TaxTMI Updates e-Newsletter
Aug 20,2019

Supply (inclusive definition under Section 7) - Consideration - Business (includes provision by a club or association of facilities or benefits to members) - Taxable person - Principle of mutuality - Supply of services by an association to its members

Supply (inclusive definition under Section 7) - Consideration - Contributions from members to the Administration Account for meetings and petty administrative expenses amount to 'supply' within the meaning of the Act. - HELD THAT: - The Authority examined the statutory definition of 'supply' and the inclusive definition of 'consideration'. It found that the membership fee collected is not confined to mere reimbursement of meeting expenses but is paid in the context of activities that confer facilities/benefits to members (such as promotion of the club's objectives and member-related services). Given the wide statutory meaning of 'consideration', the membership contributions constitute payment in respect of supply and, therefore, satisfy the ingredients of 'supply' under Section 7.

Answered in the affirmative.

Supply of services by an association to its members - Supply (inclusive definition under Section 7) - The contributions so received are classifiable as supply of services and not goods. - HELD THAT: - Having held that the transactions qualify as 'supply', the Authority observed that the nature of activities provided to members (facilitation of meetings, member-oriented benefits and services) fall within the ambit of services under GST. Accordingly, the membership contributions are to be treated as consideration for supply of services rather than goods.

Classified as supply of services.

Taxable person - Business (includes provision by a club or association of facilities or benefits to members) - The applicant (the club) is a taxable person under the GST law, subject to registration thresholds in Section 22. - HELD THAT: - The Authority referred to the definition of 'business' which expressly includes provision by a club or association of facilities or benefits to its members for a subscription or other consideration. Since the applicant carries out such activities and receives consideration in the form of membership contributions, it meets the statutory description of a person engaged in 'business' and thus is a taxable person, save for any exemption by virtue of the registration threshold.

Answered in the affirmative, subject to Section 22.

Taxable person - Liability to pay GST - The applicant (the club) and not its office-bearers is the person liable to pay GST. - HELD THAT: - The Authority noted that although office-bearers change annually and hold honorary posts, liability under GST rests with the applicant-entity which is the supplier of services. Consequently the recurring change in office-bearers does not transfer the statutory obligation to the individuals holding office; the applicant remains liable for GST compliance and payment.

The applicant is liable to pay GST; not the office-bearers.

Principle of mutuality - Supply (Schedule I / self-supply issues) - Collection of funds into a common pool and spending them back on the same contributors nevertheless constitutes 'supply' under the law. - HELD THAT: - The Authority considered the applicant's reliance on the principle of mutuality and past authorities under other tax regimes, but observed that GST law treats associations and their activities broadly. The statutory treatment of 'person', the definitions of 'supply' and 'business', and the inclusive definition of 'consideration' lead to the conclusion that pooling contributions and applying them for member-related activities cannot be characterized as outside the scope of supply for GST purposes.

Answered in the affirmative.

Supply of services by an association to its members - The common-pool collection and expenditure when treated as 'supply' is to be classified as supply of services. - HELD THAT: - Consistent with earlier findings, the Authority held that where the common-pool transactions amount to supply, the nature of what is provided to members is service in character (member benefits, facilitation of meetings and related administrative services), and therefore such transactions are services for GST classification.

Classified as supply of services.

Final Conclusion: The Authority ruled that the membership contributions collected for administration and meeting expenses constitute 'supply' under the GST law, are to be treated as supply of services, the applicant is a taxable person (subject to registration thresholds), the applicant entity is liable to pay GST (not the office-bearers), and the pooling of funds and spending back on contributors likewise constitutes a taxable supply of services.

Classification as part of fishing vessels - HSN 8902 - taxable at 5% GST under Serial No.252 of the First Schedule - application of Notification No.1/2017 Central Tax (Rate)

Classification as part of fishing vessels - HSN 8902 - taxable at 5% GST under Serial No.252 of the First Schedule - Whether the listed items used in manufacture of fishing boats and vessels are parts of fishing/floating vessels classifiable under HSN 8902 and taxable at 5% GST under Serial No.252 of the First Schedule to Notification No.1/2017 Central Tax (Rate). - HELD THAT: - The Authority examined the nature, manufacture and exclusive use of the specified items in fishing boats and vessels and noted prior rulings and the applicable rate notification. The goods in question-including propeller, shaft/SS rod, gun metal bush/bearing, stuffing box, brass tube/SS tube, rudder shaft and blade, sea cork/water strainer, GM gate valve, MS pipe, propeller nut/GM nut, coupling, SS rods & square, SS flat, GM gland and ring and MS plate-are purchased or fabricated for and exclusively used as parts of fishing/floating vessels. The Authority relied on the entries in Notification No.1/2017 and earlier AAR findings to conclude that such parts fall within the ambit of HSN 8902 and Serial No.252 of the First Schedule, which prescribes a GST rate of 5%. Given the established classification and consistent prior rulings, the items were held to be classifiable as parts of fishing/floating vessels and subject to the prescribed rate.

The listed items are parts of fishing/floating vessels classifiable under HSN 8902 and taxable at 5% GST (2.5% CGST + 2.5% SGST) under Serial No.252 of the First Schedule to Notification No.1/2017 Central Tax (Rate).

Final Conclusion: Advance ruling: the specified items used as parts of fishing/floating vessels are classifiable under HSN 8902 and attract GST at 5% (2.5% CGST + 2.5% SGST) under Serial No.252 of the First Schedule to Notification No.1/2017 Central Tax (Rate).

GST registration for multiple taxpayers at a single premises - co-working space as distinct principal place of business - proof of principal place of business by rental/sub lease agreement and utility bills - identification of taxpayer based on PAN

GST registration for multiple taxpayers at a single premises - co-working space as distinct principal place of business - proof of principal place of business by rental/sub lease agreement and utility bills - identification of taxpayer based on PAN - Separate GST registrations for multiple companies operating from a shared "co working space" address. - HELD THAT: - The Authority held that there is no prohibition under the GST law on granting separate registrations to entities operating from a shared or co working office provided the landlord permits sub leasing under the lease and the respective entities can demonstrate a distinct principal place of business. Identification of the taxpayer is by PAN, and therefore multiple registrations from the same overall premises are permissible where each sub unit is demarcated (for example by suit or desk number) and supported by documentary proof. The required proof includes the rental agreement between landlord and lessee and, where applicable, the sub lease between lessee and sub lessee, together with a monthly utility bill or other evidence of payment for electricity, water or common services for the particular suit or desk number. The Authority also noted that the GST registration granted must be displayed prominently and that books of account relating to the business must be kept at the declared principal place of business.

Separate GST registration is permissible for multiple companies operating in a co working space that provide services, subject to production of lease/sub lease documents and utility bills as proof of distinct principal place of business, and compliance with requirements to display the GST number and maintain books at the principal place of business.

Final Conclusion: The AAR allowed separate GST registrations for start up companies operating from the same co working address on the stated conditions: landlord's permission for sub leasing, appropriate rental/sub lease agreements and supporting monthly utility/common service bills as proof of the distinct principal place of business, with GST numbers displayed and books maintained at the declared premises.

Exemption under Notification No.2/2017 - frozen seafood in unit containers - registered brand name - bearing a brand name - actionable claim or enforceable right on brand name - supply to institutional customers

Frozen seafood in unit containers - registered brand name - bearing a brand name - exemption under Notification No.2/2017 - actionable claim or enforceable right on brand name - supply to institutional customers - Frozen seafood sold in packages to institutional customers without bearing the brand name is eligible for exemption under Notification No.2/2017. - HELD THAT: - The Authority found that the applicant is a registered brand name holder and that the presence of the company name on the package operates as a visible connection between the goods and the brand holder. The S.R.O./Notification scheme treats frozen sea foods put up in unit containers bearing a brand name as taxable unless the packer files an affidavit and prints a declaration relinquishing any actionable claim or enforceable right in the brand. The Authority held that ordinary inscription of the company's name or statutory name/address on the packet suffices to indicate the connection with the brand guardian and therefore amounts to the goods bearing a brand name. The applicant did not produce evidence of having filed the requisite affidavit to forego actionable rights in the brand as required by the annexure to the notification. The commercial distinction that institutional customers do not require visible branding does not alter the legal character of the packaging where the company's name is present and the goods remain connected to the registered brand. Accordingly, the supply is not eligible for the NIL-rate exemption under Notification No.2/2017 when sold in unit containers by a brand name holder without the formal renunciation steps prescribed by the notification.

No - such supply by a registered brand name holder is not eligible for exemption under Notification No.2/2017 merely because the packet lacks a brand logo; the presence of the company name indicates the goods bear a brand and the applicant has not shown relinquishment of actionable rights as required.

Final Conclusion: The Advance Ruling denies the claimed NIL-rate exemption: frozen seafood in unit containers supplied by the brand-holder to institutional customers is not exempt under Notification No.2/2017 unless the statutory conditions for foregoing actionable claim in the brand are complied with.

Transitional credit - Form GST TRAN-1 - electronic filing - manual filing - GST Portal technical glitches - IT Grievance Redressal Committee - carry forward of input tax credit - expeditious processing of claims

Transitional credit - Form GST TRAN-1 - GST Portal technical glitches - manual filing - electronic filing - Direction permitting the petitioner to file Form GST TRAN-1 electronically or manually to claim transitional credit and requiring respondents to process the claim expeditiously. - HELD THAT: - The petitioner had a legally recognisable transitional credit balance as on the appointed day and is entitled to carry it forward and claim it by filing Form GST TRAN-1. The Court acknowledged systemic difficulties on the GST Portal and noted prior orders granting relief where technical glitches impeded timely filing. Rather than adjudicating factual disputes about whether the petitioner specifically encountered upload errors, the Court directed remedial relief: respondents must reopen the Portal to permit electronic filing or, if that cannot be done, permit manual filing by the petitioner. Once filed, the petitioner's TRAN-1 claim is to be processed by the respondents in accordance with law and without delay. The direction sets a final date for the opportunity to file, after which the departmental process for adjudication of the claim will follow. [Paras 9, 10]

Respondents directed to enable electronic re-filing or permit manual filing of Form GST TRAN-1 on or before 13th September, 2019 and thereafter to process the petitioner's transitional credit claim expeditiously in accordance with law.

Final Conclusion: Petition disposed by directing respondents to reopen the Portal or permit manual filing of Form GST TRAN-1 by the petitioner by 13th September, 2019 and to process the transitional credit claim expeditiously in accordance with law.

Interim injunction - no coercive action - prima facie case - Summons under section 70 of the CGST Act, 2017 - opportunity to appear and file reply before authority

Prima facie case - interim injunction - no coercive action - Grant of interim protection restraining coercive action against the writ applicant pending further orders. - HELD THAT: - The Court, having considered the materials and submissions, concluded that the writ applicant had established a strong prima facie case warranting interim relief. Pending the next returnable date the authorities are restrained from taking any coercive action or steps against the writ applicant. This interim protection is conditional upon the matter being placed before the authority and further proceedings on the returnable date. [Paras 2, 3]

Interim protection granted; no coercive action to be taken against the writ applicant until the next returnable date.

Summons under section 70 of the CGST Act, 2017 - opportunity to appear and file reply before authority - Direction to the writ applicant to appear before the concerned authority and to the authority to file an appropriate reply on the liability sought to be enforced by issuance of summons under section 70 of the CGST Act, 2017. - HELD THAT: - The Court directed the writ applicant to appear before the concerned authority and to make good his stance. The concerned authority was directed to file an appropriate reply on the question of liability sought to be enforced by issuing summons under section 70 of the CGST Act, 2017, for consideration on the next returnable date. The order preserves the authority's opportunity to respond while maintaining interim protection against coercive measures. [Paras 4]

Writ applicant to appear before the concerned authority; authority to file appropriate reply regarding liability under summons issued under section 70 of the CGST Act, 2017.

Final Conclusion: Notice issued; interim protection granted restraining coercive action until the next returnable date, subject to the writ applicant appearing before the concerned authority and the authority filing its reply on the liability arising from summons under section 70 of the CGST Act, 2017.

Summary order. Notice issued returnable on 21/08/2019 in respect of challenge to amended Rule 89(5) of the CGST Rules, 2017; matters to be tagged with Special Civil Application Nos. 14155/2018, 12483/2019, 14980/2018 and 653/2019.

Reopening of assessment - notice beyond four years - interest on fixed deposit undisclosed - HELD THAT:- Since the tax effect involved in this matter is less than ₹ 2 crores, we see no reason to interfere in this matter. The special leave petition is dismissed, leaving all the questions of law open.

Disallowance u/s 14A r.w.r 8D - Recording of satisfaction by Assessing Officer under Section 14A(2) - applicability of Rule 8D of the Income Tax Rules - disallowance of expenditure in relation to exempt income - AO has not recorded his satisfaction regarding the correctness of the self disallowance made by the assessee - Revenue's appeal dismissed; assessment addition made by applying Rule 8D without recording the mandatory satisfaction under Section 14A(2) is quashed and the appellate authorities' deletion of the enhanced disallowance is upheld by HC [2018 (11) TMI 645 - DELHI HIGH COURT]

HELD THAT:- Since the tax effect involved in the matter is less than ₹ 2 crores, going by the latest circular issued by the CBDT, we see no reason to interfere in this matter. The special leave petition is dismissed, leaving all the questions of law open.

Obligation to deduct tax at source on interest - assessee in default under Section 201 - certificate under Section 197A declaring nil income - income from other sources (interest on fixed deposits) - possession of documents or returns to justify non-deduction

Obligation to deduct tax at source on interest - assessee in default under Section 201 - certificate under Section 197A declaring nil income - possession of documents or returns to justify non-deduction - Whether the appellant Bank was an assessee in default for failing to deduct TDS on interest paid on fixed deposits of the Official Liquidator of Patna High Court. - HELD THAT: - The Court held that interest on the fixed deposits constituted taxable income and, in the absence of any return filed by the Official Liquidator or a certificate under Section 197A declaring nil liability, the Bank was under a legal duty to deduct tax at source. It was not open to the Bank to determine at its level that the company in liquidation had losses or no taxable income; the power to avoid deduction arises only where the recipient has placed on record a valid certificate or return justifying non-deduction. Reliance on decisions where the recipient had paid tax or produced documents to show no liability was inapposite, because no such material was produced here. The appellate and tribunal findings that, on the available material, the Bank was an assessee in default for non-deduction of tax on interest were therefore upheld.

The Bank was an assessee in default for failure to deduct TDS on interest paid to the Official Liquidator; the orders below upholding the default are affirmed.

Final Conclusion: The appeal is dismissed; the finding that the appellant was an assessee in default for not deducting tax at source on interest paid to the Official Liquidator is affirmed.

Remand for fresh consideration - requirement of a reasoned order - disallowance under section 14A and application of Rule 8D - expenditure in relation to exempt dividend income - provision for non-performing assets as legitimate business deduction - transfer to Section 45-IC special reserve and its exclusion from total income/book profit - deductibility of education cess as business expenditure - applicability of section 115JB and computation of book profit - treatment of capital profit/loss in computing book profit - Explanation 1(i) to section 115JB(2) and addition of provisions to book profit

Disallowance under section 14A and application of Rule 8D - Whether disallowance under section 14A and rule 8D in respect of the appellant's claim required fresh adjudication by the Tribunal. - HELD THAT: - The High Court found prima facie substance in the appellant's contention that the Tribunal's findings on disallowance under section 14A and rule 8D required reconsideration. The matter is remitted to the Tribunal for fresh hearing of the parties and for passing a reasoned order, and the part of the Tribunal's order dealing with this question is set aside.

Remitted to the Tribunal for fresh consideration and a reasoned order within six months.

Expenditure in relation to exempt dividend income - Whether the Tribunal's upholding of the disallowance alleged to relate to exempt dividend income was sustainable. - HELD THAT: - The High Court observed substance in the appellant's challenge to the Tribunal's findings upholding the disallowance claimed as expenditure related to exempt dividend income, and directed remand to the Tribunal for fresh adjudication after hearing the parties and issuing a reasoned order.

Remitted to the Tribunal for fresh consideration and a reasoned order within six months.

Provision for non-performing assets as legitimate business deduction - Whether provision for non-performing assets made under RBI prudential norms was a legitimate business deduction. - HELD THAT: - The Court found sufficient prima facie merit in the appellant's contention that the provision recognised under RBI Prudential Norms may constitute a legitimate business deduction, and therefore remitted the issue to the Tribunal for fresh hearing and a reasoned determination.

Remitted to the Tribunal for fresh consideration and a reasoned order within six months.

Transfer to Section 45-IC special reserve and its exclusion from total income/book profit - Whether the transfer to the special reserve under section 45-IC should be excluded from total income under normal computation and/or excluded in computing book profit under section 115JB. - HELD THAT: - The High Court considered the appellant's contention regarding exclusion of the transfer to special reserve under section 45-IC and remitted the question to the Tribunal for fresh consideration on merits, directing a reasoned order after hearing the parties.

Remitted to the Tribunal for fresh consideration and a reasoned order within six months.

Deductibility of education cess as business expenditure - Whether the appellant was entitled to deduction of education cess as business expenditure in light of coordinate decisions relied upon by the appellant. - HELD THAT: - The Court found prima facie force in the appellant's contention and remitted the issue to the Tribunal for fresh adjudication and a reasoned order after hearing the parties.

Remitted to the Tribunal for fresh consideration and a reasoned order within six months.

Applicability of section 115JB and computation of book profit - Whether section 115JB applied when profit and loss accounts were prepared in accordance with RBI Act and RBI Prudential Norms which override Parts II and III of Schedule VI to the Companies Act, and whether the Tribunal erred in not adjudicating this claim. - HELD THAT: - The High Court entertained the appellant's contention that statutory/regulatory accounting under the RBI framework could affect applicability and computation under section 115JB, and remitted the question to the Tribunal for fresh consideration with directions to hear the parties and pass a reasoned order.

Remitted to the Tribunal for fresh consideration and a reasoned order within six months.

Treatment of capital profit/loss in computing book profit - Whether capital profit or loss on sale of investments, transfer of business and sale of assets is required to be considered in computing book profit under section 115JB. - HELD THAT: - The Court found that the question warranted fresh consideration by the Tribunal and therefore remitted the issue for fresh adjudication on merits, to be decided in a reasoned order after hearing the parties.

Remitted to the Tribunal for fresh consideration and a reasoned order within six months.

Explanation 1(i) to section 115JB(2) and addition of provisions to book profit - Whether the provision for non-performing assets of Rs. 13.71 crore made under RBI Prudential Norms was required to be added to book profit in terms of Explanation 1(i) to section 115JB(2). - HELD THAT: - The High Court considered the appellant's challenge to the Tribunal's treatment of the RBI-mandated provision and remitted the issue for fresh consideration by the Tribunal, directing a reasoned determination after hearing the parties.

Remitted to the Tribunal for fresh consideration and a reasoned order within six months.

Transfer to Section 45-IC special reserve and its exclusion from total income/book profit - Whether the sum transferred to special reserve under statutory compulsion of section 45-IC was required to be excluded in computing book profit under section 115JB. - HELD THAT: - The Court found merit in remitting this specific question about exclusion of the statutory transfer from book profit to the Tribunal for fresh adjudication and directed that the Tribunal hear the parties and pass a reasoned order within six months.

Remitted to the Tribunal for fresh consideration and a reasoned order within six months.

Final Conclusion: The High Court set aside that part of the Tribunal's order dated 27th February 2019 dealing with the specified questions and remitted those issues to the Tribunal for fresh consideration; the Tribunal is directed to hear the parties and pass a reasoned order within six months. The appeal is disposed of accordingly.

Revision under section 264 - Scope of revisional power under section 264 - Non-service of notice under section 148/142(1)/144 - Remand for fresh consideration

Non-service of notice under section 148/142(1)/144 - Revision under section 264 - Revisional Authority did not properly adjudicate the assessee's objection regarding non-service of statutory notices and the revisional order was set aside and remitted for fresh consideration. - HELD THAT: - The High Court observed that on remand the Revisional Authority treated the assessee's objection cryptically and relied on a decision of another High Court without addressing the merits of the contention that notices under sections 148, 142(1) and 144 were not served. The Court emphasised that a revisional exercise under section 264 requires consideration of the issues on merits and cannot be disposed of in a mechanical or casual manner. Because the Revisional Authority did not deal with the service objection in the right perspective or apply section 264's requirements to the merits of the objection, the impugned revisional order could not stand and required fresh adjudication.

Impugned order dated 26.9.2018 set aside; matter remitted to the Revisional Authority for fresh decision on the objection regarding service of notices.

Scope of revisional power under section 264 - The Court restated the limited grounds on which power under section 264 can be exercised and required those principles to guide the fresh revisional consideration. - HELD THAT: - The Court reiterated that the exercise of revisional power under section 264 is confined to situations where the authority has (i) exercised jurisdiction not vested in it by law, (ii) failed to exercise a jurisdiction vested in it, or (iii) acted illegally or with material irregularity in exercise of its jurisdiction. The Revisional Authority is obliged to advert to these limits and to examine objections brought by the assessee on merits when exercising revision. The failure to do so amounted to an improper exercise of revisional power warranting interference and remand.

Section 264 powers are limited to the stated grounds and must be applied in accordance with law; fresh decision to be taken by Revisional Authority guided by these principles.

Final Conclusion: Impugned order dated 26.9.2018 is set aside and the matter is remitted to the Revisional Authority for fresh consideration and decision in accordance with law, to be completed expeditiously and not later than 30 days from communication of this order; the High Court has expressed no opinion on the merits.

Disallowance under section 36(1)(va) of the Income Tax Act for late deposit of employees' contributions - interpretation of 'within fifteen days of the close of every month' under section 38 of the Employees Provident Funds and Miscellaneous Provisions Act - deposit of employees' contribution refers to the month for which wages are payable - precedential effect of earlier High Court decisions and contention of per incuriam

Disallowance under section 36(1)(va) of the Income Tax Act for late deposit of employees' contributions - interpretation of 'within fifteen days of the close of every month' under section 38 of the Employees Provident Funds and Miscellaneous Provisions Act - deposit of employees' contribution refers to the month for which wages are payable - Claim for deduction of employees' contributions was rightly disallowed because contributions were not deposited by the statutory due date. - HELD THAT: - The Court accepted the view in M/s Checkmate Facility And Electronic Solutions Pvt. Ltd. that section 36(1)(va) permits deduction only where the employee's contribution is credited to the relevant fund on or before the "due date." The Explanation to section 36(1)(va) incorporates the employer's obligation under section 38 of the Employees Provident Funds and Miscellaneous Provisions Act, which requires payment "within fifteen days of the close of every month." The Court construed that phrase as referring to the month in respect of which wages are payable and the corresponding duty to deduct and deposit arises; it rejected the contention that the due date is to be reckoned from the month in which wages are actually paid in a subsequent month. Applying that interpretation, late deposits beyond the statutory period attract disallowance under section 36(1)(va). [Paras 3, 4, 5, 6]

The Tribunal was correct in not allowing the claim; the disallowance under section 36(1)(va) is sustained.

Precedential effect of earlier High Court decisions and contention of per incuriam - Contention that two earlier Division Bench decisions were per incuriam because they did not consider Urmin Products Pvt. Limited was rejected. - HELD THAT: - The Court examined the decision in Urmin Products Pvt. Limited and found that the paragraphs relied upon did not lay down any contrary legal principle but merely observed that no error arose where the Tribunal had followed a Delhi High Court decision. Consequently, there was no basis to treat the earlier Division Bench decisions as per incuriam. The Court therefore declined to disturb the precedent relied upon by the Tribunal. [Paras 5, 6]

The per incuriam challenge to the Division Bench decisions is not tenable; earlier authorities remain binding for the issue before the Court.

Final Conclusion: The appeal is dismissed: the Tribunal's disallowance of the claimed employees' contributions for failure to deposit within the statutory due date is upheld, and the contention that prior decisions were per incuriam is rejected.

Diversion of income by overriding title - application of income versus diversion of income - scope of revision under Section 263 of the Income Tax Act - requirement of materials on record for exercise of revisionary power - allowability of expenditure wholly and exclusively incurred in connection with transfer - interpretation of a will to ascertain testator's intention

Scope of revision under Section 263 of the Income Tax Act - requirement of materials on record for exercise of revisionary power - Whether the Commissioner could invoke the revisional power under Section 263 against the assessment order passed under Section 143(3). - HELD THAT: - The Court held that Section 263 can be exercised only where the Assessing Officer's order is both erroneous and prejudicial to the revenue and such conclusion must be supportable from materials on the record. The assessment had been completed after issuing notices under Section 143(2) and Section 142(1), the assessee furnished the will, sale deed, legal opinion and receipts, and the Assessing Officer considered those documents and accepted the assessee's stand. The CIT did not place any independent material on record but substituted his view by reinterpreting the will; this amounted to a roving enquiry and an impermissible substitution of judgment. Mere difference of opinion or inadequate satisfaction of the Commissioner does not justify revision under Section 263 where an inquiry was conducted and the Assessing Officer applied his mind. [Paras 5, 6]

Power under Section 263 could not be invoked; the revisional order was quashed.

Diversion of income by overriding title - application of income versus diversion of income - interpretation of a will to ascertain testator's intention - allowability of expenditure wholly and exclusively incurred in connection with transfer - Whether payments directed by the will to charitable institutions and other specified payments amounted to diversion of the sale proceeds by overriding title and hence were not taxable in the hands of the assessee. - HELD THAT: - The Court examined the will as a whole to ascertain the testator's intention. The will appointed an executor to sell the property and expressly directed the executor to effect specified payments to charitable institutions, pay property taxes, meet stamp duty and executor's fee and thereafter pay the remaining sale proceeds to the assessee. The sums were earmarked to reach the respective entities before the remainder reached the assessee, meaning the assessee was not entitled to the entire sale consideration at any time. Applying the established distinction between application of income (after accrual) and diversion (before accrual), and relevant authorities, the Court concluded that the major portion of the sale consideration was diverted before it reached the assessee by virtue of an antecedent overriding title created by the will. Consequently those sums could not be treated as the assessee's income. [Paras 7, 8, 10, 11, 12]

Payments directed by the will constituted diversion of the sale proceeds by overriding title and are not taxable in the hands of the assessee.

Allowability of expenditure wholly and exclusively incurred in connection with transfer - scope of revision under Section 263 of the Income Tax Act - Whether the expenditure claimed by the assessee in connection with the sale was allowable where receipts and supporting documents were placed before the Assessing Officer but later disallowed by the Commissioner for alleged lack of inquiry. - HELD THAT: - The assessee had produced receipts and supporting documents in response to notices under Section 142(1), which were examined by the Assessing Officer who accepted the genuineness and allowed the claim. The CIT's action to disallow the expense under Section 263 on the ground of inadequate inquiry was unsustainable because there was an inquiry and materials on record; mere disagreement with the Assessing Officer's conclusion does not permit revision. In absence of any allegation of fraud or forged documents, the finding of the CIT was held to be perverse. [Paras 5, 13]

The expenditure claim must be allowed; the disallowance under Section 263 was unwarranted.

Final Conclusion: The appeal is allowed: the revisional order under Section 263 is quashed; the payments directed by the will are held to be diversion of sale proceeds by overriding title and not assessable in the hands of the assessee; the expenditure claimed in connection with the sale is allowable as the Assessing Officer had examined and accepted the supporting documents.

Colourable device to evade tax - characterisation of non-compete fee - full value of consideration for transfer of shares - relevance of subsequent events for determination of consideration - arm's length transaction and adequacy of consideration - assessment under Section 153C of the Income-tax Act - reliance on seized material to frame assessment

Full value of consideration for transfer of shares - arm's length transaction and adequacy of consideration - relevance of subsequent events for determination of consideration - Validity of the Tribunal's finding that the low share price agreed by the assessee should be accepted as genuine despite a later sale of similar shares at a substantially higher price. - HELD THAT: - The Court examined the sequence of transactions and the materials on record and held that the Tribunal's conclusion that the agreed low price was a justified reasonable price is not supported by any material and is therefore perverse. The Tribunal did not identify evidence to demonstrate why the parties were compelled to accept a low price, nor did it adequately address the contemporaneous commercial context (including subsequent sales at a much higher price). The Court emphasised that adequacy of consideration cannot be accepted merely because parties recorded it, where the factual matrix-sales by related entities at vastly different prices and the structuring of receipts-shows a pattern indicative of tax avoidance. The Tribunal's reliance on principles that subsequent events are irrelevant was rejected insofar as those events reveal the commercial raison d'e tre and probable effect of the arrangement; here the later higher-priced sale and related dealings were material to judging genuineness and intent. [Paras 32, 33, 37]

The Tribunal's acceptance of the low price as genuine is perverse and cannot be sustained.

Characterisation of non-compete fee - colourable device to evade tax - Whether the amount received by the assessee as a 'non-compete fee' is a genuine capital receipt or a device to split consideration and evade tax, thereby being exigible to tax as capital gains. - HELD THAT: - On analysis of agreements, conduct of the parties and flow of transactions, the Court found that the payment characterised as non-compete consideration formed part of an overall scheme to divide consideration and obtain fiscal advantage by transferring gains to a group company with accumulated losses. The Assessing Officer's conclusion that the receipts were a device to avoid tax was upheld: mere existence of an agreement does not preclude inquiry into its commercial substance (relying on principles in Lachminarayan Madan Lal and Mc Dowell & Co.), and where the arrangement's intended fiscal effect is to reduce tax, it is liable to be disregarded. The Court further noted infirmities in the non-compete agreement (unsigned/unnamed signatory, unregistered instrument) and that the assessee offered no satisfactory contemporaneous explanation for the low sale price coupled with separate large non-compete payment. [Paras 27, 37, 38, 39, 45]

The payment characterised as non-compete fee was a colourable device to evade tax and liable to be brought to tax as part of capital gains.

Assessment under Section 153C of the Income-tax Act - reliance on seized material to frame assessment - Validity of framing assessment under Section 153C based on material seized during the search. - HELD THAT: - The Court rejected the Tribunal's terse conclusion that no incriminating material was seized and that Section 153C could not be invoked. The record shows that search and seizure yielded documents and other material which the Assessing Officer specifically relied upon in issuing notices and framing the assessment. The Tribunal failed to examine or even refer to the seized material relied upon by the Assessing Officer. Given that papers and documents were recovered from the residence and group companies and expressly referenced in the assessment order, the invocation of Section 153C and the subsequent assessment were held to be valid. [Paras 18, 19, 23, 34, 43]

The assessment under Section 153C was properly founded on seized material and valid; the Tribunal's contrary finding was unsupportable.

Final Conclusion: Appeals allowed. The Tribunal's and CIT(A)'s orders are set aside; the assessment order is restored.

Revision under Section 264 of Income Tax Act - powers to condone delay under proviso to sub section (3) of Section 264 - statutory appeal remedy under Section 246A - rehearing and remand for fresh decision on merits - payment of costs as condition for grant of relief

Revision under Section 264 of Income Tax Act - powers to condone delay under proviso to sub section (3) of Section 264 - rehearing and remand for fresh decision on merits - Impugned revision orders dated 28.03.2019 arising out of assessment proceedings for AY 2012-13 and AY 2013-14 - HELD THAT: - Impugned order I rejected the revision for AY 2012 13 solely on the ground of delay without exercising the proviso power under sub section (3) of Section 264 to condone delay; impugned order II confirmed the assessment for AY 2013 14 without meaningful discussion of the grounds of revision. Both orders arise from a common factual matrix and one revision was within time while the other was delayed. In the facts of this case the High Court held that it was appropriate in the interest of orderly adjudication to set aside both impugned orders and direct the revisional authority to take up both revision petitions together for fresh consideration on merits, leaving all questions open for decision on merits. [Paras 5, 6, 10]

Both impugned orders dated 28.03.2019 are set aside and the revision petitions are remitted for rehearing together on merits.

Payment of costs as condition for grant of relief - rehearing and remand for fresh decision on merits - Terms on which rehearing is ordered and consequence of non compliance - HELD THAT: - The Court, while setting aside the impugned orders, imposed terms: the writ petitioner was directed to pay specified costs to a named charity within a fortnight and to produce receipts; upon production of receipts the revisional authority must dispose of both revision petitions on merits expeditiously and within a specified period. The Court also provided that failure to pay the costs within the stipulated time would result in automatic dismissal of the writ petitions. These terms balance the court's intervention with conditions to ensure prompt disposal and compliance. [Paras 13]

Writ petitions disposed by setting aside impugned orders subject to payment of costs and remand for fresh decision within the prescribed timeframe; non payment results in automatic dismissal.

Final Conclusion: The High Court set aside the two revisional orders dated 28.03.2019 (pertaining to AY 2012-13 and AY 2013-14) without expressing any view on merits, directed rehearing of both revision petitions together on merits after payment of specified costs to a charity and production of receipts, required disposal within the prescribed period, and ordered that failure to pay costs within the time stipulated would lead to automatic dismissal of the writ petitions.

Accrued employee incentive as deductible revenue expenditure - application of section 14A disallowance and Rule 8D - Rule 8D applicability from A.Y.2008-09 - capital expenditure v. revenue expenditure - 'new look' expenditure for a TV channel - write off of advances treated as business loss under section 28

Accrued employee incentive as deductible revenue expenditure - Deletion of disallowance made by Assessing Officer in respect of accrued incentives to employees. - HELD THAT: - The Tribunal followed the coordinate bench decision in assessee's own case which held that amounts provided as performance based incentives, supported by employee wise details and consistent year to year accounting treatment, constitute ascertained and accrued liabilities akin to variable salary and are allowable as business expenditure. No distinguishing facts were shown to justify a different result in the present assessments. Consequently the revenue's disallowance was not sustained. [Paras 7]

Revenue appeals dismissing the disallowance are dismissed and the disallowance in respect of accrued incentives is deleted.

Application of section 14A disallowance and Rule 8D - Rule 8D applicability from A.Y.2008-09 - Extent of disallowance under section 14A in respect of expenditure related to exempt dividend income and correctness of invoking Rule 8D for A.Y.2007 08. - HELD THAT: - The Assessing Officer had not recorded satisfaction regarding expenditure relatable to exempt income, and the assessee had not made any specific disallowance. The Tribunal recognised that some expenditure must have been incurred in relation to investments and that some element of disallowance was therefore warranted. However, Rule 8D is applicable only from A.Y.2008 09 and could not be applied to A.Y.2007 08. Balancing these factors, and in the absence of detailed findings, the Tribunal exercised its discretion to restrict the disallowance to a modest sum for each year to meet the ends of justice. [Paras 14, 15, 16]

Disallowance under section 14A restricted to Rs. 1,00,000 for each of A.Y.2005 06 and A.Y.2007 08; application of Rule 8D to A.Y.2007 08 held to be erroneous.

Capital expenditure v. revenue expenditure - 'new look' expenditure for a TV channel - Whether expenditure incurred for giving a 'new look' to the existing TV channel (logo/presentation) is capital in nature or a revenue (routine) expenditure. - HELD THAT: - Applying the commercial test of enduring benefit, the Tribunal observed that the channel already existed and the expenditure merely enhanced presentation or gave a fresh look without creating a new asset or expanding the profit making apparatus. Although some enduring advantage may flow, the nature of the advantage was held to facilitate trading operations and improve business efficiency rather than constitute acquisition of capital asset. In view of precedent authority and the facts, the change was treated as routine/revenue expenditure. [Paras 17, 25]

Impugned expenditure for giving a new look to the channel is revenue expenditure; the Assessing Officer is directed to withdraw the capitalisation and related disallowance/depreciation.

Write off of advances treated as business loss under section 28 - Allowability of advances written off - whether exigible as bad debts or claimable as business loss. - HELD THAT: - The Tribunal found that although the write off of advances did not meet the technical conditions for bad debts, the facts showed advances given in the ordinary course of business which could not be recovered. On true appraisal, such write offs should be treated as business loss under the head of business income rather than disallowed as bad debts. [Paras 32, 33]

Addition on account of advances written off is deleted and the amount is allowable as business loss under section 28.

Final Conclusion: The revenue appeals are dismissed (accrued incentives upheld); the assessee's appeals are partly allowed - section 14A disallowance restricted to a token amount for each year (Rule 8D wrongly applied to A.Y.2007 08), expenditure for 'new look' of the channel held revenue in nature and allowed, and write off of advances allowed as business loss.

Penalty under Section 271(1)(c) - concealment of income - furnishing inaccurate particulars of income - initiation and levy must be on the same limb - dual charge prohibited - principles of natural justice

Penalty under Section 271(1)(c) - concealment of income - furnishing inaccurate particulars of income - initiation and levy must be on the same limb - principles of natural justice - Validity of the penalty where penalty proceedings were initiated for furnishing inaccurate particulars of income but the penalty was levied for concealment of income - HELD THAT: - The Tribunal held that initiation of penalty proceedings under section 274 r.w.s. 271(1)(c) for one limb and levying penalty under the other limb is impermissible. The terms "concealment of income" and "furnishing inaccurate particulars of income" carry different meanings and an assessee must know the exact charge to meet it; failure to specify the limb offends principles of natural justice. The Assessing Officer's notice ticked the limb of "furnishing inaccurate particulars" while the penalty order applied Explanation 1 (concealment), and the penalty order also treated the addition as representing income "in respect of which inaccurate particulars... have been furnished/particulars... has been concealed," thereby fixing a dual charge. Reliance on binding judicial precedents supporting the requirement that the penalty must be initiated and imposed on the same specific limb was applied, and no distinguishing facts were shown by revenue to take the case out of those precedents. Consequently, the penalty could not be sustained. [Paras 4, 5]

Penalty levied under section 271(1)(c) was deleted as initiation and levy were on different limbs; dual charging was impermissible.

Final Conclusion: The Tribunal affirmed deletion of the penalty imposed under section 271(1)(c) for AY 2010-11 on the ground that the penalty proceedings were initiated under one limb but levied under another, thereby dismissing the revenue's appeal.

Rectification under section 154 of the Income-tax Act - consequential giving effect to reassessment - reassessment and modification of brought forward losses - limitation for rectification - mistake apparent from record - carry forward and set-off of losses - validity of consequential modification of assessment

Rectification under section 154 of the Income-tax Act - consequential giving effect to reassessment - carry forward and set-off of losses - limitation for rectification - mistake apparent from record - Validity of the order passed under section 154 rectifying the assessment of AY 2009-10 by modifying brought forward losses to give effect to the reassessment of AY 2008-09 and whether such rectification was barred by limitation. - HELD THAT: - The Tribunal held that the order under section 154 was a consequential order enacted solely to give effect to the reassessment carried out for AY 2008-09 which reduced the loss determined for that year. The modification effected by the AO withdrew the excess set-off of brought forward loss of AY 2008-09 while completing assessment for AY 2009-10; this was a rectification of a mistake apparent on the record in view of the reassessment result. As the rectification did not change the tax liability for AY 2009-10 (the assessee had reported a loss for that year), and the carry forward losses would only impact tax computation when the assessee reports positive income in a subsequent year, the consequential modification was permissible and not contrary to limitation. The CIT(A)'s conclusion that the withdrawal of excess set-off was valid and in accordance with law was affirmed. [Paras 5]

The rectification under section 154 to give effect to the reassessment of AY 2008-09 and to modify brought forward losses for AY 2009-10 was held valid; the limitation objection was rejected and the order sustained.

Final Conclusion: The appeal is dismissed; the Tribunal affirms the validity of the consequential rectification under section 154 to give effect to the reassessment of AY 2008-09 and upholds the CIT(A)'s order.

Deemed dividend under Section 2(22)(e) - beneficial and registered shareholder requirement for taxation - taxability in the hands of shareholder and not the concern - exception where lending of money is substantial part of business - precedential binding of High Court and coordinate Tribunal decisions

Deemed dividend under Section 2(22)(e) - beneficial and registered shareholder requirement for taxation - taxability in the hands of shareholder and not the concern - Whether the loan of Rs. 1.42 crores received by the assessee from M/s Lucky Vyapar and Holdings Pvt. Ltd. constituted deemed dividend assessable in the hands of the assessee under Section 2(22)(e). - HELD THAT: - The Assessing Officer treated the loan as deemed dividend under Section 2(22)(e). The Tribunal, affirming the order of the first appellate authority, held that the proviso in the judicial line of authority requires the payer/recipient relationship to be such that the recipient is a shareholder both in registered and beneficial sense for Section 2(22)(e) to be attracted. On the facts, the assessee company was neither a registered nor the beneficial shareholder of the lender; the common substantial interest was held by an individual. The Tribunal distinguished Supreme Court decisions relied upon by Revenue as factually inapplicable and followed binding decisions of the Bombay High Court and coordinate Bench precedents which establish that deemed dividend can be taxed only in the hands of the shareholder and not in the hands of a concern which is not the registered/beneficial shareholder. In view of these precedents and the factual finding that the assessee did not satisfy the registered/beneficial shareholder requirement, the addition was rightly deleted. [Paras 3, 7]

Addition under Section 2(22)(e) deleted; Revenue's appeal dismissed.

Final Conclusion: Following binding High Court and Tribunal precedents, the Tribunal affirmed deletion of the addition treating the loan as not a deemed dividend in the hands of the assessee (which was neither registered nor beneficial shareholder of the lender) and dismissed the revenue appeal; cross-objections by the assessee were rendered infructuous.

Arm's length price - transfer pricing adjustment - issuance of credit notes as diversion/adjustment of profits - interpretation of section 5(1)(b) - reference to Transfer Pricing Officer under CBDT instruction - duty to pass a speaking order

Duty to pass a speaking order - appellate authority's independent application of mind - Ld. CIT (Appeals) failed to apply independent mind and did not pass a speaking order on the assessee's contentions regarding credit notes and related taxability. - HELD THAT: - The Tribunal examined the order of the Ld. CIT (Appeals) and found that the appellate authority had merely adopted the Assessing Officer's conclusions without dealing with the assessee's specific contentions. The impugned appellate order (paras 6.5-6.13 of the CIT(A) order) dismisses grounds by reference to the AO's view that the transactions were not international transactions, but does not record independent reasoning or address how the credit notes are taxable under the relevant statutory provision. In consequence the Tribunal held that there was a failure of adjudication by the first appellate authority and that a speaking order addressing the assessee's arguments was required. [Paras 5]

Issue remitted to the Ld. CIT (Appeals) with a direction to re-adjudicate and pass a speaking order after considering all contentions and giving the assessee opportunity to be heard.

Issuance of credit notes as diversion/adjustment of profits - interpretation of section 5(1)(b) - arm's length price - Whether the Assessing Officer was justified in treating the credit notes issued to Associated Enterprises as income diverted under section 5(1)(b) and making an addition to income. - HELD THAT: - The Tribunal did not decide the substantive question on merits. Although the AO concluded that the credit notes amounted to diversion of profits and added the amount as income, and the CIT(A) upheld that view without independent reasoning, the Tribunal found that these contentions and factual-matters (including whether the credit notes were contractual adjustments affecting the arm's length consideration) were not properly examined by the first appellate authority. Therefore, the Tribunal declined to adjudicate the merits and remitted the issue for fresh consideration by the CIT(A) with directions to examine the contractual basis, transfer pricing documentation and applicability of the statutory provision. [Paras 5, 6]

Substantive issue remitted to the Ld. CIT (Appeals) for fresh adjudication on merits after considering the assessee's contentions and evidence.

Reference to Transfer Pricing Officer under CBDT instruction - transfer pricing adjustment - Whether the Assessing Officer should have referred the matter to the Transfer Pricing Officer in view of CBDT Instruction No.03/2016 when the adjustment involved intra group billing and credit notes. - HELD THAT: - The assessee contended that the case involved transfer pricing implications and, as per CBDT Instruction No.03/2016, should have been referred to the TPO. The AO and CIT(A) did not make a reference; the CIT(A) dismissed the plea by adopting the AO's view that the transaction was not an international transaction. The Tribunal observed that the question of referral under the CBDT instruction and whether the matter has transfer pricing implications was not properly addressed by the lower authorities. Because the Tribunal did not resolve the transfer pricing referral question on its merits, it directed the Ld. CIT (Appeals) to re-adjudicate the issue and consider whether a reference to the TPO was called for under the instruction and facts of the case. [Paras 5]

Issue remitted to the Ld. CIT (Appeals) to examine and decide afresh whether referral to the Transfer Pricing Officer was required under the CBDT instruction and the facts of the case.

Final Conclusion: The Tribunal found that the Ld. CIT (Appeals) failed to apply independent mind and did not render a speaking order on the assessee's pleaded contentions concerning the credit notes, their taxability and the need for transfer pricing reference; accordingly the Tribunal set aside the appellate order and remitted the matter to the Ld. CIT (Appeals) for fresh adjudication after affording the assessee an opportunity to be heard. Appeal allowed for statistical purposes.

Additional depreciation under section 32(1)(iia) - acquisition and installation - date of acquisition versus date of installation - relevance of invoices, delivery challans and installation certificates to vesting of property - revision of assessment order as erroneous and prejudicial under section 263

Additional depreciation under section 32(1)(iia) - date of acquisition versus date of installation - relevance of invoices, delivery challans and installation certificates to vesting of property - Whether the assessee was entitled to additional depreciation where machines were allegedly purchased before 01.04.2002 but invoices, bills of entry, delivery challans and installation certificates show acquisition and installation after 01.04.2002. - HELD THAT: - The Tribunal examined the documentary record (invoices, bills of entry, delivery challans and installation certificates) and found that, except for one low value item, the final invoices and documentary evidence establishing receipt and installation of the machines were dated after 01.04.2002. Proforma invoices are quotations and do not establish delivery or passing of property; the final invoices and attendant documents are the relevant materials to ascertain delivery and acquisition. Applying the purposive construction adopted in relevant precedents, the Tribunal held that where machines were in fact received and installed after 01.04.2002 the assessee satisfied the condition in clause (iia) of section 32(1) for additional depreciation. The Tribunal therefore concluded there was no error in the assessing officer's allowance of additional depreciation for AY 2003-04 and restored the AO's order. [Paras 16, 20, 21]

The assessee is entitled to additional depreciation for AY 2003-04; the AO's allowance is restored.

Revision of assessment order as erroneous and prejudicial under section 263 - acquisition and installation - Whether the Commissioner (CIT) was justified in holding the assessment order erroneous and prejudicial to revenue and directing withdrawal of the additional depreciation under section 263. - HELD THAT: - The CIT's revision under section 263 was based on the audit report which recorded dates of proforma invoices and concluded purchase prior to 01.04.2002. The Tribunal found that the CIT did not point to any specific defect in the AO's examination of the documentary evidence and that the AO had accepted the assessee's supporting documents. Given the documentary record showing final invoices, bills of entry, receipts and installation certificates post dating 01.04.2002, the Tribunal held that the CIT's exercise of jurisdiction under section 263 to withdraw the allowance was not justified. Accordingly the impugned order under section 263 was set aside in respect of the additional depreciation claim. [Paras 14, 16, 20]

The CIT's revision direction under section 263 withdrawing additional depreciation is set aside and the AO's original allowance is restored.

Final Conclusion: On the documentary record the machines were acquired and installed after 01.04.2002 and the assessee was entitled to additional depreciation under section 32(1)(iia) for AY 2003-04; the CIT's order under section 263 withdrawing that allowance is set aside and the assessing officer's order allowing the claim is restored.

Condonation of delay - quasi judicial duty to pass a reasoned order - jurisdiction to condone under Rule 6(1) of the Drawback Rules - application of amended time limits by Circular No.13 of 2010 - revisional jurisdiction of the Government of India and unlawful usurpation by officer - interference with appellate order

Condonation of delay - quasi judicial duty to pass a reasoned order - Validity of the purported rejection of the petitioner's condonation application and requirement of reasons/opportunity before rejecting such application - HELD THAT: - The Court found that the Commissioner did not pass any formal reasoned order rejecting the condonation application but only recorded a file note/query which was thereafter treated as a rejection. The Commissioner, when not satisfied with the reasons, was obliged to record a formal decision and, if necessary, afford the applicant an opportunity to clarify; a mere file noting or query cannot be treated as a lawful rejection of a quasi judicial application. The Joint Commissioner and subsequent authorities treated that observation as a conclusive rejection without any positive order by the Commissioner; that mode of disposal was held to be legally infirm.

The remarks of the Commissioner did not amount to a valid rejection of the condonation application; mechanical treatment of the file note as rejection is unlawful.

Jurisdiction to condone under Rule 6(1) of the Drawback Rules - application of amended time limits by Circular No.13 of 2010 - Whether the revised time limits introduced by Circular No.13 of 2010 applied to the petitioner's claim and whether the Commissioner (Appeals) was correct in allowing the claim on that basis - HELD THAT: - The Court observed that the time limit for filing brand rate claims under Rule 6 was revised by Circular No.13 of 2010 on 24.6.2010, prior to the petitioner's filing on 29.6.2010. The revised regime expanded the condonable period and the power to extend time. Since the petitioner's application was filed after the circular took effect and within the extended period, the claim fell within the jurisdiction created by the amended time limits. The Commissioner (Appeals) correctly applied the revised time limit and found the explanation for delay fit for condonation; interference with that conclusion on the premise that the circular had no retrospective application was rejected as erroneous.

The petitioner's application fell within the revised time limits under Circular No.13 of 2010 and the Commissioner (Appeals) was correct in treating the delay as condonable.

Revisional jurisdiction of the Government of India and unlawful usurpation by officer - interference with appellate order - Lawfulness of the Government of India action (by the Joint Secretary/Under Secretary) in exercising revisional power to interfere with the Commissioner (Appeals)'s order - HELD THAT: - The Court held that revisional jurisdiction vested in the Government of India (Ministry of Finance) could not lawfully be exercised by the Joint Secretary in the manner adopted, particularly where the interference reversed the Commissioner (Appeals)'s reasoned conclusion without proper legal basis. The orders dated 16.11.2015 and 03.05.2017 that purportedly exercised revisional power and set aside the Commissioner (Appeals)'s decision were found to be based on misappreciation of law and amounted to an unlawful exercise/usurpation of jurisdiction.

The revisional interference by the Joint Secretary/Under Secretary is unsustainable and the impugned revisional orders are quashed.

Final Conclusion: The orders impugned (including the revisional interference and the communication treating the condonation query as rejection) are quashed and set aside. The Commissioner (Appeals)'s allowance of the petitioner's claim is upheld; consequential reliefs shall follow and be made available to the petitioner within three months from receipt/production of a copy of this judgment.

Provisional release of seized goods - unconditional release of seized goods - retrospective operation of amendment - valuable right accrued - Section 110(2) of the Customs Act, 1962 - second proviso to Section 110(2) - Section 110A of the Customs Act, 1962

Second proviso to Section 110(2) - provisional release of seized goods - unconditional release of seized goods - valuable right accrued - Whether the petitioner was entitled to unconditional release of seized goods where a provisional release order had been passed before the expiry of the six month period under Section 110(2). - HELD THAT: - The court examined the amendment to Section 110(2) by the Finance Act, 2018 which inserted a second proviso providing that the six month period would not apply where a provisional release under Section 110A has been ordered. The provisional release in the present case had been ordered before the six month period had expired. The court held that a valuable right to unconditional release would have accrued only if no provisional release order had been passed before the six month period expired. Because the provisional release order was made within the six month period, no such valuable right had accrued to the petitioner which could be taken away retrospectively. Consequently the second proviso does not operate to deprive the petitioner of any pre existing right in the circumstances of this case. Other challenges to the legality of the seizure remain open to be agitated in the ongoing adjudication proceedings consequent upon the subsequently issued show cause notice. [Paras 6, 12, 13, 14]

Petitioner is not entitled to unconditional release of the goods; the petition is dismissed and other contentions may be urged in adjudication proceedings.

Final Conclusion: Where a provisional release under Section 110A was ordered before the expiry of the six month period specified in Section 110(2), no valuable right to unconditional release had accrued and the petitioner cannot claim unconditional release on that ground; the writ petition is dismissed.

Operation of administrative circular vis-a -vis judicial interim stay - effect of the Hon'ble Supreme Court's decision in Asian Resurfacing of Road Agency on recovery proceedings - vacation of stay and procedure for initiating recovery in presence of stay

Operation of administrative circular vis-a -vis judicial interim stay - vacation of stay and procedure for initiating recovery in presence of stay - effect of the Hon'ble Supreme Court's decision in Asian Resurfacing of Road Agency on recovery proceedings - Whether the demand notice dated 20.02.2019 could be acted upon in view of the subsequent circular of the Central Board of Indirect Taxes and Customs dated 18.07.2019 and the existing interim stay granted by the Division Bench in W.A.No.164 of 2016. - HELD THAT: - The Court recorded that the Board's circular dated 18.07.2019 directs field formations to follow the view that the Supreme Court's Asian Resurfacing judgment applies to cases pending in trial courts and, where a stay on recovery has been granted by the CESTAT or the High Court, applications should be filed for vacation of such stay before the appropriate forum before initiating recovery. The counter affidavit filed by the respondents pre-dated the circular. The High Court refrained from expressing any opinion on the correctness or interpretation of the Board's circular and left that question open for a case in which the circular's interpretation is contested. Nevertheless, because the circular is operative, the Court held that the impugned demand notice issued on 20.02.2019 cannot be allowed to stand at this stage. The Court therefore set aside the impugned notice while expressly reserving the respondents' rights to reissue a notice in the same or any other appropriate manner, subject to the outcome of the Division Bench proceedings in W.A.No.164 of 2016. [Paras 8, 9, 11]

Impugned demand notice dated 20.02.2019 set aside in view of the Board's circular dated 18.07.2019; respondents' rights to reissue the notice reserved subject to pending Division Bench proceedings.

Final Conclusion: Writ petition disposed of by setting aside the impugned demand notice dated 20.02.2019 in light of the CBIC circular dated 18.07.2019; no opinion expressed on the correctness of the circular and respondents' rights to reissue the notice are reserved, matter pending before the Division Bench in W.A.No.164 of 2016.

Implementation of Customs communication for waiver of demurrage and detention - application of Handling of Cargo Customs Areas Regulations, 2009 as subordinate legislation - definition and status of Customs Cargo Services Provider including CFS and steamer agent - obligation of Customs to ensure compliance by CFS and steamer agent with departmental orders - discretionary relief on facts favouring charitable trust importing medical equipment

Application of Handling of Cargo Customs Areas Regulations, 2009 as subordinate legislation - implementation of Customs communication for waiver of demurrage and detention - The communication dated 25.04.2018 issued under the said Regulations must be given effect to and the Regulations apply to the present case. - HELD THAT: - The Court found that the Handling of Cargo Customs Areas Regulations, 2009 were validly made by the Central Board in exercise of powers under the Customs Act and therefore operate as subordinate legislation applicable to the consignment. The impugned undated communication, signed on 25.04.2018 and issued under regulation 6(1)(l) of those Regulations, falls within that regulatory scheme and on that basis the respondents must ensure its implementation. The Court rejected the submission that the petitioner, having received the communication, alone bore responsibility to clear the goods without the Department ensuring compliance by the addressees. [Paras 11, 12, 23]

The Regulations apply and the departmental communication must be implemented by the respondents and their addressees.

Definition and status of Customs Cargo Services Provider including CFS and steamer agent - obligation of Customs to ensure compliance by CFS and steamer agent with departmental orders - Container Freight Station and the steamer agent qualify as Customs Cargo Services Provider and the Customs authorities must ensure they comply with the communication. - HELD THAT: - Relying on the definition in regulation 2(b) read with Sections 45 and 141(2) of the Customs Act, the Court held that both the CFS and the steamer agent are within the definition of Customs Cargo Services Provider, being persons responsible for receipt, storage, delivery or handling of imported goods. Because they function under the control of the Customs Department, the Department has the duty to ensure that certificates or communications issued by it (for waiver of demurrage/detention) are honoured in letter and spirit by those entities, and not remain mere paper directions. [Paras 17, 18, 19, 23]

CFS and steamer agent are Customs Cargo Services Providers and Customs must ensure their compliance with the waiver communication.

Discretionary relief on facts favouring charitable trust importing medical equipment - implementation of Customs communication for waiver of demurrage and detention - In the peculiar facts of the case the respondents are directed to ensure delivery of the imported used dialysis machine to the charitable trust without insisting on demurrage and detention charges even after the adjudication order dated 23.03.2018. - HELD THAT: - The Court took into account the admitted status of the writ petitioner as a charitable trust operating a 50 bedded hospital providing essentially free medical treatment to the poor and the nature of the imported consignment (used dialysis machine). Considering these unique and peculiar facts and having regard to precedents where detention/demurrage certificates were required to be enforced by Customs against steamer agents and CFS, the Court exercised its discretion to direct the respondents to ensure that the addressees of the 25.04.2018 communication implement it and deliver the consignment to the petitioner without insisting on demurrage and container detention charges. Compliance was ordered to be completed expeditiously and in any event within four weeks from receipt of the order. [Paras 4, 22, 23]

Respondents directed to ensure delivery of the consignment to the charitable trust without demanding demurrage and detention charges, to be implemented within four weeks.

Final Conclusion: Writ petition disposed by directing the respondents to ensure that the 25.04.2018 communication issued under the Handling of Cargo Customs Areas Regulations, 2009 is implemented by the addressees (CFS and steamer agent) and that the imported used dialysis machine is delivered to the charitable trust without demanding demurrage or container detention charges, compliance to be completed within four weeks.

Appropriation of bank guarantees as compliance with the condition precedent under the first proviso to Section 127-B(1) - entertainment of application under Section 127-B for waiver of fine, penalty and immunity from prosecution - setting aside of an order rejecting an application solely for non compliance with a condition precedent without adjudicating merits - mandamus directing appropriation of bank guarantees

Appropriation of bank guarantees as compliance with the condition precedent under the first proviso to Section 127-B(1) - mandamus directing appropriation of bank guarantees - Appropriation by the first respondent of the subsisting bank guarantees in favour of the Department would satisfy the condition precedent for the Settlement Commission to entertain the application under Section 127 B(1). - HELD THAT: - The Court recorded that the bank guarantees for a total sum of Rs. 25,50,000/- were undisputedly furnished and have been renewed and are subsisting. The consignment was held to be innocuous and importable, with no dispute on classification or rate of duty, the controversy being limited to valuation. In these circumstances the Court found it appropriate to treat appropriation of the subsisting bank guarantees by the first respondent (the beneficiary) as compliance with the condition precedent contained in clause (c) of the first proviso to Section 127 B(1) and issued a mandamus directing the first respondent to appropriate the bank guarantees within a specified period so that the Settlement Commission may proceed to entertain the application. [Paras 9, 10, 11]

First respondent directed to appropriate the subsisting bank guarantees (totaling Rs. 25,50,000/-) within a fortnight; such appropriation shall be treated as compliance with the condition precedent for entertaining the Section 127 B application.

Entertainment of application under Section 127-B for waiver of fine, penalty and immunity from prosecution - setting aside of an order rejecting an application solely for non compliance with a condition precedent without adjudicating merits - The order of the Settlement Commission dismissing the Section 127 B application solely for non compliance with the condition precedent was set aside and the matter was remitted to the Settlement Commission to hear and decide the application on merits after appropriation of the bank guarantees. - HELD THAT: - The impugned order had rejected the applicant's Section 127 B application only on the ground of non payment of the differential duty (the condition precedent) without passing any view on merits. Given the limited nature of the dispute (valuation only), the innocuous character of the goods, and the applicant's bona fide conduct in furnishing and renewing bank guarantees, the Court set aside the Commission's order without expressing any opinion on merits and directed that once the bank guarantees are appropriated by the first respondent, the Settlement Commission shall take up, hear and dispose of the application on its merits in accordance with law and within a specified timeframe. [Paras 10, 11]

Impugned order dated 30.10.2018 set aside; upon appropriation of the bank guarantees the Settlement Commission to entertain, hear and finally dispose of the Section 127 B application on merits within twelve weeks.

Final Conclusion: Impugned order of the Settlement Commission set aside for non compliance rejection; first respondent directed to appropriate subsisting bank guarantees as compliance with the condition precedent, and thereafter the Settlement Commission directed to hear and decide the Section 127 B application on merits within twelve weeks; no costs.

Dissolution of corporate debtor - powers under Section 54 of the Insolvency and Bankruptcy Code, 2016 - liquidation pursuant to decision of the committee of creditors and application under Section 33 - distribution of proceeds in order of priority - transfer of surplus to the public account under Section 555(2) of the Companies Act, 1956 - relief and discharge of the liquidator - obligation to furnish records to Registrar of Companies and Insolvency and Bankruptcy Board of India - public announcement and solicitation of claims - realisation of assets by e-auction and conveyance by registered sale deed

Dissolution of corporate debtor - powers under Section 54 of the Insolvency and Bankruptcy Code, 2016 - liquidation pursuant to decision of the committee of creditors and application under Section 33 - Order for dissolution of New Tech Fittings Private Limited. - HELD THAT: - The Tribunal considered the liquidation process initiated after the Committee of Creditors, by 100% vote in the meeting of 27.10.2017, resolved that the company be taken into liquidation and the RP filed the application under Section 33(1). The liquidator carried out statutory steps including public announcement, invitation of claims, realization of assets by e-auction, distribution of proceeds in the prescribed priority, and submission of periodical progress reports. Having satisfied that assets have been exhausted and no further proceedings remain in the liquidation process, the Tribunal in exercise of powers under Sub section (2) of Section 54 directed dissolution of the corporate debtor from the date of the order. [Paras 3]

Corporate Debtor New Tech Fittings Private Limited is ordered dissolved from the date of the order.

Transfer of surplus to the public account under Section 555(2) of the Companies Act, 1956 - distribution of proceeds in order of priority - Direction to transfer remaining funds in liquidation bank account to the public account of India. - HELD THAT: - The Tribunal noted that the liquidator's bank account in the name of the Company in Liquidation had a remaining balance. Pursuant to the completion of liquidation and in accordance with the Companies Act procedure for disposal of residual funds, the Tribunal directed the liquidator to transfer the balance to the Public Account of India in the Reserve Bank of India under the relevant provision of the Companies Act. [Paras 4]

Liquidator directed to transfer the remaining bank balance to the Public Account of India in the Reserve Bank of India.

Relief and discharge of the liquidator - obligation to furnish records to Registrar of Companies and Insolvency and Bankruptcy Board of India - Relief of the liquidator and directions to transmit records to RoC and IBBI. - HELD THAT: - Following the order of dissolution and completion of liquidation steps, the Tribunal relieved the liquidator of his duties. The Tribunal further directed the liquidator and the Registry to send a copy of the dissolution order and all books and files of the Corporate Debtor in the liquidator's possession to the Registrar of Companies with which the Corporate Debtor is registered, and to forward a copy to the Insolvency and Bankruptcy Board of India. These directions ensure statutory records are transmitted to the appropriate authorities after dissolution. [Paras 5, 6, 7]

Liquidator is relieved; he and the Registry are directed to forward the order and corporate records to the RoC and to the IBBI.

Final Conclusion: Application under Section 54 of the Insolvency and Bankruptcy Code disposed of: the Tribunal ordered dissolution of New Tech Fittings Private Limited, directed transfer of residual liquidation funds to the Public Account of India, relieved the liquidator and directed transmission of corporate records to the Registrar of Companies and the Insolvency and Bankruptcy Board of India.

Maintainability under Section 60(5) of the IBC - aggrieved person - moratorium under Section 14 of the IBC - essential goods and services - Regulation 32 of the CIRP Regulations - jurisdiction of the Adjudicating Authority/Tribunal - going concern and maximisation of value

Maintainability under Section 60(5) of the IBC - aggrieved person - Whether the Miscellaneous Application filed by the Resolution Professional under Section 60(5) of the IBC is maintainable as the applicant is an 'aggrieved person'. - HELD THAT: - The Bench held that a person invoking Section 60(5) must be an aggrieved party whose legal or proprietary rights are impacted by the act complained of. Mere procedural competence to file an application does not confer subject-matter jurisdiction unless the applicant demonstrates violation of its rights under the Code or other law. The Resolution Professional failed to show that ONGC's disconnection violated any provision of law or curtailed rights protected by the IBC, and therefore could not be treated as an aggrieved person entitled to invoke Section 60(5). The Tribunal emphasised that maintainability requires a cause of action demonstrating infringement of rights, not merely apprehension of commercial prejudice to the corporate debtor. [Paras 5, 6, 7, 8, 17]

Application is not maintainable because the applicant is not an aggrieved person under Section 60(5) of the IBC; the MA is dismissed in limine.

Moratorium under Section 14 of the IBC - essential goods and services - Regulation 32 of the CIRP Regulations - Whether the supply of natural gas by ONGC to the corporate debtor falls within the prohibition in Section 14(2) of the IBC read with Regulation 32 of the CIRP Regulations such that ONGC could be directed to continue supply during CIRP. - HELD THAT: - The Tribunal examined Section 14(2) and Regulation 32, which define 'essential goods and services' to include electricity, water, telecommunication and IT services only insofar as they are not direct inputs to the output produced by the corporate debtor. Regulation 32's illustration makes clear that supplies which are direct inputs to production do not qualify as essential supplies under Section 14. The record and candid acceptance by the applicant's counsel established that natural gas is a direct input for electricity generation by the corporate debtor; consequently gas supply does not fall within the prohibition in Section 14(2) read with Regulation 32. Absent such statutory prohibition, ONGC remained entitled to act under contract and law in respect of non-payment and to discontinue supply. [Paras 12, 13, 14, 16, 17]

Supply of natural gas to the corporate debtor is not an 'essential supply' under Section 14(2) read with Regulation 32; the Tribunal cannot direct ONGC to continue supply.

Jurisdiction of the Adjudicating Authority/Tribunal - going concern and maximisation of value - Whether the Tribunal has jurisdiction to direct ONGC to consider the corporate debtor's request or to issue orders in furtherance of keeping the corporate debtor as a going concern or maximising asset value at the cost of third parties' legal rights. - HELD THAT: - The Bench observed that the concepts of 'going concern' and 'maximisation of value' under the Code do not confer a power to compel third parties not bound by the Code to waive or compromise their legal rights. The Tribunal's jurisdiction is limited to the prohibitions and powers expressly conferred by the legislation; it cannot transgress those limits to protect the interests of the corporate debtor at the expense of others where no statutory bar to the third party's action exists. Accordingly, the request that ONGC be directed to consider the corporate debtor's plea after the CoC meeting could not be granted by the Tribunal which lacks subject-matter jurisdiction to make such an order. [Paras 23, 24, 25, 27, 28]

The Tribunal has no jurisdiction to direct ONGC to consider the corporate debtor's request or to compel third parties to bear the cost of keeping the corporate debtor as a going concern where no statutory obligation exists.

Final Conclusion: The Miscellaneous Application under Section 60(5) filed by the Resolution Professional was dismissed in limine: the applicant was not an aggrieved person entitled to invoke the Tribunal's jurisdiction, supply of natural gas is not an 'essential supply' under Section 14(2) read with Regulation 32, and the Tribunal had no jurisdiction to direct ONGC to continue or consider supplying gas or to compel third parties to subordinate their legal rights for the sake of maintaining the corporate debtor as a going concern.

Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - operational creditor - corporate insolvency resolution process - malicious or fraudulent initiation of corporate insolvency resolution process under Section 65 of the I&B Code - acceptance of payment offer after initiation of proceedings

Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - operational creditor - acceptance of payment offer after initiation of proceedings - Whether the Adjudicating Authority was correct in rejecting the Section 9 application filed by the appellant. - HELD THAT: - The Tribunal recorded that the corporate debtor had expressed willingness to pay the claimed amount and had prepared a demand draft for the total claimed sum before admission of the Section 9 application. The appellant refused to accept the draft and returned the amount when tendered. Having regard to the respondent's offer to pay subject to the GST registration process and the subsequent readiness to furnish a demand draft, the Adjudicating Authority declined to entertain the Section 9 petition. The Appellate Tribunal, on hearing, found no reason to interfere with that exercise of discretion where an unconditional or process-linked payment offer had been made and the operational creditor was unwilling to accept it. [Paras 4, 6, 7, 8]

The rejection of the Section 9 application was upheld and the appeal on this ground dismissed.

Malicious or fraudulent initiation of corporate insolvency resolution process under Section 65 of the I&B Code - corporate insolvency resolution process - Whether the appellant initiated the corporate insolvency resolution process with fraudulent or malicious intent attracting Section 65 of the I&B Code. - HELD THAT: - The Tribunal found from the conduct of the appellant - notably the refusal to accept the respondent's demand draft and the sequence of events showing that payment was available before admission - that the petition for initiation of CIRP was instituted with fraudulent and malicious intent, for purposes other than genuine insolvency resolution. On that basis the Tribunal held that the appellant's action was covered by Section 65 of the I&B Code and affirmed the Adjudicating Authority's approach. [Paras 9, 10]

The appellant's initiation of CIRP was held to be fraudulent/malicious within the scope of Section 65, and the appeal was dismissed.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the Adjudicating Authority's refusal to admit the Section 9 petition and found the initiation of CIRP to be fraudulent or malicious under Section 65 of the I&B Code; the appellant remains free to accept the respondent's tendered demand draft within the period specified by the Tribunal.

Financial service provider - financial product - financial sector regulator - exclusion from Insolvency and Bankruptcy Code - pre-existing dispute - demand notice - offer to pay and settlement

Financial service provider - financial product - financial sector regulator - exclusion from Insolvency and Bankruptcy Code - Whether the respondent company is a 'financial service provider' and therefore excluded from the purview of the Insolvency and Bankruptcy Code, 2016, rendering the Section 9 petition not maintainable. - HELD THAT: - The Tribunal examined the statutory definitions of financial product, financial service provider and financial sector regulator in the Code and noted that the respondent holds registration as a stockbroker with SEBI. On that basis, the respondent was held to fall within the definition of a financial service provider authorised by a financial sector regulator. Since financial service providers are excluded from the definition of corporate person under the Code, proceedings under Section 9 could not be maintained against the respondent. The Tribunal relied on the principle that entities registered with and regulated by a financial sector regulator for activities falling within the definition of financial services are excluded from the Code's embargo, and concluded that the petition was not maintainable on this ground. [Paras 12, 13, 14, 15, 17]

The respondent is a financial service provider within the meaning of the Code and the Section 9 petition is not maintainable against it.

Pre-existing dispute - demand notice - offer to pay and settlement - Whether a pre-existing dispute and subsequent offer to pay affected admission of the petition. - HELD THAT: - The Tribunal observed that the respondent raised a dispute relating to GST-registration/compliance contemporaneously with the advent of the GST regime and communicated that position to the petitioner. The Tribunal also recorded that, after clarification from the Ministry of Finance, the respondent made offers to settle the claim (including remittance by RTGS and a demand draft), which the petitioner declined to accept. These factual findings reinforced the conclusion that the Section 9 proceeding should not be used to pursue a claim where the respondent had raised a dispute and had sought to settle the matter, and that the petitioner's refusal to accept payment was relevant to the propriety of admitting the petition. [Paras 16, 18]

The existence of a dispute regarding GST-registration and the respondent's offers to pay (which were declined by the petitioner) were material and weighed against admission of the petition.

Final Conclusion: The petition under Section 9 is rejected: the respondent is a financial service provider excluded from the Code's ambit, and the existence of a disputed question of GST-compliance together with the respondent's attempted settlement (declined by the petitioner) further militated against admission.

Proceeds of crime - provisional attachment - confirmation of provisional attachment - ultimate beneficiary - money laundering - privity of contract - non-retrospectivity of PMLA to pre-2005 receipts

Provisional attachment - confirmation of provisional attachment - Validity of the Adjudicating Authority's confirmation of the provisional attachment order dated 27.01.2017 (confirmed 31.05.2017) against properties of the appellant. - HELD THAT: - The Tribunal examined whether the impugned order confirming provisional attachment was sustainable in law. It noted that the Tribunal's role was limited to testing legality of the attachment and whether there was material to justify the interim measure, and not to express any final opinion on allegations in the FIR or charge-sheet. Having considered the investigation material, bank transactions and statements, and despite observing an inordinate delay of seven years between FIR and provisional attachment, the Tribunal concluded that the case was not fit for release of attachment at this stage. Consequently the Tribunal modified the impugned order by directing that the attachment continue but restrained the respondent from taking physical possession of the properties. The Tribunal also recorded that no view was expressed on merits of the criminal allegations and that those are to be decided independently in appropriate proceedings. [Paras 6, 31, 34, 35, 36]

The confirmation of provisional attachment is sustained subject to modification: attachments continue but respondent is restrained from taking physical possession; no opinion expressed on the merits of criminal allegations.

Proceeds of crime - ultimate beneficiary - money laundering - non-retrospectivity of PMLA to pre-2005 receipts - privity of contract - Whether the material on record justified treating the attached properties as linked to proceeds of crime or otherwise warranted release of attachment. - HELD THAT: - The Tribunal analysed investigation findings showing receipts from NMMC into M/s H.B. Bhise & Co.'s account and near-immediate transfers into bank accounts of firms admitted to be proprietorships connected to the appellant, with sizeable cash withdrawals labelled 'SELF'. The Adjudicating Authority treated the appellant as the ultimate beneficiary of the proceeds and concluded the POC had been utilized and therefore properties could be attached. The Tribunal observed competing contentions: the appellant relied on privity of contract and absence of any direct contract with NMMC, and contended that payments for services were received earlier (2004-2006) and some properties were acquired outside that period; counsel also produced ITRs and disputed documentary lacunae. The Tribunal found that material placed on record showed that the appellant was the ultimate beneficiary of the funds transferred from Bhise's account and that the PMLA investigation discussed the appellant's role; on that basis, and despite certain force in appellant's contentions and the delay in actions against M/s H.B. Bhise & Co., the Tribunal held it was not a fit case to release the attachment at this stage. The Tribunal however expressly refrained from adjudicating the criminal allegations or giving a final determination on whether each attached property was conclusively acquired from proceeds of crime, leaving such questions to trial/adjudication on merits. [Paras 24, 30, 31, 33, 34]

On the material before it, the Tribunal declined to release the attachments, accepting that the investigation material supported the view that the appellant was the ultimate beneficiary of funds traced from M/s H.B. Bhise & Co.; nevertheless no final adjudication on the criminal allegations or definitive determination that each property is a proceed of crime was made.

Final Conclusion: The appeal is disposed of by modifying the impugned order: the confirmation of provisional attachment stands but the respondent is restrained from taking physical possession of the attached properties; the Tribunal makes no final pronouncement on the merits of the FIR or charge-sheet and leaves substantive issues for adjudication in appropriate proceedings.

Random/stratified selection for detailed scrutiny under Section 22(3) of TNVAT Act - requirement to call for accounts of the dealer prior to revision of assessment - revision of assessment consequent to selection must comply with Rule 10(11) of TNVAT Rules

Random/stratified selection for detailed scrutiny under Section 22(3) of TNVAT Act - requirement to call for accounts of the dealer prior to revision of assessment - revision of assessment consequent to selection must comply with Rule 10(11) of TNVAT Rules - Validity of revised assessment orders passed after selection under the selection mechanism when no notice calling for accounts was recorded - HELD THAT: - The Court examined Section 22(3) of the TNVAT Act which contemplates that up to twenty per cent of assessments may be selected by the Commissioner for detailed scrutiny and that revision of assessment may be made where necessary. Rule 10(11) of the TNVAT Rules prescribes that the method of selection shall be based on a suitable stratified random sampling method, that details of such selection be intimated to the assessing authority and exhibited, and that the assessing authority shall call for the accounts of those assessees for detailed scrutiny and pass appropriate orders. The impugned revised assessment orders are silent about any prior notice or calling for the assessee's accounts. Because the rule mandates that the assessing authority must call for accounts for detailed scrutiny before revising assessments under the selection mechanism, the absence of any record that accounts were called for renders the impugned orders procedurally defective. The Court declined to express any opinion on the merits of the assessments and confined its interference to the procedural non-compliance, directing the respondent to call for the accounts and redo the revised assessment in accordance with Rule 10(11). [Paras 11, 12, 13, 14]

Impugned revised assessment orders set aside for lack of recorded compliance with Rule 10(11); matter remitted to the respondent to call for the assessee's accounts, carry out detailed scrutiny and pass fresh revised assessment orders within the time directed.

Final Conclusion: Revised assessment orders for assessment years 2015-16 and 2017-18 set aside for procedural non-compliance; respondent directed to call for the assessee's accounts and pass fresh revised assessments in accordance with Rule 10(11) of the TNVAT Rules within the stipulated time, with communication to the assessee thereafter.