Department must extend C-Form issuance based on indemnity bonds to all connected appeals; legal questions remain open

SC noted that the Department had complied with directions issued by the Delhi HC in the impugned judgment concerning issuance of C-Forms pursuant to indemnity bonds furnished by the assessee. Holding that such compliance must extend to all connected appeals, SC directed the Department to follow the same course in those matters as well. The appeals were accordingly disposed of, with SC expressly keeping open any substantial questions of law to be urged in future appropriate cases.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the Court should interfere with the High Court's directions for issuance of C-Forms and F-Forms, when the Department has already complied with identical directions in the lead matter.

1.2 Whether substantial questions of law arising from the High Court's reasoning should be decided in this batch or kept open for consideration in an appropriate case.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Interference with High Court directions for issuance of C-Forms and F-Forms

Interpretation and reasoning

2.1 The Court noted that in the lead appeal, there had been compliance with the directions of the High Court, inasmuch as C-Forms were issued pursuant to indemnity bonds furnished by the assessees, and assessments were thereafter completed.

2.2 The Court further noted that the subsequent impugned orders of the High Court in the connected matters merely followed the order passed in the lead case.

2.3 The Court considered the submissions of the assessees that, in view of such compliance, there should be no interference in the other appeals and that the Department may similarly comply with the directions by issuing C-Forms and F-Forms subject to indemnity bonds.

2.4 The Court took into account that the Department itself had already complied with the High Court's directions in the lead appeal, and that, for some respondents, the Department had verified the inter-State nature of transactions and completed assessments for the relevant (pre-2016) years.

2.5 Although the Department argued that the other High Court orders were passed mechanically following the lead order and warranted detailed examination, the Court held that, in the circumstances, the Department "ought to comply" with the directions issued in the connected appeals as well.

Conclusions

2.6 The Court declined to interfere with the impugned High Court orders in the present batch of appeals.

2.7 The Court directed that the Department shall comply with the High Court's directions in the connected appeals also, including issuance of C-Forms and F-Forms, subject to conditions such as indemnity bonds as ordered by the High Court.

Issue 2: Determination of substantial questions of law

Interpretation and reasoning

2.8 The respondents requested that, considering the compliance in the lead matter and the age of the assessment years (prior to 2016), the Court should not reopen the correctness of the impugned orders, but leave any substantial legal issues to be agitated in other cases.

2.9 The Department's counsel indicated an intention to press substantial questions of law and sought detailed examination of both facts and law in the present batch.

2.10 Balancing these positions, and particularly in light of the Department's previous compliance and the completion of assessments in several cases, the Court considered it unnecessary to adjudicate the underlying questions of law in this batch.

Conclusions

2.11 The Court expressly kept open all substantial questions of law, if any, for consideration in an appropriate future case.

2.12 The appeals were disposed of without determining the correctness of the High Court's legal reasoning on the substantial questions, and all interim stay orders and pending applications, including for intervention/impleadment, were vacated and disposed of.

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