TaxTMI Updates e-Newsletter
Aug 17,2024

Penalty under the detention and seizure regime of the Uttar Pradesh Goods and Service Tax Act, 2017 - Requirement of mens rea / intention to evade tax for imposition of penalty under Section 129 - Quashing of show cause notice and refund of penalty paid under protest - Project site address treated as business place for GST purposes

Penalty under the detention and seizure regime of the Uttar Pradesh Goods and Service Tax Act, 2017 - Requirement of mens rea / intention to evade tax for imposition of penalty under Section 129 - Quashing of show cause notice and refund of penalty paid under protest - Project site address treated as business place for GST purposes - Whether the seizure, show cause notice dated December 6, 2023 and the penalty imposed under the detention provisions were maintainable in the absence of any intention to evade tax and despite the invoice address being a project site subsequently added as a business place. - HELD THAT: - The Court recorded the undisputed factual position that the address on the invoice was the project site where the petitioner was carrying out work and that this address was subsequently added as one of the petitioner's business places. The revenue did not point to any material indicating mens rea or an intention to evade tax. Relying on the principle that penalty under the detention/penalty provisions cannot be imposed without evidence of intention to evade tax (as noted in the cited Single Judge decision), the Court held that detention, the ensuing show cause notice and the imposition/collection of penalty lacked a legal basis. In view of the absence of culpable intention and the factual acceptance that the invoice address related to the petitioner's business activity, the process of detention and penalty was quashed and the collected penalty was ordered to be refunded. [Paras 3, 4, 5, 6, 7]

Seizure and show cause notice dated December 6, 2023 quashed; penalty imposed and collected to be refunded to the petitioner within eight weeks.

Final Conclusion: Writ petition allowed; detention and penalty set aside for lack of any demonstrated intention to evade tax and refund of penalty directed.

Quashing of orders for lack of independent finding - no automatic adoption of findings of survey by another authority without independent inquiry - remand for de novo proceedings - requirement of reasoned and speaking order - opportunity of hearing to stakeholders - treatment of amounts deposited subject to outcome of fresh adjudication

Quashing of orders for lack of independent finding - no automatic adoption of findings of survey by another authority without independent inquiry - Impugned orders passed without independent findings by the proper officer are unsustainable and liable to be quashed. - HELD THAT: - The Court examined the record and noted that although a survey by the Income Tax Department had produced certain findings, there was no independent finding recorded by the proper officer under the U.P.G.S.T. Act nor any confirmation by the appellate authority. The petitioner had raised the specific objection that the PAN and business profile for which proceedings were initiated differed and that the petitioner had ceased business earlier; this material was not independently adjudicated. In the absence of an independent inquiry and reasoned conclusion by the tax authority adopting or distinguishing the survey material, the impugned orders could not be sustained and had to be set aside. [Paras 7, 8]

The impugned orders are quashed for want of independent findings by the proper officer.

Remand for de novo proceedings - requirement of reasoned and speaking order - opportunity of hearing to stakeholders - treatment of amounts deposited subject to outcome of fresh adjudication - Matter remitted for fresh adjudication requiring a de novo, reasoned and speaking order after hearing all stakeholders; amounts deposited to remain subject to the outcome. - HELD THAT: - Having quashed the earlier orders, the Court directed that the matter be remitted to the proper officer to initiate de novo proceedings. The fresh proceedings must be concluded by a reasoned and speaking order after affording hearing to all stakeholders within three months from production of certified copy of the order. The Court further ordered that any amounts deposited pursuant to the quashed orders shall remain subject to the result of the fresh adjudication, thereby preserving the parties' rights pending the new decision. [Paras 9, 10]

Matter remanded for de novo proceedings by the proper officer with hearing and a reasoned order within three months; deposited amounts to be subject to the outcome.

Final Conclusion: Writ petition allowed; impugned orders quashed and matter remitted for fresh adjudication by the proper officer in a reasoned and speaking order after hearing all stakeholders within three months; deposits made pursuant to the impugned orders to remain subject to the outcome of the fresh order.

Violation of principles of natural justice - Service of notice via GST portal vs physical service - Assessment under Section 73 of the TNGST Act/CGST Act - Opportunity of personal hearing - Quashing and remand for fresh consideration on conditions

Violation of principles of natural justice - Service of notice via GST portal vs physical service - Opportunity of personal hearing - Impugned order passed under Section 73 was invalid as no physical service was effected and the petitioner was denied opportunity to file reply or seek personal hearing. - HELD THAT: - The Court found that the show cause notice and the impugned order were uploaded only on the GST portal and were not physically served on the petitioner, which resulted in the petitioner being unaware of the proceedings and unable to file a reply or seek personal hearing. In these circumstances, the absence of physical service and the failure to provide an opportunity of personal hearing rendered the adjudicatory process violative of principles of natural justice. The Court therefore concluded that an order passed without affording sufficient opportunity to the petitioner could not be sustained and was liable to be set aside.

Impugned order dated 12.12.2023 set aside for breach of natural justice; petitioner to be afforded opportunity to be heard afresh.

Quashing and remand for fresh consideration on conditions - Assessment under Section 73 of the TNGST Act/CGST Act - Proceedings remanded to the assessing authority for fresh adjudication on merits subject to conditions directed by the Court. - HELD THAT: - The Court remanded the matter to the respondent for fresh consideration and directed procedural steps to ensure fair adjudication. The petitioner was directed to deposit 10% of the disputed tax demand within four weeks from receipt of the order and thereafter file a reply within two weeks. On receipt of the reply, the authorities were directed to fix a date for personal hearing by sending a physical notice to the petitioner and thereafter decide the matter on merits in accordance with law. The remand was for fresh adjudication and compliance with the specified conditions; the Court did not decide the substantive merits of the tax demand.

Matter remanded to respondent for fresh adjudication after compliance with deposit and opportunity of personal hearing; directions to send physical notice and decide on merits.

Final Conclusion: Impugned adjudication order under Section 73 (dated 12.12.2023) set aside for non-service and denial of hearing; matter remanded to the assessing authority for fresh adjudication on merits after the petitioner deposits 10% of the disputed demand, files a reply, and is served with a physical notice for personal hearing; Writ Petition disposed of without costs.

Grant of bail - release on furnishing personal bond and sureties - Input Tax Credit fraud - bogus invoices and non-supply of goods - confessional statement recorded during remand - absence of device for creation of fake firms - compoundability of offence - non-quantification of tax liability - conditions of bail (non-tampering, surrender of passport) - trial court's independence from interim observations

Grant of bail - Input Tax Credit fraud - confessional statement recorded during remand - absence of device for creation of fake firms - compoundability of offence - release on furnishing personal bond and sureties - Bail application of the applicant was allowed subject to conditions - HELD THAT: - The Court considered the nature of the alleged offence of passing fraudulent Input Tax Credit through creation of non-existent firms, the material on record including confessional statements recorded while in judicial remand, and the fact that nothing was recovered from the applicant. It observed that no device by which the fake firms were created is available on record and that tax liability or penalty has not yet been ascertained. The Court also noted that the offences alleged are punishable up to five years and are compoundable and that a co-accused with a more serious role had been granted bail by a coordinate Bench. Balancing these factors, and without expressing any opinion on merits, the Court found that the applicant had made out a case for bail. Bail was ordered to be granted on furnishing a personal bond and two heavy sureties, subject to enumerated conditions including non-tampering with evidence, non-intimidation of witnesses, appearance at trial, prohibition against committing similar offences, surrender of passport and other usual conditions; breach of conditions would permit prosecution to move for cancellation of bail. [Paras 9, 10, 11, 12]

Bail allowed on furnishing personal bond and two heavy sureties each, subject to specified conditions; trial court not to be influenced by interim observations.

Final Conclusion: The bail application is allowed and the applicant is directed to be released on bail on furnishing the prescribed bond and sureties subject to the conditions imposed; breach of conditions may invite cancellation and the trial court remains free to decide the case on merits.

Reading down of statutory provision to avoid constitutional infirmity - denial of input tax credit to bona fide purchasing dealer - remedy against defaulting selling dealer rather than punishment of purchasing dealer - onus on purchaser to verify seller's tax deposit not permissible where transaction is bona fide - violation of Article 14 by disproportionate consequences

Denial of input tax credit to bona fide purchasing dealer - reading down of statutory provision to avoid constitutional infirmity - violation of Article 14 by disproportionate consequences - Whether Sections 16(2)(c) and 16(2)(d) of the Assam GST Act, 2017 and corresponding provisions of the CGST Act can be applied to deny ITC to a purchasing dealer who has entered into bona fide transactions with a registered selling dealer - HELD THAT: - The court applied the reasoning of the Delhi High Court in On Quest Merchandising India Private Limited, holding that the statutory language must be read down so as not to include a purchasing dealer who has bona fide transacted with a validly registered selling dealer issuing tax invoices and where there is no mismatch in returns. The provisions, if read to visit disproportionate adverse consequences on a bona fide purchasing dealer for the selling dealer's failure to deposit tax, would be vulnerable to challenge under Article 14. Consequently, the proper course is to restrict denial of ITC to culpable selling dealers; bona fide purchasers who took requisite precautions cannot be expected to ensure the seller's deposit of tax and therefore cannot be penalised by denial of ITC. [Paras 3, 5]

The provisions must be read down to exclude bona fide purchasing dealers from denial of ITC; such purchasers are protected and cannot be denied ITC on the basis of the selling dealer's failure to deposit tax.

Remedy against defaulting selling dealer rather than punishment of purchasing dealer - onus on purchaser to verify seller's tax deposit not permissible where transaction is bona fide - Whether the show cause notices and consequential orders issued to the petitioners (purchasing dealers) could be sustained - HELD THAT: - Relying on the accepted principle that where the selling dealer has collected tax but failed to deposit it, the appropriate remedy lies against the defaulting selling dealer, the court set aside the impugned show cause notices and consequential orders issued to purchasing dealers in this batch who have bona fide transactions. The State remains at liberty to proceed in matters where material shows purchases were not bona fide or where collusion exists, and to pursue recovery from defaulting selling dealers. [Paras 6, 7]

The impugned show cause notices and consequential orders against bona fide purchasing dealers are set aside; the Department may act against non bona fide transactions or the defaulting selling dealers as permissible by law.

Final Conclusion: The writ petitions are allowed insofar as purchasing dealers who bona fide transacted with registered selling dealers cannot be denied ITC under the impugned provisions; the show cause notices and consequential orders against such purchasers are set aside, while the Department remains free to act where transactions are not bona fide or where collusion is shown.

Principles of natural justice - personal hearing - remand for fresh consideration - setting aside of assessment and attachment - opportunity to avail scheme under Rule 128 - appropriation of bank funds in recovery proceedings

Principles of natural justice - personal hearing - Failure to grant an additional personal hearing occasioned a breach of the principles of natural justice. - HELD THAT: - The Court noted that Form DRC-01 was issued and the petitioner filed a detailed reply, but did not appear on the scheduled personal hearing. The respondent proceeded to pass the impugned order without affording a further hearing opportunity. The Court held that in circumstances where the assessee had engaged in the process by filing a detailed reply, the respondent ought to have granted an additional personal hearing before finalising the demand. The lack of such an additional opportunity was found to constitute a failure to accord adequate opportunity to put forward the petitioner's case. [Paras 6]

Impugned order set aside on grounds of breach of principles of natural justice; petitioner to be granted another personal hearing.

Remand for fresh consideration - setting aside of assessment and attachment - appropriation of bank funds in recovery proceedings - opportunity to avail scheme under Rule 128 - Matter remitted to the respondent for reconsideration after setting aside the assessment order and attachment, with directions to afford a physical personal hearing within a specified period. - HELD THAT: - Having set aside the impugned order and the attachment order, the Court remitted the matter to the respondent for fresh consideration. The respondent was directed to issue a physical notice and provide the petitioner 14 days' time to appear for personal hearing. The Court accepted the parties' position that the petitioner intended to avail the scheme under Rule 128 of the Act if given an opportunity; accordingly the remand is for reconsideration after giving the petitioner the opportunity to be heard and to take steps, including availing the said scheme, as may be applicable. [Paras 6]

Proceedings remitted to the respondent; respondent to send physical notice and afford 14 days for personal hearing; attachment and impugned order set aside.

Final Conclusion: Writ petition allowed; impugned assessment order dated 22.12.2023 and the attachment order set aside and the matter remitted to the respondent for fresh consideration after serving a physical notice and affording the petitioner 14 days for personal hearing; no order as to costs.

Input tax credit - transfer of input tax credit on transition to GST - refund of taxes collected in excess - liability of successor State for refund - refund under Section 56 of the Andhra Pradesh Reorganisation Act, 2014

Input tax credit - transfer of input tax credit on transition to GST - refund under Section 56 of the Andhra Pradesh Reorganisation Act, 2014 - Whether tax credit for unused input tax standing in the dealers' ledgers as on 02.06.2014 could be transferred to the AP GST regime or was required to be refunded under Section 56 of the Andhra Pradesh Reorganisation Act, 2014. - HELD THAT: - The Court held that Section 56 of the Andhra Pradesh Reorganisation Act, 2014 addresses liability of the successor State to refund tax or duty collected in excess - i.e., sums collected in excess of the taxpayer's liability. The input tax credit appearing in the petitioners' ledgers represents unused input tax credit and is not tax paid in excess. Consequently, Section 56, which governs apportionment and liability for refunds of taxes collected in excess, does not apply to the situation of unused input tax credit. The audit objection and the respondent's reliance on Section 56 to reverse transfers of such ledger credits to the AP GST regime were therefore misplaced. Having found Section 56 inapplicable, the Court concluded that the reversal of the credit transfers and the resultant demands could not be sustained. [Paras 10, 11]

Section 56 of the Andhra Pradesh Reorganisation Act, 2014 is not applicable to unused input tax credit in the petitioners' ledgers as on 02.06.2014; the demands based on reversal of credit transfers are set aside.

Final Conclusion: Writ petitions allowed; impugned demand orders reversing transfer of input tax credit and raising tax demands quashed; no order as to costs.

Principles of natural justice - remand for fresh adjudication - treating order as addendum to show cause notice - discrepancy between GSTR-7 and GSTR-3B reporting - pre-deposit of disputed tax - alternative remedy under Section 107 of the GST Act

Principles of natural justice - remand for fresh adjudication - discrepancy between GSTR-7 and GSTR-3B reporting - Impugned assessment order passed without prior notices and consequent violation of principles of natural justice - HELD THAT: - The Court found that the impugned order dated 12.02.2024 preceded the notices in DRC-01A (26.10.2023) and DRC-01 (15.11.2023), giving rise to a substantial procedural infirmity. Considering that the dispute principally concerns differences in turnover reported in GSTR-7 and GSTR-3B, the Court held that the petitioner may have a case on merits and that the procedural lapse warrants fresh consideration. In the exercise of writ jurisdiction the Court set aside the impugned order and remitted the matter to the 1st respondent for a fresh decision on merits, thereby affording the assessee an opportunity to be heard before adjudication proceeds. The availability of an alternative remedy under Section 107 of the GST Act was noted but the Court nonetheless directed remand for adjudication on merits.

Impugned order quashed and matter remitted to the 1st respondent for fresh adjudication on merits

Treating order as addendum to show cause notice - pre-deposit of disputed tax - Procedural directions on manner of fresh adjudication and interim pre-deposit requirement - HELD THAT: - The Court directed that the quashed order shall be treated as an addendum to the earlier show cause notices in DRC-01A and DRC-01. The petitioner was directed to file a consolidated reply within thirty days from receipt of the order. As an interim condition for remand, the Court required the petitioner to deposit twenty percent of the disputed tax from electronic cash registered. These directions condition the remand and set the procedural framework for the fresh adjudication by the assessing authority.

Impugned order to be treated as addendum to the show cause notices; petitioner to file consolidated reply within 30 days and deposit 20% of disputed tax from electronic cash

Final Conclusion: Writ petition allowed in part: the assessment order dated 12.02.2024 for assessment year 2018-19 is quashed and remitted to the assessing authority for fresh adjudication on merits; procedural directions require the petitioner to file a consolidated reply within thirty days and to deposit twenty percent of the disputed tax from electronic cash; no costs.

Quashing of administrative order - remand for fresh consideration on merits - right to be heard affected by seizure of records - direction to produce/seize-linked documents for representation

Quashing of administrative order - remand for fresh consideration on merits - Impugned order dated 30.12.2023 quashed and matter remitted for fresh decision on merits and in accordance with law. - HELD THAT: - The Court found that the impugned order confirming demands under various heads was liable to interference. In view of the petitioner's inability to reply to the notice because relevant records had been seized by the Central Tax Authorities, the order was set aside and the matter remitted to the respondent for fresh adjudication. The Court directed that the respondent shall pass a fresh order on merits and in accordance with law within nine months from the date of the order. [Paras 5, 6]

Impugned order quashed; case remitted to respondent to pass fresh order on merits within nine months.

Right to be heard affected by seizure of records - direction to produce/seize-linked documents for representation - Petitioner permitted to retrieve seized documents and directed to file reply within three months; liaison with Central Tax Authorities expected. - HELD THAT: - The Court accepted that the petitioner could not respond to the show-cause notice because records necessary to formulate a reply were seized by the Central Tax Authorities and that an interim stay (made absolute) was in place in related proceedings. Consequently, the Court afforded the petitioner an opportunity to obtain the seized documents by liaising with the Central Tax Authorities and to file a reply within three months from the date of the order, prior to the respondent's fresh adjudication. [Paras 3, 4, 7]

Petitioner to retrieve seized documents and file reply within three months; respondent to consider fresh reply in remand proceedings.

Final Conclusion: Writ petition disposed by quashing the impugned order and remitting the matter for fresh adjudication; petitioner given three months to retrieve seized records and file a reply, and respondent directed to decide the matter on merits within nine months.

Cancellation of bail under Section 439(2) CrPC - procurement of bail by misrepresentation or suppression of material facts - powers of the same court to cancel bail - seriousness of economic offences as justification for touching merits - misuse of bail - Section 362 CrPC

Procurement of bail by misrepresentation or suppression of material facts - misuse of bail - The bail granted to the applicant was procured by way of misrepresentation and suppression of material facts. - HELD THAT: - The Court found that the applicant filed a First Bail Application in which the prosecution disclosed his past conviction and criminal history by way of objections, but the applicant withdrew that application and, within five days, filed a Second Bail Application without disclosing the said conviction and criminal history. The conduct of not replying to objections in the first application and failing to disclose the conviction in the subsequent application amounted to deliberate suppression of material facts and misrepresentation before the trial court. Given this lack of candour, the bail was held to have been procured by misrepresentation, which justified cancellation. The Court relied on settled principles that bail may be cancelled where it is shown to have been obtained by fraud or misrepresentation and treated the non disclosure as sufficient to vitiate the grant of bail. [Paras 28, 29, 30, 31, 32]

Bail was procured by misrepresentation and suppression of material facts and therefore liable to be cancelled.

Cancellation of bail under Section 439(2) CrPC - powers of the same court to cancel bail - seriousness of economic offences as justification for touching merits - Section 362 CrPC - The Sessions Judge was justified in examining merits and cancelling the bail in view of the seriousness of the allegations and the applicant's conduct; the cancellation was not barred by Section 362 CrPC. - HELD THAT: - The Court examined whether the same court that granted bail could cancel it and whether touching the merits was permissible. Noting the gravity of the allegations of large scale economic offences causing substantial revenue loss and the applicant's past conviction and alleged threats to witnesses, the Court held that supervening circumstances and the applicant's conduct rendered it proper for the Sessions Judge to revisit the merits. The Court observed that where bail is obtained by misrepresentation or where serious allegations and risk of tampering with evidence exist, the court granting bail may revoke it; therefore Section 362 CrPC did not preclude cancellation in the circumstances of the case. The Sessions Judge's consideration of the gravity of offences and the applicant's conduct was held not to be illegal or perverse. [Paras 33, 34, 35, 36]

The Sessions Judge rightly examined the merits and cancelled the bail; the cancellation was valid and not barred by Section 362 CrPC.

Final Conclusion: The High Court dismissed the application under Section 482 CrPC, upholding the cancellation of bail on the grounds of deliberate suppression and misrepresentation by the applicant and the seriousness of the economic offences; no interference with the Sessions Judge's order was warranted.

Input tax credit - auto-populated returns - electronic records - non-application of mind - remand for fresh consideration - treating order as addendum to show cause notice - payment of part disputed tax from Electronic Cash Ledger

Input tax credit - auto-populated returns - electronic records - remand for fresh consideration - payment of part disputed tax from Electronic Cash Ledger - treating order as addendum to show cause notice - Validity of Assessment Order dated 22.12.2023 for Assessment Year 2017-2018 and directions on remand - HELD THAT: - The Court found that the petitioner may have a case to explain the confirmation of demand in the Assessment Order dated 22.12.2023. It held that the mere presence of credit in auto-populated returns does not ipso facto establish availing of input tax credit where electronic records and returns indicate otherwise. Accordingly the impugned Assessment Order dated 22.12.2023 was set aside and the matter remitted to the respondent for fresh decision on merits. The remand is subject to the petitioner (a) paying 25% of the disputed tax from the Electronic Cash Ledger for AY 2017-2018 and (b) filing a reply to the Show Cause Notice dated 22.09.2023 within 30 days of receipt of this order. The quashed Assessment Order is to be treated as an addendum to the Show Cause Notice that preceded it. [Paras 9, 10]

Assessment Order dated 22.12.2023 quashed and remitted for fresh consideration on the stated conditions.

Input tax credit - non-application of mind - remand for fresh consideration - payment of part disputed tax from Electronic Cash Ledger - treating order as addendum to show cause notice - Validity of Assessment Order dated 07.09.2023 for Assessment Year 2020-2021 and directions on remand - HELD THAT: - The Court observed apparent non-application of mind in confirming demand by the Assessment Order dated 07.09.2023. On that basis the impugned order was quashed and the case remitted for fresh adjudication. The remand is conditional on the petitioner paying 25% of the disputed tax from the Electronic Cash Ledger for AY 2020-2021 within 30 days of receipt of this order and filing any additional reply to the Show Cause Notice dated 04.03.2023 within the same period. The quashed Assessment Order is to be treated as an addendum to the Show Cause Notice. [Paras 11, 12, 13]

Assessment Order dated 07.09.2023 quashed and remitted for fresh consideration on the stated conditions.

Final Conclusion: Both impugned Assessment Orders for AY 2017-18 and AY 2020-21 are quashed and remitted to the respondent for fresh orders on merits; the petitioner must pay 25% of the disputed tax from the Electronic Cash Ledger and file replies to the respective Show Cause Notices within 30 days, and the respondent shall decide the matters in accordance with law within two months thereafter.

Reassessment proceedings u/s 148 - prima facie opinion for reopening assessment - escapement of income - objections disposed and order u/s 148A(d) - diversion of funds versus professional receipts - scope of writ jurisdiction to examine initiation of reassessment

The court [2024 (5) TMI 1460 - DELHI HIGH COURT] dismissed the writ petitions challenging initiation of reassessment and issuance of notices u/s 148, holding that the AO had formed a prima facie opinion sufficient to commence reassessment and that there was no basis for interference at this stage.

HELD THAT:- We are not inclined to entertain the Special Leave Petitions under Article 136 of the Constitution of India. Special Leave Petitions are accordingly dismissed.

Statutory fiction - continuation of non-tax benefits on upward re-classification - deeming provision - eligibility for benefit under executive scheme contingent on contemporaneous MSME status

Continuation of non-tax benefits on upward re-classification - statutory fiction - deeming provision - Whether Clause 8(5) of the Notification dated 26th June 2020 as substituted by Notification dated 18th October 2022 applies to an upward re-classification from a Medium Enterprise to 'not an MSME' and entitles the enterprise to continue to avail non-tax benefits for three years from the date of such upward change. - HELD THAT: - The substituted Clause 8(5) unequivocally provides that on an upward change and consequent re-classification an enterprise shall continue to avail of all non-tax benefits of the category it was in before the re-classification for three years from the date of such upward change. The inclusion of the word "medium" in the bracketed enumeration indicates the provision was intended to apply to medium enterprises as well; reading the clause down to exclude an upward re-classification from Medium to "not an MSME" would render that word otiose. The Court accepted that Clause 8(5) creates a statutory fiction for the limited purpose of availing non-tax benefits and must be given full effect; established authorities on statutory fictions support applying the consequences and incidents of the deemed state. Consequently, notwithstanding re-classification to "not an MSME" w.e.f. 9th May 2023, the petitioner remained entitled to non-tax benefits available to a Medium Enterprise until 8th May 2026. [Paras 26, 27, 28, 29]

Clause 8(5), as substituted, applies to the petitioner's upward re-classification and the petitioner was entitled to continue to avail non-tax benefits as a Medium Enterprise for three years from 9th May 2023.

Eligibility for benefit under executive scheme contingent on contemporaneous MSME status - entertainment and processing of administrative claims - Whether the GeM emails of 12th and 13th March 2024 denying the petitioner's claim under the Vivad Se Vishwas I-Relief for MSMEs Scheme were lawful, and what relief follows. - HELD THAT: - The Office Memorandum dated 11th April 2023 required that a supplier/contractor be registered as an MSME as per the prevalent scheme of the Ministry of MSME on the date of claim. Applying the Court's construction of Clause 8(5), the petitioner, though re-classified to "not an MSME" w.e.f. 9th May 2023, was for purposes of non-tax benefits to be treated as a Medium Enterprise until 8th May 2026. Therefore the GeM communications which held that the petitioner was not an MSME and refused portal access were incorrect. The Court quashed those communications and directed the respondents to entertain and process the petitioner's claim under the VSV Scheme. The Court expressly limited its intervention to eligibility and did not adjudicate the merits of the claim, leaving the respondents to examine and decide the claim in accordance with the Scheme and law. [Paras 22, 23, 29, 30, 32]

The emails dated 12th March 2024 and 13th March 2024 are quashed; respondents are directed to accept, entertain and process the petitioner's claim under the VSV Scheme, with merits to be decided by the respondents in accordance with the Scheme and law.

Final Conclusion: Writ petition allowed insofar as prayers (iii-a) and (iii-b) are concerned; impugned emails refusing the petitioner's access to the VSV Scheme are quashed and respondents directed to entertain and process the petitioner's claim. The Court confined its order to eligibility under Clause 8(5) and left the merits of the claim to be decided by the respondents in accordance with the Scheme and law.

Condonation of delay - sufficient cause - exclusion of time for proceedings bona fide in a wrong forum under Section 14 of the Limitation Act - bona fide belief in maintainability of revision - revision under Section 397 CrPC vis-a -vis non-application of Section 401(4) CrPC - appeal with leave under Section 378 CrPC - pragmatic/common-sense approach to limitation (Collector, Anantnag principle)

Condonation of delay - sufficient cause - pragmatic/common-sense approach to limitation (Collector, Anantnag principle) - Whether sufficient cause is disclosed to condone delay of 480 days in filing the application for leave to appeal. - HELD THAT: - The Court applied settled principles that sufficiency of cause is to be judged pragmatically and with a view to substantial justice, while guarding against negligence, inaction or mala fides. The record establishes that the Department filed a criminal revision within limitation in bona fide belief that revision lay against the Magistrate's order, and that on objection being raised as to maintainability the Department consulted its legal officers, obtained court records in two tranches, instructed the Standing Counsel, and had a draft appeal and delay application prepared and filed promptly thereafter. The Court held that not every day's delay requires pedantic explanation where the party, here a government Department, acted through its officials and legal team, and that the sequence of events demonstrated due diligence and bona fides. Applying the principles summarised from precedent (including Collector, Anantnag), the Court concluded that sufficient cause has been made out to exercise discretion in favour of condonation of delay. [Paras 38, 40, 41, 51, 52]

Delay of 480 days in filing the application for leave to appeal is condoned.

Revision under Section 397 CrPC vis-a -vis non-application of Section 401(4) CrPC - bona fide belief in maintainability of revision - Whether the revision filed under Section 397 CrPC was statutorily barred by Section 401(4) CrPC and whether filing such revision can be treated as a bona fide attempt constituting sufficient cause. - HELD THAT: - The Court observed that Section 401(4) CrPC, which bars revision where an appeal lies, is a provision specific to the High Court's revisionary powers and does not impose a like bar on revisional power under Section 397 exercised by the Sessions Court. The revision impugning the Magistrate's order was filed under Section 397 and was admittedly within the period of limitation. Given that the revision was prosecuted, notices issued and objections raised by the respondent on maintainability, the Court found that the filing of the revision manifested a bona fide belief in its maintainability. Consequently, the contention that filing the revision constituted ignorance of law such as to disentitle the Department to condonation was rejected; prosecution of the revision in good faith and within time supported the claim of sufficient cause. [Paras 24, 25, 27, 28, 33]

Revision under Section 397 CrPC was not precluded by Section 401(4) CrPC; filing of the revision in time evidenced a bona fide belief and supports condonation.

Exclusion of time for proceedings bona fide in a wrong forum under Section 14 of the Limitation Act - bona fide belief in maintainability of revision - Whether time spent prosecuting the revision in the Sessions Court can be treated as time excluded under Section 14 of the Limitation Act (proceeding bona fide in a court unable to entertain it). - HELD THAT: - Relying on the ingredients recognised by the Supreme Court for Section 14 relief, the Court noted that the prior proceeding (revision) and the subsequent proceeding (appeal) were civil/criminal proceedings prosecuted by the same party, that the prior proceeding was prosecuted with due diligence and in good faith, that the failure of the prior proceeding was by reason of a defect in entertainability (objection to maintainability), and that both proceedings related to the same matter in issue. The fact that the Magistrate's order was an acquittal by reason of non-appearance and not on merits reinforced the characterization of the prior proceeding as a bona fide prosecution in an inappropriate forum. Accordingly, the Court accepted that the time reasonably expended in prosecuting the revision before it was re-examined and corrected could be considered in assessing sufficiency of cause. [Paras 44, 46, 47, 48, 49]

Time spent prosecuting the bona fide revision in the Sessions Court supports exclusion principles under Section 14 and weighs in favour of condoning delay.

Final Conclusion: The application for condonation of delay is allowed; the delay in filing the application for leave to appeal (with the memo of appeal) is condoned, the Court finding that the Department bona fide prosecuted a revision within time, re-examined the position on objection, and thereafter promptly filed the appeal and delay application demonstrating sufficient cause.

Application under Section 197 - Satisfaction as to total income of the recipient - Effect of pending tax demand on grant of deduction at nil/ lower rate - Decision on extraneous considerations

Application under Section 197 - Satisfaction as to total income of the recipient - Effect of pending tax demand on grant of deduction at nil/ lower rate - Whether an Assessing Officer may reject an application under Section 197 solely because a tax demand is pending for another assessment year. - HELD THAT: - The Court held that the power under Section 197 is confined to the Assessing Officer satisfying himself about the total income of the recipient for the subject assessment year in respect of which deduction at a nil or lower rate is claimed. A pending tax demand for Assessment Year 2018-19 does not, by itself, entitle the Assessing Officer to summarily reject an application under Section 197. The satisfaction recorded under Section 197 must relate to the total income for the assessment year in question and cannot be premised on extraneous considerations such as unrelated pending demands. [Paras 4]

The rejection of the Section 197 applications on the ground of a pending tax demand was not justified and is set aside.

Decision on extraneous considerations - Application under Section 197 - Whether the orders rejecting the Section 197 applications should be set aside and the applications restored for fresh consideration. - HELD THAT: - The Court found that Annexures P/1 and P/2 decided the matter on extraneous considerations and therefore quashed those orders. The application(s) under Section 197 are restored to the Assessing Officer for reconsideration. The Assessing Officer is directed to consider the restored application(s) in accordance with law, applying the correct test of satisfaction as to the recipient's total income for the relevant assessment year, and without regard to the extraneous ground on which the earlier orders were based. [Paras 5]

Annexures P/1 and P/2 are set aside; the applications are restored for fresh consideration by the Assessing Officer in accordance with law.

Final Conclusion: The writ petition is allowed: the impugned orders rejecting the Section 197 applications are quashed and the applications are restored for fresh consideration by the Assessing Officer applying the statutory test of satisfaction as to the recipient's total income for the relevant assessment year (Assessment Year 2018-19).

Principles of natural justice - obligation to afford show cause opportunity in faceless assessment - binding force of Standard Operating Procedure issued by CBDT on Faceless Assessment Unit - reasonable response time to a show cause (minimum seven days as per SOP) - violation of procedure vitiating assessment - remand for fresh consideration with directions to reopen portal and permit response - faceless assessment procedure under Section 144B

Obligation to afford show cause opportunity in faceless assessment - reasonable response time to a show cause (minimum seven days as per SOP) - principles of natural justice - Faceless Assessment Unit was obliged to afford the assessee a reasonable opportunity to respond to a variation proposal and to follow the timelines in the SOP. - HELD THAT: - The Faceless Assessment Unit, when proposing variations in the income/loss determination, must serve a notice calling upon the assessee to show cause as to why assessment should not be completed as per the proposal. The SOP issued by the Central Board of Direct Taxes (NAFC SOP dated 3rd August 2022), while not having statutory force, is required to be adhered to by the Faceless Assessment Unit. Clause N.1.3 requires observance of the principles of natural justice and specifies timelines; Clause N.1.3.1 prescribes seven days as the time to respond to a show cause. A response period of less than seven days is therefore not in conformity with the SOP and, having regard to natural justice, is unreasonable. [Paras 7]

The Faceless Assessment Unit was required to provide a minimum seven days' response time and to adhere to principles of natural justice when issuing a show cause proposing variations.

Violation of procedure vitiating assessment - faceless assessment procedure under Section 144B - Show cause notice affording less than three days and absence of any communication about portal activation violated natural justice and SOP, thereby vitiating the assessment order. - HELD THAT: - The show cause notice in this case afforded the petitioner less than three days to respond, contrary to Clause N.1.3.1 of the SOP which prescribes seven days. The respondents have not produced any evidence that the portal remained activated beyond the period stated in the notice or that the petitioner was informed by email that a 'submit response' button was available after the notice period. In the absence of such communication, the petitioner could not be expected to perceive that it could submit a response after the expiry of the period stated in the show cause. On these facts, the assessment passed under Section 143(3) read with Section 144B is vitiated for breach of natural justice and failure to comply with the SOP. [Paras 8, 9, 10, 11]

The assessment order is vitiated for failure to afford a reasonable opportunity in accordance with the SOP and principles of natural justice.

Remand for fresh consideration with directions to reopen portal and permit response - Appropriate remedy is to set aside the assessment and remit the matter to the Faceless Assessment Unit with directions to permit the petitioner to file its response and to conclude the proceedings within a specified time. - HELD THAT: - Having held that the assessment is vitiated, the court set aside the order dated 11th March 2024 and remitted the matter to the Faceless Assessment Unit for fresh consideration. The petitioner is permitted to file its response within 10 days of the order; the Faceless Assessment Unit must open a micro portal for submission of the response and inform the petitioner of activation by email. The Faceless Assessment Unit is directed to dispose of the proceedings expeditiously within eight weeks from communication of the order. [Paras 11, 12, 13]

Assessment set aside and remanded with directions to reopen a micro portal, allow the petitioner 10 days to respond, notify activation by email, and conclude proceedings within eight weeks.

Final Conclusion: The assessment order dated 11th March 2024 for assessment year 2022 23 is set aside for failure to comply with the SOP and principles of natural justice; the matter is remanded to the Faceless Assessment Unit with directions to enable the petitioner to submit its response within 10 days via a micro portal (activation to be intimated by email) and to conclude the proceedings within eight weeks.

Quashing of notice under Section 148A(b) as amounting to impermissible change of opinion - Reopening assessment on basis of Internal Audit objection - Doctrine of change of opinion and its prohibition in reassessment - Reason to believe test under Section 147 - Scope of "information with the Assessing Officer" under Explanation 1(ii) to Section 148

Quashing of notice under Section 148A(b) as amounting to impermissible change of opinion - Doctrine of change of opinion and its prohibition in reassessment - Reopening assessment on basis of Internal Audit objection - Reason to believe test under Section 147 - Validity of the notice dated 19.03.2024 issued under Section 148A(b) insofar as it seeks to reopen assessment for AY 2017-18. - HELD THAT: - The Court found that the specific matter relied upon - deposit of Specified Bank Notes (SBNs) during the demonetization period - had been examined and dealt with by the Assessing Officer in the scrutiny assessment completed under Section 143(3) on 31.12.2019. The Internal Audit Party's objection recorded essentially repeats the same query and therefore represents an attempt to review an issue already considered by the AO. Relying on the principle in Mangalam Publications (as discussed in the judgment) and the settled law prohibiting reassessment based on mere change of opinion, the Court held that issuance of a fresh notice under Section 148A(b) on that ground was impermissible. The Court emphasised that reopening cannot be used to re-examine an issue already adjudicated in the assessment and declined to undertake a merits reappraisal at the writ stage. Applying these principles to the facts, the impugned notice was quashed. [Paras 16, 17, 18, 20]

The notice dated 19.03.2024 under Section 148A(b) is quashed and set aside insofar as it seeks reassessment for AY 2017-18.

Scope of "information with the Assessing Officer" under Explanation 1(ii) to Section 148 - Whether the scope and import of Explanation 1(ii) to Section 148 require adjudication in the present facts. - HELD THAT: - The Court expressly declined to decide the scope and import of Explanation 1(ii) to Section 148 in the present matter. It observed that the facts here did not require delving into that provision because the Internal Audit objection merely revisited an issue already examined during assessment. The question as to the ambit of Explanation 1(ii) was left open for determination in an appropriate case where the issue directly arises. [Paras 19]

Left open for consideration in an appropriate case; not adjudicated in this petition.

Final Conclusion: The petition is allowed: the notice dated 19.03.2024 under Section 148A(b) is quashed and set aside in relation to AY 2017-18; the Court did not decide the scope of Explanation 1(ii) to Section 148 and left that question open for future adjudication.

Deduction under section 54F - treatment of multiple flats as a single residential house - reliance on builder's affidavit and revised plan - physical verification for factual determination

Deduction under section 54F - treatment of multiple flats as a single residential house - physical verification for factual determination - reliance on builder's affidavit and revised plan - Whether the two adjoining flats (Nos. 601 & 602) purchased by the assessee can be treated as one residential house for grant of exemption under section 54F, and whether the claim should be adjudicated on the basis of the documents on record or after physical verification. - HELD THAT: - The authorities are in conflict on the factual question: the assessee produced an agreement, an affidavit of the developer and a revised plan treating the two flats as a single unit, whereas the AO relied on the core plan showing an 'open to sky' space between the two flats and concluded they were separate. No physical verification was carried out by revenue despite the factual contradiction. Given the dispute turns on physical facts as to whether the two units have been combined into one residential house, the Tribunal found it necessary to remit the matter to the AO for on-site verification. The AO is directed to physically verify the flats; if on verification both flats are found to have been combined into one residential house, the assessee should be allowed the exemption under section 54F; if not, the claim shall be disallowed. The Tribunal did not decide the merits on the documentary evidence and therefore declined to substitute its own factual finding without verification. [Paras 4]

Matter remitted to the AO for physical verification of the flats; if verified as combined, allow deduction under section 54F; appeal allowed for statistical purposes.

Final Conclusion: The ITAT remitted the factual controversy regarding whether the two adjoining flats constitute one residential house to the AO for physical verification and directed that the exemption under section 54F be allowed if the AO's verification confirms the flats have been combined; the appeal is disposed of for statistical purposes.

Estimation of income by applying average net profit rate - comparability of profit margins across different business activities - natural justice - consideration of submissions filed during appellate proceedings - remand for fresh adjudication and opportunity of hearing - setting aside appellate order and remittal to Assessing Officer

Estimation of income by applying average net profit rate - comparability of profit margins across different business activities - Addition by estimating business income at 9.39% of turnover was not finally adjudicated and was remitted for fresh consideration. - HELD THAT: - The Tribunal found that the Assessing Officer computed business income for AY 2016-17 by applying an average net profit percentage (9.39%) derived from AY 2013-14 to AY 2015-16 and assessed income accordingly. The claimant contended that the impugned year involved wholesale trading of food grains with inherently lower profit margins compared to earlier years when the assessee carried out retail trade, making the earlier years' net profit ratios non-comparable. The Tribunal observed that material and submissions filed before the CIT(A) on 12.04.2024 were not considered and that the assessee sought an opportunity to substantiate that wholesale margins were significantly lower. In the interest of natural justice and proper adjudication on merits, the Tribunal did not decide the correctness of the estimation method or quantum but set aside the CIT(A) order and remitted the matter to the Assessing Officer for fresh adjudication after affording the assessee adequate opportunity to produce evidence and be heard.

Order of CIT(A) sustaining the estimation addition is set aside and the issue is remitted to the Assessing Officer for fresh adjudication with opportunity to the assessee to submit evidence.

Natural justice - consideration of submissions filed during appellate proceedings - remand for fresh adjudication and opportunity of hearing - setting aside appellate order and remittal to Assessing Officer - Disallowance of deduction claimed under section 24(b) was not finally adjudicated and was remitted for fresh consideration. - HELD THAT: - The assessee challenged the disallowance of deduction under section 24(b), contending that the claim had been made in returns and that the Assessing Officer had not expressly disallowed it in the section 144 order. The Tribunal noted that the CIT(A) confirmed the disallowance but failed to consider submissions and material filed on 12.04.2024. Rather than decide the entitlement to the deduction on the record before it, the Tribunal granted the assessee an opportunity to place material before the Assessing Officer. Consequently, the Tribunal set aside the appellate order and remitted the issue of the claimed deduction to the Assessing Officer for fresh adjudication after affording the assessee adequate opportunity to be heard and to produce supporting evidence.

Disallowance under section 24(b) remitted to the Assessing Officer for fresh consideration with directions to provide the assessee an opportunity of hearing.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes, set aside the CIT(A) order and remitted the disputed additions and the disallowance to the file of the Assessing Officer for fresh adjudication, directing that the assessee be afforded adequate opportunity to submit evidence and be heard.

Profits in lieu of salary under section 17(3) - voluntary ex gratia / settlement receipt - capital receipt - tax relief under section 89 - precedential weight of co-ordinate orders and unchallenged assessments

Profits in lieu of salary under section 17(3) - voluntary ex gratia / settlement receipt - capital receipt - tax relief under section 89 - precedential weight of co-ordinate orders and unchallenged assessments - Characterisation of amounts received under the employer's Financial Scheme as taxable 'profits in lieu of salary' or as voluntary/capital receipts and the consequent denial of relief under section 89. - HELD THAT: - The Assessing Officer treated the amounts paid under the Financial Scheme as taxable under the definition of 'profits in lieu of salary' and denied the section 89 relief. The CIT(A) upheld that view, relying on the scheme wording and the employer's Form 16. The Tribunal, however, examined the scheme terms showing the payments were offered on a voluntary basis and noted that several co-ordinate authorities and AOs in identical factual situations (employees of the same employer who opted under the Scheme) had treated such receipts as capital/voluntary and not brought them to tax; those assessments remained unchallenged by the Revenue. The Tribunal also relied on judicial precedent (including the Calcutta High Court decision in CIT v. Ajit Kumar Bose) establishing that where a service contract permits termination without obligation to pay compensation and a payment is made ex gratia/voluntarily in connection with cessation, it does not qualify as 'compensation' within section 17(3). Applying these principles to the scheme and the contemporaneous, unchallenged decisions in materially similar cases, the Tribunal found the payments to be voluntary/capital in nature and not taxable as profits in lieu of salary, thereby removing the basis for denying relief under section 89. For these reasons the Tribunal set aside the CIT(A)'s order and directed deletion of the addition. [Paras 24, 25, 26, 28, 29]

Addition treated as 'profits in lieu of salary' deleted; amounts held to be voluntary/capital receipts and section 89 relief issue rendered moot; appeal allowed.

Final Conclusion: The Tribunal set aside the CIT(A) order, held that the amounts received under the employer's Financial Scheme were voluntary/capital in nature and not taxable as 'profits in lieu of salary', directed deletion of the addition, and allowed the appeal.

Exemption under Section 54F - construction of new residential house commenced before transfer - Exemption under Section 54F - cost of new residential house (including construction) to be set off against capital gain - Addition under Section 68 - unexplained cash credit and burden of proof on the assessee - Evaluation of contemporaneous documentary evidence (approved plan, electricity/water connections, property tax, photographs, witness confirmations) to establish a new dwelling unit

Exemption under Section 54F - construction of new residential house commenced before transfer - Exemption under Section 54F - cost of new residential house (including construction) to be set off against capital gain - Claim of deduction under Section 54F of the Income-tax Act, 1961 in respect of construction of a first-floor dwelling unit atop an existing ground-floor building - HELD THAT: - The Tribunal held that Section 54(1) permits exemption where a new residential house is purchased one year before or two years after the date of transfer, or constructed within three years after the date of transfer, and that the legislature did not intend to exclude construction commenced prior to the date of transfer where the construction satisfies the statutory time conditions. The assessee produced approved building plan, separate electricity and water connections, enhanced property tax receipts and photographs showing an independent staircase, kitchen and bedroom for the first floor. Relying on the Madras High Court authority cited by the Tribunal and on the Tribunal's own precedent, the facts established that a separate new dwelling unit was constructed within the period contemplated by Section 54(1). The AO's denial based on the assertion that the work was only an extension was rejected as factually distinguishable from cases where no separate dwelling unit was shown to exist. On this basis the Tribunal found that the assessee discharged the evidentiary burden and directed grant of deduction under Section 54F. [Paras 9]

Deduction claimed under Section 54F allowed; impugned orders denying exemption set aside and AO directed to grant the deduction.

Addition under Section 68 - unexplained cash credit and burden of proof on the assessee - Evaluation of contemporaneous documentary evidence (agreement for sale, bank statements, receipts, corroborative replies) to establish source of funds - Sustainability of addition under Section 68 of the Income-tax Act, 1961 of cash receipts asserted to be from family members amounting to the impugned sum - HELD THAT: - The Tribunal examined the documentary record including the original 2007 agreement for sale with the assessee's father, details of payments noted on the agreement, bank statements showing withdrawals, bank loan documents, receipts evidencing repayment on cancellation of the 2007 transaction and corroborative replies obtained by the CIT(A) from the vendor's family members and the stamp vendor regarding genuineness of the agreement. The AO had accepted receipt of the sale consideration in October 2011 but had not made further enquiries before invoking Section 68. On the totality of contemporaneous evidence and corroboration, the Tribunal concluded that the assessee had satisfactorily proved the nature and source of the impugned amount and that the Section 68 addition was not warranted. [Paras 11]

Addition made under Section 68 deleted.

Final Conclusion: Appeal allowed: the claim for deduction under Section 54F is allowed and the addition under Section 68 is deleted; the assessment is to be revised accordingly.

Power of the Tribunal to grant stay as ancillary to appellate jurisdiction - maintainability of stay application before the Income Tax Appellate Tribunal - jurisdiction to cancel registration under provisions governing charitable trusts - retrospective cancellation of registration under Sections 12A/12AA/12AB - tests for grant of interim relief: prima facie case, balance of convenience, irreparable injury - effect of transfer of 'case' under section 127 and consequence of Board notifications on territorial jurisdiction - public interest as a factor in interim relief

Power of the Tribunal to grant stay as ancillary to appellate jurisdiction - maintainability of stay application before the Income Tax Appellate Tribunal - Whether the ITAT has jurisdiction and power to grant stay of the operation of the cancellation order pending disposal of the appeal - HELD THAT: - The Tribunal examined precedents including the decisions in M.K. Mohammed Kunhi, ITO v. Khalid Mehdi Khan and CIT v. ITAT and observed that the appellate power conferred by Section 254(1) carries with it ancillary powers necessary to make the appeal effective. The Tribunal held that it may, in appropriate cases, grant stay of the operation of an order which is the subject matter of appeal where non-grant of stay would render the appeal meaningless or nugatory; the proviso to Section 254(2) and Rule 35A(1)(a) do not oust this implied power. However, the Tribunal proceeded to apply the established tests for interim relief and proceeded to decide entitlement on the facts of the present case. [Paras 8, 9]

ITAT has power under Section 254(1) to grant stay in appropriate cases; the stay application is maintainable but entitlement depends on satisfaction of the interim relief tests.

Jurisdiction to cancel registration under provisions governing charitable trusts - effect of transfer of 'case' under section 127 and consequence of Board notifications on territorial jurisdiction - Whether the Principal Commissioner (Central)-2, Delhi lacked jurisdiction to pass the cancellation order dated 30.09.2023 - HELD THAT: - The Tribunal considered the parties' competing contentions regarding Board notifications and the Section 127 transfer order. It noted the Revenue's reliance on Notification No.70/2014 (13.11.2014) and the effect of a Section 127 transfer (Explanation to Section 127) which, read together, vest powers in the PCIT where the AO and proceedings stand transferred. The Tribunal observed that earlier decisions relied upon by the assessee had not dealt with Notification No.70/2014 and therefore could not be held to establish lack of jurisdiction. On the materials before it, the Tribunal concluded that it could not hold that the Pr. CIT(Central)-2, Delhi had no jurisdiction to cancel the registration. [Paras 9, 10]

The challenge to the jurisdiction of Pr. CIT(Central)-2 to pass the cancellation order is not made out on a prima facie basis; jurisdiction to pass the order cannot be denied.

Retrospective cancellation of registration under Sections 12A/12AA/12AB - tests for grant of interim relief: prima facie case, balance of convenience, irreparable injury - Whether the cancellation order could be stayed on the grounds that retrospective cancellation was impermissible and that the assessee had a prima facie case, balance of convenience and would suffer irreparable injury - HELD THAT: - The Tribunal reviewed authorities and conflicting views on retrospective operation of cancellation, noting that the Delhi Bench decision in Young Indian supported retrospective cancellation while several High Court decisions were to the contrary. The Tribunal found insufficient merit in the assessee's contentions: it observed prima facie contradictions between the assessee's explanations and materials collected in survey (including emails and funding records) that called into question genuineness and conformity with objects. Applying the conventional three-factor test for interim relief, the Tribunal held that the assessee failed to establish a prima facie case, balance of convenience or irreparable harm. The Tribunal also noted public interest considerations and distinguished other High Court interim orders relied upon by the assessee on their facts. [Paras 10, 11]

No stay; the assessee failed to satisfy the tests for interim relief and the cancellation order will not be stayed.

Final Conclusion: The Tribunal held that it possesses the incidental power under Section 254(1) to grant stay of an order challenged before it, but on the facts of this case the assessee did not make out a prima facie case, balance of convenience or irreparable injury to justify stay of the Principal CIT's cancellation order dated 30.09.2023 (challenging cancellation of registration for Assessment Years 2014-15 to 2022-23 and 2023-24 onwards). The stay application was dismissed.

Revision under section 263 - Income Computation and Disclosure Standards (ICDS) - Clause 13(e) of Form 3CD - Erroneous and prejudicial to the interests of the Revenue - Assessing Officer's application of mind - Tax audit disclosure and effect of ICDS adjustment on taxable income

Revision under section 263 - Clause 13(e) of Form 3CD - Income Computation and Disclosure Standards (ICDS) - Assessing Officer's application of mind - Ld. Pr. CIT's exercise of power under section 263 to revise the assessment was unjustified and the revision order was quashed. - HELD THAT: - The Tribunal found that the adjustment disclosed in Clause 13(e) of the tax audit report relating to ICDS-V (increase in profit on account of difference between depreciation as per books and as per tax law) had been specifically placed before and considered by the Assessing Officer during the original assessment proceedings. The AO had issued a specific query (Q6) seeking detailed working of the ICDS adjustments and the assessee furnished audited financial statements, computation of income, tax audit report and return showing that depreciation as per books was added back and depreciation as per the Income-tax Act was deducted, reflecting the ICDS-related adjustment in the returned income. The Pr. CIT proceeded on an erroneous premise by treating the auditors' note as not acted upon, and provisionally computed an under-assessment without adequately taking into account the material placed on record and the AO's contemporaneous consideration of the issue. Since the matter had been examined and not left unaddressed by the AO, the prerequisite for invoking revision under section 263-an assessment order being erroneous and prejudicial to the interests of the Revenue-was not made out. The impugned revision order therefore lacked sustenance and was quashed. [Paras 3, 4]

Impugned order passed by the Pr. CIT under section 263 is quashed and the assessee's appeal is allowed.

Final Conclusion: The Tribunal held that the Pr. CIT erred in invoking revisionary power under section 263 since the AO had considered the ICDS-related adjustment disclosed in the tax audit report and the assessment order was not shown to be erroneous and prejudicial to the Revenue; accordingly the revision order is quashed and the appeal is allowed for AY 2017-18.

Deductions under section 57(iii) - expenses wholly and exclusively for making or earning interest income - onus on assessee to prove direct nexus between income and expenditure - remand for fresh adjudication where particulars are not furnished - prohibition of double addition/double taxation of same income

Deductions under section 57(iii) - expenses wholly and exclusively for making or earning interest income - onus on assessee to prove direct nexus between income and expenditure - remand for fresh adjudication where particulars are not furnished - Admissibility of deductions of interest, legal expenses, bank charges and brokerage claimed under section 57(iii). - HELD THAT: - The assessee claimed aggregate deductions of Rs. 59,71,338 against gross interest receipts of Rs. 22,30,079 under the head 'other sources'. Under section 57(iii) such deductions are allowable only if expenses were laid out wholly and exclusively for earning the interest income and the assessee bears the burden of proving direct nexus. The record shows no adequate particulars were furnished to the AO despite multiple notices and the lone reply was a part reply. While the AO's blanket disallowance (treating that no borrowed funds were used at all) was excessive, the assessee also failed to establish utilisation of borrowed funds for making loans or to justify other expenses. Given the absence of complete particulars and the need for the AO to examine claims under the touchstone of section 57(iii), the Tribunal remands the issue to the AO for fresh adjudication after the assessee furnishes full particulars; the AO must decide afresh uninfluenced by the earlier order. [Paras 9]

Remanded to the AO for fresh adjudication after the assessee files complete particulars to substantiate deductions claimed under section 57(iii).

Prohibition of double addition/double taxation of same income - Validity of addition of interest income of Rs. 22,30,079 made by the AO in assessment. - HELD THAT: - The gross interest receipt of Rs. 22,30,079 is already reflected in the computation of total income (the other sources head showed a net loss after claimed deductions). By making a further addition of the same interest amount in the assessment, the AO effectively taxed the same receipt twice. The Tribunal finds such double addition untenable and deletes the addition. [Paras 11]

Addition of Rs. 22,30,079 made by the AO is deleted.

Final Conclusion: The appeal is allowed in part: the addition of interest income is deleted; the claim for deductions under section 57(iii) is remitted to the AO for fresh adjudication after the assessee furnishes complete particulars to establish nexus and that the expenses were wholly and exclusively for earning the interest income.

Classification of interest income - income from business - income from other sources - treatment of income of a Non-Banking Financial Company (NBFC) - re-characterisation of income

Classification of interest income - income from business - income from other sources - treatment of income of a Non-Banking Financial Company (NBFC) - Interest income earned by the assessee, a registered NBFC, is to be treated as income from business and not as income from other sources. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion reversing the Assessing Officer's classification. The AO had characterized the interest as income from other sources on the ground that interest was earned from investment of surplus funds and that the assessee had not shown securities as stock-in-trade. The Tribunal agreed with the CIT(A) that such characterisation was misplaced because the assessee is a registered NBFC whose core business includes money lending and investment in securities, and therefore interest derived from those activities arises in the ordinary course of its business. Reliance on Co-ordinate Bench precedents was noted to support the proposition that where a company carries on finance/lending or investment activities as its business (and registration as NBFC exists), interest income should be assessed under the head business income. It was held to be far-fetched to treat income from the assessee's main business activity as income from other sources, and no error was found in the reasoning of the CIT(A). [Paras 6, 7]

The classification of the interest income as business income is affirmed and the Assessing Officer's re-characterisation is set aside.

Final Conclusion: The Revenue's appeal is dismissed and the CIT(A)'s re-characterisation of the interest income as business income for Assessment Year 2018-19 is upheld.

Rectification under Section 154 - requirement of opportunity before enhancing assessment - violation of principle of natural justice - limitation for rectification orders - four years - date of order as recorded in ITD database and service evidence as material for computing limitation

Rectification under Section 154 - requirement of opportunity before enhancing assessment - violation of principle of natural justice - Section 154(3) - Validity of the order passed under Section 154 insofar as it enhanced assessment without giving opportunity to the assessee - HELD THAT: - The Tribunal examined the case record and found no copy of the notice dated 01.12.2015 (referred to in the AO's order) nor any evidence of service of that notice. Although a notice dated 01.03.2018 exists on record, it is not mentioned in the order under Section 154 dated 19.03.2018 and there is no evidence of its service. The order sheet contains no noting of proceedings under Section 154. Section 154(3) requires that where an amendment enhances assessment or increases liability, an opportunity must be given before passing the order. In absence of any evidence that opportunity was afforded and given the contradiction between notices referred to and notices on file, the Tribunal concluded that the AO passed the rectification order in contravention of Section 154(3) and of the principles of natural justice. [Paras 8, 9, 11]

Order under Section 154 struck down as passed without giving the statutory opportunity; it violated Section 154(3) and principles of natural justice.

Limitation for rectification orders - four years - date of order as recorded in ITD database and service evidence as material for computing limitation - Whether the rectification order was barred by limitation - HELD THAT: - The AO's order bears the internal date 19.03.2018 but was uploaded in the ITD database with date 01.06.2018. The demand was dispatched by speed post and the assessee produced the envelope showing dispatch/receipt dates in June 2018. The Revenue did not provide a satisfactory explanation for the gap between the purported order date and dispatch/service. The Tribunal found no evidence on file of passing the order on 19.03.2018 and accepted the ITD record and dispatch evidence as establishing the operative date. As the order was thus not passed within the permissible four-year period, it was held to be time barred. [Paras 10, 11]

Rectification order held to be barred by limitation and therefore invalid.

Evidentiary value of departmental records and service acknowledgements - requirement to record proceedings on the order sheet - Assessment of the record keeping and evidentiary materials relied upon by the Revenue to justify the rectification - HELD THAT: - On perusal of the case file the Tribunal noted absence of the alleged earlier notice and lack of any order sheet entries relating to Section 154 proceedings. The only contemporaneous notice on file (01.03.2018) was not referenced in the AO's order. The departmental failure to place the purported notice on record or to explain the delay undermined the credibility of the AO's chronology. The Tribunal treated ITD database entries and the postal dispatch/receipt evidence presented by the assessee as decisive on when the order was effectively made/dispatched. [Paras 8, 9, 10]

Findings and record keeping of the Revenue insufficient to sustain the rectification; ITD data and service evidence preferred.

Final Conclusion: The rectification order dated 19.03.2018 was cancelled: it was passed without affording the opportunity mandated by Section 154(3), departmental records did not support the AO's chronology, and the order was time barred as per ITD records and dispatch evidence; the assessee's appeal is allowed.

Penalty under Section 114(iii) and Section 114AA of the Customs Act, 1962 for overvaluation and fraudulent duty drawback - liability of employees for acts of employer and requirement of mens rea - evidentiary value of contradictory or allegedly coerced statements - requirement of documentary evidence to prove sharing of duty drawback/kickbacks - duty of adjudicating authority to cross-examine witnesses where denial is made

Penalty under Section 114(iii) and Section 114AA of the Customs Act, 1962 for overvaluation and fraudulent duty drawback - evidentiary value of contradictory or allegedly coerced statements - requirement of documentary evidence to prove sharing of duty drawback/kickbacks - duty of adjudicating authority to cross-examine witnesses where denial is made - Whether penalty could be sustained against Shri Pratik Bhansali for alleged overvaluation and receipt of 40% drawback share - HELD THAT: - The Tribunal found that Shri Pratik Bhansali was neither exporter nor CHA and had no locus to claim or receive drawback. His initial statement denied involvement and subsequent statements purportedly admitting a 40% share were contradictory and recorded after repeated summonings; such conflicting statements could not be reliably relied upon. No documentary evidence was produced to show any past receipt or entitlement to sharing of drawback. The adjudicating authority also did not cross-examine witnesses after the appellant's denials. On these bases the ingredients necessary to impose penalties under the quoted provisions were not established against him. [Paras 4]

Penalties under Section 114(iii) and Section 114AA set aside and appeal allowed as regards Shri Pratik Bhansali

Penalty under Section 114(iii) and Section 114AA of the Customs Act, 1962 for overvaluation and fraudulent duty drawback - requirement of documentary evidence to prove sharing of duty drawback/kickbacks - evidentiary value of contradictory or allegedly coerced statements - Whether penalty could be sustained against Shri Zayd Chakkiwala for alleged role in overvaluation and entitlement to 60% drawback share - HELD THAT: - The Tribunal observed that Shri Zayd Chakkiwala was not the exporter or CHA and had no locus to claim or receive drawback. The record lacked documentary proof that he had received or was entitled to a share of drawback; statements implicating him were not corroborated and the exporter attributed primary responsibility to another person (Namubhai). In absence of documentary evidence and given reliance on statements not independently verified, the requisites for imposing penalties under the provisions were not made out. [Paras 4]

Penalties under Section 114(iii) and Section 114AA set aside and appeal allowed as regards Shri Zayd Chakkiwala

Liability of employees for acts of employer and requirement of mens rea - penalty under Section 114(iii) and Section 114AA of the Customs Act, 1962 for overvaluation and fraudulent duty drawback - Whether penalty could be sustained against Shri Kaustubh Parikh, a junior employee of CHA, for overvaluation and wrongful availment of drawback - HELD THAT: - The Tribunal recorded that Shri Kaustubh Parikh was a mere employee who acted on instructions of seniors, received fixed salary, and had not benefited from any alleged excess drawback. The CHA itself had been penalized, and there was no material to show mens rea or that the employee had knowledge that goods would be confiscable or that he participated in wrongful availment. Under settled principles an employee cannot be penalized absent evidence of culpable knowledge or benefit; accordingly the penalties could not be sustained. [Paras 4]

Penalties under Section 114(iii) and Section 114AA set aside and appeal allowed as regards Shri Kaustubh Parikh

Final Conclusion: The Tribunal held that none of the three appellants were liable for the penalties imposed for alleged overvaluation and fraudulent claim of duty drawback; in the absence of documentary proof, benefit or locus to claim drawback, reliable admissions, or evidence of mens rea, the penalties under Section 114(iii) and Section 114AA were set aside and the appeals allowed.

Forged and void-ab-initio - show cause notice is the foundation of the department's case - principles of natural justice - duty to furnish relied upon documents - inadmissibility of after-acquired material relied upon during adjudication - onus on department to prove forgery by independent investigation

Forged and void-ab-initio - onus on department to prove forgery by independent investigation - show cause notice is the foundation of the department's case - Whether the DEPB licences/Release Advices relied upon by the department were proved to be forged so as to justify denial of exemption, demand of duty and imposition of penalty. - HELD THAT: - The Tribunal found that the show cause notice was issued solely on a letter dated 25.08.2001 which only expressed doubt and recorded that investigations had been initiated; no subsequent investigation or evidentiary steps were taken to establish forgery. Records do not disclose inquiries with officers at the port who had registered the DEPB licences and issued Release Advices, nor any verification with DGFT or forensic examination prior to issuance of the show cause notice. Applying the principle that the show cause notice is the foundation of the department's case, the Tribunal held that vague allegations unsupported by independent investigation do not prove forgery. In consequence, the alleged forged nature of the DEPB licences was not established beyond doubt and could not sustain the denial of exemption, duty demand and penalty. [Paras 4]

Alleged forgery of DEPB licences not proved; exemptions cannot be denied and duty demand and penalty cannot be sustained.

Inadmissibility of after-acquired material relied upon during adjudication - principles of natural justice - duty to furnish relied upon documents - Whether the adjudicating authority could rely on a letter dated 06.11.2012 from DGFT produced after issuance of the show cause notice to sustain a finding of forgery. - HELD THAT: - The Tribunal observed that the Commissioner, on de-novo adjudication, relied upon a DGFT letter dated 06.11.2012 which was neither part of the original show cause notice nor furnished to the appellants earlier. The DGFT communication did not categorically state the licences were forged and did not exclude other possibilities. The adjudicating authority cannot improve the department's case by introducing new material at a belated stage; reliance on such after-acquired material to substitute for evidence that should have formed part of the show cause notice is impermissible. Further, non-supply of the foundational letter denied the appellants an opportunity in accordance with the principles of natural justice. [Paras 4]

Reliance on the DGFT letter produced during adjudication was impermissible; new material not in the show cause notice cannot be used to validate the demand.

Final Conclusion: Impugned adjudication orders set aside; appeals allowed and confirmed duty demand and penalties quashed because forgery of DEPB licences was not proved and the department impermissibly relied on after-acquired material not disclosed to the appellants.

Quashing of criminal complaint under Section 482 Cr.P.C. - Offences by companies - vicarious liability of directors - proof of directorship at the time of commission of offence - Form 32 as public document and evidence of resignation

Proof of directorship at the time of commission of offence - Form 32 as public document and evidence of resignation - vicarious liability of directors - quashing of criminal complaint under Section 482 Cr.P.C. - Whether the criminal complaint could be continued against the petitioners when they had resigned as directors prior to the alleged commission of the offence. - HELD THAT: - The Court held that Section 27 of the SEBI Act requires proof that a person was a director "at the time the offence was committed" to attract liability. The petitioners produced a certified copy of Form-32 evidencing resignation on 23.02.1998, which preceded the cause of action alleged in the complaint. The Form-32, being a statutory public document, was filed by SEBI itself before the trial court and its authenticity was not disputed; a subsequent letter of the company listing directors could not override the Form-32. Given the uncontroverted statutory record proving resignation before the alleged offence, the trial could not permissibly continue against the petitioners. The Court therefore exercised its inherent jurisdiction under Section 482 Cr.P.C. to prevent continuation of proceedings lacking the requisite factual foundation of directorship at the time of the offence. [Paras 11, 12, 13, 14, 15]

The petition is allowed and Criminal Complaint No. 39/2009 insofar as it pertains to the petitioners is quashed.

Final Conclusion: Proceedings against the petitioners were quashed because certified Form-32 established their resignation as directors prior to the alleged commission of offence, removing the factual basis for their vicarious liability and justifying exercise of the High Court's inherent power to quash under Section 482 Cr.P.C.

Providing investment advice without registration - investment adviser - prima facie violation of sub-section (1) of section 12 of the SEBI Act and sub-regulation (1) of regulation 3 of the IA Regulations - prima facie violation of section 12A of the SEBI Act and provisions of the PFUTP Regulations (manipulative, fraudulent or unfair trade practices) - liability of directors and persons in charge under section 27 of the SEBI Act - interim impounding and restraint orders - power to issue interim directions under sections 11, 11B and 11D of the SEBI Act - disgorgement and creation of escrow to secure unlawful gains

Investment adviser - providing investment advice without registration - Activities of Ravindra Bharti Education Institute Private Limited prima facie fall within the ambit of providing investment advice for consideration. - HELD THAT: - On examination of agreements, website material, email communications, call recordings and payment receipts, the entity (Noticee no.1) entered into Wealth Management contracts, charged management and performance fees, issued specific buy/sell recommendations with quantities and prices, sought contract notes from clients and used common premises and staff with an authorised person. These factual findings, including the contractual powers to make investment decisions and related fee structures, demonstrate that the Noticee no.1 was engaged in rendering advice relating to investing in, purchasing, selling or otherwise dealing in securities for the benefit of clients in lieu of consideration, thereby prima facie acting as an investment adviser. [Paras 21, 25, 31, 32, 36]

Noticee no.1 is prima facie acting as an investment adviser by providing investment advice in lieu of consideration.

Prima facie violation of sub-section (1) of section 12 of the SEBI Act and sub-regulation (1) of regulation 3 of the IA Regulations - Noticee no.1 has prima facie contravened the prohibition on acting as an investment adviser without obtaining registration from SEBI. - HELD THAT: - The IA Regulations mandate registration before acting as an investment adviser. The material shows Noticee no.1 entered into advisory contracts, collected substantial fees from clients and performed advisory functions without any registration with SEBI. The admitted receipt of advisory fees, corroborated by bank entries and payment gateway records, and the absence of registration support the conclusion of a prima facie violation of section 12 read with regulation 3 of the IA Regulations. [Paras 29, 30, 31, 32, 33]

Noticee no.1 has, prima facie, violated sub-section (1) of section 12 of the SEBI Act read with sub-regulation (1) of regulation 3 of the IA Regulations.

Prima facie violation of section 12A of the SEBI Act and provisions of the PFUTP Regulations (manipulative, fraudulent or unfair trade practices) - mis-selling and fraudulent inducement - Noticee no.1 is prima facie guilty of manipulative, fraudulent or unfair trade practices and related contraventions under section 12A and the PFUTP Regulations. - HELD THAT: - Evidence including promotional representations promising very high returns, specific recommendations influencing trading, telephone and email solicitations, inducement to trade to increase profit-sharing, and instances where clients merely acquiesced to instructions collectively indicate dissemination of information designed to influence investor decisions and probable fraudulent inducement/mis selling. These facts bring the conduct within the scope of clauses (k), (o) and (s) of regulation 4 of the PFUTP Regulations and the prohibitions under section 12A of the SEBI Act, meriting a prima facie finding of manipulative/fraudulent/unfair trade practice. [Paras 34, 35, 36, 37, 38]

Noticee no.1 has, prima facie, violated section 12A of the SEBI Act and relevant provisions of the PFUTP Regulations.

Liability of directors and persons in charge under section 27 of the SEBI Act - Noticees nos. 2, 3, 4 and 5 are prima facie liable for the contraventions committed by the company under section 27 of the SEBI Act for their respective periods of directorship. - HELD THAT: - Section 27 makes persons in charge of business of a company liable for contraventions committed by the company unless they prove lack of knowledge or due diligence. The record shows Noticees nos.2 and 3 were promoter-directors and controlled and managed the company during the period when the impugned activities occurred; Noticees nos.4 and 5 were appointed as directors while activities continued and had operational association (including prior employment). Given shareholding, control and operational involvement, the adjudicator holds these persons prima facie responsible under section 27 for the company's contraventions. [Paras 41, 42, 43, 44, 45]

Noticees nos. 2, 3, 4 and 5 are prima facie liable under section 27 for the contraventions of Noticee no.1 for their respective periods of directorship.

Interim impounding and restraint orders - power to issue interim directions under sections 11, 11B and 11D of the SEBI Act - disgorgement and creation of escrow to secure unlawful gains - Interim directions including restraint from advisory activity and dealing in securities, impoundment of estimated unlawful gains and related asset/account restrictions are warranted and are accordingly issued as a show cause interim order. - HELD THAT: - Given the prima facie findings of unregistered advisory activity, potential continued operation, social media influence on investors, incomplete responses and non furnishing of email dumps, emergent regulatory intervention is necessary to protect investors and prevent dissipation of proceeds. Exercising powers under sections 11, 11B, 11D and delegated authority, the adjudicator issues interim directions: cessation of offering advisory services; restraint from buying/selling securities; prohibition on association with SEBI registered intermediaries for Noticees 2-5; impoundment of the estimated unlawful gain of the advisory business; direction to deposit that amount in an interest bearing escrow with lien in favour of SEBI; bank/depository/RTAs to restrict debits/transfers except as permitted; prohibition on disposal of assets; requirement to furnish inventories and client/account details; cessation of collection of fees and removal of promotional materials, with limited carve outs for winding up pre existing obligations. The order is treated as a show cause notice and affords 21 days for reply and an opportunity of personal hearing. [Paras 50, 52, 53, 57, 58]

Interim directions are issued restraining the Noticees, impounding the estimated unlawful gain and directing escrow, account and asset restrictions; the order is treated as a show cause notice with 21 days for reply.

Final Conclusion: Based on prima facie findings the adjudicator holds that Ravindra Bharti Education Institute Pvt. Ltd. acted as an unregistered investment adviser and prima facie breached provisions of the SEBI Act, IA Regulations and PFUTP Regulations; certain directors and persons in charge are prima facie liable under section 27; and interim directions (including cessation of advisory activity, restraints on dealing, impoundment of estimated unlawful gains and related banking/demat/asset restrictions) are accordingly issued as a show cause interim order, with 21 days granted for submission of replies and request for personal hearing.

Collective Investment Scheme - Section 11AA test for CIS - registration requirement for collective investment schemes - illegal mobilization of funds - fraudulent and unfair trade practices - designation partners' liability under Section 27 - interim cease and desist directions to protect investors

Collective Investment Scheme - Section 11AA test for CIS - The scheme/arrangement operated through the Growpital platform prima facie constitutes a Collective Investment Scheme. - HELD THAT: - On the material available (website claims, consent letters, LLP agreements, fund flows and financial statements) the arrangement satisfies all four conditions in Section 11AA(2): (i) investor contributions are pooled and utilised for agricultural projects; (ii) contributions are made with a view to receive assured profits; (iii) the property/contribution is managed on behalf of investors by designated partners; and (iv) investors lack day-to-day control. The arrangement does not fall within the exceptions of Section 11AA(3). Therefore, prima facie the scheme/arrangement operated through Growpital falls within the definition of a CIS. [Paras 8]

Prima facie finding that Growpital's scheme/arrangement is a Collective Investment Scheme.

Registration requirement for collective investment schemes - illegal mobilization of funds - fraudulent and unfair trade practices - The Entities have prima facie violated the SEBI Act, CIS Regulations and PFUTP Regulations by operating an unregistered CIS and illegally mobilising funds. - HELD THAT: - Section 12(1B) and Regulation 3 mandate registration before sponsoring or carrying on a CIS. No material shows any of the Entities obtained the requisite certificate or formed a Collective Investment Management Company. Funds mobilised (including substantial sums routed through the escrow account and transferred to ZF Project LLPs) indicate operation of an unregistered CIS. Such illegal mobilisation of funds by sponsoring or carrying on a CIS also amounts to a fraudulent practice under the PFUTP Regulations. Accordingly, prima facie violations of the SEBI Act, CIS Regulations and Regulation 4(2)(t) of PFUTP are found. [Paras 11, 13]

Prima facie violation of registration requirements and PFUTP by operating an unregistered CIS and illegal mobilisation of funds.

Designation partners' liability under Section 27 - Mr. Rituraj Sharma, Ms. Gayatri Rinwa and Mr. Krishna Sharma are prima facie liable for the contraventions. - HELD THAT: - Given that the funds were transacted through accounts of Farm Silo Tech LLP and the ZF Project LLPs and the designated partners control management and operations, Section 27 (applicable to bodies corporate including LLPs) renders persons in charge and responsible for conduct of business liable for contraventions. The material shows these designated partners/directors are in charge of the affairs of the relevant entities and are therefore prima facie liable for the activities undertaken through the Growpital platform. [Paras 18]

Designated partners/directors named are prima facie liable for the contraventions of the Entities.

Interim cease and desist directions to protect investors - Urgent ad interim ex parte directions were necessary and have been issued to protect investors and prevent further mobilisation or diversion of funds. - HELD THAT: - In view of the accelerating trend of collections, substantial funds mobilised, absence of regulatory safeguards (such as mandated disclosures and prohibition on guaranteed returns) and ongoing investor solicitation via social media, the balance of convenience favoured immediate interim measures. Pending detailed examination, SEBI exercised its powers to restrain the Entities from sponsoring/soliciting CIS activity, collecting further funds, diverting or disposing assets, accessing the securities market and to require inventories and investor details; payment aggregator and banks were directed to stop accepting/transferring funds and to freeze relevant accounts. These directions were issued to prevent irreparable investor harm. [Paras 27]

Ad interim ex parte directions issued restraining the Entities and imposing preservation, disclosure and freeze obligations to protect investors.

Final Conclusion: On the prima facie material, SEBI found the Growpital platform to be operating an unregistered Collective Investment Scheme, concluded that the Entities have contravened applicable statutory and regulatory requirements and that the designated partners/directors are prima facie liable; accordingly, SEBI has issued ad interim ex parte directions (including cease and desist, collection and disposal restraints, asset/accounts freeze, and disclosure obligations) to protect investors pending detailed adjudication.

Withdrawal of suit under Order 23 Rule 1 CPC - Discretionary grant of leave to institute fresh suit - Requirement of satisfaction of formal defect or sufficient grounds for liberty to re file - Withdrawal of Section 9 application under the Insolvency and Bankruptcy Code and timeline imperative - Refusal of liberty to re file when withdrawal is sought at a belated stage - Imposition of costs attending withdrawal of proceedings

Withdrawal of suit under Order 23 Rule 1 CPC - Discretionary grant of leave to institute fresh suit - Requirement of satisfaction of formal defect or sufficient grounds for liberty to re file - Withdrawal of Section 9 application under the Insolvency and Bankruptcy Code and timeline imperative - Refusal of liberty to re file when withdrawal is sought at a belated stage - Permissibility of allowing withdrawal of the Section 9 petition while refusing liberty to file a fresh petition. - HELD THAT: - The Tribunal held that Order 23 Rule 1(3) CPC contemplates a discretionary grant of leave to withdraw with liberty to institute a fresh suit only when the court is satisfied that the suit must fail by reason of some formal defect or that there are sufficient grounds to allow a fresh suit. The grant of liberty is therefore not automatic. The Adjudicating Authority recorded that no reason was furnished in the withdrawal pursis nor sufficient cause shown, that the withdrawal was sought at a belated stage, and that IBC proceedings require adherence to timelines; in that context the Authority was entitled to refuse leave to re file. Precedents holding that withdrawal with liberty must be granted in certain facts were distinguished on their facts. Applying the statutory test and the IBC's emphasis on timeline, the Tribunal concluded there was no error in permitting withdrawal but denying liberty to file afresh. [Paras 11, 12, 26, 27]

No error in permitting withdrawal of the Section 9 petition while refusing liberty to file a fresh petition.

Imposition of costs attending withdrawal of proceedings - Validity of the cost of Rs.50,000 imposed by the Adjudicating Authority while permitting withdrawal. - HELD THAT: - Although the Adjudicating Authority was justified in saddling the applicant with costs for withdrawing at a belated stage and for the respondent being put to litigation, the Tribunal found that in the facts of this case imposition of the specific cost was unnecessary. The Tribunal therefore deleted the cost while upholding the refusal of liberty to re file. [Paras 27, 28]

The cost of Rs.50,000 imposed by the Adjudicating Authority is deleted.

Final Conclusion: Both appeals are dismissed except that the impugned order is modified by deleting the imposition of costs; the Adjudicating Authority did not err in allowing withdrawal of the Section 9 petitions while refusing liberty to file fresh petitions in light of Order 23 Rule 1(3) CPC and the timelines inherent in IBC proceedings.

Protection of property under Section 32-A of the IBC - Immunity of approved resolution plan from actions in relation to offences committed prior to commencement of CIRP - Attachment under the Prevention of Money Laundering Act (PMLA) - Power of the adjudicating authority to give effect to Section 32-A - Change in control requirement for invoking Section 32-A

Protection of property under Section 32-A of the IBC - Attachment under the Prevention of Money Laundering Act (PMLA) - Power of the adjudicating authority to give effect to Section 32-A - Whether the Adjudicating Authority erred in refusing to extend the protection of Section 32-A of the IBC to the Successful Resolution Applicant so as to lift attachments by the Enforcement Directorate over properties of the Corporate Debtor - HELD THAT: - The Tribunal held that the Adjudicating Authority erred in refusing to extend the protection of Section 32-A(2) to the Successful Resolution Applicant. The Court examined the statutory scheme of Section 32-A as interpreted by the Supreme Court in Manish Kumar, noting that once the statutory conditions are satisfied (an approved resolution plan resulting in change of control to a person not falling within the disqualifications), Section 32-A bars actions against the property of the corporate debtor in relation to offences committed prior to commencement of CIRP, and the Explanation expressly includes attachment, seizure, retention or confiscation. The Tribunal considered competing High Court decisions (Bombay High Court in Shiv Charan and Delhi High Court in Rajiv Chakraborty) and concluded that reliance by the Adjudicating Authority on Rajiv Chakraborty was misplaced to the extent it led to denial of the Section 32-A protection here. The Tribunal emphasised that the scheme of the Code contemplates protection of property subject to the statutory triggers in Section 32-A and that the Adjudicating Authority should have extended the bar against ED attachments once those triggers were satisfied. Consequently, the finding in the impugned order (paragraph 60) denying Section 32-A protection to the SRA was set aside and the relief sought-extension of Section 32-A protection to lift ED attachment over the corporate debtor's assets-was allowed. [Paras 22, 23]

Allow the appeal; set aside the findings in paragraph 60 of the impugned order and extend the protection of Section 32-A of the IBC to the Successful Resolution Applicant so as to lift the Enforcement Directorate's attachment over the assets of the Corporate Debtor; no order as to costs.

Final Conclusion: The Appellate Tribunal allowed the appeal, holding that the Adjudicating Authority erred in denying Section 32-A protection to the Successful Resolution Applicant; the Tribunal set aside the impugned findings and granted the relief to extend Section 32-A protection to lift Enforcement Directorate attachments over the corporate debtor's assets.

Entertainability of writ petition against show cause notice - scope and effect of Section 37A of FEMA - interim seizure distinct from adjudication under Section 16 - jurisdiction of the Adjudicating Authority and statutory remedies - obligation to exhaust adjudicatory remedy before invoking writ jurisdiction

Entertainability of writ petition against show cause notice - obligation to exhaust adjudicatory remedy before invoking writ jurisdiction - Writ challenge to the show cause notice was not entertainable in the circumstances of the case - HELD THAT: - The Court reiterated the settled principle that High Courts ordinarily should not quash a show cause notice and that writ jurisdiction under Article 226 is discretionary. Interference is appropriate only in exceptional cases where the notice is wholly without jurisdiction, tainted by mala fides, or there is a complete lack of jurisdiction. The Court observed that FEMA provides a complete adjudicatory and appellate scheme (Chapter V and the Rules) and that the recipients of a show cause notice must ordinarily avail themselves of the statutory procedures and remedies before seeking discretionary writ relief. Given that the appellants participated in the adjudication process, availed personal hearings, filed replies and compounding applications, and the adjudication was at a final stage, the writ petitions filed at that stage were premature and not maintainable; the Writ Court was correct in directing the appellants to participate in the adjudication and exhaust statutory remedies. [Paras 2, 16, 27, 29, 33]

Writ petitions challenging the show cause notice are not entertainable and the Writ Court's dismissal is upheld.

Scope and effect of Section 37A of FEMA - interim seizure distinct from adjudication under Section 16 - Section 37A authorises an interim seizure of value equivalent and is procedurally distinct from adjudication under Section 16 - HELD THAT: - The Court examined the scheme of Section 37A and concluded that it is a special provision designed to permit interim seizure of value equivalent situated in India where foreign assets are suspected to be held in contravention of Section 4. Section 37A(1) empowers the Authorised Officer to record reasons and seize equivalent value; Section 37A(2)-(4) provide for placing the seizure before a Competent Authority and for the Adjudicating Authority to deal with the seizure while disposing of adjudication proceedings. Reading Sections 4, 16 and 37A together, the Court held that the seizure is an interim protective measure and that adjudication under Section 16 proceeds independently; the Adjudicating Authority, when passing final adjudication orders, is to take appropriate directions regarding the seized equivalent assets. [Paras 12, 13, 14, 15, 34]

Section 37A constitutes an interim seizure mechanism distinct from the adjudication under Section 16; the Adjudicating Authority must consider and address the effect of any seizure in its final adjudication order.

Effect of Competent Authority's decision on adjudication - pendency of appellate proceedings under FEMA - Rejection of the seizure by the Competent Authority or pendency of appeal under Section 37A does not bar continuation of adjudication under Section 16 - HELD THAT: - The Court considered the contention that once the Competent Authority rejected the Authorised Officer's seizure order, further adjudication should not proceed. It held that the procedures under Section 37A do not operate as a bar to the Adjudicating Authority continuing with adjudication under Section 16. The legislative scheme contemplates distinct roles for Authorised Officer, Competent Authority and Adjudicating Authority; an order on seizure (and any appeal therefrom) does not preclude the Adjudicating Authority from completing adjudication, which may then deal with consequences of the seizure. Pendency of an appeal against a Section 37A order therefore is not a ground to stay or halt adjudication proceedings. [Paras 20, 30, 31, 32, 33]

The Competent Authority's rejection of the seizure order or pendency of an appeal does not preclude the Adjudicating Authority from proceeding with and concluding adjudication under Section 16.

Final Conclusion: The Letters Patent Appeals are dismissed; the High Court's dismissal of the writ petitions is confirmed. The Adjudicating Authority is directed to proceed with and conclude the adjudication expeditiously and to take appropriate note of Section 37A while passing its final order. No costs.

Inclusion of free supply in gross value of construction service - Abatement for construction services - Exemption for repair of roads - Classification as site formation and clearance service - Supply of tangible goods service and retrospective applicability from 16.05.2008 - Remand for fresh adjudication

Inclusion of free supply in gross value of construction service - Abatement for construction services - Impugned demand on account of inclusion of free-supplied material in gross value is not finally sustained and requires reconsideration in light of binding precedent - HELD THAT: - The Tribunal noted that the Larger Bench decision in Bhayana Builders Pvt. Ltd., upheld by the Supreme Court, holds that value of free supply of material by the service recipient is not includible in gross value for the purpose of abatement under the construction service notifications. On the record before it the Tribunal observed prima facie that the adjudicating authority had failed to apply that binding precedent and had not appreciated facts relevant to the claim of abatement. Consequently the matter was not finally adjudicated on merits by the Tribunal but remitted to the Adjudicating Authority for fresh consideration of this issue in accordance with law and relevant judicial authority.

Set aside and remitted to the Adjudicating Authority for fresh consideration of inclusion of free supply in gross value and related abatement claims.

Exemption for repair of roads - Classification as site formation and clearance service - Demands framed for services relating to road repair and site formation/clearance require fresh adjudication as they are prima facie covered by exemption/notifications - HELD THAT: - The Tribunal recorded that demands in respect of road repair and services classifiable as site formation and clearance appear prima facie to fall within exemptions provided by the notifications relied upon by the appellant and/or by statutory exclusion. The adjudicating authority had proceeded to confirm demands without adequate application of mind to the notifications and classifications. The Tribunal therefore did not decide the merits but directed remand so that the Adjudicating Authority may reassess classification, applicability of notifications and exemption claims on the materials and law.

Set aside and remitted to the Adjudicating Authority for fresh consideration of exemption and classification issues relating to road repair and site formation/clearance services.

Supply of tangible goods service and retrospective applicability from 16.05.2008 - Demand alleged under supply of tangible goods service requires reconsideration because invoices predate the levy and other factual aspects were not appreciated - HELD THAT: - The Tribunal observed that several invoices relied upon by the Department predate 16.05.2008, the date from which supply of tangible goods service liability was introduced, and that the adjudicating authority ignored vital facts including issuance by a different entity and payment of VAT on some invoices. Finding that the impugned order lacked application of mind, the Tribunal remitted the question for fresh adjudication rather than pronouncing a final finding on the merits.

Set aside and remitted to the Adjudicating Authority for fresh examination of liability under supply of tangible goods service in light of dates, entity particulars and VAT payments.

Remand for fresh adjudication - Impugned adjudication order set aside and entire matter remitted for reconsideration on all issues raised by the appellant - HELD THAT: - After hearing parties and perusing the record the Tribunal found that the impugned order was passed without proper application of mind to facts and legal authorities across the range of contested demands. The Tribunal observed prima facie merit in the appellant's charted contentions and binding precedent on the free-supply point, and therefore allowed the appeal by remand so that the Adjudicating Authority may re-consider all issues afresh and decide in accordance with law.

Impugned order set aside and appeal allowed by way of remand to the Adjudicating Authority for fresh consideration of all issues raised by the appellant.

Final Conclusion: The impugned adjudication order is set aside and the appeal is allowed by remanding the entire matter to the Adjudicating Authority for fresh consideration of the issues (including inclusion of free-supplied materials in gross value, applicability of abatements, classification and exemptions for road repair and site-formation services, and liability under supply of tangible goods service) in accordance with law and binding judicial precedent.

Taxability of sports players' attire and logo display - Business Auxiliary Service - Non-application of service tax prior to specific notification - Agent discharging service tax liability on behalf of assessee

Taxability of sports players' attire and logo display - Playing in IPL while wearing franchiser-mandated attire displaying logos, mascots, insignia or labels does not amount to promotion of business and is not taxable as a service. - HELD THAT: - The Tribunal applied its consistent precedents and reasoning that players who wear logos, mascots or insignia as part of their match attire are engaged in playing cricket and are not undertaking promotional activity for the business houses. The decision in Sourav Ganguly (and subsequent consistent Tribunal decisions listed by the Court) was held to be directly applicable. The court therefore concluded that the activity of wearing such attire as per franchise conditions does not attract service tax as a promotional or business-support service. [Paras 6]

Assessed tax demand on account of playing in IPL with franchiser logos is not sustainable.

Business Auxiliary Service - Non-application of service tax prior to specific notification - Endorsement/brand-promotion services cannot be taxed under a different head prior to the specific notification creating Business Auxiliary Service w.e.f. 01.07.2010; the specified service classification governs taxability. - HELD THAT: - The Court accepted the submission that brand-promotion as part of Business Auxiliary Service was notified w.e.f. 01.07.2010 and that where a specific service is subsequently notified, it cannot be retrospectively taxed under a different heading. Reliance was placed on Tribunal decisions (including Shriya Saran and Sourav Ganguly precedents) holding that services falling under the newly notified category cannot be diverted to another head for earlier dates. Applying that principle, the impugned demand on endorsement services was held unsustainable. [Paras 3, 6]

No service tax sustainable on endorsement services under a different head for the period prior to the specific notification creating Business Auxiliary Service.

Agent discharging service tax liability on behalf of assessee - Where consideration for a service is received by an agent who has discharged service tax, the principal (appellant) is not liable to pay service tax again; absence of a formal written agency agreement is not decisive where the commercial arrangements and flow of consideration demonstrate agency. - HELD THAT: - Relying on the reasoning in Katrina R. Turcotte and similar precedents, the Tribunal held that service tax discharged by an agent on receipt of consideration on behalf of the appellant operates to discharge the appellant's liability under the Act. The Court observed that no formal written agreement is necessary to establish principal-agent relationship; the factual arrangement and the flow of consideration are determinative. Alternatively, if the appellant did not directly receive consideration from the ultimate payer, no liability arises on the appellant. Applying these principles, the payment of service tax by M/s Rhiti (acting as agent) on amounts received from M/s INX relieved the appellant of liability. [Paras 7, 8]

Demand for service tax in respect of remuneration routed and taxed through the agent is not sustainable; appellant is not liable to pay again.

Final Conclusion: The appeal is allowed; the impugned order is set aside on all grounds raised, with consequential relief as per law.

Service tax on 'tolerating an act' - notice pay / recovery from employee for premature termination - provision of service by an employee outside the ambit of service tax - interpretation of Section 66E(e)

Service tax on 'tolerating an act' - notice pay / recovery from employee for premature termination - provision of service by an employee outside the ambit of service tax - interpretation of Section 66E(e) - Demand of service tax on amount recovered by the employer from an employee as notice pay (for premature termination of employment) under the head 'tolerating an act' is unsustainable. - HELD THAT: - The Tribunal held that the question is no longer res integra in view of the decision of the Hon'ble High Court of Madras and consistent Tribunal decisions. Reliance was placed on the High Court's interpretation of the Guidance Notes of the Central Board which states that provision of service by an employee to the employer is outside the ambit of service tax and that amounts paid or recovered in relation to premature termination of a contract of employment do not constitute consideration for a taxable service. Applying that reasoning, the employer does not render any taxable service by permitting an early exit in exchange for recovery of notice pay; the definition in Clause (e) of Section 66E is not attracted as the employer has not 'tolerated' an act in the sense of rendering or procuring a service but has merely facilitated termination subject to compensation. Consequently, the recovery of notice pay is treated as adjustment of salary/recovery relating to employment and not as consideration for a taxable service.

Impugned demand for service tax on the notice pay recovery is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order and held that recovery of notice pay from an employee for premature termination of employment is not liable to service tax under the 'tolerating an act' category.

Supply of tangible goods for use - deemed sale under Article 366(29A)(d) of the Constitution of India - definition of service excluded by Section 65B(44)(a)(ii) of the Finance Act, 1994 - exclusion from service of transfers deemed to be sale - payment of VAT evidencing deemed sale

Supply of tangible goods for use - deemed sale under Article 366(29A)(d) of the Constitution of India - definition of service excluded by Section 65B(44)(a)(ii) of the Finance Act, 1994 - payment of VAT evidencing deemed sale - Whether rent charges for hiring earth moving equipment constitute a taxable service as 'supply of tangible goods for use' or are excluded as a deemed sale under Article 366(29A)(d) and Section 65B(44)(a)(ii). - HELD THAT: - The Tribunal found that the appellant transferred the right to possession and effective control of earth moving equipment to the lessee and invoiced the transaction with State VAT charged and paid, establishing the transaction as a deemed sale. Under the post negative list definition of 'service' in Section 65B(44) of the Finance Act, 1994, an activity which constitutes a transfer, delivery or supply of goods that is deemed to be a sale under Article 366(29A)(d) is expressly excluded from 'service'. Applying that exclusion to the facts, the renting arrangement falls within sub clause (ii) of clause (a) of Section 65B(44) and thus is not a taxable service. The Tribunal also relied on the appellant's earlier consistent decisions on identical contracts, which examined contractual terms (including hirer's covenants, responsibilities, and charging of VAT) and concluded the arrangement effected a transfer of right to use amounting to deemed sale, not a service of supply of tangible goods for use. For these reasons the impugned demand for service tax was unsustainable. [Paras 4, 5]

Renting of earth moving equipment is a deemed sale and not a taxable service under 'supply of tangible goods for use'; impugned order set aside and appeal allowed.

Final Conclusion: The Tribunal held that the hiring of earth moving equipment constituted a deemed sale under Article 366(29A)(d) and, being excluded from the definition of 'service' by Section 65B(44)(a)(ii), is not liable to service tax; the impugned order is set aside and the appeal is allowed.

Simultaneous imposition of penalties under Section 76 and Section 78 - penalty under Section 78 for fraud, collusion, wilful misstatement or suppression of facts - recurring show cause notices / recurring demand - invocation of proviso to Section 73(1) and applicable yardstick for demand - clarificatory nature of amendment introducing proviso to Section 78

Simultaneous imposition of penalties under Section 76 and Section 78 - clarificatory nature of amendment introducing proviso to Section 78 - Whether penalty under Section 78 could be imposed where penalty under Section 76 has already been imposed. - HELD THAT: - The Tribunal held that once penalty under Section 76 has been imposed, penalty under Section 78 cannot be simultaneously imposed. Reliance was placed on the decisions of the Gujarat High Court and other authorities which explain that Section 78 deals with cases involving fraud, collusion, wilful misstatement or suppression and contemplates a different and more onerous penal consequence than Section 76. The further proviso subsequently introduced to Section 78 (excluding application of Section 76 where Section 78 applies) is clarificatory of the mutual exclusivity of the two provisions and reinforces the view that the penal regimes operate in mutually exclusive fields. The adjudicating authority's imposition of penalty under Section 76 therefore precluded imposition of a concurrent penalty under Section 78, and the Learned Commissioner rightly refrained from imposing Section 78 penalty for that reason. [Paras 4]

Penalty under Section 78 cannot be imposed simultaneously where penalty under Section 76 has already been imposed; the Learned Commissioner correctly refrained from imposing Section 78 penalty.

Penalty under Section 78 for fraud, collusion, wilful misstatement or suppression of facts - recurring show cause notices / recurring demand - invocation of proviso to Section 73(1) and applicable yardstick for demand - Whether the ingredients of Section 78 (fraud, collusion, wilful mis-statement or suppression with intent to evade) are attracted where the demand arises from recurring show cause notices. - HELD THAT: - The Tribunal found that the show cause notices in the present case were recurring in nature and the demand was raised under Section 73(1) rather than under the proviso to Section 73(1). Applying the principle in Nizam Sugar Factory, where recurring demands and prior departmental knowledge negate the element of suppression or fraud, the necessary ingredients for invoking Section 78 were not established. Because the proviso to Section 73(1) (which extends limitation where fraud, collusion or suppression is present) was not invoked, and there was no material demonstrating intent to evade, the Tribunal held that a different yardstick under Section 78 could not be applied and the Learned Commissioner correctly declined to impose Section 78 penalty on merits. [Paras 4]

Section 78 is not attracted on the facts of this case involving recurring show cause notices; the Learned Commissioner rightly refrained from imposing penalty under Section 78.

Final Conclusion: Revenue's appeal seeking imposition of penalty under Section 78 of the Finance Act, 1994 is dismissed: (i) simultaneous penalty under Sections 76 and 78 cannot be imposed where Section 76 penalty has been levied; and (ii) the facts of recurring show cause notices do not establish the ingredients of Section 78, so imposition of that penalty was correctly declined.

Utilisation of CENVAT credit for reverse charge liabilities - admissibility of CENVAT credit for warranty repair and maintenance services as input service - taxability of indivisible works contracts prior to 01.06.2007 - applicability of abatement under Notification No.19/2003-ST - onus to prove entitlement to exemption - interest and penalty where substantive demand set aside

Utilisation of CENVAT credit for reverse charge liabilities - interest and penalty where substantive demand set aside - Validity of demand for service tax on GTA paid through CENVAT account and consequential interest/penalty. - HELD THAT: - The Tribunal found the issue to be settled by binding decisions referred to by the appellant which hold that Cenvat credit may be utilized for payment of service tax on GTA under the Cenvat Credit Rules read with Section 68(2) and notifications placing liability on service recipient. Accordingly, the demand for service tax paid through Cenvat account was held to have no merit. Because the appellant had already paid the amount in cash, no refund was allowed since liability was not set aside; however, the demand for interest in respect of these amounts was set aside. The Tribunal therefore allowed the appeal on this point and set aside the interest demand while leaving the cash payment appropriation untouched. [Paras 4]

Demand for service tax through Cenvat account set aside; interest demand set aside; no refund ordered for amount already paid.

Admissibility of CENVAT credit for warranty repair and maintenance services as input service - onus to prove entitlement to exemption - Whether CENVAT credit availed on repair and maintenance services provided by authorised service centres during warranty period is admissible. - HELD THAT: - Relying on a series of Tribunal decisions, the bench held that repair and maintenance services provided by dealers/authorised service centres to fulfil warranty obligations qualify as 'input service' under Rule 2(l) of the Cenvat Credit Rules (both prior to and after 01.04.2011). The Tribunal noted that the services are used, directly or indirectly, in relation to the manufacture and sale of final products and thus credit cannot be denied. Earlier decisions of the Tribunal in the appellant's own case and in analogous cases were treated as binding for the period under audit. The Tribunal also observed that extended period for invoking limitation was not established by the department where the issue was already decided in favour of assessees in earlier precedents. [Paras 4]

Demand disallowing CENVAT credit on warranty repair and maintenance services set aside.

Taxability of indivisible works contracts prior to 01.06.2007 - applicability of abatement under Notification No.19/2003-ST - onus to prove entitlement to exemption - Sustenance of demand for differential service tax for alleged wrongful availment of Notification No.19/2003-ST in respect of installation services for imported ACs, and related penalties and interest. - HELD THAT: - The Tribunal disagreed with the adjudicating authority. Applying the ratio of the Supreme Court in Larsen & Toubro and subsequent authoritative pronouncements, the Tribunal held that indivisible/composite works contracts involving transfer of property in goods together with erection/installation/commissioning were not subject to service tax prior to 01.06.2007. As service tax was not leviable on such indivisible contracts in the period under consideration, the question of denial of abatement under Notification No.19/2003-ST did not arise. Consequently, the demand for differential service tax, interest and penalties founded on denial of the notification was set aside. The Tribunal also noted that, where the substantive demand is set aside on merits, related interest and penalties are to be set aside. [Paras 4]

Demand for differential service tax under Notification No.19/2003-ST, and the associated interest and penalties, set aside on the ground that service tax was not leviable on indivisible works contracts prior to 01.06.2007.

Final Conclusion: The appeal is allowed. The Tribunal set aside the impugned adjudication in respect of (i) service tax on GTA paid through Cenvat (interest set aside; no refund of amounts already paid in cash), (ii) disallowance of CENVAT credit on warranty repair and maintenance services, and (iii) demand founded on denial of Notification No.19/2003-ST for installation services (with related interest and penalties), for the audit period July 2004 to August 2005.

Suppression of facts attracting extended period of limitation - mis-statement of facts - service tax valuation and recoverability based on ITR/TDS vis-a -vis ST-3 returns - presumption under Section 36A of the Central Excise Act read with Section 83 of the Finance Act, 1994 - service of notices by e-mail as additional mode - accrual of interest and levy of penalty for suppressed taxable income

Service tax valuation and recoverability based on ITR/TDS vis-a -vis ST-3 returns - what has been admitted need not be proved - Sustainability of demand based on difference between income declared in ITR/TDS and value declared in ST-3 returns where proprietor admitted the discrepancy - HELD THAT: - The Tribunal found that the Department proceeded on information received from the Income Tax Department showing higher receipts in ITR/TDS than declared in ST-3 returns. The proprietor of the appellant firm admitted the receipts and accepted the difference in turnover during personal hearing, attributing it to security deposits without supporting evidence. The admission by the proprietor rendered further proof unnecessary; the appellant failed to produce documents or otherwise explain the discrepancy. In these circumstances the Tribunal held the demand for service tax on the differential value to be sustainable and confirmed the adjudication against the appellant. [Paras 7, 11]

Demand confirmed on the differential value as admitted by the proprietor; appeal on this point dismissed.

Service of notices by e-mail as additional mode - service by prescribed mode and additional contemporaneous electronic communication - Validity of departmental reliance on a letter and an e-mail for communication when statutory provision prescribes registered/speed post - HELD THAT: - The appellant contended non-receipt of the departmental letter and e-mail and argued that e-mail is not a prescribed mode under Section 37C of the Central Excise Act. The Tribunal observed that service by registered or speed post remains the prescribed mode but that service by e-mail was made in addition to the prescribed mode. The appellant's denial of any error in the e-mail address and failure to demonstrate non-receipt made the contention unacceptable. The Tribunal therefore found no infirmity in the Department using e-mail as an additional means of communication. [Paras 8]

Use of e-mail as an additional mode of communication held acceptable; objection rejected.

Presumption under Section 36A of the Central Excise Act read with Section 83 of the Finance Act, 1994 - admissibility and weight of public documents (ITR/TDS) not seized from assessee's premises - Whether reliance on income-tax records not seized from the assessee attracts the presumption under Section 36A/Section 83 and whether burden remained on the Department - HELD THAT: - The appellant argued that documents relied upon were not seized from its premises and that the presumption under Section 36A of the Central Excise Act read with Section 83 of the Finance Act therefore did not assist the Department, placing the burden upon the Department to prove the documents' relevance. The Tribunal distinguished precedents relied upon by the appellant and observed that the present case involved public domain records furnished by the Income Tax Department. Given the proprietor's admission of the higher receipts and the absence of supporting evidence from the appellant, the Tribunal accepted the departmental reliance on those records and rejected the contention that the Department had failed to discharge its burden. [Paras 9, 11]

Reliance on Income Tax records accepted; plea that presumption under Section 36A/Section 83 is unavailable rejected in facts of this case.

Suppression of facts attracting extended period of limitation - mis-statement of facts - Characterisation of the discrepancy between ITR/TDS and ST-3 returns as suppression of facts (permitting invocation of extended limitation) rather than mere mis-statement - HELD THAT: - The appellant relied on authorities treating under-declaration as mis-statement rather than suppression, contending extended limitation could not be invoked. The Tribunal examined those decisions and distinguished them on facts: unlike the cases cited, the appellant here was directly responsible for filing both ITRs and ST-3 returns and stood to benefit by under-declaration. The proprietor's admission and the absence of documentary proof for the appellant's explanation led the Tribunal to conclude the discrepancy amounted to suppression of facts with intent to evade tax, justifying the invocation of the extended period of limitation. [Paras 10, 11]

Discrepancy characterised as suppression of facts; extended period of limitation held invokable and properly applied.

Accrual of interest and levy of penalty for suppressed taxable income - Consequences of upholding differential tax liability as regards interest and penalty - HELD THAT: - Having upheld the differential service tax liability on the basis that the appellant suppressed correct taxable income, the Tribunal held that interest under the statute automatically accrues and that the penalty imposed was justified. The finding of suppression formed the basis for upholding both interest and penalty imposed by the adjudicating authority. [Paras 12]

Interest and penalty upheld consequent to confirmation of differential tax liability.

Final Conclusion: The Tribunal dismissed the appeal; the demand based on the difference between amounts in ITR/TDS and ST-3 returns was confirmed, service by e-mail as additional mode was held valid, the discrepancy was characterised as suppression permitting extended limitation, and interest and penalty imposed were upheld.

CENVAT credit - inputs - capital goods - functional utility test - accessory

CENVAT credit - inputs - functional utility test - CENVAT credit admissible on tower materials as 'inputs' under the CENVAT Credit Rules. - HELD THAT: - The Tribunal accepted precedent in Vodafone Mobile Services which, following the Delhi High Court, held that the term "all goods" in the definition of "inputs" is wide enough to cover goods used for providing output services. Applying the functional utility test, the Tribunal found that towers and prefabricated shelters are actually used in conjunction with antennae and BTS equipment to provide telecommunication services; they are therefore integrally connected to the rendition of the output service and qualify as inputs under the CENVAT Rules. The present appeal was allowed on this basis. [Paras 11, 12]

Towers and prefabricated shelters qualify as 'inputs' and CENVAT credit on them is admissible.

CENVAT credit - capital goods - accessory - Tower materials qualify as 'capital goods' (including as components/accessories) for purposes of taking CENVAT credit. - HELD THAT: - Relying on the reasoning in Vodafone Mobile Services and the Delhi High Court's interpretation, the Tribunal held that items qualify as capital goods if they fall within the relevant chapters or are components, parts or accessories of such goods and are used for providing the output service. Towers and shelters support BTS/antennae, enhance effectiveness and are either components/parts or accessories of the capital goods forming the BTS infrastructure. Consequently, they satisfy the definition of capital goods and credit taken as capital goods is permissible. [Paras 12, 13]

Towers and shelters are 'capital goods' (or their components/accessories) and CENVAT credit on them is admissible.

Final Conclusion: Impugned order dated 11.07.2018 set aside; appeal allowed and the appellant entitled to CENVAT credit on tower materials as either 'inputs' or 'capital goods', with consequential relief.

Commercial coaching or training - taxability of DGCA-approved aircraft maintenance engineering training - binding effect of a tribunal's own earlier order - precedential weight of an AAR ruling vis-a -vis tribunal/High Court decisions

Taxability of DGCA-approved aircraft maintenance engineering training - commercial coaching or training - Fees charged by the appellant for imparting training to prepare students for the DGCA AME examination do not amount to a taxable "commercial coaching or training" service. - HELD THAT: - The Tribunal's earlier decision in the appellant's own case and the Delhi High Court's decision in Indian Institute of Aircraft Engineering were applied to hold that aircraft maintenance engineering training, being a DGCA-approved course imparted by recognized training institutes to prepare students for the AME examination, falls outside the scope of commercial coaching or training for service-tax purposes. The Assistant Commissioner and Commissioner (Appeals) could not sustain the demand in view of these authoritative precedents. The conclusion follows the determinative reasoning of the Tribunal and the Delhi High Court that such training is not a taxable service under the category of commercial coaching or training.

Demand of service tax insofar as it relates to fees for DGCA AME training is unsustainable.

Binding effect of a tribunal's own earlier order - precedential weight of an AAR ruling vis-a -vis tribunal/High Court decisions - The Assistant Commissioner and the Commissioner (Appeals) were not justified in disregarding the Tribunal's own earlier order and the Delhi High Court decision and in relying on an AAR ruling to sustain the demand. - HELD THAT: - The adjudicating authorities relied on an AAR ruling and declined to give effect to the Tribunal's prior decision in the appellant's own case as well as the Delhi High Court judgment. The Tribunal held that such approach was impermissible where the facts and legal question are governed by its earlier decision and the High Court's ruling; the AAR's decision cannot be used to override or ignore binding forum decisions in the same controversy. Consequently, the Commissioner (Appeals) order upholding the demand was set aside.

The impugned orders that ignored the Tribunal's and Delhi High Court's decisions and instead relied on the AAR are set aside as not justified.

Final Conclusion: The order of the Commissioner (Appeals) dated 11.01.2017 is set aside and the appeal is allowed: the service-tax demand insofar as it pertains to DGCA AME training is held unsustainable and the authorities were unjustified in disregarding the Tribunal's and Delhi High Court's earlier decisions.

Area-based exemption - job-work and manufacturing distinction - declaration under Notification No.50/2003 - bona fide belief and non-suppression - remand for filing declaration - liberal construction of exemption provisions

Declaration under Notification No.50/2003 - area-based exemption - liberal construction of exemption provisions - Entitlement to exemption under Notification No.50/2003 despite procedural delay in filing the declaration - HELD THAT: - The Tribunal's earlier decision in the appellants' favour and subsequent consistent precedents establish that where an assessee is otherwise eligible for the area-based exemption, procedural lapses in filing the requisite declaration will not defeat the substantive benefit of the notification. The Bench relied on the Tribunal's observations that the appellant acted bona fide, did not suppress facts, and that non-filing of declaration was not intentional evasion. In view of those precedents, and on the appellants having filed the declaration (albeit belatedly), the declaration must be treated as valid and the benefit of Notification No.50/2003 cannot be denied on mere procedural grounds; consequently the impugned order confirming duty is set aside and the exemption allowed subject to usual adjudicatory scrutiny. [Paras 5, 6]

Impugned order set aside and appellants held eligible for exemption under Notification No.50/2003; belated declaration to be treated as valid.

Job-work and manufacturing distinction - bona fide belief and non-suppression - remand for filing declaration - Characterisation of the appellants' activity as job-work (not manufacture) and related conduct - HELD THAT: - The record, as accepted by the Tribunal and followed by this Bench, shows that the appellants performed banding as contract job-workers for the principal, that the principal had informed the Department and supplied materials, and that the appellants bonafidely believed their activity did not amount to manufacture. There was no material to infer suppression or mala fide intent. Given these findings and the settled position in earlier orders, the appellants are to be treated as job-workers entitled to claim the exemption; the matter had earlier been remanded by the Tribunal to permit filing of the declaration for administrative scrutiny, and on filling of the declaration the adjudicating authority must pass an appropriate order after hearing. [Paras 5, 6]

Appellants' activity treated as job-work; no suppression or mala fide conduct found; direction for consideration of belated declaration by adjudicating authority.

Final Conclusion: The appeal is allowed: the appellants are entitled to the benefit of Notification No.50/2003 for the period in question; the belated declaration is to be treated as valid and the adjudicating authority shall pass appropriate orders after affording opportunity of hearing, with consequential relief as per law.

Invocation of extended period of limitation - suppression, fraud or mis-declaration - effect of departmental audit and prior disclosure on limitation - bona fide belief based on available notifications and invoices - limitation bar to recovery of CENVAT credit

Invocation of extended period of limitation - effect of departmental audit and prior disclosure on limitation - suppression, fraud or mis-declaration - bona fide belief based on available notifications and invoices - limitation bar to recovery of CENVAT credit - Whether the Show Cause Notice invoking the extended period for recovery of CENVAT credit for the period 01.08.2012 to 19.01.2014 is barred by limitation and hence unsustainable - HELD THAT: - The Tribunal found that the Show Cause Notice was issued invoking the extended period but the Department did not establish ingredients such as suppression, fraud or mis-declaration with intent to evade duty. The appellants had been audited periodically and had placed on record an endorsement in the RG-1 Register showing audits; the Show Cause Notice, in contrast, referred to audits of other units and was silent about audits of the appellant. In light of precedent holding that regular audits and physical inspections negate suppression, the Tribunal accepted that the existence of audits and prior submission of invoices and refund claims amounted to disclosure that undermined any basis for invoking the extended period. The Tribunal also noted that, as the invoices did not indicate exemption claimed by suppliers and a relevant exemption notification was for a period listed under exclusions and later restored, the appellants could reasonably entertain a bona fide belief in entitlement to credit. Consequently, the extended period could not be invoked and the Show Cause Notice was held to be time barred. The Tribunal expressly did not decide the merits of entitlement to credit and restricted its decision to the question of limitation. [Paras 7, 8]

The Show Cause Notice invoking the extended period is barred by limitation and is set aside; the appeal is allowed without adjudicating the merits of CENVAT credit entitlement.

Final Conclusion: The appeal is allowed on the ground that invocation of the extended period for recovery of CENVAT credit for 01.08.2012 to 19.01.2014 is unsustainable in the absence of proved suppression or fraud and having regard to periodic audits and prior disclosures; merits of credit entitlement remain unadjudicated.

Cenvat credit admissibility - Denial of Cenvat credit under Rule 9(1)(b) for supplier's non-payment due to fraud - Special Additional Duty (SAD) liability on inter unit transfers from EOU to DTA - stock transfer between related units - revenue neutrality - penalty consequential to adjudicated demand - extended period of limitation invoked for non payment of duty

Cenvat credit admissibility - Denial of Cenvat credit under Rule 9(1)(b) for supplier's non-payment due to fraud - Special Additional Duty (SAD) liability on inter unit transfers from EOU to DTA - stock transfer between related units - revenue neutrality - Appellant's Cenvat credit on supplementary invoice is not liable to be denied under Rule 9(1)(b)/9(1)(bb) where the supplier's non payment of SAD arose in circumstances of inter unit stock transfer and no suppression or willful misstatement is established. - HELD THAT: - The Tribunal analysed whether Rule 9(1)(b)/9(1)(bb) could be invoked to deny Cenvat credit on the ground that the supplier (a sister unit) had not paid SAD by reason of fraud, collusion, willful misstatement or suppression. The Court accepted the appellant's contention, following a consistent line of Tribunal decisions, that clearances by a 100% EOU to its own DTA unit on inter unit transfer are transactions of stock transfer and, on the settled view, do not give rise to a payable SAD in the sense contended by Revenue. As SAD was not payable on such inter unit transfers and the transactions operated on a revenue neutral basis between related units, there was no finding of suppression, willful misstatement or intent to evade duty. In those circumstances Rule 9(1)(b)/9(1)(bb), which targets credits where duty passed on by the supplier was not paid due to fraud or suppression, could not be invoked to disallow the appellant's Cenvat credit. The Tribunal therefore held the availment of Cenvat credit on the supplementary invoice to be legal and correct, following precedent and reasoning set out in the cited decisions. [Paras 4]

Impugned denial of Cenvat credit under Rule 9(1)(b)/9(1)(bb) set aside; Cenvat credit on the supplementary invoice upheld.

Penalty consequential to adjudicated demand - Penalty imposed on the individual (Shri Manohar Maheshwari) under Rule 26(1) of the Central Excise Rules, 2002 cannot be sustained where the underlying demand against the company is held unsustainable. - HELD THAT: - The Tribunal recorded that the penalty levied on the individual was consequential to the demand which the Court has set aside. Since the demand against the company was found to be unsustainable for the reasons given, the consequential personal penalty could not survive. The Tribunal therefore quashed the penalty imposed on the individual to the extent it depended upon the now disallowed demand. [Paras 4]

Penalty on the individual set aside as consequential to the disallowed demand.

Final Conclusion: The impugned adjudication is set aside: the appellant's Cenvat credit on the supplementary invoice is upheld (Rule 9(1)(b)/9(1)(bb) not attracted where SAD was not payable on inter unit stock transfer and no suppression/intent to evade is shown), and the consequential penalty on the individual is quashed; appeals allowed.

Invocation of extended time proviso under Section 11A - limitation for demand of excise duty - availment of Cenvat credit on later date on basis of valid duty paying documents - inapplicability of Section 11A to recovery of credit taken on valid documents - penalty under Rule 26 of the Central Excise Rules, 2002

Invocation of extended time proviso under Section 11A - limitation for demand of excise duty - Whether the demand of differential central excise duty raised by invoking the extended time proviso under Section 11A is sustainable or barred by limitation - HELD THAT: - The Tribunal found as a matter of record that the appellant, upon being pointed out the mis classification, immediately reclassified the finished goods under the correct tariff and paid the differential duty which was declared in the ER 1 return for January 2008 and shown to the visiting officers. Given that the department was aware of the payment and declaration, the extended time proviso under Section 11A - which can be invoked only where duty has not been levied or paid by reason of fraud, collusion, willful misstatement, suppression of facts or contravention with intention to evade duty - could not be lawfully invoked. Consequently the demand issued after more than three years under Section 11A is barred by limitation and unsustainable. [Paras 6]

Demand of central excise duty under the extended time proviso is barred by limitation and set aside.

Availment of Cenvat credit on later date on basis of valid duty paying documents - inapplicability of Section 11A to recovery of credit taken on valid documents - Whether the Cenvat credit availed on 31.01.2008 on the basis of import documents can be denied or recovered - HELD THAT: - The Tribunal recorded that Cenvat credit was availed on the basis of valid bills of entry. Rule 4(1) permits availment of credit in respect of inputs used in manufacture and there is no provision barring taking credit at a later date where valid duty paying documents exist. The Tribunal relied on precedent holding that credit taken on valid documents is sustainable and that Section 11A is not applicable to recovery of such credit when taken on proper documents. Accordingly, the demand for recovery of the Cenvat credit availed on 31.01.2008 is not maintainable. [Paras 7]

Cenvat credit availed on valid import documents is sustainable; demand for recovery is not maintainable.

Penalty under Rule 26 of the Central Excise Rules, 2002 - Whether penalties imposed on partners and employees under Rule 26 are sustainable - HELD THAT: - Rule 26 penalises dealing with excisable goods known or reason to be liable to confiscation and certain other wrongful acts. The Tribunal noted that the goods were cleared on payment of duty, albeit under an incorrect classification, and that the appellant corrected the mistake by paying the differential duty and issuing valid invoices. As the liability was discharged and the mistake corrected, invoking penal provisions under Rule 26 against partners and employees was held to be unjustifiable. The Tribunal therefore set aside the penalties. [Paras 8]

Penalties imposed under Rule 26 are not sustainable and are set aside.

Final Conclusion: Impugned order in original confirming duty, recovery of Cenvat credit and imposing penalties is set aside; appeals are allowed.

Refund of excess excise duty paid twice - cancellation of invoice - procedural lapse not a bar to substantive relief - onus on department to prove movement of goods under cancelled invoice - evidence by affidavit, transporter and gate register sufficient to establish non-clearance

Refund of excess excise duty paid twice - evidence by affidavit, transporter and gate register sufficient to establish non-clearance - Refund claim allowed where duty was paid twice on account of an inadvertently issued invoice which was cancelled and a fresh invoice issued for actual clearance. - HELD THAT: - The Tribunal found on the record that the respondent had mistakenly issued an original invoice indicating the full consignment value and discharged duty, subsequently cancelled that invoice the same day, and issued a fresh invoice for the part consignment which was actually despatched. Documentary and testimonial material - including affidavits from the respondent's manager and the transporter, a certificate from the buyer confirming non-receipt against the cancelled invoice, and gate inward register entries - established that goods were not cleared under the cancelled invoice and that duty had been paid twice. In the absence of any contrary evidence from the department, these materials were held sufficient to demonstrate bonafides and to justify allowing the refund of the excess duty paid. [Paras 8, 10, 11]

Refund claim upheld and the order of Commissioner(Appeals) allowing refund was affirmed.

Procedural lapse not a bar to substantive relief - cancellation of invoice - Failure to intimate the jurisdictional Range Officer about cancellation of the original invoice is a procedural lapse which does not bar entitlement to refund where substantive entitlement is otherwise established. - HELD THAT: - The Tribunal noted the existence of a procedural requirement in the CBEC Manual of Supplementary Instructions to intimate invoice cancellation to the Range Officer, but held that denial of a substantive benefit cannot be founded solely on such a minor procedural irregularity. Reliance was placed on earlier decisions of the Tribunal which treated the intimation requirement as procedural and affirmed that the department cannot retain duty not exigible under law. Given the proof that duty was paid without actual clearance of goods, the procedural omission did not prevent sanctioning the refund. [Paras 9, 12, 13]

Procedural non-compliance in not intimating cancellation does not defeat the refund claim.

Onus on department to prove movement of goods under cancelled invoice - Once an invoice is cancelled, the department bears the onus to establish that goods were actually moved under the cancelled invoice and that duty was thus rightly payable. - HELD THAT: - The Tribunal held that after cancellation of an invoice no duty can be demanded unless the department proves that the goods were in fact despatched under that cancelled invoice leading to loss of revenue. In the present case the revenue produced no evidence to show movement of goods under the cancelled invoice; accordingly there was no basis to deny refund. The Tribunal relied on its own precedents and other authoritative decisions emphasising that substantive entitlement cannot be denied for procedural infractions and that the department must substantiate its claim of loss. [Paras 14]

Burden on department to prove movement under cancelled invoice not discharged; refund entitlement confirmed.

Final Conclusion: The Tribunal dismissed the department's appeals and upheld the Commissioner(Appeals) orders allowing the refund of excise duty paid twice for April 2012, holding that the documentary and testimonial evidence established non-clearance under the cancelled invoice, procedural non-compliance did not bar relief, and the department failed to prove movement of goods under the cancelled invoice.

Exemption from sugar cess under Notification No. 42/2001-CE (NT) - sugar cess treated as duty of excise under Sugar Cess Act, 1982 - application of Central Excise procedural provisions to levy, refund and exemption of cess - export under bond and diversion to home consumption-liability for duty and interest - Circular No. 10/93-CX.8 exemption of cess on exported sugar

Exemption from sugar cess under Notification No. 42/2001-CE (NT) - sugar cess treated as duty of excise under Sugar Cess Act, 1982 - Circular No. 10/93-CX.8 exemption of cess on exported sugar - Whether the appellant is liable to pay sugar cess on export of sugar in view of Notification No. 42/2001-CE (NT) dated 26.06.2001 - HELD THAT: - The Tribunal applied its earlier Final Order in the appellant's own case dated 14.05.2024 and the established statutory scheme under the Sugar Cess Act, 1982. Section 3(1) of the Sugar Cess Act levies the sugar cess as a duty of excise and sub section (4) provides that the provisions of the Central Excise Act and rules, including those relating to refund and exemption, apply to that levy. On that basis the Tribunal held that the sugar cess is to be treated as an excise duty for purposes of exemptions granted under Central Excise notifications. The earlier decision, applying the ratio of relevant precedents and the procedural parity created by the Sugar Cess Act, concluded that Notification No. 42/2001-CE (NT), which permits clearance for export under bond without payment of excise duty, must be read as applying mutatis mutandis to sugar cess. The Tribunal also relied on the Government circular (Circular No. 10/93-CX.8) exempting the duty of excise leviable under the Sugar Cess Act on sugar exported out of India. Applying these conclusions to the identical facts before it, the Tribunal found the demand for sugar cess in the impugned orders unsustainable and set those orders aside. [Paras 4]

Demand of sugar cess raised in the impugned orders is unsustainable; impugned orders set aside and appeals allowed.

Final Conclusion: Applying the Tribunal's earlier decision in the appellant's own case and the statutory scheme under the Sugar Cess Act (which assimilates cess to excise for purposes of exemptions), the appeals are allowed and the demands of sugar cess on export of sugar are set aside.

Input tax credit - remand for fresh adjudication - rectification under Section 84 - appropriation of attached tax amount - confirmation of demand subject to appellate remedy - follow reasoning of lower authorities

Input tax credit - remand for fresh adjudication - rectification under Section 84 - Impugned assessment orders for the Assessment Years 2010-11 to 2013-14 set aside and remitted to the respondent for fresh and separate orders, including consideration of the Section 84 petition filed on 07.01.2023. - HELD THAT: - The Court observed that substantial portions of the demands in the impugned orders had been the subject of earlier appellate adjudications and remands in related assessment years, with certain issues answered in favour of the petitioner and other portions remaining under appeal. In view of the pendency of the petition under Section 84 filed on 07.01.2023 and the mixed appellate outcomes, the Court set aside the orders for the four Assessment Years and remitted the matters to the respondent to pass separate common orders for each year after considering the Section 84 application. The respondent is directed to follow the reasonings of the Commercial Tax Officer and the Appellate Authority when passing fresh orders and to act in accordance with any binding favourable decisions available to the petitioner; where demands have already been accepted pursuant to appellate orders, those demands may be dropped, and where demands have been confirmed the petitioner may pursue the remedy before the Appellate Authority. [Paras 10, 11]

The assessment orders dated 28.03.2018 for 2010-11 to 2013-14 are set aside and remitted for fresh, separate adjudication including consideration of the Section 84 petition filed on 07.01.2023.

Confirmation of demand subject to appellate remedy - follow reasoning of lower authorities - Guidance on treatment of issues pending before the Appellate Tribunal and on confirmation or dropping of demands in fresh adjudication. - HELD THAT: - The Court instructed the respondent to follow the reasoning of the Commercial Tax Officer and the Appellate Authority in the fresh proceedings. For issues still pending before the Appellate Tribunal, the respondent may pass favourable orders only if the petitioner produces other court decisions favourable to it; otherwise the demand may be confirmed to enable the petitioner to pursue appellate remedies. The Court noted that some earlier assessment years had been accepted by the Department and that remanded issues should be adjudicated consistently with appellate outcomes. [Paras 11]

On remand the respondent shall follow lower authorities' reasoning; favourable orders may be passed only if the petitioner produces favourable decisions, otherwise demands may be confirmed so that appellate remedies remain available.

Appropriation of attached tax amount - remand for fresh adjudication - Appropriation of the attached tax amount of Rs. 45,65,894/- towards assessed liability and refund of any balance if demand is subsequently dropped pursuant to remand proceedings. - HELD THAT: - The Court addressed the attachment challenged in W.P.(MD)No.23369 of 2015 and directed the respondents to appropriate the attached amount towards part of the tax liability and to refund any balance in the event the demand is dropped following the remand proceedings. This direction is tied to the outcome of the fresh adjudication ordered in the remand and aims to preserve the revenue while protecting the petitioner's entitlement to refund if the demand does not survive remand. [Paras 12]

Respondents shall appropriate the attached amount towards the petitioner's tax liability and refund any balance if the demand is dropped after remand; W.P.(MD)No.23369 of 2015 disposed accordingly.

Final Conclusion: Writ Petitions relating to Assessment Years 2010-11 to 2013-14 are allowed by setting aside the impugned assessment orders and remitting the matters to the respondent for fresh, separate orders including consideration of the Section 84 application filed on 07.01.2023; guidance given to follow earlier reasonings and to treat attached tax amounts by appropriation with refund of any surplus; W.P.(MD)No.23369 of 2015 disposed. No costs.

Principles of natural justice - remand for fresh adjudication - right to be heard - confirmation of demand in absence of documentary evidence - burden of proof on the dealer

Principles of natural justice - confirmation of demand in absence of documentary evidence - remand for fresh adjudication - Impugned revision order dated 14.05.2024 for assessment year 2014-15 is quashed for violating principles of natural justice and the matter is remitted for fresh decision on merits. - HELD THAT: - The revisional order confirmed a demand by referring, for the first time in the order, to alleged sales to a third party (Tv.Malarvizhi Constructions) without having furnished those details to the petitioner prior to confirming the demand. The High Court observed that where fresh incriminating particulars are relied upon in confirming an assessment, the affected party must be given an opportunity to meet those particulars. The impugned order also proceeded on audit points reported by the Accountant General and on the Assessing Officer's finding that the petitioner had not produced documentary evidence; however, the Court held that relying on such newly asserted transactions in the confirmation stage without earlier notice or opportunity to controvert amounted to a breach of the right to be heard. For these reasons the order of 14.05.2024 was quashed and the matter remitted for fresh consideration on merits in accordance with law. [Paras 7, 8, 9]

Order dated 14.05.2024 quashed insofar as it confirmed the demand for 2014-15; matter remitted to respondents to pass fresh order on merits in accordance with law.

Right to be heard - burden of proof on the dealer - remand for fresh adjudication - Directions issued on remand requiring respondents to furnish particulars and permitting the petitioner to file a consolidated reply and be heard before passing final order. - HELD THAT: - The Court directed that the impugned order be treated as an addendum to earlier show cause notices and ordered respondents to supply the details of the sale invoice(s) alleged to have enabled wrongful availing of input tax credit. The petitioner was permitted to file a consolidated reply within three months from receipt of the order and to be heard before any final assessment or recovery is confirmed. These procedural directions were imposed to cure the procedural infirmity found in the impugned order and to ensure compliance with the dealer's right to produce documentary evidence and meet the allegations, bearing in mind that the statutory burden of proof lies on the dealer. [Paras 8]

Respondents to furnish details of the sale invoice(s); petitioner to file consolidated reply within three months and to be heard before final order; impugned order treated as addendum to show cause notices.

Final Conclusion: Writ petition disposed by quashing the revisional order dated 14.05.2024 for assessment year 2014-15 and remitting the matter to the respondents for fresh adjudication after supplying the invoice details to the petitioner, permitting a consolidated reply within three months and hearing the petitioner before passing the final order.

Violation of principles of natural justice - opportunity of hearing - quashing of assessment order and penalty notice - remand for fresh de novo assessment - method of accounting - cost plus gross profit versus valuation under Section 2(30)(c) - duty to record reasons when rejecting an accounting method - cyclostyled/indiscriminate penalty notice lacking specific reasons - compliance with earlier judicial directions and precedents (Gannon Dunkerly)

Violation of principles of natural justice - opportunity of hearing - quashing of assessment order and penalty notice - Impugned assessment order dated 14.11.2019 and accompanying penalty notice were passed without affording adequate opportunity of hearing and without proper reasoning, and are therefore liable to be quashed and set aside. - HELD THAT: - The Court found it not in dispute that the fresh assessment order and the penalty notice were passed without affording the petitioner a proper opportunity of hearing and without considering the directions issued by the Coordinate Bench in the earlier order dated 23.08.2019. The assessment order did not record findings applying Section 2(30)(c) nor did the show-cause/penalty notice specify the basis or particular instances justifying levy of penalty, the latter appearing to be a cyclostyled form. For these procedural infirmities the Court declined to enter into merits and held that the impugned order and penalty notice must be quashed and set aside and the matter remitted for fresh consideration. [Paras 9, 10]

Quashed the impugned assessment order dated 14.11.2019 and the penalty notice dated 14.11.2019; set aside and remitted the matter for fresh consideration.

Remand for fresh de novo assessment - duty to record reasons when rejecting an accounting method - compliance with earlier judicial directions and precedents (Gannon Dunkerly) - Matter remitted to respondent No.2 for a fresh de novo assessment to be completed after hearing the petitioner, applying mind to the method of accounting and giving detailed reasons if rejecting the petitioner's method, and taking into account the Apex Court decision in Gannon Dunkerly. - HELD THAT: - The Court directed that respondent No.2 shall hear the petitioner afresh, consider all materials on record and any further materials that may be adduced, and apply his mind to the method of accounting relied upon by the petitioner. If the officer concludes that the cost plus gross profit method is not in accordance with Section 2(30)(c) of the GVAT Act, that conclusion must be supported by appropriate, cogent and detailed reasons; the decision must also take into consideration the authority of the Apex Court in Gannon Dunkerly as previously indicated by this Court. The Court expressly declined to decide the merits and limited its order to remand with directions for de novo consideration. [Paras 6, 7, 10]

Remitted for fresh de novo assessment within 12 weeks, directing respondent No.2 to hear the petitioner, apply mind to the method of accounting, consider Gannon Dunkerly, and record detailed reasons if the petitioner's method is rejected.

Cyclostyled/indiscriminate penalty notice lacking specific reasons - duty to specify grounds for penalty - The show-cause/penalty notice in cyclostyled format which failed to indicate specific reasons or the nature of infraction is invalid and was set aside. - HELD THAT: - The Court observed that the penalty notice issued was of a cyclostyled nature that merely recited standard instances where penalty could be imposed without stating any particularized reason to believe or specific infraction in the petitioner's case. In view of the absence of specific allegations and the failure to afford a meaningful opportunity, the notice was quashed along with the assessment and the matter remitted for reconsideration with a direction to issue any valid penalty notice only after affording proper hearing and specifying the grounds. [Paras 5, 6, 10]

Set aside the cyclostyled penalty notice and directed that any future penalty proceedings must specify reasons and follow proper procedure after hearing.

Final Conclusion: The petition is allowed to the limited extent that the assessment order dated 14.11.2019 and the penalty notice dated 14.11.2019 are quashed and set aside; the matter is remitted to respondent No.2 for fresh de novo assessment within 12 weeks after affording opportunity of hearing, applying mind to the method of accounting, considering the Apex Court precedent (Gannon Dunkerly), and recording detailed reasons if the petitioner's accounting method is rejected. No costs.

Grant of bail under Section 43D(5) of UAPA - Prima facie true test at the bail stage - Examination of charge sheet material as it is for bail - Admissibility and content of protected witness statement - Distinction between unlawful activity/terrorist organisation and unlisted organisations

Grant of bail under Section 43D(5) of UAPA - Prima facie true test at the bail stage - Examination of charge sheet material as it is for bail - Protected witness statement discrepancies - Membership of a listed terrorist organisation - Whether the appellant was entitled to bail under the modified bail provision of Section 43D(5) of the UAPA - HELD THAT: - The Court applied the settled approach under Section 43D(5) and the authorities on interpreting the prima facie true test, holding that the court, at the bail stage, must examine the materials in the charge sheet as they stand and record a finding on broad probabilities without conducting a mini trial. The Court found serious discrepancies between paragraph 17.16 of the charge sheet and the sealed statement of protected witness Z: the witness did not expressly name the appellant as a participant in the meeting of 29 May 2022 and the charge sheet version exaggerated and distorted the witness's account. The documents and CCTV material relied upon did not, on the charge sheet material taken as a whole, furnish reasonable grounds to believe that the appellant had taken part in, advocated, abetted or conspired in unlawful activities or terrorist acts as defined under UAPA, nor that he was a member of any organisation listed as a terrorist organisation. The Court noted that the first floor tenancy negotiations were conducted by the appellant's son, the rent receipts were explained in the appellant's statement relied upon by the prosecution, and there was no recovery from the appellant linking him to the incriminating literature seized. The Court therefore concluded that the requisite statutory condition-that there be reasonable grounds for believing the accusation against the accused to be prima facie true-was not satisfied in the appellant's case and that bail ought not to have been refused. [Paras 15, 16, 19, 21, 22]

Impugned orders refusing bail set aside; appeal allowed and appellant directed to be enlarged on bail by the Special Court on appropriate terms and conditions after hearing the prosecution.

Final Conclusion: The Supreme Court held that, on the charge sheet material taken as it stood, there were no reasonable grounds to believe that the accusation against the appellant under the UAPA was prima facie true; the High Court and Special Court orders refusing bail were set aside and the appellant was directed to be released on bail by the Special Court on appropriate terms.

Presumption of liability on issuance of cheque under Sections 138, 139 and 118(a) of the N.I. Act - onus to rebut presumption by adducing evidence - effect of discrepancy in rate of interest on proof of legally enforceable debt - challenge to usurious or excessive agreed interest and forum for such challenge - admission of additional evidence under Section 391 CrPC - restoration of trial court judgment with modification of sentence and compensation - waiver of custodial sentence subject to payment within stipulated period

Presumption of liability on issuance of cheque under Sections 138, 139 and 118(a) of the N.I. Act - onus to rebut presumption by adducing evidence - admission of additional evidence under Section 391 CrPC - Whether the Appellate Court and the High Court erred in acquitting the respondent despite issuance and return of the cheque and in light of the presumption under the N.I. Act - HELD THAT: - The Court held that the issuance of the cheque and its return on account of 'Account Closed' engages the statutory presumption of liability under the N.I. Act. Where the drawer admits issuance and does not demonstrably displace the presumption by adequate evidence of discharge, the presumption remains operative. Though additional evidence was permitted under Section 391 CrPC and examined by the Appellate Court, the respondent did not produce receipts establishing complete discharge of the liability. A mere discrepancy in computation of interest does not, by itself, rebut the charge that the cheque was issued for repayment of the principal indebtedness. The Trial Court's detailed findings in favour of the complainant were thus not to be lightly displaced by the Appellate Court's reliance on interest-rate discrepancies when the principal amounts were undisputed and the respondent had not negated liability by cogent evidence. [Paras 14, 15, 16]

Appellate Court and High Court erred in acquitting the respondent; Trial Court's conviction is to be restored subject to modification.

Effect of discrepancy in rate of interest on proof of legally enforceable debt - challenge to usurious or excessive agreed interest and forum for such challenge - Whether disparity in stated rates of interest and applicability of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 justified rejection of the appellant's claim under Section 138 - HELD THAT: - The Court observed that differences in the monthly rate of interest recorded in pronotes and the Statement of Accounts (whether 1.8% or 3% per month) did not vitiate the fact that the cheques were issued for repayment of undisputed principal amounts. Even if the agreed rate exceeded the statutory cap under the Tamil Nadu Act, it was incumbent upon the respondent to challenge or seek rectification of the usurious rate by appropriate proceedings; he could not, in collateral NI Act proceedings, defeat recovery by merely pointing to excess interest where the principal obligation remained. Consequently, the disparity in interest rates was insufficient ground for acquittal when the respondent failed to prove full discharge of the debt. [Paras 16, 17]

Discrepancy in rate of interest and the Tamil Nadu Act objection did not justify acquittal in the absence of proof of total discharge of debt; the respondent ought to have challenged the rate in an appropriate forum.

Restoration of trial court judgment with modification of sentence and compensation - waiver of custodial sentence subject to payment within stipulated period - Relief to be granted on allowing the appeal: modification of sentence and quantification of compensation - HELD THAT: - The Court set aside the Appellate Court and High Court orders and restored the Trial Court's conviction subject to modification. In exercise of its discretion, the Court directed that the respondent pay compensation equal to one and a half times the amount mentioned in the cheque. Considering the respondent's advanced age and family circumstances as stated in his compliance affidavit, the custodial sentence was waived provided the respondent makes the directed payment within eight months; failure to pay within that period would result in revival of the original sentence of one year simple imprisonment. [Paras 18, 19]

Trial Court's conviction restored; respondent to pay one and a half times the cheque amount within eight months and custodial sentence waived subject to payment, failing which imprisonment revived.

Final Conclusion: The appeal is allowed: the acquittal by the Appellate Court and High Court is set aside, the Trial Court's conviction under Section 138 N.I. Act is restored with modification - compensation fixed at one and a half times the cheque amount and the one-year sentence waived on condition of payment within eight months, failing which the sentence shall be revived; parties to bear their own costs.