TaxTMI Updates e-Newsletter
Feb 29,2024

Maintainability of writ petitions where statutory appellate remedy exists - availability of alternative remedy before a statutory appellate forum - effect of repeal and savings clause on continuation of pending appeals - jurisdiction of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) to entertain appeals under transitional savings

Maintainability of writ petitions where statutory appellate remedy exists - availability of alternative remedy before a statutory appellate forum - Writ petition seeking to challenge an appellate order is not maintainable when an alternative statutory appeal remedy is available. - HELD THAT: - The Court declined to entertain the writ petition because the impugned order is appealable and an appeal lies under the statutory scheme. The petitioner's contention that the specialized Tribunal under the GST law was not functional was rejected as not ousting the availability of a statutory appellate forum. Given that an appellate remedy exists, the remedy by way of writ was held inappropriate and the petition was rejected while preserving the petitioner's right to pursue the statutory appeal. [Paras 4, 7]

Writ petition rejected on the ground that an alternative statutory appeal remedy is available; petitioner permitted to avail that remedy.

Effect of repeal and savings clause on continuation of pending appeals - jurisdiction of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) to entertain appeals under transitional savings - Under the savings provision, pending and subsequent appeals under the repealed or amended enactment continue and the next appellate forum is CESTAT, which is functional and may be approached. - HELD THAT: - Relying on the transitional savings provision, the Court accepted that proceedings and appeals instituted before or after the amendment are to continue as if the new Act had not come into force. Consequently, where the Commissioner has entertained an appeal under the relevant provision, the next appellate remedy lies under the same statutory provision to CESTAT. Because CESTAT is undisputedly functional and is entertaining such appeals, the petitioner is not left remediless and must pursue the appeal before CESTAT rather than seek writ relief. [Paras 6]

Appeal before CESTAT is the appropriate and available remedy under the savings clause; petitioner directed to pursue that remedy.

Final Conclusion: The writ petition is dismissed for want of maintainability because a statutory appeal remedy is available before CESTAT under the transitional savings; petitioner's right to file that appeal is preserved; no order as to costs.

Invocation of Section 74 for fraudulent availment of input tax credit - genuineness of transaction and admissibility of Input Tax Credit - opportunity of hearing before assessment - conditional remand and interim deposit for safeguarding revenue - service of notices via GST portal and notice adequacy

Invocation of Section 74 for fraudulent availment of input tax credit - genuineness of transaction and admissibility of Input Tax Credit - opportunity of hearing before assessment - conditional remand and interim deposit for safeguarding revenue - Validity of the assessment order which invoked Section 74 and reversed Input Tax Credit without affording the petitioner a hearing and without permitting the petitioner to establish the genuineness of the transactions. - HELD THAT: - The assessment order recorded that ITC was reversed primarily because the supplier was found to be non-existent and the assessing authority had reasons to believe that ITC was claimed fraudulently with intent to evade tax. The statute places on the registered person the obligation to establish genuineness of transactions by producing relevant documents (tax invoices, e-way bills, proof of payment, etc.). The record shows the petitioner was put on notice on the portal but was not heard prior to passing the assessment order. In these circumstances the order calls for interference to permit the petitioner an opportunity to place on record evidence establishing the genuineness of the ITC claimed. The Court observed that prima facie the ingredients of Section 74 appear to be satisfied, and, having regard to the revenue interest and the belated approach by the petitioner, directed a conditional course: the petitioner to remit 10% of the disputed tax demand within two weeks and thereafter be permitted to file a reply and be afforded a reasonable opportunity including personal hearing; the assessing officer to pass a fresh assessment within two months after being satisfied about receipt of the remittance and after hearing the petitioner. [Paras 5, 6, 7]

Impugned assessment order quashed and matter remanded for fresh consideration; petitioner to remit 10% of the disputed demand within two weeks, permitted to file a reply within two weeks of remittance, and the assessing officer to afford hearing and pass a fresh assessment within two months thereafter.

Final Conclusion: The assessment order dated 31.05.2023 is quashed and the matter is remanded for fresh assessment on the conditions and timetable stated by the Court; writ petition disposed of on those terms with no order as to costs.

Unreasoned order - requirement of reasoned order - principles of natural justice - quashing and remand for fresh consideration - opportunity of personal hearing - confirmation of tax, interest and penalty without reasons

Unreasoned order - confirmation of tax, interest and penalty without reasons - requirement of reasoned order - Impugned assessment order dated 31.12.2023 is unreasoned and liable to be quashed. - HELD THAT: - The court examined the assessment order and the findings on multiple issues (notably issues no.1, no.3, no.4 and no.5) and found that the assessing officer merely recorded that the dealer's reply dated 21.12.2023 was 'not acceptable' and thereupon confirmed the proposed levy of tax, interest and penalty. Those conclusions do not set out reasons for rejecting the reply nor explain why the proposed levy was sustained despite the reply. An order which records conclusions without articulating reasons for rejecting material submissions is an unreasoned order and interferes with the requirement that administrative action affecting rights be supported by reasons. In view of this absence of reasoning, the impugned order cannot stand and must be set aside. [Paras 5, 6]

Impugned assessment order dated 31.12.2023 quashed for being unreasoned.

Quashing and remand for fresh consideration - principles of natural justice - opportunity of personal hearing - Matter remanded for fresh consideration with directions to afford opportunity including personal hearing and to pass a fresh reasoned order within a time limit. - HELD THAT: - Having quashed the unreasoned order, the court remanded the matter to the assessing authority for reconsideration on merits. The respondent is directed to provide the petitioner a reasonable opportunity to be heard, expressly including a personal hearing, and to consider the petitioner's submissions afresh. The authority is required to pass a fresh, reasoned order after such consideration. The court specified a maximum period of two months from receipt of the copy of this order for issuance of the fresh order, thereby ensuring prompt compliance while preserving the authority's duty to apply the principles of natural justice and record reasons for its conclusions. [Paras 6]

Matter remitted for fresh consideration; respondent to provide reasonable opportunity including personal hearing and issue a fresh reasoned order within two months.

Final Conclusion: Writ petition allowed; impugned assessment order quashed and matter remanded for fresh consideration with directions to afford a reasonable opportunity including personal hearing and to pass a fresh reasoned order within two months.

Natural justice - opportunity of hearing - reasoned and speaking order - remand for fresh consideration - failure to consider statutory replies - admission of inadvertent error

Natural justice - failure to consider statutory replies - opportunity of hearing - Impugned order set aside for failure to consider the petitioner's written replies and for recording a perverse finding that no reply was filed, thereby violating principles of natural justice. - HELD THAT: - The Court noted that the order impugned was preceded by show-cause proceedings to which the petitioner had filed replies and produced acknowledgements on the online portal. Despite that, the impugned order recorded that no reply had been filed and made no discussion of the petitioner's submissions. The State conceded that an inadvertent error had crept into the proceedings. Observing that the rules of natural justice mandate that the authority must deal with objections and, if necessary, afford an opportunity of hearing before passing an adverse order, the Court found it appropriate to set aside the order and remit the matter. The remand requires respondent No.2 to afford the petitioner a hearing and to pass a fresh, reasoned and speaking order after considering the replies already filed and any further submissions permitted at the hearing.

Order dated 5.12.2023 set aside; matter remitted to respondent No.2 to pass a fresh reasoned and speaking order after affording due opportunity of hearing to the petitioner.

Final Conclusion: Writ petition disposed of by setting aside the challenged order for breach of natural justice and remitting the matter for fresh consideration after hearing; no directions were given on merits.

Time barred show cause notice - extension of time to issue show cause notice under Section 73(10) of the U.P. GST Act, 2020 - requirement of GST Council approval for issuance of notification - interim protection against final orders - joining/connection with lead writ petition for common adjudicatory determination

Time barred show cause notice - extension of time to issue show cause notice under Section 73(10) of the U.P. GST Act, 2020 - interim protection against final orders - Whether proceedings pursuant to the impugned show cause notice could be finally adjudicated in view of contentions of time bar and challenged extensions - HELD THAT: - The Court, having noted the challenge to the validity of prior notifications and the contention that the show cause notice dated 30.9.2023 (and the impugned notice dated 12.12.2023) are time barred due to absence of valid second extension, connected the matter with the lead writ raising the same legal questions. Pending consideration of those issues in the connected petition, the Court permitted the departmental proceedings to continue but restrained the respondents from passing any final order pursuant to the impugned notice except with the leave of the Court. The order therefore preserves the parties' rights to contest limitation and extension issues while preventing final adjudication in the meantime. [Paras 6, 8]

Proceedings pursuant to the impugned notice may continue but no final order shall be passed except with leave of the Court; time is granted to respondents to file counter and to petitioner to file rejoinder.

Requirement of GST Council approval for issuance of notification - joining/connection with lead writ petition for common adjudicatory determination - Validity and intra statutory applicability of the subsequent notification issued under the Central GST Act (and alleged absence of a parallel UP GST notification and GST Council approval) requiring consideration in conjunction with the lead petition - HELD THAT: - The Court recorded the petitioner's contention that the further impugned notification No.56 of 2023 dated 28.12.2023 was issued solely under the Central GST Act without prior approval of the GST Council and without a corresponding notification under the UP GST Act, and that these factual legal contentions require determination. Rather than deciding these contentions on the papers, the Court connected the petition with the lead writ (Writ Tax No.1256 of 2023) where identical issues are being examined, and directed further pleadings and affidavits to enable consideration of those questions in the connected proceedings. [Paras 3, 4, 5]

Matter is connected with the lead writ for common consideration; respondents given six weeks to file counter affidavit and petitioner two weeks thereafter to file rejoinder; the legal validity of the notification is left for adjudication in the connected proceedings.

Final Conclusion: The petition is ordered to be connected with the lead writ raising identical challenges; respondents permitted six weeks to file counter affidavits and the petitioner two weeks to reply; departmental proceedings arising from the impugned notice may continue but no final order shall be passed except with leave of the Court, and the substantive questions regarding extension of limitation and the validity/competence of the subsequent notification are to be considered in the connected proceedings.

Cancellation of GST registration and its effect on taxpayer's portal access - Reasonable opportunity of hearing and personal hearing before assessment - Quashing of assessment for non-participation in proceedings - Remand for fresh assessment with obligation to consider reply in Form DRC-01

Cancellation of GST registration and its effect on taxpayer's portal access - Quashing of assessment for non-participation in proceedings - Assessment order issued without participation of the petitioner and without providing a reasonable opportunity to be heard was liable to be quashed. - HELD THAT: - The order of cancellation of registration dated 23.11.2022, made on the petitioner's application of 10.10.2022, indicated that the petitioner would have limited reason to access the GST portal as a registered person. Although a final return was filed on 17.03.2023 after cancellation, the assessment order itself records that the petitioner did not participate in the proceedings leading to assessment. In view of the absence of participation and the likelihood that the petitioner would not be monitoring the portal post-cancellation, the assessment order and consequential notices were set aside. The court intervened for this limited reason and quashed the impugned assessment order and notices.

Impugned assessment order and consequential notices quashed for want of reasonable opportunity and non-participation.

Remand for fresh assessment with obligation to consider reply in Form DRC-01 - Reasonable opportunity of hearing and personal hearing before assessment - Matter remanded for fresh consideration with directions on procedure to be followed by the assessing officer and the petitioner. - HELD THAT: - The matter was remitted to the first respondent for re-consideration. The petitioner was directed to submit a reply to the show cause notice in Form DRC-01 within two weeks from receipt of this order. Upon receipt of the reply, the assessing officer must provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter pass a fresh assessment order within two months from receipt of the reply. The directions limit the remand to a fresh adjudication after affording opportunity of hearing.

Matter remanded; petitioner to file Form DRC-01 within two weeks; assessing officer to provide reasonable opportunity including personal hearing and to pass fresh assessment within two months.

Final Conclusion: The High Court quashed the assessment order and consequential notices for failure to afford a reasonable opportunity and remanded the matter for fresh consideration, directing the petitioner to file a reply in Form DRC-01 and the assessing officer to afford a personal hearing and pass a fresh order within stipulated timeframes.

Reverse charge mechanism - seigniorage - imposition of GST - adjudication on merits after affording reasonable opportunity of being heard - orders of adjudication to be kept in abeyance pending the Nine Judge Constitution Bench decision on the nature of royalty - no recovery of GST until the Nine Judge Constitution Bench decides

Reverse charge mechanism - seigniorage - imposition of GST - Disposition of the writ petition challenging issuance of summons under Section 70 of the Tamil Nadu Goods and Services Tax Act, 2017 relating to levy of GST on seigniorage under reverse charge. - HELD THAT: - The High Court disposed of the petition by adopting the directions issued by the Division Bench in A. Venkatachalam v. Assistant Commissioner, specifically paragraph 9 of that decision. The petitioner's challenge to the summons is therefore disposed of on the same terms: the petitioner is to submit objections/representations within the specified time; the statutory authority is to adjudicate the objections on merits and in accordance with law after affording a reasonable opportunity of hearing; and all contentions of the petitioner are left open to be raised in appropriate proceedings following the outcome of the Nine Judge Constitution Bench decision on the nature of royalty. [Paras 3]

Writ petition disposed of in terms of the directions contained in paragraph 9 of A. Venkatachalam, with liberty to raise all contentions after the Nine Judge Constitution Bench decision.

Adjudication on merits after affording reasonable opportunity of being heard - orders of adjudication to be kept in abeyance pending the Nine Judge Constitution Bench decision on the nature of royalty - no recovery of GST until the Nine Judge Constitution Bench decides - Interim regime to be followed by tax authorities in respect of GST demands on royalty/seigniorage pending the authoritative constitutional determination. - HELD THAT: - Pursuant to the adopted directions, authorities receiving objections must proceed to adjudicate on merits but keep any orders of adjudication in abeyance until the Nine Judge Constitution Bench decides the nature of royalty. Meanwhile, there shall be no recovery of GST on royalty/seigniorage until that decision is rendered. Challenges to the impugned notification and circular may be acted upon after the outcome of the Nine Judge Constitution Bench. The Court left open all substantive contentions for appropriate forums post the authoritative decision. [Paras 3]

Authorities to adjudicate objections on merits but keep adjudication orders in abeyance and refrain from recovering GST on royalty/seigniorage until the Nine Judge Constitution Bench delivers its decision; petitioners retain right to pursue remedies thereafter.

Final Conclusion: Writ petition disposed of by applying the directions in paragraph 9 of A. Venkatachalam v. Assistant Commissioner: petitioner to submit objections; authority to adjudicate on merits with hearing but keep orders in abeyance; no recovery of GST on royalty/seigniorage until the Nine Judge Constitution Bench decides; all contentions left open for appropriate proceedings thereafter.

Levy of GST on supplies by Duty Free Shops: distinction between export of goods and taxable services - Input Tax Credit entitlement and refund procedure for GST paid on input services - Obligation under concession agreement to pay taxes over and above concession fee - Reimbursement by concessionaire of GST deposited by service provider and consequential claim for refund/ITC

Levy of GST on supplies by Duty Free Shops: distinction between export of goods and taxable services - Input Tax Credit entitlement and refund procedure for GST paid on input services - Whether GST is leviable on sales by Duty Free Shops and on services provided by the Airport Authority, and the entitlement to ITC/refund. - HELD THAT: - The Court accepted the established position, as reflected in recent precedent, that supply of goods by Duty Free Shops to departing/arriving passengers falls outside the domestic indirect tax frontier and is not taxable as a domestic supply of goods; such supplies are treated as export/zero-rated for the purposes discussed. However, the petitioner is liable to pay GST on services availed from the Airport Authority. Although the petitioner is entitled to claim Input Tax Credit on GST paid for input services and may seek refund of accumulated ITC, that entitlement does not absolve the petitioner from the immediate liability to discharge tax on services. The Court therefore followed the line of authorities holding that the concessionaire should pay GST on input services, take ITC, and then pursue refund/adjustment by the statutory procedure. [Paras 14, 18, 19, 21, 22]

No GST on the supply of goods by DFSs; GST is payable on services provided by the Airport Authority and the petitioner may claim ITC and refund in accordance with law.

Obligation under concession agreement to pay taxes over and above concession fee - Reimbursement by concessionaire of GST deposited by service provider - Whether the concession agreement obliges the petitioner to bear and pay GST on services and consequently reimburse the Airport Authority for GST deposited on the petitioner's behalf. - HELD THAT: - The Court examined the concession agreement clauses which expressly stated that concession fee is exclusive of taxes and that payment of taxes relating to concession fee, location usage and operation of duty free outlets shall be the obligation of the concessionaire. In view of those contractual terms and the legal position on liability for GST on services, the Court held that the petitioner is contractually bound to pay GST on services provided by the respondents. This contractual obligation reinforces the legal conclusion that the petitioner must reimburse the respondents for GST amounts deposited by them on the petitioner's account. [Paras 23, 24, 25]

The concession agreement binds the petitioner to pay GST on services; the petitioner must reimburse respondents No.3 and 4 for GST deposited on its behalf.

Reimbursement by concessionaire of GST deposited by service provider - Interest on withheld GST and timeframe for refund/ITC claim processing - Whether the petitioner must reimburse the specific GST sums deposited by respondents No.3 and 4, the applicable interest, and the procedure/timeframe for claiming ITC/refund. - HELD THAT: - Applying the interim orders previously made and the legal and contractual conclusions, the Court directed the petitioner to reimburse the amount deposited by respondents No.3 and 4 within four weeks and prescribed interest for the period of deposit. The Court fixed the rate of interest at 8% per annum from the date of deposits made by respondents No.3 and 4 until full reimbursement. The Court also required the petitioner to make necessary applications, in accordance with law, for claiming ITC and/or refund of reimbursed amounts and directed respondents No.1, 5 and 6 to consider such applications within eight weeks of the order. [Paras 26]

Petitioner to reimburse respondents No.3 and 4 within four weeks with interest at 8% p.a.; petitioner to apply for ITC/refund and respondents No.1, 5 and 6 to decide such applications within eight weeks.

Final Conclusion: The writ petition and connected applications are disposed of by directing the petitioner to reimburse the GST amounts deposited by respondents No.3 and 4 within four weeks with interest at 8% per annum; the petitioner may claim ITC and/or refund by following statutory procedure and respondents No.1, 5 and 6 are directed to consider such claims within eight weeks.

Rejection of books of account under section 145(3) - Addition as unexplained cash under section 69A - Retraction of statement recorded during survey and evidentiary value - Binding effect of Sales Tax/VAT assessment on income tax proceedings - Burden on Revenue to prove unexplained income; suspicion insufficient

Rejection of books of account under section 145(3) - Addition as unexplained cash under section 69A - Burden on Revenue to prove unexplained income; suspicion insufficient - Binding effect of Sales Tax/VAT assessment on income tax proceedings - Validity of addition of bank cash deposits as unexplained income and rejection of books of account - HELD THAT: - The Tribunal found that the assessee maintained audited books, recorded cash sales, and furnished invoices, cash book and other documentary records to show that the deposits during the demonetisation period were cash realizations from sales. The Sales Tax/VAT authorities had accepted the turnover and purchases, and the AO did not point to any specific defect in purchases, opening or closing stock or trading figures to justify rejection of books under section 145(3). The Tribunal applied the principle that mere non maintenance of a stock register or suspicion of abnormal sales cannot alone justify rejection of books or treating declared receipts as unexplained income; the Revenue must point to material inconsistencies rendering accounts incorrect or incomplete. On the materials, the Tribunal held there was direct nexus between sales and the bank deposits and that the AO/CIT(A) acted on conjecture rather than proof. Accordingly the addition made by treating the deposits as unexplained income was not sustainable. [Paras 12]

Addition treating the demonetisation period bank deposits as unexplained income and the rejection of books was set aside; the ground in ITA No. 353/Jodh/2023 is allowed.

Retraction of statement recorded during survey and evidentiary value - Binding effect of Sales Tax/VAT assessment on income tax proceedings - Burden on Revenue to prove unexplained income; suspicion insufficient - Sustainability of addition made on account of excess stock and undisclosed gross profit after survey and subsequent retraction - HELD THAT: - The Tribunal noted that the assessee filed a retraction of the statement recorded during the survey and produced approval memos, affidavits and reconciliation showing that certain goods were held on approval and thus not part of assessee's stock. Those documents were placed before the AO and appellate authorities and were not rejected by the revenue. On the basis of the reconciliations and supporting affidavits, the Tribunal concluded that the alleged excess stock and resulting estimated gross profit lacked support and that the addition made by the revenue could not be sustained. Consequently the impugned addition on account of undisclosed gross profit was quashed. [Paras 13]

Addition of Rs.94,27,696/- on account of undisclosed gross profit was quashed and ITA No. 354/Jodh/2023 is allowed.

Final Conclusion: Both appeals are allowed: the addition treating demonetisation period bank deposits as unexplained income and the rejection of books (ITA No. 353/Jodh/2023) is set aside; the addition on account of excess stock/undisclosed gross profit (ITA No. 354/Jodh/2023) is quashed.

Wilful failure to furnish return under Section 139(1) - statutory presumption as to culpable mental state under Section 278E - prosecution under Section 276CC - filing of return after notice under Section 148 not a defence to criminal liability under Section 276CC - pendency of assessment or appeal not a bar to prosecution

Wilful failure to furnish return under Section 139(1) - prosecution under Section 276CC - Quashing of prosecution under Section 276CC for non-filing of return for Assessment Year 2014-2015 - HELD THAT: - The Court found that the petitioner did not file the return under Section 139(1) within the prescribed time and only reacted after receipt of a notice under Section 148. The notice under Section 148 is for escaped income assessment and is distinct from the duty to file the original return within the time fixed by Section 139(1). Filing a return after issuance of notice under Section 148 or under the extended provisions does not negate the infraction of non-filing within the due time envisaged by Section 139(1). On the materials placed before it a prima facie case of wilful failure to furnish return was made out and the statutory presumption under Section 278E is attracted, a matter which the petitioner must rebut at trial. In these circumstances the Court declined to quash the prosecution at the threshold. [Paras 9, 10, 11, 17]

Petition to quash prosecution under Section 276CC dismissed; prima facie wilful failure established and matter left to trial.

Statutory presumption as to culpable mental state under Section 278E - Applicability and effect of Section 278E presumption in criminal prosecution for non-filing - HELD THAT: - The Court reiterated that Section 278E mandates a presumption of culpable mental state in prosecutions requiring such state, shifting the onus to the accused to prove absence of that state beyond reasonable doubt. Because of this statutory presumption, the exercise of the High Court's power under Section 482 of the CrPC is limited; the court should not reappreciate evidence to negativate wilfulness at the threshold. Determination of wilfulness is essentially factual and requires trial where the petitioner may rebut the presumption by evidence. [Paras 11, 15, 16]

Section 278E operates to create a presumption of culpable mental state which the petitioner must rebut at trial; threshold quashing is inappropriate.

Filing of return after notice under Section 148 not a defence to criminal liability under Section 276CC - pendency of assessment or appeal not a bar to prosecution - Whether pendency of assessment/appeal or filing return after issuance of Section 148 notice bars prosecution under Section 276CC - HELD THAT: - The Court held that pendency of assessment or an appeal against the assessment is not a ground to stay or quash criminal proceedings under Section 276CC; the statutory scheme does not provide for withholding prosecution until assessment proceedings conclude. Further, filing a return only after issuance of notice under Section 148 cannot be treated as curing the earlier failure to file 'in due time' as required by Section 139(1) and so does not negate criminal liability for wilful non-filing. The Court relied on binding principles that prosecution arises from the offence of non-filing within the time fixed and is unaffected by subsequent assessment processes. [Paras 5, 12, 13]

Pendency of assessment/appeal or belated filing post-Section 148 notice does not bar prosecution; such contentions are matters for the trial court.

Final Conclusion: Criminal Original Petition dismissed; prosecution under Section 276CC may continue, with direction to the trial court to complete proceedings in E.O.C.No.507 of 2017 within three months from receipt of the order; all factual and legal defences left open for trial.

Digital Evidence Investigation Manual - Section 119 instructions binding - Search and seizure procedural compliance - Rule 112(6)-(7) independent witnesses requirement - Principles of natural justice - right to personal hearing and cross-examination - Corroboration of digital evidence - Assessment cannot be based on mere guess or suspicion (Dhakeswari principle) - Scope of appellate powers and limitation of remedy before Commissioner (Appeals)

Principles of natural justice - right to personal hearing and cross-examination - Validity of the assessment orders in view of denial of personal hearing and opportunity to cross-examine witnesses - HELD THAT: - The Court found that show cause notices were followed by assessment orders passed within a short period without providing personal hearing or producing documents and witnesses relied upon by the Department. The judgments of higher courts establishing the right to peruse relied documents and to cross-examine witnesses were applied. The absence of opportunity for cross-examination and personal hearing amounted to a breach of natural justice and vitiated the assessments. [Paras 19, 20, 63, 71]

Assessment orders set aside for violation of principles of natural justice; Assessing Officer to provide documents, permit cross-examination, grant personal hearing and pass fresh orders.

Digital Evidence Investigation Manual - Section 119 instructions binding - Search and seizure procedural compliance - Whether the Digital Evidence Investigation Manual issued by CBDT is optional or mandatory for Income Tax Authorities - HELD THAT: - Considering the scope of Section 119 and precedents treating Board's circulars/instructions as relevant to administration of the Act, the Court held that the Manual issued by CBDT under Section 119 constitutes orders/instructions which Income Tax authorities and persons executing the Act are bound to observe. The Court rejected the Department's contention that the Manual is merely illustrative or optional, noting the Manual addresses procedural safeguards to maintain evidentiary integrity and avoid invalidation of evidence. [Paras 45, 46, 48, 49]

Digital Evidence Investigation Manual is mandatory for the Department to follow while collecting and preserving digital evidence.

Rule 112(6)-(7) independent witnesses requirement - Search and seizure procedural compliance - Compliance with Rule 112(6)-(7) as to presence of independent witnesses during search - HELD THAT: - The Court interpreted 'inhabitant of the same locality' in Rule 112(6)-(7) to mean persons residing in the vicinity of the premises searched. The practice of using an official from another government department as an 'independent' witness was held inconsistent with the Rule's legislative intent. On the facts, one of the two witnesses on 27.01.2022 was an officer of the GST Department and therefore not an independent local inhabitant; search proceedings thus failed the statutory witness requirement in that instance. [Paras 24, 41, 42, 43]

Search on 27.01.2022 was conducted without the requisite independent witness as mandated by Rule 112(6)-(7); procedural non-compliance established.

Corroboration of digital evidence - Assessment cannot be based on mere guess or suspicion (Dhakeswari principle) - Admissibility and adequacy of reliance on seized digital .txt files absent procedural compliance and corroboration - HELD THAT: - The Court noted extensive procedural lapses in imaging, hashing, chain of custody, cloning and documentation set out in the Manual. Many files were corrupted or misplaced. Applying the principle that assessments must be founded on more than bare suspicion, the Court held that where the Department has not complied with the Manual, digital data may be relied upon only if supported by corroborative material and proved in the manner known to law. Mechanical extrapolation from selective data (example given of treating a single day's sale as representative) was held to be speculative and inadequate. [Paras 54, 55, 56, 70]

Electronic data seized in violation of the Manual are suspect; such data can be relied upon only if corroborated by admissible supporting evidence proven in accordance with law.

Scope of appellate powers and limitation of remedy before Commissioner (Appeals) - Appropriate forum and remedy - maintainability of writ petitions despite existence of statutory appeal and whether remand to Assessing Officer is warranted - HELD THAT: - The Court examined exceptions to the rule of alternative remedy and applied precedent recognizing that writ jurisdiction is available where authorities act in total violation of statutory provisions or natural justice. The Court concluded that the defects in procedure, non production of relied documents and denial of cross examination fall within those exceptions. It further observed limits in the appellate authority's powers (Section 251(1)(a) and Rule 46A) which may not permit complete re adjudication, and in view of multiplicity of pending proceedings and the nature of procedural infirmities it was appropriate for the High Court to set aside the assessments and remit the matters for fresh consideration with detailed directions. [Paras 21, 22, 72, 75, 76]

Writ petitions declared maintainable as exception to alternative remedy; High Court set aside assessments and remitted matters for complete re adjudication with directions rather than relegating petitioner solely to appellate forum.

Search and seizure procedural compliance - Digital Evidence Investigation Manual - Relief and directions on remand for fresh adjudication - HELD THAT: - The Court set aside the four impugned assessment orders and remitted the matters to the concerned authority for re consideration. It directed the Department to supply all documents relied upon in the show cause notices, to allow 21 days (and further reasonable time if justified) for reply, to permit cross examination of witnesses relied upon to corroborate electronic data, to grant personal hearing before final order, and to follow the procedures of the Digital Evidence Investigation Manual for any further proceedings arising from the search/seizure. [Paras 71, 78]

Four assessment orders set aside; matters remitted for fresh consideration with specific procedural directions (supply documents, permit cross examination, personal hearing, follow Manual).

Final Conclusion: The High Court held the writ petitions maintainable, concluded that the CBDT's Digital Evidence Investigation Manual issued under Section 119 is binding on Income Tax authorities, found material procedural non compliance in search/seizure (including absence of an independent local witness and failures in imaging, hashing and chain of custody) and breach of natural justice (denial of documents, cross examination and personal hearing). The Court set aside the four impugned assessment orders and remitted the matters for fresh adjudication with directions to comply with the Manual, furnish relied documents, allow time to reply, permit cross examination of corroborative witnesses and afford personal hearing before passing fresh detailed orders.

Limitation for imposition of penalty under section 275 of the Act - Functus officio of Assessing Officer on passing penalty order - Penalty under section 271(1)(c) for furnishing inaccurate particulars and scope of penal liability where claim is bona fide

Limitation for imposition of penalty under section 275 of the Act - Validity of the penalty order dated 01/04/2022 under the limitation prescribed by section 275. - HELD THAT: - The Tribunal examined section 275 and its temporal limits and found that the statutory clock is governed by the expiry of the financial year in which penalty proceedings are completed or six months from the end of the month in which the Tribunal's order was received, whichever is later. The Tribunal noted that the Appellate Tribunal's order was on 24/03/2021 and the relevant limitation dates fell within the periods relied upon by the Revenue; there was evidence to justify action by the Assessing Officer in respect of the impugned order dated 01/04/2022. On this aspect the Tribunal held that Revenue had no case to challenge limitation. [Paras 7]

The order dated 01/04/2022 was not invalidated on limitation grounds.

Functus officio of Assessing Officer on passing penalty order - Whether the Assessing Officer became functus officio upon passing the earlier penalty order dated 13/08/2021, thereby disabling him from passing the subsequent penalty order dated 01/04/2022. - HELD THAT: - The Tribunal agreed with the assessee that once the Assessing Officer passed the first penalty order within the prescribed period, he became functus officio and lacked jurisdiction to pass a second penalty order thereafter. The fact that the first order was subsequently cancelled by the Commissioner of Income Tax (Appeals) does not revive jurisdiction in the Assessing Officer to pass a later second penalty order beyond the period prescribed under section 275(1). The Tribunal therefore concluded the second order was impermissible as he had no jurisdiction to pass it after having become functus officio. [Paras 8]

The second penalty order of 01/04/2022 is invalid because the Assessing Officer was functus officio after the first order.

Penalty under section 271(1)(c) for furnishing inaccurate particulars and scope of penal liability where claim is bona fide - Whether the penalty under section 271(1)(c) is sustainable on merits where the assessee made a claim in the return that was subsequently disallowed. - HELD THAT: - The Tribunal applied the settled principle that an assessee is not to be penalised simply for making a claim in the return which is later not accepted by the Revenue. Relying on the principle in Reliance Petroproducts (as cited in the judgment), the Tribunal emphasised that mere disallowance does not automatically attract penalty under section 271(1)(c); the twin requirements for levy of penalty must be satisfied, including a finding of concealment or furnishing of inaccurate particulars with culpable intention. The Tribunal observed that claims made during assessment deserve careful scrutiny and that penalty proceedings should not be a gag on bona fide or arguable claims. Viewing the matter on any angle, the Tribunal found the impugned penalty unsustainable in law and accepted the assessee's plea for deletion. [Paras 9, 10, 11]

The penalty under section 271(1)(c) cannot be sustained and is to be deleted.

Final Conclusion: The assessee's appeal is allowed; the impugned penalty order is unsustainable and is directed to be deleted.

Section 56(2)(x)(b) - addition where stamp duty value exceeds consideration - Reference to Valuation Officer under section 50C for stamp duty valuation - District Valuation Officer report as binding valuation for assessing officer - Admission of additional evidence and remand for independent valuation - Condonation of delay in filing appeal

Condonation of delay in filing appeal - Delay in filing of the appeal and admissibility of the appeal - HELD THAT: - Registry recorded a 14-day delay caused by late submission of physical copies though the electronic filing was timely. The Tribunal found no reason to refuse condonation when the appeal was electronically filed in time and accordingly held that there was no delay in filing the appeal; the appeal was admitted. [Paras 5, 7]

Delay condoned and appeal admitted

Admission of additional evidence and remand for independent valuation - Reference to Valuation Officer under section 50C for stamp duty valuation - Whether the CIT(A) improperly relied on the District Valuation Officer's (DVO) report without considering the assessee's registered valuer report and whether the assessee was denied opportunity to be heard - HELD THAT: - The assessee submitted a registered valuer's report as additional evidence before the CIT(A); the matter was referred to the DVO. The DVO issued notice, inspected the property with the assessee's representative, considered sale instances of nearby properties, provided a preliminary valuation and allowed the assessee to file objections which were considered. The Tribunal held that the DVO examined the registered valuer's report, rejected it for lack of basis and relied on independent sale instances; therefore the CIT(A) did not blindly accept the DVO's report nor deny natural justice to the assessee. [Paras 4, 8, 12, 14]

Admission of additional evidence and remand to DVO were proper; DVO's valuation was validly relied upon after opportunity to the assessee

Section 56(2)(x)(b) - addition where stamp duty value exceeds consideration - District Valuation Officer report as binding valuation for assessing officer - Anti-avoidance character of deemed income provision - Validity of the addition under section 56(2)(x)(b) based on the difference between DVO valuation and consideration, and whether revenue must prove on-money transaction before making the addition - HELD THAT: - Undisputed facts show consideration paid was less than the stamp duty valuation; where the stamp duty value as determined (after DVO reference under section 50C) exceeds the consideration, section 56(2)(x)(b) mandates charging the excess as income under 'Income from other sources'. The Tribunal noted there is no statutory requirement that the assessing officer or CIT(A) must prove an on money transaction before invoking section 56(2)(x)(b); the provision is an anti avoidance measure and the difference between DVO valuation and actual consideration was correctly added. Judicial precedents cited by the assessee pre date the introduction of section 56(2)(x) and were held inapplicable. [Paras 10, 11, 13, 16]

Addition under section 56(2)(x)(b) upheld as valid

Final Conclusion: The Tribunal admitted the appeal (delay condoned), found no infirmity in referring valuation to and relying on the DVO after allowing opportunity to the assessee, and upheld the addition under section 56(2)(x)(b) based on the DVO's valuation; the assessee's appeal is dismissed.

Revision under section 263 - Assessing Officer's view as a possible view - Allowance under section 36(1)(viia) for provision for bad and doubtful debts - Standard assets - Erroneous and prejudicial to the interest of the revenue

Revision under section 263 - Assessing Officer's view as a possible view - Erroneous and prejudicial to the interest of the revenue - Validity of invocation of revisionary jurisdiction by the Principal Commissioner under section 263 in respect of allowance of deduction claimed under section 36(1)(viia). - HELD THAT: - The Tribunal held that different benches of the ITAT have taken differing views on whether provision for standard assets is allowable under section 36(1)(viia), and that when two views are legally possible the Commissioner cannot invoke section 263 merely because he prefers a different view. Reliance was placed on the principle in CIT v. Amitabh Bachchan and subsequent High Court authority that revisional power under section 263 would amount to appellate power if exercised where the Assessing Officer has adopted a permissible view. Applying this principle to the facts, the Assessing Officer had examined the details and taken one of the possible views; therefore the assessment could not be characterised as erroneous and prejudicial to the revenue so as to justify revision under section 263. [Paras 6, 7]

Order under section 263 is bad in law; appeal allowed and revision order quashed.

Final Conclusion: The Tribunal allowed the appeal, quashed the order passed under section 263 as the Assessing Officer had taken a permissible view on the allowance under section 36(1)(viia) and therefore the assessment was not shown to be erroneous and prejudicial to the revenue.

Transfer pricing adjustments and determination of arm's length price - benchmarking of corporate guarantee fees - quasi-capital characterisation of optionally convertible loans - reimbursement of expenses on cost-to-cost basis - capital versus revenue nature of product registration, trademark and patent expenses - weighted deduction under section 35(2AB) - disallowance under section 14A and its impact on book profits under section 115JB

Benchmarking of corporate guarantee fees - transfer pricing adjustments and determination of arm's length price - ALP of corporate guarantee fees charged by the assessee at 1% is at arm's length and TPO/DRP adjustment adopting 1.5% is to be deleted. - HELD THAT: - The Tribunal examined the TPO/AO's adoption of 2.52% (and DRP's direction of 1.5%) against the assessee's consistent historic practice of charging 1% and a line of ITAT decisions in the assessee's own case. The ITAT's earlier findings in preceding assessment years (including A.Y. 2012-13, 2013-14 and 2014-15) held that the methodology adopted by the TPO (relying on bank guarantee rates and coupon spreads) was inappropriate and that 1% was a reasonable guarantee commission in the identical factual matrix. The Revenue did not produce any distinguishing facts or legal grounds to depart from those prior decisions. Applying the principle of consistency as followed by the Tribunal in the assessee's own precedents, the impugned upward adjustment is unsustainable and deleted. [Paras 11]

Ground 1(a) allowed; adjustment of Rs. 11,01,99,257/- deleted and ALP of 1% upheld.

Quasi-capital characterisation of optionally convertible loans - transfer pricing adjustments and determination of arm's length price - No TP adjustment is warranted on optionally convertible loans treated as quasi-capital; interest need not be imputed in the impugned year. - HELD THAT: - The TPO benchmarked interest on OCLs following prior assessment years and the DRP confirmed the adjustment. The Tribunal relied on its consistent earlier findings in the assessee's own case that OCLs were quasi-capital-where the true consideration is the opportunity to acquire equity on favourable terms-and that commercial interest becomes payable only when the conversion option expires. As there were no distinguishing facts shown by the Revenue, the Tribunal followed its earlier conclusions that no imputation of interest (for the impugned year) is warranted and the adjustment must be deleted. [Paras 17]

Ground 1(b) allowed; adjustment of Rs. 13,54,90,598/- deleted.

Reimbursement of expenses on cost-to-cost basis - transfer pricing adjustments and determination of arm's length price - Reimbursements made to AEs (Zydus Mexico, Zydus France, Zydus Japan) on cost-to-cost basis are at arm's length and ALP adjustments are to be deleted. - HELD THAT: - The TPO/DRP had held that the assessee's FAR contradicted its reimbursement claims and, treating the assessee as a contract manufacturer, set ALP at nil. The Tribunal reviewed documentary evidence (supply/distribution agreements, TP study and supporting invoices) showing the assessee acted as entrepreneur/IP owner in the relevant transactions and that reimbursements related to the assessee's business interests abroad. Prior ITAT decisions in the assessee's own case accepted similar reimbursements as at arm's length and rejected TPO's resort to disallowance akin to section 37 reasoning. No material distinction was shown by Revenue; accordingly the ALP adjustments were deleted. [Paras 22]

Ground 1(c) allowed; adjustment of Rs. 2,94,40,667/- deleted.

Capital versus revenue nature of product registration, trademark and patent expenses - Product registration expenses, project registration support expenses, trademark registration fees and patent fees are not to be treated as capital for the impugned year; AO's additions are disallowed. - HELD THAT: - The assessee challenged the AO's treatment which followed positions taken in earlier years. The Revenue conceded these issues had been decided in favour of the assessee in prior ITAT and Gujarat High Court orders up to the immediately preceding years. Absent any distinguishing facts or legal points, the Tribunal declined to disturb the assessee's established position and refused to confirm the AO's capitalisation findings. [Paras 27]

Grounds 3 and 4 allowed; the additions treating those expenses as capital are deleted.

Weighted deduction under section 35(2AB) - Expenditure on clinical trials and bio-equivalence studies (including activities outside the assessee's R&D facility) and in-house R&D expenditures not approved by DSIR qualify for the weighted deduction as previously accepted in the assessee's case; AO's disallowances are to be deleted. - HELD THAT: - The Tribunal observed that identical issues had been decided in favour of the assessee in preceding assessment years and by the Gujarat High Court (no substantial question of law). The Revenue conceded that these issues were decided for prior years and adduced no distinguishing facts or law. Applying the consistent precedent in the assessee's own case, the Tribunal directed deletion of the additions under section 35(2AB). [Paras 31]

Grounds 5 and 6 allowed; additions under section 35(2AB) deleted.

Disallowance under section 14A and its impact on book profits under section 115JB - Addition of disallowance under section 14A to book profits under section 115JB is not warranted; the addition is deleted. - HELD THAT: - Ground 7 (computation under normal provisions) was not pressed and dismissed as not pressed. For book-profit treatment (ground 8), the Tribunal followed the Special Bench decision in ACIT v. Vireet Investment P. Ltd. and the ITAT's decision in the assessee's immediately preceding year which deleted identical adjustments. Revenue accepted the prior rulings but relied on AO orders; no reason was shown to depart from the Special Bench ratio or the assessee's prior favourable decision. Consequently, the addition to book profits under section 115JB was directed to be deleted. [Paras 35, 37]

Ground 7 dismissed as not pressed; Ground 8 allowed and addition of Rs. 10,98,60,824/- to book profits deleted.

Final Conclusion: The Tribunal, following consistent decisions in the assessee's own cases in preceding years and in the absence of any distinguishing facts or legal grounds urged by Revenue, allowed the appeal in part: deletions directed in respect of (a) corporate guarantee fee adjustment (ALP 1% upheld), (b) interest imputation on optionally convertible loans, (c) reimbursements to AEs on cost-to-cost basis, (d) contested capitalisation of product registration/trademark/patent expenses, (e) weighted deduction claims under section 35(2AB), and (f) addition of section 14A disallowance to book profits under section 115JB; one ground was dismissed as not pressed and the appeal was otherwise partly allowed.

Deemed dividend under section 2(22)(e) of the Income tax Act - shareholder being a person who is the beneficial owner of shares - construed as registered and beneficial shareholder - relevant date for determining shareholding - date of advancing the loan - taxability of deemed dividend in the hands of the registered shareholder and not in the hands of the recipient concern

Deemed dividend under section 2(22)(e) of the Income tax Act - Whether the loans advanced by M/s. IG3 Infra Limited to the assessee companies qualify as deemed dividend under section 2(22)(e) in the hands of the assessee companies. - HELD THAT: - The Tribunal examined the three limbs of section 2(22)(e) and the factual matrix. It found as an undisputed fact that neither the assessee companies nor their shareholders were registered (and beneficial) shareholders of M/s. IG3 Infra Limited on the dates when the loans were advanced. Applying the statutory tests, and the requirement that the recipient or the person on whose behalf the payment is made must satisfy the criteria in the provision, the Tribunal held that the mandatory conditions for attracting section 2(22)(e) were not satisfied in these cases. Accordingly, the addition treating the amounts as deemed dividend in the hands of the assessee companies was not sustainable.

Addition under section 2(22)(e) in the hands of the assessee companies deleted.

Shareholder being a person who is the beneficial owner of shares - construed as registered and beneficial shareholder - What is the correct construction of the phrase 'shareholder, being a person who is the beneficial owner of shares' in section 2(22)(e). - HELD THAT: - The Tribunal followed the binding precedents of the Delhi High Court in CIT v. Ankitech and the Supreme Court in CIT v. Madhur Housing, holding that the expression requires the shareholder to be both a registered holder and the beneficial owner. The Tribunal noted the contrary view in National Travel Services was not a binding departure because that matter was ultimately withdrawn under a settlement, and therefore the Ankitech/Madhur ratio remains binding. Consequently, invocation of either the second or third limb of section 2(22)(e) requires the relevant person to be a registered as well as beneficial shareholder meeting the prescribed voting power thresholds.

Phrase construed to mean a person who is both a registered and beneficial shareholder.

Relevant date for determining shareholding - date of advancing the loan - Which date is to be taken for determining the shareholding for applicability of section 2(22)(e). - HELD THAT: - Relying on authority including CIT v. H.K. Mittal and subsequent tribunal decisions, the Tribunal held that the relevant date for ascertaining whether the conditions of section 2(22)(e) are satisfied is the date on which the loan/advance was actually given. Share transfers effected immediately prior to the loan are immaterial unless they result in the requisite registered and beneficial shareholding on the date of the advance.

Shareholding to be determined as on the date of advancement of the loan.

Taxability of deemed dividend in the hands of the registered shareholder and not in the hands of the recipient concern - If a loan/advance qualifies as deemed dividend under section 2(22)(e), whether it is taxable in the hands of the recipient concern or in the hands of the shareholder for whose benefit it was given. - HELD THAT: - The Tribunal reviewed consistent high court and tribunal authority (Bombay, Rajasthan, Delhi, Madras High Courts and jurisdictional tribunal precedents) and held that the legal fiction in section 2(22)(e) enlarges the definition of 'dividend' but does not convert the non shareholder recipient into the taxpayer. Deemed dividend, if attracted, is to be assessed in the hands of the shareholder on whose behalf or for whose benefit the payment was made (i.e., the registered shareholder fulfilling the statutory criteria), not in the hands of the concern which merely received the loan.

Deemed dividend, if any, is taxable in the hands of the registered shareholder and not in the hands of the recipient company.

Final Conclusion: All Revenue appeals dismissed; the additions treating the loans as deemed dividend under section 2(22)(e) in the hands of the assessee companies for AY 2021-22 are deleted, since the statutory conditions (including required registered and beneficial shareholding on the date of advance) were not satisfied and, in any event, deemed dividend is assessable in the hands of the qualifying registered shareholder, not the recipient concern.

Constitutional challenge to statutory provision - pre-deposit requirement under Section 129-E of the Customs Act, 1962 - liberty to withdraw writ petition and prosecute statutory appeal - limitation/condonation of delay in filing appellate remedy

Constitutional challenge to statutory provision - pre-deposit requirement under Section 129-E of the Customs Act, 1962 - liberty to withdraw writ petition and prosecute statutory appeal - limitation/condonation of delay in filing appellate remedy - Petitioners permitted to withdraw writ petitions and granted liberty to file an appeal under Section 129-E of the Customs Act, 1962 despite the delay; CESTAT directed not to raise limitation if appeal is filed within one month. - HELD THAT: - The Court observed that the petitioners had challenged the constitutional validity of the pre-deposit requirement in Section 129-E of the Customs Act, 1962 by filing writ petitions before the High Court without first preferring the statutory appeal before CESTAT, thereby mounting a constitutional challenge in the absence of pursuit of the available appellate remedy. In view of that procedural posture and the petitioners' prayer to withdraw the writ petitions, the Court allowed withdrawal of the writ petitions and, by way of relief, reserved liberty to the petitioners to file an appeal under Section 129-E within one month. The Court directed that if the appeal is filed within that period, the Customs Excise and Service Tax Appellate Tribunal (CESTAT) shall not raise the question of limitation/condonation of delay. The decision preserves the petitioners' right to have the impugned order reviewed on merits by the statutory appellate forum while clarifying that the challenge to the provision had been advanced without first availing the prescribed appellate remedy. [Paras 2, 5, 6, 7]

Writ petitions may be withdrawn; petitioners granted one month's liberty to file an appeal under Section 129-E of the Customs Act, 1962 and CESTAT shall not raise limitation if appeal is filed within that period; Special Leave Petitions disposed of accordingly.

Final Conclusion: The Special Leave Petitions are disposed of by permitting withdrawal of the writ petitions and granting the petitioners one month's liberty to file the statutory appeal under Section 129-E of the Customs Act, 1962; if filed within one month, CESTAT shall not raise limitation.

Reasonable opportunity of hearing - penalty ceiling under Section 117 of the Customs Act, 1962 - remand for fresh consideration after providing personal hearing

Reasonable opportunity of hearing - Impugned order denied the petitioner a reasonable opportunity of hearing and was therefore invalid insofar as it affected the petitioner. - HELD THAT: - The petitioner produced communications dated 21.12.2023 and 01.01.2024 requesting adjournment and a hearing date other than 05.01.2024. The Court found that, despite these communications and a request for a post noon hearing or any date except 05.01.2024, the order was passed on 05.01.2024 without providing the petitioner a reasonable opportunity, including a personal hearing. The failure to afford a reasonable opportunity of hearing vitiated the proceedings against the petitioner and requires re examination after affording such opportunity. [Paras 5, 6]

Impugned order quashed insofar as it affects the petitioner and matter remanded for reconsideration after providing a reasonable opportunity, including a personal hearing, within six weeks of receipt of the order.

Penalty ceiling under Section 117 of the Customs Act, 1962 - Whether the penalty imposed exceeded the maximum permissible amount under Section 117 of the Customs Act, 1962. - HELD THAT: - On examination of Section 117, the Court noted that the statutory ceiling for penalty under that provision is Rs.4,00,000/-. The impugned order imposed a penalty of Rs.5,00,000/- stated to be under Section 117, which the Court held to be contrary to the statutory ceiling and therefore unsustainable. Consequently, the portion of the order imposing the excess penalty was quashed and the matter remitted for fresh consideration in light of the correct statutory limit. [Paras 5, 6]

Penalty of Rs.5,00,000/- imposed under Section 117 quashed as exceeding the statutory ceiling; matter remanded for fresh adjudication.

Final Conclusion: Writ petition allowed insofar as the impugned order imposed an excess penalty and was made without affording a reasonable opportunity; that portion is quashed and the matter is remitted for fresh consideration after affording a personal hearing, with a fresh order to be passed within six weeks.

Amendment of shipping bill / conversion of scheme code - inadvertent error - personal hearing - reasoned order - consideration of precedents - granting benefit if statutory compliances met

Amendment of shipping bill / conversion of scheme code - inadvertent error - personal hearing - reasoned order - consideration of precedents - granting benefit if statutory compliances met - Application of the Petitioner for amendment of the scheme code in two shipping bills was not finally adjudicated by the Court but was remitted to the Commissioner of Customs, NS-II for fresh decision after hearing. - HELD THAT: - The Court noted that a personal hearing before the Commissioner of Customs NS-II had been conducted on 29th March 2023 and recorded the Petitioner's plea that the wrong scheme code was entered inadvertently by its staff. Rather than decide the merits, the Court directed that all contentions raised in the writ petition be urged before the Commissioner who must consider the matter afresh. The Commissioner is to apply relevant legal principles and precedents relied upon by the Petitioner, examine whether the error was inadvertent and whether statutory compliances have been met, and thereafter pass a reasoned order. The Court expressly left all merits-based contentions open for determination by the Commissioner and instructed that, if the Commissioner is satisfied as to inadvertence and compliance, the benefit may be granted to the Petitioner. [Paras 10, 12, 13, 14, 15]

Matter remitted to the Commissioner of Customs NS-II for fresh personal hearing and a reasoned decision within four weeks; petitioner to appear before the Commissioner on the specified date; writ petition disposed in these terms.

Final Conclusion: Writ petition disposed by remitting the petitioner's application for conversion of the shipping bills' scheme code to the Commissioner of Customs NS-II for fresh hearing and a reasoned decision within four weeks; merits left open and no costs.

Pre arrest relief under Article 226 - Exercise of writ jurisdiction sparingly in pre arrest matters - Powers of Customs officers to arrest under the Customs Act - Bailability of offences under the Customs Act - Summons issued under Section 108 of the Customs Act and interrogation

Pre arrest relief under Article 226 - Exercise of writ jurisdiction sparingly in pre arrest matters - Maintainability of a writ petition seeking protection from arrest where summons under Section 108 of the Customs Act have been issued. - HELD THAT: - The High Court accepted that a writ under Article 226 seeking pre arrest protection is maintainable but emphasised the settled principle that such extraordinary jurisdiction must be exercised sparingly. Reliance was placed on authorities recognising that courts should not routinely interfere with statutory powers of arrest; the court noted precedents which caution against grant of pre arrest relief except in appropriate cases and with careful application of established principles. Applying that standard to the facts, the court declined to exercise its discretionary jurisdiction to entertain the petitioner's request for directions restraining arrest at this stage.

Writ petition seeking pre arrest protection is maintainable but the court declined to exercise its jurisdiction and dismissed the petition.

Powers of Customs officers to arrest under the Customs Act - Summons issued under Section 108 of the Customs Act and interrogation - Bailability of offences under the Customs Act - Approach where a person summoned under Section 108 apprehends arrest and the appropriate course for authorities and courts. - HELD THAT: - The court noted the submissions that statutory powers of arrest under the Customs Act must be exercised on objective grounds and that offences under the Customs Act have been treated as bailable in earlier decisions. It observed the legal position that summons under Section 108 are for recording statements and that arrest powers cannot be lightly circumscribed by anticipatory relief; accordingly, the High Court declined to intervene pre emptively and directed that the respondent authorities proceed in accordance with law, implying that any exercise of arrest powers must conform to statutory and judicially recognised safeguards.

Court refused to grant interim protection and directed the authorities to proceed in accordance with law regarding investigation, summon compliance and any action based thereon.

Final Conclusion: The writ petition was dismissed: the High Court held that while pre arrest writs under Article 226 are maintainable, such jurisdiction should be exercised sparingly and, on the facts, declined to grant protection; the respondent authorities were directed to proceed in accordance with law.

Rectification under Section 149 of the Customs Act - form of application and substance over form - claimant's burden to produce documents existing at time of clearance - consideration of rectification application on merits

Rectification under Section 149 of the Customs Act - form of application and substance over form - The communication dated 26.12.2023 is to be treated as a rectification application under Section 149 of the Customs Act notwithstanding the absence of an express reference to Section 149 or use of the word 'rectification'. - HELD THAT: - The Court observed that the statute does not prescribe any particular format for a rectification application. The communication bore the subject 'amendment of bill of entry for inclusion of CETA notification for line items Nos.5 and 6', which sufficiently indicated a request for rectification of the Bill of Entry. Consequently, the proper officer ought not to reject the application solely because it did not expressly cite Section 149 or use the term 'rectification'; substance of the request governs its character.

The respondent is directed to treat the petitioner's application dated 26.12.2023 as an application for rectification under Section 149 and to consider it on merits.

Claimant's burden to produce documents existing at time of clearance - consideration of rectification application on merits - The petitioner must place on record and establish that all relevant documents relied upon for claiming exemption were in existence at the time of clearance of the goods for home consumption. - HELD THAT: - The Court emphasised that entitlement to an exemption under the Notification requires the claimant to produce and establish that the relevant documentation existed at the time of clearance. Accordingly, rectification cannot be granted without the production of such documents; the proper officer may examine the application only after the requisite documents are produced and their temporal applicability is established.

The petitioner is directed to produce all relevant documents; the respondent shall consider the rectification application on merits only after production and verification of those documents.

Consideration of rectification application on merits - Timelines for compliance and disposal of the rectification application were fixed by the Court. - HELD THAT: - In the exercise of supervisory jurisdiction the Court directed a procedural timetable to ensure prompt adjudication: the petitioner must produce all relevant documents within a specified period, and the respondent must thereafter decide the rectification application on merits within a further specified period. This order is a case-specific procedural direction to enable expeditious resolution.

The petitioner shall produce all relevant documents within two weeks of receipt of this order; the respondent shall dispose of the rectification application on merits within four weeks of such production.

Final Conclusion: Writ petition disposed by directing the respondent to treat and consider the 26.12.2023 communication as a rectification application under Section 149, subject to production by the petitioner of all relevant documents (to be produced within two weeks) and disposal by the respondent on merits within four weeks thereafter; no costs.

Bail in non-bailable offence under the Customs Act - Arrest and search under the Customs Act including sections 101, 102 and 104 - Admissibility of statements recorded by Customs/DRI officers as confessional - Compliance with seizure, sampling and valuation procedure by approved assayer - Proof of smuggling and absence of lawful import documents

Bail in non-bailable offence under the Customs Act - Bail application in respect of offence under Section 135(1)(b)(i)(A) of the Customs Act refused - HELD THAT: - The Court found that materials on record demonstrate recovery of foreign-origin gold from the applicant in quantities and value falling within Section 135(1)(b)(i)(A), which renders the offence non-bailable. Having considered the investigation papers, statements and valuation, the Court concluded that this is not a fit case for grant of bail at this stage and rejected the prayer for bail. [Paras 9, 13, 14]

Bail denied

Arrest and search under the Customs Act including sections 101, 102 and 104 - Lawfulness of arrest and search under the Customs Act upheld - HELD THAT: - The Court examined the recovery memo and materials and recorded that the provisions of sections 101 and 102 were complied with, notice was served on the applicant, written consent for search was given before a gazetted officer and the applicant was brought to DRI office for detailed search. The Court considered Section 104 and observed that Section 104(1) permits arrest for offences under Section 135, and having regard to the alleged facts and statutory scheme, the arrest and related procedural steps were held to be in accordance with the Act. [Paras 7, 8, 9]

Arrest and search were lawful under the Customs Act

Admissibility of statements recorded by Customs/DRI officers as confessional - Statements recorded by DRI officers treated as confessional and admissible - HELD THAT: - The Court noted reliance placed on precedents that statements made before Customs officers are not covered by Section 25 of the Evidence Act and observed that the applicant's statement was recorded by DRI and signed by him. The statements of the co-accused were similarly recorded and produced on record, supporting the prosecution case at the bail stage. [Paras 12]

Statements recorded by DRI treated as confessional and admissible for present consideration

Compliance with seizure, sampling and valuation procedure by approved assayer - Seizure, sampling and valuation procedures were complied with - HELD THAT: - The Court observed that sampling was carried out in accordance with law and there was no specific allegation of non-compliance in the sampling process. An approved local government assayer conducted quantification and valuation and the seizure memo was prepared as per provisions, which the Court found placed on record by the DRI. [Paras 7, 12]

Seizure, sampling and valuation procedures found to be compliant

Proof of smuggling and absence of lawful import documents - Materials indicate smuggling and absence of lawful documents for the recovered gold - HELD THAT: - The Court reviewed the investigative material indicating that the recovered gold was of foreign origin, that no valid documents were produced by the accused to justify possession, and that the source pointed to a common supplier. On these materials the Court held that the cited authorities relied upon by the applicant were not applicable to the facts of this case for the purpose of bail adjudication. [Paras 7, 10, 11]

Prosecution materials prima facie establish smuggling and lack of lawful documentation

Final Conclusion: On the materials produced by the DRI-including recovery, valuation, statements and compliance with seizure and sampling procedures-and having regard to the statutory provision rendering the alleged offence non-bailable, the High Court found no case for grant of bail and rejected the bail application.

Regular bail under Section 439 CrPC - exercise of judicial discretion in grant of bail - no recovery or discovery at accused's instance - reliance on co-accused statements - preliminary nature of observations at bail stage

Regular bail under Section 439 CrPC - no recovery or discovery at accused's instance - reliance on co-accused statements - exercise of judicial discretion in grant of bail - preliminary nature of observations at bail stage - Whether the applicant should be released on regular bail in connection with the DRI investigation into alleged smuggling of gold. - HELD THAT: - The Court found that the applicant, a Government employee arrested on 09.07.2023, is arraigned on the basis of statements of co-accused and that there is no recovery or discovery at the instance of the applicant. The investigation is stated to be over and the offences are triable by a Magistrate. While the Court noted prosecution contentions including alleged suspicious conduct, CCTV material and statements recorded under Section 108 of the Customs Act, it treated those matters as part of the prosecution case and observed that detailed appreciation of evidence is not appropriate at the bail stage. Having regard to the absence of direct recovery from the applicant, the nature of the allegations, and applicable precedents on the exercise of discretion in bail matters, the Court exercised its discretion in favour of the applicant and imposed conditions intended to prevent misuse of liberty and protect the course of investigation and trial. The Court also cautioned that its preliminary observations should not influence the trial Court's appraisal of evidence. [Paras 11, 12, 13, 14, 15]

Application allowed; applicant enlarged on regular bail on furnishing personal bond and surety with specified conditions, and with directions concerning passport surrender, reporting, residence notification and restrictions on travel.

Final Conclusion: Bail granted: the High Court allowed the Section 439 CrPC petition and ordered release of the applicant on regular bail subject to bond, surety and specific conditions, while leaving evidentiary appreciation to the trial Court.

New vehicle - benefit of exemption under Notification No.21/2002 - import licensing notes to Chapter 87 (definition and conditions of new vehicle) - proof of conformity/Type approval and Conformity of Production requirement under Central Motor Vehicle Rules - transaction value as assessable value - redetermination of assessable value under the Customs Valuation Rules

New vehicle - benefit of exemption under Notification No.21/2002 - import licensing notes to Chapter 87 (definition and conditions of new vehicle) - Entitlement to Notification No.21/2002 exemption on the ground that the imported vehicle was 'new'. - HELD THAT: - The Tribunal examined the evidence (first check report showing 121 km) and the import licensing notes to Chapter 87 which treat a vehicle as 'used' only if it had been registered for use abroad. The department produced no evidence that the UAE registration was for use rather than a technical/export formality. Precedents and a Ministry circular were applied to hold that mere registration abroad for compliance does not convert a vehicle into a used vehicle. Consequently the allegation that the car was not new was rejected and the benefit of the Notification was held to be available. [Paras 5, 6]

The vehicle is a new vehicle for the purposes of Notification No.21/2002 and the benefit of the exemption is available.

Transaction value as assessable value - redetermination of assessable value under the Customs Valuation Rules - Validity of the adjudicating authority's rejection of the declared transaction value and its re-determination of assessable value. - HELD THAT: - The Tribunal held that the adjudicating authority merely stated the declared value 'appears to be low' without recording reasons or evidence to displace the transaction value, as required by Section 14 principles and settled authorities. The use of Australian listed prices as a comparable was held to be inappropriate because values vary by destination and no contemporaneous higher-priced imports were shown. Absent specific findings impugning arm's length nature of the invoice, the transaction value could not be rejected and the enhancement was unsustainable. [Paras 7, 8]

The re-determination of value was unjustified; the declared transaction value should have been accepted.

Final Conclusion: The Commissioner (Appeals) order was affirmed: the vehicle was held to be new and eligible for exemption under Notification No.21/2002, and the adjudicating authority's enhancement of value was set aside. The departmental appeal is dismissed.

Accessory (in relation to machinery) - Note 2(b) to Chapter 90 - classification of parts and accessories with the principal machine - Entitlement to concessional Basic Customs Duty and exemption from CVD under the relevant notifications - Scope of Show Cause Notice and prohibition on adjudication beyond the notice

Accessory (in relation to machinery) - Note 2(b) to Chapter 90 - classification of parts and accessories with the principal machine - Entitlement to concessional Basic Customs Duty and exemption from CVD under the relevant notifications - Sonalleve MR HIFU KIT is an accessory to Magnetic Resonance Imaging (MRI) apparatus and is eligible for the exemptions claimed under Notification No.21/2002 (Sl. No. 357B(ii)) and Notification No.6/2006 (Sl. No. 59(i)). - HELD THAT: - The Tribunal accepted the appellant's classification of the imported goods under CTH 9018 13 00 (Magnetic Resonance Imaging apparatus) and applied Note 2(b) to Chapter 90: parts and accessories suitable for use solely or principally with a particular kind of apparatus are to be classified with that apparatus. It was held that the Sonalleve MR HIFU KIT cannot function without an MRI machine, performs a specialised therapeutic role when used in conjunction with the MRI (transforming diagnostic capability into therapeutic ablation), and therefore enhances the function of the MRI rather than constituting an independent standalone apparatus. The Tribunal relied on precedents treating equipment that augments the utility of an imaging system as accessories and observed that the department had not disputed the appellant's adopted classification; in these circumstances the denial of exemption on the ground that the goods were independent equipment was factually incorrect. Applying these principles, the Tribunal concluded that the goods qualify as accessories and are eligible for the claimed exemptions. [Paras 5]

The Sonalleve MR HIFU KIT is an accessory to MRI and eligible for benefit under Notification No.21/2002 (Sl. No.357B(ii)) and Notification No.6/2006 (Sl. No.59(i)).

Scope of Show Cause Notice and prohibition on adjudication beyond the notice - The adjudicating authority travelled beyond the allegations in the Show Cause Notice by denying exemption from CVD under Notification No.6/2006 when no such allegation was made in the notice; the confirmation of differential duty on that undisclosed ground cannot be sustained. - HELD THAT: - The Show Cause Notice issued to the appellant specifically alleged wrong availment of benefit under Notification No.21/2002 at Sl. No.357B(ii) with respect to Basic Customs Duty; it did not allege wrong availment of exemption from CVD under Notification No.6/2006. The Tribunal held that an adjudicating order cannot confirm a demand on grounds that were not the subject of the Show Cause Notice because that would deprive the noticee of a fair opportunity to meet the allegation. Applying settled principle that the scope of adjudication is confined to the matters pleaded in the notice, the Tribunal held that denial of the CVD exemption in the impugned order travelled beyond the scope of the SCN and therefore that aspect of the demand is unsustainable. [Paras 5]

The impugned order travelled beyond the Show Cause Notice in denying CVD exemption; the confirmation of differential duty on that ground cannot be sustained.

Final Conclusion: The impugned order is set aside and the appeal is allowed: the Sonalleve MR HIFU KIT is held to be an accessory to MRI apparatus entitled to the claimed exemptions, and the adjudication which denied CVD exemption beyond the scope of the Show Cause Notice is unsustainable; consequential relief follows.

Customs tariff classification - Zinc alloys - Chapter note interpretation

Customs tariff classification - Zinc alloys - Chapter note interpretation - Remelted zinc containing zinc below the threshold specified for zinc not alloyed was correctly classifiable as zinc alloys under CTH 7901 20 90 and not as zinc not alloyed under CTH 7901 12 00. - HELD THAT: - The Tribunal held that classification had to be determined with reference to the tariff entries and the sub-heading note to Chapter 79. On the appellant's own declaration in the bills of entry, the zinc content was 95.85% and 95.75%, which did not satisfy the requirement for zinc, not alloyed. It further held that the department was justified in relying on the test reports for ascertaining the proper classification and that, even apart from those reports, the appellant's own description of the goods did not meet the chapter-note requirement. The authorities were, therefore, right in reclassifying the goods as zinc alloys, and the authorities cited by the appellant were found inapplicable on facts. [Paras 4, 5]

The reclassification of the imported goods under CTH 7901 20 90 was sustained and the challenge to the differential duty demand failed.

Final Conclusion: The Tribunal upheld the classification of the imported remelted zinc as zinc alloys under CTH 7901 20 90 and found no infirmity in the reliance placed on the test reports. The impugned orders were affirmed and the appeals were dismissed.

Amendment of documents under Section 149 of the Customs Act - Conversion of shipping bills from Drawback to Drawback with ROSCTL - Validity of Board/CBEC Circular prescribing three month time limit for amendment - Proviso to Section 149 - amendment only on basis of documentary evidence in existence at time of export - Reasonable period for seeking amendment

Amendment of documents under Section 149 of the Customs Act - Validity of Board/CBEC Circular prescribing three month time limit for amendment - Whether the three month limitation contained in CBEC Circular No.36/2010 Cus. (para 3(a)) can be invoked to deny conversion/amendment of shipping bills when no time limit is prescribed under Section 149. - HELD THAT: - The Tribunal noted that Section 149 confers discretion on the proper officer to authorise amendment of documents presented at the custom house subject to the proviso that amendments after export are permitted only on the basis of documentary evidence existing at the time of export. Multiple precedents were considered which hold that a Board circular cannot curtail or override the statutory scheme under Section 149. The impugned circular's prescription of a three month limit has been held in earlier decisions to be without jurisdiction and contrary to Section 149, and therefore the Department cannot refuse conversion solely on the basis of that circular. The Tribunal observed that the question is no longer res integra and relied on judicial authorities (including High Court and Tribunal decisions) rejecting the time bar in the circular and upholding the primacy of Section 149. Applying these principles, the Tribunal held that rejection of the amendment application on the sole ground of the circular's three month prescription was not justified. [Paras 5, 7, 9, 10]

The three month time limit in the Board circular cannot be invoked to deny amendment where Section 149 prescribes no such limit; the circular is not a valid basis to refuse conversion.

Conversion of shipping bills from Drawback to Drawback with ROSCTL - Proviso to Section 149 - documentary evidence in existence at time of export - Reasonable period for seeking amendment - Whether, on the facts, the appellant was entitled to conversion of the shipping bills from Drawback to Drawback with ROSCTL despite the delay and despite initial filing before an incorrect office. - HELD THAT: - The Tribunal found the appellant's case that the clerical error by the customs broker was bona fide and that the error was discovered only when applying for license with DGFT. The appellant promptly submitted applications on learning of the error and followed directions received from the Centralised Export Assessment Cell; delays caused by mis filing with an incorrect office and by the pandemic were considered. The Tribunal also observed that the entitlement to the ROSCTL benefit was not in dispute and that the documentary evidence required by the proviso to Section 149 existed at the time of export. The delay was not found to be so excessive as to make examination impracticable or to justify denial on merits; conversion between the two schemes involved similar examination. Having regard to the facilitative and liberalised intent of the scheme, the Tribunal held that the conversion should be permitted. [Paras 6, 11, 12, 13]

On the facts, the appellant was entitled to conversion; the delay and initial filing before an incorrect authority did not disentitle the appellant where documentary evidence existed and entitlement was otherwise established.

Final Conclusion: The impugned order rejecting the application for conversion of the shipping bills is set aside; the appeal is allowed and the appellant is entitled to conversion from Drawback to Drawback with ROSCTL with consequential relief as per law.

Confiscation of goods - redemption fine - penalty under the Customs Act - bonafide importer - margin of profit consideration - demurrage and detention charges - leniency in quantum of penalty

Redemption fine - penalty under the Customs Act - bonafide importer - demurrage and detention charges - margin of profit consideration - leniency in quantum of penalty - Whether the redemption fine and penalty imposed in respect of confiscation of imported consignments should be reduced in view of the appellant's conduct, profit margin, and demurrage/detention losses. - HELD THAT: - The Tribunal found that the consignments were ordered during the currency of the licence and that the delayed shipments were close to the licence's expiry. The appellant had voluntarily informed authorities about the lapse and had not suppressed material facts, which indicated bonafide conduct. The Tribunal also accepted that heavy demurrage and detention charges substantially reduced the appellant's profit margin. In light of these factual findings and taking into account precedent allowing reduction of redemption fine where market enquiries or profit calculations are not cogently made by authorities, the Tribunal exercised its discretion to afford leniency in the quantum of redemption fine and penalty. The Tribunal therefore modified the impugned orders by reducing the redemption fines and penalties to specified amounts for each appeal. [Paras 4, 5]

Redeemed fines and penalties reduced as specified; impugned orders modified and appeals partly allowed.

Final Conclusion: The Tribunal held that, on the facts, the appellant was a bonafide importer whose demurrage and detention losses wiped out profit margins and who had voluntarily disclosed the lapse; accordingly the redemption fine and penalty were reduced and the impugned orders were modified, appeals partly allowed.

Confiscation of goods - redemption fine - personal penalty under Section 112 - immunity granted by Settlement Commission under Section 127H(1) - undervaluation / fraud attracting confiscation under Section 111(m) - settlement by Settlement Commission and its bearing on enforcement action

Immunity granted by Settlement Commission under Section 127H(1) - confiscation of goods - redemption fine - personal penalty under Section 112 - Effect of the Settlement Commission's order (granting immunity under Section 127H(1)) on separate adjudication relating to confiscation, redemption fine and personal penalty and consequent relief to appellants - HELD THAT: - The Tribunal noted that the Settlement Commission had settled disputes arising from the show cause notice dated 14.11.2019 and granted immunity under Section 127H(1) in respect of that notice. It held that such immunity did not ipso facto extend to the separate show cause notice dated 04.10.2018 which had been adjudicated leading to findings of undervaluation and confiscation under Section 111(m). Nevertheless, having regard to the obligations discharged by the appellants under the Settlement Commission's order and the reliefs already accorded thereby, the Tribunal exercised its discretion to adopt a lenient view on the quantum of redemption fines and the personal penalty imposed. On that basis the Tribunal moderated the fines and penalty while upholding the underlying findings of confiscation and undervaluation as recorded by the adjudicating authority.

The Tribunal held that the Settlement Commission's immunity did not automatically cover the separate adjudication under the earlier show cause notice but, in view of the settlement and payments made, reduced the redemption fines and the personal penalty as a matter of leniency; appeals were partly allowed to that limited extent.

Final Conclusion: Appeals partly allowed; redemption fines reduced to Rs. 6,00,000/-, Rs. 10,00,000/- and Rs. 4,00,000/- respectively, and the personal penalty reduced to Rs. 5,00,000/-, while findings of undervaluation and confiscation were otherwise upheld.

Refund of Special Additional Duty (SAD) - interpretation of benefit-conferring notification - procedural restrictions in Board Circular subordinate to notification entitlement - single claim per Bill of Entry procedural guideline - one-year limitation for refund claims - priority to intent of notification over executive circular

Refund of Special Additional Duty (SAD) - single claim per Bill of Entry procedural guideline - procedural restrictions in Board Circular subordinate to notification entitlement - one-year limitation for refund claims - priority to intent of notification over executive circular - Entitlement to refund of 4% SAD where two refund claims were filed for the same Bills of Entry, in view of para 4.2 of CBEC Circular No.06/2008 and Notification No.102/2007-Cus. - HELD THAT: - The Tribunal examined the Department's denial predicated on para 4.2 of CBEC Circular No.06/2008, which prescribes that only a single claim against a particular Bill of Entry should ordinarily be permitted within one year and a single refund claim per importer per month. The appellants had paid SAD by two different modes (DEPB script and cash) and filed two refund applications; one earlier claim had been allowed and the second was also earlier granted by an Order in Original. The Tribunal held that the circular represents an executive procedural guideline and cannot be read so as to defeat the substantive benefit conferred by Notification No.102/2007-Cus. Where all substantive conditions of the notification are complied with (payment of SAD, sale in the domestic market and payment of VAT/sales tax, and documentary proof), a purely procedural infraction under the circular cannot be a ground to deny the refund. Reliance was placed on precedent holding that executive instructions are subordinate to the notification and that procedural convenience should not be construed to frustrate entitlement; the intent and purpose of the notification must prevail. Applying these principles to the facts - including the explanation for two claims arising from different modes of payment and prior administrative grants - the Tribunal concluded that denial on the basis of para 4.2 was not justified and that the appellant is entitled to the refund.

Denial of refund on the ground of filing two claims under para 4.2 of the Board Circular is unsustainable; the appellant is entitled to the refund under Notification No.102/2007-Cus.

Final Conclusion: Impugned order set aside and the appeal allowed: the appellant's refund claim under Notification No.102/2007-Cus is upheld.

Onus under Section 123 of the Customs Act - lawful acquisition / licit possession of seized goods - seizure under Section 110 and confiscation under Section 111 of the Customs Act - verification of invoices and documentary chain of custody - relevance of adverse inference from non-cooperation or abuse of process - failure of revenue to rebut documentary evidence

Onus under Section 123 of the Customs Act - lawful acquisition / licit possession of seized goods - verification of invoices and documentary chain of custody - failure of revenue to rebut documentary evidence - Whether the appellant discharged the burden cast under Section 123 of the Customs Act by proving licit acquisition/possession of the seized foreign marked gold and whether the confiscation and penalty could be sustained. - HELD THAT: - The Tribunal examined the documentary evidence tendered by the appellant, notably the invoices/delivery challans from Bherunath Bullion Corporation (BBC) and MMTC, and the follow up verifications carried out by the Department. The four bills produced earlier by the intercepted person (Visakha Bullion Corporation bills) were held unrelated to the seized UBS marked bars. The invoices from BBC/MMTC were sourced and copies verified by the Department; the apparent interpolation of the brand mark on a photocopy was explained by the appellant as for internal records and MMTC/BBC accepted the underlying transaction. The Department did not undertake further enquiries to rebut those documents, and its two primary grounds for discounting them (ease of generating computer invoices and manual inscription of the brand) were found insufficient. Adverse inferences drawn from the appellant's alleged non cooperation or abuse of process were held to be conjectural and unsupported; cross examination of witnesses did not produce facts to displace the documentary chain. Applying the relevant precedents cited, the Tribunal concluded that the appellant had satisfactorily discharged the statutory onus to show lawful possession and that the Revenue failed to demonstrate falsity of the evidence presented.

Appellant discharged the burden under Section 123; confiscation of the 20 foreign marked gold bars and imposition of penalty set aside; appeal allowed.

Final Conclusion: The appeal is allowed: the orders of confiscation and penalty are quashed and set aside, and consequential reliefs follow as per law.

Role and liability of non-executive director - In-charge and responsible for conduct of business - Requirement of specific averments when director is not cheque-signatory - Quashing of criminal complaint under Section 482 CrPC as abuse of process

Role and liability of non-executive director - Requirement of specific averments when director is not cheque-signatory - Quashing of criminal complaint under Section 482 CrPC as abuse of process - Maintainability of the complaint against the petitioner who was a non executive director and not a signatory to the dishonoured cheques, and whether process against him should be quashed under Section 482 CrPC. - HELD THAT: - The Court found on the record, undisputed by the respondent, that the petitioner was appointed as an Additional Director (Non Executive) of the accused company w.e.f. 16.03.2011 (paras 15-16). It reiterated the settled principle that a non executive director is ordinarily not involved in day to day management and, where such director is not the signatory of the dishonoured cheque and is not the Managing or Joint Managing Director, the complaint must contain specific averments showing that he was in charge of and responsible for the conduct of the company's business (para 17, citing Sunita Palita). The complaint only pleads generally that accused nos. 2-6, including the petitioner as a director, were responsible for day to day affairs, without any particularised material showing how the petitioner himself was in charge of the business (paras 18-19). In these circumstances, and in absence of any unimpeachable or incontrovertible material to the contrary, continuing proceedings against the petitioner would amount to an abuse of process; accordingly the complaint is not maintainable against him and is liable to be quashed (paras 19, 21). [Paras 17, 18, 19, 21, 23]

Complaint quashed insofar as it pertains to the petitioner; proceedings against him are an abuse of process and thus set aside.

Final Conclusion: The petition is allowed to the extent that Complaint Case No. 573/1/15 is quashed qua the petitioner, who was a non executive director not shown to be in charge of or responsible for the company's business and not a signatory to the cheques.

Resignation of Director under Section 168(2) - Obligation on Registrar of Companies to update statutory records on resignation - Effect of company non-compliance on efficacy of resignation

Resignation of Director under Section 168(2) - Obligation on Registrar of Companies to update statutory records on resignation - Effect of company non-compliance on efficacy of resignation - Petitioner ceased to be a director with effect from the date specified in his resignation and the Registrar of Companies was obliged to give effect to that resignation in its records despite the company's non-compliances. - HELD THAT: - The Court applied the statutory rule in Section 168(2) that resignation takes effect from the date on which the notice is received by the company or the date specified by the director, whichever is later. The petitioner's resignation dated 24 August 2021, specifying effect from 1 September 2021, was noted by the board and recorded by resolution; therefore, by operation of law the petitioner ceased to be a director from 1 September 2021. The Court held that, in the factual matrix - a company that never commenced business, pandemic-related circumstances, and inaction by the foreign co-director - the company's failure to complete other compliances did not justify retaining the petitioner's name on the Registrar's records. Consequently the Registrar of Companies was under an obligation to update the statutory records to reflect the resignation. The Court, while allowing the petition, left open the Registrar's power to initiate any lawful action against the company for other defaults. [Paras 14, 15, 16]

Petition allowed to the extent of directing that the resignation effective 1 September 2021 be given effect and the petitioner's name be removed from the Registrar's records; other compliances and actions against the company remain open to the Registrar.

Final Conclusion: The writ petition is allowed insofar as the petitioner's resignation (effective 1 September 2021) is held to have taken effect by law and the Registrar of Companies is directed to update the records accordingly; the Registrar remains free to take appropriate action against the company for its other defaults.

Challenge to auction after sale - process document vs regulations - regulatory override - time for payment applicable only upon confirmation of auction/successful bidder - non refundable EMD - remedy by challenge before Adjudicating Authority

Challenge to auction after sale - Whether a challenge to an e auction notice and sale can be entertained after the auction has been conducted and the property sold. - HELD THAT: - The Tribunal noted that the appellant, though declared a qualified bidder, did not participate in the auction and the Adjudicating Authority recorded that in the third round the relevant lot stood sold. Once the auction in respect of the lot is completed and sale has taken place, a belated challenge to the auction notice cannot be entertained in the appellate forum. The appellant's non participation in the auction disentitles him from seeking quashing of the auction notice after completion of the sale. [Paras 7, 8, 11]

Challenge to the auction notice was not entertainable after the auction and sale; the appeal on this ground fails.

Process document vs regulations - regulatory override - time for payment applicable only upon confirmation of auction/successful bidder - Whether a shorter payment period stated in the process document prevails over the longer period provided by the regulations, and when the obligation to pay arises. - HELD THAT: - The Tribunal applied the settled principle that where a clause in the process document conflicts with the regulations, the regulations prevail. Further, the obligation to make payment arises only after the auction is confirmed and a bidder is declared successful. The appellant did not allege that he was declared the successful bidder and required to pay within the shorter period; consequently, the purported conflict did not afford a ground to set aside the auction in the present circumstances. [Paras 9]

Regulations override conflicting process document clauses; payment time is triggered only upon confirmation and declaration of successful bidder, and this ground does not assist the appellant.

Non refundable EMD - remedy by challenge before Adjudicating Authority - Whether the clause in the process document demanding non refundable earnest money deposit (EMD) could be challenged before the appellate forum in these proceedings. - HELD THAT: - The Tribunal observed that the appellant could have challenged the non refundable EMD clause by seeking appropriate relief from the Adjudicating Authority earlier. Since the auction date has passed and the appellant did not avail the remedy before the Adjudicating Authority, the appellate tribunal declined to entertain the contention in the present appeal. [Paras 10]

Appellant's grievance regarding non refundable EMD should have been raised before the Adjudicating Authority; the appellate challenge is not entertained.

Final Conclusion: The appeal is dismissed as devoid of merit: the auction having been conducted and the lot sold, the belated challenge is not maintainable; regulatory provisions override inconsistent process document clauses and payment obligations arise only upon confirmation of sale; the contention regarding non refundable EMD was available for earlier challenge before the Adjudicating Authority.

Limitation under Article 137 of the Limitation Act - Running account doctrine - Acknowledgement of debt under Section 18 of the Limitation Act - Right to apply accrues on default - Section 9 of the IBC - threshold requirement under Section 4 - Time-barred claims

Limitation under Article 137 of the Limitation Act - Right to apply accrues on default - Time-barred claims - Majority of the invoices claimed by the operational creditor are time-barred under Article 137 of the Limitation Act. - HELD THAT: - The Tribunal applied Article 137, holding that the limitation period for filing an application under Section 9 of the IBC begins when the right to apply accrues, i.e., on default when the invoice becomes due. The ledgers and invoices show most defaults occurred in 2012-2014; hence three years had elapsed before the petition was filed. Specifically, out of 234 invoices, 224 were ex facie time barred because their due dates fell in 2013-2014 and the three-year limitation had lapsed prior to filing. The operational creditor's contention invoking Article 1 (running account) to extend limitation was rejected on the ledger evidence showing project-wise separate accounts and receipts. [Paras 12, 13, 15, 16, 21]

224 out of 234 invoices are time-barred under Article 137 and cannot be admitted.

Running account doctrine - Section 9 of the IBC - threshold requirement under Section 4 - The claimed consolidated amount does not satisfy the threshold requirement under Section 4 of the IBC once limitation and project-wise accounting are properly considered. - HELD THAT: - The Tribunal found the operational creditor maintained project-wise ledgers and receipts, not a single running account, so the claims cannot be aggregated across projects to evade limitation or to meet the statutory threshold. Even if the remaining non-time-barred invoices are considered, their aggregate falls well below the Rs.1,00,00,000 threshold required for Section 9 proceedings. Subdividing claims project-wise would further reduce each claim and would not assist the applicant. [Paras 14, 15, 16, 18, 21]

The claim does not meet the Rs.1,00,00,000 threshold; project-wise subdivision does not cure this defect.

Acknowledgement of debt under Section 18 of the Limitation Act - Time-barred claims - The emails relied upon do not constitute timely acknowledgements under Section 18 of the Limitation Act and do not revive time-barred claims. - HELD THAT: - The Tribunal examined the emails cited by the operational creditor and found no adequate linkage between the consolidated outstanding alleged in the emails and the specific invoices in the demand notice. Even if treated as acknowledgements, the emails post-dated the expiry of the three-year limitation for the relevant invoices. Examples include emails dated after the limitation expiry for the Kashang and Uri projects. Therefore Section 18 cannot be invoked to extend limitation and the emails do not assist the operational creditor. [Paras 19, 20]

The emails do not amount to valid acknowledgements under Section 18 and cannot revive the time-barred claims.

Final Conclusion: The Tribunal dismissed the petition: the period of limitation for Section 9 proceedings is governed by Article 137; the operational creditor's running-account plea and email acknowledgements fail; 224 invoices are time-barred and the remaining claims do not meet the Rs.1,00,00,000 threshold, hence the appeal is dismissed.

Settlement proposal under Section 12A of the Code - Commercial wisdom of the Committee of Creditors - Jurisdictional review for arbitrariness - Minutes of CoC meeting as evidence of application of mind

Settlement proposal under Section 12A of the Code - Commercial wisdom of the Committee of Creditors - Minutes of CoC meeting as evidence of application of mind - Jurisdictional review for arbitrariness - Whether the CoC adequately considered the settlement proposal submitted under Section 12A and whether the Adjudicating Authority erred in dismissing the appellant's application challenging the CoC's rejection. - HELD THAT: - The CoC placed the appellant's settlement proposal and its addendum before members and the minutes of the 13th CoC meeting of 19.05.2023 record detailed deliberations and reasons for rejection, including deferred nature of payments, lack of payment schedule, absence of source of funds and business plan, concerns on credibility and pending proceedings against the proposer. The decision to accept or reject a Section 12A settlement is a business decision resting within the commercial wisdom of the CoC. Judicial interference is limited to instances of arbitrariness. The recorded minutes demonstrate application of mind and considered reasons; therefore there is no basis to characterise the CoC's decision as arbitrary or to fault the Adjudicating Authority in dismissing the appellant's prayer. [Paras 5, 6, 8]

The Adjudicating Authority's order dismissing the application is upheld; the CoC had duly considered and validly rejected the settlement proposal.

Final Conclusion: Appeal dismissed; the order of the Adjudicating Authority rejecting the application seeking direction to place the settlement proposal before the CoC is confirmed.

Offences by companies - liability of persons in charge and responsible - Procedure when corporation is an accused - representative under Section 305 CrPC - Representation of company in liquidation - authority of provisional liquidator under Section 457 Companies Act, 1956 - Legal fiction of deeming liability - role and responsibility, not mere designation

Procedure when corporation is an accused - representative under Section 305 CrPC - Representation of company in liquidation - authority of provisional liquidator under Section 457 Companies Act, 1956 - Offences by companies - liability of persons in charge and responsible - Whether the trial court could frame charge against the company through the petitioner when the company was in liquidation and a Provisional Liquidator had been appointed - HELD THAT: - Section 305 CrPC permits a corporation to appoint a representative for the purpose of inquiry or trial and treats acts done in the presence of such representative as done in the presence of the accused corporation; where no representative appears the procedural requirements do not apply. Where a company is in liquidation, Section 457 of the Companies Act, 1956 (as then applicable) vests the authority to represent the company in the Provisional Liquidator or a person authorised by the Provisional Liquidator. Section 68 of the Foreign Exchange Regulations Act, 1973 creates a deeming fiction of liability for persons who, at the time of contravention, were in charge of and responsible to the company for its conduct of business; the liability depends on actual role and responsibility and not on mere designation. Applying these principles, the trial court erred in framing the charge against the company through the petitioner when there was no authorization from the Provisional Liquidator and the company was under provisional liquidation. The charge against the company therefore must be framed through the Provisional Liquidator appointed for the company; the Court left intact charges framed against the petitioner in his individual capacity. [Paras 17, 18, 19, 20]

Charge against the company cannot be framed through the petitioner; the charge must be through the Provisional Liquidator appointed for the company, while charges against the petitioner individually remain unaffected.

Final Conclusion: The petition is allowed to the limited extent that the impugned order framing charge against the company through the petitioner is modified: charges against the company must be framed through the Provisional Liquidator; individual charges against the petitioner are not disturbed.

Balancing freedom of the press and the right to privacy - right to fair investigation - gag orders against media permissible only where publication may prejudice investigation or trial - Advisory on Media Policy (Office Memorandum dated 01.04.2010) and compliance by investigating agencies - public figure doctrine - heightened public gaze and accountability

Advisory on Media Policy (Office Memorandum dated 01.04.2010) and compliance by investigating agencies - gag orders against media permissible only where publication may prejudice investigation or trial - Whether interim relief restraining Respondent No.1/ED and media from publishing or leaking information relating to the ongoing investigation should be granted. - HELD THAT: - The Court recorded the statement of Respondent No.1/ED and the Union of India that the Advisory on Media Policy dated 01.04.2010 is being scrupulously followed and took that statement on record. The Advisory prescribes that designated officers should disseminate only essential, authenticated information at limited stages of a case and cautions against piecemeal or speculative disclosures likely to compromise investigations. The Court examined the annexed news reports and found they related to the public act of an investigation into a public figure and did not invade the petitioner's private life or appear to prejudice the investigation or any prospective trial. Given the assurance of compliance with the Advisory and the nature of the publications, the foundation for issuing a prior restraint was absent. The Court emphasised that gag orders are exceptional and permissible only where publications have the potential to prejudice an investigation or trial; absent such potential, restraining the press is impermissible in light of the constitutional protection for free speech and press. [Paras 10, 15, 16]

The petition seeking injunctions against the ED and media was refused and no interim restraint was issued.

Balancing freedom of the press and the right to privacy - public figure doctrine - heightened public gaze and accountability - Whether the impugned media publications invaded the petitioner's privacy or warranted protection on account of her status as a public figure. - HELD THAT: - The Court recognised that while freedom of the press is fundamental, it does not override the right to privacy; however, publications concerning the public acts of a public figure attract a different standard. The petitioner, being a former Member of Parliament, is subject to a higher degree of public scrutiny. The Court reviewed the newspaper cuttings and concluded they reported on the investigation and did not disclose matters of the petitioner's private life, nor did they amount to harassment or impermissible invasion of privacy. Reliance on precedents was noted for the proposition that publications about public life of public figures cannot be restrained unless they amount to harassment or invade private life. [Paras 12, 13, 14, 15]

The publications were held not to constitute an invasion of privacy warranting restraint; they fell within permissible reporting about a public figure.

Self-regulation by electronic media and Code of Ethics - Whether additional court directions were necessary to regulate electronic and print media respondents. - HELD THAT: - The Court noted the existence of a self-regulatory mechanism for electronic media embodying a Code of Ethics and Broadcasting Standards that include impartiality, objectivity and protection of privacy. Observing that respondents 3 to 21 are bound by such Code of Ethics, the Court found no need to issue further regulatory orders against them at this stage. [Paras 11]

No further directions were issued regulating the media respondents, as the self-regulatory Code was deemed adequate.

Final Conclusion: Assurances of compliance with the Advisory on Media Policy were recorded, the news reports were found not to invade the petitioner's private life or to threaten prejudice to investigation/trial, and the writ petition seeking restraints on the ED and the media was dismissed.

Works Contract (Composition Scheme) - applicability to ongoing contracts - Classification of composite contracts post 01.06.2007 - Rule 3(3) of the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 - Effect of prior payment under earlier taxable service on entitlement to composition scheme - Interpretation in light of Larsen & Toubro (composite works contract not taxable prior to 01.06.2007) - Clarificatory effect of CBEC Circular No.128/10/2010 on ongoing contracts - Penalty under section 76 vis-a -vis penalty under section 78

Works Contract (Composition Scheme) - applicability to ongoing contracts - Rule 3(3) of the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 - Classification of composite contracts post 01.06.2007 - Interpretation in light of Larsen & Toubro (composite works contract not taxable prior to 01.06.2007) - Entitlement of the appellant to opt for the Works Contract composition scheme in respect of ongoing works contracts with effect from 01.06.2007. - HELD THAT: - The Tribunal held that the contracts of the appellant are composite in nature and were correctly classifiable as "works contract service" for the portion of activity liable to tax after 01.06.2007. Relying on the Supreme Court's interpretation in Larsen & Toubro that indivisible composite works contracts were not subject to service tax prior to 01.06.2007, the Tribunal observed that the appellant's liability arises only from 01.06.2007 onwards. Applying Rule 3(3) of the Works Contract Composition Rules and the Board's clarificatory Circular (No.128/10/2010), the Tribunal explained that an assessee may opt for the composition scheme for ongoing contracts provided the condition in Rule 3(3) is satisfied - namely that the option is exercised before payment of service tax in respect of the works contract. Where no payment of service tax was made under an earlier service head for that contract prior to 01.06.2007, the contract is eligible for the composition scheme. On the facts, the Tribunal found the appellant entitled to avail the composition scheme for the works contract from 01.06.2007 and that denial of the scheme solely because the appellant had earlier classified activities differently was not sustainable. [Paras 4, 5]

The appellant is eligible to opt for and avail the Works Contract composition scheme with effect from 01.06.2007; the impugned order denying that benefit is set aside and the appeal is allowed.

Penalty under section 76 vis-a -vis penalty under section 78 - Validity of simultaneous imposition of penalty under section 76 where penalty under section 78 is also imposed. - HELD THAT: - The Tribunal agreed with the appellant that, in view of settled law, penalty under section 76 is not tenable when penalty under section 78 is imposed for the same default. The Tribunal therefore held that simultaneous imposition of penalty under section 76 is not justified and directed that the penalty levied under section 76 be set aside. [Paras 4]

Simultaneous penalty under section 76 is set aside; the penalty under section 78 and other relief as applicable remain governed by law.

Final Conclusion: The appeal is allowed: the appellant is held eligible for the Works Contract composition scheme with effect from 01.06.2007 and the impugned order denying that benefit is set aside; simultaneous penalty under section 76 is set aside, with consequential reliefs, if any, to follow in accordance with law.

Renting of Immovable Property Service - Service tax liability - Board's Circular dated 24.5.2010 - Retrospective exemption by Notification No. 1/2018 ST dated 30.11.2018 - Right of way

Renting of Immovable Property Service - Board's Circular dated 24.5.2010 - Liability to service tax for letting roadsides for laying cables (Annual Track Rent) for the period 1.4.2010 to 30.6.2012 - HELD THAT: - The Tribunal accepted the appellant's contention that for the period 1.4.2010 to 30.6.2012 the Board's Circular dated 24.5.2010 clarified that laying of cables under or alongside roads does not constitute a taxable service under the relevant entries of the Finance Act, 1994. Applying that clarification, the Tribunal held that no service tax was payable by the appellant on amounts charged as Annual Track Rent for the stated period and the demand confirmed by the adjudicating authority and the Commissioner (Appeals) in respect of that period cannot be sustained. [Paras 4]

Demand for service tax for 1.4.2010 to 30.6.2012 set aside.

Right of way - Retrospective exemption by Notification No. 1/2018 ST dated 30.11.2018 - Effect of Notification No. 1/2018 ST dated 30.11.2018 on liability for the period 1.7.2012 to 30.6.2017 (as covering the appellant's demand period) - HELD THAT: - The Tribunal noted that the Government issued a retrospective exemption by Notification No. 1/2018 ST dated 30.11.2018 in respect of services by way of granting 'right of way' by local authorities for the period 1.7.2012 to 30.6.2017. Finding that the period of demand falls within the ambit of that notification, the Tribunal held that no service tax was payable by the appellant for that period and therefore the demands and penalties confirmed for the corresponding years must be set aside. [Paras 4]

Demand for service tax for the period covered by 1.7.2012 to 30.6.2017 (as applicable to the appellant's demand) set aside.

Final Conclusion: The Tribunal allowed the appeal, holding that (i) Board's Circular dated 24.5.2010 precludes levy of service tax on laying of cables alongside roads for 1.4.2010 to 30.6.2012 and (ii) Notification No. 1/2018 ST dated 30.11.2018 grants retrospective exemption for 'right of way' by local authorities for 1.7.2012 to 30.6.2017; consequently the impugned demand and penalties were set aside with consequential relief as per law.

Goods Transport Agency and issuance of consignment note as non-derogable ingredient - Reverse Charge Mechanism - service receiver discharging tax - Negative list exemption for transportation of goods by road (owner-driver/owner-operated vehicles)

Goods Transport Agency and issuance of consignment note as non-derogable ingredient - Whether the appellant's transportation activity amounts to a taxable 'Goods Transport Agency' service in the absence of issuance of consignment notes. - HELD THAT: - The Tribunal held that the statutory definition of 'Goods Transport Agency' requires issuance of consignment notes (by whatever name called) as an essential ingredient. Citing a series of coordinate decisions, the Court observed that in the absence of consignment notes the service provider cannot be characterised as a 'Goods Transport Agency' and consequently the services rendered do not attract service tax as GTA services. The Tribunal therefore rejected the revenue's contention that tax could be levied on the appellant as a GTA when no consignment notes were issued. [Paras 6, 12]

Appellant's services do not constitute 'Goods Transport Agency' in the absence of consignment notes and are not taxable as GTA services.

Reverse Charge Mechanism - service receiver discharging tax - Whether the appellant remained liable to pay service tax where the service receiver (BPCL) has discharged the tax under the reverse charge mechanism. - HELD THAT: - The Tribunal noted that BPCL, the service receiver, issued a certificate indicating that it discharged the service tax liability under the reverse charge mechanism. Given that the receiver had already discharged the tax on services received, the appellant could not be held liable to pay the same tax again. The Tribunal thus accepted the appellant's submission that the tax liability had been satisfied by the service receiver. [Paras 10]

Service tax liability stood discharged by the service receiver under RCM; appellant was not liable to pay again.

Negative list exemption for transportation of goods by road (owner-driver/owner-operated vehicles) - Whether the appellant, as owner of the truck providing transportation by road, is covered by the negative list exemption and thus outside service tax levy. - HELD THAT: - Relying on the negative list provision, the Tribunal observed that services by way of transportation of goods by road are excluded from taxation except where rendered by a goods transportation agency or a courier agency. Since the appellant owned and operated the truck and did not issue consignment notes (thereby not qualifying as a GTA), the service fell within the negative list exemption and was not taxable. [Paras 11]

Appellant's transportation activity falls within the negative list exemption and is not taxable.

Final Conclusion: The demand of service tax, interest and penalty proposed in the show cause notice is set aside; the appeal is allowed as the appellant's services were not taxable as GTA (no consignment notes), the tax had been discharged by the service receiver under RCM, and the activity falls within the negative list exemption.

Summary order. Civil Appeal dismissed as withdrawn; pending application(s), if any, disposed of.

Requirement of reasons for administrative and appellate orders - Appellate order without reasons vitiates the decision - Remand for fresh consideration and passing of reasoned order - Judicial review of non-speaking orders

Requirement of reasons for administrative and appellate orders - Appellate order without reasons vitiates the decision - The CESTAT allowed the departmental appeal without giving any reasons, and whether such non-speaking order is sustainable. - HELD THAT: - The Court held that the CESTAT exercised its appellate jurisdiction to allow the appeal filed by the Department but did so without recording any reasons. An appellate decision that is not accompanied by reasons is unsatisfactory for purposes of transparency and judicial review. Because the impugned order contains no reasons, the Court concluded that the order cannot stand and must be set aside to enable a reasoned decision to be rendered by the appellate authority.

The CESTAT's order allowing the departmental appeal without reasons is set aside.

Remand for fresh consideration and passing of reasoned order - Judicial review of non-speaking orders - Whether the matter should be remanded to the CESTAT for fresh consideration and the nature of directions to be given on remand. - HELD THAT: - The Court remanded the matter to the CESTAT for fresh consideration and directed that the appellate authority pass appropriate orders giving reasons for its decision. The remand is for reconsideration on merits accompanied by reasoned findings, not merely for formalities. The Court also requested expedition in disposal given the vintage of the appeal (year 2008).

The matter is remanded to the CESTAT for fresh consideration and passing of a reasoned order expeditiously.

Final Conclusion: The CESTAT's order allowing the departmental appeal without reasons is set aside and the matter is remanded to the CESTAT for fresh consideration and the passing of an appropriate reasoned order, to be disposed of expeditiously.

Refund of excise duty - unjust enrichment - passing on of incidence of duty - third proviso to section 11B of the Central Excise Act - credit to the Consumer Welfare Fund - interest under section 11BB

Refund of excise duty - passing on of incidence of duty - unjust enrichment - third proviso to section 11B of the Central Excise Act - credit to the Consumer Welfare Fund - interest under section 11BB - Entitlement to refund of the differential excise duty paid and whether the sanctioned refund should be paid to the appellant or credited to the Consumer Welfare Fund. - HELD THAT: - The facts being undisputed, the Tribunal found that the appellant paid the differential duty only after issuance of the show cause notice and no invoice had been raised at the time of clearance; the appellant attempted recovery by issuing a supplementary invoice but the customer specifically refused to pay, and the appellant subsequently wrote off the amount in its books as certified by a Chartered Accountant. On these findings the Tribunal concluded that the appellant bore the burden of the differential duty and did not pass on its incidence to the customer or any other person. Consequently the case falls within Clause (e) of the third proviso to section 11B of the Central Excise Act, which covers situations where the duty and interest were borne by the manufacturer and not passed on. Having so decided, the Tribunal held that the refund sanctioned by the Adjudicating Authority ought to be paid to the appellant and not credited to the Consumer Welfare Fund, and that consequential interest is payable under section 11BB. [Paras 8, 9]

The refund amount sanctioned shall be paid to the appellant (not credited to the Consumer Welfare Fund) together with consequential interest under section 11BB.

Final Conclusion: Appeal allowed; impugned order set aside to the extent refund had been directed to be credited to the Consumer Welfare Fund and the sanctioned refund with interest under section 11BB is to be paid to the appellant.

Maintenance of separate accounts for inputs and input services - stock transfer as clearance - exempted goods / chargeable to nil rate of duty - Rule 6(2) and Rule 6(3) of the Cenvat Credit Rules, 2004 - Cenvat credit on inputs and input services used in captive mines - time bar - extended period versus normal period - penalty for interpretational error

Maintenance of separate accounts for inputs and input services - stock transfer as clearance - exempted goods / chargeable to nil rate of duty - Rule 6(2) and Rule 6(3) of the Cenvat Credit Rules, 2004 - Cenvat credit on inputs and input services used in captive mines - Lawfulness of demand under Rule 6(3)(i) for reversal of credit on limestone stock transferred as exempted goods - HELD THAT: - The Tribunal held that when limestone, which is chargeable to nil rate of duty, is stock transferred from one registered plant to another, such stock transfer constitutes a "clearance" and the limestone so transferred is to be treated as an exempted final product for the transferring unit. Plants having separate Central Excise registrations are distinct units for purposes of Cenvat administration and credit availed in one plant cannot be transferred to another. Where common inputs and input services are used in relation to both exempted goods (stock transferred limestone) and dutiable final products (cement/clinker), sub rule (2) of Rule 6 imposes an obligation to maintain separate accounts; failing which the manufacturer must comply with options under Rule 6(3). The Tribunal rejected the appellant's contention that limestone is only an intermediate/raw material and that the Rule applies only when two different final products are manufactured by the same unit, holding that in the facts of the case there are two different final products for different units (exempted limestone for the transferring unit and dutiable cement/clinker for other units), and accordingly sustained the demand under Rule 6(3)(i). [Paras 7, 8]

Demand under Rule 6(3)(i) upheld: appellant liable to pay amount computed under Rule 6(3) for stock transferred limestone; obligation to maintain separate accounts affirmed.

Time bar - extended period versus normal period - penalty for interpretational error - Whether the recovery could be made beyond the normal period and whether penalties should be sustained - HELD THAT: - The Tribunal found that the recovery proceedings were interpretational in nature, the assessee had filed periodic returns and maintained delivery challans, and there was no evidence of suppression or intention to evade duty. A prior adjudication for the period January 2017 to June 2017 had been set aside in favour of the appellant on similar grounds. In view of these factors, the Tribunal held there were no grounds to invoke the extended period of limitation and confined the demand to the normal period. Further, because the issue was interpretational and involved stock transfers within the appellant's units, penalties imposed were set aside entirely, while duty with interest for the normal period was upheld. [Paras 10, 11]

Recovery limited to duty with interest for the normal period; extended period not invoked; penalties set aside.

Final Conclusion: Appeal partly allowed: demand and interest for the normal period sustained under Rule 6(3)(i) for failure to maintain separate accounts in respect of exempted limestone stock transfers, but extended period of limitation not invoked and penalties wholly set aside.

Summary order. Special Leave Petition dismissed; delay condoned; pending applications, if any, disposed of.

Suo motu revision - Erroneous in so far as prejudicial to the interest of revenue - Scope of Section 20(1) of the Nagaland (Sales of Petroleum...) Taxation Act, 1967 - Reassessment versus revisional powers - Jurisdictional limits of revisional authority - Fishing and roving enquiries - Determination of Central Sales Tax liability under a State revisional provision - Article 226 writ maintainability despite availability of alternative statutory remedy

Scope of Section 20(1) of the Nagaland (Sales of Petroleum...) Taxation Act, 1967 - Erroneous in so far as prejudicial to the interest of revenue - Suo motu revision - Validity of initiation of suo motu revision proceedings under Section 20(1) when the revisional authority had not on record arrived at a conclusion that the assessment orders were erroneous and prejudicial to revenue. - HELD THAT: - The Court held that Section 20(1) permits suo motu revision only if, on examination of records called for, the Commissioner reasonably considers an order passed by an officer appointed under the Act to be erroneous in so far as it is prejudicial to the interest of revenue. That consideration must be based on materials already available on the record called for; the Commissioner cannot initiate revision as a pretext to conduct fresh, wide-ranging inquiries. The impugned orders showed that the Additional Commissioner repeatedly stated that further inquiry and verification were necessary rather than recording a concluded, record based finding that the original assessments were erroneous and prejudicial to revenue. That approach amounted to embarking upon re examination and reverification (fishing and roving enquiries) rather than lawful exercise of suo motu revision under Section 20(1). [Paras 40, 42, 43, 44]

Proceedings under Section 20(1) were improperly initiated because the Commissioner did not base a concluded finding of error prejudicial to revenue on materials called for; the initiation amounted to unauthorised re examination.

Reassessment versus revisional powers - Jurisdictional limits of revisional authority - Determination of Central Sales Tax liability under a State revisional provision - Whether the Additional Commissioner, in purported exercise of Section 20, could himself re determine escaped turnover, effect reassessment and determine liabilities under the Central Sales Tax Act. - HELD THAT: - The Court emphasised that powers to reassess escape turnover are distinct and primarily vested in the assessing authority (Section 14 and related provisions) and that the revisional power under Section 20 cannot be used to trench upon powers conferred by other provisions. The impugned orders reveal that the Additional Commissioner recalculated turnover, determined escaped turnover and short payment of taxes and also adjudicated liabilities under the Central Sales Tax Act - functions beyond the scope of a Section 20 revision exercised without the requisite antecedent record based conclusion. Such exercise amounted to substitution of the assessing authority's role and exceeded the Commissioner's jurisdiction under Section 20. [Paras 44, 45, 46]

The Additional Commissioner exceeded jurisdiction by undertaking reassessment and determining CST liabilities in purported exercise of Section 20; those actions are not sustainable.

Article 226 writ maintainability despite availability of alternative statutory remedy - Maintainability of writ petitions challenging the jurisdiction of the revisional authority despite existence of statutory appeals/revision. - HELD THAT: - Relying on the principle that Article 226 confers plenary discretionary power and on established exceptions (including where proceedings are wholly without jurisdiction), the Court found the challenge to the jurisdictional power of the revisional authority falls within the exception to the normal rule of pursuing alternative remedies. As the petitioner challenged the very competence of the revisional proceedings under Section 20, the writ petitions were held maintainable. [Paras 36, 38]

Writ petitions challenging jurisdiction were maintainable and entertainable notwithstanding alternative statutory remedies.

Final Conclusion: The show cause notice dated 28.04.2020, the suo motu revision orders of the Additional Commissioner revising assessments for 2012 13, 2013 14 and 2014 15, and the demand notices dated 09.09.2020 issued pursuant thereto were held to be beyond jurisdiction and are quashed; the suo motu revision proceedings under Section 20(1) in all three matters are quashed.

Compliance with Proviso (b) to Section 138 of the Negotiable Instruments Act - demand notice must specify the cheque amount - defective notice vitiates maintainability of complaint under Section 138 - typographical error in demand notice cannot validate a defective notice in criminal prosecutions - strict construction of penal provisions

Compliance with Proviso (b) to Section 138 of the Negotiable Instruments Act - demand notice must specify the cheque amount - defective notice vitiates maintainability of complaint under Section 138 - Demand notice dated 08.06.2012 which called for an amount in excess of the cheque amount did not comply with Proviso (b) to Section 138 and rendered the complaint not maintainable. - HELD THAT: - The Court applied the settled principle that the proviso to Section 138 requires a notice making demand for the "said amount" i.e., the cheque amount, and that a notice which does not make a clear demand for the cheque amount fails the statutory requirement. Authorities including Suman Sethi and Rahul Builders were relied on to show that omnibus or excessive demands that do not clearly identify the cheque amount are defective. The notice in question demanded Rs. 2 crores against a cheque for Rs. 1 crore and did not specify any basis for the excess; therefore it did not satisfy Proviso (b). Given the penal nature of Section 138, the statutory condition precedent must be strictly complied with and non-compliance defeats the cause of action for a criminal prosecution under Section 138. [Paras 16, 17]

The demand notice was defective for not complying with Proviso (b) to Section 138 and consequently the complaint was not maintainable.

Typographical error in demand notice cannot validate a defective notice in criminal prosecutions - strict construction of penal provisions - The respondent's plea that the excess amount in the notice was a typographical/clerical error could not be accepted as a legal cure to validate the defective notice. - HELD THAT: - The Court noted that even if the discrepancy were attributable to typographical error, precedent of various High Courts demonstrates that such an explanation does not validate a notice which fails to satisfy the statutory requirement. The Court emphasised that criminal liability under Section 138 must be strictly construed and that allowing a typographical explanation to cure a materially defective notice would undermine the statutory precondition for prosecution. The Court therefore declined to enter into contested factual inquiries on the typographical error at this stage and rejected the submission that delay in raising the grievance or pendency of the complaint precluded quashing. [Paras 18, 24, 25]

A purported typographical error does not validate a defective demand notice; the complaint cannot be sustained on that basis.

Defective notice vitiates maintainability of complaint under Section 138 - quashing of criminal complaint under Section 482 Cr.P.C. - Whether the defective notice warranted exercise of inherent jurisdiction to quash the complaint pending trial. - HELD THAT: - Applying the conclusions on non-compliance with Proviso (b) and the inability of a typographical explanation to cure the defect, the Court held that continuation of criminal proceedings based on a notice which on its face does not meet the statutory requirement would cause undue prejudice to the accused. The pendency of the complaint for many years did not preclude exercise of powers under Section 482 Cr.P.C. to prevent abuse of process and to end a prosecution that is unsustainable as a matter of law. [Paras 25, 26]

The complaint was quashed under the inherent jurisdiction of the Court as it was founded on a defective notice and hence not maintainable.

Final Conclusion: The petition under Article 227/Section 482 was allowed: the criminal complaint arising from the demand notice dated 08.06.2012 (which demanded an amount in excess of the cheque) was held not maintainable for non-compliance with Proviso (b) to Section 138 of the NI Act and the complaint was quashed; no order as to costs.

Proof of authorization of company representative - mode of proof of corporate documents and secondary evidence - marking of certified true copies as exhibits - perversity standard on appeal against acquittal - conviction under Section 138 of the Negotiable Instruments Act

Proof of authorization of company representative - marking of certified true copies as exhibits - mode of proof of corporate documents and secondary evidence - The complainant proved that its witness was authorised to give evidence on behalf of the company and the board resolution and minutes (certified true copies) were admissibly proved. - HELD THAT: - The appellate Court held that the affidavit of examination in chief contained necessary averments that the original minutes book and an extract of the board resolution were produced for verification and that certified true copies were tendered and exhibited. The trial Court's emphasis on an endorsement that the originals were perused was not decisive where (i) the witness had averred production of originals and asked for their return after verification, (ii) certified true copies were marked as exhibits, and (iii) the accused, during cross examination and in his 313 answers and evidence, did not challenge the existence or mode of proof of those documents. Applying the principles relating to primary and secondary evidence, including the conditions for relying on secondary evidence, the Court found that the procedure for proving the documents was complied with in the circumstances and that it was open to mark certified true copies after satisfaction. The Court further held that the Supreme Court's observations that averments in the affidavit about a board resolution may suffice supported this conclusion. [Paras 26, 31, 33, 34, 35]

Findings recorded by the trial Court rejecting proof of authorization were set aside; the authorization and the documents relied upon by the complainant are held proved.

Perversity standard on appeal against acquittal - conviction under Section 138 of the Negotiable Instruments Act - Whether the trial Court erred in acquitting the accused despite findings on liability and service of notice in favour of the complainant, and whether such acquittal should be set aside. - HELD THAT: - The Court observed that the trial Magistrate had answered points on liability and service of demand notice in favour of the complainant but recorded acquittal solely because it found authorization not proved. Having found the trial Court's rejection of the certified copies to be hyper technical and erroneous in the factual matrix, the appellate Court concluded that the acquittal was perverse. On that basis, and since other points were already decided for the complainant, the Court set aside the judgment of acquittal and convicted the accused for the offence under Section 138 of the Negotiable Instruments Act. Sentencing was then considered with regard to the accused's age and the interests of parties. [Paras 3, 21, 33, 34, 36]

Trial Court's acquittal set aside as perverse; accused convicted for the offence punishable under Section 138 of the Negotiable Instruments Act.

Final Conclusion: Appeal allowed; the trial Court's finding that authorization was not proved is set aside, certified true copies of the board resolution and minutes are held proved, the acquittal is reversed as perverse and the accused is convicted under Section 138 of the Negotiable Instruments Act, with sentencing and payment directions imposed by the High Court.