TaxTMI Updates e-Newsletter
May 14,2024

Illegal detention/arrest beyond 24 hours - arbitrariness in arrest and detention - interim bail - protection against weaponization of criminal law - right to personal liberty

Illegal detention/arrest beyond 24 hours - arbitrariness in arrest and detention - right to personal liberty - Whether the petitioner was detained/arrested in contravention of the liberty guarantee by being detained for more than 24 hours and whether the detention was arbitrary. - HELD THAT: - The Court, on prima facie consideration, found that the respondent authorities detained the petitioner overnight and there are conflicting explanations in the respondents' affidavit and their earlier reply before the trial court regarding the timeline. The respondents' account that generating GST returns, verification and generation of arrest memo/DIN necessitated successive hours appeared to the Court to be an after-thought and an insufficient justification for keeping the petitioner overnight. The Court noted that the petitioner had earlier cooperated in the 2021 inquiry and that records for the years 2017 to 2020 had been audited and were available to the department, undermining the need for prolonged on-the-spot detention. Relying on the principle that deprivation of liberty is a serious matter and that courts must guard against the weaponization of criminal law, the Court concluded prima facie that there was no adequate reason shown for the petitioner to be kept overnight and detained for more than 24 hours. [Paras 5, 6]

Petitioner's detention/arrest prima facie found to be unjustified and amounting to arbitrary deprivation of liberty.

Interim bail - protection against weaponization of criminal law - Whether interim bail should be granted pending disposal of the petition. - HELD THAT: - Having found prima facie that the detention was unjustified and taking into account the risk of misuse of criminal process to deprive liberty, the Court exercised its discretionary powers under Article 226 to grant temporary relief. The Court observed that arrest and detention can cause incalculable harm to reputation and that immediate judicial intervention was warranted to protect the petitioner's liberty until the petition is finally heard. [Paras 7]

Interim bail granted on specified terms for a period of six weeks, with directions to furnish cash bail and P.R. bond with sureties.

Final Conclusion: The High Court granted interim bail to the petitioner for six weeks after recording a prima facie view that the petitioner had been detained overnight and for more than 24 hours without adequate justification, observing that courts must guard against arbitrary deprivation of liberty and the weaponization of criminal law; the petition is posted for admission.

Deeming fiction treating an association and its members as separate persons - Doctrine of mutuality - Retrospective application of tax amendments - Interim stay of tax demand/show cause notice

Deeming fiction treating an association and its members as separate persons - Doctrine of mutuality - Retrospective application of tax amendments - Challenge to the vires and retrospective operation of the explanatory provision introduced as Section 7(1)(aa) under the GST framework and its effect on mutuality between an association/body and its members - HELD THAT: - The petitioner assails the explanatory provision (introduced by Section 108 of the Finance Act, 2021) which states that, notwithstanding anything contained in any other law or any judicial pronouncement, a person and its members/constituents shall be deemed to be two separate persons and inter se supplies shall be deemed to take place between them, and further that the provision is retrospective with effect from 01.07.2017. The Court recorded the contention that this explanation alters the operation of the doctrine of mutuality as reflected in the definition of "person" and that such retrospective application affects existing mutual transactions. No adjudication on the merits of the constitutional or statutory challenge is undertaken at this stage; the respondents have been directed to file their reply and the matter is kept for further hearing.

Challenge to validity and retrospective operation left open for adjudication; respondents directed to file reply before the next date.

Interim stay of tax demand/show cause notice - Interim preservation of status quo in relation to the show cause notice dated 18.12.2023 issued to the petitioner - HELD THAT: - On the petition and the interlocutory application, the Court stayed the effect and operation of the show cause notice dated 18.12.2023 (Annexure P-8) issued under the GST/CGST statutory scheme until further orders. This operative relief is granted pending adjudication of the substantive challenge to the explanatory provision and associated demands for the specified financial years. [Paras 8]

The effect and operation of the show cause notice dated 18.12.2023 shall remain stayed until further orders.

Final Conclusion: The petition challenges the explanatory deeming provision (Section 7(1)(aa) as introduced) and its retrospective application; respondents permitted to file reply and no decision recorded on merits. Meanwhile, the operation and effect of the show cause notice dated 18.12.2023 (covering FYs 2019-20 to 2022-23) is stayed until further orders; matter listed on 03.09.2024.

Imposition of penalty under Section 129 for transit without e-way bill - requirement of mens rea for penal liability for evasion of tax - principles of natural justice in penalty proceedings - technical/documentary lapse versus intention to evade tax - validity of e-way bill downloaded prior to interception but not produced physically

Imposition of penalty under Section 129 for transit without e-way bill - requirement of mens rea for penal liability for evasion of tax - technical/documentary lapse versus intention to evade tax - validity of e-way bill downloaded prior to interception but not produced physically - Validity of the penalty imposed for transportation without production of e-way bill where e-way bill was downloaded prior to interception but physical copy was not produced - HELD THAT: - The Court found that the deviation was a technical/documentary lapse: the e-way bill had been downloaded prior to interception and the invoice and e-way bill matched the goods. In the absence of any material from which an intention to evade tax could be inferred, imposition of penalty under Section 129/Section 20 was impermissible. The Court applied the settled principle that mens rea to evade tax is a sine qua non for penal imposition and held that a minor or typographical/documentary error without evidence of fraudulent intent cannot sustain the penalty. Consequently, the penalty order was unlawful on merits. [Paras 9, 10, 11, 12, 13]

Penalty quashed as there was no mens rea to evade tax and the violation was a technical/documentary lapse; penalty could not be sustained.

Principles of natural justice in penalty proceedings - validity of summary penalty order passed without opportunity to be heard - Validity of the penalty order where show-cause notice and penalty order were issued on the same day without affording the petitioner an opportunity of hearing - HELD THAT: - The Court recorded that the show cause notice and the penalty order were both issued on the same day, indicating no opportunity to file a reply or to be heard. This omission violated the principles of natural justice. Further, the authorities did not verify the genuineness of the e-way bill number from the GST portal when it was communicated by the driver. The procedural lapse of passing a penalty order without hearing reinforced the conclusion that the authorities did not act in accordance with law. [Paras 8, 14]

Penalty order set aside for breach of natural justice and failure to verify the e-way bill as informed by the driver.

Final Conclusion: Writ petition allowed; impugned orders dated May 21, 2019 and January 4, 2020 quashed and set aside. Directed refund of tax and penalty deposited by the petitioner within four weeks.

Penalty proceedings under the Uttar Pradesh Goods and Services Tax Act, 2017 consequent to search and seizure - search and seizure cannot sustain penalty under Section 129 of the Act - quashing of penalty order and appellate order following precedential coordinate-bench decision - refund of tax and penalty deposited upon successful challenge to penalty proceedings

Penalty proceedings under the Uttar Pradesh Goods and Services Tax Act, 2017 consequent to search and seizure - search and seizure cannot sustain penalty under Section 129 of the Act - Penalty proceedings initiated under Section 129 of the Uttar Pradesh Goods and Services Tax Act, 2017 after search and seizure of the assessee's premises are not justified and the consequential penalty and appellate orders are liable to be quashed. - HELD THAT: - The Court, following the coordinate-bench decision in Mahavir Polyplast Pvt. Ltd. v. State of U.P., held that the search and seizure of the godown cannot give rise to penalty proceedings under Section 129 of the Act. Applying that precedent to the present facts, the proceedings initiated after the search are contrary to the principle that search and seizure alone do not sustain liability under Section 129. In consequence, the impugned penalty order dated June 23, 2018 and the appellate order dated May 7, 2019 were quashed and set aside. The Court further directed that any tax and penalty amount deposited by the petitioner pursuant to those orders be refunded by the respondents within four weeks.

Impugned orders dated June 23, 2018 and May 7, 2019 quashed; respondents directed to refund tax and penalty deposited within four weeks; writ petition allowed.

Final Conclusion: The writ petition was allowed: penalty proceedings and the related appellate order founded on post-search proceedings under Section 129 of the Uttar Pradesh GST Act, 2017 were quashed in view of the coordinate-bench precedent, and the respondents were directed to refund amounts deposited by the petitioner within four weeks.

Time limit for refund disposal under Section 54(7) of the CGST Act - interest for delayed refund under Section 56 of the CGST Act - Circular No. 125/44/2019-GST refund processing modalities - electronic submission and ARN-based filing of refund applications

Time limit for refund disposal under Section 54(7) of the CGST Act - Circular No. 125/44/2019-GST refund processing modalities - electronic submission and ARN-based filing of refund applications - Proper officers are required to comply with statutory time-limits and Board guidelines in processing refund applications filed electronically. - HELD THAT: - The Court noted that Section 54(7) mandates that the proper officer shall pass an order within 60 days from the date of receipt of a complete refund application. The Board's Circular No. 125/44/2019-GST prescribes modalities for electronic filing via FORM GST RFD-01, generation of ARN upon completion of filing and uploads, electronic transfer of the application to the jurisdictional proper officer, and reassignment procedures where transmitted to the wrong officer. In view of these statutory and administrative mandates, the proper officers are bound to follow the time-limit and the processing modalities set out in the Circular; no additional directions beyond enforcement of these provisions were called for by the Court. [Paras 3, 4, 5, 6]

Proper officers must comply with Section 54(7) and the Board's Circular in processing electronically filed refund applications.

Interest for delayed refund under Section 56 of the CGST Act - time limit for refund disposal under Section 54(7) of the CGST Act - Petitioner's individual refund application must be expeditiously processed and disposed of within a fixed short timeline, with consideration of interest claims in accordance with law. - HELD THAT: - The petitioner filed a refund claim on 22.01.2024 and, according to the petitioner, no deficiency memo had been issued and the statutory 60-day period had elapsed. The Court directed the proper officer to expedite processing and decide the application within two weeks, observing that the officer must take into account the Board's Circular and the Act while passing orders. The Court left open the petitioner's right to invoke further remedies if aggrieved by the order ultimately passed on the refund application and any claim for interest under the statutory scheme. [Paras 7, 8]

The proper officer is directed to dispose of the petitioner's refund application within two weeks and to consider any claim for interest in accordance with law; the petitioner may pursue further remedies if aggrieved.

Final Conclusion: The petition is disposed of by directing compliance with the statutory 60-day disposal period and the Board's Circular for electronic refund processing; in the present case the proper officer is ordered to decide the petitioner's refund application within two weeks, with the petitioner remaining free to seek further remedies if dissatisfied.

Retrospective cancellation of GST registration - show cause notice - opportunity of hearing - cancellation under Section 29(2) of the Act - objective satisfaction for retrospective effect - impact on input tax credit - recording of reasons

Show cause notice - opportunity of hearing - recording of reasons - Validity of the Show Cause Notice and the cancellation order in the absence of specified date/time for personal hearing and absence of notice of retrospective cancellation, and whether the order giving no reasons is sustainable. - HELD THAT: - The Show Cause Notice did not specify the date and time for personal hearing and did not inform the petitioner that registration was liable to be cancelled with retrospective effect, thereby denying the petitioner an opportunity to object to retrospective cancellation. The impugned order failed to set out reasons for cancellation and contained contradictory statements about the existence of a reply. For these deficiencies the Show Cause Notice and the cancellation order cannot be sustained. [Paras 4, 5, 6, 10]

Show Cause Notice and order are unsustainable insofar as they effected retrospective cancellation without notice of retrospective effect, without specifying hearing particulars, and without giving reasons.

Cancellation under Section 29(2) of the Act - objective satisfaction for retrospective effect - impact on input tax credit - Whether cancellation of GST registration with retrospective effect can be mechanically imposed for non-filing of returns and the standard required for retrospective cancellation under Section 29(2). - HELD THAT: - Section 29(2) permits cancellation from such date, including retrospective dates, as the proper officer may deem fit, but retrospective cancellation cannot be mechanical or based on subjective satisfaction alone. The proper officer must form an objective satisfaction based on relevant criteria; mere non-filing for a period does not justify cancelling registration retrospectively for periods when returns were duly filed and the taxpayer was compliant. The potential consequence of denying input tax credit to recipients is a relevant consideration which warrants objective satisfaction before ordering retrospective cancellation. [Paras 11, 12]

Retrospective cancellation requires objective satisfaction and cannot be ordered mechanically merely on account of non-filing of returns; potential consequences such as denial of input tax credit must be considered.

Retrospective cancellation of GST registration - cancellation under Section 29(2) of the Act - opportunity of hearing - Appropriate relief and further consequences: modification of the impugned order, compliance directions for the petitioner, and reservation of rights for the respondents to take recovery or re-examine retrospective cancellation after proper notice and hearing. - HELD THAT: - Given the defects in notice and order and the petitioner's expressed cessation of business activities, the Court modified the impugned order so that the registration stands cancelled with effect from the date of the Show Cause Notice (12.01.2021) rather than the earlier retrospective date. The petitioner is directed to comply with Section 29 and file requisite returns with penalty if any. The respondents remain free to pursue recovery of any tax, penalty or interest in accordance with law and may revisit retrospective cancellation provided they issue a proper notice and grant an opportunity of hearing. [Paras 14, 15, 16]

Impugned order modified: registration cancelled with effect from 12.01.2021; petitioner to make statutory compliances; respondents not precluded from lawful recovery or from re-opening retrospective cancellation after proper notice and hearing.

Final Conclusion: The Show Cause Notice and order cancelling registration retrospectively were set aside insofar as they effected retrospective cancellation without proper notice, hearing particulars or reasons; the cancellation is modified to take effect from 12.01.2021, subject to the petitioner completing statutory compliances and without prejudice to the respondents' right to recover dues or to reconsider retrospective cancellation after issuing proper notice and granting hearing.

Withholding of sanction of refund - blocking of Input Tax Credit (ITC) - completion of investigation within prescribed time - issue of show cause notice (GST DRC-01) - waiver of notice in Form GST DRC-01A - extraordinary writ jurisdiction - time limits under Rule 86A of the Rules

Withholding of sanction of refund - blocking of Input Tax Credit (ITC) - extraordinary writ jurisdiction - The petition challenging withholding of sanction of refund and blocking of ITC is not pressed and is disposed of without adjudication on the merits, with liberty to revive. - HELD THAT: - Counsel for the petitioner elected not to press the petition at this stage. The Court recorded the parties' positions and did not express any opinion on the merits of the challenge to the actions of the respondents relating to withholding refund and blocking ITC. The disposal is on the basis that the petitioner has not pressed the writ petition, leaving open substantive questions for adjudication if the petition is revived. [Paras 7, 8]

Petition disposed of as not pressed with liberty to revive; notice discharged.

Completion of investigation within prescribed time - issue of show cause notice (GST DRC-01) - waiver of notice in Form GST DRC-01A - time limits under Rule 86A of the Rules - Respondent authorities shall complete the investigation and issue a show cause notice in Form GST DRC-01 within the period directed by the Court. - HELD THAT: - On instructions, the learned A.G.P. stated that the investigation would be completed within three months from the date of the order. The petitioner expressly waived the issuance of intimation in Form GST DRC-01A and requested issuance of a show cause notice in Form GST DRC-01 so the petitioner could reply promptly. In view of these concessions and statements, the Court recorded that the respondents shall complete the investigation within three months and issue the notice in Form GST DRC-01 by the stipulated date. [Paras 4, 5, 6, 8]

Investigation to be completed within three months and show cause notice in Form GST DRC-01 to be issued to the petitioner on or before 2nd August 2024.

Final Conclusion: The writ petition is disposed of as not pressed without any expression on merits; the respondents are directed to complete the investigation within three months and issue the prescribed show cause notice by the stated date, and the petitioner has liberty to revive the petition in case of difficulty.

Search and seizure under Section 132 - Information in possession of the authority - Reason to believe - Formation of belief - administrative character - Judicial review limited to mala fides or extraneous material - Prior information requirement (information must precede seizure)

Search and seizure under Section 132 - Information in possession of the authority - Reason to believe - Prior information requirement (information must precede seizure) - Validity of the search and seizure conducted at the petitioners' premises under Section 132 of the Income Tax Act. - HELD THAT: - The Court applied the principles in Spacewood Furnishers and Principal Director of Income Tax vs. Laljibhai Kanjibhai Mandalia that a search under Section 132 must be founded on information in the authorised official's possession and a bona fide reason to believe, formed prior to the search, that one of the contingencies in Section 132(1)(a)-(c) is satisfied. The Court examined the Departmental file and found it did not disclose any information enabling a reason to believe as required by Section 132(1)(a)-(c). The Court emphasised that material unearthed by the search (such as locker contents) cannot be relied upon to justify the prior formation of belief. As such, there was total non-compliance with the statutory preconditions for exercise of Section 132 powers; the formation of belief was not shown to have been based on information existing before the seizure and thus the action was vitiated. [Paras 9, 10, 11]

The search and seizure under Section 132 is quashed and set aside, and all consequent actions arising therefrom are quashed and set aside.

Final Conclusion: The writ petition is allowed: the Court quashed the search and seizure for failure to demonstrate the requisite prior information and reason to believe under Section 132; consequent actions are set aside. The Respondents may, if permissible in law, use the seized material and are granted leave to challenge this order; operation of the judgment is stayed for three weeks.

Addition on account of unexplained expenditure under Section 69C - violation of the principles of natural justice - reliance on CBIC import data without particulars - onus of proof and requirement of reconciliation of import bills - remand for fresh consideration after providing details and opportunity to explain

Violation of the principles of natural justice - reliance on CBIC import data without particulars - Impugned assessment order was passed in violation of principles of natural justice by making an addition without giving the assessee adequate opportunity to meet the case based on undisclosed import data. - HELD THAT: - The Assessing Officer made an addition under Section 69C solely on the basis of a tabular, cumulative statement supplied by CBIC showing aggregate monthly values, without any particulars such as bill of entry or invoice-level data. The AO did not identify which specific import entries or invoices were alleged to be undisclosed and thus no meaningful reconciliation could be undertaken by the assessee. Where the AO lacks particulars necessary to identify the alleged unexplained expenditure, it is impermissible to proceed to make an addition merely because the source of information is an 'apex' agency. The assessee, having denied the additional purchases and having requested details, could not be expected to carry out a reconciliation or discharge any onus without those particulars. The absence of material enabling identification of the alleged omissions and the consequent inability of the assessee to effectively respond renders the order unsustainable for want of compliance with natural justice. [Paras 9, 10, 11]

Impugned order is unsustainable and was passed in violation of principles of natural justice.

Addition on account of unexplained expenditure under Section 69C - remand for fresh consideration after providing details and opportunity to explain - Matter remanded to the Assessing Officer to decide afresh, with direction that any addition under Section 69C can be made only after identifying details of the alleged expenditure and giving the assessee an opportunity to explain. - HELD THAT: - Given that the only material before the AO were cumulative CBIC figures without invoice- or bill-specific particulars, the Court set aside the assessment and remanded the matter for fresh adjudication. The AO is directed, before making any addition on account of unexplained expenditure, to ascertain and record the particulars of the alleged imports/expenditure, furnish those particulars to the assessee, and afford a reasonable opportunity to explain or reconcile. A fresh decision must be taken in accordance with law on the basis of such material and after complying with principles of natural justice. [Paras 12]

Assessment set aside and remanded for fresh decision in accordance with law after providing particulars and opportunity to the assessee.

Final Conclusion: Writ petition allowed; impugned order dated 26.03.2024 set aside and matter remanded to the Assessing Officer for fresh decision in accordance with law, permitting any addition under Section 69C only after identifying the alleged expenditure details and affording the assessee an opportunity to explain.

Validity of summons under Section 131(1A) of the Income-tax Act - Prior issuance of Section 131(1A) notice as condition precedent to search under Section 132 - Reason to suspect as precondition for authorising search and seizure - Strict construction of taxing statutes

Validity of summons under Section 131(1A) of the Income-tax Act - Post-search issuance of notices - Impugned notices issued under Section 131(1A) after the search were illegal and without jurisdiction. - HELD THAT: - The Court held that sub section (1A) of Section 131 is not an independent power to be exercised after a search but empowers specified investigation officers to exercise the procedural powers in Section 131(1) for the purpose of making an inquiry or investigation antecedent to action under clauses (i)-(v) of Section 132(1). The phrase 'before he ... takes action under clauses (i) to (v) of that sub section' is material and mandates that the exercise of powers under Section 131(1A) must, as a matter of statutory command, occur prior to initiating search and seizure under Section 132. Applying the rule that taxing statutes must be strictly construed and any ambiguity benefits the taxpayer, the Court concluded that issuance of notices under Section 131(1A) after the search contravenes the statutory scheme and is therefore invalid. [Paras 26, 30, 40, 42, 53]

Notices dated 29-12-2020, 05-01-2021, 21-01-2021 and 28-01-2021 under Section 131(1A) are set aside and quashed.

Reason to suspect as precondition for authorising search and seizure - Authorization for search under Section 132(1) and absence of antecedent material - The search and seizure authorised on 04.12.2020 was illegal and without jurisdiction for want of the statutory preconditions. - HELD THAT: - The Court found that Section 131(1A) contemplates two co existent conditions before action under Section 132: (a) the officer must have reason to suspect concealment of income by the person or class of persons, and (b) for making the related enquiry/investigation, the officer may exercise Section 131(1) powers prior to taking action under Section 132. The affidavit and record did not disclose any material establishing reasons to suspect prior to authorisation of the search; indeed, the Department issued Section 131(1A) notices only after the search. The absence of antecedent reasons to suspect and non compliance with the statutory sequence rendered the authorisation and consequent search a fishing expedition and therefore void. [Paras 49, 50, 51, 52, 53]

The authorisation dated 04.12.2020 and the search and seizure conducted pursuant thereto are quashed.

Final Conclusion: The writ petition is allowed: the search authorisation dated 04.12.2020, the search and seizure conducted thereunder, and the subsequent notices issued under Section 131(1A) are set aside and quashed; the petition is disposed of accordingly.

Non-application of mind - remand for de novo consideration - requirement of a reasoned order - personal hearing - production of documents on which action is based - notice issued under Section 148A(b) and Section 148

Non-application of mind - reliance on third party intelligence without independent analysis - Impugned order passed under Section 148A(d) suffers from non-application of mind and is unsustainable. - HELD THAT: - The Assessing Officer merely reproduced the petitioner's submissions and, in a single sentence, rejected them by relying on information received from the Directorate General of GST that linked a supplier to fraudulent invoicing. There is no indication that the AO independently evaluated the material received or analysed the petitioner's responses against that material. The absence of any reasoned consideration of the submissions demonstrates total non-application of mind, warranting quashing of the order. [Paras 5]

Impugned order under Section 148A(d) quashed for non-application of mind.

Remand for de novo consideration - notice issued under Section 148 - Whether the matter should be remanded for fresh consideration and the consequential validity of the notice issued under Section 148. - HELD THAT: - Because the AO's order is quashed for want of application of mind, the matter is remitted for de novo consideration by a different Jurisdictional Assessing Officer. Consequentially, the notice issued under Section 148 on 4th May 2023 is also quashed and set aside. The remand requires fresh adjudication rather than mere ratification of the earlier defective order. [Paras 7]

Matter remanded to a JAO other than the original officer; the Section 148 notice of 4th May 2023 quashed.

Requirement of a reasoned order - personal hearing - production of documents on which action is based - Standards and procedural directions to be followed on remand, including requirement of a reasoned order, personal hearing and disclosure of material. - HELD THAT: - The fresh decision to be taken on remand must be a reasoned order dealing with all submissions of the petitioner in detail. A personal hearing must be afforded after at least five working days' notice. The JAO is directed to furnish to the petitioner, within two weeks of the order being uploaded, all documents and information on which the Section 148A(b) notice was based; petitioner may thereafter file further submissions within two weeks. A final order on the Section 148A(b) notice is to be passed on or before 31st July 2024. [Paras 8, 9, 10]

JAO to pass a detailed, reasoned order after personal hearing; disclosure of documents and timeline for further submissions fixed; final order by 31 July 2024.

Final Conclusion: Impugned order under Section 148A(d) quashed for non-application of mind; matter remitted to a different JAO for de novo, reasoned consideration after personal hearing and disclosure of documents; consequential Section 148 notice quashed; timelines and opportunity to file further submissions directed.

Mandamus to deliver possession - certificate of sale - tax recovery officer's duty to hand over possession - state obligation to provide police assistance for dispossession - stamp duty claim not to be used to indefinitely frustrate execution

Tax recovery officer's duty to hand over possession - state obligation to provide police assistance for dispossession - mandamus to deliver possession - certificate of sale - Directions for handing over possession of property sold in auction and obligation of State authorities to provide police force to effect dispossession - HELD THAT: - Petitioner purchased the disputed property at a Tax Recovery Officer's auction and was issued a Certificate of Sale on 22.02.1995 but has not been put in possession. The Court recorded that the Tax Recovery Officer is obliged to make best efforts to hand over possession and that the State had hitherto not made police force available to dispossess trespassers. Although the State indicated willingness to provide assistance subject to stamp duty being paid on the Sale Certificate, the Court observed that after nearly thirty years the demand for stamp duty cannot be permitted to indefinitely delay possession and that the Tax Recovery Officer had already dealt with objections of the trespassers. In consequence, the Court directed that the Tax Recovery Officer shall, within two weeks, apply to the State respondent for adequate police assistance; upon receipt of such application the State shall, within four weeks, make available the necessary police force and other arrangements so that the Certificate of Sale may be given effect and possession delivered. The Court fixed an outer expectation date for handing over actual possession by 30.06.2024. The Court also left open the State's right to proceed in accordance with law in respect of any demand of stamp duty on the Certificate of Sale, subject to the compliance directed. [Paras 7, 8, 9, 10]

Tax Recovery Officer to apply to State for police assistance within two weeks; State to provide necessary police force within a further four weeks so as to enable delivery of possession with expectation of completion by 30.06.2024; State may still pursue lawful claim for stamp duty without using it to frustrate execution of the Certificate of Sale.

Final Conclusion: Writ petition disposed directing respondent authorities to cooperate to enable delivery of possession to the purchaser named in the Certificate of Sale by specified timelines, while preserving the State's right to pursue any lawful claim for stamp duty.

Failure to deduct tax at source - coverage of External Development Charges under Section 194C - recovery of shortfall where the deductee has already paid tax - interest under section 201(1A) - penalty under section 271C - reasonable cause under section 273B - finalisation of show cause notices in light of settled principles

Recovery of shortfall where the deductee has already paid tax - interest under section 201(1A) - Whether the tax deductor can be proceeded against for recovery of shortfall where the recipient has already included the amount in its income and paid tax. - HELD THAT: - The court applied the principle extracted from earlier decisions that once the recipient (deductee) has included the income and paid tax thereon, the tax department cannot recover the shortfall in tax deducted at source from the deductor. That bar on recovery does not, however, preclude the Revenue from claiming interest under the statutory provision for the period between the date tax was deductible and the date the deductee actually paid the tax. The court therefore recorded that the authority finalising show cause proceedings must take into account whether the recipient has paid tax and, if so, restrict recovery accordingly while considering interest separately.

If the deductee has paid tax on the amount, recovery of the shortfall from the deductor cannot be pursued; interest for the default period remains claimable and must be examined.

Penalty under section 271C - reasonable cause under section 273B - failure to deduct tax at source - Whether penalty under section 271C is an inevitable corollary of being declared an assessee in default for failure to deduct tax at source. - HELD THAT: - Relying on the exposition of reasonable cause under section 273B in precedents, the court reiterated that imposition of penalty under section 271C is not automatic. Where a deductor can show good and sufficient reason or genuine and bona fide legal uncertainty about the taxability or applicability of the provision (for example, nascent or conflicting judicial positions regarding the relevant provision), penalty may be disallowed. The burden to prove reasonable cause rests on the person charged. The authority finalising the proceedings must assess whether such reasonable cause exists in the facts of the case before levying penalty.

Penalty under section 271C is not inevitable; it cannot be levied where the deductor demonstrates reasonable cause or bona fide legal uncertainty as assessed by the authority.

Coverage of External Development Charges under Section 194C - finalisation of show cause notices in light of settled principles - Permissible course for adjudication of the impugned show cause notice challenging penalty proceedings for alleged non deduction of tax in the facts of this case. - HELD THAT: - The court observed that the principal question concerning whether External Development Charges fall within the ambit of the relevant withholding provision had been examined in a prior decision of this Court. Applying the legal principles discussed (including the consequences when the deductee has paid tax and the scope of reasonable cause), the court declined to grant a blanket interdiction of the show cause notice. Instead, it disposed of the writ petition while granting liberty to the respondent to finalise the show cause proceedings, directing that such finalisation must be carried out bearing in mind the legal position articulated in the judgment and relevant precedents.

Writ petition disposed; respondent permitted to finalise the show cause proceedings after applying the legal principles stated in the judgment.

Final Conclusion: The petition is disposed of with liberty to the respondent to finalise the show cause notice proceedings in accordance with the legal principles stated - namely, no recovery of tax shortfall if the deductee has already paid tax (subject to interest claims), and no automatic imposition of penalty where reasonable cause or bona fide legal uncertainty exists; all parties' rights and contentions otherwise kept open.

Condonation of delay - deduction under Section 80IB(10) - remand for fresh assessment - recall under Section 254(2) - reasoned order - personal hearing

Condonation of delay - deduction under Section 80IB(10) - remand for fresh assessment - recall under Section 254(2) - reasoned order - personal hearing - Assessment order quashed and remitted to the Assessing Officer for fresh adjudication of the claim for deduction under Section 80IB(10) for AY 2011-12 as if there was no delay in filing the return; directions for fresh reasoned assessment and personal hearing; consequence of setting aside earlier appellate orders. - HELD THAT: - The High Court had earlier condoned the delay in filing the return and directed the tax authorities to consider the claim for deduction under Section 80IB(10) for AY 2011-12 as if there was no delay. Although the ITAT observed there was no apparent mistake in its earlier order and rejected the petitioner's application under Section 254(2), this Court held that the ITAT failed to appreciate the spirit and effect of the High Court's order. Consequentially, the assessment order dated 14th March 2014 is quashed and set aside and the matter is remanded to the Assessing Officer to pass a fresh assessment in accordance with law, considering the petitioner's claim for deduction as if there was no delay. The Assessing Officer is directed to give the petitioner a personal hearing (with at least five working days' notice) and to pass a reasoned order dealing with all submissions. The Court did not enter into the merits of the Section 80IB(10) claim. As the assessment is set aside, the orders of the CIT(A) and the ITAT are also displaced as consequentially unsustainable. [Paras 3, 4, 7]

Quash and set aside the assessment order and remand to the Assessing Officer to decide the Section 80IB(10) claim for AY 2011-12 as if no delay occurred; AO to give personal hearing and pass a reasoned order by 31st August 2024; consequentially set aside appellate orders.

Final Conclusion: The assessment order for AY 2011-12 is quashed and remitted to the Assessing Officer for fresh consideration of the Section 80IB(10) deduction as if no delay in filing had occurred; the AO shall provide a personal hearing and pass a reasoned assessment by 31st August 2024, and earlier appellate orders stand displaced as consequential to this setting aside.

Application of CBDT Instruction 1916 to seizure and assessment - Seizure of jewellery at time of search - Inventory for assessment purposes - Alternate remedy under Section 246A - Extension of time for filing appeal

Application of CBDT Instruction 1916 to seizure and assessment - Seizure of jewellery at time of search - Inventory for assessment purposes - Whether non-compliance with CBDT Instruction No.1916 (11.05.1994) vitiates the assessment order confirming tax on unexplained jewellery - HELD THAT: - The Court examined the language and purpose of CBDT Instruction No.1916 dated 11.05.1994 and observed that the guidelines address instances of seizure during operations under section 132 and prescribe when jewellery should be excluded from seizure and that a detailed inventory must be prepared for assessment. Paragraph (iii) permits the authorized officer to exclude larger quantities from seizure having regard to family status, customs and other circumstances, while paragraph (iv) mandates preparation of an inventory for use in assessment. The Court held that the purport of the circular is confined to the stage of investigation/seizure and does not extend to dictate the course of assessment proceedings. Consequently, the petitioner's complaint that the circular was not followed at the assessment stage did not warrant interference with the impugned assessment order which proceeded on examination of records and submissions regarding source of jewellery. [Paras 16, 17, 18, 19]

The circular applies to the seizure/investigation stage and not to assessment; no interference with the impugned assessment order on the ground of non-compliance with Instruction No.1916.

Alternate remedy under Section 246A - Extension of time for filing appeal - Whether the petitioner should be permitted to pursue the statutory appellate remedy and whether time for filing that appeal should be extended - HELD THAT: - The Court noted that an alternate statutory remedy exists before the Appellate Commissioner under Section 246A r/w 249 and granted the petitioner liberty to pursue that remedy. In view of the petitioner's contention that the period for filing the appeal had expired, the Court extended the time for filing the appeal by 30 days from receipt of a copy of the order, thereby enabling the petitioner to availing the statutory forum for challenge. [Paras 20, 21, 22]

Liberty granted to file appeal before the Appellate Commissioner under Section 246A; time for filing the appeal extended by 30 days from receipt of the order.

Final Conclusion: Writ petition dismissed; impugned assessment order upheld on the ground that CBDT Instruction No.1916 governs seizure (investigation) and not assessment; petitioner granted liberty to file statutory appeal before the Appellate Commissioner and given 30 days' extension to do so.

Cessation of trading liability - section 41(1) of the Income Tax Act, 1961 - evidentiary value of plaint/petition - third party enquiry - deletion of assessment addition for lack of material in books of account - mere lapse of time not attracting cessation addition

Cessation of trading liability - section 41(1) of the Income Tax Act, 1961 - third party enquiry - deletion of assessment addition for lack of material in books of account - mere lapse of time not attracting cessation addition - Validity of the addition made under section 41(1) on account of alleged cessation of trading liability towards a third party - HELD THAT: - The Tribunal examined the AO's addition under section 41(1) treating a claimed trading liability as having ceased on the basis of third party enquiries and documents obtained from the third party. The Revenue was unable to identify any supporting material in the assessee's books of account to substantiate the cessation addition. The Tribunal applied the principle, as stated in Sugauli Sugar Works, that an addition under section 41(1) is not attracted merely by lapse of time or by absence of an entry in the assessee's books; affirmative material is required to show actual cessation. Given the lack of cogent material from the assessee's records and the Revenue's failure to point to such material, the Tribunal concluded that the addition could not be sustained and was fit for deletion.

Addition made under section 41(1) on account of alleged cessation of trading liability deleted; appeal allowed.

Final Conclusion: The Tribunal deleted the addition under section 41(1) relating to alleged cessation of trading liability for assessment year 2016-17, holding that the Revenue failed to produce supporting material in the assessee's books and that mere lapse of time or third party assertions do not attract section 41(1).

Validity of reopening under section 147/148 of the Income-tax Act - Reopening based on foundational reason not acted upon - Assessment additions and their linkage to reasons to believe - Precedent that reopening is unsustainable if the recorded reason is not given effect to

Validity of reopening under section 147/148 of the Income-tax Act - Reopening based on foundational reason not acted upon - Precedent that reopening is unsustainable if the recorded reason is not given effect to - Legality of the reassessment framed under section 147/148 where the recorded reason for reopening was a cash deposit but no addition was made on that basis. - HELD THAT: - The Assessing Officer recorded reasons to believe that the assessee had deposited cash of Rs. 25,01,100 in the relevant previous year and initiated proceedings under section 147/148. The reassessment order, however, assessed alleged customer advances in tuition activities and made additions and interest on other amounts, but did not make any addition in respect of the specific cash deposit which formed the recorded reason for reopening. The Tribunal applied the principle in CIT v. Jet Airways that a reopening is not sustainable where the foundational reason recorded for reopening has not been acted upon in the assessment. In the present case, because the Assessing Officer did not assess or add the cash deposit which alone constituted the recorded reason to reopen, the reassessment was held to be legally unsupportable. All other contentions on merits were rendered academic in view of this conclusion. [Paras 3]

Reassessment under section 147/148 quashed as unsustainable since the recorded reason (cash deposit of Rs. 25,01,100) was not the subject of any addition; appeal allowed.

Final Conclusion: Reopening founded on the cash deposit was held invalid because the Assessing Officer did not make any addition in respect of that deposit; the reassessment order is therefore set aside and the appeal is allowed.

Interpretation of "put to use" for claiming depreciation on new commercial vehicle under New Appendix-1 (requirement of being put to use before 1st Oct 2009) - beneficial ownership versus registration for the purpose of depreciation claim - reopening of assessment under section 147 - limitation, change of opinion and validity of reassessment beyond four years - application of CBDT notifications amending New Appendix-1 for depreciation rate on new commercial vehicles

Reopening of assessment under section 147 - limitation, change of opinion and validity of reassessment beyond four years - change of opinion doctrine - Validity of reassessment opened beyond four years and whether the reopening was sustainable in law - HELD THAT: - The Tribunal held that the Assessing Officer's initiation of reassessment proceedings after a period exceeding four years from the end of the relevant assessment year amounted to an impermissible change of opinion and was not sustainable. The chronology showed that the original assessment under section 143(3) was framed on 26.03.2013 while the section 148 notice was issued in 2017, i.e., beyond the four-year period, without recording satisfaction that the assessee had not disclosed material particulars "fully" and "truly" in the earlier proceedings. The Tribunal relied on the principle that reasons for reopening must be read on a standalone basis and cannot be improved, substituted or added to subsequently, and treated the Revenue's action as falling foul of the limitation and change-of-opinion jurisprudence. [Paras 4]

Reopening was not sustainable; reassessment initiated beyond four years amounted to an impermissible change of opinion.

Interpretation of "put to use" for claiming depreciation on new commercial vehicle under New Appendix-1 (requirement of being put to use before 1st Oct 2009) - beneficial ownership versus registration for the purpose of depreciation claim - application of CBDT notifications amending New Appendix-1 for depreciation rate on new commercial vehicles - Whether the assessee was entitled to claim 50% depreciation on the new Honda City by treating the vehicle as "put to use" on the purchase/insurance date despite registration occurring after 1st Oct 2009 - HELD THAT: - The Tribunal accepted the NFAC's detailed reasoning that the CBDT notifications permitting 50% depreciation required the vehicle to be acquired within the specified window and "put to use" before 1st October 2009, but that "put to use" must be given a reasonable meaning and does not depend on degree of utilisation. The Tribunal held that beneficial ownership and the fact of insurance effective from the purchase date supported the assessee's claim that the vehicle was put to use immediately upon purchase. Registration with the RTO, being a formality to determine legal ownership, does not negate beneficial ownership for the purpose of claiming depreciation. In the absence of any evidence to rebut the insurance and ownership facts, the assessee was entitled to the higher rate of depreciation and the addition disallowing depreciation was to be deleted. [Paras 3, 4]

Assessee entitled to 50% depreciation; addition disallowing depreciation deleted.

Final Conclusion: Revenue's appeal is dismissed; the reassessment was not sustainable and the assessee was rightly held to have "put to use" the vehicle on the purchase/insurance date entitling it to the higher rate of depreciation under the relevant CBDT notifications.

Disallowance under section 14A read with Rule 8D - application of Rule 8D(2)(ii) - interest attributable to exempt income - application of Rule 8D(2)(iii) - administrative expenses attributable to exempt income - surplus interest free funds as a defence to Rule 8D disallowance - disallowance under Section 40(a)(i) - characterisation of domain name registration payments - not royalty - Fee for Technical Services under Article 12(3) of India-US DTAA - tax withholding obligation under section 195

Disallowance under section 14A read with Rule 8D - application of Rule 8D(2)(ii) - interest attributable to exempt income - surplus interest free funds as a defence to Rule 8D disallowance - Deletion of disallowance under Rule 8D(2)(ii) in respect of interest expenditure - HELD THAT: - The Assessing Officer computed disallowance under Rule 8D(2)(ii) for interest attributable to exempt dividend income. The first appellate authority found on facts that the assessee had sufficient surplus interest free funds to meet the investments yielding exempt income and deleted the interest disallowance. The Revenue did not controvert this factual finding before the Tribunal. Applying settled principles that Rule 8D(2)(ii) disallowance is not sustainable where surplus interest free funds obviate the need to attribute interest to exempt income, the Tribunal found no infirmity in the appellate authority's conclusion and upheld deletion of the interest disallowance.

Deletion of the disallowance under Rule 8D(2)(ii) upheld.

Disallowance under section 14A read with Rule 8D - application of Rule 8D(2)(iii) - administrative expenses attributable to exempt income - Sustenance of disallowance under Rule 8D(2)(iii) in respect of administrative expenses - HELD THAT: - While the appellate authority deleted the interest disallowance, it sustained the disallowance computed under Rule 8D(2)(iii) towards administrative expenses. The Tribunal, having examined the record and the fact that the appellate authority's factual conclusions on availability of surplus funds addressed only interest attribution, did not disturb the appellate authority's view sustaining the administrative expenses disallowance. The Revenue's challenge to the partial relief was dismissed.

Sustained the disallowance under Rule 8D(2)(iii) as affirmed by the first appellate authority; Revenue's challenge dismissed.

Disallowance under Section 40(a)(i) - characterisation of domain name registration payments - not royalty - Fee for Technical Services under Article 12(3) of India-US DTAA - tax withholding obligation under section 195 - Deletion of disallowance under Section 40(a)(i) in respect of payments for domain name registration - HELD THAT: - The Assessing Officer treated payments made in foreign currency for domain name registration as royalty (and therefore remittable to taxation and subject to withholding under section 195), and disallowed the payments under Section 40(a)(i). The first appellate authority examined the registration process and found that registrars merely facilitate uniqueness checks in the ICANN registry, do not transfer copyright or provide any right to use software/code, and the user acquires only the right to use the domain name functionality and not any code or proprietary software. On these factual findings, the appellate authority concluded the payments are neither royalty nor FTS under the DTAA. The Revenue failed to produce cogent evidence to rebut those findings. The Tribunal concurred with the appellate authority's factual and legal conclusion and deleted the disallowance under Section 40(a)(i).

Disallowance under Section 40(a)(i) deleted; payments for domain name registration not held to be royalty or FTS.

Final Conclusion: The Revenue's appeal is dismissed: deletion of interest disallowance under Rule 8D(2)(ii) is upheld on the finding of surplus interest free funds; the appellate authority's sustenance of administrative expense disallowance under Rule 8D(2)(iii) remains; and disallowance under Section 40(a)(i) in respect of domain name registration payments is deleted as such payments are not royalty or FTS.

Specified Domestic Transactions - Omission/repeal of statutory provision and its effect - Applicability of Section 92BA(i) after omission w.e.f. 01.04.2017 - Nullity of assessment action founded on a repealed provision - Transfer pricing adjustment/Arm's Length Price under section 92CA

Applicability of Section 92BA(i) after omission w.e.f. 01.04.2017 - Specified Domestic Transactions - Whether an upward transfer-pricing adjustment under Section 92BA(i) could be sustained in proceedings for AY 2015-16 after Clause (i) of Section 92BA was omitted effective 01.04.2017 - HELD THAT: - The Tribunal examined whether Clause (i) of Section 92BA, having been omitted by the Finance Act, 2017 with effect from 01.04.2017, could be applied in pending proceedings. It applied the settled principle that where a statutory provision is unconditionally omitted without a saving clause, the provision is to be treated as if it had never existed and cannot be invoked in pending proceedings. Following the reasoning in the Karnataka High Court decision in PCIT v. Texport Overseas (P.) Ltd. and consistent Tribunal decisions, the Bench held that an assessment and related adjustments premised on the omitted Clause (i) of Section 92BA lack statutory basis and jurisdiction. Consequently, the upward adjustment made by the TPO/AO invoking Section 92BA(i) was invalid and liable to be quashed, and the CIT(A)'s deletion of the adjustment was upheld. [Paras 7, 8, 9]

The adjustment under Section 92BA(i) is void insofar as Clause (i) stood omitted w.e.f. 01.04.2017; the CIT(A)'s deletion of the upward transfer-pricing adjustment is upheld.

Final Conclusion: Appeal dismissed; the Tribunal upholds the deletion of the upward transfer-pricing adjustment made under Section 92BA(i) as that clause was omitted effective 01.04.2017 and could not sustain the assessment action for AY 2015-16.

TDS mismatch - reconciliation of Form 26AS with books - additional evidence under Rule 29 of the ITAT Rules - reinstatement for fresh adjudication - restoration to Assessing Officer for de novo adjudication

TDS mismatch - reconciliation of Form 26AS with books - additional evidence under Rule 29 of the ITAT Rules - restoration to Assessing Officer for de novo adjudication - Whether the addition made on account of mismatch between receipts in the books and TDS reflected in Form 26AS should be sustained or whether the matter requires fresh adjudication in view of additional evidence filed before the Tribunal. - HELD THAT: - The assessee explained that income recognition in its SAP-based books was on receipt realization and that certain receipts realized in April 2014 were accounted in the subsequent year, whereas corresponding TDS appeared in Form 26AS for the year under appeal and was claimed in the return. The Assessing Officer made an addition by extrapolating on the basis of a TDS mismatch and the CIT(A) confirmed that addition. The assessee filed party-wise reconciliation and further details under Rule 29 before the Tribunal, which were not placed before the Assessing Officer and which the Tribunal regarded as material for factual verification. Given that these additional documents bear directly on whether the receipts corresponding to the TDS were offered to tax in the relevant year, the Tribunal concluded that the matter cannot be finally resolved on the existing record and requires fresh consideration by the Assessing Officer in light of the additional evidence. [Paras 4]

The addition is set aside for fresh adjudication; the issue is restored to the Assessing Officer for de novo examination in accordance with law and the additional evidence filed before the Tribunal.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes and remitted the issue of the addition arising from the TDS/Form 26AS mismatch to the Assessing Officer for fresh adjudication after verifying the party-wise reconciliations and the additional documents filed under Rule 29.

Comparability under Transactional Net Margin Method (TNMM) - inclusion and exclusion of comparables - use of consolidated and standalone segmental financials for comparability - adjustment to arms length price - grant of MAT credit carried forward

Comparability under Transactional Net Margin Method (TNMM) - inclusion and exclusion of comparables - use of consolidated and standalone segmental financials for comparability - Whether HSIL Limited is to be excluded from the comparable set - HELD THAT: - The Tribunal declined the assessee's plea to exclude HSIL Limited. The DRP examined HSIL's annual reports and consolidated financials and found identifiable Building Products (sanitaryware/tiles) and Packing divisions with segmental results in consolidated statements that reasonably reflect the building division's financial performance. The DRP also noted that subsidiaries relating to the building division had negligible turnover and losses, reducing any adverse effect on consolidated margins. The small quantum of R&D spend by HSIL (measured against turnover) was held not to create a functional difference warranting exclusion, particularly when the assessee's own technology-related payments were proportionately higher. The Tribunal considered these factual findings and the principle that TNMM tolerates broad product diversity and some functional diversity, and thus upheld inclusion of HSIL in the comparable set. [Paras 8]

HSIL Limited not excluded; inclusion in the comparable set upheld and the ground dismissed.

Comparability under Transactional Net Margin Method (TNMM) - inclusion and exclusion of comparables - adjustment to arms length price - Whether Cera Sanitaryware Limited is to be excluded from the comparable set - HELD THAT: - Although the DRP had included Cera Sanitaryware Limited as a comparable, the Tribunal in a coordinate earlier order for a subsequent assessment year had examined Cera's financials and raw material consumption and concluded that, unlike HSIL, the available information did not permit reliable segmentation of revenue by activity to derive correct margins. Applying the same factual matrix for the assessment year under consideration and the requirements of TNMM (comparison of net profit margins), the present Bench followed the coordinate Tribunal's finding and directed exclusion of Cera from the comparable list. [Paras 15]

Cera Sanitaryware Limited to be excluded from the list of comparables; direction to the AO/TPO to exclude it.

Grant of MAT credit carried forward - adjustment to assessment computation - Whether MAT credit carried forward should be given effect to while crystallising tax demand - HELD THAT: - The Tribunal found merit in the assessee's contention that MAT credit carried forward had been ignored while crystallising tax demand. The Bench directed the Assessing Officer to grant the MAT credit to the assessee as admissible under law, treating the matter as consequential to the assessment computation. [Paras 16]

Assessee to be granted MAT credit as admissible; ground allowed.

Final Conclusion: Appeal partly allowed: HSIL Limited retained in the comparable set; Cera Sanitaryware Limited excluded from the comparables and the AO/TPO directed to act accordingly; MAT credit to be granted to the assessee as admissible in law.

Monetary limit for departmental appeals - Maintainability of appeal on ground of low tax effect - Instructions on reduction of government litigation - Redemption fine and penalty under the Customs Act

Monetary limit for departmental appeals - Maintainability of appeal on ground of low tax effect - Instructions on reduction of government litigation - Redemption fine and penalty under the Customs Act - Appeal by the Revenue is not maintainable as the aggregate monetary effect falls below the prescribed threshold in departmental Instructions. - HELD THAT: - The Tribunal's substantive adjudication is not reached because the High Court examined the maintainability of the Revenue's appeal in light of Central Board Instructions prescribing monetary thresholds for filing departmental appeals. The Instructions (initially dated 20.10.2010 and subsequently amended, most recently on 02.11.2023) set a monetary limit for appeals to the High Court. The Order-in-Original imposed a redemption fine and a penalty which together amount to a sum below the current threshold (aggregate sum of redemption fine and penalty as recorded in the proceedings). In view of the Instructions directing initiation of withdrawal of pending cases below the monetary limit and the prescribed threshold of Rs. 1 crore for High Court appeals, the appeal, being for an aggregate sum beneath that limit, is not maintainable and must be dismissed on the ground of low tax effect. [Paras 4, 5, 6]

Appeal dismissed as not maintainable being below the prescribed monetary limit.

Final Conclusion: The appeal is dismissed on the ground that the aggregate monetary effect of the order falls below the monetary threshold prescribed by departmental Instructions, and therefore the appeal is not maintainable.

Condonation of delay in filing appeals - ex parte proceedings - power of appellate tribunal to remand for jurisdictional determination - adjudication on jurisdiction including authority of Commissioner of Customs (Preventive)/DRI to issue show cause notices - direction to decide on merits uninfluenced by stayed precedent - judicial non-opinion/clarification of merits

Condonation of delay in filing appeals - Delay in filing the present appeals was condoned. - HELD THAT: - The Court observed that identical petitions in comparable circumstances had earlier been remitted to the CESTAT and, in related matters listed before the Bench, delay in filing appeals had been condoned. In view of those precedents and the similar factual backdrop, the Court exercised its discretion to condone the delays in the present appeals and proceeded to entertain them. [Paras 1, 2, 9, 10]

Delay in filing the appeals is condoned.

Ex parte proceedings - Proceedings against the respondents were continued ex parte after service by publication and non-appearance. - HELD THAT: - The Court recorded that respondents had been served through publication and despite that no one appeared on their behalf on the listed dates. Having regard to the notice by publication and continued non-appearance, the Court directed that respondents be proceeded with ex parte. [Paras 3, 4]

Respondents are proceeded with ex parte.

Power of appellate tribunal to remand for jurisdictional determination - adjudication on jurisdiction including authority of Commissioner of Customs (Preventive)/DRI to issue show cause notices - direction to decide on merits uninfluenced by stayed precedent - judicial non-opinion/clarification of merits - Impugned CESTAT orders remanding the matters for determination of jurisdiction in the light of Mangali Impex Ltd were set aside and the appeals were restored to CESTAT to be decided on merits, including the question of jurisdiction, uninfluenced by the stayed decision; the High Court did not express any opinion on the merits. - HELD THAT: - The impugned CESTAT orders had remanded the matters to the Adjudicating Authority to decide jurisdiction after the Supreme Court's decision in the Mangali Impex Ltd matter. The Coordinate Bench had earlier held that such remands were not justified because the operation of the Mangali Impex order was stayed by the Supreme Court. Applying that approach, the Court set aside the remand-orders, restored the appeals to CESTAT and directed CESTAT to decide the appeals on merits, including whether the Commissioner of Customs (Preventive)/DRI had jurisdiction to issue the show cause notices, without being influenced by the Mangali Impex decision. The Court expressly clarified that it had not expressed any view on the merits and that CESTAT remained free to take such view as it considered appropriate. [Paras 7, 8, 11, 12, 13]

Impugned remand orders set aside; appeals restored to CESTAT to be decided on merits including jurisdiction, uninfluenced by the Mangali Impex decision; High Court expresses no opinion on merits.

Final Conclusion: Delays in filing the appeals were condoned; respondents were proceeded against ex parte after service by publication; the CESTAT orders remanding the matters for jurisdictional determination in light of Mangali Impex Ltd were set aside and the appeals restored to CESTAT with a direction to decide the appeals on merits, including jurisdiction, uninfluenced by the stayed Mangali Impex decision, while the High Court refrained from expressing any view on the merits.

Refund of Special Additional Duty (SAD) under Notification No.102/2007-Cus subject to VAT payment and non-passing of incidence - Doctrine of unjust enrichment - Certificatory evidence by statutory auditor/Chartered Accountant as sufficient proof of non-passing of incidence - Distinguishing applicability of Addison (Supreme Court) to refunds under Notification No.102/2007-Cus

Refund of Special Additional Duty (SAD) under Notification No.102/2007-Cus subject to VAT payment and non-passing of incidence - Certificatory evidence by statutory auditor/Chartered Accountant as sufficient proof of non-passing of incidence - Board Circulars clarifying procedure for satisfaction of unjust enrichment - Sanctioning of refund claims of SAD under Notification No.102/2007-Cus where conditions of the Notification and the Board's circulars are satisfied by production of Chartered Accountant's certificate. - HELD THAT: - The Tribunal held that Notification No.102/2007-Cus confers refund of SAD to an importer who pays applicable duties at import and thereafter sells the goods paying appropriate sales tax/VAT, subject to satisfaction of the condition that the incidence of the SAD has not been passed on. Board Circulars (including Circular No.16/2008 and Circular No.18/2010) clarify that a certificate by the statutory auditor/Chartered Accountant who certifies the importer's accounts is acceptable to satisfy the unjust enrichment requirement and that field formations need not insist on production of audited balance sheet and profit & loss account. The adjudicating authority had accepted such CA certificates and followed the Board instructions; the Tribunal relied on its precedents which uniformly held that the CA/statutory auditor's certificate explaining that the burden was not passed on is sufficient to allow the refund. Having regard to these principles and the consistent Tribunal decisions cited, the refund sanctions were held to be rightly granted where the prescribed conditions and certificates were in order. [Paras 4]

Refunds under Notification No.102/2007-Cus were properly sanctioned where the Notification's conditions and the Board's circulars are complied with and the statutory auditor/CA certificate establishing non-passing of incidence is produced.

Doctrine of unjust enrichment - Distinguishing applicability of Addison (Supreme Court) to refunds under Notification No.102/2007-Cus - Applicability of the Supreme Court decision in Addison to refund claims made under Notification No.102/2007-Cus. - HELD THAT: - The Tribunal distinguished the Addison decision on the ground that it did not concern refund claims made specifically under Notification No.102/2007-Cus which predicates refund on fulfillment of conditions including payment of VAT and a certificate that the burden of SAD has not been passed on. The Tribunal observed that where the Notification and Board circulars prescribe a CA/statutory auditor's certificate as the mode of satisfying the unjust enrichment condition, Addison is not directly applicable to negate those claims; therefore the revenue's submission that Addison mandates a different mode of verification was not accepted in the context of Notification No.102/2007-Cus refunds. [Paras 4]

Addison does not apply to cases where refunds are claimed and granted strictly in terms of Notification No.102/2007-Cus and the accompanying Board instructions; the decision is distinguished and does not invalidate refunds allowed on production of the prescribed CA certificates.

Final Conclusion: Revenue's appeal is dismissed; the Tribunal upheld the refund orders granted under Notification No.102/2007-Cus where the Notification's conditions and Board circulars were complied with and the prescribed statutory auditor/Chartered Accountant certificates establishing non-passing of the duty incidence were produced.

Certificate of origin - preferential origin under SAFTA - designated authority verification - assessing authority's power to reject certificate - benefit of exemption notification - confiscation and penalty

Certificate of origin - preferential origin under SAFTA - designated authority verification - benefit of exemption notification - Appellant's entitlement to exemption under Notification No.99/2011-CUS dated 09.11.2011 for imports from Bangladesh based on submitted country of origin certificate and its verification. - HELD THAT: - The Tribunal found that the exporter in Bangladesh had imported crude palm oil from Malaysia/Indonesia, processed it into RBD Palm Olein and exported the processed goods to the appellant; the exporter had issued a certificate of country of origin which was verified by the Deputy Director, EPB, Bangladesh. The Revenue did not allege that the certificate or the verification report were fake or cancelled. In those circumstances, and following the Tribunal's settled view that a certificate of origin issued by the designated authority of the exporting contracting State cannot be discarded by Indian assessing authorities unless invalidated by that authority or proved fake, the appellant was entitled to the benefit of the exemption notification. The Court applied the principle that satisfaction required by the notification is met by a valid certificate and corroborating verification from the designated authority in the exporting State. [Paras 13, 18, 19, 21, 24]

Certificate of origin and its verification being accepted and not shown to be fake or cancelled, appellant entitled to benefit of Notification No.99/2011-CUS dated 09.11.2011.

Assessing authority's power to reject certificate - certificate of origin - designated authority verification - Whether the Customs/assessing authority could reject the certificate of origin on the basis of indigenous investigation, price differentials or alleged connivance without proof of invalidity of the certificate. - HELD THAT: - The Tribunal held that assessing authorities in India have no power to sit in judgement over a certificate issued by the designated authority of the exporting contracting State by conducting an indigenous investigation, unless the certificate is shown to be false or is cancelled by the issuing authority. Reliance was placed on earlier Tribunal and judicial decisions which establish that the proper mechanism to challenge a certificate is through the procedures contemplated under the Rules of Origin and by reference to the competent authority in the exporting State; mere contemporaneous price differentials, internal enquiries or correspondence recovered from the importer do not ipso facto justify discarding the certificate. [Paras 15, 16, 17, 22, 23]

Assessing authority cannot reject or discount the certificate of origin based on indigenous inquiries, price comparisons or unproven allegations of connivance; such certificate stands unless proved fake or cancelled by the issuing authority.

Confiscation and penalty - benefit of exemption notification - Sustainability of confiscation, differential duty demand and penalties imposed once exemption under the notification is held to be available. - HELD THAT: - Given the Tribunal's conclusion that the certificate of origin and its verification establish entitlement to the exemption under Notification No.99/2011-CUS, the consequential adjudicatory steps-denial of exemption, demand of differential duty, confiscation of goods and imposition of penalties-were unsustainable. The Tribunal therefore set aside the impugned adjudication and held that no penalty was imposable in the facts and circumstances of the case. [Paras 24, 25, 26]

Impugned proceedings, including differential duty demand, confiscation and penalties, set aside; no penalty payable.

Final Conclusion: The appeals are allowed: the country of origin certificate and its verification by the designated authority in Bangladesh having not been shown to be fake or cancelled, the appellants are entitled to the exemption under Notification No.99/2011-CUS dated 09.11.2011; consequential demands, confiscation and penalties are set aside and no penalty is payable.

Mis-declaration of goods - confiscation under section 111(m) of the Customs Act - customs valuation and transaction value principles - deductive method under the Customs Valuation Rules - use of expert valuation by a chartered engineer - redemption fine and penalty under section 112A - penalty under section 114AA

Mis-declaration of goods - confiscation under section 111(m) of the Customs Act - Imported goods were mis-declared in quantity and liable to confiscation - HELD THAT: - The Tribunal found as an established fact that the declared quantity of frames (1056) did not match the actual quantity found on examination (1075). The order records that this mis-declaration of quantity is proved on the material on record. In view of mis-declaration, the goods fall within the mis-description/mis-declaration contingencies contemplated by the Customs Act and are therefore liable to confiscation under section 111(m). [Paras 4]

Goods held to be mis-declared and liable to confiscation under section 111(m) of the Customs Act.

Customs valuation and transaction value principles - deductive method under the Customs Valuation Rules - use of expert valuation by a chartered engineer - Valuation adopted by revenue based on the chartered engineer's report (invoking deductive/methodical approach where contemporaneous transaction data was unavailable) was sustainable - HELD THAT: - The Tribunal accepted the factual findings in the original order that no contemporaneous import data of identical or similar goods was available, making application of Rules 4 or 5 impracticable. The show cause notice proposed adoption of the deductive method under Rule 7 but faced difficulty as market prices were for complete glasses and not for bare frames; accordingly the revenue obtained an expert valuation from a chartered engineer, who after study arrived at an assessed value. The Tribunal noted that the importer was kept informed and had opportunities to respond; given the manifest disparity between the declared USD 1.25 per piece and available market indications for the branded frames, the Tribunal found the revenue's valuation approach and reliance on the expert report to be reasonable. [Paras 4]

Valuation upheld as sustainable; revenue's adoption of expert-assisted valuation in absence of applicable Rules 4-5 data accepted.

Redemption fine and penalty under section 112A - penalty under section 114AA - Redemption fine and penalties imposed were not excessive or unreasonable - HELD THAT: - Having found mis-declaration and accepted the assessment of value, the Tribunal considered the penalties and redemption fine imposed by the authorities. The order records the imposition of a redemption fine and penalties under sections 112A and 114AA of the Customs Act. In the factual matrix-mis-declaration of quantity and materially understated value for branded goods-the Tribunal concluded that the quantum of redemption fine and penalties did not shock judicial conscience and were within permissible bounds. [Paras 4]

Redemption fine and penalties under sections 112A and 114AA upheld as not excessive or unreasonable.

Final Conclusion: The appeal is dismissed: the Tribunal upheld confiscation for mis-declaration, sustained the valuation adopted by revenue (including reliance on a chartered engineer's report where direct transactional comparables were not available), and found the redemption fine and statutory penalties to be neither excessive nor unreasonable.

Burden of proof under section 123 of the Customs Act - Reasonable belief for seizure under section 110 of the Customs Act - Applicability of presumption of smuggling to diamond studded jewellery - Confiscation under section 111 of the Customs Act - Option of redemption under section 125 of the Customs Act

Applicability of presumption of smuggling to diamond studded jewellery - Burden of proof under section 123 of the Customs Act - Whether the statutory presumption in section 123 of the Customs Act applies to the impugned diamond studded jewellery and, if not, whether the onus under section 123 can be cast on the purchasers in the present case. - HELD THAT: - The Tribunal held that section 123 is a narrowly drawn special provision which shifts the burden only in respect of the classes of goods specified by the statute. By legislative amendment with effect from 26th October 1989, the coverage of the special presumption was altered so as to exclude 'diamonds and manufactures' in the form previously understood; the presumption as presently worded is directed to gold and manufactures thereof (and other classes notified). Consequently, diamond studded jewellery of the kind seized in this case does not fall within the ambit of section 123 so as to attract the statutory burden. Independently, the provision casts burden only on the person from whose possession goods were seized and, where relevant, on a person who then claims ownership; it does not permit imposition of that onus on putative or past purchasers who were neither in possession at the time of seizure nor had asserted ownership in the statutory sense. Given that the impugned goods were not seized from the appellants and they had not, at the relevant time, been the persons from whose possession the goods were seized, the special presumption could not be foisted upon them. The Tribunal therefore concluded that the presumption in section 123 was inapplicable to the goods and that the onus could not be vicariously imposed on the appellants.

Section 123's presumption does not apply to the diamond studded jewellery seized and the statutory onus could not be cast on the appellants who were not persons from whose possession the goods were seized nor statutory claimants of ownership.

Reasonable belief for seizure under section 110 of the Customs Act - Confiscation under section 111 of the Customs Act - Whether the evidence marshalled established the necessary reasonable belief at the time of seizure and sufficed to sustain confiscation under section 111 in the absence of applicability of section 123. - HELD THAT: - The Tribunal reviewed the materials relied upon by customs-entries in the red diary, data from electronic devices of Ms Vihari Sheth, statements recorded during investigation and findings in related proceedings-and noted that, taken together, they contained gaps and did not conclusively establish foreign provenance of the specific jewellery seized from the appellants. The court observed that, outside the limited sphere of section 123, customs authorities must establish one of the statutory grounds for confiscation under section 111 by admissible material and that the linkage of inferences drawn (frequency of travel of a third person, matching of designs, job worker invoices, etc.) was insufficiently proved to satisfy normative requirements for confiscation in rem against the appellants. The Tribunal emphasised that the department is not required to prove with mathematical precision but must establish a degree of probability; here, however, the evidentiary chain as applied to these appellants did not discharge the requirement for confiscation absent the special presumption.

The material did not, on the record before the Tribunal and outside the operation of section 123, satisfactorily establish the reasonable belief or evidentiary foundation required to sustain confiscation of the appellants' goods under section 111.

Option of redemption under section 125 of the Customs Act - Appellate rehearing and natural justice - Whether the first appellate authority's decision to permit redemption by the appellant on specified terms was tenable in view of intervening findings in related proceedings and whether the matter required fresh consideration. - HELD THAT: - The Tribunal found that the first appellate authority proceeded to treat the appellants' cases differently despite the Tribunal's earlier decision in the related proceedings involving M/s Vihari Jewels, which had bearing on the burden and entitlement to redemption. The impugned order failed to take into account essential facts and the legal position as declared by the Tribunal in the connected appeals. Given these lacunae and the necessity of affording the appellant an opportunity to make written and oral submissions in the light of applicable law and relevant judicial determinations, the Tribunal held that the impugned order should be set aside and the appeal remanded for fresh consideration by the Commissioner (Appeals), with directions to hear the appellant afresh and decide in accordance with law.

Impugned order set aside; matter remitted to Commissioner of Customs (Appeals), Mumbai for fresh adjudication after affording the appellant an opportunity to make written and oral submissions.

Final Conclusion: The Tribunal held that section 123's presumption does not extend to the diamond studded jewellery in question and that its onus could not be cast on the appellants who were neither persons from whose possession the goods were seized nor statutory claimants; the evidentiary foundation for confiscation under section 111 was therefore inadequate as applied to them. The impugned appellate order is set aside and the matter is remitted to the Commissioner (Appeals) for fresh consideration after affording the appellant a fresh opportunity of hearing.

Confiscation under section 111(m) of Customs Act, 1962 - customs valuation (Determination of Value of Imported Goods) Rules, 2007 - mis-declaration - provisional assessment - technical liability to confiscation - litigation threshold under CBIC instruction - re-determination of value and differential duty - disposal of declaration under section 46 of Customs Act, 1962

Litigation threshold under CBIC instruction - re-determination of value and differential duty - Appeal by Commissioner of Customs seeking re-determination of value and levy of differential duty was maintainable before the Tribunal. - HELD THAT: - The Tribunal found the Revenue's challenge to the appellate order to reinstate the upward valuation and recover differential duty did not comply with the Central Government's litigation policy threshold set out in the CBIC instruction dated 2nd November 2023. The exception relied upon by Revenue was considered inapt in the circumstances of this appeal and did not cure non compliance with the threshold qualification. Consequently the appeal by the Commissioner of Customs was not admitted for want of compliance with the litigation policy. [Paras 5]

Appeal of Commissioner of Customs dismissed for non-compliance with the CBIC litigation threshold; Revenue not permitted to pursue re-determination of value and differential duty.

Confiscation under section 111(m) of Customs Act, 1962 - technical liability to confiscation - provisional assessment - disposal of declaration under section 46 of Customs Act, 1962 - Whether confiscation of the imported goods (portion alleged to be 'alloy steel') could be sustained. - HELD THAT: - The Tribunal held that the finding of confiscability rested on test reports from samples which were extrapolated to the entire consignment, and that the extent of mis declaration had not been quantified. The impugned order itself described the goods as only 'technically' offending and observed that the alleged mis declaration did not affect value or rate of duty and was therefore of limited relevance to disposal under section 46. In view of the limited and unquantified nature of the mis declaration and the reliance on extrapolation from samples, the Tribunal saw no reason to sustain the confiscation and set aside that consequence. [Paras 6, 7]

Appeal of importer allowed; confiscation not sustained and the relief granted by the first appellate authority upheld in favour of the importer.

Final Conclusion: The appeal by the importer is allowed and the confiscation is set aside; the appeal by the Commissioner of Customs is dismissed for failure to meet the CBIC litigation threshold, leaving the first appellate outcome favourable to the importer intact.

Mis-declaration of Retail Sale Price - confiscation under Section 111(m) of the Customs Act, 1962 - redemption fine under Section 125 of the Customs Act, 1962 - penalty under Section 112(a) of the Customs Act, 1962 - automatic imposition of fine and penalty upon confiscation - absence of mens rea not a condition precedent for confiscation or penalty

Mis-declaration of Retail Sale Price - confiscation under Section 111(m) of the Customs Act, 1962 - automatic imposition of fine and penalty upon confiscation - Mis-declaration of the declared Retail Sale Price in the Bill of Entry renders the imported goods liable to confiscation and attracts redemption fine and penalty. - HELD THAT: - The Tribunal found on record that the appellant declared a lower RSP in the Bill of Entry than the RSP pasted on the packages. Although the appellant paid the differential CVD with interest, fine and penalty before clearance and contended the discrepancy was an unintentional communication error, the statutory scheme does not permit escape from confiscation where declared value does not correspond to the goods. Once goods are liable to confiscation under Section 111(m), imposition of redemption fine under Section 125 and penalty under Section 112(a) follows as a statutory consequence. The Tribunal applied the reasoning of the Supreme Court in Pine Chemical Suppliers in support of this proposition and found no infirmity in the orders of the lower authorities confirming confiscation, redemption fine and penalty. [Paras 5]

The finding of confiscation and consequent confirmation of redemption fine and penalty was upheld.

Absence of mens rea not a condition precedent for confiscation or penalty - penalty under Section 112(a) of the Customs Act, 1962 - Mens rea is not a necessary condition for imposing confiscation or consequential penalties for mis-declaration in importation. - HELD THAT: - The Tribunal accepted the Revenue's submission, and relying on precedent, held that the question of mens rea is not a precondition for determining liability for confiscation and penalties under the Customs Act. The statutory scheme and judicial authority establish that improper declaration attracting confiscation and Section 112 penalties does not require proof of mala fide intention. [Paras 3, 5]

Liability to confiscation and penalty was sustained notwithstanding the appellant's plea of lack of mala fide intent.

Final Conclusion: The appeal is dismissed; the adjudged confiscation, redemption fine and penalty were rightly confirmed by the authorities below and require no interference.

Remand to adjudicating authority - jurisdiction of Commissioner of Customs (Preventive) / Directorate of Revenue Intelligence to issue show cause notices - decide on merits uninfluenced by stayed precedent - CESTAT's power to remand

Remand to adjudicating authority - CESTAT's power to remand - decide on merits uninfluenced by stayed precedent - Validity of CESTAT orders remanding matters to the Adjudicating Authority for decision on jurisdiction conditioned upon the Supreme Court's decision in Mangali Impex Ltd, and the appropriate course of adjudication. - HELD THAT: - CESTAT had remanded the appeals to the Adjudicating Authority to decide the question of jurisdiction only after the Supreme Court disposes the Civil Appeal arising out of this Court's decision in Mangali Impex Ltd. This Court observed that a Coordinate Bench has held such remands unjustified and has directed CESTAT to decide the appeals on merits, including the question of jurisdiction, uninfluenced by the Mangali Impex decision whose operation has been stayed by the Supreme Court. In light of those decisions and the fact that delay in filing the appeals has been condoned, the Court concluded that the impugned remands were not justified and that the appeals should be restored to CESTAT for an independent adjudication on merits. The Court expressly left the merits open and clarified that it expresses no opinion on substantive questions, permitting CESTAT to take such view as it deems appropriate. [Paras 5, 6, 9, 10, 11]

Impugned remand orders set aside; appeals restored to CESTAT with direction to decide the appeals on merits, including the question of jurisdiction of the Commissioner of Customs (Preventive)/DRI to issue show cause notices, uninfluenced by the Mangali Impex decision.

Final Conclusion: Impugned CESTAT orders remanding matters for jurisdictional determination contingent on a pending Supreme Court decision are set aside; appeals are restored to CESTAT which is directed to decide them on merits, including jurisdiction, without being guided by the stayed Mangali Impex decision; no expression of opinion on merits by this Court.

Medical bail - proviso permitting release of a person who is sick or infirm despite statutory bail embargo - protection of personal liberty in face of unreasonable trial delay - right to private medical treatment at own expense - court's discretion to relax procedural technicalities in the interest of justice

Medical bail - protection of personal liberty in face of unreasonable trial delay - Confirmation of interim medical bail granted to the applicant - HELD THAT: - Having considered the applicant's advanced age, detailed and contemporaneous medical reports from Nanavati Max Super Speciality Hospital demonstrating advanced malignancy, prolonged need for specialised stoma and post operative care, and the absence of a fair likelihood that the complex multi accused trial will commence or conclude within a reasonable period, the Court concluded that the interim medical bail previously granted should be confirmed. The Court also took into account precedent recognising that prolonged custody where trial is unlikely to be completed in reasonable time engages protection of personal liberty and may justify bail in serious economic offence prosecutions. The Court declined to allow a procedural technicality - that the earlier interim order was not finally disposed - to defeat the adjudication on medical grounds, observing that procedure is the handmaid of justice. [Paras 23, 25]

Interim medical bail is confirmed and the applicant is enlarged on bail subject to specified conditions.

Proviso permitting release of a person who is sick or infirm despite statutory bail embargo - court's discretion to relax procedural technicalities in the interest of justice - Applicability of the proviso to the statutory embargo on bail in favour of a person who is sick or infirm under the Companies Act regime - HELD THAT: - The Court accepted that while Section 212(6) of the Companies Act imposes additional constraints on grant of bail in certain offences, the proviso thereto expressly empowers the Special Court to release a person who is 'sick or infirm'. Having examined the medical material and authorities where sick or infirm persons were released on medical grounds, the Court found the proviso applicable and exercised its discretion to grant bail under that exception. The Court further relied on established authorities recognizing that courts may protect personal liberty where medical exigencies and trial delay intersect. [Paras 14, 15, 25]

The proviso permitting release of a person who is sick or infirm is applicable and supports grant of medical bail in the present case.

Right to private medical treatment at own expense - conditions of bail and supervision - Conditions to be imposed while confirming medical bail - HELD THAT: - In confirming bail the Court imposed customary supervisory conditions to safeguard the investigatory process and public interest: execution of a PR bond with sureties, attendance at the Special Court, not leaving the court's jurisdiction, surrender of passport, furnishing and updating contact details, informing authorities of any hospital admission, and prohibition on tampering with evidence or influencing witnesses. These conditions balanced the applicant's medical needs and liberty with the court's duty to ensure trial integrity and prevent flight or interference. [Paras 25]

Bail is confirmed subject to execution of PR bond, sureties and the enumerated supervisory conditions; breach entitles prosecution to seek cancellation.

Final Conclusion: The interim medical bail granted earlier is confirmed on account of the applicant's advanced and deteriorating medical condition, applicability of the proviso permitting release of a sick or infirm person despite statutory embargo, and the absence of a fair likelihood of trial being concluded within a reasonable period; bail is subject to specified conditions and supervision.

Cognizance of offence under Section 447 of the Companies Act restricted to complaint by Director, SFIO or authorised Central Government officer - private complaint not maintainable for offence under Section 447 - continuing offence doctrine - limitation under Section 468 Cr.P.C. and commencement under Section 469 Cr.P.C. - computation of limitation for offences tried together determined by offence punishable with most severe punishment (Section 468(3) Cr.P.C.) - wrongful withholding under Section 452 of the Companies Act is a continuing offence

Cognizance of offence under Section 447 of the Companies Act restricted to complaint by Director, SFIO or authorised Central Government officer - private complaint not maintainable for offence under Section 447 - Validity of summoning the petitioners for offence under Section 447 of the Companies Act on a private complaint - HELD THAT: - The Court held that the second proviso to Section 212(6) and Section 439(1) of the Companies Act preclude taking cognizance of an offence under Section 447 except upon a written complaint by the Director, SFIO or an officer of the Central Government so authorised. A complaint under Section 200 Cr.P.C. by a private person or even the company cannot support cognizance for Section 447. Reliance of other High Courts supporting this interpretation was noted. Consequently, the Trial Court's order summoning the petitioners for Section 447 could not be sustained. [Paras 26, 27, 28, 29, 55]

Order summoning petitioners for offence under Section 447 set aside.

Limitation under Section 468 Cr.P.C. and commencement under Section 469 Cr.P.C. - computation of limitation for offences tried together determined by offence punishable with most severe punishment (Section 468(3) Cr.P.C.) - Whether cognizance of offence under Section 185 of the Companies Act was barred by limitation and whether that limitation was extended by being tried with other offences - HELD THAT: - Section 185, punishable with imprisonment up to six months or fine, attracts a one year limitation under Section 468(2) read with Section 469. The complaint alleged offences occurring between 2002-2008; the complainant (a shareholder) did not plead ignorance of the commission of the offence, and the complaint filed in 2017 was therefore time-barred as regards Section 185. The Court analysed Section 468(3) and Section 220 Cr.P.C. and held that where offences are tried together the applicable limitation is determined by the offence punishable with the more severe punishment. As Section 452 (the continuing offence) is punishable with fine only (six months/treated as fine only category under Section 468), it does not enlarge the limitation period for Section 185. The allegation of conspiracy under Section 120B was not taken as a standalone offence so as to extend limitation for Section 185. The result is that cognizance for Section 185 could not be sustained. [Paras 50, 51, 52, 53, 55]

Order taking cognizance for offence under Section 185 is set aside as barred by limitation.

Wrongful withholding under Section 452 of the Companies Act is a continuing offence - continuing offence doctrine - fresh period of limitation runs during continuance (Section 472 Cr.P.C.) - Validity of cognizance for offence under Section 452 of the Companies Act and applicability of limitation - HELD THAT: - Section 452 criminalises wrongfully obtaining or withholding company property and, by its terms, the offence continues so long as the property is wrongfully withheld. Applying the continuing offence doctrine (as explained in relevant Supreme Court precedents), limitation for a continuing offence restarts during the period it continues (Section 472 Cr.P.C.), and therefore the Trial Court's cognizance of Section 452 could not be faulted on limitation grounds. The Court accordingly upheld the order so far as it took cognizance of Section 452 read with Section 120B IPC. [Paras 38, 39, 40, 41, 56]

Order taking cognizance for offence under Section 452 read with Section 120B IPC is upheld.

Trial court to examine duplicity / similarity of complaints at appropriate stage - Whether parallel/pending complaint by another company (M/s Glory Apartments Pvt. Ltd.) vitiates the summoning order for Section 452 at this stage - HELD THAT: - The High Court declined to pre-judge the factual contention that a prior complaint raising similar allegations is pending. It recorded that this is a disputed question of fact to be examined by the Trial Court at the appropriate stage; if two complaints are found to raise substantially the same allegations leading to double trials, the Trial Court would take action in accordance with law. The High Court therefore did not quash the cognizance on this ground and left the matter for trial-level determination. [Paras 54]

Question of duplicity of complaints left to be determined by the Trial Court at an appropriate stage.

Final Conclusion: The petition is allowed insofar as the summons for offences under Sections 447 and 185 of the Companies Act (read with Section 120B IPC) are set aside as not maintainable (Section 447) or time barred (Section 185). The summons insofar as they relate to Section 452 of the Companies Act read with Section 120B IPC are upheld. The respondent is at liberty to apply for extension of limitation under Section 473 Cr.P.C. if permissible; issues of overlapping complaints are left to the Trial Court to decide at the appropriate stage.

Admission of Section 7 application under the Insolvency and Bankruptcy Code - existence of financial debt and default - notice under Section 13(2) of the SARFAESI Act and its evidentiary effect - appellate interference where debt and default are proved - vacation of interim stay

Existence of financial debt and default - admission of Section 7 application under the Insolvency and Bankruptcy Code - notice under Section 13(2) of the SARFAESI Act and its evidentiary effect - appellate interference where debt and default are proved - Validity of admission of the Section 7 petition by the Adjudicating Authority on the ground that financial debt and default were established - HELD THAT: - The Tribunal observed that the sanction of credit facilities by the consortium including the respondent bank and the classification of the account as NPA were not disputed. Notices demanding payment were issued and, although the Corporate Debtor replied to the SARFAESI notice, the reply did not deny liability; it invoked steps being taken to secure investors and sought consideration of restructuring efforts. The Adjudicating Authority found that the financial creditor established the existence of a financial debt and its default. The Tribunal held that where debt and default are proved on the record, the Adjudicating Authority's admission of the Section 7 application did not call for interference. The appellant's subsequent OTS proposals and interim undertakings did not negate the proved default, and no error was made in admission of the petition. [Paras 12]

The Adjudicating Authority rightly admitted the Section 7 application; the finding of debt and default does not warrant interference.

Vacation of interim stay - appellate interference where debt and default are proved - Whether the interim order granted by this Tribunal should continue or be vacated in light of the appellant's failure to liquidate the debt or comply with OTS conditions - HELD THAT: - The Tribunal noted that on the appellant's undertaking to liquidate the dues within two weeks an interim order was passed, but during the pendency of the appeal the appellant failed to make the requisite payments or deposit the specified upfront amount for OTS despite several proposals. The bank's affidavit and minutes of the joint lenders' meeting indicated no pending OTS proposal. Consequently, the appellate interim protection could not be sustained where the appellant did not fulfill the undertaking or take steps required by the lenders. The Tribunal therefore found no ground to continue the interim relief. [Paras 13]

Interim order is vacated and the appeal is dismissed; related IA disposed of.

Final Conclusion: The appeal is dismissed for lack of merit; the impugned order admitting the Section 7 petition is upheld, the interim order is vacated and connected interlocutory application is disposed of, with no order as to costs.

Approver and pardon in predicate offence and its effect on prosecution under the PMLA - Requirement of a scheduled offence and "proceeds of crime" for offence under Section 3 PMLA - Section 45 PMLA twin conditions for grant of bail - "reasonable grounds for believing" and risk of re-offending - Evidentiary role of statements recorded under Section 50 PMLA at the bail stage - Parity doctrine / relevance of non-arrest of similarly placed co-accused in bail considerations

Approver and pardon in predicate offence and its effect on prosecution under the PMLA - Requirement of a scheduled offence and "proceeds of crime" for offence under Section 3 PMLA - Legal effect of the applicant's grant of pardon/approver status in the predicate scheduled offence on the continuance of proceedings under the PMLA. - HELD THAT: - The Court examined whether pardon granted to the applicant in the predicate proceeding (making him an approver/witness) ipso facto absolves him from prosecution under the PMLA. Relying on the principles in Vijay Madanlal Choudhary and Pavana Dibbur and on the distinction between dismissal/quashing/acquittal of the scheduled offence and grant of pardon/approver status, the Court held that pardon under Sections 306-308 CrPC converts the accused into a witness subject to statutory conditions but does not amount to an absolute acquittal for purposes of PMLA proceedings. The Court accepted the view that a prosecution under Section 3 PMLA requires the existence of a scheduled offence and proceeds of crime; if the scheduled offence is finally extinguished by acquittal/discharge/quashing, PMLA prosecution cannot continue. However, grant of pardon/approver status in the predicate case does not by itself fall within the category of being "finally absolved" so as to disable PMLA proceedings, and the evidence that the approver gives in the predicate matter cannot be used in the PMLA unless conditions under CrPC are met. Consequently, the applicant's approver status is relevant only to the limited extent provided by law and does not automatically preclude PMLA prosecution against him. [Paras 16, 17, 18, 19, 20]

Grant of pardon/approver status in the predicate offence does not automatically bar prosecution under the PMLA; the approver becomes a witness subject to CrPC conditions and evidence given in those proceedings cannot be freely used in the PMLA.

Section 45 PMLA twin conditions for grant of bail - "reasonable grounds for believing" and risk of re-offending - Evidentiary role of statements recorded under Section 50 PMLA at the bail stage - Whether the applicant satisfied the twin conditions prescribed by Section 45 PMLA for grant of bail on the materials on record. - HELD THAT: - The Court applied the settled test under Section 45 PMLA, emphasising that at the bail stage the court must assess only broad probabilities and whether there are reasonable grounds for believing that the accused has not committed the offence and would not commit an offence while on bail. The Court considered the prosecution material - principally the statements recorded under Section 50 PMLA and the allegations in the complaint - and held that Section 50 statements are admissible for limited evaluation at the bail stage to ascertain broad probabilities, though their full probative value is to be assessed at trial. On the material, the applicant was shown to have been a non-managerial field operative who repeatedly stated that he acted on instructions and was paid commission; none of his statements affirmatively established knowledge that the routed funds were bank loan proceeds or that he was a beneficiary of proceeds of crime. No asset of the applicant has been shown to be derived from proceeds of crime. The Court also noted that similarly placed co-accused had not been arrested and that the applicant had cooperated with investigation and had been in custody for a prolonged period. Applying the Section 45 framework on broad probabilities, the Court found absence of sufficient material demonstrating requisite mens rea or that the applicant would commit an offence if released. [Paras 26, 27, 28, 29, 31]

The applicant satisfied the twin conditions of Section 45 PMLA on the available material; bail was accordingly granted subject to conditions.

Evidentiary role of statements recorded under Section 50 PMLA at the bail stage - Parity doctrine / relevance of non-arrest of similarly placed co-accused in bail considerations - Whether statements under Section 50 PMLA and non-arrest of similarly placed co-accused can be considered in determining bail. - HELD THAT: - The Court reiterated that statements recorded under Section 50 PMLA are judicially significant and admissible, yet at the bail stage they must be examined only for broad probabilities rather than through a mini-trial; self-contradictions or material inconsistencies in such statements may benefit the accused at bail stage. The Court further accepted that selective non-arrest or non-custodial treatment of similarly placed co-accused is a relevant factor in assessing parity and the reasonableness of continued detention. Given that several co-accused with similar roles were not placed in custody and some were merely witnesses or granted bail in predicate matters, parity and the nature of the applicant's recorded statements weighed in favour of bail. [Paras 24, 30]

Section 50 statements can be used to assess broad probabilities at bail stage; parity arising from non-arrest of similarly placed co-accused is a relevant factor favouring grant of bail.

Final Conclusion: On the material placed before it and applying the twin conditions of Section 45 PMLA on broad probabilities, the Court found that the applicant had not been shown to possess the requisite mens rea or to be a beneficiary of proceeds of crime and that considerations of parity and cooperation with investigation favoured release; bail was therefore allowed subject to specified conditions.

Applicability of Section 205 Cr. P.C. to trials under the PMLA Act, 2002 - discretion under Section 205 Cr. P.C. to grant exemption from personal attendance - restrictive provisions of the PMLA Act and Section 45 not constituting an absolute bar to exemption under Section 205 Cr. P.C. - requirement of sufficient and cogent reasons and circumspection in exercising discretion under Section 205 Cr. P.C. - remand for fresh consideration of an application under Section 205 Cr. P.C.

Applicability of Section 205 Cr. P.C. to trials under the PMLA Act, 2002 - restrictive provisions of the PMLA Act and Section 45 not constituting an absolute bar to exemption under Section 205 Cr. P.C. - discretion under Section 205 Cr. P.C. to grant exemption from personal attendance - requirement of sufficient and cogent reasons and circumspection in exercising discretion under Section 205 Cr. P.C. - Whether an application under Section 205 Cr. P.C. for exemption from personal attendance is maintainable in proceedings under the PMLA Act, 2002 and the manner in which the trial court must exercise the discretion vested in it. - HELD THAT: - The Court held that an application under Section 205 Cr. P.C. is maintainable in proceedings under the PMLA Act and that Section 45 of the PMLA Act does not operate as an absolute bar to consideration of such an application. The trial court must exercise the discretion conferred by Section 205 Cr. P.C. with circumspection and caution and should be satisfied on the sufficiency and cogency of reasons demonstrating the accused's inability to appear personally. The discretion is to be sparingly exercised only where personal appearance would cause great hardship or where sufficient and cogent grounds are shown; it is not to be used as a substitute for bail nor to be granted routinely. The Court relied on the Coordinate Bench's reasoning and the Supreme Court's direction in the related Chintan Joshi proceedings that exemption cannot be granted as a blanket right but may be considered on merits when cogent reasons are shown, and therefore the trial court must decide applications under Section 205 Cr. P.C. on the materials placed before it and in accordance with law. [Paras 16, 18]

Application under Section 205 Cr. P.C. is maintainable in PMLA trials; Section 45 PMLA does not preclude consideration of such application and the trial court must consider it with circumspection, requiring sufficient and cogent reasons.

Remand for fresh consideration of an application under Section 205 Cr. P.C. - direction to decide the application on its merits within a specified time - Whether the impugned order rejecting the petition under Section 205 Cr. P.C. should be set aside and the matter remanded for fresh consideration. - HELD THAT: - On review of the trial court's reliance on Section 45 of the PMLA Act and its consideration of the application in a manner found to be unsustainable in law, the High Court set aside the impugned order. The Court remanded the application to the Sessions Judge-cum-Special Judge, Khurda at Bhubaneswar for fresh consideration of the petitioner's Section 205 Cr. P.C. application, directing that the trial court take into account the grounds and materials placed on record by the petitioner and the observations of the Supreme Court in the related matter. The trial court was directed to dispose of the application within six weeks from receipt of a certified copy of this judgment. [Paras 18]

Impugned order set aside and the matter remanded to the trial court for fresh consideration of the Section 205 Cr. P.C. application, to be decided within six weeks.

Final Conclusion: The High Court set aside the trial court's order rejecting exemption from personal attendance under Section 205 Cr. P.C., held that Section 45 of the PMLA Act does not bar consideration of such applications, directed that the trial court exercise its discretion with circumspection on the basis of sufficient and cogent reasons, and remanded the matter for fresh disposal within six weeks.

Composite works contract - indivisible composite works contract - abatement as indication of composite contract - service tax demand under Construction of Residential Complex Service - service tax demand under Commercial or Industrial Construction Service - service tax demand under Erection, Commissioning or Installation Service - pre-1.7.2012 charging provision applicable to composite contracts

Composite works contract - abatement as indication of composite contract - service tax demand under Construction of Residential Complex Service - service tax demand under Commercial or Industrial Construction Service - service tax demand under Erection, Commissioning or Installation Service - pre-1.7.2012 charging provision applicable to composite contracts - Sustainability of service tax demands raised under RCS, CICS and ECIS for the period 1.10.2007 to 31.3.2012 in respect of composite construction contracts - HELD THAT: - The appellant's contracts were found to be composite in nature, involving both supply of materials and rendition of services, a conclusion reinforced by the departmental quantification granting abatement which itself indicates a composite contract. Tribunal precedent in Real Value Promoters Pvt. Ltd., followed by Jain Housing & Construction Ltd. (maintained by the Supreme Court) and by Srinivasa Shipping & Property Developers Ltd., treats such indivisible composite works contracts as not amenable to separate classification under RCS, CICS or ECIS for the pre-1.7.2012 period. The High Court decision in Delhi Jal Board Contractors Welfare Association also held that an indivisible composite works contract cannot sustain a demand under ECIS. Applying those authoritative decisions and the rationale that indivisible composite contracts must be taxed under the appropriate composite charging provision rather than separately as RCS/CICS/ECIS for the period in question, the demand under the three specific service categories cannot be sustained. [Paras 6, 7, 8]

Demand of service tax raised under Construction of Residential Complex Service, Commercial or Industrial Construction Service and Erection, Commissioning or Installation Service for the period 1.10.2007 to 31.3.2012 is set aside.

Final Conclusion: The appeal is allowed; the impugned order confirming demands, interest and penalties under RCS, CICS and ECIS for the period 1.10.2007 to 31.3.2012 is set aside in view of the contracts being indivisible composite works contracts and applicable precedents.

Provision of service by an employee to the employer excluded from the definition of "service" - Taxability of remuneration paid to whole-time directors - Reverse Charge Mechanism on directors' remuneration - Use of balance sheet versus Form 16 for establishing tax liability - Extended period and suppression

Provision of service by an employee to the employer excluded from the definition of "service" - Taxability of remuneration paid to whole-time directors - Reverse Charge Mechanism on directors' remuneration - Whether remuneration paid to whole-time directors of the appellant is taxable as a service liable to service tax under reverse charge - HELD THAT: - The Tribunal held that the amounts in question were paid to whole-time directors who are employees of the company and therefore fall within the statutory exclusion that a provision of service by an employee to the employer in the course of or in relation to his employment is not a "service" for levy of service tax. The Companies Act definitions were noted to treat a director who is an employee as a whole-time director, and departmental circulars were relied upon to show that payments to whole-time directors (including commission or remuneration) are not taxable as management consultancy or other services unless separately rendered and compensated outside the employment relationship. The adjudicating authority's reliance on the difference between figures in the balance sheet and Form 16 was rejected: the Tribunal explained that the balance sheet records accrual accounting entries while Form 16 reflects remuneration actually disbursed and taxed at source, so disparity does not justify presuming a taxable service. Consequently the confirmed demand under reverse charge for remuneration to whole-time directors was held unsustainable. [Paras 4]

Remuneration paid to whole-time directors is not taxable as a service and no service tax under reverse charge can be levied thereon.

Extended period and suppression - Use of balance sheet versus Form 16 for establishing tax liability - Whether the extended limitation period could be invoked and the demand sustained on the basis of alleged suppression - HELD THAT: - The Tribunal found no cogent evidence of suppression by the appellant. It observed that the appellant had been filing ST-3 returns and discharging service tax for non-whole-time directors, and that the department produced no material to demonstrate concealment. Given the unsustainable nature of the substantive demand and absence of proof of suppression, reliance on the extended period was held to be incorrect. [Paras 4]

Extended period was not invocable; the demand based on extended limitation was wrongly relied upon.

Final Conclusion: The order confirming service tax demand on remuneration paid to whole-time directors and invoking the extended period is set aside; the appeal is allowed.

Reimbursements not includible in taxable value - free supplies / rent free accommodation not consideration for services - Rule 5 of Service Tax (Determination of Value) Rules held ultra vires Section 67 - absence of suppression - extended period/time bar cannot be invoked

Reimbursements not includible in taxable value - Rule 5 of Service Tax (Determination of Value) Rules held ultra vires Section 67 - Whether reimbursements received from the service recipient are to be included in the taxable value for levy of Service Tax - HELD THAT: - The Tribunal held that reimbursements paid on actuals (medical, vehicles, stationery, telephone, transport, etc.) cannot be treated as 'consideration' for the services and therefore are not includible in the taxable value. The decision follows the Hon'ble Supreme Court in Intercontinental Consultants & Technocrats Pvt. Ltd. and Bhayana Builders Pvt. Ltd., which rejected the inclusion of free supplies or their values in the gross amount charged, and affirmed that Rule 5 goes beyond the scope of Section 67. The Tribunal also relied on consistent earlier Benches deciding identical issues involving other units of the same Appellant, which held reimbursements non includible and applied the Supreme Court ratio to set aside the demands. [Paras 10, 11, 12, 13]

Reimbursements received from RINL are not includible in the taxable value; the demand on this count is set aside.

Free supplies / rent free accommodation not consideration for services - Whether rent free accommodation provided by the service recipient to the Appellant's personnel can be treated as additional consideration and included in taxable value - HELD THAT: - Applying the Supreme Court precedents and Tribunal decisions cited, the Tribunal held that the notional value of rent free accommodation (HRA saved) does not form part of the consideration for the service and cannot be added to arrive at the taxable value. The Tribunal observed that the legal position is no longer res integra and that earlier Tribunal decisions on identical facts are squarely applicable, leading to disallowance of the addition made on account of rent free accommodation. [Paras 11, 12, 13]

Notional value of rent free accommodation is not includible in the taxable value; the demand on this count is set aside.

Reimbursements not includible in taxable value - Whether excess pension contribution received and adjusted by the Appellant constitutes consideration liable to Service Tax - HELD THAT: - The Tribunal accepted the Appellant's submission that excess pension contribution pertains to employees' pension fund and is returned or adjusted subsequently, and is not consideration received by the Appellant for the services rendered. The Tribunal held that the same principle which excludes reimbursements from taxable value applies here, and the cited authorities are held to be squarely applicable. [Paras 3, 13]

Excess pension contribution received and adjusted is not consideration and is not includible in taxable value; the demand on this count is set aside.

Absence of suppression - extended period/time bar cannot be invoked - Whether the demand for the earlier period (01.04.2009 to 31.03.2011) is barred by limitation and whether extended period can be invoked - HELD THAT: - The Tribunal found that the Appellant, a Government of India undertaking under the Ministry of Home Affairs providing services to a PSU, had a bona fide belief (fortified by contemporaneous judicial decisions) that reimbursements and rent free accommodation were not taxable. There was no evidence of suppression or mens rea to evade tax. In view of these facts and the relevant Supreme Court authority, the Tribunal held that invocation of the extended period for 01.04.2009 to 31.03.2011 was not justified and the confirmed demand for that period was legally unsustainable. [Paras 14]

Confirmed demand for the period 01.04.2009 to 31.03.2011 is time barred and set aside.

Final Conclusion: The Appeal is allowed on merits and in part on limitation; demands in respect of reimbursements, excess pension contribution and rent free accommodation are set aside, and the confirmed demand for 01.04.2009 to 31.03.2011 is held time barred. The Appellant is eligible for consequential relief as per law.

Business Auxiliary Service - principal-to-principal sale - agency versus sale distinction - substance over form - taxability where sales tax/VAT is discharged

Principal-to-principal sale - agency versus sale distinction - substance over form - The arrangement between the appellant and Coal India Limited is a transaction of sale/purchase on a principal-to-principal basis and not an agency contract subjecting the appellant to tax as Business Auxiliary Service. - HELD THAT: - The Tribunal examined the Coal Distribution Policy, the contractual and invoicing practice and documentary evidence showing that the appellant paid the coal companies the notified price on its own account, received refunds directly, issued resale invoices to consumers and paid sales tax/VAT on its sales. The presence of prescribed price, distribution restrictions or the use of the term 'agency' in policy do not alter the substantive nature of the transactions. Applying the principle that substance prevails over form, and having regard to authorities which held that restrictions or licence-like conditions do not convert a sale into an agency, the Tribunal held there was no feature of an agency relationship such as sale of goods as the principal's property or indemnity by the principal for losses. On the facts the appellant bought coal and resold it as owner, therefore the transactions were sales between principals and not taxable services under Business Auxiliary Service. [Paras 10, 14, 15, 16, 18]

Transaction is a sale/purchase on principal-to-principal basis and not a Business Auxiliary Service.

Business Auxiliary Service - taxability where sales tax/VAT is discharged - The 5% margin prescribed by the policy and collected by the appellant does not constitute a service charge attracting service tax where both the coal companies and the appellant discharged sales tax/VAT on their respective sales. - HELD THAT: - The Coal Policy permitted the appellant a margin of up to 5% over the basic price; the appellant added this margin to the price charged to consumers and paid sales tax/VAT on the entire resale value. The Tribunal noted precedent where transactions characterised by purchase by the reseller and concurrent payment of sales tax/VAT by both parties were treated as sales and not as commissionable services. Given that the appellant bore the price and paid VAT on resale, and that the margin resulted from resale price fixed by agreement rather than a commission for marketing the principal's goods, there was no element of service liable to service tax. [Paras 10, 19, 20]

The prescribed 5% margin does not attract service tax; no service tax liability arises.

Final Conclusion: The impugned order confirming service tax demand under the Business Auxiliary Service classification is set aside; the Tribunal allows the appeal holding the transactions to be sales on principal-to-principal basis and that the prescribed margin does not give rise to service tax liability.

Show cause notice deficiency for non specification of taxable service - taxability of consideration not in money as part of gross amount charged - classification requirement in pre negative list era - reliance on prior judicial pronouncements in identical factual matrix

Show cause notice deficiency for non specification of taxable service - classification requirement in pre negative list era - Whether the show cause notice was fatally defective for failing to specify the nature/category of the taxable service in the pre negative list period, thereby rendering the demand unsustainable. - HELD THAT: - The Tribunal observed that the noticee was registered for providing port services but the impugned show cause notice omitted to identify what service, if any, was received from M/s. NCCL and under which category such service would fall. In the period prior to introduction of the negative list the classification of the service alleged is a necessary part of the demand. The impugned order maintained silence as to the nature of the taxable service and therefore the taxability could not be sustained in the absence of classification. The Tribunal further noted that the point is consistent with earlier decisions in the appellant's own litigation and the position taken by superior courts in similar factual matrices, and accordingly treated the omission as fatal to the demand.

The omission in the show cause notice to specify the nature/category of the taxable service in the pre negative list period rendered the demand untenable; appeals allowed.

Final Conclusion: Appeals allowed on the ground that the show cause notice failed to specify the nature/category of the taxable service in the pre negative list period; consequential questions including limitation were not separately decided.

Extended period - limitation - requirement of detailed verification before invoking extended period - discrepancy between ST3 returns and ITR - exemption under Notification No. 25/2012 - Entry 47(i) - exemption for admission to protected heritage sites (S.No.45)

Extended period - limitation - requirement of detailed verification before invoking extended period - discrepancy between ST3 returns and ITR - Validity of invocation of the extended period for issuance of the SCN and confirmation of demand for the period 2016-17. - HELD THAT: - The Tribunal held that the Department issued the SCN for the extended period solely on the basis of a discrepancy between ST3 Returns and Income Tax Returns (Form 26AS/ITR) without undertaking any detailed investigation or verification. The appellant was a registered service-tax assessee, filing returns and discharging service tax, and produced audited records which led the Adjudicating Authority to drop the major part of the original demand. There was no evidence that the appellant had charged service tax to clients or that there was suppression warranting invocation of the extended period. In these circumstances the Tribunal found that the extended period was improperly invoked and that the confirmed demand must be set aside on the ground of limitation. [Paras 6]

Confirmed demand for the extended period is set aside on account of limitation; impugned order is set aside.

Exemption under Notification No. 25/2012 - Entry 47(i) - exemption for admission to protected heritage sites (S.No.45) - Entitlement to exemption under Notification No. 25/2012 (Entry 47(i) and S.No.45) in respect of services at Borra Caves. - HELD THAT: - The Tribunal observed that the appellant's case that the services fall within Entry 47(i) (exhibition of cinematographic film, circus, dance or theatrical performance) and that there is an alternative exemption at S.No.45 for admission to museums, national parks, wildlife sanctuaries, tiger reserves or zoos, had force. However, having decided the appeal on limitation, the Tribunal did not examine the merits or make a definitive adjudication on entitlement to exemption. The question of whether the services at Borra Caves qualify under the cited exemption entries was not finally determined by the Tribunal and remains to be considered if necessary in any further proceedings. [Paras 7, 8]

Merits of exemption not adjudicated; left open for consideration as appropriate in consequence of the limitation ruling.

Final Conclusion: Appeal allowed on the ground of limitation; the demand confirmed for the extended period is set aside and the impugned order is quashed. The Tribunal did not decide the substantive question of entitlement to exemption under Notification No. 25/2012 and left that matter open for consideration; appellant is entitled to consequential relief as per law.

Levy of service tax as Business Auxiliary Service (Section 65(19), Finance Act, 1994) - Distinction between sale of goods and taxable service - Prohibition of double taxation where principal has discharged tax - Precedential effect of tribunal and High Court decisions on identical factual matrix

Levy of service tax as Business Auxiliary Service (Section 65(19), Finance Act, 1994) - Prohibition of double taxation - Whether the sums received by the appellant from the telecom company for sale of SIM cards and related products were exigible to service tax as Business Auxiliary Services or constituted margin on sale of goods not liable to a second charge of service tax. - HELD THAT: - The Tribunal found that the amounts in question arose from purchase and sale of SIM cards and allied products by the appellant and were not remuneration for an independent service falling under Business Auxiliary Service. Material on record showed that the telecom company had already discharged service tax on the products sold by the appellant. Applying the determinative principle that where the principal has discharged service tax on the full value of goods, imposing an additional service tax on the distributor's margin would amount to double taxation, the Tribunal followed earlier consistent decisions of the Tribunal and the Hon'ble Allahabad High Court addressing identical facts. Those precedents held that franchised distributors' purchase and resale of SIM cards (where the telecom operator has paid service tax on the product) do not attract service tax under the business-auxiliary head. On that basis the Tribunal concluded that the impugned demand was unsustainable and set aside the order of confirmation. [Paras 3, 8, 9, 11]

The appellant's receipts from sale of SIM cards and related products are not exigible to service tax as Business Auxiliary Service where the telecom company has already paid service tax on those products; impugned demand set aside and appeal allowed.

Final Conclusion: Appeal allowed; impugned order confirming service-tax demand under the Business Auxiliary Service head set aside in view of findings that the receipts were margins on sale of goods and that levy would result in double taxation where the principal had already discharged service tax, with consequential relief as per law.

Legitimate expectation and finality of adjudication - consistency of departmental stand / estoppel by acceptance of earlier orders - service tax on rebates/subsidies characterised as Business Support Services - denial of Cenvat Credit on input services reimbursed by related party - principle against reopening settled issues in subsequent periods

Service tax on rebates/subsidies characterised as Business Support Services - consistency of departmental stand / estoppel by acceptance of earlier orders - Validity of demand of service tax qua rebates/subsidies received from Suzuki Japan treated as Business Support Services for the period covered by the impugned order - HELD THAT: - The Tribunal found that the same contention had been finally decided in favour of the appellant for earlier assessment years (2006-07 and 2007-08) by a Tribunal decision in the appellant's own case and similar issues were accepted by the Commissioner for a subsequent period (2011-12) by an adjudication order which the Department did not challenge. Relying on the settled principle that the Department cannot take contrary stands in proceedings on the same issue for the same assessee and that final orders create a legitimate expectation, the Tribunal held that the impugned demand treating the rebates/subsidies as taxable Business Support Services was not sustainable and set aside the demand. The Tribunal expressly relied on the earlier Tribunal finding that reimbursement/financial arrangements with the parent company did not disentitle the assessee to contest taxability, and noted absence of departmental challenge to the subsequent favourable order, making the departmental stand inconsistent. [Paras 6, 7, 8, 9]

Demand of service tax on rebates/subsidies received from Suzuki Japan, insofar as treated as Business Support Services and confirmed in the impugned order, is set aside.

Denial of Cenvat Credit on input services reimbursed by related party - legitimate expectation and finality of adjudication - Sustainability of denial of Cenvat Credit on advertisement/input services to the extent reimbursed by Suzuki Japan - HELD THAT: - The Tribunal observed that the availability of Cenvat Credit in respect of the advertisement/input services had been accepted in the appellant's own case for earlier years by the Tribunal and for the subsequent period by the Commissioner whose order was not appealed by the Department. The Tribunal reiterated the legal position that reimbursement of part cost by a parent company does not, by itself, disentitle the assessee from claiming credit of tax actually paid on input services used in manufacture and sale of excisable goods. Given the prior adjudications in favour of the assessee and the Department's acceptance (no appeal), the Tribunal held that denial of Cenvat Credit in the impugned order could not be sustained and set aside that part of the order. [Paras 6, 7, 8, 9]

Denial of Cenvat Credit on advertisement/input services reimbursed by Suzuki Japan, as confirmed in the impugned order, is set aside.

Final Conclusion: Since the issues of taxability of the rebates/subsidies and of denial of Cenvat Credit had already been decided in the appellant's favour for earlier periods and were accepted by the Department for a subsequent period (orders not appealed), the impugned order for 2008-09 to 2010-11 is set aside and the appeal is allowed with consequential relief as per law.

Levy of service tax on upfront lump-sum payment for long-term lease of industrial land - Refund of service tax paid by mistake of law - Notification No. 41/2016-ST exemption for allotment of land - Retrospective exemption by insertion of special provision (Section 104, Finance Act 2017) - Unjust enrichment verification

Levy of service tax on upfront lump-sum payment for long-term lease of industrial land - Notification No. 41/2016-ST exemption for allotment of land - Retrospective exemption by insertion of special provision (Section 104, Finance Act 2017) - Refund of service tax paid by mistake of law - Whether service tax was leviable on the one-time upfront payment received on grant of a 33-year lease and whether refund of tax paid could be granted. - HELD THAT: - The Tribunal held that the upfront lump-sum payment for grant of a long-term lease of industrial land did not attract service tax by virtue of Notification No. 41/2016-ST and that the position was further clarified and made retrospective by insertion of Section 104 in the Finance Act, 2017. Section 104(2) provides for refund of service tax collected which would not have been collected had the special provision been in force, and Section 104(3) prescribes the time-limit for filing refund claims consequential to the Finance Bill, 2017. The appellant had filed a refund application prior to the notification and the Tribunal treated that claim as within the scope of Section 104(3). On this basis the Tribunal allowed the appeal, set aside the orders rejecting the refund and directed grant of refund subject to the adjudicating authority's verification of unjust enrichment.

Service tax was not leviable on the upfront payment; appeal allowed and refund directed subject to verification of unjust enrichment.

Unjust enrichment verification - Refund of service tax paid by mistake of law - Whether refund should be granted without further proceedings or after verification for unjust enrichment. - HELD THAT: - The Tribunal directed that the original Adjudicating Authority shall grant the refund but must first verify the question of unjust enrichment. The appellant was directed to appear before the Adjudicating Authority with a copy of the Tribunal's order and be afforded an opportunity of hearing. The Adjudicating Authority was directed to pass the consequential order within a stipulated period of 50 days from the appellant's appearance, thereby remanding the limited question of unjust enrichment for verification rather than finally quantifying the refund itself.

Refund to be granted subject to verification of unjust enrichment by the Adjudicating Authority within 50 days after hearing the appellant.

Final Conclusion: The appeal is allowed: the upfront consideration for the 33-year lease did not attract service tax in view of Notification No. 41/2016-ST and the retrospective clarification in Section 104 of the Finance Act, 2017; the refund claim is to be granted subject to adjudicating authority's verification of unjust enrichment and after affording the appellant an opportunity of hearing within the time directed.

Interest on pre-deposit - refund of pre-deposit - Section 35FF of the Central Excise Act, 1944 - inapplicability of Section 11B/11BB to deposits other than duty - entitlement to interest from date of payment till date of refund - rate of interest to be governed by statute/notifications - prohibition on arbitrary fixation of interest rate

Interest on pre-deposit - refund of pre-deposit - Section 35FF of the Central Excise Act, 1944 - inapplicability of Section 11B/11BB to deposits other than duty - entitlement to interest from date of payment till date of refund - Appellants entitled to interest on pre-deposit under Section 35FF rather than under Section 11B/11BB. - HELD THAT: - The Tribunal found that the amount refunded was a pre-deposit (a revenue deposit) and not a payment of duty; accordingly, provisions governing refunds of duty under Section 11B/11BB are not applicable. The Court accepted the established line of authorities and administrative circulars discussed in the order to conclude that where an amount deposited under Section 35F is required to be refunded consequent to an appellate order, interest is payable under Section 35FF. The interest entitlement runs from the date of payment of the pre-deposit until the date of its refund, and denial of interest on such refunded amounts was held unjustified in light of Article 300A and precedent recognizing that retained amounts of the owner attract interest. [Paras 7, 9]

Interest on the refunded pre-deposit is payable under Section 35FF from the date of payment of the amount till the date of its refund.

Rate of interest to be governed by statute/notifications - prohibition on arbitrary fixation of interest rate - Rate of interest on refund of pre-deposit must be as prescribed by statute and notifications and cannot be arbitrarily fixed by the Tribunal. - HELD THAT: - The Tribunal observed that Section 35FF (as amended) contemplates payment of interest at a rate fixed by the Central Government by notification. Having regard to the statutory scheme and the notifications issued under various provisions (showing interest rates varying in different contexts), the Court held that interest must be awarded at the rate prescribed under Section 35FF and the relevant notifications; the Tribunal cannot substitute its own arbitrary rate. Prior decisions awarding a particular rate were noted, but the controlling principle is that the statutory/notification rate governs. [Paras 9]

Interest on the refunded pre-deposit is to be paid at the rate prescribed by statute/notifications under Section 35FF and not at an arbitrarily fixed rate.

Final Conclusion: The appeal is allowed: the appellants are entitled to interest on the refunded pre-deposit under Section 35FF of the Central Excise Act, 1944 from the date of payment till the date of refund, and such interest is payable at the rate prescribed by the statute and notifications.

Cenvat Credit on capital goods - structural steel used in fabrication as capital goods - "user test" for classification as capital goods - eligibility to credit determined on date of receipt of goods - effect of Larger Bench decision in Vandana Global Ltd.

Cenvat Credit on capital goods - structural steel used in fabrication as capital goods - "user test" for classification as capital goods - effect of Larger Bench decision in Vandana Global Ltd. - Cenvat credit availed on MS angles, channels, plates, TMT bars and similar MS items used in fabrication/erection of machinery was rightly disallowed - HELD THAT: - The Tribunal examined whether MS items used to fabricate supports and beds for machinery are eligible as capital goods for Cenvat credit. It applied the "user test" as evolved by the Supreme Court and noted appellate authorities holding that structural items which are worked upon and become integral to machinery can qualify as components of capital goods. The show cause had been issued relying on the Larger Bench ruling in Vandana Global Ltd.; however that view was reversed by the Chhattisgarh High Court. On the facts the Tribunal found the impugned MS items were received in the factory and used in fabrication of equipment such as EOT cranes, reclamation tower, rails for transfer car and other capital machinery, supported by engineer and CA certificates and photographs. Consequently the appellant was held entitled to Cenvat credit of the impugned items for the period in dispute and the impugned order disallowing credit was set aside. [Paras 22, 23]

Appeal allowed and Cenvat credit on the MS items held admissible; impugned order set aside and consequential benefits granted.

Eligibility to credit determined on date of receipt of goods - Cenvat Credit on capital goods - Whether eligibility for Cenvat credit is to be determined by the date of receipt of goods in the factory or by subsequent user - HELD THAT: - The Tribunal held that eligibility for Cenvat credit must be considered as on the day the goods are received into the factory premises and not by any subsequent user. Applying this principle, items received prior to the effective amendment date and accounted as received in the factory were held to be eligible for credit irrespective of later characterisation or use. [Paras 22]

Eligibility to Cenvat credit is to be determined on the date of receipt of the goods; subsequent user does not determine admissibility.

Final Conclusion: The appeal is allowed: Cenvat credit on the disputed MS items used in fabrication/erection of machinery for March 2008 to April 2010 is held admissible and the impugned order disallowing credit is set aside with consequential relief to the appellant.

CENVAT credit reversal under Rule 6 of the Cenvat Credit Rules, 2004 - treatment of common input services for reversal - classification of newsprint in reels and its effect on CENVAT reversal - limitation period for issuance of addendum to show cause notice - remand for fresh computation and examination by Adjudicating Authority

Classification of newsprint in reels and its effect on CENVAT reversal - Classification of newsprint in reels held to be under heading 4801, entitling respondent to reversal of attributable CENVAT credit rather than payment of 10% of price. - HELD THAT: - The Tribunal accepted the respondent's reliance on earlier CESTAT/Bangalore decision in the appellant's own case and the dismissal of SLP by the Supreme Court, concluding that newsprint in reels is classifiable under heading 48.01. As a consequence, newsprint in reels fall within the category specified in Rule 6(3)(a)(v) and the scheme for quantifying and reversing CENVAT credit attributable to inputs and input services applies. Having recorded that classification as finally settled, the Tribunal endorsed the Commissioner's order dropping demands premised on the 10% payment method for such reels. [Paras 6]

Benefit of reversal of attributable CENVAT credit applies to newsprint in reels classified under heading 48.01; demand based on 10% of sale price was dropped.

Limitation period for issuance of addendum to show cause notice - Addendums to show cause notices issued beyond the normal period were barred by limitation insofar as they raised the allegation of use of common input services for periods prior to May 2006. - HELD THAT: - The Tribunal found that where all relevant facts were within the knowledge of the Revenue at the time of issuance of the original show cause notices, an addendum introducing additional allegations in the nature of a fresh show cause notice cannot be issued beyond the normal one-year limitation period applicable then. Applying this principle, the Tribunal held that the addendums issued on 11.05.2007 could not sustain demands for periods prior to May 2006, in the absence of any finding of suppression, fraud or mis-statement by the respondent. [Paras 10, 12]

Demands based on the addendums for periods prior to May 2006 are time-barred and thus not maintainable.

CENVAT credit reversal under Rule 6 of the Cenvat Credit Rules, 2004 - treatment of common input services for reversal - remand for fresh computation and examination by Adjudicating Authority - Reversal of proportionate CENVAT credit attributable to common input services upheld for the period May 2006 to February 2007 and remanded for fresh calculation and adjudication. - HELD THAT: - The Tribunal sustained the demand insofar as it related to the period from May 2006 to February 2007, concluding that reversal in respect of common input services was exigible for that period. Rather than quantifying the amount itself, the Tribunal directed the respondent to file a fresh calculation with the Adjudicating Authority and to reverse the amount as per that calculation. The Adjudicating Authority was directed to examine the computation, call for further information if necessary, and determine any additional reversible amount; if agreed by the appellant, reversal should be effected with applicable interest. The order thus remands the matter for limited fresh computation and verification rather than deciding quantum on the record. [Paras 11, 13]

Demand for reversal of common input services sustained for May 2006 to February 2007; matter remanded for fresh calculation and adjudication by the Adjudicating Authority with directions for reversal and interest as applicable.

Final Conclusion: The appeal is dismissed. Classification of newsprint in reels as falling under heading 48.01 was accepted so reversal of attributable CENVAT credit applies; demands premised on addendums are time-barred for periods prior to May 2006; reversal in respect of common input services is sustained only for May 2006 to February 2007 and remanded for fresh calculation and adjudication by the Adjudicating Authority.

Summary order. Matter adjourned for ten weeks as jointly prayed for by the parties.

Fundamental rights - Right to political activity - Imposition of conditions on liberty - Prohibition on unreasonable conditions on interim orders

Fundamental rights - Right to political activity - Imposition of conditions on liberty - Validity of the condition restraining the appellant from creating any untoward situation in public and from being involved in any political activities, directly or indirectly. - HELD THAT: - The Court held that the impugned condition, insofar as it prohibited the appellant from creating any untoward situation in public and from engaging in political activities, would amount to a breach of the appellant's fundamental rights. Such a restriction on political activity and on liberty could not be validly imposed as a term of the order. Consequently, the High Court's imposition of that condition was impermissible and had to be quashed. The Court therefore set aside the specific condition extracted in the order. [Paras 4, 5]

The condition restraining the appellant from creating untoward situations in public and from engaging in political activities is quashed and set aside; the appeals are allowed.

Final Conclusion: The Supreme Court allowed the appeals and set aside the High Court's condition to the extent it prohibited the appellant from creating untoward situations in public and from participating in political activities, holding that such a condition breached the appellant's fundamental rights.

Consumer - commercial purpose - deficiency in service - maintainability of complaint - onus of proof - preponderance of probabilities

Consumer - commercial purpose - onus of proof - preponderance of probabilities - Allocation and standard of proof when a service provider pleads that services were availed for a commercial purpose. - HELD THAT: - The Court held that the definition of consumer is structurally three-part and the burden of proving each part lies accordingly. The complainant must prove the first part - that goods were bought or services availed for consideration. Where the service provider invokes the carve-out that the service was for a commercial purpose, the onus to prove that carve-out rests on the service provider in accordance with the principle that 'one who pleads must prove'. The standard for discharging that onus is by a preponderance of probabilities. Only if the service provider succeeds in proving the commercial purpose does the burden shift to the complainant to invoke the limited exception in the Explanation (i.e., that the service was availed exclusively to earn livelihood by self-employment). A negative burden cannot be imposed on the complainant to disprove commercial purpose. [Paras 15, 16, 20, 21, 22]

The onus to prove that services were availed for a commercial purpose lies on the service provider and must be discharged on a preponderance of probabilities before any shift of burden to the complainant occurs.

Maintainability of complaint - deficiency in service - consumer - Whether the complaint was maintainable before the consumer forum in the facts of this case where the opposite party pleaded that the complainant availed services for a commercial purpose. - HELD THAT: - The Court examined the factual record and procedural posture of the case and found that the opposite party merely pleaded that the services were for a commercial purpose but failed to lead evidence to discharge the onus required to establish that plea. The consumer fora below had not properly framed the preliminary issue as to commercial purpose, but on the record before this Court the service provider did not probabilise its contention. Given that the onus remained unfulfilled by the service provider, the complaint could not be excluded on the ground of commercial purpose. The Court expressly declined to reopen the merits on deficiency of service, noting that three fora had concurred on that finding. [Paras 9, 11, 23, 24, 25]

The plea that the services were availed for a commercial purpose was not proved by the service provider; the complaint was therefore maintainable and the findings of deficiency in service reached by the fora below were left undisturbed.

Final Conclusion: Appeals dismissed; the Court held that a service provider who alleges that services were availed for a commercial purpose bears the onus to prove that fact on a preponderance of probabilities, and, having failed to discharge that onus here, the complaint was maintainable and the concurrent findings of deficiency in service by the fora below were upheld.