TaxTMI Updates e-Newsletter
Aug 24,2024

Regular bail under Section 439 Cr.P.C. - Power of arrest under the HGST Act - Offences of wrongful availment/utilisation of Input Tax Credit - Necessity of adjudication/assessment under Sections 73 and 74 before fixation of tax liability - Exceptional circumstances warranting arrest in tax-evasion cases - Consideration of maximum sentence and period of custody in granting bail

Regular bail under Section 439 Cr.P.C. - Necessity of adjudication/assessment under Sections 73 and 74 before fixation of tax liability - Consideration of maximum sentence and period of custody in granting bail - Power of arrest under the HGST Act - Whether the petitioner is entitled to regular bail pending trial in proceedings under Section 132 of the HGST Act read with IGST/CGST provisions. - HELD THAT: - The Court held that the petitioner was entitled to bail. The material establishes that the alleged wrongful availment/utilisation of ITC arose from transactions shown between April 2018 and April 2023 but the tax liability has not yet been adjudicated; a show cause notice under Section 74(1) has been issued and the exact liability remains to be determined by assessment. Following the principle that penal prosecution under provisions penalising wrongful availment of ITC is linked to the determination of tax liability (and consistent with precedents requiring fixation of liability under assessment procedures before criminal punishment, except in exceptional cases), the Court found it premature to conclusively treat the petitioner as having committed the offence for which the maximum sentence is five years. The Court further considered that the power to arrest under the HGST Act must be exercised in exceptional circumstances (such as lack of permanent place of business, non appearance to summons, habitual offending, flight risk, originator of fake invoices, or direct documentary evidence of active involvement), none of which apply here: the petitioner has no criminal antecedents, has a permanent abode, has attended proceedings and furnished documents, and there is no finding of habitual offending or flight risk. The investigation is complete and a complaint filed, but pre charge evidence remains to be recorded and trial is likely to take time; the petitioner has been in custody since 20.02.2024. Having regard to the pendency of assessment, the possibility that adjudication as against other parties may reduce the petitioner's liability, the maximum sentence involved, and the period of incarceration already undergone, the Court exercised its discretion to grant bail subject to conditions. [Paras 12, 13, 14, 15, 16]

Petition allowed; petitioner released on regular bail on furnishing personal bonds with two solvent sureties and subject to surrender of passport and conditions imposed by the trial Court.

Final Conclusion: Bail granted. The petitioner is directed to be released on regular bail on executing personal bonds with two solvent sureties and subject to surrender of passport and other conditions; observations are confined to the bail exercise and do not affect the merits of the prosecution or assessment proceedings.

Consideration of representation in statutory adjudication - right to hearing in tax adjudication - availability of alternative remedy by appeal - delay and laches in seeking writ relief - discretion to permit belated appeal subject to costs

Consideration of representation in statutory adjudication - Whether the proper officer ignored or glossed over the petitioners' response to the show cause and thereby passed the adjudication order without taking the response into account. - HELD THAT: - The High Court found that the adjudication order under Section 73 expressly records that the response filed by the petitioners along with documents was taken into consideration. Consequently, the contention that the proper officer ignored the petitioners' response is rejected. The Court further observed that the sufficiency or merits of the response and its appreciation by the proper officer are not matters ordinarily amenable to challenge under Article 226, and such evaluation cannot form the basis for quashing the order in writ jurisdiction. [Paras 7]

The petitioners' response was considered by the proper officer; the challenge that it was glossed over is rejected.

Right to hearing in tax adjudication - delay and laches in seeking writ relief - availability of alternative remedy by appeal - Whether the petitioners were denied the statutory opportunity of hearing, and whether delay in approaching the High Court disentitles them to relief when an alternative remedy by appeal exists and was not pursued in time. - HELD THAT: - The Court noted the petitioners raised the complaint of denial of hearing belatedly and that the impugned order was passed on 31st October, 2023 while the petition was filed about eight months later. Given that an appeal lay to the appellate authority and the petitioners did not file an appeal within the prescribed period nor explained delay, the Court held that interference by writ is not appropriate. The Court treated the alleged omission to afford hearing as an afterthought and emphasised that the existence of an alternative remedy and unexplained laches militate against granting writ relief. [Paras 8]

Complaint of denial of hearing is treated as raised belatedly; owing to delay and availability of an alternative appellate remedy, the High Court declined to interfere by writ.

Discretion to permit belated appeal subject to costs - availability of alternative remedy by appeal - Whether leave should be granted to the petitioners to file a belated appeal before the appellate authority and the conditions for such leave. - HELD THAT: - Although decline to quash the adjudication was indicated, the Court exercised its discretion to permit the petitioners to file an appeal against the order dated 31st October, 2023, subject to payment of costs and time limit. The Court granted leave to prefer the appeal within two weeks, on condition of payment of costs of Rs.10,000 to the respondents. The appellate authority was directed, if the appeal is filed, to hear and dispose of it on merits and to consider other formalities in the ordinary course. [Paras 10, 11]

Leave granted to petitioners to file an appeal within two weeks subject to payment of costs; appellate authority to hear and dispose of the appeal on merits.

Final Conclusion: Writ petition disposed of without interference with the adjudication order; petitioners are granted leave to prefer a belated appeal within two weeks on payment of costs, and the appellate authority is directed to hear and decide the appeal on merits.

Regular bail under Section 439 of the Criminal Procedure Code, 1973 - prima facie case - tampering with witnesses - flight risk - seriousness of offence - assets attachment as a factor in bail consideration - conditions of bail - non-influence of prima facie observations on trial

Regular bail under Section 439 of the Criminal Procedure Code, 1973 - prima facie case - seriousness of offence - assets attachment as a factor in bail consideration - conditions of bail - Application for regular bail under Section 439 CrPC was allowed and the applicant was released on bail subject to conditions. - HELD THAT: - The Court considered the nature of allegations that the applicant had allegedly availed input tax credit on the basis of fictitious transactions involving 38 firms and purported wrongful benefit of input tax credit of Rs.15.58 Crores, and that certain documents were allegedly forged. Having regard to the fact that the assets of the applicant's firms have been attached, that the offence attracts punishment of five years, and that the applicant has been in custody since 27.06.2024, the Court applied the established triadic considerations (prima facie case, risk of flight/availability at trial, and tampering with witnesses) including reference to Sanjay Chandra. The Court noted the defence contention that the applicant is not likely to abscond and observed the investigation is continuing. Balancing these factors and without delving into detailed evidence, the Court exercised its discretion to enlarge the applicant on bail. The release was made subject to execution of a bond and specified conditions aimed at preventing tampering, ensuring attendance, disclosure of residence and assets, surrender of passport, and prohibition on leaving India without permission. The trial court was directed that it should not be influenced by the prima facie observations in this order and may modify conditions in accordance with law. [Paras 5, 6, 7]

Bail allowed on execution of a bond of Rs.10,000 with one surety of like amount and subject to enumerated conditions; release to be effected if not required in any other offence and subject to compliance with conditions.

Final Conclusion: The petition for regular bail is allowed; the applicant is to be released on bail on compliance with the bond and the specified conditions, with liberty to the trial court to alter conditions and with the caveat that trial court shall not be influenced by the prima facie observations made in this order.

Right to access records - supply of copies of records - retrospective cancellation of GST registration - consideration of appeal notwithstanding delay

Right to access records - supply of copies of records - Respondent to provide physical/soft copies of documents available on the GST portal to the petitioner - HELD THAT: - The petitioner alleged inability to access notices, returns and other documents because the firm's GST portal user ID was locked and sought re activation or, alternatively, provision of copies. The Court found the petitioner's primary contentions on merits (including the circumstances of cancellation) unsubstantiated on the record but accepted the confined relief sought for access to documents. The respondent offered that, upon application, requisite documents would be supplied. In exercise of supervisory jurisdiction the Court directed supply of physical/soft copies of the documents sought by the petitioner, if available with the respondent, within one week from date. The direction is limited to providing copies of documents in the respondent's possession and does not decide the substantive questions regarding registration cancellation or the merits of any demand. [Paras 7, 8, 9]

Respondent directed to furnish physical/soft copies of the documents sought by the petitioner, if available, within one week.

Consideration of appeal notwithstanding delay - Appellate remedy to be considered uninfluenced by delay if invoked within the specified period - HELD THAT: - The petitioner was given a limited protective relief to enable pursuit of appellate remedies. The Court directed that if the petitioner avails of the appellate remedy within four weeks from date, the appeal shall be considered without being prejudiced by the question of delay. This is a procedural indulgence to facilitate adjudication on merits and does not adjudicate the underlying merits of the appeal or the correctness of the impugned orders. [Paras 10]

If the petitioner files the appeal within four weeks, it shall be considered uninfluenced by delay.

Final Conclusion: The petition is disposed of by directing the respondent to supply available physical/soft copies of the documents sought within one week and by permitting the petitioner four weeks to file an appeal which shall be considered without prejudice on account of delay; no substantive adjudication is made on the correctness or retrospective effect of the GST registration cancellation or the tax demand.

Principles of natural justice - opportunity of hearing - quashing and setting aside administrative order - remand for fresh consideration - de novo adjudication - exemption from IGST under Notification entries 144 and 260

Principles of natural justice - opportunity of hearing - quashing and setting aside administrative order - Impugned Order In Original dated 31.12.2020 was passed in breach of principles of natural justice by not considering the petitioner's reply and by not granting opportunity of personal hearing. - HELD THAT: - The Court recorded that the adjudicating authority did not consider the reply filed by the petitioner in response to the show cause notice and declined to grant an opportunity of personal hearing, observing that the petitioner could not appear on account of the COVID 19 pandemic. The order was therefore held to be ex parte and in fragrant breach of natural justice. The Court declined to enter into the merits of the tax liability while resting its conclusion on the denial of procedural fairness. [Paras 11]

Impugned Order In Original dated 31.12.2020 quashed and set aside on grounds of breach of natural justice.

Remand for fresh consideration - de novo adjudication - exemption from IGST under Notification entries 144 and 260 - Whether the matter should be remitted for fresh adjudication and whether the petitioner may raise all contentions including entitlement to exemption under the relevant notification entries. - HELD THAT: - Having quashed the impugned order for procedural infirmity, the Court directed that the matter be remanded to the adjudicating authority for a fresh de novo decision. The petitioner was accorded liberty to raise all contentions previously urged, including those relating to claimed exemption under the notification entries relied upon. The Court imposed a timeline for completion of the exercise to ensure expeditious disposal. [Paras 12]

Matter remanded to the adjudicating authority to decide afresh after giving the petitioner an opportunity of hearing; exercise to be completed within twelve weeks from receipt of copy of this order.

Final Conclusion: The impugned Order In Original dated 31.12.2020 is quashed and set aside for breach of natural justice; the matter is remanded for de novo adjudication after hearing the petitioner, to be completed within twelve weeks; petition disposed of and notice discharged.

Cancellation of registration - limitation and condonation of delay - extraordinary writ jurisdiction under Article 226 - availability of alternate remedy - service and sufficiency of show-cause notice - non-filing of returns for continuous period of six months - doctrine favoring the diligent

Limitation and condonation of delay - availability of alternate remedy - extraordinary writ jurisdiction under Article 226 - doctrine favoring the diligent - Maintainability of writ petition challenging cancellation of registration where statutory appeal remedy exists and the statutory limitation (including extended limitation) has expired. - HELD THAT: - The Court examined Section 107 of the BGST Act permitting appeal within three months and an additional one month for condonation. It applied the Supreme Court's saving of limitation from 15.03.2020 to 28.02.2022 and the direction that appeals could be filed within ninety days from 01.03.2022. The impugned order dated 20.01.2021 therefore could have been the subject of appeal by 30.06.2022 under the extended regime. The appeal was actually filed on 29.10.2023, well after the extended period expired. In these circumstances, and given the existence of a specific appellate remedy, the High Court declined to exercise its extraordinary jurisdiction under Article 226. The Court emphasised that writ jurisdiction is not a substitute for alternate statutory remedies and that the law favours the diligent and not the indolent. [Paras 3]

Writ petition not maintainable on merits due to availability of alternate remedy and unexplained delay in approaching the appellate forum; extraordinary writ jurisdiction declined.

Service and sufficiency of show-cause notice - cancellation of registration - Effect of an apparent defect in the show-cause notice (erroneous earlier hearing date) on the validity of the cancellation proceedings. - HELD THAT: - The Court noted the illegality insofar as the notice recorded a hearing date prior to the date of the notice itself. However, the notice required a reply within seven days, and the petitioner neither filed any reply nor sought an adjournment or further date. There was no case that the notice was not received. Given the absence of any claim of non-receipt or of prejudice arising from the erroneous date, the irregularity in the notice did not justify intervention by writ. [Paras 4]

Irregularity in the notice recorded but not sufficient to vitiate the proceedings in the absence of any prejudice or responsive action by the petitioner.

Non-filing of returns for continuous period of six months - cancellation of registration - Whether there was a viable defence on merits that the petitioner had filed returns for the continuous six-month period alleged in the show-cause notice. - HELD THAT: - The show-cause notice alleged cancellation on the ground of non-filing of returns for a continuous period of six months. The petitioner did not assert that returns had, in fact, been filed for that period, nor did he file any reply to the show-cause notice. In the absence of any material or averment to the contrary, the petitioner failed to make out a case on merits to challenge the cancellation. [Paras 4]

No prima facie case on merits established by the petitioner to attack the cancellation; absence of reply or evidence of filed returns fatal to the challenge.

Final Conclusion: The writ petition is dismissed: the petitioner delayed beyond the extended limitation for statutory appeal and failed to invoke the appellate remedy diligently; the procedural defect in the notice did not cause prejudice and the petitioner offered no defence that returns had been filed for the alleged period of non-compliance.

Statutory right of appeal - appeal under Section 112 of the B.G.S.T. Act - stay of recovery pending appeal - deposit as condition for grant of stay - non-constitution of Appellate Tribunal - liberty to prefer appeal upon constitution of Tribunal - release of bank attachment upon deposit - removal of difficulties notification under Section 172

Non-constitution of Appellate Tribunal - statutory right of appeal - removal of difficulties notification under Section 172 - Effect of non-constitution of the Tribunal on the petitioner's statutory remedy of appeal and entitlement to protective relief. - HELD THAT: - The Court found that the petitioner has been deprived of the statutory remedy of appeal under Section 112 of the B.G.S.T. Act by reason of the respondents' non-constitution of the Appellate Tribunal. The State's notification under Section 172 acknowledging delay in constitution did not cure the practical inability to prefer an appeal. In these circumstances, equity requires that the petitioner not be left remediless where the respondents themselves prevented constitution of the forum prescribed by statute. Accordingly, the petitioner is entitled to protective relief to preserve the statutory position until the Tribunal is constituted and functional.

Petitioner entitled to protective relief because non-constitution of the Tribunal deprived it of the statutory appeal remedy.

Stay of recovery pending appeal - deposit as condition for grant of stay - appeal under Section 112 of the B.G.S.T. Act - Whether stay of recovery under Sub-Section (9) of Section 112 should be granted and on what conditions. - HELD THAT: - Balancing equities, the Court directed that the statutory benefit of stay under Sub-Section (9) of Section 112 be extended to the petitioner despite non-constitution of the Tribunal, provided the petitioner deposits a sum equal to 20% of the remaining disputed tax (in addition to any earlier deposit under Sub-Section (6) of Section 107). The stay is a conditional, interim measure to be available because the respondents' failure to constitute the Tribunal prevented timely preferring of the appeal. The Court also made clear that the stay is not indefinite: the petitioner must file the appeal after constitution and functional commencement of the Tribunal, observing statutory requirements for filing time-limits from that date.

Stay of recovery granted on deposit of 20% of the remaining disputed tax, subject to filing of appeal once Tribunal is constituted.

Liberty to prefer appeal upon constitution of Tribunal - release of bank attachment upon deposit - Consequences of compliance with the deposit direction and failure to prefer appeal within the specified period after constitution of the Tribunal. - HELD THAT: - The Court directed that if the petitioner pays the required deposit equal to 20% of the remaining disputed tax, any bank attachment effected pursuant to the demand shall be released. The Court further provided that if the petitioner elects not to prefer an appeal under Section 112 within the period to be specified after the Tribunal is constituted, the respondent authorities would be free to proceed in accordance with law. Thus compliance with the deposit condition yields immediate protective consequences (including release of attachment), but does not bar the State from resuming recovery if the statutory appeal is not prosecuted once the Tribunal becomes available.

Deposit entitles petitioner to release of bank attachment; failure to file appeal after Tribunal constitution permits authorities to proceed.

Final Conclusion: Writ petition disposed by directing grant of conditional interim stay under Section 112(9) of the B.G.S.T. Act-subject to deposit of 20% of the remaining disputed tax (plus earlier deposit under Section 107(6))-with requirement to file the statutory appeal once the Tribunal is constituted; deposit to secure release of any bank attachment, and failure to prosecute appeal after constitution permits respondents to proceed in accordance with law.

Benefit of reduction in rate of tax - benefit of input tax credit - commensurate reduction in prices - Section 171 of the CGST Act, 2017 - post-GST regime - option to choose 8% with ITC or 1% without ITC

Post-GST regime - benefit of reduction in rate of tax - benefit of input tax credit - Section 171 of the CGST Act, 2017 - Whether the provisions of Section 171(1) of the CGST Act, 2017 were attracted in respect of the Respondent's project - HELD THAT: - The Commission accepted the DGAP's finding that the project was commenced and all relevant transactions occurred in the post-GST period (commencement certificate dated 08.03.2018; GST registration w.e.f. 27.02.2018; first payments and invoices in 2018) and there was no pre-GST turnover or ITC for the project which could be compared with post-GST figures to demonstrate any reduction in tax burden or increase in ITC. Further, the Respondent continued to charge GST at an effective 8% with ITC and did not switch to the 1% without ITC option; therefore no rate-reduction benefit crystallised that required passing on under Section 171(1). On these findings the Commission concluded that Section 171(1) did not apply to the project. [Paras 8, 9, 10, 11]

Section 171(1) of the CGST Act, 2017 is not attracted in respect of the Respondent's project.

Commensurate reduction in prices - benefit of input tax credit - option to choose 8% with ITC or 1% without ITC - Whether any benefit of rate reduction or ITC was required to be passed on to flat buyers by way of commensurate reduction in prices - HELD THAT: - Because no comparative pre-GST price or ITC position existed for the project and the Respondent continued to charge an effective 8% with ITC (instead of adopting 1% without ITC), the Commission found that no reduction-in-rate or additional ITC benefit had accrued to the Respondent which he was obliged to pass on. Consequently, there was no basis to direct a commensurate price reduction to buyers. [Paras 9, 10, 11]

No benefit of rate reduction or ITC arose that needed to be passed on; accordingly no commensurate reduction in prices was required.

Final Conclusion: Proceedings under Section 171(1) are dropped as the Commission found that the provisions are not attracted to the Respondent's project; no profiteering direction is called for.

Deduction u/s 80-IB(10) and Disallowance u/s 40(a)(ia) - non- deduction of TDS on provision for expenses - HC [2022 (11) TMI 1507 - KARNATAKA HIGH COURT] decided in favour of assessee -Delay in filling SLP - HELD THAT:- We see no reason to condone the inordinate delay of 523 days in filing the Special Leave Petition as the explanation sought to be provided, does not constitute sufficient cause.

Hence, petition(s) stands dismissed on the ground of delay.

petition(s) stands dismissed on the ground of delay.

Validity of proceedings u/s 153C - whether the assessee should be treated as a “Searched Person” or “Other Person”? - Whether ‘Loose Sheets’ and ‘Diary’ have any evidentiary value? -HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court of Karnataka at Bengaluru in Writ Appeal [2024 (2) TMI 116 - KARNATAKA HIGH COURT] held notices issued u/s 153C of the Act, based on the loose sheets/diaries are contrary to law, which require to be set aside in these writ appeals, as the same are void and illegal.

As satisfaction note is required to be recorded u/s 153C for each Assessment Year and in the impugned proceedings, a consolidated satisfaction note has been recorded for different Assessment Years, which also vitiates the entire assessment proceedings. In view of all these findings, it is said that the appeals do not have any substance for seeking intervention as sought for by the appellant / Revenue. As per the Panchanama provided herein, it is deemed appropriate to conclude that the notice provided u/s 153C is bad in law.

Faceless assessment scheme - jurisdiction of Faceless Assessing Officer versus Jurisdictional Assessing Officer - compliance with Section 151A read with the Notification dated 29 March 2022 - validity of notice under Section 148 where the prescribed Scheme is not followed - invalidity of action taken contrary to statutory scheme

Compliance with Section 151A read with the Notification dated 29 March 2022 - jurisdiction of Faceless Assessing Officer versus Jurisdictional Assessing Officer - validity of notice under Section 148 where the prescribed Scheme is not followed - invalidity of action taken contrary to statutory scheme - Notice under Section 148 issued on 1 May 2023 (consequent to proceedings under Section 148A) is invalid for want of compliance with the faceless Scheme mandated by Section 151A and the Notification dated 29 March 2022. - HELD THAT: - The Court found that the impugned notice under Section 148 and the antecedent steps under Section 148A were issued/passed by the Jurisdictional Assessing Officer and not by a Faceless Assessing Officer as required by the Scheme framed pursuant to Section 151A(2) of the Act and the Notification dated 29 March 2022. Reliance was placed on the Division Bench decision in Hexaware, which held that the Scheme envisages exclusive jurisdictional allocation by automated allocation and that notices under Section 148 must be issued in accordance with the Scheme; non-compliance renders the act contrary to law and liable to be quashed without the need for separate proof of prejudice. The Court also noted subsequent consistent decisions of this Court (including Kairos and Nainraj) treating steps under Section 148A and orders under Section 148A(d) as falling within the ambit of the Scheme. Applying these principles, the present proceedings initiated by the JAO, contrary to the Scheme, vitiate the reassessment process and the notice is unsustainable. [Paras 6, 7, 8, 11]

Writ petition allowed; notice under Section 148 dated 1 May 2023 (and the manner of initiation under Section 148A) quashed for non-compliance with Section 151A and the Notification dated 29 March 2022.

Final Conclusion: The petition is allowed and the reassessment proceedings initiated by issuance of the impugned notice under Section 148 (dated 1 May 2023) for Assessment Year 2016-17 are quashed on the ground that the faceless Scheme under Section 151A and the Notification dated 29 March 2022 was not complied with; other issues raised are left undecided.

Requirement of faceless issuance under Section 151A - Exclusive jurisdiction of Faceless Assessing Officer vis-a -vis Jurisdictional Assessing Officer - Applicability of faceless scheme to proceedings under Section 148A and issuance of notice under Section 148 - Validity of reassessment notice where statutory procedure is not followed - Limitation for issuance of notice under Section 148 as governed by Section 149 and its provisos

Requirement of faceless issuance under Section 151A - Exclusive jurisdiction of Faceless Assessing Officer vis-a -vis Jurisdictional Assessing Officer - Applicability of faceless scheme to proceedings under Section 148A and issuance of notice under Section 148 - Validity of reassessment notice where statutory procedure is not followed - Impugned proceedings under Section 148/148A were invalid for non-compliance with the faceless scheme mandated by Section 151A. - HELD THAT: - The Court found that the impugned show-cause notice (Section 148A(b)), the order under Section 148A(d) and the consequent notice under Section 148 were all issued by the Jurisdictional Assessing Officer (JAO) and not by a Faceless Assessing Officer (FAO) as required by the Scheme notified pursuant to Section 151A. The notification dated 29 March 2022 implements an automated, mandatory allocation and thus assigns jurisdiction to the FAO to issue notices under Section 148; concurrent jurisdiction of the JAO is inconsistent with the Scheme and would frustrate the faceless mechanism. The Scheme governs steps taken under Section 148A as well as issuance of notice under Section 148, so non-compliance with Section 151A and the notified Scheme renders the issuance and consequent proceedings invalid. The Court, applying the principles articulated in Hexaware and subsequent comparable decisions of this Court, held that an act done contrary to the statutory procedure is to be quashed without the assessee being required to prove further prejudice. [Paras 3, 4, 7, 10]

Quashed the notices and proceedings issued under Section 148A and Section 148 for AY 2017-18 on the ground of non-compliance with Section 151A and the faceless Scheme.

Limitation for issuance of notice under Section 148 as governed by Section 149 and its provisos - Effect of provisos to Section 149 on time-barred reopens - Assessment Year-specific operation of limitation proviso - The impugned notice was also barred by limitation under Section 149 as applicable at the time of issuance. - HELD THAT: - Relying on the interpretation in Hexaware, the Court applied Section 149 as it stood at the time the notice was issued and examined the first proviso and other provisos in their proper sequence. The Court observed that where limitation for issuing a notice under Section 148 had already expired prior to the amendment effecting an extended period, the extended period cannot revive a time-barred right. For the facts of this case the relevant three-year and six-year limitation dates had passed (three-year period to 31 March 2021 and six-year period to 31 March 2024 as noted), and therefore the reassessment notice issued beyond those limits was time-barred. The Court further noted that the fifth and sixth provisos cannot be employed to extend the restriction imposed by the first proviso, and that any exclusion under the fifth proviso is narrowly confined to periods attributable to the assessee's response or stay of Section 148A proceedings as provided therein. [Paras 5, 6]

Held that the reopening notice was beyond the period of limitation and therefore invalid.

Final Conclusion: Writ petition allowed; the notice dated 19 April 2024 under Section 148, the order dated 19 April 2024 under Section 148A(d), and the notice dated 14 March 2024 under Section 148A(b) in respect of Assessment Year 2017-18 are quashed as being issued in violation of the faceless Scheme mandated by Section 151A and as barred by limitation under Section 149. No opinion expressed on other issues raised; no costs.

Reopening of assessment under Section 148 - finality of earlier judicial decision - change of opinion doctrine - disclosure of material facts - escapement of income

Reopening of assessment under Section 148 - finality of earlier judicial decision - escapement of income - Validity of notice issued under Section 148 for reassessment of Assessment Year 2016-2017 where identical issue was earlier decided by this Court. - HELD THAT: - The Court found that the question whether depreciation on tippers was allowable at the higher rate had been previously decided by this Court in the assessee's favour by its judgment dated 01.05.2018. That prior judicial determination on the same facts binds the Assessing Officer and the information relied upon by the Assessing Officer does not constitute fresh material demonstrating escapement of income. The petitioner had lodged full particulars and the claim was considered during original assessment under Section 143(3). Absent any tangible new material beyond what was on record and given the adjudicatory finality already attained, the attempted reopening amounted to giving effect to a mere change of opinion which cannot justify exercise of jurisdiction under Section 148. [Paras 8, 9]

Impugned notice under Section 148 quashed as invalid since it sought to reopen an assessment on an issue already finally decided by this Court and no escapement of income was shown.

Disclosure of material facts - change of opinion doctrine - Whether there was any failure by the assessee to disclose material facts justifying reopening. - HELD THAT: - The Court recorded that the petitioner had fully and truly disclosed all material facts relevant for assessment, including the nature of business and the depreciation claim, which were considered in the original assessment order. The Assessing Officer did not point to any specific additional material not previously available; the reopening therefore reflected no concealment or omission but a mere change of opinion by the revenue which is impermissible as a basis for reopening under Section 148. [Paras 9]

No failure to disclose material facts found; reopening cannot be sustained as it is based on change of opinion.

Final Conclusion: The petition is allowed; the notice dated 30.07.2022 under Section 148 for Assessment Year 2016-2017 is quashed and set aside as the matter sought to be reopened was already finally decided by this Court and no fresh material showing escapement of income was produced.

Executing court's powers in execution proceedings - liability under Section 50-C of the Income Tax Act, 1961 - undertaking by counsel and its binding effect / subsequent disavowal - authority of a director to transfer company property without board resolution - requirement of evidence for factual claims in execution petitions

Executing court's powers in execution proceedings - liability under Section 50-C of the Income Tax Act, 1961 - undertaking by counsel and its binding effect / subsequent disavowal - Whether the executing court can direct a person other than the vendor named in the registered deed to shoulder the income tax liability arising from a transfer where the statutory scheme casts liability on the vendor - HELD THAT: - The court examined the consent decree and the conveyance which showed Nav Technology Pvt. Ltd. as the vendor of the Park Street office, and considered undertakings made in court by the judgment debtor's counsel that the judgment debtor would bear tax responsibility. Noting that the Income Tax Act places liability on the vendor under the statutory scheme referred to (including Section 50 C), the court held that an executing court is not authorised to issue a direction that would palpably contravene statutory provisions by shifting tax liability from the vendor to another person. The court observed that an undertaking by counsel cannot prevail to the extent it would require the court to give directions contrary to law; while counsel's undertaking and prior interlocutory orders based thereon are relevant, they do not empower the executing court to override statutory allocation of tax liability. Applying these principles, the court refused to direct judgment debtor no. 2 (or the then director personally) to assume the tax liability arising from the transfer effected in the name of the company. [Paras 21, 23]

Prayer directing judgment debtor no. 2 to shoulder the tax liability is not allowable; the executing court cannot direct a non vendor to assume tax liability which statute assigns to the vendor.

Authority of a director to transfer company property without board resolution - Whether the conveyance executed by a director without evidence of board or shareholder authorization suffices to establish a valid transfer of company property for purposes of execution relief - HELD THAT: - The court noted the conveyance recited Nav Technology Pvt. Ltd. as vendor and was executed by one director, but the deed did not refer to any board resolution or other corporate authorization, nor did other directors sign or ratify the transfer. The court recorded that no answer or evidence was placed on record by the judgment debtors to explain or justify a director acting unilaterally to convey company property. The absence of evidence on corporate authorization raises a real question about the validity and propriety of the transfer which the executing court could not resolve on the present record. [Paras 21, 22]

Validity of the director's unilateral conveyance is doubtful on the record; absence of corporate authorization requires appropriate proof before further relief can be granted.

Requirement of evidence for factual claims in execution petitions - Whether the decree holder's other substantive prayers (for reimbursement of surrender value, handing over of share certificates, cancellation of the deed etc.) could be allowed on the present record - HELD THAT: - The court observed that several obligations under the consent decree have been complied with, but that the decree holder had not specified which obligations remain or adduced evidence to substantiate claims such as surrender value or other alleged breaches. The court held that those prayers raise factual questions requiring evidence and could not be determined in the summary execution proceeding on the presently available material. Consequently, the executing court declined to grant those reliefs without appropriate evidence and enquiry. [Paras 15, 24]

Other prayers in IA No. GA 1 of 2024 are dismissed for lack of requisite evidence; factual issues must be proved before relief can be granted.

Final Conclusion: IA No. GA 1 of 2024 is dismissed. The executing court refused to direct a non vendor to bear tax liability assigned by statute to the vendor, questioned the validity of a director's unilateral conveyance in absence of corporate authorization, and declined other reliefs for want of evidence; liberty was granted to mention the execution matter before the appropriate Bench.

Reopening of assessment under Section 148 - Reasons to believe - Failure to disclose fully and truly all material facts - Portuguese Civil Code - proprietary share of spouse - Inapplicability of Section 5A where spouse predeceased - Recorded reasons must stand on the material available at the time - Quashing of notice for jurisdictional error

Reopening of assessment under Section 148 - Reasons to believe - Failure to disclose fully and truly all material facts - Validity of the notice dated 28.05.2019 reopening assessment under Section 148 on the ground that income chargeable to tax had escaped assessment - HELD THAT: - The Court examined the recorded reasons relied upon by the Revenue that the assessee had not disclosed Rs.64,43,000/-, treating the total consideration for Property II as payable to the original petitioner. The reasons lacked a rational nexus to the belief that income chargeable to tax had escaped assessment because they ignored that the original petitioner's proprietary interest was only 50% and that the sale consideration corresponding to her share had been offered in the return. The court applied the settled principle that the officer's belief must be based on relevant material and that the sufficiency of reasons is examinable to the extent of determining whether a reasonable person could entertain the belief. Having found the recorded reasons to be premised on an erroneous comparison between the full sale consideration and the aggregate amount disclosed in the return, the Court held that jurisdiction to reopen was not properly acquired. [Paras 14, 15, 20]

Notice dated 28.05.2019 issued under Section 148 is quashed as recorded reasons suffer from jurisdictional error and do not sustain a reason to believe that income chargeable to tax escaped assessment.

Portuguese Civil Code - proprietary share of spouse - Inapplicability of Section 5A where spouse predeceased - Whether the Revenue was justified in treating the petitioner as liable for the entire sale consideration by faulting non-mention of Section 5A in the return and ignoring the effect of the Portuguese Civil Code on ownership - HELD THAT: - The Court found that Section 5A relates to apportionment of income between spouses governed by the Portuguese Civil Code and does not deal with division of assets; further, the petitioner's husband had predeceased in 1986 so Section 5A was inapplicable. The substantive proprietary rights were governed by the Portuguese Civil Code and the fact of such governance was already on the Revenue record. Non-mention of Section 5A in the return therefore could not convert the petitioner's claimed half-share into liability for the entire sale consideration. The Court held that the Revenue's reliance on the absence of an express reference to Section 5A as a basis for reopening was legally untenable. [Paras 16, 17, 18]

Rejection of objections on the ground that Section 5A was not stated in the return is untenable; the petitioner could not be taxed on the entire consideration where her proprietary share under the Portuguese Civil Code was 50%.

Recorded reasons must stand on the material available at the time - Quashing of notice for jurisdictional error - Whether failure by the Revenue to take note of sale deeds (available in public records) at the time of recording reasons renders the reopening invalid - HELD THAT: - The Court observed that sale deeds are matters of public registration and the Sub-Registrar's records are available to the Revenue; the execution of the sale deeds was on record and could have been, and ought to have been, considered when reasons were recorded. The omission to have regard to those available documents and to base recorded reasons on an erroneous comparison rendered the assumption of jurisdiction defective. In light of settled authorities that recorded reasons cannot be supplemented after the fact, the Court held that the reopening could not be sustained where material on record contradicted the basis of the belief. [Paras 14, 19, 20]

The Revenue's failure to take note of the registered sale deeds available in the public domain vitiates the recorded reasons and contributes to the jurisdictional defect; the reopening is therefore unsustainable.

Final Conclusion: The writ petition is allowed: the notice dated 28.05.2019 under Section 148 and the order rejecting objections dated 16.07.2021 are quashed and set aside for jurisdictional errors arising from erroneous recorded reasons, failure to appreciate the petitioner's 50% proprietary share under the Portuguese Civil Code and misapplication of Section 5A; no costs.

Taxability as royalty under Section 9(1)(vi) of the Income tax Act and Article 12 of the India-US DTAA - Taxability as fees for technical or included services under Section 9(1)(vii) of the Income tax Act and Article 12 of the India-US DTAA - Distinction between copyright and copyrighted article (use of copyright v. use of copyrighted material) - Business profits and taxation in absence of Permanent Establishment under Article 7 of the India-US DTAA - Requirement of 'make available' for FIS under Article 12

Taxability as royalty under Section 9(1)(vi) of the Income tax Act and Article 12 of the India-US DTAA - Distinction between copyright and copyrighted article (use of copyright v. use of copyrighted material) - Receipts from providing access to online journals/online database do not constitute royalty. - HELD THAT: - The Tribunal found that the assessee provided access to compiled, indexed and curated copyrighted articles stored in an online database but did not grant any right to use or any right in the underlying copyright. The payments were for access to copyrighted material (copyrighted articles) and not for the use of, or right to use, the copyright itself. Relying on precedents treating subscription or access payments as for copyrighted articles rather than for copyright (including authorities considering similar factual matrices), and on Explanation 2 to Section 9(1)(vi), the Tribunal held that the receipts cannot be treated as royalty either under the domestic provision or under Article 12 of the India-US Treaty. [Paras 11, 12, 13, 15, 16]

Addition on account of 'royalty' deleted; receipts are not chargeable as royalty.

Taxability as fees for technical or included services under Section 9(1)(vii) of the Income tax Act and Article 12 of the India-US DTAA - Requirement of 'make available' for FIS under Article 12 - Receipts from providing access to online journals/online database do not constitute FTS/FIS. - HELD THAT: - The Tribunal observed there was no material to show human intervention, provision of technical or managerial services, or that the assessee made available technical knowledge, skill or know how to Indian customers. Access was effected via automated online search/portal; the assessee neither altered the articles nor provided interactive technical assistance. Applying the principle that human intervention and provision of technical/managerial services are necessary attributes of FTS/FIS, and following Tribunal precedents where subscription access was held not to be FTS/FIS, the Tribunal concluded the receipts do not satisfy the 'make available' or service attributes required under Section 9(1)(vii) or Article 12. [Paras 14, 15, 16]

Addition on account of FTS/FIS deleted; receipts are not chargeable as FTS/FIS.

Business profits and taxation in absence of Permanent Establishment under Article 7 of the India-US DTAA - Receipts are business profits and not taxable in India in absence of Permanent Establishment. - HELD THAT: - The Tribunal, following decisions dealing with online database/subscription models, held that the income characterised as subscription/access receipts is in the nature of business profits. Since the assessee is a US tax resident and it was undisputed that it had no Permanent Establishment in India under Article 5 of the India-US DTAA, such business profits could not be taxed in India. On this basis, and having rejected characterisation as royalty or FTS/FIS, the Tribunal allowed the appeal. [Paras 5, 14, 16]

Receipts treated as business profits not taxable in India as there is no PE; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that receipts from access to online journals/databases are not taxable as royalty or as fees for technical/included services and, being business profits of a US resident without a Permanent Establishment in India, are not taxable in India.

Characterisation of rental receipts as income from house property or income from business - application of the Sultan Brothers test to determine nature of receipts - scope and effect of an order passed under section 263 where reassessment is delegated to Assessing Officer - rule of consistency in successive assessment years

Characterisation of rental receipts as income from house property or income from business - application of the Sultan Brothers test to determine nature of receipts - Whether the rental income of the assessee for A.Y. 2014-15 is to be assessed under the head "Income from House Property" or as "Income from Business" - HELD THAT: - The Tribunal examined whether the facts established an organised, systematic business of letting (as in Chennai Properties) or merely letting of property attracting assessment as house property. It observed that the Assessing Officer and Commissioner relied principally on the percentage of receipts and generic references to the memorandum of association without any finding that the assessee carried out additional organised services or systematic business activities in relation to the properties. The Tribunal applied the tests discussed in Sultan Brothers and considered the contrast drawn by subsequent Supreme Court decisions (including Raj Dadarkar) that the object clause or high percentage of rental receipts alone cannot convert passive letting into business income. The Assessing Officer did not demonstrate provision of separate services or an organised business model of letting; service charges were statutory/incidental and not shown to amount to a commercial business of rendering services to occupiers. [Paras 19, 22]

Rental income for A.Y. 2014-15 is to be assessed as income from house property and not as business income; the Assessing Officer's finding to the contrary is vacated.

Scope and effect of an order passed under section 263 where reassessment is delegated to Assessing Officer - Whether the Commissioner's order under section 263, which set aside the assessment for re-adjudication, precluded the Assessing Officer from independently deciding the character of the income - HELD THAT: - The Tribunal noted that under section 263 the Commissioner may either himself determine the correct taxable income or remit the matter to the Assessing Officer for fresh inquiry. In the present case the Commissioner did not himself determine the issue but set aside the assessment and directed re-adjudication. Therefore the remand left the question open for fresh decision by the Assessing Officer; the Commissioner's order did not itself conclusively convert the nature of receipts into business income. The Revenue's submission that the Assessing Officer was bound to treat the income as business income merely because the Commissioner set aside the assessment was rejected. [Paras 15]

The Commissioner's section 263 order merely directed re-adjudication and did not itself finally determine that the receipts must be assessed as business income.

Rule of consistency in successive assessment years - Whether the principle of consistency precluded reopening the characterisation of rental income in A.Y. 2014-15 contrary to earlier years where the same receipts were accepted as house property income - HELD THAT: - The Tribunal observed that the assessee's treatment of the rental receipts as income from house property had been accepted in scrutiny assessments for A.Y. 2012-13 and A.Y. 2013-14 and in subsequent years under section 143(1). Relying on the settled principle that, absent any material change in facts, it is inappropriate to change a previously accepted position, the Tribunal held that the rule of consistency applied. The Revenue had not shown any material change in the assessee's activities to justify a departure from the earlier characterisation. [Paras 20, 21]

The prior consistent acceptance of the receipts as income from house property militates against treating them as business income in A.Y. 2014-15.

Final Conclusion: The assessee's appeal is allowed: the Assessing Officer's finding that rental receipts for A.Y. 2014-15 constituted business income is vacated; those receipts are to be assessed as income from house property. The Commissioner's section 263 order merely remitted the issue for fresh consideration and did not itself determine the nature of the receipts; the principle of consistency further supports treating the receipts as house property income.

Genuineness of share transactions - bogus share transactions - reliance on investigation report - burden on revenue to connect assessee to manipulation - documentary evidence including Demat records, contract notes and banking trail - principles of natural justice - opportunity for cross examination - deletion of additions treated as unexplained cash credit

Genuineness of share transactions - reliance on investigation report - burden on revenue to connect assessee to manipulation - documentary evidence including Demat records, contract notes and banking trail - principles of natural justice - opportunity for cross examination - Long term capital gains on sale of shares of M/s. Pine Animation Ltd. are genuine and not to be treated as bogus - HELD THAT: - The Tribunal held that the Assessing Officer had primarily relied on a generalized investigation report without bringing material on record to show that the assessee's transactions formed part of the alleged manipulated trades. The assessee furnished documentary evidence showing purchase through banking channels, physical share transfer followed by dematerialisation, sale through stock exchange via a broker, entry and exit of shares from the assessee's Demat account and receipt of sale consideration through banking channels. Statements recorded from the assessee and her husband contained no adverse material, and SEBI's interim directions against certain entities were subsequently revoked. Absent material connecting the assessee with the operators or exit providers identified in the investigation, and given the documentary trail, the basic burden on the Revenue to demonstrate that the transactions were arranged or sham was not discharged. The Tribunal also noted the assessee's request for cross examination of witnesses relied upon by the AO and that the AO declined that opportunity; taken together, these factors justified upholding the CIT(A)'s deletion of the addition. [Paras 11, 12, 13, 16, 17]

Addition made by the AO treating the capital gains as bogus is deleted and the CIT(A)'s order in favour of the assessee is confirmed.

Deletion of additions treated as unexplained cash credit - estimated commission/expenses in relation to alleged bogus gains - reliance on underlying finding of genuineness of transactions - Estimated commission expense assessed as unexplained expenditure is to be deleted - HELD THAT: - The AO estimated commission expenses as a percentage of sale consideration on the premise that the capital gains were bogus. Having concluded that the sale transactions cannot be doubted and the capital gains are genuine, the Tribunal found no basis to sustain the estimation of commission expenditure assessed as unexplained. The deletion of the primary addition therefore necessitated deletion of the consequential estimated expense addition as well. [Paras 7, 17]

Estimated commission addition assessed by the AO is deleted and the CIT(A)'s deletion is confirmed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal; the CIT(A)'s deletion of the additions relating to the long term capital gain on sale of Pine Animation Ltd. and the estimated commission expense is confirmed.

Principles of natural justice - Ex parte dismissal for alleged non compliance - Deemed service by placing notice on e portal is not sufficient - Condonation of delay for sufficient cause - Remand for fresh adjudication after opportunity of hearing

Condonation of delay for sufficient cause - One day delay in filing the appeal before the Tribunal is condoned. - HELD THAT: - The assessee filed an application explaining that Form No. 36 and appeal fee challan were provided to the authorised representative but uploading on the ITAT portal could not be completed due to non receipt of OTP; an affidavit supporting this explanation was filed. The Tribunal found that these circumstances amounted to sufficient cause preventing timely filing and, on that basis, exercised its discretion to condone the delay. [Paras 3]

Delay of one day in filing the appeal is condoned.

Principles of natural justice - Ex parte dismissal for alleged non compliance - Deemed service by placing notice on e portal is not sufficient - Remand for fresh adjudication after opportunity of hearing - Impugned ex parte order of the ld. CIT(A) dismissing the appeal for alleged non compliance is set aside and the matter is remanded for fresh decision after affording proper opportunity of hearing. - HELD THAT: - The Tribunal accepted the assessee's contention that no email/notice/SMS was received and observed that the impugned summary dismissal without hearing offended the principles of natural justice. Reliance was placed on the jurisdictional High Court's decision in Munjal BSU Centre of Innovation and Entrepreneurship v. Commissioner of Income Tax (E), Chandigarh, which held that Section 282(1) and Rule 127(1) require actual communication of notice and do not deem placing a notice on the e portal as sufficient service; a pragmatic approach is required since taxpayers are not expected to monitor the e portal constantly. Applying that reasoning, the Tribunal held the CIT(A)'s order unsustainable, set it aside and directed the CIT(A) to decide the appeal afresh after giving proper and adequate opportunity to the assessee to present its case. The CIT(A) was directed to serve notice of hearing both through physical mode and electronic mode. [Paras 5]

Impugned ex parte order set aside; matter remanded to ld. CIT(A) for fresh adjudication after proper and adequate opportunity of hearing, with directions to serve notice physically and electronically.

Statistical disposal - Appeal is treated as allowed for statistical purposes. - HELD THAT: - Following the setting aside of the CIT(A)'s ex parte dismissal and remand for fresh consideration, the Tribunal recorded the appeal as allowed for its statistical return, reflecting that no adjudication on merits by the Tribunal was required at this stage. [Paras 6]

Appeal treated as allowed for statistical purposes.

Final Conclusion: Delay in filing the appeal is condoned; the CIT(A)'s ex parte dismissal is set aside for breach of natural justice and for relying on e portal placement as sufficient service; the matter is remanded to the CIT(A) to decide afresh after giving proper and adequate opportunity of hearing, with notice to be served both physically and electronically; appeal treated as allowed for statistical purposes.

Deduction under section 80P(2)(d) for income from investments made with other cooperative societies - Distinction between income under section 80P(2)(a)(i) and section 80P(2)(d) - Interest income from deposits with cooperative banks held by a cooperative society - Treatment of interest income as exempt from total income of a cooperative society

Deduction under section 80P(2)(d) for income from investments made with other cooperative societies - Interest income from deposits with cooperative banks held by a cooperative society - Distinction between section 80P(2)(a)(i) and section 80P(2)(d) - Whether interest income earned by the assessee-cooperative society from deposits with a cooperative bank is allowable as deduction under section 80P(2)(d). - HELD THAT: - The Tribunal applied the statutory scope of section 80P(2)(d) and held that the provision exempts income derived by a cooperative society from investments held with other cooperative societies. The interest in the present case was earned from Lokmangal Bank, a cooperative bank, and thus falls within the scope of income derived from investment with another cooperative society. The Tribunal distinguished the ambit of section 80P(2)(d) from section 80P(2)(a)(i) and relied on precedents of the Bench and the Karnataka High Court decision in CIT v. Totagars Cooperative Sale Society which observed that the Supreme Court's ratio in Totgar's Co-operative Sale Society Ltd. v. ITO is not applicable to interest on investments covered by section 80P(2)(d). On this basis the Tribunal concluded that the interest income qualifies for deduction under section 80P(2)(d) and cannot be treated as taxable 'other income'. [Paras 5, 6]

The interest income from deposits with the cooperative bank is deductible under section 80P(2)(d); the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal for A.Y. 2020-21, holding that interest income earned by the cooperative society from deposits with a cooperative bank is exempt under section 80P(2)(d) and therefore deductible from total income.

Adjournment and court's discretion - Section 68 - unexplained cash credits - Chargeability of interest under Section 234A and Section 234B - Chargeability of interest on returned income versus assessed income - Effect of subsequent High Court precedent and per incuriam classification - Applicability of amended provision of Section 234B w.e.f. 01.04.2007

Adjournment and court's discretion - Adjournment applications filed by the assessees were rejected for repeated and unexplained delays. - HELD THAT: - The Bench declined the assessee's request for adjournment made on 12.07.2024, noting that the miscellaneous applications had been filed on 21.01.2020 and the matters had been adjourned on more than ten occasions largely at the instance of the assessee. The order applies the settled principle that courts should not grant repeated adjournments on flimsy grounds and cites authoritative condemnation of routine adjournments to underline the need for expedition of pending matters. Consequently, the adjournment applications were refused. [Paras 2]

Adjournment applications rejected.

Section 68 - unexplained cash credits - Additions made under Section 68 in respect of cash deposits were upheld; the assessees' appeals against those additions were dismissed. - HELD THAT: - The Bench reviewed the appellate record and noted that the AO had made additions after finding discrepancies between alleged receipts from the builder and amounts deposited. The Tribunal had previously sustained the additions, finding that the assessees failed to substantiate the cash deposits with credible explanation, despite production of financial statements, bank passbooks and ledgers. On appeal to the High Court, the Court considered the merits and held that the assessees failed to prove identity, creditworthiness and genuineness of the creditors and found no error in the tax authorities' approach. In view of the High Court's dismissal of the appeals, the additions under Section 68 stand affirmed. [Paras 6, 7, 9, 10]

Assessees' miscellaneous applications against additions under Section 68 dismissed; additions sustained.

Chargeability of interest under Section 234A and Section 234B - Chargeability of interest on returned income versus assessed income - Applicability of amended provision of Section 234B w.e.f. 01.04.2007 - Effect of subsequent High Court precedent and per incuriam classification - Departmental miscellaneous applications challenging the Tribunal's deletion of interest under Sections 234A and 234B were allowed in view of subsequent High Court precedent which held that interest under Section 234B is chargeable on assessed income and that the earlier authority relied upon by the Tribunal was distinguishable/per incuriam. - HELD THAT: - The Tribunal had earlier deleted interest under Sections 234A and 234B relying on a prior High Court decision that interest could be charged on return income and not on assessed income. The Revenue's MAs pointed out a later decision of the Jharkhand High Court in PCIT v. Manoj Kapoor (ITA No. 55/2019 dated 16.04.2023) which examined the applicability of Section 234B as amended and disagreed with the earlier view, holding that the Tribunal's reliance on the prior decision was erroneous. The Bench accepted the subsequent High Court ruling that questions of law were to be decided in favour of the Revenue, treated the earlier authority as distinguishable/per incuriam for the relevant period, and therefore allowed the Departmental applications seeking restoration of interest. [Paras 8, 9, 11]

Departmental miscellaneous applications allowed; deletion of interest by the Tribunal set aside in view of the subsequent High Court decision.

Final Conclusion: The assessees' miscellaneous applications are dismissed (adjournment refused and additions under Section 68 sustained); the Departmental miscellaneous applications are allowed and the Tribunal's deletion of interest under Sections 234A/234B is set aside in view of the later High Court precedent.

Disallowance under Section 40(a)(i) for failure to withhold tax - obligation to withhold tax under Section 195 - characterisation as Business Profits (Article 7) or Independent Personal Services (Article 14/15) - priority of special articles over Article 7 (Article 7(7) / corresponding treaty rule) - FTS 'Make Available' clause and Most Favoured Nation (MFN) notification requirement - mutuality doctrine in relation to KPMG International Co operative - ad hoc disallowance of advertisement/brand enhancement expenses - remand for verification of factual averments to Assessing Officer/CIT(A)

Disallowance under Section 40(a)(i) for failure to withhold tax - obligation to withhold tax under Section 195 - characterisation as Business Profits (Article 7) or Independent Personal Services (Article 14/15) - Whether professional fees paid to various non residents were taxable in India (thereby attracting withholding under Section 195 and disallowance under Section 40(a)(i)) or not. - HELD THAT: - The Tribunal held that where professional fees fall to be characterised as Business Profits under Article 7 or as income from Independent Personal Services under Article 14/15 of the relevant DTAA, and the threshold conditions for source state taxation (permanent establishment under Article 5 or fixed base/physical presence under Article 14/15) are not satisfied, such receipts are not taxable in India. Consequently the payer was not obliged to withhold tax under Section 195 and the Assessing Officer's disallowance under Section 40(a)(i) could not be sustained. This principle was applied across the assessment years 2012 13 to 2017 18 in relation to payments to non residents from multiple jurisdictions (including, inter alia, Netherlands, Sweden, Spain, Singapore, UK, USA, Tanzania, Canada, Australia, Thailand, Mauritius and others) where no PE/fixed base/physical presence was made out. The Tribunal further explained that in DTAAs lacking an FTS clause, receipts that are of the nature of professional/business income continue to be governed by Articles 7 or 14/15 and do not fall into the residuary 'Other Income' article merely because the specific article's threshold is not met. The Tribunal also noted prior decisions of its own and of the High Court rejecting the 'make available' contention in respect of identical services rendered to the assessee, and relied on the treaty texts and model commentary to interpret the scope of Articles 7 and 14/15. [Paras 15, 16, 17, 18, 19]

Disallowances under Section 40(a)(i) in respect of professional fees paid to non residents, where those fees constituted Business Profits or IPS and no PE/fixed base/physical presence in India was shown, were deleted.

FTS 'Make Available' clause and Most Favoured Nation (MFN) notification requirement - priority of special articles over Article 7 (Article 7(7) / corresponding treaty rule) - Effect of an FTS clause (including 'make available' wording and MFN / notification limitations) on treaty characterisation and withholding obligations. - HELD THAT: - The Tribunal observed that where a DTAA contains an FTS (or 'included services') article with a 'make available' requirement, that special article will prevail over Article 7 (business profits) by virtue of Article 7(7) or the corresponding treaty rule. If the services satisfy the 'make available' test they may be taxable in the source State; conversely, where the services do not make available technical knowledge/skill/experience, they do not qualify as FTS and cannot be taxed under that article. The Tribunal also recorded the effect of Nestle SA (MFN decision) that MFN based alterations are available only upon government notification, but in the present facts prior Tribunal and High Court findings that identical services did not 'make available' such expertise meant the FTS articles did not apply to make the receipts taxable in India. [Paras 13]

FTS articles apply only where the 'make available' condition is satisfied; absent that, and absent government notification extending MFN benefits, receipts remain governed by Articles 7 or 14/15 and are not taxable in India.

Mutuality doctrine in relation to KPMG International Co operative - disallowance under Section 40(a)(i) for remittances to KPMG International - Whether remittances to KPMG International Co operative, Switzerland (KPMGI) attracted withholding and disallowance under Section 40(a)(i). - HELD THAT: - The Tribunal followed coordinate bench decisions in the assessee's own earlier years and accepted that KPMGI operates as a mutual association whose receipts from member contributions were not income chargeable to tax. The member contributions were treated as cost sharing/reimbursement and, on the facts and prior precedent, not taxable in India; accordingly the payer was not obliged to withhold tax and the Assessing Officer's disallowance was deleted. The Tribunal found no reason to deviate from the prior findings for the years under consideration. [Paras 22]

Disallowance under Section 40(a)(i) in respect of remittances to KPMG International Co operative was deleted on the basis of mutuality and prior Tribunal decisions.

Ad hoc disallowance of advertisement/brand enhancement expenses - Whether an ad hoc percentage (25%) of advertisement and publicity expenses could be disallowed on the basis that such expenses benefited overseas group entities. - HELD THAT: - The Tribunal held that a notional ad hoc disallowance was not justified where the expenditure otherwise satisfied the legal tests for deduction. Reliance was placed on precedent (including Sassoon J David and Seagram decisions) that incidental benefit to another person does not, by itself, render expenditure non deductible. In the absence of specific evidence to allocate a portion of the expense as non deductible, the Assessing Officer's blanket 25% disallowance was unsustainable. [Paras 23]

Ad hoc disallowance of a fixed percentage of advertisement/publicity expenses was deleted.

Remand for verification of factual averments to Assessing Officer/CIT(A) - Appropriate scope and destination of remand where factual verification (e.g., existence of PE/fixed base, source/ utilisation of services) was necessary. - HELD THAT: - The Tribunal held that in several instances the CIT(A) had remitted issues back to the Assessing Officer for factual verification. The Tribunal found that CIT(A) should itself adjudicate issues but may call for remand reports; accordingly, where the CIT(A) had simply set aside matters to the AO, the Tribunal set aside that part of the CIT(A) order and directed the CIT(A) to decide afresh after calling for remand reports and giving the assessee opportunity of hearing. Multiple specific payments across years were therefore remitted to the CIT(A) for fresh adjudication after verification (with the assessee's rights preserved). [Paras 36, 53, 71, 85, 100]

Issues requiring verification of factual averments were remitted for fresh adjudication: the Tribunal set aside mere remands to AO and directed CIT(A) to call for remand reports, verify facts and decide after hearing the assessee.

Application of treaty text (Article 13/12) leading to withholding - France and Belgium - Whether fees paid to certain companies resident in France (and Belgium) were taxable in India as Fees for Technical Services/royalty and thus liable to withholding and disallowance. - HELD THAT: - On treaty text analysis the Tribunal found that fees paid to specified companies resident in France (and to the Belgium resident in one instance) fell within the treaty definition of Fee for Technical Services / royalties (Article 13/12 type provisions) because the services in those cases were caught by the relevant DTAA definitions. As the assessee had not withheld tax, the Assessing Officer's disallowance under Section 40(a)(i) was upheld for those payments. The Tribunal therefore overturned the CIT(A) in relation to such specific payments. [Paras 49, 50]

Disallowances under Section 40(a)(i) in respect of specified payments to companies resident in France and Belgium were reinstated as taxable (FTS/royalty) and withholding obligations were held to have arisen.

Final Conclusion: The Tribunal partly allowed the departmental appeals and allowed the assessee's cross objections; it confirmed that where professional fees to non residents are business profits or income from independent personal services and no PE/fixed base/physical presence exists, such fees are not taxable in India and withholding under Section 195 (and disallowance under Section 40(a)(i)) does not arise; it upheld the mutuality finding in respect of remittances to KPMG International Co operative and deleted the ad hoc advertisement disallowances; specific payments whose treaty text brought them within FTS/royalty were upheld as taxable; and issues requiring factual verification were remitted to the CIT(A) (with directions to obtain remand reports and to grant the assessee a hearing).

Deduction under section 80P(2)(a)(i) - Deduction under section 80P(2)(d) - Business income versus income from other sources - Statutory compulsion under Karnataka Co-operative Societies Act - Restoration to Assessing Officer for factual verification

Deduction under section 80P(2)(a)(i) - Statutory compulsion under Karnataka Co-operative Societies Act - Business income versus income from other sources - Whether interest income from investments with co operative banks is business income eligible for deduction under section 80P(2)(a)(i) when such investments are made by reason of statutory compulsion under the Karnataka Co operative Societies Act and Rules - HELD THAT: - The Tribunal accepted the line of authority holding that interest arising from funds placed or invested pursuant to statutory requirements forms part of the business of the co operative society and, if the investments are made out of compulsion under the Karnataka Co operative Societies Act and the relevant Rules, the income would be taxable as business income and eligible for deduction under section 80P(2)(a)(i). In view of the factual nature of the question-whether the assessee's investments with Apex Co operative Bank and other banks were made pursuant to statutory compulsion-the Tribunal did not decide the matter on merits but directed restoration to the Assessing Officer for examination and factual verification of that specific contention. The Tribunal relied on precedents applying the principle that statutory necessity of investment converts the income into business income, and instructed the AO to determine the factual matrix and tax character of the interest accordingly. [Paras 11]

Remanded to the Assessing Officer to examine and decide whether the investments were made out of statutory compulsion; if so, treat the interest as business income and allow deduction under section 80P(2)(a)(i).

Deduction under section 80P(2)(d) - Restoration to Assessing Officer for factual verification - Whether the assessee is entitled to deduction under section 80P(2)(d) as an alternative, where deduction under section 80P(2)(a)(i) is not available - HELD THAT: - The Tribunal directed that, in the event the Assessing Officer concludes that the assessee is not entitled to deduction under section 80P(2)(a)(i), the AO should examine entitlement to deduction under section 80P(2)(d) in light of the recent Supreme Court decision cited by the assessee. The Tribunal did not adjudicate the alternative claim on merits but instructed the AO to consider section 80P(2)(d) after completing the factual inquiry on the nature of the investments. [Paras 8]

Remanded to the Assessing Officer to consider, if necessary after the primary factual finding, whether deduction under section 80P(2)(d) is available.

Final Conclusion: The Tribunal restored the matter to the Assessing Officer for factual verification on whether the investments with Apex Co operative Bank and other banks were made pursuant to statutory compulsion under the Karnataka Co operative Societies Act and Rules; if so, interest thereon is to be treated as business income and deduction under section 80P(2)(a)(i) granted, and if not, the AO shall consider entitlement under section 80P(2)(d). The appeal is allowed for statistical purposes.

Application of mind in issuance of process - Prima facie satisfaction for cognizance - Summoning of accused not a mechanical process - Requirement of a speaking and reasoned order - Proceedings under the Prohibition of Benami Property Transaction Act, 1988

Application of mind in issuance of process - Prima facie satisfaction for cognizance - Summoning of accused not a mechanical process - Requirement of a speaking and reasoned order - Validity of the impugned summoning order dated 27.02.2024 in Criminal Complaint Case No.276 of 2024 was examined for sufficiency of reasons and application of mind. - HELD THAT: - The High Court applied settled principles that issuance of process requires judicial application of mind and recording of reasons showing prima facie satisfaction, as explained in Lalankumar Singh, Pepsi Foods Ltd. and Mehmood UL Rehman. The learned court below had merely summarized the complaint and noted the existence of a sanction order and jurisdiction, but did not record any reasons or examine the nature or truthfulness of the allegations to demonstrate that there was sufficient ground for proceeding. The order of cognizance and summons therefore lacked the minimal reasoning required by law and was held to be contrary to the authorities which require that the magistrate form and state an opinion, albeit briefly, that a prima facie case exists before issuing process. [Paras 13]

The impugned summoning order dated 27.02.2024 is set aside and the matter is remanded to the learned court below to pass a fresh speaking and reasoned order after hearing the parties.

Final Conclusion: Impugned summoning order set aside for want of application of mind and absence of reasons; matter remanded for fresh speaking and reasoned order within 60 days after hearing the parties.

Seizure under Section 110 of the Customs Act-reasonable belief standard - territorial jurisdiction of Customs officers-interpretation of appointment notification under Section 4(1) - concurrent versus exclusive jurisdiction - purposive interpretation of administrative notification

Seizure under Section 110 of the Customs Act-reasonable belief standard - evidentiary sufficiency for seizure - Validity of the seizure under Section 110 of the Customs Act on the ground of 'reason to believe' that the goods were illegally imported - HELD THAT: - The Court applied the established standard that whether an officer had 'reasonable belief' is to be judged from the officer's experienced appraisal of suspicious circumstances and is not a question for appellate reappraisal of facts. The impugned inventory-cum-seizure list recorded that the consignee did not appear or produce documents when called; representative samples were drawn and the seizure-cum-search list was prepared in presence of independent witnesses. The department also relied on returned summons to the supplier and GSTIN details suggesting lack of licence to deal in areca nuts. On these materials, the Court held there was a basis for the preventive officer's reasonable belief that the goods might be illegally imported and liable for confiscation, and therefore the seizure was not vitiated for want of basis. [Paras 14, 16, 26]

Seizure under Section 110 was valid; the writ court's quashing of the seizure on this ground was not justified.

Territorial jurisdiction of Customs officers-interpretation of appointment notification under Section 4(1) - concurrent versus exclusive jurisdiction - purposive interpretation of administrative notification - Whether the Commissioner of Customs (Preventive), West Bengal lacked jurisdiction to seize goods within the Netaji Subhas Chandra International Airport because Clause 10 of the notification conferred jurisdiction on the Principal Commissioner of Customs (Airport and Air Cargo Complex), Kolkata - HELD THAT: - The notification under Section 4(1) appoints officers and delineates areas; Clause 11 confers jurisdiction over the 'whole' of the State of West Bengal and Sikkim on the Commissioner of Customs (Preventive), West Bengal, while Clause 10 assigns certain areas (including the airport) to the Principal Commissioner(s). The Court emphasised purposive construction of the notification to give effect to administrative purpose and avoid interpretations that thwart effective implementation. The word 'whole' was interpreted in its ordinary sense to mean complete territorial coverage, and the Court held that conferring specific jurisdiction on the Principal Commissioner over the airport does not deny or oust the preventive commissioner's jurisdiction over the State. Thus the preventive commissioner retained power to act at the airport and the learned Single Bench's contrary interpretation was erroneous. [Paras 21, 22, 24, 25]

Commissioner of Customs (Preventive), West Bengal has jurisdiction over the matters seized within the State (including the airport); the Single Bench's conclusion of exclusive airport jurisdiction in favour of the Principal Commissioner was not tenable.

Final Conclusion: The appeal is allowed; the Single Bench order quashing the seizure is set aside. The Court upheld the validity of the seizure under Section 110 on the material before the officers and held that the Commissioner of Customs (Preventive), West Bengal had jurisdiction to act in the territorial area in question; the Customs department is directed to continue the investigation in accordance with law.

Classification of convergence devices - principal function / Note 3 (composite machines) - HSN-based tariff interpretation - apparatus for transmission or reception of voice, image or other data (CTH 8517) - loudspeakers and headphones (CTH 8518) read with 'wireless' - end-use not determinative of classification

Classification of convergence devices - apparatus for transmission or reception of voice, image or other data (CTH 8517) - principal function / Note 3 (composite machines) - Echo Dot (5th Gen), Echo Dot (5th Gen) with Clock and Echo Pop are classifiable under CTH 8517 62 90 - HELD THAT: - The Court held that the subject devices are 'convergence devices' whose core attributes are reception, conversion and transmission of voice, images or other data and interaction in a networked environment. Applying Note 3 to Section XVI, the devices must be classified according to their principal function rather than incidental capabilities (such as playback as mere speakers). Reliance was placed on the earlier decision of this Court in Amazon Wholesale India Private Limited, which analysed the devices' ability to transmit/receive and process data and concluded that those characteristics constitute their dominant function. End-use or the fact that the devices can function as speakers when offline does not displace their primary character as communication/data apparatus. On this basis the devices fall within the ambit of CTH 8517 62 90 rather than CTH 8518. [Paras 5, 10]

The three devices are classifiable under CTH 8517 62 90 and the AAR orders placing them under CTH 8518 are set aside.

Loudspeakers and headphones (CTH 8518) read with 'wireless' - HSN-based tariff interpretation - end-use not determinative of classification - The amendment inserting the word 'wireless' in CTH 8518 does not extend CTH 8518 to encompass the subject convergence devices - HELD THAT: - The Court examined the Finance Act, 2022 amendment that added 'wireless' to certain sub-headings of CTH 8518 but emphasised that the broad heading of CTH 8518 remains confined to microphones, loudspeakers, headphones and earphones. The adjective 'wireless' must be read in the context of those commodities and does not transform CTH 8518 into a heading covering apparatus principally designed for transmission or reception of voice, image or other data in a networked environment. Consequently, mere wireless capability of the devices is insufficient to classify them under CTH 8518 where their principal function is communication/data apparatus. [Paras 8, 9]

The inclusion of 'wireless' in CTH 8518 does not warrant classifying the subject devices under CTH 8518.

HSN-based tariff interpretation - entitlement to notification-based exemption - Appellant is entitled to claim exemption under Serial No. 20 of Notification No. 57/2017-Cus dated 30 June 2017 in respect of devices classifiable under CTH 8517 62 90 - HELD THAT: - Following the classification conclusion and the reasoning in the Court's earlier decision, the Court held that the appellant-assessee may avail the exemption specified in Serial No. 20 of Notification No. 57/2017-Cus dated 30 June 2017 for goods properly classifiable under CTH 8517 62 90. The Court therefore granted relief consequential to the reclassification. [Paras 11]

The appellant is entitled to claim the specified exemption under the notification for the devices classified under CTH 8517 62 90.

Final Conclusion: Appeals allowed; impugned AAR orders dated 12 July 2023 and 27 September 2023 are set aside. The three devices are held classifiable under CTH 8517 62 90 and the appellant may claim exemption under Serial No. 20 of Notification No. 57/2017-Cus dated 30 June 2017.

Statutory bail under Section 167(2) CrPC - indefeasible right to bail on expiry of prescribed investigation period - custodial remand period sixty days - offences punishable for a term below ten years - conditions of bail including surrender of passport and periodic appearance before Investigating Officer - flight risk of foreign nationals

Statutory bail under Section 167(2) CrPC - indefeasible right to bail on expiry of prescribed investigation period - custodial remand period sixty days - offences punishable for a term below ten years - Petitioners entitled to release on statutory bail as investigation exceeded sixty days and offences alleged are punishable for a term below ten years. - HELD THAT: - The petitioners were arrested and remanded to judicial custody on 04.06.2024 and have remained in custody for more than 61 days while investigation remains incomplete and the complaint has not been filed. Sub section (2) of Section 167 CrPC provides that on expiry of the prescribed detention period (sixty days for offences not punishable with ten years or more) an indefeasible right to be released on bail accrues to the accused where investigation is not completed. The court relied on the principle reiterated by the Supreme Court that default by the investigating agency in completing the investigation within the prescribed period entitles the accused to be released on bail upon furnishing the required bond. The risk of flight by the petitioners as foreign nationals was a prosecutorial contention, but it did not outweigh the statutory entitlement arising on expiry of the sixty day period in the facts of this case. Consequently, bail was allowed subject to specified conditions including execution of bond with sureties, periodic appearance before the Investigating Officer, surrender of passports (or filing of affidavit if none), restriction on leaving territorial jurisdiction without permission, prohibition on tampering with evidence, and preservation of power of the court below to vary or cancel bail and to continue investigations and effect recoveries if information is furnished by the petitioners. [Paras 6, 8, 9]

Applications allowed; petitioners released on bail on execution of bond with two solvent sureties subject to enumerated conditions including periodic reporting to the Investigating Officer, surrender of passports or affidavit, restriction on travel outside territorial jurisdiction, and non tampering with evidence.

Final Conclusion: Bail applications allowed under Section 167(2) CrPC on the ground that investigation remained incomplete beyond sixty days for offences punishable for a term below ten years; release subject to bond, sureties and specific conditions including surrender of passports and periodic appearances before the Investigating Officer.

Seizure and interim custody under section 110 of the Customs Act - Mandatory issuance of a notice under section 124 within six months and consequence of non-issuance - Mode and deemed service of notices under section 153 - Maintainability of writ jurisdiction where no confiscation order or penalty has been passed

Mandatory issuance of a notice under section 124 within six months and consequence of non-issuance - Seizure and interim custody under section 110 of the Customs Act - Mode and deemed service of notices under section 153 - Whether the Show Cause Notice was issued within six months of seizure as required by section 110(2) and the consequence of non-issuance - HELD THAT: - The court construed sections 110(1) and 110(2) together with section 124 and the service provisions in section 153. Section 110(2) mandates that where goods are seized under section 110(1), a notice under clause (a) of section 124 must be given within six months of seizure, failing which the seized goods shall be returned to the person from whose possession they were seized. Section 153 prescribes modes of service and deems service to have occurred on the date of tender or publication as provided therein. The admitted facts show seizure on 23-02-2023 and dispatch of the Show Cause Notice dated 17-08-2023 only on 25-08-2023; reckoning six months from the date of seizure, the statutory period expired on 22/23-08-2023. On that basis the court found that the notice was not given within the prescribed six-month period and that continued retention of the jewellery by Customs was therefore illegal and contrary to section 110(2). [Paras 10]

Show Cause Notice was not issued within six months and the continued retention of the seized gold jewellery is illegal; goods to be returned.

Maintainability of writ jurisdiction where no confiscation order or penalty has been passed - Whether the writ petition was maintainable despite statutory remedy of appeal under sections 128 and 129 being available - HELD THAT: - The respondents contended that statutory appeals under the Act would be the appropriate remedy. The court observed that no confiscation order or penalty has been passed by the authority, and therefore there was no order to which the statutory appellate provisions would apply. In the absence of a final adjudicatory order, the remedy by way of writ was appropriate to challenge continued illegal custody of the seized goods. [Paras 11]

Writ petition is maintainable; objection based on availability of statutory appeals is misconceived.

Final Conclusion: Writ petition allowed: Show Cause Notice not issued within the six-month period under section 110(2), retention of the seized gold jewellery is illegal and the respondents are directed to release the seized jewellery forthwith; petition disposed of with no order as to costs.

Proof required to impose penalty under Section 112 - Liability of Custom House Agent for clandestine removal of cargo - Penalty for collusion/conspiracy in clandestine clearance - Reliance on statements and documentary evidence to sustain penalty - Cancellation of CHA licence

Proof required to impose penalty under Section 112 - Reliance on statements and documentary evidence to sustain penalty - Liability of Custom House Agent for clandestine removal of cargo - Whether the penalty imposed on the appellant-CHA under Section 112 for clandestine clearance/collusion is sustainable - HELD THAT: - The Tribunal found that the charges against the CHA were not substantiated by the material on record. The appellant's statements indicated that the steamer agent moved the consignments to CFSs; the steamer agent's accountant corroborated issuance of delivery orders and PNR movement copies as per instructions of other agents/importer. The steamer agent was not made a party to the show-cause notice and the record showed the importer had arranged trailers; the role of the CHA/CFS in clandestine removal was not established. On the basis that positive evidence linking the appellant to clandestine dealing or active carriage/handling of undeclared goods was absent, the Tribunal held the penalty could not be sustained and set it aside. [Paras 4]

Penalty imposed on the CHA is set aside.

Cancellation of CHA licence - Liability of Custom House Agent for clandestine removal of cargo - Reliance on statements and documentary evidence to sustain penalty - Whether the order allowing the CHA to operate his licence should be set aside and the licence cancelled - HELD THAT: - The Department sought cancellation of the CHA licence on the basis of the alleged misconduct. Having concluded that the material did not establish the appellant's involvement in clandestine removal and noting absence of evidence implicating the CHA or any finding against the steamer agent, the Tribunal held the prayer to cancel the licence was not maintainable. Consequently, the appellant was permitted to continue operating the CHA licence subject to consequential relief, if any, as per law. [Paras 4, 5]

Prayer of the Revenue to cancel the CHA licence is dismissed; the CHA may operate his licence.

Final Conclusion: The penalty imposed under Section 112 on the appellant-CHA is set aside for lack of substantiating evidence, and the Revenue's challenge to the order permitting the CHA to operate his licence is dismissed; the impugned order is partly modified and both appeals are disposed of accordingly.

Refund of Special Additional Duty (SAD) - refund under Notification No. 102/2007-Cus - Chartered Accountant's certificate and reconciliation statement - minor discrepancies and clerical errors not vitiating claim - discrediting documentary evidence or incriminating material - requirement of ledger/document-based scrutiny as per Board Circular

Refund of Special Additional Duty (SAD) - refund under Notification No. 102/2007-Cus - Chartered Accountant's certificate and reconciliation statement - minor discrepancies and clerical errors not vitiating claim - discrediting documentary evidence or incriminating material - Validity of rejecting SAD refund claims solely on account of mismatches or minor discrepancies in sales invoices and stamps despite production of Chartered Accountant's certificate with reconciliation statement. - HELD THAT: - The Tribunal held that where an assessee produces a Chartered Accountant's certificate together with a reconciliation statement as prescribed (and as envisaged by Board Circulars) the certificate furnishes a ledger/document-based scrutiny of the claim which ordinarily should be relied upon. A decision to disbelieve or discard such a certificate requires the Revenue to point to incriminating, reliable documentary material and to clearly spell out reasons for discrediting the certificate. Minor variations in grade description, clerical errors such as omission of a stamp, or other trivial discrepancies between sale invoices and Bills of Entry do not go to the root of the claim and are curable. In the absence of material showing substantive non-compliance (for example, fraud, misrepresentation, or proof that the goods sold were different or duty not paid), wholesale rejection of multiple refund claims on the basis of some invoice discrepancies is not justified. If serious evasion is suspected, the correct course is to conduct further inquiry (for instance, with buyers) to discredit the CA's certificate before denying the claim. The Tribunal applied these principles to set aside the impugned rejection orders and to allow the appeal with consequential relief. [Paras 4, 5, 7]

Impugned order rejecting the refund claims set aside; appeal allowed with consequential relief as per law.

Final Conclusion: Appeal allowed. The rejection of the SAD refund claims was set aside because the Chartered Accountant's certificate with reconciliation statement should have been relied upon unless discredited by incriminating documentary evidence; minor discrepancies and clerical errors do not justify wholesale denial. The matter is remediable in accordance with law and consequential relief granted.

Royalties and licence fees related to the imported goods - condition of sale - transaction value accepted under rule 3(3)(a) of CVR 2007 - Explanation to Rule 10 concerning post import processes - repacking and relabelling amounting to manufacture - postponing collection of duty to a later stage

Royalties and licence fees related to the imported goods - condition of sale - transaction value accepted under rule 3(3)(a) of CVR 2007 - Whether the royalty of 1% payable under the Trademark License Agreement is addable to the transaction value of imported MSG under Rule 10(1)(c)/(e) of CVR 2007 - HELD THAT: - The Tribunal examined the scope of Rule 10(1)(c) and (e) and the Explanation, and applied the principle that royalties/licence fees are includible in transaction value only if they relate to the imported goods and are required to be paid, directly or indirectly, as a condition of the sale of those goods. The Original Authority had accepted the declared transaction value under rule 3(3)(a). The Trademark License Agreement is between the licensee (Ajinomoto India) and the licensor (Ajinomoto Japan) and does not make payment of royalty a pre condition imposed by the foreign supplier (Ajinomoto Thailand) for the sale of imported MSG. The Tribunal relied on the Supreme Court's reasoning in Ferodo that pricing arrangements and the terms of the transfer/assistance agreements must be examined to establish any flow back or pricing adjustment in the guise of royalties; no such adjustment or backflow was established here. The Tribunal further held that the royalty relates to post import use of a trademark on repacked retail packs and not to a process required as a condition of import; postponing duty collection to a later domestic sale stage does not convert a post import trademark royalty into a condition of sale of the imported goods. On these bases the Tribunal concluded that revenue failed to establish that the royalty was a condition of sale of the imported goods and therefore it could not be added to the price actually paid or payable for the imported MSG under Rule 10. [Paras 6, 7, 10, 12, 17]

Royalty of 1% under the Trademark License Agreement is not addable to the invoice price of the imported MSG under Rule 10(1)(c)/(e) because it was not shown to be a condition of sale of the imported goods and the transaction value had been accepted.

Repacking and relabelling amounting to manufacture - postponing collection of duty to a later stage - Explanation to Rule 10 concerning post import processes - Whether repacking/affixation of trademark after customs clearance renders the royalty addable to the import value by operation of the Explanation to Rule 10 or because the activity is 'manufacture' - HELD THAT: - The Tribunal noted that repacking and relabelling may amount to "manufacture" for certain statutory purposes, but the Customs assessable value must be determined at the time and place of importation when the taxable event occurs. The Explanation to Rule 10 does not expand the Rule to treat all post import processes as creating a condition of sale unless the payment is demonstrably a prerequisite of the import transaction. Here the royalty was payable for use of the trademark on repacked retail goods sold domestically after clearance; there was no finding that the foreign supplier conditioned supply on payment of the royalty. Postponing collection of duty until domestic sale cannot convert a post import trademark royalty into an addable element of the price actually paid or payable at import. [Paras 11, 12, 13]

Repacking/relabelling and the Explanation to Rule 10 do not make the trademark royalty addable to the import value where the royalty is not a condition of sale at the time of import; the royalty relates to post import domestic use and cannot be included in the assessable value.

Admission of additional grounds and evidence - Whether the appellant's application to admit the correct Trademark License Agreement and to raise additional legal grounds should be permitted - HELD THAT: - The Tribunal observed that admission of additional evidence or grounds at the appellate stage is discretionary and permissible where the material sought to be admitted is directly material to the main issue and its admission is in the interest of justice. The correct Agreement in force during the relevant period bore directly on whether the royalty was a condition of sale of the imported goods. The Tribunal applied established principles permitting additional grounds/evidence that are material and not merely to fill gaps, and allowed the application to place the correct Agreement on record and to raise relevant points of law. [Paras 4, 5]

Application to admit the correct Trademark License Agreement and to raise additional legal grounds is allowed.

Final Conclusion: The impugned order insofar as it adds the 1% royalty to the invoice price of imported MSG is set aside. The appeal is allowed and the appellant is entitled to consequential relief as per law; the Tribunal admitted the correct Trademark License Agreement and permitted additional relevant legal grounds.

Correction of clerical errors under Section 154 - Provisional assessment and finalisation of provisional assessment - DRI investigation bearing on amendment of bill of entry - Reassessment, refund and the unjust enrichment test - Opportunity of hearing before finalisation

Correction of clerical errors under Section 154 - Provisional assessment and finalisation of provisional assessment - DRI investigation bearing on amendment of bill of entry - Opportunity of hearing before finalisation - Rectification of a mis declared value in the bill of entry (claimed clerical error in supplier's invoice) filed during provisional assessment was not finally adjudicated by the Tribunal but remitted to the Adjudication Authority for fresh consideration in the light of the DRI investigation; if no allegation of misdeclaration and no SCN, the amendment under Section 154 shall be considered and provisional assessment finalised accordingly. - HELD THAT: - The Tribunal noted that the imported goods had been cleared on provisional assessment because the DRI had undertaken an investigation into valuation. Although there was a long delay in seeking amendment, records relating to the provisional clearance were available to the Department and the amendment sought concerned the very issue under investigation. For these reasons the Tribunal set aside the impugned orders rejecting the amendment request and remitted the matter to the Adjudication Authority to consider the outcome of the DRI investigation. The Adjudication Authority is to ascertain whether any allegation of misdeclaration exists or whether a show cause notice has been issued; where there is no allegation and no SCN, the request for correction of the clerical error in the bill of entry (sought under Section 154) shall be considered and, if permissible, allowed, subject to the law on reassessment, refund and unjust enrichment. The Authority must provide an opportunity of hearing to the appellant and finalise the provisional assessment within three months from receipt of the Tribunal's order. [Paras 12, 13, 14]

Impugned orders set aside; matter remitted to Adjudication Authority to consider outcome of DRI investigation and, if no allegation of misdeclaration/SCN, to consider amendment under Section 154 and finalise provisional assessment within three months after hearing the appellant.

Final Conclusion: The Tribunal remitted the matter for fresh consideration by the Adjudication Authority in view of the pending/related DRI investigation and directed that, if no misdeclaration is established and no SCN issued, the claimed clerical correction in the bill of entry be considered (under Section 154) and the provisional assessment be finalised within three months after affording an opportunity of hearing.

Revocation of customs broker licence - forfeiture of security - imposition of penalty under Customs Broker Licensing Regulations - prohibition and suspension of customs broker licence - contravention of obligations under Regulation 10 of CBLR, 2018 - application of Regulation 14 and Regulation 18 of CBLR, 2018 - insufficiency of evidence and lack of application of judicial mind

Prohibition and suspension of customs broker licence - infructuousness of appeal - Appeal against the order continuing suspension (C/70439/2022) is infructuous by reason of subsequent revocation order - HELD THAT: - The Tribunal noted that a subsequent order revoking the customs broker licence was passed after the suspension-extension order which was the subject-matter of Appeal No. C/70439/2022. Consequently the continuation of suspension ceased to have practical effect and the appeal challenging that order had become infructuous. The Tribunal therefore dismissed Appeal No. C/70439/2022 as infructuous. [Paras 4, 5]

Appeal No. C/70439/2022 dismissed as infructuous.

Revocation of customs broker licence - contravention of obligations under Regulation 10 of CBLR, 2018 - application of Regulation 14 and Regulation 18 of CBLR, 2018 - insufficiency of evidence and lack of application of judicial mind - Validity of the revocation of licence, forfeiture order and penalty imposed on the customs broker (appeal C/70212/2023) - HELD THAT: - The Tribunal examined the impugned revocation and penalty order which recorded contraventions of Regulation 10(a),(b),(d),(e),(f),(k) and (n) of CBLR, 2018 and proceeded under Regulations 14 and 18. The Tribunal found that the impugned order largely reproduced the inquiry report without independent application of judicial mind. On the material placed on record the only firm fact established was that a bill of entry had been filed using the appellant's login credentials and that the consignment was subsequently found to be mis-declared. Beyond certain statements, no cogent evidence was produced to connect the appellant to the filing or to establish deliberate breach of the various duties in Regulation 10. The Tribunal observed absence of forensic examination of disputed documents, lack of independent proof of the alleged agreement or the authorization letter, and that the importer had dealt with another broker. In view of these deficiencies, the Tribunal concluded that the findings of contravention and resultant exercise of power under Regulation 14 and imposition of penalty under Regulation 18 were without adequate basis. [Paras 4]

Appeal No. C/70212/2023 allowed; impugned revocation and penalty set aside for lack of sufficient evidence and absence of proper application of mind.

Final Conclusion: The Tribunal dismissed the appeal against continuation of suspension as infructuous and allowed the appeal challenging revocation and penalty, holding that the revocation and penalty under CBLR, 2018 were not supported by cogent evidence or proper application of judicial mind; the revocation and penalty were set aside.

Refund not maintainable without assailing or modifying the assessment - refund claim cannot be founded on judgment in another assessee's case - IGST is a tax on supply and not a customs duty - IGST on import is leviable under IGST Act read with Customs Tariff Act and apportioned under Article 269A - interest is payable on delayed payment of IGST by virtue of provisions made applicable to IGST - section 20 of the IGST Act makes provisions of the CGST Act (including interest) applicable to IGST

Refund claim cannot be founded on judgment in another assessee's case - Claim for refund cannot be allowed merely on the basis of a judgment delivered in a different assessee's case - HELD THAT: - Refund proceedings are executionary in nature and do not adjudicate or alter mutual rights and liabilities between the Revenue and other assesses. A decision in one assessee's case does not automatically enlarge or reduce liabilities of similarly placed taxpayers. Consequently, an assessee cannot obtain refund merely by relying on a judicial decision delivered in another assessee's litigation without having its own assessment modified or set aside. [Paras 9]

Claim for refund based on another assessee's judgment is not maintainable

Refund not maintainable without assailing or modifying the assessment - Refund is not permissible where the assessee has not assailed or obtained modification of its own assessment (including self-assessment) - HELD THAT: - The ratio in ITC Ltd. establishes that a refund cannot be claimed unless the underlying assessment (including self-assessment) is assailed or modified. The appellants had cleared goods by self-assessment and subsequently voluntarily paid IGST and interest under section 28(1)(b). No show-cause notice or modification by the proper officer was assailed before any forum. Since the assessment has not been challenged or set aside, the appellants cannot seek refund of amounts paid pursuant to their own unappealed assessment. [Paras 10]

Refund claim fails because the appellants did not contest or obtain modification of their own assessments

IGST is a tax on supply and not a customs duty - IGST on import is leviable under IGST Act read with Customs Tariff Act and apportioned under Article 269A - The charge on supplies in the course of importation is IGST (a tax on supply), not an additional customs duty; IGST on imports is levied under the IGST Act read with the Customs Tariff Act and is to be apportioned as provided by law - HELD THAT: - The taxable event for customs duties is importation/exportation and such duties are credited under Major Head 0037 and form part of the divisible pool under Article 270. By contrast, GST (including IGST) is a tax on supply, with inter-state supply (including importation) being the taxable event for IGST. Section 5 of the IGST Act and section 3(7)/(8) of the Customs Tariff Act show that the levy on supplies in the course of importation is IGST charged under the IGST charging provisions and not a customs duty. Budget heads and constitutional provisions (Articles 246A and 269A) further support that IGST is accounted separately (Major Head 0008) and apportioned between Union and States. [Paras 11, 21, 22, 23, 27]

The levy on supply in the course of importation is IGST and not a customs duty or additional duty of customs

Interest is payable on delayed payment of IGST by virtue of provisions made applicable to IGST - section 20 of the IGST Act makes provisions of the CGST Act (including interest) applicable to IGST - Interest is chargeable on delayed payment of IGST on imports - HELD THAT: - Section 20 of the IGST Act makes certain provisions of the CGST Act applicable to IGST, including the provisions dealing with interest on delayed payment. Since IGST on imports is chargeable under section 5 of the IGST Act read with section 3 of the Customs Tariff Act, the legal regime that imposes interest on delayed payment of IGST for inter-state supplies within India equally applies to IGST payable on imports. The Bombay High Court decision relied upon by the appellants concerned pre GST additional customs duty and is inapplicable to post GST levy of IGST; no binding authority was shown holding that interest is not chargeable on delayed IGST. [Paras 28, 29, 30, 31]

Interest is payable on delayed payment of IGST on imports and therefore the interest paid by the appellants was correctly demanded/paid and not refundable

Final Conclusion: The appeals are dismissed. The adjudicating and appellate authorities were correct in rejecting the appellants' refund claims: the appellants cannot obtain refund based on another assessee's decision or without assailing their own assessments, IGST on imports is a tax on supply (not a customs duty), and interest is chargeable on delayed payment of IGST; accordingly the interest paid was not refundable.

Obligations of Customs Broker under CBLR, 2018 - Authorization from importer and scrutiny of authority letters - Acceptance of documents through intermediary/logistics operator - Employment and authorization of personnel including H card holders - Know Your Customer (KYC) obligations of Customs Broker - Due diligence and proactivity required of a Customs Broker - Liability for mis declaration arising from fabricated invoices - Proportionality of disciplinary action: revocation, forfeiture and penalty

Authorization from importer and scrutiny of authority letters - Acceptance of documents through intermediary/logistics operator - Due diligence and proactivity required of a Customs Broker - Whether the appellants violated Regulation 10(a) of CBLR, 2018 by failing to obtain/verify proper authorisation and by not being proactive in scrutinising documents received through an intermediary - HELD THAT: - The Tribunal found that the Bills of Entry contained descriptions matching the commercial invoices provided to the Customs Broker, and that mis declaration arose from fabricated parallel invoices prepared by third parties. Nevertheless, the mismatch between descriptions in the MAWB and the invoices should have alerted the Customs Broker when documents were received from a logistics intermediary. While accepting documents through an intermediary is not per se prohibited, a Customs Broker must exercise heightened scrutiny when authorization and supporting documents are provided indirectly, particularly in light of DGFT guidance on misuse of IECs. On this basis the Tribunal concluded that the appellants failed to act proactively in relation to Regulation 10(a) and were liable to a penal consequence limited to their failure to scrutinise the authority letter and documents obtained via an intermediary. [Paras 7, 14, 15]

Violation of Regulation 10(a) sustained to the extent of failure to be proactive in scrutinising documents received through an intermediary; a monetary penalty was imposed accordingly.

Employment and authorization of personnel including H card holders - Obligations of Customs Broker under CBLR, 2018 - Whether the appellants violated Regulation 10(b) of CBLR, 2018 by allowing unauthorized persons to transact business on their behalf - HELD THAT: - Regulatory provisions and Board/Central instructions permit assistance by employees and by persons holding appropriate cards; 'H' card holders may assist though they are not regular employees, and appointment of personnel is subject to statutory approval processes. On the facts, the person who assisted was an 'H' card holder and the primary employee was indisposed; therefore the conclusion that unauthorized persons handled clearance in breach of Regulation 10(b) was found contrary to the record and unsustainable. [Paras 8]

Violation of Regulation 10(b) not established; finding in the impugned order is set aside.

Obligations of Customs Broker under CBLR, 2018 - Liability for mis declaration and fabrication of invoices - Whether the appellants violated Regulation 10(d) of CBLR, 2018 by failing to advise the client to comply with law upon knowledge of mis declaration - HELD THAT: - The mis declaration was occasioned by fabricated invoices prepared by third parties and was uncovered by CIU intelligence. The Bills of Entry corresponded to the commercial invoices submitted by the importer and were assessed by Customs after queries. There was no evidence that the Customs Broker had knowledge of the fabrication or mis declaration at the time of filing such that they could have informed the DC/AC. Consequently the finding of a breach of Regulation 10(d) was unsustainable. [Paras 9]

Violation of Regulation 10(d) not established; finding in the impugned order is set aside.

Due diligence and proactivity required of a Customs Broker - Obligations of Customs Broker under CBLR, 2018 - Whether the appellants violated Regulation 10(e) of CBLR, 2018 by failing to exercise due diligence to ascertain correctness of information imparted to the client - HELD THAT: - Given that the Bills of Entry matched the commercial invoices provided and Customs queries were answered leading to assessment and out of charge, and since the mis declaration stemmed from fabricated invoices later revealed by investigation, there was no documentary basis to conclude that the Customs Broker withheld information or failed to exercise due diligence in the sense required by Regulation 10(e). The impugned finding on this head lacked factual support. [Paras 10]

Violation of Regulation 10(e) not established; finding in the impugned order is set aside.

Obligations of Customs Broker under CBLR, 2018 - Standard of efficiency and timeliness in clearance - Whether the appellants violated Regulation 10(m) of CBLR, 2018 by discharging duties without speed and efficiency or causing delay - HELD THAT: - The material shows prompt replies to Customs queries, timely payment of duty and out of charge within normal timelines. There was no evidence of undue delay or demonstrable inefficiency in handling clearance. Thus the conclusion that the appellants were gravely inefficient and breached Regulation 10(m) was not borne out by the record. [Paras 11]

Violation of Regulation 10(m) not established; finding in the impugned order is set aside.

Know Your Customer (KYC) obligations of Customs Broker - Obligations of Customs Broker under CBLR, 2018 - Whether the appellants violated Regulation 10(n) of CBLR, 2018 by failing to verify IEC, identity and existence of the importer at declared address - HELD THAT: - CBIC Circular and CBLR guidelines require verification by obtaining reliable documents and any two listed documents may suffice. The appellants produced KYC documents including IEC certificate, PAN, banker's certificate and GST registration. Precedents of the Tribunal and High Court recognise that a Customs Broker is not expected to act as an inspector and that submission of the prescribed documents satisfies the KYC obligation. On the facts, the appellants complied with the KYC norms and the finding of breach was factually incorrect. [Paras 12]

Violation of Regulation 10(n) not established; finding in the impugned order is set aside.

Final Conclusion: The appeal is allowed by modifying the impugned order: findings of violation under Regulations 10(b), 10(d), 10(e), 10(m) and 10(n) are set aside; a limited breach of Regulation 10(a) for lack of proactivity in scrutinising documents received via an intermediary is upheld and a proportionate penalty is imposed; the license revocation and forfeiture imposed in the impugned order are not sustained and the matter is disposed accordingly.

Protection under Section 218 of the Companies Act, 2013 - Directory nature of Rule 150(1) of the NCLT Rules, 2016 - Re-agitation and abuse of process by repetitive applications - Court's power to regulate proceedings and refuse to act on extraneous emails to Registry - Liberty to pursue service remedies and participation in selection process

Protection under Section 218 of the Companies Act, 2013 - Liberty to pursue service remedies and participation in selection process - Entitlement of the appellant to protection under Section 218 and to be reinstated as Secretary in consequence of CA-88/2023 and CA-34/2024 - HELD THAT: - The Tribunal and higher fora had earlier considered the identical contention that the appellant's removal fell within Section 218(1)(b) and declined relief; the Appellate Tribunal and the Supreme Court noted that the appellant's fixed three-year tenure from 12.04.2018 had elapsed and granted only liberty to participate in any fresh selection/seek employment from the administrator. The impugned CAs seeking protection under Section 218 and reappointment as Secretary are thus a re agitation of matters already decided. The NCLT's prior finding that Section 218 did not apply to the appellant's claimed service right and its direction that the appellant may approach the administrator remain operative; those earlier conclusions were not disturbed and are binding on the present applications. Consequently the substantive claim for protection under Section 218 and for reinstatement was not available to the appellant in the pending CAs. [Paras 14, 15, 16, 18, 34]

The appellant is not entitled to protection under Section 218 as sought in CA-88/2023 and CA-34/2024; the applications constitute re agitation of previously decided claims and no interference with the NCLT order is warranted.

Directory nature of Rule 150(1) of the NCLT Rules, 2016 - Validity of the NCLT order dated 05.04.2024 on the ground that it was pronounced beyond thirty days from final hearing in contravention of Rule 150(1) - HELD THAT: - Rule 150(1) requires that the Tribunal pronounce orders as soon as practicable and normally within thirty days of final hearing. However, the provision is not to be read as automatically rendering an order void if pronounced after thirty days. The court held that inordinate delay may justify appellate interference, but a delay to 45 days (as in the present case) does not per se vitiate the order. Further, Rule 150 applies to pronouncement after final hearing; the impugned applications were not finally decided on merits but adjourned, so strict attraction of Rule 150(1) was not made out. [Paras 22, 23, 24]

Delay in pronouncement did not vitiate the NCLT order; Rule 150(1) is directory and in any event was not strictly attracted as the applications were not finally disposed of.

Re-agitation and abuse of process by repetitive applications - Court's power to regulate proceedings and refuse to act on extraneous emails to Registry - Whether the NCLT erred in adjourning the appellant's applications to 03.10.2024 and in recording strong observations against the appellant for his conduct and extraneous emails - HELD THAT: - The NCLT's adjournment and adverse observations were grounded on the record: the appellant had filed numerous applications in the same company petition, pursued CA-440/2022 (seeking recall) extensively, and repeatedly raised extraneous issues and allegations by emails to the Registry which were unrelated to proper pleadings. The Tribunal found that CA-88/2023 and CA-34/2024 were being pursued after and alongside other applications, some of which (notably CA-440/2022) had consumed significant hearing time and were used by the appellant to delay adjudication. The Tribunal also properly rejected attempts to use Registry emails as a substitute for adjudicatory pleadings, and it lawfully exercised its control over proceedings by admonishing the appellant and adjourn ing the matters to a later date to prevent further derailment of the court's business. The observations in Paras 37-49 were based on material on record and a legitimate concern to protect the adjudicatory process from mudslinging and intimidation tactics. [Paras 40, 45, 46, 49, 50]

The Tribunal acted within its discretion in adjourning the applications and in recording the observations against the appellant; those observations were justified by the record and do not call for being struck off.

Final Conclusion: The appeal is dismissed. The NCLT order dated 05.04.2024 (adjournment of CA-88/2023 and CA-34/2024 to 03.10.2024 and attendant observations) is affirmed: Rule 150(1) delay did not vitiate the order; the appellant's claims under Section 218 are re agitated and not sustainable in view of earlier orders; and the Tribunal validly regulated its proceedings and rebuked misconduct and extraneous communications.

Limitation and curable defect in court-fee - burden of proof and preponderance of probabilities - pleadings as boundary for evidence - specimen signature card and cheque authorisation - bank's duty in honouring cheques and customer instructions - applicability of Foreign Exchange Regulation Act to NRE transactions

Limitation and curable defect in court-fee - Suit was filed within the period of limitation and the defect in court-fee was curable - HELD THAT: - The cause of action was the alleged unauthorised transfer on 23.04.1990 and the suit was filed on 22.04.1993, within three years. The shortfall in court-fee was made good within the period permitted after objections; under the court's discretion (Section 149 CPC) a deficiency in court-fee is curable and did not bar the suit. Accordingly the suit is maintainable and within limitation. [Paras 24, 26, 27, 28, 29]

The suit is within time and the defect in court-fee was cured; maintainable.

Specimen signature card and cheque authorisation - pleadings as boundary for evidence - burden of proof and preponderance of probabilities - Change of residential status of plaintiff no.2 was not proved nor shown to have been intimated to the bank; issue decided against plaintiffs - HELD THAT: - No admissible evidence was produced to show that plaintiff no.2 ceased to be an NRI on 17.04.1990 and informed the bank. The account opening form placed the onus on account-holders to intimate change of status. Subsequent conduct (issuance of cheques from the NRE account after the alleged change) and absence of documentary proof led to the conclusion that plaintiffs failed to discharge the burden to prove change of status and intimation to the bank. On preponderance of probabilities the issue is decided against the plaintiffs. [Paras 33, 34, 35, 36, 37]

There is no proof that plaintiff no.2 changed her residential status and informed the bank; issue decided for the defendant.

Pleadings as boundary for evidence - specimen signature card and cheque authorisation - bank's duty in honouring cheques and customer instructions - burden of proof and preponderance of probabilities - Effect of earlier consumer pleadings, allegation of blank cheque/forgery and legality of transfer were not proved by plaintiffs; issues decided against plaintiffs - HELD THAT: - Issues II, IV and V were determined on the preponderance of probabilities and on the plaintiffs' failure to discharge the onus. The plaintiffs introduced key contentions (signature mismatch, existence of single specimen signature card, and that instructions on the cheque reverse were not given by drawer) only at evidence-stage and relied on materials beyond the pleadings; such afterthoughts cannot be relied upon. Plaintiffs did not produce handwriting or expert evidence, did not send the cheque for forensic comparison, and admitted continued dealings with the bank (including issuing further cheques and opening accounts). The defendant produced evidence of cheques signed as 'R. Murti' and contemporaneous communications authorising the transfer. Considering inconsistencies in the plaintiffs' earlier consumer complaint and absence of clinching proof, the court found plaintiffs failed to prove that the transfer was unauthorised or that the bank wrote instructions on the reverse of the cheque. [Paras 75, 76, 84, 85, 86]

The pleas before the NCDRC, the claim of a blank/forged cheque and that the transfer was unauthorised were not established; issues decided for the defendant.

Applicability of Foreign Exchange Regulation Act to NRE transactions - burden of proof and preponderance of probabilities - No case established that the transfer contravened FERA; issue decided against plaintiffs - HELD THAT: - Plaintiffs pleaded that NRE funds could not be invested without RBI permission under section 8 of FERA, but led no focussed evidence or argument to show the transfer fell within FERA's prohibitions. The transaction occurred in Indian rupees at Hyderabad and there was no material to demonstrate contravention of FERA. FERA is a self-contained code with specific authorities and procedures; no complaint under FERA was made. On the record, the court found no basis to hold the transfer was hit by FERA. [Paras 90, 91, 92, 93, 94]

There is no proof that the transfer contravened FERA; issue decided for the defendant.

Burden of proof and preponderance of probabilities - pleadings as boundary for evidence - Plaintiffs are not entitled to any recovery, interest or relief; suit dismissed - HELD THAT: - Given findings on authorisation, signature issues, failure to prove forgery or that bank alone was at fault, and absence of proof under FERA, plaintiffs failed to establish entitlement to any amount or interest. Consequential reliefs were therefore denied and the suit was dismissed along with pending applications. [Paras 96, 97]

Plaintiffs are not entitled to recovery or interest; suit dismissed.

Final Conclusion: On the evidence and on preponderance of probabilities the plaintiffs failed to discharge the onus on key contentions (change of residential status, forgery/unauthorised encashment, contravention of FERA); the suit is within time but all substantive issues are decided against the plaintiffs and the suit is dismissed.

Provisional attachment and confirmation under Section 8 - possession of attached or frozen property under Section 8(4) - remittance subject to trial under Section 8(6) - conflicting directions to a bank when multiple enforcement communications exist

Conflicting directions to a bank when multiple enforcement communications exist - provisional attachment and confirmation under Section 8 - possession of attached or frozen property under Section 8(4) - Direction to the bank to make a demand draft of the frozen amount in favour of the Joint Director, Enforcement Directorate, and to hand it over was to be complied with. - HELD THAT: - The Court noted that the account of the company had been placed under debit freeze pursuant to enforcement communications and that the Adjudicating Authority had passed an order under Section 8(3) confirming the provisional attachment. Having recorded that Respondent Nos.1 and 2 expressed no objection to handing over the frozen funds to Respondent No.3, and in view of the statutory mandate that upon confirmation the Director or authorized officer shall forthwith take possession of attached or frozen property, the Court directed compliance with the communication dated 12.04.2024. The Bank was granted seven days to effect the direction contained therein. [Paras 7, 8, 9]

Bank directed to comply with the communication dated 12.04.2024 and hand over the frozen amount to Respondent No.3 within seven days.

Remittance subject to trial under Section 8(6) - provisional attachment and confirmation under Section 8 - Effect of remittance: funds remitted to the Enforcement Directorate would remain subject to trial and the Court's directions did not amount to confirming or adjudicating the Adjudicating Authority's order. - HELD THAT: - The Court expressly clarified that the amount to be remitted by the Bank to Respondent No.3 shall remain subject to the trial as provided by Section 8(6) of the Act of 2002. Further, the observations and directions made by the Court were confined to resolving the present conflict of instructions and were not an exercise of adjudication or confirmation of the Adjudicating Authority's order. [Paras 10]

Remittance to the Directorate subject to trial; Court's directions do not constitute confirmation or adjudication of the Adjudicating Authority's order.

Final Conclusion: Writ petition disposed of by directing the petitioner Bank to remit the frozen balance to the Enforcement Directorate in terms of the communication dated 12.04.2024 within seven days; such remittance is subject to trial under Section 8(6) and the Court's directions do not amount to confirming the Adjudicating Authority's order.

Business Support Service - Legal Consultancy Service - classification and taxability of services - retrospective application of amended definition - reverse charge mechanism - invocation of extended period of limitation - wilful suppression

Business Support Service - Legal Consultancy Service - classification and taxability of services - retrospective application of amended definition - Whether services rendered by foreign professional law firms for preparation and filing of patent applications are taxable as Business Support Service or as Legal Consultancy Service for the disputed period - HELD THAT: - The Tribunal found that the services supplied to the appellant were professional patent-related services and not the outsourced operational/administrative support envisaged by the definition of Business Support Service applicable during the disputed period. The amended inclusive wording - referring to "operational or administrative assistance in any manner" - was inserted only with effect from 1.5.2011 and could not be applied retrospectively. The Board's TRU clarification and the nature of the services (techno-legal work of drafting specifications, claims and ancillary patent documentation) indicated that they fall within the ambit of legal/professional services. The department had itself accepted service tax payments under Legal Consultancy Service from 01.09.2009. Applying the principle that a taxing entry must have a proximate relation to the subject-matter of the levy, the Tribunal held that classification under Business Support Service for the disputed period was incorrect and set aside the impugned classification. [Paras 7]

Services for patent application were not taxable as Business Support Service for the disputed period; they fall within Legal Consultancy Service and cannot be taxed retrospectively as BSS.

Reverse charge mechanism - classification and taxability of services - Whether the appellant is liable to pay service tax under the reverse charge mechanism in the circumstances of the case - HELD THAT: - The Tribunal observed that since the primary question of characterization (Business Support Service versus Legal Consultancy Service) was decided in favour of the appellant for the disputed period, the question of liability under the reverse charge mechanism became academic. The Tribunal recorded that there was no denial that reverse charge provisions exist, but because the services were not held taxable as BSS for the period in question, reverse charge need not be applied as a consequence of the primary classification. [Paras 8]

Reverse charge liability is academic once the services are held not taxable as Business Support Service for the disputed period.

Invocation of extended period of limitation - wilful suppression - Whether invocation of the extended period of limitation and imposition of penalties was justified on the record - HELD THAT: - The Tribunal noted that the appellant had regularly discharged service tax on other services and filed ST-3 returns; there was nothing on record to show wilful suppression or misstatement of facts. Absent any finding or material establishing mala fide conduct or positive acts of suppression, invocation of the extended period and penalties was not justified. Relying on settled principles that mere failure to declare does not constitute wilful suppression without positive concealment, the Tribunal held that the conditions for extending limitation and imposing penalties were not satisfied in this case. [Paras 9, 10]

Invocation of the extended period of limitation and penalties is not justified and is set aside for the relevant period.

Final Conclusion: The appeal is allowed in part: the demand of service tax, interest and penalties for the period up to 31.08.2009 is set aside on the ground that the services in question are legal/patent services and not Business Support Services for the disputed period; service tax from 01.09.2009 (when Legal Consultancy Service was brought within the taxable net) is upheld.

Taxability of revenue-sharing arrangements - joint venture / association of persons as recipient - support service of business or commerce - principal-to-principal transaction - business support service versus core activity - renting of immovable property - negative list regime - reliance on departmental circular

Taxability of revenue-sharing arrangements - joint venture / association of persons as recipient - support service of business or commerce - principal-to-principal transaction - Revenue-sharing arrangements between an exhibitor and distributor do not, by virtue of revenue sharing alone, convert the transaction into a taxable service provided to a newly conceived joint venture/AOP and do not automatically render the exhibitor liable to service tax as provider of support service of business or commerce. - HELD THAT: - The Tribunal examined the contractual structure and the legal doctrine distinguishing a true joint venture/partnership from mere revenue-sharing arrangements. Drawing upon precedents, it held that where parties act as coventurers/partners in a common enterprise they do not stand in a principal-client/service-provider relationship vis-a -vis the joint venture; contributions of partners enter a common pool and lack the quid pro quo necessary for a taxable service. The adjudicating authority's reliance on a departmental circular to brand the box office (or part thereof) as an independent association of persons receiving services from the exhibitor was misplaced. The Tribunal observed that revenue sharing per se does not establish that the exhibitor rendered a taxable business-support service to a separate joint venture entity, particularly where the agreements confer screening rights on the exhibitor and payments flow from the exhibitor to the distributor rather than vice versa. Prior circular guidance that screening is not a taxable service except in specified rent/lease circumstances supports this conclusion. The decision in related authorities, affirmed by the Supreme Court in the cited appeal, further confirms that such revenue-sharing arrangements are not taxable merely by reason of sharing of takings. [Paras 5, 8, 11, 13, 14]

Demand of service tax by treating the arrangement as taxable service through creation of a joint venture/AOP is unsustainable and set aside.

Reliance on departmental circular - business support service versus core activity - negative list regime - The adjudicating authority erred in relying on the 2011 CBEC circular to confirm demands and penalties for the periods in question without applying the established test of service and without regard to earlier clarificatory guidance that screening is not a business support service where the exhibitor screens films on its own account. - HELD THAT: - The Tribunal noted that the 2009 circular clarified that screening of a movie is an activity on its own and not a generic business support service, except where the arrangement is a lease/rent. The 2011 circular's proposition that a new entity may emerge in certain revenue-sharing arrangements cannot be mechanically applied to hold the exhibitor liable without examining whether the contractual matrix exhibits features of a joint venture (common enterprise, joint control, sharing of risks and rewards) and whether there is a service relationship with a distinct person. The impugned order treated amounts as "taxable income" rather than value of taxable service and did not subject each arrangement to the statutory classification test under the Finance Act. In light of authoritative Tribunal decisions and subsequent judicial disposition, invoking the 2011 circular to sustain demands and penalties for the period 2009-10 to 2012-13 was legally unsustainable. [Paras 5, 6, 12, 13, 14]

Confirmation of demands and imposition of penalties based on the 2011 circular are set aside for lack of legal basis.

Final Conclusion: The appeal is allowed; the demands and penalties levied upon the appellant for the periods 2009-10 to 2012-13, premised on treating revenue-sharing arrangements as taxable services through creation of an AOP/joint venture and on reliance upon the 2011 CBEC circular, are without legal basis and are set aside.

Eligibility for input service credit / Cenvat credit - remand for redetermination of claimed adjustments - applicability of Rule 2A(ii)(a) of Service Tax (Determination of Value) Rules, 2006 - limitation on confirming demand on grounds not disclosed in show-cause notice - invocation of extended period of limitation - cum-tax / net-receipt adjustment in valuation of taxable service

Eligibility for input service credit / Cenvat credit - remand for redetermination of claimed adjustments - Adjustment/allowance of input service credit claimed by the appellant for the years 2014-15, 2016-17 and 2017-18 (up to June, 2017) was not finally adjudicated and requires re-determination by Commissioner (Appeals). - HELD THAT: - The Tribunal found that Commissioner (Appeals) allowed input service credit for 2015-16 on the basis of submitted invoices and Form 26AS but denied similar claims for 2014-15, 2016-17 and 2017-18 without adequate, detailed reasons. Given the absence of clear reasoning why documentary evidence for those years was insufficient and in view of the appellant's contention that supporting documents were produced, the matter of eligibility and extent of adjustment for those years must be reexamined. The Appellate Authority is to consider the documents that the appellant may produce and give a speaking order on entitlement, subject also to statutory constraints such as the time within which credit is to be taken under the relevant rules. [Paras 20, 31]

Issue remanded to Commissioner (Appeals) for fresh determination of entitlement and extent of adjustment/credit for 2014-15, 2016-17 and 2017-18 (up to June, 2017).

Applicability of Rule 2A(ii)(a) of Service Tax (Determination of Value) Rules, 2006 - limitation on confirming demand on grounds not disclosed in show-cause notice - Confirmation of demand based on application of Rule 2A(ii)(a) (i.e., treating abatement as 60% rather than 67%) could not be sustained because that valuation rule was not invoked in the show-cause notice as the basis for demand. - HELD THAT: - Although Commissioner (Appeals) applied Rule 2A(ii)(a) to deny the appellant's claim of 67% abatement and upheld a demand of Rs.47,683/-, the Tribunal held that the adjudication cannot be sustained where the Grounds relied upon in confirming the demand were not disclosed in the SCN. The Adjudicating Authority itself had noted that Notification No.26/2012-ST did not expressly cover the appellant's service and valuation required reference to the valuation rules; however, since Rule 2A(ii)(a) was not the basis pleaded in the SCN, it could not be invoked later to confirm the demand. [Paras 22, 23, 31]

Demand of Rs.47,683/- confirmed by Commissioner (Appeals) on the basis of Rule 2A(ii)(a) set aside.

Invocation of extended period of limitation - material facts within departmental knowledge - Extended period of limitation for recovery of service tax was appropriately invoked in the facts of the case and the finding of the Commissioner (Appeals) in this regard is upheld. - HELD THAT: - The Tribunal examined whether material facts underlying the demand were within the knowledge of the department during the relevant period. It found that discrepancies between P&L account and ST3 returns were detected only upon reconciliation and further inquiry after the appellant furnished documents in 2020; those documents were not available to the department earlier. The appellant's practice of reporting only taxable value in ST3 returns did not, on the record, amount to disclosure of the relevant facts to preclude extended period. Decisions relied upon by the appellant were distinguished on their facts. Accordingly, the invocation of the extended period was held to be justified. [Paras 24, 25, 29]

Finding upholding applicability of extended period sustained; no interference with Commissioner (Appeals) on this point.

Cum-tax / net-receipt adjustment in valuation of taxable service - Commissioner (Appeals)'s recalculation giving benefit of cum-tax/net-receipt adjustment was accepted and requires no interference. - HELD THAT: - The Commissioner (Appeals) adjusted the computation of taxable value by allowing cum-tax benefit and recalculated the confirmed service tax liability (reducing the previously computed short-payment). The Tribunal found no reason to disturb this recalculation, noting that relief already granted by Commissioner (Appeals) on this ground was not challenged by revenue and the appellant's principal challenge on this point was addressed by the appellate order. [Paras 19, 21]

Recalculation and cum-tax benefit allowed by Commissioner (Appeals) sustained.

Final Conclusion: Appeal partly allowed. The Tribunal upheld the Commissioner (Appeals) order except that (a) the demand confirmed by applying Rule 2A(ii)(a) (abatement issue) was set aside because that ground was not pleaded in the SCN, and (b) the question of entitlement to adjustment/credit for 2014-15, 2016-17 and 2017-18 (up to June, 2017) is remitted to Commissioner (Appeals) for fresh, reasoned consideration; extended period invocation and cum-tax recalculation findings are upheld.

Summary order. Appeal disposed of on account of low tax effect (impact less than Rs.2 Crores). Question of law, if any, left open for consideration in another appropriate case. Pending applications, if any, disposed of.

Cenvat Credit - Input Service - place of removal - use of port services for export as input services - Rule 2(1) of the Cenvat Credit Rules, 2004 - extended period of limitation

Cenvat Credit - Input Service - place of removal - use of port services for export as input services - Rule 2(1) of the Cenvat Credit Rules, 2004 - Respondent entitled to Cenvat credit of service tax paid on port-related services received for export as "input service". - HELD THAT: - The Tribunal held that the services rendered at the port for purposes of export of finished goods are used in relation to clearance of final product up to the place of removal, which for exports is the port. Applying the reasoning in the cited decisions (including the Gujarat High Court's decision in Inductotherm India Pvt. Ltd.), and taking into account the CBEC Circular recognising the port/ICD/CFS as place of removal for exports, the Tribunal concluded that cargo handling and other port services utilised up to the point of export fall within the wide expression of "input service" under Rule 2(1) of the Cenvat Credit Rules, 2004. The present case was found to be no longer res-integra in view of the respondent's own unit decision by this Tribunal and relevant precedents; accordingly the impugned order dropping proceedings was held to be correct and was upheld. [Paras 5, 6]

Impugned order upheld; respondent entitled to Cenvat credit of the port services in question.

Final Conclusion: The Revenue's appeal is dismissed and the adjudicating authority's order dropping the proceedings is upheld, the respondent being entitled to Cenvat credit of the service tax paid on the port services used for export under Rule 2(1) of the Cenvat Credit Rules, 2004.

Provisional assessment under Rule 7 - interest payable under Rule 7(4) of the Central Excise Rules, 2002 - liability for interest under Section 11AB - netting of excess provisional duty against duty short-paid - remand to adjudicating authority for computation of interest

Provisional assessment under Rule 7 - interest payable under Rule 7(4) of the Central Excise Rules, 2002 - liability for interest under Section 11AB - netting of excess provisional duty against duty short-paid - Whether interest is leviable on finalisation of provisional assessment under Rule 7(4) and if netting of excess provisional duty obviates interest liability - HELD THAT: - The Tribunal accepted the legal principle laid down by the Hon'ble Supreme Court in Steel Authority of India Ltd. that on finalisation of provisional assessment the assessee is liable to pay interest under Rule 7(4) from the first day of the month succeeding the month for which the amount is determined, the date of removal being the reference. That principle has been subsequently endorsed by the Supreme Court in later authority. The appellant's contention that interest must be computed only on the net difference after adjusting any excess provisional duty paid was considered in light of the facts here: the appellant had paid differential duty prior to finalisation and undertook not to claim refunds of excess duty (which had been taken as credit by the related unit). Given those facts, the question of interest computation requires application of the governing principle from the Supreme Court decisions to the factual matrix of payments, adjustments and undertakings made by the appellant. The Tribunal distinguished the earlier Karnataka High Court decision relied upon by the appellant as being in a different factual context, and observed that the statutory scheme and Rule 7(4) mandate interest consequences upon finalisation of provisional assessment. However, because the appellant had already discharged differential duty and there were facts about excess payments and undertakings, the Tribunal found it necessary to remit the matter to the adjudicating authority for computation of interest and for giving the appellant a reasonable opportunity to present its case on netting/adjustment issues. [Paras 6, 8, 9, 10, 11]

Interest liability on finalisation of provisional assessment is governed by Rule 7(4) and the Supreme Court precedent; computation of interest in the present factual matrix (including netting/undertaking issues) is remanded to the adjudicating authority for calculation and opportunity to the appellant.

Remand to adjudicating authority for computation of interest - Whether the matter should be remanded for calculation of interest and consequential proceedings - HELD THAT: - On the admitted facts that differential duty was paid prior to finalisation and that the appellant had undertaken not to claim refunds (and excess payments had been utilized as credit by the related unit), the Tribunal did not decide a final quantified interest amount. Instead, relying on the settled legal position that interest follows finalisation under Rule 7(4), the Tribunal directed remand to the adjudicating authority to compute interest in conformity with the governing Supreme Court rulings, permitting the appellant a reasonable opportunity to present its case on adjustments, netting and the effect of prior payments or undertakings. [Paras 10, 11]

The impugned orders are modified and the appeals are disposed of by remanding the matter to the adjudicating authority for calculation of interest and for affording the appellant a reasonable opportunity to be heard.

Final Conclusion: Appeals disposed of by modifying impugned orders and remanding the matters to the adjudicating authority for computation of interest under Rule 7(4) in accordance with Supreme Court precedent, with a direction to afford the appellant a reasonable opportunity to present its case on adjustments/netting.

Application under Section 2A of the Industrial Disputes Act, 1947 - appropriate Government's power to refer an industrial dispute - administrative function versus adjudicatory function in making reference - inadmissibility of deciding merits while exercising power to make reference - right under Section 25H of the Industrial Disputes Act, 1947 - remand to appropriate Government for making reference

Appropriate Government's power to refer an industrial dispute - administrative function versus adjudicatory function in making reference - inadmissibility of deciding merits while exercising power to make reference - Validity of the order of the appropriate Government refusing to make reference on the ground that the petitioner had worked only for 85 days and lacked documentary proof of continued employment - HELD THAT: - The Court held that while the appropriate Government, when considering whether to make a reference, may form an opinion as to whether an industrial dispute "exists or is apprehended", it exercises an administrative function and is not entitled to adjudicate the dispute on merits. The authority cannot determine whether the person raising the dispute is a workman or decide substantive questions which are to be adjudicated by the Labour Court or Industrial Tribunal after reference. The impugned refusal to make reference based on the technical finding that the petitioner had worked for only 85 days and the absence of documentary evidence improperly ventured into merits and was therefore unsustainable. [Paras 6, 8]

The refusal to make reference dated 05.07.2010 is legally unsustainable insofar as it adjudicated merits (the 85-day finding and absence of documentary proof) and cannot stand.

Application under Section 2A of the Industrial Disputes Act, 1947 - right under Section 25H of the Industrial Disputes Act, 1947 - remand to appropriate Government for making reference - Relief to be granted in view of the unsustainable refusal and the appropriate course of action - HELD THAT: - The Court distinguished precedents relied upon by the respondents as inapposite to the present controversy, noting that the matter raised Section 25H and related entitlement which requires adjudication by the competent Labour Court/Industrial Tribunal. Having quashed the impugned order for encroaching upon merits, the Court remitted the matter to the appropriate Government with a direction to make reference so that the Labour Court/Industrial Tribunal may decide the issues after affording both parties opportunity of hearing. [Paras 9, 10]

Impugned order dated 05.07.2010 quashed and set aside; matter remitted to the appropriate Government for making reference of the dispute.

Final Conclusion: Impugned administrative order refusing to make reference was quashed for impermissibly adjudicating merits; matter remitted to the appropriate Government to make reference so that the Labour Court/Industrial Tribunal may decide the dispute after due opportunity to the parties.

Admissibility of statement under Section 67 of the NDPS Act - prohibition on possession and transportation under Section 8(c) of the NDPS Act - punishment under Section 22(c) of the NDPS Act for commercial quantity - punishment for abetment and criminal conspiracy under Section 29 of the NDPS Act - requirement of proof of supply or participation in conspiracy to sustain conviction for supplying psychotropic substance - adverse inference for prosecution withholding a material witness

Requirement of proof of supply or participation in conspiracy to sustain conviction for supplying psychotropic substance - punishment under Section 22(c) of the NDPS Act for commercial quantity - prohibition on possession and transportation under Section 8(c) of the NDPS Act - Whether the conviction of the appellant under Section 22(c) of the NDPS Act could be sustained in absence of evidence that the contraband was supplied by the appellant or that he participated in a criminal conspiracy. - HELD THAT: - The consignment containing Fortwin injections was booked by accused no.1 and therefore found to be transporting the psychotropic substance in contravention of Section 8(c). There is no allegation or evidence that the appellant transported the consignment. The prosecution must establish that the contraband was supplied by the appellant or that he was a party to a criminal conspiracy to attract Section 22(c). The only material relied upon by the courts below to connect the appellant to the supply were: (a) statements recorded under Section 67; and (b) testimony of accused no.3 (examined as a defence witness) purportedly showing invoices. There is no evidence that accused no.3 procured the specific contraband and handed it over to the appellant or to accused no.1. There is no recovery from the appellant, and no evidence of any agreement or overt act establishing conspiracy. In these circumstances the prosecution has not proved the offences under Section 22(c) beyond reasonable doubt and the conviction cannot be sustained. [Paras 7, 8, 11, 14]

Appellant's conviction under Section 22(c) set aside and appellant acquitted.

Admissibility of statement under Section 67 of the NDPS Act - adverse inference for prosecution withholding a material witness - Whether the appellant's statement under Section 67 of the NDPS Act could be read in evidence and the consequence of the prosecution withholding the transporter as a witness. - HELD THAT: - This Court in Tofan Singh held that statements recorded under Section 67 of the NDPS Act cannot be used as confessional evidence in trial; officers under Section 53 are 'police officers' within Section 25 of the Evidence Act, and confessional statements to them are barred. Accordingly the appellant's Section 67 statement is not admissible and cannot be relied upon to convict. Further, the High Court noted that the person who allegedly transported the contraband from accused no.3 to the appellant was not produced by the prosecution; that witness was material, and by withholding his evidence an adverse inference must be drawn against the prosecution. These factors further undermine reliance on the Section 67 statement and the prosecution case. [Paras 9, 10]

Section 67 statement inadmissible for conviction; adverse inference drawn for withholding material witness, further weakening the prosecution case.

Final Conclusion: Conviction of the appellant for offences under the NDPS Act cannot be sustained in absence of legal evidence that he supplied the contraband or participated in a conspiracy, and because his statement under Section 67 is inadmissible; impugned judgments set aside and appellant acquitted.

Right to make an effective representation under Article 22(5) of the Constitution - obligation to furnish materials relied upon in a detention order - preventive detention and non supply of electronic evidence (WhatsApp chats) - binding effect of coordinate bench decisions and judicial discipline - duty to refer to a larger Bench if a coordinate Bench decision is doubted

Preventive detention and non supply of electronic evidence (WhatsApp chats) - right to make an effective representation under Article 22(5) of the Constitution - obligation to furnish materials relied upon in a detention order - Whether the detention order was vitiated by non supply of WhatsApp chats relied upon by the detaining authority - HELD THAT: - The Court noted that the Coordinate Bench of the Kerala High Court, on identical grounds and relying on the same material, had held that non supply of the WhatsApp chats (electronic material relied upon in the detention order) had vitally affected the detenus' right to make an effective representation under Article 22(5). The present detenue had similarly requested copies of the WhatsApp chats which were relied upon in the grounds of detention but were not furnished. The Court reiterated the principle that where materials relied upon in a detention order are not supplied on request, the detenue's ability to make an effective representation is impaired and the detention becomes vulnerable on that ground. Applying that principle to the present facts, and having regard to the identity of grounds and material, the Court held that the detention order and its confirmation were vitiated by non supply of the electronic material. [Paras 15, 16, 17]

Detention order quashed for non supply of WhatsApp chats which impaired the detenue's right to make an effective representation.

Binding effect of coordinate bench decisions and judicial discipline - duty to refer to a larger Bench if a coordinate Bench decision is doubted - Whether a Division Bench of the same High Court could refuse to follow a coordinate Bench's decision on identical facts without referring the matter to a larger Bench - HELD THAT: - The Court emphasised the constitutional imperative of judicial discipline and the need for predictability; where a coordinate Bench has rendered a considered view on identical grounds and material, another Division Bench of the same High Court ought to follow that view. If the later Bench considers the earlier coordinate Bench's decision to be incorrect in law, the proper course is to refer the question to a larger Bench. The Court found that the Division Bench which dismissed the appellant's petition erred in declining to follow the coordinate Bench's decision without referring the matter to a larger Bench, particularly because the grounds of detention and the material were identical. [Paras 15, 16, 17, 18]

A Division Bench must follow a coordinate Bench on identical issues; disagreement with such a decision requires reference to a larger Bench rather than disregarding it.

Final Conclusion: Appeal allowed; order of detention dated 24th August 2021 and its confirmation dated 24th May 2022 are quashed and set aside.

Presumption under Section 139 of the Negotiable Instruments Act - presumption as to consideration under Section 118 of the Negotiable Instruments Act - evidentiary burden on the accused to rebut statutory presumption - standard of proof by preponderance of probabilities for rebuttal - statement recorded under Section 313 CrPC is not substantive defence evidence - quasi criminal nature of proceedings under Section 138 of the Negotiable Instruments Act

Presumption under Section 139 of the Negotiable Instruments Act - presumption as to consideration under Section 118 of the Negotiable Instruments Act - evidentiary burden on the accused to rebut statutory presumption - Effect of admission of signature on cheque and consequent shifting of evidentiary burden under Sections 118 and 139 NI Act - HELD THAT: - The Court held that admission of the signature on the cheque activates the presumptions under Sections 118(a) and 139 of the NI Act, entailing a presumption that the cheque was issued for consideration and for discharge of a debt or liability (para 11, 15.5). Once those presumptions arise, the evidential burden shifts to the accused to raise a probable defence; the accused must rebut the presumption on a preponderance of probabilities (paras 12, 15.4, 15.3). The Trial Court erred by failing to proceed on that footing and instead required the complainant to prove the existence of the loan before considering whether the accused had rebutted the statutory presumption (paras 14, 19). Consequently the Trial Court misconstrued the nature and effect of the presumptions and misallocated the burden of proof (paras 14, 15.1, 15.3). [Paras 11, 12, 14, 15]

Admission of the signature invoked presumptions under Sections 118 and 139; the Trial Court erred in not first testing whether the accused had rebutted those presumptions and in shifting the burden onto the complainant.

Statement recorded under Section 313 CrPC is not substantive defence evidence - standard of proof by preponderance of probabilities for rebuttal - Whether a mere denial in statement under Section 313 CrPC, without leading defence evidence, suffices to rebut the presumption under Section 139 - HELD THAT: - The Court reiterated settled law that a statement under Section 313 CrPC is not substantive defence evidence and, in absence of defence evidence, cannot be treated as discharging the accused's evidentiary burden to rebut the presumption under Section 139 (paras 15.3, 15.4, 16). Authorities explain that the accused may rebut by adducing direct or circumstantial evidence or showing facts making non existence of debt probable; mere denial or pleading not guilty is insufficient (paras 15.4, 15.5, 15.6). Applying these principles, the Bench found that respondent did not lead defence evidence and therefore could not be held to have rebutted the statutory presumption (paras 16, 17). [Paras 12, 15, 16]

Statement under Section 313, without defence evidence, does not rebut the presumption under Section 139; the accused failed to discharge the evidentiary burden.

Presumption under Section 139 of the Negotiable Instruments Act - quasi criminal nature of proceedings under Section 138 of the Negotiable Instruments Act - Appropriate remedy after finding that Trial Court misapplied the presumptions and burden of proof - HELD THAT: - Having identified the Trial Court's fundamental error in approach-dissecting the complainant's case instead of first determining whether the accused had rebutted the presumption-the High Court set aside the impugned acquittal and allowed the appeal (paras 19-21). The Court did not convict on merits; instead it remitted the matter for further proceedings in the Trial Court so that the correct evidentiary approach, beginning with the presumption under Section 139 and the accused's burden to rebut, may be applied afresh (paras 19-21). [Paras 19, 20, 21]

Impugned order set aside; matter remitted to Trial Court for further proceedings applying the correct legal approach regarding the statutory presumptions and burden.

Final Conclusion: Appeal allowed; the acquittal is set aside because the Trial Court misapplied the statutory presumptions under Sections 118 and 139 NI Act and misplaced the burden of proof. The matter is remitted to the Trial Court for further proceedings in accordance with the law regarding the presumption and the accused's evidentiary burden.

Grant of bail - right to speedy trial - custodial period and trial delay - Section 37 NDPS Act - conditions of bail

Grant of bail - custodial period and trial delay - Section 37 NDPS Act - conditions of bail - right to speedy trial - Petitioner entitled to bail notwithstanding charges under NDPS Act, having regard to length of custody and pace of trial - HELD THAT: - The Court, while not commenting on merits, considered the duration of petitioner's incarceration and the stage and likely duration of the trial. The status report and prosecution narrative showed recovery of Lomotil and Alprax and links to Deep Medicos and co-accused, but the petitioner had been in custody for a prolonged period and the trial was unlikely to conclude in the near future. The Court noted precedents where prolonged custody and slow progress of trial under the NDPS regime justified bail, and observed that the rigours of Section 37 of the NDPS Act cannot indefinitely override the constitutional guarantee of an expeditious trial. On these grounds, balancing the custodial period, absence of attributable delay by the petitioner, and the interests of justice, the Court exercised its discretion under Section 439 Cr.P.C. to enlarge the petitioner on bail subject to specified conditions to ensure his presence and non-interference with the investigation/trial. [Paras 34, 35, 36, 37]

Petition allowed; petitioner enlarged on bail on furnishing personal bond with two sureties and subject to enumerated and such other conditions as Trial Court may impose; bail liable to cancellation on violation.

Final Conclusion: Bail granted to the petitioner in NDPS prosecution on account of prolonged custody and slow trial progress, subject to bond, sureties and specified conditions; observations confined to bail disposal and do not affect merits of the case.