TaxTMI Updates e-Newsletter
Dec 11,2020

Detention of goods under Section 129 of the Goods and Services Tax Act - classification dispute not a ground for detention - quashing of detention order and direction for release of goods and vehicle

Detention of goods under Section 129 of the Goods and Services Tax Act - classification dispute not a ground for detention - Exts.P1 and P1(a) detaining a consignment and vehicle on the basis of a classification dispute are legally unsustainable under Section 129 of the GST Act. - HELD THAT: - The detaining authority in Exts.P1 and P1(a) recorded classification disputes as the basis for detention. The Court found that classification disputes do not fall within the ambit of the authority's power to detain goods under Section 129 of the GST Act, relying on prior decisions of this Court to that effect. For that reason, the orders of detention and the accompanying notice were quashed. The Court directed immediate release of the goods and the vehicle upon production of a copy of this judgment and instructed the Government Pleader to communicate the gist of the judgment to the respondent to ensure expeditious clearance.

Exts.P1 and P1(a) quashed and respondent directed to release the detained goods and vehicle on production of this judgment; respondent to be informed of the judgment's gist for prompt clearance.

Final Conclusion: The writ petition is allowed: the detention orders and notice are quashed and the respondent is directed to release the consignment and vehicle upon production of this judgment, with the Government Pleader to communicate the judgment's gist for expeditious clearance.

GST registration not required for nil-rated supplies - liability to pay GST on reverse charge basis - undertaking/affidavit as substitute for GSTIN - tender/application not to be rejected solely for absence of GST registration

GST registration not required for nil-rated supplies - tender/application not to be rejected solely for absence of GST registration - Whether members of the petitioner supplying books can have their tenders/applications accepted without producing a GST registration number where the supply of books is nil-rated. - HELD THAT: - The Court noted the submission that books attract a nil rate of GST and therefore members supplying books are not required to obtain GST registration. In the interlocutory order the Court directed that, subject to the members furnishing an undertaking/affidavit, their tender/application in response to the advertisement dated 20.11.2020 shall not be rejected solely on the ground of inability to provide a GST registration number. The relief was granted as a limited, conditional measure pending filing of affidavits and further pleadings.

Tenders/applications of the petitioner's members shall not be rejected only for absence of GST registration, provided they file an affidavit/undertaking that they are not required to pay GST on the supplies of books.

Liability to pay GST on reverse charge basis - undertaking/affidavit as substitute for GSTIN - Whether an undertaking/affidavit stating non-liability under reverse charge (Section 9(3)) is acceptable for the limited purpose of permitting participation in the tender. - HELD THAT: - The Court accepted the petitioner's contention that members who aver they are not liable to pay GST on a reverse charge basis may file an affidavit/undertaking to that effect. On that basis, and without adjudicating the ultimate question of liability, the Court permitted their submissions/tenders to be received by respondent no.2 notwithstanding the non-production of a GST registration number. The direction is interim and conditional, preserving respondent's right to contest the claim in the main petition and pleadings to follow.

Members may furnish an affidavit/undertaking declaring non-liability to pay GST on reverse charge basis; upon filing such affidavit their tenders/applications shall not be rejected for lack of GST registration.

Final Conclusion: In a conditional interim order the High Court directed that tenders/applications by the petitioner's members supplying nil-rated books shall not be rejected solely for want of GST registration, provided the members file an affidavit/undertaking that they are not liable to pay GST on reverse charge basis; further pleadings were ordered and the matter listed for hearing.

Amendment of writ petition - proviso to Section 16(4) of the Central Goods and Services Tax Act, 2017 - formal amendment allowed - issue of notice

Amendment of writ petition - proviso to Section 16(4) of the Central Goods and Services Tax Act, 2017 - formal amendment allowed - Application for amendment of the writ petition to incorporate a prayer challenging the proviso to Section 16(4) of the CGST Act, 2017 was allowed and the amended writ petition was taken on record. - HELD THAT: - The petitioner sought to amend the writ petition to include a prayer challenging the proviso to Section 16(4) of the CGST Act, 2017, explaining that the ground had been pleaded but the corresponding prayer was inadvertently omitted from the Prayer Clause. The Court treated the proposed change as formal in nature and, on that basis, permitted the amendment. Acceptance of notice by counsel for the respondents was recorded. In consequence, the amended writ petition was taken on record and the application for amendment was allowed.

Application for amendment allowed; amended writ petition taken on record; notices issued/accepted.

Final Conclusion: The Court allowed the petitioner to amend the writ petition to add a prayer challenging the proviso to Section 16(4) of the CGST Act, 2017 as a formal amendment, took the amended petition on record and directed service/recording of notices.

Summary order. Respondent granted four weeks to file counter affidavit; petitioner permitted one week to file rejoinder thereafter; matter listed after five weeks; parties to exchange written notes and file hard copy and e-mail submissions at least three days before next hearing.

Violation of principles of natural justice - right to be heard - opportunity of personal hearing - service of notice by registered post and by email - remand for fresh hearing

Violation of principles of natural justice - right to be heard - service of notice by registered post and by email - The impugned assessment cum penalty cum interest order was set aside on the ground that the petitioner was not afforded adequate opportunity of hearing and principles of natural justice were violated. - HELD THAT: - The court found that the Final-cum-Hearing Notice issued on 06.11.2019 was received by the petitioner by registered post on 12.11.2019 with the hearing fixed for 13.11.2019. Although the respondent contended that the notice had been emailed on 07.11.2019, the short interval effectively deprived the petitioner of sufficient time to engage his tax consultant and prepare objections. Having regard to the circumstances and the need to permit the petitioner an effective opportunity to be heard, the court held that deciding the matter without affording adequate opportunity amounted to a breach of natural justice and therefore the impugned order could not be sustained. [Paras 5]

Impugned order set aside for want of adequate opportunity to be heard.

Remand for fresh hearing - opportunity of personal hearing - The matter was remanded to the assessing authority for de novo decision after affording hearing to the petitioner within a specified time. - HELD THAT: - The court directed that the assessing authority shall decide the matter afresh after hearing the petitioner. It observed that no fresh notice need be issued to intimate the date of hearing and imposed a timeline for final disposal to ensure expedition. This remand was ordered to cure the procedural defect identified and to enable the petitioner to present his case before the authority. [Paras 5, 6]

Matter remanded to the authority for fresh decision after hearing the petitioner, to be completed on or before 15.12.2020; no fresh notice to be issued.

Final Conclusion: Writ petition allowed; impugned assessment cum penalty cum interest order set aside for breach of natural justice and remitted to the assessing authority for fresh disposal after hearing the petitioner by 15.12.2020; no order as to costs.

Input as defined under Section 2(59) of the CGST Act, 2017 - refund of unutilised input tax credit on account of inverted duty structure under Section 54(3)(ii) of the CGST Act, 2017 - treatment of traded goods supplied 'as such' for purposes of input tax credit refund - applicability of Rule 89(5) formula for refund on account of inverted duty structure

Input as defined under Section 2(59) of the CGST Act, 2017 - refund of unutilised input tax credit on account of inverted duty structure under Section 54(3)(ii) of the CGST Act, 2017 - treatment of traded goods supplied 'as such' for purposes of input tax credit refund - Whether the goods procured and supplied as such by the appellant qualify as 'input' and entitle the appellant to refund of accumulated ITC under the inverted duty structure provision of Section 54(3)(ii). - HELD THAT: - The appellant traded in Scientific and Technical Instruments, Apparatus and Equipment procured on payment of tax at 18% and supplied some consignments to public funded research institutes at a concessional 5% rate under specified notifications while supplying identical goods to other purchasers at 18%. The adjudicating authority and the Commissioner (Appeals) examined the definition of 'input' (goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business) and the proviso in Section 54(3)(ii) which permits refund where credit has accumulated because rate of tax on inputs is higher than on outputs. The authority found that the appellant made sales of the same goods both at the reduced rate and at the full rate, performed no further processing, and effected no value addition; consequently the goods could not be treated as 'inputs' qualifying for refund under the inverted duty structure proviso. The Commissioner (Appeals) held that on these facts the proviso for refund under Section 54(3)(ii) is not attracted and the case law relied upon by the appellant did not apply squarely to these factual circumstances.

The goods supplied by the appellant as such do not qualify as 'input' for the purposes of refund under Section 54(3)(ii); the refund claims are not allowable.

Final Conclusion: The appeals are dismissed and the impugned order rejecting the refund claims for the periods April to September 2019 and October to December 2019 is upheld.

Stay of demand - condition of deposit for grant of stay - alternative remedy of review under Office Memorandum - jurisdiction of the Principal Commissioner/ Commissioner to decide review

Stay of demand - condition of deposit for grant of stay - alternative remedy of review under Office Memorandum - Challenge to the order rejecting the petitioner's application for stay of demand and directing deposit of 20% of the outstanding demand. - HELD THAT: - The High Court did not adjudicate the merits of the petitioner's challenge to the assessment authority's requirement of a 20% deposit as a condition for grant of stay. On examination of the Office Memoranda relied upon by the petitioner, the Court found that an alternative and efficacious remedy exists in the form of a review petition before the jurisdictional Administrative Principal Commissioner of Income Tax/Commissioner of Income Tax under para 4(C) of the Office Memorandum dated 29th February, 2016. Exercising supervisory jurisdiction, the Court declined to entertain the writ petition on merits and disposed it with liberty to avail the statutory/administrative review remedy. The Court directed that if the petitioner files the review petition within two weeks, the Principal Commissioner shall decide the same in accordance with law within four weeks thereafter. [Paras 4, 5, 6]

Writ petition disposed of with liberty to file a review petition under the Office Memorandum; if filed within two weeks, the Principal Commissioner to decide it within four weeks.

Final Conclusion: The petition challenging refusal of stay and the imposition of a 20% deposit condition is disposed of on the ground of availability of an alternative remedy; the petitioner is permitted to file a review petition and the Principal Commissioner is directed to decide it within the stipulated time.

Proportionate claim under section 80IB(10) - affordable housing project condition - pent houses exceeding 1,500 sq.ft. and eligibility - substantial question of law - precedential effect of earlier decision

Proportionate claim under section 80IB(10) - affordable housing project condition - pent houses exceeding 1,500 sq.ft. and eligibility - precedential effect of earlier decision - The Tribunal's allowance of the assessee's proportionate claim under section 80IB(10) was upheld despite the presence of 12 pent houses each exceeding 1,500 sq.ft., and the substantial question of law framed was answered against the revenue. - HELD THAT: - The Court observed that the substantial question of law framed on admission had already been decided against the revenue by this Court in ITA No.54/2013 by judgment dated 22.09.2020. Applying the reasoning and conclusions recorded in that earlier decision, the Court held that the Tribunal was justified in allowing the proportionate deduction under section 80IB(10) to the assessee, notwithstanding that 12 pent houses exceeding 1,500 sq.ft. formed part of the residential project. The appeal was therefore dismissed as the substantial question of law was answered in favour of the assessee and against the revenue. [Paras 3, 4]

Appeal dismissed; substantial question answered against the revenue and the Tribunal's allowance of the proportionate claim under section 80IB(10) sustained.

Final Conclusion: The appeal under Section 260-A for Assessment Year 2006-07 is dismissed; the Court followed its earlier decision in ITA No.54/2013 (22.09.2020) and upheld the Tribunal's grant of the proportionate deduction under section 80IB(10) in favour of the assessee.

Allowability of expenditure under Section 36(1)(xii) - admission of documents under Rule 46A - disallowance under Section 14A in relation to exempt dividend income - allowability of prior period expenses - crystallisation test - treatment of contingent liabilities vis-a -vis allowability under Section 37(1)

Allowability of expenditure under Section 36(1)(xii) - admission of documents under Rule 46A - Whether expenditure of Rs. 15,88,00,000/- incurred on schemes and projects is allowable under Section 36(1)(xii) or requires fresh verification after documents filed under Rule 46A. - HELD THAT: - The Tribunal found that the assessee has filed documents under Rule 46A to justify the debit of the disputed expenses and that the factual position mirrors earlier assessment years where the Tribunal remanded similar issues for verification. Consequently, the Tribunal did not decide the allowability on merits but remanded the issue to the Assessing Officer for examination and verification of the documents produced under Rule 46A, directing compliance with principles of natural justice. [Paras 8]

Issue remanded to the Assessing Officer for fresh consideration after examining the documents produced under Rule 46A; grounds partly allowed for statistical purpose.

Admission of documents under Rule 46A - Whether addition of Rs. 61,644 towards non-credit of TDS should stand or be verified in light of documents filed during hearing. - HELD THAT: - The Tribunal observed that the assessee filed additional documents during hearing supporting the claim of TDS credit. The Assessing Officer is directed to verify the evidence produced and, if justified, grant TDS credit to the assessee. The matter was not adjudicated on merits and requires verification. [Paras 8]

Directed reassessment/verification by the Assessing Officer and grant of TDS credit if evidence is found satisfactory; ground partly allowed.

Disallowance under Section 14A in relation to exempt dividend income - Whether the addition under Section 14A should be sustained where no exempt income (dividend) was credited in the assessment year. - HELD THAT: - The Tribunal applied the principle that Section 14A requires expenditure in relation to exempt income; dividend income cannot, by itself, be treated as expenditure. Relying on authoritative precedents cited by the parties, the Tribunal agreed with the CIT(A) that where no exempt income has been brought to tax in the year, the addition under Section 14A is not warranted. Accordingly the CIT(A)'s deletion of the addition was upheld. [Paras 11]

Revenue's grounds on Section 14A disallowance dismissed; CIT(A)'s deletion confirmed.

Allowability of prior period expenses - crystallisation test - Whether the disallowance of prior period royalty payment was sustainable where the royalty obligation crystallised in the assessment year. - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that the royalty payment constituted an additional payment which crystallised in the relevant assessment year and that the genuineness of the expense was not disputed by the Revenue. Applying the crystallisation test and precedent relied upon, the Tribunal found no reason to disturb the CIT(A)'s deletion of the disallowance. [Paras 14]

Revenue's ground on disallowance of the royalty prior period expense dismissed; CIT(A)'s deletion upheld.

Treatment of contingent liabilities vis-a -vis allowability under Section 37(1) - Whether addition made by treating estimated royalty amounts as contingent liabilities and disallowing them under Section 37(1) was justified. - HELD THAT: - The Tribunal noted the CIT(A)'s finding that the Assessee Board was under an obligation to pay royalty determined by the Government and that the Board lacked control over computation of the payable amount, which was advised by the Ministry of Petroleum & Natural Gas. On the material before it, the Tribunal concluded that the amounts were payable obligations and the CIT(A) was correct in deleting the addition; no interference was warranted. [Paras 17]

Revenue's addition on account of contingent liability dismissed; CIT(A)'s deletion upheld.

Final Conclusion: The assessee's appeal is partly allowed for statistical purposes by remanding the issues relating to the contested expenditure and TDS credit to the Assessing Officer for verification under Rule 46A; the Revenue's appeal is dismissed in full, with deletions under Section 14A, the prior period royalty payment and the contingent liability sustained.

Penalty under Section 271(1)(c) of the Income tax Act - Notice under Section 274 read with Section 271(1)(c) - Requirement to specify limb - concealment of particulars of income versus furnishing inaccurate particulars - Deletion of penalty where primary assessment is quashed ab initio - Inadvertent claim / absence of mens rea as defence to levy of penalty

Deletion of penalty where primary assessment is quashed ab initio - Effect of Tribunal quashing the assessment order as void ab initio on the penalty levied under Section 271(1)(c). - HELD THAT: - The Tribunal recorded that in ITA No.2141/Del/2014 (A.Y. 2004-05) the assessment framed under section 143(3) read with section 153A was quashed and declared void ab initio by the Tribunal. Once the foundational assessment order is set aside, the consequential penalty imposed under section 271(1)(c) cannot stand; the superstructure (penalty) falls with the removal of the foundation (assessment). The AO was therefore directed to delete the penalty levied for that assessment year. [Paras 4, 5]

Penalty under section 271(1)(c) deleted for A.Y. 2004-05 as assessment was quashed ab initio.

Notice under Section 274 read with Section 271(1)(c) - Requirement to specify limb - concealment of particulars of income versus furnishing inaccurate particulars - Validity of penalty proceedings where the notice under section 274 did not specify whether penalty under section 271(1)(c) was being initiated for concealment of particulars of income or for furnishing inaccurate particulars. - HELD THAT: - The Tribunal examined the notice issued under section 274 read with section 271(1)(c) and found that although the assessment order recorded satisfaction for furnishing inaccurate particulars, the notice itself did not clearly specify the limb of section 271(1)(c) under which penalty proceedings were initiated (concealment or furnishing inaccurate particulars). Reliance was placed on appellate precedents holding that a notice under section 274 which does not specify the specific limb of section 271(1)(c) renders the penalty proceedings invalid and null. In view of these authorities and the omission in the notice, the Tribunal held the penalty levied on identical facts to be bad in law and directed its deletion. [Paras 9, 12]

Penalty under section 271(1)(c) deleted where the section 274 notice failed to specify the limb of section 271(1)(c) relied upon.

Inadvertent claim / absence of mens rea as defence to levy of penalty - Penalty under Section 271(1)(c) of the Income tax Act - Whether the disallowance of depreciation claimed on flats (part of block of assets) - characterised as a human/inadvertent error - attracted penalty under section 271(1)(c). - HELD THAT: - On the identical factual matrix (claim of depreciation on flats shown in the block of assets), the Tribunal considered the assessee's submission that the claim arose from inadvertence and was not contested before appellate authorities once disallowed. The Tribunal observed that the claimed amount was small compared to the assessee's returned income and treated the claim as a human error. Applying the principle that mere disallowance of a claim resulting from inadvertence, without culpable mens rea, does not justify levy of penalty under section 271(1)(c) (as recognised by the Supreme Court in Reliance Petro Projects Pvt. Ltd.), the Tribunal concluded that the penalty was not justified on merits and directed its deletion. [Paras 13, 15, 16]

Penalty under section 271(1)(c) cannot be imposed for an inadvertent / human error in claiming depreciation; penalty deleted on merits.

Final Conclusion: All appeals are allowed: penalties levied under section 271(1)(c) are deleted - in A.Y. 2004-05 because the assessment was quashed ab initio, and in the other years both because the section 274 notice failed to specify the limb of section 271(1)(c) and because the depreciation claim was an inadvertent error not warranting penalty.

Prohibition on cash loans and repayments under section 269SS and 269T - penalty for accepting or repaying loans in cash under section 271D and 271E - treatment of transactions among sister concerns and common ownership - requirement of bank withdrawals and contemporaneous recording in books of account - remand for factual verification

Prohibition on cash loans and repayments under section 269SS and 269T - penalty for accepting or repaying loans in cash under section 271D and 271E - treatment of transactions among sister concerns and common ownership - requirement of bank withdrawals and contemporaneous recording in books of account - remand for factual verification - Whether penalties under section 271D and 271E are sustainable or require deletion in view of alleged cash loans/repayments among sister concerns and the manner in which cash was withdrawn and recorded - HELD THAT: - The Tribunal accepted that statutory prohibitions on receipt and repayment of loans in cash are intended to prevent manipulations as noted by higher authorities, but also recognised authorities holding that transactions among sister concerns standing in common ownership may not attract the penal provisions if such transactions are genuine. Given the facts of the assessee's real estate business and the potential for on-money transactions, the Tribunal found it inappropriate to decide the matter finally on the record before it. The Tribunal directed that the Assessing Officer should examine (a) whether the entities transacting with the assessee are in fact sister concerns arising from the same group of ownership, and (b) whether the cash received and repaid by the assessee were withdrawn from the bank accounts of the respective entities and were recorded in the assessee's books of account within a reasonable span of time from those bank withdrawals. If the AO finds that these criteria are satisfied, the provisions of sections 269SS and 269T would not apply and the penalties under sections 271D and 271E should be deleted; if not, the AO should pass an appropriate order in accordance with law and on merits. The Tribunal's direction remits these factual and documentary questions for fresh verification rather than deciding the applicability of the penal provisions on merits itself. [Paras 6, 7]

Matter remitted to the Assessing Officer for verification of sister concern status and the origin and accounting of cash withdrawals; if verified, delete penalties under sections 271D/271E, otherwise pass fresh orders in accordance with law; appeals disposed of accordingly.

Final Conclusion: Appeals disposed of by remanding the issues concerning applicability of sections 269SS/269T and consequent penalties under sections 271D/271E to the Assessing Officer for factual verification; appeals allowed for statistical purposes.

Section 153A assessment in case of search - abatement of pending assessments - requirement of incriminating material for reassessing completed assessments - assessment versus reassessment distinction under Section 153A - inadmissibility of third party seized documents to disturb a concluded assessment - reiteration of earlier assessment when no incriminating material is found

Requirement of incriminating material for reassessing completed assessments - assessment versus reassessment distinction under Section 153A - inadmissibility of third party seized documents to disturb a concluded assessment - Whether, under Section 153A, additions can be made to a completed (unabated) assessment year in the absence of incriminating material found from the assessee's premises, based on documents seized from a third party. - HELD THAT: - Section 153A creates separate treatment for abated (pending) and unabated (completed) assessments upon a search or requisition. For abated proceedings the AO frames fresh assessments for the six years. For assessments which were completed before the search (unabated), the Assessing Officer may disturb those completed assessments only if there is incriminating material unearthed during the search or requisition that relates to that particular assessment year. Material found exclusively at third party premises or collected after the search, without any incriminating material discovered from the assessee's premises, cannot be used to reopen or alter a concluded assessment under Section 153A. The Tribunal applied and followed precedents of the Delhi and Gujarat High Courts and other tribunals holding that absent incriminating material relatable to the assessee for the relevant year, the earlier assessment must be reiterated and additions made on the basis of third party seized documents are not sustainable. [Paras 7, 11, 12, 16, 19]

The reassessment/addition under Section 153A for A.Y. 2011-12 was unsustainable because no incriminating material was found from the assessee's premises; the addition based on documents seized from a third party is deleted and the earlier assessment reiterated.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s order deleting the addition for A.Y. 2011-12 on the ground that, in the absence of incriminating material found from the assessee's premises, a completed assessment could not be reopened under Section 153A using documents seized from a third party; consequentially the assessee's cross objection became academic and was dismissed.

Revisionary jurisdiction under section 263 of the Income tax Act - deduction under section 36(1)(viia) for provision for bad and doubtful debts - bad debts written off allowable under section 36(1)(vii) - allegation of double deduction - order erroneous and prejudicial to the interests of the revenue - assessment officer's decision after examination cannot be displaced merely by a different view

Revisionary jurisdiction under section 263 of the Income tax Act - deduction under section 36(1)(viia) for provision for bad and doubtful debts - bad debts written off allowable under section 36(1)(vii) - allegation of double deduction - assessment officer's decision after examination cannot be displaced merely by a different view - Whether the Principal Commissioner of Income tax was justified in invoking revisionary jurisdiction under section 263 to rework and restrict the assessee's claim of deduction relating to provision for bad and doubtful debts and bad debts written off for A.Y.2015 16. - HELD THAT: - The assessee filed detailed computation and notes with the return and further replied to the Assessing Officer's questionnaire; the Assessing Officer examined the material and allowed the deduction. The PCIT, in revision, reworked the PBDD and bad debt computations alleging double claim and directed restriction of the deduction. This Tribunal, following its earlier decision in the assessee's own case for A.Y.2014 15, held that where the Assessing Officer has considered the submissions and satisfied himself, the PCIT cannot simply substitute a different view by invoking section 263. The Tribunal found that the Assessing Officer had examined the details and allowed the claim; the PCIT's attempt to form another view and rework computations therefore rendered the exercise of revisionary jurisdiction impermissible. Accordingly the order under section 263 was quashed and the assessee's appeal allowed. [Paras 3, 5, 6]

The order passed by the Principal Commissioner of Income tax under section 263 is quashed; the Assessing Officer's allowance of the deductions is to stand and the assessee's appeal is allowed.

Final Conclusion: The Tribunal quashed the PCIT's order under section 263 in relation to the claimed provisions for bad and doubtful debts and bad debts written off for A.Y.2015 16, holding that the PCIT could not substitute his view where the Assessing Officer had examined the assessee's detailed submissions and allowed the claim; appeal allowed.

Exemption under section 54F - a residential house - construction of new residential asset as reinvestment of capital gains - quantification and verification on remand

Exemption under section 54F - a residential house - construction of new residential asset as reinvestment of capital gains - Whether the assessee is in principle entitled to deduction under section 54F for investment in the impugned building comprising multiple units - HELD THAT: - The Tribunal accepted the Karnataka High Court reasoning in K. G. Rukminiamma that the wording "a residential house" in sections 54/54F does not require the new residential structure to be a single indivisible "unit" and that a building comprising several independent units can still qualify as "a residential house" for the purposes of the exemption, provided it is of residential character and the investment relates to construction of the new residential asset. Applying that principle, the Tribunal held that the assessee is, in principle, eligible for deduction under section 54F despite the building containing multiple units. However, the Tribunal noted that the assessee failed to produce before the Assessing Officer the necessary documentary evidence (such as sanctioned plans, completion certificate, detailed construction vouchers or house construction account) substantiating the claimed construction expenditure and the timing of construction. Consequently, while entitlement on law was acknowledged, the factual claim as to the amount and timing of investment remained unverified and required scrutiny. [Paras 11, 12]

Entitlement under section 54F accepted in principle; matter remitted to the Assessing Officer for production, verification and quantification of relevant evidence supporting the claim.

Final Conclusion: The Tribunal allowed the appeal in principle by holding that a multi-unit residential building can qualify as "a residential house" under section 54F, but restored the matter to the Assessing Officer for verification and quantification of the assessee's documentary proof of construction expenditure and timing; appeal disposed of for statistical purposes.

Penalty under section 271(1)(c) of the Income tax Act - notice under section 274 read with section 271(1)(c) - furnishing inaccurate particulars of income - concealment of particulars of income - defective notice / non application of mind - prejudice and principles of natural justice - condonation of delay

Penalty under section 271(1)(c) of the Income tax Act - notice under section 274 read with section 271(1)(c) - defective notice / non application of mind - furnishing inaccurate particulars of income - concealment of particulars of income - Validity of penalty imposed under section 271(1)(c) where the notice under section 274 read with section 271 did not specify whether the charge was for concealment of particulars of income or for furnishing inaccurate particulars of income. - HELD THAT: - The Tribunal found that the notice dated 6.3.2014 contained inappropriate words which were not struck off and did not clearly specify under which limb of section 271(1)(c) the penalty was proposed to be initiated. The penalty order itself proceeded on the basis of furnishing inaccurate particulars but the notice failed to delineate the precise charge. The Assessing Officer also did not apply his mind to satisfy himself which limb of section 271(1)(c) was attracted and, at times, invoked both limbs. The Tribunal held that such defect is not a mere technicality but goes to the root of the statutory requirement that the assessee be informed of the specific charge so as to enable an effective reply. Reliance was placed on the ratio of higher judicial decisions holding that a notice under section 274 must specify whether the allegation is concealment of particulars of income or furnishing inaccurate particulars of income (reference made in the judgment to M/s SSA's Emerald Meadows and CIT Vs. Manjunatha Cotton & Ginning Factory ). The Tribunal distinguished authorities where the defective notice point was not raised before earlier forums (reference made to Sundaram Finance Ltd. ) because in the present case the assessee had raised the issue before the CIT(A). Decisions of other benches of the Tribunal (including Lodhi Property Company Ltd. and Triad Resorts and Hotels Pvt. Ltd. ) examining similar facts were noted as supportive of quashing the penalty where the notice failed to specify the exact limb and/or the AO failed to apply his mind. Applying these principles, the Tribunal concluded that the penalty could not be sustained in the face of the defective notice and non application of mind by the AO. [Paras 8, 12]

Penalty levied under section 271(1)(c) quashed and the assessee's appeal allowed.

Final Conclusion: The Tribunal condoned the delay in filing the appeal, found the penalty notice defective for failing to specify the precise limb of section 271(1)(c) and the Assessing Officer's non application of mind, quashed the penalty order and allowed the assessee's appeal for AY 2011 12.

Deduction under section 80-IA - rectification under section 254(2) of the Income Tax Act - apparent and patent mistake - reliance on unrelated issue (sales tax subsidy) - readjudication on merits and restoration of appeal

Deduction under section 80-IA - reliance on unrelated issue (sales tax subsidy) - apparent and patent mistake - rectification under section 254(2) of the Income Tax Act - readjudication on merits and restoration of appeal - Whether the Tribunal's order in ITA No.1002/Ahd/2006 for Asstt.Year 2000-01 contained an obvious and patent error requiring rectification and recall for fresh adjudication on the claim of deduction under section 80-IA. - HELD THAT: - The Tribunal's order was found to have relied on a decision concerning grant of sales tax subsidy, which was not the issue before the Tribunal in relation to the assessee's claim of deduction under section 80-IA. The power of rectification under section 254(2) can be exercised only for mistakes that are obvious and apparent from the record and not for matters requiring extended argument or competing opinions. Because the order manifested an apparent error by adjudicating an unrelated issue instead of the s.80-IA claim, the mistake was rectifiable as patent from the record. Applying this principle, the Tribunal's order was recalled and the appeal was ordered to be restored to its original number for fresh hearing on the merits of the s.80-IA deduction, with directions to list the matter afresh and inform the parties. [Paras 6, 7]

Miscellaneous applications allowed; the Tribunal's order is recalled for readjudication on the merits of the claim under section 80-IA and the appeal is to be restored and listed for fresh hearing.

Final Conclusion: The Tribunal's order for Asstt.Year 2000-01 contained an apparent error by addressing an unrelated sales tax subsidy issue instead of the assessee's claim under section 80-IA; the order is recalled under the rectification power and the appeal is restored for fresh adjudication on merits.

Reopening of assessment under section 147/148 - Reasons to believe and recording of reasons - Non-application of mind by the Assessing Officer - Information received through NMS/CIB and statements under Rule 114E - Quashing reassessment notice for defective reasons

Reopening of assessment under section 147/148 - Non-application of mind by the Assessing Officer - Information received through NMS/CIB and statements under Rule 114E - Quashing reassessment notice for defective reasons - Validity of the notice under section 148 and the reopening of assessment - HELD THAT: - The Assessing Officer recorded reasons for reopening based on NMS/CIB information purportedly showing a mutual fund investment of Rs.2 lakhs and commodity exchange transactions of Rs.10 lakhs and concluded an escapement of income. The material on record and the assessment order itself demonstrate that those factual particulars were incorrect, internally inconsistent and were not substantiated by any prior enquiry. The information supplied under Rule 114E (Form 61-A statements) constituted prescribed reporting thresholds and did not, without further verification, furnish tangible material justifying formation of a belief that income had escaped assessment. The A.O. admitted that the NMS information required examination but did not carry out any such verification before recording reasons. Reliance on unverified, erroneous and non-existing facts amounted to non-application of mind; consequently the statutory condition precedent for valid reopening under section 147/148 was not satisfied. Applying settled precedents, the Tribunal quashed the reopening as illegal and set aside the orders below. In view of the quashing, the additions sustained as part of the reassessment were deleted, and other issues were left undecided as academic. [Paras 6]

Reopening of the assessment under section 147/148 quashed for non-application of mind to NMS/CIB information; consequent additions deleted.

Final Conclusion: The reassessment initiated by notice under section 148 was held invalid for being founded on wrong, unverified and non-existing reasons; the reopening is quashed and the additions made in pursuance of that reassessment are deleted, allowing the assessee's appeal.

Unexplained credit under section 68 - Burden of proof regarding identity, creditworthiness and genuineness of shareholders' funds - Taxation of share premium received from a non-resident investor - Applicability of provisions on deemed income on issue of shares to non-residents (Section 56(2)(viib))

Unexplained credit under section 68 - Burden of proof regarding identity, creditworthiness and genuineness of shareholders' funds - Deletion of addition made under section 68 in respect of share capital and share premium credited by Kstart LLC, Mauritius. - HELD THAT: - The Tribunal examined the material placed on record by the assessee and the information obtained by the Assessing Officer under the Exchange of Information provisions. Documentary evidence included the investor's certificate of incorporation, tax residency certificate, audited financial statements, bank account entries showing receipt of funds from the holding company into the investor's bank account and subsequent remittance to the assessee, FIRCs, FC-GPR filing, PAS-3, KYC, valuation report and due diligence documents. The Tribunal found that the investor operated as an investment vehicle (SPV) of a known venture capital group, had capital commitments and investments in multiple companies, and that the specific remittance trail and banking documentation corroborated the allotment of compulsorily convertible preference shares. The Tribunal rejected the Assessing Officer's adverse inference based on low balances and limited account activity in the investor's bank account because the investor's business model and financial statements showed that its sole income stream was capital gains on investments and that capital funding had been deployed from the holding company. On the totality of evidence, the Tribunal held that the assessee had discharged the onus to prove identity, creditworthiness and genuineness of the receipt, so the addition as unexplained credit could not be sustained. [Paras 18, 21, 23]

Addition of Rs. 1,67,50,000 made u/s 68 is deleted; appeal partly allowed.

Taxation of share premium received from a non-resident investor - Applicability of provisions on deemed income on issue of shares to non-residents (Section 56(2)(viib)) - Whether section 56(2)(viib) applies to premium received on issue of shares from a non-resident investor. - HELD THAT: - The Tribunal observed that section 56(2)(viib) by its terms applies to sums received from a resident and therefore does not apply to amounts received from a non-resident. Consequently, the charge under that provision was not attracted to the impugned transaction where the consideration (share capital and premium) was credited by a non-resident investor. This conclusion was treated separately from the assessment under section 68 (which applies irrespective of residency). [Paras 20]

Section 56(2)(viib) is not attracted to the transaction with the non-resident investor.

Burden of proof regarding identity, creditworthiness and genuineness of shareholders' funds - Unexplained credit under section 68 - Whether, in case of remittance by a non-resident, the assessee need only prove identity of the shareholder rather than also creditworthiness and source. - HELD THAT: - The Tribunal rejected the proposition that only identity must be proved when the remitter is a non-resident. It held that section 68 makes no distinction between residents and non-residents: the assessee must satisfy the Assessing Officer about the nature and source of the credited sum. Evidence of compliance with foreign exchange or RBI formalities may have persuasive value but do not by themselves determine the tax character under the Income Tax Act. The primary onus remains to be evaluated on the scale of evidence in each case; where documentary and corroborative material satisfactorily establish identity, creditworthiness and genuineness, addition under section 68 cannot be sustained. [Paras 19]

Assessee must satisfy the AO about nature and source of credit even when the remitter is a non-resident; on facts the assessee discharged this onus.

Final Conclusion: On the materials placed before the authorities and information obtained under exchange of information, the Tribunal found that the assessee established the identity, creditworthiness and genuineness of the investment by Kstart LLC, Mauritius; section 56(2)(viib) did not apply to the non-resident remittance; consequently the addition of Rs. 1,67,50,000 under section 68 is deleted and the appeal is partly allowed.

Proviso to section 2(15) - exclusion of 'advancement of any other object of general public utility' - predominant or dominant object test - incidental or ancillary activity doctrine - application of income under section 11 - rule of consistency / judicial precedent binding on coordinate benches

Proviso to section 2(15) - exclusion of 'advancement of any other object of general public utility' - predominant or dominant object test - incidental or ancillary activity doctrine - rule of consistency / judicial precedent binding on coordinate benches - Applicability of the proviso to section 2(15) for denial of exemption under sections 11 and 12 to the Rajasthan Cricket Association for the assessment years 2010-11 and 2011-12. - HELD THAT: - The Tribunal found that RCA's registration under section 12A stood restored and that the predominant object of RCA is the promotion, organization and development of cricket in Rajasthan. Applying the predominant-object test and the doctrine that activities incidental or ancillary to the dominant charitable object do not convert the object into commercial activity, the Tribunal held that receipts from hosting matches (including ticket sales, TV subsidy, IPL subvention and related receipts) were intermittent and dependent on matches and thus ancillary to the promotion of cricket. The Tribunal placed weight on the earlier decision of a Coordinate Bench in RCA's own case for AY 2009-10 and the affirmance by the Rajasthan High Court, observing there were no changes in facts or operations for the years under consideration; absent compelling reasons to depart, consistency required following those decisions. The Tribunal also relied on persuasive authority (including the Gujarat High Court) that a State cricket association's activities must be judged by its own objects and predominant purpose and that mere generation of surplus, or receipt of funds from BCCI, does not alone establish profit motive or convert activities into trade, commerce or business within the proviso. Accordingly, the proviso to section 2(15) was held not attracted and exemption under sections 11 and 12 was available to RCA for the impugned years. [Paras 21, 30, 35, 40]

The proviso to section 2(15) does not apply to RCA for AY 2010-11 and 2011-12; exemption under sections 11 and 12 is upheld and the Revenue's appeals are dismissed.

Application of income under section 11 - capital expenditure vs. application of income - Whether grants made by RCA to district cricket associations (claimed amount approximately Rs.1.87 crore) are disallowable as capital expenditure or otherwise, or qualify as application of income for charitable purposes for AY 2011-12. - HELD THAT: - The Tribunal examined the nature and purpose of payments made to district associations for subsidies, infrastructure development and cricket equipment. It held that although such payments resulted in creation or enhancement of assets in the hands of the district associations, they did not confer any enduring asset or advantage on RCA itself and therefore could not be treated as capital expenditure of RCA. RCA was registered under section 12A and the payments had a direct nexus with its charitable object of promoting cricket across the State. The Tribunal noted CBDT guidance and precedents that donations or grants by one charitable trust to another for charitable purposes constitute proper application of income in the hands of the donor where the donee applies the funds for charitable objects. Applying these principles, the Tribunal concluded the grants constituted application of income for charitable purposes and should not have been disallowed. [Paras 50, 51]

The disallowance of the grants to district associations is set aside; the payments are held to be application of income for charitable purposes and the assessee's ground is allowed.

Final Conclusion: The Tribunal dismissed the Revenue's appeals for AY 2010-11 and 2011-12, holding that the proviso to section 2(15) did not apply to the Rajasthan Cricket Association and that RCA was entitled to exemption under sections 11 and 12; in the assessee's appeal for AY 2011-12 the Tribunal allowed the claim that grants to district cricket associations constituted application of income for charitable purposes.

Third-party information as basis for addition - double taxation - re-opening of assessment and ex-parte assessment - maintenance of books and records under Rule 6F of the Income Tax Rules - verification of claims by Assessing Officer on remand

Third-party information as basis for addition - double taxation - maintenance of books and records under Rule 6F of the Income Tax Rules - verification of claims by Assessing Officer on remand - Whether consultation charges received from Apollo Hospital group were included in the assessee's returns for the relevant assessment years and whether the ad-hoc additions made on third party information could stand. - HELD THAT: - The assessee produced an agreement with Apollo Hospital, bank statements and Form 26AS showing payments through banking channels and deduction of TDS on professional fees, and contended that Apollo Hospital collected fees, retained 15% and remitted the balance to the assessee. The Assessing Officer made ad-hoc additions based on information from the Principal CIT indicating receipt of consultation charges in cash and proceeded ex parte because the assessee did not appear before the authorities below and did not place those documents on record. The Tribunal observed that, on the material before it (paper book containing agreement, bank entries and Form 26AS), prima facie the receipts appear to have been included in the assessee's returns; making additions solely on the basis of third party information without examining the relevant documents would result in double taxation. However, since the relevant documents were not before the Assessing Officer or the CIT(A) for verification, the authorities below had no opportunity to examine the assessee's claim. For these reasons the Tribunal did not decide the quantification or merits finally on the papers, but directed a limited remand to the Assessing Officer to examine the records (including Form 26AS and bank statements) and ascertain whether the amounts were offered to tax in the relevant assessment years; if so, the additions were to be deleted.

The question whether the consultation charges formed part of the assessee's declared income was not finally adjudicated on merits; the matter is remanded to the Assessing Officer for limited verification of the evidence filed by the assessee and, if found offered to tax, the additions shall be deleted.

Final Conclusion: The appeals for assessment years 2012-13 to 2016-17 are disposed of by setting aside the additions and remanding the matter to the Assessing Officer for limited examination of the assessee's evidence (including Form 26AS and bank statements); the appeals are treated as allowed for statistical purposes and the stay petitions are dismissed as infructuous.

Deduction under Section 80P - Requirement to claim deduction in the return of income - Late return filed in response to notice under Section 148 - Interest income from deposits as part of business income of a credit cooperative society - Distinction between cooperative banks and cooperative societies for Section 80P applicability

Requirement to claim deduction in the return of income - Late return filed in response to notice under Section 148 - Deduction under Section 80P - Claim for deduction under Section 80P filed in a return submitted after the due date but in response to a notice under Section 148 is valid for consideration. - HELD THAT: - The Tribunal examined Section 80P read with Section 80A(5) and found no provision mandating that the return claiming deduction must be filed within the time prescribed under Sections 139(1) or 139(4). The determinative requirement is that the deduction is claimed in the return filed for the relevant year. A return filed in response to a notice under Section 148, though beyond the statutory due date, contains the requisite claim and therefore cannot be treated as void for the purpose of claiming deduction under Section 80P. This view is supported by the Kerala High Court decision in Chirakkal Service Co-operative Bank Ltd. v. CIT, which holds that returns filed beyond the stipulated period may be accepted and acted upon where proceedings are pending in the statutory adjudicatory hierarchy, and such returns are not automatically non est for deciding exemptions under Section 80P. [Paras 8]

The claim for deduction under Section 80P made in the return filed in response to the Section 148 notice is valid and the Revenue's contention that the deduction is barred for late filing is rejected.

Interest income from deposits as part of business income of a credit cooperative society - Distinction between cooperative banks and cooperative societies for Section 80P applicability - Deduction under Section 80P - Interest earned on deposits placed with other cooperative banks/nationalised banks by a credit cooperative society engaged in providing credit facilities to members is eligible for deduction under Section 80P(2) as part of its business income on the facts of this case. - HELD THAT: - The Tribunal distinguished the facts of Totagars (where a trading cooperative parked surplus funds and the Supreme Court held interest was not business income) from the instant case where the assessee is a credit cooperative society whose business involves providing credit to members and, in the course of that business and pursuant to statutory requirements, parks members' funds with other banks. Because the assessee treated interest earned on such deposits as integral to its business activity and the funds belonged to its members, the interest qualifies for deduction under Section 80P(2)(d). The Tribunal also noted supporting authority in which the Madras High Court held credit cooperative societies (as distinct from cooperative banks) are entitled to claim Section 80P benefit on interest earned from deposits in other cooperative banks. [Paras 9, 10]

The interest income earned from deposits kept in other cooperative banks/nationalised banks by the credit cooperative society is part of its business income and is allowable as a deduction under Section 80P.

Final Conclusion: The Tribunal upheld the CIT(A)'s order and dismissed the Revenue's appeal: the assessee's late return filed in response to the Section 148 notice validly claimed deduction under Section 80P, and interest income on deposits placed with other banks by a credit cooperative society engaged in providing credit to its members is eligible for deduction under Section 80P on the facts before the Tribunal.

Detention of goods - seizure of goods under section 110 of the Customs Act - time limit under section 110(2) of the Customs Act - show cause notice under section 124(a) of the Customs Act - clearance of goods for home consumption under section 47 of the Customs Act - distinction between detention and seizure - abuse of power by detaining goods beyond reasonable time

Detention of goods - seizure of goods under section 110 of the Customs Act - time limit under section 110(2) of the Customs Act - show cause notice under section 124(a) of the Customs Act - clearance of goods for home consumption under section 47 of the Customs Act - Legality of withholding imported consignments without seizure and beyond the statutory period and appropriate relief. - HELD THAT: - The Court held that the Customs Act contains no provision authorising indefinite detention of imported goods in lieu of seizure. Section 110 prescribes seizure where proper officer has reason to believe goods are liable to confiscation; section 110(2) fixes a six month period (extendable once for up to six months with reasons recorded and intimation) within which a show cause notice under section 124(a) must be issued, failing which goods seized must be returned. The tribunal and High Court authorities distinguish 'detention' from 'seizure', and detention cannot be used as a device to evade the temporal consequences of seizure under section 110(2). Section 47 requires release for home consumption where conditions are satisfied and does not permit indefinite withholding for verification. Applying these principles to the facts, the respondents had neither affected seizure nor issued any show cause notice within the statutory periods, and in any event had retained the consignments beyond the maximum permissible period of one year; such prolonged withholding is unauthorised and amounts to an abuse of power. The Court made clear that release of the consignments does not preclude the authority from continuing investigation or initiating lawful proceedings elsewhere, but withholding goods beyond the statutory limit is impermissible. [Paras 25, 26, 31, 32, 35]

Writ petition allowed to the extent that respondents are directed to forthwith release the imported goods covered by bill of entry Nos.3280852 dated 17.05.2019 and 3375143 dated 24.05.2019 on completion of legal formalities and in any case within two weeks from receipt of the order; detention without seizure and detention beyond the statutory period held unlawful.

Final Conclusion: The Court held that customs authorities cannot lawfully detain imported goods in lieu of seizure or retain them beyond the statutory period under section 110(2) read with section 124; the two consignments must be released forthwith within two weeks, subject to completion of formalities, without prejudice to further lawful investigation.

Withdrawal of licence without notice or hearing - principles of natural justice - requirement of a speaking order - opportunity of hearing before administrative action - maintenance of status quo pending fresh decision - remand for fresh consideration and compliance with procedural fairness

Withdrawal of licence without notice or hearing - principles of natural justice - requirement of a speaking order - Validity of public notice No.28/2020-21 dated 07.09.2020 withdrawing customs broker licence No.11/2556 without prior notice, hearing and reasons. - HELD THAT: - The Court held that withdrawal of the customs broker licence which has adverse civil consequences must be preceded by notice and a reasonable opportunity of hearing in accordance with principles of natural justice. Mere prior intimation that a licence 'may be withdrawn' because of new regulations does not satisfy the requirement of a hearing before the impugned action. Further, an order withdrawing a benefit must give reasons and thus must be a speaking order; non-furnishing of reasons vitiates the order. The Court applied and followed the decision rendered by this Bench in M/s. S. K. Freight Lines Pvt. Ltd. (order dated 03.11.2020), observing that the petitioner here is identically placed and that the reasoning in that case is applicable. [Paras 8, 9]

Public notice No.28/2020-21 dated 07.09.2020 is set aside; matter remanded to the respondent to afford the petitioner an opportunity of hearing and thereafter pass a speaking order in accordance with law within three weeks of receipt of this order; status quo to be maintained meanwhile.

Final Conclusion: Writ petition allowed to the extent that the impugned withdrawal of the customs broker licence is quashed and the matter is remitted for fresh decision after giving the petitioner hearing and reasons; the Court expresses no opinion on merits and preserves all contentions.

DFIA entitlement for alternative input - binding effect of DGFT clarifications on Customs - interpretation of SION descriptions vis-a -vis ITC (HS) classification - actual user condition under post-transferable DFIA - maintainability of appeal against communication conveying superior officer's decision

Maintainability of appeal against communication conveying superior officer's decision - Appeal maintainable before the Tribunal against a communication conveying the decision of the Principal Commissioner of Customs - HELD THAT: - The Tribunal found that the impugned communication recorded a substantive decision taken by the Principal Commissioner of Customs rejecting DFIA benefit and directing payment of customs duty, which was merely conveyed by the Joint Commissioner. In that undisputed factual position the remedy available to the appellant lay by way of appeal to the Tribunal under Section 129(1) of the Customs Act. Authorities cited by the appellant and the Tribunal's prior decisions were held to support the proposition that an appeal lies where the decision is that of the Commissioner even if communicated through a subordinate. The revenue's reliance on authorities which concern internal correspondence or the independence of assessing officers was held inapplicable on the facts where a clear decision had been recorded by the Commissioner and communicated to the importer. [Paras 10]

Appeal is maintainable and not premature.

DFIA entitlement for alternative input - interpretation of SION descriptions vis-a -vis ITC (HS) classification - binding effect of DGFT clarifications on Customs - actual user condition under post-transferable DFIA - Appellant entitled to claim DFIA benefits for import of Wheat Gluten against the DFIA description "Wheat Flour" - HELD THAT: - On merits the Tribunal held that DFIA entitlements are governed by the SION descriptions notified for the export product and not exclusively by ITC (HS) numbers. The DGFT clarification and technical opinions (including those of reputed institutes) that Vital Wheat Gluten/Gluten Flour is used in manufacture of biscuits were held to be binding on customs authorities and were accepted as not displaced by any cogent contrary evidence. The Tribunal accepted precedent (including the Uni Colloide line of decisions and the Bombay High Court direction in Shah Nanji Nagsi) that where the SION description covers an input and no specific 'actual user' condition is prescribed, inputs which are capable of being used in the export product fall within the DFIA description; post-transferability DFIAs do not carry an inherent actual user condition. The DFIA in this case itself contained annexures and permitted either ITC (HS) 11010000 or 11090000 against the wheat flour entry, and policy circulars provide flexibility for alternative inputs and amendment of ITC (HS) by transferees. In view of these factors and the settled authorities, Wheat Gluten was held to fall within the DFIA description "Wheat Flour" and the appellant was entitled to the DFIA exemption for clearance. [Paras 11, 16, 20, 21, 23]

DFIA benefit allowed for import clearance of Wheat Gluten against the DFIA description Wheat Flour.

Final Conclusion: The Tribunal held the appeal to be maintainable and allowed it on merit, directing that the appellant is entitled to DFIA benefits for import clearance of Wheat Gluten under the DFIA description "Wheat Flour" in accordance with the SION, DGFT clarifications and applicable policy circulars.

Entitlement to DFIA benefit under SION (post export entitlement) - No actual user condition unless expressly prescribed in SION/DFIA - ITC (HS) classification not determinative for DFIA entitlement - Maintainability of appeal under Section 129(1) against decision of Commissioner communicated by subordinate - Binding effect of Board circulars and policy circulars on Customs authorities - Transferable DFIA scheme - flexibility to import alternative/generic inputs

Maintainability of appeal under Section 129(1) against decision of Commissioner communicated by subordinate - Appeal before the Tribunal is maintainable against the decision taken by the Principal Commissioner of Customs and communicated through subordinate officers. - HELD THAT: - The Tribunal found that the impugned decision rejecting DFIA benefits was taken by the Principal Commissioner of Customs and communicated to the appellant by lower officers. In that undisputed position the statutory remedy lies under Section 129(1) of the Customs Act. Authorities cited by the appellant, including decisions treating communications conveying the Commissioner's decision as appealable, were held to be squarely applicable, while the revenue's reliance on precedents about internal administrative correspondence and the independence of assessing officers was held inapplicable on the facts. The appeal was therefore not premature or non maintainable. [Paras 8]

Appeal is maintainable under Section 129(1) against the Commissioner's decision communicated by subordinate officers.

Entitlement to DFIA benefit under SION (post export entitlement) - No actual user condition unless expressly prescribed in SION/DFIA - ITC (HS) classification not determinative for DFIA entitlement - Transferable DFIA scheme - flexibility to import alternative/generic inputs - Binding effect of Board circulars and policy circulars on Customs authorities - Appellant entitled to clear imported inshell walnuts against the transferable DFIA issued for export of biscuits under SION E 5; rejection of DFIA claim was incorrect. - HELD THAT: - The Tribunal held that DFIA is a post export entitlement governed by the relevant SION and that SION does not prescribe ITC(HS) codes as the exclusive criterion for entitlement. Reliance on ITC(HS) headings to restrict import was rejected; the annexures to the DFIAs and chapter heading coverage (chapter 08020000) show that inshell walnuts fall within the described inputs (Fruit/Flavour/Dietary Fibre). Technical opinions (including from JNCH lab and IIT) and authoritative references demonstrating that walnuts can serve as fruit, flavour or dietary fibre in biscuits were accepted and not displaced by any cogent contrary evidence. The Tribunal applied the reasoning of the Bombay High Court in Shah Nanji Nagsi Exports (Nagpur Bench) that DFIA does not carry an actual user condition unless SION expressly so provides, and that an input capable of use in the export product suffices. The Tribunal also relied on Board and policy circulars granting flexibility to import alternative inputs and held such circulars binding on Customs authorities. On these bases, the denial of DFIA benefit was set aside and the appellant was allowed duty free clearance under the DFIAs. [Paras 20, 21, 22, 23, 24]

Imported inshell walnuts are covered by the DFIA description (Fruit/Flavour/Dietary Fibre) and appellant is entitled to DFIA benefits; appeal allowed on merits.

Final Conclusion: The Tribunal held the appeal to be maintainable and, on merits, allowed the appeal by directing that inshell walnuts imported by the appellant be cleared under the transferable DFIAs issued against export of biscuits (SION E 5), concluding that ITC(HS) codes are not determinative, no actual user condition applied, and Board/policy circulars permitting alternative inputs are binding on Customs authorities.

Existence of debt - deficiency in service - pre-existing dispute - Section 5(6)(b) of the I&B Code - demand notice under Section 8 of the I&B Code - admission of application under Section 7 of the I&B Code

Existence of debt - demand notice under Section 8 of the I&B Code - Whether the Appellant was entitled to claim the unpaid balance and whether a debt existed in respect of the outstanding amount. - HELD THAT: - The Court found that contractual relationship and the engagement terms were not in dispute and that the Appellant had raised proforma invoices for services rendered after the sanction of funding by a lender. The Circuit Court observed that the Appellant had already received part payment and that the Corporate Debtor withheld an admitted outstanding sum of Rs. 75 lakhs. The demand notice under Section 8(1) was not responded to by the Corporate Debtor. On these facts the Tribunal held that the Appellant was entitled to raise the invoice and that a debt in respect of the unpaid balance existed and was due and payable. The Adjudicating Authority's contrary finding that there was no debt was held to be erroneous. [Paras 6, 7, 8]

There was a debt due to the Appellant in respect of the unpaid balance and the Adjudicating Authority erred in holding otherwise.

Deficiency in service - pre-existing dispute - Section 5(6)(b) of the I&B Code - Whether there existed a pre-existing dispute relating to deficiency in service which would disentitle the Appellant from initiating insolvency proceedings under the I&B Code. - HELD THAT: - The Tribunal examined the engagement letter which provided for a six-month period subject to mutual extension and noted that mandate letters issued subsequently indicated that the original six month term was not rigidly enforced. No suit or arbitration was pending on the question of service quality on the date of filing, and no dispute was communicated in response to the demand notice. The Adjudicating Authority's conclusion that there was a clear deficiency in service falling within Section 5(6)(b) was rejected as unsupported by the record. The Court emphasised that a mere assertion of deficiency, when not raised as a formal dispute or shown to have been brought to the claimant's notice in response to the demand notice, did not bar admission. [Paras 6, 8]

No pre-existing dispute of deficiency in service existed that would bar initiation of insolvency proceedings; the Adjudicating Authority's finding to the contrary was unsustainable.

Admission of application under Section 7 of the I&B Code - Relief to be granted consequent to the findings on debt and dispute. - HELD THAT: - Having held that a debt existed and that no pre-existing dispute barred the claim, the Tribunal concluded that the impugned order dismissing the application was erroneous. The Tribunal set aside the Adjudicating Authority's order and directed that the application be admitted. The Court specified that the Adjudicating Authority should admit the application after giving the Corporate Debtor an opportunity to settle the Appellant's claim, and thereafter pass consequential directions in accordance with law. [Paras 9]

The appeal is allowed; the impugned order is set aside and the Adjudicating Authority is directed to admit the application and afford an opportunity to the Corporate Debtor to settle the claim.

Final Conclusion: The appeal is allowed; the impugned order dismissing the application is set aside. The Adjudicating Authority is directed to admit the application (after affording the Corporate Debtor an opportunity to settle the claim) and to pass consequential orders. No order as to costs.

Limitation barred - date of default for IBC - effect of decree on date of default - section 9 IBC maintainability - section 14(2) of the Limitation Act

Limitation barred - section 9 IBC maintainability - The application under Section 9 of the Insolvency and Bankruptcy Code was held to be barred by limitation. - HELD THAT: - The Tribunal found that the last invoice was dated 22.03.2007 and the claim is therefore time barred under the Limitation Act. The recovery suit and subsequent decree obtained in 2016 do not extend or defer the date of default for computing limitation under the Code. Applying the precedent relied upon by the parties, the Tribunal held that the date of default remains the date when the debt became due and cannot be shifted by subsequent filing of a suit or grant of a decree. On this ground alone the Section 9 application was dismissed and other contentions were not adjudicated. [Paras 7, 10]

Application under Section 9 dismissed as barred by limitation.

Effect of decree on date of default - date of default for IBC - A civil decree for recovery does not shift or postpone the date of default for the purpose of computing limitation under the Insolvency and Bankruptcy Code. - HELD THAT: - Relying on the ratio in the authorities referred to by the NCLAT and the Supreme Court, the Tribunal held that a suit for recovery or a decree passed by a civil court cannot operate to move the date of default forward. The Tribunal explained that a decree is an independent remedy and its existence does not alter the original date of default which governs the limitation period for initiating insolvency proceedings under the Code. [Paras 8]

Decree does not shift the date of default; limitation is computed from the original date of default.

Section 14(2) of the Limitation Act - Benefit under section 14(2) of the Limitation Act is not available to the applicant for computing limitation in an application under Section 9 of the Code. - HELD THAT: - The Tribunal held that the operational creditor cannot claim extension of limitation under section 14(2) unless it is shown that proceedings under Section 7 (or the corresponding petition) were being prosecuted with due diligence in a court of competent jurisdiction. The Tribunal noted the distinction between a money recovery suit and an application under the Code, and recorded that no basis existed to treat the earlier proceedings as suspending or extending limitation for the insolvency application. [Paras 9, 10]

No computation of limitation under section 14(2) allowed; the application is time barred.

Final Conclusion: The Tribunal dismissed the Section 9 petition as time barred: the date of default is not shifted by a later recovery suit or decree, and no benefit under section 14(2) of the Limitation Act was available to the applicant; other grounds were not considered.

Substitution of financial creditor by assignment - substitution of interim resolution professional - admission of Section 7 petition and initiation of Corporate Insolvency Resolution Process (CIRP) - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment and confirmation of Interim Resolution Professional - date of default and applicability of suspension provision

Substitution of financial creditor by assignment - Substitution of the name of the financial creditor from M/s. Siemens Financial Services Pvt. Ltd. to Alchemist Asset Reconstruction Company Ltd. in CP No. (IB) 458/ALD/2019. - HELD THAT: - The applicant produced a deed of assignment dated 28.04.2020 showing that the debt owed by the corporate debtor stood assigned to Alchemist Asset Reconstruction Company Ltd., which, on that basis, stepped into the shoes of the original financial creditor and the latter ceased to have any right, title or interest in the assigned debt. The corporate debtor was given opportunities to file objections but did not do so. Having regard to the assignment and the absence of opposition, the Adjudicating Authority allowed the substitution of the financial creditor's name. [Paras 7, 9, 10]

Allowed substitution of the financial creditor in CP No. (IB) 458/ALD/2019 in favour of Alchemist Asset Reconstruction Company Ltd.

Substitution of interim resolution professional - Substitution of the proposed Interim Resolution Professional (IRP) and appointment of Mr. Devendra Singh as IRP. - HELD THAT: - The petitioner originally proposed a different IRP, but following the assignment of debt the applicant proposed a change of circumstances and nominated Mr. Devendra Singh (IBBI registration provided). The corporate debtor did not contest the substitution despite multiple opportunities. The Tribunal, on the basis of the applicant's representation and the proposed nomination, allowed the substitution of the IRP and later confirmed the appointment after receipt of the required declaration under Form 2. [Paras 8, 9, 10, 19]

Allowed substitution of the IRP and confirmed appointment of Mr. Devendra Singh as Interim Resolution Professional.

Admission of Section 7 petition and initiation of Corporate Insolvency Resolution Process (CIRP) - date of default and applicability of suspension provision - The Section 7 petition filed by the financial creditor (as substituted) was admitted and CIRP of the corporate debtor was initiated. - HELD THAT: - The Tribunal examined whether the petition was complete and whether there was a payable financial debt and default. Relying on settled authority that once satisfied on record that debt is payable and default has occurred, the Adjudicating Authority is required to admit the application, the Tribunal found the petition complete. The petition filed on 22.10.2019 was within limitation and the date of default was recorded as 30.03.2017 (also referenced as 13.03.2017 in the order), which predates the statutory suspension inserted by way of Section 10A (pertaining to defaults on or after 25.03.2020). Consequently the suspension provision did not apply. In view of these findings the petition under Section 7 was admitted and CIRP ordered to be initiated. [Paras 15, 16, 17, 18]

Section 7 petition admitted; Corporate Insolvency Resolution Process of the corporate debtor initiated.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Declaration and commencement of moratorium under Section 14 consequent to admission of the Section 7 petition. - HELD THAT: - Upon admission of the Section 7 petition and initiation of CIRP, the Tribunal declared the moratorium as prescribed by Section 14, prohibiting institution or continuation of suits or proceedings, transfer or disposal of assets by the corporate debtor, enforcement of security interests, and recovery of property occupied by the corporate debtor, subject to the statutory exceptions. The moratorium was directed to operate from the date of the order till completion of the CIRP or earlier cessation as provided by law. [Paras 18]

Moratorium under Section 14 declared with immediate effect in terms of the Code.

Appointment and confirmation of Interim Resolution Professional - Confirmation of the appointment of the proposed Interim Resolution Professional and direction to take steps under the Code. - HELD THAT: - The financial creditor's nominee, Mr. Devendra Singh, filed the requisite declaration in Form 2 affirming registration and absence of disciplinary proceedings. The Tribunal accordingly confirmed his appointment as IRP and directed him to perform duties under the Code, specifically mentioning obligations under Sections 15, 17 and 18, and to file progress reports as required. [Paras 19, 20, 22]

Appointment of Mr. Devendra Singh as Interim Resolution Professional confirmed and he was directed to discharge statutory functions and file progress reports.

Final Conclusion: Substitution of the financial creditor and the IRP was allowed; the Section 7 petition was admitted on record of debt and default (date of default prior to the suspension provision), the Corporate Insolvency Resolution Process was initiated, moratorium under Section 14 declared with immediate effect, and Mr. Devendra Singh was confirmed and directed to act as Interim Resolution Professional.

Margin money impressed with trust - bank guarantee as an independent contract - assets held in trust excluded from liquidation estate - Section 36(4) exclusion of third party assets - Section 18 duties of IRP not altering asset character - Section 14 moratorium does not confer new rights or affect trust assets - Resolution plan cannot extinguish vested third party rights - Section 30(2)(e) limitation on impermissible clauses in resolution plan - clean slate principle as a shield, not a sword

Margin money impressed with trust - assets held in trust excluded from liquidation estate - bank guarantee as an independent contract - Resolution plan cannot extinguish vested third party rights - Section 36(4) exclusion of third party assets - Whether fixed deposit receipts (margin money) held as security for bank guarantees are assets of the corporate debtor and liable to be released to the corporate debtor after approval of the resolution plan. - HELD THAT: - The Tribunal found that the FDRs maintained as 100% margin for bank guarantees are impressed with the character of a trust for the benefit of the beneficiaries of the bank guarantees and therefore are not assets of the corporate debtor while the bank guarantees subsist. The bank guarantees are independent contracts between the bank and the beneficiary; the beneficiary's rights under those guarantees are not extinguished merely by inclusion of a write off clause in the resolution plan, particularly where the beneficiary has not discharged the bank or issued any discharge note. Section 36(4) (and the Explanation to Section 18) exclude assets held in trust for third parties from the liquidation estate; duties conferred on the interim/resolution professional under Section 18 do not convert third party trust assets into assets of the corporate debtor. The moratorium under Section 14 does not create new rights or immunize actions that would nullify third party rights, and in any event the moratorium ceases on approval of a resolution plan. A resolution plan cannot lawfully contravene existing legal rights of third parties (Section 30(2)(e)), and the 'clean slate' or successful resolution applicant protection cannot be used to appropriate assets that were never the corporate debtor's. Consequently, until the bank is discharged from its guarantee obligations or the beneficiary otherwise releases its rights, the bank is entitled to retain the FDRs as margin and not release them to the corporate debtor or the resolution applicant. [Paras 30, 31, 35, 40, 41]

The FDRs given as margin against bank guarantees are not assets of the corporate debtor while the guarantees subsist and cannot be released to the corporate debtor; the application for release is dismissed as misconceived.

Final Conclusion: Application seeking release of fixed deposits held as margin for bank guarantees was dismissed. The Tribunal held that such margin money is impressed with trust and excluded from the corporate debtor's assets; the bank will release the FDRs only upon discharge of the bank guarantees or on receipt of a discharge from the beneficiary, and a resolution plan cannot extinguish third party rights contrary to law.

Section 32A of the Insolvency and Bankruptcy Code, 2016 - liability for prior offences - prohibition on action against property of the corporate debtor - applicability to liquidation proceedings - immunity in respect of sale of liquidation assets - power of the liquidator to sell attached assets - right of buyer to seek de-attachment

Section 32A of the Insolvency and Bankruptcy Code, 2016 - applicability to liquidation proceedings - liability for prior offences - Section 32A applies to assets of a corporate debtor undergoing liquidation and not only to approved resolution plans. - HELD THAT: - Having considered the text of section 32A and the object of the Amendment Ordinance/Act, the Tribunal held that the provision was introduced to protect last-mile funding and to provide immunity and protection against action in cases where a company goes into CIRP or liquidation. The Section's language - specifically its reference to sale of liquidation assets under Chapter III of Part II and the object clause mentioning 'CIRP or liquidation' - demonstrates that the immunity from prosecution and protection against action in relation to property extends to liquidation proceedings as well. The Tribunal rejected the submission that section 32A applies only where a resolution plan has been approved, finding no ratio in the NCLT Hyderabad order to that effect and construing the statutory scheme as covering liquidation as well. [Paras 11, 12]

Section 32A is applicable to assets of a corporate debtor undergoing liquidation.

Prohibition on action against property of the corporate debtor - power of the liquidator to sell attached assets - right of buyer to seek de-attachment - immunity in respect of sale of liquidation assets - A liquidator may proceed with the sale of assets of the corporate debtor even if those assets are under attachment by an investigating agency, and the buyer may seek de-attachment under section 32A. - HELD THAT: - The Tribunal found that section 32A prohibits action against the property of a corporate debtor in relation to offences committed prior to CIRP where the property is covered by a resolution plan or sold as liquidation assets to a person who is not a promoter, related party, or person implicated by the investigating authority. Consequently, the provision precludes attachment, seizure or confiscation of such property and, by virtue of this protection, a liquidator can carry on with sale proceedings despite existing attachment orders. The Tribunal clarified that section 32A does not relieve designated partners or officers in default from prosecution, but it does render attachment and confiscation of a corporate debtor's properties undergoing CIRP or liquidation void insofar as the statutory requirements are met. The practical consequence is that the buyer, upon purchase, has the right to apply for de-attachment in accordance with section 32A before the appropriate authority, and the investigating authority is directed to cooperate with the liquidator to facilitate sale. [Paras 15, 16]

Liquidator is permitted to sell attached assets under the Code; buyer may apply for de-attachment under section 32A and the respondent must cooperate to enable the sale.

Final Conclusion: The application is allowed: section 32A of the IBC applies to liquidation proceedings, the liquidator is authorised to proceed with sale of the attached assets under the Code and Regulations, the buyer may seek de-attachment under section 32A, and the respondent is directed to cooperate with the sale process.

Applicability of section 69(2) of the Indian Partnership Act to insolvency proceedings - Limitation under Article 137 of the Limitation Act to applications under the Insolvency and Bankruptcy Code - Section 5 of the Limitation Act - condonation of delay

Applicability of section 69(2) of the Indian Partnership Act to insolvency proceedings - Section 69(2) of the Indian Partnership Act does not bar petitions under the Insolvency and Bankruptcy Code. - HELD THAT: - Section 69(2) of the Indian Partnership Act prohibits instituting a 'suit' by or on behalf of a firm against a third party unless statutory registration conditions are met. Proceedings under the IBC are applications and not 'suits' within the meaning of section 69(2). Consequently the prohibition in section 69(2) is inapplicable to applications filed under the Code and does not affect maintainability of a section 9 petition filed by an unregistered firm. [Paras 11]

The bar under section 69(2) of the Indian Partnership Act does not apply to the present IBC petition.

Limitation under Article 137 of the Limitation Act to applications under the Insolvency and Bankruptcy Code - Section 5 of the Limitation Act - condonation of delay - The section 9 petition is barred by limitation under Article 137 of the Limitation Act and is not saved on the facts by section 5. - HELD THAT: - The Supreme Court's rulings establish that applications under sections 7 and 9 of the IBC attract Article 137 of the Limitation Act, so the right to apply accrues on the date of default and a three-year limitation period applies. The date of default is recorded as 23-6-2015 while the petition was filed on 25-9-2018, more than three years later. No acknowledgement of liability under section 18 of the Limitation Act was shown that might postpone accrual, and no application under section 5 to condone delay was invoked or found applicable on the facts. Applying the cited precedents and these facts, the petition is time-barred. [Paras 12, 13, 14, 15, 16]

The petition is barred by limitation and therefore not maintainable on merits.

Final Conclusion: The petition under section 9 of the IBC is dismissed: the Partnership Act provision relied upon does not prevent filing under the Code, but the petition is barred by limitation under Article 137 of the Limitation Act and is therefore rejected.

Applicability of the Limitation Act to applications under Section 7 of the IBC - Limitation under Article 137 of the Limitation Act - Effect of post limitation acknowledgments under Section 18 of the Limitation Act - One time settlement (OTS) executed after expiry of limitation does not revive the claim - Exclusion of time spent in SARFAESI proceedings from computation of limitation under Section 14(2) - not available for actions under Section 13(2)/13(4) SARFAESI - Requirement of summary satisfaction of occurrence of debt and default in Section 7 proceedings (subject to limitation)

Applicability of the Limitation Act to applications under Section 7 of the IBC - Limitation under Article 137 of the Limitation Act - One time settlement (OTS) executed after expiry of limitation does not revive the claim - Effect of post limitation acknowledgments under Section 18 of the Limitation Act - Exclusion of time spent in SARFAESI proceedings from computation of limitation under Section 14(2) - not available for actions under Section 13(2)/13(4) SARFAESI - Whether the petition under Section 7 of the IBC filed on 11.09.2019 is time barred and liable to be rejected on the ground of limitation. - HELD THAT: - The Tribunal applied the settled proposition that applications under Section 7 of the IBC attract Article 137 of the Limitation Act and the right to file accrues on the date of default; the prescribed period is three years from that date. The date of default has been stated as 30.06.2014; consequently the petition filed on 11.09.2019 is beyond the three year period unless a legally cognizable ground for extension or revival exists. The Court examined the material relied upon by the petitioner and the respondent: the balance confirmation is dated 30.06.2013 and the account declared NPA on 13.11.2014; there is no record of any acknowledgement of liability made during the subsistence of the limitation period that could revive the claim under Section 18 of the Limitation Act. The one time settlement (OTS) proposal deposited on 01.08.2018 was made well after expiry of limitation and, in absence of acceptance or an earlier acknowledgement within the limitation period, cannot revive the right to sue. The Tribunal further held that time spent in pursuing remedies under the SARFAESI Act cannot be excluded under Section 14(2) of the Limitation Act where such action under Section 13(2)/13(4) does not qualify as a 'civil proceeding' for exclusion, following the larger Bench view of the NCLAT; earlier decisions to the contrary were held not to represent correct law. Applying Sampuran Singh, the Tribunal reiterated that acknowledgements must be made before expiry of the prescribed period to have reviving effect. On these foundations, the Tribunal concluded that no legal basis existed to condone or exclude the period and that the Section 7 petition is barred by limitation. [Paras 12, 19, 22, 23, 24]

The petition is barred by limitation and is rejected.

Final Conclusion: The Adjudicating Authority dismissed the Section 7 petition filed by UCO Bank against Deegee Orchards Private Limited as barred by limitation, holding that the application under Article 137 could not be revived by the post limitation OTS or by any excluded period under SARFAESI; no opinion was expressed on merits and the petitioner's remedies before other fora remain unaffected.

Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 where duty is "quantified" on or before 30.06.2019 - admission by the declarant as a form of written communication quantifying duty - negative list under section 125(1)(e) of the Finance (No.2) Act, 2019 - obligation of Designated Committee to issue a speaking order and to verify declarations under the scheme

Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 where duty is "quantified" on or before 30.06.2019 - admission by the declarant as a form of written communication quantifying duty - negative list under section 125(1)(e) of the Finance (No.2) Act, 2019 - Declaration under the scheme was maintainable because the service tax liability stood quantified on or before 30.06.2019 by admissions made on 27.06.2019, and therefore the declaration could not be held ineligible under the exception in section 125(1)(e). - HELD THAT: - The Court applied the scheme's definition of "quantified" (a written communication of the amount of duty payable) and the Board's clarificatory circular which expressly treats a declarant's admission during enquiry as such written communication. The petitioner, by a letter dated 27.06.2019 and by the Director's statement recorded on 27.06.2019, admitted the service tax liability for the period from 2015-16 upto June, 2017, and disclosed the amount already paid. On the basis of authorities of this Court construing the scheme (including Thought Blurb and M/s. G. R. Palle Electricals), an admission by the declarant before the cut-off date constitutes quantification within the meaning of the scheme and renders the declarant eligible to file under the investigation/enquiry/audit category. In view of this construction and the factual admission, the Designated Committee's rejection on the ground that quantification had not taken place before 30.06.2019 was not justified. The Court accordingly concluded that the declaration should be treated as a valid one and remitted the matter to the Designated Committee for fresh consideration, directing that a due opportunity of hearing be given and that the ultimate decision be a speaking order. [Paras 23, 26, 29]

Order rejecting the declaration set aside; matter remanded to the Designated Committee to reconsider the declaration as valid, after giving hearing and issuing a speaking order within six weeks.

Objection of non-joinder of Directorate General of GST Intelligence (DGGI) as a necessary party - DGGI, Mumbai Zonal Unit was not a necessary party to the writ petition challenging the Designated Committee's rejection of the declaration. - HELD THAT: - The Court observed that the rejection impugned in the petition was an administrative decision of the Designated Committee (constituted under respondent No.2). Communications between officials of respondent No.2 and DGGI formed internal verification material; that did not render DGGI a necessary party to a proceeding in which the petitioner challenged the administrative act of the Designated Committee. The objection of non-joinder was therefore held to be without substance. [Paras 28]

Objection on ground of non-joinder of DGGI rejected; DGGI need not be added as a party.

Final Conclusion: Writ petition allowed: order dated 01.03.2020 rejecting the petitioner's declaration is set aside and the matter is remitted to the Designated Committee to consider the declaration afresh as a valid declaration, after giving the petitioner an opportunity of hearing and issuing a speaking order; the exercise to be completed within six weeks. No order as to costs.

Refund of service tax for construction of residential complex - exemption for complexes with less than 12 residential units - documentary proof to establish number of residential units - unjust enrichment - discharge of tax during investigation and refund admissibility - Rule 10 of the CESTAT Procedure Rule, 1982 - interest on refund under Section 11AA

Documentary proof to establish number of residential units - exemption for complexes with less than 12 residential units - Whether the appellant had established, by admissible documentary evidence, that the residential complex comprised less than 12 residential units so as to qualify for exemption and entitlement to refund. - HELD THAT: - The Tribunal held that compliance with the legal requirement to establish the number of units need not have been pleaded as a ground in the show-cause notice; what mattered was whether evidence on record proved the fact. The Commissioner (Appeals) had doubted the appellant's documents because the approved plan showed 13 floors without specifying flats per floor. The Tribunal examined the architect's certificate, floor plan and the full occupation certificate issued by the Municipal Corporation and concluded that, counting each duplex as one unit, the complex comprised nine residential units. On that basis the appellant met the statutory test for exemption and refund admissibility. [Paras 6]

Documents (architect certificate, floor plan and occupation certificate) establish that the complex comprised nine residential units; appellant entitled to refund.

Unjust enrichment - Whether the Commissioner (Appeals) failed to deal with the allegation of unjust enrichment raised in the Order-in-Original. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) had considered unjust enrichment after perusing the record and noted that the customers were not charged Service Tax for the Bandra unit; accordingly the issue of unjust enrichment was addressed in the appeal order and did not warrant interference. [Paras 6]

Unjust enrichment was considered and answered by the Commissioner (Appeals); no further relief on that ground.

Discharge of tax during investigation and refund admissibility - Rule 10 of the CESTAT Procedure Rule, 1982 - Whether the appellant's admission of having discharged the service tax liability during investigation disentitled it from refund in view of CESTAT precedent relied upon by the Department. - HELD THAT: - The Department relied on a CESTAT decision to contend that payment during pending enquiry precludes refund. The Tribunal observed that the cited decision arose on different facts and also noted that the contention was affected by Rule 10 of the CESTAT Procedure Rules, 1982 and had not been pressed at hearing; consequently that ground did not prevent allowance of refund where the appellant was found to be entitled on merits. [Paras 6]

The contention that payment during investigation bars refund is inapplicable in the present facts and does not defeat the appellant's entitlement.

Final Conclusion: Appeal allowed; order of the Commissioner (Appeals) set aside and respondent directed to refund the claimed amount with applicable interest under Section 11AA of the Central Excise Act, 1994 within three months.

Excisable goods - ineligibility under Section 125(1)(h) of the Finance (No.2) Act, 2019 for goods set forth in the Fourth Schedule - Fourth Schedule to the Central Excise Act, 1944 - charging section and definition of 'excisable goods' under the Central Excise Act, 1944 - effect of the Constitution (One Hundred and First Amendment) Act, 2016 on Entry 84 of List I of the Seventh Schedule - complete code nature of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019

Excisable goods - Fourth Schedule to the Central Excise Act, 1944 - ineligibility under Section 125(1)(h) of the Finance (No.2) Act, 2019 for goods set forth in the Fourth Schedule - charging section and definition of 'excisable goods' under the Central Excise Act, 1944 - Superior Kerosene Oil (SKO) is an excisable good set forth in the Fourth Schedule to the Central Excise Act, 1944 and therefore the petitioner was not eligible to make a declaration under the Sabka Vishwas Scheme in respect of SKO. - HELD THAT: - The Court analysed the amended provisions of the Central Excise Act, 1944, including the definition of "excisable goods" in Section 2(d), the inclusion of manufacture in Section 2(f)(ii), and the charging provision in Section 3 as amended by Act 18 of 2017. The Fourth Schedule lists SKO and, read with the additional notes, the absence of a notified rate of duty denotes that no duty is presently leviable but does not negate the status of the item as an excisable good. Section 125(1)(h) of the Finance (No.2) Act, 2019 expressly excludes declarations in respect of goods set forth in the Fourth Schedule; accordingly, SKO's presence in that Schedule rendered the petitioner ineligible under the Scheme. The court therefore concluded that the designated committee's refusal to accept the declaration was in accordance with the statutory scheme and not vitiated by manifest error of law. [Paras 18, 19, 20, 21, 26]

Declaration in respect of SKO could properly be rejected under Section 125(1)(h) because SKO is an excisable good set forth in the Fourth Schedule; petitioner was not eligible under the Scheme.

Effect of the Constitution (One Hundred and First Amendment) Act, 2016 on Entry 84 of List I of the Seventh Schedule - Section 174 of the Central Goods and Service Tax Act, 2017 - compatibility of inclusion of SKO in the Fourth Schedule with the amended Entry 84 - Inclusion of SKO in the Fourth Schedule of the Central Excise Act, 1944 is not rendered impermissible or violative of Section 174 of the CGST Act or the amended Entry 84 of the Union List. - HELD THAT: - The Court considered the constitutional amendment which substituted Entry 84 in the Union List and the saving/repeal scheme under Section 174 of the CGST Act. It noted that the Central Excise Act, 1944 was retained insofar as it relates to goods falling within the amended Entry 84 and that the Act as amended by Act 18 of 2017 expressly defines and proceeds to deal with excisable goods via the Fourth Schedule and charging provisions. The mere levy of GST on certain petroleum products does not ipso facto negate the legislative competence to retain SKO in the Fourth Schedule; accordingly the petitioner's prayers seeking deletion of SKO from the Schedule were without substance. [Paras 12, 14, 15, 21, 22]

Prayer to delete SKO from the Fourth Schedule or to declare its continued inclusion violative of Section 174/Entry 84 was rejected.

Complete code nature of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - designated committee's powers under the Scheme - administrative correctness and non-arbitrariness of rejection under the Scheme - The designated committee's communication refusing the petitioner's declaration under the Sabka Vishwas Scheme was lawful and not arbitrary, having been issued in accordance with the Scheme which is a complete code. - HELD THAT: - The Court observed that the Sabka Vishwas Scheme is a self-contained statutory code for settlement of legacy disputes, conferring specific powers on the designated committee for verification, estimation and issuing statements (Forms SVLDRS-1 to SVLDRS-3) and prescribing the consequences of payment, discharge certificates and withdrawal of proceedings. Given Section 125's exclusion and the committee's statutory role under the Scheme, the committee's refusal to accept the petitioner's declaration for SKO was in conformity with the Scheme's provisions. The rejection therefore did not suffer from manifest illegality warranting interference by writ petition. [Paras 23, 24, 25, 26]

Impugned communication of non-acceptance under the Scheme was valid; no interference warranted.

Final Conclusion: The writ petition is dismissed. The court upheld that SKO is an excisable good set forth in the Fourth Schedule to the Central Excise Act, 1944, that Section 125(1)(h) of the Finance (No.2) Act, 2019 excludes declarations in respect of such goods under the Sabka Vishwas Scheme, and that the designated committee's rejection of the petitioner's declaration was in accordance with the statutory scheme.

Entitlement to 'C' forms for concessional Central Sales Tax on inter state purchases - registration under the Central Sales Tax regime for purchasing dealers - continuing operability of CST provisions for specified goods notwithstanding GST - right to purchase in the course of inter State trade protected by Article 301 read with Article 304(b)

Entitlement to 'C' forms for concessional Central Sales Tax on inter state purchases - registration under the Central Sales Tax regime for purchasing dealers - The petitioner is entitled to have 'High Speed Diesel Oil' included in its CST registration certificate and to obtain 'C' Forms to claim the concessional rate for inter state purchases. - HELD THAT: - The Court applied and followed the ratio of earlier decisions of this Court (including the Division Bench dismissal of the State's Writ Appeal in the Ramco matter) which held that purchasing dealers retain rights under the CST Act to obtain registration and to purchase specified goods at concessional rates against 'C' Forms. The Division Bench reasoning establishes that registration under the CST Act is not conditioned solely on being a selling dealer and that Section 8(3)(b) (concessional purchase against declaration forms) continues to operate for the restricted commodities even after the GST regime. In the factual matrix before the Court the petitioner was prevented from downloading 'C' Forms and from having High Speed Diesel Oil reflected in its registration; having regard to the binding precedents the writ must be allowed and the department directed to effect inclusion of the commodity in the registration certificate and to permit issuance/download of 'C' Forms. [Paras 5]

Writ petition allowed; direction to include 'High Speed Diesel Oil' in registration within four weeks and to permit issuance/downloading of 'C' Forms; no costs.

Final Conclusion: Following binding precedent of this Court (and the Division Bench decision in the Ramco appeals), the petitioner's entitlement to CST registration inclusion for High Speed Diesel and to obtain 'C' Forms for concessional inter state purchases is upheld; the department is directed to give effect to these rights forthwith.

Exemption for sale of seeds - application of precedent - assessment set aside - remand for fresh consideration - natural justice-personal hearing and reasoned decision - penalty under the Central Sales Tax Act read with the Tamil Nadu General Sales Tax Act

Application of precedent - exemption for sale of seeds - assessment set aside - The petitioner is entitled to the benefit of this Court's earlier decision in Tvl. Rasi Seeds (P) Ltd. and the impugned assessment orders determining liability for 2003-2004 are to be set aside. - HELD THAT: - The Court noted that a co ordinate batch decision in Tvl. Rasi Seeds (P) Ltd. (Order dated 25.04.2019 in W.P. No. 10768 of 2006 etc.) had set aside a similar assessment where exemption for sale of hybrid seeds was refused. Respondents did not dispute that the petitioner is similarly placed. Applying that precedent, the Court concluded that the impugned assessment orders (CST No. 427810/2003-04 and CST No. 3141126/2003-04 dated 28.02.2006) must be set aside and the matters remitted for reconsideration in conformity with the principles laid down in the earlier decision. [Paras 6, 7]

Impugned assessment orders set aside and petitioner granted the benefit of the earlier decision.

Remand for fresh consideration - natural justice-personal hearing and reasoned decision - penalty under the Central Sales Tax Act read with the Tamil Nadu General Sales Tax Act - The matters are remitted to the assessing authority for fresh consideration of liability (including the claim of exemption and any penalty), with directions to follow prescribed procedure and afford an opportunity of personal hearing and to pass a reasoned order. - HELD THAT: - The Court remitted the assessments to the Second Respondent for fresh consideration since the earlier decision of this Court requires reassessment in like cases. The Second Respondent is directed to afford the petitioner full opportunity of personal hearing, to deal with each contention of the petitioner specifically with reference to the principles in the cited decision, to follow the prescribed procedure consonant with natural justice, and to pass a reasoned order on merits and in accordance with law and communicate it under written acknowledgment. The remand contemplates fresh adjudication and does not constitute a final adjudication on the merits of the exemption or penalty claims. [Paras 7]

Assessment remitted for fresh consideration with directions to follow natural justice and the principles stated in the earlier decision.

Final Conclusion: The Court set aside the impugned assessment orders for the tax period 2003-2004, granted the petitioner the benefit of the earlier decision in Tvl. Rasi Seeds (P) Ltd., and remitted the matters to the assessing authority for fresh, reasoned consideration after affording personal hearing in accordance with natural justice.

Offence under Section 138 of the Negotiable Instruments Act, 1881 - presumptions under Sections 118 and 139 of the Negotiable Instruments Act - rebuttable presumption and burden of proof - relevance of concurrent civil judgment on legal enforceability of debt - acquittal on appreciation of evidence and interference under Section 401 Cr.P.C.

Relevance of concurrent civil judgment on legal enforceability of debt - offence under Section 138 of the Negotiable Instruments Act, 1881 - Ext.D2 civil judgment holding that the amount covered by the cheque was not a legally enforceable debt is relevant and precludes conviction under Section 138 of the N.I.Act between the same parties. - HELD THAT: - The civil suit (Ext.D1) was tried and the plaint was dismissed by Ext.D2, which recorded findings that the complainant was not the owner of the vehicle, that the accused was the registered owner, and that the outstanding amount covered by the cheque was not proved and thus not recoverable. Ext.D2 became final between the parties and was not appealed or stayed. The Court observed that although civil and criminal proceedings may be maintained concurrently, a civil court's final finding on the recoverability of the amount is relevant under the Evidence Act when determining whether the cheque represented a legally enforceable debt. On the facts, Ext.D2 concluded that the amount under the cheque was not recoverable; that concurrent civil adjudication on the same subject-matter had not been set aside; and therefore the foundation for prosecution under Section 138-that the cheque was issued for discharge of a legally enforceable debt-was absent. The High Court held it lacked jurisdiction in revision to re-appreciate the civil court's decision and treated Ext.D2 as conclusive on the issue of legal enforceability of the debt. [Paras 12, 13, 14, 15, 16]

The final civil finding that the amount was not a legally enforceable debt is relevant and undermines the prosecution under Section 138; conviction cannot stand on that basis.

Presumptions under Sections 118 and 139 of the Negotiable Instruments Act - rebuttable presumption and burden of proof - Whether the accused successfully rebutted the statutory presumptions under Sections 118 and 139 of the N.I.Act so as to negate criminal liability under Section 138. - HELD THAT: - The court reviewed the statutory scheme that once execution of the cheque is proved the presumptions under Sections 118 and 139 arise and shift the evidential burden to the accused, but those presumptions are rebuttable. The accused (DW1) admitted execution of the cheque but gave evidence that cheques were issued as security, that several blank cheques had been entrusted to the complainant, that the vehicle was repossessed and that amounts paid by him were not adjusted by the complainant. The accused produced documents (Exts.D1-D8) and oral evidence to show the cheque was not issued for discharge of a legally enforceable debt. The High Court found that the accused had discharged the burden to raise a probable defense and had rebutted the statutory presumptions by credible evidence accepted by the Court. Consequently, the courts below had misappreciated the evidence in convicting the accused. [Paras 7, 8, 15, 17]

The accused rebutted the presumptions under Sections 118 and 139 by adducing evidence that the cheque was given as security and not for discharge of a legally enforceable debt; therefore criminal liability under Section 138 is not made out.

Final Conclusion: Criminal revision allowed; convictions and sentences under Section 138 of the N.I.Act imposed by the trial and appellate courts are set aside. The accused is acquitted, bail bond cancelled and liberty ordered; any fine deposited to be refunded in accordance with rules.