TaxTMI Updates e-Newsletter
Feb 22,2023

Cancellation of GST registration - show cause notice - principles of natural justice - speaking order doctrine - non-filing of returns for a continuous period of six months - opportunity of hearing - determination of amount payable pursuant to cancellation - remand for fresh consideration - physical service by RPAD pending portal rectification

Show cause notice - cancellation of GST registration - principles of natural justice - speaking order doctrine - opportunity of hearing - Validity of the show cause notice and the consequential order of cancellation in view of absence of specific reasons and particulars and breach of principles of natural justice. - HELD THAT: - Following the Court's earlier decision in Aggarwal Dyeing and authoritative principles on the necessity of recording reasons, the impugned show cause notice and the cancellation order were held to be cryptic and devoid of material particulars which a prudent person could meaningfully answer. Where an order entails civil or penal consequences, the authority must set out jurisdictional facts and relevant particulars in the notice and must pass a speaking order recording reasons. The absence of such particulars and reasons amounts to a violation of the principles of natural justice and renders the process and final order unsustainable in law. The Court therefore quashed the show cause notice and the consequential cancellation order and granted liberty to the authority to issue a fresh, particularised notice and to pass an appropriate speaking order after affording a reasonable opportunity of hearing to the petitioner. [Paras 8, 9, 13]

The show cause notice dated 15.03.2021 and the consequential order of cancellation dated 24.03.2021 are quashed for being cryptic and violative of principles of natural justice; respondent may issue a fresh notice containing particulars and afford a reasonable opportunity of hearing before passing a speaking order.

Determination of amount payable pursuant to cancellation - penal and pecuniary consequences - Sustainability of cancelling registration effective from 01.07.2017 without determining the amount payable pursuant to such cancellation. - HELD THAT: - The Court observed that the consequential order of cancellation failed to determine any amount payable despite recording an effective cancellation date of 01.07.2017, and that such omission is incomprehensible and unsustainable. A final cancellation order that produces civil or pecuniary consequences must indicate the basis and computation of any amounts determined to be payable so that the affected person can understand and, if necessary, challenge the determination. The cryptic determination (showing zeros without explanation) could not be upheld. [Paras 10, 11]

Cancellation operating from 01.07.2017 without a reasoned determination of amounts payable is unsustainable; the cancellation is quashed and the authority is directed, on reconsideration, to determine and record the amount payable (if any) in a speaking order.

Remand for fresh consideration - physical service by RPAD pending portal rectification - Relief and directions to be granted on quashing the impugned orders, including scope for fresh proceedings by the authority and interim/ancillary directions. - HELD THAT: - The writ petition was allowed with liberty to the respondent to issue a fresh show cause notice specifying particulars and reasons, to afford the petitioner a reasonable opportunity to file objections and produce documents, and thereafter to pass an appropriate speaking order. The petitioner is permitted to respond to the fresh notice. The Court, having followed the reasoning in Aggarwal Dyeing, approved the practice that until the department remedies portal limitations it should issue show cause notices and final orders in physical form and dispatch them by RPAD so as to ensure meaningful compliance with requirements of notice and reasons. [Paras 13]

Petition allowed; respondents permitted to issue a fresh, particularised notice, to afford a reasonable opportunity of hearing and to pass a speaking order; petitioner may file objections and reply.

Final Conclusion: Writ petition allowed: the show cause notice dated 15.03.2021 and the cancellation order dated 24.03.2021 (effective 01.07.2017) are quashed for being cryptic and violative of natural justice; respondents may reopen proceedings by issuing a fresh notice with particulars, afford a reasonable hearing, determine any amounts payable in a reasoned order and communicate decisions in physical form until portal deficiencies are rectified.

Quashing of criminal investigation - criminal writ petition vs civil writ petition - maintainability of writ under Articles 226/227 - reversal of Input Tax Credit - coercion in exercise of investigatory powers - remedies for alleged ill-treatment during investigation - right to seek refund by statutory application

Criminal writ petition vs civil writ petition - quashing of criminal investigation - maintainability of writ under Articles 226/227 - Prayer to quash the investigation and summons was not maintainable as a civil writ petition and was not pressed by the petitioner. - HELD THAT: - The Court applied the principles laid down in earlier decisions distinguishing civil and criminal writ petitions arising from investigations, enquiries or trials. A petition seeking relief against investigation or proceedings which may culminate in penal consequences falls within the category of a criminal writ petition and ought to be so styled and placed; registry and case-allocation rules described in Nagpur Cable Operators Association (as cited) govern such classification. The petitioner did not press the prayer to quash the investigation and the Court held that the present petition, insofar as it sought quashing of the investigation and summons, was not properly filed as a civil writ petition. [Paras 5]

Prayer for quashing the investigation and summons not proceeded with; the contention is not entertained in this civil writ petition.

Reversal of Input Tax Credit - coercion in exercise of investigatory powers - remedies for alleged ill-treatment during investigation - right to seek refund by statutory application - Allegation that reversal of Input Tax Credit was caused by coercion could not be adjudicated in the writ petition; investigation is pending and disputed facts require appropriate proceedings. - HELD THAT: - The petitioners asserted that they reversed Input Tax Credit under coercion during criminal investigation and sought refund. Respondents denied coercion and contested the factual assertions. The Court observed that investigation into the matter is pending and that the record discloses seriously disputed questions about the circumstances in which the ITC was reversed. In view of the pending investigation and the disputed factual matrix, the Court declined to make any finding in writ jurisdiction that reversal was due to coercion. The Court noted that if coercion or ill-treatment occurred, the accused have available legal remedies, and if the petitioner is entitled to refund on other legal grounds, the petitioner may pursue statutory applications or other proceedings for reversal/refund. [Paras 6, 7, 8]

Allegation of coercion not adjudicated; petition dismissed/disposed of with liberty to pursue appropriate remedies or statutory applications for refund.

Final Conclusion: The petition is disposed of: the prayer to quash the investigation/summons was not pressed and is not entertained in this civil writ petition; the Court declines to decide the contention that reversal of ITC was procured by coercion while the investigation remains pending and the petitioner is left to pursue available legal remedies or statutory applications for refund.

Limitation for refund under Section 54 - exclusion of period for computing limitation pursuant to notification dated 05.07.2022 - challenge to Rule 90(3) of the CGST Rules vis-A -vis Section 54 - challenge to Circular No.125/44/2019-GST

Limitation for refund under Section 54 - exclusion of period for computing limitation pursuant to notification dated 05.07.2022 - Order dated 28.07.2021 rejecting the petitioner's refund application as time barred is unsustainable in view of the concession that the period from 01.03.2020 to 28.02.2022 is to be excluded in computing limitation. - HELD THAT: - The respondent conceded that the order rejecting the refund claim dated 28.07.2021 on limitation grounds could not stand because the Central Board of Indirect Taxes and Customs notification dated 05.07.2022 excludes the period 01.03.2020 to 28.02.2022 from computation of limitation for filing refund applications under Section 54. The petitioner had filed refund applications for the period May, 2018 to March, 2019 and faced successive deficiency memos and re-filings; ultimately the claim was rejected as barred by limitation. In light of the respondent's concession and the exclusion notified, the asserted time bar defence against the petitioner's refund claim fails and the grievance concerning the rejection order stands addressed. Consequently, no adjudication on the vires of Rule 90(3) or Circular No.125/44/2019 was required as those challenges were predicated on the claim being time barred. [Paras 8, 10, 11]

The order rejecting the refund application dated 28.07.2021 is unsustainable; the petition is disposed of as the limitation grievance stands addressed in view of the period exclusion.

Final Conclusion: The challenge to the rejection of the refund application was disposed of on the basis that the period 01.03.2020 to 28.02.2022 is excluded for computation of limitation; consequently the petition was disposed of without adjudicating the vires of Rule 90(3) or the impugned circular.

Tender terms binding on successful bidder - price quoted inclusive of taxes - Goods and Services Tax liability on intra-State supplies - estoppel by acceptance of payment - unsuitability of writ under Article 226 for disputed factual issues

Price quoted inclusive of taxes - tender terms binding on successful bidder - Whether the tender conditions required bids to be quoted inclusive of applicable taxes and whether the petitioner can claim GST in addition to the contract price after securing and executing the work. - HELD THAT: - The Court found that Clause 11(f) of the General Conditions of Tender expressly required that all rates quoted should be inclusive of sales tax. In the post-GST regime the reference to sales tax must be read to cover Goods and Services Tax. Having participated in the tender process and secured the contract, the petitioner was bound by the terms of the tender which contemplated price inclusive of tax. Any doubt regarding inclusion of taxes ought to have been clarified before tendering; the petitioner accepted the subsequent part payments without claiming GST. A successful bidder cannot be permitted to challenge tender conditions after obtaining the contract and completing the work.

The tender required prices inclusive of applicable taxes and the petitioner cannot claim GST in addition to the contract price after having secured and performed the contract.

Goods and Services Tax liability on intra-State supplies - estoppel by acceptance of payment - Whether the University is liable to pay GST for the services rendered by the petitioner and whether prior payment of GST on supplied goods affects liability for GST on services. - HELD THAT: - While Section 9 of the GST law was referred to by the petitioner as imposing tax on intra-State supplies, the Court emphasised that liability to pay an additional GST claim depends on the contractual terms. The University had paid GST for the supply of the generator (a supply of goods) but the contract terms required inclusive pricing for other works. The petitioner's acceptance of payments without GST and the contractual requirement of inclusive rates precluded a fresh claim for GST on the services. The University is not estopped from relying on the tender terms when those terms were clear and accepted by the petitioner.

The University is not liable to pay additional GST on the services claimed by the petitioner where the contract required prices inclusive of taxes and the petitioner accepted payments without GST.

Unsuitability of writ under Article 226 for disputed factual issues - Whether the petition seeking determination of disputed factual contentions regarding payment and contractual interpretation is maintainable under Article 226. - HELD THAT: - The Court noted that the dispute involves factual questions concerning the interpretation and application of tender terms and the parties' conduct in the execution and payment of the contract. Such factual disputes are not amenable to resolution in a writ petition under Article 226. The appropriate course is to contest such matters in a forum or proceeding equipped to decide contested factual and contractual issues.

The writ petition is not an appropriate remedy to decide the factual disputes raised and cannot succeed under Article 226.

Final Conclusion: The petition is dismissed: the tender required rates inclusive of taxes, the petitioner cannot claim additional GST after having accepted payments and the matter involves factual disputes unsuitable for adjudication in a writ petition under Article 226.

Refund of IGST on export - zero rated supplies - shipping bill treated as refund application - jurisdiction of Customs Authority for export-related refund - limits on CGST authority scrutinising refunds processed by Customs - bill-to-ship-to transactions and requirement of one e-way bill - post-facto verification of e-way bill and scope of inquiry - detention of export consignment pending verification

Jurisdiction of Customs Authority for export-related refund - limits on CGST authority scrutinising refunds processed by Customs - shipping bill treated as refund application - Whether the CGST authority could usurp the role of the Customs Authority in scrutinising or withholding refund of IGST paid on export where refund process is governed by shipping bills under the notified rules. - HELD THAT: - The Court found that exports are zero-rated supplies and the refund mechanism operates by treating the shipping bill as the refund application under the relevant rules, a process handled by the Customs Authority after clearance. The Court recorded that respondent No.2 (CGST authority) had no clear jurisdiction to direct the Customs Authority to withhold processing of refund merely on the basis of doubt raised by it; if there are doubts as to export, it is for the Customs Authority to investigate. The Court observed that no show cause notice had been issued by the respondent No.2 before seeking to block the refund and that detention and blocking of refund at the instance of respondent No.2 went beyond its permissible role. Having regard to the facts that the Customs Authority had examined and released the consignment and that the shipping bill mechanism applies, the Court held that the CGST authority could not lawfully usurp the refund process vested with Customs or indefinitely withhold the refund without following appropriate adjudicatory steps. [Paras 10, 11]

The CGST authority cannot, in the circumstances recorded, usurp the role of the Customs Authority in adjudication/processing of refund of IGST paid on export; the shipping bill mechanism under the Customs process governs the refund.

Detention of export consignment pending verification - post-facto verification of e-way bill and scope of inquiry - bill-to-ship-to transactions and requirement of one e-way bill - Whether the petitioner was entitled to protection from coercive measures and to release of refund (with interest) pending completion of any inquiry, and the scope/timing in which further inquiry should be concluded. - HELD THAT: - The Court noted that the Customs Authority had examined and released the consignment and that no adjudicatory order withholding refund by the CGST authority remained in place. Observing that the petitioner had been protected from undue harassment and that no show cause notice had been issued by the CGST authority, the Court directed that, because export had been permitted by the authorities and the refund process under Rule 96 follows shipping bill clearance, the petitioner was entitled to the refund. The Court balanced the competing interests by protecting the petitioner while permitting the investigation to be completed: it ordered the ongoing inquiry to be finalized within eight weeks and directed that if nothing adverse is found at the end of the investigation the blocked refund shall be remitted to the petitioner through RTGS with interest without further action by the petitioner. [Paras 11, 12, 13]

The petitioner is entitled to payment of the refund of IGST (with interest) once the investigation concludes; meanwhile the Court protected the petitioner from coercive harassment and directed finalisation of the investigation within eight weeks, failing which the refund shall be released with interest.

Post-facto verification of e-way bill and scope of inquiry - bill-to-ship-to transactions and requirement of one e-way bill - Remand for completion of investigation into alleged discrepancies (including address mismatch and e-way bill issues) and determination whether any adverse finding exists. - HELD THAT: - Although the Court protected the petitioner from immediate coercive steps and held as a matter of jurisdiction that Customs is the appropriate forum to address export/refund issues, it did not foreclose factual inquiry into document discrepancies. The Court ordered that the investigation (to verify chain of movement, Input Tax Credit linkage and related issues raised by respondent authorities) be completed within eight weeks from receipt of the order. The Court further directed that if the investigation yields no adverse finding, the refund be remitted without further application by the petitioner; this preserves the authority of the respondents to investigate while imposing a time limit and protective consequence in favour of the petitioner. [Paras 12]

Investigation is remitted to the authorities for completion within eight weeks; if no adverse finding emerges, the refund must be released with interest.

Final Conclusion: Writ petition allowed: the Court held that the Customs Authority is the proper forum in relation to refund of IGST on export conducted through shipping bills and that the CGST authority could not, in the circumstances, usurp that process to withhold refund; the petitioner was protected from coercive measures, and the matter of documentary/investigative discrepancies was directed to be concluded within eight weeks, failing which the blocked refund shall be remitted to the petitioner with interest.

Writ of mandamus - condonation of delay in filing appeal under GST - GST Tribunal not constituted - absence of alternative appellate remedy - remand for fresh consideration by primary authority - jurisdiction under Article 226 of the Constitution

Writ of mandamus - GST Tribunal not constituted - absence of alternative appellate remedy - jurisdiction under Article 226 of the Constitution - remand for fresh consideration by primary authority - Whether, in view of non-constitution of the GST Tribunal and absence of an effective alternative appellate remedy, the petitioner is entitled to relief under Article 226 by remitting the matter to the primary authority for fresh consideration despite the appellate authority having rejected the appeal as being beyond the condonable period. - HELD THAT: - The Court noted that the petitioner's appeal before the appellate authority was rejected for being filed beyond the condonable period. The Court observed that the GST Tribunal under the Act has not been constituted, leaving the petitioner without an effective appellate forum. Relying on a Division Bench decision of the Telangana High Court in similar circumstances, the Court held that when the statutory appellate forum is not available, it would be just and proper to exercise writ jurisdiction under Article 226 to avoid leaving the aggrieved party remediless. In the interest of justice the Court found it appropriate to remit the matter to the primary authority for fresh consideration, directing that the petitioner be afforded a personal hearing and that the primary authority pass an appropriate order in accordance with law within a stipulated short period. The Court thereby exercised supervisory jurisdiction to secure a remedy that would otherwise be unavailable because the Tribunal has not been constituted.

Writ petition allowed; matter remitted to the primary authority to re-consider the petitioner's case after affording a personal hearing and to pass appropriate orders in accordance with law within two weeks; no costs.

Final Conclusion: The High Court allowed the writ petition under Article 226 and, because the GST Tribunal has not been constituted and no alternative appellate remedy exists, remitted the matter to the primary authority to reconsider the cancellation and related appeals after a personal hearing and to pass appropriate orders expeditiously (within two weeks); no costs.

Interest on delayed refunds - Refund of tax as consequence of court order - Calculation of interest from date of original refund application - Non discrimination and beneficial construction of interest provisions

Interest on delayed refunds - Refund of tax as consequence of court order - Calculation of interest from date of original refund application - Ranbaxy precedent applied to refund interest - Whether the petitioner was entitled to interest on the refunded amount and the period from which such interest was payable. - HELD THAT: - The Court examined the provisions dealing with refund and interest and applied the established principle that interest on delayed refunds is payable from the date prescribed by the refund provisions where the refund is due. The Court rejected the respondents' contention that interest should be computed only from the date of the refund application filed after the Court's judgment, holding that Sections 54 and 56 mandate payment of interest from the date of the original application where the refund arose and the order for refund has attained finality. The Court relied on the reasoning in the cited precedent dealing with analogous provisions to conclude that the petitioner was entitled to interest from the date of filing of the original refund application (5.4.2019). The respondents' reliance on the Explanation and on the fact that a fresh technical application was filed on the portal was held not to defeat the substantive entitlement to interest, particularly where the amount had been retained by the respondents for an extended period and no justification for the delay was shown. Consequently the impugned order rejecting the interest claim was held to be unsustainable and was partially quashed, with a direction to compute and pay the applicable interest from 5.4.2019 within the time stipulated by the Court. [Paras 11, 14]

Impugned order dated 22.12.2021 is partially quashed insofar as it rejects the claim for interest; respondents directed to calculate and pay applicable interest from 5.4.2019 and remit the same within two months of receipt of certified copy of the order.

Final Conclusion: Writ petition allowed in part; the order rejecting the claim for interest is quashed and respondents are directed to compute and pay the applicable interest from the date of the original refund application (5.4.2019) within two months from receipt of the certified copy of this order.

Prohibition on initiation of multiple proceedings under Section 6(2)(b) of CGST Act - subject-matter as meaning same cause of action - avoidance of multiplicity of inquiries under the CGST scheme - personal liberty and bail where investigation remains pending against other absconding persons - conditions for grant of bail

Prohibition on initiation of multiple proceedings under Section 6(2)(b) of CGST Act - subject-matter as meaning same cause of action - avoidance of multiplicity of inquiries under the CGST scheme - Whether the proceedings initiated by DGGI Delhi Zonal Unit against the accused are barred by Section 6(2)(b) of the CGST Act given prior initiation of proceedings by other authorities in respect of the same subject-matter. - HELD THAT: - The court examined documents showing earlier summons and initiation of proceedings by Gurgaon Zonal Unit of DGGI and by the UP State GST in respect of alleged availment of input tax credit on the basis of fake invoices. The court held that Section 6(2)(b) prohibits initiation of proceedings by another proper officer in respect of the same subject-matter once proceedings have been initiated, a rule aimed at avoiding multiplicity of enquiry and consistent with the scheme and objects of the CGST Act. Having regard to the annexed material which discloses prior and ongoing proceedings against the same firm and the same subject-matter, the court found the present action by DGGI Delhi Zonal Unit to be contrary to the spirit and language of Section 6(2)(b) and therefore impermissible in the circumstances of this case. The court noted that the earlier investigations and the deposit of sums with other investigating units reinforced this conclusion. [Paras 11, 12, 13, 14]

Proceedings initiated by DGGI Delhi Zonal Unit are hit by Section 6(2)(b) of the CGST Act insofar as they pertain to the same subject-matter where prior proceedings were already initiated by other competent authorities.

Personal liberty and bail where investigation remains pending against other absconding persons - conditions for grant of bail - Whether the accused-applicants should be released on bail despite ongoing investigation and certain co-accused being untraced. - HELD THAT: - The court observed that personal liberty cannot be deprived merely because other persons necessary for investigation are not traceable. Considering that the accused-applicants had been in judicial custody since 04.02.2023, that prior proceedings rendered the present action vulnerable under Section 6(2)(b), and that the accused had cooperated and made deposits with other investigating authorities, the court found that bail was appropriate. The grant was made subject to supervisory conditions to safeguard the investigation and prevent tampering or flight: furnishing of bail bonds with surety, joining investigation when required, obtaining court permission before leaving the country, and not tampering with evidence or influencing witnesses. [Paras 15, 16, 17]

Both accused-applicants ordered to be released on bail on furnishing bond and surety and subject to specified conditions (attendance in investigation, not leaving country without permission, no tampering or influencing witnesses).

Final Conclusion: The court concluded that the DGGI Delhi Zonal Unit's proceedings were impermissible under Section 6(2)(b) of the CGST Act in view of prior proceedings on the same subject-matter, and therefore granted bail to the two accused on furnishing bonds and surety and subject to conditions to protect the investigation.

Reopening of assessment - Change of opinion - Reasons to believe - Failure to disclose fully and truly all material facts - Reassessment beyond four years - Validity of notice under Section 148

Reopening of assessment - Change of opinion - Validity of notice under Section 148 - Reasons to believe - Failure to disclose fully and truly all material facts - Reassessment beyond four years - Whether the notice under Section 148 and consequent reassessment for assessment year 2014-15 were legally sustainable - HELD THAT: - The Court examined the reasons recorded by the Assessing Officer and found that the AO's stated satisfaction - that deduction under Section 80P(2)(d) had been irregularly allowed - was based only on 'perusal of the record' and not on any new tangible material. The issue of entitlement to deduction had already been considered during the original assessment proceedings (notice under Section 142(1), reply dated 10.10.2016 and assessment order dated 23.11.2016), and no fresh material or change in law was shown to have emerged between the original assessment and the reasons recorded for reopening. In the absence of any material establishing failure on the part of the assessee to disclose fully and truly all material facts - a jurisdictional precondition where reassessment is sought after the four year period - the action amounted to a mere change of opinion by the AO, which is impermissible. Reliance was placed on established principle that reasons must disclose the AO's mind and be founded on evidence linking the conclusion to material on record; where that link is absent and no allegation of non disclosure is made, reopening is unsustainable. [Paras 9, 10, 11, 12, 13]

Reopening and reassessment for AY 2014-15 were unsustainable as based on change of opinion and without requisite material or allegation of failure to disclose; therefore the notice under Section 148 and the assessment order dated 30th March, 2022 were set aside.

Final Conclusion: Writ petition allowed; the notice under Section 148 and the assessment order dated 30th March, 2022 for assessment year 2014-15 are quashed and set aside.

Exercise of revisional power under Section 263 - Principle of natural justice - Scope of enquiry by Assessing Officer in scrutiny under Section 143(3) - Rule of consistency in tax assessments - Allowability of depreciation where cost was not claimed as application of income

Exercise of revisional power under Section 263 - Principle of natural justice - Validity of the CIT(E)'s suo motu revision under Section 263 in quashing the assessment order for being erroneous and prejudicial to revenue - HELD THAT: - The Court held that the Commissioner invoking revisional jurisdiction must base his conclusion on materials on the record and afford the assessee a reasonable opportunity to be heard before finalising revision. The CIT(E) issued the notice on 26.03.2021 and passed the revisional order on 31.03.2021 after rejecting the assessee's request for time, thereby acting in undue haste. The revisional order merely applied a precedent mechanically without demonstrating prima facie material to show lack of inquiry by the Assessing Officer or explaining factual similarity; consequently the Order was vitiated for violation of the principles of natural justice and lack of adequate reasons to justify exercise of Section 263 revisional power. [Paras 5]

The CIT(E)'s order under Section 263 was quashed for being passed in undue haste and in violation of principles of natural justice and for lack of proper application of mind.

Scope of enquiry by Assessing Officer in scrutiny under Section 143(3) - Rule of consistency in tax assessments - Whether the Assessing Officer conducted sufficient enquiry in the scrutiny assessment before allowing the depreciation claimed by the trust - HELD THAT: - On the materials and assessment order, the Court found that the Assessing Officer issued questionnaire/notice under Section 142(1), received and examined documents and audited financial statements, and recorded verification of books and documents before accepting the return. The Tribunal's finding that enquiries were made and that the Assessing Officer, applying the rule of consistency (the assessee had consistently claimed depreciation and not cost as application of income in earlier years), was not required to probe further, was upheld. The distinction between lack of inquiry (which may justify revision) and an inquiry which is adequate though not exhaustive was emphasised; here the record showed enquiry was made. [Paras 5, 6]

The Assessing Officer made proper, sufficient and adequate enquiry in the scrutiny proceedings; the Tribunal correctly held there was no lack of inquiry.

Allowability of depreciation where cost was not claimed as application of income - Rule of consistency in tax assessments - Whether depreciation was rightly allowed where cost of the assets had not been treated as application of income in the year of acquisition - HELD THAT: - The Court noted consistent findings of fact-based on audited financial statements for preceding years-that the assessee had not claimed the cost of assets as application of income at acquisition but had consistently claimed depreciation as application of income. In that factual matrix, and having regard to established authorities recognising that income of a trust is to be computed on commercial principles and that depreciation may be allowed where cost was not claimed as application in the year of purchase, the Tribunal's conclusion to permit depreciation was sustainable. [Paras 6]

Depreciation was allowable because the assessee had not treated the cost of assets as application of income at the time of acquisition and had consistently claimed depreciation thereafter.

Final Conclusion: The appeal by the Revenue under Section 260A is dismissed. The revisional order under Section 263 and consequential proceedings were rightly quashed by the Tribunal: the CIT(E) acted in undue haste without affording adequate opportunity or recording sufficient reasons, the Assessing Officer had conducted adequate enquiry, and the depreciation claim was allowable on the established factual finding of consistent practice.

Reassessment proceedings against a deceased assessee - notice under Section 148 invalid if issued to a person who has ceased to exist - proceedings against a deceased deemed to be against legal representative (Section 159) - notice deemed valid where assessee appeared or cooperated (Section 292BB)

Reassessment proceedings against a deceased assessee - notice under Section 148 invalid if issued to a person who has ceased to exist - proceedings against a deceased deemed to be against legal representative (Section 159) - Validity of notice under Section 148 and consequent reassessment order where the notice was issued in the name of a deceased assessee instead of in the name of his legal representative - HELD THAT: - The Court found that the assessing officer was aware during the original assessment proceedings that the assessee had died and that the legal representative had been placed on record. The condition precedent for jurisdiction to reopen an assessment under Section 148 is issuance of the notice to a correct and living person; issuance of the jurisdictional notice to a person who has ceased to exist does not satisfy that requirement. Although Section 159 deems proceedings taken against a deceased to be proceedings against the legal representative where proceedings were initiated before death and continued thereafter, that fiction does not validate a first notice for reassessment issued after death in the name of the deceased. Applying these principles to the facts, the Court held that the notice dated 18.03.2020 issued in the name of the deceased was null and void and, therefore, the reassessment order passed pursuant to that notice was also null and void. [Paras 6, 8, 9, 11]

Notice under Section 148 issued in the name of the deceased was illegal and the reassessment order passed pursuant thereto is null and void; the notice dated 18.03.2020 and consequential orders are quashed and set aside.

Notice deemed valid where assessee appeared or cooperated (Section 292BB) - reassessment proceedings against a deceased assessee - Whether Section 292BB cures issuance of a jurisdictional notice under Section 148 when the notice was issued in the name of a deceased person but the legal representative participated in proceedings - HELD THAT: - The Court held that Section 292BB operates to cure infirmities in the manner of service of a notice where the assessee has appeared or cooperated, but it does not and cannot cure a complete absence of jurisdictional foundation arising from issuing the initial notice to a person who has ceased to exist. The provision is intended to validate defective service where the notice has emanated from the department; it does not render valid a notice issued to a dead person as the initiating step for reassessment. Reliance on Section 292BB was therefore rejected to validate the reassessment notice in the present facts. [Paras 5, 10]

Section 292BB does not cure the fundamental defect of issuing the first notice for reassessment in the name of a deceased person; reliance on Section 292BB to validate such notice is untenable.

Final Conclusion: Writ petition allowed: the notice dated 18.03.2020 issued under Section 148 in the name of the deceased assessee and all consequential orders, including the reassessment order dated 10.09.2021, are quashed and set aside; no order as to costs.

Deductibility of interest on non-performing assets - reversal of income previously recognized - writing off as bad debt under Section 36(1)(vii) - application of RBI prudential norms by banking companies vis-a -vis Income Tax law - remedy by revised return / adjustment

Deductibility of interest on non-performing assets - reversal of income previously recognized - Interest previously accounted as income in an earlier year cannot be deducted from the taxable income of a subsequent year merely because the underlying advances became NPAs in that subsequent year. - HELD THAT: - Tribunal considered RBI prudential norms and applied the principle of real income, observing that income properly recorded in the previous year cannot be set off against income of a later year simply because the assessee reverses the earlier entry on account of RBI instructions. The Tribunal relied on precedents to hold that non-recognition of income in conformity with RBI norms is acceptable if consistently followed, but reversal of income already recorded in an earlier year does not permit reducing subsequent year income unless the requirements for derecognition under tax law are met. The High Court agreed with the Tribunal's conclusion that the claim to exclude earlier-recognized interest from computation of the later year was contrary to the Income-tax law. [Paras 7, 8]

Claim to deduct interest (previously accrued and recorded) in assessment year 1999-2000 on account of those advances becoming NPAs in that year is not permissible.

Writing off as bad debt under Section 36(1)(vii) - reversal of income previously recognized - Reversal of credit entries relating to an earlier accounting year can be given tax effect in the current year only where the sum is derecognised in accordance with tax law, for example by writing off as a bad debt under Section 36(1)(vii). - HELD THAT: - The Tribunal noted that the assessee had not written off the disputed sum as a bad debt under Section 36(1)(vii) and treated mere reversal pursuant to RBI guidance as insufficient for tax deduction. It held that the appropriate course, if derecognition is to be claimed for tax purposes, is to follow the statutory mode of writing off bad debts; absent such write-off, reversal entries do not translate into an allowable deduction. The High Court upheld this approach, finding that the assessee had not complied with the tax-law mechanism for derecognition. [Paras 7, 8]

Reversal entries alone do not constitute a write off for purposes of Section 36(1)(vii); tax effect requires adherence to the statutory mode of write off.

Application of RBI prudential norms by banking companies vis-a -vis Income Tax law - deductibility of interest on non-performing assets - RBI prudential norms, though binding on banking companies for regulatory/accounting purposes, do not override or automatically determine the treatment of income for assessment under the Income-tax Act; tax authorities are bound by the provisions of the Act. - HELD THAT: - Counsel for the assessee relied on the mandatory nature of RBI directions for banks and on decisions permitting administrative or executive instructions to remove difficulties. The Court rejected the submission that RBI circulars could displace provisions of the Income-tax Act for assessment purposes, observing that while banks must follow RBI norms, revenue authorities must apply the Income-tax law. The Court further noted that it is open to CBDT to issue directions under Section 119 to the tax department, but no such CBDT instruction was in issue here. Consequently, RBI circulars cannot, by themselves, create an entitlement to exclude income from tax computation. [Paras 9, 10]

RBI guidelines do not, without more, entitle a banking company to the tax treatment claimed; tax treatment must conform to the Income-tax Act.

Remedy by revised return / adjustment - The assessee had available procedural remedies (such as filing a revised return or claiming adjustment/refund in time) which were not availed. - HELD THAT: - The Court observed that, as indicated in precedent, an assessee may seek to rectify earlier returns by filing a revised return or claim adjustment/refund within the time permitted; failure to pursue those remedies was noted as relevant to the availability of relief. This observation was relied upon to reject the contention that the Court should grant relief despite the omission. [Paras 11]

Assessee's failure to avail statutory remedies (e.g., revised return) precluded relief on the grounds urged.

Final Conclusion: The High Court dismissed the appeal against the Tribunal's order for AY 1999-2000, holding that reversal of interest previously recognized pursuant to RBI norms did not permit a deduction in the later year unless the tax law mode of derecognition (e.g., write off under Section 36(1)(vii)) was followed, and that RBI prudential instructions do not supplant the Income tax Act; appeal dismissed.

Classification of income as long term capital gains versus business income - rectification under section 154 - Disputed Tax under the Vivad Se Vishwas scheme - effect of rectification on disputed tax computation - issuance and validity of revised Form 3 - application of CBDT clarification (Circular No.9 of 2020, Q.25)

Rectification under section 154 - classification of income as long term capital gains versus business income - effect of rectification on disputed tax computation - issuance and validity of revised Form 3 - application of CBDT clarification (Circular No.9 of 2020, Q.25) - Validity of respondent's issuance of revised Form 3 ignoring the AO's rectification that reclassified the addition as long term capital gains and its effect on disputed tax under the Vivad Se Vishwas scheme - HELD THAT: - The Court recorded that after assessment under section 143(3) an order under section 154 was passed by the Assessing Officer rectifying the classification of the addition as long term capital gain and issuing a revised demand (paras. 13). The CBDT clarification (Circular No.9 of 2020, Q.25) was held to be determinative: where a rectification accepted by the AO alters assessed income or tax liability, the disputed tax for the purposes of the Vivad Se Vishwas scheme must be computed after giving effect to such rectification (paras. 14-16). The respondents failed to give effect to the rectification and, instead, issued a revised Form 3 treating the addition as taxable at higher rate as unaccounted/business income; that issuance therefore did not accord with the scheme and the cited CBDT clarification (paras. 6-9, 16). In these circumstances the Court found the revised Form 3 unsustainable and set aside the impugned orders, directing respondents to act in furtherance of the petitioner's original Form 3 dated 18 January 2021 in accordance with the Vivad Se Vishwas clarification for assessment year 2014-15 (para. 17). [Paras 13, 14, 15, 16, 17]

Impugned orders dated 20th September 2021 and 29th October 2021 issuing revised Form 3 set aside; respondents directed to proceed in accordance with Form 3 dated 18th January 2021 and the CBDT clarification for assessment year 2014-15.

Final Conclusion: The petition is allowed; the revised Form 3 issued by respondents ignoring the AO's rectification is quashed and respondents are directed to act on the petitioner's Form 3 dated 18 January 2021, giving effect to the rectification for assessment year 2014-15 as per the CBDT clarification under the Vivad Se Vishwas scheme.

Mandatory refund following final adjudication - Interest on delayed tax refunds - Additional interest under Section 244A(1A) (prospective application) - Compensation for delay in refund - Interplay between TRACES and ITBA for adjustment of demands

Mandatory refund following final adjudication - Interest on delayed tax refunds - Refund of the amount deposited by the assessee for AY 2005-06 became due after dismissal of the revenue's appeal and is required to be processed with statutory interest. - HELD THAT: - After the revenue's tax appeal was dismissed on 4.8.2016 confirming the ITAT order that allowed the assessee, the refund crystallised and the department could not rely on pendency of appeal to withhold the refund. The Court observed that sub-section (1) of Section 244A mandates payment of interest where a refund is due and noted the long delay (approximately five years) by the revenue in processing the refund despite communications and complaints. Although administrative difficulties arising from separate departmental systems (TRACES and ITBA) and legacy manual challan deposits were recorded by the respondent, these did not justify the prolonged inaction. The Court directed the respondent to complete processing once the petitioner furnishes requisite name-change documentation, and to effect refund and applicable statutory interest in accordance with the existing provisions, without treating the technical portal issues as a bar to discharging the statutory obligation. [Paras 13, 14]

The respondent must process the refund due for AY 2005-06 and pay statutory interest as prescribed by law upon completion of the required formalities.

Additional interest under Section 244A(1A) (prospective application) - Compensation for delay in refund - Applicability of additional interest under newly inserted sub-section (1A) of Section 244A and scope for compensation for delay. - HELD THAT: - Relying on the decision in Nima Specific Family Trust, the Court held that sub-section (1A) of Section 244A (inserted by the Finance Act effective 1.6.2016) applies prospectively to the period after its insertion. The Court recognised that statutory interest under sub-section (1) is payable where a refund is due, and that sub-section (1A) prescribes an additional rate prospectively; there cannot be directions requiring payment beyond what the statute provides (such as interest on interest). The Court noted established authority declining directions for interest over and above statutory prescriptions, while acknowledging that compensation may be awarded in exceptional circumstances for undue delay, as indicated by earlier Gujarat High Court decisions. [Paras 14, 15]

Additional interest under Section 244A(1A) is to be applied prospectively; no payment beyond statutory prescriptions (such as interest on interest) is ordered, though compensation may be awarded within the scope recognised by precedent.

Compensation for delay in refund - Interplay between TRACES and ITBA for adjustment of demands - Directions for completion of administrative steps, timeline for processing, and compensation contingency. - HELD THAT: - The Court recorded that the respondent was unable to state the exact outstanding demands because of separate systems (TRACES and ITBA) and legacy manual payments, but accepted the respondent's undertaking to complete requisite verification once the petitioner files name-change documentation. The petitioner was directed to provide e-copies and physical copies of the name-change with supporting documents within one week of receipt of the order; the respondent was directed to complete processing within three months thereafter. The Court ordered that if the respondent fails to complete the process within three months, a compensation of Rs.1 lakh shall be payable by way of costs to the petitioner. These directions balance the need for administrative verification with a firm timeline and a financial consequence for non-compliance. [Paras 16, 17]

Petitioner to furnish specified documentation; respondent to complete verification and process refund with interest within three months; failure to do so will attract compensation of Rs.1 lakh.

Final Conclusion: The petition is disposed of by directing the petitioner to submit the name-change documents to the designated officer within one week and by directing the respondent to verify and process the refund for Assessment Year 2005-06, including statutory interest, within three months; if the respondent fails to comply, a compensation of Rs.1 lakh is payable to the petitioner. The additional interest under Section 244A(1A) applies prospectively and no directions beyond statutory prescriptions (such as interest on interest) are made.

Reduction in capital loss not relevant for imposition of penalty under section 271(1)(c) - Furnishing of inaccurate particulars of income for penalty under section 271(1)(c) - Inadvertent/bona fide mistake in return due to absence of documents

Reduction in capital loss not relevant for imposition of penalty under section 271(1)(c) - Inadvertent/bona fide mistake in return due to absence of documents - Reduction in capital loss arising from corrected computation cannot be taken into account for calculating tax sought to be evaded for imposition of penalty under section 271(1)(c). - HELD THAT: - The CIT(A) found that the assessee, owing to non-availability of purchase and sale deeds, inadvertently treated the entire sale consideration as her own and treated 95% as cost, producing a capital loss; when corrected, only 5% belonged to the assessee. Because both sale consideration and cost were taken incorrectly and the mistake arose from absence of documents and an oversight by a non-practising CA-husband, the error was held to be bona fide. The CIT(A) applied Explanation 4 to section 271(1)(c) to hold that the difference between assessed income and returned income is the relevant measure for tax sought to be evaded, and that reduction in a capital loss (which could not be carried forward) cannot be used to justify imposition of penalty. The Tribunal, after reviewing the facts and noting no infirmity in the CIT(A)'s factual findings, upheld that reduction in capital loss deserves to be ignored for penalty computation. [Paras 6, 7]

Reduction in capital loss is to be ignored while imposing penalty; no interference with CIT(A)'s direction to the AO in this regard.

Furnishing of inaccurate particulars of income for penalty under section 271(1)(c) - Inadvertent/bona fide mistake in return due to absence of documents - Whether the assessee furnished inaccurate particulars of income and is liable to penalty on the long term capital gains added by the AO. - HELD THAT: - The CIT(A) concluded that although the mistake in computation was inadvertent, the assessee had filed a return showing a small returned income and later filed a revised computation after notices; the CIT(A) held that the long term capital gains finally computed should be treated as income in respect of which inaccurate particulars were furnished and directed AO to impose minimum penalty on the addition. The Tribunal examined the factual matrix, accepted the CIT(A)'s factual findings about the bona fide nature of the mistake, and found no infirmity warranting interference with the CIT(A)'s partial allowance and direction for imposition of minimum penalty on the addition. [Paras 6, 7]

Assessee held to have furnished inaccurate particulars in respect of the long term capital gains added; CIT(A)'s direction for AO to impose minimum penalty on that addition is upheld.

Final Conclusion: The departmental appeal is dismissed; the order of the CIT(A) is upheld - reduction in capital loss is to be ignored for penalty calculation and the AO is directed to impose minimum penalty on the long term capital gains as affirmed by the CIT(A).

Unexplained cash credit under section 68 - creditworthiness and genuineness of creditor - burden of proof under section 68 - rebuttal by Revenue once assessee discharges initial onus - disallowance of interest under section 36(1) - opportunity to produce evidence / principles of natural justice

Unexplained cash credit under section 68 - creditworthiness and genuineness of creditor - burden of proof under section 68 - opportunity to produce evidence / principles of natural justice - Addition of Rs.36,00,000 treated as unexplained cash credit under section 68 - HELD THAT: - The Tribunal found that the creditor's bank statement, though filed after completion of assessment because the creditor's bank account had been attached by the AO, was available in the record before appellate proceedings and demonstrated credits and payments from the creditor's account evidencing the loan entries to the assessee. The creditor had filed returns and balance sheets for prior years showing financial capacity. On these facts the assessee discharged the initial onus of proving identity, genuineness and creditworthiness of the lender; the burden then shifted to the Department to rebut the evidence, which it failed to do. The Tribunal also noted that the AO, having attached the creditor's account, could have obtained the bank statement but did not point to any discrepancy in the bank records produced. Applying the settled principle that once the assessee proves existence of creditor and that the creditor advanced the amount the presumption under section 68 stands rebutted unless Revenue can trace the source to the assessee, the Tribunal held the addition could not be sustained. [Paras 3, 4]

Addition of Rs.36,00,000 under section 68 is not sustained and is deleted.

Disallowance of interest under section 36(1) - unexplained cash credit under section 68 - Disallowance of interest expense of Rs.50,597 under section 36(1) - HELD THAT: - The disallowance of interest was founded upon the assessment finding that the underlying unsecured loan was an unexplained cash credit. Having held that the loan was proved and the addition under section 68 could not be sustained, the basis for disallowing the interest also fell away. The Tribunal therefore restored the deductibility of the interest, noting that the Department did not successfully controvert the evidence proving the genuineness of the loan transaction. [Paras 3, 4]

Disallowance of interest is reversed and the interest expense is allowed.

Final Conclusion: For Assessment Year 2016-17 the Tribunal allowed the appeal in part: the addition under section 68 of Rs.36,00,000 and the consequent disallowance of interest were set aside, the assessee having discharged the initial onus and the Revenue failing to rebut the evidence.

Long term capital gains - invocation of Section 68 for unexplained credit - exemption under Section 10(38) - modus operandi of bogus LTCG in penny stocks - holding period as indicium of genuineness - Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963

Long term capital gains - exemption under Section 10(38) - invocation of Section 68 for unexplained credit - modus operandi of bogus LTCG in penny stocks - holding period as indicium of genuineness - Whether the addition under Section 68 treating sale proceeds of ETTL as unexplained credit and denying exemption under Section 10(38) was justified - HELD THAT: - The Tribunal analysed the assessment officer's reliance on the Kolkata Investigation Wing report and the described modus operandi of fabricated LTCG in penny stocks, but found that the AO failed to appreciate decisive factual features of the assessee's case. It was an undisputed fact that the shares were originally acquired decades earlier (some holdings dating to 1989-2000) and were held for an extraordinary period (15-25 years) before the impugned sales in FY 2014-15. The Tribunal held that the long holding period, absence of any material linking the assessee to the operators/brokers named in the investigation, sale through a different registered broker, no SEBI or exchange order against the assessee, and the lack of any direct nexus or contemporaneous evidence of manipulation outweighed the generalized findings of the investigation report. The Tribunal concluded that the AO had mechanically applied the generalized investigation findings without addressing the peculiar facts of this case; such overwhelming factual indicia of genuine long-term holding disentitled the AO from treating the sale proceeds as make believe transactions and unexplained credits under Section 68. Consequently, the CIT(A)'s conclusion that the declared LTCG could not be held bogus was upheld. [Paras 11]

The addition under Section 68 was deleted and the CIT(A)'s cancellation of the addition was affirmed; the Revenue's appeal on this ground was dismissed.

Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 - invocation of Section 68 for unexplained credit - Whether the assessee could, under Rule 27, raise for the first time before the Tribunal the legal contention that Section 68 could not be invoked in the absence of books of account - HELD THAT: - Rule 27 permits the respondent to support the order appealed against only on grounds that were raised before and decided by the CIT(A). The Tribunal examined whether the prerequisite - that the point raised before ITAT must have been a ground decided against the assessee by the CIT(A) - was satisfied. The Tribunal found that the assessee had not raised this specific contention before the CIT(A), and therefore the CIT(A) had no occasion to decide it. Consequently, the statutory condition for invoking Rule 27 was not met and the Tribunal declined to entertain the new ground. The Tribunal distinguished authorities relied upon by the assessee where the issue had in fact been decided by the CIT(A). [Paras 12]

The application under Rule 27 raising the new Section 68/books-of-account contention was rejected as not maintainable.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletion of the addition in respect of LTCG from sale of ETTL shares on the facts of long antecedent holding and lack of nexus with the investigation's operators; the assessee's new objection under Rule 27 was refused and the application rejected.

Reopening of assessment - change of opinion - exercise of revisional powers under section 263 - treatment of cash deposits as unexplained income - verification of sources of investment - estimation of business profit on turnover - interest consequential under section 234B

Reopening of assessment - change of opinion - exercise of revisional powers under section 263 - Validity of setting aside the original assessment and directing fresh examination of cash deposits under revisional jurisdiction. - HELD THAT: - The original assessment order under section 143(3) r.w.s. 147 did not record any discussion on the cash deposits; therefore the Principal Commissioner of Income Tax was entitled to invoke revisional powers and direct verification of the cash deposits. The Tribunal found that the PCIT's direction to the Assessing Officer to examine sources of cash for purchase and registration of the property was not vitiated as mere change of opinion, since the original order lacked adjudicatory findings on the cash deposits and required further enquiry. Consequently, the exercise of power under section 263 to set aside the assessment for verification was justified. [Paras 2, 6]

The revisional order setting aside the assessment for verification was justified and valid.

Treatment of cash deposits as unexplained income - verification of sources of investment - estimation of business profit on turnover - Whether the unexplained cash deposits and cash sales aggregated to additions or were satisfactorily explained as business receipts and sources for the property purchase. - HELD THAT: - The Tribunal noted the undisputed nature of the assessee's trade as a kirana merchant, where cash sales are a normal trade practice, and that the revenue had not disputed the cash deposits credited to the assessee's bank account. Evidence included a statement recorded under section 132 from a named customer regarding cash purchases and a payment from the assessee's wife, who is a regular tax filer. On this basis, and in the absence of contrary findings by the Assessing Officer in the original assessment, the Tribunal held that the cash deposits could not be treated as unexplained and additions could not be sustained merely on assumptions. The Tribunal therefore accepted that the assessee had explained the source for the cash used towards the residential property purchase. Separately, the Tribunal declined to interfere with the CIT(A)'s estimation of business profit at 3.5% on turnover as a reasonable exercise of discretion. [Paras 6]

The additions on account of unexplained cash deposits were disallowed; the CIT(A)'s estimate of profit at 3.5% on turnover was upheld.

Interest consequential under section 234B - Whether separate adjudication was required on interest under section 234B. - HELD THAT: - The Tribunal observed that the issue of interest under section 234B is consequential upon the assessment adjustments and therefore did not require separate adjudication in the appeal. [Paras 8]

No separate adjudication on interest under section 234B was undertaken as it is consequential in nature.

Final Conclusion: The appeal is partly allowed: the revisional action under section 263 to verify cash deposits was justified, but on merits the Tribunal held that the cash deposits were satisfactorily explained in the context of the assessee's cash-based kirana business and the additions were deleted; the CIT(A)'s estimate of profit at 3.5% is sustained and interest under section 234B was left as consequential.

Charitable activity - registration under section 12A - approval under section 80G - remand for verification of commencement of activity

Charitable activity - approval under section 80G - Running a blood bank qualifies as a charitable activity. - HELD THAT: - The Tribunal accepted the undisputed position that running a blood bank constitutes a charitable activity. While the Commissioner (Exemptions) had rejected the Form No.10G application for 80G approval on the ground that the trust had not commenced charitable operations, the Tribunal held that the nature of the activity (running a blood bank) is charitable. The Tribunal nevertheless noted that commencement of activity for registration purposes remained a factual question in the case. [Paras 6]

It is held that running a blood bank is a charitable activity.

Registration under section 12A - remand for verification of commencement of activity - Whether the assessee was entitled to registration under section 12A from the date of application or not is remanded for verification of commencement of charitable activity. - HELD THAT: - The Tribunal observed that the assessee had applied for registration before commencing operations and that a licence had been granted on 13.12.2019. There was no evidence on record before the Tribunal to establish that the assessee had actually been running the blood bank after the licence was issued. For this reason the Tribunal did not decide entitlement to retrospective registration on the merits but remitted the matter to the CIT(E) to examine whether the assessee carried on the charitable activity from 13.12.2019 onwards. If the CIT(E) is satisfied that the assessee was carrying on the charitable activity from that date, the CIT(E) is to grant registration under section 12A from the date of application; if not, the registration is not to be granted. [Paras 6, 7]

Matter remitted to the CIT(E) to verify commencement of activity from 13.12.2019 and to grant registration under section 12A from the date of application only if such commencement is established; otherwise registration is not allowable.

Final Conclusion: The appeals are allowed for statistical purposes; the Tribunal held that running a blood bank is charitable but remitted the question of entitlement to registration under section 12A to the CIT(E) for verification whether the assessee commenced charitable activity from 13.12.2019, directing grant of registration from the date of application only if such commencement is established.

Allowability of deduction under Chapter VIA - deduction under section 80P(2)(d) - deduction under section 80P(2)(a)(i) - revision under section 263-order erroneous and prejudicial to revenue - condonation of delay in filing appeal - treatment of interest income for 80P deduction

Condonation of delay in filing appeal - Condonation of delay of 188 days in filing the appeal was allowed. - HELD THAT: - The Tribunal examined the affidavit and condonation petition explaining the 188-day delay. It found the delay was not attributable to deliberate or mala fide conduct of the assessee but due to circumstances and not intentional. Despite the Departmental Representative's objection, the Tribunal exercised discretion to condone the delay and proceeded to hear the appeal on merits. [Paras 3]

Delay of 188 days is condoned and the appeal is admitted for hearing on merits.

Allowability of deduction under Chapter VIA - deduction under section 80P(2)(d) - deduction under section 80P(2)(a)(i) - revision under section 263-order erroneous and prejudicial to revenue - treatment of interest income for 80P deduction - The Pr. CIT's invocation of section 263 and resulting orders disallowing deduction under section 80P in respect of interest income were held to be erroneous and prejudicial to the revenue; the assessment orders allowing the deduction were upheld. - HELD THAT: - The Tribunal applied the reasoning of a series of co-ordinate Pune Bench decisions concerning claims of deduction under section 80P on interest income. Noting precedents where the Pune Benches allowed 80P deduction on interest income (including consideration of contrary High Court decisions and distinguishing facts from Totgar's Cooperative Sales Society), the Tribunal held that insertion of section 80P(4) excluding cooperative banks did not negate eligibility of cooperative societies to claim deduction under section 80P(2)(d) on interest earned from deposits/investments with registered cooperative banks. Given these consistent Tribunal decisions in favour of assessee-claimants, the impugned orders passed under section 263 were found unsustainable and were set aside. [Paras 4, 5, 6, 7, 8]

Impugned orders under section 263 reversing assessments that allowed deduction under section 80P in respect of interest income are overturned; the appeal is allowed.

Final Conclusion: The Tribunal condoned the delay and, following co-ordinate Bench decisions, held that the assessments allowing deduction under Chapter VIA (section 80P) in respect of interest income were not erroneous or prejudicial to the revenue; the section 263 orders were set aside and the assessee's appeal for A.Y. 2017-18 is allowed.

Validity of penalty under Section 271AAA - Vagueness of notice under Section 274 read with Section 271(1)(c) - Requirement that penalty notice specify correct charge - Prohibition on imposing Section 271(1)(c) penalty where Section 271AAA applies

Validity of penalty under Section 271AAA - Vagueness of notice under Section 274 read with Section 271(1)(c) - Requirement that penalty notice specify correct charge - Whether the penalty imposed under Section 271AAA is vitiated where the notice was issued under Section 274 read with Section 271 and the notice recited the limbs of Section 271(1)(c) instead of limiting the charge to 'undisclosed income' under Section 271AAA. - HELD THAT: - The Tribunal held that issuance of a lawful notice is a sine qua non for a valid penalty order because the notice acquaints the assessee with the precise charge to be met. Section 271AAA creates a distinct machinery for penalty on 'undisclosed income' arising from search, and Sub-section (3) bars imposition of penalty under Section 271(1)(c) in respect of such undisclosed income. In the present case the AO issued notice described as 'under section 274 read with section 271' and, in the paragraph stating the charge, invoked both limbs of Section 271(1)(c) - concealing particulars of income and furnishing inaccurate particulars - without striking out the irrelevant limb. Thus the AO erred at two levels: invoking the wrong substantive provision in the notice (Section 271 instead of Section 271AAA) and adopting the ingredients of Section 271(1)(c) rather than limiting the charge to 'undisclosed income' under Section 271AAA. The Tribunal distinguished earlier Full Bench authority where the correct section had been invoked but an irrelevant limb was not struck out, noting that the present case was materially worse because the notice invoked a wrong substantive provision. The Tribunal rejected the Revenue's reliance on a later sentence in the notice that mentioned Section 271AAA as a procedural warning, finding that the operative part of the notice that framed the charge referred only to Section 271 and its limbs; the reference to Section 271AAA in the final sentence did not cure the defect. In view of settled law that a vague or legally incorrect charge in the penalty notice vitiates the penalty, the Tribunal concluded that the penalty order could not stand and set it aside. The Tribunal therefore did not examine the merits of the additions or the CIT(A)'s appellate findings, which became academic. [Paras 6, 9, 10, 11, 12]

Penalty order imposed pursuant to the notice was set aside as void for being founded on a notice that invoked the wrong section and adopted irrelevant limbs of Section 271(1)(c) instead of limiting the charge to 'undisclosed income' under Section 271AAA.

Final Conclusion: The assessee's appeal is allowed by setting aside the penalty order; the Revenue's cross-appeal is dismissed.

Income from Capital Gains vs Income from Business - Finality of assessment under Vivad Se Vishwas and estoppel/consistency - Effect of search assessment settled under VSVS on subsequent proceedings

Income from Capital Gains vs Income from Business - Finality of assessment under Vivad Se Vishwas and estoppel/consistency - Characterization of profits from sale of flats in Ramya Residency (JDA) and sale of residential sites obtained by will for AY 2013-14 as capital gains rather than business income. - HELD THAT: - The Tribunal found that in the search assessment proceedings under section 153C (order dated 13.12.2018) the AO had determined the income from the Ramya Residency project as short-term capital gain and that this assessment was subsequently settled by the assessee under the Vivad Se Vishwas Scheme (Form 5 dated 23.03.2021), reflecting acceptance by the Department of the capital gains treatment. Given that the search-related assessment attained finality under VSVS, the Tribunal held that the Revenue could not adopt a contrary characterization of the same transaction as business income in the regular assessment dated 28.03.2016. The Tribunal therefore applied the principle of consistency/estoppel arising from the finality of the VSVS-settled assessment and directed that the income from sale of flats in Ramya Residency through JDA be treated as capital gains (short-term or long-term as applicable) and not as business income. The Tribunal also observed that, having decided this issue, remaining grounds became infructuous. [Paras 4]

Directed AO to treat profit from sale of flats in Ramya Residency (JDA) as capital gains (short-term/long-term as applicable) for AY 2013-14 instead of business income; appeal partly allowed.

Final Conclusion: The Tribunal partly allowed the appeal for AY 2013-14 and directed the Assessing Officer to treat the profit from sale of flats in the Ramya Residency project as capital gains (short-term or long-term as applicable) in view of the search assessment having been settled under the Vivad Se Vishwas Scheme, thereby precluding characterization as business income.

Mistake apparent from record - segregation of sale consideration credited to profit and loss account as capital gains - prima facie adjustment while processing under section 143(1)

Mistake apparent from record - segregation of sale consideration credited to profit and loss account as capital gains - prima facie adjustment while processing under section 143(1) - Whether the adjustment of Rs. 17,83,441/- made by CPC, Bengaluru to the profit and loss from business and profession in the intimation under section 143(1) was a mistake apparent from the record and liable to be deleted. - HELD THAT: - The return and accompanying schedules showed that the assessee had reduced the full sale consideration of Rs. 19,90,000/- from profit/loss (Schedule BP) and separately offered the same as long term capital gain (Schedule CG), after allowing cost of acquisition, resulting in net capital gain of Rs. 5,79,703/-. While processing under section 143(1), CPC reduced only Rs. 2,06,559/- from business income instead of the full sale consideration, producing a differential addition of Rs. 17,83,441/-. The Tribunal relied on a Coordinate Bench decision with identical facts and findings that CPC had acknowledged in the intimation that the capital gains treatment was claimed, but while processing ignored the cost of acquisition and thus made an incorrect adjustment. In the present case CPC also recorded that capital gain was offered and allowed set off of long term capital loss, which confirms that the correct treatment was to exclude the full sale consideration from business income and compute capital gains separately. No material on record justified CPC's deviating computation and consequently the excess adjustment was a mistake apparent from the record. The Tribunal therefore directed deletion of the said adjustment. [Paras 8, 9, 10]

The addition of Rs. 17,83,441/- made by CPC to profit and loss was a mistake apparent from the record and is deleted; the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal for A.Y. 2020-21, holding that the impugned adjustment by CPC was a mistake apparent from the record and directing its deletion.

Validity of notifications issued under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 - non-delegation of powers under Section 6(3) of the Foreign Trade (Development and Regulation) Act, 1992 - authentication of executive orders under Article 77 and the Authentication (Orders and other Instruments) Rules - operation of the Customs Act mutatis mutandis on orders under Section 3(2) of the Foreign Trade Act - generalia specialibus non derogant / lex specialis derogat legi generali - scope of judicial review in economic policy matters

Non-delegation of powers under Section 6(3) of the Foreign Trade (Development and Regulation) Act, 1992 - authentication of executive orders under Article 77 and the Authentication (Orders and other Instruments) Rules - validity of notifications issued under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 - Whether the impugned Notification dated 4-6-2008 was issued by the DGFT without jurisdiction contrary to Section 6(3) or was a notification of the Central Government authenticated by the DGFT. - HELD THAT: - The Court held that the impugned notification is a notification of the Central Government issued under Section 5 of the Foreign Trade Act and was authenticated by the DGFT pursuant to the Authentication Rules; there was no improper delegation of powers under Section 6(3). The allocation and authentication machinery under Article 77 and the Government Rules enable the DGFT, an ex officio Additional Secretary and attached office, to authenticate instruments on behalf of the Central Government. Precedents of High Courts and the Supreme Court were examined and the Court accepted that authentication by the DGFT does not amount to exercise of Section 3/5 powers by the DGFT as a delegatee, and therefore the embargo in Section 6(3) against delegation does not render the notification ultra vires. [Paras 20, 22]

The notification was issued by the Central Government and merely authenticated by the DGFT; it is not rendered ultra vires by Section 6(3).

Authentication of executive orders under Article 77 and the Authentication (Orders and other Instruments) Rules - scope of judicial review in economic policy matters - validity of notifications issued under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 - Whether authentication of the notification by the DGFT and the procedure followed are objectionable under the procedural requirements of the Foreign Trade Act and Article 77, or whether the policy decision and its technical issuance are justiciable. - HELD THAT: - The Court found no procedural illegality. The notification recites that the amendment was effected by the Central Government and is authenticated by the DGFT in accordance with the Authentication Rules; Article 77 and the Transaction of Business/Authentication Rules permit such authentication and the Court may examine file-notes to verify compliance. Further, where a policy decision of the Government is shown to have been taken after requisite deliberation and supported by material, courts accord only limited review. The impugned notification was part of a considered policy exercise, supported by collected data and internal approvals, and therefore the Single Judge's view of procedural impropriety was set aside. [Paras 25, 28]

Authentication and procedure for issuance of the notification were valid; no procedural ground to strike down the notification.

Operation of the Customs Act mutatis mutandis on orders under Section 3(2) of the Foreign Trade Act - generalia specialibus non derogant / lex specialis derogat legi generali - validity of notifications issued under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 - Whether restriction of imports and fixation of minimum c.i.f. value under the Foreign Trade Act is impermissible because such measures fall within the Customs Act and Customs Tariff Act (lex specialis). - HELD THAT: - Relying on the Apex Court's analysis, the Court held that Section 3(2) of the Foreign Trade Act confers wide powers to prohibit, restrict or regulate imports and that where an order under Section 3(2) is passed it is deemed to be a prohibition under Section 11 of the Customs Act and the Customs Act provisions apply mutatis mutandis. The Customs Tariff Act operates alongside the Customs Act. The FTDR Act is not rendered inapplicable by the Customs enactments, and the principle of lex specialis does not displace the Central Government's power under Section 3(2) and related policy-making under Section 5; therefore fixing a minimum c.i.f. value by notification under the Foreign Trade Act was within the statutory scheme. [Paras 31, 36]

The Central Government could impose the restriction and fix the minimum c.i.f. value under the Foreign Trade Act; the Customs laws apply mutatis mutandis and lex specialis is not applicable to invalidate the notification.

Final Conclusion: The High Court's common order setting aside the Notification dated 4-6-2008 is reversed. The impugned notification was a policy decision of the Central Government, authenticated by the DGFT in accordance with the Authentication Rules and Article 77, and was intra vires the Foreign Trade Act; consequently the writ petitions were dismissed and these appeals are allowed, with no order as to costs.

Dissolution under Section 481 of the Companies Act, 1956 - when liquidator cannot proceed for want of funds and assets - claims of workmen under Section 529A of the Companies Act, 1956 - discharge and relief of the Official Liquidator - permission to make payment from Common Pool Account - reliance on Meghal Homes Pvt. Ltd. - review under Section 559 of the Companies Act, 1956

Dissolution under Section 481 of the Companies Act, 1956 - when liquidator cannot proceed for want of funds and assets - claims of workmen under Section 529A of the Companies Act, 1956 - reliance on Meghal Homes Pvt. Ltd. - Acceptance of the Official Liquidator's report and dissolution of M/s. Yogi Polyester Ltd. (In Liquidation). - HELD THAT: - The Official Liquidator reported absence of realizable assets and bank balances (auditor's certificate), inability to take possession of premises due to competing claim and prior DRT receiver and confirmed sale, invitation for worker claims produced no responses, and statutory conditions for dissolution under Section 481 (where affairs are completely wound up or liquidator cannot proceed for want of funds/assets) were satisfied. The Court, applying the principle in Meghal Homes Pvt. Ltd. , held that it was just and reasonable to dissolve the company and accordingly accepted the report and ordered dissolution. [Paras 12, 13, 14, 16, 17]

M/s. Yogi Polyester Ltd. (In Liquidation) is dissolved under Section 481 of the Companies Act, 1956.

Discharge and relief of the Official Liquidator - Whether the Official Liquidator should be discharged and relieved from duties as liquidator of the company. - HELD THAT: - On acceptance of the Official Liquidator's report and in view of absence of assets or funds to continue winding up, the Court discharged and relieved the Official Liquidator attached to the Court from the office of liquidator of M/s. Yogi Polyester Ltd. (In Liquidation). [Paras 17]

The Official Liquidator is discharged and relieved as liquidator of M/s. Yogi Polyester Ltd. (In Liquidation).

Permission to make payment from Common Pool Account - Grant of permission to make payment towards professional fees from the Official Liquidator's Common Pool Account. - HELD THAT: - The Court permitted the Official Liquidator to pay professional fees of the chartered accountant for preparation of the auditor's certificate from the Common Pool Account maintained by the Office of the Official Liquidator, as sought in the report. [Paras 18]

Permission granted to make the specified professional payment from the Common Pool Account.

Final Conclusion: The Court accepted the Official Liquidator's report and ordered dissolution of M/s. Yogi Polyester Ltd. (In Liquidation) under Section 481 of the Companies Act, 1956; the Official Liquidator was discharged and relieved, a professional fee payment from the Common Pool Account was permitted, and recourse for review was preserved under Section 559 of the Act.

Dissolution of company under Section 481 of the Companies Act, 1956 - acceptance of official liquidator's report - insufficiency of assets to continue winding up - publication inviting objections and absence of objections - registry and tax authorities' non-objection to proposed dissolution - reliance on ratio in Meghal Homes Pvt. Ltd. for dissolution - discharge and relief of the official liquidator - payment of auditor's fee and transfer of residual funds to common pool

Dissolution of company under Section 481 of the Companies Act, 1956 - acceptance of official liquidator's report - insufficiency of assets to continue winding up - reliance on ratio in Meghal Homes Pvt. Ltd. for dissolution - Report of the Official Liquidator praying for dissolution of M/s. Mansukhram Textiles Pvt. Ltd. (In Liquidation) is accepted and the company is dissolved under Section 481 of the Act. - HELD THAT: - The court examined the Official Liquidator's report and supporting material showing prior distributions to workmen and secured creditors, the absence of remaining assets or pending litigation, and the auditor's certificate indicating only a small bank balance. The Official Liquidator had published notices inviting objections and notified the Registrar of Companies and the Income Tax Department, and no objections were received; ROC expressly communicated no objection. The Official Liquidator relied on the Supreme Court's decision in Meghal Homes Pvt. Ltd. to support dissolution where winding up cannot proceed for want of assets and funds. Having considered these facts and the legal ratio relied upon, the court held that the report merits acceptance and dissolution should be ordered. [Paras 5, 6, 7, 9, 12]

Report accepted and M/s. Mansukhram Textiles Pvt. Ltd. (In Liquidation) dissolved under Section 481 of the Companies Act, 1956.

Discharge and relief of the official liquidator - payment of auditor's fee and transfer of residual funds to common pool - publication inviting objections and absence of objections - Consequential orders: Official Liquidator discharged and relieved; permitted payment of auditor's fee from company account and transfer of remaining balance to the Official Liquidator's common pool account. - HELD THAT: - The court recorded that the Official Liquidator had complied with procedural requirements including filing half yearly accounts and publishing advertisements inviting objections, and that no objections were received. In view of the dissolution and the auditor's certificate of available funds, the court allowed a nominal payment from the company account to the auditor for preparation of the certificate and directed transfer of the remaining balance to the common pool account maintained by the Office of the Official Liquidator. The court also provided the statutory review remedy under Section 559 for any aggrieved party. [Paras 10, 11, 13, 14, 15]

Official Liquidator discharged and relieved; permitted payment of auditor's fee from the company's account and transfer of remaining funds to the Official Liquidator's common pool account; review under Section 559 available for aggrieved parties.

Final Conclusion: The Official Liquidator's report is allowed; M/s. Mansukhram Textiles Pvt. Ltd. (In Liquidation) is dissolved under Section 481 of the Companies Act, 1956, the Official Liquidator stands discharged and is authorised to pay the auditor's fee and transfer the residual bank balance to the common pool account; review under the Act is available to aggrieved parties.

Striking off under Section 248 - functional company vs no business for two immediately preceding financial years - restoration of company name to the Register of Companies - compliance with statutory filings and payment of late fees - notice procedure under the removal rules (STK-1 / STK-5)

Striking off under Section 248 - functional company vs no business for two immediately preceding financial years - restoration of company name to the Register of Companies - Whether the striking off of the company's name was sustainable where audited financial statements showed substantial assets and business activity in the two immediately preceding financial years and whether the company's name should be restored. - HELD THAT: - The Tribunal found that the audited financial statements for the financial years 2014-15 and 2015-16 demonstrated that the company held substantial movable and immovable assets and was carrying on operations when the impugned notices were issued. On that material, the National Company Law Appellate Tribunal concluded that the Registrar of Companies and the NCLT's order striking off the name was not sustainable. The Appellate Tribunal examined the procedural steps and filings, noted the evidence of continued asset ownership and taxable transactions in the audited accounts, and determined that the statutory premise for striking off on the ground of 'no business or operations for two immediately preceding financial years' was not made out on the record. Consequently, the Tribunal set aside the NCLT order and directed restoration of the company's name, while conditioning restoration on payment of costs and completion of statutory filings and fees; it also left open the Registrar of Companies' power to take other actions under the Act for past non-filing or late filing. [Paras 10, 11]

Impugned order set aside; the company's name directed to be restored to the Register of Companies subject to payment of costs and compliance with filing and fee conditions.

Notice procedure under the removal rules (STK-1 / STK-5) - compliance with statutory filings and payment of late fees - Whether procedural notice defects or non-receipt of personal notice prevented striking off or otherwise affected restoration. - HELD THAT: - The Registrar of Companies' response recorded issuance of STK-1 (notice to the registered office/directors) and a public notice in STK-5 before striking off. The Appellant contested non-receipt of personal notice, but the Tribunal's decision rested on the material in the audited financial statements showing the company was operational. The Appellate Tribunal nevertheless imposed conditions on restoration: payment of costs, filing of all outstanding annual returns and balance sheets, and payment of requisite charges/late fees. The Registrar of Companies was also left free to initiate any other permissible proceedings for previous non-filing or late filing. [Paras 8, 11]

Restoration ordered subject to specified compliances (payment of costs, filing outstanding statutory returns and payment of applicable fees); Registrar remains free to take further action for non/late filing.

Final Conclusion: The appeal is allowed to the extent that the NCLT order dismissing restoration is set aside; the company's name shall be restored to the Register of Companies on payment of costs and completion of outstanding statutory filings and fees, while preserving the Registrar of Companies' right to take other actions under the Companies Act for past non-compliance.

Provisional attachment under PMLA - value thereof - release of attached property on deposit of equivalent value - proceeds of crime - jurisdiction of High Court under the explanation to section 42 of the PMLA

Provisional attachment under PMLA - value thereof - release of attached property on deposit of equivalent value - proceeds of crime - Whether the petitioner-company, not accused in the ED proceedings and having purchased the subject-property prior to provisional attachment, is entitled to release of the attached immovable property on deposit of the 'value thereof'. - HELD THAT: - The Court found that the subject-property was purchased by the petitioner-company through a registered sale-deed dated 15th June 2016, prior to the provisional attachment order dated 31st March 2018, and that neither the petitioner-company nor its directors are implicated in the ECIR as persons involved in money-laundering or in dealings with the proceeds of crime. The Adjudicating Authority's confirmation of attachment for 'value thereof' and its reasoning about the scope of 'value thereof' were noted, but the Court observed that where the attached property is not shown to be proceeds of crime nor connected to the accused, the enforcing authority can insist only upon the monetary equivalent for which the property was attached. Given that the petitioner-company sought release of the property by depositing the 'value thereof' and did not challenge the ED's investigative or adjudicatory steps, the Court directed the respondent to accept the tendered amount as deposit in an interest-bearing account and to release the property on production of proof that the petitioner had realised the said amount from the seller, subject to deposit and completion of formalities within the time stipulated. [Paras 3, 5, 6, 17, 20]

Petition allowed insofar as the petitioner-company is permitted to have the subject-property released from attachment upon depositing Rs.12 Lakhs (the stated 'value thereof') into an interest-bearing account and compliance with the conditions imposed by the Court; respondent to pass release order within four weeks on proof of deposit and realisation from the seller.

Jurisdiction of High Court under the explanation to section 42 of the PMLA - provisional attachment under PMLA - Whether the writ petition seeking release of the attached property is maintainable in the High Court of Jharkhand. - HELD THAT: - The Court examined the explanation to section 42 of the PMLA and noted that the subject-property is situated and registered at Ranchi, the petitioner-company has its registered office and carries on business in Ranchi, and the provisional attachment order was passed at Ranchi. The Court further observed that prior proceedings under the Act were instituted and pursued in the High Court of Jharkhand and that the ED's technical objection based on transfer of certain coal-block matters to designated courts was not sufficient to oust the territorial jurisdiction of this Court in respect of the present relief. Accordingly, the writ petition was held to be maintainable in the High Court of Jharkhand. [Paras 13, 14, 16]

Writ petition is maintainable before the High Court of Jharkhand and the objection to jurisdiction is rejected.

Final Conclusion: Writ petition allowed: the High Court of Jharkhand upheld its jurisdiction and directed release of the attached immovable property to the petitioner-company on deposit of the stated 'value thereof' into an interest-bearing account and compliance with the Court's directions, with the release order to be passed within four weeks on proof of deposit and realisation from the seller.

Levy of service tax on take-away food - Sale versus service distinction under the definition of 'service' excluding transfer of title in goods (section 65B(44)) - Scope of declared service: service portion in supply of food (Section 66E(i)) - Effect of Circular dated 28.02.2011 and clarification dated 13.08.2015 on take-away/home delivery - Taxability of consideration received for permitting use of premises by associated enterprise - Sharing of expenses not constituting a taxable service

Levy of service tax on take-away food - Sale versus service distinction under the definition of 'service' excluding transfer of title in goods under section 65B(44) - Effect of Circular dated 28.02.2011 and clarification dated 13.08.2015 on take-away/home delivery - Precedential weight of Anjappar Chettinad (Madras High Court) and Commissioner (Appeals) orders accepting non-taxability of take-away - No service tax is leviable on take-away sales of food; such transactions amount to sale of goods and not rendering of taxable restaurant services. - HELD THAT: - The Tribunal accepted the position in Circular dated 28.02.2011 and the clarification dated 13.08.2015 that mere pick-up, home delivery or take-away of food ordinarily constitutes a sale and is not intended to attract service tax unless the transaction includes the service attributes of a restaurant (ambience, seating, waiter service, air-conditioning, etc.). The Madras High Court decision in Anjappar Chettinad and earlier Commissioner (Appeals) orders recognising take-away as sale were relied upon and found applicable. On the facts, the appellant sold packaged/take-away items over the counter where the elements of restaurant service were absent; preparation and packing were treated as conditions of sale. Consequently the activity was held to fall outside the scope of taxable restaurant services/declared service and service tax could not be levied on take-away transactions for the period in question. [Paras 17, 18, 19, 21, 22]

Demand of service tax on take-away food set aside.

Taxability of consideration received for permitting use of premises by associated enterprise - Sharing of expenses not constituting a taxable service - Judicial authority that sharing of expenditure is not a service (Gujarat State Fertilizers & Chemicals Ltd. ) - Amount received from the associated enterprise for use of a portion of the premises is not taxable as 'renting of immovable property' but is a sharing of expenses and not a service. - HELD THAT: - The Tribunal examined the arrangement whereby the appellant leased premises from DIAL and the associated enterprise used part of that premises, paying a portion of the rent to the appellant. There was no privity of contract between the associated enterprise and the original lessor; the receipts were found to be an internal cost sharing measure rather than consideration for sub letting or a separate service. Reliance was placed on higher and appellate authority reasoning that sharing of expenditure does not amount to rendition of service. On these findings the receipts from the associated enterprise could not be treated as taxable 'renting of immovable property' or as a service for the period under adjudication. [Paras 24, 25, 26]

Demand of service tax on amounts received from associated enterprise set aside as non taxable sharing of expenses.

Final Conclusion: The impugned order confirming service tax, interest and penalty is set aside insofar as it seeks to tax take-away sales and amounts received from the associated enterprise; the appeal is allowed.

Commercial construction service - works contract service - taxability of supply of goods versus taxable service - public road works excluded from commercial or industrial construction - remand for fresh consideration

Taxability of supply of goods versus taxable service - commercial construction service - Supply of readymade furniture cannot be classified as commercial construction service and is not taxable as service. - HELD THAT: - The Tribunal found that the activity characterised as supply of readymade furniture by the appellant is essentially a sale of goods and not a component of construction service. Mere supply of readymade furniture does not transform into commercial construction service. Consequently, the demand raised under the head of commercial or industrial construction service for the supply of furniture is unsustainable and set aside.

Demand of Rs.52,228/- raised as tax on supply of furniture under commercial construction service is set aside.

Public road works excluded from commercial or industrial construction - commercial construction service - Work of strengthening culverts on a road is not taxable as commercial or industrial construction service. - HELD THAT: - The Tribunal held that the strengthening of culverts is directly connected to the road and constitutes work related to a public road. Such works fall outside the ambit of commercial construction service or industrial construction service. Therefore, the demand of service tax made on this activity cannot be sustained and has been set aside.

Demand of Rs.34,483/- levied as service tax on strengthening of culverts on road is set aside.

Works contract service - remand for fresh consideration - Whether the construction of the building for GERMI falls within works contract service is not decided and is remanded to the Adjudicating Authority for fresh consideration. - HELD THAT: - The appellant raised, for the first time before the Tribunal, the plea that the construction service rendered to GERMI should be treated as works contract service (and therefore not taxable for the periods in question). The Tribunal observed that this was a new ground which the lower authorities had not had occasion to consider. In view of that, the Tribunal did not adjudicate the contention on merits but remanded the matter to the Adjudicating Authority to examine and decide all issues, including the applicability of works contract service, afresh.

Issue remanded to the Adjudicating Authority for fresh adjudication on whether the GERMI construction is subject to works contract service treatment.

Final Conclusion: The appeal is partly allowed: the demands relating to supply of furniture and strengthening of culverts on road are set aside. The question whether the construction for GERMI is exigible as works contract service is remanded to the Adjudicating Authority for fresh consideration. MA disposed of.

Management, maintenance or repair service - Service recipient requirement in the definition of Management, Maintenance or Repair - Business auxiliary service - production or processing on behalf of the client - Exclusion of manufacture from business auxiliary service - Job work / manufacture on behalf of the principal manufacturer - compliance with Rule 4(5)(a) of Cenvat Credit Rules, 2004 - exemption under Notification No. 08/2005 ST

Management, maintenance or repair service - Service recipient requirement in the definition of Management, Maintenance or Repair - Demand cannot be sustained by treating appellant's provision of its plant to GCL as Management, Maintenance & Repair service - HELD THAT: - The definition of Management, Maintenance & Repair requires that the management, maintenance or repair of the relevant property belongs to the service recipient. In the present case the plant, machinery and equipment used for production belong to the appellant and the arrangement was that the appellant manufactured goods on inputs supplied by GCL. The tribunal found that mere exclusive use of the appellant's plant by GCL does not convert the appellant's activities into Management, Maintenance & Repair service where the property is owned by the service provider. Therefore classification of the transaction as Management, Maintenance & Repair service was incorrect and the demand predicated on that classification is unsustainable.

The demand confirmed under Management, Maintenance & Repair service is set aside.

Job work / manufacture on behalf of the principal manufacturer - Business auxiliary service - production or processing on behalf of the client - Exclusion of manufacture from business auxiliary service - compliance with Rule 4(5)(a) of Cenvat Credit Rules, 2004 - exemption under Notification No. 08/2005 ST - Appellant's activity is manufacture on job work basis for GCL and not a taxable business auxiliary service; even if treated as business auxiliary service it is covered by exemption - HELD THAT: - The tribunal held that the appellant carried out manufacture of excisable goods on inputs and packing materials supplied by the principal manufacturer (GCL) in terms of Rule 4(5)(a) of the Cenvat Credit Rules, 2004, and therefore performed job work. Manufacture of excisable goods under section 2(f) of the Central Excise Act is excluded from the definition of business auxiliary service. Further, the factual record did not allege that the principal manufacturer failed to discharge excise duty on the job work goods. Even on an alternative classification as business auxiliary service (production/processing on behalf of the client), the activity would be exempt under Notification No. 08/2005 ST when the recipient (principal manufacturer) is liable to pay excise duty. Accordingly the demand cannot be sustained on this ground either.

The activity is held to be manufacture on job work basis (excluded from business auxiliary service) and, alternatively, exempt if treated as business auxiliary service; the demand is set aside.

Final Conclusion: The impugned adjudication confirming service tax demand is set aside: the appellant's operations were manufacture (job work) on behalf of the principal manufacturer and do not fall within Management, Maintenance & Repair service; alternatively, such activity would be exempt as business auxiliary service when conditions of Rule 4(5)(a) and Notification No. 08/2005 ST are satisfied. Appeal allowed with consequential relief.

Adjustment of tax paid under wrong registration - reverse charge liability for services received from abroad - prevention of double recovery where tax has been paid and credited to Government account - rectification procedure under Board Circular No. 58/7/2003 for remittances made against incorrect registration or accounting code - non-imposition of penalties and interest where payment has been made and mistake is curable

Adjustment of tax paid under wrong registration - prevention of double recovery where tax has been paid and credited to Government account - rectification procedure under Board Circular No. 58/7/2003 for remittances made against incorrect registration or accounting code - reverse charge liability for services received from abroad - Whether demand of service tax could be sustained against the Anjar unit when the service tax on services received on reverse charge basis was admitted and already deposited by the appellant's head office under a different registration - HELD THAT: - The Tribunal found that the service tax liability in respect of consulting engineering services received from abroad was admitted and that the amount confirmed as due had in fact been deposited by the appellant's head office at Mumbai albeit under a different registration number. The Anjar unit and the Mumbai head office form parts of a single legal entity, and the payment credited to the Government account could not be treated as non-payment merely because it was made under a different registration. The decision relies on the Board Circular No. 58/7/2003 which prescribes a procedure for rectification and transfer of remittances made against wrong accounting heads or incorrect registration numbers and envisages adjustment by PAO/field formations rather than re-collection. The Tribunal also applied settled judicial principles reflected in the precedents cited that procedural mistakes in mentioning codes/registration which result in payment being credited to Government account are curable and do not justify a second demand; such procedural infractions will not nullify bona fide payments and, in the absence of mala fide or actual short payment, penalties and interest are not warranted. In view of these conclusions, the Tribunal held that the department should have effected adjustment instead of raising a fresh demand and that sustaining a duplicate demand would amount to double recovery.

Demand of service tax confirmed by the adjudicating authority is not sustainable; impugned order set aside and appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the adjudicating authority's order confirming demand, and held that the tax already deposited by the head office under a different registration ought to be adjusted in accordance with the Board circular and relevant principles, precluding double recovery and attendant penalties or interest in the absence of mala fide.

Works Contract Service - Construction of Residential Complex Service - Residential complex - personal use - exclusion from levy of service tax where construction is for personal use

Construction of Residential Complex Service - Residential complex - personal use - exclusion from levy of service tax where construction is for personal use - Whether the construction activity carried out for Gujarat State Police Housing Corporation Ltd. attracts service tax as 'Construction of Residential Complex Service' or is excluded as construction intended for personal use - HELD THAT: - The Tribunal examined the statutory definition of ''Residential complex'' and the Explanation which excludes "a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person", with "personal use" expressly including permitting residence by another person on rent or without consideration. The Tribunal applied the reasoning of earlier decisions (Sima Engineering, Lanco Tanjore Power Co. Ltd., Khurana Engineering and Nithesh Estates) which held that where a landowner or government entity directly engages a contractor to design, plan and construct residential accommodation for use by its employees (i.e. for personal use as defined), the activity falls within the exclusion and is not subject to service tax. Relying on those precedents and the statutory exclusion, the Tribunal found that the construction carried out for GSPHCL fell within the exclusion as intended for personal use by the service receiver and hence did not attract service tax as construction of residential complex. [Paras 4, 5]

The construction activity for GSPHCL is excluded from the definition of residential complex services as intended for personal use, and the demand of service tax is set aside.

Final Conclusion: The appeal is allowed: the Tribunal set aside the impugned demand, holding that the construction for GSPHCL is excluded from levy as residential complex constructed for personal use and therefore not taxable under the challenged service heads.

Scope of show cause notice - CENVAT credit - pre-deposit/waiver of pre-deposit - interim protection/stay of coercive measures - expeditious disposal of appeal

Scope of show cause notice - CENVAT credit - interim protection/stay of coercive measures - Whether the Tribunal erred in refusing interim relief where the adjudication went beyond the scope of the show cause notice and whether interim protection should be granted. - HELD THAT: - The Court found prima facie that the adjudicating authority rejected the assessee's claim of CENVAT credit on a ground of utilisation which was not raised in the show cause notices; the issue adjudicated differed from the issue framed in the notices. On that basis a prima facie case was established for interim relief. The Court observed that concerns about delay could be addressed by directing expeditious disposal of the appeal. Accordingly, the Tribunal's order refusing stay was set aside and interim protection was granted for a limited period, subject to conditions designed to secure the disputed demand.

Order dated 29.10.2010 of the Tribunal set aside; coercive measures stayed for three months or until disposal of the appeal subject to the assessee securing the disputed amount by maintaining equivalent credit entries in the Electronic Credit Ledger under the GST regime.

Expeditious disposal of appeal - pre-deposit/waiver of pre-deposit - Direction regarding the conduct and time-bound disposal of the pending appeal and the conditions of interim relief. - HELD THAT: - Having granted interim protection, the Court directed the Tribunal to make best efforts to hear and decide the appeal within three months and recorded the assessee's undertaking to cooperate so that proceedings conclude in a time-bound manner. The interim relief was conditional upon securing the disputed demand through maintenance of corresponding entries in the Electronic Credit Ledger; this addressed the concern about further delay while effectively achieving a functional waiver of coercive measures for the limited period.

Tribunal directed to decide the appeal within three months; interim stay subject to the security condition imposed on the assessee.

Final Conclusion: The Tribunal's refusal of interim relief was set aside; coercive measures restrained for three months or until disposal of the appeal on the condition that the assessee secures the disputed CENVAT claim by maintaining equivalent entries in the Electronic Credit Ledger, and the Tribunal is directed to expeditiously decide the appeal within three months.

Denial of principles of natural justice - right to cross-examination of witnesses - effective personal hearing and maintenance of record of personal hearing - order based on untested statements is nullity - remand for fresh adjudication to afford opportunity of hearing and decision on cross-examination

Right to cross-examination of witnesses - order based on untested statements is nullity - Impugned adjudication based on statements of witnesses without granting opportunity for cross-examination amounted to violation of principles of natural justice and vitiated the order. - HELD THAT: - The Court held that the adjudicating authority relied upon statements recorded under the statute and did not permit cross-examination despite the assessee disputing the truthfulness of those statements. Relying on the principle that an order founded on such untested statements is a serious flaw, the Court observed that it was not open to the authority or the Tribunal to speculate as to what the cross-examination would elicit or to deny the opportunity on that basis. For these reasons, the impugned order was quashed and the matter remitted so that the authority may decide the question of allowing cross-examination afresh within a specified time-frame. [Paras 3, 7, 9, 10]

Quash and set aside the impugned order to the extent it was based on statements without affording cross-examination; remitted for fresh decision on the question of allowing cross-examination.

Effective personal hearing and maintenance of record of personal hearing - denial of principles of natural justice - remand for fresh adjudication to afford opportunity of hearing - Failure to grant an effective personal hearing and to maintain proper record of hearings amounted to denial of natural justice, warranting quashing of the adjudication and remand for de novo hearing. - HELD THAT: - The Court found that personal hearings recorded by the adjudicating authority were deficient: hearings were held during lockdown without proper recording, a correction to the hearing record was not taken on file, and the authority itself admitted irregularity in its order. Emphasising that the authority must maintain records of personal hearings and written submissions and that evidence of such hearings is material to adjudication, the Court concluded there was a complete denial of natural justice. Consequently, the impugned order was set aside and the matters were remitted to the authority to grant effective personal hearing within two weeks and to proceed expeditiously thereafter. [Paras 4, 5, 6, 10]

Impugned order quashed for failure to afford effective personal hearing and maintain hearing records; remitted for fresh hearing and adjudication with directions to grant hearing within two weeks and to expedite the process.

Final Conclusion: The petitions are allowed: the impugned Order-in-Original is quashed and set aside for denial of natural justice both by non-grant of effective personal hearing and by reliance on untested statements; matters are remitted for fresh adjudication with directions to afford personal hearing and to decide the question of cross-examination within prescribed short timelines, and to expedite the adjudication.

Principles of natural justice - opportunity of personal hearing - right to cross-examination of witnesses - minimum three opportunities of hearing under Section 33A - Master Circular on Show Cause Notice, Adjudication and Recovery (Circular No.1053/2/2017) - quashing and remand for fresh adjudication

Opportunity of personal hearing - minimum three opportunities of hearing under Section 33A - Master Circular on Show Cause Notice, Adjudication and Recovery (Circular No.1053/2/2017) - principles of natural justice - Whether the adjudicating authority violated principles of natural justice by not granting adequate opportunities of personal hearing as required by Section 33A and the Board's circular. - HELD THAT: - The Court found that attention must be given to the statutory expectation and the Board's Master Circular which advises that at least three opportunities of personal hearing should be given, with separate communications and sufficient interval, and that adjournments (when granted) should be for reasons recorded and not exceed the permitted number. The adjudicating authority had fixed one in-person hearing on 13.4.2020 during the Covid-19 lockdown and a subsequent hearing fixed for 9.10.2020 whose communication the petitioner received only on the day of hearing. Given the circumstances of the pandemic, the requirement in the circular for separate communications with sufficient intervals, and the insistence that hearings be meaningful so that the noticee can avail the opportunity to be heard, the Court concluded there was a clear breach in the procedure followed by the authority which rendered the impugned adjudication susceptible to challenge on grounds of fairness and reasonableness. [Paras 9, 11, 12, 14, 18]

Impugned order quashed on grounds of inadequate opportunity of personal hearing; matter remitted for fresh adjudication with direction to afford opportunity within two weeks of receipt of this order.

Right to cross-examination of witnesses - principles of natural justice - quashing and remand for fresh adjudication - Whether the petitioner was denied the opportunity to cross-examine witnesses whose statements were relied upon in the adjudication. - HELD THAT: - The Court observed that the adjudicating authority had relied upon statements recorded during investigation, and the petitioner had specifically sought permission to examine and cross-examine the persons whose statements were relied upon. Citing authority that failure to permit cross-examination where statements are used as the basis of an order is a serious procedural defect rendering the order vitiated by denial of natural justice, the Court held that the question of cross-examination must be considered afresh by the adjudicating authority. Accordingly, the Court directed that on remand the authority shall decide the request for cross-examination within the timelines directed and afford the petitioner the opportunity appropriate to a fair adjudicatory process. [Paras 9, 13, 15, 16, 18]

Request for cross-examination to be considered and decided by the adjudicating authority on remand; adjudication to proceed thereafter.

Final Conclusion: The High Court quashed the ex parte adjudication dated 12.10.2020 for breach of principles of natural justice in not affording adequate opportunity of personal hearing and for not dealing with the petitioner's request to cross-examine witnesses; the matter is remitted for fresh adjudication from the stage it was left, with directions to afford hearing (within two weeks of receipt of this order) and to decide the cross-examination request expeditiously.

Manufacture - process incidental or ancillary to manufacture - capital goods versus inputs - excisability of waste and scrap - marketable subsidiary/by product - deeming provision in tariff/section or chapter note

Excisability of waste and scrap - manufacture - process incidental or ancillary to manufacture - capital goods versus inputs - Whether scrap (used/broken pipes and empty barrels) generated by the appellant is excisable as resulting from manufacture of oil or arises from maintenance/repair of capital goods and packing material and hence not liable to central excise duty. - HELD THAT: - The tribunal applied the test laid down in Grasim Industries to determine whether the waste/scrap arises from the process of manufacture (including any process incidental or ancillary to manufacture) or from other processes such as repair and maintenance of capital goods. The court explained that for goods to be excisable they must be produced or manufactured in India and the manufacturing process must produce a new or distinct excisable product; processes incidental or ancillary to manufacture must be integrally connected to production so that without them manufacture would be impossible or commercially inexpedient. The tribunal found that the pipes do not get consumed or transformed into the oil; they function as capital goods used in production and therefore remain capital goods rather than inputs. Scrap arising when such pipes are worn, repaired or replaced is waste from maintenance of capital goods and not a product of the manufacturing process or an incidental/ancillary process of manufacture. Similarly, empty barrels were held to be packing material in which inputs are received and not generated by the manufacturing process. Consequently, the scrap of pipes and barrels does not satisfy the test of being manufactured goods and is not exigible to excise duty. The tribunal thus set aside the impugned orders confirming duty and penalties. [Paras 7, 8, 11, 12, 13]

Scrap of pipes and empty barrels arises from maintenance/repair of capital goods and packing material respectively and is not excisable as resulting from manufacture; impugned orders are set aside and appeals allowed.

Final Conclusion: The tribunal allowed the appeals, holding that the scrap of pipes and empty barrels does not arise from manufacture of oil (nor from any process incidental or ancillary to it) and therefore is not liable to central excise duty; the impugned orders confirming duty and penalties were set aside with consequential relief.

Interest on refund of pre-deposit - entitlement to interest from date of deposit - interest payable after three months from filing of refund application - pre-deposit treated as deposit made pending appeal/inspection

Interest on refund of pre-deposit - entitlement to interest from date of deposit - pre-deposit treated as deposit made pending appeal/inspection - Appellant entitled to interest on refund of pre-deposit from the date of deposit until the date of refund; impugned orders set aside and appeals allowed with consequential relief. - HELD THAT: - The narrow question adjudicated was whether interest on amounts deposited as pre-deposit is payable from the date of deposit or only after three months from filing of a refund application. Applying the consistent view of the Tribunal, High Courts and the Supreme Court in the authorities relied upon, the Tribunal held that amounts deposited as pre-deposit (including deposits made during investigation or pending litigation that are to be treated as pre-deposit) attract interest from the date of deposit till the date of refund. The decision draws support from earlier precedents which treated such deposits as pre-deposit and awarded interest from the date of deposit, and distinguishes decisions that apply a three month rule where the statutory framework or facts differ. On that basis the impugned orders denying interest from the date of deposit were set aside and the appeals allowed with consequential relief to direct payment of interest from date of deposit until actual refund at the rate applied by the Tribunal.

Impugned orders set aside; appeals allowed and appellant entitled to interest on the pre-deposit from date of deposit until date of refund.

Final Conclusion: The Tribunal held that the appellant is entitled to interest on the refunded pre-deposit from the date of deposit up to the date of actual refund and accordingly allowed the appeals with consequential relief.

Unutilised PLA balance is an advance deposit not payment of duty - limitation under Section 11B for refund of duty - refund procedure under Rule 9(1A) and Rule 173G(1A) - inapplicability of unjust enrichment doctrine to unspent PLA refunds

Unutilised PLA balance is an advance deposit not payment of duty - limitation under Section 11B for refund of duty - refund procedure under Rule 9(1A) and Rule 173G(1A) - Whether limitation of one year under Section 11B applies to refund claims for unutilised balance in a Personal Ledger Account (PLA). - HELD THAT: - The Tribunal found that deposits in a PLA are advance deposits towards future duty liabilities and do not constitute payment of duty until debited on actual payment of duty. The unutilised PLA balance therefore remains the depositor's money and does not acquire the character of excise duty. Consequently, the one year limitation scheme prescribed by Section 11B, which applies to refunds of duty, is not attracted to claims for refund of unspent PLA balances. The Tribunal relied on earlier decisions and a Board circular holding that Rule 9(1A) and Rule 173G(1A) prescribe the procedure for withdrawal/refund of PLA balances and that the theory of unjust enrichment and the limitation under Section 11B do not apply to such refunds. A contrary decision was distinguished on the ground that it did not consider the earlier Tribunal precedents and the Board instruction. [Paras 4, 5]

Limitation under Section 11B does not apply to refund of unutilised PLA balance; the impugned order is set aside and the appeal is allowed with consequential relief.

Final Conclusion: The Tribunal held that unutilised PLA deposits are advances (not duty) and therefore refunds of such PLA balances are not subject to the one year limitation under Section 11B; the impugned order was set aside and the appellant's refund claim allowed in accordance with law.

Penalty under Rule 26(1) of Central Excise Rules, 2002 - Mala fide intention requirement for imposition of penalty - Suppression of facts for evasion of excise duty - Central Excise valuation under Section 4 and Section 4A

Penalty under Rule 26(1) of Central Excise Rules, 2002 - Mala fide intention requirement for imposition of penalty - Suppression of facts for evasion of excise duty - Central Excise valuation under Section 4 and Section 4A - Validity of the penalty imposed on the appellants under Rule 26(1) of the Central Excise Rules, 2002 - HELD THAT: - The appellants, officers of the company, were penalised on the basis that the company had suppressed facts and evaded excise duty by adopting valuation under Section 4 rather than Section 4A. The record establishes that the company cleared goods on payment of excise duty and issued central excise invoices while valuing the goods under Section 4; the principal dispute between the department and the company related to whether valuation should have been under Section 4A. In the peculiar facts of the case, including the company having paid duty and issued invoices and the asserted bona fide belief that Section 4 applied to supplies made to industry, the Tribunal found absence of mala fide intention on the part of the appellants. The imposition of penalty under Rule 26(1) therefore was not sustained and was set aside.

Penalty imposed on the appellants under Rule 26(1) set aside for want of mala fide intention; appeals allowed.

Final Conclusion: The Tribunal allowed the appeals by setting aside the penalties imposed on the appellants under Rule 26(1) of the Central Excise Rules, 2002, finding no mala fide intention; the underlying valuation dispute between Section 4 and Section 4A was noted but not adjudicated for purposes of penalty.

Characterisation of customised software as 'goods' for the purposes of sales tax - test of 'goods' based on capability of abstraction, consumption, use, transmission, transfer, delivery, storage and possession - levy of sales tax under the Central Sales Tax Act and the VAT Act on customised IT software - distinction between sale of goods and provision of services in software development - precedential application of Tata Consultancy Services

Characterisation of customised software as 'goods' for the purposes of sales tax - test of 'goods' based on capability of abstraction, consumption, use, transmission, transfer, delivery, storage and possession - levy of sales tax under the Central Sales Tax Act and the VAT Act on customised IT software - distinction between sale of goods and provision of services in software development - precedential application of Tata Consultancy Services - Final assessment orders holding that the petitioner's development and sale of customised IT software are taxable as sale of goods under the VAT Act read with the CST Act were valid and sustainable. - HELD THAT: - The Court upheld the Commercial Tax Officer's conclusion that the petitioner's activities of designing, developing, implementing and handing over customised software amounted to sale of goods. The decision follows the Constitution Bench in Tata Consultancy Services, which held that the test for 'goods' is not tangibility but whether the item is capable of abstraction, consumption and use and whether it can be transmitted, transferred, delivered, stored or possessed; software (both canned and uncanned) possesses those attributes. The Court rejected the petitioner's reliance on a Division Bench decision of the Karnataka High Court as distinguishable on facts, since that decision turned on agreement terms vesting absolute property of software in the customer from the date of contract and treated the contract as for services simpliciter. Applying the legal principle in Tata Consultancy Services, the Court found the Commercial Tax Officer's view consonant with precedent and sustained the assessments.

Challenge to the impugned assessment orders dated 12.05.2008 dismissed; orders upheld as the development and sale of customised software are exigible to sales tax.

Final Conclusion: Writ petitions challenging the assessment orders for assessment periods 2006-07 and 2007-08 (up to 14.02.2008) dismissed; the Court upheld the taxability of customised software as sale of goods in conformity with Tata Consultancy Services; other ancillary prayers were not considered.