TaxTMI Updates e-Newsletter
Feb 09,2021

Coercion and unlawful detention during tax interrogation - alleged forced transfer of tax amounts by departmental officers - urgent judicial scrutiny of executive conduct - service of notice by electronic mail - direction to file reply for expeditious adjudication - reliance on coordinate-bench precedent

Coercion and unlawful detention during tax interrogation - alleged forced transfer of tax amounts by departmental officers - urgent judicial scrutiny of executive conduct - Court treated serious allegations against departmental officers as requiring urgent judicial attention and issued notice. - HELD THAT: - The High Court recorded that the factual allegations against respondents Nos.2 and 3 - that the writ applicant was coerced and pressurised to transfer a large sum to the department and was detained under the guise of interrogation for approximately 33 hours - were gross and shocking and warranted immediate judicial examination. In view of the gravity of the allegations and the need for expeditious consideration, the Court directed issuance of notice to the respondents and summoned their replies so that the matter could proceed on merits. [Paras 2, 3, 4]

Notice issued to the respondents returnable on 16th February 2021 to enable judicial scrutiny of the allegations.

Service of notice by electronic mail - direction to file reply for expeditious adjudication - Court directed procedural steps to ensure prompt response by the respondents. - HELD THAT: - To facilitate expeditious adjudication the Court ordered that the respondents be served directly by email and specifically directed respondents Nos.2 and 3 to file their respective replies by the next date of hearing. The Court also directed the petitioner to furnish one set of the paper book to the Additional Solicitor General to assist in the proceedings. [Paras 4]

Respondents to be served by email and to file replies by the next hearing; petitioner to provide paper book to the Additional Solicitor General.

Reliance on coordinate-bench precedent - Court invited attention to a coordinate-bench order as potentially relevant to the controversy. - HELD THAT: - The Bench drew the parties' attention to a detailed order of a Coordinate Bench in Paresh Nathalal Chauhan vs. State of Gujarat as a decision likely bearing on the issues raised, indicating that that precedent should be considered in the further proceedings. [Paras 5]

Parties directed to note the coordinate-bench decision for consideration in subsequent proceedings.

Final Conclusion: On an oral order the High Court, noting grave allegations of coercion and prolonged detention by departmental officers, issued notice returnable 16th February 2021, directed service by email, required respondents - particularly respondents Nos.2 and 3 - to file replies expeditiously, directed the petitioner to supply the paper book to the Additional Solicitor General, and invited attention to a coordinate-bench decision for guidance.

Regular bail under Section 439 of the Code of Criminal Procedure, 1973 - nature and gravity of the offence - investigation concluded and charge-sheet filed - custodial period and entitlement to default bail - maximum sentence of five years - co-operation with investigation - health and age as a consideration for bail - conditions of bail including personal bond and surety - surrender of passport and restriction on leaving India - monthly presence before the Investigating Officer - trial court not to be influenced by preliminary observations

Regular bail under Section 439 of the Code of Criminal Procedure, 1973 - investigation concluded and charge-sheet filed - custodial period and entitlement to default bail - maximum sentence of five years - co-operation with investigation - nature and gravity of the offence - Whether the applicant should be enlarged on regular bail in connection with the offence under the Central Goods and Services Tax regime. - HELD THAT: - The Court noted that the arrest memo was dated 09.12.2020, the applicant has been in custody since that date, the investigation is complete and a charge-sheet has been filed. The Court observed that the alleged offence carries a maximum sentence of five years and that the applicant had cooperated with the investigation, having been interrogated on multiple occasions. Consideration was also given to the applicant's age and health. No special circumstances were placed on record by the prosecution to oppose bail; the applicant had made no instruction to deposit the previously mentioned offer of a percentage of the alleged tax evaded. Balancing these factors and without adjudicating the evidence in detail, the Court exercised its discretionary power under Section 439 CrPC to grant regular bail, subject to conditions intended to protect the prosecution's interest and ensure attendance at trial.

Application allowed; applicant enlarged on regular bail on executing a personal bond with one surety and upon compliance with specified conditions including surrender of passport, restriction on leaving India, monthly presence before the Investigating Officer, furnishing residential address, and other protective conditions.

Final Conclusion: The High Court allowed the application for regular bail, releasing the applicant on conditions designed to safeguard the investigation and trial, and clarified that the trial Court shall not be influenced by the preliminary observations made while granting bail.

Writ of mandamus/certiorari under Article 226 of the Constitution - interim release of seized goods and conveyance under Section 129(1)(a) of the Gujarat Goods and Service Tax Act, 2017 - completion of proceedings under Section 132 of the Gujarat Goods and Service Tax Act, 2017 - right to prefer an appeal under Section 107 of the Gujarat Goods and Service Tax Act, 2017

Completion of proceedings under Section 132 of the Gujarat Goods and Service Tax Act, 2017 - interim release of seized goods and conveyance under Section 129(1)(a) of the Gujarat Goods and Service Tax Act, 2017 - right to prefer an appeal under Section 107 of the Gujarat Goods and Service Tax Act, 2017 - Respondent No.2 directed to complete the proceedings initiated under Section 132 of the Act and the writ applicant required to appear and make his case; clarify availability of statutory appeal in the event of a final order. - HELD THAT: - The Court noted the earlier interim order dated 09.05.2019 directing provisional release of goods and the conveyance subject to payment and furnishing of a solemn undertaking. The matter before this Court was at the stage of MOV-10 with no further notice received by the writ applicant. In view of that position the Court declined to decide the merits and disposed of the writ by directing respondent No.2 to proceed to complete the statutory proceedings under Section 132 of the Act. The writ applicant was directed to appear when called and to make good his case for discharge of the notice. The Court expressly left open the statutory remedy, observing that if any final order is passed (in MOV-11), the writ applicant would be at liberty to prefer an appeal under Section 107 of the Act. The order contains a specific clarification that no opinion is expressed on the merits. [Paras 4, 5]

Writ disposed by directing respondent No.2 to complete proceedings under Section 132; writ applicant to appear and defend; statutory right of appeal under Section 107 preserved; no expression of opinion on merits.

Final Conclusion: Writ petition disposed by direction to the respondent authority to conclude the pending proceedings under Section 132 of the Gujarat GST Act, 2017, with the petitioner required to appear and contest the notice; preservation of the right to appeal against any final order, and no expression on merits by the Court.

Cancellation of GST registration - show cause notice in Form GST REG 17 - opportunity of hearing / principles of natural justice - non speaking order / order bereft of particulars - remand for fresh consideration

Show cause notice in Form GST REG 17 - opportunity of hearing / principles of natural justice - Impugned cancellation order was passed without issuing show cause notice in Form GST REG 17 and without giving the writ applicant an opportunity of hearing. - HELD THAT: - The Court found that the cancellation order dated 04.06.2020 was issued without first serving the writ applicant with the prescribed show cause notice in Form GST REG 17 and that the writ applicant had no opportunity to place his case before the authority. The absence of the statutory/formal notice and omission to afford a hearing amounted to a procedural infirmity justifying quashing of the impugned order. The Court accepted the State's concession that the order lacked the mandatory show cause notice and proceeded to set aside the order and direct a fresh exercise in accordance with law. [Paras 3, 4, 5]

Impugned order quashed; matter remitted to the Commercial Tax Officer to issue Form GST REG 17 and afford opportunity of hearing before passing any fresh cancellation order.

Non speaking order / order bereft of particulars - remand for fresh consideration - Impugned cancellation order was deficient for being bereft of material particulars and reasons. - HELD THAT: - The Court noted that the impugned order contained no material particulars and was non speaking. For that reason too the order could not be sustained. The Court directed that if the officer is of the view that cancellation is still warranted he may initiate a fresh proceeding by issuing the requisite show cause notice and, after hearing the applicant, pass an appropriate reasoned order. If the authority does not consider cancellation justified, the original registration should be restored in accordance with law. The Court fixed a brief timeline for completion of the exercise. [Paras 3, 5]

Impugned order quashed for lack of particulars; remitted for fresh, reasoned consideration following issuance of Form GST REG 17 and hearing; original registration to be restored unless fresh valid cancellation is lawfully ordered.

Final Conclusion: Writ petition allowed; the order cancelling GST registration dated 04.06.2020 (effective 24.10.2018) is quashed and set aside. Matter remitted to the Commercial Tax Officer to complete fresh proceedings by first issuing Form GST REG 17 and affording hearing, and thereafter passing a reasoned order within the timeframe indicated; if no fresh cancellation is contemplated, the registration shall be restored in accordance with law.

Provisional attachment to protect revenue - pendency of proceedings under Sections 62, 63, 64, 67, 73 or 74 - jurisdiction to provisionally attach bank account - protecting the interest of Government revenue

Provisional attachment to protect revenue - pendency of proceedings under Sections 62, 63, 64, 67, 73 or 74 - jurisdiction to provisionally attach bank account - Whether Section 83 of the Central Goods and Services Tax Act, 2017 could be invoked to provisionally attach the writ-applicant's bank account in the absence of any proceedings pending under the sections specified in Section 83. - HELD THAT: - Section 83 permits provisional attachment of property, including bank accounts, only where, during the pendency of proceedings under the specific provisions enumerated in Section 83, the Commissioner is of the opinion that attachment is necessary to protect Government revenue. The Court found that no proceedings under Section 62, 63, 64, 67, 73 or 74 were pending against the writ-applicant when the impugned order of provisional attachment was passed. Mere inquiries, investigations or actions against other persons associated with the writ-applicant do not, by themselves, create the statutory precondition for invoking Section 83 against the writ-applicant. The statutory language is plain: in the absence of the specified pending proceedings, the authority lacked jurisdiction to pass the provisional attachment order. The Court nevertheless clarified that if the statutorily specified proceedings are subsequently initiated and are pending, the authority may then lawfully invoke Section 83 in accordance with law; no opinion was expressed on the merits of any proceedings said to be initiated under Section 79. [Paras 7, 8, 9]

Impugned provisional attachment order quashed and set aside; attachment ordered to be lifted and the bank directed to permit operation of the account, subject to the authority's right to invoke Section 83 lawfully if the requisite proceedings are thereafter pending.

Final Conclusion: Writ allowed. The provisional attachment made under Section 83 in the absence of any pending proceedings under the sections specified in that provision was without jurisdiction and is quashed; the bank account is to be unfrozen, while preserving the authority's ability to proceed lawfully if the statutory preconditions for Section 83 arise in future.

Provisional attachment under Section 83 of the SGST Act - provisional attachment of bank account / cash credit account - lifting of provisional attachment - show-cause notice under Section 74 of the SGST Act - proportionality in attachment

Provisional attachment under Section 83 of the SGST Act - provisional attachment of bank account / cash credit account - lifting of provisional attachment - proportionality in attachment - Validity of provisional attachment of the writ-applicant's cash credit account and relief from such attachment - HELD THAT: - The Court found that the cash credit account of the writ-applicant ought not to have been provisionally attached under the provisions invoked. Having regard to the material on record and the settled legal position, the provisional attachment of the cash credit account bearing No.510044020408 with Kotak Mahindra Bank, Surat cannot continue. The Court noted the relatively small liability sought to be enforced and observed that attachment of the bank account (and consequential freezing of other deposits) was not appropriate in the circumstances. The Court expressly declined to adjudicate on the provisional attachment of immovable properties at this stage, limiting its decision to the bank account and leaving the question of immovable property attachment open to appropriate orders by the authority in due course. [Paras 6]

The provisional attachment of the cash credit account is set aside and the attachment is lifted.

Final Conclusion: Writ petition disposed of by ordering that the provisional attachment of the specified cash credit account is lifted; the Court declined to decide on the provisional attachment of immovable properties and left that matter to the authority to consider in accordance with law.

Release of detained goods and conveyance on interim terms - detention, release and confiscation under Sections 129 and 130 of the GST Acts - payment of tax and penalty as condition for interim release - filing of solemn undertaking to make good deficit liability - right to challenge final confiscation and appeal under Section 107

Release of detained goods and conveyance on interim terms - payment of tax and penalty as condition for interim release - filing of solemn undertaking to make good deficit liability - Interim release of detained goods and vehicle subject to conditions and disposal of the writ-application. - HELD THAT: - The Court recorded that by its earlier order dated 09.05.2019 the respondents were directed, as an interim measure, to release the detained goods together with the conveyance subject to the petitioner paying the tax and penalty as computed by the authorities and filing a solemn undertaking to make good any deficit liability that may be finally determined, while preserving the petitioner's right to challenge the determination in accordance with law. The Court observed that the matter stands at the stage of MOV-10 and expected the petitioner to participate in the proceedings before the authority, file his reply and seek discharge of the notice in MOV-10. The Court clarified that it had not expressed any opinion on the merits and that the authority shall pass appropriate orders on their own merits; if a final order of confiscation is passed under the Act, the petitioner would have the remedy of appeal under Section 107. [Paras 4, 5]

Writ-application disposed while directing interim release of goods and vehicle on payment of computed tax and penalty and filing of a solemn undertaking; petitioner to participate in MOV-10 and remedies against any final confiscation remain available.

Final Conclusion: Writ petition disposed by recording interim release directions (subject to payment and undertaking), with no expression of opinion on merits; petitioner to pursue statutory proceedings before the authority and, if necessary, avail appeal remedy under the Act.

Writ under Article 226 - release of detained goods and conveyance subject to payment and undertaking - participation in confiscation proceedings (MOV-10) and filing of reply - authority to decide confiscation on merits - right to challenge confiscation and appeal under Section 107

Release of detained goods and conveyance subject to payment and undertaking - writ under Article 226 - Interim release of the detained goods and conveyance was ordered and the writ-application disposed subject to specified conditions. - HELD THAT: - The Court recorded the earlier interim direction whereby the detained goods and the vehicle were ordered to be released on payment of tax and penalty as computed by the authorities and on filing of a solemn undertaking and production of identity documents. The petition was disposed of by directing the writ-applicants to comply with the conditions for release; the Court expressly refrained from expressing any opinion on the merits of the underlying confiscation proceedings. [Paras 2, 4, 5]

Writ-application disposed; goods and conveyance were ordered released subject to payment, filing of an undertaking and identification, and no opinion expressed on merits.

Participation in confiscation proceedings (MOV-10) and filing of reply - authority to decide confiscation on merits - right to challenge confiscation and appeal under Section 107 - The petitioners were directed to participate in the MOV-10 confiscation proceedings and the authority was directed to decide the matter on merits; appellate remedy under Section 107 remains available. - HELD THAT: - The Court expected the writ-applicants to engage in the ongoing MOV-10 proceedings by filing their reply and seeking discharge of the notice. The Court directed that the concerned authority shall, on its own merits and in accordance with law, pass the appropriate order in the confiscation proceedings; if a final order of confiscation is passed, the petitioners retain the statutory remedy of appeal under Section 107. The disposition therefore remands the substantive adjudication of confiscation to the authority while preserving the petitioners' appellate rights. [Paras 4, 5]

Matters in MOV-10 remitted to the authority for decision on merits; petitioners to file reply and may avail appeal under Section 107 against any final confiscation order.

Final Conclusion: The writ-application is disposed of: the detained goods and vehicle were ordered released on compliance with the interim conditions; the confiscation proceedings in MOV-10 are to proceed before the authority which shall decide on merits in accordance with law, with the petitioners' right of appeal under Section 107 preserved.

Summary order. Petition alleging irregularity/illegality in titling of an order under Section 144C(2) (assessment year 2016-17) was heard briefly and listed for further consideration on 8th February, 2021; corrigendum issued by Assessing Officer was noted and presence of departmental counsel requested.

Genuineness of lease transactions for entitlement to depreciation - proof and admissibility of documentary evidence to establish commercial reality of transactions - characterisation of expenditure on software as capital or revenue - precedential application of Vasisth Chay Vyapar Ltd. on accounting/prudential norms vis-a -vis Income-tax Act - judicial review of Tribunal's factual conclusion in light of binding higher court precedent

Genuineness of lease transactions for entitlement to depreciation - judicial review of Tribunal's factual conclusion in light of binding higher court precedent - The Income Tax Appellate Tribunal's conclusion that the lease transactions with M/s. Bellary Steels and Alloys Ltd. were not genuine and therefore not entitled to depreciation was set aside. - HELD THAT: - The High Court accepted the assessee's submission that the ratio in the Division Bench decision in T.C.A.Nos.2097 to 2099 of 2008, which applied the Supreme Court decision in Vasisth Chay Vyapar Ltd., was squarely applicable. In view of those authorities the Court held that the Tribunal's negative finding on the genuineness of the lease transactions could not be sustained. Having applied the cited precedents, the Court concluded that the substantial questions of law relating to the genuineness of the lease transactions must be answered in favour of the assessee and accordingly set aside the Tribunal's order denying depreciation.

Tribunal's finding that the lease transactions were not genuine is set aside; entitlement to depreciation is recognised in favour of the assessee.

Proof and admissibility of documentary evidence to establish commercial reality of transactions - judicial review of Tribunal's factual conclusion in light of binding higher court precedent - The Tribunal was not justified in ignoring the evidence produced by the assessee that would establish the genuineness of the lease transactions. - HELD THAT: - Relying on the Division Bench decision (T.C.A.Nos.2097-2099 of 2008) and the Supreme Court's reasoning in Vasisth Chay Vyapar Ltd., the High Court found that the Tribunal's approach in disregarding the assessee's documentary evidence and explanations was untenable. The Court held that, in the circumstances and applying the stated precedents, the evidence tendered by the assessee warranted acceptance and the Tribunal's adverse conclusion could not stand.

The Tribunal's disregard of the assessee's evidence is rejected and the evidence is accepted for purposes of recognising the transactions as genuine.

Characterisation of expenditure on software as capital or revenue - precedential application of Vasisth Chay Vyapar Ltd. on accounting/prudential norms vis-a -vis Income-tax Act - The substantial question whether the cost of software purchased and given on lease is capital in nature was decided in favour of the assessee. - HELD THAT: - The Court, applying the same line of authorities relied upon for the other questions, answered the substantial question of law concerning the characterisation of the software cost in favour of the assessee. By reference to the legal propositions affirmed in the cited precedents, the High Court concluded that the Tribunal's contrary conclusion was not sustainable and therefore set aside the order on this point as well.

The software cost is not to be treated as disallowable on the basis adopted by the Tribunal; the substantial question is decided for the assessee.

Final Conclusion: Applying the ratio of Vasisth Chay Vyapar Ltd. and the Division Bench decision in T.C.A.Nos.2097-2099 of 2008, the High Court set aside the Income Tax Appellate Tribunal's order for AY 1996-97, answered the substantial questions of law in favour of the assessee and allowed the tax case appeal.

Condonation of delay in filing appeal - e-filing requirement and transitional compliance - application of CBDT Circular No.20/2016 as a one-time remedial measure - exercise of discretionary power to admit appeals despite procedural non-compliance

Condonation of delay in filing appeal - e-filing requirement and transitional compliance - application of CBDT Circular No.20/2016 as a one-time remedial measure - exercise of discretionary power to admit appeals despite procedural non-compliance - Tribunal rightly condoned delay and directed the Commissioner (Appeals) to decide the appeal on merits despite the appeal not having been e-filed within the prescribed period. - HELD THAT: - The High Court followed its earlier decision in The Commissioner of Income Tax vs A.A. Antony, observing that the CBDT Circular (No.20/2016) operated as a one time measure intended to avoid denying substantive rights of appeal on a technical ground arising during the transitional period for mandatory e filing. Requiring the assessee to be sent back to the first appellate authority merely to file a fresh condonation petition would be unduly harsh and would likely occasion repetitive litigation confined to limitation issues. In the factual context prevailing in 2016, with e filing procedures newly operational and verification windows extending beyond the ordinary period of limitation, the Tribunal did not commit error in exercising its discretion to condone the delay and direct that the appeals be heard on merits. [Paras 5]

Appeal dismissed; Tribunal's order condoning delay and directing adjudication on merits is upheld and the appeal is to be heard by the CIT(A) on merits.

Final Conclusion: The Revenue's appeal is dismissed; in view of the CBDT circular as a transitional, one time measure and the factual matrix in 2016, the Tribunal's discretion to condone the delayed/non e filed appeals is upheld and the appeals are to be adjudicated on merits by the Commissioner (Appeals).

Set-off of carry forward business losses against capital gains - carry forward and set-off of business losses under Section 72 - recoupment of depreciation treated as business income - revisional jurisdiction under Section 263 - scope and restricted application of Express Newspapers Ltd.

Set-off of carry forward business losses against capital gains - recoupment of depreciation treated as business income - carry forward and set-off of business losses under Section 72 - scope and restricted application of Express Newspapers Ltd. - Whether brought forward business losses could be set off against capital gains arising from sale of a business undertaking, having regard to recoupment of depreciation and relevant precedents. - HELD THAT: - The Tribunal accepted that a portion of the sale consideration of the GGBS undertaking represented recoupment of depreciation previously claimed by the assessee, and that such recoupment is in substance like business income. Applying the principle in Express Newspapers Ltd. as explained and limited by subsequent Supreme Court decisions in Chugandas & Co. and Cocanada Radhaswami Bank Ltd., the Court held that the observations in Express Newspapers are contextual and not of universal application. The impugned Tribunal view is also consistent with coordinate decisions (Digital Electronics Ltd.) and the view accepted by the Revenue in Hickson and Dadajee (P.) Ltd., that carryforward business losses under Section 72 may be set off against gains that in substance represent business income (including recoupment of depreciation) even if assessed as capital gains. The High Court found the Tribunal's view to be a plausible one in the facts of the case and therefore raised no substantial question of law deserving interference. [Paras 17, 18, 24, 26, 28]

Substantial question answered against the Revenue and in favour of the assessee; carryforward business losses may be set off against the portion of the sale proceeds representing recoupment of depreciation and treated as business income.

Revisional jurisdiction under Section 263 - Whether the Principal Commissioner was justified in invoking revisional jurisdiction under Section 263 to set aside the assessment order allowing the set-off. - HELD THAT: - The Court observed that it was not entirely in agreement with the PCIT's exercise of revisional jurisdiction under Section 263. However, because the Tribunal's view on the merits was a plausible one grounded in binding and accepted authorities, the High Court declined to interfere with the Tribunal's order restoring the assessment. Thus, although the Court expressed reservation about the correctness of invoking Section 263 in this instance, no interference with the Tribunal's decision was warranted. [Paras 6, 29]

PCIT's invocation of revisional jurisdiction not accepted as a basis to disturb the Tribunal's order; the Tribunal's order is sustained.

Final Conclusion: The substantial questions of law are answered against the Revenue and in favour of the assessee; the Tribunal's order allowing set-off (subject to the admitted excess set-off) is upheld, and the assessee is directed to pay proportionate tax on the AO's excess set-off within three months, with no order as to costs.

Power of Tribunal under Section 254(2A) for stay of demand - Interim stay of demand and its temporal limits - Rectification/suo motu corrigendum by Tribunal after becoming functus officio - Limits on Tribunal issuing directions to Departmental representative restraining Assessing Officer from coercive action

Power of Tribunal under Section 254(2A) for stay of demand - Interim stay of demand and its temporal limits - Whether the Tribunal lawfully extended interim protection against recovery beyond the period permitted under Section 254(2A) - HELD THAT: - The Court examined the Tribunal's practice of granting and extending interim protection and observed that the Tribunal's power to grant stay of recovery is circumscribed by Section 254(2A) and its proviso. The order of the Tribunal was found to be devoid of reasons and the protection granted effectively continued beyond the period contemplated by the proviso to Section 254(2A), in part because the appeal was not taken up on the listed date. Although the non-functioning of the Tribunal (including due to the pandemic) and delays not attributable to the assessee were noted, the Court held that the Tribunal's extension of stay beyond the statutory temporal limits was not in accordance with Section 254(2A). The Court therefore answered the substantial question of law on this point in favour of the Revenue. [Paras 9, 11, 15, 16]

The Tribunal erred in extending interim protection beyond the period permitted under Section 254(2A); this substantial question is answered in favour of the Revenue.

Rectification/suo motu corrigendum by Tribunal after becoming functus officio - Whether the Tribunal could exercise suo motu rectification (issue a Corrigendum) after disposing the stay petition and becoming functus officio without hearing the Revenue - HELD THAT: - The Court criticised the Tribunal's exercise of suo motu power to issue a Corrigendum to the earlier signed order, observing that once the Tribunal has disposed the petition and become functus officio, it can only rectify mistakes under the statutory provision when brought to its notice in accordance with the procedure in Section 254(2). The Corrigendum was undated and it was unclear whether the Revenue was heard before such rectification; the practice of issuing an undated suo motu Corrigendum without hearing the Revenue was deprecated as beyond proper exercise of power. [Paras 10, 11]

The Tribunal's suo motu corrigendum after becoming functus officio, issued without following the prescribed procedure or hearing the Revenue, was improper.

Limits on Tribunal issuing directions to Departmental representative restraining Assessing Officer from coercive action - Whether the Tribunal had power to direct the Departmental representative to inform the Assessing Officer not to initiate coercive measures and thereby restrain the Assessing Officer from performing statutory functions - HELD THAT: - The Court held that the Tribunal has no power to issue directions to a Departmental representative which effectively restrain the Assessing Officer from exercising statutory powers. A departmental representative cannot, without written authority from the competent authority, bind the Department by consenting to such directions. Directions purportedly given through the Departmental representative to restrain coercive action were characterised as beyond the Tribunal's jurisdiction and therefore non est in law. The Court emphasised that any interim relief must be traceable to statutory power (i.e., the power under Section 254 subject to its conditions). [Paras 13]

The Tribunal exceeded its jurisdiction in directing the Departmental representative to restrain the Assessing Officer from coercive action; such directions are invalid.

Final Conclusion: The substantial questions of law were answered in favour of the Revenue: the Tribunal erred in extending interim protection beyond the limits of Section 254(2A), in issuing a suo motu undated corrigendum after becoming functus officio, and in directing the Departmental representative to restrain the Assessing Officer from coercive action. Despite these conclusions, the High Court declined to set aside the impugned order because the Tribunal had heard the main appeal and reserved orders; the appeal is disposed of accordingly.

Liability as assessee in default for non-deduction under section 195 - Interest liability under section 201(1A) - Reasonable period / limitation for initiating proceedings under section 201/201(1A)

Reasonable period / limitation for initiating proceedings under section 201/201(1A) - Liability as assessee in default for non-deduction under section 195 - Whether the proceedings and order under section 201(1A) for alleged failure to deduct tax at source under section 195 were barred by limitation. - HELD THAT: - The Tribunal examined the timing of initiation of proceedings in relation to the date of the transaction (registration of sale deed on 24.04.2010 falling in financial year 2010-11) and the actions of the AO (notice under section 195 issued on 18.09.2017; order under section 201(1A) passed on 22.03.2018). Relying on earlier tribunal and High Court decisions cited in the order, including Bheemarasetty Sunitha and related authorities, the Tribunal accepted the view that proceedings under sections 201/201(1A) must be initiated within a reasonable period and that a four year period from the end of the relevant financial year is to be treated as the reasonable time for initiating such proceedings in cases involving non residents. Applying that principle to the facts, the proceedings in the present case were initiated well beyond the four year period applicable to the transaction in financial year 2010 11, and were therefore barred by limitation. The Tribunal accordingly held that the assessee could not be treated as an assessee in default for the purposes of section 201(1A) in respect of the subject transaction.

Proceedings under section 201(1A) in respect of the transaction of financial year 2010-11 were barred by limitation; the orders of the lower authorities are set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal, holding that initiation of proceedings under section 201/201(1A) in respect of the purchase registered on 24.04.2010 (financial year 2010-11) was time barred, and set aside the orders treating the assessee as an assessee in default.

Unexplained cash credit - burden to prove identity, genuineness and creditworthiness under section 68 - evidentiary value of statement recorded under section 133A - verifications and replies to notice under section 133(6) - natural justice - requirement to furnish third party report and opportunity to confront witnesses

Unexplained cash credit - burden to prove identity, genuineness and creditworthiness under section 68 - verifications and replies to notice under section 133(6) - natural justice - requirement to furnish third party report and opportunity to confront witnesses - Validity of addition of alleged unsecured loans of Rs. 4.50 crores as unexplained cash credit and corresponding deletion by the first appellate authority. - HELD THAT: - The Tribunal accepted the factual finding (not challenged by Revenue) that the assessee obtained loans from eleven lender companies in the relevant year and squared up those loans (except a small balance). The AO had issued notices under section 133(6) to the lenders and the lenders directly replied with PAN, bank statements, ROC/ incorporation and audited accounts, loan confirmations and related documents. The AO nevertheless drew adverse inference based on an inspector's report (not furnished to the assessee) and a statement recorded under section 133A in a third party case. The Tribunal held that the inspector's report could not be relied upon against the assessee when it was not supplied to the assessee and when service of the section 133(6) notices on the lenders and their replies were on record. Further, the statement under section 133A had been recorded on oath in a third party survey and, as held by higher authorities, such statements lack evidentiary value against the assessee unless the procedural safeguards (supply, summons/examination and opportunity to cross examine) are followed. Removing these infirm foundations, the AO's adverse inference against the entire loan transactions fell, and the deletion of the addition by the CIT(A) was held to be justified. [Paras 11, 12]

Addition of Rs. 4.50 crores as unexplained cash credit was untenable and the deletion by the CIT(A) is confirmed.

Disallowance of interest expenditure linked to disallowed loans - causal connection between disallowance of interest and characterization of loans as unexplained cash credit - Allowability of interest expenditure of Rs. 74,30,571/- which was disallowed by the AO consequent to treating the loans as unexplained cash credit. - HELD THAT: - The disallowance of interest was directly contingent on the AO's characterisation of the loans as unexplained cash credits. Having held that the addition of the loans was unsustainable on the material and law, the corresponding disallowance of interest could not stand. The Tribunal therefore upheld the CIT(A)'s deletion of the disallowance of interest as rightly correlative to the deletion of the loan addition. [Paras 11, 12]

Disallowance of the interest expenditure is set aside and the deletion by the CIT(A) is confirmed.

Final Conclusion: The appeal by the Revenue is dismissed; the assessment addition of the alleged unsecured loans and the corresponding disallowance of interest are not sustained and the order of the CIT(A) deleting these additions is confirmed.

Limitation under section 275 - penalty under section 271E - exclusion of time under explanation to section 275 - rehearing under proviso to section 129 - time-barred penalty

Limitation under section 275 - exclusion of time under explanation to section 275 - rehearing under proviso to section 129 - penalty under section 271E - time-barred penalty - Whether the penalty order under section 271E is barred by limitation under section 275 and therefore liable to be quashed. - HELD THAT: - The Tribunal examined the computation of limitation under clause (c) of section 275 and the Explanation thereto which excludes the period taken for rehearing under the proviso to section 129. The assessee showed that the proceedings were initiated within the relevant financial year and that 162 days were consumed in rehearing after change of jurisdiction, those 162 days being excluded under the Explanation. Applying the excluded period extended the limitation date to 11-05-2004, whereas the penalty order was passed on 18-05-2004. The Tribunal found that the penalty order was therefore passed after the expiry of the extended limitation period and was delayed by seven days. The Revenue was granted time to verify the computation but did not file any rebuttal; on the available record the Tribunal held the order unsustainable as time-barred. Since the order was quashed on limitation grounds, the Tribunal expressly refrained from adjudicating the substantive merits of the penalty, treating those contentions as infructuous. [Paras 7]

Penalty order under section 271E is quashed as barred by limitation; substantive merits not adjudicated.

Final Conclusion: The appeal is partly allowed: the penalty order dated 18-05-2004 under section 271E for Assessment Year 2000-2001 is quashed as time-barred under section 275 after exclusion of time for rehearing under section 129; the merits of the penalty were left undetermined.

Validity of scrutiny notice under section 143(2) and compliance with CBDT Instruction No.20/2015 on Limited Scrutiny - Treatment of peak cash deposits as unexplained cash credits and scope of limited scrutiny under CASS - Application of presumptive taxation under section 44AD in scrutiny proceedings - Remand for de-novo verification of business activity and consideration of revised computation filed during assessment proceedings - Penalty under section 271(1)(c) and its linkage to outcome of reassessment

Validity of scrutiny notice under section 143(2) and compliance with CBDT Instruction No.20/2015 on Limited Scrutiny - Scope of limited scrutiny - requirement to communicate reasons 'forthwith' - Whether the notice issued under section 143(2) was invalid for not mentioning the CASS-limited-scrutiny reasons and whether the assessment was void ab initio on that ground. - HELD THAT: - The CBDT Instruction requires that, in Limited Scrutiny cases, the reasons/issues shall be communicated to the assessee forthwith. The Tribunal interprets 'forthwith' as 'immediately, without delay' and holds that reasons need not be embedded in the section 143(2) notice itself so long as they are communicated immediately thereafter. In the present case the reasons for limited scrutiny were communicated to the assessee at the first hearing (next date) and the assessee thereafter participated and filed responses. The AO confined the inquiry to the limited issue of cash deposits and did not exceed the scope to require complete scrutiny. As no prejudice was caused by communicating the reasons at the first hearing, non-inclusion of the reasons in the notice did not render the proceedings invalid. Accordingly the grounds challenging validity of the 143(2) notice and alleging non-compliance with CBDT Instruction are rejected. [Paras 9]

Assessee's challenge to validity of the 143(2) notice and related grounds (including additional grounds 17(a)-(h)) rejected; assessment held not invalid for that reason.

Treatment of peak cash deposits as unexplained cash credits - Application of presumptive taxation under section 44AD in scrutiny and evidentiary burden to prove carrying on of business - Remand for de-novo verification of business activity and consideration of revised computation filed during assessment proceedings - Whether the addition of peak cash deposits as unexplained cash credits was sustainable and whether the revised computation and claimed receipts should have been considered by the AO. - HELD THAT: - The Tribunal notes that the assessee had claimed business income under section 44AD and submitted that contractual receipts and a revised computation would explain the bank deposits. However, the assessee did not produce contemporaneous evidence before the AO to substantiate carrying on of construction activity. Offering income under section 44AD does not preclude the AO from examining the nature of the activity; the assessee bears the burden of proof. The Tribunal found that the revised computation and supporting material were placed on the record during assessment proceedings but were not considered by the AO. In the interest of justice the Tribunal directs de-novo verification by the AO of the assessee's claim of carrying on construction activity and remits the matter for the AO to consider the revised computation and all relevant material in accordance with law and applicable precedents (including Abhinitha Foundation and the coordinate bench decision), leaving factual determination to the AO. [Paras 13]

Addition set aside for fresh consideration; matter remitted to the AO to verify business activity de-novo and to consider the revised computation and supporting material in accordance with law.

Penalty under section 271(1)(c) and its linkage to the outcome of assessment proceedings - Whether penalty under section 271(1)(c) is sustainable in view of the remand of the assessment issues. - HELD THAT: - The Tribunal observes that the addition and its factual basis have been remitted to the AO for fresh examination. Since the quantum issue has been sent back, the Tribunal sets aside the penalty order and permits the AO to reinitiate penalty proceedings, if warranted, after conclusion of the reassessment/verification. The penalty is not finally adjudicated on merits at this stage but is remitted for reconsideration contingent on the outcome of the reassessment. [Paras 17]

Penalty order set aside with liberty to the AO to reinitiate penalty proceedings after conclusion of assessment proceedings.

Final Conclusion: Appeal against assessment (ITA No.1395/Hyd/2019) partly allowed for statistical purposes: challenge to validity of the 143(2) notice rejected, additions on cash deposits set aside and remitted to the AO for de-novo verification and consideration of the revised computation; penalty appeal (ITA No.1396/Hyd/2019) allowed for statistical purposes by setting aside the penalty with liberty to the AO to proceed afresh after reassessment.

Validity of unsigned notice under section 148 - jurisdiction to reopen assessment under section 147 - change of opinion as not constituting information to reopen under section 147 - applicability of section 282A limited to designated CPU/authorities - scope of section 292B and curability of procedural defects

Validity of unsigned notice under section 148 - applicability of section 282A limited to designated CPU/authorities - scope of section 292B and curability of procedural defects - Whether notices issued under section 148 that were not signed by the Assessing Officer are valid and whether such procedural defects can be cured by invoking section 282A or section 292B. - HELD THAT: - The Tribunal examined the notices issued on 22-03-2012 and observed they were manual notices typed on plain paper and lacked the signature of the issuing Assessing Officer. Applying Section 282 (and Order 5, Rule 1(3), CPC by virtue thereof), the Tribunal held that a notice under section 148 must be dated and signed by the officer issuing it; signing is not a mere inconsequential formality. The omission to sign was held to be more than a clerical defect and therefore not curable under the protective scope of section 292B. Further, the Tribunal held that section 282A cannot be invoked to validate the unsigned notices because section 282A applies only to a Central Processing Unit or other authorities designated by the CBDT, and the Assessing Officer in these cases was not such a designated authority. Relying on precedent and reasoning that service of a valid notice is a pre-condition for exercise of jurisdiction under section 147, the Tribunal concluded that unsigned notices were invalid and could not confer jurisdiction to reopen the assessments. [Paras 37, 38, 39]

The unsigned notices under section 148 were invalid; the reassessments founded on those notices were quashed as void-ab-initio.

Final Conclusion: The Tribunal allowed the appeals of the assessees by quashing the reassessment orders framed pursuant to unsigned notices under section 148 for AY 2007-08; consequently the appeals filed by the revenue were dismissed.

Deductibility of employees' contribution to Provident Fund and ESI - application of CIT v. Alom Extrusions Ltd. to employee contributions - remittance before the due date of filing return of income - interaction of section 36(1)(va) and section 43B principles - precedential value of non jurisdictional High Court decisions where no jurisdictional High Court decision exists - benefit of two conflicting views to the assessee

Deductibility of employees' contribution to Provident Fund and ESI - application of CIT v. Alom Extrusions Ltd. to employee contributions - remittance before the due date of filing return of income - interaction of section 36(1)(va) and section 43B principles - benefit of two conflicting views to the assessee - Whether the employees' contribution to Provident Fund and ESI is allowable where collected but not remitted before the due date of filing the return, and whether the principle in CIT v. Alom Extrusions Ltd. applies to employee contributions - HELD THAT: - The Tribunal examined competing High Court decisions and found a split view: decisions of ten High Courts support allowability while three do not, making the question debatable. Applying the principle that where two views are possible the view favourable to the assessee should be adopted, and noting that in the absence of a jurisdictional High Court decision a non jurisdictional High Court decision is binding, the Tribunal held that the Supreme Court decision in CIT v. Alom Extrusions Ltd. is applicable to contributions collected from employees as well as employer contributions. Consequently, if the amount collected from employees is not remitted before the due date for filing the return under section 139(1), it must be disallowed; conversely, where remitted before that due date it is allowable. The Tribunal therefore accepted the assessee's contention on the legal principle and directed reconsideration by the Assessing Officer in accordance with this legal view, while noting that the matter would be governed by any contrary ruling of the Supreme Court in pending appeals. [Paras 5]

Appeal allowed; deductibility recognised where employees' contributions were remitted before the due date of filing the return, and the Assessing Officer directed to reconsider the issue in light of this principle (with allowance for any contrary Apex Court ruling).

Final Conclusion: The appeal is allowed for statistical purposes: the Tribunal applied the Alom Extrusions principle to employee contributions and directed the Assessing Officer to reconsider the disallowance, holding that amounts collected from employees but not remitted before the due date for filing the return are liable to be disallowed, while amounts remitted before that date are allowable.

Rejection of books of account under section 145(3) - assessment under section 144 (best judgement/estimation) - estimation of gross/net profit rate based on past results - doctrine of consistency in accounting treatment - protection against adhoc trading additions where books show better results

Estimation of gross/net profit rate based on past results - protection against adhoc trading additions where books show better results - rejection of books of account under section 145(3) - Whether the trading addition sustained by the CIT(A) by applying an estimated net profit rate of 8.5% (against the assessee's declared 7.99%) should be deleted where the assessee had declared better GP/NP in the year under appeal and the assessing officer made an adhoc disallowance without finding defects in books. - HELD THAT: - The Tribunal noted that on the facts the assessing officer made an adhoc estimation of profit rate/addition without rejecting the books of account or pointing out defects in the accounts and vouchers. The assessee had maintained audited books, produced records and had declared better GP/NP in the year under appeal compared to earlier years. The Tribunal followed the view in its earlier decision in the assessee's own case and other precedents that where an assessee shows better trading results compared to past years and there is no material showing incorrectness or incompleteness of the accounts, past accepted results of the assessee provide a reasonable basis and, consequently, adhoc additions to protect hypothetical revenue leakage are not justified. Applying this principle to the present facts, the Tribunal held there was no basis for sustaining the addition made by the AO and confirmed by the CIT(A). [Paras 8, 9]

The addition sustained by the CIT(A) is deleted and the appeal is allowed.

Final Conclusion: On the facts and following the Tribunal's earlier decision in the assessee's own case, the adhoc trading addition sustained by the CIT(A) is deleted and the assessment is adjusted in favour of the assessee for AY 2016-17.

Penalty under section 271D - Prohibition on acceptance of loans or deposits in cash under section 269SS - Advance against sale not a loan or deposit - Reliance on suspicion and surmise not permissible - Obligation on Revenue to make verification and enquiry

Penalty under section 271D - Prohibition on acceptance of loans or deposits in cash under section 269SS - Advance against sale not a loan or deposit - Reliance on suspicion and surmise not permissible - Obligation on Revenue to make verification and enquiry - Validity of penalty imposed under section 271D for alleged receipt of cash in violation of section 269SS where the assessee contended the amount was an advance against sale of land and the Department did not verify the transaction. - HELD THAT: - The Tribunal examined the material on record and found that the authorities disbelieved the assessee's documentary evidence, including the confirmation from the purported payor, without conducting any specific enquiry or verification. Section 269SS applies to loans or deposits accepted in cash; an advance against sale of property does not fall within that prohibition. The Assessing Officer and the CIT(A) imposed and sustained the penalty on the basis of suspicion and surmise rather than on verified findings. Where the Department fails to verify or investigate the claim that the amount was an advance and proceeds to levy penalty merely on conjecture, such penalty cannot be sustained. Applying these principles, the Tribunal concluded that the impugned penalty under section 271D could not be maintained. [Paras 5, 6]

Penalty imposed under section 271D deleted and the appeal allowed.

Final Conclusion: The Tribunal held that the sum received was not shown to be a loan or deposit and that the authorities acted on suspicion without verification; consequently the penalty under section 271D was set aside and the appeal allowed.

Characterisation of income - short term capital gains versus business income - frequency, repetition and intention test in share transactions - use of borrowed funds as a factor in characterisation of share-sale gains - maintenance of separate investment and trading accounts/demat accounts as evidence of intention - assessment under section 153A and de novo proceedings

Characterisation of income - short term capital gains versus business income - frequency, repetition and intention test in share transactions - use of borrowed funds as a factor in characterisation of share-sale gains - Gains on sale of shares of Pyramid Siamira Theatre Ltd. in AY 2007-08 are to be taxed as short term capital gains and not as business income. - HELD THAT: - The Tribunal examined factual matrix including limited number of purchases (five) and sales (seven), delivery taken before sale, part holding of shares after the year end, and absence of repeated or regular transactions in the scrip. While involvement of borrowed funds was noted, the Tribunal held that part utilisation of borrowed capital in the peculiar facts would not per se convert the transactions into trading activity. The cumulative appraisal of factors - low frequency, isolated transactions, delivery taken and assessee's classification of portfolios - favoured characterisation as capital transactions. The Tribunal observed that separate demat accounts cannot be insisted upon as a sine qua non and that no straight-jacket formula exists; all facts must be weighed cumulatively. Applying these principles, the Tribunal found merit in the assessee's claim and allowed treatment as short term capital gains. [Paras 13]

Allow the appeal and treat the gains as short term capital gains for AY 2007-08.

Characterisation of income - short term capital gains versus business income - frequency, repetition and intention test in share transactions - Gains on sale of shares of Pyramid Simara Theatre Ltd. in AY 2008-09 are to be taxed as short term capital gains and not as business income. - HELD THAT: - Facts for AY 2008-09 mirrored those in the earlier year: limited number of transactions (six sales during the year), delivery and part disposals across the two years, and absence of regularity or repetition in dealing in the scrip. Applying the same cumulative evaluation of factors as adopted for AY 2007-08, the Tribunal held that the assessee's claim for concessional taxation under the head short term capital gains was justified and the lower authorities' re characterisation to business income was not warranted. [Paras 16, 17, 18]

Allow the appeal and treat the gains as short term capital gains for AY 2008-09.

Characterisation of income - short term capital gains versus business income - frequency, repetition and intention test in share transactions - Gains on sale of shares of SGLPP in AY 2007-08 (Atul Hiralal Shah) are to be taxed as short term capital gains and not as business income. - HELD THAT: - The Tribunal noted that the assessee purchased shares largely on two occasions and sold on 14 occasions, with the purchases and sales forming isolated transactions rather than a pattern of regular trading. Applying the same cumulative appraisal of factors - limited purchase instances, delivery taken, and lack of continuous trading pattern - the Tribunal concluded that the gains are correctly characterisable as short term capital gains and reversed the lower authorities' treatment as business income. [Paras 22, 23]

Allow the appeal and treat the gains as short term capital gains for AY 2007-08 (in the case of Shri Atul Hiralal Shah).

Final Conclusion: On cumulative appraisal of factual features (limited frequency of transactions, delivery taken, isolated nature of dealings and absence of regularity), the Tribunal allowed the appeals and held that the impugned gains in the three matters are short term capital gains and not business income; consequently, all three appeals are allowed.

Survey action and inventory valuation - stock reconciliation and evidentiary weight - statement recorded under section 131 and its probative value - deletion or diminution of addition for unexplained stock - addition upheld for unexplained silver stock - condonation of delay for misplacement of appeal papers

Stock reconciliation and evidentiary weight - survey action and inventory valuation - statement recorded under section 131 and its probative value - deletion or diminution of addition for unexplained stock - Validity of deletion of addition made by AO in respect of alleged excess gold stock - HELD THAT: - The CIT(A) accepted the assessee's reconciliation of book and physical stock, relied upon the sworn statement recorded under section 131 and the reconciliation submitted during survey showing issuance of bullion and old gold to named workers/goldsmiths. The CIT(A) found that the AO did not make adequate enquiries into the assessee's claims and that inclusion of the issued bullion and old gold in book stock reduces the discrepancy to 196.17 gms, a difference which could be attributable to valuation irregularities and absence of registered valuers at the inventory. The CIT(A) therefore deleted the addition of Rs. 2,33,15,262/-. The Tribunal recognised that acceptance of the reconciliation as correct would negate the addition but, on further consideration in second appeal and noting residual inability to explain each item, directed a compromise by estimating a lump-sum addition of Rs. 2 lakhs over and above the survey disclosure of Rs. 10 lakhs to meet the ends of justice, while clarifying that this estimation is not a precedent.

Deletion of the AO's gold addition sustained in principle by CIT(A); on second appeal the addition was not reinstated at the AO's level but a lump-sum addition of Rs. 2 lakhs was directed to cover residual shortfall.

Unexplained stock and addition - confirmation of addition where no substantiation - statement recorded under section 131 and its probative value - Sustenance of addition made by AO in respect of alleged excess silver stock - HELD THAT: - The CIT(A) recorded that the assessee and its authorised representative did not substantiate the claim on silver during appellate proceedings. The sworn statement recorded under section 131 did not rule out the possibility of unaccounted purchases of silver. In view of lack of specific explanation or evidence for silver stock discrepancies, the CIT(A) confirmed the AO's addition. The Tribunal, while noting the assessee's partial disclosures (including a lumpsum survey declaration), found that not all items were satisfactorily explained and, in the interest of justice, allowed a concession by reducing the net impact to a lump-sum addition of Rs. 1 lakh (over and above the survey disclosure), thereby partly relieving the assessee.

Addition for silver confirmed by CIT(A); on second appeal reduced by the Tribunal to a lump-sum addition of Rs. 1 lakh.

Condonation of delay for misplacement of appeal papers - Maintainability of the assessee's appeal delayed by misplacement of appeal papers - HELD THAT: - The Tribunal examined the cause for the delay in filing the assessee's appeal (291 days) and found it attributable to misplacement of appeal papers by office staff, concluding that the delay was neither intentional nor due to delinquency by the assessee. On that basis the Tribunal exercised discretion to condone the delay and admit the appeal for adjudication on merits.

Delay of 291 days in filing the assessee's appeal condoned; appeal admitted for consideration on merits.

Final Conclusion: Cross-appeals partly allowed: delay in filing the assessee's appeal condoned; the CIT(A)'s deletion of the large gold addition was not restored to the AO but the Tribunal imposed a lump-sum addition of Rs. 2 lakhs (in addition to the survey disclosure) to cover residual shortfall; the silver addition confirmed by CIT(A) was reduced by the Tribunal to a lump-sum addition of Rs. 1 lakh; appeals disposed accordingly.

Confiscation of conveyances - provisional release of seized goods - show cause notice within statutory period under Section 110(2) - owner's burden to prove absence of knowledge or connivance

Show cause notice within statutory period under Section 110(2) - provisional release of seized goods - Failure to issue show cause notice to the owner within the period prescribed by Section 110(2) entitled the petitioner to relief despite ongoing proceedings against other parties. - HELD THAT: - The Court held that a conjoint reading of Section 110(2), Section 110(1) and Instruction No.01/2017-Cus (08.02.2017) requires issuance of a show cause notice within six months of seizure (subject to a further six month extension in specified circumstances), and that this timeline remains applicable even where provisional release under Section 110A has been granted. In the instant case the vehicle was seized on 04.11.2019 and no show cause notice was issued to the petitioner within the six month period or the extended period; the corrigendum calling upon the petitioner was issued only on 21.12.2020 after the High Court had been seized of the matter. The Court found this failure to be significant and questioned the belated issuance, observing that the proceedings against the importer and the investigation into tampering are distinct from the question of release of the conveyance. Given the statutory timeline and the absence of timely show cause to the petitioner, interference with the impugned action was warranted. [Paras 14, 18, 21]

Seizure/continued detention of the petitioner's vehicle without issuance of a timely show cause notice was unsustainable; the Court entertained the writ and found interference justified.

Confiscation of conveyances - owner's burden to prove absence of knowledge or connivance - provisional release of seized goods - Whether the conditions imposed in the provisional release order were appropriate and whether modification was required to secure release of the vehicle. - HELD THAT: - Having regard to the material in the show cause notice which prima facie indicated that the petitioner had been engaged only as a transporter and that the tampering and removal of goods were attributable to a CHA employee who subsequently surrendered the goods, the Court found that the original conditions of provisional release were onerous in the facts of this case. Balancing the statutory scheme concerning confiscation of conveyances (including the proviso giving option to pay in lieu of confiscation) against the petitioner's pleaded lack of knowledge or connivance and the hardship caused by prolonged detention of his sole vehicle, the Court exercised its remedial jurisdiction to modify the provisional release order. The modification reduced the security requirement to a bond for 10% of the value of the seized goods and required an undertaking to cooperate with investigation and appear when required. [Paras 19, 20, 22, 23]

Provisional release order dated 14.07.2020 modified: vehicle to be released on furnishing a bond for 10% of the value of the seized goods and on an undertaking to cooperate with investigation; subject to compliance, the vehicle to be released forthwith.

Final Conclusion: Writ petition allowed. The provisional release order dated 14.07.2020 is modified: the petitioner's vehicle shall be released on furnishing a bond equal to 10% of the value of the seized goods and an undertaking to cooperate with the investigation; subject to these conditions the vehicle shall be released forthwith. No order as to costs.

Conversion of shipping bills from Drawback scheme to DFIA scheme - amendment of documents under Section 149 of the Customs Act, 1962 - validity of Board Circular prescribing time limit for conversion - procedural limitation versus statutory time bar - judicial precedent on conversion and non statutory circulars

Amendment of documents under Section 149 of the Customs Act, 1962 - validity of Board Circular prescribing time limit for conversion - conversion of shipping bills from Drawback scheme to DFIA scheme - Whether conversion of Drawback shipping bills to DFIA shipping bills could be allowed despite delay and notwithstanding a Board Circular prescribing a three month time limit. - HELD THAT: - The tribunal proceeded on the basis that Section 149 of the Customs Act, 1962 - which authorises amendment of documents - prescribes no time limit for permitting amendments and therefore a Board Circular could not, by itself, create a substantive statutory time bar. The tribunal held that the three month limit in Circular No.36/2010 Cus is a procedural guideline and not a statutory restriction that can oust the power under Section 149; applications for conversion rejected solely on that circularary limitation were therefore not sustainable. The High Court found no error in the tribunal's reasoning, noting that the issue is governed by the Court's earlier decision in Inter Continental (India) v. Union of India which was upheld by the Supreme Court, and accordingly upheld the tribunal's order permitting conversion of the shipping bills and directing revalidation of DFIA licences. [Paras 5, 6]

The tribunal's allowance of conversion of the Drawback shipping bills to DFIA shipping bills was upheld; the revenue's appeal dismissed.

Final Conclusion: The High Court dismissed the revenue appeal, upholding the tribunal's decision that Section 149 permits conversion of Drawback shipping bills to DFIA shipping bills and that a Board Circular imposing a three month limitation could not operate as a statutory bar.

Seizure and provisional detention under Section 110(1) of the Customs Act, 1962 - burden of proof where goods are alleged to be smuggled under Section 123 of the Customs Act, 1962 - judicial restraint pending administrative adjudication - right to adduce additional evidence before a quasi judicial authority

Judicial restraint pending administrative adjudication - seizure and provisional detention under Section 110(1) of the Customs Act, 1962 - Whether the High Court should entertain the petition seeking release of seized goods prior to completion of adjudication by the Customs Authority. - HELD THAT: - The Court held that the petition is premature because the statutory adjudicatory process before the Customs Authority has not been completed. The Court noted that the Authority is already seized of the matter, that the process of confiscation has not been finalised, and that assessment of evidence and discharge of statutory obligations is primarily a function of the quasi judicial authority. In these circumstances the court exercised restraint and declined to enter into the merits of the seizure, disposing the petition without granting substantive relief and leaving the adjudicatory function to the Authority. [Paras 6, 7]

Petition dismissed as premature; Court declined to adjudicate merits and refused to order release of the goods at this stage.

Burden of proof where goods are alleged to be smuggled under Section 123 of the Customs Act, 1962 - right to adduce additional evidence before a quasi judicial authority - Whether the petitioner may place evidence before the Customs Authority and how the burden of proof applies in adjudication of seized goods. - HELD THAT: - The Court observed that when goods are seized on reasonable belief of being smuggled, the burden to prove they are not smuggled lies on the person from whose possession they were seized. The Court clarified that discharge and appreciation of that burden is for the Customs Authority in its adjudicatory proceedings. The petitioner was permitted to adduce additional documentary evidence before the Authority, and the Authority was directed to consider such evidence and decide the representation in accordance with law. [Paras 6, 7]

Petitioner allowed to place additional evidence before the Authority; Authority to consider and decide the representation in accordance with law, applying the statutory burden of proof.

Final Conclusion: The petition was disposed of as premature; the High Court refused to decide the merits of the seizure and directed that the Customs Authority, which is seized of the matter, shall consider the petitioner's representation and any additional evidence and decide the matter in accordance with law, having regard to the statutory burden of proof.

Provisional release of goods upon provisional assessment and payment of customs duty - application of Section 110A of the Customs Act - waiver of demurrage and detention charges under Handling of Cargo in Customs Areas Regulations, 2009 - precedent effect of the order dated 25-8-2020 in W.P. (MD) No. 1242 of 2020

Provisional release of goods upon provisional assessment and payment of customs duty - application of Section 110A of the Customs Act - precedent effect of the order dated 25-8-2020 in W.P. (MD) No. 1242 of 2020 - Direction to assess and permit provisional release of the goods subject to provisional payment and eventual adjudication - HELD THAT: - The High Court held that the present petitions are squarely covered by the earlier order dated 25-8-2020 in W.P. (MD) No. 1242 of 2020 and, following that precedent, directed respondents to assess and permit provisional release of the goods upon payment of applicable customs duties and other charges on a provisional basis. The Court provided a timeline, requiring release after assessment and provisional collection within three weeks from receipt of the order, while allowing adjudication proceedings to continue. The respondents were directed to bear in mind the usual approach adopted for provisional release under Section 110A of the Customs Act when implementing the direction. [Paras 2, 3]

Respondents to provisionally assess, collect applicable customs duty and other charges, and release the goods within three weeks; adjudication may continue with Section 110A approach to be observed.

Waiver of demurrage and detention charges under Handling of Cargo in Customs Areas Regulations, 2009 - Entitlement to waiver of demurrage and detention charges in terms of the Handling of Cargo in Customs Areas Regulations, 2009 - HELD THAT: - The Court declared that the petitioners are entitled to a waiver in view of the Handling of Cargo in Customs Areas Regulations, 2009 and directed that no demurrage and detention charges shall be levied on the petitioners. This declaration was effected alongside the directions for provisional release and provisional collection of duties. [Paras 3]

Petitioners entitled to waiver; no demurrage or detention charges to be levied.

Final Conclusion: Writ petitions allowed; respondents directed to provisionally assess, collect applicable duties and release goods within three weeks while observing the approach under Section 110A; petitioners granted waiver of demurrage and detention charges; connected petitions closed with no costs.

Rectification of error apparent on the face of the record - classification of goods - eligibility for exemption under Notification No. 57/2017 Sl. No. 20

Rectification of error apparent on the face of the record - classification of goods - Clerical mistake in the Final Order noting the department's confirmed classification in para 2 is to be corrected. - HELD THAT: - The Tribunal found competing classifications: the appellant contended CTH 85176290 while the department contended CTH 85176990. The final order mistakenly recorded the department's confirmed classification as 85176290 in the last sentence of paragraph 2, which is an obvious error on the face of the record requiring correction. The Tribunal accordingly ordered substitution of 85176990 in place of 85176290 in that sentence to reflect the accurate departmental classification. [Paras 5]

The last sentence of paragraph 2 is amended to record the department's confirmed classification as 85176990 instead of 85176290.

Classification of goods - eligibility for exemption under Notification No. 57/2017 Sl. No. 20 - Clarification that the appellant is eligible for the exemption under Sl. No. 20 of Notification No. 57/2017. - HELD THAT: - Although the Tribunal held that the goods are classifiable under CTH 85176290, and the department had denied exemption by classifying the goods under 85176990, the Tribunal considered that holding the goods under 85176290 implies entitlement to the exemption. For clarity, the Tribunal expressly recorded that the appellant would be eligible for the exemption benefit as per Sl. No. 20 of Notification No. 57/2017 and inserted the specified sentence in paragraph 5 before its last sentence. [Paras 6]

The Final Order is clarified to state that the appellant is eligible for the exemption benefit under Sl. No. 20 of Notification No. 57/2017.

Final Conclusion: ROM application allowed: the clerical error in paragraph 2 is rectified by substituting 85176990 for 85176290, and the Final Order is clarified to record that the appellant is eligible for the exemption under Sl. No. 20 of Notification No. 57/2017.

Principles of natural justice (audi alteram partem) - Report under Section 208 and enquiry/notice under Section 206(4) - Formation of opinion as jurisdictional precondition under Section 210 - Investigation by the Serious Fraud Investigation Office under Section 212 - Judicial review confined to decision making process, not merits of administrative decision - Regulatory directions and time bound compliance by authorities

Report under Section 208 and enquiry/notice under Section 206(4) - Principles of natural justice (audi alteram partem) - Validity of the Registrar of Companies' report dated 13.12.2017 as a report under Section 208 - HELD THAT: - The report dated 13.12.2017 contained fresh and serious allegations beyond the earlier report and was filed without disclosing any contemporaneous issuance of a notice under Section 206(4). In the absence of compliance with the procedural requirement of issuing notice and providing an opportunity to the company, the report could not be allowed to stand as a valid Section 208 report in the teeth of principles of natural justice. Rather than quashing the allegations summarily, the Court treated the 13.12.2017 report as if it were a show cause notice under Section 206(4) and directed the petitioner to file detailed objections and documentary evidence within a specified time, and directed the Registrar to consider such reply and thereafter submit a consolidated report under Section 208 to the Central Government in a time bound manner. [Paras 34]

The report dated 13.12.2017 is not permitted to operate as a completed Section 208 report without the Section 206(4) procedure; it is treated as a notice under Section 206(4) and the Registrar is directed to proceed afresh after hearing the petitioner.

Formation of opinion as jurisdictional precondition under Section 210 - Investigation by the Serious Fraud Investigation Office under Section 212 - Judicial review confined to decision making process, not merits of administrative decision - Validity of the Central Government's order dated 07.05.2018 assigning investigation to SFIO - HELD THAT: - Section 212 is exercisable only after the Central Government forms the requisite opinion (as envisaged by Section 210) that investigation by SFIO is necessary. The impugned order of 07.05.2018 contained extracts from the Registrar's report but did not itself manifest the independent opinion required under Section 210. The High Court of Hyderabad had earlier set aside a prior order for the same reason and remitted the matter for fresh consideration; despite that, the impugned order was passed without recording the formation of opinion. Because the statutory manner of forming opinion was not followed, the order of 07.05.2018 could not be sustained and therefore does not survive. The Court emphasised that its supervisory review is limited to the decision making process, not a reappraisal of the merits of the decision. [Paras 35, 36, 37]

The order dated 07.05.2018 is set aside for failure to form the opinion mandated by Section 210; the Central Government must form its opinion afresh in accordance with law on receipt of the consolidated Section 208 report.

Report under Section 208 and enquiry/notice under Section 206(4) - Regulatory directions and time bound compliance by authorities - Principles of natural justice (audi alteram partem) - Remedial directions, timeline for compliance and departmental action for delay - HELD THAT: - Given the seriousness of allegations and the protracted procedural history, the Court directed a remedial, time bound process rather than a final quashing. The petitioner was ordered to file detailed explanations and documentary evidence to the 13.12.2017 report (treated as a Section 206(4) notice) within two weeks and to appear for enquiry on specified dates. The Registrar of Companies was directed to file a consolidated Section 208 report to the Central Government within two weeks of completion of that procedure. Thereafter the Central Government shall form an independent opinion strictly under Section 210 and proceed under Section 212 within three weeks. The Court also directed departmental action against officials responsible for undue delay. [Paras 43, 44]

Time bound procedural directions given: petitioner to reply to the 13.12.2017 report; Registrar to submit consolidated Section 208 report; Central Government to form opinion under Section 210 and act under Section 212; departmental action to be taken for delays.

Final Conclusion: The report of the Registrar of Companies dated 13.12.2017 could not be permitted to operate as a completed Section 208 report because the Section 206(4) procedure and principles of natural justice were not complied with; the Court treated that report as a Section 206(4) notice and directed the petitioner to file detailed objections and documentary evidence, directed the Registrar to submit a consolidated Section 208 report thereafter, and held that the Central Government's order dated 07.05.2018 assigning investigation to SFIO is unsustainable for failure to form the statutory opinion under Section 210. The authorities were given specific, time bound steps to follow and officials responsible for delay were directed to be proceeded against departmentally.

One Time Settlement (OTS) as a concluded contract - Classification as Non Performing Asset (NPA) and consequent disqualification from RBI moratorium - Applicability of RBI moratorium Circulars to accounts subject to OTS - Bank's right to treat OTS as failed on borrower's default and initiate recovery including insolvency proceedings

One Time Settlement (OTS) as a concluded contract - There was a concluded OTS between the petitioner and the bank on August 19, 2019. - HELD THAT: - The materials on record establish that the bank's letter dated August 19, 2019 approved and sanctioned the compromise proposal submitted by the petitioner, requested return of an accepted copy and thereby gave effect to an OTS concluded on that date. Subsequent correspondence, including the petitioner's later letter of November 5, 2019, did not amount to an unconditional acceptance by the bank of any new or modified settlement; rather it reopened negotiations and did not crystallise into a further concluded OTS. The only OTS that can be treated as concluded on the evidence is the one reflected in the bank's communication of August 19, 2019. [Paras 51, 52, 53]

An OTS was concluded between the parties on August 19, 2019; no later concluded OTS was established.

Bank's right to treat OTS as failed on borrower's default and initiate recovery including insolvency proceedings - The bank was entitled to treat the OTS as failed and to commence recovery proceedings where the petitioner failed to honour the concluded OTS. - HELD THAT: - Petitioner no.1 failed to comply with the payment obligations under the concluded OTS of August 19, 2019, having paid only a part of the required sum. In view of this default, the bank validly treated the OTS as failed by its communication of August 10, 2020 and called upon the petitioner to pay the entire outstanding dues; consequential recovery actions, including filing proceedings under the Insolvency and Bankruptcy Code, were within the bank's rights. The petitioners' subsequent representations and requests for extension did not negate the prior default or reinstate the OTS. [Paras 44, 54, 56]

The bank rightly treated the OTS as failed for non performance and lawfully initiated recovery and insolvency proceedings.

Classification as Non Performing Asset (NPA) and consequent disqualification from RBI moratorium - Applicability of RBI moratorium Circulars to accounts subject to OTS - The petitioners were not entitled to benefits of the RBI moratorium Circulars because their account was an NPA as on the cut off date and no operative OTS restored the account to 'standard' status. - HELD THAT: - The RBI Circulars conferred moratorium benefits only to accounts that were 'standard' as on the specified cut off and were intended to mitigate pandemic related disruptions to otherwise viable borrowers. The petitioners' account had been classified as NPA prior to the issuance of the Circulars and, on the record, there was no operative OTS in place that would have reversed that classification as of February 29, 2020. An incomplete or revoked settlement cannot be a trigger for extending the Circulars' benefits; where the borrower had already defaulted and failed to honour the concluded OTS, the Circulars do not apply. The court accordingly applied the reasoning in Amit Khaneja (pertaining to in principle OTS arrangements) to hold that OTS arrangements, if revoked or unperformed, do not entitle a borrower to moratorium relief. [Paras 55, 57, 58, 59]

The RBI Circulars did not apply to the petitioner's account; the petitioners were not entitled to moratorium relief.

Final Conclusion: The writ petition is dismissed on contest; the court held that an OTS was concluded on August 19, 2019 but was later dishonoured by the petitioner, that the bank lawfully treated the OTS as failed and pursued recovery, and that the petitioners' account was NPA as on the RBI cut off date so moratorium benefits did not apply.

Approval of Resolution Plan - Compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016 - Priority of payment to operational creditors under Regulation 38(1)(a) - Priority payment to dissenting financial creditor under Regulation 38(1)(b) - Consideration of stakeholders' interests under Regulation 38(1A) - Form H compliance under Regulation 39(4) - Ineligibility under Section 29A - Cessation of moratorium under Section 14 - Binding effect of approved plan on creditors and other stakeholders

Approval of Resolution Plan - Compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016 - Form H compliance under Regulation 39(4) - The Resolution Plan submitted by Constantia Corporate Shared Services Private Limited and Alfa Buildhome Private Limited meets the requirements of Section 30(2) of the Code and Regulations and is liable to be approved. - HELD THAT: - The Tribunal examined the Resolution Plan against the statutory requirements and the CIRP Regulations. The Resolution Professional carried out the prescribed verification including valuation, invitation of EOIs, eligibility check under Section 29A, and compliance certification in Form H under Regulation 39(4). The Plan provides for payment of CIRP costs and operational creditors, sets out management control, supervision and a monitoring committee, and contains declarations required by the Regulations. Having found that these mandatory contents are satisfied and that requisite voting by the Committee of Creditors supported the Plan, the Tribunal concluded that the Plan complies with Section 30(2) and the Regulations and accordingly permitted its approval and implementation. [Paras 6, 7, 10]

The Resolution Plan is approved and shall become effective from the date of this order.

Priority of payment to operational creditors under Regulation 38(1)(a) - Priority payment to dissenting financial creditor under Regulation 38(1)(b) - Consideration of stakeholders' interests under Regulation 38(1A) - The payment hierarchy and stakeholder-protection measures contained in the Resolution Plan conform to Regulations 38, 38(1)(a), 38(1)(b) and 38(1A). - HELD THAT: - The Tribunal noted that the Plan provides for payment to operational creditors in priority over financial creditors as required by Regulation 38(1)(a). It also recognises a dissenting financial creditor (Invent ARC) and proposes payment in priority to such dissenting creditor in accordance with Regulation 38(1)(b). The Resolution Applicant has declared that the Plan has considered the interests of all stakeholders consistent with Regulation 38(1A). The Court accepted these arrangements as satisfying the protective scheme of the Regulations. [Paras 6, 7, 10]

The payment priorities and stakeholder safeguards in the Plan are in accordance with the Regulations and are approved.

Ineligibility under Section 29A - Cessation of moratorium under Section 14 - Binding effect of approved plan on creditors and other stakeholders - The Resolution Applicants are not barred under Section 29A; the moratorium ceases on approval; and the approved Plan is binding on the corporate debtor and all stakeholders, subject to statutory obligations and requisite external approvals. - HELD THAT: - On consideration of the material and the declaration filed, the Tribunal found that the Resolution Applicants are not hit by the ineligibility provisions of Section 29A and accordingly may implement the Plan. The Tribunal further ruled that, upon approval, the moratorium under Section 14 ceases to have effect and the Plan, as approved, is binding on the corporate debtor, its employees, members, creditors (including Central/State Governments and local authorities), guarantors and other stakeholders. Any statutory waivers sought by the Resolution Applicants are not granted by the Tribunal and must be pursued before the concerned authorities in accordance with law. [Paras 7, 8, 9, 10]

Resolution Applicants are eligible; moratorium ceases with effect from this order; the approved Plan is binding on all stakeholders, subject to statutory obligations and approvals.

Final Conclusion: The Tribunal approved the Resolution Plan submitted by Constantia Corporate Shared Services Private Limited and Alfa Buildhome Private Limited after finding compliance with Section 30(2) of the Code and relevant CIRP Regulations, confirmed that the Resolution Applicants are not disqualified under Section 29A, directed that statutory waivers remain subject to appropriate authorities, declared the Plan binding on all stakeholders and ordered cessation of the moratorium with supervision of implementation by the Resolution Professional.

Inclusion of leasehold and mortgaged assets in the liquidation estate - security interest of secured creditors and relinquishment under liquidation - effect of moratorium on property of personal guarantors - liquidator's duty to realise assets for stakeholders - priority of claims under the liquidation distribution

Inclusion of leasehold and mortgaged assets in the liquidation estate - liquidator's duty to realise assets for stakeholders - effect of moratorium on property of personal guarantors - Leasehold lands used by the Corporate Debtor (express and implied leases) can be taken into the Liquidation Estate and physical possession can be directed to be handed over to the Liquidator. - HELD THAT: - The Tribunal examined whether leasehold lands on which the hospital building and utilities are constructed could be scheduled into the liquidation estate. It observed that the major part of the hospital and its utilities stand on the leasehold portion and that the building cannot be usefully sold separately from the land, making joint realisation necessary to maximise value for stakeholders. The Tribunal relied on authorities establishing that moratorium and related interim protections extend to property of personal guarantors in appropriate circumstances, and noted that one secured creditor (Respondent No.1) had no objection to surrendering possession while the other (Respondent No.2) had conditionally agreed subject to protection of its admitted claim. Balancing the liquidator's duty to dispose of liquidation assets for the benefit of all claimants against the secured creditors' rights, the Tribunal concluded that possession should be handed over to the Liquidator so that the assets may be dealt with in accordance with the Code and Regulations. [Paras 24, 25, 26]

Both Respondents directed to hand over physical possession of the mortgaged leasehold land (express and implied) to the Applicant for inclusion in the Liquidation Estate.

Inclusion of leasehold and mortgaged assets in the liquidation estate - security interest of secured creditors and relinquishment under liquidation - priority of claims under the liquidation distribution - Mortgaged lands (including areas mortgaged by promoters/personal guarantors) used by the Corporate Debtor can be added to the Liquidation Estate and the Liquidator may proceed to include them subject to compliance with the Code and Regulations. - HELD THAT: - The Tribunal considered whether lands mortgaged to secured creditors by promoters/personal guarantors, and which are utilised by the Corporate Debtor, fall within the liquidation estate such that the Liquidator may add them. Noting that the secured creditors' rights arise from mortgage and related security interests but that effective realisation requires control of the integrated asset (land plus building), the Tribunal held that the Liquidator may add the mortgaged lands to the liquidation estate. The Tribunal observed the conditional willingness of Respondent No.2 to release possession provided its admitted claim is protected under the statutory priority, and recorded that the Liquidator must follow prescribed procedures and consider admitted claims for distribution under the Code. [Paras 24, 25, 26]

The Applicant permitted to add the mortgaged lands (express and implied) into the Liquidation Estate, subject to following the statutory procedures.

Final Conclusion: MA/76/KOB/2020 allowed: both Respondents directed to surrender physical possession of the expressed and implied leasehold and mortgaged lands to the Liquidator and the Liquidator authorised to add those lands to the Corporate Debtor's Liquidation Estate, subject to compliance with the Code and Liquidation Regulations and protection of admitted claims in accordance with priority under the Code.

Summary order. Notice issued returnable within four weeks; operation of the impugned judgment stayed in the meantime; Dasti service permitted; liberty to serve the Standing Counsel for the Central Agency.

Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 for cases under investigation, enquiry or audit - quantified / quantification as written communication of amount of duty payable - amount declared versus amount estimated by the Designated Committee - issuance of Form SVLDRS 2 and Form SVLDRS 3 under the procedure in Section 127 - opportunity of hearing / principles of natural justice before adverse administrative action

Eligibility under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 for cases under investigation, enquiry or audit - quantified / quantification as written communication of amount of duty payable - Whether the writ applicant was eligible to file a declaration under the category 'investigation, enquiry or audit' of the SVLDRS Scheme on the basis of the communication dated 28.06.2019. - HELD THAT: - The Court found that the communication dated 28.06.2019 constituted a written quantification of the duty payable and directed the assessee to discharge the liability. The Board's Circular (para 10(g)) and the statutory definition of 'quantified' include a letter intimating duty demand. There was no indication in the 28.06.2019 communication that the amount was provisional or subject to further audit. The Designated Committee's own estimate (in Form SVLDRS 2) reproduced the same net amount as declared by the petitioner. On these facts the tax dues were held to have been quantified on or before 30.06.2019 and the petitioner therefore satisfied the eligibility criteria to make a declaration under the Scheme in the category 'investigation, enquiry or audit'. [Paras 20, 21]

The writ applicant was eligible to file the declaration under the category 'investigation, enquiry or audit' as the tax dues were quantified by letter dated 28.06.2019 on or before 30.06.2019.

Amount declared versus amount estimated by the Designated Committee - issuance of Form SVLDRS 2 and Form SVLDRS 3 under the procedure in Section 127 - Whether issuance of Form SVLDRS 2 by the Designated Committee was permissible where the amount estimated by the Committee equalled the amount declared by the declarant. - HELD THAT: - Section 127 distinguishes the procedure where the amount estimated equals the amount declared (mandating issuance of Form SVLDRS 3) from the situation where the estimate exceeds the declaration (permitting issuance of Form SVLDRS 2 with an opportunity of hearing). In the present case the Designated Committee's estimate matched the petitioner's declared net amount, and the petitioner had confirmed agreement in Form SVLDRS 2A. The Court held that issuing Form SVLDRS 2 in such circumstances was contrary to the statutory scheme because Form SVLDRS 2 is intended for cases where the Committee's estimate exceeds the declaration and where further hearing on the excess is required. [Paras 23, 24, 26, 27]

Issuance of Form SVLDRS 2 when the estimated amount equalled the amount declared was inconsistent with Section 127 and the Rules, and the Form SVLDRS 2 issued in the case was in contravention of those provisions.

Opportunity of hearing / principles of natural justice before adverse administrative action - Whether the rejection letters dated 05.05.2020 and 11.06.2020 were valid in view of the requirements of natural justice and whether the matter required fresh consideration. - HELD THAT: - The Court noted that the only indication of a variance was an unexplained note appended to Form SVLDRS 2; no specific varied estimate or particulars were furnished to the petitioner and no meaningful opportunity was afforded to explain or contest any alleged variance. The Designated Committee's rejection rested on absence of clarification, but the record did not show that the petitioner had been given notice of the specific grounds or a fair chance to be heard on the variance. Administrative decisions which produce civil consequences must ordinarily be preceded by an opportunity to be heard; the mechanical rejection without adequate specification of the alleged variance or an opportunity to respond was held to be violative of natural justice. Consequently the Court quashed Form SVLDRS 2 and the rejection letters and directed the Designated Committee to decide the declaration afresh after affording an opportunity of hearing and to pass a reasoned order. [Paras 30, 31]

The rejection letters were set aside for failure to comply with principles of natural justice; Form SVLDRS 2 and the rejections were quashed and the matter remanded for fresh decision after affording the petitioner a hearing.

Final Conclusion: The petition is allowed: the Court held the petitioner eligible under the SVLDRS Scheme as the tax dues were quantified by letter dated 28.06.2019, found the issuance of Form SVLDRS 2 and the subsequent rejection letters to be contrary to the statutory procedure and principles of natural justice, quashed Form SVLDRS 2 and the rejection communications, and directed the Designated Committee to reconsider the declaration afresh after affording an opportunity of hearing and to pass a reasoned order within eight days.

Summary order. Notice issued; Dasti permitted; matters posted for final disposal on 17th February, 2021; operation of the impugned judgment dated 09.03.2020 of the High Court of Judicature at Madras in W.A. Nos. 2812, 3403, 3413 and 3414 of 2019 stayed until the next date of hearing.

Summary dismissal on ground of non-payment of pre-deposit - right to have appeal heard on merits - restoration of appeal - conditional remand subject to satisfaction of pre-deposit

Summary dismissal on ground of non-payment of pre-deposit - right to have appeal heard on merits - Whether appeals summarily dismissed for non-payment of pre-deposit could be quashed and restored for adjudication on merits. - HELD THAT: - The Court found that both the First Appellate Authority and the Tribunal dismissed the appeals solely on the ground of non-payment of the pre-deposit without entering into the merits. Noting that a substantial portion of the pre-deposit had been made (Rs. 7,43,000/-) and having accepted the petitioner's undertaking to pay the balance within a stipulated period, the Court held that the appeals ought to be heard on merits rather than being finally disposed of for non-payment. Accordingly, the impugned orders of summary dismissal were quashed and set aside and the matters were remitted for fresh adjudication on merits. [Paras 10, 11, 12]

Impugned orders of summary dismissal quashed and set aside; appeals to be restored and decided on merits.

Restoration of appeal - conditional remand subject to satisfaction of pre-deposit - Terms on which the appeals are to be restored and the condition for fresh adjudication by the First Appellate Authority. - HELD THAT: - The Court directed that the appeals be restored to the First Appellate Authority and decided afresh, but conditioned the restoration on full payment of the outstanding pre-deposit. The petitioner was directed to deposit the remaining amount before the concerned authority within eight weeks from receipt of the order, and the First Appellate Authority was to proceed only after being satisfied about the payment. This remedial course preserves the petitioner's opportunity to contest the appeals on merits while enforcing the pre-deposit requirement as a condition precedent to restoration. [Paras 11, 12]

Appeals remitted to First Appellate Authority for fresh hearing; restoration conditioned on payment of outstanding pre-deposit within eight weeks.

Final Conclusion: The common order of the Tribunal and the First Appellate Authority dismissing the appeals for non-payment of pre-deposit is quashed; the appeals are restored and remitted to the First Appellate Authority for fresh adjudication on merits upon the petitioner's compliance with the Court's direction to deposit the outstanding pre-deposit within eight weeks; no order as to costs.

Refund under Section 36 of the VAT Act, 2003 - Time-bar for audit assessment under Section 34 of the VAT Act, 2003 - Power to withhold refund under Section 39 of the VAT Act, 2003 - Provisional assessment versus regular audit assessment - Entitlement to interest on withheld refund

Refund under Section 36 of the VAT Act, 2003 - Time-bar for audit assessment under Section 34 of the VAT Act, 2003 - Whether the respondents were entitled to withhold the amount recovered during search in the absence of any assessment order and after the period for audit assessment had expired. - HELD THAT: - The Court held that there was no legal justification for withholding the sum recovered where no assessment order had been passed and the period for completion of audit assessment, as prescribed under Section 34(9) and (10), had elapsed. Reliance was placed on this Court's decision in Shilpa Industries [SCA/540/2020], which recognised that where assessment proceedings are not validly subsisting and limitation under Section 34 has run, the authorities cannot retain amounts refundable to the dealer. In the present case the material showed withholding of refund without any subsisting demand or valid assessment, and accordingly such withholding was contrary to the scheme of Section 36 which mandates refund of excess payment subject only to specified adjustments. [Paras 8, 10]

Respondents were not entitled to withhold the refund in absence of assessment and after the time for audit assessment had expired; writ allowed on this ground.

Power to withhold refund under Section 39 of the VAT Act, 2003 - Provisional assessment versus regular audit assessment - Entitlement to interest on withheld refund - Whether the proviso permitting withholding of refund (Section 39) or reliance on provisional assessment justified retention of the amount; and whether the petitioner was entitled to interest. - HELD THAT: - The Court examined the scope of Section 39 and observed that withholding under that provision is confined to cases where an order giving rise to refund is the subject matter of appeal/further processing or where processing under the Act is pending and the Commissioner is satisfied that grant of refund is likely to adversely affect revenue. No valid assessment or appeal/further proceeding existed to justify withholding here. The petitioners also pointed to notices and provisional assessment forms, but the material showed provisional assessments were used where regular audit assessment was not made, which did not authorize indefinite retention. The Court further directed payment of the refund with statutory interest, applying the principle that where a refund is unjustifiably withheld the dealer is entitled to interest as contemplated by the Act and by precedent. [Paras 8, 10]

Withholding under Section 39 and reliance on provisional assessment did not justify retention; petitioner entitled to refund with statutory interest.

Final Conclusion: Writ petition allowed; respondents directed to refund the amount recovered in respect of F.Y. 2012-13 to 2015-16 and to pay statutory interest at 6% within six weeks from communication of the order.

Invocation of Section 34(8A) only during the course of proceedings - condition precedent for invoking Section 34(8A) - invalidation of consequential attachment where parent assessment is without jurisdiction - appealability of assessment order under Section 73 as alternative remedy - limitation and finality of assessment for assessment year 2010-11

Invocation of Section 34(8A) only during the course of proceedings - condition precedent for invoking Section 34(8A) - limitation and finality of assessment for assessment year 2010-11 - Validity of invoking Section 34(8A) of the GVAT Act in the absence of any proceedings pending against the dealer for the relevant period. - HELD THAT: - The Court held that sub-section (8A) may be invoked only "during the course of any proceedings under this Act" and that pendency of proceedings is a sine qua non for exercise of the power. The materials show the original assessment for AY 2010-11 was completed earlier and there were no proceedings pending when the notice under Section 34(8A) was issued; the State's own communication conceded there were no proceedings pending. The Court relied on precedents of this High Court (and their affirmation by the Supreme Court) which interpret Section 34(8A) in the statutory context of assessment and limitation provisions and which emphasise that the power cannot be exercised once assessments and any revisional or turnover-escape procedures have become final or time-barred. Given these facts, the condition precedent for invoking Section 34(8A) was not fulfilled and the impugned assessment under that provision was therefore without jurisdiction. [Paras 8, 12, 15]

Invocation of Section 34(8A) was illegal and without jurisdiction and the assessment order dated 08.07.2019 is quashed and set aside.

Invalidation of consequential attachment where parent assessment is without jurisdiction - special mode of recovery under Section 44 - Validity of the attachment of the dealer's bank account under Section 44 consequent to the impugned assessment. - HELD THAT: - Section 44 authorises special mode of recovery including attachment, but such exercise flows from a valid tax demand. The Court held that where the assessment on which recovery is predicated is void for want of jurisdiction (because Section 34(8A) could not be validly invoked), the consequent attachment under Section 44 is also without jurisdiction. Having quashed the assessment, the Court accordingly held that the attachment could not stand. [Paras 15, 19]

Attachment order dated 30.06.2020 under Section 44 is quashed and set aside as consequential to an invalid assessment.

Final Conclusion: Writ allowed; impugned assessment order dated 08.07.2019 under Section 34(8A) quashed for lack of pendency of proceedings, and the consequential bank account attachment dated 30.06.2020 under Section 44 is also quashed; writ petition disposed accordingly.

Sale in the course of inter-state trade or commerce - movement of goods - transfer of documents of title during movement - interpretation of Section 3 of the CST Act regarding inter-state sale - composite contract - job work - title to goods - jurisdiction to assess

Sale in the course of inter-state trade or commerce - movement of goods - transfer of documents of title during movement - interpretation of Section 3 of the CST Act regarding inter-state sale - composite contract - job work - title to goods - Whether the transactions constituted a sale in the course of inter-state trade or commerce under Section 3 of the CST Act. - HELD THAT: - The Tribunal found, on the subcontract dated 24.06.1983 and the terms of the primary contracts, that M/s.UEHL performed job work on raw materials supplied by the assessee and that title to the goods remained with the assessee. The Tribunal held that the arrangements formed part of a composite contract executed by the assessee outside the State and that despatches from Coimbatore were in fulfillment of that composite contract rather than a completed sale effected in Tamil Nadu. Applying the two alternative tests in Section 3 - (a) movement of goods occasioning the sale, or (b) transfer of documents of title during movement - the Tribunal concluded that neither condition was satisfied. The High Court examined these factual findings and the Tribunal's application of the legal tests (including reliance on the decision in Bharat Heavy Electricals Ltd.) and held the findings to be factual, not perverse, and correctly applying the legal principles, thereby declining to substitute its view.

The Tribunal's conclusion that the transactions did not constitute inter-state sales under Section 3 of the CST Act is upheld.

Jurisdiction to assess - title to goods - job work - Whether the Commercial Tax Officer, Podanur Assessment Circle, had jurisdiction to assess the assessee in respect of the disputed transactions. - HELD THAT: - The Tribunal considered the nature of the contract and the fact that title remained with the assessee and held that the Assessing Officer, Podanur Assessment Circle, did not have jurisdiction to assess the assessee in respect of the transactions in question. The High Court found no error in this conclusion, treating the jurisdictional finding as flowing from the factual determination about the nature of the transactions and title, and therefore not amenable to interference under Article 226.

The Tribunal's finding that the Podanur Commercial Tax Officer lacked jurisdiction is upheld.

Final Conclusion: The writ petitions are dismissed. The Tribunal's common order dated 28.11.2000 allowing the appeals of the assessee and setting aside the assessments for the assessment years 1985-86 to 1989-90 is upheld.

Reopening of assessment - rectification of assessment under Section 84 - power to reopen assessment under Section 27 - exemption for supplies to the Public Distribution System

Rectification of assessment under Section 84 - reopening of assessment - power to reopen assessment under Section 27 - Validity of invoking Section 84 to reopen and redetermine turnover and whether the Assessing Officer was entitled to reopen the assessment without complying with the requirements of the provision enabling reopening - HELD THAT: - The Court found that the Assessing Officer invoked Section 84 in the show cause notice dated 30.04.2014 to reopen the assessment and redetermine turnover, but the power to reopen assessment is traceable to Section 27 of the TNVAT Act. The assessment could be reopened only in terms of Section 27(1), which requires the officer to disclose under which sub section he proposes to reassess on the ground of escaped assessment or assessment at a lower rate. The show cause notice did not make such a proposal and did not comply with the statutory prerequisites for reopening. The Assessing Officer also failed to give reasons rejecting the appellant's contention based on governmental orders and did not pass a reasoned or speaking order when the appellant filed an application under Section 84. Although the Assessing Officer elsewhere acknowledged that Section 84 is limited to correction of clerical and arithmetical mistakes, he proceeded to reopen and revise the assessment invoking Section 84; the Court treated that as impermissible. Considering both contentions - that Section 84 was wrongly invoked and that the requirements of Section 27 were not met - the Court concluded that reopening was bad in law. [Paras 6, 7]

Reopening of the assessment by invoking Section 84 (and the consequential redetermination) was illegal and bad in law.

Exemption for supplies to the Public Distribution System - reopening of assessment - Whether the orders passed as a consequence of the illegal reopening could be sustained and what relief should follow - HELD THAT: - Because the reopening and reassessment were held to be bad in law, the consequential assessment order dated 09.06.2014 and the order in the writ petition dated 09.10.2014 (impugned before the writ court) could not be sustained. The Court, having found the reopening defective for the reasons stated, interfered with the Assessing Officer's order and allowed the writ appeal. The Court also noted earlier authority considering the limited scope of Section 84 but rested its decision on the procedural and substantive defects in reopening in the present case. [Paras 7, 9]

The assessment order dated 09.06.2014 and the order dated 09.10.2014 are quashed; the writ appeal is allowed.

Final Conclusion: Writ appeal allowed; reopening of assessment by invoking Section 84 held illegal for failure to comply with statutory requisites of Section 27(1) and for absence of reasoned consideration of the appellant's exemption claim; consequential assessment orders set aside; no costs.

Estimation for non maintenance of stock book and imposition of 1% addition - application of the exemption limit under Section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970 to assessment year 1996 97 - liability to pay additional sales tax for the tax year 1996 97 having regard to turnover for the whole year - rectification under Section 55 of the Tamil Nadu General Sales Tax Act, 1959 and its applicability to additional sales tax - reading together of the Tamil Nadu General Sales Tax Act and the Tamil Nadu Additional Sales Tax Act as a non self contained code

Estimation for non maintenance of stock book and imposition of 1% addition - Legality of the Tribunal directing a 1% addition on account of non maintenance of stock book on the basis that the assessee is not a manufacturer was considered and answered by reference to the precedent relied upon by the Court. - HELD THAT: - The Court disposed the tax case revision by answering the substantial questions in terms of the decision in Philips India Limited. The impugned questions, including the Tribunal's direction to estimate 1% addition for non maintenance of stock book, were resolved by applying the law as declared in Philips India Limited. The Court treated the substantial questions collectively and adopted the precedent's conclusions in respect of the matters raised in the revision, thereby determining the challenge to the Tribunal's direction in the same terms as the authoritative decision relied upon. [Paras 3, 4]

The question concerning the 1% estimation for non maintenance of stock book was answered in terms of Philips India Limited and disposed of accordingly.

Application of the exemption limit under Section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970 to assessment year 1996 97 - liability to pay additional sales tax for the tax year 1996 97 having regard to turnover for the whole year - Whether additional sales tax is attracted for the assessment year 1996 97 having regard to the amended exemption limit and the turnover for the year was decided in favour of the revenue by applying the reasoning in Philips India Limited. - HELD THAT: - Applying Philips India Limited, the Court held that the liability to pay additional sales tax for the assessment year 1996 97 is to be determined by reference to the position as it stood in statute during the relevant period and by reference to the turnover for the whole year. The reasoning in Philips explains that even though the amendment raising the exemption limit to a higher threshold took effect from 1.8.1996, the original statutory position continued to give rise to liability for the earlier part of the year; consequently, where the annual turnover for the year exceeded the applicable limit, additional tax liability for 1996 97 arises. The Court accepted that the Assessing Officer was justified in treating the taxable turnover for April 1, 1996 to March 31, 1997 as determinative for liability. [Paras 3, 4]

The Tribunal's conclusion on attraction of additional sales tax for 1996 97 was answered in terms of Philips India Limited and upheld as disposed in that manner.

Rectification under Section 55 of the Tamil Nadu General Sales Tax Act, 1959 and its applicability to additional sales tax - reading together of the Tamil Nadu General Sales Tax Act and the Tamil Nadu Additional Sales Tax Act as a non self contained code - Whether rectification jurisdiction under Section 55 of the TNGST Act could be exercised in relation to assessment of additional sales tax was finally decided in favour of applying the provisions of the General Sales Tax Act to additional tax assessments. - HELD THAT: - Relying on the reasoning reproduced from Philips India Limited, the Court held that the additional sales tax under Section 2(1)(aa) is to be treated as collection of sales tax at a higher rate and that the provisions of the Tamil Nadu General Sales Tax Act (including Section 55) and the rules made thereunder apply to additional tax by virtue of the Additional Sales Tax Act's saving and rule making provisions and Rule 9 which makes the General Sales Tax Rules applicable mutatis mutandis. The Court accepted that the Additional Sales Tax Act is not a self contained code and that rectification under Section 55 of the TNGST Act may be availed for effecting corrections in additional tax assessments. [Paras 3, 4]

The Court answered the question on the availability of rectification under Section 55 in relation to additional sales tax in accordance with Philips India Limited and disposed of the revision accordingly.

Final Conclusion: The substantial questions of law raised in the tax case revision were answered in terms of Philips India Limited; the tax case revision is disposed of accordingly, with no costs.

Bail pending trial - Custodial detention and prejudice to investigation - Role of accused as promoter and beneficiary in a financial fraud - Risk of tampering with evidence and hampering investigation - Multiplicity of FIRs and continuing wide-ranging investigation - Non-obtainment of regulatory licence for mobilising deposits - Evasion of arrest by co-accused

Bail pending trial - Custodial detention and prejudice to investigation - Role of accused as promoter and beneficiary in a financial fraud - Risk of tampering with evidence and hampering investigation - Multiplicity of FIRs and continuing wide-ranging investigation - Petition for grant of bail under Section 439 Cr.P.C. dismissed. - HELD THAT: - The Court found sufficient material in the investigation to show that the petitioner was not merely an innocent investor but a chief ID promoter and planner of the Company, having been issued a common ID, implicated by the Chairman-cum-CMD and supported by statements and documentary material. Bank records and recovered documents indicate receipt of substantial amounts from the Company into the petitioner's accounts and subsequent purchase of immovable property without declared sources, which corroborates complicity. Investigation, including GST and verification of the Company's mobilisation of deposits without requisite regulatory registration, is ongoing; out of 31 accused, ten are evading arrest and are alleged to be in league with the arrested persons, creating a real risk that release would enable the petitioner to hamper the investigation, influence witnesses or circulate misleading information among depositors. The delay in framing of charges is attributable to the continuing and wide-ranging investigation and the non-arrest of co-accused, not to the prosecution; therefore the petitioner cannot claim prejudice from prosecutorial delay. Given the magnitude of the alleged fraud, the multiplicity of related FIRs across States and the prospective prejudice to the investigation and victims, the Court concluded that release on bail at this stage would be detrimental to the investigation and prosecution. [Paras 9, 11, 12]

Bail is refused and the petition is dismissed.

Final Conclusion: Having regard to the material collected during investigation, the petitioner's alleged role as a chief promoter and beneficiary, ongoing multi jurisdictional investigation with several co accused yet to be arrested, and the real risk of prejudice to the investigation and victims, the High Court dismissed the bail petition.