TaxTMI Updates e-Newsletter
Mar 03,2025

Challenge to validity of Section 16(2)(aa) of the CGST Act, 2017/Assam Goods and Services Tax Act, 2017 as well as the validity of Section 16(2)(c) of the said Acts - Revenue has submitted that he has no objection if the challenge to the Section 16(2)(c) of CGST Act/AGST Act is decided in terms of the decision dated 05.08.2024 [2024 (8) TMI 836 - GAUHATI HIGH COURT] - HELD THAT:- The matter requires consideration.

List the matter for hearing in due course.

Challenge to detention order and penalty - discrepancies in the E-way bill - HELD THAT:- It is not in dispute that by either of the parties that the goods were dispatched along with genuine documents for display in Aahar Exhibition organized at Pragati Maidan, New Delhi to which a delivery challan as prescribed under Section 55 (1) was issued along with E-way bill and material entry slip at Pragati Maidan and when on 18.03.2023, the goods were returned, again a delivery challan along with exit material slip and the E-way bill was issued as per the provision of the Act. Only a technical error was creeped out i.e. the place of dispatch of goods was mentioned as Ghaziabad in place of New Delhi.

This Court in the case of The Commissioner Commercial Tax U.P. Lucknow Vs. S/S Saurabh Traders Railway Bus Stand Pilkhuwa Hapur [2020 (1) TMI 752 - ALLAHABAD HIGH COURT] has held 'the Officer managing the check post after verifying the goods on the basis of other documents available at that point of time and have filled up the blank column of Form 38 and there was no occasion for imposing penalty, as has been done by the Assessing Officer.'

Further, the record shows that the authorities have not recorded any finding that the petitioner had intention to evade payment of tax, which is mandatory under the Act.

This Court in the case of Vacmet India Ltd. [2023 (10) TMI 863 - ALLAHABAD HIGH COURT]has held that if the goods are not taxable and accompanied with genuine documents, the proceedings are not justified.

The proceedings cannot be justified in the eyes of law - Petition allowed.

Seeking grant of regular bail - fraudulent availment of Input Tax Credit - passing of ITC through five firms/companies without supply of relevant goods - offences under Section 132(1)(b) & (c) Central Goods and Services Tax Act, 2017 - HELD THAT:- This Court finds that as per the prosecution, the accused-applicants are directors of M/s Siwon Enterprises Pvt. Ltd. and M/s MS Singhal Trading India Pvt. Ltd., who were allegedly involved in arranging fake invoices for various buyers or end-users in order to pass on fake Input Tax Credit to them, and they also arranged availment of fake Input Tax Credit in the fake firms, and in return the accused-applicants had been receiving commission in cash. A perusal of the complaint/charge sheet dated 13.12.2024 would show that the applicants were associated in investigation on 16.10.2024 and their statements under Section 70 Central Goods and Services Act, 2017 were recorded, and as per these statements the accused had given the separate lists of suppliers and recipients of their above noticed two firms.

The complaint/ charge sheet dated 13.12.2024 though is silent about number of the beneficiaries, but according to the additional counter affidavit dated 10.2.2025, total 1267 persons received the benefit of fraudulent Input Tax Credit, however neither their particulars have been given in the additional counter affidavit nor the amount of commission received by the applicants has been disclosed. The sole piece of evidence relied upon by prosecution regarding involvement of accused-applicants with fake firms is the confession of the applicants recorded under Section 70 Central Goods and Services Tax Act, 2017, but the truthfulness of the same would be tested during trial, which is yet to commence.

Admittedly, the alleged offences are triable by magistrate and carry a maximum punishment of five years. As far as the investigation relating to the applicants is concerned, the same has been completed, as the complaint/ charge sheet dated 13.12.2024 has been filed against the applicants and their firms, whereupon the cognizance order dated 13.12.2024 has also been passed. However, the charges against the accused-applicants have not been framed and trial is yet to start - keeping in view the nature of the trial, period of more than five months undergone by the applicants as an undertrial as well as the fact that there is no likelihood of conclusion of trial in near future, this Court deems it appropriate to extend the concession of regular bail to the applicants, as their further detention behind the bars would not serve any useful purpose.

Conclusion - Bail is granted holding that detention was not justified given the completion of the investigation and the lack of immediate trial commencement.

The bail application is allowed and it is ordered that the applicants–Vikrant Singhal and Sachin Singhal be released on regular bail in the above case subject to their furnishing the requisite bail bonds and surety bonds to the satisfaction of the trial court.

Maintainability of petiiton - availability of alternative remedy - Validity of ex parte order passed by the Principal Commissioner declaring the petitioner liable for Service Tax - violation of principles of natural justice - HELD THAT:- In the facts of the present case, what is evident to this Court is that learned counsel for the petitioner had withdrawn CWJC No. 9292 of 2010 with liberty to take recourse to such alternative remedies as are otherwise available in accordance with law. No doubt, this Court granted liberty to the petitioner to file a fresh writ petition on the same and subsequent cause of action if the need so arise, that would not have any bearing on the present case where admittedly the petitioner has got an alternative remedy of appeal and in fact, in order to avail that remedy, the petitioner had already deposited 7 ½ percent of the pre-deposit requisite amount.

In the case of Godrej Sara Lee Ltd. vs. Excise and Taxation Officer-cum-Assessing Authority and Others [2023 (2) TMI 64 - SUPREME COURT], the Hon’ble Supreme Court has taken a view as to the circumstances under which the petitioner may be relegated to the alternative remedy of appeal.

In the totality of the facts and circumstances, it is refrained from entertaining the writ application at this stage and relegate the petitioner to statutory remedy of appeal, if so advised - If a duly constituted appeal is preferred by the petitioner within a period of eight weeks from today, the same shall be considered by the Appellate Authority and in case, a question of limitation arises for consideration, the Appellate Authority shall consider the same keeping in view the fact that the petitioner was pursuing this writ application since the date of its presentation in the Registry on 19.08.2024. The period spent before this Court would be liable to be excluded.

Conclusion - The High Courts have discretion to entertain writ petitions based on policy, convenience, and discretion. The Court may relegate parties to statutory remedies if an effective alternative remedy exists.

Application disposed off.

Violation of principles of natural justice - appellate authority has failed in granting opportunity of hearing to the petitioner - HELD THAT:- The appellate authority has strictly adhered to the principles of natural justice by providing the petitioner with opportunity of hearing, as mandated under Section 107(9). This Court finds that the procedural requirements laid down in the said provision have been duly complied with before passing the impugned order.

Moreover, this Court notes that all the grounds raised by the petitioner, have been thoroughly examined and considered by the appellate authority while rendering its decision dated 22nd November 2024. There is nothing on record to suggest that any material aspect has been overlooked or that there has been any violation of procedural fairness.

Petition dismissed.

Commencement of audit - completion of audit within three months - Explanation to Section 65(4) of the CGST Act - extension of audit by the Commissioner - audit by tax authorities

Commencement of audit - Explanation to Section 65(4) of the CGST Act - completion of audit within three months - Whether the audit was required to be completed within three months from the date on which records called for were made available, and whether the final audit report dated 08.07.2024 was time-barred. - HELD THAT: - The Court applied the Explanation to Section 65(4) which defines 'commencement of audit' as the later of the date on which records called for are made available by the registered person or the actual institution of audit at the place of business. The respondents' assertion that records were furnished on 06.05.2024 was not supported by any acknowledgment or communication and therefore could not be accepted for the present case (para 8). The petitioner's own communication Ext.P5, dated 09.04.2024, stated that additional evidence called for was enclosed as Annexure 2 and referred to production of those additional records on 09.04.2024 (para 9). Viewing the matter by reference to the Explanation, the Court concluded that the records called for were made available on 09.04.2024 and therefore the three month period for completion of the audit ran from that date; the final audit report dated 08.07.2024 was within that period (para 10). [Paras 8, 9, 10]

The audit was validly completed within three months from 09.04.2024 (the date on which records were made available) and the final audit report dated 08.07.2024 is not time barred.

Final Conclusion: Writ petition dismissed; show cause notices and final audit report upheld as not barred by the three month period prescribed under Section 65(4) when computed from the date records were made available.

Imposition of fine in lieu of confiscation - allegation is that the Appellate Authority had wrongly reduced the fine in lieu of confiscation - HELD THAT:- The entire quantity of gold seized (presently in the custody of the Department) shall be released to the petitioner on the petitioner executing bonds in the manner and form required by the Senior Enforcement Officer, Enforcement Squad, State Goods & Services Tax Department, SGST Complex, Palakkad.

The property having an extent of 6 Ares and 7 Sq. metres in Survey No.73/4-435 of Potta village, Chalakkudy Taluk, Thrissur District shall be accepted as security for the release of the seized gold pending adjudication of the matter by the Tribunal - The owner of the property (father of the petitioner in W.P.(C.) No.20073 of 2024) will file an affidavit and undertake that he will not alienate or further encumber the property referred to above until culmination of proceedings before the Tribunal.

Petition disposed off.

Can a person who enters into a contract with the Government or its agencies that contains a specific clause that the rate quoted shall be inclusive of ‘GST & other taxes’ turn around and claim that he is entitled to Goods & Services Tax (GST) over and above the rate quoted by him? - HELD THAT:- A reading of the letters/instructions referred to in the writ petitions clearly show that, those Circulars/letters/instructions do not apply in a case where the Notice Inviting Tender or the agreement executed between the contractor and the tendering agency clearly specified that the rates quoted shall be deemed to be inclusive of GST. Though certain portions of the letter dated 07.05.2024 and the illustrations given therein, at first blush, appear to support the case of the petitioner, on closer scrutiny, it must be held that even those instructions do not support the case of the petitioner. The Circulars/instructions referred to above deal with the preparation of estimate and not with the final tendering process. It clarifies that while preparing estimates for the purpose of administrative/financial sanction, the estimates must be prepared without including GST element.

The submission of the learned Government Pleader that if the contention of the petitioner were to be accepted, the sanctity of the tendering process itself will be affected is only to be accepted. This can be illustrated by means of an example. When the tender document/agreement contemplated that the rates quoted shall be deemed to be inclusive of GST and the successful bidder quotes Rs. 100/- for a particular item of work, he cannot be permitted to, thereafter, turn around and claim that he must be given Rs. 100/- plus 18% GST (total of Rs. 118) as there may have been situations where another bidder, after noticing the conditions in the tender document would have quoted Rs. 105/- inclusive of GST and would not have become successful on account of the fact that the successful bidder has quoted only Rs. 100/-. In such a situation, if the successful bidder is allowed to claim 18% GST over and above the rate of Rs. 100/- quoted by him, the Government/its agencies would end up paying Rs. 118/- which obviously, cannot be accepted.

Conclusion - The contractor was not entitled to claim GST over and above the quoted rates specified in the contract agreements.

There are no merit in these writ petitions and they are dismissed in limine.

Validity of Final assessment order due to non-compliance with the principles of natural justice - failure to grant a personal hearing as required u/s 144B - HELD THAT:- We are unable to agree with the submissions advanced by Respondents, one on the ground of availability of alternate statutory remedy to the petitioner which ought to have been exhausted before approaching this Court in writ jurisdiction. Such submission, in the given facts, would fall foul of the statutory mandate u/s 144B of the IT Act, which embraces the right to be heard, failing which the order would be without jurisdiction and non est.

In the given facts and circumstance, it would be unfair and unjust to the petitioner to be left entangled in litigation before the appellate authority and thereafter, in further appeals which are available, as the foundational illegality in a situation like the present, would have to be nipped in the bud. In such situation, the appellate remedy may not be effective or efficacious, considering the patent illegality in the impugned final assessment order.

We express our inability to agree with the submission of Respondents to the effect that the petitioner in this case did not comply with the timelines clearly set out in draft assessment order to submit its response on the e-filing portal on or before 18:00 hours of 26 August 2022.

Petitioner did submit such response with a categorical reques to be heard through video conferencing. Thus, according to Respondents when such specific timelines are not adhered to by the petitioner, the consequences ought to follow. The sequel to such submissions would mean shutting the doors of this Court to the petitioner merely because of a delay of merely one day in submitting its response as provided in the show cause notice-cum-draft assessment order. Also, accepting such submissions would tantamount to bypassing the clear statutory mandate u/s 143 (3) read with 144B of the IT Act, as interpreted by the decisions cited above. We, therefore, cannot accept justice becoming a casualty to technicalities by adopting a hyper-technical approach.

38. We may now refer to Section 156 of the IT Act which provides for the demand notice to be issued in case of any failure to pay tax by the assessee. In the present case, it is pertinent to note that such demand notice is issued pursuant to the impugned final assessment order of the said date. Therefore, when such demand notice is premised upon the impugned assessment order which itself is without jurisdiction and non est as observed any actions including issuance of consequential notices would not stand legal scrutiny.

Penalty notices u/s 274, 270A r/w Section 271AA (1) - We note that notice/order under a statutory provision which would entail civil consequences causing prejudice to the person, ought to be passed in strict adherence to the principles of natural justice to include opportunity of being heard.

As decided in UMC Technologies Private Limited v. Food Corporation of India and Another [2020 (11) TMI 966 - SUPREME COURT] to state that it is the first principle of civilized jurisprudence that a person against whom any action is sought to be taken or interest are being affected should be given a reasonable opportunity to defend himself to include the right to be heard, before an order entailing such consequence is passed. Thus, we are unable to accept the submission of Respondents on the penalty notices issued by the respondents - WP allowed.

Reopening of assessment u/s 147 - reasons to believe - relaince on information collected by virtue of the procedure prescribed under the scheme notified u/s 135A -cash deposit is unverified on account of the assessee having failed to submit any valid justification or satisfactory documentary evidences for the same - HELD THAT:- While issuing the impugned notice u/s 148 the respondents by pure inadvertence have annexed/attached the information pertaining to some other individual/assessee and not the petitioner. The said aspect appears to be an error or mistake and neither deliberate nor wilful.

On account of such error/mistake or inadvertence, no fatality can be said to attach to the issuance of the impugned notice u/s 148 of the Act. However, at the same time, the passing of the impugned order dated 03.02.2025 is absolutely unsustainable in overlooking the error apparent on the face of the record. It can be safely presumed that the authority did not apply its mind to the objections raised by the petitioner.

We are of the considered opinion that the impugned notice issued u/s 148 to the extent that it reflects information of some other person, shall be rectified by the respondents. The appropriate and correct information available on the Insight Portal as also the Approval accorded by the Specified Authority alongwith the relevant information shall be made available to the petitioner within a week from date to enable him to file his reply/objections which may be considered strictly in accordance with law.

TDS u/s 194C OR 194J - payments made by the assessee to IGSPT for services received - ITAT justiciation in not upholding the order of the A.O. that tax was deducted at source by the assessee from the above payments u/s 194J wherein services received by the assessee is technical and professional in nature.

HELD THAT:- In this case, the CIT (Appeals) and ITAT have recorded concurrent findings that the agreement entered into by the assessee with the IGSPT did not involve providing any professional / managerial / technical expertise services to the assessee. The two authorities have recorded concurrent findings of fact that the agreement concerned providing a call centre. The service executives were generally undergraduates or graduates of any stream who would act in a particular manner consistent with the prescribed guidelines when attending to the subscribers' complaints.

The above findings of fact are supported by the terms of the agreement between the assessee and IGSPT and the other material on record, such as the details of the call service executives, their qualifications, and the nature of work they discharged. Therefore, the concurrent findings of fact cannot be said to suffer from perversity either because they are based on no evidence or because they are contrary to the weight of the evidence on record.

ITAT has recorded that the service providers to whom the assessee made the payments have already paid the appropriate taxes by way of advance tax / self-assessment tax. Thus, the ITAT has held that the law laid down by the Hon’ble Supreme Court in the case of Hindustan Coca-Cola Beverage (P.) Ltd. [2007 (8) TMI 12 - SUPREME COURT] has also been substantially complied with by the assessee.

Accordingly, we are satisfied that this case does not involve any question of law.

Extraordinary jurisdiction under Article 226 - Validity of notice under Section 148A(d) and notice under Section 148 of the Income Tax Act - Interim injunction against assessment proceedings - Obligation to respond to a showcause notice - Availability of alternative and efficacious remedies under the Income Tax Act - Public interest in carrying out tax assessments - Jurisdictional and limitation contentions to be raised during assessment proceedings

Extraordinary jurisdiction under Article 226 - Validity of notice under Section 148A(d) and notice under Section 148 of the Income Tax Act - Interim injunction against assessment proceedings - Obligation to respond to a showcause notice - Availability of alternative and efficacious remedies under the Income Tax Act - Public interest in carrying out tax assessments - Jurisdictional and limitation contentions to be raised during assessment proceedings - Whether the High Court should exercise its extraordinary jurisdiction to quash the order dated 7 April 2023 under Section 148A(d) and the consequential notice dated 7 April 2023 under Section 148 and grant interim relief restraining assessment proceedings - HELD THAT: - The Court declined to exercise its extraordinary, equitable jurisdiction under Article 226 to interdict the assessment process. The petitioner did not respond to the showcause notice and adopted the stance that the notice was ex facie without jurisdiction; the Court observed that such nonresponse was not commendable because the purpose of the notice is to enable the assessee to reply and permit authorities to consider that response in the first instance. The impugned order under Section 148A(d) indicated that income chargeable to tax had escaped assessment and, at this interlocutory stage, could not be characterised as wholly without jurisdiction. The Court treated questions of jurisdiction and limitation as matters which ought to be raised and decided during the assessment proceedings and through the statutory appellate remedies under the Income Tax Act. Further, the Court noted that the matter involves disputed facts and mixed questions of law and fact, and that stalling the assessment at this stage would adversely affect the assessments of other assessees and would not be in the public interest. The respondents' reliance on a Coordinate Bench order in a similar matter was noted as an additional reason against entertaining the petition. Consequently, the petition for interim relief and quashing was refused while expressly leaving all contentions open to be urged during assessment and in statutory remedies. [Paras 7, 9, 10, 11, 12]

Petition dismissed; ad interim relief vacated and assessment proceedings not interdicted, with all contentions left open to be raised during assessment and in statutory remedies.

Final Conclusion: The writ petition seeking to quash the Section 148A(d) order and consequential Section 148 notice and to restrain assessment proceedings is dismissed; interim relief vacated, and the petitioner may pursue all available remedies during assessment and by statutory appeal.

Revision u/s 264 - claim of long term capital gains made - whether the AO was right in rejecting the stand taken by the assessee and holding that the date of acquisition of the subject property should be reckoned as 18.3.2008, when the agreement for sale was executed and registered in terms of the Maharashtra Apartment And Ownership Act and not from the date of allotment, namely, 1.8.2006.

HELD THAT:- The definition of transfer as defined under the Transfer of Property Act should not be emerged while considering whether a transaction is a transfer under the provisions of the Income Tax Act.

Undoubtedly, on the date of allotment, namely, 1.8.2006 a right has accrued in favour of the appellant/assessee. This is more so because the developer has accepted that the assessee has paid a sum of Rs.3,13,000/- by cheque dated 29.7.2006 which was prior to the allotment order dated 1.8.2006.

The revenue does not dispute the fact that the payment schedule has been adhered to by the assessee and ultimately on the date when the agreement for sale was executed, namely, 27.12.2007, 82.5% of the entire sale price payable has been paid by the assessee. Prior to the date of sale in favour of the third party which took place on 29.4.2010 the entire consideration has been paid by the assessee which has been acknowledged by the developer. All these payments are a consequence of an allotment made on 1.8.2006 and, therefore, it has to be held that the right over the property in question accrued in favour of the assessee as on the date of allotment i.e. 1.8.2006.

Undoubtedly, the letter of allotment and the payment made thereafter has created in favour of the assessee an interest in the asset directly and it was by way of an agreement/or otherwise.

It would be beneficial to take note of the decision of the Hon’ble Supreme Court in Saraswati Devi v. Delhi Development Authority and Others [2013 (1) TMI 1058 - SUPREME COURT] for the purpose of understanding as to what would the term encumbrance mean.

The word “encumbrance” imports within itself every right or interest in the land, which may subsist in a person other than the owner; it is anything which places the burden of a legal liability upon property. Further it was held that the word “encumbrance” in law has to be understood in the context of the provision under consideration but ordinarily its ambit and scope is wide.

Thus, apart from the definition of the word “encumbrance” as explained in the aforementioned decision, it should be understood in the context of the provision under consideration which, in our instant case, is the Income Tax Act.

Undoubtedly, a direct interest on the property stood created in favour of the assessee as and when the letter of allotment was issued, namely, 1.8.2006 because prior to the date of letter of allotment, the payment was made by the assessee in July, 2006 which has been acknowledged in the letter of allotment.

Therefore, we are of the view that the order passed by the PCIT as well as the assessment order calls for interference.

Accordingly, this appeal is allowed. The order passed in the writ petition is set aside and the writ petition is allowed.

The matter is remanded back to the assessing officer with the direction to take note of the date of allotment, namely, 1.8.2006 as the date of transfer of the subject asset in favour of the assessee and accordingly, the assessment shall be completed.

Reopening of assessment u/s 147 - Reason to believe - lack of specific information, such as the name of the bank - information relied upon for reassessment and outcome of enquiry if conducted any, is to be supplied - HELD THAT:- From perusal of the reasons annexed with the notice issued under Section 148A(b) of the Act, it is evident that name of the bank in which the account was maintained is not mentioned. Inspite of the mandate of Section 148A of the Act, circulars and guidelines issued by the department that material relied upon should be supplied to the assessee, the casualness in which the reasons are supplied, is evident. Vague information was supplied and in absence of name of bank it becomes impossible for the assessee to file response.

AO's decision to proceed with the notice despite the petitioner's objections - The petitioner filed objections denying that the account number does not belong to it, giving details of the bank account with the ICICI Bank which was closed, the proof thereof was annexed. The AO issued notice to the bank on 25.03.2022 and without waiting for reasonable time or giving reminder or making any efforts to verify the fact from the bank, brushed aside the objections stating that no response has been received from the bank.

In the reply filed by respondent before this court, the e-mail received from the bank that the account of the petitioner with the ICICI Bank was closed in the year 2010 and further that the account number mentioned in the notice does not exist with the ICICI Bank has not been denied.

The e-mail was of April and May, 2022 and respondent filed reply on 22.02.2023 i.e. almost eight months after receipt of the e-mail. In reply filed, there is no pleading that the bank account number mentioned in the notice was of some other bank than ICICI or that there is even a prima-facie material with the department that the bank account mentioned in the notice belonged to the petitioner. There is no reason put-forth for hurriedly passing the impugned order within five days of sending email.

The objections were not decided in accordance with Section 148A and the guidelines issued for procedure to be followed in proceedings under Section 148A of the Act.

Even before this Court, the department miserably failed to put an iota of evidence to even prima-facie show that the bank account mentioned in the notice belonged to the petitioner and even at this stage, the name of the bank of which account number belongs is not disclosed. WP allowed.

Addition u/s 68 - cash deposited in banks during the demonetization period - specific case of the Assessee that the cash deposited during the demonization was out of the cash withdrawal from the bank and the entirety of the cash withdrawals were from the regular bank account maintained in the usual course of business - HELD THAT:- AO has accepted the books of accounts of the Assessee and no defects or discrepancies of any source in the purchase and sales and stocks have been pointed out by the AO, further the A.O. has also not doubted the fact that the source cash as enduring to the Assessee from its business activities, further it is not the case of the A.O. that the inflow of cash from any activity other than business of the Assessee.

A.O. failed to look into the history of the Assessee wherein it is found that the Assessee used to deposit the cash in the bank in the months preceding demonization. CIT(A) has committed error in upholding the addition made by the A.O., accordingly, we delete the addition - Appeal filed by the Assessee is allowed.

Revision u/s 263 - As per CIT AO has not conducted enquiries with regard to valuation at which the Compulsorily Convertible Preference Shares ('CCPS') were issued to holding company of the Appellant - HELD THAT:- As relying on FIS PAYMENT SOLUTIONS[2024 (10) TMI 182 - DELHI HIGH COURT], M/S. BLP VAYU [2023 (6) TMI 209 - ITAT DELHI] and M/S. KISSANDHAN AGRI FINANCIAL SERVICES PVT. LTD. [2023 (3) TMI 769 - ITAT DELHI] Provisions of s. 56(2)(viib) would not apply in the present case where the transaction is between the assessee (subsidiary company) with its 100% holding company as issuance of share to the holding company cannot be seen to involve circulation of any unaccounted money of the assessee company per se. Thus, twin conditions of sec 263 do not simultaneously exist in the present case.

The deeming fiction of s. 56(2)(viib) would not apply in the present case and consequently, the assessment order cannot be regarded as ‘erroneous’ per se. Hence jurisdiction un/s 263 is not available to the revisional authority. Appeal of the assessee is allowed.

Penalty u/s 271(1)(c) and 270A - assessee has not deducted TDS on EDC [External Development Charges] charges paid by the assessee to HUDA - CIT(A) deleted the penalty - HELD THAT:- We find as far as disallowance of the EDC payment u/s 40(a)(ia), it is stated that the assessee has not contested the disallowance made. However, with respect to penalty, we find that the assessee has given reasonable plausible explanation before us that at that point of time, there was confusion and difference of opinion on this issue. We therefore hold that the explanation that the issue of TDS being deducted on EDC payment was not having legal clarity and there was a difference of opinion on this issue which needed clarification from the CBDT, is a valid explanation.

No evidence on record that payment of EDC charges is non-genuine or that the assessment order has demonstrated that there is any concealment of income or there is any inaccurate particulars of the income.

Mere noncompliance with the TDS provisions do not imply concealment or furnishing of inaccurate particulars to encompass the assessee with the mischief of section 271(1)(c)/270A.We are of the considered view that by making an incorrect claim in law, would not tantamount to furnishing of inaccurate particulars. In such a scenario, following the ratio in the case of Reliance Petroproducts [2010 (3) TMI 80 - SUPREME COURT] we hold that the learned CIT(A) has correctly deleted the penalty u/s 271(1)(c)

Also order of CIT(A) deleting the penalty u/s 270A of the Act needs no interference. Appeal decided in favour of assessee.

Rectification u/s 154 - Disallowance contemplated u/s 14A r.w. Rule 8D - Suo-motto disallowance made by assessee - HELD THAT:-In the absence of recording any dissatisfaction, invocation of sec 14A read with Rule 8D of the Rules is jurisdictionally defective and legally unsustainable as held in judgements delivered in the case of U K Paints India Pvt. Ltd [2024 (12) TMI 650 - DELHI HIGH COURT] and H. T. Media Ltd.[2017 (8) TMI 962 - DELHI HIGH COURT]

Sec 154 of the Act empowers the AO to rectify the mistake of apparent nature. A mistake if any, which requires long drawn process of reasoning or involves any kind of debate is ousted from the jurisdiction available u/s 154 of the Act.

In the instant case, suo-motto disallowance carried out u/s 14A of the Act by the assessee was sought to be modified and enhanced in the proceedings u/s 154 of the Act. Such disallowance on the face of it, cannot be regarded as apparent mistake contemplated under s. 154 of the Act. The first appellate order thus requires to be set aside and the rectification order passed u/s 154 is liable to be quashed. Appeal of the assessee is allowed

Revision u/s 263 - interest on enhanced compensation received by the Assessee should be classified as 'Income from Other Sources' u.56(2)(viii) - HELD THAT:- The opinion of the AO considering the ‘interest on the enhanced compensation’ as not taxable also cannot be called as plausible view. Once the Jurisdictional High Court reiterates the law considering the amendment to the provision and also the previous Judgments, the law laid down by the Jurisdictional High Court becomes binding precedent and the authorities or the Tribunal cannot ignore the same and take different view.

The Jurisdictional High Court in the case of Inderjit Singh Sodhi (HUF) [2024 (4) TMI 408 - DELHI HIGH COURT] considered the insertion of Clause (viii) to Sub Section 2 of Section 56 of the Act w.e.f 01/10/2010, wherein also considered the case of Ghanshyam (HUF) [2009 (7) TMI 12 - SUPREME COURT] and held that the interest on compensation and enhanced compensation shall be considered as ‘income from other sources’ and taxable. Thus, in our opinion, the view taken by the A.O. that the ‘interest on enhanced compensation is part of the compensation and not the ‘interest’ per-se and allowing the same as exempt u/s 10(37) of the Income Tax Act cannot be called as ‘plausible view’.

Thus, the interest on the compensation or interest on the enhanced compensation shall be considered as ‘income from other sources’ and taxable accordingly. Ld. PCIT committed no error in setting aside the assessment order and directing the A.O. to frame fresh assessment. Decided against assessee.

Assessment u/s 153C v/s 143(3) -six assessment years determination - date of receiving seized documents for determining the assessment period - HELD THAT:- As relying on Aakansha Gupta [2024 (7) TMI 1133 - ITAT DELHI] as in the case of the assessee also the satisfaction note for initiating the proceedings u/s 153C were recorded by the AO of the assessee on 10-10-2-2022 thus assessment year relevant for previous year in which search was conducted in the case of the assessee should be the Assessment Year AY 2023-24 and the six assessment years immediately preceding the assessment year relevant for the previous year in which search was conducted for initiating proceeding u/s 153C of the Act will be AY 2017-18 to 2022-23 and the impugned year i.e. AY 2021-22 is fallen in such block period thus the assessment should have been completed u/s 153C and not u/s 143(3) as has been done in the present case.

Also in the case of Jasjit Singh [2014 (11) TMI 1012 - ITAT DELHI] which has been affirmed by the Hon’ble jurisdictional high court as reported in [2015 (8) TMI 982 - DELHI HIGH COURT] the assessment order passed u/s 143(3) dt. 28.12.22 is hereby quashed. Appeal of the assessee is allowed.

Addition u/s 56(2)(viib) - equity shares were allotted to the existing shareholders - excess amount (as excess shares premium) received on account of rounded off difference @ Rs. 0.09 Paisa on allotment of 1.00 crore equity share - AR submitted that shares were allotted to the existing shareholders in their existing share holding ratio and the shareholding allotment of the aforesaid shareholders remained the same

HELD THAT:- We find material substance in the submission advanced on behalf of the assessee and there is strong ground exist to interfere with the order passed by the Ld. CIT(A) and accordingly, the order passed by the Ld. CIT(A) not sustainable in eyes of law and addition in question deserves to be deleted. Decided in favour of assessee.

Addition u/s 68 - unexplained entries in bank account - assessee has failed to produce any concrete and any additional evidences in support of its contention - CIT(A) deleted addition - HELD THAT:- The case of the assessee for the above mentioned AYs is squarely covered by the decision of Zed Enterprises (P) Ltd [2024 (1) TMI 1442 - ITAT DELHI] held the assessee company has received funds from various concerns as mentioned above and thereafter amounts were transferred to the above-mentioned companies/concerns immediately, thus the appellant company is not beneficiary company. CIT(A) also obtained the remand report from the AO and held that the AO has verified the fund flow statement depicting the source of funds and utilization of the same for payments to beneficiaries submitted by the assessee.

CIT(A) held that it was found which established that the Sh. Anand Jain and Sh. Naresh Kumar Jain were operating bank accounts in the names of various concerns/companies through which accommodation entries were being provided and the appellant company was one of such shell concerns. Further the beneficiaries of such accommodation entries were also identified and information to their respective AOs was also disseminated as mentioned in the assessment order as well as the remand report.

CIT(A) held that as far as charging of commission is concerned in the case of the assessee, it has been held by the AO in the assessment order that Sh. Anand Jain and Sh. Naresh Jain were entry operators who were managing and controlling various shell concerns including the appellant for providing accommodation entries in lieu of commission and taking that logic there is no question of charging of commission income in the hands of the appellant company arises, since nothing has been earned by the company, being the shell concern.

Since, the commission already stands taxed in the hands of the entry operators in their individual capacity, no separate commission can be charged in the hands of the pass through/ companies floated by the entry operators. As the assessee is found to be one of such pass-through entity, we decline to interfere with the order of the ld. CIT(A) in deleting the commission charged.

We therefore, are in agreement with the above extracted observations/findings in present case are squarely covered by this case.Decided against revenue.

Rejection of application for grant of registration u/s 12AB - charitable purposes or not? - CIT(E) rejecting the application seeking permanent registration of the assessee on the ground that the assessee does not possess the registration for running charitable activities of hospital - HELD THAT:- Advance made to The Central Park Hotel is for acquisition of new hospital. Accordingly, we have no hesitation to hold that assessee had not diverted its funds for non-charitable activities by advancing to parties who are related either to the office bearers or to their concerns.

Professional payments made by the assessee - Assessee from its side before us had filed an affidavit from the doctors and income tax returns of the doctors for FY 2021-22 (AY 2022-23) together with TDS certificates issued by the assessee. In any case, non submission of supporting evidences, if any, for professional fees payment cannot be a ground for rejection of permanent registration u/s 12AB. If there is any infirmity in those professional fees payment, the same could be looked into at the time of assessment proceedings. In any event, the ld CIT(E) does not even whisper or even doubt that the said professional payments were made to the parties specified u/s 13(3) of the Act. Hence, drawing adverse inference on this account and rejecting the permanent registration u/s 12AB, in our considered opinion, is not in order.

Other receipts shown which was found to be excessive by the ld CIT(E) when compared to that in the earlier two years - Since, the receipts were actually received during the FY 2022-23 in respect of services rendered earlier, the same were accounted in FY 2022-23. There is absolutely no dispute to the fact that the assessee is following cash system of accounting. Hence, adverse inference drawn by the ld CIT(E) for rejecting registration on this count, in our considered opinion, cannot be upheld.

Payment of incentives expenses - Depending upon the number of treatments completed by him, incentives would be paid to him. These facts are evident from the appointment letter of Dr. Sandeep Saraf itself. In any event, both salary as well as incentive paid to Dr. Sandeep Saraf had been duly subjected to deduction of tax at source by the assessee. The finding given by us with regard to payment of professional charges supra shall apply to payment of incentive expenditure also. Accordingly adverse inference drawn by the ld CIT(E) on this account for rejecting the registration, in our considered opinion, cannot be upheld.

Income from college fees - AR before us duly clarified that assessee still runs the hospital and affiliation has been cancelled only for running the nursing college. Nowhere the activities of running hospital was construed to be non charitable by the ld CIT(E). We find force in the said arguments advanced by the ld AR and accordingly, we hold that cancellation of registration on this count cannot be held to be justified. The treatment of college fees received had to be looked into at the time of assessment proceedings and that does not stand as a hindrance while considering the recognition for registration u/s 12AB of the Act.

Salary paid during the last three financial years by the assessee - The assessee had indeed furnished the complete details of employees and doctors together with their designations in a separate annexure before the ld CIT(E). In any event, this can never be a relevant consideration for the purpose of grant of registration u/s 12AB of the Act.

The activities of running a hospital is certainly charitable in nature and during the course of such charitable activity, payment to doctors and employees had to be made. Hence, adverse inference drawn by the ld CIT(E) on this count is hereby dismissed.

Assessee has accumulated huge profit hence, working for profit motive and not for charitable purpose - There is always a huge difference between the concept of “public profit‟ and “private profit‟ and grant of exemption u/s 11 of the Act would be in jeopardy only when there is “private profit‟ i.e. profit being distributed to the trustees as dividend or in any other form. Once there is “public profit‟ i.e. profit/ surplus earned by a trust which are being ploughed back into coffers of the trust for future charitable activities are certainly permitted. Even the provisions of section 11 to 13 permit earning of profit of 15% and in the event of any trust deriving profit in excess of 15%, then the Income Tax Act itself permits for accumulation in terms of section 11(2) of the Act to be utilized in future. Hence, in our considered opinion, surplus earning is not a sinful activity and in any manner does not hinder the concept of charity or charitable activities. Accordingly, the observations made by the ld CIT(E) in this regard are hereby dismissed as devoid of merit.

Affiliation of nursing college has been cancelled and accordingly genuineness of the activity of the assessee is not established - The assessee society has been running the hospital with proper approvals from the competent authorities and cancellation of affiliation of nursing college would not in any way hamper the continuation of charitable activities of the assessee society in running the hospital. Hence, the genuineness of the activities cannot be doubted at all qua the hospital. This issue has already been addressed by us while giving out findings with regard to yet another query raised by the ld CIT(E) supra.

Assessee had paid monthly rent to Kantialal Saraf HUF who happened to be related person u/s 13(3) - CIT(A) had not even bothered to bring comparable instances to drive home the point that the monthy rent paid by the assessee to Kantilal Saraf HUF is excessive or unreasonable. CIT(E) had not brought any evidence on record to even state that the fair market value of the rent for the infrastructure taken on rent by the assessee was less than the amount paid by the assessee to the related person. Without this finding being brought on record, there cannot be any allegation that could be leveled on the assessee. In any event, this issue has got absolutely no relevance in any manner whatsoever for the purpose of grant of registration u/s 12AB of the Act. Hence, the observation made by the ld CIT(E) is hereby dismissed as devoid of merit.

Thus, no hesitation to conclude that the assessee should be granted registration u/s 12AB of the Act. The grant of exemption u/s 80G of the Act would be consequential to the grant of registration. Accordingly grounds raised by the assessee are allowed.

Seeking release of the gold chain of foreign origin which was detained by the Customs Department - undertaking in a standard format for wavier of show cause notice and personal hearing signed by the concerned tourist.

Detention of jewellery or personal effects of a tourist, especially those of foreign origin, under the Baggage Rules, 2016 - HELD THAT:- The Indian Customs Declaration Form (hereinafter “Declaration Form”) issued by the CBIC as part of the Guide for Travellers has also been perused by the Court, which would show that gold and gold jewellery is being treated as prohibited articles where the same is beyond the prescribed limits under Rule 5 of Baggage Rules, including gold bullion.

The Supreme Court in Pushpa Lekhumal Tolani [2017 (8) TMI 684 - SUPREME COURT] has considered whether jewellery being carried by a tourist as part of her baggage would qualify as smuggling under the Act read with the Baggage Rules, 1998, that was in force during the relevant period. The Supreme Court clearly holds that it is not permissible to completely exclude jewellery from the ambit of ‘personal effects’. Accordingly, the Court declared that the seized jewellery items therein were the bona fide jewellery of the tourist for her personal use and was intended to be taken out of India.

In Saba Simran v. Union of India & Ors. [2024 (12) TMI 19 - DELHI HIGH COURT] this Court was seized with the issue of deciding the validity of the seizure of gold jewellery by the Customs Department from an Indian tourist. The Court considered the ambit of ‘personal effects’ vis-à-vis jewellery under the Baggage Rules in effect from time to time.

A conspectus of the above decisions and provisions would lead to the conclusion that jewellery that is bona fide in personal use by the tourist would not be excluded from the ambit of personal effects as defined under the Baggage Rules. Further, the Department is required to make a distinction between ‘jewellery’ and ‘personal jewellery’ while considering seizure of items for being in violation of the Baggage Rules.”

Thus, it is now settled law that the Customs Officials are required to consider the facts of each case and apply their mind before detaining the goods of a tourist, either of Indian or foreign origin. The Customs Officials have to be conscious of the fact that personal effects including jewellery of tourists are protected by the law from detention and same cannot be detained in a mechanical manner.

Applicability of the Baggage Rules qua tourists of foreign origin - HELD THAT:- It is noted that the Petitioner is a Russian passport holder and thus, the extent of applicability of the Baggage Rules to a tourist of foreign origin has to be kept in mind. This issue has also been discussed by various decisions of the of this Court including in Nathan Narayansamy vs. Commissioner of Customs, [2023 (9) TMI 1549 - DELHI HIGH COURT], wherein the Co-ordinate Bench of this Court was dealing with a similar situation wherein certain jewellery was recovered and seized from the baggage items of a tourist holding Malaysian passport.

Further, the predecessor Bench of this Court in Farida Aliyeva v. Commissioner of Customs, [2024 (12) TMI 755 - DELHI HIGH COURT] while relying upon the decision in Nathan Narayansamy, directed release of jewellery seized from a tourist who was travelling from Azerbaijan to India.

It is an undisputed fact that the Petitioner is a Russian passport holder. In view of the law discussed above, on the ground of limited applicability of the Baggage Rules to the tourist of foreign origin and as jewellery is part of personal effects, the detention of Petitioner’s gold chain would have to be set aside. However, there is another aspect of this case which has bearing on the validity of the detention of the Petitioner’s gold chain.

Undertaking in a standard format for wavier of show cause notice and personal hearing signed by the concerned tourist - HELD THAT:- The undertaking signed by the Petitioner in the present case cannot be sustained in law. Accordingly, the Customs Department has failed to satisfy the requirements of Section 124 of the Act in the present case. Therefore, the detention of the Petitioner’s gold chain has to be set aside.

Conclusion - i) Jewellery bona fide in personal use by a tourist is not excluded from personal effects under the Baggage Rules, and the Customs Department must distinguish between "jewellery" and "personal jewellery." ii) The Baggage Rules have limited applicability to foreign nationals, and the detention of the Petitioner's gold chain was unjustified. iii) The standard form used by the Customs Department for waiving show cause notice and personal hearing does not satisfy the requirements of Section 124 of the Customs Act, violating principles of natural justice.

The detention of the Petitioner’s gold chain would be contrary to law and accordingly, the same is set aside - The gold chain of the Petitioner shall be released to the Petitioner subject to payment of any charges within four weeks - Petition disposed off.

Denial of conversion of shipping bills from DEEC scheme to drawback scheme - rejection of claim on the purported ground that drawback serial number 6204 was meant for woven fabric and exports were done under CTH 6104, which were for knitted fabric - HELD THAT:- The said issue has been decided by this Tribunal in the appellant’s own case [2001 (10) TMI 181 - CEGAT, KOLKATA] has held that 'We find that the samples have been drawn and due verification of the nature of fabric and the market value etc. can be got conducted and drawback claim determined under appropriate All Industry Rate schedule. We find no force in the reasons for denying the conversion of the S/Bills into drawback claim of S/Bills. The order is therefore, required to be set aside.'

Conclusion - The appellant is entitled for conversion of their shipping bills from DEEC scheme to drawback scheme.

The adjudicating authority shall within one month of receipt of this order, shall calculate the drawback claim of the appellant and pass an appropriate order for sanctioning of drawback claim in accordance with law - Appeal disposed off by way of remand.

Interest on refund of SAD - Section 27A of the Customs Act, 1962 - compensation on account of the delay in credit of the refund amount - HELD THAT:- The interest paid under physical statute are compensatory in nature but is statutory prescribed for any delay in refunding the amounts due to the appellant.

In the case of M/s RANBAXY LABORATORIES LTD. Vs M/s UNION OF INDIA [2011 (10) TMI 16 - SUPREME COURT] Hon’ble Supreme Court has held that 'the only interpretation of Section 11BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of three months from the date of receipt of the application under sub-section (1) of Section 11B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under Section 11BB of the Act becomes payable.'

There are no merit in the impugned order, rejecting the claim of interest made by the appellant for the delay in crediting the amount to the account of beneficiary.

As the entire delay has been on the account of the dispute between the Resolution Professional earlier appointed in the matter and the Official Liquidator appointed subsequently, we are in agreement with the findings recorded in the impugned order to the effect that appellant is not entitled to any compensation. Compensation claimed would also not be admissible under Customs Act,1962 as the statute do not provide for any such compensation to be paid in any manner. Commissioner (Appeals) nor this Tribunal, being creature of Customs Act, 1962, can grant any compensation as claimed by the appellant.

Conclusion - Appellant should be paid interest as prescribed under Notification No. 25/2003-Cus(N.T.) dated 21.09.2003 to the appellant for the period of delay in crediting the amount to his account.

Appeal allowed in part.

Valuation of imported aluminum scrap - rejection of declared value - enhancement of declared value on the basis of related party transaction and LME prices as bench mark based on contemporaneous import data which indicates the undervaluation done by the Appellant - impugned order passed without properly appreciating the facts and the law - violation of principles of natural justice.

Related party transaction - HELD THAT:- The departmental officers never even claimed the re-assessment done by them on the basis of related party transaction and it is the Commissioner (Appeals) who, for the first time, has made out a new case of related party transaction in order to distinguish the binding precedents in favour of the assessee. Further, it is found that the Commissioner (Appeals) has unilaterally and erroneously relied upon the Order-in-Original dated 14.12.2017 to come to a conclusion that CMR America LLC, USA is a related party of the Appellant. This finding of the learned Commissioner (Appeals) is perverse for the reason that the said OIO was rendered in the case of M/s Sanjeevani Non-Ferrous Trading Pvt Ltd and not in the case of the Appellant and imported the said OIO without assessing the facts of the present case reflects complete non-application of mind.

Whether the enhancement of value, solely on the basis of coerced consent letters, DGoV Circular and in the absence of contemporaneous import data, is legal and valid? - HELD THAT:- This issue has been considered by various benches of the Tribunal and also, in the Appellant’s own case which has gone upto the Supreme Court and has been decided in favour of the assessee in [2019 (5) TMI 1152 - SUPREME COURT]. Further, the Hon’ble High Court of Delhi, in a bunch of appeals, has considered the identical issue in detail after considering the various judgments of the Tribunal as well as of the Supreme Court. After considering all the judgments, the Hon’ble High Court of Delhi in the case of Hanuman Prasad & Sons Vs Commissioner of Customs [2024 (11) TMI 1361 - DELHI HIGH COURT], has decided the issue in favour of the importer-assessee by setting aside the Tribunal’s order dated 20.10.2020.

Conclusion - i) The related party transaction argument was unfounded and could not justify the reassessment. ii) The appellant's acceptance under duress did not bar them from appealing the reassessment. iii) The procedural lapses rendered the reassessment invalid.

The impugned order is not sustainable in law - Appeal allowed.

Jurisdiction of Commissioner to adjudicate the demand of duty against DTA sales made by an SEZ unit under section 30 of the SEZ Act, 2005 - jurisdiction of Additional Commissioner to issue the SCN demanding duty against DTA sale made by SEZ unit under section 30 of the SEZ Act, 2005 - pecuniary jurisdiction to issue SCN at the relevant date where the demand of duty is more than Rs. 50 lakhs - jurisdiction to confirm demand under section 28(4) of the Customs Act - suppression of facts or not.

Jurisdiction of the Commissioner to adjudicate the matter relating to the demand of duty where the sale was under section 30 of the SEZ Act - HELD THAT:- Section 51 read with section 53 of the SEZ Act makes it clear that to the extent of authorised operations, SEZ will be treated as ‘outside the Customs territory of India‘- no more and no less. Thus, the Commissioner of Customs will not have jurisdiction only to the extent of the authorised operations within the SEZ. The words of both section 51 and 53 are fully in consonance with the object of the Act as is evident from its long title- to promote exports. SEZ cannot be treated as outside the Customs territory of India to carry on unauthorised operations and activities. In case of such activities, SEZ itself will be treated as Customs port, airport, ICD, etc. under section 7 of the Customs Act. Sub-section (2) of Section 53 makes this position explicit.

Once the goods are imported into the DTA, all duties as applicable have to be paid and if there is any short payment in such duties appropriate action can be taken. The goods in this case have been brought into the DTA falling under the jurisdiction of the Commissioner of Customs, Indore. If any duty is short paid, he has both the authority and duty to recover it. Merely because the goods were removed from SEZ unit as provided under section 30 of the SEZ Act and not directly imported from outside India would make no difference.

The specified officer, i.e., the Joint/Deputy/Assistant Commissioner posted in the SEZ has certain functions and they do not include issuing notices under section 28 - neither any provision of SEZ Act nor any provision of Customs Act excludes the jurisdiction of the Commissioner of Customs under section 28 in respect of the goods sold from an SEZ unit in DTA. There is therefore, no force in the submission of the learned counsel that the Commissioner of Customs lacks jurisdiction to adjudicate the matter and to issue a notice under section 28.

Jurisdiction of the Additional Commissioner to issue a notice under section 28 in a matter where the sale was under section 30 of the SEZ Act - HELD THAT:- In view of the findings on the question of jurisdiction of the Commissioner to adjudicate the matter, there are no reason to take a different view regarding the jurisdiction of the Additional Commissioner to issue the SCN.

Jurisdiction of the Additional Commissioner to issue SCN demanding duty in excess of Rs. 50,00,000/- - HELD THAT:- There are nothing in section 28 to support this argument.

Commissioner confirmed the demand under section 28(4) of the Customs Act when the SCN was issued under section 28(1) and no corrigendum was issued to the SCN - HELD THAT:- The SCN was clearly not issued under section 28(1) as asserted by the learned counsel but was issued under the proviso to section 28(1). Instead of quoting the amended provision of section 28(4) in the SCN, the Additional Commissioner quoted the unamended provision [proviso to section 28(1)]. In the impugned order, the Commissioner quoted correctly the amended provision of section 28(4).

Mere mentioning of the old provision [proviso to Section 28(1)] instead of the provision applicable to the relevant period [section 28(4)] in the SCN and mentioning of the correct provision [section 28(4)] in the impugned order does not in any way invalidate the impugned order - the submission of the learned counsel that the impugned order is invalid on the ground that it confirmed the demand under section 28(4) while the SCN demanded duty under section 28(1), therefore, has no force.

Misconstruction/ misinterpretation of the provision of the notification does not amount to suppression of facts to invoke demand enlarging the period for issuing the SCN under section 28(4) of the Customs Act - HELD THAT:- Section 28(4) can be invoked in case duty is short paid by reason collusion, wilful misstatement or suppression of facts. According to the learned special counsel for the Revenue, Prestige had indulged in wilful misstatement and suppression of facts while claiming the benefit of the notification which was available subject to the condition that the goods would be used in manufacture after following the procedure prescribed in the Rules - Trading in SEZ does not mean importing goods and selling in domestic market. Prestige did not use the imported goods either to manufacture or to export. Instead, it cleared and sold them in the DTA. Even in the Bills of Entry which it filed to clear the goods to DTA, Prestige claimed the benefit of the Notification No. 12/2012-Cus which was available only for goods to be used in manufacture of final goods following the procedure under ICGR, 1996. Prestige sold the goods to traders in the DTA.

There are no reason for Prestige to have claimed the benefit available to goods to be used in the manufacture when it neither had any such facility to manufacture and it simply imported the goods and within a few days sold them to another trader in DTA. The wilful misstatement or suppression of facts with an intention to evade can only be inferred from the circumstances and we find it in the facts of this case. It is found in favour of the Revenue and against Prestige on the question of confirming demand under section 28(4).

Misconstruction/ misinterpretation of the provision of the notification does not amount to suppression of fact and misstatement for imposition of penalty under section 114AA of the Customs Act - HELD THAT:- The expressions ‘suppression of fact' and ‘misstatement' do not even find place in this section. Learned counsel appears to have confused this section with the provision under section 28(4) to issue a demand invoking extended period of limitation. Section 114AA is attracted if any person knowingly makes signs or uses, or causes to be made, signed or used, false or incorrect declaration statement or document in the transaction of any business under the Customs Act - the submission that penalty under section 114AA could not have been imposed because there is no suppression of facts is without any force and deserves to be rejected. However, the allegation in the SCN and the finding in the impugned order is that Prestige had wrongly claimed the benefit of an ineligible exemption notification in the Bills of Entry and NOT that there was any factual mis-declaration in the Bills of Entry. Therefore, the penalty under section 114AA deserves to be set aside.

Penalty under section 114A of the Customs Act cannot be imposed, if the demand has been raised under section 28(1) of the Customs Act - HELD THAT:- The correct provision applicable during the relevant period was 28(4) which is the same as the old provision of “proviso to section 28(1)”. It is also found that the well settled legal position is that merely citing a wrong provision will not vitiate the SCN or the order. Therefore, there are no force in this submission of Prestige that penalty under section 114A could not have been imposed because the demand was under section 28(1).

The adjudicating authority failed to deal with the Notification No. 18/2011 which amended earlier Notification No. 45/2005-Cus dated 16.5.2005 since the Notification No. 18/2011 has substituted the words “produced or manufactured in” with the words “cleared from” - HELD THAT:- Learned counsel is correct in her submission that the SAD was exempted by this Notification on all goods cleared from an SEZ unit. However, this is subject to the condition that if the goods which are sold in the DTA are not exempted from the Sales tax by the State Government. This is a fact to be verified in respect of each of the invoices and the issue needs to be remanded to the Commissioner for examination and re-determination of SAD, if any.

Since Prestige was the exporter and not the importer in the DTA Bills of Entry, no duty can be demanded from it - HELD THAT:- As per section 28, the short paid duty can be demanded from the person chargeable with duty or interest. The person who is chargeable with duty or interest is the one who had allegedly short paid the duty and cleared the goods to DTA. In the facts of this case, Prestige paid duty and cleared the goods. The entities to which Prestige had sold the goods after clearing them from customs at their places neither filed the Bills of Entry nor paid the duty. They bought them from Prestige after they were cleared and the sale took place at their premises. Therefore, if Prestige short paid any duty and cleared the goods, such short paid duty can only be demanded from Prestige and not from the entities to which it had, after clearing them, sold the goods.

Since SEZ is treated as outside the customs territory of India, bringing goods into DTA from SEZ area is the import. Once such goods are cleared for consumption in the DTA, they cease to be imported goods. Therefore, there cannot be any assessment of duty under section 17 after they are cleared for consumption in the DTA - Prestige, as the owner of the goods, as the one who filed the Bills of Entry, as the one who paid the duty and cleared the goods to DTA, was also the importer in the case. It was responsible for paying the duty short paid and therefore, demand under section 28 has been correctly made on Prestige - In respect of the DTA Bills of Entry, Prestige was not only the exporter but was also, for the reasons stated before, the importer. The demand of duty short paid by Prestige can only be made from Prestige by issuing a notice under section 28.

Notification no. 12/2012-Cus dated 17.3.2012 (S.No.432) exempts BCD unconditionally and Additional Duty of Customs subject to the condition indicated therein and Prestige had paid the additional duty of customs as it had not fulfilled the condition - HELD THAT:- Notification No. 21/2002-Cus had, in turn, replaced its predecessor mega Notification No. 17/2001-Cus which had, until then, prescribed the effective rates of duties for all goods. All these three Notifications are worded similarly and have tables with similar columns viz., S. No., Chapter heading or sub-heading, description of goods, standard rate, additional duty rates and condition no. against each entry where the exemption is subject to a condition, the condition number is indicated and the conditions under each S. No. were described at the end.

The ambiguity in Notification No. 12/2012-Cus created by lack of an extra line space between the second clause and the clause pertaining to the condition must be interpreted in favour of the Revenue. It is held by the Constitution Bench of Supreme Court in Commissioner of Customs (Import), Mumbai versus Dilip Kumar and Company [2018 (7) TMI 1826 - SUPREME COURT (LB)] that in case of any ambiguity in a Notification, it should be interpreted in favour of the Revenue and against the assessee. In this case, the ambiguity is only on account of typographical mistake in not leaving an extra line space in the Notification. Therefore, condition no. 5 at S. No. 432 of the exemption Notification No. 12/2012-Cus, as amended, must be fulfilled to avail the benefit of exemption from basic customs duty also. The remark of the Commissioner in paragraph 28 of the impugned order is not correct and his final order confirming the demand of basic customs duty is correct.

Penalties imposed on Manish and Chirag - HELD THAT:- Nothing in the section confines its application to only mis-declarations in exports. Evidently, it applies to both imports and exports. In this case, in the Bills of Entry filed by Prestige, a wrong exemption Notification was claimed which it was not entitled to because on the very face of the Notification, it is clear that it is subject to a condition of the imported goods being used for manufacture following a procedure. Neither Prestige nor its buyers had any manufacturing facilities, let alone, manufacturing goods after following the proper procedure. However, no facts were mis-declared in the Bills of Entry. Therefore, penalty under section 114AA on Manish and Chirag canCnot be sustained.

Conclusion - i) SEZ is treated as outside the customs territory of India only for authorized operations. For unauthorized operations, SEZ is treated as a customs port. ii) The Commissioner of Customs has jurisdiction to demand duty on goods cleared from SEZ to DTA. iii) Misstatement or suppression of facts justifies invoking the extended period of limitation under section 28(4). iv) The exemption from basic customs duty under Notification No. 12/2012-Cus is conditional upon the use of goods for manufacturing, which was not met by Prestige. v) Penalty under section 114AA was set aside due to lack of factual mis-declaration. vi) The demand of duty and penalty under section 114A were upheld, subject to re-examination of SAD exemption.

Appeal filed by Prestige is partly allowed to the extent of setting aside the penalty under section 114AA, partly rejected to the extent of confirmation of demand of basic customs duty and additional duty of customs and partly remanded to determine if there is any evidence of the imported goods being exempted from VAT or Sales Tax by the State Government and accordingly determine if any SAD is required to be paid and also to consequently re-determine the quantum of penalty under section 114A.

Suspension of initiation of corporate insolvency resolution process under Section 10-A - Continuing default and applicability of the moratorium - Jurisdiction of adjudicating authority to admit CIRP post-moratorium - Purposive construction of moratorium provision - Maintainability of writ petition in presence of alternative statutory remedy

Suspension of initiation of corporate insolvency resolution process under Section 10-A - Continuing default and applicability of the moratorium - Jurisdiction of adjudicating authority to admit CIRP post-moratorium - NCLT had jurisdiction to entertain and admit the company petition where the default, though commencing during the moratorium period, continued beyond the moratorium period. - HELD THAT: - The Court held that Section 10-A operates as a temporary moratorium suspending initiation of CIRP for defaults arising on or after 25.03.2020 for the specified period, and the proviso bars filing only in respect of defaults that occurred during that moratorium period. Where a default that began during the moratorium continued after the moratorium expired, an application for initiation of CIRP filed after the moratorium period is not barred by Section 10-A. The Court distinguished Ramesh Kymal, noting that in that case the application was filed within the moratorium window and the Supreme Court there gave a purposive construction to the embargo in the factual matrix before it; that reasoning does not extend to cases where the default persisted beyond the moratorium period and the petition is filed thereafter. Hence, the Tribunal did not commit a jurisdictional error in admitting the petition filed after the moratorium when the default continued beyond the moratorium period. [Paras 15, 16, 17, 18, 22]

Section 10-A does not oust NCLT's jurisdiction to entertain an application where the default continued beyond the moratorium period; the admission of CP[IB].No.13/2023 was not barred by Section 10-A.

Maintainability of writ petition in presence of alternative statutory remedy - Writ petition under Article 226 was not maintainable and will not be entertained in view of the existence of an effective alternative remedy before the NCLT/other statutory fora. - HELD THAT: - The Court observed that although Article 226 may be exercised in exceptional cases despite an alternative remedy, no extraordinary circumstances were shown to justify bypassing the statutory remedy. The petitioners relied solely on the Section 10-A contention and there was an effective alternative remedy available; accordingly the Court declined to exercise its discretionary jurisdiction to entertain the writ petition. [Paras 23]

The writ petition is not maintainable in the presence of an effective alternative remedy and is therefore dismissed.

Final Conclusion: Writ petition dismissed: NCLT lawfully entertained and admitted the company petition since the default continued beyond the Section 10-A moratorium, and there was no extraordinary circumstance to warrant interdiction of the statutory remedy under Article 226.

Obligation to pay for electricity consumed during the CIRP period - Termination of electricity supply to the corporate debtor during the Corporate Insolvency Resolution Process (CIRP) under Section 14(2) of the Insolvency and Bankruptcy Code (IBC) - HELD THAT:- Section 14(2A) was inserted by Act 1 of 2020 w.e.f. 28.12.2019. Sub-section (2A) contemplates that where the interim resolution professional or resolution professional considers the supply of goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern when the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply during the moratorium period. The goods or services which are critical to protect and preserve the value of the corporate debtor is thus dependent on the decision taken by the IRP and the resolution professional. Sub-section (2) and (2A) uses two expressions i.e. ‘essential goods or supply’ (which may be specified).

The essential supply thus has need to be specified by the Board as per Regulation and Regulation 32 of the CIRP Regulations specified the ‘essential supplies’. Thus, essential supplies have to be treated in a manner and to the extent as provided in Regulation 32. It is thus clear that the electricity which is not a direct input to the output produced is essential supply within the meaning of Section 14(2) read with Regulation 32 of the CIRP Regulations and it is clearly covered by the protection extended by legislature under Section 14(2).

The Hon’ble Supreme Court again in Madanlal Fakir Chand Dudhediya vs. Shree Changdeo Sugar Mills Ltd. and Ors. [1962 (3) TMI 33 - SUPREME COURT] had held that first rule of construction is that the words used in the section must be given their plain grammatical meaning and the two sub- sections must be read as parts of an integral whole and an attempt should be made in construing them to reconcile them.

The fact that payment to essential supplies can be made as per the decision of the resolution professional even during currency of the CIRP when the costs is incurred by the resolution professional. The statutory scheme, however, as contained in Section 14(2) prohibits the supplier of essential goods from terminating/ discontinuing the supply during moratorium period. As per statutory scheme, the corporate debtor is entitled to receive the essential goods and services during moratorium and even the payment is not made of essential goods and services that shall form part of the CIRP costs.

The above Discussion Paper highlights the issue of operational difficulty with regard to supply of electricity under Section 14(2) read with Regulation 32. The illustration which is now sought to be amended, amending the regulation now contemplate that if the corporate debtor operates a manufacturing facility that may be treated as critical service by the insolvency professional for which current dues for such services must be paid.

In M/s Power Mech Projects Ltd. vs. Essar Power (Jharkhand) Ltd. & Anr. [2025 (2) TMI 217 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB] the effect and consequences of Discussion Paper considered. It is already held that the Discussion Paper has no effect on statutory scheme operating in the field and Discussion Paper only can be basis for amending regulation. The Discussion Paper, thus highlights the issues and the amendment in statutory scheme, if any, may take place only when the regulation are amended and notified.

The resolution professional, as assured to the appellant, need to take steps to clear the electricity dues, however, non-payment of electricity dues cannot be a ground to discontinue the electricity which is a clear mandate by Section 14(2). The IBBI has already taken notice of the operational issues and having proposed Regulation 32 of the CIRP Regulations, need to expedite its process and amendment, if any, which may be carried out at an early date to mitigate the hardship of the supplier of essential services.

Conclusion - i) The order of the Adjudicating Authority directing Appellant not to discontinue the electricity connection necessary for running the manufacturing facilities of the corporate debtor is not interfered with. ii) The resolution professional shall endeavour to pay the electricity dues as assured by it through various letters to the Appellant by taking steps including raising interim finance, if any. iii) IBBI in furtherance of its Discussion Paper dated 04.02.2025 which proposes amendment in Regulation 32 may expedite its steps regarding amendment, if any, which amendment may redress several operational issues as noticed by the IBBI itself.

Appeal disposed off - Let Registry communicate the copy of this order to Insolvency and Bankruptcy Board of India (IBBI).

Dismissal of Application filed by the Appellant under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Respondent, seeking resolution of an outstanding amount - existence of Pre-Existing Dispute between the Parties or not - HELD THAT:- On candidly asking the Appellant as to whether the Appellant has denied the conversation in the grounds of Appeal to have ever happened or in the manner it has happened, to which he could not answer in negative. Thus, once there is no dispute that there has been conversation between the Parties, even on WhatsApp which is a common mode of communication these days, it does not lie in the mouth of the Appellant to contradict the same on the basis of the Judgment in the case of M/s. Kashyap Infraprojects Pvt. Ltd. [2024 (11) TMI 1288 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB].

The Learned Tribunal has categorically observed that there was conversation between the Parties that the rates of Soya Bean have gone down and further recorded the conversation between the Parties to the effect that Appellant wanted to wait for the market to improve and did not receive the goods. The same conversation has been noticed by the learned Tribunal in Para 23 of the Impugned Order. Therefore, the Tribunal has rightly come to the conclusion that there was a Pre-Existing Dispute between the Parties and the process under the Code is being used for recovery for which it is not the appropriate forum.

Conclusion - The dismissal of the application upheld, concluding that there was a pre-existing dispute between the parties and that the Code was not the appropriate forum for the claim.

There are no reason to interfere in the Impugned Order and hence the present Appeal is hereby dismissed

Invocation of extended period of limitation under the First Proviso to Section 73 (1) of the Finance Act, 1994 - service tax not levied or paid due to fraud, collusion, willful misstatement, or suppression of facts by the petitioner - HELD THAT:- As is evident from the proposition which came to be propounded by the Supreme Court in P&B Pharmaceuticals and Larsen & Toubro [2007 (5) TMI 1 - SUPREME COURT], it was held that once necessary facts had already been brought to the notice of the authorities at different points in time, the same would clearly be a circumstance destructive of any allegation of the First Proviso to Section 73 (1) being applicable. The Supreme Court held that once the stand of the assessee was known and formed the subject matter of earlier notices, it would be impermissible for the respondents to allege suppression of facts. When those principles are applied to the facts of the present case, it becomes apparent that it was wholly impermissible for the respondents to resort to the First Proviso to Section 73 (1) of the Act.

As is ex facie apparent from a reading of the above, there is no material on the basis of which the allegation of a wilful suppression of facts is sought to be sustained. Regard must be had to the fact that the extended period of limitation cannot be justified by a mere reproduction or incantation of the language of the statute. A wilful suppression of facts, and which may have allegedly lead to a failure to pay tax, would have to rest on material which constitutes proof of the allegation levelled.

Conclusion - The invocation of the extended period of limitation under the First Proviso to Section 73 (1) was unjustified, as the facts were already known to the respondents from previous proceedings.

The impugned SCN is quashed - petition allowed.

Withdrawal of appeal - Refund of accumulated CENVAT credit - transition to GST regime - HELD THAT:- The appeal is dismissed as withdrawn without commenting and expressing any opinion on the merits of the case.

Classification of service - Works Contracts Service (WCS) or Construction of Residential Complex Service (CRCS) - HELD THAT:- Upto 1.7.2010, the classification of service would remain the same as declared by the service provider but however, post-1.7.2010 the tax would be chargeable under ‘Construction of Complex Service’ if it is service simpliciter and under ‘Works Contract Service’ if it is a composite works contract.

From the discussions in the respective Orders-in-Original, there is no dispute that (i) the nature of work was under composite contract and (ii) in respect of ongoing projects commenced prior to 1.6.2007 for which the appellant had already remitted the service tax under SCS, though no service tax in respect of a composite contract was leviable in view of decision in L&T Ltd. [2015 (8) TMI 749 - SUPREME COURT]. In any case, it is an admitted fact on record that during the periods under dispute, the appellant continued to remit the service tax under WCS and hence there was no reason for the Revenue not to accept the same. Hence in the light of decision of Larsen & Toubro Ltd, which has been followed by various Benches of Tribunal across India, the liability as under CRCS cannot sustain.

Since the issue of interpretation was involved, there cannot be any scope of to allege suppression or whatsoever and hence no penalty could be exigible and hence demand and penalties are set aside.

Conclusion - The liability for service tax under CRCS cannot sustain for the period before 1-7-2010.

Appeal disposed off.

Dismissal of appeal holding the appeal to be time-barred in terms of proviso to (3A) of Section 85 of Finance Act, 1994 - HELD THAT:- The appellant has not come present to contest the findings nor any evidence contrary to these findings has been brought on records. The grounds of appeal are silent to this effect. Resultantly, there are no reason to differ from the findings as arrived by the Commissioner (Appeals).

The Hon’ble Supreme Court in Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT] has already held that the Commissioner (Appeals) has the power to condone the delay only up to 30 days after the expiry of 60 days from the date of receipt of the order in original. In the present case, the order in original dated 23.02.2015 was duly dispatched by the department to the appellant on the date of order itself and the same address on which the show cause notice was served to the appellant which was duly received. The presumption of service is very much attached to the said dispatch. Though, the presumption was rebuttable but the appellant has not produced any document on record to rebut the same. He has not even appeared in person to make any submission in rebuttal thereof.

There are no infirmity in the impugned order. The same is hereby upheld - appeal dismissed.

Dismissal of appeal due to non-compliance of the pre-deposit condition mandated under Section 35F of the Central Excise Act, 1944 - HELD THAT:- There is no dispute about the fact that 7.5% was initially deposited before the Commissioner (Appeals) at that time when the integrated portal did not exist. Thereafter, while approaching the CESTAT, the remaining 2.5%has been deposited by the Petitioner. Thus, in effect the entire 10% which is the pre-deposit amount, stood deposited.

The appeal could not have been rejected merely on the ground that it was deposited on a wrong account especially when the said integrated portal was not even available for the Petitioner at the time of the initial deposit.

Following the decision of the Bombay High Court in Sodexo India Services Pvt. Ltd. vs. Union of India [2022 (10) TMI 264 - BOMBAY HIGH COURT], this Court is, therefore, inclined to direct that the appeal would now be heard by CESTAT on merits without any further deposit being insisted upon. The deposit already made shall be treated as satisfaction of the pre-deposit condition.

Conclusion - The appeal would be heard by CESTAT on merits without any further deposit being insisted upon. The deposit already made was deemed sufficient to satisfy the pre-deposit condition.

The order dated 08th November, 2024 passed by CESTAT is set aside - petition allowed.

Dismissal of appeal due to non-compliance with the pre-deposit condition under Section 35F of the Central Excise Act, 1944 - HELD THAT:- Admittedly, the pre-deposit was made by the Appellant way back on 13th August, 2018 and 17th August, 2018 itself for a sum of Rs. 1,60,600/- and Rs. 4,750/- respectively. The Petitioner has also submitted the challans showing the deposit. The ground taken in the impugned order is that the same was deposited in a wrong account and therefore credit cannot be given of the pre-deposit and hence the appeal does not deserve consideration on merits.

A mere deposit in the wrong account, that too, when the integrated portal might not have been fully functional or the existence of the same was not within the knowledge of the Petitioner, cannot result in a rejection of the appeal on the ground of defects. The matter in the opinion of this Court deserves consideration on merits by the CESTAT.

Let a competent official from the Respondent-Department be present on the next date of hearing with the instructions - List on 21st February, 2025.

Method of valuation - whether the valuation of goods sold by the appellant from their depot during the period from 01.04.2004 to 31.12.2012 is covered under Rule 7 of the Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000? - HELD THAT:- It is an admitted fact that 90% of the sales are carried at the factory gate to unrelated customers and as per the Rule 7 of the Central Excise Valuation (Determination of price of Excisable goods) Rules, 2000, it is very clearly stated that, where excisable goods are not sold by the assessee at the time and place of removal, Rule 7 can be invoked.

Considering the decisions relied by the learned Consultant for the appellant, the demand by invoking the Rule 7 of the Central Excise Valuation (Determination of price of Excisable goods) Rules, 2000 is unsustainable.

Appeal allowed.

CENVAT Credit - fuel oil in engine parts of the vessel brought for breaking purposes - Whether the fuel oil in the engine parts of the vessel is considered part of the ship and thus not eligible for Cenvat Credit? - HELD THAT:- Division Bench of this Tribunal in the decision of Navyug Ship Breaking Company [2023 (3) TMI 636 - CESTAT AHMEDABAD] has held that 'It has been rightly held by Learned Commissioner (Appeals) that removal of fuel and oil is the initiation of ship breaking activity and cannot be said as separate activity.'

Conclusion - The Cenvat Credit on the oil brought in the ship engine when used for ship breaking purposes to the extent of 85%.

Appeal allowed.

Rejection of appeal on account of suppression of material facts - whether there was any material suppression of fact on the part of the appellant’s father while obtaining an insurance policy or not? - HELD THAT:- In the case of Satwant Kaur Sandhu [2009 (7) TMI 1375 - SUPREME COURT], there was suppression of material fact relating to health of the insured and in those circumstances, the respondent insurance company was held to be justified in repudiating the insurance contract.

An insurance is a contract uberrima fides. It is the duty of the applicant to disclose all facts which may weigh with a prudent insurer in assuming the risk proposed. These facts are considered material to the contract of insurance, and its non-disclosure may result in the repudiation of the claim. The materiality of a certain fact is to be determined on a case-to-case basis. The aforementioned judgements illustrate instances of material facts, wherein the non-disclosure of certain medical conditions was held to be material in the context of a Mediclaim policy.

In Rekhaben Nareshbhai Rathod [2019 (4) TMI 1454 - SUPREME COURT], the repudiation of the policy by the insurer was within a period of two years from the commencement of the insurance cover on the ground of nondisclosure of a material fact and suppressing/non-disclosing a pre-existing life insurance. In the said case, the expression “material”, in the context of insurance policy, was defined as any contingency or event that may have an impact upon the risk appetite or willingness of the insurer to provide insurance cover.

In the facts of this case the respondent-insurer decided to issue a policy to the father of the appellant herein even though it was aware that there was another policy for a higher sum assured which was taken by the insured from Aviva. Thus, the insurer was also aware of the fact that the insured had capability and capacity to pay the premium for the policy obtained from Aviva and was confident that the insured had the capacity to pay the premium in respect of the policy which was issued to the insured by the respondent-insurer for a sum lesser assured being Rs.25 lakh only. Consequently, the repudiation of the policy, in the facts and circumstances of the present case, was improper. Therefore, the appellant herein is entitled to the benefit of the policy which was issued by the respondent herein.

Conclusion - The concept of "material facts" in insurance contracts requires disclosure of information that would influence a prudent insurer's decision to accept the risk. Failure to mention about other policies does not amount to a material fact in relation to the policy availed and consequently, the claim could not have been repudiated by the respondent company.

Appeal allowed.

Gift Deed - Valid instrument or not - time limitation - seeking grant of permanent injunction restraining the defendants/appellants from selling, mortgaging, encumbering or alienating the suit property on the strength of the said document - HELD THAT:- The entire impugned judgment does not reflect formulation of any issue at all, although issues have been supposedly decided by their respective numbers. The issues originally framed in the suit, which are a part of the paper book, also do not reflect any issue on violation of Clause II (6). Rather, the learned Trial Judge observed in her judgment that the “only” bone of contention between the parties was fraud, whereas she does not adjudicate in favour of the plaintiff on such count by holding that the deed was vitiated by fraud at all.

By such observation regarding the only bone of contention being fraud, the learned Trial Judge made it explicitly evident that she did not formulate the alleged violation of Clause II (6) as an issue for the parties to address.

Clause II (6) provides that the lessees shall not assign or transfer in any way or mortgage the subject land without the previous consent in writing of the Chairman of the Board of Trustees of the CIT. However, we do not find any clause within the four corners of the lease deed which invalidates such a transfer, even if made without such written prior permission.

The maximum consequence which might have visited the lessees in the event of breach of any of the covenants of the lease deed, including Clause II (6), would be non-renewal of the lease after the expiry of its normal tenure of 99 years - the violation of Clause II (6) is not otherwise fatal to the validity of such transfer, made without any prior written consent of the CIT.

In the gift deed itself, sufficient explanation for transfer of the property in favour of the donee in exclusion of the donor’s children was given. The donor stated that she had great love and affection for the done, who happened to be her daughter-in-law and the donee maintained great regards and esteem in her behaviour and dealings with the donor. It was further stated that the sons and daughters of the donor were well established in their lives. The husband of Rama, who subsequently shot off a letter which has been relied on by the respondent, was a confirming party to the deed and endorsed the transfer of the said land and premises in favour of the donee by way of gift by reason of natural love and affection for the donee, which is also recorded in the deed itself - in view of the intrinsic evidence available in the disputed deed itself, there is no reason why the court should go behind the deed and try to read into the mind of the donor any intention contrary to the execution of the deed.

Conclusion - The learned Trial Judge acted patently contrary to the law and materials on record in declaring the disputed gift deed to be void and not binding on the plaintiff and granting permanent injunction against the defendants from selling, mortgaging, encumbering, alienating the suit property on the strength of the said document dated May 22, 1985.

Appeal is allowed on contest without costs, thereby setting aside the impugned judgment and decree dated February 8, 2017 passed by the learned Judge, Second Bench, City Civil Court at Calcutta in Title Suit No. 1738 of 1992 and dismissing the said suit.

Dishonour of Cheque - respondent has been acquitted of the offence under section 138 of the Negotiable Instruments Act, 1881 - misinterpretation and misapplication of the statutory presumption contained in sections 118 and 139 of the NI Act - complainant was competent to depose in relation to the matter or not - HELD THAT:- As per section 118 (a) of the NI Act, a statutory presumption must be drawn in favour of a complainant that every negotiable instrument (such as a cheque) is made or drawn for consideration until the contrary is proved by the accused person - Section 139 of the NI Act goes further to cast the onus on the accused of proving that a cheque was not received by a holder in discharge of a debt or other liability owed.

The learned Magistrate has opined that the defence sought to be raised by the respondent that the subject cheques were being held by the appellant as ‘security’ was “a sham defence”. Furthermore, the learned Magistrate has, in so many words, also recorded that the respondent admits to the issuance of the subject cheques and the signatures appearing thereon.

However, in what is evidently a complete misinterpretation, misconstruction and misapplication of the statutory presumption contained in sections 118 (a) and 139 of the NI Act, and as interpreted by the courts, the learned Magistrate then proceeds to hold that the appellant (complainant) had failed to establish that there was a legally enforceable debt. In the opinion of this court, this inference drawn by the learned Magistrate is at complete odds with the foundational presumptions contained in sections 118 (a) and 139 of the NI Act, which presumptions hold good unless and until the contrary is proved by the accused person.

The fact that the cheques were issued as ‘security’ is answered in the MoM dated 17.10.1997 and letter dated 08.11.1997, whereby the respondent has admitted to owing a debt of about Rs. 94 lacs to the appellant, which would entitle the appellant to encash the subject cheques for the sum of Rs. 30 lacs towards part-payment of the debt. Therefore, the respondent cannot be heard to say that the subject cheques, which were admittedly issued as ‘security’ towards a possible future debt, cannot be encashed to satisfy a part of such debt, which debt stands admitted in the afore-noted MoM and letter.

Conclusion - i) The statutory presumption under Sections 118 and 139 of the NI Act was not rebutted by the respondent, and the Magistrate's judgment was based on a misinterpretation of these provisions. ii) The defense of 'blank signed' cheques as security is invalid, as the cheques were issued towards a debt acknowledged by the respondent.

The dismissal of the criminal complaints by the learned Magistrate is unsustainable in law and deserves to be set aside - Appeal allowed.