TaxTMI Updates e-Newsletter
Aug 16,2021

Freezing of bank accounts under Section 83 of the Central Goods and Services Tax Act, 2017 - Maintainability of writ petition in view of prior dismissal by the Supreme Court - Mootness/otiosity of administrative communication in light of subsequent orders - Right to challenge subsequent administrative orders despite dismissal of earlier petition

Freezing of bank accounts under Section 83 of the Central Goods and Services Tax Act, 2017 - Maintainability of writ petition in view of prior dismissal by the Supreme Court - Mootness/otiosity of administrative communication in light of subsequent orders - Petition challenging the communication dated 03.02.2021 (freezing of petitioner's account) passed by Deputy Director, DG-GST Intelligence, was not entertained and was dismissed. - HELD THAT: - The Court recorded that the petitioner had earlier sought identical relief before the Supreme Court in Writ Petition (Criminal) No. 202 of 2021, which was dismissed with an observation that there was no ground to entertain the matter and costs were imposed. In view of that earlier dismissal, the High Court declined to entertain a repeat petition under Article 226. The Court further noted that after the communication dated 03.02.2021, a subsequent order dated 25.02.2021 was passed by the Additional Director freezing the same account; accordingly, the earlier communication had in any event become otiose. On these bases the Court found no reason to admit the present writ petition and dismissed it, while expressly preserving the petitioner's rights to challenge subsequent orders freezing the account, subject to any legal impediment arising from the Supreme Court's earlier dismissal.

Writ petition dismissed as not entertainable and the impugned communication treated as outlived; petitioner permitted to challenge subsequent freezing orders subject to any legal bar.

Final Conclusion: The High Court dismissed the petition challenging the 03.02.2021 communication freezing the account as not maintainable in view of the Supreme Court's prior dismissal and because a later freezing order rendered the earlier communication otiose, while leaving open the petitioner's right to challenge subsequent orders.

Advance ruling - admissibility - bar on admission where the question is pending or decided in any proceedings - proviso to section 98(2) of the CGST Act - rejection of application

Advance ruling - admissibility - bar on admission where the question is pending or decided in any proceedings - Application for advance ruling not admitted under the proviso to section 98(2) as the question raised was already pending with the proper officer. - HELD THAT: - The Authority examined admissibility without adjudicating the merits. The proviso to section 98(2) precludes the Authority from admitting an application where the question raised is already pending or has been decided in any proceedings in the case of the applicant. The application showed that proceedings on the same question were pending before the assessing officer; accordingly the Authority was barred from admitting the application and declined to entertain it. The Authority therefore did not proceed to determine whether the society's activities constituted taxable supplies or whether registration was required.

Application for advance ruling is not admitted and is rejected under the proviso to section 98(2).

Final Conclusion: The Authority refused to admit the advance ruling application because the question raised was already pending before the proper officer; the application was therefore rejected without adjudication on the substantive tax issues.

Consideration - value of supply - single supply - Reverse Charge Mechanism - inclusion under Section 15 - services supplied by Government

Consideration - value of supply - inclusion under Section 15 - Contributions to NMET and DMF qualify as consideration and are includible in the value of the mining service. - HELD THAT: - The Authority examined whether statutory contributions payable to the National Mineral Exploration Trust (NMET) and District Mineral Foundation (DMF) are consideration for the supply of mining/lease services. Applying the relevant provisions governing value of supply, the Authority held that the charges levied under the MMDR regime are components of the total consideration for the single service comprising grant of licence/permission to extract and use mineral ore. Section 15(2) was read to indicate that taxes, duties, cesses, fees and charges levied under any law other than GST, if charged separately by the supplier, fall within the value of supply. The Authority concluded that NMET and DMF contributions are compulsory payments linked to the grant and continued validity of the mining licence, and thus operate as part of the total consideration for that service rather than being separate non-tax or purely fiscal levies excluded from GST valuation.

NMET and DMF contributions are consideration and must be included in the value of the mining service.

Single supply - services supplied by Government - Reverse Charge Mechanism - The Government is the supplier of the mining service, the service is a single composite supply, and the contributions being part of the value are chargeable to GST under the Reverse Charge Mechanism in the hands of the recipient. - HELD THAT: - The Authority addressed whether the payments attract GST on reverse charge in the hands of the applicant. It concluded that the licence to extract minerals and the right to use extracted minerals constitute a single service provided by the Government. Since the NMET and DMF payments are compulsory components of the consideration for that single service and there are no separate service providers for royalty, NMET and DMF, the Government is the supplier. In view of the notified provisions subjecting services supplied by Central/State/Local authorities to reverse charge, the contributions-being includible in the value of supply-are chargeable to GST on the recipient under the Reverse Charge Mechanism.

The contributions form part of the composite supply by the Government and are taxable under RCM in the hands of the applicant as service recipient.

Final Conclusion: The Authority ruled that statutory contributions to NMET and DMF qualify as consideration for the mining service, are includible in the value of that supply, and accordingly attract GST under the Reverse Charge Mechanism payable by the service recipient.

Consideration - value of supply - single composite supply (licence to mine) - inclusion of statutory levies in taxable value - reverse charge mechanism

Consideration - value of supply - inclusion of statutory levies in taxable value - single composite supply (licence to mine) - Contributions to NMET and DMF qualify as consideration for the supply of mining service and are includible in the value of supply. - HELD THAT: - The Authority held that the trusts constituted under the MMDR Act undertake activities which fall within the definition of 'business' and the amounts received by such trusts can constitute 'consideration' for supply. Applying Section 7 of the CGST Act, the licence to extract minerals and the concomitant right to use the minerals constitute a taxable supply for consideration. The Authority accepted that the payments to NMET and DMF, though measured by reference to royalty, are compulsory statutory charges and form part of the total consideration payable for the single service of granting mining rights. Reliance was placed on the statutory scheme, and on Section 15(2) which requires inclusion of certain taxes, duties, cesses, fees and charges levied under any law (other than GST) in the value of supply where charged separately. The Authority concluded that NMET and DMF contributions are not mere exactions outside the ambit of supply but are includible in the taxable value of the mining service because they are compulsory payments that are integrally connected to the grant of the licence and the government is the effective provider of the composite service.

Contributions to NMET and DMF qualify as consideration and are includible in the value of the supply.

Reverse charge mechanism - Where contributions to NMET and DMF are consideration for a service supplied by the Government, GST is payable on such amounts under the Reverse Charge Mechanism by the business recipient. - HELD THAT: - Having held that NMET and DMF payments form part of the consideration for the mining service supplied by the State, the Authority applied Entry No. 5 of Notification No. 13/2017 which makes services supplied by the Central Government, State Government or Local Authority to a business entity taxable on the recipient under RCM. Since the government (through its grant of licence) is the supplier of the composite mining service, the compulsory contributions to NMET and DMF, being part of that consideration, are chargeable to GST on the recipient under the reverse charge mechanism.

GST on NMET and DMF contributions is payable under the Reverse Charge Mechanism by the applicant as recipient.

Final Conclusion: The Authority ruled that contributions to NMET and DMF constitute consideration for the mining service supplied by the Government, are includible in the value of the supply, and are liable to GST payable by the applicant under the Reverse Charge Mechanism.

Consideration for supply - value of supply under Section 15 - inclusion of statutory charges in taxable value - supply by Government and reverse charge mechanism - trust activities constituting 'business'

Consideration for supply - trust activities constituting 'business' - Contributions to NMET and DMF qualify as consideration for supply of mining service by the State - HELD THAT: - The Authority examined whether statutory contributions to the National Mineral Exploration Trust (NMET) and District Mineral Foundation (DMF) are consideration for a supply. Relying on the statutory scheme, the Authority held that the trusts undertake activities (regional/detailed exploration; welfare of affected persons/areas) that fall within the definition of 'business' and that amounts received by the trusts qualify as consideration where the activity constitutes a supply in the course or furtherance of business (Section 7). The Authority rejected the applicant's contention that such contributions are mere taxes/cesses not linked to any supply, and it accepted the reasoning that the payments are compulsory and connected to the grant/continuance of mining rights such that they operate as part of the consideration for the licensed mining service. Consequently, the contributions cannot be treated as outside the ambit of 'consideration' merely because they are statutorily imposed or measured by reference to royalty.

Contributions to NMET and DMF are consideration for the supply of mining service by the Government.

Value of supply under Section 15 - inclusion of statutory charges in taxable value - supply by Government and reverse charge mechanism - NMET and DMF contributions are includible in the value of supply and chargeable to GST under reverse charge in the hands of the recipient - HELD THAT: - Having held that NMET and DMF contributions constitute consideration, the Authority proceeded to valuation and applicability of reverse charge. Section 15(2) was applied to conclude that charges levied under any law other than the GST Act, when part of the consideration, are includible in the value of supply. The Authority treated the licence to extract and use mineral ore as a single service for which consideration is payable under multiple heads (royalty, NMET, DMF) and observed that the Government is the provider of that licensing service. Entry No. 5 of Notification No. 13/2017 (Central Tax) makes services supplied by the State Government to a business entity liable to tax under reverse charge. On these bases, the Authority ruled that NMET and DMF contributions are includible in taxable value and are chargeable to GST under the reverse charge mechanism in the hands of the applicant (service recipient). The applicant's arguments that DMF is paid to a separate trust or that the contributions are not consideration were considered and rejected for the reasons stated.

NMET and DMF contributions are includible in the value of the taxable supply and are chargeable to GST under reverse charge in the hands of the applicant.

Final Conclusion: The Authority ruled that statutory contributions to NMET and DMF constitute consideration for the supply of mining/licensing services by the Government, are includible in the value of supply under Section 15, and are therefore chargeable to GST under the reverse charge mechanism in the hands of the applicant.

Consideration - value of supply - reverse charge mechanism - single composite supply - clubbing of payments under Section 15 - services supplied by Government to a business entity - statutory levy versus consideration

Consideration - statutory levy versus consideration - services supplied by Government to a business entity - Contributions to NMET and DMF qualify as consideration for the supply of mining service by the Government. - HELD THAT: - The Authority examined whether mandatory contributions to NMET and DMF, imposed under the MMDR Act and related Rules, are payments in lieu of a supply or merely a statutory levy outside GST. It held that the activities carried out by the trusts fall within the scope of 'business' and that amounts received by the trust can constitute 'consideration' because the person receiving the supply (the Government/authority granting mining rights) and the person paying the amount need not be the same under GST. The Authority further accepted that the licence to extract minerals and the right to use extracted minerals constitute a single service; the mandatory contributions are compulsorily linked to issuance/continuance of that licence and therefore form part of the quid pro quo for the service. Consequently the compulsory nature and the functional connection of NMET and DMF payments to the grant/continuance of mining rights render them consideration for the supply of mining services by the Government.

Contributions to NMET and DMF are consideration towards the Government's supply of mining service.

Value of supply - clubbing of payments under Section 15 - reverse charge mechanism - services supplied by Government to a business entity - The NMET and DMF contributions are includible in the value of supply and are chargeable to GST under reverse charge in the hands of the applicant (service recipient). - HELD THAT: - Applying Section 15 principles, the Authority held that compulsory contributions that are part of the consideration for granting the mining licence must be included in the value of the taxable supply. The Authority rejected the submission that these payments are merely distinct taxes or measures of royalty not forming part of value; instead, it treated royalty, NMET and DMF payments as components of the total consideration for the single service of granting mining rights. Since Entry No.5 of Notification No.13/2017-Central Tax (Rate) makes services supplied by Central/State Government to a business entity liable to tax on reverse charge, the Authority concluded that the includible contributions are chargeable to GST under the reverse charge mechanism in the hands of the applicant as service recipient.

NMET and DMF contributions are includible in the value of the taxable supply and are taxable under reverse charge in the hands of the applicant.

Final Conclusion: The Authority ruled that mandatory contributions to the National Mineral Exploration Trust and District Mineral Foundation constitute consideration for the grant of mining services by the Government, are includible in the value of the supply, and are chargeable to GST under the reverse charge mechanism in the hands of the applicant.

Consideration - value of supply (including taxes, duties, cesses, fees and charges) - reverse charge mechanism - supply of services by Government to a business entity - single composite service - statutory levy versus consideration

Consideration - value of supply (including taxes, duties, cesses, fees and charges) - statutory levy versus consideration - single composite service - Contributions to NMET and DMF qualify as consideration for the supply of mining service and are includible in the value of supply. - HELD THAT: - The Authority examined the statutory scheme under the MMDR Act and the Rules creating NMET and DMF and applied the GST provisions on supply and valuation. The activities carried out by the trusts (welfare, exploration-related functions) fall within the ambit of 'supply' under the GST law when such activities are for a vocation and receipt of amounts by the trust can be treated as consideration. Section 15(2) (as applied by the Authority) requires inclusion in value of supply of taxes, duties, cesses, fees and charges levied under any law other than the GST Act if charged separately by the supplier. The Authority concluded that NMET and DMF charges are compulsory payments connected to the grant of mining rights and constitute part of the total consideration for the single service of licensing/extraction rights: the licence/right to extract minerals is a single composite service for which consideration is payable under multiple heads (royalty, NMET, DMF). Consequently, NMET and DMF contributions are includible in the value of the taxable supply.

NMET and DMF contributions are consideration and form part of the value of the mining service.

Reverse charge mechanism - supply of services by Government to a business entity - NMET and DMF contributions being consideration for a service supplied by the Government are chargeable to GST under the Reverse Charge Mechanism in the hands of the applicant (service recipient). - HELD THAT: - Having held that the payments to NMET and DMF constitute consideration for the supply of mining-related services by the Government, the Authority applied the notification covering services supplied by Central Government, State Government or Local Authority to a business entity. The Government is the supplier of the licence/right to extract minerals; the business entity (applicant) is the recipient. Therefore, the GST liability on such services falls on the recipient under the Reverse Charge Mechanism as contemplated by the relevant notification dealing with government-supplied services to business entities.

The contributions are taxable to GST under Reverse Charge in the hands of the applicant as service recipient.

Final Conclusion: The Authority ruled that contributions to NMET and DMF constitute consideration for the Government's supply of mining services, are includible in the value of supply, and are chargeable to GST under the Reverse Charge Mechanism in the hands of the applicant (service recipient).

Consideration in relation to supply - value of supply including taxes, duties, cesses, fees and charges - single composite supply comprising licence to mine and attendant rights - reverse charge mechanism for services supplied by Government - statutory levy versus consideration for supply

Consideration in relation to supply - statutory levy versus consideration for supply - Contributions to NMET and DMF qualify as consideration for the supply of mining service by the Government. - HELD THAT: - The Authority examined the statutory framework under the MMDR Act and the rules establishing NMET and DMF and applied the GST definition of consideration in relation to supply. Although the contributions are mandatory and based on royalty, the Authority held that they are not merely a separate tax or fee outside the supply relationship. The Government grants a license and the right to extract and use minerals; the NMET and DMF contributions are compulsory payments intrinsically linked to that licence and its continued validity. The contributions therefore constitute payments made in respect of, in response to, or for the inducement of the supply of mining services by the Government and amount to consideration for that supply.

Contributions to NMET and DMF are consideration towards the supply of mining service by the Government.

Value of supply including taxes, duties, cesses, fees and charges - single composite supply comprising licence to mine and attendant rights - reverse charge mechanism for services supplied by Government - The NMET and DMF contributions are includible in the value of the supply and are chargeable to GST under reverse charge in the hands of the recipient. - HELD THAT: - Applying the valuation principles, the Authority concluded that the compulsory contributions form part of the total consideration for the single service consisting of the licence to mine and attendant rights. As such, these amounts fall within the components to be included in the value of supply. Further, services supplied by the Central/State Government are covered by the relevant notification attracting reverse charge; since the Government is the supplier of the mining service, the GST liability on the includible value (which comprises royalty, NMET and DMF contributions) is to be discharged by the business recipient under the reverse charge mechanism.

NMET and DMF contributions are includible in the value of the taxable supply and liable to GST under reverse charge in the hands of the applicant as service recipient.

Final Conclusion: The Authority ruled that contributions to NMET and DMF constitute consideration for the mining service supplied by the Government, are includible in the value of that supply, and are chargeable to GST under the reverse charge mechanism in the hands of the applicant (service recipient).

Exempted supply under Serial Number 66 of Notification No. 12/2017-CGST (Rate) - services relating to admission to, or conduct of, examination - printing activity treated as supply of service where content/design/data is furnished by recipient - definition of "educational institution" for exemption scope - scanning and result processing as part of exempted examination services

Exempted supply under Serial Number 66 of Notification No. 12/2017-CGST (Rate) - services relating to admission to, or conduct of, examination - printing activity treated as supply of service where content/design/data is furnished by recipient - Printing of pre-examination items (question papers, OMR sheets, answer booklets) supplied to educational institutions is an exempted supply of service under Serial No. 66 of Notification No.12/2017-CGST (Rate). - HELD THAT: - The applicant prints pre-examination materials according to designs, data and bar-code information furnished by educational authorities, with confidentiality and supervision by those authorities. Such supplies fall within the category of "services relating to admission to, or conduct of examination by, such institution" as contemplated by Serial No. 66. The educational bodies to whom the supplies are made meet the notification's definition of "educational institution" (education as part of a curriculum leading to a recognised qualification). Given the primacy of the content/design supplied by the institution and the character of the service rendered, the activity is to be treated as a service and is covered by the exemption.

Affirmative - exempted as service under Serial No. 66.

Exempted supply under Serial Number 66 of Notification No. 12/2017-CGST (Rate) - services relating to admission to, or conduct of, examination - printing activity treated as supply of service where content/design/data is furnished by recipient - Printing of post-examination items (marks cards, grade cards, certificates) supplied to educational institutions after processing is an exempted supply of service under Serial No. 66 of Notification No.12/2017-CGST (Rate). - HELD THAT: - Post-examination documents are printed per designs, security features and data provided by the educational authorities and form the concluding communication of examination results. The activity therefore constitutes a service relating to the conduct of examinations by the institution. As the recipients are educational institutions within the notification's definition and the applicant's role is to render printing services based on institution-supplied content, the supply is covered by the exemption.

Affirmative - exempted as service under Serial No. 66.

Exempted supply under Serial Number 66 of Notification No. 12/2017-CGST (Rate) - services relating to admission to, or conduct of, examination - scanning and result processing as part of exempted examination services - Scanning and processing of examination results carried out for educational institutions is an exempted supply of service under Serial No. 66 of Notification No.12/2017-CGST (Rate). - HELD THAT: - The scanning and processing functions form an integral part of services relating to the conduct of examinations provided to educational institutions. These activities are procured by institutions to complete the examination process and, when performed for institutions that satisfy the notification's definition, fall within the exemption for services relating to conduct of examinations. Therefore, such data-processing activities are covered by Serial No. 66.

Affirmative - exempted as service under Serial No. 66.

Final Conclusion: The Authority ruled that printing of pre examination materials, printing of post examination materials (after processing), and scanning and processing of examination results, when supplied to educational institutions as defined in the notification and performed pursuant to designs/data furnished by those institutions, are services relating to the conduct of examinations and are exempt from GST under Serial Number 66 of Notification No.12/2017 CGST (Rate).

Scope of advance ruling under Section 97(2) - Admissibility of application for advance ruling - Appropriation of tax paid in wrong jurisdiction not covered by advance ruling - Refund of tax not covered by advance ruling

Scope of advance ruling under Section 97(2) - Appropriation of tax paid in wrong jurisdiction not covered by advance ruling - Refund of tax not covered by advance ruling - Admissibility of application for advance ruling - Application seeking advance ruling on appropriation of tax paid in wrong jurisdiction and refund is not admissible under Section 97(2). - HELD THAT: - The Authority examined the statutory list of questions eligible for advance ruling under Section 97(2) and compared the applicant's queries with that list. The questions before the Authority concerned appropriation of taxes paid to a wrong jurisdiction and claim for refund of accumulated tax. These matters do not fall within any of the categories enumerated in Section 97(2) (such as classification, applicability of notifications, time and value of supply, admissibility of input tax credit, determination of liability to pay tax, registration requirement, or whether an activity amounts to a supply). Consequently the application does not seek an advance ruling on a question permitted by Section 97(2) and is therefore not maintainable for admission under Section 98(2).

Application not admitted under Section 98(2) of the CGST Act, 2017 and APGST Act, 2017.

Final Conclusion: The Authority declined to admit the application for advance ruling because the questions on appropriation of tax paid to the wrong jurisdiction and refund fall outside the scope of matters enumerated in Section 97(2); the application is therefore not entertained under Section 98(2).

Summary order. Writ Petitions dismissed for want of merit; costs of Rs. 50,000 in each case to be paid to the Supreme Court Legal Services Committee within two weeks; Special Leave Petition dismissed; pending interlocutory applications, if any, disposed of.

Assessment under Section 153A linked to incriminating material found during search - Nexus between seized material and additions or disallowances - Jurisdictional limit of assessments initiated after search - Search under Section 132 of the Act

Assessment under Section 153A linked to incriminating material found during search - Nexus between seized material and additions or disallowances - Search under Section 132 of the Act - Validity of assessment framed under Section 143(3) read with Section 153A for AY 2015-16 where no incriminating material was found during the search and the alleged cash payments were recorded in a survey prior to the search. - HELD THAT: - The Court held that assessments under Section 153A must be founded on incriminating material unearthed in the course of the search under Section 132 or material directly connected to such seized material. An assessment under Section 153A cannot be arbitrary or made without relevance or nexus to the materials found during the search. In the present case the search panchanama (conducted on 26th February 2016) recorded that nothing incriminating was recovered; the assessment, however, relied solely on entries in the cash book said to have been recorded during a survey on 12th February 2016, two weeks prior to the search. Because the impugned order did not refer to any document or material unearthed during the search and there was no demonstrated nexus between the search seizures and the cash book entries relied upon, the assumption of jurisdiction under Section 153A in respect of AY 2015 16 was without legal basis. For these reasons the assessment order and consequential demand were held to be ultravires and liable to be set aside. [Paras 11, 13, 14, 15]

Impugned assessment order under Section 143(3) read with Section 153A for AY 2015-16 was without jurisdiction and set aside.

Final Conclusion: Writ petition allowed; the assessment order dated 29th December, 2017 and the consequential demand notice are quashed; no order as to costs.

Mandatory prior intimation under Section 245 for set-off of refunds - invalidity of set-off effected prior to notice - stay of demand on deposit of 20% under Office Memorandum - effect of stay on deeming of assessee as in default and on recovery

Mandatory prior intimation under Section 245 for set-off of refunds - invalidity of set-off effected prior to notice - Adjustment of refund for A.Y. 2019-20 against outstanding demands could not lawfully be made before giving the intimation required by Section 245. - HELD THAT: - Section 245 permits an assessing officer to set off a refund against sums remaining payable by the assessee only after giving an intimation in writing of the proposed action to the person entitled to the refund. The Court found on the admitted facts that the adjustment recorded in Form 26AS was effected on 5th May, 2020 whereas the statutory intimation under Section 245 was issued only on 13th May, 2020. The intimation must precede the set-off; it cannot be simultaneous or subsequent. Reliance was placed on earlier Bombay High Court decisions recognizing the prior-notice requirement. Because the mandatory prior intimation was not given before the adjustment, the set-off was held to be wholly illegal and the respondent erred in not refunding the amount due. [Paras 5, 6, 8, 9, 11]

The adjustment made prior to issuing the Section 245 intimation is invalid; the respondent must refund the amount determined as payable for A.Y. 2019-20 with interest as per law.

Stay of demand on deposit of 20% under Office Memorandum - effect of stay on deeming of assessee as in default and on recovery - Deposit of 20% of disputed demand and grant of stay operate to keep the stay in force and prevent the assessee from being treated as in default for recovery purposes. - HELD THAT: - The Office Memorandum provides that where an outstanding demand is disputed and the assessee deposits 20% of the disputed demand, the assessing officer shall grant stay of demand. The petitioner had filed appeals against the demands for A.Y. 2015-16 and 2016-17 and deposited the required 20%; this deposit was not contested. The Court held that such deposit and the stay granted have the effect of extending the time for payment and ensuring the assessee is not deemed to be in default for recovery provisions. Consequently, the existence of the stay reinforces the position that adjustment against the refund was impermissible in the circumstances. [Paras 4, 10, 11]

Because the petitioner deposited 20% and a stay of the demands is in force, the assessee is not in default and the respondents cannot proceed with recovery by way of setting off the refund; refund with interest must be paid.

Final Conclusion: The Court held that the respondents illegally adjusted the refund for A.Y. 2019-20 before issuing the statutory intimation under Section 245 and that, having regard to the 20% deposits and the stay of demand in respect of the disputed earlier assessment years, the petitioner is not in default; respondents were directed to refund the amounts determined under the intimation under Section 143(1) for A.Y. 2019-20 with interest within four weeks.

Penalty under section 271(1)(c) - Furnishing inaccurate particulars or concealment of income - Bonafide claim and full disclosure in return - Application of section 10A deduction and export proceeds realisation - Application of section 94(7) regarding short-term capital loss - Reliance Petroproducts principle limiting scope of section 271(1)(c)

Application of section 10A deduction and export proceeds realisation - Penalty under section 271(1)(c) - Bonafide claim and full disclosure in return - Penalty under section 271(1)(c) could not be levied in respect of the disallowance relating to non-realisation of export proceeds and consequent adjustment to deduction under section 10A. - HELD THAT: - The Tribunal examined the assessment facet concerning reduction of the section 10A claim and noted that an earlier Tribunal order (reproduced at hearing) followed the jurisdictional High Court in directing exclusion of certain foreign currency expenses from export turnover, thereby negating the addition. Since the quantum addition on account of section 10A was not sustained, there was no basis for invoking penalty under section 271(1)(c). The reasoning proceeds on the settled principle that penalty for furnishing inaccurate particulars or concealment cannot be mechanically imposed where the addition itself does not survive and the assessee had made necessary disclosures; penalty is not automatic upon disallowance of a claim which is contested on merits. [Paras 6, 7, 8]

Penalty levied under section 271(1)(c) in respect of the section 10A/export proceeds issue is deleted.

Application of section 94(7) regarding short-term capital loss - Furnishing inaccurate particulars or concealment of income - Reliance Petroproducts principle limiting scope of section 271(1)(c) - Bonafide claim and full disclosure in return - Penalty under section 271(1)(c) could not be levied in respect of the disallowance arising from invocation of section 94(7) on short-term capital loss where the assessee had disclosed the transactions and advanced a bonafide legal contention. - HELD THAT: - The Tribunal applied earlier decisions including the Administrator of the Estate of late Mr. E.F. Dinshaw and the Supreme Court in Reliance Petroproducts to conclude that where the assessee has made full disclosure in the return and the claim is a bonafide legal position (even if ultimately not accepted), such a claim does not amount to furnishing inaccurate particulars or concealment attracting section 271(1)(c). The Tribunal noted authorities which held that a mere incorrect claim in law, or an interpretation dispute, is not sufficient to impose penalty; nexus of concealment or inaccurate particulars in the return must be shown. On the facts the assessee had furnished requisite details of purchase, dividend receipt and loss, and there was no finding of suppression or falsity; accordingly penalty was unjustified. [Paras 8, 11, 13]

Penalty levied under section 271(1)(c) in respect of the short-term capital loss/section 94(7) issue is deleted.

Final Conclusion: The appeal is allowed and the penalty levied under section 271(1)(c) for Assessment Year 2009-10 is deleted in respect of both the section 10A/export proceeds issue and the short-term capital loss/section 94(7) issue.

Business connection under Explanation 2 to section 9(1) - fees for technical services under Explanation 2 to section 9(1)(vii) - tax withholding obligation where payment is chargeable to tax in India - related party transactions do not ipso facto create business connection - taxability of income deemed to accrue or arise in India under section 9

Business connection under Explanation 2 to section 9(1) - fees for technical services under Explanation 2 to section 9(1)(vii) - tax withholding obligation where payment is chargeable to tax in India - related party transactions do not ipso facto create business connection - Validity of disallowance under section 40(a)(i) for failure to deduct tax at source on payments made to international freight forwarding agents. - HELD THAT: - The Tribunal upheld the Commissioner (Appeals) in concluding that the payments to foreign group companies related to logistics services performed from foreign ports onwards were for services rendered outside India and therefore were not chargeable to tax in India. The payments did not constitute income deemed to accrue or arise in India under section 9(1)(i) because the relevant operations were carried out outside India and Explanation 1(a) to section 9 limits deeming to the part of income attributable to operations in India. The payments also did not fall within section 9(1)(vii) as 'fees for technical services' because the services were executional freight and logistics activities, not managerial, consultancy or technical services involving relevant human involvement; incidental use of computers or software did not convert the consideration into technical fees. The Tribunal rejected the Revenue's contention that related party status alone created a business connection attracting tax deduction obligations, noting that mere group affiliation does not automatically establish that the foreign entities carried on business in India or had authority to conclude contracts on behalf of the foreign entities. The Tribunal followed its Coordinate Bench and the decision in UPS SCS (Asia) Ltd. in holding that absent a business connection or PE and where services are rendered outside India, the assessee had no obligation to deduct tax at source and the disallowance under section 40(a)(i) was not sustainable. [Paras 6, 7, 8]

The addition under section 40(a)(i) in respect of payments to international freight forwarding agents is not sustainable and is deleted; the CIT(A)'s order deleting the disallowance is confirmed.

Final Conclusion: Following its Coordinate Bench and applying the principles that payments for logistics services performed outside India are not taxable in India under section 9 and that related party status does not by itself create a business connection, the Tribunal dismissed the Revenue's appeal and upheld the deletion of the disallowance under section 40(a)(i).

Special provision for payment of tax by certain companies (application of section 115JB) - Minimum Alternate Tax (MAT) - Rectification under section 154 - Scheduled bank - Legislative amendment by Finance Act, 2012 and prospective application

Special provision for payment of tax by certain companies (application of section 115JB) - Minimum Alternate Tax (MAT) - Scheduled bank - Whether section 115JB (MAT) as it stood prior to amendment by Finance Act, 2012 applied to the assessee (a scheduled bank) for A.Y. 2011-12 - HELD THAT: - The Tribunal examined the legislative scheme and the machinery provisions of section 115JB, particularly the requirement in sub section (2) that accounts be prepared in accordance with the Companies Act and the practical impossibility of applying those requirements to banking companies which prepare accounts under the Banking Regulation Act. Relying on and respectfully following the reasoning in the jurisdictional decision in Union Bank of India (reproduced and discussed at length in the record), the Tribunal held that the pre 2012 form of section 115JB was unworkable insofar as banking companies were concerned and therefore did not apply to a scheduled bank for the assessment year under consideration. The Tribunal noted subsequent amendments made by Finance Act, 2012 which altered the machinery provision prospectively, but observed that the pre amendment provision could not be read as applicable to banking companies. The Tribunal further observed that, in consequence, the question of correctness of the rectification under section 154 became unimportant for the purpose of the outcome. [Paras 11]

Section 115JB as it stood prior to the Finance Act, 2012 amendment did not apply to the scheduled bank for A.Y. 2011-12; appeal allowed on this ground.

Special provision for payment of tax by certain companies (application of section 115JB) - Minimum Alternate Tax (MAT) - Rectification under section 154 - Scheduled bank - Whether the same conclusion on non applicability of section 115JB and the resultant relief extends to A.Y. 2012-13 and A.Y. 2013-14 where identical facts and issues arose - HELD THAT: - The Tribunal found the facts and legal controversy in A.Y. 2012-13 and A.Y. 2013-14 to be materially identical to A.Y. 2011-12. Applying the same legal principle (non applicability of pre 2012 section 115JB to banking companies) and for consistency with the view taken in the lead appeal, the Tribunal set aside the impugned CIT(A) orders in these assessment years as well. The Tribunal therefore granted the same relief for these years without a fresh independent adjudication of the rectification exercise, since the core legal disability of applying section 115JB to a scheduled bank rendered the rectification issue immaterial to the ultimate outcome. [Paras 13]

Impugned orders for A.Y. 2012-13 and A.Y. 2013-14 set aside and appeals allowed on the same reasoning as in A.Y. 2011-12.

Final Conclusion: For the assessment years 2011-12, 2012-13 and 2013-14 the Tribunal held that the pre 2012 form of section 115JB was not applicable to the scheduled bank; accordingly the impugned orders under appeal were set aside and the appeals allowed.

Provisional attachment under Section 132(9B) - interim relief by lifting attachment - reasonable opportunity to file counter affidavit - lifting of attachment amounting to grant of final relief at interim stage - scope of search and seizure proceedings extending to persons other than the searched person

Provisional attachment under Section 132(9B) - interim relief by lifting attachment - reasonable opportunity to file counter affidavit - lifting of attachment amounting to grant of final relief at interim stage - Validity of the interim order that lifted provisional attachment of assets without the Department filing a counter affidavit or being afforded reasonable opportunity. - HELD THAT: - The Single Bench had directed production of records and had recorded that counter/written instructions were to be filed by the Department; notwithstanding that direction the impugned interim order lifted the attachment forthwith after perusal of the produced records and recorded that the writ petitioners had not been subjected to search. The High Court held that lifting the attachment at the interim stage, before the Department had an opportunity to file its counter, effectively granted the main relief sought in the writ petitions and was therefore inappropriate. Interim relief of that character should not be granted where it disposes of the core grievance before pleadings and opportunity for the Department to place material are complete. For these reasons the Court concluded that reasonable opportunity was not afforded to the Department and interference with the impugned order was warranted. [Paras 3, 5, 6, 7, 9]

The Writ Appeals are allowed and the impugned common interim order lifting the attachment is set aside.

Provisional attachment under Section 132(9B) - scope of search and seizure proceedings extending to persons other than the searched person - Post-setting-aside procedural directions for further prosecution of the writ petitions and opportunity to the Department to file its case. - HELD THAT: - Having set aside the interim order, the Court directed that the attached Fixed Deposits shall remain in the bank and the petitioners are prohibited from withdrawing them. The Department was granted eight weeks to file its counter affidavit with annexures as a typed set of papers and the writ petitions were directed to be listed before the appropriate Single Bench after twelve weeks. These directions preserve the status quo and permit adjudication of the merits after the Department places its material on record. [Paras 10, 11]

Fixed Deposits to remain in the bank without withdrawal; Department to file counter within eight weeks; writ petitions to be listed after twelve weeks.

Final Conclusion: The appeals by the Revenue are allowed; the interim order lifting the provisional attachment is set aside for lack of reasonable opportunity to the Department, the attached fixed deposits are to remain frozen in the bank, the Department is granted eight weeks to file its counter affidavit, and the writ petitions are to be listed before the appropriate Single Bench after twelve weeks.

Reopening of assessment under Section 147/148 of the Income Tax Act - reason to believe - change of opinion - speaking order in disposal of objections - principles of natural justice in reassessment proceedings - reassessment within four years

Reopening of assessment under Section 147/148 of the Income Tax Act - reason to believe - change of opinion - reassessment within four years - Validity of reopening assessment for assessment year 2013-2014 on the basis of reasons furnished under Section 147/148 - HELD THAT: - The Court held that the Assessing Officer had the requisite "reason to believe" that income chargeable to tax had escaped assessment and therefore reopening within four years was permissible. The Court explained that "reason to believe" must have a live nexus with the initiation of proceedings and may be formed from materials already on record if the Assessing Officer can reasonably cull new information or a different factual dimension which was omitted in the original assessment. A mere comparison of issues discussed in the original assessment and in the reasons for reopening does not automatically establish a change of opinion; where from the same materials the authority traces out information not considered earlier and that omission results in escapement of income, reopening is justified. Applying these principles to the reasons furnished (which identified specific alleged omissions and miscomputations in book profits, mark-to-market losses, treatment of software expenditure, and capital gains/losses), the Court found the statutory condition for reopening satisfied and declined to interfere with the reopening action. [Paras 34, 35, 37, 38, 43]

Reopening of assessment under Section 147/148 was valid; writ petition on this ground dismissed.

Speaking order in disposal of objections - principles of natural justice in reassessment proceedings - Whether the Assessing Authority's disposal of the assessee's objections to the reasons for reopening was defective for being non-speaking or mechanical - HELD THAT: - The Court referred to the mandate in GKN Driveshafts that reasons for reopening must be furnished within a reasonable time and objections to such reasons must be disposed of by a speaking order. It clarified that the speaking order required at the objections stage is limited to addressing the reasons for reopening (to ensure the assessee knows the grounds and can respond); the entire merits of reassessment need not be finally adjudicated at that stage. The Assessing Authority had considered the objections issue-wise and recorded reasons (noting that the relevant issues were not specifically considered earlier and that the Assessing Officer could fairly form a reason to believe). Given the limited scope of the objections-stage speaking order and the further opportunities available to the assessee during reassessment, the Court found no infirmity in the disposal of objections. [Paras 34, 35, 36, 40, 42]

Disposal of objections was not vitiated for want of a speaking order in the required sense; no interference warranted.

Final Conclusion: The High Court dismissed the writ petition, holding that the Assessing Officer had a valid "reason to believe" to reopen the assessment for AY 2013-2014 and that the objections to the reasons for reopening were disposed of within the limited, permissible scope; reopening and consequent proceedings may continue and the assessee must participate in completion of reassessment.

Exercise of writ jurisdiction where alternate statutory remedy exists - violation of principles of natural justice - observations on merits prejudicing the independence of Assessing Officer - E Proceeding / E Governance in assessment proceedings - remand to Assessing Officer for fresh consideration - liberty to file statutory appeal and exclusion of period for computing limitation

Exercise of writ jurisdiction where alternate statutory remedy exists - violation of principles of natural justice - Maintainability of the writ petition challenging the assessment order and the correctness of remanding the matter when alternate statutory remedy (appeal) was available. - HELD THAT: - The Court held that where an effective alternate remedy under the statute exists, writ courts should be slow to entertain petitions bypassing the statutory appellate mechanism, particularly in taxation matters. Although the respondent pleaded violation of principles of natural justice and non-application of mind, those contentions raised factual questions requiring detailed adjudication which ought not to be undertaken in a writ proceeding. The Single Judge's remand to the Assessing Officer, coupled with observations on merits, was inappropriate because the Writ Court should avoid deciding contested factual issues and should not issue directions that prejudice the independence of the Assessing Officer. Consequently, the impugned order was set aside and the writ petition dismissed; the assessee was granted liberty to pursue the statutory appeal with prescribed facilitation for limitation. [Paras 15, 16, 18, 24, 25]

Writ dismissed; impugned order set aside; respondent granted liberty to file appeal before the First Appellate Authority with exclusion of the period from 23.1.2020 until filing for computing limitation.

E Proceeding / E Governance in assessment proceedings - observations on merits prejudicing the independence of Assessing Officer - Validity of the Single Judge's observations criticizing the E Proceeding facility and commenting on the merits of the assessment. - HELD THAT: - The High Court found that the writ petition did not challenge the E Proceeding scheme or seek declaratory relief against that facility; thus the Single Judge's appreciative and critical observations on E Governance (including that e assessments could lead to erroneous outcomes without human hearing) were unnecessary and out of scope. Further, the Single Judge made findings on prima facie merits of the assessment (including treatment under Section 69A and reference to taxation at maximum marginal rate) which could prejudice the Assessing Officer's independent decision-making. Those observations and findings were therefore eschewed and set aside so that the Assessing Officer may consider the matter afresh in the statutory appellate/assessment process without being influenced by the impugned judicial remarks. [Paras 17, 21, 22, 23, 24]

All observations and findings regarding the effectiveness of E Governance and the merits of the assessment in the impugned order are set aside.

Final Conclusion: The departmental appeal is allowed; the Single Judge's order is set aside and the writ petition dismissed. The respondent is granted liberty to prefer an appeal to the First Appellate Authority within four weeks of receipt of this judgment, and the period from 23.1.2020 to the date of filing is to be excluded for computing limitation if the appeal is filed within the stipulated time.

Deduction under Section 10-B - Manufacture or production - Processing versus manufacture - Scope of 'manufacture' in the absence of a statutory definition - Distinguishing precedent on manufacture (Gem India Manufacturing Co.)

Deduction under Section 10-B - Manufacture or production - Processing versus manufacture - Assessee entitled to deduction under Section 10-B for the assessment year 2005-06 where activities on granite blocks amounted to manufacture or production. - HELD THAT: - The Tribunal and CIT(A) were upheld in holding that the processes undertaken by the assessee on quarried granite blocks - including cutting, sizing and further stages leading to slabs/tiles - resulted in articles of a different character than the raw quarried blocks. The Court relied on the Supreme Court decision in Arihant Tiles & Marbles and the Division Bench decision in Pallava Granite Industries which treat conversion of blocks into polished slabs/tiles (including cutting and polishing stages) as manufacture or production. Where the resultant article does not retain the original character and bears a different name or character, such processes fall within the common-sense scope of 'manufacture' even in the absence, for that year, of a statutory definition under Section 2(29BA) or sub-clause (iii) of Section 10B(7). The factual examination by the lower authorities of the stages through which the rough stone passed before becoming finished articles was rightly accepted as demonstrating manufacture rather than mere processing for transport. [Paras 5, 7, 9]

Tribunal rightly allowed the claim for deduction under Section 10-B on the finding that the activities amounted to manufacture or production.

Scope of 'manufacture' in the absence of a statutory definition - Processing versus manufacture - Tribunal correctly proceeded without construing the absence of the later statutory definitions as restricting the ordinary meaning of 'manufacture'. - HELD THAT: - The Court rejected the Revenue's contention that non existence, during the relevant assessment year, of definitions later introduced (Section 2(29BA) and Section 10B(7)(iii)) required a restricted reading excluding processing. Citing Gem Granites and Arihant Tiles, the Court held that, where the resultant article attains a different character, the common man understanding of 'manufacture' encompasses the processes leading to that result. Therefore omission of the later amendment did not justify denying the deduction when the processes produced a new article. [Paras 8, 9]

Tribunal was justified in not treating the absence of later statutory definitions as determinative against the assessee's claim.

Distinguishing precedent on manufacture (Gem India Manufacturing Co.) - Processing versus manufacture - The decision in Gem India Manufacturing Co. (cutting and polishing of diamonds) was distinguishable and did not control the present case. - HELD THAT: - The Court examined Gem India and found its facts different: in Gem India the material on record did not permit a conclusion that the processed article was a new article having a different character. By contrast, here the CIT(A) and Tribunal had detailed findings on the multi stage processes converting quarried rough stone into finished slabs/tiles; accordingly Gem India was not applicable. The Court therefore refused to reverse the Tribunal on that precedent. [Paras 10]

Gem India Manufacturing Co. distinguished and the Tribunal's reliance on authorities favouring manufacture of processed granite upheld.

Final Conclusion: Appeals dismissed. The Tribunal's orders confirming allowance of deduction under Section 10 B are upheld: the activities on granite blocks constituted manufacture or production for AY 2005 06 and the Tribunal rightly did not treat absence of later statutory definitions or the cited contrary precedent as displacing that conclusion.

Reopening of assessment under Section 147 - assessment under Section 143(3) - disclosure of material facts for assessment - deemed full value of consideration under Section 50C - compounding fee under the Indian Stamp Act - production of original sale deed

Reopening of assessment under Section 147 - disclosure of material facts for assessment - Validity of reopening the assessment for AY 2005-06 under Section 147 - HELD THAT: - The Tribunal and this Court found that the reopening was effected after several years without any tangible material to show that the assessee had failed to disclose fully and truly all material facts necessary for assessment. The assessee had furnished the photostat copies of the Sale Deed and other necessary details when the assessment under Section 143(3) was completed; the Assessing Officer had not insisted on production of the original Sale Deed at that time. The Court accepted the Tribunal's conclusion that, on these facts, there was no justification for reopening the assessment under Section 147. [Paras 8, 9]

Reopening of the assessment under Section 147 quashed for want of tangible material and failure to establish non-disclosure.

Assessment under Section 143(3) - production of original sale deed - deemed full value of consideration under Section 50C - compounding fee under the Indian Stamp Act - Whether the assessee failed to disclose particulars necessary for completion of assessment under Section 143(3) and whether the compounding fee warranted adoption of a higher consideration under Section 50C - HELD THAT: - The Tribunal observed that the assessee had disclosed details of stamp duty and additional stamp duty and had produced copies of the Sale Deed during the original assessment proceedings. The compounding fee levied under the Indian Stamp Act was argued by the assessee to be not a determination of market value but a fee for incorrect particulars; the Assessing Officer treated it as indicative of higher consideration. The Court agreed with the Tribunal that there was no failure to disclose and that the facts placed before the assessing authority at the time of the original assessment did not warrant reopening to revisit valuation under Section 50C. [Paras 8, 9]

There was no failure to disclose under Section 143(3); the contention to reopen the assessment to reassess consideration under Section 50C was rejected.

Final Conclusion: The Revenue's appeal is dismissed; the Tribunal rightly set aside the reopening of assessment and held there was no failure by the assessee to disclose material facts necessary for assessment.

Exclusion of establishment and maintenance expenses of foreign branch from export turnover and corresponding exclusion from total turnover - proportionate deduction of telecommunication and similar expenses from total turnover corresponding to export turnover - deduction under Section 10A to be allowed in computation under Chapter IV before set off of brought forward or carry forward losses under Chapter VI

Exclusion of establishment and maintenance expenses of foreign branch from export turnover and corresponding exclusion from total turnover - Exclusion of establishment and maintenance expenses pertaining to a foreign branch from export turnover must also be excluded from total turnover while computing benefit under Section 10A/10B. - HELD THAT: - The Court held that the question is covered by authoritative decisions, including the ratio in Commissioner of Income-tax v. HCL Technologies Ltd., which reasons that expenses excluded from export turnover must be excluded from total turnover as well, otherwise the statutory formula becomes unworkable and yields absurd results. Relying on the precedents of the Supreme Court and this Court, the Division Bench concluded that exclusion of such branch establishment and maintenance expenses from export turnover necessitates a corresponding exclusion from total turnover for computing the deduction under Section 10A/10B. [Paras 7]

Question answered against the Revenue and in favour of the assessee; exclusion from total turnover permitted corresponding to exclusion from export turnover.

Proportionate deduction of telecommunication and similar expenses from total turnover corresponding to export turnover - Telecommunication and analogous expenses attributable to export turnover are to be excluded from total turnover in the same proportion while computing deduction under Section 10A/10B. - HELD THAT: - Following the Supreme Court's reasoning, the Court accepted that allowing such deductions only from export turnover but not from total turnover would produce an illogical and unworkable result. The Court therefore applied the principle that expenses like telecommunication, freight and insurance attributable to export business must be proportionately allowed as exclusions from total turnover as well, thereby ensuring consistent application of the statutory formula for computing the deduction. [Paras 7]

Question answered against the Revenue and in favour of the assessee; 50% (proportionate) treatment of telecommunication and similar expenses to be applied to total turnover.

Deduction under Section 10A to be allowed in computation under Chapter IV before set off of brought forward or carry forward losses under Chapter VI - Deduction under Section 10A/10B is to be given in computing gross total income under Chapter IV and cannot be negated by prior set off of brought forward or carry forward losses under Chapter VI when determining entitlement to the deduction. - HELD THAT: - Relying on this Court's earlier Division Bench decisions and the law as declared by the Supreme Court, the Court held that the statutory scheme requires the deduction under Chapter IV (Section 10A/10B) to be considered at the stage of computing gross total income and not to be defeated by earlier set offs under Chapter VI. Consequently, the Revenue's method of first setting off brought forward depreciation or losses so as to nullify the deduction was held to be contrary to settled law, and the ITAT's favourable view to the assessee was upheld. [Paras 7]

Question answered against the Revenue and in favour of the assessee; deduction under Section 10A/10B to be allowed notwithstanding prior set off of brought forward losses under Chapter VI.

Final Conclusion: Following the binding precedents of the Supreme Court and this Court, all substantial questions of law were answered against the Revenue and in favour of the assessee; the Tax Case Appeals for AY 2004-05 and 2005-06 are dismissed and connected petitions are closed (no costs).

Rectification under section 154 - mistake apparent from record - limitation under section 154(7) - merger of earlier order into reassessment - scope of adjudication in section 154 proceedings - disallowance under section 14A read with Rule 8D - effect of Supreme Court decision in Maxopp Investments Ltd. - presumption regarding interest-free funds - stock-in-trade versus investment for application of section 14A

Rectification under section 154 - mistake apparent from record - limitation under section 154(7) - merger of earlier order into reassessment - scope of adjudication in section 154 proceedings - Whether the AO validly exercised jurisdiction under section 154 to rectify an earlier excess allowance for AY 2006-07 and whether the earlier mistake can be said to have 'merged' into the reassessment order so as to bring the rectification within the limitation period. - HELD THAT: - The Tribunal found that the CIT(A)'s conclusion that the mistake in an earlier order had 'merged' into the reassessment order and thereby brought the rectification within the four year limitation under section 154(7) was not sufficiently explained. The question of whether and at what stage a proposal to correct the error was mooted, and whether the reassessment order operated to merge prior orders for the purposes of section 154, required articulation and verification of assessment records. Because the CIT(A)'s reasoning on the merger concept was cryptic and lacked necessary elaboration and factual verification, the Tribunal remitted the jurisdictional issue to the file of the CIT(A) for a speaking, reasoned order. The CIT(A) was directed to give the assessee an opportunity of being heard, examine the reassessment and related records, explain the legal basis for treating the earlier mistake as merged into the later order, and then decide in accordance with law. The Tribunal also noted that merits of the deduction cannot be adjudicated in a section 154 proceeding and that a prior Tribunal order in the assessee's case had remitted related matters to the AO. [Paras 8, 9]

Issue remitted to the CIT(A) for fresh, reasoned consideration on the narrow question whether the earlier mistake merged into the reassessment order so as to permit rectification under section 154; merits not to be decided in the section 154 proceeding.

Disallowance under section 14A read with Rule 8D - effect of Supreme Court decision in Maxopp Investments Ltd. - presumption regarding interest-free funds - stock-in-trade versus investment for application of section 14A - scope of adjudication in section 154 proceedings - Whether the AO could, by a section 154 rectification, withdraw relief earlier granted against disallowance under section 14A read with Rule 8D for AY 2008-09 relying on Maxopp, and whether such rectification was permissible where the issue was debatable. - HELD THAT: - The Tribunal examined the AO's action in withdrawing the earlier relief under section 14A by invoking the Supreme Court decision in Maxopp. It held that Maxopp did not eliminate other legal principles preserved by earlier High Court decisions-specifically the proposition that where interest free funds are adequate, disallowance under clause (ii) of Rule 8D may not be warranted-and that Maxopp itself limited disallowance to not exceed exempt income. The Tribunal concluded that the question of disallowance involved debatable legal and factual aspects (including verification of availability of interest free funds and characterization of securities as stock in trade), which could not be converted into a mere 'mistake apparent from record' amenable to rectification under section 154. Consequently the AO's section 154 exercise withdrawing the earlier relief was held to be beyond jurisdiction and unsustainable; the CIT(A)'s confirmation of the AO's action was set aside and the issue decided in favour of the assessee. [Paras 15, 16]

AO's rectification under section 154 to withdraw relief on account of section 14A disallowance was without jurisdiction and set aside; issue decided in favour of the assessee (relief under section 14A restored subject to verification where applicable).

Final Conclusion: For AY 2006-07 the question whether the AO could rectify the earlier excess allowance under section 154 by treating the mistake as merged into the reassessment order is remitted to the CIT(A) for a reasoned decision after hearing and verification of records; for AY 2008-09 the AO's section 154 rectification withdrawing relief under section 14A read with Rule 8D was held to be beyond jurisdiction and is set aside, the issue being decided in favour of the assessee.

Penalty under section 271(1)(c) - Procedure for imposition of penalty under section 274 read with section 271(1)(c) - Furnishing inaccurate particulars of income - Concealment of particulars of income - Vagueness of notice as jurisdictional defect - Difference of opinion between assessing officer and assessee - Disclosure in return and bona fide claim - Public sector undertaking and absence of mala fide

Procedure for imposition of penalty under section 274 read with section 271(1)(c) - Vagueness of notice as jurisdictional defect - Validity of the notice issued under section 274 when it does not specify the limb of section 271(1)(c) under which penalty proceedings are initiated. - HELD THAT: - The Tribunal examined the impugned order and the appellate findings and held that where the notice issued by the Assessing Officer under section 274 does not specify whether penalty proceedings are initiated for 'concealment of particulars of income' or for 'furnishing inaccurate particulars of income', the notice is vague and ambiguous. Reliance was placed on the decisions of higher courts which have held that such unspecified notices are bad in law. The Tribunal concluded that initiation of penalty proceedings under a defective notice vitiates the proceeding and renders the penalty unsustainable. [Paras 7, 9, 11]

Notice under section 274 which fails to specify the limb of section 271(1)(c) is invalid and penalty proceedings initiated thereunder are not sustainable.

Penalty under section 271(1)(c) - Furnishing inaccurate particulars of income - Difference of opinion between assessing officer and assessee - Disclosure in return and bona fide claim - Public sector undertaking and absence of mala fide - Whether disallowance of claimed R&D expenditure by the AO, treated as capital expenditure, amounts to 'furnishing inaccurate particulars of income' or 'concealment' attracting penalty under section 271(1)(c). - HELD THAT: - On the facts it was undisputed that the assessee, a public sector undertaking, had disclosed the claim for R&D expenditure (including by filing a revised return) and had set up an R&D centre. The CIT(A) concluded, and the Tribunal agreed, that the case was one of difference of opinion as to allowability under section 37 and that mere disallowance of a claim does not equate to furnishing inaccurate particulars or concealment where particulars disclosed in the return are not shown to be incorrect. The Tribunal followed the principle in Reliance Petro Products that an inaccurate claim does not amount to furnishing inaccurate particulars when the information in the return is not incorrect, and it noted the absence of contumacious conduct or mala fide on the part of the assessee. [Paras 5, 6, 12, 13]

Disallowance of the claimed R&D expenditure on grounds of capital nature amounts to a difference of opinion and does not attract penalty under section 271(1)(c); penalty cancelled.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s order deleting the penalty: the notice under section 274 was fatally vague and, on the merits, the disallowance of R&D expenditure was a bona fide difference of opinion that does not constitute concealment or furnishing of inaccurate particulars under section 271(1)(c).

Section 50C deeming provision - adoption of stamp duty valuation as deemed consideration - reference to Valuation Officer for determination of fair market value - rejection of unsigned agreement to sale (sauda chitti) as cogent evidence of earlier transfer - best judgment assessment under section 144 read with section 147 - ex parte proceedings for non appearance

Rejection of unsigned agreement to sale (sauda chitti) as cogent evidence of earlier transfer - date of transfer for capital gains - Validity and evidentiary weight of the sauda chitti dated 09-05-1997 and whether the sale is to be treated as effected in 1997 for determining capital gains. - HELD THAT: - The Tribunal upheld the reasoning of the CIT(A) that the sauda chitti of 09-05-1997 could not be given effect because it was not signed by the five purchasers and the witnesses lacked complete addresses; the contemporaneous sale deed and registration documents indicated payment and registration dates in 2008. The assessee failed to establish that the transfer took place in 1997 and offered no satisfactory explanation or corroborative evidence. In these circumstances the earlier agreement could not be the basis to treat the date of transfer as 1997 for capital gains computation. [Paras 5, 6]

The sauda chitti dated 09-05-1997 is not accepted as proof of an earlier sale and the transfer is not to be treated as having occurred in 1997.

Section 50C deeming provision - adoption of stamp duty valuation as deemed consideration - reference to Valuation Officer for determination of fair market value - Whether the valuation determined by the Valuation Officer (AVO/DVO) at a lower amount should be adopted instead of the stamp duty valuation and whether the CIT(A) and AVO findings under section 50C are sustainable. - HELD THAT: - The Tribunal agreed with the CIT(A)'s application of the mandate of section 50C as a deeming provision. Although the AO initially adopted the stamp duty valuation, a reference was made to the Valuation Officer whose valuation (AVO/DVO) at the lower figure was duly considered after the assessee did not object before the Valuation Officer. The AVO had examined the assessee's valuer's report and given reasons for rejecting its lower valuation, applying established valuation methodology and municipal by laws. The Tribunal found no infirmity in CIT(A)'s conclusion to adopt the Valuation Officer's figure and to direct recomputation of capital gains accordingly; section 50C operates through the statutory mechanism of reference to the Valuation Officer and relief must be founded on reasons within the scope of law. [Paras 5, 7]

The valuation ascertained by the AVO/DVO is upheld and the AO is directed to adopt that valuation for recomputation of capital gains under section 50C.

Final Conclusion: The Tribunal dismissed the assessee's grounds challenging CIT(A)'s order; the rejection of the alleged 1997 sale was upheld and the Valuation Officer's valuation adopted by CIT(A) under section 50C was sustained, directing recomputation of capital gains accordingly; the assessee's appeal is dismissed.

Deduction under section 36(1)(va) - Section 43B and proviso - Allowability of employees' contributions (PF/ESI) paid before due date of filing return - Binding precedent of the territorial High Court - Validity of processing adjustment under section 143(1) by CPC

Deduction under section 36(1)(va) - Section 43B and proviso - Allowability of employees' contributions (PF/ESI) paid before due date of filing return - Binding precedent of the territorial High Court - Validity of processing adjustment under section 143(1) by CPC - Deletion of disallowance made by CPC under section 143(1) in respect of employees' contributions to PF/ESI which were deposited after the statutory due date but before the due date of filing return of income - HELD THAT: - The Tribunal found on record that the employees' contributions collected by the assessees were deposited before the due date for filing the return under section 139(1). It applied the consistent line of decisions of the Hon'ble Rajasthan High Court, beginning with CIT v. State Bank of Bikaner & Jaipur and followed in subsequent Rajasthan High Court decisions, which hold that contributions paid after the due date under the respective statutes but before filing the return under section 139(1) are allowable and cannot be disallowed under section 43B read with section 36(1)(va). The Tribunal noted the divergence of views among various High Courts but held that, where the assessing officer and appeal fall within the territorial jurisdiction of a particular High Court, the appellate authorities and assessing officer are bound by that territorial High Court's decisions. Applying that territorial binding precedent, the Tribunal concluded that the adjustment made by the CPC while processing the return under section 143(1) was not sustainable and ought to be deleted. The Tribunal accordingly directed deletion of the addition and allowed the appeals; the same reasoning was applied mutatis mutandis to the other consolidated appeals which had identical facts. [Paras 14, 15, 16, 17, 18]

Adjustment made by CPC under section 143(1) disallowing employees' contributions to PF/ESI (deposited before due date of filing return) is deleted and the appeals are allowed.

Final Conclusion: The Tribunal allowed the consolidated appeals, directing deletion of the disallowances made by CPC under section 143(1) in respect of employees' PF/ESI contributions paid before the due date of filing the return, applying binding decisions of the Rajasthan High Court; identical directions were applied to the other appeals.

Illegality of decision by revisional authority who previously decided the same matter - Exercise of powers under Section 129 DD of the Customs Act, 1962 - Reconstitution of revisional authority and remand for fresh consideration - Obligation to afford opportunity of hearing and to pass reasoned orders

Illegality of decision by revisional authority who previously decided the same matter - Exercise of powers under Section 129 DD of the Customs Act, 1962 - Impugned revisional order passed by a Joint Secretary who had been in the same rank as the Commissioner who passed the earlier appellate order was impermissible and liable to be quashed. - HELD THAT: - The Court found that the revisional forum which entertained and rejected the petitioner's revision was constituted by an officer who occupied the same rank as, and had previously been in the position of, the authority whose Order In Appeal was impugned. Such a configuration gave rise to an impermissible situation in law. Reliance was placed on this Court's earlier decision in S. Moinuddin in which interference was warranted on the same ground. In the circumstances the impugned order was set aside and the matter was remitted for fresh consideration by a reconstituted Revisional Authority under Section 129 DD of the Act.

Impugned order quashed; matter remitted to the reconstituted Revisional Authority for fresh consideration under Section 129 DD of the Act.

Reconstitution of revisional authority and remand for fresh consideration - Obligation to afford opportunity of hearing and to pass reasoned orders - Remand directed to the Revisional Authority to afford full opportunity of hearing and to pass reasoned orders uninfluenced by the quashed order. - HELD THAT: - The Court directed that on remand the present Revisional Authority must, after giving the petitioner full opportunity of hearing, address each contention raised and pass a reasoned order on merits and in accordance with law. The authority was specifically enjoined not to be inhibited or influenced by the impugned order which has been set aside and to communicate its decision to the petitioner.

Matter remitted for fresh consideration; Revisional Authority to hear petitioner on merits and pass reasoned orders uninfluenced by the quashed order.

Final Conclusion: Writ petition allowed to the extent that the impugned revisional order is quashed; the matter is remitted to a reconstituted Revisional Authority under Section 129 DD of the Customs Act, 1962 for fresh consideration after affording the petitioner full opportunity of hearing and for passing reasoned orders in accordance with law; no costs.

Prohibition on same officer deciding appeal and revision - reconstitution of revisional authority - remand for fresh consideration by an independent revisional authority - affording opportunity of hearing and passing reasoned orders

Prohibition on same officer deciding appeal and revision - reconstitution of revisional authority - Validity of the impugned revisional order where the Revisional Authority was of the same rank and had earlier passed the Order In Appeal impugned in revision. - HELD THAT: - The Court found that the impugned order was passed by a Joint Secretary (Revision Application) who was of the same rank as the Commissioner who had earlier passed the Order In Appeal challenged in the revision, which rendered the revisional exercise impermissible. The petitioner relied on this Court's earlier decision in S.Moinuddin, where interference was made on the same ground. The respondents informed the Court that the Revisional Authority had been reconstituted after the anomaly was pointed out. In view of the defect in constitution, the impugned order was quashed and the matter remitted to the present Revisional Authority for fresh consideration under Section 129DD of the Customs Act, 1962. The Court directed that the Revisional Authority shall, after affording full opportunity of hearing to the petitioner, deal with each contention and pass reasoned orders on merits and in accordance with law, uninfluenced by the set aside order, and communicate the decision to the petitioner. [Paras 2, 3, 4]

Impugned revisional order quashed for being impermissibly made by an authority of same rank that passed the earlier appellate order; matter remitted for fresh consideration by a reconstituted Revisional Authority with directions to afford hearing and pass reasoned orders.

Final Conclusion: The writ petition is allowed by quashing the impugned revisional order and remitting the matter to the reconstituted Revisional Authority under Section 129DD for fresh, reasoned consideration after hearing; no costs.

Commercial discretion of Committee of Creditors - no vested right of a resolution applicant to approval of a resolution plan - judicial restraint in interfering with commercial decisions of the CoC - liquidation order and its effect on pending interlocutory applications - time limits under Section 12 of the Insolvency and Bankruptcy Code

Commercial discretion of Committee of Creditors - judicial restraint in interfering with commercial decisions of the CoC - Whether the Committee of Creditors acted arbitrarily in considering and rejecting the resolution plan submitted by the appellant such as to warrant interference with the impugned order. - HELD THAT: - The CoC considered the appellant's email requesting adjournment, chose to proceed with clause by clause consideration, connected the appellant by phone and recorded detailed commercial reasons for rejection including conditionality, lack of upfront payment, absence of relevant experience and deficiencies in format and financial capability. These are commercial evaluations entrusted to the CoC and, in view of the settled principle that a resolution applicant has no vested right to approval of its plan, the Tribunal will not substitute its judgment for that of the CoC. The appellant's contention that a higher offer alone mandates reconsideration was rejected. The court therefore found no merit to disturb the CoC's decision or the impugned order on this basis. [Paras 6]

The CoC's rejection of the appellant's resolution plan does not warrant judicial interference.

Liquidation order and its effect on pending interlocutory applications - Whether the Adjudicating Authority's passing of the liquidation order without deciding the pending I.A. filed by the appellant required interference. - HELD THAT: - The appellant filed an interlocutory application seeking an opportunity to present its plan before the CoC; the Adjudicating Authority passed the liquidation order while that application was pending. The Tribunal observed that the pendency of such an I.A. did not, by itself, provide a ground for interference with the liquidation order where the CoC had already taken a commercial decision to initiate liquidation. The court did not find that the pendency of I.A. 1625/2021 rendered the liquidation order impermissible or necessitated setting aside the order. [Paras 6]

The fact that an interlocutory application was pending before the Adjudicating Authority did not constitute a ground to interfere with the liquidation order.

Time limits under Section 12 of the Insolvency and Bankruptcy Code - Whether the appeal should be entertained in view of the passage of time and the liquidation order having been passed. - HELD THAT: - The Section 7 application was admitted on 8th November, 2019 and liquidation was ordered on 31st May, 2021. Taking into account the statutory time frame under Section 12 of the IBC within which the CIRP is to be completed, the Tribunal found no basis to entertain the appeal once the liquidation order had been passed. The court emphasised the relevance of the prescribed timelines and declined to exercise jurisdiction to keep the appeal alive in the circumstances of this case. [Paras 7]

The appeal is not entertainable after the liquidation order in the facts and timeline of this case.

Final Conclusion: The appeal is disposed of and declined to be entertained; the impugned order of liquidation is not interfered with.

Maintainability of a Section 7 application based on a court decree - decree-based claim as a financial debt under the Insolvency and Bankruptcy Code - finality of court decree and preclusion of tribunal from re adjudicating decree correctness - stipulation for interest not being a pre condition to qualify as a financial debt - admission of CIRP, appointment of Interim Resolution Professional and imposition of moratorium

Maintainability of a Section 7 application based on a court decree - decree-based claim as a financial debt under the Insolvency and Bankruptcy Code - Company petition under Section 7 filed by a financial creditor on the basis of a decree passed by the competent civil court is maintainable. - HELD THAT: - The Tribunal found it is an admitted fact that the petition is founded on a decree obtained by the Financial Creditor from the Hon'ble Bombay High Court. Having regard to precedents cited by the Financial Creditor, the petition satisfies the statutory requirements of debt and default for admission under Section 7. The Tribunal emphasised that it has no jurisdiction to re open or pronounce on the correctness of a decree passed by the High Court; a decree is binding on the Corporate Debtor and, if aggrieved, the remedy lies in appeal against the decree. In this context the Tribunal noted the Supreme Court's view that stipulation for payment of interest is not a condition precedent to qualify as a financial debt, and held that a decree founded on a money claim can constitute a financial debt under the Code for purposes of initiating CIRP. [Paras 6]

The petition is maintainable and the claim founded on the High Court decree qualifies for initiation of CIRP; therefore the Section 7 petition is admitted.

Finality of court decree and preclusion of tribunal from re adjudicating decree correctness - stipulation for interest not being a pre condition to qualify as a financial debt - Defences by the Corporate Debtor challenging the nature of the decree based claim (including absence of prior contractual stipulation for interest) are legally unsustainable before this Tribunal. - HELD THAT: - The Corporate Debtor contended that the claim does not constitute a financial debt because interest was awarded by way of compensation in a money suit and there was no underlying agreement stipulating interest. The Tribunal rejected these contentions as beyond its remit, observing that it cannot examine the correctness or validity of a concluded decree. The Tribunal relied on authoritative law cited that the existence of a stipulation for interest is not a prerequisite for classification as a financial debt; accordingly, the defences challenging the financial creditor character of the decree holder were held not tenable. [Paras 6, 7]

All defences raised by the Corporate Debtor against classification of the decree based claim as a financial debt are rejected.

Admission of CIRP, appointment of Interim Resolution Professional and imposition of moratorium - On admission of the petition, CIRP is to be initiated, an Interim Resolution Professional appointed, and statutory moratorium imposed. - HELD THAT: - Having concluded that the petition meets the requirements for admission under the Code, the Tribunal proceeded to the consequential reliefs prescribed by the statute. It appointed an Interim Resolution Professional whose consent and particulars were on record, directed deposit towards initial CIRP costs, and ordered the moratorium measures including stay of suits and proceedings, protection of assets, continuance of essential supplies and public announcement of CIRP. The management of the corporate debtor was declared to vest in the IRP/RP for the CIRP period and registry directions were given for statutory compliance. [Paras 7]

The petition is admitted; CIRP is ordered, IRP appointed and moratorium imposed as set out in the order.

Final Conclusion: The Tribunal admitted the Section 7 petition filed by the decree holder Financial Creditor, rejected the Corporate Debtor's challenges to the decree based claim being a financial debt, and ordered initiation of CIRP with appointment of an IRP and imposition of the statutory moratorium.

Definition of information technology software under Section 65(53a) of the Finance Act, 1994 - service tax liability on downloadable software - interactive or manipulable nature of software as determinative of taxability - precedential effect of Infotech Software Dealers Association (ISODA) decision

Definition of information technology software under Section 65(53a) of the Finance Act, 1994 - interactive or manipulable nature of software as determinative of taxability - service tax liability on downloadable software - Whether the anti virus software developed and distributed by the appellant falls within the expression 'information technology software' and is subject to service tax as held in the Order in Original. - HELD THAT: - The Court agreed with the learned Single Judge that the statutory definition of 'information technology software' under Section 65(53a) is sufficiently wide to include the anti virus software marketed by the appellant. The Court accepted the view that such software, being installed on hardware and interacting with the user's computer when engaged, cannot be excluded on the basis that it is not manipulable or interactive in the limited sense asserted by the appellant. The Division Bench's reasoning in ISODA was noted as a comprehensive precedent dealing with the scope of the provision and was treated as applicable to the present facts. Consequently, the appellant's primary contention - that the software is outside the statutory definition and therefore not liable to service tax - was rejected.

The anti virus software is covered by the definition of 'information technology software' and the tax demand was maintainable; the appellant's challenge to the Order in Original fails.

Precedential effect of Infotech Software Dealers Association (ISODA) decision - Whether the Single Judge erred in relying on the ISODA decision for construing the scope of the statutory definition. - HELD THAT: - The Court found no error in the Single Judge's reliance on ISODA. Although counsel for the appellant submitted that ISODA dealt primarily with constitutional challenges to a different provision, the Court observed that ISODA addressed the ambit of the definition of information technology software comprehensively. The Court accepted that the principles and interpretation in ISODA are applicable and support upholding the tax demand in the present case.

Reliance on ISODA was proper and does not afford grounds for interference with the Single Judge's order.

Final Conclusion: The writ appeal is dismissed; the order of the Single Judge upholding the service tax demand against the appellant is affirmed and connected applications are dismissed. No costs.

Reversal of Input Tax Credit - availability of input tax credit - inherent manufacturing loss - blocked credits for goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples - interpretation of inputs contained in finished product

Reversal of Input Tax Credit - inherent manufacturing loss - blocked credits for goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples - interpretation of inputs contained in finished product - Whether reversal of Input Tax Credit is warranted under Section 19(9)(iii) of the Tamil Nadu Value Added Tax Act, 2006 in respect of loss of input (invisible loss) inherent to the process of manufacture of Ghee. - HELD THAT: - The Court held that the situations contemplated by Section 19(9) - and by parity of reasoning the clause corresponding to blocked credits for goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples - refer to losses which are external, quantifiable or occasioned by events such as theft, transit damage or destruction and not to loss that is inherent in the manufacturing process. A loss occasioned by consumption in the process of manufacture (evaporation, by product formation or other inherent shrinkage) is different in kind from the instances enumerated in the provision and therefore cannot be equated to them. The Court applied the ratio of the Division Bench decision in Rupa & Co. Ltd. v. CESTAT, Chennai, which recognised that cenvat/credit entitlement must be measured by the total quantity of inputs actually used in manufacture notwithstanding that the finished product may contain a lesser quantity on account of inevitable manufacturing loss. That legal principle was held applicable to the present facts (manufacture of Ghee) and supports the conclusion that reversal of ITC on account of invisible manufacturing loss is not contemplated by Section 19(9)(iii). [Paras 12, 13, 14, 15, 16]

Reversal of ITC to the extent based on invisible loss inherent to the manufacturing process is misconceived; the impugned orders are set aside to that extent and the writ petitions are allowed.

Final Conclusion: The High Court allowed the writ petitions and set aside the assessment orders insofar as they reversed Input Tax Credit on invisible loss inherent to the manufacturing process (here, manufacture of Ghee), following the ratio in Rupa & Co. Ltd.; no costs.

Deemed assessment as on 30.6.2012 - power to revise assessment under Section 27 of the TNVAT Act - limitation/time bar for issuance of notice under Section 27(2) of the TNVAT Act - application of State general sales tax law provisions to CST assessments under Section 9(2) of the CST Act - quashing of assessment orders for want of jurisdiction

Quashing of assessment orders for want of jurisdiction - deemed assessment as on 30.6.2012 - Validity of the Single Judge's quashing of the impugned assessment orders as being without jurisdiction. - HELD THAT: - The Single Judge held that the assessments were without jurisdiction because, by virtue of the deeming fiction in the Proviso to Section 22(2) of the TNVAT Act, assessments stood completed as on 30.6.2012. The Division Bench agreed with that legal conclusion and accepted that the Assessing Officer could not proceed under Section 22(2) as if the old provisions were in force; consequently the impugned orders were rightly quashed. The appellant did not challenge this part of the Single Judge's conclusion before the High Court, and the Division Bench found no error in this legal finding. [Paras 5]

The quashing of the impugned assessment orders for lack of jurisdiction was upheld.

Power to revise assessment under Section 27 of the TNVAT Act - limitation/time bar for issuance of notice under Section 27(2) of the TNVAT Act - Whether the Single Judge could direct that the quashed assessment orders be treated as notices under Section 27 of the TNVAT Act. - HELD THAT: - Section 27(2) prescribes a five year limitation for issuing notices to reverse wrongly availed input tax credit and to determine tax due. Because the assessments were deemed completed on 30.6.2012, any attempt in 2021 to treat the earlier orders as Section 27 notices would be time barred (the limitation would have expired by 2018). The Division Bench held that the Single Judge erred in directing that the impugned orders be treated as notices under Section 27 and therefore set aside paragraphs 41 and 42 of the impugned order which created that statutory fiction of converting the quashed orders into Section 27 notices. [Paras 8]

The direction treating the quashed assessment orders as notices under Section 27 was set aside as impermissible and time barred.

Application of State general sales tax law provisions to CST assessments under Section 9(2) of the CST Act - Whether provisions and powers under the TNVAT Act apply to assessments made under the CST Act. - HELD THAT: - Section 9(2) of the CST Act confers on authorities empowered under the State general sales tax law the power to assess, re assess and enforce CST liabilities and to exercise the powers available under the State law, including provisions relating to assessments, revisions and other consequential matters. The Division Bench held that the TNVAT Act is the State's general sales tax law and its provisions and rules therefore apply to CST assessment proceedings in the present case, including the contention that revision must be under Section 27 where applicable. This principle was accepted while distinguishing the impermissible conversion of quashed orders into fresh Section 27 notices where limitation had already run. [Paras 13, 14]

Provisions of the TNVAT Act apply to CST assessments in terms of Section 9(2) of the CST Act, but the Single Judge's remedial direction converting quashed orders into Section 27 notices was incorrect.

Final Conclusion: Writ appeals allowed. Paragraphs 41 and 42 of the Single Judge's order (which treated the quashed assessment orders as notices under Section 27 of the TNVAT Act) are set aside; the earlier quashing of the impugned assessment orders on jurisdictional grounds is sustained and the appeals are allowed as prayed for.

Placement of writ petitions - Single Judge's powers under Article 226 and Article 227 - quasi-judicial authority exercising local law jurisdiction - Rule 18(3) of the Bombay High Court Appellate Side Rules, 1960 - harmonious construction of roster and Appellate Side Rules - roster yielding to Appellate Side Rules framed under Article 225

Quasi-judicial authority exercising local law jurisdiction - Single Judge's powers under Article 226 and Article 227 - Rule 18(3) of the Bombay High Court Appellate Side Rules, 1960 - Writ petitions challenging orders of a quasi-judicial authority under a local sales tax law are to be placed before the Single Judge in terms of Rule 18(3) and are not ousted by the roster provision. - HELD THAT: - The impugned orders were passed by the Chairman, Administrative and Appellate Tribunal, Daman on proceedings arising under the Daman & Diu Value Added Tax Regulation, 2005, i.e., by a quasi-judicial authority in proceedings under a local law. Sub-rule (3) of Rule 18 grants to a Single Judge power to finally dispose of applications under Article 226/227 in respect of decrees or orders passed by subordinate courts or quasi-judicial authorities arising out of local laws, subject only to the express exceptions listed therein. The Court found that the matters in these petitions do not fall within the excepted categories in Rule 18(3). Although the Chief Justice's roster requires this Bench to take up writ petitions in indirect tax matters under Central and State Acts, that roster must be read harmoniously with the Appellate Side Rules; where a true conflict arises which cannot be reconciled, the provisions of the Appellate Side Rules framed under Article 225 prevail. The Deputy Registrar's report placing the petitions before the Division Bench failed to advert to Rule 18(3) and therefore was unsustainable. [Paras 3, 4, 5]

The writ petitions ought to be placed before the learned Single Judge under Rule 18(3); the office report is overruled.

Final Conclusion: Office report dated June 09, 2021 is overruled; parties are at liberty to mention the writ petitions before the learned Single Judge for consideration and disposal.

Cancellation and adjudication of written instrument under Section 31 of the Specific Relief Act - prohibition on granting injunction to restrain prosecution under Section 41(d) of the Specific Relief Act - rejection of plaint under Order 7 Rule 11(d) CPC and prohibition of partial rejection - protective or preventive relief against vexatious use of instruments

Cancellation and adjudication of written instrument under Section 31 of the Specific Relief Act - protective or preventive relief against vexatious use of instruments - Maintainability of the claim for declaration/cancellation of cheques under Section 31 despite concurrent criminal complaints under the Negotiable Instruments Act - HELD THAT: - The Court held that the plaintiff's principal relief seeking adjudication that the cheques are void or voidable and their delivery up and cancellation falls squarely within the scope of Section 31 of the Specific Relief Act. Section 31 authorises a person against whom a written instrument is void or voidable and who reasonably apprehends serious injury from the instrument being left outstanding to sue for it to be adjudged void or voidable and ordered to be delivered up and cancelled. The Court analysed the protective justice rationale underlying cancellation-prevention of vexatious or injurious use of instruments, loss of evidence or clouding of rights-and relied on established authorities distinguishing cancellation/declaration remedies and restricting the class of persons entitled to sue under Section 31 to parties to the instrument or persons who can bind them. Applying these principles, the Court concluded that the declaration/cancellation relief in para 14(1) of the plaint is maintainable and was overlooked by the trial Court when it rejected the plaint in limine. [Paras 7, 8, 9]

The declaration/cancellation claim under Section 31 is maintainable and was erroneously rejected at the admission stage.

Rejection of plaint under Order 7 Rule 11(d) CPC and prohibition of partial rejection - prohibition on granting injunction to restrain prosecution under Section 41(d) of the Specific Relief Act - Whether the trial Court could reject the plaint in its entirety at admission stage because one of the reliefs sought (perpetual injunction restraining criminal prosecution) is barred by Section 41(d) - HELD THAT: - The Court restated the settled principle that Order 7 Rule 11 permits rejection of a plaint only where the plaint, read as a whole, discloses no cause of action and that the provision does not authorise dissection of the plaint for partial rejection. Even if a particular prayer (here para 14(2) for injunction restraining criminal proceedings) is barred by Section 41(d) of the Specific Relief Act, that would not justify rejection of the whole plaint where a distinct and maintainable cause of action (the cancellation/declaration under Section 31) is pleaded. Reliance was placed on Supreme Court and High Court precedents establishing that partial rejection is impermissible under Order 7 Rule 11 and that merits of the claim are not to be tested at the admission stage. The trial Court conflated the bar in Section 41(d) with the maintainability of the separate cancellation claim and therefore erred in dismissing the plaint at the threshold. [Paras 11, 12, 13, 14]

The trial Court erred in rejecting the entire plaint under Order 7 Rule 11(d); dismissal was unsustainable because one of the reliefs (cancellation under Section 31) was maintainable despite another relief being barred by Section 41(d).

Final Conclusion: The High Court allowed the appeal, quashed and set aside the order rejecting the plaint, restored the suit to file and directed issuance of summons; the decision leaves intact the defendants' right to pursue any criminal complaints on their own merits.