TaxTMI Updates e-Newsletter
May 20,2024

Summary order. Delay condoned. Special Leave Petitions dismissed; pending applications disposed of.

Principles of natural justice - right to be furnished with material forming basis of adjudication - adjudication based on third-party report - rehearing on supply of documents - remand for fresh hearing

Principles of natural justice - right to be furnished with material forming basis of adjudication - adjudication based on third-party report - Appellate order set aside for non-compliance with natural justice where adjudication was founded on a report not supplied to the petitioner - HELD THAT: - The adjudicating authority's finding of suppressed turnover for the tax period July, 2017 to March, 2018 was made by cross-referencing a report of the Irrigation and Waterways Directorate with GSTN data. The appellate authority affirmed that order on the same basis. The State could not demonstrate that the said report was ever supplied to the petitioner. Where a third party report forms the foundation of adjudication, the Revenue is obliged to furnish a copy to the affected party so that the party can meaningfully address its contents. Non-supply of the report thus amounted to a breach of the principles of natural justice, warranting setting aside of the appellate order and a rehearing after supplying the report to the petitioner. The appellate authority was directed to conclude the rehearing within one month from communication of the order. [Paras 3, 4, 5, 6, 7]

Order dated April 13, 2023 set aside; appeal remitted for rehearing after supply of the report dated January 3, 2020, to be completed within one month.

Final Conclusion: The appellate order affirming the adjudication is quashed for failure to supply the foundational report to the petitioner; the appeal is remanded for rehearing after furnishing the report, to be completed within one month, and the writ petition is disposed of.

Advance ruling - Form GST ARA-01 requirements - Application inadmissibility for lack of specific question - Authority's power to reject application

Advance ruling - Form GST ARA-01 requirements - Application inadmissibility for lack of specific question - Whether the application for advance ruling could be admitted when the applicant failed to specify any question in FORM GST ARA-01 or in the annexure attached thereto. - HELD THAT: - The Authority observed that an advance ruling is a decision on matters or questions specified in the statutory provisions and that an application must be made on the common portal in FORM GST ARA-01. In the present case the applicant did not populate the specified column of FORM GST ARA-01 with any question and the annexure filed comprised only auditors' comments and management replies without framing any question on which a ruling was sought. This deficiency was pointed out during personal hearing and was not disputed by the authorised representative. In consequence, the application did not meet the procedural requirement of stating a question for determination and, on that basis, there was no reason to admit the application. [Paras 1]

Application for advance ruling rejected for failure to specify any question in FORM GST ARA-01 or in the annexure.

Final Conclusion: The Authority dismissed the application and refused to admit it because the applicant failed to specify any question in the prescribed form or annexure, and the deficiency was not remedied when pointed out at hearing.

Quashing of assessment for denial of hearing - right to personal hearing in tax proceedings - faceless assessment and procedural fairness - bank attachment set aside for procedural infirmity - remand for fresh assessment subject to terms - conditional relief by deposit of percentage of disputed demand

Quashing of assessment for denial of hearing - bank attachment set aside for procedural infirmity - faceless assessment and procedural fairness - Impugned assessment order and consequential bank attachment were vitiated by the absence of a reasonable opportunity of hearing and inadequate particulars, and therefore liable to be quashed. - HELD THAT: - The court recorded that the petitioner was not afforded a personal hearing before the assessment order was passed and that only a summary of the assessment order was uploaded on the GST portal. These procedural deficiencies during the period of faceless assessment caused prejudice to the petitioner. In view of the absence of adequate particulars and opportunity to be heard, the assessment order and the consequential attachment notice could not be sustained and called for interference. [Paras 5, 6]

Impugned assessment order dated 30.03.2022 and attachment notice dated 30.01.2024 are quashed on account of denial of reasonable opportunity and inadequate particulars.

Remand for fresh assessment subject to terms - conditional relief by deposit of percentage of disputed demand - right to personal hearing in tax proceedings - Matter remitted to assessing officer for fresh adjudication after providing reasonable opportunity, subject to deposit of 10% of the disputed tax demand within a stipulated period. - HELD THAT: - The court directed that, upon the petitioner remitting 10% of the disputed tax demand within two weeks from receipt of the order, the assessing officer shall afford the petitioner a reasonable opportunity, including a personal hearing, and thereafter pass a fresh assessment order. The fresh assessment is to be completed within two months from receipt of the deposit. The remedy is therefore conditional: quashing is coupled with a remand for reconsideration on merits after compliance with the specified terms. [Paras 6]

Proceedings remitted for fresh assessment; conditional reinstatement subject to the petitioner depositing 10% of the disputed demand within two weeks and receipt of a fresh personal hearing, with a fresh order to follow within two months.

Final Conclusion: The writ petition is allowed by quashing the impugned assessment and attachment for procedural infirmity; relief is made conditional upon the petitioner depositing 10% of the disputed tax demand within two weeks, failing which the order records no further relief; on compliance the assessing officer must provide a personal hearing and pass a fresh assessment within two months.

Cancellation of GST registration - Non-application of mind / unreasoned order - Requirement to give reasons in administrative orders - Constitutional remedy under Article 226 despite limitation in appeal - Direction to pass fresh order after taking into consideration submissions

Cancellation of GST registration - Non-application of mind / unreasoned order - Requirement to give reasons in administrative orders - Direction to pass fresh order after taking into consideration submissions - Validity of the cancellation order dated 09.02.2022 which on its face contradicts itself and failed to consider the petitioner's reply dated 17.07.2022. - HELD THAT: - The Court found that the cancellation order simultaneously refers to a reply dated 17.07.2022 and also records that no reply was submitted, indicating non-application of mind. The contents of the petitioner's reply were not considered in the impugned order. An administrative order affecting valuable rights must assign reasons and demonstrate consideration of relevant submissions; an unreasoned order cannot be sustained. Consequently the cancellation order was set aside and the Assistant Commissioner was directed to pass a fresh order after considering the petitioner's reply to the show cause notice and after affording adequate opportunity to present the case. [Paras 4, 5, 8]

Cancellation order dated 09.02.2022 set aside; matter remitted for fresh decision after considering the reply dated 17.07.2022 and giving the petitioner adequate opportunity.

Constitutional remedy under Article 226 despite limitation in appeal - Direction to pass fresh order after taking into consideration submissions - Whether dismissal of the defective appeal as time-barred precluded the petitioner from seeking relief under Article 226. - HELD THAT: - The Court held that limitation in statutory appeal procedures may bar the remedy of appeal but does not oust the jurisdiction of the High Court under Article 226 when an impugned order affecting valuable rights is passed without reasons. Given the defectiveness of the cancellation order and the dismissal of the appeal on limitation grounds, the writ petition was maintainable. The appellate order dismissing the appeal was set aside, and the respondents were permitted to initiate fresh proceedings in accordance with law after giving the petitioner adequate opportunity and considering his pleas. [Paras 6, 7, 8, 9]

Order dismissing the appeal on limitation grounds set aside; writ petition allowed and respondents permitted to initiate fresh proceedings with due opportunity to the petitioner.

Final Conclusion: Writ petition allowed: the cancellation order dated 09.02.2022 and the appellate order dated 12.02.2024 are set aside; the Assistant Commissioner is directed to pass a fresh reasoned order after considering the petitioner's reply dated 17.07.2022 and after giving adequate opportunity, and the State may initiate fresh proceedings in accordance with law.

Condonation of delay - Electronic filing of appeal - Substantial compliance with filing requirements - Condonable period under Section 107(1) of CGST Act - Certified copy requirement under Rule 108 - Registration and adjudication of appeal

Electronic filing of appeal - Substantial compliance with filing requirements - Condonation of delay - Condonable period under Section 107(1) of CGST Act - Certified copy requirement under Rule 108 - Validity of the order rejecting the appeal as barred by delay where the appeal was filed electronically within the statutory period but physical certified copy was furnished later - HELD THAT: - The assessment order was uploaded on the Department's website on the date it was passed and the petitioner filed the appeal electronically within ninety days. The only dispute related to the later physical production of the certified copy. The Court held that where the impugned order was already available on the official website and the appellant furnished the website reference and order particulars in the electronic appeal, the requirement for providing a copy was substantially complied with. Electronic filing is a facilitation; consequently the date of electronic filing must be recognised for computing limitation rather than the subsequent date of physical submission. The approach of treating the later physical filing date as the effective date for limitation and rejecting the appeal as beyond the condonable period was therefore unsustainable. [Paras 9, 10]

The rejection of the appeal on the ground of delay is set aside and the electronic filing date (26.09.2022) is to be treated as the date of filing for limitation purposes.

Registration and adjudication of appeal - Electronic filing of appeal - Relief to be granted after finding electronic filing timely - HELD THAT: - Having held that the electronic appeal was filed within time, the Court remitted the matter to the appellate authority to register the electronically filed appeal and decide it on merits in accordance with law and rules. The remand is for registration and expeditious adjudication and not for re-consideration of the limitation question which has been answered. [Paras 10]

Matter is remitted to the appellate authority to register the appeal filed electronically and decide it expeditiously in accordance with governing law and rules.

Final Conclusion: Writ petition allowed; electronic appeal held timely and appellate authority directed to register and decide the appeal expeditiously; no order as to costs.

Cancellation of registration - lack of reasons / want of application of mind - quash and set aside of administrative/quasi judicial order - remand for de novo adjudication - opportunity of hearing and filing of reply to show cause notice - appeal under the statutory scheme of the Act (Section 107)

Cancellation of registration - lack of reasons / want of application of mind - quash and set aside of administrative/quasi judicial order - Validity of the original order dated January 20, 2023 cancelling the petitioner's GST registration. - HELD THAT: - The Court found that the original cancellation order was without application of mind, noting internal inconsistency in the order's recital regarding whether a reply had been filed. Reliance was placed on earlier decisions of this Court emphasising that reasons are the 'heart and soul' of any judicial or quasi judicial order and that an order devoid of reasons affecting fundamental rights (such as the right to carry on business) does not satisfy Article 14. In view of the absence of reasoned consideration, the original order cannot stand and is liable to be set aside. [Paras 3, 4, 6, 7]

The original cancellation order dated January 20, 2023 is quashed and set aside for want of application of mind and absence of reasons.

Appeal under the statutory scheme of the Act (Section 107) - quash and set aside of appellate order - remand for de novo adjudication - opportunity of hearing and filing of reply to show cause notice - Validity of the appellate order dated June 15, 2023 and the appropriate remedy. - HELD THAT: - The appellate order, having proceeded from an original order found to be non reasoned, was set aside. The Court held that since the original order is vitiated for lack of reasons and the appeal was barred by time, the proper course is to permit the petitioner to file its reply to the show cause notice and direct the adjudicating authority to proceed afresh. The matter is therefore remitted for de novo consideration after granting the petitioner an opportunity of hearing and considering any defence raised. [Paras 6, 7, 8]

The appellate order dated June 15, 2023 is quashed and set aside; the petitioner is permitted to file a reply within three weeks and the adjudicating authority is directed to decide afresh after hearing the petitioner.

Final Conclusion: Both the original cancellation order and the appellate order are quashed and set aside. The petitioner is directed to file its reply to the show cause notice within three weeks and the adjudicating authority shall proceed de novo, after affording an opportunity of hearing, to pass a reasoned order.

Cancellation of registration - order without application of mind - requirement to record reasons in quasi judicial orders - opportunity of hearing / right to be heard - quashing and remand for de novo adjudication

Cancellation of registration - order without application of mind - requirement to record reasons in quasi judicial orders - Validity of the original order cancelling the petitioner's registration where the order was internally inconsistent and did not indicate application of mind or reasons. - HELD THAT: - The Court found that the original order dated March 2, 2022 was internally inconsistent (stating both that a reply dated 27/02/2022 had been filed and that no reply had been submitted) and devoid of reasons. Reliance was placed on precedents of this Court emphasizing that reasons are the heart of administrative or quasi judicial orders and that an order affecting the right to carry on business must disclose application of mind to satisfy Article 14. In consequence, the impugned original order was set aside as non reasoned and not in compliance with the requirement to record reasons before cancelling registration. [Paras 6, 7]

The original order cancelling registration is quashed for want of application of mind and failure to record reasons; matter directed to be reconsidered afresh.

Quashing and remand for de novo adjudication - opportunity of hearing / right to be heard - Consequent fate of the appellate order and the procedural course to be followed on remand. - HELD THAT: - Although the appeal before the Appellate Authority was time barred, the Court treated the defect in the original order as decisive and quashed both the original and appellate orders. The petitioner was permitted to file its reply to the show cause notice within three weeks, and the adjudicating authority was directed to proceed de novo, grant opportunity of hearing, and pass a fresh order after considering the petitioner's defence. The remand was for fresh consideration on merits and not merely for quantification or computation. [Paras 7]

Appellate order is quashed; petitioner permitted to file reply within three weeks; adjudicating authority to hear petitioner and pass fresh order de novo.

Final Conclusion: Both the original cancellation order dated March 2, 2022 and the appellate order dated April 1, 2024 are quashed and set aside; the petitioner may file its reply within three weeks and the adjudicating authority must consider the matter afresh after affording an opportunity of hearing.

Cancellation of registration - lack of application of mind - requirement of reasons in quasi judicial orders - violation of Article 14 of the Constitution - opportunity of hearing / natural justice - doctrine of merger

Cancellation of registration - lack of application of mind - requirement of reasons in quasi judicial orders - violation of Article 14 of the Constitution - Impugned orders of cancellation of GST registration and the appellate order were without application of mind and lacked reasons, thereby warranting quashing. - HELD THAT: - The Court found that the original order of cancellation was internally inconsistent in recording both that a reply had been filed and that no reply was submitted, evidencing absence of application of mind. Reliance was placed on precedents of this Court emphasising that administrative or quasi judicial orders affecting fundamental rights require adequate reasons and that absence of reasons defeats the test of Article 14. Having regard to those authorities and the demonstrable failure to record any coherent reasoning in the impugned order, the Court concluded that the cancellation order did not satisfy constitutional and statutory standards and therefore could not stand. [Paras 7]

Original cancellation order dated 22.02.2023 and appellate order dated 04.04.2024 quashed and set aside as lacking application of mind and reasons.

Opportunity of hearing / natural justice - doctrine of merger - Matter remanded for fresh adjudication after permitting the petitioner to file reply and for the adjudicating authority to proceed de novo. - HELD THAT: - Although the appeal was time barred, the Court followed the approach in the cited Division Bench authority by setting aside the non reasoned original order and permitting the petitioner to file a reply to the show cause notice. The Court directed filing of the reply within three weeks and mandated that the Adjudicating Authority hear the petitioner afresh and pass a fresh order after considering the defence, thereby remitting the matter for reconsideration rather than deciding on merits. The order preserves the right to be heard and contemplates re adjudication without applying the doctrine of merger to foreclose challenge to the original order. [Paras 7, 8]

Petitioner permitted to file reply within three weeks; adjudicating authority to proceed de novo and pass fresh order after hearing.

Final Conclusion: Writ petition allowed; impugned cancellation and appellate orders quashed and set aside. Petitioner granted leave to file reply within three weeks and matter remitted to the adjudicating authority for fresh consideration and decision after providing opportunity of hearing.

Penalty under section 271(1)(c) read with Explanation 5A - Search and seizure under section 132 - Return filed in response to notice under section 153A - Concealment of income or furnishing inaccurate particulars - Requirement of incriminating material/assets or documentary corroboration for invocation of Explanation 5A

Penalty under section 271(1)(c) read with Explanation 5A - Requirement of incriminating material/assets or documentary corroboration for invocation of Explanation 5A - Return filed in response to notice under section 153A - Concealment of income or furnishing inaccurate particulars - Sustainability of penalty under section 271(1)(c) read with Explanation 5A where additional income was declared in return filed under section 153A but no incriminating material or seized assets/documents were found during search and assessment accepted the returned income. - HELD THAT: - Explanation 5A deems concealment or furnishing of inaccurate particulars only where, in the course of a search under section 132, the assessee is found to be owner of specified assets or there is income based on entries in books/documents discovered during the search, such that the income/asset is attributable to earlier years and either was not declared in a return filed before the date of search or return was not filed. The tribunal examined the assessment record and found that no incriminating material or seized documents were recorded by the assessing officer and the returned income filed in response to section 153A was accepted without any additions. There was therefore no finding that the assessee was found to be owner of any assets or that incriminating entries/documents were discovered to trigger the deeming fiction in Explanation 5A. Reliance upon decisions where Explanation 5A was applied is distinguishable because those cases involved seized incriminating material; absent such material or corroborative evidence, Explanation 5A cannot be invoked to sustain penalty. For these reasons the tribunal held that the imposition and confirmation of penalty under section 271(1)(c) read with Explanation 5A was not justified and deserved deletion. [Paras 7, 9, 10, 11]

Both penalties levied under section 271(1)(c) read with Explanation 5A for AYs 2009-10 and 2010-11 are deleted.

Final Conclusion: Both appeals are allowed; penalties imposed under section 271(1)(c) read with Explanation 5A for assessment years 2009-10 and 2010-11 are set aside because no incriminating material or seized assets/documents were found during the search and the returned income filed under section 153A was accepted by the assessing officer.

Jurisdiction to pass assessment order - transfer of jurisdiction under Section 127 of the Income Tax Act - assessing officer acting without jurisdiction is a nullity - transfer of PAN consequential to transfer of jurisdiction

Jurisdiction to pass assessment order - transfer of jurisdiction under Section 127 of the Income Tax Act - assessing officer acting without jurisdiction is a nullity - transfer of PAN consequential to transfer of jurisdiction - Whether the Assessing Officer in Kolkata had jurisdiction to complete the assessment on 24.03.2014 after the Commissioner transferred the file to Chennai by order dated 15.03.2013. - HELD THAT: - The Tribunal found on the facts that the Commissioner had, by order dated 15.03.2013, transferred jurisdiction to the Assessing Officer in Chennai and that thereafter the Kolkata Assessing Officer had no jurisdiction to issue notices and complete the assessment on 24.03.2014. The High Court accepted the Tribunal's factual finding and reasoning. The Court held that transfer of PAN or administrative transfer of files is consequential to the transfer of jurisdiction and cannot validate action taken subsequently by the original assessing officer; a right order by a wrong forum is a nullity. The Tribunal's reliance on precedents establishing that once jurisdiction is validly removed by a competent authority the original authority becomes incompetent to proceed was upheld. Although the Revenue argued change of PAN/files was ministerial and that the assessee's conduct should have weighed against it, the Court observed the jurisdictional point was raised before CIT(A) and was the determinative matter before the Tribunal, which the Tribunal correctly decided on the facts.

The assessment order dated 24.03.2014 was passed without jurisdiction and the Tribunal's decision setting aside the assessment on jurisdictional grounds is upheld.

Final Conclusion: The appeal is dismissed; the substantial questions of law are answered against the Revenue and the Tribunal's order deleting the assessment for AY 2008-09 on jurisdictional grounds is affirmed.

Opportunity of personal hearing under Section 144B(6)(vii) and (viii) - ex parte assessment order - right to be heard in assessment proceedings - interpretation of the word 'request' in procedural entitlement to hearing - remedial obligations of Assessing Officer on receipt of written reply

Opportunity of personal hearing under Section 144B(6)(vii) and (viii) - ex parte assessment order - interpretation of the word 'request' in procedural entitlement to hearing - Ex parte assessment order passed without granting opportunity of personal hearing to the assessee was unlawful and liable to be set aside. - HELD THAT: - The Court held that Section 144B(6)(vii) and (viii) requires that where a show-cause notice is issued the assessee must be given an opportunity of hearing; the word 'request' in that provision cannot be given an unduly narrow meaning so as to deny a personal hearing as a matter of routine. While the Assessing Officer may accept a written reply and pass an order without fixing a hearing if he intends to accept the explanation, where the Assessing Officer, on reading the reply, maintains the tentative adverse opinion, he must afford personal hearing by fixing a date and communicating it in the prescribed electronic mode. Passing an assessment ex parte by declining to grant such hearing when the record shows the assessee sought a hearing is inconsistent with these requirements. On these grounds the impugned assessment dated 22.03.2024 was set aside. [Paras 5]

Impugned assessment order set aside for denial of opportunity of personal hearing; writ petition allowed.

Remedial obligations of Assessing Officer on receipt of written reply - right to be heard in assessment proceedings - Procedure to be followed on remittal: the impugned order to be treated as final show-cause notice, timeline for filing reply, and circumstances in which Assessing Officer must fix a hearing. - HELD THAT: - The Court directed that the set-aside order shall operate as the final show-cause notice and the assessee be permitted to file its written reply within the specified short period. If the Assessing Officer, after perusal of the reply, is willing to accept the explanation in entirety he may pass the consequential order without further hearing (since the assessee has not requested personal hearing). If however the Assessing Officer proposes to reject the explanation or maintain an adverse view, he must fix a date for personal hearing with at least fifteen days' prior notice communicated by the prescribed electronic mode; the petitioner undertook to appear on such hearing. Thereafter the assessment proceedings shall be carried forward and completed in accordance with law. [Paras 5]

Order remitted for fresh consideration with directions on filing of reply and mandatory prescription of hearing where an adverse order is contemplated.

Final Conclusion: Writ petition allowed; assessment order of 22.03.2024 set aside and directed to be treated as final show-cause notice, petitioner to file reply within the stipulated time, and Assessing Officer to either accept the reply or, if proposing an adverse decision, grant a personal hearing after at least 15 days' notice and then complete the assessment in accordance with law.

Admission of additional evidence on appeal - compliance with Rule 46A of the Income Tax Rules, 1962 - obligation to afford the Assessing Officer reasonable opportunity to examine and rebut additional evidence - treatment of accumulated income under Section 11(3)(b) and investment modes under Section 11(5) - remand for verification of evidence and fresh decision

Admission of additional evidence on appeal - compliance with Rule 46A of the Income Tax Rules, 1962 - obligation to afford the Assessing Officer reasonable opportunity to examine and rebut additional evidence - Whether the Commissioner (Appeals) properly admitted and acted upon additional evidence produced before him without compliance with sub rules of Rule 46A. - HELD THAT: - The Tribunal found that the Assessing Officer had called for details of the accumulated surplus during assessment proceedings and the show cause notice remained unanswered prior to the assessment order. The assessee produced bank statements and FDRs for the first time before the CIT(A), which the CIT(A) admitted and accepted. The Tribunal held that clauses (a), (b) or (c) of sub rule (1) of Rule 46A and the recording requirement of sub rule (2) were not satisfied in the present case, and, in any event, sub rule (3) prohibits the CIT(A) from taking into account evidence produced for the first time before him unless the Assessing Officer has been given a reasonable opportunity to examine and rebut it. The CIT(A) did not afford the AO such opportunity; accordingly the admission and acceptance of the additional evidence by the CIT(A) was in violation of Rule 46A and could not be sustained. [Paras 8, 9]

Admission and acceptance of the additional evidence by the CIT(A) without complying with Rule 46A(1)-(3) was impermissible.

Treatment of accumulated income under Section 11(3)(b) and investment modes under Section 11(5) - remand for verification of evidence and fresh decision - Whether the addition of the accumulated surplus should be sustained or the matter should be remanded for verification of the bank/FDR evidence and reconsideration of claim under Section 11. - HELD THAT: - Because the CIT(A) deleted the addition by accepting the bank statements and FDRs-documents produced for the first time on appeal-without giving the AO an opportunity to verify or rebut them, the Tribunal concluded that the matter could not be finally decided in favour of either party on the present record. The Tribunal therefore restored the matter to the file of the Assessing Officer for verification of the additional evidence submitted before the CIT(A) and directed the AO to decide the issue afresh in accordance with law after allowing the assessee a reasonable opportunity of being heard. [Paras 4, 10]

Matter remanded to the Assessing Officer to verify the additional evidence and to decide afresh on the applicability of Section 11(3)(b)/11(5) in accordance with law.

Final Conclusion: The Tribunal held that the CIT(A) erred in admitting and acting upon additional evidence in breach of Rule 46A(1)-(3) and accordingly set aside the deletion; the matter is remitted to the Assessing Officer for verification of the bank/FDR evidence and fresh adjudication in accordance with law after affording the assessee a reasonable opportunity of being heard.

Rectification under section 154 - addition under section 69A - typographical error/correction - principles of natural justice - application of section 115BBE

Rectification under section 154 - typographical error/correction - addition under section 69A - principles of natural justice - Validity of the Assessing Officer's rectification changing reference from section 269SS to section 69A and whether the rectification could stand without fresh inquiry and hearing. - HELD THAT: - The Tribunal observed that the assessee had pointed out in its rectification application that the original assessment order referred to section 269SS though the substantive addition had been recorded under the nomenclature and content of section 69A. The Assessing Officer treated the misnomenclature as a typographical mistake and amended the order by invoking section 154. The Tribunal held that mere treatment of the error as typographical was insufficient where the applicability of section 69A to the deposits/unsecured loans had not been independently verified. The Assessing Officer did not confront the assessee with the substantive applicability of section 69A, did not make necessary enquiries into credibility, source and identity of lenders, and did not afford opportunity of hearing before making or sustaining the addition. In view of these omissions, the rectification could not be allowed to stand as a final adjudication on the applicability of section 69A without fresh verification and compliance with the principles of natural justice. [Paras 7]

Rectification under section 154 cannot be sustained as a mere typographical correction; the matter of applicability of section 69A is remanded to the Assessing Officer for fresh verification and for giving the assessee an opportunity of hearing.

Application of section 115BBE - rectification under section 154 - Validity of enhancement of tax liability by applying section 115BBE in consequence of the additions and whether that enhancement stands in view of the remand. - HELD THAT: - The Tribunal recorded that the second appeal raises identical contentions regarding invocation of section 154 and the consequential application of section 115BBE. Since the primary question-whether additions under section 69A are sustainable-has been remanded for fresh consideration and hearing, the Tribunal found it appropriate to remit the identical challenge concerning application of the special tax rate to the file of the Assessing Officer for adjudication after verification. No final determination on the applicability of section 115BBE was made by the Tribunal; the matter requires fresh disposal in light of the outcome of the verification under section 69A. [Paras 8]

Identical challenge on application of section 115BBE is remanded to the Assessing Officer for fresh consideration following verification of the additions; no final adjudication on section 115BBE was made.

Final Conclusion: Both appeals are partly allowed for statistical purposes: the Tribunal has remitted the question of the applicability of section 69A (and consequential tax treatment including invocation of section 115BBE) to the Assessing Officer for fresh verification and for affording the assessee an opportunity of hearing; the Assessing Officer to proceed in accordance with law.

Power to condone delay - mandatory time limit for filing Form 10AB under section 80G(5) - non-application of section 5 of the Limitation Act to tribunal proceedings - tribunal not a court for purposes of the Limitation Act - prospective application of administrative circulars

Prospective application of administrative circulars - power to condone delay - Whether the benefit of CBDT Circular No.07/2024, dated 25.04.2024, could be extended to the appellant whose application was disposed of before issuance of the circular. - HELD THAT: - The Tribunal found that the appellant's application had been disposed of by the CIT, Exemption before issuance of CBDT Circular No.07/2024 and therefore the benefit of that circular could not be extended to the appellant. The order records that an administrative circular issued after final disposal of the application cannot be applied retrospectively to revive or validate an application already decided. Consequently, the circular did not afford any remedy to cure the delay in filing Form 10AB in the present case. [Paras 6]

Benefit of CBDT Circular No.07/2024 cannot be extended to the appellant as the application was disposed of prior to issuance of the circular.

Mandatory time limit for filing Form 10AB under section 80G(5) - non-application of section 5 of the Limitation Act to tribunal proceedings - tribunal not a court for purposes of the Limitation Act - Whether the CIT or the Tribunal had power to condone the delay in filing Form 10AB under section 80G(5) where the application in Form 10AB was filed after the statutory six month period. - HELD THAT: - The Tribunal analysed the scheme of section 80G(5) and its provisos and concluded that no power is conferred on the CIT or on the Appellate Tribunal to condone delay in filing Form 10AB. The reasoning notes that the Legislature specifically prescribed time limits for applications under the provisos and provided for orders to be passed within fixed periods, evidencing an intention to preclude extension or condonation. The Tribunal relied on established authorities holding that the Limitation Act (notably section 5) does not apply to proceedings before the Tribunal and that the Tribunal is not a 'court' for the purposes of the Limitation Act; where the special enactment does not confer condonation power, the tribunal cannot supply it. Applying these principles to the admitted fact of a delay of more than six months in filing Form 10AB, the Tribunal upheld the CIT, Exemption's refusal to grant approval under section 80G(5). [Paras 7, 8, 11, 12]

There is no statutory power in the CIT or the Tribunal to condone the delayed filing of Form 10AB under section 80G(5); denial of approval was justified.

Final Conclusion: The Tribunal dismissed the appeal: CBDT Circular No.07/2024 could not be applied as the application was disposed before the circular, and neither the CIT nor the Tribunal has power to condone the delay in filing Form 10AB under section 80G(5); therefore denial of approval under section 80G(5) was upheld.

Section 50C - determination of fair market value and reference to District Valuation Officer (DVO) - Obligation to refer to DVO where assessee disputes guideline/stamp duty value - Remand for fresh valuation by DVO and de novo assessment - Ex parte assessment and duty to afford opportunity/fair hearing

Section 50C - determination of fair market value and reference to District Valuation Officer (DVO) - Obligation to refer to DVO where assessee disputes guideline/stamp duty value - Remand for fresh valuation by DVO and de novo assessment - Ex parte assessment and duty to afford opportunity/fair hearing - Whether the orders of the Assessing Officer and CIT(A) should be set aside and the matter remanded to the AO to refer the disputed fair market value to the DVO under section 50C for fresh valuation and de novo assessment after affording opportunity to the assessee. - HELD THAT: - The Tribunal, following the reasoning in Sunil Kumar Agarwal v. CIT as relied upon by the parties, held that where the guideline/stamp duty value materially differs from the sale consideration and the assessee raises a dispute as to fair market value, the statutory machinery under section 50C(2) contemplates reference to the District Valuation Officer so as to avoid miscarriage of justice. The assessee had challenged the guideline value and sought allowance of cost, and the assessment proceeded ex parte with no effective adjudication on that challenge. The CIT(A) rejected the valuer's report of the assessee as not being a DVO report but did not direct a reference to the DVO. In these circumstances the Tribunal found that both the assessment and the appellate order erred in not securing a DVO valuation and in not providing the assessee fair opportunity; accordingly the proper remedy is to set aside the orders and remand to the AO with directions to refer the matter to the DVO, to proceed on receipt of that report and to complete assessment de novo after affording the assessee a reasonable opportunity of being heard. [Paras 8, 9, 10]

Orders of the AO and CIT(A) set aside; matter remanded to the Assessing Officer to refer the disputed valuation to the DVO under section 50C, and to complete assessment de novo after providing the assessee a reasonable opportunity of being heard.

Final Conclusion: Appeal allowed for statistical purposes; the assessment and appellate orders are set aside and the matter is remanded to the Assessing Officer to obtain DVO valuation under section 50C and to pass fresh assessment in accordance with law after affording the assessee an opportunity of hearing.

Deduction under section 80P(2)(a)(i) - profits attributable to credit facilities to members of a co operative society - Construction of 'members' in section 80P in light of the relevant State Co operative Societies Act - Nominal or associate members qualifying as 'members' for the purpose of section 80P - Scope of proviso excluding co operative banks that carry on banking business from section 80P(2)(a)(i) - Condonation of delay - 'sufficient cause' and liberal approach to admit appeals

Condonation of delay - 'sufficient cause' and liberal approach to admit appeals - Two days' delay in filing the appeal was condoned. - HELD THAT: - The Tribunal examined the affidavit and explanations for the two day delay and applied the established principle of 'sufficient cause' as articulated by the Supreme Court in Collector Land Acquisition v. Mst. Katiji, holding that a liberal approach to condonation is appropriate to secure disposal on merits. There was no mala fides and the brief delay arose from circumstances beyond the assessee's control; the Revenue could not successfully controvert the explanation. [Paras 2]

Delay of two days in filing the present appeal is condoned.

Deduction under section 80P(2)(a)(i) - profits attributable to credit facilities to members of a co operative society - Construction of 'members' in section 80P in light of the relevant State Co operative Societies Act - Nominal or associate members qualifying as 'members' for the purpose of section 80P - Scope of proviso excluding co operative banks that carry on banking business from section 80P(2)(a)(i) - Deduction under section 80P(2)(a)(i) is allowable in respect of profits attributable to loans to members, including nominal/associate members as defined under the relevant State Co operative Societies Act; profits attributable to loans to non members are not deductible; exclusion in section 80P(4) applies to co operative banks that carry on banking business. - HELD THAT: - The Tribunal applied the ratio of the Hon'ble Supreme Court in Mavilayi Service Co operative Bank Ltd. v. CIT, observing that the term 'members' in section 80P must be construed with reference to the definition in the applicable State Co operative Societies Act. Where the State Act treats nominal or associate members as members, loans to such persons qualify for the deduction under section 80P(2)(a)(i). The proviso in section 80P(4) excludes co operative banks engaged in banking business (accepting deposits from the public and lending to the public) from the benefit; therefore a primary agricultural credit society providing credit to its members (including nominal members as so defined) is entitled to deduction, whereas profits attributable to loans to non members are not deductible. In consequence, the AO was directed to grant relief to the assessee in accordance with the Supreme Court's observations and to allow the grounds raised by the assessee. [Paras 6, 7, 8, 9, 10]

Grounds allowed; relief to be granted to the assessee in accordance with the Supreme Court's ratio in Mavilayi; appeal allowed.

Final Conclusion: The Tribunal condoned the two day delay and allowed the appeal for A.Y.2016-17, holding that deduction under section 80P(2)(a)(i) is available in respect of profits attributable to loans to members (including nominal members as defined by the State Co operative Societies Act), directing the AO to grant relief in accordance with the Supreme Court's decision in Mavilayi Service Co operative Bank Ltd.

Statement recorded during search proceedings - reliance on uncorroborated surrender/confession - corroboration by seized documents - CBDT instruction dated 10.03.2003 restricting reliance on confessional statements - evidentiary value of statements recorded during search - addition to prevent leakage of revenue

Statement recorded during search proceedings - reliance on uncorroborated surrender/confession - corroboration by seized documents - CBDT instruction dated 10.03.2003 restricting reliance on confessional statements - Validity of the addition of Rs. 1,76,68,829 made by the AO (and confirmed by the CIT(A)) on the basis of the assessee's surrender during search and alleged support from seized documents - HELD THAT: - The Tribunal found that the impugned addition rested solely on the assessee's lump-sum surrender recorded during search and that the surrender was expressed as an ad hoc/lump-sum figure with an undertaking to furnish year-wise and assessee-wise break-up subsequently. The assessee thereafter offered amounts in return of income based on examination of seized material, and the AO had separately made additions supported by certain seized documents. The AO's arithmetic difference between the original surrender and amounts accepted/added by authorities was not shown to be supported by independent, tangible corroborative evidence. The Tribunal emphasised the CBDT instruction dated 10.03.2003 which bars obtaining confessions during search/survey and requires that assessments be founded on material gathered during search/survey rather than on mere surrender. Applying that instruction and the judicial precedents cited by the assessee, the Tribunal concluded that an addition cannot be sustained merely on the basis of an uncorroborated surrender recorded during search; where the surrender was clearly provisional and subject to later quantification, the correct income must be determined on evidence and not by mechanical arithmetic reconciliation. In the factual matrix, the Tribunal found no evidence linking the impugned difference to seized material and therefore held the addition unsustainable. [Paras 9, 10]

Addition of Rs. 1,76,68,829 upheld by lower authorities is deleted and the appeal is allowed.

Final Conclusion: The Tribunal set aside the addition of Rs. 1,76,68,829 made for AY 2016-17, holding that the addition based on an uncorroborated lump-sum surrender during search (without supporting seized-document evidence) was unsustainable in light of CBDT instructions and authorities; the assessee's appeal is allowed.

Additions under section 153A - unexplained investment under section 69A - incriminating material requirement in search cases - completed and unabated assessment - valuation report obtained under section 142A - precedential interpretation of Section 153A

Additions under section 153A - unexplained investment under section 69A - incriminating material requirement in search cases - completed and unabated assessment - Whether additions on account of unexplained investment/money under section 69A could be sustained in assessment proceedings initiated under section 153A where the assessment for the year stood completed and no incriminating material was found during the search - HELD THAT: - The Tribunal upheld the view that where the assessment for the relevant assessment year was completed and remained unabated at the time of search, additions in proceedings under section 153A are permissible only insofar as they relate to incriminating material discovered during the search. The Assessing Officer based the addition on a valuation report obtained by the Investigation Wing and not on any incriminating material specific to the assessee for the year under consideration. Relying on the precedent interpreting section 153A to the effect that completed/unabated assessments admit additions under section 153A only in respect of incriminating material found during search, the Tribunal agreed with the Commissioner (Appeals) that the AO was not entitled to make the addition in the absence of such incriminating material. The Tribunal noted that the CIT(A) decided the jurisdictional question and declined to adjudicate other subsidiary grounds, and, following the earlier decision in the related matter, dismissed the Revenue's appeal. [Paras 9, 13, 15, 16]

Addition made by the AO under section 69A in proceedings under section 153A was deleted because the assessment was completed and unabated at the time of search and no incriminating material was relied upon; Revenue's appeals dismissed.

Final Conclusion: The Tribunal dismissed the Revenue appeals and allowed the assessees' cross objections, holding that in respect of Assessment Year 2011-12 additions under section 153A/69A could not be sustained in the absence of incriminating material in a completed and unabated assessment; the valuation report alone did not justify the addition.

Validity of final assessment under section 144C(13) - Limitation for completion of assessment after DRP directions - Binding nature of Dispute Resolution Panel directions - Prohibition on DRP issuing directions for further enquiry under section 144C(8)

Validity of final assessment under section 144C(13) - Limitation for completion of assessment after DRP directions - Binding nature of Dispute Resolution Panel directions - Prohibition on DRP issuing directions for further enquiry under section 144C(8) - Final assessment passed on 21.11.2017 was barred by limitation under section 144C(13) and therefore void. - HELD THAT: - The Assessing Officer received the DRP directions on 18.09.2017. Section 144C(13) requires the AO, in conformity with DRP directions, to complete the assessment without further opportunity to the assessee within one month from the end of the month in which such directions are received. Calculated from receipt in September 2017, the statutory outer date for completion was 31.10.2017. The AO framed the final assessment on 21.11.2017, after the limitation date. The tribunal rejected the Department's contention that post receipt verification notices extended the limitation period, noting that subsection (8) precludes the DRP from issuing directions for further enquiry and subsection (13) precludes further opportunities to the assessee beyond the prescribed timeframe. The tribunal relied on precedent holding that failure to adhere to the statutory timeline under section 144C vitiates the proceedings, and applied that principle to hold the final order passed after 31.10.2017 was without jurisdiction and therefore null. [Paras 10, 13]

Impugned final assessment order dated 21.11.2017 quashed as barred by limitation under section 144C(13).

Final Conclusion: The appeal is allowed; the final assessment order dated 21.11.2017 for AY 2013-14 is quashed as time barred under section 144C(13).

Revenue v. Capital Expenditure - Advertisement and Business Promotion Expenses - Marketing Intangibles and Brand Building - Enduring Benefit Test - Section 37 - Business Expenditure - Precedent on Treating Advertisement Expenditure as Revenue

Revenue v. Capital Expenditure - Advertisement and Business Promotion Expenses - Marketing Intangibles and Brand Building - Enduring Benefit Test - Section 37 - Business Expenditure - Whether 50% of the assessee's advertisement, publicity and business promotion expenses for AY 2017-18 were rightly treated by the Assessing Officer as capital expenditure and disallowed. - HELD THAT: - The Tribunal held that, on the facts of the assessee's online marketplace business for AY 2017-18 (which are identical to earlier years), the impugned expenditures were incurred as routine promotional activities necessary to conduct and expand the assessee's trading operations and did not create any identified intangible asset. The Assessing Officer's conclusion rested on a general finding of enduring benefit from brand promotion, but he did not point to specific expenditures that resulted in creation of an intangible or other capital asset, nor adduce evidence to show that the advantage lay in the capital field. The Tribunal applied the established principle that no single test is decisive and each case must be judged on its commercial reality; in the competitive online marketplace context repeated and ongoing publicity is required and lacks the necessary enduring capital character. The Tribunal further followed precedents of the jurisdictional High Court and its own earlier decision in the assessee's case for AY 2012-13, which held advertisement and promotional expenses to be revenue in nature absent special circumstances. For these reasons the Tribunal found the AO's ad hoc 50% disallowance unjustified and upheld the CIT(A)'s deletion of the addition. [Paras 13, 14, 15, 16]

The disallowance of 50% of advertisement, publicity and business promotion expenses is deleted; the Revenue's appeal is dismissed.

Final Conclusion: Following the Tribunal's earlier reasoning and relevant High Court precedents, the claimed advertisement and business promotion expenditures for AY 2017-18 are held to be revenue in nature; the Assessing Officer's 50% capitalisation and disallowance are set aside and the Revenue's appeal is dismissed.

Section 50C - Reopening of assessment under section 147 - Validity of notice under section 148 - Reference to District Valuation Officer (DVO) - Binding nature of DVO report - Third proviso to section 50C - 10% difference rule - Borrowed satisfaction

Reopening of assessment under section 147 - Validity of notice under section 148 - Borrowed satisfaction - Reopening of assessment and validity of notice issued under section 148/147 - HELD THAT: - The Tribunal considered whether the reassessment was validly initiated. On the material on record the Tribunal found that independent satisfaction for reopening had been recorded by the Assessing Officer and that the assessee had not considered the Jantri (stamp valuation) in computing capital gain at the time of filing the return. The Tribunal therefore upheld the reopening and dismissed the ground challenging the validity of the section 148 notice as being based on borrowed satisfaction. [Paras 7]

Ground challenging the validity of reopening under section 147/notice under section 148 dismissed.

Section 50C - Reference to District Valuation Officer (DVO) - Binding nature of DVO report - Third proviso to section 50C - 10% difference rule - Applicability of section 50C and measure of addition in view of DVO valuation and the less-than-10% difference rule - HELD THAT: - The Tribunal examined the Assessing Officer's invocation of section 50C where stamp valuation exceeded the declared sale consideration. The AO had referred the matter to the DVO at the assessee's request; the DVO determined a fair market value lower than the stamp valuation but higher than the sale consideration. The Tribunal accepted that a DVO report is binding for computation of full value of consideration and noted the Tribunal precedent applying the third proviso to section 50C (where the difference between DVO value and declared value is less than 10%) to restrict adjustments. The assessee's case was held to be covered by a co-owner's ITAT decision which allowed relief because the DVO valuation exceeded the declared value by less than 10%, and accordingly the addition was directed to be deleted in line with that decision and the applicable proviso. [Paras 6, 7]

Addition under section 50C deleted in accordance with the co-owner ITAT precedent and the less-than-10% rule; appeal allowed on this ground.

Final Conclusion: The assessee's appeal is allowed: the challenge to reopening is dismissed, and the addition under section 50C is deleted in accordance with the DVO valuation and the Tribunal precedent applying the less-than-10% proviso; overall appeal allowed.

Section 153C and Section 153A interaction - Recording of satisfaction under Section 153C as jurisdictional prerequisite - Date for reckoning six year period in Section 153C proceedings - Assessment under Section 144 read with Section 142(1) void ab initio where Section 153C is not invoked

Section 153C and Section 153A interaction - Recording of satisfaction under Section 153C as jurisdictional prerequisite - Assessment under Section 144 read with Section 142(1) void ab initio where Section 153C is not invoked - Date for reckoning six year period in Section 153C proceedings - Whether assessment for A.Y. 2012-13 framed under Section 144 read with Section 142(1) is valid where the Assessing Officer recorded satisfaction under Section 153C on 18.11.2013 but did not initiate proceedings under Section 153C/153A. - HELD THAT: - The Tribunal held that initiation of proceedings under Section 153C requires a prior recording of satisfaction by the AO of the searched person that seized documents/assets belong to a person other than the searched person and, upon such satisfaction, handing over to the AO having jurisdiction over that other person and proceedings in accordance with Section 153A. The proviso to Section 153C mandates that for the other person the reference to the date of initiation of search (for purposes of abatement and for reckoning the six year period) must be construed as the date of receipt/recording of satisfaction by the AO of the other person. Following the reasoning of the Delhi High Court and the Supreme Court authorities cited, the Bench concluded that where seized material relating to a third party is to be acted upon, the AO must invoke Section 153C/153A and cannot proceed under Section 144 r.w.s. 142(1). In the present case, assessments for A.Y. 2012-13 were framed under Section 144 r.w.s. 142(1) consequent to a satisfaction note dated 18.11.2013 (A.Y. 2014-15) without invoking Section 153C; applying the cited precedents and the statutory scheme, the Tribunal found such assessments to be beyond the proper procedure and therefore void ab initio. [Paras 9]

The assessment for A.Y. 2012-13 framed under Section 144 r.w.s. 142(1) is treated as void ab initio because the provisions of Section 153C were not invoked and proceedings under Section 153C/153A were not initiated.

Final Conclusion: Cross objection of the assessee is allowed; the Revenue's appeal is dismissed and the assessment for A.Y. 2012-13 framed under Section 144 r.w.s. 142(1) is declared void ab initio for failure to invoke Section 153C/153A.

Initiation of proceedings at the initial stage; search under Section 132 of the Act and jurisdiction of the assessing officer by initiating proceedings u/s153A - whether Panchnama does not amount to authorization to search? - mandatory application of procedure under Section 153C for reassessment of other persons - invalid initiation of fresh proceedings under Section 153A without search authorization - jurisdictional challenge to search amenable to writ under Article 226

Panchnama does not amount to authorization to search - jurisdictional challenge to search amenable to writ under Article 226 - Whether mere mention of the assessee's name in a panchnama prepared at premises of another entity can be treated as authorization to conduct search under Section 132 and support fresh proceedings under Section 153A - HELD THAT: - The Court held that a panchnama is a contemporaneous record of what the panches observed at the site and records articles or documents found; it is not a statutory instrument of authorization under Section 132. Mere inclusion of the petitioner's name in a panchnama prepared at the registered office of another company does not demonstrate that authorization to search was issued against the petitioner. Where a jurisdictional challenge is raised to the competence of the authority to exercise search powers, Article 226 may be invoked to examine the validity of initiation of search proceedings because such challenges raise pure questions of jurisdiction which appellate fora may not be equipped to decide. Applying these principles, the Court found no authorization on record to search the petitioner and concluded that the panchnama alone cannot be treated as conferring search-authority against it. [Paras 20, 21, 25, 26]

Panchnama mentioning the petitioner does not constitute authorization under Section 132; the jurisdictional challenge to the search is maintainable by writ.

Mandatory application of procedure under Section 153C for reassessment of other persons - invalid initiation of fresh proceedings under Section 153A without search authorization - Whether, where incriminating material relating to the assessee is found during a search conducted against another person, reassessment must follow the procedure prescribed by Section 153C and whether initiation of fresh Section 153A proceedings without following Section 153C is vitiated - HELD THAT: - The Court applied the well established principle that where a statute prescribes a particular manner for exercise of a power that manner must be followed. Section 153C prescribes the procedure to be followed when books, documents or assets seized in a search against one person pertain to another person; the materials must be handed over and the Assessing Officer having jurisdiction over the other person must proceed under Section 153A as qualified by Section 153C. The respondents invoked Section 153A afresh against the petitioner without any authorization to search the petitioner's premises and without following the mandatory process under Section 153C. Reliance on precedent was made to show that where no search under Sections 132/132A is conducted against an assessee, initiation of Section 153A proceedings on the basis of a panchnama prepared at premises of another entity is impermissible. Consequently the Court held the second round of proceedings under Section 153A to be without jurisdiction and vitiated. [Paras 27, 29, 30, 31, 33]

Proceedings under Section 153A initiated without following the procedure required by Section 153C (when material pertains to another person) and without authorization to search the petitioner are vitiated and liable to be quashed.

Final Conclusion: The writ petition is allowed: the notice dated 05.01.2018, the assessment order and demand notice dated 07.02.2024 for AY 2011-2012 are quashed and set aside as proceedings under Section 153A were initiated without requisite authorization and without complying with the procedure under Section 153C; the proceedings are held non-est.

Condonation of delay - appellate review of Tribunal's conclusions on law and fact - dismissal of civil appeals for lack of error in the Tribunal's order

Appellate review of Tribunal's conclusions on law and fact - condonation of delay - Whether the Customs Excise And Service Tax Appellate Tribunal committed any error of law or fact warranting interference and whether delay in filing should be condoned. - HELD THAT: - The Court considered the facts and circumstances and recorded that delay in filing was condoned. On merits, after hearing counsel and evaluating the record, the Court found no error in law or fact in the Tribunal's decision. No further reasoning was furnished; the Court accepted the Tribunal's conclusion as sustainable and declined to disturb it.

Delay condoned; no error found in the Tribunal's order; civil appeals dismissed and pending applications disposed of.

Final Conclusion: The Supreme Court condoned the delay, held that the Customs Excise And Service Tax Appellate Tribunal committed no error of law or fact, dismissed the civil appeals and disposed of pending applications.

Certified copy of order - Service of order under the Customs Act - Duty drawback - realization of export proceeds

Certified copy of order - Service of order under the Customs Act - Direction to furnish a certified copy of the order in original dated 26.12.2022 to the petitioner. - HELD THAT: - The petitioner, an exporter who availed duty drawback subject to realization of export proceeds, asserted that export proceeds were realized and that bank realization certificates and related documents are on record, and that the petitioner did not possess a copy of the order in original dated 26.12.2022. The respondents contended that if a certified copy had already been served in accordance with the Customs Act, 1962, another copy was unnecessary. The Court held that the limited relief sought - supply of a certified copy - could be granted without prejudicing the respondents' ability to prove prior service. Consequently, the respondents were directed to provide a certified copy of the order in original to the petitioner within thirty days of receipt of the judgment, subject to the respondents' right to produce evidence that a copy had been earlier served.

Respondents directed to supply a certified copy of the order in original dated 26.12.2022 to the petitioner within thirty days from receipt of this order; respondents may, if they wish, produce evidence of earlier service.

Final Conclusion: Writ petition disposed by directing respondents to furnish a certified copy of the order dated 26.12.2022 to the petitioner within thirty days; no order as to costs.

Provisional release of imported goods - enhanced duty deposit - quantification of duty by Customs - release subject to payment within stipulated period - ongoing adjudication not precluded - consideration of waiver of demurrage charges

Provisional release of imported goods - enhanced duty deposit - release subject to payment within stipulated period - Provisional release of the imported second hand digital multifunction printing and copying machines on condition of payment/deposit of the enhanced duty. - HELD THAT: - The Court directed that the respondents shall consider the petitioners' plea for provisional release of the goods on the condition that the petitioners pay or deposit the enhanced duty amount. On receipt of such payment, the goods are to be released within a maximum period of three weeks. This order implements provisional release conditioned on financial security by way of the enhanced duty, while preserving the department's ability to proceed with further legal steps. [Paras 3]

Goods to be provisionally released upon payment/deposit of the enhanced duty, and released within three weeks of receipt of such payment.

Quantification of duty by Customs - enhanced duty deposit - Timeframe and procedure for quantification of the enhanced duty and for payment by the petitioners. - HELD THAT: - The Court directed that Customs shall quantify the enhanced duty forthwith within one week from receipt of a copy of the order. On receipt of that quantification the petitioners shall immediately make the payment, and upon receipt of the payment in entirety the respondents shall release the goods within the outer limit of three weeks as directed. The order thus prescribes a short, mandatory timeline for quantification followed by expeditious payment and release. [Paras 3]

Customs to quantify duty within one week; petitioners to pay immediately on receipt of quantification; release thereafter within three weeks on receipt of payment.

Ongoing adjudication not precluded - The provisional release order does not impede the Customs Department from continuing with adjudication or other proceedings in accordance with law. - HELD THAT: - The Court expressly clarified that the directions for provisional release and payment shall not stand in the way of the Customs Department proceeding with further proceedings, including adjudication, in the manner known to law. Thus, the release is interim and subject to the outcome of any subsequent departmental action. [Paras 3]

The departmental adjudicatory process remains unimpaired by the provisional release order.

Consideration of waiver of demurrage charges - Consideration of any application by petitioners for waiver of demurrage charges shall be objectively considered and decided by the respondents. - HELD THAT: - The Court noted an earlier interim order in related petitions directing that demurrage charges be considered for waiver to date. It directed that if petitioners file an application seeking waiver of demurrage charges, the respondents shall consider and decide such application objectively. The Court did not itself waive demurrage but required the department to entertain and determine applications on merits. [Paras 3]

If an application for waiver of demurrage charges is filed, the respondents must consider and decide it objectively.

Final Conclusion: The writ petitions are disposed of on terms identical to the earlier batch order: Customs to quantify enhanced duty within one week, petitioners to deposit the quantified enhanced duty for provisional release of the imported machines (release to follow within three weeks of payment), departmental adjudication unaffected, and any application for waiver of demurrage to be considered objectively; connected miscellaneous petitions are closed and there is no order as to costs.

Interim relief - urgent hearing - seizure of perishable commodity - liberty to seek advancement of hearing

Interim relief - seizure of perishable commodity - urgent hearing - Petitioner's entitlement to prompt judicial consideration of interim prayers in respect of seized perishable goods and reservation of liberty to seek early hearing. - HELD THAT: - The Court recorded that the matter had been adjourned on 29.04.2024 and the petitioner had therefore not been able to obtain interim orders in the underlying writ petition. Having regard to the nature of the seized commodity (areca nut), which is perishable, the Court disposed of the Special Leave Petition while expressly reserving liberty to the petitioner to move for an early hearing or to advance the writ petition either for interim relief or for final disposal. The Court directed that any urgent request by the petitioner for consideration of interim prayers shall be dealt with at the earliest, taking into account the perishable character of the commodity so as to prevent its deterioration.

SLP disposed of with liberty to the petitioner to seek an early or expedited hearing for interim relief or final disposal; urgent interim applications to be considered at the earliest in view of the perishable nature of the seized commodity; pending applications disposed of.

Final Conclusion: The Special Leave Petition was disposed of while granting the petitioner liberty to seek an early or advanced hearing of the writ petition for interim or final relief; urgent interim prayers concerning the seized perishable commodity are to be considered at the earliest; pending applications are disposed of.

Threshold monetary limit for filing appeals - decisive element being duty involved - aggregation of penalty and fine with duty - appeal dismissal for low tax effect - exceptions for constitutional validity, ultra vires and recurring classification/refund issues

Threshold monetary limit for filing appeals - decisive element being duty involved - appeal dismissal for low tax effect - Maintainability of the appeal before the High Court having regard to the Board's monetary threshold. - HELD THAT: - The court applied the Board's circulars and subsequent instructions which fix monetary thresholds for filing appeals and state that the decisive element for determining whether to file an appeal is the duty/tax under dispute. Having regard to the latest enhancement of the threshold to Rs. 1,00,00,000/- for High Courts, the duty element in the present matter being Rs. 86,34,821/- falls below that threshold. The Board's examples and explanatory language make clear that even where penalty and fines cumulatively exceed the threshold, the determinative test is the duty involved. Consequently the appeal is not maintainable before the High Court and is dismissed on the ground of low tax effect. [Paras 16, 17, 19]

The appeal is not maintainable and is dismissed as the duty involved is below the prescribed monetary threshold.

Aggregation of penalty and fine with duty - decisive element being duty involved - Whether penalty and redemption fine can be aggregated with the duty to satisfy the monetary threshold for filing the appeal. - HELD THAT: - The court rejected the contention that penalty and redemption fine may be clubbed with the duty to meet the threshold. The circulars' illustrative examples demonstrate that the duty alone is the decisive element for determining applicability of the monetary limits. The court further clarified the converse rule: where duty is not in issue and only fine/penalty are in dispute, those amounts would be taken cumulatively to determine the threshold; that situation is distinct and not the present case. [Paras 16, 17, 18]

Penalty and redemption fine cannot be clubbed with the duty to determine the monetary threshold in cases where duty is the subject matter; they are not to be aggregated to render the appeal maintainable here.

Final Conclusion: The appeal is dismissed for being below the Board-prescribed monetary threshold; the duty alone (Rs. 86,34,821/-) being the decisive element is less than Rs. 1,00,00,000/-, and penalty and redemption fine cannot be aggregated with duty to confer maintainability.

Waiver of demurrage/detention/ground rent - validity of detention/seizure and consequential reliefs on setting aside confiscation and penalty - issuance of waiver certificate under Regulation 6(1)(l) of the Handling of Cargo in Custom Area Regulations, 2009 - liability for charges up to date of release versus liability from date of continued occupation

Validity of detention/seizure and consequential reliefs on setting aside confiscation and penalty - waiver of demurrage/detention/ground rent - Whether the petitioner is liable to pay demurrage, detention and ground rent charges for the period from the date of detention (10/2/2021/11.2.2021) until the date of the order - HELD THAT: - The CESTAT allowed the petitioner's appeal, setting aside the detention/seizure, confiscation, redemption fine and consequential penalty and granted consequential reliefs. Since the detention was not valid from its inception, no demurrage, detention or ground rent charges are chargeable for the period when the goods stood wrongfully detained. Regulation 6(1)(l) of the Handling of Cargo in Custom Area Regulations, 2009 contemplates issuance of a waiver certificate where charging such rents or demurrage is prohibited; having allowed the appeal and accepted by the customs authorities, the petitioner cannot be held liable for such charges from the date of detention until today. [Paras 7, 8]

The petitioner shall not be liable to pay demurrage, detention and ground rent charges to respondent No. 3 from 10/2/2021/11.2.2021 till today.

Waiver of demurrage/detention/ground rent - liability for charges up to date of release versus liability from date of continued occupation - Whether the petitioner must pay demurrage, detention and ground rent charges accruing from today until the goods are lifted - HELD THAT: - Although the petitioner is not liable for charges for the period when detention was invalid, the court directed that the petitioner is liable to pay demurrage, detention and ground rent charges accruing from the date of the order (today) until the goods are removed from the warehouse. This balances the consequences of continued occupation after the date of the order and the rights of the custodian/port operator to recover lawful charges for the post-order period. [Paras 8]

The petitioner shall pay demurrage, detention and ground rent charges to respondent No. 3 from today till the goods are lifted by the petitioner.

Consequential reliefs on setting aside confiscation and penalty - time-bound compliance for removal of goods - Timeframe within which the petitioner must remove the goods from the warehouse - HELD THAT: - Having found that detention was not valid and having directed payment of charges from today onwards, the court imposed a time-bound obligation to effectuate the relief granted. The petitioner represented readiness to lift the goods and the court fixed a definite period to ensure orderly removal and to protect the rights of other parties affected by continued storage. [Paras 4, 8]

The petitioner shall lift the goods as early as possible and latest within a period of five weeks from today.

Rights of third parties and preservation of civil remedies - Whether the order affects rights and pending civil claims of respondent Nos. 3 and 5 - HELD THAT: - The court expressly preserved the rights and contentions of respondent Nos. 3 and 5 in respect of any civil recovery claims. It directed that pending civil proceedings remain unimpaired and that the Civil Court shall decide the suits in accordance with law without being influenced by observations in this order. [Paras 8]

The rights and contentions of respondent Nos. 3 and 5 for recovery of any other claim pending in civil court are not affected by this order.

Return of containers - inter-party accommodation on removal of goods - Obligation regarding return of containers to the petitioner of Special Civil Application No. 6075 of 2022 upon removal of goods - HELD THAT: - In the interest of completion of the relief and to address inter-party arrangements, the court recorded the petitioner's undertaking and directed that on removal of the goods from the warehouse the relevant containers shall be returned to the petitioner in SCA No. 6075 of 2022 (who is respondent No. 4 in SCA No. 13963 of 2023). This ensures coordination between the parties affected by the order. [Paras 4, 8]

The petitioner shall return the containers of the petitioner of Special Civil Application No. 6075 of 2022 and respondent No. 4 in Special Civil Application No. 13963 of 2023 on removal of the goods from the warehouse.

Final Conclusion: The High Court, after noting that the CESTAT set aside the detention/seizure, confiscation and penalties, held that the petitioner is not liable for demurrage, detention and ground rent charges from the date of detention till the date of the order; directed the petitioner to lift the goods within five weeks and to pay lawful charges accruing from today until removal; preserved the rights of respondents to pursue pending civil claims; and directed return of specified containers on removal of the goods. Both petitions are disposed of in accordance with these directions.

Eligibility for concessional basic customs duty under Notification No. 21/2002-Cus and Notification No. 12/2012-Cus - classification as High Density Polyethylene (HDPE) despite chemical modification - effect of minor additives on chemical character of polymer - applicability of exemption Notification No. 12/2012-Cus to chemically modified polymers

Classification as High Density Polyethylene (HDPE) despite chemical modification - effect of minor additives on chemical character of polymer - applicability of exemption Notification No. 12/2012-Cus to chemically modified polymers - Imported HDPE granules which include miniscule percentages of other chemicals retain their character as High Density Polyethylene and are eligible for concessional duty under the exemption notification. - HELD THAT: - The Tribunal applied its earlier Final Order No. 11563/2023 dated 24.07.2023 and the test reports on record to conclude that the imported goods are predominantly high density polyethylene. Customs House Laboratory testing and the supplier's report showed the product to be composed principally of polymer of ethylene with ethylene content of about 98% by weight and minor additives in very small percentages. The Tribunal held that mere inclusion of small quantities of other chemicals does not alter the chemical character of HDPE, and therefore such modified HDPE falls within the description of HDPE in the exempt entry of Notification No. 12/2012-Cus (Serial No. 237). Reliance on earlier decisions of the Tribunal and examination of the composition led to the view that the appellants' imports are covered by the exemption and the impugned orders were accordingly set aside.

Appeals allowed; impugned orders set aside and imports held eligible for exemption under the notified entry for HDPE.

Final Conclusion: The Tribunal, following its earlier decision, held that HDPE granules containing only miniscule quantities of other chemicals retain their HDPE character and are entitled to the concessional basic customs duty under the relevant exemption notification; the appeals are allowed and the impugned orders set aside.

Revocation of customs broker licence - forfeiture of security deposit - penalty under Customs Broker Licensing Regulations - duties and obligations of a customs broker under Regulation 10 - misuse or subletting of a customs broker licence - liability for contravention without intent - evidentiary insufficiency to prove active involvement in smuggling - proportionality in imposition of penalty

Duties and obligations of a customs broker under Regulation 10 - evidentiary insufficiency to prove active involvement in smuggling - Whether the allegations that the exported consignment contained red sanders and that the customs broker actively participated in smuggling were substantiated - HELD THAT: - The Tribunal found on the record that the container intercepted at Mundra contained red sanders but that no evidence was adduced to conclude that the customs broker was actively involved in smuggling. The consignment had been supervised and sealed by Customs at the ICD and the impugned KYC documents were not proved to be false or forged. Accordingly, allegations that the broker had direct knowledge of or actively stuffed contraband were not established and related charges under Regulation 10(b), 10(d) and 10(n) were not substantiated on the materials before the authority. [Paras 10]

Allegations of active involvement in smuggling and that the declared documents were false were not proved; the specific charges under Regulation 10(b), 10(d) and 10(n) were not substantiated.

Misuse or subletting of a customs broker licence - liability for contravention without intent - Whether the appellant breached licensing obligations by permitting unauthorized persons to transact business, sharing access credentials and deriving pecuniary benefit, thereby justifying disciplinary action - HELD THAT: - The Tribunal recorded admissions in the appellant's statement that he allowed others to handle his license, accepted payment for use of the licence, and that documents were uploaded by third parties; the adjudicating authority's finding that the broker acted casually, sublet his licence and shared access was supported by the record. Citing settled regulatory expectations that a customs broker occupies a position of trust and that contravention of obligations even without specific intent attracts punishment, the Tribunal accepted that the broker's conduct evidenced serious inadequacy in discharging statutory duties and breached the trust reposed by the Department. [Paras 11, 12, 13]

Appellant breached his regulatory obligations by allowing unauthorized persons to use his licence, sharing access and deriving pecuniary benefit; such misconduct justified disciplinary action.

Revocation of customs broker licence - forfeiture of security deposit - penalty under Customs Broker Licensing Regulations - proportionality in imposition of penalty - Whether the revocation of licence, forfeiture of security and the monetary penalty imposed were warranted and, if so, whether the penalty amount required modification - HELD THAT: - Applying the regulatory principle that misuse of the licence and breach of the duties of a customs broker justify revocation to protect revenue and public interest, the Tribunal upheld revocation of the appellant's licence and forfeiture of the security deposit. However, the Tribunal held that the monetary penalty imposed by the Commissioner was excessive in view of the revocation and forfeiture already ordered; exercising its discretion, the Tribunal reduced the penalty to a lower sum to make punishment commensurate with the omission and to avoid double penal effect. [Paras 16, 17]

Revocation of licence and forfeiture of security deposit upheld; penalty reduced and re-quantified by the Tribunal.

Final Conclusion: The appeal was partly allowed: the Tribunal affirmed revocation of the customs broker licence and forfeiture of the security deposit, held that allegations of active involvement in smuggling and falsity of KYC were not proved, but found the broker guilty of permitting misuse of his licence and other breaches; the monetary penalty imposed by the Commissioner was reduced by the Tribunal to a lesser amount.

Jurisdiction of customs adjudicating authority - scope of duty free import authorisation (DFIA) and 'actual use' condition - post-export transferability of authorisations - confiscation under section 111(d) and section 111(o) of the Customs Act, 1962 - recovery of duty under section 28 of the Customs Act, 1962 - distinction between tax policy and trade policy

Jurisdiction of customs adjudicating authority - distinction between tax policy and trade policy - Whether the adjudicating authority could, in adjudication under the Customs Act, interpret and invalidate trade policy authorisations issued under the Foreign Trade (Development & Regulation) Act, 1992 - HELD THAT: - The Tribunal held that the adjudicating authority, being a creature of the Customs Act entrusted with assessment to duty and enforcement of prohibitions, exceeded its statutory remit by undertaking an interpretative exercise into a trade policy scheme (DFIA) which is designed as an export incentive under the FTP. The Court emphasised the substantive distinction between tax policy (which determines duty and assessment under Customs law) and trade policy (which affords incentives and flexible post export benefits). Subjecting the implementation and intent of a trade promotion scheme to the rigour of tax enforcement risks subordinating trade policy to revenue administration. Accordingly, customs adjudication should not arrogate to itself primacy to re formulate or invalidate trade policy authorisations except within the narrow compass of duties and prohibitions conferred by the Customs Act. [Paras 9, 10, 11, 18, 19]

Adjudicating authority had no jurisdiction to determine and invalidate DFIA authorisations as a matter of trade policy interpretation beyond its duty assessment and prohibition enforcement remit.

Confiscation under section 111(d) and section 111(o) of the Customs Act, 1962 - Validity of confiscation of imported saffron under section 111(d) and section 111(o) - HELD THAT: - The Tribunal found no basis for confiscation under section 111(d) because there was no finding that saffron was a prohibited good under the Customs Act or any other law; section 111(d) targets goods imported contrary to a prohibition, which was not pleaded or established. Invocation of section 111(o) (exempted goods subject to condition) likewise failed: the adjudication proceeded on the premise that pre export conditions (such as 'actual use') continued to attach to post export imports without showing any condition other than production of the authorization itself. The notification framework and the express waiver of certain bonds for post export imports indicate that only limited conditions are relevant to post export entitlement; the adjudication's insistence on broader conditionality and its use as basis for confiscation was unsupported. [Paras 7, 20]

Confiscation under sections 111(d) and 111(o) was unsustainable; section 111(d) was invoked without legal basis and section 111(o) could not be validly applied on the facts and construction adopted by the adjudicating authority.

Recovery of duty under section 28 - post-export transferability of authorisations - Legality of recovery under section 28 predicated on post import invalidation of DFIA authorisations - HELD THAT: - The Tribunal observed that recovery under section 28 followed from the adjudicator's invalidation of the authorisations. Such invalidation was effected without proper adjudication of the authorisations by the competent licensing authority and without lawful grounds to attach post import conditions to transferees. The assessment under section 17 (rate and value) was not disputed; the impugned recovery relied on construing the DFIA and SION restrictions in a manner beyond the customs adjudicator's competence. Where authorisations had been endorsed as 'duly transferred' by the licensing authority, imposing post import conditions to recover duty was impermissible absent a valid cancellation or finding implicating the transferee in obtaining the authorisation or exports. Reliance on revocations or rectifications in respect of other authorisations did not support general recovery and in any event, where relevant invalidations post dated transfers, limitation and absence of culpability of the person liable to pay duty precluded recovery. [Paras 8, 15, 16, 17]

Recovery under section 28 based on the adjudicating authority's invalidation of DFIA authorisations was legally unsound and could not be sustained on the facts.

Scope of duty free import authorisation (DFIA) and 'actual use' condition - post-export transferability of authorisations - Whether the 'actual use' condition in SION and authorisations continues to bind a transferee importer after export obligation has been fulfilled and the licence transferred - HELD THAT: - The Tribunal analysed the expression 'actual use' and the policy context of DFIA/post export imports. It concluded that 'actual use' as a condition in the FTP has multiple aspects (by, for and in) and is not to be read as imposing an immutable pre export constraint upon every post export transferee. The FTP and the exemption notifications envisage post export neutralisation and transferability as an incentive which allows a transference of entitlement once export obligation is certified. The adjudicator's literal and restrictive application-requiring the transferee to demonstrate actual use in the manufacture of the exported goods or to apply a commercial viability test-was inconsistent with the policy design and lacked authoritative clarification from the licensing authority. Speculation that amendments did not extinguish 'actual use' was an inadequate basis for denying entitlement. [Paras 16, 18, 21, 22, 23]

The 'actual use' condition cannot be imposed on a transferee importer in the rigid manner adopted by the adjudicating authority; post export transferability and the exemption framework preclude such an interpretation without authoritative licensing clarification.

Final Conclusion: The impugned adjudication and consequential orders of confiscation, recovery and penalty were set aside. The Tribunal held that the customs adjudicating authority exceeded its jurisdiction by reinterpreting and invalidating DFIA authorisations (a trade policy instrument), that confiscation under sections 111(d) and 111(o) and recovery under section 28 were unsustainable on the facts and law, and that the rigid imposition of an 'actual use' condition upon post export transferees was not tenable; accordingly the appeals were allowed.

Delegation and authority to issue notifications under the Foreign Trade (Development & Regulation) Act, 1992 - transitional arrangements under the Foreign Trade Policy, 2023 - legitimate expectation - prospective operation of policy and non-retrospectivity - judicial review for arbitrariness under Articles 14 and 19(1)(g) - due application of mind in policy formulation

Delegation and authority to issue notifications under the Foreign Trade (Development & Regulation) Act, 1992 - Article 77 and Government of India (Transaction of Business) Rules - Validity of the impugned notification as an act of the Central Government and whether DGFT lacked authority to issue it - HELD THAT: - The Court examined the notification which on its face recited issuance by the Central Government under Section 3 read with Section 5 of the FTDR Act and its publication in the Gazette of India. Although the notification bore the signature of the Director General of Foreign Trade, the DGFT acted as Ex Officio Additional Secretary to the Government of India. Reliance was placed on Union of India v. Agricas LLP, where the Supreme Court held that similar notifications were issued by the Central Government with the DGFT performing the ministerial act of publication and that such issuance did not infringe the non delegation restrictions in the FTDR Act. Applying that reasoning, the Court found that the challenge to the authority to issue the impugned notification cannot be sustained and that the notification was issued by the Central Government through the DGFT in his official capacity. [Paras 10]

The contention that the notification was issued without authority is rejected; the notification was issued by the Central Government through the DGFT in his capacity as Ex Officio Additional Secretary.

Transitional arrangements under the Foreign Trade Policy, 2023 - legitimate expectation - prospective operation of policy and non-retrospectivity - judicial review for arbitrariness under Articles 14 and 19(1)(g) - due application of mind in policy formulation - Whether denial of the benefit of para 1.05 (transitional arrangements) of FTP 2023 to exporters under the impugned notification was justified - HELD THAT: - FTP 2023 contained a transitional arrangement permitting exporters who had commitment through an Irrevocable Commercial Letter of Credit (ICLC) before imposition of restriction to complete exports subject to registration and prescribed conditions. The impugned notification amended the export policy for Non Basmati rice to 'prohibited' and expressly declared para 1.05 inapplicable while allowing limited categories of shipments to proceed. The petitioners relied on concluded contracts and ICLCs and asserted legitimate expectation to complete those contracts. The Court noted that respondents did not place on record cogent material or reasons explaining denial of the transitional benefit in respect of Non Basmati rice, nor did they produce the consultation file or data said to justify the restriction. Applying principles in precedents on legitimate expectation and arbitrariness, the Court held that where a transitional provision exists and no acceptable reasons are shown for denying its benefit to affected parties, denial without reason renders the action arbitrary. In consequence, the Clause 2 denial of para 1.05 was held bad in law and the transitional benefit was to be made available to petitioners provided they comply with the requirements of para 1.05(b). The Court emphasised that it read down the notification to that limited extent rather than strike down the entire policy. [Paras 16, 17, 18, 30, 33]

Clause 2 of the impugned notification insofar as it denies the benefit of para 1.05 of FTP 2023 is invalid; the petitioners are entitled to the transitional arrangement if they satisfy the conditions prescribed in para 1.05(b).

Final Conclusion: The petition succeeds in part. The challenge to the authority of the DGFT to issue the notification is dismissed; however, the impugned notification dated 20.07.2023 is read down and declared invalid to the extent that it denies exporters the benefit of the FTP 2023 transitional arrangements (para 1.05) - such benefit shall be available to the petitioners if they comply with the conditions specified in para 1.05(b). No order as to costs.

Presumption under Section 123 of the Customs Act - reason to believe / reasonable belief for seizure - smuggled goods (town seizure and handover by police) - requirement of independent corroboration for statements under Section 108 - burden of proof on Revenue where initial possession was by police

Smuggled goods (town seizure and handover by police) - reason to believe / reasonable belief for seizure - Impugned gold bars were not established to be smuggled and seizure was not sustainable. - HELD THAT: - The Tribunal upheld the finding of the adjudicating authority that there was no credible material demonstrating that the seized six gold bars were of foreign origin or had been recently imported into India. The authorities failed to identify the international border or manner by which the bars were said to have been smuggled; the bars lacked foreign markings and showed purity consistent with Indian origin. The initial recovery by GRP at a railway platform and subsequent handover to Customs, together with absence of contemporaneous, objective evidence establishing smuggling, meant the statutory pre-requisite of a formed reasonable belief was not satisfied. The adjudicator also found that relevant investigative material from Kolkata Customs had been withheld by the Department and, when produced, supported the claim of lawful stock transfer and manufacture at a sister concern in Kolkata. On this basis the adjudicating authority released the goods and dropped proceedings, a conclusion the Commissioner (Appeals) and the Tribunal sustained. [Paras 25]

Seized gold bars held to be of Indian origin; seizure and confiscation not sustainable and goods ordered released.

Presumption under Section 123 of the Customs Act - burden of proof on Revenue where initial possession was by police - Benefit of the statutory presumption under Section 123 did not assist the Revenue and the burden to prove smuggling rested on the Department in the circumstances of this case. - HELD THAT: - The Tribunal agreed with the authorities below that the presumption in Section 123 cannot be invoked in the absence of a proper formation of reasonable belief at the time of seizure and where the initial seizure was effected by police and handed over to Customs. Documentary evidence produced by the claimants (invoices, stock registers, GST returns, bank statements and a verification report by Kolkata Customs) sufficiently discharged the claimants' obligation to show lawful procurement and movement of the gold. Given the Department's failure to produce corroborative material to establish illegal importation, the statutory presumption did not tilt the case in favour of Revenue and could not substitute for proof. [Paras 25]

Presumption under Section 123 not attracted; onus to establish smuggling lay on Revenue and was not discharged.

Requirement of independent corroboration for statements under Section 108 - Confessional/retracted statements of the intercepted person and co-accused could not, without independent corroboration, support confiscation or penalty. - HELD THAT: - The Tribunal noted and applied settled authorities that statements recorded under Section 108 (and confessions by co-accused) are fragile and require independent corroboration before they can be used as substantive proof against other persons. The admitted contradictions in the driver's statements, absence of follow-up statements from other alleged carriers, non-compliance with procedures to obtain corroborative material, and the presence of documentary evidence supporting lawful transactions diminished the evidentiary value of the retracted/confessional statements. Consequently, the statements could not sustain confiscation or penalties against the claimants. [Paras 25]

Statements under Section 108 / retracted confessions were insufficient, without corroboration, to establish guilt or justify confiscation/penalty.

Final Conclusion: The Tribunal dismissed the Revenue appeals, upheld the orders below which dropped proceedings and directed release of the seized gold (or return of sale proceeds with interest), concluding that smuggling was not proved, the statutory presumption did not assist Revenue, and uncorroborated statements could not sustain confiscation or penalty.

Compromise and settlement - Deed of Settlement - delivery of demand drafts in discharge of claim - payment of Resolution Professional's dues - closure of Corporate Insolvency Resolution Process - right to file recovery application before the National Company Law Tribunal

Compromise and settlement - Deed of Settlement - delivery of demand drafts in discharge of claim - closure of Corporate Insolvency Resolution Process - Joint settlement between the appellant and the operational creditor was accepted and the interlocutory application was allowed leading to closure of the Corporate Insolvency Resolution Process against the corporate debtor. - HELD THAT: - The parties filed a joint application recording compromise embodied in the Deed of Settlement dated 01.02.2024 and the learned counsel for the appellant handed over renewed demand drafts to the learned counsel for the operational creditor as per the settlement. Having considered the settlement and the material placed on record, the Court allowed I.A. no. 31706/2024, recorded the settlement, and directed that the Corporate Insolvency Resolution Process against the corporate debtor be treated as closed. Consequentially, the appeal was disposed of and pending applications stood disposed.

I.A. allowed; CIRP against respondent no.2 treated as closed; appeal disposed of; no costs.

Payment of Resolution Professional's dues - right to file recovery application before the National Company Law Tribunal - Direction was given for payment of outstanding dues to the Resolution Professional and the Resolution Professional was permitted to seek recovery before the NCLT in case of non-payment. - HELD THAT: - The affidavit of the Resolution Professional recorded partial payment of his dues and stated that dues of the Interim Resolution Professional had been paid. Counsel for the appellant undertook that Rs.5,00,000 would be paid to the Resolution Professional within ten days. The Court recorded this undertaking and made it clear that in the event of non-payment the Resolution Professional would be at liberty to move the National Company Law Tribunal for recovery of the amount. The Court therefore left the Resolution Professional's remedy to the statutory forum while securing a prompt payment by the appellant.

Appellant to pay Rs.5,00,000 to the Resolution Professional within ten days; failure to pay leaves Resolution Professional free to file recovery application before the NCLT.

Final Conclusion: The Court recorded the parties' settlement, allowed the interlocutory application, directed payment of a specified outstanding sum to the Resolution Professional within ten days (failing which the Resolution Professional may seek recovery before the NCLT), treated the CIRP as closed, disposed of the appeal and any pending applications, and made no order as to costs.

Financial creditor - financial debt - privity of contract - maintainability of Section 7 IBC proceedings - confirming party clause in sale deed

Financial creditor - financial debt - privity of contract - maintainability of Section 7 IBC proceedings - confirming party clause in sale deed - Whether the appellants were financial creditors of the respondent and whether the Section 7 application was maintainable against the respondent. - HELD THAT: - The appellants advanced a loan to Proplarity Homes Pvt. Ltd. (PHPL) and not to the respondent. PHPL executed a sale deed in favour of the respondent in which the appellants were made a confirming party and Clause 35 recorded that the sale consideration was to be / had been received by the confirming party. The Tribunal correctly analysed that there was no privity of contract between the appellants and the respondent, that the disbursal of funds was made to PHPL and not to the respondent, and that Clause 35 merely records the role of a confirming party and does not itself create a legal obligation on the respondent to repay a loan taken by the vendor. In the absence of any agreement evidencing a financial debt owed by the respondent, any recall notice or other documentary proof showing a debt and default by the respondent, a debt within the meaning of financial debt under the Code could not be established. The scheme of the Code is for insolvency resolution and not for mere recovery of money; therefore the Section 7 petition against the respondent was not maintainable and dismissal by the Tribunal was proper, with liberty granted to the appellants to pursue other remedies in law. [Paras 9, 10]

Appeal dismissed; Tribunal rightly rejected the Section 7 application for want of relationship of financial creditor and absence of financial debt; appellants granted liberty to pursue other remedies and directed to pay costs.

Final Conclusion: The Section 7 petition was not maintainable against the respondent because no financial debt was owed by the respondent to the appellants; the Tribunal's dismissal is upheld and the appellants are directed to pay costs to the respondent.

Application of the Code of Criminal Procedure to complaints under the Prevention of Money Laundering Act - Issue of summons as the normal rule on cognizance in warrant cases - Power to take bonds for appearance under Section 88 of the CrPC is distinct from grant of bail - Issuance and cancellation of warrants under the CrPC to secure presence - Deprivation of ED's arrest power after Special Court takes cognizance - Special Court's power to grant custody to investigating agency after cognizance on stated satisfaction and brief reasons

Application of the Code of Criminal Procedure to complaints under the Prevention of Money Laundering Act - Whether proceedings on a complaint under Section 44(1)(b) of the PMLA are governed by Sections 200 to 205 of the CrPC. - HELD THAT: - The Court held that, insofar as they are not inconsistent with the PMLA, the provisions of the CrPC apply to proceedings before the Special Court. There is no inconsistency between the PMLA and Sections 200 to 205 of the CrPC; accordingly, a complaint under Section 44(1)(b) is governed by Sections 200-205 and the Special Court must apply its mind under those provisions when taking cognizance. [Paras 5, 6, 23]

Sections 200 to 205 of the CrPC apply to complaints under Section 44(1)(b) of the PMLA.

Issue of summons as the normal rule on cognizance in warrant cases - Issuance and cancellation of warrants under the CrPC to secure presence - Whether, where the accused was not arrested by ED till filing of the complaint, the Special Court should ordinarily issue a summons rather than a warrant on taking cognizance, and the subsequent course when the accused fails to appear. - HELD THAT: - Because offences under Section 4 of the PMLA are warrant cases, the Special Court retains discretion under Section 204(1)(b) to issue either summons or warrant. As a rule, where the accused was not arrested by the ED before filing of the complaint, the Special Court should normally issue a summons; where appearance is avoided, the court may in sequence issue a bailable warrant and thereafter a non-bailable warrant if necessary. If a summons is served and the accused does not appear, the Court may issue a warrant under Sections 70 and 89, and also has power to cancel such warrants on appropriate undertakings. [Paras 7, 8, 17, 23]

When the accused was not arrested by the ED till filing of the complaint, the Special Court should ordinarily issue a summons on taking cognizance; warrants may be issued for non-appearance and can be cancelled in appropriate cases.

Power to take bonds for appearance under Section 88 of the CrPC is distinct from grant of bail - Issue of summons as the normal rule on cognizance in warrant cases - Whether an accused who appears pursuant to a summons is deemed to be in custody and must apply for bail, and whether taking bonds under Section 88 amounts to grant of bail. - HELD THAT: - A summons is issued to secure attendance and does not place the accused in custody; Section 437 (which applies when a person is arrested or detained or appears before courts other than Sessions) is not attracted to a Special Court (a Court of Session) on such appearance. Section 88 is an enabling discretionary provision permitting the Court to require bonds for appearance; a bond under Section 88 is an undertaking to appear and is not the same as bail (which is governed by Sections 441 and the provisions relating to bail). Therefore, an order accepting bonds under Section 88 does not amount to grant of bail, and an accused who appears pursuant to summons need not apply for bail merely because he appeared. [Paras 10, 12, 13, 15, 23]

Appearance pursuant to a summons does not amount to custody and Section 88 bonds are distinct from bail; acceptance of bonds under Section 88 does not constitute grant of bail.

Issuance and cancellation of warrants under the CrPC to secure presence - Power to take bonds for appearance under Section 88 of the CrPC is distinct from grant of bail - Remedies and procedures where an accused, having furnished bonds under Section 88 or served with summons, fails to appear. - HELD THAT: - If an accused who furnished bonds under Section 88 fails to appear, Section 89 empowers the Court to issue a warrant for arrest; if no bond was furnished and the accused remains absent after summons, the Court may issue a warrant under Section 70. A bailable warrant entitles the accused to be enlarged on bail as of right upon appearance; the Special Court may cancel warrants on receiving satisfactory undertakings and bonds and such cancellation proceedings are not applications for bail under Section 45(1) of the PMLA. [Paras 16, 17, 18, 23]

Breach of Section 88 bond or non-appearance after summons permits issuance of warrants under Sections 89 and 70; warrants can be cancelled on undertakings and such cancellation is distinct from bail proceedings under Section 45(1) of the PMLA.

Deprivation of ED's arrest power after Special Court takes cognizance - Special Court's power to grant custody to investigating agency after cognizance on stated satisfaction and brief reasons - Whether officers of the Enforcement Directorate can exercise arrest powers under Section 19 of the PMLA after the Special Court has taken cognizance of a complaint under Section 44(1)(b). - HELD THAT: - Once the Special Court takes cognizance of the complaint and is seized of the matter, the ED and its officers cannot exercise the arrest power under Section 19 in respect of persons shown as accused in that complaint; the accused shown in the complaint fall under the jurisdiction of the Special Court. If the ED seeks custody of such an accused for further investigation after cognizance, it must apply to the Special Court which, after hearing the accused, may permit custody only upon recording brief reasons and satisfaction that custodial interrogation is required. The ED may, separately, arrest persons not shown as accused in the filed complaint if Section 19's requirements are met. [Paras 20, 21, 23]

After the Special Court takes cognizance based on a complaint under Section 44(1)(b), the ED cannot arrest a person shown as an accused in that complaint under Section 19; custody thereafter requires Special Court's order on application with brief reasons.

Issuance and cancellation of warrants under the CrPC to secure presence - Whether the warrants issued against the appellants in these matters should be cancelled and on what conditions. - HELD THAT: - On the facts before the Court the appellants had not been arrested by the ED till filing of the complaint and had cooperated with investigation; warrants were issued for non-appearance. The Court directed cancellation of the warrants subject to conditions: (i) appellants to appear within one month and furnish undertakings to attend punctually unless exempted under Section 205, and (ii) appellants to furnish bonds under Section 88 within one month. Failure to comply authorises re-issuance of warrants. The Court also set aside the impugned orders declining anticipatory bail as unnecessary to consider in light of these directions. [Paras 22, 24, 25]

Warrants issued against the appellants are cancelled conditional upon appearance, undertakings to attend, and furnishing of Section 88 bonds within one month; non-compliance permits re-issuance of warrants.

Final Conclusion: The appeals are allowed. The impugned orders declining anticipatory bail are set aside. Warrants issued against the appellants are cancelled on conditions: appearance and filing of undertakings and furnishing of bonds under Section 88 of the CrPC within one month; failure to comply permits the Special Courts to issue warrants anew. In view of these directions, consideration of anticipatory bail was unnecessary.

Summary order. Civil Appeal dismissed following this Court's earlier decision in D.No. 9104 of 2024; delay condoned; pending applications disposed of.

Adjustment of service tax paid by transporter against recipient's liability - Double taxation in service tax - Liability for service tax under Goods Transport Agency services - Reliance on transporter certificates showing non-availment of Cenvat credit - Benefit of Notification No.32/2004/ST

Adjustment of service tax paid by transporter against recipient's liability - Double taxation in service tax - Whether the department can recover service tax from the appellant where the transporter has already discharged service tax on the same GTA services. - HELD THAT: - The Tribunal accepted documentary evidence from the transporters that service tax liability in respect of invoices raised on the appellant had been discharged by them and that they had not availed Cenvat credit. Relying on earlier Tribunal decisions cited in the order, the Bench held that once tax on the service has already been paid by the transporter, the Revenue cannot confirm the same tax again against the appellant. The reasoning rejects the department's attempt to impose the same tax twice and treats such demand as amounting to double taxation. The Tribunal further noted that where certificates indicate payment and registration details, the Revenue ought to have made verification with the concerned authorities rather than shifting the burden onto the appellant. [Paras 6, 7, 8]

Demand confirmed against the appellant in respect of services for which the transporter has already paid service tax is unsustainable; such tax cannot be recovered again from the appellant.

Reliance on transporter certificates showing non-availment of Cenvat credit - Benefit of Notification No.32/2004/ST - Whether certificates/letters from the transporters stating non-availment of Cenvat credit and discharge of service tax constitute sufficient evidence to avail relief (including under Notification No.32/2004/ST) and defeat the demand. - HELD THAT: - The Tribunal found on the record that the transporters furnished letters certifying non-availment of Cenvat credit and, in the case of one transporter, a certificate that service tax liability in respect of the appellant's invoices had been discharged. The appellate authority's refusal to accept these documents was held to be incorrect in light of precedents which require the Revenue to verify such documentary claims with jurisdictional authorities instead of rejecting them as inauthentic. The Bench accepted the appellant's reliance on Notification No.32/2004/ST for the relevant period insofar as the denial by lower authority flowed from non-consideration of the transporter-issued certificate. [Paras 6, 7, 8]

Certificates/letters from transporters stating non-availment of Cenvat credit and payment of service tax suffice to defeat the demand unless independent verification shows otherwise; denial based solely on absence of further documentary proof is not sustainable.

Final Conclusion: The appeal is allowed; demands confirmed by the lower authorities in respect of GTA services for the specified periods are set aside insofar as the transporters had discharged the service tax and had not availed Cenvat credit, with consequential relief to the appellant in accordance with law.

Taxability of consultancy/advisory commission as "service" - negative list doctrine and exclusion from taxation - invocation of extended period for deliberate failure to pay tax - Small Scale Industry (SSI) exemption and cum-tax benefit - imposition and sustainment of penalty for non-payment of service tax

Taxability of consultancy/advisory commission as "service" - negative list doctrine and exclusion from taxation - Advisory/consultancy services for commission received by the appellant are taxable and not covered by the negative list. - HELD THAT: - The appellant admitted providing advisory/consultancy services to M/s ACCSL and others for commission. Following the post-amendment definition of "service" in section 65B(44) (any activity carried out by a person for another for consideration) and the negative-list regime, such activity falls within the definition of "service" and is taxable unless specifically exempted. The activity is not covered by the negative list under section 66D, and Notification No. 7/2003-ST (levying service tax on commission received by consultants/advisors) confirms liability. Therefore the adjudicating authority rightly held that service tax was payable on the commission received during the impugned period. [Paras 10, 11, 12]

Service tax liability on the commission received for advisory/consultancy services is sustained.

Small Scale Industry (SSI) exemption and cum-tax benefit - Contentions relating to entitlement to SSI exemption, correct rate application, and cum-tax benefit were considered and no infirmity was found in the confirmation of demand after adjustments. - HELD THAT: - The appellant contended entitlement to SSI exemption under Notification No. 33/2012-ST, varying applicable service tax rates during the period, and cum-tax benefit for computation of demand. The original adjudicating authority examined these pleas and adjusted the proposed demand (confirming a reduced amount). The Tribunal found no error in that exercise and did not accept the appellant's challenge to the calculation of tax after the adjudicating authority's consideration of these points. [Paras 9, 13]

The adjudication on SSI exemption, applicable rates and cum-tax benefit is upheld and the adjusted demand is sustainable.

Invocation of extended period for deliberate failure to pay tax - Invocation of the extended period for issuance of the show cause notice was justified. - HELD THAT: - The show cause notice (served 11.11.2019) covered April 2014 to June 2017 and was issued beyond the normal limitation. The reason recorded for invoking the extended period was deliberate non-payment of service tax by the appellant. Given the existence of Notification No. 7/2003-ST which made commission to consultants taxable, the appellant could not plead ignorance; failure to register and not paying tax despite that notification was treated as a positive act indicating intention to evade tax. The Tribunal concluded that the extended period was rightly invoked by the department. [Paras 14]

Extended period invocation is sustained.

Imposition and sustainment of penalty for non-payment of service tax - Penalty imposed on the appellant for non-payment of service tax is sustainable. - HELD THAT: - The Tribunal examined the contention that there was no suppression, fraud or willful mis-statement and noted that the appellant did not register or discharge tax despite clear statutory position and Notification No. 7/2003-ST. In view of the finding that the appellant intentionally failed to discharge tax liability and the departmental investigation revealing non-payment, the imposition of penalty was not found to be infirm and was accordingly sustained. [Paras 14, 15]

Penalty imposed for non-payment of service tax is upheld.

Final Conclusion: The appeal is dismissed; the adjudicating authority's confirmation of service tax demand (as adjusted), the invocation of the extended period, and the penalty imposed are sustained.

Export of services - Business Auxiliary Services - Management Consultancy Services - Intellectual Property Service - Franchise Service - Reverse Charge Mechanism - taxable value of services - reimbursements not includible in taxable value

Export of services - Business Auxiliary Services - Management Consultancy Services - Services provided by the appellant to Baxter Healthcare Far East Pte. Ltd. (Baxter Singapore) qualify as export of services and are properly classifiable as Business Auxiliary Services rather than Management Consultancy Services. - HELD THAT: - The Agreement dated 25.02.1997 shows the appellant provided information, market estimates, promotional and administrative advice and assistance to Baxter Singapore. The Tribunal found that these activities constituted the passing on of information and market support rather than advisory management consultancy. As the beneficiary of the services is located outside India and consideration was received from abroad, the services satisfy the conditions of the Export of Service Rules and qualify as export of services; classification as Business Auxiliary Services does not affect export treatment and Revenue did not dispute export status. [Paras 8, 11]

The services to Baxter Singapore are export of services and fall within Business Auxiliary Services, not Management Consultancy Services; the demand is not sustainable.

Export of services - Business Support Services - Mark up on transfer price income charged by the appellant from Baxter World Trade Corporation (BWT) qualifies as export consideration and is not taxable under service tax. - HELD THAT: - The Agreement between the appellant and BWT (dated 01.04.2006) describes services such as training and performance system data entry, reporting, HR systems support and related tasks provided to BWT. Although performed in India, the services were used and benefitted the overseas entity and payment (including reimbursement and mark up) flowed from abroad. Applying Circular No.111/05/2009 ST and consistent Tribunal precedents, these services meet the Export of Service Rules criteria and the mark up forms part of export consideration exempt from service tax. [Paras 7, 11]

Mark up on transfer pricing income from BWT is export consideration and not exigible to service tax; demand is unsustainable.

Intellectual Property Service - Franchise Service - Royalty paid by the appellant to Baxter Healthcare Inc., USA arises under a licence of intellectual property and is not a franchise service. - HELD THAT: - The License Agreement dated 27.10.2003 grants non exclusive licenses to use patents, know how and software rights to make, use and sell licensed products, and expressly excludes grant of sub licenses and contains no grant of representational rights. The Tribunal applied the statutory definitions and earlier decisions to conclude that the agreement constituted a licence of intellectual property rather than a franchise (which requires grant of representational rights). Consequently, the Department's classification as franchise services is incorrect. [Paras 9, 11]

Royalty payments fall within Intellectual Property Service and not Franchise Service; demand is not sustainable.

Reverse Charge Mechanism - No service tax under the Reverse Charge Mechanism is exigible on networking charges and technical services received from overseas entities prior to 18.04.2006. - HELD THAT: - The charging provision for import of services under the Reverse Charge Mechanism (Section 66A) came into effect only from 18.04.2006. Applying the ratio of Indian National Ship Owners Association and subsequent authorities, the Tribunal held that demands for periods prior to 18.04.2006 cannot be sustained. [Paras 10, 11]

Reverse Charge liability for networking and technical services before 18.04.2006 is not sustainable; the demand is set aside.

Taxable value of services - reimbursements not includible in taxable value - Reimbursements made by the appellant to overseas entities for performance based services are not includible in the taxable value of services for service tax purposes. - HELD THAT: - Relying on the principle that service tax is leviable only on the consideration paid as quid pro quo for the taxable service, the Tribunal held that mere reimbursement of expenditure for services performed abroad (including testing and conferences) cannot be treated as part of taxable value. The Tribunal followed Intercontinental Consultants & Technocrats and related authority that Rule 5(1) cannot expand valuation beyond consideration for the service itself. [Paras 10, 11]

Reimbursements for services performed outside India are not includible in taxable value; demands based on such inclusion are unsustainable.

Final Conclusion: All demands and confirmations set aside: the appeals are allowed as the Tribunal found the services to Baxter Singapore and BWT to qualify as exports (including mark up), royalties to be intellectual property services not franchise, no RCM liability prior to 18.04.2006 for networking/technical services, and reimbursements not includible in taxable value.

Export of services - intermediary - place of provision of services - Rule 2(f) of the Place of Provision of Services Rules, 2012 - Rule 3 of the Place of Provision of Services Rules, 2012 - Rule 9(c) of the Place of Provision of Services Rules, 2012 - Rule 6A of the Service Tax Rules, 1994 - principal-to-principal basis - extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994

Export of services - Rule 6A of the Service Tax Rules, 1994 - place of provision of services - Rule 3 of the Place of Provision of Services Rules, 2012 - Service tax liability on ship crew recruitment services supplied by the appellants to ESM Pte. Singapore for the disputed period - HELD THAT: - The Tribunal held that the services in question are ship crew management/recruitment services provided by an Indian supplier to a recipient located outside India and the payments were received in convertible foreign exchange. Applying Rule 3 of the Place of Provision of Services Rules, 2012 and the six conditions of Rule 6A of the Service Tax Rules, 1994, the place of provision is the location of the recipient and all other conditions for export of services are satisfied. The services therefore qualify as export of services and do not fall within the service tax net for the disputed period. The adjudicating authority's contrary conclusion treating the transactions as taxable in India was found unsustainable. [Paras 11, 15]

No service tax is payable on the ship crew recruitment services supplied to ESM Pte. Singapore for 01.10.2014 to 30.06.2017; the transactions qualify as export of services.

Intermediary - Rule 2(f) of the Place of Provision of Services Rules, 2012 - Rule 9(c) of the Place of Provision of Services Rules, 2012 - principal-to-principal basis - Whether the services rendered by the appellants amounted to intermediary services - HELD THAT: - The Tribunal analysed the service agreement, the nature of tasks performed, and applicable legal guidance (including CBIC Circular No. 159/15/2021-GST as reproduced in the order). It found that the appellants provided the main service on their own account to a single foreign recipient under a services contract, there was no tri-partite main supply requiring facilitation, no principal-agent relationship, and no separate ancillary intermediary supply. Consequently the essential prerequisites of 'intermediary' under Rule 2(f) were absent and Rule 9(c) (which treats intermediary services as supplied at the provider's location) did not apply. [Paras 10, 11, 12]

The appellants are not intermediary service providers; the services are supplied on a principal-to-principal basis and are not caught by the intermediary rule.

Extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 - onus on Revenue to prove mala fide - Validity of invocation of the extended period of limitation for demands raised in the show cause notice - HELD THAT: - The Tribunal applied settled precedent that the Revenue must plead and prove specific grounds (fraud, collusion, wilful mis-statement or suppression of facts) to invoke the extended period. The SCN did not make specific averments demonstrating such mala fide conduct and the records (including ST-3 returns) were available to the department. On these facts, the extended period could not legitimately be invoked and the impugned reliance on the extended period was held to be legally unsustainable. [Paras 13]

Invocation of the extended period was not justified; demands based on extended limitation are not sustainable.

Final Conclusion: The adjudicating order dated 23.07.2021 confirming service tax demands, interest and penalties is set aside. The appeal is allowed in favour of the appellants for the disputed period 01.10.2014 to 30.06.2017.

Levy of central excise duty on extraction/clearance of forest resins - Validity of show cause notices issued during pendency of litigation and stay - Bona fide retention of duty in Fixed Deposit Receipts pending judicial determination - Delay in adjudication and limitation under Section 11A(11) - Illegality/arbitrariness of duty collection where earlier judicial order declared collection illegal

Validity of show cause notices issued during pendency of litigation and stay - Illegality/arbitrariness of duty collection where earlier judicial order declared collection illegal - Sustainability of the show cause notices issued during the period when the levy/collection of excise duty on resins was sub judice and earlier judicial orders had held collection arbitrary or their execution stayed. - HELD THAT: - The Tribunal found that the show cause notices in question were issued during an extended period of litigation (including a stay and a Single Judge order holding collection arbitrary and illegal) which continued until the Division Bench judgment of 10.07.2019. The adjudicating authority proceeded to confirm demands for periods when the liability was under judicial consideration and, in some instances, when the collection had been held illegal and amounts stood released to buyers. In those circumstances the issuance and confirmation of the impugned demands is unsustainable because the matter was sub judice and prior judicial directions had negated the validity of collection.

Show cause notices and confirmed demands for the periods decided while the liability was sub judice are not sustainable and are set aside.

Bona fide retention of duty in Fixed Deposit Receipts pending judicial determination - Whether amounts retained by the appellant in the form of Fixed Deposit Receipts (FDRs) constituted collected excise duty enforceable against the appellant where the FDRs were held subject to the outcome of litigation and were subsequently released to buyers. - HELD THAT: - The Tribunal accepted the appellants' position that amounts were retained as FDRs pursuant to directions and pending the resolution of litigation on the levy; the record showed that the FDRs were subsequently released in favour of buyers and that, therefore, no excise duty remained collected with the appellant for the impugned periods. Given the bona fide retention pending judicial determination and the subsequent release, there was no subsisting duty in the hands of the appellant enforceable by the department for those periods.

Demand cannot be sustained in respect of amounts that were retained as FDRs pending litigation and subsequently released to buyers.

Delay in adjudication and limitation under Section 11A(11) - Effect of prolonged delay in adjudication on the validity of the order confirming duty where the adjudication occurred several years after issuance of show cause notices. - HELD THAT: - The Tribunal observed that statutory expectation under Section 11A(11) requires determination within six months of issuing a show cause notice. In the present matters adjudication was delayed by many years, with notices issued in 2007-2014 and finally decided in 2020. Relying on precedent and the principle that belated exercise of power in absence of a provided limitation is to be viewed as unreasonable (including cited authorities), the Tribunal held that such inordinate delay rendered the belated adjudications vulnerable and unsustainable. The delay, combined with the factual matrix of litigation and release of FDRs, supported setting aside the impugned order.

The belated adjudication, being inordinate and unreasonable, constitutes a valid ground to set aside the confirmed demands.

Final Conclusion: For the reasons stated - (i) the show cause notices and demands related to periods when the levy/collection was sub judice or held illegal, (ii) the amounts asserted to have been collected were retained as FDRs pending litigation and later released to buyers, and (iii) adjudication was inordinately delayed - the impugned Order in Original is set aside and the five appeals are allowed.

Lapse of Cenvat credit on absolute exemption - conditional exemption notification and continuity of Cenvat credit - Rule 11(3) of Cenvat Credit Rules, 2004 - prospective application - transitional provision for reversal of Cenvat credit

Conditional exemption notification and continuity of Cenvat credit - lapse of Cenvat credit on absolute exemption - Accumulated unutilized Cenvat credit does not lapse upon availing Notification No.30/2004-CE where that notification is conditional and not an absolute exemption. - HELD THAT: - The Tribunal examined Rule 11(3) of the Cenvat Credit Rules, 2004 and observed that the provision for lapsing of unutilized Cenvat credit applies when the final product is exempted absolutely under section 5A or when the assessee opts for exemption from the whole duty. Notification No.30/2004-CE contains an express proviso limiting its application to goods for which credit had been taken under earlier Cenvat rules, and is therefore conditional rather than absolute. On that basis, the statutory consequence of lapsing prescribed by Rule 11(3)(ii) is not attracted. The Tribunal relied on prior decisions addressing identical factual and legal matrices to conclude that availing a conditional exemption notification does not divest the assessee of legitimately earned and carried forward Cenvat credit. [Paras 4, 5]

Demand for reversal of accumulated Cenvat credit was unsustainable and the Commissioner (Appeals) order allowing the respondent was upheld.

Rule 11(3) of Cenvat Credit Rules, 2004 - prospective application - transitional provision for reversal of Cenvat credit - Rule 11(3) of the Cenvat Credit Rules, 2004 is prospective in operation and cannot be applied retrospectively to revive a demand in respect of credits earned and carried forward prior to its effective date. - HELD THAT: - The Tribunal noted earlier decisions and statutory history showing that sub-rule (3) was inserted with effect from 1-3-2007 and that there is no indication of retrospective operation. Precedents hold that credits legally taken and carried forward prior to the insertion of Rule 11(3) vest in the assessee and cannot be recovered by invoking a provision that has prospective effect. The Tribunal treated these authorities as supporting the proposition that reversal under Rule 11(3) cannot be applied to credits arising before its commencement. [Paras 4]

Rule 11(3) cannot be given retrospective effect; it does not support the Department's demand for credits accumulated prior to its commencement.

Final Conclusion: The appeal by the revenue is dismissed; the Commissioner (Appeals) order setting aside the demand for accumulated unutilized Cenvat credit is upheld, since Notification No.30/2004-CE is conditional and Rule 11(3) is not capable of retrospective application to revive the demand.

Reassessment for escaped turnover - reverse input tax credit - scope of "tax" for reassessment - jurisdiction under Section 29(1) of the Uttar Pradesh Value Added Tax Act, 2008 - "turnover of sale" and "turnover of purchase" as subject matter of reassessment - regular assessment under Section 28 of the Act - principles of natural justice in quasi judicial tax proceedings

Reassessment for escaped turnover - reverse input tax credit - "turnover of sale" and "turnover of purchase" as subject matter of reassessment - jurisdiction under Section 29(1) of the Uttar Pradesh Value Added Tax Act, 2008 - Validity of initiating reassessment proceedings under Section 29(1) of the Act solely to recompute or reverse input tax credit (RITC). - HELD THAT: - The Court held that Section 29(1) confines reassessment to matters referable to the "turnover of a dealer" (sale or purchase) or to wrong application of the rate of tax, or wrong deductions/exemptions in relation to turnover. Input tax credit is an allowance separate in nature from the assessment of turnover and does not arise as a rate applied to turnover. While computation of ITC is included within regular assessment (Sections 25-28) and may be corrected under Section 14 or during regular assessment, Section 29(1) does not vest the assessing authority with jurisdiction to initiate reassessment proceedings solely to redetermine ITC or to effect RITC where the turnover itself has not been disturbed. Inclusion of RITC within the definition of "tax" (Section 2(ag)) does not enlarge Section 29(1)'s subject matter to permit reassessment merely to disallow ITC; jurisdiction to reassess must be founded on language of Section 29 and a reason to believe that turnover or rate/deduction/exemption in relation to turnover has escaped assessment. Consequently, reassessment initiated only to recover RITC, without disturbance of turnover, is beyond Section 29(1)'s scope and without jurisdiction. [Paras 29, 32, 33, 37, 38]

Reassessment under Section 29(1) could not validly be initiated solely to recompute or reverse input tax credit; the reassessment proceedings directed only to RITC were without jurisdiction.

Principles of natural justice in quasi judicial tax proceedings - regular assessment under Section 28 of the Act - Whether the reassessment proceedings complied with principles of natural justice and afforded reasonable opportunity of hearing to the petitioner. - HELD THAT: - The Court found the procedural conduct of reassessment to be hurried and unfair. After the Additional Commissioner granted permission on 18.3.2023, the assessing authority issued notice on 22.3.2023 (served 24.3.2023) and fixed the first hearing on 27.3.2023, leaving only two days to respond; the assessment order was passed on 28.3.2023 effectively closing proceedings on the first hearing. Such truncation denied a reasonable opportunity to present defence and evidence. Even where urgency exists, Section 29(7) provides safeguards (application to the Commissioner) and does not justify closing proceedings without affording a fair hearing. The procedure adopted was held to violate principles of natural justice and to undermine confidence in quasi judicial process. [Paras 11, 12, 13, 14, 39]

Reassessment proceedings were conducted in violation of principles of natural justice; the petitioner was not afforded a reasonable opportunity of hearing.

Final Conclusion: Writ petition allowed; reassessment order dated 28.03.2023 (and connected proceedings) quashed for lack of jurisdiction to reassess solely for RITC and for breach of principles of natural justice; no order as to costs.

Deficiency in service under Consumer Protection Act - contract of personal service - legal profession sui generis - exclusion of regulated professions from consumer law - relation between Advocates Act disciplinary regime and consumer fora - revisit Indian Medical Association v. V.P. Shantha - reference to larger Bench under Order VI Rule 2

Deficiency in service under Consumer Protection Act - exclusion of regulated professions from consumer law - A complaint alleging deficiency in service against an Advocate is maintainable under the Consumer Protection Act - HELD THAT: - After surveying the objects, legislative history and scheme of the Consumer Protection Act, and having regard to the special and regulated nature of professions, the Court concluded that the Act was enacted to protect consumers against unfair trade and unethical business practices and that there is nothing to show the Legislature intended to bring professions and services rendered by professionals within its ambit. The Court emphasised international and comparative practice of excluding regulated professions, the risk of floodgates and multiplicity of proceedings before quasi judicial consumer fora, and the existence of separate disciplinary and civil/criminal remedies under special statutes. On this basis the NCDRC's conclusion that complaints for deficiency in service against advocates are maintainable was held to be incorrect and set aside. [Paras 15, 18, 19, 20, 42]

A complaint alleging deficiency in service against Advocates practising the legal profession is not maintainable under the Consumer Protection Act (1986/2019).

Legal profession sui generis - relation between Advocates Act disciplinary regime and consumer fora - Whether the legal profession is sui generis and distinct for the purposes of consumer law - HELD THAT: - The Court analysed the role, duties and status of advocates - their duties to the court, clients and opponents, the fiduciary and agent like attributes, the statutory regulatory framework under the Advocates Act and Bar Council Rules, and the public interest connected to independence of the Bar and administration of justice. Given these distinctive features and the potential systemic impact of subjecting legal practice to consumer adjudication, the Court held that the legal profession is unique (sui generis) and cannot be equated with ordinary commercial or professional services for the purposes of the Consumer Protection Act. [Paras 26, 27, 29, 30]

The legal profession is sui generis and cannot be treated on par with other professions or ordinary commercial service providers under the Consumer Protection Act.

Contract of personal service - deficiency in service under Consumer Protection Act - Whether a service hired or availed of an Advocate is a 'service under a contract of personal service' and thus excluded from the definition of 'service' in the Consumer Protection Act - HELD THAT: - Relying on authorities on the distinction between contracts 'of service' and 'for services' and on procedural provisions (Order III CPC, vakalatnama) together with the Bar Council duties and the degree of client control over objectives of representation, the Court found that the advocate client relationship ordinarily involves significant direct control and a fiduciary/agent character. Those attributes point to a contract 'of personal service' so as to fall within the exclusionary limb of the definition of 'service' in the Consumer Protection Act. Applying this conclusion, complaints alleging deficiency in service against advocates were held excluded from consumer jurisdiction. [Paras 38, 40, 41, 42]

Services availed of from an Advocate ordinarily amount to a 'contract of personal service' and are excluded from the definition of 'service' under the Consumer Protection Act.

Revisit Indian Medical Association v. V.P. Shantha - reference to larger Bench under Order VI Rule 2 - Whether the earlier three Judge Bench decision in Indian Medical Association v. V.P. Shantha should be reconsidered - HELD THAT: - The Court expressed the view that the reasoning in Indian Medical Association v. V.P. Shantha, which extended the definition of 'service' to cover medical practitioners, merits reconsideration in light of the legislative purpose and the distinctive nature of regulated professions. Concluding that this is a matter for a larger Bench, the Court invoked procedural mechanism to refer the question for consideration by a larger Bench under Order VI Rule 2. [Paras 21, 22, 23, 24]

The earlier decision in Indian Medical Association v. V.P. Shantha is referred to a larger Bench for reconsideration; the matter is to be placed before the Chief Justice for constitution of a larger Bench.

Final Conclusion: The impugned NCDRC order holding advocates liable to consumer complaints for deficiency in service is set aside. The Court held that (i) the Consumer Protection Act was not intended to bring regulated professions within its scope; (ii) the legal profession is sui generis; (iii) services of an advocate ordinarily fall within the exclusion for a 'contract of personal service' and therefore are outside consumer jurisdiction; and (iv) the question of revisiting Indian Medical Association v. V.P. Shantha has been referred to a larger Bench.

Termination of arbitral proceedings under clause (c) of subsection (2) of Section 32 - abandonment of claim (express or implied) - duty of arbitral tribunal to fix hearings - interaction between Section 25 (default of a party) and Section 32(2)(c) - judicial review under Section 14(2) of the Arbitration and Conciliation Act

Termination of arbitral proceedings under clause (c) of subsection (2) of Section 32 - judicial review under Section 14(2) of the Arbitration and Conciliation Act - Scope and limits of the arbitral tribunal's power under clause (c) of subsection (2) of Section 32 and the extent of court interference under Section 14(2). - HELD THAT: - Clause (c) of subsection (2) of Section 32 permits termination only where the arbitral tribunal finds that continuation of proceedings has become unnecessary or impossible. Mere existence of a reason is insufficient; the tribunal must be satisfied on the material on record that continuation is unnecessary or impossible. Courts, exercising powers under Section 14(2), may examine the legality of termination and are entitled to set aside an order where the tribunal has not recorded satisfaction based on evidence or has exercised the power casually, thereby defeating the object of the Arbitration Act. The tribunal's conclusion must be a recorded, supportable finding founded on the material before it. [Paras 14, 15, 21]

Clause (c) of subsection (2) of Section 32 can be invoked only if the arbitral tribunal records satisfaction, based on material on record, that continuation is unnecessary or impossible; judicial scrutiny under Section 14(2) is permissible to test legality of such termination.

Abandonment of claim (express or implied) - standard for proving implied abandonment - Whether the claimant's conduct amounted to abandonment of the claim such as to justify termination under Section 32(2)(c). - HELD THAT: - Abandonment may be express or implied, but cannot be readily inferred. Implied abandonment is available only where admitted or proved facts are so clinching and convincing that the only inference is abandonment. Mere absence from proceedings or failure to take steps, without more, does not automatically amount to abandonment. The tribunal must point to convincing circumstances that lead inevitably to that conclusion. In the present case, the tribunal's finding of abandonment rested on Sheil's non-challenge to the Marico award and alleged inaction, but the record showed Sheil's presence during Marico's hearings and no contemporaneous indication that Sheil had given up its claim; therefore abandonment was not established. [Paras 16, 18, 20, 21]

Abandonment was not established on the material; the arbitrator's finding of abandonment was illegal and unsupportable and could be set aside.

Duty of arbitral tribunal to fix hearings - interaction between Section 25 (default of a party) and Section 32(2)(c) - Whether failure of a claimant to request fixation of hearing or to move the tribunal is a ground to terminate proceedings, and the tribunal's duties where parties are inactive. - HELD THAT: - The Arbitral Tribunal has a duty to adjudicate and to fix meetings/hearings; it cannot abdicate this duty and require parties to request fixation. Where a claimant fails to communicate statement of claim as per Section 23, Section 25(a) mandates termination; but where a claimant has filed a claim and then fails to attend hearings or produce evidence, Section 25(c) permits the tribunal to continue and make an award on available evidence. Thus, mere failure of a claimant to request fixation of hearing does not render continuation unnecessary. If parties are absent on a fixed date, the tribunal may invoke Section 25; the tribunal's duty to actively manage and proceed with the reference persists. [Paras 8, 10, 12, 13, 21]

The tribunal must proactively fix hearings and manage the reference; failure of the claimant to ask for fixation is not, by itself, a ground for invoking Section 32(2)(c), and the tribunal may, where appropriate, proceed under Section 25.

Final Conclusion: The High Court was correct in setting aside the arbitral tribunal's termination order. Clause (c) of Section 32(2) can be invoked only upon recorded satisfaction, based on material, that continuation is unnecessary or impossible; abandonment must be clearly established and cannot be inferred from mere inaction; and the arbitral tribunal has an affirmative duty to fix hearings and manage proceedings. The appeal is dismissed.

Right to a healthy environment - right to be free from the adverse effects of climate change - judicial modification of prior directions - expert committee for environmental-technical assessment - balance between species conservation and renewable energy transition - feasibility of undergrounding power transmission lines - efficacy and specification of bird diverters - state obligations under international climate commitments

Judicial modification of prior directions - balance between species conservation and renewable energy transition - Order dated 19 April 2021 imposing a blanket injunction on setting up overhead transmission lines in the identified priority and potential areas is recalled and suitably modified. - HELD THAT: - The Court found that a blanket direction to underground all overhead transmission lines across the large area delineated in the earlier order is not feasible and may not achieve the conservation objective in isolation. The Court emphasised the need to weigh conservation of the critically endangered Great Indian Bustard alongside India's international commitments and the imperative of expanding renewable energy, observing that conversion of all lines into underground cables raises technical, safety, environmental and policy concerns. Consequently, the blanket injunction is recalled and the earlier directions substituted by the measures and processes directed in the present judgment. [Paras 62, 68, 72]

The blanket injunction of 19 April 2021 is recalled and substituted by the directions in the present judgment.

Expert committee for environmental-technical assessment - feasibility of undergrounding power transmission lines - efficacy and specification of bird diverters - An Expert Committee is constituted to assess feasibility, scope and parameters relating to overhead and underground electric lines and conservation measures in the identified areas. - HELD THAT: - The Court appointed an Expert Committee comprising wildlife and power-sector domain experts, together with two special invitees from central transmission authorities, to determine the scope, feasibility and extent of overhead and underground lines in priority areas; to evaluate conservation and protection measures for the GIB and other fauna; to assess bird diverter efficacy and, if appropriate, specify standards; and to identify sustainable alternatives that balance GIB conservation with renewable energy development. The Court explained that such technical and policy determinations are better left to domain experts rather than by an a priori judicial prescription affecting national energy policy and infrastructure. [Paras 63, 64, 65, 66, 67]

The Expert Committee is constituted with the specified composition and remit to carry out the technical and conservation assessments.

Expert committee for environmental-technical assessment - The Expert Committee is to complete its task and submit a report to the Court through the Union Government by 31 July 2024. - HELD THAT: - The Court fixed a timeline for the Committee's work, requiring the Committee to submit its report to the Court through the Union Government on or before 31 July 2024, recognising the need for an expeditious expert-led examination to assist judicial oversight and subsequent directions. [Paras 70]

The Committee shall file its report by 31 July 2024.

State obligations under international climate commitments - balance between species conservation and renewable energy transition - The Union of India and concerned ministries are directed to implement and continue the conservation measures undertaken and detailed in the Union's affidavit. - HELD THAT: - The Court recorded the Union's undertakings concerning ex-situ and in-situ conservation measures, predator-proof enclosures, habitat restoration, captive-breeding and monitoring, community engagement, upscaling of conservation activities and other steps. It directed the Union and the concerned ministries to implement those measures and to continue implementation of the measures set out in the earlier affidavit, substituting the earlier judicial directions with these implementation obligations. [Paras 71, 72]

The Union and concerned ministries shall implement and continue the conservation measures as undertaken in the affidavit; the April 2021 directions are substituted accordingly.

Judicial modification of prior directions - Project clearances granted pursuant to recommendations of the earlier committee shall remain unaffected by the present judgment. - HELD THAT: - While recalling the blanket injunction and appointing an Expert Committee, the Court expressly protected the validity of project clearances already granted on the basis of the earlier committee's recommendations, ensuring that ongoing clearances are not disturbed by the present modification. [Paras 72]

Earlier project clearances granted pursuant to the earlier committee's recommendations remain undisturbed.

Feasibility of undergrounding power transmission lines - expert committee for environmental-technical assessment - The technical and environmental feasibility, appropriateness and parameters for undergrounding, overhead routing, bird diverter specifications and related measures are to be determined by the Expert Committee (remanded for expert consideration). - HELD THAT: - The Court remitted to the Expert Committee the task of assessing, on a case-by-case and evidence-based basis, whether and where overhead lines should be converted to underground lines; the efficacy and quality standards of bird diverters; identification of conservation measures tailored to habitats; and identification of any additional areas requiring protection. The Committee is empowered to balance GIB conservation with national renewable energy objectives and to recommend further measures to the Court. This remand is for fresh expert consideration rather than final adjudication by the Court on these technical matters. [Paras 61, 66, 67, 69]

These technical and policy questions are remitted to the Expert Committee for fresh consideration and recommendation to the Court.

Final Conclusion: The Supreme Court recalled the prior blanket injunction of 19 April 2021 and substituted it with an expert-driven process: it constituted an Expert Committee (with specified members and invitees), directed continuance and implementation of the Union's conservation measures, protected prior project clearances, and remitted technical questions-including feasibility of undergrounding and standards for bird diverters-to the Committee with a mandate to report by 31 July 2024.