TaxTMI Updates e-Newsletter
Dec 21,2024

Opportunity of hearing - natural justice - mandatory personal hearing where adverse decision contemplated - effect of assessee's election to decline personal hearing - remand for fresh hearing and adjudication - application of Section 75(4) of the U.P. GST Act, 2017

Opportunity of hearing - application of Section 75(4) of the U.P. GST Act, 2017 - mandatory personal hearing where adverse decision contemplated - natural justice - Assessing Authority was required to afford an opportunity of personal hearing before passing an adverse assessment order under Section 75(4) of the U.P. GST Act, 2017. - HELD THAT: - The Court reproduced Section 75(4) and agreed with the coordinate-bench precedent in Bharat Mint & Allied Chemicals that a request in writing by the person is not a pre-condition; where an adverse decision is contemplated the authority must grant an opportunity of hearing. Observance of this requirement is an application of the principles of natural justice and is necessary before creating substantial civil liability by way of assessment. The Court emphasised that such opportunity must be real so that the assessee's stand can be heard and the authority can pass an appropriate and reasoned order which would also facilitate better appellate consideration. [Paras 6, 7, 8, 9]

Requirement to grant opportunity of personal hearing before passing an adverse assessment upheld; failure to do so vitiates the assessment.

Effect of assessee's election to decline personal hearing - opportunity of hearing - natural justice - Assessee's online indication declining personal hearing does not absolve the Assessing Authority of its duty to afford a hearing where an adverse decision is contemplated. - HELD THAT: - The Court held that a marking of 'No' by the assessee in the online reply to a show-cause notice would bear no legal consequence to displace the statutory obligation under Section 75(4). Once the legal principle requires the authority to afford hearing when an adverse order is envisaged, such an election by the assessee cannot be permitted to defeat the requirement of hearing and the protections of natural justice. [Paras 7]

Ticking 'No' against personal hearing in online response does not relieve the authority of the obligation to grant a hearing before an adverse order is passed.

Remand for fresh hearing and adjudication - opportunity of hearing - Impugned assessment order set aside and matter remitted for fresh notice and personal hearing. - HELD THAT: - In consequence of the failure to afford a hearing, the Court set aside the assessment order and directed the Assistant Commissioner to issue a fresh notice within two weeks and afford the petitioner an opportunity to appear and be heard so that proceedings may be concluded expeditiously. The petitioner undertook to appear on the next fixed date. [Paras 10]

Impugned order quashed and matter remitted for fresh notice and hearing.

Final Conclusion: Writ petition allowed; the assessment order dated April 16, 2024 is set aside and the matter is remitted to the Assistant Commissioner for issuance of a fresh notice and grant of personal hearing, in accordance with Section 75(4) and the principles of natural justice.

Penalty for detention and release of goods under Section 129 - finality of action on payment under Section 129(5) - maintainability of writ jurisdiction vis-A -vis statutory appeal remedy - condonation of minor discrepancies in consignee particulars - remand for fresh consideration and refund of penalty paid

Maintainability of writ jurisdiction vis-A -vis statutory appeal remedy - Whether the writ petition was maintainable despite the availability of a statutory appeal under Section 107. - HELD THAT: - The Court considered the respondent's submission that the petitioner should have availed the statutory appeal under Section 107. Notwithstanding the availability of a remedy, the Court exercised its writ jurisdiction and entertained the petition, addressing the grievance on merits rather than dismissing the petition on maintainability grounds. The matter was proceeded with and ultimately allowed. [Paras 3, 6]

Writ petition entertained and allowed despite existence of appellate remedy.

Penalty for detention and release of goods under Section 129 - finality of action on payment under Section 129(5) - condonation of minor discrepancies in consignee particulars - Whether the penalty imposed and the attendant detention/release decision were justified in view of a minor discrepancy in consignee name and whether payment and release under Section 129(5) precluded further adjudication. - HELD THAT: - The Court noted that the seller's invoice, GST registration extract and the e-Way Bill showed the same address and that the only error was a minor discrepancy in the consignee name. Observing that marginal errors not motivated to evade tax have been condoned in earlier decisions, the Court held that such a minor discrepancy could be excused but emphasised that this required proper determination by the respondent. Although the respondent relied on the fact that penalty was paid and delivery taken (invoking finality under Section 129(5)), the Court found it appropriate to set aside the impugned order and remit the matter for fresh consideration on merits so that the respondent may determine whether the discrepancy was truly minor and whether the penalty and its refund are justified. [Paras 5]

Impugned penalty order set aside and matter remitted to the respondent for fresh consideration on merits; minor discrepancy to be examined and addressed by respondent.

Remand for fresh consideration and refund of penalty paid - Whether the penalty paid by the petitioner may be refunded pending fresh adjudication. - HELD THAT: - The Court directed that the penalty paid to obtain release of detained consignments may be refunded, but made the refund subject to the final outcome of the fresh adjudication to be conducted by the respondent after examining the nature of the discrepancy and other relevant aspects on merits. [Paras 5]

Refund of penalty permitted subject to final outcome of fresh adjudication by the respondent.

Final Conclusion: The writ petition was allowed: the impugned order imposing penalty was set aside and the matter remitted to the respondent for fresh consideration on merits regarding the minor discrepancy in consignee particulars; the penalty paid may be refunded subject to the final adjudication. No costs.

Challenge to section 16(2)(c) of the GST Act, 2017 - impleadment of necessary parties - interim restraint on coercive action pending adjudication

Impleadment of necessary parties - Prayer of the petitioner to implead the Union of India as a party was allowed. - HELD THAT: - The petitioner sought permission to amend the memo of parties to implead the Union of India. The Court granted the oral prayer and permitted filing of the amended memo of parties, thereby recognising the Union as a necessary party for adjudication of the challenge mentioned in the petition.

Permission granted to the petitioner to implead the Union of India and to file an amended memo of parties.

Interim restraint on coercive action pending adjudication - No coercive steps shall be taken against the petitioner in the interim. - HELD THAT: - Pending further hearing and the filing of the State's reply, the Court directed that no coercive action be taken against the petitioner. This interim protection preserves the status quo until the matter is further heard on the returnable date.

Interim stay of coercive proceedings against the petitioner ordered.

Challenge to section 16(2)(c) of the GST Act, 2017 - Notice issued and State directed to file reply by the next date; matter listed for further hearing. - HELD THAT: - The petition raises a challenge to section 16(2)(c) of the GST Act, 2017 concerning the position of a bona fide purchaser where the original supplier defaults. The Court issued notice of motion to the respondent State, and the State solicitors accepted notice and were directed to file their reply on or before the next date of hearing, with advance copy to the petitioner's counsel. The matter was listed for hearing on the specified date.

Notice directed; State to file reply by the next date; matter listed for further hearing on 06.03.2025.

Final Conclusion: The Court permitted impleadment of the Union of India, issued notice to the State with direction to file a reply by the next date, listed the matter on 06.03.2025, and granted interim protection by restraining coercive action against the petitioner until further orders.

Challenge to the operation of section 16(2)(c) of the Goods and Services Tax Act, 2017 in relation to a bona fide purchaser - permission to implead Union of India as party - interim restraint on coercive measures - service of notice and opportunity to file reply

Service of notice and opportunity to file reply - Notice accepted for the petition and the State permitted time to file its reply. - HELD THAT: - The Court recorded that notice of motion was issued and that the Additional Advocate General for the State accepted notice on behalf of the State. The State was granted time to file its reply on or before the next date of hearing and directed to serve a copy in advance to the petitioner's counsel. The order confines itself to procedural directions regarding service and filing of the respondent's reply and does not adjudicate the substantive challenge.

Notice accepted and State directed to file reply by the next date of hearing with advance copy to petitioner.

Permission to implead Union of India as party - Application by the petitioner to implead the Union of India as a party was allowed. - HELD THAT: - On oral prayer, the Court permitted the petitioner to amend the memo of parties to implead the Union of India. The order grants leave to the petitioner to undertake the necessary amendment to the cause title, without addressing merits or requiring further justification in the text of the order.

Petitioner permitted to file amended memo of parties to implead the Union of India.

Interim restraint on coercive measures - Interim protection against coercive action was granted to the petitioner until the next date of hearing. - HELD THAT: - The Court directed that, in the meantime, no coercive steps shall be taken against the petitioner. This constitutes an interim restraint limited in duration to the period pending further hearing on the listed date and does not constitute a final adjudication on the substantive rights or liabilities of the parties.

No coercive steps to be taken against the petitioner until the next listed date.

Final Conclusion: Order issues notice; State permitted to file reply by the next date; petitioner granted leave to implead the Union of India; interim protection granted by restraining coercive measures against the petitioner until the next date of hearing (listed 06.03.2025).

Provisional attachment to protect revenue - attachment under Section 83 of the MGST Act - initiation of proceedings under Chapters XII, XIV or XV - principles of natural justice and fair play - notice and adjudication under Section 89 of the MGST Act

Attachment under Section 83 of the MGST Act - provisional attachment to protect revenue - principles of natural justice and fair play - Provisional attachment of the petitioner's Demat accounts under Section 83 was not justified without minimum compliance with principles of natural justice and fair play and in the absence of initiation of proceedings under the relevant Chapters. - HELD THAT: - The Court observed that Section 83 permits provisional attachment only after initiation of proceedings under Chapters XII, XIV or XV and for the purpose of protecting revenue. Nothing on record indicated that any such proceedings had been initiated against the petitioner. Having regard to the petitioner's resignation and the peculiar circumstances, the Court held that resort to provisional attachment in the present case was not warranted without at least minimum compliance with the principles of natural justice and fair play. The Court noted that any attachment action could only be validly pursued after the process contemplated by Section 89 (which involves notice and opportunity) is followed and liability is determined in accordance with law. [Paras 9, 11, 12]

Provisional attachment under Section 83 was unjustified in the facts of this case and could not stand without compliance with natural justice and initiation of the specified proceedings.

Notice and adjudication under Section 89 of the MGST Act - principles of natural justice and fair play - Relief was granted to quash/withdraw the impugned communications effecting attachment and to direct respondents to issue notices under Section 89 and afford the petitioner opportunity before any further action. - HELD THAT: - On instructions placed on record, the respondents undertook to withdraw the communications dated 22 February 2024 and 20 June 2024 (thereby vacating the provisional attachment/freezing of the petitioner's Demat accounts), to issue notices under Section 89, and to grant full opportunity to the petitioner prior to taking any consequential action. The Court recorded this statement and granted the reliefs sought in prayer clauses (a) and (b), while expressly leaving all contentions open for any future proceedings in accordance with law. [Paras 13, 14, 15]

Impugned communications are withdrawn and attachment lifted; respondents to issue notices under Section 89 and comply with principles of natural justice before taking further action.

Final Conclusion: The writ petition is allowed insofar as the provisional attachment/freezing of the petitioner's Demat accounts is quashed and the respondents have undertaken to withdraw the impugned communications, lift the attachment, and issue notices under Section 89 affording the petitioner full opportunity; future action is permitted only in accordance with law and after compliance with principles of natural justice.

Jurisdiction of Central Government to levy GST on alcoholic liquor for human consumption - binding effect of Authority for Advance Ruling - assumption of jurisdictional fact - classification and HSN-based taxability - exhaustion of alternative statutory remedies

Jurisdiction of Central Government to levy GST on alcoholic liquor for human consumption - assumption of jurisdictional fact - Whether the impugned show cause notice is ex facie without jurisdiction because it seeks to levy GST on alcoholic liquor for human consumption. - HELD THAT: - The show cause notice, on its face, alleges demands in respect of production overhead charges and misclassification of by products, and takes a tentative view that services involved in manufacturing may be exigible to GST. The Court found that the notice is not prima facie a demand on the sale of alcoholic liquor for human consumption and that determination of whether GST is leviable requires factual investigation into the nature of the charges and the circumstances of differential treatment vis-a -vis other brands. Consequently, the contention that the notice is wholly without jurisdiction or ultra vires could not be accepted without adjudication of disputed facts. [Paras 13]

The show cause notice is not ex facie without jurisdiction; factual inquiry is necessary and the writ cannot be sustained on that ground.

Binding effect of Authority for Advance Ruling - assumption of jurisdictional fact - Whether the Authority for Advance Ruling relied upon by the Petitioner binds the Respondent or renders the show cause notice void. - HELD THAT: - The show cause notice records consideration of the Advance Ruling relied upon by the Petitioner and refers to the Petitioner's own statement admitting it was not a party to the advance ruling proceedings. The Court observed that an Advance Ruling obtained by another party cannot be mechanically applied to the Petitioner and that differences in contractual arrangements introduce factual questions. Therefore, reliance on the earlier Advance Ruling does not establish that the impugned notice is without jurisdiction. [Paras 14, 15]

The Advance Ruling relied upon does not render the show cause notice ultra vires or binding on the Respondent as a matter of law.

Assumption of jurisdictional fact - Whether the production overhead charges constitute consideration for supply of service such that GST is leviable as alleged in the show cause notice. - HELD THAT: - Petitioner's submissions as to the characterisation of production overhead charges raise mixed questions of fact and contract interpretation. The impugned notice takes a tentative view and points to the need to investigate the precise nature of the charges and the contractual relationship, including admissions recorded in statements. In view of these disputed factual questions, the Court declined to hold that the notice wrongly assumes a jurisdictional fact without inquiry. [Paras 11, 16]

Whether the charges are taxable consideration must be determined after factual and contractual investigation; the show cause notice cannot be quashed on that basis at this stage.

Classification and HSN-based taxability - Whether the Petitioner's classification of by products as DDGS/Husk/Cattle Feed under HSN 1104 (Nil rate) instead of HSN 2303 (taxable) renders the show cause notice wholly without jurisdiction. - HELD THAT: - The show cause notice alleges misclassification and provides detailed tentative reasons for disputing the Petitioner's classification. The Court treated classification as a serious issue of fact requiring thorough investigation and could not characterise the impugned notice as wholly without jurisdiction merely because classification is contested. [Paras 11, 18]

The classification issue requires investigation; it does not render the show cause notice wholly without jurisdiction.

Exhaustion of alternative statutory remedies - Whether the writ petition should be entertained despite availability of statutory remedies and established principles that writ jurisdiction should not ordinarily bypass those remedies. - HELD THAT: - The Court applied precedents holding that writ jurisdiction under Article 226 is not to be used to short circuit statutory procedures where factual inquiry and adjudication are necessary and alternate remedies are available. Whirlpool and related authorities set out limited exceptions (fundamental rights, breach of natural justice, proceedings wholly without jurisdiction or challenge to vires) which the Court found inapplicable here. Given the contested factual matrix and availability of statutory remedies, the petition was not maintainable. [Paras 20, 21, 22, 24, 26]

Writ relief is inappropriate; the petitioner must pursue available statutory remedies and cannot bypass them by this petition.

Final Conclusion: Writ petition dismissed for want of grounds to bypass statutory adjudicatory processes; contested factual and classification issues raised in the show cause notice must be adjudicated through the statutory process. The petitioner is granted four weeks to file a reply to the show cause notice, which the authority shall consider.

Cancellation of GST registration for non-filing of returns - limitation for filing appeal under Section 107 - condonation of delay and extension of limitation for sufficient cause - appellate authority's power to entertain time-barred appeals

Cancellation of GST registration for non-filing of returns - Validity of cancellation of the petitioner's GST registration on the ground of non-filing of returns for a continuous period of six months. - HELD THAT: - The court noted that a show cause notice was issued for non-filing of returns for a continuous period of six months and that the petitioner filed a reply which was considered by the authority. The order cancelling registration under the statutory scheme was examined and found not to be perverse or illegal. The petitioner's explanation of business difficulties and medical reasons did not persuade the court to disturb the statutory cancellation where returns were admittedly not filed for the prescribed period and the authority passed the impugned order after considering the matter as recorded in the cancellation order. [Paras 8, 9, 11]

The cancellation of the petitioner's GST registration for failure to file returns for a continuous period of six months is upheld.

Limitation for filing appeal under Section 107 - condonation of delay and extension of limitation for sufficient cause - appellate authority's power to entertain time-barred appeals - Whether the appellate authority erred in rejecting the petitioner's appeal as time-barred under the limitation prescribed by Section 107 of the CGST Act. - HELD THAT: - The court observed that Section 107 prescribes a three-month period for filing an appeal and permits, only if satisfied of sufficient cause, an extension of one further month. The petitioner filed the appeal after approximately 17 months from the date of cancellation and did not furnish reasons sufficient to attract exercise of the discretionary extension. Given the statutory timeline and the absence of adequate cause for the prolonged delay, the appellate authority's rejection of the appeal on the ground of limitation was not amenable to interference. [Paras 9, 10, 11]

The appellate authority correctly rejected the appeal as barred by limitation; no interference with the appellate order is warranted.

Final Conclusion: The writ petition is dismissed; the cancellation of GST registration is sustained and the appellate order rejecting the time barred appeal is upheld, with no order as to costs.

Time limit for passing order under section 129(3) - communication of order by electronic means under section 169(1)(c) and (d) - communication complete when it comes to knowledge - requirement to upload summary of order in Form GST DRC-07 under rule 142(5)

Time limit for passing order under section 129(3) - communication of order by electronic means under section 169(1)(c) and (d) - communication complete when it comes to knowledge - Validity of the order purportedly made on 26th September, 2024 by e-mail vis-a -vis the requirement to pass and communicate the order within seven days under section 129(3). - HELD THAT: - Section 129(3) prescribes a specific seven-day period to pass the order counted from service of the notice specifying the penalty. Compliance entails not only passing the order within that period but also effecting communication so that it comes to the knowledge of the person against whom the order is made. The revenue relied on an e-mail allegedly sent on 26th September, 2024, and on subsequent upload to the portal on 27th September, 2024. Examination of the print of the sent mail showed reference to an attachment but no indication that the order itself was actually communicated on 26th September, 2024. Further, the petitioner filed the appeal and the revenue's subsequent intimation identified 27th September, 2024 as the date of the order; the summary in Form GST DRC-07 was uploaded on 27th September, 2024 as required by rule 142(5). On these facts the court was not satisfied that communication was completed on 26th September, 2024. Applying the principle that communication is complete only when it comes to the addressee's knowledge, the order must be treated as having been communicated on 27th September, 2024 and therefore was made on the eighth day from service of the notice, failing the seven-day mandate of section 129(3). [Paras 3, 4, 5, 6]

Impugned order is quashed for non-compliance with the seven-day requirement in section 129(3) as the communication and upload occurred on the eighth day.

Final Conclusion: Writ petition allowed; the demand order is set aside and quashed for failure to satisfy the time and communication requirements of section 129(3); consequential remedies arising from this result are left to the parties to pursue.

Blocking of Input Tax Credit - exercise of power under Section 86-A of the Central Goods and Services Tax Act, 2017 - prima facie satisfaction to protect revenue - show-cause proceedings under Section 74 - expeditious adjudication - operation of account subject to furnishing of surety

Blocking of Input Tax Credit - exercise of power under Section 86-A of the Central Goods and Services Tax Act, 2017 - prima facie satisfaction to protect revenue - Validity of blocking the assessee's Input Tax Credit and account under Section 86-A on the basis of information about fake invoices and non-existent suppliers. - HELD THAT: - The Court found that the respondents blocked an amount after information and physical verification showed that certain firms were non-existent and that fake Input Tax Credit had been passed to the petitioner. The cancellation of registrations of those firms and the blocking of the amount were held to be based on a prima facie satisfaction. At the preliminary stage for invoking Section 86-A the authority need only form a prima facie view to protect revenue, and there is no occasion to issue a show-cause notice or afford hearing prior to taking the protective step under Section 86-A, since substantive adjudication is to follow in proceedings under Section 74. [Paras 5, 6]

Blocking under Section 86-A was not wrongful and the respondents were entitled to act on prima facie information of fake ITC without issuing a pre-blocking show-cause notice.

Show-cause proceedings under Section 74 - expeditious adjudication - operation of account subject to furnishing of surety - Direction to conclude the pending adjudication under Section 74 and interim relief to the petitioner to operate its account subject to conditions. - HELD THAT: - The Court observed that although blocking under Section 86-A was permissible as a protective measure, the overall scheme requires expeditious finalisation of adjudicatory proceedings. Noting delay between the initial blocking order and the pending final order under Section 74, and that an interim order previously restrained final adjudication, the Court directed the respondents to pass the final order preferably within one month. In the meantime, recognising the prejudice to the petitioner's business from prolonged blockade, the Court ordered that the petitioner be permitted to operate its account on furnishing a surety for the blocked amount. The interim order granted earlier was vacated. [Paras 7, 9, 11]

Respondents directed to decide the Section 74 proceedings expeditiously (preferably within one month); petitioner permitted to operate its account upon furnishing a surety equal to the blocked amount; prior interim order vacated.

Final Conclusion: The High Court upheld the respondents' protective use of Section 86-A on prima facie information of fake ITC, directed expeditious disposal of the pending Section 74 adjudication (preferably within one month), allowed the petitioner to operate its account on furnishing a surety for the blocked amount, and vacated the earlier interim order.

Relevancy of information leading to discovery under Section 27 of the Indian Evidence Act, 1872 - Bail jurisdiction in economic offences - Principle that bail is the rule and jail is the exception - Gravity of economic offence and consideration of public interest in bail - Parity in grant of bail is not absolute

Relevancy of information leading to discovery under Section 27 of the Indian Evidence Act, 1872 - Admissibility of information given by accused while in custody that led to discovery and recovery of incriminating material. - HELD THAT: - The Court analysed the scope and conditions of Section 27, emphasising that only that part of an accused's statement which 'distinctly relates to the fact thereby discovered' is admissible. Applying Section 27 to the present facts, the Court found that information supplied by arrested accused persons led the Investigating Officer to premises where laptops, mobiles, SIM cards, fake invoices and other incriminating material were recovered; consequently the portion of the disclosures directly leading to those recoveries is admissible. The Court relied on established dicta that discovery must be a fact not already known to police and that admissibility is confined to information immediately and directly causing the discovery. [Paras 14, 18]

Portions of custodial statements that directly led to the discovery of incriminating material are admissible under Section 27 and are usable in the prosecution.

Bail jurisdiction in economic offences - Principle that bail is the rule and jail is the exception - Gravity of economic offence and consideration of public interest in bail - Parity in grant of bail is not absolute - Whether the applicant Sanjay Jindal should be granted bail in FIRs concerning alleged large-scale fake GST registrations and related offences under IPC. - HELD THAT: - The Court reviewed settled principles governing grant of bail, including that bail is ordinarily the rule but exceptions apply in grave economic offences; it summarised relevant Supreme Court authorities and factors to be considered (nature and gravity of accusation, evidence, likelihood of tampering, public interest). On the facts, the investigation disclosed a widespread organised scheme involving registration of thousands of fake GST firms, recovery of lists, devices, forged documents, confessional statements of multiple accused and DGGI reports linking certain fake firms to diversion of input tax credit. The Court observed that the prosecution material constitutes prima facie evidence of an organised fraud affecting public revenue; parity with other accused was considered but rejected as an absolute entitlement because each accused's role must be separately assessed. On balance, having regard to the gravity, the chain of incriminating material and impact on the public exchequer, the Court concluded it was not a fit case for bail. [Paras 20, 21, 33, 34, 35]

Bail applications of the applicant are rejected; he is not entitled to bail having regard to the prima facie material of a grave economic and organised offence and public interest.

Final Conclusion: The Court found that admissible portions of custodial disclosures under Section 27 led to recovery of incriminating material and, having considered the nature and gravity of the organised economic offence, the prima facie material and public interest, refused the applicant's bail applications.

Rectification under special procedure - extension of time to avail input tax credit - application of sub-Sections (5) and (6) of Section 16 of the CGST Act - section 148 special procedure - availability of input tax credit where earlier order held it wrongly availed

Rectification under special procedure - application of sub-Sections (5) and (6) of Section 16 of the CGST Act - section 148 special procedure - Permissibility of filing an application for rectification under the special procedure where earlier orders confirmed demand for alleged wrong availment of input tax credit but such credit is now available under sub-Sections (5) and (6) of Section 16 of the CGST Act. - HELD THAT: - The court noted the Ministry of Finance circular dated 15.10.2024 and Notification No. 22/24 dated 08.10.2024 prescribing a special procedure under section 148 of the CGST Act. The circular and notification extend retrospectively the time limit to avail input tax credit under sub-Section (4) of Section 16 and permit taxpayers, in cases where orders under sections 73, 74, 107 or 108 have confirmed demand for alleged wrong availment of input tax credit, to apply for rectification when such credit is now permissible under sub-Sections (5) or (6) of Section 16. The court allowed the petitioner to move such an application and directed that any rectification application so filed be decided in light of the provisions of sub-Sections (5) and (6) of Section 16.

Petitioner permitted to file an application for rectification under the special procedure; any such application to be decided having regard to sub-Sections (5) and (6) of Section 16 of the CGST Act.

Final Conclusion: Writ petition disposed permitting the petitioner to file a rectification application under the special procedure notified vide Notification No. 22/2024, and directing that such application be decided in accordance with sub-Sections (5) and (6) of Section 16 of the CGST Act; all pending miscellaneous applications dismissed.

Conditions of bail - Imposition of onerous conditions affecting right to liberty - Section 437 of Cr.P.C. - scope of bail conditions in nonbailable offences - Section 445 of Cr.P.C. - deposit in lieu of executing bond or furnishing sureties - Criminal court not a recovery agent - Deposit of cash security in lieu of sureties

Conditions of bail - Section 437 of Cr.P.C. - scope of bail conditions in nonbailable offences - Imposition of onerous conditions affecting right to liberty - Criminal court not a recovery agent - Deposit of cash security in lieu of sureties - Validity of the trial Court's condition directing the petitioner to deposit a sum of Rs. 1 crore as a precondition for grant of bail - HELD THAT: - The Court applied the established principle that bail conditions must not be so harsh or onerous as to frustrate the object of bail and that criminal courts are not to act as recovery agents; Section 437 Cr.P.C. permits reasonable conditions to secure presence and prevent tampering, while Section 445 Cr.P.C. contemplates deposit in lieu of executing a bond or furnishing sureties only where appropriate. Although the alleged offence is grave and involves alleged misappropriation, the trial Court's direction to deposit Rs. 1 crore would render release on bail impossibile in the circumstances and is therefore unjustified. Having balanced the gravity of the allegations and the need to secure attendance, the Court held that the deposit condition ought to be relaxed but that protective conditions (production of passport and prohibition on leaving India without court permission) are necessary to prevent absconding or flight. [Paras 16, 17]

The condition directing deposit of Rs. 1 crore is set aside and substituted by direction to produce passport before the trial Court and not to leave India without its permission.

Final Conclusion: Petition allowed under Section 482 Cr.P.C.; the trial Court's cashdeposit condition for bail is quashed and replaced by requirement that the petitioner surrender his passport and not leave India without the trial Court's permission.

Excess input tax credit - reverse charge mechanism - service of notice through GST common portal - opportunity of hearing - conditional restoration and deposit for adjudication - lifting of bank attachment

Service of notice through GST common portal - opportunity of hearing - Validity of the impugned assessment order where notices were uploaded on the GST portal and the petitioner did not participate in adjudication - HELD THAT: - The Court examined the circumstance in which the show cause notices and assessment order were uploaded on the common GST portal and the petitioner asserted inability to access the portal and participate in proceedings. Having considered the petitioner's plea and the respondents' position, the Court set aside the impugned assessment order and treated the set-aside order as a show cause notice conditional upon compliance with directions given in this order. The Court thereby afforded the petitioner an opportunity to submit objections and supporting materials and required the adjudicating authority to consider any objections and pass orders after affording a reasonable hearing. [Paras 8]

The impugned order dated 16.03.2024 is set aside and shall be treated as a show cause notice subject to the conditions directed by the Court.

Excess input tax credit - reverse charge mechanism - conditional restoration and deposit for adjudication - Adjudication of disputed claim of excess input tax credit under reverse charge mechanism remanded for fresh consideration subject to deposit - HELD THAT: - The limited controversy concerns alleged excess availment of Input Tax Credit vis-a-vis liability under the reverse charge mechanism. The petitioner expressed readiness to explain discrepancies and to deposit a portion of the disputed tax. The Court conditioned the grant of a fresh adjudicatory opportunity on the petitioner depositing 25% of the disputed tax within two weeks and filing objections with supporting documents within four weeks from receipt of the order. On compliance, the assessing authority is directed to consider the objections and pass orders in accordance with law after affording a reasonable opportunity of hearing. Failure to comply with the timelines will result in revival of the impugned assessment order. [Paras 8]

The question regarding excess Input Tax Credit is remanded to the second respondent for fresh consideration; the petitioner must deposit 25% of the disputed tax and file objections within the stipulated periods for the remand to operate.

Lifting of bank attachment - Continuance of the attachment of the petitioner's bank account following setting aside of the impugned order - HELD THAT: - The Court noted that the petitioner's bank account had been attached pursuant to the impugned order. Having set aside that order and directed a conditional remand, the Court found that the attachment cannot subsist and ordered that the bank account attachment be lifted/withdrawn. [Paras 9]

The attachment of the petitioner's bank account is ordered to be lifted.

Final Conclusion: The writ petition is disposed of by setting aside the impugned assessment order dated 16.03.2024; the petitioner is directed to deposit 25% of the disputed tax within two weeks and to file objections with supporting documents within four weeks, whereupon the assessing authority shall adjudicate afresh after affording a hearing; the bank attachment is lifted.

Scope of supply - consideration as essential ingredient for supply - activities specified in Schedule I - government grants exemption under Notification No.2/2017-Central Tax (Rate) as amended - definition of Government Entity for grant exemption - culture of justification in administrative decision-making - remand for fresh adjudication

Scope of supply - consideration as essential ingredient for supply - Validity of Ext.P1 adjudication insofar as it treats the petitioner's transfers as taxable supplies under Section 7 of the CGST Act in the absence of any finding of consideration. - HELD THAT: - The court found that Ext.P1 demonstrates internal contradictions and an absence of coherent reasoning. Section 7 requires consideration for transactions not covered by Schedule I; Ext.P1 contains no finding that the petitioner received consideration from the Government, KIIFB or the General Education Department for the alleged supplies. Payments received by the petitioner were grants to meet operational expenses and cannot be treated as consideration for supply. In view of these defects and the adjudicating authority's failure to address whether, in the absence of consideration, there can be a supply under Section 7, Ext.P1 is unsustainable. [Paras 5, 6]

Ext.P1 is quashed to the extent it holds the petitioner liable for GST by treating the transfers as taxable supplies without a coherent finding of consideration.

Government grants exemption under Notification No.2/2017-Central Tax (Rate) as amended - definition of Government Entity for grant exemption - remand for fresh adjudication - Whether amounts obtained through KIIFB for implementation of the government project should be treated as grants for the purposes of the notification exempting supply of goods by a Government entity against consideration received in the form of grants, and consequential direction for fresh consideration. - HELD THAT: - The court held that Ext.P1 did not properly consider the effect of the notification (as amended by inclusion of the relevant entry and the Explanation defining 'Government Entity') on the facts - namely that the petitioner was constituted as a special purpose vehicle implementing a government project and procured goods under a tripartite arrangement funded through KIIFB, a statutory body under government control. The adjudicating authority's conclusion that KIIFB funds are not government grants was a myopic view not sufficiently addressed. Applying the principle of justification in administrative decision-making, the court directed restoration of the adjudication to the authority so that it may specifically consider whether KIIFB funding constitutes grants within the meaning of the notification and decide the claim of exemption after affording hearing. [Paras 7, 8, 9]

Adjudication restored to the 3rd respondent for fresh orders considering whether KIIFB funds are government grants for the purpose of the notification and any other points raised by the petitioner; fresh orders to be passed within three months after hearing.

Final Conclusion: Ext.P1 is quashed for want of coherent reasoning and for failing to address whether consideration existed for a supply under Section 7 and whether KIIFB funding amounts to government grants within the notification; the show-cause adjudication is restored to the 3rd respondent for fresh adjudication after hearing on these specific questions, with a three-month timeline for passing fresh orders.

Procedural fairness - service by electronic portal - opportunity of hearing - interim deposit as condition for relief - remand for fresh adjudication

Service by electronic portal - procedural fairness - opportunity of hearing - Validity of the impugned assessment order where notices and order were uploaded on the common portal and the petitioner did not participate in adjudication - HELD THAT: - The Court found that the impugned order dated 01.03.2024 relating to assessment year 2021-2022 was challenged on the ground that show cause notices and the assessment order were not served by tender or registered post but were uploaded on the common portal, and the petitioner was unable to access the portal and therefore could not participate in the proceedings. Having regard to procedural fairness and the petitioner's inability to access the portal, the Court set aside the impugned order and directed remedial steps to secure the petitioner's right to be heard. The Court, while noting the defects alleged in the assessment, granted an opportunity to the petitioner to submit objections and supporting material within a stipulated period, subject to the condition of an interim deposit. The order reflects the Court's enforcement of the principle that electronic service must not result in denial of a real opportunity to participate in adjudication. [Paras 4, 5, 7]

Impugned order set aside and recall of assessment proceedings directed to preserve the petitioner's right to be heard, subject to conditions

Interim deposit as condition for relief - remand for fresh adjudication - Procedure and consequences ordered for fresh consideration of assessment once petitioner complies with conditions - HELD THAT: - The Court directed that the petitioner shall deposit 25% of the disputed tax within two weeks of receipt of the order; on such compliance the impugned assessment order shall be treated as a show cause notice and the petitioner shall file objections with supporting documents within four weeks. The respondent was directed to consider any objections filed and pass orders in accordance with law after affording a reasonable opportunity of hearing. The Court further provided that failure to make the deposit or to file objections within the stipulated periods would result in restoration of the original impugned order. This amounts to a remand of the assessment for fresh adjudication confined to consideration of objections and evidence, conditioned on the interim deposit and adherence to the timetable imposed by the Court. [Paras 6, 7]

Assessment remanded for fresh consideration on filing of objections and payment of interim deposit; non-compliance to restore the impugned order

Final Conclusion: The impugned assessment order for AY 2021-2022 is set aside and remitted for fresh adjudication: petitioner must deposit 25% of the disputed tax within two weeks and may file objections within four weeks; on compliance the respondent shall consider objections and pass orders after hearing; failure to comply will result in restoration of the impugned order.

Stock-in-trade not liable to seizure under Section 132 - proviso to Section 132B(1)(i) - procedure for release of seized assets - inventory and panchnama as adequate record where stock-in-trade is involved - company locker presumption - assets in locker in company's name treated as company stock - obligation to release seized assets where no order is passed within statutory framework

Stock-in-trade not liable to seizure under Section 132 - company locker presumption - assets in locker in company's name treated as company stock - inventory and panchnama as adequate record where stock-in-trade is involved - Whether the jewellery and diamonds recovered from bank locker no. 161 (in the name of the company) constituted stock-in-trade and were liable to be seized by the Income Tax authorities - HELD THAT: - The court examined Section 132 and its proviso and held that bullion, jewellery or other valuable articles being stock-in-trade found as a result of search shall not be seized but only inventoried. The director's contemporaneous statement and the printout of stock-in-trade as on 17.05.2023, together with the fact that locker no. 161 was in the name of the company, support the logical conclusion that the jewellery in that locker formed part of the company's stock-in-trade. The respondents' reliance on discrepancies between closing stock as on 31.03.2023 and stock as on 17.05.2023 does not justify seizure of items lying in a company-named locker. An inventory (panchnama) having been prepared, physical withholding of company stock-in-trade was held to be unwarranted and contrary to the statutory bar on seizure of stock-in-trade. [Paras 15, 16, 17, 22, 25]

Jewellery and diamonds recovered from bank locker no. 161, being part of the company's stock-in-trade, were not liable to be seized and should not have been physically withheld.

Proviso to Section 132B(1)(i) - procedure for release of seized assets - obligation to release seized assets where no order is passed within statutory framework - Whether the respondents complied with the procedure under the proviso to Section 132B(1)(i) and were entitled to continue withholding the seized jewellery in the absence of any order for release within the statutory framework - HELD THAT: - Section 132B(1)(i) and its proviso prescribe the manner in which seized assets may be applied towards liabilities and the procedure for release where the nature and source of acquisition is explained within the prescribed time. The court observed that no order was passed by the respondents under the proviso dealing with release, nor was any justification shown for retaining the jewellery after demand. Authorities cited by the court indicate that once the statutory period expires or where no proper order is made, respondents lack authority to continue retaining such assets. The respondents' inaction in not passing requisite orders and not releasing the assets was held to be unjustified. [Paras 18, 24]

Respondents failed to comply with the statutory procedure for dealing with seized assets and were not justified in withholding the jewellery; they were obliged to release it as per the procedural proviso.

Final Conclusion: Writ petition allowed; respondents directed to release the jewellery seized from bank locker no. 161 in accordance with the inventory (panchnama dated 17.07.2023) forthwith, the withholding having been held arbitrary and contrary to the statutory scheme.

Deduction of interest expenses under Section 57 - wholly and exclusively for the purpose of earning interest - nexus between funds borrowed and funds advanced - allowability of interest where recipient's receipts are tax-exempt - remand for verification of computation of interest

Deduction of interest expenses under Section 57 - nexus between funds borrowed and funds advanced - Allowability of interest expenditure claimed by the assessee for A.Y. 2017-18 - HELD THAT: - The tribunal examined whether the interest expenditures were laid out wholly and exclusively for earning the interest income from Tripoli Management Pvt. Ltd. The CIT(A)'s findings that interest paid on the SBI loan (Rs. 76,98,249/-) was allowable were accepted because the loan of Rs. 9.90 crore taken from SBI was transferred (Rs. 9.79 crore) to Tripoli Management on the same day, establishing direct nexus. The CIT(A)'s finding allowing interest paid to HDFC (Rs. 4,33,039/-) was also accepted on the basis that earlier taken funds were ultimately utilized to earn interest from Tripoli Management. The tribunal upheld the disallowance of interest claimed in respect of the LIC policy loan (Rs. 17,30,100/-) since the amount had been advanced to Nandan Corporation LLP and the receipts from that concern were exempt in the hands of the assessee. Regarding loans from SBH and PNB, the CIT(A) had disallowed interest because those amounts were initially advanced to Nandan Corporation LLP and the assessee's share of profit from that firm was exempt; however, the assessee produced bank evidence showing that Nandan Corporation LLP transferred Rs. 5 crore to Tripoli Management on 20/06/2016 and that amount was advanced to Tripoli Management the same day. The tribunal held that this establishes nexus to the extent of Rs. 5 crore and directed verification of the assessee's computation of proportionate interest on that Rs. 5 crore for the period 20/06/2016 to 31/03/2017 by the AO, allowing deduction if the computation is verified (with opportunity to be heard if variation arises). The confirmed disallowance standing after these adjustments is the balance amount reported by the CIT(A). [Paras 8, 11, 12]

Part allowance: interest to SBI and HDFC upheld as deductible; interest on LIC policy loan upheld as disallowable; the question of interest attributable to Rs. 5 crore (transferred from Nandan Corporation LLP to Tripoli Management on 20/06/2016) is remanded to the AO to verify the assessee's working for period 20/06/2016-31/03/2017 and allow deduction accordingly.

Deduction of interest expenses under Section 57 - remand for verification of computation of interest - Allowability of interest expenditure claimed by the assessee for A.Y. 2018-19 - HELD THAT: - Facts and legal test being identical to A.Y. 2017-18, the tribunal applied the conclusion reached in the lead appeal mutatis mutandis. The CIT(A)'s allowance of interest paid to SBI and HDFC was accepted. The disallowance of interest paid to PNB was reconsidered in light of the finding that nexus is established to the extent of Rs. 5 crore which had been traced as advanced to Tripoli Management; accordingly, the tribunal set aside the matter to the AO to verify the assessee's computation of interest attributable to Rs. 5 crore for the period 01/04/2017 to 31/03/2018 and to allow the deduction if computation is verified (with opportunity to be heard in case of variation). [Paras 14]

Appeal allowed for statistical purposes by remitting to the AO to verify and allow interest attributable to Rs. 5 crore for the period 01/04/2017-31/03/2018; other findings of CIT(A) accepted.

Final Conclusion: The appeals are partly allowed: for A.Y. 2017-18 the tribunal upheld allowance of interest relating to SBI and HDFC, upheld disallowance in respect of LIC policy loan, and remanded verification of interest attributable to Rs. 5 crore (20/06/2016-31/03/2017) to the AO; for A.Y. 2018-19 the tribunal remitted verification of interest attributable to Rs. 5 crore (01/04/2017-31/03/2018) to the AO and allowed the appeal for statistical purposes.

Option to be taxed under section 115BAA - rectification under section 154 - invalidity of rectification for withdrawal of exercised option - requirement of opportunity before changing tax computation - verification of TDS claim by Assessing Officer

Option to be taxed under section 115BAA - rectification under section 154 - invalidity of rectification for withdrawal of exercised option - requirement of opportunity before changing tax computation - Validity of the CPC's rectification order under section 154 insofar as it rejected the assessee's option to be taxed under section 115BAA and computed tax at the normal rate - HELD THAT: - The Tribunal found that the assessee had validly exercised the option under section 115BAA and that for the earlier year (AY 2020-21) the CPC had accepted that option. The statutory scheme in section 115BAA provides that once the option is exercised it applies to subsequent assessment years and cannot subsequently be withdrawn by the assessee. The CPC, while passing the section 154 rectification order, increased tax liability by computing tax at the normal rate without assigning reasons or giving opportunity to the assessee and without any finding that the conditions of section 115BAA were violated. In these circumstances the CPC's action in taxing the assessee at the normal rate was not justified. The Tribunal also observed that the Ld. CIT(A)/NFAC, having the materials before him and after the AO failed to furnish a remand report despite repeated reminders, should not have restored the matter to the AO but ought to have decided the issue; accordingly the rectification order is held invalid insofar as it substitutes tax computed at the normal rate for tax computed under section 115BAA. [Paras 11, 13]

The rectification order passed by the CPC under section 154 is invalid in law to the extent it taxed the assessee at the normal rate instead of applying the option under section 115BAA; grounds 1 to 4 of the appeal are allowed.

Verification of TDS claim by Assessing Officer - rectification under section 154 - Whether the claim for credit of TDS should be verified and adjudicated by the Assessing Officer - HELD THAT: - The claim that the CPC allowed a restricted amount of TDS credit requires factual verification at the Assessing Officer level. The Ld. CIT(A)/NFAC directed the AO to verify the TDS claim and pass necessary order; the Tribunal found no infirmity in directing AO-level verification for the quantification and credit of TDS where such verification is fact-based and within the AO's competence. Accordingly, the Tribunal upheld the direction to the AO for verification and grant of appropriate credit after enquiry. [Paras 7, 14]

The Ld. CIT(A)/NFAC's order restoring the matter to the Assessing Officer for verification of the TDS claim is upheld; the ground challenging that restoration is dismissed.

Final Conclusion: The appeal is partly allowed: the CPC's rectification under section 154 is set aside to the extent it disapplied the assessee's validly exercised option under section 115BAA and taxed at the normal rate; the direction to the Assessing Officer to verify and grant appropriate TDS credit is upheld.

Reassessment under section 147 - reopening of assessment after four years - reason to believe - failure to disclose fully and truly all material facts - change of opinion - Vivad se Vishwas settlement

Reassessment under section 147 - reopening of assessment after four years - failure to disclose fully and truly all material facts - reason to believe - Validity of reopening assessments initiated after four years where reasons recorded do not allege failure by the assessee to disclose material facts - HELD THAT: - The Tribunal examined the statutory constraint that reassessment initiated after the expiry of four years from the end of the relevant assessment year is permissible only if the assessee failed, inter alia, to disclose fully and truly all material facts necessary for assessment. The reasons recorded for reopening (dated 26.8.2021 / 31.3.2021) relied on information received from the International Taxation officer regarding payments to non-resident service providers and recorded a belief that income had escaped assessment. However, the reasons did not specifically state or allege that the assessee had failed to disclose fully and truly all material facts for the assessment year. The Tribunal held that such jurisdictional facts must appear in the reasons recorded because they constitute the sole basis for assuming jurisdiction to reopen beyond four years; other authorities cannot supply or infer those facts. Mere characterization of payments as a 'wilful act' to reduce taxable income was held insufficient to constitute the requisite allegation of non-disclosure. For these reasons the reassessment proceedings were quashed as invalid. [Paras 21, 22, 23, 25]

Reopening of assessment for 2013-14 (and, by identical reasoning, for 2014-15) quashed for failure of the reasons recorded to allege failure to disclose fully and truly all material facts, and ground relating to reopening allowed.

Vivad se Vishwas settlement - change of opinion - Whether a settlement under the Vivad se Vishwas Act, 2020 on one issue bars reopening on a distinct issue in the same assessment year - HELD THAT: - The assessee contended that because certain disputes for the assessment year were settled under the VSV Act, the Assessing Officer could not reopen the same assessment on the same issue. The Tribunal analysed the facts and found that the matter settled under VSV concerned disallowance relating to payments to resident parties, whereas the reopening related to payments to non-resident service providers; the two were treated as distinct issues. The Tribunal therefore rejected the submission that VSV settlement automatically precluded reopening on a different issue. The Tribunal noted that precedents relied upon by the assessee concerned section 263 and were not directly apposite to reassessment under section 147; accordingly the VSV argument was dismissed on its merits. However, because the reopening was independently quashed on the ground of inadequate reasons, the VSV conclusion did not salvage the reassessment. [Paras 24, 26]

Argument that VSV settlement barred reopening on the subject matter was rejected as the settled matter and the reopened issue were different; nevertheless reassessment was quashed on the separate jurisdictional ground.

Final Conclusion: The Tribunal quashed the reassessment proceedings for AY 2013-14 and, on identical facts, for AY 2014-15, holding that notices issued after four years failed to record the requisite allegation that the assessee had not disclosed fully and truly all material facts; the appellant's contention regarding bar by VSV settlement was rejected as inapplicable to the distinct issue, and all other grounds became infructuous.

Jurisdictional satisfaction under Section 153C - incriminating material having a bearing on the determination of the total income - nexus between seized material and specific assessment year(s) - distinction between Section 153A and Section 153C - abatement consequent to valid Section 153C satisfaction - no cascading/re en blanc reopening of block years

HELD THAT:- Special Leave Petitions are dismissed on the ground of inordinate delay and for lack of merit; pending applications, if any, are disposed of. HC order[2024 (4) TMI 461 - DELHI HIGH COURT] confirmed.

Permanent Establishment - Fixed Place Permanent Establishment - Dependent Agent Permanent Establishment - Preparatory or Auxiliary Activities - Article 5 of DTAA - Control and Disposal (Virtual Projection) Test - Software and Intangible Property as PE

Fixed Place Permanent Establishment - Article 5 of DTAA - Control and Disposal (Virtual Projection) Test - Preparatory or Auxiliary Activities - Liaison Office did not constitute a fixed place Permanent Establishment in India - HELD THAT: - The Court applied Article 5 and the established tests for a fixed place PE - existence of a place at the disposal of the enterprise, and that the business is carried on through that place (functional/virtual projection, control/disposal, stability, productivity and dependence). The Liaison Office's activities (liaising, distribution of literature, training of agents, promotional work, market information and facilitating contacts) were peripheral to Western Union's core money transfer business and within the scope of the RBI permission which expressly proscribed commercial contracting, receipt of fees and other trading activities. Those functions were therefore preparatory or auxiliary in character and fell within Article 5(3)(e), so that even if a fixed place existed it would be excluded from being a PE. The Court found no evidence that any part of premises in India was placed at the disposal or control of the appellant so as to satisfy the 'through which' requirement of Article 5(1). [Paras 53, 54, 55, 68, 69]

The Liaison Office does not constitute a fixed place PE; its activities are preparatory/auxiliary under Article 5(3)(e).

Dependent Agent Permanent Establishment - Article 5(4) of DTAA - Authority to Conclude Contracts - There was no Dependent Agent Permanent Establishment (DAPE) in India - HELD THAT: - Article 5(4) was considered: the legal fiction applies only where a person acting on behalf of the enterprise habitually exercises authority to conclude contracts, habitually maintains stock for delivery, or habitually secures orders. The Revenue did not prove that any Indian agent or the Liaison Office habitually had authority to conclude contracts on behalf of Western Union, habitually secured orders, or maintained stock leading to deliveries; the Indian agents were independent third parties remunerated at arm's length and had no authority to bind the principal. Consequently the conditions in clauses (a)-(c) of Article 5(4) were not satisfied and DAPE could not be invoked. [Paras 56, 57, 69]

No DAPE arose under Article 5(4); the conditions of clauses (a)-(c) were not satisfied.

Software and Intangible Property as PE - Article 5 of DTAA - Preparatory or Auxiliary Activities - Installation or provision of the 'Voyager' software did not create a Permanent Establishment - HELD THAT: - The Court followed the distinction that purely intangible property (software) is not itself a 'place' and cannot, by itself, constitute a PE. Only tangible equipment (e.g., a server or other fixed machinery) placed at the disposal of the enterprise and fixed in the State might constitute a place of business. Here the Voyager software merely enabled agents to communicate with servers outside India; no hardware or premises were placed at Western Union's disposal nor was any fixed equipment established in India by the appellant. Moreover, the software's role was ancillary - a communications/verification tool - and in any event the activities facilitated by it were preparatory/auxiliary under Article 5(3)(e). The Court relied on the Vogel/OECD reasoning and its own precedents (including E Funds) in reaching this conclusion. [Paras 60, 61, 62, 63, 69]

Provision/installation of the software did not result in a PE; software alone is not a place of business and the functions enabled were preparatory/auxiliary.

Final Conclusion: Appeals dismissed. The Liaison Office of the respondent did not constitute a Permanent Establishment in India (neither a fixed place PE nor a Dependent Agent PE), and the deployment of software did not give rise to a PE; the Tribunal's conclusion that no PE existed is upheld.

Violation of principles of natural justice - Non-compliance with Section 148A procedure - Introduction of new allegations requiring fresh opportunity - Quashing of reassessment notice under Section 148 - Permissibility of fresh proceedings subject to statutory compliance - Award of litigation costs for departmental harassment

Violation of principles of natural justice - Non-compliance with Section 148A procedure - Introduction of new allegations requiring fresh opportunity - Order passed under Section 148A(d) initiating reassessment was invalid for non-compliance with principles of natural justice and statutory procedure. - HELD THAT: - The Court found that the show cause process was conducted in undue haste and in breach of Section 148A(b), which mandates furnishing the assessee an opportunity of being heard with not less than seven days' time where material/new facts are put to the assessee. A corrigendum to the show cause notice dated 20.03.2024 introduced, for the first time, an allegation regarding a larger time deposit; that amendment amounted to new facts which required a fresh and meaningful opportunity. The timeline ultimately left the petitioner with effectively no working day to respond (weekend and holiday intervening), and the respondent thereafter proceeded to pass the impugned order in a manner the Court held arbitrary and contrary to the statutory prescription. The Court relied on the settled principle that action taken in undue haste may be arbitrary and unsustainable. [Paras 11, 13, 14]

Impugned order under Section 148A(d) initiating reassessment was procedurally flawed and therefore invalid.

Quashing of reassessment notice under Section 148 - The reassessment notice dated 29.03.2024 issued under Section 148 and the order initiating reassessment were quashed. - HELD THAT: - Having held that the proceedings under Section 148A were conducted contrary to the principles of natural justice and statutory requirement of adequate notice when new allegations were introduced, the Court quashed the impugned order dated 29.03.2024 and the consequent notice under Section 148 as a necessary consequence of that illegality. [Paras 15]

Impugned order dated 29.03.2024 and notice initiating reassessment under Section 148 are hereby quashed and set aside.

Permissibility of fresh proceedings subject to statutory compliance - Award of litigation costs for departmental harassment - Department permitted to initiate fresh proceedings, but only in strict conformity with Section 148; cost awarded to petitioner for harassment. - HELD THAT: - The Court made clear that the quashing does not preclude the department from initiating fresh proceedings, provided those proceedings adhere strictly to the statutory requirements of Section 148A and Section 148. In view of the procedural lapse and resultant harassment, the Court awarded costs to the petitioner to compensate for the departmental misconduct and to deter summary action in future. [Paras 16]

Respondent permitted to initiate fresh proceedings strictly in terms of Section 148; petitioner awarded costs of Rs. 50,000 payable by the 3rd respondent.

Final Conclusion: Writ petition allowed; impugned order dated 29.03.2024 under Section 148A(d) and the consequent notice under Section 148 dated 29.03.2024 are quashed for breach of natural justice and statutory procedure. The department may initiate fresh proceedings only after complying strictly with Section 148A/148; cost of Rs. 50,000 awarded to the petitioner.

Validity of reassessment under Section 147 read with Section 144B - Rectification under Section 154 - Statutory appeal under Section 246A - Interim stay under Section 220(6) - Non-cooperation of assessee and duty to furnish bank statements - Remand for verification and production of remand report

Validity of reassessment under Section 147 read with Section 144B - Non-cooperation of assessee and duty to furnish bank statements - Impugned reassessment/assessment order dated 23.03.2022 is not interfered with by the High Court - HELD THAT: - The Court examined the challenge to the assessment completed under the reassessment provisions and found that the petitioner had been called for information and records and did not furnish the bank statements and other documents sought under the notice. The writ court was not persuaded that the petitioner had made out a case for interference with the assessment order. Although the petitioner later produced bank statements before the Local Authority, the Court recorded that, on the material placed before it, interference with the impugned order was not justified and noted that the statutory appeal is pending. [Paras 6]

Writ petition challenging the assessment order dismissed without interference

Statutory appeal under Section 246A - Interim stay under Section 220(6) - Remand for verification and production of remand report - Directions for expeditious disposal of the pending statutory appeal, continuation of interim stay and calling of remand report by the Appellate Authority - HELD THAT: - The Court, noting that the petitioner has filed an appeal before the Commissioner (Appeals) and obtained an interim stay order under Section 220(6), directed that the appeal be disposed of as expeditiously as possible, preferably within six months from receipt of this order. The stay granted earlier was ordered to continue until disposal of the appeal. Because the petitioner has filed bank statements with the Local Authority, the Court permitted the Commissioner (Appeals) or the appellate authority to call for a remand report from the Assessing Officer and proceed to pass final orders, thereby enabling verification and consideration of the documents now placed on record. [Paras 6]

Appeal directed to be disposed within six months; interim stay to continue; appellate authority may call for remand report and pass final orders

Rectification under Section 154 - No independent relief granted in writ petition for the pending rectification application; relief is channelled through the statutory appeal and remand mechanism - HELD THAT: - The petitioner's application for rectification under Section 154 was noted as pending and not yet considered by the Department. The High Court did not exercise writ jurisdiction to direct rectification but instead provided an effective remedy by directing expeditious disposal of the statutory appeal and permitting the appellate authority to call for a remand report so that the Assessing Officer may examine the documents (including bank statements) now produced. The Court thereby refrained from direct intervention in the rectification process and left consideration to the appellate/remand procedure. [Paras 4, 6]

No writ relief on the rectification petition; matter to be addressed through appeal and remand to the Assessing Officer

Final Conclusion: Writ petitions dismissed insofar as direct interference with the assessment order is sought; the appeal before the Commissioner (Appeals) to be disposed of expeditiously (preferably within six months), the interim stay to continue until disposal, and the appellate authority is permitted to call for a remand report from the Assessing Officer to consider the bank statements and pass final orders; no order as to costs.

Apportionment of expenditure between taxable and non-taxable income under Section 14A - Quantification of disallowance under Rule 8D - Exemption of dividend on shares held as stock-in-trade from Section 14A disallowance - Amortisation of premium on Held to Maturity securities over holding period - Recognition of losses on transfer between investment portfolios (AFS/HFT to HTM) - Deductibility of employer contributions to Employees' Pension Fund as business expenditure - Tax treatment of goodwill arising on amalgamation

Apportionment of expenditure between taxable and non-taxable income under Section 14A - Quantification of disallowance under Rule 8D - Exemption of dividend on shares held as stock-in-trade from Section 14A disallowance - Deletion of addition under Section 14A/Rule 8D in respect of exempt income for AY 2009-10 - HELD THAT: - The court upheld the ITAT's deletion of the addition made under Section 14A read with Rule 8D. It accepted that where shares/securities are held as stock in trade or held in the course of business activity, dividend income earned incidentally does not attract a blanket disallowance under Section 14A; expenditure must be apportioned depending on facts. The ITAT's reliance on the Supreme Court's decisions in Maxopp/State Bank of Patiala and the subsequent South Indian Bank decision was held to cover the assessee's case, and the Revenue's challenge to the quantification under Rule 8D did not warrant interference. [Paras 8, 9, 10, 11]

Addition under Section 14A (Rs.133,16,00,000/-) deleted; Revenue's appeal on this ground dismissed.

Amortisation of premium on Held to Maturity securities over holding period - Sustenance of amortisation of premium on HTM securities claimed by the assessee - HELD THAT: - The court found no infirmity in allowing amortisation of premium paid on HTM securities over the holding period. Securities held till redemption may be acquired at a premium or discount reflecting the coupon vis a vis market rates; where premium is paid over face/redemption value, amortisation across the holding period is appropriate. The Revenue's challenge lacked merit and was not entertained in earlier years; the court agreed with ITAT's conclusion. [Paras 12, 15, 16]

Amortisation of premium on HTM securities allowed; Revenue's challenge dismissed.

Recognition of losses on transfer between investment portfolios (AFS/HFT to HTM) - Deletion of addition disallowing loss on shifting of securities from AFS/HFT to HTM - HELD THAT: - The court recorded that transfer of securities between portfolios may give rise to a devaluation reflected in profit and loss, and prior consistent decisions involving banks have accepted such losses as deductible rather than merely 'notional'. Relying on coordinate decisions (including this court's earlier orders), the ITAT's view in allowing the loss was affirmed as correct on the facts. [Paras 17, 18]

Addition disallowing the loss on shifting securities (Rs.2,00,000/-) deleted; Revenue's appeal dismissed on this point.

Deductibility of employer contributions to Employees' Pension Fund as business expenditure - Allowability of contribution to PNB Employees' Pension Fund as deductible business expenditure - HELD THAT: - The court agreed with the ITAT that the contribution to the Employees' Pension Fund was actually paid and wholly and exclusively related to the assessee's banking business. The quantum did not alter the nature of the payments. Earlier orders in related assessment years did not raise a substantial question of law, and no basis existed to disturb the finding that the contribution was an allowable business expense. [Paras 19, 20, 21]

Deduction for pension fund contribution upheld; Revenue's contention rejected.

Tax treatment of goodwill arising on amalgamation - Deletion of addition relating to goodwill arising from amalgamation - HELD THAT: - The court noted recurring similar claims in earlier assessment years and that coordinate benches and prior proceedings did not result in admission of substantive questions against the assessee on this point. Relying on earlier orders and relevant precedents, the ITAT's deletion of the addition in respect of goodwill was affirmed and no substantial question of law was found warranting interference. [Paras 22, 23]

Addition concerning goodwill disallowed; Revenue's appeal dismissed on this issue.

Final Conclusion: No substantial question of law arises; the Revenue's appeal is dismissed and the ITAT's deletions and confirmations in favour of the assessee for AY 2009-10 are upheld.

Denial of exemption under section 11/12 for delay in filing audit report - filing of audit report in Form 10B as procedural requirement - intimation under section 143(1) of the Act - Circular F.No. 173/193/2019-ITA-I dated 23.04.2019

Denial of exemption under section 11/12 for delay in filing audit report - filing of audit report in Form 10B as procedural requirement - Circular F.No. 173/193/2019-ITA-I dated 23.04.2019 - intimation under section 143(1) of the Act - Whether exemption under section 11/12 could be denied for non-filing of the audit report in Form 10B with the return and the appropriate course of action. - HELD THAT: - The Tribunal noted that the Assessing Officer's denial rested on the audit report not being filed along with the return, while the undisputed fact is that the audit report in Form 10B was signed before the return was filed. The Tribunal observed that the case is squarely covered by the CBDT Circular F.No. 173/193/2019-ITA-I dated 23.04.2019. Rather than adjudicating the claim on merits at this stage, the Tribunal directed the Assessing Officer to verify the details, take into account the circular and the fact that the audit report was signed prior to filing, and decide the issue after affording the assessee a reasonable and adequate opportunity of being heard. The Tribunal thus remanded the matter for fresh consideration and verification by the Assessing Officer instead of confirming the denial of exemption. [Paras 10, 11, 12]

Matter remanded to the Assessing Officer to verify the details and decide the claim for exemption after affording the assessee adequate opportunity of being heard; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal remanded the question of denial of exemption under section 11/12 (for A.Y 2018-19) to the Assessing Officer for verification and fresh decision after giving the assessee an opportunity of hearing, noting applicability of the CBDT Circular dated 23.04.2019; the appeal is allowed for statistical purposes.

Penalty under section 271D - Prohibition on acceptance of cash under section 269SS - Sale deed registration and stamp duty valuation as symbolic transaction - Possession and earlier payment inference - Insufficiency of evidence to establish receipt of cash

Penalty under section 271D - Prohibition on acceptance of cash under section 269SS - Sale deed registration and stamp duty valuation as symbolic transaction - Insufficiency of evidence to establish receipt of cash - Whether penalty under section 271D for alleged acceptance of cash of Rs. 33,80,000/- in contravention of section 269SS is sustainable. - HELD THAT: - The Tribunal found that the two sale deeds (18.11.2015 and 29.08.2016) relate to the same property and are to be read together, the earlier registrations covering the heirs of four brothers and the later deed covering the heir of the fifth brother. The deeds were executed to regularise transfer and for payment of stamp duty, the market value being attributed into five equal shares for stamp duty purposes. The sale deed dated 29.08.2016 does not state that cash of Rs. 33,80,000/- was received by the assessee in the assessment year; it records that the vendee had been in possession since 2007 and that sale proceeds had been received without specifying dates. Given possession since 2007, it is improbable that consideration paid earlier would remain outstanding until registration in 2016; accordingly the deed is held to be symbolic and for transfer of ownership and stamp duty compliance. On the record there was no independent evidence of receipt of cash of Rs. 33,80,000/- by the assessee in the relevant year. In the absence of evidence establishing receipt of cash in contravention of section 269SS, invocation of penalty under section 271D was not justified. Applying these findings, the Tribunal reversed the CIT(A)'s confirmation of the penalty and directed deletion of the penalty by the Assessing Officer. [Paras 13, 14, 15]

The confirmation of penalty under section 271D is reversed and the penalty is deleted; the appeal is allowed.

Final Conclusion: Appeal allowed; penalty levied under section 271D for alleged contravention of section 269SS set aside and Assessing Officer directed to delete the penalty for A.Y. 2017-18.

Taxability of services as fees for technical services - source rule for non-residents (income accrual/arising where payer is located) - right to use cloud-based software and licensing as taxable receipt - application of India-UK Double Taxation Avoidance Agreement - deeming provisions of section 9(1)(vii)(b) and exclusion clause

Taxability of services as fees for technical services - right to use cloud-based software and licensing as taxable receipt - application of India-UK Double Taxation Avoidance Agreement - Whether amounts received by the non-resident assessee for providing a cloud-based e-invoicing portal and related services are taxable in India as fees for technical services under the Income-tax Act and the India-UK DTAA. - HELD THAT: - The assessee, a UK-resident company, provided a cloud-based e-invoicing portal (subscription/right-to-use/license) and received consideration from Genpact India. The Tribunal examined the contractual arrangements (master services agreement and statement of work) and the nature of the receipts (subscription/license fees for a cloud service). Applying the source rule, the Tribunal held that income of a non-resident is chargeable where the source (payer) is located; since the payer, Genpact India, is situated in India the receipts accrue/arise in India under section 5(2). Consequently, the Tribunal found the income to be chargeable as fees for technical services on the basis of the nature of the services rendered and the sourcing analysis. The Tribunal further observed that once the primary source rule under section 5(2) establishes chargeability, recourse to deeming provisions under section 9 is unnecessary; alternatively, the income would also fall within the taxing rights allocated to the source country under the India-UK DTAA. Reliance was placed on the approach in Kotak Securities Ltd. and GVK Industries concerning modern automated/technical services and the application of the source rule. On these grounds the Tribunal upheld the assessment treating the receipts as taxable as fees for technical services and dismissed the assessee's appeals. [Paras 7, 8, 12, 13]

Appeals dismissed; receipts from the cloud-based e-invoicing service held taxable in India as fees for technical services under domestic law and within taxing rights under the India-UK DTAA.

Final Conclusion: The Tribunal dismissed the appeals for AY 2016-17 and AY 2017-18, holding that the subscription/licence receipts from the cloud-based e-invoicing portal arise in India under the source rule and are taxable as fees for technical services; reference to DTAA rights did not alter the chargeability.

Penalty under section 271(1)(c) - Limitation under section 275(1)(a) - TOLA guidelines and suspension/extension of limitation due to COVID-19 - Effect of final adjudication of quantum by tribunal on penalty proceedings - Admission of quantum and its bearing on challenge to penalty

Penalty under section 271(1)(c) - TOLA guidelines and suspension/extension of limitation due to COVID-19 - Admission of quantum and its bearing on challenge to penalty - Validity of penalty dated 25.10.2021 for undisclosed rental income (AY 2012-13) - HELD THAT: - The tribunal held that the penalty order dated 25.10.2021 in respect of undisclosed rental income for AY 2012-13 is not barred by limitation in view of the TOLA guidelines issued in consequence of COVID-19, which have the force of law for the relevant period and protect the department from limitation. On merits, since the quantum addition of undisclosed rental income (Rs. 12,97,824/-) was finally quantified by the AO and was not contested by the assessee before the tribunal, the assessee cannot challenge the consequent penalty; the conduct of the assessee in accepting the quantum is determinative, and the penalty is a natural corollary to the admitted addition. The additional ground pleading time-bar was therefore rejected as inapplicable to the rental-income penalty. [Paras 6]

Penalty dated 25.10.2021 for undisclosed rental income (AY 2012-13) sustained; grounds of appeal dismissed.

Penalty under section 271(1)(c) - Limitation under section 275(1)(a) - Effect of final adjudication of quantum by tribunal on penalty proceedings - Whether penalty dated 25.10.2021 for under-statement of income (AY 2013-14 and AY 2014-15) is barred by limitation - HELD THAT: - The tribunal recorded that the additions for under-statement of income for AY 2013-14 and AY 2014-15 were finally confirmed by the tribunal by its order dated 13.06.2018, which became final. Consequent upon finality of the tribunal order, the time-limit prescribed by section 275(1)(a) to conclude penalty proceedings - namely within six months from the end of the month of receipt of the tribunal order by the CIT/Pr.CIT/CCIT/Pr.CCIT - is attracted. Even assuming service in the last month of FY 2018-19, the penalty should have been passed on or before 30.09.2019. The impugned penalty was, however, passed on 25.10.2021 and is therefore beyond the statutory period under section 275(1)(a). The department's reliance on the proviso to section 275(1)(a) and on TOLA guidelines was found to be based on an incorrect appreciation of facts and inapplicable to save the delayed penalty. [Paras 8]

Penalty dated 25.10.2021 qua the additions for under-statement of income for AY 2013-14 and AY 2014-15 is time-barred and is quashed; lower authorities' orders set aside and AO directed to recompute penalty after excluding the time-barred component.

Final Conclusion: Appeal for ITA No.2029/Chny/2024 (AY 2012-13) dismissed; appeals ITA No.2030/Chny/2024 (AY 2013-14) and ITA No.2031/Chny/2024 (AY 2014-15) partly allowed - penalty sustained for undisclosed rental income (AY 2012-13) but penalty orders dated 25.10.2021 in respect of specified under-statement additions for AY 2013-14 and AY 2014-15 quashed as time-barred and remitted for recomputation without those components.

Choice of valuation method under Rule 11UA - rejection of valuation report by Assessing Officer without referral to an independent Registered Valuer/Merchant Banker - obligation on AO to obtain fresh valuation as per prescribed method rather than suo motu adoption of alternative method - inadmissibility of AO adopting net asset value method where assessee has opted for discounted cash flow method - deeming provision under Section 56(2)(viib) in transactions between holding company and subsidiary

Choice of valuation method under Rule 11UA - rejection of valuation report by Assessing Officer without referral to an independent Registered Valuer/Merchant Banker - obligation on AO to obtain fresh valuation as per prescribed method rather than suo motu adoption of alternative method - inadmissibility of AO adopting net asset value method where assessee has opted for discounted cash flow method - Validity of the Assessing Officer's rejection of the assessee's DCF-based valuation and the consequent adoption of NAV to determine FMV for the purpose of Section 56(2)(viib) - HELD THAT: - The Tribunal examined Rule 11UA(2)(b) which permits the assessee to determine fair market value either by the DCF method or by the NAV method and recognised that the choice of method is vested in the assessee. The assessee produced a Chartered Accountant's valuation adopting the DCF method. The AO rejected that report on the basis of mismatch between projected and actual figures and, without referring the matter to an independent Registered Valuer or Merchant Banker to re-work the DCF valuation, adopted the NAV method himself. The Tribunal held that while the AO may scrutinise the valuation, there is no power to substitute or tinker with a valuation obtained in the prescribed manner; for a fresh valuation the AO must obtain a report from an independent Registered Valuer/Merchant Banker applying the method chosen by the assessee. Reliance was placed on the principle that where the law entrusts valuation to prescribed experts pursuant to prescribed methods, an AO cannot on his own reject and replace such valuation. Applying these principles, the Tribunal found the AO's suo motu rejection of the DCF report and adoption of NAV not permissible and therefore upheld the deletion of the addition made under Section 56(2)(viib). [Paras 7, 9]

The AO's rejection of the assessee's DCF valuation without obtaining an independent valuation and his adoption of NAV were not correct; the CIT(A)'s deletion of the addition under Section 56(2)(viib) is upheld.

Final Conclusion: Revenue's appeal is dismissed; the tribunal upholds the appellate order deleting the addition under Section 56(2)(viib) on the ground that the AO wrongly rejected the assessee's DCF valuation without obtaining an independent valuation and could not substitute NAV in place of the method chosen by the assessee.

Construction/installation permanent establishment - Article 5(2)(k) of the India USA DTAA - cumulative counting of days for Article 5(2)(k) - double/multiple counting of man days not permissible - withholding obligation under Section 195 of the Income tax Act - relevance of payments dates to commencement/completion of project

Construction/installation permanent establishment - Article 5(2)(k) of the India USA DTAA - cumulative counting of days for Article 5(2)(k) - double/multiple counting of man days not permissible - TEC did not have a construction/installation permanent establishment in India under Article 5(2)(k) of the India USA DTAA. - HELD THAT: - The Tribunal examined whether the stay of TEC's employees in India exceeded the 120 day threshold in any 12 month period required to create a construction/installation PE under Article 5(2)(k). All three job orders concerned the same site (SKAPS Plant, Mundra) and were for identical periods. Applying the principle in Linklaters (ITAT Mumbai) that days of presence must be counted cumulatively (so that multiple employees present on the same day cannot be multiply counted), the appellant's undisputed records show visits from 05.03.2013 to 31.03.2013 (relevant to A.Y. 2013 14) and from 01.04.2013 to 07.06.2013 (relevant to A.Y. 2014 15), amounting to approximately 65 days in FY 2013 14 (relevant to A.Y. 2014 15) and 26 days in the earlier period-well short of 120 days in any 12 month period. The Tribunal also rejected reliance on payment dates as determinative of commencement or completion of the project, noting payments do not necessarily fix the period of physical activities. In light of these findings and the undisputed visit dates, the requisite 120 day threshold for an installation PE was not met. [Paras 9, 10]

TEC did not have an installation/construction permanent establishment in India under Article 5(2)(k).

Withholding obligation under Section 195 of the Income tax Act - relevance of payments dates to commencement/completion of project - The assessee was not under an obligation to withhold tax under Section 195 in respect of payments made to TEC. - HELD THAT: - Having held that TEC did not have an installation PE in India, the Tribunal concluded that the payments to TEC were not taxable in India on that ground and therefore did not give rise to a withholding obligation under Section 195. The Tribunal emphasised that the dates of remittance are not decisive of the period of installation activities and that absent a PE the payer was not obliged to deduct tax at source for the contractual payments to the overseas entity. [Paras 10, 11]

The assessee had no obligation to deduct tax at source under Section 195 for the contractual payments to TEC.

Final Conclusion: Appeal allowed for A.Y. 2013 14 and A.Y. 2014 15: TEC held not to have an installation/construction PE in India under Article 5(2)(k) and the assessee therefore not liable to withhold tax under Section 195 in respect of the payments made to TEC.

Confiscation - smuggling - concurrent findings of fact - perversity - natural justice - discretion to order absolute confiscation and redemption fine - deterrence - disproportionality

Concurrent findings of fact - perversity - Whether the concurrent factual findings recorded by the adjudicating authority, the Commissioner (Appeals) and the revisional authority sustaining confiscation are vitiated by perversity or are unsustainable on the record. - HELD THAT: - The Court held that the three impugned orders are primarily based on evaluation of factual material and record concurrent findings of fact. Interference by this Court requires perversity, absence of evidence, or findings contrary to the weight of evidence. The petitioners failed to demonstrate perversity; the material on record sufficiently supports the adverse findings. Consequently, the Court refused to substitute its extraordinary jurisdiction for appellate review where the factual findings are supported. [Paras 9, 10, 15]

Concurrent findings are supported by evidence and not perverse; no interference warranted.

Natural justice - Whether the impugned orders are vitiated for violation of principles of natural justice by not permitting adequate opportunity to the petitioners. - HELD THAT: - The Court found that full opportunity was granted to the petitioners during adjudication and that the allegation of denial of cross-examination or procedural unfairness was not established. The Court emphasised that the principle of natural justice had been complied with and that the recorded findings were made after affording opportunity. [Paras 5, 10]

No breach of natural justice; procedural opportunities were afforded and do not vitiate the orders.

Confiscation - discretion to order absolute confiscation and redemption fine - smuggling - Whether the belated production of an invoice by one petitioner established ownership and entitled the petitioners to avoid absolute confiscation or to be offered redemption. - HELD THAT: - The Court noted the invoice was produced during adjudication but was not in the possession of the carrier at the time of seizure; the seizure occurred the day after the invoice date and the invoice contemplated payment within 30 days with no evidence payments were made. The fact that the petitioner on the same flight did not own up at seizure, and the belated claim of ownership, undermined reliance on the invoice. The revisional authority's finding of an organised attempt to smuggle, including transfer of gold to airport staff, supported absolute confiscation. The Court also observed that allowing redemption is a discretionary exercise dependent on case facts; given the manner, quantity and alleged conspiracy, discretion to order absolute confiscation was properly exercised. [Paras 11, 12, 13, 14]

Belated invoice did not establish entitlement to avoid absolute confiscation; exercise of discretion for absolute confiscation was justified.

Disproportionality - deterrence - Whether the confiscation and penalties imposed were grossly disproportionate infringing Article 14 and therefore unsustainable. - HELD THAT: - Having examined the modus operandi, quantity, concealment method and the concomitant findings of collusion and attempt to evade customs declaration, the Court accepted the revisional authority's reasoning that deterrence was required to prevent misuse of the liberalised facilitation process. The authorities' assessment that exemplary action was necessary to prevent such smuggling was not shown to be disproportionate in the circumstances. The petitioners' belated and contradictory contentions did not establish arbitrariness. [Paras 6, 13, 15]

Actions were not disproportionate; confiscation and penalties upheld as a proportionate response invoking deterrence.

Final Conclusion: The petitions challenging concurrent orders upholding confiscation, penalties and associated findings of smuggling are dismissed; the factual findings, compliance with natural justice, the discretionary exercise to order absolute confiscation, and proportionality/deterrence rationale were sustained and do not warrant interference.

Summary order. Civil Appeal dismissed; delay in filing condoned; impugned order of the Customs, Excise & Service Tax Appellate Tribunal, East Zonal Bench, Kolkata, not interfered with; pending applications disposed of.

Delay in adjudication of show cause notice - violation of audi alteram partem / natural justice by non-intimation of transfer to the call book - non-retroactivity of procedural convenience - master circular 2017 not a retrospective defence - quashing of adjudication order for inordinate delay

Delay in adjudication of show cause notice - violation of audi alteram partem / natural justice by non-intimation of transfer to the call book - Whether non-intimation to the petitioners that show cause notices were transferred to the call book justified the 15-year delay in adjudication. - HELD THAT: - The Court found that the show cause notices dated 2 May 2008 and 22 September 2009 were delayed in adjudication for approximately 15 years and that the stated reason-transfer of the matters to the call book-was never communicated to the petitioners. The Bench held that, irrespective of any master circular, the principles of natural justice required that the petitioners be informed if adjudication was being deferred by transfer to the call book. The Court rejected the respondents' submission that the master circular of 2017, which mandates intimation, absolved them of any obligation prior to 2017, observing that the circular only clarified an existing duty and that earlier decisions of this Court have uniformly held intimation to be incumbent upon the authority. Accordingly, non-intimation could not be relied upon to justify the long inaction and delay. [Paras 2, 3]

Non-intimation that the show cause notices were transferred to the call book violated natural justice and could not justify the inordinate delay in adjudication.

Quashing of adjudication order for inordinate delay - Whether the order in original dated 31 January 2024 and the corrigendum dated 9 February 2024 should be quashed in view of the unjustified delay and failure to intimate transfer to the call book. - HELD THAT: - Relying upon a series of precedents addressing similar factual and legal situations, the Court concluded that the delay of about 15 years and the absence of any intimation to the petitioners rendered the impugned adjudication vitiated. The Court applied established authority which holds that administrative convenience or pendency of similar matters cannot be used to deny an affected party the opportunity to be heard, and that prolonged inaction may warrant quashing of adjudicatory orders. In exercise of writ jurisdiction and after reference to the cited decisions, the Court set aside the order in original and its corrigendum. [Paras 4, 5]

Order in original dated 31 January 2024 and corrigendum dated 9 February 2024 quashed and set aside; writ petition disposed.

Final Conclusion: The High Court quashed and set aside the adjudication order dated 31 January 2024 and its corrigendum of 9 February 2024 because the authorities failed to inform the petitioners that the show cause notices had been transferred to the call book, thereby causing an inordinate delay of about 15 years and violating principles of natural justice; the writ petition is disposed of with no order as to costs.

Delay in adjudication of show cause notices - quashing of show cause notices for inordinate delay - justification for delay and duty to inform affected party - reliance on subsequent Supreme Court decision as justification

Delay in adjudication of show cause notices - quashing of show cause notices for inordinate delay - The show cause notices dated 20 October 2011 and 6 August 2012 were quashed on account of inordinate and unjustified delay in adjudication. - HELD THAT: - The Court found that the show cause notices issued in 2011 and 2012 remained undecided for more than ten years without any adequate or acceptable justification from the respondents. Reliance was placed on coordinate decisions holding that prolonged non-adjudication without justification renders such notices bad in law. In the absence of any explanation amounting to justification for the delay, the statutory or equitable basis for continuing the proceedings was held to be lacking, warranting quashing of the notices. The determinative reasoning is that unexplained, prolonged delay in adjudication infringes the right to timely adjudication and vitiates the proceedings. [Paras 5]

Show cause notices dated 20 October 2011 and 6 August 2012 quashed and set aside for inordinate and unjustified delay.

Reliance on subsequent Supreme Court decision as justification - justification for delay and duty to inform affected party - The respondents' contention that delay was justified because adjudication awaited the Supreme Court decision in Canon India Private Limited was rejected, and failure to inform the petitioner of pendency on that ground was noted. - HELD THAT: - The respondents relied on the Supreme Court's decision in Canon India Private Limited delivered in 2021 to justify non-adjudication. The Court observed that (a) the Canon decision was rendered in 2021, nearly ten years after the show cause notices were issued, and thus cannot justify the entire period of non-adjudication, and (b) the respondents did not intimate the petitioner that adjudication was kept pending on account of that decision. Consequently, the purported reliance on a later judgment was held insufficient to excuse the prolonged delay and the lack of communication to the petitioner reinforced the absence of a legitimate justification. [Paras 3, 4]

Reliance on the Supreme Court decision in 2021 did not justify the decade-long delay; non-intimation to the petitioner of pendency on that ground was noted and the contention rejected.

Final Conclusion: Writ petition disposed of by quashing and setting aside the show cause notices dated 20 October 2011 and 6 August 2012 for inordinate and unjustified delay; no costs.

Exhaustion of statutory remedies - alternate remedy - writ jurisdiction under Article 226 - exceptions to rule of alternate remedy (fundamental rights, natural justice, lack of jurisdiction, vires challenge) - perversity of findings - pre-deposit requirement in CESTAT appeals

Exhaustion of statutory remedies - alternate remedy - exceptions to rule of alternate remedy (fundamental rights, natural justice, lack of jurisdiction, vires challenge) - perversity of findings - pre-deposit requirement in CESTAT appeals - Whether the High Court should entertain the writ petition despite the availability of an alternate statutory remedy of appeal to the CESTAT. - HELD THAT: - The Court held that the petition must be rejected on the ground that the petitioner has not shown any exceptional circumstances to bypass the statutory remedy of appeal to the CESTAT. The covering letter to the petitioner expressly stated the order was appealable, and the petitioner's singular averment claiming absence of an alternate efficacious remedy was found misleading. Authorities relied upon by the petitioner establish limited exceptions to the rule - enforcement of fundamental rights, breach of principles of natural justice, orders wholly without jurisdiction, or challenge to the vires of legislation - none of which are pleaded or shown on the facts. Allegations of perversity in the impugned finding about multiple consignments raise disputed questions of fact requiring appreciation of material on record and are therefore matters fit for appellate consideration. The petitioner's contention about inability to make the pre-deposit required for filing an appeal was unsupported on the record; the impugned order itself indicates substantial turnover. The Court declined to exercise discretionary writ jurisdiction under Article 226 in view of the availability of an adequate and efficacious alternate remedy, while noting the petitioner remains free to pursue appeal and that the appellate forum should be informed of the petition's pendency and the short timeline in the Court's order for condonation considerations. [Paras 16, 19, 20, 21, 22]

Writ petition not entertained; petitioner must pursue the statutory appeal to the CESTAT, and may file such appeal within the period indicated so that the Tribunal may take the petition's pendency into account for condonation of delay.

Final Conclusion: The High Court declined to exercise its discretionary writ jurisdiction and dismissed the petition for failure to establish any exception to the rule of exhaustion of alternate statutory remedies; the petitioner is permitted to institute appeal to the CESTAT and the appellate court is to consider the pendency of this petition for condonation purposes.

Computation of limitation for refund claims - provisional assessment - date of final assessment - date of payment of duty - harmonious construction of notification and Section 27 of the Customs Act, 1962 - Section 27(1B)(c) of the Customs Act, 1962 - Notification No. 93/2008-Customs - Circular No. 23/2010-Custom

Computation of limitation for refund claims - provisional assessment - date of final assessment - date of payment of duty - Section 27(1B)(c) of the Customs Act, 1962 - Notification No. 93/2008-Customs - Circular No. 23/2010-Custom - Limitation period for filing refund claim where duty was paid pursuant to provisional assessment is to be computed from the date of final assessment and not from the date of provisional payment; consequent validity of CESTAT allowing the respondent's refund claim filed beyond one year from provisional payment. - HELD THAT: - The Court agreed with the Tribunal and the Delhi High Court in Pioneer India Electronics that Section 27(1B)(c) of the Customs Act requires the one-year limitation to be computed from the date of adjustment of duty after final assessment where duty is paid provisionally. Notification No. 93/2008 cannot be interpreted or applied so as to curtail the period of limitation prescribed by Section 27; circulars or notifications that purport to make the date of provisional payment determinative in a manner inconsistent with Section 27 must be harmoniously construed so as not to reduce statutory limitation. Where an assessee files a refund claim within the period permitted by Section 27 measured from final assessment, such claim cannot be rejected on the ground of limitation even if it is beyond one year from the date of provisional payment. Applying that principle to the present facts, the Tribunal correctly allowed the respondent's appeal as the refund claim was within the period computed from final assessment. [Paras 4, 8]

Appeals dismissed; no substantial question of law arises as the CESTAT rightly held that limitation is computed from date of final assessment and therefore the respondent's refund claim was maintainable.

Final Conclusion: The High Court dismissed the revenue appeals, holding that the CESTAT correctly applied Section 27(1B)(c) and relevant precedents to compute the limitation from the date of final assessment; the refund claim was therefore maintainable and rejection on limitation grounds was unsustainable.

Regular bail under Sections 437 and 439 Cr.P.C. - entitlement to bail in cases involving commercial quantity under the NDPS Act - prima facie involvement and trial-stage testing of contradictions - filing of charge sheet as indicium of sufficient material to proceed to trial - period of incarceration alone not a ground for bail

Regular bail under Sections 437 and 439 Cr.P.C. - entitlement to bail in cases involving commercial quantity under the NDPS Act - prima facie involvement and trial-stage testing of contradictions - period of incarceration alone not a ground for bail - filing of charge sheet as indicium of sufficient material to proceed to trial - Whether the petitioner is entitled to regular bail in proceedings under the NDPS Act given the alleged recovery of a commercial quantity of contraband and the stage of investigation and trial. - HELD THAT: - The Court observed that the alleged recovery of 428.675 kilograms of Ganja in 220 packets from the vehicle in which the petitioner was present constitutes a commercial quantity, and that the petitioner has been in judicial custody since 20.06.2023. The earlier bail petition by the petitioner had been dismissed by this Court, and the present petition repeats contentions already considered. The Court held that where prima facie involvement appears, contradictions in the charge sheet are matters to be tested at trial and not at the bail stage. Further, the mere length of incarceration does not, by itself, entitle an accused to bail. The filing of the charge sheet was treated as indicating that the investigating agency found sufficient material to place the matter before the trial court. Balancing the cumulative facts and circumstances, and without expressing any view on the merits of evidence, the Court concluded that in view of the substantial quantity of contraband, the manner of commission and its societal impact, the petitioner is not entitled to bail at this stage. [Paras 7, 8, 9, 10, 11]

Petition dismissed; bail refused.

Final Conclusion: The High Court dismissed the second criminal petition for regular bail, holding that in light of prima facie involvement, the recovery of a commercial quantity of contraband, the filing of the charge sheet and the need to test contradictions at trial, the petitioner is not entitled to bail at this stage.

Classification (yarn v. thread) - anti-dumping duty (ADD) levy notification - burden of proof on the department for levy - confiscation under Section 111(m) of the Customs Act, 1962 - penalty under Section 112 of the Customs Act, 1962

Classification (yarn v. thread) - anti-dumping duty (ADD) levy notification - burden of proof on the department for levy - Whether the imported goods attract anti-dumping duty under Notification No. 23/2012-Cus - HELD THAT: - The Tribunal found the core controversy to be one of technical fact - whether the goods imported as "Embroidery Thread" are in substance viscose filament yarn classifiable under heading 5403 and therefore liable to ADD at the rate specified in the notification. The Adjudicating Authority's conclusion rested largely on its reading of tariff notes, dictionary definitions and the importer's alleged admissions, but there was no physical examination report, manufacturer literature, laboratory test report or expert opinion placed on record to establish the physical characteristics that distinguish 'embroidered yarn' from 'embroidery thread' for classification purposes. Given that the issue concerns levy, the onus lay on the department to prove that the goods are leviable to ADD; mere assumptions, inward inferences or reliance on impressions without evidentiary support do not discharge that burden. In the absence of adequate evidential foundation to show that the imported articles were not the declared threads but yarns attracting ADD, the Tribunal held that the department failed to prove levy of ADD under the impugned notification and that the adjudicatory findings to the contrary are unsupported by evidence. [Paras 4, 9, 10]

Impugned findings that the goods attract ADD under Notification No. 23/2012-Cus set aside for failure of the department to discharge its burden of proof; appeal allowed on this score.

Confiscation under Section 111(m) of the Customs Act, 1962 - penalty under Section 112 of the Customs Act, 1962 - burden of proof on the department for levy - Whether confiscation and penalty were justified for alleged mis-declaration / mis-classification - HELD THAT: - The Tribunal observed that the charge of mis-declaration and the consequent liability to confiscation and penalty depended on proof of deliberate mis-description to evade duty. The Adjudicating Authority's conclusion that the importer mis-declared the goods was not supported by independent evidentiary material; it relied on inferences from tariff notes and dictionary definitions and on the department's view of classification. Because the department had not established that the goods were other than as declared or that there was deliberate intention to evade ADD, the prerequisite factual basis for invoking confiscation under Section 111(m) or imposing penalty under Section 112 was absent. Accordingly, the punitive measures sustained by the Commissioner (Appeals) could not stand. [Paras 9, 10]

Findings sustaining confiscation and penalty set aside for want of evidence of mis-declaration or intent to evade duty.

Final Conclusion: The impugned orders demanding ADD and upholding confiscation and penalties are set aside for failure of the department to discharge the evidentiary burden; appeals are allowed and disposed of with consequential relief as per law.

Amnesty scheme for one time settlement of default in export obligation - regularization under Amnesty Scheme - Export Obligation Discharge Certificate (EODC) - payment of customs duty and interest under Amnesty Scheme - closure letter effect on adjudication and appeals - penalty under Section 112(a) of the Customs Act, 1962

Amnesty scheme for one time settlement of default in export obligation - payment of customs duty and interest under Amnesty Scheme - closure letter effect on adjudication and appeals - penalty under Section 112(a) of the Customs Act, 1962 - Export Obligation Discharge Certificate (EODC) - Validity of the penalty imposed under Section 112(a) where the appellant has regularised the default by payment of customs duty and interest under the Amnesty Scheme and obtained closure from the Regional Authority of DGFT. - HELD THAT: - The appellant availed the Amnesty Scheme by remitting the customs duty and applicable interest and, on that basis, the Dy. DGFT issued a Final Duty Paid Regularization letter/closure letter. The Public Notice explicitly permits regularisation of cases including those already adjudicated or pending adjudication and envisages issuance of an Export Obligation Discharge Certificate on receipt and verification of payment and documents. The closure letter issued by the concerned Regional Authority, produced before the adjudicating/appellate forum, satisfies the procedural requirements of the Public Notice for regularisation. The Tribunal found that, having been satisfied with the remittance and issuance of the closure letter, there was no scope to sustain the penalty which had been imposed for alleged violation; the Amnesty Scheme does not provide for imposition of penalty and non-fulfilment of export obligation under the Scheme is not necessarily to be treated as mala fide or an irregularity warranting penalty. In these circumstances the impugned penalty and the adjudicating order are not sustainable. [Paras 3, 5, 6, 7, 8]

Impugned order set aside; penalty under Section 112(a) deleted and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned adjudication order insofar as the penalty is concerned, having regard to regularisation under the Amnesty Scheme and issuance of the closure letter by the Regional Authority of DGFT after payment of duty and interest.

Power to recover escaped customs duty under Section 12 of the Customs Act - duty demand on failure to fulfil post importation conditions of an exemption notification - confiscation of imported goods and redemption fine under Section 111(o) and Section 125 of the Customs Act - imposition of penalty on importer and officers under Section 112(a) of the Customs Act - availability of goods not a prerequisite for imposition of redemption fine - duty quantification not restricted to bank guarantee/bond amount executed at time of import

Power to recover escaped customs duty under Section 12 of the Customs Act - duty quantification not restricted to bank guarantee/bond amount executed at time of import - Sustainability of the duty demand and the correctness of duty quantification confirmed in the impugned order - HELD THAT: - The Tribunal held that the duty demand arising from non fulfilment of post importation conditions of the exemption notification is recoverable by the Department under the power to levy customs duty in Section 12 and is not constrained by the time limits of Section 28. The earlier Tribunal order had directed that the duty payable is the amount leviable on the goods at the time of import but for the exemption; that direction had attained finality. The appellants' contention that the demand must be confined to the bond/ bank guarantee amount is rejected as contrary to the Tribunal's remand direction and to the principle that escaped duty arising from breach of conditional exemption is recoverable under Section 12. Consequently the duty computation in the impugned order is held to be in order and not interfered with. [Paras 8, 11]

Duty demand and its quantification as confirmed in the impugned order are sustained.

Confiscation of imported goods and redemption fine under Section 111(o) and Section 125 of the Customs Act - availability of goods not a prerequisite for imposition of redemption fine - imposition of penalty on importer and officers under Section 112(a) of the Customs Act - Validity of confiscation, imposition of redemption fine and penalties on the appellants - HELD THAT: - Relying on precedent, the Tribunal held that where post importation conditions of a conditional exemption are not met, goods are liable for confiscation under Section 111(o) and a redemption fine under Section 125 may be imposed even if the goods are no longer physically in custody because release on bond does not extinguish the authority to confiscate or to levy a redemption fine. The adjudicating authority had already reduced penalties in de novo proceedings in light of prior directions to show leniency; those reduced penalties were held not to be excessive. The Tribunal therefore found no infirmity in confirming confiscation with option of redemption fine and in upholding the penalties as reduced. [Paras 12, 13]

Confiscation, imposition of redemption fine and the reduced penalties are upheld.

Final Conclusion: The appeals are dismissed and the impugned Order in Original dated 30.06.2014 is upheld.

Basic Customs Duty exemption - interpretation of exemption notification - benefit of ambiguity in exemption notifications in favour of Revenue - burden on claimant to establish entitlement to exemption - cumulative reading of parameters/threshold test for digital cameras

Basic Customs Duty exemption - interpretation of exemption notification - cumulative reading of parameters/threshold test for digital cameras - burden on claimant to establish entitlement to exemption - Denial of BCD exemption to the appellant in respect of imported digital still image video cameras was unjustified. - HELD THAT: - The Tribunal applied the reasoning of the Larger Bench in M/s. Nikon India Pvt. Ltd., which held that for the exemption under Notification No.25/2005 (as amended) the Explanation must be read literally and the three parameters/functions of a digital camera are to be read cumulatively to ascertain whether the characteristics exceed the prescribed thresholds. The Larger Bench stated that where ambiguity exists in a charging provision benefit goes to the assessee but, for exemption notifications, any ambiguity is construed in favour of the Revenue; nevertheless, absence of ambiguity requires literal application and the claimant bears the burden of proving that the imported goods fall within the four corners of the exemption. Applying that approach, the Tribunal found that the appellant established that their cameras met the parameters for exemption (including the threshold relating to recording time), and therefore were eligible for BCD exemption. Consequently the Revenue's denial was set aside. [Paras 5, 6]

Appeal allowed and the impugned order denying BCD exemption is set aside; appellant entitled to consequential benefits as per law.

Final Conclusion: Applying the Larger Bench ratio, the appellant satisfied the parameters of the exemption Notification and the denial of Basic Customs Duty exemption was quashed; appeal allowed with consequential benefits.

Benefit of an exemption notification - strict compliance with conditions of an exemption notification - deeming fiction equating importer to a domestic manufacturer for CVD - conditional exemption versus absolute exemption - doctrine of merger and effect of grant of leave to appeal - purpose of CVD to protect level playing field for domestic manufacturers

Benefit of an exemption notification - strict compliance with conditions of an exemption notification - conditional exemption versus absolute exemption - deeming fiction equating importer to a domestic manufacturer for CVD - Entitlement of the appellant to Nil CVD under Notification No.30/2004-C.E. as claimed in the impugned bills of entry - HELD THAT: - The Tribunal held that the appellant sought exemption under an erstwhile Notification which had been superseded by Notification Nos.34/2015-C.E. and 37/2015-C.E. as on the dates of filing the bills of entry; hence the claim must be examined in the light of the prevailing amended notifications. Applying binding precedents, an importer claiming benefit of an exemption notification must satisfy all conditions prescribed therein and such conditions are to be strictly interpreted. Where an exemption notification is conditional, only domestic manufacturers who fulfil those conditions are entitled to the benefit; by parity of reasoning (the statutory deeming fiction equating an importer to a domestic manufacturer does not enable an importer to satisfy conditions which are impossible for him to fulfil), an importer cannot claim benefit if the conditions (such as inputs having suffered Central Excise duty) cannot be satisfied by an importer. The Tribunal found that the amending notifications inserted a condition requiring that Central Excise duty must have been paid on inputs - a requirement impossible for the appellant (importer) to meet - and that the appellants did not assert satisfaction of the conditions of the amended notifications. Reliance on pre-amendment authorities was held inapplicable to the facts where the law had changed; the Tribunal followed the jurisdictional High Court decisions which upheld the validity and effect of the amending notifications and concluded that the claim under Notification No.30/2004-C.E. (as if still in force) could not be entertained. [Paras 6, 16, 17]

Claim for Nil CVD under Notification No.30/2004-C.E. is not allowable; appeal dismissed on this ground.

Doctrine of merger and effect of grant of leave to appeal - Whether the admission/grant of leave by the Supreme Court against the jurisdictional High Court judgment renders that judgment non binding and prevents the Tribunal from following it - HELD THAT: - The Tribunal examined the effect of grant of leave to appeal and the doctrine of merger as discussed in Apex Court authorities. It noted that grant of leave puts the correctness of the impugned judgment in jeopardy and invokes appellate jurisdiction, but does not render the impugned order a nullity; until set aside or stayed, the impugned judgment remains binding and effective between the parties. Nonetheless, where leave has been granted and appeal is admitted, the Tribunal considered that the matter is open for consideration and proceeded to examine the merits in light of the admitted appeal and relevant authorities. The Tribunal therefore applied the jurisdictional High Court's reasoning (subject to the admitted Supreme Court challenge) and concluded there was no illegality in the lower authorities applying the amended notifications. [Paras 12, 13, 15]

Grant of leave does not automatically render the impugned judgment non binding; the Tribunal may consider merits where the Supreme Court has admitted the appeal, and here it proceeded to decide the issue on merits.

Final Conclusion: The appeals are dismissed. The appellant is not entitled to Nil CVD under Notification No.30/2004 C.E. as the notification stood superseded by Notification Nos.34/2015 and 37/2015 which imposed conditions the importer could not satisfy; the Tribunal correctly followed the jurisdictional High Court and binding precedent, and the admitted Supreme Court leave did not preclude the Tribunal from deciding the merits.

Financial debt - time value of money - acknowledgement of debt and limitation - written loan agreement not mandatory to prove financial debt - confirmation of accounts and TDS as evidentiary material - overriding effect of the Insolvency and Bankruptcy Code

Financial debt - time value of money - confirmation of accounts and TDS as evidentiary material - The amount advanced by the Appellant qualifies as a financial debt under Section 5(8) of the IBC. - HELD THAT: - The Tribunal examined the materials on record - bank statements evidencing disbursements in five instalments, payments of interest by the Corporate Debtor, Form 26AS entries showing TDS on interest, and repeated confirmations of accounts in multiple financial years - and held that these establish a transaction disbursed for the consideration for time value of money. The absence of a formal written loan agreement was not regarded as fatal where the nature of the transaction is otherwise established by contemporaneous evidence and acknowledgements. The Tribunal also found the Corporate Debtor's plea of forgery of confirmations to be unsubstantiated in light of repeated correspondence by the group accountant and the group-company relationship reflected on the record. [Paras 27, 30, 31, 32, 33]

Debt and default established; the advances constitute a financial debt under Section 5(8).

Acknowledgement of debt and limitation - confirmation of accounts and TDS as evidentiary material - The Section 7 petition is not barred by limitation. - HELD THAT: - The Tribunal found that the Corporate Debtor's acknowledgements through confirmation of accounts and the deduction of TDS on interest (latest in FY 2020-21) operate as fresh acknowledgements, thereby commencing a new period for limitation. The demand notice dated 12.03.2022 and the Section 7 filing on 02.12.2022 were held to be within three years of the last acknowledged act on record, rendering the petition timely. [Paras 28]

Limitation defence rejected; petition filed within the limitation period.

Written loan agreement not mandatory to prove financial debt - overriding effect of the Insolvency and Bankruptcy Code - The Adjudicating Authority's dismissal of the Section 7 petition for absence of a written loan agreement is unsustainable and is set aside. - HELD THAT: - The Tribunal disagreed with the Adjudicating Authority's reliance on RBI Master Circular to treat a written agreement as mandatory for NBFCs for the purpose of establishing financial debt under the IBC. Noting that several disbursements predated the RBI circular and that the IBC (and Section 238) governs the insolvency regime, the Tribunal followed precedents of this Appellate Tribunal holding that written contract is not a pre-condition where the nature of the transaction is otherwise evident. On the totality of evidence (disbursements, interest payments, confirmations, TDS), the AA's conclusion could not be sustained. [Paras 29, 31, 32, 33, 34]

Impugned order dated 21.11.2023 is set aside; NCLT, Kolkata to proceed under Section 7.

Final Conclusion: The Tribunal allowed the appeal, held that the advances constitute a financial debt and are not time-barred, set aside the NCLT order dismissing the Section 7 petition, and directed the NCLT, Kolkata Bench to proceed with the Section 7 process upon presentation.

Treatment of unadmitted statutory claims in a resolution plan - verification of claims under the CIRP Regulations - availability and inspection of the list of creditors - effect of non-challenge to non-admission of claim during CIRP - finality of approval and implementation of a resolution plan - commercial wisdom of the committee of creditors

Treatment of unadmitted statutory claims in a resolution plan - verification of claims under the CIRP Regulations - availability and inspection of the list of creditors - Whether the Adjudicating Authority erred in approving the Resolution Plan which treated the State Tax Officer's tax claim as 'nil' where the Resolution Professional had not admitted the claim and had recorded it as under dispute - HELD THAT: - The court recorded that the Appellant's claim was filed in Form F and reflected in successive lists of creditors published by the Resolution Professional, but was marked as not admitted because disputes/appeals were pending. Regulation 13 of the CIRP Regulations requires the list of creditors to be available for inspection and to be displayed; the record showed the lists were filed and placed on the website. The Resolution Plan expressly treated statutory claims admitted by the RP as nil and provided that as on NCLT approval date such claims would stand extinguished. The Appellant did not challenge the non-admission of its claim before the Adjudicating Authority or take steps during CIRP despite repeated publication of the creditor lists. On these facts the Tribunal found no error in NCLT's approval of the plan which treated the statutory claim as nil, and held that the Appellant cannot now agitate non-allocation of any amount in the plan. [Paras 12, 13, 14]

No infirmity in the approval of the Resolution Plan insofar as it treated the Appellant's statutory claim as nil; the Adjudicating Authority did not err.

Effect of non-challenge to non-admission of claim during CIRP - finality of approval and implementation of a resolution plan - commercial wisdom of the committee of creditors - Whether the Appellant's failure to challenge the Resolution Professional's non-admission of the claim precluded it from contesting approval and implementation of the Resolution Plan - HELD THAT: - The court observed that the Appellant had notice of the non-admission through periodic lists yet took no steps to agitate the issue before the Adjudicating Authority. The decision noted that the same plan had been earlier upheld by the Supreme Court, which emphasized that the commercial wisdom of the CoC cannot be routinely interfered with and that implementation of an approved plan had commenced. Given non-challenge during CIRP and subsequent implementation upheld by higher fora, the Appellant could not be permitted to reopen the matter. Consequently the appeal was held to be without merit. [Paras 15, 16, 17]

Appellant's failure to challenge non-admission during CIRP and the plan's subsequent implementation/validation preclude relief; appeal dismissed.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority's order approving the Resolution Plan which treated the State Tax Officer's statutory claim as 'nil' is sustained: the claim had been reflected but not admitted by the Resolution Professional, the creditor lists were available for inspection, the Appellant did not contest non-admission during CIRP, and the plan's approval and implementation (which has been judicially upheld) bar reopening the issue.

Recall of order - Liquidation under IBC - Exclusion/extension of CIRP period beyond 330 days - Inherent power to recall judgments - Auction by liquidator and confirmation

Recall of order - Inherent power to recall judgments - Exclusion/extension of CIRP period beyond 330 days - Whether the Adjudicating Authority erred in rejecting the application seeking recall of the liquidation order dated 13.12.2023 and in refusing exclusion of the CIRP period. - HELD THAT: - The Tribunal examined the limited grounds on which a recall of an order may be permitted - procedural error, non-service of a necessary party, misrepresentation or fraud resulting in gross failure of justice - as explained by the Hon'ble Supreme Court. The Adjudicating Authority had considered the application for exclusion of the period from 22.03.2023 to 30.11.2023 and found that (a) substantial CIRP progress was absent, (b) the applicant had not demonstrated exceptional circumstances or a high prospect of a viable resolution plan, and (c) a large exclusion of 252 days could not be permitted merely to restart CIRP. The Tribunal held that these findings fall within permissible exercise of discretion and that the grounds advanced by the appellant for recall do not satisfy the narrow criteria for recalling an order. Consequently, there was no error in rejecting the recall application or in refusing to exclude the claimed CIRP period. [Paras 11, 12]

Application for recall rejected; no interference with the liquidation order dated 13.12.2023.

Auction by liquidator and confirmation - Liquidation under IBC - Whether the Adjudicating Authority erred in directing the liquidator to continue the auction process and whether the Tribunal should stay or set aside the auction already conducted. - HELD THAT: - The Tribunal noted that an interim direction previously passed restrained approval of any auction already taken place but did not prevent the liquidator from conducting the auction; the sale conducted has not yet been approved by the Adjudicating Authority. The Adjudicating Authority's direction to continue the auction subject to the pending appeal was therefore not shown to be impermissible. The appellant retains the statutory remedy of raising objections before the Adjudicating Authority at the time of confirmation of the auction, including objections on valuation or other procedural infirmities. Given that the auction remains unapproved and the appellant may challenge confirmation, there was no ground for the Tribunal to interfere with the impugned direction to proceed with the auction process. [Paras 13, 14, 15]

No interference with the Adjudicating Authority's direction to continue the auction; appellant permitted to raise objections before the Adjudicating Authority when the auction is placed for confirmation.

Final Conclusion: Both Appeals dismissed; the liquidation order dated 13.12.2023 remains in force and the Adjudicating Authority's direction permitting the auction process to continue is unimpeached, subject to the appellant's right to raise objections at the stage of confirmation of the auction.

Money laundering - proceeds of crime - presumption under section 24 of the Prevention of MoneyLaundering Act, 2002 - bail under section 45 of the Prevention of MoneyLaundering Act, 2002 - nonarraignment in the predicate offence and its bearing on bail - prolonged detention, speedy trial and Article 21 - firsttime offender and release under section 479 of the Bharatiya Nagarik Suraksha Sanhita, 2023

Bail under section 45 of the Prevention of MoneyLaundering Act, 2002 - nonarraignment in the predicate offence and its bearing on bail - Whether the petitioner, not arraigned as an accused in the predicate offence, was entitled to bail under the PMLA. - HELD THAT: - The Court noted the twin conditions in section 45 which require opportunity to the public prosecutor and satisfaction that there are reasonable grounds to believe the accused is not guilty and is not likely to commit an offence if released. Relying on the principle in Vijay Madanlal Choudhary, the Court observed that prosecution under the PMLA cannot rest on a notional assumption that a scheduled offence has been committed; where the petitioner is not an accused in the predicate offence this materially weighs in his favour. The material collected by the Enforcement Directorate (statements under section 50, seized documents and properties) raises questions to be adjudicated at trial, but the truth and veracity of coaccused statements and the existence of an unbroken money trail are matters for trial. Balancing the broad probabilities and the risk of reoffence or tampering, the Court found the petitioner to be similarly circumstanced to coaccused who had been granted bail and concluded that the section 45 criteria did not preclude bail in the present facts. [Paras 14, 15, 17, 18, 20]

Petitioner entitled to bail; bail application allowed subject to conditions.

Presumption under section 24 of the Prevention of MoneyLaundering Act, 2002 - foundational facts required for shifting onus - Scope and operation of the statutory presumption under section 24 in relation to the material collected by the Enforcement Directorate. - HELD THAT: - The Court explained that the statutory presumption under section 24 arises only after the Enforcement Directorate establishes three foundational facts: (i) that a criminal activity relating to a scheduled offence has been committed; (ii) that the property in question was derived or obtained, directly or indirectly, as a result of such criminal activity; and (iii) that the person concerned is directly or indirectly involved in activities connected with that property. Only after proof of these foundational facts does the onus shift to the accused to rebut the presumption. The Court observed that the ED has not yet established these facts conclusively and that reliance primarily on coaccused statements warrants assessment at trial. [Paras 19]

Presumption under section 24 is not automatically attracted; ED must first establish the specified foundational facts before the onus shifts.

Prolonged detention, speedy trial and Article 21 - firsttime offender and release under section 479 of the Bharatiya Nagarik Suraksha Sanhita, 2023 - Whether prolonged pretrial incarceration and delay in conclusion of trial entitled the petitioner to bail notwithstanding the seriousness of the allegations. - HELD THAT: - The Court referred to the amended provision in section 479 of the 2023 Sanhita and recent Supreme Court jurisprudence recognising that prolonged incarceration without speedy trial engages Article 21 and can justify grant of bail even in serious cases. The Court observed that the matter involves voluminous documentary evidence, numerous witnesses and statements, and that there was a remote prospect of trial concluding within the statutory incarceration threshold. The petitioner is a firsttime offender and had undergone nearly onethird of the maximum period of imprisonment. In view of the bleak prospect of timely trial and the constitutional protection against punishment without trial, the Court held that bail should be granted on grounds of prolonged detention, subject to stringent conditions to allay concerns of tampering or abscondence. [Paras 22, 23, 24, 27, 28]

Prolonged pretrial detention and delay warranted grant of bail to the petitioner on appropriate conditions.

Final Conclusion: Bail application allowed; petitioner released on bail subject to stringent conditions (including bond, surrender of passport, territorial restrictions, attendance at trial, prohibition on tampering or contacting witnesses and provision of mobile number). Observations are confined to bail determination and not to the merits of the case.

Refund of service tax on ocean freight in CIF contracts - constitutionality of levy of service tax on ocean freight - inapplicability of Section 11B of the Central Excise Act to refunds arising from declaration of unconstitutionality - application of Section 17(1)(c) of the Limitation Act to claims for relief from consequences of a mistake - exclusion of limitation period by In Re: Cognizance For Extension Of Limitation - Article 265 - tax only by authority of law - Mohit Minerals principle on IGST and double taxation of ocean freight

Refund of service tax on ocean freight in CIF contracts - constitutionality of levy of service tax on ocean freight - Article 265 - tax only by authority of law - Mohit Minerals principle on IGST and double taxation of ocean freight - Entitlement to refund of service tax paid on ocean freight for CIF imports for April 2017 to June 2017 in light of a declaration of invalidity of the levy. - HELD THAT: - The Court held that where the statutory provisions levying service tax on ocean freight have been declared unconstitutional, the collection stands without authority of law and is susceptible to refund. The judgment accepts and applies the reasoning in Mohit Minerals and the Gujarat High Court decisions that taxing ocean freight - particularly when it forms part of the value of imported goods - results in impermissible duplication and is contrary to the statutory scheme; such collection is thus opposed to Article 265. Consequently, the petitioners are entitled to pursue refund of service tax paid on ocean freight for the stated period. The Court noted supporting administrative and tribunal decisions which followed the same legal position and observed there was no subsisting interim order preventing operation of the declaration of invalidity. [Paras 5, 6, 12, 17]

Allowed; petitioners entitled to have their refund claims of service tax on ocean freight (April 2017 to June 2017) attended to and disposed of.

Inapplicability of Section 11B of the Central Excise Act to refunds arising from declaration of unconstitutionality - application of Section 17(1)(c) of the Limitation Act to claims for relief from consequences of a mistake - exclusion of limitation period by In Re: Cognizance For Extension Of Limitation - Whether the refund claims are barred by limitation or by Section 11B of the Central Excise Act, and the applicable limitation rule. - HELD THAT: - The Court applied the principle in Mafatlal Industries that refund claims founded on a declaration that the charging provision is unconstitutional fall outside the enactment and are not governed by the special refund machinery (Section 11B). Accordingly Section 11B is inapplicable to such claims. The Court held that limitation for such claims is governed by the Limitation Act - specifically Section 17(1)(c) for relief from consequences of a mistake - and that the period of limitation begins when the claimant discovered the mistake. The Court further observed that the Supreme Court's orders in In Re: Cognizance For Extension Of Limitation exclude the period 15 March 2020 to 28 February 2022 for computing limitation; applying that exclusion, the petitioners' claims filed in December 2022 are not time-barred. Thus the respondents' plea of limitation was rejected. [Paras 11, 14, 15, 16, 17]

Section 11B is not a bar; limitation is governed by Section 17(1)(c) of the Limitation Act with the pandemic-related exclusion applied, and the refund claims are not time-barred.

Final Conclusion: Writ petitions allowed; respondents directed to attend to and dispose of the petitioners' refund claims for service tax on ocean freight for April 2017 to June 2017 forthwith, with computation of refund including applicable statutory interest.

Import of Service - Reverse Charge Mechanism - Place of Provision Rules - Service - Consideration - Extended period of limitation - Wilful suppression

Import of Service - Reverse Charge Mechanism - Place of Provision Rules - Service - Whether the disputed support services were provided by UTS USA to Reliance Infocom as import of service and thus the service tax liability lay on the recipient under reverse charge, not on UTS India. - HELD THAT: - The Tribunal examined the Master Annual Maintenance Contract and found that UTS USA, located in a non taxable territory, agreed to provide Support Services to Reliance Infocom in India, with prices exclusive of Indian taxes and Reliance to pay consideration to UTS USA. Applying the definition of "service" and the Place of Provision Rules, the Tribunal held that the place of provision is the location of the service recipient and that services provided from outside India and received in India constitute "Import of Service." Notification No.30/2012 and the reverse charge mechanism render the recipient (Reliance Infocom) liable to discharge service tax. It was an admitted fact that Reliance Infocom had discharged the service tax on the disputed amount. UTS India, being the subsidiary and not the contracting service provider under the agreement, was incorrectly treated as the service provider; the confirmed demand against UTS India was therefore unsustainable. [Paras 9, 10, 11, 15]

Demand of service tax confirmed against the appellant in respect of the disputed transactions is set aside because the services were import of service provided by UTS USA to Reliance Infocom, and Reliance had discharged the tax under reverse charge.

Extended period of limitation - Wilful suppression - Whether the extended period of limitation was correctly invoked against the appellant when the appellant had disclosed the transactions and informed the department that the recipient treated and paid the tax as import of service. - HELD THAT: - The Tribunal noted that the appellant had disclosed the relevant invoice values in ST 3 returns for the period and had communicated to the department by letter that Reliance Infocom treated the services as import and had paid the service tax. The show cause notice proceeded on the mistaken premise that UTS India had imported the services despite these disclosures. Relying on the settled requirement that invocation of the extended period requires wilful suppression, the Tribunal found no positive act of suppression or evasion by the appellant. In these circumstances the extended period was wrongly invoked and the notice was time barred. [Paras 12, 13, 14]

Extended period of limitation invoked in the show cause notice was wrongly invoked and the notice is barred by time.

Final Conclusion: The order in original confirming service tax, interest and penalty against the appellant in respect of the disputed transactions is set aside; the appeal is allowed as the transactions were import of service received by Reliance Infocom (who discharged the tax under reverse charge) and the extended period was wrongly invoked.

Reverse charge mechanism - legal consultancy services taxable under reverse charge - sponsorship services - place of provision under Place of Provision Rules, 2012 - extended period of limitation for suppression/mis representation

Reverse charge mechanism - Director's sitting fee - Service tax liability on Director's sitting fee as partly admitted by the appellant - HELD THAT: - The appellant admitted non-payment of service tax on Rs.10,000 of the Director's sitting fee and accepted the liability. The Tribunal notes this admission and accordingly upholds the confirmation of service tax on the admitted amount without further adjudication. [Paras 9]

Demand of service tax on the admitted portion of Director's fee is upheld.

Sponsorship services - reverse charge mechanism - Taxability of amounts paid for sponsoring an event (brand promotion) as sponsorship services - HELD THAT: - The appellant sponsored a cookery event displaying its company logo and obtained exclusive/priority booking rights, bore organizing expenses and sought commercial benefit by associating its name/product with the event. The relied circulars did not apply to these facts. No evidence was produced to rebut the adjudicating authority's findings. Such activity falls within sponsorship services and attracts service tax liability. [Paras 9]

Demand of service tax in respect of sponsorship services is upheld.

Legal consultancy services taxable under reverse charge - notary and stamp charges in legal payments - Taxability under reverse charge of amounts paid to advocates including notary/stamp related components where ledger and returns differ - HELD THAT: - The appellant acknowledged that the amounts in question were paid to legal consultants and there is no evidence bifurcating notary/stamp paper amounts from legal fees. Services of notary are taxable; only purchase of stamp papers might be excluded but no proof was furnished. Under Entry No.5 of the relevant notification the recipient is liable to pay 100% of service tax on legal consultancy consideration; thus the difference observed attracts service tax under RCM. [Paras 9]

Demand of service tax on the difference in legal fees (including notary-related amounts) is upheld.

Place of provision under Place of Provision Rules, 2012 - testing, analysis and certification services procured from outside taxable territory - Taxability under reverse charge of testing/analysis/certification services rendered by foreign laboratory - HELD THAT: - Rule 4(a) of the Place of Provision Rules provides that the place of provision is the place of the service provider. The record does not establish that the tests were conducted within the taxable territory or that goods were sent to a domestic provider; the service provider was located outside India. Consequently the service is treated as received domestically and taxable under reverse charge. The appellant's claim that tests were performed in a laboratory within its premises lacks evidence. [Paras 9]

Demand of service tax on testing/analysis/certification charges paid to foreign laboratory is upheld.

Extended period of limitation for suppression/mis representation - Validity of invoking extended period of limitation on grounds of suppression/misrepresentation by the appellant - HELD THAT: - The appellant discharged only 50% of the Director's fee liability and omitted notary/stamp components from declared legal fees; these acts are treated as suppression/mis representation indicating intent to evade tax. Reliance on TRU circulars was found inapplicable. Ignorance of law is not a defence. In these circumstances the Tribunal holds that invoking the extended period was justified. [Paras 10]

Invocation of the extended period of limitation is held to be valid.

Final Conclusion: All impugned demands of service tax (including on Director's fee, sponsorship services, legal consultancy/notary-related amounts, and testing/analysis/certification services) together with invoked extended period of limitation were held sustainable; the appeal is dismissed and the order under challenge is upheld.

CENVAT credit admissibility - validity of debit notes as duty paying documents - documents specified in Rule 9 of CENVAT Credit Rules, 2004 - contents of invoice under Rule 4A of Service Tax Rules, 1994 and Rule 11 of Central Excise Rules, 2002 - substantial benefit not to be denied on procedural grounds - penalty under Rule 15 of CENVAT Credit Rules and Sections 76/78 of the Finance Act - appropriation of reversed credit

CENVAT credit admissibility - documents specified in Rule 9 of CENVAT Credit Rules, 2004 - contents of invoice under Rule 4A of Service Tax Rules, 1994 and Rule 11 of Central Excise Rules, 2002 - CENVAT credit taken on the basis of debit notes/demand notes/credit notes and other vendor documents - HELD THAT: - The Tribunal examined whether debit notes and similarly titled documents qualify as documents specified under Rule 9(1) CCR, 2004 read with Rule 4A ST Rules, 1994 and Rule 11 CEX Rules, 2002. Reliance was placed on earlier orders in related units of the appellant and on Tribunal/Cestat precedent that where such documents contain the particulars required by the Rules (service provider's and recipient's details, description/nature of service, service tax particulars and registration number) they function as invoices/bills for the purpose of availment of CENVAT credit. The Tribunal held that denial of credit on the ground that the document is titled 'debit note' is a procedural hyper technicality and cannot defeat the substantive entitlement to credit where the statutory particulars are present and the service receipt is not in dispute. Following those precedents and the material on record, the demand insofar as based on alleged invalidity of debit notes and similar documents was set aside. [Paras 4]

Demand based on alleged invalidity of debit notes/demand notes/credit notes and similar vendor documents set aside and credit allowed.

CENVAT credit admissibility - CENVAT Credit availed for rent paid for unregistered premises - CENVAT credit availed for rent paid for unregistered premises - HELD THAT: - The Tribunal considered authorities dealing with credit on rent for unregistered premises and concluded that on the facts and following relevant precedents the impugned disallowance lacked merit. The departmental decisions relied upon by the adjudicating authority in other matters were examined and the Tribunal found no justification to sustain the demand in this appeal. [Paras 4]

Demand in respect of CENVAT credit on rent for unregistered premises set aside.

CENVAT credit admissibility - credit taken on xerox/duplicate invoices and improper documents - substantial benefit not to be denied on procedural grounds - CENVAT credit taken on xerox copies/other improper documents - HELD THAT: - The Tribunal noted precedents where credit on xerox/duplicate copies and other challenged documents has been examined and held that hyper technical objections cannot defeat substantive credit where the receipt and accounting for services is established and necessary particulars are available. Applying those principles and the cited decisions, the Tribunal found no merit in denying credit on these grounds. [Paras 4]

Demand based on credit taken on xerox/duplicate or similar improper documents set aside.

CENVAT credit admissibility - AMC and event management service credits for 2013-14 - CENVAT credit disputed for AMC and event management/mandap keeper services for April 2013 to March 2014 - HELD THAT: - The Tribunal reviewed the second show cause notice for April 2013-March 2014 and the departmental treatment in comparable matters. Applying the same principles regarding sufficiency of documentary particulars and admissibility of credit where service tax has been levied and paid, the Tribunal found the impugned disallowance unsustainable on merits and followed precedents holding such documents valid for credit. [Paras 4]

Demand for CENVAT credit relating to AMC and event management services for April 2013 to March 2014 set aside.

Appropriation of reversed credit - Appropriation and confirmation of demand in respect of amounts already reversed by the appellant - HELD THAT: - The Tribunal recorded that the appellant had already reversed certain disputed credits (health check up and club membership) and that adjudicating authority confirmed demand in respect of these reversals. The Tribunal accepted the confirmation of demand insofar as these specific reversed amounts and the related interest are concerned. [Paras 4]

Demand confirmed and appropriation ordered in respect of the reversed amounts (health check up and club membership) and related interest.

Penalty under Rule 15 of CENVAT Credit Rules and Sections 76/78 of the Finance Act - Imposition of penalties arising from the disputed CENVAT credit demands - HELD THAT: - As the Tribunal set aside the substantive demands on merits (except the limited reversed amounts), it observed that penalties imposed under the relevant provisions of the Finance Act and CENVAT Credit Rules could not be sustained. The Tribunal therefore quashed the penalties levied in the impugned order. [Paras 4]

Penalties imposed under the cited provisions set aside.

Final Conclusion: Appeal allowed. The Tribunal set aside the impugned demands for the periods April 2009 to March 2013 and April 2013 to March 2014 in respect of the categories of credit challenged (including debit notes/demand notes, rent for unregistered premises, xerox/duplicate documents, AMC and event management charges) on the merits following precedent; confirmed only the limited demands relating to amounts already reversed by the appellant (health check up and club membership) and ordered appropriation; penalties imposed were quashed.

Tax Treatment of Registration Facilitation - Business Auxiliary Service - Taxability of Accessory Fitting, Mat Fixing and Protective Coatings - Motor Vehicle Repair Service - Taxability across pre- and post-01.07.2012 statutory regimes - Computation of Taxable Value - Actual Receipt v. Book Provisions - Reconsideration/Remand for Limited Verification - Tax Demand and Penalty - Requirement of Mens Rea for Penalty - Taxability under Section 65(105)(zo) and Section 65B(51) of the Finance Act, 1994

Tax Treatment of Registration Facilitation - Business Auxiliary Service - Whether facilitation of registration of motor vehicles by the dealer is taxable as a 'Business Auxiliary Service'. - HELD THAT: - The Tribunal followed its earlier decisions and the adjudicating authority's finding in the appellant's own earlier order that facilitation of temporary or permanent registration for customers does not fall within 'Business Auxiliary Service' and is not chargeable to service tax. The department had not successfully challenged the earlier favourable finding. In view of binding precedents and the adjudicating authority's categorical finding, no service tax is leviable on registration facilitation. [Paras 3, 7]

No service tax payable on facilitation of vehicle registration; demand on this count is not sustainable.

Taxability of Accessory Fitting, Mat Fixing and Protective Coatings - Motor Vehicle Repair Service - Taxability across pre- and post-01.07.2012 statutory regimes - Computation of Taxable Value - Actual Receipt v. Book Provisions - Reconsideration/Remand for Limited Verification - Whether charges for Teflon coating, mat fixing and accessory fitting are chargeable to service tax, and if so, on what basis the taxable value should be computed. - HELD THAT: - The Tribunal recorded that accessory fitting, mat fixing and protective coating involve both supply of materials and services and held consistently with earlier Tribunal decisions that such activities are not liable to service tax for the period prior to 01.07.2012. The appellant admitted to having paid service tax on actual charges with effect from 01.07.2012. The adjudicating authority, however, had computed demand by reference to bookkeeping provisions made for estimated subcontractor expenses rather than the actual amounts charged and received. The Tribunal found that the demand cannot be sustained insofar as it seeks tax on amounts shown as provisions in the books and that the details and annexures furnished by the appellant were not considered. Consequently, while exonerating the appellant for the pre-01.07.2012 period, the Tribunal remanded the question of tax liability for the limited post-01.07.2012 period for fresh consideration, directing that assessment be limited to the actual amounts received for such services and not on provisional entries in the books. [Paras 4, 7, 8, 9]

No service tax on accessory fitting, mat fixing and similar works for the period prior to 01.07.2012; demand for the period after 01.07.2012 remitted for reconsideration limited to actual amounts received and not on book provisions.

Final Conclusion: The appeal is partially allowed: demands relating to facilitation of registration and to accessory-fitting/Teflon/mat works prior to 01.07.2012 are set aside; the adjudicating authority is directed to re-examine and quantify any tax liability for the limited post-01.07.2012 period only on actual amounts received for such services, having regard to the details furnished by the appellant.

Renting of immovable property as a taxable service - threshold exemption under Notification No.6/2005-S.T. (aggregate value not exceeding four lakh rupees) - apportionment of taxable value among co-owners - association of persons versus individual owners for tax assessment - Service Tax registration and collection on PAN basis - penalties under Sections 77 and 78 of the Finance Act

Threshold exemption under Notification No.6/2005-S.T. (aggregate value not exceeding four lakh rupees) - apportionment of taxable value among co-owners - association of persons versus individual owners for tax assessment - renting of immovable property as a taxable service - Whether individual co-owners who jointly own immovable property but receive rent proportionate to their shares are entitled to claim the benefit of the exemption Notification No.6/2005-S.T. separately instead of combining the total rent of all co-owners. - HELD THAT: - The Tribunal examined the contention that co-owners must be treated as an 'association of persons' so as to aggregate the entire rent for denying the exemption. Relying on authoritative decisions on the meaning of 'association of persons' and prior tribunal decisions on similar facts, the Court held that mere joint ownership of an indivisible property does not automatically create an association of persons for the purpose of the exemption. Service Tax liability is leviable on the value of service provided by a service provider and where each co-owner receives rent in proportion to his share, has separate PANs and is assessed separately to income tax, the benefit of the Notification is available to each co-owner individually. The Revenue's argument that the indivisibility of the property precludes apportionment was rejected as conceptually unsound because the tax is on the service value which can be ascertained and apportioned to each provider. The Tribunal therefore held that service tax cannot be recovered on a combined basis from the appellants and that they are individually eligible for the Notification benefit for the impugned period. [Paras 4, 5]

Individual co-owners receiving rent in proportion to their shares are eligible to claim the exemption under Notification No.6/2005-S.T. separately; service tax cannot be recovered by aggregating the total rent of all co-owners for the period 2007-08 to 2010-11.

Penalties under Sections 77 and 78 of the Finance Act - Service Tax registration and collection on PAN basis - Whether penalties imposed on the appellants under Sections 77 and 78 are sustainable where service tax liability for the impugned period is held not to arise. - HELD THAT: - Having held that the appellants were not jointly liable to pay service tax for the impugned period, the Tribunal concluded that the penalties levied under Sections 77 and 78 could not be sustained. The decision also noted that Service Tax registration and collection operate on a PAN basis and collection of tax from one co-owner for the total rent attributable jointly is not supported by law or procedure. The appellants' undertaking not to claim refunds of tax recovered from the customer was recorded, and accordingly the penalties were set aside. [Paras 5]

Penalties imposed under Sections 77 and 78 are set aside as unsustainable in view of the finding that no combined service tax liability arose for the appellants for the impugned period.

Final Conclusion: Appeals allowed: service tax cannot be recovered by aggregating rent of jointly owned immovable property; individual co-owners who receive rent proportionate to their shares are entitled to the Notification No.6/2005-S.T. exemption for 2007-08 to 2010-11, and consequent penalties under Sections 77 and 78 are set aside.

Extended period of limitation - limitation - burden to prove ingredients for invoking extended period - service tax liability of distributor on commission - business auxiliary service

Extended period of limitation - limitation - burden to prove ingredients for invoking extended period - Demand held to be barred by limitation as extended period could not be invoked - HELD THAT: - The appeal concerns a service-tax demand for the period 01.07.2004 to 31.03.2006 where the show-cause notice was issued on 13.10.2009 invoking the extended period of limitation. The Tribunal observed that in identical cases involving distributors/commission agents of M/s Amway India Enterprises the extended period of limitation has been consistently held inapplicable. The Department failed to establish the requisite ingredients or intention to evade tax necessary to justify invocation of the extended period. In view of the absence of proof satisfying the statutory tests for extension, the demand could not be sustained on the extended limitation ground, and was set aside on limitation without adjudicating the merits. [Paras 6, 7]

Impugned demand set aside as barred by limitation; appeal allowed on limitation alone.

Final Conclusion: The Tribunal allowed the appeal on limitation grounds, holding that the extended period of limitation could not be invoked for the period 01.07.2004 to 31.03.2006 because the Department did not prove the necessary ingredients to justify extension; the demand was set aside on limitation alone.

Chargeability of early payment incentive/discount as service tax - Business Auxiliary Service - trade discount not taxable as service - del-credere agent receipt of early payment incentive - precedent in appellant's own case and doctrine of res-integra

Chargeability of early payment incentive/discount as service tax - Business Auxiliary Service - trade discount not taxable as service - del-credere agent receipt of early payment incentive - P. Gautam & Co. ratio on incentives/discounts - Early payment incentive/discount retained by the appellant as del-credere agent is not liable to service tax as a service under Business Auxiliary Service. - HELD THAT: - The Tribunal applied its earlier decision in the appellant's own case and consistent coordinate-bench precedents to hold that the amounts retained as early payment incentive are trade discounts/incentives and not consideration for any service rendered to clients. The impugned demand treated the retained incentive as commission taxable under Business Auxiliary Service; the Tribunal rejected this characterization, relying on earlier findings that incentives or cash discounts retained by distributors or del-credere agents are discounts and therefore not taxable as business auxiliary services. Having found the issue no longer res-integra in view of the appellant's prior order and other decisions such as P. Gautam & Co. and Tradex Polymers, the Tribunal set aside the impugned order and allowed the appeal.

The impugned order is set aside and the appeal is allowed; the early payment incentive/discount is not taxable under Business Auxiliary Service.

Final Conclusion: Following the Tribunal's earlier decisions in the appellant's own case and consistent coordinate-bench precedents, the retained early payment incentive/discount of the del-credere agent is held to be a trade discount and not liable to service tax under Business Auxiliary Service; the impugned order is set aside and the appeal is allowed.

Classification of goods by tariff headings - Harmonized System of Nomenclature (HSN) as interpretative guide - Chapter/Section Notes and General/Explanatory Notes - Packings of a kind sold by retail with labels or other indications - Common parlance test - Burden of proof on the Revenue for classification - Specific heading vs residuary/other heading principle

Classification of goods by tariff headings - Packings of a kind sold by retail with labels or other indications - Chapter/Section Notes and General/Explanatory Notes - Whether pure coconut oil packaged and sold in small quantities is classifiable under Heading 1513 (coconut oil) or under Heading 3305 (preparations for use on the hair). - HELD THAT: - The Court held that pure coconut oil marketed and sold as edible oil is classifiable under Heading 1513 in Chapter 15 of the First Schedule to the Central Excise Tariff Act, 1985, unless the packaging satisfies all requirements of Chapter Note 3 in Chapter 33 (Section VI) read with the General/Explanatory Notes to the corresponding HSN Chapter Note. Merely being suitable for use on hair or being sold in small packagings is not sufficient to attract Heading 3305. To fall under Heading 3305, the product must not only be suitable for use as a hair preparation but must also be put up in packings of a kind sold to the consumer with labels, literature or other indications that it is intended for use as a cosmetic/toilet preparation, or be put up in a form clearly specialised to such use. Where those cumulative conditions are not satisfied, coconut oil remains within the specific description of Heading 1513 and must be classified thereunder. [Paras 31, 40, 41, 45, 48]

Pure coconut oil sold in the relevant periods as edible oil is classifiable under Heading 1513 unless the packaging and indications satisfy the Chapter 33/HSN requirements, in which event classification under Heading 3305 would apply.

Harmonized System of Nomenclature (HSN) as interpretative guide - Chapter/Section Notes and General/Explanatory Notes - Whether the HSN and its Explanatory/General Notes are to be used as the primary guide for tariff classification under the First Schedule to the Central Excise Tariff Act, 1985. - HELD THAT: - The Court reaffirmed that the First Schedule to the Act of 1985 is based on the HSN and that, where the entries in the First Schedule correspond with the HSN, the HSN and its Explanatory/General Notes are binding guidance for interpreting tariff headings. Reliance on the HSN is appropriate unless the Act itself shows a clear and unambiguous legislative intention to depart from the HSN. Where alignment exists between the First Schedule and the HSN, the General/Explanatory Notes in the HSN must be given effect in classification disputes. [Paras 18, 19, 20, 21, 27]

HSN and its Explanatory/General Notes apply as authoritative interpretative guidance for classification where the First Schedule entries correspond with the HSN.

Common parlance test - Classification of goods by tariff headings - Whether the common parlance test displaces the clear headings and HSN-based interpretation in this case. - HELD THAT: - The Court held that the common parlance test is a recognised tool of interpretation but is applicable only when the headings and Chapter/Section Notes do not clearly determine classification. Where the First Schedule and corresponding HSN entries are clear and aligned, resort to common parlance is unnecessary and inappropriate. Thus, the Revenue's reliance on popular usage of coconut oil as hair oil could not override the clear tariff entries and HSN Explanatory Notes. [Paras 35, 36, 37, 39]

Common parlance test does not apply where the First Schedule and corresponding HSN entries are clear and determinative.

Burden of proof on the Revenue for classification - Specific heading vs residuary/other heading principle - Whether the Revenue discharged the burden of proof necessary to classify edible coconut oil as hair oil under Heading 3305. - HELD THAT: - The Court observed that classification is a matter of chargeability and the burden lies on the Revenue to establish that goods fall under a heading different from that claimed by the assessee. The Revenue failed to discharge that burden in the appeals before the Court. Absent legislative action or clear evidence satisfying the Chapter/Section and General/Explanatory Notes requirements, it would be contrary to sound fiscal policy to deny a product the specific heading created for it and relegate it to a different heading. [Paras 46, 47]

The Revenue did not discharge its burden of proof; classification as hair oil was not established and the specific heading for coconut oil must be preferred.

Final Conclusion: The appeals are dismissed. Pure coconut oil sold in the stated periods as edible oil is classifiable under Heading 1513 of the First Schedule to the Central Excise Tariff Act, 1985, unless the packaging and accompanying indications fulfil all requirements of Chapter Note 3 of Chapter 33 read with the HSN Explanatory/General Notes, in which case Heading 3305 would apply; the HSN is binding where aligned with the First Schedule and the Revenue failed to discharge its burden to prove reclassification to Heading 3305.

Summary order. Interlocutory applications disposed: (i) I.A. No.105478/2022 in SLP(C) No.2902/2020 allowing taking on record fresh address of respondent No.2; (ii) I.A. No.217425/2024 in SLP(C) No.2903/2020 permitting deletion of respondent No.2 from array of parties and directing filing of amended memo of parties; (iii) I.A. No.105489/2022 in SLP(C) No.2903/2020 held infructuous and disposed.

Summary order. Civil appeals dismissed; delay condoned.

CENVAT credit where supplier has paid duty on exempted goods - treatment of duty as deposit under Section 11D - availability of credit where supplier's duty payment is not questioned - precedential application of coordinate bench decisions

CENVAT credit where supplier has paid duty on exempted goods - availability of credit where supplier's duty payment is not questioned - CENVAT credit cannot be denied to the recipient where the supplier has paid duty on goods which were exempted if the supplier's payment has not been questioned or set aside by the jurisdictional authority. - HELD THAT: - The Tribunal found as a factual matter that there was no evidence that the supplier's payment of duty was questioned, challenged or set aside by the jurisdictional officer. That factual finding was not challenged before this Court. On that basis, and following earlier decisions of this Court and other High Courts relied upon by the Tribunal, the Court held that when the supplier's payment stands unchallenged and is found to be legally correct, the recipient cannot be denied CENVAT credit. The Tribunal's approach of applying coordinate-bench and High Court precedents to identical facts was not shown to be perverse or erroneous. [Paras 4, 6]

Credit allowed to the respondent because the supplier's payment of duty was not questioned; denial of credit on that ground is not sustainable.

Treatment of duty as deposit under Section 11D - precedential application of coordinate bench decisions - No substantial question of law arises from the Tribunal's order in view of the unchallenged factual finding and the Tribunal's reliance on binding/co ordinate precedents; accordingly the revenue appeal is not maintainable. - HELD THAT: - The Appellant pressed questions concerning whether duty paid by the supplier should be treated as a deposit under Section 11D and whether the Tribunal erred in setting aside the demand. However, the Court observed that the Tribunal had followed this Court's decision in Commissioner of Central Excise vs. Nestle India Ltd. and its own earlier decision in Kris Flexipacks Pvt. Ltd., and applied High Court decisions to identical facts. As the factual finding about the supplier's unchallenged payment was not impugned and the precedent relied upon had not been shown to be displaced, the Court concluded that no substantial question of law arose from the impugned order. [Paras 5, 6]

Appeal dismissed for lack of any substantial question of law; Tribunal order stands.

Final Conclusion: For the reasons recorded, and in view of the unchallenged factual finding that the supplier's duty payment was not questioned together with the Tribunal's application of binding/co ordinate precedents, no substantial question of law arises and the revenue's appeal is dismissed.

Principles of natural justice - refund claim - opportunity to show cause - rejection for deficiency and requirement to afford notice - factual verification of documents by adjudicating authority - remand for fresh adjudication - speaking order

Principles of natural justice - opportunity to show cause - rejection for deficiency and requirement to afford notice - Rejection of the appellant's refund claims without issuance of notice and opportunity to show cause was contrary to principles of natural justice. - HELD THAT: - The Tribunal found that the appellate authority and the original adjudicating authority recorded rejection of the refund claims without first issuing a notice identifying alleged deficiencies and affording the appellant an opportunity to explain or cure them. Principles of natural justice require that an applicant likely to be adversely affected by rejection of a refund claim be served notice specifying the grounds and allowed to show cause before any final rejection is recorded. The appellate authority erred in placing the onus on the appellant to seek clarity and in holding that having preferred appeals the appellant could not claim breach of natural justice. The appellate authority also failed to state reasons why documents said to have been produced were invalid. [Paras 6, 7]

Orders rejecting the refund claims without notice and opportunity were set aside for breach of natural justice.

Factual verification of documents by adjudicating authority - refund claim - remand for fresh adjudication - speaking order - The claims must be remanded to the adjudicating authority for fresh consideration of documentary evidence and merits after following natural justice, with the Tribunal declining to decide factual issues itself. - HELD THAT: - The Tribunal emphasised that it is not the forum to re-appreciate the initial factual matrix or to decide correctness of documentary evidence; such factual verification is for the adjudicating authority which is equipped to examine documents, invoices and other evidence. Consequently, the Tribunal set aside the orders of both lower authorities and remanded the matters to the original adjudicating authority to re-consider the refund claims afresh. The appellant was directed to furnish all necessary documents and any other evidence it wishes to rely upon; the adjudicating authority was directed to consider those documents, apply relevant binding judicial precedents and pass a speaking order. All contentions were left open and no opinion was expressed on the merits. [Paras 8, 9]

Matters remanded to the adjudicating authority for fresh adjudication after affording notice and opportunity and for passing a speaking order; appeals allowed by way of remand.

Final Conclusion: The Tribunal set aside the impugned orders rejecting the refund claims for breach of natural justice and remanded the matters to the original adjudicating authority for fresh consideration of the documentary evidence and merits after affording notice, opportunity to the appellant and passing a speaking order; appeals allowed by way of remand.

Condonation of delay - pre-deposit requirement under Section 84(1) of the West Bengal Value Added Tax Act, 2003 - technical dismissal for non-compliance with pre-deposit condition - restoration of appeal on payment of pre-deposit - ex-parte assessment - high-pitched assessment

Condonation of delay - technical dismissal for non-compliance with pre-deposit condition - pre-deposit requirement under Section 84(1) of the West Bengal Value Added Tax Act, 2003 - Validity of dismissal of the appeal and the Tribunal's refusal to condone 655 days' delay where pre-deposit of 15% was not made - HELD THAT: - The Court rejected the petitioner's contention that non-signature of the notice and draft assessment order exempted it from the statutory pre-deposit. That contention was held to be a matter for adjudication on merits and not a ground to avoid the mandatory pre-deposit under Section 84(1) of the Act. Considering that the assessment was high pitched and ex parte, and that the final assessment order remained a paper order with no recovery to date, the Court exercised its discretionary supervisory jurisdiction to grant one more opportunity to pursue the appeal provided the petitioner complies with the statutory pre-deposit. The Court set aside the impugned orders subject to the condition that the petitioner pays 15% of the disputed tax within 30 days and files the challan, whereupon the appellate authority is to restore and decide the appeal on merits after personal hearing; failure to comply results in automatic dismissal of the writ petition. [Paras 5, 6, 7, 8, 9]

Writ petition allowed; impugned orders set aside and appeal to be restored and heard on merits provided the petitioner pays 15% pre-deposit within 30 days and files challan; non-compliance results in automatic dismissal.

Final Conclusion: The High Court allowed the writ petition, set aside the orders impugned and directed restoration of the appeal on compliance with the statutory pre-deposit of 15% within 30 days, recording that the petitioner's objection to the pre-deposit on account of an unsigned notice is a merits issue and does not excuse compliance; failure to comply will result in automatic dismissal.

Public demand - Schedule I, clause 8-A - jurisdictional fact - nodal agency - summary recovery under the Act - procedural safeguards - statutory remedy - principles of natural justice

Public demand - Schedule I, clause 8-A - summary recovery under the Act - Whether the claim for the cost of undelivered Custom Milled Rice (CMR) qualifies as a public demand recoverable under the Bihar and Orissa Public Demands Recovery Act, 1914 (read with Schedule I, clause 8-A). - HELD THAT: - The Court applied the inclusive definition of 'public demand' in section 3(6) read with Schedule I and adopted the Full Bench approach in Ram Chandra Singh that the term is of wide amplitude. Clause 8-A, when read by the golden rule, covers outstanding loans and advances payable to the State, its departments or officials by 'anybody whatsoever.' The determinative question is one of jurisdictional facts - whether, on the totality of circumstances, the amount claimed by the Civil Supplies Corporation represents a recoverable public demand. Having considered the procurement scheme for 2011-12, the State's change of policy, the appointment and role of the Civil Supplies Corporation as the nodal agency for procurement and supply of paddy for conversion into CMR for FCI depots, and the admitted failure to deliver CMR, the Court concluded that the jurisdictional facts exist. The cost of undelivered CMR therefore falls within the definition of public demand and is recoverable by summary proceedings under the Act. [Paras 22, 24, 26, 31, 35]

The claim for the cost of undelivered CMR qualifies as a 'public demand' under section 3(6) read with Schedule I (clause 8-A) and is recoverable by summary proceedings under the Act.

Nodal agency - agency acting on behalf of the State - jurisdictional fact - Whether the Bihar State Food and Civil Supplies Corporation, acting as the State's nodal agency, is entitled to initiate recovery proceedings under the Act against the Rice Millers. - HELD THAT: - The Court examined the nature of the transaction and the role assigned to the Civil Supplies Corporation by the State policy, including its function in procuring paddy at MSP, supplying paddy to millers for CMR and delivering CMR to FCI depots for the PDS. On the admitted contemporaneous circumstances and documentary material, the Corporation was acting as the State's nodal agency rather than as an independent commercial entity. Those jurisdictional facts - the State policy, appointment of the Corporation as nodal agency, transfer of paddy for CMR and failure to deliver - validate the Corporation's standing to invoke the summary recovery mechanism. The absence of an express clause in the agreement authorising recovery under the Act does not preclude invocation of the Act where the jurisdictional facts are otherwise established. [Paras 30, 31, 33, 34, 35]

The Civil Supplies Corporation, as the State's nodal agency in the procurement scheme, was entitled to initiate and pursue recovery proceedings under the Act.

Procedural safeguards - principles of natural justice - statutory remedy - Whether the certificate proceedings are vitiated by procedural irregularities or breach of natural justice and what remedy is available to the Rice Millers. - HELD THAT: - The Court observed that the Act contains Part II and other procedural safeguards, and that remedies in the Act (appeal, revision, review, and civil court challenge within statutory time) are available to the aggrieved. The writ court should not ordinarily substitute itself for the specialised statutory remedy when jurisdictional facts are disputed. Although procedural objections were raised, the Supreme Court did not adjudicate alleged procedural infirmities on the merits; instead it left open the statutory remedies under the Act. To afford relief, the Court granted thirty days for Rice Millers to avail statutory remedies and directed that the adjudicating authority entertain their claims without reference to delay or limitation. [Paras 37, 39, 41, 42]

Procedural objections and alleged breaches of natural justice are not finally adjudicated in these proceedings; Rice Millers are permitted thirty days to invoke statutory remedies and the competent authority shall entertain their claims notwithstanding delay or limitation.

Final Conclusion: Civil appeals dismissed; the certificate proceedings initiated by the Bihar State Food and Civil Supplies Corporation as the State's nodal agency are maintainable under the Act, with the question of procedural compliance left to statutory fora; Rice Millers granted thirty days to pursue statutory remedies, which shall be entertained without regard to delay; no order as to costs.

Power of arbitral tribunal to include pre-award interest and grant post-award interest under Section 31(7) of the Arbitration and Conciliation Act, 1996 - correction and interpretation of arbitral award under Section 33 of the Arbitration and Conciliation Act, 1996 - functus officio doctrine as applied to arbitrators - merging of pre-award interest into the 'sum' directed to be paid for the purpose of calculating post-award interest - finality of orders in execution proceedings and effect of consent remittal for computation

Correction and interpretation of arbitral award under Section 33 of the Arbitration and Conciliation Act, 1996 - functus officio doctrine as applied to arbitrators - Validity of the Arbitrator's clarification dated 15.03.2005 and whether the Arbitrator had become functus officio and thus lacked jurisdiction to issue the clarification - HELD THAT: - The Court held that Section 33(1)'s time limit for correction or interpretation (30 days) is not inflexible because it applies 'unless another period of time has been agreed upon by the parties.' Where a court (here the Division Bench) has permitted a party to seek clarification from the arbitral tribunal beyond the initial 30-day period, that permission falls within the statutory expression and validates subsequent clarification proceedings. On the facts the Division Bench had granted leave to approach the Arbitrator and the appellant actively participated in the clarificatory proceeding; the clarification therefore cannot be struck down on the ground that the Arbitrator was functus officio. The appellant's failure to challenge the clarification under Section 34 and prior consideration of the matter by this Court further precluded revisiting the jurisdictional objection. Accordingly the contention that the Arbitrator lacked jurisdiction was rejected. [Paras 45, 51, 52, 59, 60]

Clarification dated 15.03.2005 valid; Arbitrator was not functus officio and had jurisdiction to render the clarification.

Power of arbitral tribunal to include pre-award interest and grant post-award interest under Section 31(7) of the Arbitration and Conciliation Act, 1996 - merging of pre-award interest into the 'sum' directed to be paid for the purpose of calculating post-award interest - Proper interpretation of Section 31(7) - whether the 'sum' directed to be paid may include pre-award (pendente lite) interest and whether post-award interest runs on that composite sum - HELD THAT: - Following the three-Judge majority in M/s. Hyder Consulting (UK) Ltd., the Court held that clause (a) permits the arbitral tribunal to include interest for the pre-award period in the 'sum' for which the award is made; clause (b) then contemplates that the 'sum' so directed to be paid - whether inclusive or exclusive of pre-award interest - shall carry post-award interest at the statutory rate (unless the award otherwise directs). The legislative choice of the word 'sum' (not qualified as 'principal') shows Parliament intended that the awarded sum may comprise principal plus interest and that post-award interest may be calculated on that merged amount. In the absence of any contractual provision excluding such treatment, Sections 31(7)(a) and (b) apply in full measure as explained in Hyder. [Paras 36, 41, 54, 60]

The 'sum' directed to be paid can include pre-award interest, and post-award interest is to be computed on the composite 'sum' in accordance with the law laid down in M/s. Hyder Consulting (UK) Ltd.

Finality of orders in execution proceedings and effect of consent remittal for computation - Whether the Division Bench's order setting aside the operative part of the Single Judge's order as to calculations and remitting quantum for reconsideration (by consent) was susceptible to interference by this Court in execution proceedings - HELD THAT: - The Court observed that the Division Bench's order was a consent order which limited the remittal to calculations; both parties consented to the limited remit and the High Court directed the Single Judge to decide the quantum after hearing submissions on computation. Where parties consent and the matter is remitted solely for computation, the appellant cannot turn around and attack that consent order on merits in execution proceedings. Further, earlier adjudications by this Court on the law to be applied (Hyder) had settled the governing principle; only computation remained to be undertaken. [Paras 56, 57, 58]

Division Bench correctly set aside the operative part of the Single Judge's order only as to calculations and remitted the issue of quantum for computation; that limited remittal is not open to collateral attack in these execution proceedings.

Final Conclusion: The appeal is dismissed. The High Court's impugned order is upheld: the Arbitrator's clarification is valid; the interest component must be computed in accordance with M/s. Hyder Consulting (UK) Ltd. (i.e. pre-award interest may be merged into the awarded 'sum' and post-award interest computed on that composite sum); and the matter was rightly remitted for computation limited to quantum. No order as to costs.

Revisional jurisdiction under Section 21(b) of the Consumer Protection Act - concurrent findings of fact and limits of revision - interpretation of exclusionary clauses in insurance policies - condition of not leaving vehicle unattended - burden on insurer to prove breach of post-accident obligation - delay in intimation to insurer - condonation - reliability and probative value of surveyor's report

Revisional jurisdiction under Section 21(b) of the Consumer Protection Act - concurrent findings of fact and limits of revision - Whether the National Commission exceeded its revisional jurisdiction in interfering with concurrent findings of the State Commission. - HELD THAT: - The National Commission's power under Section 21(b) is confined to instances where the State Commission has acted without jurisdiction, failed to exercise vested jurisdiction, acted illegally or with material irregularity. Where the State and District Commissions have reached concurrent findings of fact-here, that the delay in intimation was justifiable and that damage occurred in two phases-the revisional jurisdiction is narrowly circumscribed and cannot be used merely because the National Commission entertains a different view. The National Commission did not demonstrate any patent illegality, material irregularity or gross miscarriage of justice in the State Commission's approach; the State Commission examined the surveyor's report and rejected it for lack of evidence and gave reasons for holding the claim to be genuine. Consequently, interference with the concurrent factual findings was impermissible. [Paras 11, 13, 15, 16]

The National Commission transgressed its revisional jurisdiction in interfering with the State Commission's concurrent findings; interference was not justified.

Interpretation of exclusionary clauses in insurance policies - condition of not leaving vehicle unattended - burden on insurer to prove breach of post-accident obligation - reliability and probative value of surveyor's report - Whether Condition No.4 of the policy excluded liability for damage caused by short-circuiting after the accident. - HELD THAT: - Condition No.4 requires reasonable steps to safeguard the vehicle after an accident and not to leave it unattended without proper precautions; its application turns on whether the insured complied reasonably with that obligation in the factual context. The appellant left the vehicle to render urgent medical assistance to a co-passenger under compelling circumstances; the State Commission held that, on these facts, Condition No.4 did not apply to disentitle the claimant. The insurer bore the onus of proving that the appellant's conduct caused the further damage, but the surveyor's opinion that the short-circuiting was caused by the appellant was unsupported by evidence and was appropriately rejected by the State Commission. Applying settled principles on exclusionary clauses, the State Commission correctly disapplied Condition No.4 in the circumstances. [Paras 14, 17, 18]

Condition No.4 does not disentitle the appellant to the claim on the facts; the State Commission correctly rejected the surveyor's unsupported conclusion and held the insurer failed to discharge its burden.

Delay in intimation to insurer - condonation - Whether the delay in intimating the insurer was fatal to the claim. - HELD THAT: - Both the District and State Commissions found that the delay was caused by the appellant's attempt to rescue and attend to his injured co-passenger and was not fatal to the claim. The State Commission's conclusion was supported by prompt reporting to the police and by the circumstances prevailing at the time. Delay can be condoned if properly explained; on the facts the delay was satisfactorily explained and did not bar the claim. [Paras 12, 19]

The delay in intimation was justified and not fatal to the insurance claim.

Final Conclusion: The appeals are allowed. The impugned order of the National Commission dated 16.07.2019 is set aside and the order of the State Commission is restored directing the insurer to pay the entire insured declared value of Rs. 5,02,285/- with 9% interest from the date of the consumer complaint until realization; no order as to costs.

Arbitrariness in allotment of government land - Violation of prescribed procedure for grant of government land - Requirement of reasons in writing where executive discretion is exercised for allotment - Eligibility of society members as on issue of Letter of Intent - Improper and successive substitution of proposed society members to meet eligibility criteria - Requirement of public advertisement and draw where more than two plots are available

Arbitrariness in allotment of government land - Violation of prescribed procedure for grant of government land - Requirement of reasons in writing where executive discretion is exercised for allotment - The allotment of the subject plot to MRCHS was arbitrary and in violation of the prescribed procedure and was therefore liable to be quashed. - HELD THAT: - The Court found that MRCHS had not applied for the plot actually allotted and no material was placed to show the allotted plot was sought by MRCHS, contrary to the requirements that the Chief Promoter submit details of the land sought. The Letter of Intent and Letter of Allotment did not disclose any reasons in writing for exercise of discretion as required by the Government Resolution, demonstrating nondisclosure and arbitrariness. The history of the file, including repeated changes in membership and repeated interventions by the Chief Minister directing reconsideration, indicated favouritism and departure from transparent procedure. Having regard to the Rules and GRs mandating transparency and that reasons be recorded when discretion is exercised, the Court concluded the allotment could not be sustained. [Paras 6, 7, 8, 9, 12]

The Letter of Allotment dated 10.04.2008 in favour of MRCHS is quashed as being arbitrary and violative of the prescribed procedure.

Eligibility of society members as on issue of Letter of Intent - Improper and successive substitution of proposed society members to meet eligibility criteria - Frequent and substantive changes in the composition of MRCHS and the inclusion of ineligible members rendered the allotment improper. - HELD THAT: - The Court recorded that the proposed society's membership changed multiple times after issuance of the Letter of Intent, with a substantial number of originally listed members resigning or being ineligible by reason of income limits. Successive substitution of members - including removal of those originally presented as doctors of the Tata Memorial Centre - defeated the object of the allotment and undermined the eligibility requirement that membership be assessed in accordance with the rules. The administrative records and office notes showing widespread ineligibility and repeated attempts to alter membership supported the conclusion that the allotment was not based on bona fide compliance with eligibility criteria. [Paras 3, 4, 5, 9, 11]

The allotment cannot be sustained because MRCHS repeatedly altered its membership composition and included persons who were prima facie ineligible, vitiating the basis of the grant.

Requirement of public advertisement and draw for multiple available plots - Transparency in disposal of government land - Where more than two plots are available in a layout, the procedure requires public advertisement and, if applications exceed available plots, selection by public draw; failure to follow this procedure rendered the allotment unsustainable. - HELD THAT: - The Court examined the Government Regulations which require press notice and inviting applications where government land is available, and that where eligible applicants exceed plots available selection should be by public draw. Evidence on record, including a Collector's letter, indicated that more than two plots were available in the relevant layout when the Letter of Intent was issued. Instead of following the mandated advertisement and draw mechanism to ensure transparency, the authorities exercised discretion without recording reasons or following the prescribed selection method. This departure from the specified transparent process contributed materially to the finding of arbitrariness. [Paras 7, 10]

Because the procedure of public advertisement and draw was not followed where multiple plots were available, the allotment was rendered arbitrary and unsustainable.

Final Conclusion: The appeal is allowed; the High Court order is set aside and the Letter of Allotment dated 10.04.2008 in favour of MRCHS is quashed for arbitrariness, non-compliance with the prescribed allotment procedure, failure to record reasons when discretion was exercised, improper changes in society membership and failure to follow the mandatory advertisement/draw process.

Requirements for offence under Section 138 of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act - quashing power under Section 482 Cr.P.C. - pendency of civil suit as a defence to prosecution under Section 138

Requirements for offence under Section 138 of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act - Sufficiency of the complaint to constitute a prima facie case under Section 138 of the Negotiable Instruments Act. - HELD THAT: - The Court identified the essential preconditions for invocation of Section 138 - presentation within validity, dishonour, demand within the statutory period and complaint filed within prescribed time - none of which were disputed (para 13). Paragraphs 4-6 of the complaint were held to specifically state that cheques were issued for discharge of legally enforceable liability and to identify presentation and return (paras 10, 14). The Court applied the statutory presumption under Section 139, observing that it raises a prima facie case which the accused may later rebut by evidence; absence of detailed breakup of the claimed debt in the complaint did not vitiate the complaint where basic facts of purchase, issuance of cheques, amounts and dishonour were averred (paras 14-15, 19). The Court emphasised that contested factual defenses (e.g., nonexistence of liability) are matters for trial and can be addressed by the accused by adducing evidence and under Section 313 Cr.P.C. (paras 15-16). [Paras 13, 14, 15, 19]

The complaint disclosed sufficient factual foundation to take cognizance under Section 138 and a prima facie case was made out; nondisclosure of detailed breakup of enforceable debt did not warrant quashment.

Pendency of civil suit as a defence to prosecution under Section 138 - Whether pendency of a civil suit alleging defective delivery and related disputes required dismissal or quashment of the criminal complaint under Section 138. - HELD THAT: - The Court recognised that pendency of a civil suit and allegations of defects in the delivered machines may constitute a defence for the accused at trial (para 16). However, such contentions do not, in absence of uncontroverted material, justify quashing the criminal proceeding at the threshold. The Court held that these are matters which can be ventilated and proved in the criminal trial; mere pendency of civil proceedings is insufficient to oust the criminal process where the complaint otherwise discloses necessary facts (paras 16, 19). [Paras 16, 19, 20]

Pendency of the civil suit does not warrant dismissal or quashment of the Section 138 complaint at this stage; the defence may be urged and examined at trial.

Quashing power under Section 482 Cr.P.C. - Scope and exercise of the High Court's power under Section 482 Cr.P.C. to quash the complaint in the facts of this case. - HELD THAT: - The Court reiterated the limited circumstances for exercise of inherent jurisdiction - clear abuse of process, mala fide institution, absurd or inherently improbable allegations, or where the complaint on its face discloses no offence (para 18). Applying that principle to the record, the Court found no such exceptional circumstances: the complaint contained the requisite basic facts and there was no material to demonstrate mala fides or inherent improbability (paras 17-19). Consequently, the Court declined to make a conclusive factual determination under Section 482 in the absence of uncontroverted material, reserving such issues for trial (para 17). [Paras 17, 18, 21]

The High Court declined to exercise Section 482 jurisdiction to quash the proceedings; no exceptional circumstance for quashment was made out and the trial court may proceed.

Final Conclusion: The petition under Section 482 Cr.P.C. was dismissed: the complaint under Section 138 NI Act disclosed sufficient prima facie facts and the pendency of a civil suit or absence of detailed breakup of the claimed debt did not warrant quashing; the trial court is directed to proceed and decide the matter on merits.

Condonation of delay - Letters Patent Appeal - Duty of diligence by Government Departments - Limitation law binds Government - Delay attributable to bureaucratic inaction - Postmaster General and others Vs. Living Media India Limited and another

Condonation of delay - Letters Patent Appeal - Duty of diligence by Government Departments - Limitation law binds Government - Whether the delay of 404 days in filing the Letters Patent Appeal is sufficiently explained so as to justify condonation of delay. - HELD THAT: - The application for condonation of delay records the chronology by which the file moved between officers and departments from April 2023 to April 2024, including periods when the file awaited opinions from the Law Department, Advocate General, Finance Department and various administrative approvals. The Court found prolonged and unexplained periods of inaction (notably gaps of months) amounting to lethargy and negligence on the part of the applicant in prosecuting the appeal. Reliance was placed on the reasoning in Postmaster General and others v Living Media India Limited and another , where the Supreme Court emphasised that government departments equipped with competent personnel are bound by the law of limitation and cannot rely on impersonal bureaucratic processes as a sufficient explanation for delay. Applying that principle to the facts, the Court concluded that the appellant-State failed to furnish a plausible, acceptable explanation for the 404-day delay and that the circumstances did not warrant a liberal concession of time. [Paras 8, 9, 10, 11, 12]

Application for condonation of delay dismissed; consequent Letters Patent Appeal dismissed.

Final Conclusion: The application for condonation of delay was dismissed for failure to show sufficient cause for the 404-day delay, and consequently the Letters Patent Appeal was dismissed; pending interlocutory applications are closed.