TaxTMI Updates e-Newsletter
Aug 16,2024

Detention and seizure under GST - production of e-way bill before seizure - presumption of intent to evade tax where transport documents absent - curing of documentary defect by production of documents prior to seizure - administrative alternative of survey of business premises

Production of e-way bill before seizure - curing of documentary defect by production of documents prior to seizure - Whether production of the requisite E-way bill after detention but before passing the seizure order cures the defect and precludes imposition of tax and penalty. - HELD THAT: - The Court found that at the time of interception no E-way bill for invoice no. 22 was produced, but the E-way bill was submitted after issuance of show cause notice and before the seizure order was passed; no discrepancy in the produced E-way bill was pointed out by any authority. On these facts the Court held that the defect was cured by production of the E-way bill prior to seizure and, accordingly, the proceedings and the consequential tax and penalty could not be sustained. The Court distinguished precedents where either no documents at all were produced at detention or where documentary defects persisted, noting those decisions did not apply where the requisite document was produced before seizure and remained unchallenged. [Paras 10, 15]

The production of the E-way bill before the seizure order cured the documentary defect and the impugned orders imposing tax and penalty were quashed.

Detention and seizure under GST - presumption of intent to evade tax where transport documents absent - administrative alternative of survey of business premises - Whether, having detained the goods for absence of documents, the authorities were justified in drawing a presumption of intent to evade tax and proceeding to seizure instead of resorting to alternative measures such as survey. - HELD THAT: - The Court observed that the sole ground for detention was absence of the E-way bill at interception, leading the authorities to draw a presumption of intent to avoid tax. The Court noted that GST authorities possess the power to conduct a survey of the business premises after detention to verify correctness of the transaction, but the authorities chose not to exercise that option. Given that the E-way bill was produced before seizure and no discrepancy was identified, the presumption of intent could not be sustained. The Court therefore found the exercise of seizure and imposition of penalty unjustified on the facts. [Paras 16, 17]

The presumption of intent to evade tax was not sustained where the E-way bill was produced before seizure and the authorities had alternative investigatory remedies; seizure and penalty were unjustified and orders were quashed.

Final Conclusion: Writ petition allowed; impugned orders of detention, tax demand and penalty quashed as the E-way bill in respect of the disputed invoice was produced before the seizure order and no discrepancy was pointed out; any amounts deposited shall be refunded in accordance with law.

Natural justice - opportunity of personal hearing - setting aside of order for violation of natural justice - remand for fresh adjudication on merits - interim deposit condition for judicial relief

Natural justice - opportunity of personal hearing - Impugned order was passed without affording an opportunity of personal hearing to the petitioner, thereby violating principles of natural justice. - HELD THAT: - The Court reviewed the material on record and the parties' submissions and found that, although the respondents contend that notices and reminders were issued, the petitioner asserted non-receipt of the notices and non-furnishing of relevant documents. In these circumstances the Court held that the impugned order was passed without providing the petitioner an effective opportunity of personal hearing to establish its case, which amounted to a breach of natural justice. The Court concluded that it was just and necessary to provide the petitioner a chance to be heard and to have the matter adjudicated on merits and in accordance with law. [Paras 7]

Impugned order set aside on grounds of violation of natural justice; petitioner to be afforded personal hearing.

Remand for fresh adjudication on merits - interim deposit condition for judicial relief - Appropriate remedial directions including conditional remand for fresh consideration and requirement of interim deposit. - HELD THAT: - Having set aside the impugned order for lack of hearing, the Court prescribed a remedial course: the petitioner must deposit 20% of the disputed tax amount within four weeks of receipt of the order. On receipt of such deposit, the Assessing Officer is directed to fix a date for personal hearing, issue a physical notice to the petitioner, consider the petitioner's objections and pass fresh orders on merits and in accordance with law within four weeks after the hearing. The Court recorded the petitioner's consent to the deposit and accepted the respondents' position that the Court may consider the matter on such condition. [Paras 8]

Order set aside on condition of 20% deposit within four weeks; matter remanded to Assessing Officer for physical notice, personal hearing and fresh adjudication within specified timelines.

Final Conclusion: Writ petition allowed; impugned order dated 31.12.2023 quashed on grounds of violation of natural justice and remanded for fresh consideration on condition that the petitioner deposits 20% of the disputed tax for financial year 2017-2018 within four weeks, after which the Assessing Officer shall issue physical notice, hold personal hearing and pass fresh orders within four weeks.

Effect of cancellation of GST registration on liability to pay tax - Statutory effect of Section 29(3) of the GST Act - Opportunity of hearing under Section 75(4) and principles of natural justice

Effect of cancellation of GST registration on liability to pay tax - Statutory effect of Section 29(3) of the GST Act - Cancellation of GST registration w.e.f. 01.02.2020 does not extinguish liability to tax for periods prior to cancellation and does not preclude assessment under Section 73 after cancellation. - HELD THAT: - The court examined the cancellation order and the statutory language of Section 29(3) and held that cancellation under Section 29(1) does not affect the liability of the person to pay tax and other dues for any period prior to the date of cancellation, whether or not such liabilities are determined before or after cancellation. The order of cancellation, which recorded determinations based on the assessee's self-assessment, could not be treated as a bar to reopening or determining tax liabilities for the earlier period. Reliance on a decision that did not consider Section 29(3) was held inapplicable. [Paras 2]

The petitioners' contention that cancellation barred initiation of proceedings under Section 73 was rejected.

Opportunity of hearing under Section 75(4) and principles of natural justice - Impugned assessment was set aside because the statutory requirement to grant an opportunity of hearing under Section 75(4) was not complied with. - HELD THAT: - Section 75(4) mandates an opportunity of hearing where a written request is received from the person chargeable with tax or where an adverse decision is contemplated. The court found from the record and notices that no date, time or venue for personal hearing was indicated and that the portal entries and notices showed hearing as 'not applicable', demonstrating non-compliance with Section 75(4). Even if no substantive reply had been filed, the petitioners were entitled to an opportunity to justify their self-assessment for the relevant period before an adverse decision was taken. Consequently, the assessment order dated 09.01.2023 was set aside and the matter remitted to the respondent for fresh hearing and decision in accordance with law. [Paras 3, 5, 6, 7]

Impugned order set aside and matter remitted for grant of hearing as required by Section 75(4); directions issued for fresh hearing and decision within a specified timetable.

Final Conclusion: The court rejected the challenge that cancellation of GST registration extinguished prior tax liability, but set aside the assessment under Section 73 as the statutory requirement to grant an opportunity of hearing under Section 75(4) was not complied with, and remitted the matter for fresh hearing and decision in accordance with law.

Service of notice through GST portal - cancellation of registration - limitation for assessment - pre-deposit requirement - adjustment of blocked input tax credit - right to appellate remedy

Service of notice through GST portal - cancellation of registration - Validity of notices uploaded on the GST portal and consequence of the petitioner not noticing or responding to them prior to cancellation of registration - HELD THAT: - The Court found that all notices and orders were uploaded on the GST portal under "Additional Notices and Orders" and that the petitioner had not noticed or effectively pursued replies to those uploads. The petitioner's registration certificate was cancelled with effect from 11.07.2023 on the ground of discontinuance of business. The Court recorded that the petitioner had filed a reply on 05.05.2023 which was not accepted as satisfactory by the authority, leading to issuance of GST DRC-01A. The Court rejected the contention that failure of the authority to separately serve notices absolved the petitioner, placing responsibility on the petitioner for not availing the opportunities available on the portal.

Notices uploaded on the GST portal are effective; the petitioner's failure to notice or adequately pursue replies does not invalidate the proceedings and does not prevent cancellation of registration.

Limitation for assessment - Whether assessment orders for the stated years were within the period of limitation - HELD THAT: - The Court examined the temporal scope of the assessment proceedings and held that the assessment orders relating to 2018-19, 2019-20 and 2020-21 fall within the limitation period applicable to assessment, whereas the assessment order pertaining to 2021-22 is beyond the limitation period. The Court treated the distinction between these tax periods as determinative for the viability of those assessments.

Assessments for 2018-19, 2019-20 and 2020-21 are within limitation; assessment for 2021-22 is beyond limitation.

Pre-deposit requirement - Claim for waiver of the statutory pre-deposit (ten percent) in respect of the contested assessment - HELD THAT: - The petitioner sought waiver of the pre-deposit on the basis that a reply had been filed and that input tax credit was blocked, rendering the petitioner unable to deposit the pre-deposit amount. The Court did not accept the petitioner's contention, noting that the reply filed was not accepted by the authority and that issuance of DRC-01A followed for insufficiency. The Court placed responsibility on the petitioner for failing to utilize the opportunities of personal hearing or portal remedies and therefore declined to grant the waiver sought.

Request for waiver of the pre-deposit (10%) is declined.

Right to appellate remedy - adjustment of blocked input tax credit - Grant of liberty to file an appeal and direction to the authority to consider the appeal with adjustment of already blocked input tax credit - HELD THAT: - Although the Court did not accept the petitioner's contentions on merits, it granted the petitioner liberty to pursue the statutory appellate remedy. The petitioner was permitted to file an appeal before the competent authority within 30 days from receipt of the copy of the order. The Court directed the authority to consider the appeal and to take into account, by adjustment, the input tax credit that had already been blocked. This directs the authority to re-examine the matters in the appellate forum and to factor in the blocked ITC while adjudicating the appeal.

Petitioner permitted to file appeal within 30 days; the authority is directed to consider the appeal after adjusting the blocked input tax credit.

Final Conclusion: Writ petitions dismissed on merits to the extent recorded; petitioner denied waiver of pre-deposit but granted liberty to file an appeal within 30 days and directed the appellate authority to consider the appeal while adjusting the blocked input tax credit; no order as to costs.

Extension of limitation under Section 168A of the CGST Act - recommendation of the GST Council - force majeure - ultra vires - notice issuance under Section 73 of the CGST Act - stay on coercive action

Extension of limitation under Section 168A of the CGST Act - recommendation of the GST Council - force majeure - ultra vires - Validity of Notification No. 56/2023 dated 28.12.2023 extending limitation under Section 168A vis-a -vis absence of GST Council recommendation and the invocation of force majeure - HELD THAT: - The Court observed that the question whether circumstances amounting to force majeure existed and whether the conditions for invoking Section 168A were satisfied requires factual determination and directed the respondent authorities to file an affidavit addressing those circumstances. On the material before it the Court prima facie found that no recommendation of the GST Council preceded issuance of Notification No. 56/2023. The Court recorded that if the Notification is found to be ultra vires, actions taken pursuant thereto cannot be sustained. The matter of validity is therefore not finally adjudicated on merits but is remitted to the respondent authorities for factual exposition and for the Court to decide thereafter. [Paras 8, 9]

Validity of the Notification remanded for determination on affidavit; prima facie absence of GST Council recommendation noted and may render the Notification unsustainable.

Notice issuance under Section 73 of the CGST Act - stay on coercive action - Interim relief in respect of notice DRC-01 dated 08.05.2024 issued under Section 73 for the period 2019-20 - HELD THAT: - Having noted the challenge to the Notification underpinning the extended limitation, the Court granted interim protection to the petitioners by directing that no coercive action be taken against them in respect of the DRC-01 notice dated 08.05.2024 until the next returnable date. The Court made clear, however, that respondent authorities remain at liberty to pass an order under Section 73(9) of the CGST Act; any coercive steps to enforce such an order are restrained during the subsistence of this interim order. [Paras 10]

Respondents restrained from taking coercive action pursuant to the DRC-01 notice dated 08.05.2024; passing of orders under Section 73(9) permitted but enforcement by coercive measures stayed until the next date.

Final Conclusion: The Court directed issuance of notice and listed the matter for 21.08.2024; the validity of Notification No.56/2023 (including whether force majeure justified invocation of Section 168A and whether GST Council recommendation was obtained) is remitted for factual determination on affidavit, while interim protection against coercive action in respect of the DRC-01 notice dated 08.05.2024 is granted until the next hearing.

Failure to consider responses filed during inspection - adoption of inspection officer's findings without independent application of mind by the proper officer - confirmation of tax demand under Section 74 without satisfaction of its ingredients - computation of liability on differential between GSTR 2A and aggregate value of e way bills - remand for fresh adjudication subject to conditional deposit - grant of reasonable opportunity including personal hearing after receipt of reply

Failure to consider responses filed during inspection - adoption of inspection officer's findings without independent application of mind by the proper officer - Impugned assessment orders set aside insofar as the respondent did not advert to or deal with the petitioner's replies submitted during inspection and proceeded largely on the inspection officer's findings. - HELD THAT: - The orders under challenge extract the inspection report and the findings of the processing (inspection) officer, but the petitioner's statements dated 19.09.2022 and 26.10.2022 submitted during inspection are not mentioned or considered in the impugned orders. The proper officer was under an obligation to apply his own mind to the material placed on record in adjudication and not to proceed merely by reproducing the inspection officer's findings. In these circumstances the Court found it appropriate to set aside the impugned orders and direct fresh adjudication after permitting the petitioner to file the omitted replies and after granting a reasonable opportunity of hearing. [Paras 7, 8, 10]

Orders set aside and fresh adjudication directed after the petitioner files its replies and is afforded an opportunity of hearing.

Confirmation of tax demand under Section 74 without satisfaction of its ingredients - Confirmation of tax proposals under Section 74 recorded in the impugned orders despite absence of satisfaction of the statutory ingredients. - HELD THAT: - The impugned orders confirm tax proposals under Section 74 of the applicable GST enactments, whereas the Court observed that the ingredients of Section 74 were not apparent from the show cause notices or the orders. This defect in the reasoning of the orders contributed to the setting aside of the orders and the direction for fresh adjudication so that proper statutory application may be considered by the adjudicating authority. [Paras 8, 10]

Orders set aside to enable reconsideration of the applicability of Section 74 during fresh adjudication.

Computation of liability on differential between GSTR 2A and aggregate value of e way bills - Correct taxable liability for defect no.2 in assessment year 2019-20 is the difference between GSTR 2A and aggregate e way bill value (Rs. 13,62,400), not the larger figure stated in the impugned order. - HELD THAT: - On examination the Court noted that as regards defect no.2 (mismatch between purchase value in GSTR 2A and aggregate value of e way bills) the amounts shown in the orders reflect Rs. 4,01,89,368/- as per e way bills and Rs. 4,15,51,852/- as per GSTR 2A; the correct basis for any liability would be the difference between these two figures which is Rs. 13,62,400/-. The Court recorded that the petitioner had not fully replied on merits during adjudication but nevertheless corrected the computational basis for the purposes of the conditional remittance ordered by the Court. [Paras 5, 9, 10]

For defect no.2 in AY 2019-20 liability to be computed on the differential amount of Rs. 13,62,400 and the conditional deposit directed accordingly.

Remand for fresh adjudication subject to conditional deposit - grant of reasonable opportunity including personal hearing after receipt of reply - Impugned orders are set aside subject to conditions: petitioner to remit 5% of the disputed tax in respect of each head (with specified qualification for AY 2019-20 defect no.2), permitted to file replies within 15 days, and respondent to provide reasonable opportunity including personal hearing and pass fresh orders within three months after receipt of the petitioner's reply and satisfactory proof of remittance. - HELD THAT: - Balancing the petitioner's omission to press replies during adjudication and the procedural defects in the impugned orders, the Court imposed conditional terms. The petitioner is directed to remit 5% in relation to each head of demand within 15 days, with the qualification that for defect no.2 in AY 2019 20 the 5% shall be calculated on Rs. 13,62,400. Within the same 15 day period the petitioner may submit its reply to the show cause notices. Upon receipt of the reply and verification of the specified remittance, the respondent must grant a reasonable opportunity including personal hearing and pass fresh orders within three months from receipt of the reply. [Paras 9, 10, 11]

Orders set aside on specified conditional remittances; petitioner allowed to file reply and respondent directed to rehear and pass fresh orders within three months after compliance.

Final Conclusion: Writ petitions allowed in part: impugned assessment orders for AYs 2018-19, 2019-20, 2020-21 and 2021-22 are set aside on the conditions stated by the Court (conditional remittance of 5% per head with the special computation for AY 2019-20 defect no.2; filing of reply within 15 days), and the respondent is directed to afford a reasonable opportunity including personal hearing and to pass fresh orders within three months thereafter; no order as to costs.

Remand for fresh consideration - non-application of mind - speculative findings - reconsideration of confirmed tax proposals - insufficiency of supporting CA certificates for Input Tax Credit - interim conditional remittance - opportunity of personal hearing - lifting of bank attachment - protection of revenue by interim deposit

Speculative findings - non-application of mind - reconsideration of confirmed tax proposals - Confirmed tax proposals affecting trade payables, alleged excess availment of Input Tax Credit, and purported inward-supply/sales suppression were set aside for reconsideration. - HELD THAT: - The Court found that the assessing officer's conclusion on trade payables rested on an assumption that 5% of trade payables were not paid within 180 days, a conclusion characterised as entirely speculative and indicative of non-application of mind. With respect to excess Input Tax Credit, the Court noted that for supplier-wise differences exceeding the stated threshold the petitioner ought to have produced certificates from the chartered accountants of the suppliers; the petitioner did not appear to have done so. As to the discrepancy between auto-populated GSTR-2A (higher) and the profit and loss account (lower), the order imposed tax by assuming sales suppression resulting from inward-supply suppression - a conclusion the Court treated as speculative and requiring reconsideration. Two tax proposals having been dropped by the assessing officer, the Court limited reconsideration to those proposals which were confirmed. The Court emphasised that its observations were tentative and directed a fresh decision on the confirmed proposals after affording the petitioner an opportunity to be heard. [Paras 6, 8, 9]

Impugned order set aside partly and matter remanded to the assessing officer for fresh consideration of the confirmed tax proposals, with directions to afford the petitioner a reasonable opportunity of hearing and to pass a fresh order.

Interim conditional remittance - protection of revenue by interim deposit - opportunity of personal hearing - lifting of bank attachment - Interim directions requiring a deposit and procedural steps pending reconsideration were issued. - HELD THAT: - Because a substantial tax demand remained after excluding proposals deemed prima facie untenable, the Court required protection of revenue by directing the petitioner to remit a specified sum within a stipulated period as a condition for grant of relief. On receipt of the remittance, the assessing officer was directed to provide the petitioner a reasonable opportunity, including a personal hearing, and to pass a fresh order within three months. Consequent to setting aside the assessment order, any bank attachment imposed in respect of the assessment was ordered to be lifted. The Court made clear that its observations are tentative and should not influence the assessing officer on merits during the fresh assessment. [Paras 7, 8, 9]

Petitioner directed to make an interim remittance within the fixed time; upon receipt, the assessing officer to grant hearing and dispose of the matter fresh within three months; bank attachment stands lifted.

Final Conclusion: The impugned assessment order dated 17.11.2023 is set aside partly and remanded for fresh consideration of the confirmed tax proposals; interim relief is granted subject to the petitioner's remittance and the assessing officer is directed to afford hearing and pass a fresh order within three months, with the bank attachment lifted.

Quashing of assessment orders - Remand for fresh adjudication on merits and in accordance with law - Opportunity to be heard and right to file consolidated reply - Show cause notice under Section 74 of the GST enactment - Delay and laches in filing writ petitions

Quashing of assessment orders - Remand for fresh adjudication on merits and in accordance with law - Opportunity to be heard and right to file consolidated reply - Validity of the impugned assessment orders and the relief to be granted - HELD THAT: - The Court considered that the impugned assessment orders were passed following show cause notices under the GST enactment and that the petitioner had not replied to those notices due to medical treatment for a kidney ailment. Having noted the petitioner had paid portions of the demanded amounts and that reconciliation with employer certificates might affect liability, the Court exercised its writ jurisdiction to quash the impugned orders and remit the matters to the respondent for fresh adjudication. The impugned orders are to be treated as addenda to the respective show cause notices. The petitioner is directed to file a consolidated reply within 30 days and the respondent to pass fresh orders on merits after hearing the petitioner, preferably within two months. [Paras 10, 11, 12]

Impugned orders quashed and matters remitted for fresh consideration after the petitioner files a consolidated reply and is heard; impugned orders to be treated as addenda to the show cause notices.

Delay and laches in filing writ petitions - Show cause notice under Section 74 of the GST enactment - Whether the writ petitions are liable to be dismissed as time-barred on account of laches - HELD THAT: - The respondents relied on Supreme Court authorities to contend that the petitions are time-barred and hopelessly barred by laches. The Court, however, after considering the petitioner's illness, partial payments made, and the possibility of reconciliation based on employer certificates, declined to dismiss the petitions on limitation grounds and proceeded to grant relief by quashing and remitting the orders for fresh adjudication. The Court thus treated the plea of delay/laches as insufficient to deny equitable relief in the circumstances of this case. [Paras 10]

Delay and laches did not result in dismissal; the Court granted relief despite the limitation arguments and remitted the matters for fresh adjudication.

Final Conclusion: The High Court quashed the impugned assessment orders in respect of AY 2018-19 and 2019-20, treated those orders as addenda to the preceding show cause notices, directed the petitioner to file a consolidated reply within 30 days and directed the respondent to pass fresh orders on merits after hearing the petitioner, preferably within two months; the petitions were disposed of with no costs.

Quashing of assessment orders - Service of notice and failure to avail opportunity to be heard - Condonation by judicial intervention subject to compliance - Deposit as condition for grant of interim relief - Treatment of impugned orders as addendum to show cause notices - Liberty to decide on merits in absence of cooperation

Quashing of assessment orders - Service of notice and failure to avail opportunity to be heard - Impugned orders passed in ASMT 10 and DRC 01A were quashed on the ground that the petitioner did not take notice of GST DRC 01 notices and therefore did not respond. - HELD THAT: - The Court set aside the impugned orders because the petitioner had received the GST DRC 01 notices for the respective assessment years on 28.08.2023 and 21.09.2023 but failed to notice and respond to them, and subsequently failed to note the earlier orders until recovery proceedings commenced. In view of that failure to avail the opportunity afforded by the notices, the impugned orders were quashed, recording the factual basis for quashing as the petitioner's omission to respond to the notices. [Paras 1, 2]

Impugned orders quashed for failure to notice and respond to the GST DRC 01 notices.

Deposit as condition for grant of interim relief - Condonation by judicial intervention subject to compliance - Petitioner permitted to file reply within 30 days subject to depositing 10% of the disputed tax within 30 days as a condition for relief. - HELD THAT: - The Court recorded the petitioner's undertaking to deposit 10% of the disputed tax in the respective proceedings and allowed the petitioner a period of 30 days from receipt of the order to file a reply. The quashing of the impugned orders was made conditional upon this deposit and the filing of a reply within the stipulated time, thereby conditioning judicial relief on compliance by the petitioner. [Paras 3]

Petitioner granted liberty to file reply within 30 days subject to depositing 10% of the disputed tax within 30 days.

Treatment of impugned orders as addendum to show cause notices - The impugned orders shall be treated as addendum to the show cause notices which preceded the impugned DRC 01 dated 28.08.2023 and 21.09.2023. - HELD THAT: - The Court directed that the quashed orders will be regarded as addenda to the original show cause notices, thereby preserving their connection to the antecedent proceedings and enabling the respondent to proceed with adjudication in accordance with that treatment once procedural requirements are met. [Paras 4]

Impugned orders treated as addendum to the earlier show cause notices.

Liberty to decide on merits in absence of cooperation - Respondent granted liberty to pass orders on merits based on available materials if the petitioner fails to cooperate. - HELD THAT: - The Court expected cooperation from the petitioner and explicitly allowed the respondent to proceed to decide the matters on merits using the available material should the petitioner not cooperate or comply with the conditions imposed. This preserves the respondent's power to conclude the proceedings if the petitioner does not participate. [Paras 5]

Respondent has liberty to pass orders on merits based on available materials in case of non-cooperation by the petitioner.

Final Conclusion: Writ petitions disposed by quashing the impugned assessment orders for failure to respond to GST DRC 01 notices; petitioner permitted to file reply within 30 days subject to depositing 10% of the disputed tax within 30 days; the quashed orders treated as addenda to the earlier show cause notices; respondent granted liberty to decide on merits if petitioner fails to cooperate.

Violation of principles of natural justice in issuance of show cause notice - show cause notice must apprise the party determinatively of the case to be met - show cause notice must state minimum factual backdrop and nature of breach - registration obtained by means of fraud, wilful misstatement or suppression of facts - cancellation of GST registration and revocation proceedings - provisional restoration of registration subject to non-utilization of Input Tax Credit pending final proceedings

Violation of principles of natural justice in issuance of show cause notice - show cause notice must apprise the party determinatively of the case to be met - show cause notice must state minimum factual backdrop and nature of breach - registration obtained by means of fraud, wilful misstatement or suppression of facts - cancellation of GST registration and revocation proceedings - Validity of the show cause notice dated 09.11.2023 and consequent orders of cancellation and rejection of revocation application - HELD THAT: - The show cause notice relied solely on the language of Section 29(2)(e) that registration is liable to be cancelled if obtained by fraud, wilful misstatement or suppression of facts, without stating the factual background or the nature of the alleged breach. The court applied the settled principle that notice must be precise and unambiguous and must apprise the party determinatively of the case he has to meet, as explained in the cited authorities. Absent a minimum factual backdrop with sufficient accuracy and precision, the petitioner could not make an effective representation; therefore issuance of the show cause notice offended the principles of natural justice. Because the show cause notice formed the foundation of the subsequent cancellation order dated 29.11.2023 and the order rejecting revocation dated 23.02.2024, those orders could not be sustained. The court set aside the show cause notice and the consequential orders and observed that respondents may proceed afresh from an appropriate stage while complying with the requirements of notice and opportunity. [Paras 8, 9, 10, 11, 13]

Show cause notice dated 09.11.2023 and orders dated 29.11.2023 and 23.02.2024 set aside for non-compliance with principles of natural justice; respondents permitted to proceed afresh from an appropriate stage.

Provisional restoration of registration subject to non-utilization of Input Tax Credit pending final proceedings - effect of setting aside administrative order - Consequences of setting aside the show cause notice on the petitioner's registration and Input Tax Credit (ITC) - HELD THAT: - Setting aside the impugned show cause notice restores the petitioner's GST registration. However, the court imposed a qualified limitation: any unutilized Input Tax Credit shall not be permitted to be utilized until the show cause proceedings are finally determined in the fresh proceedings to be conducted by the respondents. This preserves the procedural consequence of restoration while safeguarding the revenue pending final adjudication. [Paras 14]

Registration restored by operation of setting aside the notice; petitioner not permitted to utilize unutilized ITC until finalization of the fresh show cause proceedings.

Final Conclusion: Writ petition allowed to the extent that the show cause notice dated 09.11.2023 and the consequential orders dated 29.11.2023 and 23.02.2024 are set aside for failure to state the factual basis and breach, restoring registration subject to a prohibition on utilizing unutilized Input Tax Credit until the respondents re-open and conclude proceedings in accordance with principles of natural justice.

Finality of Settlement Commission orders - scope of judicial review of Settlement Commission under Article 226 - powers of the Settlement Commission exercisable in accordance with the provisions of the Act - acceptance of affidavits under Rule 8 of the Income Tax Settlement Commission (Procedure) Rules - treatment of unexplained investments/receipts and discretionary application of provisions treating amounts as income - settlement immunity from penalty and prosecution

Finality of Settlement Commission orders - scope of judicial review of Settlement Commission under Article 226 - Whether the High Court may interfere with the Settlement Commission's order under Article 226 and, if so, on what limited grounds - HELD THAT: - The Court held that orders of the Settlement Commission are conclusive under Section 245-I and that judicial interference is narrowly circumscribed. Interference is permissible only where there is a grave procedural defect (including breach of mandatory procedural requirements or rules of natural justice), where there is no nexus between the reasons given and the decision, or where the order is contrary to the provisions of the Act or tainted by bias, fraud or malice. The Settlement Commission's exercise of power must be 'in accordance with the provisions of the Act' and its settlement orders are not to be treated as regular assessments. Consequently, ordinary errors of fact or law in the Commission's decision-making do not warrant interference unless they amount to a contravention of statutory limits or procedural fairness. [Paras 16, 17, 18, 19, 26]

The High Court will not interfere except on the narrow grounds of procedural illegality, lack of nexus between reasons and decision, contravention of the Act, or mala fide conduct; these grounds were not made out in the present challenge.

Acceptance of affidavits under Rule 8 of the Income Tax Settlement Commission (Procedure) Rules - settlement immunity from penalty and prosecution - Whether the Settlement Commission was justified in accepting the assessee's explanation of cash gifts (supported by Rule 8 affidavit) and treating the additional income offered as fair and reasonable, thereby granting immunity and refusing the Department's objections - HELD THAT: - The Commission recorded that the applicant had filed an affidavit under Rule 8 declaring receipt of cash gifts and that no incriminating or contra material was produced by the Department during search or in post-search proceedings to rebut that assertion. The Commission also noted that had such cash been declared earlier in wealth returns, the search disclosures would have been unnecessary. Given the absence of rebuttal material and the Commission's role to effect settlements 'in accordance with the Act', acceptance of the explanation 'in the spirit of settlement' furnished a plausible, reasoned basis for deeming the additional income offered as reasonable. The Court found these conclusions to have a sufficient nexus with the reasons and within the Commission's discretionary settlement remit and therefore not susceptible to interference under the limited judicial review standard. [Paras 20, 21, 25]

The Settlement Commission's acceptance of the Rule 8 affidavit and its finding that the additional income offered was fair and reasonable is sustained; the grant of immunity and related settlement terms do not warrant interference.

Treatment of unexplained investments/receipts and discretionary application of provisions treating amounts as income - powers of the Settlement Commission exercisable in accordance with the provisions of the Act - Whether the Settlement Commission wrongly refused to treat the amounts as income under provisions akin to Sections 69-69D (and thus apply higher taxation under Section 115BBE) or to direct addition on valuation of jewellery - HELD THAT: - The Court noted that the Rule 9 report and PCIT's objections did not produce material to displace the affidavit-based explanation. The Commission observed that the Department failed to show that actual consideration exceeded invoice amounts and that the PCIT had not specified which of the provisions in the group would apply or demonstrated satisfaction of the statutory conditions for invoking the higher-rate provision. Precedent recognises that treating unexplained investments/receipts as income is discretionary (the word 'may' confers discretion), requiring application to facts of each case. Given absence of contra material and lack of demonstration that statutory preconditions for invoking special penal provisions were met, the Commission's refusal to make additions or to apply Section 115BBE was within its discretionary settlement jurisdiction and did not contravene the Act. [Paras 22, 23, 24]

The Settlement Commission legitimately declined to treat the amounts as income under the specified unexplained-receipts provisions or to invoke the higher-rate provision; the Revenue's challenge on these grounds fails.

Final Conclusion: Applying the narrow limits of judicial review to settlement proceedings, the Court found no procedural illegality, lack of nexus in reasoning, or contravention of statutory provisions in the Settlement Commission's order and accordingly dismissed the petition, upholding the Settlement Commission's order.

Duty to deduct tax at source on interest component of enhanced compensation - treatment of interest on enhanced compensation as accretion to capital and part of compensation - bona fide compliance with judicial orders and official legal opinion as defence to penalty for non-deduction - Actus Curiae Neminem Gravabit

Bona fide compliance with judicial orders and official legal opinion as defence to penalty for non-deduction - duty to deduct tax at source on interest component of enhanced compensation - Whether the Land Acquisition Officer could be held liable as an assessee in default and penalized under the Income-tax law for non-deduction of tax at source on interest paid on enhanced compensation. - HELD THAT: - The Court found that at the relevant time the Land Acquisition Officer had ceased deducting TDS on interest paid on enhanced compensation pursuant to interim orders and decisions of various courts, and upon a written instruction dated 09.10.2012 from the District Revenue Officer formulated on the basis of the Additional District Attorney's legal opinion. The LAO produced those judicial orders and the departmental direction before the income-tax authorities and acted in conformity with them. The principle Actus Curiae Neminem Gravabit was held to apply: a public officer following binding court orders and the legal advice of a superior officer could not be saddled with fault for withholding TDS. In those circumstances the conduct of the LAO was bona fide and not wrongful or illegal, and imposition of liability and interest under the provisions treating a payer as an assessee in default could not be justified. The Court noted that although conflicting judicial views existed and some High Court orders were subsequently reviewed, that did not vitiate the LAO's contemporaneous reliance on the judicial orders and official legal advice. [Paras 18, 19, 20, 21, 22]

Penalty and demand orders treating the LAO as an assessee in default for non-deduction of TDS on interest paid on enhanced compensation were quashed and set aside; any amounts deposited shall be refunded with interest.

Final Conclusion: Writ petition allowed; the orders of assessment and demand dated 22.03.2016 and 31.03.2016 are quashed and set aside, and any deposited amount shall be refunded to the petitioner with interest at 6% per annum.

Notice issued to a deceased assessee - Quashing of notice issued to dead person - Duty of the Department to ensure valid service of notice - Power of the Central Board of Direct Taxes to issue administrative instructions under Section 119 - Re-issue of notice to appropriate legal representative

Notice issued to a deceased assessee - Quashing of notice issued to dead person - Duty of the Department to ensure valid service of notice - The notice dated 16.03.2024 (and consequential proceedings) issued under Section 148-A(d) and Section 148 for assessment year 2020-21 is vitiated because it was issued to a deceased assessee and is quashed. - HELD THAT: - The Court confined its consideration to the legal effect of issuance of a re-opening notice to a person who had died prior to issuance. It observed that a notice must be served on a living person to have practical effect and that attempting to serve a notice on a dead person is a futile exercise which does not advance the proceedings because the deceased cannot respond and legal heirs would have no authority unless served. In these circumstances, issuance of the impugned notice to the deceased assessee rendered the proceeding vitiated. The Court therefore quashed the impugned notice dated 16.03.2024 and set it aside, while leaving open the Department's liberty to issue an appropriate fresh notice to the proper legal representative and proceed thereafter. [Paras 5, 8, 10]

Impugned notice dated 16.03.2024 quashed and set aside for having been issued to a dead person; Department may issue a fresh notice to the appropriate legal representative.

Power of the Central Board of Direct Taxes to issue administrative instructions under Section 119 - Duty of the Department to ensure valid service of notice - Re-issue of notice to appropriate legal representative - The Court recommended that the CBDT consider issuing administrative instructions to enable recall or withdrawal of notices issued to deceased persons once the Department is notified of death. - HELD THAT: - Acknowledging that there is no express provision enabling the Authority to withdraw a notice issued to a dead person, the Court noted that the CBDT has scope under Section 119 to issue instructions for effective administration. The Court advised that, if there is no legal impediment, the CBDT should consider directing concerned authorities to recall or withdraw such notices when informed of the addressee's death, to avoid multiplicity of writ petitions and wasted exercise. This observation was made as a directed administrative recommendation and the Court requested that the order be placed before the CBDT for compliance. [Paras 6, 9, 11]

Court advised CBDT to consider issuing instructions under Section 119 to recall/withdraw notices issued to deceased persons and directed the matter be placed before the CBDT.

Final Conclusion: Writ petition allowed: impugned notice dated 16.03.2024 quashed for being issued to a deceased person; Department permitted to issue a fresh notice to the appropriate legal representative; Court has recommended that the CBDT consider issuing administrative instructions to enable recall or withdrawal of notices issued to deceased persons.

Validity of reassessment proceedings under Section 147/148 read with Section 148A - Requirement of live link between reasons disclosed in Section 148A(b) notice and the final order under Section 148A(d) - Prohibition on supplementation or improvement of reasons after issuance of notice - Test of tangible material / not mere change of opinion for reopening assessments - Characterisation of receipts as dividend and incidence of tax on distributed profits (DDT / Section 115-O) - Liability to pay tax on distributed profits rests on the declaring/distributing domestic company, not the recipient

Validity of reassessment proceedings under Section 147/148 read with Section 148A - Requirement of live link between reasons disclosed in Section 148A(b) notice and the final order under Section 148A(d) - Prohibition on supplementation or improvement of reasons after issuance of notice - Test of tangible material / not mere change of opinion for reopening assessments - Whether the initiation of reassessment proceedings for AY 2018-19 was validly founded on the reasons disclosed in the Section 148A(b) notice and whether the respondents were entitled to rely on different or additional reasoning in the Section 148A(d) order to commence reassessment. - HELD THAT: - The Court held that the validity of reopening must be judged by reference to the reasons communicated in the Section 148A(b) notice and those reasons must form a live link to the ultimate opinion to reopen; the Assessing Officer (or authority disposing of objections) cannot supplement or improve those reasons subsequently or travel beyond the disclosed reasons. Reliance upon an order in another file (the CIT(IT) order in Headstrong Consulting Singapore Pte. Ltd.) to advance a materially different foundational allegation (that the payments were dividends liable to DDT) constituted a change in the character of the foundational allegation relative to the notice. The principles in Rajesh Jhaveri/Kelvinator and subsequent High Court authorities require tangible material to justify reopening and forbid reopening based on a mere change of opinion or post-hoc reasons. Applying those principles, the impugned reassessment proceedings were not supported by the reasons disclosed in the Section 148A(b) notice and therefore the action to commence reassessment was invalid. [Paras 9, 10, 11, 16]

Impugned Section 148A(d) order and consequential notice under Section 148 were quashed as the reopening was not justified by the reasons disclosed in the Section 148A(b) notice.

Characterisation of receipts as dividend and incidence of tax on distributed profits (DDT / Section 115-O) - Liability to pay tax on distributed profits rests on the declaring/distributing domestic company, not the recipient - Whether, on the respondents' case that the payments constituted dividend, reassessment could be validly initiated against the petitioner (recipient) for AY 2018-19 on the basis that the recipient should be taxed for what the Department characterises as distributed profits. - HELD THAT: - The Court observed that, even if the respondents' allegation that the payments were in truth dividends were accepted, Section 115-O (tax on distributed profits) imposes the liability to pay tax on the domestic company that declares, distributes or pays the dividend. The petitioner was merely the recipient of the payments; it was not the entity which declared or paid any dividend. Accordingly, the asserted basis for reassessment against the petitioner (i.e., that the recipient should be treated as taxable under a DDT characterization) was legally misplaced. The Court also noted that merits of the CIT(IT)'s Section 263 order in the related Headstrong/Genpact Singapore matter were the subject of a separate appeal and could not sustain reassessment proceedings against the petitioner in the present petition. [Paras 12, 13, 14, 15, 16]

Proceedings were unsustainable against the petitioner because, under Section 115-O, the tax on distributed profits could only be levied on the company declaring or paying the dividend (GIPL), not on the recipient; consequently reassessment against the petitioner was quashed.

Final Conclusion: Writ petition allowed; the Section 148A(b) notice dated 11 March 2022, the Section 148A(d) order dated 29 March 2022 and the consequential notice under Section 148 dated 30 March 2022 are quashed. The respondents remain free to pursue other remedies permissible in law.

Condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961 - equitable and judicious exercise of discretionary power by revenue authorities - inadmissibility of hyper-technical denial where delay is short and returns filed on time - bona fide error by auditor/assesse - requirement to upload Form-10B prior to filing return

Condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961 - equitable and judicious exercise of discretionary power by revenue authorities - inadmissibility of hyper-technical denial where delay is short and returns filed on time - bona fide error by auditor/assesse - Whether the Commissioner was justified in rejecting applications to condone the delay in filing Form-10B for AY 2022-2023 where the audit report was filed within 30 days of the prescribed date and the returns were filed within the extended due date. - HELD THAT: - The petitioners are registered under Section 12A and did not upload the audit report in Form-10B within the original deadline but filed the same on or before the extended date for filing returns for AY 2022-2023. The Court held that where the delay in uploading Form-10B is at most one month and the return itself was filed within the due date, the Commissioner ought to have exercised the wide discretionary power under Section 119(2)(b) in an equitable, balancing and judicious manner rather than adopting a hyper-technical or strict approach. The Court relied on and expressed respectful agreement with the reasoning in Al Jamia Mohammediyah Education Society (Bombay High Court), which recognized that short delays caused by bona fide or inadvertent errors of the auditor or assessee do not warrant automatic denial of relief and that statutes of limitation should be construed reasonably where the legislature has provided discretion to relieve hardship. Applying these principles, the Court concluded that the Commissioner's mechanical rejection was not justified and that condonation should be granted in the circumstances of these cases. [Paras 6, 7]

Ext.P8 (orders rejecting condonation applications) quashed and the delay in filing Form-10B for AY 2022-2023 condoned.

Final Conclusion: Writ petitions allowed; orders of the Commissioner dismissing the condonation applications are quashed and the delay in filing the audit report in Form-10B for Assessment Year 2022-2023 is condoned.

Settlement Commission cannot invoke Section 154 to reopen concluded proceedings - Finality of settlement orders under Chapter XIX-A - Distinction between settlement proceedings and assessment proceedings - Rectification under Section 154 versus review/recall of settlement orders - Non-applicability of assessment Chapter XIV remedies to Chapter XIX-A - Scope of interest under Section 234B in settlement cases - Exception for fraud and misrepresentation to finality of settlement orders

Settlement Commission cannot invoke Section 154 to reopen concluded proceedings - Finality of settlement orders under Chapter XIX-A - Rectification under Section 154 versus review/recall of settlement orders - Scope of interest under Section 234B in settlement cases - Assumption of jurisdiction under Section 154 to rectify an order of the Settlement Commission is impermissible and must be decided against the Department. - HELD THAT: - The Court accepted the view in Brij Lal that proceedings before the Settlement Commission are sui generis and akin to arbitration, governed by Chapter XIX-A and not by the assessment machinery in Chapter XIV. Section 154 is part of the assessment procedure (Chapter XIV) and the Scheme of Chapter XIX-A does not contemplate invocation of Section 154 for reopening or rectifying settled matters. Sections 245C(1B) and 245C(1C) prescribe specific modes of computing additional tax in settlement proceedings and make no provision for rectification under Section 154. Section 245I renders the Settlement Commission's order final and conclusive on matters raised in the application except where fraud or misrepresentation is established, and unlike the ITAT (which has rectification power under section 254(2)), no comparable power is vested in the Settlement Commission to invoke Section 154. Although there was earlier controversy on whether the Commission could waive or reduce interest under Section 234B, and on the terminus for computation of such interest, those controversies do not justify treating Section 154 as applicable to Chapter XIX-A. For these reasons, the assumption of jurisdiction by the Assessing Officer to rectify an order of the Settlement Commission under Section 154 is unsustainable.

The order assuming jurisdiction for rectification under Section 154 is quashed and the challenge succeeds in favour of the petitioner.

Final Conclusion: The writ petition is allowed; the impugned order dated 20.11.2003 is quashed, and the Department's attempt to invoke rectification under Section 154 in respect of a Settlement Commission order is rejected.

Reopening of assessment - reassessment under Section 147 read with Section 144B - non response to notices under Section 148A(b) - opportunity to be heard - quashing and remand for fresh adjudication - conditional relief by deposit - cooperation with assessing officer

Reopening of assessment - opportunity to be heard - quashing and remand for fresh adjudication - Validity of the impugned assessment orders for the Assessment Years 2018-2019 and 2019-2020 and whether they should be quashed and remanded for fresh consideration. - HELD THAT: - The Court found that the petitioner, who alleges the partnership had ceased and business was carried on by the deponent as a sole proprietor, had been negligent in not responding to notices issued under Section 148A(b) and to consequent orders under Section 148A(d). Notwithstanding that negligence, the Court was persuaded that the petitioner deserved a fair opportunity to address the reopening of assessment under Section 147 read with Section 144B, particularly since factual questions remain (including whether substantial bank deposits were reflected in the deponent's books). In view of these considerations, the Court quashed the impugned assessment orders and remitted the matter to the first respondent for fresh adjudication on merits. [Paras 11, 12, 13]

Impugned assessment orders quashed and matter remitted to the assessing authority for fresh final orders on merits.

Conditional relief by deposit - cooperation with assessing officer - Terms on which the remand is ordered, including conditions precedent to the quashment and the timeline for fresh adjudication. - HELD THAT: - The Court conditioned the relief on compliance by the petitioner with specified terms: deposit of a specified sum for each Assessment Year and filing of a reply to the notices within a stipulated period, failing which the concession would be revoked and the writ petitions deemed dismissed. The assessing authority was directed to pass final orders on merits expeditiously, preferably within six months of receipt of the order. The petitioner was directed to cooperate and produce records if called for; failure to cooperate would permit the authority to proceed without further reference to the Court. [Paras 13]

Remand subject to conditions: deposit and filing of reply within four months, cooperation with the assessing authority, and final orders to be passed preferably within six months; failure to comply revokes the concession.

Final Conclusion: The High Court quashed the impugned assessment orders for AY 2018-2019 and AY 2019-2020 and remitted the matters to the assessing authority for fresh adjudication on merits, subject to the petitioner making the directed deposits, filing a reply within four months, cooperating with the authority, and the authority deciding the matters preferably within six months; non-compliance will result in revocation of the relief and deeming of the writ petitions to have been dismissed.

Interest income on fixed deposits - business income versus income from other sources - netting off interest income against interest expenditure - surplus funds - nexus between funds and business activity

Interest income on fixed deposits - business income versus income from other sources - nexus between funds and business activity - netting off interest income against interest expenditure - Deletion of addition made on interest income from fixed deposits and allowance of netting off against interest expenditure. - HELD THAT: - The Tribunal upheld the Commissioner (Appeals) in deleting the addition made by the Assessing Officer by recording that the assessee had not established that the fixed deposits were out of surplus funds. The assessee had substantial borrowings (term loans and overdraft facilities) and used fixed deposits as margin/security to avail banking facilities; the interest rates on borrowings were higher than interest earned on the deposits. The Assessing Officer's conclusion that interest-bearing funds were utilized for advancing interest-free loans to related parties was not corroborated. The assessee had shown that advances to related entities were for project-related commercial expediency and that borrowed funds were employed for the business. On these facts, the Tribunal found a sufficient nexus between the deposits (and the interest thereon) and the business activity; the interest earned was incidental to the business and capitalised into WIP, and therefore it was not properly chargeable as income from other sources. In consequence, netting off the interest income against the interest expenditure capitalised in inventories was held to be permissible. The Tribunal relied on the coordinate bench's decision for the earlier year and on authorities treating such interest as business income where deposits are margin/security for banking facilities used in the business. The Assessing Officer failed to rebut the factual case made by the assessee that the deposits were not surplus funds and that the interest income had direct nexus with the business.

The addition on interest income was deleted and the netting off with interest expenditure was upheld.

Final Conclusion: The Revenue's appeal is dismissed; the Tribunal affirms that interest on the fixed deposits in question was incidental to the assessee's business (not income from other sources) and may be netted against interest expenditure capitalised in WIP.

Bogus accommodation entries - exemption from tax for long term capital gain under section 10(38) - reopening assessment upon information alleging bogus transactions - reliance on Investigation Wing report without independent enquiry - proof of bona fide purchase and sale of shares through demat, registered broker and banking channels - treatment of sale proceeds as income on presumption of receipt - consistency with Tribunal and Bombay High Court precedents

Bogus accommodation entries - exemption from tax for long term capital gain under section 10(38) - reliance on Investigation Wing report without independent enquiry - proof of bona fide purchase and sale of shares through demat, registered broker and banking channels - consistency with Tribunal and Bombay High Court precedents - Validity of addition of Long Term Capital Gain as bogus and deletion of that addition by the Commissioner (Appeals). - HELD THAT: - The Tribunal upheld the Commissioner (Appeals) in deleting the addition made by the Assessing Officer which treated the declared Long Term Capital Gain as bogus. The Tribunal noted that the assessee had purchased shares in physical form, got them transferred and dematerialised them, paid for purchase and received sale consideration through banking channels, sold the shares on the stock exchange through a registered broker and produced demat statements showing entry and exit of shares. The Assessing Officer had not discredited any of the documents produced by the assessee nor conducted any independent enquiry into the transactions, having instead relied on a generalized report of the Investigation Wing. Applying the correct test and following co ordinate Tribunal decisions and the Bombay High Court decision in PCIT v. Ziauddin A Siddique, which affirmed that transactions executed through stock exchange via registered brokers, with payments through banking channels and STT paid, cannot be treated as bogus without contrary findings, the Tribunal found no infirmity in the appellate order deleting the addition. [Paras 5, 7, 8]

The deletion of the addition made by the Assessing Officer treating the Long Term Capital Gain as bogus is upheld and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal against the Commissioner (Appeals) order deleting the addition of Long Term Capital Gain (AY. 2014-15), holding that on the facts and following relevant precedents the AO's reliance on an Investigation Wing report without independent enquiry was insufficient to treat the gains as bogus.

Validity of penalty notice - initiation of penalty proceedings under section 271(1)(c) of the Income tax Act - concealment of income versus furnishing inaccurate particulars - requirement to specify the limb of clause (c) in the penalty notice - incurable defect vitiating penalty

Validity of penalty notice - requirement to specify the limb of clause (c) in the penalty notice - incurable defect vitiating penalty - Whether the penalty notice dated 29/09/2016 was legally valid when it did not specify whether penalty under section 271(1)(c) was being invoked for concealment of income or for furnishing inaccurate particulars of income, and whether the penalty imposed could be sustained. - HELD THAT: - The Tribunal found that the penalty notice issued under section 274/271(1)(c) did not indicate which limb of clause (c) was being invoked-concealment of income or furnishing of inaccurate particulars-and that no part of the pre-printed form had been struck out to show the Assessing Officer's application of mind. The absence of specification was held to be an incurable defect going to the root of the matter and rendering the notice legally invalid. The Tribunal followed earlier judicial pronouncements relied upon by the assessee, including the decisions referred to in the order, which establish that concealment and furnishing inaccurate particulars are distinct concepts and that the Assessing Officer must clearly indicate which limb is invoked when initiating penalty proceedings; failure to do so leads to inference of non-application of mind and invalidates the penalty. Having held the notice invalid, the Tribunal deleted the penalty. All other grounds of appeal were held to be academic and were not adjudicated. [Paras 10, 11]

The penalty notice was legally invalid for not specifying the limb of clause (c); the penalty imposed thereon is deleted.

Final Conclusion: The appeal is allowed; the penalty imposed under section 271(1)(c) pursuant to the notice dated 29/09/2016 is quashed as the notice was legally invalid for failure to specify whether it was for concealment or for furnishing inaccurate particulars.

Levy of late fee under Section 234E - prospective application of statutory amendment - non-applicability of Section 234E prior to 01.06.2015 - legislative insertion of clause (c) to Section 200A(1) w.e.f. 01.06.2015

Levy of late fee under Section 234E - non-applicability of Section 234E prior to 01.06.2015 - prospective application of statutory amendment - legislative insertion of clause (c) to Section 200A(1) w.e.f. 01.06.2015 - Whether late fee under Section 234E could be levied for TDS statements filed for periods prior to 01.06.2015 - HELD THAT: - The Tribunal held that the power to levy late fees under Section 234E is to be exercised only prospectively from the date the legislative scheme enabled such charging mechanism. The provisions enabling the charging mechanism were effectively given operation by the insertion of clause (c) to Section 200A(1) w.e.f. 01.06.2015, and therefore Section 234E could not be validly applied by the Department to TDS statements filed prior to that date. The Tribunal noted that a settled line of decisions has reached the same conclusion, including Fatheraj Singhvi v. Union of India and coordinate Tribunal authorities, and accordingly concluded that levies of late fee made before 01.06.2015 were beyond the Department's power and were arbitrary and void ab initio. Consequently, the Assessing Officer was directed to delete the late fee charges for the contested periods. [Paras 3, 4, 5]

Late fee under Section 234E cannot be levied for defaults occurring prior to 01.06.2015; the late fees levied for the specified periods are deleted and the appeals allowed.

Final Conclusion: All appeals are allowed; late fee charges under Section 234E imposed for the stated periods prior to 01.06.2015 are held void and are directed to be deleted by the Assessing Officer.

Foreign tax credit - relief under section 90 of the Income-tax Act - application of Article 23 of the India-Netherlands DTAA - late filing of Form 67 as a procedural requirement - avoidance of double taxation - interest under sections 234B and 234C

Foreign tax credit - relief under section 90 of the Income-tax Act - application of Article 23 of the India-Netherlands DTAA - late filing of Form 67 as a procedural requirement - avoidance of double taxation - Entitlement to relief for taxes paid in Netherlands claimed in revised return under section 90 read with Article 23 of the DTAA - HELD THAT: - The Tribunal found that the assessee, a resident and ordinarily resident for AY 2019-20, had declared salary earned in Netherlands and paid tax thereon, and that the revised return (filed 09.06.2020) and Form 67 were furnished within the extended period applicable to filing. The Assessing Officer and CIT(A) did not dispute that salary was earned abroad or that foreign tax was paid. The Tribunal held that late filing of Form 67 could not defeat the substantive entitlement to relief under section 90 read with Article 23 of the India-Netherlands DTAA and that denial of treaty relief on the ground of belated procedural compliance was not justified. The Tribunal emphasised that the authorities ought to have taken into account the substantive facts and payment of tax abroad to avoid double taxation. [Paras 7, 8]

Claim for relief under section 90 read with Article 23 of the India-Netherlands DTAA allowed and the denial by the AO and CIT(A) set aside

Interest under sections 234B and 234C - consequential relief on interest consequent to allowance of treaty credit - Consequential levy of interest under sections 234B and 234C following denial of relief - HELD THAT: - The CIT(A) had confirmed demand including interest under sections 234B and 234C as a consequence of denying the foreign tax credit. Since the Tribunal held that the assessee was entitled to treaty relief and that the denial was incorrect, the consequential levy of interest could not stand. The Tribunal allowed the appeal, thereby negating the basis for the interest charges which arose from the disallowance of the treaty credit. [Paras 7, 8]

Levy of interest under sections 234B and 234C set aside as consequential to the successful claim of treaty relief

Final Conclusion: The appeal is allowed: the assessee's claim for relief under section 90 read with Article 23 of the India-Netherlands DTAA is upheld on the facts (Form 67 and revised return being within the extended filing period), and the consequential interest under sections 234B and 234C is set aside.

Unexplained cash credit under Section 68 - Long term capital gain determination under Section 50C - Characterisation of land as agricultural or non-agricultural for capital gains - Undervaluation/addition on receipt of property under Section 56(2)(vii)(b)(ii) - Remand for fresh consideration and verification of evidence - Opportunity of hearing and principles of natural justice

Unexplained cash credit under Section 68 - Remand for fresh consideration and verification of evidence - Opportunity of hearing and principles of natural justice - Addition in respect of cash deposits aggregating to Rs. 3,60,400/- made as unexplained cash credit under Section 68 remanded for verification - HELD THAT: - Tribunal observed that complete bank statements and related documentary evidence were not before the Assessing Officer or the Commissioner (Appeals) for proper adjudication of the claim that the cash deposits were out of agricultural sale proceeds or personal savings. Given the absence of the full set of bank records and the need to examine evidence produced during assessment, appellate and tribunal proceedings, the Tribunal did not decide the substantive question on merits but directed verification of the bank records and other evidence by the Assessing Officer. The assessee must be afforded an opportunity of hearing and the issue is to be decided afresh as per the Income Tax statute after taking cognisance of documents filed. [Paras 7]

Remanded to the Assessing Officer for verification and fresh adjudication with opportunity of hearing

Long term capital gain determination under Section 50C - Characterisation of land as agricultural or non-agricultural for capital gains - Remand for fresh consideration and verification of evidence - Addition of long term capital gain under Section 50C on account of sale of land remanded for verification whether the land was agricultural in nature - HELD THAT: - The deed of sale of the land was produced before the Tribunal at the hearing and the question whether the land sold was agricultural or non-agricultural is material to the applicability of the provisions invoked by the Assessing Officer. The Tribunal found that this factual and legal question requires verification in the light of the documents now produced and therefore declined to decide the matter on merits. The matter is to be examined by the Assessing Officer in accordance with the Income Tax statute, taking into account the sale deed and other records, and the assessee must be heard. [Paras 7]

Remanded to the Assessing Officer for verification and fresh adjudication with opportunity of hearing

Undervaluation/addition on receipt of property under Section 56(2)(vii)(b)(ii) - Remand for fresh consideration and verification of evidence - Addition under Section 56(2)(vii)(b)(ii) in respect of alleged undervaluation of property purchased remanded for verification - HELD THAT: - The Tribunal noted that the Assessing Officer and the Commissioner (Appeals) had not finally resolved the matter in the absence of complete consideration of evidence filed by the assessee during assessment and appellate proceedings. As the valuation and surrounding facts require scrutiny and verification, the Tribunal directed that the Assessing Officer re-adjudicate the issue after taking cognisance of the documents placed on record and afford the assessee an opportunity of hearing, applying the relevant provisions of the Income Tax Act. [Paras 7]

Remanded to the Assessing Officer for verification and fresh adjudication with opportunity of hearing

Final Conclusion: All three substantive issues raised by the assessee - unexplained cash deposits under Section 68, long term capital gain under Section 50C (including whether the land was agricultural), and addition under Section 56(2)(vii)(b)(ii) for alleged undervaluation - are remanded to the Assessing Officer for fresh verification and adjudication in accordance with the Income Tax statute; the assessee shall be given opportunity of hearing. Appeal is partly allowed for statistical purposes.

Penalty for non-compliance of notice under section 142(1) - separate penalty for each default under section 272A(1)(d) - service of notice by electronic mail - requirement of proof of service - willful and intentional default as prerequisite for penalty - invalidity of consolidated penalty order

Separate penalty for each default under section 272A(1)(d) - invalidity of consolidated penalty order - Legality of a single consolidated penalty order for two separate failures to comply with notices under section 142(1). - HELD THAT: - The Tribunal examined the penalty order dated 03.08.2021 which imposed a consolidated penalty of Rs. 20,000 for two separate non-compliances of notices issued on 01.08.2019 and 23.09.2019. The Tribunal applied the statutory prescription that penalty is leviable for each default and must be considered separately, and therefore concluded that separate penalty proceedings ought to have been initiated for each distinct failure. A consolidated penalty order covering two separate defaults does not meet the statutory requirement and is legally invalid. The Tribunal accordingly set aside the consolidated order. [Paras 9, 10, 11]

Consolidated penalty order for two defaults is legally invalid and is deleted.

Penalty for non-compliance of notice under section 142(1) - service of notice by electronic mail - requirement of proof of service - willful and intentional default as prerequisite for penalty - Whether penalty for non-compliance could be sustained in absence of proof of service of the section 142(1) notices and absence of proof of willful default. - HELD THAT: - The Tribunal observed from the order-sheet downloaded from the departmental portal that although notices were recorded as issued on the two dates, the service column was blank, leaving it unclear whether the notices were ever served on the assessee. In these circumstances the Tribunal held that the requisite proof of service was lacking and, consequently, willful and intentional default by the assessee could not be established. As the imposition of penalty under the provision presupposes a failure by the person served, absence of evidence of service and of willfulness defeats the penalty; therefore the penalty could not be sustained. [Paras 3, 4, 8, 10]

Penalty cannot be sustained in absence of proof of service and willful default; penalty deleted.

Final Conclusion: The Tribunal allowed the appeal, holding that the consolidated penalty for two separate alleged defaults was legally invalid and, independently, that absence of proof of service of the notices meant willful default was not established; the penalty was therefore deleted.

Application of section 43CA where part of consideration received by account payee cheque before agreement date (sub clauses (3) and (4)) - treatment of payment on surrender/cancellation as interest for TDS purposes and the requirement of a debtor creditor relationship under the definition of interest - operation of section 40(a)(ia) for disallowance where tax is not deducted at source

Application of section 43CA where part of consideration received by account payee cheque before agreement date (sub clauses (3) and (4)) - Deletion of addition made under section 43CA in respect of certain flats where part of consideration was received by account payee cheque pursuant to the agreement prior to registration - HELD THAT: - The Tribunal examined sub clauses (3) and (4) of section 43CA and the documentary evidence showing that advances by account payee cheque were received as per the agreements in respect of three flats. Those provisions permit the value assessable for stamp duty on the date of the agreement to be taken where part of the consideration was received by account payee cheque on or before the agreement date. On the facts, since advances were received by cheque in terms of the agreements and the sale deeds were thereafter executed, the Tribunal found that the agreement value (with such cheque advances) falls within the ambit of sub clauses (3) and (4) and, consequently, no addition under section 43CA was warranted for those flats. The Tribunal accordingly set aside the CIT(A)'s finding sustaining the addition of Rs. 14,70,250 and directed deletion by the Assessing Officer. [Paras 13, 14]

Addition of Rs. 14,70,250 under section 43CA deleted; issue allowed.

Treatment of payment on surrender/cancellation as interest for TDS purposes and the requirement of a debtor creditor relationship under the definition of interest - operation of section 40(a)(ia) for disallowance where tax is not deducted at source - Deletion of addition under section 40(a)(ia) in respect of amount paid on surrender of rights, held to be compensation and not interest attracting TDS obligation - HELD THAT: - The Tribunal followed the decision of the Hon'ble Kerala High Court in Beacon Projects (P.) Ltd. v. CIT, which held that payments made on cancellation/surrender (refunds and compensation) do not qualify as 'interest' under section 2(28A) unless there is a debtor creditor relationship or payment in discharge of a pre existing obligation. Applying that principle to the facts, the Tribunal found no debtor creditor relationship and accepted that the amount paid to Dipps Hospitality Pvt. Ltd. was compensation on surrender of rights rather than interest. Consequently, there was no obligation on the assessee to deduct tax at source and section 40(a)(ia) could not be invoked to disallow the expenditure. The CIT(A)'s sustainment of the addition was set aside and the Assessing Officer directed to delete the disallowance. [Paras 20, 21, 22]

Addition of Rs. 9,27,000 under section 40(a)(ia) deleted; issue allowed.

Final Conclusion: The Tribunal allowed the appeal for Assessment Year 2014-15, deleting the additions made under section 43CA (Rs. 14,70,250) and under section 40(a)(ia) (Rs. 9,27,000), and directed the Assessing Officer to give effect to these deletions.

Summary order. Special Leave Petition dismissed; delay of 87 days condoned; pending applications, if any, disposed of.

Condonation of delay - Review petition - Error apparent on the face of the record - Reconsideration of order - Listing in open court

Condonation of delay - Application for condonation of delay - HELD THAT: - The Court considered the application seeking condonation of delay in filing the review petitions and exercised its discretion to condone the delay. This was a preliminary procedural determination permitting the review petitions to be taken up on merits.

Delay in filing the review petitions is condoned.

Listing in open court - Application for listing the review petitions in open court - HELD THAT: - The Court examined the request to list the review petitions for hearing in open court and rejected that application. The order records a specific rejection of the prayer for open-court listing, separate from the merits determination of the review petitions.

Application for listing the review petitions in open court is rejected.

Review petition - Error apparent on the face of the record - Reconsideration of order - Merits of the review petitions challenging the impugned order - HELD THAT: - The Court examined the review petitions together with the impugned order and annexed papers and found no error apparent on the face of the record or any merit warranting reconsideration. Having applied the standard for admission of review petitions, the Court concluded that the grounds advanced did not disclose any patent illegality or mistake justifying review, and therefore no interference with the earlier order was called for.

Review petitions are dismissed for lack of merit; no reconsideration of the impugned order is warranted.

Final Conclusion: The Court condoned the delay, refused the request to list the review petitions in open court, found no error apparent on the face of the record, and dismissed the review petitions; pending applications, if any, stand disposed of.

Catch-all controls - SCOMET list - dual-use items - export control regime - civil type-certification / type-rated certificate - Exports and Imports shall be 'Free' except when regulated - rationality in export regulation

Catch-all controls - SCOMET list - dual-use items - civil type-certification / type-rated certificate - Validity of DGFT communication invoking Catch all provisions (Para 10.05 FTP, 2023) and directing SCOMET authorization for the subject exports - HELD THAT: - The Court examined the DGFT letter invoking Para 10.05 of the FTP (Catch all Controls) which directed the petitioner to obtain SCOMET authorization before export. A DRDO on site physical inspection and the type rated certificates from civil aviation authorities were placed on record. Appendix 3 / Clause 8A901.1.a of the SCOMET framework exempts aero gas turbine engines certified by civil aviation authorities and having a type rated certificate from SCOMET control. DRDO's findings concluded that the engines and parts were for civil application and do not fall within the restrictive SCOMET entries, subject to verification by civil type certification documents and end use assurances. The petitioner's submission of end user certificates and the DGCA type certificates corroborated the civil nature of the goods. The Court held that the mere possibility of dual use does not, without rational evidence of diversion risk, justify overriding the statutory exemption or treating certified civil aero engines as SCOMET items. Applying the statutory scheme and the DRDO/DGCA material, the impugned communication could not be sustained insofar as it sought to prevent export of the goods that were shown to be civil and within the FTP exemption. [Paras 15, 16, 17]

Impugned DGFT communication directing SCOMET authorization for the subject consignments quashed; exports permitted insofar as the goods are civil and fall within the exemption under Appendix 3 / 8A901.1.a.

Final Conclusion: The writ petition is allowed; the DGFT letter invoking Catch all controls in respect of the subject shipments is quashed and the petitioner is entitled to proceed with export of the consignments shown to be civil in nature in accordance with the FTP and the DRDO/DGCA findings.

Admissibility of electronic evidence under section 138C of the Customs Act pari materia to Section 65B of the Evidence Act - Requirement of certificate by a responsible person for computer printouts - Binding effect of Board's circular on valuation of second hand machinery and acceptance of Chartered Engineer's inspection/appraisement reports - Finality of value determined under CVR 2007 pursuant to an Order-in-Original based on accepted inspection/valuation report - Inadmissibility of valuation based solely on verbal statements or unverified proforma invoices

Admissibility of electronic evidence under section 138C of the Customs Act pari materia to Section 65B of the Evidence Act - Requirement of certificate by a responsible person for computer printouts - Whether computer printouts and electronic data recovered during search were admissible in evidence in the absence of the certificate mandated by section 138C(4) of the Customs Act - HELD THAT: - The Tribunal applied the binding pronouncements of the Supreme Court on electronic evidence and held that section 138C of the Customs Act is pari materia to Section 65B of the Evidence Act; consequently a written certificate by a responsible person as envisaged by section 138C(4) is a condition precedent to admissibility of computer printouts and other electronic records. Oral proof or uncertified printouts cannot substitute the statutory certificate. The impugned order relied upon printouts from electronic devices recovered during search without the required certificate; that lack of compliance rendered such electronic material inadmissible and fatally undermined the department's reliance on that evidence. [Paras 9, 10, 11, 12, 13]

Electronic records admitted through uncertified printouts are inadmissible under section 138C; the portions of the order relying on such evidence are set aside.

Binding effect of Board's circular on valuation of second hand machinery and acceptance of Chartered Engineer's inspection/appraisement reports - Finality of value determined under CVR 2007 pursuant to an Order-in-Original based on accepted inspection/valuation report - Whether the department could re open and substitute the value already accepted at the time of import based on an inspection/appraisement certificate from a Chartered Engineer empanelled under the Board's circular - HELD THAT: - The Tribunal observed that Board Circular No.25/2015 provides a recognized, uniform procedure for valuation of second hand machinery, permitting reliance on inspection/appraisement reports by Chartered Engineers. Where assessment was made at import by applying that procedure and the CE's depreciated value was accepted by the department, the SCN did not challenge the CE report nor prove it conclusively in the adjudication. Two conflicting values cannot legally co exist for the same goods after an Order in Original; the department cannot discard an earlier accepted CE certificate and re value without confronting and disproving that certificate by proper procedure. Absent a stated reason in the impugned order for ignoring the CE's certificate, the department's revaluation was impermissible. [Paras 5, 6, 14]

Value determined and accepted at import pursuant to the Board's circular and the CE's inspection/valuation cannot be disregarded later without challenging and disproving that inspection report; the department's revaluation is quashed.

Inadmissibility of valuation based solely on verbal statements or unverified proforma invoices - Whether values adopted by the department based solely on verbal statements and unverified proforma invoices/quotations were sustainable - HELD THAT: - The Tribunal noted that in two of the six cases the department fixed values based on verbal statements recorded in panchanama/statements, and in others relied on proforma invoices and printouts without independent verification at addresses or corroboration. Such procedures are neither recognised under the Customs Act nor the CVR 2007, and the lacunae in verification render the evidentiary value of those documents doubtful. Hence valuations founded on uncorroborated verbal admissions or unverified proforma invoices cannot sustain a demand. [Paras 7, 8, 14]

Values fixed solely on verbal statements or unverified proforma invoices are inadmissible; such re valuation is quashed.

Final Conclusion: The Tribunal set aside the impugned order in its entirety: the department failed to prove undervaluation as the CE inspection/valuation accepted at import was not successfully challenged, electronic evidence was inadmissible for want of the statutory certificate, and values based on unverified verbal admissions/proforma invoices were unsustainable; consequential demands and penalties accordingly do not survive.

Moratorium under Section 14(1)(d) of the IBC - occupy or be in possession for purposes of Section 14(1)(d) - distinction between right to operate/use and ownership/title - rights of secured creditor to enforce security under SARFAESI Act

Moratorium under Section 14(1)(d) of the IBC - rights of secured creditor to enforce security under SARFAESI Act - EoI dated 25.04.2022 issued by Respondent No.1 for appointment of a new operation and maintenance contractor is not barred by Section 14(1)(d) of the IBC. - HELD THAT: - The Tribunal accepted the Adjudicating Authority's conclusion that the impugned EoI does not amount to prohibited recovery of property under Section 14(1)(d). The decision rests on the character of the measures taken by the secured lender in enforcing its security against the borrower (Respondent No.2) and the contractual allocation of ownership and operational rights. The Facility was hypothecated and Respondent No.1 initiated action under the SARFAESI Act upon default by Respondent No.2; appointment of a new operator by the secured creditor in furtherance of enforcing its security cannot be equated to recovery of property from a corporate debtor protected by the moratorium where the corporate debtor is not shown to be in occupation or possession of the secured assets as owner or lessor. [Paras 19, 21]

EoI is not in contravention of Section 14(1)(d) and was correctly held non-interferable by the Adjudicating Authority.

Occupy or be in possession for purposes of Section 14(1)(d) - distinction between right to operate/use and ownership/title - The Corporate Debtor is not in "occupation" or "possession" of the Facility for the purposes of Section 14(1)(d) of the IBC despite being the appointed operator. - HELD THAT: - The Tribunal analysed the Facility Agreement and its amendments which grant the Corporate Debtor only the right to use, operate and maintain the Facility while expressly preserving ownership in Respondent No.2. Clauses reproduced (including clauses equivalent to 2.1 and 2.2(d)) establish that the Corporate Debtor has a contractual operational right but no ownership interest. Merely being the operating and maintenance contractor does not amount to occupation or possession in the sense contemplated by Section 14(1)(d); the Facility continues to be owned and in the possession/occupation of Respondent No.2, and therefore the moratorium protection does not preclude the secured creditor from proceeding to appoint a new operator or enforce its security. [Paras 17, 18, 19]

Corporate Debtor's operational role does not constitute occupation/possession under Section 14(1)(d); therefore moratorium protection does not apply to restrain Respondent No.1's measures.

Final Conclusion: The Adjudicating Authority correctly rejected the application challenging the EoI; the appeal is dismissed with no order as to costs.

Forfeiture of property - Notice under Section 6 of SAFEMA - Burden of proof under Section 8 of SAFEMA - Illegally acquired property - Nexus or link between detenue's income and property - Principles of natural justice - Tenancy rights and effect of forfeiture - Effect of orders under TADA on SAFEMA proceedings

Effect of orders under TADA on SAFEMA proceedings - Forfeiture of property - Applicability of TADA orders and Amina Ahmed Dossa precedent to challenge forfeiture under SAFEMA - HELD THAT: - The Tribunal held that the Apex Court decision in Amina Ahmed Dossa concerned Section 8 of the TADA Act and the applicability of certain CrPC provisions to TADA attachments, and therefore is distinguishable from SAFEMA which has a different statutory scheme. Forfeiture under TADA is governed by TADA provisions and attachments/orders under TADA do not operate to nullify or preclude proceedings under SAFEMA; orders or suits pending under other regimes have no automatic bearing on SAFEMA proceedings. Consequently, the argument that TADA proceedings or related appellate decisions entitled appellants to set aside SAFEMA forfeiture was rejected.

TADA orders and the Amina Ahmed Dossa decision do not invalidate or preclude forfeiture proceedings under SAFEMA; the contention is rejected.

Notice under Section 6 of SAFEMA - Burden of proof under Section 8 of SAFEMA - Nexus or link between detenue's income and property - Illegally acquired property - Whether the Competent Authority was required to establish a link/nexus between the detenue's income and the property before issuing a notice under Section 6 - HELD THAT: - Relying on precedents including Aslam Mohammed Merchants and subsequent Supreme Court decisions, the Tribunal held that Section 6 requires the competent authority to have a reason to believe (to be recorded) that properties are illegally acquired, and Section 8 places the burden on the person served to prove that the property is not illegally acquired. The statutory scheme does not mandate that the competent authority must, as a precondition to issuing a Section 6 notice, demonstrate a direct monetary nexus between the detenue's funds and the specific property; to impose such a requirement would render Section 8 otiose and frustrate the legislative purpose of reaching properties held for or on behalf of detenu/convict. The Tribunal noted that in cases involving remote relations a further indication of link may be necessary, but no general pre-issue nexus requirement exists.

No pre-issuance requirement to establish a direct nexus between the detenue's income and the property; contention dismissed.

Principles of natural justice - Allegation that principles of natural justice were violated because proceedings were taken up/passed by different officers and final hearing was brief - HELD THAT: - The Tribunal found the written contentions insufficient to establish breach of natural justice. Proceedings being taken up by the authority on the date of hearing and the order being passed by the same Competent Authority who conducted the hearing did not, on the material placed, demonstrate violation of the right to be heard. The appellants' assertion of a brief hearing without corroborative proof did not warrant interference.

No violation of principles of natural justice shown; contention rejected.

Forfeiture of property - Illegally acquired property - Tenancy rights and effect of forfeiture - Whether Flat No. 604, Bagh-e-Rehmat (Abida Mohd. Dossa) was rightly forfeited - HELD THAT: - The Tribunal accepted the appellant's evidence that the flat was acquired in her favour pursuant to a consent decree regarding mehr dated 16.8.1983, approximately ten years prior to the detenue's detention, and that she had disclosed the source of acquisition. The Tribunal observed that forfeiture in such circumstances would nullify a prior judicial decree and, absent evidence of collusion or that the decree was a device to conceal detenu's property, interference was warranted.

Forfeiture of Flat No. 604 set aside; appeal allowed in respect of this property.

Forfeiture of property - Tenancy rights and effect of forfeiture - Illegally acquired property - Whether Room No. 2B and Flat No. 12, Zaveri Mansion (Mohd. Yaseen Mohd. Dossa & Anr.) were rightly forfeited - HELD THAT: - The Tribunal found that appellants claimed tenancy but produced rent agreements that, on their terms, demonstrated ownership-like rights and the appellants failed to satisfactorily disclose sources of consideration or demonstrate absence of premium/pagdi. Given the possibility of owner-tenant collusion and the statutory scheme which targets properties effectively held for detenu, the appellants' evidence was held inadequate to rebut the presumption.

Forfeiture upheld; appeals dismissed in respect of these properties.

Forfeiture of property - Tenancy rights and effect of forfeiture - Illegally acquired property - Whether Flat No. 611-C, Meena Apartment and Shop No.1, Ruksana Palace (Arafat Haroon Merchant) were rightly forfeited - HELD THAT: - The appellant asserted tenancy and various claimed sources (gifts, FEIS remittance, loan) but failed to produce supporting documentary evidence such as tax returns corroborating such receipts or loan agreements. FEIS entries and unsubstantiated claims were insufficient proof of legitimate source. The shop being on rent, if genuinely a tenancy without premium, would not be affected, but the record did not support such claim.

Forfeiture upheld; appeal dismissed in respect of these properties.

Forfeiture of property - Illegally acquired property - Tenancy rights and effect of forfeiture - Whether Shop No. 1/18, Green House (Tabrez Mohd. Dossa) was rightly forfeited - HELD THAT: - The appellant claimed prior business income and savings but failed to produce documentary evidence to substantiate sources (bank records, income tax returns, documents for equipment purchase or FEIS receipts). The absence of proof to discharge the burden under Section 8 led the Tribunal to sustain the forfeiture.

Forfeiture upheld; appeal dismissed in respect of this property.

Forfeiture of property - Illegally acquired property - Whether Gausia House, Narayan Dhuru Street (Tabrez Mohd. Dossa & Ors.) was rightly forfeited - HELD THAT: - Although appellants asserted acquisition by conveyance and gifts and claimed shares reflected in income tax returns, they failed to produce corroborative documents (conveyance proof, gift deeds) to substantiate the asserted sources or title. The Tribunal found the material inadequate to rebut that the property was an illegally acquired property traceable to the detenu.

Forfeiture upheld; appeal dismissed in respect of this property.

Forfeiture of property - Tenancy rights and effect of forfeiture - Illegally acquired property - Whether Rooms No.1-4, Machiswala Building (Shahnawaz M. Dossa & Ors.) were rightly forfeited - HELD THAT: - Appellants contended the trust ownership and payment of compensation to Municipal Corporation leading to tenancy rights, and relied on bank statements and tax returns to show loans and sources. However, bank statements lacked identification of loan sources and loan agreements were not produced; appellants primarily claimed tenancy without establishing how they were adversely affected by forfeiture. The evidence was insufficient to discharge the burden under the Act.

Forfeiture upheld; appeal dismissed in respect of these properties.

Final Conclusion: The Tribunal rejected the challenges to the competency of SAFEMA proceedings, held that no pre-issuance nexus requirement exists between detenu's income and the property, and found no breach of natural justice. On facts, the forfeiture of Flat No. 604 (Abida Mohd. Dossa) was set aside, while the forfeiture orders as to the other properties contested in the batch of appeals were upheld and those appeals dismissed.

Grant of bail during pendency of trial - interim bail made absolute - continuation of bail on consideration of facts and circumstances - offences under the Prevention of Money Laundering Act - concurrent consideration of factual and legal issues after interim relief

Grant of bail during pendency of trial - interim bail made absolute - continuation of bail on consideration of facts and circumstances - Petitioners entitled to continue on bail during the pendency of the trial and earlier interim bail orders are made absolute. - HELD THAT: - The Court recorded that interim bail had earlier been granted on 17.05.2024 and 08.07.2024 after prima facie satisfaction that the petitioners had made out a case for enlargement on interim bail. Subsequent hearing on factual and legal issues did not displace that satisfaction; after further consideration of the relevant facts and circumstances and hearing learned counsel for the parties, the Court was satisfied that the petitioners deserve to continue on bail during the trial. Consequently, the earlier interim bail orders were converted into final orders of bail for the pendency of the trial and the special leave petitions were disposed of. [Paras 3, 4, 5, 6]

Interim bail granted on 17.05.2024 and 08.07.2024 is made absolute and petitioners shall continue on bail during the pendency of the trial; special leave petitions disposed of.

Final Conclusion: The Supreme Court confirmed continuation of bail granted earlier and made the interim orders absolute after hearing parties; the special leave petitions stand disposed of and all pending applications are also disposed.

Attachment of property - discharge of accused - Prevention of Money-laundering Act, 2002 - mootness / academic decision - revival of proceedings - interim relief - leave to challenge

Attachment of property - discharge of accused - mootness / academic decision - leave to challenge - Whether the Special Leave Petitions challenging the order of attachment should be kept pending where the accused have been discharged by the Special Court - HELD THAT: - The Court recorded the petitioners' contention that the order of attachment made under the PMLA no longer survives in view of the Special Court's order discharging the accused, and observed that if the attachment indeed ceases to operate, continued adjudication of writ petitions challenging that order would serve no purpose. The Court disposed of the Special Leave Petitions on that basis without adjudicating the respondent's contrary contention that the order of attachment continues to operate. The Court expressly left open the remedy that, if the order of discharge is set aside in the pending criminal revision proceedings and the order of attachment is thereby revived, the petitioners may either apply for revival of these SLPs or challenge the order of attachment on merits.

SLPs disposed of as academic/moot on the basis that the order of attachment is alleged to have ceased to operate; no final adjudication on whether the attachment survives; liberty granted to revive or otherwise challenge if the discharge is set aside.

Interim relief - revival of proceedings - rights and contentions reserved - Disposition of Special Leave Petitions arising from revision petitions where no interim relief has been operating and substantive hearing is pending in the High Court - HELD THAT: - The Court noted that revision petitions filed by the Directorate of Enforcement challenged orders discharging accused and that, despite issuance of notice, no interim relief had been in operation for several years. The Court was informed that the revision petitions are now listed for hearing. In the circumstances, the SLPs were disposed of as no useful purpose would be served by keeping them pending in this Court. The Court kept all rights and contentions open in the pending revision petitions in the High Court.

SLPs disposed of; no interim relief granted; rights and contentions left open in the pending revision petitions before the High Court.

Final Conclusion: The Special Leave Petitions were disposed of as academic or unnecessary to retain in this Court given the alleged cessation of the attachment and the pendency of revision proceedings; no final determination was made on whether the attachment survives the discharge, and parties were granted liberty and their rights reserved to seek appropriate relief in the pending revision petitions or to revive proceedings if circumstances change.

Maintainability of a complaint under Section 156(3) Cr.P.C. - liberty to initiate independent proceedings - no authoritative expression of opinion by this Court on maintainability - judicial determination by the court of competent jurisdiction - liberty of aggrieved party to avail appropriate remedies

Maintainability of a complaint under Section 156(3) Cr.P.C. - no authoritative expression of opinion by this Court on maintainability - judicial determination by the court of competent jurisdiction - Para 15 of the order dated 12.02.2024 shall not be construed as holding that a complaint under Section 156(3) Cr.P.C. is maintainable at the instance of the Directorate of Enforcement (ED); the question of maintainability is to be decided by the court of competent jurisdiction in accordance with law. - HELD THAT: - The review is allowed to remove any impression that this Court had authoritatively decided the maintainability of complaints filed by ED under Section 156(3) Cr.P.C. The Court has clarified that it has not expressed any opinion on that question and that any such issue must be determined independently by the judicial forum vested with jurisdiction. This modification is made to prevent prejudice to the review-petitioners and to preserve the litigating rights of all parties to contest maintainability before the appropriate court. [Paras 1, 6]

Para 15 is modified/clarified: no holding on maintainability; competent court to decide the question.

Liberty to initiate independent proceedings - liberty of aggrieved party to avail appropriate remedies - The parties are at liberty to initiate or oppose appropriate proceedings and to seek available remedies in accordance with law. - HELD THAT: - While clarifying that no view has been taken on maintainability, the Court confirmed that the ED and the aggrieved parties retain their respective procedural rights. ED may initiate independent proceedings as permissible under law, and the aggrieved parties remain free to contest maintainability or any adverse orders. This preserves the procedural avenues without prejudging substantive questions. [Paras 7, 8, 9]

Liberty granted to the parties to pursue or oppose remedies; review petitions disposed of accordingly.

Final Conclusion: Review petitions allowed to the limited extent of clarifying para 15 of the order dated 12.02.2024: the Court did not and does not decide that a complaint under Section 156(3) Cr.P.C. is maintainable at ED's instance; maintainability is left to the competent court, and parties retain liberty to pursue appropriate legal remedies; review petitions disposed of.

Grant of bail - bail in offences under the Prevention of Money Laundering Act - consideration of advanced age and period of actual incarceration in bail applications - conditional surrender of passport as bail condition - powers of trial court to fix bail terms and to cancel bail on non-compliance - expression of no opinion on merits while granting interim relief

Grant of bail - bail in offences under the Prevention of Money Laundering Act - consideration of advanced age and period of actual incarceration in bail applications - powers of trial court to fix bail terms and to cancel bail on non-compliance - Grant of bail to the appellant during the pendency of trial in connection with the Supplementary Prosecution Complaint for offences under the Prevention of Money Laundering Act, 2002. - HELD THAT: - The Court, having regard to the appellant's advanced age (more than 75 years) and the fact that he had already undergone actual incarceration for four years and nine months, allowed the appeal and directed release on bail during the pendency of trial. The Court left the precise terms and conditions of bail to be fixed by the trial court, while specifying that the appellant must surrender his passport and shall not leave India without the trial court's permission. The Court further recorded that in case of non-compliance with the bail terms it would be open to the trial court to cancel bail. The order expressly clarifies that the grant of bail is for the limited purpose of disposing of the present appeal and does not amount to any expression of opinion on the merits of the case.

Appeal allowed; impugned judgment set aside and appellant granted bail on terms to be fixed by the trial court, subject to surrender of passport and prohibition on leaving India without permission; trial court may cancel bail for non-compliance.

Final Conclusion: The Supreme Court allowed the appeal and directed that the appellant, a person aged over 75 who had already undergone substantial incarceration, be released on bail during the trial in the PMLA proceedings, subject to specified conditions and to such further terms as the trial court may impose; the order is without prejudice to the merits of the case.

Dismissal of special leave petition - interference with High Court judgment and order - observations on grant of bail not binding on trial court - disposal of pending applications

Dismissal of special leave petition - interference with High Court judgment and order - The special leave petition against the High Court's judgment and order is not maintainable and is dismissed. - HELD THAT: - The Supreme Court considered the challenge to the impugned judgment and order of the High Court and declined to interfere. Having heard counsel, the Court affirmed the High Court's decision by dismissing the special leave petition without further alteration of the impugned order.

Special leave petition dismissed; impugned High Court judgment and order is not interfered with.

Observations on grant of bail not binding on trial court - Observations made by the High Court regarding consideration of grant of bail shall not influence the trial court at trial or in any other proceeding. - HELD THAT: - Although the petition was dismissed, the Court expressly clarified that the Single Judge's observations concerning bail were limited to the High Court's consideration and must not be treated as binding or prejudicial against the accused in proceedings before the trial court. This protective clarification ensures that trial proceedings and any future applications are decided independently by the trial court.

High Court observations on bail will not influence the trial court in trial or other proceedings.

Final Conclusion: The special leave petition is dismissed; the High Court's order is left undisturbed, with the specific clarification that its observations on bail shall not influence the trial court; all pending applications stand disposed of.

Anticipatory bail - setting aside impugned order - grant of bail subject to trial court conditions - complaint filed and no arrest during investigation

Anticipatory bail - complaint filed and no arrest during investigation - grant of bail subject to trial court conditions - Application for anticipatory bail by the appellant - HELD THAT: - The Court, taking note that a complaint has already been filed and that the appellant was not arrested during the investigation, exercised its discretion to set aside the impugned order and grant anticipatory bail. The grant of bail is subject to such conditions as the trial Court may impose, leaving the specifics of bail conditions to the trial Court's determination. [Paras 2, 3]

Impugned order set aside and anticipatory bail granted to the appellant, subject to conditions to be imposed by the trial Court.

Final Conclusion: Leave granted; appeal allowed by setting aside the impugned order and granting anticipatory bail to the appellant, with bail to be subject to conditions to be fixed by the trial Court; pending applications disposed of.

Pre-deposit for maintaining appeal - appeal to High Court from every order passed by the Appellate Tribunal - mandatory pre-deposit under Section 35F - territorial jurisdiction for preferring statutory appeal - alternative statutory remedy / doctrine of alternative remedy - exercise of writ jurisdiction under Article 226

Pre-deposit for maintaining appeal - appeal to High Court from every order passed by the Appellate Tribunal - mandatory pre-deposit under Section 35F - Whether the Tribunal's order dated 5th January, 2024 directing payment of mandatory pre-deposit is an appealable order to the High Court under Section 35G of the Act - HELD THAT: - The Court held that the Tribunal's direction to make the pre-deposit and fulfil conditions for maintaining the appeal qualifies as an "order" from which an appeal to the High Court may lie under Section 35G. Relying on the breadth of the word "every" in the statutory provision and authorities construing similar statutory schemes, the Court observed that statutory limitations on maintainability do not render such interlocutory or conditional directions non-appealable; the question whether the High Court will admit the appeal depends on the requirement of a substantial question of law and other statutory limitations. The Court therefore treated the Tribunal's pre-deposit direction as falling within the scope of appealable orders under Section 35G, while noting that compliance with Section 35F may affect the Tribunal's competence to entertain the appeal. [Paras 18, 21, 23]

The Tribunal's order directing pre-deposit is an appealable order to the High Court under Section 35G.

Territorial jurisdiction for preferring statutory appeal - alternative statutory remedy / doctrine of alternative remedy - exercise of writ jurisdiction under Article 226 - Whether the writ petition should be entertained by this High Court notwithstanding the availability of a statutory appeal and the territorial locus of the adjudicating authority - HELD THAT: - The Court declined to exercise writ jurisdiction. It accepted respondents' contention that the statutory remedy of appeal (and the territorial nexus principles) provide the appropriate forum and that allowing the petition would bypass statutory provisions. Citing authorities on territorial competence and alternative remedy, the Court observed that where a statutory right of appeal exists and the adjudicating authority functions within another High Court's territorial jurisdiction, the writ petition is not to be entertained by the present Court. Having regard to these considerations, the Court did not decide the substantive question of exemption from pre-deposit and dismissed the petition on grounds of alternative remedy and lack of territorial jurisdiction. [Paras 24, 26, 28]

Writ petition dismissed for want of territorial jurisdiction and availability of alternative statutory remedy; Court declined to entertain the petition.

Final Conclusion: The writ petition was dismissed: the Tribunal's order directing pre-deposit is appealable to the High Court under Section 35G, but the present High Court declined to exercise writ jurisdiction and dismissed the petition on grounds of alternative remedy and territorial locus; the substantive question of exemption from pre-deposit was not adjudicated.

Adjustment of excess service tax under Rule 6(3) of the Service Tax Rules, 2004 - Recovery of cenvat credit on inputs cleared 'as such' and prospective operation of recovery provision introduced by Notification No.3/2013 - Limitation and invocation of larger period where no suppression - Refund under Section 11B of the Central Excise Act, 1944

Adjustment of excess service tax under Rule 6(3) of the Service Tax Rules, 2004 - Recovery of cenvat credit and Explanation to Rule 3(5) by Notification No.3/2013 - Whether the appellant could adjust inadmissible cenvat credit availed on inputs cleared 'as such' against excess service tax paid on export services under Rule 6(3) and whether the recovery of such cenvat credit was permissible for the period in question. - HELD THAT: - A plain reading of Rule 6(3) permits an assessee who has paid service tax in excess for a taxable service to adjust the excess against service tax liability for subsequent periods where the assessee has refunded the value of the taxable service and the service tax to the person from whom it was received. In the present case the appellant had erroneously availed cenvat credit on inputs cleared 'as such' and sought to adjust that credit against earlier excess service tax paid on exports; such an adjustment does not fall within the scope of Rule 6(3) which contemplates adjustment of excess service tax and not adjustment of inadmissible cenvat credit. Further, the Tribunal held that recovery of cenvat credit on account of Rule 3(5)/3(5B) could be effected only after the Explanation inserting a recovery mechanism was introduced by Notification No.3/2013 (effective 01.03.2013). That recovery provision is prospective and cannot be applied to the period 2004-2006; therefore the Commissioner's recovery of the cenvat credit for that period was not legally sustainable. [Paras 7]

Adjustment under Rule 6(3) of inadmissible cenvat credit availed on inputs cleared 'as such' is not permissible and recovery of such credit for the period in question is unsustainable because the recovery mechanism was introduced only by Notification No.3/2013 with prospective effect.

Limitation and invocation of larger period - Requirement of suppression to invoke extended period - Whether the demand could be sustained by invoking the extended period of limitation on the ground of suppression. - HELD THAT: - The record shows continuous communication between the appellant and the Department regarding adjustment of excess service tax since February 2007, including payment of interest in March 2009, and the show-cause notice was issued on 15.06.2009. There was therefore no suppression of facts warranting invocation of the larger period of limitation. In the absence of suppression and given the Department's awareness of the adjustment, extended limitation cannot be invoked to sustain the demand. [Paras 8]

Invocation of the extended period of limitation is not sustainable; the demand cannot be validated on the ground of suppression.

Final Conclusion: The impugned order demanding recovery of the cenvat credit (with interest and penalty) is set aside and the appeal is allowed, since adjustment under Rule 6(3) does not cover the inadmissible cenvat credit availed and the recovery provision relied upon is prospective (Notification No.3/2013), and extended limitation cannot be invoked.

Supply of tangible goods service - effective control and possession - Transportation of goods by Rail service - consideration - normal period of limitation - extended period of limitation - wagon facilitation charges

Supply of tangible goods service - effective control and possession - consideration - wagon facilitation charges - Whether the amounts recovered by the appellant as 'wagon facilitation charges' (freight rebate and premium) from clients constitute consideration for rendering 'supply of tangible goods service'. - HELD THAT: - The Tribunal examined the Agreement under the Wagon Investment Scheme and held that the contractual terms vest possession and control of the wagons with Indian Railways once the wagons are handed over. Clauses providing for pooling of wagons, allocation by Railways, maintenance by Railways, and transfer of ownership after the stipulated period demonstrate that the appellant did not retain effective control or possession. The amounts recovered by raising debit notes represented the appellant's recovery of a rebate or premium in relation to use of Railways' transport services by clients and were not consideration for supplying the physical wagons as a tangible-goods service. The Tribunal applied the contractual construction to conclude that the activity amounted, at best, to facilitating use of rail transport (i.e., Transportation of goods by Rail service) rather than supplying tangible goods within the meaning of the definition, and therefore the demand framed under 'supply of tangible goods service' was unsustainable on merits. [Paras 9, 10]

Demand of service tax confirmed under the category of 'supply of tangible goods service' set aside on merits.

Normal period of limitation - extended period of limitation - Whether the demand for service tax for the period 2008-09 to 2009-10 is barred by the normal period of limitation and whether penalty/extended period invocation was sustainable. - HELD THAT: - The Tribunal found the show-cause proceedings were initiated on the basis of audit and scrutiny of the appellant's books, with no fresh material alleging suppression or evasion. In absence of new material or concealment, the condition for invoking the extended period was not satisfied. Consequently, the claim for tax for the stated period was barred by the one-year normal limitation and imposition of penalty and invocation of extended limitation was not warranted. [Paras 11, 12]

Demands set aside also on the ground of limitation; interest and penalty also not leviable.

Final Conclusion: The appeal is allowed: the CESTAT set aside the service-tax demand confirmed under 'supply of tangible goods service' on merits and additionally held the demands barred by the normal period of limitation for 2008-09 to 2009-10; interest and penalties were accordingly held not leviable.

Scope of show cause notice - mining of mineral, oil or gas service - cargo handling service - classification of service - dominant nature of contract - GTA service

Mining of mineral, oil or gas service - classification of service - Whether the services rendered by the appellant fall within 'mining of mineral, oil or gas service'. - HELD THAT: - The adjudicating authority examined the scope of 'mining operation' as used in the Mines Act and concluded that transportation from stock yard/ore-bin is not, per se, covered by mining operations. It found that the appellant's principal activities were loading, unloading and short-distance transportation (mostly up to 11 km), and therefore the allegation in the Show Cause Notice that the services fell under 'mining of mineral, oil or gas service' was not substantiated. The appellate court records and accepts that the adjudicating authority held the 'mining service' demand unsustainable. [Paras 7, 8]

The activity does not fall under 'mining of mineral, oil or gas service' and the demand under that category is not sustainable.

Scope of show cause notice - cargo handling service - GTA service - dominant nature of contract - Whether the adjudicating authority was entitled to confirm demand under 'cargo handling service' though the Show Cause Notice alleged 'mining service'. - HELD THAT: - Although the adjudicating authority, after rejecting the 'mining service' classification, held that the appellant's activities constituted 'cargo handling service' (finding transportation ancillary to loading/unloading and referring to distances involved), the appellate court emphasises the fundamental principle that an adjudicatory order cannot impose or confirm a demand outside the case made in the Show Cause Notice. The Show Cause Notice proposed demand only under 'mining service'; confirmation under a distinct taxable category ('cargo handling service') therefore went beyond the scope of the notice and is legally impermissible. Consequently, the impugned order which confirmed demand under 'cargo handling service' must be set aside. [Paras 7, 8, 9]

The adjudicating authority acted beyond the scope of the Show Cause Notice in confirming demand under 'cargo handling service'; the impugned order is unsustainable and is set aside.

Final Conclusion: Appeal allowed; impugned order set aside as it confirmed demand under a service category not specified in the Show Cause Notice, with consequential relief as may be due.

CENVAT credit admissibility where invoices addressed to Head Office - Input Service Distributor (ISD) concept and head office-unit unity - Proviso to Rule 9(2) of the CENVAT Credit Rules - invoice particulars and condonation of defects - Time barred show cause notice / extended period of limitation - Rejection of legal credit on purely technical grounds

CENVAT credit admissibility where invoices addressed to Head Office - Input Service Distributor (ISD) concept and head office-unit unity - Rejection of legal credit on purely technical grounds - Appellant entitled to avail CENVAT credit though invoices were raised in the name of the Head Office which was not registered as ISD; credit cannot be denied solely because invoices are in the Head Office name. - HELD THAT: - The Original Authority had examined whether services were received and whether service tax had been paid, and on that basis dropped the demand. The Tribunal concurred with the view that the distinction between the location of the ISD (head office) and the manufacturing unit is immaterial because legally they form a single entity; an invoice in the name of the head office cannot, by itself, be a sole ground for denial of credit where there is no allegation that services were not received or tax not paid. The Tribunal relied on precedent treating the ISD and manufacturing unit as part of the same legal entity and emphasised that denying substantive credit on purely technicalities would be harsh, particularly where receipt and utilisation of services and payment of tax are not disputed. The Commissioner (Appeals) ought to have accepted the satisfaction recorded by the Original Authority or recorded his own satisfaction after examination rather than reverse the OIO solely on the invoice formality. [Paras 4, 5, 6, 7]

Impugned confirmation of denial of credit set aside; appellant entitled to CENVAT credit and appeal allowed.

Proviso to Rule 9(2) of the CENVAT Credit Rules - invoice particulars and condonation of defects - CENVAT credit admissibility where invoices addressed to Head Office - Shortcomings in invoice particulars under Rule 9(2) were effectively condoned by the Original Authority and such condonation should have been accepted by Commissioner (Appeals) in absence of dispute on receipt of services. - HELD THAT: - The OIO accepted the appellant's claim and dropped the demand after noting that the Head Office had applied for and obtained ISD registration; this acceptance amounted to condonation of any invoice defects under Rule 9(2). The Tribunal held that the Commissioner (Appeals) erred in refusing to accept that satisfaction or in not recording his own satisfaction after examination. Where material facts - receipt of services and payment of service tax - are not in dispute, a mere technical deficiency in invoice particulars should not justify denial of credit. [Paras 4, 5]

Findings of the Original Authority that condoned invoice defects upheld; Commissioner (Appeals) order reversed on this ground.

Time barred show cause notice / extended period of limitation - Show Cause Notice seeking recovery of credits for the period August 2010 to August 2011 was time barred and the extended period of five years could not be invoked. - HELD THAT: - Tribunal found no material to invoke extended period for assessment/recovery and noted that the credits were reflected in the appellant's books and monthly returns; there was no allegation of suppression or deliberate evasion. In absence of ingredients justifying extended period, the SCN was time barred and could not sustain a demand. [Paras 5, 7]

SCN held time barred; this ground supports allowing the appeal.

Final Conclusion: Impugned order of the Commissioner (Appeals) is set aside; appeal allowed and appellant held entitled to consequential relief, the denial of CENVAT credit being unjustified on the grounds relied upon and the SCN being time barred.

Provisional assessment under Rule 9B - finalisation of provisional assessment - quantification of differential duty - adjustment of excess duty paid - appropriation of duty paid - principles of natural justice

Provisional assessment under Rule 9B - quantification of differential duty - adjustment of excess duty paid - entitlement to adjust the claimed excess duty at the stage of quantification following finalisation of provisional assessment - HELD THAT: - The Tribunal examined whether amounts claimed as excess duty paid (arising from wrong billing, short-supply, incorrect calculation of duty, price escalation and corrigenda) could be adjusted when the differential duty was being quantified after finalisation of a provisional assessment under Rule 9B. The Tribunal held that the Commissioner(Appeals) erred in conflating the process of finalisation of assessment with the separate task of quantification of differential duty. While the finalisation of provisional assessment fixes the elements to be taken into account for determining assessable value, corrections that relate to accounting errors in duty payment (such as excess payments due to wrong billing or short supply) do not alter the assessable value determined by the assessment order and therefore are matters that can legitimately be considered at the quantification stage. Applying that principle to the facts, the Tribunal found that the appellant's claim for adjustment of excess duty paid on account of the said errors was unrelated to the assessable value determination and thus the denial of such adjustment could not be sustained. Consequently the impugned rejection of the adjustment claim was set aside and the appeal allowed on this count. [Paras 6, 11, 12, 13]

The impugned order is modified to permit adjustment of the excess duty claimed at the time of quantification and the appeal is allowed on this count.

Final Conclusion: The Tribunal allowed the appeal in respect of the claimed adjustment of excess duty paid (relating to wrong billing, short-supply, incorrect calculation of duty, price escalation and corrigenda) and modified the impugned order to permit such adjustment at the quantification stage following finalisation of the provisional assessment for 2001-2002.

CENVAT credit - availability of input credit on closing stock - packing/repacking constituting manufacture - verification of departmental records - remand for verification of documents - consequential relief

CENVAT credit - availability of input credit on closing stock - verification of departmental records - remand for verification of documents - Admissibility of CENVAT credit claimed on input/spare parts held in stock as on 01.06.2006 and on subsequent receipts during June-July 2006 where duty was paid but departmental authorities disallowed credit for want of specific stock-transfer documents. - HELD THAT: - The Tribunal found that the Adjudicating Authority did not comply with this Tribunal's earlier direction to verify records available with either the appellant or the Department, and proceeded to disallow the entire credit for want of a specific stock transfer note. The appellant had filed documentary material (including Annexure-21 and Annexure-22) before the authorities and before this Tribunal showing correlation between stock lying as on 01.06.2006, bill of entry details and receipts in June-July 2006; proof of payment of duties at import and on subsequent transfers was not disputed. The Tribunal noted that similar relief had been granted in respect of another service centre of the appellant and that a reviewing authority had allowed credits on identical facts. In these circumstances, and because the Department had not produced the records as directed for verification, the Tribunal concluded that the appellant was entitled to avail the CENVAT credit claimed, and that the disallowance by the Commissioner (Appeals) could not stand. [Paras 3, 4, 5, 6]

Credit held admissible; disallowance set aside and appeal allowed with consequential relief.

Final Conclusion: The appeal is allowed; the order of the Commissioner (Appeals) is set aside and the appellant is entitled to the claimed CENVAT credit with consequential relief, the Tribunal having found that departmental verification directions were not complied with and that the appellant had furnished documentary proof of stock and duty payment.

Clubbing of turnovers for SSI exemption - Mutuality of business interest and flow back of funds - Notice to affected party before clubbing - Extended period of limitation - Suppression of material facts and bar on extended limitation

Clubbing of turnovers for SSI exemption - Mutuality of business interest and flow back of funds - Turnovers of the appellant and the other co-located unit could not be clubbed to deny SSI exemption in the absence of evidence of mutuality of business interest or flow back of funds. - HELD THAT: - The Tribunal found that the Revenue failed to produce specific evidence demonstrating financial flow back or such mutuality of business interest between the two units. The decision relies on the approach of the Supreme Court in CCE, Jaipur v. Electro Mechanical Engg. Corporation, which holds that common directors, employees or shared facilities alone are insufficient to justify clubbing of clearances unless tangible evidence of financial flow back or mutuality is shown. Applying that principle to the facts, the Tribunal concluded that there was no material to establish the requisite mutuality and therefore the turnovers could not be combined to deny SSI benefit. [Paras 7]

No clubbing of turnovers; SSI exemption cannot be denied on the basis of the material on record.

Notice to affected party before clubbing - Demand based on clubbing was unsustainable because no show cause notice was issued to the other unit whose turnover was sought to be clubbed. - HELD THAT: - The Tribunal held that the Revenue erred in not issuing any show cause notice to the other unit (DTS) whose turnover was proposed to be added to the appellant's turnover. The absence of notice deprived the other unit of an opportunity to make submissions, contrary to principles recognised by the Calcutta High Court in CCE, Kolkata-II v. Diamond Scaffolding Co. As the other party was not given notice, the clubbing-based demand could not stand. [Paras 6]

Demand based on clubbing set aside for failure to issue notice to the other unit.

Extended period of limitation - Suppression of material facts and bar on extended limitation - Invocation of the extended period of limitation was not permissible as there was no deliberate or willful suppression of material facts. - HELD THAT: - Relying on the Supreme Court authorities cited (including CCE, Jaipur and Nizam Sugars Factory v. CCE, AP), the Tribunal found that the Department had knowledge of the relevant facts and that the appellant had not wilfully suppressed material information. In the absence of suppression, the extended period could not be invoked. Applying these principles to the show cause notices issued for the stated periods, the Tribunal held that the confirmed demands based on extended limitation were not sustainable. [Paras 8, 9, 10]

Extended period of limitation could not be invoked; demands under extended limitation are set aside.

Final Conclusion: Impugned orders set aside; appeals allowed on merits and on limitation grounds, and the appellant is entitled to consequential relief as per law.

Place of removal - Assessable value - FOR destination sale - Definition of input service amended to 'upto the place of removal' - Binding precedent of the Supreme Court - Interest under Section 11AA of the Central Excise Act - Penalty under Section 11AC of the Central Excise Act - Suppression with intent to evade duty

Place of removal - Assessable value - FOR destination sale - Definition of input service amended to 'upto the place of removal' - Binding precedent of the Supreme Court - Freight charges collected on FOR destination sales are includible in the assessable value of excisable goods where the sale (transfer of ownership and risk) occurs at the buyer's premises. - HELD THAT: - The Tribunal found on the facts that ownership and transit risk remained with the seller until delivery at the buyer's premises, so the point of sale was at the buyer's premises and the 'place of removal' for valuation under Section 4 is the buyer's premises. The decision applies the line of Supreme Court authorities (including Roofit, Emco, Ispat and Ultra Tech Cement) and the Board's Circular of 08.06.2018 which recognises the principle that 'place of removal' is to be determined with reference to point of sale but permits an exception for FOR destination sales. The amended definition of 'input service' (replacement of 'from' by 'upto' the place of removal) and the Supreme Court's decision in Ultra Tech Cement were held binding; accordingly outward freight to the buyer's premises must be included in transaction value and duty charged thereon. [Paras 11, 13, 14, 15]

Inclusion of outward freight in the assessable value for FOR destination sales is affirmed and the demand for excise duty is upheld.

Interest under Section 11AA of the Central Excise Act - Penalty under Section 11AC of the Central Excise Act - Suppression with intent to evade duty - Statutory interest and penalty were rightly imposed where duty was not paid and facts indicated suppression with intent to evade payment. - HELD THAT: - Having upheld the demand of duty, the Tribunal held that levy of interest under the statutory provision is automatic. The Tribunal further recorded that non-payment was noticed during departmental audit and that the appellant had unlawfully deducted freight from assessable value, thereby suppressing value in returns with intent to evade duty; on that basis penalty under the penalty provision was sustained, noting the Commissioner (Appeals) had already reduced the penalty to 25% which the Tribunal upheld. [Paras 15, 16]

Interest was properly levied and penalty for suppression with intent to evade duty was rightly sustained (as reduced by the Commissioner (Appeals)).

Final Conclusion: The Tribunal dismissed the appeal, affirming inclusion of outward freight in the assessable value for FOR destination sales, upholding the demand of excise duty with statutory interest, and sustaining the penalty for suppression (as reduced by the Commissioner (Appeals)).

Cenvat credit on inputs used in fabrication of capital goods - user test and integral-part test for capital goods - reliance on Chartered Engineer's certificate as admissible evidence - suppression of facts and invocation of extended period - penalty for wilful suppression under Section 11AC

Cenvat credit on inputs used in fabrication of capital goods - user test and integral-part test for capital goods - reliance on Chartered Engineer's certificate as admissible evidence - Cenvat credit on MS angles, channels and plates used in fabrication of capital goods which are ultimately used in manufacture of dutiable goods is allowable - HELD THAT: - The Appellant produced a detailed Chartered Engineer's certificate demonstrating use of the MS structurals in fabrication of various capital goods within the factory premises. The Tribunal found that despite such detailed evidence the lower authorities did not give proper consideration. Applying the settled tests - whether the inputs satisfy the "user test" or are an integral part of capital goods - the Tribunal held that the MS structurals qualify for Cenvat credit. Reliance was placed on precedents, including the Madras High Court decision in Thiru Arooram Sugars which held that structurals and foundations erected by using steel are integral to plant and machinery and therefore eligible for credit. On this basis the confirmed demand was set aside on merits. [Paras 7, 8, 12]

Allowed on merits; Cenvat credit held admissible

Suppression of facts and invocation of extended period - penalty for wilful suppression under Section 11AC - Extended period provisions and penalty for suppression could not be invoked as there was no wilful suppression to evade duty - HELD THAT: - The Show Cause Notice related to credits taken for 2006-07 to 2008-09. The Appellant had been regularly taking credit and filing ER-I returns and acted under bona fide belief that inputs were used in or in relation to manufacture. The Tribunal, following the reasoning in Madras High Court authorities and Supreme Court pronouncements referenced therein, held that mere omission or reversal of credit on audit does not amount to wilful suppression unless there is intent to evade duty. In the facts, inputs were used as accessories/integral parts of equipment and there was no deliberate concealment; hence invocation of extended period/penalty under the proviso was not justified. Consequently the demand was also set aside on limitation/penalty grounds. [Paras 4, 10, 11, 12]

Extended period/penalty not attracted; demand set aside on limitation and absence of wilful suppression

Final Conclusion: Appeal allowed both on merits and on account of limitation; confirmed demand set aside and appellant entitled to consequential relief as per law.

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

Burden of proof - Levy of purchase tax under Section 7A - Exemption under Section 5(3) of the Central Sales Tax Act - identity between penultimate sale and export transaction - Second sale doctrine - Penalty under Section 12(3)(b) of the TNGST Act

Burden of proof - Levy of purchase tax under Section 7A - Levy of purchase tax on turnover assessed for non-production of sale bills was sustainable in the absence of proof of purchases. - HELD THAT: - The Court accepted the concurrent findings of the Assessing Officer and the Appellate Assistant Commissioner that the assessee failed to produce purchase/sale bills to substantiate claimed purchases from the alleged supplier. Although the assessee supplied the supplier's registration number and later filed an affidavit, the supplier did not possess documents that could validate the assessee's claim. The authorities applied Section 10 of the TNGST Act placing the burden on the assessee to prove that a transaction is not liable to tax; failure to discharge this burden permits treating the assessee as a first seller/purchaser and warrants levy of purchase tax under Section 7A. Given the age of the matter and absence of material to support further enquiry, the Tribunal's confirmation of the levy was held to be unimpeachable and was affirmed. [Paras 7, 8, 9, 11, 12]

Confirmed the levy of purchase tax for non-production of sale bills; assessee failed to discharge burden of proof under Section 10.

Exemption under Section 5(3) of the Central Sales Tax Act - identity between penultimate sale and export transaction - Second sale doctrine - Claim of exemption for export sales under Section 5(3) CST Act was rightly disallowed due to lack of identity between goods purchased and goods exported and discrepancies in export documentation. - HELD THAT: - The Court recorded that a statutory pre-condition for Section 5(3) exemption is an unambiguous identity between the goods in the penultimate sale and those exported. The authorities found that while hosiery yarn purchases were shown, the exported items were mens shorts sets described as 90% cotton and 10% polyester, with no purchase invoices for polyester yarn and no evidence the assessee manufactured garments incorporating polyester. Additionally, documentary discrepancies (duplicate/differently dated bills and mismatches between delivery and invoice dates) undermined reliability. The decision in Raman & Co. was considered but the facts here were distinguishable from Govindan & Co. where first sales were undisputed. On this factual basis, the Tribunal's disallowance of export exemption was upheld. [Paras 16, 17, 18, 19, 21]

Disallowance of export turnover claimed under Section 5(3) CST Act sustained for lack of identity and documentary discrepancies.

Penalty under Section 12(3)(b) of the TNGST Act - Penalty imposed under Section 12(3)(b) was confirmed. - HELD THAT: - Having upheld the substantive additions - the levy of purchase tax and the disallowance of export exemption - the Court found no basis to interfere with the penal consequence which was imposed as a percentage of the disputed tax. The contention that the penalty was excessive was rejected in the absence of any successful challenge to the underlying tax determinations. [Paras 22]

Penalty under Section 12(3)(b) confirmed.

Final Conclusion: The concurrent orders of assessment, first appellate authority and the Tribunal were affirmed: the purchase tax assessed for non-production of bills and the disallowance of export exemption were sustained, and the penalty imposed under Section 12(3)(b) was confirmed; the writ petition is dismissed.

Summary order. Prayer for open Court/oral hearing of the review petitions rejected; delay condoned; review petitions dismissed; pending applications, if any, disposed of.

Dishonour of cheque under Section 138 NI Act - legally enforceable debt or other liability - a cheque as a promise/acknowledgement to pay - time-barred debt and limitation in cheque cases - presumption under Sections 118 and 139 NI Act - scope of quashing jurisdiction under Section 482 CrPC at summoning stage

Dishonour of cheque under Section 138 NI Act - legally enforceable debt or other liability - time-barred debt and limitation in cheque cases - scope of quashing jurisdiction under Section 482 CrPC at summoning stage - presumption under Sections 118 and 139 NI Act - Maintainability of the complaint under Section 138 of the NI Act and appropriateness of quashing the complaint at the summoning stage where cheques were issued years after the loan and a limitation/time barred defence was pleaded. - HELD THAT: - The Court held that whether cheques were issued for a legally enforceable debt or other liability, or whether the debt was time barred, involves questions of fact and evidence which cannot be adjudicated at the stage of issuance of summons. Reliance was placed on the principle that a cheque may operate as an acknowledgement or promise to pay and that the expression "debt or other liability" is to be given a meaning broad enough to include liabilities arising in varied commercial contexts. The Court noted that it is for the accused at trial to rebut statutory presumptions available under Sections 118 and 139 of the NI Act and that earlier decisions of the Apex Court require careful factual appreciation rather than dismissal at the threshold (referring to Yogesh Jain vs. Sumesh Chadha and authorities discussing the scope of "debt or other liability" such as Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel , Sunil Todi v. State of Gujarat , Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd. , and NEPC Micon Ltd. v. Magma Leasing Ltd. ). Given these considerations, the Court declined to quash the complaint under Section 482 CrPC at the summoning stage, leaving these contested factual and legal questions to be examined in trial. [Paras 11, 13, 14]

The petition to quash the complaint under Section 138 NI Act is dismissed and the trial court is directed to proceed with the complaint in accordance with law.

Final Conclusion: The High Court refused to quash the complaint under Section 138 of the Negotiable Instruments Act at the summons stage, holding that questions regarding legal enforceability of the debt, limitation and related factual matters must be tried and the trial court shall proceed in accordance with law.

Vicarious liability under Section 141 of the Negotiable Instruments Act - partners as agents of the firm / implied authority of partners - reading the complaint as a whole (no hyper-technical approach) - distinction between directors of a company and partners of a firm - retirement of partner and requirement of public notice under Section 32 of the Partnership Act - exercise of inherent jurisdiction under Section 482 Cr.P.C. to prevent abuse of process

Vicarious liability under Section 141 of the Negotiable Instruments Act - reading the complaint as a whole (no hyper-technical approach) - distinction between directors of a company and partners of a firm - Whether the complaint contains necessary averments to fasten vicarious liability on the working partners and thus is maintainable against Petitioners No.2 and No.3 - HELD THAT: - The Court examined the complaint averments (including paragraph 2, 7 and 10) together with the Partnership Act provisions (Sections 12, 13, 18, 19, 22, 23 and 25) and the partnership deed. It held that partners are agents of the firm with implied authority to bind the firm in the ordinary course of business and that, unlike company directors, working partners are ordinarily responsible for day to day conduct. Following the principles distilled in S.P. Mani & Mohan Dairy, the complaint must be read as a whole and need not reproduce the exact language of Section 141. If the substance of allegations satisfies Section 141, the complaint should proceed and a hyper technical approach to quash is inappropriate. Applying these principles, the Court found that the averment that Petitioners No.2 and No.3 are partners and working partners, together with the other allegations, provides sufficient factual foundation to proceed under Section 141 and Section 138 of the NI Act. [Paras 16, 24, 25, 28, 29]

Complaint not quashed qua Petitioners No.2 and No.3; proceedings shall continue against them.

Retirement of partner and requirement of public notice under Section 32 of the Partnership Act - partners as agents of the firm / implied authority of partners - exercise of inherent jurisdiction under Section 482 Cr.P.C. to prevent abuse of process - Whether the complaint should be quashed as against Petitioner No.1 (sleeping partner) on account of alleged retirement and/or lack of necessary averments - HELD THAT: - The Court considered the retirement deed filed by the petitioners and Section 32 of the Partnership Act which provides that a retiring partner remains liable to third parties for acts of the firm done before retirement until public notice is given. The record did not establish that the statutory requirement of public notice had been complied with. However, the partnership deed expressly identified Petitioner No.1 as a sleeping partner (not involved in day to day business). Applying the statutory scheme and exercising its inherent jurisdiction under Section 482 Cr.P.C., the Court concluded that continuation of the criminal complaint against the sleeping partner would be an abuse of process and quashed the complaint only as to Petitioner No.1. [Paras 27, 30, 31]

Complaint quashed qua Petitioner No.1 (sleeping partner); complaint shall continue against the other partners as directed.

Final Conclusion: The petition is disposed of: the complaint is quashed as to Petitioner No.1 (sleeping partner) while the complaint shall proceed against Petitioners No.2 and No.3; no other relief granted.

Rebuttable presumption under Section 139 - dishonour of cheque under Section 138 - preponderance of probabilities - interference in appeal against acquittal - presumption of innocence strengthened by acquittal - very substantial and compelling reasons

Interference in appeal against acquittal - presumption of innocence strengthened by acquittal - very substantial and compelling reasons - Whether this Court should interfere with the Trial Court's acquittal - HELD THAT: - The Court reiterated settled principles guiding appellate interference in appeals against acquittal, emphasising that although an appellate court has wide powers to re-appreciate evidence, such power must be exercised with care and caution because the presumption of innocence of the accused is reinforced by an acquittal. Interference is permissible only upon very substantial and compelling reasons, for instance where the trial court's conclusion is palpably wrong, based on an erroneous view of law, likely to result in grave miscarriage of justice, or where the approach to evidence is patently illegal. Applying these principles to the record, the Court found no such compelling reasons to disturb the well-reasoned finding of the Trial Court and declined to substitute its own view merely because a different inference was possible. [Paras 16, 21]

Appellate interference was not warranted; the Trial Court's acquittal was entitled to due weight and was not upset.

Dishonour of cheque under Section 138 - rebuttable presumption under Section 139 - preponderance of probabilities - Whether the presumption under Section 139 was rebutted and, consequently, whether the accused was rightly acquitted of the offence under Section 138 - HELD THAT: - The Court accepted that the complainant proved primary facts: execution of promissory note and agreement, admitted signatures on the seven cheques, return memos showing dishonour for "Funds Insufficient", and service of the statutory legal notice within time-facts that ordinarily activate the statutory presumption under Section 139. The Trial Court, however, examined the totality of evidence and found the accused had raised a plausible defence on preponderance of probabilities: a defence that the loan had been repaid in cash (through his mother) and that only coloured photocopies of documents were returned to him; the complainant failed to explain how such photocopies were with the accused; there were doubts about the complainant's ability to have advanced the aggregate cash sums (absence of ITR/books or corroboration of funds and failure to account for two separate transactions). On that finding the Trial Court held the presumption under Section 139 was rebutted, thereby shifting the evidential burden back to the complainant, who failed to prove the existence of the alleged two separate transactions and non-payment. Applying the standard of preponderance of probabilities for rebuttal, this Court found no infirmity in the Trial Court's conclusion that the accused's defence was probable and that the presumption stood rebutted. [Paras 32, 33, 34, 36, 37]

Presumption under Section 139 was rebutted on the available evidence; the accused's acquittal under Section 138 was upheld.

Final Conclusion: Leave to appeal is refused; the Trial Court's acquittal of the accused under Section 138 of the Negotiable Instruments Act is maintained as the presumption under Section 139 was held to be rebutted on the preponderance of probabilities and no sufficient ground existed to disturb the acquittal.