TaxTMI Updates e-Newsletter
Nov 27,2023

Rectification application - interim stay of recovery proceedings - assessment order - service by uploading on portal (deemed service)

Rectification application - assessment order - Disposal of the rectification applications filed by the petitioner against the assessment order dated 17.07.2023. - HELD THAT: - The petitioner filed rectification applications online and physically challenging alleged errors in the assessment order passed on 17.07.2023 after GSTR returns for 2022-2023. The Court did not adjudicate the merits of the assessment or the correctness of the alleged errors. Instead, noting the existence of the rectification applications and that they require consideration, the Court directed the respondents to decide the rectification applications on merits by a specified date. The direction compels the authority to examine and dispose of the petitioner's claims of error in the assessment order, but leaves substantive determination to the respondents in accordance with law. [Paras 11, 12]

Respondents directed to dispose of the rectification applications dated 17.08.2023 and 29.08.2023 by 31.12.2023.

Interim stay of recovery proceedings - rectification application - Whether recovery proceedings may be continued pending disposal of the rectification applications. - HELD THAT: - Having directed disposal of the rectification applications within the stipulated time, the Court granted an interim stay of recovery proceedings to preserve the petitioner's position until the authorities decide those applications. The stay is provisional and limited to the period until the rectification applications are disposed of; it does not pronounce on the ultimate entitlement to relief on the merits nor preclude the Department from acting in accordance with law after disposal. [Paras 12]

Interim stay of recovery proceedings against the petitioner granted until disposal of the rectification applications.

Service by uploading on portal (deemed service) - assessment order - Finding on whether the show cause notice was served to the petitioner prior to passing the assessment order. - HELD THAT: - The Court observed on the record that a show cause notice had been issued and received by the petitioner and that the assessment order was thereafter passed on 17.07.2023. The Court recorded the parties' contentions regarding actual receipt versus deemed service by uploading on the portal but did not undertake a detailed adjudication of the legality of service; it proceeded on the basis that the notice had been issued and the assessment order had been passed, which informed the disposal direction for the rectification applications. [Paras 3, 4, 10]

Court recorded that the show cause notice was issued and received and the assessment order was passed on 17.07.2023; no further adjudication on the validity of service was undertaken.

Final Conclusion: Writ petition disposed by directing the respondents to decide the petitioner's rectification applications by 31.12.2023 and granting an interim stay of recovery proceedings until such disposal; no costs.

Penalty for collecting tax and failing to pay beyond three months (Section 122(1)(iii) of the GST Act) - General disciplines related to penalty and proportionality in quantification - Mitigating effect of government waiver of late fee under Section 128 - Requirement of opportunity of being heard before imposing penalty

Penalty for collecting tax and failing to pay beyond three months (Section 122(1)(iii) of the GST Act) - General disciplines related to penalty and proportionality in quantification - Mitigating effect of government waiver of late fee under Section 128 - Validity and quantum of penalty imposed for delayed payment of GST collected and requirement to apply the general disciplines in Section 126 read with the Government's waiver of late fee. - HELD THAT: - The Court found that the revenue's case was only of delay in depositing amounts collected and there was no allegation or material of tax having been evaded; consequently the maximum statutory penalty in the circumstances would be the fixed sum (Rs. 10,000) rather than a penalty measured by evaded tax. The assessing and appellate authorities failed to apply the general disciplines relating to penalty under Section 126(2) - namely to quantify a penalty commensurate with the degree and severity of the breach - and to take into account the Government's Notification of 01.06.2021 waiving late fee for returns for July 2017 to April 2021 as a mitigating circumstance. Having regard to these omissions and the petitioner's offer to accept the fixed penalty, the impugned orders were set aside and substituted by a direction that the petitioner pay a penalty of Rs. 10,000 in each case within two weeks. [Paras 11, 12, 14, 16]

Impugned penalty orders set aside; direction to pay penalty of Rs. 10,000 in each case within two weeks.

Final Conclusion: The impugned orders imposing penalty were set aside. The petitioner was directed to pay a penalty of Rs. 10,000 in each writ petition within two weeks and both writ petitions were disposed of.

Assessment under Section 63 of the CGST/SGST Act 2017 - assessment of receipts of an unregistered person - principles of natural justice - availability of alternative remedy by way of statutory appeal - writ jurisdiction confined to the decision making process - registration threshold under Section 22 of the CGST/SGST Act 2017 - place of business as defined under Section 2(85) of the CGST/SGST Act 2017 - maintenance of books of accounts under Section 35 of the CGST/SGST Act 2017 - offence under Section 122(1)(xi) of the CGST/SGST Act 2017

Assessment under Section 63 of the CGST/SGST Act 2017 - assessment of receipts of an unregistered person - principles of natural justice - place of business as defined under Section 2(85) of the CGST/SGST Act 2017 - maintenance of books of accounts under Section 35 of the CGST/SGST Act 2017 - Validity of Ext. P24 assessment order framed under Section 63 for receipts collected during 2017-18 to 2021-22 and whether it was passed without jurisdiction or in violation of principles of natural justice. - HELD THAT: - The Assessing Authority issued a show cause notice and, after examining seized documents and the petitioner's reply, held that the receipts belonged to the driving school business and that the place of business and records demonstrated that the entities were one and the same. The authority found non compliance with record keeping requirements and concluded that the receipts were liable to assessment and penalty under the CGST/SGST code. The High Court confined itself to the decision making process and found that the statutory procedure was followed and the petitioner was afforded an opportunity to be heard; there was therefore no want of jurisdiction or breach of natural justice warranting interference by writ jurisdiction.

Ext. P24 is not vitiated for want of jurisdiction or breach of principles of natural justice and is validly passed.

Availability of alternative remedy by way of statutory appeal - writ jurisdiction confined to the decision making process - Whether the writ petition was maintainable notwithstanding the availability of the statutory appeal and whether discretionary interference was warranted. - HELD THAT: - The Court held that where the authority has followed the prescribed procedure and observed principles of natural justice, the constitutional court will not ordinarily substitute its view for that of the statutory appellate fora; the appropriate remedy is availing the statutory appeal. The petitioner was therefore not entitled to relief in writ jurisdiction. The Court nevertheless granted liberty to file the statutory appeal within fifteen days and directed the Appellate Authority to consider the appeal on merits without raising the question of limitation.

Writ petition dismissed on account of availability of alternate statutory remedy; liberty granted to file appeal with direction to consider it on merit without going into limitation.

Final Conclusion: Writ petition challenging the assessment order (Ext. P24) for Financial Years 2017-18 to 2021-22 is dismissed; the petitioner is permitted to prefer a statutory appeal within fifteen days, which the Appellate Authority shall decide on merits without raising limitation, the High Court expressing no opinion on the merits.

Validity of show cause notice - Maintainability of writ against pending adjudication - Opportunity of hearing and reply to show cause notice - Interim restraint on passing final order pending decisions of other High Courts

Validity of show cause notice - Maintainability of writ against pending adjudication - Whether the High Court should interfere with the impugned show cause notice at the writ stage - HELD THAT: - The Court declined to entertain substantive interference with the show cause notice because the petitioner has available statutory remedies before the adjudicating authority and may raise all objections in the prescribed proceedings. The writ petition was not permitted to pre-empt the adjudicatory process where the authority has yet to adjudicate the demand. The Court observed that parallel proceedings and pending litigation in other High Courts do not justify bypassing the ordinary adjudicatory forum when the petitioner can participate and raise its contentions before the authority. [Paras 4]

Writ petition not entertained insofar as it seeks pre emptive quashing of the show cause notice; no interference with the adjudication at this stage.

Opportunity of hearing and reply to show cause notice - Interim restraint on passing final order pending decisions of other High Courts - Directions to the adjudicating authority regarding procedural opportunity and interim restraint - HELD THAT: - The Court directed that the petitioner be given ten days to file a reply to the show cause notice and be allowed to participate in adjudication, including an oral hearing fixed on 11.12.2023. In the interest of justice and in view of related proceedings before other High Courts (one of which is reported to have reserved judgment), the Court ordered that the adjudicating authority shall refrain from passing a final order for one month, permitting the petitioner to place any subsequently delivered High Court decisions to the authority's notice for consideration. [Paras 5]

Petitioner granted ten days to file reply and to appear for hearing; adjudicating authority restrained from passing final order for one month and to consider any intervening High Court judgments brought to its notice.

Final Conclusion: Writ petition disposed of by declining to quash the show cause notice at this stage; petitioner afforded ten days to reply and an opportunity of hearing, and the adjudicating authority restrained from passing final order for one month to enable consideration of any relevant High Court decisions.

Kerala Flood Cess payment made under incorrect head - refund of interest paid on tax/cess - bona fide deposit in wrong account - liability for interest where notice remained unanswered - waiver of penalty and late fee for bona fide mistake

Kerala Flood Cess payment made under incorrect head - bona fide deposit in wrong account - Effect of bona fide payment of Kerala Flood Cess through GSTR-3B instead of KFC-A and consequent refund of cess paid - HELD THAT: - The petitioner deposited Kerala Flood Cess along with GSTR-3B for the period from 01.08.2019 to July 2021 in the Central Government Cess Pool instead of remitting it through KFC-A. This constituted a bona fide mistake during the initial period of GST implementation. Pursuant to this Court's interim direction, the cess amount so paid was refunded by the respondent and the petitioner thereafter filed KFC-A and remitted the cess. The Court recognised the genuine difficulties faced by assessees in the initial GST period and treated the original deposit as a bona fide error, directing that the petitioner shall not be saddled with any penalty or late fee in respect of the Kerala Flood Cess payment which was made on the wrong head along with GSTR-3B.

The cess paid under the wrong head was refunded and the petitioner shall not be liable to any penalty or late fee for having deposited the Kerala Flood Cess in the incorrect head.

Refund of interest paid on tax/cess - liability for interest where notice remained unanswered - Extent to which interest paid by the petitioner is refundable, having paid interest to effect correct remittance after being directed by the Court - HELD THAT: - The petitioner paid interest along with the KFC remittance after this Court's interim order and contends entitlement to refund of that interest because the original cess was paid on time though in the wrong head. The Court found that, notwithstanding the bona fide nature of the initial mistake, the petitioner had failed to respond to the earlier notice dated 19.03.2021. On that basis the Court held that interest for the period 01.04.2021 to 31.07.2022 should be borne by the petitioner. For the remaining period for which interest was paid, the petitioner is entitled to a refund. The Court therefore directed the first respondent to refund the interest portion after adjusting for interest attributable to 01.04.2021-31.07.2022, to be effected within three weeks.

Interest paid by the petitioner shall be refunded after adjusting interest for the period 01.04.2021 to 31.07.2022; refund to be made within three weeks.

Final Conclusion: Writ petition disposed: cess paid in the wrong head was refunded and the petitioner was permitted to remit KFC through KFC-A without penalty or late fee; interest paid by the petitioner shall be refunded after adjusting interest for 01.04.2021 to 31.07.2022, and the refund shall be made within three weeks.

Refund of unutilised input tax credit where rate on inputs exceeds rate on outputs (Section 54(3)(ii) of the GST Act) - Claimant's entitlement to refund where supplier paid higher tax than legally chargeable on input - Assessee cannot be required to pay tax in excess of the rate prescribed by law - Interest on delayed refund (Section 56 of the GST Act)

Refund of unutilised input tax credit where rate on inputs exceeds rate on outputs (Section 54(3)(ii) of the GST Act) - Claimant's entitlement to refund where supplier paid higher tax than legally chargeable on input - Whether the first respondent was entitled to refund of unutilised input tax credit where the supplier of inputs had paid IGST at 18% though the input and the final product were chargeable at 5%, under Section 54(3)(ii) of the GST Act. - HELD THAT: - The court noted there was no dispute that the vendor had paid IGST at 18% on the goods supplied and that the final product is chargeable at 5%. Section 54(3)(ii) permits refund where credit has accumulated because the rate of tax on inputs is higher than the rate on outputs. Applying that provision, the court held that where inputs were chargeable at 5% but tax was paid at 18%, the registered person is entitled to claim refund of the unutilised input tax credit. The second respondent had applied this provision and allowed the refund; the court found no error in that conclusion and endorsed the impugned order to that extent. [Paras 6, 7, 8, 9, 11]

The first respondent is entitled to refund under Section 54(3)(ii) of the GST Act as applied to the facts.

Assessee cannot be required to pay tax in excess of the rate prescribed by law - Whether the petitioner could compel the first respondent to pay IGST on the final product at the higher rate paid by its supplier (18%) instead of the rate prescribed by law (5%). - HELD THAT: - The court rejected the petitioner's contention that the first respondent should have charged IGST at 18% because the supplier paid 18% on inputs. It held that the revenue cannot insist that the assessee pay a higher rate of duty than the statutory rate applicable to the final product. The court found no substance in the submission seeking to require the assessee to collect or pay tax at a rate exceeding that prescribed in law and upheld the second respondent's rejection of that contention. [Paras 12]

The petitioner cannot require the first respondent to pay or collect IGST at 18% where the law prescribes 5% for the final product.

Interest on delayed refund (Section 56 of the GST Act) - Whether the first respondent was entitled to interest on the refund amount for the delay period. - HELD THAT: - Relying on Section 56 of the GST Act as applied by the second respondent, the court held that the first respondent is entitled to interest on the refund amount at the statutory rate for the period of delay. The court affirmed the grant of interest and directed the petitioner to deposit the refund amount along with interest into the first respondent's account within the stipulated period. [Paras 17, 18]

The first respondent is entitled to interest at the rate of 9% per annum on the refund amount for the delay period, and the petitioner was directed to deposit the refund with interest within 30 days.

Final Conclusion: Writ petitions dismissed. The court upheld the second respondent's order allowing refund under Section 54(3)(ii) of the GST Act, rejected the revenue's attempt to require payment of tax at a rate higher than prescribed by law, and directed payment of the refund with interest under Section 56 within 30 days.

Judicial review under Article 226 - appealable order under Section 107 of the CGST Act - demand and penalty under Section 73 of the CGST Act and Kerala SGST Act - interest under Section 50 of the CGST Act - compliance with principles of natural justice - extension of limitation by Central Board of Indirect Taxes notification No.53/23

Judicial review under Article 226 - demand and penalty under Section 73 of the CGST Act and Kerala SGST Act - compliance with principles of natural justice - Validity of Ext.P4 order confirming demand and imposing penalty and whether the writ petition under Article 226 is maintainable to challenge that order - HELD THAT: - The Court observed that its jurisdiction under Article 226 is limited to judicial review and it is not an appellate forum to reappreciate merits of an order which is otherwise within statutory competence. The impugned order (Ext.P4) confirming the demand and imposing penalty under the CGST and Kerala SGST Acts was held to be within the jurisdiction of the first respondent. The Court found that the petitioner was afforded opportunity to respond to the show cause notice and to be heard; accordingly there was no breach of the principles of natural justice. For these reasons the writ petition seeking to assail Ext.P4 was dismissed for want of jurisdiction to entertain an appellate reappraisal of the order.

Writ petition dismissed; Ext.P4 held intra vires the adjudicating authority's jurisdiction and not violative of natural justice.

Appealable order under Section 107 of the CGST Act - extension of limitation by Central Board of Indirect Taxes notification No.53/23 - Availability of alternative remedy in appeal and the effect of the CBIC notification extending limitation for filing appeals - HELD THAT: - The Court noted that Ext.P4 is appealable under Section 107 of the CGST Act and therefore the petitioner has an alternate statutory remedy of filing an appeal before the appellate authority. The Court adverted to notification No.53/23 issued by the Central Board of Indirect Taxes, extending the limitation for filing appeals up to 31.1.2024 for the assessment years 2017-18 and 2018-19, and observed that the petitioner may avail the appellate remedy in accordance with that extension. The interim order, if any, granted in the writ petition was directed to stand vacated and pending interlocutory applications were dismissed.

Petitioner permitted to file statutory appeal under Section 107 within the extended limitation period; interim relief, if any, vacated.

Final Conclusion: Writ petition challenging the assessment order confirming demand and penalty for April, 2018 to March, 2019 dismissed on judicial review; petitioner directed to pursue remedy by way of appeal under Section 107 of the CGST Act within the period extended by CBIC notification No.53/23, and any interim order in the writ petition stands vacated.

Limitation for filing appeal under Section 107 - Special procedure for belated appeals notified by the Central Government - Pre-deposit requirement for admission of appeals - Remand to Appellate Authority for fresh adjudication in accordance with law

Limitation for filing appeal under Section 107 - Special procedure for belated appeals notified by the Central Government - Impugned first appellate orders rejecting appeals as time-barred were set aside in view of the notified special procedure and matters remanded to the Appellate Authority. - HELD THAT: - The Court recognised Notification No.53/2023-Central Tax dated 2 November 2023 which notifies a class of taxable persons who could not file appeals by 31 March 2023 and prescribes a special procedure and time-limit (including submission in FORM GST APL-01 by 31 January 2024). In consequence of that notification the High Court held that the appeals previously rejected solely on the ground of delay cannot stand and directed that the impugned orders be set aside. The matters are remanded to the Appellate Authority to proceed in accordance with law and the terms of the notification, enabling the appellants to avail the special procedure for belated appeals.

Impugned appellate orders rejecting appeals as barred by time are set aside and matters remanded to the Appellate Authority to be proceeded with in accordance with law and the Notification.

Pre-deposit requirement for admission of appeals - Effect of interim orders on consideration of deposit and refund - Treatment of amounts deposited by petitioners and entitlement to refund while appeals remain pending under the notified procedure. - HELD THAT: - The Court observed that petitioners who have deposited the entire amount of tax should have that deposit taken into account by the Appellate Authority while deciding the appeals on merits. Any refund, if payable, is to be subjected to the outcome of the appeal. This reflects the requirement in the notification that specified payments (including admitted tax and a percentage pre-deposit) are conditions for filing under the special procedure and that refunds shall not be granted until disposal of the appeal.

Amounts deposited by petitioners shall be taken into account by the Appellate Authority; any refund will be subject to the outcome of the appeal.

Final Conclusion: Writ petitions disposed of by setting aside the impugned time-bar rejections in view of Notification No.53/2023 and remanding the matters to the Appellate Authority to proceed in accordance with law and the notification; deposits made by petitioners to be taken into account and refunds, if any, governed by the appeal outcome.

Treatment of inadvertent error in TRAN-1 column selection - processing of TRAN-1 claims under Column 7(b) - remand for verification of tax credit claim - setting aside of impugned order and consequential notice - no expression on merits; authority to decide on evidence

Treatment of inadvertent error in TRAN-1 column selection - processing of TRAN-1 claims under Column 7(b) - remand for verification of tax credit claim - Impugned order set aside and claim remitted for consideration as a Column 7(b) TRAN-1 claim if supported by documents - HELD THAT: - The petitioner asserted that a claim for transitional CENVAT credit was inadvertently made under Column 7(d) instead of Column 7(b) and stated that supporting invoices/documents exist. The Court noted precedent where a similar inadvertent misclassification was permitted to be corrected by verification of supporting material. Having perused the records and the petitioner's contention that documents exist to support a Column 7(b) claim, the Court set aside the impugned order and remitted the matter to respondent No.1 for fresh consideration. The authority is directed to verify whether supporting documents establish entitlement under Column 7(b), and if so to grant consequent relief. The Court explicitly refrained from expressing any opinion on the merits and left the merits to be decided by the authority in accordance with law. The Court also quashed the impugned Annexure-K and the consequential notice Annexure-L and imposed a timeframe for processing. [Paras 10, 11, 12, 13, 14]

Impugned order and consequential notice set aside; matter remitted to respondent No.1 to consider the petitioner's claim under Column 7(b) on verification of supporting documents and to process the claim within three months; merits left to the authority.

Final Conclusion: Writ petition allowed in part: the impugned order (Annexure-K) and consequential notice (Annexure-L) are set aside; respondent No.1 to verify and process the petitioner's TRAN-1 claim under Column 7(b) if supported by documents, and conclude processing within three months; no opinion expressed on merits.

Input tax credit - reconciliation of GSTR-3B and GSTR-2A - application of Circular No. 183/15/2022-GST dated 27.12.2022 - possession of tax invoice, receipt of goods/services and payment to supplier (conditions of Section 16) - remand for reconsideration of claim irrespective of GSTR-2A - preliminary deposit as condition for reconsideration

Input tax credit - reconciliation of GSTR-3B and GSTR-2A - application of Circular No. 183/15/2022-GST dated 27.12.2022 - remand for reconsideration of claim irrespective of GSTR-2A - Lawfulness of denying input tax credit solely because the credit claimed in Form GSTR-3B does not reflect in Form GSTR-2A for FY 2017-18. - HELD THAT: - The Court, having regard to Circular No. 183/15/2022-GST dated 27.12.2022 and earlier decision in Diya Agencies , held that denial of input tax credit merely because the amount claimed in Form GSTR-3B is not reflected in Form GSTR-2A is not sustainable. The matter was remitted to the Assessing Authority for fresh consideration of the petitioner's claim for input tax credit for financial year 2017-18, directing that the Assessing Authority examine the evidence tendered by the petitioner and apply the procedure and safeguards set out in the Circular (including verification of conditions relating to possession of tax invoice, receipt of goods/services and payment to the supplier and the relevant certification requirements where applicable). The Court emphasised that bona fide reporting errors in 2017-18 may be addressed under the Circular and that the claim must be considered on its merits irrespective of its non-reflection in GSTR-2A. [Paras 4]

Impugned orders dated 14.06.2023 and 16.06.2023 set aside and matter remitted to the Assessing Authority to reconsider the petitioner's claim for input tax credit for financial year 2017-18 in accordance with law and Circular No.183/15/2022-GST.

Preliminary deposit as condition for reconsideration - remand for reconsideration - Interim procedural condition imposed by the Court for remand and consequences in case the Assessing Authority rejects the claim. - HELD THAT: - The Court conditioned the remand on the petitioner depositing 10% of the amount assessed within fifteen days and directed the petitioner to appear before the Assessing Authority with all documents and evidence. The Court further directed that if, upon reconsideration, the Assessing Authority finds the petitioner's claim unjustified, the petitioner would be liable to remit the remaining amount; the 10% deposited would be subject to the final decision of the Assessing Authority. The directions set a timetable for appearance before the Assessing Authority and require compliance with the Circular and examination of evidence on merits. [Paras 4]

Remand granted subject to deposit of 10% of the assessed amount within fifteen days and appearance before the Assessing Authority; deposit to be subject to the final decision and remaining liability to be determined after reconsideration.

Final Conclusion: Writ petition allowed; impugned assessment orders set aside and matter remitted to the Assessing Authority to reconsider the petitioner's claim for input tax credit for financial year 2017-18 in accordance with Circular No.183/15/2022-GST and law, subject to the petitioner making a 10% preliminary deposit and complying with the directions given.

Jurisdiction to entertain belated appeal beyond statutory limitation - condonation of delay in statutory appeals - finality of period of limitation and absence of judicial exception - binding precedent of the Supreme Court under Article 141 - exercise of writ jurisdiction under Article 226 to extend limitation

Jurisdiction to entertain belated appeal beyond statutory limitation - condonation of delay in statutory appeals - Appellate authority lacked jurisdiction to entertain an appeal filed beyond the statutory period of 60 days plus the further 30 days condonable period specified under Section 107. - HELD THAT: - The Court found that Section 107 prescribes a primary period of 60 days for filing an appeal and an additional discretionary period of 30 days which the appellate authority may condone on sufficient reasons. Where an appeal is filed after the combined period of 60 + 30 days, the statutory scheme leaves no power in the appellate authority to condone further delay. Reliance on the Apex Court decision in National Spot Exchange Limited demonstrating that courts cannot carve out exceptions to statutory limitation periods reinforced the conclusion that the appellate authority was justified in refusing to entertain the belated appeal. Consequently, the appellate authority's decision declining to admit the appeal on the ground of delay was affirmed on the question of jurisdiction. [Paras 4, 6, 7, 11]

Appeal filed after expiry of 60+30 days could not be condoned and the appellate authority rightly refused to entertain the belated appeal.

Finality of period of limitation and absence of judicial exception - binding precedent of the Supreme Court under Article 141 - exercise of writ jurisdiction under Article 226 to extend limitation - High Court could not follow an unreported Division Bench decision to permit condonation contrary to the Supreme Court's binding law; Article 226 cannot be used to override the statutory limitation prescribed under Section 107. - HELD THAT: - The Court held that where the Supreme Court has laid down a clear rule regarding the non-existence of judicially created exceptions to statutory limitation, High Courts must follow that precedent. The Division Bench's unreported decision in Simplex Infrastructures, which allowed condonation in its peculiar facts, did not lay down a binding ratio applicable against the Apex Court's pronouncement. Moreover, the Constitutional supervisory jurisdiction under Article 226 does not permit the High Court to extend or contravene the statutory period of limitation prescribed for appeals under Section 107. Therefore, the petitioner could not rely on the Division Bench direction to condone delay when it conflicted with the binding Supreme Court precedent. [Paras 5, 9, 10, 11]

The High Court will not follow the unreported Division Bench direction where it conflicts with binding Supreme Court authority; Article 226 cannot be invoked to condone the statutory limitation under Section 107.

Final Conclusion: Writ petition dismissed; the appellate authority's refusal to entertain the belated appeal was upheld and the petitioner was not entitled to condonation of delay beyond the statutory 60+30 days.

Right to statutory appeal - non-constitution of Appellate Tribunal - stay of recovery pending appeal - statutory deposit condition for stay under Section 112(9) of the B.G.S.T. Act - limitation period to commence upon constitution of the Tribunal

Right to statutory appeal - non-constitution of Appellate Tribunal - Petitioner deprived of statutory remedy of appeal because the Appellate Tribunal under the B.G.S.T. Act has not been constituted. - HELD THAT: - The Court recorded that the petitioner seeks to avail the statutory remedy of appeal under Section 112 of the B.G.S.T. Act but has been prevented from doing so by reason of non-constitution of the Tribunal. The respondent-State itself acknowledged non-constitution and issued a notification under the powers in Section 172 providing that the period of limitation for preferring an appeal will commence only after the President or State President of the Tribunal enters office. On this factual and legal foundation the Court recognised that the statutory remedy is presently inaccessible to the petitioner. [Paras 3, 5]

Petitioner's inability to file an appeal is attributable to non-constitution of the Tribunal and is acknowledged by the State; the Court proceeded to grant interim relief to mitigate that deprivation.

Stay of recovery pending appeal - statutory deposit condition for stay under Section 112(9) of the B.G.S.T. Act - Whether the petitioner is entitled to the statutory benefit of stay of recovery under Sub Section (9) of Section 112 of the B.G.S.T. Act despite non-constitution of the Tribunal, and on what terms. - HELD THAT: - The Court held that the petitioner cannot be deprived of the statutory stay merely because the Tribunal has not been constituted by the State authorities. Balancing the equities, the Court directed that, subject to deposit of an amount equal to 20% of the remaining tax in dispute (in addition to any earlier deposit under Section 107(6) of the B.G.S.T. Act), the petitioner shall be extended the benefit of stay under Sub Section (9) of Section 112. The Court treated recovery proceedings and any steps taken as stayed upon compliance with this deposit condition and observed precedent where similar relief was granted by the Court. [Paras 4, 6]

On payment of the specified deposit, the petitioner is granted the statutory stay of recovery under Sub Section (9) of Section 112, and recovery steps are to be treated as stayed.

Limitation period to commence upon constitution of the Tribunal - right to statutory appeal - Scope and temporal limit of the interim stay and obligations placed on the petitioner once the Tribunal is constituted. - HELD THAT: - The Court made clear that the interim stay granted is not open ended. It directed that once the Tribunal is constituted and the President or State President enters office, the petitioner is to present/file the appeal under Section 112 observing statutory requirements to enable consideration of the appeal. The Court further provided that if the petitioner elects not to file the appeal within any period specified upon constitution of the Tribunal, the respondent authorities would be at liberty to proceed in accordance with law. This preserves the State's right to continue proceedings if the statutory appellate remedy is not pursued when made available. [Paras 6]

The stay is conditional and time limited: the petitioner must file the statutory appeal once the Tribunal is constituted, failing which the authorities may proceed.

Stay of recovery pending appeal - Effect of compliance with deposit condition on attachments made pursuant to the demand. - HELD THAT: - The Court directed that if the petitioner complies with the order by depositing a sum equivalent to 20% of the remaining tax in dispute, any attachment of the petitioner's bank account made pursuant to the demand shall be released. This relief is consequential to the grant of the stay on recovery upon compliance with the prescribed deposit. [Paras 6]

Upon payment of the specified deposit, any bank attachment made pursuant to the demand shall be released.

Final Conclusion: Writ petition disposed of by granting an interim stay of recovery under Sub Section (9) of Section 112 of the B.G.S.T. Act on the petitioner depositing 20% of the remaining tax in dispute (in addition to prior deposits); the stay is limited and contingent upon the petitioner filing the statutory appeal once the Tribunal is constituted, and failure to do so will permit respondents to proceed; compliance will also lead to release of bank attachments.

Summary order. Permission granted to withdraw the petition; petition disposed of as withdrawn. Court has not considered merits; all contentions of the petitioner are kept open. While deciding the appeal on limitation under Section 107 of the CGST Act, the pendency of this petition shall be taken into account.

Summary order. Early hearing application dismissed as not pressed; bail application dismissed as withdrawn with liberty to approach the trial court; listed hearing date cancelled; trial court directed not to be influenced by withdrawal since no arguments were addressed before this Court.

Right to seek revocation of registration - failure of administrative portal / non-availability of order - remedy for administrative lapses - restoration of registration

Failure of administrative portal / non-availability of order - remedy for administrative lapses - Effect of non-availability of the order of cancellation on the portal and the petitioner's entitlement to redress - HELD THAT: - The Court found that the purported order of cancellation dated 26th January, 2023 is not available on the departmental portal, the respondent could not produce the original order and the petitioner has not been furnished any hard copy. In these circumstances the Court held that the petitioner cannot be left remediless because of a systemic lapse in the department. The absence of the original order on the portal and failure to furnish a copy defeat the petitioner's ability to seek statutory remedies allowed against cancellation of registration. The court recognised that administrative or technical failure cannot be permitted to extinguish the procedural rights of the taxpayer. [Paras 2, 3, 4]

Petitioner entitled to relief because departmental non-availability of the cancellation order deprives him of the right to seek revocation or appeal.

Right to seek revocation of registration - restoration of registration - Relief to be granted in consequence of the departmental lapse and the directions to be followed by the CGST authority - HELD THAT: - Having concluded that the petitioner cannot be remediless, the Court directed the respondent CGST authority to hand over the original hard copy of the order of cancellation to the petitioner within fifteen days. If the original order is furnished within that period the petitioner will be entitled to file an application for revocation on the basis of that hard copy. If the department fails to furnish the original order within fifteen days, the Court directed restoration of the petitioner's registration with liberty to the department to initiate any fresh proceeding thereafter. These directions seek to protect the petitioner's procedural rights while preserving the department's ability to examine the matter afresh if the original order cannot be produced. [Paras 5, 6]

Respondent to furnish original order within fifteen days; if furnished petitioner may file revocation; if not furnished, registration to be restored and department given liberty to initiate fresh proceedings.

Final Conclusion: Writ petition disposed by directing the CGST authority to furnish the original hard copy of the cancellation order within fifteen days; if furnished the petitioner may apply for revocation on that basis, and in default of furnishing the original order the petitioner's registration shall be restored with liberty to the department to initiate fresh proceedings.

Deduction under section 36(1)(viia) - Rule 6ABA - computation of aggregate average advances - Applicability of section 115JB (Minimum Alternate Tax) to banks constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act - Remand for fresh consideration of additions to book profit under section 115JB

Deduction under section 36(1)(viia) - Rule 6ABA - computation of aggregate average advances - Whether the aggregate average advances for computing the limit of deduction under section 36(1)(viia) must be computed by taking into account outstanding advances at the end of each month as well as fresh advances (and not only incremental advances). - HELD THAT: - The Tribunal, following the decision of the jurisdictional High Court in CIT, LTU v. Canara Bank, held that Rule 6ABA requires consideration of amounts of advances outstanding at the last day of each month as they fluctuate with advances made and repayments received; the language of the Rule does not mandate considering only incremental advances. The Tribunal noted that co-ordinate Bench and other authorities have accepted the method of computation adopted by the assessee and that those decisions have attained finality. Applying that precedent, the Tribunal allowed the ground relating to disallowance under section 36(1)(viia) and directed that both advances outstanding and fresh advances be considered for computing the aggregate average advances. [Paras 10]

Ground relating to disallowance under section 36(1)(viia) allowed; aggregate average advances computed by reference to outstanding at month end as well as fresh advances.

Applicability of section 115JB (Minimum Alternate Tax) to banks constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act - Remand for fresh consideration of additions to book profit under section 115JB - Whether section 115JB applies to the assessee bank for the impugned assessment years and whether the additions made to arrive at book profit under section 115JB are sustainable. - HELD THAT: - The Tribunal did not decide the merits of applicability of section 115JB to the assessee bank. Noting that the coordinate Bench in the assessee's own earlier matter had set aside the CIT(A)'s conclusion and directed fresh examination (including effect of specific provisions of the Banking Regulations Act and the Companies Act), the Tribunal restored the issue to the file of the CIT(A) for fresh consideration and directed that the CIT(A) follow the earlier Tribunal directions, afford the assessee a reasonable opportunity of hearing and examine the applicability afresh. Consequentially, the additions made by the A.O. to book profit under section 115JB, which were sustained by the CIT(A), are also remitted to the CIT(A) for fresh examination in light of the remitted issue on applicability. [Paras 11, 12, 13]

Issue of applicability of section 115JB and the additions to book profit under that section remitted to the CIT(A) for fresh consideration and decision as per law; remand allowed for statistical purposes.

Final Conclusion: Appeals partly allowed: deduction under section 36(1)(viia) upheld in favour of the assessee (average aggregate advances to include month end outstanding as well as fresh advances); question of applicability of section 115JB to the assessee bank and related additions to book profit remitted to the CIT(A) for fresh consideration in accordance with the Tribunal's directions.

Deduction under Section 80HHC - profits of business from export - "derived from" test - direct nexus / proximate source - EEFC account as facilitative facility - strict interpretation of taxing statute

Deduction under Section 80HHC - "derived from" test - profits of business from export - EEFC account as facilitative facility - direct nexus / proximate source - strict interpretation of taxing statute - Whether gain on foreign exchange fluctuation in the assessee's EEFC account qualifies as profits "derived from" export of goods and is eligible for deduction under Section 80HHC. - HELD THAT: - The Court held that Section 80HHC permits a deduction only for profits which are derived from the export of goods or merchandise, and the expression "derived from" must be given a narrow, proximate-source meaning. An EEFC account is an optional facilitative device created by RBI under FERA notifications to enable exporters to retain and transact in foreign currency; it is not a statutory incident of the export activity nor a mandatory adjunct of the assessee's export business. Applying the settled principle that taxing provisions (including deductions) are to be strictly construed and the jurisprudence treating "derived from" as requiring a direct nexus to the industrial/export undertaking, the Court found that gains arising from exchange-rate fluctuation on amounts parked in an EEFC account do not have the requisite immediate or effective source in the export activity. The Court distinguished authorities relied upon by the assessee (including cases treating statutorily conferred receipts as export-derived) on the ground that those receipts arose from a statutory scheme or had a direct link to export operations; no similar statutory character or proximate link was shown for the EEFC appreciation in this case. Consequently, the profit from exchange fluctuation is independent of export earnings and cannot be included in the computation of deduction under Section 80HHC. [Paras 6, 7, 12, 13, 14]

The gain from foreign exchange fluctuation in the EEFC account is not "derived from" the export of garments and is not eligible for deduction under Section 80HHC; the appeals are dismissed.

Final Conclusion: The Supreme Court dismissed the Civil Appeals, holding that exchange-rate gains on amounts credited to an EEFC account do not constitute profits "derived from" export of goods and therefore are not deductible under Section 80HHC.

Maintainability of writ petition after voluntary withdrawal of statutory appeal - substance over form in notice of assessment - notice under Section 143(2) of the Income Tax Act - protection against technical infirmities by Sections 292B and 292BB - restoration of withdrawn appeals and adjudication on merits

Maintainability of writ petition after voluntary withdrawal of statutory appeal - Whether the writ petitions are maintainable where the assessee voluntarily withdrew appeals pending before the CIT(A) and initiated writ proceedings in this Court - HELD THAT: - The Court found that the petitioner had filed appeals before the Commissioner of Income-tax (Appeals) against the assessment orders and subsequently withdrew those appeals of its own volition while pursuing writ petitions. The High Court had earlier permitted withdrawal of prior writ petitions only to cure technical defects and to file afresh, but had not granted leave to withdraw the statutory appeals before the appellate authority. Withdrawal of the appeals was therefore not pursuant to any direction of this Court and the petitioner elected to abandon the statutory remedy in favour of writ jurisdiction. On this basis the Court held that the writ petitions were not maintainable. [Paras 11]

Writ petitions are not maintainable on the ground of voluntary withdrawal of appeals filed before the Commissioner of Income-tax (Appeals).

Notice under Section 143(2) of the Income Tax Act - substance over form in notice of assessment - protection against technical infirmities by Sections 292B and 292BB - Whether assessments completed under Section 143(3) read with Section 147 are invalid for want of a valid notice under Section 143(2) where the notice did not expressly cite the provision but the assessee received and participated in the proceedings - HELD THAT: - Having considered the record the Court found that the petitioner was served with a notice of hearing (Annexure-R(a)) and had actively participated in the proceedings, as reflected in the assessing officer's order sheet. The Court held that the absence of an express citation to Section 143(2) in the notice does not vitiate the notice where, in substance, it operated as a notice under Section 143(2) and the assessee received and responded to it. Reliance on the decision in Hotel Blue Moon was held to be distinguishable on facts because there the notice was not served. Further, Sections 292B and 292BB bar an assessee from raising technical objections to notices when it has participated in the proceedings; accordingly the assessments could not be impugned on the narrow technical ground of non-mention of the provision. [Paras 12, 13]

Assessments are not invalidated merely by omission of the specific statutory reference in the notice where the notice in substance summoned the assessee and the assessee participated; technical objections are barred by Sections 292B and 292BB.

Restoration of withdrawn appeals and adjudication on merits - Relief to be granted notwithstanding dismissal of writ petitions - HELD THAT: - Although the writ petitions were dismissed, the Court directed restoration of the appeals which had been withdrawn by the petitioner before the CIT(A). If the earlier appeal records are not available, the petitioner was permitted to re-file copies of the earlier appeals within fifteen days. The Commissioner (Appeals) was directed to decide the appeals on merits without entering into the question of limitation, and the petitioner is free to raise all grounds in the appellate proceedings. The appellate authority must decide uninfluenced by this Court's observations. [Paras 14]

Appeals withdrawn by the petitioner are to be restored or re-filed and decided on merits by the CIT(A) in accordance with law; writ petitions are dismissed.

Final Conclusion: Writ petitions dismissed as not maintainable; assessments upheld against the narrow technical challenge to the notice where the assessee received and participated in proceedings; withdrawn appeals to be restored or re-filed and decided on merits by the Commissioner (Appeals) without considering limitation, and the petitioner may agitate all grounds before the appellate authority.

Re-opening of assessment under Section 148 - change of opinion - non-disclosure of fully and truly all material facts - Explanation 1 to Section 147 - proviso to Section 147 - availability of statutory remedy of appeal under Section 246A

Re-opening of assessment under Section 148 - change of opinion - Validity of reassessment proceedings insofar as they are alleged to be based on a mere change of opinion - HELD THAT: - The Court examined whether the notice under Section 148 was impermissible as amounting to a re-opening based merely on a change of opinion. The assessment for AY 2014-15 had earlier been completed under Section 143(3) after the assessee had produced valuation materials. The authorities subsequently formed a belief that income chargeable under Section 56(2)(viib) had escaped assessment and issued a notice under Section 148 with sanction under Section 151. The Court found that the reasons recorded disclose formation of an opinion that income had escaped assessment due to non-disclosure of material facts, and that the sanction was not granted mechanically. On this basis the Court held that the reassessment could not be struck down merely on the ground that it involved a change of opinion. [Paras 5, 6]

Re-opening of assessment was not vitiated as being a mere change of opinion.

Non-disclosure of fully and truly all material facts - Explanation 1 to Section 147 - proviso to Section 147 - Whether the petitioner had disclosed fully and truly all material facts so as to preclude invocation of the extended limitation under the proviso to Section 147 - HELD THAT: - The Court considered whether mere production of books of account and a valuation certificate amounted to full and true disclosure within the meaning of the proviso to Section 147 read with Explanation 1. It noted that Explanation 1 contemplates that production of evidence from which material could, with due diligence, be discovered by the Assessing Officer does not necessarily amount to disclosure. The valuation submitted related to a date after the acquisition and, on the Revenue's case, did not correctly reflect fair market value at the relevant time. On the facts, the Court found that the assessee had not discharged the obligation to disclose fully and truly all material facts and that the Assessing Officer had reason to believe income had escaped assessment, justifying re-opening under the extended period. [Paras 6]

Assessee did not establish full and true disclosure; invocation of extended period under proviso to Section 147 was not erroneous.

Availability of statutory remedy of appeal under Section 246A - Maintainability of writ petition in view of the availability of an efficacious statutory remedy - HELD THAT: - The Court observed that the reassessment culminated in a final assessment order (Ext.P21) against which the assessee has a statutory remedy of appeal under Section 246A. Given that remedy, the Court declined to entertain the extraordinary writ challenge to the assessment order on merits. However, the Court granted limited relief by permitting the assessee to file the statutory appeal within three weeks and directed the Appellate Authority to decide the appeal on merits and, if filed within the stipulated period, without being influenced by the Court's observations and without going into limitation. [Paras 6]

Writ petition dismissed as statutory remedy is available; liberty granted to file appeal within three weeks and direction to appellate authority to decide on merits.

Final Conclusion: The writ petition is dismissed. The Court found no jurisdictional error in re-opening the assessment, held that the assessee had not made full and true disclosure so as to bar reassessment under the extended period, and declined to entertain the writ in view of the statutory appeal remedy, while granting liberty to file an appeal within three weeks to be decided on merits by the Appellate Authority.

Penalty under Section 271(1)(c) - concealment of particulars - furnishing inaccurate particulars - bonafide belief/bonafide explanation - change of head of income - investment versus stock-in-trade

Penalty under Section 271(1)(c) - concealment of particulars - furnishing inaccurate particulars - bonafide belief/bonafide explanation - change of head of income - investment versus stock-in-trade - Validity of levy of penalty under Section 271(1)(c) where assessee declared gains as long term capital gains but revenue treated them as business income - HELD THAT: - The Court held that Section 271(1)(c) requires concealment of particulars or furnishing of inaccurate particulars; mere disagreement on the legal characterisation of disclosed receipts does not amount to concealment or inaccurate particulars. The Tribunal's view that a bonafide explanation for treating items under a particular head, even if not accepted by the Assessing Officer, precludes penal consequences was endorsed. The Court distinguished reliance placed on Jeevan Lal Sah because the Explanation relied upon had been deleted prior to the assessment; it relied instead on precedent (including Cement Marketing and Reliance Petroproducts) that a bona fide, arguable view taken by an assessee, with full disclosure of the transaction, negatives the guilty mind necessary for invoking the penal provision. The earlier High Court finding in the assessee's quantum appeal was a factual conclusion on classification (investment v. trading) and did not constitute a finding of concealment or furnishing of inaccurate particulars; the Department could not treat that factual conclusion as conclusive proof of suppression for penalty purposes. Applying these principles, the Court concluded that merely making an incorrect claim in law as to the head of income, when the transaction and amounts were disclosed, does not attract penalty under Section 271(1)(c). [Paras 29, 30, 31, 33, 34]

Penalty under Section 271(1)(c) could not be sustained where the income was disclosed and the classification as capital gains was a bona fide, arguable view; appeal dismissed.

Final Conclusion: The appeal is dismissed; levy of penalty under Section 271(1)(c) cannot be sustained where the assessee disclosed the transactions and bona fide claimed the income as capital gains despite the revenue treating it as business income.

Validity of assessment framed without issuance of notice under Section 143(2) - Non-applicability of Section 292BB to cure complete absence of notice - Deemed service by participation in proceedings - Condonation of delay in re-filing appeal

Condonation of delay in re-filing appeal - Application for condonation of delay of 430 days in re-filing the appeal - HELD THAT: - Although the delay in re-filing the appeal was substantial, the High Court exercised its discretion to condone the delay in order to take the appeal up for hearing on merits. The court recorded that the delay is condoned and the application is disposed of on those terms. [Paras 2]

Delay in re-filing is condoned and the application is disposed of.

Validity of assessment framed without issuance of notice under Section 143(2) - Non-applicability of Section 292BB to cure complete absence of notice - Deemed service by participation in proceedings - Whether an assessment order passed under Section 143(3) is rendered defective where no notice under Section 143(2) was ever issued, having regard to Section 292BB - HELD THAT: - Both the Commissioner (Appeals) and the Tribunal found as a fact that no notice under Section 143(2) was issued before framing the assessment. The revenue relied on Section 292BB, contending that the assessee's participation in proceedings would cure any defect. The Court, applying the principle in Commissioner of Income-tax v. Laxman Das Khandelwal, held that Section 292BB remedies infirmities in the service of a notice that has emanated from the Department but does not cure the complete absence of a notice. Consequently, where no notice under Section 143(2) was issued at all, Section 292BB is inapplicable and the assessment is rendered defective. Having regard to that conclusion, the High Court found no reason to interfere with the orders of the CIT(A) and the Tribunal which had set aside the assessment on that ground. [Paras 17, 18, 19]

The assessment framed in the absence of any notice under Section 143(2) is defective; Section 292BB does not validate a complete absence of notice, and therefore no interference is called for with the orders of the lower authorities.

Final Conclusion: The application for condonation of delay in re-filing is allowed; on the merits, the High Court affirms the finding that no notice under Section 143(2) was issued and that Section 292BB cannot cure the complete absence of such notice, hence the assessment was correctly set aside by the CIT(A) and Tribunal and the appeal is closed.

Appeal under Section 260A - non-appealability of rectification orders under Section 254(2) - substantial question of law - maintainability of appeal - claim under Section 10(38) for exemption on long-term capital gains - revised return filed under duress - withdrawal of monetary limit for filing appeals by CBDT circular

Non-appealability of rectification orders under Section 254(2) - appeal under Section 260A - maintainability of appeal - Whether an appeal under Section 260A lies against the ITAT's order disposing of a Miscellaneous Application under Section 254(2). - HELD THAT: - The Court examined the scope of Section 260A and the nature of orders passed under Section 254(2). Section 260A permits appeals to the High Court from "every order passed in appeal by the Appellate Tribunal" where a substantial question of law arises. An order under Section 254(2) is a rectification/recall provision permitting amendment of an order to correct a mistake apparent from the record and does not transform such an order into an "order passed in appeal" within the meaning of Section 260A. Reliance was placed on earlier High Court decisions treating Section 254(2) orders as not appealable and on the statutory scheme which confines appeals under Section 260A to appellate orders disposing of appeals on merits. Consequently, the impugned order in the Miscellaneous Application under Section 254(2) is not amenable to an appeal under Section 260A, and the Income Tax Appeal is not maintainable on that ground. [Paras 7, 9, 10, 16]

The appeal under Section 260A against the ITAT's order in the Miscellaneous Application filed under Section 254(2) is not maintainable.

Substantial question of law - appeal under Section 260A - Whether the present appeal involves any substantial question of law warranting interference by the High Court. - HELD THAT: - The Court considered the orders of the Assessing Officer, the CIT(A) and the ITAT and concluded that the claim under Section 10(38) and the circumstances in which the revised return was filed had been examined and the ITAT's conclusion was in concurrence with the view of the CIT(A). The High Court found no substantial question of law arising from the impugned ITAT order which would justify admission of an appeal under Section 260A. In the absence of any substantial question of law, the statutory requirement for entertaining an appeal to the High Court is not satisfied. [Paras 5, 6, 9]

No substantial question of law arises from the ITAT's order; therefore the appeal under Section 260A cannot be entertained on that basis.

Claim under Section 10(38) for exemption on long-term capital gains - revised return filed under duress - withdrawal of monetary limit for filing appeals by CBDT circular - Whether the ITAT erred in dismissing the Revenue's appeal and in refusing the Miscellaneous Application seeking adjudication on merits after issuance of CBDT circulars withdrawing the monetary limit. - HELD THAT: - On merits, the High Court reviewed the Assessing Officer's treatment of the Section 10(38) claim and the subsequent decisions at appellate levels. The Court found that the CIT(A) and the ITAT had properly considered the claim, including the applicability of the CBDT circulars permitting reassessment of certain claims and allowing revised returns in appropriate circumstances. The ITAT's dismissal of the Revenue's appeal on the ground of low tax effect and its subsequent denial of the Miscellaneous Application were examined in context: even though CBDT had issued circulars addressing organized bogus LTCG/STCL cases and modifying the monetary-limit policy, the Tribunal's earlier dismissal on low tax effect and its order on the Miscellaneous Application did not disclose a mistake apparent on the record warranting recall under Section 254(2). The Court therefore found no error in the ITAT's concurrent view upholding the CIT(A) and dismissed the Revenue's challenge on merits and maintainability grounds. [Paras 2, 5, 6, 10]

The ITAT did not commit error in accepting the assessee's position and in dismissing the Revenue's Miscellaneous Application; the Revenue's challenge is without merit.

Final Conclusion: The Income Tax Appeal is dismissed: the order passed by the ITAT in the Miscellaneous Application under Section 254(2) is not appealable under Section 260A and no substantial question of law arises; on the merits the ITAT's concurrence with the CIT(A) in favour of the assessee is unexceptionable.

Foreign Tax Credit - filing of Form-67 for claiming foreign tax credit - directory versus mandatory nature of procedural requirements under Rule 128 - compliance by filing claim before conclusion of assessment proceedings - intimation under Section 143(1) and effect on claim

Foreign Tax Credit - filing of Form-67 for claiming foreign tax credit - Rule 128 - compliance before final assessment order - Whether filing Form-67 after filing the return but before completion of assessment suffices for claiming Foreign Tax Credit and whether Rule 128 is mandatory or directory - HELD THAT: - The Court held that the rule prescribing filing of Form-67 is procedural and directory in nature and does not defeat the substantive right to claim Foreign Tax Credit where the form was furnished before completion of the assessment proceedings. The petitioner filed his return without Form-67 but uploaded Form-67 on 02.02.2021, which was prior to the intimation under Section 143(1) issued on 26.03.2021; hence the claim was filed before the finalisation of the assessment. The Court applied the principle in Commissioner of Income-Tax, Maharashtra v. G.M.Knitting Industries , where it was held that a statutory form required to be filed with the return, if filed subsequently during assessment proceedings but before the final order, amounts to sufficient compliance; the same reasoning was found squarely applicable. Since the petitioner had furnished the requisite Form-67 before conclusion of the assessment, rejection of the FTC on the ground of non-filing with the return was not in accordance with law. The Court therefore set aside the order rejecting FTC and remitted the matter to the respondent to reconsider and give credit for the Kenya income, limited to the question of rejection of the FTC claim. [Paras 11, 12, 13]

Rule 128 is directory; filing of Form-67 on 02.02.2021 (before completion of assessment) sufficed and the order rejecting the FTC is set aside; matter remitted for reassessment to give credit for the Kenya income within eight weeks.

Final Conclusion: The impugned order dated 25.01.2022 rejecting the Foreign Tax Credit claim is set aside to the extent of the rejection; the matter is remitted to the respondent to reconsider and grant credit for the petitioner's Kenya income on the basis of Form-67 filed on 02.02.2021, and a final assessment order on that aspect is to be passed within eight weeks.

Reopening of assessment beyond four years - reason to believe for reopening (sufficiency and nexus with material) - change of opinion doctrine - roving and fishing inquiry impermissible under reassessment powers - full and true disclosure / burden on revenue to show nondisclosure - scrutiny assessment and prior disclosure of unsecured loans

Reopening of assessment beyond four years - reason to believe for reopening (sufficiency and nexus with material) - change of opinion doctrine - full and true disclosure / burden on revenue to show nondisclosure - roving and fishing inquiry impermissible under reassessment powers - scrutiny assessment and prior disclosure of unsecured loans - Validity of the notice dated 30.04.2019 under Section 148 reopening assessment for Assessment Year 2012-13 - HELD THAT: - The Court held that reopening beyond four years imposes on the revenue the burden to demonstrate that the assessee did not truly and fully disclose income. The record showed that the petitioner's case had undergone scrutiny assessment, the books and audit (Form 3CA/3CD) disclosed unsecured loans, and the Assessing Officer had specifically sought and received detailed particulars and confirmations regarding such loans during the earlier scrutiny. The reasons recorded for reopening relied on information from an investigation in another person's case and on a declaration and tabular extracts which, on the material before the Court, failed to establish a direct nexus or live link between that material and the petitioner's transactions. The Court found the reasons to be founded on suspicion and to amount to a roving and fishing inquiry rather than tangible material demonstrating escaped income; consequently, the reopening amounted to an impermissible change of opinion rather than a bona fide belief grounded in credible material. For these reasons the notice was held to be invalid. [Paras 6, 7, 8]

The notice dated 30.04.2019 under Section 148 for Assessment Year 2012-13 is quashed and set aside.

Final Conclusion: The petition under Article 226 is allowed; the reassessment notice dated 30.04.2019 for Assessment Year 2012-13 is quashed and set aside.

Final assessment order passed without incorporating DRP directions - remittance to Assessing Officer to give effect to DRP/TPO directions - binding effect of jurisdictional High Court precedents - scheme of section 144C of the Act

Final assessment order passed without incorporating DRP directions - scheme of section 144C of the Act - binding effect of jurisdictional High Court precedents - remittance to Assessing Officer to give effect to DRP/TPO directions - Validity of the final assessment order passed without giving effect to the Dispute Resolution Panel's directions and the appropriate remedy. - HELD THAT: - The Tribunal examined whether the AO's final assessment order, passed without incorporating the DRP's directions because the TPO's order giving effect thereto was not on record, was legally sustainable. Having regard to binding decisions of the jurisdictional High Court which dealt with identical factual situations, the Tribunal held that such failure to follow the procedure under the scheme of section 144C rendered the final order susceptible to being set aside. Applying those precedents, the Tribunal concluded that the proper remedy is not to uphold the order as valid but to remand the matter so that the DRP/AO/TPO can give effect to the DRP directions in accordance with the statutory scheme. Consequently the matter was restored to the file of the AO for passing a fresh order incorporating the DRP's directions as given effect by the TPO. As the remand was directed to enable compliance with the statutory procedure, other grounds raised by the assessee were not adjudicated at this stage. [Paras 6, 8, 9]

Matter remitted to the Assessing Officer to pass an assessment order incorporating the DRP's directions as given effect by the TPO; other grounds left open.

Final Conclusion: Appeal allowed for statistical purposes; final assessment order set aside to the extent that it did not give effect to the DRP's directions and the matter is remitted to the AO for compliance with the DRP/TPO directions under the scheme of section 144C.

Validity of DRP directions without Document Identification Number (DIN) - Mandatory compliance with CBDT Circular No. 19/2019 for quoting DIN in communications and orders - Consequential invalidity of assessment orders passed pursuant to invalid DRP directions

Admission of additional grounds raising purely legal questions - Additional grounds challenging absence of DIN on DRP directions were admitted as purely legal grounds. - HELD THAT: - The Tribunal examined the additional grounds which alleged the DRP's failure to quote the Documentation Identification Number (DIN) on the body of its directions and, relying on the Supreme Court's decision in NTPC Ltd. v. CIT to admit purely legal grounds, held that the grounds required no fresh factual verification and were therefore fit to be admitted and decided on merits. [Paras 4]

Additional grounds admitted.

Validity of DRP directions without Document Identification Number (DIN) - Mandatory compliance with CBDT Circular No. 19/2019 for quoting DIN in communications and orders - Directions/orders of the DRP passed without quoting the DIN on the body of the directions are invalid. - HELD THAT: - The Tribunal inspected the DRP directions for the two assessment years and found that the directions did not quote the DIN on their body, while separate communications issued later contained DINs generated after passing the directions. Relying on the Delhi High Court's decision in Brandix Mauritius Holdings Ltd. and consistent coordinate-bench and High Court authorities, and on the express mandate of CBDT Circular No. 19/2019 which requires quoting the computer-generated DIN in the body of communications/orders and treats non-conforming communications as invalid, the Tribunal held that subsequent generation or separate intimation containing a DIN does not cure the original non-compliance. Consequently, the DRP directions lacking DIN in their body are bad in law. [Paras 7, 8, 9]

DRP directions without DIN in the body are invalid.

Consequential invalidity of assessment orders passed pursuant to invalid DRP directions - Final assessment orders passed by the Assessing Officer pursuant to the invalid DRP directions are quashed. - HELD THAT: - Having held the DRP directions to be invalid for non-compliance with the CBDT Circular's requirement to quote DIN in the body of the directions, the Tribunal concluded that the Assessing Officer's final assessment orders passed under Section 143(3) read with Section 144C(13) pursuant to those directions were also bad in law. As the quashal was on this jurisdictional defect, the Tribunal refrained from adjudicating the merits of the additions made in the assessments. [Paras 9, 10]

Final assessment orders for AYs 2019-20 and 2020-21 quashed as consequent upon invalid DRP directions.

Final Conclusion: The Tribunal admitted the additional legal grounds, held that the DRP directions for AY 2019-20 and AY 2020-21 were invalid for failing to quote the DIN in the body of the directions in breach of CBDT Circular No. 19/2019, and consequently quashed the final assessment orders passed under Section 143(3) read with Section 144C(13) for those years; the merits of the additions were not examined.

Allowability of compensation under section 37(1) - distinction between compensatory and punitive damages - expenditure wholly and exclusively for the purpose of business - Explanation 1 to Section 37(1): expenditure for an offence or prohibited by law - deductibility of legal and professional expenses incurred in litigation

Allowability of compensation under section 37(1) - distinction between compensatory and punitive damages - Explanation 1 to Section 37(1): expenditure for an offence or prohibited by law - Whether the compensation paid pursuant to the Uphaar litigation (as reflected in the assessment) is allowable as deduction under section 37(1). - HELD THAT: - The Tribunal analysed the Supreme Court's judgment in Municipal Corporation of Delhi v. Association of Victims of Uphaar Tragedy to determine the nature of the amounts awarded. The Supreme Court had bifurcated the award into (a) amounts by way of restitution/compensation (including interest and structured grants to victims) and (b) an element described as negative restitution/punitive component relating to profits from illegally installed seats. Applying settled principles (including that amounts which are compensatory in nature are potentially deductible while penalties or punitive components are not), the Bench held that the compensation ordered by the courts comprises both compensatory/restitutionary elements (which are payable as civil consequences and are allowable if shown to be incurred in relation to the business) and a limited punitive/negative restitution component which is not allowable. The Tribunal rejected the lower authorities' blanket disallowance and their failure to distinguish the two components; it concluded that except for the punitive component of the award, the compensation represents civil restitution/compensatory payments allowable under section 37(1). [Paras 14, 16, 18, 28, 30]

Compensation payable pursuant to the Uphaar litigation is allowable under section 37(1) to the extent it is compensatory/restitutory; the punitive (negative restitution) component is not allowable.

Expenditure wholly and exclusively for the purpose of business - deductibility of legal and professional expenses incurred in litigation - Whether the legal and professional expenses incurred in connection with the Uphaar litigation are deductible as business expenditure in the relevant year. - HELD THAT: - The Tribunal noted that the genuineness of the payments was not disputed, that detailed ledger entries and payments by banking channels were on record, and that the assessee had been obliged to litigate across forums to defend civil and related consequences of the tragedy. The Revenue's contention that the business was 'closed down' and therefore the expenses were unrelated to income was rejected: the cessation of trading arose from force majeure (the fire and sealing of premises) and did not disentitle the company from incurring litigation costs necessary to defend its liabilities. Given the long-running litigation and the need to incur professional fees to defend and quantify liabilities, the Tribunal held that the legal and professional expenses were incurred wholly and exclusively for the purpose of the assessee's business and therefore were allowable; the lower authorities erred in disallowing them. [Paras 11, 12, 29, 30]

Legal and professional expenses incurred in connection with defending the Uphaar litigation are deductible as expenses wholly and exclusively for the purpose of business.

Final Conclusion: The appeal is allowed in part: the Tribunal sustains disallowance only to the extent of the punitive component of the award, rejecting the broader disallowance by the authorities and holding that the compensatory portion of the compensation and the legal and professional expenses are allowable; the appeal is otherwise allowed.

Valuation under Section 50C for computation of capital gains - Departmental Valuer (DVO) report and its adoption in assessment - Consistency of valuation among co-owners / equal treatment - Finality of assessment where valuation has been adopted - Application of precedent establishing limitation on reopening or differing treatment where earlier valuation was accepted

Departmental Valuer (DVO) report and its adoption in assessment - Consistency of valuation among co-owners / equal treatment - Valuation under Section 50C for computation of capital gains - Adoption of DVO valuation accepted in one co-owner's assessment must be applied in the assessee's assessment for the same property and same assessment year - HELD THAT: - The Tribunal found that the Valuation Officer's report dated 16.12.2016 valuing the property at Rs. 3,39,57,000/- was adopted by the Assessing Officer in the assessment of the assessee's co-owner (Late Krishan Kant Chahal) for AY 2011-12 and that that assessment has become final. The Assessing Officer in the assessee's own assessment had, by contrast, taken the circle rate value for computing capital gains under Section 50C. Relying on the principle that differential treatment of co-owners in respect of valuation of the same property for the same assessment year is not warranted where an earlier valuation has been accepted after due inquiry, the Tribunal held there was no justifiable reason to adopt a different valuation in the assessee's case. The Tribunal treated the DVO valuation adopted in the co-owner's assessment as final for the purposes of consistent treatment and directed adoption of the same valuation for computing the assessee's 1/6th share of long-term capital gains. The Tribunal expressly relied on the reasoning in Jaswant Rai (as cited in the order) that an earlier decision on the same question should not be reopened if it is not arbitrary or perverse and had been arrived at after due inquiry, and observed there was no pending corrective proceeding (such as under section 263) in the co-owner's case. Having so found, the Tribunal allowed the plea to apply the DVO valuation to the assessee's assessment and set aside the disparate application of Section 50C circle rate in the assessee's file. [Paras 8, 11]

Direct the Assessing Officer to adopt the DVO valuation dated 16.12.2016 (which was adopted in the co-owner's assessment) for computing the assessee's 1/6th share of long-term capital gains for AY 2011-12.

Final Conclusion: Appeal partly allowed: the Tribunal set aside the differing valuation adopted by the AO for the assessee and directed adoption of the DVO valuation (as accepted in the co-owner's final assessment) for computing the assessee's 1/6th share of long-term capital gains for AY 2011-12; Grounds Nos. 3 and 5 allowed and remaining grounds treated as academic.

Binding effect of Transfer Pricing Officer's arm's length price under section 92CA(4) - Assessing Officer's jurisdiction to re determine transaction value contrary to TPO's determination - Obligation to verify purchaser's assets before attributing full value to a single investment for capital gains computation - Computation of capital gains in conformity with the arm's length price and applicable rules for cost of acquisition

Binding effect of Transfer Pricing Officer's arm's length price under section 92CA(4) - Assessing Officer's jurisdiction to re determine transaction value contrary to TPO's determination - Whether the Assessing Officer was permitted to substitute the sale consideration adopted by the TPO and determine capital gains inconsistent with the TPO's finding of no adverse inference. - HELD THAT: - The Tribunal held that where the TPO, after transfer pricing proceedings, has not drawn any adverse inference and has determined the arm's length character of the international transaction, the Assessing Officer is bound to compute total income in conformity with that determination. The Assessing Officer cannot re examine or re determine the price of the same international transaction under the regular provisions of the Act so as to effect indirectly what is statutorily entrusted to the TPO. Applying these principles to the facts, the AO's adoption of a higher sale consideration by reference to a subsequent year's transaction (and thereby treating the transaction as yielding capital gain) amounted to impermissible deviation from the TPO's determination and exceeded jurisdiction. Consequently the grounds attacking the AO's substitution of sale consideration were allowed. [Paras 5, 6]

Assessment order altered by the AO to substitute the TPO accepted price was set aside; the assessee's grounds in this respect were allowed.

Obligation to verify purchaser's assets before attributing full value to a single investment for capital gains computation - Computation of capital gains in conformity with the arm's length price and applicable rules for cost of acquisition - Whether the AO complied with the DRP direction to verify that Wormhole's entire value was not attributable solely to its investment in Orbgen and whether capital gains should be computed accordingly. - HELD THAT: - The DRP had directed that the AO should verify the claim that the entire value of the purchaser (Wormhole) was not relatable solely to its investment in Orbgen and that capital gains should be computed under the provisions governing computation of capital gains. The Tribunal observed that the AO failed to undertake the required verification and, despite accepting the cost of acquisition as per DRP directions, proceeded to adopt a higher sale consideration without excluding other assets of Wormhole. In view of the absence of proper verification and the binding nature of the TPO's finding on ALP, the AO's computation of capital gains could not be sustained. The Tribunal allowed the assessee's challenge to the computation and related grounds. [Paras 2, 5, 6]

Direction to verify purchaser's assets and to compute capital gains in accordance with applicable provisions was treated as not complied with by the AO; the assessment adjustment based on the AO's substituted sale consideration was set aside.

Final Conclusion: The appeal is allowed: the Assessing Officer's deviation from the TPO's transfer pricing determination and adoption of an increased sale consideration without undertaking the DRP directed verification was held to be impermissible; the assessment adjustment calculating a capital gain on that basis is set aside.

Penalty under Section 271(1)(c) for concealment of particulars of income - exemption under Section 54 (capital gains reinvestment in residential property) - bonafide belief as defence to penalty - condonation of delay

Condonation of delay - bonafide belief as defence to delay - Delay in filing the appeal was condoned. - HELD THAT: - The Tribunal examined the explanation for delay which included the assessee being an NRI, delegation of tax matters by Power of Attorney to elderly brothers, lack of knowledge of the appellate order until the assessee's visit to India following illness and death of the brothers, and reliance on professional advice thereafter. Considering the detailed, genuine and bonafide explanation and established precedent that such delays may be condoned in exceptional circumstances, the Tribunal exercised discretion to condone the 1823-day delay. The Tribunal emphasised that the condonation is specific to the facts of this case and should not be treated as a precedent. [Paras 5]

Delay of 1823 days condoned and appeal admitted for hearing on merits.

Penalty under Section 271(1)(c) for concealment of particulars of income - exemption under Section 54 (capital gains reinvestment in residential property) - bonafide belief as defence to penalty - Penalty under Section 271(1)(c) was not attracted as there was no concealment of particulars of income in claiming exemption under Section 54. - HELD THAT: - On merits the Tribunal found that the assessee had disclosed the claim for exemption under Section 54 in the return of income and during assessment proceedings and had made bona fide investments during the relevant year. The element of concealment necessary to invoke Section 271(1)(c) was therefore absent. Reliance was placed on the principle that a bona fide claim disclosed in the return does not attract penalty, and the contrary authorities relied upon by the Revenue were inapplicable because the foundational limb for invoking Section 271(1)(c) was missing and the quantum in dispute was subsequently deleted. Applying these determinative findings, the Tribunal set aside the penalty. [Paras 9]

Penalty under Section 271(1)(c) deleted and appeal allowed on merits.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and on merits held that the assessee's disclosed, bona fide claim of exemption under Section 54 precluded invocation of Section 271(1)(c) for concealment; accordingly the penalty was deleted and the appeal allowed.

Construction of "today" in judicial orders - date of issuance of order copy as commencement of limitation - date of receipt of certified copy - effect of dismissal of appeal as time-barred on adjudication on merits - remittance for fresh consideration

Construction of "today" in judicial orders - date of issuance of order copy as commencement of limitation - date of receipt of certified copy - Whether the word "today" in the Division Bench's direction to file an appeal within two weeks referred to the date of passing of the order or to the date on which the order copy was issued/received by the petitioner. - HELD THAT: - The Court held that an appellant can effectively file an appeal only after receipt of the order copy; accordingly, the expression "today" in the Division Bench's direction must be construed, for practical purposes, as the date on which the order copy was ready to issue or was issued to the party. Applying that construction to the facts, the order copy was signed/issued on 25.04.2013 and the appeal filed on 29.04.2013 was therefore within the two week period directed by the Division Bench. The impugned dismissal of the appeal as barred by limitation was thus unsustainable. [Paras 7, 8, 9]

The word "today" was to be read as the date of issuance/receipt of the order copy; the appeal filed on 29.04.2013 was within the time fixed and the order dismissing the appeal as time-barred is not sustainable.

Effect of dismissal of appeal as time-barred on adjudication on merits - remittance for fresh consideration - Whether, having dismissed the appeal as time barred, the Appellate Authority could thereafter decide the matter on merits, and what consequent relief should follow. - HELD THAT: - It was brought to the Court's attention that once an appeal is dismissed on the ground of being time barred, the Appellate Authority cannot proceed to decide the same matter on merits. In view of the finding that the dismissal on limitation was unsustainable, the High Court set aside the impugned order in its entirety and remitted the matter to the first respondent for reconsideration and decision in accordance with law. [Paras 10, 11]

The impugned order is set aside in entirety and the matter is remitted to the first respondent for fresh consideration and decision according to law.

Final Conclusion: Impugned order dismissing the appeal as time barred quashed; appeal held to have been filed within the period fixed by the Division Bench when "today" is read as date of issuance/receipt of order copy. The matter is remitted to the first respondent for fresh consideration and decision in accordance with law.

Obligations of a Customs Broker under Regulation 10(d), 10(m) and 10(n) of the Customs Broker Licensing Regulations, 2018 - scope of KYC verification by a Customs Broker - reliance on reliable, independent, authentic documents and bank verification - physical verification of client's declared address not mandated by Regulation 10(n) - liability for licence revocation where departmental records themselves show internal contradiction regarding importer's existence - challenge to revocation of Customs Broker licence for alleged KYC lapses

Obligations of a Customs Broker under Regulation 10(d), 10(m) and 10(n) of the Customs Broker Licensing Regulations, 2018 - scope of KYC verification by a Customs Broker - reliance on reliable, independent, authentic documents and bank verification - physical verification of client's declared address not mandated by Regulation 10(n) - Whether the appellant breached the KYC and other obligations under Regulation 10(d), 10(m) and 10(n) of the CBLR, 2018, justifying revocation of its Customs Broker licence. - HELD THAT: - The Tribunal found that the appellant had accepted an import assignment after receiving and verifying documents that included an authorization, IEC, GST registration, bank-verified KYC and signature, Aadhar and PAN. The Department's adverse action rested on a subsequent departmental finding that the importer was 'non-existent' at the declared address, based on a search; however, departmental internal communications show that the Department itself had been in communication with the importer at the same address. Regulation 10(n) requires verification by using reliable, independent, authentic documents, data or information and does not mandate physical in-person verification of the declared address. Given the positive documentary and bank verification available to the broker, and the fact of 100% examination of consignments which revealed no mis-declaration, the Tribunal held that the requisite KYC verification obligation was discharged as a matter of law. The Department's internal contradiction and short time-lag between communications undermined the allegation of a culpable lapse by the broker. On these grounds the adjudicating authority's finding and consequent revocation order lacked legitimate foundation and had to be set aside. [Paras 9, 10, 12, 13, 14]

The revocation of the Customs Broker licence was set aside and the licence restored.

Final Conclusion: The appeal is allowed; the adjudication order revoking the Customs Broker licence is set aside and the licence is restored with consequential benefits.

Refund of SAD - Chartered Accountant's Certificate - veracity of certificate - remand to adjudicating authority - absence of mala fide/ulterior motive - precedent-based remand

Chartered Accountant's Certificate - absence of mala fide/ulterior motive - veracity of certificate - remand to adjudicating authority - Remand for verification of the Chartered Accountant's Certificate and related documents and consequent decision on the refund claim. - HELD THAT: - The Tribunal accepted the appellant's contention that production of the Chartered Accountant's Certificate was not made a condition precedent under the Notification and noted that the importer relied on a third party to arrange the certificate. Relying on its earlier decision in Skylark Office Machines (supra), where no ulterior motive was found and a fresh Chartered Accountant's Certificate had been produced, the Tribunal observed that a fresh certificate had been filed in the present case. In view of these facts and the absence of proof of any mala fide conduct, the Tribunal remanded the matter to the adjudicating authority with a direction to verify the veracity of the Chartered Accountant's Certificate and other relevant documents. The adjudicating authority is to pass appropriate orders on the appellant's refund claim if the documents are found to be in order, and, if the refund is held to be eligible, the confirmed demand together with interest and penalty would be set aside. [Paras 6, 7]

Matter remanded to the adjudicating authority to check the veracity of the Chartered Accountant's Certificate and other documents and, if found in order, to pass necessary orders on the refund claim, with consequential setting aside of the demand, interest and penalty if refund is allowed.

Final Conclusion: Appeal disposed of by way of remand: the Tribunal directs the adjudicating authority to verify the authenticity of the Chartered Accountant's Certificate and other relevant documents and to decide the refund claim afresh; if the refund is allowed, the confirmed demand with interest and penalty shall stand set aside.

Validity of debit of scrip under MEIS for payment of education cess and secondary & higher education cess - computation of cess when duty liability is absent - application of judicial precedent and CBIC circular to discharge of social welfare surcharge/cess - use of export incentive scrips for discharge of cess already paid

Validity of debit of scrip under MEIS for payment of education cess and secondary & higher education cess - computation of cess when duty liability is absent - application of judicial precedent and CBIC circular to discharge of social welfare surcharge/cess - Demand for recovery of education cess and secondary & higher education cess debited against MEIS scrip was not sustainable and the impugned order confirming such demand was liable to be set aside. - HELD THAT: - The Tribunal applied the legal principle articulated by the Bombay High Court in LA Tim Metal & Industries Limited that recovery proposals which compute cess as a percentage of duty cannot be sustained where there is no duty liability on which the cess could be computed. The Tribunal noted that the impugned order failed to take that decision into account. It also observed the relevance of the CBIC circular (and related judicial decisions, including the Madras High Court in KTV Health Food P Ltd) clarifying treatment of cess and social welfare surcharge in relation to discharge by export incentive scrips. In light of the settled judicial determination and CBIC clarification concerning discharge of cess in import of duty free goods, nothing survived in support of the demand and the recovery proposal was held to be flawed.

Appeal allowed; impugned order set aside and demand for discharge of education cess and secondary & higher education cess against MEIS scrip rejected.

Final Conclusion: The Tribunal allowed the appeal, holding that the demand to debit MEIS scrips for education cess and secondary & higher education cess was unsustainable in view of binding judicial precedent and CBIC clarification, and accordingly set aside the impugned order.

Value determination based on contemporaneous imports - identical or similar goods - reliance on description for comparability - setting aside enhanced assessable value

Value determination based on contemporaneous imports - identical or similar goods - reliance on description for comparability - Whether the adjudicating authority could enhance the declared CIF value of the imported goods by relying on contemporaneous imports at another port. - HELD THAT: - The Tribunal examined the descriptions used in the consignments relied upon by the adjudicating authority and those declared by the appellant. The appellant described the goods as "Mulberry Raw Silk in hanks 20/22 D 3A/4A grade and above", whereas the documents relied on by the adjudicating authority recorded "Mulberry Raw Silk yarn 20/22 D 3A/4A grade and above". The Tribunal held that such difference in description - hanks versus yarn - demonstrates that the relied imports were not identical or similar to the appellant's goods. In the absence of any other supporting evidence justifying comparability or a proper basis for substituting the declared value, the enhancement based on those contemporaneous imports could not be sustained. [Paras 6, 7]

The enhancement of value was rejected and the value declared by the appellant was accepted.

Final Conclusion: The impugned order enhancing the assessable value is set aside; the value declared by the appellant is held to be correct and the appeal is allowed with consequential relief.

Export duty exemption - Let export order - Refund of duty paid

Let export order - Export duty exemption - Refund of duty paid - The appellant's entitlement to refund turned on the effective date of the let export order and whether export duty was payable on that date on iron ore fines. - HELD THAT: - The Tribunal examined the shipping bill and found that the differential cess was debited on 08.12.2008 and that this fact stood verified by the Inspector on that date. It also found visible cutting and alteration in the let export endorsement showing 06.12.2008. Since a let export order could not have been issued before full duty payment, the endorsement could not be treated as validly issued on 06.12.2008, and its date had to be taken as 08.12.2008. As iron ore fines stood exempted from export duty with effect from 07.12.2008, no duty was payable on 08.12.2008; consequently, the duty paid was refundable. [Paras 7, 8]

The refund claim was held maintainable and allowable, as no export duty was payable on the date on which the let export order was legally taken to have been issued.

Final Conclusion: The Tribunal held that the let export order could not be treated as issued before payment of duty and, on the material on record, its effective date was 08.12.2008. Since iron ore fines were exempt from export duty on that date, the rejection of refund was set aside and the appeal was allowed with consequential relief.

Oppression and mismanagement - effect of compromise/settlement on pending company petition - jurisdiction of the company law tribunal in presence of a settlement - maintainability and locus in oppression and mismanagement petition - multiplicity of proceedings and abuse of process - concurrent civil/high court proceedings and appropriate forum for enforcement of compromise

Effect of compromise/settlement on pending company petition - oppression and mismanagement - Whether the NCLT was justified in dismissing the company petition alleging oppression and mismanagement in view of the compromise/settlement between the parties. - HELD THAT: - The Appellate Tribunal upheld the NCLT's conclusion that the parties had arrived at a settlement recorded before civil courts and the High Court, and that in those circumstances the allegations forming the basis of the company petition could not be further proceeded with by the Tribunal. The Tribunal agreed with the NCLT that the compromise recorded in the civil proceedings and as noted by the High Court left nothing to be adjudicated in the company petition and therefore dismissal was appropriate. The court rejected the submission that the NCLT had merely applied a technical view without examining substance, holding that the impugned order correctly took into account the compromise and related judicial records before dismissing the petition. [Paras 16]

The NCLT's dismissal of the company petition on account of the existing compromise/settlement was affirmed.

Jurisdiction of the company law tribunal in presence of a settlement - maintainability and locus in oppression and mismanagement petition - Whether the NCLT abdicated its jurisdiction under Sections 241-242 of the Companies Act, 2013 by dismissing the petition in view of the settlement. - HELD THAT: - The Tribunal found no abdication of jurisdiction. It held that the NCLT had considered the settlement and related judicial orders and concluded that nothing survived in the company petition for adjudication. Where parties have settled and the settlement has been recorded in other judicial forums, the Tribunal may decline to proceed with a petition that is subsumed by that compromise. The Appellate Tribunal agreed with the NCLT's exercise of discretion and reasoning that the compromise precluded further adjudication by the Tribunal under the facts of the case. [Paras 16]

The NCLT did not abdicate its jurisdiction; its dismissal in view of the settlement was proper.

Multiplicity of proceedings and abuse of process - concurrent civil/high court proceedings and appropriate forum for enforcement of compromise - Whether the Tribunal erred in declining to entertain matters that were the subject of concurrent civil/high court proceedings and whether those matters should be left to those forums. - HELD THAT: - The Tribunal endorsed the view that the remedy for enforcement or challenge to the compromise lies in the civil courts or the High Court that had recorded or were seized of the settlement, and that continuing the company petition would produce multiplicity of proceedings. The Appellate Tribunal observed that the NCLT correctly noted collateral and judicial proceedings and that disputes regarding fulfilment or binding nature of the compromise ought to be adjudicated in the appropriate civil fora already dealing with those matters, rather than by parallel adjudication before the NCLT. [Paras 16]

The NCLT correctly declined to proceed so as to avoid multiplicity and left enforcement and disputes about the compromise to the civil/high court fora.

Final Conclusion: The impugned order of the NCLT dated 30.09.2019 dismissing the company petition in view of the parties' compromise and attendant civil/high court proceedings is affirmed; the appeal is dismissed with no order as to costs.

Finality of appellate orders / res judicata - status as financial creditor and inclusion in the Committee of Creditors - inclusiveness of claims after constitution of the Committee of Creditors - binding effect of approved resolution plan and the 'clean slate' doctrine

Finality of appellate orders / res judicata - status as financial creditor and inclusion in the Committee of Creditors - Whether the Appellant can re-agitate its claim for declaration as a financial creditor and inclusion in the list of creditors after this Tribunal's order in C.A. (AT) (Ins) No. 633/2018 and related orders have attained finality. - HELD THAT: - This Tribunal observed that in C.A. (AT) (Ins) No. 633/2018 it had examined the question whether Mahal Hotel Pvt. Ltd. falls within the definition of a 'financial creditor' and set aside the Adjudicating Authority's order dated 04/10/2018, holding inter alia that there was a dispute as to that status and that the Resolution Professional had improperly included the Appellant after constitution of the CoC. The Bench noted that the Appellant did not challenge those findings by way of an appeal under Section 62 of the Code and that the Tribunal's order of 18/11/2019 had therefore attained finality. In view of that finality, the Appellant could not re-open the same controversy by seeking fresh adjudication of its status before the Adjudicating Authority at this belated stage; the pleadings and reliefs in IA No. 1437/2022 were therefore barred by the finality of the earlier decision and the principles of res judicata. [Paras 12]

The Appellant's plea to be declared a financial creditor and to be included in the list of creditors is barred by the finality of this Tribunal's earlier order and cannot be re-agitated.

Binding effect of approved resolution plan and the 'clean slate' doctrine - inclusiveness of claims after constitution of the Committee of Creditors - Whether the subsequent events (including approval and implementation of a resolution plan) permit revival of past claims against the Corporate Debtor or affect the adjudication of the Appellant's claim. - HELD THAT: - The Tribunal recorded that the Resolution Plan has been approved and implemented, and reiterated settled law that an approved plan is binding on all stakeholders. Relying on the 'clean slate' principle as explained in the cited jurisprudence, the Bench held that allowing past claims to resurface after plan approval would frustrate the settled finality and certainty that the regime seeks to achieve. Consequently, even if any controversy remained as to the Appellant's classification, the implementation of the plan and the attendant binding effect preclude revisiting and resurrecting such past claims. [Paras 12, 13]

Approval and implementation of the resolution plan, coupled with the clean slate doctrine, preclude revival of the Appellant's past claim; the appeal is dismissed accordingly.

Final Conclusion: The appeal is dismissed: the Tribunal's earlier order attained finality and the Appellant cannot re-agitate its claim to be declared a financial creditor or seek inclusion in the list of creditors; the approved and implemented resolution plan binds stakeholders and bars revival of the past claim.

Pre-existing dispute - Section 9 application - reply to demand notice as notice of dispute - requirement of no prima facie dispute for admission under Section 9 - Mobilox principle

Pre-existing dispute - reply to demand notice as notice of dispute - Section 9 application - Validity of rejection of Section 9 application on the ground of pre-existing dispute - HELD THAT: - The Adjudicating Authority found that the Corporate Debtor promptly replied to the Demand Notice on 27.12.2019 and that the reply contained specific allegations - including earlier communication of defects in basic design and a claim for refund dated 31.07.2019 - constituting a pre-existing dispute. The Tribunal examined the Reply to the Demand Notice and observed that the averments amounted to an express dispute raised prior to the Demand Notice and were not a mere afterthought. Applying the principle that a Section 9 application cannot be admitted where a prima facie pre-existing dispute exists (as considered in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd.), the Tribunal held that the Adjudicating Authority did not commit error in treating the reply as a legitimate notice of dispute and in rejecting the Section 9 application on that ground. The Tribunal noted that the Appellant's rejoinder did not negate that a dispute had been articulated earlier and that the question of completeness of design and claim for refund demonstrated a substantive contest as to liability.

The rejection of the Section 9 application by the Adjudicating Authority on the ground of a pre-existing dispute is upheld and the appeal is dismissed.

Final Conclusion: The Tribunal affirms the Adjudicating Authority's refusal to admit the Section 9 application because the Corporate Debtor's prompt reply to the Demand Notice, including earlier communications and a refund claim, disclosed a pre-existing dispute; appeal dismissed.

Summary order. Civil Appeal dismissed; delay condoned; pending application(s) disposed of.

Article 265 of the Constitution (no tax save by authority of law) - deposit made under protest - refund of amounts retained without authority - unjust enrichment - recovery of payments made under mistake of law - writ jurisdiction under Article 226 for refund of illegally retained amounts - absence of show cause notice / absence of adjudication as a condition for appropriation

Article 265 of the Constitution (no tax save by authority of law) - deposit made under protest - refund of amounts retained without authority - recovery of payments made under mistake of law - unjust enrichment - Retention by the department of amounts deposited by the petitioner 'under protest' is without authority of law and is liable to be refunded with interest. - HELD THAT: - The Court found that the petitioner voluntarily deposited amounts under protest in response to audit objections but that no show cause notice was issued and no demand adjudicating tax liability was raised. Retention of such deposits by the department therefore could not be justified as a levy or collection "by authority of law" under Article 265. The Court applied settled principles that payments made under a mistake of law or voluntarily under protest remain recoverable and that the receiving authority is bound to repay such amounts; permitting retention in these circumstances would amount to unjust enrichment. The department was not shown to possess any statutory provision empowering it to appropriate or retain the deposits merely because a connected question was pending adjudication elsewhere. Consequently the rejection of the refund claim was held to be contrary to Article 265 and the deposit must be refunded with applicable interest. [Paras 29, 31, 32, 33, 34]

Refund of the amounts deposited under protest is directed, with applicable interest, as the department had no authority in law to retain them.

Absence of show cause notice / absence of adjudication as a condition for appropriation - writ jurisdiction under Article 226 for refund of illegally retained amounts - pendency of related proceedings elsewhere not a cogent basis to retain deposits - Pendency of a split decision in a related Supreme Court matter and expectation of a larger Bench determination does not justify retention of deposits made under protest where no adjudication or show cause notice has been issued against the depositor. - HELD THAT: - The Court rejected the department's reliance on the split verdict in the Citibank litigation as a ground to withhold the petitioner's deposits. Absent any show cause notice or statutory lien, mere pendency of a related legal issue before a larger Bench cannot convert a protested deposit into a lawful appropriation. The Court emphasised that the department failed to point to any provision in the Finance Act, 1994 or other law authorising such withholding in the peculiar facts of the case, and therefore pendency of the Citibank proceedings did not cure the lack of authority to retain the sums. [Paras 5, 30, 31]

The departmental contention that the matter should await the larger Bench in the Citibank case is not a valid legal basis to retain the protested deposits; retention is unlawful in the circumstances.

Final Conclusion: Writ petition allowed: the amounts deposited by the petitioner under protest for the period October, 2007 to June, 2012 were retained without authority of law and must be refunded with applicable interest within four weeks; no costs.

Recovery of refunded duty under Section 153(4) of the Finance Act, 2003 - retrospective effect of amendment to exemption notification and Rule 3 of CENVAT Credit Rules - revenue neutrality as defence to demand for recovery of refund - effect of subsequent utilization of CENVAT credit in negating alleged excess refund

Effect of subsequent utilization of CENVAT credit in negating alleged excess refund - recovery of refunded duty under Section 153(4) of the Finance Act, 2003 - revenue neutrality as defence to demand for recovery of refund - Whether the demand and recovery confirmed under Section 153(4) of the Finance Act, 2003 for refunds allegedly in excess for the period 24.02.2000 to 22.12.2002 is sustainable where the assessee subsequently utilized accumulated CENVAT credit so that there was no loss to revenue. - HELD THAT: - The Tribunal found that the assessee, after the amendment to the exemption notification, duly utilized the accumulated CENVAT credit in the months following 22.12.2002 so that the overall position, when viewed in aggregate over the relevant period, was revenue neutral. Relying on earlier Tribunal decisions which held that where the same amount of CENVAT credit is subsequently utilized and there is no actual loss to the revenue the demand for recovery of refund is not sustainable, the Bench held that invoking Section 153(4) to recover amounts in such circumstances would defeat the purpose of the exemption notification. The Tribunal regarded the present facts as squarely covered by the cited precedents and concluded that the demand confirmed by the adjudicating authority and Commissioner (Appeals) could not be sustained because the excess refunds, if any, were neutralised by later utilization of credit and thus caused no revenue loss.

Demand confirmed under the impugned orders is set aside and the appeal is allowed; no recovery is sustainable in view of revenue neutrality arising from subsequent utilization of CENVAT credit.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order confirming demand under Section 153(4) of the Finance Act, 2003 for the period 24.02.2000 to 22.12.2002, holding that subsequent utilization of accumulated CENVAT credit rendered the situation revenue neutral and precluded recovery.

Assessable value determined under CAS-4 - Assessable value as per Rule 8 of the Central Excise Valuation Rules, 2000 - Self-assessment and provisional assessment under the Central Excise rules - Limitation under Section 11A - Explanation 1(b)(iv) - Interest liability under Section 11AB - Penalty under Section 11AC read with Rule 25 of the Central Excise Rules, 2002 - Appropriation of duty paid and CENVAT credit

Assessable value determined under CAS-4 - Assessable value as per Rule 8 of the Central Excise Valuation Rules, 2000 - Final determination of assessable value for clearances in FY 2003-04, 2004-05 and 2005-06. - HELD THAT: - The Tribunal held that value for clearance must be determined as per CAS-4 and Rule 8, i.e., cost of production of the previous finalized year adjusted by the prescribed notional profit (110%). On the material available, the Tribunal accepted that where clearances were effected on the basis of previous year's finalized accounts the value is to be re-determined on the finalized records of the year during which clearances were made. Applying this, the Tribunal redetermined the cost per unit for 2004-05 (excluding interest/finance charges) and found the assessable values to be Rs.15.40 per unit (2003-04 as ultimately to be treated by reference to subsequent finalization) and Rs.23.03 per unit (2005-06 as cleared). The Tribunal found the post-SCN revised costing sheets were not fully reliable because the supporting documents could not be produced (unit closed), and noted material differences in heads (not only interest) between the original and revised sheets, therefore giving limited weight to the later charts. [Paras 4]

Assessable value determined in accordance with CAS-4 and Rule 8; values for the years adjusted as per Tribunal's calculation (2003-04 and 2004-05 treated at Rs.15.40 and Rs.23.03 respectively; 2005-06 treated as cleared at Rs.23.03 with minor redetermination to Rs.23.09 which was accepted as meager and discharged).

Appropriation of duty paid and CENVAT credit - Appropriation of amounts already paid against the demands and computation of differential duty payable year-wise. - HELD THAT: - On the documentary chart and admissions in replies and statements, the Tribunal found the appellant had admitted and paid the differential duty for 2003-04 and 2005-06 and part payment for 2004-05. Year-wise computation in the record was adopted to appropriate amounts paid: amounts for 2003-04 and 2005-06 were appropriated fully against the demand; demand for 2004-05 was recomputed to Rs.66,13,705 and adjusted against payments of Rs.27,98,055, leaving a balance differential upheld for 2004-05. The Tribunal noted that the sister unit had taken CENVAT credit on the supplementary invoices issued for differential duty. [Paras 4, 5]

Appropriations made: duty paid for 2003-04 and 2005-06 appropriated; differential duty for 2004-05 recomputed and balance demand upheld to the extent shown by Tribunal.

Limitation under Section 11A - Explanation 1(b)(iv) - Whether the demand was within limitation under Section 11A. - HELD THAT: - The Tribunal held that where the assessee paid duty on the basis of Cost Accountant certificates issued pursuant to finalized/audited accounting records of the previous year and subsequently paid differential duty after finalization, the relevant date for computation of limitation is the date of adjustment after final assessment as contemplated by clause (iv) of Explanation 1(b) to Section 11A. Given the procedure followed by the appellant (payment on previous year's cost followed by differential payment based on finalized current year certificate), the show cause notice had to be treated as issued within the normal period of limitation. [Paras 4]

Demand held to be within limitation under Section 11A by reference to Explanation 1(b)(iv).

Interest liability under Section 11AB - Self-assessment and provisional assessment under the Central Excise rules - Whether interest under Section 11AB on the differential duty is payable. - HELD THAT: - Relying on principles explained in the cited Supreme Court authority concerning when duty 'ought to have been paid' and the parity between provisional assessment and finalization, the Tribunal upheld demand of interest under Section 11AB. The Tribunal reasoned that where valuation is finally determined to be higher (even if provisional at removal), interest liability runs from the period indicated by the Act and Rules (month for which duty is determined/Rule 8 timelines), and the circumstances of payment/differential payment by the appellant did not negate the statutory remit for interest. [Paras 4]

Interest demand under Section 11AB upheld.

Penalty under Section 11AC read with Rule 25 of the Central Excise Rules, 2002 - Validity of penalty imposed under Section 11AC read with Rule 25. - HELD THAT: - The Commissioner had imposed penalty on the basis that there was suppression/mis-statement with intent to evade duty. The Tribunal found there was no substantial reason in the show cause notice or adjudication order to invoke extended period or to justify penalty: the appellant had followed the prescribed practice of paying duty on the basis of previous year's cost certificates and subsequently paying differential duty on finalization. Given that the procedure followed was an accepted method for captive clearances and differential duty payments, the Tribunal concluded that penalty under Section 11AC/Rule 25 was not sustainable and set it aside. [Paras 4, 5]

Penalty under Section 11AC read with Rule 25 set aside.

Final Conclusion: Appeal partly allowed: assessable values for the years were determined in accordance with CAS-4 and Rule 8 with appropriations made for amounts already paid; demand as recomputed for 2004-05 and interest under Section 11AB are upheld; penalty under Section 11AC read with Rule 25 is set aside.