TaxTMI Updates e-Newsletter
Dec 23,2022

Principle of natural justice - cancellation of registration as a measure of last resort - mechanical / cyclostyled orders - delay condonation in appeals - remittal for fresh consideration after hearing

Principle of natural justice - mechanical / cyclostyled orders - delay condonation in appeals - remittal for fresh consideration after hearing - Appellate authority's dismissal of the appeal by a computer generated/cyclostyled order on the date of filing, recording only 'delay in submission of appeal' without discussing the delay condonation application or affording an opportunity of hearing to the assessee. - HELD THAT: - The appeal was filed on 30.03.2022 together with an application for condonation of delay. The first appellate authority rejected the appeal on the same day by a computer generated endorsement stating 'delay in submission of appeal' without recording any reasons, considering the delay condonation application or giving the assessee an opportunity to be heard. Such summary disposal by a quasi judicial appellate authority, without application of mind or observance of audi alteram partem, is contrary to the principle of natural justice. The Court observed that cancellation of registration under the tax regime is a drastic consequence for a small trader and authorities should ordinarily treat cancellation as a last resort, showing sensitivity and patience and considering less drastic measures or imposition of minor penalties where appropriate. An appellate authority therefore must not pass mechanical or cyclostyled orders when deciding appeals; it must consider the grounds raised, decide the question of condonation of delay on merits, and afford a hearing before concluding the appeal. In the facts of this case the summary rejection was unsustainable and required quashing and remittal for fresh adjudication.

The cyclostyled order of the first appellate authority rejecting the appeal for delay without reasons or hearing is set aside and the matter is remitted to the first appellate authority to decide afresh after affording opportunity of hearing and considering the delay condonation application.

Final Conclusion: Writ petition partly allowed; the appellate authority's order dated 30.03.2022 is quashed and the appeal is remitted for fresh decision after hearing the petitioner and considering the delay condonation application, to be completed within one month from production of a certified copy of this order.

Principles of natural justice - requirement of reasons in administrative orders - quashing of non-speaking show-cause notice and order - opportunity of hearing - non-application of mind - restoration of registration - liberty to issue fresh notice and pass a speaking order

Principles of natural justice - requirement of reasons in administrative orders - quashing of non-speaking show-cause notice and order - Validity of the show-cause notice dated 02.11.2021 and the cancellation order dated 07.10.2022 in the absence of reasons and supporting particulars. - HELD THAT: - The Court found that the show-cause notice contained only a two-line, cryptic reason without particulars or supporting documents and did not specify time or date for hearing. The absence of stated reasons and particulars, and the failure to set a hearing schedule, demonstrated non-application of mind by the authority and amounted to denial of a reasonable opportunity to the petitioner. Following the principle that reasons are integral to fair administrative decision-making, the Court held that non-communication of reasons in the notice and the consequent non-speaking order violated the principles of natural justice and rendered the proceedings unsustainable. The petition was allowed to the extent that both the notice and the cancellation order were quashed and set aside.

The show-cause notice dated 02.11.2021 and the cancellation order dated 07.10.2022 are quashed and set aside for being cryptic and without reasons, in violation of the principles of natural justice.

Liberty to issue fresh notice and pass a speaking order - opportunity of hearing - restoration of registration - Whether the authority may proceed afresh and the interim relief to be granted pending fresh consideration. - HELD THAT: - The Court restored the petitioner's registration forthwith and granted liberty to the concerned authority to issue a fresh notice that specifies particulars and supporting details of the grounds for cancellation. The authority was directed to provide a reasonable opportunity of hearing to the petitioner and to decide the matter by passing an appropriate speaking order on merits in accordance with law. The Court expressly refrained from entering into the merits of the underlying dispute, limiting its interference to procedural infirmities and directing fresh consideration.

Registration restored; respondent permitted to issue a fresh, particularised notice, afford a reasonable hearing and pass a speaking order on merits.

Final Conclusion: The petition succeeds: the cryptic show-cause notice and the non-speaking cancellation order are quashed and set aside; the petitioner's registration is restored and the authority is granted liberty to issue a fresh, particularised notice, afford a reasonable hearing and decide the matter by a speaking order in accordance with law.

Violation of principles of natural justice - ex parte order - quashing and remand for fresh adjudication - deposit as condition for hearing of appeal - stay of coercive action during pendency - directions to pass speaking order

Violation of principles of natural justice - ex parte order - Validity of the impugned appellate and assessing authority orders in view of alleged ex parte disposal and denial of fair opportunity of hearing. - HELD THAT: - The Court concluded that the impugned orders were ex parte in nature and were passed without affording the petitioner sufficient time or opportunity to represent its case, thereby infringing the principles of natural justice. The orders also failed to assign sufficient or decipherable reasons as to how the liability was determined. For these reasons, the orders were found to be bad in law and liable to be quashed and set aside. The Court expressly refrained from expressing any opinion on the merits and confined its intervention to the legal infirmity arising from lack of hearing and absence of reasoned adjudication.

Impugned appellate and assessing orders quashed and set aside on the short ground of ex facie violation of natural justice and non-speaking ex parte disposal; matter remanded for fresh consideration.

Deposit as condition for hearing of appeal - quashing and remand for fresh adjudication - Treatment of deposits already made and the obligation to make further deposits as pre-condition for hearing on remand. - HELD THAT: - The Court accepted the petitioner's statement that ten per cent of the total amount required as a condition precedent for hearing had already been deposited; if not, the petitioner was directed to make the deposit before the next date. In addition, the petitioner undertook to deposit a further ten per cent of the demand before the Assessing Officer within four weeks. The Court treated these deposits as interim conditions without prejudice to the parties' substantive rights and provided for refund if ultimately found excessive.

Existing deposit acknowledged if proved; further deposit directed within a specified period as interim condition for proceeding; deposits without prejudice to merits and refundable if found excessive.

Stay of coercive action during pendency - directions to pass speaking order - Interim protections and procedural directions to be observed by the authorities on remand. - HELD THAT: - The Court directed that no coercive steps shall be taken against the petitioner during the pendency of the proceedings. It ordered de-freezing/de-attaching of the petitioner's bank account(s), if attached in relation to the subject proceedings, to be carried out immediately. The Assessing Authority was directed to afford the petitioner an opportunity of hearing, permit filing of essential documents, decide the matter on merits after complying with principles of natural justice, and pass a speaking order assigning reasons; the authority was asked to decide expeditiously, preferably within two months of the petitioner's appearance. The Court also recorded undertakings by the parties and preserved liberties to challenge the fresh order.

Interim stay of coercive action ordered; bank accounts to be de-frozen if attached; fresh adjudication directed with opportunity to be heard and a speaking order to be passed within an expedited timeframe.

Final Conclusion: Writ petition allowed in part: impugned orders set aside for ex facie violation of principles of natural justice and lack of reasons; matter remanded for fresh adjudication on merits with specified interim deposits, immediate de-freezing of attached bank accounts (if any), protection from coercive action during pendency, and directions to the Assessing Authority to afford hearing and pass a speaking order within an expedited period; liberties reserved and no opinion expressed on merits.

Confiscation of goods and conveyance - pre-deposit requirement for appellate remedy - principles of natural justice - provisional release pending inquiry - remand for de novo hearing - power to order release on deposit and bond - detention, seizure and confiscation in transit

Confiscation of goods and conveyance - principles of natural justice - detention, seizure and confiscation in transit - pre-deposit requirement for appellate remedy - Impugned appellate order confirming confiscation was passed without considering material facts including proof of pre-deposit and denial of opportunity of hearing; whether that order must be quashed and matter remitted for fresh hearing. - HELD THAT: - The High Court found that the First Appellate Authority did not take into account the petitioner's contention and documentary proof that 25% of the tax demand had been deposited and the corresponding challan produced, and failed to consider the petitioner's plea that the authority which passed the confiscation order had not afforded an opportunity of hearing. The Appellate Authority's reasoning treating non-deposit as a determinative bar was rendered inadequate in view of the record and the specific defenses raised, and its order proceeded without addressing the grounds pleaded and the natural justice complaint. For these reasons the appellate decision confirming confiscation cannot stand and the matter requires fresh consideration by the Appellate Authority after hearing the petitioner de novo. [Paras 27, 28, 30]

Impugned order dated 31.05.2022 is quashed and set aside and the matter is remitted to the Appellate Authority to decide the appeal afresh after giving the petitioner an opportunity of hearing within 12 weeks.

Power to order release on deposit and bond - provisional release pending inquiry - Whether interim relief in the form of release of goods and conveyance should be granted subject to deposit and furnishing of bond pending fresh adjudication. - HELD THAT: - The Court recorded the petitioner's willingness to make deposits and furnish a bond for release of goods and vehicle and exercised its equitable discretion to permit release pending the remanded adjudication. The direction for payment and bond was made as a condition for immediate release, without addressing the merits of confiscation, and the Court expressly confined itself to procedural relief leaving substantive decision to the Appellate Authority on fresh hearing. [Paras 31, 32, 33]

Petitioner directed to deposit the specified amounts and furnish the required bond within the stipulated time; upon compliance the respondent authority shall release the goods and conveyance, the Court not expressing any view on merits.

Final Conclusion: The writ petition is allowed to the extent indicated: the appellate order confirming confiscation is quashed and the matter remitted for de novo hearing after affording opportunity of hearing within 12 weeks; provisional relief is granted for release of goods and conveyance subject to the petitioner making the directed deposit and furnishing the directed bond; the High Court has not adjudicated the merits.

Interim release of confiscated goods - release of detained conveyance on conditions - deposit of tax and penalty as condition for release - furnishing of bond in lieu of fine - jurisdictional challenge regarding invocation of Section 129 vis-a -vis Section 130

Interim release of confiscated goods - deposit of tax and penalty as condition for release - furnishing of bond in lieu of fine - Grant of interim relief for release of goods and conveyance confiscated under the impugned order, subject to specified conditions. - HELD THAT: - The Court declined to grant a blanket stay of the confiscation order but considered limited interim relief for release of the goods and conveyance. Noting that a similar interim order had been granted in Special Civil Application No. 8353 of 2012 and that the respondent did not dispute that order, the Court directed release upon compliance with conditions intended to protect the revenue. The conditions imposed require deposit of the tax and penalty amounts stated in the impugned order and furnishing of a bond towards the fine; upon compliance, the authorities are directed to release the goods and conveyance. The Court recorded that the contention as to whether powers under Section 129 alone applied or whether Section 130 was invoked raised a jurisdictional question, but for purposes of interim relief the Court restricted its order to conditional release rather than adjudicating the substantive jurisdictional dispute. [Paras 3, 5, 6, 7]

Petitioner's goods and conveyance to be released on deposit of the demanded tax and penalty and on furnishing bond for the fine; interim order to form part of the main matter.

Final Conclusion: Civil Application for interim relief allowed; goods and conveyance released on compliance with specified deposit and bond conditions, with the interim order to remain part of the main matter.

Admissibility of questions under Section 97(2) of the CGST Act, 2017 - scope of advance ruling in relation to utilisation of electronic credit ledger and electronic cash ledger - eligibility of input tax credit for use in the course or furtherance of business - rejection of application under Section 98(2) of the CGST Act, 2017

Continuation of GST registration for changed business activity - scope of advance ruling as to whether applicant is required to be registered - Whether the Authority could rule on the applicant's query about continuing the existing GSTIN to discharge tax and file returns for the proposed Renting/Leasing activity. - HELD THAT: - The question posed by the applicant sought guidance on whether the existing registration could be continued for the new activity rather than asking whether registration was required. Section 97(2)(f) permits advance rulings on whether the applicant is required to be registered; it does not permit advisory rulings as to whether an existing registration may be used for a changed business activity where the applicant has not framed the question as one about registration requirement. Consequently, the Authority found that the question does not fall within the matters on which an advance ruling may be given under Section 97(2) and therefore cannot be answered by the Authority. [Paras 10]

Question cannot be answered as it is not covered by the matters specified in Section 97(2) and therefore is outside the scope of advance ruling.

Utilisation of input tax credit from electronic credit ledger - eligibility of input tax credit where inputs/capital goods were used for prior manufacturing activity - Whether the Authority could rule on the applicant's proposed utilisation of the balance in the Electronic Credit Ledger (ITC) to discharge GST liability on rent arising from Renting/Leasing of the premises. - HELD THAT: - Section 16(1) permits input tax credit where goods or services are used or intended to be used in the course or furtherance of business; the admissibility of ITC relates to entitlement up to the point it is credited to the electronic credit ledger. The applicant's question concerns utilisation of amounts already standing in the electronic credit ledger (post-credit utilisation). The scope of matters on which advance rulings may be given under Section 97(2) does not extend to questions about the utilisation of ITC already held in the electronic credit ledger; notifications and rules cited by the applicant (appointing dates or prescribing order of utilisation) are general in applicability and do not bring the specific utilisation question within Section 97(2)(b). On this basis the Authority held the question is not covered by Section 97(2) and is not admissible for advance ruling. [Paras 12, 13, 16, 17, 18]

Question on utilisation of input tax credit from the electronic credit ledger is not a matter on which an advance ruling can be given and is therefore not admissible.

Utilisation of electronic cash ledger for payment of output tax - Whether the Authority could rule on utilisation of the balance in the Electronic Cash Ledger to discharge GST liability (output tax) on rent from Renting/Leasing. - HELD THAT: - The applicant's query about using amounts in the electronic cash ledger to discharge output tax relates to a post-credit/payments utilisation issue and does not fall within the categories enumerated in Section 97(2) for advance rulings. The Authority observed that the statutory provisions and notifications relied upon by the applicant are of general application and do not render the specific utilisation question admissible under Section 97(2). Accordingly, the question is outside the scope of advance ruling. [Paras 14, 18]

Question on utilisation of electronic cash ledger balance for payment of output tax is not covered by Section 97(2) and is not admissible for advance ruling.

Maintainability of advance ruling application - rejection under Section 98(2) of the CGST Act, 2017 - Whether the application for advance ruling is maintainable and, if not, the appropriate disposition. - HELD THAT: - After examining the questions framed by the applicant against the list of matters on which advance rulings may be given under Section 97(2), the Authority concluded that the issues raised (continuation of registration for a changed activity; utilisation of balances in electronic credit and cash ledgers) do not fall within those specified matters. Notifications and rules cited by the applicant were either appointing commencement dates or of general application and did not bring the specific questions within Section 97(2). As the questions are not within the statutory scope for advance rulings, the application is not maintainable under Section 97 and must be rejected under Section 98(2). [Paras 11, 19]

Application is not maintainable and is rejected under Section 98(2) of the CGST Act, 2017.

Final Conclusion: The Authority held that the questions posed do not fall within the matters on which advance rulings may be given under Section 97(2) of the CGST Act, 2017; accordingly the application is not maintainable and is rejected under Section 98(2) of the CGST Act, 2017.

Maintainability of advance ruling application - advance ruling in relation to supplies "being undertaken" or "proposed to be undertaken" - scope exclusion of completed supplies from advance ruling jurisdiction - interpretation of "being undertaken" as present and continuing action - rejection under Section 98(2) of the CGST Act, 2017

Maintainability of advance ruling application - advance ruling in relation to supplies "being undertaken" or "proposed to be undertaken" - scope exclusion of completed supplies from advance ruling jurisdiction - Whether the application for advance ruling filed in respect of consultancy services provided during July 2017 to June 2019 is maintainable before the Authority for Advance Rulings. - HELD THAT: - The Authority examined the statutory definition of 'advance ruling' and the phrase 'being undertaken' in Section 95(a) read with questions permissible under Section 97(2). The Authority concluded that the wording 'being undertaken' denotes a present and continuing supply (present participle), and the scheme of advance rulings contemplates proposed or ongoing transactions rather than supplies that have been completed. The applicant's services under the contract dated 26.07.2017 were completed in 2019 and the application filed on 08.11.2022 related to those past/completed supplies. Consequently the application does not fall within the jurisdictional scope of the Authority to decide questions in relation to supplies 'being undertaken' or 'proposed to be undertaken' by the applicant. On that basis the Authority held the application to be beyond its jurisdiction and liable to be rejected. [Paras 12, 13, 14, 15, 16]

The application is not maintainable as it relates to completed supplies (July 2017 to June 2019) and is beyond the Authority's jurisdiction; the application is rejected under Section 98(2) of the CGST Act, 2017.

Final Conclusion: The Authority rejected the applicant's advance ruling application under Section 98(2) of the CGST Act, 2017 on the ground that it concerned supplies already completed during July 2017 to June 2019 and therefore did not fall within the statutory scope of 'being undertaken' or 'proposed to be undertaken' for which advance rulings may be sought.

Automatic Data Processing Machine - Classification under tariff heading 8471 - Comprising in the same housing central processing unit and input and output units - Section and Chapter Notes interpretation - HSN sub heading 8471 41 90 (Other)

Automatic Data Processing Machine - Comprising in the same housing central processing unit and input and output units - Section and Chapter Notes interpretation - HSN sub heading 8471 41 90 (Other) - Classification of the product 'roombr' (Walltop Computer) under the Customs Tariff/HSN headings. - HELD THAT: - The Authority applied Section and Chapter Notes and the Explanatory Notes to Chapter 84 to test whether the Walltop Computer qualifies as an automatic data processing machine. Note 5(A) to Chapter 84 requires such machines to (i) store programmes and data necessary for execution, (ii) be freely programmable by the user, (iii) perform arithmetical computations specified by the user, and (iv) execute processing programs with logical decision making without human intervention; all conditions must be fulfilled simultaneously. The Walltop Computer was found to have processor, RAM and storage sufficient to store and execute programs, to be freely programmable, to perform computations and to execute programs that make logical decisions during runs. Explanatory notes further show that an automatic data processing machine may comprise, in the same housing, a central processing unit, an input unit and an output unit. The product incorporates a central processing unit (processor and motherboard), input devices (Bluetooth keyboard, IR pen, on screen input) and an output device (integrated optical projection display). Having concluded the product meets the definitional requirements for automatic data processing machines and, being neither a microcomputer nor a large/mainframe computer, the Authority placed it in the residual sub heading for "other" machines under heading 8471 41, namely 8471 41 90. [Paras 12, 13, 14, 15, 16]

The product 'roombr' (Walltop Computer) is classifiable as an automatic data processing machine and falls under tariff heading 8471 41 90.

Final Conclusion: The Advance Ruling holds that the Walltop Computer 'roombr' is an automatic data processing machine and is classifiable under HSN/tariff heading 8471 41 90 (Other).

Transfer of going concern - services by way of transfer as a going concern, as a whole or an independent part thereof - exemption under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - taxability of transfer of software as part of business

Transfer of going concern - services by way of transfer as a going concern, as a whole or an independent part thereof - exemption under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - Transfer of the independent part of business comprising the "LoanFront" mobile application qualifies as a transfer of a going concern and is exempt from GST under the notification. - HELD THAT: - The Authority examined the contractual documents and factual matrix which showed a slump sale of the business defined to include the mobile application and related software, intellectual property, domain, backend APIs, analytics and dashboards, together with assets and specified liabilities and the intention that the buyer would carry on the same business. The phrase 'going concern' (though not defined in the CGST/KGST Acts) was applied in its accounting sense as an ongoing enterprise not intended for liquidation. Given that the transaction contemplated transfer of an independent, functional part of the business with continuity in operations and assumption of liabilities and related rights, the transfer amounted to transfer of a going concern. Entry No.2 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 provides a nil rate in respect of "services by way of transfer of a going concern, as a whole or an independent part thereof" without conditionalities. Applying that notification to the facts, the Authority concluded that the transfer of the LoanFront app qualifies for exemption. [Paras 12, 13, 14, 15]

The transfer of the independent part of business relating to the LoanFront mobile application qualifies as transfer of a going concern and is exempt from GST under entry 2 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017.

Final Conclusion: Advance ruling that the transfer of the LoanFront mobile application as an independent part of the applicant's business is a transfer of a going concern and is exempt from GST under Notification No.12/2017-Central Tax (Rate) dated 28.06.2017.

Classification of goods by composition and predominant ingredient - Chewing tobacco as a manufactured tobacco product under Chapter 24 - HSN classification of chewing tobacco - GST rate applicability on tobacco products - Levy of Compensation Cess on chewing tobacco

Classification of goods by composition and predominant ingredient - Chewing tobacco as a manufactured tobacco product under Chapter 24 - HSN classification of chewing tobacco - Final product 'Raula Gundi' is classifiable as Chewing Tobacco and falls under HSN 2403 99 10. - HELD THAT: - The Authority examined the composition and manufacturing process of 'Raula Gundi' and found that tobacco dust is the predominant ingredient (about 50%) to which other ingredients are added to make a chewable product. The raw materials undergo processing and the resulting marketable product is a manufactured chewing tobacco. Applying the classification principle by composition and the entries in Chapter 24, Heading 2403, the product corresponds to the description of 'Chewing Tobacco' at HSN 2403 99 10. The Authority therefore classified 'Raula Gundi' as 'Chewing Tobacco (without lime tube)'. [Paras 4, 5]

The product 'Raula Gundi' is a manufactured chewing tobacco and is classifiable under HSN 2403 99 10.

GST rate applicability on tobacco products - Levy of Compensation Cess on chewing tobacco - Applicable GST rate is 28% (14% CGST + 14% SGST) and Compensation Cess of 160% applies to the product. - HELD THAT: - Having held the product to be chewing tobacco under Heading 2403, the Authority referred to the GST rate schedule and notifications. Chewing tobacco appears in the relevant GST notification at the 28% rate. Further, the product is listed in the Compensation Cess notification (as chewing tobacco without lime tube) attracting Compensation Cess at the specified rate. The Authority also noted the valuation reference for tobacco products and advised the applicant to observe the prescribed valuation guidance for excise and NCCD where relevant. [Paras 4, 5]

The product is taxable at 28% GST (14% CGST + 14% SGST) and is subject to Compensation Cess at 160% as per the applicable notifications.

Final Conclusion: The Authority ruled that 'Raula Gundi' is a manufactured chewing tobacco classified under HSN 2403 99 10, taxable at 28% (14% CGST + 14% SGST) and liable to Compensation Cess at 160%.

Condonation of delay - Income Declaration Scheme, 2016 - retrospective amendment - acceptance of delayed payment subject to interest - limitations on testing an earlier order by subsequent developments - liberty to file fresh representation and requirement of a speaking order - stay on coercive recovery

Condonation of delay - Application to condone delay of 13 days in filing the appeal - HELD THAT: - The Court considered the affidavit filed in support of the application and found the reasons for the delay satisfactory. Having applied the discretionary test for condonation of delay to the facts placed before it, the Court exercised its discretion in favour of the appellant and permitted the appeal to be filed out of time. [Paras 3, 4]

The delay in filing the instant appeal is condoned and I.A. No.CAN 1 of 2019 (Old CAN 3177 of 2019) is allowed.

Income Declaration Scheme, 2016 - retrospective amendment - acceptance of delayed payment subject to interest - limitations on testing an earlier order by subsequent developments - liberty to file fresh representation and requirement of a speaking order - Effect of the Finance (No.2) Act, 2019 amendment and notification dated 13th December, 2019 on the appellant's late third instalment payment under the Scheme and the appropriate course of action - HELD THAT: - The Court held that it cannot re-open or test the correctness of the Single Bench's dismissal on the basis of material that was not placed before the Writ Court. Noting, however, that the Finance (No.2) Act, 2019 retrospectively permitted acceptance of delayed payments subject to interest within dates to be notified by the Central Government, and that a notification of 13th December, 2019 fixed a later cut-off (and the appellant had paid his third instalment before that notified date), the Court was prima facie of the view that the appellant may be entitled to benefit of the amendment. In view of these developments and the fact that the appellant's prior representation remained unanswered, the Court did not decide the merits but granted liberty to the appellant to make a fresh representation placing the amendment and the notification before the appropriate authority. The Court directed that the representation be considered on merits and that a speaking order be passed in accordance with law within three weeks from receipt of the office copy of this order. The appellant was also directed to enclose the earlier representation with the fresh one. [Paras 9, 10, 11, 13]

Liberty granted to the appellant to place the retrospective amendment and notification before the respondent authorities by fresh representation; respondents to consider the representation and pass a speaking order on merits within three weeks.

Stay on coercive recovery - Whether coercive steps for recovery pursuant to the assessment framed on 26th December, 2017 may be initiated during pendency of the fresh representation - HELD THAT: - In light of the direction to permit fresh representation and the prima facie applicability of the retrospective amendment and notification, the Court afforded interim protection to the appellant. The assessing officer was restrained from initiating any coercive recovery or enforcement steps for tax and penalty arising from the assessment already framed, until the respondent authority disposes of the representation as directed. [Paras 12]

Assessing officer directed not to initiate any coercive step against the appellant for recovery of the tax and penalty pursuant to the assessment until disposal of the representation as ordered.

Final Conclusion: Condonation of delay in filing the appeal allowed; the Court granted liberty to the appellant to submit a fresh representation placing the retrospective amendment and the 13th December, 2019 notification before the income-tax authorities, directed the authorities to pass a speaking order within three weeks, and restrained the assessing officer from taking coercive recovery steps pending such consideration; appeal and connected application disposed of with no order as to costs.

Assessment based solely on investigation report - onus under section 68 of the IT Act - requirement of independent inquiry under section 142(2) of the IT Act - reliance on SEBI investigation and listings for disproof of transactions - appellate court will not interfere with concurrent findings of fact

Assessment based solely on investigation report - onus under section 68 of the IT Act - requirement of independent inquiry under section 142(2) of the IT Act - reliance on SEBI investigation and listings for disproof of transactions - appellate court will not interfere with concurrent findings of fact - Validity of the assessment framed by relying on the Investigation Wing's report without independent enquiry and whether the assessee discharged the onus under section 68. - HELD THAT: - The Tribunal found that the Assessing Officer framed the assessment primarily on statements and the Investigation Wing's report without conducting independent enquiries or corroborating those pre-existing statements during assessment proceedings. The Tribunal recorded that shares were purchased online, payments were through banking channels, shares were dematerialized and sales proceeded from the demat account; the assessee's brokers were not shown in the SEBI lists and SEBI's orders and the Investigation Wing's report post-dated the transactions. In view of these factual findings, the Tribunal held that the Assessing Officer had not discharged the duty of making independent enquiries under the enquiry provisions and that the Investigation Wing's report could not be the sole basis for the assessment. These findings being essentially questions of fact, the High Court declined to interfere with the Tribunal's concurrent conclusion that the assessee had met the initial onus and that the assessment was not sustainable insofar as it rested solely on the investigation report without independent corroboration. [Paras 22, 23, 24, 25, 26]

Tribunal's factual findings and conclusion that the assessment could not be sustained based solely on the Investigation Wing's report were upheld; appeal dismissed.

Final Conclusion: The High Court dismissed the Revenue's appeal and declined to interfere with the Tribunal's findings that the assessment, founded solely on the Investigation Wing's report without independent enquiry, was unsustainable.

Disallowance under section 40(a)(ia) for failure to deduct tax at source - liability to deduct tax at source on royalty/remake-rights payments and applicability of section 194J

Disallowance under section 40(a)(ia) for failure to deduct tax at source - liability to deduct tax at source on royalty/remake-rights payments and applicability of section 194J - Whether the deletion by the Commissioner (Appeals) of the addition made under section 40(a)(ia) in respect of the amount written off as remake rights is sustainable. - HELD THAT: - The Assessing Officer made an addition under section 40(a)(ia) on the ground that tax was not deducted at source on the payment credited as remake rights. The Commissioner (Appeals) deleted the addition reasoning that the amount was credited to the partner's capital account on 01.04.2006 and that TDS on royalty under section 194J became applicable only from 13.07.2006, hence no obligation to deduct tax arose. The Tribunal examined the orders below, noted that the Assessing Officer had again confirmed the addition after remand and that the Commissioner (Appeals) had deleted the addition without adequately considering the matter. On that basis the Tribunal found the deletion by the Commissioner (Appeals) to be unsustainable and reversed it, allowing the Revenue's appeal. [Paras 7, 8]

The deletion of the addition under section 40(a)(ia) by the Commissioner (Appeals) is reversed and the addition is restored.

Final Conclusion: The Tribunal allowed the Revenue's appeal, reversed the Commissioner (Appeals)'s deletion of the addition made under section 40(a)(ia) and restored the addition in respect of the remake-rights payment for AY 2008-09.

Ownership and user requirement for claiming depreciation under Section 32 of the Income Tax Act - entitlement to depreciation vests with the owner of the asset - sharing or licence of use does not confer ownership for tax depreciation - distinction of precedents on fractional ownership and possession

Ownership and user requirement for claiming depreciation under Section 32 of the Income Tax Act - entitlement to depreciation vests with the owner of the asset - sharing or licence of use does not confer ownership for tax depreciation - distinction of precedents on fractional ownership and possession - Whether the assessee, being a non-owner user under an internal sharing arrangement, was entitled to claim 50% of depreciation on an asset purchased and invoiced to the sister concern. - HELD THAT: - The Tribunal found that the disputed asset was purchased by and invoiced to the sister concern, making that entity the de facto and de jure owner. Section 32 requires ownership of the asset and use for the purpose of the claimant's business for depreciation to be allowable. Mere sharing of use or an internal agreement/licence to use the asset does not create an interest analogous to ownership for the purpose of claiming depreciation. The decisions relied upon by the assessee were examined and held distinguishable or supportive of the proposition that the tax benefit of depreciation belongs to the investor/owner or to the person in possession under facts establishing ownership or equivalent proprietary interest; the present case did not establish such ownership by the appellant. The fact that the sister concern's appeal was allowed for full depreciation did not confer ownership on the appellant nor permit an additional fractional claim by it. Consequently, the disallowance of 50% of depreciation was sustained. [Paras 8, 9, 10, 11, 12]

Disallowance of 50% of the depreciation claim upheld; assessee not entitled to claim depreciation as it was not the owner of the asset.

Final Conclusion: The appeal is dismissed: depreciation is allowable only to the owner of the asset and the assessee, being a non-owner user under a sharing arrangement, is not entitled to the claimed 50% depreciation for AY 2016-17.

Estimation of income by application of a deemed profit rate - Treatment of declared agricultural income as income from other sources - Admissibility and effect of post assessment evidence before appellate authority

Estimation of income by application of a deemed profit rate - Appropriateness of restricting net profit from liquor business to 5% of turnover instead of 3% or 8%. - HELD THAT: - The Tribunal noted that the assessee did not maintain or produce books of account either during search, post search enquiries or assessment proceedings. The AO originally estimated profit at 8% and the assessee had conceded a 5% net profit rate in correspondence during assessment proceedings. The CIT(A) reduced the estimate to 5% and, on appeal, the Tribunal held that having accepted 5% before the lower authorities the assessee could not seek reduction to 3% at this stage. The Tribunal distinguished the decision relied upon by the assessee on the factual basis that in the present case no books were maintained or produced for verification. For these reasons the Tribunal found no infirmity in sustaining the 5% estimation of profit. [Paras 6, 12, 13, 14]

Estimation of profit at 5% of turnover upheld; ground for adopting 3% rejected.

Treatment of declared agricultural income as income from other sources - Admissibility and effect of post assessment evidence before appellate authority - Whether agricultural income declared by the assessee should be accepted or partly treated as non agricultural income in absence of contemporaneous supporting details, and the effect of VRO certificate and other documents filed before the CIT(A). - HELD THAT: - The AO reduced the claimed agricultural income by 50% and treated the balance as non agricultural income because the assessee failed during assessment to produce details of crops, bills, mode of receipt and evidence of expenses. Before the CIT(A) the assessee produced a VRO certificate and other documents; the CIT(A) admitted these and yet sustained the AO's addition after obtaining a remand report. The Tribunal observed that although the assessee did not appear during remand, the documents produced before the CIT(A) were available to the AO who could have conducted independent enquiries but did not. Considering the smallness of the declared agricultural income, the production of the VRO certificate and other documents before the CIT(A), and the totality of facts in an old matter, the Tribunal exercised discretion to reduce the disallowance and directed that only 10% of the declared agricultural income be treated as non agricultural (i.e., addition to be restricted accordingly), while deleting the balance addition. [Paras 7, 16, 17]

Addition sustained only to the extent of 10% of the declared agricultural income; remaining addition deleted.

Final Conclusion: Both appeals are partly allowed: the restriction of liquor business profit at 5% of turnover is upheld; the addition treating agricultural income as non agricultural is reduced so that only 10% of the declared agricultural income is sustained as taxable, with the balance deleted.

Deduction under section 80P(2)(a)(i) - Eligibility of cooperative society for deduction on interest income from banks - Distinction between deduction under 80P(2)(a)(i) and 80P(2)(d) - Precedential weight of High Court and Tribunal decisions - Application of Totgar's Cooperative Sales Society decision

Deduction under section 80P(2)(a)(i) - Eligibility of cooperative society for deduction on interest income from banks - Application of Totgar's Cooperative Sales Society decision - Deduction under section 80P(2)(a)(i) was allowable in respect of interest earned on fixed deposits with banks for Assessment Year 2018-19. - HELD THAT: - The Tribunal examined earlier Bench decisions which had applied the view of the Hon'ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. to allow deduction under section 80P on interest income. The Tribunal observed that the contrary decision in Totgar's Cooperative Sale Society (and the High Court decision relied upon by the Principal CIT) related to a different clause of section 80P and arose from materially different facts concerning activities of the assessee and the applicability of section 80P(2)(d). Consequently, Totgar's decision was not germane to the claim under section 80P(2)(a)(i) in the present case. Applying the precedential approach favouring allowance of deduction on interest income from banks, the Tribunal held that the assessee's claim for deduction under section 80P(2)(a)(i) in respect of interest on fixed deposits was sustainable and directed grant of the deduction. [Paras 4, 5]

The denial of deduction was overturned and deduction under section 80P(2)(a)(i) was directed to be granted.

Final Conclusion: The appeal is allowed: the assessee is entitled to deduction under section 80P(2)(a)(i) in respect of interest earned on fixed deposits with banks for Assessment Year 2018-19; the contrary decision of the authority below is set aside.

Foreign tax credit - Double taxation avoidance agreement - Section 90 - Intimation under section 143(1) - Rectification under section 154 - Form 67 - Substantial justice over technical considerations

Intimation under section 143(1) - Rectification under section 154 - Substantial justice over technical considerations - Ld. CIT(A) erred in dismissing the assessee's appeal against the intimation u/s 143(1) on the technical ground that the intimation lost its identity by subsequent section 154 proceedings. - HELD THAT: - The Tribunal found that the assessee had preferred an appeal against the intimation framed under section 143(1), which is expressly appealable to the Commissioner (Appeals). The Commissioner (Appeals) declined to adjudicate the grievance on merits by holding that the intimation had merged with a later order under section 154. The Tribunal held that the Commissioner (Appeals) was not entitled to refuse consideration of the appeal on the basis of subsequent rectification proceedings and that the grievance ought to have been addressed on merits. The Tribunal emphasised that procedural or subsequent developments under section 154 do not extinguish the appellate forum's duty to entertain and decide an appeal against the intimation under section 143(1).

CIT(A)'s dismissal on the cited technical ground was erroneous and cannot be sustained; the appeal was not to be rejected for that reason.

Foreign tax credit - Double taxation avoidance agreement - Section 90 - Form 67 - The claim for foreign tax credit made by the assessee (initially filed under section 91 by inadvertence and later corrected to section 90) was not adjudicated on merits and is remanded for verification and determination by the Assessing Officer. - HELD THAT: - The Tribunal noted that the assessee, a resident of India, derived salary income while on secondment in Australia and paid tax there. The Tribunal accepted that Australia is a treaty country with India and that the appropriate provision for claiming credit is section 90; however, the correctness and veracity of the claim (including the revised Form 67 and revised return filed beyond the statutory time) were not examined on merits by the lower authorities. In the interest of substantial justice the Tribunal directed that the matter be remanded to the Assessing Officer for verification of the foreign tax credit claim and permitted the assessee to produce additional evidence if necessary. The remand is for fresh consideration and verification of the claim rather than a final adjudication on entitlement by the Tribunal.

Issue remitted to the Assessing Officer for verification and fresh adjudication of the foreign tax credit claim; assessee granted liberty to furnish further evidence.

Final Conclusion: The appeal is allowed for statistical purposes: the Tribunal set aside the CIT(A)'s dismissal on technical grounds and remitted the foreign tax credit claim for verification and fresh consideration by the Assessing Officer, with liberty to the assessee to produce further evidence; substantial justice is to prevail over technical considerations.

Revisionary jurisdiction under section 263 of the Income Tax Act - Applicability of section 115BBE to income detected during survey - Invocation of deeming provisions under sections 69A and 69C in survey cases - Prospective operation of amendment to section 115BBE - Requirement of specific findings by the revisional authority before exercising jurisdiction under section 263

Revisionary jurisdiction under section 263 of the Income Tax Act - Requirement of specific findings by the revisional authority before exercising jurisdiction under section 263 - Invocation of deeming provisions under sections 69A and 69C in survey cases - Whether the assessment order was erroneous and prejudicial to the interests of the Revenue so as to warrant exercise of revisionary jurisdiction under section 263. - HELD THAT: - The Tribunal found that the Assessing Officer had issued a specific show cause notice during assessment seeking explanation on applicability of the deeming provisions (relating to unexplained cash and alleged bogus expenses) and consequent taxation under section 115BBE, the assessee had filed a detailed reply, and the AO accepted that reply after consideration. The PCIT's conclusion that the AO made no enquiries or failed to apply his mind was therefore unsustainable. Reliance was placed on decisions holding that a revisional order under section 263 cannot be sustained where the AO has in fact examined the issue and recorded reasons; further, the revisional authority must record specific findings as to why the AO's conclusions are erroneous, rather than adopting a general or hypothetical approach to invoke deeming provisions. Applying these principles to the facts, the Tribunal held that the AO's order could not be said to be erroneous or prejudicial to the revenue merely because the PCIT took a different view on applicability of deeming provisions or consequent tax treatment. [Paras 6]

The PCIT's exercise of jurisdiction under section 263 was without basis and the assessment order was not shown to be erroneous or prejudicial to the interests of the Revenue.

Applicability of section 115BBE to income detected during survey - Prospective operation of amendment to section 115BBE - Whether section 115BBE (as amended) applied to the income detected in the survey conducted prior to the amendment coming into force. - HELD THAT: - The Tribunal observed that the survey in the present case was conducted before the amendment to section 115BBE came into effect. In view of judicial precedents cited in the order, the Tribunal accepted that the amended provision could not be applied to a survey/search conducted prior to the amendment's effective date. The question of applicability of the amended tax rate under section 115BBE is a debatable legal issue and cannot, without specific findings, form the basis for invoking section 263 to revise an assessment which the AO had completed after considering the assessee's explanations. [Paras 6]

The amended provision of section 115BBE was not applicable to the survey conducted prior to its effective date; this did not justify invoking section 263.

Final Conclusion: The assessee's appeal is allowed: the revisional order passed by the Principal CIT under section 263 is set aside, the assessing officer's order is held not to be erroneous or prejudicial to the revenue, and the amended provisions of section 115BBE were not applied to a survey conducted before the amendment came into force.

Computation of tax under section 115BBE - Unexplained money under section 69A - Unexplained cash credit and unexplained investments under sections 68 to 69 - Disallowance of deduction under section 80U - Deduction claimed under section 80G

Computation of tax under section 115BBE - Unexplained cash credit and unexplained investments under sections 68 to 69 - Disallowance of deduction under section 80U - Whether tax could be computed under section 115BBE when the Assessing Officer did not invoke or record findings under sections 68 to 69. - HELD THAT: - The Tribunal accepted the assessee's contention that the deeming operation of section 115BBE can be triggered only where disallowance or addition arises from matters covered by sections 68 to 69 (such as unexplained cash credits or investments). In the present case the Assessing Officer disallowed the excess claim under section 80U but did not discuss or hold that the case fell within sections 68 or 69. Absent any specific invocation or finding that the additions were covered by sections 68 to 69, the Assessing Officer had no basis to apply the deeming and compute tax under section 115BBE. The Tribunal therefore held that tax could not be imposed under section 115BBE in respect of the 80U disallowance where sections 68-69 were not pleaded or applied by the AO. [Paras 6, 7]

Allowed the ground challenging computation of tax under section 115BBE in respect of the disallowance under section 80U; tax under section 115BBE cannot be applied without findings under sections 68-69.

Unexplained money under section 69A - Deduction claimed under section 80G - Computation of tax under section 115BBE - Whether an incorrect claim of deduction under section 80G can be treated as 'unexplained money' under section 69A and taxed under section 115BBE. - HELD THAT: - The Tribunal examined the scope of section 69A and observed that it applies where the assessee is found to be the owner of money, bullion, jewellery or other valuable article not recorded in the books of account and the assessee offers no explanation as to its nature or source. An incorrect claim of deduction under section 80G does not by itself establish possession of undisclosed money or valuables outside books. In the absence of any specific finding that the assessee was in possession of unexplained money or other valuable articles not recorded in books, the invocation of section 69A was legally incorrect. Consequently, computation of tax under section 115BBE with respect to the disallowance of the 80G claim could not be sustained. [Paras 8, 9]

Allowed the ground that disallowance of the 80G claim could not be treated as unexplained money under section 69A and therefore could not be subjected to tax computation under section 115BBE.

Final Conclusion: The appeal is allowed: the Tribunal held that section 115BBE could not be applied in respect of the 80U disallowance in the absence of findings under sections 68-69, and that disallowance of the 80G claim could not be treated as unexplained money under section 69A; accordingly the computation under section 115BBE was set aside.

Characterisation of receipt as business/commercial transaction versus loan - Deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961 - Parol and documentary evidence and subsequent conduct to determine true nature of transaction - Evidentiary significance of book entries and audited financial statements

Characterisation of receipt as business/commercial transaction versus loan - Deemed dividend under Section 2(22)(e) of the Income Tax Act, 1961 - Parol and documentary evidence and subsequent conduct to determine true nature of transaction - Evidentiary significance of book entries and audited financial statements - Whether the amounts of Rs.2,53,75,000/- received from Landspace Construction Pvt. Ltd. are exigible to tax as deemed dividend under Section 2(22)(e) or are commercial receipts outside its scope - HELD THAT: - The Tribunal considered the rival contentions that the amounts were loans from a related company (for purposes of Section 2(22)(e)) while the assessee maintained they were consideration for acquisition of 50% rights in two properties under an MOU and thus commercial receipts. The CIT(A) examined the documentary chain - the MOU of 02.04.2012 providing for 50:50 sharing of rights and profits, the subsequent Agreement to Sell of 13.07.2015 involving both parties as sellers, developer correspondence acknowledging allotment to the two parties, and the subsequent division of sale proceeds and profit - and found that the MOU was acted upon. The Tribunal accepted the appellate authority's approach that the true nature of the receipt is to be ascertained from the totality of evidence and subsequent transactions rather than solely from book entries or auditor's notes; mere classification as inter-corporate loan in the audited accounts does not conclusively determine substance. Having weighed the documentary evidence and subsequent conduct showing transfer of rights and sharing of sale proceeds, the Tribunal endorsed the CIT(A)'s conclusion that the receipt was a business/commercial transaction outside the deeming fiction of Section 2(22)(e). The Tribunal found no persuasive material to displace that conclusion or to treat the MOU and related documents as sham in light of the acted upon events and profit sharing between the parties. [Paras 16, 18, 19, 20]

The receipt of Rs.2,53,75,000/- from Landspace is a business/commercial transaction for acquisition of property rights and not a loan chargeable as deemed dividend under Section 2(22)(e).

Final Conclusion: The appeal filed by the Revenue is dismissed; the Tribunal upholds the CIT(A)'s deletion of the addition made under Section 2(22)(e) for AY 2013-14 on the basis that the receipts were commercial in nature and substantiated by subsequent transactions and documentary evidence.

Rectification of assessment under section 154 - Mistake apparent from the record - Revised return under section 139(5) - limitation and exclusivity - Production of documents forming part of the return under section 139(9) - Requirement of a speaking order on rectification/reassessment - Time-bar under section 154(7)

Rectification of assessment under section 154 - Mistake apparent from the record - Revised return under section 139(5) - limitation and exclusivity - Production of documents forming part of the return under section 139(9) - Whether the assessee's rectification application under section 154 seeking withdrawal of income stated to have been wrongly returned is maintainable and, if so, whether the AO erred in rejecting it without a speaking adjudication and without calling for record/documents. - HELD THAT: - The Tribunal held that section 139(5) provides the primary and time limited remedy for correcting an omission or wrong statement in a return and that the window for filing a revised return in the present case had closed; accordingly the assessee could not invoke section 139(5) retrospectively. However, the Tribunal observed that rejection of a section 154 claim requires material on the record showing a mistake apparent from the record. Where the return as filed is internally inconsistent - i.e. the tax computation corresponds to either (a) the higher income returned (tax computed correctly on that income) or (b) the lower income the assessee now claims was intended (tax computed incorrectly) - both inferences may be possible and one of them must be resolved on the basis of material on record. In such an either/or situation the AO cannot prefer one inference without calling for and considering contemporaneous documents which form part of the return under section 139(9). The Tribunal therefore found that the Revenue's summary rejection, without requiring production of the relevant contemporaneous documents and without a speaking order addressing why the rectification was not permitted as a mistake apparent from record, was unsustainable. The Tribunal emphasised that the AO must examine the material called for and decide, by a reasoned order, whether the discrepancy was a mistake in disclosing income or an error in tax computation. [Paras 4]

The rectification claim under section 154 is not to be summarily rejected; the matter is remanded to the AO to require filing of contemporaneous documents under section 139(9), to adjudicate afresh on merits and to pass a speaking order determining whether a mistake apparent from record exists.

Time-bar under section 154(7) - Whether the rectification proceedings were barred by time under section 154(7). - HELD THAT: - The Tribunal noted that the assessee had made multiple rectification applications dating back to shortly after the intimation and that the first responsive action by the Revenue came within the continuum of those applications. Relying on precedent that the reference point in section 154(7) can be any order sought to be amended (including an amended order) and having regard to the history of repeated applications, the Tribunal held that the proceedings could not be invalidated as time barred in the circumstances of this case. [Paras 4]

The rectification proceedings were held not to be barred by time in the factual matrix before the Tribunal.

Final Conclusion: The appeal is allowed: the order rejecting rectification is set aside and the matter is remanded to the Assessing Officer for fresh adjudication in accordance with law; the AO shall call for and consider contemporaneous documents under section 139(9), hear the assessee, and pass a speaking order determining whether a mistake apparent from record exists, the rectification is permissible, or the tax computation is correct.

Revisionary jurisdiction under section 263 - scope of assessment under section 153A for unabated assessment years - abated and unabated assessment proceedings - incriminating material found during search

Revisionary jurisdiction under section 263 - scope of assessment under section 153A for unabated assessment years - incriminating material found during search - Whether the Principal Commissioner was justified in invoking revisionary jurisdiction under section 263 in respect of additions in assessments completed prior to search (unabated assessment years) where the items did not arise from incriminating material found during the search. - HELD THAT: - The Tribunal found that assessments for AY 2012-13, 2013-14 and 2015-16 were completed prior to the search and therefore constituted unabated assessment proceedings. Under the second proviso to section 153A, completed assessments on the date of search continue to remain valid and the scope of reassessment under section 153A in such unabated years is limited to income detected or emanating from incriminating material found during the search. The items impugned by the Principal Commissioner-loss on write-off of fixed assets and expenditure claimed where tax was not deducted-were part of the assessee's disclosed financials and did not arise out of any incriminating material discovered in the search. Applying the ratio that additions in unabated assessment years must be founded on incriminating material, the Tribunal held that treating the assessment orders as erroneous and prejudicial to revenue for those items and invoking section 263 was not tenable. Consequently the exercise of revisionary power in respect of those items was quashed. The Tribunal noted that once this legal issue is decided in favour of the assessee, the remaining grounds became academic. [Paras 10, 11]

The invocation of section 263 by the Principal Commissioner in respect of the specified items in the unabated assessment years is quashed; the PCIT's order under section 263 is not sustainable.

Final Conclusion: The appeals are allowed on the legal issue that additions in unabated assessment years must arise from incriminating material found during search; the section 263 order is quashed in respect of the impugned items and the remaining grounds are rendered academic; the three appeals are partly allowed.

Unexplained investment under section 69 - reopening of assessment under section 148 - principles of natural justice - right to cross-examination - admissibility and corroboration of impounded electronic documents - reliance on third party notarised registers and requirement of confrontation

Unexplained investment under section 69 - admissibility and corroboration of impounded electronic documents - principles of natural justice - right to cross-examination - Sustainability of additions treating amounts recorded in impounded satakhat documents as unexplained investments in the hands of the assessee for AY 2011-12. - HELD THAT: - The Tribunal found that the Assessing Officer relied on satakhat documents and third party statements recovered from another person's premises and from an impounded hard disk, without giving the assessee the opportunity to cross examine the witnesses whose statements formed the basis of the additions. The order records that the documents impounded did not bear the assessee's signed, stamped and registered sale deeds and that no further independent investigation or corroborative evidence (for example, contemporaneous statements of the sellers or purchasers before the AO, or confrontation of the notary register entries with the assessee) was undertaken. Reliance on unsigned, incomplete printouts from a third party's computer and on statements not confronted with or tested by cross examination was held to violate the principles of natural justice; accordingly the additions founded on such material could not be sustained. [Paras 15, 16]

Additions treating the amounts shown in the impounded satakhats as unexplained investments under section 69 are deleted for lack of corroboration and for violation of the assessee's right to cross examination.

Reopening of assessment under section 148 - reliance on third party notarised registers and requirement of confrontation - Applicability of the Tribunal's conclusion in the lead appeal to the assessee's appeal for AY 2012-13. - HELD THAT: - The Tribunal noted that the facts, documentary material and grounds in ITA No.49/SRT/2017 (AY 2012 13) are identical to those in the lead appeal (AY 2011 12). Having found the additions in the lead case to be unsustainable for the reasons stated (absence of cross examination and lack of corroborative investigation), the Tribunal applied the same reasoning mutatis mutandis to the appeal for AY 2012 13. [Paras 17]

The deletion of additions in the lead appeal is applied mutatis mutandis to the assessee's appeal for AY 2012 13.

Final Conclusion: Both appeals for AY 2011 12 and AY 2012 13 are allowed; the additions made by the Assessing Officer and confirmed by the CIT(A) treating amounts in the impounded satakhats as unexplained investments are deleted for want of corroboration and for violation of the assessee's right to cross examination.

Mutual exclusivity of Section 68 proviso and Section 56(2)(viib) - onus on assessee under Section 68 to prove identity, genuineness and creditworthiness - proviso to Section 68 requiring explanation of source in hands of shareholder - Fair Market Value under Section 56(2)(viib) and valuation under Rule 11UA - double addition/double taxation arising from concurrent application of deeming provisions

Mutual exclusivity of Section 68 proviso and Section 56(2)(viib) - double addition/double taxation arising from concurrent application of deeming provisions - Inter-play between Section 68 (with proviso) and Section 56(2)(viib) and permissibility of simultaneous/additive taxation under both provisions - HELD THAT: - The Tribunal held that the proviso to Section 68 (inserted w.e.f. AY 2013-14) and Section 56(2)(viib) address different objectives but operate in a mutually exclusive manner in practice. Section 68 (with its proviso) is an anti-money laundering deeming provision that permits addition of any sum credited in the books where the assessee fails to satisfy the Assessing Officer as to identity, genuineness and creditworthiness and, for closely held companies, the source in the hands of the shareholder. Only if the taxpayer satisfies the requirements of Section 68 does the question under Section 56(2)(viib) (taxation of excess consideration over FMV) arise. Consequently, both provisions cannot be mechanically invoked to produce double additions on the same amount; if Section 68 addition is sustained because the proviso is not satisfied, the same receipts cannot concurrently be subjected to an addition under Section 56(2)(viib). The Tribunal, however, recognised that if higher courts reverse its Section 68 finding, Section 56(2)(viib) may then be applied.

Section 68 (with proviso) and Section 56(2)(viib) cannot be applied to effectuate double additions on the same receipts; the statutory scheme contemplates Section 68 being applied where explanations fail, and Section 56(2)(viib) applying when the requirements of Section 68 are met.

Onus on assessee under Section 68 to prove identity, genuineness and creditworthiness - proviso to Section 68 requiring explanation of source in hands of shareholder - Sustenance of addition of Rs.1,51,20,000 under Section 68 read with Section 115BBE in respect of amounts subscribed by five Kolkata based companies - HELD THAT: - On the facts the Tribunal agreed with the Assessing Officer and CIT(A) that the assessee failed to discharge the heavy onus under Section 68 and its proviso. The five corporate subscribers were shown to be shell/conduit entities (meagre operating income, preponderant securities premium balances, inter company fund flows, return of notices unserved or identical/unsigned replies, common controlling persons, struck off status of several entities and absence of credible documentary trail such as PAS 3). The director of the assessee gave evasive answers and could not identify or produce subscribing companies' directors. The Tribunal concluded that the ingredients of Section 68 (identity, genuineness and creditworthiness; and source in the hands of the shareholder as required by the proviso) were not satisfactorily established and, accordingly, upheld the addition under Section 68 read with Section 115BBE.

Addition of Rs.1,51,20,000 under Section 68 read with Section 115BBE is upheld.

Fair Market Value under Section 56(2)(viib) and valuation under Rule 11UA - mutual exclusivity of Section 68 proviso and Section 56(2)(viib) - Treatment of addition under Section 56(2)(viib) and remand for fresh determination of FMV in respect of allotments to individuals - HELD THAT: - The Assessing Officer had made a Section 56(2)(viib) addition for excess of issue price over FMV for all subscribers. The Tribunal held that the portion of the Section 56(2)(viib) addition that overlaps with the Section 68 addition in respect of the five corporate subscribers (i.e. the corporate share subscriptions) cannot be sustained as a separate addition (to avoid double addition) and therefore that overlapping quantum was effectively deleted. However, the small balance relating to 2,000 shares issued to eight individuals (aggregate addition of Rs.1,29,420 as per the order) required fresh valuation/adjudication. The Tribunal found that the AO had not shown the working for his FMV figure and the assessee's NAV based valuation needed fresh consideration (and the company's prior year transactions warranted further probe). Consequently the question under Section 56(2)(viib) qua those individual allotments was remanded to the Assessing Officer for de novo adjudication after giving the assessee opportunity to be heard and to produce evidence (including valuation/working) in accordance with law.

Overlapping part of the Section 56(2)(viib) addition (corporate subscribers) stands deleted for being duplicative of sustained Section 68 addition; the remaining issue under Section 56(2)(viib) (individual allotments) is remanded to the AO for fresh determination of FMV and adjudication.

Final Conclusion: The Tribunal partly allowed the appeal for statistical purposes. It affirmed the addition of Rs.1,51,20,000 under Section 68 read with Section 115BBE (assessing the five Kolkata based corporate subscribers as shell/conduit entities and holding the assessee failed to satisfy the proviso to Section 68), disallowed overlapping double addition under Section 56(2)(viib) in respect of those corporate subscriptions, and remanded the residual question under Section 56(2)(viib) relating to allotments to eight individuals to the Assessing Officer for fresh adjudication of Fair Market Value and related issues after affording opportunity to the assessee.

Admission under section 132(4) - corroborative evidence requirement for statements made during search - retraction of statements and evidentiary value - CBDT instructions on recording statements during search and survey - addition to income based solely on search statement not sustainable

Admission under section 132(4) - corroborative evidence requirement for statements made during search - retraction of statements and evidentiary value - Validity of addition to income based solely on statement recorded under section 132(4) adopting construction cost at Rs.2,200 per sq.ft. - HELD THAT: - The Tribunal affirmed the principle that a statement recorded under section 132(4) is an important piece of evidence but is not conclusive and may be retracted or explained by the person who made it. Reliance solely on such a statement to make an addition is impermissible in the absence of corroborative or incriminating material. The CBDT instructions and subsequent communication caution against treating admissions made during search/survey as decisive where not supported by independent evidence and emphasise collection of material evidence rather than coerced confessions. In the present case the assessee retracted the earlier higher estimate and produced a confirmation from the developer that the estimated construction cost for the project was Rs.1,600 per sq.ft., and the same Assessing Officer had accepted that rate in assessing the developer. The Assessing Officer, however, ignored this corroborative material and made the addition solely on the basis of the statement recorded under section 132(4). In those circumstances, and having regard to the CBDT guidance and settled precedents that additions cannot rest solely on uncorroborated search statements, the Tribunal found no infirmity in the CIT(A)'s deletion of the addition. [Paras 11, 12]

Addition made solely on the basis of the statement recorded under section 132(4) was not sustainable and the deletion of the addition by the CIT(A) was upheld.

Final Conclusion: The Revenue's appeal is dismissed; the CIT(A)'s order deleting the addition based solely on the search-statement is upheld.

Striking off and restoration of company name - non-filing of annual returns and financial statements - dormant company notice and removal proceedings under Section 248 - conditional restoration subject to compliance and costs - continuing power of Registrar to initiate punitive action despite restoration

Striking off and restoration of company name - non-filing of annual returns and financial statements - Whether the order striking off the company and the NCLT dismissal of the restoration petition were sustainable in law - HELD THAT: - The Tribunal found that the Appellant Company possessed sale deeds and audited balance sheets for the period 2011-12 to 2018-19 evidencing substantial movable and immovable assets and that the company was not a non operational entity. On that basis the Appellate Tribunal concluded that the Registrar's action of striking off and the NCLT's dismissal were not sustainable. The Court set aside the impugned NCLT order and directed restoration of the company's name to the register, observing that non filing arose from inadvertence and lack of professional guidance rather than an intention to cease business, and that available financial records showed the company carried on business or had assets usable for business operations.

Impugned order set aside and the company's name to be restored to the Register of Companies.

Conditional restoration subject to compliance and costs - continuing power of Registrar to initiate punitive action despite restoration - What conditions should accompany restoration and whether Registrar retains power to take action for past non compliance - HELD THAT: - The Tribunal restored the company's name subject to specified conditions: payment of costs to the Registrar within eight weeks; filing of all annual returns and balance sheets and payment of requisite fees/late fees within eight weeks after restoration; and an express provision that the Registrar remains free to take any other punitive or other steps under the Companies Act for prior non filing or late filing. These conditions reflect the Court's exercise of equitable restoration while preserving statutory enforcement powers available to the Registrar.

Restoration granted subject to payment of costs, filing of outstanding statutory documents with applicable fees within prescribed time, and without prejudice to Registrar's power to proceed under the Act.

Final Conclusion: The Tribunal allowed the appeal, set aside the NCLT order, directed restoration of the company's name subject to payment of costs and filing of outstanding returns/balance sheets with applicable fees within specified timelines, while leaving open the Registrar's authority to take action for past non compliance.

Operational debt - default - pre-existing dispute - moonshine defence - change in management and liability - Section 9 application under the Insolvency and Bankruptcy Code, 2016 - admission of application

Operational debt - default - pre-existing dispute - Whether an operational debt was due and payable and whether a pre-existing dispute existed that warranted rejection of the Section 9 application. - HELD THAT: - The Tribunal examined the material placed on record including the Corporate Debtor's email of 15.04.2017 admitting a balance of Rs.37,33,552.10 and the Operational Creditor's communications of 27.12.2017 and multiple reminders. Applying the test in Mobilox (para 34), the court found that documentary evidence established an operational debt and that the Corporate Debtor's later contentions as to non-liability did not amount to a bona fide pre-existing dispute. The Adjudicating Authority had relied on the Corporate Debtor's reply to the demand notice to record a 'serious dispute' about quantum; the Tribunal held that the admitted balance and persistent reminders showed that the objections raised were not genuine disputes capable of defeating the Section 9 petition. The Tribunal treated the defenses by the Corporate Debtor as motivated attempts to avoid payment rather than credible pre-existing disputes. [Paras 13, 15, 22, 23]

There was an operational debt due and payable and no pre-existing bona fide dispute preventing admission of the Section 9 application.

Change in management and liability - pre-existing dispute - Whether change in the Corporate Debtor's management absolved the company of liabilities incurred prior to the change and constituted a valid dispute. - HELD THAT: - The Tribunal held that change in management is an internal matter of the Corporate Debtor and does not extinguish pre-existing liabilities owed to an Operational Creditor. The Corporate Debtor's plea that invoices prior to the change in management were not payable was rejected as untenable, particularly in view of the Corporate Debtor's own prior admission of liability in their communication dated 15.04.2017. Consequently, the management-change plea could not be treated as a genuine pre-existing dispute under Section 9. [Paras 21]

Change in management did not absolve the Corporate Debtor of prior liabilities and did not constitute a valid pre-existing dispute.

Moonshine defence - Section 9 application under the Insolvency and Bankruptcy Code, 2016 - admission of application - Whether the Adjudicating Authority erred in rejecting the Section 9 application and what relief should follow. - HELD THAT: - The Tribunal concluded that the defenses advanced by the Corporate Debtor - including non-reconciliation and selective reliance on invoices - amounted to moonshine defences aimed at evading liability. The Adjudicating Authority's rejection of the Section 9 petition on the ground of a 'serious dispute' as reflected in the Corporate Debtor's reply was held to be erroneous because the objections were not bona fide disputes under Mobilox. In consequence, the Tribunal set aside the Impugned Order and directed the Adjudicating Authority to admit the Section 9 application and proceed in accordance with law within one month of production of this order. [Paras 16, 23, 24]

Impugned rejection was erroneous; Section 9 application to be admitted and further steps taken in accordance with law.

Final Conclusion: Appeal allowed; the National Company Law Tribunal's order dismissing the Section 9 application was set aside. The Adjudicating Authority is directed to admit the Section 9 petition and take further steps under the IBC within one month from production of this order.

Condonation of delay in refiling - time bound nature of corporate insolvency resolution process - sufficient cause - inherent powers and power to exempt under appellate rules - duty of diligence in prosecuting appeals

Condonation of delay in refiling - sufficient cause - time bound nature of corporate insolvency resolution process - duty of diligence in prosecuting appeals - inherent powers and power to exempt under appellate rules - Whether the delay of 321 days in refiling the appeals is reasonable and is susceptible of condonation under the NCLAT Rules and in the context of the IBC. - HELD THAT: - The Tribunal acknowledged jurisdiction under Rules 11 and 14 to exempt procedural non compliance and condone refiling delay but emphasised that such powers must be exercised with caution in insolvency matters because the Code mandates prompt, predictable and time bound resolution. The Court examined the three grounds advanced for delay - ill health of the authorised representative, pandemic related limited functioning, and loss/misplacement of files - and found each unsatisfactory. There was no medical proof or attempt to deputise another representative; the appellants had themselves litigated in parallel proceedings during the period; no adequate steps were shown to trace or reconstruct lost files; and there was no diligent follow up with the Registry after defects were notified. The Tribunal held that condonation requires unavoidable delay despite all possible efforts and consistent diligence by the applicant, standards not met here. The Court further observed that permitting nearly one year of refiling delay would undermine the IBC's stringent time frame and the policy against introducing unpredictability into CIRP. Applying these principles, the Tribunal concluded that the explanations were perfunctory and insufficient to justify condonation of the 321 day delay, and therefore refused to exercise the appellate powers to exempt or condone the delay. [Paras 19, 20, 21, 23, 25]

Applications for condonation of 321 days' delay in refiling are dismissed and the refiled memoranda of appeal are rejected.

Final Conclusion: The Tribunal, applying the requirement of sufficient cause in the special, time sensitive context of the IBC and finding the appellants' explanations inadequate and lacking due diligence, dismissed the applications for condonation of refiling delay and rejected the appeals.

Section 9 insolvency petition under the I&B Code, 2016 - existence of dispute - pre existence of dispute and Section 8(2)(a) - set off - limitation - pecuniary jurisdiction and minimum threshold for initiation of CIRP

Existence of dispute - pre existence of dispute and Section 8(2)(a) - set off - Whether a pre existing dispute or a record of pendency existed such as to defeat the Section 9 application - HELD THAT: - The Tribunal examined the demand notice dated 23.07.2019 and the reply dated 08.08.2019. The reply did not show any prior dispute in respect of the same claim amount before issuance of the demand notice; the contention of set off was raised only after the demand notice and no invoices were proved to have been raised earlier by the respondent against the appellant. Applying the principle under Section 8(2)(a) of the I&B Code, 2016, a dispute must be antecedent and specific to the same amount; the respondent's averments were held to be an afterthought advanced to vitiate the proceedings. The Tribunal therefore found that no bar arose from a pre existing dispute or pendency that would preclude admission of the Section 9 application. [Paras 9]

No pre existing dispute or valid set off was shown; the Section 9 petition was not barred on that ground.

Limitation - pecuniary jurisdiction and minimum threshold for initiation of CIRP - Whether the claim was barred by limitation and whether the petition satisfied the pecuniary threshold for admission - HELD THAT: - The Adjudicating Authority had recorded that out of 13 invoices only two dated 31.08.2016 fell within the three year limitation period for filing the Section 9 application. The Tribunal accepted that position on limitation but examined whether the admitted invoices met the statutory monetary threshold applicable prior to amendment. The amount attributable to the two invoices within limitation exceeded the pre amendment minimum threshold for initiating CIRP. The Tribunal found that the Adjudicating Authority erred in treating the application as non maintainable on the ground that the respondent's claimed set off exceeded the appellant's claim, and in failing to recognise that the admissible invoices satisfied pecuniary jurisdiction. Thus the objection of limitation did not defeat admission insofar as the timely invoices met the threshold and the Adjudicating Authority's contrary conclusion was incorrect. [Paras 9, 10]

Two invoices were within limitation and their amount satisfied the minimum threshold; the petition was maintainable and not barred by limitation for the purpose of admission.

Final Conclusion: The Adjudicating Authority's order dismissing the Section 9 application was set aside. The Tribunal directed admission of the application and initiation of the Corporate Insolvency Resolution Process against the corporate debtor; no order as to costs.

Date of default versus date of NPA - Initiation of CIRP under Section 7 of the I&B Code - existence of debt and default as threshold for admission - applicability of Section 18 of the Limitation Act - acknowledgement restarting limitation - evidentiary value of bankers' book entries, information utility records and recall notice

Date of default versus date of NPA - Initiation of CIRP under Section 7 of the I&B Code - Date of NPA is not automatically the date of default for commencing proceedings under Section 7; the trigger for Section 7 is actual "default" as defined in the I&B Code. - HELD THAT: - The Tribunal affirmed that Section 7 is triggered by an actual default, i.e., non-payment when a debt or instalment becomes due and payable, and not by mere classification of an account as NPA. The adjudicatory material and binding Supreme Court authority establish that the relevant date for initiation is the date of default under the financial contract or as determined under the restructuring schedule, and not the administrative NPA-notification date. Consequently, the Appellant's contention that the NPA date must be treated as the date of default was negatived. [Paras 28, 29]

The argument that the date of NPA (27.03.2015) must be treated as the date of default was rejected; the date of default must be reckoned with reference to actual non-payment and the contractual/restructured repayment schedule.

Existence of debt and default as threshold for admission - evidentiary value of bankers' book entries, information utility records and recall notice - applicability of Section 18 of the Limitation Act - acknowledgement restarting limitation - Whether the Section 7 application was within limitation and supported by sufficient evidence of debt and default. - HELD THAT: - The Tribunal held that the Financial Creditor furnished sufficient documentary evidence to demonstrate existence of financial debt and occurrence of default, including entries from bankers' books, reports from credit information utilities (CIBIL/CRILC), the recall notice and the Corporate Debtor's annual report. Reliance was placed on settled precedent and Rules/Forms (A1 appended to the Insolvency Rules) enumerating acceptable sources of evidence. The Tribunal also applied the principle that acknowledgements can restart limitation under Section 18 of the Limitation Act; on the material before the Adjudicating Authority it was satisfied that the application was filed within the relevant limitation period or within the fresh period computed by reference to acknowledgements. For these reasons the Adjudicating Authority correctly concluded that debt and default existed and that the petition was not time-barred. [Paras 23, 25, 26, 30, 31]

The Section 7 application was held to be within limitation and duly supported by evidence of debt and default; the Adjudicating Authority's admission of the petition was upheld.

Final Conclusion: The Tribunal dismissed the appeal, holding that the Adjudicating Authority correctly found existence of debt and default and properly admitted the Section 7 application; the contention that the NPA date must be treated as the date of default was rejected and no interference with the impugned order was warranted.

Residuary Article 137 of the Limitation Act, 1963 - Article 62 of the Limitation Act, 1963 and its inapplicability to Section 7 applications - fresh cause of action arising from a recovery certificate issued by the DRT - time bar and commencement of limitation for applications under the Insolvency and Bankruptcy Code, 2016

Residuary Article 137 of the Limitation Act, 1963 - Article 62 of the Limitation Act, 1963 and its inapplicability to Section 7 applications - time bar and commencement of limitation for applications under the Insolvency and Bankruptcy Code, 2016 - Whether the Section 7 application was time barred and which Article of the Limitation Act applies to an application under Section 7 of the Code. - HELD THAT: - The Tribunal held that Article 62 of the Limitation Act, 1963, which relates to suits, is not applicable to an application under Section 7 of the Code. For an application under Section 7, the residuary Article 137 governs limitation and prescribes a three year period running from the date when the right to apply accrues. The Adjudicating Authority's conclusion applying a 12 year period (Article 62/Article 61 reasoning) was contrary to the decision of the Hon'ble Supreme Court in Gaurav Hargovindbhai Dave and therefore erroneous. The correct legal position is that Section 7 proceedings attract the residuary article and not the special provisions applicable to suits to recover immovable property. [Paras 11]

The Adjudicating Authority's application of a 12 year limitation under Article 62 was incorrect; residuary Article 137 applies to Section 7 proceedings.

Fresh cause of action arising from a recovery certificate issued by the DRT - time bar and commencement of limitation for applications under the Insolvency and Bankruptcy Code, 2016 - Whether issuance of a recovery certificate by the DRT gives rise to a fresh period of limitation for filing a Section 7 application. - HELD THAT: - The Tribunal examined authoritative precedent (Dena Bank and Kotak Mahindra Bank decisions) holding that a recovery decree/certificate from the DRT furnishes a fresh cause of action, thereby restarting limitation for the creditor. The facts showed that the DRT decreed the OA on 18.08.2017 (recovery certificate issued), and the financial creditor filed the Section 7 petition on 27.09.2018. The Tribunal accepted the principle that the judgment/order and recovery certificate of the DRT constitute a fresh cause of action enabling a new limitation period to run, and on the facts the Section 7 petition fell within the period measured from the DRT recovery certificate. [Paras 12, 14, 15]

The recovery certificate issued by the DRT gave a fresh cause of action and the Section 7 petition filed subsequently was within the fresh period of limitation.

Final Conclusion: The appeal is without merit and dismissed. The Adjudicating Authority's application of a 12 year limitation was contrary to Supreme Court precedent; however, the DRT decree/recovery certificate furnished a fresh cause of action and the Section 7 petition filed after that decree was within the fresh limitation period, so admission of the CIRP is not time barred.

Duty to serve all Relied Upon Documents (RUDs) with show cause notice - time for filing reply to be counted from supply of complete RUDs - right of inspection of original documents and entitlement to legible copies - meaningful hearing under the PMLA (duty to afford effective opportunity under section 8(2))

Duty to serve all Relied Upon Documents (RUDs) with show cause notice - time for filing reply to be counted from supply of complete RUDs - Adjudicating Authority must ensure that all documents relied upon (RUDs) accompany the show cause notice and the period for filing reply must be computed from the date when complete RUDs are supplied. - HELD THAT: - The Court, relying on its earlier decision in JK Tyre and Industries Ltd., held that section 8(1) of the PMLA read with the Adjudicating Authority (Procedure) Regulations requires that all evidence relied upon by the Adjudicating Authority, including particulars forming the basis of its reason to believe, accompany the show cause notice. A mere service of the notice without the RUDs is insufficient because no effective opportunity to reply is possible unless the defendant has the complete RUDs. Consequently, the 30 day period fixed for filing replies must be counted from the date of supply of the complete RUDs, and the Adjudicating Authority must ensure service of the RUDs (including by directing the ED to effect service). [Paras 8]

The Adjudicating Authority is required to ensure supply of complete and legible RUDs with the show cause notice and to compute the period for filing reply from the date those RUDs are supplied.

Right of inspection of original documents and entitlement to legible copies - meaningful hearing under the PMLA (duty to afford effective opportunity under section 8(2)) - The petitioner is entitled to inspect originals, obtain legible copies of the RUDs and be afforded adequate time thereafter to file a reply so as to secure a meaningful hearing. - HELD THAT: - Having noted that several documents in the produced RUDs were illegible, the Court directed that the petitioner (or two representatives including counsel) be permitted to inspect all original documents constituting the RUDs at the ED office on a specified date and obtain copies. The Court emphasised that inspection and supply of legible copies are necessary to enable an effective reply and a meaningful hearing under section 8(2) of the PMLA. The Court fixed a timeline for filing the reply after inspection and directed the Adjudicating Authority to consider the reply in accordance with law. [Paras 9, 10]

Inspection of originals and provision of legible copies to the petitioner was ordered and the petitioner was granted time to file the reply by the date specified; the Adjudicating Authority was directed to consider the reply and adjudicate in accordance with law.

Final Conclusion: The petition was allowed to the extent that the petitioner was permitted inspection of originals and supply of legible copies of the RUDs, and given an extended time to file the reply; the Adjudicating Authority was directed to ensure service of complete RUDs with show cause notices and to adjudicate the matter after considering the reply in accordance with law.

Non-speaking order - principles of natural justice - quashing of administrative order - reconsideration afresh - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - eligibility under SVLDR scheme where only interest is demanded

Non-speaking order - principles of natural justice - quashing of administrative order - Validity of the impugned communication dated 11.03.2020 issued by respondent No.4 - HELD THAT: - The impugned communication is a cryptic, laconic and unreasoned order passed without application of mind and without considering the petitioner's detailed submissions, the relevant provisions of the SVLDR Scheme or the Circulars and judgments relied upon. Being non-speaking and violative of the principles of natural justice, the communication cannot stand and requires quashing. The Court set aside the impugned order on this ground and directed further action in accordance with law. [Paras 6, 7]

Impugned communication dated 11.03.2020 quashed.

Reconsideration afresh - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - eligibility under SVLDR scheme where only interest is demanded - Appropriate remedy following quashing - direction for fresh consideration of the petitioner's SVLDRS-1 claim - HELD THAT: - Having quashed the non-speaking communication, the Court remitted the matter to the concerned respondents for reconsideration afresh of the petitioner's claim under the SVLDR Scheme. The respondents are to bear in mind the observations of the Court and the material on record, including CBIC Circulars dated 29.10.2019 and 06.10.2022 and the judgments relied upon by the petitioner, when reassessing eligibility (including contentions about eligibility where only interest has been demanded). The reconsideration is to be carried out in accordance with law and expeditiously. [Paras 7]

Matter remitted for fresh consideration of the petitioner's claim in accordance with the Court's observations and applicable circulars and judgments.

Final Conclusion: Writ petition allowed; impugned communication dated 11.03.2020 quashed and the matter remitted to the respondents for fresh reconsideration of the petitioner's SVLDRS-1 declaration in accordance with law and the Court's observations, bearing in mind the cited circulars and judicial decisions.

Refund of unadjusted revenue deposit - pre-deposit under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - departmental failure to verify pre-deposit in SVLDRS Form-III - prohibition on retention of amounts not authorised by law (Article 265) - interest on delayed refund

Refund of unadjusted revenue deposit - departmental failure to verify pre-deposit in SVLDRS Form-III - pre-deposit under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - prohibition on retention of amounts not authorised by law (Article 265) - interest on delayed refund - Entitlement to refund of the amount of Rs.29,36,382/- which was deposited during investigation but was not adjusted against the show cause notice or treated as pre-deposit under SVLDRS. - HELD THAT: - The Tribunal found as a fact that the amount of Rs.29,36,382/- was deposited by the appellant and remained unadjusted because the Department and the Designated Committee under SVLDRS recorded that the amount could not be verified (as reflected in SVLDRS Form-III). The non-adjustment arose from the Department's failure to recognise or appropriate the deposit and from the Committee's inability to verify it, not from any deficiency in the appellant's payment. Consequently the sum continued to be a revenue deposit and was never part of any admitted tax liability. The Tribunal held that the Revenue cannot retain money which it is not legally entitled to retain and that refusal to refund the unadjusted deposit was impermissible. In view of these findings the Tribunal set aside the orders rejecting the refund and directed the Adjudicating Authority to grant the refund with interest, applying the rate and period specified in the order below. [Paras 7]

The appeal is allowed; the Adjudicating Authority is directed to refund Rs.29,36,382/- with interest at 12% per annum from the end of three months from filing of the refund application until payment, within 30 days.

Final Conclusion: The Tribunal allowed the appeal, holding that the amount deposited during investigation remained an unadjusted revenue deposit due to the Department's/Designated Committee's failure to verify or appropriate it; the adjudicating authority is directed to refund the amount with interest at 12% per annum from the end of three months from the refund application till payment, within 30 days.

Pre-deposit requirement under Section 35F of Central Excise Act, 1944 - entertainment of appeal despite procedural non-compliance - remand for fresh consideration - opportunity of personal hearing

Pre-deposit requirement under Section 35F of Central Excise Act, 1944 - entertainment of appeal despite procedural non-compliance - remand for fresh consideration - opportunity of personal hearing - Whether the appeal dismissed by the Commissioner (Appeals) for noncompliance with the pre-deposit requirement should be reopened and decided on merits where the appellant has made the requisite pre-deposit of 10%. - HELD THAT: - The Tribunal noted that the Commissioner (Appeals) had dismissed the appellant's appeal solely for noncompliance with the requirement of Section 35F of the Central Excise Act, 1944, without adjudicating the merits. The appellant and the Revenue both confirmed that the appellant had deposited 10% of the disputed amount as required for filing the appeal before the Tribunal. In view of that payment and because the lower authority did not examine the substantive contentions, the Tribunal exercised its power to set aside the impugned order and remand the matter to the Commissioner (Appeals). The remand directs the Commissioner (Appeals) to decide the appeal afresh on the basis of the available records and submissions to be made by the appellant, and to afford the appellant an opportunity of personal hearing before arriving at a fresh decision.

Impugned order set aside and the appeal remanded to the Commissioner (Appeals) for fresh adjudication on merits after affording personal hearing, in view of the appellant's compliance with the pre-deposit requirement.

Final Conclusion: The appeal is allowed by setting aside the Commissioner (Appeals) order and remanding the matter for fresh decision on merits, with an opportunity of personal hearing, since the appellant had made the requisite pre-deposit.

Payment of tax by mistake - limitation under Section 11B inapplicable to tax paid by mistake - doctrine of unjust enrichment - reverse charge mechanism and incidence of tax - evidentiary value of Chartered Accountant certificate to rebut presumption of passing on - Rule 2A determination of value of service portion in works contract

Payment of tax by mistake - Rule 2A determination of value of service portion in works contract - Whether the appellant had paid the disputed service tax by mistake. - HELD THAT: - The original adjudicating authority recorded that the appellant misconstrued the service provider's invoice and paid tax on the balance 60% of the works-contract consideration though, for original works, service tax was leviable only on 40% (Rule 2A). The Tribunal after review of the invoice, the findings in the original orders and the admitted facts held that the appellant had in fact paid the impugned amount by mistake. The finding that tax was paid by mistake is accepted and treated as established on the material on record and the authorities' own observations. [Paras 7, 8]

Held that the appellant paid the disputed service tax by mistake.

Limitation under Section 11B inapplicable to tax paid by mistake - payment of tax by mistake - Whether the refund claim is barred by limitation under Section 11B despite tax having been paid by mistake. - HELD THAT: - Having held that the tax was paid by mistake, the Tribunal followed precedent of the jurisdictional High Court which held that Section 11B's limitation does not apply to refund claims where tax was paid under a mistake of law/fact. The adjudicating authority itself had observed tax was paid by mistake and in a related order had held limitation would not apply. Applying those authorities and the factual finding of mistake, the Tribunal concluded rejection on limitation grounds was unsustainable. [Paras 7, 8]

Held that the refund claim is not barred by limitation under Section 11B because the tax was paid by mistake.

Doctrine of unjust enrichment - reverse charge mechanism and incidence of tax - evidentiary value of Chartered Accountant certificate to rebut presumption of passing on - Whether the refund is barred by the doctrine of unjust enrichment. - HELD THAT: - Section 11B requires the claimant to show that the incidence of tax has not been passed on. The Tribunal noted that the impugned amount was not paid pursuant to any authority to collect tax nor was it shown in any invoice as tax; the amount was paid from the appellant's funds under a mistake and did not arise under the Finance Act. The appellant produced a Chartered Accountant certificate stating the amount was reflected as receivable and not expenditure; the department did not dispute the certificate's veracity but sought further documents. The Tribunal held that in these circumstances-payment by mistake, absence of any invoice showing tax, and an unchallenged CA certificate-rejecting the refund on unjust enrichment without affording opportunity to produce further documentary evidence or without valid basis was unsustainable. Consequently the appellant discharged the burden to show non-passing of incidence. [Paras 9, 14]

Held that the refund is not barred by unjust enrichment; the appellant has established that the incidence of tax was not passed on.

Final Conclusion: The impugned order is set aside; the appeals are allowed and the appellant is entitled to refund of the service tax paid by mistake with consequential reliefs, if any.

Judicial review of Settlement Commission orders - scope of interference in settlement matters - breach of principles of natural justice - cum-duty price - evidence of clandestine removal / fabricated documentation

Judicial review of Settlement Commission orders - scope of interference in settlement matters - Extent to which a writ court may review an order of the Settlement Commission. - HELD THAT: - The Court held that judicial review of Settlement Commission orders is maintainable but very limited. Interference is permissible only on narrow grounds such as violation of mandatory procedural requirements, breach of principles of natural justice, bias, fraud, malice or where the order is contrary to statutory provision; mere errors of fact or law or unhappy factual conclusions are not a ground for interference. The Court relied on earlier precedents and emphasised that the Settlement Commission exercises broad discretionary powers (including prescribing payment manner, condoning defaults, waiving interest/penalty and granting immunity), and therefore the writ jurisdiction must respect that limited scope of review. [Paras 5, 6]

The Court applied a restricted standard of review and declined to re adjudicate the Settlement Commission's discretionary settlement decision.

Breach of principles of natural justice - evidence of clandestine removal / fabricated documentation - Whether the Settlement Commission breached principles of natural justice by relying on findings of clandestine removal and fabricated records not put to the Petitioner. - HELD THAT: - The Court found no breach of natural justice. The show cause notice, the record of investigations and the statements (including the Director's admitted statement) placed the Petitioner on notice of clandestine removals routed through M/s. Speciality. The petitioner had opportunity to deal with these allegations in its appeal and before the Commissioner; it failed to file replies or attend hearings. Given that the case against the Petitioner specifically alleged clandestine removal through a defunct entity and produced witness statements and documents, the Settlement Commission's reliance on those materials did not amount to deciding upon facts not put to the Petitioner or denying opportunity of hearing. [Paras 10, 11, 12]

No breach of principles of natural justice was made out; reliance on the findings of clandestine removal was permissible.

Cum-duty price - evidence of clandestine removal / fabricated documentation - Whether the Petitioner was wrongly denied the benefit of treating sale price as cum duty price. - HELD THAT: - The Court upheld the Settlement Commission's conclusion that cum duty price benefit could not be granted because there was no reliable evidence that the price realized included excise duty. The Settlement Commission, after referring to relevant case law, found that the clearances were clandestine, routed through a fictitious/defunct entity controlled by the same director, and the documentary record was fabricated or of doubtful authenticity; panchnama and other investigations showed the reputed intermediary lacked requisite manufacturing/storing capacity. In such circumstances the Commission was entitled to conclude there was no basis to treat the sale price as inclusive of duty, and the decisions relied upon by the petitioner did not deal with comparable facts of fabricated documentation. [Paras 7, 13, 14]

Denial of cum duty price benefit was justified on the facts; the Settlement Commission's conclusion was upheld.

Final Conclusion: Writ Petition dismissed; the Court refused to interfere with the Settlement Commission's order, upholding its findings on clandestine removal, the limited scope of judicial review, and the denial of cum duty price benefit.

Admissibility of computer print-outs as electronic evidence - Mandatory certificate requirement under Section 36-B(2) read with Section 36-B(4) of the Central Excise Act for computer outputs - Section 65-B(4) of the Indian Evidence Act as authoritative precedent on admissibility of electronic records - Burden on the party relying on electronic record to produce the requisite certificate - Inadmissibility of oral evidence in lieu of the statutory certificate for electronic records - Validity of CESTAT's exclusion of electronic evidence lacking the statutory certificate - Deletion of penalty under Rule 26 of the Central Excise Rules - judicial review of tribunal's order

Admissibility of computer print-outs as electronic evidence - Mandatory certificate requirement under Section 36-B(2) read with Section 36-B(4) of the Central Excise Act for computer outputs - Section 65-B(4) of the Indian Evidence Act as authoritative precedent on admissibility of electronic records - Validity of CESTAT's exclusion of electronic evidence lacking the statutory certificate - Computer print-out seized from the residence of the accountant is inadmissible in adjudication proceedings in the absence of the certificate mandated by Section 36-B(2) read with Section 36-B(4) of the Central Excise Act. - HELD THAT: - The computer print-out is an electronic record and its admissibility must comply with the statutory scheme governing electronic evidence. The wording of Section 36-B(2) read with Section 36-B(4) mirrors the mandatory certificate requirement in Section 65-B(4) of the Indian Evidence Act. The Supreme Court decisions in Anvar P.V. v. P.K. Basheer and Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal establish that the certificate is a condition precedent to admissibility and oral proof cannot substitute for that certificate. Applying those principles, the CESTAT correctly excluded the seized computer print-outs for want of the prescribed certificate, and this Court concurs with that conclusion. [Paras 11, 16, 19]

The computer print-outs are inadmissible without the statutory certificate; CESTAT's exclusion of the document is upheld.

Burden on the party relying on electronic record to produce the requisite certificate - Inadmissibility of oral evidence in lieu of the statutory certificate for electronic records - The Department, which seeks to rely on the seized computer print-out, bears the burden of ensuring compliance with Section 36-B(2) read with Section 36-B(4); failure to seize the computer does not relieve that burden and a competent person in charge must furnish the certificate where the Department cannot do so. - HELD THAT: - When a party places reliance on an electronic record, it must ensure the conditions for admissibility are met. The Department's contention that non-seizure of the computer absolves it of the obligation to produce the certificate is rejected. If the Department cannot itself furnish the certificate, the statutory scheme requires that the person responsible for the operation of the device produce the certificate. Absent such certificate, the electronic record cannot be relied upon in adjudication proceedings. [Paras 17, 18]

The Department must produce the statutory certificate or secure it from the person in charge of the computing device; non-seizure of the device does not excuse non-compliance.

Deletion of penalty under Rule 26 of the Central Excise Rules - judicial review of tribunal's order - The Tribunal's deletion of the penalty imposed under Rule 26 of the Central Excise Rules is sustained in the companion appeals. - HELD THAT: - In view of the primary conclusion that the computer print-outs were inadmissible for want of the statutory certificate, the incidental questions regarding the deletion of penalty under Rule 26 were answered in favour of the assessee. The Court, having answered the core evidentiary issue against the Department, upholds the Tribunal's order deleting the penalty in the connected matters. [Paras 4, 20, 21]

Tribunal's deletion of the penalty under Rule 26 is affirmed; companion appeals are decided for the assessee.

Final Conclusion: The appeals are dismissed. The CESTAT's exclusion of the seized computer print-outs for want of the certificate required by Section 36-B(2) read with Section 36-B(4) is upheld; the Department bears the burden of producing or procuring the statutory certificate; and the Tribunal's deletion of penalties under Rule 26 is sustained. No order as to costs.

CENVAT credit admissibility - compliance with appellate directions - binding precedents - remand for de novo adjudication - speaking order

CENVAT credit admissibility - binding precedents - compliance with appellate directions - Whether the denial of CENVAT credit by the Adjudicating Authority was sustainable in view of this Bench's earlier directions and relevant judicial pronouncements - HELD THAT: - The Bench found that the Adjudicating Authority's de novo Order-in-Original failed to follow this Tribunal's earlier remand directions which required taking into account the appellant's submissions and certain judicial pronouncements; the Bench noted that two cited precedents had facts pari materia with the present case and that the earlier order permitted the appellant to produce additional evidence. The de novo order did not refer to the binding precedents and, contrary to the work orders reproduced by the Adjudicating Authority describing the job as "operation and maintenance charge for dry fly ash collection system" (including transportation), the Adjudicating Authority reached a conclusion denying CENVAT credit. For these reasons the Order-in-Original was held to be irregular and unsustainable. [Paras 6, 7]

Denial of CENVAT credit set aside for failure to follow this Bench's directions and to consider relevant precedents and job descriptions; impugned order cannot stand.

Remand for de novo adjudication - speaking order - Remedial direction to the Adjudicating Authority following the identified irregularity - HELD THAT: - In view of the serious irregularity in the Order-in-Original, the matter is restored to the Adjudicating Authority for fresh adjudication. The Adjudicating Authority is directed to grant reasonable opportunities to the appellant, pass a speaking de novo order as per law, and take into account the appellant's submissions, reproduced work orders and relevant judicial pronouncements. The Bench observed the matter has earlier travelled twice before this forum and therefore prescribed a time-frame for re-adjudication. [Paras 7, 8]

Matter remanded for de novo adjudication; Adjudicating Authority to pass a speaking order within 90 days after granting reasonable opportunities; appeals allowed by way of remand.

Final Conclusion: The Tribunal set aside the Order-in-Original and the impugned appellate order for failure to comply with this Bench's remand directions and omitted consideration of pertinent work-order descriptions and binding precedents; the matter is remanded for de novo adjudication with a direction to pass a speaking order within 90 days after affording the appellant reasonable opportunity.

Proportionate reversal of Cenvat credit - maintenance of separate records for taxable and exempt/traded goods - requirement of fraud, collusion or willful suppression to deny credit - Rules 6(3) of the Cenvat Credit Rules, 2004 read with section 11A(4) of the Central Excise Act, 1944

Proportionate reversal of Cenvat credit - maintenance of separate records for taxable and exempt/traded goods - Rules 6(3) of the Cenvat Credit Rules, 2004 read with section 11A(4) of the Central Excise Act, 1944 - Validity of the demand and reversal under Rules 6(3) read with section 11A(4) for traded goods during the financial year 2013-14 where the assessee maintained separate records. - HELD THAT: - The Tribunal considered the Chartered Accountant's certificate and accompanying annexures showing separate registers and summarized purchases and sales for trading items for FY 2013-14, and noted that central excise paid on purchases of trading items was not passed on to customers but absorbed in cost. The Tribunal observed the settled position that where separate records are maintained for taxable and exempt/traded items there is no occasion to reverse proportionate Cenvat credit. The record showed filing of statutory returns and audited accounts consistent with the figures in the certificate. In the absence of any material indicating fraud, collusion, willful mis-statement or suppression with intent to evade duty, the ingredients justifying denial under the statutory provisions were not present. Consequently the demand confirmed under the cited provisions was found not sustainable on the facts presented and the impugned orders were set aside. [Paras 4, 5]

The appeal is allowed; the impugned orders confirming the demand and penalty are set aside with consequential benefits as per law.

Requirement of fraud, collusion or willful suppression to deny credit - Whether allegation of fraud, collusion or willful suppression was established to justify denial of credit and imposition of penalty. - HELD THAT: - The Tribunal examined the material on record, including the CA certificate and audited accounts, and found no evidence of fraud, collusion, willful mis-statement or suppression of facts or contravention of provisions with intent to evade duty. The authorities below had not demonstrated the requisite ingredients that would justify denial of credit or penalty. Accordingly, the penalty and demand founded on such an allegation could not be sustained. [Paras 4, 5]

No finding of fraud or deliberate suppression; penalty and demand based on such an allegation are set aside.

Final Conclusion: The Tribunal allowed the appeal for FY 2013-14, set aside the demand and penalty confirmed under Rules 6(3) read with section 11A(4) in the absence of requirement to reverse Cenvat credit where separate records were maintained and no fraud or suppression was shown; consequential benefits to follow as per law.

Monetisation of CENVAT credit - restoration of CENVAT credit as consequential relief - impossibility of utilisation not a ground for cash refund - CENVAT Credit Rules, 2004 as operational scheme and not an exemption - conversion of restored credit into cash equates to refund of tax collected - restoration of earlier reversal of credit made under protest

Monetisation of CENVAT credit - restoration of CENVAT credit as consequential relief - impossibility of utilisation not a ground for cash refund - Whether the appellant was entitled to monetisation (cash refund) of CENVAT credit restored as consequential relief where the CENVAT credit accounts of units had ceased to exist or could not utilise the credit - HELD THAT: - The Tribunal held that restoration of credit was merely reversal of an earlier debit effected to discharge duty liability under protest and that restoration into the CENVAT credit account is the appropriate consequential relief. Following the reasoning in the decision of the Hon'ble High Court of Bombay (Gauri Plasticulture) and the scheme of CENVAT Credit Rules, 2004, monetisation of accumulated or restored credit is not permissible because the Rules are a mechanism to prevent tax cascading and not an exemption or a right to convert credit into cash. Conversion of restored CENVAT credit into cash would amount to a refund of tax collected from the production chain - effectively declaring that the tax was collected without authority - which is not the case where credit is simply restored. Accordingly, inability to utilise restored credit by virtue of closure of units or their status (including EOU) does not entitle the appellant to cash refund; the appellant remains in the position of a holder of CENVAT credit rather than an ultimate beneficiary entitled to monetisation. The Tribunal found no merit in the appellant's contention that restoration in the credit accounts of now-closed units was tantamount to rejection of the refund claim and refused monetisation of the impugned amount. [Paras 7, 8, 9]

Request for monetisation (cash refund) of the restored CENVAT credit was rejected and the appeal dismissed.

Final Conclusion: The Tribunal dismissed the appeal, upholding restoration of credit in the CENVAT accounts as the proper consequential relief and refusing monetisation of the restored credit on the ground that CENVAT Credit Rules, 2004 do not permit conversion of accumulated or restored credit into cash merely because the credit could not be utilised.

Compliance with terms of remand - burden of proof regarding non-utilisation of machinery - ascertainment of non-functional/standby machinery - compounded levy scheme - duty liability where machines are present but claimed as standby

Compliance with terms of remand - ascertainment of non-functional/standby machinery - burden of proof regarding non-utilisation of machinery - Whether the findings of the lower authorities conformed to the specific remit on remand to verify the appellant's claim that two cold rolling machines were not installed or used and were functionally inoperable. - HELD THAT: - The Tribunal examined whether the Commissioner (Appeals) had carried out the specific inquiry required by the earlier remand - namely to reconsider the appellant's contention (including the point about limited electric connection) and to test the assertion that two machines were standby/non-functional. The impugned order largely reiterated earlier observations and rejected the appellant's plea by characterising the explanations as inconsistent, but did not undertake the specific factual ascertainment directed by the remand. The first appellate authority's reasoning is described as rhetorical and focused on eliminating improbability rather than making the factual enquiries required to discharge the appellant's burden of proof on non-utilisation. Because the Tribunal's remit required a fresh determination of that factual claim and the lower authorities failed to perform that verification, the terms of remand remained uncomplied with. [Paras 6, 7, 8]

Remand not complied with; impugned order set aside and appeal allowed.

Final Conclusion: The appeal is allowed because the lower authorities did not fulfil the specific mandate of remand to verify the appellant's claim that two machines were non-functional/standby; the impugned order is set aside for want of the required ascertainment.

Deeming provision in chapter notes amounting to manufacture - interpretation of note 9 to chapter 28 of the Schedule to the Central Excise Tariff Act, 1985 - repacking and labelling as constituting manufacture - marketability and value addition as factors in deciding manufacture - confiscation and redemption under the Central Excise Rules, 2002 - clandestine removal and onus of proof by circumstantial evidence - duty liability determined on facts; requirement of reasoned adjudication

Interpretation of note 9 to chapter 28 of the Schedule to the Central Excise Tariff Act, 1985 - repacking and labelling as constituting manufacture - marketability and value addition as factors in deciding manufacture - Whether the re packing/bottling of imported 'liquid bromine' into retail packs by the manufacturer/trader amounted to "manufacture" under the chapter note so as to attract central excise duty. - HELD THAT: - The Tribunal held that the adjudicating authority failed to apply the statutory test under the chapter note to the facts. The adjudicator relied on precedents and devised a condensed test without examining whether the impugned activity satisfied any of the alternative processes specified in the note. The Court observed that prior circulars and judicial decisions demonstrate that determination of deeming manufacture under the chapter notes is fact sensitive and requires assessment of whether the activity (repacking/labelling) conforms to the prescribed threshold (including marketability/value addition) on the material before the authority. Because the adjudication did not record findings that narrow the activity to any one of the alternatives in the note, the Tribunal concluded that the matter could not be finally determined on the record before it.

Impugned findings on levy of duty by deeming repacking/bottling to be manufacture set aside and remitted to the adjudicating authority for fresh fact based determination.

Confiscation and redemption under the Central Excise Rules, 2002 - requirement of reasoned adjudication - Whether the seized repacked 'liquid bromine' could be lawfully held to be confiscated and whether the concomitant fine/penalties were justified on the material available. - HELD THAT: - The Tribunal found that the adjudicating authority's determination on confiscation (and the imposition of fine/penalty with option of redemption) was infected by the same shortcomings noted in the main adjudication: absence of explicit, fact based findings applying the relevant rule and chapter note to the seized goods. Because the order below adopted findings tainted by deficient reasoning, the Tribunal concluded that confiscation and ancillary penalty determinations require fresh adjudication after proper consideration of submissions and evidence.

Order upholding confiscation, fine and penalties set aside and remanded for fresh adjudication by the competent authority.

Clandestine removal and onus of proof by circumstantial evidence - requirement of reasoned adjudication - Whether certain clearances of 'liquid bromine' and AIBN at non comparable rates or unaccounted clearances constituted clandestine removals attracting duty, interest and penalties. - HELD THAT: - The Tribunal observed that the adjudicating authority fixed liability on assumptions without properly dealing with explanations and documentary material furnished by the appellants. Clandestine removal, being a matter often proved by circumstantial evidence, must be resolved by examining the circumstances and the defence raised; the impugned orders did not undertake this responsibility. As a result, the factual and legal basis for the findings of clandestine clearance and discounted disposals remained inadequately addressed.

Findings of clandestine clearance and related duty/penalty confirmations set aside and remitted to the adjudicating authority for fresh, reasoned consideration of the evidence and submissions.

Final Conclusion: All impugned orders are set aside and the matters remanded to the respective adjudicating authorities for fresh, fact based and reasoned adjudication on the issues of deeming manufacture by repacking/labelling, confiscation and redemption, and alleged clandestine removals; the appeals are disposed accordingly.

Evidentiary standard for establishing clandestine removal - inadmissibility of uncorroborated third party records as sole proof - requirement of corroboration and test under Section 9D of the Central Excise Act - necessity of clinching evidence (production, raw material purchases, dispatches, power consumption, flow of funds) - imposition of penalty requires cogent evidence of involvement

Evidentiary standard for establishing clandestine removal - inadmissibility of uncorroborated third party records as sole proof - requirement of corroboration and test under Section 9D of the Central Excise Act - Confirmation of duty demand for alleged clandestine removal against M/s. Pankaj Ispat Ltd. and Shri Pankaj Agrawal - HELD THAT: - The Tribunal found that the demand was founded solely on documents recovered from a third party (M/s. Amit Steels) and on statements attributed to its proprietor, without any corroborative evidence linking the entries against the name "Vikki" to the appellants. The adjudicating authorities did not test the third party statement under the statutory safeguards and failed to seek independent corroboration from the appellants' records or other probative material (production details, raw material purchases, dispatch/transport records, realization of sale proceeds, power consumption, etc.). Reliance only on third party documents and uncorroborated statements was held insufficient to sustain grave allegations of clandestine removal; such allegations require clinching and tangible evidence. Consequently, the Tribunal concluded that confirmation of the duty demand was without basis and must be set aside. [Paras 5, 6, 7, 8]

Demand confirmed against M/s. Pankaj Ispat Ltd. and Shri Pankaj Agrawal set aside for lack of cogent corroborative evidence; appeals allowed.

Imposition of penalty requires cogent evidence of involvement - inadmissibility of uncorroborated third party records as sole proof - Confirmation of penalty against Shri Narendra Agrawal - HELD THAT: - The Tribunal noted that penalty in a related appeal arising from the same search had been dropped and found no distinguishing evidence in the present proceedings to sustain imposition of penalty on Shri Narendra Agrawal. The material recovered from the third party and the statements did not furnish cogent evidence of his role in facilitating clandestine removals. In absence of such evidence, confirmation of penalty was held to be unsustainable. [Paras 5, 9]

Penalty confirmed against Shri Narendra Agrawal set aside for lack of cogent evidence; appeal allowed.

Necessity of clinching evidence (production, raw material purchases, dispatches, power consumption, flow of funds) - requirement of corroboration and test under Section 9D of the Central Excise Act - Adequacy of investigation and requirement to frame investigation guidelines - HELD THAT: - The Tribunal observed investigative lacunae: absence of efforts to collect production and raw material purchase details, transport/dispatch particulars, realization of sale proceeds and power consumption records, and failure to produce witnesses before adjudicating authorities. The Tribunal directed the department to formulate guidelines for investigating teams to ensure compliance with statutory safeguards (including the test under Section 9D and corresponding provisions) and to secure requisite corroborative evidence before confirming serious allegations. [Paras 8, 10]

Investigation found inadequate; department directed to frame guidelines for compliance with statutory provisions and corroborative investigation.

Final Conclusion: The Tribunal set aside the impugned order, allowed the three appeals for lack of cogent and corroborative evidence to support allegations of clandestine removal and penalty, and directed the department to frame guidelines to ensure proper investigational compliance with the statutory test and collection of clinching evidence before confirming similar demands or penalties.

Refund of excess tax - finality of assessment - carry forward of input tax - maintainability of post assessment refund application - statutory remedy of appeal under the Act - scope and operation of approval of refund by competent authority

Maintainability of post assessment refund application - finality of assessment - Assessing Authority's rejection of a refund application filed after passing of the assessment order which had allowed excess as carry forward. - HELD THAT: - The Court held that under the statutory scheme the assessing authority, when framing assessment, may allow refund or permit carry forward of excess amount. In the present case the dealer had claimed and the assessment order allowed excess to be carried forward; no refund was claimed at the stage of the annual return. An application for refund made after the assessment order was held to be non est and not maintainable before the Assessing Authority because an assessment order, once passed and served, cannot be altered by the Assessing Authority. If the dealer disagreed with the assessment order in respect of allowance of carry forward instead of refund, the prescribed statutory remedy was to prefer an appeal under the Act within the limitation period; the dealer did not avail that remedy.

Post assessment refund application was not maintainable and the Assessing Authority was not obliged to alter the assessment which had permitted carry forward; remedy lay in statutory appeal.

Carry forward of input tax - refund of input tax to exporters - option between refund and adjustment - Whether the dealer was entitled to a refund (with interest) as an alternative to carry forward once excess input tax was found. - HELD THAT: - The Court construed Section 20 and Rule 41 to show that input tax relating to export is refundable in full but the statutory scheme contemplates an option and a determination at the stage of assessment whether excess is refunded or carried forward. Where the assessing authority, after scrutiny, determines the excess and allows carry forward in the assessment order, that determination governs unless successfully challenged by the assessee through the appellate process. Reliance on an earlier Division Bench decision was rejected because that decision did not consider the specific scheme of Section 20 and Rule 41 applicable here.

Entitlement to refund depends on the assessment stage determination; carry forward allowed in assessment cannot be converted into a refund except by pursuing the statutory appellate remedy.

Scope and operation of approval of refund by competent authority - Rule 42 approval procedure - Whether Rule 42 required the case to be forwarded to a Committee for approval of refund where the assessing authority rejected the post assessment refund application. - HELD THAT: - The Court observed that Rule 42 prescribes which authorities are competent to allow refund arising from a single order and envisages forwarding the record to competent authority where a refund has been allowed at assessment. In the facts, no refund was allowed in the assessment order (the excess was allowed as carry forward), and therefore there was no occasion for Rule 42 to operate. The contention that the Assessing Authority lacked jurisdiction for not forwarding the matter to the Committee was held to be misconceived.

Rule 42 did not apply where assessment allowed carry forward and no refund was granted; no requirement arose to forward the matter to the Committee in such circumstances.

Final Conclusion: The writ petition was dismissed: the Assessing Authority validly rejected the post assessment refund application as non maintainable because the assessment order had permitted carry forward of excess; the petitioner's remedy was to have appealed the assessment order, and Rule 42 was inapplicable where no refund was allowed in the assessment.

Reference of substantial question of law under Section 55(2) of the Chhattisgarh Value Added Tax Act, 2005 - application of precedent in taxability of transfer of right to use goods (lease/hire) vis-a -vis interstate transactions - effect of Form-C and proviso regarding delivery in a State where purchaser is not registered - followership of Supreme Court and High Court precedents on taxation of lease/transfer of right to use

Reference of substantial question of law under Section 55(2) of the Chhattisgarh Value Added Tax Act, 2005 - Whether the Tribunal's rejection of the applicants' reference petitions should stand or the Tribunal should state and refer the substantial questions of law to the High Court. - HELD THAT: - The Tribunal originally dismissed the applicants' requests for a reference under Section 55(1) of the Act of 2005 by relying on a common judgment dated 05.12.2017. A subsequent decision in WP(T) No. 128/2015 (decided 07.12.2022) overruled the foundation on which the Tribunal had rejected the reference. The High Court found that the basis for the Tribunal's earlier refusal no longer exists and, for that reason, directed the Tribunal to state the cases and refer the formulated substantial questions of law to the High Court under the statutory procedure. The Court therefore did not decide the merits of the substantive legal questions themselves but mandated that the questions be referred for resolution. [Paras 9, 10, 11]

Reference to the High Court is required; the Tribunal is directed to state the cases and refer the questions.

Application of precedent in taxability of transfer of right to use goods (lease/hire) vis-a -vis interstate transactions - followership of Supreme Court and High Court precedents on taxation of lease/transfer of right to use - Whether precedents relied upon by the applicants (including the Supreme Court decision in 20th Century Finance Corporation and various High Court decisions) apply to the facts and hence warrant referring the substantial questions to the High Court for adjudication. - HELD THAT: - The applicants sought reference of questions concerning the applicability of authoritative precedents to their cases. The High Court observed that the judgment in WP(T) No. 128/2015 (decided 07.12.2022) applied the Supreme Court and other High Court authorities and held that the impugned assessment and revision orders were not sustainable. Because that subsequent decision undermined the Tribunal's prior basis for refusal, the High Court concluded that the Tribunal should now refer the substantial questions of law (as framed in the applications) for the High Court's consideration. The present order stops short of resolving those precedential issues on merits and confines itself to directing the statutory reference process. [Paras 8, 9, 10]

Substantive questions concerning applicability of the precedents are not decided; they are to be referred to the High Court for adjudication.

Effect of Form-C and proviso regarding delivery in a State where purchaser is not registered - application of interstate sale principle to transactions evidenced by Form-C - Whether the Tribunal erred in treating the use of Form-C by the applicants as determinative of taxability within Chhattisgarh, and whether the proviso to the para in Form-C (added from 01.02.1997) alters that conclusion. - HELD THAT: - The applicants contended that issuance and use of Form-C and the proviso permitting issuance for goods to be delivered in a State where the purchaser is not registered bear upon the question whether the lease transactions are taxable in Chhattisgarh. The High Court did not adjudicate this issue on merits in the present order. Instead, in light of the subsequent judgment in WP(T) No. 128/2015 which affected the legal foundation of the Tribunal's prior refusal, the Court directed that these contested legal questions-including the significance of Form-C and the proviso-be stated and referred by the Tribunal to the High Court for decision under the statutory reference procedure. [Paras 9, 10]

The question concerning the legal effect of Form-C and its proviso on taxability is remanded for statutory reference to the High Court.

Effect of writ court decision on earlier tribunal refusal to refer questions - Whether subsequent High Court decisions (including the order in WP(T) No. 128/2015) vitiate the Tribunal's earlier decision refusing reference and thereby require the Tribunal to now refer the questions. - HELD THAT: - The Court found that the Tribunal's refusal to refer was premised upon a common judgment dated 05.12.2017. A review and rehearing resulted in WP(T) No. 128/2015 being decided on 07.12.2022 in a manner that held the challenged assessment and revision orders unsustainable in light of higher precedents. That change in the legal landscape removed the basis for the Tribunal's earlier order. Consequently, the High Court directed that the Tribunal state the cases and refer the substantial questions of law to the High Court. The present order therefore operates as a procedural direction triggered by intervening authoritative decisions, not as an adjudication on the substantive taxability issues. [Paras 5, 8, 9, 10]

Intervening High Court decisions remove the basis for the Tribunal's refusal; the Tribunal must now state and refer the questions.

Final Conclusion: The Tribunal's earlier refusal to refer the applicants' substantial questions of law was founded on a judgment which has since been undermined by a subsequent High Court decision; accordingly the Tribunal is directed to state the cases and refer the questions to the High Court under the statutory procedure. The present petitions are disposed of accordingly.