TaxTMI Updates e-Newsletter
Apr 06,2024

Credit for payment made before issuance of assessment order - failure to afford opportunity of hearing - conditioning writ relief on pre-deposit for remand - remand for fresh adjudication and personal hearing - imposition of 100% penalty under the Tamil Nadu Goods and Services Tax regime

Credit for payment made before issuance of assessment order - failure to afford opportunity of hearing - conditioning writ relief on pre-deposit for remand - Validity of the assessment order dated 19.04.2023 insofar as it proceeded without taking into account the payment made prior to the order and without affording the petitioner an opportunity of hearing, and the appropriate remedy. - HELD THAT: - The court observed that the impugned order was founded on discrepancies between GSTR returns and that penalty at 100% was imposed. It was noted that the petitioner had remitted Rs. 3,00,000 on 12.04.2023-prior to the issuance of the assessment order-but that payment was not reflected in the order. Further, the petitioner was not heard before the order was passed. In the interests of justice the court set aside the impugned order and directed conditional remand: the petitioner was required to remit an additional sum within a specified period and permitted to file a reply to the show cause notice; on receipt of the reply and satisfaction as to the additional payment, the respondent must afford a reasonable opportunity including personal hearing and pass a fresh order within the prescribed time-frame. The order therefore restores procedural fairness while conditioning continued adjudication on a pre-deposit to secure the revenue and facilitate fresh consideration. [Paras 5, 6]

Impugned order set aside; petitioner to remit an additional sum within three weeks and to submit a reply; upon receipt and after providing personal hearing, respondent to pass a fresh order within two months.

Imposition of 100% penalty under the Tamil Nadu Goods and Services Tax regime - remand for fresh adjudication and personal hearing - Appropriateness of imposing penalty at 100% under the State GST scheme in the facts of the case and the necessity for fresh consideration of penalty. - HELD THAT: - The court recorded that penalty had been imposed at 100% of the tax dues by invoking the relevant provision of the State GST law but observed that, in the factual matrix-where a pre-order payment had been made and the petitioner had not been heard-the imposition of the full penalty was not warranted without fresh adjudication. Consequently, the matter was remitted to the respondent to reconsider the penalty after receipt of the petitioner's reply, receipt of the additional conditional payment, and after affording a personal hearing, so that the question of penalty may be examined and decided afresh. [Paras 5, 6]

Imposition of 100% penalty not sustained without fresh adjudication; penalty to be reconsidered by the respondent after compliance with conditional remand directions and after affording personal hearing.

Final Conclusion: Writ petition allowed in part: the assessment order dated 19.04.2023 is set aside and the matter is remitted for fresh adjudication on condition of an additional pre-deposit and after affording the petitioner an opportunity including personal hearing; penalty imposed at 100% to be reconsidered in the remanded proceedings.

Extension of time-limit for initiation of recovery under Section 73(10) of the CGST Act - challenge to executive notification under Article 226 of the Constitution - interim restraint on recovery pending adjudication

Interim restraint on recovery pending adjudication - challenge to executive notification under Article 226 of the Constitution - Whether recovery of the amount assessed against the petitioner should be stayed pending adjudication of the challenge to the notification and related proceedings. - HELD THAT: - The writ petition assailed the notification which extended the time-limits under Section 73(10) of the CGST Act for the financial years 2017-18, 2018-19 and 2019-20; the respondent produced Council proceedings showing recommendation for extension due to Covid-19 related backlog. The Court noted that the petitioner had participated in the departmental proceedings and that a final order had been passed on 09.02.2024. Taking into account that similar challenges are pending before other courts and that the petitioner faces enforcement of recovery pursuant to the departmental order, the Court declined to adjudicate the merits of the validity of the notification at this interim stage but granted protective relief. Consequently, and until further orders, the Court directed that enforcement of recovery assessed against the petitioner shall not be carried out. The order is interlocutory and does not decide the substantive challenge to the notification under Article 226; that question remains pending for adjudication on the returnable date. [Paras 7, 8]

Recovery of the amount assessed against the petitioner shall not be enforced until further orders of the Court.

Final Conclusion: The petition challenging the notification has been admitted; without deciding its merits the Court granted an interim protection restraining enforcement of recovery against the petitioner until further orders and listed the matter for further hearing on 10.05.2024.

Cryptic order - failure to apply mind by the Proper Officer - duty to seek specific clarification before rejecting a reply - remand for re-adjudication - intimation of documents and opportunity of personal hearing - fresh speaking order in accordance with law and timeline under Section 75(3) of the Act - order under Section 73 of the Central Goods and Services Tax Act, 2017

Cryptic order - failure to apply mind by the Proper Officer - duty to seek specific clarification before rejecting a reply - remand for re-adjudication - intimation of documents and opportunity of personal hearing - fresh speaking order in accordance with law and timeline under Section 75(3) of the Act - Validity of the impugned adjudication order which confirmed demand solely on the ground that the taxpayer's reply was 'incomplete, not duly supported by adequate documents, not clear and unsatisfactory'. - HELD THAT: - The Court found that the impugned order is cryptic because it records the conclusion that the taxpayer's reply was not duly supported and unsatisfactory without demonstrating that the Proper Officer considered the detailed replies and supporting material filed by the petitioner. The Proper Officer was required to apply mind to the contents of the reply and, if found deficient, to specify what further information or documents were necessary and to afford the petitioner an opportunity to furnish them. Absent such consideration or a specific call for clarification, the conclusion that the reply was 'not clear and satisfactory' indicates failure to exercise adjudicatory mind. In these circumstances the Court set aside the impugned order and remitted the matter to the Proper Officer for re-adjudication. The Proper Officer is directed to intimate the particular details/documents required, permit the petitioner to furnish explanations and documents, afford a personal hearing, and thereafter pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3) of the Act. The Court expressly refrained from expressing any view on the merits of the tax demand. [Paras 6, 7, 8, 9, 10]

Impugned order set aside; matter remitted for re-adjudication after intimation of required documents, opportunity of personal hearing and issuance of a fresh speaking order within the period under Section 75(3) of the Act; merits not considered.

Final Conclusion: The petition is allowed to the extent that the adjudication order dated 30.12.2023 is quashed and the matter is remitted to the Proper Officer for re-adjudication in accordance with the directions to intimate required documents, permit submission of explanations, grant personal hearing and pass a fresh speaking order within the statutory timeline; no decision on merits has been recorded.

Cancellation of GST registration with retrospective effect - Adequacy of Show Cause Notice and requirement of reasons - Objective satisfaction required for retrospective cancellation under Section 29(2) - Restoration of registration and compliance obligations - Right to notice and opportunity to object against retrospective consequences

Adequacy of Show Cause Notice and requirement of reasons - Right to notice and opportunity to object against retrospective consequences - Validity of the Show Cause Notice dated 29.09.2022 and order dated 13.10.2022 cancelling GST registration, including absence of reasons and failure to notify retrospective cancellation. - HELD THAT: - The Show Cause Notice merely stated "Others" and did not set out cogent reasons for cancellation. The cancellation order of 13.10.2022 did not furnish reasons, was internally inconsistent (recording a reply yet stating the assessee neither attended personal hearing nor responded), and imposed retrospective cancellation effective 28.07.2020 without any material or explanation justifying retrospective effect. Because the notice did not inform the assessee that cancellation would be retrospective, the assessee had no opportunity to object to the retrospective consequence. For these reasons the notice and cancellation order are unsustainable and must be set aside. [Paras 4, 5, 7, 8, 11]

Show Cause Notice dated 29.09.2022 and order dated 13.10.2022 are set aside; the cancellation is invalid for want of adequate reasons and notice of retrospective effect.

Cancellation of GST registration with retrospective effect - Objective satisfaction required for retrospective cancellation under Section 29(2) - Whether retrospective cancellation under Section 29(2) can be mechanically imposed or requires objective satisfaction and justification. - HELD THAT: - Section 29(2) permits cancellation from such date, including retrospective dates, only if the proper officer is satisfied that the circumstances warrant cancellation from that date. Such satisfaction cannot be mechanical or purely subjective; it must be based on objective criteria and justifications. Non-filing of returns alone does not automatically warrant retrospective cancellation that covers periods when the assessee was compliant. Retrospective cancellation has significant consequences (including on recipients' input tax credit) and therefore can be ordered only where the consequences are intended and justified by objective material. [Paras 9, 10]

Retrospective cancellation requires objective satisfaction on record; it cannot be imposed mechanically or without justification.

Restoration of registration and compliance obligations - Relief to be granted following invalidation of the cancellation and scope of future compliance. - HELD THAT: - Because the impugned notice and cancellation order are invalid, the Court restored the GST registration of the petitioner. Restoration is subject to the petitioner making necessary compliances and filing requisite returns and information, including under Rule 23 of the Central Goods and Services Tax Rules, 2017. The respondents, however, remain entitled to initiate recovery proceedings for any tax, penalty or interest due, and, if legally justified by objective material, may pursue retrospective cancellation in accordance with law after providing appropriate notice and reasons. [Paras 11, 12]

Petitioner's GST registration restored; petitioner to make required compliances and file returns; respondents may pursue recovery or, if justified, reconsider retrospective cancellation in accordance with law.

Adequacy of Show Cause Notice and requirement of reasons - Competency of appellate reliance on a ground (absence at premises) first mentioned in the appeal order when not set out in the Show Cause Notice or cancellation order. - HELD THAT: - The inspection-related finding that the petitioner was not found at the premises was first mentioned in the appellate order and was not part of the Show Cause Notice or the cancellation order. The Court observed that such a ground surfacing for the first time in appeal cannot cure the deficiency in the original notice and order. The absence of that ground from the notice and cancellation order reinforces the inadequacy of reasons and notice provided to the assessee. [Paras 6, 7]

A ground raised for the first time in the appellate order does not cure the inadequacy of the original notice or cancellation order and cannot sustain the cancellation.

Final Conclusion: The Show Cause Notice dated 29.09.2022 and the cancellation order dated 13.10.2022, together with the appellate dismissal dated 11.10.2023, are set aside for want of adequate reasons and failure to notify retrospective effect; the petitioner's GST registration is restored subject to compliance and filing of returns, while respondents remain entitled to pursue recovery of tax, penalty or interest and may, if objectively justified and after appropriate notice, consider retrospective cancellation in accordance with law.

Revocation of cancellation of registration - limitation for filing under section 30 - restoration of registration by furnishing final return - liberal approach to restoration of registration - requirement of payment of statutory penalty for condonation

Revocation of cancellation of registration - limitation for filing under section 30 - liberal approach to restoration of registration - requirement of payment of statutory penalty for condonation - Permission to file an application under section 30 of the Central Goods and Services Tax Act, 2017 despite the lapse of the statutory period - HELD THAT: - The petitioner's registration was cancelled for failure to furnish returns for a continuous period of six months and the statutory period for seeking revocation under section 30 had elapsed, as confirmed by the respondents. The Court noted the statutory framework including obligations to furnish monthly returns and the availability of provisions such as section 45 for restoration by furnishing final returns. Having regard to the primary object of the GST regime and the serious commercial consequences of cancellation, the Court held that a liberal approach is warranted to enable genuine defaulters to seek restoration. In exercise of this discretion, the Court permitted the petitioner to file an application under section 30 belatedly, subject to the condition that the petitioner shall make payment of any statutory penalty/fine that may be applicable for seeking such condonation. The Court directed that the period of limitation for filing shall be computed from the date of the order and granted a 30-day window for filing the application.

Petitioner permitted to file an application under section 30 within 30 days from this order, subject to payment of statutory penalty/fine as may be applicable; period of limitation shall be counted from the date of this order.

Final Conclusion: Writ petition allowed to the extent that the petitioner is permitted to file an application for revocation of cancellation under section 30 within 30 days from this order, subject to payment of statutory penalty/fine; other reliefs are not granted.

Service of show cause notice as condition precedent - mandatory compliance with Rule 142(1) and FORM GST DRC-01 - principles of natural justice and effective opportunity of hearing - provisional attachment of bank accounts under Section 83 - quashing of adjudication and recovery orders for non-compliance - remittal for fresh adjudication limited to interest after statutory notice

Service of show cause notice as condition precedent - mandatory compliance with Rule 142(1) and FORM GST DRC-01 - principles of natural justice and effective opportunity of hearing - Non service of a show cause notice under Section 73(1) and failure to comply with Rule 142(1)/FORM GST DRC 01 vitiates the adjudication leading to demand. - HELD THAT: - The Court found that Section 73/74 of the JGST Act and Rule 142(1) require issuance of a show cause notice and compliance with the summary requirement in FORM GST DRC 01 so that the assessee is made aware of the charges and the material relied upon and is afforded an effective opportunity of hearing. The record admitted that no show cause notice in the manner mandated was served and no opportunity of hearing was afforded. Because proceedings with civil and penal consequences attract the principles of natural justice, the mandatory non compliance with Section 73/74 and Rule 142(1) rendered the impugned adjudication and recovery steps vitiated. The Court concluded that, on this ground, the demand and consequential actions could not be sustained. [Paras 13, 16]

The impugned adjudication and demand based on non compliance with Section 73/74 and Rule 142(1)/FORM GST DRC 01 are quashed and set aside.

Provisional attachment of bank accounts under Section 83 - quashing of attachment for lack of statutory authority - Attachment of the petitioner's bank account without compliance with the procedure and authority under Section 83 (order by the Commissioner) and in the absence of lawful adjudication is invalid; provisional attachment ceases after one year. - HELD THAT: - The Court extracted and relied on the language of Section 83 of the CGST Act to hold that provisional attachment of property, including bank accounts, is exercisable by the Commissioner by a written order and that such provisional attachment automatically ceases after one year. The record showed that the bank accounts (including the cash credit account) were attached without the requisite compliance and without affording the petitioner opportunity of hearing; the respondents themselves acknowledged that tax was paid and that only interest might be due. The Court also observed that a cash credit account is not an attachable asset in the circumstances shown and treated the exercise of recovery/attachment by the concerned authority as a misuse of power. [Paras 14, 15, 16]

The letter of attachment/freeze on the petitioner's bank account is quashed and set aside.

Remittal for fresh adjudication limited to interest after statutory notice - Matter remitted to the Adjudicating Authority to issue statutory notice and pass a fresh order limited to interest after verification of records and following due process. - HELD THAT: - Having quashed the impugned orders for procedural infirmity, the Court directed remittal to the Adjudicating Authority with a limited mandate: to issue the statutory notice required by law, verify the records, and thereafter pass a fresh adjudication order in respect of interest only, strictly following the provisions of the Act and affording the assessee an opportunity of hearing. [Paras 16]

The matter is remitted for fresh consideration limited to interest, after issuing statutory notice and following due process.

Final Conclusion: Writ petition allowed; impugned order dated 14.07.2020 and GST DRC 07 dated 16.07.2020 quashed, the bank account attachment set aside, and the matter remitted to the Adjudicating Authority to issue statutory notice and pass a fresh order limited to interest after verification and compliance with the Act.

Principles of natural justice - right to personal hearing - service of notice by email - remand for fresh hearing

Principles of natural justice - right to personal hearing - service of notice by email - Whether the Order-in-Original dated 28.11.2023 was vitiated by violation of principles of natural justice insofar as the petitioner was not served with notices for personal hearing at its registered email-id. - HELD THAT: - The Court noted that paragraph 14 of the impugned order records intimations for personal hearing on specified dates but those e-mails were sent to an address different from the petitioner's registered e-mail. The Department did not dispute that the petitioner had earlier notified its registered e-mail-id and that the intimations were inadvertently sent to another e-mail address recorded in the Departmental portal. In these circumstances the Court held that the petitioner was not afforded a fair opportunity of personal hearing and that the Order-in-Original was thereby tainted by breach of natural justice. The Court therefore set aside the impugned order to the limited extent of this defect and directed the petitioner to appear for personal hearing before the authorities on the specified date, with the authorities thereafter to proceed and pass a fresh order in accordance with law; the Court further directed that no further notice need be issued to the petitioner for that hearing. [Paras 3, 5, 6, 7]

Impugned Order-in-Original quashed insofar as it is vitiated by denial of effective personal hearing; matter remanded for fresh personal hearing and fresh decision in accordance with law.

Final Conclusion: Writ petition allowed to the extent that the Order-in-Original dated 28.11.2023 is set aside for violation of principles of natural justice; petitioner directed to appear for personal hearing on the date specified by the Court and the authority to pass a fresh order in accordance with law.

Claim of long-term capital gains exemption under Section 10(38) - right to rectify omission / file revised return to claim exemption - principles of natural justice - right to cross-examine adverse witnesses - inadmissibility of survey-obtained admissions - reliance on statements of third-party entry providers for additions under Sections 68 and 69

Delay of 303 days in filing this special leave petition

HELD THAT:- There is gross delay of 303 days in filing this special leave petition. The explanation offered is not sufficient in law to condone the delay.

Hence, the application seeking condonation of delay is dismissed.

Consequently, the special leave petition is also dismissed keeping open the question of law, if any.

In doing so, we have also followed the earlier order of this Court in DIPANSU MOHAPATRA [2024 (3) TMI 217 - SC ORDER]

Tax Deducted at Source - External Development Charges (EDC) - obligation to withhold TDS under Section 194-I - characterisation of payment (nature of payment) - curability of erroneous statutory reference in taxing orders

HELD THAT:- Following the order passed in the case of Joint Commissioner of Income Tax vs. M/s Experion Developers Private Limited [2024 (2) TMI 894 - SC ORDER] and the order passed in Principal Commissioner of Income Tax (Central III) and Anr. vs. BPTP Limited [2021 (2) TMI 623 - SC ORDER] this special leave petition also stands dismissed.

Addition u/s 40A(3) - payment in cash - purchase of stock in trade - Decision of the Third Member of ITAT confirmed - Delay filling appeal before SC -

HC held [2022 (7) TMI 339 - CALCUTTA HIGH COURT] revenue does not state that any cash transaction took place.

HELD THAT:- There is gross delay of 521 days in filing this special leave petition. The explanation offered is not sufficient in law so as to condone the said delay.

In the circumstances, the application seeking condonation of delay is dismissed. Consequently, the special leave petition also stands dismissed.

Payment for use of computer software - royalty under Section 9(1)(vi) of the Income Tax Act read with Article 12 of the Indo US DTAA - non exclusive licence / EULA does not transfer copyright - gross delay of 636 days in filing this special leave petition.

HELD THAT:- We note that the issues raised in this special leave petition have been answered by a judgment by a three-Judge Bench of this Court in Engineering Analysis Centre of Excellence Private Limited [2021 (3) TMI 138 - SUPREME COURT]

In the circumstances, following the aforesaid order/judgment, the special leave petition stands dismissed both on the ground of merits as well as on delay.

In doing so we have also followed the order passed in M/s Gracemac Corporation in [2023 (8) TMI 98 - SC ORDER]

Permanent Establishment - Dependent Agent Permanent Establishment - Substantial question of law - Concurrent findings of fact - Perversity - delay filing this special leave petition

HELD THAT:- There is gross delay of 395 days in filing this special leave petition. Nevertheless we are not inclined to interfere in the matter.

Hence, the special leave petition also stands dismissed on the ground of delay as well as on merits [2022 (11) TMI 1346 - DELHI HIGH COURT]

In doing so, we are following our earlier order passed in the case of Director of Income Tax (International Taxation) 2, New Delhi Vs M/s MITSUI and Co.[2018 (7) TMI 141 - SC ORDER]

Pending application(s), if any, shall stand disposed of.

Vested right to pursue a statutory remedy - retrospective operation of legislation and effect on vested rights - deemed allowance of application under proviso to Section 245D(1) - invalidity of executive circular imposing additional eligibility condition - power of the Central Board to issue binding directions under Section 119 - estoppel against Revenue for delay in issuing notice - reading down to save provisions from arbitrariness

Deemed allowance of application under proviso to Section 245D(1) - vested right to pursue a statutory remedy - Validity of the application filed by the petitioner on 18th March 2021 and whether the retrospective insertion of Section 245C(5) (prohibiting applications on or after 1st February 2021) invalidates that application - HELD THAT: - On 18th March 2021 the petitioner made an application under Section 245C(1) when the law then in force permitted such an application; the definition of 'case' in Section 245A(b) read with Explanation (iiia) covered the assessment proceedings for the relevant years. The proviso to Section 245D(1) provides that where no order is passed within the prescribed period the application shall be deemed to have been allowed to be proceeded with. Consequently, the applicant's filing on 18th March 2021 was a completed act which vested a right to have the application considered. The Finance Act, 2021 inserted Section 245C(5) with retrospective wording; however, that prohibition is a bar on the future making of applications and, as worded, cannot be construed to invalidate an act already performed before the amendment's notification. Absent express words or necessary implication divesting accrued rights, retrospective amendment cannot defeat a vested right to have a pending application considered. The literal application of Section 245C(5) to treat already-filed applications as never made would be arbitrary and unreasonable; therefore Section 245C(5) must be given effect only from the date of notification of the Finance Act, 2021. [Paras 19, 20, 21, 31, 34]

Petitioner's application dated 18th March 2021 is valid and an accrued/vested right arose which is not taken away by the retrospective amendment; Section 245C(5) cannot be applied to invalidate the already-filed application.

Invalidity of executive circular imposing additional eligibility condition - power of the Central Board to issue binding directions under Section 119 - Validity of the Press Release/notification by the Interim Board/CBDT which limited entitlement to file before the Interim Board to assessees who were eligible as on 31st January 2021 - HELD THAT: - The CBDT has power under Section 119 to issue instructions and to relax the rigours of the law for administration; it may extend time-limits. However, a circular or notification cannot introduce a substantive condition or burden not prescribed by the statute. Chapter XIX-A and its amendments prescribe only a cut-off for making applications (Section 245C(5) as amended) and set out treatment of pending applications; they do not create a separate statutory cut-off date for an assessee's eligibility before the date of making an application. The impugned Press Release and notification inserted an additional condition that only those assessees who were 'eligible to file applications as on 31st January 2021' could file till 30th September 2021. That additional eligibility condition is not found in the statute and therefore exceeds the Board's power under Section 119 and is invalid to that extent. [Paras 9, 16, 24, 25, 34]

The impugned Press Release/notification insofar as it conditions filing upon eligibility on 31st January 2021 is beyond CBDT's power and is invalid.

Estoppel against Revenue for delay in issuing notice - vested right to pursue a statutory remedy - Whether the Revenue can take advantage of its delay in issuing notice under Section 153A so as to deny the petitioner eligibility to approach the Settlement Commission/Interim Board - HELD THAT: - Petitioner's eligibility to file was dependent upon issuance of the notice under Section 153A; the search concluded on 29th August 2019 but notice under Section 153A was issued only on 5th February 2021 after an inordinate delay. Where eligibility to invoke a statutory remedy is made dependent on the Revenue's action, the Revenue cannot take advantage of its own delay to defeat that remedy. On the facts, respondent no.1's delayed issuance of the relevant notice cannot be used to contend that petitioner lost the right to approach the Settlement Commission or Interim Board; respondent is estopped from denying the petitioner's entitlement on that ground. [Paras 4, 11, 27]

Respondent cannot rely on its delay in issuing the Section 153A notice to deprive petitioner of the right to approach the Settlement Commission/Interim Board.

Reading down to save provisions from arbitrariness - retrospective operation of legislation and effect on vested rights - Whether Section 245C(5) and the impugned administrative measures require reading down to avoid arbitrariness and to give effect only from notification of the Finance Act - HELD THAT: - A provision which, by literal retroactive operation, would nullify completed actions and produce arbitrary results may be read down so as to effectuate legislative intent without violating constitutional norms. Here the Board itself extended the filing date; given that literal retrospective application of Section 245C(5) would render completed filings void and be arbitrary, the provision must be applied only from the date the Finance Act was notified. To the extent the notification attempts to impose a prior eligibility cut-off not contained in the statute, that requirement cannot be upheld; otherwise, if capable of being construed consistently, the date of eligibility set out in the notification would require read-down to avoid invalidity. [Paras 31, 32, 34]

Section 245C(5) is to be given effect prospectively from the date of notification of the Finance Act; any administrative measure imposing a prior cut-off not in the statute must be read down or struck down as beyond power.

Quashing of departmental notice challenging validity of pending application - Validity of the notice dated 16th September 2021 issued by the Assessing Officer treating petitioner's application as not valid - HELD THAT: - In light of the conclusion that petitioner's application was validly filed and deemed allowed to be proceeded with, and that the extra-statutory eligibility cut-off is invalid, the departmental notice which proposed to proceed with assessment on the basis that petitioner was not eligible is unsustainable. The High Court follows the reasoning in the Madras High Court decision (reading down the eligibility date) and holds that the impugned Assessing Officer's notice is not legally tenable. [Paras 11, 16, 35]

The notice dated 16th September 2021 is quashed and set aside.

Final Conclusion: The petition is allowed: the notice dated 16th September 2021 is quashed; the CBDT notification/Press Release insofar as it restricts filing to assessees eligible on 31st January 2021 is invalid; the petitioner's application filed on 18th March 2021 is valid and shall be considered and disposed of in accordance with law by the appropriate authority.

Penalty under Section 271(1)(c) - Concealment of income - Inaccurate particulars of income - Section 50C deeming provision - Burden of proof to establish concealment - Settlement Commission's power to impose penalty

Settlement Commission's power to impose penalty - Penalty under Section 271(1)(c) - Settlement Commission was legally competent to impose penalty under Section 271(1)(c) but such power must be exercised only upon establishment of concealment or furnishing of inaccurate particulars. - HELD THAT: - The Court accepted that the Settlement Commission may impose penalty for concealment under Section 271(1)(c) and that there is no legal embargo on the Commission taking such a step. However, imposition of penalty is subject to the statutory requirement that there be concealment of particulars of income or furnishing of inaccurate particulars. The power to levy penalty therefore does not dispense with the need for material evidence or reasons to support a finding of concealment; adjectival characterisations of the applicant's conduct without supporting findings are insufficient to sustain a penalty. [Paras 16]

Settlement Commission may impose penalty under Section 271(1)(c) but only upon proper establishment of concealment or inaccurate particulars.

Section 50C deeming provision - Concealment of income - Invocation of the deeming fiction in Section 50C to compute capital gains does not, by itself, constitute proof of actual receipt of higher consideration or automatic evidence of concealment justifying penalty. - HELD THAT: - The Court observed that Section 50C operates as a deeming provision for computation of full value of consideration where stamp valuation authority has adopted a higher value. Nevertheless, an addition under Section 50C reflects a statutory estimation for computing income and does not ipso facto establish that the assessee actually received the higher amount or that the assessee concealed receipt of such amount. Absent independent evidence showing actual receipt of excess consideration, reliance solely on the deemed valuation cannot support a finding of concealment warranting penalty. [Paras 15, 24]

Section 50C-based addition does not automatically establish concealment or actual receipt of higher consideration for purposes of imposing penalty.

Burden of proof to establish concealment - Inaccurate particulars of income - Revenue bears the burden to disprove the assessee's explanation and to establish concealment or inaccuracy on material evidence; lack of investigation or failure to disbelieve the explanation precludes penalty. - HELD THAT: - The Court found that the petitioner furnished an explanation that he was unaware of the sale deed executed by his power of attorney and that, according to the deed, consideration was a lower amount. The Settlement Commission neither investigated the veracity of that explanation nor recorded cogent reasons to disbelieve it. Given that penalty under Section 271(1)(c) is predicated on concealment rather than mere under assessment, the Revenue was obliged to adduce material evidence to establish concealment. In the absence of independent evidence to show actual receipt of excess consideration or reasoned rejection of the assessee's explanation, the element of concealment was not made out. [Paras 20, 21, 24]

Penalty cannot be sustained where Revenue fails to rebut the assessee's explanation or to establish concealment on material evidence.

Final Conclusion: Writ petition allowed in part; the levy of penalty under Section 271(1)(c) imposed by the Settlement Commission's order dated 27.10.2010 is set aside for want of establishment of concealment or furnishing of inaccurate particulars of income.

Jurisdiction of Assessing Officer in reassessment proceedings - Validity of notice under Section 148 and notice-stage procedure under Section 148A - Non-jurisdictional notice void ab initio - Effect of transfer of PAN/charge and exigency of limitation on jurisdiction

Jurisdiction of Assessing Officer in reassessment proceedings - Validity of notice under Section 148 and notice-stage procedure under Section 148A - Non-jurisdictional notice void ab initio - Validity of the notices issued by the Assistant Commissioner under Section 148A(b)/148A(d) and Section 148 for AY 2016-2017 by an officer who did not have jurisdiction over the assessee - HELD THAT: - The Court found on the material on record that the petitioner was filing returns and shown on the tax portal as a Non-resident and that jurisdiction in the petitioner's case lay with the Income Tax Officer (International Taxation). The Assistant Commissioner (Respondent No.1) effectively admitted lack of jurisdiction yet proceeded to issue notices under Section 148A(b)/148A(d) and Section 148. Reliance in the judgment is placed on the principle that a notice issued by an officer who did not have jurisdiction is invalid and void ab initio, as reflected in M.I. Builders and followed in Pavan Morarka. The Court rejected the Revenue's attempt to sustain the proceedings by characterising the notice-stage requirement as requiring only prima facie satisfaction where jurisdictional competence is absent. Having regard to the admitted facts and precedents, the notices issued by the non jurisdictional Assessing Officer were held to be without jurisdiction and therefore invalid. [Paras 6, 7, 14, 17]

Notices dated March 25, 2023 (under Section 148A(b)), April 12, 2023 (order under Section 148A(d)) and April 12, 2023 (notice under Section 148) issued by Respondent No.1 are quashed as issued by an officer without jurisdiction.

Effect of transfer of PAN/charge and exigency of limitation on jurisdiction - Validity of actions taken to preserve limitation where jurisdiction is lacking - Whether the Assistant Commissioner's explanation of lack of time to migrate PAN/charge and to transfer the file could validate proceedings initiated by an officer who lacked jurisdiction - HELD THAT: - Respondent No.1 stated that the assessee's PAN and file came to his charge at the fag end of March 2023 and that, because of the looming limitation, he proceeded to issue the notice instead of migrating the PAN to the proper charge. The Court held that shortage of time or exigency of limitation cannot confer jurisdiction on an officer who is otherwise non jurisdictional. The temporary possession or transfer of records and an attempt to preserve limitation does not validate proceedings that are invalid ab initio for want of jurisdiction. The Court therefore rejected the contention that procedural exigencies could cure the fundamental defect of lack of jurisdiction. [Paras 7, 15, 16]

The explanation of shortage of time and delay in migrating the PAN does not cure the jurisdictional defect and cannot validate the notices or the reopening proceedings initiated by the non jurisdictional officer.

Final Conclusion: Rule made absolute; the reassessment notices and the impugned order issued by the non jurisdictional Assistant Commissioner are quashed. The Revenue remains free to take such steps as are available in law and the assessee may defend any fresh proceedings.

Reopening of assessment based on information suggesting escapement of income - jurisdictional satisfaction for reopening assessment under Section 148/148A - change of opinion doctrine as a bar to reassessment - dependent agent permanent establishment (DAPE) and tax neutrality where agent paid arm's length remuneration - effect of an order set aside by the appellate authority on the validity of subsequent reopening - maintainability of writ under Article 226 to challenge jurisdictional defect in reopening

Reopening of assessment based on information suggesting escapement of income - effect of an order set aside by the appellate authority on the validity of subsequent reopening - Validity of notices and order reopening assessment for AY 2016-17 where the originating information was a revision order later set aside by the ITAT - HELD THAT: - The court examined the source of the AO's 'reason to believe' and found that the only information relied upon to reopen AY 2016-17 was the Commissioner's revision order passed under Section 263 in relation to AY 2017-18. That revision order had been set aside by the ITAT and the AO had given effect to the ITAT order. Consequently the foundational material relied upon for reopening no longer survived. In these circumstances the AO lacked the requisite information to form a valid jurisdictional satisfaction that income chargeable to tax had escaped assessment for AY 2016-17, and the reopening notices and the order rejecting objections could not be sustained. [Paras 10, 11, 16]

Notices dated 27.03.2023, 30.03.2023, 13.04.2023, order dated 25.04.2023 and notice dated 25.04.2023 reopening AY 2016-17 are quashed for lack of valid information forming jurisdictional satisfaction.

Change of opinion doctrine as a bar to reassessment - jurisdictional satisfaction for reopening assessment under Section 148/148A - Whether the impugned reopening amounted to a prohibited change of opinion where the AO had earlier raised queries and received full responses during original assessment - HELD THAT: - The AO had sought specific information during the original scrutiny assessment and the assessee had provided detailed responses which were considered before the assessment order was passed. The impugned notice relied upon the same or derivative material already placed before the AO and amounted to revisiting issues that had been considered and accepted. The court applied established precedent that reassessment cannot be justified by a mere change of opinion and held that reopening in these facts was impermissible, particularly where the originating revision order itself had been set aside by the ITAT and given effect to by the AO. [Paras 13, 15]

Reopening is vitiated as it constitutes change of opinion and therefore cannot sustain reassessment.

Maintainability of writ under Article 226 to challenge jurisdictional defect in reopening - Whether the petition is premature or alternative remedies preclude writ relief where jurisdictional satisfaction is disputed - HELD THAT: - Revenue contended that the petition was premature because reassessment proceedings were pending and alternative statutory remedies existed. The court, however, distinguished challenges to jurisdictional preconditions from merits of assessment and held that where the AO has failed to satisfy jurisdictional prerequisites to reopen, writ jurisdiction under Article 226 is available. The court declined to entertain merits of reassessment in writ forum and accepted petitioner's challenge to the jurisdictional legality of the notices and order. [Paras 14]

Writ petition is maintainable to challenge lack of jurisdictional satisfaction; alternative remedies do not preclude relief against jurisdictional defect.

Final Conclusion: The petitions succeeds: the Court quashed the show cause notices dated 27.03.2023, 30.03.2023 and 13.04.2023, the order dated 25.04.2023 rejecting objections under Section 148A(d), and the notice dated 25.04.2023 under Section 148 reopening assessment for AY 2016-17, on the ground that the AO lacked valid information to form jurisdictional satisfaction and the reopening amounted to impermissible change of opinion; no costs were awarded.

Power to admit belated claims to avoid genuine hardship under Section 119(2)(b) - requirement that loss must be claimed in the original return to be eligible for carry forward - finality of assessment under Section 143(3) and its effect on belated claims - no condonation where claimant fails to demonstrate genuine hardship - habitual late filing as relevant to discretionary relief

Power to admit belated claims to avoid genuine hardship under Section 119(2)(b) - requirement that loss must be claimed in the original return to be eligible for carry forward - Whether the Board could condone delay under Section 119(2)(b) to permit carry forward of a loss which was not claimed in the original return for Assessment Year 2015-16 - HELD THAT: - The Court held that Section 119(2)(b) empowers the Board to admit belated applications or claims to avoid genuine hardship, but such power is exercisable in respect of a claim which has been belatedly made. The petitioner's return for Assessment Year 2015-16, filed belatedly on 29.03.2016, did not claim the loss arising from derivative transactions. The Court examined the return and accompanying computation and found no claim was made for the loss. Consequently, there was no belated claim before the Board to be condoned under Section 119(2)(b). The Board therefore correctly refused condonation because the statutory power addresses admission of an existing claim after time, not permitting a taxpayer to make a claim which was never presented in the return. [Paras 6, 8, 9, 11]

Application under Section 119(2)(b) rightly rejected insofar as it sought condonation for carrying forward a loss that was not claimed in the original return for Assessment Year 2015-16.

Finality of assessment under Section 143(3) and its effect on belated claims - no condonation where claimant fails to demonstrate genuine hardship - habitual late filing as relevant to discretionary relief - Whether the finality of the assessment for AY 2015-16 and the absence of genuine hardship barred the Board from allowing the belated claim - HELD THAT: - The Court noted that the assessment for Assessment Year 2015-16 under Section 143(3) had been completed on 15.12.2017 and had attained finality. The petitioner did not seek to file a revised return or take steps during assessment proceedings to claim the loss. In addition, the Board, relying on field reports, found no cogent evidence of genuine hardship; the petitioner was observed to be habitually filing returns late across several assessment years. Given the absence of a claimed loss in the original return, the finality of assessment, and the lack of any satisfactorily demonstrated genuine hardship, the discretionary power under Section 119(2)(b) could not be exercised in the petitioner's favour. The Court accepted the Board's reasoning and declined to interfere with the impugned order. [Paras 10, 12, 13, 14]

No interference with the Board's rejection: finality of assessment and absence of genuine hardship precluded condonation of the belated claim.

Final Conclusion: The petition is dismissed. The Board correctly declined to condone a belated claim for carry forward of loss for Assessment Year 2015-16 because the loss was not claimed in the original return, the assessment for that year had attained finality, and the petitioner failed to demonstrate genuine hardship; no interference with the impugned order dated 09.10.2019 is warranted.

Disallowance under section 14A of the Income Tax Act limited to exempt income - Genuineness of transactions in penny stocks - Valuation of stock-in-trade at lower market rate resulting in business loss - Appellate interference with concurrent findings of fact

Genuineness of transactions in penny stocks - Valuation of stock-in-trade at lower market rate resulting in business loss - Appellate interference with concurrent findings of fact - Deletion of the addition made by the Assessing Officer in respect of losses on penny stocks was sustainable. - HELD THAT: - The Court examined the concurrent findings of the CIT(A) and the Tribunal that the assessee had proved the genuineness of transactions in shares of Alang Industries Gases Ltd. and Kappac Pharma Ltd. by producing contract notes, ledger accounts and bank transactions showing trading on recognised online platforms. The Tribunal accepted that the assessee had no control over market prices, sold only part of the holding in one script while retaining remaining shares in subsequent year, and that closing stock valuation at a lower market rate (as stock-in-trade) legitimately gave rise to a business loss even though shares were not sold. The Assessing Officer's disallowance was held to be made without sufficient documentary evidence and contrary to the material placed on record by the assessee. Given these concurrent findings of fact, there was no basis for interference by this Court. [Paras 8, 9]

Deletion of the addition on account of losses claimed on penny stocks is affirmed and the Assessing Officer's disallowance is rejected.

Final Conclusion: The appeal is dismissed; the concurrent factual findings of the CIT(A) and the Tribunal upholding deletion of the addition on losses from penny-stock transactions are affirmed and no substantial question of law arises.

Stay of demand under Section 220(6) - pre-deposit condition - prima facie case, balance of convenience and irreparable injury - undue hardship and safeguard the interests of Revenue - CBDT Office Memorandum not to operate as an inflexible fetter - administrative review by Principal Commissioner under para 4(C) of OM

CBDT Office Memorandum not to operate as an inflexible fetter - pre-deposit condition - Whether the authorities were entitled to treat the CBDT OMs as mandating a 20% pre-deposit before entertaining applications for stay of demand - HELD THAT: - The Court held that the CBDT Office Memoranda (including the reference to 20%) do not impose an absolute or inflexible pre-condition that a fixed percentage must be deposited in every case before a stay under Section 220(6) can be considered. The OM supplies guidance as to standard practice, but the statutory discretion conferred on the assessing officer by Section 220(6) must be exercised judicially having regard to the facts of each case; the OM cannot operate as a fetter preventing the authority from considering prima facie merits and imposing a lower or higher deposit depending upon circumstances. The respondents' approach of refusing to entertain stay applications solely on the ground that 20% (or a fixed percentage) had not been deposited was therefore legally unsustainable. [Paras 15, 19]

The insistence on a fixed 20% pre-deposit as a prerequisite to entertain stay applications was held to be erroneous and untenable in law.

Prima facie case, balance of convenience and irreparable injury - undue hardship and safeguard the interests of Revenue - Whether the second respondent (AO) and the first respondent (PCIT) complied with the requirement to examine prima facie merits, undue hardship and other relevant considerations before imposing deposit conditions (including the PCIT's direction to deposit 40%) - HELD THAT: - The Court found that both authorities failed to apply the established principles for interim relief: they did not examine the prima facie merits of the petitioner's challenge, nor weigh the balance of convenience and the possibility of undue hardship against safeguarding the Revenue's interest. The PCIT went further by requiring a deposit of 40% (a more onerous condition than that imposed by the AO), without engaging with the merits or explaining why such a higher proportion was necessary to protect the Revenue. These defects rendered the impugned orders non-reasoned and unsustainable under the settled jurisprudence governing stay/waiver of pre-deposit. [Paras 16, 18]

The orders were quashed as the authorities did not address prima facie merits, undue hardship and the legitimate interest of the Revenue before fixing deposit conditions; the PCIT's imposition of a 40% deposit was unreasonable.

Administrative review by Principal Commissioner under para 4(C) of OM - stay of demand under Section 220(6) - Remedy to be afforded after quashing the impugned orders - HELD THAT: - The Court did not decide the merits of the underlying assessments. Instead, having quashed the impugned orders passed by the AO and the PCIT, it remitted the matter to the board of the AO for fresh consideration of the stay applications. The fresh exercise must be undertaken in accordance with the legal principles set out in the Court's precedents (including NASSCOM) and must address prima facie merits, likelihood of success, undue hardship and appropriate conditions to safeguard the Revenue. All substantive rights and contentions of the parties are kept open for that exercise. [Paras 19]

Matter remitted to the AO's board to re-examine the stay applications afresh in accordance with the law; merits not adjudicated and parties' rights preserved.

Final Conclusion: The impugned orders dated 22 November 2021 and 27 February 2024 are quashed. The stay applications shall be re-considered afresh by the assessing officer's board in accordance with the principles stated in the judgment (including consideration of prima facie case, balance of convenience, undue hardship and safeguarding the Revenue), and the parties' rights on the merits are left open.

Re-opening of assessment under section 148A(d) of the Income Tax Act, 1961 - Opportunity of personal hearing before re-opening - Service of notice at address registered with PAN and address in sale deed - Non-speaking approval for re-opening - Obligation to consider representation/reply before passing further orders - Administrative remand for enquiry and consideration of materials - Application of Anshul Jain precedent on agitating merits before assessing officer

Re-opening of assessment under section 148A(d) of the Income Tax Act, 1961 - Opportunity of personal hearing before re-opening - Service of notice at address registered with PAN and address in sale deed - Obligation to consider representation/reply before passing further orders - Application of Anshul Jain precedent on agitating merits before assessing officer - Writ petition seeking quashing of the re-opening order and relief of being heard prior to or in connection with re-opening. - HELD THAT: - The Court noted that notices were sent to the addresses registered with the petitioner's PAN and to the residential address in the sale deed but were returned and the order re-opening the assessment dated 31.03.2023 had already been passed. The matter, however, remains at the stage of enquiry and the petitioner has filed a reply (dated 22.07.2023) which the respondent is directed to consider. Reliance was placed on the Supreme Court's decision in Anshul Jain that grievances on merits are to be agitated before the assessing authority in re-assessment proceedings. In these circumstances the Court refrained from adjudicating the merits; instead it disposed of the writ petition with liberty to the petitioner to approach the respondent with the required materials and directed the respondent to consider the petitioner's reply and points raised, afford a personal hearing, and thereafter pass appropriate orders on merits and in accordance with law. [Paras 10, 11]

Writ petition disposed with liberty to the petitioner to approach the respondent; respondent to consider the reply dated 22.07.2023, afford personal hearing, and thereafter pass appropriate orders on merits and in accordance with law; no order as to costs.

Final Conclusion: The writ petition is disposed of by directing the assessing authority to consider the petitioner's representation/reply, afford a personal hearing and thereafter pass appropriate orders on merits and in accordance with law, with liberty to the petitioner to place materials before the authority; no costs.

Special assessment procedure in search and requisition (Sections 153A to 153D) - Assessment of income of any other person where seized material relates to third party (Section 153C) - Reopening assessments under general reassessment provision where incriminating material is absent - Procedure for issuance of notice under Section 148 and Section 148A - Non-obstante clause and overriding effect of special provisions - Assessment of 'total income' in search/requisition cases

Assessment of income of any other person where seized material relates to third party (Section 153C) - Special assessment procedure in search and requisition (Sections 153A to 153D) - Procedure for issuance of notice under Section 148 and Section 148A - Assessment of 'total income' in search/requisition cases - Validity of initiating proceedings under Section 148 where incriminating material seized during search of a third party related to the petitioner and whether proceedings ought to have been initiated under Section 153C/153A - HELD THAT: - The court held that where seized or requisitioned material recovered from a person on whom search was conducted relates to another person, the statutory scheme mandates handover of the seized material to the Assessing Officer having jurisdiction over that other person and, upon satisfaction that the material bears on determination of total income for the relevant preceding years, the AO must proceed under Section 153C and in accordance with Section 153A. The special regime in Sections 153A-153D, which commences with non-obstante language, has an overriding effect over the regular provisions and prescribes assessment of 'total income' (including returned income, undisclosed income unearthed in search, and other information) for relevant preceding years by separate orders. The explanation to the substituted Section 148 and Section 148A does not displace the operation of Sections 153A-153D where their twin pre-requisites are fulfilled. The court found on the material before it that the reasons for initiation of proceedings under Section 147/148 were based on incriminating material seized during the search of the Manihar Group which related to the petitioner; accordingly, proceedings in respect of the petitioner fall within the special procedure and could not be validly initiated by issuing notice under Section 148. The court further clarified that this does not render Section 148 wholly redundant - Section 148 remains available in cases where no incriminating material is seized or the statutory conditions for invocation of Section 153C are not satisfied - but where the twin conditions for Section 153C are met, the Department must proceed under Sections 153C/153A. [Paras 30, 31, 32, 40, 43]

The notices issued under Section 148 and the orders rejecting objections are quashed; the revenue is at liberty to proceed in accordance with law (including under Sections 153C/153A if appropriate).

Final Conclusion: Writ petitions allowed; notices issued under Section 148 and the impugned orders are quashed on the ground that the initiation of proceedings was vitiated where the incriminating material seized during search of a third party related to the petitioners and required action under Section 153C/153A; liberty granted to proceed as per law.

Rejection of books of account under section 145(3) of the Income Tax Act - best judgment assessment under section 144 of the Income Tax Act - unexplained cash credit under section 68 of the Income Tax Act - estimation of income after rejection of books - double taxation

Rejection of books of account under section 145(3) of the Income Tax Act - best judgment assessment under section 144 of the Income Tax Act - estimation of income after rejection of books - Finality and consequences of rejection of books of account under section 145(3) and the correct approach for determination of income thereafter - HELD THAT: - The Tribunal noted that the assessee did not challenge the authorities' rejection of books under section 145(3), and that decision has attained finality. Once books are rejected, the Assessing Officer's statutory recourse is to determine income by way of a best judgment assessment under section 144. Such assessment must be an honest and fair estimate having reasonable nexus to available material and circumstances of the case and not a wild guess. The AO must make an estimate in a reasonable and scientific manner, guided by the assessee's earlier results or comparable cases, and after affording opportunity of being heard. Authorities were cited to the effect that rejection of books justifies best judgment assessment and that estimates should have a reasonable nexus to material on record. The Tribunal emphasised that after rejection the AO does not obtain unfettered powers and must base his estimate on relevant data rather than arbitrary assumptions. [Paras 10, 11]

Rejection of books under section 145(3) stands final; income must be determined by best judgment assessment under section 144 in a reasonable and evidence-based manner.

Unexplained cash credit under section 68 of the Income Tax Act - rejection of books of account under section 145(3) of the Income Tax Act - double taxation - Whether cash deposits shown as cash sales during the demonetisation period could be treated as unexplained cash credits under section 68 after rejection of books - HELD THAT: - The Tribunal held that treating amounts already shown as sales in the books as unexplained cash credits under section 68 amounts to impermissible double taxation and is contrary to the statutory scheme. After rejecting books, the AO cannot concurrently treat the same receipts as unexplained credits without first adjusting the sales figure; the correct approach would be to reduce total sales by the disputed amount and then estimate taxable income on a scientific basis. The Tribunal found that the AO treated the cash deposits both as sales and as unexplained cash credits without reducing sales by the alleged unexplained credit, which is contrary to law. The Tribunal also distinguished precedents relied upon by the Revenue where facts differed, and relied on authorities holding that sales cannot be treated as unexplained cash credits in such circumstances. The Tribunal observed that the assessee's net profit ratios in adjacent years did not justify any addition on merits. [Paras 12, 13, 14]

Amounts of cash sales deposited during the demonetisation period cannot be treated as unexplained cash credits under section 68; the AO's addition is unsustainable and is deleted.

Final Conclusion: The appeal is allowed: the Tribunal upheld finality of rejection of books but directed that the AO cannot treat cash sales deposits as unexplained cash credits under section 68 and set aside the addition, directing deletion of the impugned addition for Assessment Year 2017-18.

Classification of "quicklime" - interference with appellate tribunal orders - dismissal of civil appeals - Tribunal set aside the impugned orders, confirming the classification of "quicklime" under Customs Tariff Item 2522 10 00 - Condonation of delay - HELD THAT: - The Court recorded condonation of delay and heard the parties. Having considered the matter, the Court stated that it was not inclined to interfere with the Tribunal's judgment and order [2023 (10) TMI 1260 - CESTAT MUMBAI] in the specified Custom Appeals. No further legal principle or detailed reasoning was expressed; the Court concluded that interference was unwarranted on the material before it and proceeded to dismiss the appeals. [Paras 1, 3, 4]

Delay condoned; the Supreme Court declined to interfere with the Tribunal's judgment and dismissed the civil appeals.

Final Conclusion: Delay in filing was condoned, and the appeals against the Custom Excise Service Tax Appellate Tribunal, West Zonal Bench at Mumbai's order dated 20-10-2023 were dismissed.

Summary order. Special Leave Petition dismissed; impugned judgment and order of the High Court not interfered with; pending applications, if any, disposed of.

Limitation for statutory appeals - condonation of delay in appellate proceedings - laches - finality of statutory orders - jurisdiction under Article 226

Limitation for statutory appeals - condonation of delay in appellate proceedings - laches - finality of statutory orders - jurisdiction under Article 226 - Whether the High Court should entertain a writ petition under Article 226 where the statutory first appeal was not filed within the prescribed period and the writ was filed after a long delay - HELD THAT: - The Court upheld the conclusion that the appellant's long delay in approaching the High Court (over seven years) coupled with failure to prefer the statutory first appeal within the time prescribed under the Customs Act disentitled him to relief under Article 226. Where a statute prescribes a period for filing an appeal and the statutory window is not availed, the statutory scheme of finality conferred on orders must be respected and the High Court should not override that scheme by entertaining belated collateral challenges. The Court also noted that laches and inordinate delay in invoking constitutional jurisdiction are relevant considerations and, in the facts of the case, barred interference with the appellate order. [Paras 3, 4]

Writ appeal dismissed; no interference with the Single Judge's dismissal of the writ petition

Final Conclusion: The High Court refused to exercise its Article 226 jurisdiction in view of statutory limitation, laches and the finality of the statutory order; the writ appeal is dismissed.

Classification of goods - polyhydric alcohols - specific heading over general heading - burden of proof on revenue - reclassification - expert opinion - chemically defined organic compounds - penalty under section 114A of the Customs Act, 1962

Classification of goods - polyhydric alcohols - specific heading over general heading - burden of proof on revenue - expert opinion - Whether the imported product 'Sweet Pearl P200' is classifiable under CTH 2905 4900 or is liable to be reclassified under CTH 2106 9060 - HELD THAT: - The Tribunal accepted that the Revenue challenged the appellant's declared classification and therefore carried the initial burden to disprove the appellant's case and justify reclassification. The record showed that expert analyses were obtained (EIA and Central Food Laboratory) and that CFL reported the subject goods comprised 99% Maltitol, a polyhydric alcohol/polyol. Chapter 29 covers chemically defined organic compounds and heading 2905 specifically covers polyhydric alcohols; the HSN explanatory notes and rule of interpretation prefer a specific heading over a general one. The impugned order did not analyse how the goods fitted the description of a food flavouring material under CTH 2106 nor satisfactorily rebut the chemical characterisation relied on by the appellant. Applying settled law that the department must establish the taxing category it asserts, and having found the Revenue's proposed heading inappropriate, the Tribunal upheld the classification declared by the importer under CTH 2905 4900. [Paras 6, 8, 9, 10, 11]

Classification as CTH 2905 4900 upheld; reclassification under CTH 2106 9060 set aside

Penalty under section 114A of the Customs Act, 1962 - Whether equal penalty under section 114A should be imposed on the basis of the duty demand upheld by the adjudicating authority - HELD THAT: - The Revenue sought imposition of equal penalty under section 114A consequent to confirmation of duty demand. The Tribunal, having set aside the duty demand by allowing the appellant's classification, found no basis for imposing the equal penalty and therefore dismissed the Revenue's appeal on this ground. [Paras 12]

Claim for equal penalty under section 114A dismissed as the duty demand was set aside

Final Conclusion: The appeal is allowed: the appellant's classification of 'Sweet Pearl P200' under CTH 2905 4900 is upheld and the impugned order is set aside; consequential benefits if any to flow in accordance with law. The department's cross-appeal for imposition of equal penalty under section 114A is dismissed.

Misdeclaration - confiscation of goods - penalty under Section 112 of the Customs Act, 1962 - confiscation under Section 111 - absence of mala fides / bona fide importer - revision of assessable value based on supplier's compensation

Misdeclaration - confiscation of goods - penalty under Section 112 of the Customs Act, 1962 - absence of mala fides / bona fide importer - Whether the goods were liable to confiscation and the appellant liable to penalty for misdeclaration when the excess machine was shipped by the foreign supplier by mistake and the importer had no knowledge of that mistake. - HELD THAT: - The Tribunal found on undisputed facts that the importer had ordered two pieces each of two different machines but the foreign supplier inadvertently shipped three pieces of one machine and one piece of the other. The assessable value declared by the importer exceeded the value of goods actually received. The record did not establish that the importer acted with knowledge or mala fide intention to evade duty. Applying the authorities cited (including the reasoning in Bansal Industries and related decisions), where misdeclaration results from the foreign supplier's mistake and there is no evidence of deliberate suppression or dishonest intention by the importer, confiscation and penalty are not sustainable. In view of the absence of willful misdeclaration or intent to evade duty, the Tribunal held that provisions under Section 111 and the penalty under Section 112 could not be invoked and set aside the orders of confiscation, redemption fine and penalty. [Paras 4]

Confiscation of goods, redemption fine and penalty under Section 112 set aside for want of establised mala fide misdeclaration by the importer.

Revision of assessable value based on supplier's compensation - Whether the assessable value for one machine should be revised from US$39,000 to US$38,000 on account of compensation offered by the foreign supplier. - HELD THAT: - The Tribunal recorded that the appellant had not challenged this aspect in the appeal memorandum nor pressed it in written submissions. As such, the question of revising the assessable value was not disputed before the Tribunal and therefore was not adjudicated on merits in the appeal. [Paras 5]

Revision of assessable value was not contested by the appellant in the appeal and was not decided on merits by the Tribunal.

Final Conclusion: Appeal allowed; orders of confiscation, redemption fine and penalty under Section 112 set aside. The claim for revision of assessable value was not disputed before the Tribunal and was not adjudicated on merits.

Redemption fine in lieu of confiscation - abandonment of goods under Section 23 of the Customs Act, 1962 - custody and confiscation where goods are abandoned - re-credit of duty in Advance Authorisation Scrips - appellant not to be made worse off by filing an appeal - redemption fine under Section 125 of the Customs Act, 1962

Redemption fine in lieu of confiscation - abandonment of goods under Section 23 of the Customs Act, 1962 - redemption fine under Section 125 of the Customs Act, 1962 - appellant not to be made worse off by filing an appeal - Validity of imposition of redemption fine by the Commissioner (Appeals) - HELD THAT: - The Adjudicating Authority had permitted abandonment of the consignment and recorded that no offence was committed and that redemption fine was not imposable. Where goods are abandoned under Section 23, they are taken into custody by the Central Government and there is no option or situation of redemption by the importer; consequently imposition of redemption fine under Section 125 does not arise. The Commissioner (Appeals) imposed redemption fine on the premise that confiscation and penalty had been ordered, but that misconceives the legal position when abandonment has been accepted and there is no redemption. Further, in an appeal filed by the importer the appellant cannot be placed in a worse position than under the original order. Applying those principles, the redemption fine imposed by the Commissioner (Appeals) is unjustified. [Paras 6]

Redemption fine of Rs.19 Lakhs imposed by the Commissioner (Appeals) is set aside.

Re-credit of duty in Advance Authorisation Scrips - custody and confiscation where goods are abandoned - Entitlement to re-credit of duty debited from Advance Authorisation Scrips - HELD THAT: - The appellant ordered Aluminium Alloy Ingots but received Stone Chips and abandoned the goods; nevertheless duty corresponding to Aluminium Alloy Ingots had been debited from the Advance Authorisation Scrips. The Adjudicating Authority refused re-credit; the Commissioner (Appeals) allowed re-credit but limited it to duty applicable to Stone Chips. Since the appellant did not receive the Aluminium Alloy Ingots and is not liable to pay duty for them, the appellant is entitled to re-credit of the duty that was actually debited from the Scrips and applicable to Aluminium Alloy Ingots. The tribunal modifies the impugned order to permit re-credit of the duty debited in respect of the Aluminium Alloy Ingots, while leaving undisturbed the penalty which the appellant has not contested. [Paras 7, 8]

Appellant entitled to re-credit of the duty debited from the Advance Authorisation Scrips applicable to Aluminium Alloy Ingots; the direction to re-credit only duty for Stone Chips is set aside.

Final Conclusion: The appeal is allowed: the redemption fine imposed by the Commissioner (Appeals) is set aside; the appellant is entitled to re-credit in the Advance Authorisation Scrips of the duty debited in respect of the Aluminium Alloy Ingots (the goods actually ordered but not received). The penalty previously paid and not contested remains undisturbed.

Confiscation of smuggled goods - onus on Revenue to prove smuggled nature - restricted goods not prohibited goods - notified items under Section 123 of the Customs Act, 1962 - penalty contingent on confiscation

Confiscation of smuggled goods - onus on Revenue to prove smuggled nature - notified items under Section 123 of the Customs Act, 1962 - mosquito repellents and ladies garments alleged to be of foreign origin and smuggled - HELD THAT: - The Tribunal found that the Revenue bore the burden of proving that the mosquito repellents and ladies garments were smuggled and of foreign origin. The record did not demonstrate how the Revenue established the smuggled nature of these items, and those items are not specified as notified items under Section 123 of the Customs Act, 1962. In the absence of proof of smuggling or notification, absolute confiscation could not be sustained. [Paras 9]

The confiscation of the mosquito repellents and ladies garments set aside; goods not liable for confiscation.

Restricted goods not prohibited goods - onus on Revenue to prove smuggled nature - confiscation of smuggled goods - green coloured refrigerant gas cylinders (HCFC gas) alleged to be restricted and of foreign manufacture - HELD THAT: - Although the HCFC gas cylinders were treated as restricted items, they were not prohibited. The Tribunal held that mere assertion that the goods are manufactured only in a foreign country (China) is insufficient to prove smuggling. The Revenue therefore failed to discharge the onus of proving that the HCFC gas was smuggled into India; mere foreign origin or manufacture could not alone justify absolute confiscation. [Paras 10]

The confiscation of the HCFC gas cylinders set aside; goods not liable for confiscation.

Penalty contingent on confiscation - confiscation of smuggled goods - penalties imposed on the appellants consequent to confiscation of the goods - HELD THAT: - The Tribunal concluded that confiscation could not be sustained for any of the seized items. As the foundational finding of confiscation was set aside, the imposition of penalties could not stand. The absence of a finding of smuggling or lawful basis for confiscation removes the basis for penal sanctions. [Paras 11]

Penalties imposed on the appellants set aside.

Final Conclusion: The impugned order of absolute confiscation and the penalties imposed thereon are set aside; the appeals are allowed with consequential relief.

Knowledge requirement for imposition of penalty - due diligence of Custom House Agent - Custom House Agents Licensing Regulation (CHALR) obligation to verify IEC and antecedents - abatement in export of prohibited goods - penalty under Section 114(i) of the Customs Act, 1962

Knowledge requirement for imposition of penalty - due diligence of Custom House Agent - Custom House Agents Licensing Regulation (CHALR) obligation to verify IEC and antecedents - penalty under Section 114(i) of the Customs Act, 1962 - Whether penalty imposed on the Custom House Agent (CHA) G. Seenivasan under Section 114(i) is justified where investigation did not establish knowledge of concealment of prohibited drugs but showed alleged failure to exercise due diligence under CHALR - HELD THAT: - The Tribunal noted that investigation did not disclose any evidence establishing that the CHA had actual knowledge of the concealment of contraband (as recorded from the impugned order reproduced at para-83). The adjudicating authority had found that the CHA failed to exercise mandatory due diligence under Regulation 13(o) of CHALR by not verifying antecedents and correctness of the exporter's IEC, and that signing of documents in blank and delegating obligations enabled misuse. The Tribunal accepted that while there was non-compliance with licensing obligations and that proceedings under the regulations had resulted in revocation of the licence, the absence of proof of knowledge or active involvement meant imposition of penalty under Section 114(i) (criminal/penal provision) was not justified. The Tribunal relied on precedent where penalties were set aside in the absence of active involvement or knowledge of the CHA, and concluded that regulatory sanction (licence revocation) having been imposed, the penal levy under Section 114(i) was excessive and unsustainable in the facts of the case. [Paras 12, 13, 14, 20]

Penalty of Rs.1,00,000 imposed on G. Seenivasan under Section 114(i) is set aside.

Knowledge requirement for imposition of penalty - abettment in export of prohibited goods - penalty under Section 114(i) of the Customs Act, 1962 - Whether penalty imposed on Shri S. Murugaram under Section 114(i) is sustainable where he accepted cartons and documents from a person who represented himself as the exporter but there was no proof that Murugaram knew contraband was concealed - HELD THAT: - The Tribunal recorded that Murugaram, a 'G' card holder, received the cartons and export documents from Shri V. Radhakrishnan who represented that he was the owner of the exporting firm. The investigation did not establish any positive act by Murugaram showing knowledge of concealment or active connivance beyond accepting goods and documents from Radhakrishnan. In light of the absence of evidence of knowledge or active role, and consistent with authorities where penalties were quashed where no active involvement was proved, the Tribunal concluded that the penalty imposed under Section 114(i) could not be sustained. [Paras 15, 20]

Penalty of Rs.50,000 imposed on S. Murugaram under Section 114(i) is set aside.

Final Conclusion: Both appeals are allowed: the penalty of Rs.1,00,000 on the Custom House Agent G. Seenivasan and the penalty of Rs.50,000 on S. Murugaram imposed under Section 114(i) of the Customs Act, 1962 are set aside; consequential relief, if any, to follow.

Classification of goods - automatic data processing (ADP) machines vs toys - onus of proof on the Revenue in classification disputes - application of Chapter Note 5A and Note 5E of Chapter 84 - General Rules for Interpretation of the Import Tariff - rule 1 and rule 3 - principal function test for composite machines - BIS registration and MeitY technical opinion

Onus of proof on the Revenue in classification disputes - Whether the Revenue discharged the burden of proof to justify re classification of the imported goods - HELD THAT: - The Tribunal applied settled precedent that the burden of establishing that goods fall under a tariff item different from that claimed by the importer lies on the Revenue. The adjudicating authority declined the claimed classification without leading evidence to discharge that onus. The impugned order therefore failed the mandatory test of proof required from Revenue in classification disputes and its findings are placed in serious jeopardy for want of requisite evidence. [Paras 5]

The Revenue did not discharge the burden of proof; the impugned findings are unsustainable on that ground.

Classification of goods - automatic data processing (ADP) machines vs toys - application of Chapter Note 5A and Note 5E of Chapter 84 - General Rules for Interpretation of the Import Tariff - rule 1 and rule 3 - principal function test for composite machines - BIS registration and MeitY technical opinion - Appropriate classification of the impugned MIKO II imports - whether under heading 8471 as ADP machines or under heading 9503 as toys - HELD THAT: - The Tribunal examined the features of the imported goods, the absence of any finding in the impugned order negativing conformity with the essential requisites of tariff item 8471 4190, and the lack of authoritative guidance to treat the product as a 'toy' for chapter 95 purposes. It found the adjudicating authority relied on conjecture, visual appearance and prior declarations of earlier models without applying the General Rules for Interpretation properly or discharging the requirement to demonstrate inapplicability of the claimed heading. The authority's reliance on chapter note 5(E) to exclude the product from chapter 84 was not shown to be tenable on the material before it. The Tribunal also noted that technical developments, BIS registration and MeitY opinion were relevant to the assessment and that the product's electronic processing capabilities placed it within the ambit of the claimed heading absent contrary proof. Having regard to the absence of findings that the goods lack the essentials of the claimed tariff item and the failure to justify preferring heading 9503 by application of the Rules, the claimed classification must prevail. [Paras 11, 13, 16, 17]

The classification claimed by the appellant under heading 8471 is acceptable; the impugned classification under heading 9503 is set aside and the appeal is allowed.

Final Conclusion: The appeal is allowed: the adjudicating order re classifying the imported MIKO II as toys under heading 9503 is set aside because the Revenue failed to discharge the burden of proof and the impugned order did not properly apply the Chapter 84 notes or the General Rules for Interpretation; the claimed classification under heading 8471 is retained.

Customs valuation of imported goods - related party transaction - payment of duty under protest is not acceptance - requirement of a speaking order and disclosure of basis for enhancement - reconsideration/remand for fresh adjudication in light of contemporaneous imports

Customs valuation of imported goods - related party transaction - reconsideration/remand for fresh adjudication in light of contemporaneous imports - Enhancement of declared value by the assessing authority and the correctness of the re-determined value - HELD THAT: - The Tribunal recorded that the overseas supplier is a related party and that the assessing authority re-determined the value at a figure significantly higher than the declared price. The authorities below did not explain the basis on which the enhancement was arrived at, nor did they consider the contemporaneous import price details furnished by the appellant. For these reasons the Tribunal found that the record does not disclose a reasoned conclusion sustaining the enhanced valuation. The matter was therefore remitted to the adjudicating authority for fresh consideration of valuation, permitting the appellant to place on record the contemporaneous import evidence and requiring the authority to examine and record reasons for any adjustment. [Paras 5]

Matter remitted to the adjudicating authority for fresh adjudication of valuation, taking into account contemporaneous imports and recording the basis for any enhancement.

Payment of duty under protest is not acceptance - requirement of a speaking order and disclosure of basis for enhancement - Whether payment of duty under protest amounted to acceptance of the enhanced valuation and whether the lower authorities properly treated it as acceptance - HELD THAT: - The Tribunal noted the appellant had paid duty under protest and had waived the show cause notice and personal hearing only to seek assessment. The Commissioner (Appeals) had recorded that the appellant accepted the enhancement by paying duty, but the Tribunal observed there was no detailed discussion justifying the enhancement and that payment under protest cannot be equated with acceptance where the basis for enhancement has not been disclosed or reasoned. Consequently, the Tribunal found the lower authorities erred in treating the payment as acceptance. [Paras 5]

Finding of acceptance by payment in the impugned order set aside; payment under protest does not constitute acceptance absent a reasoned basis for enhancement.

Final Conclusion: Impugned order set aside and appeals allowed by remand: valuation enhancement quashed for want of reasoned basis and failure to consider contemporaneous import evidence; adjudicating authority directed to re-decide valuation afresh after giving the appellant opportunity to furnish relevant material.

Discharge of accused - framing of charge - scope of charge-stage inquiry - role of chargesheet and documents furnished under Section 207 CrPC - reliance on findings of civil/quasi-judicial forum (NCLT) in criminal prosecution - preclusive effect of adjudication in company proceedings on criminal liability

Discharge of accused - framing of charge - role of chargesheet and documents furnished under Section 207 CrPC - Validity of the Trial Court's order discharging respondents no. 2 to 4 at the stage of charge and whether that order should be set aside. - HELD THAT: - The High Court found that the Trial Court, in discharging the accused, failed to take into account material facts and documentary evidence recorded in the chargesheet and other material placed on record by the Investigating Officer. The Trial Court had relied primarily on the NCLT's adjudicatory findings and treated those findings as decisive for the criminal prosecution without applying the proper scope of inquiry at the charge stage. The High Court noted the settled law limiting the scope of defence material at the framing stage and recalled that the accused cannot convert the charge-stage inquiry into a mini-trial; reliance on materials outside the police report and documents furnished under Section 207 CrPC is impermissible. The Court also observed that the NCLT's findings were not placed before the Trial Court as part of the chargesheet material and that the Trial Court did not evaluate the investigative material reflected in the chargesheet which contained allegations, admissions and investigative findings pointing to possible forgery, misuse of digital signatures and concealment of documents. The High Court further observed that the Satish Mehra decision relied upon by the Trial Court has been superseded by later Supreme Court authority disallowing broad reception of accused-produced material at the framing stage, and therefore the Trial Court's approach was erroneous. The High Court declined to express any opinion on merits and confined itself to the correctness of the charge-stage exercise carried out by the Trial Court. [Paras 18, 19, 20, 21]

Impugned order dated 17.08.2019 discharging respondents no. 2 to 4 is set aside and the matter is remanded to the Trial Court for fresh consideration on the point of charge after giving parties opportunity to be heard.

Final Conclusion: Petition allowed; the Trial Court's discharge order is set aside and the matter remitted for fresh charge-stage consideration, with liberty to the Trial Court to examine only the prosecution record and documents properly before it and to hear the parties; no expression of opinion on merits.

Contravention of Section 3(3) and Section 3(1) of the Competition Act - Cartelisation - Bid rigging - Exchange of information between competitors - Receipt of information versus exchange of information - Admissions and confessions of company employees - Holistic evaluation of evidence in competition proceedings - Strict rules of evidence not applicable in competition proceedings - Attempt to rig a bid as sufficient to attract Section 3

Cartelisation - Bid rigging - Contravention of Section 3(3) and Section 3(1) of the Competition Act - Appellant was a participant in the cartel and liable for contravention of Section 3(3) read with Section 3(1) of the Competition Act. - HELD THAT: - The Tribunal accepted the Commission's finding that contemporaneous admissions by various cartel members, contemporaneous emails allocating tender quantities and pricing, and the confessions of appellant's managerial personnel cumulatively establish the appellant's participation in cartel activity. The internal emails and spreadsheets showing allocation of quantities and coordinated pricing, together with oral confirmations by multiple parties, were treated as probative of an agreement to rig bids. The fact that some witnesses exonerated the appellant did not outweigh the consistent evidence implicating the appellant, including statements by the appellant's own employees that they received and acted upon the communications. Given this matrix of evidence, the appellant's contention that it merely submitted independent bids was rejected and liability under Section 3(3) read with Section 3(1) was upheld. [Paras 11, 13, 14, 15, 19]

Appellant held to be part of the cartel and guilty of contravention of Section 3(3) read with Section 3(1).

Admissions and confessions of company employees - Receipt of information versus exchange of information - Exchange of information between competitors - Statements/confessions of the appellant's employees and receipt of cartel communications were sufficient to attribute cartel participation to the company; mere receipt of information without overt sending was not a defence where evidence shows continued reception and access consistent with participation. - HELD THAT: - The Tribunal rejected the submission that an employee's statements were unauthorised and therefore non-binding, observing that managerial-level admissions and contemporaneous conduct (receipt and use of emails, passing messages to seniors, and lack of protest) indicated corporate knowledge and involvement. The court held that prolonged receipt of coordinated communications without objection, and evidence that parties had access to the cartel e-mail account, supported an inference of mutuality and meeting of minds. Consequently, the narrow pleading that the appellant only received and did not exchange information was insufficient to discharge its statutory liability. [Paras 11, 12, 21]

Employee confessions and prolonged receipt of cartel communications were held sufficient to attribute participation to the company; mere receipt did not absolve liability.

Holistic evaluation of evidence in competition proceedings - Strict rules of evidence not applicable in competition proceedings - Attempt to rig a bid as sufficient to attract Section 3 - Competition proceedings permit a holistic appraisal of oral and documentary material and are not constrained by strict rules of evidence; an attempt to rig bids falls within the definition of cartelisation. - HELD THAT: - Relying on precedent and statutory scheme, the Tribunal reiterated that proceedings under the Competition Act call for holistic scrutiny of oral statements and documents and do not demand adherence to strict evidentiary formalities applicable in other fora. The Tribunal accepted that consistent oral confessions and contemporaneous documentary records, taken together, can establish anti-competitive conduct. Further, the Tribunal emphasised that an attempt to rig bids is sufficient to attract the prohibition on cartelisation, so that evidence of pre-award coordination and allocation of quantities was determinative even if full implementation varied. [Paras 19, 20, 21]

Holistic assessment of oral and documentary evidence is permissible and an attempt to rig bids suffices to establish contravention under Section 3.

Final Conclusion: The appeal and all pending applications are dismissed; the Tribunal upheld the Commission's finding of cartelisation and liability of the appellant under Section 3(3) read with Section 3(1), applying a holistic evidentiary approach and treating employee confessions and sustained receipt of cartel communications as sufficient proof of participation.

Operational creditor and corporate debtor relationship - operational debt - acknowledgement of debt by undertaking - pre-existing dispute - Section 9 CIRP initiation conditions

Operational creditor and corporate debtor relationship - operational debt - acknowledgement of debt by undertaking - Existence of relationship of Operational Creditor and Corporate Debtor between the parties - HELD THAT: - The Appellants were found to have rendered services of issuing SOTO tickets on referral instructions and using credit card details provided by the Respondent. The record contains multiple e-mails from the Respondent undertaking that "if any debit note comes against those tickets then we will be responsible". The tribunal held that such unconditional undertakings operate as an acknowledgment of liability, and the facts therefore establish an operational debt and the relationship of operational creditor (Appellant) and corporate debtor (Respondent). The Respondent's contention that it only acted as a referral agent and did not receive goods or services was rejected in light of the contemporaneous undertakings and the parties' course of dealings. [Paras 21, 22]

There is a relationship of operational creditor and corporate debtor; the Appellant is an operational creditor and a debt in respect of services rendered arose by virtue of the Respondent's undertakings.

Pre-existing dispute - Section 9 CIRP initiation conditions - Whether a pre-existing dispute between the parties prevented initiation of CIRP under Section 9 - HELD THAT: - Applying the conditions in Mobilox Innovations (as reiterated in the judgment), the Adjudicating Authority and the Appellate Tribunal examined whether the Respondent had raised a plausible dispute prior to the Section 9 petition. The record shows replies to the Section 8 demand, police complaints and correspondence disputing liability, which the Adjudicating Authority found to be a bona fide pre-existing dispute and not a spurious or illusory defence. Given that a dispute was shown to exist on the record before the Section 9 filing, the Appellant's petition under Section 9 could not be admitted. [Paras 23, 24, 25]

A pre-existing dispute existed on the record prior to the Section 9 application; the Section 9 petition was rightly rejected for want of an undisputed operational debt.

Final Conclusion: The Tribunal affirmed that the Appellant was an operational creditor and a debt arose by virtue of the Respondent's unconditional undertakings, but because a bona fide pre-existing dispute was on the record before filing under Section 9, the Adjudicating Authority rightly dismissed the Section 9 petition; the appeal is dismissed.

Anticipatory bail - twin test under Section 45 of the PMLA - continuing activity under Section 3 of the PMLA - ex post facto amendment and temporal application of scheduled offences - director's liability for acts during tenure - parity in grant of bail - cooperation with investigation versus non-appearance before the trial court

Anticipatory bail - twin test under Section 45 of the PMLA - Grant of anticipatory bail to an accused prosecuted under the PMLA in view of the embargo and the requirement to satisfy the twin test in Section 45 of the PMLA. - HELD THAT: - The Court applied the statutory regime under the PMLA and the jurisprudence cited to conclude that Section 45 places an embargo on grant of bail under Sections 438 and 439 Cr.P.C. The accused must prima facie establish that there are reasonable grounds for believing he is not guilty and that he is not likely to commit an offence while on bail. On perusal of the complaint and the material, the Court found a prima facie case of money laundering against the applicant and was not satisfied that there were reasonable grounds to believe the applicant was not guilty. Having regard to the nature of the allegations, the statutory requirement of Section 45 and the precedents applying its rigours, the Court held that the twin test was not fulfilled and refused anticipatory bail. [Paras 25, 26, 30, 31]

Application for anticipatory bail dismissed as Section 45's twin test is not satisfied.

Ex post facto amendment and temporal application of scheduled offences - continuing activity under Section 3 of the PMLA - Whether inclusion of Section 447 of the Companies Act, 2013 in the schedule to the PMLA by amendment dated 19.4.2018 precludes prosecution for alleged transactions of 2008. - HELD THAT: - The Court examined the complaint and the statutory scheme. It accepted that Section 447 was inserted in the schedule to the PMLA by notification in 2018, but found the prosecution rested on continuing acts alleged to constitute proceeds of crime and recurring loss to shareholders traceable to the Joint Venture and supplementary agreements. Having regard to Explanation (ii) to Section 3 (continuing activity) and the factual averments of ongoing benefit/possession and outstanding loans arising from the agreements, the Court held the contention that prosecution is barred as ex post facto is unsustainable on the material before it. [Paras 15, 18, 24]

Argument based on post facto insertion of Section 447 into the PMLA schedule rejected; prosecution not barred on that ground.

Parity in grant of bail - proviso to Section 45 of the PMLA - Whether the applicant is entitled to parity with a co accused who was granted anticipatory bail. - HELD THAT: - The Court considered the order whereby a co accused was granted anticipatory bail and noted that that bail was allowed in the exercise of the proviso to Section 45 on medical/age infirmity and after examination by a medical board; the co accused had appeared before the investigating agency on two occasions. The present applicant has not placed comparable medical or factual material before the Court and had failed to appear before the trial court despite bailable warrants. In the absence of comparable grounds, parity could not be invoked as of right under the PMLA framework. [Paras 27, 28]

Parity with the co accused's grant of bail rejected as the factual and medical bases differ materially.

Cooperation with investigation versus non-appearance before the trial court - Whether the applicant's single appearance before the investigating agency and claimed cooperation disentitle the trial court's consideration that he wilfully avoided appearance and justify anticipatory bail. - HELD THAT: - The Court noted the investigative record shows the applicant appeared before the investigating agency on one date and his statement was recorded. However, the trial court had issued bailable warrants which the applicant did not comply with and ultimately issued arrest warrants for non appearance. The Court held that a solitary appearance during investigation does not nullify the effect of non appearance before the trial court and does not satisfy the requirements for anticipatory bail under the PMLA where the statutory test demands stronger prima facie satisfaction. [Paras 21, 22, 29]

Applicant's limited cooperation insufficient to overcome non appearance before the trial court; not a ground for anticipatory bail.

Final Conclusion: The application for anticipatory bail under Section 438 Cr.P.C. is dismissed: the Court found a prima facie case of money laundering, held the applicant failed to satisfy the twin test under Section 45 of the PMLA, rejected the ex post facto challenge to scheduling and declined parity with the co accused or reliance on limited cooperation with investigation.

Anticipatory bail - proviso to Section 45 of the PMLA - sick or infirm - exercise of judicial discretion under the PMLA - cooperation with investigation - attachment of properties - alienation of property - periodic medical evaluation

Anticipatory bail - proviso to Section 45 of the PMLA - sick or infirm - periodic medical evaluation - Entitlement to anticipatory bail under the proviso to Section 45 of the PMLA on account of age and medical infirmity - HELD THAT: - The Court examined the Medical Board report of AIIMS, Bhopal which found the applicant (aged about 83 years) suffering from Ischemic Heart Disease with preserved EF, hypothyroidism controlled on medication, bilateral knee osteoarthritis and lumbar spondylosis; the Board concluded morbidities are under control with oral medication but recommended periodic evaluation. The proviso to Section 45 permits release on bail of a person who is "sick or infirm" if the Special Court so directs. The High Court held that, on the basis of the expert medical examination and the applicant's advanced age, it cannot be said that incarceration is appropriate and that these factors constitute exceptional circumstances warranting grant of anticipatory bail. The Court clarified that precedents emphasising cautious exercise of discretion under Section 45 do not operate as an absolute bar to relief; judicial discretion must be exercised taking into account the individual's health, the nature of involvement and the evidence. Applying that principle to the present facts, the Court concluded the medical condition and age justify enlargement on anticipatory bail under the proviso. [Paras 8, 9, 12, 13, 15]

Grant of anticipatory bail to the applicant under the proviso to Section 45 of the PMLA on the grounds of advanced age and medical infirmity, subject to conditions.

Cooperation with investigation - attachment of properties - alienation of property - exercise of judicial discretion under the PMLA - Effect of the applicant's conduct (appearance to summons, alleged alienation) and attachment of properties on grant of anticipatory bail and the conditions to be imposed - HELD THAT: - The Court reviewed the complaint and relevant tables showing summons issued on multiple dates and that the applicant appeared on two occasions (5.9.2023 and 27.10.2023). The sale transactions relied upon by the prosecution occurred on 7.8.2023, prior to the issuance of the first summons on 19.8.2023; the complaint was filed on 8.11.2023 and attachment of properties alleged to be connected with the crime was ordered on 1.11.2023. In this factual matrix the Court found that the applicant's limited non-appearance on some summonses (attributed to illness), his subsequent appearances, and the existing attachment mitigate the prosecution's contention that incarceration is necessary. Nevertheless, the Court imposed conditions to protect investigatory and prosecutorial interests: furnishing personal bond with surety, prohibition on further alienation of attached or involved properties, surrender of passport and no departure from India without court permission, and compliance with conditions under Section 438(2) Cr.P.C. [Paras 16, 17, 18, 19, 20]

Despite allegations of large-scale proceeds and prior alienation, anticipatory bail was granted subject to bond, restrictions on alienation, surrender of passport, and other standard conditions to safeguard the investigation and trial.

Final Conclusion: The High Court allowed the applicant's anticipatory bail application under the proviso to Section 45 of the PMLA in view of his advanced age and medical infirmity, while safeguarding prosecutorial interests by imposing bond, no-alienation and passport-surrender conditions and directions to comply with Section 438(2) Cr.P.C.

Classification of construction activity as Works Contract Service versus Construction/Commercial Complex Service - Prospective operation of a tax levy - Levy of service tax under works contract only from 01.07.2010 - Penalty under Sections 76 & 77 of the Finance Act, 1994 - Exercise of Section 80 of the Finance Act, 2012 for waiver of penalties

Classification of construction activity as Works Contract Service versus Construction/Commercial Complex Service - Levy of service tax under works contract only from 01.07.2010 - Prospective operation of a tax levy - Demand of service tax in respect of Construction Service/Commercial Complex Service for the period April 2009 to September 2009 - HELD THAT: - The Tribunal applied the ratio of the Apex Court in Larsen & Toubro as followed by the Principal Bench in Krishna Homes and held that agreements between builders/promoters and buyers for construction of residential units are to be treated as works contracts but that the charging provision bringing such works contracts within taxable service was introduced only w.e.f. 01.07.2010. Consequently, service tax under Works Contract Service could not be levied for periods prior to 01.07.2010; the proper characterisation for the period in dispute is by reference to CCS/CRCS as applicable, and the demand confirmed for April 2009 to September 2009 cannot survive. The Tribunal set aside the impugned orders insofar as they related to CCS and CRCS and allowed the appeals on this ground. [Paras 7, 8]

Impugned demand in respect of CS/CCS for April 2009 to September 2009 set aside; appeals allowed on this ground.

Penalty under Sections 76 & 77 of the Finance Act, 1994 - Exercise of Section 80 of the Finance Act, 2012 for waiver of penalties - Sustainability of penalties imposed under Sections 76 & 77 in respect of renting of immovable property service (RIPS) for September 2008 to September 2009 - HELD THAT: - The Tribunal observed that the liability to service tax on renting of immovable property involved an interpretation on which the Delhi High Court had held no liability and that legislative amendment was subsequently made, with the ultimate question still pending before the Apex Court. In view of these circumstances the Tribunal found it appropriate to invoke Section 80 of the Finance Act, 2012 and set aside the penalties. The penalty confirmations in the impugned orders were therefore held not sustainable and were quashed. [Paras 6, 8, 9]

Penalties imposed under Sections 76 & 77 set aside; appeals allowed to that extent.

Final Conclusion: The impugned Orders-in-Original are set aside and the appeals are allowed: (i) demands confirmed for CS/CCS/CRCS for April 2009 to September 2009 are quashed as works contract levy arose only from 01.07.2010; and (ii) penalties under Sections 76 & 77 in respect of RIPS are set aside by exercise of Section 80, with consequential benefits as per law.

Point of Taxation Rules, 2011 - determination of point of taxation - advance receipt as point of taxation - continuous supply and completion of event - reconciliation of receipts with invoices/Balance Sheet/Form 26AS/ST-3 - payment of service tax with interest for delayed payment - penalty for suppression with intent to evade - remand for de novo adjudication

Point of Taxation Rules, 2011 - determination of point of taxation - reconciliation of receipts with invoices/Balance Sheet/Form 26AS/ST-3 - continuous supply and completion of event - Whether service tax liability was rightly quantified on the basis of alleged non issuance of invoices/ non raising of bills and whether the matter required re conciliation and fresh adjudication - HELD THAT: - The Tribunal examined Rule 3 of the Point of Taxation Rules, 2011 and noted that the rule fixes the point of taxation either at issuance of invoice, on receipt of advance, or on completion of an event in a continuous supply. The adjudicating authorities relied upon data retrieved from the appellant's computer and statements admitting non issuance of invoices in several cases and non issuance even where advances were received. However, the Tribunal observed that no thorough reconciliation was undertaken to correlate advances, stage wise receipts and final invoices/balance sheet/ST 3/Form 26AS to determine whether tax has in fact been paid against the entire contractual value. Because the quantification of any shortfall turns on such reconciliation and on application of Rule 3 to the contractual stage wise payment structure, the Tribunal found that the matter cannot be finally determined on the record before it and requires fresh adjudication de novo by the Original Adjudicating Authority after making specific findings on reconciliation and application of Rule 3. [Paras 4, 5]

Remitted to the Original Adjudicating Authority for de novo adjudication with directions to undertake reconciliation and record specific findings under Rule 3 of the Point of Taxation Rules, 2011.

Payment of service tax with interest for delayed payment - advance receipt as point of taxation - Whether interest is payable where service tax becomes due earlier under Point of Taxation Rules but is paid belatedly - HELD THAT: - The Tribunal accepted the legal proposition, on the authority of precedents, that where service tax is due at an earlier date as determined under the Point of Taxation Rules but is paid later, interest for the period of delay is payable. The Tribunal noted that the Point of Taxation Rules determine the time of payment and that delay in payment attracts interest under the statutory provisions governing interest for delayed payment of service tax. Although the Tribunal did not quantify any interest liability, it held that interest can be legitimately claimed for delayed payment and that this aspect requires examination in the remitted adjudication. [Paras 4]

Legal principle that interest is payable on belated payment of service tax accepted; interest liability to be examined and determined by the Original Adjudicating Authority in the de novo proceedings.

Penalty for suppression with intent to evade - reconciliation of receipts with invoices/Balance Sheet/Form 26AS/ST-3 - Whether penalties imposed for suppression and for non deposit of service tax are sustainable without fresh adjudication and reconciliation - HELD THAT: - The Tribunal noted that penalties under provisions for suppression and for non deposit were imposed by the lower authorities on findings of willful suppression and non issuance of invoices. Given that the quantification of taxable receipts and whether tax had actually been paid against the claimed receipts depend on a careful reconciliation and application of the Point of Taxation Rules, the Tribunal held that the correctness and sustainability of penalty findings could not be finally determined on the material then before it. Consequently, the imposition of penalties requires fresh adjudication in the remitted proceedings after the authority records specific findings on whether there was short/non payment and whether any suppression was deliberate. [Paras 4, 5]

Penalty findings not finally upheld or reversed; matter remitted for fresh adjudication of penalty issues after reconciliation and recording of specific findings.

Final Conclusion: The appeal is allowed in part by remitting the matter to the Original Adjudicating Authority for de novo adjudication within three months to undertake reconciliation of receipts, invoices and returns, apply Rule 3 of the Point of Taxation Rules, 2011, determine any shortfall and interest for delayed payment, and thereafter decide the question of penalties while affording opportunity of hearing.

Cenvat credit admissibility despite non-compliance with ISD registration formalities - procedural irregularity versus substantial compliance - Input Service Distributor registration requirement - validity of ISD invoice/challan for availing Cenvat credit - penalty and interest not leviable where credit is held admissible

Cenvat credit admissibility despite non-compliance with ISD registration formalities - procedural irregularity versus substantial compliance - Input Service Distributor registration requirement - Whether Cenvat credit availed against documents issued by the registered office prior to obtaining Input Service Distributor registration and without requisite ISD particulars can be denied and recovery with interest and penalty sustained. - HELD THAT: - The Tribunal examined the claim that credit was disallowable solely because the head office had not followed the ISD procedure and had issued documents before obtaining Input Service Distributor registration and without the particulars required under Rule 4A(2). The Bench noted there was no dispute as to receipt or use of services, original documents were produced, and the appellant operated a single unit so that distribution across units was not in issue. Applying principle that mere procedural irregularities or technical non-compliance cannot defeat substantive entitlement where there is substantial compliance and records, the Tribunal relied on the Gujarat High Court decision in Commissioner of Central Excise v. Dashion Ltd. and the CBIC Circular accepting that decision, as well as its own earlier decision in Berger Paints India Ltd. which held non-registration of ISD is only a procedural irregularity and does not justify denial of Cenvat credit when necessary records are maintained. On that basis the Tribunal held the adjudicating authority erred in denying credit and in sustaining recovery, interest and penalty, since credit was admissible and therefore interest and penalty could not be imposed. [Paras 4, 5, 6, 7, 8]

The confirmed demand, interest and penalty were set aside and the appeal allowed; credit availed was held admissible despite procedural non-compliance by the ISD.

Final Conclusion: The Tribunal allowed the appeal, holding that denial of Cenvat credit on the sole ground of non-compliance with ISD registration/formalities was unsustainable where services were received, records produced and there was substantial compliance; consequential demand, interest and penalty were set aside.

Chargeability of business auxiliary services to service tax - self-assessment and estoppel against change of stance - liability for interest and late fee for delayed ST-3 returns - imposition of penalties for deliberate non-payment of service tax

Chargeability of business auxiliary services to service tax - self-assessment and estoppel against change of stance - Activities of the appellant under the multi level marketing scheme were exigible to service tax as business auxiliary services and the appellant cannot repudiate that self-assessment. - HELD THAT: - The appellant had obtained registration under the head of business auxiliary services, declared the taxable value and service tax payable in ST-3 returns for April 2011 to March 2012 and thus treated the receipts as chargeable to service tax. The Commissioner (Appeals) relied on Tribunal precedent to hold that commissions/consideration received in the multi level marketing scheme are exigible to service tax. The Tribunal before us noted that there was no doubt in the minds of the appellant or officers that the activities were taxable, and it is not open to the appellant to now contend that those activities were not services when the appellant had self-assessed to the contrary. [Paras 11, 12]

Demand for service tax in respect of the activities declared as business auxiliary services is confirmed.

Liability for interest and late fee for delayed ST-3 returns - imposition of penalties for deliberate non-payment of service tax - Interest, late fee and penalties imposed on the appellant for delayed filing, non-payment of service tax and deliberate disregard of law are sustainable. - HELD THAT: - Records showed delayed filing of ST-3 returns and non-payment of the service tax and applicable late fee. The Assistant Commissioner confirmed demand of service tax with interest, late fee and imposed penalties; the Commissioner (Appeals) upheld those findings after noting the appellant's failure to pay despite registration, declarations in returns and issuance of SCN. The Tribunal found these conclusions to be correct and proper, treating the conduct as deliberate disregard for law justifying penalties. [Paras 13, 14]

Confirmation of interest, late fee and imposition of penalties is upheld.

Final Conclusion: The impugned order upholding the confirmation of service tax demand, interest, late fee and penalties is affirmed and the appeal is dismissed.

Eligibility for Cenvat credit under pre-GST law - Transitional credit under Section 140 of the CGST Act, 2017 - Availability of refund for CVD/BCD paid after the appointed day - Registration under Central Excise Act, 1944 as condition for claiming Cenvat credit - Limitation for refund under Section 11B of the Central Excise Act, 1944

Eligibility for Cenvat credit under pre-GST law - Transitional credit under Section 140 of the CGST Act, 2017 - Registration under Central Excise Act, 1944 as condition for claiming Cenvat credit - Availability of refund for CVD/BCD paid after the appointed day - Claim for refund of CVD/BCD and Cenvat credit paid after the appointed day is not admissible under the transitional provisions. - HELD THAT: - The Tribunal found as admitted facts that the appellant had imported capital goods in 2010 under an EPCG authorization, failed to fulfil the export obligation and consequently paid BCD and CVD only on 28.06.2019, i.e. after the appointed day (01.07.2012). The transitional provisions permit transfer of credit only if the assessee was eligible for such credit under the existing law on the appointed day and had transferred it to the electronic ledger. Since the appellant was not registered under the Central Excise Act, 1944 and had not been eligible for cenvat credit on the appointed day, the duty paid post-appointed day cannot be treated as credit eligible under Section 140/142 of the CGST Act or be refunded as cenvat credit. The Tribunal applied precedent to conclude that payment of duty after introduction of the CGST Act does not create entitlement under the transitional scheme, and that conditions attaching to conditional imports under Advance Authorization preclude conferring normal import credit where the export obligation was not met. [Paras 10, 11]

The refund claim on account of CVD/BCD paid after the appointed day is not admissible under the transitional provisions; the appellant was not eligible for cenvat credit under the pre-GST law.

Limitation for refund under Section 11B of the Central Excise Act, 1944 - The refund claim filed under Section 11B of the Central Excise Act, 1944 is barred by limitation. - HELD THAT: - The claim was filed under Section 11B where the prescribed period is one year from the relevant date. The imports related to 2010 and the duties were paid in 2019; the refund claim was filed on 28.06.2021, thus beyond the statutory period. The appellant's reliance on the Supreme Court order excluding limitation from 15.03.2020 to 28.02.2022 was rejected because the Tribunal held that the benefit could not be extended to the present refund which was filed online and in any event the claim was time-barred under the provisions applicable to Section 11B. [Paras 12]

The refund claim is time-barred under Section 11B and accordingly not maintainable on limitation grounds.

Final Conclusion: The appeal is dismissed; the refund claim for CVD/BCD and the cenvat credit thereon is rejected as not admissible under the transitional provisions and in any event barred by limitation under Section 11B of the Central Excise Act, 1944.

Relevancy of statements under Section 9D of Central Excise Rules - Examination in-chief and cross-examination of witnesses - Reliability of seized documents and collection books as evidence - Clandestine manufacture and clearance of excisable goods - Remand for de novo adjudication

Relevancy of statements under Section 9D of Central Excise Rules - Examination in-chief and cross-examination of witnesses - Reliability of seized documents and collection books as evidence - Whether the adjudicating authority could rely upon statements and seized collection books without conducting examination in chief and allowing cross examination as required under Section 9D, and whether the matter should be remanded for fresh adjudication. - HELD THAT: - The Tribunal found that the Revenue's case rested primarily on statements and collection books seized by Income tax and Central Excise authorities. Several witnesses, including the proprietor, had retracted their earlier statements. In these circumstances the statutory scheme embodied in Section 9D requires that when a person who made a statement is later examined as a witness and disputes the statement, the adjudicating authority must allow examination in chief and thereafter permit cross examination in the interests of justice. The Court held that it is not discretionary for the adjudicating authority to omit this process where witnesses have recanted; failure to follow the procedure results in unfair adjudication. While corroborative evidence such as purchase of raw materials and independent proof of manufacture and clearances are material to establish clandestine removals, the Tribunal did not decide the merits on clandestine manufacture; instead it emphasised that the absence of the Section 9D procedure rendered the impugned adjudication unsustainable and required fresh consideration. The Tribunal further clarified that if, despite efforts, cross examination remains incomplete or partly completed, the adjudicating authority is not precluded from proceeding on the basis of records. [Paras 9, 10]

Impugned order set aside and matter remanded to the adjudicating authority for de novo adjudication after conducting examination in chief and permitting cross examination of witnesses whose statements were relied upon; adjudicator may proceed on records if cross examination cannot be completed.

Final Conclusion: The appeal is disposed of by setting aside the adjudicating order and remanding the matter for fresh adjudication in conformity with Section 9D; the adjudication is to be completed within two months from the date of this order, subject to the qualification that the adjudicating authority may proceed on records if cross examination is not completed despite efforts.

Allowability of trade discounts in valuation - application of Section 4(1)(b) read with Rule 7 - normal transaction value under Rule 7 - valuation at depot/place of sale - discounts known at the time of removal - admissibility of Across-the-Board Rebate

Application of Section 4(1)(b) read with Rule 7 - normal transaction value under Rule 7 - valuation at depot/place of sale - discounts known at the time of removal - Whether Movement Plan Rebates (MPRs) which were known to the assessee at the time of removal and passed on to final customers are allowable deductions in determining the assessable value under Section 4(1)(b) read with Rule 7. - HELD THAT: - The Tribunal examined Section 4(1) and Rule 7 and concluded that where goods are transferred to depots/BSOs for sale and price is the sole consideration, the assessable value must be the normal transaction value of goods sold from that place at or about the same time. The depot is the place of sale and the time of removal for valuation purposes relates to clearance from the factory. Discounts (MPRs) that are known at the time of removal and are uniformly allowed and actually passed on to final customers must be taken into account and deducted to arrive at the realistic assessable value. The appellant's Chartered Accountant certificate and invoice practices showing MPRs being passed on were accepted as supporting the claim. Earlier Tribunal and Supreme Court precedents recognizing deduction of discounts known at clearance and the appellant's own favourable decision on Across-the-Board Rebates were held to support this position. Consequently the findings of the Commissioner rejecting the deduction were held unsustainable. [Paras 7, 9, 10]

MPRs known at the time of removal and passed on to customers constitute allowable deductions for determining assessable value under Section 4(1)(b) read with Rule 7; the adjudication sustaining duty on account of such MPRs is set aside.

Admissibility of Across-the-Board Rebate - allowability of trade discounts in valuation - Whether the present facts are distinguishable from and/or covered by the appellant's earlier decision on Across-the-Board Rebate (ABR) and relevant authorities upholding deduction of discounts. - HELD THAT: - The Tribunal found a factual parity between the earlier ABR decision and the present case: in both, a Central Marketing Organisation determined uniform rebates (ABR/MPR), communicated them to plants and depots, and those rebates were reflected on invoices or through credit notes and actually passed on to customers. Reliance on the cited Tribunal and Supreme Court authorities endorsing deduction of discounts known at clearance reinforced that the present scheme cannot be treated as ineligible for deduction. The Commissioner's attempt to distinguish the earlier favourable decision was not accepted because the material facts and corroborative records (including CA certificate) showed that cumulative MPRs passed on exceeded the rebate claimed for assessment. [Paras 9, 11]

The present case falls within the principle allowing deduction of uniform rebates actually passed on (as in the appellant's earlier ABR decision and supporting authorities); the Commissioner's contrary conclusion is reversed.

Final Conclusion: The appeal is allowed; the adjudication confirming duty, interest and penalty on account of MPRs is set aside because rebates known at the time of removal and passed on to customers must be deducted in computing the assessable value under Section 4(1)(b) read with Rule 7.

Summary order. Special Leave Petition dismissed; the impugned judgment of the High Court is not interfered with; pending applications disposed of.

Manufacture - production - extraction of coal - quarrying - entry tax under Section 4A of the Entry Tax Act - reference by the Commercial Tax Tribunal to the High Court

Extraction of coal - manufacture - production - entry tax under Section 4A of the Entry Tax Act - Whether extraction/quarrying of coal by the applicant amounts to 'manufacture' or 'production' such as to attract entry tax liability under Section 4A of the Entry Tax Act, and whether the question requires adjudication by this Court upon reference from the Tribunal. - HELD THAT: - The applicant contended that coal extraction is not manufacture and that materials used (steel tubes and explosives) are merely incidental to extraction, relying on the Supreme Court decision in Commr. of C. Ex. & Cus., Bhubaneshwar-I v. Tata Iron and Steel Co. Ltd. The respondent maintained that quarrying and extraction of coal involves 'production' and is akin to manufacture. The Court found that the controversy on whether coal extraction constitutes manufacture/production for the purposes of entry tax under Section 4A raises a question of law and fact requiring adjudication rather than summary disposal. In consequence, the Court directed that the Commercial Tax Tribunal should frame and elaborate the relevant facts and the precise question of law and make a formal reference to this Court for determination. The Court did not decide the substantive question on the merits but required the Tribunal to refer the matter for judicial determination. [Paras 4, 5]

The Tribunal is directed to make a reference to this Court, setting out the facts and the legal question whether coal extraction amounts to manufacture/production attracting entry tax under Section 4A; the substantive question is not decided and is reserved for adjudication on reference.

Final Conclusion: The writ petition is disposed of by directing the Commercial Tax Tribunal to frame and refer the factual matrix and the question of law concerning whether extraction/quarrying of coal amounts to manufacture/production for the purposes of entry tax under Section 4A to this Court for adjudication; no substantive ruling on the merits was given.

Examination under Section 313 of the Code of Criminal Procedure, 1973 - material circumstance - prejudice caused by failure to put material circumstances to accused - deemed/constructive possession - curable defect and remediability - acquittal where procedural irregularity is fatal to prosecution

Examination under Section 313 of the Code of Criminal Procedure, 1973 - material circumstance - prejudice caused by failure to put material circumstances to accused - Whether the appellant's conviction could be sustained notwithstanding that two material circumstances relied on by the prosecution were not specifically put to him in his Section 313 Cr.P.C. examination - HELD THAT: - The Court examined the evidence and record of questioning under Section 313 Cr.P.C. and found that the two material circumstances relied upon by the prosecution - (a) that the railway receipt for the parcels stood in the appellant's name and (b) that the appellant, along with a co-accused, enquired about the parcels - were not specifically and distinctly put to the appellant in his Section 313 examination. Applying the settled principle that the trial court must put each material circumstance appearing in the evidence against the accused so as to afford an opportunity to explain, the Court held that omission to put such material circumstances is a serious irregularity which will vitiate the trial if it has prejudiced the accused. Relying on the summary of law in Raj Kumar v. State (NCT of Delhi), the Court observed that where the omission goes to the root of the prosecution case and there is no other material connecting the accused to the offence, the defect is fatal. Considering the long passage of time since the incident and the prejudice that would be caused to the appellant by fresh questioning now, the Court concluded that the two unput material circumstances must be excluded from consideration and that no other evidence connects the appellant with the contraband. Consequently the conviction could not be sustained. [Paras 6, 8, 11, 12, 13]

The conviction of the appellant cannot be sustained and must be set aside because the failure to put the material circumstances in his Section 313 Cr.P.C. examination caused fatal prejudice.

Final Conclusion: The appeal is allowed insofar as it concerns the present appellant; the impugned convictions are set aside and the appellant is acquitted. The convictions of the other accused are left undisturbed.