TaxTMI Updates e-Newsletter
Mar 02,2020

Detention under section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - show cause notice and opportunity to reply - Writ jurisdiction under Article 226 - exercise of discretionary jurisdiction - statutory appeal

Detention under section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - show cause notice and opportunity to reply - exercise of discretionary jurisdiction - Validity of challenging the detention order and whether the High Court should exercise its discretionary jurisdiction under Article 226 in the facts of the case. - HELD THAT: - The detention order dated 11th September, 2019 was followed by a show cause notice served the same date under section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017. The show cause notice fixed 18th September, 2019 as the last date for filing a reply, but no reply was filed by the petitioner. Thereafter an order under section 129(3) determining the amount of tax and penalty for release of the goods and vehicle was passed on 29th September, 2019 and communicated by registered post on 30th September, 2019. The order demanding the amount has not been complied with. Having regard to these facts - service of the notice, the opportunity afforded to file a reply, the petitioner's failure to respond and non-compliance with the statutory order - the High Court declined to exercise its discretionary jurisdiction under Article 226 to grant the reliefs sought in the writ petition. The court left open the petitioner's remedy of pursuing any statutory appeal available in accordance with law.

Writ petition dismissed; petitioner may pursue any statutory appeal available in law.

Final Conclusion: The High Court dismissed the writ petition challenging the detention and consequent determination under section 129(3) of the Uttar Pradesh GST Act, 2017, refusing to exercise discretionary jurisdiction under Article 226 in view of the petitioner's failure to file a reply and non-compliance with the statutory order, while preserving the right to prefer any statutory appeal in accordance with law.

Validity of confiscation under the Central/Gujarat Goods and Services Tax Act, 2017 (Section 130) - Release of detained goods and vehicle - Adjudication of application under Section 67(6) of the Act - Exercise of powers under Sections 129 and 130 of the Act

Adjudication of application under Section 67(6) of the Act - Release of detained goods and vehicle - The application filed by the writ-applicant shall be treated as one under Section 67(6) of the Act and the tax authority is directed to consider and dispose of it forthwith. - HELD THAT: - The Court declined to enter into the merits of the confiscation notice or underlying detention at the writ stage because the matter remains at the GST-MOV-10 stage. The application annexed to the petition is to be treated as an application under Section 67(6) of the Act. The State Tax Officer, Morbi Squad, Enforcement, Division-9, Bhavnagar is directed to immediately examine that application and pass an appropriate order in accordance with law. The authority is to undertake this exercise within one week from receipt of the writ of this order. The writ-court observed that the general principles governing Sections 129 and 130 have been elaborated in F S Enterprise Vs. State of Gujarat [Special Civil Application No.7061 of 2019], decided on 11.10.2019, and the authority shall proceed to pass orders in accordance with law and may consider the writ-applicant's case for discharge of the GST-MOV-10 notice as well as release of the goods under the powers available in Section 67(6). The Court has not decided the merits on confiscation or detention and left those matters for the authority to determine. [Paras 5, 7, 9]

The application is to be treated as under Section 67(6) and the tax authority is directed to decide it and pass an appropriate order within one week; merits of confiscation/detention are not adjudicated by this Court.

Final Conclusion: Writ-application disposed by directing the State Tax Officer to consider and decide the applicant's Section 67(6) application forthwith (within one week), with liberty to the applicant to seek discharge of the GST-MOV-10 notice and release of goods; the Court did not decide the merits of confiscation or detention.

Writ of Mandamus - Confiscation under Section 130 of the CGST Act - Appeal under Section 107 of the CGST Act - Interim release of detained goods and conveyance - Relegation to alternative remedy

Appeal under Section 107 of the CGST Act - Confiscation under Section 130 of the CGST Act - Relegation to alternative remedy - Whether the writ-applicant's challenge to the order of confiscation embodied in Form GST-MOV-11 should be entertained in writ jurisdiction or the remedy by statutory appeal under Section 107 should be pursued. - HELD THAT: - The Court observed that a final order in Form GST-MOV-11 has been passed. In view of the availability of the statutory appellate remedy, the writ-application was not entertained on merits and the writ-applicant was relegated to prefer an appeal under Section 107 of the CGST Act. The earlier orders of a Co-ordinate Bench permitting release of the conveyance and goods on payment were recorded as having been availed by the writ-applicant, but the present petition was disposed of by directing pursuit of the statutory appeal against the final confiscation order. [Paras 4, 5]

Writ disposed of; petitioner relegated to prefer an appeal under Section 107 of the CGST Act against the Form GST-MOV-11 order (earlier interim release of goods/conveyance noted).

Final Conclusion: The writ-application was disposed of by relegating the petitioner to pursue the statutory appeal under Section 107 against the final order in Form GST-MOV-11; the Court noted that the petitioner had obtained earlier release of the goods and conveyance in accordance with orders of a Co-ordinate Bench.

Regular bail - Complicity of accused as kingpin in commercial fraud - Recovery of incriminating articles and electronic data as evidence of criminality - Parallel prosecutions under a fiscal statute and under the Indian Penal Code - Double jeopardy - Distinction between professional legal/consultancy services and active participation in fraud - Grant of bail in the interest of justice after prolonged custody

Regular bail - Complicity of accused as kingpin in commercial fraud - Recovery of incriminating articles and electronic data as evidence of criminality - Bail applications of Rajesh, Inder Partap Singh and Manish refused. - HELD THAT: - The Court found on the material collected during investigation that Rajesh Mittal played a pivotal role in incorporation and operation of 18 firms used for issuance of bogus bills and circulation of funds to evade GST, with his e-mail IDs and phone numbers appearing in many firm records. Recoveries from the vehicle (laptops, cheque books, fake stamps and rubber-stamps) and bank transaction records showing monies routed through the accounts of the non functional firms, which were withdrawn and traced back to the industries that made the payments, together furnished incriminating evidence of a systematic racket. Given the enormity of the alleged fraud and the assessed loss to the exchequer, the Court concluded there were no grounds to grant regular bail to the petitioners Rajesh, Inder Partap Singh and Manish. [Paras 3, 4, 6, 13, 14]

Petitions for regular bail on behalf of Rajesh, Inder Partap Singh and Manish are dismissed.

Regular bail - Distinction between professional legal/consultancy services and active participation in fraud - Grant of bail in the interest of justice after prolonged custody - Bail application of Satnarain allowed and he was released on regular bail. - HELD THAT: - The Court noted that Satnarain is an Advocate who rendered professional services in relation to incorporation/registration of firms and was paid professional fees. On the material before it, the Court could not conclude that he had joined hands with the alleged mastermind or was a beneficiary of proceeds beyond his professional fee. Considering also that he had been in custody for about eight months, the Court held further detention would not serve a useful purpose and ordered his release on furnishing bail/surety bonds to the satisfaction of the trial court. [Paras 8, 14]

Petition on behalf of Satnarain is accepted and he is released on regular bail subject to furnishing of bonds/sureties.

Parallel prosecutions under a fiscal statute and under the Indian Penal Code - Double jeopardy - Proceedings under Section 122 of the GST Act may continue alongside prosecution under the IPC; plea of double jeopardy not accepted as bar to IPC prosecution. - HELD THAT: - The Court observed that proceedings under the fiscal provision (Section 122 of the GST Act), which are primarily directed to securing realization of evaded tax, can continue in addition to criminal prosecution under the Indian Penal Code where offences like cheating or forgery are alleged. The fact that bail had been granted in the GST proceedings for some accused did not operate as an absolute bar to continuation of IPC prosecution; the double jeopardy contention did not preclude parallel action in respect of distinct legal consequences and offences. [Paras 9, 11]

The pendency of proceedings under Section 122 of the GST Act does not preclude prosecution under the IPC; double jeopardy plea rejected as a ground for bail in the IPC prosecution.

Final Conclusion: On the materials collected, bail was refused to the principal accused implicated as the mastermind and to two other co-accused, while bail was granted to the advocate who provided professional services and had been in custody for a prolonged period; concurrent fiscal proceedings under the GST Act may continue alongside IPC prosecution. None of the observations made are expressions on the merits of the main case.

Advance ruling - jurisdiction - cash ledger debit - application before GSTN - OIDAR services - advance ruling fee payment mechanism - GST portal functionality

Advance ruling - jurisdiction - Petitioner's application for advance ruling has been entertained and the hearing is scheduled. - HELD THAT: - The Court recorded that the Petitioner's application for advance ruling, filed in physical form, has been entertained and that a hearing is scheduled on 20.02.2020. The petitioner expressed a remaining concern regarding jurisdiction; the learned counsel for the petitioner sought to await the hearing to resolve that confusion. No final adjudication on the question of jurisdiction was made; the hearing before the advance ruling authority is to proceed as listed.

Application for advance ruling entertained and matter listed for hearing on 20.02.2020; jurisdictional concern to be addressed at the hearing.

Cash ledger debit - application before GSTN - Direction regarding debit of amount standing in the petitioner's cash ledger in relation to tax for May, 2019 paid in June, 2019. - HELD THAT: - Counsel for the parties informed the Court that an amount representing tax for May, 2019 (paid in June, 2019) remains in the petitioner's cash ledger and has not been debited. The Court directed that the respondents should proceed to debit the amount without prejudice to their rights and contentions, and that the petitioner may move an application for that purpose before the GSTN (Respondent No.4), which shall pass the requisite orders. This directs a procedural course for debiting the ledger balance while preserving substantive positions of the parties.

Respondents to proceed to debit the amount from the petitioner's cash ledger without prejudice; petitioner to file application before GSTN (Respondent No.4) who shall pass necessary orders.

OIDAR services - advance ruling fee payment mechanism - GST portal functionality - Clarification that online filing and fee payment functionality for advance ruling applications, including for OIDAR taxpayers, is available on the GST portal. - HELD THAT: - The Court recorded the submission of respondents' counsel that the issue concerning filing online applications for advance ruling in respect of OIDAR services has been resolved. It was stated that the GST portal now permits an applicant to file advance ruling applications online: a normal taxpayer may select both CGST and SGST Acts and pay the specified fees under respective heads, while an OIDAR taxpayer registered under the IGST Act may pay the specified fee under IGST as the fee for an advance ruling application. This is a clarification of the procedural availability of online filing and fee payment.

Online filing and fee payment for advance ruling applications, including for OIDAR taxpayers under the IGST Act, is available on the GST portal.

Final Conclusion: The High Court recorded that the advance ruling application has been entertained and listed the matter for hearing; directed respondents to debit the tax amount standing in the petitioner's cash ledger subject to preservation of rights and tasked the petitioner to apply to GSTN for the requisite orders; and noted that online filing and fee payment functionality for advance ruling (including OIDAR taxpayers) is available on the GST portal.

Exemption of support services to agriculture, forestry, fishing and animal husbandry - interpretation of the definition of "agricultural produce" in Note 4(vii) - coverage of chilling as "storage" and packing as "packing" under clause (e) of the Explanation to Heading 9986 - distinction between support services under Heading 9986 and job work services attracting 5% GST - validity of administrative clarification/circular issued by Tax Research Unit

Exemption of support services to agriculture, forestry, fishing and animal husbandry - interpretation of the definition of "agricultural produce" in Note 4(vii) - coverage of chilling as "storage" and packing as "packing" under clause (e) of the Explanation to Heading 9986 - Whether milk chilling and packing services rendered by contractors in respect of raw, unprocessed milk fall within the exemption at Serial No.24 (Heading 9986) to Notification No.11/2017 and are chargeable to nil rate of GST. - HELD THAT: - The Court found that the dispute concerns raw unprocessed milk which indisputably qualifies as "agricultural produce" within the meaning of Note 4(vii), since no further processing altering essential characteristics is carried out. The Explanation to Heading 9986 contains separate sub clauses: sub clause (c) applies to processes carried out at an agricultural farm and requires such processes to make produce marketable for the primary market; sub clause (e) separately covers "loading, unloading, packing, storage or warehousing of agricultural produce" and contains no requirement that the activities be carried out at an agricultural farm. The Court held that storage of milk necessarily involves chilling because milk cannot be stored without preservation; chilling does not alter milk's essential characteristics and is thus encompassed by "storage." Packing of raw milk likewise falls within "packing" of agricultural produce. Consequently, where contractors provide chilling (storage) and packing services in respect of raw milk, those services are support services falling under Heading 9986 and are exempted by Serial No.24 of Notification No.11/2017. [Paras 17, 18, 20, 23, 24]

Milk chilling (as storage) and packing of raw, unprocessed milk provided by contractors are support services to agriculture within Heading 9986 and are exempt from GST under Serial No.24 of Notification No.11/2017.

Distinction between support services under Heading 9986 and job work services attracting 5% GST - validity of administrative clarification/circular issued by Tax Research Unit - Whether the TRU circular F No.354/292/2018 TRU dated 9.8.2018, which held that chilling and packing of milk are not exempt and that job work on food products attracts 5% GST, is sustainable. - HELD THAT: - The impugned TRU circular proceeded on the premise that chilled and packed milk for retail sale is not "agricultural produce" and relied on sub clause (c) (processes at agricultural farms) to deny exemption. The Court observed that this premise was factually and legally misplaced because the exemption claim related to support services (storage and packing) provided to raw milk, not to chilled and packed retail milk. The circular's reliance on the job work entry imposing 5% GST is relevant only where the services do not qualify as "support services" under Heading 9986. Because chilling (as storage) and packing of raw milk fall within clause (e) and thereby within the exemption, the interpretation adopted in the circular is inconsistent with Serial No.24 of Notification No.11/2017. For these reasons the circular could not be sustained. [Paras 21, 22, 25, 27, 28]

The TRU circular dated 9.8.2018 is quashed and set aside to the extent it holds that chilling and packing of milk are not exempt and that job work at 5% applies to those services.

Refund remedy in accordance with law - Whether and how the petitioners may obtain recovery of amounts paid as GST on milk chilling and packing services. - HELD THAT: - Having quashed the impugned circular and held the services exempt, the Court did not itself order direct refund but observed that the petitioners may pursue refund of amounts recovered and collected as GST through the appropriate statutory remedy. The Court therefore left the mechanism and adjudication of any refund claims to be processed in accordance with existing law and procedure. [Paras 30]

Petitioners are entitled to seek refund and may move appropriate application for refund in accordance with law; no specific refund order was passed by the Court.

Final Conclusion: The petition is allowed: the TRU circular dated 9.8.2018 is quashed to the extent it holds that chilling and packing of milk are not exempt; milk chilling (as storage) and packing of raw, unprocessed milk provided by contractors fall within the exemption at Serial No.24 of Notification No.11/2017 and are chargeable to nil rate of GST; petitioners may pursue refund claims in accordance with law.

Anticipatory bail - statement recorded under summons under section 70 of the CGST Act - admissibility and weight of statements and confessions - possession and issuance of fake GST invoices - systematic conspiracy to cheat the exchequer - service of summons

Anticipatory bail - statement recorded under summons under section 70 of the CGST Act - admissibility and weight of statements and confessions - possession and issuance of fake GST invoices - systematic conspiracy to cheat the exchequer - Anticipatory bail application of the applicant dismissed. - HELD THAT: - The court considered the material collected by the department - the applicant's statement recorded during investigation under summons issued under section 70 of the CGST Act, account books and registers produced by the accountant, and the accountant's statement that he maintained those records for the applicant. The applicant had admitted the registers and entries therein. Though the applicant alleged that his statement was made under duress and that department officials had threatened his family, the court observed that the applicant had been given time to join investigation and had court protection at the relevant time; on that basis the court found it highly improbable that he would have been orally coerced into making such an inculpatory statement while under court protection. Viewing the overall facts and the contemporaneous material indicating multiple fictitious firms and systematic issuance of fake invoices to obtain input tax credit, the court concluded that the evidence reflected a deep rooted, systematic conspiracy to cheat the exchequer. On that foundation the court held that the matter was not fit for grant of anticipatory bail and dismissed the application.

Bail application dismissed.

Final Conclusion: The application for anticipatory bail is dismissed on the basis that the applicant's statement, corroborated by account books and the accountant's statement indicating operation of multiple fictitious firms and issuance of fake invoices, establishes a prima facie case of a systematic conspiracy to defraud the revenue; the claim of coercion was found improbable in view of court protection afforded to the applicant.

Registration under section 12AA of the Income Tax Act - genuineness of objects and activities - activities includes proposed activities - cancellation of registration under subsection (3) of section 12AA - entitlement to tax benefits under sections 11 and 12

Registration under section 12AA of the Income Tax Act - genuineness of objects and activities - activities includes proposed activities - entitlement to tax benefits under sections 11 and 12 - A newly registered trust which has not yet undertaken any activities can be registered under section 12AA on the basis of its objects and the genuineness of its proposed activities. - HELD THAT: - Section 12AA requires the Commissioner to be satisfied about the objects of the trust and the genuineness of its activities before granting registration so that only trusts with charitable objects obtain the consequential benefits under sections 11 and 12. The provision is concerned with registration and not with an ex post assessment of what the trust has already done. Accordingly, where a trust is newly formed and has not yet undertaken activities, the Commissioner may regard 'activities' to include the activities proposed to be carried out and satisfy himself about their genuineness in order to register the trust. The Commissioner remains obliged to refuse registration if, on consideration of objects and proposed activities, he is not satisfied that they are genuine or charitable. The Delhi High Court's conclusion that a newly registered trust may be considered for registration on the basis of its objects and proposed activities is correct and is upheld.

The appeal is dismissed insofar as it challenged the High Court's view that registration may be granted to a newly formed trust on the basis of its objects and proposed activities, and the High Court's judgment is upheld.

Cancellation of registration under subsection (3) of section 12AA - genuineness of activities - Where activities actually carried out are not genuine or are not in accordance with the objects of the trust, the Commissioner may cancel registration under subsection (3) of section 12AA; and the Commissioner should examine facts where a trust has not spent income on charitable purposes to determine whether cancellation is justified. - HELD THAT: - Subsection (3) of section 12AA applies to post-registration conduct: if the Commissioner is satisfied that activities of a registered trust are not genuine or are not in accordance with its objects, he may cancel registration after giving a reasonable opportunity of being heard. The standard and proof required for cancellation differ from the registration stage because the inquiry concerns activities actually undertaken. In the facts of the connected appeal, the Trust had not spent any of its income on charitable activities; such inaction may amount to not carrying out objects or to conduct contrary to objects depending on circumstances. The Court did not decide on cancellation on the merits but left the matter to the Commissioner to consider and act under subsection (3) if facts justify such action.

The appeal is dismissed with the observation that the Commissioner is entitled to consider and, if justified by facts, cancel registration under subsection (3) of section 12AA where activities actually carried out are not genuine or not in accordance with the trust's objects; the Commissioner should decide the matter afresh as appropriate.

Final Conclusion: The High Court's view that a newly registered trust may be registered under section 12AA on the basis of its objects and proposed activities is upheld; appeals are dismissed, and where post-registration conduct shows activities are not genuine or not in accordance with objects the Commissioner may proceed under subsection (3) of section 12AA to consider cancellation.

Approval for reward under Section 10(17A) - implied approval - exemption of government rewards given in public interest - purposive construction of exemption provision - maintainability of writ against assessment/revision proceedings

Maintainability of writ against assessment/revision proceedings - Whether the writ petition challenging the order under Section 263 is maintainable and whether the petitioner should be relegated to statutory remedies. - HELD THAT: - The Court held that the challenge raised is purely a legal question and no facts are in dispute, therefore it is not necessary to confine the petitioner to the statutory appellate remedy. The petition is maintainable and the matter could be decided on merits by the High Court rather than being relegated to the appellate forum. [Paras 10]

Writ petition is maintainable and proceedable on merits.

Approval for reward under Section 10(17A) - implied approval - purposive construction of exemption provision - exemption of government rewards given in public interest - Whether the reference to 'approval' in Section 10(17A) requires an express written approval of the Central Government or whether an approval may be inferred from surrounding circumstances and public recognition. - HELD THAT: - After examining the legislative history and prior decisions, the Court concluded that the proviso requiring specification of effect in an express order was omitted when clause (17A) was re-enacted in 1989. The omission indicates that the statute does not mandate a particular form of approval. Applying a purposive construction, the Court held that 'approval' under Section 10(17A) need not be confined to a formal written order by the Central Government; it may be discerned from material in the public domain and surrounding circumstances showing recognition by the Centre. The Court noted binding precedent of the Madras High Court (Commissioner of Income Tax v. J.G. Gopinath) which accepted that approval may be express or implied, and held itself bound by that view in the present jurisdictional context. [Paras 11, 13, 19, 24]

Approval under Section 10(17A) can be implied and need not be only in the form of an express written approval by the Central Government.

Exemption of government rewards given in public interest - approval for reward under Section 10(17A) - implied approval - Whether, on the facts of this case, the petitioner is entitled to exemption under Section 10(17A) by reason of implied approval/recognition by the Central Government for services rendered in public interest. - HELD THAT: - The Court applied the principle that approval may be inferred from public acts and recognition by the Centre. It observed that the petitioner had been the recipient of multiple Central awards, including the President's Police Medal for Gallantry specifically for his role in the operation against Veerappan, and that the Supreme Court has recorded the enormity and national significance of the threat posed by Veerappan. Those facts in the public domain, together with the nature and purpose of the State award, led the Court to conclude that the Central Government's approval for the 'purpose' of the reward granted by the State is effectively a fait accompli. On that basis the petitioner satisfies the requirement of Section 10(17A) and is entitled to the exemption claimed. [Paras 25, 26, 27]

The petitioner is entitled to exemption under Section 10(17A) because approval by the Central Government can be inferred from public recognition and awards; the writ petition is allowed.

Final Conclusion: The writ petition is allowed. The High Court, applying a purposive construction and binding local precedent, held that 'approval' under Section 10(17A) may be implied from public recognition and surrounding circumstances; on the facts the petitioner is entitled to exemption under Section 10(17A). No costs.

Principles of natural justice - Section 40(a)(iib) disallowance - Value Added Tax as a fee or charge appropriated from a State Government undertaking - Quashing of assessment and remand for fresh adjudication

Principles of natural justice - Section 40(a)(iib) disallowance - Quashing of assessment and remand for fresh adjudication - Assessment insofar as disallowance under Section 40(a)(iib) was set aside for breach of natural justice and remitted for de novo adjudication. - HELD THAT: - The Court found that the Assessing Officer failed to afford a fair and timely opportunity to the petitioner on the specific contention that VAT remittances were being treated as a levy covered by Section 40(a)(iib). Although the petitioner had, from 13.09.2019 onwards, specifically disclosed the VAT payments and the limited nature of the amount disallowed under Section 40(a)(iib), the show cause notice addressing the VAT issue was issued belatedly on 21.12.2019. The impugned assessment order merely repeated the show cause notice and did not advert to the detailed replies, supporting material and the legal authorities relied upon by the petitioner, nor did it contain reasoned consideration of the contention that VAT did not fall within the exclusion list in Section 40(a)(iib). Given the elapsed time between identification of the issue in earlier questionnaires and the eleventh hour SCN, together with the absence of considered reasoning in the assessment order, the Court concluded that the principles of natural justice were breached. Consequently, the disallowance under Section 40(a)(iib) was set aside and the matter remitted to the Assessing Officer for fresh hearing and a detailed order after considering the petitioner's existing and any further material. [Paras 9, 16, 17, 18, 19]

Disallowance under Section 40(a)(iib) set aside for breach of natural justice; matter remitted to the Assessing Officer for de novo consideration after personal hearing and issuance of a detailed order within six weeks of conclusion of the hearing.

Final Conclusion: Writ petition allowed insofar as the assessment for AY 2017-18 is concerned on the issue of disallowance under Section 40(a)(iib); the impugned addition is quashed and the matter is remitted for fresh adjudication after affording opportunity of personal hearing; no costs.

Stay of recovery pending disposal of appeal - adjustment of tax refund against demand - duty of revenue to consider application for stay before issuance of recovery notice - interim deferment of enforcement of bank remittance notice

Stay of recovery pending disposal of appeal - adjustment of tax refund against demand - duty of revenue to consider application for stay before issuance of recovery notice - interim deferment of enforcement of bank remittance notice - Whether the Income Tax Officer was required to consider the petitioner's application seeking stay of recovery/adjustment from refunds before issuing the bank remittance notice and whether execution of that notice should be deferred. - HELD THAT: - The ITO's own communication dated 15.01.2020 indicated that the demand could be stayed pending the appeal if the assessee paid 20% of the demanded amount; the petitioner did not refuse to pay but applied on 22.01.2020 for adjustment of that payment from an admitted tax refund due to it. That application was awaiting decision when the impugned notice dated 12.02.2020 was issued. The Court held that the ITO was obliged to consider the petitioner's pending application seeking stay/adjustment before issuing or enforcing the recovery notice. In the circumstances and given counsel's statement that the bank had not yet remitted the amount, the Court was inclined to defer execution of the notice and directed that the bank need not act on the notice until the ITO disposed of the application. The ITO was directed to hear the assessee and decide the application as expeditiously as possible and in any event within six weeks, and not to insist on compliance with the notice until such decision is taken. The order requires the petitioner to appear before the ITO and furnish an authenticated copy of the Court's order and to cooperate in the disposal of the application. [Paras 7, 8, 9, 10, 11]

Execution of the impugned notice dated 12.02.2020 is deferred; the bank need not comply until the ITO disposes of the petitioner's application dated 22.01.2020; the ITO to hear the petitioner and decide the application within six weeks; petitioner to appear before the ITO and furnish an authenticated copy of this order.

Final Conclusion: The Court deferred enforcement of the bank remittance notice and directed the ITO to hear and decide the petitioner's application for stay/adjustment within six weeks, during which period the bank need not act on the notice; rule disposed of with no order as to costs.

Income from business - nexus between transaction and business - single transaction versus series of transactions - interpretation of partnership deed

Income from business - nexus between transaction and business - single transaction versus series of transactions - interpretation of partnership deed - Proceeds from the sale of properties on 13.07.2006 constitute income from business of the appellant-assessee. - HELD THAT: - The partnership deed dated 29.07.1989 expressly defines the firm's business as including buying and selling of properties situated in various places in Goa, either wholly or in plots. The Court held that the wide phraseology of Clause 2 admits buying and selling, including agricultural properties, into the scope of the firm's business. The sale on 13.07.2006 involved not only the agricultural land but also another property, and therefore was not a solitary, isolated transaction; on the material before the authorities the sale was of properties acquired for profit and thus bore a sufficient nexus with the partnership's declared business. The Court found the concurrent findings of fact by the Assessing Officer and the ITAT to be supported by material and not perverse. The decision in Narain Swadeshi Weaving Mills was held distinguishable on its facts and not applicable to the present factual matrix. Applying these findings, the Court answered the contested substantial question of law against the appellant and in favour of the Revenue. [Paras 15, 16, 17, 18, 19]

The sale proceeds are taxable as business income; the substantial question is answered against the appellant and the appeal is dismissed.

Final Conclusion: The High Court dismissed the appeal, holding that the sale proceeds constituted business income of the partnership under the terms of its partnership deed and the facts found, and restored the view favourable to the Revenue.

Genuineness of loan transaction - creditworthiness of creditor - source of source - addition under Section 68 of the Income-tax Act - appellate interference on findings of fact

Genuineness of loan transaction - creditworthiness of creditor - source of source - Whether the addition made by the Assessing Officer under Section 68 on account of alleged unexplained credit from M/s Epic Developers Pvt. Ltd. was justified. - HELD THAT: - The Assessing Officer added an amount on the premise that the creditor, Epic Developers Pvt. Ltd., had filed a nil return and had not transacted business, and therefore its creditworthiness and the genuineness of the loan were not established. The Commissioner (Appeals) examined the balance sheet and bank/assessment particulars and found that Epic Developers had received substantial funds from group entities Benda Amtek Ltd. and Amtek Auto Ltd., both of which had significant returned income in the relevant year; accordingly the source of funds for Epic Developers was creditworthy and the transaction with the assessee was not a sham. The Tribunal concurred with these factual findings. The High Court held that these findings are purely factual, that there was no reason to doubt the creditworthiness or the genuineness of the transaction, and that such factual conclusions do not raise any substantial question of law warranting interference. Consequently the addition was not sustainable. [Paras 5, 6]

Addition under Section 68 withdrawn; impugned orders upheld insofar as they deleted the addition.

Final Conclusion: The appeal is dismissed; the Tribunal's and CIT(A)'s factual finding that the creditor was creditworthy and the loan genuine is sustained and does not warrant interference.

Validity of a settlement application - full and true disclosure - composite or indivisible contract - scope of Settlement Commission's adjudicatory jurisdiction after admission - procedure under Section 245D(2C) and Section 245D(4)

Validity of a settlement application - full and true disclosure - composite or indivisible contract - Whether the Settlement Commission, at the stage of considering the 'validity' of an application under Section 245D(2C), could decide the merits by holding the contract to be composite and thereby conclude that there was no full and true disclosure. - HELD THAT: - The Court held that the Commission, when seized of the question of admissibility/validity under Section 245D(2C), exceeded its jurisdiction by adjudicating the merits and concluding that the contract was composite and indivisible and that the applicant had not made full and true disclosure. The judgment explains that any additional tax liability arising from a conclusion on divisibility of the contract can be raised only following a final determination under Section 245D(4), since the settlement scheme contemplates that terms of settlement (including any demand by way of tax, penalty or interest) are to be provided in the final order. Treating the preliminary admission stage as a forum for merit determination is tantamount to 'putting the cart before the horse' and is beyond the scope of Section 245D(2C). Accordingly, the impugned order that decided the merits at the validity stage was set aside. [Paras 16, 17, 18, 19, 27]

Impugned order passed under Section 245D(2C) insofar as it decides merits and finds lack of full and true disclosure is beyond the scope of that provision and is set aside.

Scope of Settlement Commission's adjudicatory jurisdiction after admission - procedure under Section 245D(4) - Whether, once an application under Section 245C is admitted, the Settlement Commission has jurisdiction to deal with all issues relating to the assessment year(s) at the final hearing. - HELD THAT: - Relying on established authority and the statutory scheme of Chapter XIX-A, the Court observed that admission of an application brings the 'case' for the relevant assessment year(s) wholly before the Commission. Once allowed to proceed, the Commission must withdraw the case from other authorities and is empowered to adjudicate and settle all issues arising from the assessment for that year, including matters that were earlier before the Assessing Officer or appellate/revisional authorities. The Court emphasised that final determinations (including any demands) are to be made under Section 245D(4) at the substantive hearing. [Paras 21, 22, 23, 25]

Upon admission, the Settlement Commission has plenary jurisdiction to adjudicate all issues relating to the assessment year(s) at the final hearing under Section 245D(4).

Procedure under Section 245D(4) - final hearing and terms of settlement - Remedial directions as to the further disposal of the matter following setting aside of the impugned validity-stage order. - HELD THAT: - Having set aside the Commission's validity-stage merits decision, the Court remitted the matter to the Settlement Commission for final hearing in terms of Section 245D(4). The petitioner was directed to appear before the Commission on a specified proximate date and the Commission was directed to hear both parties on merits, consider all materials, and pass orders in accordance with law within twelve weeks from the date of first hearing. The order preserves the Commission's power to determine the issues substantively and to provide terms of settlement including any demand by way of tax, penalty or interest at the final stage. [Paras 27, 28]

Matter remitted to the Settlement Commission for final hearing under Section 245D(4); parties to be heard and final order to be passed within twelve weeks from first hearing.

Final Conclusion: The order of the Settlement Commission that adjudicated the merits at the admissibility/validity stage (Section 245D(2C)) is set aside. The matter is remitted to the Settlement Commission for final hearing on the merits in terms of Section 245D(4); the Commission is directed to hear both parties and pass a final order within twelve weeks from the date of first hearing.

Kar Vivad Samadhan Scheme, 1998 - interest under Section 220(2) of the Income Tax Act, 1961 - notice of demand under Section 156 of the Income Tax Act, 1961 - designated authority's power to compute payable amount under settlement scheme

Kar Vivad Samadhan Scheme, 1998 - interest under Section 220(2) of the Income Tax Act, 1961 - designated authority's power to compute payable amount under settlement scheme - Validity of including interest under Section 220(2) in the certificate issued under the Kar Vivad Samadhan Scheme, 1998 - HELD THAT: - Petitioner challenged a certificate issued under the Kar Vivad Samadhan Scheme, 1998 which aggregated 50% of the penalty and interest computed under Section 220(2) of the Income Tax Act, 1961. The Court considered the statutory framework including the notice of demand mechanism in Section 156 and Form VII which informs assessees of liability to pay simple interest in accordance with Section 220(2). Reliance was placed on precedents of the Madras and Andhra Pradesh High Courts holding that the designated authority processing declarations under the Scheme is within its powers to include interest under Section 220(2) even if the interest was not earlier quantified. Applying those authorities and the statutory scheme, the Court held that inclusion of interest in the certificate issued under the Scheme was permissible and there was no merit in the petitioner's objection to the levy of interest in the certificate. [Paras 15, 16, 17, 18]

The certificate under the Kar Vivad Samadhan Scheme, 1998 could validly include interest under Section 220(2) and the petitioner's challenge thereto is dismissed.

Final Conclusion: Writ petition dismissed for lack of merit; no order as to costs.

Distinction between revenue and capital expenditure - current repairs versus substantial replacement - capitalisation of expenditure on plant and machinery - consumable dies and tools treated as revenue expenditure - test of enduring benefit / commercial expediency - concurrent findings of fact and appellate interference

Distinction between revenue and capital expenditure - current repairs versus substantial replacement - test of enduring benefit / commercial expediency - Whether expenditure incurred in reconstructing the enamelling machine destroyed by fire is revenue expenditure or capital expenditure - HELD THAT: - The Court applied the established test that expenditure is revenue in nature where it preserves or maintains an existing asset and does not bring into existence a new asset or confer an enduring advantage. Following the reasoning in Desai Brothers and related authorities, replacement of parts or restoration necessitated by use or accidental damage is to be judged by commercial expediency and whether a substantial replacement creating a new or enduring asset has occurred. The Tribunal's conclusion that reconstruction produced a new asset was held to be an erroneous appreciation of facts and law. Applying the cited authorities and the commercial-expediency test, the Court concluded that the expenditure on reconstructing the enamelling machine amounted to current repairs and thus revenue expenditure. [Paras 14, 15]

Expenditure on reconstruction of the enamelling machine is revenue expenditure; the Tribunal's finding to the contrary is set aside.

Consumable dies and tools treated as revenue expenditure - distinction between revenue and capital expenditure - concurrent findings of fact and appellate interference - Whether amounts written off in respect of dies and tools (consumable, frequently replaced) are revenue expenditure or capital expenditure - HELD THAT: - The Court noted that dies and tools in the assessee's factory are consumable items replaced frequently and do not confer permanent or enduring advantage. The Tribunal disturbed the CIT(A)'s concurrent factual finding without adequate reason, relying instead on an earlier ITAT decision that is factually distinguishable and premised upon a different statutory context. The Court followed the ratios in Banco Aluminium and Sunbeam Auto which held that where dies and moulds wear out quickly, are custom-made and repeatedly replaced, and have been treated as revenue by authorities in earlier years, such expenditure is revenue in nature. Accordingly, the Tribunal's treatment of the dies and tools as capital expenditure was erroneous. [Paras 25, 26]

Expenditure on dies and tools, being consumable and frequently replaced, is revenue expenditure; the Tribunal's contrary conclusion is quashed.

Final Conclusion: The assessee's appeal is allowed. The Tribunal's order is quashed and set aside to the extent that it held (i) the reconstruction of the enamelling machine to be capital expenditure and (ii) the amounts written off for dies and tools to be capital in nature; both issues are decided in favour of the assessee and against the Revenue.

Interpretation of agency agreement - Commission payable for sales within agent's territory - Contractual construction - effect of one clause vis-a -vis other clauses - Proof of agency's role for entitlement to commission

Interpretation of agency agreement - Commission payable for sales within agent's territory - Contractual construction - effect of one clause vis-a -vis other clauses - Whether Clause 4 of the agency agreement obliged the assessee to pay commission on sales effected within the agent's territory irrespective of proof that the agent personally procured each order, and whether the Tribunal's contrary interpretation was legally sustainable. - HELD THAT: - The Tribunal required proof in each case that the order had been obtained by the agent and read Clause 4 as not superseding Clauses 1-3 and 5. The High Court disagreed, holding that a proper construction of the agreement shows Clause 4 obliges the Principal to redirect all enquiries received within the agent's territory to the agent, thereby making the agent's services integral to processing orders from that territory. Consequently, commission becomes payable on sales occurring in the agent's territory subject to the contractual condition that commission is paid only on executed orders for which payment has been received (Clause 6) and annual settlement of accounts (Clause 7). The Tribunal's interpretation that commission would only be payable upon separate proof that the agent obtained each order was therefore incorrect in the facts and circumstances of this case. [Paras 4, 5, 6]

Tribunal's interpretation set aside; Clause 4 construed to require payment of commission on sales in the agent's territory subject to Clauses 6 and 7 of the agreement.

Final Conclusion: The appeals are allowed; the Tribunal's order declining commission was incorrect and is set aside, with the contractual construction affirming the assessee's obligation to pay commission on sales in the agent's territory subject to the agreement's conditions.

Adjustment under Section 145-A - exclusive method of accounting for excise duty - CENVAT credit receivable and inverted duty structure - application of Hawkins Cooker formula - consistency in accounting method

Adjustment under Section 145-A - exclusive method of accounting for excise duty - CENVAT credit receivable and inverted duty structure - application of Hawkins Cooker formula - consistency in accounting method - Validity of the addition made by the Assessing Officer disallowing the adjustment claimed under Section 145-A where the assessee followed the exclusive method of accounting for excise duty and had accumulated CENVAT credit balances due to an inverted duty structure, and whether the Hawkins Cooker formula was applicable. - HELD THAT: - The Tribunal and the Commissioner (Appeals) found that the assessee followed the exclusive accounting method mandated by ICAI under which excise duty paid on inputs is credited to a CENVAT credit receivable account and not charged to the profit and loss account at the time of purchase. On the facts, the excise duty paid on raw materials exceeded the excise duty payable on finished goods because of an inverted duty structure, resulting in persistent balances in the CENVAT credit receivable account. The Assessing Officer's approach assumed a notional equality between duty on inputs and duty on outputs and applied a hypothetical equation; the Tribunal held that this assumption was factually inapplicable. The Commissioner (Appeals) examined the relevance of the Hawkins Cooker formula and concluded, on the figures and factual matrix of the assessee's case, that that formula did not apply. The Tribunal, following a coordinate decision for the assessee for an earlier year and on the material on record, upheld the deletion of the addition. The High Court independently applied its mind to those findings, found the reasoning of the lower authorities cogent and supported by material - namely, the accounting treatment accepted under ICAI principles, the existence of inverted duty structure and CENVAT balances, and the inapplicability of the Hawkins Cooker formula - and concluded no interference was warranted. [Paras 9, 10, 12, 13]

The addition disallowing the adjustment under Section 145-A was rightly deleted by the Commissioner (Appeals) and affirmed by the Tribunal; the Revenue's appeal is without merit and is dismissed.

Final Conclusion: The High Court dismissed the Revenue's appeal against the Tribunal's order for assessment year 2010-11, upholding the deletion of the addition under Section 145-A on the grounds that the assessee's exclusive accounting method, the resulting CENVAT balances from an inverted duty structure, and the inapplicability of the Hawkins Cooker formula justified the allowance of the adjustment.

Withholding of refund under Section 241A - processing of return under Section 143(1) - notice under Section 143(2) and pending scrutiny assessment - reasons to be recorded in writing and previous approval of Principal Commissioner/Commissioner - auto-generated intimation not constituting an order - certificate under Section 197 (TDS at nil rate) as relevant prima facie material

Auto-generated intimation not constituting an order - withholding of refund under Section 241A - Auto-generated communication by the Income Tax Department cannot be treated as an order under Section 241A and does not satisfy the statutory preconditions for withholding a refund. - HELD THAT: - Section 241A permits the Assessing Officer, for reasons recorded in writing and with previous approval of the Principal Commissioner/Commissioner, to withhold a refund where a notice under Section 143(2) has been issued and the grant of refund may adversely affect recovery. The auto-generated intimation dated 24.3.2019 was not passed by the competent Assessing Officer, did not contain reasons recorded in writing, and lacked the requisite prior approval; it is merely a computerized communication. The statutory scheme requires application of mind by the Assessing Officer and compliance with the conditions in Section 241A; those tests are not met by an automated system-generated message. The departmental practice of issuing such automated withholding intimations is therefore legally impermissible. [Paras 16]

Auto-generated intimation is not an order under Section 241A and cannot be relied upon to withhold the refund.

Withholding of refund under Section 241A - processing of return under Section 143(1) - notice under Section 143(2) and pending scrutiny assessment - certificate under Section 197 (TDS at nil rate) as relevant prima facie material - Whether the Assessing Officer's subsequent order under Section 241A withholding the petitioner's refund was justified on the facts of the case. - HELD THAT: - The Assessing Officer, after obtaining prior approval, recorded reasons referring to the contrast between taxable income in the preceding year and a large loss declared for 2017-18 and to various issues pending before the Tribunal. Section 241A empowers withholding only where the Assessing Officer forms a bona fide opinion that grant of refund may adversely affect revenue, records reasons in writing and obtains prior approval. The Court examined the asserted grounds and evidence adduced by the petitioner, including a prima facie affidavit quantifying potential adjustments and the Section 197 order permitting TDS at nil rate, and found on the material before it that even accepting the Department's asserted additions the petitioner would still declare a loss for the year. Mere discrepancy between adjacent years or pendency of issues decided adversely in earlier years does not, without more, justify withholding the refund. The Court concluded that the statutory requirements for a justified exercise of discretion under Section 241A were not fulfilled in the present facts and that the withholding was not warranted. [Paras 18, 19, 21, 22, 24]

The order passed under Section 241A withholding the refund was unjustified on the facts and is set aside; the refund is to be released with statutory interest.

Final Conclusion: The Court held that the automated intimation could not operate as an order under Section 241A and that the Assessing Officer's substantive withholding order did not satisfy the statutory safeguards or the facts of the case; the impugned orders were set aside and the refund arising from processing under Section 143(1) for AY 2017-18 was directed to be released with interest within three weeks.

Undisclosed investment under section 69 - valuation by DVO and weight of DVO report - additions cannot be based on surmises and conjectures - relevance of circle rate for taxation of property transactions - applicability of section 50C to purchaser - applicability of section 56(2)(vii)(b) to prior assessment years

Undisclosed investment under section 69 - valuation by DVO and weight of DVO report - additions cannot be based on surmises and conjectures - Whether the addition made by the AO under section 69 by adopting the DVO value and circle rate was sustainable where the assessee produced evidence that the properties were old, tenanted, situated in slum areas, produced an approved valuer's report, produced contemporaneous sale deeds of nearby properties and the sellers admitted sale at deeded price. - HELD THAT: - The Tribunal examined the material placed on record: the assessee's explanation that both properties were old, tenanted and situated in slum areas; a valuation report by a registered valuer; sale deeds of nearby properties sold around the same time below circle rates; and statements of the seller recorded by the AO confirming sale at the deeded prices. The Tribunal observed that the AO's addition rested solely on the DVO's estimates and circle rate comparisons, without tangible material to show that any payment over and above the deed consideration had in fact emanated from the assessee. Relying on the settled principle that additions must not be based on mere surmises and conjectures, and on the cumulative effect of the assessee's documentary and testimonial evidence, the Tribunal concluded that the AO had not established undisclosed investment in the hands of the assessee. Accordingly the addition was held unsustainable and was deleted. [Paras 12, 13]

Addition under section 69 deleted; appeal allowed on this ground.

Applicability of section 50C to purchaser - applicability of section 56(2)(vii)(b) to prior assessment years - Whether provisions introduced by section 50C or section 56(2)(vii)(b) could be invoked against the assessee in respect of A. Y. 2011-12. - HELD THAT: - The Tribunal noted that the assessee is the buyer and that section 50C operates in the hands of the seller; therefore section 50C was not applicable to the assessee. The Tribunal also observed that section 56(2)(vii)(b) was introduced by the Finance Act, 2013 with effect from 01.04.2014 and thus could not be invoked for assessment year 2011-12. These statutory inapplicabilities reinforced the conclusion that the additions based on circle rate comparisons and post-amendment deeming provisions were not available to sustain the AO's action for the year under consideration. [Paras 12, 13]

Sections 50C and 56(2)(vii)(b) held inapplicable for A. Y. 2011-12; they do not support the addition.

Final Conclusion: The Tribunal set aside the addition made by the AO and sustained by the CIT(A), deleted the assessment addition under section 69 for A. Y. 2011-12, and allowed the appeal of the assessee.

Peak credit method - treatment of unexplained cash credit - burden of proof to explain cash deposits - reopening of assessment under Section 147/148 - remand for verification of reconstructed books and bank records - statistical disposal of appeals

Peak credit method - treatment of unexplained cash credit - burden of proof to explain cash deposits - remand for verification of reconstructed books and bank records - Addition on account of peak cash credit was not finally adjudicated but the matter was remanded to the Assessing Officer for limited verification of reconstructed cash/book and bank-book entries vis-a -vis declared sources. - HELD THAT: - The Tribunal recorded that the AO had reopened the assessments within four years and had made additions by applying the peak credit method because the assessee could not, at the time of reassessment, produce books and explain cash deposits. Subsequent to assessment, the assessee produced reconstructed cash book, bank book, P&L and balance sheet and the AO in the remand report accepted that records were damaged by floods and that such books were produced for verification. The authorities below, however, made generalized adverse comments and did not point out specific defects in the reconstructed records or demonstrate how declared sources failed to account for deposits. Given the material produced and the absence of focused examination of the reconstructed entries against declared income, the Tribunal found that verification was necessary to determine whether any income had in fact escaped assessment and directed that the AO examine the records, point out specific discrepancies, and ascertain whether any addition is justified instead of relying on generalized conclusions. The remand is thus for limited verification and specific identification of any escapement of income arising from cash/bank book entries. [Paras 6]

Matter restored to the file of the Assessing Officer for verification of records and specific findings on any escapement of income.

Statistical disposal of appeals - Final procedural disposition of the appeals before the Tribunal. - HELD THAT: - Because the Tribunal remitted the core factual issue to the AO for verification, it disposed of the present appeals by directing restoration for enquiry and recorded the outcome for administrative purposes. The Tribunal therefore allowed the appeals for statistical purposes while ordering the limited remand to the AO as elaborated. [Paras 7]

Appeals allowed for statistical purposes and restored to the file of the Assessing Officer for further action as directed.

Final Conclusion: The Tribunal remitted the question of additions made by applying the peak credit method to the Assessing Officer for limited verification of reconstructed cash/bank book entries against declared sources and directed specific findings on any escapement of income; the appeals are allowed for statistical purposes while the AO carries out the verification and reports back.

Arm's Length Price - Transaction Net Margin Method - Operating Profit to Operating Cost (OP/OC) - Comparability and selection/exclusion of comparable companies - Turnover filter in comparable selection - Admission of additional grounds in appellate proceedings - Remand for recomputation of ALP

Comparability and selection/exclusion of comparable companies - Arm's Length Price - Inclusion of Evoke Technologies Pvt. Ltd. in the final list of comparable companies for determination of ALP - HELD THAT: - The DRP excluded Evoke Technologies suo motu on the basis that its margin was abnormally low and that a large increase in consultancy expenses indicated peculiar circumstances. Both the assessee and the Revenue sought inclusion. The Tribunal found the DRP's reasons unsound, observed that functional comparability and prior acceptance by the TPO and assessee supported inclusion, and relied on a coordinate ITAT decision where Evoke was regarded as a valid comparable for a SWD service provider. Exercise of the DRP's power to exclude was not justified in the facts and the company is directed to be included in the comparable set. [Paras 8]

Evoke Technologies Pvt. Ltd. is to be included in the list of comparable companies.

Admission of additional grounds in appellate proceedings - Admission of the assessee's additional ground seeking exclusion of Larsen & Toubro Infotech Ltd., Persistent Systems Ltd., and Sasken Communication Technologies Ltd. - HELD THAT: - Although these three companies were included in the assessee's original TP study, the assessee sought for the first time before the Tribunal to exclude them, relying on subsequent public-domain information and prior tribunal decisions (including the Special Bench in Quark Systems). The Tribunal held that prior selection by the assessee does not estop it from contending non-comparability and that prima facie grounds existed to admit the additional plea for adjudication on merits. [Paras 10]

The additional ground for exclusion of the three named companies is admitted for adjudication.

Turnover filter in comparable selection - Comparability and selection/exclusion of comparable companies - Exclusion of Larsen & Toubro Infotech Ltd., Persistent Systems Ltd., and Sasken Communication Technologies Ltd. from the comparable set on account of disproportionate turnover - HELD THAT: - The assessee argued these three companies were not comparable due to materially larger turnover compared to the assessee. The Tribunal followed its earlier decision in Autodesk India Pvt. Ltd. v. DCIT and related precedents, treating turnover as a relevant filter for comparability. Applying that principle, the Tribunal held the three companies should be excluded from the comparable set and directed their removal. [Paras 14]

Larsen & Toubro Infotech Ltd., Persistent Systems Ltd., and Sasken Communication Technologies Ltd. are to be excluded from the list of comparable companies.

Remand for recomputation of ALP - Direction to recompute the ALP after modifying the comparable set and to afford opportunity of hearing - HELD THAT: - Having directed inclusion of Evoke and exclusion of the three large-turnover companies, the Tribunal directed the AO/TPO to recompute the ALP in accordance with those directions and the accepted methodology (TNMM with OP/OC), after affording the assessee an opportunity of hearing. The Tribunal did not adjudicate further grounds which were rendered academic by these directions. [Paras 14]

Matter remitted to AO/TPO to compute ALP in light of Tribunal's directions, with an opportunity of hearing to the assessee.

Final Conclusion: Appeal of the assessee is partly allowed: Evoke Technologies Pvt. Ltd. is reinstated in the comparable set; Larsen & Toubro Infotech Ltd., Persistent Systems Ltd., and Sasken Communication Technologies Ltd. are excluded following application of the turnover filter; computation of ALP is remitted to the AO/TPO in accordance with these directions after hearing the assessee. Revenue's appeal dismissed as not maintainable under CBDT Circular No.17/2019.

Inadvertent clerical error and amendment of shipping bill - entitlement to benefits under the Merchandise Exports from India Scheme (MEIS) subject to DGFT verification - quashing of administrative order refusing amendment - mandamus to amend shipping bill

Inadvertent clerical error and amendment of shipping bill - entitlement to benefits under the Merchandise Exports from India Scheme (MEIS) subject to DGFT verification - mandamus to amend shipping bill - Whether an inadvertent failure to select the option for availing MEIS at the time of filing the shipping bill is fatal to the claim and whether Customs must allow amendment of the shipping bill so that entitlement can be considered. - HELD THAT: - The Court accepted the petitioner's case that the omission to indicate 'YES' for MEIS on the online shipping bill was inadvertent and, in view of earlier single Judge decisions of this Court, such a clerical omission should not preclude the substantive consideration of entitlement to the Scheme. The Court observed that entitlement to MEIS is itself to be examined and determined by the Director General of Foreign Trade upon application by the exporter; the Customs authorities' role is to permit amendment of the shipping bill so that the claim may be presented for DGFT verification. On these grounds the impugned administrative order refusing the requested amendment was quashed and a mandamus issued directing the Customs authority to amend the shipping bill as sought by the petitioner, leaving the question of entitlement to be decided on merits by the DGFT. [Paras 4, 5, 6, 7, 8]

Impugned order rejecting amendment quashed; Customs directed to amend the shipping bill to record MEIS availment so that entitlement may be verified and decided by the DGFT; writ petition allowed.

Final Conclusion: The petition was allowed by consent: the order refusing amendment of the shipping bill was quashed and a mandamus issued directing Customs to amend the shipping bill to reflect MEIS availment, with entitlement to be determined by the DGFT; no costs.

Completion of investigation under Section 110 of the Customs Act, 1962 within prescribed time-frame - Provisional release of seized goods subject to bond and bank guarantee - Withholding of IGST refund pending investigative/adjudicatory process

Completion of investigation under Section 110 of the Customs Act, 1962 within prescribed time-frame - Withholding of IGST refund pending investigative/adjudicatory process - Provisional release of seized goods subject to bond and bank guarantee - Authorities directed to complete the ongoing customs investigation and conclude the adjudicatory process within a reasonable period, preferably within six months from communication of a certified copy of the order. - HELD THAT: - The Court noted that the investigation into seizure of goods by the Special Investigation and Intelligence Branch (Export) is continuing and that the goods had been provisionally released subject to a bond for full FOB value and a bank guarantee. Section 110 of the Customs Act, 1962, prescribes a time-frame for completion of investigations relating to seizure of goods, documents and things - initially six months with a possible further extension not exceeding six months. Given that the investigatory process has caused withholding of the claimed IGST refund, the Court held that the concerned authorities are obliged to complete the investigation and the ensuing adjudication within the statutory time-frame and directed expeditious finalisation of the process. The Court therefore disposed of the writ petition by mandating completion of the investigation and adjudication at an early date, preferably within six months from the date of communication of a photostat certified copy of the order.

Writ petition disposed; respondent authorities directed to complete the investigation and adjudicatory process within a reasonable time, preferably within six months from communication of a certified copy of this order.

Final Conclusion: Petition disposed with a direction that the customs investigation and adjudication concerning the seized goods (provisionally released on bond and bank guarantee) be completed expeditiously and preferably within six months from communication of a certified copy of this order; IGST refund to be decided in consequence.

Bona fide purchaser for value - liability of transferee under a show cause-cum-demand notice under Section 28 of the Customs Act, 1962 - longer period of limitation - precedential impact of tribunal decision

Bona fide purchaser for value - liability of transferee under a show cause-cum-demand notice under Section 28 of the Customs Act, 1962 - precedential impact of tribunal decision - Admission of the appeal under Section 130 of the Customs Act, 1962 and formal recognition of the substantive controversy for adjudication - HELD THAT: - The Court recorded that the appellant, as transferee of a duty free advance licence, claims immunity from liability on the basis that it is a bona fide purchaser for value and relies upon a CESTAT decision. The High Court held that the law on whether the transferee is liable to a show cause-cum-demand notice invoking the longer period of limitation requires elucidation by this Court and therefore admitted the appeal under Section 130 for hearing. No substantive determination on the merits of the liability or on the applicability of the cited tribunal decision was made at this stage.

Appeal admitted for hearing under Section 130; the substantive legal question is directed to be considered by the Court.

Service and notice dispensed where respondent is represented - directions for filing informal paper book - listing and procedural case management - disposal of interim relief application - Procedural directions including dispensation of service, filing of paper book, listing date and disposal of the stay application - HELD THAT: - Noting that respondents were represented by counsel, the Court dispensed with service and issuance of notice of the appeal. The appellant's advocate-on-record was directed to file an informal paper book by a specified date and to serve a copy upon the respondents not later than seven days before the hearing. The appeal was listed for a stated date, and the interim stay application was disposed of by the Court in the same order. These directions are procedural and facilitate adjudication on the merits at the admitted hearing.

Service dispensed with; directions issued for filing and service of an informal paper book; appeal listed for hearing; stay application disposed of.

Final Conclusion: The High Court admitted the appeal under Section 130 for hearing on its merits, dispensed with formal service since respondents were represented, directed filing and service of an informal paper book, listed the appeal for hearing, and disposed of the interim stay application.

Condonation of delay - sufficient cause - limitation law not favouring those who sleep on rights - penalty under Regulation 11(a) and (n) of CBLR, 2013 - no automatic condonation because of subsequent favourable precedent - availability of appellate remedy against adverse administrative action

Condonation of delay - sufficient cause - no automatic condonation because of subsequent favourable precedent - limitation law not favouring those who sleep on rights - Application for condonation of 764 days' delay in filing the appeal was dismissed for want of sufficient cause. - HELD THAT: - The appellant sought condonation of a 764-day delay after having initially paid the penalty imposed by the original order and deciding not to pursue an appeal. The plea that the appeal should be allowed because a later decision of the High Court was favourable was rejected: the mere existence of a subsequent favourable precedent does not, by itself, constitute sufficient cause for condoning delay. The appellant's asserted apprehension that a no objection certificate for extension of business would be denied was not supported by evidence of any request having been made or refused, and the tribunal observed that, in any event, an aggrieved party could pursue an appellate remedy if an extension were denied. Citing the settled principle that limitation is intended to prevent laches, the tribunal held that the appellant had deliberately chosen not to file the appeal within time and failed to furnish a plausible or prompt explanation for the long delay. Given the absence of sufficient cause and the delay exceeding two years, the application for condonation was found to be without merit. [Paras 7, 8, 9]

Application for condonation of delay dismissed; consequentially the appeal is dismissed.

Final Conclusion: The tribunal dismissed the application for condonation of a 764-day delay for want of sufficient cause and, accordingly, dismissed the appeal against the penalty imposed under Regulation 11(a) and (n) of CBLR, 2013.

Cocoa Powder not equivalent to Flour/Atta/Maida - Interpretation in common parlance over technical meaning - Application of ejusdem generis and noscitur a sociis - DGFT clarification and prospective effect of Public Notice No. 93 (RE-2010)/2009-14 dated 1/2/2012 - Revenue's power to revisit earlier erroneous clearances; no estoppel in taxation - Limitation and extended period: requirement of suppression, misstatement or misrepresentation - Seizure, confiscation and penalty unsustainable where like cases were cleared and no special culpability shown

Cocoa Powder not equivalent to Flour/Atta/Maida - Interpretation in common parlance over technical meaning - Application of ejusdem generis and noscitur a sociis - Imported 'Cocoa Powder' cannot be treated as 'Maida/Atta/Flour' for purposes of DFIA entitlement and customs exemption. - HELD THAT: - The tribunal examined statutory definitions, guidance notes and technical literature and held that 'Maida/Atta/Flour' derive from cereals/tubers whereas 'Cocoa Powder' is derived from cocoa beans; regulatory definitions and expert opinion confirm distinct identities. Where the word 'Flour' appears in the company of 'Maida' and 'Atta' it must be read in the context of that group (ejusdem generis / noscitur a sociis), and common parlance interpretation is to be preferred over strained technical aggregation. DGFT clarifications also record that 'Flour' cannot mean 'Cocoa Powder'. Accordingly, prior tribunal reasoning in the Kushalchand matter does not justify treating cocoa powder as flour in general. [Paras 7, 8, 9, 11, 12]

On the merits, cocoa powder is not covered by DFIA entries describing 'Maida/Atta/Flour' and therefore import of cocoa powder was not eligible for the claimed duty-free benefit (subject to the limited prospective exception created by DGFT Public Notice dated 1/2/2012).

DGFT clarification and prospective effect of Public Notice No. 93 (RE-2010)/2009-14 dated 1/2/2012 - DGFT's Public Notice permitting limited import of cocoa powder as additive is prospective and prior to that date cocoa powder was not permissible as an input against export of biscuits under DFIA. - HELD THAT: - The tribunal recorded that DGFT by Public Notice dated 1/2/2012 permitted import of a specified small quantity of cocoa powder as an additive against biscuits; this change is prospective. Before that date cocoa powder was not an allowable input under DFIAs for biscuits, and DGFT clarifications to Customs reinforced that the ITC(HS) codes and descriptions could not be varied by transferees. [Paras 12]

The Public Notice of 1/2/2012 is prospective; imports of cocoa powder as an input under DFIA before that date were not permitted.

Revenue's power to revisit earlier erroneous clearances; no estoppel in taxation - Limitation and extended period: requirement of suppression, misstatement or misrepresentation - Customs/Revenue may correct past erroneous clearances and reopen assessments, but invocation of extended limitation period requires suppression/misstatement; where licences and consignments were presented and officers had allowed exemption relying on Kushalchand, demands raised later are hit by limitation. - HELD THAT: - The tribunal accepted that revenue is not bound to perpetuate an earlier wrong practice and may reassess; however, notifications granting exemption are administered by Customs who must be satisfied that imports conform to authorisation. Where proper officers had examined licences and cleared consignments (often relying on the Kushalchand decision), and there is no material to show suppression, misstatement or misrepresentation by importers, invocation of extended limitation is not justified. Accordingly, although the Revenue's legal position on entitlement may be correct on merits, many demands fall foul of limitation. [Paras 15, 16, 17]

Revenue can reopen past clearances in law, but demands beyond normal limitation cannot be sustained in the absence of suppression; therefore several Revenue appeals fail on limitation despite merits favouring Revenue.

Seizure, confiscation and penalty unsustainable where like cases were cleared and no special culpability shown - Seizure, confiscation and penalties imposed on M/s Ravi Foods (and penalties on officials) are not justified and are set aside; however, duty demand as assessed is confirmed. - HELD THAT: - The tribunal found that multiple importers had their consignments cleared after officers applied Kushalchand; Ravi Foods was not shown to have acted differently or with special culpability. While provisional assessment by Customs is permissible pending enquiries, the confiscation, redemption fine and penalties under section 112/125 were excessive and beyond legal justification in the circumstances. The commissioner himself later dropped proceedings in a related case noting the Supreme Court order had not been placed on record when the earlier OIO was passed. Consequently confiscation and penalties were quashed though the denial of exemption and duty assessment was maintained. [Paras 17, 18, 19, 20]

For M/s Ravi Foods the duty demand is confirmed but confiscation, redemption fine and penalties are set aside; related individual appeals against penalties are allowed.

Citation effect of Kushalchand decision limited to parties inter se - The Supreme Court's decision in Kushalchand is binding inter se between the parties before it but does not operate as a general principle entitling other importers to the same benefit where the Department did not abandon its right to challenge. - HELD THAT: - The tribunal noted the Supreme Court in Kushalchand declined to examine the substantive question because the Department had not appealed the Tribunal's finding; the Supreme Court's conclusion was therefore operative inter se between the parties. A wrong decision in favour of a particular party does not automatically confer benefit on others; hence reliance on Kushalchand by other importers does not conclusively entitle them to DFIA benefit where DGFT clarifications and subsequent adjudication show the contrary. [Paras 13, 14]

Kushalchand decision is binding only inter se and cannot be invoked as a general precedent to permit cocoa powder imports under DFIA for other parties.

Final Conclusion: On merits cocoa powder is not equivalent to 'Maida/Atta/Flour' and was not eligible for DFIA-based duty-free import prior to DGFT's prospective Public Notice of 1/2/2012; DGFT clarifications support this. Revenue's legal case on entitlement succeeds on merits, but many departmental demands are barred by limitation because licences and consignments were presented and clearances were granted without any suppression. Accordingly the tribunal (i) confirmed duty demand against M/s Ravi Foods but set aside confiscation, redemption fine and penalties; (ii) allowed certain appeals by individuals; (iii) allowed Revenue's separate appeal in C/87192/2019 holding respondents not eligible for exemption; and (iv) rejected multiple Revenue appeals as time-barred.

Penalty for export of prohibited goods under the Customs Act - vicarious liability of an employer for acts of an employee in export transactions - mens rea in imposition of customs penalty - confiscation with option to redeem - applicability of precedent to distinguish factual matrices

Penalty for export of prohibited goods under the Customs Act - vicarious liability of an employer for acts of an employee in export transactions - mens rea in imposition of customs penalty - Validity of penalty imposed on the appellant for export of prohibited items where the appellant pleaded lack of knowledge and attributed the act to its Marketing Manager. - HELD THAT: - The Tribunal found that prohibited goods were exported and intercepted. The appellant's sole defence was that the export was effected by its Marketing Manager without the appellant's knowledge or consent. The Tribunal did not accept that defence, observing that the Marketing Manager acted in the course of his employment on behalf of the appellant and that the appellant failed to inspire confidence that the act occurred without its knowledge. The Tribunal therefore upheld the imposition of penalty under the Customs law, noting absence of any compelling reason to infer that mens rea was lacking so as to negate liability in the circumstances of this employer-employee export transaction. The Tribunal also recorded that the penalty imposed was not exorbitant and there was no infirmity in the exercise of discretion to impose penalty in the facts of the case.

Penalty upheld and appeal dismissed.

Applicability of precedent to distinguish factual matrices - Whether the decision relied upon by the appellant (Anchor Logistics) applied to the present facts. - HELD THAT: - The Tribunal examined the precedent relied upon by the appellant and held it distinguishable. Anchor Logistics concerned a Custom House Agent and its legal matrix, whereas the present case involved an export carried out by a Marketing Manager in the course of employment for the appellant. On that factual distinction the Tribunal rejected the contention that the precedent entitled the appellant to relief.

Precedent held not applicable to the facts; reliance thereon rejected.

Final Conclusion: The appeal is dismissed; the penalty imposed by the Commissioner of Customs is upheld and the reliance on the cited precedent is rejected as factually distinguishable.

Acceptance of declaration as 'transaction value' at the time and place of importation - Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - enhancement of declared value by adjudicating authority - confiscation under Section 111 of the Customs Act, 1962 - redemption fine and penalty under Section 112 of the Customs Act, 1962 - penalty under Section 114A of the Customs Act, 1962 - penalty under Section 114AA of the Customs Act, 1962 limited to documents submitted before Customs

Acceptance of declaration as 'transaction value' at the time and place of importation - Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Whether the negotiated price agreed after importation constituted the 'transaction value' for assessment - HELD THAT: - The Tribunal found that the negotiated price was agreed after importation and therefore did not satisfy the qualification that the price be the one at the time and place of importation. Because the agreement between appellant and supplier was concluded post-arrival, the declaration could not be accepted as the transaction value. In these circumstances recourse to the Customs Valuation Rules, 2007 was required to determine value, and reliance on precedents was examined and distinguished on their facts, including where the price was contemporaneous with importation or where special circumstances (such as long diversion or conformity with international prices) justified acceptance of a later-negotiated price. [Paras 8, 9, 10]

The negotiated post-import price was not accepted as the transaction value; valuation as per the Customs Valuation Rules was appropriate.

Enhancement of declared value by adjudicating authority - Whether the enhancement of the declared value from the declared figure to the supplier's pro forma invoice price was sustainable - HELD THAT: - The Tribunal noted that documentary evidence from the shipper showed pro forma invoices indicating a higher price and that there was no material on record to show the supplier had offered a lower price contemporaneously for sale into India. The appellate order's enhancement of value to the price reflected in the pro forma invoices was therefore upheld. The Court also recorded that the reference to Section 28 had been expunged by the appellate authority and that Revenue did not challenge that modification. [Paras 7, 10, 13]

The enhancement of value as recorded in the impugned order is upheld.

Confiscation under Section 111 of the Customs Act, 1962 - redemption fine and penalty under Section 112 of the Customs Act, 1962 - penalty under Section 114A of the Customs Act, 1962 - penalty under Section 114AA of the Customs Act, 1962 limited to documents submitted before Customs - Whether confiscation, redemption fine and the penalties imposed could be sustained - HELD THAT: - The Tribunal found no evidence that the negotiated price had been contrived to evade customs duties or that the circumstances attracted confiscation under Section 111; the ground invoked under Section 111(d) was not disclosed and Section 111(m) did not apply on the findings. With the appellate authority having expunged the reference to Section 28, the basis for invoking Section 114A no longer subsisted. There was also no allegation of fraudulent amendment of the Import General Manifest or of submission of fraudulent documents to justify penalty under Section 114AA. Consequently, the redemption fine and the penalties imposed were not sustainable and were set aside. [Paras 11, 12, 13]

Confiscation, redemption fine and penalties (including under Sections 112, 114A and 114AA as imposed) are set aside.

Final Conclusion: The Tribunal upheld only the enhancement of the declared value; all other adverse orders of confiscation, redemption fine and penalties were set aside.

Preferential transactions - relevant time / look-back period - ordinary course of business or financial affairs (exception to avoidance) - reading disjunctive "or" as conjunctive "and" in exception clause - security interest / mortgage as collateral - financial debt and financial creditor (disbursal against time value of money) - orders of avoidance under Section 44 of the IBC

Preferential transactions - relevant time / look-back period - ordinary course of business or financial affairs (exception to avoidance) - reading disjunctive "or" as conjunctive "and" in exception clause - orders of avoidance under Section 44 of the IBC - Whether the impugned mortgage transactions by Jaypee Infratech Limited are avoidable as preferential transactions under Section 43 read with Section 44 of the Insolvency and Bankruptcy Code, 2016. - HELD THAT: - The Court held that the six challenged mortgage transactions satisfy the twin deeming requirements of Section 43(2): they were transfers of interests in JIL's property for the benefit of Jaiprakash Associates Limited (a related party/creditor/surety) on account of antecedent liabilities and had the effect of putting that related party in a more beneficial position than it would have been in a distribution under Section 53. Because the beneficiary was a related party, the two year look back under Section 43(4)(a) applied and the relevant transactions fell within 10.08.2015 to 09.08.2017. The Court rejected the respondents' contention that earlier mortgages or technical re registrations meant no fresh transaction: releases followed by re mortgages during the look back were treated as fresh transfers. The Court further held that the exclusion in Section 43(3)(a) must be read purposively so that the word "or" between "corporate debtor" and "transferee" is read as "and"; consequently a transfer qualifies for the exception only if it was in the ordinary course of business or financial affairs of both the corporate debtor and the transferee. Applying the Downs test and the factual matrix, the Court concluded the mortgaging was not in the ordinary course of JIL's business or financial affairs (given its liquidity crunch, NPAs and the facts of the transactions) and thus the exception did not apply. For these reasons the NCLT's avoidance order discharging the security interests and vesting the properties in the corporate debtor under Section 44 was upheld and NCLAT's contrary interference was set aside. [Paras 22, 24, 25, 27, 55]

The mortgage transactions concerning Property Nos. 1-6 are preferential within the meaning of Section 43 and the NCLT's orders for avoidance and discharge of the security interests under Section 44 are upheld; NCLAT's contrary order is set aside.

Security interest / mortgage as collateral - financial debt and financial creditor (disbursal against time value of money) - secured creditor - financial creditor (role in CIRP) - Whether the lenders of Jaiprakash Associates Limited who held mortgages over JIL's properties qualify as financial creditors of Jaypee Infratech Limited for the purposes of the IBC. - HELD THAT: - The Court analysed the statutory definitions in Section 5(7)-(8) and concluded that the essential feature of a "financial debt" is a disbursal against consideration for the time value of money. While a mortgage creates a security interest and may give rise to a pecuniary liability, a third party mortgage taken to secure a debt owed by a different borrower does not, by itself, convert the mortgagee into a financial creditor of the mortgagor. The Court rejected the submission that all secured creditors (including indirect or third party mortgagees) ipso facto fall within the category of financial creditors: the defining focus under Part II is whether the corporate debtor owes a financial debt to the claimant. On the facts, because JIL had not received disbursement against the time value of money from those lenders and had not incurred the financial debt owed to them (the mortgages secured JAL's obligations), those lenders could at most be secured creditors by virtue of the security but were not financial creditors of JIL. The Court therefore restored NCLT's orders rejecting the lenders' claims to be financial creditors and dismissed the NCLAT's allowance of those claims. [Paras 48, 54, 55]

The lender mortgagees of JAL are not financial creditors of Jaypee Infratech Limited; the NCLT's findings to that effect are restored and the appeals allowing them to be treated as financial creditors are dismissed.

Final Conclusion: The appeals are allowed in part. The Supreme Court upholds the NCLT's avoidance of six mortgage transactions as preferential under Section 43 (and consequent orders under Section 44), sets aside the NCLAT's contrary order, and also restores the NCLT's findings that the third party mortgagees (lenders of JAL) are not financial creditors of Jaypee Infratech Limited.

Manifest arbitrariness - deprivation of property by authority of law - attachment and confirmation under Section 5 and Section 8 of PMLA - taking possession under Section 8(4) of PMLA and corresponding Rules - presumption and burden of proof under Section 24 of PMLA

Manifest arbitrariness - taking possession under Section 8(4) of PMLA and corresponding Rules - attachment and confirmation under Section 5 and Section 8 of PMLA - presumption and burden of proof under Section 24 of PMLA - Challenge to Section 8(4) of the Prevention of Money Laundering Act, 2002 read with the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by Adjudicating Authority) Rules, 2013 as manifestly arbitrary and violative of Article 14 was rejected. - HELD THAT: - The Court held that the Act and the Rules operate in furtherance of a legislative objective to prevent money laundering and to deprive offenders of the fruits of crime. Attachment under Section 5 and confirmation under Section 8(3) are stages in a statutory scheme which includes hearing, appellate remedies and eventual trial; once attachment is finally confirmed, Section 8(4) empowers possession to be taken in the manner prescribed. The Rules providing for eviction and securing of attached property are connected to the object of preventing disposal or dissipation of tainted property and are not capricious, irrational or without an adequate determining principle. In view of Section 24 which casts a statutory burden on the accused to rebut the presumption that the property is proceeds of crime, the procedure for taking possession cannot be characterised as manifestly arbitrary under Article 14. [Paras 17, 19, 20, 22]

The challenge that Section 8(4) read with the Rules is manifestly arbitrary and violative of Article 14 is dismissed.

Deprivation of property by authority of law - attachment and confirmation under Section 5 and Section 8 of PMLA - Challenge that Section 8(4) and the Rules effect deprivation of property in violation of Article 300 A of the Constitution was rejected. - HELD THAT: - The Court observed that Article 300 A bars deprivation of property save by authority of law, and that the PMLA is a complete code prescribing stages of provisional attachment, adjudication, appeals and eventual confiscation only after conviction or final adjudication. The statutory scheme affords opportunity of hearing, appellate review and restoration where appropriate. A person who has purchased property with proceeds of crime cannot claim the protection of Article 300 A to retain enjoyment of tainted property. Accordingly, a mere confirmed attachment and consequent possession taken in accordance with the statute does not constitute unlawful deprivation under Article 300 A. [Paras 23, 24]

The contention that Section 8(4) read with the Rules violates Article 300 A is repelled and is not sustainable.

Final Conclusion: Writ petition dismissed; the High Court upheld the constitutionality and vires of Section 8(4) of the PMLA and the impugned Rules, holding that the procedure for taking possession of attached properties is connected to the statutory object, is not manifestly arbitrary under Article 14, and does not amount to unlawful deprivation of property contrary to Article 300 A.

Anticipatory bail under Section 438 Cr.P.C. read with Section 65 of the PMLA - rigour of Section 45(1)(ii) of the PMLA - non-arrest during investigation under Section 19 of the PMLA - provisional attachment of properties in money laundering investigation - presumption of innocence and bail as the general rule

Anticipatory bail under Section 438 Cr.P.C. read with Section 65 of the PMLA - rigour of Section 45(1)(ii) of the PMLA - non-arrest during investigation under Section 19 of the PMLA - provisional attachment of properties in money laundering investigation - presumption of innocence and bail as the general rule - Interim anticipatory bail granted earlier to the petitioners is confirmed and made absolute. - HELD THAT: - The Court proceeded on the factual matrix that investigation commenced on 18.02.2016, petitioners were repeatedly associated with the investigation and their statements were recorded over a protracted period, yet they were not arrested under Section 19 of the PMLA. The Enforcement Directorate has provisionally attached numerous properties, including two hotels, and the petitioners have furnished bail/surety bonds and have been appearing before the Investigating Officer. Relying on the principle that bail is the general rule and having regard to the facts that there was no arrest during extended investigation and that assets have been provisionally attached, the Court held that the stringent requirement under Section 45(1)(ii) of the PMLA would be attracted primarily in cases where the accused has been arrested by the ED under Section 19. The Division Bench decision in Dalip Singh Mann was treated as supportive of the view that where arrest has not been effected despite prolonged investigation and attachment has occurred, the exceptional rigour of Section 45(1)(ii) should not preclude grant of pre arrest protection. In these circumstances and on the totality of facts the interim orders granting protection were made absolute without entering into a mini trial on merits so as to avoid prejudicing the parties. [Paras 19, 20, 21, 22]

Interim anticipatory bail orders dated 19.04.2019, 30.04.2019 and 10.05.2019 are made absolute and the petitions are disposed of.

Final Conclusion: On the facts that the petitioners were not arrested during a prolonged investigation, had their statements recorded, properties stood provisionally attached and they furnished bonds and cooperated with the investigation, the High Court confirmed and made absolute its earlier interim anticipatory bail orders and disposed of the petitions.

Appointed date - effective date - deemed date of amalgamation/transfer - refund of service tax on intra-group transactions treated as service to self - treatment of taxes paid by demerged undertaking between appointed date and effective date - unjust enrichment - ratio in Marshall Sons & Co. regarding effect of sanctioned scheme from appointed date

Appointed date - deemed date of amalgamation/transfer - refund of service tax on intra-group transactions treated as service to self - ratio in Marshall Sons & Co. regarding effect of sanctioned scheme from appointed date - Whether, for the purpose of service tax refund, the Scheme of Arrangement sanctioned by the High Court operates from the appointed date (01.04.2014) so that services provided by the demerged undertaking to the resultant company before the effective date are to be treated as services to self and the service tax paid is refundable. - HELD THAT: - The Tribunal examined the Scheme of Arrangement as sanctioned by the High Court which defines an "Appointed Date" (commencement of business on 01.04.2014) and an "Effective Date" (the later of completion of specified consents/filings, here 11.03.2016), while expressly providing that the Scheme shall be operative from the Appointed Date though effective from the Effective Date. Clauses of the Scheme (notably Clauses 3.1.1, 3.1.3, 3.4.1-3.4.3, 5.1 and 5.3) treat assets, receivables, taxes and profits of the demerged undertaking on and after the Appointed Date as those of the Resultant Company, and provide that taxes paid by the demerged company in respect of the demerged undertaking shall be treated as taxes paid by the Resultant Company. Applying the binding principle in Marshall Sons & Co., where the Supreme Court held that when a court sanctions a scheme without prescribing a different date, the transfer/amalgamation must be taken to operate from the date specified in the scheme, the Tribunal held that the appointed date in the present Scheme is the date of amalgamation/transfer. On that basis the services rendered by the demerged company to the appellant from the Appointed Date fall to be treated as services to self, making the service tax paid during that period refundable. The Tribunal relied on consistent Tribunal precedents applying Marshall Sons & Co. and concluded that the Commissioner's contrary conclusion - treating effectiveness as commencing only from formal completion dates - is unsustainable.

The appointed date (01.04.2014) is the operative date of amalgamation for service-tax purposes; services between the demerged and resultant entities from that date are services to self and the service tax paid is refundable.

Treatment of taxes paid by demerged undertaking between appointed date and effective date - unjust enrichment - refund of service tax - Whether taxes/service tax paid by the demerged company in respect of the demerged undertaking for the period between the appointed date and the effective date are to be treated as taxes of the resultant company and whether the refund was vitiated by limitation, lack of CA certificate or unjust enrichment. - HELD THAT: - The sanctioned Scheme explicitly provides that taxes (direct or indirect) paid by the demerged company on or after the Appointed Date but prior to the Effective Date shall be treated and deemed to be taxes paid by the Resultant Company and that the Resultant Company may claim refunds or credits accordingly. The original adjudicating authority had examined and accepted the appellant's compliance with statutory requirements (timeliness, CA certificate and absence of unjust enrichment) and sanctioned the refund. The Tribunal, applying the Scheme's express clauses and the legal position that the appointed date governs the operative effect of the amalgamation, treated taxes paid in the interregnum as attributable to the resultant company and upheld entitlement to refund. The Tribunal thereby rejected the Commissioner's view that formal completion only at the Effective Date prevented refundability, and found no basis to sustain findings of unjust enrichment or procedural disqualification where the original authority had examined and accepted those aspects.

Taxes/service tax paid by the demerged undertaking between the Appointed Date and Effective Date are deemed taxes of the Resultant Company and do not preclude the sanctioned refund; the refund stands allowed subject to any consequential adjustments.

Final Conclusion: The impugned order of the Commissioner is set aside. Applying the sanctioned Scheme and the Supreme Court's ratio in Marshall Sons & Co., the Tribunal held that the Scheme operates from the appointed date (01.04.2014), rendering intra-group services to be services to self and entitling the appellant to the sanctioned refund of service tax, with consequential reliefs as may follow.

Business Auxiliary Services - promotion or marketing of goods produced or provided by or belonging to the client - definition of "sale" and "purchase" under Section 2(h) of the Central Excise Act, 1944 - distinction between promotion of finished goods and promotion of supplier's input - CENVAT credit and admissibility of advertising/marketing services as input services

Business Auxiliary Services - promotion or marketing of goods produced or provided by or belonging to the client - definition of "sale" and "purchase" under Section 2(h) of the Central Excise Act, 1944 - distinction between promotion of finished goods and promotion of supplier's input - Whether the appellant was liable to pay service tax as Business Auxiliary Services for marketing and promotional support received from Coca Cola India Pvt Ltd in respect of market promotion of beverages. - HELD THAT: - The Tribunal held that the issue is controlled by earlier Tribunal decisions (including Superior Drinks and Narmada Drinks) which were followed. The Revenue's contention that promotional activity by the bottler amounted to promotion of the supplier's concentrate was rejected. Applying the definition of "sale" and "purchase" in Section 2(h) of the Central Excise Act, 1944 (made applicable to service tax matters by Section 65(121) of the Finance Act, 1994), the transfer of concentrate to the appellant for consideration amounted to a sale; restrictions on subsequent use did not convert the transaction into a mere "transfer for use." The Tribunal observed that accepting the Revenue's argument would lead to the illogical result that every manufacturer promoting its finished product would be deemed to promote the supplier of inputs, which is not the intention of the Business Auxiliary Services category. The Bombay High Court decision relied upon by the Commissioner (concerning CENVAT credit) was distinguished as addressing admissibility of credit for advertising services to the concentrate manufacturer and not establishing taxable BAS liability of the bottler. The Tribunal therefore found no merit in the impugned orders sustaining demands of service tax, interest and penalties. [Paras 4]

Impugned orders set aside; appeals allowed.

Final Conclusion: The Tribunal allowed the appeals, set aside the demands for service tax, interest and penalties recorded by the Commissioner, and held that the promotional support taken by the appellant did not attract service tax as Business Auxiliary Services for the periods in dispute.

CENVAT credit on capital goods - availability of credit despite removal to customer's premises - rule 3(5) of CENVAT Credit Rules, 2004 - removed "as such" - deeming under rule 3(6) enabling recipient's credit

CENVAT credit on capital goods - availability of credit despite removal to customer's premises - rule 3(5) of CENVAT Credit Rules, 2004 - removed "as such" - deeming under rule 3(6) enabling recipient's credit - Whether the appellant was obliged to reverse CENVAT credit on capital goods (set top boxes and control instruments) removed to customers' premises and left there after discontinuation of paid service, by application of rule 3(5) of the CENVAT Credit Rules, 2004. - HELD THAT: - The Tribunal held that CENVAT Credit Rules, 2004 permit credit on duties paid for capital goods procured by a provider of output services and contain no condition of perpetual deployment in operations as prerequisite for initial eligibility. Capital goods are distinct from inputs because they are not absorbed into the final product and need not remain in continuous operation; disconnection of service is normally preceded by actual use. The expressions in rule 3(5) - "removed" and "as such" - are directed to situations of clearance by a manufacturer and serve valuation/clearance purposes; they are not apt to be mechanically imported to govern continuation of credit for a service provider whose capital goods were used and then remained at the customer's premises. Further, rule 3(6)'s deeming of amounts paid on removal as duty underscores that the scheme contemplates transfer facilitation and entitlement of the recipient to credit, rather than an automatic disqualification of the original claimant where no successor has availed credit. In the absence of any specific statutory provision requiring reversal where the capital goods were used and subsequently remained at the customer's premises, application of rule 3(5) to deny or recover credit was unsustainable. Consequently, the adjudicating authority's presumption and consequent tax demand, interest and penalties based on that application were erroneous. [Paras 6, 7, 8]

Impugned demand, interest and penalties premised on reversal of CENVAT credit under rule 3(5) were set aside and the appeal allowed.

Final Conclusion: The Tribunal held that the appellant was entitled to retain CENVAT credit on capital goods which had been put to use and later remained at customers' premises; rule 3(5) did not mandate reversal in the circumstances, and the adjudicating authority's demand and penalties were quashed.

Exemption for inputs intended for use in the manufacture of fertilisers - use in or in relation to the manufacture of fertilisers - by product/main product distinction in exemption notifications - captively consumed intermediate qualifying as an excisable fertiliser - revenue neutrality by availment of cenvat credit - penalty under Section 11AC and requirement of mala fides

Captively consumed intermediate qualifying as an excisable fertiliser - exemption for inputs intended for use in the manufacture of fertilisers - Exemption under Notification No. 12/2012-CE applies to sulphur used to manufacture sulphuric acid/oleum which is used to produce molten urea. - HELD THAT: - The Tribunal applied the settled principle that the plain language of an exemption notification governs and that an input which results in the manufacture of a product classifiable as a fertiliser falls within the notification. Molten urea is an excisable chemical fertiliser and the fact that molten urea is further used in the manufacture of melamine does not defeat the claim to exemption for the earlier stage. Revenue's distinction that some sulphuric acid is used for cooling-tower pH control does not vitiate the admitted direct use of sulphuric acid in urea manufacture and was not shown to negate the condition of the notification.

Exemption allowed in respect of sulphur used for manufacture of sulphuric acid/oleum that is used to produce molten urea.

By product/main product distinction in exemption notifications - exemption for inputs intended for use in the manufacture of fertilisers - Sulphur used to make sulphuric acid/oleum which is used in the Caprolactam plant is exempt to the extent it results in manufacture of ammonium sulphate (a fertiliser); however, duty is confirmed on quantity of sulphur attributable to Hydroxylamine Sulphate sold on payment of duty. - HELD THAT: - Relying on precedent, the Tribunal rejected Revenue's attempt to deny exemption on the ground that ammonium sulphate is a by product of caprolactam manufacture. The exemption condition looks to whether the input is used in manufacture of a fertiliser and makes no distinction between primary product and by product. The appellants however admitted duty liability on Hydroxylamine Sulphate sold on the open market; for that portion the excise demand on sulphur is sustainable and CENVAT neutralisation claimed by the appellant does not negate the duty liability for clearances made on payment of duty.

Exemption allowed for sulphur used in manufacture of ammonium sulphate via caprolactam process; demand confirmed for sulphur attributable to Hydroxylamine Sulphate cleared on payment of duty.

Use in or in relation to the manufacture of fertilisers - exemption for inputs intended for use in the manufacture of fertilisers - Sulphuric acid used in cooling towers for pH control that feeds manufacturing processes qualifies for exemption under the notification. - HELD THAT: - The Tribunal followed prior decisions of the Tribunal and higher courts which recognised that sulphuric acid used in cooling systems that are integrally related to the fertiliser manufacturing process is 'used in or in relation to the manufacture' of fertilisers. The functional connection between the cooling-water pH control and the fertiliser plant brings such use within the scope of the exemption.

Exemption allowed in respect of sulphur used to produce sulphuric acid applied in cooling towers for pH control connected to fertiliser manufacture.

Exemption for inputs intended for use in the manufacture of fertilisers - by product/main product distinction in exemption notifications - revenue neutrality by availment of cenvat credit - Sulphur used to produce phosphoric acid (and consequential phospho gypsum by product) that is used to manufacture ammonium phosphate is covered by the exemption; duty is leviable on sulphur used in phosphoric acid cleared on payment of duty. - HELD THAT: - Applying the principle that the inevitability of emergence of a by product does not defeat the exemption where the input is used in manufacture of a fertiliser, the Tribunal held that sulphur used to make phosphoric acid which is thereafter used to produce ammonium phosphate qualifies for exemption. However, where phosphoric acid (or resultant product) is cleared for sale on payment of duty, the admitted liability for that quantity cannot be avoided; the appellants' contention of revenue neutrality through CENVAT credit does not eliminate the excise liability on clearances on payment.

Exemption allowed for sulphur used in manufacture of phosphoric acid consumed in fertiliser production; demand sustained for sulphur attributable to phosphoric acid cleared on payment of duty.

Penalty under Section 11AC and requirement of mala fides - Penalty under Section 11AC cannot be imposed where dispute is one of interpretation and there is no apparent mala fide intention. - HELD THAT: - The Tribunal found that the controversy concerned interpretation of exemption notifications and admissibility of claims rather than deliberate evasion. Given the bona fide contest on legal interpretation and the admitted duty on certain clearances, imposition of penalty under Section 11AC was not justified.

Penalty imposed under Section 11AC set aside.

Final Conclusion: The appeal is partly allowed: demands of excise duty arising from use of sulphur are set aside insofar as sulphur is used to produce sulphuric acid/oleum that is used for manufacture of molten urea, ammonium sulphate (including via caprolactam process) and phosphoric acid used in fertiliser manufacture; confirmed demands remain only for quantities attributable to Hydroxylamine Sulphate and for phosphoric acid (or its clearances) sold on payment of duty; penalty under Section 11AC is cancelled.

Calculation of percentage of fly ash with reference to dry weight of finished product - eligibility for concessional exemption where product contains not less than 25% by weight of fly ash - re-quantification of duty after allowing cum-duty price and MODVAT credit - confiscation of finished goods requiring evidence of intent to clear without payment of duty - personal penalties to be commensurate with proven duty liability and nature of offence

Calculation of percentage of fly ash with reference to dry weight of finished product - eligibility for concessional exemption where product contains not less than 25% by weight of fly ash - Whether Asbestos Cement Sheets manufactured by the appellants satisfied the 25% fly ash threshold for entitlement to exemption when percentage is computed with reference to the dry weight of the finished product. - HELD THAT: - The Tribunal accepted the Board's clarification that the weight of fly ash used must be compared to the weight of the finished product in dry condition. The Tribunal examined the actual wet mixture reports and the appellants' shift-wise production and raw-material records, and found that when moisture is excluded (i.e. by reference to dry weight) the proportion of fly ash vis-a -vis other raw materials in the sheets exceeded 25% on average. The Tribunal relied upon earlier precedents and Board circulars that moisture must be ignored in computing the dry weight. Consequently, the Tribunal held that the sheets largely met the condition of the exemption; only a small admitted quantity where fly ash was under 25% remained liable to duty. [Paras 6, 7, 8]

Duty demand and penalties insofar as they relate to Asbestos Cement Sheets were set aside except in respect of admitted quantity where fly ash was below 25%, which liability is upheld.

Re-quantification of duty after allowing cum-duty price and MODVAT credit - Whether the duty demand on Asbestos Cement Pipes must be re-quantified after allowing benefit of cum-duty price and MODVAT (MODVAT) credit. - HELD THAT: - The Tribunal found that the appellants failed to establish that fly ash content in pipes exceeded 25%, and that the adjudicating authority's demand on pipes could not be sustained as originally quantified. However, the appellants are entitled to adjustment for cum-duty price and MODVAT credit as available in law. The Tribunal therefore directed re-quantification of duty on pipes (and adjustment to sheet liability where applicable) by the adjudicating authority after allowing those benefits, and allowed the option regarding penalty corresponding to the re-quantified duty under the proviso to section 11AC. [Paras 8, 9]

Duty on Asbestos Cement Pipes to be re-quantified after allowing cum-duty price and MODVAT credit; consequential interest/penalty and options to be determined in accordance with the re-quantified liability.

Confiscation of finished goods requiring evidence of intent to clear without payment of duty - Whether confiscation of finished Asbestos Cement sheets and pipes was justified on the ground that entries were not made in RG-1 register and goods were intended to be cleared without payment of duty. - HELD THAT: - The Tribunal reviewed the record of maintained books including Wet Mixture Reports, Daily Production Reports, Physical Lab Register, General Shift Furnishing Report and RG-1 register. It observed that the appellants had consistently maintained multiple records and had informed the department about the stage at which RG-1 entries were made. No incident of clandestine removal was proved by the Revenue. In view of the absence of evidence demonstrating an intention to clear goods without payment of duty, the Tribunal concluded that confiscation under Rule 25(1)(b) was not warranted. [Paras 10]

Confiscation of asbestos cement sheets and pipes and the consequential redemption fine were set aside.

Personal penalties to be commensurate with proven duty liability and nature of offence - Whether personal penalties imposed on company officers should be sustained as imposed by the adjudicating authority. - HELD THAT: - Given the substantial reduction in duty demand following the Tribunal's findings on entitlement to exemption for sheets and the direction to re-quantify duty on pipes (after allowing cum-duty price and MODVAT credit), the Tribunal held that personal penalties required reduction to reflect the corrected liability and the interpretative nature of the dispute. Considering facts and gravity of the case, the Tribunal exercised its discretion to reduce specified personal penalties to quantified reduced sums for the individual officers. [Paras 11]

Personal penalties imposed on the listed officers were reduced to specified lower amounts by the Tribunal.

Procedural abatement of appeal on death of appellant - Whether the appeal filed by Shri Basant Kumar Bangur should continue after his death. - HELD THAT: - The Tribunal noted the demise of Shri Basant Kumar Bangur during the pendency of proceedings and applied the rule of abatement accordingly. [Paras 12]

The appeal filed by Shri Basant Kumar Bangur is abated due to his death.

Final Conclusion: The appeals are partly allowed: the Tribunal held that asbestos cement sheets met the 25% fly-ash requirement when percentage is computed by reference to the dry weight of finished product and set aside the corresponding demands and penalties except for the admitted shortfall; duties on asbestos pipes are to be re-quantified after allowing cum-duty price and MODVAT credit; confiscation of goods and redemption fine are set aside; personal penalties are reduced; the appeal of Shri Basant Kumar Bangur is abated on account of his death.

Cenvat Credit - Capital goods - User Test - Definition of capital goods under Rule 2(a) - Definition of input and exclusion under Rule 2(k)

Cenvat Credit - Capital goods - User Test - Definition of input and exclusion under Rule 2(k) - Definition of capital goods under Rule 2(a) - Admissibility of Cenvat credit on specified steel items used for repair/maintenance of the foundation frame of the Return Bagasse Carrier (RBC). - HELD THAT: - The Tribunal recorded that the steel items in dispute were consumed only for repair/maintenance of the foundation frame, i.e. a component of the RBC, and not for laying down the foundation of the RBC. The frame is an essential part of the machine and functions as an accessory or component without which the machinery cannot be installed or operate effectively. Applying the principle in Jindal Steel & Power Ltd. and other consistent decisions, the definition of capital goods under Rule 2(a) includes components, spares and accessories; consequently the appropriate test is the User Test to determine whether items used in fabrication or repair of support structures fall within capital goods. The Tribunal found that the disputed steel items were used in repair of the foundation frame (a component/part of the capital good) and therefore fall within the ambit of capital goods rather than within the exclusion in the definition of input under Rule 2(k). Having decided the matter on merits in favour of the appellant, the Tribunal did not adjudicate the contention on the extended period of limitation. [Paras 5, 6]

Cenvat credit of duty paid on the specified steel items used for repair/maintenance of the foundation frame of the RBC is admissible; appeal allowed and credit granted, reservation on extended period of limitation not decided.

Final Conclusion: The appeal is allowed; Cenvat credit on the steel items used in repair/maintenance of the RBC foundation frame is held admissible as capital goods under the User Test, and the Tribunal did not decide the question of extended period of limitation.

Power of Reassessment on remand within two years - limitation under Section 42(2) of the JVAT Act - ante-dated order - void ab initio - maintainability of writ when impugned order is void - classification of earth moving machinery as capital goods

Power of Reassessment on remand within two years - limitation under Section 42(2) of the JVAT Act - ante-dated order - void ab initio - Validity of the reassessment order dated 16.02.2015 in view of the two year limitation under Section 42(2) of the JVAT Act and allegations of ante dating. - HELD THAT: - Section 42(2) permits reassessment within two years from the date of the remand order (remand dated 19.02.2013), hence reassessment ought to have been completed on or before 19.02.2015. The order-sheet (Annexure 8) shows no action until 08.01.2015, fixing hearings on 27.01.2015 and subsequently on 14.02.2015, while the detailed reassessment bears date 14.02.2015/16.02.2015. The sequence of entries, absence of contemporaneous hearing records for those dates, repeated unsuccessful service entries thereafter, and service of demand on the retained advocate only on 02.08.2016 (over 17 months later) support the petitioner's contention that the order was ante dated to fall within the two year period. The State's counter affidavit does not meaningfully deny these factual assertions. On these findings the reassessment is held to have been passed after the limitation period and shown as within time by ante dating, rendering the reassessment order void ab initio. Consequently the revisional order affirming that reassessment cannot be sustained. [Paras 16, 17, 18, 22, 24]

The reassessment order dated 16.02.2015 is quashed as void ab initio for being ante dated and beyond the two year limitation; the revisional order dated 04.10.2018 is consequently unsustainable.

Maintainability of writ when impugned order is void - Whether the writ petition is maintainable despite availability of alternative statutory remedies. - HELD THAT: - Where an impugned order is found to be void ab initio (here, because it was ante dated and beyond the statutory limitation), the Court may entertain a writ petition challenging that order without requiring exhaustion of alternative appellate or revisional remedies. Given the quashing of the reassessment on the ground of invalidity, the petition was properly maintainable in the High Court. [Paras 23]

The writ petition is maintainable and is allowed on the stated ground; alternative remedies need not be exhausted in view of the voidness of the impugned order.

Final Conclusion: Impugned reassessment order dated 16.02.2015 is quashed as void ab initio for having been ante dated and passed beyond the two year period under Section 42(2) of the JVAT Act; the revisional order dated 04.10.2018 is also quashed. Any excess VAT collected beyond the concessional rate claimed by the petitioner shall be refunded with statutory interest or adjusted against future liabilities. The Court refrains from deciding the substantive classification issue of the goods and records concern about the Assessing Authority's conduct for higher authorities to consider.

VAT on activation and installation charges - Input tax credit - Transfer of right to use - Interaction between service tax payment and VAT liability - Requirement of speaking order - Remand for fresh adjudication

VAT on activation and installation charges - Transfer of right to use - Interaction between service tax payment and VAT liability - Input tax credit - Remand for fresh adjudication - Impugned assessment orders set aside and remitted for fresh consideration on merits. - HELD THAT: - The impugned orders for the specified assessment years did not clearly address whether the department proposed to tax the activation and installation charges as a transfer of right to use attractable to VAT, nor did they clearly deal with the denial of input tax credit. The orders relied in part on clauses from earlier agreements and failed to clarify whether the petitioner had paid service tax on the activation/installation charges in full or in part. In view of these omissions and lack of clarity on the fundamental questions-whether a sale or transfer of right to use had occurred, the extent to which service tax had been paid, and the consequent entitlement to or denial of input tax credit-the Court held the impugned orders liable to be set aside and remitted the matters to the assessing authority for fresh adjudication on merits. [Paras 11, 12]

Set aside the impugned orders and remit the matters for fresh decision on merits.

Remand for fresh adjudication - Requirement of speaking order - Procedural directions for re-adjudication and interim treatment of impugned orders. - HELD THAT: - The Court directed that the quashed impugned orders shall be treated as show cause notices. The assessing authority was permitted, if necessary, to issue a corrigendum requiring the petitioner to respond within 60 days. The authority is to pass a speaking order in accordance with law within 120 days from receipt of a copy of the Court's order and must hear the petitioner in person or through authorised representatives before passing any fresh orders. These directions were given to ensure that the fresh adjudication addresses the lacunae identified by the Court and records reasons for its conclusions. [Paras 13]

Impugned orders to be treated as show cause notices; respondent to afford the petitioner hearing and pass a speaking order within prescribed time limits.

Final Conclusion: The writ petitions are disposed by quashing the impugned assessment orders for AYs 2009-10 to 2013-14 and remitting the matters to the assessing authority for fresh adjudication on the clarified issues, with directions to treat the quashed orders as show cause notices, afford hearing, and pass a speaking order within the stipulated time; no costs.

Valuation - trade discount - Reduced rate on value addition for sale of used cars - Availability of benefit under G.O.Ms.No.79/CT & R(B2) dated 23.03.2007 as amended by G.O.Ms.No.78/CT & R(B2) dated 11.07.2011 - Remand for fresh consideration in light of Authority for Clarification and Advance Ruling dated 25.10.2016 - Treatment of operative portion of assessment order as show cause notice

Valuation - trade discount - Monthly returns and disclosure of purchases - Demand of tax on trade discount in the impugned assessment orders - HELD THAT: - The Court examined the assessments for the stated years and concluded that the challenge to the tax demand insofar as it related to tax on trade discount succeeds. Having considered the material and submissions, the Court answered the valuation issue in favour of the petitioner and quashed the demand to that extent. The Court recorded that the demand of tax on trade discount in the impugned orders is not sustainable and must be set aside. [Paras 7]

The demand of tax on trade discount in the impugned orders is quashed.

Reduced rate on value addition for sale of used cars - Availability of benefit under G.O.Ms.No.79/CT & R(B2) and G.O.Ms.No.78/CT & R(B2) - Remand for fresh consideration in light of Authority for Clarification and Advance Ruling dated 25.10.2016 - Whether the petitioner is entitled to tax at the reduced rate on value addition for sales of used cars under the Notifications relied upon - HELD THAT: - The Court observed that the two notifications operate in respect of different kinds of dealers and noted an earlier order to that effect. However, in view of the clarification issued by the Authority for Clarification and Advance Ruling dated 25.10.2016, the Court held that the question of entitlement to the reduced rate requires reconsideration by the assessing authority. Accordingly, the Court remitted the rate issue to the respondent for fresh adjudication in accordance with the AAR clarification, directing that the operative portion of the impugned order on rate may be treated as a show cause notice and allowing the petitioner an opportunity to file a reply/representation within a specified time. [Paras 6, 7]

The issue as to the rate of tax is remitted to the respondent for fresh consideration in light of the AAR clarification dated 25.10.2016; operative portion of the impugned order to be treated as a show cause notice and the petitioner given opportunity to reply.

Final Conclusion: Writ petitions disposed: demand of tax on trade discount quashed; question of entitlement to reduced rate on value addition for used-car sales remitted to the assessing authority for fresh consideration in light of the Authority for Clarification and Advance Ruling dated 25.10.2016, with the operative portion to be treated as a show cause notice and the petitioner granted opportunity to reply.

Classification of goods - automatic data processing machines - residuary entry - incorporation of Central Excise Tariff - binding effect of CBEC circular - functional utility and primary usage - non-speaking order and breach of natural justice - writ jurisdiction despite alternative remedy

Classification of goods - automatic data processing machines - residuary entry - functional utility and primary usage - Whether tablet computers with calling feature are classifiable under sub heading 8471 30 (portable digital automatic data processing machines) or under the residuary entry of Schedule II. - HELD THAT: - The court found as an admitted fact that the product is a portable automatic data processing machine but also has an additional calling feature. Applying the principle that a specific heading must be preferred over a residuary heading and having regard to the functional utility and predominant use test, the calling capability was held to be incidental to the principal function of data processing. Deletion of certain telephony items from another sub heading did not alter the character of tablets whose principal function remains data processing. Consequently, the residuary entry could not be invoked as a substitute for the specific entry 8471 30 when that entry answers the description of the goods. [Paras 31, 32, 34]

Tablet computers with calling feature are classifiable under sub heading 8471 30 of Entry 4 of the notification issued under Entry 45 of Schedule II to the GVAT Act and not under the residuary entry.

Incorporation of Central Excise Tariff - binding effect of CBEC circular - Whether the interpretation given by the CBEC in Circular No.20/2013 Customs is required to be followed by authorities under the GVAT Act where the Central Excise Tariff entries have been incorporated in the State notification. - HELD THAT: - The State notification had 'bodily lifted' Headings and Sub headings from the Central Excise Tariff. The court relied on the principle that incorporated provisions are to be read as having the meaning they bore in the original statute. Given the object of adopting uniform classification and the CBEC's authoritative interpretation that tablets are classifiable under 8471 30, the court held that authorities under the GVAT Act could not ignore that interpretation without defeating the purpose of incorporation. While the CBEC circular directly binds Customs/Central Excise officers, incorporation of the excise entries in the State notification obliges the respondent authority to follow the interpretation to maintain uniformity. [Paras 24, 25, 28]

The assessing authority was obliged to follow the CBEC interpretation of the incorporated Central Excise Tariff entries and could not repudiate that interpretation in relation to the same goods.

Non-speaking order and breach of natural justice - writ jurisdiction despite alternative remedy - Whether the writ petition under Article 226 was maintainable despite an alternative statutory remedy, in view of the impugned order being non speaking and violative of principles of natural justice. - HELD THAT: - The impugned assessment/rectified order failed to deal with the petitioner's submissions, including the applicability of the CBEC circular, and contained no reasoning on those points. The court applied established exceptions where alternative remedy does not bar writ jurisdiction - including breach of natural justice and absence of reasoned order - and concluded that the petition was maintainable. Prior decisions of this court in comparable circumstances were noted to support entertaining the writ. [Paras 36, 38]

The writ petition under Article 226 was maintainable and the impugned order was vulnerable for being non speaking and in breach of natural justice.

Classification of goods - incorporation of Central Excise Tariff - Whether the matter should be remitted to the assessing authority for fresh assessment in accordance with the legal conclusions reached. - HELD THAT: - Having quashed the impugned rectified assessment order for failing to apply the correct classification and for being non speaking, the court directed that the file be restored to the assessing authority to pass a fresh assessment. The fresh assessment is to classify the tablet computers with calling facility under sub heading 8471 30 of Entry 4 of the notification issued under Entry 45 of Schedule II to the GVAT Act and proceed accordingly. [Paras 39]

Impugned order quashed and matter remitted to the assessing authority to pass a fresh assessment classifying the goods under sub heading 8471 30.

Final Conclusion: The petition is allowed; the rectified assessment order is quashed and set aside. The assessing authority is directed to pass a fresh assessment classifying tablet computers with calling facility under sub heading 8471 30 of Entry 4 of the notification dated 1.8.2009 issued under Entry 45 of Schedule II to the GVAT Act.

Interim relief in procurement matters - public interest justification for permitting contract execution - effect of High Court cancellation of tender on supply pending final hearing - deduction of disputed amount from payment as security pending final adjudication - condition precedent to interim stay where successful bidder insists on full payment

Interim relief in procurement matters - public interest justification for permitting contract execution - effect of High Court cancellation of tender on supply pending final hearing - Whether the Department may be permitted to procure the videoscopes from the successful bidder notwithstanding the High Court's cancellation of the tender and order for retendering, by grant of interim relief. - HELD THAT: - The Court confined itself to the question of interim relief, noting the urgent operational requirement for the videoscopes and that the tender had been floated in 2018. Having regard to the prospect of long delay if a fresh tender were ordered, the uncertainty whether such retendering would be financially beneficial to the Government, and the fact that the equipments are already imported and ready for installation, the Court held that public interest warranted permitting the Department to procure the equipments from the successful bidder pending final hearing. The Court expressly declined to decide the merits, which require detailed hearing, and limited its order to an interim measure designed to balance the public interest in obtaining urgently required equipment against the grievance of the unsuccessful bidder. [Paras 6]

The Department is permitted, as an interim measure, to procure the videoscopes from M/s. ASVA Power Systems India Pvt. Ltd. pending final adjudication.

Deduction of disputed amount from payment as security pending final adjudication - remand for determination of entitlement to deducted amount - Whether any security or deduction should be made from payment to the successful bidder while permitting procurement as an interim measure, and the treatment of that deducted amount. - HELD THAT: - To protect the Government's financial interest in light of the High Court's calculation of potential loss, the Court directed that a sum of Rs. 63 lakhs be deducted from payments to the successful bidder and that orders regarding that amount be passed after hearing the parties at the final hearing. The Court thereby preserved the contested monetary claim for adjudication on merits while allowing supply to proceed. The direction contemplates a subsequent determination on entitlement and disposal of the deducted sum after full hearing. [Paras 6]

A sum of Rs. 63 lakhs shall be deducted from payment to M/s. ASVA Power Systems India Pvt. Ltd.; orders regarding that amount to be passed after hearing the parties at the final hearing.

Condition precedent to interim stay where successful bidder insists on full payment - The consequences if the successful bidder insists on receiving full payment immediately and opposes the deduction. - HELD THAT: - The Court imposed a clear conditionality: if the successful bidder insists on full payment at the interim stage (i.e., refuses the deduction), there shall be no interim stay of the High Court's order, and consequently the Department would be required to float a fresh tender. This preserves the choice between immediate procurement subject to security and adherence to the High Court's cancellation if the bidder is unwilling to accept the protective deduction. [Paras 6]

If M/s. ASVA Power Systems India Pvt. Ltd. insists on full payment at this stage, there shall be no interim stay and the Department must float a fresh tender.

Final Conclusion: Interim relief granted permitting the Department to procure the videoscopes from the successful bidder in the public interest, subject to deduction of Rs. 63 lakhs from payment to be kept pending final orders after hearing; if the bidder insists on full payment, no interim stay will be granted and the Department must retender.

Presumption under Section 139 of the Negotiable Instruments Act, 1881 - Rebuttable presumption of consideration under Section 118 of the Negotiable Instruments Act, 1881 - Liability on issuance of cheque for discharge of debt - Offence under Section 138 of the Negotiable Instruments Act, 1881 - Corroboration not required where statutory presumption is un-rebutted - Sentence, fine and interest upon conviction under Section 138

Liability on issuance of cheque for discharge of debt - Presumption under Section 139 of the Negotiable Instruments Act, 1881 - Whether the cheque was issued for discharge of debt and the statutory presumption under Section 139 applies where the cheque was dishonoured and statutory notice was served - HELD THAT: - The trial Court's factual findings as to issuance of the cheque, its dishonour for insufficiency of funds and service of statutory notice are supported by the complainant's evidence and bank witnesses and by documents on record. In view of Section 139, a presumption arises that the cheque was issued for discharge of any debt or liability; that presumption is rebuttable but nothing on the record rebuts it. The defence did not enter witness box and did not adduce evidence to displace the presumption. Therefore the statutory presumption stands and no further corroboration of the complainant's case was required. [Paras 6, 7, 9, 10, 11]

The cheque was issued for discharge of debt and the presumption under Section 139 applies; the presumption was not rebutted.

Offence under Section 138 of the Negotiable Instruments Act, 1881 - Corroboration not required where statutory presumption is un-rebutted - Whether the trial Court erred in acquitting the accused and whether the act falls within the mischief of Section 138 - HELD THAT: - The High Court found the trial Court's conclusion-especially its view that a loan agreement was suspicious and that corroboration was required-to be contrary to the statutory scheme. When the presumption under Section 139 is not displaced, further corroboration is unnecessary. On the overall assessment of evidence and documents (including the handwritten acknowledgment), the acquittal was against the weight of evidence and contrary to the provisions of the Act. The respondent's conduct thus attracted criminal liability under Section 138. [Paras 11, 12]

The trial Court's acquittal is set aside and the respondent is convicted for offence under Section 138.

Sentence, fine and interest upon conviction under Section 138 - What sentence, fine and interest are to be imposed following conviction under Section 138 - HELD THAT: - Having convicted the respondent, the Court sentenced him to pay a fine which is directed to be paid to the complainant for discharge of liability. The Court directed payment of interest at the stated rate on the amount advanced, fixed the consequence of non-deposit within the prescribed time (further interest accrual) and clarified that any imprisonment for non payment would be a mode of recovery and would not discharge the monetary liability until actual payment is made. The trial Court is directed to make efforts under the Criminal Procedure Code for liquidation of the amount. [Paras 13]

Respondent is sentenced and ordered to pay the fine to the complainant, with interest as directed; imprisonment, if any, will not discharge the monetary liability.

Final Conclusion: The High Court allowed the appeal, set aside the trial Court's acquittal, convicted the respondent for offence under Section 138 of the Negotiable Instruments Act, 1881, and imposed sentence, fine and interest as directed; the trial Court is to effect recovery in accordance with law.

Maintaining prosecution under Section 141 of the Negotiable Instruments Act - Arraignment of a company as accused in proceedings under Section 138 N.I. Act - Vicarious liability of persons in charge of company for offences by the company - Quashing of criminal proceedings under Section 482 Cr.P.C.

Maintaining prosecution under Section 141 of the Negotiable Instruments Act - Arraignment of a company as accused in proceedings under Section 138 N.I. Act - Vicarious liability of persons in charge of company for offences by the company - Whether a criminal complaint under Section 138 of the Negotiable Instruments Act is maintainable where the cheque is alleged to have been issued on behalf of a company but the company has not been arraigned as an accused and proceedings are initiated only against an individual director. - HELD THAT: - The notice and the complaint in the present case were filed solely against the applicant in his individual capacity; the company was not made a party either in the notice or in the complaint. The Court applied the binding precedent in Aneeta Hada, which holds that for attracting vicarious liability under Section 141 and for maintaining prosecution it is imperative that the company be arraigned as an accused. The subsequent decision in Himanshu, which set aside proceedings where the company was not arraigned and the statutory proviso requirements were not complied with, was also followed. In light of these authorities and the fact that the complaint did not aver or arraign the company, the prosecution could not be maintained against the individual director alone. Consequently, the summoning order and the ensuing revision order and entire prosecution under Section 138 could not stand and required quashing. [Paras 8, 9, 10]

The complaint and all consequent orders and proceedings under Section 138 of the N.I. Act against the applicant are not maintainable and are quashed.

Final Conclusion: Application under Section 482 Cr.P.C. allowed; the summoning order dated 17.7.2013, the revision order dated 05.12.2015 and the entire criminal complaint proceedings under Section 138 N.I. Act insofar as they are against the applicant are quashed, following Aneeta Hada and Himanshu.

Computation of one month under Section 142(b) of the Negotiable Instruments Act, 1881 - Exclusion of the day on which the cause of action arose in computing limitation - Limitation and maintainability of complaint under Section 142(b) - Compliance with proviso clauses (b) and (c) to Section 138 of the Negotiable Instruments Act, 1881

Computation of one month under Section 142(b) of the Negotiable Instruments Act, 1881 - Exclusion of the day on which the cause of action arose in computing limitation - Limitation and maintainability of complaint under Section 142(b) - Whether the complaints filed on 31.10.2000 were barred by the one month limitation prescribed by Section 142(b) of the Negotiable Instruments Act, 1881, and whether the date of the cause of action (30.09.2000) is to be excluded in computing that period. - HELD THAT: - The Court examined the chronology: cheques were returned on 24.08.2000, notice issued on 06.09.2000 and returned unclaimed on 14.09.2000, and the cause of action arose after expiry of the 15 day cure period on 30.09.2000. The question whether the day on which the cause of action arose is to be included or excluded in computing the one month under Section 142(b) was considered in light of the Supreme Court's Larger Bench decision in ECON Antri Ltd. v. Rom Industries Ltd., which upheld Saketh India Limited and rejected M/s Sil Import USA. Applying that ratio, the date on which the cause of action arose is to be excluded for computing the one month period. Consequently, excluding 30.09.2000, the complaints filed on 31.10.2000 fell within the one month period prescribed by Section 142(b). The Court also noted that the proviso to Section 138 (clauses (b) and (c)) was complied with insofar as the cheque was presented within time and notice was given within 15 days of information of dishonour. [Paras 18, 19, 21, 23]

Complaints were not ex facie barred by time; objection on limitation rejected and the applications to quash the summoning orders dismissed.

Final Conclusion: The applications under Section 482 Cr.P.C. seeking to quash the summoning orders were dismissed on the ground that the complaints were filed within the one month period under Section 142(b) of the Negotiable Instruments Act, 1881; interim orders, if any, were vacated.