TaxTMI Updates e-Newsletter
Dec 19,2023

Reopening of assessment - income escaping assessment - agent of the State Government - finality of appellate findings - quashing of notice

Agent of the State Government - income escaping assessment - reopening of assessment - quashing of notice - finality of appellate findings - Validity of notices under Section 148A(b)/148A(d) and Section 148 in respect of the petitioner given findings that petitioner is an agent of the State Government and its income is fixed at Rs. 5,00,000/- - HELD THAT: - The Court proceeded on the determinative finding that the petitioner has been held to be an agent of the State Government by earlier judicial and quasi-judicial decisions and that the petitioner's income has been accepted as a fixed amount of Rs. 5,00,000/-. The Single Judge and Division Bench decisions in Writ Petition No. 1211 of 2009, and the ITAT's orders (including the ITAT order for AY 2006-2007 and the ITAT's recorded acceptance of the petitioner's status and fixed remuneration) establish that the petitioner functions under the control and supervision of the State and that remuneration of Rs. 5,00,000/- is the income to be assessed. The Assessing Officer in the assessment for AY 2013-2014 had accepted the returned income as Rs. 5,00,000/-. In these circumstances, the Court found that there is no question of any income escaping assessment and, accordingly, the reopening notices and orders impugned in the petitions cannot stand. The Court noted that the Revenue has pending petitions/appeals challenging those appellate findings, but as of the date of these petitions those findings remain undisturbed. [Paras 10, 11, 12, 13, 14]

Impugned notices and orders issued under Section 148A(b)/148A(d) and Section 148 are quashed and set aside.

Final Conclusion: Petitions disposed by quashing the impugned notices and orders; however, if the Revenue subsequently succeeds in its pending challenges to the appellate findings that the petitioner was an agent of the State Government or that its income was restricted to Rs. 5,00,000/-, the Revenue remains at liberty to take action in accordance with law (no opinion expressed).

Extension of time under the proviso to Section 142(2C) - non-delegable statutory discretion vested in the Assessing Officer - appointment of a special auditor under Section 142(2A) entails civil consequences - rule audi alteram partem in assessment proceedings - substance and effect conformity with Section 292B

Extension of time under the proviso to Section 142(2C) - non-delegable statutory discretion vested in the Assessing Officer - Whether the power to extend time under the proviso to Section 142(2C) could be exercised by an authority other than the Assessing Officer. - HELD THAT: - The Court held that the determinative question is the authority in which the legislature has invested the statutory discretion. The discretion to extend the timeframe is vested in the Assessing Officer (AO) and is non-delegable; the AO alone must exercise that discretionary power. Although ministerial or administrative measures may be employed to effectuate a decision, the substantive discretionary function cannot be abdicated or exercised by a superior officer in place of the AO. Consequently, the CIT could not validly extend the timeframe on the basis of the AO's recommendation while the AO remained seisin of the assessment proceedings. [Paras 16, 20, 24, 25]

The power to extend time under the proviso to Section 142(2C) is vested in the AO and could not be validly exercised by the CIT; such extension by a superior authority is not permissible.

Appointment of a special auditor under Section 142(2A) entails civil consequences - rule audi alteram partem in assessment proceedings - Whether the decision to appoint an auditor under Section 142(2A) is administrative in nature or a step in assessment proceedings attracting civil consequences and principles of natural justice. - HELD THAT: - The Court accepted that ordering an audit under Section 142(2A) is a step in the assessment process and not a mere administrative act. Because such appointment entails civil consequences - including imposition of further accounting and potential professional consequences for the auditor - the distinction between administrative and quasi-judicial acts is attenuated. Orders of this character therefore attract the rules of natural justice, including audi alteram partem, and cannot be treated as purely administrative exercises. [Paras 21, 22, 23]

The appointment of a special auditor under Section 142(2A) is a step in assessment proceedings that entails civil consequences and requires observance of principles of natural justice.

Substance and effect conformity with Section 292B - Whether, without prejudice, the act of the Assessing Officer could be upheld as being in substance and effect in conformity with the intent and purpose of the Act under Section 292B. - HELD THAT: - The Court answered the framed questions against the revenue and in favour of the assessee on the primary grounds that the discretionary power to extend time is non-delegable and that the appointment of a special auditor is part of the assessment process attracting civil consequences and natural justice. Given these conclusions, the Court found it unnecessary to uphold the impugned extension on the basis of conformity under Section 292B; the determinative rulings rendered dispose of the appeals in favour of the assessee. [Paras 25]

The contention that the AO's act could be sustained in substance under Section 292B did not save the impugned action; the questions are answered against the revenue and in favour of the assessee.

Final Conclusion: For the Assessment Years listed, the appeals are disposed of against the revenue and in favour of the assessee: the discretion to extend time under the proviso to Section 142(2C) is vested exclusively in the Assessing Officer and cannot be exercised by the CIT; the appointment of a special auditor under Section 142(2A) is part of assessment proceedings attracting civil consequences and natural justice, and the revenue's challenges fail.

Mandatory requirement of section 144C(1) - draft assessment order - eligible assessee - foreign company - assessment under section 153C - final assessment order without draft is void for want of jurisdiction - Place of Effective Management (POEM)

Mandatory requirement of section 144C(1) - draft assessment order - eligible assessee - foreign company - final assessment order without draft is void for want of jurisdiction - Validity of the assessment order passed under section 153C where no draft assessment order was issued to a foreign company as an eligible assessee under section 144C(1). - HELD THAT: - The Tribunal found as an admitted fact that the assessee is a foreign company and thus an "eligible assessee" within the meaning of section 144C(15)(b). Section 144C(1) mandates that where the Assessing Officer proposes any variation prejudicial to an eligible assessee, he must in the first instance forward a draft of the proposed order to the eligible assessee to enable filing of objections before the Dispute Resolution Panel. In the present case the Assessing Officer did not issue any draft assessment order prior to passing the final assessment under section 153C. The Tribunal, after considering binding decisions of the jurisdictional High Court in Zuari Cement (and subsequent affirmance by dismissal of SLP), and consistent pronouncements of other High Courts, held that failure to adhere to the procedure in section 144C(1) renders the final assessment order without jurisdiction. The Tribunal rejected the Revenue's contention seeking remand in view of the binding ratio of the jurisdictional Division Bench and the factual parity with Zuari Cement, and consequently quashed the assessment order as null and void. The Tribunal further held that because the assessment order is quashed on this legal ground, the substantive grounds on merits became infructuous. [Paras 6, 7, 9, 11]

Assessment order passed under section 153C without issuance of a draft assessment order as mandated by section 144C(1) is without jurisdiction and is quashed; consequential demand and penalty proceedings are unsustainable.

Final Conclusion: The appeal is allowed: the assessment order dated 31/03/2022 passed under section 153C is quashed for failure to issue the draft assessment order required by section 144C(1) in respect of the foreign company (AY 2018-19); the appellant's remaining grounds become infructuous.

Penalty under section 271(1)(c) of the Income Tax Act, 1961 - furnishing inaccurate particulars of income - mere change of head of income is not furnishing inaccurate particulars - estimate-based process loss and levy of penalty - disallowance under section 40A(2)(b) of the Act and revenue neutrality - requirement of positive finding of concealment/animus to sustain penalty

Penalty under section 271(1)(c) of the Income Tax Act, 1961 - furnishing inaccurate particulars of income - mere change of head of income is not furnishing inaccurate particulars - requirement of positive finding of concealment/animus to sustain penalty - Deletion of penalty levied for A.Y. 2012-13 in respect of process loss and profit on sale of land/flats - HELD THAT: - The Tribunal upheld the Commissioner (Appeals) in deleting the penalty imposed under section 271(1)(c). The Tribunal applied the settled principle that mere non-acceptance of a claimed deduction or a change in the head of income does not, by itself, amount to furnishing inaccurate particulars of income; there must be material leading to a reasonable conclusion of concealment or that particulars supplied were false. The disallowance in respect of process loss was estimate-based and fell within the ambit of a bonafide, debatable claim; accordingly penalty was unsustainable. Similarly, the profit on sale of land/flats being treated as business income instead of capital gain involved a real issue of classification where two opinions were possible; in absence of a finding that details furnished in the return were incorrect, invocation of section 271(1)(c) was not justified. Reliance on Supreme Court precedent (as applied by the authorities below) and co-ordinate Tribunal decisions supported deletion of penalty on merits. [Paras 13, 14]

Penalty imposed for A.Y. 2012-13 deleted; Revenue's appeal dismissed.

Penalty under section 271(1)(c) of the Income Tax Act, 1961 - estimate-based process loss and levy of penalty - mere making of a claim which is debatable will not sustain penalty - Deletion of penalty levied for A.Y. 2015-16 in respect of process loss - HELD THAT: - The Tribunal followed the coordinate Bench decision (ITA No. 1189/Ahd/2019 dated 17.09.2021) which held that where a process loss claim is debatable and made in the return with supporting facts, mere disallowance does not constitute furnishing of inaccurate particulars to attract section 271(1)(c). Applying that precedent, the Tribunal found no material to demonstrate that the assessee's explanation was false or that there was animus to conceal, and therefore deleted the penalty. [Paras 16, 17]

Penalty imposed for A.Y. 2015-16 deleted; assessee's appeal allowed.

Disallowance under section 40A(2)(b) of the Act - revenue neutrality and acceptance by recipients - requirement of evidence to sustain disallowance - Deletion of addition made under section 40A(2)(b) for A.Y. 2016-17 in respect of excess interest paid to chairman and director - HELD THAT: - The Tribunal found that the assessee produced ledger evidence and returns of the recipients showing receipt and tax on the interest, and that the chairman and director had furnished personal guarantees for bank borrowings - a business exigency explaining the higher interest. The Tribunal noted absence of contrary material from Revenue and observed revenue neutrality (assessees having nil assessed income while recipients declared and paid tax). On these facts the Tribunal held the Assessing Officer's addition under section 40A(2)(b) unsustainable and deleted the addition. [Paras 22, 24, 25]

Addition under section 40A(2)(b) for A.Y. 2016-17 deleted; assessee's appeal allowed.

Final Conclusion: The Tribunal dismissed the Revenue appeal for A.Y. 2012-13 by deleting the penalty under section 271(1)(c), deleted penalties for A.Y. 2015-16 relating to process loss, and allowed the assessee's appeal for A.Y. 2016-17 by deleting the disallowance under section 40A(2)(b).

Fees for Technical Services - "make available" clause - DTAA interpretation - subscription, professional and training services - TDS credit verification - consequential interest recalculation - penalty initiation premature

Fees for Technical Services - "make available" clause - DTAA interpretation - subscription, professional and training services - Subscription, professional and training services charged by the assessee do not constitute Fees for Technical Services under the India-Netherlands DTAA and are not taxable in India. - HELD THAT: - The Tribunal, following its earlier decision in the assessee's own case for A.Y. 2019-20, held that the assessee merely granted access to software and did not transfer technology or otherwise 'make available' technical knowledge, experience, skill, know how or processes to the recipient. The Tribunal applied the 'make available' requirement in Article 12(5)(b) of the India-Netherlands Treaty and relied upon the principles in De Beers and Kotak Securities to conclude that common or access type services which do not enable the recipient to apply the technology do not attract FTS treatment. On this basis the additions made by the AO treating such receipts as FTS were deleted. [Paras 7, 8, 11]

Grounds challenging the addition treating the receipts as FTS are allowed; the additions are deleted for the assessment years in issue.

TDS credit verification - Credit for taxes (TDS) claimed by the assessee is to be verified and granted by the AO in accordance with law. - HELD THAT: - The DRP had directed verification of factual submissions relating to tax credit; the Tribunal observed that entitlement to credit requires factual examination and therefore remitted the matter to the assessing officer to verify documents (including Form 26AS) and grant credit as per law. [Paras 8, 16]

AO directed to verify and grant TDS credit after due verification in accordance with law.

Consequential interest recalculation - Interest charged under sections 234A/234B/234C/234D is consequential and to be recalculated in light of the appellate relief. - HELD THAT: - The Tribunal held that any interest charged is consequential upon the tax determination; therefore, upon deletion of the additions and grant of any TDS credit, the AO shall recompute interest, if any, while giving effect to the appellate order. [Paras 9, 17]

AO to recalculate interest, if any, consequential to the relief granted.

Penalty initiation premature - Initiation of penalty proceedings under section 274 read with section 270A is premature and requires no adjudication at this stage. - HELD THAT: - The Tribunal deemed the initiation of penalty proceedings premature in the context of the substantive adjustments and remittances ordered, and therefore declined to adjudicate penalty proceedings at this stage. [Paras 10, 18]

Penalty proceedings held to be premature and not adjudicated.

Final Conclusion: Assessee's appeals for A.Y. 2020-21 and A.Y. 2021-22 are partly allowed: additions treating subscription, professional and training receipts as FTS are deleted; TDS credit to be verified and granted by the AO; interest to be recomputed consequentially; penalty proceedings held premature.

Condonation of delay - substantial question of law - binding precedent effect of a Supreme Court decision - attribution of profits to Indian operations - appeal disposed on merits

Condonation of delay - appeal re-filing - Condonation of delay of 460 days in re-filing the appeals was sought and decided. - HELD THAT: - The applications filed by the appellant/revenue seeking condonation of delay in re-filing the appeals were considered. The Court, stating its intention to decide the appeals on merits, granted condonation of the delay and disposed of the applications accordingly. The order condones the delay and allows re-filings to proceed. [Paras 1, 4, 5]

Delay of 460 days in re-filing the appeals is condoned and the applications are disposed of.

Binding precedent effect of a Supreme Court decision - substantial question of law - attribution of profits to Indian operations - Whether any substantial question of law arises for consideration in the appeals in view of the Supreme Court's dismissal of SLP and the coordinate bench's decision attributing 15% of profits to Indian operations. - HELD THAT: - The learned senior standing counsel for the appellant/revenue conceded that the Supreme Court's decision in the group-entity case governs the merits. The Supreme Court had dismissed the special leave petition after recording that issues were considered and held against the Revenue by affirming the High Court. The primary merit issue before the Tribunal - the sustainability of attributing 15% of profits from Indian operations to the respondent/assessee - was upheld by the coordinate bench and subsequently affirmed by the Supreme Court dismissal of SLP. In view of this binding precedent, the High Court held that no substantial question of law arises for its consideration and closed the appeals. [Paras 7, 8, 9, 10, 12]

In light of the Supreme Court's dismissal of the SLP and the coordinate bench's finding on attribution, no substantial question of law arises; the appeals are closed.

Final Conclusion: Applications for condonation of delay are allowed; on the merits the appeals are closed as no substantial question of law arises in view of the Supreme Court's dismissal of the special leave petition affirming the coordinate bench's conclusion on attribution of profits.

Transfer Pricing - Bright Line Test - Advertising, Marketing and Promotion expenses - International transaction - Onus of proving international transaction - Tribunal remittal to Assessing Officer - Substantial question of law

Bright Line Test - Advertising, Marketing and Promotion expenses - International transaction - Onus of proving international transaction - Sustainability of the adjustment made by the Transfer Pricing Officer in respect of AMP expenses by applying the Bright Line Test for AY 2010-11 - HELD THAT: - The Tribunal had earlier, in relation to AY 2008-09, held that the assessee was primarily engaged in manufacturing and that AMP expenditure was incurred to benefit its own operations, hence the alleged excessive AMP did not constitute an international transaction and the TPO's adjustment was unsustainable. The Tribunal also disapproved the TPO's application of the Bright Line Test and emphasised that revenue must first discharge the onus of establishing that an international transaction occurred before determining arm's length price. The court observed that the appellant/revenue failed to demonstrate any factual or legal distinction between AY 2010-11 and AY 2008-09. However, because a pending Special Leave Petition concerning the correctness of the coordinate-bench decisions relied upon (including Sony Ericsson) raises a substantial question of law, the court did not decide the ultimate sustainability of the TPO's adjustment for AY 2010-11 and closed the appeal, subject to revival if the appellant/revenue succeeds in the pending SLP. [Paras 6, 7, 8, 10, 11]

Appeal closed without deciding the substantive question on the Bright Line Test application; liberty granted to revive the appeal if the pending SLP succeeds.

Tribunal remittal to Assessing Officer - Effect of the Tribunal's remittal of the matter to the Assessing Officer - HELD THAT: - The Tribunal had remitted the matter to the Assessing Officer in both AY 2008-09 and AY 2010-11. The High Court noted the remittal and did not disturb that direction. Given the closure of the appeal for the reasons stated, the remittal stands and any further action remains subject to the outcome of the pending higher court proceedings and any revival of the present appeal by the revenue. [Paras 9]

Tribunal's remittal to the Assessing Officer remains intact; no interference by this court in the remittal in view of the closure of the appeal.

Final Conclusion: The appeal concerning AY 2010-11 is closed without adjudication on the substantive question whether the TPO's Bright Line Test-based adjustment to AMP expenses was sustainable, because a substantial question of law arising from a pending SLP (including the Sony Ericsson challenge) requires resolution; the revenue may revive the appeal if it succeeds in the pending SLP. The application for condonation of delay is rendered infructuous.

Power to reopen assessment under Section 148 read with Section 147 - change of opinion - disclosure of material facts / constructive disclosure - Calcutta Discount Co. principle on inferences and disclosure - assessment completed under Section 143(3) read with section 92CA(3) and Section 144C(8) - penalty proceedings under Section 274 read with Section 271(1)(c) - mercantile system of accounting and treatment of foreign exchange loss as revenue expenditure

Power to reopen assessment under Section 148 read with Section 147 - change of opinion - disclosure of material facts / constructive disclosure - Calcutta Discount Co. principle on inferences and disclosure - Validity of the notice dated 25.03.2021 under Section 148 (reopening for assessment year 2014-2015) and the order dated 01.03.2022 disposing of the objection to reopening - HELD THAT: - The Court found that the return filed on 28.11.2014 and the documents subsequently furnished (audited profit & loss account, balance sheet, notes to accounts and auditor's report provided in hard copy in response to the Section 143(2) call) disclosed the primary material facts concerning foreign exchange gains and unrealized exchange loss. The statements, notes and cash flow statement specifically recorded "Net gain on account of foreign exchange fluctuations" and an item of "Unrealised foreign exchanges loss, net", showing that the Assessing Officer had the primary facts necessary for assessment. Relying on the principle in Calcutta Discount Co., the Court held that an assessee is not required to state the inferences to be drawn from disclosed facts and that reopening cannot be justified on mere difference of opinion. The reasons recorded for reopening were found to be founded on a review/change of opinion by the subsequent officer rather than on non-disclosure of primary material facts; consequently the power under Section 148 read with Section 147 (as in force for the period in dispute) was exercised without jurisdiction. For these reasons the impugned order disposing of the objection was quashed. [Paras 34, 35, 36, 39, 40]

The notice dated 25.03.2021 under Section 148 and the order dated 01.03.2022 disposing of the objection are quashed and WP.No.6635 of 2022 is allowed.

Assessment completed under Section 143(3) read with section 92CA(3) and Section 144C(8) - revised assessment order - Validity of the revised assessment order dated 30.03.2022 passed pursuant to the reopened proceedings - HELD THAT: - The impugned revised assessment order was passed only because the reopening (notice dated 25.03.2021 and disposal of objection) had been permitted to proceed. Having quashed the reopening on the ground that it was founded on a change of opinion and that material facts had been disclosed earlier, the consequent assessment passed pursuant to the reopening cannot stand. The assessment order is therefore set aside as consequential to the quashing of the reopening. [Paras 4, 40, 41]

The revised assessment order dated 30.03.2022 is quashed and WP.No.27432 of 2022 is allowed.

Penalty proceedings under Section 274 read with Section 271(1)(c) - Validity of the penalty notice dated 30.03.2022 issued under Section 274 read with Section 271(1)(c) - HELD THAT: - The penalty proceedings arose from and are consequential to the reopened assessment. Since the reopening and the resultant assessment have been quashed on the ground of change of opinion and prior disclosure of material facts, the penalty notice issued under Section 274 read with Section 271(1)(c) is also unsustainable and must be quashed. [Paras 5, 41]

The notice dated 30.03.2022 under Section 274 r/w Section 271(1)(c) is quashed and WP.No.27428 of 2022 is allowed.

Final Conclusion: All three Writ Petitions are allowed: the reopening notice and the order disposing the objection are quashed; the assessment order passed pursuant to the reopening and the penalty notice issued consequentially are also quashed. Connected miscellaneous petitions are closed. No costs.

Revisionary jurisdiction under Section 263 - erroneous and prejudicial to the interests of revenue - exemption under Section 54 - exemption under Section 54F - deposit in capital gain account scheme and conditions for exemption

Revisionary jurisdiction under Section 263 - erroneous and prejudicial to the interests of revenue - exemption under Section 54 - Validity of the Pr.CIT's exercise of jurisdiction under Section 263 in setting aside the assessment completed under section 143(3) on account of erroneous allowance of exemption under section 54. - HELD THAT: - The Pr.CIT found that the Assessing Officer allowed exemption under Section 54 although the capital gain arose from transfer of a plot of land, which does not attract Section 54. The Pr.CIT concluded that the AO applied the wrong provision of law, rendering the assessment order erroneous and prejudicial to revenue, and therefore exercised revisional jurisdiction to set aside the assessment and direct a fresh assessment. The Tribunal agrees that the AO's allowance of Section 54 exemption against the statutory scheme was incorrect, and that such an error falls within the scope of Section 263 as an order which is erroneous and prejudicial to the interests of revenue. The assessee's acceptance that Section 54 was wrongly allowed reinforces the finding of error. No other infirmity in the Pr.CIT's conclusion is shown on the record before the Tribunal.

The Pr.CIT's order under Section 263 setting aside the assessment for erroneous allowance of exemption under Section 54 is upheld.

Exemption under Section 54F - deposit in capital gain account scheme and conditions for exemption - Scope of verification to be undertaken by the Assessing Officer regarding the assessee's eligibility for exemption under Section 54F and whether the assessee's fresh contention before the Tribunal that Section 54F would yield equal or greater exemption could be entertained. - HELD THAT: - Section 54F contains detailed conditions, including computation by reference to net consideration and requirements for deposit/use of amount in the capital gain account scheme. The assessee raised before the Tribunal, for the first time, a contention that full exemption would be available under Section 54F and that no prejudice was caused to revenue. The Tribunal held that this contention was not raised before the Pr.CIT and is subject to factual verification under the statutory conditions of Section 54F; accordingly it cannot be entertained as a basis to upset the revisional order. The Pr.CIT had already directed the AO to examine the assessee's eligibility under Section 54F and verify compliance with the statutory conditions; that exercise is necessary to determine the correct quantum of exemption, if any.

The assessee's new contention regarding Section 54F is not entertained by the Tribunal; the matter of eligibility and computation under Section 54F is to be examined and verified by the Assessing Officer as directed by the Pr.CIT.

Final Conclusion: The Pr.CIT's revision under Section 263 is sustained: the assessment was set aside for erroneous allowance of exemption under Section 54 and the matter is remitted to the Assessing Officer to verify and determine, in accordance with law and the conditions of Section 54F, the correct relief (if any). The assessee's appeal is dismissed.

Scope of Section 206C(1) and applicability of TCS to forest produce - TCS on forest produce versus minor forest produce - Collection of tax at source under Section 206C(6A) and interest under Section 206C(7) - Penalty under Section 271CA and its infructuousness upon quashing of primary demand

Scope of Section 206C(1) and applicability of TCS to forest produce - TCS on forest produce versus minor forest produce - Collection of tax at source under Section 206C(6A) and interest under Section 206C(7) - TCS liability and consequential interest in respect of sales of minor forest produce - HELD THAT: - The Tribunal examined whether the goods dealt by the assessee - described as minor forest produce (non-timber forest products) - fall within the goods specified in the Table to Section 206C(1) so as to attract collection of tax at source under Section 206C(6A) and interest under Section 206C(7). Applying the statutory categorisation in the Table, the Bench concluded that 'minor forest produce' (non-timber, agricultural/vegetable-origin forest produce) are distinct from the entries contemplated for TCS collection and are not covered by the provision invoked by the revenue. The Assessing Officer's characterization and consequential computation (50% of turnover treated as liable) therefore could not be sustained. In view of the quashing of the primary TCS demand, the levy of interest under Section 206C(7) founded on that demand also falls away. The Tribunal set aside the AO's addition and upheld the deletion of the TCS and interest. [Paras 7]

Appeal allowed; TCS demand under Section 206C(6A) and interest under Section 206C(7) quashed in respect of minor forest produce.

Penalty under Section 271CA and its infructuousness upon quashing of primary demand - Sustainability of penalty under Section 271CA consequential to the TCS demand - HELD THAT: - The Tribunal noted that the quantum appeals disposing the TCS demand in favour of the assessee render the penalty proceedings under Section 271CA infructuous. Since the primary liability for collection of tax at source was set aside, the penalty founded on that liability could not be sustained. Accordingly, the penalty orders were allowed as consequential to the favourable disposal on the merits. [Paras 8]

Appeals against penalty under Section 271CA allowed as infructuous consequent to quashing of the TCS demand.

Final Conclusion: The Tribunal allowed the appeals for A.Ys. 2011-12 to 2016-17, holding that sales of the assessee's minor forest produce do not attract TCS under the entries relied upon in Section 206C, quashing the TCS demand and consequential interest, and allowing the penalty appeals under Section 271CA as infructuous.

Revision under Section 263 - deduction under Section 80GGC - bogus donation - failure to make enquiries/non-application of mind - use of material from search and investigation for verification - public-domain verification of donor lists

Revision under Section 263 - deduction under Section 80GGC - bogus donation - failure to make enquiries/non-application of mind - Validity of the Principal Commissioner invoking revisional jurisdiction under Section 263 to set aside the assessment insofar as deduction claimed under Section 80GGC was allowed. - HELD THAT: - The Tribunal held that the assessment order was vitiated by an evident lack of enquiry by the Assessing Officer before allowing the deduction. Noteworthy discrepancies on the record - donation receipts lacking cheque/bank particulars, the assessee's prior receipt of substantial funds from a third party shortly before making donations, and absence of the assessee's name in the public list of donors of the donee party - were matters which the AO ought to have probed. Reliance on precedent established that where an AO accepts an assessee's version without requisite investigation or application of mind, exercise of revisional power under Section 263 is justified. The Tribunal observed that, even without considering adverse material obtained during search and investigation, the public-domain information and the anomalies in the assessee's own submissions furnished sufficient basis to conclude that the assessment was erroneous and prejudicial to the revenue because proper enquiries were not made; accordingly, the Principal Commissioner was justified in setting aside the assessment and directing fresh verification. [Paras 8]

Order under Section 263 setting aside the assessment insofar as deduction under Section 80GGC was allowed is valid; assessment order is erroneous for lack of necessary enquiries.

Use of material from search and investigation for verification - public-domain verification of donor lists - principles for exercise of revisional jurisdiction - Whether the Principal Commissioner erred in relying on material not confronted to the assessee (including material from search/investigation) in invoking Section 263 and setting aside the assessment. - HELD THAT: - The Tribunal found that the Principal Commissioner's opinion that the assessment was erroneous did not rest solely on material which was not confronted to the assessee; rather, even on the stand-alone record available to the AO and in public domain there were sufficient anomalies warranting enquiry. The Tribunal therefore rejected the contention that invocation of revisional jurisdiction was invalid because certain adverse material relied upon in the 263 order had not been earlier furnished to the assessee, holding that the existence of unexplained discrepancies and the AO's failure to seek basic verifications rendered the assessment amenable to revision. [Paras 9]

Objection that adverse material (from search/investigation) was not confronted to the assessee does not invalidate the revisional order; revisional exercise was justified on available record and public-domain information.

Final Conclusion: The appeal is dismissed; the order of the Principal Commissioner under Section 263 setting aside the assessment insofar as the deduction claimed under Section 80GGC was allowed is upheld and the matter is remitted to the Assessing Officer for fresh assessment/verification as directed.

Penalty under section 271(1)(c) - Penalty notice defects-failure to specify limb (concealment or furnishing inaccurate particulars) - Vitiation of penalty proceedings for non-striking of twin charges - Application of jurisdictional High Court precedent

Penalty under section 271(1)(c) - Penalty notice defects-failure to specify limb (concealment or furnishing inaccurate particulars) - Vitiation of penalty proceedings for non-striking of twin charges - Application of jurisdictional High Court precedent - Validity of the penalty imposed under section 271(1)(c) where the show-cause notice did not strike off either limb of the twin charges. - HELD THAT: - The Assessing Officer issued a notice under section 274 read with section 271(1)(c) without striking off either of the twin charges (concealment of income or furnishing inaccurate particulars). The Tribunal found that this omission is a substantive defect in the penalty proceedings. Relying on the decision of the Hon'ble Jurisdictional High Court in Mohd. Farhan A. Shaikh v. CIT, [2021] 434 ITR 1 (Bom.), which holds that non-striking of the irrelevant limb vitiates penalty proceedings, the Tribunal held that the penalty could not be sustained. Respectfully following that precedent, the Tribunal quashed the penalty order passed under section 271(1)(c). [Paras 7]

Penalty levied under section 271(1)(c) quashed; appeal allowed.

Final Conclusion: The penalty order under section 271(1)(c) for assessment year 2010-11 is quashed because the show-cause notice failed to specify/strike off the applicable limb of the twin charges, and the appeal is allowed.

Rectification under section 154 - intimation under section 143(1) - TDS credit withdrawal by assessing officer - jurisdiction of AO in rectification proceedings - verification of transaction and evidentiary consideration in TDS credit claims

Rectification under section 154 - intimation under section 143(1) - TDS credit withdrawal by assessing officer - jurisdiction of AO in rectification proceedings - verification of transaction and evidentiary consideration in TDS credit claims - Validity of the assessing officer's withdrawal of TDS credit by invoking section 154 after issuance of intimation under section 143(1) - HELD THAT: - The Tribunal examined whether the AO could, by exercise of powers under section 154, withdraw TDS credit after the return was processed and intimation under section 143(1) issued. It was held that rectification under section 154 is confined to correcting errors apparent on the face of the record arising from processing of the return filed under section 139(1) and issuance of intimation under section 143(1). Withdrawal of TDS credit is a consequence of action by the deductor and cannot be treated as a mechanical rectification in the absence of adequate verification of the underlying transaction and documentary evidence. The AO failed to consider the assessee's submissions and supporting documents (including bills, bank entries and Form 26AS) before withdrawing credit; such a withdrawal without proper verification was beyond the scope of section 154. Consequently the demand raised pursuant to the purported rectification was unsustainable. [Paras 6]

The AO acted beyond jurisdiction in withdrawing the TDS credit under section 154; the demand arising therefrom is quashed and the appeal is allowed.

Final Conclusion: The Tribunal set aside the impugned order; the assessing officer's withdrawal of TDS credit under section 154 after issuance of intimation under section 143(1) was held to be beyond jurisdiction for lack of verification, and the demand arising from that withdrawal is quashed.

Penalty under section 271(1)(c) of the Income-tax Act (concealment of particulars or furnishing of inaccurate particulars) - omnibus show-cause notice - failure to specify limb of section 271(1)(c) - non-application of mind - vagueness in statutory notice - principles of natural justice

Penalty under section 271(1)(c) of the Income-tax Act (concealment of particulars or furnishing of inaccurate particulars) - omnibus show-cause notice - failure to specify limb of section 271(1)(c) - non-application of mind - vagueness in statutory notice - principles of natural justice - Validity of penalty imposed under section 271(1)(c) where the statutory notice did not strike off the inapplicable limb and did not specify the exact charge. - HELD THAT: - The Tribunal found that the penalty notice issued under section 274 read with section 271(1)(c) was issued in a mechanical/omnibus form stating both concealment and furnishing of inaccurate particulars without striking off the inapplicable portion, thereby failing to intimate the assessee of the specific limb and charge. Relying on the reasoning in the Full Bench decision of the Hon'ble Bombay High Court in Mr. Mohd. Farhan A. Shaikh v. ACIT and the jurisdictional High Court authority, the Tribunal held that the assessee must be informed of the grounds of the penalty proceedings through a precise statutory notice and that an omnibus notice suffers from vagueness and betrays non-application of mind. The Tribunal observed that section 271(1)(c) is a mandatory provision with significant consequences and that principles of natural justice require precision in the notice so as to avoid prejudice; Dilip N. Shroff and related authorities disapprove routine omnibus notices. Applying that ratio to the facts, the Tribunal concluded that the penalty proceedings were vitiated for want of a valid notice specifying the relevant limb, and accordingly quashed the penalty. As the preliminary legal ground succeeded, other merits-based grounds were not adjudicated as they became academic. [Paras 4, 6, 7, 9, 10]

Penalty order under section 271(1)(c) for Assessment Year 2012-13 quashed for being founded on an omnibus notice that failed to specify the relevant limb; appeal allowed.

Final Conclusion: The penalty imposed under section 271(1)(c) of the Income-tax Act for Assessment Year 2012-13 is quashed on the ground that the statutory notice was omnibus and did not specify the relevant limb or charge; other grounds were not decided as academic; appeal allowed.

Revision jurisdiction under section 263 of the Income Tax Act - Erroneous and prejudicial to the interests of Revenue - Selection for scrutiny through CASS and examination of introduction of capital - Assessment order sustained where inquiries were conducted though not recorded in the assessment order - Genuineness and source of partner capital contributions

Revision jurisdiction under section 263 of the Income Tax Act - Selection for scrutiny through CASS and examination of introduction of capital - Assessment order sustained where inquiries were conducted though not recorded in the assessment order - Validity of the Principal CIT's exercise of revisionary jurisdiction under section 263 to set aside the assessment on the ground that capital contributions by partners were not examined by the Assessing Officer. - HELD THAT: - The Tribunal found on the record that the return had been selected for scrutiny through CASS specifically to examine the introduction of large capital. The AO issued queries under section 142(1) seeking ITRs, bank statements and source details of the capital introduced, and the assessee furnished ITRs, partner capital accounts, bank statements and the partnership deed during assessment proceedings. The Tribunal concluded that the issue of capital contribution was in fact examined by the AO during scrutiny notwithstanding that the AO's final order did not recite the result of each enquiry. Reliance was placed on the principle that omission to refer to enquiries in the assessment order does not, by itself, render an order erroneous where the matter was looked into during assessment. On these findings, the Tribunal held that the Principal CIT's conclusion that the assessment order was erroneous and prejudicial to the revenue was not sustainable and that there was no valid exercise of revisionary jurisdiction under section 263. [Paras 11]

The revision order under section 263 setting aside the assessment was held unjustified and is set aside; the assessee's appeal is allowed.

Final Conclusion: The Tribunal set aside the Principal CIT's order under section 263, concluding that the Assessing Officer had duly examined the introduction of partner capital during scrutiny and therefore the assessment order was not erroneous or prejudicial to the revenue.

Principal function test - Note 3 to Section XVI - classification under CTH 8517 62 90 - classification under CTH 8518 and CTH 8528 - machines for the reception, conversion and transmission or regeneration of voice, images or other data - interpretation of Chapter Headings and GI Rules - exemption Notification No. 57/2017-Cus (Sl. No. 20)

Principal function test - Note 3 to Section XVI - classification under CTH 8517 62 90 - machines for the reception, conversion and transmission or regeneration of voice, images or other data - interpretation of Chapter Headings and GI Rules - Whether the eleven Amazon Echo family devices are classifiable under CTH 8517, and more particularly under Tariff Entry 8517 62 90. - HELD THAT: - Applying the General Rules for Interpretation, Chapter Headings and Note 3 to Section XVI, the Court held that composite or multifunction devices must be classified according to the component or machine which performs the principal function. The Echo devices possess core capabilities of receiving, converting, transmitting and regenerating voice, images or other data in a wired or wireless network environment (interaction with cloud/AVS, voice-activation, control of smart appliances), and those features constitute their principal function rather than mere playback. CTH 8517 expressly covers apparatus for transmission or reception of voice, images or other data and thereby properly embraces such convergence/communication devices. By contrast, CTH 8518 is confined to loudspeakers/headphones and CTH 8528 to monitors/displays, neither of which contemplates apparatus whose principal function is transmission/reception of data. The AAR's reliance on product nomenclature, advertising or the fact that the devices may operate as speakers/monitors when disconnected from the internet was rejected; end-use or label alone cannot determine classification. The Court also observed that international determinations and the Board's circular on Bluetooth headsets (recognizing networked devices as falling under heading 85.17) are relevant for understanding HSN-based classifications and support treating the Echo devices as convergence/communication apparatus. On these grounds the impugned order was set aside insofar as it classified the seven devices under CTH 8518/8528, and the eleven devices were held classifiable under CTH 8517 62 90. [Paras 42, 43, 44, 55, 57]

All eleven Echo family devices are correctly classifiable under CTH 8517, specifically under Tariff Entry 8517 62 90.

Exemption Notification No. 57/2017-Cus (Sl. No. 20) - classification under CTH 8517 62 90 - MIMO exclusion criterion - Whether Echo Show 5, Echo Dot 4th Generation and Echo Dot 4th Generation with Clock are eligible for exemption under Sl. No. 20 of Notification No. 57/2017-Cus dated 30.6.2017 as amended. - HELD THAT: - The entitlement to the exemption depends on (i) classification under Tariff Entries 8517 62 90 or 8517 69 90 and (ii) non-inclusion in the list of excluded items (notably non-MIMO enabled). Having held that the Echo Show 5, Echo Dot 4th Generation and Echo Dot 4th Generation with Clock are classifiable under CTH 8517 62 90, the Court found that the AAR's denial of exemption could not be sustained. The Court therefore concluded that those three devices satisfy the classification condition and, subject to the notified exclusion criteria (e.g., MIMO), are eligible to claim exemption under the specified notification. [Paras 56, 57]

Echo Show 5, Echo Dot 4th Generation and Echo Dot 4th Generation with Clock are eligible to claim exemptions in accordance with Sl. No. 20 of Notification No. 57/2017-Cus dated 30.6.2017, as amended.

Classification under CTH 8517 62 90 - affirmation of AAR finding - Whether the AAR's classification of Echo Flex, Echo Auto, Echo Link and Echo Link Amp should be upheld. - HELD THAT: - The AAR had accepted that Echo Flex, Echo Auto, Echo Link and Echo Link Amp were communication devices falling within CTH 8517 62 90 (or otherwise within the scope of communication apparatus). The Court found no error in the AAR's conclusions in respect of these specific devices and accordingly affirmed the AAR's classification for them. [Paras 6, 7, 27, 57]

The AAR's classification of Echo Flex, Echo Auto, Echo Link and Echo Link Amp is affirmed.

Final Conclusion: The impugned AAR order dated 20 July 2021 is set aside insofar as it classified seven of the Echo devices under CTH 8518 and CTH 8528; all eleven Echo devices are held classifiable under CTH 8517 (notably Tariff Entry 8517 62 90). Echo Show 5, Echo Dot 4th Generation and Echo Dot 4th Generation with Clock are eligible for exemption under Sl. No. 20 of Notification No. 57/2017-Cus (as amended). The AAR's findings in respect of Echo Flex, Echo Auto, Echo Link and Echo Link Amp are affirmed.

Exemption from additional duty of customs (CVD) - interpretation of exemption notification S.No. 171 of Notification No. 6/2002-CE - availability of exemption from Special Additional Duty (SAD) - date of removal as the relevant date for applicable notifications - use of Work in Progress (WIP) register entries as supporting evidence and effect of contra entries - imposition of penalty under Rule 26 of the Central Excise Rules, 2002 - strict interpretation of exemption notifications

Exemption from additional duty of customs (CVD) - interpretation of exemption notification S.No. 171 of Notification No. 6/2002-CE - strict interpretation of exemption notifications - Entitlement to unconditional exemption from Additional Duty of Customs (CVD) under S.No. 171 of Notification No. 6/2002-CE for the goods classified as studded/ornamental jewellery. - HELD THAT: - The Tribunal examined the entries and the definition of 'ornament' and 'articles' in S.No. 171 and held that the notification, as framed, unambiguously covers jewellery and expressly extends to ornaments whether or not set with stones or gems or pearls. Diamond-studded jewellery therefore falls within the description of goods exempted under S.No. 171. Although the Commissioner had dealt with a different entry (S.No. 44A) which the appellant had not claimed, the Tribunal chose to decide entitlement under S.No. 171 on merits. Applying the definitions in the notification and the plain language 'whether or not set with stones or gems', the Tribunal found the exemption to be full and unconditional and allowed the appellant the benefit of Notification No. 6/2002-CE (S.No. 171) for CVD. [Paras 14, 16, 17]

Benefit of Notification No. 6/2002-CE (S.No. 171) granted for CVD; appeal partly allowed to that extent.

Availability of exemption from Special Additional Duty (SAD) - date of removal as the relevant date for applicable notifications - Availability of exemption from SAD under Notification No. 6/2004-Cus dated 08.01.2004. - HELD THAT: - The Tribunal held that the rate or availability of an exemption is to be determined with reference to the date of removal. The alleged removals occurred between 7.9.2000 and 4.10.2002, and the exemption notification relied upon (No. 6/2004-Cus dated 08.01.2004) was not in existence during that period. The appellant's reliance on a provision (Rule 9A(5) of the 1944 Rules) that would make the SCN date determinative was rejected because that Rule was no longer in force by the time of the SCN. As the exemption did not exist on any of the relevant dates of removal, the benefit of Notification No. 6/2004-Cus for SAD could not be extended to the appellant. [Paras 18, 19, 21, 22]

Benefit of Notification No. 6/2004-Cus denied for SAD; finding for Revenue.

Use of Work in Progress (WIP) register entries as supporting evidence and effect of contra entries - Effect of entries in the WIP register, including claimed 'contra entries' and alleged returns, on the quantification of duty. - HELD THAT: - The Tribunal noted that the demand was founded on multiple sources (two notebooks and other documents) with the WIP register serving only as supporting evidence. The appellant claimed contra entries showing return of 501.407 carats out of 965.585 carats. On examination the Commissioner found only limited rejection entries totalling 37.63 carats and no documentary indication that larger quantities were returned to the sender. The Tribunal found no reason to interfere with the Commissioner's factual conclusion that the claimed 501.407 carats were not supported by documentary evidence and therefore could not be accepted as reducing the demand. [Paras 23, 25, 27, 28]

Claim of contra entries/returns in the WIP register not accepted; no reduction in quantification on that basis.

Imposition of penalty under Rule 26 of the Central Excise Rules, 2002 - principles of natural justice and scope of remand - Sustainment of the penalty imposed on Shri Anand Shrivastava under Rule 26 CER, 2002. - HELD THAT: - The Tribunal examined whether the de novo proceedings before the Commissioner failed to consider Shri Anand Shrivastava's submissions or violated natural justice. It found that the role of Shri Shrivastava had been considered in the original Order-in-Original dated 19.7.2006 where a penalty under Rule 26 was imposed and that the Tribunal's remand was limited to CVD, SAD and WIP quantification. No new grounds or additional documents were presented by Shri Shrivastava in the de novo proceedings. Although the impugned order did not expressly record his pleadings, both parties treated the order as deciding the de novo proceedings, and there was no interference by the Tribunal with the original finding on his role. Consequently, there was no merit in setting aside the penalty on grounds of non-consideration or procedural infirmity. [Paras 32, 33, 34, 35, 36]

Penalty on Shri Anand Shrivastava under Rule 26 CER, 2002 sustained; appeal dismissed.

Final Conclusion: The appeal of M/s Global Diamond Pvt. Ltd. is partly allowed by granting exemption from CVD under Notification No. 6/2002-CE (S.No. 171); the claim for exemption from SAD under Notification No. 6/2004-Cus is rejected; the WIP contra-entry claim is disallowed; the appeal of Shri Anand Shrivastava is dismissed and the penalty imposed under Rule 26 CER, 2002 is upheld.

Provisional release under Section 110A - prohibited goods - validity of CBIC Circular No. 35/2017 - adjudication versus provisional relief - principles of natural justice - notification based conditional import (Notification No. 50/2017 and Notification No. 96/2008) - test reports and methodology (Fire Assay Method v. Gravimetric / CRCL SOP 13) and permissible testing tolerance - seizure and its maintainability pending adjudication - re export/refund of defective goods and related procedural remedies

Provisional release under Section 110A - validity of CBIC Circular No. 35/2017 - adjudication versus provisional relief - Whether provisional release of seized imported goods can be denied on the sole ground that they are alleged to be 'prohibited goods' by reliance on para 2 of CBIC Circular No.35/2017 or otherwise withheld pending adjudication. - HELD THAT: - The Tribunal applied the principle that Section 110A permits provisional release of any goods, documents or things seized and that executive instructions which purport to exclude categories of goods from eligibility cannot supplant the parent statute. Following/accepting the reasoning in the High Court decision cited by parties, para 2 of Circular No.35/2017 cannot operate so as to render goods ineligible for provisional release merely because they are alleged to be 'prohibited goods'. The Tribunal balanced competing interests and observed that provisional release does not impede final adjudication; the availability of adequate security (duty amount deposited and bond/security) protects revenue. On that basis the Tribunal held that provisional release may be granted despite allegations that the goods might be found prohibited at adjudication, leaving final determination of confiscation or other consequences to the adjudicating authority. [Paras 57, 58]

Provisional release under Section 110A cannot be categorically denied by reliance on para 2 of Circular No.35/2017; provisional release of 26 gold dore bars ordered subject to conditions and security.

Prohibited goods - seizure and its maintainability pending adjudication - notification based conditional import (Notification No. 50/2017 and Notification No. 96/2008) - Whether the impugned goods ought to be treated as 'prohibited goods' at the provisional release stage and whether the entire consignment could be non released or seized on that basis. - HELD THAT: - The Tribunal emphasized that categorisation of goods as 'prohibited' is a matter of adjudication. A belief at the stage of seizure does not conclusively establish prohibition for all purposes. The Tribunal noted factual material including prior consistent clearances (103 prior consignments), competing assay reports, and that one bar was below prescribed weight due to an admitted exporter error. While the Tribunal refrained from finally determining confiscation or entitlement to notification benefits, it held that the allegations of misuse and the department's case require adjudication; they do not justify an absolute bar to provisional release where adequate security is offered. [Paras 17, 57, 58]

Goods are not to be conclusively treated as 'prohibited' for purposes of denying provisional release; final determination deferred to adjudicating authority, while provisional release of eligible bars permitted subject to security.

Principles of natural justice - test reports and methodology (Fire Assay Method v. Gravimetric / CRCL SOP 13) and permissible testing tolerance - Whether denial of provisional release was vitiated by denial of opportunity/nondisclosure of the test report relied upon by the department and whether the differing test methodologies and marginal variations in assay results justified withholding release. - HELD THAT: - The Tribunal considered the appellant's contention that the CRCL test report dated 27.01.2023 (allegedly relied upon) had not been supplied and that testing by Gravimetric/SOP 13 (rather than Fire Assay under IS 1418:2009) and marginal excesses over 95% were within permissible error (+/ 0.25%). The Tribunal noted the department's clarification concerning the report date and recognised that three different reports produced divergent results, with two reports showing conformity and the DRI/CRCL sample showing marginal excesses largely within the laboratory's own stated tolerance. While noting that methodology and tolerance bear on the weight to be given to reports, the Tribunal declined to decide the ultimate admissibility or correctness of the sample tests at the provisional release stage, leaving the issues for adjudication. Nonetheless, these factors informed the Tribunal's decision to allow provisional release subject to security. [Paras 8, 9, 57]

Non provision of the report and differences in testing methodology and marginal variations did not, by themselves, preclude provisional release; the correctness and consequence of competing test reports to be examined by the adjudicating authority.

Re export/refund of defective goods and related procedural remedies - seizure and its maintainability pending adjudication - Whether specific reliefs such as refund, re export or treatment of the single undersized bar and appropriation of duties paid should be finally decided at the provisional release stage. - HELD THAT: - The Tribunal recorded submissions regarding statutory provisions permitting refund or re export of defective goods and pointed out that the single gold dore bar below prescribed weight was asserted to be an exporter error. The Tribunal observed that such substantive determinations as entitlement to re export, refund, or appropriation of duty and the ultimate fate of the undersized bar involve adjudication that should follow completion of investigation and final show cause proceedings. Accordingly, while allowing provisional release of the bulk subject to bond and security, the Tribunal left the substantive claims (refund, re export, confiscation, appropriation) to the adjudicating authority. [Paras 7, 57, 58]

Claims for refund, re export or final treatment of the undersized bar are remitted to the adjudicating authority for final decision; provisional measures ordered do not decide these substantive questions.

Final Conclusion: The Tribunal allowed provisional release of 26 gold dore bars (weighing 5 kg and above) subject to conditions (retention of deposited duty as security, retention of the single undersized bar, and execution of a bond with security), held that Circular No.35/2017 cannot operate to categorically deny provisional release under Section 110A, and left all substantive issues of adjudication - including whether the goods are ultimately prohibited, the correctness of competing assay reports and methodologies, entitlement to notification benefits, refund or re export, and confiscation - to the adjudicating authority.

Exemption from whole of customs duty under notification (Serial No. 13, heading 8517) - Interpretation of conjunctive 'and' in exclusion clause - Construction of exclusionary clause strictly and narrowly - Classification under Customs Tariff Item 8517 62 90 - Information Technology Agreement (ITA) and entitlement of network equipment

Interpretation of conjunctive 'and' in exclusion clause - Construction of exclusionary clause strictly and narrowly - Whether the exclusionary phrase 'Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products' excludes products having only MIMO technology or only products having both MIMO and LTE. - HELD THAT: - The Tribunal examined the plain language of clause (iv) and the grammatical role of the conjunction 'and', together with dictionary meanings and precedents construing conjunctive language. The word 'and' is ordinarily conjunctive and joins terms to be taken jointly. MIMO is a technology and not an independent product; had the intention been to exclude products having only MIMO technology, the word 'products' would have been used after 'MIMO' as it is in other entries. Reliance on authorities considering conjunctive usage supports reading the clause to require both elements to be present. An exclusionary clause in an exemption notification must be narrowly construed so as not to frustrate the object of the exemption. Applying these principles, the clause denotes products which contain both MIMO and LTE rather than separately covering MIMO products and LTE products or treating 'and' as disjunctive. [Paras 22, 23, 24, 28, 30]

Clause (iv) must be read conjunctively and excludes only products which contain both MIMO and LTE; products having only MIMO technology are not caught by the exclusion.

Classification under Customs Tariff Item 8517 62 90 - Exemption from whole of customs duty under notification (Serial No. 13, heading 8517) - Information Technology Agreement (ITA) and entitlement of network equipment - Whether the imported Wireless Access Points (WAP) that are MIMO-enabled but do not support LTE are correctly classifiable under CTI 8517 62 90 and entitled to exemption under Serial No. 13 of the notification. - HELD THAT: - The facts found by the Tribunal establish that the imported WAP are MIMO-enabled but do not support LTE, and that they are classifiable under CTI 8517 62 90. Applying the interpretation of clause (iv) (which excludes only products having both MIMO and LTE), the WAP do not fall within the exclusion and thus remain within the scope of the exemption. Further, India's obligations under the Information Technology Agreement and the characterization of WAP as network equipment support the conclusion that such WAP were intended to remain exempt. Prior Tribunal authority in an identical factual context (Ingram Micro) and the Department's acceptance of that order reinforce the conclusion that the exemption applies. [Paras 2, 14, 26, 27, 30]

The WAP imported by the respondent are properly classifiable under CTI 8517 62 90 and are entitled to the exemption under Serial No. 13 because they do not possess both MIMO and LTE.

Final Conclusion: The departmental appeal is dismissed; the order of the adjudicating authority holding WAP (MIMO-enabled but not LTE) exempt under Serial No. 13 of heading 8517 stands, and demands, confiscation and penalties proposed in the show cause notice are dropped.

Change in management - appointment of directors - shareholding pattern / controlling interest - classification test under Article 14 - intelligible differentia - rational nexus to statutory object - reading up

Change in management - appointment of directors - shareholding pattern / controlling interest - Appointment of new directors in the usual course of business or filling vacancies caused by death does not constitute a "change in management" under the West Bengal Excise (Change in Management) Rules, 2009. - HELD THAT: - The Court held that the expression "change in management" contemplates a structural shift in ownership/control - namely movement in shareholding or change in controlling interest - rather than mere alterations in the Board of Directors. Reliance was placed on the ordinary meaning of the term, its treatment in the Rules (notably Rule 4(2) and the references to "change of membership" and "proposed transferee(s)"), and the rationale that appointments to the Board do not affect shareholding or voting control. Accordingly, mere induction of directors, including on account of death of directors, is not a transfer of shares or a "proposed transferee" event that would determine the earlier excise licence or attract the fees contemplated by Rule 5(1). The Court noted that the subsequent Notifications of 2020 which define "change in management" cannot be given retrospective effect to alter the position existing in 2009. [Paras 16, 17, 18, 19, 21]

Appointment of directors in the usual course, without any change in shareholding or transfer of ownership, is not a "change in management" for the purposes of the 2009 Rules.

Classification test under Article 14 - intelligible differentia - rational nexus to statutory object - reading up - Clause (d) of the proviso to Rule 5(1) of the West Bengal Excise (Change in Management) Rules, 2009 is constitutionally invalid under Article 14 for lacking intelligible differentia and a rational nexus to the object of the Rules. - HELD THAT: - The Court analysed clauses (d) and (e) of the proviso to Rule 5(1) and concluded that they create disparate zones of exemption for private and public limited companies without any intelligible basis in the 2009 Rules. Rule 4(2) treats "company" generically and makes no distinction between private and public limited companies in dealing with change in management or Board changes; the fitness/eligibility enquiry under Rule 4(3) likewise applies to a "proposed transferee" irrespective of company type. The Court applied the twin tests under Article 14 - the classification must be founded on an intelligible differentia and that differentia must bear a rational nexus to the statutory object - and found both tests unmet. The disparity (public companies receiving broader exemption than private companies) has no discernible connection to the object of requiring assessment of a transferee's fitness on a change that determines the licence. The Court observed that, as an alternative, clause (d) could be "read up" to include "change in management in the usual course of business" but proceeded to declare clause (d) ultra vires since no intelligible differentia or rational nexus existed in the impugned text. [Paras 24, 29, 40, 43, 47]

Clause (d) of the proviso to Rule 5(1) is ultra vires Article 14 and is therefore invalid.

Final Conclusion: The writ petition is allowed: changes in a company's Board of Directors in the usual course do not amount to "change in management" under the 2009 Rules; clause (d) of the proviso to Rule 5(1) is declared ultra vires Article 14; the impugned order dated 16.2.2018 and the revised demand dated 27.2.2018 are quashed; the respondents are directed to refund the sums paid by the petitioners; the prayer for stay of the judgment is refused.

Territorial jurisdiction under Section 20 of the Code of Civil Procedure, 1908 - place of knowledge does not confer territorial jurisdiction - jurisdictional bar of the Insolvency and Bankruptcy Code (no civil court jurisdiction) - exclusive jurisdiction of the National Company Law Tribunal/Appellate Tribunal over questions arising out of insolvency resolution - NCLT/NCLAT empowered to determine questions of priorities and law or fact in CIRP

Territorial jurisdiction under Section 20 of the Code of Civil Procedure, 1908 - place of knowledge does not confer territorial jurisdiction - assignment deed territorial nexus - Whether the Delhi High Court has territorial jurisdiction to entertain the suit challenging the assignment deed dated 03.02.2023. - HELD THAT: - The court found that the impugned assignment deed was executed in Chandigarh between defendant No.1 and defendant No.2, the corporate debtor had connections with Chandigarh/Mohali and defendant No.1's registered office was in Tamil Nadu with its authorized signatory in Faridabad. The plaintiff's contention that jurisdiction arises because he came to know of the assignment when it was filed in the NCLAT, New Delhi was rejected: knowledge or filing of a document before a court does not create a cause of action within Delhi for the purposes of Section 20 CPC. Given the geographical nexus of the assignment and the underlying dispute, the Delhi High Court lacks territorial jurisdiction to entertain the plaintiff's challenge to the assignment deed dated 03.02.2023. [Paras 27, 28]

The Delhi High Court has no territorial jurisdiction to adjudicate the challenge to the assignment deed dated 03.02.2023; the suit cannot be maintained in Delhi on that basis.

Jurisdictional bar of the Insolvency and Bankruptcy Code (no civil court jurisdiction) - exclusive jurisdiction of the National Company Law Tribunal/Appellate Tribunal over questions arising out of insolvency resolution - NCLT/NCLAT empowered to determine questions of priorities and law or fact in CIRP - Whether the suit is barred by the Insolvency and Bankruptcy Code, 2016 (Section 231 read with Section 60 and Section 63) and thus not maintainable before the civil court. - HELD THAT: - The court observed that COPL is undergoing Corporate Insolvency Resolution Process and that the controversy raised by the plaintiff falls within the ambit of matters which the NCLT/NCLAT are empowered to decide under the IBC. Sections 60(5)(c), 63 and 231 of the IBC vest jurisdiction in the Adjudicating Authority to entertain claims and questions of law or fact arising out of insolvency resolution, and bar civil courts from entertaining suits on such matters. The settlement relied upon by the plaintiff had been held breached by the NCLT/NCLAT (and the position affirmed by the Supreme Court), further indicating that the dispute is integrally connected with the CIRP and must be addressed before the adjudicating authority under the IBC. [Paras 29, 31, 32]

The suit is barred by the IBC; civil court jurisdiction is excluded and the matter is within the exclusive domain of the NCLT/NCLAT, rendering the present suit not maintainable.

Final Conclusion: The plaint is returned: the Delhi High Court lacks territorial jurisdiction to adjudicate the challenge to the assignment deed dated 03.02.2023, and the suit is barred by the Insolvency and Bankruptcy Code as the subject matter falls within the exclusive jurisdiction of the NCLT/NCLAT; liberty granted to the plaintiff to pursue appropriate remedies.

Custody not required - release on bail - arrest in connection with E.C.I.R. - impugned order set aside

Custody not required - release on bail - Direction that, if the petitioner is arrested in connection with E.C.I.R. No. RPZO/09/2022 / CC No. 5956 of 2023, she shall be released on bail on such terms as the Special Judge may consider fit and proper; the impugned order is set aside. - HELD THAT: - The respondent, through its counsel, informed the Court that the Directorate of Enforcement would not require the custody of the petitioner. On that basis the Court disposed of the petition by directing that in the event of the petitioner's arrest in relation to the specified E.C.I.R. and case, she shall be released on bail subject to terms to be determined by the Special Judge. The Court therefore set aside the impugned order. The Court recorded that it had gone through the materials disclosed and heard the parties before passing the direction.

Petition disposed with direction for bail upon arrest and impugned order set aside.

Final Conclusion: The petition is disposed of: following the respondent's concession that custody is not required, the Court directed that if the petitioner is arrested in connection with the named E.C.I.R. and case she shall be released on bail on terms to be fixed by the Special Judge; the impugned order stands set aside and pending applications are disposed.

Service tax liability on construction of residential flats - classification as Works Contract service - construction of residential complex taxable as Works Contract service w.e.f. 01.06.2007 - interpretation of entry in Sec 65(105)(zzzza) as making construction of residential complex taxable - relevance of Board Circular No.151/2/2010-ST - precedential value of Larsen & Toubro Ltd and Tribunal precedents

Service tax liability on construction of residential flats - relevance of Board Circular No.151/2/2010-ST - Service tax liability for construction of residential property/flats for period prior to 01.07.2010. - HELD THAT: - The Tribunal accepted that for the period prior to 01.07.2010 service tax is not chargeable in respect of construction of residential property/flats, having regard to the clarification issued by the Board in Circular No.151/2/2010-ST. The finding treats the Board's clarification as determinative for the pre-01.07.2010 period and discharges liability for that span. [Paras 4]

No service tax is chargeable for construction of residential property/flats for the period prior to 01.07.2010.

Classification as Works Contract service - construction of residential complex taxable as Works Contract service w.e.f. 01.06.2007 - precedential value of Larsen & Toubro Ltd and Tribunal precedents - interpretation of entry in Sec 65(105)(zzzza) as making construction of residential complex taxable - Correct classification and chargeability of service tax for construction of residential flats for the period 01.07.2010 to 31.03.2011. - HELD THAT: - The Tribunal held that the demand for 01.07.2010 to 31.03.2011 raised under the category 'construction of residential complex' was incorrect. Relying on the decision in Larsen & Toubro Ltd and this Bench's precedents (including Sai Teja Constructions and Pragati Edifice Pvt Ltd), and having regard to the statutory entry construed as making 'construction of residential complex' taxable under the head 'Works Contract service' w.e.f. 01.06.2007, the Tribunal concluded that the correct classification for the subject activity is 'Works Contract service'. The Tribunal therefore set aside the demand insofar as it was levied under the incorrect category and remitted the matter only to the extent of recognising the correct classification for the stated period. [Paras 2, 4]

Demand for 01.07.2010 to 31.03.2011 under 'Construction of residential complex service' was wrongly made; correct classification is 'Works Contract service'.

Final Conclusion: The appeal is allowed; the impugned order is set aside with consequential benefits to the appellant, the pre-01.07.2010 demand disallowed and the post-01.07.2010 demand required to be treated as Works Contract service in accordance with law and precedents.

Extended period of limitation - limitation for issuance of show cause notice - service tax liability of sub-contractor - Cenvat credit mechanism

Extended period of limitation - limitation for issuance of show cause notice - Show Cause Notice dated 05.04.2011 for the period October 2005 to May 2007 is barred by limitation - HELD THAT: - The Tribunal found it was an admitted fact that the appellant was registered, maintained books and filed returns regularly and had paid admitted service tax. During the relevant period there was a prevailing understanding that service tax on work done by a sub-contractor could be discharged either by the main contractor or the sub-contractor and the matter was highly controversial. Although a Larger Bench later held that service tax may be demanded from a sub-contractor (with corresponding Cenvat credit to the main contractor), the Panel took judicial notice of the contemporaneous controversy and the appellant's reliance on contractual allocation of liability and absence of wilful suppression or fraud. In these circumstances the Show Cause Notice issued on 05.04.2011 for October 2005 to May 2007 was held to be hit by limitation and unsustainable. [Paras 5, 6]

Appeal allowed on the ground of limitation and the impugned order set aside; consequential benefits to follow in accordance with law.

Final Conclusion: The appeal is allowed on the ground that the Show Cause Notice for October 2005 to May 2007 is barred by limitation; the impugned order is set aside and consequential relief, if any, to be given in accordance with law.

Service tax on notice pay - compensation for premature termination not consideration for service - provision of service by an employee outside the ambit of service tax - service tax on amounts recovered from employees

Service tax on notice pay - compensation for premature termination not consideration for service - provision of service by an employee outside the ambit of service tax - Taxability of amounts recovered/received as 'notice pay' from employees on premature termination of employment. - HELD THAT: - The Tribunal found that the amount recovered or received as notice pay on premature termination of an employment contract does not constitute consideration for a service. Employment contracts contemplate notice periods and pre agreed compensation for breach or premature termination, but such compensation is not the quid pro quo for a service rendered under the contract. The decision follows the reasoning in the Tribunal's earlier decision in M/s Rajasthan Rajya Vidhyut Prasaran Nigam Ltd. and the clarification in CBEC guidance (paragraph 2.9.3) that amounts paid on premature termination of a contract of employment are in relation to services provided by the employee in the course of employment and therefore outside the charge to service tax. The Tribunal also relied on the Madras High Court decision in GE T&D India Ltd. (2019 (12) TMI - 1566 - Madras High Court) and subsequent Tribunal precedents holding that notice pay in lieu of termination does not give rise to rendition of service by employer or employee. Applying these authorities and the CBEC clarification to the facts, the impugned demand confirming service tax on notice pay could not be sustained. [Paras 5, 6]

The demand of service tax confirmed on notice pay recovered from employees is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the adjudicating authority's confirmation of service tax on notice pay recovered/received from employees, and upheld the principle that compensation for premature termination of employment is not consideration for a taxable service.

Extended period of limitation - time-bar - suppression of facts - penalty for failure to furnish information - proportionality of penalty

Extended period of limitation - time-bar - Whether the show cause notice dated 26.04.2018 was barred by limitation or validly issued after invocation of the extended period - HELD THAT: - The Tribunal accepted the appellate finding that the delay between the initial information (letter dated 11.02.2014) and issuance of the show cause notice was attributable to the appellant's failure to produce requisite documents and to respond to repeated departmental requisitions. The record shows multiple reminders issued to the appellant between March 2014 and April 2018 seeking Income Tax returns, balance sheets, Form 26AS, VAT returns, work orders and invoices for the disputed years, which were not furnished. In the absence of any explanation from the appellant for the delay in responding or for non-production of documents, the period of delay is held to be the appellant's fault and not the department's. Consequently, the invocation of the extended period was not improper and the demand was not time-barred. [Paras 5]

Show cause notice dated 26.04.2018 was not barred by limitation; invocation of extended period sustained.

Suppression of facts - penalty for failure to furnish information - proportionality of penalty - Whether penalties under Section 77(1)(c) and Section 78 were correctly imposed and whether reduction was warranted - HELD THAT: - The Tribunal agreed with the conclusion that the appellant had admittedly made only short payments and had failed to disclose true facts or produce relevant documents when requested, which constituted suppression of facts and non furnishing of information. Although part payment was made before issuance of the show cause notice, the admitted short payment and the appellant's silence in face of repeated requests justified levy of penalty under the provisions cited. The contention that the penalty was disproportionate was rejected because the appellate record supported an inference of intent to evade tax; therefore there was no basis to confine penalty to the balance shortfall. [Paras 5]

Penalties under Section 77(1)(c) and Section 78 upheld; no reduction ordered.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the order-in-appeal, holding the show cause notice validly issued within the extended period due to the appellant's failure to furnish documents, and affirmed the imposition of penalties for suppression and non furnishing of information without any reduction.

Unjust enrichment - refund under Section 11B of the Central Excise Act, 1944 - interest under Section 11BB of the Central Excise Act, 1944 - price variation clause - scope of appellate authority

Unjust enrichment - refund under Section 11B of the Central Excise Act, 1944 - price variation clause - Whether the refund of excess excise duty was rightly rejected on the ground of unjust enrichment and whether the appellant is entitled to refund of the claimed amount not barred by limitation. - HELD THAT: - The Tribunal found that the Adjudicating Authority had admitted the refund claim on merits but rejected it solely on the ground of unjust enrichment. The material on record, notably the communication dated 18.08.2010 from the buyer (South Central Railway) and its certified annexure, established that the railway adjusted the contract price downward and recovered the differential amount including duty from amounts payable to the appellant. The appellant therefore did not receive the invoiced differential (including the excise element) and bore the burden of the excess duty. The Commissioner (Appeals) had travelled beyond the scope of the appellant's challenge by addressing other issues; those observations were treated as obiter. Applying Section 11B, the Tribunal held that unjust enrichment was not established against the appellant and that the refund (excluding the portion disallowed on limitation by the original order) was admissible. The Tribunal directed payment of the refundable amount with interest under Section 11BB within 60 days. [Paras 12, 13, 14]

Refund of Rs.4,77,292/- allowed as not barred by unjust enrichment; payment to be made with interest under Section 11BB.

Final Conclusion: The Tribunal set aside the impugned order, allowed the appeal and directed the Adjudicating Authority to grant the refund of Rs.4,77,292/- with interest under Section 11BB of the Act within 60 days.

Classification of goods as inputs or capital goods - entitlement to cenvat credit - use and consumption in the manufacturing process - liability to pay interest on cenvat credit availed

Classification of goods as inputs or capital goods - use and consumption in the manufacturing process - entitlement to cenvat credit - The goods Carbon Electrode Paste, Tamping Carbon Paste, Whytheat-A and Castable Refractory are inputs and not capital goods. - HELD THAT: - The Tribunal found that the items in question were used as damping/patching material in the blast furnace to provide high voltage to the furnace and to prevent hot metal from coming out during the manufacture of ferro alloys. As these items were used and consumed by the appellant during the manufacturing process, they do not acquire the character of capital goods. Applying the principle that materials consumed in manufacturing constitute inputs, the goods were correctly treated by the appellant as inputs for the purpose of cenvat credit.

The goods are inputs and not capital goods; the appellant was entitled to take cenvat credit thereon.

Entitlement to cenvat credit - liability to pay interest on cenvat credit availed - The demand of interest levied on the appellant for having taken cenvat credit in the year of procurement is not sustainable. - HELD THAT: - Having held that the goods were inputs and that the appellant was entitled to cenvat credit, the Tribunal concluded that there was no improper availing of credit requiring interest. The proceedings and demand of interest premised on the view that the goods were capital goods are therefore unsustainable. Consequently, the impugned order confirming interest was set aside.

The demand of interest is not sustainable and is set aside.

Final Conclusion: Appeal allowed; impugned order set aside and the demand of interest quashed, the appellant having correctly availed cenvat credit on the goods treated as inputs.

Application of transaction value under Rule 4 where independent sales exist - valuation under Rule 8 for goods removed to sister units / for own consumption - preference of Rule 4 over Rule 8 where both rules could be invoked - precedential effect of Larger Bench decision in Ispat Industries Ltd. - penalty not leviable where dispute is purely interpretational

Application of transaction value under Rule 4 where independent sales exist - preference of Rule 4 over Rule 8 where both rules could be invoked - precedential effect of Larger Bench decision in Ispat Industries Ltd. - Whether valuation of goods removed to a sister unit must be determined under Rule 4 (transaction value) or Rule 8 (cost-plus percentage) where the assessee had contemporaneous sales to independent buyers. - HELD THAT: - The Tribunal held that the question is squarely covered by the Larger Bench decision in Ispat Industries Ltd., which answered the reference by stating that Rule 8 will not apply where part of production is cleared to independent buyers and that Rule 4 is to be preferred over Rule 8 where both rules are capable of application. The Larger Bench reasoning was endorsed and noted to be consistent with Section 4 of the Central Excise Act. The Gujarat High Court in CCE, Bhavnagar v. Ultra Tech Cement Pvt. Ltd. has confirmed the Larger Bench finding. Applying these precedents to the facts for the period when both independent sales and transfers to sister concern occurred, the Tribunal concluded that valuation must be determined under Rule 4 (transaction value) rather than under Rule 8.

Valuation for removals to sister unit during the period with concurrent independent sales is to be determined under Rule 4; impugned findings to the contrary set aside.

Valuation under Rule 8 for goods removed to sister units / for own consumption - penalty not leviable where dispute is purely interpretational - Treatment of removals to sister unit and imposition of penalty for the period when there were no independent sales (March 2009 to September 2010), where differential duty was deposited but the assessee contested imposition of penalty. - HELD THAT: - For the period when all removals were to the sister unit and there were no independent sales, it was admitted that differential duty was not disputed and was deposited with interest. The Tribunal noted the appellant's contention that the controversy was purely interpretational. Having considered the submissions and the admitted payment of duty, the Tribunal found it appropriate to relieve the assessee from penalties linked to that interpretational dispute. The reliance by Revenue on the Board Circular and on later amendment to Rule 8 (with effect from 01.12.2013) did not change the Tribunal's view as to the interpretational nature of the dispute for the period in question.

Penalties for the period March 2009 to September 2010 are set aside; differential duty having been deposited, the assessee is not liable to the penalties contested on interpretational grounds.

Final Conclusion: Appeal allowed; impugned order set aside. Valuation of removals to sister unit where independent sales existed must follow transaction value under Rule 4 as per the Larger Bench in Ispat Industries Ltd. and consequent authorities; penalties arising from the interpretational dispute for the period when only sister unit removals occurred are vacated. Appellant entitled to consequential reliefs in accordance with law.

Condonation of delay - limitation for reference of question of law - reference of question of law to High Court - special statute excluding applicability of Section 5 of the Limitation Act - finality of appellate order

Condonation of delay - reference of question of law to High Court - The learned Tribunal did not err in dismissing the petition for condonation of delay and consequently the petition seeking reference of questions of law. - HELD THAT: - Section 12(D) permits filing an application for reference within sixty days from communication of the Tribunal's order and the first proviso allows a further period not exceeding thirty days if prevented by sufficient cause, making the maximum permissible period 90 days from communication. The appellate order was communicated on 29.02.2022 and no reference was filed within the 90-day window; therefore the application was time barred. The learned Tribunal's dismissal on the ground of delay was thus upheld as correct and the consequential dismissal of the petition for reference followed. The Court declined to disturb the Tribunal's factual and legal conclusion on maintainability of the delayed application (paras. 11-13). [Paras 11, 12, 13]

Application for condonation of delay and petition for reference were rightly dismissed as barred by the time limit in Section 12(D).

Special statute excluding applicability of Section 5 of the Limitation Act - application of Limitation Act to appeals and revisions - The provisions of Section 5 of the Limitation Act do not apply to extend the period for filing a reference under Section 12(D) of the J&K GST Act, 1962. - HELD THAT: - While Section 12(b) (referred to in the petition) makes Sections 5 and 12 of the Limitation Act applicable to appeals and revisions under the Act, Section 12(D) governs filing of references and, read with its proviso, prescribes a specific 60 day period with a limited 30 day grace. The Tribunal correctly held that the special statutory scheme for references excludes reliance upon Section 5 to extend the limitation period beyond the maximum 90 days; therefore the decisions relied upon by the petitioners were inapplicable to the reference procedure (paras. 11-12). [Paras 11, 12]

Section 5 of the Limitation Act cannot be invoked to extend the time for filing a reference under Section 12(D); the special limitation regime in Section 12(D) governs.

Final Conclusion: The High Court dismissed the petition, holding that the Tribunal rightly found the application for condonation of delay and the consequent petition for reference to be time barred under the specific limitation regime of Section 12(D) of the J&K GST Act, 1962, and that Section 5 of the Limitation Act could not be invoked to extend that period.

Refund of excess tax - processing of refund application - re-quantification or re-adjudication by refund officer - jurisdictional limits of refund officer - interest under Section 42(5) of the Tamil Nadu Value Added Tax Act, 2006 - direction to refund

Re-quantification or re-adjudication by refund officer - jurisdictional limits of refund officer - The 1st respondent was not empowered to issue the impugned notice seeking re-quantification of the refund after having passed the refund order. - HELD THAT: - The Court found that the 1st respondent had earlier assessed and passed a refund order dated 22.09.2022 determining an excess tax amount. Thereafter the 1st respondent issued a subsequent notice calling for particulars as if to re-determine the refund. The Court held that once the refund order has been passed, the officer processing the refund does not have power to re-adjudicate or re-quantify that refund in the course of processing; any defect or dispute as to the assessment must be addressed by way of reassessment or revision under the statutory scheme, not by issuance of a fresh notice in the refund process. Consequently the impugned notice dated 24.01.2023 was beyond the scope of the 1st respondent's jurisdiction. The Court recorded these findings after perusal of the refund order and the notice and on hearing the parties. [Paras 6, 7, 8]

Impugned notice dated 24.01.2023 held to be beyond the 1st respondent's jurisdiction and invalid.

Refund of excess tax - interest under Section 42(5) of the Tamil Nadu Value Added Tax Act, 2006 - direction to refund - The petitioner was entitled to refund of the excess tax determined by the refund order dated 22.09.2022 together with interest, and the Court directed respondents to effect the refund. - HELD THAT: - Having held the subsequent notice invalid, the Court observed that the refund order had determined an excess tax amount that was payable to the petitioner. Although respondents stated they were in the process of refunding, no effective steps had been taken. The Court therefore directed the 1st and 2nd respondents to refund the excess tax amount determined in CST No.50806/2013-14 dated 22.09.2022 together with interest as provided under Section 42(5) of the Act, and stipulated a deadline for completion of the refund process. The direction was given to enforce the entitlement established by the refund order and to ensure compliance within the time fixed. [Paras 6, 9, 10, 11]

Respondents directed to refund the excess tax determined by the refund order dated 22.09.2022 with interest as per Section 42(5), to be completed on or before 05.12.2023.

Final Conclusion: The Court set aside the notice of 24.01.2023 as beyond the refund officer's jurisdiction and ordered the 1st and 2nd respondents to refund the excess tax determined in the refund order dated 22.09.2022 together with interest under Section 42(5) of the Tamil Nadu VAT Act, 2006, to be completed by 05.12.2023, with a compliance report listed for 08.12.2023.

Power to refer parties to arbitration under Section 8 of the Arbitration & Conciliation Act, 1996 - Scope of judicial intervention and minimal interference in arbitration - Competence of arbitral tribunal to rule on its own jurisdiction (kompetenz kompetenz) - Non arbitrability and its narrow exceptions - Action in rem versus action in personam - Plea of fraud as a ground to oust arbitration

Power to refer parties to arbitration under Section 8 of the Arbitration & Conciliation Act, 1996 - Scope of judicial intervention and minimal interference in arbitration - Whether the Trial Court and the High Court were right in referring the suit to arbitration on the basis of the arbitration clauses in the 2007 and 2008 Tripartite Agreements. - HELD THAT: - The Court held that the two Tripartite Agreements of 31.03.2007 and 25.07.2008 contained broad arbitration clauses covering disputes "in relation to these agreements or in relation to any matter touching or arising from this Agreement," and that the subsequent Development Agreements and the Conveyance Deed derived from those Tripartite Agreements. In view of the amended Section 8 and the legislative policy to minimise judicial intervention, the courts below correctly found that prima facie a valid arbitration agreement existed and therefore referred the disputes to arbitration. The existence and validity of the arbitration agreement and other jurisdictional objections are matters for the Arbitral Tribunal to determine ultimately. [Paras 6, 7, 8, 21]

Reference to arbitration was rightly ordered by the Trial Court and affirmed by the High Court.

Non arbitrability and its narrow exceptions - Action in rem versus action in personam - Whether the suit for cancellation/declaration relating to immovable property is an action in rem and therefore non arbitrable. - HELD THAT: - Relying on precedent, the Court held that a suit for cancellation of a deed or declaration of rights arising from a deed is not an action in rem but is an action in personam. The decision in Deccan Paper Mills was cited to reject the contention that a Section 31 suit under the Specific Relief Act constitutes an action in rem. Since the present dispute concerns rights and obligations arising under the Tripartite Agreements and the consequential instruments, it does not fall within the categories of manifestly non arbitrable disputes reserved for public fora. [Paras 11, 19]

The dispute is not an action in rem and is not manifestly non arbitrable.

Plea of fraud as a ground to oust arbitration - Competence of arbitral tribunal to rule on its own jurisdiction (kompetenz kompetenz) - Whether the appellants' plea of fraud was sufficiently pleaded to prevent reference to arbitration. - HELD THAT: - The Court recorded that the appellants made only bald allegations of fraud without substantiation. Applying established principles, a plea of fraud will oust arbitration only if it permeates the entire contract including the arbitration clause or if it involves serious public domain implications. Where fraud allegations are internal to the parties and not of the requisite seriousness, they do not preclude reference to arbitration. Further, Section 16 and the kompetenz kompetenz doctrine empower the Arbitral Tribunal to decide on existence or validity of the arbitration agreement, including jurisdictional objections. [Paras 14, 20]

The unsubstantiated allegations of fraud did not disentitle the respondents to a reference to arbitration; such objections are for the arbitral tribunal to decide.

Competence of arbitral tribunal to rule on its own jurisdiction (kompetenz kompetenz) - Scope of judicial intervention and minimal interference in arbitration - Whether matters concerning existence, validity and other jurisdictional objections to the arbitration agreement should be decided at the pre reference stage or by the Arbitral Tribunal. - HELD THAT: - The Court reiterated that post amendment judicial scrutiny under Section 8 is limited to determining whether prima facie a valid arbitration agreement exists. Section 16 empowers the arbitral tribunal to rule on its own jurisdiction and to decide objections regarding existence or validity of the arbitration agreement. While courts must refuse reference if there is no arbitration agreement or it is null and void prima facie, absent such a finding the tribunal should adjudicate jurisdictional challenges and produce an award which can thereafter be challenged under the Act. [Paras 7, 14, 15, 17]

Jurisdictional issues short of a prima facie finding of non existence or nullity of the arbitration agreement are for the arbitral tribunal to decide.

Final Conclusion: The appeal is dismissed. The courts below correctly referred the disputes arising from the 2007 and 2008 Tripartite Agreements to arbitration; the objections of non arbitrability, action in rem, and unsubstantiated fraud were rejected, and jurisdictional and validity issues are to be determined by the Arbitral Tribunal.