TaxTMI Updates e-Newsletter
Jul 11,2019

Right to refund of IGST on zero-rated supplies - withholding of refund under Rule 96(4) of the CGST Rules - deeming fiction of shipping bill as refund application - binding nature and limits of administrative circulars - system-based electronic refund mechanism

Right to refund of IGST on zero-rated supplies - deeming fiction of shipping bill as refund application - withholding of refund under Rule 96(4) of the CGST Rules - Entitlement of the writ-applicant to refund of IGST paid on exports where shipping bills and statutory conditions under Rule 96 are satisfied and none of the withholding contingencies in Rule 96(4) apply. - HELD THAT: - The Court held that exports in July 2017 constituted zero-rated supplies under Section 16 of the IGST Act and that, by virtue of Rule 96 of the CGST Rules, the shipping bill is deemed to be an application for refund once the manifest/EGM and valid GSTR-3/GSTR-3B return requirements are met. Rule 96(4) limits withholding of such refund to two situations: (a) a request from the jurisdictional Commissioner under Section 54(10) or (11), or (b) a Customs determination of export in violation of the Customs Act. The respondents conceded that neither ground applied. The department's reliance on an administrative circular and on the electronic system's inability to process a refund after a higher drawback claim was rejected. The Court held that a circular cannot override the statutory scheme embodied in Rule 96 and Section 54, and that the electronic system's limitations do not supplant the statutory entitlement where the prescribed conditions are satisfied. Applying these principles, the Court found the petitioner entitled to the IGST refund. [Paras 29, 30, 34, 35, 36]

Refund of IGST paid in respect of the exported goods is to be sanctioned immediately, since none of the contingencies in Rule 96(4) applied and the petitioner fulfilled the requirements of Rule 96.

Binding nature and limits of administrative circulars - system-based electronic refund mechanism - Validity of reliance on Board Circular No.37/2018-Cus and the respondents' contention that system constraints preclude sanction of refund after a higher drawback claim. - HELD THAT: - The Court held that the Circular dated 9.10.2018 is an administrative instruction and cannot override or have the effect of altering the statutory provisions under Section 54 and Rule 96. The circular additionally post-dates the exports and merely interprets drawback provisions; it therefore could not justify withholding statutory refunds. Further, the department's plea that the automated system cannot process a refund where a higher drawback was claimed was not a legal ground to deny a refund when statutory requisites for refund were met. The Court rejected the submission that unilateral repayment of differential drawback by the petitioner is ineffective, finding that statutory rules, not the circular or system limitations, govern entitlement. [Paras 29, 34]

The Circular and alleged system constraints do not constitute lawful grounds to deny the IGST refund; reliance on them is unsustainable.

Interest on delayed refund - Entitlement to interest on the delayed refund and the rate to be applied. - HELD THAT: - Having held that the refund is due, the Court directed that the refund be paid with simple interest at the rate of 7% from the date of the shipping bills until actual payment. The Court exercised its remedial power to award interest for the period of delay in sanctioning the statutory refund. [Paras 36]

Refund to be paid with 7% simple interest from the date of the shipping bills till actual refund.

Final Conclusion: Writ petition allowed; respondents directed to immediately sanction the IGST refund payable in respect of the exported goods and to pay the refund with simple interest at 7% from the date of the shipping bills until actual payment; Rule made absolute.

Search, seizure and prohibition under Section 67 of the GST Act - reason to believe - secreted (within the meaning of Section 67) - power of general search - provisional release on execution of bond and furnishing of security - principles of natural justice

Search, seizure and prohibition under Section 67 of the GST Act - reason to believe - power of general search - Validity of the seizure and prohibition orders issued under Section 67 and Rule 139 - HELD THAT: - The Court examined whether the proper officer had the requisite 'reasons to believe' to authorise inspection, search and consequent seizure or, where seizure was impracticable, prohibition. The statutory test requires an honest and reasonable belief based on relevant materials; the Court's role is to determine whether there existed prima facie grounds justifying that belief. Precedents were applied to hold that the statutory power is one of general search and that while reasons need not be recited in the authorisation, if challenged the materials supporting belief must be disclosed. The record showed that the Commissioner (Enforcement) had authorised inspection and that confiscation proceedings under Sections 73 and 74 had been initiated; consequently, action under Section 67 to preserve goods/books was permissible. On this basis the Court held the impugned seizure and prohibition orders to be in accordance with law. [Paras 5]

The seizure and prohibition orders under Section 67/Rule 139 are lawful and not liable to be quashed on the grounds urged.

Secreted (within the meaning of Section 67) - power of general search - Meaning and applicability of the term 'secreted' for invoking Section 67 powers - HELD THAT: - The Court adopted authoritative precedent interpreting 'secreted' to include goods or documents not necessarily hidden in a literal sense but kept otherwise than in the normal or usual place or goods likely to be secreted. Thus, a belief that goods are likely to be secreted suffices to invoke search/seizure or, if impracticable, an order of prohibition. Applying that understanding to the facts, the Court found no merit in the challenge that the goods were not 'secreted' and upheld the authority's exercise of powers. [Paras 5]

The word 'secreted' must be understood broadly; the authority was entitled to act on the belief that goods were secreted or likely to be secreted, and the prohibition order stands.

Provisional release on execution of bond and furnishing of security - principles of natural justice - Whether seizure/prohibition was premature pending adjudication and availability of interim relief under Section 67(6) - HELD THAT: - The Court rejected the contention that seizure or prohibition could not be ordered pending adjudication; rather the scheme of the Act permits preservation of goods pending determination of liability. The Court noted that Section 67(6) expressly empowers provisional release of seized goods upon execution of a bond and furnishing security or payment of tax, interest and penalty. Consequently, the petitioner was granted liberty to apply for provisional release under Clause (6) and such application was to be considered expeditiously on merits. The Court also considered the challenge based on natural justice and found no basis to set aside the prohibition on that ground. [Paras 3, 5]

Seizure/prohibition pending adjudication is not premature; petitioner may seek provisional release under Section 67(6) and the authority shall consider such application expeditiously.

Final Conclusion: The writ petition is disposed of: the Court upholds the seizure and prohibition orders as being in accordance with Section 67/Rule 139 and declines to quash them; the petitioner is permitted to seek provisional release of the seized goods by invoking Section 67(6), and any such application shall be considered expeditiously on its merits. The Court observed an irregularity in the forms used (signature/attribution) which it directed the State Government to examine, but did not set aside the prohibition on that ground.

Jurisdictional vires of revenue officers - exercise of powers under Section 67(2) - exemption of municipal services under Article 243W - municipal corporation as municipality under Articles 243P and 243Q - interim stay of coercive proceedings - prima facie jurisdictional error

Jurisdictional vires of revenue officers - exercise of powers under Section 67(2) - prima facie jurisdictional error - Validity of actions taken by respondent no.8 and his associates under the authority exercised in relation to search and seizure - HELD THAT: - The Court found that respondent no.8, who is below the rank of Joint Commissioner, purported to exercise powers in relation to search and seizure under Section 67(2). On the materials placed before the Court there is a strong prima facie view that such exercise of power by an officer below the prescribed rank is without jurisdiction. The seizure and repeated coercive acts by that authority therefore constitute a jurisdictional error and amount to harassment warranting interim protection. The Court confined this finding to a tentative conclusion on maintainability for the purposes of granting interim relief and kept other grievances open for consideration by the Regular Bench.

Proceedings commenced by respondent no.8 under the impugned exercise of power are prima facie without jurisdiction and warrant interim protection.

Exemption of municipal services under Article 243W - municipal corporation as municipality under Articles 243P and 243Q - interim stay of coercive proceedings - Applicability of the Notification exemption to services relating to municipal parking lots and consequent GST liability - HELD THAT: - The petitioners relied on a Notification which, in Article 3, exempts pure services in relation to functions entrusted to a Municipality under Article 243W of the Constitution. The Court accepted prima facie the submission that functions entrusted to a Municipality include public amenities such as parking lots, and that a Municipal Corporation falls within the definition of 'Municipality' under Articles 243P and 243Q. On that tentative view, municipal parking lot services collected by the petitioners are prima facie covered by the exemption and not liable to GST, justifying interim protective relief against coercive recovery in relation to the annexure P/21 search and seizure.

Services in relation to municipal parking lots are prima facie covered by the Notification exemption and coercive measures for GST realization in respect thereof are stayed on an interim basis.

Final Conclusion: On a prima facie view the actions of the officer below the rank of Joint Commissioner were without jurisdiction and the services in relation to municipal parking lots are prima facie exempt under the Notification; accordingly all further proceedings connected with annexure P/21 and coercive steps for realization of GST in respect of municipal parking lots are stayed for eight weeks or until further order, service on non-appearing respondents to be completed and the matter listed before the Regular Bench.

Reopening of assessment- change of opinion - difference between a conclusion of the AO after scrutiny which may appear to the Revenue to be erroneous and a situation where the AO during the scrutiny assessment does not examine a particular claim of the assessee altogether -

The reassessment under Section 147/notice under Section 148 in respect of Assessment Year 2008-09 is unsustainable for want of new tangible material and constitutes a change of opinion as held by HC [2019 (1) TMI 120 - BOMBAY HIGH COURT] - HELD THAT:- SLP dismissed.

Income from sale of shares - business income or capital gain - Capital Gains - Exemption u/s. 10(38) - investor versus trader test - holding period and intention in classification of income - Employee Stock Option Plan - validity of trust and sham trust doctrine - trust objective and prohibition on business activities

High Court [2019 (1) TMI 603 - BOMBAY HIGH COURT] dismissed the Revenue's appeal against the Tribunal, upholding the Tribunal's factual conclusion that the Trust's sale of the shares represented investment activity giving rise to capital gains (treated as exempt under section 10(38)) rather than business income; no substantial question of law warranted interference - HELD THAT:- SLP dismissed.

Exercise of revisional jurisdiction under Section 263 - deemed dividend under Section 2(22)(e) - assessment under Section 153C consequent to search and seizure - conversion of advance/loan into share capital to exclude deemed dividend - scope of interference by appellate/tribunal authorities with factual findings of the Assessing Officer

Exercise of revisional jurisdiction under Section 263 - deemed dividend under Section 2(22)(e) - conversion of advance/loan into share capital to exclude deemed dividend - scope of interference by appellate/tribunal authorities with factual findings of the Assessing Officer - Validity of the PCIT's exercise of revisional jurisdiction under Section 263 in quashing the assessment on the ground that Section 2(22)(e) was not examined and whether the ITAT was justified in holding that Section 2(22)(e) did not apply. - HELD THAT: - The Court examined the material placed before the AO and noted that the assessee had produced audited statements and a balance sheet showing that the sums received from AAIPL were converted into share capital by allotment of shares in the subsequent assessment year. On this factual foundation the ITAT concluded that the AO's order was not erroneous and that Section 2(22)(e) was not attracted. The Revenue failed to establish that the amounts continued to be loans or advances and were not converted into share capital. Given that the conversion was reflected in the balance sheet and relied upon by the ITAT, sending the matter back to the AO for a fresh assessment would be an academic exercise. Accordingly, there was no reason to sustain the PCIT's invocation of Section 263 to set aside the assessment. [Paras 6, 8, 9]

The ITAT's conclusion that Section 2(22)(e) is not attracted stands; the exercise of revisional jurisdiction under Section 263 was unwarranted and does not give rise to a substantial question of law.

Final Conclusion: The Revenue's appeal is dismissed; no substantial question of law arises from the ITAT's order quashing the PCIT's invocation of revisional jurisdiction and holding that Section 2(22)(e) is not attracted in the facts of AY 2013-14.

Applicability of tax deduction at source under Section 194C on interconnection usage charges (IUC) - duty of an appellate tribunal to adjudicate the principal ground before considering alternate submissions - nature of remand - limited remand versus open remand for fresh adjudication - requirement for fresh decision by Assessing Officer uninfluenced by prior orders

Applicability of tax deduction at source under Section 194C on interconnection usage charges (IUC) - Whether the Tribunal adjudicated the assessee's principal contention that Section 194C does not apply to IUC paid to other telecom operators and rendered a finding thereon. - HELD THAT: - The High Court found that the Tribunal noted the assessee's primary submission challenging the applicability of Section 194C to IUC but did not render any finding on that principal contention. Instead, the Tribunal proceeded to entertain and partially accept alternate submissions without first disposing of the main plea. The Court held that when a litigant raises a principal legal issue, the tribunal ought to have dealt with and given a finding on that issue; only if not convinced could it legitimately proceed to consider alternate contentions. Because the Tribunal did not answer the core question on applicability of Section 194C, that contention remains undecided and requires fresh consideration.

The Tribunal failed to adjudicate the principal contention regarding applicability of Section 194C to IUC; that issue remains undecided and requires fresh consideration by the Assessing Officer.

Nature of remand - limited remand versus open remand for fresh adjudication - requirement for fresh decision by Assessing Officer uninfluenced by prior orders - Whether the remand ordered by the Tribunal was a restricted verification-only remand or an open remand entitling the Assessing Officer to consider all issues afresh. - HELD THAT: - The Tribunal set aside the orders of the lower authorities and remanded the matter while adding a rider directing verification as to whether payees had included receipts and paid tax. The High Court held that, having set aside the lower orders in their entirety and having not decided the applicability of Section 194C, the remand must be treated as an open remand. The rider could not be construed to limit the Assessing Officer from considering all issues raised by the assessee. Consequently the Assessing Officer is required to examine the matter afresh on merits and in accordance with law, uninfluenced by earlier orders.

The remand is an open remand; the Assessing Officer shall consider all issues afresh and is not confined to a restricted verification alone.

Duty of an appellate tribunal to adjudicate the principal ground before considering alternate submissions - Whether it was proper for the Tribunal to proceed to alternate submissions without first rendering a finding on the assessee's primary ground. - HELD THAT: - The Court reiterated the procedural principle that a tribunal should address and decide the principal legal issue raised by a litigant before considering alternate or without-prejudice contentions. If the tribunal is not convinced by the principal contention, it may then entertain alternate submissions. Here the Tribunal did not follow this sequence and failed to render any finding on the principal plea, thereby necessitating reconsideration.

The Tribunal ought to have rendered a finding on the principal ground before considering alternate submissions; failure to do so warrants fresh adjudication.

Final Conclusion: The appeal is disposed by directing that the Assessing Officer shall consider all issues raised by the assessee and decide the matter afresh on merits and in accordance with law; the Tribunal's remand is to be read as an open remand and the substantial questions of law are left open.

Validity of reopening of assessment under Section 147 (reassessment) - Intimation under Section 143(1) vis-a -vis assessment order under Section 143(3) - Scope of appellate authority of Commissioner of Income Tax (Appeals) to examine validity of reopening - Doctrine of change of opinion in reassessment proceedings

Scope of appellate authority of Commissioner of Income Tax (Appeals) to examine validity of reopening - Validity of reopening of assessment under Section 147 (reassessment) - The First Appellate Authority (CIT(A)) is entitled to examine the validity of reopening of assessment as it involves a mixed question of law and fact. - HELD THAT: - The Court held that the question whether the assessment was validly reopened is a mixed question of law and fact and hence within the ambit of the CIT(A)'s appellate review. Although the assessee had not pressed the objection to reopening before the Assessing Officer and had not fully contested the point before the Tribunal, the CIT(A), as first appellate authority, may examine the entire facts and determine the validity of the reopening. In the circumstances of this case the appellate forum should be permitted to entertain and decide objections to reassessment rather than being precluded merely because the matter was not earlier raised at the assessing stage.

CIT(A) entitled to examine the validity of the reopening; matter remanded for fresh consideration by CIT(A).

Intimation under Section 143(1) vis-a -vis assessment order under Section 143(3) - Doctrine of change of opinion in reassessment proceedings - Application of precedents (Zuari Estate and Rajesh Jhaveri) to validity of reopening - Allowability of expenditure (interest) and requirement of nexus under Section 37 - Validity of the reopening, applicability of the precedents relied upon by the Revenue, and the question of allowability of interest expense were not finally adjudicated but remanded to the CIT(A) for fresh consideration on merits. - HELD THAT: - The Court observed competing contentions: Revenue relied upon Supreme Court authorities holding that an intimation under Section 143(1) is not an assessment order and that the First Proviso to Section 147 may not apply, whereas the assessee alleged change of opinion. Rather than deciding these contested legal questions on the record before it, the Court concluded that the matters require fresh adjudication by the CIT(A). The remand encompasses the validity of reopening in light of the factual record and legal precedents, and the question whether interest paid is deductible (including the requirement to establish nexus under Section 37). The parties are permitted to canvass all points afresh before the CIT(A), which shall decide them on merits and in accordance with law.

Reopening validity, applicability of cited precedents, and allowability of interest expense remanded to CIT(A) for fresh adjudication on merits.

Final Conclusion: Revenue's appeal is allowed; the orders of the Tribunal and CIT(A) are set aside and the matter is remanded to the Commissioner of Income Tax (Appeals) for fresh consideration of the validity of reopening and all contested issues on merits, with liberty to both parties to canvass their contentions.

Addition under Section 69 (unexplained investments treated as income) - remand for verification and recording of statements - satisfaction of fact-finding by the Tribunal and appellate restraint on re-appreciation of evidence - creditworthiness of alleged parties producing gold

Addition under Section 69 (unexplained investments treated as income) - remand for verification and recording of statements - satisfaction of fact-finding by the Tribunal and appellate restraint on re-appreciation of evidence - Deletion by the Tribunal of the addition made under Section 69 in respect of gold and diamond entries in the work-in-progress account - HELD THAT: - The Tribunal called for remand reports and directed recording of statements from the customers and job workers whose names and details had been culled from the assessee's computerised work-in-progress records. The Assessing Officer and Additional Commissioner furnished remand reports and sworn statements were recorded under Section 131 from the customers and workers, who also produced identity proofs. The Tribunal found the explanation, read with those recorded statements and identity documents, to be satisfactory and deleted the addition. The High Court held that the Revenue had complied with the Tribunal's remand directions and cannot, in an appeal under Section 260A, impugn the Tribunal's factual satisfaction by re-appreciating evidence; appellate interference was not permissible where the Tribunal's conclusion rested on remand material and accepted identification and statements. The Court also distinguished the cited decision (R.C. Jewellers) on facts, noting that in that case the creditworthiness of alleged donors was doubtful and entries were absent from books, whereas here the entries originated from the assessee's records and the identities were supported by documentation. Given these facts, the Tribunal's factual satisfaction was not shown to be perverse or untenable, and the Court declined to disturb it. [Paras 10, 11, 12, 13, 14]

Tribunal rightly deleted the addition under Section 69 after remand verification; the High Court will not re-appreciate the factual satisfaction recorded by the Tribunal and therefore dismissed the Revenue's appeal.

Final Conclusion: Appeal dismissed; the substantial question of law answered against the Revenue as the Tribunal's deletion of the addition under Section 69, based on remand reports and recorded statements supported by identity proofs, was sustained and not open to reassessment by this Court.

Capital expenditure versus revenue expenditure - software license fees and maintenance fees - recurring expenditure - enduring benefit / test of enduring advantage - treatment of payments as tantamount to royalty and deduction of tax at source

Capital expenditure versus revenue expenditure - software license fees and maintenance fees - recurring expenditure - enduring benefit / test of enduring advantage - treatment of payments as tantamount to royalty and deduction of tax at source - Nature of expenditure on software license fees and maintenance fees-capital expenditure or revenue expenditure - HELD THAT: - The Tribunal affirmed the Commissioner (Appeals)'s factual finding that the payments to Aspen Tech related to scheduling and refinery decision support models and were recurring in nature being annual maintenance and support fees. The CIT(A) concluded that TDS had been deducted where applicable and that the payments were for maintenance and recurring support rather than an acquisition giving an enduring benefit. The Court examined precedents relied upon by Revenue and distinguished them on facts where acquisition was an outright purchase conferring technical know how or where software formed an integral part of a hardware dependent arrangement. Although the Tribunal referred to a Division Bench decision relied upon by Revenue, it nevertheless considered and adopted the CIT(A)'s factual conclusion. On the material before it the Court found no error in treating the expenditure as revenue expenditure and rejected Revenue's contention that the payments were capital in nature or tantamount to royalty leading to disallowance. [Paras 6, 7]

The expenditure on software license fees and maintenance fees for Assessment Year 2006-07 is to be treated as revenue expenditure; the Tribunal's order confirming the CIT(A) is affirmed.

Final Conclusion: Revenue's appeal is dismissed; the substantial questions of law are answered against Revenue and the Tribunal's order confirming the CIT(A) is upheld for Assessment Year 2006-07.

Allowance of belated claims in assessment proceedings - bona fide omission - revised return requirement versus appellate allowance - deduction under Section 80IA - admissibility of mark-to-market loss and loss on cancellation of forward contracts - purpose of assessment to assess correctly the tax liability (NTPC principle) - distinguishing the Lakshmi Card Clothing decision

Allowance of belated claims in assessment proceedings - revised return requirement versus appellate allowance - bona fide omission - purpose of assessment to assess correctly the tax liability (NTPC principle) - Belated claims made by the assessee during assessment proceedings can be entertained by the appellate authorities despite not being included in the original return, where the omission is bona fide and relevant material is on record. - HELD THAT: - The Court upheld the Tribunal's and the CIT(A)'s approach that additional claims placed before the Assessing Officer during assessment proceedings need not be excluded solely because a revised return was not filed, provided the omission was bona fide and the material necessary to adjudicate the claim was already available to the Assessing Officer. The Court relied on the NTPC principle that assessment proceedings exist to correctly determine tax liability and observed that the appellate authorities possess power to allow additional grounds where omission is not wilful and a reasonable explanation is furnished. Given that books and details were available and discussed with the Assessing Officer, foreclosing the claims only on the ground of absence of a revised return was not warranted. [Paras 11, 14, 15, 18]

Claims not included in the original return but made during assessment proceedings were rightly entertained by the appellate authorities as bona fide omissions and are allowable notwithstanding absence of a revised return.

Admissibility of mark-to-market loss and loss on cancellation of forward contracts - allowance of belated claims in assessment proceedings - The Tribunal's allowance of the assessee's fresh claims for write-back of mark-to-market provisions and actual loss on cancellation of forward contracts was upheld. - HELD THAT: - On the facts, the Court found that particulars relating to the mark-to-market provision and the actual loss on cancellation of forward contracts were on record and had been placed before the Assessing Officer during assessment proceedings. The CIT(A) and the Tribunal applied consistent authorities holding that where requisite material is available and omission is bona fide (not a deliberate concealment), the claims can be considered and allowed. The Revenue's contention that Goetze (India) Ltd. precluded such allowance absent a revised return was rejected on the facts because the Tribunal and CIT(A) were satisfied about the bona fide nature and record availability. [Paras 5, 10, 11, 15, 18]

The fresh claims relating to mark-to-market provision write-back and loss on cancellation of forward contracts were correctly allowed by the Tribunal.

Distinguishing the Lakshmi Card Clothing decision - revised return requirement versus appellate allowance - The decision in M/s. Lakshmi Card Clothing Mfg. Co. (P) Ltd. does not apply to the facts of the present case and therefore does not preclude allowance of the claims here. - HELD THAT: - The Court examined Lakshmi Card Clothing and noted its factual matrix involved a post-assessment rectification under Section 154, reliance on a subsequent year's order, and different procedural posture. That decision held that an assessee cannot expect the Assessing Officer to help file returns and that Section 154 is limited to manifest mistakes. The present case, by contrast, involved claims placed during assessment proceedings with the necessary details on record and bona fide reasons for non-inclusion in the original return; accordingly Lakshmi Card Clothing was distinguishable and inapplicable. [Paras 16, 17, 18]

Lakshmi Card Clothing is distinguishable on facts and does not prevent the appellate authorities from allowing the claims in the present case.

Final Conclusion: The appeals by the Revenue are dismissed. The Tribunal's order confirming allowance of the belated claims (including deduction under Section 80IA and losses relating to mark-to-market and forward contracts) was upheld on the ground of bona fide omission and availability of requisite material; the Lakshmi Card Clothing decision was held distinguishable and inapplicable.

Interest on pre commencement deposits - capital receipt vs income from other sources - inextricable link to setting up of business - application of judicial precedent to facts - remand for fresh factual enquiry

Interest on pre commencement deposits - capital receipt vs income from other sources - inextricable link to setting up of business - Whether interest earned on short term deposits of funds raised from equity prior to commencement of business is a capital receipt or taxable as "Income from Other Sources" - remitted for fresh consideration. - HELD THAT: - The Court noted that the Assessing Officer, CIT(A) and the Tribunal proceeded primarily by applying precedent (notably Tuticorin Alkali and related decisions) without conducting a fact finding exercise to determine whether the deposits were mere surplus funds or funds inextricably linked with setting up the business and purchase of capital assets. The authorities below failed to examine the assessee's pleaded position that share capital was earmarked for acquisition of plant, that funds were temporarily placed in short term fixed deposits and were withdrawn as and when required for capital purchases, and that no borrowed funds were used. Prior decisions establish that if interest arises from surplus idle funds the receipt is income, whereas interest inextricably linked to capital formation is capital in nature and reduces capital cost. Because the determinative factual finding was not recorded, the Court declined to decide the characterisation on merits and remitted the question to the Assessing Officer for fresh factual inquiry and application of law. [Paras 5, 6, 9, 18, 19]

Characterisation not finally decided; matter remitted to the Assessing Officer to determine on facts whether the interest is a capital receipt or taxable as income, and then to apply the relevant legal principles.

Application of judicial precedent to facts - fact based enquiry before applying legal principle - remand for fresh factual enquiry - Whether the lower authorities erred procedurally by applying legal precedents without recording requisite factual findings - held that they erred and remand required. - HELD THAT: - The Court found that the Assessing Officer did not interrogate or record findings on the assessee's factual contentions regarding purpose and deployment of the funds (including the nature and duration of deposits and their earmarking for capital purchases), but proceeded directly to apply Supreme Court decisions. The Bench emphasised that legal principles must be applied to the specific facts of the case; where fact finding is absent or inadequate, the matter cannot be resolved by mere recourse to authority. For these reasons the Tribunal's order was set aside and the matter remitted for fresh consideration uninfluenced by earlier observations. [Paras 6, 11, 18, 19, 20]

Orders of the authorities below set aside to the extent they applied precedent without factual determination; matter remitted to the Assessing Officer for fresh fact finding and decision.

Final Conclusion: Appeal allowed; the Tribunal's order dated 27.11.2018 is set aside and the matter remitted to the Assessing Officer for fresh consideration to record factual findings on deployment and purpose of the funds and thereafter apply the relevant legal principles; no costs.

Allowability of deduction under section 54F - agricultural land versus capital asset under section 2(14)(iii)(b) - appellate authority's power to entertain a claim not made in the return - verification of source of funds for allowance of exemption

Appellate authority's power to entertain a claim not made in the return - Power of the appellate authority to consider a claim (deduction) not raised in the original or revised return - HELD THAT: - The Tribunal examined precedents including the Hon'ble Bombay High Court in CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. and the Hon'ble Delhi High Court in Jai Parabolic Springs Ltd., and concluded that the finding of the CIT(A) - that an appellate authority has no power to consider a claim not made in the return - is incorrect. The Tribunal held that appellate authorities possess power to entertain and decide additional claims raised on appeal where such claims arise in the matter and are necessary for a just decision, distinguishing the limited scope of Goetze (India) Ltd. with respect to the assessing authority. [Paras 9, 10]

The appellate authority has power to consider a claim not made in the original or revised return; the CIT(A)'s bar on entertaining such a claim is set aside.

Allowability of deduction under section 54F - verification of source of funds for allowance of exemption - Entitlement to deduction under section 54F where the new residential property was purchased in the name of the assessee's wife and the deduction was first claimed on appeal - HELD THAT: - The Tribunal surveyed decisions of various High Courts (including Delhi, Madras and Karnataka) holding that deduction under section 54/54F should not be denied merely because the new property is in the name of the assessee's wife where the consideration for the purchase has actually flowed from the assessee. Applying these authorities, the Tribunal held that the assessee should not be denied the benefit of section 54F if it is established that sale proceeds were deposited in the assessee's bank account and were used for the purchase of the house registered in the wife's name. However, the Tribunal did not decide the factual question on the papers; it directed verification of the bank account and the flow of funds by the AO and remitted the matter for determination of fact and law after giving the assessee an opportunity of hearing. [Paras 11]

Claim for deduction under section 54F is conditionally accepted subject to verification by the AO of the deposit and utilisation of sale proceeds; the issue is restored to the AO for factual verification and decision.

Final Conclusion: The Tribunal held that an appellate authority may consider a claim not made in the original or revised return, allowed the assessee's grounds for statistical purposes, and remanded the question of entitlement to deduction under section 54F to the AO for verification of the source and utilisation of sale proceeds (with directions to decide after giving the assessee an opportunity of being heard); appeal allowed for statistical purposes.

Concealment of income - furnishing inaccurate particulars of income - penalty under section 271(1)(c) - Explanation 1 presumption of concealment - failure to explain unexplained cash deposits - revised computation filed when cornered by tax authorities not bonafide

Penalty under section 271(1)(c) - Explanation 1 presumption of concealment - concealment of income - furnishing inaccurate particulars of income - failure to explain unexplained cash deposits - revised computation filed when cornered by tax authorities not bonafide - Validity of levy of penalty under section 271(1)(c) for A. Y. 2011-12 in respect of additions made on account of profit on undisclosed cash bank deposits. - HELD THAT: - The Tribunal upheld the CIT(A)'s confirmation of the penalty imposed by the Assessing Officer. The Assessing Officer had made additions by estimating profit at 8% on substantial cash deposits in bank accounts and initiated penalty proceedings under section 271(1)(c). The assessee neither cooperated nor offered any explanation during assessment or penalty proceedings; notices were returned with remark "No such person" and no submissions were filed. The CIT(A) applied Explanation 1 to section 271(1)(c), which raises a presumption of concealment when assessed income exceeds reported income, placing onus on the assessee to rebut. The Tribunal accepted the view that the assessee failed to discharge that onus, and that the subsequent revision of computation when confronted by the AO was not a bona fide voluntary disclosure but made after the assessee was cornered by departmental material. Reliance was placed on the principle that non cooperation and absence of explanation permit inference of deliberate concealment or furnishing of inaccurate particulars, thereby justifying levy of penalty. The Tribunal found no material on record to controvert the conclusions reached below and held the order sustaining penalty to be in accordance with law.

Penalty under section 271(1)(c) confirmed and appeal dismissed.

Final Conclusion: The Tribunal dismissed the appeal and upheld the penalty levied under section 271(1)(c) for A. Y. 2011-12, concluding that the assessee's non cooperation, failure to explain large cash deposits, and belated revision of income when confronted by the AO established concealment or furnishing of inaccurate particulars.

Penalty under section 271(1)(c) - addition of undisclosed long term capital gain - voluntary disclosure - restriction of penalty to 100% of tax sought to be evaded - reassessment under section 147 / completion of assessment under section 143(3)

Addition of undisclosed long term capital gain - Penalty under section 271(1)(c) - Levy of penalty under section 271(1)(c) for failure to disclose long term capital gain arising from sale of jewellery - HELD THAT: - The assessment under the reassessment proceedings recorded undisclosed long term capital gain which was added to the total income. The Tribunal notes that the assessee did not disclose the capital gain in the return of income and that penalty proceedings were validly initiated and imposed by the Assessing Officer and confirmed by the CIT(A). While the existence of the undisclosed income supports invocation of penal provisions, the Tribunal exercised its power to moderate the quantum of penalty and held that imposition at 300% of the tax sought to be evaded was excessive in the facts of the case. Applying judicial discretion, the Tribunal reduced the penalty to 100% of the tax sought to be evaded. [Paras 5, 7, 8]

Penalty under section 271(1)(c) upheld in principle but reduced from 300% to 100% of the tax sought to be evaded; appeal partly allowed.

Voluntary disclosure - Penalty under section 271(1)(c) - Whether the offer of the long term capital gain during assessment proceedings amounted to a voluntary disclosure disentitling imposition of penalty - HELD THAT: - The Tribunal accepted the view recorded by the CIT(A) that the capital gain was not voluntarily disclosed. The disclosure was made only after the Assessing Officer specifically confronted the assessee during investigation and after multiple hearings. Reliance in the orders below was placed on established authorities to the effect that a disclosure made when faced with investigation does not qualify as voluntary disclosure for exemption from penalty. Consequently, the Tribunal did not cancel the penalty on the ground of purported voluntary disclosure. [Paras 5, 7]

Disclosure was not voluntary; penalty cannot be wholly waived on that ground.

Final Conclusion: The Tribunal upheld the levy of penalty under section 271(1)(c) for undisclosed long term capital gain for A. Y. 2010-11, held that the disclosure was not voluntary so as to negate penal liability, but exercised discretion to reduce the penalty to 100% of the tax sought to be evaded; the appeal is partly allowed.

Penalty under section 271(1)(c) - Validity of penalty notice for defective charge specification - Charge of concealment of particulars versus furnishing of inaccurate particulars - Ex parte appellate order and restoration for fresh adjudication

Ex parte appellate order and restoration for fresh adjudication - Penalty under section 271(1)(c) - Whether the ex parte confirmation of penalty by the Commissioner (Appeals) should be sustained. - HELD THAT: - The Tribunal examined the circumstances of non-appearance before the Commissioner (Appeals) and the material on record and found that the assessee had reasonable grounds for non-appearance on the hearing dates. The Tribunal further observed that the ground contended before it regarding a defect in the initiation notice (variation in the charge) was not considered by the Commissioner (Appeals) because the appeal had been dismissed ex parte. In the interests of justice the Tribunal set aside the ex parte order of the Commissioner (Appeals) and restored the matter to that authority for fresh decision on merits after considering the issues raised by the assessee, including the alleged defect in the notice. [Paras 4, 5]

Ex parte order of the Commissioner (Appeals) confirming penalty is set aside and the matter is restored to the file of the Commissioner (Appeals) for fresh adjudication.

Validity of penalty notice for defective charge specification - Charge of concealment of particulars versus furnishing of inaccurate particulars - Whether the alleged variation between the charge specified in the penalty initiation notice and the charge recorded in the penalty order required fresh consideration. - HELD THAT: - The Tribunal noted that the assessee raised a contention that the penalty notice under section 274 read with section 271(1)(c) specified a different charge from that finally recorded in the penalty order, relying on authority addressing the requirement that the nature of the charge (concealment or furnishing inaccurate particulars) be clearly specified. That specific contention was not adjudicated by the Commissioner (Appeals) because of the ex parte dismissal. The Tribunal therefore remanded the question to the Commissioner (Appeals) to decide afresh on merits after considering whether the notice was defective and whether that defect, if any, renders the penalty unsustainable. [Paras 4]

Issue remanded to the Commissioner (Appeals) for fresh consideration of the alleged defect in the penalty notice and its consequences for the penalty order.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes only, set aside the ex parte confirmation of penalty, and restored the matter to the Commissioner (Appeals) to decide afresh on the merits, including the question of alleged defect in the penalty initiation notice.

Denial of opportunity of fair hearing - principles of natural justice - reassessment under section 147/148 - furnishing of statements and related details relied upon by Revenue - remand for fresh adjudication

Denial of opportunity of fair hearing - furnishing of statements and related details relied upon by Revenue - remand for fresh adjudication - Whether the assessment should be set aside and remitted for fresh adjudication because the assessee was not furnished copies of statements/details relied upon and thereby denied a fair hearing. - HELD THAT: - The Tribunal found that reassessment proceedings under section 147/148 were completed by the AO on the basis of information alleging that share transactions through a broker group were not genuine, but the assessee was not supplied with the report/statements or particulars on which the AO relied and was not given an opportunity to rebut or to cross examine. Relying on paragraph 8 of the judgment of the Hon'ble Karnataka High Court in M/s. Chandra Devi Kothari, which directed reconsideration after providing copies of the statement and related details, the Tribunal concluded that the matter required restoration to the file of the AO so that the assessee may be furnished the relevant details and given a fair and reasonable opportunity of hearing. The Tribunal expressly declined to adjudicate the merits of the addition or other grounds in view of the remand order. [Paras 4, 5]

Impugned orders set aside and matter restored to the Assessing Officer for fresh adjudication after furnishing copies of the statements/details relied upon and providing the assessee a fair and reasonable opportunity of hearing.

Final Conclusion: Appeal allowed for statistical purposes; assessment and appellate orders set aside and remitted to the Assessing Officer for fresh adjudication in conformity with the direction to furnish statements/details and afford opportunity of hearing; no adjudication on merits at this stage.

Exemption under section 10(20A) for authorities constituted by or under law - authority constituted by or under an Act - distinction between statutory corporation and company incorporated under Companies Act - setting up of business v. commencement of business (deductibility of pre operative expenses) - income from other sources v. business income - characterization of interest on surplus/idle funds - allowability of expenditure under section 57 against income from other sources - deduction of preliminary expenses under section 35D - capitalization of interest/expenditure into cost of project (adjustment against capital work in progress) - revisionary jurisdiction under section 263 - requirement of order being erroneous and prejudicial to revenue

Exemption under section 10(20A) for authorities constituted by or under law - authority constituted by or under an Act - distinction between statutory corporation and company incorporated under Companies Act - Assessee not entitled to exemption under section 10(20A) for the assessment years in issue. - HELD THAT: - The Tribunal examined the three conditions of section 10(20A) as framed (entity is an "authority"; constituted in India by or under any law enacted; constituted for purposes of planning, development or improvement of cities, towns and villages). Although the Memorandum shows objects relating to planning and development of the Metro project, the assessee was incorporated under the Companies Act, 1956 and no notification or provision of any Central/State Act was produced to show the company was created by or under a legislative enactment. Authorities distinguish statutory corporations "established by or under" an Act from companies merely incorporated under the Companies Act; a company does not "owe its existence" to the Companies Act. On the facts the Tribunal held the assessee was merely registered under the Companies Act and therefore failed the statutory establishment requirement of section 10(20A); accordingly the claim of exemption was rejected. [Paras 15]

Grounds seeking exemption under section 10(20A) are dismissed; assessee not eligible for section 10(20A) relief for the years under appeal.

Setting up of business v. commencement of business (deductibility of pre operative expenses) - capitalization of interest/expenditure into cost of project (adjustment against capital work in progress) - Business of the assessee was not set up in assessment years 1996-97 to 2002-03; the business was set up only immediately prior to commercial run (around 25/12/2002). - HELD THAT: - The Tribunal reviewed the company records, directors' reports, auditors' annexures and the nature of the Metro project. The Tribunal held that planning and consultancy activities undertaken prior to operation did not render the overall metro rail business 'set up' for a service enterprise whose revenue source is operation of the railway; substantial capital works and infrastructure remained incomplete through the years in issue and there were no regular employees or operational receipts. The Assessing Officer's factual finding that commercial run began on 25/12/2002 was accepted; accordingly the date of 'setting up' is to be treated as in the period immediately prior to commencement of commercial operation, and not in any earlier assessment year. [Paras 16, 18]

Grounds challenging the date when business was set up are dismissed; business was not set up in any assessment year before commercial operation (around 25/12/2002).

Income from other sources v. business income - characterization of interest on surplus/idle funds - capitalization of interest/expenditure into cost of project (adjustment against capital work in progress) - Interest earned on bank deposits in the years before the business was set up is taxable under the head 'Income from other sources' and not to be treated as business income or, generally, capitalized, for the years in issue. - HELD THAT: - Following Supreme Court authority (Tuticorin Alkali Chemicals) and on the factual finding that the assessee's business was not set up in the years under appeal, the Tribunal held interest earned on surplus/idle funds invested in fixed deposits is revenue in nature and taxable as 'income from other sources'. The Tribunal distinguished decisions where interest was held inextricably linked to a specific capital acquisition or where funds were parked to secure an imminent transaction; the DMRC funds were invested to earn interest and minutes show investments were chosen for best yield. Accordingly the claims to treat such interest as business income or to capitalize it against project cost are rejected for the years before setting up. [Paras 22]

Assessee's claims to treat/adjust the interest as business income or to capitalize it are dismissed; interest in the years concerned taxed under 'Income from other sources'.

Allowability of expenditure under section 57 against income from other sources - revisionary jurisdiction under section 263 - requirement of order being erroneous and prejudicial to revenue - Tribunal upheld the Commissioner's exercise of revisionary jurisdiction under section 263 in AYs 1998 99 and 1999 2000 to estimate the portion of expenses allowable against interest income; Tribunal also affirmed the quantum of expenses allowed by the CIT(A)/CIT as reflected in the orders under appeal for the other years. - HELD THAT: - The Assessing Officer had allowed a broad range of expenses against interest without making specific enquiries or segregation. The Commissioner issued proceedings under section 263, found the AO's order erroneous and prejudicial for lack of enquiry, asked the assessee to segregate expenses and, where segregation was not furnished, estimated the fraction relatable to interest (identifying and excluding items like advertisement tied to tender sales and estimating relatable salaries/overheads). The Tribunal found (i) the AO had not inquired into the nexus of the diverse expenses with interest income and therefore the Commissioner was justified to invoke section 263, and (ii) in absence of segregation the CIT's estimation was a permissible exercise; the Tribunal declined to upset the amounts allowed by the CIT(A) in subsequent years where no Revenue appeal challenged the quantum. [Paras 7, 38, 39]

Orders passed under section 263 for AYs 1998 99 and 1999 2000 are upheld; the expenses allowable against interest are sustained as per the CIT/CIT(A) findings and estimation; related grounds are dismissed.

Deduction of preliminary expenses under section 35D - setting up of business v. commencement of business (deductibility of pre operative expenses) - Deduction under section 35D in the assessment years before business was set up is not allowable; the assessee may claim such amortisation only after the business is set up. - HELD THAT: - Because the Tribunal held the business was not set up during the assessment years in dispute, the statutory computation period for business profits had not begun; therefore the assessee could not claim deduction under section 35D in those years. The Tribunal noted that entitlement to amortisation arises only after the business is set up and allowed the assessee to pursue the claim in the year in which the business is set up in accordance with law. [Paras 15, 27]

Claims for deduction under section 35D in the years before setup are dismissed; assessee may claim the allowance in the year the business is set up.

Depreciation - requirement of asset 'used for the purposes of the business' - setting up of business v. commencement of business (deductibility of pre operative expenses) - Depreciation claims for the years before the business was set up are disallowed. - HELD THAT: - Section 32 relief applies only where assets are used for the purposes of a business that is carried on. On the factual finding that the assessee's business was not set up in the years under appeal and there were no operations yielding business receipts, the Tribunal held depreciation could not be allowed for those years. The Tribunal distinguished cases permitting depreciation on assets kept ready for use because here the statutory precondition of an operative business was not met. [Paras 31]

Depreciation claims for the disputed years are dismissed.

Capitalization of interest/expenditure into cost of project (adjustment against capital work in progress) - Alternative claim to capitalize certain expenditures as part of project cost is permitted in principle and left open for consideration when the legal conditions (e.g. business set up) are met. - HELD THAT: - The Tribunal recognised the assessee's additional ground that, alternatively, expenses disallowed as current deductions might be capitalized and added to project cost. While dismissing the immediate allowance claims for the years before business set up, the Tribunal observed that where particular items fall squarely within the capitalisation/amortisation provisions (for example, items allowable under section 35D when the business is set up, or other costs directly attributable to creation of capital assets), the Assessing Officer may, in the appropriate year, consider their capitalization and inclusion in capital work in progress or written down value in accordance with law. The Tribunal therefore allowed the additional ground (in part) to the extent of permitting such consideration in the proper year. [Paras 28]

Alternative plea for capitalization is allowed in principle and deferred for consideration in the year when the business is set up or as and when the legal tests for capitalization are met.

Final Conclusion: For assessment years 1996 97 to 2002 03 the Tribunal (i) rejects the assessee's claim to exemption under section 10(20A), (ii) holds the DMRC's business was not set up in any of those years (business set up only immediately prior to commercial run around 25/12/2002), (iii) treats interest on bank deposits in the pre setup years as taxable under 'Income from other sources', (iv) upholds the Commissioner's revision under section 263 for AYs 1998 99 and 1999 2000 and the resultant estimates of expenses relatable to interest, (v) disallows claims for deduction under section 35D and depreciation for the years before the business was set up, and (vi) permits in principle the assessee's alternative plea for capitalization of certain costs to be considered in the appropriate year when the statutory conditions for capitalization/amortisation are satisfied.

Classification of imported goods as clear float glass or extra clear float glass - applicability of anti dumping duty to imported goods - causal link between dumped imports and injury to domestic industry - imposition of anti dumping duty where the article is not manufactured domestically

Classification of imported goods as clear float glass or extra clear float glass - applicability of anti dumping duty to imported goods - imposition of anti dumping duty where the article is not manufactured domestically - Imported extra clear float glass is not liable to anti dumping duty under Notification No.4/2009-Cus because it is a distinct product from the clear float glass covered by the notification and is not manufactured in India so as to cause injury to domestic industry. - HELD THAT: - The Tribunal examined technical literature and brochures which demonstrated that extra clear float glass differs from ordinary clear float glass in raw materials, manufacturing technique (notably lower iron content), light transmittance and commercial presentation. Documentary material from manufacturers and suppliers showed separate product identity and pricing distinctions between the two varieties. The appellant produced a certificate from the Federation of Safety Glass that extra clear glass is not manufactured in India. In these circumstances the Tribunal applied the principle that anti dumping duties are intended to prevent injury to domestic industry caused by dumped imports; where the imported article is a distinct product not made domestically and therefore not capable of causing injury to the domestic like article, imposition of anti dumping duty is unwarranted. The Tribunal relied on the reasoning in the decision of Indian Refractory Makers Association to the effect that if dumped imports do not or cannot cause injury to the domestic industry, anti dumping duty should not be imposed as it only increases costs to importers without protecting domestic manufacturers of a like article. Having found that the imported goods were of a different variety and not produced domestically, the Tribunal held there was no basis to sustain the anti dumping levy and directed assessment without such duty. [Paras 4, 5]

Anti dumping duty not leviable on the imported extra clear float glass; impugned orders set aside and goods to be assessed without anti dumping duty.

Final Conclusion: The appeals are allowed; the impugned orders upholding anti dumping duty are set aside and the imported extra clear float glass shall be assessed without imposition of anti dumping duty, with consequential reliefs if any.

Substantial compliance - exemption notification - conversion of Export Oriented Unit to Domestic Tariff Area Unit - entitlement to benefit of notification

Substantial compliance - exemption notification - conversion of Export Oriented Unit to Domestic Tariff Area Unit - Respondent had substantially complied with the conditions required to avail the benefit of the exemption notification on conversion from a 100% Export Oriented Unit to a Domestic Tariff Area Unit, and was entitled to the benefit. - HELD THAT: - The Supreme Court agreed with the Tribunal's finding that the respondent had effected substantial compliance with the conditions prescribed by the exemption notification governing conversion of a 100% Export Oriented Unit into a Domestic Tariff Area Unit. Having accepted the Tribunal's conclusion that the conditions for claiming the relief under the notification were met, the Court declined to interfere with the Tribunal's allowance of the benefit. The Court therefore did not entertain the Civil Appeal in the facts and circumstances of the case and dismissed it.

Appeal dismissed; Tribunal's allowance of the benefit of the exemption notification upheld.

Final Conclusion: The Supreme Court upheld the Tribunal's conclusion that the assessee had substantially complied with the conditions for claiming the exemption on conversion from a 100% EOU to a DTA unit and dismissed the Civil Appeal.

Identity of evidence in parallel adjudicatory and criminal proceedings - penalty under Section 112(b) of the Customs Act, 1962 - prosecution under Section 135(1)(b) of the Customs Act, 1962 - acquittal by criminal court as determinative in subsequent quasi civil proceedings - rebuttal of statutory presumption of mens rea - preponderance of probability versus proof beyond reasonable doubt - avoidance of double jeopardy / double punishment in parallel proceedings

Identity of evidence in parallel adjudicatory and criminal proceedings - penalty under Section 112(b) of the Customs Act, 1962 - acquittal by criminal court as determinative in subsequent quasi civil proceedings - avoidance of double jeopardy / double punishment in parallel proceedings - Whether a penalty under Section 112(b) can be sustained where, on the same set of facts and evidence, the accused have been acquitted by the criminal courts under proceedings initiated under Section 135(1)(b). - HELD THAT: - The Court held that the ingredients for imposing penalty under Section 112(b) and for prosecution under Section 135(1)(b) are identically worded, requiring acquisition of possession or being concerned in dealing with goods liable to confiscation. Where both proceedings rest on the same set of facts and evidence, and the criminal court after full appreciation of that evidence has acquitted the accused, the findings of the criminal court cannot be ignored by the adjudicating authority. The Court applied the principle that permitting the civil/quasi civil penalty to stand in such circumstances would amount to double jeopardy or a double whammy, particularly when no additional or different evidence is available to the Revenue to sustain the penalty. The judgment distinguished earlier decisions relied on by the Revenue where admissions or different material supported penalty despite criminal acquittal. The Court also noted the contrast between standards of proof (preponderance of probability in adjudication versus proof beyond reasonable doubt in criminal trials) but emphasized that the distinguishing feature permitting parallel outcomes is the availability of different or additional evidence in one forum - which was absent here. Consequently, in absence of any fresh material, the Tribunal was correct in setting aside the penalty in view of the criminal acquittal upheld on appeal. [Paras 8, 9, 11, 13, 15]

Penalty under Section 112(b) set aside as it could not be sustained in face of the criminal court's acquittal based on the same evidence; Revenue failed to show any additional material to justify a different outcome.

Rebuttal of statutory presumption of mens rea - prosecution under Section 135(1)(b) of the Customs Act, 1962 - Whether the acquittal was vitiated by failure to consider statutory presumption of mens rea or by the need for the accused to rebut such presumption. - HELD THAT: - The Court examined the criminal court's reasoning and observed that the prosecution had failed to establish even the basic factual ingredient that the accused had physically dealt with the alleged quantity of goods. Because the prosecution did not adduce clear evidence of possession or dealing, the criminal court had no occasion to draw or require rebuttal of any statutory presumption under provisions akin to Section 138A. Following precedents, the obligation to rebut the presumption of mens rea arises only after prosecution proves possession/dealing; that threshold was not met here. Accordingly, absence of any finding that the presumption applied reinforced the conclusion that the acquittal could not be disregarded by the adjudicating authority. [Paras 10]

No presumption of mens rea arose on the facts; the acquittal therefore stands and cannot be displaced by the penalty proceedings.

Final Conclusion: The appeal by the Revenue is dismissed. The Tribunal correctly set aside the penalty imposed under Section 112(b) of the Customs Act, 1962 where the criminal courts, after full consideration of the same evidence, acquitted the accused and no fresh or different material was available to sustain the penalty; no costs.

Approval of resolution plan under Section 31(1) subject to compliance with Section 30(2) - Committee of Creditors' commercial wisdom not to be substituted by Adjudicating Authority - Resolution Professional has no adjudicatory jurisdiction and determination of claims is open to correction - Payment to operational creditors not less than liquidation value - Requirement of performance security under Regulation 36B(4A) - Resolution plan to be binding on corporate debtor and stakeholders - Moratorium under Section 14 to cease on approval under Section 31

Approval of resolution plan under Section 31(1) subject to compliance with Section 30(2) - Payment to operational creditors not less than liquidation value - Resolution plan to be binding on corporate debtor and stakeholders - Whether the Resolution Plan approved by the Committee of Creditors meets the requirements of Section 30(2) of the Code and is fit for approval under Section 31(1). - HELD THAT: - The Tribunal examined the Final Resolution Plan, the compliance certificate in Form H and material on record and held that the Plan satisfies the clauses (a) to (f) of Section 30(2). The Plan provides for payment of insolvency resolution process costs in priority, provides aggregate payment to operational creditors not less than liquidation value, contains provisions for management, implementation and supervision of the Plan, and does not contravene existing law. The Resolution Professional certified verification of eligibility under Section 29A and compliance with Regulations, and the CoC approved the Plan with requisite super-majority. In absence of any demonstrated perverse discrimination or contravention of law, the Tribunal declined to substitute its view for the commercial decision of the CoC and approved the Plan under Section 31(1). [Paras 70, 73, 76, 77, 79]

The Resolution Plan is approved under Section 31(1) as meeting the requirements of Section 30(2); it is binding on the corporate debtor and all stakeholders and shall become effective from the date of this order.

Requirement of performance security under Regulation 36B(4A) - Direction regarding deposit of performance security by the successful resolution applicant in terms of Regulation 36B(4A). - HELD THAT: - The CoC had approved a performance security amount and the minutes record the resolution applicant's willingness to furnish it. Regulation 36B(4A) mandates provision of performance security by the resolution applicant. The Tribunal directed the successful resolution applicant to deposit the performance security as stipulated by the CoC within 30 days of receipt of the order. [Paras 17, 71, 72, 80]

The successful resolution applicant is directed to provide the performance security as approved by the CoC within 30 days from receipt of this order.

Resolution Professional has no adjudicatory jurisdiction and determination of claims is open to correction - Committee of Creditors' commercial wisdom not to be substituted by Adjudicating Authority - Scope of the Resolution Professional's power to determine claims and the Tribunal's role in adjudicating disputed claims filed by operational creditors during CIRP. - HELD THAT: - The Tribunal reiterated that the Resolution Professional's role is limited to collating and determining claims for constitution of the CoC and that such determinations are administrative, not adjudicatory, and remain open to correction. Disputed claims that have not been adjudicated by a competent forum cannot be finally decided in the CIRP approval proceedings; claimants are at liberty to pursue appropriate legal remedies for adjudication of their disputes. The Tribunal also emphasised that it will not interfere with the CoC's commercial decision unless the Plan contravenes law or public interest. [Paras 32, 33, 46, 47, 48]

Determinations by the Resolution Professional do not finally adjudicate disputed claims; aggrieved claimants may seek adjudication before competent fora and the Tribunal will not substitute the CoC's commercial judgment absent contravention of law or public interest.

Claims pending adjudication to be dealt with by competent fora - Disposition of various applications by operational creditors whose claims were rejected or disputed by the Resolution Professional. - HELD THAT: - The Tribunal examined multiple company applications and observed that several claims involved disputed questions of fact or pendency before other courts. Where a claim was based on an unchallenged and final arbitral award and was filed in time, the Tribunal allowed the claim to be considered in the resolution plan on par with similarly situated operational creditors. Other claims rejected by the Resolution Professional for reasons such as delay, alleged mismatch, limitation or being subject-matter of pending suits were not adjudicated on merits in these proceedings. The Tribunal disposed of those applications by leaving the claimants free to pursue adjudication before appropriate forums, with the consequence that any decree obtained would be equated with similarly placed operational creditors under the Plan. [Paras 42, 43, 44, 45, 49]

CA No. 38 (operational creditor with final arbitral award) is allowed and its claim shall be considered pari passu with similar operational creditors; other contested claims are disposed of without adjudication and claimants are permitted to seek remedy before competent fora, after which successful claimants will be treated with similarly placed operational creditors under the Plan.

Moratorium under Section 14 to cease on approval under Section 31 - Effect of approval of the Resolution Plan on the moratorium and consequent change in management. - HELD THAT: - Upon approval of the Resolution Plan under Section 31(1), the Tribunal declared that the moratorium previously imposed would cease to have effect from the date of the order. The approval confers change in management and ownership, vesting control of the corporate debtor with the new management; the Resolution Professional is directed to forward all CIRP records to the Board. [Paras 82, 85, 86, 87, 88]

The moratorium under Section 14 ceases from the date of this order; the Plan effects change of management and becomes effective immediately, and CIRP records shall be forwarded to the Board.

Final Conclusion: The Tribunal approved the Resolution Plan as meeting the requirements of Section 30(2) and sanctioned it under Section 31(1); directed deposit of the performance security as stipulated by the CoC; allowed the operational creditor with a final arbitral award to be treated pari passu with similar operational creditors; disposed other contested claims by leaving claimants free to seek adjudication before competent fora; declared the Plan binding on all stakeholders, effective from the date of the order, and terminated the moratorium accordingly.

Appeal against the decision of liquidator - Definition of "financial debt" under Section 5(8) of the I&B Code - Financial creditor - Collateral security versus indebtedness - Indemnity under pledge deed - Condonation of delay and applicability of the Limitation Act - Right to realise security under Section 52(1)(b) of the I&B Code

Condonation of delay and applicability of the Limitation Act - Appeal against the decision of liquidator - Delay in filing the appeal under section 42 and whether such delay should be condoned. - HELD THAT: - The application against the liquidator's decision under section 42 was filed 18 days after the fourteen-day period prescribed for an appeal. The Tribunal held that, having regard to Section 238A of the I&B Code which makes the Limitation Act applicable to the Code and the fact that liquidation proceedings were not yet finalised, no prejudice would be caused by adjudicating the claim. The applicant's active follow-up with the liquidator and the documentary exchanges were held to constitute sufficient cause for the delay. Accordingly, the delay in filing the application was condoned. [Paras 4, 18]

Delay in filing the appeal under section 42 is condoned and the application is admitted for adjudication.

Definition of "financial debt" under Section 5(8) of the I&B Code - Financial creditor - Collateral security versus indebtedness - Indemnity under pledge deed - Right to realise security under Section 52(1)(b) of the I&B Code - Whether the claimant (ICICI Bank) is a Financial Creditor of the corporate debtor on account of pledge/indemnity and whether the liquidator was correct in rejecting the claim. - HELD THAT: - The Tribunal examined the contractual documents and found that the loan agreements were between the applicant and the borrower; the corporate debtor only provided a pledge of its shares as collateral. The Deed of Pledge did not amount to the corporate debtor undertaking a counter indemnity or guarantee in respect of the loan obligations such that the corporate debtor incurred a "financial debt" as defined in Section 5(8) of the Code. The pledge was held to be collateral security and the corporate debtor was not a borrower under the loan agreements. Reliance on analogous orders and appellate pronouncements was noted to the effect that third party security by way of pledge/mortgage does not convert the secured creditor into a financial creditor of the security provider absent a substantive indebtedness or guarantee. The Tribunal further observed that the secured creditor retains the remedy to realise its security under Section 52(1)(b). On these findings the liquidator's rejection of the claim as not constituting a financial debt of the corporate debtor was upheld. [Paras 19, 20, 21, 22, 23]

The claimant is not a Financial Creditor of the corporate debtor in respect of the pledge; the liquidator correctly rejected the claim.

Final Conclusion: The application under section 42 is dismissed: the Tribunal condoned the delay in filing the appeal but affirmed the liquidator's rejection of the claimant's proof of claim on the ground that the pledge constituted collateral security and did not create a financial debt of the corporate debtor, leaving the claimant with the remedy to realise its security.

Summary order. Special leave petition dismissed as the tax amount involved is insignificant; delay condoned.

Summary order. Special Leave Petition under Article 136 dismissed; pending applications, if any, disposed of.

Condonation of delay - sufficient cause - liberal approach to deciding causes on merits - award of costs as condition for condonation - remand for fresh disposal on merits

Condonation of delay - sufficient cause - liberal approach to deciding causes on merits - Whether the Tribunal was justified in dismissing the applications for condonation of delay and refusing to entertain the appeals. - HELD THAT: - The Tribunal concluded that the impugned orders were passed on 11.12.2014 and the appeals were filed on 25.10.2017, finding an inordinate delay of over two and a half years and attributing the delay to gross negligence and lack of proper explanation by the appellant. The High Court accepted that the appellant had failed to furnish a convincing explanation for the delay and agreed with the Tribunal's finding of negligence. However, the Court held that while lack of sufficient cause justified refusal, the Tribunal ought also to have considered whether a lenient approach could be adopted to secure adjudication on merits - a view consistent with settled authorities that courts and quasi-judicial bodies should, where appropriate, favour disposal on merits rather than technical dismissal. The High Court therefore considered whether conditional relief (by imposing costs) could have been imposed instead of outright dismissal and concluded that such a course was available and warranted in the facts of these cases. [Paras 3, 6, 7]

The Tribunal's finding that the appellant failed to adequately explain the delay is upheld in substance, but the Tribunal ought to have considered adopting a lenient approach to enable adjudication on merits.

Award of costs as condition for condonation - remand for fresh disposal on merits - Whether the delay should be condoned on payment of costs and the consequent course to be adopted. - HELD THAT: - Balancing the appellant's failure to offer a fully convincing explanation against the public interest in deciding disputes on merits, the Court exercised its jurisdiction to permit condonation of the delay subject to a compensatory condition. The High Court considered prejudice to the revenue and held that payment of costs would reasonably compensate the respondent Department. The Court imposed costs of Rs. 7,500/- in each case as the condition to allow condonation, directed that on proof of such payment the Tribunal shall restore and decide the appeals on merits after affording opportunity to both parties, and made clear that failure to remit the prescribed costs within the stipulated period would leave the impugned Tribunal orders in force. [Paras 8, 9]

Delay condoned subject to payment of costs of Rs. 7,500/- in each case; appeals remitted to the Tribunal for fresh disposal on merits upon proof of payment.

Final Conclusion: The appeals are allowed to the extent that the applications for condonation of delay are permitted on condition that the appellant pays the prescribed costs within two weeks; on receipt of payment the Tribunal shall restore and decide the appeals on merits, and in default the impugned orders shall remain in force.

Manpower Recruitment and Supply Agency Service - Business Auxiliary Service - control and supervision test for manpower supply - exemption for services in relation to agricultural produce - penalties under Sections 76 and 78 cannot be imposed simultaneously

Manpower Recruitment and Supply Agency Service - control and supervision test for manpower supply - Business Auxiliary Service - exemption for services in relation to agricultural produce - Service rendered to Reliance Fresh Limited does not qualify as Manpower Recruitment and Supply Agency Service and is not taxable as such. - HELD THAT: - The Tribunal accepted the appellant's contention that the contract with Reliance Fresh Limited was for handling agricultural produce and that the deployed manpower remained under the control and supervision of the appellant rather than the service recipient. The agreement, though remunerated on a man-days basis, is a work contract for execution of assigned tasks and not merely supply of personnel. The impugned order did not rebut the specific assertion regarding control. Reliance on earlier Tribunal decisions holding that where control and supervision remain with the contractor the activity is not a manpower supply service was held persuasive. Consequentially, services characterised as work for handling agricultural produce fall within the scope of Business Auxiliary Service and attract the exemption referenced in the impugned reliance, rendering the demand in respect of Reliance Fresh Limited unsustainable. [Paras 4]

Demand of service tax, interest and penalties in respect of the service provided to Reliance Fresh Limited set aside.

Penalties under Sections 76 and 78 cannot be imposed simultaneously - Penalty imposed under Section 76 set aside and consequential adjustment to penalty under Section 78 in respect of the set-aside demand. - HELD THAT: - The Tribunal noted the settled legal position that penalties under Section 76 and Section 78 of the Finance Act, 1994 cannot be imposed simultaneously. Since the substantive demand relating to supply of manpower to Reliance Fresh Limited was set aside, the penalty levied under Section 76 was set aside. The penalty under Section 78 was also set aside to the extent it related to the same demand. [Paras 4]

Penalty under Section 76 set aside; penalty under Section 78 set aside insofar as it relates to the set-aside demand.

Final Conclusion: The appeal is partly allowed: the tax demand, interest and penalties relating to the services provided to Reliance Fresh Limited are set aside, and the penalty under Section 76 (and corresponding portion of penalty under Section 78) is vacated.

Clubbing of clearances - benefit of duty-free clearance under Notification 8/2003 - valuation for levy of duty - remand for fresh consideration of valuation submissions - stay of coercive recovery pending further proceedings

Clubbing of clearances - benefit of duty-free clearance under Notification 8/2003 - Conclusion of the Tribunal that clearances of all manufacturing units should be clubbed and the duty-free benefit under Notification 8/2003 granted to SBDTPL is upheld. - HELD THAT: - The Tribunal in paragraph 16 held that clearances of all manufacturing units must be clubbed and that the benefit of duty-free clearance under the specified notification is to be allowed to SBDTPL. The Supreme Court, having examined the factual foundation set out in paragraphs 10 to 15 of the impugned judgment, found no reason to take exception to those findings of fact and declined to entertain the appeals on this aspect. The court thus accepted the Tribunal's factual conclusion and its legal consequence concerning entitlement to the notification benefit. [Paras 16]

The Tribunal's finding on clubbing of clearances and allowance of the notification benefit to SBDTPL is upheld and the appeals are not entertained on that aspect.

Valuation for levy of duty - remand for fresh consideration of valuation submissions - Submission that valuation should account for clearances through several other unrelated concerns was not specifically dealt with by the Tribunal and is left open for consideration by the Tribunal. - HELD THAT: - Counsel for the appellants contended that, beyond the three trading units considered by the Tribunal, goods were cleared through several unrelated concerns and that valuation ought not to have been fixed solely on the basis of prices at which those three trading units sold to independent buyers. The Supreme Court observed that the impugned Tribunal decision and its recorded submissions do not show that this specific contention was addressed. The court therefore directed that the appellants may raise this grievance before the Tribunal and expressly refrained from expressing any opinion on the merits of the valuation contention, leaving the matter to the Tribunal for appropriate consideration.

The valuation contention was not decided on merits and is remitted to the Tribunal for consideration; the Supreme Court expressed no opinion on its merits.

Stay of coercive recovery pending further proceedings - Court ordered a limited restraint on coercive recovery to enable the appellants to approach the Tribunal on the valuation grievance. - HELD THAT: - To enable the appellants to move the Tribunal on the valuation point, the Supreme Court directed that no coercive steps shall be taken to realise the balance of the demand for a period of four weeks from the date of the order, noting that 50 per cent of the demand had been deposited. This direction is incidental to the remand and intended to provide the appellants a short window to seek redress before the Tribunal.

No coercive steps for recovery shall be taken for four weeks to enable the appellants to approach the Tribunal.

Final Conclusion: The Tribunal's factual finding to club clearances and permit the duty-free benefit under Notification 8/2003 to SBDTPL is upheld; a separate valuation contention not addressed by the Tribunal is remitted to the Tribunal for fresh consideration and no coercive recovery shall be initiated for four weeks to enable the appellants to seek that relief.

Cenvat credit on MS items/iron and steel used for fabrication of goods or support structures - power of the Tribunal under Section 35C to pass orders "as it thinks fit" - remand for computation only - imposition of penalty unwarranted where issue is interpretational - penalty under Section 11AC requires a finding of deception, fraud or wilful misstatement

Cenvat credit on MS items/iron and steel used for fabrication of goods or support structures - remand for computation only - Entitlement of the assessee to avail cenvat credit on MS items/iron and steel used for fabrication of goods or support structures and remand limited to computation of such credit. - HELD THAT: - The Tribunal, after referring to binding and persuasive decisions, held that the assessee was entitled to avail cenvat credit on MS items/iron and steel used for fabrication of goods or support structures and remanded the matter to the adjudicating authority solely for computation of the credit. The Revenue did not dispute the entitlement before this Court. The remand was therefore limited to quantification and verification of figures, not to re-open the question of entitlement which the Tribunal had finally determined in favour of the assessee. [Paras 2, 5, 6]

The entitlement to cenvat credit was upheld and the matter was remanded only for computation of the credit.

Power of the Tribunal under Section 35C to pass orders "as it thinks fit" - imposition of penalty unwarranted where issue is interpretational - penalty under Section 11AC requires a finding of deception, fraud or wilful misstatement - Whether the Tribunal could set aside the penalties while remanding the matter for computation, on the ground that the question was interpretational and no deception was alleged. - HELD THAT: - The Tribunal exercised its discretionary power under Section 35C to both decide the entitlement and to conclude that penalties were unwarranted because the dispute involved an interpretational question. The Court accepted that the phrase "as it thinks fit" in Section 35C confers on the Tribunal the power to give a substantive verdict on imposition of penalty while remanding only for computation. Reliance on the principle that Section 11AC's penalty provisions apply only where there is a finding of deception, fraud, wilful misstatement or contravention with intent to evade duty (as explained in Union of India v. Rajasthan Spinning & Weaving Mills) was held not to assist the Revenue because no such finding or dispute as to entitlement was advanced; accordingly the Tribunal was justified in setting aside the penalties. [Paras 6, 7, 8, 9, 10]

The Tribunal was entitled to set aside the penalties given the interpretational nature of the issue and the absence of any finding of deception; the setting aside of penalties is sustained.

Final Conclusion: Both substantial questions are answered in favour of the assessee: the assessee is entitled to cenvat credit on the specified MS/iron and steel items with the matter remanded only for computation, and the Tribunal validly set aside the penalties given the interpretational character of the dispute and lack of any finding of deception.

Classification of fertilizers - Chapter Note 3 to Chapter 31 - superphosphates (single, double or triple) - mixtures of superphosphate with gypsum and other inorganic substances - residuary entry for chemical products not elsewhere specified - eligibility for exemption under Notification No. 1/2011 - CE and Notification No. 12/2012 - penalty and allegation of suppression

Classification of fertilizers - Chapter Note 3 to Chapter 31 - superphosphates (single, double or triple) - mixtures of superphosphate with gypsum and other inorganic substances - Product 'Power Gold' is classifiable under CETSH 3103 as a phosphatic fertilizer. - HELD THAT: - The tribunal examined the composition and manufacturing constituents of Power Gold and the statutory chapter note. Chapter Note 3 to Chapter 31 expressly covers superphosphates and fertilizers consisting of superphosphates mixed with chalk, gypsum or other inorganic non-fertilising substances. The Chemical Examiner's report and the disclosed formulation show Power Gold contains Single Super Phosphate (SSP), gypsum and other inorganic matter and records presence of phosphorus (expressed as P2O5). Chapter Note 3 does not prescribe a minimum percentage of phosphorus and the HSN Explanatory Note indicates mixtures of superphosphate may be in any proportion. The adjudicating authority's emphasis on an alleged requirement of 16% phosphorus (derived from external standards) and the distinction between 'phosphorus' and 'P2O5' were held to be incorrect. Documentary classification by the Directorate of Agriculture further supports treatment as fertilizer. On these bases Power Gold falls within heading 3103. [Paras 10]

Power Gold merits classification under CETSH 3103 and is eligible for exemption under the notifications relied upon for the material period.

Classification of fertilizers - organic manure - eligibility for exemption under Notification No. 1/2011 - CE and Notification No. 12/2012 - Product 'Bio Gold' (organic manure) is classifiable under CETSH 3101 (organic/animal fertilizers). - HELD THAT: - The tribunal considered the composition and nature of Bio Gold, which is made from poultry manure and on testing was found to contain carbon and small amounts of phosphorus, potassium and nitrogen; the test report matched specifications for organic manure in Schedule IV of the Fertilizer Control Order, 1985. The Directorate of Agriculture's certificate treating Bio Gold as a fertilizer supports that classification. Given its origin as animal-derived organic manure and the test results, Bio Gold falls within Chapter 31 (animal/vegetable fertilizers) and specifically under the appropriate subheading, entitling it to the exemptions under the cited notifications for the period in question. [Paras 10]

Bio Gold merits classification under Chapter 31 (CETSH 3101) and is eligible for exemption under Notification No. 1/2011 and Notification No. 12/2012 during the material period.

Residuary entry for chemical products not elsewhere specified - classification of fertilizers - penalty and allegation of suppression - Demand and classification of NPK Fertilizer under Chapter 38 and the adjudicated demand for duty on NPK are unsustained; no case of suppression or penal consequences is made out. - HELD THAT: - The show cause notice did not challenge the classification of the NPK Fertilizer (which was acknowledged under CETSH 3101) yet the impugned order recorded a demand without assigning reasons for reclassifying or taxing that product. The tribunal found no discussion or basis in the record to support classification of NPK under Chapter 38 or to sustain the demand. Further, since the primary disputes resolved relate to classification, there is no finding of suppression or intention to evade duty; therefore penalty and allegations of suppression were not warranted. [Paras 10]

The demand of duty on the NPK Fertilizer is set aside for want of reasoned classification in the impugned order; no penalty is sustainable as suppression or intent to evade duty is not established.

Final Conclusion: The tribunal allowed the appeals: Power Gold held to be classifiable under CETSH 3103 and Bio Gold under CETSH 3101, both eligible for exemption under Notification No.1/2011 and Notification No.12/2012 for the material period; the demand in respect of NPK Fertilizer was set aside for lack of reasoned basis and no penalty for suppression was sustained.

Benefit of job work notification under Notification 214/86 - liability to pay duty in job work - manufacturer versus principal - invocation of extended period of limitation where point of law was referred to a Larger Bench

Liability to pay duty in job work - manufacturer versus principal - benefit of job work notification under Notification 214/86 - Liability for duty on goods manufactured on job work lies with the job-worker (manufacturer) and entitlement to job-work treatment cannot be denied to the job-worker merely because suppliers/principals did not follow the procedural formalities. - HELD THAT: - The Tribunal applied the Larger Bench decision in Thermax Babcock & Wilcox Ltd., which settles that the liability to pay duty in respect of goods produced on job work rests with the manufacturer (job-worker). The facts admitted that goods were received for job work and returned, and that suppliers had not followed procedures under Notification 214/86. Having regard to the Larger Bench ruling, the proper legal position is that the job-worker bears duty-liability and the failure of principals to follow procedural formalities does not automatically dis-entitle the job-worker to job-work treatment where the manufacture and return are not disputed.

Liability to pay duty in respect of goods produced on job work lies with the manufacturer (job-worker); benefit of job-work notification cannot be denied to the job-worker solely because the principals did not follow Notification 214/86 procedures.

Invocation of extended period of limitation where point of law was referred to a Larger Bench - Demand made beyond the normal period of limitation is not maintainable where there was a bona fide legal doubt that had been referred to a Larger Bench, and consequently extended period cannot be invoked. - HELD THAT: - The Tribunal found that at the relevant time there existed conflicting authority and a substantial doubt on the legal position (specifically on liability in job-work cases) which was referred to the Larger Bench. Reliance on precedent (Marsha Pharma) supports that where a point of law was unsettled and referred to a Larger Bench, invoking the extended period of limitation is not appropriate. Applying that principle, the Tribunal set aside demands raised beyond the normal limitation period and, as attendant relief, set aside the penalty confirmed by the Commissioner (Appeals).

Demand beyond the normal period of limitation is set aside due to bona fide legal doubt referred to a Larger Bench; penalty confirmed by the Commissioner (Appeals) is also set aside.

Final Conclusion: Appeal partly allowed: demands and penalty confirmed for periods barred by extended limitation are set aside; the legal position that liability in job-work cases lies with the manufacturer is recognised in accordance with the Larger Bench decision.

Mandatorily drawn samples for testing not liable to excise duty - controlled samples retained for shelf life and complaint analysis not liable to duty - marketability test for levy of excise duty - regulatory testing under the Drugs and Cosmetics Act affecting marketability - denial of Modvat credit in respect of inputs consumed or destroyed in mandatory testing - relevance of maintenance of accounts of samples to discharge burden of proof

Mandatorily drawn samples for testing not liable to excise duty - controlled samples retained for shelf life and complaint analysis not liable to duty - marketability test for levy of excise duty - regulatory testing under the Drugs and Cosmetics Act affecting marketability - Whether samples withdrawn for mandatory quality testing (including controlled samples retained for future testing) are exigible to Central Excise duty. - HELD THAT: - The Tribunal found that samples withdrawn for mandatory in house testing of pharmaceutical products and controlled samples retained for shelf life analysis/complaint investigation are not in a marketable condition when withdrawn and are consumed or destroyed in the course of testing. The decision in ITC Ltd. was distinguished on facts: cigarettes are a physically marketable commodity before testing, whereas pharmaceutical goods require statutory testing under the Drugs and Cosmetics Act and Rules before they can be said to be marketable. Reliance was placed on earlier tribunal decisions (including Glaxo Smithkline and Thermax Culligan) holding that samples mandatorily drawn and used up/destroyed during testing, or retained as control samples tested later, do not attract excise duty. Applying those precedents and the distinction on regulatory requirements and marketability, the Tribunal concluded that duty could not be imposed on such samples in the appellant's case. [Paras 5, 6]

Demand of excise duty on samples withdrawn for mandatory testing and on controlled samples is not sustainable; appeals allowed on this ground.

Denial of Modvat credit in respect of inputs consumed or destroyed in mandatory testing - relevance of maintenance of accounts of samples to discharge burden of proof - Whether denial of Modvat credit for storage of inputs used in making samples and for destruction of inputs before use in production was justified. - HELD THAT: - The Tribunal held that denial of Modvat credit in respect of inputs stored for manufacture of samples and destroyed in the course of mandatory testing was incorrect. The reasoning followed the view that where samples are legitimately consumed in the process of mandatory quality control under statutory regulatory regime, corresponding inputs are not liable to be treated as cleared excisable goods for levy purposes and Modvat credit cannot be denied on that basis. The Tribunal relied on precedents which also recognise that absence of evidence of removal or misuse of control samples is fatal to a demand; however, the present facts and regulatory context warranted allowance of the appellant's claim. [Paras 5, 6]

Denial of Modvat credit in respect of inputs relating to mandatory testing/destruction was held to be wrong in law; appeals allowed on this ground.

Final Conclusion: Relying on tribunal precedents and distinguishing the Apex Court decision in ITC on facts, the appeals were allowed: demands of excise duty on samples withdrawn for mandatory pharmaceutical testing (including controlled samples) and the concomitant denial of Modvat credit were set aside.

Rectification of mistake apparent from the record - limitation period for rectification - power of Appellate Tribunal to amend its order - equal application of statutory limitation to party-filed and Tribunal-initiated rectification - service tax liability for export of services during transitional period - alleged discriminatory demand and Article 14

Rectification of mistake apparent from the record - limitation period for rectification - power of Appellate Tribunal to amend its order - equal application of statutory limitation to party-filed and Tribunal-initiated rectification - Whether the six months limitation prescribed by Section 35C(2) applies equally when rectification is sought by a party and when rectification is undertaken suo motu by the Tribunal. - HELD THAT: - The Court examined sub-section (2) of Section 35C which empowers the Appellate Tribunal to amend any order within six months to rectify a mistake apparent from the record and to do so when the mistake is brought to its notice by a party or Revenue. The provision contains no distinction between rectification proceedings initiated by the Tribunal suo motu and rectification applications filed by a party. The limitation of six months, as substituted by the Finance Act, 2002, is applicable to the rectification power of the Tribunal and to applications for rectification made by either the Revenue or the other party to the appeal. Consequently, the submission that limitation applies only to suo motu action by the Tribunal and not to party-filed applications was rejected. [Paras 8, 9]

The six months limitation under Section 35C(2) applies to rectification applications filed by parties as well as to rectification proceedings by the Tribunal.

Limitation period for rectification - Whether the Tribunal was justified in rejecting the rectification application as time-barred. - HELD THAT: - The Tribunal found that its final order was dated 19.02.2010 and that the application for rectification (review/rectification) was filed beyond the six-month period prescribed by Section 35C(2). The High Court noted that the assessee did not place on record the date of filing of the rectification application and that there was no material to reach a different conclusion. In view of the statutory six-month limitation and the Tribunal's finding of delay, the Court found no error in dismissing the rectification application on the ground of limitation. [Paras 4, 9, 10]

The Tribunal's rejection of the rectification application as barred by limitation was upheld.

Service tax liability for export of services during transitional period - Whether service tax was payable by the appellant for the period from 15.03.2005 to 15.06.2005 by applying the amended provision of Rule 3(2) of the Export of Service Rules, 2005. - HELD THAT: - This question was specifically admitted for consideration by the Court. Having considered the matter, the Court answered the admitted questions against the assessee and in favour of the Revenue. The appeal did not succeed on this ground and no interference was made with the Tribunal's conclusion as recorded in the impugned order. [Paras 5, 10]

The Tribunal's conclusion on service tax liability for the said period was sustained and the question was answered against the assessee.

Alleged discriminatory demand and Article 14 - Whether the appellant was discriminately treated in the Union Territory of Pondicherry such that Article 14 was violated. - HELD THAT: - The contention that the appellant alone was singled out and demanded service tax, amounting to a violation of Article 14, formed one of the admitted questions. The Court considered the point but found no merit in the appeal. The admitted question regarding discriminatory treatment was answered against the appellant and in favour of the Revenue. [Paras 5, 10]

The claim of discriminatory treatment invoking Article 14 was rejected and the question was decided against the appellant.

Final Conclusion: The High Court dismissed the appeal. The Court held that Section 35C(2)'s six-month limitation for rectification applies equally to applications filed by parties and to rectification proceedings, upheld the Tribunal's rejection of the rectification application as time barred, and answered the other admitted questions (relating to service tax applicability for the period 15.03.2005 to 15.06.2005 and alleged violation of Article 14) against the assessee in favour of the Revenue.

CENVAT credit of service tax on input services - eligibility of credit for commission paid to sales/distribution agents - sales promotion versus mere sale of goods - clarificatory explanation to the definition of "input service" with effect from 03.02.2016 - Board Circular No. 943/4/2011-CX dated 29.04.2011 - precedent of CESTAT in M/s. Krishi Icon on applicability of the explanation

Eligibility of credit for commission paid to sales/distribution agents - sales promotion versus mere sale of goods - CENVAT credit of service tax on input services - Whether CENVAT credit of Service Tax paid on commission to overseas sales/distribution agents is admissible where the agents are contractually obliged to "actively promote" the appellant's products. - HELD THAT: - On the facts before the Tribunal the distributor/commission agent agreement expressly required the distributor stationed abroad to "sell and actively promote the sale of Greaves Products" and to maintain a sales force to "actively solicit the sale and promote the advantages" of the products. The Tribunal found that these contractual obligations show the agents performed sales promotion activities and not merely acts of sale of goods. The Gujarat High Court decision in M/s. Cadila Healthcare Ltd. was held inapplicable on these factual distinctions. The Board Circular No. 943/4/2011-CX, which explains that remuneration to sales commission agents is linked to actual sale and involves sales promotion, was noted. The Tribunal's earlier decision in M/s. Krishi Icon treating the explanation inserted with effect from 03.02.2016 as clarificatory and holding that commission paid for sales commission activities prior to that date is eligible for credit was followed. Applying these considerations, the denial of credit was held to be unjustified and the impugned order was set aside. [Paras 6, 7]

Credit of Service Tax paid on commission to the overseas sales/distribution agents was held admissible because the agents' contractual obligations demonstrated activities of sales promotion rather than mere sale; the impugned denial of credit was set aside and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the Service Tax paid on commission to the overseas distributors/agents qualified as input service credit on the facts (agent obligations to actively promote sales), following the Board circular and the Tribunal's view in M/s. Krishi Icon; the denial of credit by the lower authorities was set aside with consequential reliefs.

Suo moto re-credit of Cenvat - payment of service tax twice - re-creditability of Cenvat when duty paid twice - deposit versus tax distinction where duty paid twice - recovery under Rule 14 of Cenvat Credit Rules - penalty under Rule 15 of Cenvat Credit Rules

Suo moto re-credit of Cenvat - payment of service tax twice - re-creditability of Cenvat when duty paid twice - deposit versus tax distinction where duty paid twice - Validity of taking suo moto re-credit of Cenvat where service tax was paid first by debiting Cenvat and subsequently paid again in cash. - HELD THAT: - The Tribunal found that the respondent had debited Cenvat for payment of service tax which was later objected to by the department, and thereafter the respondent paid the same service tax in cash. Once the tax was paid twice, the excess payment is to be treated as a deposit and not as tax, entitling the assessee to re-credit the amount earlier debited from Cenvat. The Court relied on precedents, including Motorola India (Karnataka High Court) and the Tribunal's decision in J.K. Lakshmi Cements, which hold that where duty/tax stands paid twice the assessee may correct entries and take re-credit suo moto; the Larger Bench decision to the contrary was held to be inapplicable where earlier judicial decisions recognized re-creditability when tax is paid twice. Applying these principles to the facts (tax paid via Cenvat and thereafter by cash), the Tribunal concluded that the assessee's suo moto availment of credit was permissible. [Paras 5]

Suo moto re-credit was valid; the respondent was entitled to re-credit the amount debited from Cenvat after paying the service tax in cash.

Recovery under Rule 14 of Cenvat Credit Rules - penalty under Rule 15 of Cenvat Credit Rules - Whether the adjudicating authority's order rejecting recovery and allowing credit but imposing penalty could be sustained on appeal by the Revenue. - HELD THAT: - The Tribunal noted that the adjudicating authority allowed the credit but imposed a penalty under Rule 15 for alleged procedural violation. Having held that the suo moto re-credit was permissible on the facts and law, the Tribunal found no fault with the impugned order and therefore declined to upset the adjudicating authority's conclusions. The appellate challenge by the Revenue, which contended that suo moto credit was impermissible and that relevant provisions were not cited, was dismissed in view of the legal position that where tax has been paid twice the initial Cenvat debit stands re-creditable; consequently the impugned order (which had allowed credit and imposed penalty) was upheld. [Paras 7]

Revenue's appeal dismissed; impugned order upheld (credit allowed and penalty retained as per the adjudicating authority's order).

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the adjudicating authority's order: the respondent's suo moto re-credit of Cenvat following double payment of service tax was held valid, and the impugned order (allowing credit and imposing penalty) was sustained.

Audit assessment - Turnover escaping assessment - Non-obstante clause and its limited operation - Section 34(8A) - initiation of assessment in respect of a particular transaction or claim - Finality of assessment and prohibition on re-opening concluded assessments

Section 34(8A) - initiation of assessment in respect of a particular transaction or claim - Finality of assessment and prohibition on re-opening concluded assessments - Power of the authority under section 34(8A) to initiate assessment in respect of a transaction or claim after an audit assessment for the same period has attained finality. - HELD THAT: - The Court held that sub-section (8A) of Section 34 cannot be read as empowering the assessing authority to correct an error in an audit assessment or to re-open matters which have already been subjected to scrutiny and have attained finality. The provision is intended to permit initiation of assessment proceedings in respect of a specific transaction or claim where some proceedings are pending and the transaction or claim has not been subjected to audit assessment under sub-section (2). The power under sub-section (8A) is available when proceedings are ongoing and a particular transaction or claim requires separate assessment; it is not a vehicle to enable the authority effectively to sit in appeal over its own completed audit assessment. Applying this principle to the facts, the assessments for A.Y. 2011-12 and A.Y. 2012-13 had been completed, were not challenged within the statutory period and had attained finality; consequently no proceedings were pending on the dates the impugned notices were issued and subsection (8A) could not lawfully be invoked to reopen those concluded assessments. [Paras 4, 5]

Sub-section (8A) of Section 34 cannot be invoked to initiate assessment in respect of transactions already assessed and finally concluded; the notices issued invoking Section 34(8A) in respect of the two assessment years were invalid.

Non-obstante clause and its limited operation - Audit assessment - Effect of the non-obstante clause in Section 34(8A) vis-a -vis other assessment provisions where assessment proceedings are not pending. - HELD THAT: - The Court examined authorities on the construction of non-obstante clauses and emphasised that such clauses must be construed in light of legislative intent and harmonised with the statute as a whole. A non-obstante provision does not confer unlimited or unconstrained power; it must be given effect only to the extent intended by the legislature. Applying these principles, the Court concluded that the non-obstante language in sub-section (8A) does not permit the assessing authority to invoke that clause to reopen and reassess transactions after the audit assessment has attained finality and when no proceedings are pending; the clause cannot be used to negate the finality of completed assessments. [Paras 4]

The non-obstante clause in Section 34(8A) must be read restrictively within the legislative scheme and does not authorise initiation of fresh assessment in respect of transactions already finally assessed when no proceedings are pending.

Final Conclusion: Both petitions succeed. The impugned notices dated 04/05.09.2018 and 05.09.2018 issued under Section 34(8A) of the Gujarat Value Added Tax Act, 2003 for A.Y. 2012-13 and A.Y. 2011-12 respectively are quashed and set aside; no order as to costs.

Penalty for intention to evade tax - requirement of recorded satisfaction in penalty order - technical defect in statutory declaration form - exemption of 100% export oriented unit

Requirement of recorded satisfaction in penalty order - penalty for intention to evade tax - Whether a penalty under the Act can be sustained in the absence of a recorded satisfaction by the Assessing Officer that the dealer had intention to evade tax. - HELD THAT: - The Act permits imposition of penalty only where the Assessing Officer is satisfied that the offending dealer had an intention to evade tax; such satisfaction must be manifested in the penalty order itself. The court held that satisfaction cannot be inferred in revision proceedings and must appear on a plain reading of the order. In the present case the penalty order merely records defaults in filling Form-31 but does not record the required satisfaction that the assessee intended to evade tax. Consequently the statutory precondition for levy of penalty was not met. [Paras 12]

Penalty quashed for want of the statutory satisfaction being recorded in the penalty order.

Technical defect in statutory declaration form - exemption of 100% export oriented unit - penalty for intention to evade tax - Whether a mere technical defect in Form-31 warrants imposition of penalty where there is no evidence of intention to evade tax and the assessee is a 100% export oriented unit exempt under the Act. - HELD THAT: - On the facts the goods were accompanied by consignment note, bill of entry and excise certificate and the consignor - not the assessee - failed to complete certain columns on Form-31. The assessee was a 100% EOU holding an exemption certificate and there was no allegation or material to show it had sold the goods or intended to evade tax. Given absence of any finding or evidence of intent, and the statutory requirement that penalty hinges on such intent, a mere technical omission in the declaration form did not justify imposing penalty on the assessee. The Tribunal's reduction of penalty did not cure the jurisdictional defect in the original imposition. [Paras 5, 6, 8, 13]

Mere technical defects in Form-31, in absence of proved intention to evade tax and in the factual matrix of a 100% EOU, do not warrant imposition of penalty.

Final Conclusion: Revision allowed; Tribunal order dated 19.3.2008 set aside. The question whether a mere technical defect in Form-31 warrants penalty is answered in the negative in favour of the assessee and against the revenue.

JKM Graphics principle - Revised assessment under the Tamil Nadu Value Added Tax Act, 2006 - remand for fresh assessment applying JKM Graphics principle - input tax credit mismatch enquiry and verification

JKM Graphics principle - Revised assessment under the Tamil Nadu Value Added Tax Act, 2006 - Impugned revised assessment was set aside solely for non adherence to the JKM Graphics principle. - HELD THAT: - The Court found that the facts of the present petition mirror an earlier petition involving the same writ petitioner in which the Court held that where mismatches in returns are noticed, the assessing authority must first make departmental enquiries (including verification with the other end dealer's assessing officer) and record the scope of such enquiry and the prima facie basis for revision before issuing show cause notices. Applying that reasoning, the Court set aside the revised assessment order dated 23.11.2018 on the sole ground that the Revisional authority did not adhere to the JKM Graphics principle. No opinion was expressed on the merits of the assessment itself.

Impugned order dated 23.11.2018 is set aside solely for non adherence to the JKM Graphics principle.

Remand for fresh assessment applying JKM Graphics principle - input tax credit mismatch enquiry and verification - Matter remitted to the revisional authority to redo the assessment in accordance with law, applying the JKM Graphics principle, with opportunity to the assessee to furnish documents. - HELD THAT: - The Court directed that the writ petitioner shall submit all supporting documents to the second respondent within a fortnight of receipt of the order. The second respondent was required to redo the assessment expeditiously and in conformity with the JKM Graphics principle - i.e., after appropriate internal verification and enquiry regarding mismatch and after recording the scope and basis of any prima facie view before issuing further notices - without the Court expressing any view on the correctness of the claim or assessment on merits.

Writ petitioner to supply supporting documents within a fortnight; second respondent to redo the assessment applying JKM Graphics principle expeditiously.

Final Conclusion: The revised assessment order dated 23.11.2018 is set aside solely for non adherence to the JKM Graphics principle; the petitioner is directed to produce supporting documents within a fortnight and the revisional authority is directed to re assess in accordance with law and the JKM Graphics principle, expeditiously; no order as to costs.

Purchase of High Speed Diesel Oil on concessional rate by way of 'C' forms - continuing entitlement to pre-GST concessional interstate purchase after introduction of GST - binding effect of a High Court decision in rem pending stay or reversal - obligation of assessing authorities to apply precedent to all pending assessments - direction to permit download/access of 'C' forms by eligible dealers

Purchase of High Speed Diesel Oil on concessional rate by way of 'C' forms - continuing entitlement to pre-GST concessional interstate purchase after introduction of GST - binding effect of a High Court decision in rem pending stay or reversal - obligation of assessing authorities to apply precedent to all pending assessments - direction to permit download/access of 'C' forms by eligible dealers - Petitioner's entitlement to be permitted to download 'C' forms and to purchase High Speed Diesel Oil on concessional rate in light of existing High Court precedents, and the respondents' obligation to implement those precedents forthwith. - HELD THAT: - The writ petition was disposed of on the basis that the controversy falls squarely within the rule laid down in the earlier Single Judge decision in M/s. Ramco Cements Ltd., which was not stayed or reversed and therefore continues to govern. A subsequent Single Judge order in Southern Cotspinners Coimbatore Private Limited expressly directed that until the Ramco Cements order is stayed or reversed, assessing authorities in Tamil Nadu must apply its rationale to pending assessments; paragraphs 5 and 6 of that order were relied on. Given that Ramco Cements remains effective and no dispute as to facts exists, the court held that the Department cannot restrict access to download 'C' forms to only parties to the Ramco Cements case; the decision operates in rem and is applicable to all dealers entitled to benefit under it. Consequentially, the respondents were directed to take necessary action to permit the petitioner (and similarly placed dealers) to download 'C' forms and to implement the precedent without delay, within a short specified period. [Paras 10, 11]

Writ petition allowed; respondents directed to permit download of 'C' forms and to implement the Ramco Cements rationale forthwith within five working days; connected miscellaneous petition closed.

Final Conclusion: The petition is allowed: the Revenue/assessing authorities must permit the petitioner (and similarly placed dealers) to download 'C' forms and apply the Ramco Cements decision to pending assessments until that decision is stayed or reversed, with action to be taken within five working days.

Consideration of objections in assessment proceedings - deemed assessment and best judgment assessment - alternate remedy by way of statutory appeal under Section 51 of the TNVAT Act - relegation to alternate remedy in fiscal matters with rigour

Consideration of objections in assessment proceedings - Whether the assessing authority neglected to consider the objections filed by the petitioner in the reassessed order. - HELD THAT: - The impugned order records issuance of notice for personal hearing, attendance of an authorised representative and filing of objection letters and documents. The Court observed that the complaint that objections were not considered gives rise to grounds which are essentially appellate in nature and turn on factual evaluation of how the objections were addressed in the impugned order. Such questions fall within the realm of statutory appeal and are not appropriate for deciding in writ proceedings in the present factual matrix. [Paras 11, 14, 16]

The alleged failure to consider objections is a matter for the statutory appeal and not for adjudication in this writ petition.

Alternate remedy by way of statutory appeal under Section 51 of the TNVAT Act - relegation to alternate remedy in fiscal matters with rigour - Whether the writ petitioner should be relegated to the alternate statutory remedy of appeal instead of entertaining the writ petition. - HELD THAT: - The Court noted that an appeal to the Appellate Deputy Commissioner under the TNVAT Act is available. Citing the settled principle that alternate remedy in fiscal matters must be applied with rigour, the Court exercised its discretion to require the petitioner to avail the statutory appeal. The Court also recorded that if there is any delay in filing the appeal the petitioner may seek condonation and exclusion of time, and such applications will be considered on their merits uninfluenced by the present order. [Paras 15, 16, 17]

The petitioner is relegated to file the statutory appeal under Section 51 of the TNVAT Act; the writ petition is dismissed subject to the petitioner's right to pursue appeal and any condonation application.

Deemed assessment and best judgment assessment - Whether the reassessment ought to have been a revised assessment or a best judgment assessment, or whether deemed assessment provisions were attracted. - HELD THAT: - The Court noted divergent contentions on applicability of deemed assessment and best judgment assessment provisions and observed that these questions relate to the appropriate mode of assessment and involve factual and legal determinations more suitably ventilated in the appellate forum. The Court declined to entertain detailed adjudication on whether Section 22(2) deemed assessment, Section 22(4) best judgment, or revision under Section 27 should have been applied, leaving such contentions open to be raised before the Appellate Authority. [Paras 9, 13, 16]

Questions regarding deemed assessment, best judgment assessment or revision are left for consideration in the statutory appeal and not decided in this writ petition.

Final Conclusion: Writ petition dismissed; petitioner relegated to avail the statutory appeal to the Appellate Deputy Commissioner under Section 51 of the TNVAT Act, with liberty to apply for condonation of delay and exclusion of time which shall be considered on merits; no order as to costs.

Interest on belated payment - remission of tax, penalty or interest - power of Government to notify remission - condition precedent to consideration - revival of impugned order

Interest on belated payment - revival of impugned order - Writ petitioner in W.P.No.18812 of 2019 (CST) directed to pay the interest specified in the impugned order within a fortnight, failing which the impugned order shall stand revived and respondents may proceed in accordance with law. - HELD THAT: - The Court recorded that the interest payable under the impugned CST order amounts to Rs. 42,127/-. The petitioner undertook to pay that sum within a fortnight from receipt of the order; the Court directed payment on that basis and specified that non-payment will result in automatic revival of the impugned order, leaving remedies to the respondent to proceed as per law. The order is final and operative subject to the conditional payment directed by the Court. [Paras 6]

Payment of Rs. 42,127/- within a fortnight; non-payment will revive the impugned order and respondents may proceed in accordance with law.

Power of Government to notify remission - remission of tax, penalty or interest - condition precedent to consideration - communication to Government - Application for remission of interest under the TNGST/TNVAT scheme (impugned interest Rs. 39,98,914/-) directed to be considered by the Government under its statutory power, subject to the petitioner making an interim payment of Rs. 10,00,000/- within eight weeks; upon payment the Government to decide the remission application within eight weeks from payment and communicate the decision within seven working days. - HELD THAT: - The Court noted the statutory power of the Government to remit tax, penalty or interest and the petitioner's representation for remission. As a condition precedent to consideration of that representation the Court imposed an obligation on the petitioner to demonstrate bonafides by paying Rs. 10,00,000/- (approximately 25% of the interest claimed) within eight weeks. The Court acknowledged that the power to grant remission vests with the Government as defined in the statute and directed the State counsel to communicate the order to the Government for consideration of the petitioner's remission application. The Court provided that failure to pay the specified sum will result in automatic revival of the impugned order, while compliance will trigger the Government's statutory consideration and disposal within fixed time frames, to be communicated to the petitioner. [Paras 8, 9, 11]

Petitioner to pay Rs. 10,00,000/- within eight weeks; if paid, Government to consider and dispose of the remission application within eight weeks from payment and communicate the decision within seven working days; failure to pay will revive the impugned order.

Final Conclusion: Writ petitions disposed by conditional orders: in the CST matter the petitioner is directed to pay the specified interest within a fortnight or face revival of the impugned order; in the TNGST/TNVAT matter the petitioner must pay Rs. 10,00,000/- within eight weeks to secure Government consideration of a remission application, with prescribed timelines for decision and communication, failing which the impugned order will be revived.

Correction of inadvertent clerical error in judgment - construction of appellate decree to effectuate original intention - continuance of parties' banking arrangements - scope of appellate restoration of lower court order - dismissal of contempt petitions as otiose - non-justiciability of collateral relief beyond appeal scope

Correction of inadvertent clerical error in judgment - construction of appellate decree to effectuate original intention - continuance of parties' banking arrangements - Substitution in para 59 of the April 3, 2019 judgment of the word 'management' with 'banking operations' to correct an inadvertent mistake and to clarify the scope of the arrangement to be continued. - HELD THAT: - The Court found that the reference in paragraph 59 to the 'arrangements arrived at in respect of the management of the Hamdard in terms of resolution dated 28.04.2015' was inadvertent because the resolution of 28.04.2015 related solely to operation of two bank accounts in Corporation Bank and had no connection with the management of Hamdard. The Single Bench had not granted the appellant exclusive right to operate bank accounts; rather, it directed continuation of the voluntary banking arrangements of 28.04.2015. Consequently, the word 'management' is required to be substituted by 'banking operations' so that the appellate order accurately reflects the limited nature of the arrangement being continued and does not confer any wider managerial control which was not adjudicated or granted by the Single Bench. [Paras 9, 10, 11]

Para 59 of the judgment dated April 3, 2019 is modified by substituting 'banking operations' for 'management', clarifying that the continuation relates only to the banking arrangements of 28.04.2015 and does not confer managerial rights.

Dismissal of contempt petitions as otiose - Disposition of contempt petitions lodged in consequence of the April 3, 2019 judgment following the correction made by the Court. - HELD THAT: - Having corrected the inadvertent terminology in paragraph 59 to reflect the proper scope of the order, the Court held that no further orders were necessary in the contempt proceedings which had arisen from the earlier text. In view of the substitution and clarification, the contempt petitions do not call for separate relief and are therefore disposed of. [Paras 12]

The contempt petitions are dismissed as no orders are called for in light of the amendment to the judgment.

Non-justiciability of collateral relief beyond appeal scope - Application seeking determination of who shall represent Hamdard in various criminal proceedings and related reliefs was not entertained by this Court. - HELD THAT: - The Court observed that the question of authorised representation of Hamdard in ongoing criminal proceedings and the appointment of particular representatives falls outside the scope of the appeals decided by this Court. The applicant's grievance about appointment of the appellant's son as authorised representative raises matters that are ancillary and are more appropriately litigated in the pending civil suit or before the relevant criminal courts. Accordingly, the interlocutory application seeking directions in that regard was disposed of without granting the substantive relief and the applicant was left free to seek appropriate relief in the civil suit. [Paras 13, 14, 15, 16]

The application is disposed of; the applicant may pursue appropriate relief in the pending civil suit as the matter falls beyond the scope of the appeals decided by this Court.

Final Conclusion: The Court corrected an inadvertent terminological error in its earlier judgment by substituting 'banking operations' for 'management' in paragraph 59, clarified that the continuation relates only to the 28.04.2015 banking arrangements (and not to managerial control), dismissed the consequent contempt petitions as otiose, and disposed of the application about authorised representation in criminal proceedings while leaving the applicant to seek appropriate relief in the pending civil suit.

Reference to arbitration pursuant to arbitration clause - Enforcement of arbitration agreement and exclusion of writ remedy - Appointment of sole arbitrator by court on joint request - Independence and impartiality under Section 12 of the Arbitration and Conciliation Act, 1996 - Seat of arbitration as agreed in contract - Fees payable to arbitrator in accordance with the Fourth Schedule to the Arbitration and Conciliation Act, 1996

Reference to arbitration pursuant to arbitration clause - Enforcement of arbitration agreement and exclusion of writ remedy - The arbitration clause in the MoU prevails and the dispute must be referred to arbitration rather than adjudicated by writ. - HELD THAT: - The MoU between the parties contains a comprehensive arbitration clause providing for settlement of disputes by arbitration at Aurangabad. The High Court declined to entertain the writ petition on the ground that the arbitration clause must be given effect to. On the hearing of the Special Leave Petition the petitioner's counsel expressly submitted to refer the dispute to arbitration in terms of the MoU. In light of the arbitration agreement and the parties' submission, the Court recorded that the matter should proceed to arbitration and did not permit continuation of the writ remedy.

Writ petition is not to be adjudicated; the dispute is to be referred to arbitration in terms of the MoU.

Appointment of sole arbitrator by court on joint request - Independence and impartiality under Section 12 of the Arbitration and Conciliation Act, 1996 - Seat of arbitration as agreed in contract - Fees payable to arbitrator in accordance with the Fourth Schedule to the Arbitration and Conciliation Act, 1996 - On the parties' joint request the Court appointed a sole arbitrator subject to statutory declarations and fixed other arbitral parameters. - HELD THAT: - The parties jointly requested appointment of Mr. Justice Pratap Hardas (Retd.) as Sole Arbitrator. The Court acceded to the joint request and appointed him, expressly subject to the declarations required by Section 12 of the Arbitration and Conciliation Act, 1996 regarding independence, impartiality and availability to complete the arbitration within 12 months. The Court recorded that the fees would be paid in accordance with the Fourth Schedule and that the seat/place of arbitration, as provided in the MoU, shall be Aurangabad. A copy of the order was directed to be dispatched to the arbitrator and the matter was disposed of accordingly.

Mr. Justice Pratap Hardas (Retd.) is appointed Sole Arbitrator subject to Section 12 declarations; arbitration to be conducted at Aurangabad with fees as per the Fourth Schedule.

Final Conclusion: The Special Leave Petition is disposed of by referring the dispute to arbitration in terms of the MoU and by appointing Mr. Justice Pratap Hardas (Retd.) as Sole Arbitrator subject to the requisite Section 12 declarations, with the seat at Aurangabad and fees in accordance with the Fourth Schedule; pending applications stand disposed of.

Criminal liability of company directors under Section 138 read with Section 141 of the Negotiable Instruments Act - power of High Court under Section 482 Cr.P.C. to quash criminal complaint - prima facie satisfaction for issuance of process by Magistrate - requirement of specific averments that directors were in charge of and responsible for conduct of company's business - role of unimpeachable or incontrovertible evidence at quash stage - no mini trial or roving enquiry at the stage of quashing a complaint

Criminal liability of company directors under Section 138 read with Section 141 of the Negotiable Instruments Act - prima facie satisfaction for issuance of process by Magistrate - requirement of specific averments that directors were in charge of and responsible for conduct of company's business - role of unimpeachable or incontrovertible evidence at quash stage - Validity of issuance of process against the petitioners (directors) in the complaint under Section 138 read with Section 141 of the Negotiable Instruments Act and whether the High Court should quash the complaint under its inherent power. - HELD THAT: - The High Court examined the averments in the complaint and the verification and concluded that the complaint contained the basic and specific averments that at the relevant time the petitioners were directors and were "in charge of and responsible for the day to day affairs and management" of the company, and that the cheques in question were issued in discharge of liability and were dishonoured. Relying on authoritative exposition of law, the court noted that where such basic averments are made a Magistrate may issue process after being prima facie satisfied. The court emphasised that a High Court exercising its power under Section 482 Cr.P.C. does not conduct a mini trial or roving enquiry, but it may quash proceedings in rare cases where unimpeachable, incontrovertible evidence or totally acceptable circumstances demonstrate that a director could not possibly have been concerned with the impugned act. Here the petitioners did not place before the court any such unimpeachable or incontrovertible evidence (for example, proof of resignation, terminal illness or other totally acceptable circumstances) which would satisfy the exceptional threshold for quashing. On an overall reading of the complaint and materials, the court held that the Magistrate had recorded prima facie satisfaction and that the complaint was not amenable to quashing on the grounds urged by the petitioners. [Paras 15, 16, 17, 18]

Process issued by the Magistrate against the petitioners was proper; the petition to quash the complaint is rejected.

Final Conclusion: The writ petition seeking quashing of the complaint and issuance of process against the petitioners (directors) under Section 138 read with Section 141 of the Negotiable Instruments Act is dismissed; rule discharged.