TaxTMI Updates e-Newsletter
Dec 07,2024

Failure to consider reply/representation - remand for fresh consideration - order for recovery of interest under the Uttar Pradesh Goods and Services Tax Act, 2017 - order unsustainable for non-consideration of material filed by the party

Failure to consider reply/representation - order unsustainable for non-consideration of material filed by the party - remand for fresh consideration - Whether the impugned order dated 17.09.2024 can be sustained where the Authority did not take into consideration the reply filed by the petitioner in response to the notice. - HELD THAT: - The Court found on instructions that the petitioner had filed a response by e-mail on 22.08.2024 which was received by the Authority but was not considered when passing the impugned order dated 17.09.2024. As the Authority did not take into account the reply filed in response to the notice, the order could not be sustained. The Court therefore set aside the impugned order and remanded the matter to the Authority with directions to take into consideration the response filed by the petitioner and to pass a fresh order in accordance with law. The remand is for fresh consideration of the reply and for decision afresh on merits by the Authority. [Paras 7, 8]

Impugned order dated 17.09.2024 set aside; matter remanded to the Authority to consider the petitioner's reply and pass a fresh order in accordance with law.

Final Conclusion: The petition is disposed of by setting aside the order of recovery of interest dated 17.09.2024 and remanding the matter to the Authority for fresh consideration of the reply filed by the petitioner and for decision in accordance with law.

Show cause notice under Section 74(1) - non-consideration of reply - opportunity of hearing - limitation for filing appeal - conditional quashing and remand for fresh adjudication - deposit as condition for interim relief

Show cause notice under Section 74(1) - non-consideration of reply - opportunity of hearing - Validity of the order dated 24.07.2023 (DRC-7) founded on the show cause notice and whether the petitioner was denied appropriate consideration of its replies and opportunity of hearing. - HELD THAT: - The Court found that the show cause notice reproduced only part of the petitioner's earlier reply (paras 18-22) and did not appear to take into account other pleas raised in the reply. The impugned order records that no response or appearance was made, although the earlier reply had been filed; the assessment order therefore did not reflect consideration of all the petitioner's contentions. In these circumstances, and in view of the factual backdrop that the petitioner could not attend the hearing due to family circumstances, the Court concluded that the matter required rehearing so that the petitioner's remaining pleas are considered and a fresh order is passed after affording opportunity of hearing. [Paras 6]

Order dated 24.07.2023 set aside and matter remanded to the respondent to afford the petitioner an opportunity of hearing and pass a fresh order after considering all pleas.

Limitation for filing appeal - conditional quashing and remand for fresh adjudication - deposit as condition for interim relief - Whether interim relief should be granted and on what condition given that the respondent has lost limitation for filing appeal. - HELD THAT: - The Court noted that, in the overall factual matrix, the respondent had in some measure lost the limitation for filing an appeal. Balancing that circumstance with the omission to consider certain pleas of the petitioner, the Court exercised discretion to grant conditional relief. The conditional relief is framed to protect the revenue interest while enabling the petitioner to obtain a rehearing: if the petitioner deposits fifty percent of the demand (after adjusting amounts already deposited) within four weeks, the impugned order will be set aside and the respondent will rehear and pass a fresh order; failure to deposit within the prescribed period will result in the writ petition being deemed dismissed. [Paras 7, 8]

Conditional relief granted: petitioner to deposit 50% of the demand within four weeks to obtain setting aside of the order and remand; non-deposit will result in dismissal of the writ petition.

Final Conclusion: The High Court set aside the order dated 24.07.2023 and directed that the respondent shall afford the petitioner a fresh hearing and pass a fresh order, subject to the petitioner depositing 50% of the demand within four weeks; failure to comply will result in dismissal of the writ petition.

Exhaustion of alternate remedies - entertainment of writ petitions under Article 226 - relegation to alternate remedy of appeal - direction to appellate authority not to raise limitation when appeal filed within specified time

Exhaustion of alternate remedies - entertainment of writ petitions under Article 226 - Petition under Article 226 declined for failure to demonstrate any reason to depart from the practice of exhausting alternate remedies - HELD THAT: - The Court found that the petitioner's sole pleading that there was no efficacious alternate remedy due to 'wrongful actions by the Respondents' did not furnish any specific averments warranting departure from the settled practice of requiring exhaustion of alternate remedies before entertaining a writ under Article 226. The High Court applied its earlier reasoning in comparable matters where petitions were rejected for similar lack of justification, and accordingly declined to exercise its discretionary jurisdiction to entertain the writ. The petitioner was therefore relegated to pursue the statutory appellate remedy. [Paras 3, 4, 5, 6, 7]

Writ petition declined and petitioner relegated to the alternate remedy of appeal.

Relegation to alternate remedy of appeal - direction to appellate authority not to raise limitation when appeal filed within specified time - Appellate authority directed to entertain an appeal filed within four weeks without addressing limitations - HELD THAT: - The Court accepted the counsel's undertaking that an appeal would be instituted within four weeks after completing necessary procedures. In view of the fact that the writ had been instituted, apparently within the limitation period for appeal, the Court directed that if the appeal is filed within the stated fourweek period the appellate authority should entertain it on merits and refrain from raising the question of limitation. All other contentions were left open for consideration by the appellate forum. [Paras 8, 9]

If an appeal is instituted within four weeks, the appellate authority shall entertain it on merits without addressing limitation; other contentions left open.

Final Conclusion: The High Court refused to entertain the writ for failure to show a basis to bypass exhaustion of alternate remedies, relegated the petitioner to file an appeal, and directed that any appeal filed within four weeks be entertained on merits without the appellate authority raising limitation; the petition is disposed of with all other contentions left open and no costs ordered.

Natural justice - opportunity of personal hearing - condonation of delay - exercise of discretion under Section 107 of the CGST Act - remand for decision on merits

Natural justice - opportunity of personal hearing - Impugned order rejecting the appeal was set aside for gross breach of principles of natural justice by denying the petitioner an effective hearing. - HELD THAT: - The Court found that the appellate authority had issued successive notices for personal hearing, accepted an adjournment request and fixed a fresh date, but then cancelled the hearing and, before the petitioner could respond, issued the impugned order rejecting the appeal as time-barred. In these circumstances the petitioner was denied a hearing opportunity and the order constituted a gross breach of natural justice, warranting interference. The Court therefore set aside the impugned order and directed reconsideration. This finding is recorded in the judgment where the factual sequence and the absence of hearing are examined and the Court declines to relegate the petitioner to alternate remedies on that ground (paras 4, 8-11). [Paras 4, 8, 9, 10]

Impugned order dated 31 January 2024 set aside for breach of natural justice and denial of hearing.

Condonation of delay - exercise of discretion under Section 107 of the CGST Act - remand for decision on merits - Delay of 18 days in filing the appeal was condoned and the matter remanded to the first appellate authority to decide the appeal on merits. - HELD THAT: - Although the appeal was filed beyond the initial three-month period, it was within the further condonable period of one month plus an additional 18 days. The Court examined the rectification proceedings pursued by the petitioner and concluded that sufficient cause existed for the marginal delay. Applying the discretionary scheme for extension under Section 107 of the CGST Act, the Court exercised its supervisory jurisdiction to condone the delay of 18 days. Consequently, the matter was remanded to the appellate authority for disposal on merits, with all contentions left open for fresh consideration (paras 5-7, 11-12). [Paras 5, 6, 7, 11, 12]

Delay of 18 days condoned; appeal remitted to the first appellate authority to be decided on merits.

Final Conclusion: The Court set aside the impugned order dated 31 January 2024 for breach of natural justice, condoned the delay in instituting the appeal, and remitted the matter to the first appellate authority to decide the appeal on merits; all contentions are left open and there shall be no order as to costs.

Administrative determination by National Anti-Profiteering Authority - judicial review of methodology of administrative determination - interim stay subject to deposit of security - absence of statutory right of appeal against determination

Interim stay subject to deposit of security - Grant of ad-interim stay of the impugned order subject to deposit of 50% of the profited amount referred to in paragraphs 49 and 50 of the impugned order (excluding interest). - HELD THAT: - On an application for interim relief against the National Anti-Profiteering Authority's determination, the Court concluded that conditional interim relief was appropriate in the facts of these petitions. The petitioners were directed to deposit 50 per cent of the profited amount referred to in paragraphs 49 and 50 of the impugned order (excluding interest) in this Court within eight weeks. The Court observed that the petitioners have objections to the methodology and the determination, which could be examined on merits, but nevertheless granted a stay conditioned upon the specified deposit to serve the interests of justice. [Paras 11, 12]

Ad-interim relief granted subject to deposit of 50% of the profited amount (excluding interest) in this Court within eight weeks.

Interim stay subject to deposit of security - Consequences of non-deposit of the directed amount for maintaining the interim relief. - HELD THAT: - The Court provided that if the directed deposit is not made within the stipulated period, the ad-interim relief granted would stand vacated without further reference to the Court. This condition governs the continued operation of the stay and makes the interim relief contingent on compliance with the deposit direction. [Paras 13]

Failure to deposit the stipulated amount within the time directed will result in automatic vacatur of the ad-interim relief.

Absence of statutory right of appeal against determination - judicial review of methodology of administrative determination - Permissibility of interim judicial relief notwithstanding that the petitioners asserted they have no right of appeal against the Authority's determination and that methodology adopted is contested. - HELD THAT: - The Court noted the petitioners' contention that they have no statutory right of appeal against the Authority's determination and that the methodology adopted to compute profited amount is erroneous. While observing that these objections could be examined on merits, the Court did not deny interim relief on the ground of absence of an appeal; instead it balanced the parties' interests by granting a conditional stay subject to deposit, thereby preserving the petitioners' challenge for adjudication. [Paras 10, 11]

Interim relief was granted despite the asserted absence of a statutory right of appeal, subject to the deposit condition, leaving merits for adjudication.

Procedural extension for filing pleadings - Extension of time for filing the affidavit in the main petition and for filing rejoinder. - HELD THAT: - The Court extended time for filing the affidavit in the main petition by six weeks from the date of the order and, correspondingly, extended the time for filing the rejoinder by six weeks from receipt of the reply. This procedural extension was ordered to facilitate the progress of the writ proceedings in light of the Rule issued and interim directions. [Paras 14]

Time for filing the affidavit and rejoinder extended by six weeks as directed.

Final Conclusion: Rule issued; ad-interim stay granted as prayed subject to deposit of 50% of the profited amount (excluding interest) within eight weeks, non-compliance to vacate the stay automatically; time for filing affidavit and rejoinder extended by six weeks.

Extinguishment of statutory dues under a resolution plan - effect of appellate modification of adjudicating authority's direction - remand for fresh adjudication - opportunity of personal hearing before adjudication - requirement of a reasoned order - consideration of binding and persuasive precedents

Effect of appellate modification of adjudicating authority's direction - extinguishment of statutory dues under a resolution plan - remand for fresh adjudication - Validity of the impugned order-in-original dated 29 April 2022 in light of the NCLAT's modification of the NCLT's paragraph 95(ii) and need for remand. - HELD THAT: - The court found that the 2nd Respondent proceeded on the basis of the unmodified direction in paragraph 95(ii) of the NCLT order dated 07 June 2021, whereas the NCLAT modified that direction by its order dated 12 July 2021 to provide that all dues, including statutory dues owed to the Central Government, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the approval under Section 31 could be continued. The personal hearing before the 2nd Respondent had concluded on 25 February 2021 and the NCLAT order was not placed before the 2nd Respondent when the impugned order was passed on 29 April 2022. Given this material appellate modification which is directly relevant to the adjudication, the court held that the matter requires fresh consideration by the 2nd Respondent. In these circumstances relegation to the alternate remedy was held to be inappropriate and the impugned order was quashed and set aside, with remand for de novo decision in light of the NCLAT modification. [Paras 5, 11, 12, 13, 15]

Impugned order dated 29 April 2022 quashed and set aside; matter remanded to the 2nd Respondent for fresh adjudication taking into account the NCLAT's modification.

Opportunity of personal hearing before adjudication - requirement of a reasoned order - consideration of binding and persuasive precedents - Obligations of the 2nd Respondent on remand including hearing, consideration of NCLAT order and cited decisions, and timeline for disposal. - HELD THAT: - The court directed that on remand the 2nd Respondent must afford the Petitioner an opportunity of hearing, consider the NCLAT order dated 12 July 2021 as well as the judicial decisions referred to by the High Court (and any other decisions the parties may cite), and pass a reasoned order on the merits in accordance with law. The court emphasised that the fresh decision must follow law and be reasoned. The 2nd Respondent was directed to decide the matter expeditiously and, in any event, within three months of uploading the High Court's order. [Paras 16, 17]

2nd Respondent to grant hearing, consider the NCLAT order and cited authorities, and pass a reasoned decision within three months.

Final Conclusion: The High Court quashed the order-in-original dated 29 April 2022 and remanded the matter to the 2nd Respondent for fresh, reasoned adjudication after giving the Petitioner an opportunity of hearing and taking into account the NCLAT's order and the relevant authorities; disposal to be effected within three months.

Disallowance of input tax credit for delay in filing GSTR-3B - retrospective extension of time for filing returns - rectification under section 148 - writ jurisdiction where alternative statutory remedy exists

Disallowance of input tax credit for delay in filing GSTR-3B - retrospective extension of time for filing returns - Whether the petitioner was entitled in writ jurisdiction to quash the impugned order disallowing Input Tax Credit on the basis of an amendment extending the time for filing returns - HELD THAT: - Petitioner challenged an order disallowing ITC on account of delayed filing of GSTR-3B and relied on an amendment inserted into section 16 of the CGST Act (notification dated 27th September, 2024) which extended the time for filing returns. The Court noted that the petitioner had not preferred an appeal against the impugned order but had invoked writ jurisdiction. The Court did not adjudicate the substantive entitlement to ITC under the amendment. Instead, having observed that a departmental procedure (CBIC circular dated 15th October, 2024) required rectification under section 148 where no appeal had been filed, and that time to seek rectification remained available to the petitioner, the Court directed compliance with that statutory remedy rather than deciding the merits in writ proceedings. [Paras 3, 4, 5]

Writ petition not entertained on merits; petitioner directed to avail the rectification remedy under section 148 in accordance with the departmental circular.

Rectification under section 148 - writ jurisdiction where alternative statutory remedy exists - Availability and invocation of rectification under section 148 as the appropriate remedy where no appeal has been filed - HELD THAT: - The Court accepted the revenue's position based on the post-filing circular that, in the absence of an appeal, the assessee should seek rectification under section 148 within the prescribed period from the date of the notification. The Court observed that the circular was issued after institution of the writ petition and that the procedure it prescribes was available and capable of being availed by the petitioner. Given that the statutory/departmental remedy remained open and time to apply for rectification was still available, the Court disposed of the writ petition directing compliance with that remedy rather than exercising writ jurisdiction to set aside the impugned order. [Paras 3, 4, 5]

Petitioner to apply for rectification under section 148 as per the departmental circular; writ petition disposed accordingly.

Final Conclusion: The writ petition was disposed of without adjudication on the merits; the petitioner was directed to pursue rectification under section 148 in accordance with the CBIC circular and the notification, as the alternate statutory remedy remained available.

Ineligible input tax credit claimed on invoices of a non-existent supplier - service of notice via common GST portal - opportunity of hearing - set aside and remand for fresh adjudication - conditional interim relief by deposit of disputed tax - lifting of bank attachment upon compliance

Service of notice via common GST portal - opportunity of hearing - Validity of the impugned assessment order where notices were uploaded on the common portal and the petitioner was unable to access the portal and participate in adjudication. - HELD THAT: - The Court accepted the petitioner's challenge that the show cause notices and the assessment order had been uploaded on the common portal and were not served by tendering or registered post, and that the petitioner was unable to access the portal and therefore was deprived of an opportunity to participate in the proceedings. In view of this procedural shortcoming and the petitioner's request for an opportunity to explain the alleged discrepancies, the impugned order was set aside and the matter directed to be treated as not finally adjudicated until the petitioner is afforded an opportunity to file objections and be heard. The Court relied on the petitioner's willingness to cooperate and to deposit a portion of the disputed tax as a precondition for interim relief. [Paras 3, 4, 5]

Impugned order set aside and treated as not finally adjudicated; petitioner to be afforded opportunity to file objections and be heard after compliance with the stipulated condition.

Set aside and remand for fresh adjudication - ineligible input tax credit claimed on invoices of a non-existent supplier - Procedure to be followed on remand for reconsideration of the claim of ineligible input tax credit. - HELD THAT: - The assessment arose from inspection findings that input tax credit had been availed on the basis of documents issued by a supplier found not to be conducting business. The Court did not decide the substantive correctness of the addition on merits but directed that, upon the petitioner depositing 25% of the disputed tax and filing objections with supporting material within the prescribed time, the respondent shall consider those objections and pass fresh orders in accordance with law after affording a reasonable opportunity of hearing. Thus the substantive issue remains to be decided afresh by the adjudicating authority on receipt of the petitioner's objections and evidence. [Paras 2, 5]

Matter remitted to the respondent for fresh consideration on merits after the petitioner deposits 25% of disputed tax and files objections; respondent to afford a reasonable hearing and pass orders in accordance with law.

Conditional interim relief by deposit of disputed tax - lifting of bank attachment upon compliance - Grant of interim relief in the form of conditional deposit and consequential lifting of bank attachment. - HELD THAT: - The Court granted conditional interim relief by directing the petitioner to deposit 25% of the disputed tax within four weeks; on such compliance the impugned order shall be treated as a show cause notice and the petitioner afforded time to file objections. The Court further ordered that bank attachments made pursuant to the impugned assessment shall be lifted forthwith on compliance with the deposit condition (specified to be within two weeks for lifting), thereby providing immediate interlocutory relief while preserving the respondent's right to proceed if conditions are not met. [Paras 5]

Petitioner to deposit 25% of disputed tax within the stipulated time; on compliance the impugned order to be treated as show cause notice and bank attachments to be lifted; failure to comply will result in restoration of the impugned assessment order.

Final Conclusion: Writ petition disposed by setting aside the impugned assessment order for procedural infirmity, directing conditional interim relief on deposit of 25% of disputed tax, remitting the matter to the adjudicating authority for fresh consideration after affording hearing, and ordering lifting of bank attachments upon compliance; failure to comply will result in restoration of the impugned order.

Reasoned order requirement - special audit under Section 66 - show cause notice - imposition of penalty for unsatisfactory reply under Section 73(9) - principles of natural justice - remand for fresh consideration

Reasoned order requirement - show cause notice - special audit under Section 66 - Validity of the order dated 26 April 2024 confirming audit observations and creating demand - HELD THAT: - The impugned order failed to engage with or adjudicate the various objections raised by the petitioner to the findings of the special audit and the proposed additions. The order is terse, records that the taxpayer's replies were "incomplete/inconclusive" and states that there were no substantial facts to counter the auditor's observations, but does not address the specific submissions made in the detailed replies filed by the petitioner. For these reasons the order is wholly unreasoned and cannot stand.

The order dated 26 April 2024 is quashed for want of reasoned consideration.

Principles of natural justice - remand for fresh consideration - imposition of penalty for unsatisfactory reply under Section 73(9) - Relief appropriate to cure the identified defect and further course of action - HELD THAT: - Rather than deciding the controversy on merits in the present proceedings, the Court directed that the matter be remitted to the GST Officer concerned for fresh consideration of the Show Cause Notice and the detailed replies already filed by the petitioner. The remand contemplates that the GST Officer will re-examine the audit observations, the petitioner's submissions and afford opportunities consonant with the principles of natural justice; the Court has kept all contentions on merits open for reconsideration by the assessing authority.

Matter remitted to the GST Officer for fresh consideration of the SCN and the petitioner's replies, with all merits contentions kept open.

Final Conclusion: Writ petition allowed; the demand order dated 26 April 2024 (tax period July 2018 to March 2019) is quashed and the matter is remitted to the GST Officer for fresh consideration of the SCN and the replies, preserving all substantive contentions for adjudication afresh.

Exhaustion of alternate remedy - pre-deposit requirement for statutory appeal - scope of writ jurisdiction under Article 226 - pure question of law versus factual investigation - Section 16(2)(c) of the CGST Act - insolvency of a party not a ground to bypass statutory remedy - reluctance to permit bypass of statutory remedies to evade pre-deposit

Exhaustion of alternate remedy - pre-deposit requirement for statutory appeal - scope of writ jurisdiction under Article 226 - Maintainability of the writ petition when an appeal lies under the CGST Act but requires a statutory pre-deposit. - HELD THAT: - The Court found that the impugned order dated 30 May 2024 is appealable under the CGST Act and the petitioner admitted availability of the alternate remedy under Section 107 of the CGST Act. The statutory requirement of a pre-deposit is not a valid ground to bypass the statutory appellate remedy. Exercising extraordinary jurisdiction under Article 226 to circumvent mandatory statutory pre-deposit requirements is not justified where the petitioner has not exhausted the alternate remedy and appears to be 'taking a chance' to avoid the pre-deposit. Reliance on authorities emphasising that writ jurisdiction cannot be used to subvert mandatory statutory requirements reinforces this conclusion. [Paras 3, 4, 10]

The writ petition is not maintainable in the face of an available statutory appeal subject to pre-deposit; the petitioner must avail alternate remedies under the CGST Act.

Pure question of law versus factual investigation - Whether the petition raises only a pure question of law permitting bypass of the statutory remedy. - HELD THAT: - The Court held that the petition does not present solely a pure question of law because adjudication of the challenge to the impugned order would require investigation into factual aspects. Accordingly, the exception permitting direct writ remedy in cases of purely legal questions does not apply. The petitioner's contention that only a pure question of law is involved was therefore rejected. [Paras 5]

The matter involves factual inquiry and is not confined to a pure question of law; hence the petitioner cannot be excused from pursuing the statutory appellate remedy.

Section 16(2)(c) of the CGST Act - Validity of the impugned order's reliance on Section 16(2)(c) of the CGST Act and whether that reliance precludes alternate remedy. - HELD THAT: - The impugned order applies Section 16(2)(c) of the CGST Act and the petition does not challenge the constitutional validity of that provision. Several High Courts have upheld the provision. The petitioner disputes the factual applicability of Section 16(2)(c) and places reliance on a circular, but such disputes concerning applicability are matters for adjudication in the statutory appeal process rather than for bypassing it through writ jurisdiction. [Paras 6]

Disputes about the applicability of Section 16(2)(c) are matters for the statutory appellate forum; reliance on that provision in the impugned order does not justify avoidance of the alternate remedy.

Insolvency of a party not a ground to bypass statutory remedy - reluctance to permit bypass of statutory remedies to evade pre-deposit - Whether the admission of Respondent No. 7 into insolvency justifies not pursuing the statutory appeal or makes the pre-deposit requirement irrelevant. - HELD THAT: - The Court found the insolvency of Respondent No. 7 to be irrelevant to the question of whether the petitioner must pursue the statutory appellate remedy. The petitioner admitted that the only reason for not pursuing appeal was the pre-deposit requirement; the circumstance of the seventh respondent's insolvency does not displace the statutory requirement. The petitioner's inability or unwillingness to make the statutory pre-deposit (having deposited an earlier sum) evidenced an intention to bypass the appellate process, which the Court would not permit. [Paras 4, 8, 9]

Insolvency of another party does not excuse non-exhaustion of the statutory appeal or obviate the pre-deposit requirement; the petitioner must pursue the statutory remedy.

Final Conclusion: The petition is dismissed for non-exhaustion of the alternate statutory remedy; the High Court has not considered the merits and the petitioner is left free to pursue all available remedies under the CGST Act.

Facility of making payment of GST in instalments - self-assessed tax - treatment of amounts declared in GSTR-1 but not paid in GSTR-3B as self-assessed tax - recovery under the provisions applicable to self-assessed tax - revival of cancelled GST registration under statutory procedure

Facility of making payment of GST in instalments - treatment of amounts declared in GSTR-1 but not paid in GSTR-3B as self-assessed tax - self-assessed tax - Petitioner's entitlement to payment of the disputed GST liability in monthly instalments where the liability was declared in GSTR-1 but not discharged by filing GSTR-3B. - HELD THAT: - The Court accepted the administrative interpretation that the instalment facility applies only where non-payment is attributable to amounts other than liability self-assessed in any return. By reference to the Explanation to the provision dealing with recovery of self-assessed tax, amounts declared in GSTR-1 but not included in GSTR-3B are treated as self-assessed tax. The impugned order correctly held that, because the petitioner declared the liability in GSTR-1 for the relevant periods but did not file GSTR-3B or pay the tax, the liability is self-assessed and therefore not eligible for the instalment facility. The Court further observed that no discretion to extend payment could be exercised in such circumstances and that the petitioner ought to have filed GSTR-3B and discharged the tax. [Paras 6, 9]

Request for payment of the amount in instalments was rejected and no discretion to allow instalments was available to the petitioner.

Revival of cancelled GST registration under statutory procedure - Petitioner's request for revocation of suo moto cancellation of GST registration. - HELD THAT: - The Court did not grant substantive relief on the revival of registration but directed that the petitioner must follow the statutory mechanism for revival as provided under the relevant provisions and rules. The impugned order advised the petitioner to follow the procedure under the applicable provision and rule for seeking revocation or fresh registration, leaving the statutory process to be followed by the petitioner and considered by the authorities. [Paras 6, 12]

No order revoking the suo moto cancellation; petitioner to follow statutory procedure for revival or fresh registration.

Dismissal of writ petition for failure to pay self-assessed tax and delay - Whether the writ petition should be allowed despite non-payment and passage of time since the impugned order. - HELD THAT: - The Court found no infirmity in the impugned administrative order and noted that more than two years had elapsed since that order with no payment having been made by the petitioner. The pendency of the writ petition provided only temporary respite, but in view of the self-assessed nature of the liability and the petitioner's failure to discharge it during the pendency, the Court declined to grant further relief. Consequently, the writ petition was dismissed but with liberty to the petitioner to pay the amount with interest and then apply for revival or fresh registration. [Paras 10, 11, 12]

Writ petition dismissed; liberty granted to pay tax with interest and thereafter seek revival or fresh registration.

Final Conclusion: The High Court dismissed the writ petition challenging the impugned order refusing instalments and rejecting the request, holding that liabilities declared in GSTR-1 but not paid through GSTR-3B constitute self-assessed tax not eligible for instalments; no relief was granted on revocation of cancellation, and the petitioner was permitted to pay the dues with interest and then seek revival or fresh registration.

Belated availing of input tax credit - Section 16(5) of the CGST Act, 2017 - Statutory amendment operative retrospectively for specified financial years - Notification No.22/2024-CENTRAL TAX dated 08.10.2024 - Remand for fresh consideration in light of statutory amendment - Setting aside of assessment order

Belated availing of input tax credit - Section 16(5) of the CGST Act, 2017 - Notification No.22/2024-CENTRAL TAX dated 08.10.2024 - Remand for fresh consideration in light of statutory amendment - Sustainability of the impugned order holding that the petitioner contravened Section 16(4) by availing ITC belatedly and directing recovery, in view of the subsequent insertion of Section 16(5) and its notification. - HELD THAT: - The Court noted that Parliament introduced sub-sections (5) and (6) into Section 16 of the CGST Act by Clause 114 of the Finance (No.2) Bill, 2024, thereby permitting availment of input tax credit for specified financial years up to a stated cut-off date. The Court recorded that Section 16(5) has been notified by the Central Government by Notification No.22/2024-CENTRAL TAX dated 08.10.2024. In light of this statutory amendment and its prospective operation for the financial years identified in the amendment, the Court found it appropriate to set aside the impugned order which had held that ITC was availed beyond the permissible time and ordered recovery. Rather than adjudicating the claim afresh itself, the Court remitted the matter to the respondent to pass a fresh order on merits and in accordance with the amended statutory position under Section 16 of the CGST Act.

Impugned order set aside and matter remitted to the respondent for fresh adjudication on merits in accordance with the statutory amendment to Section 16; writ petition allowed.

Final Conclusion: The impugned order for the period December 2018 to March 2019 is set aside and the matter is remitted to the respondent to reconsider and decide the claim for input tax credit and any consequential recovery in accordance with the insertion of Section 16(5) of the CGST Act and the notified amendment; writ petition allowed with no costs.

Appropriation of amounts collected only after issuance of a show cause notice - requirement of show cause notice before demanding tax under Sections 73 and 74 of the GST enactments - co operation between central and state authorities in investigation and adjudication - remand for fresh adjudication of tax demand

Appropriation of amounts collected only after issuance of a show cause notice - The 1st respondent cannot retain or appropriate the sums recovered from the petitioner without issuing a show cause notice and following the statutory adjudicatory process. - HELD THAT: - The Court held that the amount recovered from the petitioner cannot be retained by the central authority unless appropriation is effected in accordance with law. To appropriate the amounts collected, the respondent is obliged to issue a show cause notice and proceed under the statutory adjudication provisions. The petitioner's payments, though made earlier and under protest, do not dispense with the requirement of initiating formal proceedings before appropriating the sums.

Respondent directed not to retain or appropriate the amounts without issuing a proper show cause notice and following statutory procedure.

Requirement of show cause notice before demanding tax under Sections 73 and 74 of the GST enactments - remand for fresh adjudication of tax demand - The respondents are directed to issue proper show cause notice to the petitioner under Sections 73 and 74 of the GST enactments and adjudicate the alleged tax demand afresh within specified timelines. - HELD THAT: - Noting the absence of appropriate adjudicatory steps, the Court directed the 1st respondent to cooperate with the State authority (impleaded as 2nd respondent) and for the appropriate authority to issue a show cause notice under Sections 73 and 74. The Court mandated that this issuance and related exercise be completed within three months from receipt of the order, and that the petitioner be afforded an opportunity to file a detailed reply, after which final orders are to be passed on merits within a further period of three months, subject to statutory limitations. The direction preserves the petitioner's right to all legal defences during adjudication.

Respondents to issue show cause notice under Sections 73 and 74 and complete adjudication within the prescribed timelines; petitioner to be heard and may raise available defences.

Co operation between central and state authorities in investigation and adjudication - The 1st respondent is directed to cooperate with the State authority in the issuance of show cause notice and adjudication process. - HELD THAT: - Although the petitioner alleged arrest by the State authority and raised questions about the jurisdiction of central authorities, the Court suo motu impleaded the State authority and directed cooperation between the two authorities so that the procedural requirement of issuing a show cause notice and adjudicating the demand can be properly undertaken. The order leaves open the jurisdictional contentions to be raised and considered in the adjudicatory proceedings.

1st respondent to cooperate with State authority in issuance of show cause notice and subsequent adjudication.

Refund where demand is dropped - In the event the demand is dropped in the adjudication, the amounts deposited shall be refunded to the petitioner. - HELD THAT: - The Court expressly provided that if, after completion of the adjudicatory process, the demand is not sustained, the amounts deposited by the petitioner would be refunded. This preserves the petitioner's entitlement to restitution should the authorities decide not to confirm the demand.

If the demand is dropped, the deposited amount shall be refunded to the petitioner.

Final Conclusion: Writ petition disposed with directions that respondents shall, within three months, issue show cause notice under Sections 73 and 74 and complete the adjudicatory exercise within a further three months after receipt of the petitioner's reply; respondents must cooperate in the process and, if the demand is not sustained, refund the amounts deposited by the petitioner.

Summary order. Writ petition dismissed as withdrawn with liberty to the petitioner to avail the benefit of amendments and the amnesty scheme of the Governments.

Reopening of assessment on ground of income escaping assessment - Change of opinion doctrine - Retrospective application of procedural amendments and vested rights (General Clauses Act, s.6) - Interpretation of Section 11(4A) - business income exemption for trusts - Requirement of separate books of account for business income - Limitation for issue of notice under Section 149

HC [2013 (7) TMI 224 - PUNJAB & HARYANA HIGH COURT] upheld the validity of reassessment notices for the specified assessment years, held that amendments to procedural limitation cannot curtail vested rights under Section 6 of the General Clauses Act, interpreted Section 11(4A) as constrained for the earlier period but more beneficial as substituted, and remanded factual questions regarding satisfaction of Section 11(4A) conditions to the Assessing Officer for fresh enquiry.

HELD THAT:- Appeals dismissed as withdrawn.

Reopening of assessment - first proviso to Section 147 - failure to disclose fully and truly all material facts - reason to believe - change of opinion - tangible material - finality after four years - special leave petition filled with delay

As decided by HC [2017 (7) TMI 1010 - DELHI HIGH COURT] writ petition is allowed as notice u/s 147/148 and the order rejecting objections are quashed because the reasons do not satisfy the statutory requirement of recording a failure to disclose fully and truly all material facts as mandated by the first proviso to Section 147 - reopening after four years must be supported by tangible material and not by mere change of opinion.

HELD THAT: - We find that the reasons assigned are neither satisfactory nor sufficient in law so as to condone the delay of 457 days in filing the special leave petition.

Hence, the application seeking condonation of delay is dismissed.

Final Conclusion: The application for condonation of a 457 day delay was refused as the reasons were held unsatisfactory; consequently the Special Leave Petition was dismissed on the ground of delay and all pending applications were disposed of.

Notice under Section 148A(b) issued to a deceased person - Substitution of legal representatives and continuance of assessment proceedings - Power of Assessing Officer to adjudicate objections on merits after remand - Precedential effect of Union of India v. Rajeev Bansal on challenge to notices

Notice under Section 148A(b) issued to a deceased person - Substitution of legal representatives and continuance of assessment proceedings - Whether the appellants may be permitted to contend before the Assessing Officer that the initial notice was defective because it was issued in the name of a person who had died prior to issuance of the notice - HELD THAT: - The Court noted that the initial notice dated 24.05.2022 under Section 148A(b) was issued in the name of the original assessee who had died on 02.09.2016, and that subsequent communications recorded the identity of the legal representatives and orders were passed in their names. While the Revenue relied on this Court's decision in Union of India v. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] to require objections to be considered by the Assessing Officer, the appellants submitted that the High Court had curtailed their right to raise the specific contention that the proceedings were vitiated ab initio because the initial notice was addressed to a dead person. The Court found it reasonable and in accordance with law to permit the appellants to raise that contention before the Assessing Officer, set aside paragraph 4 of the impugned High Court order to that extent, and remanded the matter. The Court expressly refrained from expressing any opinion on the merits and directed that the Assessing Officer consider all contentions on their own merits and in accordance with law.

Paragraph 4 of the High Court order is set aside and the appellants are permitted to raise before the Assessing Officer the contention that the initial notice was issued in the name of a deceased person; the matter is remanded to the Assessing Officer to decide all objections on merits.

Final Conclusion: The appeal is allowed to the limited extent of permitting the appellants to contend before the Assessing Officer that the initial notice was issued in the name of a deceased person; the matter is remanded for the Assessing Officer to decide all objections on merits in accordance with law, and no opinion is expressed on the merits.

Eligibility for deduction under Section 10A - Meaning of "undertaking" and exclusionary clauses (splitting up, reconstruction, transfer of previously used machinery or plant) - Res judicata/consistency in repeated assessment years where initial-year factual acceptance stands - Transfer Pricing-determination of arm's length price under Transactional Net Margin Method (TNMM) at enterprise versus unit/segment level - Definition and scope of "enterprise" for transfer pricing purposes - Prior period expenditure-crystallisation of liability for deductibility

Eligibility for deduction under Section 10A - Meaning of "undertaking" and exclusionary clauses (splitting up, reconstruction, transfer of previously used machinery or plant) - Res judicata/consistency in repeated assessment years where initial-year factual acceptance stands - NOIDA-II unit is entitled to deduction under Section 10A and is not a mere extension or reconstruction of the earlier unit. - HELD THAT: - The Court found on the undisputed facts that NOIDA-II was independently established (separate leased space, substantial fresh investment, significant increase in gross block and seating capacity and independent revenue growth), and the fact that it carried on the same business as the earlier unit did not by itself bring it within the exclusionary clauses of Section 10A(2). The Court relied on earlier authorities construing similar exclusionary clauses to emphasise that the relevant test is whether a new and identifiable undertaking has emerged and not merely whether the activity is identical. Further, the Tribunal's earlier acceptance in the assessee's AY 2003-04 proceedings that NOIDA-II was a new undertaking, which the Revenue had not challenged, was material; absent any new material, the Revenue could not be permitted to reopen the question in subsequent assessment years. Applying these principles, the Court upheld the ITAT and CIT(A) findings that NOIDA-II qualified as an eligible undertaking for Section 10A relief. [Paras 36, 45, 46, 52, 53]

Assessee entitled to deduction under Section 10A in respect of NOIDA-II unit; questions 1 and 2 answered in favour of the assessee.

Transfer Pricing-determination of arm's length price under Transactional Net Margin Method (TNMM) at enterprise versus unit/segment level - Definition and scope of "enterprise" for transfer pricing purposes - Application of TNMM-need for comparable uncontrolled transactions at corresponding level (segment/unit or enterprise) - It was appropriate to determine the arm's length price using TNMM at the enterprise level rather than separately for each STP unit; the TPO's unit-wise benchmarking was not warranted on the facts. - HELD THAT: - The Court held that TNMM compares net profit margins realised by an enterprise from international transactions with margins in comparable uncontrolled transactions, and where segmental data are unavailable or where the transactions form part of an overarching agreement and there is unity of management, funds and contractual terms, benchmarking at enterprise level is appropriate. The TPO had benchmarked each STP unit separately but used external comparables whose PLIs were computed at the entity level, producing a mismatch; the Tribunal and CIT(A) correctly faulted that approach. The Court emphasised that only closely linked transactions of a similar nature should be bunched and that where segmental data are absent or internal CUTs are not reliable, enterprise level benchmarking under TNMM is permissible and proper. On the facts, the Court found no error in the CIT(A)/ITAT directing ALP determination at enterprise level and dismissed the Revenue's challenge on this point. [Paras 57, 75, 81, 83, 86]

Benchmarked at enterprise level under TNMM was appropriate; question 3 answered in favour of the assessee.

Prior period expenditure-crystallisation of liability for deductibility - The expense of Rs. 19,26,120 constituted a deductible expense in AY 2004-05 because the liability crystallised on reconciliation at the end of the Australian tax year. - HELD THAT: - The assessee demonstrated that the Australian payroll tax liability was determined upon year-end reconciliation (1 July-30 June), and that the reconciled liability crystallised on 30.06.2003 with payment in July 2003. The CIT(A) and the ITAT found, and this Court agreed, that under those facts the liability accrued and crystallised in the relevant year and was therefore allowable as a deduction in AY 2004-05. [Paras 87, 88, 89, 90]

Prior period disallowance deleted; expense allowable in AY 2004-05; question 4 answered in favour of the assessee.

Final Conclusion: The appeal is dismissed. The High Court upheld the ITAT and CIT(A) findings: NOIDA-II qualifies as a distinct undertaking entitled to Section 10A relief; the ALP under TNMM was correctly determined at the enterprise level; and the payroll tax expense was deductible in AY 2004-05.

Quashing of criminal proceedings - Prima facie case for framing of charges - Misuse of digital signature - Conspiracy to cheat and misappropriation of income tax refunds - Reliance on approver/confessional statements as incriminating material - Limit on court's power to appreciate defence at quash stage

Quashing of criminal proceedings - Prima facie case for framing of charges - Limit on court's power to appreciate defence at quash stage - Whether the petition to quash the criminal proceedings in C.C.No.850 of 2023 against the petitioner should be allowed - HELD THAT: - The Court examined the materials on record and concluded that incriminating circumstances exist which justify framing of charges rather than quashing. The record shows a fraudulent credit of Rs.21,83,150 in the petitioner's bank account and that the petitioner's digital signature was used by A1; approver statements disclose a contrived scheme to withdraw income tax refunds belonging to other taxpayers. In view of these materials, and applying the principle that a court at the quash stage must not undertake a mini-trial or appreciate the accused's defence, the High Court declined to examine the merits of the petitioner's contentions in detail. Reliance was placed on precedents that preclude detailed defence appraisal at the threshold; on the record before it a prima facie case for trial was found to exist and the petition to quash was therefore not maintainable. [Paras 7]

The petition to quash is dismissed and the matter is remitted to trial; the petitioner may raise all defence points before the trial court which shall consider them in accordance with law without being influenced by observations in this order.

Final Conclusion: Criminal Original Petition dismissed; prima facie case found for framing of charges based on alleged misuse of digital signature, deposit in the petitioner's account and approver statements, and petitioner is free to raise all defence points at trial before the Chief Judicial Magistrate who shall decide them in accordance with law.

Reopening of assessment under Section 148 - fresh notice after earlier reassessment proceedings - reliance on Settlement Commission findings - non-disclosure and accommodation entries as basis for reopening - limitation for reassessment

Reopening of assessment under Section 148 - fresh notice after earlier reassessment proceedings - limitation for reassessment - Validity of issuing a fresh notice under Section 148 after earlier reassessment proceedings had been filed - HELD THAT: - The Court held that the language of Section 148 does not prohibit the Assessing Officer from issuing a fresh notice even after earlier reassessment proceedings have been instituted, so long as the fresh action is within the applicable limitation. The Court observed that nothing in the statutory provision restricts issuance of another notice once an earlier set of proceedings was filed, and therefore a second notice issued on 21.06.2004 could not be struck down merely because earlier proceedings had been initiated. The Court directed that any final assessment pursuant to the re-opening must be completed in accordance with the law as it stood at the relevant time. [Paras 5, 8]

Fresh notice issued after earlier proceedings was not impermissible and Assessing Officer may proceed to conclude reassessment in accordance with law.

Reliance on Settlement Commission findings - non-disclosure and accommodation entries as basis for reopening - Whether reopening based on the Settlement Commission's finding that receipts were accommodation entries and that there was not full and true disclosure is a valid ground for fresh reassessment - HELD THAT: - The Court accepted that the Settlement Commission had found the amounts to be accommodation entries and had rejected the settlement application on the ground of lack of full and true disclosure. On that basis the Court held that the Assessing Officer could legitimately derive a fresh cause of action to initiate reassessment proceedings and that the fresh notice specifying the non-disclosure of income by way of accommodation entries (Rs.15,75,000/-) furnished a valid reason for reopening. The Court found the objections to the fresh reassessment to be without basis in view of the Settlement Commission's conclusions and the subsequent reasons furnished by the Assessing Officer. [Paras 3, 6, 7]

Reopening premised on the Settlement Commission's findings of accommodation entries and non-disclosure was sustainable and the objection to the fresh reassessment was rejected.

Final Conclusion: Writ petition dismissed; interim order recalled and respondents permitted to proceed with and conclude the reassessment proceedings initiated by the notice dated 21.06.2004 in accordance with law, the Assessing Officer being directed to decide the matter expeditiously, preferably within three months.

Registration under Section 12AA - Exemption under Section 80G - Effect of 12AA registration on entitlement to 80G approval - Precedential effect of Hiralal Bhagwati and Surat City Gymkhana - Finality of judicial precedent as barring further enquiry

Registration under Section 12AA - Exemption under Section 80G - Effect of 12AA registration on entitlement to 80G approval - Precedential effect of Hiralal Bhagwati and Surat City Gymkhana - Whether the Commissioner (Exemption) was justified in rejecting the assessee's application for approval under Section 80G notwithstanding the assessee's registration under Section 12AA. - HELD THAT: - The Court recorded that the assessee's registration under Section 12AA is operative and that the legal position is governed by the Gujarat High Court decision in Hiralal Bhagwati, which was approved by the Supreme Court in Surat City Gymkhana. Those precedents hold that once registration under Section 12A/12AA has been granted, the consequent benefits (including approval under Section 80G) cannot be denied by subsequent enquiry into the objects or whether the scheme benefits the public at large. Applying that settled principle, the Court found the ITAT correct in setting aside the Commissioner(Exemption)'s refusal and directing grant of approval under Section 80G. [Paras 8, 9, 11, 12]

The CIT(E)'s rejection of the 80G application was set aside and the ITAT's direction that the Commissioner grant approval under Section 80G was upheld.

Final Conclusion: The tax appeal is dismissed; the ITAT's order directing the Commissioner (Exemption) to grant approval under Section 80G to the assessee (registered under Section 12AA) is upheld.

Allowability of depreciation on intangible asset (trademark) - jurisdiction of Transfer Pricing Officer - reference to Transfer Pricing Officer under Section 92CA for benchmarking an international transaction - arm's length price determination of an international transaction - scope of TPO in examining commercial expediency - remand for fresh consideration of admissibility and quantum of depreciation

Jurisdiction of Transfer Pricing Officer - reference to Transfer Pricing Officer under Section 92CA for benchmarking an international transaction - arm's length price determination of an international transaction - Validity of the TPO's proceedings and the impugned TPO order dated 28.01.2021 in respect of AY 2011-12 - HELD THAT: - The Court held that the AO's reference to the TPO for AY 2011-12 was misconstrued and impermissible because the purchase of the trademark occurred in FY 2006-07 and, if an international transaction at all, required benchmarking in the assessment year relevant to that earlier previous year. The learned ITAT's remand did not contemplate a fresh determination of the arm's length price for the year 2011-12; rather, the AO was to examine admissibility and quantum of depreciation for AY 2011-12. Consequently, the TPO's proceedings and the order passed under Section 92CA (92CA proceedings) for AY 2011-12 were without jurisdiction and liable to be set aside. [Paras 11, 12, 14]

The impugned TPO order dated 28.01.2021 is without jurisdiction and is set aside.

Allowability of depreciation on intangible asset (trademark) - scope of TPO in examining commercial expediency - remand for fresh consideration of admissibility and quantum of depreciation - Treatment of the assessee's claim for depreciation on the trademark FABINDIA for AY 2011-12 and directions for fresh consideration - HELD THAT: - The Court explained that the ITAT had previously set aside the TPO's ALP determination in earlier years and remanded related issues for fresh examination. For AY 2011-12 the AO is required to consider the admissibility and quantum of depreciation afresh in accordance with the ITAT's directions (not to require re-benchmarking of the original purchase in 2006-07 for the year 2011-12). The Court refused the assessee's specific prayer for a direction to compute depreciation on the written down value as on 01.04.2010, and instead directed that the AO consider the claim afresh in light of the ITAT order dated 08.10.2018 and the present judgment, after affording opportunity of hearing. [Paras 10, 12, 16]

The AO shall reconsider the assessee's claim for depreciation afresh in accordance with the ITAT's directions and the present order; no specific computation direction (as requested) is issued.

Final Conclusion: The TPO's order dated 28.01.2021 for AY 2011-12 is set aside as being without jurisdiction; the AO is directed to reconsider admissibility and quantum of depreciation on the trademark FABINDIA for AY 2011-12 afresh in accordance with the ITAT's directions and this order, after affording the assessee a hearing.

Unit of settlement under the DTVSV Act - tax arrears - disputed tax - declarant - deemed withdrawal of appeal on issuance of certificate under Section 5(1) - choice to settle one or more appeals under the DTVSV Act - settlement under the Direct Tax Vivad se Vishwas Act, 2020

Unit of settlement under the DTVSV Act - disputed tax - appellant - Whether the unit for settlement under the DTVSV Act is an appeal (or writ/SLP) and not the assessment year, permitting a declarant to confine settlement to the subject-matter of a specific appeal. - HELD THAT: - The Court held that the statutory scheme of the DTVSV Act treats each appeal, writ petition or special leave petition as a separate dispute for purposes of computing 'disputed tax'. Clause (A) of Section 2(1)(j) requires disputed tax to be determined as the amount payable if the particular appeal were decided against the appellant, and Section 2(1)(a)(i) contemplates an 'appellant' in respect of an appeal pending as on the specified date. Section 4(2) deems any appeal in respect of the disputed income to be withdrawn upon issuance of the certificate under Section 5(1). The statutory language, read with the Rules and the prescribed forms, and consistent CBDT clarifications, indicate that the 'unit of settlement' is an appeal (or writ/SLP) and not the assessment year. The Revenue's contention that settlement must be across all disputes in an assessment year is contrary to the statutory scheme which permits filing a declaration in respect of 'any appeal' and allows the declarant an option to settle only his appeal, only the departmental appeal, or both. [Paras 24, 26, 27, 31, 32]

The unit of settlement under the DTVSV Act is an appeal (or writ petition or SLP); a declarant may confine the settlement to the subject-matter of a specific appeal.

Deemed withdrawal of appeal on issuance of certificate under Section 5(1) - choice to settle one or more appeals under the DTVSV Act - settlement under the Direct Tax Vivad se Vishwas Act, 2020 - Whether the certificate issued under Section 5(1) could be modified to include disputes not covered by the declarant's declaration and the appropriate relief. - HELD THAT: - The Court found that the petitioner had filed a declaration confined to its appeal before the ITAT (ITA No. 5958/Del/2014) relating to the disallowance of loss in derivatives for AY 2011-12. The certificate issued in Form No.3 by the designated authority was required to reflect and be confined to the declaration made by the Assessee. Since the Revenue's consolidated appeal before this Court related to orders arising from two separate ITAT appeals (including one in which the Assessee had not filed a declaration), the fact of a subsequent consolidated appeal did not enlarge the scope of the petitioner's declaration. Accordingly, the court directed that the certificate dated 23.04.2021 be confined to the declaration actually made and ordered respondents to issue a modified certificate under Section 5(1) limited to the declared dispute. [Paras 17, 33, 34]

The certificate under Section 5(1) must be confined to the declaration made by the Assessee; the existing certificate is to be modified accordingly and a fresh certificate issued limited to the declared dispute.

Final Conclusion: Petition allowed. The DTVSV Act treats each appeal as a separate unit of settlement; the certificate issued under Section 5(1) must be confined to the declarant's stated appeal (here, ITA No. 5958/Del/2014 relating to AY 2011-12) and respondents are directed to issue a modified certificate limited to that declaration.

Faceless assessment - principles of natural justice - opportunity of personal hearing by video conferencing - right to request personal hearing under Section 144B(7)(vii) - alternative remedy and writ jurisdiction under Article 226

Principles of natural justice - opportunity of personal hearing by video conferencing - right to request personal hearing under Section 144B(7)(vii) - Assessment order passed without affording the requested personal hearing violated the principles of natural justice. - HELD THAT: - The faceless assessment scheme and Section 144B(7)(vii) permit an assessee, where variation is proposed, to request a personal hearing to make oral submissions through video conferencing. Although the assessee did not exercise an online selection option, it specifically requested a personal hearing within the prescribed time by filing its response. No standards or procedures for approving such requests have been placed on record. Fundamental fairness requires that no person be condemned unheard; where a specific request for personal hearing has been made and not considered, the assessment passed thereafter is in violation of the principles of natural justice. The impugned assessment order was therefore set aside on this ground. [Paras 12, 13, 15]

Impugned assessment order set aside for breach of audi alteram partem; assessee entitled to personal hearing by video conferencing.

Alternative remedy and writ jurisdiction under Article 226 - faceless assessment - Writ petition under Article 226 was maintainable despite availability of statutory appeal because there was a breach of natural justice. - HELD THAT: - While ordinarily an efficacious alternate statutory remedy would preclude writ relief, established exceptions include cases of breach of principles of natural justice. The facts show a specific request for a personal hearing which was not considered; this amounts to a violation that falls within the exception to the rule of alternate remedy. Accordingly, invocation of writ jurisdiction was appropriate and the petition could be entertained. [Paras 6, 7, 14, 15]

Writ petition entertained and allowed on the ground that natural justice was violated notwithstanding the availability of statutory remedies.

Faceless assessment - opportunity of personal hearing by video conferencing - Matter remitted for fresh assessment after affording the assessee a personal hearing through video conferencing, with directions for notice by registered e-mail. - HELD THAT: - Given the quashing of the impugned order for breach of natural justice, the statutory authorities are permitted to pass fresh assessment orders in accordance with law. The assessing officer is directed to afford the assessee an opportunity of hearing through the video conferencing mechanism and to issue notice indicating date and time of hearing through the assessee's registered e-mail. Thereafter, assessment may be completed in accordance with law. [Paras 16, 17]

Assessment remitted for fresh consideration after providing video-conference hearing; assessing officer to issue hearing notice by registered e-mail.

Final Conclusion: Writ petition allowed: impugned assessment for Assessment Year 2018-19 set aside for breach of natural justice; authorities may proceed to fresh assessment after affording a personal hearing by video conferencing as directed.

Bar of limitation for imposing penalties - initiation of penalty proceedings - date of receipt of reference as initiation date - limitation under Section 275(1)(c) of the Income Tax Act, 1961 - penalty under Section 271DA

Initiation of penalty proceedings - date of receipt of reference as initiation date - limitation under Section 275(1)(c) of the Income Tax Act, 1961 - penalty under Section 271DA - Whether the penalty order dated 17.10.2024 under Section 271DA was barred by limitation under Section 275(1)(c) because penalty proceedings were initiated earlier on receipt of the reference by respondent no.3 on 18.01.2023. - HELD THAT: - The court applied the settled principle that the date of receipt of the reference is the date on which penalty proceedings are to be treated as initiated. The statutory limitation under Section 275(1)(c) requires that an order imposing penalty in any other case be passed within six months from the end of the month in which action for imposition of penalty is initiated (or within the financial year in which the proceedings are completed, whichever is later). The assessee's case shows that the Assessing Officer forwarded a proposal for initiation of proceedings to respondent no.3 on 18.01.2023; that date therefore constitutes initiation. The Revenue's contention that initiation should be fixed at 08.05.2024, when additional documents were supplied, was rejected: the reference itself was complete to trigger initiation and respondent no.3's delay of over a year in seeking further documents could not cure the lapse of limitation. Applying the above to the facts, the penalty order dated 17.10.2024 was passed beyond the period of limitation prescribed by Section 275(1)(c) and is therefore invalid. [Paras 7, 8, 9, 10, 11]

The penalty order dated 17.10.2024 under Section 271DA is barred by limitation under Section 275(1)(c) because the penalty proceedings were initiated on 18.01.2023 when the reference was received; the impugned order is set aside.

Final Conclusion: The petition is allowed; the order imposing penalty for AY 2020-21 under Section 271DA is held time-barred and is set aside.

Penalty under Section 271DA for contravention of Section 269ST - Limitation under Section 275(1)(c) of the Income Tax Act, 1961 - Commencement/Initiation of penalty proceedings - Reference by the Assessing Officer as initiation of penalty proceedings

Limitation under Section 275(1)(c) of the Income Tax Act, 1961 - Commencement/Initiation of penalty proceedings - Reference by the Assessing Officer as initiation of penalty proceedings - Penalty under Section 271DA for contravention of Section 269ST - Whether the penalty order dated 17.10.2024 under Section 271DA for alleged contravention of Section 269ST in respect of AY 2021-22 was barred by limitation under Section 275(1)(c). - HELD THAT: - The court applied its earlier decisions holding that the date of receipt of the reference by the designated authority is to be treated as the date of initiation of penalty proceedings. The reference proposing initiation of penalty was forwarded by the Assessing Officer to respondent no.3 on 24.03.2023; therefore the limitation period prescribed by Section 275(1)(c) required the penalty order to be passed within six months from the end of the month in which that reference was received. The Revenue's contention that the proceedings should be treated as initiated only on 04.09.2024 (when additional documents were supplied) was rejected: respondent no.3 could not delay action for nearly a year after receiving the reference and treat a later transmission of documents as the initiation date. Applying the established principle that the receipt of the reference marks initiation, the order dated 17.10.2024 fell outside the statutory limitation and could not be sustained. [Paras 6, 7, 8, 10, 11]

The penalty order dated 17.10.2024 is barred by limitation and is set aside.

Final Conclusion: The petition is allowed; the impugned penalty order under Section 271DA for AY 2021-22, being time-barred, is quashed and the pending application, if any, is disposed of.

Rectification under section 154 - mistake apparent from record - requirement of clear data in record for rectification

Rectification under section 154 - mistake apparent from record - requirement of clear data in record for rectification - Whether the AO was justified in rejecting the assessee's rectification application under section 154 on the ground that the omission to claim interest was not a mistake apparent from the record. - HELD THAT: - The Tribunal affirmed the findings of the lower authorities that rectification u/s 154 is permissible only where a mistake is apparent from the record and that reference to materials outside the record is impermissible. The authorities below noted that the original return and the record processed u/s 143(1) contained no details or evidence of the interest claim of Rs. 31,17,879 and that the supporting evidence was produced only during rectification proceedings. Reliance was placed on the principle, as applied by the lower authorities, that in the absence of clear data in the record the AO is not obliged to allow rectification; the Tribunal agreed with that approach. The Tribunal also recorded the precedent reliance in the impugned order (Keshri Metal (P) Ltd. and Anchor Pressings (P) Ltd.) to the effect that rectification cannot be based on material extraneous to the record and that lack of clear data disentitles the assessee to relief under section 154. Applying these principles to the facts - namely, that the return as processed contained no indication of the interest claim - the Tribunal concluded that the AO rightly rejected the rectification request and the CIT(A) correctly affirmed that rejection. [Paras 3, 6]

The rejection of the rectification application by the AO was upheld and the order of the CIT(A) confirming that rejection was affirmed; the assessee's appeal is dismissed.

Final Conclusion: The Tribunal dismissed the appeal, holding that omission to claim interest in the original return did not constitute a mistake apparent from record and therefore rectification under section 154 was rightly refused by the AO and upheld by the CIT(A).

Assessment additions on unexplained cash found during search - Admissibility and evidentiary value of statements recorded under section 132(4) of the Income tax Act - Reliance on documents seized during search for making substantive additions - Retraction of statements made during search and its evidentiary effect

Admissibility and evidentiary value of statements recorded under section 132(4) of the Income tax Act - Reliance on documents seized during search for making substantive additions - Retraction of statements made during search and its evidentiary effect - Validity of the addition of undisclosed income of Rs. 4,55,00,000/- based on the assessee's statement on oath during search and the entries in Annexure A(1) - HELD THAT: - The Tribunal examined the material seized (Annexure A1) and the statement recorded on oath under section 132(4). The Commissioner (Appeals) analysed the pages of the spiral notebook (Annexure A1) and accepted the explanation that the entries were projections/wrong impressions and that the surrender recorded at the time of search was under coercion and subsequently retracted. The Tribunal found the appellate authority's analysis in paras 6.12-6.17 to be cogent and held that the explanation offered by the assessee was tenable on the basis of the record; consequently the department's contention that the entries and the statement warranted the addition was rejected. The Tribunal therefore upheld deletion of the addition made by the Assessing Officer. [Paras 14, 18]

Addition of Rs. 4,55,00,000/- deleted; departmental grounds in this regard dismissed.

Assessment additions on unexplained cash found during search - Reliance on documents seized during search for making substantive additions - Correctness of the addition confirmed by the Assessing Officer of cash found during search (total cash recovered) and the allocation between assessee and spouse - HELD THAT: - Record shows cash of Rs. 15,16,000/- was recovered from the assessee's premises during search. The assessee contended that the cash belonged to the family and produced explanation regarding habitual cash holdings and incomes of spouse. The Commissioner (Appeals) apportioned amounts between the assessee and his spouse, allowing part of the cash as explained. The Tribunal, on review of the facts and the appellate authority's reasoning, concluded that the appellate allowance was justified and that the Assessing Officer's addition as confirmed against the assessee required interference. The Tribunal therefore held that the amounts allowed by the CIT(A) were acceptable. [Paras 11, 15]

Partial allowance made by the CIT(A) upheld; addition as confirmed by the AO set aside to the extent allowed by CIT(A).

Retraction of statements made during search and its evidentiary effect - Admissibility and evidentiary value of statements recorded under section 132(4) of the Income tax Act - Whether retraction letters filed after the search disentitle the assessee from asserting that statements/entries were not admissions of income - HELD THAT: - The Tribunal accepted the view of the Commissioner (Appeals) that the contemporaneous record and explanations demonstrated that the alleged surrender was a wrong impression/coerced and that the retraction and explanatory material warranted acceptance. The Tribunal found that the assessee's explanations and the appellate analysis sufficiently refuted the department's reliance on the seized entries and statements, and that natural justice and examination of the material had been carried out. [Paras 14, 18]

Retraction and explanatory material held sufficient to displace the addition based on the seized entries and statements; related departmental grounds dismissed.

Final Conclusion: For Assessment Year 2017-18 the Tribunal allowed the appeals filed by the assessees and dismissed the cross appeals filed by the Revenue, upholding the Commissioner (Appeals)'s deletion/part deletion of the additions founded on the search records and related statements.

Unexplained cash credit - burden of proof under Section 68 - genuineness of transaction - requirement of approval for CSR implementing agency - effect of non utilisation of CSR funds on taxability - characterisation of CSR funds as loan

Unexplained cash credit - burden of proof under Section 68 - genuineness of transaction - requirement of approval for CSR implementing agency - effect of non utilisation of CSR funds on taxability - characterisation of CSR funds as loan - Addition under Section 68 treating the amounts received as unexplained cash credits - HELD THAT: - The Tribunal found that the assessee had established the identity and creditworthiness of the payer and the purpose for which the amounts were received, namely CSR activities carried out as an implementing agency for the payer. Although the requisite approvals were obtained after the date of receipt, Form 10AB (approval under Section 12AB(1)(b)) was produced for the relevant period. The payer had not claimed a deduction in respect of the amounts, and there was no evidence that the funds had been routed back to the payer. The Tribunal held that non utilisation of the amounts for CSR at the fag end of the year, or the fact that approvals were obtained subsequently, does not convert the receipts into unexplained cash credits under Section 68. Section 68 is concerned with identity, creditworthiness and genuineness of the receipt; subsequent utilisation (or lack of utilisation) may attract other consequences under company law but, on the facts, did not render the amounts assessable as unexplained income. The Tribunal also accepted the submission that, if not utilised, the amounts would retain the character of a loan rather than income. For these reasons the Tribunal held that the CIT(A) erred in confirming the invocation of Section 68. [Paras 7, 8, 9]

The addition under Section 68 was deleted and the appeal was allowed.

Final Conclusion: The Tribunal allowed the appeal for Assessment Year 2022-23, holding that Section 68 was not attracted on the facts: the identity and creditworthiness of the payer and the purpose of the receipts were established, subsequent non utilisation did not convert the receipts into unexplained income, and the CIT(A)'s confirmation of the addition under Section 68 was set aside.

Summary order. Special Leave Petition dismissed; impugned High Court order upheld; pending application disposed of.

Principles of natural justice - prejudice requirement in alleged breach of natural justice - efficacy of alternate remedy of appeal - powers of the Appellate Tribunal under Section 129B of the Customs Act, 1962

Efficacy of alternate remedy of appeal - powers of the Appellate Tribunal under Section 129B of the Customs Act, 1962 - Whether the writ petitions should be entertained or the petitioners relegated to the alternate remedy of appeal. - HELD THAT: - The Court held that the questions raised-whether documents were not furnished, their relevance, reliance upon them in the impugned order and whether prejudice resulted-are factual and best examined by the appellate authority. Given the broad remedial powers of the Appellate Tribunal to confirm, modify, annul or remit for fresh adjudication after taking additional evidence, the remedy of appeal is efficacious. The Court noted that the petitions did not disclose a breach of natural justice apparent on the face of the record and that the petitioners had repeatedly sought time and inspection, often without filing substantive replies. Applying precedent discouraging premature resort to this Court, the petitions were dismissed and the petitioners relegated to file appeals against the impugned order dated 28 June 2024. [Paras 5, 8, 9, 12, 13]

Petitions dismissed; petitioners relegated to the alternate remedy of appeal and left free to appeal the impugned order dated 28 June 2024.

Principles of natural justice - prejudice requirement in alleged breach of natural justice - Whether the impugned order grossly violated the principles of natural justice such that this Court should independently interfere. - HELD THAT: - The Court declined to adjudicate the merits of the natural justice complaint at this stage. It observed that mere allegation of non-furnishing of documents is insufficient; the petitioners must plead and establish actual prejudice, as not every breach is material. From the record the Court formed a prima facie view that petitioners had been reluctant to file replies and had been offered inspections and deferments. The Court reiterated that whether any documents relied upon were unduly withheld or whether withholding caused prejudice are facts that the appellate authority should examine and determine. [Paras 4, 5, 6, 7, 8]

No interference by this Court on merits; the issue is to be considered and decided by the appellate authority in the appeal.

Efficacy of alternate remedy of appeal - Whether the appellate authority shall be precluded from considering limitation if appeal is filed promptly. - HELD THAT: - The Court directed that if the petitioners file appeals within four weeks from the date of the order and comply with all legal requirements, the appellate authority will consider the appeals on merits and in accordance with law without advertence to the limitation issue. This direction was given because the writ petitions were filed within the limitation period for instituting an appeal. [Paras 14]

If appeals are filed within four weeks and statutory requirements are met, the appellate authority will decide merits without raising limitation.

Final Conclusion: Writ petitions dismissed; petitioners relegated to file appeals against the impugned order dated 28 June 2024, which, if filed within four weeks in compliance with legal requirements, shall be considered on merits by the appellate authority without reference to limitation; questions concerning alleged non-furnishing of documents and prejudice are to be examined by the appellate authority.

Principles of natural justice - show-cause notice - opportunity of personal hearing - joint and several liability for fiscal penalty under Section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 - setting aside orders for breach of natural justice

Show-cause notice - opportunity of personal hearing - principles of natural justice - setting aside orders for breach of natural justice - Impugned orders imposing joint and several liability were vitiated for want of show-cause notice and opportunity of personal hearing to the petitioner. - HELD THAT: - The Court examined the record and found that the notice dated 17.12.2012 (Exhibit E-3) was addressed only to the company and two named directors and did not address or serve the petitioner, an Independent Director (paras. 9). The Court noted that reliance upon a recital in paragraph 5 of the Order-in-Appeal that the SCN and personal hearing were made available to the petitioner was insufficient in the absence of supporting material on the record and that the referenced show-cause notice dated 10.01.2013 was not on record (paras. 7, 10). The Court concluded that, because the liabilities imposed upon the petitioner carry civil consequences, minimum compliance with the principles of natural justice (i.e., issuance of a proper show-cause notice and an opportunity for personal hearing) was mandatory; their absence vitiated the adjudicatory orders (para. 11). Accordingly, the impugned orders dated 11.10.2017 and 28.03.2018 were set aside on this short ground (para. 11). [Paras 7, 9, 11]

Impugned orders set aside for want of issuance of show-cause notice to the petitioner and denial of opportunity of personal hearing; orders quashed on ground of breach of principles of natural justice.

Show-cause notice - opportunity of personal hearing - joint and several liability for fiscal penalty under Section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 - Respondents permitted to issue fresh show-cause notice and comply with natural justice before proceeding against the petitioner. - HELD THAT: - Having set aside the orders for procedural infirmity, the Court expressly left it open to the respondents to issue the necessary show-cause notice and to otherwise comply with principles of natural justice before proceeding further against the petitioner (para. 12). The Court did not adjudicate the merits of liability, resignation, or status as an Independent Director and left those contentions open for determination upon compliance with due process (para. 13). [Paras 12, 13]

Respondents may re-initiate proceedings by issuing proper show-cause notice and affording hearing; merits left open for fresh consideration after compliance with natural justice.

Final Conclusion: The petition succeeds on the limited ground that the petitioner was not issued a show-cause notice nor afforded a personal hearing; the orders imposing joint and several fiscal liability are set aside for breach of principles of natural justice, while the respondents are permitted to issue fresh notice and comply with due process before proceeding further; merits remain open.

Power to make provisions relating to imports and exports under the Act of 1992 - power to impose quantitative restrictions under Section 9A - Foreign Trade Policy-2023 - authorization for import as a privilege not a right - legitimate expectation - unfettered discretion and arbitrariness - fairplay in action / non-arbitrariness under Article 14 - right to carry on trade under Article 19(1)(g)

Power to make provisions relating to imports and exports under the Act of 1992 - power to impose quantitative restrictions under Section 9A - Foreign Trade Policy-2023 - Whether respondents had statutory authority to restrict the quantity of Maize Corn imports in the absence of any Order published by the Central Government imposing prohibitions, restrictions or quantitative limits - HELD THAT: - The Court examined the scope of the Central Government's powers under the Act of 1992 to make provisions for imports and exports and to impose quantitative restrictions. The respondents failed to point to any Order published in the Official Gazette establishing a prohibition, restriction or specific quantitative regime applicable to Maize Corn imports. The FTP-2023 and clause relied upon by respondents (that authorization is not a right) do not themselves supply a statutory basis for imposing quantitative limits unless exercised within the framework of powers conferred by the Act and any Gazette Orders made thereunder. In absence of a statutory or Gazette prescription restricting Maize Corn imports, the respondents' truncation of the petitioner's requested quantity lacked legal foundation. [Paras 14, 15, 20]

Respondents had no statutory authority to impose the quantity restriction on Maize Corn imports in the absence of a Central Government Order publishing such prohibition or quantitative restriction; reliance on Clause 2.13 of FTP-2023 is insufficient.

Authorization for import as a privilege not a right - legitimate expectation - unfettered discretion and arbitrariness - fairplay in action / non-arbitrariness under Article 14 - right to carry on trade under Article 19(1)(g) - Whether the respondents' grant of only 2,000 MT instead of the 10,000 MT sought was arbitrary, violative of Article 19(1)(g) and the petitioner's legitimate expectation, and whether the writ court should direct issuance of the balance authorization - HELD THAT: - The Court accepted that the petitioner has a history of importing Maize Corn and had applied for 10,000 MT, submitting requisite particulars and demonstrating processing capacity. The Licensing Authority lacked any articulated principles or statutory guidance to limit quantities and thereby exercised uncontrolled discretion. In such circumstances the exercise of power was held to be arbitrary and violative of the principles of fair decision making, legitimate expectation and non arbitrariness under Article 14, and impinging the petitioner's right to carry on trade under Article 19(1)(g). Given the absence of statutory restrictions and the exhausted earlier allotment, the Court concluded that the refusal to grant the balance quantity was unsustainable and directed issuance of the remaining authorization. [Paras 16, 17, 18, 21]

The respondents' limitation of the petitioner's import authorization to 2,000 MT was arbitrary and violative of Article 19(1)(g) and legitimate expectation; the petitioner is entitled to authorization for the balance 8,000 MT and the respondents are directed to grant it expeditiously.

Final Conclusion: Writ petition allowed. The respondents' restriction of the petitioner's import authorization to 2,000 MT was without statutory basis and arbitrary; petitioner is entitled to authorization for the balance 8,000 MT of Maize Corn, which shall be issued within four weeks of production of the order.

Limitation where statute is silent - proceedings must be initiated within a reasonable period - Recovery of duty foregone under Section 143 of the Customs Act - Reasonable period for initiation of proceedings - Time limit under Section 28 of the Customs Act as guidance for reasonable period - Inordinate and unexplained delay / laches - ground for quashing notices - Quashing of show-cause/recovery notice for delay

Limitation where statute is silent - proceedings must be initiated within a reasonable period - Recovery of duty foregone under Section 143 of the Customs Act - Time limit under Section 28 of the Customs Act as guidance for reasonable period - Inordinate and unexplained delay / laches - ground for quashing notices - Whether the notice dated 15 December 2022 seeking recovery of duty foregone under Section 143 for non-submission of the Export Obligation Discharge Certificate dated 23 September 1996 is barred by inordinate and unexplained delay. - HELD THAT: - The Court held that although Section 143 contains no express time-bar, where a statute is silent proceedings must be initiated within a reasonable period ascertained by a holistic reading of the Act. Section 28, which prescribes a five-year limit in cases involving suppression or fraud, provides a legislative clue and guidance for what may constitute a reasonable period. In the present case there are no allegations of fraud or suppression and the notice was issued after almost 26 years; no explanation was offered for this inordinate delay. The respondents were unable to demonstrate that initiation of proceedings after 26 years was reasonable. Reliance on the Supreme Court's decision in Union of India v. Citi Bank and the coordinate Bench decisions was considered appropriate in quashing prolongedly delayed adjudicatory actions. Applying these principles, the Court concluded that the impugned recovery proceedings are barred by inordinate and wholly unexplained delay. [Paras 6, 7, 9]

The notice dated 15 December 2022 is barred by inordinate and unexplained delay and is quashed and set aside.

Final Conclusion: The petition is allowed; the impugned notice dated 15 December 2022 (seeking recovery of duty foregone for non-submission of the Export Obligation Discharge Certificate dated 23 September 1996) is quashed and set aside on the ground of inordinate and unexplained delay.

Applicability of Public Notice No.22(RE-2013)/2009-2014 - amendment to Notification No.49/2000 by Notification No.46/2013 - limitation of interest to amount of customs duty on regularisation of default - distinction between bonafide default and default simpliciter

Applicability of Public Notice No.22(RE-2013)/2009-2014 - amendment to Notification No.49/2000 by Notification No.46/2013 - limitation of interest to amount of customs duty on regularisation of default - distinction between bonafide default and default simpliciter - Whether Public Notice No.22(RE-2013)/2009-2014 and the consequent amendment to Notification No.49/2000 by Notification No.46/2013 restrict the interest payable on regularisation of export-obligation defaults to an amount not exceeding the customs duty payable, irrespective of whether the default is bonafide. - HELD THAT: - The Court analysed Public Notice No.22(RE-2013)/2009-2014 and the amendment effected to Notification No.49/2000 by Notification No.46/2013. The Public Notice permits regularisation of pending defaults in meeting export obligations by payment of applicable customs duty corresponding to the shortfall together with interest on such duty, and expressly caps the interest component at an amount not exceeding the customs duty payable. The amendment at Sl.No.22 to Notification No.49/2000, inserted by Notification No.46/2013, incorporates the same principle into the customs notification. The Court held that neither the Public Notice nor the amendment confines the benefit to cases of bonafide default; they speak of default simpliciter and the intention of the Commerce Ministry to regularise pending defaults is reflected across the amendments. Therefore the Settlement Commission's conclusion that the limitation of interest applied only to bonafide defaults was contrary to the Public Notice and the amendment and was arbitrary. On that basis the Court found the quantification communicated by the Deputy Commissioner (requiring further interest payment) to be incorrect to the extent it ignored the statutory amendment and Public Notice. [Paras 16, 17]

The Court set aside the Settlement Commission's confirmation insofar as it required the petitioner to pay further amounts towards interest and held that the Public Notice and the amendment apply to regularise defaults without limiting the benefit to bonafide defaults.

Final Conclusion: The impugned portion of the Settlement Commission's order affirming additional interest liability is set aside; the petitioner's application before the Settlement Commission is allowed and the writ petition is allowed. No costs.

Maintainability of government appeal - monetary limits for filing appeals by the Department - threshold for realisation of duty as criterion for filing appeal - appeal under Section 130 of the Customs Act, 1962 - confiscation and non-redeemability of smuggled goods - interpretation of departmental circular

Maintainability of government appeal - monetary limits for filing appeals by the Department - threshold for realisation of duty as criterion for filing appeal - confiscation and non-redeemability of smuggled goods - interpretation of departmental circular - Whether the appeal by the Commissioner of Customs (Preventive) is maintainable notwithstanding the Circular fixing monetary limits for departmental appeals to High Courts. - HELD THAT: - The Court construed the Circular as setting a monetary threshold based on likely realisation of duty and other levies, below which the Department would ordinarily not file appeals. However, the Circular is directed at cases where successful challenge would yield recovery of duty or levies above the threshold. The present matter concerns an order setting aside confiscation of smuggled goods where, if the Department succeeds, the consequence would be absolute confiscation without any right of redemption on payment of duty, penalty or fine. Such an outcome does not involve quantifiable realisation of duty within the meaning of the Circular and therefore falls outside the narrow category the Circular was intended to regulate. For these reasons the Court rejected the submission that the appeal is barred by the monetary limits and held the appeal to be maintainable. [Paras 9, 10, 11]

The challenge to maintainability under the Circular is rejected and the appeal is held maintainable.

Final Conclusion: The Court rejected the contention that the departmental Circular's monetary limits bar the appeal; the appeal is maintainable and is listed for admission on 5th December, 2024.

Cancellation of public bonded warehouse licence - requirement of audit trail in computerized warehouse system - duty of licensee to provide infrastructure for warehouse operations - adequacy of security measures for warehoused goods - remand for verification of compliance with Warehouse (Custody and Handling of Goods) Regulations, 2016

Requirement of audit trail in computerized warehouse system - cancellation of public bonded warehouse licence - Delay in installing an audit trail in the warehouse computerized system amounted to a violation warranting cancellation of the licence - HELD THAT: - The Tribunal examined the submission that the computerized system at the warehouse did not incorporate an audit-trail feature and that Circular No. 25/2016 was relied upon by the adjudicating authority to treat this omission as a contravention. The Tribunal accepted that while a licensee must provide required infrastructure, the delay in installation was caused by the COVID-19 pandemic and related operational constraints. It noted that despite absence of an audit trail the accounts and records were maintained in terms of Regulations 4 and 11 for two years, and there was no finding of discrepancy in record-keeping in the impugned order. The Tribunal held that non-inclusion of an audit trail, in these circumstances, did not constitute a violation warranting immediate cancellation and that revocation without an opportunity to install the audit trail was legally unsustainable. [Paras 9, 10]

Revocation on account of non-provision of an audit trail was not proper and did not justify cancellation of the licence.

Adequacy of security measures for warehoused goods - cancellation of public bonded warehouse licence - A single incident of theft sufficed to conclude that security measures were inadequate and to justify cancellation of the licence - HELD THAT: - The Tribunal acknowledged the importance of adequate security for warehouse operations and noted that an FIR was filed and duty paid in respect of stolen goods. However, it held that one isolated theft, by itself, did not support a conclusion that security measures were inherently inadequate. The appropriate course is for the Department to advise the licensee to augment security and staffing; the record did not demonstrate persistent or systemic failure justifying revocation. [Paras 9, 10]

One isolated theft did not justify revocation; the Department may direct increased security and staffing but cancellation on this ground was not proper.

Experience requirement for warehouse keeper - admissibility of evidence to support adverse finding - Adjudicating authority's finding that the warehouse keeper lacked prior experience and thereby violated Regulation 3(1) was justified - HELD THAT: - The Tribunal reviewed the impugned authority's conclusion that the warehouse keeper lacked prior experience. It found that the licensee operated with minimum staff during the COVID period and that the adjudicating authority did not produce evidence in the order to substantiate the allegation regarding the warehouse keeper's inexperience. In absence of such evidentiary foundation, the adverse finding could not be sustained. [Paras 9]

The finding that the warehouse keeper lacked prior experience and that Regulation 3(1) was violated is not tenable for want of supporting evidence.

Remand for verification of compliance with Warehouse (Custody and Handling of Goods) Regulations, 2016 - duty of licensee to provide infrastructure for warehouse operations - Whether the appellant has presently complied with the infrastructural and security requirements for continuing to hold the warehouse licence - HELD THAT: - The Tribunal recorded that the appellant asserted installation and functioning of the audit-trail facility and provision of required security and staff. Given the factual nature of these assertions and the absence of verification in the record, the Tribunal considered it appropriate to remit the matter to the adjudicating authority for on site verification and fresh examination of whether the licensee presently meets the regulatory requirements. The adjudicating authority was directed to take appropriate action as per law after verification. [Paras 10, 11]

Matter remanded to the adjudicating authority for verification of infrastructure, audit-trail functionality and security/staffing; adjudicating authority to take further action as per law.

Final Conclusion: The impugned order cancelling the warehouse licence is set aside; the matter is remanded to the adjudicating authority for factual verification of installation and functioning of the audit-trail, adequacy of security and staffing and other regulatory requirements, and for appropriate action thereafter.

Assessment as scrap - mutilation under customs supervision - consistency of departmental stand / estoppel by prior litigation - rejection of transaction value and re-determined valuation - non-compliance with appellate order

Assessment as scrap - mutilation under customs supervision - consistency of departmental stand / estoppel by prior litigation - Impugned consignment is to be treated and assessed as scrap and released after effective mutilation under customs supervision at the appellant's cost. - HELD THAT: - The Tribunal noted that an earlier, substantially similar consignment from the same supplier had been held to be scrap by the Commissioner (Appeals) and that decision was upheld by the Tribunal. Having regard to that prior adjudication and the identity of the seller, supplier's plant and nature of goods, the Department had no valid basis to take a contrary view in respect of the present consignment. The Tribunal observed that the Commissioner (Appeals) had directed release after effective mutilation and that principle applies equally to the present import. It reiterated the settled position that the Department cannot adopt inconsistent stands in successive proceedings concerning the same assessee on the same issue. On that basis the Tribunal allowed the appeal and directed assessment as scrap with mutilation under customs supervision at the appellant's expense, following the same terms as the earlier Commissioner (Appeals) order. [Paras 10, 11]

Allowed; goods to be assessed as scrap and released after effective mutilation under customs supervision at appellant's cost.

Rejection of transaction value and re-determined valuation - rejection of transaction value and re-determined valuation - The demand based on re-determined valuation (as arrived at by the chartered engineer) and consequent duty/penalty was not sustained where the goods are to be held and assessed as scrap. - HELD THAT: - The Tribunal recorded that the chartered engineer's report opined values of new machines and applied 70% depreciation to arrive at a seizure value, but the engineer did not disclose the basis or technical sources for the valuation. More importantly, having concluded that the consignment is scrap in view of earlier consistent adjudication, the Tribunal found no justification to uphold the re-determined valuation and the resulting demand in respect of classification and valuation contrary to treatment as scrap. The original demand confirmed by the lower authorities was set aside insofar as it is inconsistent with the direction to assess and clear the goods as scrap after mutilation. [Paras 6, 7, 11]

Re-determined valuation and demand consequent thereto not sustained in view of assessment of goods as scrap; original demand set aside to the extent inconsistent with that treatment.

Non-compliance with appellate order - consistency of departmental stand / estoppel by prior litigation - The Department's failure to implement the Commissioner (Appeals) order directing first check and subsequent issuance of a show cause notice was unsustainable. - HELD THAT: - The Tribunal observed that the appellant had sought first check and the Commissioner (Appeals) had directed the Assistant Commissioner to accede to that request; instead of implementing that direction, the Department proceeded to issue a show cause notice alleging mis-declaration. The Tribunal found no reason recorded for non-compliance with the appellate direction and treated the Department's subsequent contrary proceedings as impermissible, especially in light of the prior adjudication holding similar consignments to be scrap. [Paras 8, 9]

Department's non-compliance with the Commissioner (Appeals) direction was unsustainable; proceedings initiated thereafter cannot prevail against the appellate direction and prior consistent adjudication.

Final Conclusion: The appeal is allowed. The impugned goods are to be treated and assessed as scrap and released after effective mutilation under customs supervision at the appellant's cost; demands and penalties inconsistent with that treatment are not to be sustained.

Entitlement to exemption under tariff notification - mandatory conditions for exemption - declaration of VAT registration number as precondition - indelible marking of retail sale price - doctrine of substantial compliance - revenue neutrality and refund procedure - confiscation and penalty under the Customs Act - extended period of limitation

Entitlement to exemption under tariff notification - declaration of VAT registration number as precondition - mandatory conditions for exemption - Claim to exemption from Special Additional Duty (SAD) under Notification No.21/2012- Cus was not allowable for want of declaration of the Value Added Tax registration number as required by the notification. - HELD THAT: - The Tribunal held that the proviso to Notification No.21/2012 conditions the grant of exemption on the importer declaring the State of destination and his VAT registration number in that State, and that these conditions are mandatory for entitlement to the exemption. The Delhi VAT Act proviso excluding certain goods from mandatory registration does not displace the separate statutory pre-condition contained in the customs notification. Subsequent obtaining of a TIN after filing the Bill of Entry did not satisfy the pre-condition which had to be met at the time and in the manner prescribed by the notification. The court applied a purposive reading to link sub-clauses (i) and (ii) and concluded the declaration requirement goes to the essence of the exemption and cannot be treated as a mere procedural formality. [Paras 11, 12, 13, 22]

Exemption from SAD under Notification No.21/2012-Cus denied for non-compliance with the mandatory requirement to declare the VAT registration number; demand upheld.

Entitlement to exemption under tariff notification - indelible marking of retail sale price - mandatory conditions for exemption - Claim to exemption from Counter-Vailing Duty (CVD) under Notification No.12/2012-CE (Sl. No.180) was not allowable because the retail sale price was not indelibly marked or embossed on the footwear itself as required by Condition No.15. - HELD THAT: - The Tribunal found no dispute as to the goods falling within the tariff description and price threshold, but emphasised that Condition No.15 requires the retail sale price to be 'indelibly marked or embossed on the footwear itself'. 'Indelibly' was interpreted in its ordinary meaning as incapable of removal, to prevent tampering. Affixing the MRP on a stitched cloth sticker inside the shoe was held removable and therefore did not meet the mandatory statutory requirement. Permitting such a form of marking would effectively delete the word 'indelibly' from the condition, which the court declined to do. Hence the exemption could not be allowed. [Paras 14, 15, 16, 22]

Exemption from CVD under Notification No.12/2012-CE denied for non-compliance with Condition No.15; demand upheld.

Doctrine of substantial compliance - revenue neutrality and refund procedure - The plea of substantial compliance and the contention of revenue neutrality (refundable SAD) were rejected; substantial compliance doctrine did not apply to the mandatory conditions and refund under the relevant notification is subject to scrutiny and procedure. - HELD THAT: - Relying on authoritative principles, the Tribunal reiterated that a party claiming an exemption must strictly satisfy pre-conditions that are essential to the legislative object. The doctrine of substantial compliance is applicable only where non-compliance pertains to procedural or non-essential requirements; it cannot be invoked to remedy failure to meet clear statutory pre-requisites. The appellant's reliance on refund/neutrality was also rejected because refunds under Notification No.102/2007-Cus are not automatic and are subject to verification and procedure; the exemption notifications stand on a different footing from schemes where revenue neutrality arguments have been accepted. [Paras 17, 18, 19, 21]

Substantial compliance and revenue neutrality arguments not accepted; non-compliance with mandatory conditions fatal to exemption claims.

Confiscation and penalty under the Customs Act - extended period of limitation - Confiscation, imposition of penalty and invocation of the extended period of limitation were upheld as legally sustainable in view of the appellant's wilful mis-statement and failure to comply with mandatory conditions of the exemption notifications. - HELD THAT: - The Tribunal recorded that the appellant, a trading concern with prior imports, claimed the exemption without satisfying mandatory pre-conditions and made wilful mis-statements regarding registration and marking. Consequently, the goods were liable for confiscation under Section 111(o) and, as goods were not available, a fine was imposed under Section 125. The authorities rightly invoked the extended limitation and imposed penalties under Sections 112 and 114A for collusion or wilful suppression of facts. The adjudicatory findings on confiscation, extended limitation and penalties were affirmed as justified by the material and legal standards. [Paras 5, 22, 23]

Confiscation, fine in lieu, extended period of limitation and penalties affirmed; impugned orders upheld.

Final Conclusion: The Tribunal dismissed the appeals, upholding the denial of exemption from SAD and CVD for non-compliance with mandatory conditions (failure to declare VAT registration number and failure to indelibly mark RSP), rejecting substantial compliance and revenue-neutrality pleas, and affirming confiscation, extended limitation and penalties.

Classification under Rule 2(a) of General Rules for Interpretation - essential character test for incomplete or unfinished articles - assessment of goods imported in CKD/SKD condition - entitlement to exemption under Notification No. 50/2017 (Entry 514) - proof of undervaluation and onus on the Revenue - admissibility of electronic records under Section 138C of the Customs Act - invocation of extended period of limitation under Section 28(4) of the Customs Act - mis-declaration and brand attribution

Classification under Rule 2(a) of General Rules for Interpretation - essential character test for incomplete or unfinished articles - assessment of goods imported in CKD/SKD condition - Imported goods are parts and panels of television and not complete TV sets in SKD/CKD condition; Rule 2(a) of GRI was wrongly invoked by the department. - HELD THAT: - The Tribunal applied the essential-character test under Rule 2(a) and the authoritative guidance in Bharat Heavy Electricals Ltd. (Tri. LB) and related precedents, emphasizing that Rule 2(a) requires the imported incomplete articles, as presented, to have the approximate shape/outline and be capable only of completion into the finished article. The burden to prove that separately imported consignments proximate in time together constituted sufficient parts to form complete TVs lay on the department. The record showed lack of temporal proximity (most questioned consignments belonged to 2015-2016, with others in 2017-2018), absence of technical expert (chartered engineer) findings for the live consignments, and evidence that several parts were not imported and some imported items were sold in the local market. An earlier chartered engineer report for a 2016 consignment had found the goods to be monitors, not TV reception apparatus. On these facts the department failed to establish that the imported items, as presented, had the essential character of complete televisions and therefore Rule 2(a) could not be invoked. [Paras 6]

Rule 2(a) does not apply; the imported items are parts and panels, not complete TV sets.

Entitlement to exemption under Notification No. 50/2017 (Entry 514) - Appellants are entitled to the exemption under Entry 514 of Notification No. 50/2017 for LED panels/parts for manufacture of televisions. - HELD THAT: - Having held that the imported consignments were parts and panels rather than complete TVs in SKD condition, the Tribunal observed that Entry 514 exempts panels/parts for manufacture of televisions. The finding that some essential parts were not imported and that certain imported items were sold in the domestic market confirmed that the consignments were parts for manufacture and therefore eligible for the notified exemption. [Paras 7]

Benefit of Notification No. 50/2017 (Entry 514) allowed to the appellants.

Proof of undervaluation and onus on the Revenue - admissibility of electronic records under Section 138C of the Customs Act - Undervaluation was not proved; computer printouts relied upon by the department were not sufficient to establish undervaluation and the transaction value must be accepted. - HELD THAT: - The Tribunal held the computer printouts of proforma invoices admissible as primary evidence because they were retrieved from the appellants' own e-mail account on the department's system; however, even if admissible, proforma invoices alone cannot sustain a finding of undervaluation. The Revenue bore the onus to prove undervaluation through contemporaneous import data, NIDB data, or other cogent material; it failed to produce such evidence or independent technical valuation. Prior clearance and a 2016 chartered engineer report supporting classification as parts/monitors further weakened the Revenue's case. Reliance solely on parallel/ proforma invoices and statements without corroborative contemporaneous data was held insufficient to reject declared transaction value. [Paras 8]

Declared invoice/transaction value accepted; undervaluation not established.

Mis-declaration and brand attribution - There is no evidence of branding or mis-declaration of the imported goods as branded televisions. - HELD THAT: - The department's allegation that consignments were branded (Samsung) was countered by documentary evidence from the exporter and by inspection showing that the Samsung mark was on a chip and on packing material, while the panels and other imported parts were unbranded. The department did not obtain a chartered engineer's technical examination of the live consignments and failed to rebut the exporter's certificate or the appellants' production of panels/chips. Public notices and labelling requirements did not alter the factual finding that the majority of imported parts were unbranded and the packing-label usage did not prove that the consignments were branded finished televisions. [Paras 8]

No mis-declaration as branded goods; imported parts/panels held to be unbranded.

Invocation of extended period of limitation under Section 28(4) of the Customs Act - Extended period of limitation was wrongly invoked and the show cause notice is time-barred. - HELD THAT: - The Tribunal found absence of mala fide suppression or misrepresentation by the appellants and observed that relevant permissions, registrations and prior dealings were known to the department. Given the department's failure to prove that the declared consignments differed materially from past imports (including absence of a positive technical report for live consignments) and the lack of cogent evidence to establish concealment, the conditions warranting invocation of the extended period did not exist. Consequently, the show cause notice issued under extended limitation was held barred by time. [Paras 9, 10]

Extended limitation wrongly invoked; show cause notice time barred.

Final Conclusion: On the facts and reasons given, the Tribunal set aside the adjudicating authority's order, held that the disputed imports were parts/panels eligible for exemption under Notification No. 50/2017 (Entry 514), rejected the claims of undervaluation, mis branding and invocation of extended limitation, quashed the differential demand and penalties, and allowed the appeals.

Abuse of extraordinary jurisdiction - maintainability of constitutional challenge where petitioner has not complied with regulatory procedure - investor grievance redressal mechanism and arbitration opt-in timelines - effect of show-cause notice/defaulter declaration on availability of arbitration remedy - discipline under SEBI circular of 2013

Abuse of extraordinary jurisdiction - maintainability of constitutional challenge where petitioner has not complied with regulatory procedure - investor grievance redressal mechanism and arbitration opt-in timelines - Whether the writ petition challenging Clause 7 of SEBI's circular dated 1 July 2020 should be entertained where the petitioner has failed to comply with the grievance redressal regime, withdrew its arbitration intimation, delayed notification until after a show-cause notice, and has no means to secure the IGRC directions. - HELD THAT: - The Court declined to adjudicate the constitutional validity of Clause 7 on the facts of this petition because the petitioner, after the IGRC directions dated 8 November 2021, initially intimated arbitration but then unconditionally withdrew that intimation and later sought arbitration only after a show-cause notice was issued. The petitioner admitted inability to deposit or secure the IGRC-ordered amount and did not implead the complainant. These facts indicated prima facie misuse of the Court's extraordinary jurisdiction to delay and frustrate the claimants' attempts to secure amounts under the IGRC order. The Court observed that the methodology in SEBI's 2013 circular, including the seven-day timeline to opt for arbitration and the requirement to secure blocked amounts, has been in operation for years and was known to the petitioner. In these circumstances the Court refused to decide the broader question of constitutionality or arbitrariness of the impugned clause, holding that entertaining the petition would be inappropriate and might foreclose serious challenges by genuine relators; the petition was therefore dismissed for want of propriety in invoking writ jurisdiction. [Paras 12, 16, 18, 19, 20]

Writ petition dismissed as petitioner abused the Court's extraordinary jurisdiction; constitutional challenge not decided on merits.

Final Conclusion: The petition challenging Clause 7 of SEBI's circular dated 1 July 2020 is declined and dismissed with costs payable to Tata Memorial Hospital; the Court refused to decide the constitutional challenge on the merits because the petitioner had, on the facts, abused the writ jurisdiction by withdrawing arbitration, failing to secure IGRC directions, delaying until issuance of a show-cause notice, and not impleading the complainant.

Preferential transaction - Moratorium under the Insolvency and Bankruptcy Code - Special mode of recovery under Section 28(1) of the Madhya Pradesh VAT Act, 2002 - Avoidance of preferential transactions under Section 43 of the IBC

Preferential transaction - Avoidance of preferential transactions under Section 43 of the IBC - Application under Section 43 was misconceived because the questioned payment was not a transaction made by the corporate debtor. - HELD THAT: - Section 43 requires that the corporate debtor must have at the relevant time given a preference by transferring property or an interest of the corporate debtor for the benefit of a creditor. The deposit of Rs.17,12,094/- was made by M/s. VE Commercial Vehicles Limited in response to a statutory notice and was not a transfer effected by the corporate debtor. Therefore the essential condition precedent for invoking Section 43-that the corporate debtor itself gave a preference-was not satisfied, and the application under Section 43 was not maintainable. [Paras 10]

Application under Section 43 dismissed as misconceived insofar as it sought avoidance of the transaction on the ground of preferential transfer by the corporate debtor.

Moratorium under the Insolvency and Bankruptcy Code - Special mode of recovery under Section 28(1) of the Madhya Pradesh VAT Act, 2002 - The deposit by M/s. VE Commercial Vehicles Limited in response to the notice under Section 28(1) of the MP VAT Act did not contravene the moratorium under Section 14 of the IBC. - HELD THAT: - Section 14 prohibits actions against the corporate debtor and its assets after the insolvency commencement date. The impugned payment was effected by a third party who had availed input tax credit and, on account of the corporate debtor's failure to deposit GST, reversed that benefit by paying the tax to the revenue. The Commercial Tax Department did not recover the amount from the corporate debtor or its assets; recovery was from an entity holding money for or on account of the corporate debtor under the statutory power in Section 28(1). Consequently, the statutory notice-driven payment by the third party cannot be characterised as a violation of the moratorium. [Paras 14, 15]

No breach of Section 14; the payment by the third party pursuant to Section 28(1) is not barred by the moratorium.

Avoidance of preferential transactions under Section 43 of the IBC - Remedy by resolution professional - The Adjudicating Authority's direction to the Commercial Tax Department to refund the deposited amount was unsustainable and is set aside. - HELD THAT: - Given that Section 43 was not attracted and that the moratorium under Section 14 was not contravened by the statutory recovery from the third party, the Adjudicating Authority erred in directing refund of the amount to the resolution professional. The conclusions that the payment constituted a preferential transaction or violated the moratorium are unsupported by the applicable statutory framework. [Paras 16, 17]

Order directing refund is set aside; IA/131/MP/2020 filed by the resolution professional is dismissed.

Final Conclusion: Appeal allowed. The Adjudicating Authority's order directing refund of the tax amount is set aside and the application filed by the resolution professional is dismissed; parties to bear their own costs.

Proceeds of crime - offence of money-laundering - condition precedent of scheduled offence - requirement of dominion and control - twin conditions of section 45 of PMLA - right to liberty and speedy trial under Article 21

Proceeds of crime - offence of money-laundering - condition precedent of scheduled offence - requirement of dominion and control - Whether the material in the Complaint prima facie establishes that the funds collected by the petitioners are 'proceeds of crime' and thus make out an offence under Section 3 of the PMLA. - HELD THAT: - The Court held that the core ingredient of the money laundering offence is 'proceeds of crime', which must be property derived or obtained 'as a result of' criminal activity relating to a scheduled offence. The ED's case that funds collected to commit an intended scheduled offence amount to proceeds of crime is contrary to that scheme: collection of funds preceding a scheduled offence cannot, without more, be treated as proceeds generated 'as a result of' that offence. Prima facie there is no evidence on the face of the Complaint that any scheduled offence had already been committed so as to convert the collected funds into proceeds of crime. Further, even on the ED's case, the petitioners merely collected and forwarded funds to PFI accounts or accountants; there is prima facie lack of dominion and control by the petitioners over the alleged proceeds, which is material to positing possession/use/concealment under Section 3. For these reasons the Court was not satisfied prima facie that the offence of money laundering was made out against the petitioners. [Paras 40, 41, 43]

Prima facie the Complaint does not establish that the funds are 'proceeds of crime' nor that the petitioners had the requisite dominion and control to make out an offence under Section 3 of the PMLA.

Twin conditions of section 45 of PMLA - right to liberty and speedy trial under Article 21 - bail is the rule and jail is the exception - Whether, having regard to the twin conditions in Section 45 of the PMLA and the petitioners' period of incarceration and prospects of trial, bail should be granted. - HELD THAT: - The Court applied the constitutional principle that personal liberty under Article 21 must prevail where there is no reasonable likelihood of trial concluding within a reasonable time. Noting that trial was at the stage of supply of documents and framing of charges, that 185 prosecution witnesses and voluminous documentary and digital material are listed, and that the petitioners had already undergone over two years' incarceration, the Court found that the twin conditions under Section 45 had been satisfied for the purpose of considering bail: the Public Prosecutor had been given opportunity to oppose and, on prima facie assessment, reasonable grounds existed to believe the petitioners were not guilty and were not likely to commit an offence while on bail. Reliance was placed on the constitutional jurisdiction to relax statutory bail thresholds in cases of prolonged incarceration and no prospect of expeditious trial. Accordingly, conditional bail was directed with specified terms (personal bond, surety, surrender of passport/permission to travel, contact and address particulars, prohibition on tampering or contacting witnesses, and cooperation with investigation). [Paras 46, 49, 50, 53, 54]

Petitioners are to be released on bail subject to specified conditions, in view of prolonged incarceration, absence of prospect of speedy trial and satisfaction of the twin conditions under Section 45 of the PMLA.

Final Conclusion: The High Court found prima facie that the ED's Complaint did not establish that the funds were 'proceeds of crime' nor that the petitioners had requisite dominion and control to attract Section 3 of the PMLA; having regard to prolonged pre trial incarceration and no reasonable prospect of an early trial, the Court granted conditional regular bail to the petitioners, without prejudice to the merits of the pending proceedings.

Proceeds of crime - provisional attachment - letter of allocation of coal block - predicate offence - powers of Enforcement Directorate under PMLA - indelible connection between scheduled offence and money laundering

Provisional attachment - proceeds of crime - Validity of confirmation of the Provisional Attachment Order over investments and properties as proceeds of crime - HELD THAT: - The Tribunal found that the Adjudicating Authority confirmed the PAO on the basis that there was evidence of generation and utilisation of proceeds of crime by the appellants. However, the material on record did not show that the additional investments by outsider investors (notably the investment by Shri R.S. Rungta and family made in 2008-09) constituted proceeds of crime. The conviction in the predicate trial related to obtaining the letter of allocation through misrepresentation and did not record any finding that outsider investments were procured by means of such misrepresentation or were themselves tainted. In absence of findings in the chargesheet or trial linking those investments to the scheduled offence, the attempt to treat those investments as proceeds of crime was impermissible and could not sustain the confirmation of the PAO. [Paras 15, 16]

The confirmation of the PAO insofar as it treated the outsider investments and the impugned properties as proceeds of crime is invalid.

Letter of allocation of coal block - proceeds of crime - Whether the letter of allocation of a coal block by itself constitutes proceeds of crime - HELD THAT: - The Tribunal accepted that the letter of allocation is a conferment of a valuable right but endorsed the principle that an allocation letter, standing alone, cannot be equated to proceeds of crime. Proceeds of crime arise from generation of illicit financial gains (for example, revenue from mining or subsequent wrongful utilisation). The impugned conviction established misrepresentation in obtaining the allocation, but did not hold that the allocation itself generated monetary gains that would fall within the definition of proceeds of crime; therefore the allocation letter could not, by itself, be treated as proceeds of crime for the purposes of PMLA attachment. [Paras 16]

The letter of allocation of the coal block, by itself, cannot be regarded as proceeds of crime.

Predicate offence - powers of Enforcement Directorate under PMLA - indelible connection between scheduled offence and money laundering - Whether the Enforcement Directorate could treat investments as proceeds of crime or investigate alleged linkages absent specific findings or registration concerning the flow of those investments in the predicate offence - HELD THAT: - The Tribunal applied the principle that authorities under the PMLA cannot act on an assumption that property is proceeds of crime or that a scheduled offence has been committed without those aspects being registered and investigated by the competent police or being part of the chargesheet/findings in the predicate proceedings. The conviction in the predicate trial did not incorporate findings about allurement of investors or that outsider investments were attracted by misrepresentation; accordingly, the ED could not assume or investigate such a link independently. The required indelible connection between the scheduled offence and alleged money laundering was not established on the record, and the ED lacked jurisdiction to proceed on the assumption of such a link. [Paras 16, 17]

The Enforcement Directorate could not lawfully treat or investigate the outsider investments as proceeds of crime in the absence of a predicate registration or findings linking those investments to the scheduled offence; therefore its attachment could not be sustained on that basis.

Final Conclusion: Appeal allowed; the confirmation of the Provisional Attachment Order is set aside insofar as it treats the outsider investments and the specified properties as proceeds of crime, the allocation letter does not by itself constitute proceeds of crime, and the ED cannot assume or investigate alleged links to investments absent appropriate predicate findings or registration.

Provisional Attachment Order under PMLA - Finality of High Court order / non-reopening of concluded criminal allegations - Attachment based on allegations in an unrelated FIR - Absence of prima facie material to justify continued attachment

Provisional Attachment Order under PMLA - Finality of High Court order / non-reopening of concluded criminal allegations - Absence of prima facie material to justify continued attachment - Validity of the provisional attachment of the factory property where identical allegations had been finally considered and rejected by the Additional Sessions Judge and the Bombay High Court, and whether the respondents could base attachment on those allegations or on an unrelated subsequent FIR. - HELD THAT: - The Tribunal found that the allegations relied upon in the Provisional Attachment Order (concerning undervaluation and irregularity in the auction and sale to M/s Guru Commodity Services Pvt. Ltd.) had earlier been the subject-matter of a criminal complaint and cognizance taken, but were tested and negatived by the Additional Sessions Judge and that order was upheld by the Bombay High Court. Having been finally decided against the complainant, those identical allegations could not be reopened by the respondents to justify attachment under the Act. Further, the Provisional Attachment Order was said to flow from an FIR registered in 2019 pursuant to a PIL concerning the general working of co-operative societies; the Tribunal held that the 2019 FIR and its allegations were different and did not furnish material that connected to or revived the previously quashed allegations. In consequence there was no fresh prima facie material before the respondents or the Adjudicating Authority to sustain the attachment: the attachment proceeded on allegations already adjudicated and on facts unconnected to the 2019 FIR, which the Tribunal regarded as insufficient to justify provisional attachment and its confirmation. [Paras 15, 16, 17, 18, 19]

Impugned orders of provisional attachment and confirmation set aside; appeals allowed.

Final Conclusion: The Tribunal held that the Provisional Attachment Order could not be sustained because it relied on allegations already finally negatived by the Additional Sessions Judge and the Bombay High Court and/or on an unrelated FIR whose allegations did not furnish prima facie material to justify attachment; the impugned orders were set aside and the appeals allowed.

Confirmation of provisional attachment under the Prevention of Money Laundering Act - Notice under Section 8(1) to disclose source of acquisition - Relevance of ECIR and cognizance despite acquittal in criminal cases - Admissibility of additional documents at appellate stage - Distinction between IncomeTax returns and proof of lawful source under PMLA

Confirmation of provisional attachment under the Prevention of Money Laundering Act - Relevance of ECIR and cognizance despite acquittal in criminal cases - Distinction between IncomeTax returns and proof of lawful source under PMLA - Validity of the Adjudicating Authority's confirmation of the provisional attachment of properties despite acquittals in many criminal cases - HELD THAT: - The Tribunal upheld the Adjudicating Authority's confirmation of the provisional attachment. It found that ECIR had been recorded and cognizance taken by the Special Court and that those proceedings had not been set aside; therefore the existence of acquittals in a majority of related criminal cases did not by itself negate the Adjudicating Authority's reason to believe that the property comprised proceeds of crime. The appellants were given opportunity under Section 8(1) to disclose sources of acquisition but failed to produce documentary evidence to justify acquisition of properties worth the amounts shown. The Tribunal accepted the Adjudicating Authority's analysis of bank transactions, cash deposits and the routing of funds (including statements recorded under Section 50) and held that ITRs serve a different statutory purpose and do not, without independent documentary proof of legitimate business receipts, displace the inference that the funds were proceeds of crime. On these facts and reasoning the Tribunal found no ground to interfere with the confirmation of attachment, save as separately noted in relation to a specific property. [Paras 24, 30, 31, 34, 35]

The confirmation of the provisional attachment was upheld; appellants failed to prove lawful source and the attachments were justified.

Notice under Section 8(1) to disclose source of acquisition - Relevance of ECIR and cognizance despite acquittal in criminal cases - Whether the Adjudicating Authority's notice procedure under Section 8(1) was a ground for setting aside the confirmation - HELD THAT: - The appellants contended that the 'reasons to believe' were not conveyed with the Show Cause Notice and relied on a Delhi High Court decision. The Tribunal observed that the ECIR and cognizance of offence remained and that the Delhi High Court judgment relied upon had its operation stayed by the Supreme Court; accordingly that decision could not be relied upon to invalidate the procedure. The Tribunal treated the statutory notice framework as having been engaged and found no procedural defect warranting interference given the appellants' failure to substantiate sources of funds when put to notice. [Paras 8, 9, 14, 35]

No interference on the ground of defective notice; the challenge based on noncommunication of 'reasons to believe' was rejected.

Admissibility of additional documents at appellate stage - Whether documents produced with the rejoinder or at the appellate stage could be considered by the Tribunal without following the prescribed procedure - HELD THAT: - The Tribunal held that documents filed with the rejoinder were not an appropriate vehicle to introduce material without affording the respondent an opportunity to rebut, and additional documents at the appellate stage could not be taken into account unless accompanied by an application seeking acceptance of additional evidence with reasons. The appellants had not sought such leave; therefore the additional documents were not considered in overturning the Adjudicating Authority's findings. [Paras 17]

Documents filed with the rejoinder or at appellate stage were not admitted without compliance with the procedure; they did not alter the outcome.

Confirmation of provisional attachment under the Prevention of Money Laundering Act - Disposition of the specific immovable property listed at item No. 17 in the schedule of attached properties - HELD THAT: - The Tribunal noted that a separate order has been passed in the appeal concerning that specific property (in the appeal of Rina Kumari) and therefore the fate of that property is dealt with by the separate order. The Tribunal directed that the treatment of item No. 17 shall be governed by that separate order. [Paras 36]

Property at item No. 17 is not decided in these appeals and shall be governed by the separate order referred to.

Final Conclusion: The appeals are dismissed and the Adjudicating Authority's confirmation of the provisional attachment is sustained on the merits; the attachments are upheld for all properties except that the property at item No. 17 is governed by a separate order and is not disposed of by these appeals.

Interpretation of Section 8(3)(a) of PMLA - continuance of attachment during investigation - requirement to file prosecution complaint against the person whose property is attached - attachment of proceeds of crime in the hands of a third person - lapse of provisional attachment for failure to file prosecution complaint within statutory period

Interpretation of Section 8(3)(a) of PMLA - continuance of attachment during investigation - lapse of provisional attachment for failure to file prosecution complaint within statutory period - Whether the provisional attachment lapsed because the authorised officer did not file a prosecution complaint naming the appellant within 90 days of confirmation of the provisional attachment order. - HELD THAT: - The Tribunal held that Section 8(3)(a) required completion of investigation within the stipulated period (90 days as applicable at the relevant time) or the pendency of proceedings relating to any offence under the Act, but it did not mandate that a prosecution complaint must be filed against every person whose property has been attached within that period. The record showed that a prosecution complaint in the matter was filed on 18.07.2018, which was before the Adjudicating Authority's confirmation order dated 20.07.2018. The appellant was named later in a supplementary complaint filed on 17.12.2018, but the Tribunal reasoned that Section 8(3)(a) concerns investigation and proceedings relating to the offence generally and not investigation or court proceedings specifically against the person in whose name the property stands. Reliance was placed on the principle that the Act aims to immobilise proceeds of crime wherever they are held, including when held by third persons, and on earlier decisions (including the Apex Court in Vijay Madanlal Chaudhary) and Tribunal precedents which support that attachment may be in respect of property held by persons who are not yet accused. Applying these principles to the facts, the Tribunal concluded that the requirement of Section 8(3)(a) was satisfied because the prosecution complaint in the matter had been filed within the statutory period, and therefore the provisional attachment did not lapse for the reason urged by the appellant. [Paras 6, 7, 8, 9, 10]

Argument that PAO No.02/2018 lapsed for failure to name the appellant in a prosecution complaint within 90 days is rejected; the attachment did not lapse.

Final Conclusion: Appeal dismissed; provisional attachment confirmed by the Adjudicating Authority did not lapse because the statutory requirement under Section 8(3)(a) was met by filing of the prosecution complaint in the matter within the stipulated period and Section 8(3)(a) does not require filing of a prosecution complaint specifically against each person in whose name attached property stands.

Condonation of delay - provisional attachment order - notice and service under Section 8(4) of the Prevention of Money Laundering Act, 2002 - impleadment for confirmation of provisional attachment - recall/modification of provisional attachment order - remedies under Section 8(6) to (8) of the Prevention of Money Laundering Act, 2002

Condonation of delay - provisional attachment order - Application for condonation of delay in filing the appeal against the impugned order dated 18.09.2023 - HELD THAT: - The Tribunal examined the explanation for an 11-month delay in filing the appeal (appeal filed on 22.08.2024) and found the appellant's account to be inconsistent and vague. The appellant's application asserted ignorance of proceedings before the Adjudicating Authority and non-service of notice, yet contemporaneous averments and pleadings showed knowledge of fixation of PAO No.04/2023 and active steps taken by the appellant in the form of two communications to the Enforcement Directorate dated 14.06.2023 and 10.07.2023 (received on 18.07.2023). The Tribunal held that once the appellant knew of the PAO he ought to have pursued impleadment or taken steps before the Adjudicating Authority or enquired about the status instead of remaining a silent spectator until the impugned order was passed and thereafter delaying the appeal. The application also failed to specify dates and particulars of verification or the manner in which the copy of the impugned order was obtained, rendering the explanation defective. Having considered these factors, the Tribunal concluded that no sufficient or plausible cause was made out for condoning the delay. [Paras 9, 10, 11, 12, 13]

The application for condonation of delay is dismissed and, consequently, the appeal is dismissed for want of sufficient justification for the delay.

Remedies under Section 8(6) to (8) of the Prevention of Money Laundering Act, 2002 - Effect of dismissal of the appeal on the appellant's right to seek release of the property - HELD THAT: - While dismissing the application for condonation and the appeal, the Tribunal clarified that the dismissal would not preclude the appellant from seeking relief under the statutory provisions for release of attached property. The Tribunal noted that if the appellant can make out a case for release, he remains entitled to pursue remedy under Section 8(6) to (8) of the Act at the appropriate stage. [Paras 14, 15]

Dismissal of the appeal does not bar the appellant from applying for release of the property under Section 8(6) to (8) of the Act if a case is made out.

Final Conclusion: The application for condonation of delay was dismissed and the appeal was dismissed for want of adequate justification for the delay; however, the appellant remains free to seek release of the attached property under the statutory provisions at the appropriate forum.

100% credit for Management Consultancy Service under Rule 6(5) of the Cenvat Credit Rules, 2004 - Proportionate reversal under Rule 6 of the Cenvat Credit Rules, 2004 - Option under Rule 6(3)(ii) to pay proportionate credit where inputs/services are used for taxable and exempted services - Re-credit and its treatment under Rule 6(3A) of the Cenvat Credit Rules, 2004 - Obligation to maintain separate registers for inputs/services used for taxable and exempted services

100% credit for Management Consultancy Service under Rule 6(5) of the Cenvat Credit Rules, 2004 - Proportionate reversal under Rule 6 of the Cenvat Credit Rules, 2004 - Whether Cenvat credit availed on Management Consultancy Services for Financial Year 2010-11 was liable for proportionate reversal. - HELD THAT: - The Tribunal examined sub-rule (5) of Rule 6 which expressly allowed full credit on specified services including Management Consultancy Service even if partially used for exempted services, unless used exclusively for exempted services. The adjudicating authority had denied this relief by applying a Notification dated 01.03.2011 which omitted sub-rule (5) with effect from 01.04.2011. The period in question is March 2010 to March 2011; therefore the omission w.e.f. 01.04.2011 was not applicable to Financial Year 2010-11. Consequently, the credit on Management Consultancy Services was not liable to proportionate reversal and the demand insofar as it relates to such services is not sustainable. [Paras 7]

Demand for proportionate reversal of Cenvat credit on Management Consultancy Services for Financial Year 2010-11 is set aside.

Re-credit and its treatment under Rule 6(3A) of the Cenvat Credit Rules, 2004 - Proportionate reversal under Rule 6 of the Cenvat Credit Rules, 2004 - Whether the department rightly included the re-credit amount in computing short reversal for April 2012 to June 2012. - HELD THAT: - The Tribunal noted that the assessee had taken a re-credit in June 2012 in respect of excess reversal in the previous year and that the already reversed credit had been intimated to and acknowledged by the adjudicating authority. The adjudicating authority had adjusted the proportionate value accordingly. On this factual and accounting basis the Tribunal found no reason to interfere with the modification effected in respect of the re-credit and the consequent reduction in the proportionate Cenvat credit demand for the period April 2012 to June 2012. [Paras 7]

Demand for the period April 2012 to June 2012 stands modified as recorded by the adjudicating authority.

Option under Rule 6(3)(ii) to pay proportionate credit where inputs/services are used for taxable and exempted services - Obligation to maintain separate registers for inputs/services used for taxable and exempted services - Proportionate reversal under Rule 6 of the Cenvat Credit Rules, 2004 - Whether Cenvat credit on Wi fi services for July 2012 to March 2013 was liable to full credit or required proportionate reversal. - HELD THAT: - The assessee contended Wi fi was exclusively used for taxable services. The Tribunal relied on admitted facts that the assessee provided both taxable and exempted services and did not maintain separate registers to identify use of inputs/services for each category. The assessee had earlier exercised the option under Rule 6(3)(ii) to pay proportionate credit, which it could not thereafter ignore. The adjudicating authority correctly held that Wi fi was not exclusively for taxable services and that proportionate reversal under Rule 6 was warranted in absence of identifiable exclusive use. [Paras 7]

Demand for the period July 2012 to March 2013 is upheld.

Final Conclusion: The appeal is partly allowed: the demand relating to Cenvat credit on Management Consultancy Services for Financial Year 2010-11 is set aside; the demand for April 2012 to June 2012 is modified as recorded by the adjudicating authority; and the demand for July 2012 to March 2013 is affirmed.

Extended period of limitation under the proviso to section 73(1) of the Finance Act - suppression of facts - intent to evade payment of service tax - self-assessment - public documents (balance sheet and profit & loss account) - relevant date for limitation

Extended period of limitation under the proviso to section 73(1) of the Finance Act - suppression of facts - public documents (balance sheet and profit & loss account) - relevant date for limitation - Invocation of the extended five-year limitation under the proviso to section 73(1) of the Finance Act for the period April 2012 to March 2013 was not sustainable and the demand was time-barred. - HELD THAT: - The Tribunal found that the show cause notice for April 2012 to March 2013 was issued after the one-year normal limitation period and that the proviso to section 73(1) (extending limitation to five years on grounds such as fraud, collusion, wilful mis-statement or suppression of facts with intent to evade tax) was not invoked or established. Earlier show cause notices dated March 2013 for prior periods were on record and facts underlying the demand for the year in question were therefore within the department's knowledge. The demand was based on figures disclosed in the appellant's profit & loss account and balance sheet, documents treated as public, and hence their existence undermines any finding of suppression. The lower authorities did not examine or record reasons to justify invocation of the extended period. Reliance upon precedents was noted that where liabilities are evident from public records and no mala fide or suppression is shown, the extended period cannot be invoked. Applying these principles, the Tribunal concluded the extended limitation was inapplicable and the demand is barred by limitation. [Paras 6, 12, 13, 15]

The Commissioner (Appeals) order confirming the demand is set aside as the extended period under the proviso to section 73(1) could not be invoked; the appeal is allowed.

Final Conclusion: The impugned order dated 21.08.2017 confirming service tax demand for April 2012 to March 2013 is set aside on limitation grounds and the appeal is allowed with consequential reliefs, if any, to the appellant.

Export of service - reverse charge mechanism - appropriation of payment - extended period of limitation - waiver of interest for extended period - interest under Section 75 - penalty under Section 78 - penalties under Section 77(1)(a) and Section 77(2)

Reverse charge mechanism - appropriation of payment - Upholding of service tax demand in respect of consulting engineer's service, erection/commissioning/installation service and GTA service and appropriation of payments made by the appellant towards those liabilities. - HELD THAT: - The Tribunal noted that the appellant did not contest the substantive demand under the three categories and that payments made by the appellant were acknowledged by the adjudicating authority. The adjudicating authority recorded that initial and subsequent payments were made, and the Tribunal found the entire payment stood paid and acknowledged. On that basis the demand in respect of those services is upheld and the payments already made are appropriated against the appellant's liability for those services. [Paras 8]

Demand in respect of consulting engineer's service, erection/commissioning/installation service and GTA service is upheld and the payments already made are appropriated against those liabilities.

Export of service - Whether the services rendered to the foreign principal constitute export of service and thus are not liable to service tax under 'Business Auxiliary Services'. - HELD THAT: - Applying Rule 3(1)(iii) of the Export of Services Rules, 2005 and the Board clarification (Circular 111/05/2009-ST), the Tribunal held that the decisive factor is the location of the service receiver. The services in question were received abroad by the foreign establishment of the recipient, and therefore fall within the definition of export of service. Consequently, such services are not taxable in India as business auxiliary services. [Paras 8]

Demand under the category of Business Auxiliary Services is set aside as the services qualify as export of service.

Export of service - Whether expenditure incurred for sending personnel abroad for training attracts service tax as 'Commercial Training or Coaching Services'. - HELD THAT: - The Tribunal observed that the appellant sent its personnel abroad and incurred expenditure in foreign currency for training received outside India. As the service was received abroad, it does not attract service tax in India. The demand under the commercial training category therefore lacks merit. [Paras 8]

Demand under the category of Commercial Training or Coaching Services is set aside.

Extended period of limitation - waiver of interest for extended period - interest under Section 75 - Liability for interest: whether interest for the extended period of limitation is exigible and whether interest for the normal period is payable. - HELD THAT: - The Tribunal found no suppression with mala fide intent and noted that the demand arose from information in the appellant's financial statements; hence the extended period of limitation could not be invoked. Following the Tribunal's precedent, the demand of interest for the extended period was set aside. However, delay in payment for the normal period attracts interest under Section 75, and the Tribunal found that the appellant had paid interest for the normal period and that payment is to be appropriated towards that liability. [Paras 9]

Interest for the extended period of limitation is set aside; interest for the normal period is payable and the interest already paid by the appellant is appropriated.

Penalty under Section 78 - Sustainability of penalty imposed under Section 78 of the Finance Act, 1994. - HELD THAT: - The Tribunal concluded that the appellant accepted liability and discharged the tax once the liability was pointed out, and there was no mala fide intention to evade tax. Relying on precedent, the Tribunal held that penalty under Section 78 is not sustainable in these circumstances and therefore must be set aside. [Paras 10]

Penalty imposed under Section 78 is set aside.

Penalties under Section 77(1)(a) and Section 77(2) - Validity of penalties imposed for non-registration and non-filing of ST-3 returns under Sections 77(1)(a) and 77(2). - HELD THAT: - The Tribunal observed that penalties under Sections 77(1)(a) and 77(2) are imposed for non-registration and non-filing of returns and found no reason to interfere with the adjudicating authority's conclusions on these specific defaults. [Paras 11]

Penalties under Section 77(1)(a) and Section 77(2) are upheld.

Final Conclusion: The appeal is partly allowed: demands for business auxiliary services and commercial training are set aside; demand and appropriation in respect of consulting engineer's service, erection/commissioning/installation and GTA are upheld and payments appropriated; interest for the extended period is set aside while interest for the normal period is sustained and appropriated against payments made; penalty under Section 78 is set aside and penalties under Sections 77(1)(a) and 77(2) are upheld.

Reliance on Income Tax Returns (ITR) to determine service tax liability - burden of proof on revenue to establish evasion - investigation required before invoking extended period for fraud or suppression - service of show cause notice and breach of principles of natural justice - email not a valid mode of service under section 37C of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994 - precedential value of coordinate Bench decisions and adherence to larger Bench view

Reliance on Income Tax Returns (ITR) to determine service tax liability - burden of proof on revenue to establish evasion - investigation required before invoking extended period for fraud or suppression - Whether the department could base a demand for service tax for 2015-16 on the turnover shown in ITR without any inquiry or investigation, and invoke the extended period on grounds of fraud/suppression. - HELD THAT: - The Tribunal held that while ITR information may trigger an enquiry, it cannot by itself be treated as the basis for determining the value of services or for raising a demand-much less for invoking the extended period on allegations of fraud or suppression-without any investigation or proof. The burden to prove blameworthy conduct and short payment of service tax rests on the revenue, which was not discharged here because the show cause notice was presumptive and issued without examining the assessee's records or reasons for the variance between ITR and ST-3. Reliance merely on the figure in ITR to compute tax and penal consequences is impermissible; the revenue must first establish that the amounts reflected in ITR constituted consideration for taxable services and that evasion occurred before invoking extended limitation and penalties. [Paras 4, 5]

Demand based solely on ITR without investigation is unsustainable; revenue failed to discharge burden of proof and could not validly invoke the extended period for fraud/suppression.

Service of show cause notice and breach of principles of natural justice - email not a valid mode of service under section 37C of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994 - Whether the show cause notice and personal hearing notice were validly served and whether absence of valid service amounted to denial of principles of natural justice. - HELD THAT: - The Tribunal found that the SCN was not served in the manner prescribed by law and that the department's reliance on email as the mode of service could not be accepted as valid service under section 37C read with section 83. Because the SCN/personal hearing notice was not properly tendered, the Original Authority proceeded in violation of natural justice. Given that the foundational grounds in the notice were inadequate and would require fresh investigation to cure, remanding to cure service defects would be futile; the proceedings were vitiated by lack of valid service and absence of inquiry. [Paras 5]

Service of the SCN by the method claimed was invalid; proceeding in absence of valid service violated principles of natural justice and vitiated the OIO.

Precedential value of coordinate Bench decisions and adherence to larger Bench view - Whether the Tribunal should follow the view in earlier coordinate Bench decisions addressing similar reliance on ITR/Form 26AS and demand without inquiry. - HELD THAT: - The Tribunal referred to and followed the reasoning in earlier decisions of coordinate Benches which held that demands based on differences between ITR/Form 26AS and statutory returns, without examining the nature of transactions or the assessee's records, are presumptive and unsustainable. It also noted the judicial discipline that a Bench of lesser quorum should follow the view taken by a Bench of larger quorum where the ratio covers the legal issue, and applied those precedents to set aside the impugned order. [Paras 6, 7]

Tribunal followed precedents and larger-Bench view that demands premised on ITR/Form 26AS differences without inquiry are not sustainable; impugned order set aside accordingly.

Final Conclusion: Impugned order set aside; appeal allowed and demand, interest and penalties confirmed by the Original Authority quashed for being based on presumptive treatment of ITR figures without investigation and for being vitiated by defective service of the show cause notice, with consequential relief as per law.

Input service - CENVAT credit admissibility - insurance service by Deposit Insurance and Credit Guarantee Corporation (DICGC) - nexus between input service and output service - mandatory/compulsory registration and premium payment as integral part of banking services - rule 6(3B) reversal mechanism - negative list exclusion for extending deposits under section 66D(n)

Input service - CENVAT credit admissibility - insurance service by Deposit Insurance and Credit Guarantee Corporation (DICGC) - nexus between input service and output service - mandatory/compulsory registration and premium payment as integral part of banking services - rule 6(3B) reversal mechanism - Admissibility of CENVAT credit of service tax paid by banks on insurance premium paid to DICGC - HELD THAT: - The Tribunal applied the Larger Bench's conclusion that the insurance service provided by the Deposit Insurance and Credit Guarantee Corporation to banks qualifies as an input service for the purpose of CENVAT credit. The Larger Bench held that registration with DICGC and payment of premium is compulsory and commercially indispensable for a bank to render its output service of "banking and other financial services", establishing sufficient nexus between input service and output service. The Tribunal further relied on the Larger Bench's reasoning distinguishing "accepting deposits" from "extending deposits" for the purpose of the negative list under section 66D(n), and noted that where banks have made the statutory reversal under rule 6(3B), they are entitled to claim credit of input services such as the DICGC insurance. Precedential support from the Larger Bench decisions, Karnataka High Court's treatment of analogous reinsurance services, subsequent CBEC acceptance, and affirmations by High Courts were treated as reinforcing the legal position. On this basis the Tribunal set aside the impugned orders denying credit and allowed the appeals. [Paras 5, 7, 13]

CENVAT credit of service tax paid on DICGC insurance premium is admissible to banks as an input service; impugned orders denying such credit are set aside and appeals allowed.

Final Conclusion: The Tribunal, following the Larger Bench and supporting High Court and administrative pronouncements, held that service tax paid on deposit insurance by banks to DICGC is an input service eligible for CENVAT credit; the impugned orders rejecting such credit for the periods May,2014 to June,2015 and 2015-16 are set aside and the appeals are allowed.

Interpretation of the phrase "one time upfront amount" - exemption from service tax in respect of one time upfront amount for longterm lease of industrial plots - treatment of installment payments (with interest) as onetime upfront consideration - Notification No. 41/2016ST - exemption of one time upfront amount for longterm lease

Interpretation of the phrase "one time upfront amount" - treatment of installment payments (with interest) as onetime upfront consideration - exemption from service tax in respect of one time upfront amount for longterm lease of industrial plots - Whether amounts payable as premium, salami, cost, price or development charges paid by installments with interest for grant of a 30year lease qualify as a "one time upfront amount" and therefore fall within the exemption from service tax. - HELD THAT: - The Tribunal examined the statutory text introducing the exemption and the Notification exempting the "one time upfront amount" payable for longterm (thirty years or more) leases of industrial plots. The revenue's contention that "one time upfront amount" requires a single lumpsum payment was rejected. The Tribunal held that the phrase denotes the nature of the consideration - a onetime, nonrecurring charge (premium, salami, cost, price, development charges) applicable to the entire lease period - and not the frequency or schedule of payments. Payment spread over time with interest does not convert the character of the charge into a recurring lease rent; the instalments (even when payable with interest) relate to the single upfront consideration which is payable for the lease and therefore fall within the exemption. The Tribunal distinguished such onetime heads from recurring lease rent, on which service tax was being discharged separately.

Amounts characterized as premium, salami, cost, price or development charges paid by the respondent in instalments (with interest) were held to be "one time upfront amount" for the lease and within the exemption; revenue's appeal dismissed.

Final Conclusion: The Tribunal dismissed the revenue appeal and upheld the Commissioner (Appeal)'s allowance of the refund claim, holding that the upfront premium/development charges paid in instalments (with interest) constituted a "one time upfront amount" eligible for the exemption for longterm industrial leases for the period commencing 1 June 2007 and ending 21 September 2016.

Intellectual Property Service - Reverse Charge Mechanism - Taxability under Negative List regime - Amortisation and accounting treatment under Ind AS 38 - Book entry (P&L/trial balance) versus consideration for service - Extended period of limitation (proviso to section 73)

Intellectual Property Service - Reverse Charge Mechanism - Amortisation and accounting treatment under Ind AS 38 - Book entry (P&L/trial balance) versus consideration for service - Whether the amounts appearing in the appellant's trial balance as licence fees, documentation fees and computer software represent consideration for taxable services from overseas and are liable to service tax under reverse charge - HELD THAT: - The Tribunal accepted the appellant's submission that the amounts reflected in the trial balance were amortisation disclosures in terms of Ind AS 38 and not contemporaneous consideration for services rendered by overseas vendors during the periods in dispute. Ind AS 38 distinguishes expenditure that meets the definition of an intangible asset (which is capitalised and amortised) from expenditure recognised as an expense when incurred; it requires disclosure of amortisation and carrying amounts and contemplates systematic allocation of depreciable amount over an intangible asset's useful life. Reliance on P&L/trial-balance entries alone to infer receipt of taxable services was held to be legally unsound: the point of taxation and the liability to tax must be governed by statutory rules (and not merely by accounting amortisation entries). The Tribunal also noted precedents (including the Madras High Court decision in Firm Foundations and earlier Tribunal decisions considering similar inter-governmental/license arrangements) which held that picking amounts from accounting entries without applying the statutory point-of-taxation and factual verification is an improper basis for a demand. Applying these principles to the material, the Tribunal found that no service was actually received from foreign vendors during the relevant period that would attract reverse-charge liability; the entries were book amortisation and not contemporaneous consideration for taxable services. For these reasons the demand on merits could not be sustained. [Paras 4]

Demand of service tax based on the trial-balance/amortisation entries is set aside; consequential penalties and interest recorded in the impugned order are also set aside as the demand is vacated.

Final Conclusion: The Tribunal allowed the appeal, set aside the adjudicating authority's demand of service tax (and consequential interest and penalties) made by treating the appellant's amortisation/book entries as consideration for overseas intellectual property/technology services for the period 2011-12 to 2014-15.

Adoption of customs exchange rate versus accounting forex rate - date of determination of rate of exchange under Section 67A - Cenvat credit and revenue neutrality - extended period of limitation and mens rea for penalty - penalty under Section 78: requirement of suppression, fraud or collusion

Adoption of customs exchange rate versus accounting forex rate - date of determination of rate of exchange under Section 67A - Cenvat credit and revenue neutrality - extended period of limitation and mens rea for penalty - Whether the demand for differential service tax on account of FOREX rate fluctuation was sustainable and whether the demand was time-barred in view of revenue neutrality and Cenvat credit eligibility. - HELD THAT: - The Tribunal noted that Section 67A (and its subsequent amendments) governed the rate of exchange for determination of value, and that the law during the material period was evolving with provision for adoption of accounting forex rate thereafter. The appellants had paid the service tax with interest though under invocation of extended limitation. Critically, the Tribunal found that the appellant was eligible to take Cenvat credit in respect of the tax paid, rendering the overall situation revenue neutral. On that basis and having considered the cited authorities, the Tribunal held that a demand which is revenue neutral and where Cenvat credit is available is not sustainable as time-barred. Nevertheless, because the appellants had already paid the service tax with interest, the liability as paid was maintained. [Paras 4]

The demand so far as it is time-barred and rendered unsustainable by revenue neutrality and Cenvat credit eligibility is not maintainable; tax paid with interest is maintained.

Extended period of limitation and mens rea for penalty - penalty under Section 78: requirement of suppression, fraud or collusion - Whether penalty under Section 78 could be imposed where the demand was raised under extended limitation but there was no mala fide intention or suppression on the part of the appellant. - HELD THAT: - The Tribunal examined the Revenue's reliance on the decision in Union of India v. Rajasthan Spinning & Weaving Mills and observed that mandatory equal penalty arises only where ingredients such as suppression, fraud or collusion (and therefore mens rea) are established. In the present case the appellants had acted on a bona fide view of the law which had undergone changes, had paid the tax with interest, and were eligible for Cenvat credit. The Tribunal found absence of mens rea or deliberate suppression and therefore concluded that the conditions necessary to impose an equal penalty under Section 78 were not satisfied. [Paras 4, 5]

Penalties imposed by the adjudicating authority and sustained by the Commissioner (Appeals) are set aside for lack of mens rea; equal penalty under Section 78 cannot be imposed.

Final Conclusion: The appeal is allowed: the demand is unsustainable to the extent barred by limitation given revenue neutrality and Cenvat credit eligibility (tax paid with interest maintained), and the penalties imposed under Section 78 are set aside for absence of mens rea.

Exemption to services provided to Special Economic Zone units - eligibility of subcontractor for SEZ service tax exemption - services consumed within Special Economic Zone - interpretation and scope of exemption notification for authorised operations in SEZ - overriding effect of SEZ statutory regime on other laws

Eligibility of subcontractor for SEZ service tax exemption - exemption to services provided to Special Economic Zone units - interpretation and scope of exemption notification for authorised operations in SEZ - Whether a subcontractor who provides services in relation to authorised operations in a SEZ on behalf of the main contractor is eligible for exemption under the exemption notifications relied upon by the appellant. - HELD THAT: - The Tribunal held that the determinative criterion for exemption is that the taxable service is provided in relation to authorised operations in a SEZ and is consumed within the SEZ by a developer or unit. Where those conditions are satisfied, it makes no difference that the service was provided by a subcontractor acting on behalf of the main contractor. The Tribunal relied upon its own prior decision in the appellant's case and several other decisions of the Tribunal and courts which interpret the notifications as conferring exemption where services are rendered for consumption in the SEZ, even if supplied through a contractor/subcontractor chain. The Tribunal rejected the contrary view that a subcontractor is automatically excluded from the benefit of the notification, noting that procedural or formal distinctions between direct supply by the main contractor and supply by a subcontractor do not defeat the statutory exemption when the substantive conditions of the notification are met. Applying these principles to the facts, the Tribunal concluded that the appellant's services fell within the scope of the exemption notifications as they related to authorised SEZ operations and were consumed in the SEZ.

Impugned order set aside; appeal allowed and the services rendered by the appellant as subcontractor held eligible for exemption under the cited notifications.

Final Conclusion: The Tribunal allowed the appeal and set aside the adjudicating order, holding that services rendered by the appellant subcontractor in relation to authorised operations and consumed in the SEZ are eligible for exemption under the applicable SEZ service tax notifications.

Supply of tangible goods on hiring - reverse charge liability of recipient - exemption under Notification No. 25/2012-ST (Sr. 12(e) and Sr. 13(a)) - sub contractor entitlement to exemption where main contract is for government - supply of manpower and security service

Supply of tangible goods on hiring - reverse charge liability of recipient - Demand of service tax on renting of JCB machines and excavators (assessed as supply of tangible goods on hiring) is not sustainable against the appellant - HELD THAT: - The Tribunal found that the impugned demand of Rs. 58,249/- related to renting of JCB machines and excavators pertains to transportation of construction material for road construction and, by operation of Notification No. 13/2012 ST (reverse charge effective 01.07.2012), the service tax liability in the factual matrix was on the recipient of the service. In view of the appellant being a proprietary firm performing transportation/loading-unloading connected to construction, the demand confirmed against the appellant was held to be unsustainable and accordingly set aside. [Paras 4]

Demand of Rs. 58,249/- set aside.

Exemption under Notification No. 25/2012-ST (Sr. 12(e) and Sr. 13(a)) - sub contractor entitlement to exemption where main contract is for government - Service tax demands relating to site formation, excavation and earthmoving for road construction and water supply projects are covered by the exemption entries and are not sustainable - HELD THAT: - The Tribunal construed Sr. No. 12(e) (services by way of construction of pipeline/plant for water supply) and Sr. No. 13(a) (services by way of construction of a road for use by general public) of Notification No. 25/2012 ST and held that where the main contract is for a government/governmental authority (GIDC here) the sub contractor's services performed for execution of that project fall within the exemption. Denying exemption solely because the appellant was a sub contractor would defeat the object of the notification, since main contractors commonly deploy sub contractors to execute government projects. Accordingly, the Tribunal set aside the demands of Rs. 27,226/- (road) and Rs. 10,64,431/- (water supply). [Paras 4]

Demands of Rs. 27,226/- and Rs. 10,64,431/- set aside as covered by the exemption.

Supply of manpower and security service - Demand relating to supply of manpower and security service is sustained - HELD THAT: - The Tribunal recorded that the appellant did not contest the demand of Rs. 32,514/- relating to supply of manpower and security service; accordingly that portion of the demand was not disturbed. [Paras 4]

Demand of Rs. 32,514/- upheld (not contested by the appellant).

Final Conclusion: The appeal is allowed in part: the Tribunal set aside the demands of Rs. 58,249/-, Rs. 27,226/- and Rs. 10,64,431/- as unsustainable or covered by exemption, while the uncontested demand of Rs. 32,514/- is maintained; the impugned order is modified accordingly.

Manpower Recruitment or Supply Agency Services - process amounting to manufacture or production of goods - exemption under Notification No. 25/2012-ST Sr. No. 30(i) read with clause (ya) of para 2 - negative list regime

Manpower Recruitment or Supply Agency Services - Whether the appellant's contracts for per-piece packing/filling of milk pouches, loading/unloading of crates and ancillary activities fall within "Manpower Recruitment or Supply Agency Services" for the period up to 30.06.2012. - HELD THAT: - On construction of the contract and the factual matrix the Tribunal found that the agreement was for execution of particular jobs on a lump-sum / per-piece basis and not for supply of manpower charged on man-day or man-hour basis. The client was not concerned with number of personnel or manhours; the appellant carried out specified jobs using its own labour and charged on quantum of work. Reliance was placed on a line of CESTAT decisions holding that lump-sum contracts for execution of work are not classifiable as manpower recruitment or supply agency services. Applying that principle to the undisputed contract terms, the activity could not be classified as "Manpower Recruitment or Supply Agency Services" for the period up to 30.06.2012 and service tax was not leviable for that period. [Paras 4]

The classification as "Manpower Recruitment or Supply Agency Services" up to 30.06.2012 is not sustainable; no service tax payable for that period.

Process amounting to manufacture or production of goods - exemption under Notification No. 25/2012-ST Sr. No. 30(i) read with clause (ya) of para 2 - negative list regime - Whether the appellant's activities from 01.07.2012 amount to manufacture and are exempt from service tax under Notification No. 25/2012-ST Sr. No. 30(i) read with clause (ya) of para 2. - HELD THAT: - Under the post-01.07.2012 negative list regime the Tribunal examined whether the appellant's packing and related operations rendered the product marketable and fell within the Central Excise definition of manufacturing (Section 2(f) / processes on which excise duty is leviable). The Tribunal concluded that packing of milk into pouches and ancillary operations amount to a process on which duties of excise would be leviable and therefore constitute "process amounting to manufacture or production of goods" as defined in the notification (clause (ya)). Services by way of such processes are covered by Sr. No. 30(i) of Notification No.25/2012-ST and are accordingly exempt. Applying the exemption to the appellant's activity, no service tax was leviable for the period from 01.07.2012. [Paras 4]

The activities from 01.07.2012 amount to manufacture and are exempt under Notification No.25/2012-ST Sr. No.30(i) read with clause (ya); no service tax payable for that period.

Final Conclusion: The Tribunal set aside the impugned order, holding that the appellant's lump-sum/per-piece contracts are not manpower supply services for the period up to 30.06.2012 and that the packing and related processes from 01.07.2012 amount to manufacture and are exempt under Notification No.25/2012-ST; accordingly the appeal is allowed and no service tax is payable for the periods in issue.

Works Contract Service - composite contract of supply and services - Value of works contract service under Rule 2A - Reverse Charge Mechanism - proviso to Section 73 (extended period / limitation)

Works Contract Service - composite contract of supply and services - for the purposes of carrying out - Whether the activity rendered by the appellant qualifies as Works Contract Service - HELD THAT: - The contract with the foreign supplier combined supply of goods with supervision, training, erection, start-up and commissioning and did not separately apportion price of goods and services. The phrase "for the purposes of carrying out" in the definition of works contract was held to include activities incidental to erection, commissioning and installation. Supervision, training and related services accompanying supply of plant thereby fall within works contract envisaged by the definition. Consequently the composite contract attracted classification as Works Contract Service and, in terms of the statutory scheme, the appellant was liable to discharge service tax under the Reverse Charge Mechanism. [Paras 6]

Activity held to be Works Contract Service; decision recorded for the department and against the appellant.

Value of works contract service under Rule 2A - amount paid to a sub-contractor - includable in gross amount charged - Whether payments made to sub-contractors for erection and commissioning are includable in the value of the works contract under Rule 2A - HELD THAT: - Rule 2A treats the value of works contract service as the gross amount charged less the value of property in goods transferred, and expressly includes amounts paid to sub-contractors for labour and services within the value of works contract service. Given the composite nature of the contract and absence of separation of goods and service prices, the amounts paid by the appellant to contractors for erection and commissioning are includable in the gross value of the impugned contract and form part of the taxable value. The Tribunal however directed that service tax already paid by the appellant against the activity and vis-a -vis invoices of the contractors must be set off against the confirmed demand. [Paras 7]

Amounts paid to sub-contractors held includable under Rule 2A; computation modified to give set-off for service tax already paid by the appellant.

Proviso to Section 73 (extended period / limitation) - concealment / suppression with intent to evade - Whether the show cause notice was barred by limitation or the proviso to Section 73 was rightly invoked - HELD THAT: - The adjudicating authority recorded that the taxable transaction and payments came to the department's notice and that returns were not filed in the appropriate period; the appellant's failure to disclose the taxable value was treated as concealment/suppression with intent to evade tax. On these findings the proviso to Section 73 (extended period) was held to be properly invoked and the show cause notice was not time-barred. [Paras 7]

Proviso to Section 73 validly invoked; notice not barred by limitation.

Final Conclusion: The appeal is dismissed; the order under challenge is upheld except that the service tax already paid by the appellant is to be set off against the confirmed demand.

Valuation of taxable services - Consideration under Section 67 - Transaction-specific consideration - Incentives and commission vis-a -vis taxable value - Ocean freight as independent transaction

Ocean freight as independent transaction - Valuation of taxable services - Demand of service tax on the differential between ocean freight collected from exporters and ocean freight paid to shipping lines - HELD THAT: - The Tribunal noted that the freight collected from the shipper/exporter and the freight paid to the shipping line are two independent transactions. Relying on earlier Tribunal precedents including APL Logistics (India) Pvt. Ltd. and Greenwich Meridian Logistics (India) Pvt. Ltd. , and on the admission by the Departmental Representative that there is no material distinction of fact in the present case, the Tribunal held that service tax is not leviable on the differential amount retained by the appellant. The Tribunal therefore concluded that the demand confirmed by the adjudicating authority in respect of the differential freight was incorrectly sustained and was to be set aside.

Demand on the differential freight amount set aside.

Consideration under Section 67 - Transaction-specific consideration - Incentives and commission vis-a -vis taxable value - Demand of service tax on commission/brokerage/incentive received by the appellant from shipping lines - HELD THAT: - The Tribunal examined the scope of valuation under Section 67 of the Finance Act, 1994 and applied the principle that only amounts which constitute consideration for provision of the particular taxable service are includible in the taxable value. The Tribunal referred to the Supreme Court decision in Union of India v. Intercontinental Consultancy and Technocrats for the proposition that valuation must be confined to the gross amount charged for providing 'such' taxable services and that amounts not calculated for providing the taxable service cannot be included. Following the Larger Bench decision in Kafila Hospitality & Travels Pvt. Ltd. vs. Commissioner of Service Tax , which held that incentives are not transaction-specific consideration and thus not liable to service tax under Section 67, the Tribunal held that commission/brokerage/incentive received by the appellant could not be included in the value of taxable services. Consequently, the confirmed demand in respect of commission/brokerage was set aside.

Demand on commission/brokerage/incentive set aside.

Final Conclusion: Both demands challenged in the appeal - on the differential ocean freight retained and on commission/brokerage/incentive received - were found not leviable and the appeal is allowed, with the confirmed demands set aside.

Clandestine removal of goods - preponderance of probabilities - value of retracted confessions - requirement of tangible and corroborative evidence for evasion - reliability of stock verification by visual estimation - linkage between recovered documents and factory activities - burden of proof in adjudication proceedings

Clandestine removal of goods - requirement of tangible and corroborative evidence for evasion - preponderance of probabilities - Whether the Tribunal was justified in holding that Revenue failed to establish clandestine manufacture and clearance of goods. - HELD THAT: - The Court examined the standard of proof applicable in adjudication proceedings and reiterated that charges of clandestine removal, though serious, are to be judged on the civil standard of preponderance of probabilities and not by criminal standards. Revenue is not required to prove matters with mathematical precision, but conclusions must be based on cogent and logical evidence and not on mere suspicion or assumption. The Tribunal found that the case for clandestine manufacture and clearance rested on sketchy materials - retracted statements, private papers and disputed entries - and that crucial corroborative evidence (such as purchases of excessive raw material, verified instances of removal to buyers, receipts of sale proceeds traced to the assessee, excess electricity consumption or proofs of transportation) was absent. On independent examination of the record the Tribunal concluded that the evidence did not satisfy the minimum threshold for establishing clandestine removal and the High Court finds no palpable error in that conclusion. [Paras 12, 13, 14, 19, 25]

Tribunal's finding that Revenue did not establish clandestine manufacture and clearance is upheld.

Reliability of stock verification by visual estimation - burden of proof in adjudication proceedings - Whether stock verification carried out by visual estimation could form a reliable basis for demanding duty for alleged shortfall of raw material. - HELD THAT: - The Tribunal observed that the Panchnama alone and a purported admission by an authorised representative cannot substitute for an objectively reliable stock verification where it is unclear whether physical weighment was effected. The Court endorsed the Tribunal's approach that a mode of verification by mere eye-estimation, if true, is not a proper verification and cannot sustain a demand predicated on alleged shortages of raw material. The Tribunal further noted that the Original Authority had not properly examined the basic factual aspects relating to furnace capacity and production capability which bore on whether the alleged shortage could translate into clandestine manufacture. [Paras 15, 16, 17]

Stock verification by unsubstantiated visual estimation cannot, by itself, support a demand for clandestine clearance.

Value of retracted confessions - linkage between recovered documents and factory activities - Whether retracted statements and documents recovered from third persons were sufficient to establish liability of the assessee. - HELD THAT: - The Tribunal found that the persons from whose possession documents were recovered were not shown to be clearly established employees of the assessee and that material weaknesses in the private records (such as impossible production entries inconsistent with furnace capacity) cast doubt on their reliability. The Tribunal also relied on the principle that retracted confessions require careful scrutiny and independent corroboration; the Court noted authoritative guidance that retractions cannot be summarily brushed aside and that the Revenue bears responsibility to establish that such confessions are free from coercion. In the absence of corroborative evidence linking the recovered papers to unaccounted manufacture and clearances, the Tribunal concluded that the documents and retracted statements did not constitute adequate proof. [Paras 17, 18, 19, 23]

Retracted statements and the recovered documents, without independent corroboration and clear linkage to the assessee's factory activities, do not suffice to sustain the demand.

Final Conclusion: The High Court finds no infirmity in the CESTAT's order which set aside the demand for clandestine manufacture and unaccounted clearance; the appeal is dismissed.

Remand for verification of supplier payments - captively consumed compound and exemption claims - limited enquiry into levy and exemption before adjudicating authority - departmental laches and limitation - setting aside orders and remand for fresh adjudication

Remand for verification of supplier payments - captively consumed compound and exemption claims - setting aside orders and remand for fresh adjudication - Whether the matter should be remanded for fresh consideration to ascertain if the supplier of the 'compound' has discharged any duty and, if so, whether the demand against the respondent should be dropped - HELD THAT: - The High Court found that the controversy over levy of excise on the 'compound' (kimam) and the entitlement to exemption could not be finally determined without factual enquiry into the provenance of the compound and whether the supplier had already paid duty. The Court noted delays and apparent laches by departmental officers in auditing and raising demands over several years but declined to dispose of the core dispute on limitation or substantive exemption grounds in the absence of verification of supplier documents and transactions. For these reasons the Court set aside the adjudicating authority's order dated 28.01.2016 and the CESTAT order dated 03.08.2023 and remitted the matter to the Commissioner of Central Excise, Shillong with directions to examine the records relating to purchase of the compound, to ascertain the identity of the supplier and whether duty has already been paid by the supplier, and to drop any consequential demand to the extent the supplier has already discharged the liability; if the supplier has not paid, the Commissioner is to proceed in accordance with law. The respondent was permitted to place relevant records before the officers for their satisfaction. [Paras 26, 27, 28, 29, 30]

Order dated 28.01.2016 and the CESTAT order dated 03.08.2023 are set aside and the matter is remanded to the Commissioner of Central Excise, Shillong for verification of supplier payments and reconsideration in accordance with the observations made by the Court

Final Conclusion: The High Court set aside the impugned orders and remanded the matter to the Commissioner of Central Excise, Shillong for fresh adjudication limited to verification of supplier-related records and payments; the respondent may produce records and any duty found to have been paid by the supplier shall be taken into account and consequential demands adjusted or dropped as warranted.

Maintainability of appeal under Section 117 of the Central Goods and Services Tax Act, 2017 - Constitution of Goods and Services Tax Appellate Tribunal - Requirement of an order of the Appellate Tribunal under Section 113 for a High Court appeal - Taxability of services and appeal to the Supreme Court under Section 35L of the Central Excise Act, 1944

Maintainability of appeal under Section 117 of the Central Goods and Services Tax Act, 2017 - Constitution of Goods and Services Tax Appellate Tribunal - Taxability of services and appeal to the Supreme Court under Section 35L of the Central Excise Act, 1944 - Appeal under Section 117 of the Central Goods and Services Tax Act, 2017 is not maintainable before the High Court in the present proceedings. - HELD THAT: - An appeal to the High Court under Section 117 lies only against an order passed by the Appellate Tribunal under Section 113 of the Act of 2017. Section 2(9) and Section 109 contemplate constitution of the Goods and Services Tax Appellate Tribunal by the Government. No material was placed to show that such Appellate Tribunal has been constituted. Consequently, there is no order of the Appellate Tribunal under the Act of 2017 which can sustain an appeal under Section 117. Further, the determinative question in this case is the taxability of the services rendered by the respondent. Section 35L of the Central Excise Act, 1944 permits an appeal to the Supreme Court in matters relating to determination of taxability, and this Court has earlier held in Commissioner of CGST, Guwahati v. Oil India Ltd. that challenges on taxability falling within Section 35L must be pursued before the Supreme Court. Having regard to the nature of the dispute (taxability of services), the matter falls within the purview of Section 35L and not as a maintainable appeal under Section 117 before this Court. [Paras 6, 8, 9, 10, 11]

The appeal is dismissed as not maintainable before the High Court, with liberty to the appellant to pursue such remedy as is available in law.

Final Conclusion: The High Court dismissed the appeal for want of maintainability under Section 117 of the CGST Act, 2017, holding that no Appellate Tribunal under the Act has been constituted and that the taxability issue falls within Section 35L of the Central Excise Act, 1944; liberty granted to the appellant to avail other legal remedies.

Cenvat Credit admissibility - Section 11A(2B) benefit on voluntary payment - Rule 8(3A) ultra vires - extended period of limitation - suppression requirement - penalty under Rule 26 - mens rea requirement

Cenvat Credit admissibility - Section 11A(2B) benefit on voluntary payment - Denial of Cenvat credit and confirmation of demand where appellant had voluntarily disclosed liability and paid duty and interest. - HELD THAT: - The Tribunal found that the appellant voluntarily informed the Department about their liability and paid duty and interest before issuance of the Show Cause Notice. In that factual backdrop, benefit under subsection (2B) of Section 11A was available and there was no necessity to deny credit or issue the Show Cause Notice. The Department had examined invoices and details of Cenvat Credit prior to issuance of the notice and had earlier required only differential duty and interest, which the appellant paid; those facts negate a later denial of credit. The Tribunal relied on the established line of authorities that when duty is subsequently held payable on a final product, entitlement to credit cannot be denied merely because the credit was availed earlier. [Paras 7, 11]

Denial of Cenvat credit was not sustainable; benefit of Section 11A(2B) applies where duty and interest were voluntarily paid and intimated to the Department.

Rule 8(3A) ultra vires - Validity and applicability of Rule 8(3A) as a basis to deny use of Cenvat credit and to demand duty in cash. - HELD THAT: - The Tribunal held that Rule 8(3A) was wrongly relied upon by the Adjudicating Authority because that provision is applicable only where an assessee otherwise paying duty commits default in payment by the due date. The Tribunal noted judicial pronouncements holding Rule 8(3A) to be ultra vires (including decisions of the Punjab & Haryana High Court and Telangana High Court) and observed the Gujarat High Court decision and subsequent proceedings in the Supreme Court; in the facts of this case, Rule 8(3A) was not a proper basis to disallow credit or require cash payment. [Paras 8, 9, 10]

Reliance on Rule 8(3A) to deny Cenvat credit and to demand duty in cash was incorrect and not applicable in the present case.

Extended period of limitation - suppression requirement - Invocation of extended period of limitation by the Department in respect of the demands. - HELD THAT: - The Tribunal found that the extended period of limitation could not be invoked because the essential ingredient of suppression with intent to evade duty was absent. The appellant had voluntarily disclosed the manufacture and liability by letter dated 17.06.2010 and subsequently paid duty and interest; issuance of the Show Cause Notice after more than two years was therefore timebarred as the facts did not support invocation of the extended limitation period. [Paras 12]

The demand confirmed by invoking the extended period of limitation is barred and cannot be sustained.

Penalty under Rule 26 - mens rea requirement - Sustainability of penalty under Rule 26 of the Central Excise Rules on the authorized signatory. - HELD THAT: - The Tribunal held that imposition of penalty under Rule 26 on Shri Sanjay Sharma was bad in law because the statutory ingredients for imposing such penalty - including culpable intention or mens rea required by the provision - were not established on the facts. The adjudicating authority did not demonstrate the requisite omissions or commissions with the necessary mental element to justify personal penalty. [Paras 13]

Penalty under Rule 26 imposed on the authorized signatory is not sustainable.

Final Conclusion: Impugned order confirming demands and penalties set aside; both appeals allowed.

Interpretation of exemption entry in a notification - scope of the term "drugs" vis-a-vis "bulk drugs" - entitlement to exemption under a notification description (A) where goods are specified in appended lists - conditional exemption requiring compliance with procedural rules for concessional removal - personal penalty under Rule 26 for aiding or abetting - requirement of mala fide or suppression for imposition of personal penalty

Scope of the term "drugs" vis-a-vis "bulk drugs" - entitlement to exemption under a notification description (A) where goods are specified in appended lists - interpretation of exemption entry in a notification - Whether the goods manufactured and cleared by the company (the five named drugs) fall under description (A) of Sr. No. 108 of Notification No. 12/2012-CUS and are therefore unconditionally exempted - HELD THAT: - The Tribunal held that description (A) grants exemption to drugs and medicines specified in List No. 3 and 4 and that where the impugned goods are specifically listed in those lists they fall within the term "drugs". Following prior tribunal and High Court decisions reproduced in the judgment, the court reasoned that the term "drugs" includes "bulk drugs" (as also reflected in the Drugs (Prices Control) Order), and therefore bulk drugs specified in the appended lists are entitled to the unconditional benefit of description (A). Consequently the Revenue's contention that the goods fall under description (B) (which attracts conditions such as compliance with procedural rules) was held to be incorrect on the facts of this case because the products in question were reflected in list 3 or list 4 and declared by the company under the notification entry. The Tribunal therefore concluded that the duty demand founded on denial of exemption is not sustainable. [Paras 1, 4]

The impugned goods fall under description (A) of Sr. No. 108 of Notification No. 12/2012-CUS and are entitled to exemption; the revenue's demand based on denial of that exemption is unsustainable.

Personal penalty under Rule 26 for aiding or abetting - requirement of mala fide or suppression for imposition of personal penalty - conditional exemption requiring compliance with procedural rules for concessional removal - Whether penalty under Rule 26 of the Central Excise Rules imposed on the appellant (an employee) can be sustained when the company's clearances are held to be entitled to exemption and there was no suppression or mala fide - HELD THAT: - The Tribunal examined the imposition of personal penalty on the basis that the appellant was alleged to have aided or abetted duty evasion. Having concluded that the company's clearances were entitled to exemption under description (A) and noting that the company had consistently declared the notification entry and product description in returns, the Tribunal found no suppression of facts or mala fide on the part of the company or the appellant. In light of the disputed question of law on interpretation of the notification and the absence of any culpable concealment, the imposition of penalty under Rule 26 was held to be unsustainable. The Tribunal relied on the principle that where entitlement to exemption is a genuine legal controversy and there is no mala fide, personal penalty cannot be upheld. [Paras 1, 4, 5]

Penalty imposed under Rule 26 on the appellant is set aside as unsustainable.

Final Conclusion: The appeal is allowed: the goods are held to be covered by description (A) of Sr. No. 108 of Notification No. 12/2012-CUS and entitled to exemption, the departmental duty demand is therefore not sustainable, and the personal penalty imposed under Rule 26 on the appellant is quashed.

Time-limit for adjudication under section 11A(11) of the Central Excise Act - interpretation of the phrase "where it is possible to do so" - lapse of show cause notice for non-adjudication within statutory period - balance between principles of natural justice and statutory timeline - requirement to record reasons when adjudication exceeds statutory period

Time-limit for adjudication under section 11A(11) of the Central Excise Act - interpretation of the phrase "where it is possible to do so" - lapse of show cause notice for non-adjudication within statutory period - requirement to record reasons when adjudication exceeds statutory period - balance between principles of natural justice and statutory timeline - Impugned adjudications are vitiated because the Adjudicating Authority failed to determine the amount of duty within the period prescribed by section 11A(11) and did not record any plausible reasons showing it was not possible to adjudicate within that period. - HELD THAT: - Sub-section (11) of section 11A prescribes a statutory deadline (six months or one year, as applicable) for determination of duty under sub-section (10), subject only to the limited flexibility inherent in the words "where it is possible to do so." The Tribunal accepted the legal principle, as explained by several High Courts, that the phrase permits deviation from the time-limit only where circumstances or "insurmountable exigencies" make adjudication impracticable; the onus lies on the revenue to demonstrate such circumstances. The Adjudicating Authority in these matters (including Kopertek) did not record any reasons showing why the statutory period could not be met; the orders contain no plausible justification for the prolonged delay between issue of the show cause notices and final adjudication. The Tribunal rejected the contention that adherence to principles of natural justice (grant of opportunities, cross-examination, hearings) alone justified the delay: where the statute fixes a timeline the authority must reasonably balance fair opportunity with timely adjudication and, if unable to meet the statutory period, must record compelling reasons. In the absence of any such reasons on the facts of these cases, the show cause notices/adjudications have lapsed and the impugned orders are unsustainable. The Tribunal therefore set aside the impugned orders in Kopertek and in the other appeals listed, without deciding the remaining contentions. [Paras 12, 28, 42, 45, 46]

Impugned orders set aside for failure to adjudicate within the time prescribed by section 11A(11); appeals allowed with consequential relief.

Final Conclusion: Adjudications rendered after expiry of the period prescribed by section 11A(11), without any recorded justification showing it was not possible to determine duty within that period, are set aside; the impugned orders in the appeals are quashed and the appeals are allowed with consequential reliefs.

Input Tax Credit - refund of input tax credit - zero rated sale - accrual of input tax credit - limitation period for refund - Form W refund claim procedure - assessment on basis of returns - carry over of excess input tax credit

Refund of input tax credit - limitation period for refund - accrual of input tax credit - Form W refund claim procedure - assessment on basis of returns - Validity of rejection of refund claims on the ground that Form W was filed beyond 180 days as per Section 18(3) and Rule 11(2) as they stood during the period in dispute. - HELD THAT: - The Court examined Section 18(3) and Rule 11(2) as they stood for the period in dispute and held that the entitlement to file a refund claim in Form W arose on the "accrual of such input tax credit" which, in the statutory scheme as then in force, occurs after returns are assessed. Where returns had been used to carry forward monthly input credits under Rule 10(10)(a), the excess credit is to be carried over and worked out on assessment under Section 22; consequently the date of accrual for the purpose of the 180 day limitation cannot be taken as the date of purchase or the date of export if returns remain unassessed. The Court noted the admitted position that the dealer had been claiming the credit in monthly returns (Form I) and that those returns had not been taken up for assessment; therefore the rejection of the refund solely because Form W was filed beyond 180 days was not justified. The proper course, the Court held, was for the assessing officer to take up the monthly returns for consideration under Section 22 and decide the refund claim accordingly. The Court also observed that the statutory amendments effected with effect from 1 April 2010 altered the position prospectively, and expressly refrained from expressing any opinion on matters arising after the amendment. [Paras 27, 28, 29, 31, 33]

The orders rejecting the refund claims were set aside; the assessing authority is directed to take up the returns for assessment under Section 22 and consider the refund claim in accordance with law as it stood for the period in dispute.

Refund of input tax credit - zero rated sale - Input Tax Credit - Whether the Writ Court erred in entertaining the petition instead of directing remedy by appeal under the statutory provision. - HELD THAT: - The Court considered the Government Advocate's contention that the Writ Court should have directed the assessee to pursue an appeal under the Act. Having reviewed the matter, the Court found no error in the Single Judge entertaining and deciding the writ petitions which raised the statutory construction of Sections and Rules governing refund entitlement for the period in dispute. The High Court affirmed the Single Judge's decision and declined to displace it. [Paras 32, 33]

The Writ Court's order was upheld and the Writ Appeals dismissed.

Final Conclusion: The High Court dismissed the Writ Appeals and upheld the Single Judge's order setting aside the assessing authority's rejection of the refund claims for the periods in dispute, directing that the assessing officer take up the monthly returns for assessment under Section 22 and decide the refund claims in accordance with the law as it stood during the relevant period; no opinion was expressed on the altered position following the amendments effective 1 April 2010.

Refund of amounts with interest as compensation - interest at 9% per annum - interest as compensation for mental agony and harassment - payment without deduction of TDS - withdrawal of deposit from Court Registry - directions to make good shortfall

Interest at 9% per annum - refund of amounts with interest as compensation - Refund to complainants to be made with interest at the rate of 9% per annum. - HELD THAT: - The appellants had been directed by the NCDRC to refund the amounts paid by buyers along with interest at 9% per annum. A majority of the complainants (11 out of 14) settled on the basis of that rate. Having regard to the settlement pattern and consistency of treatment, the Court directed that the remaining three complainants be given interest at the same rate of 9% per annum, and not at the higher rate of 12% sought by the complainants' counsel. The award of interest is treated as compensation flowing from the consumer dispute resolution and settlement reached in most cases. [Paras 3, 5]

Refunds to be paid with interest at 9% per annum to all complainants, including the remaining three.

Withdrawal of deposit from Court Registry - directions to make good shortfall - Deposit already made in Court Registry permitted to be withdrawn by the complainants; any shortfall to be made good by the appellants within four weeks. - HELD THAT: - The appellants had deposited the principal amounts along with interest at 9% per annum in the Registry. The Court allowed the complainants to withdraw the deposited amounts. To ensure full compliance, the Court directed that if there is any shortfall in the amounts available for withdrawal, the appellants must make good the shortfall within four weeks from the date of the order. [Paras 6, 7, 8]

Amounts deposited in the Registry may be withdrawn by complainants; appellants to make good any shortfall within four weeks.

Interest as compensation for mental agony and harassment - payment without deduction of TDS - Interest awarded as compensation for mental anguish is to be paid without deducting TDS. - HELD THAT: - The Court referred to its earlier decision in Haryana Urban Development Authority v. Munshi Ram and observed that the interest awarded in the present case is by way of compensation for mental agony and harassment caused to the buyers. In the peculiar facts and circumstances, the Court held that the payment of such interest should be made without deducting Tax Deducted at Source under the Income Tax Act. Accordingly, no TDS is to be deducted from the interest component paid to the complainants. [Paras 9, 11, 12]

Interest component treated as compensation for mental agony shall be paid without deduction of TDS.

Final Conclusion: The appeals are partly allowed: refunds to the complainants are to be made with interest at 9% per annum (uniformly applied to the remaining complainants), amounts deposited in the Registry may be withdrawn by the complainants with any shortfall to be made good by the appellants within four weeks, and the interest awarded as compensation shall be paid without deduction of TDS.