TaxTMI Updates e-Newsletter
Mar 01,2025

Constitutional Validity of Power to arrest under the Customs Act, 1962 and the Central Goods and Services Tax Act, 2017 - Constitutionally and statutorily prescribed safeguards, including the requirement of reasons to believe, disclosure of grounds of arrest, and compliance with the Code of Criminal Procedure, 1973 - Reasons to believe -Pith and substance - Proportionality - Personal liberty - non-cognizable offences - Jurisdictionary Powers of judicial review under Article 32 and Article 226 of the Constitution of India - Effects ofamendments made to the Customs Act in 2012, 2013 and 2019, effectively modify the application of Om Prakash [2011 (9) TMI 65 - SUPREME COURT].

As per Sanjiv Khanna, CJI

HELD THAT:- Section 41-D of the Code is applicable for offences under the Customs Act. Accordingly, a person arrested by a customs officer has the right to meet an advocate of his choice during interrogation, but not throughout interrogation - In Senior Intelligence Officer, Directorate of Revenue Intelligence v. Jugal Kishore Samra, [2011 (7) TMI 910 - SUPREME COURT]. This Court held that an advocate/authorised person may be present within visual distance during interrogation, but he cannot be within hearing distance of the proceedings nor can there be any consultations with such advocate/authorised person during the course of the interrogation.

Reference can also be made to Section 50A of the Code, which states that every police officer or other person making an arrest under the Code shall forthwith give information regarding such arrest and place where the arrested person is being held to any of his friends, relatives, or other person as may be disclosed or nominated by the arrested person for the purpose of giving such information. The arrested person must be informed of this right - the details of compliance with this mandate must be entered into the diary maintained by customs officer. It is the duty of the Magistrate, when an arrested person is produced, to satisfy himself that the requirements of Section 50A(2) and (3) have been complied with. Thus, these stipulations will apply in cases of arrests made by the customs officers.

Arvind Kejriwal v. Directorate of Enforcement, [2024 (7) TMI 760 - SUPREME COURT] a recent judgment authored by one of us (Sanjiv Khanna, J.), is a dictum relating to the Prevention of Money Laundering Act, 2002. This Court held that the power of arrest granted to the Directorate of Enforcement under Section 19 of the PML Act is fenced with certain pre-conditions. These pre-conditions act as stringent safeguards to protect the life and liberty of individuals.

In Arvind Kejriwal, a combined reading of Pankaj Bansal v. Union of India and Others, [2024 (7) TMI 760 - SUPREME COURT] Prabir Purkayastha v. State of NCT of Delhi, [2024 (5) TMI 1104 - SUPREME COURT] and Vijay Madanlal Choudhary and Others v. Union of India and Others [2022 (7) TMI 1316 - SUPREME COURT (LB)] was adopted by this Court. It was held that the power to arrest a person without a warrant and without instituting a criminal case is a drastic and extreme power. Therefore, the legislature had prescribed safeguards in the language of Section 19 itself which act as exacting conditions as to how and when the power is exercisable. These safeguards include the requirement to have “material” in the possession of DoE, and on the basis of such “material”, the authorised officer must form an opinion and record in writing their “reasons to believe” that the person arrested was “guilty” of an offence punishable under the PML Act. The “grounds of arrest” are also required to be informed forthwith to the person arrested.

Arvind Kejriwal also holds that the courts can judicially review the legality of arrest. This power of judicial review is inherent in Section 19 as the legislature has prescribed safeguards to prevent misuse. After all, arrests cannot be made arbitrarily on the whims and fancies of the authorities. This judicial review is permissible both before and after criminal proceedings or prosecution complaints are filed.

The investigating officer is also required to look at the whole material and cannot ignore material that exonerates the arrestee. A wrong application of law or arbitrary exercise of duty by the designated officer can lead to illegality in the process. The court can exercise judicial review to strike down such a decision.

There is substantively no difference between a person being guilty of an offence and a person committing an offence. In a catena of judgments of this Court, it has been held that words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning, unless such construction leads to some absurdity or unless there is something in the context or in the object of the statute to suggest to the contrary - given the framework of the Customs Act, which explicitly classifies offences into bailable and non-bailable, as well as cognizable and noncognizable, the “reasons to believe” must reflect these classifications when justifying an arrest. The reasoning must weigh in why an arrest is being made in a specific case, particularly given the specific severity assigned to the offence by the legislature. The reasoning must also state how the monetary thresholds outlined in the Act are met.

There are no inconsistency between Section 19(1) of the PML Act and Section 104(1) of the Customs Act. We are of the opinion that principles and ratio developed in the case of Arvind Kejriwal, and the principles specifically discussed and delineated in paragraphs 30 to 45 of this judgment, are equally applicable to the power of arrest under Section 104 of the Customs Act. The respondent authorities are, therefore, directed to comply with the mandate of this judgment and that of Arvind Kejriwal.

The amendments made to the Customs Act in 2012, 2013 and 2019 are substantive and were introduced to effectively modify the application of Om Prakash [2011 (9) TMI 65 - SUPREME COURT], which required a customs officer to obtain prior approval from a Magistrate before making an arrest. These amendments designated specified offences as cognizable and non-bailable, while also imposing certain preconditions and stipulations for making arrest. Consequently, the petitioners’ reliance on Om Prakash (supra) is no longer valid and must be rejected. However, it remains important to examine the pre-conditions and safeguards established by the legislature to protect the life and liberty of arrestees.

The challenge to the amendments as well as provisions of the Customs Act is rejected. Reliance placed by the petitioners on the decision of this Court in Om Prakash (supra) is misconceived as the statutory provisions have undergone amendments to bring them in consonance with the law of the land. Moreover, the provisions themselves provide enough safeguards against arbitrary and wrongful arrests.

Section 162(1) of the GST Acts permits compounding of offences and therefore, the ratio in Makemytrip [2016 (9) TMI 52 - DELHI HIGH COURT] should be applied to the GST Acts. The decision in Makemytrip, itself carves out an exception when an assessment order under the Finance Act may not be required, namely cases where a person who is shown to be a habitual evader as one who has not filed service tax returns for a continuous period of time, who has a history of repeated defaults for which there have been fines, penalties imposed, and prosecutions launched, etc. - there are sufficient safeguards to ensure that no arrests are made till the Commissioner is able to show and establish, on the basis of material and evidence, that the conditions of clauses (a) to (d) as well as clause (i) of sub-section 1 to Section 132 of the GST Acts are satisfied and therefore the offences are non-bailable.

Constitutional validity of Sections 69 and 70 of the GST Acts - HELD THAT:- The Parliament, under Article 246-A of the Constitution, has the power to make laws regarding GST and, as a necessary corollary, enact provisions against tax evasion. Article 246-A of the Constitution is a comprehensive provision and the doctrine of pith and substance applies. The impugned provisions lay down the power to summon and arrest, powers necessary for the effective levy and collection of GST. Time and again this Court has held that while deciding the issue of legislative competence, entries should not be read in a narrow or pedantic sense but given their broadest meaning and the widest amplitude because they are intrinsic to a machinery of government.

A penalty or prosecution mechanism for the levy and collection of GST, and for checking its evasion, is a permissible exercise of legislative power. The GST Acts, in pith and substance, pertain to Article 246-A of the Constitution and the powers to summon, arrest and prosecute are ancillary and incidental to the power to levy and collect goods and services tax. In view of the aforesaid, the vires challenge to Sections 69 and 70 of the GST Acts must fail and is accordingly rejected.

The challenge to the constitutional validity as also the right of the authorised officers under the Customs Act and the GST Acts to arrest are rejected and dismissed with elucidation and clarification on the pre-conditions and when and how the power of arrest is to be exercised.

The matters are directed to be listed before an appropriate Bench in the week commencing 17.03.2025 for final hearing and disposal.

As per Bela M. Trivedi, J

HELD THAT:- Whenever the jurisdiction of the High Court or the Supreme Court is invoked under Article 226 or Article 32 as the case may be, challenging the punitive or preventive detention, the Court is expected to take into consideration the nature of right infringed, the scope and object of the legislation under which such arrest or detention is made, the need to balance the rights and interests of the individual as against those of the society, the circumstances under which and the persons by whom the jurisdiction is invoked etc. In exercise of their discretionary jurisdiction, the High Courts and the Supreme Court do not, as courts of appeal or revision, correct errors of law or of facts. The judicial intervention is warranted only in exceptional circumstances when the arrest is prima facie found to be malafide; or is prompted by extraneous circumstances, or is made in contravention of or in breach of provisions of the concerned statute; or when the authority acting under the concerned statute does not have the requisite authority etc.

The power of judicial review keeps a check and balance on the functioning of the public authorities and is exercised for better and more efficient and informed exercise of their powers, such power has to be exercised very cautiously keeping in mind that such exercise of power of judicial review may not lead to judicial overreach, undermining the powers of the statutory authorities. To sum up, the powers of judicial review may not be exercised unless there is manifest arbitrariness or gross violation or non-compliance of the statutory safeguards provided under the special Acts, required to be followed by the authorized officers when an arrest is made of a person prima facie guilty of or having committed offence under the special Act.

Conclusion - i) The amendments to the Customs Act and GST Act are valid. ii) The procedural safeguards under the CrPC apply to arrests under the Customs Act and GST Act, ensuring protection of individual rights. iii) Customs officers must exercise their arrest powers with caution, ensuring compliance with statutory and constitutional safeguards. iv) The power of arrest under these Acts is subject to judicial review to prevent arbitrary or unlawful arrests. v) The constitutional validity of Sections 69 and 70 of the GST Acts is upheld, affirming the legislative competence to enact such provisions.

Issuance of Form GST DRC-07 - appeal under Section 107 of the UPGST Act, 2017 - compliance with Rule 142 of the UPGST Rules, 2017 regarding issuance of summary order in DRC-07 - infructuousness

Issuance of Form GST DRC-07 - appeal under Section 107 of the UPGST Act, 2017 - infructuousness - Petition seeking direction to respondents to upload/issue summary order in Form GST DRC-07 to enable filing of online appeal under Section 107 of the UPGST Act, 2017. - HELD THAT: - The petition sought a direction for issuance/upload of DRC-07 pursuant to the order dated 29.09.2022 so that an appeal under Section 107 of the UPGST Act, 2017 could be filed. The Court directed the respondents to place their instructions on the nature of the order required and on whether DRC-07 should be issued in terms of Rule 142 of the UPGST Rules, 2017. On production of instructions, it was shown that the summary of order in Form GST DRC-07 had been issued and uploaded on 03.02.2025 and a copy furnished to the petitioner's counsel. As the specific relief sought - issuance/upload of DRC-07 enabling the filing of an online appeal - has been effected by the respondents, there remains no live controversy requiring adjudication on the petition.

Petition disposed of as having become infructuous in view of the issuance/upload of Form GST DRC-07 on 03.02.2025 and delivery of its copy to the petitioner's counsel.

Final Conclusion: Relief sought for issuance/upload of DRC-07 granted by respondents during proceedings; writ petition disposed of as infructuous.

Challenge to order of determination u/s 73 of the GST Act, as well as the appellate order - non-constitution of Tribunal - jurisdiction under Article 226 of the Constitution of India - HELD THAT:- The petitioner can be given the liberty to prefer an appeal to the Tribunal within 30 days of its constitution, and also if the condition stipulated in Section 112(8)(b) of the GST Act is complied with, further recovery can be deferred until disposal of the appeal.

This writ petition is disposed of giving liberty to the petitioner to prefer an appeal within 30 days of the constitution of the Appellate Tribunal contemplated under Section 112(1) of the GST Act. It is further directed that if the petitioner deposits the amount of 10% as contemplated under Section 112(8)(b) within 30 days from today, further proceedings for recovery pursuant to Exhibit-P3 and Exhibit-P5 shall be kept in abeyance till the appeal as directed above is disposed of.

Validity of summary of the order in Form GST DRC-07 and the Order-in Original - DRC-07 does not have any physical or digital signature - time limitation - HELD THAT:- Admittedly, the petitioner had a remedy of appeal under the GST Act and did not avail such remedy. This petition is not filed within the statutory time limit prescribed under the GST Act. Thus, in view of the judgment of the Apex Court in GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [2020 (5) TMI 149 - SUPREME COURT], there are substance in the argument of learned Senior Standing Counsel for CBIC that this petition is not liable to be entertained. Otherwise, it will be against the scheme and intention of the statutory provision.

The O.I.O. dated 24.04.2024 contained physical signature and it is issued within the limitation period which was extended upto 30.04.2024. DRC-07 is only a ‘summary of order’ and even if it did not contain any signature, it will not cause any prejudice to the petitioner.

The petitioner can avail the remedy under the relevant statute, if law so permits - petition dismissed.

Maintainbaility of petition - availability of alternative remedy of statutory right of appeal - HELD THAT:-Having considered the materials on record as also taking note of the fact that the Appellate Tribunal is yet to be constituted, it is opined that the petition should be heard.

Since, the petitioner has been able to make out a prima facie case, there shall be an unconditional stay of the demand made in Form GST APL – 04 dated 17th September, 2024 for a period of three weeks from date - In the event, the petitioner makes payment of 10% of the balance amount of tax in dispute, in addition to the amount already deposited in terms of Section 107 (6) of the said Act, within three weeks from date, the interim order passed herein, shall continue till the disposal of the writ petition or until further order, whichever is earlier.

Let affidavit-in-opposition to the present writ petition be filed within a period of six weeks from date. Reply, thereto, if any, be filed within four weeks thereafter.

Challenge to assessment order in Form GST DRC-07 - said proceeding does not contain the signature of the assessing officer and also DIN number, on the impugned assessment order - HELD THAT:- The effect of the absence of the signature, on an assessment order was earlier considered by this Court, in the case of A.V. Bhanoji Row Vs. The Assistant Commissioner (ST), [2023 (2) TMI 1224 - ANDHRA PRADESH HIGH COURT]. A Division Bench of this Court, had held that the signature, on the assessment order, cannot be dispensed with and that the provisions of Sections-160 & 169 of the Central Goods and Service Tax Act, 2017, would not rectify such a defect.

A Division Bench of this Court in the case of M/s. Cluster Enterprises Vs. The Deputy Assistant Commissioner (ST)-2, Kadapa [2024 (7) TMI 1512 - ANDHRA PRADESH HIGH COURT], on the basis of the circular, dated 23.12.2019, bearing No.128/47/2019-GST, issued by the C.B.I.C., had held that non-mention of a DIN number would mitigate against the validity of such proceedings.

Conclusion - For the non-mention of a DIN number and absence of the signature of the assessing officer, in the impugned assessment order would have to be set aside.

This Writ Petition is disposed of setting aside the impugned assessment order in Form GST DRC-07, dated 12.08.2024, issued by the 2nd respondent, with liberty to the 2nd respondent to conduct fresh assessment, after giving notice and by assigning a signature to the said order.

Failure to consider reply to show cause notice - order passed without adjudication to overcome period of limitation - remand for fresh adjudication - natural justice - opportunity of hearing - quashing of order - fraud on the statute

Failure to consider reply to show cause notice - natural justice - opportunity of hearing - order passed without adjudication to overcome period of limitation - quashing of order - remand for fresh adjudication - Impugned adjudication order dated 29.04.2024 set aside and matter remitted for fresh consideration in light of the petitioner's response and to ensure compliance with principles of natural justice. - HELD THAT: - The Court found on a prima facie reading that the Adjudicating Authority had confirmed the demand in the impugned order without considering the detailed reply furnished by the petitioner to the Show Cause Notice, and that the only reason recorded was that the taxpayer had not 'properly replied/filed explanation' despite opportunities. The Court held that such non-consideration, particularly where the order appears directed to 'overcome the period of limitation', amounts to a failure to adjudicate the merits and may constitute a fraud on the statute. In view of these deficiencies and the apparent absence of a proper opportunity of hearing, the appropriate remedy is to quash the impugned order and remit the matter to the Adjudicating Authority for fresh adjudication, directing that the petitioner's submitted response be specifically considered. The Court preserved all parties' rights on the merits for determination by the Adjudicating Authority on fresh consideration. [Paras 5, 7, 8, 9, 10]

Impugned order dated 29.04.2024 quashed; matter remitted to the Adjudicating Authority for fresh consideration bearing in mind the petitioner's response and ensuring adherence to principles of natural justice.

Final Conclusion: The writ petition is allowed; the adjudication order dated 29.04.2024 is quashed and the matter is remitted to the Adjudicating Authority for fresh consideration of the issues raised in relation to financial year 2018-19, with all rights and contentions on merits kept open.

MIsuse of petitioner's credentials on the Goods and Services Tax portal, leading to allegations of passing fraudulent Input Tax Credit without actual supply of goods - HELD THAT:- Similar issue decided in Aakash Gupta vs. Commissioner of Delhi Goods and Services Tax & Ors [2024 (12) TMI 1535 - DELHI HIGH COURT] where it was held that 'the question of whether the credentials of the petitioner were misused and is a case of identity theft clearly gives rise to disputed questions of fact and would be liable to be duly inquired into by the competent authorities and which investigation cannot be undertaken by this Court.'

Petition disposed off.

Challenge to order on the ground that the same is made in violation of principles of natural justice - availing of Input Tax Credit after the due date - HELD THAT:- The said issue is no longer res integra. This Court in a batch of writ petitions in W.P.(MD)Nos.25081 of 2024 etc. [2024 (10) TMI 1631 - MADRAS HIGH COURT], by taking note of the amendment to Section 16(4) of the CGST Act which came into force with retrospective effect from 01.07.2017 had quashed the similar impugned orders and thereafter this Court in a similar issue in JC VALVULAS INDIA PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER, CHENNAI. [2024 (11) TMI 1430 - MADRAS HIGH COURT] taking note of the amendment passed, had set aside the order of assessment and remitted the matter back to the assessing officer for passing order afresh.

The impugned order dated 24.08.2024 is set aside and the matter is remitted back to the respondent for fresh consideration in consonance with the amended provision of Section 16 of the GST Act

Petition allowed by way of remand.

Show cause notice - advance ruling - no interference at show cause notice stage - adjudication on merits - determination of tax liability and rate - liberty to file reply/representation - judicial direction for expeditious adjudication

Show cause notice - advance ruling - no interference at show cause notice stage - adjudication on merits - Petition seeking quashing of the show cause notice at the pre-adjudication stage - HELD THAT: - The Court declined to quash or stay the impugned show cause notice issued to the petitioner. The Bench observed that whether the show cause notice impermissibly seeks to go beyond the earlier Advance Ruling or is otherwise covered by it is a question to be determined by the adjudicating authority during adjudication. Determinations as to what tax is payable and at what rate likewise fall to be decided in the adjudication process. Accordingly, interference with the issuance of the show cause notice at this preliminary stage was refused, and all contentions of the parties were left open for the authority to decide on merits. [Paras 5, 6]

Writ petition dismissed insofar as it sought quashing of the show cause notice; no interference at show cause notice stage and contentions left open for adjudication.

Liberty to file reply/representation - judicial direction for expeditious adjudication - Directions regarding filing of reply and timeline for adjudication of the show cause notice - HELD THAT: - The Court granted the petitioner liberty to file a Reply/Representation to the show cause notice and directed that the Reply be filed within four weeks from the date of the order. The Court further directed that the show cause notice shall be adjudicated by the authorities within twelve weeks from the date of the order, thereby imposing a timeline for expeditious disposal while keeping the parties' substantive contentions available for decision by the authority. [Paras 7, 8]

Petitioner permitted to file reply within four weeks; authority directed to adjudicate the show cause notice within twelve weeks.

Final Conclusion: The writ petition challenging the show cause notice is dismissed at the threshold; the petitioner is granted liberty to file a reply within four weeks and the authorities are directed to conclude adjudication within twelve weeks, with all substantive contentions left open for determination by the adjudicating authority.

Liability to pay GST demand for the Assessment Years 2017-2018, 2018-2019, and 2019-2020 - it is alleged that petitioner was indulging in passing Input Tax Credit to facilitate evasion of tax - respondent submit that entire tax liability has been borne by the petitioner out of the Input Tax Credit availed by the petitioner which was passed on by the respective dealers.

HELD THAT:- The law on the subject has been settled by the Division Bench of this Court in Sahyadri Industries Limited Vs. State of Tamil Nadu [2023 (4) TMI 912 - MADRAS HIGH COURT]. Although the said decision was rendered in the context of Tamil Nadu Value Added Tax (TNVAT) Act, 2006, the ratio therein will squarely apply to the facts of the case under the Central Goods and Services Tax (CGST) Act, 2017 and the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017.

The fact remains that the petitioner has discharged the entire tax liability from and out of the Input Tax Credit availed from the invoices raised by the above mentioned suppliers. There is no payment of tax in cash by the petitioner. Prima facie, there are indications that the petitioner acted as an accessory to pass an ineligible Input Tax Credit.

Petition dismissed.

Chalelnge to assessment order - said proceeding does not contain the signature of the assessing officer and also DIN number on the impugned assessment orders - HELD THAT:- The effect of the absence of the signature, on an assessment order was earlier considered by this Court, in the case of A.V. Bhanoji Row Vs. The Assistant Commissioner (ST)[2023 (2) TMI 1224 - ANDHRA PRADESH HIGH COURT] - A Division Bench of this Court, had held that the signature, on the assessment order, cannot be dispensed with and that the provisions of Sections-160 & 169 of the Central Goods and Service Tax Act, 2017, would not rectify such a defect. Following this Judgment, another Division Bench of this Court, in the case of M/s. SRK Enterprises Vs. Assistant Commissioner, [2023 (12) TMI 156 - ANDHRA PRADESH HIGH COURT], had set aside the impugned assessment order.

Conclusion - In view of the non-mention of a DIN number and absence of the signature of the assessing officer, in the impugned assessment order would have to be set aside.

The impugned assessment orders in Form GST DRC-07, dated 30.04.2024 and Form GST DRC-08, dated 18.01.2022, issued by the 3rd respondent set aside - petition allowed.

Violation of principles of natural justice - opportunity of personal hearing - service of notice by uploading on portal - set aside and remand for fresh consideration - pre-deposit condition - treatment of assessment order as show cause notice - restoration of order on non-compliance

Violation of principles of natural justice - opportunity of personal hearing - service of notice by uploading on portal - set aside and remand for fresh consideration - pre-deposit condition - treatment of assessment order as show cause notice - restoration of order on non-compliance - Impugned assessment order dated 19.08.2024 was set aside for breach of natural justice and the matter remanded to the assessing authority subject to conditions including payment of 10% of disputed taxes and filing of objections. - HELD THAT: - The Court found that the petitioner had not been afforded effective notice or an opportunity of personal hearing because the show cause notices and assessment order were not served by tender or RPAD but uploaded in the portal's "view additional notices" column, resulting in the petitioner being unaware of the assessment. The parties consented to disposal on terms. Accordingly, the impugned order was set aside and the matter remitted to the assessing authority for verification and fresh consideration. The remand was made conditional: the petitioner must deposit 10% of the disputed taxes within specified timelines (with adjustment for any amount already recovered or pre-deposited), the assessing authority will communicate any balance to be paid, and on compliance the assessing authority shall treat the set-aside assessment order as a show cause notice and decide objections after affording a reasonable opportunity of hearing. The order provides that failure to comply with the deposit or to file objections within the stipulated periods will result in restoration of the impugned order; any bank attachments or garnishee proceedings are to be lifted upon compliance. [Paras 6]

Impugned order set aside; petitioner to deposit 10% of disputed taxes with verification and adjustment mechanism; on compliance assessment order to be treated as show cause notice and objections to be considered after hearing; impugned order to be restored on non-compliance.

Final Conclusion: Writ petition disposed of by setting aside the assessment order dated 19.08.2024 and remanding the matter to the assessing authority for fresh consideration on compliance with the conditional pre-deposit and filing of objections; failure to comply will result in restoration of the impugned order.

Cancellation of registration of the petitioner - non filing of the GST return for a considerable period - petitioner contends that now the petitioner is ready to make the payment towards GST return as well as the penalty, if any, imposed by the respondent-department - HELD THAT:- In view of the consensus between the parties, the matter is covered by the order passed in WPMS No.2285 of 2024, [2024 (9) TMI 904 - UTTARAKHAND HIGH COURT], the present writ petition is also decided in terms of the said order. The petitioner shall be at liberty to move an application for revocation or cancellation of the order under Section 30(2) of the CGST Act, 2017, within two weeks.

The writ petition stands disposed of.

Reopening of assessment u/s 147 - attempt to reopen the case based on the audit objection - petitioner's failure to provide attachments and evidence to support their claims -Scope of post-amendment reopening - HELD THAT:- In the absence of any attachments being annexed in the present petition, this Court cannot examine whether the issue for which reopening is sought, details of which were filed during the regular assessment proceedings or not. If the petitioner relied on the same email, it was incumbent upon him to annex the attachments to Exhibit C’. Therefore, even on this count, the petitioner cannot invoke the extraordinary jurisdiction of this Court in support of his submission.

In the assessment order, the officer has stated that the income was assessed after verification of the details. At least prima facie, there is no indication of the details. Therefore, this would require examination and investigation of the facts as to what details were filed, and in the absence of any attachments to Exhibit ‘C’, this Court cannot exercise its discretionary and equitable jurisdiction to investigate such factual issues. The information furnished to the petitioner states that the revenue audit could not find any documentary evidence on record to show nexus. Therefore, this would require the Court to go into facts of what was filed or not, and such an exercise certainly cannot be carried out in writ proceedings.

Given the facts in the present case and the petitioner’s failure to provide the entire material on which he alleges a change of opinion, we do not deem it appropriate to decide the legal contention of whether post-amendment reopening can be done based on an audit opinion even if a query was raised during assessment proceedings. The necessary factual foundation for deciding this issue is simply not evident in this case. Merely relying upon precedents but not demonstrating how they apply to the fact situation at hand or not placing the entire material before the Court renders it quite unsafe to decide this issue one way or the other in this case. Our observations are, therefore, prima facie.

We deem it fit not to exercise discretionary and extraordinary jurisdiction to entertain the present petition but to give the petitioner liberty to raise the issue of the validity of the reassessment proceeding before the Appellate Authority if and when the reassessment order is challenged pursuant to the notice under Section 148 of the Act. WP dismissed.

Rectification u/s 254 beyond period of limitation - rectification application must be filed within six months from the date of knowledge of the order sought to be rectified - HELD THAT:- Even according to the Petitioner, the limitation period expired on 31 May 2022, i.e. beyond the period between 15 March 2020 and 28 February 2022. The Petitioner’s contention that the limitation in this matter would commence only from 01 March 2022 cannot be accepted. This is not what the order which the Petitioner relies upon says.

Therefore, even though the plea based on the order of the Hon’ble Supreme Court was never raised by the Petitioner before the ITAT, still, upon consideration of the same, we find that the same would not assist the Petitioner in the facts of the present case.

Insofar as the second contention is concerned, the issue of sufficient cause is not quite relevant. Section 254 of the IT Act does not contain any provision that enables the ITAT to condone a delay beyond 6 months. This is so held by the coordinate bench in Ram Baburao Salve [2024 (9) TMI 1127 - BOMBAY HIGH COURT]

Given the above position, sufficient cause, if any, would be irrelevant. The ITAT has also not gone into the issue of sufficient cause but by relying on the decision of Re. Karuturi Global Ltd.[2019 (7) TMI 939 - KARNATAKA HIGH COURT] held that it has no power to condone the delay in entertaining an application under Section 254 (2) of the IT Act.

Since the ITAT’s view aligns with that of our coordinate bench in Ram Baburao Salve (supra) and the decision of Re. Karuturi Global Ltd. (supra), we see no good ground to interfere with the impugned order.

Seizure of gold and jewellery at Airport u/s 132(1)(iii) - as argued bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business - revenue submitted that the petitioners have alternate and efficacious remedy u/s 132B

HELD THAT:- In the clarification, no specific plea is raised regards seizure being ultra vires the provisions of Section 132 (1) (iii) proviso of the Act. If the petitioners seek writ of mandamus, it is important that the petitioners demand justice from the authorities and this is followed by refusal. The issue of seizure being ultra vires Section 132 (1) does not appear to have been raised by the petitioners and based upon the same, there is no demand of return of the gold and jewellery.

Petitioner submits that he would obtain instructions whether such demand is made. If such demand is indeed made, then, the petitioners must point out such demand to the respondents so that the respondents can deal with such demand.

If no demand is made, we grant the petitioners a week’s time to make such demand by giving full particulars and also, by referring to the relevant legal provisions upon which the petitioners seek to rely upon. Within two weeks from receipt of such demand/application/representation, the concerned respondents must deal with such demand/ application/representation and dispose of the same in accordance with law.

Validity of Assessment u/s 153C - as argued material gathered had no correlation or connection with the individuals who were subjected to the search - whether in the absence of the evidence gathered being pertinent or relevant to the persons named in the search authorization, the commencement of action u/s 153C against the writ petitioners would not sustain?

HELD THAT:- The trigger for Section 153C is thus the discovery of documents or articles in the course of a search which pertain or belong to a third party, and which may have a bearing on the determination of the total income of such other person for the six AY period or the relevant assessment years.

In terms of the procedure as prescribed under Section 153C, the AO of the searched entity, on being satisfied that the books or articles discovered in the course of the search belong or pertain to a person other than one referred to in Section 153A, would transmit the same to the jurisdictional AO of the non-searched entity. That jurisdictional AO is thereafter obliged to form an opinion whether the books of account, documents or assets seized are likely to have a bearing on the determination of the total income of such other person.

The entire edifice of Section 153C is built on incriminating material that may be gathered in the course of a search. The submission that action under Section 153C must be premised upon some connection between the searched and the non-searched entity or for that matter on the material gathered having some link with the searched person is clearly misconceived. If the material that had been gathered were to have a link or connect to the searched persons, it would clearly not fall within the scope of Section 153C at all. This, since the commencement of action under that provision is itself predicated upon the material gathered in the course of the search belonging or pertaining to an unrelated party and one who may not have been covered under the search authorization.

We are therefore of the firm opinion that the statutory scheme does not mandate or envisage the discovery of a connect or interrelationship between the searched and the non-searched entity.

Action under Section 153C is premised solely on the discovery of incriminating material and which is likely to have an impact or bearing on the assessed income of a non-searched entity. The statute neither requires nor obliges the AO of the other person to find or uncover a relationship or an association between the searched and the non-searched person.

The provision is merely concerned with the evaluation of the material unearthed in the course of a search and an assessment of whether it is likely to have a bearing on the income of a non-searched entity. If the submission of Mr. Sinha were to be accepted, we would be compelled to read Section 153C as being liable to be invoked only if there be some relationship between persons who were subjected to the actual search and those to whom the material may relate. Interpreting Section 153C as suggested would lead one to a situation where even though the material unearthed may be incriminating, absent a relationship between persons, the AO would be left powerless to even consider the likely impact of that material. That clearly does not appear to be the object or the purpose of that provision. We are thus of the considered opinion that the challenge is clearly misconceived. WP dismissed.

Suit for recovery - Contravention of the statutory provisions of Section 269ST r.w.s. 271D - plaintiff transferred the money in cash and that the same was received by the defendants - Whether the collaboration agreement is void on account of being violative of the statutory provisions? - HELD THAT:- The defendant received Rs. 1.5 crore in cash, a fact that remains undisputed. The defendant now seeks dismissal of the suit for recovery in limine by relying on Section 269ST of the Income Tax Act, 1961, arguing that the transaction itself is illegal.

Court cannot lose sight of the crucial fact that Section 271DA of the Income Tax Act imposes a penalty only on the recipient of the cash amount, thereby making the defendant the culpable party in the eyes of law. The provision does not render the underlying transaction void but only prescribes a fiscal penalty for the contravention, which would also be chargeable against the hands of the recipient, who in the instant case is the defendant. Therefore, the defendant cannot take advantage of his own wrongdoing to escape liability.

As in Loop Telecom [2022 (3) TMI 1629 - SUPREME COURT] clarified that the 'Principle of In pari delicto' applies only when both parties are equally responsible for the illegality. Here, it remains undisputed that the plaintiff made a payment under the Collaboration Agreement, while the defendant was the party who violated Section 269ST by receiving the amount in cash. As per Loop Telecom, the defendant cannot be allowed to unjustly enrich himself by retaining the money under the guise of statutory violation of Section 269 ST, which draws the penal liability solely against him.

Thus, the defendant cannot be permitted to benefit from the alleged statutory illegality, especially when it is he who has committed the contravention under Section 269ST of the Income Tax Act.

As the Supreme Court in Loop Telecom emphasized, Section 65 of the Contract Act mandates restitution where one party has derived an advantage under a void agreement, provided they are not in pari delicto. Since the plaintiff merely discharged a contractual obligation, and the defendant was the one in violation of the law, he cannot escape the liability for restitution.

Thus, even if the Collaboration Agreement is alleged to contravene the provisions of the Income Tax Act, the determination of such a violation falls exclusively within the domain of the Income Tax Authorities under Section 271D of the Act. The mere receipt of cash in violation of Section 269ST does not, by itself, render the underlying agreement void or unenforceable in a Civil Court. In the absence of any established intent on the part of the plaintiff to evade tax liability, which is also a matter to be adjudicated by the competent Income Tax authority, there exists no statutory bar preventing this Court from entertaining the suit for recovery. The statutory penalty prescribed for contravention of Section 269ST is imposed upon the recipient and not the payer, and the imposition of such a penalty does not automatically nullify the underlying transaction.

The defendant has failed to demonstrate any legal bar to the maintainability of the present recovery suit within the confines of Order VII, nor can such a bar be implied by an overextended interpretation of a fiscal statute whose objective is merely to regulate cash transactions rather than to vitiate otherwise valid agreements.

Accordingly, the plea raised by the defendant, seeking rejection of the plaint under Order VII Rule 11 (d) of the CPC on the ground of statutory violation, is misconceived, as the same fails to establish any express legal prohibition that would preclude the Court from adjudicating the instant claim for recovery.

ITAT remanding the matter back to CIT(A) to decide the purely legal issue even after admitting the additional ground as purely legal ground under Rule 27 itself - HELD THAT:- Tribunal itself has reached to the conclusion that there does not seem to be any dispute so far as the legal issues raised before the CIT(A) are concerned. There is also no dispute so far as the assessee having raised the ground of applicability of Rule 27 of the Rules.

The Tribunal also does not seem to be in quarrel to the contention of the appellant that they had, in fact, raised the ground of Rule 27 before the Tribunal and which has been left undecided, though the CIT (A) had decided the matter in favour of the assessee.

Rather than again remitting the matter back to the CIT (A) for fresh adjudication of the matter and thereafter again facing another round of appeals by either of the parties, it would have been more appropriate if the Tribunal itself would had decided the said issue rather than remitting the matter back to the Tribunal.

The view taken by the Income Tax Appellate Tribunal in the instant case does not seem to be proper, legal and justified. The Tribunal should have itself decided the said matter on merits in accordance with law. Hence, the order of remand by the impugned order deserves to be and is, accordingly, set aside and the matter stands remitted back to the Income Tax Appellate Tribunal for the Tribunal itself to decide the grounds.

Deduction under Section 80IA - infrastructure facility - agreement with Central or State Government, local authority or statutory body - revisional powers under Section 263 - statutory body / State action

Deduction under Section 80IA - infrastructure facility - agreement with Central or State Government, local authority or statutory body - Whether the respondent-assessee was eligible to claim deduction under Section 80IA in respect of the concession granted by DIAL. - HELD THAT: - Section 80IA(4) applies only where the enterprise carries on the business of developing, operating and maintaining an "infrastructure facility" and has entered into an agreement with the Central or State Government, a local authority or any other statutory body. Although an airport is an "infrastructure facility" under the Explanation to Section 80IA(4), the qualifying condition requires that the relevant agreement be with the Central/State government, local authority or a statutory body. DIAL arose as a private consortium which obtained a concession from AAI under the OMDA; that concession and the arrangement whereby AAI granted rights to a private consortium does not elevate DIAL to the status of a Central/State government, local authority or statutory body for the purposes of Section 80IA(4). The concession granted by DIAL to the assessee therefore does not satisfy the primordial requirement of Section 80IA(4) that the enterprise have an agreement with the specified public authorities. For these reasons the Principal Commissioner was justified in doubting the entitlement to the deduction and in holding that the AO's allowance was open to revision under Section 263. The Tribunal erred in treating earlier High Court decisions on writ jurisdiction and "State action" as determinative of eligibility under Section 80IA, and in restoring the AO's order without addressing the statutory pre-conditions in Section 80IA(4). [Paras 25, 26, 27]

The respondent-assessee was not eligible to claim deduction under Section 80IA in respect of the concession from DIAL because DIAL does not qualify as the Central/State government, local authority or statutory body required by Section 80IA(4); the PCIT was justified in exercising powers under Section 263.

Final Conclusion: The appeal is allowed; the order of the Tribunal dated 23 October 2018 is set aside and the order of the Principal Commissioner of Income Tax restoring the exercise of revision under Section 263 is restored.

Reopening of assessment u/s 147 - Videocon Industries Ltd. [Videocon] had utilised financing and credit facilities granted to it to provide interest free loans to various entities, including Top Most Investment, YK Securities and Glider Investment - HELD THAT:- On a more fundamental plane, it appears to have been asserted that even if it were assumed that the allegation of Videocon having diverted credit facilities received by it to provide interest free loans were accepted to be correct, there could be no plausible or justifiable reason to hold that income assessable in the hands of Top Most Investment, YK Securities or Glider Investment could be said to have escaped assessment.

The various objections which were made were ultimately negated in terms of the final order u/s 148A(d) which came to be passed by the respondents.

This since the solitary allegation which is levelled is a diversion of funds by Videocon to YK Securities, Top Most Investment and Glider Investment. Even if it were assumed to be correct that the Videocon had diverted funds and credit facilities provided by banks and financial institutions to third party entities, it would have at best and perhaps led to the deletion of any claims towards interest paid that may have been made by that entity.

We fail to comprehend how such a diversion of funds could have led to the formation of opinion that income taxable in the hands of Top Most Investment, YK Securities and Glider Investment could have escaped assessment. The notice u/s 148A (b) dated 31 March 2023 and the order u/s 148A (d) dated 20 April 2023 fails to provide any clue as to how such an opinion could have been formed even on a prima facie basis.

We find ourselves unable to sustain the impugned order of reassessment.

Rejection of application seeking for registration u/s 12A as well as approval u/s 80G - submission of assessee that the various details were furnished before the CIT(Exemption), however, the same were not as per his requirement and if given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details before the CIT(E) to his satisfaction - HELD THAT:- Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the CIT(Exemption) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details.

Denial of approval u/s 80G - Since we have already restored the issue of registration u/s 12A to the file of the Ld. CIT(E) for adjudication afresh, therefore, we deem it proper to restore the issue of approval u/s 80G also to his file for fresh adjudication.

Appeals filed by the assessee are allowed for statistical purposes.

Addition u/s 40A(3) - payments made to suppliers of material in the assessee's contract business - as submitted payments have been made by bearer cheques to various individuals for supply of material and the necessary certificates from the Mukhias of the relevant Gram Panchayat had also been produced before the AO in the course of the original proceedings itself wherein it has been categorically admitted that there is no branch of any bank in the village where the suppliers were operating - HELD THAT:- It is clear that even, in the course of the original proceedings, the certificate issued by the Mukhia of the relevant villages were available. Obviously, the Mukhias are the Gram Pradhan who were elected representatives and who know the facts and the ground reality. They represented to the Government also in their respective villages. Such Mukhias have specifically confirmed that there are no banks or any branch of banks operating in the respective villages. Thus, obviously, the provisions of Rule 6DDJ would come into play and no disallowance can be made in respect of the payment made by bearer cheques to the various suppliers of material.

Addition invoking the provisions of section 40(a)(ia) - non-deduction of TDS on payments made to Mangla Planners for map design - HELD THAT:- As submitted by the ld. AR that in view of the principles laid down in the case of Hindusthan Coca Cola Beverage (P) Ltd. [2007 (8) TMI 12 - SUPREME COURT] the issue could be restored to the file of the Assessing Officer for verification as to whether the recipients of the amount of Rs. 2,95,000/- being Rs. 1,00,000/- paid to Mangalam Planners and the amount of Rs. 1,95,000/- paid to the different persons for the design and planning of the water towers have been offered by the recipients to tax as their income. AO will also consider the fact as to whether the recipients are liable to tax or whether their incomes are below the taxable limit.

Revision u/s 263 - assessment order passed u/s 147 r.w.s. 144B challenged distinction between "lack of inquiry" and "inadequate inquiry" - claim of 100% deduction u/s 80IC - re-verify and re-examine the matters in reference being the question of the proportion of deduction (viz. 25% versus 100%) u/s 80IC for the reason that prior to the initiation of the revision proceedings, enquiries/examinations in the manners in which these ought to have been carried out were not so carried out by the Assessing officer rendering such previous impugned order of assessment erroneous and prejudicial to the interest of Revenue.

HELD THAT:- No discussion or findings by the ld Pr.CIT in respect of the nature of enquiry or verification so carried out by the AO vis-à-vis its reasonableness in the facts and circumstances of the case in the proceedings so completed u/s 147 r/w 144B of the Act. The Explanation 2(a) to Section 263 doesn’t give such unfettered powers to the ld PCIT and it is the responsibility of the ld PCIT to show that the enquiry or verification conducted by the AO was not in accordance with the enquires or verification that would have been carried out by a prudent officer in the facts and circumstances of the present case.

Merely the fact that the order so passed is cryptic doesn’t give the jurisdiction to ld PCIT to exercise the jurisdiction u/s 263 as what needs to be seen is the assessment records at the time of examination by the ld PCIT and which speak about the issue of notices, the submissions and documentation so submitted by the assessee which reflect due application of mind by the AO. The assessment order is reflection of conclusion of assessment proceedings and it is an accepted practice that only where an adverse view is taken against the assessee, the basis of arriving at such a adverse view find mention in the assessment/reassessment order which in turn allows the assessee to challenge and avail remedial action as so advised.

AO after calling for required information/documentation and after duly considering the explanations and documentation submitted before him, reached a rightful conclusion that the assessee is eligible for claim of 100% deduction u/s 80IC of the Act for the impugned assessment year 2017-18.

In our view, such a view is clearly a plausible view which a reasonable and prudent officer could have taken and in absence of any further enquiry conducted by the ld PCIT and merely for the purposes of re-verification and re-examination of claim so allowed, the view so taken and order so passed by the Assessing officer cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue and the exercise of revisional jurisdiction by the Ld. PCIT u/s 263 cannot be sustained in the eyes of law. Assessee appeal allowed.

Cessation of liability - application of section 41(1) of the Income Tax Act - addition under section 68 of the Income Tax Act - genuineness and existence of liability - lease deposits and booking advances treated as current liabilities

Cessation of liability - application of section 41(1) of the Income Tax Act - genuineness and existence of liability - lease deposits and booking advances treated as current liabilities - addition under section 68 of the Income Tax Act - Deletion of addition of Rs. 5.20 crore (lease deposit Rs. 3.00 crore and booking advances Rs. 2.20 crore) made by the Assessing Officer under the head of cessation of liability. - HELD THAT: - The Tribunal affirmed the CIT(A)'s conclusion that the Assessing Officer failed to satisfy the foundational condition for invoking section 41(1): there was no prior allowance or deduction in any assessment which was subsequently followed by a remission or cessation entitling the assessee to be taxed under section 41(1). The AO had doubted the genuineness and existence of longstanding liabilities but did not demonstrate that any allowance or deduction had been made earlier in respect of those liabilities. The transactions in question (lease deposits and booking advances) were old, preexisting items recorded in audited balance sheets and supported by lease deed, ledger entries and confirmations; the lease deposit related to a subsisting lease agreement and booking advances were routine advance receipts in the developer's business to be appropriated to sale on completion. The Tribunal further observed that, while the AO could have considered the AO's doubt of genuineness as a basis for proceedings under section 68, the transactions were old and not made in the year under consideration, and section 68 was not attracted on the facts. The Tribunal accepted the view that the Explanation to section 41(1) was not satisfied on the material before the AO and that the AO had not articulated how section 41(1) applied; on that basis the additions were unsustainable and were correctly deleted by the CIT(A). The Tribunal also noted reliance on precedents supporting that booking advances and bona fide deposits do not ipso facto result in cessation of liability where liabilities subsist and are evidenced. [Paras 10, 11, 13, 15, 16]

Addition of Rs. 5.20 crore under section 41(1) deleted; grounds of Revenue dismissed.

Final Conclusion: The order of the CIT(A) deleting the additions on account of alleged cessation of liability (lease deposits and booking advances) is upheld; the Revenue's appeal is dismissed.

Addition u/s 68 - Unexplained cash credit - HELD THAT:- We find that the assessee submitted confirmations, bank statements, and ITRs of all share applicants, thereby discharging its initial burden of proof.

As held in the case of CIT vs. Vrindavan Farms (P) Ltd. [2015 (11) TMI 279 - DELHI HIGH COURT] once the assessee submits basic documentary evidence, the onus shifts to the AO to make further inquiries and bring contrary material on record. In the present case, the AO merely rejected the documents without conducting further verification, which is contrary to this principle.

As decided in case of Arjun Trading Co. Pvt. Ltd. [2018 (6) TMI 1860 - ITAT AGRA] where a company is newly incorporated and has not commenced business, cash credits cannot be treated as unaccounted income.

AO rejected creditworthiness solely on the ground of low-income levels of investors, which is legally untenable - AO failed to conduct any further inquiry or cross-examine the investors, despite having their details. This is contrary to the principle laid down in the case of Clavecon India P. Ltd. [2023 (12) TMI 625 - ITAT DELHI] where it was held that if the AO doubts the creditworthiness, he must conduct independent inquiries before making an adverse inference.

The rejection of share applicants' creditworthiness solely on the basis of their low-income levels is not legally sustainable. Since no business activity had commenced during the relevant year, the application of Section 68 in this case is wholly unwarranted. Accordingly, the addition under Section 68 deserves to be deleted in its entirety.

Alternative addition u/s 56(2)(viib) - AO’s action of ignoring the DCF method without any proper basis and replacing it with the NAV method is arbitrary, contrary to legal precedents, and unsustainable in law. Accordingly, the alternative addition under Section 56(2)(viib) of the Act is unjustified and deserves to be deleted.

Disallowance of expenses - As per AO since no business operations were carried out, the expenses could not be allowed as business expenditure - AO noted that the financial cost was related to borrowings used for investment in the share capital of an associate company, which is not allowable u/s 57(iii). Similarly, ROC expenses were held to be capital in nature. Other expenses such as traveling, legal, and professional fees were also disallowed due to lack of any direct connection with the interest income. The CIT(A) upheld the disallowance, concurring with the AO’s finding that the expenditure was not incurred for the purpose of earning interest income and thus could not be allowed u/s 57(iii) of the Act. The only expenses allowed were statutory audit fees, postal expenses, and telephone charges which were deducted from the income.

We find no reason to interfere with the decision of the lower authorities. The assessee did not demonstrate any direct nexus between the claimed expenditure and the income earned, which is a necessary condition u/s 57(iii) - AO and CIT(A) have correctly applied the provisions of law, and accordingly, the disallowance is justified.

Appeal of the assessee is partly allowed.

Unexplained cash credit u/s 68 - Bogus share application / share premium, received during the year - HELD THAT:- Assessee has filed the various documents / evidences of the 8 share subscribers which comprised of share application, ITRs, audited financial statements, PAN Cards, allotments receipts, bank statements of source of funds, assessment orders u/s 147/143(3) of the Act. We find that in all most all the cases the assessments were framed u/s 143(3) r.w.s 144 of the Act.

We also find that the source of source were explained in some cases even though the same was not required. Needless to say that all these details / documents were before the ld. CIT (A) who has not taken a cogent view to the same. We also note that the ld. AO has also issued summons u/s 131 of the Act to the director of the assessee company, which were not complied with. Now, coming to the evidences filed before us, we have examined the evidences filed by the assessee in the form of share applications, ITRs, audited financial statements, PAN Cards, allotments receipts, bank statements of source of funds, assessment orders and find that the identity and creditworthiness of the shares and the genuineness of the transactions are adequately proved. However, the authorities below have failed to conduct any enquiry or pointed any defects the said documents.

As decided in Shreen Hire Purchase P. Limited [2024 (12) TMI 1536 - CALCUTTA HIGH COURT] both the nature & source of the share capital received with premium were fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed before the ld AO. Accordingly, all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction were placed before the AO and the onus shifted to the ld AO to disprove the materials placed before him. Without doing so, the addition made by AO is based on conjectures and surmises cannot be justified.

Assessee appeal allowed.

Unexplained cash credit u/s 68 - AO observed that the assessee had deposited cash in three different bank accounts during the year -

Cash Deposit in Andhra Bank - HELD THAT:- It is a well-recognized fact that real estate transactions in India often take place based on oral agreements, particularly in cases where mutual trust exists between parties. The sale-purchase deed furnished by the assessee before the ld. CIT(A) and in remand proceedings before the AO clearly establishes the flow of funds. This documentary evidence directly supports the assessee’s explanation that the cash received was used towards the cost of acquiring the property for Mr. Chandra Kaladhara Reddy. Despite this crucial fact being on record, both the CIT(A) and the AO have failed to consider it, which constitutes a significant lapse in the assessment proceedings.

Additionally, the Revenue failed to conduct any independent inquiry with Shri Chandra Kaladhara Reddy, despite all relevant details being available on record. In view of the above, we hold that the assessee has duly discharged the primary onus under Section 68 of the Act concerning the cash deposit of ₹ 1.57 crore in Andhra Bank. Since the Revenue has not controverted this explanation through independent inquiry or contrary evidence, we hereby set aside the findings of the lower authorities and direct the AO to delete the addition of ₹ 1.57 crore.

Cash Deposits in Chartered Sahakari Co-operative Bank and Karnataka State Apex Co-operative Bank - We observe that the assessee has made cash withdrawals from these banks throughout the year.

Similarly, we also note that there was balance cash receipt of Rs. 50 lacs (200 lacs less 150 lacs) against the sale of the property discussed above. The aggerate of all these cash is sufficient to justify the deposit of cash discussed above. At the same time, the revenue has not brought anything on record suggesting that the amount of cash available in his hands discussed above has been utilised for any other purposes i.e. personal expenses or investments other than the deposit in the impugned bank accounts. Given these facts and circumstances, we are inclined to set aside order of the learned CIT-A with the direction to the AO to delete the addition made by him on account of cash deposits in the bank.

Credit in the assessee’s bank account from M/s KR Shelter and on account of interest, neither of which were offered to tax - Out of the sum of ₹ 29 lakh credited from M/s KR Shelter Pvt. Ltd., only ₹ 19 lakh is accounted for in the books as commission income and advance. However, the accounting treatment for the remaining ₹ 10 lakh is not substantiated in the profit and loss account or balance sheet. Based on the facts emerging from the above discussion, we conclude that the assessee has failed to establish that the amount of ₹ 10 lakh credited to his bank account was duly accounted for and offered to tax. Accordingly, we confirm the same.

Similarly, we note that assessee’s Andhra Bank account was credited with ₹ 2.45 lakh, with the transaction description reading "Inst03551 Clg Axis Bank Ltd," which was treated by the authorities below to be an interest credit. Upon reviewing the same, we note that Inst03551 represents the “instrument” and not the interest as alleged by the revenue. Accordingly, we are of the view that such amount of Rs. 2.45 lacs do not represent the undisclosed interest income of the assessee as alleged by the authorities below. Accordingly, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him for Rs. 2.45 lakhs on account of interest income. Hence, the ground of appeal raised by the assessee is hereby partly allowed.

Jurisdiction - power of DRI to issue SCN - Proper officer or not - HELD THAT:- The Supreme Court in COMMISSIONER OF CUSTOMS VERSUS M/S CANON INDIA PVT. LTD. [2024 (11) TMI 391 - SUPREME COURT (LB)] has disposed of the review petition by observing that the decision passed in the Canon India Private Limited did not consider the notification and provisions of law since same was not brought to their notice. The Supreme Court in review petition held that the DRI officer is the “proper officer” for issuing the show cause notice. The Supreme Court also upheld the Validation Act by which amendment, the DRI officers were empowered to issue show cause notices. Now that the review petition filed by the Revenue has been allowed, the Petition is taken up for disposal.

The Petitioner is granted twelve weeks time [from the date of uploading of this order on the High Court website] to file an appeal challenging the Order-in-Original dated 30th March, 2023 before the CESTAT.

Conclusion - The DRI officers, Commissionerates of Customs, and other relevant officers are proper officers for issuing show cause notices under Section 28.

Petition disposed off.

Seizure order - condition precedent of "reason to believe" under Section 110(1) of the Customs Act, 1962 - extension of the time limit for issuing a show cause notice under Section 124 of the Customs Act, 1962, without granting an opportunity to be heard - violation of principles of natural justice - HELD THAT:- On a bare reading of sub-section (1) of Section 110, it is crystal clear that the proper officer must form reason to believe that the goods which he is looking to cease are liable to be confiscated. Chapter XIV of the Act of 1962 contains the provisions for confiscation of improperly imported goods, goods attempted to be improperly exported etc., confiscation of conveyance, confiscation of goods used for concealing smuggled goods, adjudication of confiscations and penalties and adjudication procedure.

The learned co-ordinate Bench In case of Assam Supari Traders [2024 (9) TMI 1617 - PATNA HIGH COURT] held that what has been assigned as reason for seizure is that there are violation of the aforementioned statutory provisions. In what manner is not forthcoming in the seizure memo. The Court observed “Prima-facie, none of the cited provisions are attracted in the present case, having regard to the factual aspect of the matter read with documents relating to purchase of goods and its transportation and traders are registered and they are fulfilling all the criteria for purchase of dried Areca nuts transportation and sale etc.” It has been held that what would constitute the reason to believe are to be recorded and for invoking the powers under Section 110 of the Act of 1962, the Seizing Officer has to record his reason to believe in writing.

In Santosh Kumar Murarka [2024 (8) TMI 1161 - PATNA HIGH COURT], the learned co-ordinate Bench held that there was disputed issue as to whether driver of the vehicle had produced relevant document at 21:00 Hours on 19.06.2021 or not. It was found that the RUD-05 E-way Bill was generated on 19.06.2021 at 09:26 PM and seizure was at 09:30 PM. Finding some discrepancies, the learned co-ordinate Bench was of the view that under Article 226 Court cannot examine disputed issues among the parties.

A conjoint reading of sub-section (2) of Section 110 and Clause (a) of Section 124 of the Act of 1962 would make it clear that where no notice in respect of the seized goods under sub-section (1) of Section 110, is given under Clause (a) of Section 124 within six months of the seizure of the goods or within the extended period under the first proviso to sub-section (2) of Section 110, the goods shall be returned to the person from whose possession they were seized. The effect of not giving notice under Clause (a) of Section 124 within six months of the seizure of the goods is stipulated under sub-section (2) of Section 110 and according to this, the consequence would be that the goods shall be returned to the person from whose possession they were seized - In this case, admittedly the goods have been provisionally released on 16.06.2020 i.e. after a period of six months, twice this period has been extended by three months each.

It is apparent from a bare reading of the order of the Hon’ble Supreme Court in UNION OF INDIA & ORS. VERSUS M/S. OM SAI TRADING COMPANY & ANR. ETC. [2022 (9) TMI 1656 - SC ORDER] that it was passed after granting leave against the Division Bench judgments of this Court and the effect of the order of the Hon’ble Supreme Court may be clearly seen. The principle of ‘merger’ will apply. Despite quashing of the seizure memo, it cannot be said that the appellants cannot investigate and proceed in accordance with law under the provisions of the Act of 1962.

Conclusion - Seizure memos must contain specific reasons to believe for confiscation, mere citation of statutory provisions is insufficient.

The seizure memo is quashed; however, the show cause notice was upheld - application allowed.

Smuggling of Gold - Entitlement to additional compensation from the Respondent after the confiscation and subsequent release of gold weighing 755.50 grams - applicability of Instruction No. 22/2022-Customs - HELD THAT:- Clause 3.1.1 of the Instructions provide for the determination of the value of the gold at the time of seizure by recording the average market price per 10 gms. based on the price reported in three National Economic Dailies. Clause 3.1.2(i) of the Instructions states that where the seizure is made in the customs area, the calculations shall be based on the value of gold on the date of such seizure.

Concededly and in terms of the orders passed by this Court, the Petitioner has received the value of confiscated gold. The grievance of the Petitioner is that, he has paid Rs. 3.14 lakhs approximately in excess in view of the difference in the value of customs duty. However, what the Petitioner has not taken into account is that the Petitioner has received an additional amount. Since, the difference in the rate of gold in these 10 years was approximately Rs. 370/- for 10 gms., the value for 755.50 gms. of gold would be approximately Rs. 2.8 lakhs. Given this fact, the contention that the Petitioner recovered 3.14 lakhs less is incorrect.

Conclusion - The Petitioner had already received the value of the confiscated gold and that the additional compensation claimed was not justified based on the valuation and customs duty calculations. The prayers in the present Petition stands satisfied in view of the fact that the payment for the seized gold has already been received by the Petitioner.

Petition disposed off.

Invocation of extended period of limitation - suppression of facts or not - importation of melting scrap without a proper inspection certificate - HELD THAT:- From the documents placed on record, it is found that the appellant, upon import, had filed various Bills of Entry right from 09.04.2003 and the last presentation of such Bills of Entry was dated 04.06.2003 though it is undisputed that the imports were made against different DEPB licenses. The date of Show Cause Notice, as noted supra, is 19.12.2005 which is clearly beyond two years, moreover in the SCN strangely, the Authority has only proposed to raise the demand under provisions of Section 28 (1) ibid.

Hence, the findings of the Original Authority in the Order--in--Original as well as the First Appellate Authority in the impugned Order-in-Appeal insofar as invoking of extended period of limitation is concerned is clearly beyond the SCN and hence, the impugned order cannot sustain.

Conclusion - The demand proposed in the Show Cause Notice is time-barred, as it was issued beyond the normal period for such demands.

The appeal stands allowed on limitation alone. The demand, if any, for the normal period stands confirmed. The appeal is disposed of.

Levy of penalty on appellant u/s 112(b) of the Customs Act, 1962 - alleged involvement in the smuggling of foreign-origin cigarettes - entire case upon appellant is based upon the statements recorded behind his back - opportunity of cross- examination of such persons who have given the statements, was not granted - violation of principles of natural justice - HELD THAT:- As per his own admission as well as the statements of different persons concerned like Sri Pravin Kumar Singh, Sri Srimonta Rakshit, Sri Man Singh, Sri Akhilesh Singh and Mr. Matin, Sri Santosh Kumar Prasad is the main link man of this smuggling racket. Shri Santosh Kumar Prasad arranged the CHA, the transporter, the godown and instrumental in the breaking open of the container. He arranged the declared stationery goods for repalcement, as per CTD for the containers GESU5984886 (40) and VMLU 3707024 (20').

The appellant submitted that he has retracted his statement vide his letter dated 28.07.2015. However, his statement was again recorded on 04.08.2015, wherein he has reiterated what he has stated in his earlier statements dated 23.05.2015 and 26.05.2015. Thus, it is observed that the retraction was only an after thought, which need not be taken cognizance as he has affirmed his earlier statements again in his subsequent statement after the retraction. Thus, the statements given by the appellant can be relied upon against him to establish his role in the offence. As the role of the appellant in the offence committed has been established based on his own admission as well as the statements of different persons concerned like Sri Pravin Kumar Singh, Sri Srimonta Rakshit, Sri Man Singh, Sri Akhilesh Singh and Mr. Matin, it is held that the appellant is liable for penalty as per Section 112(b) of the Customs Act, 1962.

Conclusion - The Appellant had knowingly or consciously involved himself in the alleged act of smuggling. Thus, the appellant has abetted the illegal smuggling activities and thereby connived with the smuggling racket for smuggling of cigarettes in to the country. Accordingly, the ld. adjudicating authority has rightly imposed penalty on the Appellant under Section 112(b) of the Customs Act, 1962. However, the penalty imposed on him is very high and it can be reduced to commensurate with the role played by him in the offence. Accordingly, the penalty imposed on the appellant in the impugned order is reduced from Rs.50,00,000/- to Rs.25,00,000/-.

Appeal disposed off.

Classification of imported goods - converter, charging socket, connection box - to be classified under CTH 8703 9000 as electric motor vehicles or under CTH 8708 9900 as parts and accessories of automobiles? - recovery of differential duty with interest and penalty - HELD THAT:- In the instant case, it is noted that the appellant have imported certain components of the E-Rickshaw i.e.converter. charging socket, connection box, On-off switch, digital speedometer, alarm system, throttle with left grip, controller, left right switch, hand brake with wire, handle T, lamp ear, shocker, arm rest and motor. Thus, it is seen from the components, an E-Rickshaw can be assembled, even though it might be in an incomplete E-Rickshaw.

HSN Explanatory Notes is noted which categorically states that an incomplete or unfinished vehicle is classified as the corresponding complete or finished vehicle, provided it has the essential character of the latter. As per the HSN Explanatory Notes, even though parts of E-Rickshaw falling under CTH 8708 9900 were imported, on assembly, the said e-rickshaw is liable to be classified as complete or finished vehicle under CTH 8703 9000 provided it has the essential character of the latter - the appellant and has imported connection box for the e-rickshaw. The Connection box in an E rickshaw also known as junction box, is an electrical enclosure that protects wiring connections. It is an important safety feature that protects people from electric shock and the connections from environmental conditions.

It is noted that the Tribunal in Commissioner Of Customs (Import), Mumbai Versus Videomax Electronics [2010 (8) TMI 422 - CESTAT, MUMBAI], the CESTAT clubbed the consignments of two different importers namely M/s. Electronic Instrumentation and M/s. Videomax Electronics to come to conclusion that the parts imported by these two importers can be clubbed together and Law is made applicable to the assembled resultant product.

From the parts of E Rickshaw imported, it can be concluded that axles imported in these 10 consignments (Bills of Entry) are to supplement the other parts imported in the 8 each consignments ( Bills of Entry) meant for assembly of e-Rickshaws. It is noted that the impugned order has relied on the case law of Commissioner Of Customs (Import), Mumbai Versus Videomax Electronics which was upheld by Supreme Court in Electronic Instrumentation v. Commissioner [2011 (1) TMI 1517 - SC ORDER] while addressing the submissions made by the appellant.

The benefit of Sl. No. 526A of Notification No. 55/2017 dt. 30.06.2017 was not claimed by the Appellant at the time of filing of Bill of Entry. It is also noted that the impugned order has denied the benefit of the said Notification relying CESTAT Order in the case of Abhedya Industries Ltd. Versus Commr. Of C. Ex. & S.T., Hyderabad-III [2016 (7) TMI 1113 - CESTAT HYDERABAD].

Conclusion - The impugned components imported are essential components of the E-Rickshaw. Consequently, the correct classification of the impugned goods is CTH 87039000.

The appeal is dismissed.

Levy of penalty u/s 454 (3) of the Companies Act, 2013 read with Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014 amended by the Companies (Adjudication of Penalties) Rules, 2019 - non compliance of the provision of Section 203 (4) of the Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 - whether the authority could have applied its discretion while adjudicating the default on the part of the petitioners?

HELD THAT:- In Apex Traders [2024 (5) TMI 1525 - CALCUTTA HIGH COURT] the Court interpreted the expression ‘liability’ used in Section 203 (5) of the Companies Act, 2013. The Court was of the opinion that the language of Section 203 (5) confirms discretion on the Registrar of Companies to impose penalty. Such discretion also includes the converse, that is, the discretion not to impose penalty or to impose lesser penalty. The liability has been found to be subject to adjudication by the Registrar of Companies. Such discretion associates with it, responsibility of the adjudicating authority to consider any mitigating or alleviating circumstances which might have visited the Company for not adhering to the statutory provision.

The Hon’ble Supreme Court in the matter of Chairman, SEBI [2006 (5) TMI 191 - SUPREME COURT] interpreted the words ‘shall be liable’ under the SEBI Act and the regulations framed thereunder and held the same as mandatory provision for imposition of monetary penalties for breaches or non-compliance with the provisions of the Act and the regulations - The Court clearly laid down that penalty is attracted as soon as the contravention of the statutory obligation contemplated by the Act and the regulations are established and intention of the parties committing such violation becomes wholly irrelevant. Once contravention is established, the penalty is to follow.

The Court was of the view that the power to impose penalty would be severely curtailed if the presence of mens rea is to be considered. The same would set the stage for various market players to violate statutory regulations with impunity and subsequently claim ignorance of law or lack of mens rea to escape imposition of penalty. Imputing mens rea against the plain language of the statute would frustrate the entire purpose and the object of the Act to secure strict compliance of the statutory provisions.

Whether the authority could have exercised discretion in fixing the quantum of penalty and whether the quantum of penalty imposed is proper or not? - HELD THAT:- Section 203(5) of the Companies Act, 2013 lays down that if the Company contravenes the provisions of the Section, the Company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. Every Director in default shall be punishable with fine which may extend to fifty thousand rupees and where the contravention is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.

In the instant case, the contravention continued for years together. The adjudicating authority gave benefit to the Company for the COVID period and calculated the fine. The authority exercised its discretion in doing so. Such exercise of discretion does not appear to be illegal, erroneous or arbitrary, requiring interference. Hence, the Court is not inclined to interfere with the same.

Petition dismissed.

Maintainability of petition without exhausting alternative remedies under the Payment of Gratuity Act, 1972 - Gratuity and its Interplay with IB Code - whether Gratuity Fund come within the meaning of Assets of Corporate Debtor for distribution u/s 53 IBC or not - HELD THAT:- Since in many instances, liquidation results in the complete closure of the business of the ailing debtor, which results in the termination of the employment of the workers. In legal parlance, this discharge of workers amounts to their retrenchment i.e. the termination of service of workers by the employer for any reason other than punishment inflicted by way of disciplinary action. Naturally to protect the workers, funds such as pension fund, provident fund, and the gratuity fund are kept out of the liquidation distribution and to be used solely for the benefit of the workers.

This question was even dealt with by the National Company Law Appellate Tribunal (NCLAT) in Somesh Bagchi v. Nicco Corpn. Ltd. (Somesh Bagchi) [2018 (7) TMI 2362 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] as well SBI v. Moser Baer Karamchari Union (Moser Baer – NCLAT) [2019 (8) TMI 915 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] wherein the Appellate Tribunal had held that gratuity does not form a part of the liquidation estate.

In Moser Baer – NCLT, the Court further directed the liquidator that in cases there is any deficiency to the provident, pension or the gratuity funds; the liquidator shall ensure that the fund is available in these accounts, “even if their employer has not diverted the requisite amount” -

This order was impugned by the State Bank of India – a secured creditor of Moser Baer in SBI v. Moser Baer Karamchari Union, where the limited question that came before the NCLAT was whether the gratuity dues formed a part of the liquidation estate. Holding the answer in negative, the NCLAT decided not to interfere with the order of the NCLT.

In the present case, there is no such fund maintained by the company. Herein, the company never closed down nor did it go into liquidation.

The dues for the welfare of the workers is not permissible to be included in the liquidation estate and is to be utilized only for the payment of the dues of such workers in full - Admittedly the respondent joined in the post of Manager Technical Operations and is not a worker and any dispute raised by him is thus not an industrial dispute. But the claim herein is in respect of gratuity in respect of an ‘employee’ which is guided by the labour legislation, payment of gratuity act and applies to all employees.

Conclusion - i) All ‘employees’ are covered under the payment of gratuity act and the said act is a labour legislation. This answers the point of jurisdiction/determination. ii) Admittedly the company never closed down, as the petitioner-company was taken over by the new management under the CIRP and the company remained active. Thus the jurisdiction of the concerned authority has never been ousted. iii) There being no specific fund maintained for such purpose by the company, the controlling authority rightly held that the entire dues of the workers would not come under the ‘liquidation assets’ and a worker was entitled to his total dues from the assets of the company. Such claim was above the claim of other creditors.iv) The controlling authority thus had jurisdiction to decide the issue of gratuity as the company never closed down. CIRP is a recovery mechanism for creditors unlike liquidation which is a way to end a company’s life.

Petition dismissed.

Jurisdiction of NCLT to decide issues after the approval of the resolution plan - NCLT nullified the outstanding dues payable to the Appellant for the period prior to initiation of Corporate Insolvency Resolution Process.

Whether the NCLT has jurisdiction to decide the issue after the approval of the resolution plan? - HELD THAT:- Once the resolution plan is approved its binding on the Corporate Debtor, its employees, members, creditors including the Central Government, any State Government or any local authority to whom a debt in respect of payment of dues arising under a law for a time being in force, such authorities to whom statutory dues are owned, guarantors and other stakeholders involved in the resolution plan as per provisions of Sub-section (1) of Section 31 of IBC, 2016.

Whether the SRA is liable to pay past electricity dues of pre-CIRP period of the Corporate Debtor, even after approval of the resolution plan and taking over of the Corporate Debtor, is an issue directly arising from approval of the resolution plan and its successful implementation. The NCLT has jurisdiction to entertain or dispose of any application or proceeding by or against the Corporate Debtor arising out of or in relation to the insolvency resolution. This position has been reiterated in recent judgment of this Tribunal in the case of Damodar Valley Coorporation Vs. Mackeil Ispat & Forging Ltd. & Anr., [2025 (2) TMI 425 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB] - NCLT has jurisdiction to decide the issue relating to pre-CIRP outstanding electricity dues.

Whether the dispute regarding the demand for payment of arrears relating to the Corporate Debtor by the Successful Resolution Applicant, after the approval of the resolution plan, can be dealt only under the Electricity Act, 2003, and the Rules made therein, and cannot be adjudicated under the IBC, 2016? - HELD THAT:- This Tribunal in the case of Madhya Gujarat Vij Company Ltd. v. Kalptaru Alloys Pvt. Ltd., [2018 (9) TMI 1959 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] has held that in view of Section 238 of the IBC, 2016, the provisions of Gujarat Electricity Regulatory Commission (Electricity Supply Code and related matters) Regulations, 2015 cannot override the provisions of IBC, 2016 - The Hon’ble Supreme Court in the case of Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Private Limited & Ors. [2023 (7) TMI 831 - SUPREME COURT] has held that the provisions of IBC, 2016 override the provisions of the Electricity Act, 2003.

In view of the provisions of Section 238 of IBC, 2016 and the guidelines given in the judicial decisions discussed above, it is held that provisions of the IBC, 2016 over ride the provisions of Electricity Act, 2003, and the issue of payment of pre-CIRP electricity dues of corporate debtor by the SRA is an issue which can be decided by the NCLT u/s 60(5)(c) of IBC, 2016

Whether the Successful Resolution Applicant is liable to pay the arrears of electricity dues for the pre-CIRP period of the Corporate Debtor, even though no claim is filed by the electricity company in CIRP and no such provision is made in the resolution plan? - HELD THAT:- The Successful Resolution Applicant has taken over the Corporate Debtor and its commitment made in the resolution plan does not include any payment towards the electricity dues of the Corporate Debtor. As per scheme of IBC, 2016 the creditors relating to pre-CIRP period are required to file claim before the Resolution Professional (RP) regarding the debt payable by the Corporate Debtor. In the present case, no claim was filed by the Appellant electricity company and there was no commitment in the resolution plan to pay any amount towards pre-CIRP electricity dues.

In the present case the Appellant had not even filed its claim before the RP and it cannot be permitted to benefit from of its failure to file the claim and yet be paid pre-CIRP dues for restoring the electricity. The SRA had made payment under protest only under the compulsion to get the electricity restored and to make the Corporate Debtor to restart its business, which is one of the primary aim of the IBC, 2016. The Appellant is barred from seeking arrears of the amount that stands extinguished by operation of law as pre-condition to restoring the electricity connection.

Conclusion - i) NCLT has jurisdiction to adjudicate disputes arising from insolvency resolutions, as per Section 60(5) of the IBC. ii) The provisions of the IBC, 2016 override those of the Electricity Act, 2003, as per Section 238 of the IBC. iii) Once a resolution plan is approved, it is binding on all stakeholders, extinguishing pre-CIRP dues unless claims are filed during the CIRP.

Appeal dismissed.

Revival of the appeal - Appellant’s case is that the Appellant is first pari pasu charge holder with State Bank of India of the assets of the Corporate Debtor which is in liquidation and in the liquidation e-auction was held - HELD THAT:- A perusal of judgment of this Tribunal in STCI FINANCE LTD. VERSUS IMP POWERS LTD. & ORS. [2024 (8) TMI 1529 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] indicates that this Tribunal did not entered into the issues raised in the appeal and relying on affidavit which was filed by the Liquidator where entire amount admitted of the Appellant was proposed to be distributed, appeal was closed referring to the affidavit, which has been noticed in Paras 4 and 5 of the order. In Para 6 of the order, it is clearly mentioned that “we are of the view that there is no necessity of considering any issue which has arisen in this appeal” and further this Tribunal clarified that “We make it clear that we have not entered into any issue on merits”. Due to subsequent events, which have been noticed above, especially the issue regarding distribution to other creditors being open for consideration, we are of the view that appeal deserve to be revived.

Conclusion - The appeal should be revived to address the unresolved distribution issues, and all parties, including the Appellant, other creditors, and the Liquidator, should be given an opportunity to present their arguments.

Appeal disposed off.

Money Laundering - scheduled offences in Part B of the Schedule - Section 44 of the PMLA - total value involved in the scheduled offences in the complaint subject matter of this appeal is less than Rs.30,00,000/- - HELD THAT:- The impugned judgment is set aside and the complaint bearing Criminal Miscellaneous Case No.295 of 2021 pending before the Special Court, PMLA at Lucknow, Uttar Pradesh is quashed.

Appeal allowed.

Dismissal of appeal on the ground that appellant/assessee has not complied with the amended provision of Section 35F as applicable to Service tax matters by virtue of Section 83 of the Finance Act, 1994 - HELD THAT:- As could be seen from the impugned order passed by the learned Tribunal dated 13.05.2015, the appeal filed by the assessee on 15.11.2014 challenging the order-in-original dated 9.12.2009 passed by the Commissioner of Central Excise and Service Tax, Siliguri Commissionerate was dismissed on the ground that appellant/assessee has not complied with the amended provision of Section 35F as applicable to Service tax matters by virtue of Section 83 of the Finance Act, 1994.

The learned Tribunal while dismissing the appeal for non-compliance of the statutory requirement under Section 35F of the Central Excise Act, relied upon two decisions of the Co-ordinate Bench of the Tribunal in the case of AI Champdani Industries Murlidhar Ratanlal Exports Limited VS. CCE [2015 (2) TMI 421 - CESTAT KOLKATA]. The contention of the appellant/assessee is that the appellant’s right to file an appeal continues to be governed by the appellate provisions of the Central Excise Act and as they existed on the date of the issuance of the show cause notice dated 25.09.2008, 19.03.2009 and 10.08.2009 and the provisions of Section 35F substituted with effect from August 06, 2015 has no application to the case of the assessee.

This issue is no longer res integra and has been settled in the decision Hindustan Petroleum Corporation Ltd. Vs. UOI, [2015 (11) TMI 959 - KARNATAKA HIGH COURT] High Court, Karnataka High Court – Central Excise. Among several other issues which were considered in the said matter the issue as to whether the amended provisions of Section 35F would have retrospective operation was also considered and it was held 'all cases not covered under the second proviso, the main amendment and main amended Section 35F would apply irrespective of as to when the lis has commenced. The date on which the lis has commenced in each case has no bearing on the amendment as it has retrospective effect and even if the lis has commenced prior to the date of amendment and it had not been filed on that date, even in such a situation the amended Section 35F would apply and a pre-deposit as per amended provision would have to be made.'

Conclusion - Section 35F of the Act has retrospective operation and applies to all cases except those covered under the second proviso.

The substantial questions of law which were admitted in this appeal are answered against the appellant/assessee and the appeal stands dismissed.

Exemption from service tax - Export of Services or not - invocation of extended period of limitation under Section 73(1) of the Finance Act, 1994 - suppression of facts or not - HELD THAT:- This Court finds that the Hon’ble Commissioner (Appeals) did not have the benefit of going through the decision in the matter of KONE ELEVATOR INDIA PVT. LTD VS. STATE OF TAMIL NADU [2014 (5) TMI 265 - SUPREME COURT (LB)] and developments prior to that in taxation specially from the point of view of limitation.

The matter therefore deserves to be remanded to Commissioner (Appeals) to consider the impact of KONE ELEVATOR INDIA PVT. LTD VS. STATE OF TAMIL NADU and see its effect on limitation based on the facts of this matter. In case it is found that now settled law, which earlier was following the predominance test between services and goods and later started following the aspect doctrine between service tax and taxability of goods clarified the position in relation to works contract around 2014 only, will need special consideration of Commissioner (Appeals).

The Learned Commissioner giving his decision will look into the decision of KONE ELEVATOR INDIA PVT. LTD and decide the limitation keeping in mind that the law came to be settled only around that time. Further, if appears that only some portion of limitation will survive if decided against the party, then question of penalty shall be accordingly decided. Party shall be free to support its stand on limitation with any case law or established facts.

Conclusion - Matter remanded to the Commissioner (Appeals) to consider the impact of the Kone Elevator India Pvt. Ltd. judgment on the limitation period and penalties.

Matter is remanded for Commissioner to pass a reasoned decision on limitation as well as to finally quantify the sustainable demand and penalty as per law - Appeal allowed by limited remand.

Entitlement to Cash Refund - Denial of refund of Cenvat credit of service tax paid on Ocean Freight under RCM after onset of the GST regime - applicability of Section 11B of the Central Excise Act, 1944 read with Section 142(3) and Section 174(2)(c) of the CGST Act, 2017.

Rejection of refunds on the grounds that Cenvat credit ceased to exist on 01.07.2017 and therefore, the service tax so paid is not admissible as Cenvat credit post 01.07.2017 and that service Tax paid in financial year 2018-19 for pre-GST regime cannot be considered for refund under Section 142(3) of the CGST Act because it deals with the refund of the amount of Cenvat credit paid as on 30.06.2017.

HELD THAT:- Reference made to the decision of the CESTAT, Hyderabad in the case of CAD Vision Engineers Pvt Ltd. Vs. Commissioner of Customs & Central Tax (Appeals-I) [2024 (5) TMI 72 - CESTAT HYDERABAD] wherein, identical issue was raised and decided by considering the various decisions of the Tribunal as well as the High Court of Jharkhand in the case of Rungta Mines [2022 (2) TMI 934 - JHARKHAND HIGH COURT] by the Ld. DR.

It was held in the said case that 'the provision of Section 142(3) does not entitle a person to seek refund where no such rights occur under the existing law or new CGST regime in terms of provision of CGST Act and the rules framed and notification issued thereunder. Meaning thereby, Section 142(3) does not confer a new right which never existed under the old regime to the manner of giving relief if the person is not entitled under the existing law.'

Conclusion - There was no provision under the existing law or the GST Act that entitled the appellant to a cash refund of unutilized Cenvat credit. The appellant's claims for cash refunds of service tax paid under RCM post-GST implementation rightly denied.

Appeal dismissed.

Reversal of CENVAT Credit - whether on removal of inputs to the premises of job worker, the CENVAT credit availed thereon, is required to be reversed under Rule 3(5) of the Rules of 2004, or, there is no requirement of any such reversal, in terms of Rule 4(5)(a) of Rules of 2004, as claimed by the appellants? - HELD THAT:- In the case in hand, the ‘CENVAT credit availed Smart-Cards’ were sent by the appellants to the STB manufacturer for the purpose of testing, pairing etc.; and that upon completion of the said process and assembly of the Smart-Cards into the STBs, the same were delivered in the various warehouses, belonging to the appellants. Thereafter, such STBs, were supplied to the DTH customers as a part of CPE, thereby the appellants were able to provide the output service of Broadcasting to their DTH customers. Considering the factual matrix, the case of the appellants, squarely falls under the first proviso clause appended to sub-rule (5) of Rule 3 ibid inasmuch as the Smart-Cards removed to the STB manufacturer were ultimately used by the appellants for providing the DTH Broadcasting services to their customers. Therefore, the adjudged demands confirmed in the impugned order, by taking recourse to Rule 3(5) ibid, ignoring the proviso appended thereto, does not stand the legal scrutiny.

Rule 4(5)(a)(i) of the Rules 2004 mandates that CENVAT credit on inputs ‘shall’ be allowed, even if the inputs ‘as such’ are sent out to a job worker for further processing, testing, repairing, reconditioning or for carrying out for any other purposes, and it is established from the records, challans or memos or any other document, evidencing that the said inputs are received back within the prescribed time frame - it is evident from the accounting records that the total numbers of Smart-Cards sent by the appellants to the STB manufacturer (job-worker) were received back in the form of Viewing Cards, in their premises for providing the taxable service under the category of ‘DTH Broadcasting’ to their customers. The learned adjudicating authority has not examined the accounting records maintained by both the parties and simply denied the benefit provided under Rule 4(5)(a) ibid, holding the ground of non-maintenance of records.

The accounting records maintained by the appellants for sending of Smart-Cards to the job worker’s premises and their return together with the STBs to the warehouses of the appellants, after necessary processes, are adequate enough to validate the stand of the appellants that they had complied with the conditions laid down in Rule 4(5)(a) ibid. The Tribunal in the case of Southern Lubrication (P) Ltd. [2012 (1) TMI 106 - CESTAT BANGALORE] has held that the department cannot insist for reversal of CENVAT credit or cannot snatch away the rights provided under the CENVAT statute, if the assessee has duly complied with the laid down procedures therein.

On careful reading of the order passed by the Co-ordinate Bench of this Tribunal, in the case Non-Ferrous Industries [2002 (3) TMI 778 - CEGAT, KOLKATA], relied upon by learned Special Counsel for Revenue, we find that the said order was passed in context with Rule 57F(3) of the erstwhile Central Excise Rules, 1944. Since, the procedures prescribed under the said rule provided for regulating movement of the Modvat availed raw materials between the sender and a job worker were not followed, the Tribunal in the said case has rejected the appeal filed by the assessee, holding that compliance of the procedures laid down in the rule is not a mere technicality and the same has been prescribed with the objective of ensuring that the modvat availed goods sent from the factory were returned back from the job worker, after carrying out the required processes, so that the objective of the Modvat statute is achieved.

Conclusion - The case of the appellants squarely falls under the scope and purview of Rule 4(5)(a) of the Rules of 2004 and that for removal of the CENVAT availed Smart-Cards to the STB manufacturer, they are not required to pay equal amount of CENVAT credit availed on such goods.

There are no merits in the impugned order - appeal allowed.

Levy of service tax - payments made by M/s Modern Cargo Services Private Ltd to overseas logistics agents for handling cargo at the destination - inclusion of reimbursable expenses incurred by the service provider on behalf of the recipient in the taxable value - Scope for deploying of specific contingency in Finance Act, 1994, made operational by rule 2 of Service Tax Rules, 1994, Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 and Place of Provision of Service Rules, 2012 - HELD THAT:- The scope for valuation by service provider is limited to rule 3 of Service Tax (Determination of Value) Rules, 2006 as also rule 5 of the said Rules and the adjudicating authority could well have detailed its computation in terms of the said Rules without any contribution from the assessee. Even assuming that it was the responsibility of assessee to provide the information, which appears not in the light of stipulation that disaggregation of value should be in conformity with section 67 of Finance Act, 1994, the decision of the Tribunal in re Modern Cargo Systems Pvt Ltd [2022 (11) TMI 1544 - CESTAT MUMBAI] on non-taxability, in the light of the decision of the Hon’ble Supreme Court in re Intercontinental Consultants and Technocrats Ltd [2018 (3) TMI 357 - SUPREME COURT], of the domestic component puts to rest any lack of wherewithal for determination of the overseas component which alone remains in dispute. That tax liability does not arise on the service intended by section 65(105)(j) of Finance Act, 1994 when rendered outside India is not controverted in the impugned order. Consequently, the demand for the period upto 30th June 2012 does not sustain.

It would appear that a notice issued for a period prior to 1st July 2012 in the era of taxation of enumerated services, under the impression of overlap of ‘customs house agents service’ and ‘clearing and forwarding agents service’ on fact and law as also of impression of applicability to activity for which payment was effected to overseas entity, was sought to be deployed when the boundaries of service was no longer defined and a new framework for identifying rendition eligible for exemption from tax and procurement liable to tax was established in Finance Act, 1994 - The clear, and unambiguous, stand of the Central Government on handling of service of transportation of goods, which is central to the present dispute, was overlooked in fastening the liability for the period after 1st July 2012.

Conclusion - i) The upholding of demand of 11,97,047 for the period prior to 18th April 2006 in the impugned order is blatantly in breach of the legal provisions, stipulated judicially, that enable levy of tax on services procured from abroad only with effect from 18th April 2006. ii) The clear, and unambiguous, stand of the Central Government on handling of service of transportation of goods, which is central to the present dispute, was overlooked in fastening the liability for the period after 1st July 2012.

The impugned order is set aside to allow the appeal.

Non-payment of service tax on the amount of consideration and reimbursement of expenses received for his services during the period 2012–2013 - HELD THAT:- The short question to be answered as if service tax could be charged during the relevant period on the reimbursements of expenses received by the service provider and the answer is negative as per the judgment of the Supreme Court in Intercontinental Consultants [2018 (3) TMI 357 - SUPREME COURT] - The Supreme Court held that 'High Court was right in interpreting Sections 66 and 67 to say that in the valuation of taxable service, the value of taxable service shall be the gross amount charged by the service provider ‘for such service’ and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service.'

Conclusion - i) Reimbursable expenses not calculated for providing taxable services should not be included in the valuation for service tax. ii) The Commissioner (Appeals) committed a grave error in not following the judgment of the Supreme Court and upholding demand of service tax by including the reimbursable expenses received during 2012–2013 in the value of taxable services.

The impugned order is set aside - appeal allowed.

Benefit of a specific notification regarding duty payment on goods transferred for job work - whether the concept of revenue neutrality based on CENVAT Credit could exempt the appellant from paying duty? - revenue neutrality - HELD THAT:- All the three authorities, i.e., the adjudicating authority, the appellate authority and the Tribunal have concurrently found that the appellant was not entitled to any relief based on the plea sought to be raised pertaining to the fact that as claimed the moulds, which were cleared without payment of duty for getting the job work done, were returned back and consumed in the appellant's factory and on account of the purported revenue neutrality. Exhaustive discussions and reasons have been indicated for negating the plea as raised by the appellant.

Once the goods leave the factory even for job work, the Notification had no applicability. The finding recorded in this regard cannot be faulted inasmuch merely because the goods in question, which were cleared without payment of duty, were again used by the appellant for production of finished goods, the fact that the same could be finished goods also cannot be ruled out and, therefore, the submissions made in this regard have rightly been negated.

Revenue neutrality - HELD THAT:- Plea of revenue neutrality, based on the fact that the appellant would be entitled to CENVAT Credit, has also rightly been denied by the Tribunal, as accepting the said proposition would negate the very scheme of CENVAT Credit as every assessee for non payment of duty would claim that on account of entitlement to claim CENVAT Credit, the duty was not paid. Once the plea raised pertains to revenue neutrality, the same plea is sufficient for holding the appellant guilty inasmuch there was no reason in the given case not to pay the duty at the time of clearance of the goods when they were being sent for job work, as required under the law.

Conclusion - i) Specific notifications and credit schemes should not be used to circumvent duty payment obligations. ii) Once the plea raised pertains to revenue neutrality, the same plea is sufficient for holding the appellant guilty inasmuch there was no reason in the given case not to pay the duty at the time of clearance of the goods when they were being sent for job work, as required under the law.

There are no reason to interfere with the well reasoned order of the Tribunal upholding the concurrent findings recorded by the adjudicating authority and appellate authority - appeal dismissed.

Classification of the goods manufactured - Collar Band - Chest Band - Classifiable under Central Excise Tariff Sub-Heading (CETSH) 49090090 or under CETSH 4818 5000 of first schedule of Central Excise Tariff Act, 1985 or not - Printed Fabric Folder and Swatch Cards - to be classified under CETSH 4901 1020 or under CETSH 4820 3000? - suppression of facts or not - extended period of limitation.

Classification of Collar Band and Chest Band - HELD THAT:- These are rightly classified by the respondent under CETSH 48185000, since the CETSH 48185000 specifically reads 'articles of apparel and clothing accessories' and are chargeable to duty at the rate 16% at the relevant time.

Classification of printed fabric folder and swatch cards - HELD THAT:- It is found that the Heading 4820 clearly indicates that the goods covered therein are all items of stationary and as known in the market. The product being manufactured by the appellant is totally different and not comparable to the goods 'folder' as contemplated in the CETSH 48203000. Accordingly classification of the same under CETSH 48203000 is unsustainable.

Time limitation - suppression of facts or not - HELD THAT:- It is an admitted fact that, if there is no proper classification prescribed under the statues to classify the goods, adopting similar classification as adopted by the appellant cannot be considered as suppression of facts to allege illegality. The issue regarding invoking the extended period of limitation is well settled as per the judgment of the Hon’ble Supreme Court in the matter of Continental Foundation Jt. Venture Vs. Commr. Of C. Ex., Chandigarh-I [2007 (8) TMI 11 - SUPREME COURT], wherein it is held that as far as fraud and collusion are concerned, it is evident that the intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word ‘wilful’, preceding the words “mis-statement or suppression of facts” which means with intent to evade duty. The next set of words ‘contravention of any of the provisions of this Act or Rules’ are again qualified by the immediately following words ‘with intent to evade payment of duty.’ Therefore, there cannot be suppression or mis-statement of fact, which is not wilful and yet constitute a permissible ground for the purpose of invoking penal provisions - the Appellants cannot be charged with willful mis-statement or suppression of facts with intent to evade tax, for invoking extended period of limitation in this case.

Conclusion - i) Collar Band and Chest Band are rightly classified by the respondent under CETSH 48185000. ii) The printed fabric folder and swatch cards are righly classifiable under CETSH 4901 1020 iii) The Appellants cannot be charged with willful mis-statement or suppression of facts with intent to evade tax, for invoking extended period of limitation in this case.

The confirmation of the demand by invoking extended period of limitation is unsustainable. Since entire demand is barred by limitation, the impugned order is set aside - appeal allowed.

Seizure of Gold bars - stolen property linked to fraudulent transactions involving M/s. Globe International - Conviction of Accused No. 3 (Nandkumar Babulal Soni) under Sections 120B and 411 of the IPC - Acquittal of the Accused - HELD THAT:- In the case at hand, the Trial Court has held in para 120 that whether the gold bars which were sold by M/s. CN to Mr. Mukesh Shah of M/s. Globe International are the same or not has not been proved beyond reasonable doubt. It is held by the Trial Court that the distance between may and must is very vast and prosecution has to cover that distance to reach the destination of must, however, the prosecution in this case could not achieve that level of proof. With this finding of the Trial Court, it is surprising as to how the appellant can be convicted for committing offence under Sections 120B and 411 of the IPC. Once the courts below have found that the seized gold bars, (Article 2) are not the same gold bars, conviction under Sections 120B and 411 of the IPC cannot be sustained.

The High Court impliedly held that witnesses connected with M/s CN have failed to identify the seized gold. However, in the opinion of the High Court, the same is not relevant because the appellant has failed to prove lawful acquisition of gold. It is failed to understand, when the prosecution has failed to prove the identity of seized gold as being the same gold which were sold by M/s. CN to M/s. Globe International, how the appellant is liable to prove lawful acquisition of gold visà- vis the stolen gold.

In Mohan Lal vs. State of Maharashtra [1979 (4) TMI 178 - SUPREME COURT], this Court held that the prosecution has to prove that the accused was in possession of property which he had reason to believe that it was stolen property.

Conclusion - In view of the fact that the identity of the seized property being the stolen property has not been established, Vijaya Bank is not entitled to the possession of the seized gold.

Appeal dismissed.

Violation of the appellant's right under Article 22(1) of the Constitution of India - appellant was not informed of the grounds for his arrest - offences under Sections 409, 420, 467, 468 and 471 read with Section 120-B of the Indian Penal Code - HELD THAT:- As far as Article 22(1) is concerned, compliance can be made by communicating sufficient knowledge of the basic facts constituting the grounds of arrest to the person arrested. The grounds should be effectively and fully communicated to the arrestee in the manner in which he will fully understand the same. Therefore, it follows that the grounds of arrest must be informed in a language which the arrestee understands - Once a person is arrested, his right to liberty under Article 21 is curtailed. When such an important fundamental right is curtailed, it is necessary that the person concerned must understand on what grounds he has been arrested. That is why the mode of conveying information of the grounds must be meaningful so as to serve the objects stated.

The requirement of informing the person arrested of the grounds of arrest is not a formality but a mandatory constitutional requirement. Article 22 is included in Part III of the Constitution under the heading of Fundamental Rights. Thus, it is the fundamental right of every person arrested and detained in custody to be informed of the grounds of arrest as soon as possible. If the grounds of arrest are not informed as soon as may be after the arrest, it would amount to a violation of the fundamental right of the arrestee guaranteed under Article 22(1). It will also amount to depriving the arrestee of his liberty. The reason is that, as provided in Article 21, no person can be deprived of his liberty except in accordance with the procedure established by law - In a given case, if the mandate of Article 22 is not followed while arresting a person or after arresting a person, it will also violate fundamental right to liberty guaranteed under Article 21, and the arrest will be rendered illegal. On the failure to comply with the requirement of informing grounds of arrest as soon as may be after the arrest, the arrest is vitiated. Once the arrest is held to be vitiated, the person arrested cannot remain in custody even for a second.

The grounds of arrest must exist before the same are informed. Therefore, in a given case, even assuming that the case of the police regarding requirements of Article 22(1) of the constitution is to be accepted based on an entry in the case diary, there must be a contemporaneous record, which records what the grounds of arrest were. When an arrestee pleads before a Court that grounds of arrest were not communicated, the burden to prove the compliance of Article 22(1) is on the police - When an arrested person is produced before a Judicial Magistrate for remand, it is the duty of the Magistrate to ascertain whether compliance with Article 22(1) has been made. The reason is that due to non-compliance, the arrest is rendered illegal; therefore, the arrestee cannot be remanded after the arrest is rendered illegal. It is the obligation of all the Courts to uphold the fundamental rights.

Conclusion - i) Non-compliance with Article 22(1) will be a violation of the fundamental rights of the accused guaranteed by the said Article. Moreover, it will amount to a violation of the right to personal liberty guaranteed by Article 21 of the Constitution. Therefore, non-compliance with the requirements of Article 22(1) vitiates the arrest of the accused. Hence, further orders passed by a criminal court of remand are also vitiated. ii) When a violation of Article 22(1) is established, it is the duty of the court to forthwith order the release of the accused. That will be a ground to grant bail even if statutory restrictions on the grant of bail exist. The statutory restrictions do not affect the power of the court to grant bail when the violation of Articles 21 and 22 of the Constitution is established.

Appeal allowed.

Quashing of FIRs - criminal breach of trust - mens rea / dishonest intention - prima facie case - no second FIR - same transaction rule - clubbing of multiple FIRs - exercise of extraordinary jurisdiction under Article 226 - prevention of money laundering - predicate offence

Quashing of FIRs - criminal breach of trust - mens rea / dishonest intention - prima facie case - exercise of extraordinary jurisdiction under Article 226 - Whether the multiple FIRs against the petitioner disclose only civil disputes and are liable to be quashed, the allegations at best constituting an offence under Section 406 IPC and not offences under Sections 420, 467, 468 or 471 IPC. - HELD THAT: - The Court analysed the ingredients of criminal breach of trust and the requirement of entrustment and dishonest misappropriation. The record, including investigation material, prima facie indicates collection of monies from intending purchasers and diversion/purchase of property by the petitioner, which suggests dishonest intention from the inception of transactions. The Court rejected the contention that the FIRs merely disclose civil disputes or at most only Section 406 offences such that quashing is warranted. Applying the legal tests for interference under Article 226, the Court found sufficient material to deny quashing and declined to exercise extraordinary jurisdiction to set aside the FIRs. [Paras 28, 29, 30]

Writ petition seeking quashing of the FIRs dismissed; FIRs not quashed.

No second FIR - same transaction rule - clubbing of multiple FIRs - separate transactions doctrine - exercise of extraordinary jurisdiction under Article 226 - Whether the multiple complaints/FIRs arising from sales/booking agreements ought to be clubbed and trials proceeded as a single case (i.e., whether subsequent FIRs are impermissible when arising from the same transaction). - HELD THAT: - The Court considered precedents recognising that successive FIRs based on the same occurrence may be impermissible, but also noted authorities holding that separate agreements/deals with different parties may constitute independent transactions. Having regard to the factual matrix - multiple projects, different allottees, different jurisdictions, and complaints filed at different fora - the Court did not accept the petitioner's plea for clubbing or for striking down subsequent FIRs on that ground. The Court observed that clubbing and grant of relief by way of consolidation was not appropriate on the material before it. [Paras 15, 16, 19, 20, 30]

Prayer for clubbing of FIRs not accepted; no order for consolidation or quashing on that ground.

Final Conclusion: The writ petition for quashing of multiple FIRs is dismissed; the Court finds prima facie material suggesting dishonest misappropriation and rejects the petitioner's pleas for quashing or clubbing of the FIRs, and makes no order as to costs.