TaxTMI Updates e-Newsletter
Feb 13,2025

Insufficiently particularised show cause notice - requirement to specify material particulars in show cause notice - duty to consider and give reasons on reply to show cause notice - invalid cryptic order of cancellation of registration - appellate authority's duty to remit for corrective measures

Insufficiently particularised show cause notice - requirement to specify material particulars in show cause notice - Impugned show cause notice lacking material particulars is unsustainable. - HELD THAT: - The Court held that a show cause notice which merely cites the provision of law alleged to be violated, without indicating the material particulars of the violations, is deficient. Once a notice solicits the dealer's response to detected violations, the authority must indicate details or material particulars so as to enable an effective reply. Even where those details may have been furnished elsewhere (for example, in a demand notice), the issuing authority should have at least indicated that the particulars were already supplied or appended a copy of such material to the show cause notice. The absence of such particulars rendered the proceedings initiated by that notice unsustainable. [Paras 5]

The show cause notice dated 07.06.2023 is quashed for not specifying material particulars.

Duty to consider and give reasons on reply to show cause notice - invalid cryptic order of cancellation of registration - Cancellation of registration by a cryptic order without considering the dealer's reply and giving reasons is invalid. - HELD THAT: - The Court found that after the petitioner responded to the show cause notice and asserted that payments were made through bank transactions, the Assessing Authority was obliged to consider that explanation and record reasons for accepting or rejecting it. The impugned cancellation comprised a single-line order stating only that the reply was examined, without disclosing whether the reply was found satisfactory or explaining the basis for rejection. Such a cryptic, non-speaking order cannot lawfully effect cancellation of registration. [Paras 6, 7]

The cancellation order dated 17.11.2023 is set aside for being cryptic and for failure to give reasons after considering the reply.

Appellate authority's duty to remit for corrective measures - Appellate Authority's order was set aside for failure to appreciate the defects and for not remitting the matter for corrective action. - HELD THAT: - The Court concluded that the Appellate Authority did not properly appreciate that the show cause notice was deficient and that the cancellation order was non-speaking. Instead of remanding the matter to enable the Assessing Authority to cure the defects and follow the law, the Appellate Authority dismissed the appeal. For these reasons the Appellate Authority's order was set aside and the impugned orders quashed, with liberty to the Assessing Authority to issue a fresh notice and proceed according to law. [Paras 7, 8]

Appellate Authority's order dated 29.11.2024 is set aside and the impugned orders are quashed, with liberty to the Assessing Authority to proceed afresh.

Final Conclusion: Writ petition allowed; the Appellate Authority's order dated 29.11.2024 and the Assessing Authority's orders (show cause and cancellation) are quashed. The Assessing Authority may issue a fresh notice and proceed in accordance with law; the petitioner cannot claim delay as a bar.

Provisional attachment under Section 83 of the CGST Act - formation of opinion based on tangible material - necessity to protect the interest of the government revenue - jurisdictional fact and non-application of mind - duty to disclose reasons for attachment - post-decisional objections and Rule 159(5) safeguards - draconian power and last-resort principle

Provisional attachment under Section 83 of the CGST Act - formation of opinion based on tangible material - necessity to protect the interest of the government revenue - jurisdictional fact and non-application of mind - draconian power and last-resort principle - Validity of the provisional attachment in the absence of disclosure of tangible material and application of mind - HELD THAT: - The Court applied the principle from Radha Krishan Industries that exercise of power under Section 83 is draconian and conditioned on the Commissioner forming an opinion, based on tangible material, that a provisional attachment is necessary to protect government revenue. The impugned DRC-22 merely recited initiation of proceedings under Section 67 and reproduced the statutory language without setting out any material forming the basis of the opinion. The order therefore shows no application of mind to the jurisdictional fact that attachment was the only measure necessary to protect revenue. A jurisdictional fact must exist and be shown; absence of such tangible material renders the exercise of power ultra vires. Applying these principles to the facts, the Court held that the provisional attachment was vitiated for failure to identify tangible material and for mechanical reproduction of statutory terms without the requisite reasoning. [Paras 7, 14]

Provisional attachment set aside because the order does not disclose tangible material nor reflect application of mind that attachment was necessary to protect revenue.

Duty to disclose reasons for attachment - post-decisional objections and Rule 159(5) safeguards - provisional attachment under Section 83 of the CGST Act - Validity of the proceedings for failure to disclose reasons and for not considering objections filed by the petitioner - HELD THAT: - The Court emphasised that reasons are the link between materials and conclusions and that Section 83, while permitting post-decisional hearing, does not excuse disclosure of reasons that led to the formation of opinion. Disclosure is necessary to make the objection procedure under Rule 159(5) real and effective. The respondent's contention that the DRC-22 portal/form limitations prevented setting out reasons was rejected; the authority could have furnished reasons by other modes under Section 169. The respondent also erred in refusing to consider the petitioner's letters on the ground that they were not in Form DRC-23; such technicality cannot defeat the requirements of natural justice. For these reasons the attachment process was procedurally defective. [Paras 11, 12, 13, 14]

Provisional attachment set aside for failure to disclose reasons and for not dealing with the petitioner's objections in a manner consistent with Rule 159(5) and principles of natural justice.

Final Conclusion: The provisional attachment order in Form DRC-22 is set aside: the order failed to disclose tangible material or reasons constituting the jurisdictional basis for attachment and did not properly afford or consider post-decisional objections; writ petition disposed of with no costs.

Seeking grant of Regular bail - no assessment of alleged embezzlement of GST committed by the petitioner - HELD THAT:- As per the principle of the criminal jurisprudence, no one should be considered guilty, till the guilt is proved beyond reasonable doubt and the conclusion of trial is likely to take considerable time and therefore, detaining the petitioner behind the bars for an indefinite period would solve no purpose.

Reliance can be placed upon the judgment of the Apex Court rendered in Dataram versus State of Uttar Pradesh and another [2018 (2) TMI 410 - SUPREME COURT] wherein it has been held that the grant of bail is a general rule and putting persons in jail or in prison or in correction home is an exception.

This Court is conscious of the fundamental principle of law that right to speedy trial is a part of reasonable, fair and just procedure enshrined under Article 21 of the Constitution of India.

Conclusion - The petitioner is directed to be released on regular bail on his furnishing bail and surety bonds to the satisfaction of the trial Court/Duty Magistrate, concerned.

Petition allowed.

Maintainability of petition - availability of alternative remedy - concessional rate of tax at 12% under N/N. 11/2017-Central Tax (Rate) - denial of opportunity of hearing as mandated by Section 75 of the Act 2017 - violation of principles of natural justice - HELD THAT:- It is well settled law that mere availability of an alternative remedy of appeal or revision, which the party invoking the jurisdiction of the High Court under Article 226 of the Constitution of India has not pursued, would not oust the jurisdiction of the High Court and render a writ petition as not maintainable. Where the controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, petition cannot be throw/dismissed only on the ground of alternative remedy.

However, the averments in the present petition itself depicts that two notices were received by the petitioner and the reason for not responding to such notices is not sufficient, it is mentioned that “due to lack of awareness and technical knowledge, the petitioner could not respondent to the said notice”. Therefore, it cannot be said that substantial compliance of natural justice has not been made. Moreover, there is efficacious alternative remedy in favour of the petitioner of filing an appeal under Section 107 of the Act 2017.

Conclusion - i) Mere availability of an alternative remedy does not render a writ petition not maintainable if the controversy involves purely legal questions. ii) This Court is of the view that the petitioner has not been able to make out a case for interference by this Court under Article 226 of the Constitution of India.

Petition dismissed.

Limitation under Section 73(10) of the U.P. GST Act, 2017 - due date for filing annual return under Section 44(1) of the U.P. GST Act, 2017 - retrospective effect of notification extending limitation - jurisdictional bar resulting from expiry of statutory limitation

Limitation under Section 73(10) of the U.P. GST Act, 2017 - due date for filing annual return under Section 44(1) of the U.P. GST Act, 2017 - retrospective effect of notification extending limitation - jurisdictional bar resulting from expiry of statutory limitation - Validity of demand order dated 02.12.2023 and show cause notice dated 29.09.2023 issued under Section 73 in view of the threeyear limitation prescribed by Section 73(10) as calculated from the due date for furnishing annual return under Section 44(1) - HELD THAT: - The Court held that the due date for filing the annual return for FY 2017-18, ordinarily 31.12.2018, had been validly extended to 05.02.2020 by notification adopted by the State; consequently the threeyear period in Section 73(10) expired on 05.02.2023. The subsequent notification dated 24.04.2023 relied upon by the State extended the limitation only with retrospective effect from 31.03.2023 and therefore could not revive or validate orders if the threeyear period had already expired prior to 31.03.2023. As the assessment/order in question was passed after the expiry of the threeyear period (i.e., after 05.02.2023) and before any applicable retrospective extension date, the orders were beyond the time prescribed by Section 73(10) and consequently suffered from want of jurisdiction. Applying that reasoning, the Court quashed the impugned orders dated 02.12.2023 and 29.09.2023 as timebarred. [Paras 8]

Writ petition allowed; impugned orders dated 02.12.2023 and 29.09.2023 quashed as barred by the limitation in Section 73(10) read with Section 44(1).

Final Conclusion: The petition is allowed; the demand/order and show cause notice impugned as dated 02.12.2023 and 29.09.2023 are quashed on the ground that they were issued after the threeyear limitation prescribed by Section 73(10) as computed from the extended due date for filing the annual return for FY 2017-18, and consequences shall follow accordingly.

Show Cause Notice under Section 73(1) - Statement of determination under Section 73(3) - Summary of Show Cause Notice in FORM GST DRC-01 - Attachment to determination of tax - Requirement of issuance by the Proper Officer - Conditions precedent for validity of an order under Section 73(9) - Right to initiate de novo proceedings where procedural defects vitiate earlier order - Exclusion of time for computation of limitation under Section 73(10)

Show Cause Notice under Section 73(1) - Summary of Show Cause Notice in FORM GST DRC-01 - Whether a Summary of Show Cause Notice in FORM GST DRC-01 can substitute for the Show Cause Notice required by Section 73(1). - HELD THAT: - The Court applied the analysis in the co ordinate Bench decision dated 26.09.2024 and held that the Summary in FORM GST DRC-01 is not a substitute for the Show Cause Notice mandated by sub section (1) of Section 73. The Rule 142(1)(a) requirement to issue a summary electronically alongside prescribed notices does not dispense with the statutory requirement that a Show Cause Notice, setting the proceedings in motion under Section 73(1), must be issued by the Proper Officer. Issuance of only the summary therefore does not comply with the statutory scheme and cannot initiate valid Section 73 proceedings. [Paras 10]

Summary in FORM GST DRC-01 does not substitute for the Show Cause Notice under Section 73(1); non issuance of the statutory Show Cause Notice renders the proceedings defective.

Statement of determination under Section 73(3) - Attachment to determination of tax - Whether the Attachment to the Summary (being the Statement of determination under Section 73(3)) can stand in place of the Show Cause Notice under Section 73(1). - HELD THAT: - Relying on the reasoning in the batch decision, the Court distinguished the Statement under Section 73(3) from the Show Cause Notice under Section 73(1). The attachment to the Summary appended to the DRC 01 is only a statement of determination under Section 73(3) and, being issued without the antecedent Show Cause Notice by the Proper Officer, cannot fulfill the requirement of sub section (1). The statutory scheme contemplates separate issuance and authentication by the Proper Officer of the Show Cause Notice, the Statement and the Order; one document cannot substitute for another. [Paras 11]

The Attachment/Statement under Section 73(3) cannot substitute for the Show Cause Notice under Section 73(1).

Conditions precedent for validity of an order under Section 73(9) - Requirement of issuance by the Proper Officer - Whether the impugned order passed under Section 73(9) without issuance of the Show Cause Notice and prescribed statement is sustainable. - HELD THAT: - The Court held that compliance with sub sections (1) to (8) and (10)-(11) of Section 73 and Rule 142(1) are conditions precedent for a valid order under Section 73(9). As the Show Cause Notice under sub section (1) was not issued and only the Summary and Attachment were served, the impugned order dated 30.12.2023 suffers from procedural infirmity. In view of the earlier common judgment and the statutory requirements that these documents be issued and authenticated by the Proper Officer, the impugned order was liable to be set aside. [Paras 11, 12]

Impugned order under Section 73(9) is not sustainable and is set aside for non compliance with conditions precedent.

Right to initiate de novo proceedings where procedural defects vitiate earlier order - Exclusion of time for computation of limitation under Section 73(10) - Whether respondent authorities may initiate fresh proceedings and how limitation is to be treated if they do so. - HELD THAT: - While quashing the impugned order for procedural defects, the Court exercised its discretion to permit the respondent authorities to initiate de novo proceedings under Section 73 if deemed fit, in accordance with Paragraph 29(F) of the co ordinate Bench judgment. The Court directed that the period from issuance of the Summary of Show Cause Notice until service of a certified copy of this judgment upon the Proper Officer shall be excluded in computing the period prescribed under Section 73(10). The petitioner is left free to raise all legal grounds in any fresh proceedings. [Paras 8, 14]

Respondent authorities may initiate de novo Section 73 proceedings; time from summary issuance to service of certified copy of judgment shall be excluded for computation under Section 73(10).

Final Conclusion: The impugned order dated 30.12.2023 passed under Section 73(9) is quashed for failure to issue the statutory Show Cause Notice under Section 73(1) and for relying solely on the Summary and Attachment; the respondents are permitted to initiate de novo proceedings in compliance with Section 73 and related rules, and the period from issuance of the Summary to service of the certified copy of this judgment is excluded in computing the limitation under Section 73(10).

Reversal of ITC credit along with penalty and interest - HELD THAT:- Considering the fact that the legal issue involved in this Writ Petition has already been dealt with by this Court in a batch of Writ Petitions, viz., in SRI GANAPATHI PANDI INDUSTRIES [2024 (10) TMI 1631 - MADRAS HIGH COURT], this Court is inclined to dispose of the present Writ Petition on the same lines.

The petitioner was entitled to claim ITC for the specified financial years under the amended provisions of Section 16.

Petition allowed.

Retrospective cancellation of GST registration - power to cancel GST registration with retrospective effect under Section 29 - requirement of a reasoned order demonstrating application of mind for retrospective cancellation - need to place taxpayer on prior notice of intention to cancel retrospectively in the show cause notice - modification of effective date of cancellation to date of show cause notice

Retrospective cancellation of GST registration - requirement of a reasoned order demonstrating application of mind for retrospective cancellation - need to place taxpayer on prior notice of intention to cancel retrospectively in the show cause notice - Validity of a retrospective cancellation of GST registration where the show cause notice did not disclose any intent to cancel from a retrospective date and the cancellation order lacked reasons. - HELD THAT: - The Court applied the principle that although the proper officer has statutory power to cancel registration with retrospective effect, the exercise of that power must be reasoned and demonstrate application of mind given the deleterious consequences of retroactive cancellation. The impugned show cause notice contained no indication that cancellation would be from a retrospective date and the cancellation order failed to assign rudimentary reasons for imposing a retrospective effective date. Reliance was placed on earlier decisions which held that retrospective cancellation cannot be mechanical or routine, must be based on objective criteria, and requires prior notice to the taxpayer of the intention to cancel retrospectively so that the taxpayer has an opportunity to meet that case. Applying these precepts, the Court found that absence of reasons in the original show cause notice and failure to place the petitioner on prior notice of retrospective cancellation invalidated the action of cancelling registration from a retrospective date. [Paras 4]

Retrospective cancellation is invalidated for want of prior notice and absence of reasons in the show cause notice and cancellation order.

Modification of effective date of cancellation to date of show cause notice - power to cancel GST registration with retrospective effect under Section 29 - Remedial relief to be granted where retrospective cancellation is invalid - appropriate effective date for cancellation. - HELD THAT: - Having held that the retrospective aspect of the cancellation could not be sustained for lack of notice and reasons, the Court exercised judicial remedial discretion to modify the impugned order. Rather than restoring registration ab initio, the Court directed that the cancellation shall take effect from the date of the show cause notice (07 November 2024). The Court consequently quashed the specific stipulation in the impugned order which made the cancellation effective from 13 February 2024. [Paras 5, 6]

Impugned order modified: cancellation shall take effect from the date of the show cause notice (07 November 2024); the retrospective effective date of 13 February 2024 is quashed.

Final Conclusion: Writ petition allowed: retrospective cancellation of GST registration was set aside for failure to give prior notice and reasons; the cancellation is modified to operate from the date of the show cause notice (07 November 2024) and the earlier retrospective effective date is quashed.

Challenge to assessment order - petitioner raised a specific ground that the petitioner was not served with any notice seeking explanation with regard to the alleged defects - principles of natural justice - HELD THAT:- Reliance placed upon the judgment passed by this Court in a batch of writ petitions in MR. SAHULHAMEED VERSUS THE COMMERCIAL TAX OFFICER, TUTICORIN-II, THIRUNELVELI, TAMILNADU [2025 (1) TMI 1021 - MADRAS HIGH COURT] where it was held that 'Section 169 mandates a notice in person or by registered post or to the registered e-mail ID alternatively and on a failure or impracticability of adopting any of the aforesaid modes, then the State can, in addition, make a publication of such notices/ summons/ orders in the portal/ newspaper through the concerned officials.'

The aforesaid judgment of this Court is squarely applicable to the case on hand. In view of the same, the impugned assessment order passed by the respondent dated 26.04.2024 for the assessment year 2018-19 cannot be sustained and is liable to be quashed. Accordingly, the impugned assessment order passed by the respondent dated 26.04.2024 for the assessment year 2018-19 is hereby quashed. It is made clear that the impugned assessment order passed by the respondent dated 26.04.2024 shall be treated as show cause notice.

Petition allowed.

Principles of natural justice - Conditional remand subject to pre-deposit - Treatment of an assessment order as a show cause notice for fresh adjudication - Adjustment of amounts already recovered or pre-deposited against directed pre-deposit - Restoration of impugned order on non-compliance with conditional direction

Principles of natural justice - Conditional remand subject to pre-deposit - Treatment of an assessment order as a show cause notice for fresh adjudication - Adjustment of amounts already recovered or pre-deposited against directed pre-deposit - Restoration of impugned order on non-compliance with conditional direction - Impugned assessment order dated 24.08.2024 set aside and matter remitted for fresh consideration subject to conditions of deposit and procedure - HELD THAT: - The writ petition challenging the assessment order on grounds including breach of principles of natural justice was disposed of by consent. The court set aside the impugned order and directed that the petitioner shall deposit 10% of the disputed tax within four weeks. Any sums already recovered or pre-deposited shall be adjusted against this directed deposit and the assessing authority is to intimate the balance, if any, for payment. Upon deposit (after verification and adjustment), the impugned assessment order will be treated as a show cause notice and the petitioner afforded four weeks to file objections with supporting material; the authority shall consider such objections and pass fresh orders after giving a reasonable opportunity of hearing. The court provided a timeline for verification, intimation and payment and ordered that attachments or garnishee proceedings, if any, shall be lifted on compliance. The court further directed that failure to comply with the deposit or to file objections within the stipulated periods will result in restoration of the original impugned order. The order was passed by reference to a similar earlier decision and on the petitioner's expressed willingness to make the deposit, and the respondent did not oppose the relief.

Impugned order dated 24.08.2024 set aside; petitioner to deposit 10% of disputed tax within four weeks (with adjustments for amounts already paid/recovered); on such compliance the assessment order is to be treated as a show cause notice for fresh adjudication after hearing; failure to comply will restore the impugned order; attachments to be lifted on compliance.

Final Conclusion: By consent the High Court quashed the impugned assessment/demand order dated 24.08.2024 and remitted the matter to the assessing authority for fresh adjudication on the petitioner depositing 10% of the disputed tax (with adjustment of sums already paid), subject to timelines and restoration on non-compliance; no costs.

Exemption under entry 41 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - use for industrial or financial activity in an industrial or financial business area - long term lease of thirty years or more - entity having 20 per cent or more ownership of Central Government, State Government or Union territory - orders of Appellate Authority under section 101 (confirm or modify ruling)

Long term lease of thirty years or more - exemption under entry 41 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - Whether the lease period condition of thirty years or more is satisfied for the purpose of entry 41 exemption - HELD THAT: - The allotment letter and lease agreement show the land was leased for thirty (30) years. The Appellate Authority records that the first condition (lease period of thirty years or more) is a settled fact on the material before it, and therefore this condition is fulfilled for the purposes of entry 41. [Paras 9]

The lease period condition of thirty years or more is satisfied.

Use for industrial or financial activity in an industrial or financial business area - exemption under entry 41 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - Whether the leased plot is being used for industrial activity or for financial activity in an industrial or financial business area so as to qualify for entry 41 exemption - HELD THAT: - The WBAAAR examined the Tender (NIT) definitions which specify 'setting up of a commercial office complex' and expressly exclude 'industrial building' from permitted construction. The authority held that mere corporate office functions, including maintenance of accounts, do not amount to 'financial activity' as contemplated by the notification; financial activity requires rendering of financial services (examples and SAC classification were referred to). The appellant's stated business profile on GSTN (manufacturing/export) and absence of activities covered under financial services led to the finding that the appellant cannot be said to be undertaking 'financial activity' on the leased plot. Consequently, the pivotal second condition (use for industrial or financial activity) is not satisfied. [Paras 28]

The leased plot is not being used for industrial activity nor for financial activity in the sense required by entry 41; the second condition for exemption is not satisfied.

Entity having 20 per cent or more ownership of Central Government, State Government or Union territory - exemption under entry 41 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - Whether SMPK (Shyama Prasad Mookerjee Port, Kolkata) qualifies as an entity having 20% or more ownership of Central Government/State Government/Union territory for the purpose of entry 41 exemption - HELD THAT: - The authority sought and considered SMPK's replies and statutory material. SMPK stated ownership vests in the Board constituted under the Major Port Authorities Act, 2021 and that Central Government does not hold ownership. Although SMPK's accounts are audited by the CAG under statutory provisions, the WBAAAR held that audit by CAG or administrative control does not ipso facto establish 20% or more ownership by the Central/State Government as required by the notification. On the material before it, the third condition therefore remains unsatisfied. [Paras 28]

SMPK does not qualify, on the available material, as an entity having 20% or more ownership of Central/State Government; the third condition for exemption is not satisfied.

Orders of Appellate Authority under section 101 (confirm or modify ruling) - Whether the Appellate Authority could exercise power to confirm or modify the WBAAR ruling and whether such power was exercised in this appeal - HELD THAT: - The Appellate Authority referred to section 101(1) and observed that it may, after hearing parties, pass such order as it thinks fit, confirming or modifying the ruling. The WBAAAR reviewed the WBAAR's findings, expanded discussion on the conditions of the notification (noting WBAAR could have been more comprehensive), and in exercise of its statutory power upheld the WBAAR order while adding further discussion on the notification's conditions. [Paras 28]

The Appellate Authority rightly exercised its power under section 101(1) to consider the appeal, add discussion on the conditions, and uphold the WBAAR ruling (with modification by way of additional discussion).

Exemption under entry 41 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - Whether, taking all conditions together, the grant of long term lease by SMPK to the appellant for setting up a commercial office complex qualifies as an exempt supply under entry 41 - HELD THAT: - Entry 41 requires satisfaction of all specified conditions. The authority found that although the lease period (thirty years) and recipient being an industrial unit were satisfied, the crucial conditions of (i) use for industrial or financial activity and (ii) the lessor being an entity with 20% or more government ownership were not satisfied on the material. As a result, the transaction does not fulfil all conditions necessary for exemption under entry 41. [Paras 22, 28]

The grant of long term lease by SMPK to the appellant for setting up a commercial office complex is not covered by entry 41 and therefore is not an exempt supply.

Final Conclusion: The Appellate Authority upheld the Advance Ruling that the upfront premium for the longterm lease by SMPK to the appellant for setting up a commercial office complex does not qualify for exemption under entry 41 of Notification No. 12/2017Central Tax (Rate) dated 28.06.2017, because the leased plot is neither used for industrial nor qualifying financial activity and SMPK does not, on the material before the authority, meet the '20% or more government ownership' requirement, although the lease period and recipient status were satisfied.

Proceedings for an offence u/s 276-B - non-payment/belated remittance of the TDS - Failure to pay tax to the credit of Central Government - interpretation given to term “reasonable cause” -

As decided by HC[2024 (6) TMI 1070 - ANDHRA PRADESH HIGH COURT] reason provided by the Petitioner for the delay in remitting the amount to the Central Government is sufficient to constitute “reasonable cause” in view of Section 278AA of the I.T. Act and hence criminal prosecution against the Petitioners is not warranted.

HELD THAT:- We are not inclined to interfere in exercise of jurisdiction under Article 136 of the Constitution of India; hence, the special leave petition is dismissed.

Pending application(s), if any, shall stand disposed of.

Scrutiny by the High Court in an appeal u/s 260A for Determination of the arm’s length price made by the Tribunal -whether in every case where the Tribunal determines the arm’s length price, the same shall attain finality and the High Court is precluded from considering the determination of the arm’s length price determined by the Tribunal, in exercise of powers u/s 260A?

This application has been filed seeking recall of this Court’s order [2023 (4) TMI 859 - SUPREME COURT] on the ground that it had been tagged inadvertently.

HELD THAT:- Though the order pertains to a different issue, even the issue raised in Special Leave Petition is covered by the decision of this Court in Ahmedabad Urban Development Authority”[2022 (10) TMI 948 - SUPREME COURT]

Miscellaneous application stands dismissed.

Validity of order passed u/s 154 - violation of principles of natural justice - HELD THAT:- As gone through the order which has been passed by the Joint Commissioner of Income Tax. The procedure said to be adopted by the respondents, is not known to jurisprudence of any nature.

When already application under Section 154 of the Act has been decided on 30.12.2024, without recalling the said order, a fresh order on 06.02.2025 could not have been passed.

Court had only noted the contention in its order dated 22.01.2025 pertaining to the order being laconic and there was no direction to pass a fresh order and the indications made that as the order is being passed on the directions of the Court, no opportunity of hearing was required is, to say the least, most unwarranted and factually incorrect. Neither there was any direction nor the requirement of providing opportunity before passing a fresh order stood obviated only on account of filing of the writ petition before this Court.

The challenge laid in the writ petition regarding the order passed on 30.12.2024 being laconic, stands admitted and, therefore, the said order cannot be sustained and is accordingly quashed.

So far as the order dated 06.02.2025 is concerned, the same having been passed without recalling the earlier order and in violation of principles of natural justice, also cannot be sustained. Consequently, the order passed on 06.02.2025 is also quashed.

Petitioner shall appear before the authority on 19.02.2025 and it would be required of the authority to provide opportunity of hearing to the petitioner and thereafter pass a fresh order on application under Section 154 of the Act in accordance with law.

Existence of dependent PE in India/fixed place PE in India - HELD THAT:- All the substantial questions of law raised in this appeal is no more res integra and has been decided against the appellant/revenue by the judgement passed in Adobe Systems Software Ireland Ltd [2023 (10) TMI 699 - ITAT DELHI] and batch matters. The parties in the aforesaid batch matters and the present appeals are the same, except that, in those appeals, the AYs were for the years from 2013 till 2017, whereas in the present appeal, the AY pertains to 2021-2022.

Predicated thereon, he candidly submits that no substantial question of law is made out in the present appeal.

Existence of dependent PE in India/fixed place PE in India - HELD THAT:- Substantial questions of law raised in this appeal are no more res integra and has been decided against the appellant/revenue by the judgements passed in Adobe Systems Software Ireland Ltd.[2025 (1) TMI 1412 - DELHI HIGH COURT] - The parties in the aforesaid batch matters and the present appeals are the same, except that, in those appeals, the AYs were for the years from 2013 till 2017, whereas in the present appeal, the AY pertains to 2020-2021. No substantial question of law is made out in the present appeal.

Bogus purchases - purchase as well as the sale of shares was a colorable device adopted by the Assessee in order to avoid tax - HELD THAT:- The three authorities have considered the submissions and have arrived at the conclusion of the transfer being colourable device to avoid tax. This Court cannot reconsider the said findings of facts, which are based upon the records filed before the authorities.

In light of the concurrent findings of fact by all the three authorities, in our view, whether the transaction is a colourable device to avoid tax does not raise any substantial question of law but is purely a finding of fact which has been arrived at concurrently by the three authorities.

The evidence on record backs this crucial finding. Adequacy of evidence is usually not examined in such appeals dealing with substantial questions of law. In any case, this is also not a matter where the evidence could be said to be inadequate.

Belated contention that even without the colourable device the assessee could have advanced a loan and claimed deductions is purely hypothetical. The effect of such a course cannot be envisioned. Such an issue does not arise. In any case, findings of fact that are backed by the material on record cannot be interfered based on such a contention. Appeal dismiised.

Withdrawal of pending Appeals below the monetary limits prescribed - As submitted though the monetary limits in these Appeals were less than Rs. 2 crores, the revenue was not obliged to withdraw them or refrain from pursuing these appeals - HELD THAT:- When it comes to withdrawal of pending Appeals below the monetary limits prescribed, the circulars were specifically made applicable to pending Appeals. When it comes to exceptions, the circulars provided that the decision could be taken by the revenue to institute Appeals below the monetary limits prescribed, where the Appeals were covered by the exceptions set out in paragraph 3.1 of the circular dated 15 March 2024.

Paragraph 10 of the circular dated 15 March 2024 states that this circular shall come into force from the date of its issue. This circular will apply to SLPs and appeals filed henceforth before the Supreme Court, High Courts, and Tribunals. On the holistic reading of the two circulars, Mr. Pardiwalla’s contention will have to be upheld.

As in the case of V. M. Salgaonkar and Brothers [2024 (12) TMI 717 - BOMBAY HIGH COURT] has expressly upheld such contention by expressly rejecting the argument identical to that which is advanced today before us. Even in V. M. Salgaonkar and Brothers [2024 (12) TMI 717 - BOMBAY HIGH COURT] revenue had argued that the circulars must be read holistically and there was no scope for reading or construing one part retrospectively and the other prospectively.

Thus, based on the above two CBDT circulars and the decision of the Co-ordinate Bench in V. M. Salgaonkar and Brothers (supra), we dispose of these Appeals since Mr. Chhotaray maintains that he has no instructions to withdraw the same. This was the course of action adopted by the Coordinate Bench in V. M. Salgaonkar and Brothers (supra) and by the Rajasthan High Court in the case of Satish Kumar Agarwal (supra) [2024 (10) TMI 431 - RAJASTHAN HIGH COURT]

All these appeals are thus disposed of.

Jurisdiction of Delhi court to entertain the present appeal -Revision u/s 263 against Firms dissolved - HELD THAT:- In Seth Banarsi Dass Gupta [1978 (3) TMI 100 - DELHI HIGH COURT] this court held that the High Court within whose jurisdiction the AO has passed the assessment order would have the jurisdiction to entertain the appeal u/s 260A of the Act.

In M/s ABC Papers Ltd. [2022 (8) TMI 863 - SUPREME COURT] the Supreme Court considered the question as to the jurisdiction of the court in cases in which the jurisdiction of the AO had been transferred during the pendency of the proceedings pursuant to an order passed under Section 127.

This court does not have the jurisdiction to entertain the appeal as it emanates from the assessment order issued by the AO in Amritsar.

In the present case as original assessment order was passed by the AO in Amritsar, therefore, this court would not have the territorial jurisdiction to entertain the present appeal.

Once it is found that this court does not have the jurisdiction to entertain the present appeal, it would not be apposite to examine any other question relating to the merits of the dispute including whether the learned ITAT had jurisdiction to entertain the appeal preferred by CFIPL.

Direct Tax Vivad Se Vishwas Scheme, 2024 - definition of "appellant" under the Scheme - treatment of appeals filed after the specified date but within the period for filing - exercise of power to remove difficulty under section 98 - availability of scheme benefit to persons with appeals treated as pending

Definition of "appellant" under the Scheme - treatment of appeals filed after the specified date but within the period for filing - availability of scheme benefit to persons with appeals treated as pending - Whether persons whose orders were passed on or before 22.07.2024, who had time remaining to file an appeal as on that date and who filed the appeal after that date (without any application for condonation of delay) are entitled to be treated as appellants and avail benefits under the Direct Tax Vivad Se Vishwas Scheme, 2024. - HELD THAT: - The Court recorded that the petitioner had challenged the Scheme's restricted definition of "appellant" and had sought relief to include persons who had not filed an appeal by the specified date but for whom the time to file an appeal had not expired. The Court referred to and reiterated directions in the Delhi High Court order dated 09.12.2024 asking the CBDT to consider the anomaly and to treat the petition as a representation. Pursuant to those directions, the Central Government, exercising the power to remove difficulties under section 98 of the Finance (No.2) Act, 2024, issued S.O. 348(E) dated 20.01.2025. The Order provides that where (a) an order was passed on or before 22.07.2024, (b) time for filing an appeal was available as on that date, (c) the appeal was filed after that date within the stipulated time without any condonation application, then (i) such appeal shall be considered as pending as on 22.07.2024 for the purposes of the Scheme, (ii) such person shall be considered an appellant for the purposes of the Scheme, (iii) disputed tax shall be calculated on the basis of such appeal, and (iv) the provisions of the Scheme and its rules shall apply accordingly. The Court recorded that, in view of the issuance of this Order accepting the petitioner's plea, the petitioner's grievance stands addressed.

The petitioner's challenge to the restricted definition of "appellant" is effectively resolved by the Central Government Order dated 20.01.2025 which treats specified subsequently filed appeals as pending on 22.07.2024 and confers Scheme benefits; the writ petition is closed as the relief has been achieved.

Final Conclusion: The writ petition is disposed of as the Central Government, by S.O. 348(E) dated 20.01.2025, has remedied the anomaly by treating specified appeals filed after 22.07.2024 (but within the time for filing and without condonation applications) as pending on that date and by declaring such persons appellants for purposes of the Direct Tax Vivad Se Vishwas Scheme, 2024; the petition is closed with no order as to costs.

Validity of assessment order passed u/s 147 r.w.s.144B - petition challenged an order passed u/s 154 r.w.s.143(3) - HELD THAT:- Petitioner has to file an appeal against the Order passed u/s 147 r.w.s. 144B on 31.03.2022 or the Order passed u/s 154 r.w.s. 143(3) of the Income Tax Act, 1961 on 29.03.2022. Both have similar impact on the petitioner.

Petitioner can therefore be asked to workout the appellate remedy against the Impugned Order dated 29.03.2022 which rectifies the earlier Order dated 29.12.2017 which was also sought to be revised pursuant to the Notice dated 31.03.2021 issued u/s 148 of the Income Tax Act, 1961.

Both the Writ Petitions are disposed with liberty to the petitioner to challenge the Impugned Assessment Order dated 31.03.2022 and the Rectification Order dated 29.03.2022 before the Commissioner of Income Tax (Appeals) within a period of 30 days from the date of receipt of a copy of this order.

Client Code Modification (CCM) and its evidentiary weight - Reopening of assessment - proviso to section 147: failure to disclose fully and truly all material facts - Reason to believe - need for a demonstrable link between tangible material and formation of belief

Reopening of assessment - proviso to section 147: failure to disclose fully and truly all material facts - Reason to believe - need for a demonstrable link between tangible material and formation of belief - Client Code Modification (CCM) and its evidentiary weight - Validity of reopening assessment under section 147/148 in respect of CCM transactions - HELD THAT: - The Tribunal held that reopening of a completed assessment under the proviso to section 147 is permissible only where there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The reasons recorded by the Assessing Officer were based on an investigation report regarding CCM and did not identify any omission or failure by the assessee to disclose material facts. The authorities must demonstrate a live link between tangible material and the formation of belief; mere reproduction of conclusions from an investigation report or suspicion about multiple CCMs without independent application of mind does not satisfy the statutory requirement. The Tribunal noted that even if the escaped income figure varied in the proceedings, the reassessment could not be sustained because the essential ingredient-failure of disclosure by the assessee-was not shown. Reliance on precedents emphasising that reasons must disclose the AO's mind and link to evidence led the Tribunal to conclude that the reopening was beyond jurisdiction and bad in law. Consequently, the reassessment proceedings initiated by the notice under section 148 were quashed and the appeal allowed; other contentions became academic. [Paras 7, 8]

Reopening under section 147/148 was invalid for AY 2009-10 as the reasons did not demonstrate failure by the assessee to disclose material facts and lacked the requisite link between tangible material and the AO's belief.

Final Conclusion: The appeal is allowed: the reassessment proceedings initiated by the notice under section 148 in respect of AY 2009-10 are quashed as the reopening was invalid for want of required failure to disclose and an adequate reasons-to-believe linking tangible material to escapement of income.

Reopening of assessment - change of opinion - reasons to believe - Explanation 2(c)(i) of Section 147 - rejection of books for limited purpose under section 145(3) - disallowance on account of bogus purchases - computation of profit element using gross profit rate - addition on unexplained investment/peak purchase - material surfaced from survey and statements recorded under section 131/133A

Reopening of assessment - change of opinion - reasons to believe - material surfaced from survey and statements recorded under section 131/133A - Validity of reopening the concluded assessment for A.Y.2013-14 - HELD THAT: - The Tribunal held that the reopening of assessment was not a mere "change of opinion". The reassessment was founded on new material arising from post-survey investigation and statements (including admissions of the assessee and others) indicating purchases from certain parties were bogus and that commission-income from accommodation entries had escaped assessment. Those facts were not before the AO who framed the original scrutiny assessment; therefore they constituted material justifying the formation of belief that income had escaped assessment and validly supported proceedings under Section 147. The claim that reopening was vitiated by a change of opinion was rejected. [Paras 14, 15, 16]

Reopening for A.Y.2013-14 sustained; reopening was not based on change of opinion.

Approval under Section 151 - reopening of assessment - Validity of the approving authority's sanction for reassessment (approval under Section 151) for A.Y.2013-14 - HELD THAT: - Although the proposal form contained factual errors at some entries, the Tribunal observed the reasons to believe expressly recorded that the case was a reassessment within the meaning of Explanation 2(c)(i) to Section 147 and the reasons set out the earlier assessment particulars. The approval by the Joint Commissioner referred to Explanation 2(c)(i) and the substantive reasons were before and considered by the approving authority; therefore the clerical inaccuracies in parts of the proposal form did not render the approval or consequent reassessment invalid. [Paras 18, 19, 20, 21]

Approval under Section 151 upheld; defect in proposal form not fatal to reassessment.

Rejection of books for limited purpose under section 145(3) - disallowance on account of bogus purchases - computation of profit element using gross profit rate - Quantification of addition in respect of alleged bogus purchases for A.Y.2013-14 - HELD THAT: - The Tribunal accepted that the AO's factual finding of bogus purchases was supported by survey material and admissions. The determinative question was quantification of the income element attributable to such bogus purchases. The CIT(A) quantified the profit element by adopting a gross profit (GP) rate of 10% (seen as representative of the trade) and allowed credit for the GP disclosed in the assessee's audited books (1.53%), thereby adding the balance (8.47%) on the value of the suspicious purchases. The Tribunal found no infirmity in this approach and sustained the CIT(A)'s restricted addition instead of the AO's 25% disallowance. [Paras 22, 23, 26, 27]

Addition sustained to the extent upheld by CIT(A); AO's full 25% disallowance reduced by adoption of GP methodology.

Addition on unexplained investment/peak purchase - material surfaced from survey and statements recorded under section 131/133A - Addition on account of unexplained investment/peak purchase for A.Y.2013-14 - HELD THAT: - The AO added a peak purchase amount as unexplained investment on the basis of patterns revealed by the survey and banking transactions; CIT(A) upheld that addition after considering the modus operandi and the presence of seed/unaccounted money. The Tribunal found no infirmity in the reasoning or in sustaining the addition. [Paras 7, 28]

Addition towards unexplained investment (peak purchase) sustained.

Mutatis mutandis application of reasoning across years - disallowance on account of bogus purchases - computation of profit element using gross profit rate - addition on unexplained investment/peak purchase - Application of the findings and methodology to A.Y.2014-15 and A.Y.2015-16 - HELD THAT: - The Tribunal applied the same approach and conclusions reached for A.Y.2013-14 to the subsequent assessment years. For each year the AO's factual conclusion that purchases from specified parties were bogus was accepted; the CIT(A)'s exercise of quantifying the profit element by adopting a 10% GP rate and allowing credit for the GP shown in books (resulting in a reduced addition) was affirmed. Likewise, additions made as unexplained investment/peak purchase were sustained as assessed by the AO and confirmed by CIT(A). The Tribunal found no infirmity in applying the same reasoning mutatis mutandis to A.Y.2014-15 and A.Y.2015-16. [Paras 44, 45, 57, 59, 60]

CIT(A)'s reductions and sustenances for A.Y.2014-15 and A.Y.2015-16 upheld; appeals dismissed.

Final Conclusion: The Tribunal dismissed the assessee's and revenue's appeals. Reopenings were held valid (not mere change of opinion) and approval for reassessment sustained despite clerical errors in the proposal form; factual findings of bogus purchases based on survey and statements were accepted, but the profit element was quantified by applying a trade GP rate (10%) with credit for GP disclosed in books, which reduced the AO's 25% disallowance; additions for unexplained investment (peak purchases) were sustained. The same conclusions were applied mutatis mutandis to A.Y.2014-15 and A.Y.2015-16.

Denial of deduction u/s 80P(2)(a)(i) - interest earned from Sangli District Central Co-operative Bank - HELD THAT:- Hon’ble High Court of AP & TS, THE VAVVERU CO-OPERATIVE RURAL BANK LTD. VERSUS THE CHIEF COMMISSIONER OF INCOME TAX, VIJAYAWADA [2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] held that Interest Income earned by investing Income derived from Business and Profession by a Co-Operative Society was eligible for deduction u/sec.80P(2)(a) of the Act.

No contrary decision of the Hon’ble jurisdictional High Court has been brought to our notice - As decided in Yashwant Nagari Sahakari Patsanstha Maryadit [2024 (6) TMI 1387 - ITAT PUNE] held that the assessee was eligible for deduction u/sec.80P(2)(a) of the Act on the Interest earned by assessee. Decided in favour of assessee.

Deduction u/s 80C - interest on housing loan - HELD THAT:-Considering the nature of business carried on by the assessee and the turnover disclosed which is mainly received in cash and since it is also not the case of the AO that total deposits in the bank account both cash and through cheques / DD etc. far exceeds the turnover disclosed by the assessee, the addition of the entire cash deposited in the bank account appears to be on the higher side.

Disallowance of sundry creditors especially when the assessee has given Ledger copy of various parties from whom land was purchased. At the same time, by not furnishing the full details as per the satisfaction of the AO the claim of the assessee that no addition is called for cannot be accepted.

Since the assessee in the instant case is engaged in plotting business and full details were not given before the AO in the manner in which it should have been given as per the direction of the AO and since the assessment year involved is assessment year 2013-14 which is very old and litigation must come to an end, therefore, considering we are of the considered opinion that the estimation of income @ 10% of the total turnover of Rs. 2,23,77,000/- as mentioned by the Assessing Officer in the assessment order will meet the ends of justice.

Since the assessee has filed a copy of the interest certificate from the bank showing the repayment of principal amount of Rs. 72,643/- and interest amount of Rs. 3,59,357/- totaling to Rs. 4,32,000/- for the period between 01.04.2012 to 31.03.2013 which was also filed before the CIT(A), we direct the AO to allow the consequential deduction as per the provisions of section 80-C of the Act and interest on self occupied house property. Appeal filed by the assessee is partly allowed.

Denying the claim of deduction u/s. 80P - assessee is a co-operative society registered under the Kerala Co-operative Societies Act, formed with the object of providing financial accommodation to its members for agricultural purposes - HELD THAT:- The issue is now settled by the judgment of Mavilayi Service Cooperative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] Respectfully following the judgment of the Hon’ble Supreme Court, we direct the AO to allow the claim of the assessee. Appeal filed by the assessee is allowed.

Seeking setting aside of the bank attachment notice - non-service of OIO as per prescribed procedure - HELD THAT:- In view of the stand of the Department, it is directed that the directions be issued for de-freezing of these said bank accounts by 14th February, 2025.

The prayer for condonation of delay shall be considered by the Appellate forum in accordance with law - Petition disposed off.

Partial exemption from customs duty for the import of Lactulose under Sr. No. 166 (A) of N/N. 50/2017 - whether imported goods are "Bulk Drugs" and should be classified under Sr. No. 166 (B)? - HELD THAT:- When one examines Sr. No. 166 of the 2017 Notification, it is found that the standard rate of duty is the same whether the Lactulose [imported by the Petitioner] falls within Sr. No. 166 (A) or under Sr. No. 166 (B). The only difference between the two is that if they fall within Sr. No. 166 (B), the Petitioner has to comply with the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022. If those Rules are not complied with, the Petitioner would be liable for action.

At this stage, and keeping all issues open, the Lactulose imported by the Petitioner can be released by allowing them the partial exemption as contemplated under Sr. No. 166 (A) of the 2017 Notification subject to them furnishing a bond to the Customs Department in the format asked for by them. Thereafter, the Department is free to issue a Show Cause Notice, if it so chooses and take it to its logical conclusion. It is not opined whether the Lactulose imported by the Petitioner can be classified under Sr. No. 166 (A) or 166 (B) of the 2017 Notification.

Conclusion - The Customs Department are directed to assess the Bills of Entry with the benefit of partial exemption under Sr. No. 166 (A) of the 2017 Notification, subject to the Petitioner furnishing a bond.

Petition disposed off.

Jurisdiction of CESTAT to decide the case of the respondent when in fact the order in appeal was revisable as contemplated under Section 129DD of the Customs Act, 1962 - respondent herein being a frequent flyer, eligible passenger under the Act to carry gold or not - prohibited goods or not - the Applicant prayed that the order of the Appellate Tribunal needs to be stayed during the pendency of the appeal having regard to the questions of law framed while admitting the appeal.

HELD THAT:- Considering the questions of law on which the appeal is admitted, and having regard to the issues involved in the present appeal, as an interim arrangement, the impugned order needs to be stayed and is accordingly stayed.

Application allowed.

Seeking grant of bail - smuggling - admissibility of statements - non-corroborated statements can be bare basis of conviction of an accused or not? - HELD THAT:- This court is of the opinion that the confessional statement of an accused recorded under section 108 of the Act,1962, cannot blindly be accepted unless it is corroborated by any independent evidence/material as the same would not lead to conviction. The examination of confessional statement of the accused is essentially required so as to find out that the same is not taken under coercion or under extraneous influences. The trial court has also to be conscious enough while examining the correctness and voluntariness of the nature of the statement of the accused.

Though, it has been held by the Hon'ble Apex Court in the case of Romesh Chandra Mehta Vs State of West Bengal, reported in [1968 (10) TMI 50 - SUPREME COURT], that the custom officers are not the police officers and the statement recorded under section 108 of the Act,1962, is admissible in evidence, though there seems to be no quarrel regarding the same, whereas the further issue is that can the statement of an accused recorded under section 108 of the Act,1962, blindly be accepted without any corroboration of other evidences ? Infact, the admissibility of an evidence is one aspect of the matter and the conviction can lead only on the basis of the confessional statement recorded under section 108 of the Act,1962 is the other aspect of the matter and the answer would be no.

This court is of the opinion that the confessional statement of an accused recorded under section 108 of the Act,1962, cannot blindly be accepted unless it is corroborated by any independent evidence/material as the same would not lead to conviction. The examination of confessional statement of the accused is essentially required so as to find out that the same is not taken under coercion or under extraneous influences. The trial court has also to be conscious enough while examining the correctness and voluntariness of the nature of the statement of the accused.

It has also been noticed that identically situated co-accused, namely, Avinash Singh has already been enlarged on bail. Further, the applicant has a case criminal history which has been explained in paragraph 5 of the bail application and he is languishing in jail since 07-08-2024 coupled with the fact that he has undertaken that if he is granted bail, he will not misuse the liberty of the same and would cooperate in the trial proceedings.

Conclusion - Considering the submissions of learned counsel of both sides, nature of accusation and severity of punishment in case of conviction, nature of supporting evidence, prima facie satisfaction of the Court in support of the charge, reformative theory of punishment and considering larger mandate of the Article 21 of the Constitution of India and, without expressing any view on the merits of the case, this is a fit case of bail.

Let the applicantinvolved in the aforementioned crime be released on bail, on his furnishing a personal bond and two sureties each in the like amount, to the satisfaction of the court concerned, subject to fulfilment of conditions imposed.

Application allowed.

Seeking grant of bail - smuggling of currency notes of U.S. Dollars - admissibility and sufficiency of the confessional statement recorded under Section 108 of the Customs Act, 1962 without corroboration - HELD THAT:- It transpires that some interception was done by the D.R.I. officials at CCS International Airport, Lucknow, from where the co-accused person, namely, Tanvir Mustafa and other said accused persons were arrested, wherein 3 kg. gold was recovered from the front shirt pocket of Tanvir Mustafa and, thereafter, on the basis of some call records, the D.R.I. officials have also raided the house of the present applicant and recovered some articles. From perusal of the 'Panchnama', it also reveals that no articles either of prohibited category or restricted category are recovered from the possession of the applicant or his house and, therefore, prima facie, there seems to be no strong evidence and in consonance with the conversation with other co-accused persons. Further much emphasis is drawn on the statement of the present applicant-accused recorded under section 108 of the Act,1962 and the argument is placed on behest of the D.R.I. officials that the confessional statement itself is enough to convict the applicant.

Though, it has been held by the Hon'ble Apex Court in the case of Romesh Chandra Mehta Vs State of West Bengal [1968 (10) TMI 50 - SUPREME COURT], that the custom officers are not the police officers and the statement recorded under section 108 of the Act,1962, is admissible in evidence, though there seems to be no quarrel regarding the same, whereas the further issue is that can the statement of an accused recorded under section 108 of the Act,1962, blindly be accepted without any corroboration of other evidences ? Infact, the admissibility of an evidence is one aspect of the matter and the conviction can lead only on the basis of the confessional statement recorded under section 108 of the Act,1962 is the other aspect of the matter and the answer would be no.

This court is of the opinion that the confessional statement of an accused recorded under section 108 of the Act,1962, cannot blindly be accepted unless it is corroborated by any independent evidence/material as the same would not lead to conviction. The examination of confessional statement of the accused is essentially required so as to find out that the same is not taken under coercion or under extraneous influences. The trial court has also to be conscious enough while examining the correctness and voluntariness of the nature of the statement of the accused.

It has also been noticed that the applicant has no previous criminal history, which has been explained in paragraph 35 of the bail application and he is languishing in jail since 09-08- 2024 coupled with the fact that he has undertaken that if he is granted bail, he will not misuse the liberty of the same and would cooperate in the trial proceedings.

Conclusion - Considering the submissions of learned counsel of both sides, nature of accusation and severity of punishment in case of conviction, nature of supporting evidence, prima facie satisfaction of the Court in support of the charge, reformative theory of punishment and considering larger mandate of the Article 21 of the Constitution of India and, without expressing any view on the merits of the case, this is a fit case of bail.

Let the applicantinvolved in the aforementioned crime be released on bail, on his furnishing a personal bond and two sureties each in the like amount, to the satisfaction of the court concerned, subject to fulfilment of conditions imposed.

Application allowed.

Time barred SCN or not - fulfilment of conditions for re-export obligation as per N/N.158/95-CUS. or not - Revenue argued that goods are initially exported under EPCG scheme and not under bond, without payment of Excise Duty - HELD THAT:- SCN was issued after prescribed period, as provided under Section 28(1)(a) of the Customs Act, 1962. There are no mis-statement or suppression of facts on the part of the appellant.

Therefore, appeal is liable to be allowed - appeal allowed.

Classification of imported Multimedia Speakers and spare parts - classificable under heading no.85182200 or under heading no. 85279100? - HELD THAT:- This issue was before the Banglore Tribunal in the case of Logic India Trading Co-v-C.C [2016 (3) TMI 5 - CESTAT BANGALORE]. The Tribunal has held that the speakers should be classified under CTH 8518 22 00.

Conclusion - The goods should be classified under heading no.85182200 as speakers, rather than under heading no.85279100 as broadcast receivers.

Appeal allowed.

Valuation of imported goods - electronic calculators - rejection of delared value - redteremination of value of the consignment on per piece basis - rule 4 to 9 of CVR 2007 - market enquiry report has not been provided to the appellant - violation of princuples of natural justice - HELD THAT:- The erstwhile Rule 10A of CVR 1988 had a provision for the rejection of declared value and it came to be replaced by a more elaborate Rule 12 after the introduction of CVR 2007. However, what is of interest is the rationale for introduction of a provision for rejection of the declared value.

However over a period of time the Customs Valuation (Determination of Price of Imported Goods) Rules, have come to be modified, and the 2007 version is now dealt with, the circular brings out the difficulty in rejecting a declared value even though in some cases invoices were found to be manipulated but on the face of it the transaction value (i.e. the invoice price) is projected to be true and correct or the value was found to be substantially lower than the prevailing international market price. The Issue does not appear to be localised to India alone as the circular mentions that the Rule has been added to give effect to the decision taken by the Ministers of the Countries which are signatories to GATT, 1994. The Rule thus seeks to address the 'mischief of manipulated values declared by some importers by not correctly disclosing the transaction value based on documents which are in their exclusive possession’.

In the present case, the market enquiry report has not been provided to the appellant showing the results of the survey and with a work sheet as to how the value was arrived at. This has effectively disadvantaged the appellant from giving a reply and violates the principles of natural justice.

In Commissioner of Sales Tax, U.P. v. R.P. Dixit Saghidar [2000 (3) TMI 992 - SUPREME COURT], it was held that when principles of natural justice are stated to have been violated it is open to the appellate authority, in appropriate cases, to set aside the order and require the Assessing Officer to decide the cases de novo. This is because when an order is held to be invalid due to a violation of principles of natural justice, there is no final decision of the case and therefore proceedings are left open and the proceedings are not terminated. This being so it is felt appropriate to remand the matter to the Original Authority to cure the defect by supplying a copy of the ‘Market Inquiry Report’ and worksheet to the appellant and decide the matter afresh.

Conclusion - The original authority must provide the appellant with the market enquiry report and worksheet, allowing them to respond before issuing a new decision. Matter remanded to the original authority for fresh adjudication.

Appeal disposed off by way of remand.

Determination of the applicable customs duty rate on imported goods - relevant date for rate of duty - whether the duty rate should be based on the date the vessel entered Indian territorial waters or the date of entry inwards at the specific port where the goods were unloaded? - HELD THAT:- There is no doubt that the goods assume, the nature of imported goods, the moment they enter into territorial waters of India and thus become leviable to duty on such import but the machinery provision as contained in Section 15 indicates, as to how assessment is to be done and duty shall be calculated when goods are required to be subjected to duty. Reading of Section 15 along with the proviso makes it clear that in case filing of Bill of Entry precedes the date of entry inwards of the vessel, the Bill of Entry shall be deemed to have been presented on the date of such entry inwards. Entry inwards as has been correctly pointed out by the Departmental Representative is required to be as per process dictated in Section 30 and Section 31 of the Customs Act, 1962.

From plain reading of Section 31, it is clear that grant of entry inwards for any vessel is a port specific documentation and is required to be done at each port by the proper officer. Expression “the proper” connotes proper officer as “authorised specific officer” at each port. The goods cannot be unloaded at any port unless such proper officer has granted entry inwards at the specific port.

This Court has also examined the matter in the light of the decision cited by both sides as well as the relevant statutory provisions, the judgments cited by the appellants do not deal with situation where entry inwards are granted at two different ports at two different points of time. As is emanating from the facts of this case, this Courts finds that the submission made by the appellants, proceed on the wrongful basis that entry into territorial waters and the first entry inwards granted, at the first touched port will dictate rate of duty and shall be considered as date of entry inwards for all subsequent ports, it touches. This Courts finds that there is no statutory basis to support such an argument and rather the plain reading of the statutory provision specifically Section 31, supports the argument of the department that entry inwards at the respective port and not the first port shall determine the rate of duty applicable. This Court, therefore, finds that the impugned order is well reasoned and deserves to be maintained.

Conclusion - The duty rate is determined by the date of entry inwards at the specific port of unloading. The assessment of duty at 7.5% as per the entry inwards at Pipavav Port maintained.

Order of Commissioner (Appeals) is upheld and appeal of the party is rejected.

Denial of benefit of exemption from payment of Special Additional Duty [SAD] availed under Serial No. 2 of Notification dated 17.03.2012 on the goods imported under various Bills of Entry during the period 01.04.2013 to 31.03.2017 - recovery of SAD with penalty - HELD THAT:- The dispute in the present appeals relate to Notification dated 17.03.2012, as amended, which exempts the goods of the description contained in the Table when imported into India from so much of the additional duty of customs, as is in excess of the amount calculated at the standard rate specified in the corresponding entry in Column No. 4 of the Table. However, the proviso stipulates that the exemption shall apply on goods imported on or after 01.05.2012 if the importer declares the State of destination namely the State where the goods are intended to be taken immediately for the first time after importation whether for sale or distribution on stock transfer basis and also declares the value added tax registration number or sales Tax registration number or Central Tax registration number, as the case may, be in the said State.

By comparing the data, the goods valued at Rs. 73.79 Crores were not declared and disclosed by the appellant in the VAT return of Delhi State. The declaration made by the appellant was, therefore, false and SAD benefit would not be available, more particular when during the course of investigation, the appellant failed to provide any documentary evidence to support his claim - There is nothing in the appeal which may controvert the findings recorded by the Principal Commissioner.

Penalty - HELD THAT:- VAT was not paid on the imported goods valued at Rs. 73.79 Crores. This finding recorded by the Principal Commissioner is borne out from the records and there is nothing in the appeal which may controvert this finding.

Conclusion - The Principal Commissioner's findings regarding the appellant's fraudulent practices and non-compliance with notification conditions were crucial in determining the denial of the SAD exemption. There is nothing in the appeal which may controvert the findings recorded by the Principal Commissioner.

Appeal dismissed.

Validity of Circular dated 02.09.2022 advising the trading member to refund the penalty levied on account of short/non-collection of upfront margin to clients, if the same has been passed on to the clients after 11.10.2021 - HELD THAT:- In the present case, it is the selection of the date, that is, 11.10.2021, that is the subject matter of challenge, and I am unable to find any support from the material on record as to the reason or basis for such selection. Apart from the offending date itself, there are other conditions that would have to be satisfied, for the refund of the penalty.

A perusal of GRC proceedings dated 31.03.2023 would reveal that the only reason why a portion of the relief sought for has been denied is the stipulation of the date as 11.10.2021 in Circular Ref.No.60/2022 dated 02.09.2022.

The circumstance set out under question and answer 15 in Circular No.48/2021 dated 12.10.2021 is thus, inapplicable to the present case. Such a conclusion emanates from a reading of the order of the GRC where the TM is not seen to have argued that there were failure/default on the part of the petitioners to justify passing on of the penalty.

Having considered the matter carefully, selection/stipulation of the date as 11.10.2021 has no basis whatsoever. Such a stipulation had led to discrimination between two groups of investors, those who have been passed on the burden of penalty prior to 11.10.2021 and those who have suffered the burden post 11.10.2021. Thus, those investors who satisfy all the conditions under the Circulars but have suffered the passing on the penalty prior to 11.10.2021 have been left remediless.

The passing of the penalty for short-levy by the TM to the investor has been consistently decried by SEBI. In such circumstances imposition of a date after which only the penalty would be refunded has no justification whatsoever. This is contrary to Article 14 of the Constitution of India, affecting adversely one group out of two equally placed groups of investors.

The investor has no control over the date on which penalty is levied. Hence, there is serious prejudice caused by virtue of a fact that is outside the control of an investor, in respect of financial transactions that are identical to transactions by other investors, though of an anterior date.

In the present case, the satisfaction of the petitioner of the other conditions for refund constitute questions of fact and I extract below the findings of the GRC which are relevant and set the context for the grievance of the petitioner. To be noted that the GRC has passed the order after hearing both the petitioner and HDFC/TM.

The GRC has made it clear that the petitioner is, in fact, entitled to the refund and has ordered refund to the extent to which the Circular does not stand in the way. The decision adverse to the petitioner relates to that part of the penalty on upfront margin relatable to the period prior to 11.10.2021 only.

The stipulation relating to the date under Circular Ref.No.60/2022 dated 02.09.2022, is found to be arbitrary and is quashed. As a consequence, the prayer of the petitioner stands moulded to a challenge encompassing order passed by the GRC dated 31.03.2023 and such challenge is allowed and order dated 31.03.2023 set aside. The petitioner's application before the GRC restored to its file. The GRC shall issue notice to both the Petitioner as well as the TM/HDFC, hear them and decide the matter de novo. In doing so, the GRC shall not be circumscribed by the reference to the date '11.10.2021', in Circular No.60/22 dated 02.09.2022.

Jurisdiction of Adjudicating Authority to entertain the Application relting to refund of pre-CIRP dues - Adjudicating Authority had become quorum non-judice - extinguishment of claims of the Appellant for pre-CIRP dues, upon the approval of the Resolution Plan by the Adjudicating Authority - Estoppel from claiming a refund of the amount paid towards pre-CIRP dues.

Jurisdiction of Adjudicating Authority to entertain the Application relting to refund of pre-CIRP dues - HELD THAT:- The approval of the Resolution Plan by the Adjudicating Authority dated 21.09.2021 and the claim which was filed by the Appellant in the CIRP. The correspondence entered between the Parties was in reference to the approval of the Resolution Plan and payment of the amount which was due to the Appellant as per the Resolution Plan with a prayer to resumption of supply.

Section 60(5) clearly indicates that under Section 60(5)(c) any question arising out of or in relation to the Insolvency Resolution or Liquidation proceeding of the Corporate Debtor is covered by the said definition. On looking into the reliefs and the concessions granted by the Order dated 21.09.2021, and the letter given by the Corporate Debtor on 29.10.2021, offering to make payment under the Resolution Plan and seeking restoration of supply, the said request clearly fell within Section 60(5)(c) - The NCLT had jurisdiction to entertain the application filed by the Respondent No.1 concerning the refund of pre-CIRP dues and compliance with the Resolution Plan.

Extinguishment of claims of the Appellant for pre-CIRP dues, upon the approval of the Resolution Plan by the Adjudicating Authority - HELD THAT:- The law is well settled that by approval of the Resolution Plan, all dues and claims of pre-CIRP stand extinguished. In the present case, the DVC has filed its claim in the CIRP of ₹2,32,13,387/- for which an amount of ₹4,64,003/- was allocated for the Resolution Plan. Judgment of this Tribunal relied by the Respondent in the matter of Damodar Valley Corporation Vs. Kharkia Steels Pvt. Ltd. & Ors. [2022 (3) TMI 821 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI], as well as the Judgment of the Hon’ble Supreme Court in Paschimanchal Vidyut Vitran Nigam Ltd. Vs. Raman Ispat Pvt. Ltd. & Ors. [2023 (7) TMI 831 - SUPREME COURT] as well as the Judgment of the Hon’ble Supreme Court in Ghanshyam Mishra & Sons Pvt. Ltd. [2021 (4) TMI 613 - SUPREME COURT] clearly lays down that all claims after approval of the Plan stands extinguished.

The claims of the Appellant for pre-CIRP dues were extinguished upon the approval of the Resolution Plan, and the Appellant was not entitled to claim any additional pre-CIRP dues.

Estoppel from claiming a refund of the amount paid towards pre-CIRP dues - HELD THAT:- The correspondence entered between the Parties clearly indicates that Respondent No.1 has offered to make the payment which was due as per the Plan. However, the Respondent itself has asked the Appellant to give the details of the payment which are required to be paid. Vide letter dated 07.12.2021 in response to which communication dated 07.12.2021 was issued.

The Appellant has sought for claims that were due before the CIRP period and during the CIRP period as well. No issue can be raised regarding any claim prior to CIRP period since, the claim said after approval of the Resolution Plan and payment of amount under the Plan to the Appellant stood extinguished. It is however relevant to notice that no bifurcation and details have been given as to what was the claim prior to CIRP period and what was the claim subsequent to the CIRP period as was communicated by the Appellant vide letter dated 07.12.2021. On the record, there are also no details to come to the conclusion that how much amount as communicated in letter dated 07.12.2021 was during the CIRP period and what was the amount prior to CIRP period. The Impugned Order passed by the Adjudicating Authority cannot be faulted insofar as is directed for refund of the amount which was claimed by the Appellant of pre-CIRP period.

The Respondent No.1 was not estopped from claiming a refund of pre-CIRP dues, as the payments were made under duress to ensure the resumption of electricity supply.

Conclusion - i) The NCLT had jurisdiction to entertain the application filed by the Respondent No.1 concerning the refund of pre-CIRP dues and compliance with the Resolution Plan. ii) The claims of the Appellant for pre-CIRP dues were extinguished upon the approval of the Resolution Plan, and the Appellant was not entitled to claim any additional pre-CIRP dues. iii) The Respondent No.1 was not estopped from claiming a refund of pre-CIRP dues, as the payments were made under duress to ensure the resumption of electricity supply. iv) The Appellant is not entitled for recovering any dues from the Respondent which relate to pre-CIRP period with regard to which claim was filed by the Appellant and was dealt in the Resolution Plan approved on 21.09.2021.

Appeal disposed off.

Seeking grant of regular bail - Money Laundering - reasons to believe - compliance with the statutory requirements under Section 19 of the PMLA - it was held by High Court that 'This Court is not inclined to release the applicant on bail and the instant application, is, hereby, dismissed.'

HELD THAT:- There are no ground to interfere with the impugned order passed by the High Court. However, the petitioner is granted two days’ time to surrender.

SLP dismissed.

Maintainability of proceedings under the Prevention of Money Laundering Act, 2002 (PMLA) in the absence of a scheduled offence - applicant's arrest and subsequent detention - lack of necessary sanction and procedural irregularities - it was held by high Court that 'The prayer for bail made by the applicant under Section 483 of the Bhartiya Nagrik Suraksha Sanhita, 2023 (BNSS) read with Section 45 of the PMLA, 2002 for the offences under Section 3 & 4 of the PMLA, 2002, deserves to be and is hereby rejected.'

HELD THAT:- There are no ground to interfere with the impugned order passed by the High Court. However, liberty is given to the petitioner to move the Trial Court, particularly taking note of the subsequent development.

SLP disposed off.

Seeking grant of bail - Money Laundering - extortion of money by impersonating himself - twin conditions of Section 45 of PMLA, 2002 - it was held by High Court that 'Looking into the facts and circumstances of the case as well as nature and gravity of the offence, it is not inclined to release the applicant on bail.'

HELD THAT:- It is not required to interfere with the impugned order.

SLP dismissed.

Jurisdiction of Adjudicating Authority to substitute a new order in place of the original order - rectification of mistake - mistake apparent on the face of record or not - HELD THAT:- Under Section 74 of Finance Act concerned Officer can rectify his order if any mistake apparent from the record. Therefore, Adjudicating Authority only rectifies any mistake which is apparently shows. The Adjudicating Authority cannot do anything which is not permissible in law.

Revenue relied on Hon’ble Supreme Court judgment in the case of Deva Metal Powders Pvt Ltd., Vs Commissioner, Trade Tax, UP 2007 (12) TMI 221 - SUPREME COURT] in which Hon’ble Supreme Court held that “a mistake which can be rectified is one which is patent, which is obvious and whose discovery is not dependent on any argument or elaboration, rectification of an order does not mean obliteration of order originally passed and its substitution by a new order. Where an error is far from self-evident, it ceased to be an apparent error.”

In this case Adjudicating Authority by Order-in-Original No. 88/2022- 23-Adjn dated 25.05.2022 substituted a new order in place of Order-in- Appeal No. 78/2022-Adjn dated 22.03.2022 which is beyond his jurisdiction.

Conclusion - The Adjudicating Authority exceeded its jurisdiction by substituting a new order in place of the original order, leading to the dismissal of the appeal.

There are no illegality or irregularity in the Order-in-Original - Appeal dismissed.

Abatement claim - construction services - rejection of entire claim on the ground that the appellant had provided only ‘completion and finishing service’ and not ‘construction of commercial complex service’ - rejection of a part of the claim as being barred by limitation -burden pf prove - principles of unjust enrichment - HELD THAT:- The Hon’ble Supreme Court in Smt. J. Yashoda vs Smt. K. Shobha Rani [2007 (4) TMI 11 - SUPREME COURT], held that the rule which is the most universal, is that the best evidence which the nature of the case will admit shall be produced. So long as the higher or superior evidence is within a persons possession or may be reached by him, he shall give no inferior proof in relation to it. In the present case the Original Authority has at para 12.4 of the OIO, stated that the appellant had not furnished contract copies in spite of repeated reminders. No copies of the contract stated to have been submitted to the Original Authority and First Appellate Authority (if any), is seen filed along with the Appeal Memorandum. It is not required to examine the matter independently and disturb the findings of the Lower Authorities. The ends of justice would be met by remanding the matter to the Original Authority and facilitating the appellant from furnishing the requisite contract copies so that the issue of classification can be examined in its proper perspective and a decision arrived at.

Rejection of a part of the claim as being barred by limitation - HELD THAT:- The appellant has stated that the excess amounts were paid by mistake and could not be termed as duty/ service tax and hence, the same would be outside the purview of Section 11B of the Act. It is the appellants opinion that the department has no authority to retain such amount and therefore they are entitled for the refund of the said amount. Revenue has contested this plea citing the judgment in Mafatlal Industries Ltd. [1996 (12) TMI 50 - SUPREME COURT] - Hence as per the law declared by the Hon’ble Supreme Court the right which accrues in favour of the appellant to claim the refund is under section 11B of the Central Excise Act 1944 and therefore, the limitation prescribed under the section would apply.

Burden pf prove - principles of unjust enrichment - HELD THAT:- As per the judgement even in the case of an illegal levy or a levy which is unconstitutional, the right of refund is not automatic. The burden of proof lies on the claimant to establish that it would not cause unjust enrichment.

Conclusion - The impugned order is set aside and the matter remanded for fresh adjudication, emphasizing the principles of natural justice and the need for a thorough review of the evidence.

Appeal allowed by way of remand.

Non-reversal of CENVAT Credit attributable to exempted services - classification and taxability of services under 'Business Support Service' and 'Business Auxiliary Service' - demand under 'Health Care Service' as a 'Pure Agent' - applicability of Service Tax on 'Renting of Immovable Property' and under 'Health Care Service' for amounts received from corporates - demand under 'Import of Service' without specific classification in the Show Cause Notice (SCN) - Invocation of extended period under Section 73(1) of the Act.

Demand of Rs.1,00,76,186 on account of Cenvat Taken - Non-reversal of CENVAT Credit attributable to exempted services - HELD THAT:- The facts of the case show that the Modvat credit taken on the inputs was reversed by the petitioner. Since the reversal of Modvat credit has been done by the petitioner hence in our opinion it has to be treated that no credit was taken by the petitioner on the inputs, namely PVC granules used in the manufacture of PVC/PP bottles as contemplated under the Notification No. 15/94-C.E., dated 1-3-1994.

There is no dispute that the appellant has reversed the entire credit of Rs.25,02,361/-‐ taken on exempted output services along with interest of Rs.6,71,531 in September 2013, after the Show Cause Notice was issued. These details have been certified by the Chartered Accountant and they are not being disputed by the Revenue - the confirmed demand of Rs. Rs.1,00,76,186/-, is legally not sustainable.

Demand of Rs.42,94,470/- under ‘business support service’ - Classification and taxability of services under 'Business Support Service' and 'Business Auxiliary Service' - HELD THAT:- It is not found that the appellant, apart from making available the above ‘space’ has provided any other infrastructure facilities to the client. In fact, it is clear from the Agreement that all such infrastructure facilities will have to be created by the client with their own cost.

It is more akin to letting out the space on rent to the client for which the consideration is arrived @ 18% of the sale proceeds of the medicines. Therefore, on factual matrix there are no justification to classify the service as “Business Support Service”, the classification under which the present demand has been made and confirmed - the demand of Rs.42,94,470/- made under ‘business support service’ set aside.

Demand of Rs.8,87,242/- under ‘business auxiliary service’ - HELD THAT:- The collection of blood samples prima facie does not fall under any of the above seven categories. Further, in the show cause notice, the department has nowhere specified under which clause of the definition of “Business Auxiliary Service” the liability shall be fastened on the Appellant. It is well settled that to bring any activity under the definition of “Business Auxiliary Service” for levy of tax, it is to be clearly mentioned in the show cause notice under which clause of the definition shall apply to fasten that service under the classification of “Business Auxiliary Service” - demand set aside.

Demand of Rs.19,69,383/- under ‘health care service’ as pure agent - HELD THAT:- On going through the copy of the ST 3 enclosed, it is found that indeed it is an inadvertent error on their part because of which they have shown an amount of Rs.1,91,20,228/- under Sl.3F(l)(iii) instead of at S.No. 3F(l)(ii), wherein it should have been shown, since this amount was received on account of diagnostic and treatment provided to admitted inpatients which is an exempted service - the demand of Rs.19,69,383 set aside.

Demand of Rs.1,95,934/- under ‘renting of immovable property service’ - HELD THAT:- On going through the challans and calculation sheet provided by the appellant at page Nos.367 to 389 and find the appellant’s claims to be correct. Since, the Revenue has not adduced any evidence to the effect that the appellants have charged and recovered the Service Tax from their tenants, it is held that they are entitled for cum-tax benefit in terms of Section 67(2) of the Finance Act 1994 - the demand is required to be re-quantified as Rs.1,67,181 and not at Rs.1,95,934/- as calculated by the Revenue.

Demand of Rs.4,73,252/- under ‘health care service’ in respect of sundry debtors - HELD THAT:- The appellant shows by way of documentary evidence, along with the Chartered Accountant’s Certification, that as and when the amounts were realized from the debtors, the same have been properly accounted for and Service Tax has been paid. The Appellant submits that during the material period, service tax was payable on collection basis and not on the invoice basis - the confirmed demand of Rs.4,73,252/- on the unrealised sundry debtors set aside.

Demand of Rs.3,28,957/- under ‘health care service’ in respect of amount received from corporates for treatment of their employees - HELD THAT:- If the payment is made towards health checkup and preventive care, then such service would become taxable under the category “health service’. In the present case, it is found that the amount being paid by the corporates is not account of such services, but is on account of in-patient hospitalization charges, which is being paid by the corporates to the appellant - demand set aside.

Demand of Rs.1,03,133/- under Section 66A of the Act - HELD THAT:- The SCN proposed to levy service tax under Section 66A without mentioning any specific classification whatsoever. However, on production of the documentary evidences along with the reply to the SCN, the Adjudcating authority dropped a portion of the demand and confirmed the demand on Rs.7,27,129/- and Rs.1,38,583/- as expenditure incurred in foreign currency for the years 2008-09 and 2010-11. On such payments, he has confirmed the demand of Rs.1,03,133/- under three taxable classifications namely ‘Business Support Service’, Commercial Coaching Centre and Tutorial Service’ and ‘Scientific or Technical Consultancy Service’ knowing fully that the demand proposed in the impugned show cause notice without mentioning any taxable service under which the demand was proposed - Since the appellant was not put to notice about the sub-classification of the import of service in the Show Cause Notice, the confirmed demand of Rs.1,03,133/- set aside.

Time limitation - HELD THAT:- In this case, the appellant has reversed the cenvat taken along with interest and the decision are in their favour. Further all the cenvat credit taken whether for the exempted services or for the taxable services, have been recorded by them in their books of account. All these make it clear that the Dept has not brought in any evidence to the effect that the appellant was indulging in suppression with an intent to evade Service Tax payment. Similarly in case of import of service, even if the same payable, which is not in the present case, the same would be available as Cenvat Credit to the appellant. Hence, there would not be any motive to suppress. The entry of Rs.19 lacs is on account of their clerical mistake while filing the ST3 Returns. In respect of Renting of immovable property services, due to the confusion prevailing at that time, they have neither collected the Service Tax nor paid the same. Subsequently on getting clarification, they have paid the Service Tax along with interest. Thus if all the facts are considered together, we find that the Revenue has not made out any case of suppression, and the non-payment / short payment, if any has been purely on account of interpretational difficulties. The appellant has also shown their bonafides by making the payment of Service Tax, wherever payable, along with interest. Therefore, the confirmed demand for the extended period is legally not sustainable.

Conclusion - All the demands are set aside. The Appeal succeeds on merits and on account of time-bar.

Appeal allowed.

Valuation of service tax - inclusion of reimbursable expenses in the taxable value of services under Section 67 of the Finance Act, 1994, and Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 - Pure Agent under Rule 5(2) of the Valuation Rules - extended period of limitation - HELD THAT:- The issue is no more res-integra in view of the decision of the Honourable Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT] which has considered the issue of liability to pay service tax on reimbursable expenses received by the service provider in the course of rendering services for the client, apart from the consideration received for rendering the services on which the client has discharged the liability to pay service tax. The Honourable Supreme Court affirmed the decision of the Delhi High Court in INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. & ANR. [2012 (12) TMI 150 - DELHI HIGH COURT], wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections.

The impugned order in appeal and order in original are set aside - Appeal allowed.

Valuation of service tax - inclusion of expenses incurred by the appellant, a Customs House Agent (CHA), and reimbursed by client in the assessable value - "Pure Agent" under Rule 5(2) of the Valuation Rules - extended period of limitation - HELD THAT:- The issue is no more res-integra in view of the decision of the Honourable Supreme Court in the case of UOI v Intercontinental Consultants and Technocrats Pvt Ltd, [2018 (3) TMI 357 - SUPREME COURT] which has considered the issue of liability to pay service tax on reimbursable expenses received by the service provider in the course of rendering services for the client, apart from the consideration received for rendering the services on which the client has discharged the liability to pay service tax. The Honourable Supreme Court affirmed the decision of the Delhi High Court in INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. & ANR. [2012 (12) TMI 150 - DELHI HIGH COURT], wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections.

Conclusion - The reimbursed expenses are not part of the taxable value for service tax purposes, aligning with the Supreme Court's interpretation of Section 67.

The impugned order in appeal upholding the impugned order in original cannot sustain - Appeal allowed.

Clandestine removal - appellant has consumed electricity in excess than the production what has been accounted - suppression of total manufactured quantity - demand raised by the Revenue for the period December 2012 to September 2013 - HELD THAT:- The Department has been issuing periodical notices on the appellant based on the same allegation that the electrical consumption shows that the appellant should have manufactured more ingots. All the proceedings are on the basis of Dr. Batra’s Report on output ratio based on electrical consumption. The earlier eight Show Cause Notices are for the period 2002-03 to 2010. All the Show Cause Notices were initially decided by the adjudicating authority against the party and the demands were confirmed. The appellants had filed their appeal before the Tribunal.

Conclusion - The allegations of suppressing manufacture were not substantiated, as the reliance on Dr. Batra's report was deemed unreliable based on previous precedents.

The Tribunal had remanded the matter to the adjudicating authority to go through all the documentary evidence placed before him and to pass a considered decision - Appeal allowed.

CENVAT Credit - whether the appellant has received MS ingots? - HELD THAT:- It is understood from the ruling by Hon’ble Allahabad High Court in the case of CCE vs. Juhi Alloys Ltd. [2014 (1) TMI 1475 - ALLAHABAD HIGH COURT] that the manufacturer has to take reasonable steps to ensure that the goods received by it are duty paid. The copies of certain invoices submitted by the appellant on 16.01.2025 indicate the central excise duty paid nature of the inputs and all the entries required in an invoice issued by first stage dealer are entered in the same.

The appellant had taken required care in respect of receipt of inputs from M/s. Shreyas Enterprises. Therefore, in view of the ruling by Hon’ble Allahabad High Court, the appellant is entitled for cenvat credit disputed in the proceedings.

The impugned order set aside - appeal allowed.

Joint and several liability to repay debit balance in the bank account - Whether respondent no. 1, who is the husband of respondent no. 2, could have been made a party to the arbitration that was invoked by the appellant, who is a registered stock broker, and held to be jointly and severally liable for the debit balance that had accrued in the wife’s (respondent no. 2’s) account with the appellant?.

Perversity of the finding of joint and several liability - HELD THAT:- Applying the test for perversity under Section 34, it is clear that the High Court, while exercising jurisdiction under Section 37, adopted an incorrect approach. The arbitral tribunal’s findings are definitely based on evidence, as has been rightly held by the Section 34 court. The High Court, at the stage of the Section 37 appeal, took an alternative view on this finding of fact by reappreciating evidence. The arbitral tribunal’s conclusion was based on oral and documentary evidence regarding the conduct of the parties, which leads to a reasonable and possible view that there is joint and several liability. Hence, the High Court, while exercising jurisdiction under Section 37, has incorrectly held the award to be perverse.

Patent illegality - HELD THAT:- The High Court held that despite noting the need for a client’s express authorisation for adjustment of accounts, the arbitral tribunal approved an illegal transfer of the credit balance from respondent no. 1’s account to that of respondent no. 2. On going through the arbitral award, the finding of the arbitral tribunal is based on “past experience” – meaning the conduct of respondent no. 1 all along acting on behalf of respondent no. 2, joint and several liability, and the respondents’ marital relationship.

Bye-law 247A provides that a broker shall not withdraw money from a client’s account other than money required for payment on behalf of the client, for payment of debt due to the broker from the client, or money in respect of which there is a liability of the client to the broker. Once the arbitral tribunal arrived at a finding that respondent no. 1 is jointly and severally liable for the debit balance in respondent no. 2’s account, which we have upheld above, Bye-law 247A in fact permits the withdrawal of the credit balance from respondent no. 1’s account. Therefore, the adjustment of accounts on 05.03.2001 is legal and valid. Although the arbitral tribunal has held that written authorisation for such adjustment is required, we find nothing in Bye-law 247A or in the SEBI Guidelines, on which this Bye-law is based, that mandates the same.

Conclusion - The arbitral tribunal had jurisdiction over respondent no. 1, and the High Court erred in setting aside the arbitral award. The arbitral award was upheld in its entirety, holding both respondents jointly and severally liable for the debit balance in respondent no. 2's account.

Appeal allowed.

Insurance claim - valid permit or not - absence of non-depositing of authorization fee - HELD THAT:- This Court has carefully gone through the permit which is on record and the National Permit is certainly valid up to 13.10.2017. The authorization fee was required to be paid only when the truck was moving out of State of Bihar as it was registered in the State of Bihar and the truck caught fire on account of short-circuit on 08.06.2014 in the State of Bihar itself and, therefore, the respondent company could not have repudiated the claim on such a frivolous ground. The permit in question was issued by the competent authority in Bihar and, therefore, there was no requirement of paying authorization fee when the truck was being used in the State of Bihar and as per the terms and conditions of the National Permit, authorization fee was required to be paid only when the truck was moving out of State of Bihar. Thus, in the considered opinion of this Court, the appellant was certainly entitled for the insurance claim as held by the State Commission and, therefore, the order passed by the National Commission, dated 19.08.2020, deserves to be set aside and is accordingly set aside.

Appeal allowed.

Dishonour of cheque - death of accused during pendency of the Revisional application preferred against conviction and sentence of compensation would be abated automatically or not - compensation and fine are similar and the said amount as imposed by the Court is to be recoverable from the estate of the deceased - HELD THAT:- There is no definition of fine stipulated in the CrPC but there is a provision to allow fine while convicting the accused person in view of the Indian Penal Code. Even no compensation is defined either in CrPC or IPC.

The present proceeding is initiated under Sections 138/141 of the Negotiable Instruments Act, 1881 and whenever a person is convicted under the said sections, there is a provision to sentence of imprisonment as well as fine but, in the present case, both the Learned Courts below awarded compensation to be paid by the accused to the complainant to the tune of Rs. 12 Lakhs. Actually, compensation is granted to address the suffering caused by any loss or injury resulting from an act for which the accused has been sentenced. While it establishes criminal liability, the compensation awarded to the victim is treated similarly to what could be granted in a civil suit. As for accused herein, no fine was imposed on him; instead, he was directed to pay compensation.

In the light of the provisions contained in Sections 421 of the Code of Criminal Procedure, 1973, fine amount as imposed by the Court, is to be recovered by sale and auction of the property of the accused; whereas as per Section 431 of the Code of Criminal Procedure, 1973, even amount of compensation can be recovered as if it was a fine. In the instant case, compensation was directed to be paid by the accused persons. Therefore, as per both sections 421 and 431 of the Code of Criminal Procedure, 1973, amount is to be recovered by way of auction and sale of the property of the late accused/petitioner no. 3, namely, Goutam Gupta.

The legal heirs and representatives of the deceased did not prefer any application for substitution themselves as the petitioners in place of deceased Goutam Gupta. Therefore, the present Opposite Party No. 2 filed an application for substitution of legal heirs and representatives of the deceased Goutam Gupta. Therefore, the case of the petitioners would not abate for the death of petitioner no. 3 (since deceased), namely, Goutam Gupta as the sentence includes the compensation.

Conclusion - i) The case would not abate for the death of the petitioner. ii) The registry is directed to take necessary steps to substitute the legal heirs and representatives in the Revisional application.

Application allowed.