TaxTMI Updates e-Newsletter
Jun 13,2024

Summary order. Delay condoned; notice issued in the special leave petitions to the respondents and on interim reliefs; petitions tagged along with SLP(C) No.28270/2023.

Mandamus to restrain performance of statutory duty - power to summon under Section 70 of the CGST Act - jurisdictional allocation between CGST and SGST authorities - maintainability of writ petition challenging summons

Mandamus to restrain performance of statutory duty - maintainability of writ petition challenging summons - Petition for a writ of mandamus to restrain issuance or operation of summons under Section 70 of the CGST Act was not maintainable. - HELD THAT: - The Court observed that Section 70 empowers a proper officer to summon any person whose attendance is considered necessary in relation to an enquiry. A mandamus is a prerogative remedy intended to enforce, not to restrain, the performance of statutory duties. Given the statutory power to summon, the Court declined to grant an injunction or mandamus to prevent the officer from performing that duty. The petitioner was directed to respond to the summons and ventilate all contentions before the appropriate forum rather than seek pre-emptive restraint by writ. [Paras 6, 7]

Writ petition seeking to restrain the summons under Section 70 dismissed; mandamus refused.

Power to summon under Section 70 of the CGST Act - jurisdictional allocation between CGST and SGST authorities - Petitioner permitted to respond to the summons and to raise the objection that the assessment/ enquiry falls within SGST jurisdiction as per earlier order of the Court. - HELD THAT: - The Court noted uncertainty whether the impugned summons related to the petitioner or to another entity (M/s. GBR). In view of that uncertainty and the petitioner's contention based on an earlier decision that CGST officers should not interfere with assessments allotted to SGST authorities, the Court refused pre-emptive relief but expressly left open the petitioner's right to (a) respond to the summons and raise all contentions including reliance on the earlier W.P.No.34792 of 2019 batch, and (b) if it becomes clear that the proceedings relate to the petitioner, initiate appropriate legal proceedings challenging jurisdiction, provided the earlier order continues to remain binding. [Paras 6, 8]

Petitioner directed to answer the summons and may raise jurisdictional objections; may pursue appropriate proceedings if the summons is found to relate to it.

Final Conclusion: Writ petition dismissed: no mandamus to restrain the statutory power to summon was granted; petitioner must respond to the summons and may raise jurisdictional objections including reliance on the earlier decision allocating assessments to SGST authorities, and may initiate further proceedings if the summons is shown to relate to the petitioner.

Denial of reasonable opportunity of hearing - personal hearing requirement - interpretation and application of Notification No.03/2019 regarding concessional GST for affordable housing - jurisdiction to impose higher GST rate for non-compliance with a concessional notification - invocation of penal proceedings under Section 74 - remand for fresh adjudication subject to deposit

Denial of reasonable opportunity of hearing - personal hearing requirement - Whether the impugned assessment orders were vitiated by denial of a personal hearing and consequent denial of reasonable opportunity - HELD THAT: - The court found that although the impugned orders referred to and considered the petitioner's written replies, the petitioner had expressly requested a personal hearing in the final reply dated 24.02.2024 which was not granted prior to passing the orders. The absence of a personal hearing when expressly sought rendered the proceedings procedurally infirm. For this reason interference with the impugned orders was warranted and they were set aside to the extent indicated.

Orders set aside on grounds of denial of personal hearing and reasonable opportunity.

Remand for fresh adjudication subject to deposit - Whether the matter should be remanded for fresh consideration and, if so, on what terms - HELD THAT: - Having held that a personal hearing was not granted, the court nonetheless noted that the impugned orders were preceded by an intimation and show cause notices and that the petitioner's written replies had been considered. Balancing the petitioner's right to a hearing with the revenue interest, the court directed that the impugned orders be set aside and the matter remitted for fresh adjudication. The remand was made conditional on the petitioner remitting 5% of the disputed tax demand for each assessment period within two weeks; upon satisfaction of receipt, the assessing authority was directed to afford a reasonable opportunity, including a personal hearing, and to pass fresh orders within three months from receipt of the copy of this order.

Matter remanded for fresh adjudication on condition that the petitioner deposits 5% of the disputed tax demand for each period; fresh hearing and orders to follow within three months.

Interpretation and application of Notification No.03/2019 regarding concessional GST for affordable housing - jurisdiction to impose higher GST rate for non-compliance with a concessional notification - invocation of penal proceedings under Section 74 - Whether the legality of applying GST at 5% instead of 1% under Notification No.03/2019 and the sufficiency of the show cause notice invoking Section 74 were finally adjudicated - HELD THAT: - The court did not adjudicate these contested substantive questions on merits. Though the petitioner challenged the application of the higher rate and contended that the show cause notice lacked essential ingredients for invoking Section 74, the court remitted the matter for fresh consideration after granting the procedural relief of a personal hearing. The remand contemplates that the assessing authority will reconsider these substantive contentions in the fresh proceedings.

Substantive controversies regarding entitlement to the concessional rate under Notification No.03/2019 and the vires/adequacy of invoking Section 74 remanded for fresh consideration by the authority.

Final Conclusion: Impugned assessment orders for AYs 2019-20, 2020-21 and 2021-22 set aside for failure to grant the requested personal hearing; matter remitted for fresh adjudication on the condition that the petitioner deposits 5% of the disputed tax demand for each period, after which the authority shall afford a personal hearing and pass fresh orders within three months.

Breach of principles of natural justice - inspection under GST provisions - input tax credit reversal for non-payment beyond 180 days - claim exclusion of inter-State turnover from assessment - personal hearing - quashing of assessment subject to deposit and fresh adjudication - compliance with Circular No.12/2022 dated 26.09.2022

Breach of principles of natural justice - inspection under GST provisions - personal hearing - Validity of the impugned assessment orders in view of the petitioner's replies during inspection, request for extension and the alleged denial of opportunity to be heard - HELD THAT: - The court examined the inspection proceedings and contemporaneous replies filed by the petitioner addressing each of the 15 discrepancies raised during inspection, including submission of an ageing report and trial balance, and a request for extension and personal hearing. The assessing authority proceeded from intimation to show cause notice and ultimately to assessment without granting the requested extension or adequately considering the replies furnished at the inspection stage. Having regard to these facts, the court concluded that the assessment orders called for interference on grounds of breach of principles of natural justice, while recognising that the petitioner had opportunities during assessment proceedings but that the inspection-stage replies were overlooked in reaching the impugned orders. [Paras 2, 3, 6]

The impugned assessment orders are quashed on grounds of breach of natural justice, subject to conditions specified by the court.

Quashing of assessment subject to deposit and fresh adjudication - input tax credit reversal for non-payment beyond 180 days - claim exclusion of inter-State turnover from assessment - compliance with Circular No.12/2022 dated 26.09.2022 - Terms on which quashed assessments are to be regularised and the scope of fresh consideration by the assessing officer - HELD THAT: - The petitioner agreed to remit specified amounts towards the disputed tax demands after excluding issues relating to ITC reversal and turnover differences. The court conditioned the quashing on deposit of those sums within a stipulated period and permitted the petitioner to submit a reply to the show cause notice within the same period. Upon receipt of the deposits and the reply, the assessing officer is directed to afford a reasonable opportunity, including a personal hearing, and to pass fresh assessment orders within two months, taking note of and following the procedure prescribed in Circular No.12/2022. The court thereby remanded the matter for fresh adjudication confined to the statutory/administrative procedure and the matters raised by the petitioner, without finally adjudicating the substantive merits of ITC reversal or turnover inclusion. [Paras 4, 7]

Quashing is subject to deposit and the matter is remitted for fresh assessment after the petitioner's submission and personal hearing; the assessing officer must comply with Circular No.12/2022 and pass fresh orders within two months.

Final Conclusion: The writ petitions are allowed by quashing the impugned assessment orders for assessment years 2018-19, 2019-20 and 2020-21 on grounds of breach of natural justice; quashing is conditional upon specified deposits by the petitioner, who is permitted to file a reply and seek a personal hearing, and the assessing officer is directed to pass fresh assessment orders in accordance with Circular No.12/2022 within two months of receiving the petitioner's reply.

Power of inspecting officer to issue show cause notice - adjudication by inspecting officer - definition of "proper officer" - elimination of bias - transfer of inspection report to jurisdictional proper officer - circulars guiding adjudication procedure

Power of inspecting officer to issue show cause notice - definition of "proper officer" - Validity of the Show Cause Notice in Form GST DRC-01 dated 25.09.2023 and whether the inspecting officer was barred from issuing such notice or from adjudicating the matter. - HELD THAT: - The Court held that there is no embargo under the GST enactments on an inspecting officer issuing a show cause notice; issuance of FORM GST DRC-01 by the inspecting officer is permissible. However, adjudication by the inspecting officer is permissible only if that officer satisfies the statutory definition of a "proper officer" for the function assigned. The Court relied on the definition of "proper officer" to clarify that assignment by the Commissioner determines who may adjudicate. Applying these principles, the challenge to the impugned show cause notice was found to be without merit insofar as issuance is concerned, but adjudication by the inspecting officer was curtailed to avoid conflict with the requirement that the adjudicating function be performed by a proper officer. [Paras 12, 13]

The Show Cause Notice was not vitiated on the ground of issuance by the inspecting officer; adjudication by the inspecting officer is subject to the requirement that the officer be a "proper officer" and therefore the challenge to the notice on that basis lacked merit.

Elimination of bias - transfer of inspection report to jurisdictional proper officer - circulars guiding adjudication procedure - Validity of Circular No. 13/2022-TNGST dated 08.11.2022 and the appropriate course for adjudication where an inspecting officer has issued FORM GST DRC-01A/DRC-01. - HELD THAT: - The Court found that Circular No.13/2022-TNGST properly provides safeguards to eliminate scope for bias by discharging the inspecting officer from acting as the adjudicating authority in cases where transfer is mandated. Paragraphs 3 and 4 of the circular prescribe the procedure for issuance of FORM GST DRC-01A/DRC-01 and the criteria for transfer to the jurisdictional proper officer based on revenue effect, while Paragraphs 4 and 5 prescribe the transmission and follow-up mechanism. On that basis the impugned circular was not struck down; instead the Court directed procedural compliance: the inspecting officer was to transmit the notice and records to the jurisdictional proper officer for adjudication in accordance with Paragraphs 4 and 5 of the impugned circular, within a stipulated timeframe, to secure impartial adjudication. [Paras 7, 10, 13, 14, 15]

Circular No.13/2022-TNGST stands; the matter is remitted for adjudication by the jurisdictional proper officer in accordance with the circular, with directions for transmission of the file and timelines for adjudication.

Final Conclusion: Challenges to the impugned Show Cause Notice and the impugned circular were rejected on merits; to avoid bias the inspecting officer was directed to transmit the notice and records to the jurisdictional proper officer for adjudication under the procedures and timelines prescribed in the impugned circular, and the proper officer was directed to decide the matter on merits within the stipulated period.

Opportunity of personal hearing - compliance with request for adjournment - Section 75(5) of the CGST Act - quashing of order for failure to consider representation - re-adjudication after giving last opportunity of personal hearing

Opportunity of personal hearing - compliance with request for adjournment - quashing of order for failure to consider representation - re-adjudication after giving last opportunity of personal hearing - Impugned order dated 29.09.2023 was quashed for failure to pass any order on the petitioner's request for adjournment and for not affording a last personal hearing in accordance with law. - HELD THAT: - The Court examined the hearing chronology and the petitioner's request for adjournment received by the authority on 26.09.2023. Although the matter was listed for hearing on 27.09.2023, no order was passed on the adjournment request and ultimately the impugned order was issued on 29.09.2023 under the provision invoked. The Court held that the authority ought to have passed some order on the request when it was in its possession and that proceeding to pass the impugned order without dealing with that representation amounted to failure to afford the opportunity of personal hearing envisaged by the statutory scheme. In view of that procedural deficiency, the Court found it appropriate to quash the impugned order and to remit the matter for fresh adjudication after giving the petitioner a final opportunity of personal hearing and thereafter passing a fresh speaking order in accordance with law.

Writ petition allowed; impugned order dated 29.09.2023 quashed and matter remitted for re-adjudication after affording last personal hearing and passing a fresh speaking order.

Final Conclusion: The impugned order is set aside for procedural infirmity in not dealing with the adjournment request or affording the petitioner a last personal hearing; respondents directed to re-adjudicate the matter after giving one final personal hearing and to pass a fresh speaking order in accordance with law.

Reverse charge mechanism - Notification No. 43 of 2017 specifying raw cotton liable to reverse charge - application of section 9(3) as charging provision versus section 9(4) - determination under section 73 and enhanced jurisdiction under section 74 for suppression - penalty for willful-misstatement or suppression under section 122(2)

Reverse charge mechanism - Notification No. 43 of 2017 specifying raw cotton liable to reverse charge - application of section 9(3) as charging provision versus section 9(4) - Liability to pay GST on reverse charge basis for raw cotton purchased from agriculturist from 15.11.2017 - HELD THAT: - The Court examined the statutory scheme of Section 9 and the Notifications. Notification No. 43 of 2017, issued under Section 9(3) with effect from 15.11.2017, inserted an entry making raw cotton (Tariff Item 5201) purchased from an agriculturist taxable on reverse charge, making the registered recipient liable to pay tax. The petitioner's purchases of raw cotton from agriculturists therefore attract GST on RCM from 15.11.2017. The contention that absence of a notification under Section 9(4) absolves the petitioner is unsustainable because Notification No. 43 operates under Section 9(3) and is a charging specification applicable to the petitioner's purchases. [Paras 6, 7, 11]

The petitioner is liable to pay GST on reverse charge basis for raw cotton purchased from agriculturists from 15.11.2017 as per Notification No. 43 of 2017 issued under Section 9(3).

Determination under section 73 and enhanced jurisdiction under section 74 for suppression - Validity of invoking Section 74 after earlier proceedings under Section 73 - HELD THAT: - The Court compared the earlier intimation under Form GST DRC-01A (Section 73) and the subsequent notice under Section 74. It found that further investigation disclosed additional suppression of purchases for Financial Year 2018-19 beyond the matters initially intimated for 2017-18. Where suppression is found, the proper officer may invoke Section 74, which confers an extended period for assessment. Thus, issuance of the Section 74 show cause notice was not rendered impermissible merely because an earlier notice or intimation arose under Section 73. [Paras 9]

Invocation of Section 74 was valid in view of further suppression discovered, and the subsequent notice under Section 74 does not suffer from jurisdictional infirmity.

Application of section 9(3) as charging provision versus section 9(4) - Effect of referring to Section 9(4) in the show cause notice when Notification under Section 9(3) is the operative basis - HELD THAT: - The Court observed that both the show cause notice and the impugned order expressly referred to Notification No. 43 of 2017, which operates under Section 9(3). A clerical or referential mention of Section 9(4) in the notice does not vitiate the proceedings where the operative legal basis and the notification invoked are those under Section 9(3). The petitioner was on notice that Notification No. 43/2017 applied to raw cotton purchases from agriculturists and hence could not successfully contend that the notice was incompetent on that ground. [Paras 10, 12]

Mention of Section 9(4) in the show cause notice does not vitiate the notice or order where Notification No. 43 of 2017 under Section 9(3) is the operative basis for RCM liability.

Reverse charge mechanism - Whether revenue-neutrality by export (refund of IGST) absolves the petitioner from RCM liability - HELD THAT: - The Court rejected the submission that the petitioner's significant exports (circa 80%) would render the exercise revenue-neutral and therefore obviate the RCM liability. The RCM liability under Section 9(3) is a charging obligation independent of subsequent refund or export treatment; partial export does not negate the liability, and entitlement to refund under IGST/Section 54 does not absolve the petitioner from being charged tax under the Act. [Paras 13]

Revenue-neutrality by way of export and potential refund does not absolve the petitioner from its charging obligation to pay GST on RCM.

Penalty for willful-misstatement or suppression under section 122(2) - determination under section 73 and enhanced jurisdiction under section 74 for suppression - Imposability and sustainment of penalty under Section 122(2) - HELD THAT: - The Court reviewed the record and the respondent's reasoning that the petitioner had been put on notice since 2022 regarding non-payment of GST under RCM and nonetheless did not discharge the obligation. Having found suppression and deliberate non-payment in the light of Notification No. 43/2017, the Court held that the respondent furnished cogent reasons justifying imposition of penalty under Section 122(2). The Court declined to interfere with the penalty decision. [Paras 17]

The penalty imposed under Section 122(2) was justified on the facts and does not call for interference.

Final Conclusion: Writ petition dismissed. The High Court upheld the show cause notice and the order of the assessing authority: the petitioner is liable to pay GST on reverse charge for raw cotton purchased from agriculturists from 15.11.2017 (per Notification No. 43/2017), invocation of Section 74 was permissible for additional suppression, the notice was not vitiated by reference to Section 9(4), revenue-neutrality by export does not absolve RCM liability, and the penalty under Section 122(2) was sustainable.

Breach of principles of natural justice due to failure of communication - service of notices via GST portal and duty of registered person to monitor portal - penalty liability under Section 73 and Section 74 and inconsistency in notice and order - remand for fresh consideration subject to deposit of part of disputed demand and opportunity of personal hearing

Breach of principles of natural justice due to failure of communication - service of notices via GST portal and duty of registered person to monitor portal - Whether the impugned assessment order suffered from breach of principles of natural justice on account of communication being effected only by uploading on the GST portal and warranted interference. - HELD THAT: - The Court observed that the intimation, show cause notice and impugned order had been uploaded under the "View Additional Notices and Orders" tab on the GST portal and were not communicated to the petitioner by any other mode. Although it noted that a registered person has an obligation to monitor the GST portal continuously, the apparent failure in communication and the inconsistency between the show cause notice and the impugned order required interference with the order. In view of these findings, the Court set aside the impugned order and remanded the matter for fresh consideration on terms designed to cure the procedural defect while preserving all substantive contentions for fresh adjudication. [Paras 5, 6]

Impugned assessment order set aside and matter remanded for reconsideration, subject to conditions ensuring opportunity to the petitioner.

Penalty liability under Section 73 and Section 74 and inconsistency in notice and order - remand for fresh consideration subject to deposit of part of disputed demand and opportunity of personal hearing - Whether the inconsistency between the show cause notice (issued under Section 73) and the impugned order (referring to Sections 73 and 74 and mentioning 100% penalty) vitiated the adjudication and required fresh consideration, and on what terms the matter should be remitted. - HELD THAT: - The Court compared the show cause notice and the impugned order and found that the notice had been issued under Section 73, yet 100% penalty was mentioned and the detailed order also referred to Section 74. Given this inconsistency, the Court remanded the matter for fresh adjudication, but conditioned the remand on the petitioner depositing 10% of the disputed tax demand within two weeks and being permitted to file a reply within that period. Upon receipt of the reply and verification of the deposit, the respondent was directed to afford a reasonable opportunity including a personal hearing and to pass a fresh order within three months. All substantive contentions were left open for determination in the remanded proceedings. [Paras 5, 6]

Issue remanded for fresh consideration; remand conditional on payment of 10% of disputed demand, filing of reply, and grant of personal hearing, with fresh order to follow within three months.

Final Conclusion: The assessment order dated 29.07.2023 is set aside and the matter is remanded for fresh adjudication; remand is conditional on the petitioner depositing 10% of the disputed tax demand within two weeks and filing a reply, after which the authority shall provide a reasonable opportunity including a personal hearing and pass a fresh order within three months; all substantive contentions are left open.

GST liability on seigniorage fee and mining lease - services supplied by Government by way of renting of immovable property excluded from GST - interim stay by Supreme Court in respect of royalty and mining lease - adjudication kept in abeyance pending decision of Nine Judge Constitution Bench on nature of royalty - no recovery of GST on royalty until Constitution Bench decision - submission of objections/representations and adjudication on merits after hearing

GST liability on seigniorage fee and mining lease - services supplied by Government by way of renting of immovable property excluded from GST - interim stay by Supreme Court in respect of royalty and mining lease - adjudication kept in abeyance pending decision of Nine Judge Constitution Bench on nature of royalty - no recovery of GST on royalty until Constitution Bench decision - Whether the petition challenging the intimation of GST liability in respect of seigniorage fee and mining lease should be disposed of on the same interim terms as the Division Bench decision while awaiting the Nine Judge Constitution Bench determination - HELD THAT: - The petitioner challenged the intimation assessing GST on amounts paid as seigniorage fee and for mining lease, relying on the contention that services by Government by way of renting of immovable property are excluded from GST and on interim orders of the Supreme Court which granted stay in respect of royalty and mining lease. The Division Bench in A. Venkatachalam v. Assistant Commissioner (ST), Palladam issued directions permitting submission of objections/representations within four weeks, requiring adjudication on merits after affording opportunity of hearing but keeping orders of adjudication in abeyance until the Nine Judge Constitution Bench decides the nature of royalty, and prohibiting recovery of GST on royalty until that decision. Applying those directions to the present petition, the High Court allowed the petitioner to submit his reply to the intimation within four weeks and disposed of the writ petition on the same terms indicated by the Division Bench, leaving the substantive contentions open for consideration in proceedings after the Constitution Bench's determination. [Paras 4, 5]

Petition disposed on the same interim terms as the Division Bench; petitioner permitted to submit reply within four weeks; adjudication and any recovery to remain subject to the outcome of the Nine Judge Constitution Bench.

Final Conclusion: Writ petition disposed on the terms of the Division Bench direction: petitioner may submit objections/reply within four weeks and the matter is to be adjudicated on merits after hearing, but adjudication/orders and recovery in respect of royalty/mining lease are to remain in abeyance until the Nine Judge Constitution Bench decides the nature of royalty; no costs.

Rejection of taxpayer's reply for being merely descriptive - failure to upload reconciliation statement - requirement to consider explanations on record - remand for fresh consideration and opportunity of personal hearing - quashing of assessment order for failure to consider material reply

Rejection of taxpayer's reply for being merely descriptive - failure to upload reconciliation statement - requirement to consider explanations on record - Whether the assessing officer was justified in treating the petitioner's reply as incomplete and rejecting it on the ground that no reconciliation statement was uploaded - HELD THAT: - The assessing officer's operative findings record that the petitioner had furnished a descriptive reply and had stated that a reconciliation statement of Form 26AS along with sample invoices was furnished, but no such reconciliation statement was found uploaded with the reply. The High Court found this conclusion unsustainable in the face of the Chartered Accountant's categorical statement in Form GST ASMT-11 that a reconciliation statement and sample invoices were attached. Although the petitioner had not produced all invoices necessary to fully substantiate non-inclusion of certain expenses in taxable turnover, the core explanation on record was not duly considered by the assessing officer. In these circumstances the Court held that the assessment order could not stand insofar as the assessing officer rejected the reply without properly considering the material placed before him and without affording a fair opportunity to the petitioner to produce supporting documents. [Paras 5, 6, 7]

The assessing officer's rejection of the reply as incomplete for want of an uploaded reconciliation statement is set aside and the assessment order quashed to the extent described; the matter is remanded for reconsideration after permitting the petitioner to submit supporting documents and after affording a personal hearing.

Final Conclusion: The impugned assessment order dated 29.12.2023 is quashed and the matter is remanded for fresh consideration; the petitioner may file additional documents within two weeks and the assessing officer shall afford a reasonable opportunity including personal hearing and pass a fresh assessment order within two months of receipt of the petitioner's reply.

Release of seized goods on furnishing bond and bank guarantee - provisional release of seized goods upon execution of bond and bank guarantee under the CGST regime - indemnity bond versus bank guarantee for release of seized goods - contempt for non-compliance with court direction - effect of prior communication on claimed valuation of seized goods - state policy in processing proceedings under the Central Goods and Services Tax Act, 2017

Contempt for non-compliance with court direction - release of seized goods on furnishing bond and bank guarantee - Whether the complainant established contempt against the 1st respondent for not implementing the Single Judge's direction to release the seized goods and what relief should follow. - HELD THAT: - The Court recorded that the Single Judge's order contained a direction for conditional release of seized articles. Having considered the contempt petition and submissions, the Court accepted that a direction for release exists but observed that statutory procedures under the Central Goods and Services Tax Act, 2017 must be followed. The Court therefore declined to treat non-release as wilful disobedience in circumstances where release is regulated by State policy and CGST Rules. Instead of imposing punitive consequences, the Court disposed of the contempt petition by directing compliance through the statutory mechanism, requiring the complainant to furnish a Bond and a Bank Guarantee for the worth of the goods before release is effected. The Court framed the remedy as a direction to release upon satisfaction of the Rule-compliant security requirements and ordered that no delay be brooked in effecting release once the prescribed securities are furnished. [Paras 4, 6]

Contempt petition disposed by directing release of seized goods upon the complainant furnishing a Bond and Bank Guarantee in accordance with statutory requirements, and the 1st respondent directed to release the goods without delay.

Provisional release of seized goods upon execution of bond and bank guarantee under the CGST regime - indemnity bond versus bank guarantee for release of seized goods - Whether the release of the seized goods could be effected by taking an indemnity bond as directed by the Single Judge, or whether the respondent was justified in insisting upon a Bank Guarantee under the applicable rules. - HELD THAT: - Counsel for the respondent-accused contended that the Single Judge's direction did not contemplate notice to his client and that, in any event, Rule 140(1) of the Central Goods and Services Tax Rules, 2017, contemplates release of seized goods upon execution of a bond and furnishing of a security in the form of a bank guarantee equivalent to applicable tax, interest and penalty. The Court noted this provision and accepted that, as a matter of State policy and statutory procedure, provisional release is permissible only upon compliance with the mechanism prescribed by the CGST Rules. Consequently, the Court held that insisting on a Bank Guarantee (along with the bond) was not a wilful refusal but consistent with Rule 140(1), and indemnity bond alone would not satisfy the statutory requirement for release under the CGST regime. [Paras 3, 4]

Release must follow the procedure under Rule 140(1) CGST Rules, 2017; a Bank Guarantee (together with the bond) is required rather than only an indemnity bond.

Effect of prior communication on claimed valuation of seized goods - release of seized goods on furnishing bond and bank guarantee - What is the quantum for which security must be furnished having regard to the complainant's prior representations about the value of the goods? - HELD THAT: - The Court observed that the complainant had earlier, in writing, stated a value for the goods (as per Annexure-R8) which was materially lower than the value now advanced in the contempt proceedings. The Court treated that prior communication as determinative for the present purpose and noted that the 1st accused-respondent's latest correspondence disclosed an even lower valuation. The Court further recorded that the complainant did not assert any financial inability to furnish security. In these circumstances the Court directed that release could be effected upon the complainant furnishing a Bank Guarantee for the lesser sum as shown in the more recent correspondence, thereby aligning the security requirement with the disclosed valuation. [Paras 4, 5, 6]

Complainant must furnish a Bank Guarantee for the lesser value of the goods as reflected in his earlier and the respondent's later communications; release to follow upon such security being furnished.

Final Conclusion: The contempt petition was disposed of by directing the 1st respondent to release the seized goods forthwith upon the complainant furnishing the prescribed Bond and a Bank Guarantee for the appropriate (lesser) value disclosed in prior communications, the Court emphasising that release must conform to the procedure under the CGST Rules and be effected without delay.

GST liability on seigniorage fee and mining lease - services supplied by the Government by way of renting of immovable property excluded from GST - interim stay on recovery of GST on royalty and mining lease pending constitution bench decision - adjudication to be kept in abeyance until determination of the nature of royalty - right to submit objections/representations and opportunity of being heard

Adjudication to be kept in abeyance until determination of the nature of royalty - interim stay on recovery of GST on royalty and mining lease pending constitution bench decision - Application of the Division Bench directions to stay recovery of GST on royalty/mining lease and to keep adjudication in abeyance until the Nine Judge Constitution Bench decides the nature of royalty. - HELD THAT: - The High Court applied the directions issued by the Division Bench in A. Venkatachalam v. Assistant Commissioner (ST), whereby objections/representations are to be entertained and adjudication proceeded with on merits but orders of adjudication are to be kept in abeyance until the Nine Judge Constitution Bench determines the nature of royalty. The Division Bench specifically directed that there shall be no recovery of GST on royalty until the Constitution Bench decides the issue. In view of those directions, the present petition is disposed on the same terms so that substantive adjudication remains subject to the outcome of the Constitution Bench and recovery is restrained accordingly. [Paras 5, 6]

The petition is disposed on the Division Bench terms; adjudication/orders to be kept in abeyance and no recovery of GST on royalty until the Nine Judge Constitution Bench decides the issue.

Right to submit objections/representations and opportunity of being heard - services supplied by the Government by way of renting of immovable property excluded from GST - Permitting the petitioner to submit reply/objections to the intimation and directing further adjudicatory proceedings in accordance with law after hearing. - HELD THAT: - Relying on the Division Bench direction that petitioners challenging show cause notices may submit objections/representations within four weeks, the Court allowed the petitioner to file his reply to the intimation within a maximum period of four weeks from receipt of this order. The authority is to proceed with adjudication on merits and in accordance with law after affording a reasonable opportunity of being heard, while preserving the stay/abeyance mandated by the Division Bench pending the Constitution Bench decision. [Paras 5, 6]

Petitioner permitted to submit reply/objections within four weeks; adjudication to proceed on merits after hearing but subject to abeyance as directed.

GST liability on seigniorage fee and mining lease - interim stay on recovery of GST on royalty and mining lease pending constitution bench decision - Disposition of the writ petition and closure of connected miscellaneous petitions on the terms directed by the Division Bench. - HELD THAT: - Having applied the Division Bench directions to the present facts, the High Court disposed of W.P. No.5224 of 2024 on those terms and ordered that the connected Writ Miscellaneous Petitions be closed. The Court recorded that all contentions remain open for petitioners to pursue appropriate remedies after the Constitution Bench decision. [Paras 6, 7]

Writ petition disposed on the Division Bench terms; connected miscellaneous petitions closed; no costs.

Final Conclusion: The petition is disposed applying the Division Bench directions: petitioner may file objections within four weeks; adjudication may proceed on merits after hearing but orders are to be kept in abeyance and there shall be no recovery of GST on royalty/mining lease until the Nine Judge Constitution Bench decides the nature of royalty; connected petitions closed.

Advance ruling maintainability under Section 95(a) of the CGST Act - eligibility for input tax credit - Input Tax Credit entitlement under Section 16 - forward charge mechanism - exempt supply - used or intended to be used in the course or furtherance of business

Advance ruling maintainability under Section 95(a) of the CGST Act - exempt supply - Whether a ruling can be given on whether the supplier can charge GST on hiring/rental services to the Applicant where the Applicant is not the supplier of that service. - HELD THAT: - The Authority held that the question on chargeability of inward supplies (whether the supplier can charge GST on rental/hiring services) is not maintainable as an advance ruling because Section 95(a) limits the scope of advance rulings to matters in relation to supplies of goods or services being undertaken or proposed to be undertaken by the applicant. Since the Applicant is not undertaking and has not proposed to undertake the supply of hiring/rental services, the Authority cannot pronounce a ruling on the supplier's liability to charge GST in respect of that supply. [Paras 4, 5]

The question is not maintainable under Section 95(a) of the CGST Act and no advance ruling is issued on the supplier's ability to charge GST on the hiring/rental services.

Eligibility for input tax credit - Input Tax Credit entitlement under Section 16 - used or intended to be used in the course or furtherance of business - forward charge mechanism - Whether the Applicant, being a registered Goods Transport Agency who has opted to pay tax under the forward charge mechanism, can claim input tax credit on inward supplies of services. - HELD THAT: - The Authority applied the test in Section 16(1) that a registered person is entitled to take credit of input tax charged on any supply of goods or services to him which are used or intended to be used in the course or furtherance of his business. Noting that the Applicant is a registered GTA and has opted to pay GST under the forward charge mechanism, the Authority held that the Applicant may be entitled to claim ITC on inward supplies subject to fulfillment of the conditions and restrictions prescribed in Section 16. The ruling does not adjudicate factual compliance with those conditions (such as documentary or procedural requirements) and confines itself to the legal entitlement under Section 16. [Paras 4, 5]

The Applicant may be entitled to take input tax credit on inward supplies used or intended to be used in the course or furtherance of its business, subject to the conditions and restrictions of Section 16 of the CGST Act.

Final Conclusion: The Authority declined to rule on the supplier's liability to charge GST on hiring/rental services as that question is not maintainable under Section 95(a), and separately held that the Applicant, as a registered GTA who has opted for forward charge, may claim input tax credit subject to meeting the statutory conditions and restrictions in Section 16.

Writ jurisdiction under Article 226 of the Constitution - Availability of an alternate statutory remedy and rule of exhaustion of remedies - Right to appeal under Section 107 of the U.P. Goods and Services Tax Act, 2017 - Exceptions to the rule of alternate remedy where there is violation of principles of natural justice - Discretionary restraint in entertaining writ petitions in tax and public-recovery matters

Writ jurisdiction under Article 226 of the Constitution - Availability of an alternate statutory remedy and rule of exhaustion of remedies - Right to appeal under Section 107 of the U.P. Goods and Services Tax Act, 2017 - Exceptions to the rule of alternate remedy where there is violation of principles of natural justice - Maintainability of the writ petition under Article 226 in view of the availability of a statutory appeal under Section 107 of the U.P. GST Act, 2017. - HELD THAT: - The Court held that an efficacious statutory remedy to challenge the impugned orders exists in the form of an appeal under Section 107 of the U.P. Goods and Services Tax Act, 2017. Applying the settled principle that a High Court will ordinarily not exercise its writ jurisdiction where an effective alternate remedy is available, and having regard to decisions summarising exceptions, the Court observed that while exceptions exist (including cases of total violation of principles of natural justice), the petitioner did not establish that such an exception applied so as to justify bypassing the statutory forum. The petitioner conceded availability of the statutory appeal and relied on alleged procedural infirmities (lack of digital signatures, absence of preliminary/consultative notice, non-communication by ordinary mail), but the Court declined to examine the merits and exercised discretionary restraint, directing that the petitioner may pursue the statutory appeal. The Court also noted established authorities emphasising heightened self-restraint in matters involving tax or public-recovery schemes which provide detailed remedial mechanisms. [Paras 8, 9, 10, 11, 12]

Writ petition dismissed on maintainability grounds; petitioner permitted to challenge the impugned orders by filing the statutory appeal within three weeks, which shall be considered on merits and limitation sympathetically.

Final Conclusion: The High Court declined to exercise writ jurisdiction and dismissed the petition because an effective statutory remedy by way of appeal under Section 107 of the U.P. GST Act, 2017 is available; the petitioner is directed to pursue that remedy and the Court has not adjudicated the merits of the challenge.

GST liability on seigniorage fee and mining lease - services by Government by way of renting of immovable property excluded from GST - adjudication to be kept in abeyance pending Nine Judge Constitution Bench decision on nature of royalty - no recovery of GST on royalty until Nine Judge Constitution Bench decision

GST liability on seigniorage fee and mining lease - services by Government by way of renting of immovable property excluded from GST - Writ petition disposed on the same terms as the Division Bench judgment permitting submission of objections and directing adjudication to follow the specified procedure. - HELD THAT: - The High Court recorded reliance on Notification No.13/2017 - Central Tax (Rate) and on interim orders of the Supreme Court concerning GST characterisation of royalty and mining lease, and followed the Division Bench directions. The petitioner is permitted to submit objections/representations within four weeks from receipt of this order. The authority is directed to proceed with adjudication on merits after affording reasonable opportunity of being heard, but must do so in accordance with law and the directions provided by the Division Bench. The court expressly left open all contentions for the petitioner to raise in appropriate proceedings after the decision of the Nine Judge Constitution Bench. [Paras 5, 6]

Petition disposed on the same terms as the Division Bench judgment; petitioner to submit reply within four weeks and authority to adjudicate on merits subject to directions.

Adjudication to be kept in abeyance pending Nine Judge Constitution Bench decision on nature of royalty - no recovery of GST on royalty until Nine Judge Constitution Bench decision - Adjudicatory orders on GST (including any recovery) in relation to royalty/mining lease to be kept in abeyance and no recovery of GST on royalty pending the Nine Judge Constitution Bench decision. - HELD THAT: - Following the Division Bench, the High Court directed that although the authority may proceed with adjudication after receiving objections, the orders of adjudication shall be kept in abeyance until the Nine Judge Constitution Bench decides the issue as to the nature of royalty. It was further made clear that there shall be no recovery of GST on royalty until that decision is rendered. This preserves the parties' substantive positions pending the higher constitutional adjudication. [Paras 5]

Adjudication to be kept in abeyance and no recovery of GST on royalty until the Nine Judge Constitution Bench decides the question of the nature of royalty.

Final Conclusion: Writ petition W.P. No. 5228 of 2024 is disposed of on the same terms as the Division Bench judgment: petitioner may submit objections within four weeks; authority to adjudicate on merits after hearing but keep orders in abeyance; and no recovery of GST on royalty until the Nine Judge Constitution Bench gives its decision.

Reopening of assessment under Section 148 of the Income Tax Act, 1961 - Writ jurisdiction under Article 226 of the Constitution - Alternative statutory remedy by appeal before the Commissioner (Appeals) - Pure question of law versus disputed questions of fact - Validity of satisfaction note and connection of incriminating material with escaped income - Assessment completed under Section 147 of the Income Tax Act, 1961

Reopening of assessment under Section 148 of the Income Tax Act, 1961 - Pure question of law versus disputed questions of fact - Writ jurisdiction under Article 226 of the Constitution - Alternative statutory remedy by appeal before the Commissioner (Appeals) - Validity of satisfaction note and connection of incriminating material with escaped income - Assessment completed under Section 147 of the Income Tax Act, 1961 - Maintainability of the writ petition challenging the notice under Section 148 and the consequent assessment order for A.Y. 2016-17 after participation in assessment proceedings - HELD THAT: - The petitioner participated in the assessment proceedings after receiving the notice under Section 148, filed detailed replies under Section 142(1) and on merits, and the Assessing Officer thereafter passed an assessment order under Section 147 after considering the petitioner's contentions and seized documentary material. The challenge to reopening thus pertains to the connection and veracity of incriminating material and the resulting additions, matters which involve disputed questions of fact requiring appreciation of documentary evidence. Reliance on the principles in M/s. Godrej Sara Lee Ltd. establishes that a writ may be entertained where the controversy is purely legal; however, where factual controversy remains and the Assessing Officer has adjudicated on merits, the High Court should not entertain the writ and the petitioner must be relegated to the alternative statutory remedy. Given the factual adjudication by the Assessing Officer on the seized material and the merits of the proposed additions, the petition is not maintainable and the petitioner is directed to challenge the assessment order before the Commissioner (Appeals). [Paras 4, 6, 7]

Writ petition dismissed; petitioner relegated to prefer appeal before the Commissioner (Appeals) against the assessment order for A.Y. 2016-17.

Final Conclusion: The High Court declined to entertain the writ challenging the Section 148 notice and resultant assessment for A.Y. 2016-17 because the Assessing Officer had considered and decided disputed factual issues on the merits; the petitioner is directed to pursue the alternative appellate remedy before the Commissioner (Appeals).

Violation of principles of natural justice - Non-compliance with faceless assessment scheme under Section 144B - Reliance on third-party replies obtained under Section 133(6) without disclosure - Remand for de novo assessment with opportunity to cross-examine

Violation of principles of natural justice - Non-compliance with faceless assessment scheme under Section 144B - Reliance on third-party replies obtained under Section 133(6) without disclosure - Assessment order quashed for breach of natural justice and non-compliance with the faceless assessment procedure where the draft show-cause did not disclose reliance on replies to summons under Section 133(6) and no opportunity was given to the assessee to meet that material. - HELD THAT: - The Court found a clear variance between the show cause notice in the form of a draft assessment order and the final assessment order, in that the show cause notice did not refer to or enclose replies received pursuant to summons issued under Section 133(6). The Assessing Officer relied on those third-party replies in framing additions under Section 68 without supplying the replies to the petitioner or granting an opportunity to cross-examine or otherwise meet the material gathered after issuance of the draft. Having regard to the scheme of faceless assessment under Section 144B and the requirements of fair hearing, the absence of disclosure of the relied-upon material and denial of opportunity to the petitioner amounted to a breach of principles of natural justice warranting interference. [Paras 11, 12]

Impugned assessment order set aside for breach of natural justice and non-compliance with Section 144B; matter remitted for fresh consideration.

Remand for de novo assessment with opportunity to cross-examine - Reliance on third-party replies obtained under Section 133(6) without disclosure - Matter remitted to Assessing Officer to pass fresh de novo assessment order after supplying relied-upon documents and affording opportunity to the petitioner, including cross-examination if requested. - HELD THAT: - The Court directed that on remand the Assessing Officer must furnish the petitioner with all documents relied upon, specifically the replies received pursuant to summons under Section 133(6) and other relevant documents of parties (including those who did not reply), and must afford the petitioner an opportunity of hearing and to request cross-examination of third parties where appropriate. The fresh assessment is to be conducted in accordance with law and the faceless assessment procedure, ensuring that the petitioner can meaningfully meet the case sought to be established against it. The exercise is to be completed within 12 weeks from receipt of the order. [Paras 13]

Matter remitted for de novo assessment with directions to supply relied documents and to afford opportunity of hearing and cross-examination; fresh order to be passed within 12 weeks.

Final Conclusion: The petition is allowed to the extent that the impugned assessment order dated 18th March 2024 is quashed and set aside; the matter is remitted to the Assessing Officer for de novo consideration after supplying the relied-upon documents (including replies to summons under Section 133(6)) and affording the petitioner an opportunity of hearing and cross-examination, to be completed within 12 weeks.

Transfer pricing adjustment - arm's length price (ALP) - comparability and choice of most appropriate method - Transactional Net Margin Method (TNMM) versus Resale Price Method (RPM) - allocation of indirect expenses between segments - foreign exchange fluctuation adjustment - role of Dispute Resolution Panel directions

Transfer pricing adjustment - Transactional Net Margin Method (TNMM) versus Resale Price Method (RPM) - arm's length price (ALP) - comparability and choice of most appropriate method - Validity of the Transfer Pricing Officer's rejection of TNMM for the trading segment and application of RPM, and consequent transfer pricing adjustments upheld by the Assessing Officer following DRP directions. - HELD THAT: - The Tribunal recorded that the assessee applied TNMM to benchmark international transactions but the Transfer Pricing Officer rejected TNMM for the trading segment and applied RPM as the most appropriate method. The Dispute Resolution Panel granted part relief, and the Assessing Officer framed the assessment in accordance with the DRP directions. The assessee did not furnish any material before the Tribunal to controvert the findings of the Transfer Pricing Officer or the order of the DRP. In the absence of any contrary material or submissions, the Tribunal upheld the transfer pricing adjustments made by the TPO and adopted in the assessment order. [Paras 5]

Transfer pricing adjustments including the change of method from TNMM to RPM and related allocations are upheld and the appeal is dismissed on this ground.

Allocation of indirect expenses between segments - transfer pricing adjustment - Adjustment by allocation of indirect expenses of the trading segment to the engineering services segment confirmed. - HELD THAT: - The Tribunal noted that the TPO had allocated indirect expenses of the trading segment to the engineering services segment and made corresponding adjustments which formed part of the total transfer pricing adjustment. The assessee failed to produce any material before the Tribunal to challenge this allocation. Having considered the record and the DRP's directions implemented by the Assessing Officer, the Tribunal found no ground to interfere with the allocation and related adjustment. [Paras 4, 5]

The allocation of indirect expenses and the resulting transfer pricing adjustment are sustained and the appeal dismissed on this aspect.

Foreign exchange fluctuation adjustment - Adjustment on account of foreign exchange fluctuation gains contested by the assessee found unsupported before the Tribunal and not admitted for interference. - HELD THAT: - One of the primary grounds of appeal challenged an adjustment relating to foreign exchange fluctuation gains. The Tribunal observed that the assessee did not place any material before it to rebut the assessment or the transfer pricing findings in this regard. Consequently, there being no contrary material or argument on record, the Tribunal declined to disturb the adjustment. [Paras 4, 5]

The adjustment on account of foreign exchange fluctuation gains is upheld and the appeal dismissed on this ground.

Role of Dispute Resolution Panel directions - Effect of DRP directions on the assessment and the scope for appellate interference. - HELD THAT: - The DRP had given part relief to the assessee and the Assessing Officer passed the assessment order in conformity with those directions. The Tribunal recorded that no material was placed before it to challenge the findings of the TPO or the DRP. Given that the assessment follows the DRP directions and in absence of contrary material, the Tribunal found no basis to interfere with the assessment. [Paras 5]

Assessing Officer's order made in accordance with DRP directions is sustained; no interference warranted.

Final Conclusion: The Tribunal, having found no material before it to controvert the findings of the Transfer Pricing Officer or the Dispute Resolution Panel and with the Assessing Officer's order framed in accordance with the DRP directions, upheld the assessment order for assessment year 2014-15 and dismissed the assessee's appeal.

Valuation of non-cumulative redeemable preference shares - Rule 11UA valuation methodology - statutory evidence in the form of merchant banker/accountant report - applicant's valuation to be rebutted by AO with cogent evidence - applicability of section 56(2)(viib) on issue of shares at premium

Rule 11UA valuation methodology - valuation of non-cumulative redeemable preference shares - Whether unquoted non cumulative redeemable preference shares are to be valued under the method applicable to equity shares or by a different method under Rule 11UA. - HELD THAT: - The Tribunal held that Rule 11UA prescribes a different approach for valuing preference shares as compared to unquoted equity shares and that the methodology applicable to equity (net asset/value methods) is not automatically applicable to redeemable preference shares. The Tribunal accepted that preference shares, being quasi debt with contractual coupon and redemption terms, can be valued by methods such as the Dividend Discount/Discounted Cash Flow approach where cash flows and terminal value are ascertainable. [Paras 9]

Valuation of the NCRPS could not be determined by applying the valuation formula prescribed for unquoted equity shares; a different methodology under Rule 11UA for preference shares is permissible.

Statutory evidence in the form of merchant banker/accountant report - applicant's valuation to be rebutted by AO with cogent evidence - Whether the valuation report furnished by an independent chartered accountant/merchant banker is to be treated as statutory evidence and what burden lies upon the Assessing Officer to rebut it. - HELD THAT: - The Tribunal held that a valuation report obtained from a merchant banker or an accountant under Rule 11UA is statutory evidence and is entitled to a presumption of correctness. The Assessing Officer may not lightly discard such a report; he must rebut it by demonstrating that the valuation is founded on fundamentally incorrect facts, manifest arithmetic or methodological errors, or by producing an alternative valuation prepared by a prescribed valuer or cogent material showing specific defects. Mere questioning of assumptions (for example, the discount rate) without providing an alternate working or summarily undermining the expert methodology is not sufficient to negate the statutory valuation evidence. [Paras 9, 11]

The valuation report of the independent valuer is statutory evidence entitled to presumptive correctness and cannot be rejected unless the AO rebuts it with credible material or alternative valuation.

Applicability of section 56(2)(viib) on issue of shares at premium - assessment addition under section 56(2)(viib) - Whether the addition under section 56(2)(viib) of the Act for share premium was sustainable in view of the valuation report filed by the assessee. - HELD THAT: - Applying the principles above and examining the remand report and material on record, the Tribunal found that the assessee had filed a DDVM based valuation by an independent accountant which adequately explained the valuation of the 5% NCRPS. The AO's objections - namely lack of substantiation for the discount rate and absence of past dividends - were held to be insufficient, as the AO did not produce any contrary valuation, alternative discounting computation, or demonstrate specific errors in the expert's methodology. The CIT(A) had considered the additional evidence and answered the AO's objections; the Tribunal endorsed those conclusions and found the addition unsustainable. [Paras 10, 12]

The addition made under section 56(2)(viib) is not sustainable and is deleted.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the deletion of the addition made under section 56(2)(viib), holding that the independent valuation report under Rule 11UA in respect of the unquoted redeemable preference shares was acceptable statutory evidence and that the Assessing Officer failed to rebut it with cogent material.

Resale Price Method (RPM) - Transactional Net Margin Method (TNMM) - most appropriate method - aggregation of closely linked international transactions - resale without value addition - selection of comparables under transfer pricing

Resale Price Method (RPM) - Transactional Net Margin Method (TNMM) - most appropriate method - resale without value addition - Whether RPM is the most appropriate method for benchmarking the assessee's international purchase and resale of solar goods, or TNMM applied by aggregating transactions should be adopted. - HELD THAT: - The Tribunal examined whether the TPO was justified in rejecting RPM and applying TNMM after aggregating purchases, warranty claims and reimbursements. It noted that the assessee's core activity-purchase of solar products from Associated Enterprises and resale in India-was undisputed and that the assessee claimed no value addition. The aggregated warranty and reimbursement costs constituted only a small fraction (about 1.5%) of the purchase value and were thus financially immaterial to displace RPM. The revenue did not produce documentary evidence of value addition by the assessee beyond assertions and general references to marketing and after-sales activities. Reliance was placed on jurisdictional authority holding that where there is no value addition before resale, RPM is the most appropriate method. Given the absence of persuasive evidence to the contrary and the negligible quantum of the ancillary transactions, the Tribunal held RPM to be the appropriate benchmarking method and rejected the replacement by TNMM. [Paras 8, 9, 10, 11]

RPM is the most appropriate method to benchmark the purchase and resale of solar goods; TNMM applied on aggregation is not warranted.

Aggregation of closely linked international transactions - most appropriate method - Whether aggregation of reimbursement of expenses and warranty claims with purchase of goods alters the choice of the most appropriate method. - HELD THAT: - The Tribunal accepted that warranty claims and reimbursements were connected to the purchase transactions but found their combined value to be financially insignificant relative to overall purchases. Even if aggregated, the small weight of these ancillary transactions would not change the appropriate benchmarking method. Therefore, aggregation in the facts of this case does not justify displacing RPM with TNMM. [Paras 10, 11]

Aggregation of the ancillary transactions with purchases does not change the appropriateness of RPM given their immaterial value.

Selection of comparables under transfer pricing - Whether the comparables selected by the transfer pricing authorities were appropriate. - HELD THAT: - The Tribunal did not decide the challenge to the selection of comparables because it granted relief to the assessee on the choice of method. Consequently, the question of comparables was left open for adjudication at the appropriate stage, since a finding on method rendered detailed consideration of comparables premature. [Paras 12]

Ground challenging selection of comparables left open and not adjudicated.

Ground assailing adjustment in respect of interest rates not pressed by the assessee. - HELD THAT: - The assessee's representative expressly stated that this ground was not being pressed due to the smallness of the amount involved. In view of that statement, the Tribunal dismissed the ground as not pressed. [Paras 13]

Ground dismissed as not pressed.

Final Conclusion: The appeal is partly allowed: the Tribunal held RPM to be the most appropriate method for benchmarking the assessee's purchase-and-resale of solar goods and found that aggregation of minor warranty and reimbursement transactions does not justify applying TNMM; the challenge to comparables was left open; the interest-rate ground was dismissed as not pressed.

Diversion of profit - genuineness of transaction - arm's length price - deduction under section 10A - principle of consistency - binding effect of TPO findings - assessment under section 153A

Deduction under section 10A - assessment under section 153A - Whether the Assessing Officer erred in not allowing deduction under section 10A consequent to enhancement of business profit made during assessment proceedings - HELD THAT: - The Tribunal held that where the Assessing Officer increases business profit in assessment, the amount of deduction under section 10A also correspondingly increases and, therefore, the returned taxable income may remain unchanged. Applying the ratio in CIT v. Gem Plus Jewelers India Ltd. and having regard to CBDT Circular No.37/16 dated 02/11/2016, the Tribunal found that the Assessing Officer committed error by refusing the section 10A deduction after making the addition. As the addition on account of diversion of profit was deleted on merit by the CIT(A), the question of section 10A entitlement could not be left adversely affected by the Assessing Officer's computation; accordingly the ground in the Cross Objections was allowed. [Paras 11]

Allowed the Cross Objections on the point that deduction under section 10A must be allowed on account of enhanced business profit; the Assessing Officer erred in not granting the deduction.

Diversion of profit - arm's length price - genuineness of transaction - binding effect of TPO findings - principle of consistency - Whether the CIT(A) erred in deleting additions made by the Assessing Officer on account of alleged diversion of profit for Assessment Years 2011-12 and 2012-13 - HELD THAT: - The Tribunal recorded that the Transfer Pricing Officer (TPO) had examined the transactions with the Mauritius group company and found them to be at arm's length. Although the Assessing Officer is entitled to test genuineness, the Assessing Officer ignored the TPO's findings and made additions. The Tribunal placed weight on the fact that identical service agreements and transactions for other assessment years were subsequently examined and accepted by the Department (assessments u/s 143(3) for later years reached finality) and that the Department had not invoked section 263 against those assessments. Applying the principle of consistency and noting the finality of later years' assessments, the Tribunal concluded that the Department could not adopt a different approach for the years under consideration; consequently the CIT(A)'s deletion of the additions was upheld. [Paras 18, 20, 21]

Appeals by the Revenue dismissed; deletions of additions on account of alleged diversion of profit were sustained.

Final Conclusion: Cross Objections filed by the assessees were partly allowed by directing allowance of deduction under section 10A on account of enhanced business profit; consequentially the Revenue's appeals for the earlier years became in fructuous and were dismissed, and the Revenue's appeals for AY 2011-12 and 2012-13 were dismissed on merits upholding deletion of additions for diversion of profit.

Exemption under section 10(23C)(vi) - rectification under section 154 - principles of natural justice - failure to adjudicate on merits - remand for fresh adjudication

Failure to adjudicate on merits - remand for fresh adjudication - exemption under section 10(23C)(vi) - Ld.CIT(A) erred in declining to decide the appeal on merits and directing corrective procedural action instead of adjudicating the claim of exemption. - HELD THAT: - The Tribunal noted that the Ld.CIT(A), acting as first appellate authority, has powers co-terminus with the Assessing Officer and therefore ought to have examined the assessee's entitlement to the claimed exemption rather than confining itself to procedural observations and advising corrective steps. The Tribunal set aside the order of the Ld.CIT(A) and restored the matter to the file of the Ld.CIT(A) for fresh adjudication on merits, directing the Ld.CIT(A) to verify the exemption claimed under section 10(23C)(vi) and to grant appropriate relief if the claim is found correct. [Paras 6, 7]

Order of the Ld.CIT(A) set aside and matter remitted to Ld.CIT(A) for fresh adjudication on the entitlement to the claimed exemption.

Rectification under section 154 - principles of natural justice - Order passed by CPC under section 154 without providing an opportunity of being heard violated principles of natural justice. - HELD THAT: - The Tribunal recorded that the CPC processed the rectification application and passed an order disallowing the claimed exemption without taking into account the reason for rectification and without affording the assessee an opportunity of being heard. This omission was held to be a breach of natural justice. The Tribunal directed that on remand the Ld.CIT(A) must ensure the assessee is provided an adequate opportunity of being heard before passing any order. [Paras 6]

CPC's rectification order under section 154 was identified as having been passed without affording hearing; Ld.CIT(A) directed to ensure hearing on remand.

Final Conclusion: The appeal is allowed for statistical purposes; the order of the Ld.CIT(A) is set aside and the matter is remitted to the Ld.CIT(A) to verify the exemption claimed under section 10(23C)(vi) for AY2018-19, to afford the assessee an opportunity of hearing, and to pass a reasoned order on merits.

Applicability of section 56(2)(x)(B) - treatment of difference between stamp duty valuation and consideration as income - Pre incorporation contract and enforceability of promoters' agreement - Beneficial ownership for tax purposes - Stamp duty valuation on date of original acquisition versus date of subsequent conveyance - Treatment of promoter transactions vis a vis company - separate legal personality notwithstanding pre incorporation arrangements

Applicability of section 56(2)(x)(B) - treatment of difference between stamp duty valuation and consideration as income - Pre incorporation contract and enforceability of promoters' agreement - Beneficial ownership for tax purposes - Stamp duty valuation on date of original acquisition versus date of subsequent conveyance - Whether the difference between stamp duty valuation and consideration paid on conveyance dated 21-04-2017 is taxable under section 56(2)(x)(B) where the promoters had purchased the land on behalf of the company prior to its incorporation on 15-07-2016 pursuant to an earlier MOU and thereafter transferred it to the company. - HELD THAT: - The Tribunal held that the promoters entered into a valid pre incorporation arrangement to acquire the land for the prospective company, evidenced by the MOU dated 30-06-2016 (executed prior to the promoters' purchase on 15-07-2016), subsequent purchase deed in promoters' names, conversion of the land to non agricultural use and the conveyance to the company on 21-04-2017. Reliance on the principles embodied in the Specific Relief Act (sections dealing with enforceability of contracts entered by promoters on behalf of a company prior to incorporation) supports recognition of such pre incorporation contracts once translated into action and accepted by the company after incorporation. The Tribunal found that the AO and the CIT(A) erred in treating the conveyance as a fresh transaction attracting section 56(2)(x)(B) by focusing on the higher stamp duty value payable after conversion to non agricultural land. On the facts, the original effective acquisition by the company was the transaction of 15-07-2016 (promoters acting for the company), and the conveyance merely fulfilled that prior obligation on a cost to cost basis without any undisclosed benefit accruing to the company. Therefore the higher stamp valuation on the later conveyance could not be taken as income of the company under section 56(2)(x)(B). [Paras 12]

The addition made under section 56(2)(x)(B) based on the stamp duty valuation on 21-04-2017 is deleted and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the promoters had validly purchased the land on behalf of the prospective company before incorporation and that the later conveyance at higher stamp valuation did not attract section 56(2)(x)(B); the addition was set aside and the assessing officer directed to delete the impugned addition.

Disallowance as prior period expense and matching principle - disallowance under section 14A - application of Rule 8D - recognition of bank guarantee commission: timing difference versus amortisation - recognition of interest on non-performing assets and Rule 6EA vis-a -vis RBI guidelines - allowability of Employees Stock Option Plan (ESOP) cost under section 37(1) - transfer pricing: Letter of Comfort versus corporate guarantee - safe harbour rate for international loan transactions

Disallowance as prior period expense and matching principle - Deletion of disallowance of Annual Technical Service (ATS) fees of the assessee. - HELD THAT: - The Assessing Officer treated annual maintenance fees paid to Infosys for the bank's core banking software as prior period expenses and proposed disallowance applying the matching principle. The DRP directed disallowance to "keep the issue alive" despite identical items having been allowed by the CIT(A) and confirmed by the ITAT in earlier years. The Tribunal noted no factual distinction between the present year and the earlier years where the ITAT had deleted identical disallowances and observed that Revenue had not produced any adverse higher authority decision or distinguishing facts. In the absence of any justification for departing from the ITAT precedents applying to the assessee, the Tribunal directed deletion of the disallowance. [Paras 6]

Disallowance of ATS fees amounting to Rs. 48,66,726/- deleted.

Disallowance under section 14A - application of Rule 8D - Deletion of the addition computed by AO under Rule 8D for disallowance under section 14A. - HELD THAT: - The assessee made a suo-moto scientific allocation to compute disallowance under section 14A. The AO applied Rule 8D without recording the mandatory satisfaction required by section 14A(2) - namely, that the assessee's books did not support its claim - and rejected the assessee's explained methodology by general and factually incorrect remarks. The Tribunal followed the jurisdictional High Court's precedent that Rule 8D can be invoked only after the AO is dissatisfied with the assessee's computation having regard to books of account. Since the AO did not fulfil this prerequisite and did not address the assessee's specific explanations, the invocation of Rule 8D was held to be contrary to law and the resultant disallowance was deleted. [Paras 17]

Disallowance of Rs. 43.59 crores computed under Rule 8D deleted.

Recognition of bank guarantee commission: timing difference versus amortisation - Deletion of the addition of bank guarantee commission income treated as income of the year instead of being amortised over guarantee period. - HELD THAT: - The AO treated upfront guarantee commission as taxable in the year of receipt, whereas the assessee recognised such commission on a pro rata basis over the guarantee period. The DRP sustained the AO's view to keep the issue alive despite the ITAT having consistently deleted identical additions in the assessee's preceding years. The Tribunal found no distinguishing facts or adverse higher authority decision to justify departing from the ITAT precedents which favoured the assessee; accordingly the addition was deleted. [Paras 23]

Addition of guarantee commission amounting to Rs. 188.32 crores deleted.

Recognition of interest on non-performing assets and Rule 6EA vis-a -vis RBI guidelines - Deletion of the addition made by AO under Rule 6EA for notional interest on NPAs. - HELD THAT: - The AO applied Rule 6EA to tax interest which the assessee did not recognise per RBI guidelines (recognition at 90 days) as against the 180 days criterion in Rule 6EA. The DRP directed the addition to protect Revenue despite ITAT deletions in prior years. The Tribunal observed that the DRP produced no distinguishing facts and that identical additions had been deleted by the ITAT in earlier assessments for the assessee; in absence of any adverse higher authority decision or factual distinction, the Tribunal directed deletion of the addition. [Paras 29]

Addition of interest on NPAs amounting to Rs. 237.98 crores deleted.

Allowability of Employees Stock Option Plan (ESOP) cost under section 37(1) - Issue restored to the Assessing Officer for fresh adjudication. - HELD THAT: - The assessee claimed deduction for ESOP cost relying on the Biocon special bench and Karnataka High Court decisions. The AO had disallowed the claim and noted that earlier assessments for the assessee on the same issue had been restored to AO by the ITAT. The assessee's counsel admitted that preceding years' issues were remitted for fresh adjudication. To preserve consistency and having regard to the procedural posture and ongoing higher court litigation, the Tribunal remanded the issue to the AO for fresh decision according to prevailing law. [Paras 34, 35]

ESOP cost issue restored to the Assessing Officer for fresh adjudication.

Transfer pricing: Letter of Comfort versus corporate guarantee - safe harbour rate for international transactions - Partial allowance of transfer pricing adjustment: LOC cannot be equated to bank guarantee; AO directed to adopt safe harbour rate of six months LIBOR plus 400 bps as ALP. - HELD THAT: - The TPO/DRP increased the arm's length interest rate by treating a Bank of India quote that contemplated a Letter of Comfort (LOC) as equivalent to a bank guarantee and adding a spread to adjust for that LOC. The Tribunal analysed the legal and commercial distinctions: a bank guarantee imposes a financial obligation on the guarantor, whereas an LOC is an assurance of creditworthiness without the immediate financial risk of a guarantee. The Tribunal held that LOCs cannot be equated to bank guarantees and that the TPO/DRP erred in making an LOC-based adjustment without the LOC's terms being on record. However, on the facts the Tribunal directed adoption of the safe harbour interest rate (six months LIBOR plus 400 bps) as the ALP for the international loan transaction and directed the AO to compute the adjustment accordingly; the assessee's contention that upfront fees obviated any LOC adjustment was rejected on facts. [Paras 52, 53]

LOC-based increase to ALP disallowed; AO to apply six months LIBOR plus 400 bps as ALP and compute adjustment accordingly.

Final Conclusion: The appeal is allowed in part: deletions directed in respect of (i) Annual Technical Service fees, (ii) disallowance under section 14A computed under Rule 8D, (iii) bank guarantee commission addition, and (iv) interest on NPAs; ESOP-cost claim is remitted to the Assessing Officer for fresh adjudication; transfer pricing adjustment is partly allowed - LOC cannot be equated to bank guarantee and the AO is directed to apply six months LIBOR plus 400 bps as the ALP for the international loan transaction.

Computation of taxable surplus under Section 44 and Rule 2 of the First Schedule - Application of exemptions under Section 10(34) and Section 10(23AAB) to amounts computed under Section 44 - Applicability of Section 14A to life insurance companies whose income is computed under Section 44 - Rate of tax under Section 115B for life insurance companies - Duty on assessing officer to verify and pass a speaking order on deduction claims (Section 80JJAA) - Remand for factual verification of claimed exemption quantum

Computation of taxable surplus under Section 44 and Rule 2 of the First Schedule - Methodology adopted by the assessee (Old Form I / Rule 2) for computing taxable surplus under section 44 read with Rule 2 of the First Schedule is correct and should be followed. - HELD THAT: - The Tribunal found the issue not res integra and followed its earlier decisions in the assessee's own case and the Tribunal's ratio in ICICI Prudential Insurance Co. Ltd., holding that the assessee's computation in accordance with Rule 2 (Old Form I / actuarial valuation prepared as per the Regulations under the Insurance Act) is in accordance with law. The Tribunal observed that the earlier precedents support treating the figures in accounts prepared under the Insurance Act as binding for the purposes of section 44 and Rule 2, and directed that the AO's contrary methodology (relying on New Form I and adding shareholders' P&L surplus separately) could not be sustained. [Paras 15]

Revenue grounds challenging the assessee's manner of computation under section 44/Rule 2 dismissed; assessee's methodology upheld.

Application of exemptions under Section 10(34) and Section 10(23AAB) to amounts computed under Section 44 - Exemptions under section 10(34) (dividend) and section 10(23AAB) (participating pension business) are allowable when computing income under section 44/read with the First Schedule. - HELD THAT: - Following earlier Tribunal orders in the assessee's own case and authoritative Division Bench/precedent reasoning (as applied in General Insurance Corporation and Life Insurance Corporation decisions), the Tribunal held that exemption clauses under section 10 are not excluded merely because profits are computed under section 44. The Tribunal observed binding precedent that exemptions can be claimed post computation of profits under the First Schedule and therefore affirmed the CIT(A)'s allowance of exemptions under sections 10(34) and 10(23AAB). [Paras 18]

Revenue grounds seeking denial of exemptions under sections 10(34) and 10(23AAB) dismissed; exemptions allowed.

Applicability of Section 14A to life insurance companies whose income is computed under Section 44 - Section 14A does not apply to life insurance companies whose incomes are computed strictly in terms of the Rules under the Insurance Act and section 44. - HELD THAT: - The Tribunal relied on its earlier findings in the assessee's own case that provisions of section 14A are not applicable to insurance companies whose income is assessable in terms of the Rules of the Insurance Act. Accordingly, the Tribunal affirmed the CIT(A)'s conclusion and dismissed the revenue's grounds raising section 14A-based disallowances. [Paras 20]

Revenue grounds predicated on applicability of section 14A dismissed.

Rate of tax under Section 115B for life insurance companies - Income of the assessee being from life insurance business is taxable at the rate specified in section 115B and the AO must apply that rate. - HELD THAT: - The Tribunal noted that the assessee carries on life insurance business under IRDA licence and that in earlier years the AO had applied the concessional rate under section 115B. On this basis, the Tribunal held the correct rate of tax is that provided by section 115B and directed the AO to apply it (thereby allowing the assessee's contention that 12.5% rate applies instead of 30%). [Paras 24]

Assessee's ground on applicable rate allowed; AO directed to apply section 115B rate.

Duty on assessing officer to verify and pass a speaking order on deduction claims (Section 80JJAA) - AO must verify the assessee's claim under section 80JJAA (supported by Form-10DA) and pass a speaking order after giving opportunity to the assessee. - HELD THAT: - The Tribunal found that the assessee had filed Form-10DA and the AO had disallowed the claim without examination or reasons. In these circumstances the CIT(A) correctly directed the AO to verify the claim and pass a speaking order. The Tribunal directed the AO to consider the claim in accordance with law after affording the assessee an opportunity. [Paras 25]

Assessee's claim under section 80JJAA remanded to AO for verification and speaking order.

Remand for factual verification of claimed exemption quantum - Quantification of the amount treated as exempt under section 10(34) in AY. 2013-14 is restored to the file of the AO for factual verification and adjudication. - HELD THAT: - The Tribunal observed that the assessee disputed the quantum taken by the authorities as exempt under section 10(34) and that factual verification was necessary. Accordingly, the Tribunal restored the matter to the AO to verify the claim and pass an appropriate order after hearing the assessee. [Paras 36]

Issue remanded to AO for verification of the exempt amount and for passing order in accordance with law.

Final Conclusion: The appeals of the revenue are dismissed. The assessee's appeal is allowed in part: (i) the assessee's methodology for computing taxable surplus under section 44/Rule 2 is upheld; (ii) exemptions under sections 10(34) and 10(23AAB) are allowed; (iii) section 14A is held not to apply; (iv) the rate of tax under section 115B is to be applied by the AO; (v) the claim under section 80JJAA is remanded to the AO for verification and a speaking order; and (vi) the quantification of exempt dividend for AY. 2013-14 is restored to the AO for factual verification.

Addition treated as unexplained income - onus to prove genuineness and creditworthiness of creditors - requirement to summon confirming parties before drawing adverse inference - powers to summon under section 131 and notice under section 133(6) - banking channel receipts and account confirmations as evidentiary material

Addition treated as unexplained income - onus to prove genuineness and creditworthiness of creditors - requirement to summon confirming parties before drawing adverse inference - banking channel receipts and account confirmations as evidentiary material - powers to summon under section 131 and notice under section 133(6) - Validity of the addition of Rs. 18,01,000 as unexplained income in the hands of the assessee - HELD THAT: - The assessee produced confirmations of account, PAN details of the four persons, evidence that amounts were received by account payee cheques and opening balances showing advances in earlier years. The assessee also specifically requested the AO to summon those persons under the statutory powers available to the department, but the AO did not issue summons or notices under the said powers. The AO and the CIT(A) rejected the confirmations as insufficient without issuing summons to verify the confirming parties and relied on the absence of those parties before them and on discrepancies in trade receivables as on the balance sheet date. The Bench held that the evidence on record - confirmations, PANs, bank cheques and continuity of opening balances in audited balance sheets - discharged the assessee's burden of proof and that, in the absence of the AO exercising his statutory power to summon the confirming parties, an adverse inference could not be drawn. The Bench applied the precedent of the ITAT Bangalore in Suraj Stones Corporation Ltd. v. ITO, where confirmations and banking channel evidence not acted upon by the AO led to deletion of additions, and concluded that the addition was made on surmises and conjectures and therefore was not sustainable.

The addition of Rs. 18,01,000 as unexplained income is deleted and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, deleted the addition of Rs. 18,01,000 for Assessment Year 2013-14, holding that the assessee had furnished corroborative confirmations, PANs and banking evidence and that the AO could not draw an adverse inference without issuing summons or exercising statutory powers to verify the confirming parties.

Abatement of assessment proceedings under Section 153A - Return filed under Section 153A treated as return under Section 139 - Fresh claim of deduction in return filed under Section 153A - Applicability of Chapter VI-A deductions to assessments under Section 153A - Allowability of deduction under Section 80-IA(4)(i) - Filing of Audit Report in Form 10CCB pursuant to notice under Section 153A

Abatement of assessment proceedings under Section 153A - Return filed under Section 153A treated as return under Section 139 - Fresh claim of deduction in return filed under Section 153A - Applicability of Chapter VI-A deductions to assessments under Section 153A - Fresh/new claims of deduction legitimately made in Returns filed pursuant to notices under Section 153A are admissible for assessment years whose assessment proceedings had abated on the date of search. - HELD THAT: - The Tribunal held that where pending assessment proceedings abate by operation of the second proviso to Section 153A(1), the return filed in response to the Section 153A notice substitutes the earlier return filed under Section 139 and the assessment is re-started de-novo on the basis of that fresh return. Consequently, all provisions of the Act (including Chapter VI-A deductions) apply to the return filed under Section 153A to the extent not inconsistent with Section 153A. Relying on a catena of authorities and the statutory scheme, the Tribunal rejected the AO's technical objections (including reliance on Goetze Ltd. which arose in a different factual matrix) and held that legally tenable deductions not claimed earlier may be claimed afresh in the Section 153A return when the original proceedings had abated; returns filed within the time permitted by the Section 153A notice are deemed timely for this purpose. [Paras 93, 96, 104, 105]

Fresh claims of deduction in returns filed under Section 153A are admissible for abated/pending assessment years and such returns are to be treated as returns under Section 139 for the purpose of allowing legitimate deductions.

Allowability of deduction under Section 80-IA(4)(i) - Filing of Audit Report in Form 10CCB pursuant to notice under Section 153A - Assessee's claim of deduction under Section 80-IA(4)(i) for AYs 2017-18 to 2019-20 (and consequentially AY 2020-21) was allowable where the claims and requisite Form 10CCB were filed in the returns submitted pursuant to Section 153A. - HELD THAT: - The Tribunal accepted the coordinate-bench findings that the assessee had filed the corresponding Audit Reports in Form 10CCB electronically within the time permitted by the Section 153A notices and that the returns filed under Section 153A substituted the original returns. The coordinate-bench decision sustained that the assessee met the conditions for deduction under Section 80-IA(4)(i) and accordingly allowed the deduction; applying that reasoning to the year under appeal, the revenue's grounds contesting admissibility of the 80-IA claim for AY 2020-21 were dismissed. [Paras 9, 11]

Deduction under Section 80-IA(4)(i) as claimed in the Section 153A returns is allowable for the impugned years, and the revenue's grounds 1 and 2 are dismissed.

Allowability of deduction under Section 80-IA(4)(i) - Characterisation of taxpayer as developer of infrastructure vs works contractor - The assessee is to be treated as a 'Developer of Infrastructure' (not a 'Works Contractor') for the relevant projects, and the revenue cannot adopt a different characterisation for the year under appeal. - HELD THAT: - The Tribunal noted that the coordinate bench had already recorded, and the Department had not contested, the finding that the assessee qualified as a 'Developer of Infrastructure' for the preceding years where 80-IA relief was allowed. In view of that finality and identical activities/facts for the year under appeal, the revenue cannot be permitted to relabel the assessee as a 'Works Contractor' for the same activities; accordingly the departmental ground seeking such re-characterisation was dismissed. [Paras 10, 61]

The assessee's characterization as a 'Developer of Infrastructure' stands; revenue's ground challenging that classification is dismissed.

Final Conclusion: The revenue's appeal is dismissed. The Tribunal affirms that returns filed pursuant to Section 153A (where prior proceedings abated) substitute earlier returns and permit fresh, legally tenable claims (including Section 80-IA deductions supported by Form 10CCB filed within the Section 153A timeframe); the assessee remains characterised as a developer of infrastructure and the deductions claimed are allowable.

Allowability of statutory contribution to Core Settlement Guarantee Fund as business expenditure - application of section 10(23EE) to Core Settlement Guarantee Fund - SEBI regulatory mandate for Core SGF and Default Waterfall framework - amortisation of lease premium for leasehold land - maintenance charges recovered from licensees: reimbursement v. income from house property - disallowance under section 14A read with Rule 8D and requirement of AO's satisfaction

Allowability of statutory contribution to Core Settlement Guarantee Fund as business expenditure - application of section 10(23EE) to Core Settlement Guarantee Fund - SEBI regulatory mandate for Core SGF and Default Waterfall framework - Statutory contributions made by the assessee to the Core Settlement Guarantee Fund are allowable as deduction under section 37(1) as expenditure incurred exclusively for the purpose of business. - HELD THAT: - The Tribunal examined the SEBI circular (27.08.2014) and SECC Regulations which mandate creation, composition and utilisation of the Core SGF, including the monthly determination of Minimum Required Corpus and the prescribed default-waterfall. The fund operates under detailed regulatory constraints; contributors' shares are identified and the corpus is managed and invested separately. Section 10(23EE) recognises specified income of the Core SGF (including contributions) as income of the Fund. Having regard to the regulatory mandate, the nature and purpose of the Core SGF to guarantee settlement obligations and the absence of enduring or proprietary benefit to the assessee, the Tribunal held that the contribution was incurred exclusively in the course of carrying on the assessee's business and is accordingly allowable under section 37(1). The Tribunal considered and applied the coordinate-bench decision in BSE Ltd. and the statutory and regulatory framework in reaching this conclusion, notwithstanding the contrary view taken by the AO and the CIT(A). [Paras 25]

Grounds disallowing the contribution to Core SGF are rejected and the claim is allowed.

Amortisation of lease premium - relevant factual verification in light of Sun Pharmaceuticals - Claim for amortisation of lease premium paid for leasehold land is restored to the Assessing Officer for fresh adjudication. - HELD THAT: - The Tribunal noted that the assessee had capitalised the leasehold payment as an asset and had earlier litigated similar issues. Following precedents and an earlier ITAT direction to decide the matter afresh in the light of the Gujarat High Court decision in Sun Pharmaceuticals, the Tribunal directed the AO to verify the relevant facts and adjudicate the claim de novo. The matter is remitted for factual verification and application of the legal tests identified by the Tribunal and precedent. [Paras 28]

Ground relating to amortisation of lease premium is remitted to the Assessing Officer for fresh consideration (allowed for statistical purposes).

Maintenance charges recovered from licensees - income from house property vs reimbursement - requirement of speaking order - Treatment of maintenance and other charges recovered from licensees is remitted to the CIT(A) for fresh adjudication by way of a speaking order to determine whether such receipts are reimbursements (not chargeable under 'Income from House Property') or taxable as annual value. - HELD THAT: - The Tribunal observed that the AO treated the recoveries as income from house property, while the assessee maintained they were reimbursements of specific expenses incurred. Having regard to prior Tribunal directions in the assessee's earlier years and the need for a reasoned adjudication addressing the assessee's contentions and evidentiary material, the Tribunal remitted the issue to the CIT(A) for de novo adjudication by a speaking order after giving the assessee an opportunity to substantiate the cost-to-cost nature of the recoveries. [Paras 32]

Ground regarding maintenance recoveries is remitted to the CIT(A) for fresh adjudication (allowed for statistical purposes).

Disallowance under section 14A read with Rule 8D - requirement of AO's satisfaction and basis for allocation - Assessee's disallowance under section 14A and Rule 8D is remitted to the Assessing Officer for de novo determination after verification of the basis for allocation of expenses to exempt income. - HELD THAT: - The Tribunal found that the AO had recorded dissatisfaction with the assessee's suo-moto estimation of disallowance and identified the assessee's substantial investments and tax-exempt receipts. The AO invited application of section 14A read with Rule 8D and the assessee responded with its allocation basis. The Tribunal considered it necessary that the AO examine the correctness of the assessee's self-devised allocation method and directed restoration of the issue to the AO to decide on merit after verification of supporting material. The Tribunal distinguished precedents relied upon by the assessee on the facts of the case. [Paras 40]

Ground concerning section 14A/Rule 8D disallowance is remitted to the Assessing Officer for fresh adjudication (allowed for statistical purposes).

Final Conclusion: The Tribunal allowed the appeals to the extent that statutory contributions to the Core Settlement Guarantee Fund were held deductible under section 37(1). Claims relating to amortisation of lease premium, characterization of maintenance recoveries, and the correct disallowance under section 14A/Rule 8D were remitted to the respective authorities for fresh consideration after factual verification or by way of a reasoned/speaking order.

Mis-declaration of country of origin - evidentiary value of certificate of origin - expert opinion based on visual inspection - admissibility and weight of export declaration obtained from shipping line - compliance with FSSAI (Labeling and Packaging) Regulations, 2011 and role of Authorized FSSAI Officer - confiscation under Section 111(m) of the Customs Act, 1962 - penalty under Section 112(a) of the Customs Act, 1962 - penalty under Section 114AA of the Customs Act, 1962

Mis-declaration of country of origin - evidentiary value of certificate of origin - Goods were not mis-declared as being of UAE origin and the certificate of origin and related export documents supported UAE origin. - HELD THAT: - The Tribunal found that invoice, bill of lading, phytosanitary certificate and a certificate of origin issued by Ajman Chamber of Commerce consistently declared UAE as country of origin and that no steps were taken by Customs to verify or impugn the authenticity of that certificate with the issuing authorities in UAE. The certificate certified that evidence produced satisfied origin criteria and the phytosanitary certificate corroborated UAE origin. The Tribunal applied the principle that a country of origin certificate issued by the competent authority merits due weight and cannot be discarded on mere suspicion; Rule 6 of the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 was noted as providing for verification requests where genuineness is in doubt, and no such verification was shown to have been initiated. In these circumstances the Tribunal held the goods to be of UAE origin and that confiscation on account of alleged mis-declaration of origin was unsustainable. [Paras 17, 20]

Goods held to be of UAE origin; confiscation on ground of mis-declaration of origin not sustainable.

Expert opinion based on visual inspection - Expert opinion from ARDPL based on visual inspection was not reliable to prove Pakistan origin. - HELD THAT: - The Tribunal observed that the ARDPL report was the product of visual inspection without chemical analysis, did not disclose the examiner's qualifications or the basis for distinguishing origins, and merely opined 'Indian sub-continent' which is vague and does not specifically indicate Pakistan. Citing precedent and evidentiary principles under Section 45 Indian Evidence Act, the Tribunal held that opinion based solely on naked-eye inspection lacks sufficient evidentiary value to establish country of origin and therefore could not support the confiscation finding. [Paras 21]

The visual-inspection expert opinion is inadmissible as conclusive evidence of Pakistan origin and cannot sustain confiscation.

Admissibility and weight of export declaration obtained from shipping line - The export declaration obtained from the shipping line could not be relied upon to prove Pakistan origin. - HELD THAT: - The Tribunal noted that the export declaration was an unsigned photocopy obtained from the shipping line rather than from the exporting country's customs, contained multiple discrepancies (incorrect consignor/consignee names and mismatched values), and therefore lacked authenticity and evidentiary weight. Relying on authority that unattested photocopies and documents not procured from the relevant customs formation have limited evidentiary value, the Tribunal held that the export declaration could not establish country of origin as Pakistan. [Paras 22]

Export declaration from shipping line is not reliable evidence to prove origin as Pakistan.

Admissibility and weight of statements recorded during investigation - Statements of witnesses relied upon by the adjudicating authority were hearsay, retracted or lacked corroboration and thus could not sustain findings of mis-declaration. - HELD THAT: - The Tribunal examined statements of the clearing agent and other individuals and found them to be based on hearsay, office gossip or to have been retracted. It recalled settled law that statements recorded under Section 108, when retracted, require independent corroboration and that hearsay statements or uncorroborated confessions do not constitute reliable evidence to prove an offence. The retraction of one key witness, coupled with absence of supporting documentary proof, rendered such statements inadequate to prove connivance or intentional mis-declaration by the importer or its directors. [Paras 24, 25, 26]

Statements relied upon are insufficient and lack corroborative force to establish mis-declaration or culpability.

Compliance with FSSAI (Labeling and Packaging) Regulations, 2011 and role of Authorized FSSAI Officer - There was no non-compliance with FSSAI labeling and packaging regulations; FSSAI Authorized Officer had issued NOC after inspection. - HELD THAT: - The Tribunal held that the proper authority to determine compliance with FSSAI labeling rules is the Authorized FSSAI Officer. The consignment had been inspected by FSSAI, samples drawn, and an NOC issued certifying conformity to FSSAI specifications. Circular No.9/2015-Cus and FSSAI (Import) Regulations, 2017 were noted to show that Customs should await FSSAI release; Customs examining officers had also earlier examined and found no discrepancy. On this basis the Tribunal concluded that the allegation of non-compliance with labeling/packaging requirements was baseless and could not support confiscation. [Paras 18, 19]

FSSAI compliance established by NOC; confiscation on account of labeling non-compliance is invalid.

Confiscation under Section 111(m) of the Customs Act, 1962 - Confiscation under Section 111(m) could not be sustained in absence of proof of mis-declaration or non-compliance. - HELD THAT: - Having rejected the department's primary pieces of evidence-the ARDPL opinion, the export declaration from the shipping line, and the uncorroborated statements-the Tribunal concluded that confiscation founded on alleged mis-declaration of origin and on FSSAI non-compliance rested on assumption and presumption. The importer had filed the bill of entry in conformity with supplier documents, the goods were examined and cleared by Customs and FSSAI officers, and there was no material to show importer involvement in any manipulation. Reliance was placed on settled authorities that an importer filing BE as per supplier documents cannot be held to have mis-declared origin absent proof of involvement. [Paras 20, 21]

Confiscation under Section 111(m) set aside.

Penalty under Section 112(a) of the Customs Act, 1962 - Penalty under Section 112(a) against the corporate appellant is not sustainable. - HELD THAT: - Section 112(a) penalty attaches when actions make goods liable to confiscation. Because the Tribunal held that confiscation was not sustainable due to lack of evidence of mis-declaration or non-compliance, the foundational basis for penalty failed. The Tribunal therefore set aside the penalty imposed on the company. [Paras 27]

Penalty under Section 112(a) on M/s Omega Packwell Pvt. Ltd. quashed.

Penalty under Section 114AA of the Customs Act, 1962 - Penalties under Section 114AA imposed on directors and others were unjustified and are quashed. - HELD THAT: - The Tribunal observed that Section 114AA requires proof of knowingly or intentionally making, signing or using false or incorrect declarations. No evidence was produced to show that Shri Yogesh Gupta or other named individuals knowingly participated in any falsification; declarations in the BE were made on the basis of supplier documents. In absence of evidence of intentional misrepresentation, the Tribunal held penalties under Section 114AA could not be sustained and set them aside. [Paras 28, 29]

Penalties under Section 114AA on Shri Yogesh Gupta and other individuals quashed.

Final Conclusion: The impugned adjudication order is set aside in its entirety: goods held to be of UAE origin, confiscation and redemption fine are unsustainable, and all penalties imposed on the company and individuals are quashed; the six appeals are allowed with consequential relief as per law.

Confiscation - penalty under section 114 of the Customs Act, 1962 - requirement of corroborative evidence to establish intended smuggling - seizure within Indian territory not amounting to prima facie proof of illegal export

Confiscation - penalty under section 114 of the Customs Act, 1962 - requirement of corroborative evidence to establish intended smuggling - seizure within Indian territory not amounting to prima facie proof of illegal export - Whether the absolute confiscation of 154 mobile phones and imposition of penalty on the appellant could be sustained in the absence of corroborative evidence that the goods were intended to be smuggled to Bangladesh - HELD THAT: - The Tribunal observed that the goods were intercepted while moving within Indian territory, over 60 kms from the Bangladesh border, and that mere absence of invoices with the appellant does not warrant a presumption of illegal export. The appellant had furnished the name and contact of the alleged supplier and the names and mobile numbers of several intended purchasers within Tripura; nevertheless the Department did not verify those persons or obtain corroborative evidence. The Adjudicating Authority relied on the supplier's non-cooperation to impute guilt to the appellant, yet the record shows the Department failed to seek independent verification of the appellant's statements or investigate the named recipients. In these circumstances the Tribunal held that the proceedings were founded on assumptions and presumptions rather than proper, cohesive and corroborative evidence necessary to prove an intention to smuggle. Applying this reasoning, the Tribunal concluded that the confiscation and penalty could not be sustained. [Paras 6, 7]

Absolute confiscation of the 154 mobile phones and penalty imposed on the appellant set aside for lack of corroborative evidence proving intended smuggling.

Final Conclusion: The appeal is allowed; the absolute confiscation of the seized mobile phones and the penalty imposed on the appellant are set aside for want of proper and corroborative evidence that the goods were being illegally exported.

Tariff classification of imported goods - Classification of Liquid Crystal Display (LCD) panels - Interpretation of Chapter and Section Notes - Exclusionary effect of a chapter note and narrow construction of pull in provisions - Specific provision prevailing over general description

Classification of Liquid Crystal Display (LCD) panels - Specific provision prevailing over general description - Interpretation of Chapter and Section Notes - Exclusionary effect of a chapter note and narrow construction of pull in provisions - Classification of the imported LCD panels and accessories under Chapter Heading 9013 80 10 rather than under Heading 8528/8529. - HELD THAT: - The Tribunal followed the binding legal principle laid down by the Supreme Court that LCDs are specifically provided for in Heading 9013 and that exclusionary chapter notes (including Note 1(m) and the relationship with Note 2) must be narrowly construed so as not to defeat the express exclusion. The Court observed that where goods are excluded from a chapter, any purported "pull in" through a subsequent note must be read subject to that exclusion; consequently parts or accessories described generically in Chapter 85 cannot override a specific provision in Chapter 90 which expressly covers Liquid Crystal Devices. The Tribunal also applied prior decisions of the Tribunal classifying LCD panels under Heading 9013 and accepted that the general description of parts in Chapter 85 does not render LCDs less specifically covered by 9013 80 10. On that basis the impugned goods fall within the specifically carved out tariff entry for LCDs and are not to be classified under the more general provisions applicable to television sets or their parts.

The impugned LCD panels and accessories are classifiable under Chapter Heading 9013 80 10; the Commissioner (Appeals) order is upheld and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal, applying the Supreme Court's interpretation of the General Rules of Interpretation and chapter notes, held that LCD panels are specifically classifiable under Heading 9013 80 10 and dismissed the Revenue's appeal.

Dissolution of company - Winding up - Official Liquidator's discharge - Distribution to secured creditors - Transfer to Common Pool Fund - Cannot proceed for want of funds - Section 481 of the Companies Act, 1956

Dissolution of company - Winding up - Section 481 of the Companies Act, 1956 - Cannot proceed for want of funds - Application under Section 481 for dissolution of the company in liquidation was allowed. - HELD THAT: - The Court applied the principle in Meghal Homes (P) Ltd. v. Shree Niwas Girni K.K. Samiti & Ors. that where the affairs of a company have been completely wound up or the liquidator cannot proceed for want of funds or assets, the Court may dissolve the company. Having regard to the factual matrix - appointment of provisional liquidator, winding up order, realization and distribution of sale proceeds, absence of further assets, and limited funds remaining - the Court was satisfied that it was just and reasonable to dissolve the company and bring the winding up proceedings to an end. Therefore the petition for dissolution was allowed and the company stands dissolved from the date of the order. [Paras 14, 15]

The company M/s. Sarvodya Paper Mills Ltd. (in liquidation) is dissolved.

Official Liquidator's discharge - Official Liquidator was discharged as liquidator of the dissolved company. - HELD THAT: - Upon ordering dissolution under Section 481 and finding no purpose in continuing the winding up proceedings, the Court discharged the Official Liquidator from his duties in respect of the company. This follows as an incident of the dissolution order where the liquidator cannot continue to administer a non-existent corporate entity. [Paras 15]

The Official Liquidator is discharged as liquidator of the company.

Distribution to secured creditors - Transfer to Common Pool Fund - Official Liquidator was permitted to make payments to secured creditors from available funds and to transfer any remaining balance to the Common Pool Fund after deduction of liquidation expenses. - HELD THAT: - The Court noted the funds position and liquidation expenses as recorded in the application and previous orders authorising distribution of sale proceeds among secured creditors. In light of the paucity of assets and the application seeking permission to pay secured creditors and remit any residual balance to the Common Pool Fund, the Court authorised such payments and transfer, permitting the Official Liquidator to act accordingly as part of closing the liquidation. [Paras 9, 11, 16]

The Official Liquidator may pay secured creditors as indicated and transfer any available balance to the Common Pool Fund.

Winding up - Official Liquidator's discharge - Requirement to file further half-yearly/annual accounts was dispensed with and the Official Liquidator was permitted to close the company's books of account. - HELD THAT: - As the Court ordered dissolution and discharged the Official Liquidator, it found no necessity to require further periodic accounts to be filed with the Court. In consequence, the Official Liquidator was authorised to dispense with such filings and to close the books of account of the company in liquidation. [Paras 16]

Filing of half-yearly/annual accounts dispensed with and books of account may be closed.

Dissolution of company - A copy of the dissolution order must be communicated to the Registrar of Companies. - HELD THAT: - The Court directed the Official Liquidator to communicate a copy of the judgment to the Registrar of Companies within 30 days, thereby giving statutory and administrative effect to the dissolution order and ensuring necessary record updating. [Paras 17]

The Official Liquidator shall send a copy of the judgment to the Registrar of Companies within 30 days.

Final Conclusion: The application under Section 481 was allowed: the company M/s. Sarvodya Paper Mills Ltd. (in liquidation) is dissolved, the Official Liquidator is discharged, he is permitted to pay secured creditors and transfer any residual funds to the Common Pool Fund, filing of further periodic accounts is dispensed with and the Registrar of Companies is to be informed.

Grant of bail under Section 45(1) of the PMLA - Parity principle in grant of bail - Challenge to legality of arrest under Section 19 of the PMLA at bail stage - Requirement of a scheduled/predicate offence for prosecution under the PMLA - Remedy for challenge to remand under Section 19 vis-a -vis writ jurisdiction

Challenge to legality of arrest under Section 19 of the PMLA at bail stage - Remedy for challenge to remand under Section 19 vis-a -vis writ jurisdiction - Whether a plea of illegal or non-compliant arrest under Section 19 of the PMLA can be adjudicated in an application for bail. - HELD THAT: - The Court observed that challenges to the legality of arrest under Section 19, and to orders of remand, are to be tested by the statutory remedies and not ordinarily by a bail application. Reliance was placed on the decision in V. Senthil Balaji which distinguishes between detention that is illegal for non-compliance of statutory mandate (for which extraordinary writ may lie) and remand orders that should be challenged by the statutory route. The Court therefore did not permit the applicant to succeed on the ground of alleged non-compliance with arrest formalities at the bail stage and noted that an order of remand ought to be assailed in appropriate proceedings rather than by invoking bail, absent exceptional circumstances justifying a writ. [Paras 16, 19]

The plea that the arrest did not meet the threshold under Section 19 was not accepted as a standalone ground for bail; such challenges are to be pursued by the remedies prescribed by law and not through the bail application in ordinary course.

Requirement of a scheduled/predicate offence for prosecution under the PMLA - Grant of bail under Section 45(1) of the PMLA - Whether the inchoate or pending nature of investigation into the predicate offence (scheduled offence) precludes prosecution or bail under the PMLA. - HELD THAT: - The Court followed the Supreme Court authorities (Vijay Madanlal Choudhary and Pavana Dibbur) in holding that an accused in a prosecution under Section 3 of the PMLA need not necessarily be arraigned or finally dealt with in the scheduled offence before money laundering proceedings are maintainable. The existence of a scheduled offence and proceeds of crime is a condition precedent, but incompleteness of investigation or non filing of charge sheet in the scheduled offence does not automatically efface the predicate offence for purposes of PMLA prosecution. Only final discharge, acquittal or quashing of the scheduled offence would negate the basis for PMLA prosecution. [Paras 20, 21, 22, 23]

Pending or inchoate investigation into the predicate offence does not bar prosecution under the PMLA; the mere absence of a completed investigation or charge sheet in the scheduled offence is not a defence to money laundering proceedings.

Parity principle in grant of bail - Grant of bail under Section 45(1) of the PMLA - Whether the applicant should be granted bail despite serious prima facie material against him, in view of the principal alleged mastermind being at liberty after release. - HELD THAT: - While recognising the stringent twin conditions in Section 45(1) of the PMLA (satisfaction of reasonable grounds that the accused is not guilty and not likely to commit any offence while on bail), the Court examined the totality of circumstances. The Court noted prima facie material against the applicant (seizures, statements, alleged money trail and recovery), but found it significant that the principal accused (alleged mastermind) against whom graver allegations were levelled had been released on bond and remained at liberty. The Court observed that deprivation of personal liberty should not be a matter of chance and that the principle of parity has persuasive force where the principal alleged offender is unrestrained while a relatively peripheral actor is detained. Although the attempt to bribe a contractual employee was a serious factor, the Court exercised judicial discretion in favour of parity and released the applicant on bail subject to conditions (personal bond/sureties, regular appearance, prohibition on tampering with evidence, surrender of passport, reporting conditions). [Paras 28, 33, 35, 36]

In view of the incongruity that the alleged mastermind remains at liberty, the applicant was granted bail on conditions despite the seriousness of the allegations.

Final Conclusion: Bail application allowed. The applicant was directed to be released on furnishing prescribed bond and sureties and subject to conditions including regular reporting to ED, non tampering with evidence, surrender of passport and attendance at trial; observations are confined to bail determination and not an expression on guilt. An oral application to stay the bail order was rejected.

Provisional attachment - proceeds of crime - double attachment - Section 8(2) of the Prevention of Money Laundering Act, 2002 - schedule offence - scope of an ECIR under the PMLA

Provisional attachment - proceeds of crime - double attachment - Section 8(2) of the Prevention of Money Laundering Act, 2002 - Validity of the provisional attachment and its confirmation insofar as they affect properties acquired by the appellants under a court decree and for consideration, where an earlier attachment had been made in respect of the property received by Hazra Memon. - HELD THAT: - The Tribunal found that the properties of the appellants were acquired pursuant to a court decree and by payment of consideration to Hazra Memon, and that the respondents had already attached the 14,000 sq. ft. that came to Hazra Memon as alleged proceeds of crime. Once the proceeds of crime were shifted and the specific asset in the hands of Hazra Memon had been attached, further attachment of the appellants' legally acquired property would amount to double attachment. The Adjudicating Authority was required to record a finding under Section 8(2) that the properties in question were involved in money laundering after considering the reply, hearing the parties and taking into account relevant material; the record did not support treating the appellants' property (transferred under decree and on consideration) as proceeds of crime independent of the already attached asset in Hazra Memon's hands. For these reasons the Tribunal concluded that the impugned provisional attachment and its confirmation were inappropriate and liable to be quashed. [Paras 29, 30, 31]

The provisional attachment and the adjudicating authority's confirmation insofar as they relate to the appellants' properties acquired under the court decree and for consideration are quashed.

Schedule offence - FSI violation - scope of an ECIR under the PMLA - Whether alleged violation of FSI and related municipal construction norms could validly be invoked to justify attachment under the ECIR when such violations are not schedule offences under the PMLA. - HELD THAT: - The Tribunal observed that the respondents sought to rely on alleged excess construction and violation of FSI norms to justify attachment, but such violations are not offences listed in the schedule to the PMLA and therefore do not fall within the scope of an ECIR under the Act. The use of FSI violation arguments to support attachment was held to be misplaced and not a lawful basis for the attachments made against the appellants. [Paras 31]

Alleged FSI violations, not being schedule offences under the PMLA, do not furnish a proper basis to sustain the attachments.

Final Conclusion: The Tribunal allowed the appeals, quashed the provisional attachment order dated 11.07.2022 and the Adjudicating Authority's confirmation thereof in respect of the appellants' properties acquired under the court decree and for consideration, and held that reliance on alleged FSI violations (not scheduled offences) could not sustain the attachment.

Proceeds of crime - property equivalent in value - attachment and seizure of property held by third parties - continuance of attachment during investigation and the 365 day period

Proceeds of crime - property equivalent in value - Seized documents relating to a flat acquired earlier and gifted after registration of FIR fall within the definition of 'proceeds of crime' and are subject to seizure as property equivalent in value. - HELD THAT: - The Tribunal construed the definition of proceeds of crime to include not only property directly or indirectly derived from a scheduled offence but also property of equivalent value. Relying on the statutory definition and precedents, the court held that where tainted assets cannot be traced or are deficient in value, legitimately acquired or earlier acquired properties may be proceeded against to the extent of equivalence in value. The facts show the flat originally belonged to an accused and was gifted after registration of the FIR and recording of ECIR; the transfer was held to be designed to circumvent attachment. Consequently, documents relating to that flat could be seized as falling within the statutory ambit of property equivalent in value to proceeds of crime. [Paras 13, 14, 15, 16, 18]

Documents relating to the flat are liable to seizure as proceeds of crime or property equivalent in value and seizure was not illegal.

Attachment and seizure of property held by third parties - Property held by a third person can be subjected to seizure/attachment even if that person is not named as an accused, where the property is proceeds of crime or equivalent in value. - HELD THAT: - The Tribunal emphasised the statutory scheme and legislative purpose of the Act to reach proceeds of crime 'in whosoever name they are kept'. It held that if proceeds are parked with a third person, that person's holding is not immune from attachment; otherwise the objective of the Act would be frustrated. The court found the gift to the appellant, after registration of FIR and ECIR, to be a device to evade enforcement and therefore seizure from a non accused holder was permissible. [Paras 15, 16, 23]

Attachment/seizure of property held by a third party not named as accused is permissible where the property is shown to be proceeds of crime or of equivalent value and transfers are designed to frustrate enforcement.

Continuance of attachment during investigation and the 365 day period - Non filing of a prosecution complaint against the person from whom property is seized does not, by itself, mandate cessation of attachment after 365 days under the continuance provision. - HELD THAT: - Interpreting the continuance provision, the Tribunal held that Section 8(3)(a) requires completion of investigation within 365 days or pendency of proceedings relating to the offence; it does not require that a prosecution complaint be filed against the specific person whose property was attached. Requiring such a complaint would enable accused persons to evade attachment by parking assets with third parties. The Tribunal declined to read into the provision any obligation to file a complaint against the holder of seized property within 365 days. [Paras 19, 20, 21, 22]

Seizure does not automatically lapse for want of a prosecution complaint against the person from whom property was seized merely because 365 days have passed; the provision governs investigation and pendency of proceedings, not filing of complaint against that specific person.

Final Conclusion: The Tribunal dismissed the appeal: the seizure of documents relating to the flat was lawful as they fall within the definition of proceeds of crime or property equivalent in value, seizure from a non accused holder is permissible where transfers are designed to evade enforcement, and lapse of attachment was not attracted merely by non filing of a prosecution complaint against the appellant within 365 days.

Refund of excess recovery - deposit of 7.5% on appeal - bank guarantee to secure revenue's interest - expeditious disposal of statutory appeal - service tax demand and penalties under the Finance Act, 1994

Refund of excess recovery - deposit of 7.5% on appeal - Whether the excess amount recovered from the petitioner should be refunded subject to statutory deposit requirements. - HELD THAT: - The Court recorded that the petitioner's appeal against Order in Original No.71/22 ST dated 15.03.2022 has been admitted by the Appellate Commissioner. Relying on the statutory scheme made applicable to appeals, the petitioner is required to deposit 7.5% of the taxed amount (as contended by the petitioner). In view of the admitted appeal and the reduced deposit obligation, the Court directed refund of the balance amount recovered from the petitioner's bank account, while safeguarding the revenue by conditioning the refund on the petitioner furnishing a bank guarantee for the balance amount. The direction to refund is therefore made subject to the petitioner providing the bank guarantee to secure the revenue's interest. [Paras 10]

Balance amount recovered to be refunded to the petitioner subject to the petitioner furnishing a bank guarantee and after accounting for the 7.5% deposit requirement.

Expeditious disposal of statutory appeal - Whether the admitted appeal should be directed for expeditious disposal by the Appellate Commissioner. - HELD THAT: - Having noted that the appeal against the Order in Original No.71/22 ST dated 15.03.2022 has been admitted as Appeal No.90/2023 ST, the Court suo motu impleaded the Commissioner (Appeals) and directed that the appeal be disposed of as expeditiously as possible, preferably within six months from receipt of a copy of the order, subject to defences available to the Revenue. The direction is remedial and procedural to ensure adjudication of the admitted appeal within a stipulated timeframe. [Paras 8, 9]

Commissioner (Appeals) directed to dispose of the petitioner's appeal expeditiously, preferably within six months from receipt of this order.

Service tax demand and penalties under the Finance Act, 1994 - Recognition of the underlying demand for service tax and imposition of penalties which form the subject matter of the admitted appeal. - HELD THAT: - The Court recorded the contents of the show cause notice and the consequent Order in Original confirming demand of service tax for the period April 2015 to June 2017 and imposing interest and penalties under the Finance Act, 1994. Those adjudications form the subject matter of the admitted appeal which the Court has directed to be decided by the appellate authority. The Court did not reopen or decide the merits of the underlying demand or penalties but treated them as the basis for the admitted appeal and for the directive to secure revenue through deposit/bank guarantee. [Paras 6, 7]

Underlying service tax demand and penalties are recorded as the subject matter of the admitted appeal and are to be adjudicated by the Appellate Commissioner.

Final Conclusion: The writ petition is disposed with directions that the Commissioner (Appeals) shall decide the admitted appeal expeditiously (preferably within six months), and the respondents shall refund the balance amount recovered after accounting for the required 7.5% deposit, conditioned upon the petitioner furnishing a bank guarantee to secure the revenue's interest.

Extended period of limitation - suppression of facts with intention to evade payment of tax - works contract service - residential complex - personal use - inclusion of value of free supply materials in assessable value - service tax on advances

Extended period of limitation - suppression of facts with intention to evade payment of tax - Extended period of limitation could not be invoked as there was no suppression of facts with intent to evade tax. - HELD THAT: - The appellant had informed the Department by letter dated 16.04.2009 that, in their view, the services rendered to JSPL were not liable to service tax and that JSPL would not reimburse service tax in view of an expert opinion. The Show Cause Notice was issued on 07.06.2012, beyond the normal limitation period. The Tribunal found that the appellant had disclosed the position to the Department and there was no concealment with intent to evade tax; therefore invocation of extended limitation was not sustainable. [Paras 6, 7]

Demand raised by invoking the extended period of limitation is not sustainable.

Works contract service - residential complex - personal use - Works contract services rendered for construction of residential complexes for JSPL's employees are not liable to service tax as they fall within the exclusion for construction intended for personal use. - HELD THAT: - The Tribunal examined the definition of "residential complex" and the explanation that "personal use" includes permitting residence by another person on rent or without consideration. The complexes at Angul and Raigarh were constructed by JSPL for use by its employees; the works contract undertaken by the appellant thus fell within the ambit of "personal use" and accordingly were not taxable as works contract service. [Paras 8]

Services rendered by the appellant for construction of the residential complexes are not liable to service tax.

Inclusion of value of free supply materials in assessable value - Value of free supply materials supplied by the service recipient is not includable in the assessable value of services. - HELD THAT: - Relying on the reasoning of the Apex Court in Commissioner of Service Tax v. M/s. Bhayana Builders (as reproduced in the order), the Tribunal held that the value of goods supplied free by the service recipient cannot be added over and above the contract value to arrive at the value of taxable services because such value is not part of the contract and bears no relevance to the service provider's taxable service value. In any event, having held the services non-taxable, inclusion of free supply materials did not arise. [Paras 9]

Demand by including value of free supply materials in the assessable value is not sustainable.

Service tax on advances - Demand of service tax on advances received for the works contract is not sustainable. - HELD THAT: - Advances were received towards the same services on which the Tribunal has held there is no liability to service tax. Consequently, the demand of service tax on such advances cannot be sustained. [Paras 10]

Demand of service tax on the advances received is not sustainable.

Penalty - interest - Interest and penalty cannot be imposed where the primary demand is held unsustainable. - HELD THAT: - Since the Tribunal set aside the substantive demands of service tax, it held that the question of levying interest and penalty does not arise. [Paras 11]

Demand of interest and penalty is not sustainable.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order and held the demands of service tax (including alleged inclusion of free supply materials and tax on advances), and the consequential interest and penalty, to be unsustainable for the period 2007-08 to 2009-10.

Failure to specify taxable category in show cause notice under the positive list regime - import of services - classification under the Import of Service Rules (Rule 3(i), 3(ii), 3(iii)) - performance based services v. recipient based services - place of provision and liability under reverse charge - purchase of goods v. taxable service - penalty under Section 9AA of the Central Excise Act - liability of person in charge and scope of show cause notice

Failure to specify taxable category in show cause notice under the positive list regime - burden of classification on the revenue - Whether the demand is sustainable where the show cause notice failed to classify the specific taxable category under which service tax was sought to be levied. - HELD THAT: - The Tribunal held that under the positive list regime the burden to determine taxability and to specify the precise category of taxable service in the show cause notice rests on the revenue. The impugned notice and adjudication failed to identify the specific sub category under which the foreign currency payments were alleged to be exigible, and the adjudicating authority could not sustain demands in the absence of such classification. Reliance was placed on earlier Tribunal precedent that a notice must put the assessee on notice as to the exact liability; failure to do so renders confirmation of demand unsustainable. For these reasons the demands were held not sustainable on this ground alone. [Paras 8]

Demands set aside as the show cause notice failed to specify the precise taxable category and thus the demand is unsustainable.

Import of services - classification under the Import of Service Rules (Rule 3(i), 3(ii), 3(iii)) - performance based services v. recipient based services - place of provision and liability under reverse charge - purchase of goods v. taxable service - Whether the foreign currency payments made by the appellant constituted import of taxable services liable to tax on reverse charge, having regard to the nature of each payment and the Import of Service Rules. - HELD THAT: - The Tribunal examined the nature of various foreign payments and applied the Import of Service Rules. It held that (a) payments for bunker, lubricants, stores and spares were purchases of goods and not taxable services and therefore not import of service; (b) freight and demurrage in respect of transportation of petroleum products were not leviable - petroleum transportation being exempt and demurrage being a penal/ancillary charge - and therefore not taxable; (c) time/charter hire for vessels involved no effective control or possession and fell outside taxable ambit as performance based 'supply of tangible goods for use' located outside India; (d) port disbursements and steamer/port agent services, being performance based and rendered outside India, did not qualify as import of taxable services under Rule 3(ii); (e) dry docking, special survey, maintenance and repair payments were performance based services performed outside India and thus not taxable under Rule 3(ii); (f) survey/inspection for statutory certification was not taxable; and (g) certain items (P&I insurance, data retrieval, professional charges, etc.) had already been treated as taxable and tax paid by the appellant. The adjudicating authority had broadly categorized the payments under Rule 3(iii) and confirmed tax, but the Tribunal found that most contested payments were performance based and performed outside India and hence not exigible. On merits, therefore, the demands were held unsustainable. [Paras 9]

Demands set aside on merits as the impugned order wrongly treated various payments as imported taxable services; most were either purchases of goods, performance based services rendered outside India, exempt, or already taxed by the appellant.

Penalty under Section 9AA of the Central Excise Act - liability of person in charge and scope of show cause notice - requirement of proof of consent or negligence and temporal responsibility - Whether the penalty imposed on Shri K. Satishchandra under Section 9AA was sustainable. - HELD THAT: - The Tribunal observed that Section 9AA penalises a person in charge only if it is established that the person was in charge and responsible at the time of the offence and that the offence was committed with his consent or negligence. The show cause notice did not invoke Section 9AA and the department did not produce evidence to establish that the executive president was responsible for day to day affairs during the relevant period or that the offence was committed with his consent or negligence. His appointment in October 2011 meant he was not in charge for the substantial period when the alleged offences occurred. The penalty was therefore held to be beyond the scope of the notice and unsupported by evidence. [Paras 10]

Penalty under Section 9AA set aside for lack of invocation in the notice and absence of evidence of responsibility, consent or negligence.

Final Conclusion: The Tribunal allowed the appeal, set aside the demands confirmed in the impugned order and quashed the penalties; since the demands were unsustainable, interest and penalty claims did not survive.

Business Support Services - Online information and database access or retrieval services (OIDAR) - export of services - Principle of most specific description (Section 66F) - Place of Provision of Services Rules - Rule 3 - Rule 6A of the Service Tax Rules

Business Support Services - Online information and database access or retrieval services (OIDAR) - Principle of most specific description (Section 66F) - Services rendered by the respondent are classifiable as Business Support Services and not as OIDAR services. - HELD THAT: - The adjudicating authorities examined the contractual scope, the step wise business process and the sample reports and held that the respondent performed outsourced verification, operational, managerial and report preparation activities which involved extensive human intervention and did not amount to automated delivery of content or ownership/dissemination of data by the service provider. The authorities applied the CBEC Education Guide and post 2016 clarifications which characterise OIDAR as services that are essentially automated, mediated by IT with minimal human intervention, and where the provider typically owns the data/content. Section 66F's rule preferring the most specific description supported classification as Business Support Services, viewed as the specific description of outsourced business activities. Precedents and circulars cited reinforced that mere use of electronic means to transmit outcomes does not convert a manually intensive outsourced business support activity into OIDAR. On these grounds the tribunal upheld the finding that the services fall within Business Support Services and not OIDAR. [Paras 4]

The services are Business Support Services and not OIDAR.

Export of services - Rule 6A of the Service Tax Rules - Place of Provision of Services Rules - Rule 3 - The Business Support Services supplied to Dataflow Dubai qualify as export of services and are not taxable under service tax. - HELD THAT: - The authorities applied the export conditions under Rule 6A (provider located in taxable territory; recipient located outside India; service not specified in section 66D; place of provision outside India; payment received in convertible foreign exchange; and provider and recipient not mere establishments of a distinct person). Facts on record-Indian location of provider, contractual recipient in Dubai, place of provision determined by Rule 3 of the PoPS Rules as the location of the recipient, receipt of consideration in convertible foreign exchange and separate legal identities of parties-satisfied all prescribed conditions. Consequently, the Business Support Services were held to be exports and the demand for service tax was rightly dropped. [Paras 4]

The services to Dataflow Dubai qualify as export of services; no service tax is due.

Final Conclusion: The revenue appeal is rejected; the Tribunal upholds classification of the respondent's activities as Business Support Services and their treatment as export of services, resulting in no service tax liability for the relevant period.

Classification of services as Business Auxiliary Service versus Information Technology Service - Liability of a sub-contractor to discharge service tax notwithstanding payment by main contractor - Operation of the Cenvat credit mechanism and avoidance of double taxation - Invocation of extended period of limitation under proviso to Section 73(1) and time bar - Interplay between extended limitation and imposition of penalty under Section 78 (and Section 76) - Remand for recomputation of demand for the normal period and verification of amounts deposited

Classification of services as Business Auxiliary Service versus Information Technology Service - Services rendered by the appellant to UPDESCO and UPELC are correctly classifiable as Business Auxiliary Services and not as Information Technology Services. - HELD THAT: - On scrutiny of the agreements and invoices the Tribunal found that the appellant acted as a General Marketing Associate/sub contractor performing marketing, pre sales and post sales activities, supplying deliverables including printed electoral rolls, documentation, installation kits, source code on media where applicable, and receiving a structured share (16% or other agreed percentage) as commission. The nature, terms and revenue sharing in the contracts show the appellant provided services on behalf of UPDESCO/UPELC and earned commission, thereby meeting the elements of Business Auxiliary Service (notably sub clauses including provision of service on behalf of the client). The Tribunal held that taxable liability must be determined by the transaction between the actual service provider (the appellant) and the recipient (UPDESCO/UPELC), and therefore the classification under Business Auxiliary Service is correct. [Paras 4]

Classification as Business Auxiliary Service upheld and appellant's contention that services are IT services rejected.

Liability of a sub-contractor to discharge service tax notwithstanding payment by main contractor - Operation of the Cenvat credit mechanism and avoidance of double taxation - A sub contractor who renders a taxable service is liable to pay service tax even if the main contractor has discharged tax on the composite service; availability of Cenvat credit prevents impermissible double taxation. - HELD THAT: - Relying on the Larger Bench and subsequent Division Bench reasoning, the Tribunal accepted that each service provider is liable to tax on the taxable services they render. The scheme of Cenvat/Cenvat Credit Rules permits input tax paid at an earlier stage to be credited by the subsequent provider, so collection of tax at multiple stages does not result in unlawful double taxation. Prior contrary decisions holding otherwise were disapproved to the extent inconsistent. The Tribunal therefore rejected the appellant's argument that payment by UPDESCO/UPELC absolved the appellant of liability. [Paras 4]

Sub contractor's liability to pay service tax sustained; double taxation avoided by operation of Cenvat credit, not by exemption of the sub contractor.

Invocation of extended period of limitation under proviso to Section 73(1) and time bar - Extended period of limitation could not be invoked in the facts of this case; the demand must be confined to the normal period of limitation. - HELD THAT: - The Tribunal considered recent Bench decisions and authorities which examined trade circulars, past practices and bona fide beliefs arising from earlier circulars and treatment of tax at the main contractor level. It observed that where there was a plausible interpretation and contemporaneous practice giving rise to a bona fide belief (and where material indicates that tax on the gross consideration was already subjected to tax by the main service provider), invoking the extended period for assessment/demand is not sustainable. In view of these considerations and precedents cited, the Tribunal held the impugned demand (which invoked extended period) cannot be sustained and must be limited to the normal period. [Paras 4, 5]

Extended period denied; demand to be recomputed for the normal limitation period only.

Interplay between extended limitation and imposition of penalty under Section 78 (and Section 76) - Penalties imposed under Section 78 (and Section 76 where claimed) cannot be upheld where extended period of limitation is not sustainable. - HELD THAT: - The Tribunal reasoned that the essential ingredients for invoking extended limitation and for imposing penalty under Section 78 are co related; since extended period could not be invoked on the facts, the conditions justifying penalty under Section 78 (and relatedly Section 76 for earlier periods) were not made out. The Tribunal relied on principles that penalty provisions require the factual and legal prerequisites to be satisfied before mandatory penalties are sustained and applied the precedents addressing mens rea, deliberate evasion and the limits of mandatory penalty provisions. [Paras 4, 5]

Penalties under Section 78 (and Section 76 for the barred period) set aside.

Remand for recomputation of demand for the normal period and verification of amounts deposited - The matter is remanded to the original adjudicating authority to recompute the demand for the normal period of limitation and verify/apportion the amounts the appellant deposited for the post 1.7.2010 period. - HELD THAT: - Because the Tribunal held extended limitation could not be invoked, it directed that the original authority recompute the tax demand limited to the normal period and check whether the appellant's claimed deposit(s) (notably the sums said to have been paid post 1.7.2010) cover the tax due for the normal period. The appellant's year wise computation chart shall be taken into account; the remand is limited to recomputation, verification and appropriate appropriation of payments. The Tribunal directed finalization within three months. [Paras 4, 5]

Matter remanded for limited recomputation and verification; original authority to finalize within three months.

Final Conclusion: Appeal of the assessee is partly allowed: classification as Business Auxiliary Service upheld, sub contractor liability to pay service tax sustained, but extended period cannot be invoked; penalties tied to extended period set aside. The matter is remanded to the original authority to recompute demand for the normal limitation period and verify/apportion deposits, to be finalized within three months. Revenue's appeal is dismissed.

Service tax under Reverse Charge Mechanism - levy of service tax on fees charged by State/State Excise - fees as price for parting with exclusive privilege/license fee not leviable to service tax - absence of quid pro quo - fee not a service - refund of erroneously paid service tax with interest

Service tax under Reverse Charge Mechanism - levy of service tax on fees charged by State/State Excise - absence of quid pro quo - fee not a service - refund of erroneously paid service tax with interest - Whether service tax was leviable on Export Pass Fees paid to the State Excise Department and whether refund of the amount paid could be allowed with interest - HELD THAT: - The Tribunal followed the reasoning of the Division Bench in United Spirits Ltd. and concluded that fees paid to the State/State Excise - including Export Pass Fees - do not constitute consideration for a service but are a price for parting with an "exclusive privilege" or licence and therefore are not liable to service tax under the Reverse Charge Mechanism. The Tribunal also relied on the decision of the Hon'ble Allahabad High Court quashing the imposition of export pass fees with retrospective effect, which negated the basis for any service tax levy thereon. In view of these precedents and the absence of quid pro quo, the impugned orders rejecting the refund were found unsustainable. Consequently the refund of the service tax inadvertently paid on the Export Pass Fee was held to be admissible, and interest was directed to be paid from the date of deposit until refund at the rate and within the period stated in the order. [Paras 9, 11, 13]

The demand/denial was set aside; refund of the service tax paid on Export Pass Fees allowed with interest.

Final Conclusion: Appeal allowed. The adjudicating authority is directed to grant the refund of the service tax erroneously paid on Export Pass Fees together with interest from the date of deposit until grant of refund, and to do so within the period specified by the Tribunal.

Tour operator service vs short-term accommodation service - abatement for tour operator - recovery under Section 73A of the Finance Act, 1994 - simultaneous invocation of Sections 73 and 73A - application of precedent / identical facts

Tour operator service vs short-term accommodation service - abatement for tour operator - application of precedent / identical facts - Whether the appellant was providing short-term accommodation service or a tour operator service and whether it was entitled to abatement as a tour operator - HELD THAT: - The Tribunal's earlier decision in M/s. Make My Trip (2024 (1) TMI 681 - CESTAT New Delhi) held that the intermediary did not qualify as a hotel and acted as a facilitator receiving commission, and that it qualified as a tour operator entitled to abatement. The present appeals involve identical facts and issues. Applying that decision, the impugned findings that the appellant was rendering short-term accommodation or renting hotel accommodation were set aside. The Tribunal's reasoning that the appellant merely facilitated bookings, received commission, and thus qualified for the tour-operator abatement was followed as determinative here. [Paras 10, 11, 12]

Held for the appellant: the appellant is not providing short-term accommodation/hotel renting but qualifies as a tour operator and is entitled to the abatement previously recognised by the Tribunal; the impugned contrary findings are set aside.

Recovery under Section 73A of the Finance Act, 1994 - simultaneous invocation of Sections 73 and 73A - application of precedent / identical facts - Whether tax amounts collected by the appellant could be recovered under Section 73A and whether Section 73A could be invoked in the circumstances - HELD THAT: - The earlier Tribunal decision held that amounts collected by the intermediary were paid to the hotels for further remittance and therefore Section 73A could not be invoked. Given that the facts and documentary position in the present appeals are identical to those considered earlier, the impugned authority's invocation of recovery under Section 73A (and its concurrent treatment under Section 73) could not be sustained. The appellate order adopts the prior Tribunal's conclusion that the conditions for invoking Section 73A were not satisfied in these circumstances. [Paras 10, 12]

Held for the appellant: invocation of Section 73A for recovery is not sustainable on the facts; the impugned demand under Section 73A (and concurrent invocation with Section 73) is set aside.

Recovery with respect to hotels having tariff below specified limit and hotels in Jammu & Kashmir - penalty and limitation / extended period - application of precedent / identical facts - Whether demands in respect of hotels with tariff below the specified threshold or hotels in Jammu & Kashmir, imposition of penalties on the appellant and its officials, and invocation of extended limitation could be sustained - HELD THAT: - The Tribunal's earlier decision addressed the core contentions including treatment of collections for hotels with tariff below the notified threshold and hotels in Jammu & Kashmir, and the question of recovery and penalties arising from alleged excess collections. Because the present appeals involve the same factual matrix and legal questions, the earlier conclusions were applied. On that basis the impugned order's demands and penalties flowing from the same legal stance were not sustained and were set aside. [Paras 10, 11, 12]

Held for the appellant: demands and penalties insofar as founded on the same reasoning as the impugned order are set aside; the authority's recovery claims in respect of the specified hotels and the penalties/extended limitation are not sustained.

Final Conclusion: The impugned order dated 28.09.2021 is set aside and the appeals are allowed, applying the Tribunal's earlier decision on identical facts; the demands and penalties confirmed by the impugned order are revoked in accordance with that precedent.

Liability of promoter/developer for service tax on construction of residential complex - classification of composite works contracts as Works Contract Services - applicability of Board clarification on builder/promoter liability

Liability of promoter/developer for service tax on construction of residential complex - applicability of Board clarification on builder/promoter liability - Whether the appellant, as a promoter/builder under joint venture agreements, was liable to pay service tax under 'Construction of Residential Complex Services' for the periods October 2007 to December 2009, January 2010 to September 2010 and October 2010 to September 2011. - HELD THAT: - The Tribunal examined the show cause notices and the nature of agreements showing that the appellant acted as a promoter/builder under joint venture arrangements. It applied the Board clarification (Circular No.108/2/2009 dated 29.01.2009) and the Tribunal's earlier decision in M/s. Krishna Homes which held that demands against promoters/builders for construction of residential complexes cannot be sustained for the period prior to 01.07.2010. Having regard to those authoritative clarifications and decisions, the demand raised against the appellant under 'Construction of Residential Complex Services' was held to be unsustainable for the period in question. [Paras 7, 8]

Demand under 'Construction of Residential Complex Services' against the promoter/builder is unsustainable for the stated periods; impugned demand set aside.

Classification of composite works contracts as Works Contract Services - Whether, for composite contracts involving supply of materials and services, the demand could be sustained under 'Construction of Residential Complex Services' rather than as Works Contract Services for the periods before 01.07.2012. - HELD THAT: - The Tribunal noted that works contracts are composite in nature involving both supply of material and rendition of services. It followed the decision in Real Value Promoters Pvt. Ltd. which held that where contracts are composite, service tax liability prior to 01.07.2012 can be raised only under Works Contract Services and not under Residential Complex Services. Applying that principle, the Tribunal concluded that the demand framed under 'Construction of Residential Complex Services' for composite contracts could not be sustained. [Paras 9]

Where contracts are composite in nature, demand could only be raised under Works Contract Services for the relevant pre-01.07.2012 period; demand under Residential Complex Services cannot be sustained.

Final Conclusion: The impugned order confirming service tax, interest and penalty under 'Construction of Residential Complex Services' for the periods October 2007 to December 2009, January 2010 to September 2010 and October 2010 to September 2011 is set aside; appeals allowed with consequential reliefs.

Export of service - Business Auxiliary service - Business Support Service - refund of unutilised CENVAT Credit - nexus between input services and service exported - destination-based tax - Circular No.111/05/2009-ST

Export of service - refund of unutilised CENVAT Credit - Business Auxiliary service - nexus between input services and service exported - Circular No.111/05/2009-ST - Entitlement to refund of unutilised CENVAT credit on input services claimed to have been used for export of services for the periods in dispute - HELD THAT: - The Tribunal considered whether services rendered by the appellant from India for a foreign principal constitute export of service and thereby justify refund of unutilised CENVAT credit. Revenue treated the services as falling within Business Support Service and denied refund on the ground that the activities were used in India and thus lacked the requisite nexus between input services and service exported. The Tribunal examined its earlier decisions in the appellant's own cases and other precedents, and noted Board clarification in Circular No.111/05/2009-ST, observing that for certain services, notably Business Auxiliary service, export of service may be recognized even when the relevant activities are performed in India so long as the benefit accrues outside India, consistent with the characterization of service tax as a destination-based tax. As the issue has been previously decided in favour of the appellant by this Tribunal and applied in subsequent appellate and adjudicatory orders, there was no reason to depart from that ratio. On that basis the Tribunal held that the refund claims for the periods in question are sustainable and the appeals succeed. [Paras 8, 11, 12, 13]

Appeals allowed and refund claims sustained following the Tribunal's earlier view and Board clarification, with consequential relief as per law.

Final Conclusion: The appeals are allowed; the Tribunal, applying its earlier decisions and Board Circular No.111/05/2009-ST, held that the services qualify as export of service for the periods in dispute and granted consequential relief.

Nexus requirement for Cenvat Credit - place of removal - Input service - valid duty paying document - cross-utilization of Cenvat credit - natural justice - remand for verification

Nexus requirement for Cenvat Credit - place of removal - Input service - Admissibility of Cenvat credit on input services used beyond the place of removal or lacking nexus with manufacture - HELD THAT: - The Tribunal examined the Adjudicating Authority's finding that the impugned input services (GTA, manpower, security, maintenance/repair) were used at locations beyond the place of removal and for post-manufacturing activities, and therefore lacked the required nexus with manufacture and clearance up to the place of removal under the definition of "Input service" in Rule 2(l) of the Cenvat Credit Rules, 2004. The Tribunal noted that both the Adjudicating Authority and Commissioner (Appeals) found that the assessee failed to establish the necessary nexus and that many services appeared to have been used at third-party sites. However, rather than adjudicating the factual sufficiency of the evidence itself, the Tribunal concluded that the assessee should be granted an opportunity to place full factual particulars and documentary evidence demonstrating which input services were used within the factory or in relation to manufacture and which services were exclusively for provision of output services at client sites. The Tribunal emphasised that where input services are used for providing output services, those credits may be available for service-tax liability but cannot be used for payment of excise duty on manufactured goods unless nexus with manufacture is established. [Paras 11, 12]

Remanded to the Adjudicating Authority for fresh consideration: the assessee to be afforded opportunity to establish with documentary evidence the nexus of each input service to manufacture and clearance up to the place of removal; determination to be revisited accordingly.

Valid duty paying document - cross-utilization of Cenvat credit - remand for verification - Validity of credit entries effected by transfer from Service Tax khata to RG 23/ER 1 without production of underlying invoices or duty paying documents - HELD THAT: - The Tribunal recorded the Adjudicating Authority's view that the assessee had made ledger entries stating "Service Tax input credit transfer from Service Tax khata" and had not produced invoices, bills or challans required by Rule 9(1) of the Cenvat Credit Rules, 2004 for availing credit. The Commissioner (Appeals) similarly found that the assessee failed to discharge the burden of proof under Rule 9(5). The Tribunal observed that the controversy is not limited to mere ledger transfers but raises the question whether valid duty paying documents exist to support the credits and whether cross utilization is permissible in each case. The Tribunal did not decide the legitimacy of the specific entries on the merits; instead it directed that the Adjudicating Authority must consider the documentary record afresh, including ST 3/Service Tax returns, invoices, GAR 7 challans or other papers, and verify whether the credits were taken on permitted documents and whether any cross utilization was allowable consistent with nexus requirements. [Paras 8, 10, 11]

Remanded to the Adjudicating Authority for verification of documentary support for the entries and for fresh adjudication on admissibility and permissible cross utilization of credits.

Final Conclusion: The Tribunal did not uphold or dismiss the confirmed demand on merits; instead it set aside the appellate conclusions to the extent necessary and remanded the matters to the Adjudicating Authority for de novo consideration after affording the assessee opportunity to place complete documentary evidence and submissions, and directed that the proceedings be completed within three months from communication of this order.

Valuation of medicaments supplied to institutional buyers under Section 4 of the Central Excise Act, 1944 - Inapplicability of valuation under Section 4A where goods are not offered for retail sale - Retail sale price (MRP) requirement under the Drugs (Prices Control) Order, 1995 - Abatement notification for medicaments and its linkage to MRP - Penalty not imposable where the issue is debatable despite duty payment

Valuation of medicaments supplied to institutional buyers under Section 4 of the Central Excise Act, 1944 - Inapplicability of valuation under Section 4A where goods are not offered for retail sale - Retail sale price (MRP) requirement under the Drugs (Prices Control) Order, 1995 - Medicaments supplied to institutional buyers which are not offered for retail sale are to be valued under Section 4 and not under Section 4A of the Central Excise Act, 1944. - HELD THAT: - The Tribunal held that where medicaments are supplied for consumption by institutions (for example hospitals) and are not offered for retail sale, the prescription in the Drugs (Prices Control) Order, 1995 requiring printing of MRP applies only to goods offered for retail sale; therefore the abatement scheme tied to retail sale price (MRP) (notification bringing medicaments within Section 4A assessment) is not attracted. The Tribunal relied on a consistent line of earlier decisions including USV Ltd. 2019 (5) TMI 507, Medley Pharmaceuticals Ltd. 2022 (11) TMI 41 CESTAT Ahmedabad, Zydus Healthcare Ltd. 2019 (10) TMI 810 CESTAT Ahmedabad and JB Chemicals & Pharmaceuticals Ltd. 2023 (7) TMI 301 CESTAT AHM, which addressed identical facts and concluded that supplies to institutional buyers not intended for retail consumption are to be valued under Section 4. Applying those precedents to the facts of the present case, and noting that institutional supplies bore indications such as "hospital supply - not for sale" and there was no evidence that such supplies were retailed by the institutions, the Tribunal concluded the impugned Section 4A-based demands were unsustainable and set aside the same. [Paras 5, 6, 7]

Demand and adjudication based on valuation under Section 4A set aside; value of institutional supplies held to be governed by Section 4.

Penalty not imposable where the issue is debatable despite duty payment - Cenvat credit and duty paid on control samples - Penalty relating to cenvat credit/duty on removal and retention of control samples is set aside while the duty/cenvat credit itself is maintained. - HELD THAT: - The Tribunal noted that the appellant had not contested the liability to pay duty (cenvat credit/duty on control samples was paid) and expressly gave up contest on the merit. Because the point concerning diversion was debatable, the Tribunal declined to impose penalty corresponding to that duty. The Tribunal therefore maintained the payment of duty/cenvat credit but, considering the issue to be arguable, set aside the penalty component. [Paras 6, 7]

Duty/cenvat credit on control samples upheld; penalty corresponding to that duty set aside.

Final Conclusion: Appeals allowed: impugned orders modified by holding that medicament supplies to institutional buyers not offered for retail sale are to be valued under Section 4 (not Section 4A), consequential demands set aside, and penalty relating to duty on control samples dispensed with while the duty/cenvat credit is maintained.

Fixation of special rate of refund - limitation / time-bar of application for rate fixation - effect of subsequent notifications on pending refund applications (clarificatory versus derogatory) - vested rights under earlier notifications

Fixation of special rate of refund - limitation / time-bar of application for rate fixation - Whether the applications filed by the appellant for fixation of special rate under Notification No. 20/2007-CE were time-barred - HELD THAT: - The Tribunal examined the rejection of the appellant's applications for fixation of special rates on the ground that they were filed after the period prescribed and therefore time-barred. Relying on earlier decisions of the Tribunal in M/s. Hindustan Unilever Limited Vs Commissioner of Central Excise & Service Tax and M/s. Godrej Consumer Products Limited Vs. Commissioner of Central Excise & Service Tax, Guwahati , and having regard to the Hon'ble Supreme Court's pronouncements in Union of India Vs. V.V.F. Limited and the Guwahati High Court in Jyoty Labs , the Tribunal held that subsequent notifications clarifying the basis of refund and the jurisprudence applying those clarificatory notifications require pending applications to be decided on merits in accordance with the later clarifications. Applying that principle to the present facts, the Tribunal concluded that the applications filed by the appellant cannot be treated as time-barred and that rejection on limitation grounds was unsustainable. [Paras 6, 7, 8]

Applications for fixation of special rate filed by the appellant are not time-barred and the impugned order rejecting them on limitation grounds is set aside

Final Conclusion: The appeal is allowed; the order rejecting the appellant's applications for fixation of special rates on limitation grounds is set aside and the applications shall be considered on merits.

Entitlement to exemption under Notification No. 6/2006-CE for goods supplied against international competitive bidding - treatment of supplies by sub contractors as supplies against international competitive bidding - coverage of goods 'required for setting up of any Mega Power Project' under Customs exemption entry (relating to sub heading 9801) - condition requiring customs duty exemption on import as pre condition for excise exemption

Entitlement to exemption under Notification No. 6/2006-CE for goods supplied against international competitive bidding - treatment of supplies by sub contractors as supplies against international competitive bidding - coverage of goods 'required for setting up of any Mega Power Project' under Customs exemption entry (relating to sub heading 9801) - condition requiring customs duty exemption on import as pre condition for excise exemption - Appellant is entitled to benefit of Notification No. 6/2006-CE dated 1.3.2006 for the goods cleared to the Mega Power Project during the impugned period. - HELD THAT: - The Tribunal found that although the goods cleared by the appellant were classifiable under Central Excise Tariff headings 8413 and 8431, Notification No. 6/2006-C.E. exempts goods of any chapter when supplied against international competitive bidding subject to the condition that such goods are exempted from customs duty on import. The Tribunal placed reliance on its earlier decision in the appellant's own case for an earlier period and on consistent tribunal precedents which held that supplies made to a main contractor executing a mega power project pursuant to international competitive bidding are to be treated as supplies against such bidding even where the supplier is a sub contractor. The Tribunal accepted that the project had the requisite certificate of Mega Power status and that supplies to the contractor/sub contractor chain reaching the project site satisfy the condition for coverage under the Customs notification (entry relating to goods required for setting up any Mega Power Project) and thereby the condition of Notification No. 6/2006-C.E. Consequently, the impugned adjudication denying exemption for the period was held contrary to the settled ratio and set aside. [Paras 5, 6, 7]

Impugned order denying benefit of Notification No. 6/2006-CE is set aside and appellant held entitled to the exemption for the period in question.

Final Conclusion: Appeal allowed; the appellant is entitled to the benefit of Notification No. 6/2006-CE for the period September, 2010 to September, 2011, and the impugned order denying the exemption is set aside with consequential relief, if any.

Parliamentary privilege - immunity from prosecution in respect of anything said or any vote given - necessity test for claiming privilege - bribery not protected by parliamentary privilege - the phrase "in respect of" construed as "arising out of" - scope of Article 194(2) including Rajya Sabha elections - reconsideration of PV Narasimha Rao and doctrine of stare decisis

Reconsideration of PV Narasimha Rao and doctrine of stare decisis - Whether the decision in PV Narasimha Rao should be reconsidered by a larger bench - HELD THAT: - The Court held that the doctrine of stare decisis is not inflexible and that a co-equal or larger Bench may revisit prior rulings where error and public interest justify it. Given the wide ramifications of the majority view in PV Narasimha Rao on parliamentary democracy and probity in public life, this Court found prima facie reasons to doubt that decision and proceeded to reconsider it by a seven-judge Bench. The judgment explains that earlier instances where doubts were noted by this Court justified a reference and canvasses established tests for overruling precedent, concluding that the present matter properly called for reconsideration. [Paras 32, 34, 40, 44, 188]

PV Narasimha Rao was referred to and has been reconsidered; the Court permits overruling where prior precedent proves unsound and has proceeded to re examine the majority view.

Parliamentary privilege - necessity test for claiming privilege - parliamentary privilege as a collective right of the House - The constitutional scope and purpose of parliamentary privileges and the test for claiming them - HELD THAT: - The Court re affirmed that privileges under Articles 105 and 194 are granted to secure free and fearless legislative deliberation and are collective in character. An individual member may claim privilege only insofar as the claimed immunity is tethered to the collective functioning of the House and is necessary for the discharge of essential legislative duties. Privileges are not an end in themselves and do not place legislators above the law; the burden lies on the claimant to establish necessity and functional connection to legislative activity. [Paras 76, 85, 88, 90, 91]

Privilege is available only where it is essential to the House's functioning and satisfies the necessity test; individual claims must be functionally connected to collective legislative duties.

Bribery not protected by parliamentary privilege - immunity from prosecution in respect of anything said or any vote given - Whether acceptance or receipt of a bribe in connection with a vote or speech is immune from criminal prosecution under Articles 105(2) or 194(2) - HELD THAT: - The Court held that bribery is not protected by the immunity in Articles 105(2) and 194(2). Receiving or agreeing to receive illegal gratification is a criminal offence independent of any subsequent speech or vote; such misconduct is not an exercise of the privileged legislative function necessary for the House's deliberative work. The House's power to punish for breach of privilege and the criminal jurisdiction of courts operate in distinct spheres and may run in parallel; but the existence of a disciplinary or contempt remedy in the House does not oust criminal prosecution for bribery. [Paras 96, 99, 111, 113, 188]

A member who accepts a bribe is not immune from prosecution under Articles 105(2) or 194(2); bribery falls outside the protected sphere of privileged speech or vote.

The phrase "in respect of" construed as "arising out of" - Proper interpretation of the phrase 'in respect of' in the context of Articles 105(2) and 194(2) - HELD THAT: - The Court rejected an interpretation that 'in respect of' should be read so broadly as to cover any remote nexus with speech or vote. Instead, the phrase must be read to mean 'arising out of' or bearing a clear relation to the speech or vote itself; immunity extends only to liabilities that arise as a consequence of something actually said or vote actually given in the House or committee. A broad construction that immunises pre speech or pre vote criminal acts (such as receipt of a bribe) would subvert the purpose of the constitutional privilege. [Paras 100, 102, 105, 106, 188]

'In respect of' means 'arising out of' and requires a clear, direct causal relation to the speech or vote; mere or remote connection does not attract immunity.

The offence of bribery completes on acceptance - delivery of results is irrelevant to the offence of bribery - Whether the offence of bribery is complete on acceptance/agreement and whether performance of the promised legislative act is material to criminal liability - HELD THAT: - The Court held that under the Prevention of Corruption Act and established precedent the offence is complete on obtaining, accepting, or agreeing to accept an undue advantage; actual performance of the promised act (speech or vote) is immaterial. Illustrations, statutory text and case law demonstrate that acceptance or agreement suffices to constitute the offence. Because the criminal offence crystallises on acceptance, it is independent of any subsequent speech or vote and thus outside the protection of Articles 105(2) and 194(2). [Paras 114, 116, 118, 122, 188]

Bribery is complete on acceptance or agreement to accept an undue advantage; performance of the promised act is irrelevant to criminal liability.

Scope of Article 194(2) including Rajya Sabha elections - Whether votes cast by state legislators in Rajya Sabha elections fall within the protection of Article 194(2) - HELD THAT: - The Court held that Article 194(2)'s protection extends to 'anything said or any vote given by him in the Legislature' and that the term 'Legislature' in the provision is deliberately wider than 'House'; processes such as Rajya Sabha elections, though not taking place on the floor during a sitting, are functions of the Legislature entrusted to elected members and are therefore within the first limb of Article 194(2). The Court distinguished preceding authorities that treated such elections as exercises of franchise, and concluded that the free and fearless exercise of franchise in electing Rajya Sabha members warrants protection under Article 194(2). [Paras 171, 174, 177, 184, 186]

Voting by elected members in Rajya Sabha elections falls within Article 194(2)'s protective ambit, but that protection does not confer immunity for bribery connected with such votes.

Final Conclusion: The reference is answered: the majority view in PV Narasimha Rao is overruled insofar as it granted immunity from criminal prosecution for bribery connected with speech or vote; Articles 105(2) and 194(2) protect legislative speech and votes only where liabilities arise out of those acts and only to the extent necessary for the House's functioning; bribery is a standalone criminal offence complete on acceptance and is not shielded by parliamentary privilege; Rajya Sabha elections fall within Article 194(2)'s ambit but do not immunize bribery. The criminal appeal is disposed of accordingly.

Interim compensation under Section 143A of the Negotiable Instruments Act - Discretionary nature of Section 143A - Prima facie evaluation of complainant's case and accused's defence - Quantum of interim compensation - Presumption under Section 139 is rebuttable - Revisional jurisdiction and interference with exercise of discretion - Relevant factors for awarding interim compensation

Discretionary nature of Section 143A - Prima facie evaluation of complainant's case and accused's defence - Revisional jurisdiction and interference with exercise of discretion - Validity of the Additional Sessions Judge's interference with the Metropolitan Magistrate's discretionary refusal to grant interim compensation under Section 143A - HELD THAT: - The Court held that the power to award interim compensation under Section 143A is discretionary and directory, and that the court hearing such an application must prima facie evaluate the merits of the complainant's case and the defence pleaded by the accused. The learned Magistrate had recorded that the accused had placed vouchers and bank extracts on record and had given a plausible explanation indicating a probability of rebutting the statutory presumptions; further, the Magistrate found no dilatory conduct by the accused. Those findings were supported by material on record and were not shown to be arbitrary, based on no material, or legally perverse. In such circumstances the revisional Court ought not to lightly substitute its view merely because a different conclusion was possible on the same facts. Consequently, the Additional Sessions Judge's interference with the Magistrate's discretionary order was unwarranted. [Paras 14, 16, 21, 24, 25]

The interference by the Additional Sessions Judge with the Metropolitan Magistrate's discretionary refusal to award interim compensation was quashed and the Magistrate's order restored.

Quantum of interim compensation - Interim compensation under Section 143A of the Negotiable Instruments Act - Relevant factors for awarding interim compensation - Whether the Additional Sessions Judge properly considered and recorded reasons for the quantum of interim compensation when directing payment - HELD THAT: - Even if a court concludes that interim compensation is warranted, it must apply its mind to the appropriate quantum having regard to factors such as the nature of the transaction, relationship between parties, and the accused's paying capacity; 20% is the upper limit and cannot be awarded as a matter of course. The impugned revisional order directed payment of 20% without any recorded application of mind to the quantum or brief reasons indicating consideration of relevant factors. That omission rendered the revisional order legally infirm on this ground as well. [Paras 26, 27]

The impugned order was set aside for failure to consider and record reasons for the quantum of interim compensation; the matter was resolved by restoring the Magistrate's order rejecting the application.

Final Conclusion: Writ petition allowed; the judgment and order of the Additional Sessions Judge dated 19th August, 2023 is quashed and set aside, the Metropolitan Magistrate's order dated 10th April, 2023 is restored, the application for interim compensation stands rejected, and the court's observations are confined to entitlement to interim compensation and shall not influence the trial on guilt.

Rebuttal of statutory presumption under Section 139 of the Negotiable Instruments Act - offence under Section 138 of the Negotiable Instruments Act - standard of proof - preponderance of probabilities - non-existence of consideration as a probable defence - reliability of oral evidence vis-a -vis documentary exhibits

Rebuttal of statutory presumption under Section 139 of the Negotiable Instruments Act - standard of proof - preponderance of probabilities - reliability of oral evidence vis-a -vis documentary exhibits - Whether the accused succeeded in rebutting the statutory presumption in favour of the complainant and thus was rightly acquitted of the offence under Section 138 of the Negotiable Instruments Act - HELD THAT: - The trial court found that the accused succeeded in rebutting the statutory presumptions and the High Court reviewed the evidence and documentary exhibits. PW1's account that he advanced a loan of the cheque amount shortly before the cheque date was discredited by his own cross-examination, in which he initially denied business dealings but then admitted signatures on Exhibits D1 and D2 when confronted. Exhibits D1 and D2 (agreements) show the same monetary figure as the cheque and establish transactions involving the son of the accused and the complainant's partner. DW1's evidence supported the existence of those timber transactions and loans, and PW1 failed to give satisfactory explanation for the apparent inconsistencies and omissions in his complaint and chief affidavit. The Court applied settled authorities to restate the applicable standard: an accused need only raise a probable defence on the preponderance of probabilities to rebut presumptions under Sections 118 and 139, not prove non-existence of the presumed fact beyond reasonable doubt. In the absence of satisfactory evidence showing that Exhibit P1 was issued to discharge a legally enforceable debt from the accused to the complainant, and given the documentary record and the implausibility of PW1's account, the High Court concluded there was no reason to disturb the trial court's finding of successful rebuttal of the statutory presumption and consequent acquittal. [Paras 8, 9, 13, 14, 15]

The accused has successfully rebutted the statutory presumption and the acquittal under Section 138 NI Act is upheld.

Final Conclusion: The appeal is dismissed; the High Court affirms the trial court's conclusion that the accused rebutted the statutory presumption on the preponderance of probabilities and is not guilty of the offence under Section 138 of the Negotiable Instruments Act.

Dishonour memo as admissible proof under Section 146 of the Negotiable Instruments Act - Commencement of limitation for statutory notice under Section 138 from receipt of information from the bank - Validity of statutory notice containing claim for interest as severable from demand for cheque amount - Conviction for offence under Section 138 of the Negotiable Instruments Act

Dishonour memo as admissible proof under Section 146 of the Negotiable Instruments Act - Requirement to produce bank ledger extract - Whether the dishonour memo (Exhibit P2) suffices to prove presentation and dishonour of the cheque and whether the complainant was required to produce the ledger extract. - HELD THAT: - The court accepted that Exhibit P1 (cheque) and Exhibit P2 (dishonour memo dated 21.05.1996) establish that the cheque was presented and returned for 'funds insufficient'. Reliance was placed on the statutory scheme and prior decisions of the High Court holding that a dishonour memo is admissible proof under Section 146 of the NI Act and is sufficient unless disproved. On that basis the trial court's requirement that the complainant must summon the bank ledger extract to prove the exact date of presentation and dishonour was rejected as legally unsound. [Paras 8]

Exhibit P2 dishonour memo is sufficient proof of dishonour and the trial court erred in requiring production of the bank ledger extract.

Commencement of limitation for statutory notice under Section 138 from receipt of information from the bank - Whether the period for issuing the statutory notice under Section 138(b) runs from the date of dishonour of the cheque or from the date of receipt of information from the bank regarding the return of the cheque as unpaid. - HELD THAT: - The court examined Section 138 and held that the statutory thirty-day period for giving notice under clause (b) begins from the date on which the payee or holder receives information from the bank about the cheque being returned unpaid, and not from the exact date of dishonour in the bank's records. Consequently, the trial court's finding that the complainant had failed to prove issuance of the notice within the limitation period by relying on the ledger requirement was unsustainable. [Paras 9, 10]

Limitation for issuance of the statutory notice commences on receipt of information from the bank regarding return of the cheque, not from the cheque's date of dishonour.

Validity of statutory notice containing claim for interest as severable from demand for cheque amount - Whether the statutory notice (Exhibit P3) is invalid because it additionally claimed legal interest along with demand of the cheque amount. - HELD THAT: - The court applied the principle that a notice must be read as a whole and that where the cheque amount is specifically demanded, ancillary claims for interest or costs are severable and do not vitiate the notice. Citing relevant precedent, the court found that Exhibit P3 specifically stated the cheque amount and that the mention of a legal right to interest did not render the notice vague or invalid. [Paras 10, 11]

The statutory notice is valid; an additional claim for interest is severable and does not invalidate the notice where the cheque amount is clearly demanded.

Conviction for offence under Section 138 of the Negotiable Instruments Act - Whether, having found the presentation, dishonour and valid notice, the accused should be convicted under Section 138 NI Act and sentenced. - HELD THAT: - Having accepted that the cheque was presented and dishonoured (Exhibit P2), that the statutory notice was issued within the permissible period counted from receipt of bank information, and that the notice was not vitiated by a claim for interest, the court concluded that the ingredients of Section 138 were established. The earlier acquittal was set aside and the accused was convicted and sentenced, with an order for compensation and a default sentence as recorded by the court. [Paras 12]

The accused is convicted under Section 138 NI Act and sentenced with compensation awarded to the complainant as recorded by the court.

Final Conclusion: The appeal is allowed; the trial court's acquittal is set aside. The High Court held that the dishonour memo is admissible proof under Section 146, limitation for the statutory notice runs from receipt of bank information, the notice was not invalidated by a claim for interest, and on these findings the accused was convicted under Section 138 NI Act and sentenced with compensation as ordered.