TaxTMI Updates e-Newsletter
Jan 20,2024

Principles for grant of bail - presumption of innocence - triple/tripod test in economic offences - danger of tampering with evidence and influencing witnesses - investigation completed and charge-sheet filed as factor favouring bail - Article 21 right to liberty and speedy trial - economic offences not to be treated as a monolithic class

Principles for grant of bail - presumption of innocence - investigation completed and charge-sheet filed as factor favouring bail - danger of tampering with evidence and influencing witnesses - triple/tripod test in economic offences - Article 21 right to liberty and speedy trial - Whether the petitioner accused of alleged economic offences is entitled to regular bail pending trial - HELD THAT: - The Court applied established bail principles, noting that considerations include prima facie grounds, nature and gravity of charge, severity of punishment, risk of absconding, character and means of accused, likelihood of repetition, and reasonable apprehension of tampering with witnesses or evidence. The Court observed that economic offences cannot be treated as a single category mandating denial of bail and that the triple test (flight risk, tampering with evidence, influencing witnesses) is relevant. Having regard to the incarceration already undergone by the petitioner, the maximum punishment prescribed, completion of investigation and presentation of the challan, and authorities emphasizing that completed investigation and filing of charge-sheet weigh in favour of bail, the Court held that continued detention was not necessary for further investigation. The Court balanced the liberty interest under Article 21 with the concerns of the prosecution and concluded that bail should be granted subject to stringent conditions to allay apprehensions of the investigating agency. The Court left the Trial Court free to impose additional lawful conditions and specified certain pre-conditions directed at preventing tampering or evasion. [Paras 12, 13, 14]

Petition allowed; petitioner released on bail on furnishing bonds/sureties, subject to surrender of passport, an undertaking regarding non-alteration of documents/addresses/companies under investigation and informing the agency of any change of mobile number, and such other conditions as the Trial Court may impose.

Final Conclusion: Bail granted to the petitioner pending trial on stringent conditions and subject to the Trial Court's power to impose further lawful conditions; the order is made without expressing any opinion on the merits of the case.

Detention of goods under GST - penalty under GST - release of detained goods on deposit of penalty - availability of alternative remedy of appeal - maintainability of writ against show cause notice

Detention of goods under GST - penalty under GST - release of detained goods on deposit of penalty - availability of alternative remedy of appeal - maintainability of writ against show cause notice - Challenge to the detention order, imposition of penalty and release of goods disposed with liberty to pursue statutory remedy; writ petition not entertained on merits. - HELD THAT: - The court recorded that the impugned order imposing penalty was passed on 30.05.2023 and that the petitioner deposited the penalty amount on 08.07.2023 after which the detained goods (areca nuts) were released. In view of the statutory scheme and the fact that the authorities have passed the order in accordance with the relevant provisions, the petitioner was directed to avail the statutory appellate remedy rather than seek relief by way of writ. The court relied on the principle in The State of Punjab v. Shiv Enterprises that writ petitions challenging show cause notices or similar statutory proceedings are not ordinarily maintainable, and therefore declined to adjudicate the merits of the detention/penalty in the writ petition. The petition was disposed of while granting the petitioner liberty to file the appropriate appeal within a limited period. [Paras 3, 4, 5]

Writ petition disposed with liberty to the petitioner to avail the alternative statutory remedy of appeal within four weeks; no adjudication on merits of detention or penalty.

Final Conclusion: Writ petition under Articles 226/227 dismissed without deciding merits; petitioner permitted to pursue appellate remedy against the order imposing penalty and concerning release of goods within four weeks.

Cancellation of GST registration with retrospective effect - Requirement of objective satisfaction under Section 29(2) - Consideration of consequences including denial of input tax credit - Show cause notice and opportunity of hearing - Recovery of tax, penalty and interest

Cancellation of GST registration with retrospective effect - Show cause notice and opportunity of hearing - Impugned order cancelling registration retrospectively to 02.07.2017 was unsustainable and was modified. - HELD THAT: - The order dated 16.01.2023 was found to be bereft of reasoning, merely referring to the show cause notice and fixing the retrospective effective date as 02.07.2017 without objective satisfaction. The Court held that registration cannot be cancelled retrospectively in a mechanical manner and that any retrospective cancellation must be founded on objective criteria and proper reasoning. In view of the petitioner's stated decision to discontinue business, the Court exercised its remedial power to limit cancellation to 23.12.2022 instead of 02.07.2017. [Paras 4, 5, 7]

Impugned cancellation order set aside to the extent it applied from 02.07.2017 and registration is cancelled with effect from 23.12.2022.

Requirement of objective satisfaction under Section 29(2) - Consideration of consequences including denial of input tax credit - Legal standard for retrospective cancellation under Section 29(2) of the CGST Act was articulated. - HELD THAT: - Section 29(2) permits cancellation from a retrospective date only if the proper officer 'deems fit' on objective grounds. Such satisfaction must be based on objective criteria and not be subjective or mechanical. The Court observed that consequences of retrospective cancellation-such as denial of input tax credit to customers-are relevant and ought to be considered by the proper officer when determining whether retrospective cancellation is warranted. [Paras 5, 6]

Retrospective cancellation is permissible only upon objective satisfaction by the proper officer, who must consider attendant consequences including impact on input tax credit.

Show cause notice and opportunity of hearing - Cancellation of GST registration with retrospective effect - Respondent may initiate further action for retrospective cancellation only after issuing a proper show cause notice and affording opportunity of hearing. - HELD THAT: - The Court made clear that while it has limited the retrospective application in the present order, the respondents remain at liberty to pursue cancellation with retrospective effect, provided such action is taken in accordance with law. Any such step must follow issuance of a proper show cause notice and grant of an opportunity of hearing to the petitioner, so that the statutory requirements and the need for objective satisfaction are complied with. [Paras 8]

Respondents may take further action for retrospective cancellation only in accordance with law and after issuing a proper show cause notice and providing hearing.

Recovery of tax, penalty and interest - Respondents are not precluded from recovery proceedings for any tax, penalty or interest due. - HELD THAT: - The Court recorded that its modification of the effective date of cancellation does not bar the respondent authorities from pursuing recovery of any tax, penalty or interest that may be due from the petitioner, and such recovery may be undertaken in accordance with law. [Paras 9]

Respondents remain free to take steps for recovery of any tax, penalty or interest in accordance with law.

Final Conclusion: The writ petition is disposed by modifying the retrospective cancellation: registration is cancelled with effect from 23.12.2022; retrospective cancellation to 02.07.2017 is set aside for lack of objective reasoning; respondents may, however, initiate further lawful proceedings (including retrospective cancellation) only after issuing a proper show cause notice and affording hearing, and are not precluded from recovery of any dues.

Input tax credit mismatch between GSTR-3B and GSTR-2A - Circular No. 183/15/2022-GST relaxation for financial years 2017-18 and 2018-19 - Remand for fresh consideration in light of administrative circular - Opportunity of personal hearing before finalising assessment

Input tax credit mismatch between GSTR-3B and GSTR-2A - Circular No. 183/15/2022-GST relaxation for financial years 2017-18 and 2018-19 - Whether the assessing authority's disallowance of input tax credit on the ground of mismatch between GSTR-3B and GSTR-2A must be reconsidered in light of Circular No. 183/15/2022-GST. - HELD THAT: - The Court accepted that the petitioner filed GSTR-3B for the period July, 2017 to March, 2018 and that a notice was issued due to a mismatch between GSTR-3B and GSTR-2A leading to disallowance of the claimed input tax credit. It noted the Central Board of Indirect Taxes and Customs Circular No. 183/15/2022-GST dated 27.12.2022 which provides procedural relaxation for supplies not reflected in GSTR-2A owing to reporting errors by suppliers during the initial GST implementation years (2017-18 and 2018-19), including cases where supplies were wrongly reported as B2C instead of B2B. The Government Pleader did not dispute that the petitioner's case may fall within the scope of the Circular. In view of these facts and the Circular's procedural mechanism for handling differences between ITC claimed in GSTR-3B and GSTR-2A, the Court concluded that the disallowance must be reassessed by the assessing authority in accordance with the Circular. [Paras 5]

Impugned orders disallowing input tax credit are set aside and the matter is remitted to the assessing authority to reconsider the claim afresh in the light of Circular No. 183/15/2022-GST.

Remand for fresh consideration in light of administrative circular - Opportunity of personal hearing before finalising assessment - Whether the writ petition may be treated as a substitute forum and the assessment proceedings should be remitted for fresh consideration with an opportunity of personal hearing. - HELD THAT: - The Court recorded that the petitioner would have preferred to file the second appeal before the Tribunal but could not do so due to the Tribunal not being constituted. The petitioner sought that the writ petition be treated as the appeal and that the matter be remitted to the assessing authority for fresh consideration under the Circular. The Government Pleader did not dispute the applicability of the Circular to the petitioner's case. Exercising its supervisory jurisdiction, the Court allowed the writ petition, treated the remedy by way of writ as sufficient in the circumstances, set aside the impugned orders and remitted the matter to the assessing authority for fresh consideration. The Court expressly directed that the petitioner be afforded an opportunity of personal hearing before finalising the reassessment on remand. [Paras 4, 5]

Writ petition allowed as substitute remedy in the circumstances; matter remitted for fresh consideration in accordance with the Circular and the petitioner to be given personal hearing before finalising assessment.

Final Conclusion: The writ petition is allowed; the impugned assessment and appellate orders are set aside and the matter is remitted to the assessing authority to reconsider the petitioner's claim for input tax credit for July, 2017 to March, 2018 afresh in the light of Circular No. 183/15/2022-GST, with the petitioner being afforded a personal hearing before finalisation.

Opportunity of personal hearing under sub-section (4) of Section 75 of the GST Act, 2017 - requirement to record reasons for disposing representations/replies - prima facie case for grant of interim relief - interim restraint on coercive recovery proceedings

Opportunity of personal hearing under sub-section (4) of Section 75 of the GST Act, 2017 - requirement to record reasons for disposing representations/replies - interim restraint on coercive recovery proceedings - Whether the petitioner was denied the statutory opportunity of personal hearing and reasons were not recorded before passing the order under Section 73, and whether interim protection from coercive recovery should be granted. - HELD THAT: - The petitioner filed a detailed reply to the Show Cause Notice on 09.12.2023 and specifically requested a personal hearing in terms of sub-section (4) of Section 75 of the GST Act, 2017. The impugned order under Section 73 was passed on 10.12.2023, the day after the reply was uploaded, with no recording of reasons addressing the submissions and without affording the requested personal hearing. Sub-section (4) of Section 75 contemplates granting an opportunity of hearing where such a request is made in writing or where an adverse decision is contemplated. On the material placed before the Court, a prima facie case was made out that the statutory opportunity was not afforded and that the order did not reflect consideration of the petitioner's submissions; accordingly, interim relief was justified to preserve the petitioner's position pending further adjudication. [Paras 3, 7, 8]

Interim protection granted: till the next date of listing there shall be no coercive action by the respondent authorities to recover the dues stated in the impugned order dated 10.12.2023.

Final Conclusion: The Court, finding a prima facie case that the petitioner's request for a personal hearing under sub-section (4) of Section 75 was not complied with and that reasons for addressing the petitioner's submissions were absent, restrained the revenue from initiating coercive recovery proceedings in respect of the impugned order dated 10.12.2023 until the next listing.

Rectification for errors apparent on the face of the record under section 161 of the GST Act - effect of non-contestation of a show cause notice - agreed order and bar to rectification - assessment under section 73(1) of the CGST Act where the assessee failed to respond to notices and hearing - statutory appeal against assessment and rectification orders to be decided independently on merits

Rectification for errors apparent on the face of the record under section 161 of the GST Act - effect of non-contestation of a show cause notice - agreed order and bar to rectification - Rectification under section 161 of the GST Act was not available to the appellant to correct the excess input tax credit claimed where the show cause notice was not contested and the assessment order resulted therefrom was not amenable to rectification on that basis. - HELD THAT: - The appellant admitted the excess availment of input tax credit and did not respond to discrepancies communicated in the return, nor to the show cause notice issued under section 73(1) of the CGST Act, and did not avail a personal hearing. Rectification under section 161 is confined to errors apparent on the face of the record and is appropriate where a show cause notice has been contested. Where a show cause notice is not contested, the resulting order assumes the character of an agreed order; in such circumstances a rectification application cannot be used to reopen or review the factual basis of the assessment. The learned Single Judge therefore correctly declined to direct rectification of the assessment order in exercise of writ jurisdiction. [Paras 4, 5]

Rectification application under section 161 dismissed; rectification not available because the show cause notice was not contested and the assessment stands as an agreed order.

Assessment under section 73(1) of the CGST Act where the assessee failed to respond to notices and hearing - statutory appeal against assessment and rectification orders to be decided independently on merits - The assessment completed under section 73(1) of the CGST Act was finalised on available records where the assessee failed to respond, and any challenge to the assessment or the rejection of the rectification application is to be pursued by statutory appeal and considered on merits by the appellate authority. - HELD THAT: - The first respondent issued the assessment after finding excess input tax credit and finalised the proceedings in the absence of any response or appearance by the appellant. The High Court declined to interfere with the assessment in writ jurisdiction since what was sought amounted to a review of the assessment order rather than bona fide rectification. The Court observed that the appellant retains the statutory remedy of appeal against the assessment (Ext. P1) and the rectification rejection (Ext. P5), and directed that any such appeal be considered independently on merits by the appellate authority. [Paras 2, 4, 7]

Writ appeal dismissed; statutory appeal, if filed against the assessment and rectification orders, to be adjudicated independently on merits by the appellate authority.

Final Conclusion: The writ appeal was dismissed. The High Court held that rectification under section 161 was not available where the show cause notice was not contested and the assessment order was finalised on the available record; any challenge to the assessment or to the rejection of rectification must be pursued by statutory appeal and will be considered on merits by the appellate authority.

Anti-profiteering under Section 171 of the CGST Act, 2017 - Benefit of input tax credit (ITC) - Commensurate reduction in price - Comparison of pre-GST and post-GST base prices for applicability of anti-profiteering - Applicability of Section 171(1) where project commenced post-GST

Benefit of input tax credit (ITC) - Commensurate reduction in price - Comparison of pre-GST and post-GST base prices for applicability of anti-profiteering - Applicability of Section 171(1) where project commenced post-GST - Whether the provisions of Section 171(1) of the CGST Act, 2017 were attracted in respect of the Respondent's project "Galaxy" and whether any benefit of ITC or reduction in tax rate had to be passed on to the buyers. - HELD THAT: - The Director-General of Anti-Profiteering (DGAP) investigated the project and found that the project commenced after implementation of GST, with the commencement certificate dated 23.08.2018 and first booking on 27.10.2018, and that there was no sale or allotment in the pre-GST regime. Consequently, there was no pre-GST price history or pre-GST turnover/ITC against which post-GST prices or ITC could be compared to determine any accrual of additional ITC or reduction in tax rate. The Commission accepted the DGAP's factual findings and legal conclusion that absent any pre-GST baseline, Section 171(1)-which obliges passing on the benefit of a reduction in tax rate or ITC by way of commensurate price reduction-was not attracted to the project. The Applicant had also withdrawn his complaint and did not pursue inspection opportunities provided; the Commission proceeded ex parte and found no evidence of profiteering. The proceedings were therefore unnecessary and were dropped. [Paras 5, 6, 7]

The Commission held that Section 171(1) of the CGST Act, 2017 is not attracted to the Respondent's project "Galaxy" as the project commenced post-GST and there was no pre-GST baseline; accordingly, the proceedings are dropped.

Final Conclusion: The Commission accepted the DGAP's finding that the project began after GST implementation and that no benefit of additional ITC or tax-rate reduction had accrued which was required to be passed on; consequently, the anti-profiteering provisions under Section 171(1) do not apply and the proceedings are dropped.

Computation of capital gains on the sale of a capital asset - description of the previous owner and the period of holding of the asset by the assessee - Benefit of indexed cost of inflation - determination of indexed cost of acquisition - as decided by HC [2012 (2) TMI 733 - DELHI HIGH COURT] cost of acquisition stipulated in Section 49 means the cost for which the previous owner had acquired the property. The term “held by the assessee” should be interpreted to include the period during which the property was held by the previous owner.

HELD THAT:- As petitioner submitted that the special leave petition would not survive for further consideration owing to low tax effect. The submission of learned counsel for the petitioner is placed on record.

In the circumstances, the Special Leave Petition is dismissed owing to the aforesaid reason.

Assessment u/s 153A r.w/s 153C - Rejecting the claim of agricultural income and treating the income as income from other sources - HELD THAT:- Following the earlier order passed by this Court in M/S NILAMBUR TRADERS [2023 (9) TMI 849 - SC ORDER] as held resistance to the notice by the assessee is very informal. As already noted, the said reply did not convince the assessing authority. No exception to the findings of fact recorded in this behalf is argued.

Special leave petitions are also dismissed by holding that the High Court [2022 (3) TMI 1571 - KERALA HIGH COURT] has rightly recorded that no substantial question of law arose in the appeals filed under Section 260A of the Income Tax Act, 1961. Decided against assessee.

Notice under Section 148A(b) of the Income Tax Act, 1961 - clubbing of assessment years - amendment of notice by subsequent communication - inquiry under Section 148A(a) of the Income Tax Act, 1961 - opportunity to be heard under Section 148A(b) - decision under Section 148A(d) - prior approval of specified authority - re-assessment under Section 148

Notice under Section 148A(b) of the Income Tax Act, 1961 - clubbing of assessment years - amendment of notice by subsequent communication - Whether the notice dated 31.03.2023 unlawfully clubbed multiple assessment years or was amended impermissibly by a subsequent email and whether the proposed re-assessment related only to assessment year 2016-2017. - HELD THAT: - The Court found that, despite annexed information spanning multiple financial years, the notice in its tabulated form and text pertained only to assessment year 2016-2017. The assessing officer's contemporaneous email clarifying that information was sought in respect of cash deposits in the financial year 2015-2016 relevant to AY 2016-2017 was not an illegal amendment of the notice. The Court held that the email cannot be construed as modifying the notice, since the material called for by the notice related only to the single assessment year identified therein; accordingly the contention that the notice impermissibly clubbed three assessment years was rejected. [Paras 11]

The challenge that the notice clubbed multiple assessment years or was impermissibly amended by email is rejected; the proposed re-assessment relates solely to assessment year 2016-2017.

Inquiry under Section 148A(a) of the Income Tax Act, 1961 - opportunity to be heard under Section 148A(b) - decision under Section 148A(d) - prior approval of specified authority - re-assessment under Section 148 - Whether an independent inquiry under Section 148A(a) was mandatory before issuing the show-cause notice under Section 148A(b), and whether the procedure under Clauses (b)-(d) of Section 148A was complied with such that the order under Section 148A(d) is valid. - HELD THAT: - The Court construed Section 148A as conferring discretion on the assessing officer to conduct an inquiry under Clause (a) only 'if required'; it is not a mandatory step in every case. The assessing officer concluded that the information received was specific and an inquiry under Clause (a) was not required; the Court found no error in that conclusion. The assessing officer followed the Clause (b) procedure by serving a show-cause notice affording not less than seven days; he considered the assessee's replies under Clause (c) and thereafter, with prior approval of the specified authority, passed a reasoned order under Clause (d) recording that issuance of a notice under Section 148 was warranted. The Court held that the statutory procedure under Section 148A(b)-(d) was scrupulously followed and there was no infirmity in the order under Section 148A(d). [Paras 13]

An inquiry under Section 148A(a) was not mandatory in the facts of this case; the assessing officer complied with Clauses (b)-(d) and the order under Section 148A(d) is valid.

Final Conclusion: The appeal is dismissed; the order passed under Section 148A(d) of the Income Tax Act, 1961 upholding initiation of re-assessment for assessment year 2016-2017 is valid, and the assessee is directed to participate in the re-assessment proceedings which shall be carried out expeditiously.

Reopening of assessment under Section 148 - change of opinion doctrine - consideration of queries raised during original assessment - failure to disclose fully and truly all material facts within the meaning of the First proviso to section 147(1)

Reopening of assessment under Section 148 - change of opinion doctrine - consideration of queries raised during original assessment - Validity of the notice dated 30.03.2021 under Section 148 for Assessment Year 2017-2018 impugned as being based on alleged concealment and capitalization of financial costs. - HELD THAT: - The Court held that the Assessing Officer had raised specific queries during the original scrutiny assessment and the assessee had responded with particulars concerning loans, interest, depreciation and related compliance; there was also a disallowance of interest on TDS in the assessment order, which indicates that the subject matters now relied upon for reopening were considered during the original proceedings. Relying on the principle in Aroni Commercials Limited, once a query is raised in assessment proceedings and replied to by the assessee, it is a matter that the Assessing Officer must be taken to have considered even if the assessment order does not record detailed discussion or satisfaction on that point. The impugned reasons for reopening therefore amount to a mere change of opinion by the Assessing Officer rather than a bona fide formation of reasons to believe that income has escaped assessment; a change of opinion is not a valid basis to invoke Section 148. Applying this reasoning to the facts of the petition, the Court concluded that the notice to reopen was unsustainable. [Paras 8, 9, 10]

Impugned notice dated 30.03.2021 under Section 148 for Assessment Year 2017-2018 quashed.

Final Conclusion: Writ petition allowed; notice under Section 148 dated 30.03.2021 for Assessment Year 2017-2018 set aside on the ground that reopening was founded on a mere change of opinion as the matters relied upon were considered during the original assessment.

Validity of notice under Section 148 issued after four years - Requirement of prior sanction under Section 151(ii) for reopening assessments - Treatment of pre-amendment Section 148 notice as show cause under Section 148A(b) - Writ jurisdiction to entertain challenges to jurisdictional/legal defects in reopening notices

Requirement of prior sanction under Section 151(ii) for reopening assessments - Validity of notice under Section 148 issued after four years - Orders under Section 148A(d) and notices under Section 148 quashed for lack of requisite sanction - HELD THAT: - The petition was disposed on the ground that the reopening procedure was not in conformity with the statutory mandate as interpreted by the Division Bench in Siemens Financial Services Pvt. Ltd. and Crompton Greaves Consumer Electrical Ltd. The Court held that the authority which sanctioned issuance of the order under Section 148A(d) had exercised incorrect sanctioning power (Section 151(i) instead of Section 151(ii)), and, being squarely covered by the cited Division Bench decisions, the impugned order and notices could not be sustained. The Court declined to decide other grounds, concluding that the deficiency in sanction vitiated the reopening and notice procedure under the Income-tax Act.

Impugned order under Section 148A(d) and notices under Section 148 quashed and set aside.

Writ jurisdiction to entertain challenges to jurisdictional/legal defects in reopening notices - Writ petition maintainable to challenge jurisdictional/legal defect in reopening where defect goes to root of matter - HELD THAT: - Relying on the coordinate bench precedent (Arvind Sahdeo Gupta), the Court accepted that where a jurisdictional issue is purely legal and goes to the root of the reopening (here, absence of proper sanction), the writ petition cannot be dismissed on the ground of alternative remedy. The Court therefore proceeded to adjudicate the legality of the reopening procedure instead of relegating the petitioner to an alternative statutory remedy.

Writ petition entertainable and not barred by alternative remedy in circumstances where reopening suffers a jurisdictional/legal defect.

Final Conclusion: Petition disposed by quashing the orders passed under Section 148A(d) and the notices issued under Section 148 for assessment year 2016-17 on the ground that the reopening lacked the requisite sanction; no order as to costs.

Anonymous donations under section 115BBC - onus of proof under section 68 read with rule 46A - power of inquiry under section 133(6) - appeal under section 260A - requirement of a substantial question of law - exemption claim under section 11 not a pure question of law

Anonymous donations under section 115BBC - power of inquiry under section 133(6) - Assessments of cash donations as anonymous under section 115BBC - HELD THAT: - The Tribunal's factual conclusion that the cash donations received from 7,145 donors were anonymous was upheld. The assessing officer's enquiries and sample verifications - including letters under section 133(6) returned unserved, statements that some donors denied giving donations, inspection reports of incomplete or vague addresses and absence of bank deposits - justified drawing adverse inference against the assessee. On these facts the Tribunal was correct in sustaining the treatment of the donations as anonymous under section 115BBC. [Paras 14, 16, 17]

The finding that the donations were anonymous is sustained and is not vitiated by any error giving rise to a substantial question of law.

Onus of proof under section 68 read with rule 46A - Burden to substantiate genuineness of donations - HELD THAT: - By virtue of section 68 read with rule 46A the burden rested on the assessee to substantiate the genuineness and identity of donors. The assessee failed to discharge this onus: it initially did not file returns, submitted donor lists that were later replaced, and the sample verifications did not establish identity. Given the failure to produce cogent evidence, the assessing authority and the Tribunal were justified in reaching the adverse conclusion. [Paras 13, 14, 15]

The assessee failed to discharge the statutory onus and the authorities' adverse findings are upheld.

Appeal under section 260A - requirement of a substantial question of law - exemption claim under section 11 not a pure question of law - Maintainability of the appeal under section 260A and existence of substantial question of law - HELD THAT: - An appeal under section 260A requires demonstration of a substantial question of law. The Court held that the dispute concerning the assessee's entitlement to exemption under section 11 involves factual controversy and is not a pure question of law appropriate for a section 260A appeal. Having regard to the factual matrix and the authorities' findings, the appellant did not establish a substantial question of law requisite for admission under section 260A. [Paras 4, 12]

The appeal under section 260A does not raise a substantial question of law warranting interference.

Administrative instructions of CBDT - power of assessing officer and jurisdictional scope - Applicability of CBDT instructions and their effect on AO's jurisdiction - HELD THAT: - The Court observed that the cited CBDT instructions (No.10 and 13 of 2013) are administrative in nature and do not oust or go to the root of the assessing officer's jurisdiction, particularly where the assessee initially failed to file returns. Consequently those instructions did not invalidate the AO's actions in the facts of this case. [Paras 9]

The CBDT instructions relied on by the assessee are inapplicable to negate the AO's jurisdiction in the present facts.

Final Conclusion: The Tribunal's conclusions sustaining the assessment treating the cash donations as anonymous were upheld: the assessee failed to discharge the statutory onus under section 68 read with rule 46A, the AO's inquiries (including under section 133(6)) and the Tribunal's adverse inferences were justified, and no substantial question of law under section 260A was shown; the appeal is dismissed.

Condonation of delay - Rectification under section 154 - Intimation under section 143(1) - Principles of natural justice - Remand for fresh adjudication

Condonation of delay - Rectification under section 154 - Intimation under section 143(1) - Delay in filing appeal before the CIT(A) was condoned and the matter remitted to the CIT(A) for adjudication on merits. - HELD THAT: - The Tribunal examined the reasons for the delay of 2,929 days in filing the appeal to the CIT(A). The assessee asserted non-receipt of the intimation and relied upon having filed rectification applications under section 154 which were not processed, and upon a suggestion from the Assessing Officer to file an appeal. The CIT(A) dismissed the appeal solely on the ground of delay and ignored the assessee's affidavit explaining the delay and the steps taken to seek rectification. The Revenue did not deny service of the intimation but did not controvert the factual account of attempted rectification and the AO's communication advising appeal. Having regard to these circumstances, the Tribunal found the delay was not deliberate and constituted a reasonable cause warranting condonation. The Tribunal therefore set aside the dismissal for delay and remanded the matter to the CIT(A) to decide the substantive issues afresh, observing that the assessee must be afforded an opportunity of hearing in accordance with the principles of natural justice. [Paras 7]

Delay in filing the appeal before the CIT(A) is condoned and the appeal is remitted to the CIT(A) for proper adjudication on merits with opportunity of hearing; appeal partly allowed for statistical purposes.

Final Conclusion: The Tribunal condoned the delay in prosecuting the appeal to the CIT(A), observed that the CIT(A) failed to consider the assessee's explanations and rectification efforts, and remanded the appeal to the CIT(A) for fresh adjudication of the substantive issues in accordance with natural justice; the appeal is partly allowed for statistical purposes.

Reopening of assessment under section 148 - Escapement of income - Prima facie belief for issuance of notice - Void ab initio of reassessment notice - Taxability of repatriation of earlier investments - Offer of interest to tax in earlier years

Reopening of assessment under section 148 - Escapement of income - Prima facie belief for issuance of notice - Void ab initio of reassessment notice - Validity of reopening the assessment by issue of notice under section 148 for A.Y. 2017-18 - HELD THAT: - The Tribunal found that the Assessing Officer relied on ITS/AIR entries showing remittances during the year and the assessee's non-filing of return to form a belief that income had escaped assessment. However, on examination of material on record it was concluded that the transactions represented repatriation of amounts invested in earlier years and no fresh income had accrued in the year under consideration. The Assessing Officer had not examined relevant records showing prior taxation of interest and redemption details before issuing the notice. In these circumstances the required objective that income chargeable to tax had escaped assessment was not satisfied and the notice under section 148 was held to be void ab initio. The Tribunal applied the principle that at the stage of issuance the AO must have cogent material leading to a reasonable belief of escapement, and on facts here such belief was not established.

Notice issued under section 148 is void ab initio and reopening is invalid; reassessment is nullity.

Taxability of repatriation of earlier investments - Offer of interest to tax in earlier years - Whether the amount remitted in the year represented taxable income or merely repatriation of earlier investments already taxed - HELD THAT: - The Tribunal recorded undisputed facts that the assessee had subscribed to NCDs in 2014, earned interest which was offered to tax in earlier assessment years, and that the NCDs were redeemed in 2015 with subsequent transfer of funds to the assessee's foreign bank account. Given that the sums remitted in the year under consideration were proceeds of earlier investments and interest had already been subjected to tax, no fresh taxability arose in A.Y. 2017-18. The Assessing Officer's treatment of the remittance as unexplained investment and income was unsustainable in absence of examination of records demonstrating prior taxation and the timing of investment and redemption.

The remitted amount was repatriation of earlier investments/amounts whose interest had been offered to tax earlier; it did not constitute taxable income in A.Y. 2017-18.

Final Conclusion: The assessee's appeal is allowed: the reassessment notice under section 148 is quashed as void ab initio and the addition treating the remittance as unexplained income for A.Y. 2017-18 is set aside, the assessment being declared a nullity.

Taxability of interest income - deduction under Section 80P of the Income-tax Act, 1961 - revisional jurisdiction under Section 263 of the Income-tax Act, 1961 - second view not a ground for revision - claim of deduction by cooperative societies

Deduction under Section 80P of the Income-tax Act, 1961 - taxability of interest income - revisional jurisdiction under Section 263 of the Income-tax Act, 1961 - second view not a ground for revision - Validity of the Principal Commissioner of Income Tax's order under Section 263 setting aside assessment for disallowing deduction under Section 80P in respect of interest on fixed deposits. - HELD THAT: - The Tribunal found that at the time the assessment under Section 143(3) was completed the law governing the claim of deduction under Section 80P by cooperative societies in respect of interest income was settled by relevant decisions of the Gujarat High Court and, on that basis, the assessee had rightly claimed the deduction. Invocation of revisional powers under Section 263 was held to be impermissible where the assessing officer adopted a view reasonably open on the facts and law; a mere existence of a second view does not render an assessment order erroneous or prejudicial to the revenue so as to justify exercise of Section 263. The Tribunal noted that in the assessee's own case for a subsequent assessment year a similar Section 263 order had been quashed, and applied the same reasoning to quash the present revisionary order. Consequential submissions relied upon by the revenue were held not to displace the position that the assessment was within permissible bounds and therefore not amenable to revision under Section 263.

Order under Section 263 quashed; appeal allowed.

Final Conclusion: The revisionary order passed by the Principal Commissioner under Section 263 for Assessment Year 2017-18, insofar as it set aside the assessment on the issue of deduction under Section 80P in respect of interest on fixed deposits, is quashed and the appeal is allowed.

Denial of exemption under Section 10(38) for alleged bogus long term capital gains - Validity of addition under Section 68 for unexplained/accommodation entry transactions - Independent inquiry by Assessing Officer and admissibility of Investigation Wing material without formal cross examination

Denial of exemption under Section 10(38) for alleged bogus long term capital gains - Validity of addition under Section 68 for unexplained/accommodation entry transactions - Addition of Rs. 7,54,948/- treated as unexplained income and denial of LTCG exemption under Section 10(38) was upheld. - HELD THAT: - The Tribunal upheld the Assessing Officer's finding that the transaction in Kappac Pharma Ltd. shares was not genuine and amounted to an accommodation entry. The AO's independent inquiry (not merely reliance on the Investigation Wing report) established that the assessee purchased 5,000 shares in physical form for cash, used a broker of dubious credibility, dematerialisation and transfer dates were inconsistent, and the shares were sold after a period engineered to attract exemption under Section 10(38). These facts, together with anomalous purchase and sale prices and the timing of demat and sale, supported the conclusion that the alleged long term capital gain was fabricated to launder unaccounted income. The Tribunal found that the AO afforded opportunities to the assessee and was not required to allow cross examination of third party statements to sustain the independent findings. Reliance on prior decisions cited by the assessee was rejected as distinguishable on facts. [Paras 3, 8]

Addition under Section 68 upheld and exemption under Section 10(38) denied; appeal dismissed on this ground.

Independent inquiry by Assessing Officer and admissibility of Investigation Wing material without formal cross examination - Objection that cross examination of Investigation Wing statements was necessary was rejected. - HELD THAT: - The Tribunal accepted the AO's approach that he conducted an independent enquiry and did not blindly rely on the Investigation Wing's report. Given the AO's independent findings based on documents, demat records, transfer forms and transaction chronology, the request for cross examination of third parties did not vitiate the inquiry or require exclusion of the materials relied upon. The Tribunal found no procedural infirmity in the AO's or CIT(A)'s decision on this aspect. [Paras 8]

Request for cross examination refused in substance and did not affect the validity of the assessment; ground dismissed.

Final Conclusion: The Tribunal dismissed the assessee's appeal for AY 2015-16, upholding the Assessing Officer's addition treating the claimed LTCG as unexplained/accommodation entry and affirming that the AO's independent inquiry and use of available materials (without formal cross examination) did not render the assessment invalid.

Registration under section 12AA - charitable purpose versus commercial activity - trade, commerce or business in the course of achieving general public utility - quantified limit for business receipts - separate books of account and financial statements to demonstrate compliance - remand for fresh consideration in light of binding precedent

Registration under section 12AA - charitable purpose versus commercial activity - remand for fresh consideration in light of binding precedent - Assessee's challenge to the CIT(E)'s rejection of registration under section 12AA was considered and remanded for fresh adjudication. - HELD THAT: - The Tribunal examined the CIT(E)'s reasons for rejecting registration, which included findings that the assessee conducted commercial activity (sale of medicines), relied heavily on cash transactions, did not furnish purchase/sales bills or separate accounts for medicine transactions, and applied only a limited portion of receipts to charitable activity. The assessee produced additional documents and financial statements for the period ended 31/03/2019 under Rule 29. Applying the ratio in the cited Supreme Court decision concerning when activities connected with general public utility amount to trade or business and the relevance of quantitative limits and separate books, the Tribunal did not decide the merits on whether the activities are charitable or commercial. Instead, the Tribunal directed that the documents and financial statements produced by the assessee be considered afresh by the assessing authority in the light of the Supreme Court's guidance on: (a) distinguishing bona fide cost/nominal charging from commercial trade, (b) the prescribed quantitative limits for receipts from business activities, and (c) the necessity of separate books/financials to demonstrate compliance. The Tribunal therefore remanded the matter for verification and reconsideration rather than adjudicating entitlement to registration itself. [Paras 5]

Remanded to the file of the assessing officer for fresh consideration of the documents and financial statements produced by the assessee in terms of the Supreme Court's ratio.

Final Conclusion: Appeal partly allowed for statistical purposes; matter remanded to the assessing officer to examine the additional documents and financial statements (period ended 31/03/2019) and determine eligibility for registration under section 12AA in accordance with the Supreme Court's principles on commercial activity, quantitative limits and requisite accounting.

Carry forward of business losses - time limit under Explanation 2 to section 139(1) for filing original return - revised return filed under section 139(5) vis-a -vis classification as a belated return under section 139(4) - effect of belated return on eligibility for carry forward of losses

Carry forward of business losses - time limit under Explanation 2 to section 139(1) for filing original return - revised return filed under section 139(5) vis-a -vis classification as a belated return under section 139(4) - effect of belated return on eligibility for carry forward of losses - Whether the loss of Assessment Year 2019-20 could be carried forward where the assessee had filed an original return on 26/11/2019 within the time permitted by Explanation 2 to section 139(1), notwithstanding the assessing authority and CIT(A) treating a later-filed revised return as a belated return. - HELD THAT: - The Tribunal accepted the assessee's documentary evidence showing filing of the original return for AY 2019-20 on 26/11/2019, which fell within the extended time provided by Explanation 2 to section 139(1). The First Appellate Authority had recorded the return date as 20/02/2020 and treated that filing as a belated return under section 139(4), thereby disallowing carry forward of losses. The Tribunal found this to be a recording error by the authorities below. Because the original return was filed within the time permitted by Explanation 2 to section 139(1), the assessee remained eligible to carry forward the losses pertaining to AY 2019-20. The Tribunal therefore directed the assessing officer to allow carry forward of the claimed loss for AY 2019-20 as asserted by the assessee.

Assessee's claim to carry forward the loss of AY 2019-20 allowed; A.O. directed to permit carry forward of the loss claimed for AY 2019-20.

Final Conclusion: The Tribunal allowed the appeal, holding that the assessee filed the original return for AY 2019-20 within the time permitted by Explanation 2 to section 139(1) and directing the assessing officer to allow the carry forward of the loss pertaining to AY 2019-20.

Mistake apparent on the record - rectification under section 154 - payer's liability where payee has included income - verification of deductee's discharge of tax before charging payer

Rectification under section 154 - mistake apparent on the record - payer's liability where payee has included income - verification of deductee's discharge of tax before charging payer - Whether the intimation/demand raised by CPC could be corrected by rectification under section 154 in light of the assessee's reliance on Hindustan Coca Cola Beverages and attendant evidence. - HELD THAT: - The Tribunal observed that section 154 permits rectification only where there is a mistake apparent on the record and that reference to material outside the record is impermissible, as reiterated in the cited authority relied upon by the CIT(A). The assessee contended that, in view of Hindustan Coca Cola Beverages, it was not liable because the deductees had included the relevant receipts in their returns and paid tax; however the record before CPC did not contain documents establishing that the deductees had discharged their tax liability. Because the factual question whether the deductees had included the relevant income and paid tax requires verification of material not presently on the record, the Tribunal declined to decide the matter on the papers and remanded the issue to the file of the DCIT (TDS) for a full examination and, if justified, rectification under section 154. The Tribunal directed the assessee and DCIT(TDS) to endeavour to obtain the necessary details and complete the rectification process within 180 days. [Paras 9, 10]

Matter remanded to the DCIT (TDS) to examine whether deductees had included the relevant income and discharged tax and to complete rectification under section 154 within 180 days; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal remitted the claim for rectification to the DCIT(TDS) for factual verification of the deductees' tax compliance and directed completion of any rectification under section 154 within 180 days; appeal disposed of as allowed for statistical purposes.

Requirement of prima facie satisfaction for reopening under section 148 - Validity of notice under section 148 and concept of escapement of income - Reopening void ab initio and consequent nullity of assessment

Requirement of prima facie satisfaction for reopening under section 148 - Validity of notice under section 148 and concept of escapement of income - Reopening void ab initio and consequent nullity of assessment - Validity of the notice issued under section 148 and the reopening of assessment for AY 2017-18 - HELD THAT: - The Tribunal examined the reasons recorded by the Assessing Officer for issuance of notice under section 148 and found them limited to the facts that the assessee had made large remittances and had not filed an income-tax return for the year. The AO's reasons merely noted remittances (disclosed by Form 15CA) and the absence of an ITR, without articulating cogent material leading to a prima facie belief that income chargeable to tax had escaped assessment. At the stage of issuing a notice under section 148 the requirement is only for the formation of a prima facie satisfaction that income chargeable to tax has escaped assessment; however, the reasons must disclose how that belief was formed. In the present case the reasons did not explain or connect the remittance to undisclosed taxable income (the remittance arose from sale of investments), and thus did not amount to the necessary prima facie satisfaction. Consequently, the notice was held to be void ab initio and the assessment made pursuant thereto is a nullity. [Paras 10, 11]

Notice under section 148 quashed as void ab initio for lack of prima facie satisfaction; assessment is set aside.

Final Conclusion: The appeal is allowed: the reopening notice issued under section 148 for AY 2017-18 is quashed as void ab initio for failure to record requisite prima facie satisfaction, and the consequent assessment is declared a nullity.

Levy of penalty under 272A(2)(k) - delayed filing of TDS returns - interest under section 201(1A) - no loss to the exchequer - technical/venial breach - precedential reliance on tribunal decision

Levy of penalty under 272A(2)(k) - delayed filing of TDS returns - interest under section 201(1A) - no loss to the exchequer - technical/venial breach - Levy of penalty under 272A(2)(k) for delayed filing of quarterly TDS returns. - HELD THAT: - The Tribunal accepted the assessee's explanation that delays in filing quarterly TDS returns arose from paucity of funds and inability to file electronically without remitting taxes and in some instances due to non-availability of deductees' PANs. The assessee had remitted the TDS along with interest under section 201(1A) and filed the returns suo motu without any departmental notice. The revenue did not find the explanations to be false and there was no loss to the exchequer as the tax and interest were paid. Applying these facts and treating the omission as a technical and venial breach, the Tribunal held that imposition of penalty under 272A(2)(k) was not justified. The Tribunal also placed reliance on the cited Delhi Tribunal precedent to support the conclusion that penalty should not follow where the breach is technical, explanations are bona fide and tax with interest has been paid. [Paras 5, 6]

Penalty under 272A(2)(k) set aside; grounds raised by the assessee allowed.

Final Conclusion: The appeals are allowed and the penalty imposed under 272A(2)(k) is deleted for the years under consideration, the Tribunal treating the delayed filing as a technical breach where tax and interest were paid and no loss occurred to the exchequer.

Reasonable time - Arbitrariness under Article 14 - Limitation where statute is silent - Confiscation under Section 124 of the Customs Act - Penalty under Section 112 of the Customs Act

Reasonable time - Arbitrariness under Article 14 - Confiscation under Section 124 of the Customs Act - Limitation where statute is silent - Initiation and completion of confiscation proceedings under Section 124 of the Customs Act 9 to 11 years after import is unreasonable and vitiated by arbitrariness. - HELD THAT: - The Court held that where a statute (here Section 124 of the Customs Act) prescribes no limitation, the authority must exercise its jurisdiction within a reasonable time and any unreasonable delay renders the action arbitrary and violative of Article 14. The court applied the settled principle that what constitutes a reasonable time depends on the statutory scheme, nature of rights and obligations, and the facts of the case. Reliance was placed on earlier decisions including State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd. , S.B. Gurbaksh Singh v. Union of India , and other High Court decisions which held that long unexplained delays in issuing or prosecuting show cause notices vitiate the proceedings. Having regard to the scheme of the Customs Act and comparative indicators of permissible delay, proceedings initiated and concluded 9 to 11 years after the date of import were held to be inordinate and unreasonable; accordingly the adjudication and penalties founded on such delayed proceedings could not be sustained. [Paras 9, 10, 11]

Proceedings under Section 124/penalty orders arising from show cause notices issued 9 to 11 years after the imports are quashed as unreasonable and arbitrary; the writ petitions are allowed.

Final Conclusion: The impugned adjudication and penalty orders founded on show cause notices issued 9 to 11 years after the respective imports are set aside on the ground of unreasonable delay and arbitrariness; writ petitions disposed of with no costs.

Prohibited goods - provisional release under Section 125 of the Customs Act, 1962 - date for determination of applicable restriction - date of presentation of bill of entry - Foreign Trade Policy restrictions on import of electronic and IT goods - Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order - coverage of Multi Function Devices - definition of prohibited goods in Section 2(33) of the Customs Act, 1962 - effect of Section 11(3) (Finance Act, 2018) pending notification - release on payment of enhanced duty and provision of security for potential redemption fine

Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order - coverage of Multi Function Devices - Foreign Trade Policy restrictions on import of electronic and IT goods - prohibited goods - definition of prohibited goods in Section 2(33) of the Customs Act, 1962 - Second hand Multi Function Devices imported by the petitioner were prohibited under the applicable Foreign Trade Policy and MeitY Orders and therefore fell within the concept of "prohibited goods". - HELD THAT: - The Court examined the sequence of notifications and the Foreign Trade Policy provisions and held that electronic and IT goods notified under the Compulsory Registration Orders (including printers/MFDs as clarified by MeitY) were subject to prohibition unless registered with BIS or covered by an exemption. The amended policy and the insertions into Paragraph 2.31 rendered import of such notified goods (new and second hand) prohibited unless authorization and registration conditions were satisfied. The expression "prohibited goods" as defined in Section 2(33) of the Customs Act encompasses goods importable subject to prohibition under other laws, and the imported second hand MFDs therefore fell within that category under the policy in force at the relevant time. [Paras 60, 64, 65, 67]

Second hand MFDs imported by the petitioner were prohibited goods for the purpose of import control under the then applicable MeitY Orders and Foreign Trade Policy.

Date for determination of applicable restriction - date of presentation of bill of entry - prohibited goods - The date relevant for determining whether the import was subject to the later Order is the date of presentation of the bill of entry in India and not the bill of lading at the port of export. - HELD THAT: - On construction of the statutory scheme and prior decisions relied upon by the parties, the Court held that where a later order/notification comes into force before presentation of the bill of entry, the later order governs the clearance of goods. The petitioner's bills of entry were presented on 23.09.2021, after the Order which came into force on 17.09.2021; accordingly, the newer restrictions applied to these consignments despite an earlier bill of lading date. [Paras 32, 41]

The date of presentation of the bill of entry is the relevant date for applicability of the restrictive order; therefore the Order in force on 23.09.2021 applied to the consignments.

Provisional release under Section 125 of the Customs Act, 1962 - release on payment of enhanced duty and provision of security for potential redemption fine - Despite the consignments being prima facie prohibited, the Court directed provisional assessment and provisional release of the imported MFD consignments on payment of appropriate customs duty (enhanced duty) and on production of suitable security to cover any redemption fine. - HELD THAT: - Having noted precedent (including the Supreme Court's interim orders in similar matters) and the discretionary power to release confiscable/prohibited goods under Section 125, the Court exercised its discretion to permit provisional clearance. The order directs provisional assessment, remittance of enhanced duty quantified on certified valuation, and furnishing of bank guarantee/security to cover any redemption fine that may be imposed in adjudication. The period for clearance and conditions are fixed to protect the revenue while permitting release pending final adjudication. [Paras 72, 75, 76]

The consignments shall be provisionally assessed and released upon payment of enhanced duty and on furnishing suitable security to cover any redemption fine; clearance within thirty days subject to those conditions.

Effect of Section 11(3) (Finance Act, 2018) pending notification - Section 11(3) as introduced by the Finance Act, 2018 has not been given effect by notification; therefore prohibitions under other laws are not yet rendered redundant by Section 11(3) for practical enforcement. - HELD THAT: - The Court observed that Section 11(3), which would require prohibition/restriction under other laws to be notified under the Customs Act to be enforceable through Customs, has not been brought into effect by the Central Government. Until such notification is issued, the separate notifications and orders issued by other Ministries (MeitY, Commerce) remain operative for import control and enforcement under the existing statutory framework. [Paras 68, 69, 71]

Section 11(3) is not yet in force for practical purposes; existing prohibitions/restrictions under MeitY and Foreign Trade Policy continue to operate unless and until a corresponding notification under Section 11(3) is issued.

Final Conclusion: The writ petition is allowed in part: although the imported second hand MFDs were prima facie prohibited under MeitY Orders and the Foreign Trade Policy and the relevant date for applicability is the date of presentation of the bill of entry, the Court directed provisional assessment and release of the consignments on payment of enhanced customs duty (as per certified valuation) and on furnishing suitable security (bank guarantee) to cover any redemption fine, with clearance to occur within thirty days and without costs.

Jurisdiction to issue show cause notice under Section 28AAA of the Customs Act - recovery of duty where instrument obtained by collusion, wilful misstatement or suppression of facts - requirement of DGFT initiation/cancellation before Customs decides recovery (Circular No.334/1/2012-TRU) - competence of licensing authority (DGFT) vis-a -vis Customs in relation to validity of trade scrips - precedential distinction between Titan Medical Systems and Pennar Industries

Jurisdiction to issue show cause notice under Section 28AAA of the Customs Act - requirement of DGFT initiation/cancellation before Customs decides recovery (Circular No.334/1/2012-TRU) - competence of licensing authority (DGFT) vis-a -vis Customs in relation to validity of trade scrips - Validity of the show cause notice dated 24.11.2020 issued by Customs under Section 28AAA where DGFT had not cancelled the SEIS scrips and earlier DGFT proceedings were withdrawn - HELD THAT: - The Court held that Section 28AAA permits recovery where an instrument was obtained by collusion, wilful misstatement or suppression of facts, but the Department of Revenue's Circular No.334/1/2012-TRU requires Customs field formations to initiate demands only after DGFT or the concerned regional authority initiates action for cancellation, and that the matter may be decided only after DGFT has cancelled the instrument. Applying this principle, the Court found that although DGFT had earlier issued show cause notices and placed the petitioner on a denied list, those DGFT actions were withdrawn by letter dated 20.09.2021 and DGFT had not initiated cancellation of the SEIS scrips. On that factual basis and following the reasoning in Titan Medical Systems (that once a licensing authority issues and does not question a licence, Customs cannot assume the licensing authority's role), the Court concluded that Customs could not assume jurisdiction under Section 28AAA to recover duty in the absence of DGFT-initiated cancellation proceedings. The Court distinguished the Pennar Industries line of authority as not applicable to the present facts under Section 28AAA, and therefore set aside the impugned show cause notice as being contrary to the circular and without jurisdiction. [Paras 12, 14, 17, 18]

The show cause notice dated 24.11.2020 issued by the second respondent under Section 28AAA is without jurisdiction and is set aside.

Final Conclusion: The writ petition is allowed; the impugned show cause notice dated 24.11.2020 issued by the second respondent is set aside as contrary to Circular No.334/1/2012-TRU and for lack of jurisdiction, with no order as to costs.

Transmission of shares - requirement of succession certificate for transmission - articles of association governing mode of transfer of shares - shares as movable property under Section 44 of the Companies Act, 2013 - SEBI circular on simplified documentation and its limited applicability - indemnity bond and legal heirship certificate as alternative documentation - role of a competent court in resolving disputes of heirship

Transmission of shares - requirement of succession certificate for transmission - articles of association governing mode of transfer of shares - shares as movable property under Section 44 of the Companies Act, 2013 - Submission of a Succession Certificate is required for transmission of the deceased member's shares where the Articles of Association stipulate such requirement and rival claims to heirship exist. - HELD THAT: - Section 44 construing shares as movable property mandates transfer in the manner provided by the Articles of Association. Article 8.15 of the company's Articles requires a Succession Certificate for recognition of title by the company. In the factual matrix there are competing claims by multiple legal heirs and a pending recall/IA before the NCLT; accordingly a Succession Certificate would furnish legal indemnity under Section 381 of the Indian Succession Act, 1925 and protect the company against third party claims. Prior decisions cited where succession/ probate issues were contested support refusal to direct transmission in absence of an indisputable succession document. Given these considerations, directing transmission without the Succession Certificate was erroneous. [Paras 10, 11, 13, 15]

Impugned direction to effect transmission without production of a Succession Certificate set aside; Succession Certificate required and NCLT to proceed in accordance with law.

SEBI circular on simplified documentation and its limited applicability - indemnity bond and legal heirship certificate as alternative documentation - role of a competent court in resolving disputes of heirship - The SEBI circular on simplified documentation does not prevail over the Articles of Association of an unlisted private company and cannot be read to dispense with a Succession Certificate where rival claims exist. - HELD THAT: - The SEBI circular permits acceptance of a Legal Heirship Certificate and a notarised indemnity bond in certain contexts, but its scope is confined to entities under SEBI's regulatory jurisdiction and to situations where all legal heirs jointly furnish the indemnity. The annexure to the circular contemplates non production of a Succession Certificate only where indemnity is jointly furnished by all heirs. In the present case, competing claims among legal heirs mean the circular's relaxed documentation regime is inapplicable; it cannot override the company's Articles which prescribe a Succession Certificate for transmission. Where heirship is disputed, title should be settled by a competent court before the company effects transfer. [Paras 12, 14]

SEBI circular does not operate to displace the Articles' requirement of a Succession Certificate for this unlisted private company; circular reliance is untenable in the circumstances.

Final Conclusion: The appeal is allowed; the Impugned Order dated 26.07.2023 is set aside. The matter is remitted to the NCLT to proceed in accordance with law (including requirement of a Succession Certificate where applicable). No order as to costs.

Fresh loan versus restructuring - priority of charges / first charge - security interest and enforcement - jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code to decide inter se disputes between creditors - liquidator's control over project proceeds for completion - excluded assets

Fresh loan versus restructuring - security interest and enforcement - The Second Loan sanctioned on 31.01.2019 is a fresh Construction Finance Loan and not a restructuring or continuation of the First Loan. - HELD THAT: - The Sanction Letter dated 31.01.2019 does not state that the advance was for restructuring the earlier facility and its terms do not refer to any restructuring. The two facilities bear distinct loan account numbers and the account statements show separate treatment; the first loan account is recorded as closed. Correspondence and the email trail demonstrate that a fresh sanction was agreed and that a fresh NOC for ceding charge in respect of the second loan was sought but never issued. The absence of a registered charge in MCA records for the second loan and documentary indicators (including an email evidencing agreement to sanction a new loan) support the conclusion that the 31.01.2019 facility was a new loan and not a rescheduled first loan. [Paras 18, 19, 20, 21, 25]

The Second Loan is a fresh loan and not a restructuring of the First Loan.

Priority of charges / first charge - security interest and enforcement - jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code to decide inter se disputes between creditors - Appellant is not entitled to retain the first charge over the project assets in respect of the second loan; the First Respondent's first charge continues until a fresh NOC/mortgage and ROC registration were issued. - HELD THAT: - The Tripartite Agreement and the NOC of 14.06.2017 related to the original first loan and provided that upon repayment the First Respondent would become the first charge holder. The record shows that the first loan was closed and that the mortgage deed and tripartite arrangements were confined to the first loan. Requests for a fresh NOC and fresh mortgage/ROC registration in relation to the second loan remained outstanding. Given that no fresh NOC was issued and no charge registered for the second loan, the First Respondent's priority charge over the assets continued. The Adjudicating Authority had jurisdiction to consider inter se creditor disputes under the Code and, in order to protect homebuyers and facilitate project completion, restrained enforcement and directed handing over of title deeds to the liquidator pending disposal of the related application. [Paras 16, 21, 22, 24, 26]

The Appellant cannot claim the first charge over the assets in respect of the second loan; the First Respondent's charge remains, and restraint on enforcement and handing over of documents to the liquidator was justified.

Liquidator's control over project proceeds for completion - security interest and enforcement - excluded assets - Directions in the liquidation order concerning completion of the project, segregation of proceeds into a project account, and restriction on enforcement of security by the Appellant were sustained. - HELD THAT: - The Adjudicating Authority issued detailed directions to the liquidator for completion and handing over of sold flats, creation of separate bank accounts including a project-specific account, restriction on financial creditors' charge over project receipts, and use of proceeds solely for completion; these directions aimed to protect homebuyers and ensure project completion before distribution. Given the findings that the second loan did not carry a valid first charge and the need to preserve proceeds for completion, the appellate Tribunal found no reason to interfere with those directions and dismissed the appeals. [Paras 2, 4, 13, 27]

The impugned directions concerning the liquidator's control of project proceeds and restraint on enforcement were upheld.

Reopening and rehearing of reserved appeals - The applications to re-open and re-hear the appeals were dismissed as misconceived; there were no grounds to re-open the matter. - HELD THAT: - After reserve of judgment, the appellants sought to re-open the proceedings and place additional emails on record. The Tribunal examined the provenance and timing of those documents and concluded that they did not alter the factual and documentary matrix establishing that the second loan was a fresh facility and that no NOC was issued. Accordingly, the applications for re-opening and re-hearing were refused. [Paras 22, 23, 24, 27]

Applications to re-open and re-hear the appeals are dismissed.

Final Conclusion: The appeals are dismissed. The Tribunal held that the 31.01.2019 sanction constituted a fresh loan (not a restructuring of the first loan), that no fresh NOC or registered charge was created in favour of the Appellant for the second loan and therefore the First Respondent's priority charge continued; the Adjudicating Authority's directions restraining enforcement and vesting control of project proceeds with the liquidator were sustained, and applications to re-open the appeals were refused.

Transfer of investigation - Special Investigation Team (SIT) - bias and impartiality of investigating police - exclusion of local police - central agency investigation - supervision by Magistrate and judicial monitoring - handing over of case diary

Bias and impartiality of investigating police - exclusion of local police - The conduct and sequence of events surrounding registration of FIRs and the investigative lapses cast serious doubt on impartiality of Nazat Police Station personnel and require their exclusion from further investigation. - HELD THAT: - The Court found that a counter version recorded as FIR No. 7 of 2024 was registered as the first FIR despite an earlier GD entry for the suo moto FIR, and that interpolations and a watered-down suo moto FIR raise serious doubt about the Nazat Police Station's impartiality. The absence of prompt, effective steps at the scene, failure to seek permission to break open the accused's residence, omission of serious offences from the FIRs, and the police's failure to arrest prominent accused cumulatively justify excluding Nazat police personnel from conducting the investigation into the incidents at Nazat. These factual findings are sufficient to disqualify at least the personnel of Nazat Police Station or its outposts from further investigative involvement in the present cases. [Paras 10, 11, 12, 13, 14]

Nazat Police Station personnel and its outposts shall not be involved in investigating the offences; their exclusion is warranted by the record of registration and investigative lapses.

Special Investigation Team (SIT) - transfer of investigation - central agency investigation - Further investigation of Nazat Police Station FIR Nos. 8 and 9 of 2024 shall be conducted by a Special Investigation Team headed by a CBI officer, with specified composition and powers. - HELD THAT: - Having regard to the magnitude of the mob attack on ED officials, the apparent investigative deficiencies and the allegations of bias against local police, the Court directed that an SIT be constituted headed by a CBI officer of Superintendent of Police rank to be nominated by the CBI (with a specific local officer also named). Each Team Head may induct equal numbers of members from the State Police and the CBI. The SIT is empowered to seek assistance from State and Central forces for searches, seizures or arrests. The Court held that a pan India agency like the CBI is better placed to handle possible inter State or cross border aspects and that a joint SIT would instil public confidence and ensure a fair and effective investigation. [Paras 17, 18, 20, 21, 22]

Investigation of Nazat FIR Nos. 8 and 9 of 2024 shall be transferred to and conducted by an SIT headed by a CBI Superintendent of Police (to be nominated by the CBI), with joint membership from CBI and State Police and power to seek assistance from State and Central forces.

Supervision by Magistrate and judicial monitoring - no final report without leave - The SIT shall report to the jurisdictional Magistrate and the Court will monitor the investigation; no final report shall be filed without the leave of the Court and progress reports must be submitted. - HELD THAT: - To ensure transparency and accountability, the Court directed that the SIT shall not report to the State or the Centre but to the jurisdictional Magistrate in respect of regular steps and required reports. The Court will monitor the investigation and expressly ordered that no final report in form shall be filed without the leave of the Court. The SIT is required to file a progress report on the next date, thereby subjecting the investigation to judicial oversight. [Paras 20, 22]

The SIT shall report to the jurisdictional Magistrate; the Court will monitor the probe; no final report shall be filed without the Court's leave; the SIT shall file progress reports as directed.

Handing over of case diary - exclusion of local police - The existing Investigating Officer shall cease further investigation immediately and hand over the case diary and all materials to the SIT; existing security arrangements shall continue. - HELD THAT: - To effectuate the exclusion of Nazat Police Station personnel and to place the investigation under the SIT, the Court ordered that the present Investigating Officer shall not conduct any further investigation from that moment and must hand over the case diary and all materials collected to the SIT. The Court further ordered that existing arrangements of police pickets and CCTV cameras shall continue until decided otherwise by the SIT, ensuring preservation of scene security and evidence while the new investigative arrangement takes over. [Paras 22]

The present Investigating Officer shall stop further investigation and hand over the case diary and materials to the SIT; existing pickets and CCTV arrangements shall continue.

Final Conclusion: In view of serious doubts about the Nazat Police Station's handling of the matter and the gravity of the mob attack on ED officials, the Court directed constitution of an SIT led by a CBI Superintendent with joint CBI-State membership to investigate Nazat FIR Nos. 8 and 9 of 2024, excluded Nazat police personnel from further involvement, required immediate handover of the case diary to the SIT, mandated reporting to the Magistrate and judicial monitoring, and prohibited filing of any final report without the leave of the Court.

Offence under Section 3 of the Prevention of Money Laundering Act is dependent on illegal gain from a scheduled offence - Quashing of PMLA proceedings upon acquittal/discharge or quashing of the predicate (scheduled) offence - Requirement of a subsisting criminal substratum for initiation or continuation of proceedings under PMLA - High Courts to decide cases on the law as it stands and not await pending proceedings before the Supreme Court

Offence under Section 3 of the Prevention of Money Laundering Act is dependent on illegal gain from a scheduled offence - Quashing of PMLA proceedings upon acquittal/discharge or quashing of the predicate (scheduled) offence - Requirement of a subsisting criminal substratum for initiation or continuation of proceedings under PMLA - Continuation of prosecution under PMLA where the accused in the predicate/scheduled offence has been acquitted - HELD THAT: - The Court held that the offence under Section 3 of the PMLA is predicated on illegal gain of property arising from criminal activity relating to a scheduled offence and thus cannot be prosecuted in the absence of a subsisting scheduled offence. Relying upon the reasoning in Vijay Madanlal Choudhary and subsequent High Court decisions, the Court observed that if the person implicated in the criminal activity relating to the scheduled offence is finally discharged, acquitted or the criminal case is quashed by a competent Court, there can be no offence of money-laundering against that person or any person claiming through him in relation to property linked to that scheduled offence. The Court rejected the respondent's submission that proceedings should be kept pending until the Supreme Court decides an SLP on the issue, noting that High Courts proceed on the law as it stands and are not obliged to await a decision unless specifically directed otherwise. Applying these principles to the facts, since the co-accused (the principal accused in the predicate offence) was acquitted by the trial court and that judgment remains unchallenged, the ECIR and the consequential complaint under PMLA cannot survive and must be quashed. The respondent is, however, permitted to initiate appropriate proceedings for revival in case of altered circumstances or in the event of a final adverse decision by the Supreme Court in the pending SLP. [Paras 8, 11, 12, 13]

The ECIR No. ECIR/7/DZ/2008 and all consequential proceedings arising therefrom are quashed; liberty granted to the respondent to revive proceedings in case of altered circumstances or on a final decision of the Supreme Court in the specified SLP.

Final Conclusion: The petition is allowed: the complaint filed by the Enforcement Directorate under Section 3 of the PMLA arising out of ECIR/7/DZ/2008 and all consequential proceedings are quashed in view of the acquittal of the co-accused in the predicate offence; ED may revive proceedings if circumstances change or following a final Supreme Court decision in the pending SLP.

Summary order. Delay condoned; Civil Appeals dismissed for want of merit, the Court agreeing with the view of the Customs Excise & Service Tax Appellate Tribunal.

Contractual clause vis-a -vis pre existing statutory liabilities - statutory first charge under the Finance Act - priority of claims under Section 53 IBC (waterfall mechanism) - non obstante override under Section 238 IBC - recoverability from transferee under Section 87C Finance Act - obligation to lodge claims in liquidation under IBC/LPR - limitation of Government dues to two years preceding liquidation commencement date - disregard of contractual arrangements that disrupt statutory priority

Contractual clause vis-a -vis pre existing statutory liabilities - disregard of contractual arrangements that disrupt statutory priority - Clause in the tender/deed (Clause 7) does not render the purchaser liable for taxes already due by the corporate debtor and cannot override IBC priorities. - HELD THAT: - The tender clause refers only to taxes "hereafter to become chargeable or payable" and does not expressly make the purchaser liable for antecedent tax liabilities. Further, Section 53(2) IBC mandates that contractual arrangements among recipients which would disrupt the statutory order of priority be disregarded by the liquidator. Consequently reliance on Clause 7 to impose liability for pre existing dues or to obtain priority contrary to Section 53 is misplaced and not binding. [Paras 8]

Clause 7 cannot be invoked to recover taxes already due or to claim priority over distributions under IBC.

Statutory first charge under the Finance Act - non obstante override under Section 238 IBC - recoverability from transferee under Section 87C Finance Act - The statutory first charge created by Section 88 of the Finance Act and the recovery mechanism in Section 87C do not override the code; IBC's provisions prevail where inconsistent. - HELD THAT: - Section 88 creates a first charge but qualifies it by the expression "save as otherwise provided ... in Insolvency and Bankruptcy Code." Section 238 IBC contains a non obstante clause giving the Code overriding effect. Read together, Section 88 yields to the IBC regime; therefore reliance on Sections 87C/88 to claim priority or to sustain recovery outside the IBC waterfall is unsustainable. The Court contrasted the Finance Act provisions with other fiscal statutes relied upon by respondents and found material differences making those authorities inapplicable. [Paras 8, 9, 10, 11]

Section 88/87C of the Finance Act cannot be invoked to displace the priority and distribution scheme under the IBC.

Obligation to lodge claims in liquidation under IBC/LPR - priority of claims under Section 53 IBC (waterfall mechanism) - Revenue's failure to lodge claims during the liquidation process disentitles it to later enforcement against the successful auction purchaser; unreasonable delay vitiates the demand. - HELD THAT: - IBC is a time bound process with strict timelines for lodging claims; participation and filing of claims in the liquidation process are mandatory to assert entitlement to proceeds. The Central Government did not submit claims before the insolvency resolution professionals or liquidator; pursuing recovery after completion of sale and distribution is arbitrary and contrary to the statutory scheme and settled precedent permitting limited exceptions only in strong cases. Inaction by revenue to participate in the process thus defeats the impugned demand. [Paras 3, 12]

In the absence of a timely lodged claim under IBC/LPR, the revenue cannot sustain the demand raised post liquidation and distribution.

Limitation of Government dues to two years preceding liquidation commencement date - priority of claims under Section 53 IBC (waterfall mechanism) - Section 53(1)(e)(i) limits distribution in favour of Central/State Government dues to amounts relating to the two years preceding the liquidation commencement date; demands outside that period cannot be satisfied from liquidation proceeds. - HELD THAT: - Section 53(1)(e)(i) confines the amounts recoverable for Government dues from liquidation proceeds to dues "in respect of the whole or any part of the period of two years preceding the liquidation commencement date." Applying the expansive meaning of "in respect of," the Court held entitlement is limited to dues connected with that two year window. Since liquidation commenced on 07.08.2019, recoverable dues are limited up to 07.08.2017; the impugned demands relate to 2012 and 2015 2016 and therefore fall outside the statutory two year window. [Paras 13, 14]

Dues falling outside the two years preceding the liquidation commencement date are not recoverable from the sale proceeds under Section 53.

Final Conclusion: The impugned demand notice seeking recovery of service tax dues from the successful auction purchaser was set aside: Clause 7 of the sale instrument cannot impose liability for antecedent dues or override IBC priorities; statutory first charge under the Finance Act yields to the IBC; failure of the revenue to lodge claims in the liquidation process and the limitation of government dues to two years preceding the liquidation commencement date preclude the contested recovery. Writ petition allowed; demand notice quashed.

Jurisdiction to adjudicate service tax demand - place of rendering/place of execution of service as determinative of adjudicatory jurisdiction

Jurisdiction to adjudicate service tax demand - place of rendering/place of execution of service as determinative of adjudicatory jurisdiction - Whether the Assistant Commissioner, Bhavnagar-I had jurisdiction to adjudicate and demand service tax for services rendered at Balmer in Rajasthan. - HELD THAT: - The Tribunal found that the appellant was engaged in full-time services at M/s. Cairn Energy India Ltd's Balmer office in Rajasthan and that any taxable services, if rendered, were performed at Balmer. Applying the principle that jurisdiction to adjudicate a service tax demand lies where the work was executed, the Tribunal held that the Assistant Commissioner, Bhavnagar-I had no jurisdiction to issue the demand for services rendered at Balmer. The Tribunal relied on the reasoning in B. L. Mehta & Co., which states that where the appellant was not registered and the work was executed at a particular place, the cause of action arises at that place and the adjudicating authority elsewhere lacks jurisdiction. On that basis the impugned adjudication was found to be without jurisdiction and liable to be set aside. [Paras 4, 5]

Demand confirmed by the Assistant Commissioner, Bhavnagar-I was without jurisdiction; impugned order set aside and the appeal allowed.

Final Conclusion: The appeal is allowed; the impugned Order-In-Appeal dated 27.07.2023 confirming the service tax demand is set aside for want of jurisdiction, with consequential relief as per law.

CENVAT credit on inputs and capital goods - Entitlement to credit on goods and services used for supply and installation of telecom towers - Precedential effect of a High Court decision which fails to consider binding Supreme Court precedent - Application of Solid And Correct Engineering Works precedent to supply-and-installation contracts

CENVAT credit on inputs and capital goods - Entitlement to credit on goods and services used for supply and installation of telecom towers - Application of Solid And Correct Engineering Works precedent to supply-and-installation contracts - Assessee is entitled to CENVAT credit on monopole supply, monopole installation, monopole supply and installation, prefabricated shelters, raw material - towers (GBT, RTT-MP), shelter, tower supply and transportation and towers transportation under the category of inputs/capital goods. - HELD THAT: - The Tribunal examined conflicting High Court decisions and applied the binding principle that a High Court decision which did not consider the Supreme Court judgment in Solid And Correct Engineering Works cannot prevail over a subsequent High Court decision which correctly applies that Supreme Court precedent. The Delhi High Court in M/s. Vodafone Mobile Services Limited, having relied on the Supreme Court's decision in Solid And Correct Engineering Works, held that credit is permissible on the goods and services used for supply and installation of telecom towers. Following that reasoning and the consistent view taken by this Tribunal in subsequent orders, the Tribunal concluded that the appellant is entitled to CENVAT credit on the specified goods and services related to telecom tower supply and installation. [Paras 4, 5]

Impugned orders set aside; appeals allowed and CENVAT credit granted on the goods and services in question.

Final Conclusion: In view of the Delhi High Court's application of the Supreme Court precedent in Solid And Correct Engineering Works and subsequent consistent Tribunal decisions, the appellant is held entitled to CENVAT credit on the goods and services relating to supply and installation of telecom towers; impugned orders are set aside and the appeals are allowed.

Business Auxiliary Service - requirement to specify the applicable sub-clause of a composite service definition in show cause notice - reverse charge on import of services leviable w.e.f. 18.04.2006 - Taxation of Services (Provided from outside India and received in India) Rules, 2006 - Rule 3(ii) - import only if services performed in India - management, maintenance or repair of software provided from outside India - extended period of limitation - fraud, collusion, wilful misstatement or suppression of facts required to be shown - consequence of demand being set aside - interest and penalty not sustainable

Business Auxiliary Service - requirement to specify the applicable sub-clause of a composite service definition in show cause notice - reverse charge on import of services leviable w.e.f. 18.04.2006 - Validity of service tax demand confirmed under Business Auxiliary Service for imported marketing support services - HELD THAT: - The Tribunal held that the demand under Business Auxiliary Service could not be sustained because the show cause notice and the impugned order failed to specify which sub clause of Section 65(19) applied to the services sought to be taxed. The Tribunal followed its consistent view that a specific clause must be indicated for a BAS demand to be enforceable and cited earlier Tribunal decisions applying that principle. The Tribunal also noted that reverse charge liability for services received from outside India is leviable only w.e.f. 18.04.2006 as clarified by higher authority and departmental circular, reinforcing the illegality of demanding tax for earlier periods. Applying these principles, the Tribunal set aside the BAS demand confirmed by the Commissioner. [Paras 6]

Demand under Business Auxiliary Service set aside

Taxation of Services (Provided from outside India and received in India) Rules, 2006 - Rule 3(ii) - import only if services performed in India - Commercial training or coaching service - reverse charge on import of services leviable w.e.f. 18.04.2006 - Liability to service tax on subscription payments to foreign institutions characterised as commercial training or coaching services - HELD THAT: - The Tribunal found that the subscribed coaching and training services were performed entirely outside India and therefore did not qualify as imports under Rule 3(ii) of the Import Rules. Relying on precedents where identical facts led to setting aside of reverse charge demands for abroad performed training, the Tribunal held there was no tax liability under the reverse charge mechanism for those payments and allowed the appellant's plea on this count. [Paras 7]

Demand under Commercial Coaching or Training Services set aside

Convention centre service - reverse charge on import of services leviable w.e.f. 18.04.2006 - Taxation of Services (Provided from outside India and received in India) Rules, 2006 - Rule 3(ii) - import only if services performed in India - Validity of demand for Convention Centre Services - HELD THAT: - The Tribunal observed that Section 66A (bringing convention services under tax) came into force w.e.f. 18.04.2006; consequently, no service tax could be demanded for periods prior to that date. Further, receipt of convention services qualifies as import only if the services are performed in India under Rule 3(ii); where services were performed outside India the reverse charge demand could not be sustained. Applying these points, the Tribunal set aside the demand in respect of convention centre services. [Paras 8]

Demand under Convention Centre Service set aside

Management, maintenance or repair of software - Taxation of Services (Provided from outside India and received in India) Rules, 2006 - Rule 3(ii) - import only if services performed in India - Liability to service tax for software upgradation and maintenance provided from outside India - HELD THAT: - The Tribunal found that the software upgradation and maintenance were carried out entirely from outside India (over the Internet) and therefore did not amount to imported services taxable under the Import Rules, which require services to be performed in India to qualify as import. On this basis the Tribunal concluded that the demand under Management, Maintenance or Repair Services could not be sustained and set it aside. [Paras 9]

Demand under Management, Maintenance or Repair Service set aside

Extended period of limitation - fraud, collusion, wilful misstatement or suppression of facts required to be shown - consequence of demand being set aside - interest and penalty not sustainable - Invocation of extended period of limitation and sustainment of interest and penalty - HELD THAT: - The Tribunal held that the Department failed to establish any of the statutory ingredients (fraud, collusion, wilful misstatement or suppression of facts with intent to evade tax) necessary to invoke the extended period of limitation. The Tribunal further observed that the transactions were revenue neutral since the appellant would have been entitled to take credit of any reverse charge tax, negating mala fide intent. Having set aside the substantive demands, the Tribunal held that interest and penalties could not be sustained. [Paras 10]

Extended period invocation rejected; interest and penalty not sustainable

Final Conclusion: The appeal is allowed. The Tribunal set aside the impugned order in entirety: demands confirmed under Business Auxiliary Service, Commercial Coaching or Training Services, Convention Centre Service, and Management/Maintenance/Repair Service were quashed for the reasons stated; the extended period was not invocable and consequent interest and penalties do not survive. Appellant granted consequential relief as per law.

Exemption under Notification No. 25/2012-ST - exemption under Notification No. 33/2012-ST (SSI) - extended period of limitation - absence of fraud, misrepresentation or suppression

Exemption under Notification No. 33/2012-ST (SSI) - construction of school building - Whether receipts for construction of the school building fall within the exemption under Notification No. 33/2012-ST (SSI). - HELD THAT: - The Tribunal found on the admitted facts that the amount received for construction of the ZPHS school building (gross amount Rs. 8,44,300) qualifies for the Small Scale Industry exemption under Notification No. 33/2012-ST. The adjudicating authority's confirmation of tax in respect of this work was not sustained because the work squarely fell within the exemption criteria under the SSI notification as applied to the material facts of the case. [Paras 9]

Receipts for construction of the school building are exempt under Notification No. 33/2012-ST (SSI).

Exemption under Notification No. 25/2012-ST - construction of roads and irrigation works - Whether services in relation to road construction/black topping and irrigation works are exempt under Notification No. 25/2012-ST. - HELD THAT: - The Tribunal accepted the appellant's records and contractual documents showing the works were executed for Government departments and for public use or irrigation purposes. Applying the terms of Notification No. 25/2012-ST, the Tribunal held that (i) black topping of the Power House main road meant for use by the general public is covered by the exemption at Serial No. 13, and (ii) formation and providing WBM for the Priyadarshini Jurala Project are irrigation works exempt under Serial No. 12. In view of these findings, almost the entire turnover was held to be exempted and the portion taxed by the adjudicating authority could not be sustained. [Paras 9]

Services for the road and irrigation works are exempt under Notification No. 25/2012-ST.

Extended period of limitation - absence of fraud, misrepresentation or suppression - Whether invocation of the extended period of limitation was justified in the absence of fraud, misrepresentation or suppression. - HELD THAT: - The Tribunal noted that the appellant was registered under VAT and Income Tax, filed regular returns, maintained proper books and routed receipts through banking channels. There was no finding or material demonstrating fraud, misrepresentation or suppression by the appellant. On these facts the Tribunal concluded that the extended period of limitation was wrongly invoked and could not be sustained. [Paras 9]

Extended period of limitation was wrongly invoked as there was no fraud, misrepresentation or suppression.

Final Conclusion: The appeal is allowed; the impugned order is set aside as almost the entire turnover was held to be exempt under the stated notifications and the extended period of limitation was wrongly invoked; consequential benefits to the appellant to follow in accordance with law.

No interference with High Court order - dismissal of Special Leave Petition - liberty to file review

No interference with High Court order - dismissal of Special Leave Petition - liberty to file review - Whether the Special Leave Petitions should be entertained and whether interference with the High Court's order is warranted. - HELD THAT: - The Court heard learned senior counsel for the petitioner and examined the impugned order of the High Court. The Bench found no merit or ground to disturb the High Court's decision. While refusing to intervene, the Court granted the petitioners liberty to file a review before the High Court. The order therefore records both the refusal to interfere with the High Court's judgment and the limited relief of permitting a review application.

Special Leave Petitions dismissed; no interference with the High Court order; petitioners granted liberty to file a review; pending applications disposed of.

Final Conclusion: The Special Leave Petitions were dismissed for want of merit with the Supreme Court declining to interfere with the High Court's order, while affording the petitioners liberty to seek review before the High Court; all pending applications stand disposed of.

Reasonable classification - Article 14 - equality and non arbitrariness - budgetary support scheme under GST - eligible unit under NEIIPP / area based exemption notifications - interpretation of exemption notifications in light of industrial policy - subsummation of Central Excise into GST and its consequences - doctrine of promissory estoppel / legitimate expectation (contextual)

Budgetary support scheme under GST - eligible unit under NEIIPP / area based exemption notifications - interpretation of exemption notifications in light of industrial policy - Article 14 - equality and non arbitrariness - Validity of the clarification/circular dated 10.01.2019 which excluded units that were under threshold exemption or manufacturing exempted goods from eligibility for budgetary support - HELD THAT: - The Court held that the impugned clarification by circular dated 10.01.2019, insofar as it excludes industrial units which, although otherwise eligible under NEIIPP/related notifications, were not registered under Central Excise prior to 01.07.2017 because (a) their turnover was below the threshold or (b) they manufactured goods exempted under the erstwhile Central Excise law, is unlawful. The scheme of budgetary support was introduced to provide financial support to units that were eligible under the area based exemption policies; the notification itself contemplates eligibility of units which were eligible under the earlier exemption notifications. After GST subsumed Central Excise there is no statutory mechanism to apportion a "Central Excise component" within GST payable; both the petitioners and other beneficiaries now pay GST. Excluding petitioners on the sole basis that they had not been registered or had not paid excise earlier creates an artificial classification divorced from the object of the scheme and from the eligibility criteria under the industrial policy. Such classification lacks a rational nexus to the object sought to be achieved and is arbitrary, therefore violative of Article 14. The Court also noted that the petitioners had satisfied the substantive eligibility requirements of the NEIIPP and related schemes and that non payment or non claiming of excise refunds prior to GST (by reason of exemption or threshold) did not render them ineligible. Consequently the clarification is set aside to the extent it operates to exclude such units. [Paras 44, 86, 87]

The clarification dated 10.01.2019 to the extent it excludes units under threshold exemption or manufacturing exempted goods is quashed as arbitrary and violative of Article 14; such units are to be considered eligible if they otherwise satisfy NEIIPP/notification criteria.

Budgetary support scheme under GST - eligible unit under NEIIPP / area based exemption notifications - subsummation of Central Excise into GST and its consequences - Remedial direction to the authorities to examine and decide claims of excluded petitioners for budgetary support - HELD THAT: - Having held that the exclusionary clarification was unlawful, the Court directed the respondent authorities to examine individual claims of the petitioners on the basis of eligibility under NEIIPP and the related exemption notifications. The examination is to apply the scheme's eligibility criteria (as reflected in the notification) rather than disqualification based solely on absence of Central Excise registration or prior excise payments where non registration was due to threshold exemption or manufacture of exempted goods. The Court required the authorities to pass appropriate orders on the claims within a short, specified period, permitting extension of benefits to those found eligible under the policy and scheme. [Paras 87]

Respondents directed to examine individual claims and, if eligibility under NEIIPP/related notifications is established, extend budgetary support to the petitioners; decision to be taken within 30 days of receipt of certified copy of the order.

Final Conclusion: The writ petitions are allowed. The Court quashes the circular dated 10.01.2019 insofar as it excludes units (which, though eligible under NEIIPP/related notifications, were not registered or had not paid excise due to threshold/exemption) from the budgetary support scheme; respondents are directed to reconsider individual claims and, if eligibility is made out, grant the budgetary support within 30 days.

Service tax on services received from a non-resident service provider - invalidity of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 - scope of notification under Section 68(2) of the Finance Act, 1994 - charge of tax remains on the provider unless statutory change makes recipient liable - effect of insertion of Section 66A w.e.f. 18-4-2006 in making recipient liable for services received from abroad

Service tax on services received from a non-resident service provider - invalidity of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 - scope of notification under Section 68(2) of the Finance Act, 1994 - charge of tax remains on the provider unless statutory change makes recipient liable - Rejection of the appellant's refund claim for service tax paid in respect of services rendered by a non-resident service provider for the period prior to 31.12.2004 was illegal. - HELD THAT: - The Court accepted the reasoning of the Bombay High Court in Indian National Shipowners Association that Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 and the notification of 31-12-2004 could not lawfully shift the charge of service tax from the provider to the recipient prior to enactment of Section 66A. The statutory scheme charged the provider with the tax and rules or notifications cannot conflict with that scheme; consequently levy on recipients for services received outside India before Section 66A came into force lacked legal authority. Applying that principle, the respondents' rejection of the refund claim for the period prior to 31.12.2004 was held to be without lawful foundation, and the appellate and departmental orders upholding that rejection were set aside. The Court directed refund with applicable interest and implementation within six months on production of certified copy of the order. [Paras 7, 8, 9, 10, 11]

Impugned orders rejecting the refund set aside; respondents directed to refund the amount with applicable interest within six months.

Final Conclusion: Appeal allowed; departmental and appellate orders set aside and refund directed for service tax paid in respect of services from a non-resident provider for the period prior to 31.12.2004, with interest, in accordance with law.

Reversal of Cenvat credit on clearance of exempted goods - treatment of non-excisable goods as exempted goods for the purpose of Rule 6 - classification of bagasse and press mud as agricultural waste / non-manufactured residue - effect of amendment to Rule 6 w.e.f. 01.03.2015 - precedential effect of Supreme Court decision in Union of India v. DSCL - administrative clarification in Board Circular treating by-products as exempted goods

Reversal of Cenvat credit on clearance of exempted goods - classification of bagasse and press mud as agricultural waste / non-manufactured residue - effect of amendment to Rule 6 w.e.f. 01.03.2015 - precedential effect of Supreme Court decision in Union of India v. DSCL - Whether the respondent was required to reverse Cenvat credit under Rule 6 of the CENVAT Credit Rules in respect of bagasse and press mud cleared from the factory. - HELD THAT: - The Tribunal held that the question is no longer res integra and is governed by the Supreme Court's decision in Union of India v. DSCL which treated bagasse and press mud as agricultural waste or residue and not as products of manufacturing so as to attract reversal under Rule 6. The Revenue's contention that the amendment to Rule 6 w.e.f. 01.03.2015 and the subsequent Board Circular change the legal position was considered and rejected on the facts: where bagasse and press mud are agricultural waste/residue (i.e., not manufactured goods), the amendment and the circular do not alter the applicability of the Supreme Court's precedent. The Tribunal relied on its own earlier orders in the assessee's cases and related precedents (recorded in the impugned and earlier final orders) to conclude that the assessee was not under an obligation to reverse Cenvat credit on clearances of bagasse and press mud for the period in question. [Paras 5, 6, 7, 8]

The appellant's demand for reversal of Cenvat credit in respect of bagasse and press mud is not sustainable; the Commissioner (Appeals) order allowing the assessee's appeal is upheld and the Revenue's appeal is rejected.

Final Conclusion: The Tribunal rejected the Revenue's appeal and upheld the Commissioner (Appeals) order, holding that bagasse and press mud are agricultural waste/residue and, on the facts and precedents, no reversal of Cenvat credit under Rule 6 was warranted for the period in dispute.

Reversal of Cenvat credit under Rule 6 of the Cenvat Credit Rules, 2004 - Non-excisability of bagasse and consequent inapplicability of Cenvat Credit Rules - Treatment of by-products cleared without payment of duty as exempted/non-excisable goods - Clarification by Board (CBIC Circular)

Reversal of Cenvat credit under Rule 6 of the Cenvat Credit Rules, 2004 - Non-excisability of bagasse and consequent inapplicability of Cenvat Credit Rules - Whether reversal of proportionate Cenvat credit under Rule 6 is required where bagasse (and its derivatives) produced during sugar manufacture is cleared without payment of duty. - HELD THAT: - The Tribunal found that when bagasse, which emerges as a by-product in sugar manufacture, is cleared without payment of duty, reversal of Cenvat credit in terms of Rule 6 is not warranted. This conclusion follows the Hon'ble Supreme Court's decision in Union of India v. DSCL Sugar Ltd., which held that bagasse is non-excisable and not a result of manufacturing process attracting Cenvat rules, and the subsequent disposition in Union of India v. M/s. Indian Sucrose Limited confirming that position. The Board's Circular (CBIC - 110267/33/2022 - CX VIII) recognizing and clarifying the effect of these decisions was also noted. Applying these authorities and the Board's clarification, the Tribunal held that the departmental demand for reversal of credit on the ground that dutiable and exempted products were manufactured is not sustainable where the by-product is non excisable and cleared without duty. [Paras 5, 6]

Demands for reversal of Cenvat credit confirmed by the lower authority set aside; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal and set aside the confirmed demands for reversal of Cenvat credit, holding that bagasse and its derivatives cleared without payment of duty are non excisable and do not attract reversal under Rule 6, in view of the Supreme Court decisions and the Board's circular.

Refund of excess central excise duty - unjust enrichment - burden of proof for non-passing on of duty - captively consumed goods and applicability of unjust enrichment - Chartered Accountant's certificate insufficient to discharge burden

Unjust enrichment - captively consumed goods and applicability of unjust enrichment - burden of proof for non-passing on of duty - Chartered Accountant's certificate insufficient to discharge burden - refund of excess central excise duty - Refund claim for excess duty rejected on the ground of unjust enrichment as appellant failed to prove that the incidence of duty was not passed on, including in respect of goods cleared to a related party for captive consumption. - HELD THAT: - The Tribunal accepted the legal proposition that the unjust enrichment bar applies even where goods are cleared for captive consumption, relying on the Supreme Court decision in Union of India v. Solar Pesticides Pvt. Ltd. The appellant cleared goods to a related person for captive consumption and, after final assessment pursuant to CAS-4, was found to have paid excess duty and sought refund. The authorities required evidence that the incidence of duty had not been passed on to customers; the appellant produced only a Chartered Accountant's certificate. The Tribunal concurred with the Commissioner (Appeals) that a mere CA certificate is not sufficient to discharge the burden of proof that the duty was not included in the cost of the final product and therefore unjust enrichment would operate. The judgment further relied on precedent holding that where no documentary evidence (such as financial accounts or corroborative material) is produced to show non-inclusion of the impugned duty in the cost of the final product, refund cannot be allowed. Having found absence of cogent evidence to rebut unjust enrichment, the Tribunal upheld the rejection of the refund claim. [Paras 3, 4, 5, 6, 7]

The appellant is not eligible for the refund; the rejection of the refund claim is upheld and the appeal is dismissed.

Final Conclusion: The appeal is dismissed; the refund claim for excess central excise duty (year 2014-15) is rejected for failure to prove non-passing of duty and on the application of the unjust enrichment bar.

Requirement to declare Retail Sale Price (R.S.P) on packaged goods - applicability of Standards of Weights and Measures (Packaged Commodities) Rules to 50 kg cement bags - eligibility for concessional duty under Sl. No.1C of Notification No.4/2006 CE - vagueness of show cause notice as a ground for invalidating demand - delay in adjudication / call book placement and prejudice to defence

Requirement to declare Retail Sale Price (R.S.P) on packaged goods - applicability of Standards of Weights and Measures (Packaged Commodities) Rules to 50 kg cement bags - Whether the Standards of Weights and Measures (Packaged Commodities) Rules require affixation of R.S.P. on cement packed in 50 kg bags when cleared to industrial or institutional consumers - HELD THAT: - The Tribunal held that the principal question has been settled by the decisions of the Tribunal and the Hon'ble Supreme Court (cited in the impugned order) which concluded that R.S.P. need not be printed on cement bags of 50 kg when the packages are sold to industrial or institutional consumers. The adjudicating authority's contrary approach, founded on a literal reading of Rule 2A and an opinion of Legal Metrology, overlooked the Board's clarification and the jurisprudence recognising that such clearances are not retail sales within the Chapter and therefore do not require R.S.P. to be declared. Having regard to those precedents and the factual finding that clearances were made to industrial/institutional buyers, the requirement to print R.S.P. on 50 kg cement bags for those clearances does not arise. [Paras 13, 19]

R.S.P. affixation is not required on 50 kg cement bags cleared to industrial or institutional consumers; the adjudicating authority's contrary finding cannot stand.

Eligibility for concessional duty under Sl. No.1C of Notification No.4/2006 CE - Whether the appellant was entitled to the concessional rate under Sl. No.1C of Notification No.4/2006 CE for clearances of cement in 50 kg bags to industrial/institutional consumers - HELD THAT: - Applying the settled legal position that R.S.P. need not be declared on packages sold to industrial/institutional consumers and having regard to the Board's clarification and consistent Tribunal and High Court decisions (and their acceptance by the Supreme Court in the batch of cases), the Tribunal found the demands based on denial of Sl. No.1C benefit unsustainable. The adjudicating authority's confirmation of differential duty was founded on an insufficient and vague assertion that the appellant had not proved the nature of the buyers, despite records and invoices having been inspected; in these circumstances and in light of precedent, the demand could not be sustained. [Paras 20, 21]

Benefit under Sl. No.1C is available for the clearances in question; the confirmed demand is set aside and the appeal is allowed.

Vagueness of show cause notice as a ground for invalidating demand - delay in adjudication / call book placement and prejudice to defence - Whether the show cause notices and subsequent adjudication were vitiated by vagueness and by inordinate delay/placement in call book such that the demand could not be sustained - HELD THAT: - The Tribunal observed that the SCNs, although issued after verification of records, contained only a vague and minor averment that it was 'not exactly known' whether buyers were industrial or institutional; they did not identify any particular transaction or evidential basis to permit a focused defence. Further, the matters were adjudicated many years after issuance (S.C.N.s from December 2007 onward were decided in 2021), and the Tribunal found that late adjudication based on such vague allegations was unjustified. Considering the passage of time, the absence of specific allegations in the SCNs and the prejudice to the appellant's ability to defend, the Tribunal held that the demands could not be sustained on this basis. [Paras 15, 16, 20]

SCNs were impermissibly vague and, coupled with the lengthy delay and call book placement, the confirmation of demand on that basis is unsustainable.

Final Conclusion: Following settled precedent that R.S.P. need not be affixed on 50 kg cement bags sold to industrial or institutional consumers, and having found the SCNs insufficiently particular and the delayed adjudication prejudicial, the Tribunal set aside the confirmed differential duty demands for the period December 2007 to June 2017 and allowed the appeal with consequential relief.

Cenvat credit adjustment against output duty - classification of activity as manufacture versus trading - repacked imported goods and revenue neutrality - passing on of CVD through dealer invoice

Cenvat credit adjustment against output duty - passing on of CVD through dealer invoice - classification of activity as manufacture versus trading - repacked imported goods and revenue neutrality - Entitlement to adjust Cenvat credit against Central Excise duty demanded when the department treats repacking and sale (earlier invoiced as dealer sale with Cenvat passed on) as manufacture and clearance liable to duty. - HELD THAT: - The Tribunal found that the same transaction was treated by the department as clearance of manufactured goods and that the goods had been imported duty paid including CVD/SAD. Consequently, any Cenvat credit attributable to those goods must be available for adjustment against the total duty liability arising from the department's classification. The revenue's contention that Cenvat could not be adjusted because the assessee had passed on the CVD by issuing dealer invoices was rejected: the Tribunal held that the CVD was not passed on twice and that adjustment of the Cenvat credit does not offend revenue neutrality. The Tribunal relied on identical reasoning in Commissioner of Central Excise and Service Tax, Bhavnagar v. Gujarat Heavy Chemicals Ltd., observing that where reconciliation between procurement (with Cenvat involved) and resultant duty on sale shows that available Cenvat suffices to meet output liability, the case is revenue neutral and further demand will not sustain. Applying this principle to the facts, the Tribunal concluded that the Adjudicating Authority rightly adjusted Cenvat credit against the duty demand and that the revenue's appeal had no substance. [Paras 4, 5]

Impugned order confirmed; appeal dismissed.

Final Conclusion: The Tribunal upheld the Adjudicating Authority's adjustment of Cenvat credit against the excise duty demanded on goods treated as manufactured; the revenue's appeal was dismissed.

Suo motu revision under Section 80(4) of the JVAT Act - scope and limits of review jurisdiction under Section 81 and Rule 54 of JVAT Rules - jurisdictional fact of calling for records before exercising revisional power - maintainability and forum shopping - procedural fairness - reasonable opportunity of hearing and undue haste - judicial review of Tribunal's order and scope of interference

Suo motu revision under Section 80(4) of the JVAT Act - scope and limits of review jurisdiction under Section 81 and Rule 54 of JVAT Rules - Validity of initiation and exercise of suo motu revision power by Additional Commissioner/Commissioner on the same set of grounds for which sanction for review had earlier been granted and review proceedings were dropped - HELD THAT: - The Court held that Section 80(4) empowers the Commissioner to call for and examine records suo motu or on application to satisfy itself about legality or propriety of an order. However, where the Commissioner itself had earlier granted sanction for review under Rule 54 and the adjudicating authority thereafter initiated and dropped review proceedings on the ground that no mistake apparent on the record existed, it was not proper for the department (through the Additional Commissioner) to initiate suo motu revision on the identical set of grounds merely on the basis of a letter. Under the statutory scheme there were alternative remedies (appeal/revision under Sections 79 and 80(1)); initiation of a fresh suo motu revisional exercise by the Additional Commissioner in those circumstances was an improper course and beyond the permissible exercise of power. [Paras 50, 51, 52]

Suo motu revision initiated by Additional Commissioner/Commissioner on the same grounds after review was sanctioned and subsequently dropped was improper and beyond the proper course of action.

Jurisdictional fact of calling for records before exercising revisional power - Whether the Additional Commissioner satisfied the jurisdictional fact of calling for and perusing the records before exercising revisional jurisdiction under Section 80(4) - HELD THAT: - The Court accepted the Tribunal's finding that the jurisdictional precondition for exercise of Section 80(4) - namely calling for and examining the records of the proceedings - was absent. Although the Additional Commissioner recorded that he had perused records, there was no evidence that the lower court records or assessment records were summoned or produced; no counter-affidavit was filed to controvert this. The absence of the calling-for/perusal of records meant that the assumed jurisdiction under Section 80(4) was not established and the revisional order could not be sustained. [Paras 53, 54, 55, 56]

Finding that records were not called for/perused is upheld; absence of this jurisdictional fact vitiates the revisional order.

Procedural fairness - reasonable opportunity of hearing and undue haste - maintainability and forum shopping - Whether the Additional Commissioner acted with procedural fairness, or in undue haste/bias and whether the conduct amounted to forum shopping rendering the revisional orders invalid - HELD THAT: - The Court noted the chronology of events: filing of the revision letter, short notice, limited time sought by the assessee but curtailed, and disposal within a short period. The Additional Commissioner disposed of the matter in undue haste, which gives rise to a presumption of mala fides in law. The course adopted by the Assessing Authority in seeking revision after dropping review, and by the Additional Commissioner to proceed on a letter without adequate procedure, also amounted to impermissible forum shopping. On these grounds the revisional order was found to suffer from illegality and infirmity, supporting the Tribunal's decision to set aside it. [Paras 57, 58, 59]

Additional Commissioner's disposal was procedurally unfair and unduly hasty; conduct and forum-shopping infirmities render the revisional order invalid.

Judicial review of Tribunal's order and scope of interference - Whether the High Court should interfere with the Tribunal's order setting aside the revisional order - HELD THAT: - The Court observed that the Tribunal's decision was reasoned and addressed the material statutory and factual infirmities in the revisional exercise. Judicial review does not permit reappreciation merely because another view was possible. Given the identified illegalities - absence of calling for records, improper exercise of Section 80(4), procedural haste and forum shopping - the Tribunal's setting aside of the Additional Commissioner's order was in accordance with law and did not warrant interference. [Paras 59, 60]

The Tribunal's order setting aside the Additional Commissioner's revisional order is sustained and not interfered with.

Final Conclusion: Writ petitions dismissed; the High Court upheld the Tribunal's setting aside of the Additional Commissioner's revisional orders for Assessment Years 2013-14 and 2014-15 on grounds that the revisional power under Section 80(4) was improperly exercised without the jurisdictional calling-for of records, amounted to an improper course of action after review had been sanctioned and dropped, and was tainted by undue haste and procedural unfairness.

Interim release of detained vehicle and goods - deposit of portion of penalty as condition for release - security by bank guarantee as condition for release - compliance with penalty notice dated 21.11.2023

Interim release of detained vehicle and goods - deposit of portion of penalty as condition for release - security by bank guarantee as condition for release - compliance with penalty notice dated 21.11.2023 - Release of the petitioner's vehicle and goods on specified security and deposit in relation to the penalty imposed by notice dated 21.11.2023. - HELD THAT: - The petitioner sought release of a vehicle detained on 20.11.2023 and offered to pay 200% of the penalty imposed by the impugned notice dated 21.11.2023, proposing to deposit 25% at the time of filing an appeal and to furnish a bank guarantee for the remaining 75%. The respondent, while opposing release, agreed to release the vehicle upon payment of 200% of the penalty. Having considered the submissions and materials on record, the court directed the petitioner to deposit 25% of the penalty amount imposed by the notice dated 21.11.2023 and to execute a bank guarantee for the remaining 75%. Upon such deposit and execution of the bank guarantee, the respondent is directed to release the petitioner's vehicle along with the goods immediately. The direction implements the parties' proposal and the respondent's concession, subject to the specified security and payment conditions. [Paras 7]

Petitioner's vehicle and goods to be released upon deposit of 25% of the penalty imposed by notice dated 21.11.2023 and execution of a bank guarantee for the remaining 75%; compliance to be effected immediately.

Final Conclusion: Writ petition disposed of with directions for immediate release of the vehicle and goods upon the stipulated deposit and bank guarantee; no costs.

Section 17A - prior approval for enquiry into offences relatable to recommendation/decision in discharge of official duties - Commencement of enquiry as trigger for applicability of protective provision - Illegality of investigation under the Prevention of Corruption Act without prior approval - Survival of independent IPC prosecutions despite invalidity of PC Act action - Jurisdiction of Special Judge under Sections 3 and 4 of the Prevention of Corruption Act read with Section 223 Cr.P.C. - Remedial effect of non-compliance with statutory pre conditions - quashment versus continued remand/processing - Referral to Larger Bench for resolution of conflicting interpretations

Commencement of enquiry as trigger for applicability of protective provision - Section 17A - prior approval for enquiry into offences relatable to recommendation/decision in discharge of official duties - Whether an enquiry ordered by the Anti Corruption Bureau on 05.06.2018 constituted commencement of an enquiry for the purposes of Section 17A so as to render Section 17A inapplicable - HELD THAT: - The Court (Aniruddha Bose, J.) held that the communication of 05.06.2018 was a request to conduct an enquiry and did not, by itself, evince commencement of an enquiry, inquiry or investigation within the meaning of Section 17A. No steps under the Code of Criminal Procedure were taken prior to 2021 and the earliest positive investigative activity appears only in 2021. The expression 'enquiry' must connote some active exercise to verify or search for particulars; a mere request or communication cannot be treated as the starting point of an enquiry for triggering or negativing the operation of Section 17A. Accordingly, the letter dated 05.06.2018 cannot be treated as the commencing point of an enquiry under Section 17A and the protection envisaged by Section 17A would arise only if active enquiry, inquiry or investigation commences after 26.07.2018. [Paras 11, 12, 13]

05.06.2018 communication did not amount to commencement of enquiry; therefore, no enquiry had commenced before Section 17A became operative.

Section 17A - prior approval for enquiry into offences relatable to recommendation/decision in discharge of official duties - Illegality of investigation under the Prevention of Corruption Act without prior approval - Whether enquiries, inquiries or investigations commenced after Section 17A came into force attract the prior approval requirement and consequences of non compliance - HELD THAT: - One judge (Aniruddha Bose, J.) interpreted Section 17A as operative from the date an enquiry, inquiry or investigation commences and not from the date of commission of the alleged offence. On that view, if active enquiry/investigation into offences relatable to recommendations/decisions made in discharge of official duties was commenced after 26.07.2018 without the prior approval required by Section 17A, such action is illegal. The judge directed that where such an enquiry is so commenced, at least prima facie previous approval must be obtained and in absence thereof action under the PC Act is illegal; the State retains liberty to apply for approval retrospectively. However, the Constitution Bench question as to whether Section 17A is substantive or procedural and whether it applies retroactively/retrospectively was not authoritatively settled by the Bench because the Judges expressed divergent views on that interpretive question and referred the point to the Chief Justice for constitution of a Larger Bench. [Paras 21, 22, 34]

Where enquiry/investigation commenced after Section 17A became operational and the alleged offence is prima facie relatable to recommendations/decisions in discharge of official duties, prior approval is required; absence of such approval renders action under the PC Act illegal (liberty preserved to seek approval); but the ultimate question of the temporal scope and retrospective/ prospective character of Section 17A is referred for larger bench consideration.

Survival of independent IPC prosecutions despite invalidity of PC Act action - Jurisdiction of Special Judge under Sections 3 and 4 of the Prevention of Corruption Act read with Section 223 Cr.P.C. - Whether invalidity of PC Act proceedings for want of Section 17A approval vitiates remand orders or removes the Special Judge's jurisdiction to remand/try accused on IPC offences arising from the same transactions - HELD THAT: - The Court (Aniruddha Bose, J.) held that the alleged IPC offences arise from the same or similar transactions and are not merely ancillary to PC Act offences; therefore, invalidation of PC Act action for absence of prior approval would not automatically collapse the IPC allegations. Section 4(3) of the PC Act permits the Special Judge to try offences not specified in Section 3 where they arise in the same trial; Section 223 CrPC principles on joint trial are applicable. Consequently, the remand order dated 10.09.2023 was not rendered non est by absence of prior approval under Section 17A and the Special Judge retained jurisdiction to pass the remand order and to proceed on IPC counts. The appellant was, however, held not to be proceed against under the PC Act until appropriate prior approval is obtained (liberty to the State to seek such approval). [Paras 29, 30, 31, 34]

Remand order is not vitiated by absence of Section 17A approval; proceedings on IPC offences may continue and the Special Judge has jurisdiction to deal with those IPC allegations arising from the same transactions; prosecution under the PC Act cannot proceed without prior approval unless such approval is obtained.

Referral to Larger Bench for resolution of conflicting interpretations - Whether the interpretive question concerning Section 17A's temporal scope and whether it is substantive or procedural should be authoritatively decided now - HELD THAT: - The two judges delivered differing opinions on core interpretive questions (one judge holding Section 17A applicable from commencement of enquiry and invalidating PC Act action without prior approval; the other judge holding Section 17A to be substantive and not applicable retrospectively and upholding the remand and investigation). Given these contrary views on the legal question of Section 17A's operation and scope, the matter was referred to the Chief Justice for constitution of a Larger Bench to determine the question authoritatively. [Paras 30]

The interpretive issue regarding Section 17A is referred to the Chief Justice for constitution of a Larger Bench.

Final Conclusion: The Bench recorded differing opinions on interpretation and temporal operation of Section 17A of the Prevention of Corruption Act, 1988 and accordingly referred the question to the Chief Justice for constitution of a Larger Bench. Meanwhile, one judgment (Aniruddha Bose, J.) directed that (i) no enquiry, inquiry or investigation under the PC Act relatable to recommendations/decisions in discharge of official duties may be conducted after 26.07.2018 without the prior approval specified in Section 17A and that absence of such approval renders PC Act action illegal (liberty preserved to seek retrospective approval), (ii) the appellant cannot be proceeded against under the PC Act until such approval is obtained, but (iii) the remand order and prosecution on independent IPC offences arising from the same transactions remain valid and the Special Judge has jurisdiction to proceed on those counts. The other Judge (Bela M. Trivedi, J.) took a contrary view, dismissing the appeal; the conflict of views on the core legal question has therefore been referred for adjudication by a Larger Bench.