TaxTMI Updates e-Newsletter
Jan 28,2022

Provisional release under Section 67(6) of the GST Act - bond versus bank guarantee - furnishing of security for tax, interest and penalty - application of Rule 140 for provisional release - detention and confiscation under the GST regime

Provisional release under Section 67(6) of the GST Act - application of Rule 140 for provisional release - bond versus bank guarantee - furnishing of security for tax, interest and penalty - Whether the enforcement authority could insist on furnishing a bank guarantee or additional security for provisional release after the petitioner had paid the applicable tax and penalty and executed the bond required under the statutory scheme. - HELD THAT: - The Court examined the scheme of Section 67(6) read with Rule 140 which provides two routes for provisional release: (i) execution of a bond and furnishing of security, or (ii) payment of applicable tax, interest and penalty. Rule 140 contemplates release on execution of a bond in FORM GST INS-04 and furnishing of a bank guarantee equivalent to the amount of applicable tax, interest and penalty. The petitioner had paid tax and penalty and executed the bond for the value of the goods. Relying on the distinction between a bond and a bank guarantee as explained by this Court in Western Enterprises, the court held that once the statutory option of executing a bond (and payment where applicable) is validly exercised, the authority cannot mechanically insist upon additional collateral in the form of a bank guarantee or other security contrary to the scheme. The Court recorded that the authority's subsequent communication demanding further security despite compliance with the bond-and-payment requirement was inconsistent with the statutory provision and the earlier binding clarification by this Court. In consequence, the insistence on further security was held to be arbitrary and contrary to the statutory scheme and earlier judicial pronouncement. The petitioner was nevertheless directed to furnish details of assets/properties to enable recovery of bond amount if required; therefore, the Court permitted a limited step to protect statutory recovery interests while enforcing the statutory method of provisional release. [Paras 8, 9, 10, 11, 12]

The authority cannot insist on a bank guarantee or additional collateral once the petitioner has complied with the requirements of Section 67(6) and Rule 140 by payment of tax and penalty and execution of the bond; the goods and conveyance are to be released and no further insistence for bank guarantee shall be made, subject only to furnishing asset details for recovery.

Final Conclusion: The petition is allowed; respondent is directed to release the seized goods and conveyance forthwith since the petitioner has paid the tax and penalty and executed the bond as required under the rules, and the respondent shall not insist on a bank guarantee or further security; petitioner to furnish details of assets/properties for recovery purposes.

Eligibility and conditions for taking input tax credit under Section 16(1) - Utilisation of input tax credit held in the electronic credit ledger - Output tax payable by a taxable person and its payment from electronic credit ledger - Common pool of input tax credit and absence of commodity wise identification - Exclusion/blocked credits under Section 17(5) - Statutory authority to use credit for any output tax under Section 49(4) - Nexus between inputs and outward supplies - one to one correlation questioned

Eligibility and conditions for taking input tax credit under Section 16(1) - Utilisation of input tax credit held in the electronic credit ledger - Statutory authority to use credit for any output tax under Section 49(4) - Nexus between inputs and outward supplies - one to one correlation questioned - Common pool of input tax credit and absence of commodity wise identification - Input Tax Credit validly taken on any inputs can be utilised for payment of output tax on any outward supply even where there is no nexus between the inputs and that outward supply. - HELD THAT: - The Authority rejected GAAR's requirement that the appellant must prove a specific nexus between the inputs on which ITC was taken (gold/silver dore) and the outward supply (castor oil seeds) for utilisation of credit. Section 16(1) prescribes the eligibility and conditions for taking ITC (i.e., inputs must be used or intended to be used in the course or furtherance of business) but does not impose a restriction that utilisation of legitimately taken ITC must be limited to GST liabilities arising from the particular outward supply on which that ITC was originally claimed. Once ITC is validly taken, it is credited to the electronic credit ledger and merges into a common pool; accounting for credit is not maintained commodity wise. Section 49(4) specifically empowers use of the amount available in the electronic credit ledger for making any payment towards output tax under the Act (subject to prescribed manner and conditions). Consequently, the requirement of one to one correlation between specific inputs and particular outward supplies is not mandated by the GST provisions. The GAAR's ruling to the contrary was set aside as contrary to the statutory scheme and practical operation of the electronic credit ledger (illustrated by the supermarket example and the impossibility of maintaining credit commodity wise). The decision leaves intact the applicability of other provisions governing determination, restriction and reversal of ITC, which were not under challenge. [Paras 11, 12, 14, 15, 16]

The appellant may utilise the legitimately earned Input Tax Credit balance in its Electronic Credit Ledger for payment of output tax on its outward supply of Castor Oil Seeds notwithstanding absence of a nexus between those inputs and that outward supply; GAAR's contrary ruling is set aside.

Final Conclusion: The appeal is allowed: ITC validly taken and credited to the electronic credit ledger forms a common pool that may be applied to discharge any output tax liability of the registered person in accordance with Section 49(4); requiring proof of a one to one nexus between particular inputs and a particular outward supply for utilisation of such credit is not mandated by Section 16(1) and is rejected.

Taxability of sale of developed plots - Entry 5 of Schedule III - exclusion of sale of land from supply - construction of civil structure intended for sale treated as supply of service - composite supply and principal supply - consideration and valuation - inclusion under Section 15 - consideration includes amounts supplier is liable to pay under Section 2(31)

Taxability of sale of developed plots - Entry 5 of Schedule III - exclusion of sale of land from supply - construction of civil structure intended for sale treated as supply of service - Sale of plots for which development of mandatory common amenities has been/ will be undertaken does not fall under Entry No.5 of Schedule-III and is taxable as construction service. - HELD THAT: - The authority found that the appellant's scheme involves division of land into plots and development of common facilities (drainage, water, electricity, roads, compound wall, etc.) as mandated by the plan approval authority. Where such development is effected or is required to be effected prior to sale, the activity falls within clause (b) of paragraph 5 of Schedule-II - construction of a complex, building or civil structure intended for sale to a buyer - and is therefore a supply of service. The factual record showed no reliable evidence that the price charged excluded the cost of common amenities; in ordinary practice sellers charge on a super-built-up basis which includes such amenities as intrinsic to the plot. Accordingly, sale of developed plots is not a mere sale of land excluded by Entry No.5 of Schedule-III but a taxable supply of construction services liable to GST. [Paras 13, 15, 18]

Confirmed that sale of the appellant's developed plots is not covered by Entry No.5 of Schedule-III and is a taxable construction service.

Composite supply and principal supply - conditions for composite supply under Section 2(30) - The transaction does not qualify as a composite supply with sale of land as the principal supply. - HELD THAT: - To constitute a composite supply the supply must be made by a taxable person, consist of two or more taxable supplies, be naturally bundled and supplied in conjunction, and include a principal supply. The authority observed that the appellant was not a registered taxable person for the activity as pleaded; further, one element (sale of land) is not a taxable supply under Schedule-III, leaving only the construction activity as a taxable supply. Therefore the conditions for a composite supply (multiple taxable supplies with a principal supply) are not satisfied and the composite supply argument fails. [Paras 14]

The supply cannot be characterized as a composite supply with sale of land as principal supply.

Consideration and valuation - inclusion under Section 15 - consideration includes amounts supplier is liable to pay under Section 2(31) - Amounts relating to development of common facilities are includible in the transaction value for valuation under the CGST Act. - HELD THAT: - The authority relied on the definition of 'consideration' in Section 2(31) and the valuation provisions of Section 15 to hold that amounts the supplier is liable to pay in relation to the supply - even if incurred by the recipient or routed through another entity - must be included in the value. Thus, even if buyers undertake development through an association, where the supplier remains liable or the sale price effectively includes such costs, those amounts form part of the consideration and must be included in valuation for GST. [Paras 13]

Costs of common facilities are includible in the value of supply and relevant for GST valuation.

Final Conclusion: The Appellate Authority for Advance Ruling confirmed the GAAR order: the appellant's sale of developed plots (where provision or mandated development of common amenities is involved) is a taxable service (construction services) and not an excluded sale of land; the composite-supply plea was rejected and amounts for common amenities are includible in value - appeal dismissed.

Allowability of employee contribution as deduction under Section 36(1)(va) read with Section 2(24)(x) - applicability of Section 43B to employee share of PF/ESI contributions - effect of Finance Act, 2021 amendments on due date rule (prospective vs retrospective application) - judicial consistency and precedential value of jurisdictional High Court decisions

Allowability of employee contribution as deduction under Section 36(1)(va) read with Section 2(24)(x) - applicability of Section 43B to employee share of PF/ESI contributions - Deduction under Section 36(1)(va) for employee share of PF/ESI collected by the employer but deposited after the statutory PF/ESI due date, yet before the due date for filing return under Section 139(1). - HELD THAT: - The Tribunal examined competing authorities and the amendments made by Finance Act, 2021. Applying judicial discipline the Bench followed the view of the jurisdictional High Court and earlier Division Bench decisions that where the employee share (collected by the employer) is deposited to the credit of the employees with the relevant PF/ESI fund before the due date for filing the return under Section 139(1), the deduction under Section 36(1)(va) read with Section 2(24)(x) is allowable despite belated deposit under the PF/ESI statute. The Tribunal considered the Memorandum to the Finance Bill, 2021 and numerous tribunal and High Court decisions and concluded that the Finance Act, 2021 clarifications were to apply prospectively from 01.04.2021 (assessment year 2021 22 onwards) and do not defeat the taxpayer's entitlement for assessment years prior to 2021 22. The Bench emphasised that Section 43B can be invoked only where the deduction is otherwise available; where Section 36(1)(va) conditions are satisfied by deposit before the return filing date, the deduction is admissible. In the present appeal the assessee's tax audit report showed deposits before the return filing date but the paid challans were not on record; hence the Tribunal allowed the claim subject to verification of payment evidence by the AO.

Assessee entitled to deduction for the employee share deposited before the due date for filing return; addition deleted subject to verification of challans.

Prospective effect of Finance Act, 2021 amendments on Section 36(1)(va) and Section 43B - judicial consistency and precedential value of prior Division Bench order - Whether the clarificatory Explanations inserted by Finance Act, 2021 apply retrospectively to assessment years prior to 2021 22. - HELD THAT: - The Tribunal reviewed the Memorandum to the Finance Bill, 2021 and the legislative intent recorded therein, noting the explicit statement that the amendments take effect from 01.04.2021 and apply to AY 2021 22 and subsequent years. The Bench observed that numerous High Court and tribunal decisions had permitted deduction for belated deposits made before the return filing date for years prior to AY 2021 22; Parliament, aware of those decisions, elected to make the clarification prospective. Having earlier decided the preceding year appeal in the assessee's favour, the Tribunal adhered to principles of consistency and followed the jurisdictional High Court's position that the Finance Act, 2021 explanations do not operate retrospectively to defeat entitlements for assessment years before 2021 22.

Finance Act, 2021 explanations treated as prospective (effective 01.04.2021) and do not deny the assessee relief for AY 2019 20; Tribunal follows prior Division Bench and jurisdictional High Court precedent.

Remand for verification of payment evidence - Verification of proof of deposit (challans) supporting the assessee's claim for deduction. - HELD THAT: - Although the Tribunal allowed the claim in principle, it noted absence of paid challans on record. For limited purposes the matter was remitted to the Assessing Officer to verify the actual payment challans and dates to ensure the employee contributions were deposited to the employees' credit before the due date for filing the return; the assessee was directed to furnish complete bifurcation and paid challans to the AO for verification.

Matter remitted to AO for verification of challans; deduction to be allowed only upon verification that deposits were made before the return filing due date.

Final Conclusion: Appeal allowed for AY 2019 20: the Tribunal held that employee share of PF/ESI deposited to employees' credit before the due date for filing the return is deductible under Section 36(1)(va) read with Section 2(24)(x) for assessment years prior to AY 2021 22; the Finance Act, 2021 clarifications were treated as prospective. The AO is directed to verify production of paid challans and dates before allowing the deduction.

Entitlement to interest on tax refund under section 244A - computation of interest up to the date of issuance of refund voucher - improper computation of interest up to the date of signing of notice of demand

Entitlement to interest on tax refund under section 244A - computation of interest up to the date of issuance of refund voucher - improper computation of interest up to the date of signing of notice of demand - Assessee is entitled to interest on the tax refund up to the date of issuance of the refund voucher and the AO erred in computing interest only up to the date of signing of the notice of demand. - HELD THAT: - The Tribunal found as a matter of statutory interpretation that section 244A grants an assessee, when a refund becomes due, a right to simple interest calculated as prescribed, and there is no ambiguity in the provision to restrict the period of interest to the date of signing of the notice of demand. The AO had computed interest only up to the notice of demand; that approach was held to be incorrect. The Tribunal accepted the view of coordinate benches in earlier decisions that interest must be computed up to the date of issuance of the refund voucher. Consequently the CIT(A)'s confirmation of the AO's computation was set aside and the matter was remitted to the AO for computation and grant of interest in accordance with section 244A up to the date of issuance of the refund voucher for the stated assessment years. [Paras 7, 8, 9, 10, 11]

Appeals allowed; CIT(A) orders set aside and AO directed to compute and grant interest under section 244A up to the date of issuance of the refund voucher for A.Y. 2012-13 and A.Y. 2013-14.

Final Conclusion: The Tribunal allowed the appeals, holding that interest on the tax refund under section 244A is payable up to the date of issuance of the refund voucher; the CIT(A) orders were set aside and the AO directed to recompute and grant the interest accordingly for A.Y. 2012-13 and A.Y. 2013-14.

Deduction under Section 80-IA - port operations vs. operation of a berth - requirement of certificate from port authority - maintaining separate accounts for eligible unit - consistency of assessment treatment / concluded position from earlier year

Deduction under Section 80-IA - port operations vs. operation of a berth - requirement of certificate from port authority - consistency of assessment treatment / concluded position from earlier year - Assessee entitled to deduction under Section 80-IA in respect of operating Berth No. 12 at Haldia Dock Complex. - HELD THAT: - The Court examined whether operation and maintenance of a multipurpose berth qualified as an activity falling within the meaning of a "port" for the purpose of Section 80-IA. The assessing officer rejected the claim on the basis that the assessee was only operating a berth and that the port authority's letter did not establish that the berth formed part of the port, and further questioned the exclusivity of the license. The Tribunal and the CIT(A) had earlier allowed deduction for the first year (2003-2004) after factual examination, and the assessing officer had given effect to that order, noting that separate accounts for Berth No. 12 were maintained and that Circular No.10/2005 applied. The High Court held the assessing officer's contrary findings to be perverse: a berth is necessarily located within a port, the letter and agreement granted exclusive rights to equip, construct, operate and maintain facilities that fall within the inclusive definition of "port" (storage, loading and unloading), and the documents produced satisfied the requirement contemplated by the circular. The Court further emphasised that where the assessee had been granted relief for the first year and there was no change in circumstances, a consistent approach in subsequent years was required. On these grounds the Tribunal's confirmation of the allowance was upheld.

Tribunal's allowance of deduction under Section 80-IA for operation of Berth No. 12 was confirmed; assessing officer's denial set aside.

Maintaining separate accounts for eligible unit - deduction under Section 80-IA - Assessee's claim was not defeated by alleged failure to maintain separate accounts for the unit. - HELD THAT: - Although the revenue contended that the assessee did not substantiate its claim by maintaining separate accounts for different units, the assessment records and the assessing officer's own earlier notes (in giving effect to the first-year order) recorded that a separate profit & loss account and balance sheet were prepared for Berth No. 12 and were submitted with the return. The Court relied on these findings and on the absence of any material change in circumstances to conclude that the assessee had, in substance, furnished the requisite accounting segregation and thereby met the evidentiary requirement for claiming the deduction.

Claim of deduction was not disallowed on account of lack of separate accounts; the Tribunal's and CIT(A)'s findings that separate accounts existed were upheld.

Final Conclusion: Revenue appeals dismissed; substantial questions answered against the revenue and the allowance of deduction under Section 80-IA for the relevant assessment years upheld, the Tribunal's orders confirmed and applications dismissed.

Slump sale - transfer by way of exchange - definition of transfer under Section 2(47) - treatment of transfer of undertaking as long term capital asset - application of precedent in the assessee's own case - remand for fresh consideration - disallowance of expenditure under Section 14A and application of Rule 8D

Slump sale - transfer by way of exchange - definition of transfer under Section 2(47) - treatment of transfer of undertaking as long term capital asset - Whether the transfer of two specified hotels was a slump sale chargeable under the provisions applicable to slump sale / Section 50B, or a transfer by way of exchange falling within the definition of transfer under Section 2(47). - HELD THAT: - The Tribunal found as a fact that the two specified hotels were transferred as going concerns, the consideration was a lumpsum payment not allocable to identifiable assets, and the consideration was settled by issuance of preference shares and debentures in EIH Associated Limited. Applying the principle that a transfer of assets in consideration of allotment of shares constitutes an exchange and not a sale, and having regard to the inability to ascertain cost of acquisition of the undertakings, the Tribunal held that the transfer could not be brought within the slump sale dispensation invoked by the revenue. The Tribunal relied on earlier authorities (including R.R. Ramakrishna Pillai and B.C. Srinivasa Setty) and the High Court of Bombay decision relied upon, and the court observed that the subsequent amendment to the definition of slump sale (widening it to capture transfer by any means) only bolsters the assessee's position but is not retrospective to alter the facts at hand. On this basis the High Court upheld the Tribunal's conclusion that the transaction was by way of exchange under the definition of transfer and not a slump sale attracting the special provisions relied upon by the revenue.

Answered against the revenue; the Tribunal's finding that the transfer was by way of exchange and not a slump sale is affirmed.

Application of precedent in the assessee's own case - Whether the substantial questions raised in respect of various disallowances and tax withholding issues (listed in the revenue's questions (ii), (iii), (iv), (v), (viii), (ix), (x) and (xi)) should be decided against the revenue. - HELD THAT: - It was not disputed before the Court that these substantial questions had been answered against the revenue in the assessee's own case for assessment year 2008-09 by ITAT No.34 of 2020 dated 16th December, 2021. Following that decision, the High Court declined to disturb the Tribunal's findings in the present appeal and answered these questions against the revenue.

All those substantial questions are answered against the revenue following the earlier decision in the assessee's own case.

Remand for fresh consideration - Whether the Tribunal erred in remanding the issue relating to leave encashment to the assessing officer for fresh consideration in light of the Apex Court's then pending decision. - HELD THAT: - The Tribunal had remanded the leave encashment issue to the assessing officer to decide afresh after taking note of the Supreme Court's decision in Exide Industries Ltd. v. Union Bank of India, which was not finally concluded at that time. The High Court treated the matter as one remitted for fresh factual and legal consideration rather than a substantive question of law for its determination and therefore rejected the revenue's contention that a substantial question of law arose.

Rejected as not constituting a substantial question of law; the remand stands.

Disallowance of expenditure under Section 14A and application of Rule 8D - Whether the Tribunal erred in deleting the disallowance under Section 14A (and the AO's application of Rule 8D) in respect of expenses attributable to exempt income. - HELD THAT: - The High Court examined the Tribunal's findings recorded at paragraphs 7.2.1 and 7.2.2 of the impugned order and concluded that the Tribunal had analysed the factual position and granted relief to the assessee. On that factual basis the Court found no substantial question of law to be adjudicated and affirmed the Tribunal's factual conclusion granting relief.

Affirmed the Tribunal's finding and decided against the revenue.

Final Conclusion: The appeal fails and is dismissed; the Tribunal's order is affirmed in the respects recorded, the remand on the leave encashment issue remains, and the stay application is closed.

Section 40A(3) - disallowance of cash payments exceeding prescribed limit - Rule 6DD - exemption from requirement of payment by crossed cheque where payment from producers is practicable - Genuineness of business transactions and documentary corroboration - Contemporaneous records and tax audit verification as evidence of purchases

Section 40A(3) - disallowance of cash payments exceeding prescribed limit - Genuineness of business transactions and documentary corroboration - Entitlement to deduction for purchases of raw hides and skins paid in cash in excess of Rs.20,000 under Section 40A(3) - HELD THAT: - The Tribunal and the Court examined whether payments in cash for purchase of raw hides and skins in excess of the limit prescribed under Section 40A(3) could be disallowed where the assessee produced contemporaneous documents and records to demonstrate the transactions. Relying on the principle that Section 40A(3) is not absolute and that bona fide transactions supported by satisfactory explanation and evidence may be exempted from disallowance, the authorities accepted the assessee's production of purchase bills, transport permits, sales tax way bills and the day to day stock register. The Tribunal noted absence of any material to controvert those records other than returned notices under Section 133(6), and accepted the assessee's explanation that payments in the prescribed manner were not practicable in the trade. On this basis the disallowance under Section 40A(3) was not sustained.

The allowance of the deduction was affirmed; the disallowance under Section 40A(3) was rejected in view of contemporaneous documentary evidence and bona fide nature of purchases.

Rule 6DD - exemption from requirement of payment by crossed cheque where payment from producers is practicable - Contemporaneous records and tax audit verification as evidence of purchases - Whether purchases were from persons covered by Rule 6DD and thus exempt from the cheque payment requirement - HELD THAT: - The Tribunal assessed whether the sellers fell within the circumstances contemplated by Rule 6DD so that payment by crossed cheque was not mandatory. It held that the assessee's production of statutory transport permits, sales tax way bills, purchase bills and corroboration in the tax audit report showing day to day stock entries established that purchases were from producers or persons covered by the Rule. The mere fact that some notices under Section 133(6) were returned 'not known' did not rebut the documentary evidence or permit an inference that the purchases were fictitious. Applying the settled principle that Rule 6DD allows exemption where payment by cheque is impracticable and the transaction is genuine, the Tribunal's conclusion that the Rule applied was sustained.

The Tribunal's finding that the purchases fell within Rule 6DD and that cheque payment was not required was upheld.

Final Conclusion: The High Court dismissed the Revenue's appeal and answered the substantial questions of law against the Revenue, affirming the Tribunal's acceptance of the assessee's documentary evidence and its consequent refusal to disallow the cash purchases under Section 40A(3) and to deny applicability of Rule 6DD for assessment year 2010/11.

Disallowance of cash expenditure - double addition - deduction under section 80IA(4) - Explanation to section 80IA - works contract - binding nature of Tribunal decisions - judicial consistency

Disallowance of cash expenditure - double addition - judicial consistency - Validity of Assessing Officer's disallowance of cash withdrawals/payments in respect of Dummugudem project and whether the same could be sustained as a separate unexplained addition. - HELD THAT: - The Tribunal noted that the Revenue pressed identical grounds across the three assessment years challenging CIT(A)'s restriction of disallowance to 12.5% and sought revival of the AO's full disallowance of cash payments relating to the Dummugudem project. The Bench observed that a coordinate bench of the Tribunal in the assessee's own earlier proceedings (A.Ys. 2008-09 to 2013-14) had examined identical facts and held that the AO's separate addition was unsustainable and amounted to a double addition, since the AO had already disallowed project expenses under a separate head. The earlier coordinate-bench reasoning, which explained that parts of the cash withdrawals were either met through advances to a subcontractor (accounted and assessed in its hands) or merged with an existing disallowance of project expenses, was applied by the Bench as a matter of judicial consistency. No distinguishing fact or law was pointed out by Revenue for these assessment years. Consequently, the CIT(A)'s deletion of the impugned disallowance (limited to 12.5%) was affirmed. [Paras 2, 3]

CIT(A)'s deletion of the separate disallowance relating to cash withdrawals for the Dummugudem project is affirmed; Revenue's challenge on this ground dismissed.

Deduction under section 80IA(4) - Explanation to section 80IA - works contract - binding nature of Tribunal decisions - Allowability of deduction claimed under section 80IA(4) in respect of profits from projects executed (including by SPVs/JVs/constituent members) and whether the Explanation excluding works contracts applies. - HELD THAT: - The Tribunal examined competing coordinate-bench authorities and earlier appellate orders in the assessee's own cases. While some earlier Tribunal decisions held that deduction under section 80IA(4) could be available to constituents executing works through JVs/consortia, another coordinate-bench (in the assessee's cross appeals for earlier years and in subsequent Revenue/assessee cross-appeals) found that the projects in question amounted to works contracts within the statutory Explanation to section 80IA and therefore were excluded from the deduction. That bench applied principles of strict construction of fiscal/exemption provisions and relevant judicial interpretations of the word 'works', concluding that the factual matrix (mobilization advances, lump-sum payment terms, absence of genuine developer risk) showed the assessee had executed works contracts. The present Bench, finding no distinguishing facts and noting the pendency of requests for a Special Bench did not oblige staying its decision, adopted the cited coordinate-bench conclusion and restored the Assessing Officer's disallowance of the section 80IA(4) claim for the assessment years under appeal. [Paras 4, 5, 6]

Assessing Officer's disallowance of the claim under section 80IA(4) is restored; CIT(A)'s allowance on this issue is set aside.

Final Conclusion: The appeals are partly allowed: the Tribunal affirms CIT(A)'s deletion of the separate disallowance relating to cash expenditure on the Dummugudem project, but restores the Assessing Officer's disallowance of the deduction claimed under section 80IA(4) on the ground that the projects fall within the Explanation excluding works contracts.

Reopening of assessment - proviso to section 147 - limitation where original assessment under section 143(3) - disclosure of fully and truly all material facts - reassessment barred by limitation - quashing of reassessment proceedings

Reopening of assessment - proviso to section 147 - limitation where original assessment under section 143(3) - disclosure of fully and truly all material facts - Validity of reopening and reassessment for AY 1990-91 in view of the proviso to section 147 where original assessment was completed under section 143(3) - HELD THAT: - The Tribunal held that the reasons recorded for reopening merely alleged that the assessee followed cash-basis treatment for certain interest items and claimed notional depreciation on investments, but the original assessment under section 143(3) had considered and contained disclosure of those very details. The assessee's return and the original assessment record (including the memo of income, notes to computation and disclosure of depreciation and accrued interest) constituted a full disclosure of material facts. Applying the proviso to section 147, as explained in the decision of Foramer France and the Madras High Court decision in RPG Transmissions Ltd. , the Tribunal concluded that where there is no failure to disclose fully and truly all material facts and an assessment under section 143(3) has been completed, reopening after the four-year period is barred. On this basis the reassessment for AY 1990-91 was quashed. [Paras 9]

Reassessment for AY 1990-91 quashed and appeal allowed.

Reopening of assessment - proviso to section 147 - limitation where original assessment under section 143(3) - disclosure of fully and truly all material facts - Validity of reopening and reassessment for AY 1991-92 in view of the proviso to section 147 where original assessment was completed under section 143(3) - HELD THAT: - The facts for AY 1991-92 were found to be similar to AY 1990-91 and were not disputed by Revenue. For the same reasons - namely that the original assessment under section 143(3) contained the material disclosures relied upon by the assessee and there was no failure to disclose fully and truly all material facts - the proviso to section 147 barred reopening beyond four years. The Tribunal therefore quashed the reassessment proceedings for AY 1991-92, taking a consistent view with its conclusion in AY 1990-91. [Paras 10]

Reassessment for AY 1991-92 quashed and appeal allowed.

Final Conclusion: Both appeals allowed; reassessment proceedings for assessment years 1990-91 and 1991-92 quashed as barred by the proviso to section 147 since the original assessments were completed under section 143(3) and there was no failure by the assessee to disclose fully and truly all material facts.

Failure to substantiate expenditure on foreign travel - addition as unexplained expenditure on account of marriage expenses - incriminating document found during search - presumption under section 132(4A) and section 292C regarding custody and correctness of incriminating documents - addition on account of unexplained cash credit - undisclosed income on account of entries - non-adjudication / non-speaking order and principle of natural justice

Failure to substantiate expenditure on foreign travel - Addition of Rs.5,00,000 made as expenditure on foreign travel upheld for Assessment Years 2008-09, 2010-11 and 2011-12. - HELD THAT: - The Tribunal examined the record and found that the assessee failed to produce any evidence to substantiate the claimed foreign travel expenditure. In the lead assessment (2008-09) the Assessing Officer made the addition and the Commissioner (Appeals) confirmed it; on appeal to the Tribunal no documentary evidence was placed on record by the assessee to rebut the addition. For the subsequent years (2010-11 and 2011-12) the facts were identical and the Tribunal took a consistent view following the decision in the lead year. In the absence of any material to establish the expenditure, the findings of the authorities below were affirmed. [Paras 10, 18, 22]

Grounds relating to the addition of Rs.5,00,000 as foreign travel expenditure are dismissed and the addition is affirmed for the three assessment years.

Addition as unexplained expenditure on account of marriage expenses - incriminating document found during search - presumption under section 132(4A) and section 292C regarding custody and correctness of incriminating documents - Addition of Rs.33,95,000 as unexplained expenditure on account of marriage expenses upheld for Assessment Year 2008-09. - HELD THAT: - During search proceedings an incriminating paper containing entries relating to marriage expenses (with a wedding date noted) was recovered from the assessee's premises. The assessee's representative failed to explain or produce any documentary evidence to rebut the entries or to show that the paper did not relate to the assessee. The Commissioner (Appeals) applied the statutory presumption that incriminating documents found in custody belong to the person from whose custody they were found and that the entries are correct under the provisions invoked, and recorded that the assessee had not discharged the burden to rebut that presumption. In the absence of any material before the Tribunal to controvert the findings, the Tribunal affirmed the addition. [Paras 13]

Addition of Rs.33,95,000 as unexplained marriage expenditure is confirmed and the ground is dismissed for AY 2008-09.

Addition on account of unexplained cash credit - undisclosed income on account of entries - non-adjudication / non-speaking order and principle of natural justice - Additions of Rs.28,90,000 (unexplained cash credits) and Rs.6,20,700 (undisclosed income on account of entries) in Assessment Year 2011-12 were not adjudicated by the Commissioner (Appeals); the Tribunal dismissed the assessee's grounds of appeal in respect of these additions. - HELD THAT: - The Tribunal noted that the Commissioner (Appeals) did not record any finding on the merits in respect of the additions relating to bank credits and other entries. The assessee did not place submissions before the Tribunal to remedy that omission. In view of the absence of any appellate adjudication below and no material before the Tribunal to decide the claims in favour of the assessee, the Tribunal dismissed the relevant grounds of the assessee's appeal. [Paras 24]

Grounds challenging the additions of Rs.28,90,000 and Rs.6,20,700 are dismissed for want of adjudication below and in the absence of submissions before the Tribunal.

Final Conclusion: All three appeals filed by the assessee for Assessment Years 2008-09, 2010-11 and 2011-12 are dismissed; additions relating to foreign travel and marriage expenses are affirmed for the lead year and applied consistently to other years, and the grounds relating to unexplained cash credits and undisclosed entries in 2011-12 are dismissed due to non-adjudication below and lack of material before the Tribunal.

Rectification under section 154 - limitation under section 154(7) - power to dispose of timely filed rectification applications after statutory period in terms of exercise of power under section 119(2)(a) (CBDT Circular No.73) - treatment of receipts as long term capital gains vis-a -vis income from other sources - admissibility of additional jurisdictional grounds at appellate stage - claim for credit of TDS subject to verification of TDS certificates

Limitation under section 154(7) - rectification under section 154 - Rectification order dated 20.06.2016 passed under section 154 insofar as it altered the head of income in the intimation issued under section 143(1) is barred by limitation. - HELD THAT: - The Tribunal held that the time-limit for making an amendment under section 154 is to be reckoned from the date of the original order sought to be amended. Section 154(7) precludes amendment after four years from the end of the financial year in which the original order was passed, except as otherwise provided. The intimation issued by CPC, Bengaluru under section 143(1) (dated 05.03.2012 in one case and 29.03.2012 in the other) is the order sought to be rectified and therefore the period of limitation commences from that date. A rectification order dated 20.06.2016 falls beyond the permissible period (the Tribunal so held) and is therefore barred by limitation; accordingly the rectification orders were quashed on this ground. The Tribunal declined to decide other contested issues because the appeals were allowed on the sole ground of limitation. [Paras 6, 8, 9, 12]

Rectification orders dated 20.06.2016 quashed as barred by limitation under section 154(7).

Admissibility of additional jurisdictional grounds at appellate stage - Admission of additional grounds raising limitation (a jurisdictional plea) was allowed and the Tribunal proceeded to adjudicate that ground. - HELD THAT: - The Tribunal exercised its power to admit additional grounds where the plea relates to jurisdiction and goes to the root of the matter. Applying precedents referenced by the assessee, the Tribunal observed that the limitation plea was a jurisdictional issue evident from the record and therefore admissible even though not raised earlier before the CIT(A). The Tribunal accordingly admitted the additional grounds and adjudicated the limitation issue on merits. [Paras 5]

Additional grounds raising limitation were admitted for adjudication.

Power to dispose of timely filed rectification applications after statutory period in terms of exercise of power under section 119(2)(a) (CBDT Circular No.73) - claim for credit of TDS subject to verification of TDS certificates - Where a valid application under section 154(2)(b) was filed within the statutory time limit but disposed of after the period prescribed by section 154(7), the AO may still dispose of the application on merits in accordance with the CBDT circular and exercise of powers under section 119(2)(a); AO directed to allow TDS credit after verification of certificates. - HELD THAT: - Although the Tribunal quashed the rectification orders as time-barred, it noted that where an assessee filed a valid application under section 154(2)(b) within time, the CBDT Circular No.73 (F.No.245/13/71-A&PAC dated 07.01.1972) permits the authority to dispose of such applications on merits even after expiry of the statutory period by exercising power under section 119(2)(a). Applying that position, the Tribunal directed that the Assessing Officer should verify the TDS certificates produced and allow the TDS credit as per law. [Paras 6, 10, 13]

AO to verify TDS certificates and allow TDS credit in terms of CBDT Circular No.73 and the exercise of powers under section 119(2)(a).

Final Conclusion: The appeals are allowed: the rectification orders dated 20.06.2016 are quashed as barred by limitation under section 154(7), the Tribunal admitted the additional jurisdictional ground of limitation and directed the Assessing Officer to verify TDS certificates and grant credit in accordance with law and CBDT Circular No.73.

Deduction under s.57(iii) for expenditure laid out wholly and exclusively for the purpose of making or earning income from other sources - Scope of presumptive taxation under s.44AD and its effect on separate heads of income - Admissibility of interest expense against income assessed under the head "Income from other sources" - Principle that purpose of expenditure, not its actual fruition into income, determines deductibility under s.57(iii)

Deduction under s.57(iii) for expenditure laid out wholly and exclusively for the purpose of making or earning income from other sources - Scope of presumptive taxation under s.44AD and its effect on separate heads of income - Assessee entitled to deduct interest expenditure attributable to income shown under the head "Income from other sources" despite adopting presumptive taxation for business income under section 44AD. - HELD THAT: - The Tribunal found that the assessee had declared business income under section 44AD while showing separate receipts under the head "Income from other sources" (including interest). Expenditure incurred to earn income chargeable under that head is allowable under section 57(iii) if it was laid out wholly and exclusively for the purpose of making or earning such income. Reliance was placed on the Supreme Court's decision in CIT v. Rajendra Prasad Moody, which holds that s.57(iii) requires examination of the purpose of the expenditure and does not condition deductibility upon the expenditure actually yielding income in the same assessment year. Applying that principle, the Tribunal concluded that interest expense incurred to earn the interest income shown under "Income from other sources" was deductible under s.57(iii) and therefore the disallowance sustained by the CIT(A) was not justified. [Paras 6, 7]

Disallowance of interest expense of Rs. 3,44,516/- sustained by the CIT(A) deleted and appeal allowed.

Final Conclusion: Assessee's appeal allowed for AY 2015-16: interest expenditure incurred for earning income shown under the head "Income from other sources" held deductible under section 57(iii) notwithstanding adoption of section 44AD for business income; disallowance deleted.

Comparability analysis for transfer pricing - selection and exclusion of comparables - functional similarity as determinative for comparability - arm's length price benchmarking under TNMM - working capital adjustment in transfer pricing comparability

Comparability analysis for transfer pricing - functional similarity as determinative for comparability - Includability of Ashok Reservation and Marketing Services (ITDC segment) in the final list of comparables for benchmarking the assessee's international transactions. - HELD THAT: - The Tribunal examined prior treatment of the Ashok reservation and marketing services segment in the assessee's earlier years and the functional similarity between that segment and the assessee's basic market research and testing activities. The Tribunal found no change in facts or circumstances since earlier years when Revenue and the appellate authorities had accepted the segment as functionally comparable. The mere fact that ITDC is a government-owned company was held not to be a valid ground for exclusion where functional similarity exists, and the authorities' prior acceptance reinforced its comparability. Accordingly the TPO/Assessing Officer was directed to include ITDC in the final comparable set for benchmarking. [Paras 6, 8, 9, 10]

ITDC (Ashok reservation and marketing services segment) to be included as a comparable.

Comparability analysis for transfer pricing - selection and exclusion of comparables - functional similarity as determinative for comparability - Includability of Hi Tech Laboratories Ltd. in the final list of comparables. - HELD THAT: - Although the TPO rejected Hi Tech Laboratories on the ground of lower turnover in the relevant year, the Tribunal observed that when a company is functionally similar and had been accepted as a comparable in earlier assessment years by Revenue and appellate authorities, a lower turnover in the particular year does not justify exclusion. Given prior acceptance of functional similarity, the Tribunal directed the TPO/Assessing Officer to include Hi Tech Laboratories in the final list of comparables. [Paras 11, 12, 13]

Hi Tech Laboratories Ltd. to be included as a comparable.

Selection and exclusion of comparables - comparability analysis for transfer pricing - Exclusion of Axis Integrated Systems Ltd. from the final list of comparables. - HELD THAT: - On review of the material and following a coordinate bench decision in the assessee's own case for AY 2013-14, the Tribunal found Axis Integrated Systems Ltd. to be functionally dissimilar (providing liaising/regulatory facilitation and specialised consultancy) to the assessee's activities. Respecting the earlier Tribunal view and noting no differing facts pleaded for the year under appeal, the Tribunal directed exclusion of Axis Integrated Systems Ltd. [Paras 14, 15, 16]

Axis Integrated Systems Ltd. to be excluded from the comparable set.

Selection and exclusion of comparables - comparability analysis for transfer pricing - Comparability of HSCC (India) Ltd. remanded for verification by the TPO/Assessing Officer. - HELD THAT: - The Tribunal found that available material did not permit a definitive conclusion on whether HSCC (India) Ltd.'s provision of professional consultancy services in healthcare and social sectors is functionally comparable to the assessee's activities. Given the uncertainty in the record and that proper verification was required to determine whether HSCC performed different functions, the Tribunal remanded the issue to the TPO/Assessing Officer for thorough verification and directed that the assessee be heard; if HSCC is found to perform different functions it should be excluded. [Paras 17, 18, 19]

Issue remanded to the file of the TPO/Assessing Officer for verification and fresh consideration; inclusion/exclusion to be decided after hearing the assessee.

Working capital adjustment in transfer pricing comparability - arm's length price benchmarking under TNMM - Re-computation of working capital adjustment to be done by the TPO/Assessing Officer in accordance with ALP margins after affording the assessee an opportunity of being heard. - HELD THAT: - Following a coordinate-bench direction in the assessee's own case that the working capital adjustment computation by the TPO/Assessing Officer was improper, the Tribunal observed that the working capital adjustment must be recomputed consistently with the ALP margins. Both parties concurred that the same course should be applied for the year under appeal. The matter was therefore restored to the TPO/Assessing Officer to recompute the working capital adjustment as per ALP margins after hearing the assessee. [Paras 20]

Working capital adjustment remitted for recomputation by the TPO/Assessing Officer in accordance with ALP margins after hearing the assessee.

Final Conclusion: Appeal allowed in part: ITDC (Ashok reservation and marketing services) and Hi Tech Laboratories to be included as comparables; Axis Integrated Systems excluded; comparability of HSCC (India) remanded for verification; working capital adjustment remitted for recomputation in accordance with ALP margins. Appeal disposed of for statistical purposes.

Exemption under section 54F - Deposit in capital gains account before furnishing return under section 139 - Interpretation of section 139(4) as falling within reference to section 139 - Parity between section 54 and section 54F - Validity of reopening of assessment under section 147

Exemption under section 54F - Deposit in capital gains account before furnishing return under section 139 - Interpretation of section 139(4) as falling within reference to section 139 - Parity between section 54 and section 54F - Claim for exemption under section 54F was allowable where the assessee deposited capital gains within the extended time under section 139(4) and purchased a residential house within the prescribed period. - HELD THAT: - The Tribunal found no dispute regarding sale of the asset on 26.02.2010, deposit of NHAI bonds on 26.03.2010 and 11.08.2010, filing of return under section 139(4) on 31.03.2011, and purchase of a residential house on 22.09.2011 with appropriation of the capital gain. Applying the ratio in CIT v. Rajesh Kumar Jalan and subsequent High Court decisions, the Tribunal held that the reference to section 139 in the proviso to the capital gains provisions includes subsection (4) thereof; accordingly the extended date for filing under section 139(4) operates for the purpose of depositing unutilised capital gains and for meeting the condition for exemption. Noting that sections 54 and 54F are pari materia, the Tribunal applied the established view that deposit or utilisation of capital gains within the extended period under section 139(4) satisfies the requirement for exemption. Consequently the AO was directed to allow the entire capital gain as exempt under section 54F. [Paras 13, 14, 15, 16, 17]

The claim of exemption under section 54F is allowed and the Assessing Officer is directed to exempt the entire capital gain accordingly.

Final Conclusion: The appeal is allowed: the assessee's claim under section 54F is accepted because deposit/utilisation of capital gains within the extended filing period under section 139(4) satisfies the statutory condition; the challenge to the validity of reopening under section 147 was recorded but left academic in view of the relief granted on merits.

Disallowance of interest on borrowings in respect of advances to related concerns - presumption that investments in sister concerns are made out of interest-free own funds where shareholders' funds are adequate - use of shareholders' funds to rebut attribution of interest-bearing borrowings - requirement of business purpose for advances to related concerns

Disallowance of interest on borrowings in respect of advances to related concerns - requirement of business purpose for advances to related concerns - presumption that investments in sister concerns are made out of interest-free own funds where shareholders' funds are adequate - use of shareholders' funds to rebut attribution of interest-bearing borrowings - Whether the disallowance of interest made by the AO under the Act in respect of advances to a sister concern is sustainable given the assessee's level of shareholders' funds and absence of proof of non-business purpose. - HELD THAT: - The Tribunal found that the AO treated the advances to the sister concern as for non-business purposes and disallowed a portion of interest paid on borrowings. The assessee did not substantiate that the advances were made for business purposes, yet the Tribunal examined the quantum of the shareholders' funds. The assessee's share capital with reserves and surplus at year end was substantially higher than the closing balance of advances to the sister concern. Applying the rule in the line of authorities relied upon by the Tribunal, where an assessee possesses sufficient interest-free funds generated during the relevant year and substantial shareholders' funds, a presumption arises that investments in sister concerns were made out of interest-free own funds and not out of interest-bearing borrowings. On that basis the Tribunal held that no part of the interest paid on borrowings could be disallowed, and consequently deleted the disallowance made by the AO. [Paras 2, 3, 4, 5]

The disallowance of interest was deleted and the appeal was allowed.

Final Conclusion: The Tribunal, applying the established presumption that adequate shareholders' funds negate attribution of interest-bearing borrowings to advances to related concerns, set aside the disallowance of interest and allowed the assessee's appeal for AY 2011-12.

Re-opening of assessment under section 147/148 - reason to believe - escape of income - valuation of property for capital gains under section 50C - discrepancy between reasons recorded and value adopted

Re-opening of assessment under section 147/148 - reason to believe - escape of income - Validity of the reassessment proceedings initiated by issuance of notice under section 148 read with section 147 - HELD THAT: - The Tribunal examined the material on record including the reasons recorded by the Assessing Officer that information showed a difference between the registered sale consideration and the stamp valuation, suggesting undisclosed capital gain. The assessee did not place any material to show disclosure of capital gain in the return, and had failed to appear before the Tribunal despite service attempts. On the record before it the Tribunal found that the Assessing Officer had a reason to believe that income had escaped assessment and dismissed the grounds challenging the reopening as devoid of merit. [Paras 8]

Grounds 1 to 3 challenging the reopening under sections 147/148 are dismissed.

Valuation of property for capital gains under section 50C - discrepancy between reasons recorded and value adopted - Whether the valuation adopted in reassessment (and by lower authorities) can be sustained without addressing a noted discrepancy between the reasons recorded and the value adopted - HELD THAT: - The Tribunal noted that the reasons for reopening referred to a difference between registered sale consideration and stamp valuation and recorded specific figures, while the assessment order adopted a different higher value; the CIT(A) had adopted yet another figure. The authorities below did not address the discrepancy between the reasons recorded by the Assessing Officer and the final value adopted under section 50C. In view of this omission and the lack of any considered response to the discrepancy, the Tribunal set aside the impugned order and restored the valuation issue to the file of the CIT(A) for fresh consideration after advertence to the discrepancy and application of mind. [Paras 12]

Grounds 4 and 5 are partly allowed for statistical purposes by remanding the valuation issue to the CIT(A) for fresh decision after addressing the discrepancy in reasons and the value adopted under section 50C.

Final Conclusion: The appeal is dismissed insofar as it challenges the legality of reopening under sections 147/148, and is partly allowed for statistical purposes by remanding the valuation issue under section 50C to the CIT(A) for fresh consideration in light of the discrepancy identified; otherwise the appeal is disposed of.

Deemed rent on unsold flats held as stock-in-trade - Income from House Property - Profits and Gains from Business or Profession - non-application of the Finance Act, 2017 amendment to section 23(5) for the assessment year 2015-16

Deemed rent on unsold flats held as stock-in-trade - Income from House Property - Addition of deemed rent on unsold vacant flats held as stock-in-trade taxed under the head Income from House Property was not sustainable for assessment year 2015-16. - HELD THAT: - The Tribunal examined the assessment for 2015-16 and observed that the Finance Act, 2017 introduction of sub-section (5) to section 23 - which treats property held as stock-in-trade and not let out as having deemed annual value for house property purposes after specified periods - is effective only from 01-04-2018 and thus does not apply to the year under consideration. Prior to that amendment, Tribunal precedent had held that no income from house property arises in respect of unsold flats held as stock-in-trade. The assessing officer's computation invoking deemed rent under the head Income from House Property therefore lacked statutory foundation for AY 2015-16. Applying these legal principles to the facts, the Tribunal found the addition unjustified and directed its deletion. [Paras 4]

The addition of Rs. 8,52,902/- as income from house property on account of vacant unsold flats is deleted.

Profits and Gains from Business or Profession - deemed rent on unsold flats held as stock-in-trade - Deemed rental income on unsold flats cannot be treated as business income in the absence of any provision deeming such rent to be taxable as Profits and Gains from Business or Profession for the year in question. - HELD THAT: - The CIT(A) had relied on Tribunal observations that income from unsold flats is assessable as business income and directed inclusion accordingly. The Tribunal clarified that earlier orders merely stated that income, if any, arising from unsold flats held as stock-in-trade could only be considered under the head Business Income rather than House Property; those orders did not prescribe any statutory mechanism which converts or deems rental income into business income. Since there is no provision under the law operative for AY 2015-16 that deems rental income from unsold flats to be business income, the inclusion of deemed rent as business income was not warranted. Consequently, the directed inclusion as business income could not be sustained. [Paras 4, 5]

There is no basis to include the deemed rental income as Profits and Gains from Business or Profession for AY 2015-16; the directed inclusion is unsustainable.

Final Conclusion: The appeal is allowed: the addition of deemed rent on unsold vacant flats held as stock-in-trade for AY 2015-16 is deleted, and there is no basis to assess that amount either as Income from House Property or as Business Income for the year under consideration.

Interpretation of proviso to Section 110(2) of the Customs Act, 1962 - Requirement to record reasons in writing and inform the person from whom goods were seized - Exclusion of prior audi alteram partem by clear statutory language and doctrine of necessity - Effect of amendment and interplay with provisional release under Section 110A

Interpretation of proviso to Section 110(2) of the Customs Act, 1962 - Requirement to record reasons in writing and inform the person from whom goods were seized - Requirement of prior opportunity to be heard - Quasi-judicial character and doctrine of necessity - Whether the amended proviso to Section 110(2) requires grant of prior hearing to the person from whom goods were seized before extending the six month period for issuance of show cause notice. - HELD THAT: - The Court analysed the proviso as it stood prior to amendment (which permitted extension on "sufficient cause being shown") and the amended proviso (effective 29.03.2018) which permits the Principal Commissioner/Commissioner to "for reasons to be recorded in writing, extend such period" and to "inform the person from whom such goods were seized before the expiry of the period so specified." The amendment replaces the earlier "sufficient cause" language and introduces the twin statutory requirements of recording reasons in writing and informing the person concerned. Relying on the principle that where statutory language is clear and unambiguous the Court must give effect to it, and having regard to the doctrine of necessity as explained in Tulsiram Patel, the Court held that the amended proviso does not mandate a prior hearing; Parliament, by changing the phraseology, deliberately dispensed with the earlier requirement of notice and hearing and substituted a requirement to record reasons and inform before expiry. The decision in Charan Das Malhotra and Bibhuti Bhushan Bagh, rendered under the pre amended provision, is therefore not applicable to interpret the post amendment proviso. The Court accepted the reasoning in the cited decision (Swees Gems and Jewellery) that the amendment effected a material change and softened the rigour of the unamended provision (also noting availability of provisional release under Section 110A), and accordingly no separate prior hearing is contemplated by the amended proviso. [Paras 22, 25, 26, 27]

The amended proviso to Section 110(2) does not require grant of prior hearing before extending the period; the authority need only record reasons in writing and inform the person from whom goods were seized before the expiry of the period.

Validity of extension order under amended proviso to Section 110(2) - Recording of reasons in writing and communication to the affected person - Whether the order dated 24.06.2020 extending the period for issuance of show cause notice was valid. - HELD THAT: - The impugned order was a speaking order which recorded reasons in writing, referred to the Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020 and communicated the extension to the writ petitioners. The writ petitioners did not challenge the stated reasons and the Writ Court did not comment on them. Applying the interpretation of the amended proviso adopted above, the Court held that the twin statutory conditions were satisfied and the extension order was valid. Any grievance about provisional release was rendered academic by the subsequent adjudication and confiscation order. [Paras 30, 31, 32]

The order dated 24.06.2020 extending the period for issuance of the show cause notice is valid as reasons were recorded in writing and the affected persons were informed before expiry of the period.

Final Conclusion: The writ court's order setting aside the extension dated 24.06.2020 was interfered with; the appeal is allowed, the writ petition is dismissed, and the extension order is held valid while preserving the respondents' remedies against the subsequent adjudication order except on the issue decided in this appeal.

Liability under Section 111(o) of the Customs Act, 1962 for non-observance of conditions of duty exemption - importer as person filing bill of entry and deemed importer for Customs purposes - rights of an unpaid seller under the Sale of Goods Act - withholding delivery and title retention - re-export/reshipment of imported goods by exporter/unpaid seller where importer abandons goods - administrative discretion of Policy Relaxation Committee and advance authorisation conditions - directive to Commissioner to verify ownership and grant permission for re-export upon hearing

Importer as person filing bill of entry and deemed importer for Customs purposes - liability under Section 111(o) of the Customs Act, 1962 for non-observance of conditions of duty exemption - Whether the department was justified in demanding customs duty / treating the goods as liable to confiscation under Section 111(o) of the Customs Act, 1962. - HELD THAT: - The court held that the person who files a bill of entry is the importer for the purposes of the Customs Act and that respondent no.5, having filed the ex-bond bill of entry and claimed exemption under the advance authorisation, is properly the importer. Where exemption from duty is granted subject to conditions (such as processing and re-export within the period specified in the authorisation) and those conditions are not complied with and no extension is granted, Section 111(o) applies and the goods become liable to confiscation unless the non-observance was sanctioned by the proper officer. The court observed that the department's stance that the advance authorisation imposed a six month export obligation and that non compliance (and a refusal to extend) engages Section 111(o) is well founded. The fact that the exporter has not been paid or suffers loss does not alter the legal position as to liability under Section 111(o). [Paras 13, 34, 35, 36]

The respondents are justified in treating the goods as liable under Section 111(o) where the advance authorisation condition of re-export within the prescribed period was not complied with and no extension was sanctioned.

Rights of an unpaid seller under the Sale of Goods Act - withholding delivery and title retention - re-export/reshipment of imported goods by exporter/unpaid seller where importer abandons goods - directive to Commissioner to verify ownership and grant permission for re-export upon hearing - Whether the writ-applicant as unpaid seller/owner can claim title and seek permission to re export the goods and what relief the court should grant. - HELD THAT: - Applying the principle in Sampat Raj Dugar and subsequent authorities, the court held that where the importer effectively abandons the goods or fails to clear them (despite filing an ex bond bill of entry), mere filing of the bill of entry does not necessarily vest absolute title in the importer if the goods are not ultimately cleared and the exporter remains unpaid. The writ applicant, as unpaid seller, may retain title and seek re export. The court noted that there was no allegation of misdeclaration, wrongful classification or suppression in this case, distinguishing it from cases where re export would be prohibited on account of such illegality. In view of these considerations and the contractual terms retaining title until full payment, the court granted liberty to the writ applicant to apply to the Commissioner for permission to re export. The Commissioner was directed to afford a personal hearing to the writ applicant, to record satisfaction as to ownership and title, to give an opportunity of hearing to respondent no.5 if it wishes to be heard, and thereafter to consider granting permission to re export in accordance with law, permitting imposition of reasonable duties/conditions as appropriate. [Paras 40, 41, 42, 47, 48]

The writ applicant, as unpaid seller who retains title, is entitled to seek re export; the matter is remitted to the Commissioner to consider an application for re export after affording hearing and recording satisfaction as to ownership, and the Commissioner may grant permission subject to lawful conditions (including reasonable duty).

Final Conclusion: The writ petition is disposed of by recognising the department's legal position on liability under Section 111(o) for breach of advance authorisation conditions, while also upholding the writ applicant's status as unpaid seller entitled to seek re export. The court granted liberty to the writ applicant to apply to the Commissioner for permission to re export; the Commissioner must hear the parties, verify ownership/title and decide the application in accordance with law, permitting re export subject to such lawful conditions (including reasonable duty) as may be appropriate.

Obligations of Customs Broker - exercise due diligence in verifying client documents - duty to inform client to comply with statutory requirements - penal liability for contravention of CBLR - ignorance of law not a defence for CHA

Obligations of Customs Broker - exercise due diligence in verifying client documents - duty to inform client to comply with statutory requirements - penal liability for contravention of CBLR - Whether the appellant Customs House Agent breached Regulations 10(d), 10(e) and 10(n) of CBLR, 2018 and whether imposition of penalty upon him was justified. - HELD THAT: - The Tribunal found on the record that the Export Inspection Agency (EIA) Certificate was not annexed to the impugned shipping bill and was obtained only later, after filing of the shipping bill and after initiation of investigation. Regulation 10(e) imposes on a customs broker a mandatory duty to exercise due diligence as to correctness of information imparted to a client and to verify antecedents and documents; Regulation 10(d) requires the broker to inform the exporter of mandatory statutory requirements and to report non-compliance to the appropriate Customs authorities. The admitted absence of the EIA Certificate at the time of clearance established non-compliance by the appellant with these obligations. The Tribunal applied the principle affirmed by the Apex Court that a CHA's contravention of licensing obligations attracts disciplinary/penal consequences even in the absence of mala fide intent, and that ignorance cannot absolve the CHA of responsibility. The adjudicating authority had already afforded the appellant a benefit by refraining from revoking the licence and from forfeiting the security; that limited concession did not preclude imposition of the penalty, which the Tribunal held to be justified on the facts and law. [Paras 7, 8, 9, 10]

Findings of breach of Regulations 10(d), 10(e) and 10(n) are sustained and the penalty imposed on the appellant is upheld.

Final Conclusion: The appeal is dismissed; the order imposing penalty on the Customs House Agent for contravention of CBLR, 2018 is upheld while the lower authority's decision not to revoke licence or forfeit security is noted as a mitigating concession already extended to the appellant.

Restoration of company name under Section 252(3) of the Companies Act, 2013 on "just" grounds - power of Registrar to strike off under Section 248 of the Companies Act, 2013 - restoration subject to statutory compliances, filing of annual returns and balance sheets - conditions on restoration: costs, prohibition on alienation, affidavit and undertakings - effect of restoration on directors disqualified under Section 164 - preservation of Registrar's power to proceed for late filings and other penalties

Restoration of company name under Section 252(3) of the Companies Act, 2013 on "just" grounds - Restoration of the name of M/s. Vox Realties Private Limited in the Register maintained by the Registrar of Companies. - HELD THAT: - The Tribunal examined the documents produced by the applicant - balance sheets, invoices and bank statements - and found that the company had been active and carrying on business for the two years preceding the strike-off, thereby demonstrating a 'just' ground under sub section (3) of Section 252 to order restoration. The circumstances relied upon by the applicant (demise of employees responsible for statutory filings and reliance on the company auditor) were considered but the determinative factor was the evidence of continuing business activity which fortified the claim for restoration. Consequently, the Tribunal ordered restoration of the company's name in the RoC register as if it had not been struck off, subject to specified conditions. [Paras 7, 8]

Application allowed; name of the company restored in the Register of Companies.

Restoration subject to statutory compliances, filing of annual returns and balance sheets - Restoration was made subject to the company filing its outstanding annual returns, balance sheets and statutory compliances for the period of default within a stipulated time. - HELD THAT: - The Tribunal directed that the company shall, within 30 days from restoration, file its annual returns, balance sheets and other compliances required under the Companies Act, 2013 for the period from which there has been default, and pay requisite fees including additional/late fees. The direction conditions the benefit of restoration on the company completing these statutory formalities, reflecting the Tribunal's approach of restoring corporate status while ensuring compliance with filing obligations. [Paras 8]

Restoration is conditional on filing outstanding returns, balance sheets and payment of requisite fees within 30 days.

Conditions on restoration: costs, prohibition on alienation, affidavit and undertakings - The Tribunal imposed specified ancillary conditions as part of the restoration order, including payment of costs, prohibition on alienation of assets, filing of an affidavit of compliance and submission of an undertaking regarding accounts not being used for tainted transactions. - HELD THAT: - As part of the restoration order the Tribunal required payment of a cost (payable online), restrained the company from alienating or disposing of valuable assets until compliances were completed, directed filing of an affidavit of compliance within two months, and mandated a joint undertaking from the shareholders asserting that accounts were not used to transact tainted money during demonetisation. These conditions form part of the remedial framework by which restoration is effected and ensure safeguards pending full statutory compliance. [Paras 8]

Restoration granted subject to payment of cost, no alienation of assets until compliance, filing of affidavit, and shareholders' undertaking.

Effect of restoration on directors disqualified under Section 164 - preservation of Registrar's power to proceed for late filings and other penalties - Restoration of the company's name does not automatically reinstate any directors who have been disqualified under Section 164; and the Registrar's power to initiate proceedings for alleged late filings or other non compliances is preserved. - HELD THAT: - The Tribunal expressly recorded that the order of restoration shall not automatically entitle directors who may have been disqualified under Section 164 to resume directorship except by following the law. Further, the order does not preclude the Registrar from proceeding against the company or its directors for alleged late filing of forms, returns or other statutory defaults, thereby preserving the Registrar's enforcement powers despite restoration. [Paras 8]

Restoration does not reinstate disqualified directors automatically and does not bar the Registrar from pursuing proceedings for statutory non compliances.

Final Conclusion: The Tribunal allowed the application under Section 252(3) and directed restoration of the company's name on the ground of 'just' cause, while imposing specified conditions (statutory filings and fees, payment of costs, no alienation, affidavit and undertaking) and preserving the Registrar's enforcement powers and the legal position regarding any disqualified directors.

Severability of assigned financial transactions - effect of interim injunction on assignment of debt - requirement under Section 7 of the Insolvency and Bankruptcy Code - existence of debt and default - scope of adjudicating authority's scrutiny under Section 7 - records of information utility and evidence of default - admissibility of Section 7 application where some assigned facilities are unenforceable but other assigned debts are valid

Effect of interim injunction on assignment of debt - admissibility of Section 7 application where some assigned facilities are unenforceable but other assigned debts are valid - Whether the assignment dated 23.03.2019 in favour of the Financial Creditor (ACRE) being in purported breach of the Delhi High Court interim order of 12.10.2018 rendered the Section 7 application untenable. - HELD THAT: - The Tribunal noted that the interim injunction of 12.10.2018 restrained taking steps to give effect to the Facility Agreement dated 14.05.2018 to the extent of creating lien, charge, security or pledge (paragraph 11). The Assignment Agreement of 23.03.2019 covered three separate financial transactions (two debenture transactions of 04.12.2015 and 24.11.2016 and the Facility Agreement of 14.05.2018) and included a express severability clause (Clause 10.5) (paragraphs 8, 14, 18). While the assignment of the Facility Agreement may have been in conflict with the interim injunction, the injunction did not affect the earlier debenture transactions, which remained enforceable (paragraphs 16-17). Applying the severability principle, the Tribunal held that the unenforceability of the part of the assignment relating to the Facility Agreement did not vitiate the assignment or the Financial Creditor's rights in respect of the two debenture transactions; those debts were separate, severable and remained actionable (paragraphs 18-19, 22-24). The Tribunal relied on established authorities endorsing separability where one part creates an independent personal obligation and another merely adds security, and concluded the Adjudicating Authority was justified in proceeding on the basis of the valid assigned debts (paragraphs 20-23). [Paras 18, 19, 22, 23, 24]

Even if the assignment of the Facility Agreement was unenforceable in view of the interim injunction, the assignment as to the separate debenture transactions was severable and valid; consequently the Section 7 application was not rendered untenable by the injunction.

Requirement under Section 7 of the Insolvency and Bankruptcy Code - existence of debt and default - scope of adjudicating authority's scrutiny under Section 7 - records of information utility and evidence of default - Whether the Adjudicating Authority erred in admitting the Section 7 petition when some part of the assigned debt related to the Facility Agreement that might be unenforceable. - HELD THAT: - The Tribunal recapitulated the statutory mandate under Section 7 that the Adjudicating Authority's task is to ascertain existence of a financial debt and default from information utility records or other evidence furnished by the Financial Creditor; if satisfied that default has occurred and the application is complete, the Authority may admit the petition (paragraphs 12-13). The Section 7 application included particulars and supporting documents for three distinct financial transactions and disclosed admitted defaults under the two debenture transactions which were not affected by the Delhi High Court interim order (paragraphs 8-9, 12, 16). Given the admitted default in respect of the unaffected debentures and the Authority's limited role of prima facie satisfaction on the basis of evidence produced, the Tribunal held there was no error in admitting the Section 7 petition (paragraphs 12-13, 22-24). [Paras 12, 13, 16, 22, 24]

The Adjudicating Authority did not commit an error in admitting the Section 7 application because existence of debt and admitted default in respect of the severable debenture transactions satisfied the Section 7 threshold.

Severability of assigned financial transactions - Whether the Assignment Agreement's severability clause permitted enforcement of those assigned obligations which were not rendered unenforceable by interim orders of a court. - HELD THAT: - The Assignment Agreement expressly provided for severability (Clause 10.5) so that any provision held illegal, invalid or unenforceable could be severed without affecting remaining provisions (paragraph 18). The Tribunal applied the principle that where an instrument embodies distinct transactions one of which is severable and enforceable, the enforceable part can be given effect without invalidating the remainder (paragraphs 19-21, citing established precedents). Applying that principle, it held the parts of the assignment relating to the debenture transactions could be enforced even if the part relating to the Facility Agreement could not be given effect in view of the interim order (paragraphs 18-24). [Paras 19, 20, 21, 22, 24]

The severability clause and the separable nature of the three financial transactions permitted enforcement of the assignments in respect of the debenture transactions notwithstanding unenforceability of the assignment of the Facility Agreement.

Final Conclusion: The Appeal is dismissed. The Tribunal held that the Adjudicating Authority did not err in admitting the Section 7 petition: the interim injunction impacted only the Facility Agreement portion, the assignment was severable and the admitted defaults under the earlier debenture transactions sufficed to satisfy the Section 7 threshold.

Mens rea - penalty under Rule 26 - liability of employees for imposition of penalty - Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS) - effect of settlement under SVLDRS on parallel penalty proceedings - deemed withdrawal/withdrawal of appeals under SVLDRS

Mens rea - penalty under Rule 26 - liability of employees for imposition of penalty - Penalties imposed on the appellants (employees) under Rule 26 could not be upheld in absence of establishment of mens rea and where the main company's liability stood settled under SVLDRS. - HELD THAT: - The Tribunal held that imposition of penalty under Rule 26 requires proof of the mental element (mens rea) - that the person knew or had reason to believe in the circumstances making the goods liable to confiscation - and that mere performance of duties as employees without such intention does not satisfy the statutory test (drawing on earlier decisions such as Vijaya Steels Pvt Ltd and Vee Gee Faucet Pvt Ltd ). The Tribunal further noted the scheme and effect of the Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS), under which settlement of the main appellant's liability and the consequent deemed/actual withdrawal of appeals operates to extinguish or render academic parallel penalty proceedings against employees in the absence of independent proof of culpable intent (citing the reasoning in Vikas Garg ). Applying these principles, and in view of the main appellant's case having been settled under SVLDRS (with Form 4 yet to be issued for these appellants), the Tribunal found itself unable to sustain the penalties and set them aside. [Paras 2, 3]

Penalties imposed on the appellants under Rule 26 are set aside for lack of mens rea and because the main company's dispute has been settled under SVLDRS, which precludes continuation of parallel penalty proceedings against the employees.

Final Conclusion: Appeals allowed; penalties imposed on the appellants are set aside because the mandatory mental element for penalty was not established and the main company's settlement under SVLDRS precludes sustaining parallel penalty proceedings against employees.

Transportation of passengers by air - supply of tangible goods for use (charter/hire of aircraft) - classification of taxable service - substance over form - right of possession and effective control - imposition of penalty under section 77(1)(a) and section 77(2) of the Finance Act, 1994 - interest under section 75 of the Finance Act, 1994

Supply of tangible goods for use (charter/hire of aircraft) - transportation of passengers by air - right of possession and effective control - classification of taxable service - substance over form - Services rendered by the appellant in hiring out aircraft/helicopters are classifiable as 'supply of tangible goods for use' (STG) and not as 'transportation of passengers by air' (TPA). - HELD THAT: - The Tribunal accepted the factual finding that the appellant hired out its aircraft/helicopters for lump-sum consideration, supplied its own crew, and retained effective possession and control of the aircraft. The invoices did not record passenger-wise receipts or tickets but showed lump-sum charter charges, supporting characterization as supply of the aircraft for use. The Board's circular of 09.02.2009 and the statutory definition of STG (service in relation to supply of tangible goods without transfer of right of possession and effective control) were applied. Section 65A/section 66F principles do not assist the appellant because the services are not genuinely classifiable under multiple heads; the most specific description is STG, taxable w.e.f. 16.05.2008. Earlier authorities (including Tribunal decisions) treating similar charter/hire arrangements as STG were followed. [Paras 21, 22, 24, 28]

Classification as STG upheld; services are taxable as supply of tangible goods for use (charter/hire) w.e.f. 16.05.2008.

Interest under section 75 of the Finance Act, 1994 - classification of taxable service - substance over form - No interest under section 75 was leviable where there was no delay in payment of service tax despite classification under a different head; the appellate finding disallowing interest is sustained. - HELD THAT: - The Commissioner (Appeals) found, on the record, that the appellant had discharged the service tax liability timely and the dispute related to classification under a different taxable head rather than non-payment or delayed payment. In such circumstances interest under section 75 cannot be charged. The Tribunal found no error in that conclusion and did not disturb the appellate finding. [Paras 4, 16, 31]

Levy of interest under section 75 set aside/ not attracted; appellate finding upheld.

Imposition of penalty under section 77(1)(a) and section 77(2) of the Finance Act, 1994 - failure to take registration/contravention of Chapter V - Penalties under section 77(1)(a) and section 77(2) were validly imposed for failure to take registration and contravention of provisions of Chapter V and rules thereunder; those penalties are sustained. - HELD THAT: - The appellate authority recorded that the appellant had not taken registration under the STG taxable service and had contravened provisions of Chapter V and related rules. Given these findings and the absence of any demonstrable error in them, the Tribunal held that the imposition of penalties under section 77(1)(a) and section 77(2) is justified and not liable to be set aside. [Paras 15, 30]

Penalties under section 77(1)(a) and section 77(2) sustained.

Final Conclusion: The appeals are dismissed. The services rendered by the appellant are held to be classifiable as 'supply of tangible goods for use' taxable w.e.f. 16.05.2008; no interest under section 75 is attracted; penalties under section 77(1)(a) and section 77(2) are sustained.

Construction of residential complex service - Declared service - Negative list regime of taxation - Valuation of construction service - Applicability of administrative circulars - Double taxation

Construction of residential complex service - Declared service - Negative list regime of taxation - Applicability of administrative circulars - Valuation of construction service - Whether the CBEC Circular dated 10.02.2012 (and the subsequent TRU instruction of 20.01.2016) remains applicable after introduction of the negative list from 01.07.2012 and, applying those guidelines, whether provision of flats to existing society members under redevelopment agreements falls within the levy of service tax. - HELD THAT: - The Tribunal examined the statutory scheme before and after 01.07.2012 and concluded that the essential taxing principle for levy of service tax on construction of residential complexes remained the same notwithstanding renumbering and elaboration of explanations. The Board circular dated 10.02.2012 provided a practical methodology for valuation of flats given to landowners/society members by equating their value to similar flats sold to other buyers under section 67(1)(iii) and related rules; the High Level Committee and the Board's instruction dated 20.01.2016 expressly affirmed that the Circular's guidelines are more appropriate and should govern valuation post 01.07.2012. On the facts, the adjudicating authority correctly applied those guidelines to hold that flats allotted free to existing society members under redevelopment agreements did not constitute sale to those members and therefore were not exigible to service tax in the manner alleged in the demand notice. The Tribunal found no error in relying on the Circular and TRU instruction to drop the proceedings instituted by the revenue. [Paras 4]

The Circular dated 10.02.2012 and the TRU instruction dated 20.01.2016 are applicable post 01.07.2012; applying those guidelines, the activity of giving flats to existing society members under the redevelopment agreements does not attract the service tax demand raised in the show-cause notice, and the adjudicating authority's view was upheld.

Valuation of construction service - Double taxation - Whether a further demand for service tax on flats handed over to existing society members could be sustained where the developer had discharged service tax on the gross amounts received from sale of flats to other buyers. - HELD THAT: - The Tribunal noted that the respondent had declared and discharged service tax liability on the gross amounts received from sale of flats to third-party buyers (which, under the applicable valuation provisions and Board instructions, encompassed the taxable value of the construction activity). Having discharged service tax on the gross consideration for the construction services, a subsequent demand seeking to charge service tax again in respect of the flats handed over to existing members would amount to double taxation. The adjudicating authority's acceptance of the respondent's compliance and its consequent dropping of the demand was upheld. [Paras 4, 5]

Where the builder/developer has discharged service tax on the gross amount charged for the construction services, a fresh demand in respect of flats allotted to existing society members cannot be sustained as it would result in double taxation; the demand was rightly dropped.

Final Conclusion: The revenue appeal is dismissed; the Commissioner's order dropping the service tax demand insofar as flats allotted to existing society members under redevelopment agreements is upheld, and the respondent's cross-objections are disposed of accordingly.

Adjustment (set-off) of excess duty against short payment - CAS-4 based annual costing - valuation at 110% of cost of production - Rule 8 and Rule 9 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - inter-unit transfer / transfer to sister concern

Adjustment (set-off) of excess duty against short payment - CAS-4 based annual costing - Rule 8 and Rule 9 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Excess duty paid in certain months can be adjusted against short payment of duty determined on CAS-4 (annual costing) for the relevant period. - HELD THAT: - The Tribunal examined the submissions and records and accepted the appellant's CAS-4 certificates and audited verification showing excess duty paid amounting to Rs. 6,82,309.88/-. It held there is no legal prohibition to set off excess duty paid in one period against short payments in another when duty liability is determined on the basis of annual CAS-4 costing. The Tribunal relied on earlier decisions where annual costing required that overall duty liability (excess or shortage) be computed after considering duty already paid during the year, and that selective application of the annual cost price only to months of short payment is untenable. The adjudicating authority's refusal to adjust the excess payments, despite CAS-4 certificates and prior consistent orders in the appellant's favour, was found to be erroneous. The Tribunal therefore set aside the order under appeal and allowed adjustment in accordance with Rule 9 read with Rule 8 and the CAS-4 based annual valuation principle. [Paras 5, 6, 8]

Setting off the excess duty paid in certain months against short payments determined on CAS-4 annual costing is permissible; the impugned order refusing adjustment is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that excess excise duty paid during the period could be adjusted against short payments determined on CAS-4 annual costing under Rule 8 and Rule 9, set aside the order-in-appeal and directed adjustment in accordance with the admitted CAS-4 certificates and prior consistent adjudications.

Entitlement to exemption under an industrial incentive notification - strict construction of exemption notifications in fiscal statutes - conditions of eligibility and Form No.26 declarations - clarificatory versus amending notifications - application of promissory estoppel/legitimate expectation in taxation - levy of penalty under Section 45(5) of the Gujarat Sales Tax Act, 1969 for shortfall exceeding twenty five percent

Entitlement to exemption under an industrial incentive notification - conditions of eligibility and Form No.26 declarations - Whether the respondent was entitled to purchase tax exemption under original Entry No.255(2) dated 05.03.1992 - HELD THAT: - The original Entry No.255(2) and Form No.26 required that the eligible unit actually use the purchased goods within the State as raw materials, processing materials or consumable stores in the manufacture of goods. It is an admitted fact that after procuring Naphtha and Natural Gas on Form No.26 declarations the respondent sold those inputs to another entity (EPL) which used them to generate electricity subsequently sold back to the respondent. The original notification did not permit transfer of exempted inputs to another unit for its use; such a practice varies the clear conditions of the exemption. Consequently the respondent failed to fulfil the eligibility criteria and violated the declaration in Form No.26; it was therefore not entitled to the exemption under the original Entry No.255(2). [Paras 11, 14, 17, 18, 24]

The respondent was not entitled to exemption under original Entry No.255(2) because it did not satisfy the eligibility conditions and breached the Form No.26 declaration.

Clarificatory versus amending notifications - strict construction of exemption notifications in fiscal statutes - Whether the subsequent Notifications dated 14.11.2000 and 16.01.2002 altered or amended the basic requirements of the original Entry No.255(2) - HELD THAT: - The 14.11.2000 amendment made explicit that goods must be used by the eligible unit in the industrial unit for which the eligibility certificate was obtained, and the 16.01.2002 amendment expanded scope to permit dispatch to another unit/division under specified conditions. The Court held the 14.11.2000 notification to be clarificatory and/or expanding eligibility rather than taking away rights under the parent notification, and the 16.01.2002 amendment likewise expanded scope. In any event the core requirement that the eligible unit 'shall actually use the goods' remained unchanged. [Paras 15, 16]

The subsequent notifications did not amend or take away the basic eligibility requirement of the original Entry; they were clarificatory or scope expanding while preserving the core obligation that the eligible unit actually use the goods.

Application of promissory estoppel/legitimate expectation in taxation - strict construction of exemption notifications in fiscal statutes - Whether the respondent's right to exemption under the first notification was taken away by the subsequent notifications so as to invoke promissory estoppel in its favour - HELD THAT: - The Court rejected the application of promissory estoppel. First, the respondent was not entitled to the exemption even under the parent notification due to breach of Form No.26 and non use of inputs. Second, in taxation matters each assessment year is independent and the Revenue may correct earlier erroneous concessions. No clear promise or representation existed that would preclude the State from enforcing the statutory conditions; the doctrine of promissory estoppel cannot be used to override the explicit conditions of an exemption notification. [Paras 19, 20, 21, 22, 24]

Promissory estoppel did not bar the demand; the principle was inapplicable because the exemption conditions were not met and each assessment period is independent.

Conditions of eligibility and Form No.26 declarations - strict construction of exemption notifications in fiscal statutes - Whether there was a breach of the declaration filed in Form No.26 - HELD THAT: - Form No.26 certified that goods purchased would be used by the eligible unit in manufacture of goods for sale. The respondent did not use the purchased Naphtha and Natural Gas in its own unit but sold them to EPL, an industry listed as 'ineligible' under the incentive policy, which thereby obtained the benefit of exempt inputs. That conduct amounted to breach of the declaration in Form No.26 and failure to satisfy the eligibility criteria of the original Entry. [Paras 11, 12, 14, 18, 24]

There was a breach of the Form No.26 declaration; the respondent did not use the purchased goods as declared.

Levy of penalty under Section 45(5) of the Gujarat Sales Tax Act, 1969 for shortfall exceeding twenty five percent - strict construction of exemption notifications in fiscal statutes - Whether levy of penalty was justified for false claim of exemption and tax shortfall - HELD THAT: - Section 45(5)/(6) prescribes penalty where the assessed shortfall exceeds twenty five percent. The Court found that the difference between tax paid and tax leviable exceeded the statutory threshold and that the respondent's modus operandi (selling exempted raw materials to an ineligible power producer) constituted a deliberate and wrongful claim of exemption, including breach of Form No.26. Therefore imposition of penalty within the statutory limits was warranted and the orders quashing the penalty were in error. [Paras 23, 24]

Penalty under Section 45(5)/(6) is justified and the Assessing Officer's levy of purchase tax and penalty is restored.

Final Conclusion: Appeals allowed; High Court and Tribunal orders setting aside the demand for purchase tax and quashing the penalty are quashed. It is held that the respondent was not entitled to exemption under original Entry No.255(2) because it failed to meet eligibility conditions and breached Form No.26; the Assessing Officer's demand and penalty are restored. No order as to costs.

Limitation in statutory proceedings - exclusion of period due to COVID-19 for computation of limitation - treatment of replacement goods under warranty as non sale - appreciation of evidence and remand for fresh consideration - right to statutory appeal

Limitation in statutory proceedings - exclusion of period due to COVID-19 for computation of limitation - The challenge to the impugned order on the ground of limitation was rejected. - HELD THAT: - The Court held that the reassessment/assessment proceeding following remand is a statutory proceeding governed by the limitation period provided under the Act and that the order of the Supreme Court dated 23.09.2021 excluding the period from 15.03.2020 to 02.10.2021 from computation of limitation applies to the present matter. The three year period under the statutory provision runs from the date of receipt of the appellate remand order (noted as 26.10.2018 in the case), and, when the COVID 19 exclusion is applied, the impugned order dated 26.11.2021 falls within the permissible period. The Court therefore declined to set aside the order on limitation grounds. [Paras 8]

Limitation objection repelled; impugned order held to be within time.

Treatment of replacement goods under warranty as non sale - appreciation of evidence and remand for fresh consideration - right to statutory appeal - The writ court declined to interfere with the assessing authority's factual conclusion and directed the petitioner to pursue available statutory remedy before the appellate authority. - HELD THAT: - The High Court found that the question whether replacement goods issued under warranty constitute a non sale requires examination of records and documentary evidence, including transport and replacement documentation, which involves voluminous appreciation of evidence not suitable for determination in writ proceedings. The Court noted deficiencies identified by the assessing authority (for example, absence of customer names in stock replacement notes and lack of documentary linkage to manufacturer replacements) and observed that these factual matters ought to be agitated and substantiated before the Appellate Joint Commissioner (CT), Tirupathi, by producing all available documentary evidence. Consequently, the High Court refused to adjudicate the merits on facts, did not express any opinion on them, and left the petitioner free to file the statutory appeal within the time permitted. [Paras 9, 10, 11]

Writ petition dismissed on merits; petitioner granted liberty to prefer statutory appeal and to produce supporting evidence before the Appellate Joint Commissioner.

Final Conclusion: Writ petition dismissed; limitation objection rejected and no interference with the assessing authority's factual conclusion, with liberty granted to the petitioner to file the statutory appeal before the Appellate Joint Commissioner (CT), Tirupathi; no costs.

Waiver of 100% of penalty and interest under the Karasamadhana Scheme, 2021 - Applicability of the Scheme to assessments/re-assessments completed on or before the cut-off date - Mutual exclusivity and independent operation of Clauses 1 to 4 of the Scheme - Condition of eligibility under Clause 5.1 and Clause 5.2 (payment of tax / absence of tax arrears) - Scope of Clause 3 vis-a -vis specific penal provisions of the KVAT Act

Waiver of 100% of penalty and interest under the Karasamadhana Scheme, 2021 - Applicability of the Scheme to assessments/re-assessments completed on or before the cut-off date - Condition of eligibility under Clause 5.1 and Clause 5.2 (payment of tax / absence of tax arrears) - Interpretation of the Scheme as applicable to the petitioner and entitlement to 100% waiver of penalty under Clause No.2 - HELD THAT: - The Scheme's clauses operate as independent, mutually exclusive categories; Clause No.2 grants 100% waiver of arrears of penalty and interest under the KVAT Act in respect of assessments/re-assessments/rectification orders already completed and to be completed on or before 31.07.2021. Clause 5.1 conditions waiver where there are arrears of tax on full payment by 31.10.2021, while Clause 5.2 allows waiver where there are only arrears of penalty and interest and no tax arrears, for assessments/re-assessments completed on or before 31.07.2021. In the present case reassessment was completed on 28.04.2021 and the petitioner had no arrears of tax but only arrears of penalty; on a plain and harmonious reading the petitioner falls squarely within Clause No.2 and Clause 5.2 and is therefore entitled to 100% waiver of the penalty demanded in the reassessment order. [Paras 7, 8, 9, 11]

Petitioner entitled to 100% waiver of the penalty under Clause No.2 of the Scheme and Clause 5.2 applies as there were no tax arrears.

Scope of Clause 3 vis-a -vis specific penal provisions of the KVAT Act - Interpretation of Section 70(2) penalty in relation to Scheme clauses - Whether a penalty imposed under Section 70(2) R/w Section 39 of the KVAT Act is excluded from the Scheme because Section 70(2) is not enumerated in Clause No.3 - HELD THAT: - Clause No.3 of the Scheme lists particular penal provisions of the KVAT Act whose penalties are separately waived; that does not mean penalties under other provisions of the KVAT Act are excluded from Clause No.2. The penalty under Section 70(2) relates to reassessment proceedings completed on 28.04.2021 and therefore falls within the category covered by Clause No.2. The respondents' contention that absence of Section 70(2) from Clause No.3 precludes waiver is incorrect; Clause No.3 is a separate, distinct category and its non-enumeration of Section 70(2) does not oust the operation of Clause No.2 for reassessments completed before the cut-off date. [Paras 10, 12]

Penalty under Section 70(2) R/w Section 39 of the KVAT Act is covered by Clause No.2 and is eligible for waiver; respondents' contention to the contrary is rejected.

Waiver of 100% of penalty and interest under the Karasamadhana Scheme, 2021 - Whether the earlier Division Bench decision under the Karasamadhana Scheme, 2017 governs the present case - HELD THAT: - The 2017 Scheme contained different provisions and the decision rendered under that Scheme is not applicable to the interpretation or application of the Karasamadhana Scheme, 2021. Reliance on the 2017 decision is therefore misplaced in the facts of this case. [Paras 13]

Decision in the 2017 Scheme case is inapplicable and cannot be pressed into service against the petitioner.

Final Conclusion: Petition allowed; impugned endorsement dated 16.08.2021 and the demand notice dated 28.04.2021 quashed, and respondents directed to allow the petitioner's application under the Karasamadhana Scheme, 2021 and grant 100% waiver of the penalty imposed in the reassessment order dated 28.04.2021.

Classification of goods - rate of tax - rectification under Section 84 of the TNVAT Act, 2006 - disputed questions of fact - production of C-Forms and rectification

Classification of goods - rate of tax - disputed questions of fact - Validity of assessment orders raising tax at a higher rate by treating the petitioner as seller of pre-recorded/recorded DVDs and CDs instead of packing materials liable to a lower rate. - HELD THAT: - The Court recorded that the impugned Assessment Orders under the TNVAT Act, 2006 and the CST Act, 1956 raise a question of classification and applicable rate of tax which involves disputed questions of fact whether the petitioner sold packing materials or pre-recorded/recorded DVDs/CDs. The petitioner had not responded to the notice calling for objections and has sought rectification under Section 84. Because the controversy turns on factual classification and the petitioner chose the statutory remedy, the writ petitions do not merit interference. The Court therefore declined to adjudicate the classification and rate issue in the writ proceedings. [Paras 10, 11]

Writ petitions dismissed insofar as they seek interference with the assessment orders on classification and rate of tax.

Rectification under Section 84 of the TNVAT Act, 2006 - Effect of petitioner having invoked Section 84 remedy on maintainability of writ petitions. - HELD THAT: - The Court noted that the petitioner has filed objections under Section 84 of the TNVAT Act, 2006 (as made applicable) in respect of both the TNVAT and CST assessment orders and that those statutory petitions were pending. On that basis the Court found no merit in entertaining the writ petitions which raise the same controversy and observed that the statutory remedy should be allowed to run its course. [Paras 10]

Statutory remedy under Section 84 being invoked and pending, the writ petitions are not entertained.

Production of C-Forms and rectification - Whether non-production of C-Forms precludes rectification of assessment orders. - HELD THAT: - Relying on the Court's prior decision referred to in the order, the Court observed that non-production of C-Forms is not a bar to seeking rectification and it remains open to the petitioner to approach the assessing authority for rectification when the C-Forms are produced. The Court therefore left the question of C-Forms to be addressed through the statutory remedy and proceedings before the authority. [Paras 8]

Petitioner may seek rectification of the assessment orders on production of C-Forms before the assessing authority.

Rectification under Section 84 of the TNVAT Act, 2006 - Direction to the assessing authority to dispose of the pending objections filed under Section 84. - HELD THAT: - Although the writ petitions are dismissed, the Court directed the respondent to decide the objections filed under Section 84 of the TNVAT Act, 2006 within six weeks from receipt of a copy of the order, thereby ensuring that the statutory remedy invoked by the petitioner is expeditiously adjudicated. [Paras 12]

Respondent directed to pass appropriate orders on the objections under Section 84 within six weeks.

Final Conclusion: Writ petitions dismissed without costs as the disputes on classification and rate involve contested questions of fact and the petitioner has invoked the statutory remedy under Section 84 of the TNVAT Act, 2006; the assessing authority is directed to decide the pending objections under Section 84 within six weeks, and the petitioner may seek rectification upon production of C-Forms.

Adjustment of deposit against interest and tax - compensatory interest for belated payment of tax - application of binding precedent in computation of tax and interest - recomputation and reassessment in accordance with appellate and Full Bench judgments

Adjustment of deposit against interest and tax - compensatory interest for belated payment of tax - Validity of adjustment of the Rs.10 lakhs deposit made by the dealer against interest due instead of tax arrears. - HELD THAT: - The Court held that the mode of adjustment of the amount deposited by the dealer is governed by the legal principles articulated in the Full Bench decision and related appellate judgment cited in the order. Interest under the statute is compensatory in nature and becomes payable where taxable turnover was omitted or misclassified in the return; therefore, the manner and sequence of crediting deposits (interest first, then tax) must be determined consistently with those authoritative decisions. The Tribunal's contrary finding that the deposit should be credited to tax rather than interest is not sustainable in law in view of the binding precedents relied upon by the Court. Consequently the Tribunal's findings on adjustment are set aside and held to be contrary to law.

Tribunal's decision on adjustment is quashed; adjustment must be carried out in accordance with the principles laid down by the Full Bench and the appellate judgment relied upon by this Court.

Application of binding precedent in computation of tax and interest - recomputation and reassessment in accordance with appellate and Full Bench judgments - Whether the assessing officer's computation and assessment require fresh determination in light of the appellate and Full Bench judgments. - HELD THAT: - The Court found that the original assessment orders and the Annexure-A rectifications differ and that the computation of tax and adjustment of deposits undertaken earlier did not take into account the final view expressed by this Court and the Full Bench. The assessing officer did not consider the deposit of Rs.10 lakhs in the original assessment dated 05.01.2007, and the subsequent adjustment recorded in 15.09.2008 requires reconsideration. The Court set aside the Tribunal's order and directed the assessing officer to work out the tax payable or refundable afresh strictly in terms of the Full Bench decision and the judgment in W.A. No.1035/2006 and connected matters, permitting recomputation and issuance of consequential orders.

Assessing officer is directed to recompute tax/interest and pass fresh orders in accordance with the Full Bench and appellate judgments; Tribunal order set aside.

Final Conclusion: S.T. Revisions allowed; the Tribunal's findings on adjustment are set aside and the assessing officer is granted liberty to recompute tax and interest for the assessment years 2000-01 to 2004-05 strictly in accordance with the Full Bench and appellate decisions referred to by this Court.

Reopening of assessment under section 17 of the Wealth Tax Act - wealth escaping assessment - reassessment based on a sale subsequent to the valuation date - failure to disclose fully and truly all material facts - change of opinion doctrine and limitation on reassessment - maintainability of writ petition where condition precedent for reassessment is absent

Reassessment based on a sale subsequent to the valuation date - wealth escaping assessment - change of opinion doctrine and limitation on reassessment - Validity of reassessment proceedings under section 17 of the Wealth Tax Act founded on a sale of the subject property that occurred after the valuation date for the assessment years in question. - HELD THAT: - The Court held that reassessment under section 17 cannot be validly initiated merely because the Assessing Officer relies upon a sale that took place subsequent to the relevant valuation date to redetermine the value of the property for earlier assessment years. Section 17 requires reason to believe that net wealth chargeable to tax has escaped assessment by reason of omission, misrepresentation or failure to disclose fully and truly material facts. Where returns were filed disclosing the asset and there was no allegation or material showing of concealment or nondisclosure by the assessee, reopening on the basis of a subsequent sale amounts to a mere change of opinion and is legally impermissible. The Court applied precedents to reject the Department's reliance on an event occurring after the valuation date to project value backwards and found the reassessment unsustainable on that legal basis. [Paras 12, 13, 16, 17]

Reassessment orders dated 26.03.2002 reopening assessments under section 17, insofar as they are founded on the subsequent sale to reassess value for the assessment years, are quashed.

Failure to disclose fully and truly all material facts - maintainability of writ petition where condition precedent for reassessment is absent - Whether the writ petitions were maintainable despite availability of an alternative remedy of appeal when the Assessing Officer had not satisfied the condition precedent for invoking reassessment under section 17. - HELD THAT: - The Court found that the Assessing Officer did not record any material or additional facts showing failure by the assessee to disclose fully and truly all material particulars, and the statutory prerequisites for issuing a notice under section 17 were not met. In that factual and legal scenario the invocation of the alternative statutory remedy did not preclude relief under Article 226; where the reassessment is invalid for want of the required foundational satisfaction, the assessee was entitled to challenge the action by writ petition. The Court therefore upheld the single Judge's refusal to insist on exhaustion of the alternative appellate remedy. [Paras 17, 19]

Writ petitions challenging the reassessment were maintainable and rightly allowed; the plea of alternative remedy is rejected in view of absence of the condition precedent for reassessment.

Final Conclusion: The intra court appeal is dismissed. The reassessment orders reopening the wealth tax assessments (impugned orders dated 26.03.2002) are quashed because they were founded on a subsequent sale and there was no material to show failure to disclose fully and truly all material facts; the writ petitions were maintainable and were correctly allowed by the single Judge.

Offence under Section 138 of the Negotiable Instruments Act - Presumption under Section 139 of the Negotiable Instruments Act - Dishonour of cheque for insufficiency of funds - Rebuttal of presumption by alleging theft or misuse of cheque - Compensation in lieu of fine and sentence modification

Offence under Section 138 of the Negotiable Instruments Act - Dishonour of cheque for insufficiency of funds - Conviction under Section 138 of the N.I. Act was justified. - HELD THAT: - The complainant proved production and dishonour of the cheque (Ex.P-1, Ex.P-2, Ex.P-3) and service of legal notice (Ex.P-4, Ex.P-5). The complainant consistently stated that the petitioner issued the cheque in discharge of a monetary liability arising from funds advanced against sale of residential plot, and reiterated the same in evidence. There was no material to show any complaint to police about theft of the cheque or any contemporaneous allegation of misuse. On the evidence, the Courts below correctly held that the offence under Section 138 of the N.I. Act stood established. [Paras 9]

Conviction under Section 138 upheld.

Presumption under Section 139 of the Negotiable Instruments Act - Rebuttal of presumption by alleging theft or misuse of cheque - The defence that the cheque was stolen and misused did not successfully rebut the presumption under Section 139. - HELD THAT: - Although the presumption under Section 139 is rebuttable, the petitioner did not produce evidence of theft or file any police complaint to support the allegation of theft/misuse. The absence of such contemporaneous complaint or other supporting material meant the petitioner failed to discharge the burden of rebutting the statutory presumption. The trial and appellate findings rejecting the defence were therefore warranted. [Paras 9]

Allegation of theft/misuse held insufficient to rebut Section 139 presumption.

Compensation in lieu of fine and sentence modification - Appellate modification of sentence to require payment of compensation and reduce imprisonment was not interfered with. - HELD THAT: - Considering the age of the petitioner and absence of previous criminal antecedents, the Appellate Court reduced the substantive imprisonment and directed payment of compensation in place of the previously imposed fine. Having regard to the appellate court's lenient exercise of discretion on sentence and the circumstances recorded, this Court found no reason to interfere with the sentence as modified by the Appellate Court. [Paras 11]

Sentence as modified by the Appellate Court affirmed; no interference warranted.

Final Conclusion: The revision petition is dismissed at the admission stage; the conviction under Section 138 of the Negotiable Instruments Act is upheld and the appellate modification of sentence (compensation in lieu of fine) is affirmed.

Power of the first appellate court to direct deposit pending appeal under amended Section 148 of the Negotiable Instruments Act - Deposit of a minimum of 20% of the fine or compensation pending appeal - Construction of the expression 'may' in amended Section 148 as generally to be construed as a rule (i.e. mandatory) except for special reasons - Applicability of amendment to Section 148 to appeals arising from complaints filed prior to the amendment coming into force - Challenge under inherent jurisdiction of the High Court under Section 482 Cr.P.C. to an appellate deposit order

Power of the first appellate court to direct deposit pending appeal under amended Section 148 of the Negotiable Instruments Act - Deposit of a minimum of 20% of the fine or compensation pending appeal - Construction of the expression 'may' in amended Section 148 as generally to be construed as a rule (i.e. mandatory) except for special reasons - Impugned order directing the convict to deposit 20% of the compensation pending appeal is not illegal. - HELD THAT: - The Court examined the impugned order in light of the amended provision conferring power on the first appellate court to direct deposit of a sum not less than 20% of the fine/compensation and the authoritative exposition in Surinder Singh Deswal (supra). That decision explains the legislative object to curb delay tactics and holds that although the amended text uses 'may', it is to be purposively construed generally as a rule - i.e. directing deposit ordinarily, with non-direction being an exception requiring special reasons. Applying that reasoning, the High Court found no illegality in the Additional Sessions Judge directing deposit of 20% within the prescribed period, and there was no basis to interfere under Section 482 Cr.P.C. [Paras 5, 6, 8]

The petition challenging the deposit direction was dismissed; the impugned deposit order was held not illegal.

Applicability of amendment to Section 148 to appeals arising from complaints filed prior to the amendment coming into force - Amendment to Section 148 applies to appeals against convictions even where the underlying criminal complaints were filed prior to the amendment coming into force. - HELD THAT: - Relying on the Supreme Court's reasoning in Surinder Singh Deswal (paras reproduced), the Court accepted that the amendment, enacted to prevent frustration of Section 138's object by delay tactics, does not take away any vested substantive right of appeal. The purposive construction adopted by the Supreme Court supports application of the amended provision to appeals preferred after the amendment's commencement, even if the complaint was filed earlier. The High Court applied this principle and found no infirmity in treating the amended provision as applicable. [Paras 6, 7, 8]

The amended provision is applicable and the challenge that it cannot apply to pre-amendment complaints was repelled.

Final Conclusion: The petition under Section 482 Cr.P.C. was dismissed; interim orders were vacated. The High Court declined to interfere with the appellate court's direction to deposit 20% of the compensation, while noting the petitioner remains free to pursue other legal remedies in accordance with law and urging expedition by the Appellate Court.

Penalty as condition for grant of anticipatory bail - reasonableness and proportionality of costs imposed in criminal proceedings - estoppel by acceptance of benefit and waiver of challenge to earlier order - adjournment and non-appearance as ground for imposition of costs

Penalty as condition for grant of anticipatory bail - reasonableness and proportionality of costs imposed in criminal proceedings - adjournment and non-appearance as ground for imposition of costs - Validity and reasonableness of the penalty of Rs. 50,000 imposed by the Sessions Judge as a condition for grant of anticipatory bail. - HELD THAT: - The Court examined the chronology of repeated adjournments, non-appearances and instances where the petitioner's bail had been cancelled earlier, and noted imposition of costs on several occasions and striking off of defence for failure to cross-examine witnesses. The zimni orders disclose multiple defaults by the petitioner and issuance of non-bailable warrants on more than one occasion. Having regard to the conduct of the petitioner in delaying proceedings, non-appearance despite service, earlier forfeiture of bail bonds and the history of costs imposed, the Court found that the Sessions Judge's imposition of a penalty as a condition of bail was appropriate and in accordance with law. The petitioner did not demonstrate that the penalty was unlawful or wholly disproportionate in the circumstances presented, and nothing was shown to disentitle the trial Court from imposing such costs as a regulatory and punitive measure for misuse of process and delays.

Penalty of Rs. 50,000 imposed as condition of anticipatory bail was valid and reasonable in the facts and thus not interfered with.

Estoppel by acceptance of benefit and waiver of challenge to earlier order - Whether the petitioner is estopped from challenging the order dated 02.12.2021 by having sought and obtained extension of time to deposit the penalty by order dated 15.12.2021. - HELD THAT: - The Court observed that after the order of 02.12.2021 imposing the penalty, the petitioner moved an application dated 15.12.2021 seeking extension of time to deposit the penalty, and the Sessions Judge granted such extension. The subsequent order granting extension was not challenged by the petitioner. On these facts the Court held that by seeking and availing the concession of additional time, the petitioner was estopped from now assailing the original order imposing the penalty. The Court treated the application for extension and its acceptance as a waiver of immediate challenge to the penalty order.

Petitioner is estopped from challenging the earlier order imposing the penalty after availing the extension granted by order dated 15.12.2021.

Final Conclusion: Writ petition under Section 482 Cr.P.C. dismissed: the Sessions Judge's imposition of Rs. 50,000 as penalty in connection with anticipatory bail was held appropriate on the facts of repeated delay and non-appearance, and the petitioner was held estopped from challenging the penalty after obtaining an extension to deposit it.

Rebuttable presumption under Section 139 of the Negotiable Instruments Act - Rebuttable presumption under Section 118 of the Negotiable Instruments Act - Standard of proof to rebut presumption: preponderance of probabilities - Effect of loss of cheque and stop-payment instruction on execution presumption - Burden shifting once presumption is rebutted - Interference with acquittal on appeal - double presumption and appellate restraint

Rebuttable presumption under Section 139 of the Negotiable Instruments Act - Rebuttable presumption under Section 118 of the Negotiable Instruments Act - Standard of proof to rebut presumption: preponderance of probabilities - Effect of loss of cheque and stop-payment instruction on execution presumption - Burden shifting once presumption is rebutted - Whether the presumption of execution and liability arising from the cheque (under Sections 118 and 139 of the Negotiable Instruments Act) applied or was rebutted so as to sustain conviction under Section 138. - HELD THAT: - The Court held that the statutory presumptions under Sections 118 and 139 are rebuttable and arise only when execution of the cheque is established. The 1st respondent specifically denied executing the cheque in his 313 statement and asserted that cheque leaves were lost in 2007; contemporaneous bank material (Ext. C2) showed a stop-payment memo dated 24.5.2010-almost a year before the alleged date of issuance (16.5.2011). PW1's evidence contained discrepancies (absence of complaint particulars such as date and bank details, inconsistent statements about amounts and settlement terms, and lack of corroboration of persons said to have mediated the settlement). Applying the test in Rangappa, the Court accepted that the accused had raised a probable defence on the preponderance of probabilities standard sufficient to rebut the statutory presumption. Once rebutted, the evidential burden shifted back to the complainant, who failed to prove the existence of a legally enforceable debt and the execution of the cheque beyond reasonable doubt or on the balance of probabilities in the face of the defence and documentary material. For these reasons the trial court's finding that the presumption was successfully rebutted was upheld. [Paras 10, 12, 13, 14, 15]

Presumption under Sections 118 and 139 held rebutted on available evidence and the accused raised a probable defence; prosecution failed to prove offence under Section 138.

Interference with acquittal on appeal - double presumption and appellate restraint - Whether the High Court should interfere with the trial court's acquittal. - HELD THAT: - The Court reiterated the principle that an appellate court must exercise restraint in upsetting an acquittal, recognising the twin presumptions favouring the accused (presumption of innocence and reinforcement by the trial court's acquittal). Where two reasonable conclusions are possible on the evidence, the appellate court should not disturb the trial court's finding. Having regard to the accepted probable defence, the documentary evidence (stop memo) and material discrepancies in the complainant's case, the High Court found no reason to reappraise credibility so as to justify interference with the acquittal recorded by the Magistrate. [Paras 15, 16]

No interference with the trial court's acquittal; the acquittal is confirmed.

Final Conclusion: The High Court dismissed the criminal appeal, holding that the accused had successfully raised a probable defence that rebutted the statutory presumptions attendant on the cheque and that there was no sufficient basis to disturb the trial court's acquittal; the judgment of acquittal was confirmed.

Judgment on admission under Order 12 Rule 6 of the Code of Civil Procedure - commercial dispute within Section 2(c) of the Commercial Courts Act, 2015 read with Explanation (a) - admission by execution of mercantile documents and post-dated cheques - decree on admission for admitted debt and interest - injunction refused with liberty to secure claim

Commercial dispute within Section 2(c) of the Commercial Courts Act, 2015 read with Explanation (a) - Maintainability of the suit before the Commercial Division as a commercial dispute - HELD THAT: - The Court held that the dispute is a commercial dispute falling within Section 2(c)(i) read with Explanation (a) of the Commercial Courts Act, 2015. The judge distinguished the authorities relied on by the defendant (which dealt with informal or friendly loans without mercantile documents) on the ground that in the present case multiple written mercantile documents, confirmations of account and post-dated cheques evidence a commercial transaction. The commercial character of the transaction, supported by documents and admissions, renders the suit maintainable before the Commercial Division. [Paras 12]

The suit is maintainable before the Commercial Division as a commercial dispute.

Judgment on admission under Order 12 Rule 6 of the Code of Civil Procedure - admission by execution of mercantile documents and post-dated cheques - decree on admission for admitted debt and interest - Entitlement to judgment on admission for the admitted loan and interest - HELD THAT: - Applying the principle of Order 12 Rule 6 CPC, the Court found unambiguous admissions by the respondent: receipt of Rs. 4 crores, execution of Memoranda of Understanding, confirmation of accounts admitting principal and interest, and repeated issuance (and subsequent dishonour) of post-dated cheques. These admissions being undisputed entitled the petitioner to a speedy judgment to the extent of the admission. The Court exercised its discretion to enter a decree on admission for the claimed amount and awarded costs to the petitioner. [Paras 11, 13, 15]

Decree on admission entered in favour of the petitioner for the claimed sum and costs assessed at Rs. 1,00,000.

Injunction refused with liberty to secure claim - Claim for interlocutory injunction restraining dealing with the secured property - HELD THAT: - The Court declined to grant the injunction sought by the petitioner, noting that the respondent had already dealt with the security referred to in the Memorandum of Understanding. Rather than granting the interlocutory relief sought, the Court granted liberty to the petitioner to take appropriate legal steps to secure its claim in accordance with law. [Paras 14]

Prayer for injunction refused; petitioner granted liberty to take appropriate steps to secure its claim.

Final Conclusion: Decree on admission granted in favour of the petitioner for the claimed amount with costs assessed at Rs. 1,00,000; the suit is maintainable as a commercial dispute before the Commercial Division; injunction not granted but petitioner given liberty to secure its claim. GA/1/2021 in C.S. 221 of 2021 disposed of.

Condonation of delay in filing restoration application - Restoration of criminal revision proceedings to file - Offence under Negotiable Instruments Act, 138 - compromise and quashing of conviction - Release of accused on compromise where complainant withdraws objection

Condonation of delay in filing restoration application - Delay of 120 days in preferring the Restoration Application in Criminal Revision Application No. 822 of 2016 is condoned. - HELD THAT: - The Court heard the parties, considered the averments in the application and the submissions made on behalf of the applicant and respondents, and concluded that the delay of 120 days has been sufficiently explained. In view of the explanation and the material placed before the Court, the delay was held to deserve condonation and the rule was made absolute to that extent. [Paras 4, 5]

Application for condonation of 120 days' delay is allowed and the delay is condoned.

Restoration of criminal revision proceedings to file - Criminal Revision Application No. 822 of 2016 is restored to its original file. - HELD THAT: - On hearing submissions and considering the facts and averments in the application, the Court ordered restoration of the original revision proceedings to the file. The rule was made absolute to the extent of restoring the Criminal Revision Application No. 822 of 2016. [Paras 8]

The revision application is restored to its original file and the restoration application is allowed.

Offence under Negotiable Instruments Act, 138 - compromise and quashing of conviction - Release of accused on compromise where complainant withdraws objection - The convictions and sentences recorded in Criminal Case No. 600 of 2010 and the appellate order in Criminal Appeal No. 67 of 2014 are quashed and set aside qua the present applicant, and the applicant is ordered to be released forthwith if not required in any other offence. - HELD THAT: - The Court examined the applicant's prayer to quash the judgment and order of conviction and the appellate order in view of a settlement. The complainant filed an affidavit stating that he has received the cheque amount and has no objection to quashing the impugned orders; he averred that the settlement was voluntary and without coercion and undertook not to raise dispute in future. Although the offence falls under section 138 of the Negotiable Instruments Act, the Court noted the private nature of the offence and that the dispute had been amicably settled between the parties. Having regard to the complainant's affidavit of no objection and receipt of the cheque amount, the Court allowed the revision insofar as it relates to the present applicant, quashed and set aside the conviction and appellate orders against him, and directed his release if not required elsewhere. [Paras 14, 16, 17, 18, 19]

Impugned conviction and appellate orders are quashed and set aside qua the present applicant; the applicant is directed to be released forthwith if not required in any other matter.

Final Conclusion: The application for condonation of delay is allowed, the restoration application is allowed and Criminal Revision Application No. 822 of 2016 is restored; upon the complainant's affidavit of settlement and no objection, the convictions and appellate orders against the present applicant under the proceedings arising from Criminal Case No. 600 of 2010 are quashed and set aside, and the applicant is ordered to be released if not required in any other offence.

Presumption under Section 118 of the Negotiable Instruments Act - rebuttable presumption and burden of proof under the Indian Evidence Act - standard of proof by preponderance of probabilities - effect of admissions and intrinsic worth of negotiable instrument - scope of interference in second appeal under Section 100 CPC

Presumption under Section 118 of the Negotiable Instruments Act - rebuttable presumption and burden of proof under the Indian Evidence Act - Whether the presumption under Section 118 arose in favour of the plaintiff in respect of Ex.A1 and whether the appellant successfully rebutted that presumption - HELD THAT: - The Court found that execution and contents of Ex.A1 were admitted by the defendants and supported by the plaintiff's evidence and intrinsic worth of the document. Reliance on authorities established that Section 118 raises a rebuttable presumption of consideration once execution is proved, and that the defendant must lead evidence-direct or circumstantial-sufficient to make the non-existence of consideration probable. The defendants' evidence comprised interested witnesses and failed to produce or examine material independent witnesses (notably D.W.4 and the chartered accountant) or documentary entries that would make non-existence of consideration probable. Ledger extracts and cross-examination did not support the mediation-based defence or show that Ex.A1 arose from a collective settlement. On the material before the courts below, the presumption under Section 118 was not displaced and thus supported the decree in favour of the plaintiff. [Paras 37, 42, 46, 48, 56]

Presumption under Section 118 applied and was not successfully rebutted by the appellant; Ex.A1 was held to be supported by consideration.

Effect of admissions and intrinsic worth of negotiable instrument - rebuttable presumption and burden of proof under the Indian Evidence Act - Whether the admissions by the appellant and secondary evidence supported the plaintiff's case so as to shift the burden back to the defendants - HELD THAT: - The appellants admitted execution and contents of Ex.A1, including that Rs.2 lakhs was borrowed on 01.02.2004. The Court held that such admissions, together with the plaintiff's oral testimony and the document's intrinsic value, entitled the plaintiff to the benefit of the statutory presumption. Once the defendants failed to produce credible contrary evidence (direct or circumstantial of sufficient weight), the initial onus remained on them and shifted back as required by law. [Paras 21, 37, 56]

Admissions and the intrinsic worth of Ex.A1 sustained the plaintiff's claim and kept the burden of proof on the defendants unfulfilled.

Standard of proof by preponderance of probabilities - rebuttable presumption and burden of proof under the Indian Evidence Act - Whether alleged payments and accounts produced by the appellants established partial discharge of the promissory note debt - HELD THAT: - The courts below examined ledger extracts and account entries relied on by the defendants and concluded there was no direct or indirect connection between those entries and discharge of liability under Ex.A1. The appellate court found the claimed payments inconsistent with other account evidence (including Ex.A2 and Ex.B41) and with the pleaded case; absence of specific documentary linkage or credible witnesses to connect the entries to Ex.A1 meant the plea of partial discharge did not meet the standard of preponderance required to rebut the statutory presumption. [Paras 51, 52, 54]

The claimed payments did not establish partial discharge of Ex.A1 and did not rebut the presumption of consideration.

Scope of interference in second appeal under Section 100 CPC - Whether this Court should interfere with concurrent findings of fact recorded by the trial and first appellate courts under Section 100 CPC - HELD THAT: - Applying the parameters for interference in a second appeal, the Court observed that concurrent findings were based on proper appreciation of oral and documentary evidence and did not suffer from any error warranting interference. The appellants failed to demonstrate that findings were perverse, recorded without evidence, or contrary to law. Given the absence of grounds such as misreading of material evidence or recording of findings beyond pleadings, the Court held that interference was not justified. [Paras 55, 58]

No interference under Section 100 CPC; concurrent findings of fact and the decree were upheld.

Final Conclusion: The High Court dismissed the second appeal, holding that (i) the presumption under Section 118 of the Negotiable Instruments Act in favour of the plaintiff was not rebutted; (ii) admissions and evidence supported the decree; (iii) allegations of partial discharge were not proved; and (iv) there was no ground to disturb the concurrent factual findings under Section 100 CPC; the decree and judgment of the courts below are therefore confirmed.

Quashing of criminal proceedings under inherent powers of High Court - Compounding/compromise of offences having predominating civil flavour - Application of Gian Singh principle for non compoundable offences - Abuse of process of law and prejudice to accused

Quashing of criminal proceedings under inherent powers of High Court - Compounding/compromise of offences having predominating civil flavour - Application of Gian Singh principle for non compoundable offences - Whether the High Court should, in exercise of its inherent jurisdiction, permit compounding/record the compromise and quash criminal proceedings and set aside convictions in respect of offences under the Negotiable Instruments Act in view of a full and complete settlement between the parties. - HELD THAT: - The High Court examined the joint memo and the parties' appearance confirming that the petitioner had paid and the complainant had accepted full and final settlement. Relying on the principles laid down in Gian Singh (concerning the scope of Section 482 Cr.P.C. where offences, though non compoundable, have an overwhelmingly civil character), the Court considered the nature and gravity of the offence, the private character of the dispute and the compromise between the parties. The Court held that where continuation of criminal proceedings would be unfair, oppressive or tantamount to an abuse of process because the possibility of conviction is remote and the dispute is essentially civil/mercantile, it is within the High Court's inherent jurisdiction to quash the proceedings to secure the ends of justice. Applying those principles to the facts, the Court recorded the compromise, permitted compounding and quashed the criminal proceedings and convictions against the petitioner. [Paras 6, 7, 8, 9]

Joint compromise recorded; exercise of inherent jurisdiction under Section 482 Cr.P.C. allowed to quash the proceedings and set aside the conviction, and the petitioner is acquitted.

Final Conclusion: Criminal revision allowed; compromise recorded and proceedings under the Negotiable Instruments Act (as impugned) quashed in exercise of the High Court's inherent jurisdiction; petitioner acquitted and pending miscellaneous petitions closed.