TaxTMI Updates e-Newsletter
Aug 16,2023

Refund of excess tax under Section 54(5) of the CGST Act, 2017 - quashing administrative order for failure to state reasons - fresh application and adjudication in accordance with Circular No.125/44/2019-GST - relegation to alternative remedy of appeal - merits adjudication of refund claims

Refund of excess tax under Section 54(5) of the CGST Act, 2017 - quashing administrative order for failure to state reasons - Legality and validity of order No. 13990 dated 27.2.2020 rejecting the petitioner's refund claim. - HELD THAT: - The impugned order rejecting the claim for refund under Section 54(5) of the CGST Act, 2017 was examined and found to be without any reasons. The Court recorded that orders lacking reasons are vulnerable to judicial review and, in the circumstances of the petitioner - which had migrated to the GST regime and claimed refunds of excess tax after rectifying short payments - the absence of reasons rendered the impugned order unsustainable. Having regard to precedent of coordinate Benches and the settled position reflected in earlier orders in the petitioner's case, the Court concluded that the order must be set aside. [Paras 7, 11]

Impugned order dated 27.2.2020 rejecting the refund claim is quashed and set aside.

Fresh application and adjudication in accordance with Circular No.125/44/2019-GST - merits adjudication of refund claims - relegation to alternative remedy of appeal - Procedure to be followed thereafter and whether the petitioner should be relegated to filing an appeal under the CGST Act. - HELD THAT: - The Court declined to remit the petitioner to the appellate route as a precondition to relief and instead directed the petitioner to file a fresh refund application in terms of Circular No.125/44/2019-GST within three weeks. The authorities were directed to dispose of that application on merits in accordance with law, preferably within four weeks of its filing. This amounts to quashing the earlier order and remanding the matter for fresh adjudication on merits in accordance with the referenced circular and applicable law; the respondents' contention that the petitioner should be relegated to an appeal under Section 107 was noted but did not prevent the remedial directions issued by the Court. [Paras 10, 11]

Petitioner to file fresh refund application within three weeks in terms of Circular No.125/44/2019-GST; authorities to decide on merits preferably within four weeks.

Final Conclusion: The petition is allowed: the order rejecting the refund claim is quashed for want of reasons and the petitioner is directed to make a fresh refund application in terms of Circular No.125/44/2019-GST within three weeks, with the authorities directed to decide the same on merits as early as possible, preferably within four weeks; no order as to costs.

Authorization of State Tax Officers as Proper Officers under Section 4 of the IGST Act - Application of provisions of the CGST Act to IGST matters under Section 20 of the IGST Act (inspection, search, seizure and demands) - Detention, seizure and release of goods and conveyances in transit under Section 129 of the CGST Act - Confiscation of goods or conveyances and levy of penalty for intent to evade tax under Section 130 of the CGST Act - Requirement and evidentiary value of e-way bills and prescribed documents for goods in transit (Rule 138 and related provisions) - Reuse of documents with mala fide intention to evade tax as sufficient indicia of mens rea under Section 130

Authorization of State Tax Officers as Proper Officers under Section 4 of the IGST Act - Application of provisions of the CGST Act to IGST matters under Section 20 of the IGST Act (inspection, search, seizure and demands) - Competence of the Asstt. Excise & Taxation Officer (Enforcement) of State Tax, Gurugram to act as a Proper Officer and exercise powers under Sections 129 and 130 in respect of inter-State carriage of goods. - HELD THAT: - The court examined the IGST Act's scheme and the enabling cross-empowerment provisions. Section 20 makes provisions of the CGST Act, including Chapter XIV (inspection, search, seizure and arrest), applicable to IGST matters. Section 4 authorizes officers appointed under State GST Acts to be Proper Officers for IGST subject to notifications. Additionally, the Commissioner of State Tax, Haryana, by order dated 07.12.2017, assigned functions under the Haryana GST Act corresponding to Sections 129 and 130 to the Asstt. Excise & Taxation Officer. In light of these statutory provisions and the state delegation, the Asstt. Excise & Taxation Officer was properly empowered to inspect, detain and initiate proceedings under Sections 129 and 130 in respect of the inter-State movement involved. [Paras 21, 22]

The Asstt. Excise & Taxation Officer of State Tax, Gurugram was a competent Proper Officer authorised to act under Sections 129 and 130 in relation to the inter-State carriage of the goods; the appellate authority's conclusion on this point requires no interference.

Detention, seizure and release of goods and conveyances in transit under Section 129 of the CGST Act - Confiscation of goods or conveyances and levy of penalty for intent to evade tax under Section 130 of the CGST Act - Requirement and evidentiary value of e-way bills and prescribed documents for goods in transit (Rule 138 and related provisions) - Reuse of documents with mala fide intention to evade tax as sufficient indicia of mens rea under Section 130 - Validity of the orders under Sections 129 and 130 (demanding tax, imposing penalty and ordering fine in lieu of confiscation) and whether the impugned appellate order upholding them is liable to be quashed. - HELD THAT: - The court reviewed the factual findings: documents produced at interception bore earlier dates and origins inconsistent with the driver's oral account; weighment slips and discrepancies in quantities contrasted with invoices; no e-way bills were produced for the intermediary movements relied on by the petitioner. Section 68 and Rule 138 require prescribed documents and e-way bills for movement; absence of authentic e-way records and material discrepancies supported the Proper Officer's finding of reuse of documents. Under Section 129, payment within the prescribed period would have concluded proceedings; failure to pay authorised initiation of Section 130 proceedings. Section 130 requires intention to evade tax for confiscation; the reuse of invoices/e-way bills and the mismatches were held to constitute mala fide intent and sufficient basis for confiscation, penalty and fines. The appellate authority considered the Proper Officer's enquiry and reasons and rightly upheld the orders. [Paras 32, 34, 35]

The orders passed under Sections 129 and 130 were lawful; the appellate authority correctly upheld them and the writ petition raising these grounds is without merit.

Final Conclusion: The High Court dismissed the writ petition. It held that the State Enforcement Officer was a duly authorised Proper Officer for purposes of Sections 129 and 130 (as read with Sections 4 and 20 of the IGST Act and the state delegation) and that the detention, confiscation and penalties were sustainable on the factual finding of reuse of documents, absence of e-way bill evidence and intention to evade tax; there was no occasion to interfere with the appellate order.

Constitutional validity of Section 17(5)(c) of the Central Goods and Services Tax Act, 2017 - Constitutional validity of Section 17(5)(c) of the Maharashtra Goods and Services Tax Act, 2017 - Withdrawal of petition with liberty to raise contentions - Availment of input tax credit and administrative adjudication - Keeping all contentions open for appropriate forum

Withdrawal of petition with liberty to raise contentions - Disposition of the writ petition by permitting withdrawal with liberty to raise all contentions at the appropriate time and forum. - HELD THAT: - The Court disposed of the petition by adopting the operative directions in its earlier order in Connect Residuary Pvt. Ltd. v. Union of India, permitting withdrawal of the petition while expressly granting liberty to the petitioner to raise all contentions before the appropriate forum at the appropriate time. The order records that the petition is disposed as withdrawn and that all contentions of the parties are kept open.

Petition disposed as withdrawn with liberty to raise contentions; no costs.

Availment of input tax credit and administrative adjudication - Right to make applications to the concerned authority for availment of input tax credits and the obligation of the authority to decide such applications in accordance with law was kept open. - HELD THAT: - The Court kept open the petitioner's right to make appropriate application before the concerned authority regarding availment of input credits and directed that any such application, if made, shall be decided in accordance with law. This preserves the administrative remedy and requires adjudication on the merits by the competent authority rather than foreclosing the claim.

Applications for input tax credit may be filed and shall be decided by the concerned authority in accordance with law; all contentions in that regard remain open.

Constitutional validity of Section 17(5)(c) of the Central Goods and Services Tax Act, 2017 - Constitutional validity of Section 17(5)(c) of the Maharashtra Goods and Services Tax Act, 2017 - Keeping all contentions open for appropriate forum - Preservation of challenge to the constitutional validity of Section 17(5)(c) of the CGST Act and corresponding provision of the MGST Act by keeping all contentions open for adjudication at the appropriate forum. - HELD THAT: - Although the petitions challenged the constitutional validity of Section 17(5)(c) of the CGST Act and the corresponding provision of the MGST Act, the Court did not adjudicate these constitutional questions on the merits in the present proceedings. Instead, by permitting withdrawal with liberty and expressly keeping all contentions open, the Court preserved the petitioners' right to press the constitutional challenge before the appropriate forum, including reliance on any pending proceedings before higher fora.

Constitutional challenges are not finally decided here; petitioners' right to raise those contentions at the appropriate forum is preserved.

Scope of adoption of earlier order excluding specific paragraph - Extent of adoption of the earlier order; the present petition is disposed in terms of the earlier order except for paragraph 6 thereof. - HELD THAT: - The Court expressly adopted its order in Connect Residuary Pvt. Ltd. v. Union of India for disposing the present petition but carved out paragraph 6 of that order. By excluding paragraph 6, the Court limited the operative effect of the earlier order as applied to the present proceedings. No further action or reliance was recorded in respect of the matter referred to in paragraph 6 of the earlier order.

Present petition disposed in terms of the earlier order, subject to exclusion of paragraph 6 of that order.

Final Conclusion: The writ petition is disposed of as withdrawn in terms of the Court's earlier order in Connect Residuary Pvt. Ltd. v. Union of India, with liberty to the petitioners to raise all contentions before the appropriate forum; applications regarding input tax credit may be filed and shall be decided in accordance with law; paragraph 6 of the earlier order is excluded; no costs.

Input Tax Credit - Self-ascertainment under Section 74(5) of the Act - Show cause notice under Section 74(1) of the Act - Voluntary deposit versus deposit under coercion/pressure - Refund of amounts deposited during search pending initiation of proceedings - Prohibition on appropriation before final assessment and demand - Principles of natural justice

Self-ascertainment under Section 74(5) of the Act - Show cause notice under Section 74(1) of the Act - Voluntary deposit versus deposit under coercion/pressure - Refund of amounts deposited during search pending initiation of proceedings - Prohibition on appropriation before final assessment and demand - Whether amounts deposited by the petitioners during search/investigation could be retained by the revenue as voluntary 'self-ascertainment' under Section 74(5) in absence of any show cause notice under Section 74(1), or whether the deposits were refundable. - HELD THAT: - Section 74(5) permits payment by a person, before service of notice under Section 74(1), of tax, interest and penalty on the basis of self-ascertainment; Section 74(6) bars issue of a notice in respect of tax so paid. However, Section 74(5) does not operate as a statutory sanction for compulsory advance collection of tax pending final determination. The Court examined the circumstances in which the payments were made - during and immediately after a search/inspection when the proprietor was under stress - and found no material to show an unconditional, deliberate self-ascertainment by the petitioners or any considered application of mind by the revenue accepting such ascertainment. The petitioners consistently contested liability and sought refund shortly after depositing the sums. In absence of any crystallised liability, demand or adjudicatory order under Section 74(1), the revenue had no statutory basis to appropriate the amounts deposited during investigation. The Court relied on its earlier decisions treating deposits made under pressure during searches as not voluntary and on the principle that amounts cannot be appropriated without finalised demand or assessment. Applying these principles, the Court held the deposits were not voluntary self-ascertainments attracting Section 74(5) protection and must be refunded with interest. [Paras 12, 13, 14, 16, 17]

The deposits made by the petitioners during search/investigation do not qualify as voluntary 'self-ascertainment' under Section 74(5) in the absence of any show cause notice or final demand under Section 74(1); the amounts retained by the revenue are refundable with interest.

Final Conclusion: Writ petitions allowed. The sums collected from M/s Parsvnath Traders and M/s Mahavira Dyes & Chemicals during the course of search are to be refunded with interest at 6% per annum from date of deposit until realisation; directions issued for refund (Parsvnath within six weeks). No order as to costs.

Provisional release of seized goods and conveyance - Section 67(6) CGST Act - deposit and bond conditions for provisional release - restraint on further action under Section 130 CGST Act

Provisional release of seized goods and conveyance - Section 67(6) CGST Act - deposit and bond conditions for provisional release - Provisional release of the petitioner's vehicle and goods on compliance with specified deposits and bonds. - HELD THAT: - The Court directed provisional release of the seized conveyance and goods on the petitioner complying with enumerated financial conditions. The petitioner was ordered to deposit amounts specified as tax, penalty and fine in lieu of confiscation, and to furnish fresh bonds for the fine in lieu of confiscation; upon compliance the respondent authorities were directed to release the goods and vehicle forthwith. Non-compliance with any of the conditions was held to render the interim relief liable to be vacated. The relief was granted as an interim measure while the petition is pending and the Rule was made returnable. [Paras 2]

Goods and vehicle to be provisionally released on the petitioner depositing the specified sums and furnishing the required bonds; failure to comply will vacate the interim relief.

Restraint on further action under Section 130 CGST Act - Prohibition on the respondent-authority passing any other or further order under Section 130 of the CGST Act until final disposal of the petition. - HELD THAT: - As part of the interim relief, the Court restrained the respondent-authority from passing any further order under Section 130 of the CGST Act during the pendency of the petition. This restraint is confined to the period until final disposal of the petition and is conditional upon the interim release framework ordered by the Court. [Paras 2]

Respondent-authority restrained from passing any other or further order under Section 130 CGST Act until final disposal of the petition.

Final Conclusion: Rule issued returnable; interim relief granted by directing provisional release of the petitioner's goods and vehicle on compliance with specified deposits and bonds, and respondent restrained from passing further orders under Section 130 CGST Act till final disposal of the petition.

Revisional jurisdiction under Section 264 - Reliance on Form 26AS and TDS certificates as probative evidence of receipt - Rejection of books of account for non-maintenance and non-audit - Duty to provide opportunity to rebut third party confirmations

As per HC [2021 (3) TMI 86 - JHARKHAND HIGH COURT] Writ petition dismissed no interference with the Commissioner's revision order upholding the additions and rejection of books where payments were confirmed by third parties, supported by Form 26AS/Form 16A and no contrary evidence was produced by the assessee -

HELD THAT:- Having heard the learned counsel for the petitioner, this court is not inclined to interfere with the impugned judgment and order of the High Court.

The special leave petition is, accordingly, dismissed.

Charitable purpose / General Public Utility - exemption under Sections 11 and 12 - registration as charitable under Section 10(29) - receipts resembling trade, commerce or business - cost plus nominal markup test for distinguishing commercial receipts - application of Gujarat Maritime Board precedent for period 1-4-2003 to 1-4-2011 - assessment scrutiny to determine whether consideration is significantly higher than cost

Exemption u/s 11 - Exemption u/s 10(29) - Assessment of trust - HELD THAT:- As jointly submitted that these appeals are covered by the judgment of this Court in Ahemdabad Urban Development Authority [2022 (10) TMI 948 - SUPREME COURT] wherein held that amounts or any money whatsoever charged by a statutory corporation, board or any other body set up by the State Governments or Central Government, for achieving what are essentially “public functions/services” (such as housing, industrial development, supply of water, sewage management, supply of food grain, development and town planning, etc.) may resemble trade, commercial, or business activities. However, since their objects are essential for advancement of public purposes/functions (and are accordingly restrained by way of statutory provisions), such receipts are prima facie to be excluded from the mischief of business or commercial receipts.

For the period 1-4-2003 to 1-4-2011, a statutory corporation could claim the benefit of Section 2(15) having regard to the judgment of this Court in the Gujarat Maritime Board Case[2007 (12) TMI 7 - SUPREME COURT] Likewise, the denial of benefit under Section 10(46) after 1-4-2011 does not preclude a statutory corporation, board, or whatever such body may be called, from claiming that it is set up for a charitable purpose and seeking exemption under Section 10(23-C) or other provisions of the Ac

Also submitted at the Bar that the respondent(s) herein which has been registered for conducting an activity, in the nature of a General Public Utility, which is charitable in nature under Section 10(29) of the Income Tax Act is entitled to exemption from tax under Sections 11 and 12 of the said Act, therefore, appropriate an order may be made in these appeals. Appeal dismissed.

Penalty under Section 271D - journal entries - remand - finality of order - rendered infructuous - academic question

Whether the appeals should be proceeded with where, on remand, the Assessing Officer reversed the imposition of penalty and the Revenue did not challenge that fresh order? - HELD THAT: - The appeals arise from imposition of penalty under Section 271D, and on remand the Assessing Officer recorded that the entries were only journal entries and thereby did not impose any penalty. That fresh order on remand was not assailed by the Revenue and has attained finality. In these circumstances the controversy between the parties has ceased to exist; the factual basis for the impugned penalty has been removed and there is no live dispute to be adjudicated by this Court. Although the broader legal question whether penalty is leviable where transfers are effected through journal entries was pressed by the Revenue, the Court left that question open because the underlying order has become final and the appeal is rendered academic.

Appeals disposed of as rendered infructuous; question of law kept open; no costs.

Final Conclusion: The appeals are dismissed as infructuous and disposed of in view of the Assessing Officer's final order on remand reversing the penalty; the substantive legal question was not decided and is left open. No costs.

Reopening of completed assessments after search - absence of incriminating material in search proceedings - exercise of power to reopen under Sections 147/148 of the Income Tax Act subject to statutory conditions

Assessment u/s 153A -addition based on seized material or not? - competency of AO to consider all the material that is available on record - HELD THAT:- As submitted by the learned counsel on both sides that the issue involved in this appeal is squarely covered by the decision of this Court Abhisar Buildwell P. Ltd.[2023 (4) TMI 1056 - SUPREME COURT] In the light of the dictum laid down thereunder and in view of the indisputable fact that during the search no incriminating material was found, this appeal must fail. Consequently, it is dismissed.

In view of the decision in Abhisar’s case (supra), completed/unabated assessments could be re-opened by the AO in exercise of powers under Sections 147/148 of the Income Tax Act subject to fulfilment of the conditions envisaged under Sections 147/148 of the Income Tax Act and hence, such powers are saved in terms of the said judgment. Appeal dismissed.

Assessment u/s 153A -addition based on seized material or not? - competency of AO to consider all the material that is available on record - HELD THAT:- The issue involved in the present petitions is squarely covered against the Revenue in view of the decision of this Court in the case of Abhisar Buildwell P. Ltd.[2023 (4) TMI 1056 - SUPREME COURT]

The present Special Leave Petitions stand dismissed. Pending applications shall stand disposed of.

Assessment u/s 153A - Addition u/s 68 -addition based on seized material or not? - competency of AO to consider all the material that is available on record - HELD THAT:- The issue involved in the present petitions is squarely covered against the Revenue in view of the decision of this Court in the case of Principal Commissioner of Income Tax, Central -3 Vs. Abhisar Buildwell P. Ltd.[2023 (4) TMI 1056 - SUPREME COURT]

The present Special Leave Petitions stand dismissed. Pending applications shall stand disposed of.

Condonation of delay in depositing amount under Direct Tax Vivad Se Vishwas Act, 2020 - Remedial condonation versus extension of a statutory scheme - Extraordinary or unforeseen circumstances as a ground for relief - Certificate issued by designated authority under Section 5 of the Act, 2020 and consequence of payment timelines - Effect of Executive notifications extending last date for payment

Condonation of delay in depositing amount under Direct Tax Vivad Se Vishwas Act, 2020 - Extraordinary or unforeseen circumstances as a ground for relief - Delay of three days in depositing the balance amount under the Act, 2020 was liable to be condoned and the deposited amount accepted as within time under the scheme. - HELD THAT: - The petitioner filed the declaration within the time prescribed under the Act and the designated authority issued the certificate under Section 5. The balance amount was deposited but the bank challan was generated three days after the notified last date because the last notified date fell on a Sunday and the petitioner suffered a disabling injury on 1.11.2021, rendering him unable to approach the bank. Those facts were not disputed by the Department. Having considered precedents which recognize that courts may grant relief where non-compliance is due to extraordinary or unforeseen circumstances beyond the party's control, the Court held that the three-day delay was attributable to such circumstances and therefore deserved condonation. The impugned order rejecting the petitioner's application for condonation was quashed and the deposited amount was directed to be treated as within time under the scheme. [Paras 14, 15]

Delay of three days is condoned; deposited balance tax to be accepted as within time and impugned order dated 25.8.2022 quashed.

Remedial condonation versus extension of a statutory scheme - Certificate issued by designated authority under Section 5 of the Act, 2020 and consequence of payment timelines - Effect of Executive notifications extending last date for payment - Permitting condonation in exceptional cases does not amount to extending the statutory scheme; remedial relief may be granted where payment was impossible due to extraordinary circumstances. - HELD THAT: - The Court distinguished decisions which hold that the statutory last date cannot be extended, observing that those decisions did not address cases where non-payment was impossible for reasons beyond the declarant's control. Citing the principle that courts can provide remedial measures (and the reasoning in Shekhar Resorts Ltd.), the Court held that allowing condonation for extraordinary circumstances is not an impermissible extension of the scheme but a corrective measure to prevent injustice where compliance was impossible. The Court noted that some apex-court observations about non-extendability of the scheme do not preclude consideration of exceptional facts warranting condonation. [Paras 12, 13]

Remedial condonation in an extraordinary case is permissible and does not constitute extension of the scheme.

Final Conclusion: Writ petition allowed; three-day delay in depositing balance amount under the Direct Tax Vivad Se Vishwas Act, 2020 condoned, the deposited amount directed to be accepted as within time, and the impugned order dated 25.8.2022 quashed.

Foundational material for reopening under Section 148A - Section 148A(b) show cause notice - requirement to supply underlying material/evidence - reasonable opportunity under a taxing statute - reopening assessment under Section 148 - judicial review under Article 226/227

Section 148A(b) show cause notice - foundational material for reopening under Section 148A - Whether Section 148A obligates the Assessing Officer to supply underlying material/evidence forming the foundation of the opinion that income chargeable to tax has escaped assessment. - HELD THAT: - The Court construed Section 148A by reference to the plain language of the taxing statute and held that the provision does not oblige the Assessing Officer to supply the underlying documentary or oral material which forms the foundation of his tentative opinion. Section 148A requires that a show cause notice communicate the information and reasons which disclose the Assessing Officer's mind and the prima facie view that certain income has escaped assessment, but it does not convert the preliminary inquiry into a detailed adversarial disclosure regime. Accordingly, supply of the foundational material/evidence is not mandated so long as the show cause notice contains sufficient information and reasons to enable the assessee to know the basis of the tentative view and to reply. [Paras 6, 8, 9]

No statutory obligation to supply the underlying material; a reasoned show cause notice suffices.

Section 148A(b) show cause notice - reasonable opportunity under a taxing statute - Whether a show cause notice under Section 148A must be precise and contain reasons sufficient to constitute a reasonable opportunity to the assessee. - HELD THAT: - The Court emphasised that the inquiry under Section 148A is not a full scale inquiry but a limited one intended to prevent casual or rampant re openings. The show cause notice must be concise and precise and contain information revealing the reasons and foundational material which persuaded the Assessing Officer to form a tentative view that income has escaped assessment; such disclosure of reasons satisfies the concept of reasonable opportunity in the taxing context. Where the notice and its annexures sufficiently communicate the Assessing Officer's reasons, the statutory precondition for issuing a notice under Section 148 is met even if the underlying materials are not furnished. [Paras 6, 9]

A concise, reasoned show cause notice that reveals the Assessing Officer's tentative view and the foundational material suffices to afford reasonable opportunity.

Judicial review under Article 226/227 - reopening assessment under Section 148 - Whether the High Court should probe the veracity and genuineness of the material/evidence forming the Assessing Officer's opinion while exercising writ jurisdiction under Articles 226/227. - HELD THAT: - The Court held that the veracity, genuineness or reliability of the foundational material is not to be gone into in writ proceedings at the stage of challenge to the order under Section 148A(d); the scope of judicial intervention in such proceedings is limited to whether the statutory preconditions (i.e., a reasoned show cause notice disclosing the Assessing Officer's tentative view) have been satisfied. On the facts, the show cause notice and annexure informed the assessee of reasons and information persuading the Assessing Officer that income for assessment year 2016 17 had escaped assessment, and the assessee filed a detailed reply; therefore the impugned order and consequential notice were held to have been issued after due process. [Paras 5, 9, 11, 12]

Courts will not examine the reliability of foundational material in writ jurisdiction at this stage; where statutory preconditions under Section 148A are met, the reopening proceeds.

Final Conclusion: Writ petition challenging the order under Section 148A(d) and consequential notice under Section 148 in respect of assessment year 2016-17 is dismissed at admission; the Court held that a reasoned show cause notice satisfying Section 148A(b) suffices even without production of underlying material, and granted liberty to the petitioner to pursue statutory remedies under the Income tax Act.

Genuineness of transaction - forfeiture of security deposit - disallowance of business loss - related party transactions and common directorship - late production of evidence and documentary proof - assessment year 2015-16

Genuineness of transaction - forfeiture of security deposit - disallowance of business loss - related party transactions and common directorship - Sustenance of the addition by disallowing the claimed business loss arising from the forfeiture of the security deposit. - HELD THAT: - The Court upheld the Tribunal's addition because the appellant failed to establish that the agreement and the transaction were genuine. The authorities below found that the original agreement was not produced, the forfeited amount appeared unusual, the forfeiture notice was issued much later than the time when defects were discovered, and the counterparty wrote off a portion only in FY 2014 15 despite defects being discovered in March April 2010. The existence of inter se relationships (10% equity holding and common directors) reinforced the need for credible contemporaneous proof, which was not furnished; on this appreciation of the material, the Tribunal's conclusion that the loss was not allowable was sustained. [Paras 6, 7, 8, 10]

Addition sustained and disallowance of the claimed business loss upheld.

Late production of evidence and documentary proof - burden of proof on assessee - Effect of documents produced for the first time before the Tribunal (service tax document) on the conclusion regarding genuineness of the transaction. - HELD THAT: - The Court held that the service tax document produced before the Tribunal in 2019 could not alter the conclusion because the determinative question was whether the original agreement and contemporaneous material demonstrated a genuine arrangement. The service tax document was dated much later and was insufficient to cure the earlier absence of primary documentary proof; therefore its late production did not impact the Tribunal's finding. [Paras 9]

Late produced service tax document held not to affect the conclusion on genuineness; it did not enable interference with the impugned order.

Final Conclusion: The High Court dismissed the appeal and declined to interfere with the Tribunal's order for AY 2015 16, upholding the addition made by disallowing the claimed business loss because the appellant failed to prove the genuineness of the transaction and relied on documents produced belatedly which did not cure the deficiency.

Allowability of depreciation on goodwill - goodwill as an intangible asset under Explanation 3 to Section 32(1) - treatment of goodwill arising on amalgamation - operation of law for transfers under a scheme of amalgamation and exclusion under Section 47 - inapplicability of cost of acquisition / Section 49 in sanctioned amalgamation transfers

Allowability of depreciation on goodwill - goodwill as an intangible asset under Explanation 3 to Section 32(1) - Depreciation on goodwill created pursuant to a court sanctioned scheme of amalgamation is allowable under Section 32 as goodwill is an intangible asset within Explanation 3(b). - HELD THAT: - The Tribunal and the courts below correctly applied the ratio of the Supreme Court in Commissioner of Income Tax, Kolkata v. Smifs Securities Ltd., which held that 'goodwill' falls within the expression 'any other business or commercial rights of similar nature' in Explanation 3(b) to Section 32(1) and is therefore an asset eligible for depreciation. The goodwill in the present case arose by virtue of the sanctioned Scheme of Amalgamation; the factual finding that goodwill was created in the process of amalgamation and thereby increased the market worth of the transferee was upheld. On that basis, depreciation claimed on the goodwill created by the amalgamation was rightly allowed under Section 32(1). [Paras 5, 6]

Claim for depreciation on goodwill created by the sanctioned amalgamation upheld.

Treatment of goodwill arising on amalgamation - operation of law for transfers under a scheme of amalgamation and exclusion under Section 47 - inapplicability of cost of acquisition / Section 49 in sanctioned amalgamation transfers - Provisions relating to 'cost of acquisition' and Section 49 are not applicable to the goodwill created by a sanctioned merger because Section 47 excludes transfers effected by a scheme of amalgamation and such transfers occur by operation of law. - HELD THAT: - The Department's reliance on the capital gains chapter (Section 55/Section 49) overlooked that Section 47 expressly excludes transfers effected under a sanctioned scheme of amalgamation. Transfers in terms of a sanctioned amalgamation occur by operation of law and are not to be treated as ordinary transfers giving rise to capital gains consequences addressed by Section 49. Consequently, the argument that cost of acquisition rules under Section 55/49 apply to deny depreciation was rejected, and the Tribunal's and appellate authority's view sustaining depreciation under Section 32 was affirmed. [Paras 8]

Contention based on Section 49/Section 55 rejected; Section 47 exclusion and operation of law character of amalgamation transfers upheld.

Final Conclusion: The appeals are dismissed; the Tribunal's decision upholding allowance of depreciation on goodwill arising under the sanctioned Scheme of Amalgamation is affirmed, and the Department's contention invoking capital gains provisions (Section 49/Section 55) is rejected in view of Section 47 and the authoritative ratio in Smifs.

Penalty under Section 271(1)(c) - concealment of income or furnishing inaccurate particulars - revised return and disclosure before assessment - requirement of specificity in show-cause notice under Section 271(1)(c) - no substantial question of law for interference

Revised return and disclosure before assessment - penalty under Section 271(1)(c) - concealment of income or furnishing inaccurate particulars - Whether the respondent/assessee concealed income for AY 2009-10 despite filing a revised return declaring the utilisation of accumulated corpus - HELD THAT: - The Tribunal found, and this Court concurred, that the respondent/assessee had disclosed the utilisation of accumulated corpus donations in the revised return filed before the matter was flagged by the Assessing Officer. On that factual foundation the Tribunal concluded there was no concealment of income within the meaning of the penal provision; the Court agreed with that conclusion and observed no error in the Tribunal's appreciation of the sequence and timing of disclosure. The Court, having regard to the Tribunal's reliance on those facts and relevant authorities, held that the imposition of penalty on the ground of concealment was not sustainable. [Paras 17, 19]

No concealment found; penalty cannot be sustained on the ground of concealment.

Requirement of specificity in show-cause notice under Section 271(1)(c) - penalty under Section 271(1)(c) - concealment of income or furnishing inaccurate particulars - Whether the show-cause notice for imposition of penalty under Section 271(1)(c) was valid when it did not specify which limb of the provision (concealment or inaccurate particulars) was invoked - HELD THAT: - The Tribunal held that the penalty notice failed to indicate which limb of Section 271(1)(c) was being invoked. This Court agreed with the Tribunal's conclusion, noting precedents of coordinate benches and High Courts that require the notice to specify the precise charge under the sub clause so as to enable a proper defence. Relying on those authorities and the Tribunal's reasoning, the Court found the notice deficient and therefore not a valid basis for imposing penalty. [Paras 17, 21]

Penalty notice held defective for lack of specification of the limb of Section 271(1)(c); penalty set aside on this ground.

Final Conclusion: The Tribunal's order reversing the CIT(A) was upheld; the appeal is dismissed and no substantial question of law arises for interference.

Arm's Length Price - comparables - transfer pricing - remand for fresh consideration - perverse finding of fact

Comparables - perverse finding of fact - Arm's Length Price - Exclusion of Accentia Technology Ltd. and Cosmic Global Ltd. as comparables for computation of ALP - HELD THAT: - The Tribunal found that Accentia Technology Ltd. had developed its own software, operated in medical transcription (not BPO) and underwent an extraordinary economic event (acquisition of 96% stake in Oak Technologies Inc.) which materially affected its results; and that Cosmic Global Ltd. operated a different business model, outsourced a major part of its business and registered abnormal profit in the relevant period. These are findings of fact recorded by the Tribunal (see paragraphs 21.1 to 21.3 for Accentia and 20.1 to 20.3 for Cosmic). The High Court held that such findings are not perverse and there is no question of law made out by the Revenue to justify interference with the Tribunal's conclusion to exclude these comparables for ALP determination. [Paras 19, 20, 21]

Tribunal's exclusion of Accentia Technology Ltd. and Cosmic Global Ltd. upheld; no interference.

Comparables - Arm's Length Price - transfer pricing - Treatment of Eclerx Services Ltd. and Coral Hub Ltd. as comparables for ALP - HELD THAT: - The Revenue relied on the coordinate-bench decision in Rampgreen Solutions (P.) Ltd. v. CIT to contend that the Tribunal's approach was incorrect insofar as Eclerx Services Ltd. and Coral Hub Ltd. are concerned. The High Court noted the reliance on that precedent and observed that an appeal against Rampgreen is pending before the Supreme Court. The Court did not find any substantial question of law in the present appeal warranting interference with the Tribunal's approach in respect of these two comparables. [Paras 12, 20, 21]

No interference with Tribunal's treatment of Eclerx Services Ltd. and Coral Hub Ltd.; matter not disturbed.

Remand for fresh consideration - working capital adjustment - Remand of working capital adjustment to Assessing Officer - HELD THAT: - The Tribunal remanded the question of working capital adjustment to the Assessing Officer for examination. The High Court noted this remand in the record and observed that the Revenue does not challenge that direction in the present appeal. Consequently, the remand stands and was not the subject of adjudication in this appeal. [Paras 11]

Issue remanded to the Assessing Officer as directed by the Tribunal; not contested in this appeal.

Final Conclusion: The appeal is dismissed. The High Court declines to interfere with the Tribunal's exclusion of the four specified comparables and records that no substantial question of law arises; the working-capital matter remains remitted to the Assessing Officer as directed by the Tribunal.

Reopening of assessment under section 147 of the Income Tax Act - jurisdictional limits - change of opinion - reason to believe - requirement of fresh/tangible material to reopen assessment - reassessment jurisdiction and abuse of power

Reopening of assessment under section 147 of the Income Tax Act - jurisdictional limits - change of opinion - requirement of fresh/tangible material to reopen assessment - Validity of reassessment notice and order framed under Section 147/148 where the same issue (verifiability of sundry creditors) was considered during original assessment - HELD THAT: - The Tribunal found on the material on record that the assessing officer had raised and examined the issue of unverifiable sundry creditors during the original proceedings and had recorded enquiries, sent notices under section 133(6), issued show-cause notices and framed the original assessment taking into account that certain sundry creditors remained unverifiable. Reopening was therefore founded on the same set of facts already considered in the original assessment. Relying on the principle that reassessment cannot be used as a vehicle for review and that reopening must be supported by fresh or tangible material, the Tribunal applied the test articulated by the Supreme Court in Kelvinator India Ltd. and subsequent High Court decisions to hold that mere change of opinion by the Assessing Officer is not a permissible basis to invoke section 147. In the absence of any fresh tangible material that was not available to the Assessing Officer at the time of the original assessment, the formation of belief was vitiated as being a mere change of opinion; accordingly the reassessment proceedings and the consequential order were held to be unsustainable and liable to be quashed. The Tribunal therefore set aside the reassessment order which had added the sundry creditors to the assessee's income. [Paras 8, 9, 13]

Reassessment proceedings initiated on the ground of unverifiable sundry creditors were a mere change of opinion and the reopening under section 147/148 is quashed.

Final Conclusion: The appeal is allowed; the reassessment order framed under section 143(3) r.w.s. 147 following notice under section 148 is quashed as being founded on a mere change of opinion regarding the unverifiability of sundry creditors for Assessment Year 2009-10.

Computation of book profit under section 115JB(2A) of the Income tax Act - other comprehensive income - proviso excluding amounts credited to other comprehensive income from adjustments to book profit - treatment of revaluation surplus and gains on equity instruments under Indian Accounting Standards (Ind AS 16, Ind AS 38, Ind AS 109) - notional or unrealised gains - CBDT Circular No.24/2017 and related FAQs on computation of book profit for Ind AS companies

Other comprehensive income - book profit under section 115JB - proviso excluding amounts credited to other comprehensive income - revaluation surplus and fair value through other comprehensive income - CBDT Circular No.24/2017 - Whether amounts credited to other comprehensive income on account of revaluation surplus / fair value gains are to be added to book profit for computing MAT under section 115JB. - HELD THAT: - The Tribunal accepted the assessment material showing the variance arose from amounts recorded below profit before tax as revaluation/valuation gains on investments reported in other comprehensive income. The increase in value was an accounting revaluation and not realisable income; it was not earned cash income but a notional or uncertain gain. The proviso to the relevant clause bars application of the adjustment to amounts credited to other comprehensive income in respect of revaluation surplus under Ind AS 16 / Ind AS 38 and gains on equity instruments designated at fair value through other comprehensive income under Ind AS 109. Reliance on CBDT Circular No.24/2017 and the FAQs supports that such revaluation surplus and OCI gains are excluded while computing book profit for MAT purposes for Ind AS compliant companies. Applying the proviso and the guidance in the circular, the addition made by the AO/CPC to include the OCI amount in book profit was not warranted.

The addition of the other comprehensive income amount to book profit was correctly deleted and need not be added for computation of MAT under section 115JB.

Final Conclusion: The Tribunal confirms the CIT(A)'s order deleting the addition of the other comprehensive income from book profit for AY 2018-19 and dismisses the Revenue's appeal.

Penalty under section 271(1)(b) - Notice under section 142(1) - Reasonable cause for non-compliance - Section 273B - exemption from penalty where reasonable cause exists

Penalty under section 271(1)(b) - Notice under section 142(1) - Reasonable cause for non-compliance - Section 273B - exemption from penalty where reasonable cause exists - Validity of penalty imposed under section 271(1)(b) for alleged non-compliance with notice issued under section 142(1). - HELD THAT: - The Tribunal accepted the assessee's plea that the notice dated 06.11.2019 issued under section 142(1) was not received by the assessee and that non-receipt occasioned non-compliance. Given that the failure to comply with the notice was attributable to non-receipt and not deliberate default, the assessee had a reasonable cause for non-compliance. Applying the legal principle that where reasonable cause exists the levy of penalty under section 271(1)(b) is not justified and that section 273B affords relief from penalty in such circumstances, the Tribunal concluded that the penalty cannot be sustained. The Tribunal therefore deleted the penalty imposed by the Assessing Officer and confirmed by the Commissioner (Appeals).

Penalty under section 271(1)(b) deleted as non-compliance with section 142(1) notice was due to non-receipt and amounted to reasonable cause.

Final Conclusion: The appeal is allowed; the penalty imposed under section 271(1)(b) is deleted on the ground that the assessee had reasonable cause for non-compliance with the section 142(1) notice.

Acquisition of title to goods - tampering of documents and its evidentiary consequence - exercise of jurisdiction under Article 136 of the Constitution

Acquisition of title to goods - tampering of documents and its evidentiary consequence - Settlement Commission findings - Petitioner failed to establish title in the goods and documents relied upon were found tampered with by the Settlement Commission. - HELD THAT: - The Court recorded that the petitioner had not satisfied it that title in the goods was ever acquired. The respondent drew attention to the Settlement Commission's finding that even the documents produced by the petitioner were tampered with. In view of that finding and the petitioner's inability to prove title, the Court treated the claim to title as unsuccessful and did not accept the petitioner's contentions on ownership or entitlement in respect of the goods.

Claim to title rejected; documents found tampered with and petitioner unable to establish acquisition of title.

Exercise of jurisdiction under Article 136 of the Constitution - Whether the Court should exercise its special jurisdiction under Article 136 in the matter. - HELD THAT: - Having regard to the petitioner's failure to establish title and the adverse finding of tampering by the Settlement Commission, the Court declined to exercise its discretionary jurisdiction under Article 136. The exercise of that extraordinary jurisdiction was not warranted on the facts before the Court.

Discretionary jurisdiction under Article 136 declined; special leave petition dismissed.

Final Conclusion: Special leave petition dismissed; interim order vacated; pending applications disposed of.

Provisional release of seized goods/currency - finality of tribunal order - confiscation under the Customs Act - appealable order - alternative remedy of appeal to CESTAT - judicial discipline

Provisional release of seized goods/currency - finality of tribunal order - confiscation under the Customs Act - appealable order - Whether the petitioner was entitled to release of the seized currency in compliance with the CESTAT order dated 18.08.2022. - HELD THAT: - The Tribunal set aside the order which had rejected the petitioner's application for provisional release and thereby directed release. However, before compliance could occur the Principal Commissioner of Customs (Adjudication), Mumbai passed a final adjudication directing confiscation of the seized currency as sale proceeds of smuggled goods. A final order of confiscation is an appealable order and, once passed, operates to preclude compliance with the earlier direction for provisional release. The court noted that the departmental authorities had forwarded the petitioner's application to the competent authority and thereafter the Principal Commissioner passed the final confiscation order; accordingly the prayer for provisional release could not be granted as the subject-matter had been finally adjudicated by a subsequent order which is open to challenge by way of appeal to CESTAT. [Paras 8, 13]

The petition seeking release in compliance with the CESTAT order is not maintainable because a subsequent final order of confiscation has been passed; the petitioner may challenge that final order by appeal to CESTAT.

Judicial discipline - finality of tribunal order - Whether costs should be imposed for non-disclosure of the subsequent final order of confiscation when filing the petition for provisional release. - HELD THAT: - The court found that the petitioner did not disclose the Principal Commissioner's final order of confiscation when instituting the present petition, despite the order having been passed prior to filing. The failure to disclose that material fact was contrary to fair conduct of proceedings. In consequence, the court exercised its discretion to impose costs for suppression of the relevant final adjudication which was within the petitioner's knowledge. [Paras 9, 14]

Costs of Rs. 25,000 are imposed on the petitioner for suppression of the final order; the writ petition is dismissed.

Final Conclusion: Writ petition dismissed as the Principal Commissioner 9s subsequent final order of confiscation precluded compliance with the earlier CESTAT direction for provisional release; petitioner may agitate the final order by statutory appeal to CESTAT. Costs of Rs. 25,000 awarded against the petitioner for non-disclosure of the final order.

Interim restraint pending adjudication - status quo - liberty to approach appellate forum - appointment of liquidator

Interim restraint pending adjudication - status quo - Grant of interim protection restraining the Liquidator from taking action adverse to the appellant until the appellate forum reopens - HELD THAT: - The Court, noting that the NCLAT, Chennai had reserved judgment and is on summer vacation until 5 June 2023, exercised its supervisory powers to preserve the appellant's position pending consideration by the NCLAT. For that limited period the Court granted an interim restraint that the Liquidator shall not take any action adverse to the interest of the appellant, thereby maintaining the status quo until the NCLAT reopens and can be approached by the appellant. [Paras 5]

The Liquidator shall not take any action adverse to the appellant's interest until 5 June 2023.

Liberty to approach appellate forum - appointment of liquidator - Whether the appellant should be permitted to seek relief before the NCLAT once it reopens and the consequence for the present Civil Appeal - HELD THAT: - The Court granted the appellant liberty to approach the NCLAT, Chennai on 5 June 2023 and seek appropriate relief there. Having provided this limited interim protection and an opportunity to the appellant to pursue the pending appeal before the competent appellate forum, the Court found no necessity to retain the present writ remedy and accordingly disposed of the Civil Appeal on those terms. [Paras 5, 6]

Liberty granted to the appellant to approach the NCLAT on 5 June 2023; the Civil Appeal is dismissed on the aforesaid terms.

Final Conclusion: The Supreme Court granted a limited interim restraint preserving the appellant's position until 5 June 2023, gave liberty to approach the NCLAT when it reopens, and dismissed the Civil Appeal on those terms; pending applications are disposed of accordingly.

Pre-existing dispute - operational debt - demand notice under section 8 - admission under section 9 - Corporate Insolvency Resolution Process - moratorium under section 14 - Mobilox Innovations test - arbitration clause

Pre-existing dispute - operational debt - demand notice under section 8 - admission under section 9 - Mobilox Innovations test - arbitration clause - Existence of a pre-existing dispute in relation to the amount claimed as service tax by the operational creditor and its effect on admission of the section 9 petition. - HELD THAT: - The Tribunal found that the corporate debtor and the operational creditor had exchanged communications prior to issuance of the section 8 demand notice in which the parties discussed rejection of four original invoices, issuance and payment of four fresh GST-compliant invoices, and the operational creditor's contention that it had already deposited service tax which it sought to recover. The four fresh invoices relating to the underlying work were paid by the corporate debtor, leaving only the question of refund/credit of service tax paid to the Government as disputed. Applying the principle in Mobilox Innovations, the adjudicating authority's task at the admission stage is limited to determining whether a plausible, pre-existing dispute (not hypothetical, illusory or patently feeble) exists prior to the demand notice. The Tribunal held that the e-mail exchanges and admissions recorded in the section 8 particulars demonstrated a real dispute about who could claim credit or refund of the service tax and that this dispute preceded the demand notice. The NCLT erred by proceeding to adjudicate the dispute on merits instead of applying the limited Mobilox enquiry and disregarding the contemporaneous communications. The MSA's dispute-resolution clause (arbitration) was noted as available for resolution but the determinative finding was that a pre-existing dispute existed, which barred admission of the section 9 petition. [Paras 20, 21, 23, 25, 26]

A pre-existing, real dispute existed prior to the section 8 demand notice as to the service tax payment; the section 9 application was therefore incorrectly admitted and the impugned order is set aside.

Final Conclusion: The appeal is allowed; the Impugned Order admitting proceedings under section 9 is set aside, the CIRP abates and the corporate debtor is released from the effects of moratorium under section 14 with immediate effect.

Classification of CIRP expenses into essential and non-essential - reimbursement of CIRP costs and review by Adjudicating Authority despite CoC ratification - duties and professional conduct of Interim/Resolution Professional in pursuing withdrawal applications - adverse/deprecatory remarks and expunction of judicial observations

Classification of CIRP expenses into essential and non-essential - reimbursement of CIRP costs and review by Adjudicating Authority despite CoC ratification - Adjudicating Authority's exclusion of certain claimed CIRP expenses as non-essential and allowance of only specified expenses and limited IRP fees. - HELD THAT: - The Tribunal scrutinised paragraphs 14 and 15 of the impugned order which tabulated 17 claimed items and noted the Adjudicating Authority's categorisation of items 1-7 as essential while disallowing expenses relating to valuation exercises and PUFE-advocate fees on the ground that the directors had not handed over records and those exercises were pending. The Court found no disagreement on the items admitted as essential and upheld the Adjudicating Authority's exercise of mind in excluding expenses that could not reasonably be undertaken or completed in the absence of records. Although many items had been ratified by the CoC, the Adjudicating Authority's evaluation that certain tasks were uninitiated or incomplete justified disallowance; the Tribunal found that exclusion to be fair and reasonable and therefore refused interference with the Adjudicating Authority's decision to allow only the specified CIRP costs and to limit the IRP's fees. [Paras 6, 8, 14, 15]

The categorisation and disallowance of non-essential expenses and the allowance of specified CIRP costs and limited IRP fees as recorded in paragraphs 14-15 of the impugned order are upheld.

Duties and professional conduct of Interim/Resolution Professional in pursuing withdrawal applications - adverse/deprecatory remarks and expunction of judicial observations - Adjudicating Authority's finding that the IRP did not actively pursue the withdrawal application and corresponding deprecatory remarks were justified; prayer to expunge adverse observations rejected. - HELD THAT: - The Tribunal examined whether the IRP had bona fide pursued IA No.510/2021 and related stay/withdrawal applications. While the IRP asserted attendance and reliance on this Tribunal's earlier view in Madhusudan, the record did not demonstrate successful engagement with the Adjudicating Authority to secure an expedited decision. The Tribunal held that mere presence at hearings, without persuasive pursuit of the application, did not absolve the IRP. The Adjudicating Authority's criticism of the IRP's conduct for continuing CIRP activities and seeking ratification of expenses despite pending withdrawal applications was found to be supported by the material; accordingly, the request to expunge adverse remarks was rejected. [Paras 9, 10, 11, 12, 15]

The finding that the IRP was lax in pursuing the withdrawal application and the related deprecatory observations are sustained; the request for expunction is dismissed.

Reimbursement of CIRP costs and review by Adjudicating Authority despite CoC ratification - Whether CoC ratification of fees/expenses precluded Adjudicating Authority from disallowing claimed expenses-Adjudicating Authority's independent scrutiny affirmed. - HELD THAT: - Although the CoC had ratified many of the claimed items, the impugned order record shows that several exercises were incomplete or not initiated and that the Adjudicating Authority applied its own assessment to determine whether the expenses were legitimately payable. The Tribunal upheld the principle, as applied in the present facts, that CoC ratification does not immunise claims from judicial scrutiny where the underlying work was not completed or justified; the Adjudicating Authority's independent determination to disallow certain items was therefore sustained. [Paras 6, 7, 8]

The Adjudicating Authority was entitled to review and disallow expenses notwithstanding CoC ratification where the claimed work was uninitiated or unsupported by records; its determination is upheld.

Final Conclusion: Application dismissed; the National Company Law Tribunal's findings recorded in paragraphs 14 and 15 of the impugned order are affirmed, including the categorisation and partial allowance of CIRP expenses, the limitation of IRP fees, and the refusal to expunge the Adjudicating Authority's adverse remarks; no order as to costs.

Summary order. Civil Appeal dismissed as withdrawn.

Employment relationship v. taxable service - Classification as Business Support Service and Brand Promotion Service - Invocation of extended period of limitation under the proviso to section 73(1) of the Finance Act, 1994 - Suppression of facts must be wilful with intent to evade tax

Employment relationship v. taxable service - Classification as Business Support Service and Brand Promotion Service - Whether the payments made to the appellant under the Indian Premier League Playing Contract are consideration for employment (not a taxable service) or for taxable business support/brand-promotion services - HELD THAT: - The Tribunal held that the contract between the appellant and the franchisee is an employment contract under which the appellant was engaged to play cricket and was subject to the control and directions of the franchisee. Clauses relied on by the revenue (such as rights of photographing/televising and obligation to wear team clothing) are contractual conditions attendant to employment and do not convert the playing engagement into a business-support or promotional service. The terms show a fixed players' fee payable for participation in matches irrespective of promotional activity; the clause providing for retention of a percentage of fee when a player does not play serves to retain the player rather than to denote a separate promotional fee. The Tribunal also relied on consistent appellate authorities holding that such playing contracts create an employer-employee relationship and do not amount to taxable business support services. Applying that reasoning, the Tribunal concluded that the activities undertaken pursuant to the contract are not taxable services and that the Commissioner erred in treating the remuneration as business-support/brand-promotion taxable receipts. [Paras 15, 17, 18]

The payments are attributable to employment (playing cricket) and not taxable as Business Support Service/Brand Promotion Service; the portion of the demand premised on such classification cannot be sustained.

Invocation of extended period of limitation under the proviso to section 73(1) of the Finance Act, 1994 - Suppression of facts must be wilful with intent to evade tax - Whether the proviso to section 73(1) could be invoked on the ground of suppression of facts where there is no finding of wilful suppression with intent to evade tax - HELD THAT: - The Tribunal examined the Commissioner's reason that the extended period was invokable because the contract details came to the department's notice only on enquiries and the appellant did not seek clarification despite being registered. The Tribunal held that mere non-disclosure or silence is insufficient; suppression of facts in the context of the proviso must be deliberate and accompanied by an intent to evade tax. Reliance was placed on the Supreme Court and High Court authorities which construe 'suppression of facts' narrowly and require wilfulness and an intention to escape tax. The Tribunal further observed that there was no finding in the show cause or impugned order that the appellant's non-disclosure was accompanied by such intent, and that an assessee believing a receipt not to be taxable is not obliged to seek prior clarification. In that absence, invocation of the extended limitation was improper and the demands confirmed on that basis are time-barred. [Paras 23, 24, 30, 31, 32]

The extended period under the proviso to section 73(1) was not rightly invoked; in absence of wilful suppression with intent to evade tax the demands are barred by limitation and must be set aside.

Final Conclusion: The impugned order upholding service tax demands was set aside: the Tribunal held the contract to be one of employment (not a taxable business-support/brand-promotion service) and found the invocation of the extended period under the proviso to section 73(1) unjustified in the absence of wilful suppression with intent to evade tax; the appellant's appeal is allowed and the department's appeal against the bifurcation is dismissed.

Exemption from service tax for SEZ units - interpretation of Section 26(1)(e) of the SEZ Act - Notification No. 12/2013-ST - ab initio exemption procedure and conditions - use of services for authorised operations - consumption of services outside the SEZ and its relevance - Corporate Social Responsibility expenditure as connected to business/authorised operations - traversing beyond the Show Cause Notice

Interpretation of Section 26(1)(e) of the SEZ Act - Notification No. 12/2013-ST - ab initio exemption procedure and conditions - consumption of services outside the SEZ and its relevance - Whether Notification No. 12/2013-ST read with Section 26(1)(e) requires that the specified services must be consumed within the SEZ to avail exemption from service tax. - HELD THAT: - The court examined Section 26(1)(e) which grants exemption for taxable services provided to a Developer or Unit to carry on authorised operations in a SEZ and the text of Notification No. 12/2013-ST which provides exemption by way of refund and an option for ab initio non-payment where services are used exclusively for authorised operations. Neither the statute nor the notification contains an express requirement that services be consumed physically within the geographical limits of the SEZ. Reliance was placed on judicial precedents recognising that exemption is available where services are used for authorised operations and that prior notifications or restrictive conditions construed as requiring in-SEZ consumption are not mandated by Section 26(1)(e). On this basis the Tribunal held there is no legal requirement that the impugned services be consumed inside the SEZ so long as they are used for authorised operations, and the demand premised on consumption outside the SEZ could not be sustained. [Paras 12, 13, 19]

Notification No. 12/2013-ST does not require physical consumption of services within the SEZ; exemption is available if services are used for authorised operations, and the demand based on alleged consumption outside the SEZ is unsustainable.

Use of services for authorised operations - Corporate Social Responsibility expenditure as connected to business/authorised operations - exemption from service tax for SEZ units - Whether the works contract services for CSR (construction/repair of village school toilets), construction of dormitory for employees, and security services are used for authorised operations and hence eligible for exemption under the SEZ regime. - HELD THAT: - The Tribunal considered the nature and nexus of the disputed services with the appellant's SEZ operations. CSR works (construction/repair of toilets and school premises) were found to have a direct nexus with the appellant's activities and to contribute to carrying on authorised operations, following reasoning that corporate social initiatives in the locality of the business form part of the business environment and goodwill. The construction of dormitory was held necessary to house migrant labourers employed at the SEZ unit and thus directly related to authorised operations. Security services provided for the factory premises and the dormitory were likewise held necessary for protection of the SEZ unit and its workforce. On these facts the services were treated as being used for authorised operations and therefore covered by the exemption framework. [Paras 15, 16, 17, 18]

Works contract services for CSR, the dormitory construction, and security services were held to be used for authorised operations and qualify for exemption under the SEZ provisions/notification.

Traversing beyond the Show Cause Notice - procedural fairness in adjudication - Whether the adjudicating authority exceeded the scope of the Show Cause Notice by raising findings not put to the appellant and whether that affects sustainment of the demand. - HELD THAT: - The Tribunal found that the Order-in-Original travelled beyond the matters set out in the Show Cause Notice by relying on alleged consumption outside the SEZ - an allegation not raised in the notice. The first appellate authority did not sustain that aspect and Revenue has not appealed against the deletion relating to renting of motor vehicles. The Tribunal held that where the adjudication proceeds on a basis not put to the assessee, the resultant findings cannot be sustained. [Paras 20]

The Order-in-Original traversed beyond the Show Cause Notice; such overreach vitiates the demand and is a further ground for setting aside the impugned order.

Final Conclusion: The impugned Order-in-Appeal is set aside; the confirmed demand is held unsustainable because the notification and Section 26(1)(e) do not require physical consumption within the SEZ, the disputed services were held to be used for authorised operations (including CSR, dormitory and security), and the original adjudication traversed beyond the Show Cause Notice. The appeal is allowed with consequential benefits as per law.

Re-warehousing certificate - deemed export - diversion to Domestic Tariff Area - burden of proof to establish non-re-warehousing and diversion - duty demand on finished goods versus duty on raw materials - genuineness of CT-3 and contract delivery terms (ex-factory) - remand for fresh adjudication - opportunity of personal hearing

Re-warehousing certificate - burden of proof to establish non-re-warehousing and diversion - diversion to Domestic Tariff Area - Whether the departmental finding of non-re-warehousing and diversion of goods was established on the material on record. - HELD THAT: - The Tribunal found that the adjudicating authority relied on a report of the State Commercial Tax Department and on statements/denials by vehicle operators but did not examine or discredit the re-warehousing certificates produced by the appellant nor verify their authenticity. The Court emphasised that where the department alleges non-re-warehousing and diversion it must prove that allegation by substantial evidence and cannot rest on assumption; it must also indicate where the goods were diverted if they were not warehoused. As the Commissioner did not make any finding that the re-warehousing certificates were false or manipulated and did not verify those certificates, the matter requires fresh consideration on merits with proper evidentiary appraisal. [Paras 8]

Finding of non-re-warehousing/diversion set aside for want of proper evidentiary determination; issue remanded for fresh adjudication.

Duty demand on finished goods versus duty on raw materials - Whether duty could be demanded separately on raw materials in addition to the finished goods. - HELD THAT: - The Tribunal observed that the Revenue both demanded duty on finished goods and also sought duty on raw materials consumed in manufacture, which is impermissible. If any duty is leviable, it must be confined to the finished goods; duty on raw materials consumed for manufacture cannot be additionally imposed. The adjudicating authority failed to properly consider this legal principle and is required to re-examine the demand in the light of this principle. [Paras 9]

Demand, if any, to be restricted to finished goods; the additional demand on raw materials set aside for reconsideration.

Genuineness of CT-3 and contract delivery terms (ex-factory) - deemed export - opportunity of personal hearing - remand for fresh adjudication - Whether the procedural compliance (CT-3, contract terms, CBEC instructions) and the appellant's entitlement should have been examined and whether the matter requires fresh hearing. - HELD THAT: - The Tribunal noted that the appellant produced CT-3 forms, re-warehousing certificates and contractual documents showing ex-factory delivery and payment, and that the Commissioner did not deal with these documents or with the applicability of the CBEC circular and relevant notifications in a satisfactory manner. Given these lacunae in the adjudication, the Tribunal directed that the adjudicating authority must reconsider the entire matter afresh after affording the appellant a personal hearing and re-examine the veracity and legal effect of the documents and compliance with procedural conditions. [Paras 3, 8, 11]

Matter remanded to the adjudicating authority for fresh decision after giving personal hearing, with directions to examine CT-3, re-warehousing certificates, contractual terms and applicable instructions.

Final Conclusion: Impugned Order-in-Original set aside; appeals allowed by remand and the matter is directed to be re-decided by the Adjudicating Authority afresh after affording personal hearing to the appellant, preferably within two months.

Constitutionality of Sub rule 3A of Rule 8 of the Central Excise Rules, 2002 to the extent 'without utilizing the Cenvat credit' - right to carry on trade under Article 19(1)(g) and reasonableness under Article 14 - principle of proportionality in assessing restrictions on fundamental rights - effect of judicial decisions striking down a rule on pending departmental proceedings - Cenvat credit utilisation despite temporary default in duty payment

Constitutionality of Sub rule 3A of Rule 8 of the Central Excise Rules, 2002 to the extent 'without utilizing the Cenvat credit' - Cenvat credit utilisation despite temporary default in duty payment - effect of High Court decisions declaring a rule ultra vires on departmental demand proceedings - Validity of the demand and disallowance of Cenvat credit based on Sub rule 3A of Rule 8 of the Central Excise Rules, 2002 for the period February 2011 to November 2011. - HELD THAT: - The Tribunal examined the departmental demand founded on breach of Sub rule 3A of Rule 8, which mandated payment of duty 'without utilizing the Cenvat credit' where duty remained unpaid beyond thirty days. Relying on binding decisions of various High Courts, including the jurisdictional Punjab & Haryana High Court in Sandley Industries and the Gujarat and Madras High Courts, the Tribunal noted that the impugned portion of Sub rule 3A has been declared arbitrary and violative of Article 14 and an unreasonable restriction on Article 19(1)(g). The judgments applied the principle of proportionality and rendered the words 'without utilizing the Cenvat credit' invalid. Where the rule under which proceedings are initiated has been judicially struck down, no liability can be sustained thereunder; consequently the adjudicating authority correctly dropped the duty demand and allowed the Cenvat credit. The Tribunal endorsed earlier Tribunal and High Court reasoning that invalidation of the operative part of Sub rule 3A ousts the basis for the show cause notice and related penalties.

The impugned demand and disallowance premised on Sub rule 3A are unsustainable and the adjudicating authority's order dropping the demand and allowing the Cenvat credit is upheld.

Final Conclusion: Following High Court and Tribunal precedents that struck down the portion of Sub rule 3A disallowing Cenvat credit, the Revenue's appeal is dismissed and the adjudicating authority's order allowing the credit and dropping the duty demand is affirmed.

Classification of goods - binding nature of Board circulars on departmental authorities - application of Chapter Note 2 to Chapter 84 vis-a -vis Section Notes 3 and 4 to Section XVI - retrospective benefit of a beneficial circular - protecting revenue interest v. applicability of a binding circular during its currency

Classification of goods - application of Chapter Note 2 to Chapter 84 vis-a -vis Section Notes 3 and 4 to Section XVI - Classification of the parboiling/drier parts supplied for rice mill machinery for the period in question. - HELD THAT: - The Tribunal recorded that while the Larger Bench has held on merits that the goods are classifiable under Chapter heading 8419, Board Circular No. 924/14/2010-CX dated 19-05-2010 had, during its currency, directed classification of rice parboiling machinery and driers under Chapter heading 8437. The Board circular applied the interpretative interplay between Chapter Note 2 to Chapter 84 and Section Notes 3 and 4 to Section XVI, concluding that parboiling machines and driers used in conjunction with rice-milling plant merit classification under 8437. The subsequent Circular No. 982/06/2014-CX dated 15-05-2014 rescinded the earlier circular and directed classification under 8419 prospectively. The Tribunal accepted that, for the period 2011-12 to 2013-14 when Circular No. 924/2010 was in force, the circular governed classification and therefore the goods should be treated as classifiable under 8437 for that period. [Paras 4, 5, 6, 11, 13]

For clearances made during 2011-12 to 2013-14, the Board Circular dated 19-05-2010 is binding and the impugned goods are to be treated as classifiable under Chapter heading 8437 for that period.

Binding nature of Board circulars on departmental authorities - retrospective benefit of a beneficial circular - protecting revenue interest v. applicability of a binding circular during its currency - Whether show cause notice/demand and penalties can be sustained for clearances made during the currency of Circular No. 924/14/2010-CX (19-05-2010). - HELD THAT: - Relying on established precedent (as discussed in the judgment), the Tribunal held that Board circulars are binding on departmental officers while in force and that a beneficial circular must be given effect to for the period it was operative. Since Circular No. 924/2010 prescribed classification under 8437 and remained in force throughout the tax period under dispute, the issuance of demand contrary to that circular was held to be incorrect. Consequentially, demands for duty, interest and penalties founded on classification contrary to the binding circular could not be sustained for the relevant period. The Tribunal therefore set aside the impugned orders of demand and held that penalties were not imposable for the period when the beneficial circular prevailed. [Paras 5, 6, 11, 13, 14]

The demands (including penalties) based on classification contrary to Circular No. 924/14/2010-CX for goods cleared during 2011-12 to 2013-14 are not sustainable and the impugned orders are set aside.

Time-bar - cum-duty price - Cenvat/Modvat credit entitlement - Other ancillary issues raised (time-bar/extended period, cum-duty pricing, Cenvat claim) were not adjudicated and left open for consideration. - HELD THAT: - The Tribunal expressly declined to adjudicate on issues relating to limitation/extended period, whether realized value should be treated as inclusive of duty (cum-duty price), and availability or quantification of Cenvat credit, because the principal issue (applicability of the binding circular for the period in question) disposed of the appeals. Those matters were therefore left open for future adjudication as necessary. [Paras 7]

Time-bar, cum-duty price and Cenvat-related issues are left open for consideration and were not decided in this order.

Final Conclusion: The appeals are allowed insofar as clearances made during 2011-12 to 2013-14 are governed by Board Circular No. 924/14/2010-CX dated 19-05-2010, which classified the parboiling/drier parts under Chapter heading 8437; demands and penalties premised on classification contrary to that circular for the relevant period are set aside. Ancillary issues of limitation, cum-duty pricing and Cenvat credit remain undecided and are left open.

Cenvat credit - technical infirmity - receipt and utilization of inputs - condonation of defects in duty-paying documents - Rule 9(2) of Cenvat Credit Rules, 2004

Cenvat credit - technical infirmity - receipt and utilization of inputs - Rule 9(2) of Cenvat Credit Rules, 2004 - condonation of defects in duty-paying documents - Whether cenvat credit availed on input invoices bearing the assessee's head office address (and not the factory address) could be denied where the inputs were received at and used in the registered manufacturing unit. - HELD THAT: - The Tribunal accepted that the invoices bore the head office/earlier address while the goods were in fact received at and utilized in the registered Gamharia manufacturing unit. The adjudicating authority in a subsequent, similar adjudication in the assessee's own case recorded that the invoices were endorsed/diverted to the Gamharia unit and that transport documents, goods receipt entries in RG-23 Part I and utilization in manufacture established actual receipt and accounting of inputs. Reliance was placed on Rule 9(2) of the Cenvat Credit Rules, 2004 which permits allowance of credit despite omission of particulars where the document contains duty details, description, registration number and where the Deputy/Assistant Commissioner is satisfied that the goods have been received and accounted for. The Tribunal held that the address error was a technical infirmity, condonable in view of documentary proof of receipt and utilization, and that once inputs were used in manufacture and duty paid on final product, credit could not be denied for such technical defects. [Paras 6, 7, 8, 9]

Cenvat credit availed on the impugned invoices is allowable; the address discrepancy was a technical infirmity and the credit is to be permitted.

Final Conclusion: The impugned order denying cenvat credit is set aside and the appeal is allowed; consequential relief, if any, shall follow.

Excisability of by products - waste versus manufactured goods - exemption under Notification No.89/95-CE - effect of amendment to definition of excisable goods (w.e.f. 10.05.2008) - confirmation of demand and imposition of penalty

Excisability of by products - waste versus manufactured goods - exemption under Notification No.89/95-CE - Acid oil, fatty acids, gums and waxes arising during refining of edible oil are not manufactured excisable goods but waste and are covered by Notification No.89/95-CE. - HELD THAT: - The Tribunal applied the ratio of the Larger Bench in Ricela Health Foods Ltd. and earlier Supreme Court precedents to conclude that gums, waxes and fatty acid distillates emerge incidentally in the refining process whose object is to produce refined edible oil. The removal of these unwanted materials does not amount to a process of manufacture of those materials themselves; they are inevitable/waste by products. Prior decisions of several Benches treating acid oil and similar residues as non excisable waste were noted and followed. On that basis the goods qualify for exemption under Notification No.89/95-CE rather than being exigible to excise duty.

The goods in question are waste arising during manufacture and fall within the exemption Notification No.89/95-CE; they are not manufactured excisable goods.

Effect of amendment to definition of excisable goods (w.e.f. 10.05.2008) - confirmation of demand and imposition of penalty - Impugned orders confirming demands, interest and penalties relating to the appeals before the Tribunal are unsustainable and are set aside. - HELD THAT: - Although the Commissioner (Appeals) had held that the post amendment explanation to the definition of excisable goods (added w.e.f. 10.05.2008) rendered such residues marketable and exigible, the Tribunal found the Larger Bench and subsequent judicial pronouncements decisive that these residues remain non excisable waste. Applying that settled view, the Tribunal held that the orders confirming demand and imposing penalties in the stated appeals cannot stand and therefore allowed the appeals with consequential relief. The Tribunal did not decide the parties' separate contention on eligibility under Notification No.8/2002 (consequential relief) and left that unconsidered.

Impugned orders confirming demand, interest and penalties in the listed appeals are quashed; the appeals are allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeals, holding that acid oil, fatty acids, gums and waxes arising in the refining of edible oil are waste covered by Notification No.89/95-CE and are not excisable; consequently the demands, interest and penalties confirmed in the impugned orders were set aside and the appeals were allowed with consequential relief.

Inclusion of container value in assessable value - transaction value as sole consideration - packing material supplied free by purchaser - application of precedential coordinate-bench decisions

Inclusion of container value in assessable value - packing material supplied free by purchaser - transaction value as sole consideration - Cost of empty cylinders supplied free by customers is includible in the assessable value of Liquid Sulphur Dioxide under section 4 of the Central Excise Act, 1944. - HELD THAT: - The Tribunal considered whether the amortised value of empty cylinders, owned and supplied by buyers free of cost for packing Liquid Sulphur Dioxide, must be added to the assessable value. Relying on the Tribunal's earlier final order in the appellant's own case (A/12250/2018 dated 18.10.2018) and earlier coordinate-bench authorities, the Court held there was no factual basis to treat the buyers' provision of cylinders as affecting the transaction value. The decision in Grasim Industries (post-01.07.2000) and subsequent Tribunal rulings were treated as directly applicable: where buyers (not related parties) supply packaging and there is no extra-commercial consideration, the value of such packaging is not includible in the assessable value. The Tribunal noted the Commissioner (Appeals) had also accepted this position in the appellant's earlier period. Applying these precedents and the appellant's own prior successful orders, the impugned order holding otherwise was set aside.

Impugned order set aside; appeals allowed and value of empty cylinders supplied by customers not includible in the assessable value of Liquid Sulphur Dioxide.

Final Conclusion: Following the Tribunal's prior decision in the appellant's own case and consistent coordinate-bench authorities, the value of empty cylinders supplied free by buyers is not includible in the assessable value of Liquid Sulphur Dioxide; the impugned order is set aside and the appeals are allowed.

Summary order. Special Leave Petition dismissed; delay condoned; pending applications, if any, disposed of.

Constitution of Municipalities - Specification and alteration of a larger urban area by public notification - Application of municipal laws and consequential operation of appointments, notices, taxes and rules in newly included areas - Saving of pre-existing local tax provisions after introduction of the GST regime - Challenge to rules providing for interest and penalty as ultra vires the Municipal Act

Specification and alteration of a larger urban area by public notification - Application of municipal laws and consequential operation of appointments, notices, taxes and rules in newly included areas - Village Chole forms part of the revised boundary of the larger urban area for which the Kalyan-Dombivali Municipal Corporation was constituted and therefore KDMC has jurisdiction over that area. - HELD THAT: - The State notification dated 14 May 2015 was issued under clause (a) of sub section (3) of Section 3 of the MMC Act after previous publication and consultation, and explicitly includes Village Chole within Schedule II describing the revised boundaries. Article 243Q read with Section 3(3)(a) and (b) and the definition of larger urban area in Section 2(30A) contemplate that areas specified by such notification form part of the larger urban area and are subject to the municipal corporation's laws and taxes from the date of inclusion. The notification and schedules therefore establish that Chole falls within KDMC limits and the municipal corporation has jurisdiction to assess and levy LBT in respect of that area. [Paras 6, 8, 9, 10]

The petitioner's contention that Village Chole is outside the jurisdiction of KDMC is rejected.

Saving of pre-existing local tax provisions after introduction of the GST regime - The repeal/deletion of LBT provisions by reference in Maharashtra Act No. XLII of 2017 does not preclude applicability of LBT for the relevant periods because Section 78 of that Act saves pre existing provisions and related proceedings. - HELD THAT: - Maharashtra Act No. XLII of 2017 contains a saving provision (Section 78) which preserves the operation of laws, rules, notifications, certificates, notices and related procedural matters that were in force immediately prior to the appointed day of the MGST Act insofar as they apply, for purposes including levy, assessment, appeal, recovery and related proceedings. On that statutory footing, the argument that the LBT charging provisions stand deleted so as to render assessments without jurisdiction is contrary to Section 78 and to Section 173 of the MGST Act. Consequently, the municipal corporation's assessments for the periods in question are not rendered without jurisdiction by reason of the 2017 Act. [Paras 11, 12]

The petitioner's contention that LBT provisions no longer apply by reason of Maharashtra Act No. XLII of 2017 is rejected.

Challenge to rules providing for interest and penalty as ultra vires the Municipal Act - The Court declines to sustain the challenge to levy of interest and penalty under the LBT rules and does not undertake detailed adjudication of the ultra vires plea in this petition. - HELD THAT: - The rules expressly provide for levy of interest and penalty where circumstances warrant and the petitioner has not shown that the rules were framed without any corresponding power under the MMC Act. Moreover, the petitioner had voluntarily registered and made partial payment of LBT, and seeks to challenge interest and penalty only after assessments and demands were raised. The Court therefore is not inclined to examine this contention in the writ petitions and notes that the petitioner has an alternate remedy of appeal under Section 406 of the MMC Act in which all contentions remain open. [Paras 3, 13, 14]

The challenge to levy of interest and penalty is not accepted in these petitions and is not adjudicated on merits here; petitioner may pursue statutory appeal and all contentions are kept open.

Final Conclusion: The writ petitions challenging the LBT assessment orders for Financial Years 2015-16, 2016-17 and 2017-18 and the notice dated 14 June 2023 are dismissed; the petitioner remains free to file the statutory appeal under Section 406 of the MMC Act and all contentions are left open for consideration in that forum. No costs.

Applicability of Section 197 CrPC - Previous sanction for prosecution under the Prevention of Corruption Act - Distinction between Section 19 of the PC Act and Section 197 of the CrPC - Nexus test for sanction under Section 197 - Quashing of criminal proceedings under Section 482 CrPC

Applicability of Section 197 CrPC - Public servant removable only with sanction of Government - Section 197 CrPC is not attracted in respect of the appellant who is an Assistant General Manager of a nationalised bank. - HELD THAT: - The Court held that Section 197 applies only to a judge, magistrate or a public servant who is not removable from office save by or with the sanction of the appropriate Government. A manager/official of a nationalised bank, though a "public servant" for some purposes, does not occupy a post removable only with Government sanction; earlier decisions of this Court (K. Ch. Prasad and S.K. Miglani) confirm that managers in nationalised banks cannot claim protection under Section 197. Accordingly, even assuming the appellant is a public servant, the pre-condition for applicability of Section 197 is not fulfilled and therefore no prior sanction under Section 197 was required before proceeding on the IPC charges. [Paras 46, 47, 48, 49, 50]

The appellant cannot claim protection under Section 197 CrPC and the provision is not attracted in his case.

Distinction between Section 19 of the PC Act and Section 197 of the CrPC - Nexus test for sanction under Section 197 - Previous sanction for prosecution under the Prevention of Corruption Act - Prosecution for offences under the IPC may continue notwithstanding refusal of sanction under Section 19 PC Act; Section 19 and Section 197 operate in different fields and the need for sanction under Section 197 depends on factual nexus with official duty. - HELD THAT: - The Court explained that sanctions under the PC Act (Section 19) and under the CrPC (Section 197) serve different statutory schemes and are not interchangeable. Offences punishable under the PC Act are conceptually distinct from general penal offences under the IPC; sanction under Section 19 is mandatory for offences under the PC Act, but that does not automatically preclude prosecution under the IPC. Where IPC offences are alleged, the necessity of sanction under Section 197 turns on whether the alleged acts bear a sufficient nexus to the discharge of official duty; if the statutory conditions for Section 197 are absent, the IPC prosecution can proceed. The Court rejected the appellant's submission that decline of Section 19 sanction necessarily disentitles the trial court from continuing IPC proceedings and observed that quashing under Section 482 CrPC is only appropriate where the complaint discloses no offence or is frivolous, vexatious or oppressive; merits and defences are ordinarily to be tested at trial. [Paras 56, 57, 58, 59, 60]

Proceedings on the IPC charges can be continued; decline of sanction under Section 19 PC Act does not ipso facto bar prosecution for distinct IPC offences, and the need for Section 197 sanction depends on the nexus with official duty (which is absent here as a matter of law).

Final Conclusion: The appeal is dismissed. The Court held that Section 197 CrPC does not apply to the appellant (a bank manager) and that refusal of sanction under Section 19 of the PC Act does not preclude continuation of prosecution for distinct offences under the IPC; the matter will proceed to trial on the IPC charges.

Material alteration - void negotiable instrument under Section 87 of the Negotiable Instruments Act - RBI cheque alteration guidelines (CTS 2010) and their statutory force - validity of cheque as a tender for purposes of Section 138 NI Act - agency and scope of authority under Section 27 of the Negotiable Instruments Act - quashing of criminal proceedings under Section 482 Cr.P.C.

Material alteration - void negotiable instrument under Section 87 of the Negotiable Instruments Act - RBI cheque alteration guidelines (CTS 2010) and their statutory force - validity of cheque as a tender for purposes of Section 138 NI Act - Whether the cheque in question, having apparent material alterations, was a valid negotiable instrument/tender and whether proceedings under Section 138 could be sustained. - HELD THAT: - The Court examined the cheque and found overwriting/cuttings on the payee's name and amount in words and apparent overwriting in figures. Read together, Section 87 of the NI Act and the RBI Guidelines dated 22.02.2010 (CTS 2010) - which have statutory force - permit only date-validation alterations and prohibit other changes/corrections; any material alteration not made with the consent of the drawer renders the instrument void as against a party who did not consent. The complaint did not disclose the earlier return of the cheque for material alteration nor explain how the materially altered cheque came into the complainant's possession. The complainant's plea that the altered cheque was handed over to him did not remove the statutory bar; absent an explanation that the alteration was made with the consent of the parties or to carry out their common intention, the presumption is that alteration was made subsequent to execution. Given the apparent material alterations and lack of any satisfactory explanation, the cheque could not be treated as a valid tender and proceedings under Section 138 based on that cheque could not be permitted to continue. [Paras 12, 13]

Impugned complaint, summoning order, notice of accusation and subsequent proceedings quashed insofar as they rest on the materially altered cheque.

Agency and scope of authority under Section 27 of the Negotiable Instruments Act - liability under Section 138 NI Act in proprietorship concerns - quashing of proceedings under Section 482 Cr.P.C. - Whether proceedings could be sustained against Sudha Mittal who was not the proprietor or drawer but only an authorized signatory. - HELD THAT: - The Court noted that the bank account and cheque were in the name of the proprietorship concern and that Sudha Mittal was only an authorised signatory; she was neither proprietor nor drawer. Section 27 and established authorities show that general authority to transact business or to receive/discharge debts does not, by itself, confer power to accept or indorse bills so as to bind the principal. The prosecution material did not establish that she was the drawer or proprietor or that any purported countersignature on alterations operated to validate the materially altered instrument vis-a -vis the drawer. In these circumstances continuation of criminal proceedings against her would be unsustainable. [Paras 12, 13]

Proceedings quashed as against Sudha Mittal.

Final Conclusion: The High Court, applying Section 87 of the Negotiable Instruments Act in conjunction with the RBI CTS 2010 guidelines and having regard to the absence of any satisfactory explanation for the material alterations or for the complainant's acceptance of the altered cheque, held the cheque to be void and quashed the complaint No.105-A dated 24.04.2013, the summoning order dated 24.10.2013, the notice of accusation dated 06.08.2014 and all subsequent proceedings qua all the accused, including specifically quashing the proceedings against Sudha Mittal.