TaxTMI Updates e-Newsletter
Feb 02,2024

Cancellation of GST registration for registration obtained by fraud, willful misstatement or suppression of facts - show cause notice requirements - requirement to disclose reasons and supporting material in a show cause notice - right to personal hearing - opportunity to file a reply before adjudication - adjudication within a prescribed reasonable timeframe - power to conduct fresh inspection of premises

Show cause notice requirements - requirement to disclose reasons and supporting material in a show cause notice - Validity of the Show Cause Notice dated 18.01.2024 insofar as it fails to specify cogent reasons, the officer, place or time for appearance, and does not furnish complete material in support. - HELD THAT: - The Court found that the impugned Show Cause Notice did not specify cogent reasons, did not name the officer or indicate place or time where the petitioner was to appear, and did not provide complete material relied upon. In these circumstances the notice was procedurally defective insofar as it did not afford the petitioner adequate particulars or material necessary to enable an effective reply. The Court therefore directed respondents to supply, within one week, all material relied upon in support of the Show Cause Notice, and afforded the petitioner one week thereafter to file a reply. The Court expressly declined to decide the merits of the underlying allegation that registration was obtained by fraud, willful misstatement or suppression of facts, reserving all rights and contentions of the parties. [Paras 5, 6, 7, 11]

Show Cause Notice held procedurally defective for lack of particulars and material; respondents directed to provide material and afford opportunity to reply.

Right to personal hearing - opportunity to file a reply before adjudication - adjudication within a prescribed reasonable timeframe - power to conduct fresh inspection of premises - Directions for fresh adjudicatory process and remand to respondents to complete adjudication after providing material and hearing the petitioner. - HELD THAT: - In view of the procedural defects in the Show Cause Notice and the factual contention that the petitioner was not found at the premises, the Court directed that on receipt of the material the petitioner shall be given an opportunity to file a reply within one week, and that respondents shall adjudicate the Show Cause Notice within a maximum period of two weeks. The petitioner shall be given an opportunity of personal hearing. The respondents are permitted, if required, to carry out a fresh inspection of the premises prior to adjudication. The Court clarified that it has not considered or commented upon the merits of the parties' contentions and reserved all rights. [Paras 7, 8, 9, 10, 11]

Proceedings remitted to respondents with directions to furnish material, hear the petitioner (including personal hearing), allow reply, and conclude adjudication within two weeks; fresh inspection permitted if necessary.

Final Conclusion: The petition is disposed of by setting aside the impugned Show Cause Notice procedureally to the extent of directing respondents to furnish all material, permit the petitioner to reply and be heard (including personal hearing), and to complete adjudication within a stipulated short period; no decision on the merits has been made and all rights are reserved.

Benefit of Section 14 of the Limitation Act - Limitation under Section 107 of the Central Goods and Services Act, 2017 - Wrong jurisdiction and withdrawal of appeal - Quashing and remand for fresh hearing

Benefit of Section 14 of the Limitation Act - Limitation under Section 107 of the Central Goods and Services Act, 2017 - Wrong jurisdiction and withdrawal of appeal - Whether the appellant is entitled to the benefit of Section 14 of the Limitation Act so that the appeal under Section 107 of the Act would not be time-barred in view of the earlier filing in wrong forum and subsequent withdrawal and re-filing before the correct appellate authority. - HELD THAT: - The Court accepted the petitioner's contention that the appeal initially filed before the wrong jurisdictional authority was withdrawn and a fresh appeal was filed before the correct appellate authority. Applying the principle embodied in Section 14 of the Limitation Act, the Court found merit in the submission that the period spent in prosecuting the appeal in the wrong forum and its withdrawal should be ignored for the purpose of limitation. In consequence, the impugned order dismissing the appeal as barred by limitation was quashed and the matter was directed to be reconsidered by the correct appellate authority after giving the petitioner the benefit of Section 14. The appellate authority is required to grant the benefit of Section 14, determine whether the re-filed appeal is within time, and, if so, proceed to hear the appeal on merits. [Paras 3, 4, 5]

Impugned order dated October 15, 2019 quashed; respondent no.3 to grant benefit of Section 14 of the Limitation Act and, if the appeal is within time thereafter, hear the appeal afresh on merits.

Final Conclusion: Writ petition allowed; impugned appellate order set aside and matter remanded to the Additional Commissioner (Appeals), Meerut, to grant the benefit of Section 14 of the Limitation Act and to hear the appeal afresh if found within time.

Constitutional writ jurisdiction under Article 226/227 - alternative statutory remedy / relegation to statutory appeal - show cause notice - interpretation of GST rate for supply of LPG (5% v 18%) - Board circular clarification

Constitutional writ jurisdiction under Article 226/227 - alternative statutory remedy / relegation to statutory appeal - Appropriateness of exercising writ jurisdiction in presence of an alternate statutory remedy - HELD THAT: - Relying on the principle in State of Maharashtra v. Greatship (India) Ltd., the Court refrained from exercising its constitutional writ jurisdiction where an alternate statutory remedy exists. The petition challenges a show cause notice and the petitioner has filed a reply; therefore, judicial prudence requires relegation to the statutory remedial machinery rather than adjudication of the dispute under Article 226/227. The Court directed that the respondents consider the petitioner's reply and the defences raised therein and observe the available statutory remedies. [Paras 4, 5]

Writ jurisdiction not exercised; petitioner relegated to avail statutory remedies and appeal mechanisms.

Show cause notice - interpretation of GST rate for supply of LPG (5% v 18%) - Board circular clarification - Disposition of challenge to the Board circular and the substantive question of tax rate applicable to LPG for the period in question - HELD THAT: - The Court declined to decide the substantive challenge to the circular and the dispute over whether 5% or 18% GST applied for the period 01.07.2017 to 24.01.2018. The Court noted that in a similar case the authority at Mangaluru, after considering the circular and the assessee's justification, concluded that no additional GST liability, interest or penalty was payable and accordingly dropped the proceedings. Given that the petitioner has replied to the show cause notice, the Court left the issue open for consideration by the competent authority and did not adjudicate the merits of the circular or tax-rate question. [Paras 3, 5]

Challenge to the circular and the tax-rate dispute left open for consideration by the competent authority; proceedings not decided on merits by this Court.

Final Conclusion: Writ petition disposed of by declining to exercise constitutional jurisdiction in view of available statutory remedies; petitioner relegated to pursue statutory remedy and the respondents directed to consider the reply and defences, while the substantive challenge to the circular and tax-rate question remains open for administrative adjudication.

Withdrawal of writ petition - liberty to file statutory appeal under executive notification - extension of limitation by notification issued under section 148 of the Tripura SGST Act, 2017 - pre-deposit / compliance conditions for filing belated appeal - expeditious decision of appeal by appellate authority

Withdrawal of writ petition - liberty to file statutory appeal under executive notification - Writ petition dismissed as withdrawn with liberty to avail the special appeal procedure notified by the State Government. - HELD THAT: - Learned counsel for the petitioner sought permission to withdraw the writ petition in order to avail the remedy conferred by the Government of Tripura notification dated 4th November, 2023, which permits specified taxable persons to file appeals notwithstanding prior rejection or delay. The State raised no objection to withdrawal but submitted that the conditions in the notification must be complied with. On this basis the High Court permitted withdrawal of the writ petition and granted liberty to file an appeal in accordance with the notification within the cut-off date.

Writ petition dismissed as withdrawn with liberty to file appeal under the notification dated 4th November, 2023.

Extension of limitation by notification issued under section 148 of the Tripura SGST Act, 2017 - pre-deposit / compliance conditions for filing belated appeal - expeditious decision of appeal by appellate authority - Petitioner permitted to file appeal within the notified cut-off subject to stipulated conditions; appellate authority directed to endeavour to decide the appeal expeditiously. - HELD THAT: - The notification prescribes that eligible persons may file an appeal in FORM GST APL-01 on or before 31st January, 2024, provided they comply with specified conditions including full payment of admitted amounts and payment of a portion of the remaining disputed tax (with a requirement that at least twenty percent be debited from the Electronic Cash Ledger). The Court recorded that these conditions must be complied with and afforded the petitioner the opportunity to file the appeal within the cut-off. The Court further directed that, upon filing after necessary compliance, the appellate authority shall take endeavour to decide the appeal in an expeditious manner.

Petitioner may file the appeal by 31st January, 2024 after complying with the conditions in the 4th November, 2023 notification; the appellate authority shall endeavour to decide the appeal expeditiously.

Final Conclusion: The writ petition is dismissed as withdrawn; petitioner is granted liberty to file an appeal under the Government of Tripura notification dated 4th November, 2023 by the cut-off of 31st January, 2024 after satisfying the prescribed conditions, and the appellate authority is directed to endeavour to decide the appeal expeditiously.

Availability of alternative statutory remedy - statutory appeal under Section 107 of the CGST Act, 2017 - doctrine of exhaustion of alternate remedy - exercise of writ jurisdiction under Articles 226/227 of the Constitution - relief from limitation for filing statutory appeal where raised in writ

Availability of alternative statutory remedy - statutory appeal under Section 107 of the CGST Act, 2017 - exercise of writ jurisdiction under Articles 226/227 of the Constitution - doctrine of exhaustion of alternate remedy - relief from limitation for filing statutory appeal where raised in writ - Writ petition seeking to set aside assessment order disallowing input tax credit not maintainable in view of an efficacious statutory appeal; petitioner granted liberty to pursue statutory remedy with limited protection on limitation and appellate adjudication directed on merits. - HELD THAT: - The Court found that an efficacious alternative statutory remedy is available to the petitioner in the form of a statutory appeal under Section 107 of the CGST Act, 2017 and that established principles require availing the statutory remedy where provided. Relying on authorities recognising that writ jurisdiction should not normally be invoked when a statutory appeal exists, the Court declined to entertain the petition. Notwithstanding dismissal, the Court granted the petitioner liberty to file the statutory appeal and safeguarded the petitioner against the plea of limitation by permitting filing within twenty days from the date of the order. The appellate authority was directed to consider and decide all grounds raised in the writ on merits and to do so expeditiously. [Paras 4, 5]

Writ petition dismissed; petitioner permitted to file statutory appeal within twenty days and appellate authority directed to decide the appeal on merits expeditiously, limitation not to operate as a bar if appeal filed within the stipulated period.

Final Conclusion: The petition is finally disposed of for non-maintainability in view of the availability of a statutory appeal; the petitioner is allowed to file the statutory appeal within twenty days and the appellate authority is directed to adjudicate the matters raised on merits expeditiously, with limitation not to be a bar if the appeal is filed within the stipulated period.

Holding of shares by a holding company is not a supply of services - taxability of securities under GST - Circulars issued under section 168(1) - quashing of administrative order as without jurisdiction

Holding of shares by a holding company is not a supply of services - taxability of securities under GST - Circulars issued under section 168(1) - The impugned order treating the holding of shares by the holding company in the petitioner as a taxable supply of services was illegal and liable to be quashed. - HELD THAT: - During the pendency of the petition the Central Government and the State Government issued clarificatory Circulars under the power conferred by section 168(1), stating that securities (including shares) are neither goods nor services and that mere holding of shares by a holding company in a subsidiary does not, by itself, constitute a supply under the relevant GST enactments. The Court accepted these clarifications and held that the presence of a SAC entry alone cannot convert mere shareholding into a supply unless a supply as defined in the statute is shown. The impugned order proceeded on the basis that shareholding amounted to a supply of services; in view of the authoritative Circulars and the statutory test for supply, that order was found to be without jurisdiction, arbitrary and contrary to law and therefore was quashed. [Paras 6, 7, 8]

Impugned order dated 02.11.2022 quashed; petition allowed.

Final Conclusion: The petition is allowed and the order passed by the tax authority on the basis that mere shareholding by a holding company in its subsidiary constitutes a taxable supply of services is quashed in view of the Central and State Government circulars clarifying that mere holding of shares is not a supply under GST.

Retrospective application of proviso to Section 50 - redetermination of interest demand under Section 50 - remand for reconsideration in light of statutory amendment - lifting of bank attachment upon interim payment subject to final determination

Retrospective application of proviso to Section 50 - redetermination of interest demand under Section 50 - remand for reconsideration in light of statutory amendment - Redetermination of the interest demand raised under Section 50 in view of retrospective insertion of the proviso. - HELD THAT: - The Court observed that Section 50 of the Central Goods and Service Tax Act, 2017 was amended by the Finance Act, 2019 by insertion of a proviso, and that further amendment by the Finance Act, 2021 made that proviso retrospective with effect from 01.07.2017. Both parties accepted that the retrospective proviso has implications on the interest demand earlier raised by the revenue. Given this change in law, the Court directed that the demand reflected in the notices dated 11.09.2018 and 13.08.2019 be reconsidered and redetermined by the respondents in accordance with the amended provision. The petitioner was permitted to file an appropriate representation specifying the demand which, in the petitioner's view, would be payable so that the respondents may re-evaluate the interest liability under the amended legal position.

Petition disposed with a direction to the petitioner to submit a representation and for the respondents to redetermine the interest payable in terms of the retrospective proviso to Section 50.

Lifting of bank attachment upon interim payment subject to final determination - Interim treatment of the bank attachment and effect of payment made by the petitioner pending redetermination. - HELD THAT: - The Court noted that the petitioner's bank account had been attached for non-payment of the demand. It directed that if the petitioner makes the payment of the amount he asserts is payable in the representation, the respondents shall lift the attachment of the bank account. The Court clarified that such payment would be provisional and would remain subject to the ultimate redetermination by the respondents; the respondents would retain the right to enforce any balance demand thereafter in accordance with law.

Attachment to be lifted upon the petitioner's interim payment as indicated in his representation, subject to final determination and without prejudice to enforcement of any remaining demand.

Final Conclusion: The writ petition is disposed of by remanding the interest demand for fresh redetermination by the respondents in light of the retrospective proviso to Section 50; the petitioner to file a representation and, upon making the interim payment claimed in that representation, the attachment on the petitioner's bank account shall be lifted while the payment remains subject to final reconciliation and enforcement of any balance demand by the respondents.

Permissibility of rectification of GSTR-1 for bonafide inadvertent errors - entitlement to Input Tax Credit where tax has been paid despite return mismatch - purposive interpretation of return-filing provisions to permit correction where no loss of revenue - electronic GST regime and the need to maintain accurate return particulars to avoid cascading prejudice

Permissibility of rectification of GSTR-1 for bonafide inadvertent errors - entitlement to Input Tax Credit where tax has been paid despite return mismatch - Petitioner permitted to amend/rectify Form GSTR-1 for financial year 2018-19 to correct an inadvertent GSTIN entry so that the recipient may claim Input Tax Credit. - HELD THAT: - The Court found that the petitioner had committed an inadvertent, bona fide error in furnishing the GSTIN in its GSTR-1 which led to a mismatch and consequent notices to its customer. The tax in question had already been paid and there was no loss of revenue to the exchequer. The Court applied a purposive construction of the return-filing provisions, following the reasoning in the coordinate decision of Star Engineers India Pvt. Ltd. and other High Court precedents such as Sun Dye Chem and Mahalaxmi Infra Contract Ltd. , that where an error is inadvertent and rectification causes no revenue loss, the bar of limitation in the return provisions should not be read to prevent correction. Given the electronic GST scheme and the cascading effect of incorrect particulars, permitting rectification preserves accurate records and does not prejudice the revenue. On this basis the Court directed respondents to allow amendment/rectification of Form GSTR-1 for the period in question by online or manual means within four weeks, and observed that upon such rectification the recipient would be entitled to claim the Input Tax Credit. [Paras 10, 11, 12, 14, 15]

Direction issued permitting amendment/rectification of Form GSTR-1 for financial year 2018-19 to correct the inadvertent error, enabling the recipient to claim Input Tax Credit; respondents to allow amendment within four weeks.

Final Conclusion: Writ petition disposed by directing respondents to permit the petitioner to amend/rectify Form GSTR-1 for financial year 2018-19 to correct the inadvertent GSTIN error, within four weeks, so that the recipient may claim the Input Tax Credit; all other contentions left open.

Composite supply - IGST on import of goods - levy on service component included in value of imported goods - reverse charge - recommendations of the GST Council are recommendatory

IGST on import of goods - levy on service component included in value of imported goods - composite supply - Entitlement to refund of IGST paid by the petitioner on the amount which included ocean freight under a CIF contract in light of the reasoning in Union of India v. Mohit Minerals (supra). - HELD THAT: - The High Court applied the conclusions in Mohit Minerals (supra), which held that where the value of imported goods includes a service component (such as ocean freight) as part of a composite supply under a CIF contract, a separate levy of tax on that service component is impermissible. The Court accepted that the impugned notifications and their operation which resulted in taxation of the freight as a separate supply conflicted with the principle of composite supply and the scheme of the CGST/IGST Acts as explained in Mohit Minerals (paras 133-135, 169, 216 and 171.5 reproduced in the order). On that basis the petitioner was held entitled to the refund of IGST paid on the amount inclusive of freight, and the respondents were directed to effect refund in accordance with law within six weeks.

Petitioner entitled to refund of IGST paid on the amount that included freight; respondents to refund in accordance with law within six weeks.

Reverse charge - recommendations of the GST Council are recommendatory - Application of Mohit Minerals' ancillary conclusions regarding reverse charge specification and the status of GST Council recommendations to the present proceedings. - HELD THAT: - The Court noted and adopted Mohit Minerals' conclusions that the notifications clarifying the recipient for reverse charge did not, by themselves, alter the person taxable under the statute and that the recommendations of the GST Council are recommendatory rather than binding when it comes to primary legislation or its proper application. Those principles were applied to the petitioner's challenge to the impugned notifications and orders, supporting the conclusion that the impugned levy on the service aspect was not sustainable.

Mohit Minerals' conclusions regarding reverse charge specification and the recommendatory character of GST Council recommendations were applied in favour of the petitioner.

Final Conclusion: Writ petition disposed of in terms of the Supreme Court decision in Union of India v. Mohit Minerals (supra); petitioner entitled to refund of the IGST paid on the amount inclusive of freight, to be processed by the respondents within six weeks in accordance with law.

Cancellation of GST registration for non-filing of returns - exercise of writ jurisdiction under Article 226 to revive registration - right to livelihood under Articles 19(1)(g) and 21 - limitations and bar to appellate remedy under the GST enactment - judicial power to grant relief despite statutory limitation where revocation causes disproportionate hardship

Cancellation of GST registration for non-filing of returns - limitations and bar to appellate remedy under the GST enactment - Impugned order cancelling the petitioner's GST registration on account of non-filing of returns was liable to be quashed and set aside in the facts of the case. - HELD THAT: - The Court found that the petitioner, a small-scale contractor dependent on GST registration for livelihood, lost registration for non-filing of returns and, by reason of limitation under the GST enactment, also lost the appellate remedy. Having regard to the hardships endured by small traders (including inability to manage e-mail/portal, ill-health and pandemic-related disruption) and consistent high-court decisions permitting revival of registration in similar circumstances, the Court held that cancellation would disproportionately affect the petitioner's right to carry on trade and his livelihood. The Court noted that constitutional jurisdiction under Article 226 can be exercised to prevent denial of the right to livelihood and to effectuate the objectives of the GST regime by bringing taxpayers back into the tax fold, subject to safeguards. Accordingly, the cancellation order dated 03.02.2023 was set aside and the petitioner was directed to file returns and regularize defaults within a specified time, with no order as to costs. The reasoning relied upon authorities which recognized that statutory limitation and appellate bars do not oust the High Court's constitutional jurisdiction where continued cancellation would cause undue hardship and defeat the objective of tax collection. [Paras 6, 10, 11, 12]

The writ petition is allowed; the order cancelling GST registration dated 03.02.2023 is set aside and the petitioner is directed to file returns within six weeks from receipt of this order.

Final Conclusion: The High Court allowed the writ petition, quashed the cancellation of the petitioner's GST registration and directed the petitioner to file the pending returns within six weeks so that his registration may be revived, observing that constitutional jurisdiction may be exercised to protect right to livelihood and to enable revival subject to statutory safeguards.

Condonation of delay - Limitation and condonation of delay under Section 5 of the Limitation Act - Dismissal for non-prosecution - Inherent power to dismiss for default - Requirement of sufficient cause and bonafide explanation

Condonation of delay - Limitation and condonation of delay under Section 5 of the Limitation Act - Dismissal for non-prosecution - Inherent power to dismiss for default - Whether the inordinate delay in filing the appeals should be condoned and the appeals admitted for adjudication on merits - HELD THAT: - The Tribunal found an inordinate unexplained delay of 493 days in filing the principal appeal (ITA No.325/RPR/2023 for A.Y.2014-15) and observed that the assessee had been non-cooperative before the CIT(Appeals), having been validly put to notice on multiple occasions and yet not appearing or filing written submissions. The explanation offered for the delay - death of the former chartered accountant, rural location, lack of computer literacy of staff and poor internet access - was examined and rejected as not establishing sufficient cause. The Tribunal noted that the demise occurred in April 2021 but the appeal was filed two and a half years thereafter, and that the assessee had not even informed the CIT(Appeals) or taken steps to prosecute the appeal. Reliance was placed on the settled principle that courts and tribunals possess the inherent power to dismiss proceedings for non-prosecution and on authorities emphasising that inordinate delay coupled with negligence militates against condonation. The Tribunal held that where delay is inordinate and not satisfactorily explained, discretion tilts against the applicant and limitation must be strictly construed; accordingly condonation was refused. The same reasoning was applied mutatis mutandis to the remaining appeals where similar delays were recorded, and the Tribunal declined to examine the merits. [Paras 17, 18, 19, 20, 21]

Condonation of delay refused; appeals dismissed as barred by limitation without adjudication on merits

Final Conclusion: The Tribunal declined to condone the inordinate delays (notably 493 days in the lead appeal), held the explanations not to constitute sufficient cause, and dismissed the appeals as barred by limitation, applying the same reasoning to the other connected appeals without deciding their merits.

Validity of reopening of assessment - photocopy of the notice was given to the Assessee during the re-assessment proceedings - sufficient service of notice on the Assessee or not? - as decided by HC [2015 (9) TMI 1064 - DELHI HIGH COURT] no legal error committed by the ITAT in holding that there was no proper service of notice on the Assessee under Section 148 - Revenue stated that this petition has to be dismissed on on the ground of low tax effect as being covered by the Circular No. 17 of 2019 dated 08.08.2019 issued by Department of Revenue, Ministry of Finance - HELD THAT:- Special Leave Petition dismissed.

Reopening of assessment u/s 147 - legality of the notice issued u/s 148 - as decided by HC [2015 (9) TMI 756 - DELHI HIGH COURT] ITAT was right in its conclusion that since no proper service of notice had been effected u/s 148 (1) on the Assessee, the reassessment proceedings were liable to be quashed - HELD THAT:- We see that the said notice as followed by the order passed by the AO/CIT was set aside by the Income Tax Appellate Tribunal way back on 21.06.2013. Subsequently the order of the Tribunal was upheld by the High Court on 15.09.2015. Proceedings initiated in 2008 have concluded by the order of the High Court in 2015. Yet another decade passed thereafter. Under the circumstances, while we keep the question of law open for consideration in another case, we will not interfere with the judgment of the High Court. Special Leave Petition is dismissed.

Validity of revision under Section 263 of the Income Tax Act - Reasonableness of enquiries by the Assessing Officer into source of funds - Prima facie demonstration of error and prejudice to the revenue - Prospective application of Explanation 2(a) to Section 263 - Scope of supervisory jurisdiction and limits of revisional power

Validity of revision under Section 263 of the Income Tax Act - Scope of supervisory jurisdiction and limits of revisional power - Order passed by the Principal Commissioner under Section 263 could not be sustained and the Tribunal's setting aside of that order was justified. - HELD THAT: - The Court found that although Explanation 2 to Section 263 creates a presumption as to error and prejudice, the Commissioner is not empowered to exercise revisional powers in every case merely because inquiries could have been made more extensively. The material on record did not disclose a prima facie demonstration that the assessing officer's order was erroneous and prejudicial to the revenue; absent such demonstration or necessity for further enquiries the exercise of revisional jurisdiction was unjustified. The Tribunal's conclusion that the Assessing Officer had made reasonable inquiries and that the Principal Commissioner acted casually is supported by the record and warrants no interference. [Paras 4, 5, 6]

The revisional order under Section 263 is unsustainable and is set aside; the Tribunal's allowance of the assessee's appeal is upheld.

Reasonableness of enquiries by the Assessing Officer into source of funds - Prima facie demonstration of error and prejudice to the revenue - Assessing Officer's enquiries into the source of the loan were adequate for the purposes of the assessment and did not justify revisional interference. - HELD THAT: - The Principal Commissioner criticised the assessing officer for not conducting detailed enquiries into the source of funds of the lender. The Tribunal, however, recorded that the Assessing Officer had made inquiries and the assessee furnished material particulars during assessment proceedings; there was no prima facie material showing the transactions to be bogus. The High Court concurs that the AO had not 'sleepwalked' and that mere dissatisfaction of the Commissioner with the manner of inquiry is insufficient to invoke Section 263. [Paras 3, 4, 6]

The AO's inquiries were reasonable and the ground for revisional action does not arise.

Prospective application of Explanation 2(a) to Section 263 - Explanation 2(a) to Section 263, being effective from 01.06.2015, could not be applied to the assessment year in question. - HELD THAT: - The Tribunal noted that the Principal Commissioner invoked Explanation 2(a) which came into force from 01.06.2015; that provision was not applicable to the assessment year under adjudication. The High Court accepted the Tribunal's view that reliance upon Explanation 2(a) did not support the revenue's case for the relevant year. [Paras 6]

Explanation 2(a) is inapplicable to the assessment year before the Tribunal and does not furnish a valid basis for revisional action.

Scope of supervisory jurisdiction and limits of revisional power - No substantial question of law arose warranting interference in the tax dispute; appeal by revenue dismissed. - HELD THAT: - Given that the tax consequence would be limited (as noted in the order) and the Tribunal's reasoning was supported by the material, the High Court found no substantial question of law meriting the High Court's intervention under the prevailing litigation policy. The Court declined to revisit the Tribunal's factual conclusions and left any broader legal challenge to an appropriate case. [Paras 7, 8]

The revenue's appeal lacks merit and is dismissed; no substantial question of law is made out in the facts of this case.

Final Conclusion: The High Court dismissed the revenue's appeal, upheld the Tribunal's order setting aside the Principal Commissioner's revisional order under Section 263 for A.Y. 2012-13, and found no substantial question of law warranting interference.

Computation of limitation under Section 153(3) of the Income tax Act - extension of assessment time limit by reference to Section 153(4) and pandemic related relaxation (TOLA) - time barred assessment - adjustment of refunds against a non existent demand - entitlement to refund with statutory interest

Computation of limitation under Section 153(3) of the Income tax Act - extension of assessment time limit by reference to Section 153(4) and pandemic related relaxation (TOLA) - time barred assessment - Final assessment order dated 13 February 2023 is barred by limitation and therefore liable to be set aside. - HELD THAT: - The Court held that the period for completion of assessment under Section 153(3) is to be computed from the date when the earlier order (the ITAT order dated 20 December 2018) was received by the statutory authority (received on 31 January 2019). Even allowing extension under Section 153(4) because of a TPO reference, and further extension by the pandemic relief enacted by TOLA, the terminal date for framing the assessment in the facts of this case was 30 September 2021. The final assessment passed on 13 February 2023 was therefore beyond the prescribed period and contravened the mandatory time limits; the respondents' contention that limitation commenced from the dismissal of the SLP was rejected as untenable. The Court accordingly set aside the impugned assessment on the ground of limitation. [Paras 14]

Assessment order dated 13 February 2023 quashed as time barred.

Adjustment of refunds against a non existent demand - requirement of existence of demand for valid adjustment - entitlement to refund with statutory interest - Adjustments made on 20 May 2022 and 02 June 2022 of refunds pertaining to AYs 2008 09, 2009 10 and 2010 11 against a perceived demand for AY 2011 12 were invalid and refunds must be recomputed and paid with interest. - HELD THAT: - The Court found that on the dates when the respondents adjusted earlier years' refunds (20 May 2022 and 02 June 2022) no subsisting demand for AY 2011 12 existed because the ITAT had set aside the original assessment on 20 December 2018 and remitted the matter for fresh adjudication. Any valid demand relating to AY 2011 12 could only have been created on or before the terminal date for assessment (ultimately 30 September 2021); no such valid demand had been raised before that date. Consequently the adjustments of refunds against a non existent demand were unlawful. The respondents were directed to re compute the refunds, taking into account that the impugned adjustments stand annulled, and to pay the amounts with statutory interest up to date of remittance. [Paras 15, 16, 17]

Impugned adjustments set aside; respondents directed to recompute and refund amounts for AYs 2008 09, 2009 10 and 2010 11 with statutory interest.

Final Conclusion: Both writ petitions allowed: the assessment order dated 13 February 2023 is quashed as time barred and the adjustments of earlier year refunds against the perceived demand for AY 2011 12 are set aside. Respondents directed to re compute and refund the amounts due, with statutory interest, and to pass the refund order within three weeks.

Ex parte assessment - Failure to file reply to show-cause notice - sufficient cause / bonafide inability - Opportunity to be heard / fresh opportunity - Remand for fresh consideration

Ex parte assessment - Failure to file reply to show-cause notice - sufficient cause / bonafide inability - Opportunity to be heard / fresh opportunity - Remand for fresh consideration - Impugned assessment order passed ex parte was liable to be set aside and matter remitted for fresh consideration in view of petitioner's pleaded bonafide inability to respond to notices. - HELD THAT: - The court examined the petitioner's pleaded reasons (paragraphs 3 to 7) for not filing replies to show-cause notices and not participating in the e-assessment proceedings, including unfamiliarity with online proceedings and delays in engaging professional assistance. Although the respondents recorded non-filing of replies, the court found the explanations to be valid and sufficient. Adopting a justice-oriented approach and without expressing any opinion on the merits of the assessment, the court granted one last indulgence by setting aside the impugned ex parte order and remitting the matter to the assessing authority for reconsideration afresh. The assessing authority was directed to issue notice, afford the petitioner an opportunity to file responses and documents, and thereafter proceed to pass appropriate orders in accordance with law; the petitioner was required to submit its response within fifteen days of receipt of the notice. [Paras 6, 7]

Impugned order dated 31.03.2021 set aside; matter remitted to respondent No.2 for fresh consideration with directions to issue notice, allow the petitioner fifteen days to submit response and documents, and proceed in accordance with law.

Final Conclusion: The petition is allowed: the ex parte assessment order for A.Y. 2018-19 is quashed and the matter is remitted to the National e-Assessment Centre for fresh consideration after issuance of notice and affording the petitioner fifteen days to file its response.

Opportunity of being heard - personal hearing - show-cause notice - discretion to conduct enquiry - interpretation of statutory silence - plain language/literal rule of interpretation

Opportunity of being heard - personal hearing - show-cause notice - interpretation of statutory silence - Whether a show-cause notice under Section 148A(b) mandatorily requires a personal hearing - HELD THAT: - Section 148A(b) requires that the Assessing Officer "provide an opportunity of being heard" by serving a notice to show cause within the specified time; the statute does not expressly include the words "and a personal hearing". Sub-section (c) requires consideration of the assessee's reply. Legislative material (the Finance Bill memorandum) likewise describes providing an opportunity of being heard and considering the reply, without expressly mandating a personal hearing. Authorities relied upon by petitioners granted personal hearings on the facts but did not decide the interpretative question of mandatory personal hearing. Consistent judicial principle is that oral or personal hearing is not an indispensable facet of natural justice where the statute is silent; whether oral hearing is required depends on statutory prescription and the tribunal's discretion. Applying the plain/literal rule, the Court will not read into Section 148A(b) a requirement of personal hearing which the legislature consciously omitted. Consequently, absence of a personal hearing does not ipso facto constitute denial of opportunity to be heard where the statute affords consideration of written replies and no statutory requirement for oral hearing exists. [Paras 18]

A personal hearing is not mandatorily required by Section 148A(b); providing and considering the show-cause notice and the assessee's written reply satisfies the statutory "opportunity of being heard", although the Department may grant a personal hearing in its discretion.

Discretion to conduct enquiry - if required - plain language/literal rule of interpretation - Whether conducting an enquiry under Section 148A(a) is mandatory before issuing a notice under Section 148 - HELD THAT: - Section 148A(a) states that the Assessing Officer shall "conduct any enquiry, if required, with the prior approval of specified authority" before issuing a notice under Section 148. The express inclusion of the words "if required" conveys legislative intent to leave the decision to conduct an enquiry to the Assessing Officer's discretion. The Court applied established principles of statutory interpretation (literal/plain meaning and giving effect to all words) and concluded that treating the verb "shall" in clause (a) as imposing an absolute mandatory duty would render the qualifying phrase "if required" meaningless. Reliance on Supreme Court authorities that validity of reopening is tested on whether there was prima facie material and that sufficiency of material is not to be examined at that stage further supports reading clause (a) as permissive. Accordingly, Section 148A(a) does not mandate a compulsory enquiry in every case; it permits an enquiry where the Assessing Officer considers it required. [Paras 27]

The conduct of an enquiry under Section 148A(a) is discretionary and not a mandatory precondition to issuance of a notice under Section 148; the words "if required" leave the matter to the Assessing Officer's judgment.

Final Conclusion: The petitions are disposed of: Section 148A(b) does not mandatorily require a personal hearing - written show-cause proceedings and consideration of the reply satisfy the statutory opportunity to be heard - and Section 148A(a) vests discretion in the Assessing Officer to conduct an enquiry (the qualifying words "if required" render enquiry permissive rather than compulsory). The departmental proceedings under Section 148 may continue, subject to the assessees being given adequate opportunity in accordance with law.

Principles of natural justice - service of show cause notice cum draft assessment order and opportunity to be heard - reopening of assessment under Section 147 read with Section 148 - faceless assessment procedure and notices under Section 142(1) - limitation under Section 153 and need to avoid lapsing of reassessment proceedings - quashing and remand for fresh adjudication

Principles of natural justice - service of show cause notice cum draft assessment order and opportunity to be heard - Impugned assessment orders dated 30.03.2022 for AY 2014-2015 and AY 2015-2016 insofar as they were passed after show cause notices cum draft assessment orders dated 26.03.2022. - HELD THAT: - The Court found that the assessments were preceded by show cause notices cum draft assessment orders dated 26.03.2022 but that insufficient time was afforded to the petitioner to respond before the impugned orders were passed on 30.03.2022. The orders were passed hurriedly, evidently to avoid lapse of reassessment proceedings due to limitation, and thus amounted to a manifest violation of the principles of natural justice. The failure to afford adequate opportunity to file a reply/representation to the draft assessment notices rendered the impugned orders unsustainable and required quashing and remand so that the petitioner may be heard afresh. [Paras 26, 27, 28]

Impugned assessment orders dated 30.03.2022 for AY 2014-2015 and AY 2015-2016 quashed; matters remitted to the first respondent for fresh adjudication after giving the petitioner opportunity to file reply/representation.

Quashing and remand for fresh adjudication - notice under Section 221(1) - Validity of the notice dated 04.07.2022 issued under Section 221(1) insofar as it relates to AY 2014-2015 and AY 2015-2016. - HELD THAT: - Since the assessments for AY 2014-2015 and AY 2015-2016 were set aside and remitted for fresh consideration on grounds of breach of natural justice, the consequential notice under Section 221(1) issued on 04.07.2022 in respect of those years was also quashed. The Court granted liberty to the Revenue to issue a fresh notice, if appropriate, subject to the outcome of the remand proceedings ordered. [Paras 29, 31]

Notice dated 04.07.2022 under Section 221(1) quashed insofar as it relates to AY 2014-2015 and AY 2015-2016, with liberty to issue fresh notice subject to remand outcome.

Notice under Section 221(1) - remand for fresh consideration - Procedure to be followed in respect of the notice dated 04.07.2022 for AY 2008-2009. - HELD THAT: - The Court did not quash the notice for AY 2008-2009 but directed the first respondent to consider the petitioner's representations dated 03.11.2016 and 14.07.2022 and pass a reasoned order within six months from receipt of the copy of the judgment. The matter relating to AY 2008-2009 was therefore left for fresh consideration by the assessing authority within the stipulated time-frame. [Paras 31, 32]

First respondent directed to consider the petitioner's representations in respect of AY 2008-2009 and pass order within six months; W.P.No.19122 of 2022 disposed insofar as AY 2008-2009.

Final Conclusion: Writ petitions challenging assessment orders dated 30.03.2022 for AY 2014-2015 and AY 2015-2016 allowed: those assessment orders quashed and remitted to the first respondent for fresh orders within six months after affording the petitioner 45 days to file reply/representation; notice dated 04.07.2022 under Section 221(1) quashed insofar as it relates to those two years; in respect of AY 2008-2009 the first respondent is directed to consider the petitioner's representations and pass orders within six months. No order as to costs.

Condonation of delay - assessment under section 143(3) of the Income-tax Act, 1961 - disallowance of expenditure claimed against miscellaneous income - burden of proof on assessee to substantiate claimed deductions - appellate power to moderate additions in absence of substantiation

Condonation of delay - Whether the delay of five days in filing the appeal should be condoned. - HELD THAT: - The Tribunal considered the assessee's explanation attributing the five day delay to change of the society's executive body and intervening holidays. The Revenue did not press objection to condonation. Having regard to these reasons, the Tribunal exercised its discretion in favour of the assessee and condoned the delay in filing the appeal. [Paras 2]

Delay of five days in filing the appeal is condoned.

Disallowance of expenditure claimed against miscellaneous income - burden of proof on assessee to substantiate claimed deductions - appellate power to moderate additions in absence of substantiation - Whether the disallowance made by the Assessing Officer and the extent of addition confirmed by the CIT(A) in respect of unexplained proportionate expenses against miscellaneous income are sustainable. - HELD THAT: - The assessee claimed proportionate expenses of Rs.1,64,676 against miscellaneous income of Rs.3,05,402 but failed to produce supporting material either before the AO or before the CIT(A). The AO made an ad hoc restriction of the deduction to 10% of the miscellaneous income, disallowing the balance. The CIT(A) reduced the disallowance and allowed expenses at 20% of the miscellaneous income after noting the absence of justification for the claimed quantum. The Tribunal found no perversity in the concurrent view of the lower authorities and observed that, in the absence of substantiation, the AO and the CIT(A) were entitled to make and moderate the ad hoc disallowance to protect revenue. Consequently the CIT(A)'s restriction of the deduction and confirmation of addition to the extent of Rs.1,03,596 were upheld. [Paras 4, 5, 7, 8]

The CIT(A)'s order restricting the deduction and confirming the addition to the extent indicated is sustained; the appeal is dismissed on merits.

Final Conclusion: The Tribunal condoned the five day delay and dismissed the appeal on merits, upholding the CIT(A)'s reduction of the AO's ad hoc disallowance and confirming the addition as recorded for A.Y.2017 18.

Tax Deduction at Source - classification of payments as fees for technical/professional services or contract payments - Assessee's liability under section 201(1) where deductee has declared receipt and paid tax - Application of CBDT guidance on maintenance/AMC payments versus technical services - Remand for fresh adjudication where material evidence was not considered

Tax Deduction at Source - classification of payments as fees for technical/professional services or contract payments - Application of CBDT guidance on maintenance/AMC payments versus technical services - Assessee's liability under section 201(1) where deductee has declared receipt and paid tax - Remand for fresh adjudication due to inadequate consideration of material evidence - Characterisation of payments made for maintenance of X Ray and CVC machines (whether taxable under the head of professional/technical fees or as contractual payments) and consequent TDS liability for AYs 2017-18 and 2019-20 - remand to Assessing Officer for fresh adjudication. - HELD THAT: - The Tribunal found that the Assessing Officer and the CIT(A) reached adverse conclusions treating the maintenance payments as fees for professional and technical services liable to higher TDS without adequately considering the assessee's contentions, supporting authorities (including CBDT circular guidance and tribunal decisions), and evidence that the payees had included the receipts in their returns and paid tax. Relying on the principle in Hindustan Coca Cola Beverage (that a deductor is not in default under section 201(1) if the deductee has shown the amounts in its return and paid tax), the Tribunal held that the lower authorities had not given proper weight to the documents and submissions placed on record (including Form 26A material yet to be uploaded/verified). In view of this omission and the contested factual/legal classification (routine AMC/maintenance falling under contractual payments versus services attracting section 194J), the Tribunal did not decide the substantive question on merits but restored the matter to the Assessing Officer to examine all evidence afresh, verify whether the payees have correctly declared and paid tax, and adjudicate TDS liability in accordance with law after giving the assessee an opportunity of being heard.

Matter restored to the file of the Assessing Officer for fresh adjudication of the TDS characterisation and liability for AYs 2017-18 and 2019-20 after considering all evidence and submissions; appeals allowed for statistical purposes.

Final Conclusion: The Tribunal has set aside the CIT(A)'s confirmation and remitted the issue of classification of maintenance payments (X Ray and CVC machines) and consequent TDS liability for AYs 2017 18 and 2019 20 to the Assessing Officer for fresh adjudication after considering the assessee's evidence and the question whether the payees have declared and paid tax; appeals disposed of as allowed for statistical purposes.

Addition/disallowance under section 69C treated as accommodation entry - deemed dividend under section 2(22)(e) - valuation of immovable property under section 50C and reference to the Departmental Valuation Officer (DVO) - requirement to call for remand report and remand for fresh examination - onus to establish shareholding/substantial interest and character of advance - assessment framed under section 144 - assessment enhancement under section 56(2)(vii) and examination of sources

Addition/disallowance under section 69C treated as accommodation entry - assessment framed under section 144 - requirement to call for remand report and remand for fresh examination - Addition of advance of Rs. 15.00 lakhs in A.Y. 2011-12 treated as accommodation entry under section 69C was not finally sustained and required fresh examination by the AO - HELD THAT: - The assessing officer passed the assessment under section 144 treating the advance from M/s Advance Technologies Ltd as an accommodation entry. Before the CIT(A) the assessee produced details and a confirmation from the payer, which the CIT(A) rejected without adequate reasoning and without seeking a remand report from the AO. The Tribunal found that the CIT(A)'s rejection lacked proper adjudicatory reasoning and that the matter therefore must be restored to the file of the AO for fresh examination. The assessee was directed to cooperate for expeditious completion of proceedings. [Paras 3]

Order of the CIT(A) set aside and issue remanded to the AO for fresh examination.

Deemed dividend under section 2(22)(e) - onus to establish shareholding/substantial interest and character of advance - requirement to call for remand report and remand for fresh examination - Addition of Rs. 14,85,000 as deemed dividend in A.Y. 2012-13 could not be sustained without examination of shareholding/substantial interest and nature of advance and therefore requires fresh enquiry by the AO - HELD THAT: - The AO invoked section 2(22)(e) solely on the basis of the assessee being a director, but section 2(22)(e) applies when the recipient holds substantial interest as a shareholder; the AO did not examine the company's shareholding at the relevant time. The assessee also asserted the advance was a normal advance given in the capacity of an employee and that she had resigned and did not hold substantial interest, but furnished no documentary proof; the character of the advance and the statutory exclusion for advances given in the course of business were not investigated. In these circumstances the Tribunal held that the CIT(A)'s confirmation could not stand and remitted the issue to the AO for fresh examination with directions to the assessee to cooperate. [Paras 4, 5]

Order of the CIT(A) set aside and issue remanded to the AO for fresh examination regarding applicability of section 2(22)(e) and nature of the advance.

Valuation of immovable property under section 50C and reference to the Departmental Valuation Officer (DVO) - assessment enhancement under section 56(2)(vii) and examination of sources - requirement to call for remand report and remand for fresh examination - Additions under sections 50C (valuation) and 56(2)(vii) in A.Y. 2013-14 could not be sustained because the CIT(A) erred in refusing reference to the DVO, relied on internet valuations from a later year, and failed to seek a remand report on sources; the matter was remitted to the AO for fresh examination - HELD THAT: - The assessee disputed the stamp duty valuation and requested reference to the DVO as contemplated by section 50C; the CIT(A) rejected that request and relied on internet valuations (from 2023) to determine value as of 2012, which the Tribunal found inconsistent with the statutory requirement. Further, the CIT(A) directed the assessee to furnish sources and rejected the explanations without calling for a remand report from the AO. The Tribunal held that refusal to refer to the DVO violated section 50C, reliance on later internet valuations was improper, and the explanations as to sources required fresh verification by the AO. Accordingly the matter was restored to the AO for fresh adjudication and directed the assessee to cooperate. [Paras 6, 7, 8, 9]

Order of the CIT(A) set aside and issues under sections 50C and 56(2)(vii) remanded to the AO for fresh examination and verification.

Final Conclusion: All three appeals are allowed to the extent that the orders of the CIT(A) are set aside and the matters in respect of A.Y. 2011-12, 2012-13 and 2013-14 are remitted to the Assessing Officer for fresh examination and verification with directions to the assessee to cooperate for expeditious completion of assessment proceedings.

Incidental or ancillary publication activity not amounting to business - onus on Revenue to prove that a trust is "carrying on business" - proviso to section 2(15) and proviso to section 13(8) - test for denial of charitable exemption where activities resemble trade

Incidental or ancillary publication activity not amounting to business - onus on Revenue to prove that a trust is "carrying on business" - proviso to section 2(15) and proviso to section 13(8) - test for denial of charitable exemption where activities resemble trade - Whether the income from printing, publishing and sale/subscription of books and magazines by the Trust is incidental to its charitable object and not a business activity falling within the proviso to section 2(15) / proviso to section 13(8), entitling the Trust to exemption under section 11. - HELD THAT: - The Tribunal accepted the assessee's case that the dominant object of the Trust is to spread the teachings and message of Rev. Pandurang Shastri Athavle and that the publication activity is in furtherance of that object. Relying on the ratio of the Hon'ble Supreme Court in Sai Publication Fund, the Tribunal applied the principle that incidental or ancillary transactions do not ordinarily amount to "business" unless the Department proves an independent intention to carry on business in the incidental activity. The Tribunal observed that mere generation of receipts or profit from sale and subscription does not, by itself, convert the publications into trade or commerce; the onus lies on the Revenue to establish that the Trust was carrying on business. Having regard to the facts - publications devoted to preaching, absence of advertising, absence of royalty payments to preachors, voluntary involvement of swadhyayees, and prior departmental treatment in earlier years - the Tribunal held that the Department had not discharged the onus of proving that the publication activity amounted to business within the meaning of the relevant provisions. Consequently, the proviso to section 2(15) and proviso to section 13(8) were held not to apply so as to deny exemption under section 11. [Paras 10, 11, 12, 13, 14]

Income from publication, sale and subscription held incidental to the Trust's charitable object and not business income; exemption under section 11 allowed and revenue appeal dismissed.

Final Conclusion: Relying on Sai Publication Fund and on the finding that publication activity was ancillary to the Trust's dominant charitable object, the Tribunal held that the Revenue failed to prove the Trust was "carrying on business"; the appeal is dismissed and exemption under section 11 is sustained for A.Y. 2015-16.

Treatment of bogus purchases as deemed income - quantification by aligning gross profit rate with genuine purchases - reopening of assessment under section 147 - penalty under section 271(1)(c) - requirement to specify limb in show cause notice - non-application of mind vitiates penalty proceedings

Treatment of bogus purchases as deemed income - quantification by aligning gross profit rate with genuine purchases - Extent of addition in respect of purchases alleged to be bogus for A.Y.2009-10 and A.Y.2012-13 - HELD THAT: - The Tribunal accepted the factual finding that purchases claimed from certain tainted parties were not substantiated and involved accommodation/bogus billing. However, it disagreed with the Assessing Officer's addition of the entire value of such purchases. Applying the principle upheld by the High Court in the cited decision, the Tribunal held that in trade cases where sales are accepted, the correct mode of quantification is to restrict the addition to the profit element by bringing the gross profit rate of the bogus/unverified purchases to the same rate as that of other genuine purchases. On this basis the Tribunal restored the matter to the file of the Assessing Officer with a direction to compute the addition accordingly (i.e., determine the profit element by aligning GP rates), leaving the quantification to be carried out by the AO in accordance with the direction given. [Paras 10, 11]

Matter restored to the Assessing Officer for computation of addition by bringing the GP rate of the bogus/unverified purchases to the same rate as that of other genuine purchases; appeals for A.Y.2009-10 and A.Y.2012-13 allowed for statistical purposes.

Penalty under section 271(1)(c) - requirement to specify limb in show cause notice - non-application of mind vitiates penalty proceedings - Validity of penalty under section 271(1)(c) for A.Y.2010-11 where the show cause notice did not specify whether penalty was for concealment of income or for furnishing inaccurate particulars - HELD THAT: - The Tribunal held that the two limbs in section 271(1)(c) - 'concealment of income' and 'furnishing of inaccurate particulars of income' - are distinct and that it was incumbent on the Assessing Officer to specify in the statutory show cause notice which limb was invoked. The SCN dated 28.12.2017 failed to strike off the inapplicable portion and thus did not clearly inform the assessee of the specific charge, resulting in non-application of mind and denial of a fair opportunity to meet the precise charge. Citing binding and persuasive authorities on the requirement of clarity in SCNs and the consequences of omnibus notices, the Tribunal concluded that the penalty proceedings were vitiated and quashed the penalty imposed. The Tribunal therefore did not adjudicate the merits of the underlying addition since jurisdictional infirmity in the SCN disposed of the penalty issue. [Paras 31, 35, 36]

Penalty under section 271(1)(c) for A.Y.2010-11 quashed for want of valid show cause notice; appeal allowed on this ground and other penalty grounds left open.

Final Conclusion: Appeals disposed: for A.Y.2009-10 and A.Y.2012-13 the matters are restored to the Assessing Officer for computation of addition by aligning the GP rate of unverified/bogus purchases with genuine purchases (appeals allowed for statistical purposes); for A.Y.2010-11 the penalty under section 271(1)(c) is quashed because the show cause notice failed to specify the limb relied upon, vitiating jurisdiction.

Registration under section 80G(5)(vi) of Income-tax Act, 1961 - Requirement of genuine need for donations where an entity has an assured source of receipts - Accumulation of funds in the form of FDRs and bank balances as a bar to 80G approval - Burden to demonstrate utilization of donations for non-recurring charitable purposes - Commercialisation and no-profit-no-loss principle in educational institutions

Registration under section 80G(5)(vi) of Income-tax Act, 1961 - Accumulation of funds in the form of FDRs and bank balances as a bar to 80G approval - Burden to demonstrate utilization of donations for non-recurring charitable purposes - Requirement of genuine need for donations where an entity has an assured source of receipts - Commercialisation and no-profit-no-loss principle in educational institutions - Approval under section 80G(5)(vi) was rightly denied to the assessee-trust - HELD THAT: - The Tribunal upheld the CIT(Exemption)'s conclusion that the trust failed to establish a cogent rationale for seeking donations and therefore was not entitled to registration under section 80G(5)(vi). The revenue authority found that the trust's major receipts derived from fees and annual charges, that it had consistently claimed depreciation and accumulated large surpluses manifested as FDRs and bank balances, and that these entrenched sources of income undermined the case for soliciting donations. The CIT(Exemption) further noted deficiencies in the applicant's submissions: absence of particulars regarding target donors, vague plans for educational expansion, lack of quantification of required finances, and no evidentiary link between claimed charitable activities and expenditures in the income and expenditure account. The order also observed that the asserted need for donations for non recurring expenditure (notably construction at specified locations) was unsupported by documentary evidence. Given these findings, and in the absence of any rebuttal or production of evidence before the Tribunal, the appellate forum sustained the denial of 80G approval. The Tribunal also accepted the concern that where educational institutions generate substantial fee receipts and accumulate funds, allowing 80G benefits could be at odds with principles against commercialisation and with the statutory purpose of encouraging donations for entities lacking assured resources.

Denial of approval under section 80G(5)(vi) sustained and the assessee's appeal dismissed.

Final Conclusion: The Tribunal affirmed the CIT(Exemption)'s refusal to grant registration under section 80G(5)(vi) on the grounds that the trust had entrenched sources of income, substantial accumulated funds, and failed to furnish evidence of need or intended utilization of donations; the appeal is dismissed.

Assessments under section 153A - Additions under section 68 - Incriminating material requirement for sustaining search-based additions - Application of the Supreme Court ratio in PCIT v. Abhisar Buildwell Pvt. Ltd.

Additions under section 68 - Incriminating material requirement for sustaining search-based additions - Application of the Supreme Court ratio in PCIT v. Abhisar Buildwell Pvt. Ltd. - Deletion of additions confirmed in assessment framed under section 153A r.w.s. 143(3) where no incriminating material was found during the search. - HELD THAT: - The Tribunal noted that the search on the group and its associates did not yield any incriminating material or documents, a fact not disputed by the Revenue. Applying the legal principle laid down by the Hon'ble Supreme Court in PCIT v. Abhisar Buildwell Pvt. Ltd., additions that are not based on incriminating material unearthed during the search cannot be sustained. Since the additions confirmed by the CIT(A) were made in the absence of any such incriminating material, the Tribunal followed the Supreme Court ratio and held that the additions must be deleted. [Paras 4, 5]

Additions deleted and appeal allowed.

Final Conclusion: The appeal is allowed: additions made by the Assessing Officer under section 153A r.w.s. 143(3) and confirmed by the CIT(A) are deleted because they were not founded on any incriminating material recovered in the search, in view of the Supreme Court precedent relied upon.

Filing of audit report/Form 10CCB - deduction under section 80-IA - due date specified u/s 139(1) of the Act - directory versus mandatory requirement - substantial compliance before framing of assessment

Filing of audit report/Form 10CCB - due date specified u/s 139(1) of the Act - directory versus mandatory requirement - deduction under section 80-IA - substantial compliance before framing of assessment - Filing of Form 10CCB along with the return by the due date specified u/s 139(1) is not a mandatory condition for claiming deduction under section 80-IA for the year under consideration. - HELD THAT: - The Tribunal held that the requirement to file the audit report in Form 10CCB along with the return by the due date under section 139(1) is directory and not mandatory. In support, the Tribunal relied on a line of High Court decisions, including the Delhi High Court in CIT v. Contimeters Electricals Pvt. Ltd., and the Madras High Court in CIT v. AKS Alloys Pvt. Ltd., which treated analogous provisions (such as section 80J(6A)) as directory and accepted filing of the audit report any time before completion/framing of assessment as substantial compliance. The Tribunal noted that other High Courts (Bombay, Gujarat, Punjab & Haryana, Calcutta, Allahabad, Uttarakhand, Karnataka) have taken a similar view. Applying these precedents to the facts - where the assessee filed Form 10CCB with a revised return before assessment was completed - the Tribunal concluded that the statutory condition was satisfied and the deduction under section 80-IA ought not to have been disallowed.

Assessee's claim for deduction under section 80-IA is allowable because filing Form 10CCB by the time before framing of assessment constitutes compliance; the requirement to file it with the original return by the due date is directory.

Final Conclusion: Appeal allowed. The AO is directed to allow the deduction claimed under section 80-IA for AY 2019-20, the filing of Form 10CCB with the revised return before completion of assessment being held to satisfy the statutory requirement.

Jurisdiction of Directorate of Revenue Intelligence to issue and adjudicate show cause notices - effect of Canon India Pvt. Ltd. on DRI proceedings - illegality of delayed adjudication of show cause notice - interim stay of show cause notice pending adjudication - review and challenge to Finance Act, 2022

Jurisdiction of Directorate of Revenue Intelligence to issue and adjudicate show cause notices - effect of Canon India Pvt. Ltd. on DRI proceedings - interim stay of show cause notice pending adjudication - Show cause notice issued by the Directorate of Revenue Intelligence prima facie attracted the principle in Canon India Pvt. Ltd. and could not be validly adjudicated by DRI; interim stay granted. - HELD THAT: - The Court examined the impugned show cause notice issued by the Directorate of Revenue Intelligence and, having regard to the Supreme Court's decision in Canon India Pvt. Ltd., was prima facie of the view that the DRI did not possess jurisdiction to adjudicate the notice. The Court noted similar reasoning and interim relief granted in Parvez Shaikh and found substance in the petitioner's contention that Canon India applies to the present proceedings. On that basis the Court stayed the show cause notice pending final disposal of the petition. The Court recorded that aspects relating to review proceedings and challenges to the Finance Act, 2022 before the Supreme Court remain live and may be considered by the parties, but this did not preclude the interim relief granted here. [Paras 6, 10, 12, 14]

The show cause notice dated 13th October 2003 issued by DRI shall remain stayed pending hearing and final disposal of the petition; respondents to file reply within eight weeks; respondents may move to vacate the interim stay.

Illegality of delayed adjudication of show cause notice - interim stay of show cause notice pending adjudication - Delayed adjudication of the show cause notice is prima facie impermissible and supports grant of interim relief. - HELD THAT: - Relying on this Court's decision in Coventry Estates Pvt. Ltd., the Court observed that undue delay in adjudicating a show cause notice can render the adjudication process illegal. The petitioner demonstrated that, despite remand by the Appellate Tribunal and receipt of that order in December 2014, final adjudication had not been completed. In view of the combined force of delay and the jurisdictional objection under Canon India, the Court found it appropriate to preserve the status quo by staying the notice pending final adjudication. [Paras 5, 7, 12]

Delayed adjudication of the show cause notice is prima facie objectionable and justifies interim stay of the notice pending final disposal of the petition.

Final Conclusion: Petition allowed in part by grant of interim relief: the show cause notice dated 13th October 2003 is stayed pending final disposal of the petition; respondents to file a reply within eight weeks; respondents permitted to apply to vacate the interim stay; matter to be listed along with Parvez Shaikh.

Provisional release of goods - binding effect of earlier judicial orders - arbitrariness in administrative action - classification of imported goods at the time of import - execution of bond to secure differential duty

Binding effect of earlier judicial orders - provisional release of goods - Respondents are bound by the earlier order permitting provisional release and cannot impose different conditions for similar imports. - HELD THAT: - The Court observed that the petitioner had earlier obtained an order in Writ Petition No. 12757 of 2023 permitting provisional release of identical imports on execution of a bond and that those orders were subsisting with no stay. In the facts, the same circumstances recur in respect of the two bills of entry dated 11.12.2023. Applying different conditions for identical goods (insisting on a bank guarantee instead of accepting the bond already furnished) would be contrary to the earlier order and impermissible. The Court therefore held that the department must adhere to the terms of the earlier judicial direction and cannot apply a different yardstick in respect of similar imports. [Paras 8]

Respondents are directed to permit clearance of the goods under the two bills of entry as the petitioner has furnished a bond.

Execution of bond to secure differential duty - arbitrariness in administrative action - classification of imported goods at the time of import - Provisional release of the goods is to be effected on the security of the bond already furnished, and withholding release or demanding a bank guarantee would be arbitrary. - HELD THAT: - Relying on the earlier findings that the goods have been consistently classified and cleared under the relevant tariff heading and that the petitioner is a regular importer, the Court held there was no justification for refusing provisional release or for imposing a bank guarantee when a bond for differential duty has been submitted. The Court characterised the department's proposal to apply different parameters as arbitrary and contrary to the earlier order, and directed immediate release of the goods within a week from availability of the order. [Paras 8]

Goods to be released within one week from the day a copy of the order is available, on the basis of the bond already furnished.

Final Conclusion: The writ petition is allowed: the respondents are directed to permit clearance of Ethanol Absolute under the two specified bills of entry on the bond already furnished and to release the goods within one week of availability of this order; the petition is disposed of with no order as to costs.

Binding effect of an advance ruling pronounced under Chapter V-B of the Customs Act - Validity period of an advance ruling after amendment to Section 28J(2) (three year limitation) - Availability of statutory appeal under Section 28KA and limitation bar to judicial review under Article 226 - Classification of imported goods is a question of fact for the Assessing Officer to decide - Remand for re adjudication and provisional release subject to payment on tariff value and security for redemption fine

Availability of statutory appeal under Section 28KA and limitation bar to judicial review under Article 226 - Binding effect of an advance ruling pronounced under Chapter V-B of the Customs Act - Writ petition challenging Order No.CAAR/Del/Isha Exim/02/2022 dated 31.03.2022 dismissed as barred by limitation and because an efficacious statutory appeal under Section 28KA existed. - HELD THAT: - The Court held that the impugned order refusing review under Section 28K was appealable under amended Section 28KA to the High Court within sixty days. The petitioner filed the writ beyond that period; therefore the High Court in exercise of Article 226 cannot be used to substitute the statutory appellate remedy. The complainant was granted liberty to pursue the remedy under Section 28KA if advised. The Court emphasised that the power of supervisory writ cannot be converted into appellate jurisdiction where a statutory appeal exists. [Paras 33, 34, 41, 42, 43]

W.P.No.30426 of 2022 stands dismissed; liberty to file appeal under Section 28KA granted.

Validity period of an advance ruling after amendment to Section 28J(2) (three year limitation) - Binding effect of an advance ruling pronounced under Chapter V-B of the Customs Act - Advance Ruling No.AAR/44/Cus/02/2017 remains binding on parties and customs authorities and, after amendment, advance rulings have a limited validity of three years from the date specified in the proviso unless modified under Section 28K. - HELD THAT: - The Court explained that an advance ruling pronounced under Chapter V B binds the applicant and the Customs authorities as per Section 28J(1). The amendment introduced by Section 92 of the Finance Act, 2022 curtailed the duration by providing that such rulings remain valid for three years (or until change of law/facts), with the proviso specifying the reckoning date for existing rulings. Hence Ruling No.AAR/44/Cus/02/2017 continues to bind until it is validly annulled or until the three year period, as applicable, expires. [Paras 21, 23, 24, 25, 26]

The AAR ruling of 31.03.2017 remains binding and its continued operation is governed by the amended Section 28J(2) (three year validity), unless annulled under Section 28K.

Classification of imported goods is a question of fact for the Assessing Officer to decide - Whether the imported consignments are classifiable under Sub Heading 2106 90 30 or residuary Sub Heading 0802 80 90 is a question of fact to be determined by the Assessing Officer by physical/chemical examination and application of commercial parlance. - HELD THAT: - The Court observed that classification for the consignments in issue depends on factual determination - including laboratory examination and scrutiny of the manufacturing/processing - and that the High Court should not decide such factual classification while the AAR ruling remains in force. The Assessing Officer must ascertain if the imports fall within the scope of the AAR ruling or within the residuary heading. [Paras 52, 53, 54, 55, 56]

Classification is to be determined by the Assessing Officer; the Court declined to decide the factual classification.

Remand for re adjudication and provisional release subject to payment on tariff value and security for redemption fine - Order in Original No.15/2023 Gr.1 dated 06.02.2023 and the Provisional Release Order No.33/2023 Gr.1 dated 27.03.2023 were set aside/remitted; consignments directed to be provisionally released on payment of customs duty on the tariff value under Notification No.68/2022 Customs(NT) and on furnishing security to secure any redemption fine. - HELD THAT: - The Court held that even if the consignments are ultimately classified under the residuary Areca nut heading and are subject to import restrictions, provisional clearance may be granted on payment of customs duty computed on the tariff value fixed by Notification No.68/2022 Customs(NT) dated 12.08.2022. Consequently, absolute confiscation need not be ordered. The matter of adjudication on the Show Cause Notices was remitted for re adjudication and provisional release was ordered subject to payment of duties and such security as the authorities may require to protect revenue interests. [Paras 65, 69, 70, 71, 72]

Impugned OIO and Provisional Release Order quashed/remitted; goods to be provisionally cleared on payment of duty on tariff value and furnishing security; OIO remitted for re adjudication.

Binding effect of an advance ruling pronounced under Chapter V-B of the Customs Act - Remand for re adjudication and provisional release subject to payment on tariff value and security for redemption fine - Writ petitions challenging the Show Cause Notices are to be disposed of in accordance with the Court's observations and related petitions concerning the same bills of entry stand disposed/remitted as indicated. - HELD THAT: - The Court directed that the writ petitions listed (challenging the Show Cause Notices and related provisional release orders) be disposed in line with the determinations made: the assessing authorities must adjudicate in light of the AAR ruling's current status, the amended statutory position, and the directions for provisional release on payment of duty on tariff value and provision of security. Where an OIO related to the same bill was remitted, associated petitions were to be disposed or dismissed accordingly. [Paras 2, 3, 5, 43, 72]

Writ petitions listed are disposed/ remitted in accordance with observations; W.P.Nos.26225 and 27828 disposed in view of other orders.

Final Conclusion: The High Court dismissed W.P.No.30426/2022 as time barred and observed the correct statutory appellate remedy under Section 28KA; held that the AAR ruling of 31.03.2017 remains binding subject to the amended three year validity and unless annulled; remitted the adjudication under the impugned Order in Original and directed provisional release of the consignments on payment of customs duty computed on the tariff value under Notification No.68/2022 Customs(NT) and on furnishing security to protect revenue, and disposed the remaining writ petitions in accordance with these directions.

Illegal seizure of goods - release of seized goods - abuse of powers by excise officials - vilification and reputational injury to traders - duty to exercise statutory powers bona fide and in public interest - inquiry into conduct of public servants - departmental and criminal proceedings against officials

Illegal seizure of goods - release of seized goods - vilification and reputational injury to traders - Seizure of petitioners' ethanol and vehicle despite earlier court orders permitting clearance was unjustified and the goods were to be released forthwith. - HELD THAT: - The Court recorded that goods which had been cleared under its earlier orders were nevertheless seized on 11 December 2023. Having considered prior concurrent orders holding that the goods did not fall within the Bombay Prohibition Act and the materials placed before it (including newspaper reports and photographs), the Court reached a prima facie conclusion that the seizure was wrongful and that the petitioners had suffered illegal detention and damage to market standing and reputation. On instructions from the State, the Court accepted the department's statement that it would not continue the seizure and directed immediate release of the seized goods and vehicle. The Court observed that excise powers must be exercised with caution and in public interest, and that officials cannot act in a manner that vilifies traders or disregards binding court orders. [Paras 13, 14, 23, 24, 25]

The seized goods and vehicle are to be released forthwith to the petitioners; the petition is disposed of in view of the respondents' statement for release.

Abuse of powers by excise officials - duty to exercise statutory powers bona fide and in public interest - inquiry into conduct of public servants - departmental and criminal proceedings against officials - A prima facie finding was recorded that excise officials acted without bona fides and at the behest of private interests, and an inquiry into their conduct was directed; the inquiry may lead to departmental or criminal action and interim measures if warranted. - HELD THAT: - The Court, on available materials and submissions (including interventions and media coverage), formed a prima facie opinion that the concerned Excise officials may have abused statutory powers and acted to the detriment of the petitioners' rights and reputation. To restore confidence and examine possible collusion with private parties, the Court directed the Additional Chief Secretary to hold an inquiry into the role of the officials and any private parties involved, to consider allegations in media reports, and to complete the inquiry within three weeks. The Court empowered the Additional Chief Secretary to record statements, recommend suspension pending inquiry where prima facie material exists, and, if warranted, initiate appropriate civil and criminal proceedings against officials. [Paras 17, 19, 20, 21, 22]

The Additional Chief Secretary is directed to conduct an inquiry into the conduct of the concerned officials and involved private parties, complete it within three weeks, place the report before the Court, and take/all recommend departmental or criminal action as warranted, including interim suspension if prima facie material exists.

Final Conclusion: The Court found the seizure of the petitioners' goods to be prima facie illegal, ordered immediate release of the goods and vehicle, disposed of the petition in view of that release, and directed the Additional Chief Secretary to inquire into the conduct of the excise officials and any private parties, with power to recommend departmental or criminal action and interim measures; the inquiry report is to be placed before the Court within three weeks.

Appellate power to review and re-appreciate evidence in appeals against acquittal - double presumption in favour of the accused - requirement of valid sanction for prosecution under statutory scheme - proof of seizure and production of material objects as essential for conviction - need to establish ownership and mens rea for offences under the Customs Act

Appellate power to review and re-appreciate evidence in appeals against acquittal - double presumption in favour of the accused - Whether this Court ought to interfere with the trial Court's acquittal of the respondents. - HELD THAT: - The Court applied settled principles that an appellate court has full power to review, re appreciate and reconsider evidence in an appeal against acquittal but must bear in mind the double presumption favouring the accused; if two reasonable conclusions are possible the appellate court should not disturb the trial court's finding. The Court examined whether the trial court's view was a reasonably possible view on the evidence and found that the prosecution had not proved the case beyond reasonable doubt for reasons set out in the subsequent issues. In the circumstances, there was no substantial or compelling reason to reverse the acquittal. [Paras 11, 16]

The appeal is dismissed; there is no basis to interfere with the trial Court's acquittal.

Requirement of valid sanction for prosecution under statutory scheme - proof of seizure and production of material objects as essential for conviction - need to establish ownership and mens rea for offences under the Customs Act - Whether the prosecution proved the offences under Section 135(1)(a)(ii) read with Section 135A of the Customs Act against the respondents. - HELD THAT: - On review of the evidence the Court found multiple deficiencies fatal to the prosecution. The order of sanction was not proved by calling the sanctioning authority for examination; the prosecution relied on marking the sanction order through P.W.2. Independent witnesses at the scene of seizure were not examined. The alleged sandalwood was stored in a godown belonging to one Kesavan, who was not made an accused nor examined, and ownership of the seized material was not established. No expert opinion was produced to identify the material as sandalwood and there was no evidence to show intention to export clandestinely to evade customs duty or that forged documents were used. Given these lacunae, the prosecution failed to establish the essential ingredients, including ownership and mens rea, for conviction under the Customs provisions. [Paras 11, 12, 14]

The prosecution failed to prove the charges beyond reasonable doubt; the trial Court's acquittal is upheld.

Final Conclusion: The Court dismissed the criminal appeal, upholding the trial Court's acquittal because the prosecution failed to prove sanction, seizure, ownership and requisite intention; accordingly there was no basis to overturn the acquittal.

Appellate interference with acquittal - presumption of innocence and double presumption - standard of proof beyond reasonable doubt - reappreciation of evidence in appeal against acquittal - mahazar and production of seized material - sanction for prosecution - ownership and identification of seized goods

Appellate interference with acquittal - reappreciation of evidence in appeal against acquittal - presumption of innocence and double presumption - standard of proof beyond reasonable doubt - Whether the appellate court was justified in reversing the trial court's acquittal or whether the trial court's view was a reasonably possible view warranting preservation of the acquittal. - HELD THAT: - The Court reviewed settled principles governing appeals against acquittal, including the appellate power to re-appreciate evidence but subject to the double presumption in favour of the accused and the rule that if two reasonable conclusions are possible the acquittal should not be disturbed. Applying these principles to the material on record, the Court found the prosecution failed to prove the offences beyond reasonable doubt. The Trial Court's findings - notably that there was no evidence establishing the accused as customs house agents who packed and attempted clandestine export, no proof of forged documents or intention to evade customs duty, and absence of proof linking ownership of the sandalwood to the respondent - constituted a reasonably possible view. The appellate court therefore had no substantial and compelling reason to overturn that view. The Court further observed that the Supreme Court's earlier remand left questions of law and fact open but did not supplant the requirement that the prosecution must establish guilt beyond reasonable doubt before interference with an acquittal could be sustained. [Paras 10, 11, 13, 14]

The appellate interference with the acquittal was not justified; the Trial Court's acquittal was a reasonably possible view and is upheld.

Mahazar and production of seized material - sanction for prosecution - ownership and identification of seized goods - standard of proof beyond reasonable doubt - Whether defects in seizure formalities, non-production of material objects, non-examination of sanctioning authority, and lack of proof of ownership/identity of seized sandalwood vitiated the prosecution case. - HELD THAT: - The Court examined evidentiary defects relied upon by the Trial Court: non-production of the seized materials before the Trial Court, absence of independent witnesses to the seizure, failure to produce expert confirmation that the seized items were sandalwood, marking of the sanction order through P.W.4 without examining the sanctioning authority, and lack of evidence establishing ownership of the seized sandalwood (which was shown to be in a godown owned by a third person not charged). These deficiencies meant the prosecution did not establish the essential ingredients of the offences, including intention to evade customs duty and the identity/ownership of the goods. The Court held that such lacunae were fatal to the case and supported the acquittal. [Paras 11]

The defects in seizure, non-production and identification of the seized goods, and absence of sanctioning authority's evidence fatally weakened the prosecution case; the Trial Court's acquittal on these grounds stands.

Final Conclusion: The Criminal Appeal is dismissed. The Trial Court's acquittal is upheld because the prosecution failed to prove the charged offences beyond reasonable doubt, and there were no substantial and compelling reasons to disturb the acquittal.

Extended limitation period under Section 28(4) of the Customs Act - Suppression, wilful mis-statement and intention to evade duty - Classification dispute and reliance on Explanatory Notes - Time barred demand and consequences for duty, interest, penalty and confiscation

Extended limitation period under Section 28(4) of the Customs Act - Suppression, wilful mis-statement and intention to evade duty - Whether the extended limitation period under Section 28(4) could be invoked for demands in respect of imports under Bills of Entry dated 04.02.2010 and 18.03.2010. - HELD THAT: - The Tribunal determined the appeal on limitation without adjudicating the substantive classification dispute. It found that all relevant documents and information were submitted by the appellant at the time of import and that the proper officer had examined the goods and allowed clearance after assessment. The subsequent reliance by Revenue on Explanatory Notes (which are for officers' guidance and not part of chapter notes) did not amount to newly discovered clinching evidence of suppression. The record showed that DRI had investigated and issued an earlier SCN only in respect of a later bill, and the facts relating to the earlier bills were within the knowledge of Revenue when the first DRI proceedings occurred. The Tribunal applied the established principle that invocation of the extended period requires evidence of deliberate suppression or wilful mis-statement with intent to evade duty; mere change of view by another authority or post clearance reclassification does not satisfy that standard. In the absence of credible independent evidence of deliberate suppression or fraud, the extended period could not be legally invoked in this case, and the demand was time barred.

Extended period under Section 28(4) could not be invoked; the demand in respect of the specified Bills of Entry is time barred.

Time barred demand and consequences for duty, interest, penalty and confiscation - Classification dispute and reliance on Explanatory Notes - Whether the duty demand with interest, penalties and redemption fine (in lieu of confiscation) could be sustained once the demand was held time barred. - HELD THAT: - Having held the demand to be hit by limitation, the Tribunal concluded that all consequential actions dependent on a valid duty demand also fell. The Tribunal observed that where extended limitation cannot be invoked, associated measures - recovery of differential duty, interest, imposition of penalties and confiscation/redemption fines - cannot be sustained. The Tribunal therefore set aside the order confirming duty, interest, penalties and redemption fine without deciding the substantive classification question.

Consequential imposition of differential duty, interest, penalties and redemption fine set aside as the underlying demand is time barred.

Final Conclusion: The appeal is allowed on the ground of time bar: the extended limitation period under Section 28(4) was not attracted, and the demand for differential duty with interest and the consequent penalties, confiscation/ redemption fine are set aside.

Amendment of shipping bills under Section 149 of the Customs Act - validity of Board Circular No. 36/2010 prescribing a three month limitation for amendment - limitation/reasonable time for seeking amendment of export documents - retrospective application of amendment to Section 149 and temporal applicability of statutory time limits

Amendment of shipping bills under Section 149 of the Customs Act - validity of Board Circular No. 36/2010 prescribing a three month limitation for amendment - limitation/reasonable time for seeking amendment of export documents - Rejection of the appellant's request to amend shipping bills on the ground that it was filed beyond the three month period prescribed in Board Circular No.36/2010. - HELD THAT: - The Tribunal held that, for the period in question, Section 149 did not prescribe a statutory time limit for seeking amendment of shipping bills, and therefore a Board Circular could not impose a substantive limitation which effectively negatived the statutory power to amend. The Tribunal followed its earlier decision in M/s. Autotech Industries (India) Pvt. Ltd., which recognised that while amendments should be sought within a reasonable time, no specific statutory limitation existed then and excessive delays could be rejected on the basis of inordinate delay; and it also relied on the High Court of Bombay's reasoning in Colossustex Pvt. Ltd. that the Circular could not be elevated into binding regulations and could not validly curtail the exercise of powers under Section 149 as it stood prior to the later statutory amendment. The Tribunal further noted that the one year period introduced by Notification No.11/2022 Cus.(NT) with effect from 22.02.2022 was not applicable to shipping bills filed prior thereto. Applying these principles to the facts, the Tribunal concluded that the Original Authority's rejection solely on the basis of Board Circular No.36/2010 was not legally sustainable.

Impugned order rejecting the amendment request on the ground of the three month Circular is set aside; the appeal is allowed with consequential relief as per law.

Final Conclusion: The Tribunal allowed the appeal, holding that the rejection of the amendment request based solely on Board Circular No.36/2010 was unjustified where Section 149 then contained no statutory time limit; the Original Authority's order is set aside and consequential relief granted as per law.

Duty to exercise due diligence by Customs Broker - Liability of Customs Broker for facilitation of fraudulent exports - Verification of IEC, GSTIN and client identity as regulatory obligation - Mens rea and aggravating conduct in licence revocation and penalty - Principle of proportionality in imposing revocation of licence - Time bar and limitation in initiation of proceedings based on offence report - Principles of natural justice and opportunity of hearing

Verification of IEC, GSTIN and client identity as regulatory obligation - Duty to exercise due diligence by Customs Broker - Liability of Customs Broker for facilitation of fraudulent exports - Compliance with Regulation 10(a), (d), (e) and (n) of CBLR, 2018 and validity of revocation of Customs Broker licence, forfeiture of security deposit and imposition of penalty. - HELD THAT: - Tribunal accepted the adjudicating authority's findings that investigations and recorded statements establish that the appellant relied on a third party (Shri Kultar Singh), did not independently verify IECs or the existence and identity of the six exporters, suggested the description used in export documents, received additional cash payments without bills and was shown samples of the goods prior to export. Those facts demonstrate failure to verify IEC/GSTIN and client functioning as required under the CBLR and active facilitation of the fraudulent exports. On that basis the Tribunal held that the appellant contravened Regulation 10(a), (d), (e) and (n) and that the revocation, forfeiture and penalty imposed flowed from those contraventions. The Tribunal therefore found no error in the adjudicating authority's conclusion upholding the regulatory obligations and consequent sanction. [Paras 17, 18, 22, 23]

The adjudicating authority correctly found contravention of Regulation 10(a), (d), (e) and (n) of CBLR, 2018; revocation of licence, forfeiture of security and penalty are sustained.

Time bar and limitation in initiation of proceedings based on offence report - Whether the revocation proceedings were barred by limitation/time bar. - HELD THAT: - The Tribunal recorded that the show cause notice in the present matter was issued within 90 days of the offence report received in October 2019 and distinguished earlier, separate orders and investigations from 2014-2016 which related to different subjects. On that factual basis the Tribunal rejected the contention that the revocation proceeding was time barred. [Paras 15]

The challenge based on time bar is rejected; proceedings were not barred.

Principles of natural justice and opportunity of hearing - Whether the impugned order was passed ex parte in violation of natural justice. - HELD THAT: - The Tribunal examined the adjudicating authority's hearing schedule and the appellant's attendance. Personal hearing opportunities were granted and dates recorded; although the appellant sought adjournment and some representatives attended, the appellant did not appear on the scheduled dates. On those facts the Tribunal concluded that the assertion of an ex parte order in violation of natural justice was not established. [Paras 16]

The order was not invalid for being passed ex parte; principles of natural justice were not breached.

Mens rea and aggravating conduct in licence revocation and penalty - Principle of proportionality in imposing revocation of licence - Whether mens rea existed and whether revocation was disproportionate given the appellant's conduct. - HELD THAT: - The Tribunal relied on recorded statements and admissions that the appellant suggested the description of goods, was shown samples, and received unbilled cash payments from exporters. Those circumstances were held to demonstrate deliberate facilitation and culpable knowledge (mens rea). The Tribunal acknowledged that revocation is a grave penalty and must meet proportionality, but concluded that active connivance and receipt of secret consideration made revocation and penalty commensurate with the misconduct. [Paras 19, 22]

Mens rea and aggravating conduct established; revocation and penalty are not disproportionate in the facts of this case.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the adjudicating authority's findings that the Customs Broker had failed to exercise required due diligence, actively facilitated fraudulent exports and therefore breached Regulation 10(a), (d), (e) and (n) of CBLR, 2018; the revocation of licence, forfeiture of security deposit and imposition of penalty were sustained, the proceedings were not time barred and no breach of natural justice was made out.

Mandatory nature of time-limits in regulatory proceedings - Customs Brokers Licensing Regulations, 2018 - compliance with prescribed timelines - Consequences of non-compliance with procedural time-limits - perpetuation of suspension - Validity of inquiry report and subsequent orders when timelines breached - Board Circular No. 9/2010 - overall time-frame for suspension/revocation proceedings

Mandatory nature of time-limits in regulatory proceedings - Customs Brokers Licensing Regulations, 2018 - compliance with prescribed timelines - Time-limits prescribed under the Customs Brokers Licensing Regulations, 2018 are mandatory and not merely directory. - HELD THAT: - The Tribunal examined earlier decisions of this Court and other High Courts and Coordinated Benches which have held that the staged 90-day limits (for issuance of show cause notice, preparation/submission of inquiry report and passing of final order) and the overall timetable envisaged by Board Circular No. 9/2010 are mandatory. The court rejected the contention that absence of an express statutory consequence in the Regulations renders the timelines directory, reasoning that the obvious and intended consequence of non-compliance is perpetuation of suspension and irremediable prejudice to the licensee's business. Reliance was placed on precedent holding that an inquiry report prepared or submitted beyond the prescribed period cannot be treated as a valid report and that follow-up proceedings based on such report are vitiated. The Tribunal accordingly concluded that the timelines in CBLR, 2018 must be complied with mandatorily. [Paras 4]

The time-limits in CBLR, 2018 are mandatory and must be observed.

Validity of inquiry report and subsequent orders when timelines breached - Consequences of non-compliance with procedural time-limits - perpetuation of suspension - Whether the departmental failure to comply with the timelines in the present case vitiates the proceedings and warrants relief to the appellant. - HELD THAT: - The Tribunal applied the mandatory-timelines principle to the facts: the show cause notice, inquiry report and final order were each issued beyond the respective 90-day periods as set out in the judgment's tabulation (delays identified against Regulation 17(1), 17(5) and 17(7)). Having found breaches of the prescribed time-limits and in the absence of any binding contrary decision from the Gujarat High Court or any superseding Board circular, the Tribunal held that the departmental actions could not be continued and that the suspension was therefore bad in law. The Tribunal expressly did not adjudicate other merits but granted relief on the limitation ground, observing that the lapse on the part of the authority precluded further proceedings under the Regulations. [Paras 4, 5]

Departmental non-compliance with the CBLR time-limits vitiated the proceedings; the appeal is allowed and suspension is revoked (relief granted on limitation ground).

Final Conclusion: The Tribunal held that the time-limits prescribed under the Customs Brokers Licensing Regulations, 2018 are mandatory; because the authority failed to comply with those timelines in the present case (as tabulated in the order), the proceedings based on the belated acts were vitiated and the appeal was allowed, with revocation of the suspension (relief granted on the limitation ground without expressing a view on merits).

Validity of demand of IGST after provisional assessment where IGST and interest were paid prior to finalization - confiscation and redemption fine in absence of seizure or provisional release under bond - penalty for removal of goods without out of charge where payment of IGST was subsequently made - extended period of limitation for demand where there was no short payment

Validity of demand of IGST after provisional assessment where IGST and interest were paid prior to finalization - extended period of limitation for demand where there was no short payment - Demand of IGST and invocation of extended period quashed as unjustified where IGST and interest were paid before finalisation of provisional assessment and out of charge was later granted - HELD THAT: - The Tribunal found that the importer filed a provisional bill of entry before the new GST regime took effect, the vessel arrived after GST commencement, and on becoming aware of IGST liability the importer recalled the entry, paid IGST and interest and the bill was finally assessed with out of charge granted. There was no evidence of mala fide or short payment; the payment of IGST and interest was made prior to finalisation and was appropriated on final assessment. In these circumstances initiation of fresh demand proceedings invoking extended period was unwarranted and Section 28(4) could not be invoked to sustain the impugned demand.

Impugned demand of IGST (and invocation of extended period) set aside.

Penalty for removal of goods without out of charge where payment of IGST was subsequently made - Penalty / confiscation imposed for alleged removal without out of charge and related penal consequences are unsustainable in the facts of the case - HELD THAT: - The Tribunal noted that removal and discharge occurred with the knowledge and permission of customs officers during a transitional period, and the importer promptly paid IGST and interest. Prior proceedings against the custodian had resulted in a reduced penalty on the basis of non intentional contravention. Given the supervisory role of customs, absence of mala fide by the importer and subsequent full payment and finalisation of assessment, initiation of penal proceedings against the importer and co noticees was held to be unwarranted.

Penalties imposed in the impugned order set aside.

Confiscation and redemption fine in absence of seizure or provisional release under bond - Confiscation and imposition of redemption fine quashed because there was no seizure or provisional release under bond - HELD THAT: - Relying on the principle that redemption fine can be imposed only where goods have been seized and provisionally released under bond, the Tribunal observed that the goods had already been cleared and consumed long before the confiscation notice; there was no seizure or provisional release on record. Consequently, confiscation and a large redemption fine could not be sustained.

Order of confiscation and redemption fine set aside.

Final Conclusion: The impugned order confirming demand, confiscation and penalties is set aside; appeals allowed.

Effective date of notification - Section 25(4) of the Customs Act - Publication and offer for sale requirement for notifications

Effective date of notification - Section 25(4) of the Customs Act - Publication and offer for sale requirement for notifications - Whether Notification No. 46/2015-Cus. took effect on 17.09.2015 (date of issue/publication) or on 21.09.2015 (date when it was offered for sale). - HELD THAT: - The Tribunal found as an undisputed factual position, evidenced by RTI information, that Notification No. 46/2015-Cus. though issued on 17.09.2015 was put on sale to the general public only on 21.09.2015. Applying the statutory mandate in Section 25(4), which contemplates that a notification shall come into force on the date of its issue for publication and shall also be published and offered for sale on that date, the Tribunal construed clause (b) to require all the specified events (issue/publication and offer for sale) for the notification to become effective. The Tribunal followed its earlier decision in Ruchi Soya Industries Ltd. Vs. Commissioner of Customs, Kandla , and relied on the line of authority (including the decisions discussed therein) holding that where the notification is offered for sale on a later date than its date of issue/publication, the later date is the effective date. Applying that principle to the present facts, the Tribunal held that the effective date of Notification No. 46/2015-Cus. is 21.09.2015, and therefore the increase of duty claimed by the revenue was not applicable to clearances where duty became payable prior to that effective date. The Tribunal set aside the impugned order and directed reassessment on the basis of the un-amended notification rate. [Paras 4, 5]

Notification No. 46/2015-Cus. came into force on 21.09.2015 (date offered for sale); impugned order set aside and appeals allowed with consequential relief.

Final Conclusion: The Tribunal held that, in view of Section 25(4) and the RTI evidence that the notification was offered for sale on 21.09.2015, Notification No. 46/2015-Cus. became effective on 21.09.2015 and not on 17.09.2015; accordingly the appellants were entitled to reassessment applying the un-amended rate and the appeals were allowed.

Right to cross-examination - natural justice - scope of due diligence of a Customs Broker in verification of IEC/GSTIN/PAN - mandatory time limits under the Customs Broker Licensing Regulations, 2018 - maintainability of writ petition despite availability of alternative statutory remedy - appeal remedy to Customs, Central Excise & Service Tax Appellate Tribunal under Section 129A

Maintainability of writ petition despite availability of alternative statutory remedy - appeal remedy to Customs, Central Excise & Service Tax Appellate Tribunal under Section 129A - Whether the writ petition under Article 226 is maintainable despite the availability of a statutory appeal before CESTAT - HELD THAT: - The Court held that availability of a statutory alternative remedy does not oust the jurisdiction of the High Court to entertain a writ petition; entertainability is discretionary but mere non pursuit of an alternative remedy is not an absolute bar. As the controversy raised was essentially a question of law and did not involve disputed questions of fact, the writ petition was held maintainable and appropriately entertainable notwithstanding the remedy under Section 129A before CESTAT. [Paras 8]

Writ petition is maintainable and may be entertained despite an alternative appeal being available, because the dispute is essentially one of law.

Right to cross-examination - natural justice - Whether denial of the petitioner's request to cross-examine witnesses whose statements were relied upon vitiated the adjudication - HELD THAT: - Regulation 17(4) recognises a right to cross examine witnesses whose statements are relied upon and requires written reasons where that right is denied. The Inquiry Officer declined permission for cross examination without recording any reasons and the Commissioner upheld the inquiry despite this omission. The Court relied on binding precedents establishing that denial of an opportunity to cross examine persons whose adverse statements are relied upon vitiates the proceedings unless exceptional circumstances (e.g., witness dead, unavailable for reasons beyond control) are shown. In the present case no such reasons were recorded, and the petitioner was thereby prejudiced. [Paras 16, 18, 21, 22]

Denial of opportunity to cross examine without recorded reasons violated principles of natural justice and vitiated the revocation proceedings.

Mandatory time limits under the Customs Broker Licensing Regulations, 2018 - Whether the time limits prescribed under Regulation 17 of CBLR, 2018 (and the Board's Circular prescribing an overall nine month limit) are mandatory - HELD THAT: - The Court observed that the timelines in Regulation 17 for issue of show cause notice, submission of inquiry report and passing of final orders are mandatory and not directory. The Board's Circular prescribing an overall nine month period from receipt of the offence report for completion of revocation proceedings was noted as prescribing cumulative time limits for stages of the process. The Court recorded the timelines in the instant case (offence report dated 11.08.2021; receipt 18.11.2021; show cause 05.01.2022; inquiry forwarded 04.04.2022) while addressing the procedural framework. [Paras 9]

Time limits under Regulation 17 (and the Board's Circular prescribing an overall nine month limit) are mandatory.

Scope of due diligence of a Customs Broker in verification of IEC/GSTIN/PAN - Whether a Customs Broker is obliged to undertake an independent background verification of an exporter beyond relying on system generated IEC/GSTIN details and KYC available from statutory portals - HELD THAT: - The Court relied on precedent holding that a Customs Broker acts as a processing agent and may proceed on the basis that issuance of an IEC/GSTIN follows appropriate background checks by relevant authorities; it is not onerous to require the CHA to perform a separate, full background probe of the exporter. The Department did not contend that IEC/GSTIN/PAN/Authorized Dealer Code were not genuine; reports of later GST enquiries showing non existence at the time of enquiry (conducted months after export) did not establish non existence at the date of export. On these grounds, the Commissioner erred in concluding the CHA failed in the mandated verification. [Paras 19, 20]

A Customs Broker is not obliged to undertake an additional independent background verification beyond the system generated IEC/GSTIN/PAN checks; the petitioner cannot be held liable merely because exporters were later found untraceable.

Final Conclusion: Writ petition allowed. The revocation of the petitioner's Customs Broker licence and the penalty imposed are quashed and set aside insofar as they revoke the licence and levy penalty; the adjudication was vitiated by denial of the right to cross examination and misapplication of the regulatory obligations.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Liability of directors and officers during corporate insolvency - Executability of orders against promoters despite moratorium - Second proviso to sub Section (1) of Section 32A of the IBC - Application of P. Mohanraj and Anjali Rathi

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Liability of directors and officers during corporate insolvency - Executability of orders against promoters despite moratorium - Whether the moratorium under Section 14 of the IBC bars initiation or continuation of execution proceedings against directors/officers/promoters of a corporate debtor. - HELD THAT: - The Court held that the moratorium under Section 14 IBC operates in respect of the corporate debtor and does not automatically extend protection to directors, officers or promoters so as to preclude proceedings against them where they are otherwise liable to comply with an order passed against the company. The Court applied and approved the reasoning in P. Mohanraj and Anjali Rathi that, notwithstanding the moratorium, proceedings may be continued or instituted against natural persons who are statutorily or otherwise liable. Consequently, the existence of moratorium against the company does not, by itself, preclude execution against the opposite party individuals named in the execution application, if they are liable to abide by the decree. [Paras 8, 9, 10, 11]

Moratorium under Section 14 does not bar execution proceedings against directors/officers/promoters who are otherwise liable; execution may proceed against them.

Executability of orders against promoters despite moratorium - Second proviso to sub Section (1) of Section 32A of the IBC - Whether the execution application could be continued against the individual opposite parties in the present proceedings and what further steps are permitted. - HELD THAT: - The Court set aside the National Commission's orders declining to proceed against the individual opposite parties and remitted the execution application for fresh consideration. The Court observed that the National Commission had not adjudicated whether those individuals were under an obligation to implement the directions made against the company and therefore directed that execution proceed against them. It also permitted those individuals to raise contentions and file additional objections with supporting documents on the question of executability and liability as against them. The determination of whether the opposite party individuals are bound to implement the order is to be decided by the National Commission in accordance with law. [Paras 12, 13, 14]

Impugned orders set aside; execution remitted to the National Commission to continue against the individual opposite parties, who may file objections and have their liability determined afresh.

Final Conclusion: Appeals partly allowed; the National Commission's orders declining to proceed against the individual opposite parties are set aside and the execution applications are remitted for continuation against those individuals, who may raise objections and have their liability determined in accordance with law.

Commercial wisdom of the Committee of Creditors - limited judicial review of Committee of Creditors' decision - locus and 'aggrieved person' status of promoters under Section 61 - decision to liquidate based on absence of assets and termination of lease - compliance with Regulation 40D of the CIRP Regulations - expression of interest and resolution process steps

Commercial wisdom of the Committee of Creditors - limited judicial review of Committee of Creditors' decision - decision to liquidate based on absence of assets and termination of lease - compliance with Regulation 40D of the CIRP Regulations - Validity of the Committee of Creditors' unanimous decision to liquidate the corporate debtor and whether the Adjudicating Authority's liquidation order was interferable - HELD THAT: - The Tribunal held that a unanimous (100%) commercial decision of the Committee of Creditors to liquidate, taken after noting that the sole leased asset had been terminated and no viable resolution was available, falls within the CoC's commercial wisdom and is subject only to limited judicial review. The record shows deliberation in CoC meetings, consideration of the lease termination, attempts to negotiate renewal, and the RP's assessment that no resolution could reasonably be achieved; Regulation 40D factors and Section 33(2) matrix were considered. In these circumstances, the Adjudicating Authority's order directing liquidation was free from legal error and not to be disturbed by the Tribunal. [Paras 71, 72, 73, 77, 78]

The Committee of Creditors' unanimous decision to liquidate was valid; the Adjudicating Authority's liquidation order is sustainable and not interfered with.

Locus and 'aggrieved person' status of promoters under Section 61 - expression of interest and resolution process steps - Whether the appellants (promoters/shareholders) had locus to challenge the liquidation order as 'aggrieved persons' and whether they were entitled to an opportunity of hearing before liquidation - HELD THAT: - The Tribunal observed that the IBC does not confer on promoters/shareholders a legal or vested right to oppose a liquidation order or to be afforded a hearing at the time of passing such order. The appellants were not characterised as 'aggrieved persons' within the parameters of Section 61 in the facts of this case. The RP and CoC had noted the appellants' representations, but statutory scheme and precedent do not mandate that promoters be heard prior to a liquidation order where the CoC has lawfully exercised its commercial wisdom. [Paras 74, 75, 76]

The appellants lacked locus as 'aggrieved persons' and were not entitled to a pre-liquidation hearing; their challenge is not maintainable on that ground.

Expression of interest and resolution process steps - commercial wisdom of the Committee of Creditors - Whether alleged procedural deficiencies in the CIRP (no valuation, no expression of interest, no sector expert assessment, forensic audit findings) amounted to material irregularity vitiating the liquidation decision - HELD THAT: - The Tribunal examined the appellants' complaints of procedural lapses - absence of a formal valuation, non-issuance of an expression of interest, and limited project assessment - but found that the CoC's decision was taken after consideration of available information, including the decisive loss of the leased asset and communications from the lessor. The court emphasised that CoC must have relevant information before exercising commercial wisdom and that a limited judicial review does not substitute the CoC's business judgment. On the material before it, the Tribunal concluded that the alleged irregularities did not amount to such material illegality as would justify setting aside the liquidation order. [Paras 67, 68, 69, 73, 77]

The alleged procedural deficiencies did not constitute material irregularity sufficient to vitiate the CoC's decision or the liquidation order.

Final Conclusion: The appeal is dismissed: the CoC's unanimous decision to liquidate the corporate debtor, taken in light of the terminated lease and absence of assets or viable resolution, was a valid exercise of commercial wisdom subject only to limited judicial review; the appellants (promoters/shareholders) lacked locus as 'aggrieved persons' to maintain the challenge, and alleged procedural irregularities did not vitiate the liquidation order.

Summary order. Civil Appeal dismissed; delay condoned and pending applications disposed of.

Condonation of delay - extended period of limitation under Section 73 of the Finance Act, 1994 - reservation of rights on withdrawal of petition - adjudicating authority to decide show cause notice after personal hearing - exclusion of time spent in petition from limitation under Section 73(4B)(b) of the Finance Act, 1994

Condonation of delay - Application for condonation of delay in filing the petition - HELD THAT: - The Court considered the application for condonation of delay and allowed it for the reasons stated in the application. As a result, delay in filing the petition has been condoned and the petition proceeded to be considered subject to subsequent orders recording withdrawal.

Delay is condoned and the condonation application is allowed.

Reservation of rights on withdrawal of petition - time to file reply to show cause notice - Withdrawal of the writ petition with reservation of the petitioner's rights and grant of time to reply to the show cause notice - HELD THAT: - In view of the respondents' preliminary objection on maintainability, the petitioner was permitted to withdraw the writ petition while expressly reserving the right to raise all legally permissible pleas, including those concerning limitation, before the adjudicating authority. The Court directed the petitioner to file a reply to the show cause notice within 30 days from the date of the order, thereby enabling the adjudicatory process to proceed on the merits before the statutory forum.

Petition dismissed as withdrawn reserving all rights; petitioner to file reply to the show cause notice within 30 days.

Extended period of limitation under Section 73 of the Finance Act, 1994 - adjudicating authority to decide show cause notice after personal hearing - Authority and procedure for adjudication of the show cause notice including invocation of the extended period of limitation - HELD THAT: - The Court did not decide the merits of whether the proviso to Section 73(1) and the extended limitation period apply. Instead, it left the question open for determination by the adjudicating authority. The adjudicating authority is directed to adjudicate the show cause notice, including the question of invocation of the extended period of limitation, in accordance with law and after affording the petitioner an opportunity of personal hearing. This constitutes a remand for fresh consideration of that issue by the statutory forum.

Adjudicating authority to decide the show cause notice, including the extended period question, after giving personal hearing; issue remanded for fresh consideration.

Exclusion of time spent in petition from limitation under Section 73(4B)(b) of the Finance Act, 1994 - Whether the time spent in the present petition is to be counted for purposes of the statutory limitation under Section 73(4B)(b) - HELD THAT: - The Court expressly clarified that it has neither considered nor commented on the merits or contentions of the parties. It further held that the time consumed by the present petition shall not be counted towards the period of limitation prescribed under Section 73(4B)(b) of the Finance Act, 1994. This directional clarification preserves the petitioner's entitlement to pursue defence on limitation grounds before the adjudicating authority without prejudice arising from the period spent in the High Court proceedings.

Time spent in this petition shall not be counted for the purpose of limitation under Section 73(4B)(b) of the Finance Act, 1994; court made no comment on merits.

Final Conclusion: The High Court allowed condonation of delay, permitted the petitioner to withdraw the writ petition with all rights reserved, directed the petitioner to file a reply to the show cause notice within 30 days, remanded the question of invocation of the extended limitation period to the adjudicating authority for decision after personal hearing, and clarified that the time spent in the petition shall not be counted towards limitation under Section 73(4B)(b) of the Finance Act, 1994.

Alternative and efficacious statutory remedy - exercise of writ jurisdiction under Article 226 - relegation to statutory appeal - entertainability of writ petition in revenue matters - prima facie satisfaction on documentary proof - exemption under Mega Exemption Notification No. 25/2012-S.T.

Alternative and efficacious statutory remedy - exercise of writ jurisdiction under Article 226 - entertainability of writ petition in revenue matters - Maintainability of the writ petition in view of availability of statutory appeal remedies - HELD THAT: - Applying the principles in Greatship (India) Ltd. and other precedents, the Court held that where an alternative and efficacious statutory remedy is available against an assessment/impugned order in revenue matters, judicial prudence requires the writ forum under Article 226 not to be invoked to bypass that remedy. The High Court must consider whether complex disputed facts, nondisclosure of material facts, delay, or other exceptional circumstances justify invocation of writ jurisdiction; absent such justification, the petitioner should be relegated to the appellate forum. The Court found no such exceptional circumstances here and relied on the cited authorities to conclude that entertainability is inappropriate when statutory remedies exist. [Paras 15, 16, 17]

Writ petition is not maintainable and is dismissed at the motion stage; petitioner is relegated to avail the statutory appeal remedy.

Prima facie satisfaction on documentary proof - exemption under Mega Exemption Notification No. 25/2012-S.T. - Whether the petitioner furnished sufficient documentary evidence to prima facie show that receipts for construction of bailey bridges were exempt from service tax - HELD THAT: - The Court examined the materials placed on record and observed that the petitioner had not registered under the CGST Act, had not filed service tax returns for the relevant period, and had not, despite earlier notices, produced adequate documentary proof before the revenue authority to establish that all receipts shown in Form 26AS related to exempted contractual receipts for bailey bridges. Although the petitioner produced a Government letter and certain documents after the demand notice, the available materials were insufficient for the Court to reach a prima facie satisfaction that the service component of the receipts was entirely exempt. In these circumstances the Court could not excuse invocation of statutory appeal in favor of entertaining a writ petition. [Paras 9, 11, 12, 13, 16]

Materials are insufficient to prima facie establish exemption; petitioner must raise the claim before the appellate/statutory forum.

Final Conclusion: Writ petition dismissed at the motion stage for want of maintainability; petitioner relegated to file the statutory appeal and other remedies, with the period from 10-6-2022 to 22-6-2022 excluded for computation of limitation; no order as to costs.

Time-bar and extended period of limitation - suppression of facts and willful mis-statement - exemption to exporter under Notification No. 31/2012 ST (reverse charge) and conditions for availment (Form EXP 1/EXP 2) - departmental duty to examine returns and raise objections

Time-bar and extended period of limitation - suppression of facts and willful mis-statement - departmental duty to examine returns and raise objections - Whether the demand for service tax was barred by limitation and whether extended period could be invoked on account of suppression of facts or willful mis-statement. - HELD THAT: - The Tribunal found that the appellant had filed EXP 2 returns and ST 3 returns for the period under audit and that the Department did not point out any deficiency or produce evidence of deliberate suppression to evade payment of service tax. The notification regime required filing of EXP 1 and half yearly EXP 2 returns and, having received EXP 2, the responsibility lay on the Department to examine the returns in a timely manner and to communicate any shortfall. In absence of any material showing deliberate omission or positive act of evasion by the appellant, the conditions for invoking the extended period of limitation were not satisfied. Reliance was placed on settled authorities that mere omission or non payment does not ipso facto amount to willful mis statement or suppression; suppression must be deliberate to attract extended limitation. Applying that principle to the facts, the Tribunal concluded that the demand could not be sustained as a demand under the proviso to the limitation provision. [Paras 8, 9, 10]

Demand is time barred; extended period cannot be invoked in absence of deliberate suppression or willful mis statement, and appeal is allowed on this ground.

Exemption to exporter under Notification No. 31/2012 ST (reverse charge) and conditions for availment (Form EXP 1/EXP 2) - Whether Notification No. 31/2012 ST exempts service tax on inward receipt of goods into the factory. - HELD THAT: - A plain reading of Notification No. 31/2012 ST shows that the exemption applies to taxable service provided to an exporter for transport by a goods transport agency from any container freight station or inland container depot to the port/airport or from place of removal to an inland container depot, container freight station, port or airport from where goods are exported. The notification does not provide exemption for receipts of goods into the factory. Therefore, availment of exemption for inward receipt into the factory would be incorrect under the terms of the notification. [Paras 6, 7]

Notification No. 31/2012 ST does not extend exemption to inward receipt of goods into the factory; exemption is confined to transport related to export as specified.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal on the ground that the demand was barred by limitation since there was no material to establish deliberate suppression or willful mis statement; separately, the Tribunal observed that Notification No. 31/2012 ST does not grant exemption for inward receipt into the factory, but the primary relief was granted on the time bar principle.

Classification of services - composite contract - works contract service - construction of complex service - abatement on value of transfer of property in goods - exemption for construction meant for allocation to beneficiaries for personal use - remand for de novo adjudication - precedent of CCE v. L&T Ltd.

Classification of services - composite contract - works contract service - construction of complex service - precedent of CCE v. L&T Ltd. - Whether the services rendered during April 2006 to March 2011 are classifiable as Works Contract Service or as Construction of Complex Service - HELD THAT: - The Tribunal found that the central question of classification requires fresh examination in light of the decision of the Hon'ble Supreme Court in CCE v. L&T Ltd. The adjudicating authority had recorded demands under Construction of Complex Service for April 2006 to March 2011 but the appellant contends that those supplies were effected under composite contracts involving transfer of property in goods and are therefore properly classifiable as Works Contract Service. Because the Supreme Court ruling directly bears on the classification issue and the factual nature of the contracts (composite or otherwise) must be reconsidered, the Tribunal has set aside the impugned findings and remanded the question of classification to the adjudicating authority for fresh decision on merits. [Paras 6]

Classification issue remanded to the adjudicating authority for fresh adjudication in light of CCE v. L&T Ltd.

Abatement on value of transfer of property in goods - works contract service - Whether the appellant is entitled to abatement on the value of transfer of property in goods for demands confirmed under Works Contract Service - HELD THAT: - The Tribunal observed that the adjudicating authority confirmed demands under Works Contract Service without allowing the abatement claimed by the appellant. The appellant maintains that the contracts involved supply of materials and hence were eligible for abatement. As this is a factual and valuation question linked to classification and the admitted absence of abatement in the impugned order, the Tribunal directed that the adjudicating authority re-examine entitlement to abatement after the appellant places relevant documents and evidence. [Paras 6]

Entitlement to abatement remanded for fresh consideration by the adjudicating authority.

Exemption for construction meant for allocation to beneficiaries for personal use - remand for de novo adjudication - Whether certain contracts executed by the appellant (for example, construction for Tamil Nadu Slum Clearance Board) are exempt from service tax - HELD THAT: - The appellant contended that some contracts, including those for the Slum Clearance Board, are not liable to service tax as they pertain to allocation for beneficiaries' personal use, and that relevant documents were not placed before the adjudicating authority during personal hearing. The respondent raised no objection to remand. The Tribunal therefore directed that the adjudicating authority examine the exemption pleas afresh on the basis of all relevant documents to be submitted by the appellant. [Paras 6]

Exemption claims remanded to the adjudicating authority for fresh adjudication on production of relevant documents.

Final Conclusion: The impugned order is set aside and the matter is remanded to the adjudicating authority for de novo consideration of classification, entitlement to abatement and exemption claims for the periods and financial years specified, with directions that the appellant submit all relevant documents for fresh adjudication.

Value of taxable services - consideration for taxable services - TDS/withholding tax not includable in service value - Section 67(1)(a) of the Finance Act, 1994 - computable value of services - Service Tax (Determination of Value) Rules, 2006 - Rule 7(1) - interaction between Income Tax withholding obligation and service tax valuation

Value of taxable services - consideration for taxable services - TDS/withholding tax not includable in service value - Section 67(1)(a) of the Finance Act, 1994 - computable value of services - Service Tax (Determination of Value) Rules, 2006 - Rule 7(1) - Whether the TDS amount paid to the Income Tax Department on behalf of a foreign service provider forms part of the consideration/ value of taxable services for the purpose of service tax - HELD THAT: - The Tribunal found that the appellant paid only the consideration as indicated in the foreign service provider's invoice and that the TDS was paid to comply with the Income Tax Act. Applying the test of Section 67(1)(a) and Rule 7(1) of the Service Tax Valuation Rules, service tax liability is to be discharged on the amounts billed by the service provider. The Tribunal agreed with the appellant that grossing up to meet the TDS obligation under the Income Tax law does not convert the TDS into consideration for the service. The decision of the Tribunal in Adani Bunkering Pvt. Ltd. v. CCE, Ahmedabad - II (2024 (1) TMI 984 - CESTAT Ahmedabad) was held to be squarely applicable: amounts of TDS deposited over and above the invoice value are not liable to service tax because TDS is a tax obligation and does not partake the character of value or consideration for the services. Consequently, the demand for service tax on the TDS paid on behalf of the foreign service provider was unsustainable and was set aside. [Paras 6, 7, 8]

Service tax is not payable on the TDS paid by the appellant on behalf of the foreign service provider; the demand confirmed in the impugned order is set aside.

Final Conclusion: The appeal is allowed; the impugned demand for service tax on the TDS paid on behalf of the foreign service provider is set aside, with consequential relief as per law.

Inclusion of TDS in gross value for service tax - reverse charge mechanism - Section 195A grossing-up and deemed increase of income - concept of consideration for taxable service - requirement for invocation of extended period (suppression/mis-statement) - contractual indemnity for taxes and withholding taxes borne by payer - precedential effect of Tribunal decisions on identical facts

Inclusion of TDS in gross value for service tax - Section 195A grossing-up and deemed increase of income - concept of consideration for taxable service - contractual indemnity for taxes and withholding taxes borne by payer - Whether TDS paid by the appellants under Section 195A is includable in the gross amount for computation of service tax under Section 66A read with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 - HELD THAT: - The Tribunal adopted the reasoning in the cited TVS Motor Company decision and related precedents that service tax is leviable on the gross amount charged by the service provider, which is the consideration agreed between the parties, and that statutory deductions made by the payer (TDS) do not themselves constitute consideration for the service. Section 195A prescribes grossing-up for the purpose of determining the amount on which tax is to be deducted and ensures the foreign payee receives the agreed net amount, but the obligation to deduct and deposit TDS arises from statutory duty and varying tax rates; there is no contractual agreement that the quantum of TDS becomes part of the service provider's consideration. Further, the appellants' agreement contained an express clause making taxes, including withholding taxes, to be borne and indemnified by the appellant, showing that TDS was to be borne in addition to the agreed consideration. On these facts and in view of the Tribunal precedents relied upon, the TDS amount paid by the appellants is not includable in the taxable gross value for levy of service tax. [Paras 6, 7, 8, 9]

TDS paid under Section 195A is not includable in the gross value for calculation of service tax; the demand based on its inclusion is not tenable.

Requirement for invocation of extended period (suppression/mis-statement) - precedential effect of Tribunal decisions on identical facts - Whether the demand was barred by limitation and whether the extended period could be invoked - HELD THAT: - The Tribunal found no material in the show-cause notice or adjudicating order establishing suppression, mis-statement, or intent to evade tax that would justify invoking the extended period. The appellants had initially included TDS in service tax payment but later adopted a bona fide interpretation that TDS should not be included; subsequent Tribunal and Commissioner (Appeals) decisions on identical or similar agreements support that interpretation. In these circumstances the appellants were entitled to a different interpretation and there is no basis for extended period invocation. [Paras 9, 10]

Proceedings are barred by limitation insofar as extended period is concerned; extended period not invokable and appeal allowed on limitation ground.

Final Conclusion: The appeal is allowed on merits and on limitation: the TDS amount paid under Section 195A is not includable in the gross value for levy of service tax for the period 2008-09 to 2010-11, and there is no case for invocation of the extended period; the demand and consequential penalties are set aside.

Use of audited revised balance sheet to determine service tax liability - inadmissibility of balance sheet/Income Tax figures as sole basis for service tax demand without corroborative evidence - invocation of extended period of limitation - assessment founded on mismatch between ST 3 returns and balance sheet - liability for interest for delayed payment within normal period - penalty for late filing of ST 3 returns

Use of audited revised balance sheet to determine service tax liability - assessment founded on mismatch between ST 3 returns and balance sheet - Whether the adjudicating authority could ignore the duly audited revised balance sheet for F.Y. 2009-10 and sustain the service tax demand based on mismatch between ST 3 returns and the balance sheet. - HELD THAT: - The Tribunal found that the appellant had filed a duly audited revised balance sheet for F.Y. 2009-10 which reduced receipts and, on consideration, eliminated the alleged service tax difference for that year. The revised figures showed a reduction in receipts which, when applied at the relevant rate, wiped out the claimed demand for F.Y. 2009-10. The adjudicating authority therefore erred in rejecting the revised audited balance sheet as an afterthought without treating it as part of the material for assessment. [Paras 14, 19]

Demand for service tax for F.Y. 2009-10 based on the alleged mismatch is set aside; the revised audited balance sheet must be taken into account.

Inadmissibility of balance sheet/Income Tax figures as sole basis for service tax demand without corroborative evidence - Whether amounts reflected in the balance sheet or Income Tax returns can, by themselves, be used to determine service tax liability in absence of corroborative evidence that such receipts represented taxable services. - HELD THAT: - The Tribunal reaffirmed the settled principle that figures in profit and loss accounts or income tax returns are not ipso facto proof of taxable services. Absent independent or corroborative evidence (invoices, contracts, recoveries, incriminating statements) that the amounts represented consideration for taxable services actually rendered, such statutory returns cannot form the sole basis for raising service tax demands. The judgment relied on a consistent line of authorities applying this principle and held that the Department had not discharged the burden of proving that the receipts related to taxable services. [Paras 16]

The Department cannot base a service tax demand solely on balance sheet or Income Tax figures without supporting evidence; such demands cannot be sustained in the present case.

Invocation of extended period of limitation - assessment founded on audit objections - Whether the extended period of limitation could be invoked by the Department on the basis of audit objections, scrutiny of balance sheets, or where the assessee had been regularly filing ST 3 returns and the accounts were public documents. - HELD THAT: - The Tribunal held that extended limitation cannot be invoked merely on the basis of audit queries or by relying on figures in statutory returns/ balance sheets. CBEC circulars place a duty on assessing officers to scrutinize filed returns at the preliminary stage, and audit objections alone do not justify invoking extended limitation. Further, where the assessee is a private limited company and statutory filings (profit/loss account and balance sheet) are public documents, suppression cannot be alleged solely on that basis. The Department produced no evidence of suppression, omission, or mala fide intent to evade tax; consequently the extended period was erroneously invoked. [Paras 17, 18]

Invocation of the extended period of limitation was improper and is set aside in so far as it was used to sustain the demands.

Liability for interest for delayed payment within normal period - penalty for late filing of ST 3 returns - Extent of interest and penalty to be sustained after setting aside the principal demand and extended period invocation. - HELD THAT: - With the principal demand set aside, the Tribunal examined the interest and penalty items. It upheld interest of Rs.30,585 only for the normal period of limitation, specifically from October 2012 to March 2013, and set aside interest for the remainder. The penalty of Rs.1,100 for late filing of ST 3 Returns for April June 2012 fell within the extended period relied upon by the Department and was therefore set aside. [Paras 19, 20, 21]

Interest is upheld only for the normal limitation period from October 2012 to March 2013; the remainder of interest and the late filing penalty for April June 2012 are set aside.

Final Conclusion: The appeal is partly allowed: the service tax demand of Rs.56,39,991/ (and attendant interest under Section 75 and penalty under Section 78) is set aside in view of the revised audited balance sheet and absence of corroborative evidence and suppression; interest is sustained only for the normal period October 2012 to March 2013; the penalty for late filing of ST 3 for April June 2012 is set aside. The appellant is entitled to consequential reliefs as per law.

Clandestine removal / clandestine clearance - burden of proof on revenue to produce corroborative evidence - reliability and admissibility of statements (pre drafted / cyclostyled) - use of private records / loose chits as sole basis for demand - requirement of corroborative evidence: raw material consumption, power consumption, transport/dispatch evidence and receipt of sale proceeds - insufficiency of visual inspection / panchnama without mode of stock taking - benefit of job work where substantive job work relationship established despite procedural lapse

Clandestine removal / clandestine clearance - use of private records / loose chits as sole basis for demand - burden of proof on revenue to produce corroborative evidence - requirement of corroborative evidence: raw material consumption, power consumption, transport/dispatch evidence and receipt of sale proceeds - Demand for excise duty on account of alleged clandestine removal held unsustainable - HELD THAT: - The Tribunal found that the show cause notice and demand of duty were founded principally on private records and statements of a few buyers, without any independent corroborative evidence. The adjudicating material lacked evidence of cash receipts at the appellant's end, any documentation proving unaccounted cash transactions, investigation of buyers' factory premises, transport or dispatch evidence for the large quantities alleged, or proof of disproportionate/raw material or power consumption to support the claim of clandestine manufacture. The statements of buyers were noted to be cyclostyled/pre drafted and therefore not reliable. The Tribunal applied settled principle that clandestine removal is a serious charge which the Revenue must prove by positive and tangible evidence and that loose chits, uncorroborated private registers and untested or pre drafted statements cannot sustain such a demand. In particular, the Tribunal recorded that minor shortages alleged on visual inspection and a panchnama lacking mode of stock taking were inadequate to establish clandestine clearances. On these grounds the case for unaccounted production and clandestine clearance was not established. [Paras 4]

Demand of Rs. 3,20,30,376/- on account of alleged clandestine removal set aside

Benefit of job work where substantive job work relationship established despite procedural lapse - insufficiency of procedural non compliance to deny substantive exemption/benefit - Demand of duty on goods said to be manufactured on job work basis held unsustainable - HELD THAT: - Records and statements indicated that certain goods were manufactured on job work basis for principal manufacturers who were availing notification benefits. Though the department alleged non compliance with prescribed procedural formalities, the Tribunal held that mere procedural lapses in following the notification do not disentitle the appellant to the job work characterisation. The Tribunal relied on authorities holding that benefit cannot be denied solely for procedural non observance where the substantive job work relationship and treatment are established on record. [Paras 2, 4]

Demand of Rs. 43,98,397/- on account of alleged duty on job work manufacture set aside

Final Conclusion: The appeals are allowed; the impugned order raising demands and penalties is set aside and the demands and penalties framed against the appellants are quashed, with consequential reliefs, for lack of admissible and corroborative evidence to establish clandestine manufacture and for wrongly denying job work treatment.

Refund under Section 11B - unjust enrichment - Consumer Welfare Fund - MRP-based assessment vs assessable value - burden of proof to show incidence not passed on - verification of buyers' ledgers

Refund under Section 11B - MRP-based assessment vs assessable value - burden of proof to show incidence not passed on - Claim for refund of excise duty paid on MRP basis for January and February 2007 is eligible in principle where duty was paid in excess of assessable value but subject to proof that incidence of duty was not passed on to others. - HELD THAT: - The Tribunal examined Section 11B and held that a claimant must file an application within the prescribed period and furnish documentary evidence establishing that the duty claimed was paid by him and that the incidence of such duty had not been passed on to any other person. The authorities found that the goods manufactured by the appellants were not covered by the MRP-based levy and therefore payment on MRP produced an excess which is, in principle, refundable. However, entitlement under Section 11B is contingent upon satisfying the unjust enrichment test by proving that the incidence of the excess duty was not passed on; verification of buyers' individual ledgers was directed by the earlier remand as the proper method to determine whether credit notes were given effect to and whether the excess was ultimately borne by buyers. The Tribunal accepted the earlier finding that the refund application was not time-barred and proceeded to adjudicate the merit of the refund claim on the basis of the evidence or absence thereof. [Paras 6, 7]

Refund was, on principle, available because duty paid on MRP exceeded duty payable on assessable value, but admissibility depended on proof that the incidence was not passed on to buyers.

Unjust enrichment - Consumer Welfare Fund - verification of buyers' ledgers - burden of proof to show incidence not passed on - Whether the refundable amount should be paid to the appellants or credited to the Consumer Welfare Fund. - HELD THAT: - Sub-section (2) of Section 11B provides that a determined refundable amount shall be credited to the Consumer Welfare Fund except where it is relatable to specified exceptions (clauses (a)-(f)), including where the manufacturer has not passed on the incidence of duty or where the buyer has borne it. The authorities below, after remand and de novo proceedings, found that the appellants had not produced customers' individual ledger accounts despite repeated requests, and thus failed to discharge the onus of proving that the excess duty incidence was not passed on. On the basis of illustrative customer letters, bank statements and absence of ledger evidence showing reversal or non availment of Cenvat by buyers, the adjudicating authority concluded that the incidence had likely been passed on to buyers. Applying the well established principle that refund claims under Section 11B are subject to the unjust enrichment test (as reiterated in Mafatlal and subsequent authorities), and in absence of direct and tangible proof to the contrary, the Tribunal upheld the authorities' conclusion to credit the refundable amount to the Consumer Welfare Fund. [Paras 8, 9, 10]

Appellants failed to prove non passage of incidence; the refundable amount was correctly directed to be credited to the Consumer Welfare Fund and the appeal was dismissed.

Final Conclusion: The Tribunal dismissed the appeal: although duty paid on MRP exceeded assessable-value duty and was, in principle, refundable, the appellants failed to prove that the incidence of the excess duty was not passed on to buyers (notably by producing buyers' ledgers), and therefore the refund was correctly credited to the Consumer Welfare Fund under Section 11B.

Entitlement to CENVAT credit on the basis of an endorsed Bill of Entry - substantial compliance with CENVAT Credit Rules - Rule 9(2) of CENVAT Credit Rules, 2004 - availment of CENVAT credit in respect of imports under FMC and DFCE scrips - treatment of manufacturer as job-worker for purpose of CENVAT credit - invocation of extended period of limitation requiring suppression, fraud or collusion - imposition of penalty under Rule 26 on companies - departmental change of stance and its effect on subsequent proceedings

Entitlement to CENVAT credit on the basis of an endorsed Bill of Entry - Rule 9(2) of CENVAT Credit Rules, 2004 - substantial compliance with CENVAT Credit Rules - CENVAT credit cannot be denied where credit is availed on the basis of an endorsed Bill of Entry which shows the manufacturer as consignee/supporting manufacturer and the goods are received and utilized in the manufacturer's factory. - HELD THAT: - The Tribunal held that the core dispute was documentary - whether an endorsed Bill of Entry could support a claim of CENVAT credit. It found that substantial compliance with CENVAT requirements was established: the Bills of Entry disclosed the name of the supporting manufacturer, endorsements and declarations on the reverse recorded that the supporting manufacturer would take the credit, the goods were received directly into the manufacturer's factory, used in manufacture and final products were cleared on payment of duty. Reliance on earlier Tribunal decisions (including Bando India) shows that Rule 9(2) of the CENVAT Credit Rules, 2004 contemplates such documentary forms and that mere presence of another name on import documents does not disentitle the manufacturer to credit where the goods were in fact received and utilized by the manufacturer and no credit was claimed by the importer/contractor. Consequently, credit availed could not be held incorrect merely on the ground that the Bill of Entry was endorsed. [Paras 11, 12, 13]

Appellants entitled to CENVAT credit on the basis of the endorsed Bills of Entry; credit could not be disallowed for documentary reasons where goods were received and utilized by the manufacturer.

Availment of CENVAT credit in respect of imports under FMC and DFCE scrips - treatment of manufacturer as job-worker for purpose of CENVAT credit - substantial compliance with CENVAT Credit Rules - CENVAT credit of duties (CVD and ACD) paid on imports under FMC and DFCE scrips could not be denied merely because the supporting manufacturer's name was not mentioned in the import license where the goods were received, used in manufacture and cleared on payment of duty and the activity amounted to job-work. - HELD THAT: - The Tribunal noted Revenue's contention that conditions of the relevant Customs notifications were violated because the appellants' name did not appear in the licences. It held that mere non-mention of the supporting manufacturer in the import license does not defeat the substantial benefit of credit where the Bills of Entry and other documentary evidence show the appellants as supporting manufacturer and the importer retained ownership while sending goods for job-work. The Tribunal observed there is no requirement in the notifications that the job-worker must be engaged under a separate notification procedure and that, if the importer had violated notification conditions, action should lie against the importer rather than the supporting manufacturer. Where goods were cleared from the appellant's factory after payment of duty and valuation rules were complied with, the appellants could not be denied credit. [Paras 14]

Appellants entitled to CENVAT credit of duties paid under FMC and DFCE scrips; non-mention in the licence did not disentitle them where job-work facts and documentary record established entitlement.

Invocation of extended period of limitation requiring suppression, fraud or collusion - departmental change of stance and its effect on subsequent proceedings - Extended period of limitation could not be invoked because there was no evidence of suppression, mis-statement, fraud or collusion, and the Department had earlier issued a show-cause notice in respect of the same credit position and therefore could not change its stand to the detriment of the appellants. - HELD THAT: - The Tribunal recorded that the Department had earlier issued a show-cause notice accepting the availment of credit and later issued subsequent notices taking a contrary position. It held that the Department is not free to change its stand to the detriment of the assessee and that prior issuance of a show-cause notice on the same subject disentitles the Department from invoking extended limitation in later proceedings. No element of suppression, mis-statement, fraud or collusion with intent to evade duty was established; accordingly, the extended period was not invocable and the impugned show-cause notices were time-barred. The Tribunal further observed that even on merits the demands could not be sustained. [Paras 15]

Extended period of limitation not invocable; impugned show-cause notices barred by limitation and unsustainable on merits.

Imposition of penalty under Rule 26 on companies - Penalty under Rule 26 could not be imposed on the appellants where the demand itself could not be sustained and, in any event, Rule 26 penalty is not imposable on companies in the circumstances on which the Tribunal relied. - HELD THAT: - The Tribunal concluded that since the substantive demands could not be sustained, the question of imposing penalties did not arise. It also accepted the appellant's submission, supported by Tribunal and Supreme Court precedent referenced in the hearing, that Rule 26 penalties cannot be imposed on companies in the factual matrix presented. Accordingly, penalties levied could not be upheld. [Paras 15]

Penalties under Rule 26 set aside; imposition unjustified where demand unsustainable and Rule 26 penalties were not liable to be imposed on the companies in the case.

Final Conclusion: All six appeals allowed: CENVAT credit availed on the basis of endorsed Bills of Entry and in respect of imports under FMC/DFCE scrips upheld; extended period not invocable; demands (including for normal period) unsustainable and consequent penalties under Rule 26 set aside.

Summary order. Special Leave Petition dismissed; delay condoned; pending applications, if any, disposed of.

Meaning of "authority concerned" - jurisdiction of assessing authority versus tribunal - nullity of proceedings for lack of jurisdiction - remand to tribunal for fresh adjudication

Meaning of "authority concerned" - jurisdiction of assessing authority versus tribunal - The expression "authority concerned" in the order dated 22.04.2022 referred to the Appellate Tribunal and not the Assessing Authority. - HELD THAT: - The operative prayer in the earlier writ petitions sought quashing of the Tribunal's order and a direction to the second respondent to hold a de novo enquiry in respect of the appeals before the Tribunal. The Division Bench's remit directed the petitioner to submit documents before the "authority concerned" and for that authority to decide on merits after personal hearing. Considering the context of the original petitions and the relief sought, the Court held that the phrase could only logically and purposively denote the Tribunal. The Court therefore concluded that the subsequent action by the Assessing Authority (2nd respondent) in conducting reassessments pursuant to that remit misconceived the scope of the direction and amounted to an exercise beyond the intended forum. [Paras 9]

The phrase "authority concerned" meant the Tribunal; the assessing authority had no jurisdiction under the remit.

Nullity of proceedings for lack of jurisdiction - The reassessment orders dated 31.05.2022 passed by the Assessing Authority are nullities for being made without jurisdiction under the Court's direction. - HELD THAT: - Because the Court's direction to submit documents was directed to the Tribunal, the 2nd respondent's proceedings and orders arising from the petitioner producing documents before the Assessing Authority were held to be made in excess of jurisdiction. Consequently, those reassessment orders cannot stand and are rendered void. As the 1st respondent's later revision orders proceeded on the premise that the 2nd respondent's reassessments were prejudicial to revenue, they too cannot subsist in view of the foundational jurisdictional defect. [Paras 9]

The reassessment orders dated 31.05.2022 are nullities; consequential revision orders similarly do not survive.

Remand to tribunal for fresh adjudication - The petitioner is permitted to submit documents before the Tribunal and the Tribunal is directed to decide the matter afresh on merits within the time stipulated by the Court. - HELD THAT: - Noting the mutual misconstruction of the earlier direction by both parties, the Court exercised its remedial supervisory power to afford the petitioner the opportunity originally contemplated. The Court directed that the petitioner may submit the documents to the Tribunal within four weeks of receipt of this judgment, and that the Tribunal shall consider the submissions and decide the matter on merits and in accordance with law within four weeks thereafter. This effectively remands the matter to the Tribunal for fresh adjudication, taking into account any material placed on record by the petitioner. [Paras 10]

Assessee permitted to submit documents to the Tribunal within four weeks; Tribunal to decide on merits within four weeks thereafter.

Meaning of "authority concerned" - The consequences for pending original side appeals arising from the Court's determination. - HELD THAT: - Given the Court's finding that the remit was to the Tribunal, the prayer in O.S.A. No. 86 of 2023 (seeking clarification on the meaning of "authority concerned") no longer requires separate adjudication and is closed. O.S.A. No. 99 of 2023, which challenged the order permitting the Official Liquidator to restrict the department's claim in light of the reassessments, is disposed of leaving the Official Liquidator at liberty to act in accordance with the orders in these writ petitions and applicable law. [Paras 10]

O.S.A. No. 86 closed; O.S.A. No. 99 disposed leaving the Official Liquidator free to proceed as per law.

Final Conclusion: The Court held that the phrase "authority concerned" in its earlier order referred to the Tribunal; reassessments by the Assessing Authority are therefore nullities and consequent revision orders cannot survive. The petitioner is granted leave to file documents before the Tribunal within four weeks and the Tribunal is directed to decide the matter on merits within four weeks thereafter; the connected original side appeals are closed or disposed in accordance with these directions.

Input tax credit - condition of original tax invoice for availing ITC - reversal of input tax credit upon cancellation of seller's registration - prohibition on unregistered dealers collecting tax - strict compliance of statutory concession - double taxation - constitutional challenge to fiscal legislation

Constitutional challenge to fiscal legislation - Section 19(15) of TNVAT Act, 2006 - Validity of Section 19(15) of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT: - The Court rejected the petitioner's plea that Section 19(15) is unconstitutional. The petitioner did not establish that the statutory provision violated any constitutional provision; the challenge was treated as an attempt to delay reversal proceedings. The Court observed that a constitutional attack on fiscal legislation requires clear demonstration of contravention of constitutional norms, which was not made out here. [Paras 14, 15]

Section 19(15) is not declared unconstitutional and the challenge fails; the writ petition is dismissed.

Input tax credit - condition of original tax invoice for availing ITC - reversal of input tax credit upon cancellation of seller's registration - prohibition on unregistered dealers collecting tax - double taxation - strict compliance of statutory concession - Right of a purchasing registered dealer to retain ITC when the seller's registration had been cancelled prior to the purchase - HELD THAT: - Applying Sections 19(15) and 40 of the TNVAT Act, the Court held that entitlement to ITC is a statutory concession subject to strict compliance with conditions such as production of the original tax invoice. Relying on the principle of strict compliance endorsed by the Supreme Court (as applied in Jayam and Company and followed in Ald Automotive), the Court found that the petitioner purchased five months after the seller's registration had been cancelled and did not produce a valid tax invoice from a registered dealer. Since the cancelled seller would not have paid tax, reversal of the ITC claim is permissible and does not amount to double taxation. [Paras 9, 11, 13]

The claim for ITC cannot be sustained; reversal of the ITC under Section 19(15) is lawful and does not constitute double taxation.

Final Conclusion: The writ petition challenging Section 19(15) and seeking to prevent reversal of claimed input tax credit is dismissed; connected miscellaneous petition closed.

Classification of 'stone' under Entry No.109 of Schedule II Part A - inclusion of granite within the generic term 'stone' - exclusion of glazed stone, marble and marble chips - interpretation of legislative intent in tax notifications - tax treatment of processed versus unprocessed stone - tax rate 5% under Entry No.109 as against unclassified rate

Classification of 'stone' under Entry No.109 of Schedule II Part A - inclusion of granite within the generic term 'stone' - exclusion of glazed stone, marble and marble chips - tax treatment of processed versus unprocessed stone - Granite stone blocks and pieces sold by the dealer fall within the term "stone" in Entry No.109 and are taxable at 5% (including additional tax) under that entry; processed stones that have undergone manufacture may be excluded while unprocessed stones are included. - HELD THAT: - Entry No.109 expressly uses the generic term "stone" and specifically excludes glazed stone, marble and marble chips, which indicates the Legislature's intent to carve out those items alone. The omission of granite from the exclusion demonstrates that granite was not intended to be excluded from Entry No.109; if exclusion of granite had been intended the notification could and would have been amended to state so. The Tribunal's working distinction - that stones not processed are included within Entry No.109 while processed stones subjected to manufacturing processes are excluded - accords with the specific exclusion of glazed stone and aligns with the legislative language. Rejecting the revenue's submission that Entry No.109 is confined to lower-value aggregates only, the court held that it is impermissible to read into the entry further exclusions which the Legislature has not made. Having examined the Tribunal's reasoning and its consonance with the notification's text, the court found no ground to interfere. [Paras 5, 6, 7, 8]

The Tribunal's classification of the dealer's granite as covered by Entry No.109 and taxable at 5% is upheld; the revision petition is dismissed.

Final Conclusion: The High Court dismissed the revision petition, upholding the Tribunal's conclusion that granite stone blocks and pieces are covered by Entry No.109 (and taxable at 5%), and found no reason to exclude granite from that entry or to disturb the Tribunal's distinction between processed and unprocessed stone.

Revision under Section 72 of the TVAT Act, 2004 - revision under Section 70(2) of the TVAT Act, 2004 - review under Section 74 of the TVAT Act, 2004 - limitation under Section 72 - remand for alternative remedy - dispensing certified copy requirement - tagging of connected petitions

Revision under Section 72 of the TVAT Act, 2004 - limitation under Section 72 - Time allowed to respondents to take preliminary objections on limitation and on merits - HELD THAT: - The Court recorded that the respondents-State raised a preliminary objection that the petition under Section 72 was barred by the 60 day limitation period and would file an affidavit-in-opposition addressing the preliminary objections and merits. The Court granted four weeks' time to the respondents to file the affidavit, thereby directing the filing and preservation of the respondents' objections for subsequent hearing rather than deciding the limitation point at this stage. [Paras 3]

Respondents permitted four weeks to file affidavit-in-opposition on preliminary objections including limitation.

Tagging of connected petitions - Connected revision petitions challenging the common order to be heard together - HELD THAT: - The petitioner had filed multiple connected revision petitions challenging the common impugned order dated 15.10.2022. The Court ordered CRP Nos.45/2023, 46/2023 and 47/2023 to be tagged along with CRP No.44/2023 so that the matters may proceed together for efficient adjudication. [Paras 4, 5]

CRP Nos.45/2023, 46/2023 and 47/2023 tagged with CRP No.44/2023.

Dispensing certified copy requirement - Requirement of filing certified copy of impugned order dispensed with in connected petitions - HELD THAT: - The petitioner sought dispensation from filing certified copies of the impugned order in the connected petitions on the ground that a certified copy had already been filed in the main petition. The Court accepted that a photocopy of the common impugned order is on record in the main matter and allowed the prayer to dispense with the requirement of filing another certified copy in the connected petitions. [Paras 7, 8]

Prayer to dispense with filing certified copy allowed and interlocutory applications so far disposed of.

Procedural listing - Listing date fixed for further hearing - HELD THAT: - After tagging the connected matters and directing filing of affidavits, the Court fixed the next date for hearing to enable further progress of the consolidated matters and disposal upon filing of responses and consideration of interlocutory applications. [Paras 6]

Matters listed on 05.12.2023.

Interlocutory application disposal - Interlocutory applications disposed of - HELD THAT: - Following the allowance of the prayer to dispense with filing certified copies, the Court recorded that all interlocutory applications (I.A.s) stand disposed of, concluding the immediate interlocutory reliefs sought in the connected matters. [Paras 9]

All interlocutory applications disposed of.

Final Conclusion: The Court granted four weeks to the respondents to file affidavits opposing the revision petitions (including any limitation objection), ordered connected revision petitions to be tagged and listed the matters for further hearing on 05.12.2023, allowed dispensation of the certified copy requirement in the connected petitions, and disposed of all interlocutory applications.

Refund application - designation of competent officer - return and production of pending application - treatment of filing date for pending applications - remand for fresh consideration - no adjudication on merits

Designation of competent officer - return and production of pending application - Direction to implead the officer now competent to consider the refund application and to return and produce the original application before that officer - HELD THAT: - The Court noted that the refund application for 2005-06 was originally filed in 2015 before the Deputy Commissioner of State Taxes, Begusarai, and that subsequently the officer competent to decide the application had been redesignated (Additional Commissioner State Taxes (Administration), Darbhanga). The Court suo motu impleaded the Additional Commissioner as an additional respondent and directed the Deputy Commissioner Commercial Taxes to return the application within one week and to produce it before the Additional Commissioner. This direction is administrative and procedural, intended to place the application before the officer who now has the statutory or functional competence to decide it. [Paras 3]

The Additional Commissioner State Taxes (Administration), Darbhanga was impleaded and the Deputy Commissioner was directed to return and produce the application before the Additional Commissioner.

Refund application - treatment of filing date for pending applications - remand for fresh consideration - no adjudication on merits - Mandate that the refund application be considered as having been filed in 2015 and be decided afresh within a specified period, without expressing any view on the merits - HELD THAT: - The Court directed that, upon production before the Additional Commissioner, the refund application shall be treated as having been filed in 2015 and shall be considered in accordance with law after hearing the petitioner. A one-month period was prescribed for decision from the date of production of the certified copy of the judgment. The Court expressly refrained from expressing any opinion on the substantive merits of the claim, confining its order to procedural directions for fresh consideration by the competent authority. [Paras 3, 4]

The refund application is to be treated as filed in 2015 and shall be considered by the Additional Commissioner within one month of production of the certified copy of the judgment; no observation was made on merits.

Final Conclusion: Writ petition disposed of by directing procedural steps: the competent tax officer (Additional Commissioner State Taxes (Administration), Darbhanga) was impleaded and the pending refund application for 2005-06 is to be returned, produced before that officer and decided as having been filed in 2015 within one month; the Court made no adjudication on the merits.

Power to record additional evidence under Section 391 CrPC - Rebuttable presumptions under Section 118 of the Negotiable Instruments Act - Obligation on accused to lead defence evidence to rebut presumption - Admissibility of certified bank records under the Bankers' Books Evidence Act - Handwriting expert comparison and trial-stage relief

Power to record additional evidence under Section 391 CrPC - Handwriting expert comparison and trial-stage relief - Whether the appellate Court erred in refusing to record additional evidence under Section 391 CrPC by directing handwriting comparison and summoning a Post Office official. - HELD THAT: - The Court applied the settled principle that Section 391 CrPC should be exercised only where the party was prevented from producing the evidence despite due diligence or where new facts emerge during the appeal and non-recording would cause failure of justice. The trial record showed the accused had earlier sought handwriting comparison before the trial Court and that application was rejected on 13th June, 2019 and left unchallenged. Further, the accused had examined the bank witness during trial but did not put any question as to genuineness of signatures. The cheque return memo records the reason for dishonour as "funds insufficient and account dormant" and not mismatch of signature. Given these facts, the appellate Court was not obliged to gather defence evidence on behalf of the accused by invoking Section 391 CrPC, and rightly declined to summon the Post Office official or direct fresh handwriting comparison at the appellate stage. [Paras 10, 11, 12, 18, 19]

Application for additional evidence under Section 391 CrPC seeking handwriting expert opinion and Post Office official's attendance was correctly rejected.

Rebuttable presumptions under Section 118 of the Negotiable Instruments Act - Obligation on accused to lead defence evidence to rebut presumption - Admissibility of certified bank records under the Bankers' Books Evidence Act - Whether the accused had the onus and opportunity to rebut the statutory presumptions under Section 118 NI Act regarding the negotiable instrument and whether failure to do so justified refusal to assist in collecting defence evidence. - HELD THAT: - The Court reiterated that Section 118 NI Act creates presumptions in favour of the holder which are rebuttable by the accused. A certified copy of bank records, including specimen signatures, is admissible under the Bankers' Books Evidence Act and could have been procured by the accused; the concerned bank official could have been examined to test genuineness. The record, however, demonstrates the accused neither cross-questioned the bank official about signature mismatch during trial nor sought certified bank records before the appellate stage. Because the accused had the means and opportunity to lead such defence evidence and failed to do so, the appellate Court was not required to collect defence evidence for him; the presumptions therefore stood unrebutted. [Paras 13, 14, 15, 16, 17]

The accused failed to rebut the presumptions under Section 118 NI Act and the Court was not obligated to assist in procuring defence evidence; the presumption in favour of the complainant remains unrebutted.

Final Conclusion: The High Court's dismissal of the application for additional evidence and refusal to interfere with the appellate Court's order is affirmed; the appeal is dismissed.

Appeal against order under Order IX Rule 13 CPC rejecting application to set aside ex parte decree - Maintenability of revision under Section 115 CPC where an appellate remedy exists - Concurrent remedies against ex parte decree - Order IX Rule 13 CPC and appeal under Section 96(2) CPC - Effect of dismissal of appellate remedy on maintainability of petition under Order IX Rule 13 CPC (merger doctrine) - Condonation of delay under Section 5 of the Limitation Act in applications under Order IX Rule 13 CPC - Liberty to institute prescribed appeal and restriction on raising limitation objection by the High Court

Maintenability of revision under Section 115 CPC where an appellate remedy exists - Appeal against order under Order IX Rule 13 CPC rejecting application to set aside ex parte decree - Civil Revision under Section 115 CPC challenging dismissal of an application under Order IX Rule 13 CPC was not maintainable where an appeal lay under Order XLIII Rule 1(d) CPC. - HELD THAT: - The Court held that an order rejecting an application under Order IX Rule 13 CPC rejecting an application to set aside an ex parte decree is an appealable order under Order XLIII Rule 1(d) CPC, and therefore the High Court could not entertain a revision under Section 115 CPC. Section 115 is confined to cases where no appeal lies or where the subordinate court has acted without jurisdiction or with material irregularity; it does not permit by passing an express appellate remedy. Consequently, where an alternative and effective appellate remedy exists, a revision petition is not the correct remedy and the High Court's order setting aside the trial court order in revision was set aside on that ground. [Paras 10, 11, 16, 17, 20]

Revision under Section 115 CPC was not maintainable; the High Court's order in Civil Revision Petition was set aside on that ground.

Concurrent remedies against ex parte decree - Order IX Rule 13 CPC and appeal under Section 96(2) CPC - Effect of dismissal of appellate remedy on maintainability of petition under Order IX Rule 13 CPC (merger doctrine) - Explanation of co existence and interaction of remedies available to a defendant against an ex parte decree and the effect of dismissal of one remedy on the other. - HELD THAT: - The Court explained that a defendant has concurrent remedies: an application under Order IX Rule 13 CPC to set aside an ex parte decree and an appeal under Section 96(2) CPC. Both may be invoked, but if an appeal is dismissed (so that the ex parte decree merges with the appellate order), a petition under Order IX Rule 13 would not be maintainable thereafter; conversely, dismissal of an Order IX Rule 13 petition does not preclude preferring an appeal against the ex parte decree. The Court relied on the principle articulated in Bhanu Kumar Jain v. Archana Kumar and applied the Explanation to Order IX Rule 13 to clarify these consequences. [Paras 12, 13, 14, 15]

Concurrent remedies coexist; dismissal of an appeal merging the decree ousts subsequent Rule 13 petition, whereas dismissal of a Rule 13 petition leaves open the remedy of appeal.

Condonation of delay under Section 5 of the Limitation Act in applications under Order IX Rule 13 CPC - Liberty to institute prescribed appeal and restriction on raising limitation objection by the High Court - The High Court's order condoning delay in the Civil Revision was not sustainable; however, liberty was granted to the respondent to file the appropriate appeal under Order XLIII Rule 1(d) CPC within a stipulated period and the High Court was directed not to raise the question of limitation if such appeal is filed within that period. - HELD THAT: - The Supreme Court observed that the impugned order in revision had condoned an inordinate delay in filing the Rule 13 petition, but since the revision itself was not maintainable, that relief could not stand. In the interests of justice and to avoid prejudice to the respondent, the Court granted liberty to institute the statutory appeal under Order XLIII Rule 1(d) CPC on or before the date specified by this Court and directed that the High Court should not raise the limitation objection if the appeal is filed within that period. The High Court was further directed to dispose of any such appeal in accordance with law. [Paras 7, 19, 20, 21, 22]

Impugned order condoning delay in revision set aside; respondent given liberty to file appeal under Order XLIII Rule 1(d) CPC by specified date and High Court directed not to raise limitation if appeal is so filed.

Final Conclusion: The appeal is allowed. The High Court's order in the Civil Revision Petition is set aside because revision under Section 115 CPC was not maintainable where an appeal lay under Order XLIII Rule 1(d) CPC; liberty is granted to the respondent to institute the appropriate appeal by the date directed and the High Court shall not raise the limitation point if the appeal is filed within that period, and shall decide the appeal in accordance with law.

Offence under Section 138 of the Negotiable Instruments Act, 1881 - liability of non-issuer of cheque - quashing of criminal proceedings

Offence under Section 138 of the Negotiable Instruments Act, 1881 - liability of non-issuer of cheque - quashing of criminal proceedings - Proceedings under Section 138 of the Negotiable Instruments Act against a person who did not issue the cheque are unsustainable and liable to be quashed. - HELD THAT: - The complaint expressly records that the cheque in question was issued by Accused No. 1. No allegation is made that the petitioner issued the cheque or that any distinct offence under the Act was committed by her. Section 138 proceedings lie against the person who issues the cheque; where the only allegation against a co-accused is commission of the offence under Section 138 and that co-accused did not issue the cheque, continuation of proceedings against such person is unsustainable. Applying this principle, the Court held that the criminal proceedings as against the petitioner cannot be maintained and must be quashed. [Paras 4, 5]

Proceedings against the petitioner quashed as she did not issue the cheque and no sustainable allegation under Section 138 was made against her.

Final Conclusion: The criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881, as framed against the petitioner (who did not issue the cheque) are quashed.

Discharge under Section 227 of the Code of Criminal Procedure - Prima facie case / threshold for framing charge - Sifting and limited weighing of evidence at the stage of Section 227 - Definition of psychotropic substance under the NDPS Act - Substance or preparation containing scheduled psychotropic substances treated as psychotropic substance

Discharge under Section 227 of the Code of Criminal Procedure - Prima facie case / threshold for framing charge - Sifting and limited weighing of evidence at the stage of Section 227 - Whether the Learned Sessions Judge was justified in refusing to discharge the accused at the stage of Section 227 Cr.P.C. - HELD THAT: - The High Court applied the settled principles governing Section 227 Cr.P.C., namely that the court must consider the broad probabilities and the total effect of the material on record and may sift and weigh evidence for the limited purpose of ascertaining whether a prima facie case is made out. The Court observed that this exercise does not require a roving inquiry or a trial-like appreciation of evidence, but a strong suspicion founded on material capable of being translated into evidence suffices to frame a charge. Having regard to the material placed before the Sessions Judge and to earlier unchallenged findings, the High Court concluded that it could not be said that the accusation was groundless and that the Judge was therefore justified in refusing discharge. [Paras 7, 9]

The refusal to discharge the accused was sustained; the Sessions Judge rightly applied the Section 227 threshold and the petition for discharge was dismissed.

Definition of psychotropic substance under the NDPS Act - Substance or preparation containing scheduled psychotropic substances treated as psychotropic substance - Whether the seized khat leaves could be treated as a psychotropic substance under the NDPS Act for the purpose of prosecution. - HELD THAT: - The Court relied on earlier findings that laboratory analysis disclosed the presence of cathinone and cathine, both listed as psychotropic substances in the schedule to the NDPS Act. The determinative legal principle is that any natural material or preparation containing a substance listed as psychotropic falls within the definition of psychotropic substance. The nomenclature or botanical name of the material (being 'khat leaves') is immaterial; what matters is the composition. On the face of the material placed before the Court, the presence of scheduled psychotropic alkaloids in the seized leaves established material sufficient to proceed with prosecution. [Paras 8]

Khat leaves containing cathinone and cathine qualify as a psychotropic substance within the meaning of the NDPS Act and support continuation of the prosecution.

Final Conclusion: The petition under Section 482 Cr.P.C. is dismissed; the order of the Learned Sessions Judge refusing discharge is affirmed and the prosecution may proceed.