TaxTMI Updates e-Newsletter
Feb 25,2026

Extraordinary jurisdiction under Article 226 - alternative remedy of appeal - principles of natural justice / audi alteram partem - jurisdiction of Appellate Authority to make further inquiry - adverse inference for withholding best evidence - HELD THAT:- It is well established principle of law that High Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India should not bypass the alternative remedy except in exceptional circumstances.

Jurisdiction of Appellate Authority to make further inquiry - HELD THAT:- From plain reading of this section, it is clear that the appellate Authority has a jurisdiction to make further inquiry as may be necessary before passing such order as it thinks just and proper for confirming, modifying or annulling the decision or order appealed against. Therefore, the jurisdiction of the appellate Authority is much wider than the jurisdiction of this Court under Article 226/227 of Constitution of India. This Court cannot embark upon an inquiry to adjudicate the disputed question of fact. Even if petitioner is of the view that an inquiry was required on the part of the assessing Authority before passing an order of cancellation of registration, still the same can be done by the appellate Authority and the appellate Authority is not required to remand the matter for the said purpose. Only in view of the wider powers given to the appellate Authority, it has been mentioned in subsection 11 of section 107 of the Act that the appellate Authority would not remand the matter.

Principles of natural justice / audi alteram partem - adverse inference for withholding best evidence - HELD THAT:-The law relating to violation of principle of natural justice has undergone a change and unless and until a person claiming violation of principles of natural justice points out the prejudice caused to him, he cannot succeed merely by saying that his valuable right of natural justice/ audi alteram partem was violated by the Authority concerned.

As already pointed out, petitioner has not filed any document before this Court to show that he was actually running his business. Thus, in the considered opinion of this Court, petitioner has failed to point out any prejudice which has been caused to him even if petitioner is of the view that his valuable right of natural justice was violated. Therefore, the contention of counsel for petitioner that this Court should bypass the statutory remedy of appeal on the ground of violation of principles of natural justice cannot be accepted.

Admittedly, petitioner did not file any document before the assessing Authority to show that he was or is in active business and he is not issuing any fake/false invoice/bill. It is a well established principle of law that if a person is in possession of best evidence and if he decides to withhold the same, then an adverse inference can be drawn against him. Therefore, the contention of petitioner that department should have supplied documents to him is nothing but an attempt to wriggle out of the allegations made by the department against the petitioner. In fact, burden is on the petitioner to supply all the documents to show that he was or is in active business and he has never issued any fake/false invoice/bill.

Accordingly, this Court is of considered opinion that no prejudice was caused to the petitioner even in case if any document which was demanded by him was not supplied by the department. It is made clear that non-supply of any document would not make the impugned order vulnerable, but the petitioner has to prove that the documents which were necessary to put forward his defence were not supplied. As already pointed out, all the best evidence is in possession of the petitioner and it is the petitioner who is withholding the same. Therefore, it cannot be said that any violation of principles of natural justice was done by the department

Thus, this Court is of considered opinion that since highly disputed question of facts are involved, specifically when the petitioner has not filed any document before this Court to rebut the allegations made in the show cause notice and in view of the wider powers of the appellate Authority, the petitioner has failed to make out any exceptional circumstance for bypassing the alternative remedy of appeal. Accordingly, this Court is of considered opinion that the petitioner must avail the alternative remedy available to him under section 107(11) of the Act.

With aforesaid liberty, this petition is dismissed.

Cancellation of registration for non-filing of returns - power to drop proceedings on compliance with proviso to sub-rule (4) of Rule 22 - restoration of GST registration - computation of limitation u/s 73(10) vis-a -vis Financial year 2025-26 - HELD THAT:- Having regard to the fact that the GST registration of the petitioner has been cancelled under Section 29(2)(c) of the CGST Act, 2017 for the reason that the petitioner did not submit returns for a period of 6 (six) months or more and the provisions contained in the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017 and cancellation of registration entails serious civil consequences, this Court is of the considered view that in the event the petitioner approaches the officer, duly empowered, by furnishing all the pending returns and make full payment of the tax dues, along with applicable interest and late fee, the officer duly empowered, has the authority and jurisdiction to drop the proceedings and pass an order in the prescribed Form.

This writ petition is disposed of by providing that the petitioner shall approach the concerned authority within a period of 2 (two) months from today seeking restoration of her GST registration. If the petitioner submits such an application and complies with all the requirements as provided in the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017, the concerned authority shall consider the application of the petitioner for restoration of the GST registration and passed necessary orders in accordance with law. The aforesaid process be completed expeditiously and preferably within an outer limit of 60 days from the date of receipt of the certified copy of this order.

The writ petition accordingly stands disposed of.

Cancellation of GST registration u/s 29(2)(c) - proviso to sub rule (4) of Rule 22 of the CGST Rules, 2017 - dropping proceedings and passing Form GST REG 20 upon furnishing pending returns and payment - restoration of GST registration upon compliance - computation of limitation u/s 73(10) and as per Section 44 for financial year 2024-25 -

Cancellation of GST registration under Section 29(2)(c) - proviso to sub rule (4) of Rule 22 of the CGST Rules, 2017 - dropping proceedings and passing Form GST REG 20 upon furnishing pending returns and payment - HELD THAT:- It is discernible from a reading of the proviso to sub-rule (4) of Rule 22 of the Rules of 2017 that if a person, who has been served with a show cause notice under Section 29(2)(c) of the Act, is ready and willing to furnish all the pending returns and to make full payment of the tax itself along with applicable interest and late fee, the officer, duly empowered, can drop the proceedings and pass an order in the prescribed Form i.e. Form GST REG-20.

Having regard to the fact that the GST registration of the petitioner has been cancelled under Section 29(2)(c) of the Act, for the reason that the petitioner did not submit returns for a period of 6 (six) months and more and the provisions contained in the proviso to sub-rule (4) of Rule 22 of the CGST Rules, 2017 and cancellation of registration entails serious civil consequences, this Court is of the considered view that in the event the petitioner approaches the officer, duly empowered, by furnishing all the pending returns and make full payment of the tax dues, along with applicable interest and late fee, the officer duly empowered, may consider to drop the proceedings and pass an appropriate order in the prescribed Form.

Restoration of GST registration upon compliance - HELD THAT:- This writ petition is disposed of by providing that the petitioner shall approach the concerned authority within a period of 2 (two) months from today seeking restoration of her GST registration. If the petitioner submits such an application and complies with all the requirements as provided in the proviso to Rule 22 (4) of the Rules, the concerned authority shall consider the application of the petitioner for restoration of her GST registration in accordance with law and shall take necessary steps for restoration of GST registration of the petitioner as expeditiously as possible.

Computation of limitation under Section 73(10) - HELD THAT:- The period as stipulated under Section 73 (10) of the Central GST Act/State GST Act shall be computed from the date of the instant order, except for the financial year 2024-25, which shall be as per Section 44 of the Central GST Act/State GST Act. The petitioner herein would also be liable to make payment of arrears i.e. tax, penalty, interest and late fees.

The writ petition accordingly stands disposed of.

Provisional release u/s 67(6) - release on payment of fine in lieu of confiscation u/s 130(2) - detention and seizure in transit u/s 129 - inspection of goods in movement u/s 68 - binding procedure under the Board's Ext.P6 Circular (Forms GST MOV-1 to MOV-10) - expressio unius est exclusio alterius - proprietary protection under Article 300A of the Constitution -

Release on payment of fine in lieu of confiscation u/s 130(2) - provisional release u/s 67(6) - HELD THAT:-Evidently, mere notice to initiate confiscation proceedings will not amount to authorisation fore when the final order of confiscation is passed after following the procedure contemplated in this regard. It is also to be noted in this regard that, as per sub-section 5 of section 130 of the CGST Act, where any goods or conveyance are confiscated under the Act, the title of lso to be noted in this regard that, as per sub-section 5 of section 130 of the CGST Act, where any goods or conveyance are confiscated under the Act, the title of such goods or conveyance immediately vests with the Government.

Thus, the authorization comes into effect only upon final order of confiscation is passed and until such an order is passed, the proceedings that are undergoing can only be a proposal to confiscate the goods, which is falling short of an authorization to confiscate. The Hon'ble Supreme Court in Gunwantlal Godwat v. Union of India and Another [2017 (11) TMI 1317 - SUPREME COURT] considered the meaning of the words 'confiscation authorized by the Act' as contained in section 73 of the Gold (Control) Act, 1968 which is a provision providing option to pay fine in lieu of confiscation and held that 'confiscation authorized by this Act' limits the operation of section 73 only to the confiscations adjudged under the Gold Act. Thus, the view taken by this court is fortified by the aforesaid observations of the Honourable Supreme Court.

As mentioned, section 67 of the CGST Act, that deals with the seizure of goods, contains specific provision namely, sub-section (6), providing for provisional release. Thus, as per the scheme of the statute, wherever, the provisional release is permitted, it is expressly provided. Therefore, as section 130 does not contain an express provision that deals with provisional release, is a factor which is very conspicuous, when it comes to the question of interpretation of the said provision. Moreover, a careful scrutiny of sub-sections (2) and (7) of section 130 would make it clear that, sub-section (7) is depending upon sub-section (2).

It is to be noted that, even though, sub-section (7) of section 130 deals with the release of the confiscated goods and conveyance, on payment of fine in lieu of confiscation, the manner in which such fine is to be calculated, is not provided therein, but on the other hand, the same is contemplated in sub-section (2). Thus, it is amply clear that, stipulations in sub-section (2) is for the purpose of sub-section (7) and thus, the release on payment of fine in lieu of confiscation, provided therein, is only after the order of confiscation and not as a provisional measure.

Whether the official respondents have the power to retain the goods proposed to be confiscated, until an order of confiscation is passed. - Admittedly, the goods which are sought to be confiscated, are the properties of the petitioner and the title vests upon the petitioner, so long as an order of confiscation is not passed, by following the procedure contemplated under the Act. Sub-section (5) of Section 130 provides that, the title of the goods passes on to the Government only upon issuing an order of confiscation. Therefore, since the petitioner is the owner of the goods, it can be deprived off its right to hold the said goods, by the actions of any statutory authority, only in exercise of statutory powers, which are specifically incorporated in the relevant statute or if it can be implied from the scheme of the Act.

Detention and seizure in transit under Section 129 of the CGST Act - inspection of goods in movement under Section 68 of the CGST Act - HELD THAT:- Admittedly no order under section 129 for detaining the goods are passed. Even though Form MOV-2 is relied on by the learned Special Government Pleader, a perusal of clause 2(d) of Ext.P6 in which, such form is prescribed, it can be seen that, the purpose of issuing of MOV-2 is only to ensure the inspection of goods and conveyances, which has to be completed within a period of three working days as provided in clause 2(e).

In this case, Form GST MOV-4 is issued within the time prescribed as per Ext.P6 Circular. However, the consequence of submission of MOV-4 is that, once the said physical verification report is prepared and uploaded, the scope and purpose of inspection as contemplated as per section 68 is over and therefore the respondent cannot keep the articles in their possession, unless an order of detention as contemplated under proviso to sub-section (1) of section 129 is passed.

Thus, in the light of Article 300 A, an interference in the right of the property of a person can be made only by the authority of law. The word “law” in the context of Article 300-A must mean an Act of Parliament or of a State legislature, a rule, or a statutory order, having the force of law, that is positive or State made law. The rights in property can be curtailed, abridged or modified by the State only by exercising its legislative power. Deprivation of property can only be done according to law. Without law, there can be no deprivation of property.

Hence, it becomes the bounden duty of the official respondents to demonstrate the source of power they are exercising, while taking any decision or passing an order interfering with such Constitutional rights.

Once a confiscation order is passed and the title is vested upon the Government, the proper officer shall be entitled to take possession of the goods and conveyances if the possession is not already with the said authority. Therefore, mere initiation of proceedings under section 130 of the Act, by itself is not an authority for the officer concerned, to retain the goods in his possession and such retention of possession can be made, only following the procedure for detention contemplated under section 129 of the Act.

It is to be noted that, there is no prohibition in invoking section 130 proceedings after initiating the proceedings under section 129 of the Act. To be precise, in a case where, the proceedings were initiated under section 129 and during the course of such proceedings, the officer concerned arrives at a reasonable belief that the transactions which are the subject matter of the proceedings were carried out by the party concerned with an intention to evade the tax, it shall be open to the officer concerned, to switch over to the proceedings under section 130 of the Act. If that switching over of the proceedings takes place after an order of detention as contemplated under section 129(1), that would enable the officer concerned to hold the possession of the goods which are under confiscation proceedings.

Mere initiation of the confiscation proceedings would not validate such possession. This is because, when the detention is authorised by the statute by following certain procedure and issuance of certain orders, the same can be affected only by following such course of action. Any other method would defeat the purpose of the provisions. Thus, any action of the officer concerned to retain the possession without passing an order of detention as contemplated under the Act would be illegal which would enable the party concerned to seek release of the goods and conveyances.

Thus, it is clear that, the officers can exercise only those powers which are conferred upon them by the statute, because the powers of statutory bodies are derived, controlled and restricted by the statutes which create them and that any action of such bodies in excess of their power or in violation of the restrictions placed on their powers is ultra vires in view of the law laid down in Sukhdev Singh v. Bhagatram [1975 (2) TMI 111 - SUPREME COURT]

It can be seen that based on Ext.P7 notice issued to the petitioner in Form MOV-10, wherein, it was proposed to impose an amount of Rs.8,92,053/, as fine in lieu of confiscation of goods, the petitioner had already deposited the said amount. Even though the petitioner sought provisional release of the said goods on payment of confiscation of goods, since I found that the provisional release is not contemplated under section 130, the said prayer cannot be granted. However, I have already found that the continued detention of the goods is not legally sustainable, merely because of the reason that proceedings under section 130 of the Act is in progress. In the absence of any valid order of detention, the respondents cannot hold the possession of the goods.

Writ Petition is disposed of directing the respondents 1 to 3 to release the goods of the petitioner forthwith, upon the petitioner furnishing a simple bond, as it was found that the detention of the aforesaid goods and conveyance by the respondents are not supported by any statutory provisions. The competent officer shall comply with the proceedings for confiscation initiated as per Ext.P7 and shall finalise the same after giving the petitioner an opportunity to be heard, as expeditiously as possible.

Vagueness and failure to disclose particulars in show cause notice - principles of natural justice in tax proceedings - cancellation of GST registration under Rule 21(e) for availing ineligible input tax credit - independent exercise of quasi judicial power and prohibition on acting under dictation - non speaking order and pre determination in revocation proceedings -

Vagueness and failure to disclose particulars in show cause notice - principles of natural justice in tax proceedings - HELD THAT:- A bald reproduction of the statutory provision does not satisfy the requirement of “due notice”.

The petitioner, in its reply dated 19.08.2025, specifically objected to the vagueness of the allegation and asserted that, in the absence of particulars: tax period, invoices, suppliers, and quantum, it was impossible to furnish an effective response.

An opportunity of hearing is not an empty formality; it must be meaningful. The failure to disclose the basic material on which the authority proposes to act renders the notice arbitrary and unsustainable.

There is nothing on record to indicate that the proper officer independently evaluated the material or formed a satisfaction based on reasons of his own.

Independent exercise of quasi judicial power and prohibition on acting under dictation - cancellation of GST registration under Rule 21(e) for availing ineligible input tax credit - HELD THAT:- There is nothing on record to indicate that the proper officer independently evaluated the material or formed a satisfaction based on reasons of his own.

The law, in this regard, is well settled. In Orient Paper Mills [1967 (3) TMI 47 - SUPREME COURT] the Hon’ble Apex Court held that when a statute vests quasi-judicial power in an authority, that authority must exercise the power independently, and cannot act under the dictation of a superior administrative authority.

Such a principle is not an administrative courtesy; it is a constitutional imperative flowing from the rule of law. The discretion conferred by the statute cannot be surrendered to another.

Non speaking order and pre determination in revocation proceedings - principles of natural justice in tax proceedings - HELD THAT:- The final order dated 31.10.2025, rejecting the revocation application, reproduces verbatim so called reasons contained in the earlier communication. There is no independent reasoning. There is no analysis of whether the alleged discrepancy in GSTR-2B, assuming it exists, satisfies the statutory conditions under Section 16(2) or attracts the rigour of Rule 21(e).

The act provides adequate machinery for assessment, adjudication and recovery. To cancel registration solely on the basis of an interim investigation report, without furnishing particulars and without independent satisfaction, amounts to obstructing the statutory process.

In view thereof, the impugned show-cause notice dated 10.09.2025, order of cancellation dated 25.08.2025 and order dated 31.10.2025 are set aside.

The petitioner’s registration shall stand restored forthwith.

It is, however, opined to the authority under the GST Act, 2017 to initiate fresh proceeding in accordance with law, if so advised, by issuing a detailed show-cause notice specifying the precise allegations; the tax period involved; the invoices and the suppliers relied upon and the quantification of the alleged ineligible credit and by affording the petitioner a reasonable opportunity of hearing.

The writ petition is allowed as indicated hereinabove.

Effective service of show cause notices by electronic portal - right to be heard / audi alteram partem - remand for fresh adjudication to secure opportunity of personal hearing - portal-based intimation and communication safeguards - access to portal for filing replies - HELD THAT:- It is the petitioner’s case that, in both matters, the mode of uploading did not result in the SCNs being effectively brought to its notice, and consequently, no replies were filed. It is further submitted that the impugned orders came to be passed ex-parte, without the petitioner being afforded an effective opportunity to challenge the proceedings on merits.

In fact, this Court in Neelgiri Machinery through its Proprietor Mr. Anil Kumar Vs. Commissioner Delhi Goods And Service Tax And Others [2025 (3) TMI 1308 - DELHI HIGH COURT], under similar circumstances where the SCN was uploaded on the ‘Additional Notices Tab’ had remanded the matter.

Accordingly, the impugned orders are set aside. The petitioner is granted 4 weeks’ time to file the replies to the SCNs. Upon filing of the replies, the Adjudicating Authority shall issue notices for personal hearing to the petitioner. The personal hearing notices shall be communicated to the petitioner on the registered mobile number and e-mail address.

The replies filed by the petitioner to the SCNs along with the submissions made in the personal hearing proceedings shall be duly considered by the Adjudicating Authority and fresh orders with respect to both the SCNs shall be passed accordingly.

The present writ petitions are disposed of in terms.

Ad-interim relief - bank guarantee - stay on encashment of security - HELD THAT:- Issue notice to respondents returnable on 19th November 2025. Mr. Ladda, learned counsel waives service for respondent No. 6. Learned A.G.P. waives service for State.

The petitioner shall furnish Bank guarantee in the sum of Rs. 40,00,000/- (Rupees Forty Lakhs) of a Nationalised Bank within a period of six weeks from today. The authorities concerned shall not encash the same for a period of two months post the decision of this Writ Petition.

On this condition, ad-interim relief in terms of prayer clause (K), till next date only.

Profiteering - benefit of input tax credit arising on introduction of GST - commensurate reduction in price - Section 171 of the Central Goods and Services Tax Act, 2017 - Rule 128 of the CGST Rules, 2017 - Rule 133(3)(b) of the CGST Rules, 2017 - penalty u/s 171(3A) of the CGST Act, 2017 - HELD THAT:- DGAP concluded that the Respondent has already passed more than the required benefit to 240 eligible home buyers. However, the Respondent has not commensurately passed on the benefit of input tax credit to 13 eligible buyers as they have passed on an amount of Rs. 21,84,437/- whereas they have made a profiteering amount of Rs. 27,64,716/-. Thus, ITC benefit of Rs. 5,80,280/- is still required to be passed on to these 13 home buyers.

The Tribunal is of the view that the Respondent has profiteered by an amount of Rs. 4,65,07,296/- plus GST @ 12% i.e. Rs. 55,80,876/-, totalling to Rs. 5,20,88,172/- and ITC benefit of Rs. 6,63,41,543/- has already been passed on by the Respondent to the 240 eligible recipients in the project “F Residences”. Hence, the ITC benefit passed on to such 240 buyers is greater than the profiteering amount calculated in respect of these buyers. Moreover, it is also observed that as mentioned in Table ‘C’ of the Report, out of profiteering amount of Rs. 27,64,716/- (inclusive of GST), the Respondent has passed on an amount of Rs. 21,84,437/- to 13 eligible buyers (S. No. 3 of Table – ‘C’). Hence, ITC benefit of Rs. 5,80,280/- is still required to be passed on to these 13 buyers. The Respondent has accepted DGAP investigation report and has promised to refund the balance profiteered amount along with interest to eligible 13 home buyers. Thus, in view of the promise of the Respondent to refund the balance profiteered amount along with interest, the Respondent has agreed to comply with the provisions of Section 171 of the CGST Act.

Accordingly, we hold that the balance profiteering amount of Rs. 5,80,280/- is liable to be passed to the 13 eligible buyers. Further as per Rule 133(3)(b) of the Central Goods and Services Tax Rules, 2017, the Respondent is liable to pay interest as applicable to the 13 buyers. The Respondent shall pay the remaining profiteered amount of Rs. 5,80,280/- to the 13 eligible buyers along with applicable interest within 30 days and submit compliance report to the jurisdictional CGST/SGST Commissioner with intimation to the DGAP within 2 months.

Penalty under Section 171(3A) - HELD THAT:- The said provision came into force w.e.f. 01.01.2020, and as the period of contravention in the present case is from 01.07.2017 to 29.01.2020. therefore, penalty is leviable as per Section 171(3A) of the CGST Act.

The DGAP’s investigation report is accepted and the case is disposed of, accordingly.

Maintainability of settlement application - Cut-off date for proceedings pending- last date for preferring the application before the Interim Board for Settlement, so as to obtain the benefit of the directions - time granted by the Supreme Court taking note of the Covid pandemic situation - as by HC [2025 (6) TMI 2101 - KERALA HIGH COURT] clarified the issue as regards the cut-off date on which the proceedings have to be pending for supporting an application for settlement before the Interim Board for Settlement u/s 245C, the stand of the Interim Board for Settlement that the proceedings had to be pending as on 31.01.2021 cannot now be legally sustained. As the appellant herein had filed the application for settlement on 17.03.2022, which is well within the time granted by the Supreme Court taking note of the Covid pandemic situation that had arisen in the country, the appellant herein can be permitted to pursue his application that was filed before the Interim Board for Settlement on 17.03.2022.

HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court.

Special Leave Petition is dismissed and the accompanying interlocutory application(s), if any, stands disposed of.

Section 197 certificate - receipts of the petitioner amounts to Royalty/FTS liable to be taxed under Section 44DA - For computing the rate of TDS, the Revenue assumed profit at rate of 20% and directed that TDS be deducted at the rate of 7% - case of the petitioner is primarily that the receipts shall be taxable as per provisions of Section 44BB of the Act; whereas the AO came to the conclusion that the services/receipts provided by the petitioner are in the nature of the FTS/Royalty and hence income from these activities is covered under Section 44DA - interplay between the provisions of Sections 44BB and 44DA and their applicability to non-residents carrying on the business of exploration etc. of mineral oils

HELD THAT:- After the amendment introduced by the Finance Act, 2010, FTS/ Royalty arising out of activities in connection with the exploration etc. of mineral oils shall be taxable as per Section 44DA of the Act by virtue of the second proviso to Section 44DA(1). However, for the said provision to apply, the income/receipts at the hand of the assessee necessarily need to be in the nature of FTS/Royalty. As such, to decide the controversy in the present case, it is necessary to examine whether the consideration received by the petitioner amount to FTS/Royalty.

The issue regarding FTS in respect of this very petitioner has been settled by this Court in PGS Exploration (Norway) AS .[2016 (4) TMI 317 - DELHI HIGH COURT] wherein the Court considering the activities of 2D/3D seismic survey carried out by the petitioner in connection with exploration of oil held that the income received pursuant to the contract with ONGC would not amount to FTS.

We find that though the AO had not considered the above judgment for the FY 2024-25, he issued the certificate withholding tax @ 3.5% under the same contract. However, in the impugned order / certificate, there is a clear departure from the earlier FY as the AO has stated that the income from the activities of the petitioner is FTS/Royalty, covered under Section 44DA of the Act.

In the impugned order, the AO has merely stated that the services are in the nature of FTS/Royalty; hence the activities are covered under Section 44DA of the Act. There is no reason provided as to why there is a deviation from the earlier FY, wherein the receipts of the petitioner were held to be covered under Section 44BB of the Act. Further, the order does not specify as to whether the receipts (or parts thereof), are in the nature of FTS or in the nature of Royalty, to be covered under Section 44DA of the Act.

Be that as it may, the finding of the AO with respect to FTS cannot be sustained in view of the decision in PGS Exploration (Norway) AS (supra) wherein this Court had held to the contrary in the case of the petitioner itself, albeit before the amendment was introduced. As such, the stand of the Revenue that the income of the petitioner would amount to FTS and would be taxable as per Section 44DA prima facie cannot be accepted.

Thus, the impugned order and certificate under Section 197 of the Act be set aside and the matter be remanded back to the AO for him to consider the law laid down in the case of ONGC [2015 (7) TMI 91 - SUPREME COURT] as also this Court in PGS Exploration (Norway) AS (supra) as well as the issue with regard to the element of Royalty and then pass a fresh order under Section 197 of the Act.

Revision u/s 263 - CIT(A) held the assessment erroneous and prejudicial to revenue interests due to the shares' classification as stock-in-trade, excess set-off and disallowable capital loss - HELD THAT:- Record herein demonstrates that the AO diligently inquired into the assessee's claim concerning the purchase and sale of 34 unlisted preference shares in ICICI Bank Ltd. A notice u/s 142(1) was issued, prompting the assessee to submit comprehensive evidence such as the Board resolution dated May 21, 2012 authorizing the acquisition as an investment, purchase and sale documents, balance sheet extracts, capital gains computation and reliance on the CBDT Instruction dated May 02, 2016. AO considered this material and accepted the Long-Term Capital Gains claim, reflecting a prima facie inquiry rather than a mechanical acceptance.

Principal Commissioner's invocation of Section 263 falters on the ground that the assessment order lacks “elaborate discussion.” It is a settled jurisprudence, as held in CIT v. Max India Ltd. [2007 (11) TMI 12 - SUPREME COURT] that clarifies brevity in reasoning does not equate to non-inquiry or error. Where the AO has made relevant enquiries and adopted a plausible view supported by material, revisional jurisdiction cannot be exercised merely because the revisional authority disagrees. This principle safeguards against substituting superior wisdom for the AO's reasonable judgment, preserving administrative efficiency.

As the AO's stance aligned with the binding CBDT Instruction dated May 02, 2016, which categorises income from unlisted shares transfers as “Capital Gains,” in absence of specified exceptions. No such exceptions were indicated or proven herein, rendering the view not only plausible but authoritative. Thus, the order was neither erroneous nor prejudicial to revenue, as no revenue loss accrued from a legally tenable position.

Thus, the Tribunal correctly set aside the revisionary order, holding that Section 263 requires more than mere retrospective disapproval. We answer substantial question (a) in the affirmative, i.e., against the revenue and in favour of the assessee.

Assessee converted stock-in-trade into a capital asset shortly before the sale lacks foundational support in the prior proceedings, rendering it untenable - The Tribunal's observation in this regard aligns squarely with the settled principles of tax jurisprudence. Appellate forums, including the Income Tax Appellate Tribunal (ITAT), operate within the confines of the record as it stood before lower authorities.

As held in CIT v. Shree Manjunatheswara Packing Products & Camphor Works [1997 (12) TMI 4 - SUPREME COURT] a new plea altering the character of the transaction cannot be sprung at the appellate level without prior ventilation. Here, the absence of any conversion finding in the AO's assessment or PC's revision order bars the revenue from pivoting to this argument, preventing a backdoor re-characterization of the gains.

Even on merits, the revenue's plea falters. The shares were acquired in June 2012 and transferred in March 2018, reflecting a holding period of nearly six years, far exceeding the typical tenure for stock-in-trade in trading activities. The transaction was isolated and singular, devoid of the volume, frequency or intent of repetitive trading. Absent evidence of business-like activity or proximate conversion, the gains qualify as capital gains under section 45 of the Act not business income under section 28 of the Act.

Tribunal did not erred in rejecting the plea. We answer substantial question (b) in the affirmative, i.e., against the revenue and in favour of the assessee affirming the capital asset characterization.

Characterization of gain - correct head of income - whether the surplus arising from the sale of unlisted preference shares by the assessee constitutes business income or capital gains? - In the present case, the shares were acquired pursuant to a specific Board resolution designating them as investments, evidencing a clear investment intent from inception. They were held for nearly six years, a duration indicative of a long-term investment rather than trading stock. Critically, there was no regularity or frequency of transactions making it a solitary sale, with no pattern of repetitive dealing. The shares were consistently valued at cost in the assessee's books, eschewing the “lower of cost or market value” method typical of trading activities. The assessee's conduct thus aligns squarely with that of an investor, not a trader. It is a trite law that mere accounting nomenclature cannot dictate the true nature of the asset or income. As held in Electronic Corporation of Tamil Nadu Ltd. [2018 (12) TMI 47 - MADRAS HIGH COURT] the substance prevails over form, reinforcing that labels alone are inconclusive.

While CBDT Circular No. 6/2016 dated February 29, 2016 primarily addresses listed shares, it underscores the fact-dependent nature of the inquiry and the policy thrust towards consistency, applicable by analogy. The revenue's failure to invoke or prove exceptions, such as lifting the corporate veil, leaves the assessee's claim unimpugned. The Assessing Officer's contrary view, classifying the surplus as business income, lacked sustainability in light of these binding circulars, which carry the force of law under section 119 of the Act. The Tribunal's decision to treat the surplus as long-term capital gains was thus justified. We answer substantial question (c) in the affirmative, i.e., against the revenue and in favour of the assessee.

Revenue's assertion that Paragraph 3(b) of Circular No. 6/2016 dated February 29, 2016 was overlooked merits careful scrutiny - The instant case revolves around unlisted preference shares, rendering Paragraph 3(b) inapposite. The governing directive is the CBDT Instruction dated May 02, 2016, which expressly applies to unlisted shares and mandates their treatment as capital gains, thereby obviating any grounds for dispute by the Assessing Officer.

Revisional proceedings u/s 263 of the Act were not predicated on Paragraph 3(b) of the aforementioned Circular. The Principal Commissioner invoked entirely distinct reasoning in initiating revision, unconnected to the Circular's stipulations for listed shares. Consequently, the Income Tax Appellate Tribunal was only responsible for checking if the revision order was legally valid. It can't be blamed for not deciding on an issue that wasn't part of the revision order's reasoning. Expecting it to do so would wrongly force the Tribunal to go beyond what the order actually covered. We answer substantial question (d) in the affirmative, i.e., against the revenue and in favour of the assessee.

Rejection of application for registration u/s 12A -main object of the respondent-society appeared to be to act as a bridge between pharmaceutical companies and doctors through holding of conferences as not charitable - ITAT accepted application as not only was the respondent-society holding conferences which led to enhancement of knowledge of medical professionals which in turn benefitted the society at large but the respondent-society was also implementing the ECHO project in collaboration with the University of New Mexico Health Science Centre and under the guidance of the PGIMER, Chandigarh through which respondent-society was helping the prisoners in Punjab who were suffering from liver diseases and that the respondent-society was also distributing, free of cost, test kits to diagnose if any of the prisoners in Punjab was suffering from liver diseases.

HELD THAT:- No evidence in support of implementation of the ECHO project by the respondent-society in the prisons of the State of Punjab was placed before the Tribunal by the respondent-society. No application for additional evidence was also filed. Therefore, it is clear that through the impugned order, the Tribunal set aside the order of the CIT(E) only on the basis of oral submissions made before it which were not backed by any pleadings or evidence which is legally impermissible. The appellant-revenue had also not been put to any formal notice of such pleas raised on the respondent-society’s behalf which also clearly violates the principles of natural justice.

The fact that the respondent-society has been granted registration u/s 12A of the Act for the financial years which are subsequent to the financial years in question cannot be made the reason to grant it registration under the same section for the financial years in question because for registration u/s 12A of the Act its activities for the relevant financial years would be relevant.

As in normal circumstances, we would have simply set aside the impugned order of the Tribunal with consequences to follow but in the peculiar facts of this case where submissions were raised on behalf of the respondent-society before the Tribunal with regard to it indulging in charitable activities but no evidence in support of such submission was produced and because for subsequent financial years the revenue authorities have granted to the respondent-society registration under Section 12A of the Act, we deem it just and appropriate to not only set aside the impugned order passed by the Tribunal but also the order of the CIT(E) and remit the matter to the CIT(E) for a fresh decision as to whether the respondent-society is entitled to be granted registration under Section 12A of the Act for the financial years in question.

Refund claim - order as modified by an order passed by the Income Tax Appellate Tribunal in an appeal preferred by the appellant against an order passed by the Commissioner under Section 263 - petitioner contends that upon the reference being dismissed the order of the Tribunal attained finality and as such the petitioner became entitled to refund - HELD THAT:- If the petitioner is entitled to refund, the petitioner should not be denied refund. At the same time, the petitioner who claims refund must be vigilant enough to maintain documents which would be required for the petitioner to justify its claim. Alongside, since the reference that was carried to this Court was dismissed only on July 31, 2019, therefore the Department should also not shirk its responsibility by saying that no document whatsoever is available with the Department.

A meaningful solution to the stated problem is therefore required. Calling for affidavits in the present case would not serve any purpose. This Court therefore deems it fit to remit the matter back to the Principal Chief Commissioner of Income Tax West Bengal & Sikkim (hereafter “PCCIT”) who would authorize a competent officer to look into the matter and come up with a proper solution to the problem posed.

Accordingly, it is directed that the PCCIT shall appoint/nominate a competent officer of the rank of Commissioner of Income Tax or above for the aforesaid purpose. Such officer shall devise an appropriate mechanism and conduct relevant enquiry for reaching a solution to the problem at hand. The competent officer aforesaid, shall within a week of its appointment issue notice to the petitioner calling upon the petitioner to present its case before the said officer. The petitioner shall then be entitled to state its case before the said competent officer. Such competent officer shall thereafter decide the matter pertaining to the refund claim of the petitioner, in accordance with law.

The competent officer shall take an informed decision and ensure that if the petitioner is indeed entitled to any refund, the same is not denied.

Capital gain computation - transfer of capital asset in terms of Section 2(47) - transfers an immovable property to a developer for redevelopment - Claim of indexed cost of acquisition/construction - Deduction u/s 54 -

Assessee and her husband were owners of an immovable property, being a residential house constructed over a land admeasuring 500 sq. yad entered into a agreement with a developer as the old residential house was to be demolished and in its place, a new residential house having ground plus three floors was to be constructed entirely with the investment of the developer - HELD THAT:- Terms of the agreement clearly demonstrate that in lieu of the existing immovable property handed over to developer for redevelopment, the assessee and her husband received ground plus two floors and the undivided share in the land to the extent of constructed area falling into their shares. Of course, additionally, the monetary amount. Thus, in our view, there was a transfer of capital asset in terms of Section 2(47). The capital asset transferred was the existing immovable property in lieu of which assessee and her husband received the constructed area along with undivided share over the land.

Therefore, cost of acquisition with indexation benefit in terms of Section 48 of the Act would be available to the assessee over the entire property and cannot be limited to the 22.5% of the undivided share in land, corresponding to the constructed area falling to the share of the developer. Therefore, disallowance of assessee’s claim of indexed cost of acquisition/construction by the AO is unsustainable, hence, deserves to be deleted. Accordingly, we do so.

Deduction u/s. 54 - Undisputedly, in place of the old building used by the assessee and her husband for residential purpose, the builder has developed a new building consisting of ground plus three floors. Because the developer invested own fund for the development of new building one floor was given to him in lieu of cost of construction. However, fact remains that except one floor given to the builder, rest of the building remained in the possession of assessee and her husband. It is not a case where the builder was given the authority and freedom to develop the property for sale to outsiders. Therefore, two floors given to the assessee are part of one residential house and cannot be considered as more than one in number.

Thus, in on overall consideration of facts and materials on record, we hold that the assessee is eligible to claim deduction u/s. 54. AO is directed to factually verify the computation of deduction u/s. 54 of the Act and allow.

Assessee appeal allowed.

Validity of reopening of assessment - Notice after expiry of four years - prior approval of the Range Head, i.e., JCIT accorded -sanction u/s 151(1) from competent authority - HELD THAT:- After expiry of four years from the end of the relevant assessment year, the competent authority who can grant approval u/s.151(1) of the Act is PCCIT/CCIT/PCIT/CIT, whereas, in the facts of the present appeal, the sanction has been obtained from the JCIT. This, in our view, is in violation of section 151(1) of the Act.

Thus, it is required to be examined what would be the effect of such violation. In our view, since lack of proper sanction strikes at the very root of assumption of jurisdiction u/s. 147 of the Act, it is a fundamental jurisdictional error, hence, not a curable defect. The decision relied upon assessee supports this view.

The contention of DR that the extension granted under The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) would apply to section 151 of the Act, in our view, is unacceptable.

We hold that notice u/s. 148 of the Act having been issued without proper sanction in terms with section 151(1) of the Act, is invalid. Assessee appeal allowed.

Unexplained cash credit - cash deposited in the bank account during the demonetization period - assessee could not provide PAN of all persons to whom sales were made - HELD THAT:- In the assessment order, except alleging that PAN of the persons to whom sales are made are not available, the A.O. has not made any adverse observations regarding the authenticity of books of account and other supporting evidences. In fact, the very same evidences were again verified by ld. First appellate authority and nothing suspicious was found. Even, ld. First appellate authority has recorded a categorical finding of fact that before rejecting the books of account, the A.O. has neither given any opportunity to the assessee nor pointed out the specific defect/deficiency.

Thus, when all verifiable evidences were available before the departmental authorities, merely because PAN of some persons to whom sales are made are not available, a part of the cash deposits made out of cash sales could not have been treated as income of the assessee. Decided in favour of assessee.

Reopening of assessment u/s 147 - approval of the competent authority in terms with section 151(ii) - HELD THAT:- We are of the considered opinion that the order u/s. 148A(d) and notice u/s. 148 of the Act having not been issued with the approval of the competent authority in terms with section 151(ii) of the Act, the proceedings are vitiated, hence, invalid. Since, the assumption of jurisdiction u/s. 147 of the Act by the A.O. in absence of a valid sanction is vitiated, we deem it appropriate to quash the notice issued u/s. 148 of the Act. Resultantly, the assessment order passed in pursuance thereof deserves to be quashed. Decided in favour of assessee.

Disallowance of deduction claimed u/s 80JJAA - assessee did not claim the deduction in its original return of income filed nor was the claim raised during the course of assessment proceedings - Procedural omission v/s statutory deduction - CIT(A) further noted that Form 10DA, being a mandatory requirement for claiming deduction u/s 80-JJAA was not filed within the prescribed due date under the Act and applicable Rules

HELD THAT:- As per section 80A(5) of the Act, no deduction shall be allowed to the assessee if a claim of deduction, inter alia, under any provisions of Chapter-VIA under the heading "C.—Deductions in respect of certain incomes" of the Act, is not made by the assessee in his return of income. In the present case, the assessee is seeking a deduction in respect of additional employee costs under section 80-JJAA of the Act, which forms part of Chapter-VIA under the heading "C.—Deductions in respect of certain incomes" of the Act.

Undisputedly, the assessee did not make any claim of deduction under section 80-JJAA in its return of income filed for the year under consideration, and the said claim was made for the first time before the learned CIT(A). Therefore, it is evident that section 80A(5) disentitles the assessee from claiming the deduction u/s 80-JJAA of the Act. Decided against assessee.

Disallowance of deduction claimed u/s 80JJAA - mandatory audit report in Form 10DA was not filed along with the original return - Procedural omission v/s statutory deduction - HELD THAT:- We are of the considered view that since the return was filed within the extended due date and the same was also revised within the extended due date in which the claim u/s 80JJAA was made and Form 10DA had also been filed, the CPC should have considered the same while processing the return and allowed the claim of deduction. Accordingly, we hold that the procedural omission of not filing of report before the due date of furnishing of original return would not result in denial of deduction u/s 80JJAA of the Act.

Thus, remit the issue to the file of JAO for limited verification and quantification of allowable deduction u/s 80JJAA - Appeal of the assessee allowed for statistical purposes.

Addition on account of alleged short-term capital gains - plot in question is a residential hold vacant plot purchased through their GPA Holder - Determination of real owner - capital gains taxation on transfer effected through general power of attorney and agreement to sell - treatment of sale proceeds received by agent/GPA-holder - AR has contended that appellant is not the beneficial owner of the sale proceeds of the land pursuant to the transfer deed of lease hold rights - HELD THAT:- GPA coupled with the agreement to sell against which the entire consideration was received by the Appellant resulted in Shri Narpat Singh (Director N.N. Buildwell Pvt. Ltd.) becoming the beneficial owner of the land. It is evident from the aforesaid terms of the GPA that for all practical purposes, including receiving consideration from the sale of the plot in question, Shri Narpat Singh was the beneficial owner of the said property, and not the Appellant herein. The consideration thus received was not on behalf of the assessee. See SAMA OM REDDY, HYDERABAD [2020 (5) TMI 55 - ITAT HYDERABAD] as held except being described as the Vendor, the assessee is neither a signatory to the subsequent Sale Deed nor is he the recipient of any of the sale consideration. In view of the same, it is held that the assessee is not liable for tax on any capital gain arising out of transfer of property.

Addition u/s 69C - fuel expenses - There is no disproportionate or abrupt jump in the expenses that would suggest they were inflated. If the fuel expense incurred during 2008-09 is disregarded the % of revenue spent on fuel expense comes down to below 20% which is significantly/abnormally lower than the fuel expense compared to AY 2009-10, 2010-11 as well as 2007-08. Hence, the petrol/diesel/fuel expenses amounting to a sum of Rs. 3,56,30,412/- is proportionate to the revenue/receipts from transport services during AY 2008-09.

We find substance in the contention that from the tabular chart above it is evident that during AY 2008-09 it was not possible for the appellant to achieve a turnover/ revenue of Rs. 9,75,09,573/- from transport services provided by its proprietorship firm, Sun National Transport Co., by merely spending Rs. 2,11,13,626/-on petrol/diesel/fuel etc.

Therefore it appears that justification given for two heads of expenditures needed to be examined rationally. The receipts/turnover from transport services has not been called into question, the books of account maintained by the appellant has not been questioned, nor has any cogent evidence been brought on record by the department, vis-à-vis, the fuel expense. Therefore, the addition of Rs. 1,45,16,786/- deserves to be deleted.

Addition on account of Bonus paid to the employees u/s 69C - Source is duly recorded in the books of account. Source of expense incurred on bonus payment stands established as having been incurred out of funds shown in books of account. Neither the books have been discarded/ rejected by the CIT, nor has the sales/revenue/receipts been called into question. The gross profit has been accepted. No discrepancies has been pointed out by the auditor in the books of account for AY 2008-09. Thus the ground is sustained.

TDS u/s 194A - TDS on the interest paid to banking institutions - HELD THAT:- Admittedly the payment of interest made to banking institutions is exempt from the application of TDS under Section 194A of the Act. Hence, the disallowance of interest paid by the Appellant to banking institutions during AY 2008-09 is exempt from the application of tax deduction at source. In this context we find that copies of repayment schedule/ amortization schedule of the loans taken from banking institutions and NBCs against which interest was paid in AY 2008-09 is also placed as Additional Evidence and same being material needs to be admitted. In light of the same the disallowance paid as interest to banking institutions on account of non-deduction of TDS during AY 2008-09 is liable to be deleted.

Disallowance of interest paid to NBFCs - Assessee relied on decision of Ansal Landmark Township (P) Ltd.[2015 (9) TMI 79 - DELHI HIGH COURT] to contend that it is by Hon’ble High Court that the disallowance for non-deduction of TDS on payments on interest made to NBFCs was not sustainable in view of the insertion of second proviso to Section 40(a)(ia) - AO is directed to verify whether the said amount is included by these NBFC in their income and paid taxes therein. If this has been proved with necessary form prescribed, the disallowance paid as interest to NBCs is liable to be deleted. The grounds are thus sustained for statistical purposes.

Addition made towards the gratuity provision made and compensated absences - HELD THAT:- Figures are taken by the AO from the Balance Sheet where the same were shown as provision in the liability side. From the perusal of Profit & Loss Account available at page 28 of Paper Book and corresponding Schedule-22 of employee’s benefits and other expenses, it is observed that assessee has not claimed any expenditure in respect of gratuity and compensated absences. Since no expenses was claimed on account of these provisions, therefore, no additions could be made. Accordingly, we delete the said addition. Ground of appeal No.1 raised by the assessee is thus, allowed.

Disallowance claimed as bad debt - AO has made disallowance by observing that the assessee has failed to furnish any documents - Before us, assessee had filed a table containing name, PAN and amount written off, and further filed copies of ledger accounts of few parties however, from the perusal of same, we could not be able to point out whether the amounts written off was offered for tax or not in any of the preceding Assessment Years. Therefore, in the interest of justice, we remand this issue back to the file of AO and direct to examine whether the assessee has fulfilled all the conditions laid down u/s 36(1)(vii)/36(2) of the Act, claiming the bad debts. The assessee has also directed to file all the necessary documents/evidences in support of bad debts claimed during the year. Accordingly, Ground of appeal raised by the assessee is allowed for statistical purposes.

Adhoc disallowance made @ 30% out of the travelling and convenience expenses - AO observed that assessee has failed to establish that these expenses were wholly and exclusively incurred for the purpose of business and part details were filed with respect to the foreign travelling conducted by the Director and their relatives. Despite of repeated requests and opportunities given by the lower authorities, assessee has not been able to substantiate the travelling expenses as incurred wholly and exclusively for the purpose of business. However, looking to the entirety of facts, one more opportunity is granted to the assessee and the issue is remanded back to the file of AO for making fresh verification. Assessee is also directed to file all the necessary evidences to establish that travelling expenses were claimed for the purpose of business.

Appeal of the assessee is partly allowed.

TP adjustment - Arm’s Length Price of notional interest on outstanding receivable from various associated enterprises for delayed period computed on the basis of six month LIBOR rate +400 basis points - HELD THAT:- It is the specific case of the Assessee that the transaction of outstanding receivables is inextricably connected to main international transaction of sale of goods, management and technical knowhow service income and Interest is already factored in sale price /service income being charged by the appellant. In so far as sale of goods, it is claimed that the Assessee is having Operating profit margin of 11.36% & OP/OC of 12 82% at entity level which is higher than the OPM & OP/OC of comparable companies of (5.13% to 10.74%) & (5.40% to 12.04%) respectively of 35th and 65th percentile of comparable companies. In respect of transactions of management and technical & know how services provided, the Assessee OP/OC is above 100% which is more than the OP/OC range earned by the comparable companies which is between 3.84% to 11.99%.

As decided in the case of Micro Ink Limited [2015 (12) TMI 143 - ITAT AHMEDABAD] held that, when such an interest is includible in operating income and the operating income itself has been accepted as reasonable under the TNMM, there cannot be an occasion to make adjustment for notional interest on delayed realization of debtors.

It is not in dispute that the Assessee does not charge interest from both Associated Enterprises and Non-Associated enterprises on outstanding receivables. Thus the Assessee has not made any distinction between AE and non AE in charging the interest made on outstanding received, therefore, the adjustment made on account of Arm's length adjustment is not sustainable - Decided in favour of assessee.

Adjustment made in in Arm’s Length Price in relation to international transaction of Interest charged on loan given to Associated Enterprises in Foreign Currency - In the present case, the Assessee has charged more than the internal CUP on all the three AE’s i.e. on Varun Beverages Morocco SA average interest rate 4.1%, Varun Beverages Mozamibique Limited average rate 4.18% and in Varun Beverages (Zambia) Limited is average 4.49%. The said average interest imposed on all the three entities are much more higher than determined in the case of CIT v. Vaibhav Gems Ltd. [2017 (12) TMI 583 - RAJASTHAN HIGH COURT] - Thus, in our opinion, the transactions involved in the present Appeal are at Arm’s Length as per the ratio laid down thereon and the effective rate of interest charged by the Assessee from its subsidiary Companies is even higher than internal CUP of interest rate on foreign currency loan taken by the Assessee. Accordingly, we delete the additions made by the A.O. which has been confirmed by the Ld. CIT(A). Decided in favour of assessee.

Revision u/s 263 - distinction between “lack of inquiry” and “inadequate inquiry” - share capital received from a foreign investor - suspicion of ld. Revisionary authority about source of investor company - order prejudicial to the interests of revenue - CIT alleging that AO in the reassessment proceedings has concluded the assessment without making inquiries that should have been made and the addition of share capital received from RCI WTL, UAE was not made - AOs acceptance of DCF method

HELD THAT:- What is relevant is that AO was alive to the entire issue and the balance sheet of RCI World Trade Link was before AO on the basis of which genuineness and creditworthiness of RCI World Trade Link stood accepted. Then any action or proceedings arising out of such proceedings in 2011 from search or surrender in settlement are not relevant to the present assessment year.

Merely because assessee relates to NV Group that alone cannot be basis to impute an error in the judgment of AO by holding that any inquiry was lacking.

Mere suspicion of ld. Revisionary authority about source of investor company cannot be conclusive to hold that ld. AO should have entered into this enquiry to, as assessee was not supposed to establish the source of source.

Factually speaking as part of financials of RCI World Trade Link DMCC there is description of unsecured loan account which shows that during the financial year ending on 31/12/2015 there was no unsecured loan from RCI Ind. & Tech. Ltd. and loans from five different companies to extent of AED14,390,688/ were received.

To allege that enquiry in source of source would have resulted in a different consequence to make the credibility and creditworthiness of investor company, RCI World Trade Link DMCC, to be suspicious and resultantly to hold the lack of enquiry has resulted in passing an order which is erroneous so far as prejudicial to the interest of revenue.

Then it was with regard to the valuation of shares the ld. Revisional Authority seems to have questioned the AO’s action of accepting the same but legally speaking the Assessing Officer had not much scope to interfere in the valuation provided by merchant banker. The valuation, if conducted by a qualified merchant banker using the DCF method as per Rule11UA(2), is generally accepted. In Apna Punjab Resorts Ltd.[2023 (3) TMI 553 - ITAT CHANDIGARH] it has been held that while exercising powers u/s 263 of the Act, AOs acceptance of DCF method, cannot be interfered to hold the order to be erroneous so far as prejudicial to revenue. Decided in favour of assessee.

Unaccounted stock of jewellery - absence of proper stock register and rejection of books of account - assessee is having jewellery business for the five decades and for the first time participated in a trade fair at Sharjah and these jewellery taken to Sharjah only part of which was sold and the rest was brought back to India - HELD THAT:- For taking these jewellery out of India and for bringing it back to India the assessee had to go through different rules and regulations of the Customs Department; the clearance was to obtain for both taking the jewellery out of this country as well as for bringing the same back to India. The above reconciliation and the details of values were filed before the AO clarifying that different represents only the difference in the rate of currency in Dollar terms and there is no difference in the quantity as re-imported which was the same and it was only unsold goods which were re-imported back.

A complete affidavit was also filed in regard to the item-wise quantity reconciliation of the goods which were lying as opening stock with the assessee as on 01.04.2014, goods taken out, goods purchased during the year, goods sold during the year and the goods which were re-imported to India as well as the closing stock as on 31.03.2015 as per the audited financials of the assessee and the stock mentioned.

CIT(A) taking into consideration the entire aspect of the matter, concluded that the AO failed to bring any reason in treating this stock taken for exhibition as unaccounted or any further reason to disbelieve the appellant that the valuation of the opening stock and the stock taken for exhibition was done by following different methods of valuation i.e., one at cost and the other was at FOB value as per the Customs rules and regulations which admittedly cannot be compared and, therefore, deleted the addition made by the AO which, in our considered opinion found to be just and proper and does not warrant any interference. The order passed by the CIT(A) to this extent is confirmed.

NP Estimation - rejection of books of accounts - addition pertaining to net profit of the assessee and estimated the same at 3% as against 2.24% calculated by the assessee - CIT(A) has upheld the addition made by the AO without citing any cogent reason whatsoever. Having regard to the nature of business done by the assessee as already observed by us hereinabove we do not find any reason to uphold the order confirming addition on estimation of profit at 3% made by the Ld. AO and particularly keeping in view the ratio laid down by the different judicial forums as narrated hereinabove, the addition is found to be not sustainable, arbitrary, bad in law and, thus, deleted.

Penalty u/s 271A - Since the appeal of the assessee on quantum addition, which is the very basis of imposing the penalty, stands allowed by upholding the decision of the CIT(A) and further deletion of addition on estimated profit, the penalty does not survive.

Admissibility and evidentiary value of statements recorded u/s 108 - Voluntariness requirement for statements u/s 108 - Corroboration by subsequent discovery and recoveries as independent evidence under the Evidence Act - Concurrent findings of fact and limited interference under Article 136 of the Constitution - Judicial discretion to reduce sentence in view of prolonged pendency, delay, advanced age and period already undergone - HELD THAT:- Having considered the matter in its entirety, we find ourselves in agreement with the observations made by the High Court. The findings of guilt recorded by the trial Court, which stand concurrently affirmed by the appellate Court as well as the High Court do not suffer from any perversity, illegality, or manifest error warranting interference by this Court in exercise of its jurisdiction under Article 136 of the Constitution of India.

It is significant to note that Shri Thakare, learned A.S.G. appearing for respondents was not in a position to dispute the fact that the recovery relates to the year 1985, and that the offending consignment of watches was recovered lying in an abandoned condition. The conviction of the appellants seems to be primarily based on confessional statements recorded under Section 108 of the Customs Act, 1962. Conscious possession of the smuggled goods is not attributed to the appellants.

It is further not in dispute that several co-accused persons were acquitted by the trial Court. Some of the appellants before us are reported to have passed away during the pendency of the present appeals. The surviving appellants are now of advanced age and have undergone a substantial period of incarceration, reportedly around one year, which is more than the statutory minimum sentence of six months contemplated under the proviso to Section 135 (1)(b)(i) of the Customs Act, 1962 as it then existed.

In this backdrop, including the fact that the incident is nearly four decades old, the period of incarceration already undergone by the appellants, the prolonged pendency of proceedings, and the advanced age of the surviving appellants, we are of the considered view that directing the appellants to undergo any further incarceration at this point of time would be unduly harsh and would not subserve the ends of justice. In the peculiar facts and circumstances of the present case, ends of justice would be served by reducing the sentence to the term already undergone by the appellants.

Accordingly, while affirming the judgment of conviction dated 26th March, 2003 passed by the trial Court, we deem it appropriate to reduce the sentence awarded to the appellants to the period already undergone by them.

Since, the appellants are on bail, they need not surrender. Their bail bonds stand discharged.

The civil appeal is dismissed as infructuous because the High Court disposed of the writ petition on 09.12.2025; pending interlocutory applications, if any, are disposed of.

Classification of imported goods - front cover, middle cover and back cover and few other parts of the mobile phones - HELD THAT:- Since appeals arising out of the same impugned judgment and order [2024 (2) TMI 1508 - CESTAT NEW DELHI] have been dismissed, the present appeal also stands dismissed.

Pending application(s), if any, stands disposed of.

Disposal of appeal as infructuous - justiciability affected by party affidavit - undertaking to accept tariff classification - HELD THAT:- Learned counsel, appearing for the appellant states, on instructions, that in the light of the affidavit dated 29.01.2026 filed by respondent No. 1, and more particularly paragraph-3 thereof, wherein he stated that he does not intend to import the subject goods and in the event he decides to do so in future, he will get the same assessed under tariff item 85235100, as determined by the appellant, the cause in these civil appeals no longer survives for consideration on merits.

Recording the aforestated statement, the appeals are disposed of.

Applicability of Section 5 of the Stamp Act, 1958 to the order of NCLT sanctioning the scheme of amalgamation under the statutory provisions of Section 230 to 232 of the Companies Act, 2013 - Instrument chargeable with duty - order of sanction as instrument - bringing an instrument executed outside the State - Section 19 rebate for instrument executed outside State - Article 25(da) cap on stamp duty for NCLT orders - HELD THAT:- The provisions of Section 5 of the Stamp Act, 1958 applies, where one instrument relates to several distinct matters of transactions which cannot be blended into one or cannot be conceived as merely parts of one aggregate. It applies where the instrument comprises of several distinct matters, though may be of same category and where Section 5 applies, each of the instruments dealing with each of the matter would be chargeable under the Stamp Act, 1958 by the aggregate amount of stamp duty in respect of all such instruments. The application of Section 5 requires going into the underlying transaction which cannot be done in respect of order of sanction of scheme.

The composite scheme was considered by NCLT, Mumbai Bench for ascertaining whether the same was fair and reasonable. In that context, the consideration in respect of the share holders of the second transferrer company i.e LuK India was noted. A similar exercise was carried out by NCLT, Chennai which also noted the consideration of issuance of shares to share holders of LuK India by the Petitioner Company. The observations of NCLT, Mumbai as regards the consideration in respect of amalgamation of LuK India does not constitute a distinct transaction within the meaning of Section 5 of the Stamp Act, 1958 or amounts to bringing the order of NCLT, Chennai in this State.

Even accepting that the order of sanction of scheme of NCLT Chennai bench has not been lodged for adjudication in Chennai and there is no payment of stamp duty, the stamp authorities in Mumbai would not have the jurisdiction to assess the stamp duty on the NCLT, Chennai order as it is not an order which is originating in Maharashtra. The provisions of Section 19 envisages an instrument executed outside State in respect of the property in the State and subsequently received in the State of Maharashtra. As the order of the NCLT, Chennai bench has not been received in Maharashtra, the mere reference to the same in the NCLT Mumbai order would not amount to that instrument of NCLT Chennai being brought in the State of Maharashtra. Whether the duty has been paid on the NCLT Chennai order is an issue to be considered by the concerned authorities in Chennai and the same is immaterial for the purpose of assessing the stamp duty on the order of NCLT, Mumbai bench.

The impugned order assessing the stamp duty on the transactions of merger with INA Bearings and LuK India by considering the two transactions as separate and distinct transactions is clearly erroneous in view of the settled legal position. The impugned order seeks to levy the stamp duty on the transaction by segregating the transactions into two different transactions : one of amalgamation of INA Bearings with Petitioner and other of LuK India with the Petitioner. As held by the Hon’ble Gujarat High Court in Ambuja Cements Limited vs Chief Controlling Revenue Authority [2023 (2) TMI 1447 - GUJARAT HIGH COURT (LB)], such reconstruction cannot be inter se segregated.

The writ petition is allowed: the orders of Respondent Nos.1 and 2 are quashed and set aside

The Petition is allowed in the above terms.

Execution of foreign judgment u/s 44A of the Code of Civil Procedure - exceptions to enforcement under Section 13(c) and 13(f) of the Code of Civil Procedure - applicability of FEMA and Reserve Bank of India directions to enforcement of foreign decrees - Master Direction on External Commercial Borrowings - all-in-cost ceiling and other costs cap - damages for breach of contract awarded by a foreign court are not subject to FEMA/RBI ceilings - remittance in satisfaction of a foreign decree to a non-resident's bank account - reciprocating territory and recognition of foreign superior court decrees - preclusion of new substantive objections not raised before the foreign court - post-facto RBI permission and regulatory compliance - ratio: foreign court's award of damages and interest does not become unenforceable in India merely because of alleged FEMA/RBI non-compliance - HELD THAT:- It is an undisputed fact that the United Kingdom is a ‘reciprocating territory’ as per Section 44A of the CPC. It is also not in dispute that in the present case, the judgment/decree has been passed by the High Court of Justice Business & Property Courts of England & Wales Commercial Court, Queen’s Bench Division, which would be a ‘Superior Court’ of a ‘reciprocating territory’.

It may be noted that the issue of violation of FEMA was never raised by Prakash Industries before the English Court. Therefore, there was no occasion for the English Court to give a finding on the said issue. A foreign court cannot be expected to take cognizance of an Indian statute, unless it has been pointed out by a contesting party. This is not a case of an ex-parte decree as Prakash Industries was duly contesting the case before the English Court.

Since it is an undisputed fact that the RBI has approved the Subscription Agreement, along with the coupon rate of 5.95% mentioned therein, it has to be presumed that the interest rate was in terms of the limits provided in paragraph 2.1(vi) of the Master Direction-ECB.

The damages were awarded by the English Court on account of breach committed by Prakash Industries of its contractual obligations i.e. failure to convert the FCCBs into equity in a timely manner as was agreed in the Subscription Agreement. The English Court has also awarded interest on the aforesaid amount of damages, which was squarely within its jurisdiction.

In my considered view, the amounts awarded by a competent Court, whether Indian or foreign, towards damages for breach of contract, cannot be subject to ceilings prescribed under FEMA and/or RBI directions/circulars.

In Alcon Electronics [2016 (12) TMI 1826 - SUPREME COURT], the Supreme Court had rejected the objection raised by the judgment debtor that since costs imposed by the Foreign Court were not in terms of Section 35A of the CPC, the decree passed by the foreign Court is unenforceable. The Supreme Court held that Indian courts can execute a foreign decree for interest on costs, which are permissible under the UK law.

Taking note of the contradiction in the stand taken by the RBI, this Court vide order dated 8th September, 2025 had directed RBI to file an affidavit. Even in the subsequent affidavit filed by RBI on 18th November, 2025, same stand was maintained.

It is manifest from reading of the judgment in NTT Docomo (supra) that damages for breach of contract, such as those awarded by the English Court in the present case, cannot be subjected to FEMA Regulations or RBI guidelines. The RBI in NTT Docomo [2017 (5) TMI 492 - DELHI HIGH COURT] had raised an objection that permission from the RBI is required for transmission of amount awarded as damages by the Arbitral Tribunal. However, the Court held that in respect of damages awarded by an Arbitral Tribunal, no general or special permission from the RBI would be required. The Court while declining RBI’s request for intervention in the enforcement proceedings, held that FEMA and RBI directions/circulars could not be invoked to obstruct or dilute the enforcement of a foreign award.

Even though NTT Docomo (supra) pertains to a foreign arbitral award, the aforesaid findings would equally be applicable in cases where a decree awarding damages has been passed by a foreign court.

The ERA has been granted by the English Court in terms of Clause 10.1 and Clause 11.1 of the Subscription Agreement which provided for acceleration of the bonds in the event of default, which occurred in the present case due to non-payment of coupon interest by Prakash Industries. Clearly, there is no bar under any of the FEMA regulations or the Master Direction-ECB in respect of such early redemption.

Interest - The Subscription Agreement provided for interest at the rate of 5.95% on the FCCBs and an additional default interest of 2% per annum.

The interest awarded by the English Court on the ERA at the rate of 7.95%, clearly falls within the cap of 2% provided under paragraph 2.1 (vii) of the Master Direction-ECB. Therefore, there is no merit in the objection taken on behalf of Prakash Industries that the interest has been awarded by the English Court over and above what is stipulated in the Master Direction-ECB.

Thus, it is held that the decree passed by the English Court is executable under Section 44A of the CPC. The said Decree does not fall under the exceptions provided under Section 13(c) and 13(f) of the CPC.

The objections raised on behalf of the Prakash Industries are completely devoid of merits and have been filed solely to cause obstruction and to cause delay in the execution of the Foreign Decree. Consequently, the same are rejected with costs of Rs. 1,00,000 payable to the decree holder/Peter Beck.

Thus, Prakash Industries is liable to remit the decretal amount in favour of Peter Beck along with costs.

All pending applications stand disposed of.

Enforceability and executability of foreign arbitral awards - Deeming of foreign award as decree u/s 49 - Limited scope of challenge u/s 48 - Executing court cannot go behind a decree except where the decree is a nullity - Compliance with FEMA and NDI Rules and pricing guidelines as rectifiable, not rendering award void; RBI's power to condone or direct - Residuary execution powers u/s 51(e) of the Code of Civil Procedure, 1908 for giving effect to decrees - Partial execution and severability of reliefs in a decree for specific performance - Preclusion of re-agitation of issues previously decided by the Supreme Court in enforcement proceedings - HELD THAT:- Taking this Court to Part II of the Arbitration Act, which deals with enforcement of certain foreign awards, and to the definition of a foreign award in Section 44 of the Arbitration Act and to Section 46 of the Arbitration Act which provides as to when a foreign award is binding, Dr Saraf has submitted that any foreign award which would be enforceable under this chapter shall be treated as binding for all purposes on the persons as between whom it was made and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in India.

The Respondents’ have sought to resist the execution of the Awards primarily on the ground that the executability of an award differs from the enforceability of the award and that they are two different and distinct stages and that the executing Court cannot execute a decree, the implementation of which is either illegal or impossible. That there exists a dichotomy between the executability of an award on one hand and enforceability of the award on the other, and that there is material difference in the scope of enquiry and the powers of the Court in a proceeding for enforcement of a foreign award under Section 48 of the Arbitration Act and the execution of an award as a decree of the Court after the Court is satisfied. Also the ground that the transfer of shares would be contrary to the FEMA and the Foreign Exchange Management (Non-debt Instrument) Rules, 2016 (NDI Rules) including on the valuation for the transfer of shares has been raised.

Enforcement v/s executability of the Award - HELD THAT:- As can be seen the words enforcement and execution, bear the same meaning and are often used interchangeably. In the context of arbitral awards, once an award is held to be enforceable, it necessarily becomes executable, as enforceability under law implies that the award can be acted upon in the manner as a decree of a civil court. Thus while all execution proceedings fall under the umbrella of enforcement, a determination that an award is enforceable legally entitles the award-holder to initiate execution. If the Court is satisfied that the application under Section 48 is without merit, and the foreign award is found to be enforceable, then under limited purpose of the legal fiction is for the purpose of the enforcement of the foreign award. The High Court concerned would then enforce the award by taking recourse to the provisions of Order XXI of the CPC.

Therefore, what the law requires is the satisfaction of the Court that the foreign award is enforceable and once that is done there is no necessity for the Executing Court to delve into the very same question once again. To give a restricted and therefore contrived meaning to the word ‘enforcement’ would lead to an absurd situation where a foreign award creditor would have to face an additional hurdle in the form of objections as to executability of a foreign award alien to the grounds enumerated in Section 48 of the Arbitration Act even after the award has been held to be enforceable.

It is trite law that the executing court cannot go behind a decree or an award which is held to be executable and it is only where the award/decree sought to be enforced is on the face of the record, wholly without jurisdiction and thus a nullity, that an executing court will interfere with the execution of an award/decree. And that admittedly is not the case here.

As can be seen that the Hon’ble Supreme Court has categorically held that unlike Section 47 of the Foreign Exchange Regulation Act, 1973 (“FERA”) transactions that violate FEMA cannot be held to be void. That even if RBI were to take action under FEMA, the non-enforcement of a foreign award on the ground of violation of a FEMA Regulation or Rule would not arise as the award does not become void on that count. That a rectifiable breach under FEMA can never be held to be a violation of the fundamental policy of Indian Law. That if a particular act violates any provision of FEMA or the Rules framed thereunder, permission of RBI may be obtained post facto if such violation can be condoned.

As can be seen, Section 3 of the FEMA inter-alia provides that no person can deal in or transfer foreign exchange/foreign security to a person not being an authorised person or make payment to or for the credit of any person resident outside India, “Save as otherwise provided in this Act, rules or regulations made thereunder, or with the general or special permission of the Reserve Bank, no person shall..”

Section 3 of the FEMA, by itself does not impose any requirement of prior approval or prior permission. The term “general or special permission” includes within its ambit, both prior permission as well as subsequent permission.

In the facts of this case, in fact the transaction being a current account transaction, is already contemplated in the general permission that have been granted by the Reserve Bank of India only subject to the pricing / valuation being certified by a Chartered Accountant, which in the facts of this case is done by the Deloitte Report and which has already been looked into and approved by the Hon'ble Supreme Court and therefore the same issue cannot be re-agitated before this Court. The question therefore of prior approval from Reserve Bank of India does not arise.

The Respondents have sought to rely upon the decision of Cruz City Mauritius Holdings [2017 (4) TMI 729 - DELHI HIGH COURT] to contend that the prior approval of the RBI is necessary, the Respondents’ reliance is misplaced in as much as in the facts in the said decision pertain to the remittance of foreign exchange in favour of a foreign party seeking enforcement of a foreign exchange in favour of the Indian Party.

Thus, the contention of the Respondents that the Awards are in contravention of FEMA having been previously raised and decided before the Hon’ble Supreme Court cannot be raised again in execution.

Apart from the fact that the issue has already been concluded by the decision of the Hon'ble Supreme Court and cannot be re-agitated before this Court, it is settled law that valuation relating to the date of the passing of the awards in the year 2014 would be relevant and not the current or recent valuation or the date when the Hon'ble Supreme Court passed the order negativing the challenges to the enforcement of the award or the date of the judgment holding the awards to be executable in view of the decision of the Hon'ble Supreme Court holding the award to be enforceable. The decision of the Hon'ble Supreme Court in the case of Forasol [1983 (10) TMI 234 - SUPREME COURT] as sought to be relied upon by Mr. Nankani, therefore, would not be applicable to the facts of this case.

The Respondents’ attempt to raise the above and other objections in the current execution mirrors those previously addressed during the enforcement phase of the arbitral award. Such repetitive objections are impermissible, as they contravene the pro-enforcement bias of the New York Convention adopted by Section 48 of the Arbitration Act. Allowing the respondents to reintroduce these objections at this juncture would effectively grant them a ‘second bite at the cherry’ undermining the finality of the arbitral award and the efficiency of the execution process and therefore these objections stand rejected.

Section 98 of the Companies Act, 1956, contemplates the NCLT directing convening of a meeting of a company whereas the prayers sought for in Interim Application No. 1401 of 2021 are qua the Respondents in enforcement of the contractual rights confirmed by the award not falling within the purview of Section 98 and that the reliefs sought do not fall within the exclusive jurisdiction of the NCLT. That, this Court being an executing Court can exercise powers under Section 51(e) of the CPC, as has been upheld by the Hon'ble Supreme Court in the case of State of Haryana [2004 (6) TMI 619 - SUPREME COURT] which allows this Court to pass orders for enforcement of decrees in a manner to give effect to it. Further, the decision in the case of Cheran Properties Ltd. vs. Kasturi & Sons [2018 (4) TMI 1412 - SUPREME COURT] is distinguishable and therefore not applicable and would not apply to the facts of this case as the said decision was on an application for rectification whereas the present case pertains to execution of a foreign award which declares the Applicant’s rights to have the shares held by the Respondents in the Company transferred to it.

It is in furtherance of these rights that the Respondents have been directed to convene and hold a meeting of the board of directors of the company for the limited purpose of registering the transfer of shares in favour of the Applicants, whereas the award in the case of Cheran Properties Ltd. vs. Kasturi & Sons contains no such direction / order. There is no rectification of the register of members sought in the facts of this case.

The residuary power under Section 51(e) of the CPC permits execution as far as machinery under CPC can actually operate, it does not create new substantive jurisdiction, it only covers cases where the machinery under CPC is adaptable. The injunctive reliefs in furtherance of the Awards and transfer of shares and direction to the Respondents to take all necessary steps and to execute all necessary documents for the appointment of the Applicant’s nominee directors on the Board of Directors of Ravin Cables Ltd are within the powers of the executing Court.

As can be seen, the RBI letter does not bear out any new circumstance necessitating a renewed deliberation on issues already argued and dealt with. The RBI letter in fact records that the RBI has no objection to the enforcement of the arbitration award upheld by the Hon’ble Supreme Court. The said letter does not convey that prior permission of the RBI is required for the execution of the award. Infact, as noted above, paragraph 88 of the decision of the Hon'ble Supreme Court in the case of Vijay Karia and Others [2020 (2) TMI 628 - SUPREME COURT] has considered and negatived this objection which cannot be gone into again, and that, no objection as to the FEMA 1999, Rules, Regulations nor the pricing guidelines can be raised again. The objection sought to be raised by way of a fresh letter dated 19th August 2025 post the filing of the Execution Application, in my view, would therefore not be of any relevance but only to delay the execution proceedings, inviting an order for payment of costs.

As noted, on 9th September 2025 and on 11th November 2025, this Court has permitted deletion of the Respondents no.70, 71, 72, 74, 75 and 78 at the request of the Applicant. It is pertinent to note that no objection was raised then nor the order permitting the deletion has been challenged. But only subsequently an objection has been raised on behalf of the Respondents that the award cannot be executed partially as the award contemplates transfer of all shares.

Apart from the fact that no objection was raised when the deletion was allowed, I am of the view that although the award contemplates transfer of all shares held by multiple shareholders, and the same refers to entitlement inter se the contracting parties the same is not necessarily a joint, inseparable obligation requiring simultaneous performance. The said relief is several and the award does not expressly stipulate that the transaction is indivisible or conditional upon collective performance.

It is trite law that partial execution of a decree that grants separate reliefs is permissible. In the case of Panaji Girdharlal v. Ratanchand Hajarimal Marwadi [1933 (2) TMI 19 - BOMBAY HIGH COURT] this Court held that where the decree sought to be executed gives two different reliefs, the decree may be executed separately and the Applicant will have waived his right to execution for the reliefs he chooses not to press.

Accordingly, the relief of transfer of shares is severable and distinct and the Applicant is entitled to pursue the execution against those Respondents whose share transfer obligations are sought to be enforced.

All the objections against the Final Arbitral Award raised by the Respondents are hereby rejected and the Final Arbitral Award is held to be executable and the Execution Application is held to be maintainable. The execution to proceed as per law.

It is clear that the stand taken by the Respondents is contrary to the opinion of the Hon'ble Supreme Court in enforcement proceedings viz. in the case of Prysmian Cavi E Sistemi SRL vs. Vijay Karia and Another and despite that, the Respondents have raised the very same issues only to delay the fruits of the award in favour of the Execution Applicant, by not only re-agitating the grounds already decided and negatived by the Hon'ble Supreme Court but also endeavoured to raise a fresh issue in the garb of a fresh letter from the Reserve Bank of India which cannot be permitted but has to be deprecated by imposition of costs to be paid to the Applicant, particularly when there is no challenge to the award under the English law.

The Final Award, already held enforceable by the Supreme Court, is executable.

Pre-show cause consultation - Master Circular No. 1053/2/2017-CX para 5.0 - Circular No. 1079/03/2021-CX - use of Form 26AS as sole basis for Service Tax demand - remand for fresh adjudication on merits - HELD THAT:- The show cause notice was issued to the respondent on 21.10.2019 and the issue of payment of Service Tax had been finalized by the Principal Commissioner, CGST, Dibrugarh, vide order dated 22.10.2021, i.e., prior to the subsequent Circular dated 11.11.2021 and the clarification made thereunder. Further there is nothing in the show cause notice dated 21.10.2019, to show that the Service Tax sought to be levied upon the respondent, was due to fraud or collusion or willful mis-statement or suppression of facts or contravention of any of the provision of the Central Excise Act, 1944 or Chapter V of the Finance Act, 1994 or the Rules made there under.

Thus, the show cause notice dated 21.10.2019 and the subsequent order dated 22.10.2021 passed by the Principal Commissioner, CGST, Dibrugarh was not proper and sustainable in law, due to non issuance of the pre show cause notice consultation.

We are accordingly of the view that the entire issue, as on date, not having been decided on merits, but solely on the issue of technicality, the matter should be remanded back to the learned CESTAT, Kolkata, for a determination on the merits of the case, without going into the issue of whether pre show cause notice consultation or whether the “26AS data” only could be a ground for levying/demanding service tax. This is due to the fact that all the work orders, invoices and all other documents of the respondent have already been submitted to the learned CESTAT. The learned CESTAT shall accordingly take a fresh decision on the merits of the case, after giving an opportunity of hearing to both the parties, without relegating the said issue to be decided on merits to the authorities. This decision directing the learned CESTAT to take a fresh decision on the matter on merits is being made with the consent of the parties, though we are of the view that the show cause notice dated 21.01.2019 and the order dated 22.10.2021 passed by the Principal Commissioner, CGST, Dibrugarh should also be set aside. However, as stated above, the parties want the entire matter to be decided on merits by the learned Tribunal without relegating the said case to the Principal Commissioner, as a number of years have gone by.

The impugned Final Order of the CESTAT, Kolkata is set aside

Admissibility of CENVAT/credit on items used for maintenance, repair, upkeep or fabrication of plant and machinery - interpretation of the expression "used in or in relation to manufacture" as of wide import - application of precedent to dispose of appeals - disposal of proceedings on account of "low tax effect" while leaving open substantial questions of law - HELD THAT:- The appeals in which credit for items used in maintenance, repair or upkeep of plant and machinery was claimed are allowed in terms of the cited precedent that construes "used in or in relation to manufacture" broadly; other Special Leave Petitions were disposed of or dismissed by applying earlier orders or, where fiscal impact was small, disposed of on 'low tax effect' while leaving open any substantial question of law.

Negotiable Instruments Act - Dishonour Of cheque -Rebuttal of statutory presumption under Sections 118 and 139 - proof of consideration and wherewithal to lend - appellate interference with concurrent appreciation of evidence in criminal acquittal - judicial restoration of trial court's acquittal where two views are possible - HELD THAT:- The specific case of the petitioner is that the respondent is a total stranger and he took loan only from Dhanakshmi Finance and the cheque (Ex.P1) which was given to Dhanalakshmi Finance, misused by the respondent and at no point of time, the petitioner obtained any hand loan from the respondent. The trial Court took a judicial notice with regard to another loan taken on the same day and pendency of the case against the petitioner on similar grounds in C.C.No.142 of 2011.

This Court finds that the petitioner by examining defence witnesses, marking exhibits and cross examining the respondent, rebutted the presumption and probablized his defence. Once such rebuttal evidence is adduced and considered by the Court, the evidential burden shifts back to the complainant and thereafter, the presumptions under Sections 118 & 139 of Negotiable Instruments Act, 1881 will not again come to the complainant’s rescue.

The Hon’ble Apex Court as well as this Court time and again held that when two views possible unless there is perversity and gross miscarriage of justice, the judgment of acquittal not to be disturbed. On proper appreciation of evidence and materials, the trial Court rightly acquitted the petitioner and dismissed the complaint, which needs no interference of this Court. The lower appellant Court had merely gone on the statutory presumption, but not considered the evidence and materials in totality.

This Criminal Revision Case stands allowed.

Negotiable Instruments Act - Dishonour of the cheque -Presumption under Sections 118 and 139 - power of appellate court in appeal against an order of acquittal - probabilization of defence to rebut statutory presumption - requirement of perversity or gross miscarriage to disturb acquittal - filling up of a cheque by the payee and authority u/s 20 - HELD THAT:- In this case, neither the said Ramasamy nor Subulakshmi, wife of respondent or the said Moorthy examined as witnesses. The respondent specifically denied in his evidence that he is not involved in share market business and he does not know what share trading is about. He admits that neither in the statutory notice nor in the complaint or in his evidence he referred to any share business. Though he states that he gave Rs. 8,00,000/- to the petitioner by way of cheque, not produced any material to confirm Rs. 8,00,000/- was paid to the account of the petitioner through cheque. When a specific question was put to the respondent involved in share trading business from the year 2007 to 2015, he stoutly denied the same and also feigned ignorance about the petitioner as a share broker. When a specific question was put with regard to the transfer of money from the respondent's account to Networth Stock Broking Limited, then to he denied. The respondent admits that the loan given to the petitioner does not reflect in his income tax returns/Ex.P5 to Ex.P8. Further, Ex.D1 to Ex.D5, marked through the respondent, are the cheques issued for the share broking business. The respondent's wherewithal has been questioned. Added to it, in this case, the petitioner examined himself as DW1 and marked statements of accounts/Ex.D6 to Ex.D8,from which, the transaction of the Network Stock Broking Limited confirms payment received by the respondent and his wife Subulakshmi.

Thus, the petitioner probabilized his defence that it was only a share broking business, the petitioner was a share broker and the respondent who invested in the share market had a misfortune on a wrong prediction and calculation and lost some money in share trading business, later the blank cheque of the petitioner misused, clearly probabilized by way of cross-examination and by examining the defence witness and marking defence documents. These facts rightly considered by the Trial Court and thereafter, the trial court dismissed the complaint discharging the petitioner. The Lower Appellate Court had merely gone on the fact that the signature in Ex.P1/cheque is not disputed and statutory presumption under Sections 118 and 139 of NI Act, 1881 is against the petitioner without any discussion on the evidence and materials and failed to show any perversity committed by the Trial Court. In the absence of any such finding of perversity, reversing the judgment of acquittal, is not proper. In view of the above, the finding of the lower appellate Court is not sustainable and the same is liable to be set aside.

Criminal Revision allowed.

Entitlement to grant of regular bail - successive bail - requirement of substantial change in circumstances - impersonation and conspiracy in corruption offences - role of electronic evidence (CCTV, voice recordings, IPDR) in prima facie satisfaction - non-cooperation and evasion as factor against grant of bail - completion of investigation and filing of charge sheet - balance between personal liberty and interest of justice - HELD THAT:- This Court finds no justifiable ground to take a different view, particularly when it is well settled that a successive bail application can be entertained only upon demonstration of a substantial change in circumstances, and no such substantial change has been shown in the present matter. The investigation stands concluded and both the charge sheet as well as the supplementary charge sheet have been filed before the learned Trial Court, and the material collected during investigation prima facie discloses the involvement of the applicant in the alleged commission of the offence, specifically the allegation that he impersonated himself as Commissioner of CGST and, in conspiracy with the co-accused persons, sought to extract illegal gratification from the complainant.

The presence of the applicant at the Starbucks Coffee Shop, where the alleged negotiations regarding the bribe took place, is supported by CCTV footage, and he has been identified by the complainant and other witnesses, as reflected in the return filed by the respondent/Central Bureau of Investigation his voice sample has also been obtained and relied upon in support of the recorded telephonic conversations forming part of the prosecution case.

Though this Court is not required to undertake a meticulous appreciation of the evidence at the stage of bail, but the material available on record prima facie indicates that the applicant played a central and active role in the alleged conspiracy by projecting himself as a senior official and directing the actions of the co-accused persons. Furthermore, the conduct of the applicant during investigation does not inspire confidence, inasmuch as repeated notices under Section 35(3) of the BNSS were issued at multiple addresses and he allegedly evaded execution of the non-bailable warrant issued by the learned Trial Court before eventually appearing, and even during police custody he was reluctant to provide his voice sample for scientific comparison; such conduct prima facie reflects non-cooperation with the investigation.

In view of the seriousness of the allegations, the nature of the evidence collected, the attributed role of the applicant as the principal conspirator, and in the absence of any new or substantial change in circumstances since rejection of the earlier bail application, this Court is of the considered opinion that no case for grant of bail is made out; accordingly, the second bail application stands rejected.

The High Court rejected the applicant's second bail application.

Demand and acceptance of illegal gratification - presumption under Section 20 of the Prevention of Corruption Act - proof beyond reasonable doubt - benefit of doubt and two views rule in criminal jurisprudence - appellate interference with acquittal - HELD THAT:- The demand and acceptance is not properly established by the material evidence placed on record, inasmuch as, complainant having turned partially hostile to the case of the prosecution. The shadow witness specifically admits that the recording in the voice recorder is not properly audible.

When no application was given for the purpose of issue of clearance certificate and, when accused and Balaswamy were not competent for issue of clearance certificate, the complaint averments and oral testimony of the complainant that accused demanded illegal identification for issue of clearance certificate cannot be countenanced in law.

Moreover, it has been admitted by PW-1 that the first visit took place in the month of November 2012 and the demand was in the month of February 2013.

Complainant has also categorically admitted that his industry is covered by Value Added Tax. How accused and his assistant namely Balaswamy were involved in issuance of the clearance certificate is not properly established by the prosecution.

Merely on the ground that there was a demand made by the accused and accused taking out the tainted currency from the almirah kept in the office and colour test turning positive would not be sufficient enough to hold that prosecution has successfully proved all the ingredients to attract the aforesaid offences.

It is settled principles of law and requires no emphasis that whenever a duly constituted Court records an Order of acquittal, it reinforces the innocence of the accused as the accused is presumed to be innocent.

It is equally settled principles of law that prosecution has to travel a long distance between ‘may be proved’ and ‘actual proof’.

Applying the above principles to the facts of the case, on re-appreciation of the material on record, this Court does not find any compelling reasons to upset the finding of acquittal recorded by the learned Special Judge.