TaxTMI Updates e-Newsletter
Dec 01,2022

Refund of accumulated input tax credit - lapse of input tax credit - requirement to consider material on record - administrative notification and clarificatory circular - judicial precedent - unreasoned order - remand for fresh consideration

Refund of accumulated input tax credit - lapse of input tax credit - administrative notification and clarificatory circular - judicial precedent - requirement to consider material on record - unreasoned order - The impugned orders rejecting the petitioner's refund claim were unreasoned for failing to consider the petitioner's pleadings, documents, the notification and circular relied upon, and the judicial precedent cited. - HELD THAT: - The Court found that the adjudicating authority and the Appellate Authority did not properly consider or appreciate the material produced by the petitioner - including stock details, the Chartered Accountant's certification, the Notification dated 26.07.2018 and the clarified Circular dated 24.08.2018 - nor did the adjudicating authority give cogent reasons for declining to follow the judgment relied upon by the petitioner. For these deficiencies the impugned orders are held to be unreasoned. The defect is decisive because it deprived the petitioner of an evaluative decision on whether the input tax credit relating to stock not cleared as on 31.07.2018 would lapse or be refundable, a question the petitioner had specifically pleaded and supported with documents. In consequence, the Court concluded that the orders must be set aside and the matter reconsidered afresh in accordance with law.

Impugned orders set aside as unreasoned for failure to consider relevant pleadings, documents, notifications, circulars and precedent.

Remand for fresh consideration - requirement to consider material on record - The claim for refund is remitted to the adjudicating authority for fresh consideration in accordance with law, with liberty to the petitioner to produce additional pleadings and documents and a direction to decide expeditiously. - HELD THAT: - Considering the failure to evaluate the materials relied upon by the petitioner, the Court ordered that the matter be remitted to respondent No.4 (the adjudicating authority) for fresh adjudication. The authority is directed to reconsider the refund claim bearing in mind the petitioner's pleadings, documents, judgments and the observations made by the Court, and to proceed in accordance with law. The Court also expressly granted the petitioner liberty to file additional pleadings and documents before the adjudicating authority, which is obliged to consider them. The Court imposed a time-bound direction that the authority decide the matter as expeditiously as possible and, in any event, within three months from receipt of the order.

Matter remitted to adjudicating authority for fresh consideration; petitioner granted liberty to file additional materials; adjudication to be completed within three months.

Final Conclusion: Writ petition allowed; the orders rejecting the refund claim are set aside and the matter remitted to the adjudicating authority for fresh consideration in accordance with law, with liberty to the petitioner to produce additional material and a direction to decide the claim within three months.

Reopening of assessment u/s 147 - validity of second show cause notice - Section 129 as permits to continue with the earlier proceedings in case of change of the AO - Appellant feeling aggrieved and dissatisfied with the impugned judgment of High Court has not only quashed and set aside the reopening of the assessment but has also quashed and set aside the Assessment Order for the A.Y. 2008-09 - HELD THAT:- Section 129 of the Act permits to continue with the earlier proceedings in case of change of the Assessing Officer from the stage at which the proceedings were before the earlier AO - In that view of the matter, as such, fresh show cause notice dated 18.01.2016 was not at all warranted and/or required to be issued by the subsequent Assessing Officer. Still, for whatever reason, the subsequent Assessing Officer issued the fresh notice on dated 18.01.2016 which, as observed hereinabove, was not warranted and/or required at all. Section 129 of the Act is very clear.

The subsequent issuance of the notice cannot be said to be dropping the earlier show cause notice as observed and held by the High Court. The reasons to reopen the assessment for the A.Y. 2008-09 were already furnished after the first show cause notice which ought to have been considered by the High Court. However, the High Court has considered the reasons recorded after the second show cause notice which was not required to be considered at all.

The finding recorded by the High Court that the subsequent notice dated 18.01.2016 can be said to be barred by limitation is unsustainable.

It is required to be noted that the Assessment Order is passed on the basis of the first notice dated 23.03.2015 and not on the basis of the notice dated 18.01.2016.

Under the circumstances and in view of the above factual aspect, the High Court has erred in quashing and setting aside the reopening of the assessment for the A.Y. 2008-09. The impugned judgment and order passed by the High Court holding so is unsustainable and the same deserves to be quashed and set aside.

the impugned judgment and order passed by the High Court is set aside. - Decided in favor of Revenue

Stay of demand pending appeal - Deposit of twenty per cent of disputed demand - Grant of stay on lesser deposit in appropriate cases - Prima facie case, balance of convenience and irreparable injury - Non speaking order - Personal hearing before adjudication of stay - Prohibition on coercive action pending adjudication

Stay of demand pending appeal - Deposit of twenty per cent of disputed demand - Grant of stay on lesser deposit in appropriate cases - Requirement of deposit of twenty per cent of disputed tax demand is not an absolute pre requisite for grant of stay of recovery pending first appeal. - HELD THAT: - The Court held that the condition in the Office Memoranda prescribing payment of twenty per cent of the disputed demand as a condition for putting recovery in abeyance is not mandatory in all cases and can be relaxed in appropriate circumstances. The Office Memorandum itself recognises illustrative exceptions (for example, where a similar addition has been deleted in earlier years or where binding judicial decisions favour the assessee). The Supreme Court's decision in PCIT v. M/s LG Electronics India Pvt. Ltd. was noted as authority that tax authorities may, on the facts of a case, grant stay on deposit of an amount lesser than twenty per cent. Accordingly, the twenty per cent requirement is directory and subject to case by case relaxation. [Paras 7]

The pre condition of deposit of twenty per cent of the disputed demand is not mandatory; stay may be granted on lesser deposit in appropriate cases.

Non speaking order - Prima facie case, balance of convenience and irreparable injury - Personal hearing before adjudication of stay - Prohibition on coercive action pending adjudication - Impugned stay orders were non reasoned for failing to consider the petitioner's contentions and the three basic principles; therefore the stay applications required fresh adjudication with opportunity of personal hearing, and coercive action was restrained until fresh decision. - HELD THAT: - The Court found that both the Assessing Officer and the Commissioner of Income Tax passed non speaking orders when dismissing the petitioner's stay applications and did not address the petitioner's submissions nor apply the requisite judicial/administrative principles of prima facie case, balance of convenience and irreparable injury. For these reasons the impugned orders and notices were set aside and the matter remanded to the Commissioner of Income Tax for fresh adjudication of the stay applications. The Commissioner was directed to grant a personal hearing to the authorised representative of the petitioner before deciding the stay application. Meanwhile, the respondents were restrained from taking coercive action pursuant to the demands arising out of the impugned orders until the stay applications are decided. [Paras 8, 9, 10]

Impugned non reasoned orders set aside; stay applications remanded for fresh decision after personal hearing; no coercive action until decision.

Final Conclusion: Impugned orders directing payment of twenty per cent and rejecting stay were set aside; matters remanded to the Commissioner of Income Tax for fresh adjudication of the stay applications after granting personal hearing, and respondents restrained from taking coercive action pending that decision.

Remedial/beneficial statute - purposive and liberal interpretation - unit for settlement is an appeal, writ petition or SLP (and not the assessment year) - disputed tax to be computed per appeal/deemed appeal - deemed appeal - interpretation of CBDT FAQs in light of statute and rules

Unit for settlement is an appeal, writ petition or SLP (and not the assessment year) - disputed tax to be computed per appeal/deemed appeal - deemed appeal - interpretation of CBDT FAQs in light of statute and rules - An assessee is free to settle any appeal, writ petition or SLP under the Direct Tax Vivad se Vishwas Act, 2020 and is not required to settle all pending appeals filed by the revenue for the same assessment year. - HELD THAT: - The Court held that DTVSV Act is a remedial/beneficial statute to reduce pendency and provide certainty and therefore calls for purposive and liberal interpretation (paras 29-31). The statutory language treats each appeal, writ petition or SLP as a separate dispute for computation of disputed tax: Section 2(1)(a) and 2(1)(j) refer to "an appeal" and "any appeal" and Rule 2(b) defines "dispute" to mean an appeal, writ or SLP; Form No.5 further records dispute details by appeal reference (paras 34-36). Consequently the unit of settlement under the Act is the individual appeal/writ/SLP and not the assessment year (para 34). The Court rejected the revenue's contention that an assessee must settle all departmental appeals for a given assessment year, observing that such a requirement is not found in the statute or rules and is contrary to the Department's inconsistent practice (para 35). The Court examined the CBDT FAQs relied on by the revenue and concluded that: FAQ-7/27 (dealt with remand situations) and FAQ-11 (non-qualifying arrears) are not applicable to the petitioner's case where the declaration related to a departmental deemed appeal and no issues were pending before the AO (paras 38-41); FAQ-14, properly read, permits settlement of all issues arising from a single order and therefore does not mandate settling disputes arising from different orders in the same year (para 42); and FAQ-19 unequivocally permits an assessee to choose either of multiple appeals arising in the same assessment year to be settled under the scheme, thereby supporting the petitioner's position (paras 43-44). Applying these principles, the Court found that the departmental SLP before the Supreme Court concerned issues distinct and unconnected with the deemed departmental appeal arising from the Tribunal's order dated 16th September, 2019 (ECB interest and related interest) and therefore there was no legal basis to require settlement of that SLP as a precondition for accepting the petitioner's declaration (para 36). [Paras 36, 38, 43, 45, 46]

The petitioner is entitled to settle the departmental deemed appeal under the DTVSV Act without being required to settle all other departmental appeals for the assessment year 2007-08; the impugned rejection is unsustainable.

Final Conclusion: The impugned order rejecting the petitioner's declaration is set aside; the respondents are directed to reconsider the petitioner's declaration dated 08th December, 2020 for AY 2007-08 under the DTVSV Act and to issue any refund in accordance with law within eight weeks.

Deduction under section 80IB(10) - area limit of residential unit for eligibility - completion certificate as conclusive indication of compliance with sanctioned plans - probative value of post-completion survey evidence - appellate interference with findings of fact

Deduction under section 80IB(10) - area limit of residential unit for eligibility - probative value of post-completion survey evidence - completion certificate as conclusive indication of compliance with sanctioned plans - appellate interference with findings of fact - Whether the claim for 100% deduction under Section 80IB(10) can be denied on the basis of a survey conducted in 2011 which reported merged/oversized flats when the project was completed in 2008 and completion certificate and other records conform to the approved plans. - HELD THAT: - The Court accepted the factual findings recorded by the Tribunal and CIT(A) that the residential project had been initiated and completed prior to the 2011 survey and that a completion/occupancy certificate had been issued only if construction complied with the sanctioned plans. The Assessing Officer's denial relied principally on the 2011 survey report which alleged three larger flats per floor and supporting observations (meters, doors, advertisements, independent architect reports). The CIT(A) examined these contentions against the approved BMC plans, occupancy certificate, registered sale agreements, separate possession certificates, separate utility connections, society records, and stamp registration, and concluded there was no proof that the assessee had constructed and sold flats in excess of the area limits for Section 80IB(10). The Court held that the Revenue had the onus to establish that oversized units were constructed and sold at the relevant time; it failed to discharge that burden and the Tribunal rightly treated the survey as not displacing the earlier completion certification and documentary evidence. The Court declined to disturb the concurrent findings of fact recorded by the lower authorities as not being perverse. [Paras 6, 7, 12, 13]

The denial of deduction under Section 80IB(10) on the basis of the 2011 survey was not sustained; the Tribunal's and CIT(A)'s findings upholding the assessee's entitlement were affirmed.

Appellate interference with findings of fact - Whether a second appeal raising identical facts and issues should be decided differently from the earlier appeal. - HELD THAT: - The Court observed that the facts and issues in the second appeal were identical to those decided in Income Tax Appeal No.1244 of 2016. Having upheld the Tribunal's factual conclusion in that appeal, the Court applied the same view to the second appeal without further adjudication. [Paras 14]

The second appeal was dismissed applying the same conclusion as in the earlier appeal.

Final Conclusion: Concurrent factual findings of the CIT(A) and the Tribunal that the assessee complied with sanctioned plans and was entitled to deduction under Section 80IB(10) were upheld; the Revenue failed to establish that post-completion alterations shown in a later survey justified denial of the deduction, and a subsequent identical appeal was dismissed accordingly.

Disallowance under Section 14A - application of Rule 8D(2)(iii) - recording of satisfaction by the Assessing Officer - inclusion of strategic investments for computation of disallowance - principle of consistency in taxation

Recording of satisfaction by the Assessing Officer - disallowance under Section 14A - application of Rule 8D(2)(iii) - Validity of the Assessing Officer's recorded satisfaction before invoking Section 14A and applying Rule 8D(2)(iii) and consequent rejection of the assessee's suo moto disallowance. - HELD THAT: - The Court examined the assessment record and the AO's order which showed that the AO first analysed the assessee's accounts, called for explanation about the basis of the assessee's self-computed disallowance, considered the reply and working submitted by the assessee, and expressly recorded dissatisfaction with the basis of the assessee's estimate. The appellate authorities (CIT(A) and the Tribunal) concurred with the AO's finding that the assessee's allocation was an ad hoc/guess estimate and that particulars of actual expenditure in relation to exempt income were not furnished. In these circumstances the statutory method under Rule 8D(2)(iii) was correctly invoked. Reliance upon earlier decisions and the assessee's self-devised apportionment did not supplant the requirement that the AO be satisfied on the record; here the AO's satisfaction (that the assessee's claim could not be accepted) was recorded and sustained on appeal. The Court therefore found no infirmity in the concurrent factual findings upholding invocation of Section 14A read with Rule 8D(2)(iii). [Paras 8, 10]

The AO validly recorded dissatisfaction and correctly invoked Rule 8D(2)(iii); the rejection of the assessee's suo moto disallowance was upheld.

Application of Rule 8D(2)(iii) - inclusion of strategic investments for computation of disallowance - precedent of Maxopp Investment Ltd. - Whether investments held in subsidiaries (strategic investments) must be included in the base for computing disallowance under Rule 8D(2)(iii). - HELD THAT: - The Tribunal included the value of the assessee's strategic investments in subsidiaries for computing average investments subject to disallowance, applying the Supreme Court's decision in Maxopp Investment Ltd. The Court noted that the Tribunal's approach to include such investments was in conformity with Maxopp, and that earlier interlocutory directions and remands in related assessment years clarified that exclusion of strategic investments was not tenable. The Court accepted the Tribunal's computation methodology as modified to include the subsidiary investments and the consequent revision of disallowance under Rule 8D(2)(iii). [Paras 2, 3, 7]

Investments in subsidiaries used for deriving exempt dividend were to be included for computing the average investment under Rule 8D(2)(iii); the Tribunal's inclusion of strategic investments was upheld.

Principle of consistency in taxation - disallowance under Section 14A - Whether the assessee's self-devised method of computing disallowance should be accepted on the ground of consistency with earlier assessment years. - HELD THAT: - The Court rejected the contention that past acceptance in other assessment years required adoption of the same suo moto computation in the years under appeal. The record showed that in intervening assessment years the assessee's method had been rejected by the AO and that those findings had attained finality; remands in related years were limited to computation issues and did not preserve any entitlement to the assessee's ad hoc allocation. Given the concurrent factual findings that the assessee's estimate was a guess estimate unsupported by particulars, the principle of consistency did not warrant overriding the statutory method mandated by Rule 8D. [Paras 7]

The plea of consistency was unsustainable; the assessee's self-devised ad hoc disallowance need not be accepted.

Final Conclusion: The High Court found no substantial question of law and dismissed the appeals, upholding the concurrent findings that the Assessing Officer validly recorded dissatisfaction and correctly applied Section 14A read with Rule 8D(2)(iii), including the value of strategic investments for computation; the assessee's consistency plea and suo moto ad hoc disallowance were rejected.

Violation of principles of natural justice - Reassessment under Section 153A following search and seizure - Regular assessment under Section 143(3) - Limitation for completion of assessments under Section 153B - Setting aside orders and remand for de novo assessment within limitation - Direction to proceed without further notice to facilitate completion within limitation

Violation of principles of natural justice - Reassessment under Section 153A following search and seizure - Regular assessment under Section 143(3) - Limitation for completion of assessments under Section 153B - Impugned assessment orders were passed without adequate compliance with principles of natural justice and whether such orders should be set aside. - HELD THAT: - The Court noted that show cause notices in the matters under Section 153A were issued in December 2021, responses were filed by the petitioner in March 2022, and fresh show cause notices issued in September 2022 granted on average only about one week for reply. The assessing orders impugned in six writ petitions were passed on 27.09.2022, within an average of ten days from issuance of those show cause notices. The Court observed that the limited time afforded for response indicated an apparent breach of the principles of natural justice. The Court further recorded that limitation for completion of assessments under Section 153A (by virtue of the operation of Section 153B) would expire on 31.03.2023 given the date of the last authorization, and that the regular assessment challenged similarly fell within the same overall limitation timeline. In view of the procedural infirmity in affording a fair opportunity to the petitioner, the Court concluded that the impugned orders could not stand.

All impugned assessment orders were set aside and the matters remitted for fresh adjudication; the petitioner is to be heard and assessments are to be framed de novo in accordance with law and principles of natural justice within the period of limitation.

Setting aside orders and remand for de novo assessment within limitation - Direction to proceed without further notice to facilitate completion within limitation - Procedural directions to facilitate recommencement and timely completion of reassessment proceedings. - HELD THAT: - To enable timely completion within the statutory limitation, the Court directed the petitioner to appear before the assessing authority on 18th November 2022 at 10:30 a.m. without awaiting further notice. The Court emphasised that both parties must conduct the proceedings properly so that assessments are completed well within the limitation period and strictly in accordance with law and principles of natural justice.

Petitioner directed to appear on the specified date without awaiting further notice; parties to proceed expeditiously and appropriately so that reassessments are completed within limitation.

Final Conclusion: Impugned assessment orders were quashed for breach of natural justice and remitted for de novo assessment; petitioner is directed to appear on the specified date and the authorities shall complete the reassessment in accordance with law and within the applicable period of limitation.

Maintainability of writ petition filed by husband on behalf of wife - competency of husband to testify and prosecute proceedings on behalf of wife under Section 120 of the Indian Evidence Act, 1872 - requirement of impleading proper and necessary parties in a writ petition - judicial discretion in awarding and expunging costs - direction for expeditious disposal of pending civil suits

Maintainability of writ petition filed by husband on behalf of wife - competency of husband to testify and prosecute proceedings on behalf of wife under Section 120 of the Indian Evidence Act, 1872 - requirement of impleading proper and necessary parties in a writ petition - Writ petition filed by the husband on behalf of his wife was not maintainable and could not be justified by reliance on Section 120 of the Indian Evidence Act, 1872. - HELD THAT: - The Court agreed with the learned Single Judge that the husband, though competent as a witness under Section 120 in civil proceedings, could not initiate or prosecute a writ petition in place of his wife. Section 120 merely addresses competency to testify and does not confer a right on the husband to file and prosecute substantive proceedings on behalf of the wife before a Court or authority. The petitioner's failure to implead the wife and the opposing party rendered the writ petition inappropriate as a vehicle to press the private grievance against the third party. The Court emphasised that it was for the wife herself to file the petition and to ensure proper parties were before the Court. [Paras 4, 5]

Writ petition dismissed as not maintainable; reliance on Section 120 to justify filing by the husband rejected.

Judicial discretion in awarding and expunging costs - direction for expeditious disposal of pending civil suits - The appellate court expunged the costs imposed by the Single Judge and directed the civil court to take up and dispose of the pending suits within twelve months. - HELD THAT: - While upholding the Single Judge's conclusion on maintainability, the Division Bench exercised its discretion to remove the cost penalty imposed on the appellant, noting that the appellant's wife may have a valid cause of action against the third party. The Court further issued a directive to the learned City Civil Judge to proceed with the suits (renumbered O.S.Nos.110 and 111 of 2020) and dispose of them preferably within twelve months from receipt of the judgment copy, thereby ensuring expeditious adjudication of the substantive disputes between the parties. [Paras 6]

Cost imposed by the Single Judge expunged; suits to be taken up and disposed of by the City Civil Judge preferably within twelve months.

Final Conclusion: Writ appeal dismissed on merits for lack of maintainability; appellate court expunged the cost ordered by the Single Judge and directed the trial court to proceed with and dispose of the pending civil suits within twelve months; no costs in the appeal.

Addition as undisclosed sales - deemed export - related party transactions - comparison of tax audit report with profit and loss account - addition under section 68 as unexplained cash credit - net increase in current liabilities

Addition as undisclosed sales - deemed export - comparison of tax audit report with profit and loss account - related party transactions - Validity of addition made by AO treating difference between domestic sales reported in tax audit report and sales shown in P&L as undisclosed local sales. - HELD THAT: - The CIT(A) found that the AO erroneously compared particulars of sales to associated enterprises reported under audit notes with the gross sales figure in the Profit & Loss account without accounting for the characterisation of certain transactions as deemed exports. The assessee explained, and produced ledgers and sample export invoices to show, that sales to an entity located in a notified SEZ were export (deemed export) transactions and therefore should not have been treated as domestic sales. Excluding those deemed export sales from the aggregate of sales to related parties reconciled the figures reported in the tax audit report with the local sales in the P&L account. The CIT(A) concluded that on the facts before it the AO's addition as unrecorded local sales was untenable and directed deletion of the addition. The Revenue did not controvert this finding before the Tribunal.

Impugned addition as undisclosed local sales deleted; revenue's ground in respect thereof dismissed.

Addition under section 68 as unexplained cash credit - net increase in current liabilities - Sustenance of addition made under section 68 by treating increases in 'advance received from parties' and 'trade payables for goods' as unexplained cash credits. - HELD THAT: - The CIT(A) accepted the assessee's alternate contention that where opening and closing balances and the transactions during the year are not disputed, the AO could not single handedly disbelieve the net increase in current liabilities and treat it as unexplained credit. Reliance was placed on precedent holding that where purchases, sales and gross profits as disclosed are accepted by the AO and the creditors relate to purchases, no addition under section 68 is warranted merely because of an increase in sundry creditors. On the facts, the CIT(A) held the AO unjustified in invoking section 68 for the net increase in current liabilities and deleted the addition. The Revenue did not contest this finding before the Tribunal.

Addition made under section 68 treating the increases as unexplained cash credit deleted; revenue's ground in respect thereof dismissed.

Final Conclusion: The appeal filed by the Revenue is dismissed; the additions challenged (undisclosed local sales and unexplained cash credit under section 68) were deleted by the CIT(A) and these deletions are upheld by the Tribunal.

Dissolution of corporate debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016 - Infructuousness of appeals upon dissolution of the company - Continuance of tax proceedings against a dissolved company - Liability of directors under section 179 of the Income-tax Act, 1961

Dissolution of corporate debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016 - Infructuousness of appeals upon dissolution of the company - Continuance of tax proceedings against a dissolved company - Appeals by the Revenue are infructuous and dismissed because the assessee company has been dissolved by NCLT and no proceedings can be continued against a non-existent company. - HELD THAT: - The Tribunal noted the NCLT order dated 11.02.2022 directing dissolution of M/s SBQ Steels Limited after completion of liquidation under Section 54 of the IBC. The factual position established that the corporate debtor's assets were liquidated, the liquidator applied for dissolution and the NCLT ordered dissolution with directions to forward the order to the Registrar of Companies. In view of the corporate debtor having been dissolved and there being no successor entity, the Tribunal held that proceedings against the now non-existent company cannot be continued. The Revenue did not advance any persuasive legal basis to counter the effect of the dissolution order; while the departmental representative referred to a judicial view on unexplained investment, that contention did not meet the obstacle that the corporate entity has been lawfully dissolved. The Tribunal observed that remedies for recovery of tax from persons other than the company (for example under section 179 of the Income-tax Act in respect of private companies) were distinct and, in any event, the dissolution of the corporate debtor rendered continuation of these appeals against the company itself infructuous. [Paras 2, 4, 5]

The appeals of the Revenue are dismissed as infructuous because the assessee company has been dissolved by order of the NCLT.

Final Conclusion: The Tribunal dismissed the Revenue's appeals as infructuous because M/s SBQ Steels Limited had been dissolved by the NCLT following completion of liquidation under the IBC, and no proceedings can be continued against a non-existent corporate debtor.

Allowability of interest as business expenditure - interpretation of Section 36(1)(iii) regarding interest deduction - nexus between borrowed funds and business assets - disallowance based on presumptive imputation of interest rate

Allowability of interest as business expenditure - interpretation of Section 36(1)(iii) regarding interest deduction - nexus between borrowed funds and business assets - disallowance based on presumptive imputation of interest rate - Whether the disallowance of interest (impugned interest) upheld by the CIT(A) was justified or whether the interest is allowable as business expenditure under Section 36(1)(iii). - HELD THAT: - The Tribunal found that the Assessing Officer and the CIT(A) proceeded on a presumptive basis by applying an imputed rate of 4.36% instead of accepting the assessee's demonstration that interest earned and interest paid were at 6% for the relevant loans and advances. The assessee had explained that the borrowings and unsecured loans on which interest was paid were utilised wholly and exclusively for the purpose of the land trading and financial business, and that loans and advances shown as business assets together with closing stock exceeded the interest bearing borrowings. The Tribunal recorded that there was no instance of interest free lending by the assessee and that the AO/CIT(A) had not properly examined the factual matrix or applied Section 36(1)(iii) to the material on record. On that basis the Tribunal concluded that the addition was founded on presumptive and assumptive computation of interest and that the expenditure was incurred wholly and exclusively for business; accordingly the disallowance could not be sustained. [Paras 7]

Disallowance of interest of Rs.21,57,962/- deleted; grounds allowing deduction under Section 36(1)(iii) accepted and appeal allowed.

Final Conclusion: The Tribunal set aside the disallowance of interest upheld by the CIT(A), holding that the interest expenditure was wholly and exclusively for business and that the Assessing Officer and CIT(A) erred in making a presumptive reduction; the assessee's appeal is allowed for Assessment Year 2015-16.

Reference to Departmental Valuation Officer under section 55A - fair market value as on 01.04.1981 - amendment to section 55A w.e.f. 01.07.2012 not applicable to transfers before amendment - acceptance of declared cost of acquisition for transfers prior to 01.07.2012 - opportunity of hearing before recomputation

Amendment to section 55A w.e.f. 01.07.2012 not applicable to transfers before amendment - reference to Departmental Valuation Officer under section 55A - acceptance of declared cost of acquisition for transfers prior to 01.07.2012 - Whether the Assessing Officer could rely on a reference to the Valuation Officer and apply the post 2012 amended test in section 55A to re determine cost of acquisition for properties transferred in August 2010, or whether the assessee's declared 01.04.1981 values must be accepted/verified without applying the amendment. - HELD THAT: - The Tribunal found there was no dispute that both transfers took place in August 2010, i.e., prior to the amendment to clause (a) of section 55A effective from 01.07.2012. Applying the binding decision of the jurisdictional High Court in CIT v. Gaurangiben S. Shodhan Indl., the Tribunal held that the amended provision (which empowers reference where declared value is "at variance with its fair market value") is not applicable to transfers made before 01.07.2012. Consequently the Assessing Officer's reference/attempt to apply the amended test and compute capital gains on the basis of stamp valuation/fair market value without accepting the assessee's declared 01.04.1981 values was not sustainable. The Tribunal therefore directed the Assessing Officer to verify the computation of income already furnished by the assessee (as recorded in the assessment proceedings), to grant appropriate relief and to afford the assessee an opportunity of hearing before passing the recomputation/order. The Tribunal expressly allowed the grounds raised by the assessee and remanded the matter to the Assessing Officer for verification and compliance with the directions. [Paras 10, 11]

Assessee's grounds allowed; amended clause of section 55A held not applicable to transfers in August 2010 and matter remitted to Assessing Officer to verify the assessee's computation, grant relief and afford opportunity of hearing.

Final Conclusion: Appeal allowed: the Tribunal held that the 2012 amendment to section 55A is not applicable to the assessee's transfers in August 2010, directed the Assessing Officer to verify the assessee's computation, grant appropriate relief and afford a hearing before passing the recomputation/order.

Royalty - business income - permanent establishment - copyrighted software license - Article 12(3) of Indo-US DTAA - Section 9(1)(vi) of the Income tax Act, 1961

Royalty - business income - copyrighted software license - Article 12(3) of Indo-US DTAA - Section 9(1)(vi) of the Income tax Act, 1961 - permanent establishment - Whether amounts received by the assessee for sale of software licenses are taxable as royalty or form business income not taxable in India in absence of a permanent establishment. - HELD THAT: - The Tribunal applied earlier coordinate bench and High Court authorities considering the character of transactions under Article 12(3) of the Indo-US DTAA and Section 9(1)(vi). It noted that the assessee sold shrink wrapped/downloadable project management software licences while retaining copyright and restricting copying, modification and sublicensing; customers received only a limited right to use the copyrighted product for internal business purposes. The Tribunal followed precedents holding that such transactions effect sale of a copyrighted article or product rather than transfer of copyright or the right to use the copyright itself, and therefore do not fall within the treaty/ statutory definition of "royalties". The Tribunal rejected the Revenue's reliance on alternative characterisations not reflected in the AO's case (such as transfer of a process), observed there is no change in material facts from earlier years, and found no higher court reversal of those earlier favourable decisions. Consequently, the receipts were held to be ordinary business income arising from sale of copyrighted products/licenses and not taxable in India in the absence of a permanent establishment of the non resident assessee. [Paras 7, 8]

Amounts received for sale of the assessee's software licences are not 'royalty' under Article 12(3) of the Indo-US DTAA or Section 9(1)(vi) and constitute business income not taxable in India in absence of a permanent establishment; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal for A.Y. 2014 15, holding that receipts from sale of the assessee's copyrighted software licences are business income and not taxable as royalty in India in the absence of a permanent establishment.

Scope of revision under section 263 - Requirement of an existing order to invoke section 263 - Twin satisfaction test of erroneous order and prejudicial to revenue - Initiation of penalty proceedings not being part of assessment proceedings - CIT cannot direct AO to initiate or change penalty proceedings under section 263 - Availability of alternative remedial provisions (e.g. section 154, section 147, section 292BB)

Scope of revision under section 263 - Requirement of an existing order to invoke section 263 - Twin satisfaction test of erroneous order and prejudicial to revenue - CIT cannot direct AO to initiate or change penalty proceedings under section 263 - Whether the Principal Commissioner of Income Tax (PCIT) could, in exercise of revisional powers under section 263, direct the Assessing Officer to initiate or re-initiate penalty proceedings (or change the section under which penalty is to be initiated). - HELD THAT: - The Tribunal held that section 263 presupposes the existence of an order passed in the proceeding which the Commissioner seeks to revise and requires satisfaction that the order of the AO is both erroneous and prejudicial to the interests of revenue. Penalty proceedings are separate and distinct from assessment proceedings; initiation or non-initiation of penalty, or incorrect initiation of penalty proceedings, does not constitute an independent order in the penalty proceeding that can be revised under section 263. The PCIT cannot, by invoking section 263, create or direct initiation of a non-existent penalty order or substitute his own satisfaction for that of the AO (or appellate authority) required under the penalty provisions. The Tribunal relied on binding and consistent authorities of the jurisdictional High Court and precedents (including the ratio in CIT v. Keshrimal Parasmal and followings) to conclude that directing AO to initiate/modify penalty under section 263 is beyond the revisional power. The existence of other remedial provisions (such as rectification under section 154, reopening under section 147, or statutory deeming of service under section 292BB) does not expand the scope of section 263 to permit the PCIT to direct initiation or alteration of penalty proceedings. On the facts, the PCIT's direction to the AO to initiate and levy penalty (by specifying the requisite sections) was held to be beyond jurisdiction and therefore invalid. [Paras 23, 26]

The PCIT's exercise of revisional power under section 263 to direct initiation/alteration of penalty proceedings was beyond jurisdiction and the revisionary direction is quashed; the assessment itself is not disturbed.

Condonation of delay - Whether the delay of six days in filing the appeals should be condoned. - HELD THAT: - On the facts the Tribunal accepted the assessee's explanation that the impugned order was physically received on a later date and that the limitation should be reckoned accordingly. The Revenue did not oppose the condonation. The Tribunal found merit in the application for condonation and granted relief. [Paras 6]

Delay of six days in filing the appeals is condoned.

Final Conclusion: The appeals are allowed. The PCIT's order under section 263 directing initiation/levy of penalty (by specifying the sections) is quashed as beyond jurisdiction while the underlying assessments are left undisturbed; the six day delay in filing the appeals is condoned. The same reasoning is applied mutatis mutandis to the consolidated related appeals for the listed assessment years.

Reopening of assessment under section 148/147 - reopening based on audit objection - application of independent mind by Assessing Officer - change of opinion

Reopening of assessment under section 148/147 - reopening based on audit objection - application of independent mind by Assessing Officer - change of opinion - Validity of reassessment framed after reopening where reasons recorded mirror audit objections - HELD THAT: - The Tribunal examined the reasons recorded by the Assessing Officer for issuing notice under section 148 read with section 147 and compared them with the Revenue audit objections obtained under the RTI Act. The reasons recorded were found to be verbatim repetitions of the audit objections and no independent material or application of mind by the Assessing Officer was demonstrated. Reliance was placed on the principle that internal or revenue audit objections, standing alone, do not constitute "information" warranting reopening where the AO has not applied his independent judgment and where the recorded reasons merely echo the audit party. Following the view of the Madras High Court in Cholamandalam Investment & Finance Co. Ltd. and the principle in Indian & Eastern Newspaper Society that an audit opinion cannot substitute for independent reasons under section 147, the Tribunal concluded that the reopening amounted to a change of opinion without fresh material and was therefore bad in law. Because the foundational reason for reassessment was invalid, the reassessment framed pursuant to the reopening was set aside.

Reopening held invalid as based solely on audit objection without independent application of mind; reassessment quashed and appeal allowed.

Final Conclusion: The Tribunal held that the notice under section 148/147 was based on verbatim audit objections without independent application of mind by the Assessing Officer, constituting an impermissible change of opinion; accordingly the reassessment for AY 2010-11 was quashed and the assessee's appeal allowed.

Deeming fiction under Section 50C - reference to District Valuation Officer under Section 50C(2) - penalty under Section 271(1)(c) for furnishing inaccurate particulars - computation of capital gains under Section 48 - determination of fair market value

Deeming fiction under Section 50C - reference to District Valuation Officer under Section 50C(2) - penalty under Section 271(1)(c) for furnishing inaccurate particulars - Whether penalty under Section 271(1)(c) can be imposed where addition to capital gains is based on the deeming provision of Section 50C and is subject to possible revision on reference to the District Valuation Officer - HELD THAT: - The Tribunal accepted the assessee's submission that Section 50C operates by a deeming fiction which replaces the actual sale consideration for computation under Section 48, but that this replacement is subject to possible adjustment if the Assessing Officer makes a reference to the Valuation Officer under Section 50C(2). Reliance was placed on the Coordinate Bench decision in Chinubhai Ambalal Patel , which held that an addition made by applying the deeming fiction of Section 50C cannot, without more, permit a conclusive finding of concealment or furnishing of inaccurate particulars. Given that the deemed value may change on a DVO reference, it is difficult to hold an assessee liable for concealment solely because an addition arose from Section 50C. Applying that reasoning to the facts, the Tribunal found the imposition of penalty to be unsustainable. [Paras 6]

Penalty under Section 271(1)(c) quashed and appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, quashed the penalty imposed under Section 271(1)(c) insofar as it was founded on an addition resulting from the deeming provision of Section 50C (subject to possible revision on DVO reference), and directed that the penalty order is erroneous and bad in law.

Deeming provision for non-realisation of export proceeds under Section 75 of the Customs Act - recovery of wrongfully paid duty drawback under Rule 18 of the Customs and Central Excise Duties Drawback Rules, 2017 - provisional attachment and statutory timeframe under Section 110(5) of the Customs Act - withholding of access to credited duty drawback pending adjudication - power of revenue to invest recovered amounts in an interest-bearing deposit pending adjudication

Deeming provision for non-realisation of export proceeds under Section 75 of the Customs Act - recovery of wrongfully paid duty drawback under Rule 18 of the Customs and Central Excise Duties Drawback Rules, 2017 - withholding of access to credited duty drawback pending adjudication - Whether the petitioner can be permitted access to the duty drawback amount credited to its bank account where sale proceeds for the exports have not been realised within the prescribed period. - HELD THAT: - The Court found as an undisputed factual position that sale proceeds in respect of the subject exports have not been received. The second proviso to Section 75(1) operates to deem drawback as never having been allowed where sale proceeds are not realised within the time permitted under FEMA, subject to rules. Rule 18 of the 2017 Drawback Rules prescribes recovery where drawback has been paid but export proceeds have not been realised, and mandates the procedure for such recovery (including issuance of notice and recovery under Rule 17). Applying these provisions to the admitted facts, the Court held that the duty drawback already credited in the petitioner's account falls within the purview of the deeming and recovery provisions and therefore the petitioner cannot be permitted at this stage to obtain access to those funds pending adjudication. [Paras 31, 32, 33, 34]

Access to the duty drawback amount credited in the account is refused because the deeming provision and Rule 18 require recovery where sale proceeds have not been realised.

Provisional attachment and statutory timeframe under Section 110(5) of the Customs Act - withholding of access to credited duty drawback pending adjudication - power of revenue to invest recovered amounts in an interest-bearing deposit pending adjudication - Whether the flawed impugned communication precluded corrective action by the revenue and what interim relief, if any, should be granted to the petitioner in relation to the bank account and the credited drawback. - HELD THAT: - The Court observed that the impugned communication was flawed insofar as it may have been issued before compliance with Section 110 formalities. However, the revenue subsequently issued provisional attachment orders (initial and an extension) under the statutory scheme; those provisional attachment orders are not challenged in this petition. Given that the statutory timeframe for provisional attachment (as extended) has expired, the Court directed that the petitioner be allowed to operate the bank account generally, but that the portion of the balance representing the sanctioned duty drawback (being the amount admitted in the record) shall be remitted to the official respondents. The Court further directed that the remitted amount be invested by the revenue in an interest-bearing fixed deposit and set timelines for the petitioner to respond to the show-cause notice and for the adjudicating authority to conclude adjudication, while preserving the petitioner's liberty to seek release of drawback if sale proceeds are subsequently realised. [Paras 20, 21, 35, 36, 39]

Petitioner may operate the bank account, but the credited duty drawback amount is to be remitted to the revenue and invested in an interest-bearing deposit pending adjudication; petitioner given time to reply and adjudication directed to be concluded within a fixed period, with liberty to apply for release if proceeds are realised.

Final Conclusion: Writ petition disposed: petitioner allowed to operate its bank account generally; the duty drawback amount credited in the account (admitted by parties) is remitted to the official respondents who shall invest it in an interest-bearing fixed deposit; petitioner granted four weeks to reply to the show-cause notice and the adjudicating authority directed to endeavour to conclude proceedings within three months; petitioner may approach the authority for release of drawback if sale proceeds are realised within the prescribed timeframe.

Unusual delay vitiates proceedings - principles of natural justice - service of show-cause notice and personal hearing - penalty under Section 112 of the Customs Act - liability of a subsequent purchaser for import mis-declaration - condonation of delay in filing appeal

Unusual delay vitiates proceedings - condonation of delay in filing appeal - Validity of the adjudication when the Order in Original was passed after an unusual delay and effect of previous condonation of limitation by the Tribunal. - HELD THAT: - The Tribunal observed that an unusual delay in passing the Order in Original (a gap of about 15 years from issuance of the show cause notice) vitiates the proceedings. The Tribunal noted that it had already considered and condoned the delay in filing the present appeals (imposing and receiving costs), thereby precluding re agitation of the limitation plea. Having addressed limitation, the Tribunal proceeded to find that the prolonged inaction by the Department rendered the adjudicatory process unsustainable and was a valid ground for allowing the appeals. [Paras 5]

The appeals were allowed on the ground that the unusual delay in passing the Order in Original vitiated the proceedings.

Principles of natural justice - service of show-cause notice and personal hearing - penalty under Section 112 of the Customs Act - Sustainability of penalty imposed on Appellant Mafatlal R. Mehta where there was no proof of service of show cause notice or personal hearing. - HELD THAT: - The Tribunal relied on the DRI record indicating absence of proof that the show cause notice and intimation of personal hearing were served on the Appellant. In those circumstances, and given that the Appellant was never called to participate in adjudication, the penalty was imposed in gross violation of natural justice. The Tribunal further noted the practical difficulties posed by the long delay since the alleged occurrence (1992) and the appellant's terminal illness, concluding that de novo adjudication was neither feasible nor appropriate and relief from liability was warranted. [Paras 5]

Appellant Mafatlal R. Mehta was relieved from the imposed penalty for want of service and breach of natural justice.

Liability of a subsequent purchaser for import mis-declaration - penalty under Section 112 of the Customs Act - Whether penalty under Section 112 could be sustained against Citibank, a subsequent purchaser who bought ATMs from a domestic supplier. - HELD THAT: - The Tribunal found that Citibank was a subsequent purchaser who acquired the ATMs and controllers from M/s Philips India by local sale invoices and was not the importer. Apart from statements indicating that Philips considered sourcing through a third party importer and pricing the machines for sale to banks, there was no evidence of any complicity or that Citibank was connected to the importation by the alleged importer. The transaction between Citibank and Philips India was confined to a domestic sale unrelated to the import process; accordingly the imposition of penalty under Section 112 on Citibank was unsustainable in law and fact. [Paras 6]

Penalty under Section 112 as imposed on Citibank was set aside.

Final Conclusion: The appeals were allowed: the Order in Original dated 27.12.2007 was set aside because (a) the long delay in adjudication vitiated the proceedings, (b) the penalty on the customs broker was quashed for want of service and breach of natural justice (with relief granted in view of the elapsed time and illness), and (c) the penalty on Citibank - a subsequent purchaser - was found unsustainable and set aside.

Restoration of company struck off - Operation of company notwithstanding absence of profits - Power to strike off name of company under Section 248 - Restoration under Section 252(3) - Conditional restoration and compliance requirements

Restoration of company struck off - Operation of company notwithstanding absence of profits - Restoration under Section 252(3) - Whether the NCLT erred in rejecting the appellant's application for restoration of the company when material on record indicated the company was in operation during the relevant period despite not generating profits - HELD THAT: - The Tribunal examined the record placed before the NCLT, including incorporation documents, financial statements, bank statements, annual returns and income-tax filings, and found that although the company did not generate profits, materials on record showed some degree of operation during the period for which the name was struck off. The bench noted that the statutory power to strike off under Section 248 is not rendered redundant by the restoration remedy in Section 252(3), but held that non-generation of revenue alone is not a sufficient ground to refuse restoration where the company can demonstrate it was in operation. The Tribunal observed that the NCLT's recording in para 13 that counsel admitted non-operation did not warrant overturning other documentary material showing activity; however, any perceived error in that paragraph was not itself addressed to alter findings because rectification should have been sought before the NCLT. On the basis of the documentary evidence of operations, the Tribunal concluded that the appeal should be allowed and the company restored to the register.

Allowed the appeal and directed restoration of the company on the ROC register, holding that non-generation of profit alone did not justify refusal of restoration where the company demonstrated operation during the relevant period.

Conditional restoration and compliance requirements - Restoration under Section 252(3) - Terms and conditions to be imposed upon restoration of the company's name - HELD THAT: - While allowing restoration, the Tribunal imposed conditions to secure statutory compliance and public notice. These require filing of all overdue statutory returns including balance sheets and annual returns with fee and additional fee as applicable, publication of notice in two leading district newspapers and the Official Gazette in a respondent-approved draft at the petitioner's cost, production of acknowledgements of filing of income-tax returns, production of bank statements, production of relevant documents evidencing capacity to carry on business and assurance against future defaults in statutory filings, and payment of costs to the ROC/Official Liquidator. The Tribunal directed compliance within three months and treated these conditions as necessary safeguards when restoring a struck-off company.

Restoration granted subject to specified compliance conditions, including filing of overdue returns, publication of notices, production of tax and bank records, undertaking of future compliance, and payment of costs; compliance directed within three months.

Final Conclusion: The appeal is allowed: the Tribunal restored the company's name to the register, holding that absence of profit did not preclude restoration where evidence showed the company was in operation, and imposed specified conditions (filing overdue returns, publication and Gazette notice, production of tax and bank records, assurance of future compliance and payment of costs) to be complied with within three months.

Jurisdiction - Section 10A of the Insolvency and Bankruptcy Code, 2016 - interlocutory application - decision on jurisdiction before merits - erroneous assumption of jurisdiction

Jurisdiction - Section 10A of the Insolvency and Bankruptcy Code, 2016 - interlocutory application - decision on jurisdiction before merits - NCLT must decide the interlocutory application challenging its jurisdiction under Section 10A of the IBC before proceeding to decide the merits of the company petition. - HELD THAT: - The petitioner's interlocutory application raising jurisdiction under Section 10A IBC was pending before the NCLT and had been heard extensively on ten dates with written submissions filed by both parties. Given that considerable time and argument had already been devoted to the jurisdictional challenge, and having regard to the principle that a tribunal should not proceed to the merits without first determining its jurisdiction (to avoid erroneous assumption of jurisdiction), the High Court held that the NCLT should decide the interlocutory application on its own merits prior to entertaining other issues. The Court noted that the Apex Court's decision in Ramesh Kymal considered Section 10A and that the facts of the authority cited by the respondent were distinguishable, reinforcing the direction that the jurisdictional challenge be adjudicated first. Accordingly, the High Court directed the NCLT to decide interlocutory application No.609 of 2022 before dealing with other issues. [Paras 7, 8]

Petition allowed; NCLT directed to decide the pending interlocutory application No.609 of 2022 on jurisdiction under Section 10A IBC before deciding other issues.

Final Conclusion: Writ petition allowed; NCLT shall decide the pending interlocutory application challenging its jurisdiction under Section 10A of the IBC (IA No.609 of 2022) on its merits before proceeding to the merits of the company petition; rule made absolute; no order as to costs.

Interim moratorium - stay of proceedings in respect of any debt - scope of "debt" under the I&B Code - proceedings under section 19(2) - proceedings under section 66 and section 67 - harmonious construction of conflicting provisions - distinction between moratorium applicable to corporate debtor and moratorium in respect of debt/personal guarantor

Interim moratorium - stay of proceedings in respect of any debt - scope of "debt" under the I&B Code - proceedings under section 19(2) - proceedings under section 66 and section 67 - Interim moratorium under Section 96(1)(b) does not stay proceedings under Section 19(2) or proceedings under Sections 66 and 67. - HELD THAT: - Section 96(1)(b)(i) stays "any legal action or proceeding pending in respect of any debt". The term "debt" in Section 3(11) means a liability or obligation in respect of a claim which is due. Read together, the interim moratorium operates only in relation to proceedings that concern liabilities or obligations that are due on the date the interim moratorium is declared. It does not extend to stay future liabilities or to proceedings whose purpose is to challenge conduct (such as actions under Section 19(2) or under Sections 66 and 67). The scheme and object of the Code, and the statutory language, do not contemplate that Section 96(1)(b) will bar the Adjudicating Authority from entertaining or passing orders in applications under Section 19(2) or under Sections 66/67. Reliance on the Tribunal's earlier reasoning that provisions like Section 14 and Section 66 must be read harmoniously supports this construction and avoids rendering Section 66 otiose; accordingly the Adjudicating Authority rightly rejected the prayer to stay those proceedings. [Paras 7, 8, 9]

Application seeking stay of proceedings under Section 19(2) and Sections 66-67 on the ground of interim moratorium was correctly rejected.

Distinction between moratorium applicable to corporate debtor and moratorium in respect of debt/personal guarantor - harmonious construction of conflicting provisions - The Supreme Court precedent concerning Sections 96/101 and Section 14 (as to personal guarantors) does not advance the appellants' claim that Section 96(1)(b) stays proceedings under Section 19(2) or Sections 66-67. - HELD THAT: - The cited Supreme Court authority recognises that moratoria under Parts III (Sections 96/101) operate with reference to the debt and that Section 14 operates differently in relation to corporate debtors; that distinction does not support extending the interim moratorium to bar proceedings under Section 19(2) or Sections 66/67. The Tribunal has previously explained that provisions such as Section 14 and Section 66 serve different objects and must be read harmoniously; accepting the appellants' contention would render Section 66 ineffective. Consequently, the Supreme Court decision relied upon does not assist the appellants in the present factual matrix. [Paras 10, 11]

Reliance on the Supreme Court decision does not alter the conclusion that the interim moratorium under Section 96(1)(b) does not stay the impugned proceedings.

Final Conclusion: The Adjudicating Authority did not err in rejecting the appellants' application for stay; the appeal is dismissed.

Extension of time for payment of sale consideration - enforcement of timelines in a liquidation sale process - effect of process document/letter of intent on bidder's rights - opportunity of hearing before Stakeholders' Consultation Committee - speed and time-bound mandate of the Insolvency & Bankruptcy Code, 2016

Extension of time for payment of sale consideration - effect of process document/letter of intent on bidder's rights - enforcement of timelines in a liquidation sale process - Validity of rejection of the appellant's request for extension of time to pay the balance sale consideration and dismissal of IA (IBC)/972/2022. - HELD THAT: - The Tribunal upheld the Adjudicating Authority's finding that the Updated Process Document and the Letter of Intent prescribed the timeline for payment (30 days without interest; 90 days with interest) and did not contemplate further extension. The Bid Process/Updated Process Document and Letter of Intent expressly contemplated consequences for failure to pay within the stipulated timeline, including cancellation of the LoI and forfeiture. The Tribunal emphasised that IBC is a time-bound, self-contained code where speed is of the essence and that a successful bidder cannot, as a matter of right, seek routine extensions beyond the prescribed timelines. On a cumulative consideration of the facts, including prior defaults by the appellant and the Stakeholders Consultation Committee's rejection, the plea for extension was unsustainable and the impugned dismissal of the interlocutory application was free from legal flaw. [Paras 15, 16, 26, 28, 29]

Request for extension of time denied; dismissal of IA (IBC)/972/2022 upheld.

Opportunity of hearing before Stakeholders' Consultation Committee - procedure of Stakeholders' Consultation Committee - Whether the appellant was denied opportunity to participate in the 14th Stakeholders' Consultation Committee meeting and whether that vitiated the decision rejecting the extension. - HELD THAT: - The Adjudicating Authority and this Tribunal found that the Liquidator had sent e-mail communication and telephonic intimation to the successful bidder and that the appellant did not participate in the meeting for reasons best known to it. The Stakeholders' Consultation Committee had considered the matter and rejected the appellant's request. The Tribunal recorded that the plea of denial of opportunity was negatived on the material placed before the Adjudicating Authority and that the Committee's minutes and its decision were properly relied upon. [Paras 11, 12]

No denial of opportunity; rejection by the Stakeholders' Consultation Committee stands.

Effect of prior defaults by bidder - forfeiture and cancellation of Letter of Intent - Effect of the appellant's earlier defaults and conduct on entitlement to relief. - HELD THAT: - The Tribunal noted the appellant had previously been declared successful in an earlier e-auction round and had defaulted earlier (failure to furnish performance security / proposed extended timelines not in conformity with regulations). The Committee and Liquidator relied on these past defaults and the absence of demonstrated sources for balance payment. Having defaulted in honoring the LoI for a second time and not shown sufficient funds or maintenance payments, the appellant could not claim equitable relief to extend timelines. These factual findings supported the Adjudicating Authority's order and were held to justify forfeiture and cancellation. [Paras 14, 15, 29]

Appellant's prior defaults and failure to demonstrate funds justified cancellation of LoI and forfeiture; no relief granted.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority's order dated 12.10.2022 dismissing the application for extension of time is upheld as being free from legal flaw. No costs; connected interim applications closed.

Dependence of the offence under the PMLA on the existence of a scheduled offence - proceeds of crime - quashing of a scheduled offence and its effect on subsequent PMLA proceedings - inherent powers of the High Court under Section 482 Cr.P.C. - abuse of process of court

Dependence of the offence under the PMLA on the existence of a scheduled offence - proceeds of crime - quashing of a scheduled offence and its effect on subsequent PMLA proceedings - Whether quashing of the regular criminal case in respect of the scheduled offence nullifies the ECIR and the subsequent proceedings under the PMLA. - HELD THAT: - The court applied the principle that the offence under Section 3 of the PMLA is premised on illegal gain arising from criminal activity relating to a scheduled offence, and that authorities under the PMLA cannot proceed on a notional assumption of commission of a scheduled offence. Reliance was placed on the ratio in Vijay Madanlal Chowdhury as adopted by subsequent courts, and the Hon'ble Appellate Tribunal PMLA's specific finding that the properties subject to attachment were acquired prior to the loans and therefore did not constitute "proceeds of crime". Given that the regular case (the scheduled offence) has been quashed by this Court and the Appellate Tribunal found no prima facie proceeds of crime for attachment, there is no subsisting scheduled offence on which to base money laundering proceedings. In these circumstances the PMLA proceedings and the ECIR cannot be sustained independently and must be set aside.

ECIR No. 41/2009/KOL/PMLA dated 23rd December 2009 and all proceedings arising therefrom, including M.L. Case No. 2 of 2016, are quashed.

Inherent powers of the High Court under Section 482 Cr.P.C. - abuse of process of court - Whether the High Court should exercise its inherent jurisdiction under Section 482 Cr.P.C. to quash the PMLA proceedings in the facts of this case. - HELD THAT: - The court held that, having found that the scheduled offence has been quashed and there is no identifiable proceeds of crime as found by the Appellate Tribunal PMLA, continuation of the ML proceedings would amount to an abuse of the process of the court. In view of the settled ratio that PMLA proceedings cannot stand in the absence of a subsisting scheduled offence and on the particular factual findings (including the Tribunal's setting aside of provisional attachment), the exercise of inherent jurisdiction under Section 482 Cr.P.C. is warranted to prevent abuse and to do substantial justice.

The petition under Section 482 Cr.P.C. is allowed and the PMLA proceedings are quashed as constituting an abuse of process in the present circumstances.

Final Conclusion: The High Court allowed the criminal revision, quashed ECIR No. 41/2009/KOL/PMLA dated 23rd December 2009 and all connected PMLA proceedings (including M.L. Case No. 2 of 2016), and vacated interlocutory orders; continuation of money laundering proceedings was held unsustainable where the underlying scheduled offence has been quashed and no proceeds of crime subsist.

Business Support Service - Joint venture / co-developer - Agent versus principal - Consideration by way of profit sharing - Limitation / extended period - Apparent tenor of agreement

Business Support Service - Joint venture / co-developer - Agent versus principal - Consideration by way of profit sharing - Apparent tenor of agreement - Whether the appellant provided taxable Business Support Service under the co-development agreement or was a co-developer sharing profit and not a service-provider. - HELD THAT: - The Tribunal examined the co development agreement and found that the parties agreed to carry out joint development by contributing expertise, resources and manpower; the agreement expressly disclaimed partnership and agency, allocated functional divisions of work to each co developer, provided for profit entitlement (75%/25%) and authorised individual collection of sale proceeds. The appellant was assigned tasks (licenses, approvals, legal aspects, marketing, follow up) in its capacity as a co developer and not as an agent or a service provider to another person. Applying the principle that the apparent tenor of the contract ordinarily reflects the real state of affairs (subject to proof to the contrary), the Tribunal held that there was no contractual relationship of service provider-service recipient and therefore no provision of Business Support Service that would attract service tax. The Revenue, having not established that the apparent tenor was a camouflage for a service arrangement, could not treat the appellant as having provided taxable Business Support Service. [Paras 5, 7]

Demand of service tax confirmed on the premise of Business Support Service is not sustainable and is set aside.

Limitation / extended period - Whether the demand could be sustained by invoking the extended period of limitation. - HELD THAT: - The Tribunal noted that the activities were recorded in the appellant's books and arose from the co development agreement; there was no clandestine activity, suppression of facts or mala fide intent to evade tax. The case was initiated on the basis of audit observations and the relevant transactions were reflected in accounts. In these circumstances the Tribunal found that the requisites for invoking extended period were not made out and the demand was therefore hit by limitation. [Paras 6, 7]

Invocation of the extended period is not justified; the demand is time barred.

Final Conclusion: The impugned order confirming service tax, interest and penalties is set aside; the appeal is allowed and consequential relief granted.

Refund of service tax paid on services consumed within SEZ - refund admissible even without reliance on Notification No. 09/2009-ST where service is not taxable as consumed within SEZ - characterisation of CHA service despite invoice bifurcation - authorised operations of SEZ - refund for construction services partly performed outside SEZ but rendered for SEZ operations

Refund of service tax paid on services consumed within SEZ - refund admissible even without reliance on Notification No. 09/2009-ST where service is not taxable as consumed within SEZ - Refund of service tax paid on construction services admitted to have been received and consumed wholly within the SEZ is admissible. - HELD THAT: - The Adjudicating Authority rejected refund on the premise that services wholly consumed within SEZ are not governed by Notification No. 09/2009-ST. The Tribunal found that once it is admitted that the service was received and consumed within the SEZ and hence not taxable, the amount paid is refundable even without applying Notification No. 09/2009-ST. The Revenue's contention that tax which was not payable cannot be refunded under the Notification was rejected on this factual admission. [Paras 4]

Refund is allowable for the construction service which was admitted to be received and consumed within the SEZ; the rejection on the ground of inapplicability of Notification No. 09/2009-ST is set aside.

Characterisation of CHA service despite invoice bifurcation - refund of service tax paid on services consumed within SEZ - Refund of service tax paid for CHA services is admissible despite the CHA's invoice showing amounts under various heads of cost and expenses. - HELD THAT: - The Adjudicating Authority treated the presence of line items such as staff salary, office rent, electricity and security in the CHA invoice as indicating that charges were not for CHA service. The Tribunal held that bifurcation of the total charge into various expense heads does not alter the nature of the supply; the services were provided by the CHA as CHA service. Therefore the refund could not be denied merely because the invoice apportioned amounts to different expense heads. [Paras 5]

Refund of service tax paid on CHA services is allowable; rejection based on invoice bifurcation is set aside.

Refund for construction services partly performed outside SEZ but rendered for SEZ operations - authorised operations of SEZ - Refund of service tax paid for trenching and pipeline construction, partly outside SEZ but executed for authorised SEZ operations, is admissible. - HELD THAT: - The Adjudicating Authority denied refund on the ground that trenching work was not fully within the SEZ. The Tribunal noted that the construction was exclusively for the SEZ and, although part of the works lay outside the SEZ premises, that circumstance did not convert the service into one rendered for purposes other than authorised SEZ operations. On the admitted facts that the trenching and pipelines were installed for use in SEZ operations, the refund was held to be admissible. [Paras 6]

Refund is allowable for the construction related to trenching and pipelines installed partly outside but for the use of the SEZ; the impugned denial is set aside.

Final Conclusion: The impugned orders rejecting the refund claims are set aside and the appeals are allowed; the appellant is entitled to the refunds with consequential relief.

Exemption of admission to museum from service tax - service tax liability on ancillary charges as part of admission fee - rectification of mistake in appellate order - payment and deposit of service tax with interest - penalties under Section 77(2) and Section 78

Service tax liability on ancillary charges as part of admission fee - payment and deposit of service tax with interest - Service tax treatment of guide fee, audio tour charges, elevator fee and parking charges for the period under dispute. - HELD THAT: - The Tribunal modified its earlier final order to clarify that guide fee, audio tour charges, elevator fee and parking charges are taxable for the period 01/07/2012 to 31/03/2014. However, the assessee had already deposited the applicable service tax with interest on these four charges before issuance of the show cause notice, and therefore no further demand arises for the period under dispute. The modification corrects the earlier inadvertent setting aside of the demand in respect of these charges while preserving the effect of the prior payment with interest. [Paras 5]

Service tax is payable on guide fee, audio tour charges, elevator fee and parking charges, but no further demand remains as these amounts with interest have already been paid.

Exemption of admission to museum from service tax - service tax liability on ancillary charges as part of admission fee - Whether camera ticket charges and entry fees to Chokel Deo Bagh are exempt as museum admission for the period under dispute. - HELD THAT: - The Tribunal held that camera ticket charges are in the nature of an additional admission fee to the museum and therefore fall within the retrospective exemption afforded to admission to museum from 01-07-2012. The Tribunal also clarified that the entry fee contested in respect of 'Chokel Deo Garden Restaurant' was in fact an entry fee for Chokel Deo Bagh (a museum) and no entry fee is charged for the restaurant; accordingly, entry fees to Chokel Deo Bagh are exempt for the period under dispute. [Paras 5]

Camera ticket charges and entry fees to Chokel Deo Bagh are exempt from service tax for the period 01/07/2012 to 31/03/2014.

Rectification of mistake in appellate order - penalties under Section 77(2) and Section 78 - Whether the final order requires rectification and the fate of penalties imposed under Section 77(2) and Section 78. - HELD THAT: - The revenue's miscellaneous application seeking rectification was allowed insofar as the Final Order was modified and clarified on the taxable status of the specified charges and the museum admission exemption. In addition, the Tribunal expressly set aside the penalties imposed under Section 77(2) and Section 78, thereby removing the penalty liability reflected in the earlier order. [Paras 5]

The Final Order was rectified and modified as stated; penalties under Section 77(2) and Section 78 are set aside.

Final Conclusion: Miscellaneous application for rectification is allowed. The Final Order is modified to (i) confirm taxability but no further demand in respect of guide fee, audio tour, elevator and parking charges due to prior payment with interest, (ii) hold camera ticket charges and entry fees to Chokel Deo Bagh exempt for the stated period, and (iii) set aside the penalties under Section 77(2) and Section 78.

Manufacture as defined under Section 2(f) of the Central Excise Act, 1944 - reclamation/refining of waste oil does not amount to manufacture - classification of reclaimed fuel oil versus lubricating oil under the Central Excise Tariff - Chapter Note 4 of Chapter 27 and its applicability to lubricating oils - deeming fiction in Chapter Note 4 and its limited scope - interpretation of Circular No. 1024/12/2016-CX regarding re-refined/used oil - limitation - extended period demands and requirement of suppression

Manufacture as defined under Section 2(f) of the Central Excise Act, 1944 - reclamation/refining of waste oil does not amount to manufacture - Conversion of waste oil/sludge into reclaimed fuel oil amounts to manufacture attracting Central Excise duty - HELD THAT: - The Tribunal held that mere purification processes (filtering, distillation, dehydration, centrifuging, removal of impurities) on waste/used oil that leave the product essentially as oil do not result in a new and distinct commodity and therefore do not constitute "manufacture" under Section 2(f). The determinative test applied is whether the processed product is recognised in trade as a new and distinct commodity; where the material before and after processing remains oil and the oil content is not consumed or transformed into a different substance, the activity is cleaning/reclamation and not manufacture. The Tribunal followed consistent precedents and circular guidance treating reclamation of waste oil (including transformer and used lubricating oil analogies) as non-manufacture and concluded demands of excise based on a finding of manufacture could not be sustained on merits. [Paras 5]

Processing of waste/used oil into reclaimed fuel oil is not "manufacture" and does not attract Central Excise duty on the ground of manufacture.

Classification of reclaimed fuel oil versus lubricating oil under the Central Excise Tariff - Chapter Note 4 of Chapter 27 and its applicability to lubricating oils - deeming fiction in Chapter Note 4 and its limited scope - interpretation of Circular No. 1024/12/2016-CX regarding re-refined/used oil - Whether the product obtained on cleaning/reclamation is classifiable as lubricating oil subject to Chapter Note 4 or as reclaimed fuel oil not covered by that note - HELD THAT: - The Tribunal accepted that the appellant's product is reclaimed fuel oil falling under the waste/reclaimed heading rather than lubricating oil. Chapter Note 4's deeming fiction applies to lubricating oils and preparations of Heading 2710 and requires specified processes (and attendant marketability steps such as labelling/repacks) to be treated as manufacture. There was no evidence that the appellant undertook the processes listed in Chapter Note 4, changed marketing/packaging, or held out the product as original lubricating oil; the product was described as recycled/re-refined and marketed as reclaimed fuel oil. The Circular was construed to confirm that Chapter Note 4 is confined to lubricating oils, and similar deeming treatment is not intended for reclaimed fuel oil under heading 2710 99 00. [Paras 5]

The reclaimed fuel oil is classifiable as reclaimed/waste fuel oil and Chapter Note 4 (and its deeming fiction for lubricating oils) is not applicable.

Limitation - extended period demands and requirement of suppression - interpretation of Circular No. 1024/12/2016-CX regarding re-refined/used oil - Validity of the demand raised for an extended period of limitation in the absence of suppression - HELD THAT: - The Tribunal found on the material that the department had been aware of the appellant's activities: information was furnished in response to official queries, the department monitored receipts and storage, and earlier communications had treated the activity as non-excisable. The Circular and prior administrative instructions treat the issue as interpretational and direct that demands, if raised, should generally be within the normal period of limitation. In these circumstances there was no suppression warranting invocation of extended limitation; accordingly the demand for the extended period was legally unsustainable and set aside. [Paras 5, 6]

The demand raised for the extended period is time-barred and unsustainable in absence of suppression.

Final Conclusion: Following the Tribunal's earlier detailed ruling, the impugned order confirming excise demand for the subsequent period was set aside: the processes of cleaning/reclamation of waste/used oil into reclaimed fuel oil do not amount to manufacture, Chapter Note 4 is inapplicable to the reclaimed fuel oil in question, and the demand for an extended period is time-barred; accordingly the appeal is allowed.

Refund of CENVAT credit - maintainability of refund application based on a set-aside appellate order - effect of prior remand on subsequent refund claim - remand for de novo adjudication - limitation - availability of credit prior to 01.04.2011 - verification of entries in the CENVAT Credit account

Refund of CENVAT credit - maintainability of refund application based on a set-aside appellate order - effect of prior remand on subsequent refund claim - Whether the Commissioner (Appeals) was justified in confirming refusal of the refund claim filed on 04.07.2018. - HELD THAT: - The Tribunal noted that on the earlier round this Tribunal set aside the entire Order-in-Appeal dated 29.05.2017 and remanded the matter to the original adjudicating authority for fresh examination of filing of returns, entries in the CENVAT Credit account, the plea of limitation and the availability of credit for the period prior to 01.04.2011. Given that the Order-in-Appeal had been wholly set aside, the refund application premised upon that Order-in-Appeal could not be treated as maintainable. The Commissioner (Appeals) therefore correctly refused the refund application which sought relief on the basis of an appellate order that had been set aside and remitted for de novo adjudication. No irregularity or illegality is shown in the confirmation of the refusal of refund by the Commissioner (Appeals). [Paras 5, 6]

Appeal dismissed; the Commissioner of GST & Central Excise (Appeals-Thane) order confirming refusal of refund is upheld.

Remand for de novo adjudication - limitation - availability of credit prior to 01.04.2011 - verification of entries in the CENVAT Credit account - Scope of the remand previously directed by this Tribunal on 05.12.2017. - HELD THAT: - The operative portion of the earlier Tribunal order set aside the impugned Order-in-Appeal and remanded the matter to the original adjudicating authority to examine whether returns were filed and entries made in the CENVAT Credit account, to reconsider the plea of limitation in light of precedent submissions, and to examine availability of credit for the period prior to 01.04.2011. Those aspects were left for fresh adjudication by the original authority and were not finally decided on merits by the present order. [Paras 4, 5]

The matter remains remitted to the original adjudicating authority for fresh adjudication on limitation, verification of CENVAT records and availability of credit for the period prior to 01.04.2011.

Final Conclusion: The appeal is dismissed and the Order-in-Appeal confirming refusal of the refund is affirmed; the substantive issues regarding limitation, filing of returns, verification of CENVAT Credit account entries and availability of credit prior to 01.04.2011 continue to stand remanded to the original adjudicating authority for de novo adjudication as directed by this Tribunal on 05.12.2017.

Locus standi of purchaser to claim tax refund - acceptance of Form C beyond prescribed time as directory - entitlement to concessional rate under Section 8 of the CST Act - refund of excess Central Sales Tax to purchaser versus selling dealer - doctrine of unjust enrichment in tax refund - binding effect of central circular directing compliance with High Court decisions - statutory interest on tax refunds under the WBST Act - assessment order set aside for erroneous rejection of declarations

Locus standi of purchaser to claim tax refund - refund of excess Central Sales Tax to purchaser versus selling dealer - The purchasing dealer (writ petitioner) has locus to maintain a claim for refund of excess CST directly against the State of West Bengal. - HELD THAT: - The Court examined statutory scheme and authorities and found that where the purchaser has borne the burden of tax and the Form C declarations submitted on its behalf were accepted and verified, the purchaser is a person aggrieved entitled to seek refund. The factual averment that the purchaser did not pass on the tax burden was not controverted and was supported by a chartered accountant's certificate; accordingly the State's plea of lack of locus was unsustainable. Reliance on provisions and decisions holding refund only to selling dealer was distinguished on the basis of differing statutory language and the presence of Section 37(3) of the WBST Act and related authorities permitting refund to buyers who have borne the tax burden. [Paras 84, 92, 106]

Purchasing dealer has locus to maintain refund claim directly and the writ petition is maintainable.

Acceptance of Form C beyond prescribed time as directory - entitlement to concessional rate under Section 8 of the CST Act - Filing of Form C is mandatory to obtain concessional rate, but the time limit for filing is directory and the prescribed authority may accept Form C beyond the period on sufficient cause. - HELD THAT: - A conjoint reading of Section 8(4) CST Act and Rule 12(7) shows the authority has power to permit filing beyond the three-month period if satisfied of sufficient cause. Precedents (including Arulmurugan, Gujarat Ambuja and others) establish that declarations filed after assessment can be received and the concession applied if sufficient cause is shown. The assessing authority in IOCL's case had accepted the forms, indicating satisfaction of sufficient cause; therefore rejecting concession on technical ground of revised returns or amended invoices was unsustainable. [Paras 73, 74, 78, 106]

Form C is mandatory but time limit is directory; the accepted Form C declarations must be treated as valid for concessional rate.

Assessment order set aside for erroneous rejection of declarations - assessment proceedings and appellate power to consider belated declarations - The assessment order dated 30.06.2020 is set aside to the extent it refused acceptance of the Form C declarations and denied concessional rate. - HELD THAT: - The Court found the assessing officer's refusal-based on non-filing of revised returns, non-amendment of invoices and non-issuance of credit notes-to be legally untenable and arbitrary. Procedural impossibility (expired window for revised returns) and the primacy of substantive entitlement to concession led to the conclusion that the rejection was perverse; appellate and revisional authorities have power to admit belated forms and direct reassessment. [Paras 72, 79, 82, 83, 106]

Assessment order set aside insofar as it rejects Form C declarations and denies concessional rate.

Entitlement to concessional rate under Section 8 of the CST Act - The writ petitioner is entitled to the concessional rate of tax for transactions covered by the verified Form C declarations, having fulfilled conditions under Section 8. - HELD THAT: - On verification, the Form C declarations were found to comply with statutory requirements; therefore the substantive right to be assessed at concessional rate accrued to the purchaser. The Court emphasised that once statutory conditions are satisfied, procedural technicalities cannot defeat the substantive concession. [Paras 72, 76, 106]

Writ petitioner entitled to concessional rate as conditions of Section 8 are fulfilled.

Refund of excess Central Sales Tax to purchaser versus selling dealer - doctrine of unjust enrichment in tax refund - The writ petitioner may claim refund directly from the State of West Bengal; refund need not be routed only through the selling dealer, and the State cannot withhold refund on unjust enrichment grounds where purchaser bore the burden. - HELD THAT: - The Court reviewed statutory provisions (including Section 37 of WBST Act) and precedent (R.S. Joshi, Mafatlal, J.K. Cements and multiple High Court decisions) to hold that where excess tax was collected from purchasers and deposited with the State, the purchaser who has borne the burden is entitled to refund. The State's contentions that only seller may claim refund or that refund to seller must be used to pass benefit to purchasers were rejected as impractical and contrary to Article 265; unjust enrichment defence could not be invoked against purchasers who did not pass on the burden and who had entitlement to refund. [Paras 52, 89, 90, 103, 106]

Purchaser entitled to claim refund directly; State unjustified in refusing refund on pleaded grounds.

Binding effect of central circular directing compliance with High Court decisions - The Union of India's circular dated 01.11.2018 directing States to follow the Capro Power reasoning is binding on the State of West Bengal in its role as collecting agent for CST. - HELD THAT: - The Court noted consistent High Court decisions and dismissal of special leave petitions, and observed that the Central circular, issued for compliance with judicial decisions, must be followed by States acting as agents for collection of Central Sales Tax. West Bengal's prior internal circular had continued issuance of Form C, and the subsequent refusal in assessment was inconsistent with the binding legal position. [Paras 83, 106]

The 01.11.2018 circular is binding on the State and non-refund contravenes that instruction.

Doctrine of unjust enrichment in tax refund - The plea of unjust enrichment cannot be used to deny refund to the writ petitioner where no material shows the purchaser has passed the tax burden to others. - HELD THAT: - Applying the definition and principles of unjust enrichment, the Court found no evidence that the writ petitioner retained a benefit to another's loss; the purchaser had averred non-passing of burden and supplied supporting certification, and the State did not controvert this. Consequently, unjust enrichment defence fails as a basis to deny purchaser's refund. [Paras 84, 85, 103, 106]

Unjust enrichment defence is not available to the State to deny the purchaser's refund claim on the facts.

Statutory interest on tax refunds under the WBST Act - The writ petitioner is entitled to statutory interest on the refund under the WBST Act, limited to the period from 01.07.2020 (day after the assessment order dated 30.06.2020) until payment; earlier anterior interest is not awarded. - HELD THAT: - While statutory interest must conform to Section 34 of the WBST Act, the Court held that retention of excess tax after erroneous refusal of Form C was unauthorized; entitlement to interest therefore accrues from the date the assessment order rejecting Form C was passed. The Court declined to award interest from the original payment date because the legal position prior to the High Court of Jharkhand's judgment was unsettled. [Paras 37, 105, 106, 107]

Interest payable at statutory rate under WBST Act from 01.07.2020 until refund is effected.

Assessment proceedings and appellate power to consider belated declarations - moulding relief under Article 226 - Pending appeals/revisions in favour of IOCL are to be allowed in terms of this judgment; the High Court will mould relief under Article 226 to grant finality and direct refund to purchasers where appropriate. - HELD THAT: - The Court criticised appellate authorities' failure to keep appeals pending and exercised its writ jurisdiction to grant effective relief. Given assessment orders were set aside insofar as they rejected Form C, appellate and revisional forums are directed to allow appeals in terms of this judgment; the Court's power to mould relief under Article 226 was invoked to ensure direct refund to purchasers and to secure finality. [Paras 82, 93, 104, 106]

Pending appeals/revisions to be allowed in terms of this judgment and the Court may mould relief to direct refund to purchasers.

Final Conclusion: The intra-court appeal is dismissed. The High Court's order is affirmed: the writ petitioner (purchasing dealer) may claim refund directly from the State of West Bengal for the excess CST collected and deposited by the selling dealer (IOCL) in respect of the disputed period; the Form C declarations submitted are valid (time limit directory), the assessment denying concessional rate is set aside to that extent, statutory interest under the WBST Act is payable from 01.07.2020 until refund, and the State is directed to effect refund to the writ petitioner within 45 days in accordance with the judgment.

Liability of directors of a private company on winding-up - recovery under Section 16B of the Act - pre-condition of winding-up for invoking director's liability - requirement to record steps taken to recover dues from the company - defence of absence of gross neglect, misfeasance or breach of duty

Liability of directors of a private company on winding-up - recovery under Section 16B of the Act - requirement to record steps taken to recover dues from the company - defence of absence of gross neglect, misfeasance or breach of duty - Validity of the notice of attachment issued against an ex-director when the company is not wound-up and whether Section 16B could be invoked to recover tax arrears from the petitioner. - HELD THAT: - The Court held that Section 16B of the Act attaches liability to directors of a private company in the context of winding-up: tax assessed on the company before, in the course of, or after its liquidation gives rise to director liability. The provision does not permit automatic recovery from directors whenever recovery from the company fails; it contemplates invocation in the context of a wound-up company and allows the director to escape liability by proving that non-recovery is not attributable to gross neglect, misfeasance or breach of duty on his part. The impugned notice of attachment failed to record any antecedent efforts or steps taken to recover the arrears from the company and, on the respondent's own affidavit, the company's management merely changed in 2001-02 (indicating the company was not wound-up). In these circumstances, the authority could not validly proceed against the petitioner, an ex-director, by attaching her property under the impugned notice; the attachment was therefore unsustainable. The Court permitted the revenue to initiate recovery proceedings against the company in accordance with law. [Paras 11, 12, 13, 14, 15]

Impugned notice of attachment against the petitioner set aside; respondent at liberty to proceed against the company in accordance with law.

Final Conclusion: Writ petition allowed; attachment on the petitioner's property set aside because Section 16B was inapplicable absent winding-up and the notice did not record attempts to recover from the company; revenue may pursue recovery from the company.

Re-assessment jurisdiction under Section 25 of the KVAT Act - extension of limitation period by amendment - prospective application of statutory amendment - accrual of vested right on expiry of limitation

Re-assessment jurisdiction under Section 25 of the KVAT Act - extension of limitation period by amendment - prospective application of statutory amendment - accrual of vested right on expiry of limitation - Validity of reassessment notices issued after 01.04.2017 in light of the amendment extending the limitation period from five to six years and whether dealers had acquired a vested right against reassessment before the amendment. - HELD THAT: - The Court examined the amended provision which, with effect from 01.04.2017, substituted 'six years' for 'five years' in Section 25(1) of the KVAT Act and extended the period for proceedings expiring on 31.03.2017 up to 31.03.2018. The Court held that the amendment enlarging the period of limitation operated prospectively from its effective date; consequently, where the limitation period had not already concluded as a vested or accrued right in favour of the dealer on 01.04.2017, the Department retained jurisdiction to issue reassessment notices within the extended period. The judgment in Baiju A A and related precedents recognizing accrual of a right on expiry of the five-year period do not bar application of the amended limitation where, as on 01.04.2017, no vested right had yet arisen. Applying this principle to the cases before it (including the assessment years 2013-14 and 2014-15), the Court found that notices issued after the amendment date but within the extended limitation were within jurisdiction and could not be quashed merely by reference to earlier decisions. [Paras 3, 4, 6]

Notices issued after 01.04.2017 but within the extended six-year period are valid; the amendment applies prospectively and does not vest a right against reassessment where the five-year period had not yet resulted in an accrued right on 01.04.2017.

Extension of limitation period by amendment - re-assessment jurisdiction under Section 25 of the KVAT Act - Appropriate relief where earlier writ judgments quashed reassessment notices by applying Baiju A A. - HELD THAT: - Having found that the amended limitation applied and that notices issued within the extended period were within jurisdiction, the Court set aside the writ judgments which had quashed those notices. The Court granted the dealers liberty to file appeals before the Appellate Authority within four weeks, excusing delay occasioned during pendency of the writ petitions, and directed that such appeals be admitted, numbered and heard on merits in accordance with law. [Paras 6]

Judgments under appeal quashing reassessment notices are set aside; respondents granted leave to file appeals before the Appellate Authority within four weeks with delay excused.

Final Conclusion: The appeals are allowed: the amendment extending the limitation period to six years, effective 01.04.2017, applies prospectively so that reassessment notices issued after that date but within the extended limitation are valid; the writ judgments quashing such notices are set aside and the dealers are permitted to file appeals before the Appellate Authority within four weeks, with delay excused.

Liability of directors for company's tax arrears - application of Section 16-B of the Andhra Pradesh General Sales Tax Act, 1957 - deemed winding up by amalgamation not equivalent to winding up under Companies Act - proceedings under the Andhra Pradesh Revenue Recovery Act, 1864 - attachment in Form 5 under Section 27 of the Act of 1864

Liability of directors for company's tax arrears - application of Section 16-B of the Andhra Pradesh General Sales Tax Act, 1957 - Whether the petitioner, a former director who ceased to hold office before the relevant year, can be made liable and have his properties attached for tax arrears of the company for the year 2002-03. - HELD THAT: - The Court applied its earlier rulings and held that recovery of a company's tax dues from its directors is permissible only within the scope of Section 16-B of the APGST Act, i.e., when the company is in liquidation in the sense contemplated by that provision. The petitioner ceased to be a director on 01.11.2001 and the arrears relate to tax for 2002-03. In the absence of the company being under winding up proceedings as prescribed under the Companies Act, the respondents have no authority to recover the company's CST arrears from the petitioner. Reliance was placed on this Court's consistent decisions to the effect that directors cannot be made personally liable for company dues except in the specific statutory situation envisaged by Section 16-B, and those precedents were treated as determinative of the present facts. [Paras 5, 10, 11]

The attachment and recovery proceedings against the petitioner personally for the company's 2002-03 tax arrears cannot be sustained and must be set aside.

Deemed winding up by amalgamation not equivalent to winding up under Companies Act - proceedings under the Andhra Pradesh Revenue Recovery Act, 1864 - attachment in Form 5 under Section 27 of the Act of 1864 - Whether amalgamation of the 3rd respondent company with another company amounts to 'winding up' so as to render directors personally liable under Section 16-B and justify recovery under the Act of 1864. - HELD THAT: - The Court rejected the respondents' contention that amalgamation under Section 397 of the Companies Act operates as a deemed winding up. Amalgamation effects transfer of assets and liabilities to the transferee company and is a distinct corporate procedure, whereas winding up follows the statutory scheme set out in Part II of Chapter XX of the Companies Act. Consequently amalgamation cannot be equated with winding up for purposes of invoking director liability under Section 16-B. On that basis, initiation of recovery proceedings under the Revenue Recovery Act by issuing an attachment in Form 5 under Section 27 against the petitioner was held to be without legal foundation. [Paras 7, 9]

Amalgamation does not amount to winding up for the purpose of imposing personal liability on directors; the impugned attachment under the Act of 1864 is unsustainable on this ground.

Final Conclusion: The writ petition is allowed: the notice of attachment in Form 5 dated 22.08.2007 is set aside and the recovery proceedings against the petitioner, a former director, for the company's 2002-03 CST arrears are quashed, the Court holding that director liability under Section 16-B arises only where the company is in winding up and amalgamation does not amount to winding up.

Works contract - compounded rate of tax - exclusion of labour charges from turnover - input tax credit - levy of interest from date of completion of assessment - remand for fresh consideration

Works contract - compounded rate of tax - Validity of the Tribunal's finding that the dealer is not entitled to payment of tax at the compounded rate as a works contractor - HELD THAT: - The Tribunal had found that the work carried out by the dealer is not a works contract and therefore the dealer is not entitled to payment of tax at the compounded rate, applying assessment under the general rates. The High Court reviewed the Tribunal's order and observed an internal inconsistency between the Tribunal's finding that the activity was not a works contract and other directions in the same order; however, the Court did not disturb the Tribunal's substantive finding recorded in the paragraph holding that the appellant is not entitled to compounded rate treatment. That finding remains intact. [Paras 10]

Tribunal's finding that the activity is not a works contract and that the dealer is not entitled to tax at the compounded rate is left undisturbed.

Exclusion of labour charges from turnover - remand for fresh consideration - Whether labour charges must be excluded from the dealer's turnover for VAT purposes and the consequent directions in the Tribunal's order - HELD THAT: - The Tribunal directed exclusion of labour charges from the levy of tax, but the High Court found this direction inconsistent with the Tribunal's own finding that the activity was not a works contract and noted that the nature of the labour charges (whether employed in bus body building or received separately for repair/maintenance) was not specified. Because those factual and classificatory details are material to deciding entitlement to exclude labour charges, the Court held the Tribunal's paragraph containing that direction to be inconsistent and set that portion aside. The Court accepted the respondent's alternative submission and remitted the specific question - whether labour charges are entitled to be excluded from turnover - to the Tribunal for fresh consideration and disposal limited to that issue, leaving other findings undisturbed. [Paras 15]

Paragraph 15 of the Tribunal's order (directing exclusion of labour charges) is set aside and the matter is remitted to the Tribunal for fresh consideration only on whether labour charges are to be excluded from turnover; other findings of the Tribunal remain intact.

Final Conclusion: Revision allowed in part: the Tribunal's general finding that the dealer is not a works contractor and is not entitled to compounded rate tax is maintained; the Tribunal's direction excluding labour charges from turnover is set aside and remitted to the Tribunal for fresh consideration limited to that question; other findings remain unaffected.