TaxTMI Updates e-Newsletter
Feb 28,2022

Summary order. Petition seeking quashing of the Order in Appeal dated 27.12.2021 (refund claims for May 2018 and June 2018 contended to be time barred) admitted for consideration; notice issued to respondents who have accepted notice; matter listed on 12th April, 2022.

Detention, seizure and release of goods and conveyances - Confiscation of goods or conveyance and levy of penalty - Option to pay fine in lieu of confiscation - Vicarious liability - Requirement of opportunity of being heard

Detention, seizure and release of goods and conveyances - Confiscation of goods or conveyance and levy of penalty - Option to pay fine in lieu of confiscation - Vicarious liability - Whether the owner of the conveyance can be compelled to pay the tax, penalty and fine in respect of the detained goods so as to prevent release of the conveyance when the owner of the conveyance has paid the fine imposed on the vehicle. - HELD THAT: - The court analysed the scheme of Sections 129 and 130 of the Central Goods and Services Act, 2017 and held that Section 129 prescribes the conditions for release of detained goods and conveyances on payment of applicable tax and penalty by the owner of the goods. Section 130 being a penal provision authorises confiscation and permits an owner to be given an option to pay a fine in lieu of confiscation, but it does not authorise indefinite extension of vicarious liability so as to deprive the owner of a conveyance of the protection afforded by the proviso to subsection (2). Relying on the reasoning in M/s Shiv Enterprises this Court observed that the principle of vicarious liability cannot be extended indefinitely and that penal consequences under Section 130 require a direct nexus of intent or culpability attributable to the person sought to be punished. To force the owner of the conveyance to pay tax, penalty and fine on the goods would effectively foist upon the conveyance-owner the vicarious liability for mis-declaration or fraud by the owner of the goods, which is impermissible. Applying these principles to the facts, since the petitioner (owner of the conveyance) paid the fine imposed on the vehicle and there was no justification to treat him as liable for the goods' tax and penalty, the conveyance was ordered to be released forthwith while the goods could be dealt with in accordance with law. [Paras 4, 5, 6, 7]

The petition is allowed; the conveyance is directed to be released forthwith while the goods shall be confiscated and disposed of in accordance with law.

Final Conclusion: The writ petition was allowed: the court held that the owner of the conveyance cannot be compelled to discharge the tax, penalty and fine attributable to the goods so as to sustain detention of the vehicle; having paid the fine on the vehicle, the petitioner's conveyance must be released immediately while the goods may be dealt with under the Act.

Default bail under the proviso to sub-section (2) of Section 167 Cr.P.C. - conditions of bail being oppressive, harsh or exploitative - modification of bail conditions by a higher court - financial incapacity as a relevant factor in assessing bail conditions - effect of failure to furnish bail on the indefeasible right to default bail

Conditions of bail being oppressive, harsh or exploitative - modification of bail conditions by a higher court - default bail under the proviso to sub-section (2) of Section 167 Cr.P.C. - Whether the modified conditions of default bail imposed by the Additional Sessions Judge were oppressive and required judicial modification. - HELD THAT: - The Court found that where conditions imposed as a pre-condition to default bail are so onerous as to negate the practical benefit of the bail, they may be liable to modification. The Apex Court decision relied upon by the respondent was held inapplicable to the present factual matrix because that decision did not consider a challenge to allegedly exploitative bail conditions of the kind present here. The petitioner's counsel, on instructions, represented that the petitioner lacked means to comply with the modified conditions imposed by the Additional Sessions Judge (personal bonds and substantial bank guarantees/FDR). Accepting that representation as a prima facie showing of inability to comply, the High Court concluded the impugned modified conditions would effectively deprive the petitioner of the benefit of default bail and therefore were oppressive. The Court accordingly substituted reasonable conditions (personal bonds and three sureties, two local, of Rs.10 lakhs each) and quashed the requirement to furnish the larger bank guarantee/FDR imposed earlier. [Paras 5, 6, 7, 8]

Modified the impugned bail conditions as being oppressive; directed that the petitioner be admitted on personal bonds and three sureties (two local) of Rs.10 lakhs each and set aside the requirement to furnish the larger bank guarantee/FDR.

Financial incapacity as a relevant factor in assessing bail conditions - effect of failure to furnish bail on the indefeasible right to default bail - Whether the petitioner's demonstrable lack of financial resources is a relevant consideration and whether the petitioner made sufficient disclosure to justify modification. - HELD THAT: - The Court emphasised that prima facie lack of financial empowerment is a relevant factor in determining whether bail conditions are exploitative and whether they negate the effect of default bail. Although the petitioner was expected to disclose tangible evidence of impecuniosity, the petitioner's counsel made a candid, on instruction statement at the bar that the petitioner could not meet the onerous conditions but was prepared to furnish the reduced security proposed. The Court accepted this representation as sufficient for the limited purpose of modifying the conditions and held that the substituted, reasonable conditions would make the default bail efficacious without unjustly curtailing personal liberty. [Paras 6, 7, 8]

Held that financial incapacity is a relevant consideration; accepted petitioner's on record representation of inability to comply and modified conditions accordingly.

Final Conclusion: The High Court, finding the modified conditions imposed by the Additional Sessions Judge to be oppressive and to nullify the benefit of default bail, accepted the petitioner's representation of financial inability and substituted reasonable bail conditions (personal bonds and three sureties, two local, of Rs.10 lakhs each), quashing the requirement for the larger bank guarantee/FDR; petition disposed of.

Show cause notice - principles of natural justice - essential ingredients of a proper show cause notice - summary of show cause notice (Form GST DRC-01) - Section 73 of the Jharkhand Goods and Services Tax Act, 2017 - scope of adjudication limited to grounds specified in notice (Section 75(7) reference) - online GSTN portal as facilitator

Show cause notice - essential ingredients of a proper show cause notice - principles of natural justice - Section 73 of the Jharkhand Goods and Services Tax Act, 2017 - summary of show cause notice (Form GST DRC-01) - Impugned show cause notice and its summary did not satisfy the requirements of a proper show cause notice and were vitiated for failure to disclose the grounds and materials necessitating action. - HELD THAT: - The court found that the show cause notice issued under Section 73 was issued in a pre set format without striking out irrelevant portions and without stating the specific contraventions the petitioner was required to meet. The accompanying Form GST DRC 01, being a summary generated from the portal, likewise failed to disclose the foundational material-specifically which works contract or services and which payments from the government treasury gave rise to the alleged mismatch with GSTR 3B-so as to inform the petitioner of the precise charges. Reliance was placed on binding principles that a show cause notice must state the material/grounds which necessitate action and the nature of the proposed action so that the person affected may mount an effective defence; absent such particulars, the proceeding infringes principles of natural justice and precludes the Revenue from proving matters beyond the grounds specified in the notice (including the limitation in Section 75(7) against demands beyond specified grounds). The court held that a summary in Form DRC 01 cannot substitute for a proper show cause notice when the latter lacks essential particulars. [Paras 11, 14, 15, 16]

Annexure 1 (show cause notice under Section 73) and Annexure 2 (Form GST DRC 01 summary) quashed for failure to satisfy the essential ingredients of a proper show cause notice and for violation of principles of natural justice.

Online GSTN portal as facilitator - summary of show cause notice (Form GST DRC-01) - scope of adjudication limited to grounds specified in notice (Section 75(7) reference) - Whether the impugned quashing precludes the Revenue from initiating fresh proceedings and whether form ASMT 10 is a condition precedent - court's treatment of re initiation and ASMT 10. - HELD THAT: - Although the court quashed the defective notices for lack of specified grounds, it declined to decide the question whether issuance of Form GST ASMT 10 is a condition precedent for invoking Sections 73/74. The court observed that the portal formats are facilitatory and cannot dispense with statutory requirements of a proper notice. Because the court did not go into the merits, it permitted the respondents to initiate fresh proceedings in accordance with law from the same stage within a stipulated period, thereby leaving open the Revenue's right to proceed provided proper notice and materials are furnished. [Paras 16, 17]

Quash did not bar fresh proceedings; respondents may initiate fresh proceedings in accordance with law within four weeks; the question whether Form GST ASMT 10 is a condition precedent was left undecided.

Final Conclusion: The writ petition succeeds: the show cause notice under Section 73 and its summary in Form GST DRC 01 were quashed for failing to state the material grounds and particulars necessary for a proper show cause notice, thereby violating principles of natural justice; respondents are permitted to commence fresh proceedings in accordance with law within four weeks, the question of Form GST ASMT 10 being a condition precedent remaining undecided.

Classification under HSN 2106 (food preparations not elsewhere specified) - Classification under HSN 1106 (flour, meal and powder of dried leguminous vegetables) - Applicability of Circular No.80 regarding mixture of flours (Chhatua / Sattu) - Taxability at 18% under Schedule-III entry No.23 - Advance Ruling - limited bindingness and persuasive value of other AARs - Remarks of jurisdictional officer not binding on the Appellate Authority for Advance Ruling

Classification under HSN 1106 (flour, meal and powder of dried leguminous vegetables) - Applicability of Circular No.80 regarding mixture of flours (Chhatua / Sattu) - Classification under HSN 2106 (food preparations not elsewhere specified) - The products manufactured and sold by the appellant are not classifiable as mere flour mixtures under HSN 1106 but as food preparations under HSN 2106. - HELD THAT: - The Appellate Authority examined the composition of the appellant's products (dosai, idly, tiffin, health and porridge mixes) and found that they contain significant value-addition and taste/characteristic-imparting ingredients beyond a mere mixture of flours. While Circular No.80 treats a plain mixture of ground pulses and cereals (Chhatua/Sattu) as remaining within HSN 1106 where only very small additives are present, the appellant's declared formulations demonstrate substantial processing aimed at creating ready-to-cook food preparations with distinguishing characteristics. The explanatory notes to HSN 1106 show that heading 1106 covers flour/meal used as such, whereas heading 2106 expressly covers preparations for use after processing (such as cooking) and mixtures intended as food preparations or to improve characteristics of food. Because the appellant's products are prepared and marketed as specific ready-to-cook mixes (not sold as plain flours) and are not covered expressly by heading 1106 or 0713, they fall within HSN 2106 and are not within the scope of the circular's example of mere flour mixtures. [Paras 7]

Products are classifiable under HSN 2106 and not under HSN 1106.

Taxability at 18% under Schedule-III entry No.23 - Classification under HSN 2106 (food preparations not elsewhere specified) - The applicable GST rate on the appellant's products is 18% (9% CGST + 9% SGST) as they fall under Schedule-III entry No.23 applicable to HSN 2106. - HELD THAT: - Having classified the products under HSN 2106 (food preparations not elsewhere specified), the Appellate Authority applied the entries in Notification No.1/2017-Central Tax (Rate) and observed that such items are covered by Schedule-III entry No.23 attracting the 18% rate. The Authority noted that the products are not enumerated in exempt or lower-rate entries applicable to plain flours or specific ready-for-consumption items, and therefore the Schedule-III rate for food preparations not elsewhere specified governs. [Paras 7, 8]

GST at 18% (9% CGST + 9% SGST) applies to the appellant's products under Schedule-III entry No.23.

Advance Ruling - limited bindingness and persuasive value of other AARs - Decisions of other Advance Ruling Authorities (including the Gujarat AAR relied upon by the appellant) are not binding on this Appellate Authority; their persuasive value is limited and must be considered in context. - HELD THAT: - The Authority observed that earlier AAR decisions are binding only on the parties before those AARs and the concerned officers in those matters. The appellant's reliance on other AARs was noted, but the Appellate Authority recorded that the Gujarat AAR decision cited by the appellant had itself been appealed and that the Gujarat Appellate Authority had come to a contrary conclusion in appeal. Consequently, prior AAR rulings do not determine the classification in this case and may be considered only for guidance where factually identical. [Paras 7]

Prior AAR decisions do not bind this Authority and do not alter the classification reached.

Remarks of jurisdictional officer not binding on the Appellate Authority for Advance Ruling - Comments or written submissions of the jurisdictional officer are not binding on the Appellate Authority and do not substitute for an independent examination of facts and law. - HELD THAT: - The Authority noted the appellant's contention that the jurisdictional officer had stated the products fall under a different notification. The Appellate Authority held that such remarks are unsubstantiated opinions and that advance rulings are issued after independent examination of facts and law. The appellant could have sought provisional assessment under Section 60 but did not, and the jurisdictional officer's views do not constrain the Authority's decision. [Paras 7]

Remarks of the jurisdictional officer are not binding and do not affect the Authority's independent ruling.

Final Conclusion: The Appellate Authority affirmed the Authority for Advance Ruling: the appellant's ready-to-cook/instant mix products are classifiable under HSN 2106 (food preparations not elsewhere specified) and are taxable at 18% (9% CGST + 9% SGST); the appeal is dismissed.

Exemption under Notification No.12/2017-Central Tax (Rate) Sl. No.3 - pure services - services provided to a local authority / Municipality - activity in relation to functions entrusted under Article 243W (Twelfth Schedule) - urban planning - advance ruling admissibility under Section 97(2) / Section 95(a)

Advance ruling admissibility under Section 97(2) / Section 95(a) - Application admitted for consideration on merits. - HELD THAT: - The Authority examined whether the issue raised - applicability of the entry at Sl. No. 3 of Notification No.12/2017 (Central Tax Rate) - falls within the scope of the Advance Ruling provisions. Having considered the submissions and documents, the Authority held that the question pertains to the applicability of the Notification to the applicant's supply and thus falls within Section 97(2)/95(a) of the GST Act and admitted the application for decision on merits. [Paras 6]

Application admitted for consideration on merits.

Pure services - exemption under Notification No.12/2017-Central Tax (Rate) Sl. No.3 - services provided to a local authority / Municipality - activity in relation to functions entrusted under Article 243W (Twelfth Schedule) - urban planning - The consulting services supplied to Greater Chennai Corporation are exempt from GST under Sl. No. 3 of Notification No.12/2017-Central Tax (Rate). - HELD THAT: - On examination of the contract, terms of reference and scope of work, the Authority found that the applicant (a joint venture acting as Programme Management Consultant and for Accompanying Measures) supplies only services - planning, detailed design, tender documents, contractor selection assistance, supervision, operation & maintenance manuals, training, stakeholder coordination and related institutional support - without supply of goods, and thus constitutes 'pure services'. Greater Chennai Corporation is a Municipal Corporation and thereby a 'local authority' within the meaning of the GST Act. The project is part of 'Sustainable Urban Infrastructure Development' and the services relate to improvement of urban storm water drains, which falls within 'Urban planning including town planning' listed in the Twelfth Schedule under Article 243W. Applying the Notification entry, the Authority concluded that the supplies are services to a local authority in relation to a function entrusted to a Municipality and therefore covered by Sl. No. 3 of the Notification and exempt from GST. [Paras 8, 9, 10]

Consulting 'pure services' rendered to Greater Chennai Corporation for the stated project are covered by Sl. No. 3 of Notification No.12/2017 and exempt from GST.

Final Conclusion: The Authority ruled that the applicant's consulting 'pure services' for programme management and accompanying measures relating to the Integrated Storm Water Drain project for Kovalam Basin, supplied to the Greater Chennai Corporation, are covered by Sl. No. 3 of Notification No.12/2017-Central Tax (Rate) (and the corresponding SGST entry) and are exempt from payment of GST; the application was admitted for adjudication on merits.

Scope of supply - mutuality principle - deeming of person and member as distinct persons - retrospective amendment to widen supply between person (other than individual) and its members - overriding effect of statutory explanation over judicial decisions

Scope of supply - retrospective amendment to widen supply between person (other than individual) and its members - deeming of person and member as distinct persons - mutuality principle - overriding effect of statutory explanation over judicial decisions - GST liability on services provided by clubs to their members - HELD THAT: - The Authority examined the GST statute as it stands after legislative amendments and not the erstwhile service tax regime. Section 2(84) and the definition of "services" were noted, but the determinative provision is Section 7(1)(aa) which, by retrospective amendment, includes activities or transactions by a person (other than an individual) to its members or constituents for consideration within the scope of "supply". An explanation deeming the person and its members to be two separate persons was held to have overriding effect over any other law or judicial decision. Paragraph 7 of Schedule II (which previously treated supply of goods by an unincorporated association to its members as supply of goods) has been deleted with retrospective effect, and the combined effect of clause (aa) and the explanation was held to nullify the applicability of the Calcutta Club Ltd. ratio insofar as it exempted incorporated clubs under the earlier service tax regime. Applying these provisions, supplies of services by clubs to members fall within the expanded statutory "scope of supply" and are exigible to GST w.e.f. July 1, 2017. [Paras 5, 7, 8]

Services provided by clubs to their members are taxable under GST as falling within clause (aa) of sub-section (1) of Section 7 of the CGST Act w.e.f. July 1, 2017.

Final Conclusion: The Authority rules that GST is payable on services provided by clubs to their members, the statutory amendment and explanation in Section 7(1) having widened the scope of "supply" and overridden the earlier judicial position from the service-tax era.

Exception under Rule 6DD(b) - Section 40A(3) - disallowance for cash payments exceeding twenty thousand rupees - Instrumentality or agency of the State - tests in Som Prakash Rekhi - Legal tender - payment in Indian currency

Instrumentality or agency of the State - tests in Som Prakash Rekhi - Whether the recipient companies (Rajasthan State Ganganagar Sugar Mills Ltd. and Rajasthan State Beverages Corporation Ltd.) qualify as "Government" for the purposes of Rule 6DD(b) as instrumentality/agency of the State. - HELD THAT: - Applying the tests articulated by the Supreme Court in Som Prakash Rekhi and followed by coordinate Benches, the Tribunal found that both undertakings are State Government companies with 100% shareholding by the State Government, subject to deep and pervasive State control and full control of working, policy and framework by the State. Those factors, including complete shareholding and pervasive State control, satisfy the indicia for classification as an instrumentality or agency of the State and bring the entities within the meaning of "State" for the purpose of Rule 6DD(b). [Paras 7]

Both recipient companies are to be treated as part of the Government (instrumentalities/State agencies) for the purposes of Rule 6DD(b).

Exception under Rule 6DD(b) - Legal tender - payment in Indian currency - Section 40A(3) - disallowance for cash payments exceeding twenty thousand rupees - Whether the cash payments made to those Government undertakings in Indian currency fall within the exception in Rule 6DD(b) and are therefore not liable to be disallowed under Section 40A(3). - HELD THAT: - Rule 6DD(b) exempts from disallowance payments made to the Government where, under rules framed by it, such payment is required to be made in legal tender. The Tribunal accepted the ordinary meaning of "legal tender" as the currency of the State and observed that the payments in the present case were made in Indian currency. Given (i) that the recipients qualify as Government instrumentalities and (ii) that the payments were made in Indian currency (legal tender), the conditions of Rule 6DD(b) are satisfied. The Tribunal also noted the absence of any rule proscribing receipt of payment in legal tender by the Government undertakings and observed that the genuineness of payments was not in doubt (reflected in TCS returns and Form 26AS). On these bases the Tribunal held that the payments were not exigible to disallowance under Section 40A(3). [Paras 7]

The cash payments made in Indian currency to the State undertakings are covered by the exception in Rule 6DD(b) and cannot be disallowed under Section 40A(3).

Final Conclusion: The Tribunal upheld the CIT(A)'s conclusion that payments made in cash in Indian currency to the two State undertakings fall within the exemption of Rule 6DD(b) and therefore the disallowance under Section 40A(3) was correctly deleted; the revenue's appeal is dismissed.

Condonation of delay - exercise of judicial discretion - Vivad Se Vishwas Scheme (V.S.V. Scheme) - disposal of appeal on account of election under V.S.V. Scheme - substantial question of law left open

Condonation of delay - exercise of judicial discretion - Application for condonation of delay in filing the appeal was allowed. - HELD THAT: - The Court noted a delay of 326 days in filing the appeal. Having heard the appellant and observing that notice had been served on the respondent, the Court exercised its discretion to condone the delay and allowed the application (IA No. GA 1 of 2020). The exercise of discretion was recorded briefly and founded on service of notice and subsequent steps taken in the matter.

Delay of 326 days in filing the appeal condoned; IA No. GA 1 of 2020 allowed.

Vivad Se Vishwas Scheme (V.S.V. Scheme) - disposal of appeal on account of election under V.S.V. Scheme - stay application disposed - Appeal under Section 260A was disposed of because the respondent/assessee had elected to opt for the V.S.V. Scheme; the stay application was also disposed. - HELD THAT: - The Court recorded that the respondent/assessee, by letter dated 14.12.2021, informed that he had opted for the Vivad Se Vishwas Scheme and that Form No.4 had been issued. On that ground the Court disposed of the appeal without adjudicating the substantial questions of law raised by the revenue. The ancillary application for stay (IA No. GA 2 of 2020) was also disposed of. The Court observed that annexures to the respondent's letter were not placed on record in the affidavit of service but relied on the respondent's own election to treat the matter as settled under the Scheme.

Appeal disposed of on account of the assessee's election under the V.S.V. Scheme; stay application disposed.

Substantial question of law left open - Substantial questions of law framed by the revenue were not adjudicated and were left open. - HELD THAT: - Although the revenue had framed multiple substantial questions of law concerning treatment of alleged unexplained LTCG, applicability of Section 68 principles, and characterization of penny-stock transactions, the Court expressly refrained from deciding these questions because the appeal was disposed on the ground of the assessee's election under the V.S.V. Scheme. Consequently, the substantial questions of law remain undetermined by this Court.

All substantial questions of law raised in the revenue's appeal left open and not decided.

Final Conclusion: The condonation application was allowed and the delay in filing the appeal was condoned. The appeal under Section 260A was disposed of because the assessee elected to avail the Vivad Se Vishwas Scheme (Form No.4 issued), and the stay application was disposed; the substantial questions of law raised by the revenue were not adjudicated and remain open.

Valuation of closing stock - consistency in accounting method - Last In First Out (LIFO) versus First In First Out (FIFO) - Accounting Standard-2 - Section 145 - method of accounting - Section 145A - notwithstanding provision on method of accounting - assessing officer's recourse under Section 144 where accounts are not reliably maintained - inadmissibility of confessions obtained during survey/search operations (CBDT circular)

Inadmissibility of confessions obtained during survey/search operations (CBDT circular) - valuation of closing stock - Whether the assessing officer could base the addition to closing stock solely on the alleged admission recorded during survey operations. - HELD THAT: - The Court held that the assessing officer could not base his conclusion solely on the alleged admission recorded during the survey. The CBDT circular admonishing against seeking confessions during search and survey operations and directing focus on independent evidence was relied upon as a direct answer to the revenue's contention. Having eschewed the survey report, the assessing officer was obliged to rely on independent evidence for completing the assessment rather than on the director's alleged statement during survey.

Addition could not be sustained solely on the basis of alleged confession recorded during survey; assessing officer's reliance on the survey admission was impermissible without independent supporting evidence.

Consistency in accounting method - Last In First Out (LIFO) versus First In First Out (FIFO) - Accounting Standard-2 - Section 145 - method of accounting - Section 145A - notwithstanding provision on method of accounting - Whether the assessee was obliged to value closing stock by FIFO (or weighted average) under Accounting Standard-2 and whether the Tribunal was right to uphold the use of LIFO on the facts. - HELD THAT: - The Court noted that Section 145 permits computation according to the accounting system regularly followed and that Section 145A contains a non-obstante clause specifying method of accounting for certain cases. On the facts, the assessee had consistently followed the LIFO method, which had been accepted by the revenue in earlier years and upheld by the Tribunal for AY 2009-10. Given this consistent acceptance and prior adjudication, the Tribunal was correct in applying the principle of consistency and affirming the CIT(A)'s deletion of the addition. The Court also observed precedents where consistently adopted LIFO had been recognised and revenue's appeals dismissed. Consequently, the contention that Accounting Standard-2 mandated FIFO in the assessee's case was not held to overturn the established and consistently followed method.

Tribunal correctly affirmed deletion of the addition and upheld the assessee's consistent adoption of LIFO; Accounting Standard-2 did not displace the established and consistently followed accounting method on these facts.

Final Conclusion: The appeal by the revenue is dismissed. The Tribunal rightly set aside the addition based on the survey admission and rightly upheld the assessee's consistent use of LIFO for valuation of closing stock for AY 2011-12; substantial questions of law are answered against the revenue.

Writ jurisdiction and alternative remedy - Discretionary relief - Validity of search and seizure and reason to believe - Appellate authority's power to examine legality of assessment - Direction to decide pending appeal within fixed time

Writ jurisdiction and alternative remedy - Discretionary relief - Whether the writ court should exercise its discretionary jurisdiction to entertain challenge to search, assessment and demand when an appeal against the assessment is pending. - HELD THAT: - The Court recognised that it has jurisdiction to examine the correctness and validity of orders arising from search and seizure, but declined to exercise its discretionary writ jurisdiction in the present facts because an alternate statutory remedy - an appeal against the assessment order - is available and has in fact been invoked by the petitioners and is pending. The mere contention that an appellate authority may be precluded by an explanation to Section 132 from probing the 'reason to believe' does not oust the appellate forum of its jurisdiction to examine the legality and validity of the assessment and demands on merits. In these circumstances, judicial restraint required the Court to refuse to entertain the petition and leave the parties to the appellate remedy they had chosen.

Petition dismissed insofar as it seeks exercise of writ jurisdiction; Court refuses to entertain the challenge while appeal is pending and available.

Appellate authority's power to examine legality of assessment - Validity of search and seizure and reason to believe - Direction to decide pending appeal within fixed time - Disposition of the pending appeal and the scope of examination by the Appellate authority, including the challenge to 'reason to believe' and satisfaction recorded under the search provisions. - HELD THAT: - Although the writ petition was not entertained on merits, the Court directed that the appeal already filed by the petitioners before the Appellate authority be decided within three months from receipt of the order. The Court expressly held that the Appellate authority is entitled to examine the petitioners' contentions, including the challenge to the aspect of 'reason to believe and satisfaction' underlying the search and seizure, as permissible under law. The direction is procedural and amounts to remittance of the controversy to the appellate forum for expeditious adjudication on merits rather than an adjudication by the writ court.

Appeal to be decided by the Appellate authority within three months; appellate authority to examine the challenge to the legality of the search and related aspects on merits.

Final Conclusion: Writ petition dismissed without going into merits because an alternate remedy by way of appeal exists and has been availed; the appeal is directed to be decided within three months and the appellate authority may examine the petitioners' challenge, including the 'reason to believe' underlying the search and seizure.

Cash credit - identity, creditworthiness and genuineness of the creditor - cash deposits treated as unexplained income in absence of satisfactory explanation - exemption under section 54F of the Income-tax Act - tribunal as final fact-finding authority - interference by the High Court only on perversity or established error of law

Cash credit - identity, creditworthiness and genuineness of the creditor - cash deposits treated as unexplained income in absence of satisfactory explanation - Addition of Rs. 46,50,000 made by lower authorities in respect of cash deposit in Catholic Syrian Bank was sustained. - HELD THAT: - The Tribunal found that the assessee's explanation that the amount was an advance for purchase and installation of a pollution control plant was not supported by contemporaneous evidence. The cheque was encashed across the counter on the same day, the ledger entries and confirmation produced were held to be afterthoughts, and the assessee failed to furnish satisfactory explanations or corroborative material to establish repayment. On these factual findings the Tribunal, as the fact-finding authority, affirmed the addition.

Addition of Rs. 46,50,000 upheld.

Cash credit - identity, creditworthiness and genuineness of the creditor - cash deposits treated as unexplained income in absence of satisfactory explanation - Addition of Rs. 12,50,000 on account of alleged advance to Shri R. Nagarajan was sustained. - HELD THAT: - The Tribunal accepted the Assessing Officer's finding that statements and documentary claims were inconsistent: the creditor's version differed as to mode and recipient of payment, there was no evidence of onward payment or repayment by the purported Erode party, and the bank confirmation showed encashment at counter. The assessee failed to establish identity, creditworthiness and genuineness of the transaction required for treating the deposit as a loan/advance; consequently the addition was confirmed on facts.

Addition of Rs. 12,50,000 upheld.

Cash credit - identity, creditworthiness and genuineness of the creditor - cash deposits treated as unexplained income in absence of satisfactory explanation - Addition of Rs. 6,00,000 claimed to have been received from Shri D. Palanisamy was sustained. - HELD THAT: - The Tribunal concurred with the lower authorities that the assessee failed to establish the identity, creditworthiness and genuineness of Shri D. Palanisamy and did not furnish requisite details to treat the deposit as a genuine cash credit. On this factual basis the addition was confirmed.

Addition of Rs. 6,00,000 upheld.

Exemption under section 54F of the Income-tax Act - principle against double claim of exemption for same property - Denial of exemption under section 54F in respect of investment in property standing in the name of the assessee's wife was sustained. - HELD THAT: - The Tribunal noted that the assessee's wife, an independent assessee, had itself claimed exemption under section 54F in respect of the same property by investing her capital gain. The Tribunal held that where the wife has claimed exemption for her capital gain in respect of the property, the assessee cannot claim the same exemption again in respect of the same property. On this factual finding the disallowance of exemption was confirmed.

Disallowance of exemption under section 54F confirmed.

Final Conclusion: The High Court declined to interfere with the Tribunal's concurrent fact-finding on the above issues, observing that they are questions of fact and there was no perversity or error of law warranting interference; the tax case appeal is dismissed.

Section 144C(13) - time for completion of assessment upon receipt of DRP directions - extension of time-limits under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - applicability of CBDT Notifications No.20/2021, No.38/2021 and No.74/2021 for extension of statutory time-limits - construction of notifications and limits of executive modification of statutory limitation

Section 144C(13) - time for completion of assessment upon receipt of DRP directions - extension of time-limits under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - Whether Section 3(1) of the Relaxation Act extended the time-limit for completion of assessment under Section 144C(13) in the petitioner's case. - HELD THAT: - Sub-section (1) of Section 3 of the Relaxation Act applies to actions whose time-limit falls during 20 March 2020 to 31 December 2020 or such other date as specified by notification. The DRP directions in this case were issued and received on 20 March 2021, and therefore the one month period for completion of assessment under Section 144C(13) expired on 30 April 2021. Because the statutory time-limit in the petitioner's case did not fall within 20 March 2020 to 31 December 2020 (and no applicable notification brought it within that period), the Relaxation Act's primary extension under Section 3(1) did not operate to extend the time for completion of assessment under Section 144C(13). The Court held that the Relaxation Act was therefore not applicable to the petitioner's case. [Paras 15, 20]

Section 3(1) of the Relaxation Act does not apply to extend the time-limit for completion of assessment under Section 144C(13) in the petitioner's case.

Applicability of CBDT Notification No.20/2021 - construction of executive notifications extending limitation - Whether Notification No.20/2021 (31 March 2021) extended the petitioner's time for completion of assessment under Section 144C(13). - HELD THAT: - Notification No.20/2021 extended to 30 April 2021 the time-limit only where the time-limit for completion of the action was falling on or before 31 March 2021. In the present case the time-limit for completion under Section 144C(13) was 30 April 2021 because DRP directions were received on 20 March 2021 and hence did not fall on or before 31 March 2021. Consequently Notification No.20/2021 was not applicable to the petitioner's case. [Paras 16]

Notification No.20/2021 did not extend the time-limit for completion of assessment under Section 144C(13) in the petitioner's case.

Applicability of CBDT Notification No.38/2021 - requirement that extension applies only where original expiry was due to earlier notification - Whether Notification No.38/2021 (27 April 2021) extended the petitioner's time for completion of assessment under Section 144C(13). - HELD THAT: - Notification No.38/2021 further extended to 30 June 2021 only those time-limits which expired on 30 April 2021 "due to its extension by earlier notifications." In the petitioner's case the expiry on 30 April 2021 arose under Section 144C(13) because DRP directions were received on 20 March 2021, not because an earlier notification had extended an earlier expiry to 30 April 2021. Therefore Notification No.38/2021 was inapplicable to the petitioner. [Paras 17]

Notification No.38/2021 did not extend the time-limit for completion of assessment under Section 144C(13) in the petitioner's case.

Applicability of CBDT Notification No.74/2021 - construction of notification language - limitation of executive extension to specified actions - Whether Notification No.74/2021 (25 June 2021) extended the time-limit to 30 September 2021 for passing an order under Section 144C(13). - HELD THAT: - Notification No.74/2021 extended certain assessment and penalty time-limits to 30 September 2021 but did so with express reference to orders under Sections 153/153B and penalties under Chapter XXI; it did not extend or purport to include orders under Section 144C(13). The notification scheme shows that where CBDT intended to extend Section 144C(13) it expressly did so in earlier notifications. The Court rejected the submission that the conjunctive word "and" in the notification should be read as "or"; statutory and notification language must be given its plain grammatical meaning unless absurdity or contrary context requires otherwise. Accordingly Notification No.74/2021 did not operate to extend the time-limit for Section 144C(13) to 30 September 2021, and even on a broader view it applies only where earlier notifications had already extended the relevant time-limit, which was not the position here. [Paras 18, 21, 22, 23]

Notification No.74/2021 did not extend the time-limit for completion of assessment under Section 144C(13) to 30 September 2021 in the petitioner's case.

Final Conclusion: The assessment order dated 30 September 2021 under Section 143(3) read with Section 144C(13) and Section 144B for AY 2016-17 was passed beyond the statutory time-limit and the Court quashed the impugned assessment order, demand notice and penalty notice.

Validity of reassessment notice issued after substitution of reassessment provisions - Applicability of substituted reassessment scheme to assessment years prior to 01.04.2021 - Compliance with the reassessment procedure under Section 148A - Non-revival of time-barred notices by substituted limitation provisions - Effect of notifications vis-a -vis commencement of substituted provisions

Validity of reassessment notice issued after substitution of reassessment provisions - Compliance with the reassessment procedure under Section 148A - Non-revival of time-barred notices by substituted limitation provisions - Impugned reassessment notice dated 22.04.2021 issued after 01.04.2021 for Assessment Year 2017-2018 is invalid for non-compliance with the substituted reassessment scheme. - HELD THAT: - The Court applied the principle that upon substitution the earlier reassessment provisions stood repealed and the newly introduced scheme governs any issuance of notices after 01.04.2021. The substituted provisions create a distinct procedural code including the enquiry and pre-notice steps under Section 148A and revised limitation rules under Section 149, and there is no indication that the pre-existing scheme was intended to survive for notices issued after the substitution date. The first proviso to the substituted limitation provision prevents revival of notices which had become time-barred prior to 01.04.2021 by reliance on the extended period under the new clause. Notifications relied upon by the revenue did not operate to defer the coming-into-force of the substituted provisions so as to validate notices issued post 01.04.2021 without following the new procedure. Accordingly, a notice issued after 01.04.2021 without complying with the substituted procedure (including the requirements under Section 148A) is invalid and liable to be quashed.

Impugned notice dated 22.04.2021 quashed as invalid for failure to comply with the substituted reassessment procedure applicable to notices issued after 01.04.2021.

Final Conclusion: Writ petition allowed; reassessment notice dated 22.04.2021 for Assessment Year 2017-2018 quashed and petition disposed of.

Power to transfer cases under Section 127 of the Income tax Act - Requirement to record reasons for transfer - Service of notice under Section 282 and Rule 127 of the Income tax Rules - Administrative exigency and centralisation of assessment

Power to transfer cases under Section 127 of the Income tax Act - Requirement to record reasons for transfer - Administrative exigency and centralisation of assessment - Validity of the transfer of the assessee's case from Dimapur (Nagaland) to Kollam (Kerala) under the power to transfer cases. - HELD THAT: - The Court upheld the transfer under the statutory power to transfer cases as exercisable in public interest and for administrative exigencies to facilitate coordinated investigation and assessment. The authorities had recorded cogent and credible reasons in the notice of proposed transfer, detailing the search findings, the locus of the family's financial interests and business operations in Kerala, and the movement of funds from Nagaland to Kerala. The Court accepted that the purpose of Section 127 is to enable effective and coordinated assessment and that the only legal requirement is that reasons be assigned; that requirement was satisfied by the material contained in the notice and transfer order. Having found the reasons adequate, the Court declined to interfere with the transfer made for better assessment by the Revenue. [Paras 9, 11]

Transfer from Dimapur to Kollam was validly made and the transfer order does not call for interference.

Service of notice under Section 282 and Rule 127 of the Income tax Rules - Whether service of the notices proposing and effecting the transfer complied with the statutory rules and was valid. - HELD THAT: - The Court found that notices dated 23.05.2018 and 26.06.2018 were sent to addresses permissible under Rule 127, including the registered office addresses of companies where the petitioners were shown as directors. The Revenue's case that the first notice was received and that a subsequent notice was returned unclaimed supported a presumption inconsistent with the appellants' denial. The appellants did not rebut the Revenue's position that notice was received, and the Court held that service on the company address constituted sufficient compliance under Rule 127 and Section 282. [Paras 10]

Service of the notices was in compliance with Section 282 and Rule 127 and was valid.

Final Conclusion: The writ appeals are dismissed; the High Court affirmed the Single Judge's conclusion that the transfer to Kollam was supported by recorded reasons and that service of notices complied with the statutory rules, warranting no interference with the transfer order.

Agricultural land - capital asset - capital gains - characterisation of land - user on date of sale - tests/guidelines for agricultural status - classification in revenue records - future use by purchaser - burden of proof

Agricultural land - capital asset - user on date of sale - tests/guidelines for agricultural status - classification in revenue records - Whether the schedule property sold in March 1996 constituted agricultural land and not a capital asset for the purposes of capital gains under the Income tax Act for Assessment Year 1996-97. - HELD THAT: - The Court applied the settled principle that whether land is agricultural or a capital asset is essentially a question of fact to be answered by cumulative evaluation of relevant tests and guidelines. The tribunal's finding that the property was used as agricultural/plantation land up to the date of sale, remained classified as agricultural in revenue records, and was situated outside notified municipal limits warranted treating it as agricultural land. The Court rejected the Revenue's reliance on abstract or singular considerations and emphasised that the applicable tests are guidelines to be applied to the facts of each case; having regard to the material before the tribunal and the assessee's discharge of the evidential burden, the factual conclusion that the land was agricultural on the date of sale was sustainable and not fit for interference. [Paras 8, 9]

The schedule property was agricultural land on the date of sale and not a capital asset; the sale consideration is not exigible to capital gains.

Characterisation of land - user on date of sale - tests/guidelines for agricultural status - Whether the clause in the Memorandum of Agreement permitting the vendor to cut and carry away rubber trees converted the land into non agricultural or barren land thereby attracting capital gains. - HELD THAT: - The Court held that the contractual clause authorising removal of standing trees did not alter the fundamental character or classification of the land. Cutting and removal of plantations, at best, rendered the land arable or vacant agricultural land but did not ipso facto convert it into non agricultural or barren land. The tribunal's appreciation that standing trees were excluded from the scope of sale and that such removal did not amount to a change of user affecting the land's agricultural character was accepted as reasonable. [Paras 8]

The MoA clause and the cutting/carrying away of rubber trees did not change the land's agricultural character; the Revenue's contention that this converted the land into non agricultural/barren land was rejected.

Future use by purchaser - user on date of sale - burden of proof - Whether subsequent conversion and use of the land by the purchaser (KSIDC) as an industrial estate could render the vendor's sale exigible to capital gains. - HELD THAT: - The Court reaffirmed that liability to tax depends on the character of the asset at the time of transfer; subsequent acts or intentions of the purchaser are irrelevant to determine whether the vendor sold a capital asset. The vendor cannot be taxed on account of the transferee's later change of user, and the tribunal correctly held that the assessee had discharged its burden to show the land's agricultural character on the date of sale. The Revenue's reliance on future use by KSIDC to defeat the exemption was held to be unsustainable. [Paras 8, 9]

Subsequent use of the land by the purchaser as an industrial estate does not affect the vendor's tax liability; it does not convert the vendor's sale into a transfer of a capital asset.

Final Conclusion: The tribunal's order allowing the assessee's appeal is upheld. The schedule property was held to be agricultural land on the date of sale and not a capital asset; the appeal by the Revenue is dismissed and the sale consideration is not exigible to capital gains for Assessment Year 1996-97.

Allowability of employee's contribution to provident fund and ESI as deduction when deposited after statutory due date but before filing of return - interpretation and retrospective effect of amendments clarifying non-applicability of section 43B to employee contributions - binding effect of jurisdictional High Court precedents on the Tribunal

Allowability of employee's contribution to provident fund and ESI as deduction when deposited after statutory due date but before filing of return - section 36(1)(va) - Employee contributions to PF and ESI deposited after the due date prescribed under the respective Acts but before filing the return under section 139(1) are allowable as deduction for AY 2019-20. - HELD THAT: - The Tribunal examined the competing views in earlier authorities and the interpretation given by the jurisdictional High Court in AIMIL Ltd. and related decisions. Noting that the relevant statutory schemes (PF Act and ESI Act) permit belated deposit subject to statutory consequences and that the Delhi High Court has held that for income-tax purposes payment made before filing the return qualifies for allowance, the Tribunal followed the binding ratio of the jurisdictional High Court. Applying that ratio to the facts, the Tribunal directed deletion of the addition created by CPC under the intimation u/s 143(1) for AY 2019-20, thereby allowing the claimed deduction where the employee contribution was deposited before filing the return u/s 139(1). [Paras 9, 10]

Addition on account of delayed deposit of employee contribution to PF and ESI deleted; appeal allowed.

Binding effect of jurisdictional High Court precedents on the Tribunal - The Tribunal is bound to follow the legal position laid down by the jurisdictional High Court (Delhi High Court) on the issue and accordingly applied those precedents in allowing the appeal. - HELD THAT: - The Tribunal considered conflicting authorities including non jurisdictional High Court decisions relied upon by the Revenue and the view taken by the CIT(A). However, because the Delhi High Court decisions (AIMIL Ltd. and related orders) are binding on the Tribunal in the Delhi jurisdiction and address the precise question of allowability when payment is made before filing the return, the Tribunal applied the jurisdictional High Court's ratio and set aside the disallowance. The Tribunal therefore gave precedence to the binding jurisdictional rulings over non jurisdictional decisions cited for contrary view. [Paras 8, 9]

Tribunal followed and applied binding jurisdictional High Court precedents and allowed the grounds raised by the assessee.

Final Conclusion: Following binding decisions of the jurisdictional High Court, the Tribunal held that employee contributions to PF and ESI which were deposited before filing the return are deductible for AY 2019-20 and directed deletion of the addition; the appeal was allowed.

Penalty under section 271(1)(c) - notice requirement under section 274 - Assumption of jurisdiction for levy of penalty - Defective notice vitiating penalty proceedings - Requirement to specify limb: concealment of particulars or furnishing inaccurate particulars - Principles of natural justice in penalty initiation

Penalty under section 271(1)(c) - notice requirement under section 274 - Requirement to specify limb: concealment of particulars or furnishing inaccurate particulars - Defective notice vitiating penalty proceedings - Whether the penalty levied under section 271(1)(c) is sustainable where the notice under section 274 did not specify which limb of section 271(1)(c) (concealment or furnishing inaccurate particulars) the proceedings were initiated under. - HELD THAT: - The Tribunal examined the assessment and penalty records and concluded that initiation of penalty proceedings must specify the particular limb of section 271(1)(c) relied upon so that the assessee may meet the specific grounds. Reliance was placed on the Division Bench decision in CIT v. Manjunatha Cotton & Ginning Factory and subsequent authorities (including SSA's Emerald Meadows and the decision of the Delhi High Court in PCIT v. Sahara India Life Insurance Co. Ltd.), which hold that a notice which fails to indicate whether proceedings are for concealment of particulars or for furnishing inaccurate particulars is defective. Where the basis for initiation of proceedings is not identical with the ground on which penalty is ultimately imposed, the imposition offends principles of natural justice and cannot be sustained. Applying these precedents to the facts, the Tribunal found the notice under section 274 read with section 271(1)(c) to be defective, hence the Assessing Officer lacked valid jurisdiction to levy the penalty, and directed deletion of the penalty. [Paras 9, 10, 11, 12]

Penalty under section 271(1)(c) deleted as the notice under section 274 was defective for not specifying the limb of section 271(1)(c); assumption of jurisdiction to levy penalty therefore vitiated.

Final Conclusion: The appeal is allowed and the penalty imposed under section 271(1)(c) is deleted on the ground that the notice under section 274 did not specify which limb of section 271(1)(c) was invoked, rendering the penalty proceedings and order unsustainable.

Exemption under Section 10(23C)(vi) - application of Section 13(1)(c) - allowability of expenditure for objects of trust - power of first appellate authority to admit alternative claim - direction to remit for verification and opportunity to be heard

Exemption under Section 10(23C)(vi) - power of first appellate authority to admit alternative claim - Whether the Commissioner (Appeals) rightly entertained and allowed the assessee's alternative claim for exemption under Section 10(23C)(vi) for AY 2014-15. - HELD THAT: - The Tribunal found that the assessee's application for approval under Section 10(23C)(vi) was pending before the appellate authorities at the time the assessment under Sections 11-13 was completed and that the approval was ultimately granted by the CIT(Exemptions) for AY 2014-15. The CIT(A) rightly entertained the alternative claim in view of the pendency and subsequent grant of approval, having obtained remand comments from the AO and considered the material on record and judicial precedents. The Tribunal observed no infirmity in the CIT(A)'s exercise of jurisdiction to admit and decide the alternative claim and accordingly upheld the CIT(A)'s allowance of exemption under Section 10(23C)(vi). [Paras 8]

The CIT(A)'s order allowing exemption under Section 10(23C)(vi) for AY 2014-15 is upheld and the Revenue's appeal on this issue is dismissed.

Application of Section 13(1)(c) - allowability of expenditure for objects of trust - direction to remit for verification and opportunity to be heard - Whether the disallowance of Rs. 37,46,289 as not incurred for the purpose of educational activity should be sustained or requires fresh adjudication. - HELD THAT: - Although the CIT(A) confirmed disallowance of the specified expenditure as not incurred for educational purposes, the Tribunal noted that, in the context of exemption under Section 10(23C)(vi), the assessee was entitled to an opportunity to prove that the expenditures were applied wholly and exclusively to the objects of the trust as contemplated by the provisos to Section 10(23C)(vi). The Tribunal observed that no specific opportunity had been afforded to the assessee to adduce such evidence before the AO and that fairness required remand. Consequently the Tribunal directed that the issue be restored to the file of the AO for decision in accordance with law after giving the assessee an opportunity of being heard and producing necessary evidence. [Paras 9]

Disallowance of Rs. 37,46,289 is not finally adjudicated by the Tribunal; the matter is remitted to the Assessing Officer for fresh decision after affording the assessee an opportunity to be heard and to furnish evidence.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s grant of exemption under Section 10(23C)(vi) for AY 2014-15; the assessee's challenge to the disallowance of Rs. 37,46,289 is remitted to the Assessing Officer for fresh consideration after giving the assessee an opportunity of being heard.

Deductibility under section 37(1) - cost of acquisition of land - payment for relinquishment/assignment of rights in land - principal-to-principal transaction - disallowance under section 40(a)(ia) for non-deduction of tax - tax deduction at source under section 194H

Deductibility under section 37(1) - cost of acquisition of land - payment for relinquishment/assignment of rights in land - Deletion of addition made by AO disallowing payment to SBPL as not forming part of cost of land or not being expenditure wholly and exclusively for business - HELD THAT: - The Tribunal found on the material on record - the memorandum of understanding, the agreement to sell between SBPL and land owners, the sale deeds and bank evidence of payments - that SBPL had pre-existing preferential/vested rights in the land and had received advances to reserve those rights which were subsequently transferred to the assessee. The MoU expressly provided that SBPL would assign/relinquish/transfer its present and future rights and that the land could be registered in the name of the assessee. The assessing officer's view that the arrangement was a make-believe, because sale deeds were executed directly in favour of the assessee and SBPL representatives did not attend, was rejected: the assessee had discharged its onus by filing agreements, sale deeds and bank records and the documents showed that payments made to SBPL related to acquisition of interest in the land. The Tribunal also observed that the payments were made in FY 2007-08 (the year the rights were acquired and acted upon) and that there was no basis to disallow those amounts in the assessment for 2013-14. On these grounds the deletion of the disallowance under section 37(1) was upheld. [Paras 10, 11, 12]

The payment of Rs. 8,10,29,645 made to SBPL was correctly treated as part of the cost/consideration for acquisition of land (payment for relinquishment of rights) and the disallowance under section 37(1) is deleted.

Disallowance under section 40(a)(ia) for non-deduction of tax - tax deduction at source under section 194H - principal-to-principal transaction - Whether the alternative protective disallowance under section 40(a)(ia) for non-deduction of TDS under section 194H is sustainable (i.e., whether the payment constituted commission/brokerage attracting TDS) - HELD THAT: - The Tribunal held that the payment to SBPL was for renunciation/transfer of SBPL's vested rights in land and, on the facts and documents, the parties dealt on a principal-to-principal basis. The amount was not in the nature of commission or brokerage. Accordingly, the statutory test for applicability of section 194H (tax deduction at source on commission/brokerage) was not satisfied and the alternative disallowance under section 40(a)(ia) was unsustainable. The appellate deletion of the protective disallowance was therefore upheld. [Paras 13]

The alternative protective disallowance under section 40(a)(ia) for non-deduction of TDS under section 194H is not sustainable and is deleted.

Final Conclusion: Revenue's appeal is dismissed; the Tribunal upholds the appellate authority's deletion of the disallowance under section 37(1) and the alternative protective disallowance under section 40(a)(ia)/section 194H, treating the payment to SBPL as part of the cost/consideration for acquisition of land and as a principal-to-principal transaction.

Simultaneous parallel reassessment proceedings - pending reassessment divests jurisdiction to issue a subsequent notice - only one process of assessment or reassessment - sanction under section 151 requires application of mind

Simultaneous parallel reassessment proceedings - pending reassessment divests jurisdiction to issue a subsequent notice - Validity of reassessment proceedings initiated by issuing a second notice under section 148 during the pendency of an earlier reassessment notice for the same assessment year. - HELD THAT: - The Tribunal found on facts that the Assessing Officer had issued two separate notices under section 148 on the same date backed by distinct reasons to believe; dispatch/reference numbers and the sequence of subsequent orders established that one reassessment (in respect of the cash deposits of Rs. 43.47 lakhs) was pending and had culminated in an assessment under section 147 r.w.s. 143(3) dated 08.11.2016 before the second reassessment (in respect of deposits of Rs. 95 lakhs) culminated in the impugned order dated 27.12.2016. Relying on settled precedent, the Tribunal held that once reassessment proceedings are pending, the Assessing Officer is divested of jurisdiction to initiate another reassessment for the same year; there cannot be two parallel reassessments and a second notice issued during pendency of the first is invalid. Applying that principle to the established sequence of notices and orders in this case, the Tribunal concluded that the second set of reassessment proceedings could not be sustained. [Paras 8, 9]

The reassessment proceedings initiated by the second notice under section 148 (which culminated in the assessment dated 27.12.2016) are invalid and unsustainable.

Sanction under section 151 requires application of mind - Validity of the approval/sanction given by the Pr. Commissioner under section 151 for initiation of the reassessment proceedings. - HELD THAT: - The Tribunal examined the sanction records and observed that the Pr. Commissioner had granted approval for both sets of reassessment proceedings on the same date by brief, identical endorsement entries. In the factual backdrop - namely initiation of parallel reassessments for the same year on the same date - the Tribunal concluded that the sanction was granted in a mechanical manner without any application of mind to the material before the sanctioning authority. That lack of application of mind to the question whether a second notice could properly be issued supports invalidation of the reassessment founded on that sanction. [Paras 10]

The sanction/approval under section 151 was given mechanically and without application of mind, and does not validate the impugned reassessment.

Merits of additions left open - Adjudication of other procedural and substantive grounds raised by the assessee (including challenge to additions and service/opportunity objections). - HELD THAT: - Having quashed the impugned assessment for invalid assumption of jurisdiction and mechanical sanction, the Tribunal declined to adjudicate other contentions raised by the assessee regarding service of notices, opportunity of hearing and the merits of additions. Those issues were not decided on merits and remain open for consideration in accordance with law if proceedings are validly re-initiated. [Paras 12]

Other grounds (grounds 1-11) are left open and not adjudicated; they remain for fresh consideration if valid proceedings are taken.

Final Conclusion: The impugned assessment order passed under section 144 r.w.s. 147 dated 27.12.2016 is quashed because the Assessing Officer had initiated a second reassessment while an earlier reassessment for the same year was pending and the sanction under section 151 was granted mechanically; other challenges to the assessment were not decided and remain open for fresh consideration.

Valid service of notice under Section 148 - assumption of jurisdiction under Section 147 - substituted service under Order V Rule 20 CPC - service where defendant resides out of India under Order V Rule 25 CPC - substituted service by affixture - vacation of reassessment for invalid notice service - penalty under Section 271(1)(c)

Valid service of notice under Section 148 - substituted service under Order V Rule 20 CPC - service where defendant resides out of India under Order V Rule 25 CPC - assumption of jurisdiction under Section 147 - vacation of reassessment for invalid notice service - Validity of notice issued under Section 148 and consequent assumption of jurisdiction for framing reassessment under Section 147 - HELD THAT: - The Tribunal found that the Assessing Officer was aware from notice-server reports that the assessee had shifted to and was residing in Canada. Despite that knowledge the AO resorted to substituted service by affixture at the assessee's old residential premises under Order V Rule 20 CPC on the premise that the assessee was 'avoiding service'. The Tribunal held that when the assessee resides abroad and no agent in India is shown, the proper mode is service in accordance with Order V Rule 25 CPC (sending to the foreign address by post/courier/fax/electronic means where postal communication exists), and that affixture at a sold former residence does not constitute valid substituted service. The AO did not demonstrate that, despite exercising all reasonable and due diligence, the foreign address could not be obtained; instead the record showed knowledge of the assessee's foreign residence. In these circumstances the notice was not validly served and, because valid service of notice under Section 148 is a precondition to assumption of jurisdiction under Section 147, the reassessment framed u/s 144 r.w.s.147 stood vitiated and was quashed. [Paras 9, 10, 11, 12]

The notice under Section 148 was not validly served; assumption of jurisdiction under Section 147 is invalid and the reassessment order passed u/s 144 r.w.s 147 dated 18.03.2014 is quashed.

Penalty under Section 271(1)(c) - vacation of reassessment for invalid notice service - Sustainability of penalty imposed under Section 271(1)(c) - HELD THAT: - Because the reassessment was quashed for want of valid assumption of jurisdiction (invalid service of notice u/s 148), the penalty levied under Section 271(1)(c) cannot stand independently. The Tribunal therefore held that the penalty imposed by the AO must be vacated. [Paras 17]

Penalty imposed under Section 271(1)(c) is vacated.

Final Conclusion: The appeals are allowed: the reassessment order framed u/s 144 r.w.s 147 dated 18.03.2014 is quashed for invalid service of notice under Section 148, and the penalty under Section 271(1)(c) imposed thereon is vacated; other merits were left open for fresh consideration.

Burden of proof under Section 123 of the Customs Act - shift of burden upon production of baggage/import receipts - reliance on documentary evidence to rebut presumption of smuggling - admissibility and evidentiary weight of statements recorded under Section 108 of the Customs Act - setting aside adjudication order by the Customs, Excise and Service Tax Appellate Tribunal

Burden of proof under Section 123 of the Customs Act - shift of burden upon production of baggage/import receipts - reliance on documentary evidence to rebut presumption of smuggling - Whether the Tribunal was justified in setting aside the Commissioner's Order-in-Original in respect of Mr. R. Kailash by accepting baggage receipts produced by him and holding that the Department failed to prove the seized gold to be smuggled goods. - HELD THAT: - The Court held that although Section 123 places the initial burden on the person from whose possession goods are seized to prove they are not smuggled, that burden shifts to the Department once the accused produces baggage/import receipts purporting to show licit import. Thereafter the Department must prove that the receipts do not pertain to the seized goods. In the present case Mr. R. Kailash produced baggage receipts to rebut the presumption of smuggling and the Department did not produce evidence to establish that those receipts were not connected to the seized gold. In the absence of such evidence the Tribunal's finding in favour of Mr. Kailash and setting aside the penalty was not interfered with. [Paras 8]

Tribunal's order setting aside the penalty and OIO in respect of Mr. R. Kailash is upheld.

Admissibility and evidentiary weight of statements recorded under Section 108 of the Customs Act - reliance on expert assay report to determine origin and purity of seized gold - setting aside adjudication order by the Customs, Excise and Service Tax Appellate Tribunal - Whether the Tribunal was justified in setting aside the Commissioner's Order-in-Original in respect of Mr. C. Srinivas on the basis that the seized gold was not shown to be of foreign origin and that statements were made under threat. - HELD THAT: - The Court accepted that Mr. C. Srinivas had alleged that his statement under Section 108 was recorded under threat and that he produced correspondence indicating samples were sent for assay to the Mint Master, Bombay, with results showing lower purity than foreign-marked gold. The Special Court (Economic Offences Court) had also acquitted the accused on evidence that the goods were duty paid and not of foreign origin. Given the assay correspondence and the acquittal on the criminal side, the Tribunal's conclusion that the OIO could be set aside was sustained. The Court therefore found no basis to reject the Tribunal's factual conclusion that the Department failed to establish the seized gold as smuggled. [Paras 9]

Tribunal's order setting aside the penalty and OIO in respect of Mr. C. Srinivas is upheld.

Final Conclusion: Both departmental appeals are dismissed; the Tribunal's setting aside of the Commissioner's Orders-in-Original in respect of the two respondents is maintained on the grounds that the accused produced evidence (baggage receipts and assay correspondence) which the Department failed to rebut, and therefore the Department did not establish that the seized gold was smuggled.

Return of seized goods on expiry of six months under Section 110(2) of the Customs Act, 1962 - requirement of prior issuance and valid service of show cause notice for confiscation under Section 124 read with service provisions - limited power of Principal Commissioner/Commissioner to extend statutory period on sufficient cause

Return of seized goods on expiry of six months under Section 110(2) of the Customs Act, 1962 - effect of non issuance of show cause notice within prescribed period - Seized cash and articles retained beyond the statutory six month period without issuance of show cause notice were liable to be returned to the petitioner. - HELD THAT: - The Court held that Sub section (2) of Section 110 mandates that where no notice for confiscation under Section 124(a) is given within six months of seizure, the goods shall be returned to the person from whose possession they were seized. The statutory scheme permits a single extension by the Principal Commissioner/Commissioner for reasons recorded in writing, but in the absence of any provisional release under Section 110A or any valid extension order, the petitioner's civil right to restoration accrued on expiry of the prescribed period. The respondents did not contend that provisional release was granted and produced no reasoned extension order; consequently the retention beyond the statutory period could not be sustained and judicial intervention was warranted to secure return of the seized cash and articles while preserving the department's right to initiate fresh adjudication if lawfully permissible. [Paras 10, 11, 12, 14]

Seized cash and articles were ordered to be returned to the petitioner within eight weeks; respondents remain at liberty to initiate adjudication afresh in accordance with law if permissible.

Requirement of prior issuance and valid service of show cause notice for confiscation under Section 124 read with service provisions - limited power of Principal Commissioner/Commissioner to extend statutory period on sufficient cause - The departmental show cause notice issued after the expiry of the statutory period could not cure non compliance with the requirement to give notice within six months, and no extension had been shown to have been validly granted. - HELD THAT: - The Court examined the interplay between the requirement to give notice before confiscation and the time limits under Section 110(2) and Section 124, observing that the mandate is not satisfied merely by a later issuance of notice. The respondents failed to demonstrate any reasoned order of extension by the competent authority as envisaged in the proviso to Section 110(2), nor was there any provisional release under Section 110A. Reliance on post expiry show cause notice does not negate the automatic operation of Section 110(2) to effect return of seized items when statutory conditions are unmet. Accordingly, the late show cause notice could not validate continued retention of the seized cash and mobile phones. [Paras 7, 10, 11, 13]

The show cause notice issued after the statutory period did not validate continued retention; absence of a valid extension meant the seized items must be returned, leaving open the department's right to re commence lawful proceedings.

Final Conclusion: Writ petition allowed: respondents directed to return the seized cash and articles to the petitioner within eight weeks for failure to issue a show cause notice within the statutory period; respondents may, if legally permissible, initiate fresh adjudication in accordance with law.

Amendment to a bill of entry under Section 149 of the Customs Act, 1962 - amendment of bill of entry after clearance only on basis of documentary evidence existing at the time of clearance - correction of clerical/punching error in self-assessment - refund claim requiring modification of assessment or self-assessment order - remand to original authority for reconsideration and reassessment

Amendment to a bill of entry under Section 149 of the Customs Act, 1962 - correction of clerical/punching error in self-assessment - remand to original authority for reconsideration and reassessment - Application under Section 149 for amendment of the Bill of Entry to correct a clerical/punching error and consequential reassessment was to be considered afresh by the original authority. - HELD THAT: - The Tribunal found that the Bill of Entry contained an evident clerical error: the commercial invoice and one Bill of Entry recorded 2760 pieces while the other Bill of Entry incorrectly recorded 5520 pieces, the invoice number matching the correct entry. Section 149 permits amendment of a Bill of Entry to correct such errors, including errors arising under self-assessment. Given the documentary record submitted by the appellant, the matter was not fit for final adjudication by the Tribunal on the present record and required reconsideration by the original authority under the statutory procedure. Consequently the Tribunal remanded the matter to the original authority with a direction to decide the application made under Section 149 on the basis of the documents submitted and in accordance with law, and to complete the remand proceedings within three months. All consequential effects arising from the order on the Section 149 application were directed to follow as applicable to the appellant. [Paras 3, 4]

Appeal allowed by way of remand; original authority directed to consider and decide the Section 149 application and reassess within three months, with consequences flowing to the appellant.

Final Conclusion: The appeal is allowed by way of remand: the original authority is directed to consider the appellant's application under Section 149 of the Customs Act, 1962, to amend the Bill of Entry and reassess accordingly within three months; consequences of the order on such amendment shall follow to the appellant.

Confiscation of imported goods for alleged non-compliance with approval requirements for non-specified food - binding effect of FSSAI certification and post-import clarification by FSSAI - retrospective application of departmental/CBIC instructions to imports already effected or warehoused - rejection of confiscation and setting aside of penalty and redemption fine where statutory approval not required

Confiscation of imported goods for alleged non-compliance with approval requirements for non-specified food - binding effect of FSSAI certification and post-import clarification by FSSAI - Whether the imported consignment of Sajji Khar was liable to confiscation and penalty for alleged import without prior approval under the FSS (Approval of Non-specified Food and Food Ingredients) Regulations, 2017. - HELD THAT: - The Tribunal found that the appellant had obtained FSSAI certification for the consignment confirming the sample to the applicable standards. Subsequently, FSSAI issued a clarification stating that Sajji Khar/Papad Khar may be treated as "food not specified" until formal standards are notified and therefore does not require product approval under the 2017 Regulations; imported consignments are to be tested as "foods not specified". On the basis of the FSSAI certificate and the Authority's clarification, the Tribunal concluded that the import could not be faulted for lack of prior approval and that confiscation and the consequential penalty and redemption fine were not justified.

Confiscation, penalty and redemption fine set aside; goods not liable to confiscation.

Retrospective application of departmental/CBIC instructions to imports already effected or warehoused - Whether the CBIC instruction dated 21.05.2020 (requiring compliance with the 2017 Regulations) could be applied to the import/warehousing transaction for which the bill of entry was filed on 28.12.2019. - HELD THAT: - The Tribunal held that the CBIC instruction issued on 21.05.2020 could not be applied retrospectively to imports and warehousing entries that had been effected prior to the instruction. The bill of entry in this case was filed on 28.12.2019 and the import had taken place earlier; accordingly any condition imposed by the later instruction did not apply to this consignment. The Tribunal also noted practice of earlier imports of the same product being allowed without the later-imposed condition.

CBIC instruction of 21.05.2020 held not applicable retrospectively to the present consignment.

Final Conclusion: The appeal is allowed; the impugned order of confiscation, penalty and redemption fine is set aside on the combined findings that the consignment was certified by FSSAI and later clarified to be a "food not specified" not requiring prior product approval, and that the CBIC instruction relied upon could not be applied retrospectively to the warehousing entry filed on 28.12.2019.

Admission of application under the Insolvency and Bankruptcy Code, 2016 (Section 7) - existence of debt and admission by the corporate debtor - investment agreement as evidence of receipt of funds - adjudicating authority's obligation to determine existence of debt and date of default - remand for admission with liberty to settle

Existence of debt and admission by the corporate debtor - investment agreement as evidence of receipt of funds - adjudicating authority's obligation to determine existence of debt and date of default - Whether the Adjudicating Authority erred in rejecting the Section 7 application on the ground that no debt and no date of default were established. - HELD THAT: - The Investment Agreement dated 01.04.2014 on the record expressly records that the appellant invested and that the corporate debtor received Rs. 75 lakhs; the agreement therefore evidences receipt of funds. The corporate debtor's written reply to the appellant's legal notice admits receipt of investment, acknowledges payment of Rs. 25 lakhs and states that the balance would be paid when the project began to pay back. Those admissions manifest the existence of debt and an acknowledgement of liability. The Adjudicating Authority's conclusion that the agreement was too vague and that no debt or date of default was shown was erroneous in view of the admitted facts recorded in the agreement and in the respondent's reply. In consequence, the Tribunal found the rejection of the Section 7 application to be incorrect and set aside the impugned order, directing the Adjudicating Authority to admit the application and pass an order within one month; the Tribunal also left the parties free to settle during that period. [Paras 7, 8, 9, 10]

Impugned order rejecting the Section 7 application set aside; matter remitted to the Adjudicating Authority to admit the application and pass an order within one month, with liberty to the parties to settle.

Final Conclusion: Appeal allowed; the Adjudicating Authority's order dated 28th May, 2019 rejecting the Section 7 application is set aside and the Adjudicating Authority is directed to admit the application and pass appropriate orders within one month, subject to any settlement between the parties.

Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - computation of period of limitation from date of default / date of NPA - effect of acknowledgment in writing under Section 18 of the Limitation Act, 1963 - applicability of the Limitation Act to proceedings under the IBC pursuant to Section 238A - relevance of post-assignment statements of account and cut-off date of assignment

Computation of period of limitation from date of default / date of NPA - application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Whether the Section 7 petition was barred by limitation and the correct date from which limitation is to be computed. - HELD THAT: - The Tribunal accepted that the date of NPA (30.06.2014) is the relevant date of default for computation of limitation in the present case. Applying the residuary Article (three years) for applications under Section 7, the bench observed that, measured from the date of NPA, the three year period would expire on 30.06.2019 while the petition was filed on 07.05.2019. Having regard to the statutory framework and binding precedents cited, the petition was held to be filed within the prescribed period and therefore not barred by limitation. [Paras 11]

The petition under Section 7 is within limitation when computed from the date of NPA and is not time barred.

Effect of acknowledgment in writing under Section 18 of the Limitation Act, 1963 - applicability of the Limitation Act to proceedings under the IBC pursuant to Section 238A - Whether acknowledgements / settlement communications given by the corporate debtor during the limitation period revive or extend limitation for filing the Section 7 petition. - HELD THAT: - The Tribunal applied Section 18 of the Limitation Act and the principles laid down by the Supreme Court (including the approach in Dena Bank and related authorities) to hold that written acknowledgements or settlement offers made within the limitation period operate to start a fresh period of limitation from the date of such acknowledgement. The bench accepted that the correspondence and settlement communications on record could, insofar as they constituted acknowledgements of subsisting liability, justify computation of limitation afresh and supported admission of the Section 7 petition. [Paras 11]

Acknowledgements/settlement communications in writing made within the limitation period attract Section 18 and may give rise to a fresh three year limitation for filing under Section 7; such effect is available in the present case.

Relevance of post-assignment statements of account and cut-off date of assignment - Whether the Appellant/ARC could place on record statements of account prior to the assignment date and the effect of the assignment cut off date. - HELD THAT: - The Tribunal noted that the assignment of debt to the Appellant took effect from the cut off date (31.08.2014) and that ARC could not submit statements of account for periods prior to the assignment as those records were in the books of the assignor (ING Vysya Bank) and, following merger, Kotak Mahindra Bank. The decision explained that post assignment records of the assignor (now Kotak Mahindra Bank) are the relevant source for account statements and that the assignment and merger history constrained which records could legitimately be relied upon by the appellant. [Paras 11]

Account statements prior to the date of assignment are not in the appellant's books; the assignor's / successor bank's records are the relevant source post assignment.

Pleading requirements regarding limitation - application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Whether absence of a specific pleading seeking exclusion/condonation of time in the company petition precludes consideration of documents which demonstrate that the petition is within limitation. - HELD THAT: - The impugned NCLT order had observed that the petitioner did not plead extension/exclusion of time and therefore the petition should be dismissed. The Appellate Tribunal reviewed the material on record and considered the correspondence and settlement communications which operated under Section 18 to revive limitation. On that basis the Tribunal set aside the Adjudicating Authority's dismissal and directed initiation of CIRP. The Tribunal's conclusion indicates that lack of an express pleading before the Adjudicating Authority did not extinguish the merits of material demonstrating that the petition was within limitation. [Paras 11]

Failure to plead exclusion/condonation before the Adjudicating Authority did not prevent the Appellate Tribunal from examining materials that established the petition was within limitation; the NCLT order was set aside.

Final Conclusion: The appeal is allowed. The impugned order of the Adjudicating Authority is set aside on the ground that the Section 7 petition is within limitation (having regard to the date of NPA, relevant acknowledgements and the effect of Section 18 read with Section 238A), and the Adjudicating Authority is directed to admit the petition and initiate CIRP; parties remain at liberty to settle in the interim.

Removal and replacement of liquidator under Section 276(1)(d) of the Companies Act, 2013 - Inability to act as liquidator on medical and personal grounds - Transfer of records and assets on replacement of liquidator - Requirement of written consent and affidavit by newly appointed liquidator - Obligation to file quarterly progress reports by the liquidator - Liquidator's fee determination under Section 34(8)-(9) of the Insolvency and Bankruptcy Code and Regulation 4 of the Liquidation Process Regulations

Removal and replacement of liquidator under Section 276(1)(d) of the Companies Act, 2013 - Inability to act as liquidator on medical and personal grounds - Application for replacement of the incumbent liquidator was maintainable and allowed on grounds of inability to act. - HELD THAT: - The Tribunal examined the application filed under Section 60(5)(c) of the Code read with Section 276 of the 2013 Act and found it maintainable. The applicant produced medical records showing essential hypertension and related ailments and evidence of a change in family circumstances (son's transfer) that rendered the applicant unable to continue performing duties requiring travel and exertion. In view of the illness and the applicant's age, and applying Section 276(1)(d) which permits removal where there is inability to act, the Tribunal concluded that replacement on these grounds meets the ends of justice and should be ordered. [Paras 6, 7, 8, 9]

IA No.45 of 2022 allowed; Kuljeet Singh, the incumbent liquidator, is replaced on the stated grounds.

Transfer of records and assets on replacement of liquidator - Requirement of written consent and affidavit by newly appointed liquidator - Obligation to file quarterly progress reports by the liquidator - Liquidator's fee determination under Section 34(8)-(9) of the Insolvency and Bankruptcy Code and Regulation 4 of the Liquidation Process Regulations - Appointment of a successor liquidator and ancillary directions concerning handover, consent, reporting and fee determination. - HELD THAT: - The Tribunal appointed Mr. Amit Kumar Goyal (whose credentials on the panel for the applicable period were checked and found without adverse record) as the new liquidator. The order directs immediate handover of records and assets by the outgoing liquidator and vesting of charge in the newly appointed liquidator. The newly appointed liquidator is required to file a written consent with an affidavit within seven days confirming absence of disciplinary proceedings, and to submit quarterly progress reports to the Tribunal. While no fee was prayed for in the application, the Tribunal noted that fee, if required to be determined, shall be fixed in accordance with Section 34(8)-(9) of the Code and Regulation 4 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. [Paras 9, 10, 11]

Mr. Amit Kumar Goyal appointed as liquidator with directions for handover, filing of consent and affidavit, periodic reporting, and fee to be determined as per the statutory and regulatory provisions if necessary.

Final Conclusion: The application for replacement of the liquidator was allowed on medical and personal incapacity grounds; a successor liquidator was appointed and directed to take charge, file requisite consent/affidavit and quarterly reports, with liquidator's fee to be determined as per the Code and relevant regulations if required.

Extension of time granted by higher court - jurisdiction to modify order of Supreme Court - powers of Adjudicating Authority in liquidation proceedings - liberty to approach higher forum

Extension of time granted by higher court - jurisdiction to modify order of Supreme Court - powers of Adjudicating Authority in liquidation proceedings - Whether the Adjudicating Authority can extend or modify the time granted by the Hon'ble Supreme Court for removal of the corporate debtor's equipment, and whether the liquidator may seek such extension before this Tribunal. - HELD THAT: - The Tribunal noted that ordinarily it possesses powers to pass directions in relation to CIRP and liquidation matters. However, the present application expressly sought an extension of the period earlier granted by the Hon'ble High Court and extended by the Hon'ble Supreme Court. Because the relief sought would effectively modify the time-limit already fixed by the Apex Court in S.L.P.(C) Nos. 7994 & 7995 of 2021, the Tribunal held that the proper course is for the liquidator to approach the Hon'ble Supreme Court to seek any further extension or modification of that order. Consequently, the Tribunal declined to grant the extension itself and did not purport to alter the period fixed by the higher court, instead granting liberty to the applicant to seek appropriate relief before the Apex Court. [Paras 8, 9]

I.A. disposed of; the Tribunal declined to extend or modify the time fixed by the Hon'ble Supreme Court and granted liberty to the liquidator to approach the Hon'ble Supreme Court in accordance with law.

Final Conclusion: The application for extension of time to remove the corporate debtor's equipment was declined by the Tribunal insofar as it would modify the period fixed by the Hon'ble Supreme Court; the liquidator was granted liberty to seek any extension or modification from the Supreme Court.

Interim relief in PMLA proceedings - provisional attachment under PMLA - quashing of ECIR under Section 482 CrPC - effect of exoneration in adjudicatory/departmental proceedings on subsequent criminal prosecution - burden of proof under Section 24 PMLA - application of CrPC provisions to trials under PMLA - standards for grant of interim protection (guidelines in Neeharika)

Interim relief in PMLA proceedings - quashing of ECIR under Section 482 CrPC - provisional attachment under PMLA - standards for grant of interim protection (guidelines in Neeharika) - Petitioner's claim for interim relief by staying the impugned ECIR, addendum to ECIR and proceedings (including provisional attachment orders) pending final adjudication. - HELD THAT: - The Court examined whether exceptional circumstances exist to grant interim protection in PMLA proceedings and applied the principles in Neeharika and related precedents. While acknowledging that in exceptional cases the High Court may exercise inherent jurisdiction to quash or stay criminal proceedings, the Court emphasised restraint at the preliminary stage so as not to impede investigation. The PMLA is a special complete code with specific attachment and adjudication mechanisms and contains a statutory burden-shifting provision (Section 24) relevant to proceeds of crime. The Court found that the investigation under PMLA stood at a nascent stage, that the Directorate had recorded material justifying continuation of proceedings and provisional attachment, and that the petitioner had not availed remedies such as anticipatory bail. Having regard to the need to balance prevention of abuse of process against the public interest in investigating economic offences and the guidelines restricting blanket interim orders, the Court held that no sufficient ground existed to stay the ECIR, addendum or associated attachment orders at this interlocutory stage. [Paras 24, 26, 27, 29, 30]

Interim application for stay/relief rejected; impugned ECIR, addendum and proceedings not stayed.

Effect of exoneration in adjudicatory/departmental proceedings on subsequent criminal prosecution - application of CrPC provisions to trials under PMLA - Legal significance of prior exoneration in Income Tax, departmental and adjudicating authority proceedings vis-a -vis the continuance of criminal proceedings under PMLA. - HELD THAT: - The Court recognised the established principle that when adjudicatory or departmental proceedings have exonerated a person on merits, continuation of criminal prosecution on the same factual matrix may be impermissible; conversely, where exoneration is on technical grounds or differs in facts, it may not bar criminal proceedings. The Court articulated the yardstick: one must examine whether the exoneration was on merits and whether charges in the adjudicatory proceedings are identical to the criminal allegations. However, the Court did not resolve the factual and legal sufficiency of the petitioner's asserted exonerations for the purposes of terminating PMLA proceedings at this interlocutory stage. That question is left for full adjudication at final hearing. [Paras 22, 27, 28, 31]

Question of whether prior exonerations preclude PMLA prosecution left open for final determination; not finally decided at this interim stage.

Final Conclusion: The interlocutory application for interim relief under Section 482 Cr.P.C. is dismissed; the Court refused to stay the ECIR, the addendum or related provisional attachment orders, while leaving open the substantive contentions (including the effect of prior exonerations) for decision at the final hearing.

Reverse charge mechanism - Rent-a-Cab service - transport of goods by road (GTA) services - deeming fiction - invocation of extended period of limitation - penalty and interest contingent on demand

Reverse charge mechanism - Rent-a-Cab service - deeming fiction - Validity of demand of service tax under reverse charge on Rent a Cab service raised on the basis of motor car and vehicle hire ledgers. - HELD THAT: - The Tribunal found that the adjudicating authority confirmed demand under reverse charge without identifying the supplier of service or appreciating the documentary reconciliations and ledgers produced by the appellant. The motor car expenses ledger comprised miscellaneous running costs (fuel, tolls, repairs, reimbursements) and the vehicle hire charges ledger related to GTA outward/inward freight, as shown by the reconciliations and ST 3 returns. No contrary evidence was produced by the department to displace the appellant's records. The Tribunal held that the adjudicator's reliance on a deeming fiction and on assumptions/presumptions to treat these entries as Rent a Cab service was unsustainable, and therefore the demand based solely on such assumptions could not be sustained. [Paras 6, 7]

Demand of service tax under reverse charge on Rent a Cab service set aside.

Transport of goods by road (GTA) services - Whether amounts shown as vehicle hire charges were liable as Rent a Cab service when they were alleged to have suffered tax as GTA services. - HELD THAT: - The appellant produced reconciliations, ST 3 return summaries, invoices and consignment copies demonstrating that vehicle hire charges related to GTA services and that tax had been paid under GTA. The Tribunal observed that the amounts disclosed for GTA in ST 3 returns exceeded the vehicle hire charges and that other ledgers had similarly been taxed as GTA. The department did not make any contrary effort to correlate its claim with the appellant's records. In absence of contrary evidence, the Tribunal accepted the appellant's contentions that the entries related to GTA and not Rent a Cab service. [Paras 6]

Demand in respect of vehicle hire charges cannot be sustained as Rent a Cab; they are accepted as GTA related.

Invocation of extended period of limitation - Validity of invoking the extended period of limitation for issuing the show cause notice in 2018 for the period 2012 13 to 2015 16. - HELD THAT: - The Tribunal noted the substantial delay in raising the demand (period 2012 13 to 2015 16; SCN issued in 2018) and that the department did not furnish any explanation justifying invocation of the extended period. In absence of any satisfactory justification for the delay or of any finding of suppression of material facts by the appellant, the Tribunal held that the extended period of limitation could not be invoked. [Paras 6]

Invocation of the extended period of limitation is not justified.

Penalty and interest contingent on demand - Sustainability of penalty and interest where the principal demand for service tax was set aside. - HELD THAT: - Since the Tribunal set aside the demand of service tax raised on Rent a Cab service (and found vehicle hire charges to be taxable, if at all, as GTA), it followed that consequential penalty and interest predicated on the impugned demand could not be sustained. The adjudicatory outcome on the principal demand determined the fate of ancillary monetary consequences. [Paras 7]

Penalty and interest held not sustainable and set aside consequentially.

Rent-a-Cab service - Tax treatment of amounts paid to director for car hire charges. - HELD THAT: - The Tribunal observed that the appellant had not disputed liability in respect of amounts paid to the director for car hire charges and that service tax on those amounts had been discharged and disclosed in ST 3 returns. Given this admission and documentary reconciliation, the Tribunal saw no ground to make further observations or to reopen that aspect. [Paras 6]

Amounts paid to director for car hire charges were already subjected to service tax and are not reopened by the Tribunal.

Final Conclusion: The appeal is allowed: the demand of service tax under reverse charge on Rent a Cab (raised on assumptions regarding motor car and vehicle hire ledgers) is set aside; invocation of the extended period of limitation is rejected; consequential penalty and interest are also not sustainable; amounts paid to the director already taxed need not be reopened.

Valuation of taxable services - gross amount charged - nexus with the service - interest on security deposit - negative list / post-negative list regime - proviso to section 73(1) - extended period for fraud, collusion or suppression

Valuation of taxable services - gross amount charged - nexus with the service - interest on security deposit - negative list / post-negative list regime - Interest received on security deposit is not includible in the gross value of consideration for Business Auxiliary Services. - HELD THAT: - The Tribunal held that valuation for service tax is the amount of consideration charged by the service provider that has a direct nexus with the taxable service; benefits not arising in lieu of the taxable service cannot be added to taxable value. The agreement clearly treated the Rs. 5 crore as a security deposit, payable back on termination, with interest payable to the depositor; the disputed receipts were interest on the appellant's own money invested with the service recipient and not consideration for services. The Tribunal relied on the principle that notional or unrelated interest cannot be added to the taxable value and observed that no evidence was produced to establish any nexus between the deposit/interest and the consideration for Business Auxiliary Services. The Tribunal further noted statutory developments and administrative clarifications excluding interest-in-nature payments from valuation and observed that post-introduction of the negative-list regime the nature of the service (deposits, loans or advances where consideration is interest) is outside taxable services. Reliance in the reasoning was placed on earlier judicial pronouncements including MorirokoUT India P.Ltd. Vs State of UP , V S T Industries ltd. vs. CCE Hyderabad and related authorities, as recorded in the order. For these reasons the adjudicating authority's inclusion of the interest in taxable value was held to be wrongful and the demand set aside. [Paras 10, 11, 13, 14, 16]

Amount of interest earned on the security deposit is not part of the gross value of consideration for Business Auxiliary Services and cannot be included for service tax valuation; the demand based on such inclusion is set aside.

Proviso to section 73(1) - extended period for fraud, collusion or suppression - extended period of limitation - Invocation of the extended five-year limitation period was improper and the show cause notice was time-barred. - HELD THAT: - The Tribunal examined the conditions for invoking the extended period (fraud, collusion, wilful intent to evade tax or suppression of facts) and found none to exist. The department had audited the appellant in August 2012 and had access to material; the appellant was registered and filing returns and there was no evidence of wilful mis-declaration or suppression. Since the department possessed knowledge of the relevant facts well before issuance of the impugned show cause notice, the statutory preconditions for invoking the extended period were not satisfied. Reliance placed on earlier authorities as recorded in the judgment supported the principle that extended limitation cannot be arbitrarily invoked. Consequently the extended period was held wrongly applied and the notice held barred by time. [Paras 15]

Extended five-year period was wrongly invoked; the show cause notice is time barred.

Final Conclusion: The appeal is allowed. The adjudicating authority's order confirming service tax on interest earned on the security deposit is set aside as the interest is not part of gross consideration for Business Auxiliary Services; the extended period of limitation was wrongly invoked and the show cause notice is time barred.

Point of taxation - reverse charge mechanism - determination of point of taxation for services provided by a person located in non-taxable territory by transportation of goods by vessel - eligibility for Cenvat credit on input services

Point of taxation - reverse charge mechanism - Rule 7 - determination of point of taxation in case of specified services or persons - Rule 8B - determination of point of taxation for services by person located in non-taxable territory - eligibility for Cenvat credit on input services - Applicability of Rule 7 or Rule 8B of the Point of Taxation Rules, 2011 and consequent entitlement to Cenvat credit for ocean freight paid under reverse charge. - HELD THAT: - The appellant was liable to pay service tax on ocean freight under the reverse charge mechanism and had paid the service tax on 30th June, 2017. Rule 7 governs the point of taxation for persons required to pay tax as recipients of service under reverse charge and states that the point of taxation shall be the date on which payment is made (with a proviso for delayed payments). Rule 8B deals with services provided by a person located in a non-taxable territory by way of transportation of goods by vessel, fixing the point of taxation as the date of bill of lading. Given that the appellant is a recipient required to pay tax under reverse charge, Rule 7 is the applicable provision and not Rule 8B. Applying Rule 7 to the admitted facts (payment made on 30.06.2017) establishes that the point of taxation falls on the date of payment and, accordingly, the appellant was entitled to avail Cenvat credit of the service tax paid under the reverse charge mechanism. The adjudicating authorities erred in applying Rule 8B to deny credit. [Paras 7, 8]

Rule 7 applies (not Rule 8B); the appellant was entitled to Cenvat credit as payment of service tax was made on 30.06.2017 and the confirmed demand is set aside.

Final Conclusion: The Tribunal held that Rule 7 of the Point of Taxation Rules governs reverse charge payments and, on the admitted facts of payment on 30.06.2017, the appellants validly availed Cenvat credit; the impugned demand is quashed and the appeal is allowed.

Levy of service tax on composite works contracts - distinction between Works Contract Service and other construction services - application of Larsen & Toubro principle to pre-1.7.2012 period - negative list regime and taxable services post 01.07.2012 - abatement under Rule 2A(ii)(A) of the Service Tax (Determination of Value) Rules, 2006 - relevance of CENVAT credit to entitlement to abatement - remand for fresh adjudication where findings are sketchy or not recorded - setting aside of penalties where principal demand is substantially disallowed

Levy of service tax on composite works contracts - distinction between Works Contract Service and other construction services - application of Larsen & Toubro principle to pre-1.7.2012 period - Demand for service tax raised under 'Commercial or Industrial Construction Service' for periods prior to 01.07.2012 is not sustainable where the contracts were composite works contracts. - HELD THAT: - The Tribunal applied the Supreme Court's reasoning in Larsen & Toubro that composite indivisible works contracts constitute a separate species of contract and, prior to the statutory scheme dealing with works contracts, service tax could not be validly levied under other heads. In the present case, save for one labour contract, the disputed contracts up to 30.06.2012 were composite works contracts. Since no demand was made under the specific head 'Works Contract Service' for those periods and the impugned order confirms demand under 'Commercial or Industrial Construction Service', the demand for the pre-01.07.2012 period cannot be sustained and is set aside. [Paras 11, 14]

Demand prior to 01.07.2012 set aside.

Negative list regime and taxable services post 01.07.2012 - abatement under Rule 2A(ii)(A) of the Service Tax (Determination of Value) Rules, 2006 - relevance of CENVAT credit to entitlement to abatement - remand for fresh adjudication where findings are sketchy or not recorded - Liability for service tax, entitlement to abatement and the question of whether CENVAT credit was availed for services rendered after 01.07.2012 (and the sole labour contract) were not finally adjudicated and require fresh consideration. - HELD THAT: - For the period post-01.07.2012, the charging regime changed under the negative list and works contract services were exigible unless excepted. The Commissioner's findings on whether the appellant had availed CENVAT credit (a precondition to deny abatement under Rule 2A(ii)(A)) are sketchy, incomplete for two service recipients and absent for two others. The issue of the single labour contract (2010-11) also requires verification whether it is already covered by tax paid. Because the record and findings do not resolve these questions, the Tribunal remanded these matters to the adjudicating authority for receipt of evidence, verification and a reasoned decision. [Paras 13, 15, 16]

Post-01.07.2012 liability and the lone labour-contract item remanded for fresh adjudication.

Setting aside of penalties where principal demand is substantially disallowed - exercise of power to drop or set aside penalties in view of modified demand - Penalties imposed under Sections 77 and 78 were set aside in view of substantial disallowance of the principal demand. - HELD THAT: - Having set aside the major part of the demand pertaining to the pre-2012 period and remanded the remainder for fresh consideration, the Tribunal exercised its power to quash the penalties levied under Chapter V by directing that all penalties be set aside under section 80 of Chapter V of the Finance Act, 1994, since the bulk of the demand has been disallowed. [Paras 17]

All penalties set aside.

Final Conclusion: The appeal is partly allowed: demands confirmed under 'Commercial or Industrial Construction Service' for periods prior to 01.07.2012 are set aside; liability and entitlement to abatement for services rendered after 01.07.2012 and the single labour contract item are remanded to the Commissioner for fresh, reasoned adjudication; and penalties under Chapter V are set aside.

Refund of accumulated CENVAT credit - export of services - rule 5 of CENVAT Credit Rules, 2004 - rule 6A of Service Tax Rules, 1994 - intermediary service - Place of Provision of Services Rules, 2012 - consideration - taxable territory

Refund of accumulated CENVAT credit - export of services - rule 5 of CENVAT Credit Rules, 2004 - rule 6A of Service Tax Rules, 1994 - taxable territory - consideration - Entitlement to refund of accumulated CENVAT credit under rule 5 for services rendered outside the taxable territory (exports) for the period July 2012 to December 2013. - HELD THAT: - The Tribunal held that the nature of the service is irrelevant to eligibility under rule 5; what matters is compliance with the conditions in rule 6A for export of services. The lower authorities' finding that there was no 'service' or that the transactions were mere internal reimbursements was inconsistent and unsustainable: financial flows and the contractually stipulated 'consideration' could not be divorced from the question of service without a proper determination under section 65B(44). The Tribunal observed that the authorities failed to identify requisite elements for treating the appellant as an 'intermediary' and did not initiate proceedings to recover service tax if they considered the transactions to be domestic taxable services. Having found that the appellant rendered services outside the taxable territory and complied with rule 6A, the denial of refund was without authority of law and the appellant is entitled to relief under rule 5 to the extent established.

Appellant entitled to refund under rule 5 for services exported in the period July 2012 to December 2013; denial by lower authorities set aside to that extent.

Refund of accumulated CENVAT credit - quantification of refund - documentary deficiencies - Appropriateness of restricting the refund to the amount of Rs. 10,77,183 and treatment of the balance claim. - HELD THAT: - The Tribunal noted that the original authority did not controvert entitlement to Rs. 10,77,183 and that the appellant had claimed a higher amount. The Tribunal did not adjudicate the admissibility of the remaining portion of the claim on merits but found that conformity of the balance to rule 5's formulation required further consideration. Consequently, the Tribunal allowed the appeal insofar as Rs. 10,77,183 and remanded the matter to the original authority to examine the submissions and documentary compliance supporting the remaining portion of the refund claim.

Appeal allowed to the extent of Rs. 10,77,183; balance of the claim remanded to the original authority for consideration and quantification.

Final Conclusion: The Tribunal allowed the appeal in part: it set aside the denial of refund to the extent of Rs. 10,77,183, held that the appellant was entitled to relief under rule 5 for exported services in the period July 2012 to December 2013, and remanded the remaining portion of the refund claim to the original authority for verification and appropriate decision.

Status of software maintenance under service tax - interpretation of circulars vis-a -vis statutory provisions - CENVAT credit utilisation and non-lapsing of accumulated credit - non obstante clause in Rule 6(3) of the CENVAT Credit Rules - interest under Section 75 of the Finance Act, 1994 - penalty under Section 76 of the Finance Act, 1994

Status of software maintenance under service tax - interpretation of circulars vis-a -vis statutory provisions - Liability to service tax on maintenance and repair of computer software for the period 9.7.2004 to November 2005. - HELD THAT: - The Tribunal examined the statutory scheme and precedents and found the point no longer res integra. Following the Madras High Court in M/s. Kasturi and Sons and the Karnataka High Court in M/s. IBM (India) Pvt. Ltd., the Bench held that until the Finance Act, 2007 (with effect from 1-6-2007) expressly included computer software within the definition of 'goods', information technology services (including maintenance of computer software) were excluded from the ambit of the relevant statutory entry. The impugned departmental circulars relying on the Supreme Court's Tata Consultancy Services decision could not override the statutory exclusions in force for the period in question. Consequently, the demand of service tax on software maintenance services for 9.7.2004 to November 2005 was set aside. [Paras 4]

Demand of service tax on maintenance and repair of software for the period 9.7.2004 to November 2005 is set aside.

CENVAT credit utilisation and non-lapsing of accumulated credit - non obstante clause in Rule 6(3) of the CENVAT Credit Rules - interest under Section 75 of the Finance Act, 1994 - penalty under Section 76 of the Finance Act, 1994 - Whether the appellants could utilise the unutilised 80% CENVAT credit after 1.4.2008 for service tax liabilities of June 2007 to March 2008, and the ancillary consequences of delayed payment. - HELD THAT: - The Tribunal analysed Rule 6(3) of the CENVAT Credit Rules and consistent judicial pronouncements holding that the restriction in sub rule (3) affects only the extent of utilisation in a given period and does not provide for lapse of accumulated credit. The Bench observed that the non obstante language in Rule 6(3) and prior Tribunal decisions support carrying forward and later utilisation of the balance credit. Even if the departmental circular relied upon by the appellant could not be placed on an assured statutory footing, the absence of any lapsing provision in the Rules meant the accumulated credit remained available for utilisation after 1.4.2008. The Tribunal therefore held that the appellants were entitled to utilise the 80% balance credit after 1.4.2008; however, such utilisation amounted to delayed payment of the service tax originally due for 2007-08 and attracted interest under Section 75. Further, because the appellants were established registrants and the non-payment could not be treated lightly, penalty under Section 76 was upheld in respect of the delayed payment, while other penalties were set aside. [Paras 4, 5]

The appellants may utilise the unutilised 80% CENVAT credit after 1.4.2008; they must pay applicable interest on the tax attributable to June 2007-March 2008 from the due date until actual payment, and are liable to penalty under Section 76 for the delayed payment; other penalties are set aside.

Final Conclusion: Appeal allowed in part: service tax demand on software maintenance for 9.7.2004 to November 2005 set aside; CENVAT credit of 80% availed before 1.4.2008 may be utilised subsequently but the appellants must pay interest on the delayed tax for June 2007-March 2008 and are liable to penalty under Section 76; other penalties are vacated.

Deemed Cenvat credit - goods in stock - transitional provisions for textiles under Rule 9-A of the Cenvat Credit Rules, 2002 - entitlement to avail credit only for goods lying in stock as on 31st day of March, 2003 upon written declaration - availability of document evidencing actual payment of duty - removal from factory to port on invoices disclosing buyer's name

Goods in stock - deemed Cenvat credit - removal from factory to port on invoices disclosing buyer's name - written declaration of stock as on 31st day of March, 2003 - availability of duty-paying documents - Whether goods stored in port area after removal from the factory on invoices disclosing buyers' names could be treated as "goods in stock" for claiming transitional Cenvat credit under Rule 9-A. - HELD THAT: - The facts are undisputed that the appellant removed the finished goods from the factory to port godowns on the basis of commercial invoices showing the buyers' names and the goods had been discounted from the factory stock accounts. Rule 9-A permits a manufacturer to avail credit only in respect of inputs or finished products "lying in stock or in process or contained in finished products lying in stock as on 31st day of March, 2003" upon making the prescribed written declaration and subject to the availability of documents evidencing duty payment. Where finished goods have been removed from the factory on invoices disclosing the purchasers and recorded as cleared from factory stock prior to 31st March, 2003, they are no longer shown as lying in the assessee's stock at the factory. The Adjudicating Authority and the Tribunal correctly concluded that such goods, though physically situated at port godowns, could not be treated as stock of the manufacturer for the purposes of claiming transitional credit under Rule 9-A, since the removal on buyer-disclosing invoices and the consequent discounting from stock accounts precluded their inclusion in the declaration of goods "lying in stock" on the specified date. [Paras 8, 9]

Goods removed to port on invoices disclosing buyers' names and discounted from factory stock are not "goods in stock" for claiming transitional Cenvat credit under Rule 9-A; the claim therefore fails.

Final Conclusion: The Tribunal's order upholding the exclusion of goods removed to port on buyer-disclosing invoices from "goods in stock" for the purpose of transitional Cenvat credit under Rule 9-A is affirmed; the appeals are dismissed.

Cenvat credit of Sugar Cess - refund of Cenvat credit - infructuous demand / pending adjudication - binding precedent and judicial discipline

Cenvat credit of Sugar Cess - refund of Cenvat credit - binding precedent and judicial discipline - Entitlement of the assessee to Cenvat credit and consequential refund in respect of Sugar Cess - HELD THAT: - The Tribunal held that the question whether Cenvat credit on Sugar Cess is admissible was conclusively answered in favour of the assessee by the decision of the Hon'ble Karnataka High Court in Renuka Sugar, which attained finality on dismissal of the Department's appeal by the Hon'ble Supreme Court. Applying that binding precedent and having regard to Board instructions on following judicial discipline, the Tribunal found that the Appellant was entitled to the refund of Cenvat credit of Sugar Cess and that similar decisions of this Bench in related matters supported allowance of the claim. The Tribunal distinguished departmental decisions concerning exemption of education cess where the legal issue was different and not germane to eligibility of Cenvat credit of Sugar Cess. [Paras 9, 10, 12]

Refund claim in respect of Cenvat credit on Sugar Cess allowed in favour of the assessee.

Infructuous demand / pending adjudication - refund of Cenvat credit - Effect of an earlier pending show-cause/demand notice on grant of refund for the same period and same issue - HELD THAT: - The Tribunal observed that the First Appellate Authority had rejected part of the refund on the ground that a demand notice for the period August 2014 to June 2015 was pending adjudication. The Tribunal held that where the subject-matter (eligibility of Cenvat credit on Sugar Cess) has been finally decided in favour of the assessee, the earlier demand notice relating to the same issue and period becomes infructuous and cannot be sustained. Consequently, the pendency of the earlier notice did not justify withholding of the refund for that period, and two concurrent demands/claims on the same issue and period cannot be maintained. [Paras 11, 12]

Part refund previously denied on account of a pending demand was to be allowed because the demand became infructuous; the appellate order modified accordingly.

Final Conclusion: The appeal by the assessee is allowed and the refund of Cenvat credit on Sugar Cess granted; the departmental appeal against the refund allowed by the First Appellate Authority is dismissed.

Principles of natural justice - right to be furnished material documents and particulars to enable effective reply - assessment order set aside for procedural unfairness - remand for fresh consideration with directions to furnish documents and afford opportunity of hearing - exercise of writ jurisdiction under Article 226 despite availability of alternate remedy where natural justice is violated

Principles of natural justice - right to be furnished material documents and particulars to enable effective reply - assessment order set aside for procedural unfairness - Whether the assessment orders dated 31.05.2016 are vitiated by non-furnishing of the list/details relied upon by the Assessing Officer and thereby violate the principles of natural justice. - HELD THAT: - The Court found that the Assessing Officer concluded there was a mismatch between purchases reported by the appellant and sales reported by vendors without furnishing the list or details on which that conclusion was based. Despite the appellant's specific requests for those particulars in reply to the pre-assessment notices, the required material was not supplied, preventing an effective response on both factual and legal points. This procedural failure amounted to a violation of the principles of natural justice. In view of this procedural unfairness the assessment orders could not stand. The Court set aside the impugned assessment orders and remanded the matter to the assessing officer for fresh consideration, directing that all copies of material documents be furnished to the appellant, adequate opportunity to submit reply/objection be afforded, and a fresh order be passed on merits and in accordance with law. [Paras 6, 7]

Assessment orders dated 31.05.2016 set aside for violation of natural justice; matter remanded for fresh consideration with directions to furnish material documents and afford opportunity to reply.

Exercise of writ jurisdiction under Article 226 despite availability of alternate remedy where natural justice is violated - remand for fresh consideration with directions to furnish documents and afford opportunity of hearing - Whether the Single Judge erred in refusing relief on the ground of existence of alternate remedy when the appellant complained of procedural unfairness. - HELD THAT: - The High Court held that where there is a demonstrable violation of principles of natural justice - here the Assessing Officer's failure to furnish the particulars relied upon - relegation to alternative statutory remedies may be an empty formality and cannot cure the procedural defect. The learned Single Judge's refusal to interfere on the sole ground that alternate remedies were available was therefore inappropriate. Given the admitted non-supply of required details and the consequent inability of the appellant to file an effective reply, the Court found it proper to exercise its writ jurisdiction and set aside the Single Judge's order, remitting the matter for fresh consideration with specific directions to furnish documents and afford opportunity to the appellant. [Paras 6, 7]

Order of the Single Judge refusing relief on account of alternate remedy set aside; writ relief granted to the extent of remanding the matter for fresh consideration with directions.

Final Conclusion: The impugned orders dated 31.05.2016 and the High Court order dated 19.07.2021 are set aside; the matter is remitted to the assessing officer to furnish all material documents, afford opportunity to the assessee to file objections and thereafter pass a fresh order on merits and in accordance with law within eight weeks.

Input tax credit - verification of supplier registration from official records - payment through bank as evidence of transaction - reliance on information received from Special Investigation Officer - appellate fact finding by the Tribunal - remand for verification by first appellate authority

Input tax credit - verification of supplier registration from official records - payment through bank as evidence of transaction - reliance on information received from Special Investigation Officer - appellate fact finding by the Tribunal - Whether the Commercial Tax Tribunal was legally justified in allowing input tax credit without verifying the nature of the transactions as questioned by the Assessing Authority and the first appellate authority. - HELD THAT: - The Assessing Authority had disbelieved the purchases on the basis of information from the Special Investigation Officer and treated them as purchases from unregistered dealers, rejecting the input tax credit claim. The first appellate authority remanded the matter instead of verifying that information. On second appeal the Tribunal examined the official departmental website and records and recorded findings of fact that the sellers were duly registered during the relevant period and that payments were made through bank accounts. Those factual findings were not disputed by the revisionist. The Tribunal, as the final fact finding forum, therefore lawfully allowed the input tax credit on the basis of verifiable registration status and bank transactions. In view of the Court's prior decisions on identical facts and the uncontested factual findings recorded by the Tribunal, there is no merit in interfering with the Tribunal's order.

Tribunal's factual finding that purchases were from registered dealers and payments made through bank upheld; allowance of input tax credit sustained and revisions dismissed.

Final Conclusion: The revisions are dismissed; the Tribunal's fact finding that the suppliers were registered and transactions evidenced by bank payments is affirmed and no question of law arises warranting interference.

Section 482 Cr.P.C. - Section 138 of the Negotiable Instruments Act - absconder declaration - trial court's erroneous reliance on administrative office order - stay of absconder order - undertaking to appear in trial - costs for delay and non-appearance - expedition of trial

Absconder declaration - trial court's erroneous reliance on administrative office order - stay of absconder order - Validity of the trial court order dated 12.04.2021 staying the order dated 06.10.2018 declaring respondent No.2 as an 'absconder', where the trial court relied on an administrative office order. - HELD THAT: - The High Court found that the trial court's reliance on Office Order No.256/RG/DHC/2021 (and its predecessor) to stay the earlier order declaring respondent No.2 an 'absconder' was erroneous. The office order directed that no adverse orders be passed on non-appearance of parties from the date of that office order onward; it could not retrospectively affect an absconder declaration dated 06.10.2018 which preceded the office orders. Further, the earlier orders declaring respondent No.2 as an 'absconder' had been upheld by this Court on 22.03.2021 and respondent No.2's prior petitions had been dismissed noting his conduct in delaying trial. In those circumstances the impugned stay was ex facie bad in law and in conflict with the order of this Court. [Paras 6, 7]

The impugned order was held to be ex facie bad in law and in the teeth of this Court's earlier order, though the High Court, in view of case-specific considerations, elected to dispose of the petition by imposing conditions rather than mechanically setting aside the order.

Undertaking to appear in trial - costs for delay and non-appearance - expedition of trial - Appropriate remedial directions to address respondent's non-appearance, delay and to secure progression of the trial. - HELD THAT: - Balancing the Court's inclination to set aside the impugned order against the need to avoid further delay, the High Court accepted a recorded undertaking by respondent No.2 to appear as and when the matter is fixed and imposed monetary costs as a consequence of his conduct. The undertaking was to be filed as an affidavit within one week. The respondent was directed to pay previously imposed costs and additional costs totaling the amount specified by the Court within ten days. The Trial Court was requested to expedite and preferably conclude the trial within one year from the next date, given the matter originates in 2016. [Paras 8, 9, 10]

Respondent No.2 directed to file a written undertaking to appear in the Trial Court, to pay costs (including earlier imposed costs) within the time stipulated, and the Trial Court requested to expedite and conclude the trial preferably within one year.

Final Conclusion: The High Court held that the Trial Court's stay of the absconder declaration was legally unsustainable as it rested on an administrative office order that could not operate retrospectively and was contrary to this Court's earlier refusal to set aside the absconder finding; however, the petition was disposed by directing respondent No.2 to file an affidavit undertaking to appear, to pay costs as ordered, and by urging expedition of the trial. The respondent is bound by the undertaking taken on record.