TaxTMI Updates e-Newsletter
Dec 24,2024

Exhaustion of alternate remedy - alternate statutory remedy - breach of natural justice - writ jurisdiction under Article 226 - pre-deposit requirement - interim relief - limitation for appeal

Exhaustion of alternate remedy - alternate statutory remedy - Maintainability of the writ petition in view of existence of an alternate and efficacious statutory remedy of appeal. - HELD THAT: - The Court held that the petitioner possessed an available and efficacious alternate remedy in the form of statutory appeals against the Orders in Original dated 31 May 2024 and therefore the writ petition was not maintainable. General and vague averments alleging lack of jurisdiction or inconsistency with certain decisions could be raised before the appellate forum and did not justify bypassing the statutory remedy. Reliance on prior orders in unrelated proceedings did not establish the necessity to invoke writ jurisdiction. The Court referred to and applied precedents discouraging the routine filing of Article 226 petitions to obtain interim relief where statutory remedies exist, observing that matters involving revenue are ordinarily to be pursued by the prescribed appellate route. Considering these factors cumulatively, the petition was declined and the petitioner relegated to the alternate remedy of appeal. [Paras 12, 13, 14, 16, 17]

Petition dismissed for want of exhaustion of alternate statutory remedy; petitioner relegated to the appellate remedy.

Breach of natural justice - writ jurisdiction under Article 226 - Whether a claim of violation of natural justice justified entertaining the writ petition and bypassing the alternate remedy. - HELD THAT: - The Court found that the petition did not plead a ground of breach of natural justice in the paragraph relied upon to justify bypassing the statutory remedy, and further that the prior High Court order relied upon pertained to a different show cause notice (11 August 2023) whereas the impugned Orders in Original arose from a different show cause notice dated 14 February 2024. On that basis, there was no prima facie case of denial of natural justice that would warrant departure from the rule of exhaustion of statutory remedies. [Paras 8, 9, 10, 11]

Allegation of breach of natural justice held unestablished for purposes of justifying writ jurisdiction; cannot be used to avoid the statutory appeal route.

Pre-deposit requirement - limitation for appeal - interim relief - Directions relating to limitation and pre-deposit if the petitioner institutes appeals following dismissal of the writ petition. - HELD THAT: - The Court granted conditional relief to facilitate prosecution of statutory appeals: if the petitioner institutes the appeals within six weeks from the date of the order and complies with all legal requirements including pre-deposit, the Appellate Authority was directed to consider and dispose of such appeals on merits without reference to limitation. This direction was given because the writ petition itself had been instituted within the limitation period for appeals, and the Court exercised its discretion to prevent technical defeat on limitation grounds while leaving the merits to the appellate forum. [Paras 18, 19, 20]

If appeals are filed within six weeks with required pre-deposit, the Appellate Authority should decide them on merits without raising limitation.

Interim relief - Whether interim relief should be granted to unfreeze the petitioner's bank account or otherwise alter the impugned orders. - HELD THAT: - The Court noted the petitioner's urgency arising from a frozen bank account but observed that the account balance did not indicate inability to make the pre-deposit and that urgency of this character did not suffice to bypass the alternate remedy. The Court declined to grant interim relief and refused to interfere with the impugned orders in the writ petition. [Paras 3, 13, 17]

No interim relief granted; freezing of bank account did not warrant departure from the appellate remedy.

Writ jurisdiction under Article 226 - Whether the merits of the impugned orders were adjudicated by the High Court in this petition. - HELD THAT: - The Court expressly left all contentions on merits open for consideration by the appellate forum. The dismissal was on procedural grounds of maintainability and did not constitute an adjudication on the substantive merits of the Orders in Original. [Paras 20, 21]

Merits left open; no adjudication on substantive issues in this writ petition.

Final Conclusion: The writ petition was dismissed for failure to exhaust the available statutory appellate remedy; the petitioner was relegated to file appeals, and if such appeals are filed within six weeks with the requisite pre-deposit the Appellate Authority was directed to decide them on merits without referring to limitation; all substantive contentions were left open.

Adjudication under Section 74 of the GST Act - Liability for IGST on supply from SEZ to DTA - Supply from SEZ to DTA treated as import and IGST liability on DTA unit - Permissibility of payment by Treasury Challan (TR-6) and its reflection in GSTR-3B - Obligation to consider replies and documentary evidence before passing an adjudicatory order - Requirement of reasons in adjudication orders

Liability for IGST on supply from SEZ to DTA - Supply from SEZ to DTA treated as import and IGST liability on DTA unit - Petitioner was not liable to pay IGST on goods cleared from the SEZ unit to the Domestic Tariff Area (DTA). - HELD THAT: - The Court accepted the position, as reflected in the affidavit-in-reply of the GST Network, that supply from an SEZ unit to a DTA unit is treated as an import for the DTA unit and accordingly the IGST and other applicable duties are payable by the DTA unit on filing of the bill of entry. Applying that legal position to the facts, the petitioner had no obligation to pay IGST on such supplies and had not claimed any refund of the IGST it had paid. The revenue's demand proceeded on the assumption that the petitioner owed the IGST, which the Court found to be contrary to the applicable legal position and the material on record. [Paras 10, 11]

Demand in respect of IGST on SEZ-to-DTA supplies cannot be sustained against the petitioner; there was no liability on the petitioner to pay such IGST.

Permissibility of payment by Treasury Challan (TR-6) and its reflection in GSTR-3B - Obligation to consider replies and documentary evidence before passing an adjudicatory order - The respondent failed to consider the petitioner's explanation and documentary evidence (payment by TR-6) before issuing the adjudicatory order demanding tax, interest and penalty. - HELD THAT: - The petitioner explained that IGST had been discharged by way of TR-6 treasury challan and furnished copies in reply to the assessment notices. Rule 61(2) requires tax to be discharged through electronic cash or credit ledger for GSTR-3B, but the petitioner's position was that payment by TR-6 resulted in a mismatch between GSTR-1 and GSTR-3B. The respondent issued notices and the petitioner furnished explanations, yet the impugned order proceeds to raise demand without engaging with or recording reasons rejecting the petitioner's evidence and explanations. The court found that the order ignores the explanation and the documentary material produced by the petitioner. [Paras 4, 5, 6, 7, 11]

Adjudicatory order is unsustainable insofar as it was passed without properly considering the petitioner's explanation and the TR-6 evidence.

Adjudication under Section 74 of the GST Act - Requirement of reasons in adjudication orders - The impugned demand order dated 05.02.2022 under Section 74 was without sufficient reasons and therefore liable to be quashed. - HELD THAT: - On examination of the impugned order, the Court observed an absence of any reasoned conclusion justifying the demand under Section 74; the order contains only a bare statement that no reply or evidence was provided. Subsequent attempts by the department to justify the order in affidavit largely re-state statutory provisions without addressing the petitioner's factual explanations and documentary proof. Because adjudication under Section 74 requires consideration of the reply and evidence and reasoned findings, and those were lacking, the order was held to be legally untenable. [Paras 8, 12]

Impugned order under Section 74 is vitiated for want of reasons and proper consideration and is therefore quashed.

Final Conclusion: The petition is allowed: the order dated 05.02.2022 raising the demand is quashed and set aside for lack of reasons and failure to consider the petitioner's explanations and evidence; no order as to costs.

Refund of unutilised input tax credit on zero-rated supplies - adjusted total turnover under Rule 89(4) of the CGST Rules - Explanation inserted in sub rule (4) of Rule 89 (Notification No. 14/2022) - CBIC Circular No.197/09/2023 GST clarifying manner of calculation of adjusted total turnover - remand for reconsideration applying administrative clarification

Refund of unutilised input tax credit on zero-rated supplies - CBIC Circular No.197/09/2023 GST clarifying manner of calculation of adjusted total turnover - remand for reconsideration applying administrative clarification - Petition seeking direction to refund the disputed IGST amount remitted to respondent Authorities was remanded for reconsideration in light of the CBIC clarification - HELD THAT: - The Court recorded that the petitioner had claimed refund of accumulated ITC on zero rated exports and that a portion of the claim was rejected by the authorities relying on the Explanation inserted in sub rule (4) of Rule 89 by Notification No.14/2022. During pendency, CBIC issued Circular No.197/09/2023 GST which clarifies that the value of goods exported to be included while calculating "adjusted total turnover" under sub rule (4) of Rule 89 is to be determined in accordance with the Explanation inserted by Notification No.14/2022 and consistent with the amended definition of "Turnover of zero rated supply of goods." In view of that clarification, the Court directed that the respondent Authorities shall reconsider the refund application afresh applying the Circular, provide the petitioner an opportunity of hearing and recompute the refund amount accordingly. The Court did not adjudicate the substantive entitlement on merits but remitted the matter for fresh consideration and processing in accordance with the administrative clarification. [Paras 6]

Matter remanded to respondent Authorities to reconsider and decide the refund claim applying Circular No.197/09/2023 GST after hearing the petitioner, to be completed within twelve weeks.

Final Conclusion: The petition is disposed of by remanding the refund claim to the respondent Authorities for reconsideration and recomputation in accordance with CBIC Circular No.197/09/2023 GST, with an opportunity of hearing to the petitioner and completion of the exercise within twelve weeks.

Valuation of taxable services - reimbursable expenditure forming part of consideration - prospective operation of legislative amendment - Section 67 amendment by Finance Act, 2015

Reimbursable expenditure forming part of consideration - valuation of taxable services - prospective operation of legislative amendment - Validity of demand confirmed for reimbursable expenses charged by the petitioner for periods prior to 14.05.2015 - HELD THAT: - The Court applied the legal principle laid down by the Supreme Court in Intercontinental Consultants and Technocrats Pvt. Ltd., holding that the amendment to the valuation provision (Section 67) by the Finance Act, 2015, which expressly included reimbursable expenditure within the 'consideration' for taxable services, is a substantive change and therefore operates prospectively from 14.05.2015. Consequently, reimbursable expenses incurred and charged prior to 14.05.2015 did not form part of the valuation for service tax and could not sustain a demand. Having noted that there were no other disputes in the impugned order, the Court quashed the demand insofar as it related to periods before 14.05.2015, while preserving the petitioner's right to pursue appellate remedy for the period from 14.05.2015 to June 2017. [Paras 5, 6]

Demand confirmed in the impugned order is quashed to the extent it relates to periods prior to 14.05.2015; the writ petition is allowed to that extent.

Final Conclusion: The writ petition is allowed insofar as demands for reimbursable expenses relating to periods before 14.05.2015 are quashed on the ground that the legislative amendment including reimbursable expenditure in valuation is prospective; the petitioner may pursue appellate remedies in respect of the period from 14.05.2015 to June 2017.

Extraordinary jurisdiction under Article 226 - statutory appeal to the Tribunal - maintainability of writ where alternative statutory remedy exists - refund of input tax credit under inverted duty structure - pre-deposit requirement for preferring statutory appeal

Extraordinary jurisdiction under Article 226 - statutory appeal to the Tribunal - maintainability of writ where alternative statutory remedy exists - Whether the High Court should exercise writ jurisdiction under Article 226 in respect of orders rejecting refund claims when a statutory appeal to the Tribunal is available - HELD THAT: - The Court declined to invoke its extraordinary jurisdiction under Article 226 because a statutory appeal remedy before the Tribunal is available to the petitioner. Although a Tribunal had not yet been constituted, the Central Government had issued a notification permitting filing of appeals after constitution. The petitioner's grievance concerning rejection of refund applications therefore falls within the statutory appellate scheme and is not an appropriate subject for exercise of writ jurisdiction. The Court expressly refrained from adjudicating the merits and left the petitioner free to pursue the statutory remedy when the Tribunal is constituted. [Paras 6, 8, 9]

Writ petition dismissed; petitioner granted liberty to file appeal before the Tribunal when constituted; no adjudication on merits.

Refund of input tax credit under inverted duty structure - pre-deposit requirement for preferring statutory appeal - Whether any pre-deposit (such as 20% of tax demand) is required to pursue the appellate remedy in respect of refund orders in the present case - HELD THAT: - The Court noted that the impugned orders relate to refund and that there is no demand; consequently, the requirement to deposit a portion of the tax demand (e.g., 20%) as a condition for preferring an appeal, as applied in other contexts, does not arise where no demand has been raised. This observation follows the distinction between appeals against demands and appeals concerning refunds, and the Court relied on the factual position that the orders under challenge pertain solely to refund rejection. [Paras 7]

No pre-deposit requirement applies in the present proceedings concerning refund orders; petitioner may pursue appellate remedy without making such deposit.

Final Conclusion: Writ petition dismissed without deciding merits; petitioner permitted to file appeal before the Tribunal when constituted, and no pre-deposit is required in view of the absence of any tax demand in relation to the refund orders.

Prosecution Proceedings initiated u/s 276C - Bogus LTCG - guilty mind i.e., mens rea - willful evasion of tax on claims made under the head LTCG/Short Term Capital Loss - allegation of crime invoking Section 200 of the CrPC for offence punishable u/s 276C - infirmities pointed out in the complaints registered independently against all the members of the family and the Companies

As held by HC [2024 (1) TMI 1007 - KARNATAKA HIGH COURT] Proceedings under Section 276-C could not be sustained against the petitioners on the record before the Court because mens rea was not shown and the filing of revised returns after search dispelled the requisite wilful evasion.Magistrate's cognizance order did not reflect the necessary judicial application of mind; in view of precedents and the identical defects identified by co-ordinate Benches and affirmed by the Apex Court in related contexts, the cognizance orders were legally infirm and had to be set aside

Proceedings pending before the Special Court (Economic Offences) Bengaluru in these cases stand quashed.

HELD THAT:- After hearing learned Additional Solicitor General, we are not satisfied that any case for interference is made out under Article 136 of the Constitution of India.

Special Leave Petitions are, accordingly, dismissed, leaving the question of law to be decided, if necessary in some other appropriate case.

High-Pitched Scrutiny Assessment - Local Committee on High Pitched Scrutiny Assessment - opportunity of personal hearing - violation of principles of natural justice - not an alternative forum to appellate remedy - report of the Local Committee not binding on appellate or revisional authorities - administrative remedial mechanism

Opportunity of personal hearing - violation of principles of natural justice - Whether the Local Committee is obliged to grant an opportunity of personal hearing to a taxpayer before submitting its Report - HELD THAT: - The Court held that the Local Committee, constituted as an internal administrative mechanism to examine grievances of taxpayers in relation to alleged high pitched assessments, is neither a quasi judicial nor a statutory authority and the governing instructions do not prescribe giving the taxpayer an opportunity of personal hearing. The Committee's role is to examine prima facie whether an assessment is unreasonably high, whether principles of natural justice appear to have been violated by the Assessing Officer, and to submit a report for administrative action; it is not empowered to act as a fact finding appellate forum requiring adjudicatory hearing procedures. Consequently, absence of a hearing before the Local Committee does not amount to a breach of principles of natural justice in the context of the Committee's internal, non adjudicatory function. [Paras 11, 15, 16]

No mandate exists for the Local Committee to grant a personal hearing before submitting its Report; failure to afford such a hearing does not vitiate the Committee's process.

High-Pitched Scrutiny Assessment - Local Committee on High Pitched Scrutiny Assessment - not an alternative forum to appellate remedy - report of the Local Committee not binding on appellate or revisional authorities - administrative remedial mechanism - Whether the Report of the Local Committee operates as an alternative or binding forum to appellate or revisional proceedings and the legal effect of its findings - HELD THAT: - The Court examined the instructions constituting and subsequently amending the Local Committee's mandate and concluded that the Committee was created to check and curb unreasonable or high pitched assessments by facilitating administrative follow up against erring officers and to assist in reducing unproductive litigation. The Report is advisory and discretionary in character; it does not displace statutory appeal or dispute resolution fora, nor is it binding on Appellate or Revisional Authorities. The Principal Chief Commissioner may, at his discretion, take administrative action on the Committee's findings, but the Committee's conclusions do not prejudice the taxpayer's right to pursue appellate remedies or bind the Appellate Authority. [Paras 10, 11, 12, 13, 15]

The Local Committee's Report is administrative and advisory only; it is not an alternative forum nor binding on appellate or revisional authorities, and it does not extinguish the taxpayer's appellate rights.

Final Conclusion: Writ petitions challenging the Local Committee's Reports in respect of AY 2016-2017 and AY 2019-2020 dismissed; the Court finds no legal infirmity in the Committee's procedure or in the non binding, administrative character of its Report, and there is no order as to costs.

Reopening of assessment under Section 147 read with Section 148 - reason to believe - change of opinion - speaking order - Net Asset Valuation (NAV) method under Rule 11UA - opportunity of hearing upon change of incumbent under Section 129 - assessment by best judgment under Section 144

Reopening of assessment under Section 147 read with Section 148 - reason to believe - speaking order - Net Asset Valuation (NAV) method under Rule 11UA - Validity of reopening assessment and sufficiency of reasons communicated for AY 2016-17 - HELD THAT: - The Court examined the reasons communicated in the impugned communication dated 15.11.2021 and the speaking order dated 30.12.2021. It held that the reasons given-primarily that (i) entitlement to treaty relief under the India Singapore DTAA depended on satisfying limitations-of-benefit conditions which were not evidenced by the petitioner, and (ii) the valuation relied upon by the petitioner (EY report) was prepared for RBI/internal management and had limited scope and verification-constituted sufficient material to form a reason to believe that income had escaped assessment. The officer applied Rule 11UA NAV method to demonstrate a surplus over FMV and recorded a reason to believe accordingly. The Court found these to be adequate and not a mere impermissible change of opinion, especially when the departmental officer had recorded reasons and issued a speaking order addressing objections before proceeding further. [Paras 34, 35]

Challenge to reopening of assessment and the communicated reasons dismissed; the reopening under Section 147/148 upheld.

Opportunity of hearing upon change of incumbent under Section 129 - show cause notice and scrutiny notice under Sections 142(1) and 143(2) - assessment by best judgment under Section 144 - Validity of subsequent show cause/scrutiny notices and consequence of petitioner's non cooperation - HELD THAT: - The Court noted that the petitioner received the speaking order and subsequent show cause and scrutiny notices and was given opportunities and extensions to furnish information and objections. The petitioner did not cooperate fully or furnish the information sought. The Court held that after a speaking order and issuance of notices, the petitioner could not sustain collateral challenge to those proceedings. Further, the respondents were entitled, if the petitioner failed to cooperate, to finalize assessment by invoking the best judgment provisions under Section 144. In these circumstances the writ petitions were premature and lacked merit. [Paras 35, 36, 37, 39]

Challenges to the show cause and scrutiny notices dismissed; respondents may proceed to complete assessment and, if necessary, finalize under Section 144 for non cooperation.

Final Conclusion: Writ petitions dismissed. The Court upheld the reopening of assessment for AY 2016 17 as supported by sufficient reasons and a speaking order, rejected the petitioner's collateral challenge to subsequent notices, directed completion of assessment preferably within three months subject to the petitioner filing objections, and permitted the Department to finalize the assessment under Section 144 in case of non cooperation.

Settlement under Direct Tax Vivad Se Vishwas Act, 2020 - tax arrear - designation and certificate by the designated authority under Section 5 - finality of determination under Section 5(1) - immunity from initiation of proceedings under Section 6 - reopening of concluded settlement - Form No. 3 and Form No. 5 certificates

Designation and certificate by the designated authority under Section 5 - finality of determination under Section 5(1) - Form No. 5 certificate - Effect of issuance of certificate under Section 5 and payment thereunder on finality of disputes in respect of tax arrear - HELD THAT: - The Court held that once the designated authority, in accordance with Section 5 of the DTVSV Act, issues a certificate determining the amount payable and the declarant deposits the determined amount, the order under Section 5 is conclusive and the disputes in respect of the tax arrear stand settled. Section 5(1) requires the designated authority to determine the amount and grant a certificate; Section 5(2) contemplates payment within fifteen days and records that the authority shall pass an order stating that the declarant has paid the amount. Section 5(3) makes every such order conclusive and bars reopening of matters covered by that order in any other proceeding. Having obtained the certificate in Form No.5 and paid the determined amount, the declarant is entitled to the finality contemplated by the Act. [Paras 8, 10, 11, 12, 13]

A certificate issued under Section 5 and payment of the determined amount conclusively settles disputes relating to the tax arrear and bars reopening of those matters.

Reopening of concluded settlement - immunity from initiation of proceedings under Section 6 - Form No. 3 - Validity of the Designated Authority issuing a fresh/modified Form No. 3 reopening a settlement already concluded under the DTVSV Act - HELD THAT: - The Court examined the impugned fresh Form No.3 (dated 29.01.2021) which sought to modify or reopen the earlier settlement evidenced by certificates issued in terms of the DTVSV Act and Rules. The respondent conceded that the statute contains no provision empowering the designated authority to reopen a concluded settlement. The statutory scheme, read as a whole-particularly the conclusive character of orders under Section 5 and the bar on institution of proceedings under Section 6-precludes reopening. Consequently, issuance of a subsequent Form No.3 to revisit a matter already determined and settled under the Act is without authority of law. [Paras 11, 12, 13, 15, 16]

The impugned fresh Form No.3 reopening a concluded settlement is without legal authority and is set aside.

Final Conclusion: The petition is allowed: the court declared that a Section 5 certificate and payment thereunder conclusively settle the tax arrear and that the subsequent modified Form No.3 issued to reopen that settlement was without authority of law and is set aside.

Deduction under Section 10A - export turnover - total turnover - telecommunication expenditure - proportionate exclusion of expenses from total turnover - allowability of foreign exchange loss - finality of appellate order

Deduction under Section 10A - export turnover - total turnover - telecommunication expenditure - proportionate exclusion of expenses from total turnover - Telecommunication expenditure excluded from export turnover must also be excluded from total turnover for computing deduction under Section 10A; the Tribunal's approach is in accordance with binding precedent. - HELD THAT: - The Court accepted that the question raised by substantial question no.2 is governed by the Supreme Court's decision in Commissioner of Income-Tax, Central III v HCL Technologies Ltd., which formulated the computation for deduction under Section 10A and held that expenses excluded from export turnover (such as freight, telecommunication and insurance) must be excluded from total turnover as well, so as to give a workable and non-absurd result. The same principle was extended to technical services expenses incurred in foreign exchange. Applying that precedent, the telecommunication expenditure rightly falls to be excluded from both export turnover and total turnover in the proportionate manner required for computing the Section 10A deduction, and the Tribunal's conclusion in that respect is sustained. [Paras 2, 3]

The Tribunal was right in holding that telecommunication expenditure should be excluded from both the export turnover and the total turnover for the purpose of computing deduction under Section 10A, following the Supreme Court precedent.

Allowability of foreign exchange loss - finality of appellate order - Substantial question no.1-relating to deletion of additions for loss on account of foreign exchange fluctuation-is misconceived and returned unanswered because it did not arise from the Tribunal's order and the matter had been finally decided by the Commissioner of Income-Tax (Appeals). - HELD THAT: - The Court noted that the first appellate authority (CIT(A)) had adjudicated the allowability of foreign exchange fluctuation loss and its order dated 15.09.2011 attained finality as the assessee did not challenge it. The Tribunal's affirmation proceeded on an incorrect premise regarding the appellant of the appeal. Consequently, the substantial question framed at (i) does not arise out of the order under challenge in the Tribunal and therefore cannot be entertained or answered by this Court. [Paras 4, 6, 7]

Substantial question of law no.1 is returned unanswered as it does not arise from the Tribunal's order and the issue had been finally decided by the first appellate authority.

Final Conclusion: Substantial question no.2 is resolved by applying the Supreme Court's decision in HCL Technologies Ltd., upholding exclusion of telecommunication expenditure from both export and total turnover for computation of deduction under Section 10A; substantial question no.1 is returned unanswered as it did not arise from the Tribunal's order and had been finally decided by the Commissioner (Appeals). The appeal is disposed of with no costs.

Re-opening of assessment - Reason to believe - Mere change of opinion - Jurisdiction under Section 147 - Disclosure of all material facts - Tangible material

Re-opening of assessment - Reason to believe - Mere change of opinion - Disclosure of all material facts - Tangible material - Validity of the notice issued for re-opening the assessment for AY 2015-16 - HELD THAT: - The Court examined whether the Assessing Officer had jurisdiction to re-open the assessment under Section 147/148 for AY 2015-16. The reasons recorded by the Assessing Officer were reviewed and it was found that they were drawn from material already available on record and not from any fresh information. The petitioner had been subjected to scrutiny, had furnished the details called for during regular assessment proceedings (including accounting policy disclosures and explanations on percentage completion method, investments, land cost write-offs and direct expenses), and the assessment under Section 143(3) was completed without additions. The Court held that where all material facts have been disclosed and considered in the original assessment, a subsequent re-opening based on the same material amounts to a mere change of opinion by the Assessing Officer. Relying on the settled principle that re-opening requires a 'reason to believe' supported by tangible fresh material and not mere change of opinion, the Court concluded that no valid jurisdiction to re-open the assessment existed in the present case. Consequently, the impugned notice was held to be issued without the necessary jurisdictional foundation and was liable to be quashed. [Paras 8, 9, 10, 11]

Impugned re-opening notice quashed as issued on mere change of opinion; no failure to disclose material facts and no fresh/tangible material justifying re-opening.

Final Conclusion: Petition allowed; notice dated 31st March, 2021 for re-opening assessment for AY 2015-16 is quashed and set aside; rule made absolute; no order as to costs.

Penalty under section 271DA for contravention of section 269ST - Aggregation of cash sales for applying section 269ST - Burden to prove receipts from a single person in a day - Maintainability of departmental appeal in light of CBDT monetary limit

Penalty under section 271DA for contravention of section 269ST - Aggregation of cash sales for applying section 269ST - Burden to prove receipts from a single person in a day - Whether penalty under section 271DA for alleged violation of section 269ST (for AY 2018-19) was rightly levied by the Assessing Officer by aggregating cash sales across invoices. - HELD THAT: - The Tribunal upheld the findings of the Commissioner (Appeals) that the Assessing Officer erroneously aggregated disparate cash-sale invoices raised at different points of time, by different sales persons, at different retail outlets and treated the aggregate as receipts from a single person in a day. The CIT(A) examined the detailed chart and data placed on record, noted that standalone invoice amounts were below the statutory threshold and that the AO did not bring on record any identity or evidence to show that the aggregated amounts were received from one person. The Tribunal agreed that the provision does not permit aggregation of unrelated cash-sale invoices in a day to treat them as contraventions unless it is conclusively proved that the amounts were received from a single payer; in the absence of such proof the presumption of splitting was unjustified. On this basis the CIT(A)'s deletion of the penalty to the extent challenged was found to be justified and was upheld. [Paras 8, 9]

Penalty of Rs. 1,43,56,339/- levied under section 271DA for alleged contravention of section 269ST (AY 2018-19) is deleted and the CIT(A)'s order upholding that deletion is affirmed.

Maintainability of departmental appeal in light of CBDT monetary limit - Whether the Revenue's appeal for AY 2019-20 was maintainable in view of the CBDT circular revising the monetary limit for filing departmental appeals to the ITAT to Rs. 60 lakhs. - HELD THAT: - The Tribunal noted the assessee's submission that the tax effect in the departmental appeal was below the revised threshold of Rs. 60 lakhs as prescribed by CBDT Circular No.09/2024 dated 17.09.2024, a position not opposed by the Departmental Representative. In view of the Circular and the admitted tax effect being below the notified limit, the Tribunal treated the departmental appeal as not maintainable and dismissed it accordingly. [Paras 14, 15]

Revenue's appeal for AY 2019-20 is dismissed as not maintainable in view of the CBDT circular fixing the monetary limit for departmental appeals to the ITAT at Rs. 60 lakhs.

Final Conclusion: Both appeals filed by the Revenue are dismissed: the penalty deletion for AY 2018-19 is affirmed on merits for lack of proof that aggregated cash receipts were from a single person, and the appeal for AY 2019-20 is dismissed as not maintainable under the CBDT's revised monetary threshold.

Bogus long-term capital gains - addition under section 68 - addition under section 69C - principle of preponderance of probabilities - natural justice - non-provision of documents and right to cross examination - reliance on SEBI investigation and orders - matching principle for commission as unexplained expenditure

Bogus long-term capital gains - addition under section 68 - addition under section 69C - reliance on SEBI investigation and orders - matching principle for commission as unexplained expenditure - Validity of the additions made by the AO/CIT(A) treating the claimed long term capital gains as bogus and the consequent additions under section 68 and section 69C. - HELD THAT: - The Tribunal examined whether the AO and CIT(A) were justified in discrediting the assessee's claim of genuine investments and treating the LTCG as fabricated. While the authorities primarily relied on generalized parameters-Kolkata Investigation Report, SEBI orders, weak financials of the scrips and typical modus operandi of bogus LTCG cases-the Tribunal found no specific evidence linking the assessee to a colorable device. SEBI had in fact revoked earlier directions against the assessee after investigation, and the SEBI proceedings referred to did not establish that the assessee participated in manipulation giving rise to bogus appreciation. The AO's dependence on price movement and third party non compliance, without independent evidentiary material showing the assessee's complicity, was inadequate. The Tribunal emphasised that the test of preponderance of probabilities must rest on evidence indicating a colorable device and not merely on outcome oriented inferences from industry reports or generalized modus operandi. Consequently the Tribunal was not satisfied that additions under section 68 (and the related 69C commission addition) were sufficiently established on merits and set aside the impugned additions. [Paras 10, 11, 12, 13, 15]

Additions treating the LTCG as bogus and the consequential additions under section 68 and section 69C are not sustained; the assessee's appeal on merits is allowed.

Natural justice - non-provision of documents and right to cross examination - principle of preponderance of probabilities - Whether failure to provide relied statements/documents to the assessee and denial of opportunity to cross examine witnesses vitiated the assessment and appellate process and prejudiced the assessee. - HELD THAT: - The Tribunal found that while the CIT(A) directed production of relevant material in remand proceedings, many statements and documents relied upon by the AO were not furnished to the assessee and no meaningful opportunity to cross examine the witness (notably the director of AMS Powertronics Ltd.) was accorded. Such omission, when material to the AO's adverse inference, amounted to breach of natural justice and was prejudicial. The Tribunal treated the absence of opportunity to test adverse statements as a ground to discount those statements and to set aside conclusions drawn principally from them. This procedural infirmity reinforced the conclusion that the impugned additions were not adequately proved. [Paras 6, 9, 13]

Failure to provide documents and afford cross examination was prejudicial; adverse findings based thereon cannot stand.

Addition under section 68 - overlap of deeming provisions and non fatality of wrong statutory citation - Whether the AO's invocation of section 68 instead of section 69A (or vice versa) vitiates the additions. - HELD THAT: - The Tribunal observed that mere mention of an incorrect section by the AO is not fatal where the nature of the transaction justifies invocation of deeming provisions and overlapping statutory provisions may apply. The Tribunal held there was no ambiguity or non application of mind by the authorities in a manner that would vitiate the order solely on that ground. However, this conclusion on the formal point did not salvage the substantive findings, which were set aside for lack of requisite evidence and due process infirmities. [Paras 5]

Incorrect statutory citation (section 68 versus section 69A) is not by itself fatal; the formal defect does not invalidate the assessment in absence of other prejudice.

Final Conclusion: The Tribunal allowed the assessee's appeal: the tax authorities' findings that the claimed LTCG were bogus and the consequential additions were not sustained in view of inadequate specific evidence, intervening SEBI developments exonerating the assessee, and prejudicial procedural lapses; the impugned additions are set aside and the appeal is allowed with consequential directions.

Reopening of assessment under section 148 - conversion of notice into deemed show-cause under clause (b) of section 148A - validity of notice for reopening where income is below threshold - application of CBDT Instruction No.1 dated 11.05.2022 - assessment void ab initio if notice under section 148 is invalid - claim of coownership share supported by sale deeds

Reopening of assessment under section 148 - conversion of notice into deemed show-cause under clause (b) of section 148A - application of CBDT Instruction No.1 dated 11.05.2022 - validity of notice for reopening where income is below threshold - assessment void ab initio if notice under section 148 is invalid - Validity of the reopening notice and consequent assessment under section 147 read with section 144 after the notice regime conversion and issuance of a subsequent notice dated 28.07.2022. - HELD THAT: - The Tribunal examined the sequence of notices: an initial notice under section 148 dated 25.06.2021, the assessee's reply of 31.10.2021, and the AO's compliance with the Supreme Court judgment and CBDT Instruction No.1 dated 11.05.2022 by issuing a deemed showcause notice under clause (b) of section 148A on 01.06.2022. The Tribunal found that the later notice dated 28.07.2022 under section 148 for reopening in respect of the Assessment Year 2013-14, premised on income below the prescribed threshold, was contrary to law. Because the statutory notice requirements for valid reopening were not met as to the subsequent notice relied upon by the authorities, the DRP's directions dated 26.02.2024 and the assessment order dated 22.03.2024 founded on that reopening could not stand. The Tribunal therefore set aside the impugned directions and the assessment order. [Paras 6]

Directions of the DRP dated 26.02.2024 and the assessment order dated 22.03.2024 are illegal and are set aside insofar as they rest on the invalid notice dated 28.07.2022.

Claim of coownership share supported by sale deeds - assessment void ab initio if notice under section 148 is invalid - Entitlement of the assessee to be assessed only for her declared 1/6th share of the sale consideration and the invalidity of the addition of the claimed share. - HELD THAT: - On the merits, the assessee had, in response to the original notice, produced copies of two sale deeds dated 30.12.2012 which expressly recorded her share as 1/6th (16.69%) of the total sale consideration of Rs. 86,27,000/-. The Tribunal accepted the documentary evidence of coownership and the assessee's assertion that her share amounted to Rs. 14,39,500/-. Given the invalidity of the subsequent reopening notice and the supporting assessment, the addition of the amount attributable to the assessee's declared share was not sustainable. [Paras 6]

The addition of the amount attributable to the assessee's declared 1/6th share is not sustained; assessment framed on the basis of the invalid reopening is set aside.

Final Conclusion: The appeal is allowed; the DRP directions dated 26.02.2024 and the assessment order dated 22.03.2024 are set aside, the reopening notice relied upon is held contrary to law, and the addition based on the invalid assessment is not sustained.

Jurisdiction under section 147 - notice under section 148 - approval under section 151 - reasons to believe - vague and non-descript reasons - application of mind - quashing of reassessment for jurisdictional defect - requirement of particulars in reasons for reopening

Jurisdiction under section 147 - reasons to believe - notice under section 148 - approval under section 151 - vague and non-descript reasons - application of mind - quashing of reassessment for jurisdictional defect - Validity of reopening assessment for A.Y.2012-13 by issuing notice under section 148 based on reasons and approval relating to a different year and non-descript information - HELD THAT: - The Tribunal found that the 'reasons to believe' recorded by the Assessing Officer referred to FY 2013-14 relevant to A.Y.2014-15 while the reopening pertained to A.Y.2012-13, thereby undermining the foundational basis for assumption of jurisdiction under section 147. The reasons relied upon were cryptic and lacked particulars of the information from the Investigation Wing; such vague and non-descript reasons cannot objectively sustain reopening. Further, the Principal Commissioner granted approval under section 151 on the same defective reasons without application of mind. Because the reasons recorded were substantively defective and related to a different assessment year, the notice under section 148 and the consequent reassessment lacked the statutory pre-requisites for valid exercise of jurisdiction under section 147. [Paras 10, 11]

The notice under section 148 and the reassessment order for A.Y.2012-13 are quashed for want of jurisdiction; appeal allowed.

Final Conclusion: Reopening of assessment for A.Y.2012-13 was invalid because the reasons to believe were vague, related to a different assessment year, and the approval under section 151 was recorded without application of mind; the notice under section 148 and the reassessment order are quashed and the appeal is allowed.

Valuation of unquoted shares by DCF method under Rule 11UA - determination of fair market value for purposes of section 56(2)(viib) - addition under section 68 in respect of share application money - rejection of valuation based on valuer's disclaimers - assessment officer reviewing projected financials against subsequent actuals

Valuation of unquoted shares by DCF method under Rule 11UA - determination of fair market value for purposes of section 56(2)(viib) - rejection of valuation based on valuer's disclaimers - assessment officer reviewing projected financials against subsequent actuals - Acceptability of the assessee's DCF-based valuation certified by a chartered accountant and correctness of addition under section 56(2)(viib) following AO's rejection of that valuation. - HELD THAT: - The assessee, a start-up, adopted the DCF method-one of the methods permitted under Rule 11UA-to value unquoted shares and furnished a certified valuation. The Tribunal held that the AO's rejection of the DCF valuation on the basis of customary disclaimers in the valuer's report and by comparing projections with later actuals was not permissible. Valuation inherently rests on projections and expert approximation; the AO cannot reassess or substitute the valuer's forward-looking assumptions by reviewing subsequent performance. The Tribunal relied on the principle that where an assessee adopts a recognized method under Rule 11UA and the valuation is not shown to be based on a demonstrably wrong approach or to suffer from a defect going to the root of the valuation process, the AO cannot reject it without providing an alternative fair value determined by a proper valuation exercise. Consequently the additions made under section 56(2)(viib) based on the AO's reassessed FMV were deleted. [Paras 10, 11, 12, 13, 14]

The DCF valuation under Rule 11UA is accepted; the AO's rejection was improper and additions under section 56(2)(viib) are deleted.

Addition under section 68 in respect of share application money - determination of fair market value for purposes of section 56(2)(viib) - Validity of the addition under section 68 in respect of share application money where shares were issued with share premium to existing shareholders. - HELD THAT: - Having held the DCF valuation to be valid, the Tribunal observed that the shares issued at face value with share premium were to existing shareholders. In that factual matrix, the AO could not sustain an addition under section 68 in respect of the same receipts. The acceptance of the valuation and the fact that subscriptions were by existing shareholders removed the basis for treating the receipts as unexplained cash credits under section 68. [Paras 15]

Addition under section 68 in respect of the share application money is deleted.

Final Conclusion: The appeal is partly allowed: the DCF valuation submitted under Rule 11UA is accepted and additions under section 56(2)(viib) and section 68 are deleted; the remainder of the assessment stands as per the order.

Exemption under section 10(34A) - distribution tax liability under section 115QA - treatment of long term capital gains under section 112 - sham transaction / colourable device

Exemption under section 10(34A) - distribution tax liability under section 115QA - sham transaction / colourable device - Whether the assessee was entitled to deduction under section 10(34A) in respect of profits arising on buyback of shares by related unlisted companies - HELD THAT: - The Tribunal upheld the findings of the Commissioner (Appeals) that the conditions for claim of exemption under section 10(34A) were satisfied in the assessment year under consideration. The Assessing Officer's adverse inference premised on earlier allotment and transfer transactions (in FYs 2007-08 to 2010-11) and on the asserted non-payment of tax by the issuer companies under section 115QA was held to be based on vague and retrospective suspicion. The CIT(A) had examined the chronology and concluded that the buyback gave rise to distributed profits in the year under appeal and that any alleged manipulations or consequences arising in earlier concluded assessment years could not be a ground to deny the exemption in the year in which the buyback was recorded and assessed. The Tribunal found no infirmity in that reasoning and declined to interfere. [Paras 11]

Deduction under section 10(34A) allowed; addition deleted.

Treatment of long term capital gains under section 112 - sham transaction / colourable device - Whether the long term capital gains of the assessee were correctly taxed at the concessional rate under section 112 - HELD THAT: - The Tribunal affirmed the CIT(A)'s conclusion that the Assessing Officer's view that unaccounted money was being converted into legitimate funds was unfounded. The assessee had not claimed exemption under section 10(38) and had disclosed the LTCG in the return, applying the special rate under section 112 and paying tax accordingly. The Tribunal agreed that transactions of acquisition in earlier years could not be retrospectively disturbed in the assessment year to deny the concessional capital gains treatment in the absence of cogent evidence, and that the AO's contrary approach lacked basis. [Paras 12]

Long term capital gains held to be taxable under section 112 at concessional rate; addition deleted.

Final Conclusion: The Revenue's appeal is dismissed; the CIT(A)'s deletion of the additions relating to exemption under section 10(34A) and the concessional tax treatment of LTCG under section 112 is upheld. The assessee's cross-objection is held to be infructuous in view of the dismissal of the Revenue's appeal and is dismissed.

Penalty under Section 271(1)(c) for furnishing inaccurate particulars or concealment of income - validity of notice under Section 274 where limb of Section 271(1)(c) is not specified - application of Manjunatha Cotton & Ginning Factory principle on sufficiency of notice - penalty where additions are reflected in audited accounts and no affirmative case of concealment

Validity of notice under Section 274 where limb of Section 271(1)(c) is not specified - application of Manjunatha Cotton & Ginning Factory principle on sufficiency of notice - Whether the penalty proceedings were valid when the notice under Section 274 did not specify the particular limb of Section 271(1)(c) on which penalty was sought to be levied. - HELD THAT: - The Tribunal noted that the notice dated 27.03.2015 under Section 274 read with Section 271(1)(c) did not express under which limb of Section 271(1)(c) the penalty proceedings were initiated. Applying the principle laid down in Manjunatha Cotton & Ginning Factory, the deficiency in the notice is material to the statutory requirement for informing the assessee of the specific charge. Because the notice failed to specify the particular basis within Section 271(1)(c), the initiation of penalty proceedings was held to be improper. The insufficiency of the notice therefore vitiates the penalty proceedings. [Paras 7]

Penalty proceedings quashed for invalid notice not specifying the limb of Section 271(1)(c).

Penalty under Section 271(1)(c) for furnishing inaccurate particulars or concealment of income - penalty where additions are reflected in audited accounts and no affirmative case of concealment - Whether penalty under Section 271(1)(c) could be sustained in respect of the stock difference of Rs. 1,81,725/- where the discrepancy was reflected in the audited accounts and no case of furnishing inaccurate particulars or concealment was established. - HELD THAT: - On the merits, the Tribunal observed that the closing stock details and the stock difference were reflected in the audited accounts and that the Assessing Officer did not demonstrate that the assessee furnished inaccurate particulars or concealed income in relation to the stock difference. The Assessing Officer had not built up a case of intentional concealment; the assessee had presented stock details and the discrepancy was part of audited accounts. In these circumstances, there was no basis to sustain penalty for concealment or furnishing inaccurate particulars with respect to the stock difference. [Paras 7]

Penalty in respect of the stock difference set aside as there was no concealment or furnishing of inaccurate particulars.

Final Conclusion: The appeal is allowed: the penalty proceedings are quashed because the notice failed to specify the limb of Section 271(1)(c) and, on the merits, the penalty in respect of the stock difference cannot be sustained as the discrepancy was reflected in audited accounts and no concealment or inaccurate particulars was shown.

Formation of belief for reopening assessment - reopening of assessment under section 147/148 of the Income-tax Act, 1961 - approval under section 151 of the Income-tax Act, 1961 - cogent material to form belief - mechanical approval / failure to apply mind - quashing of reassessment proceedings

Formation of belief for reopening assessment - reopening of assessment under section 147/148 of the Income-tax Act, 1961 - cogent material to form belief - quashing of reassessment proceedings - Validity of the reassessment proceedings initiated by issuance of notice under section 148 read with section 147 in respect of AY 2013-14 - HELD THAT: - The Tribunal found that the Assessing Officer primarily relied upon a Suspicious Transaction Report and the statement of Shri Vijay Goyal (director of M/s Perfect Polychem Pvt. Ltd.) as recorded by the investigation wing. A careful reading of that statement showed that Mr. Vijay Goyal referred to exchange of bills with five parties and did not mention the assessee; no questions were put to him by the investigation wing about transactions with the assessee. The AO drew an inference treating all transactions of Perfect Polychem as accommodation entries and treated the assessee's sales to that entity as bogus without any direct or tangible material connecting the assessee to the alleged accommodation entries. The assessee had earlier furnished supporting documents (invoices, consignment notes, ledger copies and other records) in response to summons under section 131(1A), during scrutiny under section 143(3) and to notices under section 133(6); the scrutiny assessment for AY 2013-14 had accepted the returned income. The Tribunal emphasised that the AO was not in possession of the primary material (STR and the statement) at the time of recording the reasons and in fact requested those documents from the investigation unit only later, which demonstrates absence of requisite material to form a belief when reasons were recorded. In these circumstances the formation of belief was held to be based on surmise and conjecture and not on cogent material capable of sustaining reopening. Consequently the reassessment proceedings were quashed. [Paras 6, 7, 8, 9, 11]

Reopening held invalid and reassessment proceedings quashed for AY 2013-14

Approval under section 151 of the Income-tax Act, 1961 - mechanical approval / failure to apply mind - quashing of reassessment proceedings - Validity of the approval granted under section 151 for initiating reassessment - HELD THAT: - The Tribunal noted that the Additional CIT's approval recorded in the proforma was superficial and that the primary information (STR and statement) was obtained by the AO from the investigation wing only on 27-12-2018, after the reasons were recorded. The approving authority thus could not have applied independent mind to the material when granting approval. Reliance was placed on precedents where similar perfunctory approvals were held to be mechanical and invalid: CIT Vs. S. Goyenka Lime and Chemicals Ltd and PCIT Vs. NC Cables Ltd . Applying those principles, the Tribunal held that the approval under section 151 was given without proper application of mind and therefore vitiated the reopening. [Paras 10, 11]

Approval under section 151 held to be mechanical and invalid; reassessment vitiated

Final Conclusion: The reassessment proceedings in respect of Assessment Year 2013-14 are quashed; the assessee's appeal is allowed and the revenue's appeal is dismissed. Other substantive grounds were left open as unnecessary to decide.

Deduction under Section 10AA for SEZ unit profits - proviso to Section 92C(4) and its applicability to ALP adjustments pursuant to APA - voluntary transfer pricing adjustment and Advance Pricing Agreement (APA) - distinction between adjustments made by Transfer Pricing Officer and voluntary/APA adjustments - precedential value of coordinate Bench decisions and reliance on High Court precedent

Deduction under Section 10AA for SEZ unit profits - proviso to Section 92C(4) and its applicability to ALP adjustments pursuant to APA - voluntary transfer pricing adjustment and Advance Pricing Agreement (APA) - precedential value of coordinate Bench decisions and reliance on High Court precedent - Allowability of deduction under Section 10AA in respect of increased profits arising from an ALP adjustment pursuant to an APA (voluntary transfer pricing adjustment) for AY 2017-18. - HELD THAT: - The Tribunal examined whether the proviso to Section 92C(4) - which bars deduction under Section 10AA in respect of income enhanced after computation of income by the Assessing Officer under sub-section (3) - applies to ALP adjustments arising from an APA entered into by the assessee. The CIT(A) had allowed the claim relying on CBDT Circular No.14 of 2006 and on coordinate Bench decisions in the assessee's own case (including ITA No.199/Bang/2015 and ITA No.2984/Bang/2018) which followed the Karnataka High Court and other Tribunal decisions to hold that adjustments made voluntarily by the taxpayer pursuant to an APA are not adjustments made by the TPO/AO within the meaning of the proviso to Section 92C(4). The Tribunal found these precedents to be directly on point, noted that the CIT(A) had applied the coordinate Bench reasoning, and saw no infirmity in that approach. Accordingly, the Tribunal held that increased profits arising from the voluntary APA adjustment are eligible for deduction under Section 10AA and are not barred by the proviso to Section 92C(4). [Paras 8, 10]

The disallowance of the Section 10AA claim made by the AO was deleted and the CIT(A)'s order allowing the deduction was upheld.

Final Conclusion: Appeal by the Department dismissed; the Tribunal upholds the CIT(A)'s order deleting the disallowance and allowing deduction under Section 10AA for AY 2017-18 in respect of the voluntary ALP/APA adjustment, following coordinate Bench and High Court precedents.

Condonation of delay under the proviso to Section 28KA of the Customs Act, 1962 - maximum condonable period - appeal under Section 28KA of the Customs Act, 1962 - continuing wrong doctrine - preclusive effect of statutory limitation

Condonation of delay under the proviso to Section 28KA of the Customs Act, 1962 - maximum condonable period - preclusive effect of statutory limitation - Whether delay of 102 days in filing an appeal under Section 28KA could be condoned despite exceeding the maximum condonable period prescribed in the proviso. - HELD THAT: - The Court applied the plain statutory scheme of Section 28KA and followed binding precedent in Commissioner of Customs JNCH vs Bag Industries and the Delhi High Court decision in Commissioner of Customs (Import) AIR Cargo Complex, New Delhi vs Amazon Seller Services Pvt Ltd, holding that delay beyond the maximum condonable period in the proviso to Section 28KA cannot be condoned. The appellant's reliance on the continuing wrong doctrine and on decisions such as Union of India v. Tarsem Singh and M. R. Gupta v. Union of India was rejected because those authorities did not concern a statutory provision analogous to Section 28KA and therefore could not displace the specific limitation scheme enacted by Parliament. Reliance on a decision under the NIA Act was similarly inapposite, as that decision dealt with liberty and a different statutory context. In light of the direct authorities on Section 28KA, the Court declined to extend condonation beyond the statutorily fixed maximum period and dismissed the condonation application, resulting in the dismissal of the underlying appeal and the connected interim application. [Paras 3, 4, 6, 7]

Delay of 102 days, being beyond the maximum condonable period under the proviso to Section 28KA, cannot be condoned; the condonation application is dismissed and the appeal and connected interim application are disposed of.

Final Conclusion: The application for condonation of delay is dismissed because the delay exceeds the maximum condonable period under the proviso to Section 28KA of the Customs Act, 1962; consequently the appeal and the connected interim application do not survive and are disposed of.

Anti-dumping duty - country of origin - mis-declaration - onus of proof - principle that the one who asserts must prove - preponderance of probability - extended period of limitation - re-visitation of valuation

Anti-dumping duty - country of origin - onus of proof - principle that the one who asserts must prove - Whether the department could treat unmarked stainless-steel sheets as originating from a country subject to anti-dumping duty and shift the burden to the importer to prove otherwise after mis-declaration was found. - HELD THAT: - The Tribunal held that the department, having alleged in the show cause notice that the unmarked pallets were of Taiwanese/Chinese origin, bore the burden of proving that assertion. The Commissioner rightly declined to treat sheets without country markings as conclusively of Taiwanese origin merely because other sheets in the consignment bore such a marking. The adjudicating authority had already imposed consequences for the mis-declaration (enhancement of value, duty and penalty) and had levied anti-dumping duty only on pallets on which origin was conclusively shown by marking while granting benefit where origin was shown to be Japanese. The general proposition that mis-declaration relieves the department of its burden to prove asserted facts was rejected. The Tribunal emphasised the cardinal pleading and evidence principle that the party asserting a fact must prove it, and that assumptions or presumptions by the department as to origin are not permissible in the absence of evidence. The Tribunal further observed that where a consignment shows a mix of origins (Japanese and Taiwanese markings present), the mere presence of similar grade and thickness in unmarked sheets does not suffice to treat them as of the contested origin by preponderance, as the factual matrix here did not permit such a presumption. [Paras 7]

The department cannot treat unmarked pallets as of Taiwanese/Chinese origin nor shift the onus to the importer to prove otherwise; the Commissioner's finding to drop demand on the unmarked 19 pallets is upheld.

Mis-declaration - extended period of limitation - re-visitation of valuation - Scope of statutory consequences of mis-declaration under the Customs regime and whether those consequences extend to shifting evidentiary onus on origin. - HELD THAT: - The Tribunal noted that the statute itself prescribes specific consequences for mis-declaration, namely extension of the period of limitation to five years and revisiting valuation. Those consequences were applied in the case (enhanced value, duty and penalty). However, the Tribunal held that the statute does not furnish a basis for the department to expand consequences of mis-declaration to include displacing the evidentiary burden on the question of country of origin. Consequently, once the statutorily enumerated consequences were applied, the department could not thereafter assume unmarked sheets to be of a dutiable origin without independent proof. [Paras 7]

Consequences of mis-declaration are confined to the statutory remedies (extended limitation and re-examination of valuation); they do not shift the burden on origin to the importer, and the department must prove asserted origin.

Final Conclusion: The departmental appeal is rejected; the adjudicating authority's order upholding anti-dumping duty where origin was proved by markings and dropping demand for pallets without origin markings is affirmed.

Jurisdiction of Tribunal versus revision by Central Government - baggage versus goods - assessment as determinant of appellate jurisdiction - confiscation and redemption under section 125 - non-declaration and confiscation under section 111(l) and section 111(m) - mandatory notice requirement under section 124

Jurisdiction of Tribunal versus revision by Central Government - baggage versus goods - assessment as determinant of appellate jurisdiction - Competence of the Tribunal to entertain the appeal challenging confiscation of goods carried as baggage - HELD THAT: - The court examined the statutory evolution of appellate and revisionary remedies under the Customs Act and held that assessment is the primary determinant that links a dispute to the Tribunal's appellate jurisdiction. The proviso restoring limited revision to the Central Government in 1984 carves out only specified matters (baggage, short-landing penalty and drawback) from the Tribunal's purview but does not permit a broad exclusion of disputes involving assessment. Where the matter concerns assessment or consequences flowing from assessment, the inalienable appellate jurisdiction conferred by Article 323B and the scheme of the Act places the dispute within the Tribunal's jurisdiction. The court therefore rejected the preliminary objection to maintainability and held that the Tribunal was competent to decide the appeal. [Paras 16, 17]

Tribunal competent to hear the appeal; preliminary objection on maintainability overruled

Non-declaration and confiscation under section 111(l) and section 111(m) - mandatory notice requirement under section 124 - confiscation and redemption under section 125 - Validity of absolute confiscation of the gold carried by the appellant and whether redemption should be permitted - HELD THAT: - On merits the court found that the appellant failed to declare the gold and was ineligible to import it as duty-free baggage, so detention and action for confiscation under the relevant confiscation provisions was not per se faulted. However, the confiscation was absolute without adequate foundation for treating the goods as prohibited imports; there was no evidence of expert examination to establish classification under the restricted tariff entry relied upon, and the mandatory notice requirement was not properly reflected in the records. The court held that absolute confiscation was disproportionate and not justified in the circumstances and exercised its discretion to permit redemption upon payment of a fine and to reduce the penalty imposed by the first appellate authority. [Paras 21, 23, 24]

Absolute confiscation set aside; gold to be redeemable on payment of fine and penalty reduced

Final Conclusion: Preliminary objection to the Tribunal's jurisdiction rejected; on merits absolute confiscation of the appellant's gold set aside and redemption ordered on payment of a fine with the penalty reduced; appeal disposed accordingly.

Exemption from additional duty of customs - application of exemption notifications to duties imposed by Finance Act - interpretation of sub-section (3) of Section 116 of the Finance Act, 1999 - benefit of advance licence / DEEC scheme imports

Exemption from additional duty of customs - interpretation of sub-section (3) of Section 116 of the Finance Act, 1999 - benefit of advance licence / DEEC scheme imports - Whether additional duty of customs levied under sub-section (1) of Section 116 of the Finance Act, 1999 on imported high speed diesel is eligible for exemption where the imported goods are covered by an exemption notification under the Customs law for imports against an advance licence. - HELD THAT: - The Tribunal applied the ratio of its earlier decision in Atlantic Shipping Pvt. Ltd. (drawing on Toyota Kirloskar Motor P. Ltd.) and held that sub-section (3) of Section 116 brings the additional duty of customs within the ambit of the procedural provisions of the Customs Act, including provisions relating to refunds and exemptions. Consequently, where an exemption notification under the Customs law (applicable to imports against an advance licence/DEEC) extends to the goods, that exemption must be read to cover the additional duty levied under Section 116. Contrary departmental instructions or earlier decisions which did not consider sub-section (3) or were ex parte were held not to preclude application of this principle. Applying that legal principle to the facts, the impugned denial of exemption in respect of the additional duty on high speed diesel imports was unsustainable. [Paras 5, 6]

Benefit of the exemption applicable to imports under advance licence is extended to the additional duty levied under sub-section (1) of Section 116 of the Finance Act, 1999; the impugned order is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that additional duty levied under Section 116(1) of the Finance Act, 1999 is exemptible where the imported goods are entitled to exemption under the relevant Customs notification for imports against an advance licence; the impugned order is set aside.

Customs valuation - CIF versus FOB and addition of freight and insurance - Addition of notional freight and insurance under Rule 10(2)(i) and (ii) of the Customs Valuation Rules, 2007 - MRP/RSP based valuation for Additional Duty (CVD) under Section 4A of the Central Excise Act and Standards of Weights and Measures (Packaged Commodities) Rules, 1977 - Institutional/industrial consumer exclusion under Legal Metrology for retail-package/retail-sale rules - Invocation of extended period - limitation and time-bar where no concealment or new evidence

Customs valuation - CIF versus FOB and addition of freight and insurance - Addition of notional freight and insurance under Rule 10(2)(i) and (ii) of the Customs Valuation Rules, 2007 - Whether the overseas invoice price was CIF (so freight and insurance borne by seller and not addable) or FOB (requiring addition of freight and insurance to assessable value). - HELD THAT: - The Tribunal examined the documentary evidence - marine insurance policy showing the assured as the exporter with premium paid by exporter, airway bill stating freight as 'Agreed', bill of lading indicating freight to be billed to Microgen Inc., USA, and invoices stating supply to Government of Jharkhand. On this factual matrix the Tribunal found that freight and insurance were borne and paid by the overseas exporter and there was no material to indicate reimbursement by the importer. Consequently the price in the overseas invoice was CIF to destination Calcutta and not FOB, and the Revenue's enhancement by adding notional freight and insurance under the Customs Valuation Rules was unsustainable. [Paras 12]

Held that the overseas price was CIF; addition of freight and insurance to enhance assessable value is not legally sustainable.

MRP/RSP based valuation for Additional Duty (CVD) under Section 4A of the Central Excise Act and Standards of Weights and Measures (Packaged Commodities) Rules, 1977 - Institutional/industrial consumer exclusion under Legal Metrology for retail-package/retail-sale rules - Whether MRP/RSP based valuation under Section 4A (notification reliance) applies so as to determine CVD on the basis of declared retail price (RSP/MRP). - HELD THAT: - The Tribunal analysed the notification entry relied upon by Revenue (Sl. No.40 of Notification No.14/2008-CE (NT)) and the nature of the imported goods. The entry covers goods of Heading 34.02 in the form of bars, cakes, moulding pieces or shapes, whereas the imported goods were liquids classified under CTH 3402 90 99. The record and labels showed the consignments were for supply to Government of Jharkhand hospitals, not for retail sale. Applying the legal-metrology exclusion of institutional/industrial consumers from 'retail package' obligations and relying on precedent distinguishing retail sales from institutional bulk supplies, the Tribunal held Section 4A/MRP valuation inapplicable and that CVD could not be computed on MRP/RSP in the present case. [Paras 12]

Held that MRP/RSP based valuation under Section 4A was not attracted; CVD cannot be computed on MRP for these institutional bulk supplies.

Invocation of extended period - limitation and time-bar where no concealment or new evidence - Whether the Show Cause Notice dated 29.11.2012 invoking the extended period (for imports in September-October 2008) was time-barred in absence of concealment or discovery of new evidence. - HELD THAT: - The Tribunal noted that the Bills of Entry had been finally assessed at time of import based on documents placed by the appellant and that the Department did not produce evidence of any new material or of reimbursement of freight/insurance by the importer. There was no proof of suppression or wilful mis-statement; the documents relied upon by Revenue in the proceedings were the same as those available at import. In these circumstances the Tribunal concluded that the extended period could not be invoked and the demand was hit by limitation. [Paras 14, 15]

Held that the notice invoking extended period was time-barred; confirmed demand unsustainable on limitation grounds.

Final Conclusion: Appeal allowed. The Tribunal set aside the adjudicating order: (i) enhancement of assessable value by adding freight and insurance was quashed because the import price was CIF; (ii) MRP/RSP based valuation under Section 4A for CVD was held inapplicable for the liquid institutional supplies to Government hospitals; and (iii) the Show Cause Notice invoking the extended period was also held time-barred. Consequential relief to the appellant as per law.

Public interest litigation maintainability - doctrine of delay and laches in PIL - judicial review of contracts involving State instrumentalities - selection without competitive tender and Article 14 - delegation of power to levy taxes or fees - excessive delegation - reasonableness of concession formula (Annexure F) - perpetuity of concession agreements - severability of contract clauses - recovery of Total Project Cost and returns

Public interest litigation maintainability - doctrine of delay and laches in PIL - Maintainability of the writ petition filed by the Federation of NOIDA Residents Welfare Association - HELD THAT: - The Court held that the Association possessed locus standi as a society established to protect NOIDA residents' civic interests and that the petition was filed bona fide. The doctrine of delay and laches was considered but rejected as a bar because (i) writ jurisdiction under Articles 32/226 is governed by equitable doctrine rather than the Limitation Act and (ii) the cause of action was continuing in nature such that the petition filed after disclosure of relevant auditor reports was not barred by delay. The Court also held that judicial review is available even in contracts involving State instrumentalities where public interest, arbitrariness or constitutional infirmity is alleged, thereby validating the High Court's entertain ment of the PIL.

The writ petition was maintainable; there was no fatal delay or laches and the High Court rightly entertained the public interest petition.

Selection without competitive tender and Article 14 - Validity of awarding the contract to NTBCL without a competitive tender - HELD THAT: - The Court agreed with the High Court that NOIDA and other authorities failed to follow a transparent, non discriminatory procedure and did not demonstrate any justification for not inviting competitive bids. NTBCL was incorporated after the MoU and there was no material to show lack of capable competitors; the selection process was opaque and amounted to arbitrariness inconsistent with Article 14. Accordingly, the contract award process was held to be constitutionally defective.

The award of the concession to NTBCL without following a transparent competitive process was unfair and inconsistent with Article 14.

Delegation of power to levy taxes or fees - excessive delegation - Whether NOIDA validly delegated the power to levy fees/tolls to NTBCL - HELD THAT: - Interpreting the Uttar Pradesh Industrial Area Development Act, 1976 and the subsequently inserted Section 6A, the Court held that while the Authority may delegate the collection of taxes/fees to a designated developer, the statutory scheme does not permit delegation of the power to levy taxes or fees itself. NOIDA exceeded its statutory authority by empowering NTBCL to determine and revise fee rates under the Concession Agreement and the post facto Regulations; such sub delegation was unlawful and undermined the statutory scheme.

NOIDA exceeded its authority; the sub delegation of the power to levy fees/tolls to NTBCL was invalid.

Reasonableness of concession formula (Annexure F) - perpetuity of concession agreements - severability of contract clauses - Whether Article 14 and the formula in Annexure F are opposed to public policy - HELD THAT: - The Court found the formula in Annexure F unreasonable and arbitrary. The formula compounded unrecovered returns into the Total Project Cost, allowed uncontrolled inclusion of O&M and other expenses, and guaranteed a high fixed return (20%), producing an outcome where recovery could be perpetual. The CAG report and record showed inflated costs, excessive O&M charges and conflict/practices enabling unjust enrichment. Given these features and the practical inevitability of indefinite extension, Article 14 read with Annexure F was held contrary to public policy and severable from the Agreement.

Article 14 read with Annexure F is opposed to public policy and must be severed from the Concession Agreement.

Recovery of Total Project Cost and returns - Whether NTBCL has recovered the Total Project Cost and returns - HELD THAT: - Relying on the independent CAG examination, the Court accepted that NTBCL had, to a large extent, recovered project costs and realised substantial profits. The CAG concluded that total expenses and total income were comparable and that only a small residual amount remained as of 31.03.2016; NTBCL had been profitable for years, paid dividends and repaid debt. On this basis the Court affirmed the High Court's conclusion that continued imposition of user fees/tolls was no longer justified.

NTBCL has effectively recovered the Project Cost and substantial returns; continued toll collection is unjustified.

Judicial review of contracts involving State instrumentalities - Entitlement of NOIDA to recover dues for outdoor advertisements and scope of the present appeal - HELD THAT: - The Court observed that claims by NOIDA for licence fees arising from outdoor advertisements are outside the scope of the present public interest challenge to toll levy and the validity of the Concession Agreement. NOIDA was granted liberty to pursue recovery proceedings through the contractual dispute resolution mechanisms, subject to NTBCL's defences; the appellate decision does not adjudicate those dues on merits.

The advertising dues dispute is not decided in this appeal; NOIDA may initiate recovery proceedings under contractual mechanisms.

Final Conclusion: The appeal is dismissed. The High Court's judgment is affirmed: the public interest petition was maintainable; the award to NTBCL without a transparent competitive process offended Article 14; NOIDA unlawfully sub delegated the power to levy fees to NTBCL; Article 14 (Annexure F) is contrary to public policy and is severed; NTBCL has recovered the Project Cost and substantial returns and therefore must cease collection of user fees/tolls. The separate dispute regarding outdoor advertising dues remains open for NOIDA to pursue through appropriate proceedings.

Financial Creditor - financial debt - contract of guarantee - hypothecation - Security Trustee acting on behalf of lenders - claim under Section 3(6) of the IBC - moratorium under Section 14 of the IBC - severability of contractual provisions

Financial Creditor - financial debt - contract of guarantee - Security Trustee acting on behalf of lenders - Appellants qualify as Financial Creditors of the Corporate Debtor by virtue of a guarantee embodied in the Deeds of Hypothecation read with the MSTA. - HELD THAT: - The Court examined the MSTA and the Deeds of Hypothecation (DoH) and held that the Security Trustee acted on behalf of the secured lenders (the appellants) in accepting hypothecation and enforcing security. Clause 5(iii) of the DoH obliged each Chargor, including the Corporate Debtor, to accept the Security Trustee's account of realisation and to pay on demand any shortfall or deficiency shown after realisation of hypothecated assets. That obligation, in respect of liabilities of RCom and RTL (third parties vis-a-vis the Corporate Debtor), constitutes a promise to discharge the liability of a third person and therefore meets the definition of a contract of guarantee under Section 126 of the Contract Act. Once such liability exists in respect of a guarantee of amounts borrowed by the obligors, the amount of such liability falls within clause (i) of Section 5(8) of the IBC and thus constitutes a financial debt; the person to whom that financial debt is owed is a Financial Creditor under Section 5(7). The Court rejected arguments that the nomenclature 'hypothecation' or the absence of the word 'guarantee' in the document precluded this conclusion, reiterating that the document must be read as a whole and commercial efficacy given to its terms. [Paras 49, 50, 55, 56, 58]

The DoH, read with the MSTA, creates a guarantee by the Corporate Debtor in favour of the appellants and, therefore, the appellants are Financial Creditors of the Corporate Debtor.

Claim under Section 3(6) of the IBC - financial debt - requirement of default - No requirement of actual default exists for admission of a claim by a Financial Creditor under the public announcement process; the existence of financial debt suffices for classification as Financial Creditor. - HELD THAT: - The Court explained that a 'claim' under Section 3(6) is a right to payment whether or not reduced to judgment and whether matured or unmatured. Section 5(8) does not require a prior default for a debt to be a financial debt, and Section 5(7) makes a person to whom such debt is owed a Financial Creditor irrespective of default. Consequently, submission of claims pursuant to the public announcement under Section 15 does not necessitate that the debt be in default on the date of filing; the appellants' claims could be admitted as Financial Creditors without proof of an event of default. [Paras 48, 61, 62]

Admission of the appellants' claims as Financial Creditors did not require prior occurrence of default; the existence of financial debt is the decisive factor.

Moratorium under Section 14 of the IBC - contingent contract - severability of contractual provisions - The moratorium under Section 14 does not extinguish contingent claims or the underlying contractual liability; the DoH remains valid and the contingent promise to pay shortfall is not obliterated by moratorium. - HELD THAT: - Respondents argued that clause 5(iii) was a contingent contract which became impossible to perform after the moratorium (because hypothecated assets could not be sold). The Court rejected this, holding that Section 14(1) imposes prohibitions on enforcement actions but does not extinguish the underlying liability; creditors retain the right to file claims even if enforcement is barred during moratorium. The Court further observed that clause 16(vi) of the DoH provides for severability, so even if aspects relating to enforcement are inoperative during moratorium, the obligation to pay any shortfall remains a distinct, severable promise and a cognizable claim. [Paras 63, 64, 65]

Moratorium does not extinguish the contingent liability under clause 5(iii) of the DoH; the contractual obligation survives and may be the basis of a claim.

Final Conclusion: The impugned NCLAT order dated 9th September 2022 is quashed and set aside; the NCLT order dated 2nd March 2021 is restored. The appeals are allowed, with the result that the appellants are held to be Financial Creditors of the Corporate Debtor by virtue of the guarantee embodied in the Deeds of Hypothecation read with the MSTA, and related contentions based on moratorium or nomenclature are rejected.

Finality of approved resolution plan - cleanslate principle - binding effect of an approved resolution plan - power of the Adjudicating Authority to modify an approved resolution plan - remedy for nonimplementation of a resolution plan under Regulation 39(9) of the CIRP Regulations - gratuity entitlement under the Payment of Gratuity Act, 1972

Finality of approved resolution plan - cleanslate principle - binding effect of an approved resolution plan - power of the Adjudicating Authority to modify an approved resolution plan - Whether the Adjudicating Authority could revive and direct payment of gratuity claims which were not provided for in the approved and implemented resolution plan - HELD THAT: - The Tribunal proceeded from the established jurisprudence that approval of a resolution plan confers finality and renders the plan binding on the corporate debtor and all stakeholders, thereby protecting the successful resolution applicant from belated or 'surprise' claims. The Supreme Court's 'cleanslate' principle and subsequent decisions require that liabilities be ascertained during the CIRP so that the SRA knows the obligations it is assuming. Where a plan has been approved by the CoC and the Adjudicating Authority and has attained finality and implementation, there is no provision in the IBC for the Adjudicating Authority to unilaterally modify the approved plan or to impose postfacto liabilities which were not considered by the CoC. The Tribunal found no material demonstrating nonimplementation or default by the SRA that would justify reopening the plan. In these circumstances allowing the IAs amounted to impermissible modification/review of the approved resolution plan and exceeded the adjudicatory powers vested in the Adjudicating Authority. [Paras 26, 27, 28, 29, 30]

The Adjudicating Authority exceeded its jurisdiction in directing payment of gratuity claims not provided for in the approved and implemented resolution plan; the impugned orders insofar as they revive such claims are set aside.

Remedy for nonimplementation of a resolution plan under Regulation 39(9) of the CIRP Regulations - gratuity entitlement under the Payment of Gratuity Act, 1972 - Whether the Respondents had established that they were aggrieved by nonimplementation of the resolution plan so as to attract Regulation 39(9) and warrant directions for payment of gratuity - HELD THAT: - The Adjudicating Authority relied on Regulation 39(9) to entertain the IAs, observing ambiguity between plan clauses and an annexure. The Tribunal examined whether the Respondents had pleaded or proved any nonimplementation of the plan. It found that the resolution plan, when read with its Annexure listing employees on payroll as on the insolvency commencement date, demonstrated that the disputed claims were not part of the plan and that the SRA had effected payments as provided. No material established a stalemate, default or breach in implementation by the SRA. Consequently the factual threshold for invoking Regulation 39(9) - being aggrievement by nonimplementation - was not satisfied, and the Adjudicating Authority erred in treating the IAs as a ground to reopen settled and implemented plan provisions. [Paras 16, 17, 20, 21]

Regulation 39(9) was not attracted because the Respondents failed to demonstrate nonimplementation of the resolution plan; the Adjudicating Authority erred in invoking that provision to direct payment of the disputed gratuity claims.

Final Conclusion: The appeals are allowed. The impugned orders admitting I.A. Nos. 2260 of 2022 and 2943 of 2022 are set aside on the ground that the Adjudicating Authority exceeded its jurisdiction by reviving and directing payment of claims not provided for in an approved and implemented resolution plan; no costs.

Recall of admission order - withdrawal of CIRP under Section 12A and Regulation 30A - inherent power of the Adjudicating Authority/NCLT - malafide/fraudulent initiation of CIRP and Section 65 consequences - prior determination of Section 65 pleadings before further CIRP steps

Recall of admission order - Recall of the order admitting the Section 7 petition dated 08.10.2021 - HELD THAT: - The Appellants sought recall of the admission order dated 08.10.2021. This Tribunal noted that the Appellants had earlier challenged the admission order by way of Company Appeal (AT)(Ins.) No.881 of 2021 which was dismissed for non-prosecution, their restoration application was dismissed and a further appeal to the Supreme Court was also dismissed. The Adjudicating Authority considered the submissions and rejected the prayer for recall. Given the prior dismissals of the Appellants' challenges to the admission order and the Adjudicating Authority's consideration of the matter, the Tribunal found no error in rejecting the recall prayer and declined to interfere with the impugned order to that extent. [Paras 12]

The Adjudicating Authority's rejection of the prayer to recall the admission order dated 08.10.2021 is upheld.

Withdrawal of CIRP under Section 12A and Regulation 30A - Permissibility of withdrawal of the CIRP under Section 12A and Regulation 30A on the facts of the case - HELD THAT: - The Appellants contended that the CIRP should be permitted to be withdrawn because Financial Creditors holding 92.17% of the CoC had agreed to a settlement and because the Section 7 petition was allegedly instituted mala fide. The Tribunal referred to the Supreme Court's exposition of the statutory procedure for withdrawal in Glass Trust Company LLC v. BYJU Raveendran, observing that Section 12A and Regulation 30A prescribe the mechanism and requirements for withdrawal (including the role of the applicant who initiated the Section 7 proceeding and the CoC process). As the Section 7 application was filed by Respondent Nos.6 to 9, and no compliant application under Section 12A/Regulation 30A by the initiating applicants had been made in the prescribed manner, the Tribunal held that withdrawal under Section 12A read with Regulation 30A could not be permitted in the present facts. [Paras 14]

Withdrawal under Section 12A read with Regulation 30A is not permissible on the facts of this case.

Inherent power of the Adjudicating Authority/NCLT - malafide/fraudulent initiation of CIRP and Section 65 consequences - prior determination of Section 65 pleadings before further CIRP steps - Whether the Adjudicating Authority should exercise inherent jurisdiction (including under Rule 11/NCLT inherent powers) to close the CIRP or otherwise act prior to disposal of the pending Section 65-related application (IA No.1238 of 2022) - HELD THAT: - The Tribunal acknowledged that the Adjudicating Authority possesses inherent powers and, in appropriate extraordinary circumstances, may exercise them to secure the object of the IBC (citing the Supreme Court in SBI v. Consortium of Murari Lal Jalan & Florian Fritsch). It also recognised that Section 65 provides for consequences where initiation of CIRP is fraudulent or malicious. The Appellants had filed IA No.1238 of 2022 (filed 11.05.2022) alleging mala fide/fraudulent initiation within the ambit of Section 65, and the Adjudicating Authority had directed that voting on any resolution plan be stayed pending that IA. Given that the Section 65 pleading is pending and that the Adjudicating Authority has already stayed voting, the Tribunal held that IA No.1238 of 2022 must be heard and decided by the Adjudicating Authority before any further steps are taken in the CIRP. The Tribunal expressly declined to express any opinion on the merits of IA No.1238 but required its prior adjudication. [Paras 16, 20, 22]

IA No.1238 of 2022 (pleading fraudulent/malafide initiation under Section 65) shall be heard and decided by the Adjudicating Authority before proceeding further in the CIRP; no opinion expressed on its merits.

Final Conclusion: The Adjudicating Authority's order dated 21.08.2024 rejecting the Appellants' prayer to recall the admission order is upheld; withdrawal under Section 12A/Regulation 30A is not available on these facts; IA No.1238 of 2022 (raising Section 65 allegations) must be heard and disposed of by the Adjudicating Authority before any further CIRP steps are taken. Parties to bear their own costs.

Writ jurisdiction under Article 226 - State under Article 12 - Mandamus against a non-State body - Indemnification obligation of a private association - Penalty imposed under FEMA

Writ jurisdiction under Article 226 - State under Article 12 - Mandamus against a non-State body - Maintainability of a writ petition against the BCCI seeking directions under Article 226 - HELD THAT: - The Court applied the principle that the Board of Control for Cricket in India does not fall within the definition of 'State' for the purposes of Article 12 and therefore is not amenable to writ jurisdiction under Article 226. Reliance was placed on the decision in Zee Telefilms Ltd. & Anr. v. Union of India & Ors., which holds that BCCI is not a State; hence, a petition seeking writ relief against BCCI is not maintainable. The petitioner's contention that subsequent decisions render BCCI amenable to writ jurisdiction was rejected, and the Court held that where the relief sought concerns indemnification by a private body and does not involve discharge of public functions, writ jurisdiction cannot be invoked against such body. [Paras 5, 6]

The petition against BCCI is not maintainable and must be dismissed.

Indemnification obligation of a private association - Penalty imposed under FEMA - Whether a writ of mandamus can be issued to compel BCCI to pay a penalty imposed under FEMA on behalf of the petitioner - HELD THAT: - The Court found the relief sought-a writ of mandamus directing BCCI to pay the penalty imposed by the adjudicating authority under FEMA-to be misconceived. Since BCCI is not amenable to writ jurisdiction, no mandamus can be issued to compel it to discharge the FEMA penalty. The petition seeking an order to direct BCCI to deposit the penalty on behalf of the petitioner was therefore held to be without basis and frivolous. [Paras 4, 7]

No mandamus can be issued to compel BCCI to pay the FEMA-imposed penalty; the prayer is misconceived and rejected.

Costs for frivolous petition - Appropriate costs for filing a frivolous petition - HELD THAT: - The Court characterised the petition as frivolous and imposed costs to deter such litigation. It directed payment of the specified costs to Tata Memorial Hospital within the time stipulated and required proof of payment to be filed in court. [Paras 8]

The petition is dismissed with costs of Rs. 1,00,000 payable to Tata Memorial Hospital within four weeks and proof of payment to be filed.

Final Conclusion: The petition is dismissed as not maintainable against the BCCI and insofar as it seeks a mandamus to compel payment of a FEMA penalty; the petition is characterised as frivolous and dismissed with costs payable to Tata Memorial Hospital, with proof of payment to be filed.

Limitation under the Foreign Exchange Management Act, 1999 - write off of export proceeds and conditional waiver by Reserve Bank of India - contravention of Section 18(2) and (3) of the Foreign Exchange Regulation Act, 1973 - penalty assessment and appellate reduction to one third - requirement of a reasoned and speaking order by the Appellate Tribunal

Limitation under the Foreign Exchange Management Act, 1999 - Whether the proceedings for alleged failure to repatriate export proceeds were time barred under the limitation provision of the Act of 1999. - HELD THAT: - The Court examined the pleadings and records showing that the first show cause notice was issued on 23.01.2001 and that the appellants replied on 01.12.2001. Those dates fall within the two year period permitted under the relevant limitation provision of the Act of 1999, which allowed initiation of proceedings up to 31.05.2002 in the facts of this case. Reliance was placed on precedents of various High Courts to conclude that the limitation defence was not available to the appellants in these proceedings. [Paras 12, 13]

Limitation defence rejected; proceedings not time barred.

Write off of export proceeds and conditional waiver by Reserve Bank of India - contravention of Section 18(2) and (3) of the Foreign Exchange Regulation Act, 1973 - Effect of RBI's write off on prosecution under the repealed Act of 1973 and whether the appellants were absolved of contravention. - HELD THAT: - The Court held that RBI's grant of write off was subject to the condition that the appellants return export incentives already availed. The correspondence granting write off must be read as a whole; absent compliance with the condition (return of export incentive), the RBI write off could not be treated as a waiver of contravention under Section 18(2). The Court therefore found that non compliance with the condition meant the appellants had contravened the provisions of Section 18(2) and (3) of the Act of 1973. [Paras 14, 16]

RBI write off, being conditional, did not extinguish liability; contravention under Section 18(2) and (3) established as a result of non compliance.

Penalty assessment and appellate reduction to one third - requirement of a reasoned and speaking order by the Appellate Tribunal - Whether the penalty imposed by the Special Director warranted interference and whether the Appellate Tribunal adequately considered the appellants' contentions in reducing the penalty. - HELD THAT: - The Court observed that the Appellate Tribunal had considered the appellants' submissions and the Special Director's material, noted that the Special Director had not specified the quantum of export incentive availed, and on that basis reduced the penalty to one third of the amount originally imposed. The Tribunal's order was held to be reasoned and speaking, and the reduction was viewed as reflecting proper consideration of mitigating contentions. The High Court found no substantial merit to disturb the appellate conclusion. [Paras 15, 16]

Appellate Tribunal's reasoned reduction of penalty to one third upheld; no interference warranted.

Write off of export proceeds and conditional waiver by Reserve Bank of India - penalty assessment and appellate reduction to one third - Whether steps taken by the appellants to recover export proceeds absolved them of penalty liability. - HELD THAT: - Although the appellants contended that they had taken reasonable steps (including seeking assistance from diplomatic missions) and relied on RBI policy permitting write off where unrecovered amounts were below a threshold, the Court held that these contentions did not negate non compliance with the conditional requirement imposed by RBI (return of export incentives). The Tribunal had already factored appellants' conduct in mitigation by substantially reducing the penalty, and the High Court found that the appellants' efforts did not suffice to overturn the finding of contravention or the reduced penalty. [Paras 9, 11, 15]

Appellants' recovery efforts and reliance on RBI policy did not absolve liability; mitigation already reflected by appellate reduction.

Final Conclusion: The High Court dismissed the appeals, upholding that the proceedings were not time barred, that RBI's conditional write off did not extinguish liability in the absence of compliance with the condition, and that the Appellate Tribunal's reasoned reduction of the penalty to one third was sustainable; appeals are dismissed and miscellaneous applications closed.

Criminal character of proceedings under the Prevention of Money Laundering Act, 2002 - attachment and confiscation of proceeds of crime ancillary to criminal trial - ousting of civil court jurisdiction in matters under PMLA - Adjudicating Authority and Appellate Tribunal vested with powers of a Civil Court for specified purposes - appeals under Section 42 of PMLA to the High Court to be entertained on the criminal side

Criminal character of proceedings under the Prevention of Money Laundering Act, 2002 - attachment and confiscation of proceeds of crime ancillary to criminal trial - ousting of civil court jurisdiction in matters under PMLA - Appeals under Section 42 of the Prevention of Money Laundering Act, 2002 shall be entertained on the criminal side of the High Court. - HELD THAT: - The Court held that the PMLA is a special legislation whose object is prevention of money laundering and includes criminal offences punishable under the Act. Proceedings for attachment under the PMLA are instituted in aid of the trial of the offence and the ultimate fate of attached property (confiscation or release) depends on the conclusion of the criminal trial. Provisions such as the application of the Code of Criminal Procedure to arrest, investigation, attachment and prosecution, the bar on civil suits and the ouster of civil court jurisdiction under the statute, and the provision that confiscation follows conclusion of trial, demonstrate the criminal character of the scheme. While the Adjudicating Authority and the Appellate Tribunal are vested with certain powers of a civil court for adjudicatory purposes, those powers are ancillary and limited; they do not convert the statutory scheme into ordinary civil proceedings. Applying the test that criminal proceedings are those which may result in sentences including imprisonment or forfeiture/confiscation of property, the Court concluded that appeals from orders of the Adjudicating Authority/Appellate Tribunal under the PMLA fall on the criminal side. [Paras 11, 12, 18]

The appeal under Section 42 of the PMLA is to be filed and entertained on the criminal side of the High Court.

Final Conclusion: The High Court directed that the appeal under Section 42 PMLA shall be placed on the criminal side and listed accordingly after the Christmas vacation.

Provisional attachment and its confirmation within 180 days - computation of 180 days under Section 5(3) of the PMLA - exclusion of period of limitation due to Covid-19 (In re: Limitation and In re: Limitation, 2022) - application of In re: Limitation orders to PMLA proceedings - right to enjoyment of attached property under Section 5(4) of the PMLA - deprivation of property and Article 300A

Provisional attachment and its confirmation within 180 days - computation of 180 days under Section 5(3) of the PMLA - exclusion of period of limitation due to Covid-19 (In re: Limitation and In re: Limitation, 2022) - Whether the provisional attachment ceased to have effect because the confirmation order was passed after the expiry of 180 days - HELD THAT: - The Tribunal held that the period from 15.03.2020 to 28.02.2022, excluded by the Supreme Court in In re: Limitation and as clarified in In re: Limitation, 2022, must be excluded while computing the 180-day period under Section 5(3) of the PMLA. Having considered binding and persuasive authorities and the reasoning in allied High Court decisions, the Tribunal concluded that where the 180-day period fell, in whole or in part, within the Covid-19 exclusion window, confirmation passed after the nominal 180-day date did not ipso facto render the attachment ineffective. Applying that principle to the facts, the impugned confirmation (passed in 2021) fell within the period affected by the Covid-19 exclusion and therefore the provisional attachment did not lapse for want of confirmation within 180 days. [Paras 12, 17, 18, 19, 20]

The challenge that the attachment lapsed by reason of confirmation beyond 180 days is rejected; the Covid-19 exclusion applies and the provisional attachment did not cease to have effect.

Deprivation of property and Article 300A - right to enjoyment of attached property under Section 5(4) of the PMLA - Whether the attachment was invalid because the properties were joint and no notice was given to the joint owner - HELD THAT: - The Tribunal found no material on record to establish joint ownership of the attached immovable properties. It observed that, if joint ownership existed, the co-owner ought to have challenged the attachment; no appeal or challenge was filed by any other person. On the basis of absence of evidence showing joint title or that any co-owner had sought relief, the contention that the entire property was erroneously attached and that the attachment must be set aside was not made out. [Paras 6, 13, 21]

The contention of invalid attachment on account of alleged joint ownership is rejected for want of material and appropriate challenge by any co-owner.

Final Conclusion: On the decided issues, the Tribunal found no merit in the appellant's contentions: the confirmation of the provisional attachment did not lapse in view of the Covid-19 exclusion applied to computation of the 180-day period, and there was no basis to set aside the attachment on the ground of alleged joint ownership. The appeal is dismissed.

Limitation under Section 73(4B) of the Finance Act - adjudication within six months/one year - where it is possible to do so - doctrine ofreasonable time in exercise of statutory power - keeping proceedings in abeyance pending disposal of another appeal

Limitation under Section 73(4B) of the Finance Act - adjudication within six months/one year - doctrine of reasonable time - keeping proceedings in abeyance pending disposal of another appeal - Adjudication proceedings in respect of the show cause notice dated 21.04.2015 have become time-barred under Section 73(4B) of the Finance Act in the facts of this case. - HELD THAT: - The Court found the following undisputed facts determinative: the show cause notice was issued on 21.04.2015; the petitioner replied on 26.05.2015; a hearing was fixed by notice dated 30.09.2015 and was held and concluded on 19.10.2015; no adjudication order was communicated thereafter and the matter was not placed in the call book. The Revenue accepted that the proceedings were kept in abeyance purportedly because a related appeal was pending before the CESTAT in respect of earlier show cause notices, the proceedings under which had been dropped by Order-in-Original dated 26.04.2012 and the Revenue's appeal dismissed by the CESTAT on 15.09.2022. The Court applied Section 73(4B) which prescribes adjudication within six months or one year "where it is possible to do so", and held that the time limits are intended to ensure effective tax administration and must be adhered to where adjudication could reasonably have been completed. The Court noted authority of coordinate benches and of the Gujarat High Court that the phrase "where it is possible to do so" does not permit consigning matters to cold storage for years; legitimate operational difficulties may justify limited extensions but not a nine-year delay. The Revenue did not show any justification for re-initiating proceedings after about nine years nor for keeping the matter in abeyance so as to render the statutory timeline illusory. Having regard to the conclusion of hearing on 19.10.2015 and absence of transfer to call book or other bona fide impossibility to decide within the statutory timeframe, the impugned hearing notice dated 18.09.2024 was held to be vitiated by inordinate delay and therefore time-barred. [Paras 28, 30, 31, 32, 33]

Impugned hearing notice dated 18.09.2024 issued pursuant to show cause notice dated 21.04.2015 quashed on the ground of being time-barred under Section 73(4B).

Final Conclusion: The writ petition is allowed; the impugned hearing notice dated 18.09.2024 is quashed as time-barred and the petition is disposed of on that ground. The Court did not adjudicate the separate contention regarding the jurisdiction of the officer who issued the hearing notice.

Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS) - pre-deposit computation under SVLDRS - consideration of amounts deposited during investigation for settlement computation - error in computation by Designated Committee - time-limit for deposit under a statutory scheme and prohibition on judicially extending scheme timelines - mandamus to accept corrected pre-deposit and issue discharge certificate

Pre-deposit computation under SVLDRS - consideration of amounts deposited during investigation for settlement computation - error in computation by Designated Committee - mandamus to accept corrected pre-deposit and issue discharge certificate - Designated Committee's SVLDRS computation must take into account amounts already deposited during investigation and petitioner be permitted to pay the corrected pre-deposit amount. - HELD THAT: - The court found as a matter of fact and law that the petitioner had deposited a sum during investigation which was subsequently appropriated by the adjudicating authority while determining liability. That amount ought to have been taken into account by the Designated Committee when computing the amount payable under the SVLDRS; instead the Committee erroneously considered only a smaller pre-deposit resulting in an inflated amount payable in Form SVLDRS-3. The petitioner consistently represented the existence and applicability of the deposited amount, filed requisite forms on the SVLDRS portal, and expressed readiness to pay the correct balance for settlement. Permitting the petitioner to pay the corrected amount does not amount to an impermissible judicial extension of the Scheme's timeline because the relief granted corrects a computation error committed by the Designated Committee rather than changing the Scheme's terms. In these circumstances the court exercised its equitable and supervisory jurisdiction under Article 226 to direct acceptance of the corrected pre-deposit and issuance of the discharge certificate on payment, subject to interest for the delayed period. [Paras 28, 29, 30]

Petitioner permitted to deposit the corrected amount and, on payment, respondent to issue Form SVLDRS-4; Rule made absolute to that extent.

Final Conclusion: Writ petition allowed to the extent that petitioner is directed to pay the corrected pre-deposit within four weeks with interest and, on receipt, the authorities shall issue the SVLDRS discharge certificate; no other relief granted.

Classification of composite contracts as works contract - taxability of works contracts w.e.f. 01.06.2007 - applicability of abatement/composition scheme for works contracts - invocation of extended period of limitation for suppression - reliance on Board circulars for levy and classification - liability where main contractor has paid service tax

Classification of composite contracts as works contract - taxability of works contracts w.e.f. 01.06.2007 - reliance on Board circulars for levy and classification - Whether the contracts executed by the appellants are taxable prior to 01.06.2007 as construction/commercial/industrial construction services or are to be treated as works contracts taxable only from 01.06.2007. - HELD THAT: - The Tribunal examined the legal position in light of the Apex Court decisions (including Larsen & Toubro) and relevant circulars. It held that contracts which involve both supply of material and service fall within the definition of "works contract" under Heading 65(105)(zzzza) and, on the precedents cited, such composite works contracts are taxable only with effect from 01.06.2007. The panel rejected the Department's contention that composite contracts could be vivisected and taxed as construction/commercial services prior to that date, noting consistent judicial authority treating such contracts as works contracts and taxable only from the notified date. The Tribunal also observed that this conclusion renders the question of commercial or non-commercial character of the projects irrelevant for the pre-01.06.2007 period. [Paras 15]

Contracts are works contracts and taxable only w.e.f. 01.06.2007.

Liability where main contractor has paid service tax - applicability of abatement/composition scheme for works contracts - Whether the demand confirmed in the first show cause notice (10.09.2004 to 31.03.2010) for certain projects is sustainable, having regard to payment by the main contractor and composition/abatement options. - HELD THAT: - The Tribunal noted that the Adjudicating Authority had allowed deduction for service tax paid by the main contractor in respect of one project and relied on existing Tribunal authority to the effect that where the main contractor has discharged service tax, demand cannot ordinarily be re-imposed on the subcontractor. The Tribunal also accepted that the failure to formally opt into the Works Contract Composition Scheme is procedural and does not extinguish substantive rights where the contract is a works contract; consequently, the confirmed demand of Rs.51,02,914 against the appellants for the period 10.09.2004 to 31.03.2010 was held unsustainable. [Paras 17]

Demand confirmed in the first show cause notice is not sustainable; appeal allowed on this ground.

Invocation of extended period of limitation for suppression - Whether the second show cause notice (2007-08 to 2011-12) could invoke the extended period of limitation on the ground of suppression, and whether that SCN was sustainable. - HELD THAT: - Applying the principle in Nizam Sugar Factory (as followed by the Tribunal), the Bench found that where all relevant facts were already within the knowledge of authorities when the first show cause notice was issued, a subsequent SCN cannot invoke the extended period on the ground of suppression. The Tribunal observed overlap between the periods covered by the two notices, found no evidence of deliberate suppression with intent to evade duty, and concluded that the extended period could not be invoked for the second SCN; accordingly the adjudicating authority correctly dropped the proceedings initiated by the second show cause notice. [Paras 19]

Second show cause notice invoking extended period is unsustainable and the proceedings under it are to be dropped; Revenue appeal dismissed.

Final Conclusion: The appeal of the assessee is allowed: the impugned demand confirmed for the period 10.09.2004 to 31.03.2010 is set aside as the contracts are works contracts taxable only from 01.06.2007 and the demand was unsustainable; the Revenue's appeal against the dropping of the subsequent show cause notice for 2007-08 to 2011-12 is dismissed as the extended period could not be invoked in the facts of the case.

Export turnover of services - intermediary services - place of provision of service - export without payment of taxes - remand to Original Sanctioning Authority - Rule 3 of the Place of Provision of Services (POPS)

Export turnover of services - intermediary services - Rule 3 of the Place of Provision of Services (POPS) - Whether elements of service comprising collections and contact/ call centre services for credit/debit card operations were correctly excluded as intermediary services from export turnover of services - HELD THAT: - The Tribunal noted that this Bench has already considered and decided the classification issue in its Final Order dated 17.01.2024, holding that the elements of service such as collections and contact centre services for credit/debit card operations cannot be characterised as intermediary services and, being part of the bundled/ main service, qualify for inclusion in export turnover. In the present appeals the Tribunal directed that the Original Sanctioning Authority should revisit its computation of export turnover and periodic refund claims in light of those findings. The Tribunal therefore did not re-adjudicate afresh on merits but remanded the matter for correction of records and reworking of periodic refund claims pursuant to the earlier decision. [Paras 11]

Remanded to the Original Sanctioning Authority to rework the computation of export turnover and periodic refund claims taking into account this Tribunal's findings that the said services are not intermediary services and qualify as part of export turnover.

Export turnover of services - place of provision of service - export without payment of taxes - Whether reimbursements in foreign exchange received towards services provided to foreign personnel visiting India for inspection of export activity were correctly excluded from export turnover - HELD THAT: - The Tribunal referenced its earlier Final Order dated 17.01.2024, which found a connection between visits of foreign customers and the appellant's backoffice support services under the subcontracting arrangement and held such expenses/ reimbursements should qualify as export turnover because the place of provision of service is the location of the recipient (HGRL, UK) under Rule 3 of the POPS. Accordingly, the Tribunal remanded the appeals to the Original Sanctioning Authority to modify records and rework refund claims in conformity with that conclusion. The Tribunal limited its current direction to remand and record correction rather than ordering any fresh payment. [Paras 11]

Remanded to the Original Sanctioning Authority to allow the reimbursements as part of export turnover and rework periodic refund claims in accordance with this Tribunal's earlier findings.

Remand to Original Sanctioning Authority - Whether the appeals should be disposed by remand for revision of sanctioning authority's records and computation - HELD THAT: - Having noted that the legal issues were already authoritatively decided by this Bench in Final Order dated 17.01.2024 and that the Department had not effectively engaged special counsel to contest the matter, the Tribunal concluded that the proper course was to remit the matters to the Original Sanctioning Authority so that it may make necessary corrections in its records and rework the periodic refund claims under Rule 5 of the Cenvat Credit Rules and the relevant notifications in light of the Tribunal's earlier observations. The Tribunal emphasised that the remand is for implementation of the earlier decision and correction of records, not for additional entitlement. [Paras 11, 12]

All appeals disposed of by remand to the Original Sanctioning Authority with directions to effect corrections in accordance with this Tribunal's earlier order; no additional payment of refund shall follow as consequence of this exercise.

Final Conclusion: Appeals disposed of by remand: the Original Sanctioning Authority is directed to rework the computation of export turnover and the periodic refund claims for the period April, 2010 to December, 2015 in accordance with this Tribunal's Final Order dated 17.01.2024, with the clarification that no additional refund payment will follow from this corrective exercise.

Definition of partnership under the Indian Partnership Act - service agreement versus partnership - classification as Mining Service under Section 65(105)(zzzh) - classification as Business Support Service - extended period of limitation for tax demands - suppression and absence of bona fide belief

Definition of partnership under the Indian Partnership Act - service agreement versus partnership - Agreement dated 17.10.2001 with codicil is not a partnership agreement but a service (raising contract cum sale) agreement between the appellant and M/s Golden Granites. - HELD THAT: - The agreement's terms were examined holistically and found to treat the raising contractor as an independent service-provider obliged to perform specified statutory and operational responsibilities (payment of royalties, EPF, gratuity, civil/criminal liabilities, minimum production obligations, penal clauses and custody/control of records by GG). The codicil post-dating the original registered agreement, unregistered and limited to income-tax filing, did not alter the substantive contractual rights and obligations to convert the arrangement into a partnership; registration requirements and the absence of firm-naming, profit-sharing and joint filing corroborate the contractual character as service provision. The arrangement therefore lacks essential partnership features and is properly characterised as a service agreement. [Paras 10, 11, 12, 13, 14]

Agreement is a service (raising contract cum sale) agreement and not a partnership agreement; appellants are service-providers to M/s GG.

Classification as Mining Service under Section 65(105)(zzzh) - classification as Business Support Service - Activities performed by the appellant fall within Mining Service and not within Business Support Service. - HELD THAT: - Although the appellant carried out ancillary tasks (invoicing, joint price-fixing, periodical returns, construction of sheds etc.), those activities were incidental and intrinsic to quarrying operations. Given that GG held the prospecting licence and the core scope of work was quarrying and extraction of granite, the tasks are properly characterised as mining services rather than business support services. [Paras 15, 20]

Appellant's activities are correctly classified as Mining Service, not Business Support Service.

Extended period of limitation for tax demands - suppression and absence of bona fide belief - Invocation of the extended period for raising the service-tax demand was justified on the facts; extended period correctly applied. - HELD THAT: - The adjudicator found that despite furnishing some information to the department, the appellants did not disclose the true taxable character of their activities, did not obtain service-tax registration, and failed to demonstrate a bona fide, reasonable belief that their services were non-taxable. Mere submission of certain documents or copies of the agreement did not preclude invocation of the extended period where there was suppression or misinterpretation of tax liability. The findings of deliberate non-disclosure and lack of adequate enquiry by the appellant support application of the extended limitation period. [Paras 16, 17, 18, 19, 20]

Extended period for raising demand was rightly invoked in the facts of the case.

Final Conclusion: The Tribunal affirms the adjudicating authority: the agreement is a service contract (not a partnership), the services rendered are classifiable as Mining Service, and invocation of the extended limitation period to raise the service-tax demand is justified; appeal dismissed.

Principle of Mutuality - Convention Services (definition not open to general public) - Club or Association Services (exclusion for trade unions and bodies constituted under law) - Taxable service in relation to holding of conventions - Explanation 3 to the definition of 'service' under Section 65B(44)

Convention Services (definition not open to general public) - Principle of Mutuality - Taxable service in relation to holding of conventions - Whether delegation fees charged by the appellant for seminars/workshops fall within 'Convention Services' and are exigible to service tax - HELD THAT: - The Tribunal examined the nature of the seminars and the appellant's status as an association registered under the Trade Union Act and held that the seminars were organised for the benefit of members and that the transactions were governed by the principle of mutuality. Applying the Supreme Court's reasoning in State of West Bengal v. Calcutta Club Limited, the Tribunal observed that services between an association and its members, where mutuality applies, do not constitute a taxable service because there is no activity carried out by one person for another for consideration. Consequently, the holding of seminars and charging of delegation fees by the appellant does not fall within the definition of 'Convention' as attracting service tax when mutuality applies; the Tribunal also noted supportive Tribunal authority that meetings/seminars for members are not exigible to service tax. On that basis the demand classified as Convention Service was set aside and the original order dropping the demand was restored. [Paras 7, 8, 9]

Delegation fees for seminars organised for members are not exigible to service tax as Convention Services, owing to the Principle of Mutuality; demand set aside.

Club or Association Services (exclusion for trade unions and bodies constituted under law) - Principle of Mutuality - Taxable service in relation to holding of conventions - Whether other receipts (tour receipts, circulars, contributions for newsletters, advertisement income, sale of publications) are taxable once the principle of mutuality is accepted - HELD THAT: - Having accepted that the appellant's activities vis-a-vis its members are governed by the principle of mutuality and noting the appellant's registration under the Trade Union Act (an exclusion under the definition of 'club or association'), the Tribunal held that all other activities on which demand was confirmed fall to be set aside. The Tribunal recorded that the appellant had been registered and discharged tax where exigible, but once mutuality applies the impugned demands for these other receipts cannot be sustained and the original adjudication dropping the demand must be restored. [Paras 9, 11]

Demands on other receipts were set aside on the basis of mutuality and the order dated 29.01.2016 restored.

Final Conclusion: The appeal is allowed: the demand confirmed as Convention Service (including delegation fees) and related demands on other receipts are set aside on the ground of Principle of Mutuality and the original order dated 29.01.2016 is restored.

Manufacture - definition of manufacture under Central Excise law - essential change / emergence of a new and distinct article - Business Auxiliary Service - services by way of carrying out any process amounting to manufacture or production of goods (negative list exclusion) - extended period of limitation for recovery and suppression - time barred show cause notice

Manufacture - definition of manufacture under Central Excise law - essential change / emergence of a new and distinct article - Whether the processes carried out by the appellant on raw forgings amount to manufacture - HELD THAT: - The Tribunal applied the statutory definition of manufacture and settled tests from Supreme Court authorities that manufacture requires a transformation resulting in a new and distinct article having a different name, character or use. The material on record - process description (drilling, CNC machining on two sides, deburring and broaching/spline cutting), photographs and physical samples - established that the received "Forged Blastings" were converted into identifiable "Gear 4th Platina" parts having gear teeth and a changed character and use. The Tribunal held that the processes, including those incidental or ancillary to completion of the manufactured product, imparted a lasting change and therefore amounted to manufacture. The Tribunal rejected the department's contention that the goods retained their original identity and thus the activity was only job work, finding no evidence to rebut the appellant's case and relying on the principle that the burden of proof lay on the department to establish otherwise. [Paras 5]

Processes undertaken by the appellant on the received forgings amount to manufacture; the activity is manufacture and not merely job work or Business Auxiliary Service.

Business Auxiliary Service - services by way of carrying out any process amounting to manufacture or production of goods (negative list exclusion) - Whether any service tax liability arises for the pre and post negative list periods in respect of the activity - HELD THAT: - Having held the activity to be manufacture, the Tribunal addressed tax liability for the appeal period. For the pre negative list portion (2010 11 to 30.06.2012) services amounting to manufacture were not taxable; for the post negative list period the activity falls within the exclusion in the negative list (services by way of carrying out any process amounting to manufacture or production of goods). Accordingly, no service tax liability arises for the entire period under challenge. [Paras 5]

No service tax liability arises for the periods in dispute because the activity amounts to manufacture and is excluded from service tax.

Extended period of limitation for recovery and suppression - time barred show cause notice - Whether invocation of the extended period of limitation and allegations of suppression were sustainable - HELD THAT: - The impugned order invoked the extended period on the ground of alleged suppression (non filing of returns and non disclosure). The Tribunal held those findings to be redundant because the primary conclusion is that no taxable service was rendered. The job work challans and disclosures showed receipt and return of forgings; since the activity was manufacture and not a taxable service, there was no suppression of taxable activity or intent to evade service tax. Reliance by the adjudicating authority on non filing and challans did not sustain invocation of the extended period. The Tribunal accordingly held the show cause notice to be time barred insofar as it relied on suppression. [Paras 5]

Extended period of limitation was wrongly invoked; allegations of suppression are unsustainable and the show cause notice is time barred on that basis.

Final Conclusion: The appeal is allowed: the Tribunal set aside the impugned order, holding the appellant's processes to be manufacture (not taxable Business Auxiliary Service) and that no service tax liability arose for the period 2010 11 to 2013 14; the extended period and suppression findings were also held unsustainable, and the demand, interest and penalties set aside.

Refund of service tax on export of services - admissibility of cenvat credit from unregistered premises - computation of limitation for refund from date of receipt of foreign exchange (FIRC) - requirement for reasoned orders by the Commissioner (Appeals) under section 35A(4) (and operation of section 73(5) of the Finance Act, 1994) - remand for de novo hearing

Refund of service tax on export of services - remand for de novo hearing - Validity of Commissioner (Appeals) order which rejected refund claims solely on the ground of non-registration and declined to decide other grounds of rejection - HELD THAT: - The Tribunal found that the Commissioner (Appeals) dealt with the mPortal decision but then distinguished it by relying on the Madras High Court decision in Sutham Nylocot and thereupon rejected the refund solely on the non-registration ground while expressly declining to decide the other grounds (para 12 reproduced at para 4). The Tribunal held that such partial disposal without adjudication of other grounds was unsustainable because the other contentions raised by the appellant required consideration. For these reasons the order of the Commissioner (Appeals) was set aside and the appeal was allowed by way of remand for fresh adjudication. [Paras 4, 7]

Order of the Commissioner (Appeals) set aside; appeal allowed by way of remand for de novo hearing on the refund claims

Admissibility of cenvat credit from unregistered premises - Admissibility of cenvat credit taken in respect of inputs received at unregistered premises (as a ground of rejection) is not finally decided and is remanded - HELD THAT: - The Tribunal observed that the Madras High Court decision cited by the Commissioner (Appeals) concerned non registration of the assessee, whereas the present controversy relates to admissibility of cenvat credit taken on unregistered premises (para 5). The Tribunal directed that this issue be considered afresh by the Commissioner (Appeals) in the de novo hearing, taking into account the relevant judicial precedents and the factual matrix of the claims. [Paras 5, 6]

Issue remanded to the Commissioner (Appeals) for fresh consideration

Computation of limitation for refund from date of receipt of foreign exchange (FIRC) - refund of service tax on export of services - Computation of limitation period for refund claims (whether to commence from date of receipt of foreign exchange/FIRC) is to be considered afresh and is remanded - HELD THAT: - The Tribunal noted the legal position developed in SPAN INFOTECH and related decisions that limitation for refund may start from the date of receipt of foreign exchange, and that statute has been amended to reflect this position; it held that the Commissioner (Appeals) must apply section 35A(4) (as applicable) and decide the limitation issue on merits (para 5-6). The matter of computation of limitation was therefore not finally adjudicated below and requires fresh consideration by the Commissioner (Appeals). [Paras 5, 6]

Issue remanded to the Commissioner (Appeals) for fresh consideration in accordance with law

Requirement for reasoned orders by the Commissioner (Appeals) under section 35A(4) (and operation of section 73(5) of the Finance Act, 1994) - Obligation of the Commissioner (Appeals) to record points for determination, decision thereon and reasons while disposing appeals under the statutory scheme - HELD THAT: - The Tribunal reiterated that the Commissioner (Appeals) is required to pass a speaking order stating points for determination, the decision thereon and reasons, particularly in light of section 35A(4) of the Excise Act as made applicable to service tax matters (and the operation of section 73(5) of the Finance Act, 1994) (para 5). The Tribunal held that the Commissioner (Appeals) failed to discharge this duty in respect of all issues raised, which necessitated remand for a reasoned adjudication. [Paras 5, 6]

Commissioner (Appeals) to decide the appeal afresh and furnish a reasoned order addressing the points, decisions and reasons

Final Conclusion: The appeal is allowed by way of remand. The order of the Commissioner (Appeals) dated 30.09.2016 is set aside and the matter is remitted to the Commissioner (Appeals) for de novo hearing and disposal expeditiously, taking into account the legal positions noted (including computation of limitation from date of foreign exchange receipt and admissibility of cenvat credit on unregistered premises) and while furnishing reasoned findings in accordance with the applicable statutory provisions.

Tour Operator Service - export of service - destination based consumption tax - composite tour taxation - intellectual property right service

Tour Operator Service - export of service - destination based consumption tax - Service tax liability on outbound tours and on inbound tours provided to foreign travellers - HELD THAT: - The Tribunal held that the definition of Tour Operator Service and the fundamental principle that service tax is a destination based consumption tax require that services performed outside India are not leviable to service tax in India. Arrangement of tours whose destination is outside India (outbound tours) are not taxable in India, including where the service recipient is located in India, by virtue of Rule 3(2) of the Export of Service Rules and Notification No. 09/2005 exempting outbound tours. The Tribunal noted that this position is not res integra and followed the larger bench decision in M/s Cox & Kings Limited . Accordingly the demand in respect of outbound tours was set aside. In contrast, tours the situs of performance of which is within India (inbound or domestic tours) are taxable when both provider and/ or the portion of the service performed are within India.

Demand for service tax on outbound tours set aside; demand on touring activity performed in India confirmed.

Tour Operator Service - composite tour taxation - Liability to service tax on domestic (inbound) tours and treatment of composite tours - HELD THAT: - The Tribunal examined the amended scope of Tour Operator Service (including planning, scheduling, organizing or arranging tours and related accommodation/food) and the insertion of valuation provision treating gross tour charges as includible in value. It held that where the touring activity is performed within India the amount charged for arranging such domestic/inbound tours is taxable. For composite tours combining India and foreign elements, service tax is leviable only on the portion of services rendered for the Indian leg; separate billing for Indian services is required. The decision in M/s Cox & Kings Limited was held to cover this issue. Therefore the order confirming demand on inbound/domestic tours was upheld.

Demand in respect of domestic/inbound tours confirmed; composite tours taxable only for India portion and require separate billing.

Intellectual property right service - Whether web domain charges paid in foreign currency amount to consideration for an intellectual property right service and are taxable - HELD THAT: - The Tribunal analysed the definition of intellectual property right service (rights in trademarks, designs, patents or other intangible property) and the concept of trademark as denoting proprietorship and source-identification. It observed that a domain name functions as an internet address or rental for use of a web address, renewed periodically, and that neither the user nor the service provider in the present facts is proprietor of a trademark in respect of the domain name. On that basis the amount paid for use of the domain name does not constitute payment for an intellectual property right service. Consequently the demand framed on account of web domain charges was held unsustainable and set aside.

Demand in respect of web domain charges set aside.

Final Conclusion: The appeal is partly allowed: demands in respect of outbound tours and web domain charges are set aside; demands in respect of domestic/inbound tours and the conceded tax on renting of immovable property are sustained.

Erection, commissioning and installation service - incidental to manufacture / continuation of manufacturing process - composite contract inclusive of installation charges - assessable value of goods inclusive of installation where excise duty paid on entire contract value - substance of contract to determine sale versus service (Kone Elevators principle)

Erection, commissioning and installation service - incidental to manufacture / continuation of manufacturing process - assessable value of goods inclusive of installation where excise duty paid on entire contract value - composite contract inclusive of installation charges - substance of contract to determine sale versus service (Kone Elevators principle) - Liability to service tax on erection, commissioning and installation charges included in the contract value of machinery where excise duty has been paid on the entire contract value. - HELD THAT: - The Tribunal held that where the supplier is primarily a manufacturer and enters into a lump sum/composite contract to supply machinery in fully installed and operational condition, and there is no separate charge or segregated amount for erection, commissioning and installation, those activities are incidental to the manufacture and form a continuation of the manufacturing process. The court relied on precedents which establish that one ingredient of the statutory definition of the erection/installation service is that it be provided by a commissioning and installation agency, which is not the case where the manufacturer itself undertakes supply in a fully commissioned state. Further, where central excise duty has been discharged on the entire contract value (including installation/commissioning), it is not permissible to bifurcate a portion as service for levy of service tax. The Tribunal applied the principle of construing the substance and terms of the contract (as explained in Kone Elevators) to conclude that the dominant object was transfer of goods and the incidental on site processes did not attract separate service tax liability. The Revenue's alternative contention on classification under works contract service after 01.06.2007 was not adjudicated as the Tribunal disposed of the matter on the ground that service tax was not leviable for the erection/installation in the facts of the case. [Paras 4, 5]

Demand of service tax on erection, commissioning and installation charges was not sustainable; revenue appeals set aside and dismissed.

Final Conclusion: Applying settled precedent and the substance over form test, the Tribunal held that where machinery is sold under an all inclusive contract and excise duty is paid on the full invoice/contract value, the erection, commissioning and installation elements are incidental to manufacture and do not attract separate service tax; the revenue's appeals were dismissed.

Liability of job worker to pay central excise duty - movement of excisable goods under Rule 57-F(2) - marketability of goods and exigibility to excise duty - applicability of exemption notification - finality of findings recorded on remand - directions for expeditious reconsideration on remand

Liability of job worker to pay central excise duty - movement of excisable goods under Rule 57-F(2) - marketability of goods and exigibility to excise duty - applicability of exemption notification - finality of findings recorded on remand - Demand for central excise duty on job worker upheld where raw materials were received under challans under Rule 57-F(2), and exemption not established - HELD THAT: - The Court accepted the reasoning of the Supreme Court in Kartar Rolling Mills that the Tribunal's finding on marketability of the products and their exigibility to excise duty, recorded in the remand order and left unchallenged, is final and cannot be reopened. The assessee failed to produce evidence that suppliers had supplied raw materials under the conditions of the relevant exemption notification; copies of challans only showed movement under Rule 57-F(2). In the absence of material satisfying the conditions of the exemption notification, the finding of fact recorded by the Tribunal and the authorities below that excise duty was exigible must be sustained. Consequently the demand for excess duty as affirmed by the Commissioner (Appeals) and the Tribunal is upheld, subject to a reduction in penalties as recorded in the impugned order.

Demand for central excise duty is upheld in favour of the revenue; penalties reduced as per the impugned order; reference answered for the revenue.

Directions for expeditious reconsideration on remand - Registry's failure to list the matter after Supreme Court remand noted and administrative direction issued - HELD THAT: - The Court recorded that although the Supreme Court remitted the matter on 11.07.2011 with a direction to appear before the High Court on 8.8.2011, the High Court registry did not list the case thereafter until 2016. This laxity resulted in remanded matters remaining undecided despite directions for expeditious disposal. The registry is directed to place the order before the Chief Justice to bring the situation to his notice.

Registry directed to place the order before the Chief Justice to inform him of the failure to list the remanded matter and the resultant delay.

Final Conclusion: The reference is answered in favour of the revenue: the demand for central excise duty on the job-worker (where raw material movements were under Rule 57-F(2)) is upheld while penalties imposed on the assessee are reduced; additionally the High Court registry is directed to report the failure to list the remanded matter to the Chief Justice for appropriate administrative action.

Charging of interest when not proposed in the show cause notice or adjudication order - no recovery without authority in the show cause notice or adjudication order - interpretation and applicability of Section 11AA of the Central Excise Act - temporal application of statutory amendment inserting interest provision

Charging of interest when not proposed in the show cause notice or adjudication order - no recovery without authority in the show cause notice or adjudication order - interpretation and applicability of Section 11AA of the Central Excise Act - Whether interest under Section 11AA could be deducted/adjusted from a refund where interest was neither proposed in the show cause notice nor imposed in the adjudication order. - HELD THAT: - The Court noted that Section 11AA (interest on duty determined under Section 11A where not paid within three months) was inserted w.e.f. 26.5.1995. The determinative question was procedural and statutory: if, at the time the show cause notice was issued and the Order-in-Original passed, interest was not proposed or imposed, the department lacks authority to subsequently charge or appropriate such interest against a refund. Recovery of any sum without a corresponding proposal in the show cause notice or a specific adjudication in the original order is illegal and unsustainable. The adjudicating authority erred in refusing to apply decisions of coordinate fora (e.g., the Madhya Pradesh High Court decision relied on by the appellant) and in discriminating between constitutional courts; such selective disregard was contrary to judicial discipline. The Tribunal also relied on a coordinate Bench decision holding that interest cannot be demanded where it was not resorted to in the show cause notice or Order-in-Original, a view the Court endorsed. Applying these principles to the facts, the deduction of interest which was neither proposed in the show cause notice dated 8.4.1994 nor imposed in the Order-in-Original dated 24.1.1996 could not be sustained and the impugned appropriation from the refund was set aside. [Paras 4, 6, 7, 8, 9]

Deduction/adjustment of interest not proposed in the show cause notice nor imposed in the adjudication order is illegal; the impugned order appropriating such interest from the refund is set aside.

Final Conclusion: The appeal is allowed: the department cannot deduct or adjust interest that was neither proposed in the show cause notice nor imposed in the Order-in-Original; the impugned order is set aside and consequential relief to the appellant granted in accordance with law.

MODVAT/CENVAT credit - revenue neutral - separate accounts requirement for inputs - suppression of material facts - extended period of limitation - utilisation versus mere availment of credit - Rule 57 / Rule 6(2) distinction on invocation of separate records

MODVAT/CENVAT credit - revenue neutral - utilisation versus mere availment of credit - Entitlement to retain MODVAT/CENVAT credit for the period March, 1997 to August, 2001 on the ground of revenue neutrality. - HELD THAT: - Tribunal accepted that although the assessee had availed MODVAT/CENVAT credit on inputs and capital goods while its principal final product (refined vegetable oil) attracted nil/exempt rate, the overall exercise was revenue neutral because duty was paid/adjusted (including payments into the PLA) so that the Revenue did not suffer loss. The Tribunal placed weight on authorities holding that where the assessee has chosen to pay duty in respect of exempted goods and the net effect is revenue neutral, the benefit of input credit need not be denied. The Tribunal further noted the legislative and judicial development distinguishing mere notation of credit in the ledger from actual utilisation (payment/adjustment) and observed that in the present case utilisation occurred in the course of adjustments and payments, removing the ground for interest or reversal relied upon by Revenue. On remand from the High Court, the Tribunal applied these principles and concluded that nothing survived to sustain a liability for the disputed period. [Paras 6, 7]

Assessee entitled to retain the MODVAT/CENVAT credit for the disputed period on the basis of revenue neutrality; appeals allowed.

Separate accounts requirement for inputs - Rule 57 / Rule 6(2) distinction on invocation of separate records - Whether failure to maintain separate inventory/accounts and non-payment of eight percent on exempted final product disentitled the assessee to credit. - HELD THAT: - The Tribunal held that the requirement to maintain separate records for inputs is invoked where some final products are dutiable and others are exempt or nil-rated. Where, as in the present case, none of the final products was dutiable (all were exempt or nil-rated), the obligation to maintain separate inventories under the corresponding rule did not arise. Consequently, non-maintenance of separate records and non-payment of an amount equivalent to eight percent (as contended by the Commissioner) did not, by themselves, justify denial of credit in the factual matrix where no dutiable final product existed and the overall exercise resulted in revenue neutrality. [Paras 6]

Non-maintenance of separate records and non-payment of the contested percentage did not disentitle the assessee to credit in the facts of this case.

Suppression of material facts - extended period of limitation - Validity of the allegation of suppression of material facts and invocation of extended period / penalties. - HELD THAT: - The High Court had remanded the matter for de novo consideration because the Tribunal had not addressed the Commissioner's specific findings of suppression (paras 26, 27, 33 of the Commissioner's order) and had issued a cryptic order. On remand the Tribunal examined the factual matrix and relevant law and concluded that, for the entire extended period (March 1997 to August 2001), final products were not dutiable and the conduct did not justify invocation of the extended period to sustain duty, interest or penalties. While registration irregularity might have exposed the assessee to prosecution, the Tribunal found that such irregularity did not validate extended-period assessment or penalty in the circumstances presented. [Paras 6]

Allegation of suppression and invocation of extended period/penalty did not survive; extended-period assessment set aside.

Final Conclusion: On remand from the Bombay High Court the Tribunal, after de novo consideration, held that for March, 1997 to August, 2001 the availment and utilisation of MODVAT/CENVAT credit resulted in a revenue neutral position and, having regard to the fact that none of the final products was dutiable, the separate accounts obligation did not arise; the Tribunal set aside the Commissioner's order and allowed the appeals with consequential relief.

Service of orders under Section 37C - deemed service - principles of natural justice - time-bar and limitation for filing appeals - remand for fresh adjudication on merits

Service of orders under Section 37C - deemed service - principles of natural justice - time-bar and limitation for filing appeals - Whether the appellant's appeal was barred by limitation in view of service of the OrderinOriginal and whether the Commissioner (Appeals) erred in dismissing the appeal as timebarred without affording opportunity and while relying on departmental reports not supplied to the appellant. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) dismissed the appeal solely on the ground of time bar but failed to put the appellant on notice to explain the delay and did not supply the reports obtained from the Assistant Commissioner, constituting a violation of principles of natural justice. On the question of service, the record shows the order sent by registered AD post was returned because the factory was closed and the department thereafter affixed the order on the notice board of the Assistant Commissioner under clause (c) of Section 37C. The Tribunal held that Section 37C requires sequential compliance: attempt at service by registered post (clause (a)), then affixment at the factory/warehouse/place of business or usual residence if (a) fails (clause (b)), and only if (a) and (b) cannot be effected may the order be affixed on the departmental notice board (clause (c)). Because the department did not first affix the order at the factory when postal delivery failed, affixment on the departmental notice board did not constitute proper service. The Tribunal treated 27.03.2015-the date on which the appellant actually received a copy of the order-as the correct date of communication, and on that basis held that the appeal was filed within the statutory period. Since the Commissioner (Appeals) decided only on limitation and on a record tainted by procedural unfairness and defective service, the matter requires fresh consideration on merits. [Paras 4, 5]

Impugned order set aside; appeal allowed in part and remanded to the Commissioner (Appeals) for fresh decision on merits without reopening the question of timebar.

Final Conclusion: The Tribunal set aside the Commissioner (Appeals) order that dismissed the appeal as timebarred, held that service under Section 37C was not correctly effected and that principles of natural justice were violated, treated 27.03.2015 as date of communication, and remanded the matter to the Commissioner (Appeals) to decide the appeal on merits without revisiting the timebar issue.

Captively used tools and fixtures - exemption under Notification No. 67/95-CE - time-bar / limitation and extended period - revenue neutrality and availability of Cenvat credit - excise duty payable on clearance and not on manufacture

Captively used tools and fixtures - exemption under Notification No. 67/95-CE - excise duty payable on clearance and not on manufacture - Whether tools and fixtures manufactured by the appellant and retained and used within their factory for manufacture of excisable goods are liable to excise duty despite issuance of sale invoices. - HELD THAT: - The Tribunal found that excise duty is leviable on clearance of goods and not merely on manufacture. In the present facts the tools and fixtures were manufactured and retained in the appellant's factory for captive use in the manufacture of parts for General Motors India Pvt Ltd and there was no physical removal prior to their captive use. Such captive consumption falls within the exemption afforded by Notification No. 67/95-CE. The issuance of sale invoices in favour of General Motors India Pvt Ltd, without physical removal, does not negate the exemption or attract excise liability. The Tribunal relied upon earlier decisions on the same legal proposition and applied that settled principle to the facts of this case. [Paras 4]

No excise duty is payable on the tools and fixtures manufactured and captively used in the factory; the exemption under Notification No. 67/95-CE applies despite issuance of sale invoices.

Clearance to own unit outside factory - revenue neutrality and availability of Cenvat credit - time-bar / limitation and extended period - Whether the demand of excise duty in respect of tools and fixtures cleared to the appellant's own Pune unit is sustainable in view of availability of Cenvat credit to the Pune unit and the limitation (extended period) bar. - HELD THAT: - The Tribunal recorded that the Pune unit manufactures parts for the same principal and clears those parts on payment of duty, thereby being eligible to avail Cenvat credit. The appellant produced material showing that the Pune unit paid duty from cash/PLA and availed credit, demonstrating that any duty payable by the manufacturing unit would be utilisable as Cenvat credit at the Pune unit, rendering the transaction revenue neutral. In light of settled law that where there is revenue neutrality malafide intention to evade duty cannot be attributed and extended period of limitation is not invokable, the Tribunal held that the demand raised after the normal period is time-barred. Accordingly the demand in respect of clearances to the Pune unit was held to be hit by limitation. [Paras 4]

Demand in respect of tools and fixtures cleared to the Pune unit is barred by limitation because availability of Cenvat credit to the Pune unit establishes revenue neutrality, precluding invocation of extended period.

Final Conclusion: The impugned order confirming the duty demand is set aside; the appeal is allowed - tools and fixtures used captively are exempt under Notification No. 67/95-CE, and the demand in respect of clearances to the Pune unit is timebarred due to revenue neutrality and availability of Cenvat credit.

Classification of supply as sale or works contract - inclusive definition of 'works contract' - manufacture in the ordinary course versus manufacture to order - embodiment of goods into immovable property versus supply of marketable goods

Classification of supply as sale or works contract - manufacture in the ordinary course versus manufacture to order - inclusive definition of 'works contract' - Whether the supply of Pre-stressed Concrete (PSC) sleepers by the petitioner amounted to a works contract or to a sale liable to tax as turnover of goods. - HELD THAT: - The Assessing Officer characterised the transactions as a 'works contract' relying on the inclusive definition of that term and on precedents dealing with construction agreements which result in embodiment of goods into immovable property. The Court observed that the determinative feature for a works contract is that the agreement results in construction, manufacture or fabrication in relation to movable or immovable property, and that there is a fine line between a sale and a works contract. The Court found no recorded findings by the Assessing Officer on whether the sleepers were manufactured only to order or were regularly manufactured by the petitioner. The material shows that the petitioner regularly manufactures PSC sleepers and supplies them not solely to Indian Railways but also to other dealers; although the sleepers may be made to the Railways' specifications, that fact alone is not decisive. Applying the legal principle that regularly manufactured marketable goods supplied in the ordinary course point to sale rather than to a works contract, the Court held that on the material before it it was inappropriate to conclude the transactions were works contracts. For these reasons the assessment order classifying the supply as a works contract was set aside. [Paras 10, 11, 12, 13]

The transaction is not shown to be a works contract on the material before the Court and the Assessment Order dated 28.05.2009 is set aside.

Final Conclusion: Writ petition allowed; the assessment classifying supply of PSC sleepers as a works contract is set aside and there shall be no order as to costs.

Discharge under Section 227, Cr.P.C. - Prima facie case - Sifting of evidence at charge stage - Confession of co accused inadmissible as evidence - Section 27(b) of the NDPS Act - offence of consumption

Discharge under Section 227, Cr.P.C. - Prima facie case - Confession of co accused inadmissible as evidence - Section 27(b) of the NDPS Act - offence of consumption - Whether the appellant (accused No.13), charge sheeted for offence under Section 27(b) of the NDPS Act, ought to have been discharged under Section 227, Cr.P.C. - HELD THAT: - The Court applied the settled principles governing exercise of power under Section 227, Cr.P.C., including the requirement that the trial Judge sift the material on record to determine whether a prima facie case or grave suspicion, founded on some material capable of being translated into admissible evidence at trial, is made out (paras 5-8, 11). The only material said to connect the appellant to the offence was the confession statement of a co accused (accused No.1); there was no recovery from the appellant and no admissible confession by him (paras 10-12). The Court reiterated that a co accused's confession containing incriminating matter against another cannot by itself suffice to frame a charge, and that Section 25 of the Indian Evidence Act renders confessions to police inadmissible (paras 10-12). Applying Dipakbhai and Suresh Budharmal Kalani, the Court held that absent any other material which can be translated into evidence at trial, a mere confession of a co accused does not constitute the requisite material to support a prima facie case; making the accused stand trial in such circumstances would be a miscarriage of justice (paras 11-13). [Paras 10, 11, 12, 13, 14]

Impugned orders dismissing the discharge application were set aside and the appellant (accused No.13) was discharged from CC No.43 of 2020.

Final Conclusion: Appeal allowed; in absence of any material other than a co accused's confession, which is inadmissible and cannot by itself found a prima facie case, the appellant is discharged from the prosecution for the offence under Section 27(b) of the NDPS Act.

Validity of gift and acceptance by delivery of possession - Construction of onerous gift and condition of services - Revocation of gift on breach of condition - Application of principles of the Transfer of Property Act, 1882 by way of equity despite non-application - Perpetual service condition tantamount to forced labour and void as unconstitutional - Burden of proof on plaintiff to prove nature of services, demand and refusal - Effect of long uninterrupted possession on resumption claims

Validity of gift and acceptance by delivery of possession - Application of principles of the Transfer of Property Act, 1882 by way of equity despite non-application - Whether the oral gift dated 13.12.1953 was valid and operative in favour of the donees. - HELD THAT: - The Court found that all conditions for a valid gift were present when the transfer was effected on 13.12.1953: immovable property was transferred voluntarily without consideration and acceptance was evidenced by delivery of possession on the same day. Although the Transfer of Property Act, 1882 was not in force in erstwhile Punjab at that time, the Court applied its underlying principles of equity, justice and good conscience to assess the transaction. Possession given contemporaneously with the gift weighed strongly in favour of its validity under the governing legal and equitable principles. [Paras 15, 16]

The oral gift of 13.12.1953 was valid and the donees acquired an interest in the suit land, possession having been delivered.

Construction of onerous gift and condition of services - Revocation of gift on breach of condition - Burden of proof on plaintiff to prove nature of services, demand and refusal - Whether the gift could be revoked on the plaintiffs' allegation that the donees (or their successors) ceased to render the stipulated services. - HELD THAT: - The Court held that mere inclusion of a defeasance clause in the mutation does not relieve plaintiffs of the burden to prove the specific nature of services, that a demand for performance was made, and that the defendants refused to perform. Sections 126 and 127 of the TPA (as reflecting equitable principles) permit conditional and onerous gifts, but revocation on breach requires clear proof. The plaint and oral evidence failed to show specific instances of denial of services, or communication of demand and refusal. Given the long and uninterrupted possession by the donees and their successors, plaintiffs' vague and conclusory allegations were insufficient to establish a right to resumption. [Paras 6, 10, 11, 12]

The claim for revocation on account of cessation of services was not proved and could not justify resumption of the land.

Perpetual service condition tantamount to forced labour and void as unconstitutional - Construction of onerous gift and condition of services - Whether the condition that donees and their successors render services in perpetuity is enforceable and whether such a condition voids the gift. - HELD THAT: - The Court observed that construing the condition as imposing perpetual, indefeasible obligations on donees and their successors would amount to forced labour (begar), offending Article 23 and fundamental rights. That construction would be impermissible. Rather, a purposive and contextual interpretation was required: the reference to 'services' must be read as referring to past services or, at most, services to be rendered to the original donor during his lifetime. Such construction preserves the validity of the gift while avoiding an unconstitutional condition. The Court further noted that Section 127 (onerous gifts) was not in force in the territory at the time, and one cannot import a perpetual servitude into the gift consistent with equity and constitutional norms. [Paras 16, 17]

The condition cannot be read as imposing perpetual service obligations on donees and successors; the gift is to be construed as referring to past (or at most lifetime) services and is not rendered void by an unconstitutional perpetual condition.

Effect of long uninterrupted possession on resumption claims - Burden of proof on plaintiff to prove nature of services, demand and refusal - What is the effect of long, uninterrupted possession by the donees on the plaintiffs' claim for resumption? - HELD THAT: - The Court reiterated the settled principle that where defendants have long and uninterrupted possession, a plaintiff seeking resumption must produce strong and specific evidence to displace that possession. Here, the donor died soon after the gift and the donees and their successors enjoyed peaceful possession for decades; plaintiffs delayed filing suit for around 45 years and provided only vague allegations of cessation of services. In the absence of cogent proof of breach and demand, resumption was not justified. [Paras 6, 12]

Long uninterrupted possession by the donees undermined the plaintiffs' claim; plaintiffs failed to produce the strong evidence required to justify resumption.

Final Conclusion: The appeal is dismissed. The oral gift of 13.12.1953 must be construed as valid, the alleged perpetual service condition cannot be read to impose unconstitutional forced labour and in any event the plaintiffs failed to prove breach; hence resumption of the suit land is not warranted.

Stay of proceedings - reservation and disposal of reserved judgment - petition under Section 482 CrPC - effect of framing of charges on pending extraordinary remedy

Stay of proceedings - effect of framing of charges on pending extraordinary remedy - Stay of trial court proceedings was ordered pending disposal of the High Court petition. - HELD THAT: - The Supreme Court, noting that a petition under Section 482 CrPC in the High Court had been reserved and remained undelivered for fourteen months while trial proceedings continued up to framing of charges, exercised its supervisory jurisdiction to protect the efficacy of the pending extraordinary remedy. Without adjudicating the merits of the petition, the Court held that in the interim the proceedings in the trial court (Additional Chief Judicial Magistrate-IV, Varanasi, Case No. 330 of 2019) shall be stayed until the High Court considers the petition next. The petitioner is permitted to seek extension of the stay until final disposal of the High Court petition. [Paras 8]

Interim stay of proceedings before the trial court granted until the High Court considers and disposes of the petition; liberty given to the petitioner to seek extension.

Reservation and disposal of reserved judgment - petition under Section 482 CrPC - High Court directed to hear and dispose of the reserved petition as early as possible. - HELD THAT: - The Supreme Court recorded that a reserved judgment in the High Court had remained undelivered for fourteen months and, while refraining from expressing further comment on the conduct of the High Court judge, requested the roster bench of the High Court to hear all parties and dispose of the petition in accordance with law, preferably within three months from the date of listing. The Court also observed that, should any party fail to cooperate, the High Court may proceed according to law. This direction does not decide the merits of the Section 482 petition but mandates expeditious disposal. [Paras 6, 7]

Roster bench of the High Court directed to dispose of the reserved Section 482 petition preferably within three months after hearing the parties.

Final Conclusion: Special leave petition disposed of by granting an interim stay of the trial court proceedings and directing the High Court to expeditiously hear and dispose of the reserved Section 482 petition, with the petitioner permitted to seek extension of the stay if necessary.