TaxTMI Updates e-Newsletter
Nov 28,2022

Transitional credit under Section 140 - FORM GST TRAN-1 - opening of common portal for TRAN-1 and TRAN-2 - verification of transitional credit by officers within 90 days - extension of time by Circular No. 180/12/2022-GST

Transitional credit under Section 140 - FORM GST TRAN-1 - extension of time by Circular No. 180/12/2022-GST - Petitioner permitted to avail benefit of filing TRAN-1/TRAN-2 during the reopened window in accordance with the Supreme Court directions and the Government circular. - HELD THAT: - The petitioner, unable to submit FORM GST TRAN-1 electronically due to technical glitches, filed the declaration manually and sought treatment of the manual submission as compliance. Relying on the Supreme Court order in Union of India v. Filco Trade Centre Pvt. Ltd. which directed GSTN to open a common portal for filing TRAN-1 and TRAN-2 for a limited period, and on Circular No. 180/12/2022-GST extending the time for availing transitional credit, the High Court disposed the writ petition to enable the petitioner to take benefit of those directions and the circular. The court recorded the parties' agreement and granted the petitioner the opportunity to file/revise the relevant form within the period provided by the higher directions and circular. [Paras 6, 7, 8]

Writ petition disposed to enable petitioner to avail the reopened TRAN-1/TRAN-2 window and claim transitional credit in terms of the Supreme Court order and the Government circular.

Verification of transitional credit by officers within 90 days - opening of common portal for TRAN-1 and TRAN-2 - Adjudicatory verification of claimed transitional credit remitted to the concerned officers for scrutiny and passing of orders within the prescribed timeframe. - HELD THAT: - The Supreme Court directed that concerned officers be given 90 days after the reopened portal period to verify the veracity of transitional credit claims, grant reasonable opportunity, and pass appropriate orders on merits, after which allowed transitional credit is to be reflected in the electronic credit ledger. The High Court's disposal explicitly subjects the petitioner's claim to that process, thereby leaving the factual and merits-based scrutiny to the administrative officers in accordance with the directions. [Paras 6]

Claims are to be verified and decided by the concerned officers within the time and manner indicated by the Supreme Court's directions.

Final Conclusion: The writ petition is disposed to permit the petitioner to avail the benefit of the Supreme Court's directions and the Government circular for filing/revising TRAN-1/TRAN-2 and claiming transitional credit; the claim remains subject to verification and adjudication by the concerned officers within the timeframe prescribed by the Supreme Court.

Cancellation of registration for continuous non-filing of returns - revival of registration upon payment of tax, interest, penalty and filing returns - prohibition on utilisation of Input Tax Credit to discharge past tax liability - scrutiny and approval of Input Tax Credit before utilisation - directions to enable filing and payment through GST portal - application of consistent High Court precedent to similar cases

Cancellation of registration for continuous non-filing of returns - revival of registration upon payment of tax, interest, penalty and filing returns - prohibition on utilisation of Input Tax Credit to discharge past tax liability - scrutiny and approval of Input Tax Credit before utilisation - directions to enable filing and payment through GST portal - application of consistent High Court precedent to similar cases - Whether the petitioner whose GST registration was cancelled for non-filing of returns could be granted revival on the terms earlier laid down by this Court in Tvl.Suguna Cutpiece and subsequent consistent decisions - HELD THAT: - The petitioner's registration was cancelled with effect from 31.12.2021 on the ground of continuous non-filing of monthly GST returns for six months. The petitioner attributed non-filing to health issues and could not file a revocation application in time. This Court observed that it has consistently followed the directions recorded in paragraph 229 of the judgment in Tvl.Suguna Cutpiece (and subsequent decisions), which permit revival of registration subject to stipulated conditions: filing of the pending returns, payment of tax, interest, penalty/fine and fees for belated filing, prohibition on adjusting unpaid tax against unutilised Input Tax Credit, scrutiny and approval of any Input Tax Credit before utilisation, requirement that post-revival returns and GST for periods after cancellation be filed and paid in cash, and directing respondents to facilitate filing and payment through the GST portal. In view of the consistency of the earlier decisions and the Revenue's acceptance (absence of appeals), the Court applied those directions to the petitioner and ordered revival on the same terms as paragraph 229 of Suguna Cutpiece.

Writ petition allowed; registration to be revived on compliance with the conditions and directions set out in paragraph 229 of the Suguna Cutpiece order; no costs.

Final Conclusion: The High Court allowed the writ petition and extended to the petitioner the benefit of the court's earlier precedent (Suguna Cutpiece and follow-on decisions), directing revival of the GST registration on fulfillment of the specified conditions regarding filing of returns, payment of tax/interest/penalty and safeguards on Input Tax Credit; no costs.

Mens rea for evasion of tax - liability under Section 129(1)(a) for detention/seizure and demand of tax and penalty - requirement of reasoned findings by appellate authority - remand for fresh consideration and personal hearing - security in form of bank guarantee and substitute bond

Mens rea for evasion of tax - liability under Section 129(1)(a) for detention/seizure and demand of tax and penalty - requirement of reasoned findings by appellate authority - Whether the First Appellate Authority recorded sufficient reasoned findings to establish mens rea on the part of the appellants for evasion of tax, thereby justifying demand of full tax and penalty under Section 129(1)(a). - HELD THAT: - The appellate order of 6.4.2022, though lengthy, largely reproduces submissions and authorities and contains only a short discussion; it does not set out how mens rea was made out. The court emphasised that the mere use of the term "mens rea" is insufficient to infer a willful attempt to evade tax and that the authority must record reasons in writing demonstrating how and in what manner mens rea was established. Given the absence of such reasoned findings on the crucial question whether the appellants had the requisite mens rea when two trucks failed to reach the consignee within e way bill validity, the matter cannot be regarded as finally adjudicated on the merits. The High Court therefore directed remand for fresh consideration limited to the mens rea issue, with an opportunity of personal hearing to the appellants' authorised representative, and instructed that the Appellate Authority decide the matter on merits uninfluenced by the court's observations.

Order of the First Appellate Authority set aside and matter remanded for fresh consideration on whether mens rea for evasion was established; personal hearing to be afforded and fresh reasoned order to be passed.

Security in form of bank guarantee and substitute bond - remand for fresh consideration and personal hearing - Whether the appellants must keep the previously furnished bank guarantee alive pending remand proceedings. - HELD THAT: - The appellants had furnished a bank guarantee for the amount of tax and penalty. Having set aside the appellate order and remanded the matter, the court held that continuation of the bank guarantee was not necessary and directed that, in place of the bank guarantee, the appellants shall furnish a bond to the satisfaction of the concerned authority for the full amount. This direction accompanies the remand so that the appellate proceedings may continue without the burden of an active bank guarantee.

Bank guarantee need not be kept alive; appellants to furnish a bond for the entire amount to the satisfaction of the concerned authority.

Final Conclusion: The appeals are allowed; the orders of the Single Judge are set aside and the matter is remanded to the First Appellate Authority to decide, on merits and after personal hearing, whether mens rea to evade tax under the relevant provisions was established, with the appellants to furnish a bond in lieu of the bank guarantee; no order as to costs.

Condonation of delay by High Court under Article 226 - lack of jurisdiction of Appellate Authority to condone delay under the CGST scheme - setting aside cancellation of GST registration and restoration subject to compliance - exercise of writ jurisdiction to grant reliefs otherwise unavailable before statutory appellate forum

Condonation of delay by High Court under Article 226 - lack of jurisdiction of Appellate Authority to condone delay under the CGST scheme - High Court may, in appropriate cases, condone delay in preferring an appeal by exercising its writ jurisdiction under Article 226 despite the Appellate Authority lacking power to condone such delay. - HELD THAT: - The petitioner pleaded that delay in payment of GST, non-filing of returns and delay in preferring the appeal were on account of financial constraints and the COVID-19 pandemic. Though the first respondent (Appellate Authority) recorded that it had no power to condone delay under the statutory scheme, this Court held that it is open to the High Court to exercise its constitutional writ jurisdiction under Article 226 to condone delay in a given case. Applying a justice-oriented approach to the facts and accepting the petitioner's explanation of bonafide and unavoidable circumstances, the Court found it appropriate to condone the delay and to grant relief that the Appellate Authority could not grant on statutory grounds. [Paras 7]

Delay in preferring the appeal is condoned by the High Court under Article 226 and the petitioner's explanation is accepted.

Setting aside cancellation of GST registration and restoration subject to compliance - exercise of writ jurisdiction to grant reliefs otherwise unavailable before statutory appellate forum - The cancellation of the petitioner's GST registration was set aside and the registration was directed to be restored, subject to the petitioner paying outstanding dues and being permitted to file returns. - HELD THAT: - On the accepted premise of sufficient cause for delay, the Court set aside the impugned appellate order refusing to condone delay and the original order cancelling the GST registration. The Court directed the second respondent to restore the GST registration forthwith and permitted the petitioner to file outstanding returns, provided the petitioner clears all outstanding dues within one month. The Court made clear that failure to pay the dues within the stipulated period would render the directions ineffectual for the petitioner's benefit and that thereafter respondents would proceed in accordance with law. [Paras 7]

Impugned appellate order and cancellation order set aside; registration to be restored and returns allowed upon payment of outstanding dues within one month, thereafter respondents to proceed as per law.

Final Conclusion: Petition allowed; appellate order and cancellation order quashed, GST registration to be restored forthwith and petitioner permitted to file returns on payment of outstanding dues within one month, failing which the relief will not operate in the petitioner's favour.

Levy of GST on sale of developed land - Interpretation of Schedule III of the Central Goods and Services Tax Act, 2017 - Clarification issued by Union Ministry of Finance regarding taxable status of developed land - Remand for fresh consideration in light of executive clarification

Levy of GST on sale of developed land - Interpretation of Schedule III of the Central Goods and Services Tax Act, 2017 - Clarification issued by Union Ministry of Finance regarding taxable status of developed land - Remand for fresh consideration in light of executive clarification - Bhopal Development Authority to reconsider levy of GST on sale of developed plots to the petitioners in light of the Government of India circular dated 03.08.2022. - HELD THAT: - The Court noted the circular of the Ministry of Finance dated 03.08.2022 which clarifies that sale of land, including land after development activities such as levelling and laying of drainage, remains a sale of land covered by Sl. No. (5) of Schedule III of the CGST Act, 2017 and therefore does not attract GST, while services received for development attract GST. In view of this clarification, the Court did not decide the substantive question on merits but directed the Bhopal Development Authority to apply its mind afresh to whether GST should be levied on the sales to the petitioners. The Authority was directed to undertake the reconsideration uninfluenced by its earlier impugned orders dated 23-11-2021 and 09-12-2021 and to complete the exercise within 60 days from receipt of the order.

Petition disposed directing the Bhopal Development Authority to reconsider the question of levy of GST on the sale of developed plots to the petitioners in light of the Ministry of Finance circular dated 03.08.2022 and to conclude the exercise within 60 days, uninfluenced by the impugned orders.

Final Conclusion: Writ petition disposed by directing reconsideration of GST levy on the sale of the developed plots to the petitioners in light of the Government of India circular dated 03.08.2022; reconsideration to be completed within 60 days and earlier impugned orders not to influence the Authority.

Exemption for services relating to admission to or conduct of examination - supply "to" an educational institution - strict construction of notification conditions for claiming exemption - sub-contractor not entitled to exemption where privity of contract is with non-educational institution

Exemption for services relating to admission to or conduct of examination - supply "to" an educational institution - Exemption applicability where services are provided to an educational institution - HELD THAT: - The notification grants exemption for services "relating to admission to, or conduct of examination by, such institution" when those services are provided to an educational institution. The authority construed the entry to mean that exemption is available where the service is supplied to the educational institution itself. The wording of the notification must be read strictly and the exemption will apply only when the condition of supply "to" an educational institution is satisfied. [Paras 14]

Exemption is available when the services are provided to an educational institution.

Sub-contractor not entitled to exemption where privity of contract is with non-educational institution - strict construction of notification conditions for claiming exemption - Eligibility for exemption where the applicant supplies services as a sub-contractor to a main contractor who contracts with the educational institution - HELD THAT: - The authority examined whether a sub-contractor, whose contract is with a main contractor (which is not an educational institution), can claim the exemption that applies when services are supplied to an educational institution. Applying a strict construction of the notification's wording, the authority held that the condition of supply "to" an educational institution is not fulfilled when the immediate contractual privity is with the main contractor (a non-educational entity). Therefore the sub-contractor cannot claim the benefit of the exemption merely because the main contractor ultimately provides services to an educational institution. The applicant must satisfy the specific conditions of the notification to avail the exemption. [Paras 15, 16]

As a sub-contractor supplying services to a main contractor (which is not an educational institution), the applicant is not eligible for the exemption under the notification.

Final Conclusion: The Advance Ruling holds that the exemption for services relating to admission to or conduct of examinations is available only when the services are supplied to an educational institution; a sub-contractor whose contractual privity is with a main contractor (not an educational institution) cannot claim the exemption.

Exemption notification to be interpreted strictly - pure service - in relation to - direct and proximate relationship - Governmental authority - effect of amendment omitting "Governmental authority"

Exemption notification to be interpreted strictly - pure service - in relation to - direct and proximate relationship - Governmental authority - Medical insurance premium paid for employees, pensioners and their family members is exempt under Entry No. 3 of Notification No.12/2017 - Central Tax (Rate), dated 28-06-2017. - HELD THAT: - The Appellate Authority examined whether insurance services procured by the Board for its employees and their family members fall within the exemption at Sl. No. 3 as "pure services" provided to a Governmental authority by way of any activity in relation to a function entrusted to a Municipality under Article 243W. While insurance services qualify as "pure services," the exemption requires that the services be "in relation to" the municipal function. The expression "in relation to" in this context is read narrowly to mean a direct and proximate relationship to the function (such as water supply and sewerage). Applying the test, insurance for employees and their family members does not have the necessary direct and proximate connection to the Board's water supply and sewerage functions and therefore does not fall within the exemption. The Authority also noted the statutory definition treating the Board as a "Governmental authority" for the relevant period, but emphasised that the substantive nexus requirement remains decisive. The lower authority's negative ruling on this question is accordingly upheld. [Paras 8, 13]

Not exempt; medical insurance premium for employees and their family members does not fall under Entry No.3 and is taxable.

Final Conclusion: The advance ruling of the lower authority is upheld with respect to the medical insurance premium claim; the supply does not qualify for exemption under Entry No.3 of Notification No.12/2017 and the appeal is disposed of accordingly.

Transfer of capital asset by way of distribution of capital assets - Section 45(4) - the word 'otherwise' expanding chargeability beyond dissolution - revaluation surplus credited to partners' capital accounts treated as distribution/transfer - omission of clause exempting distribution on dissolution and plugging of tax-avoidance loophole - pre-insertion authority (Hind Construction Ltd. [1971 (9) TMI 16 - SUPREME COURT]) inapplicable to post-Section 45(4) regime - A.N. Naik Associates [2003 (7) TMI 46 - BOMBAY HIGH COURT] interpretation of 'otherwise' as including transfers to retiring or subsisting partners

Section 45(4) - the word 'otherwise' expanding chargeability beyond dissolution - revaluation surplus credited to partners' capital accounts treated as distribution/transfer - transfer of capital asset by way of distribution of capital assets - Whether the revaluation of partnership assets and crediting of the resultant surplus to partners' capital accounts amounted to a 'transfer' chargeable under Section 45(4)? - HELD THAT: - The Court examined the amended text of Section 45(4) and its legislative purpose - namely to plug the loophole left by omission of the prior exemption for distribution on dissolution - and emphasised the significance of the expression 'or otherwise'. Relying upon and affirming the reasoning in A.N. Naik Associates, the Court held that 'otherwise' is not to be read ejusdem generis with 'dissolution' and covers transfers of partnership assets when the firm's right in the asset is extinguished in favour of partners (including cases where assets are allotted or credited to partners though the firm continues). Applying that principle to the facts, the Court found that the revaluation surplus credited to partners' capital accounts in profit-sharing ratio - coupled with induction of new partners who obtained immediate large credits and withdrawals - amounted in effect to distribution/transfer of capital assets within the meaning of Section 45(4). Consequently the profits or gains arising therefrom are chargeable to tax as the income of the firm in the year of transfer, with fair market value deemed to be consideration for computing capital gains. [Paras 7]

Revaluation surplus credited to partners' capital accounts constituted a 'transfer' falling within Section 45(4), and was therefore chargeable to tax as income of the firm for the relevant year.

Pre-insertion authority (Hind Construction Ltd.) inapplicable to post-Section 45(4) regime - A.N. Naik Associates interpretation of 'otherwise' as including transfers to retiring or subsisting partners - Whether the pre-Section 45(4) decision in Hind Construction Ltd. governs the present case and whether the Bombay High Court decision in A.N. Naik Associates is applicable. - HELD THAT: - The Court noted that Hind Construction was rendered in the pre-insertion regime when Section 45(4) (and its 'otherwise' clause) did not exist and therefore did not address the expanded chargeability introduced by the Finance Act, 1987. For that reason Hind Construction is not apposite to interpretation of the amended provision. By contrast, the Bombay High Court in A.N. Naik Associates interpreted 'otherwise' broadly to include transfers to retiring or subsisting partners and to effectuate Parliament's object of preventing tax-avoidance by conversion of firm assets into individual assets. The Supreme Court affirmed that approach and held A.N. Naik Associates to be correctly reasoned and applicable to the post-amendment statutory scheme. [Paras 7]

Hind Construction Ltd. is not applicable to interpretation of Section 45(4) post-amendment; A.N. Naik Associates correctly interprets 'otherwise' and is affirmed as applicable.

Final Conclusion: The appeals are allowed. The High Court and ITAT orders deleting the additions are quashed and set aside, and the Assessing Officer's order making the addition under Section 45(4) is restored; no order as to costs.

Chargeability of TDS on non-convertible debentures and FDR below - HELD THAT:- As gone through the judgment and orders passed by the Tribunal as well as the High Court [2017 (8) TMI 1684 - ALLAHABAD HIGH COURT], we are of the opinion that no error has been committed by the Tribunal and/or the High Court on the chargeability of TDS amount on non-convertible debentures and fixed deposit of the value less than Rs.5,000/-.

Both, the Tribunal as well as the High Court have concurrently found that on non-convertible debentures and fixed deposit of the value less than Rs.5,000/-, there shall not be any TDS leviable.

We are in complete agreement with the view taken by the Tribunal as well as the High Court. Once, there is no liability to deduct TDS on non-convertible debentures and fixed deposit of the value less than Rs. 5,000/-, there is no question of charging any interest. At the same time the issue whether the levy of the interest was time barred considering Section 201(1) / 201(1)(a) has not been dealt with and considered in High Court, we keep the question of law on the aforesaid open.

Curability of procedural lapse in tax proceedings - Requirement to file audit report in Form 10CCB within prescribed time - Non-retroactivity of Finance Act, 2020 amendment to earlier assessment years - Raising new ground suo motu without notice to assessee

Curability of procedural lapse in tax proceedings - Requirement to furnish audit report along with return - Whether a procedural defect in not furnishing the audit report or claiming deduction in the original return is curable and the deduction under Section 80IA can be allowed at a later stage. - HELD THAT: - The Court accepted the consistent view of earlier High Court decisions that failure to attach an audit report or to claim a deduction in the original return, being procedural, can be cured subsequently either by filing a revised return or during assessment proceedings. The Tribunal had itself noted this settled legal position; had it applied that finding it would have had to allow the assessee relief. The High Court held that where the defect is procedural, the assessee is entitled to have the defect cured and the substantive right to the deduction recognised.

The procedural lapse was curable and the deduction under Section 80IA was to be allowed.

Requirement to file audit report in Form 10CCB within prescribed time - Non-retroactivity of Finance Act, 2020 amendment to earlier assessment years - Whether the Tribunal was justified in treating the Finance Act, 2020 amendment (requiring electronic filing of Form 10CCB within the prescribed time) as applicable to A.Y. 2014-15. - HELD THAT: - The Court observed that the time-prescription for electronic filing of the audit report arose from an amendment made by the Finance Act, 2020, which came into force on 1.4.2020. The assessment and CIT(A) orders predate that amendment. The Tribunal failed to examine whether the 2020 amendment applied to the assessment year in question before relying on it to deny relief. The High Court held that the Tribunal ought to have considered applicability of the amendment to A.Y. 2014-15 and could not apply a post-enactment change without such examination.

The Finance Act, 2020 amendment could not be applied to A.Y. 2014-15 without examination; the Tribunal's reliance on it was misplaced.

Raising new ground suo motu without notice to assessee - Whether the Tribunal could raise, for the first time, the applicability of the 2020 amendment and direct verification by the Assessing Officer without giving the assessee notice and an opportunity to be heard. - HELD THAT: - The Court noted that the point regarding the post-2020 amendment was not the case of the revenue before the Assessing Officer, CIT(A) or the Tribunal, and that the Assessing Officer and CIT(A) could not have taken that view when their orders were passed prior to the amendment. The Tribunal, having taken up the issue suo motu in its reserved hearing, was required to afford the assessee notice and opportunity to address that new ground. The Tribunal did not do so. Consequently, its direction to the Assessing Officer to verify filing under the post-2020 regime was procedurally infirm.

The Tribunal erred in raising a new ground suo motu without giving notice and opportunity to the assessee.

Final Conclusion: Appeal allowed. Orders of the Tribunal, CIT(A) and Assessing Officer insofar as deduction under Section 80IA for A.Y. 2014-15 was disallowed are set aside and the Assessing Officer is directed to allow the deduction; the Tribunal's reliance on the Finance Act, 2020 amendment and its suo motu course without notice were held to be incorrect.

Condonation of delay - exercise of power under Section 263 of the Income Tax Act - requirement of independent application of mind by the Principal Commissioner of Income Tax - invalid exercise of jurisdiction founded on initiation at the instance of the Assessing Officer - substantial questions of law on merits left open

Condonation of delay - Application for condonation of delay in filing the appeal - HELD THAT: - The Court perused the affidavit in support of the petition and found that sufficient cause had been shown for condonation of delay. On that basis the application for condonation of delay was allowed and the delay in filing the appeal was condoned.

Application allowed; delay in filing the appeal condoned.

Exercise of power under Section 263 of the Income Tax Act - requirement of independent application of mind by the Principal Commissioner of Income Tax - invalid exercise of jurisdiction founded on initiation at the instance of the Assessing Officer - Validity of the Principal Commissioner of Income Tax's exercise of jurisdiction under Section 263 - HELD THAT: - The Tribunal found that proceedings under Section 263 were initiated on a proposal by the Assessing Officer and there was no material to show that the Principal Commissioner of Income Tax applied its independent mind or recorded reasons demonstrating that the twin conditions for exercise of Section 263 were jointly satisfied. The Court observed that PCIT must apply its own mind and record reasons before issuing a show-cause notice under Section 263. The revenue did not challenge the Tribunal's factual and legal finding on this head in its substantial questions of law, indicating reconciliation with that finding. In these circumstances the Court affirmed the Tribunal's conclusion that the exercise of jurisdiction under Section 263 was not in accordance with law and upheld the Tribunal's setting aside of the PCIT order.

Tribunal's finding that the exercise of power under Section 263 was invalid is affirmed; the revenue's appeals are dismissed on this ground.

Substantial questions of law left open - Disposition of the substantial questions of law raised by the revenue concerning the merits of taxability/exemption - HELD THAT: - Because the Tribunal granted relief to the assessee on the primary ground that the exercise of jurisdiction under Section 263 was improper, the Court declined to decide the substantial questions of law framed by the revenue concerning the merits (including issues relating to claimed exemption under Section 10(38), characterisation of transactions as trading/adventure, and applicability of provisions such as section 68). The Court noted that those questions are left open for adjudication and were not decided in the instant proceedings.

Substantial questions of law on the merits are left open and are not decided.

Final Conclusion: The application for condonation of delay is allowed. The Tribunal's finding that the PCIT's exercise of jurisdiction under Section 263 was invalid (being based on a proposal by the Assessing Officer without independent application of mind) is affirmed and the revenue's appeals are dismissed on that ground; the substantive questions of law on the merits are left open.

Validity of notice issued to struck-off company - Restoration under Section 252(3) of the Companies Act, 2013 - Effect of restoration order placing company in same position as if not struck off - Continuing liability of struck-off company - Locus standi of director to impugn notice issued to company

Restoration under Section 252(3) of the Companies Act, 2013 - Validity of notice issued to struck-off company - Effect of restoration order placing company in same position as if not struck off - Continuing liability of struck-off company - Impugned notice dated 28th March, 2019 issued under Section 148 of the Income Tax Act in the name of the company is not invalid merely because the company had earlier been struck off, on account of the subsequent NCLT restoration order. - HELD THAT: - The Tribunal's restoration order under Section 252(3) has the statutory effect of placing the company and all persons in the same position as if the name of the company had not been struck off; consequently, the company is deemed to have been in existence even on the date the notice was issued. Section 250 and the corresponding proviso to the earlier provision establish that liabilities of a struck-off company continue and may be enforced. The Supreme Court's decision in Gopal Shri Scrips (as considered) supports that proceedings against a struck-off company cannot be nullified simply because it was struck off; where restoration is ordered, the defect is cured and the notice is valid. On these statutory and precedential bases the Court held the impugned notice for AY 2012-13 to be valid and not non-est on the ground of prior striking off. [Paras 11, 12, 13, 16, 17]

The notice dated 28th March, 2019 is valid because the NCLT restoration operates to deem the company as not struck off and the liabilities/proceedings continue.

Locus standi of director to impugn notice issued to company - Validity of notice issued to struck-off company - Petition filed by the director in his individual capacity challenging the notice in the name of the company is not maintainable and is infructuous once the company has been restored. - HELD THAT: - The petitioner, a promoter and director, challenged the notice issued to the company though the company itself has not challenged the notice or the NCLT restoration order, which has attained finality. In these circumstances the petitioner lacks locus to maintain the petition in his individual capacity and, alternatively, the petition has become infructuous. Further, the petitioner's conduct in opposing restoration before the NCLT and persisting with this petition after restoration evidences misuse of process. The Court accordingly dismissed the petition, vacated interim relief and imposed costs. [Paras 9, 19, 20, 21]

The petition is dismissed as not maintainable/infructuous; interim orders are vacated and costs awarded to the Court.

Final Conclusion: The writ petition challenging the notice dated 28th March, 2019 is dismissed. The NCLT restoration of the company cures the alleged defect of issuance to a struck-off entity and the petitioner, in his individual capacity, lacks locus; interim relief is vacated and costs are imposed.

Territorial jurisdiction - doctrine of forum non conveniens - faceless assessment under section 144B - Article 226 - cause of action - dominus litis - res judicata - principles of natural justice

Territorial jurisdiction - Article 226 - Whether this Court has the necessary territorial jurisdiction under Article 226 to entertain the writ petitions when the PAN Assessing Officer/Jurisdictional Assessing Officer is located outside the NCT of Delhi - HELD THAT: - The Court recorded that the question of territorial jurisdiction when the jurisdictional assessing officer is situated outside the National Capital Territory of Delhi is a substantial legal issue requiring authoritative resolution. The bench observed conflicting views in coordinate decisions and considered that the matter raises recurring legal questions in the faceless assessment context. Given the complexity and the potential for divergent approaches, the Court declined to finally decide the jurisdictional question and refrained from adjudicating the point itself. [Paras 15, 16]

Referred to a larger bench for authoritative determination; no final decision on territorial jurisdiction.

Doctrine of forum non conveniens - territorial jurisdiction - Whether this Court, assuming it has jurisdiction, should refuse to exercise jurisdiction under Article 226 applying the doctrine of forum non conveniens if the PAN Assessing Officer/Jurisdictional Assessing Officer is located outside the NCT of Delhi - HELD THAT: - The bench recognised that the Full Bench decision in Sterling Agro establishes that a court may refuse to exercise jurisdiction on forum non conveniens grounds even where a cause of action partially arises within its territory. Noting the significance of that doctrine in tax litigation under the faceless regime and the likelihood of repeated disputes, the Court considered the question sufficiently important to merit consideration by a larger bench rather than being resolved in the present hearing. [Paras 15, 16]

Referred to a larger bench for authoritative determination; not decided on merits here.

Faceless assessment under section 144B - cause of action - Whether the presence of National Faceless Assessment Centre in Delhi would be a sufficient 'cause of action' to confer jurisdiction on this Court to entertain a writ petition under Article 226 ignoring the location of the PAN/Assessing Officer Jurisdictional Assessing Officer and any other relevant factors - HELD THAT: - The Court acknowledged competing contentions: that NaFAC's role and the issuance/communication of orders from Delhi may give rise to a cause of action within this Court's territory, while the Revenue emphasised that substantive assessment functions and appellate architecture link jurisdiction to the situs of the PAN AO. Given the unsettled nature and wider implications, the Court elected to refer the legal question for consideration by a larger bench. [Paras 15, 16]

Referred to a larger bench for authoritative determination; not decided.

Cause of action - dominus litis - Whether when a part of cause of action arises within one or more High Courts, the petitioner being dominus litis would have the right to choose his forum - HELD THAT: - The bench noted the parties' reliance on precedent holding that a petitioner who is dominus litis may choose the forum when part of the cause of action arises within its jurisdiction, but also noted the countervailing principle permitting refusal of jurisdiction on forum non conveniens grounds. Because the interplay between dominus litis and forum non conveniens in the faceless assessment scheme is a recurring and substantial legal question, the Court referred the matter to a larger bench for resolution. [Paras 15, 16]

Referred to a larger bench for authoritative determination; no final adjudication here.

Sterling Agro Industries (Full Bench) - doctrine of forum non conveniens - Whether applying the principles of the Full Bench decision in Sterling Agro Industries Limited v. Union of India and Ors., this Court should entertain the writ petitions or refuse to exercise discretion to entertain the same on the ground that the PAN Assessing Officer/Jurisdictional Assessing Officer is located outside the jurisdiction of this Court - HELD THAT: - The Court accepted that Sterling Agro lays down the test for applying forum non conveniens in the context of Article 226 and noted that some coordinate bench decisions (including RKKR Foundation) took differing approaches. Given the potential for divergent application and the frequency with which the issue will arise under the faceless regime, the bench considered the question fit for determination by a larger bench rather than resolving it in the present petitions. [Paras 15, 16]

Referred to a larger bench for authoritative determination; not decided here.

Res judicata - Whether in WP(C) No.9307/2022 the principle of res judicata is attracted - HELD THAT: - The Court noted that the petitioner contended res judicata based on earlier proceedings before a Division Bench of this Court which had entertained a related writ; the bench observed that the correctness of that coordinate-bench view and its applicability in subsequent proceedings raises significant legal questions requiring resolution. Rather than settling the res judicata contention itself, the Court concluded that the issue should be determined by a larger bench along with the other framed questions. [Paras 15, 16, 17]

Referred to a larger bench for authoritative determination; the res judicata point remains undetermined in this order.

Final Conclusion: The Court did not decide the framed questions of law but referred six substantial legal questions concerning territorial jurisdiction, forum non conveniens, the effect of the National Faceless Assessment Centre, dominus litis and res judicata to a larger bench for authoritative determination; nothing in this order adjudicates those questions.

Deduction under Chapter VI-A: section 80P(2)(a)(i) and 80P(2)(d) - Due date of filing return and Explanation 2 to section 139(1) - Interpretation of Explanation 2(a)(ii) vis-a -vis Explanation 2(c) - Applicability of section 80AC - Remand for fresh adjudication on merits

Due date of filing return and Explanation 2 to section 139(1) - Interpretation of Explanation 2(a)(ii) vis-a -vis Explanation 2(c) - Deduction under Chapter VI-A: section 80P(2)(a)(i) and 80P(2)(d) - Applicability of section 80AC - Whether the assessee was correctly classified under Explanation 2(c) to section 139(1) so as to render its returns 'beyond due date' and thereby disentitle it from deductions under section 80P by application of section 80AC. - HELD THAT: - The Tribunal found that the assessee is liable to be audited under the state cooperative law and therefore falls within Explanation 2(a)(ii) to section 139(1) (i.e., a person other than a company whose accounts are required to be audited), and is not covered by the residuary clause in Explanation 2(c) ("any other assessee"). The lower authorities and the CIT(A) had treated the assessee as covered by clause (c) and on that basis recorded the extended due date as 31/08/2018/31/08/2019 and denied deductions under section 80P because returns were filed after those dates. The Tribunal held that this classification was incorrect; since Explanation 2(a)(ii) applies, the premise for invoking section 80AC to deny the Chapter VI-A deductions fell away in principle. Consequently, the Tribunal reversed the action of the lower authorities insofar as they applied section 80AC to deny the claimed deductions and directed that the sole substantive grievance be restored to the Assessing Officer for fresh adjudication on merits in accordance with law. [Paras 3, 5]

Assessee is covered by Explanation 2(a)(ii), not Explanation 2(c); reversal of denial under section 80AC in principle and remand to Assessing Officer for fresh adjudication on merits.

Final Conclusion: Both appeals are allowed; the orders denying deductions under section 80P by reference to late filing under Explanation 2(c) are reversed in principle, and the matter is remitted to the Assessing Officer for fresh adjudication on merits for assessment years 2018-19 and 2019-20.

Disallowance of exemption under section 11 for failure to furnish audit report in Form No.10B - condonation of delay in filing Form No.10B under CBDT circulars and section 119(2) - acceptance of belated audit report by assessing officer/CIT on satisfaction of reasonable cause - processing of return under section 143(1) and limited powers of assessing officer in adjustments

Disallowance of exemption under section 11 for failure to furnish audit report in Form No.10B - condonation of delay in filing Form No.10B under CBDT circulars and section 119(2) - acceptance of belated audit report by assessing officer/CIT on satisfaction of reasonable cause - Whether denial of exemption under section 11 on account of non-filing of Form No.10B could be sustained where the audit report was belatedly furnished and delay was claimed to be bonafide, and whether the belated Form No.10B should be accepted. - HELD THAT: - The Tribunal held that failure to furnish Form No.10B with the return disentitles a trust to exemption under sections 11 and 12, but the CBDT has issued circulars authorising condonation of delay and empowering Commissioners of Income-tax (and, by delegation in earlier instructions, the AO) to accept belated audit reports after being satisfied that the assessee was prevented by reasonable cause. The extant CBDT guidance (including Circular No.2/2020) permits condonation for A.Y.2018-19 where delay is up to 365 days and envisages consideration on merits by the Competent Authority. Applying that legal framework to the facts, the Tribunal found that the assessee's failure to file Form No.10B on time resulted from a bonafide mistake and was neither willful nor negligent. In view of the reasonable cause shown, the Tribunal concluded that the delay ought to be condoned, and directed acceptance of the belatedly filed Form No.10B, thereby restoring the assessee's entitlement to claim the reliefs contingent on compliance. [Paras 9]

Delay in filing Form No.10B is condoned as bonafide; lower orders denying exemption under section 11 are reversed and the AO is directed to accept the audit report in Form No.10B.

Final Conclusion: The Tribunal allowed the appeal for A.Y. 2018-19, condoned the delay in filing Form No.10B being a bonafide mistake, reversed the denial of exemption under section 11, and directed the Assessing Officer to accept the belated audit report.

Exemption under 80P(2)(d) for interest on investments made with other cooperative societies - Deduction under 80P(2)(a)(i) in relation to business income of a cooperative society - Distinction between a cooperative society and a cooperative bank for purposes of 80P - Disallowance under 40(a)(ia) for failure to deduct tax at source and its impact on taxable/business income - Allowability of contribution to recognized funds under section 36(1) as business expenditure

Exemption under 80P(2)(d) for interest on investments made with other cooperative societies - Distinction between a cooperative society and a cooperative bank for purposes of 80P - Interest income received on investments with the Goa State Cooperative Bank is eligible for exemption under section 80P(2)(d) as income from investment with another cooperative society. - HELD THAT: - The Tribunal followed the view of a Coordinate Bench which held that what matters for claim under section 80P(2)(d) is that the interest income is derived from investments made by the assessee cooperative society with another cooperative society. A cooperative bank, being a cooperative society, does not fall outside the scope of section 80P(2)(d) for interest on investments. The earlier reasoning of the Assessing Officer and the CIT(A) that treated such interest as ineligible was overruled by applying the Coordinate Bench decision and relevant High Court/Tribunal authorities which supported allowability of the exemption in similar factual contexts. Consequently the interest income in question was directed to be allowed as exempt under section 80P(2)(d). [Paras 10]

Interest income of Rs.3,26,721/- (as recorded) received from investment with the cooperative bank is allowable as deduction under section 80P(2)(d).

Disallowance under 40(a)(ia) for failure to deduct tax at source and its impact on taxable/business income - Deduction under 80P(2)(a)(i) in relation to business income of a cooperative society - Additions/disallowances made under section 40(a)(ia) by the Assessing Officer are to be considered part of business income and, consequently, are to be allowed for computing exemption under section 80P. - HELD THAT: - The Tribunal did not advert to the technical merits of the disallowances but held that the inflated profits resulting from such disallowances form part of business income which would qualify for deduction under section 80P(2)(a)(i). On that basis the Assessing Officer was directed to allow the disallowances when computing exemption under section 80P, thereby permitting the appellant to claim the benefit of section 80P in respect of the impugned items arising from the disallowances. [Paras 11, 12]

Disallowances confirmed under section 40(a)(ia) are to be treated as business income and allowed for the purpose of computing exemption under section 80P; the Assessing Officer to give effect accordingly.

Allowability of contribution to recognized funds under section 36(1) as business expenditure - Deduction under 80P(2)(a)(i) in relation to business income of a cooperative society - Contribution to recognized funds (claimed under section 36(1)) disallowed by the Assessing Officer is to be treated as affecting business income and therefore considered for exemption under section 80P when computing taxable income. - HELD THAT: - The Tribunal observed that disallowances such as contribution to recognized funds, even if contested on merits before the Assessing Officer, produce effects on the computation of business income. Since section 80P exemption applies to business income of cooperative societies, the Assessing Officer was directed to allow such disallowances (i.e., to consider them for the purpose of computing business income) so that the appellant may claim the appropriate exemption under section 80P. [Paras 11, 12]

Disallowance of contribution to recognized funds under section 36(1) shall be treated for purposes of computing business income and allowed insofar as it affects the exemption under section 80P.

Application of Tribunal decision mutatis mutandis to subsequent assessment year - Deduction under 80P(2)(d) for interest on investments made with other cooperative societies - The decision in relation to A.Y. 2013-14 applies mutatis mutandis to A.Y. 2014-15; the appeal for A.Y. 2014-15 is allowed on the same grounds. - HELD THAT: - The Tribunal recorded that the facts and issues for A.Y. 2014-15 are identical to those for A.Y. 2013-14 and accordingly applied the reasoning and directions given in the earlier part of the order to the subsequent assessment year without re adverting to the merits separately. [Paras 14]

The order in ITA No.240/PAN/2019 (A.Y. 2013-14) is applied mutatis mutandis and the appeal for A.Y. 2014-15 is allowed.

Final Conclusion: Both appeals for A.Y. 2013-14 and A.Y. 2014-15 are allowed: interest on investments with the cooperative bank is held exempt under section 80P(2)(d), and the Assessing Officer is directed to consider the disallowances (including under section 40(a)(ia) and section 36(1)) for computing business income so as to give the appellant the benefit of section 80P.

Validity of notice under section 153C - Requirement of incriminating material as result of search - Belongingness/nexus of seized material to the assessee - Cumulative jurisdictional conditions for issuance of notice under section 153C - Quashing of assessment framed under section 153C r.w.s. 143(3) - Application of PCIT-3, Pune v. Sinhgad Technical Education Society

Validity of notice under section 153C - Requirement of incriminating material as result of search - Belongingness/nexus of seized material to the assessee - Cumulative jurisdictional conditions for issuance of notice under section 153C - Quashing of assessment framed under section 153C r.w.s. 143(3) - Application of PCIT-3, Pune v. Sinhgad Technical Education Society - Whether notices issued under section 153C and the consequential assessments for A.Ys. 2009-10 to 2014-15 were legally sustainable. - HELD THAT: - The Tribunal held that section 153C requires satisfaction of three cumulative jurisdictional conditions before a notice can be issued: (i) existence of undisclosed/unexplained assets or incriminating documents discovered as a result of search; (ii) recorded satisfaction that such seized assets/documents belong to the assessee for the relevant assessment year; and (iii) proper satisfaction recorded for the relevant assessment year. Where any of these pre-conditions is not satisfied, the notice under section 153C is legally unsustainable. On the facts, the Assessing Officer failed to demonstrate that any incriminating material was found and seized during the search that belonged to the assessee or had a bearing on determination of its total income. The Tribunal applied and followed the reasoning of the Hon'ble Supreme Court in PCIT-3, Pune v. Sinhgad Technical Education Society that mandates a nexus between the incriminating material found in search and the person whose assessment is sought to be reopened. The Tribunal also noted consistent view of the jurisdictional High Court in CIT v. Kabul Chawla that assessments under section 153A/153C can be sustained only on the basis of incriminating material unearthed in the search. In consequence, the Tribunal found the CIT(A)'s conclusion-treating the section 153C notices as ab initio invalid and quashing the assessments-correct and confirmed it, directing deletion of the additions made by the AO. [Paras 6, 7, 8]

Notices under section 153C and consequent assessments for A.Ys. 2009-10 to 2014-15 are invalid; the assessments are quashed and additions deleted.

Final Conclusion: The Revenue's appeals for A.Ys. 2009-10 to 2014-15 are dismissed; the CIT(A)'s orders quashing the assessments are confirmed and the assessee's cross-objections are allowed.

Penalty under section 271D - satisfaction recorded by Assessing Officer - contravention of section 269SS - void ab initio - precedent in CIT v. Jai Laxmi Rice Mills

Penalty under section 271D - satisfaction recorded by Assessing Officer - contravention of section 269SS - void ab initio - Validity of the penalty imposed under section 271D where the Assessing Officer did not record satisfaction regarding contravention of section 269SS in the assessment order - HELD THAT: - The Tribunal found that the assessment order under section 143(3) records initiation of penalty proceedings under section 271(1)(c) but contains no satisfaction or finding that the assessee had contravened section 269SS; consequently there was no recorded satisfaction to support initiation of penalty under section 271D. Following the principle laid down by the Hon'ble Supreme Court in CIT v. Jai Laxmi Rice Mills, and consistent Tribunal practice, a penalty under the specific provision (section 271D) cannot be sustained in the absence of the Assessing Officer's satisfaction recorded in the assessment order that would justify proceedings under that provision. Applying that principle to the present facts, the Tribunal held the penalty order to be bad in law and quashed it. The Tribunal expressly declined to examine other grounds on merits as the quashing rendered them academic. [Paras 10, 11, 12]

Penalty order under section 271D quashed as bad in law for want of recorded satisfaction by the Assessing Officer regarding contravention of section 269SS; other grounds left undecided as academic.

Final Conclusion: The appeal is allowed: the penalty imposed under section 271D is quashed for lack of recorded satisfaction by the Assessing Officer regarding contravention of section 269SS; other grounds were not adjudicated as the penalty order has been set aside.

Genuineness of sundry creditors and disallowance under section 41 - Tax Deduction at Source under Section 194C - threshold conditions and applicability for AY 2010-11 - relevance of certificate of DDIT (Exemptions) for TDS applicability - disallowance limited to amounts demonstrably liable for TDS

Genuineness of sundry creditors and disallowance under section 41 - remand report and appellate scrutiny of assessment material - Deletion of addition of Rs.5,08,398/- made on account of sundry creditors - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the addition because the Assessing Officer, on remand, admitted that five parties and the total amount were not disputed and failed to point out any material discrepancy in the explanations and documents furnished by the assessee. The CIT(A) had examined the remand report and found that variations in names arose from recording either agent names or actual truck owners; the AO could not demonstrate that the creditors claimed were not genuine. In these circumstances there was no justification for sustaining the addition made under section 41. [Paras 8]

Addition of Rs.5,08,398/- on account of sundry creditors deleted; revenue ground dismissed.

Tax Deduction at Source under Section 194C - threshold conditions and applicability for AY 2010-11 - disallowance limited to demonstrable failures to deduct TDS - Deletion of addition of Rs.5,66,23,307/- on account of freight expenses alleged to be liable for TDS - HELD THAT: - The Tribunal confirmed the CIT(A)'s deletion of the addition because the Assessing Officer failed to identify a single payment where TDS was required to be deducted but was not. The appellate authority, after perusal of the remand report, found no allegation that the freight payments were bogus nor any case showing specific instances of non-deduction as per law; accordingly the broad addition on the ground of non-deduction of TDS could not be sustained. Where the AO cannot point to payments meeting the statutory criteria for deduction, disallowance is not justified. [Paras 11]

Addition of Rs.5,66,23,307/- deleted; revenue ground dismissed.

Relevance of certificate of DDIT (Exemptions) for TDS applicability - Tax Deduction at Source under Section 194C - threshold conditions and applicability for AY 2010-11 - disallowance limited to amounts demonstrably liable for TDS - Disallowance in respect of loading and unloading expenses restricted to Rs.1,40,563/- and balance deletion of Rs.53,17,313/- - HELD THAT: - The Tribunal upheld the CIT(A)'s approach of quantifying only the amount which was demonstrably liable for TDS. The AO had not specified which payments required TDS and had ignored a certificate from the DDIT (Exemptions) indicating that certain wages and levy receipts were not subject to TDS. Applying the Section 194C tests as applicable for the year, the CIT(A) found that only Rs.1,40,563/- was chargeable to TDS and rightly confirmed disallowance to that limited extent while deleting the remaining addition of Rs.53,17,313/-. The Tribunal found no infirmity in that reasoning. [Paras 15]

Disallowance confined to Rs.1,40,563/-; balance Rs.53,17,313/- deleted; revenue grounds dismissed.

Final Conclusion: For A.Y. 2010-11 the Tribunal affirms the CIT(A)'s deletions and limited disallowance: additions on account of sundry creditors and freight expenses deleted, loading/unloading disallowance restricted to the amount demonstrably liable for TDS; Revenue's appeal dismissed.

Evidentiary value of documents seized from third parties (dumb documents) - presumption of documents seized in search under section 132(4) and section 292C - right to cross-examination as element of natural justice where statements are relied upon - requirement of transfer (registered sale deed) for incidence of capital gains - right person and right year - primacy of statutory/official valuation (DVO report) over speculative entries in seized informal documents

Evidentiary value of documents seized from third parties (dumb documents) - presumption of documents seized in search under section 132(4) and section 292C - Addition based on 'sauda chithi' seized from third party is not sustainable against the assessee where the document does not identify the assessee and is not in his handwriting or signed by him. - HELD THAT: - The Tribunal accepted the Coordinate Bench's analysis that the 'sauda chithi' was found at a third party's premises, did not contain the assessee's name or signature, and thus the statutory presumptions available under search provisions were not attracted against the assessee. Statements of other co-owners and the assessee denied the transaction; one seizure-possession witness retracted. On these facts the seized informal document is a "dumb document" vis-a -vis the assessee and cannot by itself fasten tax liability. The Assessing Officer's reliance on such a document without corroboration was therefore held unsustainable. [Paras 12, 13]

Addition based solely on the seized 'sauda chithi' was deleted and the Assessing Officer's addition cancelled.

Right to cross-examination as element of natural justice where statements are relied upon - Additions founded on statements of third parties are unsustainable if the assessee is not given a meaningful opportunity to cross-examine those persons whose statements are relied upon. - HELD THAT: - Following binding precedent, the Tribunal (by reference to the Coordinate Bench) held that where the Assessing Officer relies on statements recorded by the Investigation Wing or AO, denial of an effective opportunity to cross-examine those witnesses violates the principles of natural justice. The Assessing Officer's contention that cross-examination requests were belated was not accepted on the facts relied upon, and the failure to permit cross-examination rendered the additions infirm. [Paras 12]

Addition based on statements without affording opportunity of cross-examination was held unsustainable and deleted.

Requirement of transfer (registered sale deed) for incidence of capital gains - right person and right year - primacy of statutory/official valuation (DVO report) over speculative entries in seized informal documents - No capital gains could be fastened on the assessee for AY 2017-18 in absence of a registered transfer; the DVO valuation (accepted in the subsequent year's assessment) negated the speculative values stated in the seized 'sauda chithi'. - HELD THAT: - The Tribunal endorsed the Coordinate Bench's conclusion that capital gains arise only on transfer (i.e., registered sale deed) and must be assessed in the correct year on the right person. The land remained registered in the names of the co-owners and possession was with the assessee; hence there was no completed transfer in the year under consideration. Further, the DVO report, subsequently accepted in the next year's assessment, placed the market value far below the amount shown in the informal 'sauda chithi', demonstrating that the figure in the seized note was unreliable. On these grounds the additions for alleged undisclosed capital gains were not sustainable. [Paras 12, 13]

No charge of capital gains for AY 2017-18; Assessing Officer's addition based on speculative entries and prior to DVO valuation was set aside.

Final Conclusion: Assessee's appeal for ITA No.110/SRT/2021 (AY 2016-17) was dismissed as not pressed. Revenue's appeal for AY 2017-18 was dismissed; the Tribunal followed the Coordinate Bench in holding that additions based on the seized 'sauda chithi', without proper identification of the assessee, without allowing effective cross-examination and contrary to the DVO valuation and absence of registered transfer, were unsustainable.

Disallowance under section 40A(3) of the Income Tax Act - genuineness of cash purchases - transactions not exceeding threshold limit of Rs.20,000 - acceptance of evidence by appellate authority - powers of CIT(A) co-terminus with Assessing Officer

Disallowance under section 40A(3) of the Income Tax Act - genuineness of cash purchases - transactions not exceeding threshold limit of Rs.20,000 - acceptance of evidence by appellate authority - powers of CIT(A) co-terminus with Assessing Officer - Validity of deletion by CIT(A) of addition made under section 40A(3) consequent to cash purchases and related challenge to the appellate authority's acceptance of evidence and exercise of powers vis-a -vis the Assessing Officer. - HELD THAT: - The Assessing Officer added back cash purchases on the premise of contravention of section 40A(3). Before the CIT(A) the assessee produced cash book, purchase register and individual invoices and explained its business model of buying talk-time stock including numerous small cash purchases, none exceeding the statutory threshold. The CIT(A) examined the records, recorded the factual finding that not a single transaction exceeded the threshold limit of Rs.20,000 and deleted the addition. The Revenue contended that the CIT(A) ignored the A.O.'s remand report and should have sustained the addition or remanded for further inquiry, invoking the co-terminus nature of the CIT(A)'s powers with the A.O. The Tribunal found no reason to interfere with the CIT(A)'s factual finding and concurrent acceptance of the documentary evidence; having regard to the CIT(A)'s specific examination of cash book, purchase register and invoices and the finding that threshold limits were not breached, the deletion under section 40A(3) was upheld. The Tribunal therefore rejected the Revenue's contention that further inquiry or remand was required.

The CIT(A)'s deletion of the addition under section 40A(3) is upheld and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal affirms the CIT(A)'s factual finding that the cash purchases were supported by records and that no transaction exceeded the threshold; consequently the addition under section 40A(3) is deleted and the Revenue's appeal is dismissed.

Unexplained investment under section 69 of the Income Tax Act - addition as unexplained cash credits in the form of share capital and share premium - undisclosed commission income treated as income - onus on assessee to prove identity, genuineness and creditworthiness of creditors - consequence of non-appearance and failure to produce evidence before assessing and appellate authorities

Unexplained investment under section 69 of the Income Tax Act - addition as unexplained cash credits in the form of share capital and share premium - onus on assessee to prove identity, genuineness and creditworthiness of creditors - Validity of addition of Rs. 2,73,25,000 as unexplained investment in respect of share capital and share premium. - HELD THAT: - The Tribunal upheld the finding of the authorities that the assessee raised share capital and security premium from subscribers whose identity, genuineness and creditworthiness remained unexplained. The assessee failed to produce the alleged shareholders or any documentary evidence before the Assessing Officer, the Commissioner (Appeals) or the Tribunal despite opportunities and notices. In these circumstances the onus to explain the cash credits was not discharged and the provisions relating to unexplained cash credits were attracted. The Tribunal agreed with the reasoning that the entries represented routed/unaccounted income introduced as share capital and premium through accommodation entries, and found no infirmity in confirming the addition. [Paras 7, 8]

Addition of Rs. 2,73,25,000 as unexplained investment is confirmed and the ground of appeal is dismissed.

Undisclosed commission income treated as income - consequence of non-appearance and failure to produce evidence before assessing and appellate authorities - Validity of addition of Rs. 69,750 as undisclosed commission income relating to share capital and share premium. - HELD THAT: - The Assessing Officer made an addition of commission income on account of the transactions, which was confirmed by the Commissioner (Appeals). The assessee did not file any documentary evidence or make submissions to rebut the addition before the authorities or the Tribunal. On the material on record and the absence of any substantiation by the assessee, the Tribunal found no error in the authorities upholding the addition as undisclosed commission income. [Paras 9]

Addition of Rs. 69,750 as undisclosed commission income is confirmed and the ground of appeal is dismissed.

Final Conclusion: The appeal is dismissed; the additions made by the Assessing Officer and confirmed by the Commissioner (Appeals) in respect of unexplained investment and undisclosed commission income for AY 2008-09 are upheld.

Suo-moto appropriation of refunds against confirmed demand - pre-deposit mandate for statutory appeal and stay of recovery - doctrine of merger - power of tribunal to recall or rectify its order - direction to disburse refunds with interest

Suo-moto appropriation of refunds against confirmed demand - pre-deposit mandate for statutory appeal and stay of recovery - direction to disburse refunds with interest - Validity of respondents' appropriation of refunds allowed on merits against the demand confirmed by Order-in-Original dated 28th November 2014. - HELD THAT: - Petitioner obtained orders allowing refunds on merits (impugned orders dated 17th February 2021 and 31st December 2021). However, respondents had adjusted those refunds against a demand confirmed by Order-in-Original dated 28th November 2014. The Court observed that Appeal No. C/85678/15 has been restored to the CESTAT and that petitioner had already paid amounts during investigation proceedings far in excess of the 7.5% pre-deposit threshold required under the substituted pre-deposit mandate for statutory appeals. Consequentially, no recovery in excess of 7.5% of the duty in dispute could be made while the appeal stands restored. In view of these facts and the restoration of the appeal, the impugned orders insofar as they appropriated the allowed refunds were quashed and set aside and respondents were directed to refund the amounts allowed on merits together with applicable interest within the timeframe prescribed by the Court. [Paras 9, 10, 11]

Impugned orders dated 17th February 2021 and 31st December 2021 quashed insofar as they appropriated the allowed refunds; respondents directed to disburse the refunded amounts with applicable interest within eight weeks.

Doctrine of merger - power of tribunal to recall or rectify its order - Whether the doctrine of merger applied so as to bar petitioner from seeking rectification/recall and whether CESTAT should be directed to consider petitioner's rectification application and rehear the appeal. - HELD THAT: - The Court considered the question of merger in light of petitioner having earlier sought leave to withdraw its appeal before the Apex Court. It held that the doctrine of merger did not apply because (a) the Apex Court had granted leave to withdraw the appeal and did not pass any order on merits or admit the appeal, and (b) there was no order of dismissal by the Apex Court which could be treated as an affirmance of the Tribunal's order. The Court noted that the original CESTAT order of 4th October 2016 was a common order concerning four appellants, rectification applications filed by three other appellants had been allowed on the ground that certain materials (including a departmental clarification) escaped consideration, and petitioner had filed the rectification-related orders in the Apex Court. In the interest of justice and to avoid gross injustice to petitioner, the Court set aside the CESTAT order rejecting petitioner's rectification application and directed CESTAT to consider petitioner's rectification application and decide the appeal on merits preferably within twelve weeks. [Paras 12, 13]

Doctrine of merger held inapplicable; order dated 26th August 2019 set aside and CESTAT directed to consider petitioner's rectification application and to hear and dispose of Appeal No. C/85678/2015 on merits preferably within twelve weeks.

Final Conclusion: Both petitions allowed: respondents are restrained from appropriating the refunds already allowed on merits and are directed to refund the amounts together with interest within eight weeks; CESTAT directed to reconsider petitioner's rectification application and decide the restored appeal on merits within the timeline indicated.

Beneficial importer - town seizure and presumption of duty-paid goods - seizure under Section 110 of the Customs Act - vague show cause notice and requirement to specify clause of Section 111 - revaluation based on statements and inadmissible electronic data - right to cross-examination under Section 138B of the Customs Act - penalties under Section 112 and Section 114AA of the Customs Act

Beneficial importer - town seizure and presumption of duty-paid goods - Whether the appellant was the importer/beneficial importer and liable for assessment of customs duty and related penalties - HELD THAT: - The Tribunal found on the material on record that the appellant had neither filed any bill of entry nor held himself out to be the importer prior to out of charge, nor placed purchase orders with foreign suppliers or financed the imports. Suppliers whose invoices were produced confirmed supplies against those invoices. In the context of a town seizure, goods available in the open market are presumed duty paid unless the Department proves otherwise. Reliance by Revenue on statements alone, without documentary proof that the appellant imported the goods, is insufficient to characterize the appellant as the importer or beneficial importer and to fasten duty or related penal liability on him. [Paras 16, 17]

Appellant is not the importer/beneficial importer; duty and duty-related demand confirmed against him are unsustainable.

Seizure under Section 110 of the Customs Act - vague show cause notice and requirement to specify clause of Section 111 - Validity of the seizure and of the show cause notice alleging confiscation under Section 111 - HELD THAT: - The Tribunal held the seizure to be defective because the Revenue did not produce evidence that the goods were smuggled or liable for confiscation and did not record reasons showing belief that the goods were liable to confiscation at the time of seizure. The show cause notice was also held to be vague for failing to specify the particular clause of Section 111 under which confiscation was alleged, thereby leaving the noticee unable to meet the precise case of the Department. [Paras 18]

Seizure under Section 110 and the confiscation proceedings premised on a vague show cause notice are bad; confiscation order set aside.

Revaluation based on statements and inadmissible electronic data - right to cross-examination under Section 138B of the Customs Act - Legitimacy of re-valuation carried out by Revenue on the basis of statements and retrieved electronic data (CPU/mobile) and compliance with evidentiary safeguards including opportunity of cross-examination - HELD THAT: - The Tribunal found that re-valuation was carried out by Revenue without producing relied-upon documents (such as retrieved printouts or DGOV circulars) in the record and without drawing any panchnama for retrieval of electronic data from the appellant's devices. The adjudicating authority also did not make witnesses available for cross-examination as required under Section 138B. Re-valuation based solely on statements and unproduced electronic material was therefore held to be inadmissible and unlawful. [Paras 16, 17, 18]

Re-valuation and duty demand founded on statements and unproduced electronic data are invalid; procedural and evidentiary defects vitiate the demand.

Penalties under Section 112 and Section 114AA of the Customs Act - Sustenance of penalties imposed on the appellant under Section 112 and Section 114AA - HELD THAT: - Since the foundational findings of importation, mis-declaration/undervaluation and confiscation were held to be unsustainable, and because procedural infirmities in seizure, valuation and show cause notice were found, the concomitant imposition of penalties under Section 112 and Section 114AA was held to be unwarranted. The Tribunal also observed that there was no evidence that the appellant signed or caused to be used any false declaration or document in respect of import/export transactions. [Paras 18]

Penalties under Section 112 and Section 114AA are not sustainable and are set aside.

Final Conclusion: Appeal allowed; the order-in-original confirming confiscation, duty, interest and penalties is set aside for lack of evidence that the appellant was the importer, for defective seizure and vague show cause proceedings, and for unlawful re-valuation and failure to comply with evidentiary safeguards; appellant entitled to consequential relief in accordance with law.

Exemption to durable containers under Notification No. 104/94-Cus - verification of identity of imported and re exported goods - provisional assessment retains its provisional character - demand of duty cannot be raised before finalization of provisional assessments

Exemption to durable containers under Notification No. 104/94-Cus - verification of identity of imported and re exported goods - Whether benefit of Notification No. 104/94 Cus ought to be denied where the importer asserts re export of the imported containers/packing materials - HELD THAT: - The Tribunal accepted that the Notification grants exemption to durable containers subject to re export within the prescribed period or extended period. The Tribunal held that where the same goods imported under claim of the Notification have in fact been re exported, denial of the exemption by demanding duty is not correct merely because re export occurred after the stipulated period. However, entitlement to the benefit depends on proof of export and on establishing the identity between the imported items and those exported. The matter was therefore remanded to the assessing authority to examine the appellant's evidence, verify identity of the imported and re exported goods and reconsider the claim in accordance with law. [Paras 4]

Benefit of Notification No. 104/94 Cus should be granted where the goods are shown to have been re exported; matter remanded for verification of identity and reconsideration by the assessing authority.

Provisional assessment retains its provisional character - demand of duty cannot be raised before finalization of provisional assessments - Whether the departmental demand of customs duty can be sustained prior to finalization of provisional assessments - HELD THAT: - The Tribunal agreed with the appellant that numerous Bills of Entry remained provisionally assessed. Relying on settled law cited in the judgment, the Tribunal held that a provisional assessment retains its provisional character for all purposes, and provisional assessment as to valuation or classification also affects entitlement to exemption notifications and quantification of duty. Consequently, no irreversible demand of duty can be sustained until the provisional assessments are finalized in accordance with the Customs Act. The Tribunal directed the assessing authority to finalize the provisional assessments under the statutory procedure and, thereafter, to determine and recover duty, if any, observing principles of natural justice. [Paras 4]

Impugned demand set aside insofar as raised before finalization of provisional assessments; matter remanded for finalization of assessments and then recovery of duty, if found due.

Final Conclusion: Appeal allowed by way of remand: the matter is set aside and directed to the assessing/adjudicating authority to (a) verify identity and re export evidence and reconsider grant of Notification No. 104/94 Cus benefits, and (b) finalize provisional assessments in accordance with the Customs Act and principles of natural justice before determining or recovering any customs duty.

Look Out Circular - flight risk - administrative action and limited judicial review - investigation into siphoning of funds and concealment of foreign assets - Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - RBI fraud classification and bank fraud declaration

Look Out Circular - flight risk - administrative action and limited judicial review - investigation into siphoning of funds and concealment of foreign assets - Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - Suspension of any Look Out Circular (LOC) operating against the petitioner for travel from 01.11.2022 to 21.11.2022 - HELD THAT: - The petition for suspension of the LOC was considered in light of material placed by investigative agencies (SFIO, Income Tax Department and bank respondents) that disclose allegations of large-scale diversion of funds, transfers to overseas accounts and beneficial ownership of foreign entities allegedly connected to the petitioner, and an ongoing inquiry under the Black Money Act and related fraud declarations by a bank. The court noted that issuance of an LOC is an administrative action subject to limited judicial review and that courts should not substitute their judgment for that of competent authorities. Having regard to the pendency and preliminary/crucial stage of investigations, allegations of non-cooperation by the petitioner, the existence of proceeds allegedly moved to foreign jurisdictions, and the petitioner's familial connections abroad (including the son's continued absence from India), the court found it inappropriate to exercise its discretion to suspend the LOC for the requested period. The court therefore declined to interfere with the administrative restriction, exercising caution because of the potential that allowing travel could frustrate ongoing investigations and enforcement under the Black Money Act and related proceedings. [Paras 20]

Petition dismissed; suspension of LOC not granted for the period sought and pending applications disposed of.

Final Conclusion: The High Court dismissed the petition seeking suspension of any Look Out Circular for the specified travel period, declining to suspend the LOC in view of ongoing investigations into alleged bank fraud, transfers to foreign accounts, the preliminary stage of proceedings under the Black Money Act, alleged non-cooperation and the limited scope for judicial interference in administrative issuance of LOCs.

Locus to sue as a member - transmission of shares by operation of law - maintainability of petitions under Sections 241-242 of the Companies Act, 2013 - interim restraint against dealing with company assets - grant of interim reliefs vis-a -vis final relief - compensation direction without quantification - power of Registrar to inquire under Section 206(4) - apportionment of assets under Section 53 of the Andhra Pradesh Reorganisation Act, 2014

Locus to sue as a member - transmission of shares by operation of law - maintainability of petitions under Sections 241-242 of the Companies Act, 2013 - apportionment of assets under Section 53 of the Andhra Pradesh Reorganisation Act, 2014 - Whether Telangana State Industrial Infrastructure Corporation (TSIIC) has locus to maintain CP/36/2021 under Sections 241 242 of the Companies Act, 2013 by virtue of being the shareholder of Emaar Hills Township Pvt. Ltd. - HELD THAT: - The Tribunal held that, on the materials placed before it (including the company's annual return/list of shareholders as on 31.03.2019, notes to accounts for year ended 31.03.2019, minutes of board meeting dated 16.06.2016 and the statutory scheme of the Andhra Pradesh Reorganisation Act, 2014), TSIIC has been recognised and treated as the successor entity of APIIC in respect of assets located in Telangana. Section 53 of the Reorganisation Act effects apportionment of assets by reference to location and, in the circumstances of this case, the transfer/vesting operates by operation of law so as to vest the beneficial ownership in TSIIC. The Tribunal therefore concluded that the petition filed by TSIIC under Sections 241 242 is ex facie maintainable and entertainable for enquiry, and that technical non entry in the register of members or pending demotion/demerger formalities do not defeat maintainability where the company itself has treated TSIIC as shareholder. [Paras 160, 168, 172, 173, 174]

TSIIC has locus to file CP/36/2021 and the petition is ex facie maintainable.

Interim restraint against dealing with company assets - grant of interim reliefs vis-a -vis final relief - Validity of the interim order restraining Respondent Nos.2 & 3 (and their nominees) from dealing with, alienating or creating third party interest in assets of Emaar Hills Township Pvt. Ltd. - HELD THAT: - Having found a prima facie case that the subject properties are State property and that public interest and potential irreparable injury attend the transactions alleged, the Tribunal sustained the NCLT's interim restraint prohibiting the respondents and their nominees from dealing with, encumbering, alienating or creating third party interests in the company's assets. The order was treated as an interlocutory protective direction pending full adjudication, and the Tribunal declined to displace that restraint on appeal while noting the need for a reasoned final hearing before the NCLT. [Paras 185, 187]

The interim restraint against dealing with the company's assets is sustained.

Compensation direction without quantification - grant of interim reliefs vis-a -vis final relief - Validity of the NCLT's direction that the respondent companies compensate the Government of Telangana/TSIIC for alleged financial losses arising from equity dilution and other consequences. - HELD THAT: - The Tribunal held that an order directing compensation requires quantification and a finding of liability. In the absence of any pleaded and proved quantification of loss or established liability at the interim stage, directing compensation amounted to conferring a substantive/final relief at an interlocutory stage. That direction was therefore unsustainable and was set aside, while leaving open the question of liability and quantification for the NCLT to decide on merits after full pleadings and evidence. [Paras 186]

The direction to compensate the Government of Telangana/TSIIC is set aside for being unquantified and impermissibly substantive at the interim stage.

Final Conclusion: The appeals are disposed of. The Tribunal held that TSIIC is prima facie entitled to maintain CP/36/2021 under Sections 241 242 by virtue of its recognition as successor/beneficial shareholder (transmission by operation of law) and sustained the interim restraint preventing the respondents from dealing with the company's assets. However, the direction ordering the respondents to compensate alleged losses to the State/TSIIC was set aside for lack of quantification. Parties were directed to complete pleadings before the NCLT and the NCLT was directed to decide the main petition on merits after a reasoned hearing.

Time barred claims under limitation - petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - principles of natural justice - acknowledgement in financial statements and fresh cause of action - pre petition dispute on performance and invoices

Time barred claims under limitation - petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - pre petition dispute on performance and invoices - Whether the Adjudicating Authority correctly dismissed the Section 9 petition as barred by limitation in view of the facts and documents on record. - HELD THAT: - The Tribunal considered the factual matrix including the invoices dated between 02.11.2010 and 10.12.2012, the last payment received on 11.02.2013, the demand notice dated 23.03.2018 and the respondent's reply dated 04.04.2018 which averred that the claims were time barred. The Adjudicating Authority recorded an earlier pre petition dispute concerning performance and completion of work and noted the dates of invoices and payments. On these materials the Adjudicating Authority concluded that the company petition filed on 26.06.2018 was beyond the three year limitation period and therefore barred. The Tribunal found no error in that conclusion, observing that there existed disputes between the parties predating the Section 9 filing and that the documents before the Adjudicating Authority supported the finding of limitation. The Tribunal accordingly affirmed the Adjudicating Authority's order dismissing the petition as time barred. [Paras 12, 13]

The dismissal of the Section 9 petition by the Adjudicating Authority as barred by limitation is affirmed.

Principles of natural justice - petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Whether the Adjudicating Authority violated principles of natural justice in passing the impugned order. - HELD THAT: - The Appellant alleged that it was denied an opportunity of hearing and that interlocutory applications for production of documents were not disposed of before the final order. The Respondent and the record before the Tribunal indicated that the parties had been heard and that the Adjudicating Authority had considered the documents and submissions. The Tribunal found no merit in the contention that principles of natural justice were breached, and held that the Adjudicating Authority had acknowledged and analysed the material on record before arriving at its decision. [Paras 12, 13]

Allegation of violation of natural justice is rejected; no breach found in the impugned order.

Acknowledgement in financial statements and fresh cause of action - time barred claims under limitation - Whether any alleged acknowledgements (emails or entries in financial statements) operated to revive limitation and render the petition maintainable. - HELD THAT: - The Appellant relied on alleged emails and entries in balance sheets as acknowledgements sufficient to restart limitation. The Respondent contested the existence and effect of such acknowledgements and produced material indicating denial of liability. The Tribunal noted the appellant's contentions but concluded on the material before the Adjudicating Authority that there was no basis to treat the claims as revived; the primary finding remained that the petition was filed after the limitation period and was time barred. The Tribunal did not accept the appellant's contention that alleged acknowledgements cured the limitation bar. [Paras 12, 13]

Contention that alleged acknowledgements revived limitation is not accepted; limitation bar stands.

Final Conclusion: The Appellate Tribunal has affirmed the Adjudicating Authority's order dismissing the Section 9 petition as time barred, rejected the complaint of breach of natural justice, and dismissed the appeal with no costs.

Exclusion of time under Section 14 of the Limitation Act, 1963 - Bonafide litigious activity - Limitation as jurisdictional bar - Duty to file appeal within statutory period under Section 61 of the Insolvency & Bankruptcy Code, 2016 - Obligation to comply with time granted by a court while exercising interim relief - Requirement to apply for certified copy and due diligence in IBC appeals

Exclusion of time under Section 14 of the Limitation Act, 1963 - Bonafide litigious activity - Whether the period from 25.01.2022 to 22.06.2022 (147 days) is excludable from computation of limitation under Section 14 of the Limitation Act, 1963 for the purpose of filing the Company Appeal. - HELD THAT: - The Tribunal found that the appellants had engaged in bonafide litigious activity by prosecuting W.P. No.2832/2022 and W.A. No.537/2022 before the High Court of Kerala with good faith and due diligence. Applying Section 14 of the Limitation Act in a liberal and equitable manner, and having regard to the nature of the proceedings pursued before the High Court, the Tribunal held that the period from 25.01.2022 (date of upload) to 22.06.2022 may be excluded when computing the period of limitation for the appeal. The IA for exclusion (IA/990/2022) was allowed without costs. [Paras 36]

IA/990/2022 allowed; the period 25.01.2022 to 22.06.2022 (147 days) excluded for computation of limitation.

Limitation as jurisdictional bar - Duty to file appeal within statutory period under Section 61 of the Insolvency & Bankruptcy Code, 2016 - Obligation to comply with time granted by a court while exercising interim relief - Whether the Company Appeal (AT)(CH)(Ins) No.337/2022 is maintainable in view of the appellants filing it after the time permitted by the High Court's order. - HELD THAT: - The Tribunal observed that limitation is a jurisdictional issue and the court has a duty to dismiss time barred proceedings. Although the High Court in W.A. No.537/2022 extended the interim order and permitted the appellants to prefer an appeal within two weeks from 22.06.2022 (i.e., on or before 05.07.2022), the e filing record shows the appeal was filed on 06.07.2022. Having regard to the tenor and spirit of the High Court's direction, the Tribunal held that the appellants failed to adhere to the timeline and, consequently, the appeal was filed beyond the permitted period. On that basis the Tribunal concluded it had no jurisdiction to entertain the appeal and rejected the Company Appeal. Connected interim applications were closed. [Paras 5]

Company Appeal (AT)(CH)(Ins) No.337/2022 is not entertained/rejected as filed beyond the time permitted by the High Court's order; connected IAs closed.

Final Conclusion: The Tribunal allowed IA/990/2022 and excluded the period 25.01.2022 to 22.06.2022 (147 days) under Section 14 of the Limitation Act as bonafide litigious activity; however, the Company Appeal was nonetheless rejected as it was filed one day after the last date permitted by the High Court's order, and therefore is not maintainable.

Claim as homebuyer - Form-CA vs Form-C - allottee under the Real Estate (Regulation and Development) Act, 2016 - exclusive charge/mortgage over project including current and future receivables - novation by settlement/MOU - infringement of sections 43 and 66 of the IBC

Claim as homebuyer - Form-CA vs Form-C - allottee under the Real Estate (Regulation and Development) Act, 2016 - exclusive charge/mortgage over project including current and future receivables - novation by settlement/MOU - Whether the appellant's claim in Form-CA as a homebuyer/allottee for seven flats should be accepted in the CIRP or whether the RP rightly required the appellant to file in Form-C as an unsecured creditor. - HELD THAT: - The appellant originally advanced an unsecured loan to the corporate debtor which was the basis of his Section 7 proceedings and which satisfies the characteristics of a financial debt. The appellant relies on an unregistered settlement/MOU dated 23.11.2019 by which seven flats were purportedly allotted to him in lieu of the debt and contends that this made him an allottee entitled to file a claim in Form-CA. The record, however, shows that Canara Bank had an exclusive charge over the entire project, expressly including structures and entire current and future receivables, and that the bank's sanction required NOC for allotment of flats/groups of flats; no such NOC or escrow receipts for the seven flats exist. The appellant is not an original allottee under the RERA definition but claims allotment only by the subsequent settlement; the circumstances create grave doubt about the validity of that allotment, particularly in view of the bank's prior charge and the absence of requisite NOC. The MoU is unregistered and the ledger entries and prior receipt of interest indicate the original transaction was financial in nature. Given these facts and the serious question whether the allotment could lawfully be made without the bank's consent, the RP did not err in directing the appellant to file in Form-C and treating him as an unsecured creditor; the Adjudicating Authority correctly affirmed that decision. [Paras 14, 15, 16, 17, 18]

The appellant's claim in Form-CA as a homebuyer is not accepted; the RP was correct in asking the appellant to file in Form-C as an unsecured creditor, and the Adjudicating Authority's order is affirmed.

Final Conclusion: The appeal is dismissed for lack of merit; the impugned order directing the appellant to file its claim as an unsecured creditor in Form-C (and rejecting acceptance of Form-CA as a homebuyer claim) is affirmed. There is no order as to costs.

Limitation - Bar of limitation under Section 3 of the Limitation Act - Computation of limitation from the date of default - Section 7 application under the Insolvency and Bankruptcy Code - Obligation of the Adjudicating Authority to examine limitation even when the corporate debtor is ex parte - Benefit under Sections 5 and 14 of the Limitation Act - Time barred debt and the scope of insolvency remedy - Claim for interest as a component of financial debt

Obligation of the Adjudicating Authority to examine limitation even when the corporate debtor is ex parte - Bar of limitation under Section 3 of the Limitation Act - Section 7 application under the Insolvency and Bankruptcy Code - Whether the Adjudicating Authority was obliged to examine the question of limitation before admitting the Section 7 application despite the corporate debtor's non appearance. - HELD THAT: - The Court held that Section 3 of the Limitation Act places an imperative duty on the Adjudicating Authority to examine limitation even if limitation has not been set up as a defence and even where the corporate debtor did not appear. The Section 7 application filed in Form I contained Part IV particulars and a tabular chart showing defaults beginning 20.09.2012 and demand notices dated 19.05.2016, 06.06.2016 and 12.09.2016. Given these averments, the Adjudicating Authority ought to have examined whether the application was within the three year period under Article 137; admitting the application without such examination was erroneous. The Court emphasised that absence of contest by the corporate debtor did not relieve the Adjudicating Authority of its duty to consider limitation. [Paras 5, 6, 8]

The impugned admission order was unsustainable for failure to consider limitation; the matter was set aside and remitted to the Adjudicating Authority for fresh consideration.

Computation of limitation from the date of default - Benefit under Sections 5 and 14 of the Limitation Act - Time barred debt and the scope of insolvency remedy - Claim for interest as a component of financial debt - Whether the Section 7 application was time barred on the material before the Adjudicating Authority and whether the Financial Creditor could claim the benefit of Sections 5 and 14 of the Limitation Act or maintain the claim to recover interest. - HELD THAT: - The Court observed that on the materials in the Section 7 application (including the demand notices of May-September 2016 and the Part IV default chart) the application appeared to be filed beyond three years from the asserted demand dates. The respondents' contention that Sections 5 and 14 (and other principles) extended limitation could not be accepted without scrutiny of the factual sequence and supporting material; entitlement to those statutory extensions requires relevant facts to be placed before the court and examined. The Court also directed that the Adjudicating Authority should consider the contention that the claim relates only to additional interest and whether such claim falls within the insolvency remedy, but did not express any view on the merits. [Paras 6, 8, 9]

The question of limitation, the applicability of Sections 5 and 14, and the nature of the claim (including whether it is limited to interest) were remitted to the Adjudicating Authority for fresh adjudication; the corporate debtor was granted two weeks to file a reply.

Final Conclusion: The appeal is allowed; the Adjudicating Authority's order admitting the Section 7 application is set aside and the petition is revived for fresh consideration on limitation and related contentions in accordance with law, with liberty to the corporate debtor to file a reply within two weeks.

Notice of dispute - Section 9 application under IBC - Operational creditor - Operational debt - Genuine dispute - Memorandum of Understanding

Section 9 application under IBC - Notice of dispute - Genuine dispute - Operational debt - Whether the Adjudicating Authority was correct in dismissing the Section 9 application on the ground that the Corporate Debtor had raised a valid notice of dispute supported by material, thereby creating a genuine dispute and precluding invocation of Section 9 proceedings. - HELD THAT: - The Appellant's claim rested on an MOU dated 1st June, 2018 alleging entitlement to commission. The Appellant issued a demand under Section 8 and thereafter the Corporate Debtor replied by issuing a notice of dispute which expressly denied any liability, stated that no goods or services were supplied to the end client and explained that the project was not awarded to the Corporate Debtor by the end client. The notice of dispute set out specific factual contentions challenging the existence of any operational debt and asserted that the Appellant had not provided services that would give rise to an operational creditor claim. Under the scheme of the Code, where a notice of dispute is raised and is supported by material and is not a frivolous or moonshine defence, the Adjudicating Authority should not entertain a Section 9 petition. The Adjudicating Authority found the dispute to be genuine and requiring further investigation, and correctly held that such disputed issues are not amenable to summary resolution under Section 9; the appellant's remedy for disputed claims lies in ordinary proceedings for recovery. Having examined the record and the reply, the Court found no reason to interfere with the Adjudicating Authority's conclusion that the notice of dispute was bona fide and that Section 9 was not maintainable. [Paras 6, 7]

The dismissal of the Section 9 application by the Adjudicating Authority on the ground of a bona fide notice of dispute is upheld and the Section 9 petition cannot be maintained.

Final Conclusion: The appeal is dismissed; the NCLT's order rejecting the Section 9 application on the basis that a genuine, supported notice of dispute existed is affirmed, leaving the Appellant free to pursue alternate legal remedies for recovery of any disputed claim.

Bar on filing of applications for initiation of corporate insolvency resolution process during the period specified in Section 10A - prohibition expressed as "shall ever be filed" - continuing default - scope of Section 10A vis-a -vis defaults occurring before, during and after the prohibited period - liberty to file fresh application after issuing a fresh notice under Section 8

Bar on filing of applications for initiation of corporate insolvency resolution process during the period specified in Section 10A - prohibition expressed as "shall ever be filed" - continuing default - Whether an application for initiation of CIRP can be filed in respect of defaults that occurred during the period covered by Section 10A. - HELD THAT: - The Tribunal examined the language and purpose of Section 10A, including the proviso stating that "no application shall ever be filed" for defaults occurring during the notified period. Relying on the reasoning of the Supreme Court in Ramesh Kymal v. Siemens Gamesa Renewable Power Pvt. Ltd., the Tribunal held that Parliament intended a complete bar on filing applications in respect of defaults that occurred on or after 25-3-2020 for the period covered by Section 10A. The protection was introduced to shelter corporate debtors during the COVID-19 disruption, and permitting filing after expiry of the notified period would defeat that legislative object. Accordingly, defaults that arose during the prohibited period cannot later be revived as a basis for initiating proceedings under Sections 7, 9 or 10. [Paras 18, 22]

Defaults committed during the period covered by Section 10A cannot be the basis of any application for initiation of CIRP; the prohibition is absolute for that period.

Scope of Section 10A vis-a -vis defaults occurring before, during and after the prohibited period - liberty to file fresh application after issuing a fresh notice under Section 8 - Disposition of the appellant's Section 9 application which pleaded defaults both during the prohibited period and for dates subsequent to that period. - HELD THAT: - A reading of Part IV of the appellant's application showed that the claim included defaults falling within the Section 10A prohibited period as well as defaults occurring after that period (March 2021 and October 2021). The Tribunal found no merit in the appellant's contention that the embargo merely suspended initiation and would cease to prevent filing for the same defaults after the notified period. However, because the application also pleaded defaults outside the prohibited period, the Tribunal declined to finally adjudicate on merits and instead granted liberty to the appellant to file a fresh application limited to recoveries for defaults not barred by Section 10A, after issuing a fresh notice under Section 8. The Tribunal also clarified that observations in the impugned order shall not prejudice the adjudicating authority considering any fresh application, and it did not express any opinion on other defenses or factual contentions available to the corporate debtor. [Paras 13, 23, 24]

Liberty granted to the appellant to file a fresh Section 9 application, after serving a fresh Section 8 notice, insofar as it concerns defaults not barred by Section 10A; no adjudication was made on other substantive issues.

Final Conclusion: The appeal succeeds to the limited extent of permitting the appellant to file a fresh application (after issuing a fresh Section 8 notice) in respect of defaults that occurred prior to or subsequent to the period barred by Section 10A; defaults that arose during the Section 10A notified period cannot be relied upon for initiation of CIRP and no application can ever be filed in respect of those defaults.

Bail under the Prevention of Money Laundering Act, 2002 - regular bail in related customs proceedings - custody pending investigation - conditions of bail - affidavit disclosing passport details - periodic presence before investigating agency - prohibition on hampering investigation or influencing witnesses

Bail under the Prevention of Money Laundering Act, 2002 - custody pending investigation - conditions of bail - affidavit disclosing passport details - periodic presence before investigating agency - prohibition on hampering investigation or influencing witnesses - Grant of bail to the appellant-Sanjay Agarwal in the PMLA proceedings arising out of alleged customs offences. - HELD THAT: - The Court, noting that the appellant had earlier been admitted to regular bail in the Customs Act proceedings and had undergone custody for about a year while investigation under the PMLA remained pending and the matter was not ripe for trial on merits, held that bail was warranted in the peculiar facts of the case. The Court exercised its discretion to grant bail despite the seriousness of the allegations because of the period of custody already undergone and the ongoing nature of the investigation. The release was made subject to specific conditions designed to secure presence and prevent interference with the investigation: production before the trial Court for release on bail, furnishing an affidavit detailing passport(s) to the Enforcement Directorate, weekly attendance at the Enforcement Directorate office (every Monday between 11.00 am and 1.00 pm), and a prohibition on hampering the investigation or influencing witnesses. The Court further observed that any attempt to contravene these conditions would invite cancellation of the bail granted.

Appeal allowed; appellant to be released on bail subject to stated conditions including passport affidavit, weekly attendance before the Enforcement Directorate, and non-interference with the investigation.

Regular bail in related customs proceedings - custody pending investigation - Challenge to the High Court's earlier grant of bail to Preet Kumar Agarwal was dismissed. - HELD THAT: - The Court observed that the High Court had granted bail to Preet Kumar Agarwal on 05.05.2021 and that, other than a general assertion of assistance to his father, no specific acts were attributed to him. Having considered the circumstances and the passage of time since release, the Court found no ground to interfere with the High Court's exercise of discretion and dismissed the Special Leave Petition.

Special Leave Petition dismissed; no interference with the High Court's bail order for Preet Kumar Agarwal.

Final Conclusion: The appeal in respect of Sanjay Agarwal is allowed and bail is granted subject to specified conditions; the Special Leave Petition challenging bail to Preet Kumar Agarwal is dismissed. The observations made are confined to the grant of interim relief and do not prejudice the merits of the cases.

Default bail under Section 167(2) CrPC - piecemeal investigation / incomplete charge sheet - charge sheet and further investigation under Section 173 CrPC - supplementary charge sheet cannot be used to extend custody under Section 167(2) CrPC - power to investigate under the PMLA and effect of further investigation

Default bail under Section 167(2) CrPC - piecemeal investigation / incomplete charge sheet - charge sheet and further investigation under Section 173 CrPC - Petitioner is entitled to default bail under Section 167(2) CrPC despite filing of a complaint (charge sheet) when further investigation is pending. - HELD THAT: - The Court held that Section 173 CrPC does not permit piecemeal or incomplete filing of a charge sheet as a device to prolong detention. Although Section 173(8) CrPC allows further investigation after filing of a charge sheet, the investigating agency cannot expand the maximum custodial period prescribed by Section 167(2) CrPC by filing a supplementary or partial charge sheet. Where investigation remains incomplete and a charge sheet filed is incomplete or piecemeal, such filing cannot be permitted to defeat the accused's statutory right to default bail. Applying these principles to the facts, the Court found that investigation was still ongoing and the complaint filed against the petitioner was incomplete; consequently the right to default bail under Section 167(2) CrPC was attracted. [Paras 11, 12]

Granted default bail to the petitioner as investigation was not complete and the incomplete/piecemeal charge sheet could not extend the period under Section 167(2) CrPC.

Power to investigate under the PMLA and effect of further investigation - supplementary charge sheet cannot be used to extend custody under Section 167(2) CrPC - Continuation of investigation under the PMLA does not justify denial of default bail by resort to filing an incomplete complaint; Section 44(2) PMLA or ongoing PMLA investigation cannot be used to subvert CrPC safeguards. - HELD THAT: - The Court considered the respondent's contention that provisions of the PMLA permit further investigation and that subsequent complaints would be subsumed into the initial complaint. The Court observed that while the PMLA may empower the agency to continue investigation, that statutory power does not override or permit circumvention of the CrPC requirement limiting pre-charge detention under Section 167(2). Therefore, invocation of PMLA investigatory power cannot validate a piecemeal complaint intended to deny default bail where investigation remains incomplete. [Paras 9, 11, 12]

Held that ongoing PMLA investigation cannot be used to frustrate the accused's right to default bail; the incomplete complaint was contrary to law.

Final Conclusion: Petition allowed. The petitioner was granted bail under the conditions imposed by the Court because investigation remained incomplete and the filing of an incomplete/piecemeal charge sheet could not be used to deny default bail under Section 167(2) CrPC.

Entitlement to benefit under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme) - quantification by admission prior to the cut-off date as constituting "quantified" liability for SVLDR Scheme - availability of SVLDR Scheme benefit despite pendency of enquiry, investigation or audit - discrepancy between admitted/quantified liability and amount shown in SVLDRS-1 not ipso facto disentitling claim - remand for reconsideration in accordance with scheme and circulars - res judicata and maintainability of writ petition where earlier proceedings did not decide the question

Quantification by admission prior to the cut-off date as constituting "quantified" liability for SVLDR Scheme - availability of SVLDR Scheme benefit despite pendency of enquiry, investigation or audit - Where the assessee had admitted and quantified service tax liability prior to 30.06.2019, the assessee was entitled to benefit under the SVLDR Scheme notwithstanding that an enquiry/investigation/audit was pending as on that date. - HELD THAT: - The Court followed its earlier decision in M/s. Bioneeds India (P) Ltd. holding that clause 10(g) of the Circular dated 27.08.2019 and Section 123(c) of the SVLDR Scheme treat a duty liability admitted during enquiry/investigation/audit as "quantified" for the purpose of the Scheme. The undisputed record shows the petitioner admitted and quantified service tax payable before the cut-off date (21.06.2019) and made payments; consequently, pendency of investigation on 30.06.2019 did not disentitle the petitioner from the Scheme. The impugned communication rejecting the claim on the ground that the liability was not quantified as on 30.06.2019 was quashed and set aside. [Paras 10, 11]

Admission and quantification prior to 30.06.2019 amounts to "quantified" liability; petitioner entitled to SVLDR Scheme benefit despite pending investigation.

Discrepancy between admitted/quantified liability and amount shown in SVLDRS-1 not ipso facto disentitling claim - Variance between the amount admitted/quantified by the petitioner and the amount shown in Form SVLDRS-1 did not disentitle the petitioner from claiming the benefit under the Scheme. - HELD THAT: - Respondents relied on a discrepancy between the admitted quantified liability (Rs.50,50,277/-) and the amount stated in the declaration (Rs.53,88,248/-). The Court observed that, on the Scheme's mechanics, the petitioner would be entitled to waiver of 50% of the declared sum and that the amount already admitted/paid by the petitioner exceeded the waiver amount; therefore the discrepancy could not operate to deny the Scheme benefit. The respondents' contention based on this variance was rejected as unsustainable. [Paras 13, 14]

Discrepancy between admitted amount and amount in SVLDRS-1 does not preclude entitlement to the Scheme in the facts of this case.

Res judicata and maintainability of writ petition where earlier proceedings did not decide the question - maintainability of writ petition despite absence of interim stay on impugned order - The petition was maintainable under Article 226 notwithstanding that the earlier writ concerned only the communication dated 06.05.2020 and no interim order was granted; res judicata did not apply because no issue was finally decided in the earlier proceedings. - HELD THAT: - The Court noted the earlier petition (W.P.No.8051/2021) challenged the communication dated 06.05.2020 and did not determine the matter on merits; the order in original dated 05.03.2021 was passed subsequently during the pendency of that petition. For res judicata to apply there must be a final determination of the issue, which was absent. Similarly, the fact that the order in original was not stayed did not render the present petition non maintainable; therefore the contentions on these grounds were repelled. [Paras 15, 16, 17]

Writ petition maintainable; res judicata inapplicable because earlier proceedings did not finally decide the issues now raised.

Remand for reconsideration in accordance with scheme and circulars - The impugned administrative communication and the subsequent order-in-original were quashed and the matter was remitted to the respondents for fresh consideration in accordance with the SVLDR Scheme and relevant circulars. - HELD THAT: - Having found the petitioner entitled to the Scheme benefit on the admitted facts and having rejected respondents' contentions, the Court set aside the impugned communication dated 06.05.2020 and the order-in-original dated 05.03.2021. The matter was remitted to the authorities with directions to reconsider the petitioner's claim afresh bearing in mind the Circulars dated 27.08.2019 and 12.12.2019 and the observations made in the judgment. [Paras 12, 18]

Impugned orders quashed; matter remitted to respondents for fresh consideration in accordance with law and the Scheme.

Final Conclusion: Petition allowed; impugned communication dated 06.05.2020 and order in original dated 05.03.2021 quashed. The claim of the petitioner under the SVLDR Scheme is to be reconsidered by the authorities in accordance with the Scheme and the Circulars dated 27.08.2019 and 12.12.2019.

Interpretation of the word "building" in an exemption notification - exemption for construction services of a building owned by an entity registered under Section 12AA of the Income Tax Act - strict interpretation of exemption notification - refund of service tax paid by a service recipient - limitation under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994

Interpretation of the word "building" in an exemption notification - exemption for construction services of a building owned by an entity registered under Section 12AA of the Income Tax Act - strict interpretation of exemption notification - Whether services in respect of flats and shops purchased by the appellant fall within the exemption granted for construction of a "building" under Entry No.13(c) of Notification No.25/2012-ST. - HELD THAT: - The Tribunal examined the language of Entry No.13(c) which exempts services provided by way of construction, erection, completion, fitting out, repair, maintenance, renovation or alteration of a building owned by an entity registered under Section 12AA and meant predominantly for religious use. Having noted authoritative pronouncements and dictionary meanings that the term "building" is of wide import and may include structures designed for habitation and the fabric thereof, the Tribunal concluded that a multi storey project divided into separate flats and shops remains a "building" for the purpose of the Notification and that individual flats/shops are encompassed within that term. The Tribunal also considered Supreme Court and High Court authorities cited by the parties and, applying the principles in Dilip Kumar & Co. regarding interpretation of exemption notifications, held that the entry must be read according to its plain meaning and that here the plain reading covers the flats and shops purchased by the appellant. Consequently, the appellant, being an entity registered under Section 12AA and occupying premises meant predominantly for religious use, is eligible for the benefit of Entry No.13(c). [Paras 4]

The refund claim is maintainable on merits because the term "building" in Entry No.13(c) of Notification No.25/2012-ST includes the flats and shop purchased by the appellant; the appellant is entitled to the exemption.

Refund of service tax paid by a service recipient - limitation under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - Whether the appellant's refund claim was barred by limitation under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. - HELD THAT: - The Tribunal noted that the Commissioner (Appeals) had set aside the original authority's finding on limitation and held that the refund claim was not time barred. Revenue did not appeal against that finding to the Tribunal. Consequently, that limitation finding stands final and cannot be reopened by the Revenue in the present appeal. The Tribunal therefore accepted that the refund claim is not barred by limitation as per the impugned order. [Paras 4]

The refund claim is not barred by limitation; the Commissioner (Appeals)'s finding on limitation is final in the absence of Revenue's appeal.

Final Conclusion: The appeal is allowed: the Tribunal upheld that the appellant is entitled to the benefit of Entry No.13(c) of Notification No.25/2012 ST because the term "building" includes the flats and shop purchased, and the claim is not barred by limitation (the Revenue did not challenge the limitation finding); the impugned rejection of the refund on the grounds contested in the appeal is set aside.

Cenvat credit - input service - reverse charge mechanism - works contract service - nexus between input service and output service - Rule 2(l) of Cenvat Credit Rules - extended period of limitation - suppression - revenue neutrality

Cenvat credit - legal services - reverse charge mechanism - Entitlement to cenvat credit of service tax paid under reverse charge on legal services - HELD THAT: - The Tribunal upheld the finding that cenvat credit of service tax paid on legal services was correctly availed. The claim was recorded in the assessee's books and supported by challan evidencing payment under the reverse charge mechanism. The legal services, though relating to litigation over property in which a director was involved, were held to have a sufficient connection to the assessee's business because adverse outcome of the litigation could directly affect the existence or operations of the hotel. There was no finding of suppression or contumacious conduct; the transaction was disclosed in records and taxed, rendering the position revenue neutral.

Cenvat credit of service tax paid under reverse charge on legal services allowed.

Cenvat credit - works contract service - nexus between input service and output service - Rule 2(l) of Cenvat Credit Rules - Entitlement to cenvat credit of service tax paid under reverse charge on works contract service for construction of cafe and banquet hall - HELD THAT: - The Tribunal found that works contract services used for construction of cafe and banquet hall had a direct and proximate nexus with the appellant's output taxable services (hotel accommodation, mandap/banquet, and restaurant). Rule 2(l)'s main limb admits credit for any service used by a provider of output service for providing the output service, and it expressly covers services used in relation to setting up premises. Reliance on earlier tribunal and High Court precedents recognizing credit for input services used in construction subsequently employed for rendering output services was noted. Given these factors and the recorded transactions and supporting vouchers, the credit was held to be admissible.

Cenvat credit of service tax on works contract service for construction of cafe and banquet hall allowed.

Extended period of limitation - suppression - revenue neutrality - Whether the extended period of limitation could be invoked for recovery of disallowed cenvat credit - HELD THAT: - The Tribunal concluded that extended period of limitation was not attractable. The transactions were recorded in the books of account and supported by vouchers and challans; the dispute arose from an audit note based on those records. There was no finding of wilful suppression with intent to evade service tax; on the contrary, tax had been paid and credit claimed making the position revenue neutral. Absent contumacious or concealment conduct, invocation of extended limitation was improper.

Extended period of limitation not available to Revenue; demands barred by limitation.

Final Conclusion: The appeal is allowed: cenvat credit claimed on legal services and on works contract services for construction of cafe and banquet hall is held admissible, and the extended period of limitation cannot be invoked; consequential relief to the appellant to follow.

Cenvat Credit - capital goods - manufacture of exempted goods - use of capital goods to provide taxable output services - Wet Lease - Business Auxiliary Service / Business Support Service - Renting of Immovable Property - limitation - Rule 6(4) of the Cenvat Credit Rules, 2004

Cenvat Credit - capital goods - manufacture of exempted goods - use of capital goods to provide taxable output services - Rule 6(4) of the Cenvat Credit Rules, 2004 - Entitlement to Cenvat credit on capital goods which were not used by the assessee for manufacture but were used in provision of taxable services after entering into a wet lease. - HELD THAT: - The Court accepted the factual finding that the assessee had not undertaken any manufacturing activity and that the capital goods were never used by the assessee for manufacturing exempted goods. The decision in Surya Roshni Ltd. was held distinguishable because in that case capital goods were used in manufacture of products that were exempt from duty at the time of receipt. Here the manufacturing function was taken over by the lessee and the assessee became a service provider; accordingly the capital goods were used to provide taxable output services and Cenvat credit was available. The Tribunal's conclusion that Rule 6(4) (which precludes credit where capital goods are exclusively used in manufacture of exempted goods) did not apply was endorsed. [Paras 19, 21, 23, 24]

Assessee entitled to avail Cenvat credit on the capital goods in question.

Wet Lease - Business Auxiliary Service / Business Support Service - Renting of Immovable Property - Classification of the services rendered under the Wet Lease as Business Auxiliary Service/Business Support Service and not Renting of Immovable Property. - HELD THAT: - On appreciation of the Wet Lease Agreement the Adjudicating Authority found, as a factual matter, that the services provided were composite in nature and amounted to Business Support Services (taxable from 01.05.2006) rather than merely renting immovable property. The High Court declined to interfere with this factual finding and upheld the classification adopted by the authorities and the Tribunal. [Paras 22]

Classification as Business Auxiliary Service/Business Support Service upheld; not Renting of Immovable Property.

Limitation - Validity of Show Cause Notices issued in relation to specified years on limitation grounds. - HELD THAT: - The Court held that the Show Cause Notice dated 13.07.2010 (relating to the years 2006-2007 to 2008-2009) was issued beyond the period of limitation measured from filing of ST-3 returns and therefore barred; there was no finding of nondisclosure or incorrect records requiring extension. The Show Cause Notice dated 18.10.2010 (relating to 2009-2010) was within limitation; the resulting confirmed demand was not contested by the assessee as the amount was deposited and only penalty waiver was sought. [Paras 14, 15]

SCN of 13.07.2010 (2006-07 to 2008-09) barred by limitation; SCN of 18.10.2010 (2009-10) within limitation.

Final Conclusion: The High Court dismissed the revenue's appeal: the Tribunal's findings that the assessee was entitled to Cenvat credit because the capital goods were not used for manufacturing exempted goods, that the services fell under Business Support Service and that the earlier show cause notice was time barred were upheld; no substantial question of law warranted interference.

Eligibility of service tax credit passed on by Input Service Distributor - responsibility of Input Service Distributor to prove admissibility of credit - invalidity of demand founded solely on a prior Order in Original which has been set aside - jurisdictional limits of audit/Additional Commissioner (Audit) to issue show cause invoking extended period

Eligibility of service tax credit passed on by Input Service Distributor - responsibility of Input Service Distributor to prove admissibility of credit - Validity of demand for alleged wrongful availment of service tax credit against ISD invoices for the period May, 2016 to March, 2017. - HELD THAT: - The impugned demand proceedings for May, 2016 to March, 2017 proceeded exclusively on the basis of an earlier Order in Original (covering March, 2013 to April, 2015). The Tribunal, in an independently decided appeal arising out of that earlier order, held that the input service distributor is obliged to establish the admissibility of credits passed on by it and that certain audit based show cause actions were beyond the jurisdiction of the Audit authority. Since the root order on which the present show cause hinged has been set aside by the Tribunal, the foundation for the present proceedings no longer exists. For these reasons the demand for alleged wrongful availment of ISD credits in the period May, 2016 to March, 2017 is unsustainable and the order confirming recovery must be set aside. [Paras 5, 8]

The appeal is allowed and the impugned order is set aside; consequential relief, if any, to follow as per law.

Final Conclusion: The Tribunal allowed the appeal and set aside the impugned order because the present demand was founded on an earlier Order in Original which the Tribunal had itself quashed; consequently the proceedings for May, 2016 to March, 2017 could not be sustained.

Capital goods - input - CENVAT Credit - user test - structural support as integral part of machinery - retrospective effect of amendment - parimateria

Capital goods - input - user test - structural support as integral part of machinery - MS angles, plates, joists and similar steel items used to fabricate structural support for machinery qualify as capital goods (and inputs for capital goods) for the purpose of availing CENVAT credit. - HELD THAT: - The Tribunal held that the machinery in question is covered by the definition of capital goods under the CENVAT Credit Rules and applied the "user test" as adopted by the Supreme Court in Rajasthan Spinning & Weaving Mills Ltd. Since the steel items were used to fabricate structural supports integral to machinery employed in manufacture of excisable goods, those fabricated supports must be treated as part of the machinery. Consequently, the steel items used in such fabrication fall within the scope of clause (iii) of Rule 2(a)(A) (corresponding to accessories/parts) and qualify for CENVAT credit. The earlier Larger Bench decision in Vandana Global Ltd., which excluded such supporting structures from capital goods, was held to be not good law in view of the subsequent Supreme Court ruling applying the user test. [Paras 6, 7, 8]

Steel items used to fabricate structural supports for machinery qualify as capital goods and are eligible for CENVAT credit; the impugned orders denying credit on this ground are set aside.

CENVAT Credit - retrospective effect of amendment - The amending notification relied upon by the lower authorities cannot be treated as retrospective or clarificatory so as to deny credit for the periods in dispute. - HELD THAT: - The Tribunal referred to the Chhattisgarh High Court decision in Vandana Global (which in turn followed the Gujarat and Madras High Courts) holding that the amendment to the CENVAT Credit Rules effected by the 2009 Amendment Rules was not clarificatory and could not be given retrospective effect. The adjudication premised on applying that amendment to deny credit for March 2008, July 2008 and January 2009 was therefore unsustainable. [Paras 6]

The amending notification is not retrospective/clarificatory for the disputed periods and cannot be invoked to deny CENVAT credit; the denial based on that amendment is set aside.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned orders, and held that the steel items used to fabricate structural support for machinery qualify as capital goods eligible for CENVAT credit for the months March 2008, July 2008 and January 2009; the amending notification relied upon by the lower authorities was not retrospective and could not be applied to deny credit for those periods.

Right to be heard - service of notice - natural justice - remand for fresh hearing - expeditious disposal

Right to be heard - service of notice - natural justice - remand for fresh hearing - Whether the impugned order of the Commercial Tax Tribunal dated 19.1.2021 should be set aside and the matter remitted for fresh consideration on the ground that the revisionist was not heard due to non-service of notice and change of address. - HELD THAT: - The Court examined rival contentions on service and non-appearance. Although the Tribunal's registry had issued a notice, the record indicates the notice was not served on the revisionist and the revisionist remained unrepresented before the Tribunal. The non-appearance was found not to be intentional or deliberate, and the revisionist had undergone an office relocation which was not brought to the Tribunal's notice. In these circumstances, the Court held that the requirements of fair hearing and service were not satisfied. In consequence, the Tribunal's determination could not stand without giving the revisionist an opportunity to place arguments and contentions. The appropriate remedy was to set aside the impugned order and remit the matter to the Tribunal for fresh determination after affording the revisionist an opportunity to be heard. [Paras 7, 8]

Impugned order dated 19.1.2021 set aside and matter remitted to the Commercial Tax Tribunal for fresh determination after affording the revisionist opportunity of hearing.

Expeditious disposal - remand for fresh hearing - Directions as to listing and timeline for disposal on remand. - HELD THAT: - With the consent of parties the Court directed that the matter be listed before the Tribunal on 21.11.2022 for the revisionist to appear and press the appeal. The Tribunal was directed to proceed expeditiously and, as far as possible, decide the matter before 23.12.2022. The Court also recorded that further proceedings by the respondents shall follow the fresh determination made by the Tribunal. [Paras 9, 10]

Matter to be listed on 21.11.2022; Tribunal to decide expeditiously and, as far as possible, by 23.12.2022; further proceedings to follow the fresh determination.

Final Conclusion: The revisions are allowed: the Tribunal's order dated 19.1.2021 is set aside and the matter is remitted for fresh determination after affording the revisionist a hearing; the Court directed specific listing and expeditious disposal by the Tribunal and permitted further proceedings to follow the fresh determination.

Determination of capital investment by Committee - concessional Central Sales Tax at 1% for manufacturing units - mandatory procedure prescribed by statutory instrument - remand for fresh determination by constitution of Committee

Determination of capital investment by Committee - mandatory procedure prescribed by statutory instrument - concessional Central Sales Tax at 1% for manufacturing units - Whether denial of concessional CST at 1% on the ground that the unit's capital investment exceeded the threshold, when no determination was made by the Committee envisaged in the Notifications, is sustainable. - HELD THAT: - The Notifications conferring the concessional rate mandated that the total capital investment in plant and machinery "shall be determined by a Committee constituted by the State Government". In the present case no such Committee determination was made; instead the Assessing Officer assessed the capital investment himself and the same assessment was sustained by the Appellate Authority and the Tribunal. Where a statute or statutory instrument prescribes a particular mode or authority for making a critical determination, that mode must be followed and other modes are precluded. The Assessing Officer's unilateral assessment, in absence of the Committee's determination contemplated by the Notifications, is therefore contrary to the procedure laid down and vitiates the impugned orders. Applying this principle, the Tribunal's and lower authorities' orders upholding the Assessing Officer's assessment are unsustainable. The proper course is to constitute the Committee as envisaged, have it determine the exact total capital investment for the period under consideration, and thereafter issue a fresh assessment consistent with that determination. [Paras 9, 10, 12]

Orders of the Assessing Officer, the Appellate Authority and the Tribunal are set aside; matter remitted with direction to constitute the Committee to determine total capital investment and for a fresh assessment thereafter.

Final Conclusion: The Revision is allowed in part: the orders denying the 1% concessional CST (upholding the Assessing Officer's self-assessment of capital investment) are set aside and the matter is remanded with directions to the Commissioner to move the Government for formation of the Committee envisaged by the Notifications, obtain the Committee's determination of total capital investment for the period under consideration, and thereafter pass a fresh assessment order.

Cut-off date for compensation - applicability of the R&R Act, 2013 to acquisitions under the Coal Bearing Areas (Acquisition and Development) Act, 1957 - First Schedule of the R&R Act, 2013 governs re-determination of compensation - R&R Policy 2006 as amended in 2013 governs employment and rehabilitation benefits - definition of family for employment entitlement under the R&R Policy - finality of Commission reports and non-reopening of approved determinations - obligation to provide resettlement plots or one-time lump sum in lieu thereof - Third Schedule entitlements - provision of amenities and facilities in resettlement areas - protection and preservation of SC/ST status and benefits on displacement - time-bound directions for completion of compensation determination, disbursement and development

Cut-off date for compensation - The common cut-off date for determination of market-value based compensation for the acquired lands is September 2010 (the Gopalpur survey date) for all 14 villages whose compensation was determined under the Commission's model. - HELD THAT: - The Court accepted the Parichha Commission's reasoning that determining market value with reference to the date of the Commission's notice of survey in September 2010 avoided grave unfairness to landowners after prolonged delay and had been consistently applied in reports approved between 2010 and 2013. Reopening or adopting different survey dates would generate uncertainty and prejudice settled determinations; statutory interest will also accrue to offset any difference in timing. Accordingly, the Gopalpur cut-off (September 2010) is adopted as the basis for compensation and attendant benefits (solatium, interest) for the relevant villages whose reports were prepared under that model. [Paras 16, 17, 18, 68]

Adopt September 2010 (Gopalpur survey date) as the common cut-off date for compensation determination for the acquisition.

Applicability of the R&R Act, 2013 to acquisitions under the Coal Bearing Areas (Acquisition and Development) Act, 1957 - First Schedule of the R&R Act, 2013 governs re-determination of compensation - The First Schedule of the R&R Act, 2013 applies to those villages in respect of which the Commission's reports were not approved prior to the Central Government notification; compensation for Tumulia, Jhupuranga, Ratansara and Kirpsara must be re-determined under the First Schedule of the R&R Act, 2013. - HELD THAT: - Section 105 read with the Fourth Schedule initially excluded the CBA Act from the R&R Act, 2013, but the Central Government notification (effectively brought into force for applicable provisions by 28.08.2015 and clarified thereafter) made the beneficial provisions of the First, Second and Third Schedules applicable where compensation had not been determined before the relevant date. For villages whose reports were not approved prior to that notification, the statutory regime under the CBA Act for compensation determination was superseded and therefore market value, solatium and allied components must be re-determined in accordance with the First Schedule; the Commission need only compute the differential payable since basic identification and valuation elements exist. Reports already approved before the notification remain final and cannot be reopened. [Paras 27, 29, 32, 33, 34]

Apply the First Schedule of the R&R Act, 2013 to re-determine compensation for Tumulia, Jhupuranga, Ratansara and Kirpsira; approved earlier reports remain final.

R&R Policy 2006 as amended in 2013 governs employment and rehabilitation benefits - definition of family for employment entitlement - finality of Commission reports and non-reopening of approved determinations - The Orissa R&R Policy 2006, as amended in 2013, applies to employment and rehabilitation benefits; a family unit for employment entitlement comprises the head (father), one major son (or, if no son or son is unavailable, one major grandson) and an unmarried daughter as a separate unit; determinations already finalized and approved cannot be reopened. - HELD THAT: - Section 108 permits affected persons to choose the more beneficial State policy or the Act; the Court held the 2006 policy as amended in 2013 to be applicable and more beneficial for employment/rehabilitation entitlements. Interpreting the amended definition purposively, the entitlement is to one employment per family: the head (or father) and, where relevant, one major son (not multiple sons), and an unmarried daughter is separately treatable; in the absence or inability of a son, one major grandson may be considered. This construction prevents an unduly expansive grant of multiple employments while protecting beneficiaries. Where employment has already been accepted under prior determinations, those decisions are final and shall not be reopened. [Paras 45, 48, 50, 51, 52]

Apply R&R Policy 2006 as amended (2013) for employment and rehabilitation benefits with the described family-unit interpretation; finalized/approved cases are not reopenable.

Obligation to provide resettlement plots or one-time lump sum in lieu thereof - time-bound directions for completion of compensation determination, disbursement and development - State authorities and MCL must develop and allot resettlement plots in consultation with displaced families within specified time frames; where plots are unavailable or a family opts out, a one-time lump-sum compensation is to be paid (with specified procedural steps and timelines). - HELD THAT: - Given long delays and partial development, the Court directed a structured process: the Collector will hold consultations, involve three nodal officers, finalize and approve plots within nine months and complete development within 15 months; where plots are insufficient, allotment shall be by draw of lots; families not allotted or who decline plots shall receive a one-time cash settlement (declared in judgment) and interest where handover is delayed beyond two years. The directions seek to bring the rehabilitation process to an effective conclusion while preserving choice for displaced families. [Paras 60, 61, 62, 68]

Direct development/allotment of resettlement plots within the prescribed timeframes; where plots cannot be provided or are declined, pay the prescribed one-time lump-sum compensation and interest as directed.

Third Schedule entitlements - provision of amenities and facilities in resettlement areas - protection and preservation of SC/ST status and benefits on displacement - The State must ensure provision of amenities and facilities for resettlement areas in accordance with the Third Schedule to the R&R Act, 2013; displaced SC/ST persons must have their status and attendant benefits preserved and be issued fresh caste certificates as necessary. - HELD THAT: - The Third Schedule prescribes comprehensive amenities (schools, health centres, drinking water, sanitation, community centres, etc.) which must be provided in resettlement sites. Sundergarh falls within Fifth Schedule areas and displacement implicates special statutory protections: Section 41 and Section 42 mandate measures to minimize harm to ST/SC communities and preserve their entitlements on relocation. The Court requires the State to prepare and implement a plan to provide these amenities within three years of plot handover or from the judgment date and to ensure issuance of appropriate SC/ST certificates so affected families retain their statutory benefits. [Paras 63, 64, 66, 67, 68]

Mandate provision of Third Schedule amenities in resettlement areas within the directed timeframe and preservation/issuance of SC/ST status and benefits for displaced families.

Time-bound directions for completion of compensation determination, disbursement and development - finality of Commission reports and non-reopening of approved determinations - The Commission and State are directed to complete compensation determination and disbursement within fixed timelines; reports for specific villages are to be finalized within stated months; approved reports remain final and individual disputes should be taken to the High Court. - HELD THAT: - The Court ordered that compensation determination and payments be completed within six months for general cases; the Commission must finalize Kiripsira and Ratansara reports and re-determine Jhupuranga and Tumulia within three months for redetermination under the First Schedule; employment offers and rehabilitation packages are to be implemented within prescribed periods. The Court also clarified that previously approved Commission reports are final and not to be reopened, and any fresh disputes over calculations or disbursements are to be adjudicated by the High Court rather than this Court via piecemeal applications. [Paras 66, 68, 69, 70]

Direct time-bound completion of determination, redetermination and disbursement as specified; maintain finality of approved reports and channel fresh disputes to the High Court.

Final Conclusion: The Court (exercising powers under Article 142) directs that the Gopalpur cut-off (September 2010) govern compensation where already applied; for villages whose reports were not approved before the Central Government notification, compensation must be re-determined under the First Schedule of the R&R Act, 2013; R&R Policy 2006 as amended (2013) governs employment and rehabilitation benefits with the prescribed family-unit interpretation; State and MCL must develop and allot resettlement sites or pay one-time compensation where appropriate, provide Third Schedule amenities, preserve SC/ST status of displaced families, and complete compensation determination, disbursement and implementation within the time-bound directions given, while finalized Commission reports remain final.