TaxTMI Updates e-Newsletter
Nov 29,2023

Refund of accumulated Input Tax Credit - valid proof of export - turnover of zero-rated supplies - verification of shipping bills by tax authority - procedural irregularities in Customs not to automatically defeat GST refund - reconsideration and remand for fresh decision on merits - Circular No. 125/44/2019-GST and document upload requirement - clearance for export under Section 51 of the Customs Act

Valid proof of export - turnover of zero-rated supplies - verification of shipping bills by tax authority - reconsideration and remand for fresh decision on merits - Whether the appellate authority was correct in disallowing the FOB values of twelve shipping bills (signed by an Inspector of Customs) as "valid proof of export" for computing "turnover of zero-rated supplies" and in upholding that conclusion without direct verification from the Customs authorities. - HELD THAT: - The High Court found that the appellate authority arrived at its conclusion by treating signatures or internal procedural irregularities in the Customs Department as determinative to deny refund, without seeking verification or report from the Customs office to ascertain whether goods were actually exported or whether the shipping bills were genuine. The Court observed that the formalities complained of were internal to the Customs Department and could and should have been verified by the GST authority before disallowing the shipping bills as proof of export. In view of these omissions, the Court set aside the appellate order insofar as it disallowed the twelve shipping bills and directed respondent No. 4 to reconsider the issue after thorough scrutiny and verification of the shipping bills and related documents, giving the petitioner an opportunity of hearing and deciding the matter afresh on merits. [Paras 12, 13, 14, 15]

Impugned appellate finding in respect of the twelve shipping bills set aside; matter remanded to respondent No. 4 for fresh verification and decision on merits after consulting Customs and giving petitioner a hearing.

Refund of accumulated Input Tax Credit - Circular No. 125/44/2019-GST and document upload requirement - procedural irregularities in Customs not to automatically defeat GST refund - clearance for export under Section 51 of the Customs Act - Whether the petitioner had complied with the document submission requirements under the GST circular and whether the petitioner can be penalised for the alleged procedural irregularity in signatures on shipping bills by Customs officers. - HELD THAT: - The Court noted that the petitioner had filed the refund application on the common portal and uploaded the documents listed in Circular No. 125/44/2019-GST; the petitioner thereafter also produced the triplicate shipping bills signed by the Superintendent of Customs physically. The Court held that the petitioner made a bona fide mistake in uploading the quadruplicate copy and that such a procedural lapse by Customs officers is an internal irregularity of the Customs Department which should not, without proper verification, be allowed to defeat the refund claim. The Court emphasised that it is not the petitioner's duty to supervise internal Customs procedures and that Section 51 requires clearance of goods for export, which was not disputed. The Court therefore directed respondent No. 4 to act in accordance with law and pass a reasoned, speaking order upon re-consideration. [Paras 8, 9, 12, 13, 15]

Held that the petitioner had uploaded documents as required by the circular and should not be prejudiced for Customs' procedural irregularities; respondent No. 4 to reconsider the refund claim and pass a reasoned order.

Final Conclusion: The impugned appellate order dated 12.12.2022 is set aside insofar as it disallowed certain shipping bills; respondent No. 4 is directed to re-examine and verify the shipping bills and related documents, consult the relevant departments, give the petitioner an opportunity of hearing and pass a reasoned order within four months; no coercive action to be taken meanwhile; writ petition disposed of.

Refund of unutilised Input Tax Credit - zero-rated supply without payment of tax - clubbing of refund claim and simultaneous recovery/adjustment - remand for fresh consideration

Clubbing of refund claim and simultaneous recovery/adjustment - refund of unutilised Input Tax Credit - Validity of clubbing invoice No. EXP/2021-22/005 with the petitioner's refund application and of denying and simultaneously recovering the refund claimed in respect of that invoice. - HELD THAT: - The High Court found that the Appellate Authority acted without authority of law in treating invoice No. EXP/2021-22/005 as part of the petitioner's refund claim and in simultaneously denying the refund for that invoice and effecting recovery/adjustment. The court observed that there is no provision permitting the authority to reject a particular claim in a refund application and, at the same time, club and recover the same from the applicant while the refund process stands. Consequently the portion of the impugned order which denied and recovered the amount attributable to invoice No. EXP/2021-22/005 was set aside. The court did not decide the merits of the claim on substance but remitted the question for fresh consideration by the Appellate Authority in accordance with law within a stipulated eight-week period, directing that the authority should not be influenced by the court's observations.

Portion of the order denying and simultaneously recovering the amount relating to invoice No. EXP/2021-22/005 set aside; matter remanded for fresh decision on that claim within eight weeks.

Refund of unutilised Input Tax Credit - zero-rated supply without payment of tax - Finality of the balance refund allowed by the Appellate Authority and whether the Court should interfere with that portion of the order. - HELD THAT: - The Court noted that, apart from the disputed invoice, the order dated 29 July 2022 had been modified to allow refund of the remaining claimed amount and that the Appellate Authority had confirmed that modification. The High Court declined to interfere with the remainder of the impugned order and expected respondent authorities to take expeditious steps to pay the admitted refundable amount in accordance with law.

The remaining portion of the impugned order is not interfered with and payment of the admitted refundable amount is to be expedited.

Final Conclusion: Writ petition allowed to the extent set aside the portion of the order relating to invoice No. EXP/2021-22/005 and remitted that issue to the Appellate Authority for fresh consideration within eight weeks; the balance of the impugned order is upheld and respondent authorities directed to effect payment of the admitted refund forthwith.

Power of appellate authority to admit unclaimed deductions - rectification under section 154 versus filing of revised return - officer's duty to assist taxpayer and not take advantage of ignorance

Power of appellate authority to admit unclaimed deductions - officer's duty to assist taxpayer and not take advantage of ignorance - Whether the appellate authority can allow deductions not claimed in the original return of income. - HELD THAT: - The Tribunal examined the competing contentions whether unclaimed deductions could be entertained without filing a revised return and whether an appellate authority could permit such claims. Noting the line of authorities referenced by the parties, the Bench confined its adjudication to the power of the appellate authority. The Tribunal held that an appellate authority has coterminous power to accept deductions which were not claimed in the return of income, provided relevant evidence is placed on record. Applying that principle to the facts, the assessee had produced supporting documents (Form No.16, bank certificate showing housing loan interest and principal, and particulars supporting claims under section 80C and 80D) before the authorities and before the Tribunal. In view of the appellate power to admit such claims and the evidence on record, the Tribunal directed the revenue to allow the deductions claimed under sections 24(b), 80C and 80D for the assessment year in question, setting aside the order of the CIT(A). The Tribunal also referred to the administrative instruction that officers should not take advantage of an assessee's ignorance and should assist taxpayers in claiming due reliefs, as reinforcing the outcome on the facts. [Paras 10, 11]

Assessee's claim for deductions under sections 24(b), 80C and 80D allowed by appellate authority; order of CIT(A) set aside and revenue directed to permit the deductions.

Final Conclusion: Appeal allowed: the Tribunal, exercising appellate power to admit unclaimed deductions on the basis of supporting evidence, set aside the CIT(A) order and directed that deductions under sections 24(b), 80C and 80D be allowed for A.Y. 2014-15.

Ceasure of income tax settlement commission - Retrospective legislation and its limits - vested right to approach the Income tax Settlement Commission - administrative circular under statutory power cannot impose new burdens - read down as remedy for unconstitutional retrospectivity - legal fiction constrained by purpose (lex prospicit non respicit)

Administrative circular under statutory power cannot impose new burdens - retrospective legislation and its limits - Validity of paragraph 4(i) of the Circular dated 28.09.2021 which made eligibility to file before the Interim Board dependent on being eligible as on 31.01.2021 - HELD THAT:- The Circular was issued under the executive power to give administrative relief and is binding on departmental officers, but it cannot impose conditions contrary to the statute or create additional burdens. Read against the amended Chapter XIX A (which renders the ITSC inoperative from 01.02.2021 and provides for transfer of pending applications to the Interim Board), paragraph 4(i) does not introduce a new statutory condition; rather it operationalises the effect of the cut off in the amending scheme by limiting the relief to those who had an accrued right to approach the ITSC. Absent paragraph 4(i) the Circular would frustrate the legislative intention to treat only those with crystallised rights as within the settlement mechanism; accordingly the clause does not run counter to the statute and is not ultra vires in the circumstances of these cases. [Paras 35, 36]

Paragraph 4(i) of the Circular is not bad in law insofar as it implements the cut off imposed by the Finance Act, 2021 and does not add an unlawful condition.

Vested right to approach the Income tax Settlement Commission - retrospective legislation and its limits - read down as remedy for unconstitutional retrospectivity - Constitutionality of the Finance Act, 2021 insofar as it gave retrospective effect from 01.02.2021 and thereby purported to deny the right of assessees to file applications in the interregnum up to 31.03.2021. - HELD THAT: - Although Parliament may abolish the ITSC and may enact retrospectively, a retrospective provision that defeats rights already accrued must do so expressly or by necessary implication. Chapter XIX A conferred a statutory right to 'approach' the ITSC where a 'case' was pending; that right subsisted during the interregnum up to notification of the Act. The Amending Act, while making the ITSC inoperative from 01.02.2021 and creating the Interim Board, did not expressly or by necessary intendment extinguish the rights of those whose cases arose and applications were filed in the interregnum up to 31.03.2021. The statutory fiction of making the ITSC inoperative from the date of introduction of the Bill cannot be extended beyond its legitimate purpose. To prevent undue retrospectivity that would render vested rights nugatory, Section 245C(5) is to be read down so that the operative date for disallowing new applications is 31.03.2021, thereby preserving those rights accrued or crystallised in the interregnum. [Paras 37, 38, 39, 40]

Section 245C(5) (as amended by the Finance Act, 2021) is to be read down so that the retrospective cut off is 31.03.2021; the Finance Act, 2021 cannot be applied to negate vested rights of assessees who had cases or pending applications in the interregnum.

Read down as remedy for unconstitutional retrospectivity - vesting and transfer of pending applications to Interim Board - Reliefs to be granted to petitioners whose applications were rejected as not having a case pending as on 31.01.2021. - HELD THAT: - Having read down the statutory cut off to 31.03.2021 and read paragraph 4(i) of the Circular accordingly, applications filed by petitioners in respect of cases arising between 01.02.2021 and 31.03.2021 are to be treated as 'pending applications' for purposes of transfer to and consideration by the Interim Board. Rejections premised on absence of a case pending as on 31.01.2021 are set aside; such applications, if otherwise in order and eligible, shall be dealt with on merits by the Interim Board in accordance with the scheme framed by the Central Government. [Paras 41]

Petitioners' applications for cases arising between 01.02.2021 and 31.03.2021 are deemed pending and shall be reconsidered by the Interim Board; orders rejecting them for lack of eligibility as on 31.01.2021 are set aside.

Final Conclusion: Writ petitions partly allowed: the retrospective cut off in Section 245C(5) is read down to 31.03.2021; paragraph 4(i) of the Circular is read accordingly; applications arising between 01.02.2021 and 31.03.2021 shall be deemed pending and considered by the Interim Board if otherwise eligible; earlier rejections on the ground of non eligibility as on 31.01.2021 are set aside; no costs.

Compounding of offences under Section 279(2) of the Income Tax Act - validity of CBDT circular fixing 12-month time limit for compounding - scope of powers under Section 119 and the explanation to Section 279 for issuance of circulars - remand for fresh consideration of compounding application on merits

Compounding of offences under Section 279(2) of the Income Tax Act - validity of CBDT circular fixing 12-month time limit for compounding - Whether a compounding application may be refused as barred by the 12 month limitation imposed by Clause 7(ii) of the CBDT circular dated 14.06.2019 and whether CBDT is empowered to fix such a time limit contrary to Section 279(2). - HELD THAT: - The Court examined Section 279(2) which permits compounding either before or after institution of proceedings and observed that the statute contains no time limit for filing compounding applications. Although the CBDT has power under Section 119 and the explanation to Section 279 to issue guidelines for implementation of the Act, that power does not extend to issuing a directive which effectively amends or negates the statutory permissibility of compounding after institution of proceedings. Clause 7(ii) of the circular, prescribing a 12 month cut off from the month in which the prosecution complaint is filed, was held to be beyond the scope of the legislative provision because it curtails the statutory right to seek compounding either before or after institution of prosecution. Consequently, an order rejecting a compounding application solely on the ground that it was filed after that prescribed 12 month period cannot stand. The Court therefore set aside the rejection and directed fresh consideration on merits by the competent authority without applying the struck down limitation. [Paras 16, 18, 19, 22, 24]

Order rejecting the compounding application as barred by limitation set out in the circular is set aside and the matter remitted for fresh decision on merits; compounding may be filed either before or after institution of prosecution under Section 279(2).

Validity of CBDT circular fixing 12-month time limit for compounding - scope of powers under Section 119 and the explanation to Section 279 for issuance of circulars - Whether Clause 7(ii) of the CBDT circular dated 14.06.2019, prescribing that no compounding application can be filed after 12 months from the end of the month in which prosecution complaint has been filed, is intra vires the Act. - HELD THAT: - The Court distinguished authorities upholding the CBDT's power to issue circulars from the present challenge to the substantive content of the circular. While acknowledging that CBDT may issue directions for implementation, the Court held that Clause 7(ii) goes beyond implementation and operates contrary to the object and language of Section 279(2) by imposing a limitation inconsistent with the statutory allowance to compound either before or after institution of proceedings. Therefore that portion of the circular is ultra vires and liable to be struck down. [Paras 17, 18, 19, 21, 25]

Clause 7(ii) of the CBDT circular dated 14.06.2019 is struck down as beyond the scope of the Act.

Final Conclusion: The Court set aside the authority's rejection of the petitioner's compounding application on the sole ground of the 12 month limitation prescribed by the CBDT circular, struck down Clause 7(ii) of the circular as beyond the Act, and remitted the petitioner's compounding application to the competent authority for fresh consideration on merits in accordance with law.

Reopening of assessment under Section 148 read with Section 147 of the Income-tax Act - Reason to believe - Requirement of fresh material for valid reopening - Escapement of income - Notional income additions and principle of real income - Jurisdictional validity of notice

Reopening of assessment under Section 148 read with Section 147 of the Income-tax Act - Requirement of fresh material for valid reopening - Reason to believe - Jurisdictional validity of notice - Validity of the notice dated 29.03.2021 issued under Section 148 for assessment year 2016-17 - HELD THAT: - The Court examined the reasons recorded for reopening and found that the Assessing Officer relied solely on material already placed on record during the original assessment proceedings. The reasons consisted of an assertion that unsecured advances ought to have attracted interest at 12% and that interest income was therefore understated, but no fresh material or new facts were identified which could reasonably give rise to a 'reason to believe' that income had escaped assessment. The assessee had disclosed the relevant facts and produced ledger and other details during the original scrutiny under Sections 143(2) and 142(1), and the assessment order had been framed after considering those documents. The Court observed that a mere difference of opinion or a notional computation based on assumed interest rates, without supporting material, cannot form the basis for reopening; notional additions of income that were considered (or could have been considered) in the original assessment do not amount to fresh material permitting exercise of powers under Section 147/148. In these circumstances the notice was held to be founded on assumptions and presumptions rather than any new tangible material, rendering the Assessing Officer without jurisdiction to issue the impugned notice. [Paras 19, 20, 21, 22, 23]

Impugned notice dated 29.03.2021 under Section 148 for A.Y. 2016-17 quashed as issued without jurisdiction; consequential proceedings set aside

Final Conclusion: Writ petition allowed. The reopening notice for A.Y. 2016-17 and all consequential proceedings are quashed and set aside on the ground that the reasons recorded lacked any fresh material and were based on assumptions, so that there was no valid 'reason to believe' for reopening.

Penalty under Section 271(1)(c) for concealment of income - Assessment proceedings under section 153A following search under section 132 - Seized materials and presumption under section 292C - Estimation of income versus addition based on seized documents - Reliance on judicial precedents for initiation and sustainment of penalty proceedings

Penalty under Section 271(1)(c) for concealment of income - Seized materials and presumption under section 292C - Estimation of income versus addition based on seized documents - Assessment proceedings under section 153A following search under section 132 - Levy of penalty under section 271(1)(c) for concealment of commission income for AY 2013-14 is sustained. - HELD THAT: - The Tribunal examined the material on record and the reasoning of the CIT(A). The Assessing Officer completed assessment under section 143 read with section 153A after search under section 132, determining unexplained income from seized materials. On appeal the CIT(A) reduced the assessed income to the amount of commission determined from the seized papers and applied the presumption under section 292C in view of documents found at the assessee's premises. The Tribunal found that the CIT(A)'s addition was not an estimation of income but was based on seized documents and the assessee's own statements, and that therefore the case laws relied on by the assessee concerning purely estimative additions were inapplicable. The Tribunal further accepted the CIT(A)'s reliance on higher judicial precedents which hold that penalty proceedings may be initiated where concealment is established from seized material and related enquiries, and that the Assessing Officer need not record satisfaction in any particular form before initiating penalty proceedings. In view of these findings, the Tribunal held that concealment of income was established and the levy of penalty under section 271(1)(c) was legally sustainable. [Paras 7, 8]

Penalty under section 271(1)(c) upheld; appeal dismissed.

Final Conclusion: The Tribunal dismissed the assessee's appeal and upheld the levy of penalty under section 271(1)(c) for AY 2013-14, holding that the addition was based on seized materials (with applicable presumption) and not an impermissible estimation, and that concealment of income was thereby established.

Charitable purpose - proviso to section 2(15) of the Act - advancement of general public utility - profit motive - cost basis or nominal charging vs. commercial mark up - mercantile system of accounting - provision for guarantee claims - application of income under section 11 - accumulation under section 11(2) - set off of brought forward deficit

Proviso to section 2(15) of the Act - charitable purpose - advancement of general public utility - profit motive - cost basis or nominal charging vs. commercial mark up - Denial of exemption under section 11 by invoking the proviso to section 2(15) in respect of the assessee for AY 2018-19. - HELD THAT: - The Tribunal held that the assessee trust, created by the President of India and funded by Government of India and SIDBI, is established for advancement of general public utility and qualifies as a charitable trust. Applying the test in Ahmedabad Urban Development Authority, the Tribunal found that charging of guarantee fees by the trust is on cost/nominal basis and the trust has consistently run deficits from guarantee activities, with substantial government contributions to corpus, which negates any profit motive. The facts show no change in activities from earlier years where the Tribunal had held the trust to be charitable. The levy of guarantee fees therefore does not, without more, bring the trust within the mischief of the proviso to section 2(15); the proviso cannot be invoked against the assessee for AY 2018-19. [Paras 12, 18, 20]

The claim of exemption under sections 11 and 12 is not hit by the proviso to section 2(15); ground No.2 allowed in favour of the assessee.

Provision for guarantee claims - mercantile system of accounting - application of income under section 11 - Allowability of deduction for provisions for guarantee claims (actuarial provisions) made in the books under the mercantile system for AY 2018-19. - HELD THAT: - The Tribunal recorded that the assessee follows the mercantile system of accounting as reflected in its notes to accounts and past assessment records. The AO's treatment as cash basis was incorrect. Reliance on judicial precedents recognising provisions properly made under mercantile accounting (including warranty and leave encashment jurisprudence) supported the view that such provisions represent liabilities to be taken into account in computing income. The Tribunal held that the provision for guarantee claims, having been properly ascertained and recorded, is an allowable deduction and directed the AO to allow the claimed amount. [Paras 21, 24, 26, 28, 29]

Provision for guarantee claims upheld and deduction allowed; ground No.3 allowed.

Accumulation under section 11(2) - 15% deduction under section 11(1)(a) - set off of brought forward deficit - application of income under section 11 - Consequential treatment of accumulation under section 11(2), the 15% deduction under section 11(1)(a), and set off of brought forward deficits following allowance of exemption under section 11. - HELD THAT: - Having held that the trust is entitled to exemption under section 11, the Tribunal declared the related disallowances by lower authorities to be consequential. The AO was directed to process the assessee's claims for accumulation under section 11(2) and for the statutory deduction (15% claim) as well as the claim for set off of brought forward deficits in accordance with the entitlement restored by the Tribunal. [Paras 30, 31]

Ground Nos.4, 5 and 6 treated as consequential and directed to be processed in favour of the assessee.

Final Conclusion: The appeal is allowed: exemption under sections 11 and 12 restored for AY 2018-19 (proviso to section 2(15) not attracted), actuarial provision for guarantee claims allowed as deduction under mercantile accounting, and related claims for accumulation, statutory deduction and carry forward set off to be processed accordingly.

Disallowance under section 36(1)(va) read with section 2(24)(x) - application of section 43B to employees' contributions - processing of returns and adjustments under section 143(1)(a) - disallowance based on tax audit report (section 143(1)(a)(iv)) - quasi-judicial obligation of CPC to record reasons when disposing objections - treatment of unpaid statutory dues not charged to profit and loss account

Disallowance under section 36(1)(va) read with section 2(24)(x) - processing of returns and adjustments under section 143(1)(a) - disallowance based on tax audit report (section 143(1)(a)(iv)) - quasi-judicial obligation of CPC to record reasons when disposing objections - Validity of summary disallowance in intimation under section 143(1)(a) of delayed deposit of employees' contributions towards EPF/ESIC - HELD THAT: - The Tribunal held that on the date the return was processed the legal question whether delayed deposits (made after statutory due dates but before filing under section 139(1)) could be treated as assessor's income under section 36(1)(va) or saved by section 43B was a debatable issue. A tax-audit entry indicating delayed deposit does not, by itself, justify summary disallowance under section 143(1)(a)(iv) where binding judicial precedent or substantial debate exists. Further, when objections are raised under the intimation process the CPC/Assessing Officer performs a quasi-judicial function and must apply mind and record cogent reasons for rejecting the objections; template or non-speaking disposals are insufficient. In the facts before the Tribunal (where the auditor had merely reported delayed deposits in Form 3CD and had not offered them as income) and having regard to contemporaneous divergent decisions, the summary addition made while processing the return was held unjustified and was vacated. [Paras 13, 14]

Addition made in processing u/s 143(1)(a) in respect of delayed deposit of employees' contributions (vacated)

Application of section 43B to employees' contributions - treatment of unpaid statutory dues not charged to profit and loss account - processing of returns and adjustments under section 143(1)(a) - Sustainability of disallowance under section 43B of service tax amount not charged to profit and loss account and its summary adjustment under section 143(1)(a) - HELD THAT: - Relying on the ratio of the jurisdictional High Court (Ganapati Motors), the Tribunal accepted that where an assessee accounts on an exclusive basis and does not claim the statutory levy (here service tax) as a deduction in the profit and loss account, that unpaid liability is not amenable to addition under section 43B as an 'incorrect claim' in the return. Given that the service-tax component was not claimed in the assessee's accounts, the disallowance could not be treated as within the adjustments permissible under section 143(1)(a). Consequently the addition towards service tax was vacated. [Paras 16, 17]

Addition of service-tax liability under section 43B vacated

Final Conclusion: The appeal is allowed: the Tribunal set aside the CIT(A) order and vacated (a) the summary addition made under section 143(1)(a) in respect of delayed deposit of employees' contributions to EPF/ESIC, and (b) the addition under section 43B in respect of service tax not charged to the profit and loss account for AY 2018-19.

Revisionary jurisdiction under section 263 - erroneous order prejudicial to the interests of the revenue - assessment under section 143(3) - assessment of total income or loss - Dividend Distribution Tax and independent charging mechanism under Chapter XII-D - assessee in default under section 115Q - separate order required for collection and recovery of DDT/interest - rectification under section 154 vis-a -vis revision under section 263 - jurisdictional error required for revision

Dividend Distribution Tax and independent charging mechanism under Chapter XII-D - assessee in default under section 115Q - separate order required for collection and recovery of DDT/interest - revisionary jurisdiction under section 263 - erroneous order prejudicial to the interests of the revenue - Whether the Principal Commissioner could invoke revisionary jurisdiction under section 263 to direct imposition of DDT and interest under Chapter XII-D (sections 115-O/115P) in the absence of a separate order holding the assessee as an assessee in default under section 115Q. - HELD THAT: - The Tribunal held that assessment under section 143(3) is confined to determination of the assessee's total income or loss and does not by itself constitute the separate order required to fasten liability under Chapter XII-D. Chapter XII-D creates an independent mode of charging DDT and, upon default, requires the assessee to be held an 'assessee in default' so that collection and recovery provisions apply; only thereafter can a demand/notice under section 156 issue for DDT/interest. By contrast, section 263 presupposes existence of an order passed under the Act which is erroneous and prejudicial to revenue. Since no separate order under section 115Q/115P fixing DDT or interest existed, the Principal Commissioner could not validly invoke section 263 to impose DDT/interest merely by treating it as part of the section 143(3) assessment. The Tribunal noted that treating DDT/interest as arising automatically out of a 143(3) assessment would render section 115Q otiose and collapse distinct charging/collection mechanisms. Accordingly, the revisionary order was unjustifiable on this ground. [Paras 15]

Revision under section 263 could not be validly exercised to impose DDT and interest in absence of a separate order under Chapter XII-D; the Principal Commissioner's revisionary order on this ground is quashed.

Rectification under section 154 vis-a -vis revision under section 263 - jurisdictional error required for revision - revisionary jurisdiction under section 263 - erroneous order prejudicial to the interests of the revenue - Whether the AO's assessment was 'erroneous and prejudicial to the interests of the revenue' under section 263 because of double adjustment of a long term capital loss, or whether the matter was a rectifiable inadvertent mistake not attracting revisionary jurisdiction. - HELD THAT: - The Tribunal found on facts that the double adjustment of the long term capital loss twice (against LTCG and STCG) was an admitted, bona fide, typographical/inadvertent error by the assessee. The computations on record demonstrated that correcting the error did not change the final tax liability for AY 2018 19 (tax payable under section 115JB remained unchanged) and only affected the quantum of MAT credit carry forward. As section 263 requires an order to be erroneous in a jurisdictional sense and prejudicial to revenue (not merely a rectifiable mistake), the Tribunal held that the mistake fell within the scope of rectification under section 154 rather than revision under section 263. Applying Malabar Industries and related principles, the Tribunal concluded that no prejudice to revenue arose in the relevant year and no exercise of revisionary powers was justified. [Paras 7]

The revision under section 263 was not justified in respect of the double adjustment of capital loss; the matter is a rectifiable inadvertent mistake and the impugned revisionary order on this ground is quashed.

Final Conclusion: Both limbs of the Principal Commissioner's revisionary order under section 263 - (i) directing imposition of DDT/interest under Chapter XII D without a separate order holding the assessee an 'assessee in default', and (ii) reopening assessment for an admitted inadvertent double adjustment of capital loss - were found unjustified; the revisionary order is quashed and the appeal is allowed.

Appealability of orders passed under section 119(2)(b) of the Income-tax Act - appellate jurisdiction under section 253(1) of the Income-tax Act - administrative orders non-appealable

Appealability of orders passed under section 119(2)(b) of the Income-tax Act - appellate jurisdiction under section 253(1) of the Income-tax Act - administrative orders non-appealable - Whether an appeal lies to the Appellate Tribunal against an order passed by the Commissioner under section 119(2)(b) refusing condonation of delay in filing Form No.10BB. - HELD THAT: - The Tribunal held that an assessee has no statutory right to appeal to the Appellate Tribunal against an order passed by the Commissioner under section 119(2)(b). Section 253(1) lists the categories of orders which are appealable to the Tribunal, and orders under section 119(2)(b) are not included in that statutory catalogue. The Court treated an order under section 119(2)(b) as administrative in character and therefore not amenable to appeal before the Tribunal. The Tribunal's view is supported by the decision of the High Court of Gujarat in CIT Vs. Rasida Ibrahimbhai Vohra, which reached the same conclusion and set aside Tribunal orders entertaining such appeals. Applying this statutory scheme and precedent, the appeals against the Commissioner's orders rejecting condonation of delay in filing Form No.10BB were held not maintainable and were dismissed. [Paras 5, 6]

Appeals against orders of the Commissioner under section 119(2)(b) refusing condonation of delay are not maintainable before the Appellate Tribunal; the appeals are dismissed as not maintainable.

Final Conclusion: All three captioned appeals challenging the Commissioner's orders under section 119(2)(b) refusing condonation of delay in filing Form No.10BB were dismissed as not maintainable for want of appellate jurisdiction under section 253(1).

Re-opening of assessment under section 147 - reason to believe escapement of income - reason to suspect - reasons recorded - stand-alone examination of reasons - preliminary inquiry before recording belief - quashing of reopening for want of jurisdiction

Re-opening of assessment under section 147 - reason to believe escapement of income - reason to suspect - reasons recorded - preliminary inquiry before recording belief - Validity of the reopening of assessment by the AO for A.Y. 2010-11 by issuance of notice under section 148 read with section 147. - HELD THAT: - The Tribunal held that the statutory pre-condition for valid re-opening is a 'reason to believe' that income chargeable to tax has escaped assessment, which must rest on information and a reasoned foundation; mere adverse information gives rise only to a 'reason to suspect' and is insufficient. Reasons recorded by the AO must be examined on a stand-alone basis and must be self explanatory; nothing can be added to them. In the present case the reasons relied upon were general observations arising from a search in the RK Kedia group and generic assertions about accommodation entry operators and weak financials of investor companies, coupled with the fact that the assessee issued shares at a premium. The AO did not conduct any preliminary enquiry to ascertain the identity or nature of the investors, did not name the alleged investor/paper companies in the recorded reasons, nor did he demonstrate any factual nexus establishing that the investors were accommodation providers. Consequently the material in the recorded reasons only amounted to information capable of giving rise to a 'reason to suspect' and fell short of the jurisdictional 'reason to believe' required to reopen assessment. For these reasons the AO's action to initiate reassessment was without jurisdiction and liable to be quashed. [Paras 7, 8]

Reopening of assessment quashed for want of jurisdiction; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, quashed the re-opening of assessment for A.Y. 2010-11 on the ground that the reasons recorded did not demonstrate the requisite 'reason to believe' escapement of income and merely evidenced 'reason to suspect', and directed that the re-opening proceedings be set aside.

Royalty - cost-to-cost reimbursement - treatment under DTAA - intellectual property rights - shrink-wrapped software - characterisation of receipts

Royalty - cost-to-cost reimbursement - treatment under DTAA - intellectual property rights - shrink-wrapped software - Whether the amounts received by the assessee from its Indian subsidiary as reimbursement of software licence costs are taxable as royalty under the India-USA DTAA and domestic law. - HELD THAT: - The Tribunal found on the materials placed on record that the assessee had purchased shrink-wrapped software licences from third party vendors and cross charged the cost to group entities on allocation keys; invoices from third party vendors demonstrated the nature and cost of the software supplied. The Assessing Officer had treated the receipts as royalty, reasoning that a markup was charged; however, no material was produced to establish that the reimbursements included any markup and the AO had impermissibly mixed up a separate back office support services arrangement with the cost reimbursement transaction. On merits, the Tribunal held that the third party vendors, not the assessee, owned the copyright/IPR in the software; the assessee had only sold copyrighted articles (shrink wrapped software) without transferring any right in the copyright or right to use the copyright. Applying the legal principle that sale of copyrighted articles by a purchaser of such articles (who does not hold copyright) does not constitute grant of a right to use copyright, the Tribunal held the receipts were not royalty under the treaty and were not taxable as such (the reasoning aligns with the precedent relied upon by the assessee). [Paras 9, 10, 11]

The receipts representing reimbursement of cost of software licences are not taxable as royalty under the India-USA DTAA; the addition is directed to be deleted.

Final Conclusion: The appeal is allowed; the addition treating the cost to cost reimbursement of software licence expenses as royalty is deleted and the assessment is to be revised accordingly.

Condonation of delay for substantial justice - fiction treating partner's remuneration as business income/return of share of profits - deductibility of interest on monies borrowed for investment in firm against remuneration assessed as business income - nexus between borrowing and investment in partnership firm

Condonation of delay for substantial justice - Delay in filing the appeal was condoned and the appeal admitted for adjudication on merits. - HELD THAT: - The assessee explained non-receipt of the appellate order due to use of another person's email ID and delay in discovering the order; an affidavit setting out the facts was placed on record. The Revenue did not file any material challenging those explanations. Applying the established principle that the power to condone delay is to be exercised to secure substantial justice and that sufficient cause should be interpreted liberally, the Tribunal found the reasons furnished by the assessee to be reasonable and in the interest of justice and accordingly condoned the delay and proceeded to decide the appeal on merits. [Paras 6]

Delay of 53 days in filing the appeal condoned; appeal admitted for adjudication on merits.

Fiction treating partner's remuneration as business income/return of share of profits - deductibility of interest on monies borrowed for investment in firm against remuneration assessed as business income - nexus between borrowing and investment in partnership firm - Interest paid on monies borrowed and introduced as capital in the partnership firm is allowable as a deduction against remuneration received from the firm which is assessed as business income. - HELD THAT: - The Tribunal accepted the assessee's case that funds borrowed from creditors were transferred to the partnership firms and that the assessee's principal source of income was remuneration and share of profits from those firms. Relying on the legal principle that remuneration paid to a partner is, by statutory fiction, assessed as business income (a return of share of profits) and therefore a partner is entitled to deductions available for computing his share of profits, the Tribunal held that interest on monies borrowed for investment in the firm is deductible against the remuneration assessed as business income. The Tribunal noted that the lower authorities had questioned the genuineness of borrowings but observed that no conclusive findings were recorded by the CIT(A) and that the assessee had placed balance sheet entries and bank transfers showing introduction of funds into the firms, establishing the requisite nexus. Applying the precedent cited by the assessee, the Tribunal allowed the claim of interest incurred for funds invested in the partnership. [Paras 16, 17, 18, 19]

Interest expenditure incurred on monies borrowed and introduced as capital in the partnership firm is allowable against the remuneration assessed as business income; appeal allowed on this ground.

Final Conclusion: Delay in filing the appeal was condoned and, on the merits, the Tribunal allowed the appeal by holding that interest on funds borrowed and introduced as capital in the partnership firm is deductible against the remuneration assessed as business income, reversing the disallowance by the lower authorities.

Allowability of business loss under section 28 and section 37 - conditions for allowance as bad debt under section 36(2) - genuineness of write offs and commercial expediency - remand for fresh consideration

Allowability of business loss under section 28 and section 37 - conditions for allowance as bad debt under section 36(2) - genuineness of write offs and commercial expediency - Deductibility of the amount written off (20% of loan to joint venture) claimed as business loss in each year - HELD THAT: - The Tribunal recorded that the same controversy arose in earlier years and that proceedings on whether the write off arose in the course of business and in the relevant year are sub judice before the High Court. The assessee maintained that the write off was not claimed under the bad debt provision but as a business loss under section 28 read with section 36(1)(vii) or section 37, and relied on several judicial decisions. The Tribunal noted that the CIT(A) simply followed the Tribunal's earlier order for AY 2012 13 without considering the submissions and materials placed before him in the present years. In the interest of justice and fair play the Tribunal held that the matter requires fresh consideration by the assessing officer after hearing the assessee and examining the contentions and evidence brought on record; accordingly the CIT(A)'s orders in both years were set aside and the issue was restored to the file of the AO for fresh decision in accordance with law with an opportunity of hearing. [Paras 11]

Order set aside and matter remanded to the assessing officer for fresh adjudication after considering assessee's submissions and giving an opportunity of hearing.

Conditions for allowance as bad debt under section 36(2) - genuineness of write offs and commercial expediency - Deductibility of amounts written off as bad debts comprising loans to employees and debit balances of suppliers (AY 2014 15) and advances to suppliers (AY 2015 16) - HELD THAT: - The AO had disallowed these amounts on the ground that the conditions of section 36(2) for allowance as bad debts were not satisfied. The Tribunal observed that the loans/advances were made in the course of the assessee's business, later became irrecoverable and were written off in the books, and that neither the AO nor the CIT(A) doubted the genuineness of the write offs. Applying the principle that an assessee is best placed to judge recoverability and that bona fide write offs made in the ordinary course of business are allowable in computing business income, the Tribunal directed deletion of the impugned disallowances in both assessment years. [Paras 13, 14]

Impugned disallowances in respect of the bad debts/write offs deleted and appeals treated as allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the CIT(A) orders insofar as the issue of write off of 20% of the loan to the joint venture is concerned and remanded that issue to the assessing officer for fresh decision after considering the assessee's submissions; separately, the Tribunal directed deletion of the disallowances relating to loans/advances and debit balances written off in both years and treated the appeals as allowed for statistical purposes.

Treatment of excess stock as business income - application of section 69B to stock forming part of entire lot - applicability of section 115BBE to surrendered excess stock - doctrine of ejusdem generis in construing "other valuable articles" under section 69B - precedential application of M/s. D. N. Singh v. CIT

Treatment of excess stock as business income - application of section 69B to stock forming part of entire lot - applicability of section 115BBE to surrendered excess stock - Excess stock found during survey which is not separable from the entire lot of stock and which was surrendered and accepted as business income is not assessable as deemed income under section 69B nor taxable under section 115BBE. - HELD THAT: - The Tribunal found that the excess stock pertained to the assessee's regular business and was part of the entire lot of stock, a portion being recorded in books and a portion not recorded but subsequently surrendered and offered to tax as business income. Following the ratio in M/s. D. N. Singh v. CIT, the excess stock which is inseparable from the whole stock cannot be treated as an independent investment or as "other valuable articles" falling within the mischief of section 69B. Consequently, where such excess stock is regularised by surrender and accepted by the assessing officer as business income, it does not attract the deeming provision of section 69B nor the higher rate taxation under section 115BBE. The Tribunal held that the Commissioner (Appeals) erred in confirming the application of section 69B read with section 115BBE and deleted the addition accordingly. [Paras 7, 8]

Addition on account of excess stock treated as income under the head business income and not as deemed income under section 69B/read with section 115BBE; addition deleted.

Final Conclusion: Appeal allowed; addition confirmed by the Commissioner (Appeals) under section 69B read with section 115BBE set aside and deletion granted, following the Supreme Court precedent in M/s. D. N. Singh.

Registration under section 12AA - Genuineness of objects and activities - Power of CIT (Exemptions) under section 12AA limited to objects and genuineness - Captive/corporate-controlled trust and Corporate Social Responsibility (CSR) arrangements - Rejection of registration where no defect in objects is pointed out

Registration under section 12AA - Genuineness of objects and activities - Captive/corporate-controlled trust and Corporate Social Responsibility (CSR) arrangements - Power of CIT (Exemptions) under section 12AA limited to objects and genuineness - Validity of rejection of the appellant's application for registration under section 12AA on the ground that the trust was formed to implement CSR activities and was not amenable to public charity - HELD THAT: - The Tribunal examined the material including the trust deed, composition of trustees and the financial statements for F.Y. 2015-16. The CIT(E) had held that the trust was a captive vehicle created by the settlor company to meet CSR obligations, that its composition was restrictive and it did not enure to the benefit of the general public. The Tribunal accepted that CSR obligations and the accompanying tax treatment of CSR spending are relevant background, but reiterated the limited scope of the CIT(E)'s inquiry under section 12AA: satisfaction about the charitable nature of objects and the genuineness of activities. The Tribunal found that the CIT(E) had neither pointed out any defect in the objects of the trust nor doubted the genuineness of activities carried out to achieve those objects. The Goenka Charitable Trust decision relied upon by the CIT(E) was treated as distinguishable on facts. Applying the principle that registration cannot be rejected merely because a trust is funded by or associated with a corporate settlor, and that detailed eligibility under sections 11/13 is for the Assessing Officer at assessment stage, the Tribunal concluded that the rejection was infirm and perverse to the record and directed grant of registration from the date of application. [Paras 6, 11, 12]

Impugned rejection set aside; CIT(E) directed to grant registration under section 12AA from the date of application

Final Conclusion: Appeal allowed; registration under section 12AA granted to the appellant trust from the date of application as the CIT(Ex.) erred in rejecting the application where no defect in objects or genuineness of activities was pointed out.

Refund of value on setting aside confiscation - value as on date of seizure - validity of public auction - ownership vests in the Central Government upon confiscation - burden of proof under Section 106 of the Indian Evidence Act, 1872

Refund of value on setting aside confiscation - value as on date of seizure - Whether, upon confiscation being set aside, the owner is entitled to refund of the value of the goods as on the date of seizure or is limited to the proceeds of auction. - HELD THAT: - The Court accepted the settled principle of the Hon'ble Supreme Court that when an order of confiscation is held illegal and set aside, the person concerned is entitled to the value of the goods as it stood on the date of seizure. However, the Court held that where the confiscated goods have been put to public auction and a value has been determined by auction, that auction value cannot be lightly displaced. Unless the auction itself is challenged on its validity or correctness before an appropriate forum, the auction-determined value will be difficult to ignore in applying the Supreme Court principle. Thus the general rule favouring refund as on the seizure date is acknowledged, but its application is subject to the intervening fact of a valid auction that has fixed the realisable value unless successfully assailed. [Paras 7, 8]

Principle that refund is of value as on seizure is recognized, but where a valid auction has determined value, that auction value governs unless the auction is successfully challenged.

Validity of public auction - burden of proof under Section 106 of the Indian Evidence Act, 1872 - Whether the petitioner was entitled to a determination of the seizure-date value on the record before the Court and what further steps were open to him. - HELD THAT: - The Court found there was no material on record to establish that the estimated value stated in the seizure order was a conclusively determined value as on the date of seizure. The petitioner, being the person who procured the goods, was held to be in the best position to produce evidence of the actual value at seizure, consistent with the evidentiary burden noted under Section 106 of the Indian Evidence Act. In the absence of evidence to fix the seizure-day value, the Court refrained from adjudicating the quantum of refund. The Court granted liberty to the petitioner to challenge the valuation fixed by the auction limited to questioning the auction value; if the respondents accept any legally sustainable alteration in valuation, the petitioner may revisit the claim for refund of the seizure-date value or for adjustment against any revised auction valuation. [Paras 9, 10, 11, 12]

No adjudication on the seizure-date value for refund due to lack of material; petitioner granted liberty to challenge the auction valuation and to seek fresh relief depending on the outcome of such challenge.

Final Conclusion: Writ petition disposed of: the Court acknowledged the rule entitling an owner to value as on seizure when confiscation is set aside but, given a subsequent auction that fixed value and absence of material to prove seizure-day value, declined to quantify refund; petitioner granted liberty to assail the auction valuation and to seek further relief thereafter.

Maintainability of writ petition in presence of alternative statutory remedy - jurisdictional scope of writ jurisdiction under Article 226 where appeal lies - interference with provisional assessment orders - principles of non-interference where order is not without jurisdiction or violative of natural justice

Maintainability of writ petition in presence of alternative statutory remedy - jurisdictional scope of writ jurisdiction under Article 226 where appeal lies - Whether the writ petition challenging the provisional assessment order was maintainable in view of the availability of an appeal under the Customs Act. - HELD THAT: - The Court held that the petitioner had an efficacious alternative remedy by way of appeal under the Customs Act and that the impugned provisional assessment order could not be characterised as being without jurisdiction or in violation of principles of natural justice. Merely because the petitioner's view is that the order is contrary to provisions of law does not justify this Court supplanting the appellate authority. Accordingly, where an order is not shown to be without jurisdiction or tainted by breach of natural justice, the High Court will ordinarily refrain from exercising writ jurisdiction and direct the petitioner to pursue the statutory appeal. The court therefore dismissed the writ petition but permitted the petitioner to prefer the appeal within a limited time and directed expeditious consideration by the appellate authority. [Paras 5, 6, 7]

Writ petition dismissed; petitioner permitted to file appeal within fifteen days and appellate authority directed to consider it expeditiously.

Final Conclusion: The writ petition challenging the provisional assessment order is dismissed on grounds of alternative remedy; the petitioner is allowed to file the statutory appeal within fifteen days and the appellate authority is directed to decide it expeditiously in accordance with law.

Anticipatory Bail - Proclamation under Section 82 Cr.P.C. - Publication under Section 82(2) and Section 82(3) Cr.P.C. - Non-cognizable and bailable offence - Delay in lodging FIR - Applicability of Prevention of Corruption Act to a non-public servant - Parity of relief to co-accused

Proclamation under Section 82 Cr.P.C. - Publication under Section 82(2) and Section 82(3) Cr.P.C. - Anticipatory Bail - Whether a proclamation issued under Section 82(1) Cr.P.C. operated as a bar to entertaining the applicant's anticipatory bail application - HELD THAT: - The Court found that although a proclamation under Section 82(1) Cr.P.C. had been issued, there is nothing on record to show compliance with the publication and court statement requirements contained in sub sections (2) and (3) of Section 82 Cr.P.C. In the absence of evidence that the proclamation was published as prescribed and that the Court made the conclusive statement contemplated by sub section (3), the statutory bar relied upon by the prosecution did not operate to oust the Court's jurisdiction to consider the anticipatory bail application on merits. Consequently the anticipatory bail petition could be entertained. [Paras 5]

Proclamation under Section 82 Cr.P.C. not shown to have been published in the manner required by sub sections (2) and (3); no bar to considering anticipatory bail on merits.

Delay in lodging FIR - Non-cognizable and bailable offence - Applicability of Prevention of Corruption Act to a non-public servant - Parity of relief to co-accused - Anticipatory Bail - Whether, on merits, the applicant was entitled to anticipatory bail - HELD THAT: - On the merits the Court noted that the FIR was lodged substantially after the alleged recovery (no explanation for the delay), the substantive offence under the Customs Act alleged is non cognizable and bailable carrying a maximum sentence of three years, and though the C.B.I. alleged offences under the Prevention of Corruption Act the applicant is not a public servant. The applicant had no other criminal history. The Court also observed that co accused persons in respect of similar recoveries had already been granted anticipatory bail by the same Court. Taking these factors together, and without making observations that would affect the trial, the Court concluded that the balance of convenience and other relevant considerations warranted granting anticipatory bail to the applicant subject to usual conditions. [Paras 7, 8, 11, 13, 14]

Anticipatory bail granted to the applicant on furnishing personal bond and two solvent sureties, subject to conditions including attendance, non tampering with evidence and non intimidation of witnesses.

Final Conclusion: The Court entertained the anticipatory bail application because the proclamation under Section 82 Cr.P.C. was not shown to have been published as required, and on merits granted anticipatory bail to the applicant subject to furnishing bond and sureties and complying with conditions regarding attendance, non tampering with evidence and non intimidation of witnesses.

Remand for fresh consideration - impossibility of compliance due to prior disposal - redemption for re-export - redemption fine - confiscation under Customs Act - notice and opportunity of hearing

Remand for fresh consideration - impossibility of compliance due to prior disposal - notice and opportunity of hearing - Ext.P10 revisional order set aside and matter remitted for fresh decision because the subject goods were disposed of before the revisional order, rendering its directions incapable of performance. - HELD THAT: - The revisional authority had allowed redemption of the seized gold bars for re-export on payment of a redemption fine and had reduced the penalty. It was established in the writ petition that the two gold bars seized in 2013 had already been disposed of by the Customs before Ext.P10 was passed; that material fact was not placed before the revisional authority. Because the revisional order directed acts (redemption and re-export) which could not be complied with due to prior disposal of the goods, the order could not stand. The appropriate remedy is to set aside the revisional order and remit the matter to the Revisional Authority to pass a fresh order after taking note of the prior disposal, issuing appropriate notice to the petitioner and other concerned respondents, and affording opportunity of hearing. The court directed the Revisional Authority to decide the matter expeditiously, preferably within three months, given the long pendency since seizure in 2013. [Paras 3]

Ext.P10 is set aside and the matter is remitted to the Revisional Authority to pass a fresh order after taking note of the prior disposal of the seized goods, issuing notice to the petitioner and respondents, and affording hearing; fresh decision to be rendered expeditiously, preferably within three months.

Final Conclusion: Writ petition allowed; revisional order set aside and matter remitted for fresh consideration by the Revisional Authority after taking note of the disposal of the seized goods and after issuing notice and hearing, with a direction to decide expeditiously (preferably within three months).

Pre-determination / predisposition to decide - show cause notice - judicial review of show cause notices limited to exceptional or jurisdictional grounds - expeditious disposal of adjudicatory proceedings - deferment of disposal under Section 110(1D) of the Customs Act, 1962

Pre-determination / predisposition to decide - show cause notice - judicial review of show cause notices limited to exceptional or jurisdictional grounds - Validity of the Show Cause Notice dated 17 July 2023 challenged as manifesting a predetermined opinion and thus vitiating the proceedings - HELD THAT: - The Court examined the recitals of the SCN and found that the language used (notably repeated use of the expression "it appears") discloses tentative conclusions reached after investigation rather than an irrevocable determination of guilt. Applying the settled principle that interference with SCNs is permissible only in exceptional circumstances or on jurisdictional grounds, the petitioner's contention of a predisposed mind was rejected. The Court was unable to hold that the SCN amounted to a foregone conclusion warranting quashing. [Paras 7, 8]

The challenge to the SCN dated 17 July 2023 is negatived and the writ petition does not succeed on the ground of predetermination.

Expeditious disposal of adjudicatory proceedings - deferment of disposal under Section 110(1D) of the Customs Act, 1962 - Direction for expeditious conclusion of the SCN proceedings and temporary restraint upon further action under Section 110(1D) - HELD THAT: - While rejecting the petitioner's challenge, the Court noted the respondents' undertaking to refrain from acting under Section 110(1D) pending the SCN outcome. In the exercise of supervisory jurisdiction the Court directed the competent authority to endeavour to conclude the SCN proceedings within two months from the date of the order, subject to the petitioner's full cooperation. The Court also ordered that any further action under Section 110(1D) shall be deferred and shall abide by the final decision in the SCN proceedings. [Paras 9, 10, 11]

The competent authority is directed to dispose of the SCN proceedings within two months and further action under Section 110(1D) is deferred pending the outcome of those proceedings.

Final Conclusion: The writ petition is disposed of: the challenge to the SCN is dismissed, the authority is directed to conclude the SCN proceedings within two months, and any further action under Section 110(1D) is deferred pending the decision in those proceedings; parties' rights and contentions remain open for determination before the competent authority.

Classification under Rule 2(a) of GIR - Levy of anti-dumping duty on CKD/SKD imports - Applicability of product scope from Designated Authority's notification - Admissibility and weight of expert opinion in fiscal adjudication - Confiscation, rejection of classification and penalty under the Customs Act

Classification under Rule 2(a) of GIR - Levy of anti-dumping duty on CKD/SKD imports - Applicability of product scope from Designated Authority's notification - Whether the imported consignments should be classified as complete PIMM under Rule 2(a) GIR and thereby made liable to anti-dumping duty - HELD THAT: - The Tribunal examined the notifications and the Designated Authority's investigation scope and held that the anti-dumping levy was directed to the article identified in the DA's inquiry - complete plastic processing or injection moulding machines - and not to generic parts. Rule 1 of the GIR requires classification by headings and notes where possible; Rule 2(a) applies to articles presented unassembled or incomplete only where the imported article possesses the essential character of the finished article and is presented unassembled for convenience of packing/transport and requires only assembly operations without further working. The factual record, including technical and financial certificates, shows that post-import activities went beyond mere assembly and indigenous vital parts (for example, base frame, PLC, hydraulic valves) and manufacturing steps in India were integral to producing the final PIMM. Documentary communications relied on by Revenue did not establish importation of a complete machine in CKD/SKD condition. Consequently Rule 2(a) was held inapplicable to reclassify the imported consignments as complete PIMM for purposes of Section 9A and the notifications imposing ADD. [Paras 12, 14]

Imported consignments are not to be treated as complete PIMM under Rule 2(a) GIR; levy of anti-dumping duty under the impugned notifications is not sustainable.

Admissibility and weight of expert opinion in fiscal adjudication - Confiscation, rejection of classification and penalty under the Customs Act - Whether the expert and accounting evidence furnished by the appellants was wrongly ignored and whether the adjudicator's reliance on departmental expert findings justified confirmation of confiscation, reclassification and penalties - HELD THAT: - The Tribunal reviewed the certificates from the appellants' experts (IIT professor and chartered engineers) and the chartered accountant cost details alongside the chartered engineer report engaged by Revenue. It found that the adjudicating authority had not addressed or rebutted those expert opinions and financial records but had effectively brushed them aside. The Tribunal applied the principle that expert opinion in the field of trade or technical expertise cannot be ignored without countervailing findings and held that the authorities had no clinching evidence to show that the machines were imported complete or merely to be assembled without further manufacturing operations in India. In absence of such affirmative proof, confirmation of confiscation, reclassification and penalties could not be sustained. [Paras 8, 9, 13]

The adjudicating authority's failure to consider and counter the appellants' expert and accounting evidence vitiates confirmation of confiscation, reclassification and penalties; such confirmations are set aside.

Procedure - abatement of appeal under Tribunal rules - Whether Appeal No. C/85991/2017 filed by the appellant who expired should abate - HELD THAT: - On production of the municipal death certificate, the Tribunal noted the appellant's death and applied Rule 22 of the CESTAT (Procedure) Rules, 1982. The contemned appeal relates to a deceased appellant and, accordingly, procedural law requires abatement. [Paras 5]

Appeal No. C/85991/2017 abates.

Final Conclusion: The Tribunal set aside the adjudicating authority's order insofar as it confirmed anti-dumping duty, confiscation/reclassification and penalties against the appellants for the period 30.9.2011 to 9.10.2012, holding that the imported items were not proved to be complete PIMM within Rule 2(a) GIR and that the appellants' expert and accounting evidence was not properly considered; one appeal abated on the death of the appellant.

Summoning order without reasons - non-disclosure of appellate exoneration order - criminal prosecution after exoneration on merits - interim stay of criminal proceedings - Section 482 of the Code of Criminal Procedure, 1973

Summoning order without reasons - non-disclosure of appellate exoneration order - criminal prosecution after exoneration on merits - interim stay of criminal proceedings - Whether interim protection should be granted by staying the operation of the impugned summoning order and related proceedings insofar as the petitioner is concerned - HELD THAT: - The Court recorded that the impugned Complaint dated 06.10.2022 is identical to the Show-Cause Notice dated 17.07.2019 and that the learned CESTAT had earlier exonerated the petitioner by its order dated 28.03.2022; that order was not disclosed before the trial court though counsel for the Commissioner of Customs had stated that all documents were filed. The Court noted the summoning order was passed in a mechanical manner without assigning reasons. In view of these facts, and having regard to the principle that a criminal prosecution should not ordinarily continue where the accused has been exonerated on merits, the Court was prima facie satisfied that the petitioner made out a case for interim protection. Consequently the Court stayed the operation of the impugned order dated 01.07.2023 and all proceedings emanating therefrom pending before the ACMM-01, insofar as they pertain to the petitioner, until the next date of hearing. [Paras 12, 14, 15, 16]

Operation of the impugned order dated 01.07.2023 and all proceedings emanating therefrom pending before ACMM-01 are stayed qua the petitioner until the next date of hearing.

Interim procedural directions - filing of replies and synopses - renotification for hearing - Procedural directions concerning filing of pleadings, synopses and listing for further hearing - HELD THAT: - The Court directed the respondent to file its reply within three weeks and permitted rejoinder within two weeks thereafter. Both parties were directed to file a written synopsis, not exceeding three pages, giving a chronological list of dates, events and documents and relevant judgments highlighted, within two weeks. The matters were renotified for hearing on 21.02.2024. [Paras 5, 6, 7, 8, 17]

Respondent to file reply in three weeks, rejoinder in two weeks; both parties to file three page synopses within two weeks; matters renotified to 21.02.2024.

Exemption from court fees/filing requirements - Application for exemption (CRL. M.A. 29533/2023) - HELD THAT: - The Court allowed the application for exemption subject to all just exceptions and disposed of that application accordingly. [Paras 1, 2]

Application for exemption allowed subject to all just exceptions; application disposed of.

Final Conclusion: Interim relief granted: the impugned summoning order dated 01.07.2023 and proceedings before ACMM 01 are stayed insofar as they relate to the petitioner; procedural directions issued for filing of pleadings and synopses; exemption application allowed subject to exceptions; matters listed on 21.02.2024.

Summary order. Special Leave Petition dismissed as withdrawn.

Dependency of money-laundering offence on scheduled offence - Effect of quashing or compounding of predicate offence on PMLA proceedings - ECIR as an internal departmental document distinct from an FIR - Jurisdictional fact - Legitimacy of taking subsequent FIRs on record in an existing ECIR

Dependency of money-laundering offence on scheduled offence - Effect of quashing or compounding of predicate offence on PMLA proceedings - Jurisdictional fact - Whether proceedings under the PMLA in respect of scheduled offences that have been compounded or quashed can be continued against the petitioner. - HELD THAT: - The Court accepted the settled proposition that Section 3 offence under the PMLA is dependent on illegal gain as a result of a scheduled offence and that in absence of a scheduled offence there can be no maintainable prosecution under the PMLA. Having noted that FIR No. 16/2018 was compounded and FIR No. 49/2021 was quashed (and that those orders have not been challenged by the State or complainants), the Court held that the department cannot initiate or continue any proceeding or investigation under the impugned ECIR with respect to the scheduled offences forming part of those two FIRs. The Court applied the principle that a jurisdictional fact (here, existence of the scheduled offence) is a condition precedent for PMLA action and, where that fact is finally extinguished by compounding or quashing, consequential proceedings in respect of that predicate cannot survive. [Paras 25, 34, 36]

Proceedings under ECIR/09/HIU/2019 insofar as they relate to FIR No. 16/2018 and FIR No. 49/2021 stand quashed against the petitioner.

ECIR as an internal departmental document distinct from an FIR - Legitimacy of taking subsequent FIRs on record in an existing ECIR - Whether the impugned ECIR could be maintained on the basis of a later-registered FIR taken on record by the department and whether the ECIR must be wholly quashed where earlier predicate FIRs were compounded or quashed. - HELD THAT: - Relying on the Supreme Court's distinction that ECIR is an internal document and not equivalent to an FIR, the Court held that the department may take subsequent FIRs relating to the same project on record in an existing ECIR for purposes of PMLA inquiry. Consequently, the existence of FIR No. 55/2023 (registered after quashing/compounding of the earlier FIRs) legitimizes continuation of the ECIR generally. However, the Court clarified that while the ECIR as a document may subsist on the basis of the later FIR, that does not permit continuation of investigation under the ECIR in respect of predicate offences already extinguished by compounding/quashing; thus the ECIR survives but not insofar as it concerns the first two FIRs. [Paras 29, 31, 32, 36]

ECIR/09/HIU/2019 is not wholly quashed because FIR No. 55/2023 has been taken on record; the ECIR may legitimately include the later FIR, but investigation in respect of the first two FIRs cannot continue.

Final Conclusion: The petition is partly allowed: ECIR/09/HIU/2019 dated 27.06.2019 is not quashed in its entirety because a subsequent FIR (No. 55/2023) has been taken on record and sustains the ECIR; however, all proceedings and investigation under the ECIR insofar as they relate to FIR No. 16/2018 and FIR No. 49/2021 (which were compounded/quashed) stand quashed as no scheduled offence survives in respect of those FIRs.

Stay of proceedings pending determination of predicate proceedings - Proceedings under the Prevention of Money Laundering Act as independent offence - Provisional attachment of alleged proceeds of crime - Abuse of process of law - Effect of exoneration by appellate tribunal on consequent criminal proceedings

Stay of proceedings pending determination of predicate proceedings - Effect of exoneration by appellate tribunal on consequent criminal proceedings - Abuse of process of law - Grant of interim stay of ECIR/DLZO-I/39/2023 and all proceedings emanating therefrom qua the petitioner until the next date of hearing. - HELD THAT: - The Court examined the Provisional Attachment Order and the material placed before the ED and noted that the ECIR was recorded with reference to Section 135 of the Customs Act, 1962 as a scheduled offence under the PMLA. The Court took into account that the adjudication proceedings against the petitioner had been dismissed by the CESTAT and that the Division Bench of this Court had affirmed that dismissal. The Court further noted its earlier order staying the operation of the impugned order and related proceedings in Ct. Case No.2012/2022. Given the common set of facts forming the genesis of the CESTAT proceedings, the complaint before the ACMM and the present ECIR, and having found merit in the petitioner's submissions on the peculiar facts and circumstances, the Court was of the prima facie view that there were sufficient materials to stay the ECIR proceedings qua the petitioner. The Court therefore directed that the ECIR dated 17.07.2023 and all proceedings emanating therefrom, including the summoning order dated 10.11.2023, shall remain stayed as against the petitioner until the next date of hearing, while permitting the ED to proceed against other persons named in the ECIR in accordance with law. [Paras 18, 19, 20, 21, 22]

ECIR/DLZO-I/39/2023 dated 17.07.2023 and all proceedings emanating therefrom, including the summoning order dated 10.11.2023, are stayed qua the petitioner until the next date of hearing.

Exemption from filing fees / procedural exemption - Application for exemption (CRL.M.A. 31442/2023) is allowed. - HELD THAT: - The Court allowed the application for exemption subject to all just exceptions and disposed of the application accordingly. [Paras 1, 2]

The application for exemption is allowed subject to all just exceptions and stands disposed of.

Final Conclusion: Interim relief granted: the ECIR dated 17.07.2023 and all proceedings emanating therefrom are stayed as against the petitioner until the next date of hearing; the ED remains at liberty to continue proceedings against other persons named in the ECIR; application for exemption allowed.

Proceeds of crime - predicate offence - money-laundering as an independent offence dependent on predicate offence - acquittal of scheduled/predicate offence prevents action under the PMLA - cognizance under Section 4 of the Prevention of Money Laundering Act

Predicate offence - proceeds of crime - acquittal of scheduled/predicate offence prevents action under the PMLA - money-laundering as an independent offence dependent on predicate offence - cognizance under Section 4 of the Prevention of Money Laundering Act - Whether proceedings under the Prevention of Money Laundering Act instituted by an ECIR can continue after the accused has been acquitted of the predicate scheduled offences on which the ECIR was founded - HELD THAT: - The Court applied the principle that the offence of money laundering, while independent in character, is dependent on the existence of proceeds of crime derived or obtained as a result of criminal activity relating to a scheduled (predicate) offence. Relying on the ratio in Vijay Madanlal Chaudhary, the Court recorded that authorities under the PMLA cannot treat recovered property as proceeds of crime or proceed for money laundering on mere assumption of commission of the scheduled offence; the predicate offence must be registered or pending and, if the person is finally absolved by discharge, acquittal or quashing of the scheduled offence, no action for money laundering can be sustained in relation to the property linked to that scheduled offence. Applying these principles to the facts, the petitioner had been acquitted in the predicate trials (Jamalpur P.S. Case No.121 of 2010 and Munger Kotwali P.S. Case No.227 of 2010) which formed the basis of the ECIR. The Enforcement Directorate did not, in the proceedings before the High Court, successfully controvert the legal position that acquittal of the predicate offences precludes continuation of the PMLA proceeding based on the same allegations. In view of the settled legal position and its application to the facts, the cognizance taken and summons issued under Section 4 of the PMLA could not be permitted to continue.

The order dated 24.08.2018 taking cognizance under Section 4 of the PMLA and issuing summons to the petitioner is quashed.

Final Conclusion: The High Court quashed the session court's order of cognizance and summons under the PMLA because the ECIR was founded on predicate offences in respect of which the petitioner stands acquitted, and acquittal of the scheduled offences precludes maintenance of the money laundering proceeding in respect of the alleged proceeds.

Jurisdiction of the Central Excise Officer under Section 73 - appointment and powers of Central Excise Officers under Rule 3 - mining service as a taxable service (activities in relation to mining) - service tax as a value added tax on activity - supply of tangible goods service and transfer of right to use/effective control - site formation, clearance, excavation, earthmoving and demolition services - deemed sale / transfer of right to use under Article 366(29 A)(d) - extended period for recovery on account of suppression - penalty under the Finance Act - statutory penalty and section 78/section 77(1)/(2)

Jurisdiction of the Central Excise Officer under Section 73 - appointment and powers of Central Excise Officers under Rule 3 - Whether adjudication by the Commissioner was vitiated because the Show Cause Notice was issued by a DGCEI officer - HELD THAT: - The Tribunal held that officers of DGCEI, having been invested with the powers of Central Excise Officers by notifications issued by the Board, are Central Excise Officers capable of issuing notices and that Rule 3 and the Notifications empower the Board to appoint officers to exercise adjudicatory and investigatory powers. The Court explained that subsections (1) and (2) of Section 73 operate in independent domains - issuance of notice and determination by a speaking order - and that there is no legal infirmity in an officer empowered to issue a notice being different from the officer who adjudicates, provided both are competent under the Act and notifications. Reliance on the Madras High Court and Supreme Court authorities was noted to support the Board's power to invest officers and the non infirmity of adjudication by a Commissioner where a DGCEI officer issued the SCN. [Paras 6]

The adjudication by the Commissioner is not vitiated; the SCN issued by the DGCEI officer and the impugned adjudication do not suffer from jurisdictional error.

Mining service as a taxable service (activities in relation to mining) - service tax as a value added tax on activity - exigibility of minor minerals - Whether the appellant's quarrying/excavation and related activities in respect of river sand are exigible to service tax as mining service - HELD THAT: - The Tribunal concluded that taxable incidence is on activities in relation to mining and not on the mined commodity per se. The definition of 'minerals' in the MMDR Act does not exclude minor minerals (such as sand) from the term 'mineral' for the purposes of the Finance Act; regulatory classification as a 'minor mineral' under state law does not bar levy of service tax on activities in relation to mining. Applying the value addition principle and precedents treating service tax as a tax on activity, the quarrying, extraction, processing (grading/cleaning) and loading activities performed for consideration constitute taxable services in relation to mining. The Tribunal rejected the contention that these activities amount to manufacture/excise able production such that service tax would be excluded, and found that in the facts the appellant's operations amounted to taxable mining related services. [Paras 7]

Quarrying and allied activities in relation to river sand are exigible to service tax as mining service; the appellant's pleas to the contrary fail.

Supply of tangible goods service and transfer of right to use/effective control - deemed sale / transfer of right to use under Article 366(29 A)(d) - Whether amounts received for supply/hiring of vehicles are taxable as supply of tangible goods service or constitute transfer of right to use (deemed sale) and hence not service tax - HELD THAT: - The Tribunal applied the test in Adani Gas and examined the contracts and facts. Where written agreements (for example the reproduced lorry supply agreement) show transfer of possession and effective control to the hirer (second party) - ability to decide use, stationing, employment of drivers, bearing fuel/minor repairs and transit insurance, and exclusive use during the term - the transaction amounts to transfer of right to use and is a deemed sale (not a taxable supply of tangible goods service). Conversely, where no agreement or documentary proof was furnished and statements indicated that effective control remained with the appellant (e.g., TAMIN engagements where appellant supplied operators, insured and maintained machines), those hires were held to be taxable as supply of tangible goods service. The Tribunal therefore upheld the legal test but found mixed factual outcomes across contracts and hirings. [Paras 8]

Supply under formal agreements that transfer possession and effective control to the hirer is not exigible to service tax (deemed sale); supplies without such agreements or where effective control remained with the appellant are exigible to service tax.

Remand for quantification of duty and interest - cum tax (inclusive tax) valuation and adjustment - Whether quantification of duty/interest and penalty in respect of vehicles supplied without agreement and the cum tax benefit require further adjudication - HELD THAT: - The Tribunal held that factual determination and quantification remain necessary. It directed remand to the Original Authority to bifurcate and rework demands: (a) to quantify duty and interest for supplies covered by agreement (deemed sale) and for supplies without agreement (taxable supply of tangible goods), (b) to apply cum tax valuation benefit under section 67(2) if not already given, and (c) to compute the consequential statutory penalty (section 78) on the revised duty. The appellant is to be given opportunity to be heard and the adjudicating authority to complete quantification within 90 days or such extended time. [Paras 7, 8, 12, 13]

Matter remanded to the Original Authority for quantification of duty, interest and revised statutory penalty, and for applying cum tax benefit where applicable.

Site formation, clearance, excavation, earthmoving and demolition services - exemption for government works under Notification No.25/2012 (articles 243G/243W) - Whether the appellant's activities qualify as exempt construction/road works for use by general public under Notification No.25/2012 or fall within taxable site formation services - HELD THAT: - Based on statements from service recipients and absence of documentary proof that the appellant's principal activities were construction of roads for general public, the Tribunal found the appellant provided composite site formation services (jungle clearance, earth formation, earthmoving, transport and manpower) to private entities (NAPC, L&T, GVR) and thus are not entitled to exemption as services by a governmental authority under the cited notification. The Tribunal observed that the appellant failed to discharge the initial burden of proof and that recipients' statements were unretracted and entitled to evidentiary weight. [Paras 9]

The activities constitute taxable site formation services and are not covered by the governmental authority exemption in Notification No.25/2012 for the facts on record.

Extended period for recovery on account of suppression - Whether the extended period for issuance of SCN was rightly invoked - HELD THAT: - The Tribunal found that the appellant had engaged in long standing activities, maintained large fleets, failed to maintain transaction level records or disclose taxable activities in returns, and in many instances collected charges inclusive of statutory dues while not filing appropriate disclosures. The Tribunal drew an adverse inference from unretracted investigation statements and concluded there was positive suppression of facts with intent to evade duty. On those factual findings, invocation of the extended period under the proviso to Section 73(1) was held to be justified. [Paras 10]

Extended period was properly invoked on the factual finding of suppression; the extended period invocation stands.

Penalty under the Finance Act - statutory penalty and section 78/section 77(1)/(2) - Whether penalty was imposable and whether any penalty should be quashed or modified - HELD THAT: - The Tribunal held there was no reasonable cause to invoke Section 80 and that, given the factual finding of suppression and non disclosure, penalty provisions were attracted. However, the Tribunal quashed imposition under Section 77(2) as not made out on facts, and directed recalculation of the statutory penalty under Section 78 (which is dependent on duty determined) after remand and re quantification of duty. The Tribunal explained that statutory penalties where mandatory must be imposed in accordance with law and adjusted to the revised duty. [Paras 11, 12, 13]

Penalty under Section 78 to be recalculated and informed after quantification; penalty under Section 77(2) is quashed.

Final Conclusion: The Tribunal upheld the adjudicating authority's core legal conclusions: DGCEI officers are Central Excise Officers for issuance of SCNs and adjudication by the Commissioner is valid; quarrying and allied activities in relation to river sand are exigible to service tax as mining/site formation services; certain vehicle hire receipts where effective control remained with the appellant are exigible to service tax while hires under contracts transferring possession and effective control constitute deemed sale; the extended period was rightly invoked on facts of suppression; penalties are largely sustainable though the Section 77(2) penalty was quashed. The matter is remanded to the Original Authority for limited factual quantification of duty, interest, application of cum tax benefit and recalculation of the statutory penalty, with opportunity to the appellant; quantification to be completed within 90 days or such extended time as allowed.

Eligibility of input service credit under Rule 14 of CCR - parity between disallowance under Rule 14 and refund procedure under Rule 5 of CCR - nexus between input services and taxable output services (IT & ITES) - precedential effect of a Commissioner (Appeals) order in subsequent adjudication

Eligibility of input service credit under Rule 14 of CCR - parity between disallowance under Rule 14 and refund procedure under Rule 5 of CCR - nexus between input services and taxable output services (IT & ITES) - precedential effect of a Commissioner (Appeals) order in subsequent adjudication - Whether disallowance of Cenvat credit of specified input services under Rule 14 of CCR for the stated periods was justified. - HELD THAT: - The Tribunal accepted the appellant's submission that the procedural approach under Rule 14 and the refund procedure under Rule 5 of CCR are similar in nature and that conflicting outcomes under the two rules should not persist. It placed reliance on the Commissioner (Appeals) Order dated 18.09.2017, which had examined identical disallowances for the appellant for the period April 2010 to December 2015 and allowed the disputed input-service credits on the basis that such services are normally used in providing the appellant's output services (IT & ITES) and that disallowances in adjudication were made without adequate determination of eligibility. In view of that detailed appellate adjudication covering the period in dispute, the Tribunal found the impugned disallowances unsustainable and set aside the impugned orders, directing consequential benefits to the appellant in accordance with law. [Paras 7, 8]

Impugned orders disallowing input service credit under Rule 14 of CCR are set aside; appeals allowed and appellant entitled to consequential benefits.

Final Conclusion: Appeals allowed; impugned orders disallowing input-service Cenvat credit for the periods April 2010 to March 2012 and April 2012 to March 2014 are set aside in view of the Commissioner (Appeals) order which authorised the credits; appellant to receive consequential benefits as per law.

Extended period of limitation - proviso to section 73(1) of the Finance Act, 1994 - suppression of facts - wilful intent to evade payment of service tax - self-assessment regime - information disclosed in financial statements / public document - services provided to Government in discharge of sovereign/statutory function

Extended period of limitation - proviso to section 73(1) of the Finance Act, 1994 - suppression of facts - wilful intent to evade payment of service tax - self-assessment regime - information disclosed in financial statements / public document - Invocation of the extended period of limitation under the proviso to section 73(1) of the Finance Act, 1994 is not sustainable and the demand falls beyond the period of limitation. - HELD THAT: - The Tribunal applied settled principles that the proviso to section 73(1) can be invoked only where fraud, collusion, wilful misstatement, suppression of facts or contravention of the law is shown with an intent to evade tax. Mere nondisclosure in returns, difference between amounts in ST-3 and financial statements, or operation under self-assessment does not, by itself, establish the deliberate suppression or mens rea required to invoke the extended period. The adjudicating authority reproduced allegations of nondisclosure but did not record any finding of deliberate intent to evade tax; nor did it examine the ingredients necessary for invoking the proviso. The Tribunal relied on precedents holding that information available in public documents (such as balance sheets), bona fide differences of opinion on taxability, or mere failure to seek clarifications do not constitute wilful suppression. In this case the demand arose from comparison with amounts recorded in the appellant's financial statements and the show cause notice was issued after the normal limitation period; the Commissioner failed to establish the requisite deliberate suppression or intent. Applying these principles, the Tribunal concluded the extended limitation could not be invoked and therefore the demand for the periods in dispute is barred by limitation.

The impugned order is set aside and the appeal is allowed insofar as the demand falling beyond the period of limitation (periods 2016-17 and April 2017 to June 2017) is concerned.

Final Conclusion: The Tribunal set aside the original order and allowed the appeal on limitation grounds, holding that the Revenue failed to demonstrate deliberate suppression with intent to evade such as would justify invocation of the proviso to section 73(1); the demand for the specified periods is therefore barred by limitation and is quashed, with consequential relief.

Reimbursement not part of consideration - service tax liability on reimbursable expenses - setting aside interest and penalty on amounts already paid - remand for verification of turnover and payments due to clerical/typographical error - interest liability on quantified demand - no penalty on requantified amount; penalties dropped

Reimbursement not part of consideration - service tax liability on reimbursable expenses - setting aside interest and penalty on amounts already paid - Taxability and ancillary consequences of medical reimbursement receipts - HELD THAT: - The Tribunal applied the legal principle that reimbursable amounts are not part of the consideration for service and therefore not liable to service tax, relying on the decision of the Hon'ble Supreme Court in Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd. and coordinate Tribunal precedents. It was held that the appellant was not required to pay service tax on medical expense reimbursements for the periods in question. The appellant had in any event paid the tax amounts on 07.12.2011 and did not contest the tax payment; the only contention was in respect of interest and penalty. In view of the legal position on reimbursements and the factual payment, the Tribunal set aside the interest and penalty levied on the specified medical reimbursements. [Paras 7]

Service tax not leviable on the medical reimbursements; interest and penalty on those paid amounts set aside.

Remand for verification of turnover and payments due to clerical/typographical error - interest liability on quantified demand - no penalty on requantified amount; penalties dropped - Adjudication of the balance confirmed service tax demand and procedural outcome - HELD THAT: - The Tribunal found that the appellant asserted having paid service tax on the correct turnover but clerical/typographical errors in ST-3 returns may have caused discrepancies leading to the confirmed demand. The Tribunal did not decide the disputed balance on merits but remanded the matter to the adjudicating authority for limited verification of payments made vis-a -vis the turnover adopted by the Department. The adjudicating authority was directed to follow principles of natural justice, permit production of supporting documents including Chartered Accountant certificates, and to pass a considered order within four months. The Tribunal further directed that, if any demand is quantified on verification, interest would be payable in terms of Section 75 of the Finance Act, 1994, but no penalty was to be imposed on the requantified amount; all penalties under the impugned order stand dropped. [Paras 8]

Matter remanded for limited verification of turnover and payments; interest payable on any quantified demand, no penalty on requantified amount, and all penalties under the impugned order dropped.

Final Conclusion: Appeal disposed: service tax on specified medical reimbursements held not leviable and interest/penalty on those amounts set aside; remainder of demand remanded to adjudicating authority for verification of payments versus turnover with directions to follow natural justice, interest payable on any confirmed shortfall, and no penalty on requantified amount; all penalties under the impugned order dropped.

Refund of tax paid for services not provided - application of section 142(5) of the CGST Act in respect of refunds under existing law - time bar under section 11B of the Central Excise Act and its non-application - unjust enrichment - jurisdictional correctness of refund claim - entitlement to cash refund under existing law notwithstanding contrary provisions - Article 265 - absence of authority to retain tax paid when no liability exists

Jurisdictional correctness of refund claim - Claim was filed before the correct jurisdictional authority. - HELD THAT: - The original adjudicating authority framed multiple issues and decided three of them in favour of the assessee, including that the refund claim was filed before the correct jurisdictional authority. The Tribunal records and accepts that the refund claim was presented to the proper authority and there is no infirmity on jurisdictional grounds. [Paras 7, 8]

Refund claim was filed before the correct jurisdictional authority; that finding is upheld.

Refund of tax paid for services not provided - entitlement to cash refund under existing law notwithstanding contrary provisions - Refund claim in respect of service tax paid for services not provided is admissible and payable in cash under section 142(5) of the CGST Act. - HELD THAT: - Section 142(5) of the CGST Act mandates that claims filed after the appointed day for refund of tax paid under the existing law in respect of services not provided shall be disposed of in accordance with the provisions of the existing law and any amount eventually accruing shall be paid in cash, subject only to subsection (2) of section 11B of the Central Excise Act. The Tribunal held that where a contract was cancelled before service was rendered, no tax liability subsists and the refund mechanism under section 142(5) governs such claims; thus the claimant is entitled to refund in cash under existing law. [Paras 8, 9]

Refund claim is admissible and governed by section 142(5) of the CGST Act; entitlement to cash refund recognised.

Unjust enrichment - There is no unjust enrichment in respect of the refunded amounts. - HELD THAT: - The adjudicating authority had examined whether unjust enrichment arose and found none; the Tribunal accepts these findings. Because no unjust enrichment was found, the statutory safeguard in sub-section (2) of section 11B that could deny refund on that ground does not operate to withhold the refund. [Paras 8, 10]

No unjust enrichment is involved; refund cannot be denied on that ground.

Time bar under section 11B of the Central Excise Act and its non-application - application of section 142(5) of the CGST Act in respect of refunds under existing law - Article 265 - absence of authority to retain tax paid when no liability exists - The one-year limitation in sub-section (1) of section 11B of the Central Excise Act cannot be invoked to reject the refund claim filed under section 142(5) of the CGST Act; consequently the refund cannot be refused on the ground of time bar. - HELD THAT: - The Tribunal analysed section 142(5), which preserves disposal under existing law but expressly excludes the applicability of sub-section (1) of section 11B's time bar by providing that refunds shall be made 'notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B'. The contract was cancelled before any service was rendered so no tax liability subsisted; retention of amounts paid when there is no liability would be impermissible under Article 265. Relying on precedents applying the principle that limitation under section 11B does not bar refunds where payment was not a valid liability, the Tribunal held that the time-limit provision in section 11B(1) could not be invoked to defeat the refund claim filed under section 142(5). [Paras 9, 11, 13]

Section 11B(1) time bar is not applicable to the refund claim filed under section 142(5) of the CGST Act; the refund cannot be rejected on limitation grounds.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal: the refund claim filed under section 142(5) of the CGST Act is admissible, was filed before the correct authority, involves no unjust enrichment, and cannot be rejected on the ground of the one year time bar in section 11B(1) of the Central Excise Act; consequently the appellant is entitled to the refund.

Exemption from service tax for services to SEZ developers and units - overriding effect of the SEZ Act over other laws - prescribed means prescribed by rules under the SEZ Act - redundancy of exemption notifications where charging section is overridden - refund of amounts paid where there is no legal charge to levy tax - non-application of statutory interest provisions where the charging statute does not apply

Exemption from service tax for services to SEZ developers and units - overriding effect of the SEZ Act over other laws - prescribed means prescribed by rules under the SEZ Act - redundancy of exemption notifications where charging section is overridden - refund of amounts paid where there is no legal charge to levy tax - Appellant entitled to refund of service tax paid on input services received through ISD invoices for authorised operations of the SEZ unit. - HELD THAT: - The SEZ Act (section 26 read with rule 31 of the SEZ Rules) grants exemption from service tax for taxable services provided to developers and units for authorised operations, and section 51 gives the SEZ Act overriding effect over inconsistent provisions in other laws. The word "prescribed" in section 26(2) is defined to mean rules made under the SEZ Act, and the terms and conditions for exemption are those set out in the SEZ Rules (not conditions in notifications issued under the Finance Act). Where the SEZ Act overrides the charging provisions of the Finance Act, there is no legal authority to levy service tax on services for authorised SEZ operations; amounts paid as service tax (whether directly by service providers or indirectly via ISD invoices) are therefore deposits and refundable. Consequently, exemption notifications and their conditions under the Finance Act are redundant in the context of SEZ authorised operations and need not be satisfied for entitlement to refund. [Paras 22, 24, 31, 32, 34]

Refunds claimed in the eight applications must be sanctioned and paid.

Non-application of statutory interest provisions where the charging statute does not apply - overriding effect of the SEZ Act over other laws - Appellant not entitled to interest under the service-tax interest provision (section 11BB as applied) on the refunds. - HELD THAT: - Because the Tribunal held that the charging provisions of the Finance Act do not apply to services for authorised SEZ operations by virtue of section 26 of the SEZ Act and its overriding effect under section 51, the statutory machinery and consequential provisions of the Finance Act (including the provisions for interest on delayed refunds) are not applicable. In that legal matrix, entitlement to interest under the Finance Act cannot be sustained where the levy itself does not apply. [Paras 36]

No interest is payable on the refunds.

Final Conclusion: All eight refund claims are allowed and refunds to the appellant must be paid; claims for interest on those refunds are rejected because the SEZ Act overrides the charging provisions of the Finance Act, rendering the service-tax levy (and consequential interest provisions) inapplicable.

Refund of service tax on export of services - nexus between input services and exported output services - eligibility for refund of input service tax credit - entitlement to consequential relief on allowing appeal

Nexus between input services and exported output services - refund of service tax on export of services - eligibility for refund of input service tax credit - Whether the partial rejection of refund claimed in respect of various input services for the period April 2011 to September 2011 was justified for want of nexus with the exported output services. - HELD THAT: - The Tribunal reviewed the rival contentions and the case law relied upon by the appellant concerning the connection between the input services listed (including travel, banking and financial services, business support, professional and consulting services, courier, customs house agent services, insurance, facility management, maintenance and repair, rent-a-cab and telecommunication services) and the exported output services. Having considered the facts and the authorities placed before it, the Tribunal concluded that the impugned order erred in rejecting part of the refund on the ground of absence of nexus. On that basis the Tribunal allowed the appeal and set aside the impugned Order-in-Original rejecting the refund, holding that the appellant is entitled to the relief claimed subject to consequential adjustments in accordance with law.

Appeal allowed; impugned order set aside and the appellant entitled to the rejected portion of refund with consequential benefits as per law.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order which had partially rejected the refund for lack of nexus between the input services and exported output services for April 2011 to September 2011, and directed that the appellant be granted consequential benefits in accordance with law.

Limitation for filing appeal under section 85(3A) of the Finance Act - condonation of delay - circumscribed discretion of the appellate authority - time-barred appeals - pari materia with section 35 of the Central Excise Act, 1944

Limitation for filing appeal under section 85(3A) of the Finance Act - condonation of delay - circumscribed discretion of the appellate authority - time-barred appeals - pari materia with section 35 of the Central Excise Act, 1944 - Appeal was barred by limitation and the Commissioner (Appeals) correctly dismissed it for delay because the proviso to section 85(3A) permits condonation only for a further one month beyond the initial two months. - HELD THAT: - The Tribunal examined sub-section (3A) of section 85 and held that an appeal must be presented within two months from receipt of the adjudicating authority's order; the proviso permits the Commissioner (Appeals) to allow presentation within a further period of one month only if satisfied that the appellant was prevented by sufficient cause from presenting the appeal within two months. The discretion to condone delay is therefore strictly circumscribed by that proviso and cannot extend beyond the additional one-month period. Applying these principles to the facts, the order of the adjudicating authority was received on 06.01.2017 while the appeal was filed on 27.12.2017, which was neither within the initial two-month period nor within the further one-month extended period. Reliance on the Supreme Court decision in Singh Enterprises, interpreting the identical proviso in section 35 of the Central Excise Act, 1944, was accepted: the proviso limits the period for condonation and the appellate authority has no power to allow appeal beyond that further period. Consequently, the Commissioner (Appeals) was justified in dismissing the appeal as barred by limitation. [Paras 6, 7, 8, 9]

Appeal dismissed as time-barred; condonation beyond the one-month extension under the proviso to section 85(3A) could not be allowed.

Final Conclusion: The Tribunal dismissed the appeal, upholding the Commissioner (Appeals)'s order that the appeal was barred by limitation and that the proviso to section 85(3A) permits condonation only for the further one-month period beyond the initial two months.

Principle of mutuality - Taxability of services provided to members - Management, maintenance or repair service - Invalidation of club or association levy as ultra vires - Liability under Section 73(2) of the Finance Act

Principle of mutuality - Taxability of services provided to members - Management, maintenance or repair service - Liability under Section 73(2) of the Finance Act - Whether the amounts received by the society from its residents for supply of water and maintenance of water filtration, lifting and storage system are exigible to service tax and consequent liability for interest and penalty - HELD THAT: - The Tribunal held that services supplied by the society to its members fall within the scope of the principle of mutuality and are not taxable as services rendered to members. The Tribunal applied and followed precedents including the Gujarat High Court in Sports Club of Gujarat Ltd., the Jharkhand High Court in Ranchi Club Ltd., and its own decisions (including Federation of Indian Chambers of Commerce & Industry and the Principal Bench in Commissioner of Service Tax, Delhi v. DLF Golf Resorts Ltd.) which concluded that services provided to members are not exigible under the club/association category and that provisions purporting to levy such tax were declared ultra vires. Relying on those decisions, the Tribunal concluded that there are no operative legislative provisions to justify levying service tax on services provided to members under the facts of this case, and consequently the demand under Section 73(2) of the Finance Act could not be sustained. As a corollary, the Tribunal held that interest under Section 75 and penalty under Section 78 could not be sustained where the primary demand was not exigible. [Paras 5, 6, 7, 8]

Demand of service tax confirmed by lower authorities set aside; consequential interest and penalty held not sustainable and appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, setting aside the demand for service tax relating to supply and maintenance of water to residents for November, 2012 to August, 2013, and held that consequent interest and penalty are not sustainable.

Proof of service - service by speed post - service on employee of the assessee - computation of limitation from date of receipt - remand for decision on merits after opportunity of hearing

Proof of service - service by speed post - service on employee of the assessee - computation of limitation from date of receipt - Whether the Order in Original dated 30.7.2020 was validly served so as to commence limitation for filing appeal before the Commissioner (Appeals) - HELD THAT: - The Tribunal held that mere dispatch by speed post does not constitute proof of service in the absence of evidence of receipt by the assessee; proof of dispatch/receipt is mandatory. Although speed post is a recognised mode of service, issuance or dispatch alone cannot be equated with service under the statutory scheme. The order was also delivered to an employee of the appellant who deposed by affidavit that he did not bring the notice to the attention of the appellant and the partner corroborated that the Order in Original never came to the appellant's notice. In those circumstances the Tribunal concluded that the Order in Original did not effectively come to the notice of the appellant until receipt of the recovery notice on 23.2.2023, and the appeal filed thereafter was within the period of limitation reckoned from actual receipt. [Paras 8, 9]

Findings of service and computation of limitation made by the Commissioner (Appeals) were set aside; the Order in Original was not proved to have been served on the appellant for purposes of limitation.

Remand for decision on merits after opportunity of hearing - Appropriate remedy to be provided in view of defective service and timely filing on receipt of knowledge - HELD THAT: - The Tribunal determined that, having set aside the finding on service and limitation, the appeal should not be rejected at the threshold but adjudicated on merits. The matter was remitted to the Commissioner (Appeals) with a direction to afford the appellant a reasonable opportunity of personal hearing and decide the appeal on merits. The Commissioner (Appeals) was directed to decide the remitted appeal within four months from receipt of the Tribunal's order. [Paras 10]

Appeal remanded to the Commissioner (Appeals) for fresh adjudication on merits after giving reasonable opportunity of hearing; decision to be rendered within four months.

Final Conclusion: The appeal is allowed by way of remand: the finding of service and consequent limitation bar was set aside and the matter is remitted to the Commissioner (Appeals) to decide the appeal on merits after providing a reasonable opportunity of hearing within four months.

Finality of judicial decisions and bar on reopening concluded matters - effect of a subsequent overruling decision on past decisions which have attained finality - res judicata / nemo debet bis vexari - Explanation to Order XLVII Rule 1 CPC - prohibition on reopening a judgment in light of a subsequent judgment - recoverability of refunds of Education Cess and Secondary & Higher Education Cess made pursuant to a binding Supreme Court decision

Effect of a subsequent overruling decision on past decisions which have attained finality - recoverability of refunds of Education Cess and Secondary & Higher Education Cess made pursuant to a binding Supreme Court decision - finality of judicial decisions and bar on reopening concluded matters - Whether revenue could issue show-cause/demand/recovery notices to recover Education Cess and Secondary & Higher Education Cess refunded earlier to assessees pursuant to a then-binding Supreme Court decision which was subsequently overruled. - HELD THAT: - The Court held that where a refund of the cesses was made to assessees pursuant to a Supreme Court judgment that was binding and had attained finality for the parties, a subsequently rendered contrary decision overruling that earlier judgment does not entitle the revenue to reopen and recover amounts from those past decisions. The reasoning follows the Supreme Court order of 04.07.2022 which explained that reopening earlier final decisions in light of a later overruling would defeat finality of litigation, contravene the maxims nemo debet bis vexari and interest reipublicae ut sit finis litium, and offend the principle embodied in the Explanation to Order XLVII Rule 1 CPC. Consequently, recovery notices issued to compel return of the refunded cesses, where refunds had been made pursuant to the earlier binding decision, cannot be sustained. [Paras 3, 4]

Impugned show-cause/demand/recovery notices directed to recover the refunded cesses are quashed and set aside.

Final Conclusion: Writ petitions allowed; recoveries sought by respondent No.4 in respect of Education Cess and Secondary & Higher Education Cess refunded pursuant to an earlier binding Supreme Court decision are impermissible where those refunds had attained finality, and the connected recovery notices are quashed. No order as to costs.

Admissibility of third-party statements - requirement of corroborative tangible evidence for third-party statements - primacy of documentary evidence over oral testimony - burden on revenue to prove non-receipt of inputs - identification of nature of scrap from panchnama and photographs - Cenvat credit entitlement where inputs are recorded in RG 23A registers - recovery under Rule 14 of CENVAT Credit Rules read with Section 11A(1) of the Central Excise Act

Admissibility of third-party statements - requirement of corroborative tangible evidence for third-party statements - burden on revenue to prove non-receipt of inputs - Whether the departmental case built largely on statements of brokers, transporters and third parties sufficed to establish non-receipt/diversion of duty paid inputs so as to sustain recovery under the show cause notice. - HELD THAT: - The Tribunal upheld the learned Commissioner's conclusion that the statements of brokers, vehicle owners, transporters and authorised persons are not by themselves sufficient to prove non receipt or diversion of inputs in absence of corroborative tangible evidence. The adjudicating authority formed an opinion under the statutory scheme (including the operation of section 9D procedures) that these statements could not be relied upon without independent corroboration; that opinion was not challenged by the department. The record showed that no independent investigation was carried out at the premises of alleged recipients (re rolling mills) and that brokers' statements contained contradictions and were not supported by brokers' own records. In that factual matrix, the Tribunal applied settled principles that the burden lies on Revenue to establish non receipt of inputs by adequate evidence and that uncorroborated third party statements cannot displace documentary proof of receipt.

The departmental reliance on third party statements was held insufficient; the learned Commissioner's rejection of those statements for want of corroboration was upheld and the demand could not be sustained on that basis.

Primacy of documentary evidence over oral testimony - Cenvat credit entitlement where inputs are recorded in RG 23A registers - Whether statutory registers and documentary records evidencing receipt and utilisation of inputs merit primacy over adverse oral statements and justify allowance of Cenvat credit. - HELD THAT: - The Tribunal endorsed the Commissioner's conclusion that documentary evidence - notably RG 23A Part I records showing receipt and utilisation of inputs, invoices issued by ship breakers and other statutory registers - must be given due weight, absent proof that such records were fabricated or manipulated. The Tribunal relied on consistent precedents and reasoning that where voluminous and contemporaneous documentary evidence supports receipt of inputs, conflicting oral statements of third parties ought to be treated with caution and cannot solely overturn the documentary record. Consequently, where the documentary registers remain unchallenged and unchecked for fraud, entitlement to Cenvat credit cannot be negatived merely on the basis of oral allegations.

Documentary records showing receipt and utilisation of inputs were held to outweigh uncorroborated oral statements; Cenvat credit entitlement was sustained.

Identification of nature of scrap from panchnama and photographs - requirement of corroborative tangible evidence for third-party statements - Whether the panchnama and photographs seized at the search and the panchas' apparent lack of recorded expertise sufficed to conclude that bazaar (non excisable) scrap was being used to replace duty paid inputs. - HELD THAT: - The Tribunal agreed with the Commissioner that photographs alone did not permit reliable identification of the nature of scrap and that the panchnama did not establish the panchas' expertise or working experience to qualify as experts for that purpose. The mere presence of some bazaar scrap, and admission by the assessee of occasional purchases of bazaar scrap, did not support an inference that all disputed consignments were not received. In the absence of quantified identification of the seized material and in the absence of expert opinion or other corroborative material, the Tribunal found that the panchnama and photographs could not form a reliable basis for displacing the documentary evidence of receipt.

Findings based on the panchnama/photographs and the panchas' opinion were held inadequate to prove substitution of bazaar scrap for duty paid inputs; those materials could not sustain the demand.

Final Conclusion: The Tribunal upheld the Commissioner's order dropping the show cause notice. On the facts - uncorroborated third party statements, deficiencies in the panchnama evidence, and unchallenged documentary records (RG 23A, invoices) demonstrating receipt and utilisation of inputs - the departmental demand for recovery of Cenvat credit was liable to be dismissed and the revenue appeals were dismissed.

By-product - manufacture requirement for exempted goods - Cenvat Credit Rule 6 - obligation of a manufacturer and options for reversal - Explanation 1 to Rule 6(1) - non-excisable goods cleared for a consideration deemed as exempted goods - reversal of credit under Rule 6(3) - CBEC manual para 3.7 - admissibility of Cenvat on inputs contained in by-products

By-product - manufacture requirement for exempted goods - Explanation 1 to Rule 6(1) - non-excisable goods cleared for a consideration deemed as exempted goods - Cenvat Credit Rule 6 - obligation of a manufacturer and options for reversal - CBEC manual para 3.7 - admissibility of Cenvat on inputs contained in by-products - Sulphuric acid produced incidentally during smelting is a by-product and not a manufactured exempted good for the purpose of Rule 6 of the Cenvat Credit Rules, 2004; therefore demands under Rule 6(3) based on Explanation 1 cannot be sustained. - HELD THAT: - The Tribunal held that Rule 6(1) requires that the manufacturer must manufacture exempted goods; Explanation 1 inserted w.e.f. 01.03.2015 deems certain non-excisable goods cleared for consideration to be "exempted goods" but did not amend sub-rule (1) to treat goods that merely emerge incidentally in a manufacturing process as goods "manufactured" by the assessee. Sulphuric acid in the present facts is an incidental by-product arising unavoidably in the process of manufacturing copper products and therefore is not a manufactured exempted good within the meaning of Rule 6. The Tribunal relied on the established principle that inputs contained in waste, refuse or by-products do not attract denial of Cenvat (as reflected in CBEC manual para 3.7) and that where a product is a by-product, demand under Rule 6 will not sustain. On that basis the demand premised on Explanation 1 and the Board circular was held unsustainable. [Paras 11, 12, 13, 14]

Demand under Rule 6(3) in respect of sulphuric acid as an "exempted good" cannot be sustained because sulphuric acid is a by-product and not a manufactured exempted product within Rule 6.

Cenvat Credit Rule 6 - obligation of a manufacturer and options for reversal - reversal of credit under Rule 6(3) - Disposition of the appeals arising from demands under Rule 6 for the stated periods. - HELD THAT: - Applying the above conclusion to the appeals for the periods March 2015 to July 2015, August 2015 to May 2016 and June 2016 to June 2017, the Tribunal found the department's reliance on Explanation 1 and the Board circular insufficient to sustain the confirmed demands. Consequently, the Tribunal allowed the assessee's appeals and dismissed the department's appeal/cross-objection in respect of the contested demands. [Paras 15]

Assessee's appeals allowed and revenue's appeal dismissed; cross-objection disposed of.

Final Conclusion: The Tribunal held that sulphuric acid recovered incidentally during copper smelting is a by-product and not a manufactured exempted good under Rule 6; Explanation 1 to Rule 6(1) and the related Board circular do not support reversal of Cenvat in these facts. Accordingly, demands under Rule 6(3) for the periods March 2015 to July 2015, August 2015 to May 2016 and June 2016 to June 2017 were not sustained; the assessee's appeals were allowed and the revenue's appeal dismissed.

Extended period of limitation under Section 11A(4) of the Central Excise Act - suppression of facts with wilful intent to evade payment of duty - revenue neutrality - Cost Accounting Standard (CAS-4) - exclusion of abnormal/non recurring costs from cost of production

Extended period of limitation under Section 11A(4) of the Central Excise Act - suppression of facts with wilful intent to evade payment of duty - revenue neutrality - Whether the extended period of limitation under Section 11A(4) could be invoked against the appellant for non payment of excise duty on the additional levy directed by the Supreme Court - HELD THAT: - The Tribunal examined the show cause notice and the material on record and held that invocation of the extended five year period requires proof of deliberate suppression of facts accompanied by an intent to evade payment of duty. Reliance was placed on authoritative decisions establishing that mere omission or difference of opinion does not amount to suppression warranting the extended period. The appellant had a bona fide belief - supported by CAS 4 principles and CBEC guidance - that the additional levy was not includable in cost of production, and there was no allegation or proof that this belief was accompanied by a wilful intention to evade duty. Further, the coal was supplied to an affiliated unit which had paid duty using CENVAT credit and PLA, so any additional duty would have been available as CENVAT credit to the related plant, rendering the position revenue neutral. Where a situation is revenue neutral, an intention to evade cannot reasonably be inferred. In the absence of an allegation and proof of wilful suppression with intent to evade, the requirements for invoking Section 11A(4) were not satisfied and the extended period could not be lawfully relied upon to sustain the demand. [Paras 25, 36, 37, 38, 42]

Invocation of the extended period under Section 11A(4) was unsustainable; the demand confirmed by the Commissioner is set aside.

Final Conclusion: The order of the Commissioner dated 28.11.2017 confirming the excise demand (purportedly under the extended period) is set aside and the appeal is allowed.

Metallization as manufacture - Cenvat credit - deemed manufacturing status under Section 2(f) - manufactured good under Section 2(f)

Metallization as manufacture - Cenvat credit - captively consumed intermediate goods - Whether the process of making electronic capacitor grade metallised dielectric plastic film (MPP film) from plain plastic film amounted to manufacture during the relevant period and, consequently, whether Cenvat credit availed by the appellant was admissible. - HELD THAT: - The Tribunal held that the question whether metallization amounts to manufacture was no longer res integra and, on the facts and comparable decisions, the metallization process produced a new product (MPP film) and therefore amounted to manufacture. It noted Coordinate Bench decisions (Paper Products Ltd.; Dhruv Industries Ltd.) which, under similar facts, distinguished the Apex Court's decision in Metalex and found that metallised films are materially different from plain plastic films, involved substantial machinery and processes, and result in a new product. The Tribunal also observed that the Apex Court in Dhruv affirmed the Tribunal's conclusion. On this basis the Tribunal concluded that MPP film is a manufactured good and, once the process is treated as manufacture, Cenvat credit availed on inputs and capital goods could not be denied for the period in question. [Paras 7, 9]

The process of making capacitor-grade MPP film from plain plastic film amounted to manufacture for April 2005 to February 2006 and the appellant is entitled to the Cenvat credit that had been disallowed.

Deemed manufacturing status under Section 2(f) - manufactured good under Section 2(f) - Whether the later insertion of a chapter note deeming metallization to be manufacture (with effect from 01.03.2006) precluded treating metallization as manufacture for periods prior to that insertion. - HELD THAT: - The Tribunal rejected the revenue's reliance on the post-facto deeming provision (Chapter Note 16 to Chapter 39 effective 01.03.2006) as determinative of the pre existing legal character of the process. It held that the deeming provision does not alter the substantive scope of Section 2(f) so as to prevent an independent examination of whether a process amounts to manufacture. Thus absence of a specific chapter note prior to 01.03.2006 did not preclude treating metallisation as manufacture under Section 2(f) on its own merits. [Paras 8, 9]

The post insertion deeming provision did not negate the possibility of treating metallization as manufacture prior to 01.03.2006; metallization may be a manufactured process under Section 2(f) on its merits.

Final Conclusion: Appeal allowed; impugned order set aside. The process of making capacitor grade MPP film from plain plastic film during April 2005 to February 2006 is held to be manufacture and the appellant is entitled to the Cenvat credit disallowed by the impugned order, with consequential benefits in accordance with law.

Substantial compliance - partnership retirement and liability for firm's tax dues - notification under Rule 5(8) of the KGST Rules - departmental knowledge and estoppel - relegation to statutory alternative remedy

Substantial compliance - notification under Rule 5(8) of the KGST Rules - departmental knowledge and estoppel - Whether the appellant, having executed and submitted a retirement deed and whose retirement was acted upon by the Department, could be proceeded against for the firm's tax liability for assessment year 2002-2003 despite non submission of Form No. 3 prescribed under Rule 5(8) of the KGST Rules. - HELD THAT: - The Court found as fact that the retirement deed showing the appellant's retirement with effect from 17.10.2000 was received by the Department and that the Department, by its conduct in parallel penalty and assessment proceedings, treated the appellant as having ceased to be a partner. The principle of substantial compliance, as recognised in the authorities relied upon by the appellant, requires that where the substance and object of a statutory provision are satisfied and no prejudice is caused to the revenue, a mere non observance of formal or directory procedure may be overlooked. Applying that principle, and having regard to the Department's acceptance of the retirement deed and its subsequent actions (including not showing the appellant as a partner in penalty proceedings and recognising the incoming partner in assessments), the Court held that the object of Rule 5(8) was met in the facts of this case. Consequently the Department could not validly proceed against the appellant for realisation of the firm's tax dues for the stated period. The Court further held that since these factual aspects were undisputed, relegation to the alternate statutory remedy was unnecessary and relief under Article 226 was appropriate. [Paras 3, 5, 7]

The challenge to the assessment orders and recovery notices was allowed insofar as they related to the appellant, on the basis that the retirement deed received by the Department constituted substantial compliance with the object of Rule 5(8) and precluded proceeding against the appellant for the firm's tax liability for assessment year 2002-2003.

Relegation to statutory alternative remedy - Whether the learned Single Judge was right to dismiss the writ petition and direct the appellant to pursue the alternative statutory remedy of appeal. - HELD THAT: - The Court held that where material facts are admitted and the Department's own conduct demonstrates knowledge of those facts, relegation to an alternative remedy is unnecessary. Because the factual basis (receipt of the retirement deed and the Department's subsequent treatment of the appellant) was not in dispute, the High Court was justified in entertaining and deciding the writ petition rather than directing pursuit of the appellate remedy. [Paras 4, 7]

The Single Judge's refusal to decide the writ on merits and direction to pursue the alternative statutory remedy was set aside; the writ was entertained and allowed on the merits as to the appellant.

Final Conclusion: Writ appeal allowed; impugned assessment orders and revenue recovery notices set aside insofar as they pertain to the appellant, on the ground that the retirement deed accepted by the Department constituted substantial compliance with the object of Rule 5(8) and precluded liability for the firm's tax dues for assessment year 2002-2003; the Single Judge's order relegating the appellant to the appellate remedy was set aside.

Offence under Section 138 of the Negotiable Instruments Act - Presumption under Section 139 of the Negotiable Instruments Act and rebuttal on preponderance of probabilities - Effect of seizure/attachment/blocking of bank account on drawer's liability under Section 138 - Proviso to Section 138 - requirement of notice and 15 days for payment - Section 140 - defence excluding lack of reason to believe cheque may be dishonoured - Dishonour arising from 'payment stopped' or 'account closed'-liability under Section 138 - Security cheque defence - misuse and its insufficiency to negate liability under Section 138

Effect of seizure/attachment/blocking of bank account on drawer's liability under Section 138 - Dishonour arising from 'payment stopped' or 'account closed'-liability under Section 138 - Whether seizure/attachment of the drawer's bank account by Court/competent authority absolves the drawer from criminal liability under Section 138 when cheques are dishonoured. - HELD THAT: - The Court examined authorities which hold that dishonour on grounds of account closure or stop payment falls within the ambit of insufficient funds and attracts Section 138, while acknowledging decisions that an account truly beyond the drawer's control (e.g., post-IBC appointment of IRP) may differ. On the facts, the bank statement showed that the account never had sufficient funds to honour the cheques either before or after seizure; the account balance was minimal at the time of seizure and the maximum balance recorded earlier was far below the cheque amounts. There was no evidence that the drawer attempted to obtain release of the seizure or otherwise secure funds or an arrangement with the banker. The Court therefore held that mere assertion of seizure does not automatically exonerate the drawer if the account lacked sufficient funds at all relevant times and no credible steps were taken to make payment; consequently the legal position that stoppage/closure/attachment does not per se preclude prosecution under Section 138 applies here. [Paras 25, 32, 33, 36, 40]

Seizure/attachment of the account did not absolve the petitioner where the account never had sufficient funds and no steps were shown to procure release or payment; Section 138 remains attracted.

Presumption under Section 139 of the Negotiable Instruments Act and rebuttal on preponderance of probabilities - Section 140 - defence excluding lack of reason to believe cheque may be dishonoured - Whether the petitioner successfully rebutted the statutory presumption that the cheques were issued for discharge of any debt or liability. - HELD THAT: - The Court recited the statutory presumptions under Sections 118 and 139 and the settled authorities that the presumption of a legally enforceable debt is rebuttable on the basis of preponderance of probabilities. The accused must raise a probable defence supported by credible material; the standard is not beyond reasonable doubt. Here, the petitioner admitted signatures but relied on account seizure and asserted non-receipt of notice and misuse of cheques. The evidence on record (bank statements and banker testimony) showed insufficiency of funds and no evidence was led by the petitioner to show that, at presentation, there were sufficient funds or that the stoppage was for reasons other than paucity of funds. Section 140 also precludes the defence that drawer had no reason to believe the cheque might be dishonoured. Consequently, the presumption stood unrebutted on the material before the Court. [Paras 21, 22, 23, 42, 43]

Petitioner failed to rebut the presumption under Section 139; the statutory presumption remains and supports conviction under Section 138.

Proviso to Section 138 - requirement of notice and 15 days for payment - Offence under Section 138 of the Negotiable Instruments Act - Whether non-receipt of the statutory notice by the petitioner (due to custody) vitiated proceedings under the proviso to Section 138. - HELD THAT: - The Court considered the proviso's protective object and Supreme Court precedent which permits a drawer who claims non-receipt of notice to make payment within 15 days of receipt of summons; statutory presumptions of service by registered post apply. In this case, legal notice was sent by registered post to the drawer's address and postal receipts were on record. The petitioner, though in custody, did not, upon first production, offer payment within 15 days of summons nor did he seek to show that he was prevented from making payment; no application was made to the trial court to contend non-service or to seek relief. On these facts the absence of direct service upon the jail did not excuse compliance with the proviso. [Paras 37, 44, 45, 46, 47]

Non-receipt of the notice by the petitioner in custody did not vitiate prosecution where notice was sent by registered post, no payment was made within 15 days of summons and no steps were taken to rely on non-service defensive remedy.

Security cheque defence - misuse and its insufficiency to negate liability under Section 138 - Offence under Section 138 of the Negotiable Instruments Act - Whether the allegation that the cheques were given as security and were misused by the complainant absolves the drawer from criminal liability under Section 138. - HELD THAT: - The Court noted the complainant's testimony that the cheques were filled in by the accused and that particulars were not filled by the complainant. Even if cheques were intended as security, settled authority and reasoning indicate that dishonour of a security cheque may still attract Section 138 because a security cheque is an acknowledgement of liability and may be used to discharge that liability. The petitioner produced no credible evidence to show misuse sufficient to probabilise a defence. [Paras 7, 50]

Claim of security cheque and alleged misuse did not rebut the presumption or absolve the petitioner; defence was insufficient and conviction under Section 138 stands.

Final Conclusion: All twelve revision petitions are without merit and are dismissed; the convictions and sentences recorded by the courts below are upheld (subject to the appellate modification noted in the record concerning default imprisonment).