TaxTMI Updates e-Newsletter
Jul 24,2024

Finding of intent to avoid payment of tax - appellate authority's duty to record reasons when reversing findings of fact - validity of appellate order in absence of cogent reasons - e-way bill non-compliance and detention - order under Section 130 of the CGST Act - application of precedent in appellate adjudication

Finding of intent to avoid payment of tax - appellate authority's duty to record reasons when reversing findings of fact - validity of appellate order in absence of cogent reasons - application of precedent in appellate adjudication - Impugned appellate order allowing appeal against detention under Section 130 was liable to be quashed for failing to advert to and reverse the detaining authority's recorded finding of intent to avoid payment of tax and for lacking cogent reasons applying the cited precedent. - HELD THAT: - The detaining authority had, after notice, recorded a specific finding that the goods were being transported without proper documents and that there was an intention to avoid payment of tax. The appellate authority allowed the appeal by reference to this Court's decision in M/s Raj Iron and Building Material, without recording any specific factual finding or reasoned analysis to displace the detaining authority's conclusion on intent. Where an appellate authority overturns a finding of fact-especially one involving intent to evade tax-it is duty bound to record cogent reasons and, if relying on precedent, to explain its applicability to the facts before it. The appellate order failed to demonstrate how the precedent applied or to set out reasons sufficient to justify reversal of the factual finding. In the absence of such reasoned findings, the appellate order cannot stand.

Impugned appellate order dated 26.4.2019 quashed for want of reasoned decision and failure to reverse the detaining authority's finding of intent to avoid tax.

Final Conclusion: Writ petition allowed; impugned order dated 26.4.2019 passed by the appellate authority is quashed.

Adjudication vitiated by death of party - proceedings against legal heirs - opportunity of hearing - treatment of response of deceased as response of legal representative - remand for fresh adjudication - order under Section 74(9) of the West Bengal GST/CGST Act, 2017

Adjudication vitiated by death of party - order under Section 74(9) of the West Bengal GST/CGST Act, 2017 - Validity of the adjudication order passed after the death of the registered taxpayer - HELD THAT: - The court found on the record that the registered taxpayer died on 7th February, 2024 prior to the personal hearing which had been fixed and that the fact of death was not intimated to the Proper Officer. The court held that where the adjudication proceeds and an order is passed after the demise of the taxpayer, and there was no representation on behalf of the deceased or his estate at the hearing stage, the proceedings and the resulting order stood vitiated because no adjudication could properly be continued or concluded against a dead person. Consequently the order dated 13th March, 2024 passed under Section 74(9) was declared unenforceable and set aside. [Paras 11, 12, 13, 19]

Order dated 13th March, 2024 is unenforceable and set aside as it was passed subsequent to the death of the registered taxpayer.

Proceedings against legal heirs - treatment of response of deceased as response of legal representative - opportunity of hearing - remand for fresh adjudication - Procedure to be followed after setting aside the order and whether the legal heir is entitled to be heard - HELD THAT: - Recognising that the writ petitioner claims to be the legal heir, the court directed that the show cause notice issued to the deceased shall be deemed a notice in favour of the legal representative. The response already filed by the registered taxpayer is to be treated as a response of the legal representative, while permitting the legal representative (the petitioner) to be afforded an opportunity of personal hearing and to file an additional response not inconsistent with the original response. The matter was remanded to the Proper Officer for fresh adjudication in accordance with law, with a direction to conclude the proceedings expeditiously within eight weeks from communication of the order, and with liberty to the Proper Officer to proceed if the legal representative fails to appear without just cause. [Paras 14, 15, 16, 17, 18]

Show cause notice and earlier response are to be treated as addressed to the legal representative; the petitioner shall be given opportunity to be heard and to file additional response; the matter is remanded to the Proper Officer for fresh adjudication within eight weeks.

Final Conclusion: The adjudication order dated 13th March, 2024 (Section 74(9) order) passed after the registered taxpayer's death is set aside as unenforceable; the show cause notice and the deceased's earlier response are to be treated as in favour of the legal representative, who shall be afforded a hearing and may file an additional response, and the Proper Officer is directed to finally adjudicate the matter within eight weeks.

Refund of accumulated input tax credit under inverted duty structure - ultra vires of administrative circular - binding effect of High Court decisions on departmental action - requirement of consistent departmental stand (Kusum Ingot principle)

Refund of accumulated input tax credit under inverted duty structure - ultra vires of administrative circular - Validity of rejection of the petitioner's refund claim for November, 2023 by application of para 3.2 of CBEC Circular No.135/05/2020-GST - HELD THAT: - The Court noted that para 3.2 of CBEC Circular No.135/05/2020-GST had been struck down as ultra vires by several High Courts. In spite of those decisions not being reversed, the respondent applied the Circular to reject the petitioner's refund claim. Applying the principle that the department cannot adopt a contrary stand where binding High Court decisions have declared the Circular ultra vires, and having regard to earlier orders sanctioning refunds to the petitioner for other periods, the Court found the impugned rejection unsustainable. The Court therefore set aside the impugned order and remitted the matter to the respondent to pass a fresh order in the light of the mentioned High Court decisions and the petitioner's earlier sanctioned refunds. The respondent was directed to complete that exercise within three months from receipt of the copy of this order. [Paras 6, 7, 8, 9, 10]

Impugned rejection set aside; matter remitted to respondent for fresh decision in light of the High Court rulings and earlier sanctioned refunds, to be completed within three months.

Final Conclusion: Writ petition allowed; the order rejecting the refund for November, 2023 is set aside and the matter is remitted to the respondent to decide afresh in accordance with the High Court decisions striking down the Circular and in light of the petitioner's earlier sanctioned refunds, within three months.

Classification of tractors under HSN 8701 - rate of tax: 12% vs 28% - Input Tax Credit matching and entitlement where supplier's invoice issued in subsequent financial year - recording of reasons for rejection of explanations - ingredients of Section 74

Classification of tractors under HSN 8701 - rate of tax: 12% vs 28% - recording of reasons for rejection of explanations - Impugned order set aside insofar as the classification and applicable rate of tax for the tractors is concerned and matter remanded for fresh consideration. - HELD THAT: - The impugned order did not address or record reasons for rejecting the petitioner's explanation that the tractors were farm tractors taxable at 12% under the relevant entry, instead merely reproducing the conclusion from the audit and noting absence of cubic capacity on the invoice. The court found that the third respondent failed to consider the petitioner's detailed explanations and therefore the conclusion on classification is unsatisfactory. In view of this failure to deal with the petitioner's contentions and to record reasons, the matter requires fresh consideration including a reasonable opportunity to the petitioner and a personal hearing before a fresh order is passed. [Paras 5, 6]

Order partly set aside on classification; matter remanded for fresh consideration and hearing; fresh order to be issued within three months.

Input Tax Credit matching and entitlement where supplier's invoice issued in subsequent financial year - matching of GSTR-3B with auto-populated GSTR-2A - recording of reasons for rejection of explanations - Impugned order set aside insofar as the ITC mismatch issue is concerned and matter remanded for fresh consideration. - HELD THAT: - The third respondent recorded a contention about ITC matching for an earlier period which was not the contention raised by the petitioner; the petitioner's reply stated that suppliers issued invoices in the subsequent financial year and that ITC was claimable accordingly. Because the impugned order did not deal with the petitioner's actual explanation or record reasons for rejecting it, the court concluded that the issue must be reconsidered after affording the petitioner a reasonable opportunity, including personal hearing. [Paras 5, 6]

Order partly set aside on ITC mismatch; matter remanded for fresh consideration and hearing; fresh order to be issued within three months.

Ingredients of Section 74 - criminal/penal/adjunctive consequences under GST proceedings - No finding was recorded on whether the ingredients of Section 74 were satisfied; the matter remains undecided and requires consideration on remand. - HELD THAT: - The petitioner had contended that the ingredients of Section 74 of the applicable GST enactments were not satisfied, but the impugned order does not contain a finding on this contention. The court observed the absence of any express conclusion on this point, implying that this legal question must be addressed when the respondents reconsider the matters remanded, after affording the petitioner an opportunity of hearing. [Paras 5, 6]

No adjudication on Section 74; to be considered during fresh proceedings on remand.

Final Conclusion: The writ petition is allowed in part: the order dated 24.04.2024 is set aside insofar as the classification/rate issue and the ITC mismatch issue are concerned, and those matters (along with the unanswered contention on the ingredients of Section 74) are remitted for fresh consideration after giving the petitioner a reasonable opportunity, including personal hearing; a fresh order to be passed within three months. Writ disposed of; no costs.

Mandatory issuance of Form GST ASMT-10 upon selection of return and discovery of discrepancies - scrutiny of returns as a remedial, non-adjudicatory process - vitiation of scrutiny conclusions if ASMT-10 is not issued - adjudication under Section 73 not dependent on prior scrutiny under Section 61 - opportunity to be heard and remand for fresh adjudication

Mandatory issuance of Form GST ASMT-10 upon selection of return and discovery of discrepancies - scrutiny of returns as a remedial, non-adjudicatory process - vitiation of scrutiny conclusions if ASMT-10 is not issued - Obligation to issue notice in Form GST ASMT-10 when a return is selected for scrutiny and discrepancies are discovered and consequences of non-issuance - HELD THAT: - The Court examined Section 61(1) and Rule 99(1). While Section 61 employs the permissive 'may' for scrutiny, the obligation to issue Form GST ASMT-10 arises when two conditions are fulfilled: (a) the return is selected for scrutiny and (b) discrepancies are discovered on such scrutiny. Rule 99(1)'s wording that the proper officer 'shall' issue ASMT-10 upon any discrepancy, read with the statutory structure that separates scrutiny from determination of tax, indicates that the ASMT-10 notice is mandatory once those two conditions are satisfied. Scrutiny under Section 61 is a process to verify returns and elicit explanation or acceptance of discrepancies and does not itself effect determination of tax; accordingly, failure to issue ASMT-10 vitiates the scrutiny process and any quantification arising therefrom, and scrutiny conclusions so reached cannot be relied upon for adjudication. [Paras 10, 11, 12, 13, 14]

Where returns are selected for scrutiny and discrepancies are found, issuance of Form GST ASMT-10 is mandatory; non-issuance vitiates the scrutiny findings and any quantification made therein and those findings cannot be used as the basis for adjudication.

Adjudication under Section 73 not dependent on prior scrutiny under Section 61 - adjudication may be initiated on other credible information - Whether adjudication under Section 73 can be initiated only after scrutiny under Section 61 and issuance of ASMT-10 - HELD THAT: - A close reading of Section 73 shows it commences with 'Where it appears to the proper officer', which contemplates initiation of adjudication on the basis of scrutiny, audit, inspection or other credible information. There is no textual indication in Sections 61 or 73 that scrutiny and issuance of ASMT-10 are pre-conditions to exercise adjudicatory power under Section 73. Thus, while ASMT-10 is mandatory if scrutiny yields discrepancies, adjudication under Section 73 is not rendered impermissible merely because scrutiny was not undertaken or ASMT-10 was not issued in cases where adjudication is founded on other information. [Paras 16, 17]

Adjudication under Section 73 is not conditionally dependent upon prior scrutiny under Section 61 or issuance of ASMT-10; adjudication may be initiated on other credible information and is not automatically barred for lack of prior scrutiny.

Opportunity to be heard and remand for fresh adjudication - conditioning of relief on interim payment - Relief and directions in the two writ petitions where ASMT-10 issuance or consideration of the taxpayer's reply was defective - HELD THAT: - In W.P.No.15307 of 2024 the Court could not conclusively find that scrutiny under Section 61 was the foundation for adjudication; however the assessment order was passed ex parte and the petitioner alleged non-receipt of communication. In the interest of justice the impugned order was set aside on condition that the petitioner remit 10% of the disputed tax demand within fifteen days and may submit a reply; upon receipt and satisfaction of the interim payment the authority must provide a reasonable opportunity including personal hearing and pass a fresh order within three months from receipt of the reply. In W.P.No.15330 of 2024 the record showed that returns were selected for scrutiny and discrepancies were noticed but ASMT-10 was not issued and the petitioner's reply (uploaded in DRC-06) was not considered; the matter was remanded for reconsideration, petitioner permitted to file additional reply within fifteen days, and authority directed to provide hearing and pass a fresh order within three months. [Paras 15, 18, 19, 20]

W.P.No.15307/2024: impugned assessment order set aside conditional on payment of 10% of disputed tax and with directions for fresh adjudication after giving opportunity to be heard. W.P.No.15330/2024: impugned order set aside and matter remanded for reconsideration with opportunity to file/add to reply and for personal hearing; fresh order within three months.

Final Conclusion: The Court held that issuance of Form GST ASMT-10 is mandatory where a return selected for scrutiny discloses discrepancies, and failure to issue ASMT-10 vitiates the scrutiny findings and renders them unusable as the basis for adjudication; however, adjudication under Section 73 is not, as a matter of law, strictly contingent upon prior scrutiny. On the facts, one assessment was set aside on conditions including interim payment and a fresh adjudication with hearing; the other matter was remanded for reconsideration after permitting the taxpayer's reply, with directions to conclude fresh orders within three months.

Right to personal hearing - cancellation of GST registration - retrospective cancellation - condonation of delay in filing appeals - remand for fresh adjudication - decision on merits uninfluenced by delay

Right to personal hearing - cancellation of GST registration - remand for fresh adjudication - Petitioner was not afforded a real opportunity of personal hearing before cancellation and the matter requires fresh consideration. - HELD THAT: - The Show Cause Notice called for a reply within seven working days and warned of ex parte decision if the petitioner failed to appear, but did not specify any appointed date or time for personal hearing. The court recorded that, as a consequence, the petitioner was not granted any real opportunity of being heard. In these circumstances and having regard to the importance of hearing before cancellation of registration, the impugned order was set aside and the matter remitted to the Appellate Authority for fresh decision after affording a personal hearing to the petitioner. [Paras 5, 12]

Set aside the impugned order and remand for fresh decision after affording personal hearing to the petitioner.

Condonation of delay in filing appeals - decision on merits uninfluenced by delay - remand for fresh adjudication - The Appellate Authority should decide the appeal on merits uninfluenced by the question of delay, having regard to the extension/condonation of limitation in appropriate cases. - HELD THAT: - The petitioner's appeal to the Appellate Authority was filed after the prescribed period and was not entertained on the ground of delay. The court noted the Supreme Court's order condoning delay in matters where limitation expired prior to 28.02.2022 and, in the peculiar facts of the case, directed that the Appellate Authority decide the appeal afresh on merits uninfluenced by the question of delay. The appellate body was requested to dispose of the appeal expeditiously, preferably within eight weeks. [Paras 10, 12, 13]

Remand to the Appellate Authority to decide the appeal on merits without being influenced by delay, with a direction for expeditious disposal.

Retrospective cancellation - cancellation of GST registration - remand for fresh adjudication - The retrospective cancellation of GST registration required reconsideration because the impugned Show Cause Notice did not propose retrospective cancellation and the cancellation order did not set out reasons for retrospective effect. - HELD THAT: - The cancellation order recorded retrospective cancellation from 15.07.2017, whereas the Show Cause Notice alleged non-filing of a specific return and did not propose any retrospective effect. The impugned cancellation order also failed to state reasons for imposing retrospective cancellation. Given this disconnect and absence of reasons, the court considered it appropriate to remit the matter to the Appellate Authority for fresh adjudication so that the propriety and legality of retrospective cancellation can be examined on merits. [Paras 11, 12]

Remand for fresh consideration of the propriety of retrospective cancellation, in light of the absence of a proposal for retrospective effect in the Show Cause Notice and the lack of reasons in the cancellation order.

Final Conclusion: The petition is disposed of by setting aside the impugned order and remanding the appeal to the Appellate Authority for fresh consideration on merits after affording personal hearing, and without being influenced by the question of delay; the Appellate Authority is requested to decide the appeal expeditiously, preferably within eight weeks.

Violation of principles of natural justice - cancellation of registration - show cause notice with particulars and reasons - right to reasonable opportunity of hearing - requirement to disclose evidence proposed to be relied upon - speaking order - physical service of notice by RPAD pending portal compliance - remand for fresh consideration

Violation of principles of natural justice - cancellation of registration - show cause notice with particulars and reasons - Impugned orders cancelling the petitioner's registration and the appellate order upholding the cancellation were quashed for non-compliance with principles of natural justice where reasons and particulars were not furnished. - HELD THAT: - The Court relied on the guidance in M/s. Aggrawal Dyeing & Printing to hold that an order of cancellation of registration which travels beyond the scope of the show cause notice or which is passed without assigning reasons and furnishing particulars violates the principles of natural justice. Where the authority intends to rely upon inspection reports, spot visit reports or any documentary evidence, that material must first be brought to the notice of the dealer to enable a fair opportunity to respond. For these procedural deficiencies, the impugned orders could not be sustained and were quashed. [Paras 5]

Impugned cancellation orders and the appellate order upholding them are quashed for violation of natural justice; merits not adjudicated.

Show cause notice with particulars and reasons - right to reasonable opportunity of hearing - physical service of notice by RPAD pending portal compliance - speaking order - remand for fresh consideration - Matter remitted to the Assessing Officer to issue a fresh show cause notice containing detailed reasons and particulars, afford reasonable opportunity of hearing, and thereafter pass an appropriate speaking order on merits. - HELD THAT: - Pursuant to the Court's decision, the Assessing Officer is directed to issue a fresh show cause notice incorporating particulars of reasons and the details of any material intended to be relied upon, provide the petitioner a reasonable opportunity to file objections and produce documents, and then pass a speaking order on merits. Until the departmental portal is suitably updated, notices and final orders should be furnished in physical form and served by RPAD as contemplated by the cited guidance. The Court expressly refrained from deciding the substantive merits and limited its direction to ensuring compliance with procedural fairness and adequate disclosure. [Paras 5, 6]

Matter remanded to the Assessing Officer to issue fresh notice with particulars, afford hearing, and pass a speaking order in accordance with law; petitioner permitted to file objections.

Final Conclusion: Writ petition allowed in part: impugned cancellation and appellate orders quashed for breach of natural justice and remitted to the Assessing Officer for fresh notice with particulars, opportunity to be heard and a speaking decision; merits left open.

Quashing and remand for fresh decision - opportunity of hearing - exercise of discretion under Section 161 of the Central Goods and Services Tax Act, 2017 - treatment of order as addendum to show cause notice

Quashing and remand for fresh decision - opportunity of hearing - Impugned assessment order quashed and remitted for fresh adjudication on merits. - HELD THAT: - The court found that the petitioner had filed returns in GST DRC 01A part B and GST DRC 03 on 28.04.2022, copies of which were on record but had not been considered by the assessing authority. The impugned order confirmed the demand while recording non-appearance and non-response, notwithstanding the earlier filed material. In view of the omission to consider the filed returns and the absence of adjudication on merits, the impugned order was held unsustainable. The matter is therefore remitted to the second respondent for fresh consideration on merits and in accordance with law, with the petitioner being granted an opportunity to be heard before any fresh order is passed. [Paras 4, 6, 7, 9]

Impugned order quashed and matter remitted for fresh adjudication; petitioner to be heard before fresh orders.

Exercise of discretion under Section 161 of the Central Goods and Services Tax Act, 2017 - treatment of order as addendum to show cause notice - Directive to provide petitioner opportunity to prompt exercise of Section 161 discretion and procedural directions for further proceedings. - HELD THAT: - The court directed that the petitioner be permitted to file a consolidated reply within 30 days from receipt of the order and may request the assessing authority to exercise its discretion under Section 161 of the GST Act, 2017. The impugned order was to be treated as an addendum to the show cause notice in DRC 01 dated 29.04.2024. The second respondent was directed to pass fresh orders on merits and in accordance with law, preferably within three months of receiving the consolidated reply, ensuring the petitioner is heard prior to finalisation. [Paras 6, 8, 9]

Petitioner to file consolidated reply within 30 days; impugned order treated as addendum; assessing authority to consider Section 161 discretion and pass fresh orders preferably within three months after hearing petitioner.

Final Conclusion: The writ petition is allowed: the impugned assessment order for 2018-19 is quashed and the matter is remitted for fresh consideration; the petitioner may file a consolidated reply within 30 days, the impugned order is to be treated as an addendum to the show cause notice, and the assessing authority must hear the petitioner and pass fresh orders preferably within three months.

Pre-deposit requirement under Section 107(1) of the AP GST Act and Rule 108(1) of the AP GST Rules - acceptance of payment made under DRC-03 as APL-01 pre-deposit - technical glitch in online payment mechanism - condonation of delay in filing appeal - remand for fresh consideration to ascertain compliance

Pre-deposit requirement under Section 107(1) of the AP GST Act and Rule 108(1) of the AP GST Rules - acceptance of payment made under DRC-03 as APL-01 pre-deposit - technical glitch in online payment mechanism - remand for fresh consideration to ascertain compliance - Whether the Appellate Authority was bound to enquire into alleged technical difficulties in making payment under APL-01 and, if satisfied, accept payments made under DRC-03 as constituting the required pre-deposit under APL-01 and proceed with the appeals. - HELD THAT: - The Division Bench's earlier directions required the Appellate Authority to consider whether a technical difficulty prevented payment under APL-01 and to act accordingly. Instead of conducting that enquiry, the Appellate Authority dismissed the appeals solely on the ground that payment under a different head was not in compliance with the Rules and the Act. The Court found that the Appellate Authority did not follow the earlier mandate to ascertain the existence of technical glitches or difficulties that prevented payment under the prescribed head. Accordingly, the impugned orders were set aside and the matters remanded with clear directions: the Appellate Authority must ascertain whether petitioners faced technical difficulties in making the pre-deposit under Form APL-01, and upon being satisfied of such difficulties, accept the payments made under DRC-03 as pre-deposit under APL-01 and process the appeals for further hearing.

Impugned orders dated 22.02.2024 set aside; matters remanded to the Appellate Authority to ascertain technical difficulty in payment under APL-01 and, if satisfied, to accept DRC-03 payments as APL-01 pre-deposit and proceed with the appeals.

Final Conclusion: Writ petitions allowed; orders dismissing the appeals dated 22.02.2024 set aside and matters remanded to the Appellate Authority with directions to verify claimed technical difficulty in making payment under APL-01 and, if satisfied, to treat payments made under DRC-03 as valid pre-deposit under APL-01 and continue with adjudication. No order as to costs.

Seizure and detention of goods in transit - genuineness of accompanying documents (tax invoice and e way bill) - no statutory requirement under GST to declare route of transit - power to detain or seize goods exercisable only where documents are not genuine - inference of intention to evade tax from deviation of route

Seizure and detention of goods in transit - genuineness of accompanying documents (tax invoice and e way bill) - power to detain or seize goods exercisable only where documents are not genuine - Validity of seizure/detention of the consignment where goods were accompanied by tax invoices and e way bills purportedly genuine. - HELD THAT: - The Court found that the goods were accompanied by tax invoices and e way bills and that the genuineness of those documents was not disputed. The statement attributed to the truck driver in Form GST MOV 01 did not support the revenue's allegation that goods were to be unloaded at places not shown in the tax invoices. The Court held that the statutory power of detention and seizure can be exercised only where goods are not accompanied by genuine documents required under the Act; absent any challenge to the authenticity of the documents, seizure was not justified. Having found the documents to be genuine and no material placed on record to impugn them, the detention and seizure orders could not be sustained. [Paras 13, 15, 16, 19]

Seizure and detention quashed as unjustified because goods were accompanied by genuine documents and no cogent material justified seizure.

No statutory requirement under GST to declare route of transit - inference of intention to evade tax from deviation of route - Whether interception of the vehicle at a place not on an alleged 'regular route' or deviation of route permits inference of intention to evade tax and justifies seizure in absence of any statutory requirement to declare the route under GST. - HELD THAT: - The Court noted that unlike the earlier VAT regime, the GST Act does not require the selling dealer to disclose the route to be taken during transportation. The Court held that mere interception of a vehicle at a place other than what the revenue considered the regular route, without supporting material, cannot lead to a mechanical inference of intention to evade tax. Reliance was placed on High Court precedents which disapproved detention solely on the basis of alleged route deviation or undervaluation where no supporting material exists. Since the legislature omitted any provision mandating route disclosure, authorities were not justified in seizing goods merely because the vehicle was not on a particular route. [Paras 14, 17, 19]

Alleged deviation of route did not justify seizure; no inference of intent to evade tax could be drawn in absence of statutory route declaration requirement or supporting material.

Final Conclusion: Impugned order of the Additional Commissioner rejecting the appeal and imposing penalty is quashed; writ petition allowed and detention/seizure set aside as legally unsustainable in view of genuine accompanying documents and absence of any statutory obligation to declare route.

Bar on concurrent proceedings by State where Central Authority has issued notice in respect of the same transaction - interim restraint against departmental proceedings - proceedings under Section 73 of the CGST Act - claim of Input Tax Credit (ITC) arising from the same transaction

Bar on concurrent proceedings by State where Central Authority has issued notice in respect of the same transaction - interim restraint against departmental proceedings - proceedings under Section 73 of the CGST Act - claim of Input Tax Credit (ITC) arising from the same transaction - State authorities restrained from proceeding with impugned show cause notice dated 31.01.2024 on the ground of overlap with earlier Central proceedings. - HELD THAT: - Taking into consideration the petitioner's submission that an ITC claim for the same transaction and for the assessment period July 2017 to March 2019 is already the subject-matter of a notice issued by the Central Goods and Services Tax Authorities under Section 73 of the CGST Act, the Court recorded that a subsequent notice by the State Authorities in respect of the same matter is barred by the principle embodied in Section 6(2)(b) of the CGST Act and the RGST Act. On that basis and as an interim measure, respondent Nos.2, 3 and 4 were restrained from proceeding further pursuant to the impugned show cause notice dated 31.01.2024. The Court clarified that this interim restraint does not affect the Central/CGST Authorities or respondent No.1 in relation to the earlier notice issued to the petitioner on 17.03.2022. The order is interlocutory and directed service and further listing for adjudication of the petition.

Respondent Nos.2, 3 and 4 restrained from proceeding further pursuant to the show cause notice dated 31.01.2024; interim order not to affect CGST proceedings under the earlier notice dated 17.03.2022.

Final Conclusion: Interim injunction granted restraining the State authorities (respondent Nos.2-4) from proceeding on the show cause notice dated 31.01.2024 in view of overlapping Central proceedings concerning the ITC claim for July 2017 to March 2019; Central proceedings unaffected; matter listed for further hearing.

Maintainability of writ against statutory adjudicatory proceedings - availability of alternative statutory remedy - challenge to show cause notice under CGST regime - jurisdictional validity of a show cause notice - denial of interim relief where statutory remedy exists

Maintainability of writ against statutory adjudicatory proceedings - availability of alternative statutory remedy - Whether the writ petition challenging the show cause notice is maintainable in view of the pending statutory adjudication and the availability of alternative remedy - HELD THAT: - The Court observed that the petitioner had already filed a reply to the show cause notice and that the questions raised by the petitioner-relating to correctness of availing input tax credit and payment of late fee for delayed filing of annual returns-fall to be decided by the competent authority under the statute. Given the existence of the statutory adjudicatory process and the remedy provided therein, the Court declined to entertain the writ petition and refrained from intervening in ongoing statutory proceedings. The Court further noted that once the authority decides the matter, the petitioner would have the remedy available under the statute. [Paras 4]

Writ petition is not maintainable at this stage and is not entertained; petitioner to seek remedy through the statutory process.

Challenge to show cause notice under CGST regime - jurisdictional validity of a show cause notice - Whether the show cause notice issued under the CGST Act was without jurisdiction or otherwise illegal - HELD THAT: - The Court expressly recorded that the show cause notice issued in Form GST DRC-01 under the CGST Act was neither without jurisdiction nor against law. Having so found, and in the context of the pendency of statutory proceedings and the petitioner's reply to the notice, the Court declined to adjudicate the substantive merits of the notice in writ jurisdiction. [Paras 4]

The show cause notice is not shown to be without jurisdiction or illegal; no writ relief granted on that ground.

Final Conclusion: The writ petition is dismissed for lack of maintainability; pending interlocutory application, if any, is also dismissed. The petitioner may pursue remedies available under the statute after adjudication by the competent authority.

Impact of GST on existing government contracts - updating Schedule of Rates to incorporate GST - remand for administrative decision - direction to consider representation - opportunity of hearing - stay of coercive action pending administrative decision - requirement of a reasoned and speaking order

Impact of GST on existing government contracts - updating Schedule of Rates to incorporate GST - direction to consider representation - remand for administrative decision - Liberty granted to petitioner to seek administrative redressal regarding additional tax liability on government contracts and updating of the State Schedule of Rates to incorporate GST; matter remitted to the Additional Chief Secretary, Finance Department for final decision. - HELD THAT: - The writ petition seeking a direction that the respondents bear additional tax liability arising from GST and that the State Schedule of Rates be updated to incorporate GST is not finally adjudicated by this Court. Instead, the petitioner is given liberty to file a representation before the Additional Chief Secretary, Finance Department within four weeks. On receipt, the Additional Chief Secretary is directed to take a final decision after consultation with relevant departments within four months. The Court has required that the decision be taken after giving the petitioner an opportunity of hearing and after consideration of the judgments the petitioner intends to rely upon. Thus, the substantive controversy is remitted for fresh administrative consideration and decision on merits rather than being decided by the Court in this petition. [Paras 3, 5]

Representation to be filed within four weeks; Additional Chief Secretary to decide the matter on merits within four months after consultation and hearing; substantive relief remitted for administrative determination.

Stay of coercive action pending administrative decision - opportunity of hearing - requirement of a reasoned and speaking order - Interim protection from coercive action and procedural safeguards pending final administrative decision. - HELD THAT: - The Court ordered that until the Additional Chief Secretary takes the final decision on the representation, no coercive action shall be taken against the petitioner. The protection is conditional on the petitioner making the representation within the stipulated time; failure to do so renders this order ineffective. The Additional Chief Secretary is required to act in accordance with law, afford an opportunity of hearing to the petitioner or authorised representative, and pass a reasoned and speaking order on the merits. [Paras 4, 5]

No coercive action against the petitioner until the administrative decision; protection conditional on timely filing of representation; decision to be reasoned and after hearing.

Final Conclusion: Writ petition disposed of by granting liberty to the petitioner to file a representation; the matter is remitted to the Additional Chief Secretary, Finance Department to decide the substantive issues regarding GST impact and updating of the Schedule of Rates within four months after consultation and hearing, with interim protection from coercive action until that decision.

Interim restraint on coercive recovery - Show cause notice under Section 73(1) of the CGST Act - Obligation to file response and administrative decision - Voluntary deposit of IGST and interest

Interim restraint on coercive recovery - Show cause notice under Section 73(1) of the CGST Act - Interim protection against coercive recovery during pendency of writ petition - HELD THAT: - The High Court recorded that show cause proceedings under Section 73(1) of the CGST Act had been issued and that the petitioner had earlier made voluntary deposits of IGST and interest and had represented to the revenue that it was collating documents to file a comprehensive reply. Having noted these facts and the ongoing representations, the Court directed that if any adverse order is passed against the petitioner during the pendency of the writ petition, the respondents shall not take any coercive steps to recover the amount. This restraint is granted as an interim measure while representations are pending and the writ petition remains sub judice. [Paras 8]

Respondents restrained from taking coercive steps to recover the assessed amount during pendency of the writ petition.

Obligation to file response and administrative decision - Voluntary deposit of IGST and interest - Direction to petitioner to furnish comprehensive response and to respondents to decide representation - HELD THAT: - The Court directed the petitioner to file its comprehensive response by 15.01.2024, observing that the petitioner had represented on 20.11.2023 that documents were being collated. The respondents were directed to take a decision on the representation after receipt of the response. The order frames a timetable for administrative adjudication of the representation before further judicial consideration. [Paras 8]

Petitioner to file response by 15.01.2024; respondents to decide the representation thereafter.

Adjournment and consolidation with connected petition - Adjournment and direction to hear with connected petition - HELD THAT: - The Court listed the matter for further hearing on 13.02.2024 and directed that it be heard with the connected petition CWP-25351-2023, thereby consolidating judicial consideration for similar challenges and ensuring coordinated adjudication. [Paras 7, 9]

Matter adjourned to 13.02.2024 to be heard with the connected petition; copy of order to be placed on connected file.

Final Conclusion: The High Court granted interim protection restraining coercive recovery during the pendency of the writ petition, directed the petitioner to file a comprehensive response by 15.01.2024 and the respondents to decide the representation, and listed the matter for hearing on 13.02.2024 to be heard with the connected petition.

Exemption under Notification No. 12/2017 for services in relation to functions entrusted to Panchayats and Municipalities (Article 243G/243W) - continuous supply of services - transit fee for movement of forest produce (Abhivahan Shulk) as permission/permit charge - exemption where consideration for government/local authority services does not exceed five thousand rupees

Exemption under Notification No. 12/2017 for services in relation to functions entrusted to Panchayats and Municipalities (Article 243G/243W) - transit fee for movement of forest produce (Abhivahan Shulk) as permission/permit charge - Whether Abhivahan Shulk paid to the Forest Department is exempt under the Nil-rated entries for services connected with functions entrusted to Panchayats/Municipalities under Article 243G/243W - HELD THAT: - The Authority examined the nature and use of the fee collected by the Forest Department and the statutory regime under the Indian Forest Act and Chhattisgarh transit rules. The fee is collected in consideration for permitting removal/transport of forest produce (coal) from forest areas and for administrative surveillance and quantification of the produce. The Authority found no nexus between the permit/ transit fee and functions such as "urban forestry, protection of the environment and promotion of ecological aspects" or "social/farm forestry" listed under Articles 243W and 243G respectively. Consequently, the service of granting permission for transit is not a service "in relation to" those municipal or panchayat functions and therefore does not attract the Nil-rated exemption under the specified entries of Notification No. 12/2017. [Paras 8]

Abhivahan Shulk is not eligible for Nil-rating under the entries relating to functions entrusted to Panchayats/Municipalities and is taxable under GST.

Continuous supply of services - exemption where consideration for government/local authority services does not exceed five thousand rupees - Whether the Abhivahan Shulk qualifies for exemption under the entry which exempts government/local authority services where consideration does not exceed five thousand rupees, having regard to the definition of "continuous supply of services" - HELD THAT: - The Authority applied Section 2(33) of the CGST Act and the conditional proviso to the Nil-entry. The fee is paid recurrently throughout the year as transit permissions are granted for removal of coal from the appellant's forest-located mine; payments are vehicle-wise for administrative convenience but relate to an ongoing supply of coal necessitating repeated permissions. That pattern of recurrent payments for permission to move produce from the same source falls within the statutory concept of "continuous supply of services." Applying the proviso, the exemption for supplies by government/local authority is available only if the consideration does not exceed the prescribed threshold in a financial year. The Authority concluded that the cumulative consideration exceeds that threshold in a financial year and therefore the conditional exemption does not apply. [Paras 8]

Abhivahan Shulk does not attract the exemption under the entry for government/local authority services subject to the consideration threshold and is therefore not Nil-rated on that ground.

Final Conclusion: The AAAR affirms that the Abhivahan permission shulk charged by the Forest Department for transit of coal is not covered by the Nil-rated entries for services connected to Articles 243G/243W and does not qualify for the conditional Nil-exemption for low-value government/local authority services; accordingly the fee is liable to GST.

Liability to deduct tax at source u/s 195 - temporal applicability of amendment to Explanation to Section 9(1)(vii) - retrospective operation of fiscal amendment - application of the source rule - delay in filling SLP

HC [2023 (6) TMI 773 - KARNATAKA HIGH COURT] held that Finance Act, 2010 substitution of the Explanation to Section 9(1)(vii) is effective from AY 2011-12; it could not be applied to require TDS u/s 195 for AYs 2009-10 and 2010-11, and the Revenue's appeals are dismissed.

HELD THAT:- There is a gross delay of 296 days in filing this Special Leave Petition. Even otherwise, we do not find any merit in the matter.

Hence, the Special Leave Petition is dismissed both on the ground of delay as well as on merits.

Reopening of assessment u/s 147 - Notice issued after the expiry of four years - gain on sale of land - treating the land in question as ‘stock in trade’ or ‘capital asset’ - As decided by HC 2023 (9) TMI 437 - BOMBAY HIGH COURT] there was no failure to disclose any material fact, on that ground alone the notice issued u/s 148 has to be quashed - HELD THAT:- Following the order dated [2023 (11) TMI 291 - SC ORDER] passed by this Court in SLP, this Special Leave Petition is also dismissed.

Reassessment on dictation of superior authorities - independent application of mind by Assessing Officer - quasi-judicial function of assessing authority and prohibition on external dictation - requirement to hand over seized documents to Assessing Officer within 15 days under Section 132(9A) - doctrine of bias / nemo judex in sua causa and the test of apparent bias - distinction between general superintendence and interference in adjudication - limitation under Section 153 barring de novo reassessment after expiry

Reassessment on dictation of superior authorities - independent application of mind by Assessing Officer - quasi-judicial function of assessing authority and prohibition on external dictation - Whether the Assessing Officer passed the reassessment orders under influence or dictation of superior authorities. - HELD THAT: - The Tribunal's review of correspondence and the AO's office-record plainly show persistent directions, drafting guidance and control from officers at the Directorate of Investigation (Delhi) and the CIT, Jabalpur, culminating in framing of the assessments by the AO. The letter of DDIT (Inv.) dated 20.03.95 and contemporaneous notings and entries (including requests for approval, telephonic instructions and drafting of questionnaires and 'skeleton' orders) demonstrate that the AO did not exercise an independent, unbiased judgment but acted under the influence of superior authorities. Authorities cited and principles of law (necessity of neutrality in adjudication, prohibition on surrendering discretion to others) lead to the conclusion that the AO's quasi judicial function was vitiated by external dictation and abdication of independent decision making. [Paras 16, 17, 27, 39, 41]

Held that the Assessing Officer acted on the dictates of superior authorities and therefore did not apply independent mind.

Requirement to hand over seized documents to Assessing Officer within 15 days under Section 132(9A) - distinction between general superintendence and interference in adjudication - Whether procedural failings in handling seized documents and the continued control by Investigating Directorate rendered the inception of reassessment invalid. - HELD THAT: - The record establishes that part of the seized material was handed over to the AO after the statutory 15 day period envisaged by the scheme applicable to seized material, and that the Directorate of Investigation continued to exercise control and perform adjudicatory acts (preparing questionnaires, drafting notices and orders, directing hearings). Reliance on precedent (K.V. Krishnaswamy Naidu and Sirpur Paper Mills) supports the proposition that an authorised/requisitioning officer cannot usurp the functions of the Assessing Officer or retain control beyond statutory limits. The combination of late transfer of documents and the Directorate's active role vitiated the reassessment process from inception. [Paras 16, 17, 27, 63]

Held that procedural non compliance and sustained interference by the Investigation Directorate rendered the reassessment proceedings invalid in their inception.

Doctrine of bias / nemo judex in sua causa and the test of apparent bias - limitation under Section 153 barring de novo reassessment after expiry - Whether the Tribunal, having upheld initiation of reassessment, ought to have remanded the matter to the AO for fresh assessment and whether fresh assessment is permissible in view of limitation. - HELD THAT: - Because the Court holds that the reassessment initiation and the subsequent process were vitiated by dictation and bias, the question of remand for fresh assessment was considered. The Court observes that limitation under the statutory scheme (Section 153 as then prevailing) has lapsed for the years in issue, so a remand for de novo assessment would not cure the vice and cannot be ordered. The Court therefore affirms that remand is not an available remedy here and that the Revenue, if it wishes, may initiate reassessment only in accordance with law and subject to statutory limitation. [Paras 71, 72, 73, 76]

Held that remand for fresh assessment is not appropriate; reassessment is vitiated and, in any event, limitation bars de novo proceedings unless initiated lawfully within statutory limits.

Final Conclusion: The reassessment proceedings for AYs 1988-89 to 1992-93 were vitiated because the Assessing Officer acted under the dictation and control of superior authorities and did not exercise independent judgment; the ITAT erred in upholding initiation of reassessment; remand for fresh assessment is not appropriate in view of the defect and expiry of the relevant limitation, and the Revenue may proceed only in accordance with law and limitation.

Reopening assessment beyond four years for failure to disclose fully and truly all material facts under section 147 r.w. section 148 - Reason to believe - Mere change of opinion - Possession of material by the Assessing Officer at the time of original assessment - Requirement of new or tangible material to justify reopening - Embedded information in accounts not attracting Explanation 1 unless not discoverable by due diligence

Mere change of opinion - Possession of material by the Assessing Officer at the time of original assessment - Requirement of new or tangible material to justify reopening - Impugned notice under section 148 quashed as it amounted to a mere change of opinion where reopening was sought on the same material already before the Assessing Officer when assessment under section 143(3) was framed. - HELD THAT: - The Court examined the reasons recorded and the material on record and found that the Assessing Officer, at the time of framing assessment under section 143(3), was in possession of relevant material including profit and loss account and balance-sheet and had called for and considered details such as export sales, duty drawback and cash assistance. The revenue's reasons merely pointed to a difference between amounts shown in balance-sheet and those routed through profit and loss account and sought to reopen on that basis. In absence of any new or tangible material not previously available to the Assessing Officer, issuance of notice on the same material amounted to a mere change of opinion, which is impermissible. The Court therefore held that reopening on identical material already considered at the original assessment could not be sustained. [Paras 8, 9, 10]

Notice under section 148 is invalid insofar as it reopens assessment on the same material already before the Assessing Officer and is a mere change of opinion.

Reopening assessment beyond four years for failure to disclose fully and truly all material facts under section 147 r.w. section 148 - Reason to believe - Embedded information in accounts not attracting Explanation 1 unless not discoverable by due diligence - Reopening beyond the four year period was not justified because there was no failure on the part of the assessee to disclose fully and truly all material facts warranting invocation of the extended limitation. - HELD THAT: - The recorded reasons claimed that certain accruals were not routed through profit and loss account and that material was 'embedded' in annual reports such that the Assessing Officer could not discover it without due diligence. The Court found these contentions inconsistent with the admitted fact that the assessee had submitted annual report, audited P&L and balance-sheet and other documents during scrutiny and that the Assessing Officer had considered those documents when framing assessment. Given that the Assessing Officer had the relevant material and there was no finding of concealment or non-disclosure amounting to failure to disclose fully and truly all material facts, the statutory requirement to reopen beyond four years was not satisfied. [Paras 6, 9, 11]

In absence of failure to disclose fully and truly all material facts, reopening the assessment beyond four years was impermissible and the notice is invalid.

Final Conclusion: The petition is allowed. The notice dated 18.03.2020 under section 148 for Assessment Year 2013-14 is quashed and set aside as the reopening was based on the same material already before the Assessing Officer and no failure to disclose fully and truly all material facts was shown to justify reopening beyond four years.

Reopening of assessment under Section 148 - Reasons recorded under Section 147 - Escaped assessment - Non-application of mind - Borrowed satisfaction - Quashing of notice under Section 148

Reopening of assessment under Section 148 - Reasons recorded under Section 147 - Escaped assessment - Non-application of mind - Quashing of notice under Section 148 - Legality of the notice under Section 148 and the order rejecting objections to reassessment for Assessment Year 2012-13. - HELD THAT: - The Assessing Officer recorded reasons based on information from the investigation wing that the assessee had derived profit of Rs. 3,13,100 through trading on NMCE which allegedly had not been reflected in the return, and invoked Section 147/148 to reopen the assessment. The petitioner placed on record a contract note, the broker's ledger and bank statements demonstrating that the said profit had been reflected in the accounts and return for the year. On the material so produced, the foundational premise that income had escaped assessment was incorrect. The Court found that the reopening was therefore founded on a wrong factual premise and amounted to a sheer non-application of mind by the Revenue. Consequently the notice under Section 148 and the order disposing of objections could not be sustained and were quashed. [Paras 11, 12, 14]

Notice under Section 148 dated 31.03.2018 and the order dated 05.10.2018 rejecting objections quashed and set aside.

Final Conclusion: Petition allowed; reopening notice under Section 148 and the order rejecting objections set aside for Assessment Year 2012-13 as the recorded reasons were based on incorrect facts and showed non-application of mind.

Consistency in tax assessment - pre-operative expenses treated as revenue expenditure - capitalisation of pre-operative expenses - reopening settled position in subsequent assessment years - res judicata in income-tax proceedings

Consistency in tax assessment - pre-operative expenses treated as revenue expenditure - reopening settled position in subsequent assessment years - res judicata in income-tax proceedings - Whether the Tribunal was justified in reversing its earlier view and treating power, fuel and lease rent as capital expenditure for AY 1986-87 despite identical factual and legal position in earlier years where those items were held to be revenue expenditure - HELD THAT: - The Court held that the Tribunal was not justified in taking a view contrary to the one it had adopted earlier for the assessee in relation to preceding assessment years where the same heads (power, fuel and lease rent for hired machines) had been treated as revenue or pre-operative expenditure. The Court applied the established principle that, although res judicata strictly does not apply across assessment years, a fundamental factual or legal position consistently accepted and not successfully challenged by the revenue ought not to be reopened in a later year in the absence of any material change or strong and compelling reasons. The Court relied on the reasoning in M/s. Radhasoami Satsang, Saomi Bagh, Agra and the reiteration of those principles in Godrej and Boyce Manufacturing Co. Ltd., observing that no material change or justification for departure had been shown and that the Tribunal had not given reasons for taking a different view. For these reasons the Tribunal's contrary conclusion for AY 1986-87 was unsustainable. [Paras 4, 14, 15, 16, 17]

The Tribunal's reversal was unjustified; the question is answered in favour of the assessee and against the revenue.

Final Conclusion: The appeal is allowed: the Tribunal was not justified in departing from its earlier consistent view treating the contested pre-operative items as revenue expenditure for AY 1986-87 in the absence of any material change or reasons; appeal disposed of in favour of the assessee.

Moratorium under the Insolvency and Bankruptcy Code (IBC) - resolution plan binding on the corporate debtor and freezing of claims on approval - extinguishment of claims not part of approved resolution plan - inapplicability of post approval tax demand and interest where claim was not lodged in CIRP - income tax dues do not enjoy priority over other creditors

Moratorium under the Insolvency and Bankruptcy Code (IBC) - resolution plan binding on the corporate debtor and freezing of claims on approval - extinguishment of claims not part of approved resolution plan - inapplicability of post approval tax demand and interest where claim was not lodged in CIRP - Whether the tax demand (including interest under sections 234A, 234B and 234C) for AY 2010-11 could be levied after the NCLT-approved resolution plan when the Revenue had not lodged its claim in the CIRP and the demand was not part of the approved resolution plan - HELD THAT: - The Court held that upon approval of the resolution plan by the adjudicating authority the moratorium under the IBC operates to freeze claims and the approved resolution plan binds the corporate debtor and all stakeholders. Any claim not included in the resolution plan stands extinguished and cannot be pursued thereafter. Reliance on Supreme Court decisions established that once a resolution plan is approved under Section 31(1) the claims provided therein stand frozen and binding; consequently, claims not part of the plan cannot survive. Applying these principles to the facts, since the Income Tax Department did not lodge its claim during CIRP and the assessed demand was not incorporated in the approved resolution plan, the demand and the consequential interest charged under sections 234A, 234B and 234C could not be sustained. The Court therefore concluded that the charge of interest under those provisions does not survive. [Paras 19, 20, 22, 23]

The tax demand and interest for AY 2010-11, insofar as they relate to amounts not included in the approved resolution plan and which were frozen by operation of the IBC moratorium, cannot be levied and do not survive.

Effect of approval of resolution plan on pending proceedings - quashing of assessment action taken contrary to frozen claims - refund of amounts paid in respect of frozen claims - Whether the order under Section 254 giving effect to the ITAT order dated 27.09.2022 and the Notice of Demand under Section 156 dated 07.02.2023 should be quashed and whether the amounts paid by the assessee in respect of AY 2010-11 should be refunded - HELD THAT: - Having found that the assessed demand and interest could not be sustained because the claim was not part of the approved resolution plan and stood frozen by operation of the IBC moratorium, the Court proceeded to set aside the consequential tax proceedings. The order passed under Section 254 and the Notice of Demand dated 07.02.2023 were quashed. The Court directed refund of the amounts that the assessee had earlier paid in respect of the Assessment Year 2010-11, as those payments related to demands that could not survive the operation of the resolution plan and moratorium. [Paras 23, 24]

The Section 254 order dated 07.02.2023 and the Notice of Demand under Section 156 dated 07.02.2023 are quashed and the amounts paid by the assessee for AY 2010-11 are to be refunded.

Final Conclusion: The writ petition is allowed: the Court held that claims not lodged in the CIRP and not included in the NCLT approved resolution plan are frozen/extinguished by the IBC moratorium, the related tax demand and interest for AY 2010 11 do not survive, the income tax proceedings dated 07.02.2023 are quashed, and the amounts paid by the assessee for AY 2010 11 are ordered to be refunded.

Estimation of net profit in retail liquor trade - Estimation of income in absence of cash memos/sales bills - Variation of profit percentage depending on facts - Privilege fee reducing profit margins - Recomputation of income on remand

Estimation of net profit in retail liquor trade - Estimation of income in absence of cash memos/sales bills - Variation of profit percentage depending on facts - Privilege fee reducing profit margins - Recomputation of income on remand - Net profit for the assessee's retail liquor business for assessment year 2016-17 to be estimated at 3% of turnover and the income recomputed accordingly. - HELD THAT: - The Assessing Officer estimated net profit at 5% of stock put to sale/turnover following the Tribunal's decision in Kanakadurga Wines and similar cases because the assessee had not maintained cash memos. The Commissioner (Appeals) confirmed that estimate. The Tribunal noted that the appropriate profit percentage varies from case to case and took into account the subsequent introduction of the privilege fee, which, according to the assessee's representative, reduced profit margins. Applying a holistic view to the facts and circumstances, the Tribunal concluded that an estimate of net profit at 3% of turnover would meet the ends of justice and directed the Assessing Officer to recompute the assessee's income accordingly. [Paras 6, 7]

Appeal allowed in part; net profit to be estimated at 3% of turnover and income to be recomputed by the Assessing Officer.

Final Conclusion: Tribunal reduces the rate of estimated net profit from 5% to 3% for the assessee's retail liquor business for AY 2016-17 and remands the matter to the Assessing Officer for recomputation of income.

Refund under Section 237 of the Income Tax Act - Dividend Distribution Tax liability under Section 115-O - application of DTAA Article 10 to dividend paid to non-resident shareholder - treaty protection not extending to domestic payer-company - binding effect of special bench precedent

Refund under Section 237 of the Income Tax Act - Dividend Distribution Tax liability under Section 115-O - application of DTAA Article 10 to dividend paid to non-resident shareholder - treaty protection not extending to domestic payer-company - binding effect of special bench precedent - Whether the assessee, a domestic company, is entitled to refund under Section 237 of excess Dividend Distribution Tax paid under Section 115-O by invoking the reduced rate under Article 10 of the India-Mauritius DTAA - HELD THAT: - The Tribunal analysed the effect of Section 115-O which casts liability to pay Dividend Distribution Tax upon the domestic company declaring/distributing dividend, thereby shifting the tax incidence from the recipient to the payer. The Tribunal held that the benefit of a DTAA rate for taxation of dividends accrues to the resident shareholder unless the contracting states have manifested an intention to extend treaty protection to the domestic company payer. Relying on the reasoning of the Special Bench decision in the case of Total Oil India Private Ltd. , the Tribunal concluded that where the treaty does not extend protection to the domestic company paying DDT, the company cannot claim treaty rates to reduce or recover tax paid under the specific statutory charge of Section 115-O. Consequently, a claim for refund under Section 237 could not be entertained by the payer-company in respect of excess DDT paid vis-a -vis the DTAA rate. The Tribunal found the view of the lower authorities to be in accordance with law and accordingly dismissed the appeals. [Paras 9, 10, 11, 12]

Appeals dismissed; assessee not entitled to refund of excess DDT under Section 237 where DTAA protection does not extend to the domestic payer under Section 115-O.

Final Conclusion: The Tribunal dismissed the appeals for assessment years 2005-06, 2006-07, 2009-10, 2011-12, 2013-14, 2014-15 and 2015-16, holding that a domestic company paying DDT under Section 115-O cannot claim refund under Section 237 by invoking DTAA Article 10 unless the treaty extends protection to the payer-company; the Special Bench precedent was followed.

Bogus purchases - addition restricted to percentage of disputed purchases - revenue leakage principle - weight of search report versus independent AO inquiry - precedential application of coordinate-bench and High Court orders

Bogus purchases - addition restricted to percentage of disputed purchases - revenue leakage principle - Extent of disallowance leviable in respect of purchases found to be from paper/entry providers - HELD THAT: - The Tribunal held that taxing the entire value of disputed purchases is not appropriate; only the income component needs to be brought to tax to prevent revenue leakage. Having examined the facts, including the assessee's low declared gross profit rate (0.78%), the Tribunal followed its coordinate-bench reasoning in Pankaj K. Choudhary (lead) and the subsequent affirmation by the jurisdictional High Court in Surya Impex, and concluded that a restricted addition at the rate of 6% of the disputed purchases is sufficient. The Tribunal contrasted the present facts with precedents where different rates were applied and explained that the restricted percentage was arrived at by reference to the assessee's declared profitability and to avoid over-taxation of transactions that may contain a genuine income component. [Paras 6]

Disallowance limited to 6% of the disputed purchases; AO's addition of 100% set aside.

Weight of search report versus independent AO inquiry - Whether an Assessing Officer can sustain 100% addition solely on the basis of investigation/search report without independent enquiry and rejection of books - HELD THAT: - The Tribunal noted that the AO primarily relied on the investigation wing's report and did not undertake an independent enquiry, nor did the AO reject the assessee's books or dispute the recorded sales. In such circumstances the Tribunal regarded a wholesale disallowance as unsustainable. The decision emphasises that reliance on search/ seizure material, without probing the evidentiary value of the assessee's records or making independent findings, cannot justify taxing the entire disputed purchase amount. [Paras 6]

AO's reliance solely on the search report to make 100% addition is not sustained.

Precedential application of coordinate-bench and High Court orders - Applicability of the Tribunal's coordinate-bench decision and the jurisdictional High Court's affirmation to the present facts - HELD THAT: - The Tribunal found the facts of the present case to be similar to the consolidated matter decided by the coordinate bench (Pankaj K. Choudhary) where a restricted addition was upheld at a specified percentage, and observed that the jurisdictional High Court in Surya Impex dismissed Revenue's challenge to the restriction to 6% as not raising a substantial question of law. In absence of distinguishing material or change in law, the Tribunal applied those precedents to sustain the restricted addition. [Paras 6]

Coordinate-bench and High Court precedents are followed; no reason to deviate.

Final Conclusion: Revenue's appeal is dismissed; the addition made by the AO is restricted to 6% of the disputed purchases for AY 2014-15, following the Tribunal's coordinate-bench precedent and the jurisdictional High Court's subsequent affirmation.

Assessment under section 153A vis-a -vis completed/unabated assessments - Requirement of incriminating material found during search for additions under section 153A - Allowability of business expenses raised through bank finance under section 36(1)(iii) - Burden to establish identity, creditworthiness and genuineness of share application money under section 68 - Reopening under sections 147/148 saved where no incriminating material is found

Allowability of business expenses raised through bank finance under section 36(1)(iii) - Assessment under section 153A vis-a -vis completed/unabated assessments - Whether proportionate financial expenses disallowed by AO in relation to circular/paper transactions were correctly restored by the CIT(A). - HELD THAT: - The Tribunal noted that the assessee admitted use of circular transactions to raise bank finance for genuine business needs. The CIT(A) treated the losses on circular transactions as fabricated and confirmed that disallowance, but separately held that the financial charges incurred on discounted letters of credit were genuine business expenses and allowable under section 36(1)(iii) because the discounting charges were paid to banks and the funds so raised were used for working capital in the assessee's delivery-based business. The Tribunal observed there was no evidence of diversion of funds and that the Assessing Officer had not demonstrated that the financial charges lacked nexus with business use. On this basis the Tribunal found no reason to interfere with the CIT(A)'s conclusion and dismissed the Revenue's grounds challenging deletion of the disallowance of financial expenses. [Paras 5]

Revenue's grounds in respect of disallowance of proportionate financial expenses are dismissed; the expenses are allowable.

Requirement of incriminating material found during search for additions under section 153A - Burden to establish identity, creditworthiness and genuineness of share application money under section 68 - Reopening under sections 147/148 saved where no incriminating material is found - Whether the addition under section 68 in respect of alleged unexplained share application money/ share premium can be sustained for the assessment year 2011-12 in absence of incriminating material seized during search. - HELD THAT: - The Tribunal held that assessment year 2011-12 was a completed/unabated assessment on the date of the search. Applying the binding line of authority, the Tribunal reiterated the principle that additions in respect of completed/unabated assessments can be made under section 153A only if incriminating material relating to that assessment year is found/unearthed during the search; absent such incriminating material, additions based on other material are not sustainable under section 153A. The assessment order did not identify any incriminating evidence, statements under section 132(4), or corroborative material against the assessee; transactions appeared in regular books and the Revenue did not point to any seized material forming basis for the addition. While noting that powers of reopening under sections 147/148 remain available if conditions are met, the Tribunal concluded that the AO had no jurisdiction under section 153A to make the addition in the absence of incriminating material and thus upheld deletion of the addition under section 68. [Paras 7, 8, 9]

Addition under section 68 in respect of share application money/share premium for AY 2011-12 is deleted for lack of incriminating material; Revenue's grounds on this point are dismissed.

Final Conclusion: The Revenue's appeal is dismissed: the CIT(A)'s allowance of the proportionate financial expenses is upheld, and the addition under section 68 in respect of share application money for AY 2011-12 is deleted because no incriminating material was found during search; remedies under sections 147/148 remain available if their conditions are satisfied.

Disallowance under section 36(1)(va) read with section 2(24)(x) - intimation under section 143(1) of the Income-tax Act - limitation under proviso 5 to section 143(1) and CBDT time-relaxation - prior intimation requirement under proviso to section 143(1) - computer-generated intimation and digital signature - principles of natural justice in processing under section 143(1)

Disallowance under section 36(1)(va) read with section 2(24)(x) - application of Supreme Court decision in Checkmate Services Pvt. Ltd. - Validity of disallowance of employees' contribution to PF & ESI while processing return under section 143(1). - HELD THAT: - The Tribunal upheld the disallowance made by CPC while processing the return, following the Supreme Court's declaration that employees' contribution deducted from salary retains character as deemed income under section 2(24)(x) and is allowable only if deposited by the due date specified in Explanation 1 to section 36(1)(va). The Court treated that ratio as a binding declaration of law applicable to proceedings under section 143(1) as well as section 143(3), and noted consistent decisions of coordinate benches upholding similar adjustments. The assessee's factual/contentions regarding timing of deposits and claim under section 37 were not certified in the audit report and did not arise from the processing adjustments; accordingly those merit grounds were rejected and the CIT(A)'s confirmation sustained. [Paras 12, 13, 14]

Disallowance under section 36(1)(va) in respect of delayed deposit of employees' contribution to PF & ESI upheld.

Intimation under section 143(1) of the Income-tax Act - computer-generated intimation and digital signature - limitation under proviso 5 to section 143(1) and CBDT time-relaxation - Whether the intimation dated 31.03.2021 (digitally signed and communicated on 01.04.2021) was barred by limitation. - HELD THAT: - The Tribunal found that the intimation was computer-generated and bore the processing date of 31.03.2021 (DIN), whereas the digital signature on the email was the date of communication (01.04.2021) and not the date of processing. Further, CBDT issued administrative relaxation extending the timeframe for processing returns with refund claims for the relevant years (including A.Y. 2019-20) up to 31.01.2024; the return in the present case was processed on 31.03.2021, within the applicable period. In view of the processing date and subsequent administrative relaxations, the intimation could not be held time-barred. [Paras 17, 18, 19]

Intimation not barred by limitation; the processing date controls and administrative extensions apply.

Intimation under section 143(1) of the Income-tax Act - requirement to indicate nature/type of adjustment under section 143(1)(a) - Whether the intimation was defective for not specifying the specific clause of section 143(1)(a) under which adjustment was made. - HELD THAT: - The Tribunal examined the annexure to the intimation and observed that the adjustment of Rs. 5,87,43,293/- was specifically indicated in the computation sheet (Annexure, Sl. No.14) showing variances against items declared in the return. The prior communication similarly set out proposed adjustments and their nature. Consequently, the nature/type of adjustment was reflected in the intimation and related communications, and the defect contention was dismissed. [Paras 20]

Intimation was not defective for failure to indicate the nature of adjustment; the type of adjustment was reflected in the annexure and prior communication.

Prior intimation requirement under proviso to section 143(1) - principles of natural justice in processing under section 143(1) - Whether the CPC gave the requisite prior intimation before making adjustments and whether the prior communication was legally sent to the assessee. - HELD THAT: - The Revenue produced the 'User Profile Administration' record and the specific communication dated 30.12.2020 (with DIN) sent to the assessee's email indicating proposed adjustments under section 143(1)(a). The Tribunal found that the email ID used ([email protected]) was the assessee's primary email as per user profile and RTI/Form 36 records, and that the prior communication set out the nature of proposed adjustments. The assessee's objections about an alternate email and non-transmission were rejected as inconsistent with the record. On that basis, the proviso requirement for prior intimation was held satisfied and natural justice contention dismissed. [Paras 21, 22, 23]

Prior intimation requirement complied with; intimation not vitiated for lack of prior communication or breach of natural justice.

Final Conclusion: All grounds raised by the assessee were considered and rejected; the Tribunal dismissed the appeal and upheld the intimation and the disallowance confirmed by the CIT(A).

Revisionary jurisdiction under section 263 - prejudicial to the interest of revenue - inadequate enquiry / lack of application of mind - disallowance under section 40A(9) - approved superannuation fund - deduction under section 36(1)(iv) and section 37(1)

Revisionary jurisdiction under section 263 - prejudicial to the interest of revenue - inadequate enquiry / lack of application of mind - Validity of the Principal Commissioner of Income Tax's invocation of revisionary jurisdiction under section 263 - HELD THAT: - The Tribunal found that the Principal Commissioner was justified in concluding that the assessment order was erroneous and prejudicial to the revenue because the Assessing Officer did not properly adjudicate the specific objection flagged by the tax auditor and raised in reassessment proceedings. Although the reassessment was initiated and queries were raised, the AO overlooked the tax auditor's report, accepted only partial receipts, did not verify whether the superannuation fund was an approved fund, and thereby failed to apply his mind to the determinative issues. On these facts the Tribunal concluded that inadequate enquiry had occurred, which warrants exercise of revisionary power under section 263. [Paras 9]

Revision under section 263 was validly invoked because the assessment showed inadequate enquiry and lack of application of mind, making the order erroneous and prejudicial to the revenue.

Disallowance under section 40A(9) - approved superannuation fund - deduction under section 36(1)(iv) and section 37(1) - Whether the payment to Life Insurance Corporation towards superannuation fund is deductible - HELD THAT: - The Tribunal did not decide the deductibility on merits. It observed that deductions under section 36(1)(iv) are available only for payments to an approved superannuation fund and that the AO did not verify approval or related facts. The assessee's alternative plea under section 37(1) was noted, but the Tribunal declined to express any view on merits. Instead, the Tribunal modified the PCIT's direction and remitted the matter to the AO to verify the claim, examine whether the fund is an approved fund, inspect supporting receipts and beneficiary details, and determine deductibility after full verification. All issues on merits were kept open for the AO's fresh consideration. [Paras 10]

Matter remitted to the Assessing Officer for verification and fresh adjudication on deductibility; merits not decided by the Tribunal.

Final Conclusion: The Tribunal upheld invocation of revisionary jurisdiction under section 263 on the ground of inadequate enquiry by the Assessing Officer, and remitted the substantive issue of deductibility of the superannuation payments to the Assessing Officer for verification and fresh decision; appeal partly allowed.

Approval under section 153D - Application of mind - Blanket or generic approval - Prior approval requirement in search assessments - Quashing assessment for invalid approval - Validity of assessment in search cases

Approval under section 153D - Application of mind - Blanket or generic approval - Quashing assessment for invalid approval - Validity of the approval granted by the Additional Commissioner under section 153D and its effect on the assessment order. - HELD THAT: - The Tribunal found that the Additional CIT granted a consolidated approval dated 29/12/2019 covering 178 cases of 29 assessees in a blanket manner without reference to issues or draft assessment orders and with no indication that the seized material, appraisal report or assessment records were examined. The approval was accorded the day after the request and contained no record of independent consideration, thereby demonstrating lack of application of mind. Reliance was placed on precedents holding that approval under section 153D must reflect due application of mind and cannot be a mere mechanical formality. Because the approval did not stand up to judicial scrutiny as a self defending act showing consideration of relevant material, the assessments made pursuant thereto failed the statutory safeguard intended by section 153D in search cases. [Paras 9, 10, 11, 12, 13]

Approval under section 153D was held invalid for lack of application of mind; the resulting assessment order was quashed and set aside.

Validity of assessment in search cases - Disposition of Grounds No. 2 and 3 of the appeal. - HELD THAT: - The assessee's counsel informed the Tribunal that Grounds No. 2 and 3 were not pressed. The Tribunal recorded this submission and accordingly dismissed those grounds as not pressed. [Paras 5]

Grounds No. 2 and 3 were dismissed as not pressed.

Final Conclusion: The appeal is allowed: the assessment order for Assessment Year 2018-19 (and the CIT(A)'s confirmation of that assessment) is set aside because the approval under section 153D was a mechanically granted, non application of mind approval, rendering the assessment a nullity; other grounds having become infructuous were not adjudicated.

Date of receipt of seized documents as deemed date of search for the purposes of section 153C/153A - validity of assessment framed under section 143(3) vis-a -vis proceedings under section 153C - reckoning of six assessment years for proceedings under section 153C from the date of receipt of seized documents - quashing of assessment for want of jurisdiction

Date of receipt of seized documents as deemed date of search for the purposes of section 153C/153A - validity of assessment framed under section 143(3) vis-a -vis proceedings under section 153C - reckoning of six assessment years for proceedings under section 153C from the date of receipt of seized documents - Validity of the assessment framed for AY 2021-22 by issuance of notice under section 143(2)/assessment under section 143(3) when proceedings ought to have been initiated under section 153C. - HELD THAT: - The Tribunal admitted additional grounds challenging jurisdiction as they were purely legal and based on facts already on record. The satisfaction note recorded by the AO on 30.06.2022 held that clone data seized from a third party belonged to the assessee and that the seized documents were received on that date. Following the coordinate-bench precedent (Jasjit Singh and related decisions) and the proviso to section 153C, the date of receiving the seized documents by the AO having jurisdiction over the other person is to be treated as the operative date for determining the assessment year relevant to the previous year in which search was conducted and for reckoning the six preceding assessment years. Applying that principle, the date of 30.06.2022 is the deemed date of search/possession for the assessee's case; the assessment year relevant to the previous year in which the documents were received is AY 2023-24 and the six immediately preceding assessment years are AY 2018-19 to 2022-23. Consequently, proceedings and notices for AY 2021-22 should have been framed under section 153C, not by issuing notice under section 143(2) and completing assessment under section 143(3). No contrary fact was shown by the Revenue; therefore the notice dated 30.06.2022 under section 143(2) and the consequent assessment order dated 29.12.2022 were held to be invalid and quashed. [Paras 8, 9]

Notice under section 143(2) dated 30.06.2022 and assessment order under section 143(3) dated 29.12.2022 for AY 2021-22 are quashed for lack of jurisdiction; proceedings should have been initiated under section 153C with six-year reckoning from 30.06.2022.

Quashing of assessment for want of jurisdiction - effect of quashing assessment on consequential additions - Consequences of quashing the assessment order on the additions and other grounds raised in the appeal. - HELD THAT: - Having quashed the assessment order itself on jurisdictional grounds, the Tribunal held that the additions and other substantive grounds prosecuted against the assessment do not survive and therefore require no adjudication. The Tribunal accordingly declined to decide the merits of the additions made by the AO and confirmed by the CIT(A) because those orders were rendered void by the quashing of the assessment. [Paras 10]

Additions and other grounds challenged in the appeal do not survive consequent to the quashing of the assessment; they require no adjudication.

Final Conclusion: The appeal is allowed: the notice issued under section 143(2) dated 30.06.2022 and the assessment order under section 143(3) dated 29.12.2022 for AY 2021-22 are quashed for lack of jurisdiction because proceedings ought to have been initiated under section 153C with the six-year period reckoned from the date of receipt of seized documents (30.06.2022); consequential additions need not be adjudicated.

Summary order. Delay condoned; Court declined to interfere with the interim orders; special leave petitions dismissed; pending applications disposed of.

Classification under Customs Tariff/HSN - General Rules for Interpretation (GRI) Rule 3(a) - General Rules for Interpretation (GRI) Rule 3(b) - Explanatory Notes to the Harmonized System of Nomenclature (HSN) - reasons requirement in quasi-judicial orders - principles of natural justice - non-speaking order - remand with pre-deposit

Classification under Customs Tariff/HSN - General Rules for Interpretation (GRI) Rule 3(a) - General Rules for Interpretation (GRI) Rule 3(b) - Explanatory Notes to the Harmonized System of Nomenclature (HSN) - Whether the assessing officer properly considered the GRI and Explanatory Notes in classifying the petitioner's smart key and lock system, and whether the classification finding requires re-examination. - HELD THAT: - The assessing officer recorded a factual finding that the goods are made of a combination of metal and plastic and concluded they do not merit classification under Chapter 83. The petitioner had specifically invoked Schedule I GRI, including Rules 3(a) and 3(b), arguing that the more specific heading or the material conferring essential character should govern classification. Although the impugned order sets out reasons rejecting the petitioner's classification, the court found no discussion applying the cited GRI or the Explanatory Notes to HSN, despite those materials being directly relied upon by the petitioner and potentially determinative of the outcome. The court posed the correct test: if consideration of the GRI could have led to a different result, non-consideration would vitiate the order. Given the factual finding of mixed materials and the prima facie relevance of Rules 3(a) and 3(b) and the HSN Explanatory Notes (which indicate electrically operated locks may fall within CTH 8301.20), it is a distinct possibility the result could have differed had those rules and notes been applied and reasoned upon in the order. Accordingly, limited interference by remand for fresh consideration was warranted. [Paras 10, 11, 12, 13, 15]

Classification finding set aside for fresh consideration by the assessing officer after deposit (conditioning remand on the specified pre-deposit); assessing officer to reconsider GRI and Explanatory Notes and record reasons.

Reasons requirement in quasi-judicial orders - principles of natural justice - non-speaking order - Whether the impugned order adequately recorded reasons on other heads of tax demand (e.g., ineligible ITC, canteen expenses) and whether those findings require fresh adjudication. - HELD THAT: - For several heads the impugned order merely reproduces the taxpayer's reply and records confirmation of the tax proposal without any supporting reasoning. Examples include the ineligible ITC finding and the canteen-expenses demand where the order states conclusions (confirmation of demand) without explaining the basis on verification or why the taxpayer's explanations were rejected. A quasi-judicial order must disclose the adjudicating authority's application of mind by giving reasons; while those reasons need not be elaborate, they must be sufficient to show why contentions were rejected. Where conclusions are recorded without supporting reasons and those conclusions are material to the demand, the court concluded interference is necessary and directed fresh consideration. To balance revenue interest, the court conditioned remand on the petitioner's agreed pre-deposit and directed the assessing officer to afford a reasonable opportunity (including personal hearing) and to pass a fresh order within a stipulated time after receipt of the petitioner's reply. [Paras 14, 15]

Findings on other heads set aside for fresh adjudication; remand conditioned on the petitioner remitting the specified pre-deposit, followed by opportunity of hearing and a fresh order within three months.

Final Conclusion: The writ petition was allowed by setting aside the impugned assessment order and remanding the matter for fresh consideration: (i) the classification issue must be reconsidered with explicit application of the GRI and HSN Explanatory Notes, and (ii) other heads recorded without reasons must be re-adjudicated; remand is subject to the petitioner making the specified pre-deposit and the assessing officer providing opportunity of hearing and passing a fresh reasoned order within the prescribed period.

Violation of principles of natural justice - quashing of administrative order for failure to serve show cause notice and deny personal hearing - maintainability of writ petition notwithstanding availability of statutory appeal where principles of natural justice are breached - appeal remedy under Section 15 of the Foreign Trade (Development and Regulation) Act, 1992 - remand for fresh consideration after compliance with natural justice

Violation of principles of natural justice - quashing of administrative order for failure to serve show cause notice and deny personal hearing - Impugned order imposing penalty quashed for lack of service of show cause notice and denial of opportunity of personal hearing. - HELD THAT: - The Court found that the petitioner asserted non-receipt of the show cause notice(s) and absence of any opportunity for personal hearing. The respondent could not produce records establishing service of the notices or that the petitioner failed to reply. Relying on the established principle that an order passed without observance of principles of natural justice cannot be sustained, the Court concluded that the impugned order, which imposed a penalty for alleged non-fulfilment of export obligation, is vitiated and must be quashed. [Paras 4, 5, 7, 8]

Impugned order dated 24.08.2021 quashed for failure to afford show cause notice and personal hearing.

Maintainability of writ petition notwithstanding availability of statutory appeal where principles of natural justice are breached - appeal remedy under Section 15 of the Foreign Trade (Development and Regulation) Act, 1992 - Writ petition held maintainable despite existence of statutory appeal remedy due to breach of natural justice. - HELD THAT: - The respondent contended that the petitioner should exhaust the statutory appeal under Section 15 of the FT(D&R) Act, 1992. The Court reiterated the well-settled principle that availability of an alternative statutory remedy does not preclude writ jurisdiction where there is a violation of principles of natural justice. Since the impugned order was found to have been passed without giving the petitioner the mandated opportunity, the Court entertained the writ petition on that ground. [Paras 6, 7]

Writ petition maintainable notwithstanding availability of appeal because of breach of natural justice.

Remand for fresh consideration after compliance with natural justice - Matter remitted to respondent to issue fresh show cause notice, afford personal hearing and pass fresh orders on merits in accordance with law within a stipulated period. - HELD THAT: - Having quashed the impugned order for procedural infirmity, the Court directed that fresh proceedings be conducted. The respondent is to issue a fresh show cause notice, provide an opportunity of personal hearing to the petitioner, and thereafter decide the question of alleged non-fulfilment of export obligation on merits and in accordance with law. A timeline of twelve weeks from receipt of the Court's order was prescribed for completion of the process. [Paras 8]

Matter remanded for fresh show cause notice, personal hearing and decision on merits within twelve weeks.

Final Conclusion: The writ petition is allowed: the penalty order dated 24.08.2021 is quashed for breach of natural justice; the matter is remitted to the respondent to issue fresh show cause notice, afford personal hearing and decide the matter on merits within twelve weeks; connected miscellaneous petition closed; no costs.

Disposal of seized goods under Section 150 of the Customs Act - statement recorded under Section 110 of the Customs Act - adjudication before disposal of non-perishable seized goods - show cause notice before adjudication - perishability of seized goods

Disposal of seized goods under Section 150 of the Customs Act - statement recorded under Section 110 of the Customs Act - adjudication before disposal of non-perishable seized goods - show cause notice before adjudication - Validity of issuing notice for disposal of non-perishable seized goods solely on the basis of a statement recorded under Section 110 without prior adjudication or issuance of a show cause notice - HELD THAT: - The Court held that seized gold being non-perishable cannot be summarily disposed of under the impugned notice issued under Section 150 merely because a statement was recorded under Section 110. Relying on the reasoning in Zhinet Banu Nazir Dadany , the court observed that where seized material is not perishable there is no justification for hurried disposal without giving the affected person an opportunity to be heard by way of adjudication. The determinative legal principle is that disposal of non-perishable seized goods under the Act must be preceded by appropriate adjudication proceedings, which include issuance of a show cause notice and an opportunity to contest the proposed disposal; mere reliance on a voluntary statement under Section 110 is insufficient to bypass that procedure. Applying that principle to the facts, the court set aside the impugned Section 150 notice and directed the authorities to issue a show cause notice and proceed with adjudication before any disposal. [Paras 6, 7]

Impugned notice under Section 150 set aside; respondents directed to issue show cause notice to the petitioner and thereafter adjudicate the matter before any disposal of the seized gold.

Final Conclusion: The writ petition is allowed insofar as the notice for disposal of non-perishable seized gold issued solely on the basis of a statement under Section 110 is set aside; the authorities must issue a show cause notice and conduct adjudication before any disposal, and the petition is finally disposed of.

Payment of customs duty by scrips - voluntary payment with interest - invocation of larger period of limitation under section 28(4) of the Customs Act - absence of fraud, suppression or misstatement - confiscation and penalty under section 114A of the Customs Act - assessing officer's acceptance via EDI

Payment of customs duty by scrips - voluntary payment with interest - invocation of larger period of limitation under section 28(4) of the Customs Act - assessing officer's acceptance via EDI - Validity of issuance of show cause notice under section 28(4) and invocation of extended limitation where duty was initially debited by scrips, accepted at assessment, and later paid in cash with interest. - HELD THAT: - The Tribunal found no material to demonstrate culpability or intention to evade duty by the appellant where the duty-debit by scrips was presented at assessment, accepted by departmental officers and the EDI system, and subsequently the appellant, upon being pointed out, voluntarily paid the full duty in cash along with interest prior to issuance of the show cause notice. Section 28(2) (as then in force) bars service of a notice under the relevant clause where duty and interest have been paid and notified to the proper officer. Invocation of the larger period of limitation under section 28(4) requires proof of fraud, suppression or misstatement; none of these elements were shown. The department's failure to point out the anomaly at assessment and its own acceptance of scrip debit undermined any basis for treating the matter as an evasion warranting extended limitation or penal proceedings. [Paras 7, 8, 9]

Show cause notice under section 28(4) invoking extended limitation was not justified and could not be validly issued.

Confiscation and penalty under section 114A of the Customs Act - absence of fraud, suppression or misstatement - Sustainability of confiscation of imported goods and imposition/enhancement of penalty under section 114A in the facts of the case. - HELD THAT: - The Tribunal held that confiscation and the imposition (and subsequent enhancement) of penalty under section 114A could not be sustained because the essential ingredients for invoking punitive measures-intentional evasion, fraud, suppression or misstatement-were not established. The appellant's conduct was found to be one of ignorance accepted by the department at assessment; moreover, the appellant promptly regularised the position by paying duty and interest when the anomaly was pointed out. Given these circumstances and the departmental omission at the assessment stage, penal action and confiscation were unwarranted. [Paras 9]

Order of confiscation and penalty under section 114A set aside.

Final Conclusion: The appeal succeeds: the Tribunal set aside the lower authority's order holding the imported goods liable to confiscation and imposing penalty under section 114A, and found no justification for issuance of the show cause notice under section 28(4) where duty had been accepted at assessment and subsequently paid in cash with interest.

Penalty for improper importation of goods - Penalty for use of false and incorrect material in customs transactions - Customs House Agents' duty and misconduct under licensing regulations - Abetment and complicity in smuggling - Customs valuation and confiscation implications of mis declaration

Penalty for improper importation of goods - Penalty for use of false and incorrect material in customs transactions - Abetment and complicity in smuggling - Customs House Agents' duty and misconduct under licensing regulations - Liability of the CHA firm and its director for penal action under the Customs Act for mis declaration, concealment of goods, use of manipulated documents and abetment of illegal importation. - HELD THAT: - The Tribunal upheld the finding that the consignments involved gross mis declaration of description, quantity and value and the presence of undeclared/concealed high valued goods, supported by comparative records of declared versus found items, manipulated Bills of Lading and discrepancies between RSP/MRP. Cyber forensic evidence from devices seized from the director showed packing lists and prior systematic undervaluation, and admissions by the importer indicated complicity. As a Customs House Agent, the appellant failed to discharge regulatory obligations by filing Bills of Entry on the basis of unsigned/impermissible documents and by aiding importations where documents were manipulated. These facts established abetment and rendering the appellants liable to penal action under the provisions dealing with improper importation and for using false/incorrect material in customs transactions. The Tribunal therefore sustained liability for penalties against the CHA and its director. [Paras 11, 12]

M/s. Prethvisha Logistics Pvt. Ltd. and Shri Palash Banerjee held liable to penal action under the Customs Act for the acts of omission and commission, including abetment of illegal importation.

Penalty for improper importation of goods - Customs valuation and confiscation implications of mis declaration - Quantum of penalty to be sustained against the CHA and its director under the Customs Act. - HELD THAT: - While no case for complete waiver of penalty was made out given the nature and scale of mis declarations, concealment and documentary manipulation established by forensic evidence, the Tribunal exercised corrective discretion in quantification. Taking into account the appellants' role as agent acting on importer instructions but with self serving intent, failure to discharge statutory obligations, and the evidentiary record of systematic undervaluation, the Tribunal reduced the penalty amount imposed by the adjudicating authority and fixed a moderated monetary penalty to meet ends of justice. [Paras 13]

Penalty sustained but reduced: penalty of Rs.4.00 Lakh on M/s. Prethvisha Logistics Pvt. Ltd. and Rs.1.00 Lakh on Shri Palash Banerjee under the provision relating to dutiable goods.

Final Conclusion: The appeals are disposed of by upholding liability for penal action for mis declaration, concealment and abetment in the subject imports while moderating the monetary penalty imposed on the CHA and its director to the amounts specified by the Tribunal.

Interest on confiscated proceeds - restitution - Section 42(3) of the Foreign Exchange Regulation Act, 1973 - Rule 8(i) of the Foreign Exchange Management (Encashment of Draft, Cheque, Instrument and Payment of Interest), Rules, 2000 - payment of interest at prevailing bank rate - decree silence and separate suit for interest under Section 34 CPC

Interest on confiscated proceeds - Section 42(3) of the Foreign Exchange Regulation Act, 1973 - Rule 8(i) of the Foreign Exchange Management (Encashment of Draft, Cheque, Instrument and Payment of Interest), Rules, 2000 - payment of interest at prevailing bank rate - decree silence and separate suit for interest under Section 34 CPC - restitution - entitlement to interest on amount confiscated and subsequently refunded and the rate and period for such interest - HELD THAT: - The Court held that the petitioner is entitled to interest on the confiscated amount from the date of confiscation until the date of payment. The statutory scheme in Section 42(3) of the Foreign Exchange Regulation Act, 1973 contemplates payment of proceeds to the person entitled together with interest at six per cent per annum from custody to payment; Rule 8(i) of the 2000 Rules similarly recognises payment of interest where seized currency is returned. The respondents' contention that no interest can be awarded in the absence of an express direction by the Appellate Tribunal or that Section 34 CPC precludes recovery unless ordered was rejected. The Court reasoned that refunding amounts belatedly pursuant to an appellate order does not afford the Department a discretion to withhold interest; the principle of restitution requires compensation for deprivation of use of the money. Applying these principles, the Court directed payment of interest for the period from confiscation to refund at the prevailing bank interest rate, as a just measure of restitution, to be paid within three months of the order. [Paras 14, 15, 16]

The respondents are directed to pay interest to the petitioner on the confiscated amount from the date of confiscation up to the date of refund at the prevailing bank interest rate, payable within three months of receipt of the order.

Final Conclusion: Writ petition allowed in part; respondents directed to pay interest on the confiscated amount from date of confiscation to date of refund at prevailing bank interest within three months; no costs.

Procedure where accused not arrested prior to filing of complaint - Obligation to furnish bond under Section 88, Cr.P.C. when not arrested - Precedential application of Tarsem Lal v. Directorate of Enforcement

Procedure where accused not arrested prior to filing of complaint - Obligation to furnish bond under Section 88, Cr.P.C. when not arrested - Where the accused was not arrested prior to the filing of the complaint, he is not liable to be arrested and is required only to furnish a bond under Section 88 Cr.P.C. - HELD THAT: - The Court applied the settled principle in Tarsem Lal v. Directorate of Enforcement that when an accused has not been arrested before the complaint is filed, the correct course is to require the accused to furnish a bond under Section 88 Cr.P.C. rather than effecting an arrest. Relying on that precedent, the impugned order directing arrest was set aside and the appellant was directed to file the bond under Section 88 Cr.P.C. The Court therefore disposed of the appeal by following the binding dictum and remitted the matter to the limited extent of requiring compliance with the bond direction.

Impugned order set aside; appellant directed to furnish bond under Section 88 Cr.P.C. and no arrest is required.

Final Conclusion: Appeal allowed by applying the precedent in Tarsem Lal; the impugned order directing arrest is set aside and the appellant is directed to file a bond under Section 88 Cr.P.C.; pending applications disposed of.

Reasonable grounds for believing - twin conditions under Section 45 PMLA (non-bailable; bail only if court is satisfied there are reasonable grounds for believing accused is not guilty and not likely to commit offence) - proceeds of crime - predicate/scheduled offence - admissibility and evidentiary weight of statements under Section 50 PMLA - broad probabilities test at bail stage - finality of quasi judicial order (SAR Court order) and its effect

Twin conditions under Section 45 PMLA (non-bailable; bail only if court is satisfied there are reasonable grounds for believing accused is not guilty and not likely to commit offence) - broad probabilities test at bail stage - Grant of bail to the petitioner on satisfaction of the twin conditions under Section 45 PMLA - HELD THAT: - The Court applied the statutory test in Section 45 PMLA by asking whether there are reasonable grounds for believing that the petitioner is not guilty and that he is not likely to commit an offence while on bail. The Court held that at the bail stage it must examine broad probabilities based on materials collected during investigation and need not weigh evidence meticulously. On the available material - absence of registers or revenue records bearing the petitioner's name, infirmities in the chain by which ownership/possession is alleged, the fact that many documents recovered do not directly impute ownership to the petitioner, and the SAR Court order restoring possession having attained finality - the Court found that the overall conspectus on broad probabilities does not establish beyond those probabilities that the petitioner is guilty of money laundering in relation to the 8.86 acres. The Court also concluded there was no sufficient basis to infer a likelihood that the petitioner would commit an offence while on bail. Applying the principles in Ranjitsingh Brahmajeetsing Sharma and subsequent authorities, the Court recorded its application of mind and granted bail subject to conditions. [Paras 63, 64]

Application for bail allowed; petitioner released on bail on furnishing bond and sureties to the satisfaction of the Special Court in connection with ECIR Case No. 06/2023.

Proceeds of crime - predicate/scheduled offence - Whether the material prima facie establishes that the subject land constitutes 'proceeds of crime' derived from a scheduled offence such that PMLA applies - HELD THAT: - The Court examined the Enforcement Directorate's case that the land was derived/obtained as a result of scheduled offences and that the petitioner indulged in activities connected with such property. Reliance was placed on seized registers, mobile images and statements. However, the Court noted crucial lacunae: the registers and revenue records recovered do not expressly name the petitioner or his family; some witnesses' assertions do not cohere with documentary records; and the SAR Court order restoring possession to others has attained finality. In light of Vijay Madanlal Choudhary and related authorities the Court emphasised that property is 'proceeds of crime' only if it is derived or obtained as a result of criminal activity relatable to a scheduled offence, and that the existence and quality of such predicate material is relevant to the broad probabilities. On the totality of material and given the gaps identified, the Court concluded that the prosecutorial case linking the petitioner on a prima facie basis to proceeds of crime is not sufficiently established for the purpose of withholding bail under Section 45. [Paras 35, 62]

The Court did not accept that, on the material before it, the land is conclusively shown to be 'proceeds of crime' such as to bar bail; this finding influenced the grant of bail.

Admissibility and evidentiary weight of statements under Section 50 PMLA - broad probabilities test at bail stage - The role and weight of statements recorded under Section 50 PMLA in considering the bail application - HELD THAT: - The Court acknowledged that statements under Section 50 PMLA are admissible and are deemed to be recorded in a judicial proceeding, but their probative value must be tested at trial. At the bail stage such statements may be considered for limited purpose of assessing broad probabilities and 'reason to believe'. The Court reviewed the Section 50 statements relied upon by the ED (including statements of Bhanu Pratap Prasad, Manoj Kumar, Santosh Munda and others) and concluded that although they form part of the material, they do not, without corroborative documentary proof directly linking the petitioner to ownership or transfer in the revenue records, establish a conclusive chain. The Court therefore treated the Section 50 statements as relevant but not decisive against the petitioner for the purpose of refusing bail. [Paras 46, 47, 48]

Section 50 statements are admissible and may be considered at bail stage for broad probabilities, but they did not alone rebut reasonable grounds to believe the petitioner is not guilty.

Finality of quasi judicial order (SAR Court order) and its effect - Effect of the SAR Court order dated 29.01.2024 restoring possession in SAR Case No. 81/2023-24 on the ED's case and on bail consideration - HELD THAT: - The Court took note that the SAR Court order restoring possession to Raj Kumar Pahan and others had attained finality in the absence of any challenge. The Court observed that such a quasi judicial order cannot be lightly disregarded and that statements under Section 50 or seizure material cannot automatically overwhelm a final judicial/quasi judicial determination. While the ED questioned the speed and circumstances of that order, the fact of its finality weakened the prosecutorial contention that the petitioner had clear and established ownership/possession derived from proceeds of crime. This consideration formed part of the overall assessment of broad probabilities in favour of bail. [Paras 61, 62]

The SAR Court order's finality diminished the weight of the ED's case on ownership/possession and contributed to satisfaction of the Section 45 conditions for bail.

Final Conclusion: On an appraisal of broad probabilities and the materials on record, the High Court found reasonable grounds for believing the petitioner is not guilty of the offence under PMLA and not likely to commit an offence while on bail; accordingly the petition for bail was allowed and the petitioner ordered released on furnishing bonds and sureties to the Special Court in respect of ECIR Case No. 06/2023.

Classification of service - tour operator service - travel agent service - Business Auxiliary Service (agency/commission) - leviability of service tax - prohibition on double taxation - extended period for demand - value of taxable service / nexus for valuation

Classification of service - tour operator service - travel agent service - Whether the services rendered by the Appellant fall within the definition of "tour operator service" or are correctly classifiable as travel agent/agency services - HELD THAT: - The Tribunal analysed the statutory definition of "tour operator" and held that the primary business contemplated is planning, scheduling, organising or arranging tours by any mode of transport, with any arrangements for accommodation being incidental to such tour-related activities. A standalone activity of arranging accommodation does not, by itself, convert the provider into a "tour operator". The Appellant's case - facilitating hotel reservations through a website, collecting payments as a collection/commission agent and passing amounts to hotels after deducting commission - did not satisfy the condition precedent of conducting tours or operating tourist vehicles. The SCN and the Commissioner erred in classifying the Appellant's hotel-booking facilitation as "tour operator service" merely because the word "accommodation" appears in the definition. On this statutory interpretation ground the Appellant's classification as supplying travel agent/agency services rather than tour operator services was accepted and the demand based solely on the tour-operator classification was found to be unsustainable. [Paras 8]

The classification of the Appellant's hotel booking facilitation as "tour operator service" is erroneous; the activity does not fall within the statutory definition of tour operator and the Appellant succeeds on this ground.

Leviability of service tax - Business Auxiliary Service (agency/commission) - prohibition on double taxation - value of taxable service / nexus for valuation - Whether Service Tax was leviable on the gross amounts collected by the Appellant (including hotel charges) and whether demand on the gross amount resulted in double taxation - HELD THAT: - The Tribunal found that the Appellant acted as a collection/commission agent: it received payments from customers and remitted the hotel portion to hotels after deducting commission, for which the Appellant discharged Service Tax on its commission. The hotel accommodation component was not taxable under Service Tax law for the relevant period ending 31.03.2011 (the levy on hotel accommodation being introduced w.e.f. 01.05.2011). Consequently, demanding tax on the entire gross amount collected by the Appellant - including the non taxable hotel accommodation component - was unsustainable. The Tribunal also noted that treating the same commission as taxable again on the gross-amount demand would amount to double taxation, a principle contrary to equity and recognised by the Tribunal in its reasoning. The Commissioner had not made specific findings on these points and had relied on the erroneous tour-operator classification to uphold the demand. [Paras 9, 10]

Leviability of Service Tax on the gross amounts collected is not established; the hotel accommodation portion was not taxable in the relevant period and demand on the gross amount (in addition to tax already paid on commission) is unsustainable as amounting to double taxation.

Extended period for demand - Whether the extended period for raising Service Tax demand was invocable against the Appellant - HELD THAT: - The Tribunal examined the chronology of communications and the course of investigation and concluded that extended period provisions could not be invoked where the underlying activity was not leviable to Service Tax. It observed delays and gaps in the Department's investigation and reliance upon extended limitation to cover investigational lacunae. Applying settled principles (including that omission to act by a party does not necessarily amount to suppression when facts are known), and given the finding that the service itself was not leviable as classified, invocation of the extended period was held to be inappropriate in the present proceedings. [Paras 10, 11]

Extended period provisions were not invocable; the demand could not be sustained on limitation grounds once the activity was held not to be leviable under the classification applied by the Department.

Final Conclusion: The appeal is allowed: the Commissioner's Order in Original confirming demand under "tour operator service" is set aside with consequential relief, since the Appellant's hotel booking facilitation does not qualify as "tour operator service", the hotel accommodation portion was not taxable for the period April, 2006 to March, 2011 and the extended period invocation is not sustainable.

Service of notice by e-mail - limitation for filing appeal - amendment to Rule 64 - duty to inform change of contact details - filing of F Forms and supply of F Forms under Rule 12(7)

Service of notice by e-mail - amendment to Rule 64 - limitation for filing appeal - duty to inform change of contact details - Validity of service of the assessment order by e-mail and its effect on limitation for filing an appeal - HELD THAT: - The Court held that service of the assessment order by e-mail is effective in view of the amendment to Rule 64. The petitioner, a large registered dealer, cannot claim ignorance of assessment timelines or await a hard copy where the amended rule permits electronic service. The contention that the e-mail ID was inactive and that an officer having access had left employment was rejected: it is the petitioner's duty to inform the Assessing Officer of any change in e-mail/contact details. Given these findings, the delay in seeking certified copy and initiating steps only in June 2022 militates against the petitioner. The consequence is that limitation has run and the petitioner is not entitled to revival of the time to file an appeal based on alleged non-service by e-mail. [Paras 11, 12, 13]

Service by e-mail was valid under the amended Rule 64; limitation to file an appeal is not excused and the petitioner's plea of non-receipt is rejected.

Filing of F Forms and supply of F Forms under Rule 12(7) - limitation for filing appeal - Whether the Court should direct the Assessing Officer to furnish a certified copy of the assessment order to enable filing of an appeal and production of F Forms - HELD THAT: - The Court considered the petitioner's request for a certified copy so that belatedly available F Forms could be produced before the Appellate Authority. It noted that Rule 12(7) permits filing of F Forms with leave of the Assessing Officer on sufficient cause, and that rectification or production before appellate authorities may be permissible in proper proceedings. However, because the assessment was validly served by e-mail and limitation has expired, the Court found no basis to direct the Assessing Officer to furnish a certified copy to revive or extend the period for filing an appeal. Consequently, the discretionary relief sought to enable filing of an appeal for production of F Forms was refused. [Paras 10, 13]

No direction to furnish certified copy or to permit filing of an out-of-time appeal; the petitioner's request is refused.

Final Conclusion: Writ petition dismissed: the assessment order served by e-mail is valid in view of the amended Rule 64, the petitioner's claims of non-receipt and inaction do not justify revival of limitation, and no direction is issued to furnish a certified copy or permit filing of a delayed appeal.

Right to speedy trial under Article 21 - bail where prolonged pre-trial incarceration renders timely trial unlikely - modified application of Cr.P.C. under Section 43D(5) of the UAP Act and its reconciliation with constitutional jurisdiction - balancing seriousness of offence against period of incarceration and prospects of expeditious trial - presumption of innocence in bail proceedings - flight risk of foreign national and permissible bail conditions - limitations on imposing arbitrary or oppressive bail conditions

Right to speedy trial under Article 21 - bail where prolonged pre-trial incarceration renders timely trial unlikely - balancing seriousness of offence against period of incarceration and prospects of expeditious trial - Whether continued incarceration of the appellant for over nine years without prospect of timely trial justifies grant of bail despite grave charges - HELD THAT: - The Court found that the appellant had been in custody since 23.02.2015 and, as of the hearing, only two prosecution witnesses had been examined, indicating that the trial was progressing at a very slow pace (paras 18-19, 21). Applying the settled principle that an accused has a constitutional right to a speedy trial under Article 21, the Court held that prolonged pre-trial detention with no reasonable prospect of expeditious conclusion of the trial outweighs the gravity of the charges for purposes of bail. The Court relied on precedent emphasizing that seriousness of the charges cannot be the sole basis to deny bail when the prosecution or courts have not ensured a timely trial (paras 22-29, 32). In the circumstances of this case, continued incarceration was held unjustified and bail was to be granted. [Paras 23, 27, 29, 32, 33]

Appellant entitled to bail due to lengthy pre-trial incarceration and unlikely timely completion of trial; continued detention not justified.

Modified application of Cr.P.C. under Section 43D(5) of the UAP Act and its reconciliation with constitutional jurisdiction - presumption of innocence in bail proceedings - Whether statutory restrictions in Section 43D(5) of the UAP Act operate to oust constitutional courts from granting bail on grounds of violation of Part III rights where incarceration has been prolonged - HELD THAT: - The Court held that statutory restrictions like Section 43D(5) do not oust the power of constitutional courts to grant bail on grounds of infringement of fundamental rights. While courts must have regard to the legislative policy reflected in such provisions at the threshold, those restrictions 'melt down' where there is no likelihood of trial being completed within a reasonable time and prolonged incarceration has occurred (paras 20.2, 27.1, 29, 32). The Court emphasised that constitutional jurisdiction must be harmonised with statutory provisions and that long incarceration with no prospect of timely trial is a valid ground to grant bail despite restrictions in the UAP Act. The presumption of innocence also informs that an accused is not to be treated as a convict in bail proceedings (para 23.1, 32). [Paras 20, 27, 29, 32]

Section 43D(5) does not preclude grant of bail by constitutional courts where continued detention violates Part III rights; statutory restriction is not absolute in such circumstances.

Flight risk of foreign national and permissible bail conditions - limitations on imposing arbitrary or oppressive bail conditions - What conditions are appropriate when granting bail to a foreign national accused facing serious offences - HELD THAT: - Recognising the State's concern about flight risk, the Court authorised imposition of reasonable and pragmatic conditions tailored to securing the accused's presence for trial while respecting constitutional rights (paras 24, 30, 30.1-30.3, 33-34). The Court disapproved the imposition of arbitrary, onerous or privacy-invading conditions and reiterated that conditions must be minimally intrusive and consistent with the object of bail. In view of the appellant being a foreign national, the Court ordered specific measures (passport/citizenship document impounded, prohibition on leaving territorial jurisdiction, furnishing address, mandatory attendance at trial dates, fortnightly police station reporting, and prohibition on tampering with evidence or threatening witnesses) rather than conditions that unduly curtail liberty or rely on foreign missions' assurances. [Paras 24, 30, 33, 34]

Bail to be granted subject to specified reasonable conditions (impounding of passport/citizenship documents, territorial restriction, furnishing address, attendance at trial, fortnightly police reporting, prohibition on tampering or threatening witnesses); arbitrary or oppressive conditions rejected.

Final Conclusion: The High Court order refusing bail is set aside; the appellant is released on bail subject to specified reasonable conditions to secure his presence at trial and to prevent interference with the process of justice, with liberty to the prosecution to move for cancellation of bail on breach of conditions.

Compounding of offences under the Negotiable Instruments Act - Dishonour of cheque as a regulatory offence - Compounding after conviction with leave of the appellate court - Priority of compensatory relief over punitive sanction - Exercise of powers under Article 142 for quashing conviction upon compensation

Compounding of offences under the Negotiable Instruments Act - Compounding after conviction with leave of the appellate court - Priority of compensatory relief over punitive sanction - Validity of the settlement between the parties as compounding of the offence and consequent setting aside of convictions recorded under Section 138 NI Act. - HELD THAT: - The Court noted that offences under the Negotiable Instruments Act are compoundable and that compounding after conviction requires leave of the court where an appeal against conviction is pending. The settlement produced by the parties demonstrated receipt by the complainant of the disputed sum and an express statement of no objection to setting aside conviction. The Court verified the settlement's genuineness by seeking and receiving an affidavit from the complainant corroborating the compromise. Recognising that dishonour of cheques is a regulatory offence and that the compensatory aspect of remedy is to be given primacy over punishment, the Court held that where the parties have lawfully and genuinely settled the dispute and the Court is satisfied as to authenticity, the conviction serves no further purpose. Reliance was placed on the consistent approach of this Court encouraging compounding in NI Act matters where appropriate and, in exceptional cases, the exercise of powers under Article 142 to quash convictions where adequate compensation has been made. Applying these principles to the verified settlement in the present case, the Court concluded that the convictions should be set aside. [Paras 4, 5, 6, 8]

The settlement is treated as compounding of the offence; the convictions recorded by the High Court and Trial Court are set aside and the appellants are acquitted; appellant no.2 need not surrender and his sureties are discharged.

Final Conclusion: Allowing the appeal on the basis of a genuine settlement and the compensatory priority in NI Act cases, the Court set aside the convictions of the appellants, acquitted them, and discharged the sureties of appellant no.2.

Quashing of criminal proceedings as abuse of process - Section 482 Cr.P.C. inherent jurisdiction - Section 156(3) Cr.P.C. order to register FIR - Civil dispute masquerading as criminal offence - Arbitration clause and parallel criminal proceedings

Quashing of criminal proceedings as abuse of process - Section 482 Cr.P.C. inherent jurisdiction - Civil dispute masquerading as criminal offence - Impugned criminal proceedings arising out of FIR No. 113 of 2020 and the SDJM order under Section 156(3) Cr.P.C. amount to abuse of process and are liable to be quashed under Section 482 Cr.P.C. - HELD THAT: - The Court examined the allegations and documentary material and concluded that the dispute between the parties is essentially contractual and civil in nature, not disclosing the essential ingredients of offences such as cheating or forgery. Applying settled precedents, the Court held that where a civil dispute is given the cloak of a criminal offence and criminal proceedings are deployed to harass or coerce the other party, the High Court in exercise of its inherent jurisdiction under Section 482 Cr.P.C. may quash the criminal proceedings to prevent abuse of the process of the court. Allowing investigation and prosecution to proceed in such circumstances would be oppressive and amount to misuse of criminal process. The Court therefore found that continuation of the impugned criminal proceedings would be an abuse of process and warranted interference under Section 482 Cr.P.C. [Paras 10, 12, 16, 17]

The criminal proceedings arising from FIR No. 113/2020 and the SDJM order under Section 156(3) Cr.P.C. are quashed as an abuse of the process of the court.

Arbitration clause and parallel criminal proceedings - Civil dispute masquerading as criminal offence - Existence of an arbitration clause and ongoing arbitration support quashing of parallel criminal proceedings instituted to coerce the appellant. - HELD THAT: - The record showed an arbitration clause in the agreement and that arbitration proceedings had commenced between the parties. Correspondence produced before the Court indicated the complainant had admitted inability to perform the contract and had sought to withdraw and involve its financial partner to settle accounts, demonstrating the matter to be contractual. Given that the contractual dispute was to be resolved by arbitration and criminal proceedings were instituted later (and in one instance concealing the earlier FIR), the Court concluded that the criminal route was being used to exert pressure and that permitting such parallel criminal proceedings would frustrate the contractual/arbitral remedy and amount to abuse of process. Accordingly, the existence of the arbitration mechanism reinforced the conclusion that the criminal proceedings should be quashed. [Paras 7, 11, 12]

In view of the arbitration clause and ongoing arbitration, parallel criminal proceedings instituted to coerce the appellant are impermissible and are quashed.

Final Conclusion: Appeals allowed; the High Court's order is set aside and the petitions under Section 482 Cr.P.C. are allowed. FIR No. 113 dated 13.02.2020 and the SDJM order dated 09.03.2021 under Section 156(3) Cr.P.C. are quashed and set aside.