TaxTMI Updates e-Newsletter
Jan 03,2023

Detention and seizure in transit - confiscation under Section 130 - detention and release under Section 129 - interim release on furnishing security and payment of fine/penalty - stay on coercive steps pending compliance

Detention and seizure in transit - detention and release under Section 129 - confiscation under Section 130 - interim release on furnishing security and payment of fine/penalty - Whether interim release of the detained vehicle and goods should be granted subject to conditions and to what extent coercive action under the confiscation notice is restrained. - HELD THAT: - The Court considered the petition challenging the detention order in Form GST MOV-06 and the show-cause/confiscation notice in Form GST MOV-10 and heard counsel for both parties. By agreement between the parties, and after hearing, the Court directed interim release of the goods and conveyance seized pursuant to the stated orders, conditional upon the petitioner depositing the specified fine and penalty and furnishing a bond for the value of the goods. The Court further directed that on compliance with those conditions the authorities shall release the goods and conveyance and shall not take any coercive steps or pass any further order under Section 130. The petition has been tagged with a related pending petition for further consideration on the listed date. [Paras 5, 6, 7]

Interim release granted on compliance with deposit of the specified fine and penalty and furnishing of the specified bond; no coercive steps or further order under Section 130 to be taken while conditions are complied with; matter tagged with a related petition.

Final Conclusion: The High Court granted conditional interim relief: upon the petitioner's deposit of the stated fine and penalty and furnishing the stated bond, the detained vehicle and goods shall be released and no coercive steps under the confiscation notice shall be taken; the petition is tagged with a related matter for further consideration.

Summary order. Notice issued returnable 22.12.2022; respondent to file affidavit-in-reply; petitioner permitted to seek adjournment of the hearing scheduled on 16.12.2022 and, if requested, the officer concerned shall consider the same; direct service by e-mode on official email address permitted in addition to regular mode of service.

Regular bail under Section 439 of the Code of Criminal Procedure - Allegation under Section 132(1)(a) read with Section 137 of the CGST Act - Preliminary prima facie satisfaction for grant of bail without detailed adjudication of evidence - Imposition of conditional bail including bond and surety, surrender of passport and territorial/leave restrictions - Trial court not to be influenced by preliminary observations on evidence

Regular bail under Section 439 of the Code of Criminal Procedure - Preliminary prima facie satisfaction for grant of bail without detailed adjudication of evidence - Allegation under Section 132(1)(a) read with Section 137 of the CGST Act - Imposition of conditional bail including bond and surety, surrender of passport and territorial/leave restrictions - Enlargement of the applicant on regular bail in respect of the arrest recorded by Arrest Memo No.CBIC-DIN-20220764WU000000DE16 dated 19/07/2022. - HELD THAT: - The High Court, after hearing counsel and perusal of the record, examined the nature of allegations framed under the CGST Act but declined to undertake a detailed appraisal of evidence at the bail stage. The Court recorded a prima facie view that the case was fit for exercising discretion in favour of bail and therefore allowed the bail application. The Court noted contentions as to absence of intention to evade tax and that the case was not one of sale without invoice, but did not finally decide those factual contentions while granting bail. Bail was directed to be granted on execution of a bond with one surety of like amount to the satisfaction of the trial court and was made subject to specified conditions, including prohibition on misuse of liberty, not acting in a manner injurious to the prosecution, surrender of passport within a week, prior permission before leaving India, and furnishing and not changing residence without prior permission. The Court further directed that the authorities shall release the applicant only if he is not required in connection with any other offence and clarified that the trial court would be free to modify the conditions and must not be influenced by the Court's preliminary observations on evidence at the bail stage. [Paras 7, 8]

Bail allowed on executing a bond of Rs.10,000 with one surety of like amount, subject to specified conditions including surrender of passport, restrictions on travel, residence disclosure and non-misuse of liberty; release only if not required for any other offence.

Final Conclusion: The petition for regular bail is allowed on the terms and conditions specified by the High Court; preliminary observations made by the Court at the bail stage shall not influence the trial court's assessment of evidence.

Validity of order under Section 148A(d) - Requirement of speaking order and application of mind under Section 148A - Opportunity of being heard and principles of natural justice - Information from risk-management/Insight Portal as basis for reopening - Remand for furnishing additional material and fresh consideration

Validity of order under Section 148A(d) - Requirement of speaking order and application of mind under Section 148A - Opportunity of being heard and principles of natural justice - Order passed by the Assessing Officer under Section 148A(d) was quashed for failure to consider the assessee's reply and for not passing a speaking order complying with Section 148A and principles of natural justice. - HELD THAT: - The Assessing Officer issued a show-cause notice under clause (b) of Section 148A based on information from the Insight/RMS portal but, on receiving the assessee's detailed reply, proceeded to pass an order under Section 148A(d) which merely repeated the notice and conclusorily held that income had escaped assessment. The order failed to deal with and rebut the specific replies and documentary material filed by the assessee, did not identify or rely upon the adverse material earlier relied upon in the show-cause so as to afford a fair opportunity, and therefore was not a reasoned, speaking order reflecting application of mind. Such omissions amounted to breach of the statutory mandate under Section 148A and to denial of the principles of natural justice, rendering the order unsustainable. [Paras 13, 14, 15]

The impugned order under Section 148A(d) is quashed for failure to pass a speaking order and for not properly considering the assessee's reply; the assessee's contentions regarding lack of relevant material and the need for particulars are upheld.

Information from risk-management/Insight Portal as basis for reopening - Remand for furnishing additional material and fresh consideration - Matter remanded to the respondents to furnish additional material relied upon in the show-cause and for the Assessing Officer to reconsider issuance of notice under Section 148 after fresh consideration. - HELD THAT: - Although the court noted that the RMS/Insight Portal information may constitute 'information' under the re-assessment scheme, the Assessing Officer must furnish the specific additional material or reports forming the basis of the allegations so that the assessee can meaningfully reply. In view of the procedural defects in the order under Section 148A(d), the court directed respondents to produce the supporting material within a limited period; thereafter the Assessing Officer is to decide the matter afresh in accordance with law and after applying the statutory procedure under Section 148A and relevant guidelines. [Paras 20]

Respondents directed to furnish additional material relied upon within four weeks; thereafter the Assessing Officer shall decide the matter in accordance with law after fresh consideration.

Final Conclusion: Writ petition allowed; impugned order under Section 148A(d) quashed. Respondents directed to furnish additional material relied upon in support of the show-cause within four weeks, after which the Assessing Officer shall reconsider and decide the matter in accordance with law.

Book profit for the purposes of Section 115J - prior period adjustments - profit and loss account prepared in accordance with Parts II and III of Schedule VI to the Companies Act - limited power of the assessing officer under Section 115J (acceptance of authentic accounts and alterations only as per the Explanation)

Book profit for the purposes of Section 115J - prior period adjustments - profit and loss account prepared in accordance with Parts II and III of Schedule VI to the Companies Act - limited power of the assessing officer under Section 115J (acceptance of authentic accounts and alterations only as per the Explanation) - Whether prior period adjustments are to be included in or excluded from book profit computed under Section 115J where the profit and loss account is prepared in accordance with Parts II and III of Schedule VI to the Companies Act. - HELD THAT: - The statute requires preparation of the profit and loss account in accordance with Parts II and III of Schedule VI and defines 'book profit' as the net profit shown in that account, subject only to the specific increases and reductions enumerated in the Explanation. There is no provision in Section 115J mandating exclusion of prior period adjustments from book profit. Reliance on the reasoning in Apollo Tyres Ltd. establishes that an assessing officer must accept the authenticity of accounts prepared under the Companies Act and has no jurisdiction to substitute a different net profit except to the limited extent permitted by the Explanation to Section 115J. Applying that principle, the assessing officer erred in taking a figure other than the net profit as shown in the profit and loss account by excluding the prior period adjustment; such alteration was not authorised by the Explanation. The substantial questions of law are therefore answered in favour of the assessee. [Paras 12, 13, 14, 15, 16]

Prior period adjustments, reflected in the profit and loss account prepared under Parts II and III of Schedule VI, form part of the 'net profit' for computing book profit under Section 115J and the assessing officer cannot substitute another figure except as permitted by the Explanation to Section 115J.

Final Conclusion: Appeal allowed: the assessing officer's rejection of the net profit as shown in the profit and loss account by excluding prior period adjustments was contrary to law; book profit must be taken as per the accounts prepared under Parts II and III of Schedule VI subject only to adjustments authorised by the Explanation to Section 115J.

Exemption under Section 10(38) for long term capital gains - Treatment of shares as penny stock / bogus investment - Addition under Section 68 as unexplained receipt - Appellate Tribunal factual findings and perversity standard of judicial review

Exemption under Section 10(38) for long term capital gains - Treatment of shares as penny stock / bogus investment - Addition under Section 68 as unexplained receipt - Appellate Tribunal factual findings and perversity standard of judicial review - Whether the addition of the long term capital gain claimed as exempt was justified or whether the Tribunal and the Commissioner (Appeals) rightly held the investment to be genuine and deleted the addition. - HELD THAT: - The authorities below accepted the assessee's evidence that the shares in question were purchased in 2000-01 and retained for more than ten years, supported by transaction statements covering the period 1.6.2001 to 1.10.2010. Those findings led the Tribunal to conclude that the transactions were longstanding genuine investments and not penny stock dealings engineered to create exempted long term capital gains. The High Court found that these conclusions are based on material on record and amount to findings of fact; there is no demonstrable perversity in the appellate fora's conclusions. On that basis no substantial question of law arises out of the deletion of the addition made under the impugned provision, and the revenue's contention that the Tribunal's decision is ex facie perverse was not accepted. [Paras 5, 6]

The appellate findings that the investment was genuine and not penny stock are upheld; no substantial question of law arises and the appeal is dismissed.

Final Conclusion: The High Court dismissed the revenue's appeal, upholding the Tribunal's factual findings that the shares were a longstanding genuine investment and concluding that no substantial question of law arises from the deletion of the addition.

Faceless assessment procedure under section 144B - Show-cause notice-cum-draft assessment order - Opportunity of personal hearing through video conferencing - Principles of natural justice - Remand for fresh faceless assessment complying with section 144B

Faceless assessment procedure under section 144B - Opportunity of personal hearing through video conferencing - Principles of natural justice - Show-cause notice-cum-draft assessment order - Impugned assessment order and consequent penalty notice were passed without providing the draft assessment/show-cause and without affording the personal hearing mandated under the faceless assessment scheme, thereby violating principles of natural justice. - HELD THAT: - Section 144B prescribes a faceless assessment procedure in which a draft assessment order or show-cause notice must be served to the assessee, and where variation prejudicial to the assessee is proposed the assessee is entitled to request personal hearing which, if approved, must be conducted exclusively through video conferencing. The record shows no draft assessment or show-cause notice was furnished to the petitioner nor was the requested video-conference hearing effectively provided despite repeated requests and attempts to join. The assessment was therefore completed without following the procedure envisaged by section 144B(1) and section 144B(7), resulting in denial of the opportunity of hearing and contravention of natural justice principles. The Court applied its earlier decisions on faceless assessments and concluded that the assessment and the subsequent penalty notice could not stand in these circumstances. [Paras 11, 12]

Impugned assessment order dated 18.08.2021 and notice dated 26.08.2021 under section 270A are quashed and set aside for failure to comply with the faceless assessment procedure and for denial of personal hearing.

Remand for fresh faceless assessment complying with section 144B - Show-cause notice-cum-draft assessment order - Opportunity of personal hearing through video conferencing - Whether the Revenue may proceed afresh and the scope and timeline for such exercise. - HELD THAT: - The Court did not go into the merits of the proposed additions. Instead, it granted the Revenue liberty to proceed in accordance with law by issuing the requisite show-cause-cum-draft assessment order and affording the petitioner the opportunity of hearing as mandated by section 144B. The Court directed that the exercise be completed as early as possible and preferably within twelve weeks from receipt of the copy of the order, thereby remanding the matter for fresh adjudication strictly in accordance with the faceless assessment procedure. [Paras 13]

Revenue permitted to proceed afresh under section 144B after issuance of show-cause-cum-draft assessment order and after affording video-conference hearing; exercise to be completed preferably within twelve weeks.

Final Conclusion: Writ petition allowed: assessment order dated 18.08.2021 and penalty notice dated 26.08.2021 quashed for failure to follow the faceless assessment procedure and for denial of personal hearing; Revenue permitted to proceed afresh under section 144B, providing show-cause-cum-draft assessment order and video-conference hearing, to be completed preferably within twelve weeks.

Fees for included services - "make available" test - transfer of technology - Article 12(4) of the India-US DTAA - interpretation of the DTAA read with the MOU

Fees for included services - "make available" test - transfer of technology - Article 12(4) of the India-US DTAA - interpretation of the DTAA read with the MOU - Whether the receipts of the assessee from provision of information technology and other administrative services to its Indian affiliate constitute "fees for included services" under the India-US DTAA and are taxable in India. - HELD THAT: - The Tribunal held that to qualify as "fees for included services" under Article 12(4) of the India-US DTAA the services must satisfy the MOU articulated "make available" requirement, i.e., the provider must make technical knowledge, skill, know how or processes available such that the recipient is enabled to apply the technology independently. The Global Services and Cost Allocation Agreement describes recurring group IT and administrative support supplied by the assessee to its Indian affiliate. Applying the DTAA and the Explanatory Notes/MOU and following precedents (including the decisions discussed from the Kerala, Karnataka and Delhi High Courts and Tribunals), the Tribunal found no transfer of enduring technology or know how that would enable the Indian affiliate to perform the services without the assessee. The fact that the services were supplied year after year since 2009 demonstrated reliance on the provider rather than absorption of technology by the recipient; mere incidental benefits or technical input by the provider do not satisfy the "make available" test. Judicial authorities cited establish that mere performance of services or provision of data/software without transfer enabling independent application does not convert receipts into fees for included services. On these findings the receipts do not fall within Article 12(4)(b) and are not taxable in India as FIS under the DTAA. [Paras 21, 22, 23, 26, 30]

Receipts for IT and administrative services to the Indian affiliate are not "fees for included services" under the India-US DTAA and are to be deleted by the Assessing Officer.

Final Conclusion: Appeals allowed; Assessing Officer directed to delete the additions treating the receipts as fees for included services under the India-US DTAA for Assessment Years 2018-19 and 2019-20.

Exemption under section 11 - registration under section 12A - audit report in Form No.10B - mandatory or directory - return processing under section 143(1) by CPC limited to return and accompanying documents - correction of return by filing petition under section 154 - effect of filing wrong return form (Form No.5 instead of ITR-7)

Exemption under section 11 - registration under section 12A - audit report in Form No.10B - mandatory or directory - return processing under section 143(1) by CPC limited to return and accompanying documents - effect of filing wrong return form (Form No.5 instead of ITR-7) - correction of return by filing petition under section 154 - Whether the Assessing Officer and NFAC were justified in rejecting the section 154 petition and denying exemption under section 11 where the assessee filed return in Form No.5 without submitting the audit report in Form No.10B or accompanying documents evidencing registration under section 12A. - HELD THAT: - The Tribunal held that the assessee filed the return in Form No.5 and did not furnish documents with the return to substantiate a claim for exemption under section 11 or the registration under section 12A. The audit report in Form No.10B was not filed with the return, nor was it produced with the section 154 petition or before NFAC. In processing under section 143(1), the CPC is confined to the return filed and documents accompanying it; a return filed as Form No.5 naturally indicates a return filed as a partnership firm and must be processed accordingly. The CPC cannot go beyond the face of the return to treat the assessee as a charitable trust claiming section 11 exemption where no supporting documents were before it. For these reasons the Assessing Officer correctly rejected the section 154 petition and NFAC correctly confirmed that rejection. [Paras 7]

The rejection of the section 154 petition and the confirmation thereof by NFAC were upheld; the appeal is dismissed.

Final Conclusion: The Tribunal dismissed the appeal, holding that in the absence of documentary support filed with the return (and no audit report in Form No.10B), the CPC's processing based on the return filed as Form No.5 was correct and the Assessing Officer and NFAC were justified in rejecting the section 154 petition and denying the claimed exemption.

Penalty under section 271(1)(c) for furnishing inaccurate particulars - Raising deduction claim for the first time in assessment under section 153A - Distinction between quantum proceedings and penalty proceedings - Deletion of penalty where deduction legitimately claimed in section 153A assessments

Penalty under section 271(1)(c) for furnishing inaccurate particulars - Raising deduction claim for the first time in assessment under section 153A - Distinction between quantum proceedings and penalty proceedings - Validity of penalties imposed under section 271(1)(c) for disallowances relating to the assessee's section 80IA deduction raised for the first time in section 153A assessments. - HELD THAT: - The Tribunal held that imposition of penalty under section 271(1)(c) could not follow automatically from a quantum disallowance made in assessment proceedings. Citing the settled principle that quantum and penalty proceedings are parallel and distinct, the Tribunal noted that an assessee is entitled to raise a deduction claim for the first time in section 153A proceedings, and that the mere fact of claiming such deduction in unabated or abated assessments does not ipso facto establish concealment or furnishing of inaccurate particulars. The coordinate bench's quantum decision restoring the disallowance was based on a technical finding concerning unabated assessments and did not establish a general rule that the claim itself amounted to concealment. In the absence of any specific finding that the claim was dishonest or intended to mislead, both lower authorities erred in imposing the penalties. Accordingly, the penalties imposed for the four assessment years were deleted. [Paras 3, 5]

Penalties under section 271(1)(c) deleted for the assessment years in dispute; appeals allowed.

Final Conclusion: The Tribunal allowed the assessee's appeals, set aside the penalties imposed under section 271(1)(c) in respect of the section 80IA deduction claimed in section 153A assessments for the years in issue, and directed deletion of the penalties.

Foreign exchange fluctuation loss - revenue v. capital nature of expenditure - allowability under section 37(1) - distinction between cost of asset and cost of raising funds - application of accounting standards (AS 11) - verification of tax credits and direction to Assessing Officer - mercantile system of accounting and reconciliation - restoration of issues for fresh verification

Verification of tax credits and direction to Assessing Officer - allowance of TDS, advance tax and self-assessment tax - Whether the Assessing Officer should be directed to verify and give credit for taxes claimed by the assessee. - HELD THAT: - The Tribunal noted that the Assessing Officer had computed total taxes paid at a lower figure than that claimed by the assessee and had not assigned any reason for the shortfall. The Commissioner (Appeals) had directed the AO to verify taxes paid and give appropriate credit. The Tribunal found no infirmity in that direction, recorded the possibility that the AO must verify the records, and expressly directed the AO to verify the record and grant due credit of TDS, advance tax and self-assessment tax claimed by the assessee. The order of the CIT(A) was upheld on this point and the ground was allowed for statistical purposes. [Paras 8]

Direction to the AO to verify the record and give due credit of the taxes paid by the assessee is upheld; ground allowed for statistical purposes.

Mercantile system of accounting and reconciliation - restoration of issues for fresh verification - Whether the addition on account of underreported receipts (reconciliation with Form 26AS) should be restored to the Assessing Officer for verification in view of the assessee following mercantile system of accounting. - HELD THAT: - The Tribunal accepted the assessee's contention that it follows the mercantile system of accounting and that a reconciliation statement had been filed. The assessee sought opportunity to substantiate that the amounts were accounted for consistently and possibly offered to tax in subsequent years. In the interest of justice and since the matter required verification of accounting treatment and supporting evidence, the Tribunal directed restoration of the issue to the file of the AO with a direction to verify the method of accounting consistently followed and to pass appropriate orders in accordance with fact and law. [Paras 11]

Issue restored to the Assessing Officer for verification and fresh adjudication; ground allowed for statistical purposes.

Foreign exchange fluctuation loss - revenue v. capital nature of expenditure - allowability under section 37(1) - application of accounting standards (AS 11) - distinction between cost of asset and cost of raising funds - Whether the foreign exchange loss on restatement of a loan taken for purchase of an indigenous building is capital (to be added to asset cost) or revenue in nature and therefore allowable as deduction. - HELD THAT: - The Tribunal examined the facts that the term loan was taken for purchase of an Indian building and that the assessee incurred exchange loss on restatement of the outstanding loan. Relying on authority distinguishing cost of an asset from cost of raising funds, the mandatory application of accounting standards (AS 11) and decisions holding that exchange differences accounted in profit and loss may be allowable under section 37(1), the Tribunal found that section 43A (which applies to foreign assets) was not applicable. The Tribunal accepted the view that the conversion/restatement and resulting loss were dictated by revenue considerations (e.g., saving interest costs, hedging) and that the loss bore a revenue character. Having considered Supreme Court and Tribunal precedents and the accounting treatment, the Tribunal held that the foreign exchange fluctuation loss is revenue in nature and is allowable accordingly. [Paras 21, 22, 27]

Foreign exchange fluctuation loss of Rs.14,32,814/ on restatement of the loan is revenue in nature and is allowed as deduction; grounds on this issue are allowed.

Final Conclusion: The appeal is partly allowed: the Tribunal directed the AO to verify and grant tax credit claimed by the assessee, restored the reconciliation/underreported receipts issue to the AO for verification, and held that the foreign exchange fluctuation loss on restatement of the loan taken for purchase of the building is revenue in nature and allowable under the Act.

Section 68 - burden of proof as to identity, genuineness and creditworthiness of shareholder - Admissibility and weight of documentary evidence versus oral examination of parties - Duty of the assessee to produce witnesses and enable enquiries before AO - Assessing Officer's power to make additions where initial onus is not discharged - Reliance on survey statements and accommodation-entry operators in tax inquiries

Section 68 - burden of proof as to identity, genuineness and creditworthiness of shareholder - Admissibility and weight of documentary evidence versus oral examination of parties - Assessing Officer's power to make additions where initial onus is not discharged - Reliance on survey statements and accommodation-entry operators in tax inquiries - Validity of deletion by CIT(A) of addition made by AO under section 68 in respect of share capital and share premium of Rs.10 crores - HELD THAT: - The Tribunal found that the AO had material casting doubt on the genuineness of the share subscriptions - survey findings, the statement of an alleged accommodation-entry operator, incorrect or non-existent addresses of subscriber companies, meagre declared incomes of those companies and unserved summons to the subscribers - and had accordingly called for production of shareholders and further enquiries. The assessee supplied documentary material but failed to produce the alleged subscribers or its own directors for oral examination and did not supply corrected addresses, thereby failing to discharge the initial onus under section 68. The CIT(A) accepted the written submissions and certain documents without addressing the AO's specific factual findings or requiring production/examination of the subscribers, and erred in treating the documentary record as conclusively establishing identity, genuineness and creditworthiness. The Tribunal held that where the assessee has not satisfactorily discharged the initial burden, the burden does not shift to the AO and the AO is entitled to make additions; citing that on similar facts the Supreme Court has upheld additions. On that basis the Tribunal reversed the order of the CIT(A) and restored the AO's addition under section 68. [Paras 9, 10]

The deletion by the CIT(A) is reversed and the addition made by the AO under section 68 is confirmed.

Final Conclusion: The Tribunal allowed the revenue's appeal, reversed the CIT(A)'s deletion of the addition, and restored the assessing officer's addition under section 68 in respect of the share capital and premium for A.Y. 2011-12.

Characterisation of rental income as business income versus income from house property - Rule of consistency in taxation - Relevance of memorandum of association in determining nature of receipts

Characterisation of rental income as business income versus income from house property - Relevance of memorandum of association in determining nature of receipts - Rule of consistency in taxation - Whether the rent received by the assessee for AY 2014-15 is taxable as income from business and profession or as income from house property, having regard to the objects in the Memorandum of Association and prior treatment in earlier assessment years. - HELD THAT: - The Tribunal noted that the facts for the year under consideration were not disputed to be identical to those of the preceding seven years and that the assessee had consistently offered the same receipts to tax under the head 'Income from House Property' in earlier assessments. Although the Assessing Officer relied on the objects in the Memorandum of Association and judicial authorities to treat the receipts as business income, the Tribunal applied the rule of consistency as stated by the Apex Court in Radhasoami Satsang, observing that where facts remain unchanged and the assessee has consistently treated the income under a particular head, the revenue cannot alter that character without a change in facts or circumstances. The Tribunal recorded that the Revenue did not controvert the factual consistency and, in view of that consistency, deleted the addition treating the receipts as business income for the year in question, while clarifying that the order would not bind in case of any change in facts or circumstances. [Paras 7]

Assessee's appeal allowed; the addition treating rent as business income for AY 2014-15 deleted applying the rule of consistency.

Final Conclusion: The Tribunal allowed the appeal for Assessment Year 2014-15, deleting the addition that treated rental receipts as business income and directing that the consistent prior treatment as income from house property be respected in the absence of any change in facts or circumstances.

Reference to Departmental Valuation Officer under Section 55A - Fair market value - Prospective application of statutory amendment - Deduction under Section 54B - Nature of land on the date of transfer - Agricultural income versus income from undisclosed sources

Reference to Departmental Valuation Officer under Section 55A - Fair market value - Prospective application of statutory amendment - Validity of the Assessing Officer's reference to the DVO and adoption of DVO valuation in place of registered valuer's report. - HELD THAT: - The Tribunal found that both transfers occurred before 01/07/2012. The amendment to Section 55A(a) effected from 01/07/2012 (substituting the test for reference to DVO) is prospective and therefore not applicable to the transactions in issue. Following the consistent decisions of the jurisdictional High Court and this Bench, the Assessing Officer's reference to the DVO under the amended clause was not competent for the assessment year under consideration. Consequently, the DVO report cannot be relied upon to displace the valuation furnished by the registered valuer. The Tribunal directed the Assessing Officer to adopt the value as per the registered valuer's report and recompute capital gains accordingly. [Paras 17, 19, 20]

Grounds 1 to 4 allowed; AO to adopt registered valuer's value and recompute capital gains.

Deduction under Section 54B - Nature of land on the date of transfer - Standards in CIT Vs Siddarth J Desai - Allowability of deduction under Section 54B in respect of the lands sold and whether the land was agricultural on the relevant date. - HELD THAT: - The Tribunal observed that the ld. CIT(A)'s order contains contradictory findings: accepting some facts in favour of the assessee while nevertheless confirming the Assessing Officer's disallowance. Given the conflict in findings and the relevance of established principles laid down by the jurisdictional High Court in CIT Vs Siddarth J Desai for determining whether land was agricultural on the date of transfer, the Tribunal remitted the matter to the Assessing Officer. The AO is to reconsider the claim in accordance with law and the Siddarth Desai principles, afford the assessee a fair opportunity, and adjudicate after considering complete details of agricultural activities, dates of sale and subsequent acquisition of agricultural land. [Paras 21, 22, 23]

Ground No. 5 allowed for statistical purposes and remitted to the Assessing Officer for fresh consideration in accordance with law.

Agricultural income versus income from undisclosed sources - Restoration for fresh adjudication - Treatment of the declared agricultural income for AY 2012-13 and whether it can be sustained or must be treated as income from undisclosed sources. - HELD THAT: - The Tribunal noted that the Assessing Officer treated the agricultural income as unexplained due to alleged lack of evidence, while before the ld. CIT(A) the assessee produced written submissions and documentary material asserting agricultural activity and receipts. The Tribunal found it appropriate to restore the matter to the Assessing Officer for fresh consideration of the evidence relating to agricultural income. The AO should examine the documents, consider the extent of agricultural holdings retained, and decide the issue; if deduction under Section 54B is allowed, the agricultural-income question should then be adjudicated consistently. [Paras 24, 25, 26]

Ground No. 6 allowed for statistical purposes and remitted to the Assessing Officer for fresh adjudication.

Final Conclusion: The appeal is partly allowed: the Tribunal directed adoption of the registered valuer's 1981 value (grounds 1-4 allowed) and remitted the questions regarding deduction under Section 54B and the treatment of agricultural income to the Assessing Officer for fresh consideration in accordance with law, after affording the assessee a fair opportunity.

Computation sheet not in agreement with assessment order - acceptance of returned income as assessed income - deduction under Chapter VI-A - notice of demand under section 156 - vacation of demand raised in computation sheet

Computation sheet not in agreement with assessment order - acceptance of returned income as assessed income - notice of demand under section 156 - vacation of demand raised in computation sheet - Whether the demand shown in the computation sheet (disallowing the claimed deduction) is maintainable when the assessment order accepts the returned income without modification. - HELD THAT: - The Tribunal found on the admitted facts that the assessing officer in the assessment order finalized u/s 143(3) accepted the returned income as assessed income without any modification. The computation sheet, however, exhibited a demand by not taking into account the deduction claimed under Chapter VI-A. Under section 156 the notice of demand must be in consequence of an order passed under the Act; a demand reflected only in the computation sheet but not supported by the assessment order is therefore not sustainable. The Revenue was unable to controvert the assessee's contention that the self-assessment tax shown as payable in the return had been paid. In view of this, the Tribunal held that the demand raised in the computation sheet is void insofar as it is inconsistent with the assessment order and directed the assessing officer to vacate the demand. [Paras 4, 7]

Demand raised in the computation sheet is not in agreement with the assessment order and is to be vacated; Ground No.3 is allowed.

Deduction under Chapter VI-A - acceptance of returned income as assessed income - Other grounds raised by the assessee relating to the correctness of denial of the Chapter VI-A deduction and exemption under section 10(1) were not adjudicated. - HELD THAT: - The Tribunal expressly refrained from deciding the remaining grounds (including the legality of disallowance of the claimed deduction and the contention of exemption under section 10(1)), regarding them as academic in light of the disposal on Ground No.3. Those contentions were left open for any future proceeding or consideration as may be appropriate. [Paras 7]

Other grounds are not adjudicated and remain undecided.

Final Conclusion: The appeal is allowed insofar as the demand shown in the computation sheet (inconsistent with the assessment order accepting returned income) is vacated; other grounds were left undecided.

Rejection of books of account under section 145(3) for inability to deduce true profits - computation of taxable income by application of a notional gross profit rate where books are unreliable - reliance on preceding year's gross profit rate as a basis for quantification

Rejection of books of account under section 145(3) for inability to deduce true profits - Validity of rejection of the assessee's books of account and trading results under section 145(3). - HELD THAT: - The authorities below found material discrepancies and incompleteness in the assessee's records: absence of a regular stock register for finished jewellery, no goods inward/outward registers, lack of purchase orders and specifications, and implausible accounting practices such as alleging manufacture-held-by-a-supervisor to avoid maintaining finished-goods records. The Assessing Officer recorded that these defects rendered the books unreliable for determining true profits and therefore invoked section 145(3). The Commissioner (Appeals) and this Tribunal concur that an assessing officer has both the right and duty to examine whether accounts disclose the true state of affairs and, where they do not, to reject them and compute income by such method as he determines. Given the cogent factual findings of record demonstrating the inherent defects and the assessee's failure to satisfactorily controvert those findings before the authorities, the rejection of accounts under section 145(3) was held to be justified and is sustained. [Paras 3, 5, 7, 9]

Rejection of the books of account under section 145(3) is sustained and not interfered with.

Computation of taxable income by application of a notional gross profit rate where books are unreliable - reliance on preceding year's gross profit rate as a basis for quantification - Appropriate gross profit (GP) rate to be applied for quantification of income after rejection of books. - HELD THAT: - The Assessing Officer, having rejected the books, applied a notional GP rate of 3% based on a general reference to prevailing GP rates of similar exporters (said to be 4-8%). The Commissioner (Appeals) affirmed that application. This Tribunal observed that the AO's reference to prevailing GP rates was unspecific and unsupported by particulars of comparable concerns, rendering the 3% application unsustainable on that basis. Considering the case-specific facts, the assessee's declared GP in the immediately preceding assessment year and the parties' agreement, the Tribunal found it reasonable and just to adopt the preceding year's GP rate as the basis for computation. Accordingly, the Tribunal directed that the AO apply a GP rate of 2.5% (the rate declared by the assessee in the immediately preceding year) for quantification purposes, thereby allowing the appeal partly. [Paras 6, 7, 8, 9]

The AO's application of GP rate at 3% is modified; the AO is directed to apply a GP rate of 2.5% as declared in the immediately preceding year for quantification.

Final Conclusion: The rejection of the assessee's books under section 145(3) is upheld; however, for quantification of income the Tribunal modifies the GP rate applied by the AO and directs computation using a GP rate of 2.5% (the rate in the immediately preceding year), allowing the appeal partly.

Addition based on survey findings - retraction of statement recorded during survey and its evidentiary value - overlap between addition for inflated purchases and addition for excess physical stock - deletion of addition where assessee has already offered amount as income (double addition)

Addition based on survey findings - retraction of statement recorded during survey and its evidentiary value - overlap between addition for inflated purchases and addition for excess physical stock - Sustainability of additions made on account of inflated purchases and excess physical stock discovered during survey - HELD THAT: - The additions for inflated purchases (Rs.40,75,528) and excess physical stock (Rs.76,46,384) were founded on survey computations and a statement recorded during survey. The Tribunal observed that the computation of stock as per books depended on the figure of raw-cotton consumption, which the assessee demonstrated had been understated by the survey team because certain purchase documents (kanta chitthi and vouchers) were not taken into account. The Commissioner (Appeals) had accepted the assessee's explanation regarding purchases, consumption/yield ratios and GP/NP consistency, but nonetheless sustained part of the excess-stock addition; the Tribunal found this approach inconsistent. The addition for inflated purchases was based solely on the partner's survey statement which was subsequently retracted and the retraction supported by documentary explanation. Further, the additions were overlapping: inflated purchases and excess stock arose from the same survey discrepancy. For these reasons the Tribunal held both additions unsustainable and directed their deletion. [Paras 15, 16, 17, 18, 19]

Both the addition on account of inflated purchases and the addition on account of excess physical stock found during survey are deleted.

Deletion of addition where assessee has already offered amount as income (double addition) - Validity of deletion of addition for unexplained cash deposits where the assessee had already offered the amount as income - HELD THAT: - The Commissioner (Appeals) deleted the addition of unexplained cash deposits on the ground that the assessee had already credited the amount to profit & loss account and shown it as cash in hand, i.e., the amount had been offered as income for the year. The Revenue did not controvert this factual finding. The Tribunal found no ground to interfere with the factual conclusion that re-adding the same amount would amount to double addition and therefore upheld the deletion. [Paras 20, 21, 22]

The deletion of the addition relating to unexplained cash deposits is upheld.

Final Conclusion: The assessee's appeal is allowed by deleting additions for inflated purchases and excess stock; the Revenue's appeal is dismissed, including its challenge to the deletion of the addition for unexplained cash deposits.

Disallowance of payments to relatives covered by section 40A(2)(b) - proof and substantiation required for business expenditure - onus under section 37(1) - reliability of single consolidated bill and absence of corroborative records - ad-hoc disallowance of expenses for personal element where vouchers/logbooks are absent

Disallowance of payments to relatives covered by section 40A(2)(b) - reliability of single consolidated bill and absence of corroborative records - Sustainability of disallowance of commission of Rs.8,98,445 claimed to have been paid to the assessee's father. - HELD THAT: - The Tribunal upheld the findings of the Assessing Officer and the CIT(A) that the assessee failed to substantiate the claim of commission paid to his father. The only documentary support was a single year-end typed bill and a ledger entry which did not identify goods, particulars of services, travel or other records showing that the payee had in fact solicited or effected sales. The assessee also avoided producing the payee for examination. In these circumstances the Tribunal accepted the inference that the expenditure was not genuinely incurred for business purposes but was a device to suppress profits, and therefore the addition was correctly sustained. [Paras 9]

Disallowance of Rs.8,98,445 for commission paid to father is upheld.

Disallowance of payments to relatives covered by section 40A(2)(b) - onus of proof under section 37(1) - reliability of single consolidated bill and absence of corroborative records - Sustainability of disallowance of job work charges of Rs.7,06,700 claimed to have been paid to the assessee's brother. - HELD THAT: - The Tribunal agreed with the lower authorities that the assessee did not discharge the onus cast by law to prove that the job-work payments were genuine business expenditures. The only bill produced was a single undetailed bill which did not record dates, nature or extent of work, labor involvement or entries that would verify periodic performance. The assessee likewise failed to produce the payee for verification. Given the absence of corroborative documentary evidence, the Tribunal concluded the expenditure lacked credibility and was properly disallowed as having been booked to reduce taxable profits. [Paras 12]

Disallowance of Rs.7,06,700 for job work charges paid to brother is upheld.

Ad-hoc disallowance of expenses for personal element where vouchers/logbooks are absent - reliability of vouchers and need for log book/call register to rebut personal usage - Validity and quantum of ad-hoc disallowance (15%) on vehicle and telephone expenses. - HELD THAT: - While the Tribunal concurred that, in the absence of log books and call registers, personal usage could not be ruled out, it found that the Assessing Officer had not pointed to any specific vouchers as defective or otherwise shown why the entire 15% should be disallowed. Applying a proportionate approach, the Tribunal reduced the ad-hoc disallowance to 5% of the claimed vehicle and telephone expenses. [Paras 13]

Ad-hoc disallowance reduced from 15% to 5%; ground partly allowed.

Final Conclusion: The appeal is partly allowed: disallowances of commission to father and job-work charges to brother are sustained, while the ad-hoc disallowance on vehicle and telephone expenses is reduced from 15% to 5% for A.Y.2014-15.

Remand for fresh consideration - failure to record reasons / non-speaking order - principle of natural justice - ejusdem generis rule of statutory interpretation - scope of "civil structure" in Cenvat Credit Rules

Ejusdem generis rule of statutory interpretation - scope of "civil structure" in Cenvat Credit Rules - failure to record reasons / non-speaking order - remand for fresh consideration - principle of natural justice - Whether the order of the Commissioner (Appeals) was sustainable where a specific plea based on the ejusdem generis rule concerning the meaning of 'civil structure' in Rule 2(l) was raised but not addressed, and whether the matter should be remitted for fresh decision. - HELD THAT: - The Appellant contended that electricity poles do not fall within 'civil structure' in Rule 2(l)(A)(a) because the term follows 'building' and, applying the ejusdem generis rule, should be confined to structures akin to buildings. That specific submission and supporting Supreme Court authority were brought before the Commissioner (Appeals), but the Commissioner recorded only a conclusory statement that the submission was 'not relevant' without discussing the contention or the cited authority. The Tribunal held that the omission to consider and record findings on a determinative legal plea produced a non-speaking order; absence of reasons renders the impugned order unsustainable. Since the plea bears on the merits, the correct course is to remit the matter to the Commissioner (Appeals) for fresh adjudication, with directions to consider the appellant's submissions (including the applicability of the ejusdem generis principle to the phrase 'civil structure'), to give detailed reasons, and to adhere to the requirements of natural justice. The Tribunal expressly left all substantive issues open for fresh decision. [Paras 3, 4]

Impugned order set aside; appeal allowed by way of remand to the Commissioner (Appeals) to decide afresh with detailed findings on the pleas raised and in compliance with the principle of natural justice; all issues left open.

Final Conclusion: The impugned order is set aside and the appeal is allowed by way of remand; the Commissioner (Appeals) is directed to decide the matter afresh, give detailed findings on the appellant's contention (including the submission based on the ejusdem generis rule regarding 'civil structure'), and observe the principles of natural justice; all other issues remain open for fresh adjudication.

Maintainability of tax appeal under Section 35G of the Central Excise Act - determination of whether a process amounts to 'manufacture' for excise purposes - questions directly and proximately relating to rate of duty or coverage by an exemption notification - appeal to Supreme Court under Section 35L for matters relating to rate of duty or valuation

Maintainability of tax appeal under Section 35G of the Central Excise Act - questions directly and proximately relating to rate of duty or coverage by an exemption notification - Whether the tax appeal under Section 35G of the Central Excise Act against the CESTAT order is maintainable before the High Court, where the dispute involves coverage by an exemption notification and questions directly and proximately relating to rate of duty. - HELD THAT: - The Court examined whether the dispute-principally whether blending of 5% Ethanol with Motor Spirit amounts to manufacture and whether the assessee was entitled to exemption notifications-constitutes a question that relates directly and proximately to the rate of duty or to the value/classification of goods for assessment. Relying on the test articulated by the Supreme Court in Navin Chemicals and the Division Bench precedents of this Court (Swiss Glass Coat Equipments; Kich Industries), the Court held that questions as to whether goods are covered by an exemption notification and thereby the rate of duty applicable fall within the category of matters that must be entertained by the Supreme Court under Section 35L (formerly expressed as questions concerning determination of rate of duty or value). The Court distinguished authorities where the dispute was confined to breach of conditions of a notification or was essentially inter partes factual adjudication (e.g., Motorola), observing those do not engage the broader legal question of applicability of exemption affecting rate of duty. Applying these precedents, the Court concluded that the present controversy-turning on whether the assessee was covered by the exemption notification for the period 01.07.2004 to 07.08.2004 and hence on the rate of duty-is not maintainable before the High Court under Section 35G and must be pursued before the Supreme Court under Section 35L. [Paras 12, 13]

Appeal dismissed as not maintainable before this Court; the correct forum for the questions directly and proximately relating to rate of duty and coverage by exemption notification is the Supreme Court under Section 35L.

Final Conclusion: The High Court dismissed the tax appeal under Section 35G as not maintainable because the dispute-whether the assessee was covered by exemption notifications and thereby the applicable rate of duty for the period 01.07.2004 to 07.08.2004-raises questions that must be agitated before the Supreme Court under Section 35L. No costs.

Retention/detention charges - assessable value - transaction value of goods sold - not part of sale price - precedent of the Supreme Court in Grasim Industries Ltd

Retention/detention charges - assessable value - transaction value of goods sold - not part of sale price - precedent of the Supreme Court in Grasim Industries Ltd - Retention/detention charges recovered for cylinders retained beyond the stipulated period are includible in the assessable value of the gas supplied. - HELD THAT: - The Tribunal considered whether charges recovered for retention/detention of cylinders, when the gas is supplied beyond the stipulated time, form part of the transaction value of the gas packed in cylinders. The Tribunal relied on its earlier decision in the appellant's other factory (Final Order No. A/10679-10681/2019 dated 03.04.2019) which, after considering a catena of authorities and the larger Bench decisions of the Supreme Court in Grasim Industries Ltd., held that retention/detention charges arise only when customers retain cylinders beyond the stipulated period and therefore are not part of the sale price. Applying that settled ratio, the Tribunal concluded that such charges are not includable in the assessable/transaction value of the excisable goods (gas) sold in cylinders. The Revenue conceded that the department had accepted the Tribunal's earlier order, and no contrary legal principle was shown to displace the binding precedent.

The impugned order is set aside and the appeal is allowed; retention/detention charges are not includible in the assessable value of the gas.

Final Conclusion: Following the Tribunal's earlier decision-which applied the Supreme Court's rulings in Grasim Industries Ltd-the appeal is allowed and the impugned order is set aside on the ground that retention/detention charges are not part of the transaction/sale price of the gas supplied in cylinders.

Pre-deposit requirement at admission stage - prima facie consideration by appellate authority - quashing of appellate orders for failure to consider merits - remand for fresh adjudication on merits - consideration of financial hardship in fixing pre-deposit

Pre-deposit requirement at admission stage - prima facie consideration by appellate authority - Validity of the Tribunal's direction for pre-deposit and summary dismissal of the second appeal without addressing the prima facie case - HELD THAT: - The Tribunal directed a substantial pre-deposit and thereafter dismissed the second appeal for non-compliance without addressing the appellant's prima facie case. Reliance on the coordinate-bench decision in Kavya Marketing establishes that at the stage of admitting an appeal under the statutory pre-deposit regime, the appellate authority is required to consider the prima facie strength of the case and exercise its discretion judiciously. The Tribunal's order did not advert to or evaluate the petitioner's prima facie contentions regarding export documents, and therefore the insistence on the pre-deposit and the consequent dismissal amounted to failure to apply the statutorily conferred discretion and was arbitrary. [Paras 6]

The orders of the Tribunal dated 20.07.2022 and 08.09.2022 directing pre-deposit and dismissing the second appeal for non-payment are quashed and set aside.

Remand for fresh adjudication on merits - consideration of financial hardship in fixing pre-deposit - Direction to the First Appellate Authority to hear the appeal on merits and to reconsider pre-deposit in light of financial hardship - HELD THAT: - Rather than adjudicating the controversy itself, the High Court remitted the matter to the Commissioner (Appeals)/First Appellate Authority for fresh hearing on merits. The First Appellate Authority is directed to consider the petitioner's prima facie case and to decide afresh on any pre-deposit requirement, taking into account the financial hardship claimed by the petitioner. The High Court expressly left all substantive issues, including stay of demand, open for the appellate authority to determine on merits. [Paras 6]

Matter remitted to the First Appellate Authority for de novo consideration on merits and for fresh determination of pre-deposit, with attention to the petitioner's financial hardship; all issues left open.

Final Conclusion: The Tribunal's orders of 20.07.2022 and 08.09.2022 directing pre-deposit and dismissing the second appeal are quashed; the matter is remitted to the First Appellate Authority to hear the appeal on merits and to reconsider any pre-deposit requirement having regard to the prima facie case and the petitioner's financial hardship, with all substantive issues left open.

Interest on delayed refund - Statutory entitlement to interest on refund under Section 54 of the Gujarat Sales Tax Act, 1969 - Interest on refund under Section 38 of the Gujarat Value Added Tax Act, 2003 - Doctrine of merger - Compensatory principle vis-a -vis statutory interest

Interest on delayed refund - Statutory entitlement to interest on refund under Section 54 of the Gujarat Sales Tax Act, 1969 - Doctrine of merger - Entitlement of the petitioner to interest on the delayed refund and the rate and period for which interest is payable. - HELD THAT: - The Court held that the petitioner is entitled to interest on the delayed refund granted for Financial Year 2004-2005. Applying Section 54 of the Gujarat Sales Tax Act and the analogous provisions of Section 38 of the GVAT Act, and following precedent (notably State of Gujarat v. Doshi Printing Press and M/s Syngenta Crop Protection Pvt. Ltd. v. State of Gujarat), the Division Bench applied the doctrine of merger to treat the appellate order as the final assessment. The Court observed that treating a refund arising from an appellate modification as other than a refund 'by virtue of an order of assessment' would defeat the doctrine of merger and produce discriminatory results. While earlier decisions discuss compensatory relief and limitations on interest-on-interest, the determinative legal conclusion here is that interest is payable at the statutory appellate rate (6% under the GVAT provisions relied upon) for the period specified by the Court. The Court considered interlocutory proceedings before the Supreme Court and related stays but found no reason to depart from the cited decisions. In view of these considerations the Court directed payment of interest at 6% per annum on the refunded principal for the period specified in the order. [Paras 9, 15, 16]

Petitioner entitled to interest at 6% per annum on the refunded principal; interest payable from 13.07.2009 until the date of actual refund, to be paid within twelve weeks of receipt of the judgment.

Final Conclusion: Writ petition allowed; respondent directed to pay interest at 6% p.a. on the principal refund for Financial Year 2004-2005 from 13.07.2009 until actual refund, payable within twelve weeks.

Validity of levy of advertisement tax post-101st Constitutional Amendment - Power of State and municipal bodies to legislate and levy advertisement tax - Subsumation of erstwhile State advertisement tax into Goods and Services Tax and the Compensation Act - Article 265 - no tax except by authority of law - Distinction between tax and fee - Constitutional invalidation of statutory provisions continuing after constitutional amendment

Validity of levy of advertisement tax post-101st Constitutional Amendment - Article 265 - no tax except by authority of law - Demand notices seeking payment of advertisement tax raised by municipal authorities are not sustainable and are quashed. - HELD THAT: - The Court held that entry No.55 of List II of the Seventh Schedule was omitted by the Constitution (One Hundred and First Amendment) Act, 2016 and consequently the legislative competence of the State to impose advertisement tax stood withdrawn. In consequence of the subsumption of specified State taxes into the Goods and Services Tax regime (and recognition in the Goods and Services Tax (Compensation to States) Act, 2017), municipal corporations and municipalities no longer possess power to levy or collect advertisement tax. Applying Article 265, the Court concluded that demands for advertisement tax made after the constitutional amendment were without authority of law and therefore unsustainable; the specific demand notices relied upon in W.P.No.9936/2019 were quashed. [Paras 15, 16, 23, 32]

Demand notices demanding advertisement tax are quashed and the petitions seeking to set aside such demands are allowed.

Power of State and municipal bodies to legislate and levy advertisement tax - Constitutional invalidation of statutory provisions continuing after constitutional amendment - Provisions of the Karnataka Municipal Corporations Act, 1976 empowering corporations to levy advertisement tax are unconstitutional and struck down to the extent indicated. - HELD THAT: - The Court examined the relevant provisions of the KMC Act, 1976 and found that the power to levy advertisement tax under Section 103(b)(vi) and the charging machinery under Section 134 (and related provisions which operate 'after the levy of the tax' such as Sections 135(1), 135(2)(ii), 135(3), 139 and Schedule VIII) derived their competence from entry No.55 of List II. With entry No.55 omitted by the 101st Constitutional Amendment and the GST scheme in place, those statutory provisions lost their constitutional foundation. The Court therefore declared the specified provisions and consequential bye-laws invalid and struck them down to the extent they authorise levy or collection of advertisement tax. [Paras 14, 15, 16, 23, 32]

Section 103(b)(vi) and Section 134 of the Karnataka Municipal Corporations Act, 1976 and the related provisions and Schedule VIII (to the extent they operate for levy/collection of advertisement tax) are declared unconstitutional and struck down.

Power of State and municipal bodies to legislate and levy advertisement tax - Constitutional invalidation of statutory provisions continuing after constitutional amendment - Provisions of the Karnataka Municipalities Act, 1964 empowering municipal councils to levy advertisement tax are unconstitutional and struck down to the extent indicated. - HELD THAT: - The Court analysed the corresponding provisions in the KM Act, 1964 - including Section 94(1)(b)(xiii) (with explanations), Section 94(1-B), and the provisions which condition permission on payment of the tax (Sections 133(1), 133(2)(ii), 133(3), proviso (iv) to Section 142, Section 324(1)(ff) and Schedule VII). As these provisions similarly traced legislative competence to the omitted entry No.55, they no longer had constitutional backing after the 101st Amendment and the GST framework, and were therefore declared unconstitutional and struck down to the extent they authorise levy or collection of advertisement tax. [Paras 13, 15, 23, 32]

Section 94(1)(b)(xiii) (and its explanations), Section 94(1-B), the identified provisions conditioning permission on tax payment and Schedule VII of the Karnataka Municipalities Act, 1964 (to the extent they authorise levy/collection of advertisement tax) are declared unconstitutional and struck down.

Distinction between tax and fee - Constitutional invalidation of statutory provisions continuing after constitutional amendment - Characterisation of the levy as a 'fee' by municipal authorities does not save the impugned statutory provisions from invalidity arising from loss of legislative competence. - HELD THAT: - The Court considered submissions relying on judicial distinctions between 'tax' and 'fee' and on the State's subsequent amendment seeking to substitute 'fee' for 'tax' in certain enactments. It held that re-characterisation or contentions that the levy is a fee cannot supply the legislative competence lost by omission of entry No.55; the existence of bye-laws or later amendments substituting 'fee' does not validate levy or collection where the underlying legislative power to impose such imposts has been withdrawn by the constitutional amendment and the GST regime. [Paras 24, 27, 32]

The contention that the impost is a 'fee' and not a 'tax' does not preserve the challenged statutory provisions; they remain unconstitutional to the extent impounding levy/collection of advertisement tax.

Remedial directions for amounts collected after constitutional amendment - Subsumation of erstwhile State advertisement tax into Goods and Services Tax and the Compensation Act - Petitioners are entitled to pursue refund or adjustment of amounts collected as advertisement tax after the 101st Amendment; the authorities are directed on procedure for representation, refund or adjustment. - HELD THAT: - Recognising that amounts may have been collected after the constitutional amendment, the Court granted petitioners liberty to make representations detailing amounts paid. The respondent authorities were directed to either refund the amounts so paid or permit adjustment/appropriation against other levies, providing a detailed break-up within six weeks of representation. If no adjustment is possible, refund must be made. This provides an administrative remedial mechanism without quantifying amounts in the writ. [Paras 32]

Petitioners may represent for refund; respondents must refund or allow adjustment with detailed break-up within the stipulated time or refund if no adjustment is possible.

Final Conclusion: Writ petitions are allowed. The High Court declared specified provisions of the Karnataka Municipal Corporations Act, 1976 and the Karnataka Municipalities Act, 1964 (and consequential provisions/bye-laws) unconstitutional and struck them down to the extent they authorise levy or collection of advertisement tax after omission of entry No.55 by the 101st Constitutional Amendment; the impugned demand notices were quashed, coercive action in respect of petitioners' hoardings is prohibited, and petitioners are permitted to seek refund or adjustment of amounts collected after the constitutional amendment with directions to the authorities for prompt disposal of such representations.

Writ of Mandamus - Right to speedy justice under Article 21 - Equality before law and non-arbitrary treatment under Article 14 - Appointment of Presiding Officer - In-charge / additional charge arrangement - Judicial direction to conclude administrative appointment within fixed time

Writ of Mandamus - Appointment of Presiding Officer - In-charge / additional charge arrangement - Right to speedy justice under Article 21 - Equality before law and non-arbitrary treatment under Article 14 - Petition seeking direction to the respondent to fill the vacancy of Presiding Officer, Debt Recovery Tribunal-I, Ahmedabad, and to provide an interim in charge arrangement. - HELD THAT: - The Court found that the vacancy of the Presiding Officer, DRT-I, Ahmedabad, resulted in adjournments and denial of timely adjudication of matters assigned to that Bench, thereby impinging upon the litigants' right to speedy justice under Article 21 and causing unequal treatment contrary to Article 14 where similarly placed litigants before DRT-II were able to proceed. Although the respondent had earlier given assurances and taken temporary in charge arrangements, those assurances had not crystallized into a continuing administrative order after 31.3.2022 and no concrete steps had been shown to this Court to fill the vacancy. In view of the continuing prejudice to litigants and absence of a timely administrative remedy, the exercise of supervisory jurisdiction is warranted to secure effective adjudicatory access. The Court therefore exercised its writ jurisdiction to compel the administrative authority to conclude the appointment process within a specified outer time-limit and to direct immediate issuance of an interim notification placing the Presiding Officer of DRT-II with additional charge of DRT-I until a regular appointment is made.

Writ Petition allowed; a Writ of Mandamus issued directing the respondent to conclude the process for appointment of the Presiding Officer, DRT-I, Ahmedabad, expeditiously and within two months, and until such appointment the respondent to forthwith notify that the Presiding Officer, DRT-II, Ahmedabad, will hold additional charge of DRT-I.

Final Conclusion: The petition was allowed: the Court directed the respondent to complete the appointment to the vacant Presiding Officer post at DRT-I, Ahmedabad, within two months and ordered an immediate interim in charge arrangement by placing the Presiding Officer of DRT II with additional charge of DRT I; no order as to costs.