TaxTMI Updates e-Newsletter
Jan 24,2024

Anticipatory bail under Section 438 CrPC - applicability of Section 438 CrPC to offences under the CGST Act - pre-arrest protection under Article 226 of the Constitution - cancellation of bail for non-compliance with conditions - cooperation in investigation as a factor in bail - deposit/renewal of passport as a bail condition - reversal of Input Tax Credit

Anticipatory bail under Section 438 CrPC - applicability of Section 438 CrPC to offences under the CGST Act - pre-arrest protection under Article 226 of the Constitution - Validity of the anticipatory bail granted to the respondent in light of the Supreme Court judgment in Choodamani Parmeshwaran Iyer and availability of pre-arrest protection under Article 226. - HELD THAT: - The Court examined the effect of the Supreme Court's observation in Choodamani Parmeshwaran Iyer that Section 438 CrPC is not invocable where persons are only summoned under Section 69 of the CGST Act. It noted that the facts of Choodamani involved only summons and no apprehension of arrest, whereas in the present case a co-accused had been arrested, creating a genuine apprehension of arrest for the respondent. The Court further held that the Supreme Court's order delivered after the grant of anticipatory bail could not be given retrospective effect to defeat an earlier order. Independently, the High Court observed that it may exercise its jurisdiction under Article 226 to grant pre-arrest protection. Applying these principles to the facts, the Court sustained the grant of anticipatory bail to the respondent. [Paras 8, 9, 10, 11, 12]

The anticipatory bail granted to the respondent is valid and sustainable; Choodamani does not retrospectively invalidate the earlier grant and the High Court may grant pre-arrest protection under Article 226.

Cancellation of bail for non-compliance with conditions - cooperation in investigation as a factor in bail - deposit/renewal of passport as a bail condition - reversal of Input Tax Credit - Whether the anticipatory bail should be cancelled on the ground of alleged non-compliance with bail conditions, including failure to cooperate, non-deposit of passport and alleged irregularities in Input Tax Credit. - HELD THAT: - On the allegation that the respondent did not cooperate, the Court accepted the finding that he had joined investigation on multiple dates and had given his statement under Section 70 of the CGST Act. The claim that the passport was not deposited was rejected on record: the passport had expired in 1998 and was not renewed, a fact not rebutted by the DGGI. The learned ASJ's finding that the respondent had reversed the Input Tax Credit was noted and corroborated by the electronic credit ledger filed by the DGGI. As to leaving the National Capital Region without informing the Investigation Officer, the Sessions Court had issued a warning; the High Court preserved that approach and observed that future non-appearance may attract cancellation but required the DGGI to give at least 48 hours' notice to the respondent to appear pursuant to summons. Having considered these factors, the High Court was not persuaded to interfere with the orders refusing cancellation. [Paras 18, 19, 20, 21, 22]

The petition for cancellation of anticipatory bail is dismissed; the respondent has not been shown to have breached the bail conditions so as to warrant cancellation, subject to strict compliance in future and notice requirements for summons.

Final Conclusion: The High Court dismissed the petitions challenging the anticipatory bail and refusing its cancellation, upholding the grant of anticipatory bail to the respondent while warning that any future failure to comply with summons or bail conditions may invite cancellation; liberty was granted to the DGGI to seek cancellation on non-compliance after giving at least 48 hours' notice.

Anticipatory bail under Section 438 CrPC - pre-arrest protection under Article 226 - economic offences and discretionary denial of anticipatory bail - CGST input tax credit fraud as an economic offence - violation of bail conditions and cancellation of bail - forensic laboratory report - conclusiveness for investigative inference

Anticipatory bail under Section 438 CrPC - pre-arrest protection under Article 226 - Choodamani Parmeshwaran Iyer - Applicability of the Supreme Court's observations in Choodamani Parmeshwaran Iyer to deny anticipatory bail in the present proceedings and the power of the High Court to grant pre-arrest protection under Article 226. - HELD THAT: - The Court held that the observations in Choodamani Parmeshwaran Iyer, which restrict invocation of Section 438 CrPC where a person is only summoned under the CGST Act, do not operate retrospectively to invalidate anticipatory bail granted prior to that ruling. Moreover, even accepting the scope of that decision, the High Court may independently exercise constitutional jurisdiction under Article 226 to grant pre-arrest protection. Consequently, the DGGI's submission that anticipatory bail could not be granted at all in CGST cases by reason of Choodamani Parmeshwaran Iyer was rejected as not determinative of the present petitions. [Paras 7, 8, 9, 10, 11]

Choodamani Parmeshwaran Iyer does not retrospectively invalidate the anticipatory bail granted on 21st December 2022 and does not preclude the High Court from exercising Article 226 to consider pre-arrest protection.

CGST input tax credit fraud as an economic offence - economic offences and discretionary denial of anticipatory bail - forensic laboratory report - conclusiveness for investigative inference - Whether the anticipatory bail granted to the accused could be sustained on merits in light of the material indicating large-scale GST Input Tax Credit fraud and the laboratory findings. - HELD THAT: - On the material on record, the Court found prima facie that Input Tax Credit was fraudulently obtained by showing procurement of high-value input (cigarettes) purportedly used to manufacture a low-value product (smoking mixture), with onward transfer of large GST refunds through a network of companies controlled by the accused. The Court held that the laboratory report, insofar as it answered the relevant query, conclusively stated that the seized sample was not smoking tobacco as declared, and therefore the impugned bail order erred in treating the lab opinion as inconclusive. Having regard to the magnitude of the alleged fraud, its economic character and the stage of investigation, the Court applied the well-established principle that anticipatory bail is an extraordinary remedy to be sparingly exercised in economic offences and concluded that the anticipatory bail order could not be sustained. [Paras 18, 19, 28, 29, 30]

The anticipatory bail order was set aside on merits because the material disclosed a prima facie case of large-scale CGST Input Tax Credit fraud and the impugned order misapprehended the laboratory report.

Violation of bail conditions and cancellation of bail - anticipatory bail under Section 438 CrPC - Whether anticipatory bail granted to Chaman Goel was liable to be cancelled for breach of conditions and attempt to flee the country. - HELD THAT: - The Court recorded that Chaman Goel had been specifically restrained from leaving the country as a bail condition and was required to deposit his passport; despite refusal of permission to travel abroad and subsequent withdrawal of a revision, he attempted to depart the country and was intercepted at the airport. The attempt to leave the country and failure to deposit the passport constituted serious violations of the bail conditions and an attempt to flee from justice. In those circumstances, and in combination with the gravity of the allegations, cancellation of anticipatory bail was held to be justified. [Paras 21, 22, 23, 30, 31]

Anticipatory bail granted to Chaman Goel was rightly cancelled for violation of bail conditions and an attempt to flee justice.

Final Conclusion: The High Court set aside the anticipatory bail granted to Chirag Goel and Chaman Goel on merits and cancelled the anticipatory bail of Chaman Goel for breach of conditions; the petitions filed by the DGGI are allowed and the petition by Chaman Goel challenging cancellation is dismissed, with observations confined to bail issues and without expression on merits of the criminal charge.

Regular bail under Section 439 Cr.P.C. - Final report presented under Section 173 Cr.P.C. - Custodial detention no longer necessary - Documentary evidence as primary material - Offences triable by Magistrate - Invocation of special statute versus IPC

Regular bail under Section 439 Cr.P.C. - Custodial detention no longer necessary - Final report presented under Section 173 Cr.P.C. - Grant of regular bail to the petitioner - HELD THAT: - The Court noted that the petitioner was arrested on 26.08.2023 and had been in custody for about four months. It was recorded that the investigation had been completed and the final report under Section 173 Cr.P.C. had been presented before the competent Court. The petitioner is on bail in other cases registered against him, the primary material in the present case is documentary, and the police have already collected the documentary evidence. The Court observed that further custodial detention would not serve any meaningful purpose and, without adjudicating the merits of the allegations or commenting on competing contentions regarding invocation of IPC as against the special GST statute, allowed bail.

Petitioner released on bail on furnishing bail/surety bonds to the satisfaction of the learned trial Court/Duty Magistrate/CJM concerned.

Final Conclusion: Bail granted: petitioner released on furnishing bonds, the order being based on completed investigation, filing of final report and the Court's view that further custody would serve no meaningful purpose; no adjudication on merits or on the contention regarding applicability of IPC vis-a -vis the GST statute.

Classification as "Labels, badges and similar articles" under CTH 58.07 - exclusion of narrow woven fabrics from CTH 58.06 where they have the character of woven labels - trade or common parlance / functional test for tariff classification - persuasive value of HSN Explanatory Notes in classification - coverage by entry no. 153 of Schedule II of Notification 1/2017 - IGST (Rate) dated 28 June 2017

Classification as "Labels, badges and similar articles" under CTH 58.07 - trade or common parlance / functional test for tariff classification - persuasive value of HSN Explanatory Notes in classification - Rolls made of Polyester, Nylon Taffeta, Satin etc., in the widths described, are classifiable as articles similar to labels of textile material in strips under CTH 58.07. - HELD THAT: - The Authority applied the trade/common parlance and functional tests, and relied on the HSN Explanatory Notes which describe labels as utilitarian strips bearing inscriptions or motifs and also permit classification of similar articles. The products, although imported unprinted in roll form, are narrow woven fabrics presented in strips intended and used for making labels (printing and subsequent cutting/stitching) and have no alternate use shown by the jurisdictional Customs Commissionerate. The Explanatory Notes exclude such woven labels from CTH 58.06 and bring them within CTH 58.07. Precedents and prior CAAR reasoning dealing with identical products were considered persuasive. On this basis the Authority concluded that the impugned rolls are articles similar to labels and therefore fall under sub-heading 5807 10 (and, at the 8 digit level, into 5807 1010 / 5807 1020 / 5807 1020 / 5807 1090 according to composition and characteristics). [Paras 6, 7]

The products merit classification under CTH 58.07 as articles similar to labels (sub heading 5807 10xx according to composition).

Coverage by entry no. 153 of Schedule II of Notification 1/2017 - IGST (Rate) dated 28 June 2017 - classification as determinative for applicable IGST rate - The products classified under CTH 58.07 are covered by entry no. 153 of Schedule II of Notification 1/2017 - IGST (Rate) dated 28 June 2017. - HELD THAT: - Having ruled that the rolls are classifiable as articles similar to labels under CTH 58.07, the Authority accepted that those tariff entries fall within the scope of entry no. 153 of Schedule II to Notification 1/2017 - IGST (Rate). The prior CAAR ruling on identical goods and the composition based 8 digit classifications were applied to determine that the IGST rate specified in entry no. 153 is applicable to the products as classified. [Paras 6, 7]

The products are covered by entry no. 153 of Schedule II of Notification 1/2017 and attracted the IGST rate specified therein.

Final Conclusion: The Authority ruled that the described rolls are classifiable as textile articles similar to labels under CTH 58.07 (specific 8 digit sub headings according to composition) and that they are covered by entry no. 153 of Schedule II of Notification 1/2017 - IGST (Rate) dated 28 June 2017.

Section 68 of the Income-tax Act - onus to explain identity, creditworthiness and genuineness of subscribers - Foreign Currency Convertible Bonds represented by a single global certificate - Lead manager/registered holder versus ultimate beneficial bondholders - Application of precedents on identical facts

Section 68 of the Income-tax Act - onus to explain identity, creditworthiness and genuineness of subscribers - Foreign Currency Convertible Bonds represented by a single global certificate - Lead manager/registered holder versus ultimate beneficial bondholders - Application of precedents on identical facts - Deletion of the addition made under Section 68 of the Act in respect of FCCB proceeds received through the lead manager - HELD THAT: - The Tribunal's conclusion that the assessee had adequately discharged the onus under Section 68 was upheld. The Assessing Officer had accepted that the assessee received the FCCB subscription amount from Barclays Bank and the subscription agreement and offer document showed that the bonds were to be represented by a single global certificate issued to the lead manager. On identical facts the Tribunal in Reliance Communication Ltd held that the assessee was required to prove the identity, capacity and creditworthiness of the entity that subscribed to its issue (i.e., the registered subscriber/lead manager) and was not obliged to establish the identity and creditworthiness of subsequent/ultimate bondholders represented by the global certificate. The High Court found the facts and legal questions in that precedent to be similar and correctly applied by the Tribunal in the present case, concluding that the nature and source of the FCCB funds were explained and the reassessment addition under Section 68 was unsustainable. [Paras 9, 10]

Tribunal order deleting the addition under Section 68 is upheld; reassessment addition in respect of FCCB proceeds set aside.

Final Conclusion: The High Court dismisses the appeal and affirms the Tribunal's deletion of the addition under Section 68 in respect of the FCCB proceeds, following the reasoning in the similar precedent and on the facts that the subscription was received from the lead manager and the bonds were represented by a single global certificate.

Operational subsidy versus capital subsidy and taxability as revenue receipt - revenue expenditure versus capital expenditure - compensation to landowners as incidental business expenditure - block of assets and written down value adjustment under Section 43(6) - accounting treatment cannot override statutory block of assets provisions

Operational subsidy versus capital subsidy and taxability as revenue receipt - Whether subsidies freely usable are operational (taxable as revenue) or capital in nature - HELD THAT: - The Court followed its earlier decision in ITA No. 158/2010 and held that the Tribunal's conclusion was erroneous on this question. The substantial question was answered in favour of the revenue, thereby displacing the Tribunal's contrary conclusion and setting aside the Tribunal's order insofar as it treated the subsidy as non-taxable capital receipts. [Paras 3]

Answered in favour of the revenue and against the assessee; Tribunal order set aside on this question.

Revenue expenditure versus capital expenditure - compensation to landowners as incidental business expenditure - Whether compensation paid to landowners for surface damage in mining lease area is capital or revenue expenditure - HELD THAT: - The Court found that the compensation arose solely because of damage caused during mining/business operations and was payable as determined by the Collector; no interest in land was acquired by payment. The payment was thus incidental to carrying on the mining business and not a capital outlay for acquisition of an interest in land. The Supreme Court decision cited by the revenue was distinguishable on facts as it dealt with lease rent for acquiring leasehold rights, not compensation for surface damage during operations. Accordingly the CIT(A) and Tribunal were correct in treating the amount as revenue expenditure deductible from income. [Paras 8, 10]

Answered in favour of the assessee and against the revenue; disallowance set aside and deduction allowed.

Block of assets and written down value adjustment under Section 43(6) - accounting treatment cannot override statutory block of assets provisions - Whether sale proceeds of part of block assets may be reduced from written down value under the block provisions and whether accounting treatment can affect operation of Section 43(6) - HELD THAT: - The Court held that Section 43(6)(c)(i)(B) specifically permits reduction of the aggregate written down value of a block by money payable in respect of assets sold or discarded during the previous year (together with scrap value), subject to the statutory limitation. The assessee's reduction of the block's written down value by the sale amount was in accordance with the statutory provision. The Tribunal and CIT(A) therefore did not err in allowing depreciation on the reduced written down value; accounting treatment cannot alter the statutory scheme governing blocks of assets. [Paras 11, 12, 13]

Answered in favour of the assessee and against the revenue; reduction of written down value and consequent depreciation allowed.

Final Conclusion: The appeal is partly allowed: the revenue succeeds on the issue of taxability of freely usable subsidies; the assessee succeeds on (a) deductibility as revenue expenditure of compensation paid to landowners for surface damage in the mining lease and (b) reduction of written down value under the block of assets provisions with consequent allowance of depreciation.

Mandatory compliance of Section 202(1) of the Code of Criminal Procedure before issuance of process - Territorial jurisdiction of the Magistrate in cognizance proceedings - Cognizance under Section 200 Cr.P.C. read with Section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - Remand for compliance of mandatory procedural requirement

Mandatory compliance of Section 202(1) of the Code of Criminal Procedure before issuance of process - Territorial jurisdiction of the Magistrate in cognizance proceedings - Cognizance under Section 200 Cr.P.C. read with Section 50 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - Impugned order issuing summons was quashed for failure to comply with the mandatory requirements of Section 202(1) Cr.P.C. where the accused resides outside the Magistrate's territorial jurisdiction. - HELD THAT: - The complaint under Section 200 Cr.P.C. read with Section 50 of the Act was presented to the Magistrate at Panaji against an accused resident of Mumbai, which is outside that Magistrate's territorial jurisdiction. The Court applied the mandatory principle in Section 202(1) Cr.P.C., as explained by the Supreme Court in the cited precedents, which requires examination of the complainant and witnesses before issuing process where the accused resides outside the Magistrate's jurisdiction. There was no material to show compliance with that mandatory requirement; the Magistrate passed a cryptic order taking cognizance and issuing summons without following subsection (1) of Section 202 Cr.P.C. Consequently, the order could not be sustained and remand for compliance was warranted. The Court therefore quashed the impugned order and remanded the matter to the Magistrate to comply with Section 202(1) Cr.P.C. before issuing summons, while leaving the merits open for reconsideration by the Magistrate. [Paras 13, 14, 15]

Impugned order dated 18.2.2022 issuing summons quashed and set aside; matter remanded to the Magistrate for compliance with subsection (1) of Section 202 Cr.P.C. prior to issuing process.

Final Conclusion: The petition is allowed: the Magistrate's order of 18.2.2022 issuing summons is quashed and the matter is remanded for mandatory compliance with Section 202(1) Cr.P.C.; all contentions on merits are kept open.

Application of mind in assessment proceedings - deeming of undisclosed investment as income under section 69 - taxation of deemed income at a special rate and denial of deductions under section 115BBE - scope of Explanation 2 to section 263 - limits on revisional power to substitute the view of the Assessing Officer

Application of mind in assessment proceedings - Whether the Assessing Officer conducted necessary inquiries and applied his mind while framing the assessment in respect of income surrendered during survey. - HELD THAT: - The Tribunal examined the record of assessment proceedings and the notice issued under section 142(1), noting that specific queries about comparison of profits, details of other income, valuation of closing stock and the material impounded in survey were raised. The assessee responded to these queries and furnished the survey statement and ledger entries showing the disclosed amount. On this basis the Tribunal held that the AO had made a conscious inquiry and applied his mind before accepting the income as business income in the assessment order. Therefore the assessment could not be characterised as framed without verification or inquiry. [Paras 6]

Assessment framed after necessary inquiries; AO applied mind and therefore assessment not erroneous for lack of verification.

Deeming of undisclosed investment as income under section 69 - taxation of deemed income at a special rate and denial of deductions under section 115BBE - Whether the income surrendered during survey was rightly to be treated as deemed income under section 69 and therefore taxable under section 115BBE with denial of deductions. - HELD THAT: - The Tribunal analysed the requirements for attracting the deeming provisions and observed that for section 69 to apply there must be a finding that investments are not recorded in the books and that the assessee offers no satisfactory explanation. The PCIT did not point to any specific contravention showing the surrendered amount fell within section 69. The assessee had furnished explanations and documentary entries and was able to justify the source of the surrendered amount; consequently the Tribunal found that the amount could not be treated as deemed income under section 69 and, once it did not fall within the deeming provision, section 115BBE was not applicable. The Tribunal therefore rejected the contention that the income must be taxed at special rates with denial of deductions. [Paras 6]

Surrendered amount is not held to be deemed income under section 69; section 115BBE is not applicable.

Scope of Explanation 2 to section 263 - limits on revisional power to substitute the view of the Assessing Officer - Whether the Principal Commissioner of Income Tax correctly invoked Explanation 2 to section 263 and was justified in setting aside the assessment by substituting his view for that of the AO. - HELD THAT: - The Tribunal observed that the PCIT's order referred to Explanation 2 to section 263 in holding the assessment erroneous, but noted the PCIT did not refer to Explanation 2 in the notice issued under section 263. The Tribunal emphasised that a revisional authority cannot lightly substitute its view for that of the AO where the AO has applied his mind and made inquiries. Given that the AO's view was within the realm of possible conclusions based on the material and explanations on record, and no specific defect under Explanation 2 was shown in the notice, the Tribunal held that the PCIT erred in setting aside the assessment and substituting his conclusion. [Paras 6]

PCIT erred in invoking Explanation 2 and in substituting its view for the AO's permissible conclusion; order under section 263 is unsustainable.

Final Conclusion: The Tribunal quashed the order passed under section 263, held that the AO had applied his mind and conducted necessary inquiries, found that the surrendered amount was not to be treated as deemed income under section 69 (and hence section 115BBE did not apply), and allowed the assessee's appeal.

Taxability of non-resident on salary - Salaries earned outside India - Income deemed to accrue or arise in India - Scope of total income - Service rendered in India

Taxability of non-resident on salary - Salaries earned outside India - Service rendered in India - Income deemed to accrue or arise in India - Salary and compensatory allowances paid by an Indian employer to the assessee, a non-resident who rendered services outside India, are not taxable in India. - HELD THAT: - The tribunal examined Sections 5, 9 and 15 of the Income-tax Act together. Section 9(1)(ii) deems income chargeable under the head "Salaries" to be taxable in India if it is "earned in India", and the statutory explanation clarifies that income earned refers to service rendered in India. Section 5 distinguishes the scope of total income for residents and non-residents, and Section 15 prescribes chargeability under the head salaries when salary is due or paid. On the facts the assessee, deputed to work and stationed in Vienna, rendered services outside India and there was no rest or leave period falling within the statutory exception that would treat the remuneration as earned in India. Applying the statutory scheme, the tribunal held that the salary and allowances paid abroad to the non-resident for services rendered outside India do not accrue or arise in India and therefore are not taxable in India.

The addition of salary and allowances is reversed and such income is held not taxable in India.

Final Conclusion: The appeals are allowed: salary and compensatory allowances paid to the non-resident assessee for services rendered outside India are not taxable in India, and the additions made on that account are set aside.

Validity of notice under section 143(2) - Jurisdiction of Assessing Officer under CBDT Instruction No.1/2011 - Monetary limits for assignment of cases and locus of jurisdiction - Jurisdictional notice as non-curable defect - Quashing of assessment for want of jurisdiction

Validity of notice under section 143(2) - Jurisdiction of Assessing Officer under CBDT Instruction No.1/2011 - Jurisdictional notice as non-curable defect - Quashing of assessment for want of jurisdiction - Notice issued under section 143(2) by an Income-tax Officer who lacked jurisdiction under CBDT Instruction No.1/2011 rendered the assessment void and liable to be quashed. - HELD THAT: - The Tribunal admitted an additional ground challenging jurisdiction based on CBDT Instruction No.1/2011 which prescribes monetary limits allocating cases between ITOs and DCs/ACs. Instruction No.1/2011 placed corporate returns with declared income above the specified metropolitan threshold in the jurisdiction of DCs/ACs. The assessee's declared income for the year under appeal exceeded the monetary limit for an ITO in a metropolitan city; despite this, the notice under section 143(2) was issued by an ITO. The Tribunal followed the reasoning in the jurisdictional High Court decision reproduced in the record, and subsequent coordinate-bench decisions, that a jurisdictional notice (such as under section 143(2) or section 148) issued by an officer without authority is inherently defective and not a curable defect. On that basis, and having regard to the settled principle that the notice under section 143(2) is mandatory for making the assessment, the Tribunal concluded that the assessing officer who issued the notice lacked jurisdiction to issue it and to complete the assessment; therefore the assessment order was quashed. Because the assessment was quashed for want of jurisdiction, the Tribunal declined to decide the merits of the substantive addition made under the Act. [Paras 6, 7, 8, 9]

Assessment proceedings quashed for want of jurisdiction; merits not adjudicated.

Final Conclusion: The appeal is allowed: the assessment order for A.Y. 2014-15 is quashed because the notice under section 143(2) was issued by an officer without jurisdiction under CBDT Instruction No.1/2011; no decision was rendered on the substantive addition.

Revisionary jurisdiction under section 263 - exemption under section 10(23C)(vi) - income from letting out property versus income incidental to attainment of objects - requirement of maintaining separate books of account for business income - prospective operation of a Supreme Court judgment

Revisionary jurisdiction under section 263 - Explanation 2 to section 263 - Whether the Commissioner (Exemption) was justified in invoking section 263 to set aside the assessment framed under section 143(3) as erroneous and prejudicial to the interest of revenue. - HELD THAT: - The Tribunal examined whether the Assessing Officer had failed to make inquiries or verifications which ought to have been made before allowing exemption under section 10(23C)(vi). The Commissioner observed that the assessment record did not show verification of (i) whether the letting out of building constituted business income, (ii) whether such activity was incidental to attainment of the society's objects, and (iii) whether separate books were maintained for such activity. The Tribunal noted the factual matrix placed before the AO, including that the buildings were funded for educational purposes, that part of the infrastructure was temporarily vacant during the year and let out to meet fixed expenditure, and that the AO adopted a view consistent with binding High Court precedent. On these facts the Tribunal held that the AO's conclusion accepting exemption was a tenable view - one of two possible views - and that the mere absence of express discussion in the assessment order did not render the order per se erroneous or prejudicial to revenue. Consequently the exercise of revisionary jurisdiction was not justified and the s.263 order was quashed. [Paras 9, 10, 11, 12]

Impugned revision under section 263 quashed and the assessment order under section 143(3) restored.

Exemption under section 10(23C)(vi) - income from letting out property versus income incidental to attainment of objects - prospective operation of a Supreme Court judgment - Whether rental income earned by the educational society disqualified it from exemption under section 10(23C)(vi) in light of the Supreme Court decision in New Noble Educational Society. - HELD THAT: - The Tribunal acknowledged that the Supreme Court in New Noble held income from letting out properties is not incidental to education; however, it emphasised the Supreme Court's declaration that that judgment would operate prospectively from 19/10/2022. For the year under consideration (AY 2018-19) earlier High Court precedents favourable to the assessee, notably the Jurisdictional High Court's ruling in DIT (Exemption) v. Sahu Jain Trust, remained binding. Given that the AO adopted a view consistent with such precedents and considering the factual finding that rental was earned to meet expenditure and applied for educational purposes, the Tribunal found the AO's treatment permissible for the relevant year and that the subsequent Supreme Court ratio could not be applied retrospectively to render the assessment erroneous. [Paras 10, 11]

Supreme Court's New Noble decision operates prospectively; for AY 2018-19 earlier High Court authority applied and the AO's acceptance of exemption was sustainable.

Final Conclusion: The appeal is allowed: the order passed by the Commissioner under section 263 is quashed and the assessment order dated 03/02/2021 under section 143(3) is restored for Assessment Year 2018-19, the Tribunal holding that the AO's view was tenable in light of binding pre-New Noble precedent and that the New Noble ratio applies prospectively.

Classification of surrendered receipts as business income versus deemed income under the deeming provisions - deeming provisions under Section 69 and Section 69A and their statutory pre conditions - taxation of surrendered amounts under Section 115BBE - evidentiary value of statement recorded during survey under Section 131/133A and need for corroborative material - retraction of surrender made during survey and effect of bona fide retraction

Classification of surrendered receipts as business income versus deemed income under the deeming provisions - deeming provisions under Section 69A - taxation of surrendered amounts under Section 115BBE - Whether the excess stock (difference between physical stock and book stock) found during survey is to be treated as deemed income under Section 69A/69 or as business income taxable at normal rates. - HELD THAT: - The Tribunal found no physical distinction between accounted stock and the excess stock found; the excess was part of the same mixed lot dealt with in the assessee's regular business. The assessee had explained nexus of the excess stock with his trading business and the statement and documents of the survey corroborated physical stock valuation and comparison with books. Given that the source (business operations) and nature of the excess stock were established, the second condition for invoking the deeming fiction was not satisfied. Consequently the excess stock must be assessed as business income under the head 'Income from Business/profession' at normal rates and not as deemed income under Section 69A, so Section 115BBE does not apply to that amount. [Paras 36, 38, 39]

Excess stock of Rs.27.54 lacs to be assessed as business income for FY 2017-18 (AY 2018-19) at normal rates; not taxable as deemed income under Section 69A.

Classification of surrendered receipts as business income versus deemed income under the deeming provisions - deeming provisions under Section 69A - taxation of surrendered amounts under Section 115BBE - Whether the excess cash found during survey is an unexplained money liable to be deemed income under Section 69A and taxed under Section 115BBE, or is business income taxable at normal rates. - HELD THAT: - The assessee explained that the excess cash represented proceeds from unrecorded sales of his trading business; the AO did not point to any activity other than the assessee's business. The Tribunal held that where the unrecorded cash can be reasonably linked to the assessee's business and no contrary material exists, the deeming provisions cannot be invoked. On the facts, the excess cash was established as arising from unrecorded business transactions and therefore should be assessed as business income at normal rates; Section 115BBE is not attracted to that amount. [Paras 40]

Excess cash of Rs.9.96 lacs to be assessed as business income for FY 2017-18 (AY 2018-19) at normal rates; not taxable as deemed income under Section 69A/115BBE.

Deeming provisions under Section 69 - evidentiary value of statement recorded during survey under Section 131/133A and need for corroborative material - retraction of surrender made during survey and effect of bona fide retraction - Whether unexplained advances shown in a seized pocket diary (entries lacking dates, full identities and corroboration) can be invoked as unexplained investment under Section 69 and taxed accordingly, including addition of the undisclosed portion (Rs.70 lacs) despite the assessee having declared part (Rs.35 lacs) in the return. - HELD THAT: - The seized diary contained 77 entries with only first names/nicknames, no dates, no indication whether amounts were receipts or payments, and no corroborative material linking entries to identifiable persons or transactions in the relevant year. The Tribunal reiterated that statements recorded during survey (Section 131/133A) have no evidentiary value absent corroboration. The AO lacked tangible material to establish that the diary entries represented advances by the assessee on the day of survey or within the relevant year. While the assessee had offered Rs.35 lacs in the return (and tax paid), the AO's addition of the remaining Rs.70 lacs was unsupported. Applying these principles and relevant precedents, the Tribunal deleted the addition of Rs.70 lacs but left intact the Rs.35 lacs voluntarily declared by the assessee. [Paras 41, 42, 43, 45, 46]

Addition of Rs.70 lacs on account of alleged unexplained advances is deleted; the Rs.35 lacs voluntarily declared in return stands.

Evidentiary value of statement recorded during survey under Section 131/133A and need for corroborative material - Whether the statement recorded during the survey and the subsequent surrender letter, without corroborative material, can by themselves satisfy the statutory precondition for invoking deeming provisions under Sections 69/69A. - HELD THAT: - The Tribunal followed binding precedents that statements during survey (Section 131/133A) are not conclusive evidence because the officers recording them cannot administer oath; such statements are relevant only when corroborated by tangible material. The deeming provisions require the AO to establish initial tangible findings (ownership/expenditure not recorded in books). A bare statement or a surrender letter, without corroborative material, does not fulfill that initial burden. Therefore, the AO could not validly invoke Sections 69/69A based solely on the assessee's statement and surrender. [Paras 30, 32, 33, 34]

Statement recorded during survey and surrender letter are not, by themselves, sufficient to invoke deeming provisions; corroborative material is required.

Final Conclusion: The Tribunal allowed the appeal: excess stock and excess cash found at survey were held to be business income assessable at normal rates (not deemed income under Sections 69/69A, so Section 115BBE inapplicable for those amounts), the addition of Rs.70 lacs alleged as unexplained advances was deleted for lack of tangible/corroborative material (the Rs.35 lacs voluntarily declared by the assessee remains), and the authorities were directed to recompute assessment accordingly.

Reliability of laboratory test reports - classification of goods - binding nature of Board Circulars - inadmissibility of test reports from laboratories lacking requisite facilities

Reliability of laboratory test reports - classification of goods - binding nature of Board Circulars - Whether the test report of CRCL, Kandla/Delhi - carried out at a time when those laboratories did not have facilities to test calcite powder - could be relied upon for classifying the imported goods, and consequentially whether the goods are classifiable as natural Calcite Powder under CTH 25309030 or as precipitated Calcium Carbonate Powder under CTH 28365000. - HELD THAT: - The Tribunal found as an admitted fact that at the relevant time CRCL, Kandla/Delhi did not possess the requisite testing facilities for the product in question. In light of Board Circulars (Circular No. 43/2017; Circular No. 11/2018; Circular No. 15/2019) and consistent decisions of this Tribunal, a test report produced by a laboratory which, at the time of testing, lacked the requisite facilities cannot be relied upon to determine classification. The Tribunal noted that the Board Circulars identify items which revenue laboratories could not then test and direct forwarding of such samples to specified external/accredited laboratories; those Circulars are binding on departmental officers. Applying these principles, and following precedents where similar CRCL reports were discarded, the Tribunal concluded that the CRCL reports in the present case are not acceptable and that, absent any cogent independent evidence to reject the appellant's claim, the appellant's declaration as to the nature, classification and valuation of the goods must be accepted. Accordingly the impugned order was set aside and the appeal allowed. [Paras 4, 5]

The test reports of CRCL, Kandla/Delhi made when those laboratories did not have testing facilities are not to be relied upon; the appellant's classification as natural Calcite Powder under CTH 25309030 is accepted and the impugned order is set aside.

Final Conclusion: Appeal allowed; impugned order set aside because CRCL test reports made when those laboratories lacked requisite facilities are inadmissible for classification, and the appellant's claimed classification is accepted.

Right to file reply struck off - failure to file reply despite repeated opportunities - exercise of discretion by the Adjudicating Authority to refuse further opportunity - settlement negotiations not constituting compliance with filing direction - costs imposed for non-compliance with directions

Right to file reply struck off - failure to file reply despite repeated opportunities - settlement negotiations not constituting compliance with filing direction - exercise of discretion by the Adjudicating Authority to refuse further opportunity - Adjudicating Authority did not err in striking off the appellant's right to file reply and in refusing to grant another opportunity. - HELD THAT: - The Appellate Tribunal noted that the Adjudicating Authority repeatedly granted time to the Corporate Debtor to file a reply (orders dated 20.03.2023, 16.05.2023, 27.07.2023 and 11.10.2023) and imposed costs where appropriate. An application for further extension (IA No.2356 of 2023) was rendered infructuous on the statement that a settlement had been reached; subsequently the Adjudicating Authority directed payment of costs and allowed three weeks to place any settlement agreement on record, failing which the right to file a reply would be struck off. The Corporate Debtor did not file the reply or place a settlement agreement on record within the stipulated time. The Tribunal held that settlement negotiations, without placing an agreement on record, did not constitute compliance with the filing directions and that, in the facts of the case, the Adjudicating Authority was within its discretion to refuse any further opportunity. The Tribunal observed that the Appellant may still seek leave of the Adjudicating Authority to make submissions or file written submissions before that forum, but there was no error in the impugned order striking off the right to file reply. [Paras 8, 9]

Appeal dismissed; impugned order refusing further opportunity and striking off right to file reply upheld, subject to Appellant being allowed to seek leave before the Adjudicating Authority to make submissions or file written submissions.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority did not commit error in striking off the appellant's right to file a reply after repeatedly affording opportunities and not receiving the reply or a recorded settlement; the appellant may, however, apply to the Adjudicating Authority for leave to make submissions or file written submissions.

Summary order. The civil appeal is dismissed and the pending application(s), if any, stand disposed of.

Principles of natural justice - opportunity of hearing - ex-parte disposal - remand for fresh decision - setting aside impugned order

Principles of natural justice - opportunity of hearing - ex-parte disposal - Whether the Commissioner (Appeals) decided the departmental appeal ex-parte without affording the appellant adequate opportunity of hearing, thereby violating principles of natural justice. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) recorded personal hearing dates but did not record service of hearing notices on the appellant nor that the appellant failed to appear despite service. The department did not establish actual service of the hearing notice. As the Original Authority had allowed the appellant's claim, the Commissioner (Appeals)'s decision to allow the department's appeal on the basis of records without demonstrating that the appellant had been furnished proper notice amounted to disposal without adequate and proper opportunity of hearing. The failure to demonstrate service and to afford the appellant an opportunity to be heard rendered the impugned order procedurally infirm. [Paras 10, 11]

Impugned order set aside and matter remanded for fresh decision after affording proper and adequate opportunity of hearing to the appellant.

Remand for fresh decision - setting aside impugned order - Remedial direction to the Commissioner (Appeals) following the breach of natural justice. - HELD THAT: - In view of the procedural infirmity, the Tribunal directed that the Commissioner (Appeals) decide the appeal afresh on merits after giving proper and adequate opportunity of hearing to the appellant. The Tribunal required disposal within a specified time frame to ensure finality and prompt adjudication. [Paras 11, 12]

Order remitted to the Commissioner (Appeals) with direction to decide the matter afresh after hearing the appellant and to dispose of the appeal within three months of receipt of the certified copy of the Tribunal's order.

Final Conclusion: The Tribunal set aside the Commissioner (Appeals)'s order as passed without affording adequate opportunity of hearing, remitted the appeal for fresh adjudication after hearing the appellant, and directed disposal within three months.

Applicability of Rule 6(3) of the Cenvat Credit Rules, 2004 to exempted banking services where common input service credit was availed - limitation under Section 73(1) of the Finance Act, 1994 - suppression of facts and requisite mens rea for invoking extended period of limitation - availment and declaration of Cenvat credit in ST-3 returns by a registered bank

Applicability of Rule 6(3) of the Cenvat Credit Rules, 2004 to exempted banking services where common input service credit was availed - limitation under Section 73(1) of the Finance Act, 1994 - suppression of facts and requisite mens rea for invoking extended period of limitation - availment and declaration of Cenvat credit in ST-3 returns by a registered bank - Whether the demand of 6% under Rule 6(3) for exempted banking services for the period 2008 to 2011 is sustainable in view of limitation under Section 73(1) when the appellant had availed and declared Cenvat credit on common input services. - HELD THAT: - The Tribunal found that the appellant, a co-operative bank registered under service tax, had been regularly paying service tax and declaring availment of Cenvat credit in ST-3 returns. The nature of the banking services claimed as exempt (cash credit, overdraft, discounting of bills, interest on loan etc.) was publicly known as part of the bank's ordinary business; therefore there was no suppression of facts or mala fides to suggest an intent to evade tax or wrongfully avail credit. The record also showed correspondence with the department from April 2010 onward. The show cause notice was issued on 01.03.2013, which placed the entire period of demand (2008 to 2011) beyond the normal period of limitation. In the absence of suppression with intent, the condition for invoking extended limitation was not satisfied, and accordingly the demand could not be sustained under Section 73(1) of the Finance Act, 1994.

The demand of 6% under Rule 6(3) for the period 2008 to 2011 is unsustainable on the ground of limitation and the impugned order is set aside; the appeal is allowed.

Final Conclusion: The appeal is allowed: having found no suppression or mala fide and that the show cause notice was issued beyond the normal limitation period, the demand under Rule 6(3) for the period 2008 to 2011 is barred by limitation under Section 73(1) and is set aside.

Recovery of CENVAT credit wrongly taken or utilized - Limitation under Section 11A - one year rule and five year exception for fraud, collusion or wilful suppression of facts - Requirement of mens rea for invoking extended period under Section 11A(4) - Jurisdictional effect of amendment to Rule 14 changing "or" to "and" - Admissibility of CENVAT credit on capital goods acquired for intended manufacture of dutiable goods though initially used for exempted goods

Limitation under Section 11A - one year rule and five year exception for fraud, collusion or wilful suppression of facts - Requirement of mens rea for invoking extended period under Section 11A(4) - Extended period under Section 11A(4) was not invokable as suppression or fraud was not established and show cause ought to have been issued within one year. - HELD THAT: - The Court examined Section 11A and its explanations and held that the general one-year limitation applies unless invocation of the proviso under Section 11A(4) is justified by fraud, collusion, wilful misstatement or suppression of facts with intent to evade duty. Mere omission or incorrect view based on bona fide belief does not constitute the requisite mens rea. The appellant had disclosed the availment of CENVAT credit in monthly returns and the Revenue had earlier issued an audit-based show cause notice in 2010, so material facts regarding credit were within the knowledge of the authorities. Reliance on Supreme Court precedents (P&B Pharmaceuticals, Larsen & Toubro, Continental Foundation, Reliance Industries) led the Court to conclude that suppression was not established and therefore the extended five-year period could not be invoked; the normal one-year period applied and the Revenue's show cause issued on 7-8-2013 was time-barred. The Court computed the relevant date from July 2008 (date of availment) and applied Rule 8 (date of payment 6th of the month), finding the show cause beyond the one-year/five-year computation by one day and thus barred. [Paras 11, 19, 24, 26]

Extended period under Section 11A(4) could not be invoked; the demand was time-barred and show cause should have been issued within the one-year period.

Jurisdictional effect of amendment to Rule 14 changing "or" to "and" - Recovery of CENVAT credit wrongly taken or utilized - When the amended Rule 14 (effective 1 April 2012) required that credit must have been both taken and utilized to permit recovery, a show-cause issued after that amendment alleging only that credit was taken (but not utilized) lacked jurisdiction. - HELD THAT: - The Court traced the evolution of Rule 14 and the judicial interpretation (Ind-Swift) that construed the earlier "or" to permit recovery even where credit was taken but not utilized. The Rule was subsequently amended to read "taken and utilized". The amended Rule 14 in force when the impugned show cause (7-8-2013) was issued required both taking and utilisation to permit recovery. Reliance on principles that administrative action contrary to binding circulars or legislative provision is impermissible supported the view that Revenue lacked jurisdiction to issue a recovery notice based solely on taking of credit where utilisation had not occurred. Consequently the show cause issued under the post-amendment Rule 14 was held to be without jurisdiction. [Paras 29, 30, 31, 32, 34]

Show cause issued after the amendment to Rule 14 (which required credit to be both taken and utilized) was without jurisdiction insofar as it sought recovery for credit only 'taken' and not 'utilized'.

Admissibility of CENVAT credit on capital goods acquired for intended manufacture of dutiable goods though initially used for exempted goods - Recovery of CENVAT credit wrongly taken or utilized - CENVAT credit on capital goods purchased for a plant intended for manufacture of dutiable goods is admissible even if those goods were initially used in production of exempted goods, where there was an intention to manufacture excisable goods. - HELD THAT: - Relying on precedent (Kailash Auto Builders and State of Haryana v Dalmia), the Court held that 'for use' in the definition of capital goods contemplates intended use; the right to avail CENVAT credit arises once duty is paid on capital goods and the assessee subsequently manufactures excisable goods. The appellant consistently declared the intention to set up a dutiable manufacturing facility and disclosed availment of credit in statutory returns. Given this bona fide intention and subsequent commencement of manufacture of dutiable goods (in 2017), the disallowance of credit on the ground that the power plant commenced production prior to the excisable capacity was not justified. [Paras 20, 37, 38, 39]

Credit on capital goods used in a co-generation power plant intended for future manufacture of dutiable goods could not be disallowed merely because the plant commenced production earlier; the appellant was entitled to the CENVAT credit.

Final Conclusion: Applying settled principles on limitation, mens rea for invoking the five-year exception, the effect of the 2012 amendment to Rule 14 and the admissibility of credit on capital goods acquired for an intended dutiable manufacturing facility, the High Court set aside the CESTAT order, held the recovery proceedings time barred and without jurisdiction to the extent challenged, and allowed the appeal in favour of the appellant.

Limitation and condonation of delay in re-filing appeals - Bar of limitation on Revenue appeals - Denial of cenvat credit for inputs used in supporting structures - Mala fide/suppression as a ground to invoke extended period of limitation - Prospective operation of amendment to the Cenvat Credit Rules, 2004

Limitation and condonation of delay in re-filing appeals - Bar of limitation on Revenue appeals - Whether the Revenue's appeal, re-filed after prolonged intervals, was barred by limitation and whether delay in refiling was liable to be condoned. - HELD THAT: - The Court found that the appeal was re-filed after inordinate delays with multiple returns and an unexplained gap between August 2016 and May 2022. The explanation that earlier counsel had misplaced records and left the panel, and reliance on Covid-19, did not justify the unexplained four-year gap from August 2016 to March 2020. Relying on the principle that unreasonable delay in refiling cannot be permitted and that defects which can be cured should not be allowed to result in protracted refiling, the Court held there was no sufficient cause to condone the delay. Accordingly, the appeal was held to be time-barred and the application for condonation of the delay rejected. [Paras 5, 6]

Delay in re-filing was not condoned; the appeal is barred by limitation and is liable to be dismissed on that ground.

Denial of cenvat credit for inputs used in supporting structures - Mala fide/suppression as a ground to invoke extended period of limitation - Prospective operation of amendment to the Cenvat Credit Rules, 2004 - Whether on merits the denial of cenvat credit in respect of items used for supporting structures was sustainable and whether suppression or mala fide could be attributed to the Revenue. - HELD THAT: - The Court observed that the Tribunal had allowed the appeal on limitation and noted precedents where identical issues had been decided in favour of the assessee. It further noted that subsequent judicial developments, including the view that the relevant amendment to the Cenvat Credit Rules operated prospectively, settled the issue in favour of the assessee. In view of these developments, the Court found no basis to attribute malafide or suppression to the Revenue to invoke an extended period of limitation. As the merits were settled against the Revenue, the Court declined to further probe suppression or extended limitation. [Paras 2, 3, 4]

On the merits the issue of denial of cenvat credit stood settled in favour of the assessee; no malafide/suppression found to justify invoking extended limitation.

Final Conclusion: The appeal is dismissed: the re-filed appeal is time-barred and delay in refiling is not condoned; additionally, on merits the denial of cenvat credit stood settled in favour of the assessee, removing any basis to invoke extended limitation.

Appeal to High Court under Section 35G - Appeal to Supreme Court under Section 35L - Determination of value of goods for purposes of assessment - Determination of rate of duty for purposes of assessment - Nature of adjudication/order decisive for forum - Intermingling of valuation/rate issues with other questions

Appeal to High Court under Section 35G - Appeal to Supreme Court under Section 35L - Determination of value of goods for purposes of assessment - Nature of adjudication/order decisive for forum - Whether the appeals filed under Section 35G are maintainable before the High Court or whether they lie to the Supreme Court under Section 35L because the impugned proceedings involve determination of value of excisable goods for assessment. - HELD THAT: - The Court examined the show cause notice, the Order-in-Original and the Tribunal order and concluded that questions relating to undervaluation and assessable value were expressly raised in the adjudication (including allegation of under-valuation and findings in the Order-in-Original and references in the Tribunal order). In the statutory scheme the character of the adjudication/order (whether it involves determination of value or rate of duty for purposes of assessment) governs whether an appeal lies to the High Court under Section 35G or to the Supreme Court under Section 35L. The Court considered relevant precedents and the Board's circular and noted that where an adjudication/order involves determination of value or rate (or such issues are intermingled with other questions), jurisdiction is vested in the Supreme Court. Applying these principles to the present records, the Court found that one of the issues relates to valuation of excisable goods for the period 1st September 2007 to 15th October 2008 and therefore the exclusion in Section 35G applies. [Paras 16, 17]

Both appeals are not maintainable before the High Court and lie to the Supreme Court under Section 35L; the appeals are dismissed at the admission stage.

Final Conclusion: The High Court held that the impugned proceedings involved determination of value of excisable goods for assessment and therefore the appeals under Section 35G are not maintainable before the High Court; both appeals are dismissed at the admission stage as matters falling within Section 35L and amenable to appeal to the Supreme Court.

Definition of 'manufacture' as exhaustive and to be given a restricted meaning - blending and packing of tea vis-a -vis 'manufacture' - process must alter the nature or character of goods to amount to manufacture - distinction between commercial mixing for marketing and processing to produce a distinct commodity - construction and applicability of precedents Nilgiri Ceylon Tea Supplying Co., Chowgule & Co. and M/s Shiv Datt and Sons

Definition of 'manufacture' as exhaustive and to be given a restricted meaning - blending and packing of tea vis-a -vis 'manufacture' - process must alter the nature or character of goods to amount to manufacture - distinction between commercial mixing for marketing and processing to produce a distinct commodity - Blending and packing of tea carried out by the assessee did not amount to 'manufacture' within the meaning of Section 2(e-1) of the U.P. Trade Tax Act, 1948. - HELD THAT: - The Court examined the statutory definition which enumerates producing, making, extracting, altering, finishing or otherwise processing, treating or adapting goods and noted that the definition is exhaustive and framed in restrictive terms (it does not say 'includes'). Applying the reasoning in M/s Shiv Datt and Sons and the Bombay High Court's view in Nilgiri Ceylon Tea Supplying Co., the Court held that mere purchase in bulk and subsequent mixing/blending for sale, without any mechanical, chemical or other process that alters the nature or character of the tea, does not constitute manufacture. A wide interpretation that treats minor additions or mixing as manufacture would lead to impractical and absurd results and is contrary to the purpose of the definition, which requires processes of such character as to have an impact on the nature of the goods. [Paras 9, 11, 12, 13, 19]

Blending and packing of tea, as performed by the assessee (mixing different teas for sale), is not manufacture under the Act; the High Court's conclusion in favour of the assessee is upheld.

Construction and applicability of precedents Nilgiri Ceylon Tea Supplying Co., Chowgule & Co. and M/s Shiv Datt and Sons - distinction between commercial mixing for marketing and processing to produce a distinct commodity - The precedential scope of Chowgule & Co. is distinguishable and does not govern the present facts; the ratio in M/s Shiv Datt and Sons (and the approach in Nilgiri Ceylon Tea Supplying Co.) applies. - HELD THAT: - Chowgule & Co. concerned a contractually required specific combination of different ores where processing produced a commercially distinct contracted commodity; those facts materially differ from the present case of blending tea for marketing. The Court explained that Chowgule's reasoning is limited to its factual matrix and does not overrule the three-Judge Bench view in M/s Shiv Datt and Sons. Given the factual similarity of the present case to Nilgiri Ceylon Tea Supplying Co., and the interpretative approach in M/s Shiv Datt and Sons, Chowgule is not applicable and the High Court correctly relied on the decisions holding that mere mixing without altering the nature or character of the goods is not manufacture. [Paras 14, 15, 16, 17, 18]

Chowgule & Co. is distinguished on facts; M/s Shiv Datt and Sons and Nilgiri Ceylon Tea Supplying Co. govern the present dispute and support the High Court's answer in favour of the assessee.

Final Conclusion: The High Court correctly held that the assessee's blending and packing of tea did not amount to 'manufacture' under the U.P. Trade Tax Act; the appeals by the Revenue are without merit and are dismissed.

Pollute the stream of administration of justice - contempt of court for filing fabricated documents or misrepresentation - suppression of material facts (supressio veri) as fraud on the court - abuse of process disentitles litigant to interim or final relief - duty of advocates as officers of the court to verify and disclose material facts - listing of subsequent bail applications arising out of the same FIR before the same Judge - mandated disclosure of earlier and pending bail applications in bail petitions

Suppression of material facts (supressio veri) as fraud on the court - contempt of court for filing fabricated documents or misrepresentation - abuse of process disentitles litigant to interim or final relief - Concealment of material facts and non disclosure of pendency of earlier or parallel bail proceedings before higher courts amounts to an attempt to overreach the court and constitutes conduct that may amount to contempt or abuse of process, disentitling the litigant to relief. - HELD THAT: - The Court reviewed its precedents emphasising that truthfulness in court proceedings is a foundational value and that deliberate suppression or misrepresentation of material facts is equivalent to playing fraud with the court. Citing earlier decisions, the Court held that a litigant who touches the fountain of justice with tainted hands is not entitled to interim or final relief. The factual matrix showed that the petitioner filed a second bail application before the High Court while a Special Leave Petition challenging an earlier High Court order was pending in this Court and did not disclose that fact; the omission, together with failure to place the earlier dismissal order on record, amounted to a serious lapse that justified the Court's strong censure. The Court, while noting available remedies (including cancellation of bail) in appropriate cases, applied these principles to conclude that the petition could not be allowed to proceed on the merits in view of the conduct of the petitioner. [Paras 7, 11, 18, 22]

The conduct of non disclosure was deprecated as an attempt to pollute the stream of justice and disentitled the petitioner to the relief sought; the appeal was dismissed as infructuous and a token cost was imposed.

Listing of subsequent bail applications arising out of the same FIR before the same Judge - mandated disclosure of earlier and pending bail applications in bail petitions - duty of advocates as officers of the court to verify and disclose material facts - Steps required to avoid anomalous and conflicting bail orders in the same crime: procedural directions for disclosure and listing of bail applications arising out of the same FIR. - HELD THAT: - The Court noted the Orissa High Court's Standing Order and endorsed the need for a uniform practice to prevent different Judges passing contrary bail orders in matters arising out of the same FIR. The Court prescribed that bail petitions should mandatorily state and annex details and copies of earlier decided bail orders, disclose any pending bail applications in other courts (including higher courts) or state that none are pending, and that the Registry should furnish a system generated report of decided or pending bail applications in the same crime. It emphasised the duty of the Investigating Officer or any officer assisting the State Counsel to apprise the State's counsel of earlier or parallel proceedings and reiterated that counsel must act as officers of the court and verify facts from records. [Paras 16, 17, 18, 20]

Directions issued for meticulous compliance by courts and registries: mandatory disclosure in bail applications, annexing earlier orders, registry reports on prior/pending bail applications, and duty on investigating officers and counsel to disclose relevant orders to avoid conflicting outcomes.

Abuse of process disentitles litigant to interim or final relief - contempt of court for filing fabricated documents or misrepresentation - Whether bail granted by the High Court should be cancelled in view of the petitioner's conduct. - HELD THAT: - The Court observed that cancellation of bail is a possible remedial option where conduct so warrants. Having considered the facts and the available material, the Court opted not to exercise the extreme measure of cancelling the bail in the present case, while making clear that such a course remains open if future facts justify it. [Paras 22, 23]

Bail was not cancelled; the Court declined to exercise that option but imposed a token cost and left open the possibility of cancellation in appropriate circumstances.

Final Conclusion: The petition was dismissed as infructuous; the Court reprimanded the petitioner for non disclosure and misrepresentation, imposed a token cost to be deposited with the Mediation and Conciliation Centre of the Orissa High Court, declined to cancel bail though left the option open for future cases, and issued procedural directions to High Courts, registries, investigating officers and counsel to ensure mandatory disclosure and consistent listing of bail applications arising from the same FIR to avoid conflicting orders.

Compulsory retirement under FR 56(j) - scope of judicial review of subjective satisfaction in public interest retirements - requirement of ACC approval for actions affecting ACC appointees - consultation with Central Vigilance Commission where integrity is in issue - weight of entire service record (including old adverse entries) in review for compulsory retirement - admissibility and probative value of confidential notes and uncommunicated APAR entries - procedural fairness in review and representation committees - allegation of bias by recurrence of same member in review/representation committees

Compulsory retirement under FR 56(j) - requirement of ACC approval for actions affecting ACC appointees - Validity of the petitioner's compulsory retirement under FR 56(j) and whether ACC approval was mandatory for retiring an ACC appointee at SAG level. - HELD THAT: - The Court held that on the date of the impugned order the DoPT OMs of 2014 and 2015 governed review under FR 56(j). Those consolidated instructions envisage a Review Committee headed by the Secretary of the concerned Ministry/Department to consider retention/retirement of Group-A and ACC appointees; they do not make ACC approval a prerequisite for retirement. In view of the Transaction of Business Rules and the applicable DoPT OMs, ACC's role is consultation for appointments/empanelment/upgradation and not for retirements. The record showed that the Review Committee was headed by the Secretary and the Commerce & Industry Minister (as the appointing authority) approved the recommendation; therefore the challenge that ACC approval was mandatory fails. [Paras 98, 99, 101, 103]

The compulsory retirement under FR 56(j) was lawfully effected under the DoPT OMs in force on the relevant date and ACC approval was not mandatory for the impugned retirement.

Consultation with Central Vigilance Commission where integrity is in issue - procedural fairness in review and representation committees - Whether consultation with the Central Vigilance Commission (CVC) was mandatory before retiring the petitioner when 'integrity' was a stated concern, and whether the presence of CVO in the Review Committee sufficed. - HELD THAT: - The Court examined the applicable DoPT OMs (2014, 2015) and concluded that these required association of the Chief Vigilance Officer (CVO) with the Review Committee where an officer's record reflected on integrity; they did not mandate separate consultation with the CVC for every such case. The record established that a CVO (or representative) was part of the Review Committee. Consequently, the petitioner's plea that consultation with the CVC in the form contended by him was mandatory could not be sustained. [Paras 101, 102]

No separate consultation with the CVC in the form asserted was mandatory; the association of the CVO with the Review Committee met the applicable requirement.

Weight of entire service record (including old adverse entries) in review for compulsory retirement - scope of judicial review of subjective satisfaction in public interest retirements - Whether the Review Committees could lawfully rely on earlier adverse entries and a confidential note in considering retention, and whether the Tribunal erred in upholding that reliance. - HELD THAT: - The Court reiterated settled law that a review for compulsory retirement is an assessment of the officer's entire service record and earlier adverse entries may be taken into account; the 'washed off' theory applicable to some promotion contexts does not bar consideration of old adverse entries when assessing retention. The Second Review Committee re examined the petitioner's entire record, including APAR entries (notably the 2014 15 remark in the integrity column) and a confidential note; it also examined the file of the author of the confidential note and interacted with him. The Court found that these materials furnished a basis for the subjective satisfaction of the Review Committee and that the committees applied their mind rather than acting mechanically. [Paras 114, 115, 116, 122, 127]

The reliance on the entire service record, including past adverse entries and the confidential note, was permissible and the Tribunal rightly upheld the Review Committees' conclusions.

Procedural fairness in review and representation committees - admissibility and probative value of confidential notes and uncommunicated APAR entries - Whether the petitioner's multiple representations (including the comprehensive August 30, 2018 representation) were ignored and whether interaction with the author of the confidential note behind the petitioner's back vitiated the process. - HELD THAT: - The Court found on the record that the Representation Committee remanded the case for reconsideration and that the Second Review Committee did re examine the petitioner's representations and service record. The Second Review Committee expressly took note of the petitioner's contentions (as in the June 1, 2018 representation) and also corroborated the confidential note by examining the author's file and by interacting with him. The Court observed that compulsory retirement is not punitive and therefore does not attract the full rigour of departmental inquiry and formal hearing; thus interaction with the author for clarification did not render the process arbitrary or procedurally unfair, particularly where the committees considered the representations and the materials on record. [Paras 112, 113, 115, 119, 120]

The representations were considered and the committees' interaction with the confidential note author did not vitiate the process or make the retirement order arbitrary.

Allegation of bias by recurrence of same member in review/representation committees - procedural fairness in review and representation committees - Whether the presence of the same officer (DGFT) in multiple committees created reasonable suspicion of bias and invalidated the decision. - HELD THAT: - The Court noted that DoPT instructions contemplate representation of the cadre controlling authority in review/representation proceedings; the DGFT's participation was in that representative capacity. The minutes and approvals involved other senior officers and ultimate approval by the Minister (delegate of the President). The petitioner did not make members of the committees parties to the writ to enable specific allegations to be tested by affidavit. On these facts the Court was not persuaded that recurrence of the same member produced such bias as to vitiate the process. [Paras 104, 105, 123, 125]

Presence of the same DGFT member in the committees, in representative capacity, did not constitute such bias as to invalidate the compulsory retirement.

Final Conclusion: The writ petition is dismissed. The Court found that the compulsory retirement under FR 56(j) was carried out in accordance with the DoPT OMs in force on the relevant date, that ACC approval and separate consultation with the CVC in the form asserted were not mandatory, that the Review and Representation Committees lawfully considered the entire service record (including past adverse entries and a confidential note), and that allegations of procedural unfairness or bias were not established on the record.