for extension of time due to COVID-19, possession of the company's assets has been handed over to the Corporate Debtor. Counsel for the Scheme Proponent stated that instructions were required from the Scheme Proponent and undertook to file a memo before the Tribunal by the end of the week. The Tribunal took that undertaking and the memo on record.

Possession recorded as handed over to the Corporate Debtor; Scheme Proponent to file a memo regarding instructions before the end of the week, which is taken on record.

Final Conclusion: The Tribunal recorded the parties' settlement and took the joint memorandum on record, dismissed IA/640/2020 as withdrawn, recorded the payment-and-handover arrangement for the dredger to the Scheme Proponent upon payment to the Liquidator, noted withdrawal of the mediation before the Corporate Debtor's Chartered Accountant/Statutory Auditor in respect of the applicant's claim, directed the Liquidator's claim to proceed for mediation, and recorded that possession of the company's assets has been handed over to the Corporate Debtor while directing the Scheme Proponent to file a memo on instructions.

Tax Relief under SVLDR Scheme - quantified duty demand as of 30.06.2019 - deduction of pre-deposit from amount payable - opportunity to indicate disagreement under section 127(3) - rectification/modification of Form SVLDRS-3 under section 128 - verification by the Designated Committee under Rule 6 - issuance of Discharge Certificate under section 127(8)

Tax Relief under SVLDR Scheme - quantified duty demand as of 30.06.2019 - deduction of pre-deposit from amount payable - verification by the Designated Committee under Rule 6 - opportunity to indicate disagreement under section 127(3) - rectification/modification of Form SVLDRS-3 under section 128 - issuance of Discharge Certificate under section 127(8) - Petitioner satisfies conditions for tax relief under the SVLDR Scheme and the declared pre-deposit must be taken into account despite an apparent error in Form No.SVLDRS-1; petitioner is entitled to issuance of the Discharge Certificate. - HELD THAT: - The Scheme confers a substantive right to one-time tax relief where the duty demand has been quantified on or before 30.06.2019 and the tax relief is to be computed as provided by the Scheme. Section 124(2) requires deduction of any pre-deposit when issuing the statement indicating amount payable, and Circular No.1071/4/2019-CX clarifies that an audit note constitutes quantification. The petitioner was issued an Audit Note dated 04.04.2019 quantifying duty and recording the service tax recovered (pre-deposit). Those facts satisfy the statutory conditions for relief. The Department bears an onus to verify the disclosure under Rule 6, and a technical or clerical error in the declarant's Form No.SVLDRS-1 (declaring 'Nil' pre-deposit) cannot defeat the substantive right where the records demonstrate a pre-deposit. Although Form SVLDRS-3 may be rectified under section 128 for apparent errors, and the Designated Committee's power is time-bound, the petitioner was not afforded the procedure contemplated by section 127(3) before issuance of Form SVLDRS-3. In the peculiar facts of this case, refusal to recognise the pre-deposit and denial of the opportunity under section 127(3) cannot stand; accordingly the petitioner is entitled to the Discharge Certificate under section 127(8), subject to the proviso that no refund is mandated if deposit exceeds amount payable. [Paras 11, 12, 13, 14, 15]

Writ petition allowed in part and Designated Committee directed to expeditiously consider issuance of the Discharge Certificate to the petitioner under section 127(8) of the SVLDR Scheme in light of the observations.

Final Conclusion: Petitioner entitled to tax relief under the SVLDR Scheme on the basis of the audit quantification and recorded pre-deposit; Designated Committee directed to expeditiously consider and issue the Discharge Certificate under section 127(8), taking into account the pre-deposit and the procedural opportunity under section 127(3).

Works Contract Service - Inclusion of material cost in gross value - Abatement under Notification No. 01/2006-ST - Taxability prior to 01.06.2007 - Precedential effect of COMMISSIONER v. LARSEN & TOUBRO LTD.

Works Contract Service - Inclusion of material cost in gross value - Abatement under Notification No. 01/2006-ST - Taxability prior to 01.06.2007 - Precedential effect of COMMISSIONER v. LARSEN & TOUBRO LTD. - Whether the services rendered by the appellant for the period October, 2004 to March, 2007 constituted taxable service liable to service tax. - HELD THAT: - The Tribunal found on the contract terms and factual matrix that the appellant supplied services together with materials (cement, metal, steel reinforcement, sand, etc.) and the recipient deducted Works Contract Tax, establishing that material cost was part of the gross value of the transaction. The revenue had itself applied the 67% abatement under Notification No. 01/2006-ST when computing demand, thereby conceding inclusion of material cost in gross value. Given these findings, the service qualified as Works Contract Service. Applying the binding precedent in COMMISSIONER v. LARSEN & TOUBRO LTD., the Tribunal held that Works Contract Service was not taxable prior to 01.06.2007. As the entire disputed period falls before that date, the confirmed demand and penalties could not be sustained. [Paras 7, 8, 9, 11]

The demand and penalties confirmed by the lower authorities were set aside as the services were Works Contract Service and not taxable for the period October, 2004 to March, 2007 in view of the Larsen & Toubro precedent.

Final Conclusion: Appeal allowed; impugned order set aside and demand/penalties vacated because the service was held to be Works Contract Service and not taxable for the period October, 2004 to March, 2007 in light of COMMISSIONER v. LARSEN & TOUBRO LTD.

Penalty under Section 78 of the Finance Act, 1994 - intention to evade payment of tax - payment of tax prior to issue of show cause notice - VCES amnesty scheme and immunity from interest and penalty - presumption regarding Public Sector Undertakings (PSUs) and absence of fraudulent intent - payment of interest before adjudication

Penalty under Section 78 of the Finance Act, 1994 - intention to evade payment of tax - payment of tax prior to issue of show cause notice - presumption regarding Public Sector Undertakings (PSUs) and absence of fraudulent intent - Penalty under Section 78 was not imposable in the facts of the case. - HELD THAT: - The Tribunal found that the service tax for the period January 2013 to January 2014 had been paid and informed to the Department prior to issuance of the Show Cause Notice, and applicable interest was subsequently deposited during the appeal stage. There was no positive evidence on record to demonstrate that the non-payment was due to deliberate action to evade tax. The decision relied on earlier authorities which hold that where tax is paid before issuance of proceedings and no mens rea of evasion is established, imposition of penalty is not called for. The Tribunal also noted the established presumption that Public Sector Undertakings do not act with intent to evade payment of tax, and considered that the circumstances of voluntary payment and absence of fraudulent conduct disentitled the Revenue from imposing a penalty under Section 78. [Paras 8, 9]

Penalty under Section 78 set aside and appeal allowed.

Final Conclusion: The penalty imposed under Section 78 is set aside; the appeal is allowed with consequential relief in accordance with law.

Taxability of collection charges retained by hospital - business support services - exemption for health care services by clinical establishments - revenue sharing agreement between hospital and doctors - negative list regime for taxation of services

Taxability of collection charges retained by hospital - business support services - exemption for health care services by clinical establishments - revenue sharing agreement between hospital and doctors - Whether the amounts retained by the hospital as 'collection charges' for amounts collected from patients are liable to service tax as consideration for providing infrastructural support to contracted doctors or form part of exempt healthcare services under the clinical establishment exemption. - HELD THAT: - The Tribunal's earlier decision concerning the appellant - which examined the contractual terms and the revenue-sharing model between the hospital and visiting doctors - concluded that the arrangements were for the joint benefit of both parties with shared obligations, responsibilities and benefits, and that the retained amounts were part of the overall consideration for providing health care services to patients rather than consideration specifically attributable to provision of infrastructural support. Under the negative list regime and Notification No.25/2012, health care services rendered by clinical establishments are exempt from service tax. The Revenue's characterization of a portion of the consideration as taxable business support services would, in effect, negate the exemption available to clinical establishments and is neither factually nor legally sustainable where the contractual structure reflects a revenue-sharing model for providing health care services. The Department accepted the Tribunal's earlier decision by communication dated August 20, 2018, and that decision has been followed in subsequent Tribunal decisions. Having regard to these determinations, the Commissioner was not justified in confirming service tax on the collection charges as business support services.

The impugned order confirming service tax on the amounts retained as collection charges is set aside and the appeal is allowed.

Final Conclusion: The Commissioner's order confirming service tax on the amounts retained by the hospital as collection/facilitation charges is reversed: the retained amounts form part of the consideration for exempt health care services under the revenue sharing arrangements with doctors and are not taxable as business support services; the appeal is allowed and the impugned order set aside.

Treatment and disposal of hazardous waste by incineration - cleaning activity - exterminating of objects - taxability of service as cleaning activity - impact of settled/dropped audit objection on subsequent show cause notice

Impact of settled/dropped audit objection on subsequent show cause notice - Whether a demand based on an audit objection can be sustained after the audit objection has been dropped. - HELD THAT: - The Tribunal held that where the departmental audit para which gave rise to the proceedings has been settled/dropped, the subsequent show cause notice and demand emanating from that audit para cannot be sustained. Reliance was noted on earlier Tribunal precedents to the same effect. Because the audit objection underlying the show cause notice was dropped, the demand founded on that objection had to be set aside. [Paras 21]

Demand set aside insofar as it proceeded from the dropped audit objection.

Cleaning activity - exterminating of objects - treatment and disposal of hazardous waste by incineration - taxability of service as cleaning activity - Whether incineration of hazardous waste carried out at the appellant's plant for waste delivered by third parties falls within the definition of 'cleaning activity' as 'exterminating of objects' and is therefore taxable. - HELD THAT: - The Tribunal analysed the statutory scope of 'cleaning activity' and held that the concept contemplates cleaning, disinfecting, exterminating or sterilising of objects or premises at the premises of the service recipient to sanitize those objects/premises (for example, fumigation or pest control). Incineration, by contrast, is the destruction of waste by burning at a separate plant where the service provider receives packaged waste delivered by third parties; the activity does not involve treatment of objects or premises at the client's site. Dictionary meanings and the nature of extermination (connected with pest control and annihilation of pests) were invoked to distinguish 'extermination' from 'incineration'. The Tribunal also noted the Board's Circular indicating that incineration of waste is not taxable under business auxiliary services or other taxable services. For these reasons the Commissioner erred in equating incineration with extermination and treating the activity as a taxable cleaning service. [Paras 24, 25, 28, 29, 30]

Incineration of hazardous waste at the appellant's plant does not amount to 'exterminating of objects' within 'cleaning activity' and is not taxable as such; the demand premised on that classification is unsustainable.

Final Conclusion: The appeal is allowed; the demand of service tax confirmed by the Commissioner is set aside because the audit objection on which it was based was dropped, and in any event incineration of hazardous waste at the appellant's plant does not fall within the statutory definition of 'cleaning activity' as 'exterminating of objects' and is not taxable on that basis.

Conditions of bail under Section 437(3) CrPC - presumption of innocence - fundamental right to liberty - proportionality of bail conditions - economic offences as a separate class - surety obligation and FDR deposit not obligatory - pre-requisite monetary deposit for grant of bail

Surety obligation and FDR deposit not obligatory - proportionality of bail conditions - Whether the condition requiring the sureties to deposit FDRs as security for furnishing surety bonds is legally permissible and/or reasonable. - HELD THAT: - The Court held that there is no provision in the CrPC obliging a surety to deposit fixed deposit receipts as a pre-condition for securing the accused's release on bail; the surety's legal obligation is to ensure the accused's attendance and, if required, the Magistrate may enquire into the soundness of the surety. Directing deposit of FDRs totalling the substantial sum ordered by the Magistrate would therefore go beyond the expectation of law and amount to an onerous, harsh condition, particularly as those funds would remain locked for an indefinite and unpredictable period. Applying the requirement that bail conditions must be reasonable and not arbitrary, the Court concluded that the FDR deposit condition imposed on the sureties is excessive and must be set aside. [Paras 11]

The condition directing sureties to deposit FDRs is set aside.

Conditions of bail under Section 437(3) CrPC - pre-requisite monetary deposit for grant of bail - economic offences as a separate class - presumption of innocence - Whether the order requiring the accused to deposit 25% of the alleged amount as a pre-requisite for bail was permissible and, if not, what modification is appropriate. - HELD THAT: - The Court recognised the settled principle that courts may impose conditions under Section 437(3) CrPC, including monetary conditions, in the interests of justice, but such conditions must not be arbitrary, excessive or unrelated to the good administration of justice. The Court also acknowledged that economic offences are a distinct category warranting a stricter approach because of the risk of flight and the public interest involved. Balancing the accused's fundamental right to liberty and presumption of innocence against the State's legitimate concern to secure his presence and protect the public interest, the Court found the specific 25% pre-deposit to be excessive. Consequently, while upholding the Court's power to impose a monetary pre-condition in appropriate economic offence cases, the Court modified the condition to require deposit of 15% of the total amount involved by way of an FDR in court as a pre-requisite to bail. [Paras 12, 16]

The 25% pre-deposit condition is modified to a requirement that the accused deposit 15% of the total amount involved by way of an FDR in court as a pre-requisite for bail; the remainder of the bail conditions continue subject to the modification.

Final Conclusion: The application is allowed in part: the Magistrate's direction that the sureties deposit FDRs is set aside as unreasonable, and the requirement that the accused deposit 25% of the alleged amount for bail is reduced and modified to a 15% FDR deposit in court; the bail order dated 12.10.2020 stands modified accordingly.

Summary order. Both petitions dismissed as having become infructuous.

Admissibility of electronic records - Principles of natural justice - right to documents, personal hearing and cross-examination - Proof of clandestine removal - requirement of cogent corroborative evidence - Reliance on third party records - Section 36B evidence certification - Unit specific demand - necessity of linking seized records to the particular manufacturing unit

Principles of natural justice - right to documents, personal hearing and cross-examination - Whether principles of natural justice were violated by denial of access to seized records, refusal of cross examination of third party witnesses and restriction of personal hearing - HELD THAT: - The Tribunal found that the adjudicating authority erroneously determined which documents were 'necessary' and denied the appellants access to records relied upon by the department; it also refused cross examination of punch witnesses and officers of the third party (M/s SPRML) whose statements and seized records formed the basis of the case. Given that the department's case rested solely on records recovered from a third party and the appellants did not accept those records, the request for cross examination and further opportunity for personal hearing was a reasonable procedural requirement. The denial of these opportunities amounted to a breach of natural justice and vitiates the adjudication. The Tribunal emphasised that right to cross examination is not absolute but, in the peculiar facts where primary evidence is third party material and the noticee disputes its contents, cross examination and access to the seized records were necessary for fair adjudication. [Paras 14, 19]

Principles of natural justice were violated; adjudication is vitiated for denial of documents, cross examination and adequate personal hearing.

Admissibility of electronic records - Section 36B evidence certification - Reliance on third party records - Whether the electronic records/printouts seized from a third party had been validly obtained and were sufficient to sustain the duty demand against the appellants - HELD THAT: - The Tribunal observed that neither the show cause notice nor the adjudication order addressed whether the mandatory conditions for use of computer/hard disk printouts (including certification under Section 36B(4)) were complied with. The material consisted of electronic records recovered from M/s SPRML and printouts taken therefrom; those records were not in the possession or under the control of the appellants and the department did not demonstrate adherence to the statutory safeguards for computer evidence. Further, the appellants did not accept the seized records and the department did not corroborate them by independent inquiry (e.g., transport verification, stock checks, production inputs, financial receipts). Reliance solely on third party electronic data, without establishing statutory formalities or independent corroboration, was held to be insufficient. [Paras 19, 21]

Electronic records seized from a third party, absent compliance with statutory certifications and independent corroboration, were not shown to be admissible or sufficient to sustain the duty demand.

Proof of clandestine removal - requirement of cogent corroborative evidence - Reliance on third party records - Whether the department had produced cogent, corroborative evidence to establish clandestine removal by the appellants - HELD THAT: - The Tribunal applied established criteria for proving clandestine manufacture/clearance and held that the department failed to produce tangible evidence on essential links: procurement/consumption of raw materials, production indicators (power/coal consumption, labour), transportation verification despite truck numbers being available, discovery of goods outside the factory, or financial receipts. The show cause notice and order relied only on DGCEI's seized records from M/s SPRML and the statements of that company's officers; no stock verification at the appellants' factory or other corroborative enquiries were conducted. In these circumstances, the Tribunal concluded that the allegation of clandestine removal of the large quantity asserted was not proved even on a prima facie or gross approximation basis. [Paras 20, 21]

The department failed to produce cogent corroborative evidence to substantiate clandestine removal; the demand is unsustainable on the evidence produced.

Unit specific demand - necessity of linking seized records to the particular manufacturing unit - Whether the demand could be validly levied on Unit III when Annexure H and seized records did not specify which manufacturing unit of the group effected the alleged clandestine clearances - HELD THAT: - Annexure H, relied upon by the department, recorded alleged clearances but did not indicate which unit of the registered group (Unit II, Unit III or Unit IV) was the source of those transactions. The Tribunal found no reasoning or evidence in the show cause notice or adjudication order to explain why Unit III alone had been targeted for the demand. In absence of any linkage between the seized records and the specific unit, the Tribunal held that the demand could not be properly fixed on Unit III. [Paras 22]

Demand could not be sustained against Unit III in the absence of evidence linking the seized records to that specific unit.

Penalty - contingent on sustainable duty demand - Whether imposition of penalties on the company and individuals was justified when the foundational duty demand was not established - HELD THAT: - The Tribunal held that since the duty demand itself was unsustainable on the evidence produced, there was no justification to uphold penalties imposed on the company or on the individual directors/officers. The order noted absence of findings recording any instrumental role by the Managing Director and observed that the statement of the Managing Director was not recorded; similarly, the authorised signatory denied the allegations. Given the failure to establish the primary allegation of clandestine removal, penalties could not stand. [Paras 9, 21]

Penalties imposed on the appellants (company and individuals) could not be sustained because the duty demand was not proved.

Final Conclusion: The Tribunal found fatal infirmities in the adjudication - denial of necessary documents and cross examination, failure to establish statutory formalities for electronic evidence, absence of independent corroboration to prove clandestine removal and lack of linkage to the specific unit - and held the department's case unsustainable. The appeals are allowed and the impugned demand and penalties are set aside.

Reliability of rough register (RUD-26) as basis for assessment - best judgment assessment and guesswork - burden of proof for clandestine removal - entitlement to abatement for assessable value - penalty under Section 11AC read with Rule 25 - requirement to examine author of seized documents

Reliability of rough register (RUD-26) as basis for assessment - best judgment assessment and guesswork - requirement to examine author of seized documents - entitlement to abatement for assessable value - Validity of the duty demand computed on the basis of the rough register (RUD 26) and related valuation/quantity assumptions for the disputed two months (May and June, 2010). - HELD THAT: - The Tribunal found that the demand rested on wide guesswork and an unreliable source document. RUD 26 was not a reliable production register: its author was not examined and entries were not explained by the proprietor; statements relied upon did not constitute a categorical admission of clandestine removal and some were retracted. Revenue also failed to establish source of raw materials, flow back of proceeds or any adverse quantitative or electricity consumption ratio commensurate with the alleged clandestine production. The installed capacity certificate from a Chartered Engineer was not shown to be false and was ignored without reason. Further, valuation adopted by Revenue used MRP without properly applying the statutory abatement. In the interest of justice and on appreciation of evidence, the Tribunal restricted the duty to the amount admitted by the appellant, treating the department's higher computations as speculative and excessive. [Paras 14]

Demand based on RUD 26 and the department's valuation was held to be high pitched and speculative; duty limited to the amount accepted by the appellant (adjustable against returns) for May and June, 2010.

Penalty under Section 11AC read with Rule 25 - best judgment assessment and guesswork - Validity of penalty imposed under Section 11AC read with Rule 25 (and penalties under Rule 26 on related persons). - HELD THAT: - Having held that the department's case on clandestine removals and the quantum of duty was not proved and was founded on conjecture, the Tribunal concluded that the statutory requirements for imposing penalty were not satisfied. In consequence, the penalty under Section 11AC read with Rule 25 was set aside; penalties imposed under Rule 26 on specified persons were also set aside in respect of these proceedings as the foundational demand was reduced and the case against clandestine removal was not established. [Paras 14]

Penalties (Section 11AC read with Rule 25 and penalties under Rule 26) set aside as the department's case was not proved.

Final Conclusion: The appeal is allowed: duty demand for the disputed period (May and June, 2010) is restricted to the amount admitted by the appellant (adjustable against returns) and penalties imposed are set aside; consequential relief to follow in accordance with law.

Cenvat credit - Rule 6(1) of the CENVAT Credit Rules, 2004 - Explanation 1 (Notification No. 6/2015-CE(NT) dated 01.03.2015) - exempted goods / final products - sale of electricity - precedent - appellant's own case

Cenvat credit - Rule 6(1) of the CENVAT Credit Rules, 2004 - Explanation 1 (Notification No. 6/2015-CE(NT) dated 01.03.2015) - sale of electricity - Whether the Explanation inserted under Rule 6(1) by Notification No. 6/2015-CE(NT) operates to deny Cenvat credit on services used for repair and maintenance of windmills when the assessee has not sold the electricity generated from those windmills. - HELD THAT: - The Tribunal considered the amended scope of Rule 6(1) by the Explanation inserted w.e.f. 01.03.2015, which treats certain non-excisable goods cleared for consideration as "exempted goods" or "final products" for the purposes of the rule. The revenue's contention was that the amended provision precludes Cenvat credit on services connected with windmills located away from the factory. The Tribunal held that the Explanation comes into play only where the electricity generated from the windmills is sold (i.e., where there is a clearance for consideration making the product fall within the Explanation). In the present case the appellant's counsel affirmed that no electricity generated from the windmills was ever sold. Consequently, the factual premise required to attract the Explanation is absent and the earlier Tribunal decision in the appellant's own case on identical facts remains applicable. Relying on that precedent, the denial of credit was not sustainable.

The impugned denial of Cenvat credit is set aside and the appeals are allowed on the basis that the Explanation to Rule 6(1) does not apply where the electricity generated from the windmills was not sold.

Final Conclusion: The Tribunal allowed the appeals, set aside the impugned order and restored Cenvat credit relying on the appellant's earlier Tribunal precedent because the Explanation to Rule 6(1) applies only where electricity generated is sold, which was not the case here.

Eligibility of Cenvat credit on gardening services - definition of input service - effect of amendment to the definition of input service (2011-2012) - compliance with environmental and factory law as business necessity

Eligibility of Cenvat credit on gardening services - definition of input service - compliance with environmental and factory law as business necessity - effect of amendment to the definition of input service (2011-2012) - Cenvat credit of service tax paid on gardening/manpower for garden maintenance is allowable as input service for the appellant's manufacturing operations. - HELD THAT: - The Tribunal considered its earlier order in the appellant's own case (order No. A/10508-10509/2017 dated 07.02.2017) and the decision of the Hon'ble Karnataka High Court in CCE, Bangalore v. Millipore India Pvt. Ltd., which treated landscaping and garden maintenance as falling within the broad, inclusive concept of "input services." The Court accepted that maintaining factory premises, including gardening, is integrally connected to the functioning of the factory and may be mandated by environmental and factory laws; such expenditure is part of the cost of final products and thus within the scope of input services. Although the revenue relied on amendments to the definition of input service effected in 2011 and 2012, the Tribunal upheld the proposition that gardening services qualify as input services for the periods under challenge, applying the reasoning in the cited authorities and the appellant's earlier favourable order. The impugned orders denying credit were therefore unsustainable. [Paras 6, 7]

Impugned order set aside; appeals allowed and Cenvat credit of gardening services held admissible.

Final Conclusion: The appeals are allowed: Cenvat credit for gardening/manpower for garden maintenance is held to be an admissible input service connected to factory functioning and compliance with environmental and factory laws; the orders denying credit are set aside.

Eligibility of Cenvat credit on inputs and input services prior to amendment - retrospective effect of amendment to the Cenvat Credit Rules - user test for classification of goods as capital goods - deliberate suppression

Eligibility of Cenvat credit on inputs and input services prior to amendment - retrospective effect of amendment to the Cenvat Credit Rules - Cenvat credit on cement, TMT bars, beam, angle, channels and joist and related inward-transportation service-tax credit is allowable up to 06/07/2009. - HELD THAT: - The Tribunal examined the departmental demand for alleged wrongful availment of Cenvat credit on specified items and on inward transportation. The Adjudicating Authority had relied on the Larger Bench decision in Vandana Global to deny credit, treating the amendment to Rule 2(k) as clarificatory and retrospective. The Tribunal noted that Vandana Global has been quashed by the Chhattisgarh High Court and disapproved by the Calcutta High Court, and therefore declined to follow that view. Applying the settled principle that eligibility must be determined having regard to law as it stood prior to the amendment, the Tribunal held that the items and the service-tax paid on inward transportation qualify as eligible Cenvat credit up to 06/07/2009, and allowed the appeal to that extent.

Demand confirmed by the Adjudicating Authority is set aside insofar as Cenvat credit on the listed items and related inward-transportation service-tax is concerned up to 06/07/2009; appeal allowed to that extent.

User test for classification of goods as capital goods - deliberate suppression - Application of the 'user test' to iron and steel items and treatment of credits post 07/07/2009 where the appellant has reversed credits and whether there was deliberate suppression. - HELD THAT: - The Tribunal referred to the Supreme Court's adherence to the 'user test' for classifying goods as capital goods and directed that usage must be examined in light of that principle. Regarding the post-07/07/2009 period, records showed the appellant had already reversed a substantial portion of the challenged credit. Because the controversy involved interpretation of law and the appellant had undertaken reversals during investigation, the Tribunal found that the case did not disclose deliberate suppression as alleged by the Department. The Tribunal therefore treated the reversed amount as having been adequately addressed and did not sustain an inference of deliberate concealment.

Issues as to classification of iron and steel items to be assessed by applying the 'user test'; the reversed Cenvat credit for the post-07/07/2009 period stands and the record does not establish deliberate suppression.

Final Conclusion: The appeal is allowed in part: the confirmed demand is set aside insofar as Cenvat credit on specified items and related inward-transportation service-tax is concerned up to 06/07/2009; the appellant's reversal of credit for the post-07/07/2009 period is noted and no deliberate suppression is found; the appeal is disposed of accordingly.

Withdrawal of appeal - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - infructuous application - listing for regular hearing

Withdrawal of appeal - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - infructuous application - Miscellaneous application for withdrawal of the appeal filed by the appellant under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. - HELD THAT: - The appellant had earlier filed an application to withdraw the appeal alleging election to opt under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. Subsequently the appellant's counsel submitted a written communication stating that the appellant was not eligible for relief under the Scheme because the matters were not prior to June 2019 and therefore sought to withdraw the earlier application for withdrawal. In view of that communication the Tribunal found the pending miscellaneous application for withdrawal to have become infructuous and directed that the appeal be placed for regular hearing. [Paras 2]

The Miscellaneous Application for withdrawal is dismissed as infructuous and the appeal is directed to be listed for regular hearing on 28.10.2020.

Final Conclusion: The Tribunal dismissed the application for withdrawal as infructuous in light of the appellant's subsequent communication regarding ineligibility under the Sabka Vishwas Scheme, and restored the appeal to the regular hearing list.

Reassessment and right to reasonable opportunity to be heard - jurisdiction to tax interstate stock transfers and out-of-state sales - taxability of government subsidy - application of Neyveli Lignite Corporation precedent - remand for fresh consideration

Jurisdiction to tax interstate stock transfers and out-of-state sales - reassessment and right to reasonable opportunity to be heard - Impugned reassessment set aside and remanded because the authority did not examine whether tax could be levied on interstate stock transfers and sales made locally in other States, a question affecting jurisdiction to reassess. - HELD THAT: - The Court found that the essential premise of the petitioner's challenge-whether the reassessment included levy of tax on interstate stock transfers and sales made locally in other States-was not examined by the assessing authority. That jurisdictional question directly impacts the validity and quantum of the reassessment. Given its unexamined character and potential to alter the outcome, the impugned order could not be sustained. Accordingly, the order was set aside and the matter remanded to the Deputy Commissioner for fresh consideration after affording the petitioner a reasonable opportunity to be heard on the proposal set out in the revised proposition notice.

Impugned order set aside and matter remanded to the third respondent for reconsideration and for affording the petitioner a reasonable opportunity to show cause.

Taxability of government subsidy - application of Neyveli Lignite Corporation precedent - Question whether tax can be levied on the subsidy received by the petitioner is to be considered afresh in light of the Supreme Court's decision in Neyveli Lignite Corporation. - HELD THAT: - The Court noted that the proposition that subsidy received under the Urea Based Subsidy Scheme and the Nutrients Based Subsidy Scheme may not be taxable has been considered by the Supreme Court in Neyveli Lignite Corporation, which held that fertilizer subsidy could not be taxed in similar circumstances. While the assessing authority referred to distinctions between statutes, the High Court held that the authority must reconsider the contention and apply the enunciation in paragraphs 12 and 13 of the Neyveli decision when deciding the reassessment. The Court did not decide the subsidy point on merits but directed the authority to examine it afresh in light of the Supreme Court's dictum and other contentions of the petitioner.

Issue remanded for fresh consideration by the third respondent with specific direction to apply and consider the Neyveli Lignite Corporation ratio.

Final Conclusion: Writ petition allowed in part; the order dated 25.09.2020 is set aside and the matter remanded to the Deputy Commissioner for reconsideration after affording the petitioner a reasonable opportunity to be heard (petitioner to appear on 2.12.2020), including reconsideration of the taxability of subsidy in light of paragraphs 12 and 13 of the Neyveli Lignite Corporation decision.

Power of review under Section 114 and Order 47 Rule 1 CPC - error apparent on the face of the record - review not to be an appeal in disguise - any other sufficient reason in Order 47 Rule 1 - appreciation of evidence - non-framing of issues and its effect - limits of review jurisdiction

Power of review under Section 114 and Order 47 Rule 1 CPC - limits of review jurisdiction - error apparent on the face of the record - review not to be an appeal in disguise - Whether the High Court erred in exercising its review jurisdiction to delete para 20 of its judgment (observations regarding possession) by invoking Order 47 Rule 1 CPC read with Section 114 CPC. - HELD THAT: - The Court held that the High Court exceeded its limited jurisdiction under Section 114 read with Order 47 Rule 1 CPC. Review lies only on specified grounds - discovery of new evidence, mistake or error apparent on the face of the record, or any other sufficient reason analogous to those grounds - and cannot be used to re hearth or substitute merits. The impugned deletion was based solely on the High Court's view that no issue on possession was framed below; but the observations in para 20 were made on appreciation of evidence on record (depositions of PW1 and PW2 and other material) and were therefore findings on merits. Such findings do not constitute an error apparent on the face of the record that could be corrected in review without transforming review into an appeal. The authorities on the narrow scope of review were applied and the High Court's exercise of review on the ground adopted was held to be beyond the permissible limits. [Paras 10, 11, 12, 14, 15]

High Court's review and deletion of para 20 was impermissible; the High Court overstepped its review jurisdiction and therefore the review order is unsustainable.

Appreciation of evidence - non-framing of issues and its effect - error apparent on the face of the record - Whether absence of a formally framed issue on possession at trial justified deletion of the High Court's finding on possession in review proceedings. - HELD THAT: - The Court found that non framing of a specific issue on possession was immaterial where pleadings and evidence before the trial court and appellate court clearly raised possession and the parties led evidence thereon (and the defendants did not effectively contest or lead contrary evidence). The High Court itself had relied on the evidence (and even noted that respondents had filed an application seeking the plaintiffs' eviction) when making para 20. Thus the contention that para 20 was vitiated merely because no separate issue was framed was untenable; the finding was based on material on record and could not be expunged by way of review on that ground. [Paras 11, 13]

Non framing of a discrete issue on possession did not justify deleting the possession finding on review; the possession observation was rightly restored.

Final Conclusion: The appeal is allowed. The impugned review order dated 14.07.2017 is quashed and set aside and para 20 of the judgment and order dated 10.12.2013 is restored.