TaxTMI Updates e-Newsletter
Aug 30,2024

Cancellation of registration for non-filing of returns - restoration of registration subject to compliance - pragmatic approach to protect revenue interest - activation of portal to enable compliance

Cancellation of registration for non-filing of returns - restoration of registration subject to compliance - pragmatic approach to protect revenue interest - Whether the order cancelling the petitioner's registration should be set aside and the registration restored, notwithstanding failure to file returns for a continuous period of six months - HELD THAT: - The Court recorded that the registration was cancelled because the petitioner failed to file returns for a continuous period of six months and that the petitioner, a small businessman, claimed pandemic-related reverses but there was no allegation that he adopted dubious processes to evade tax. Noting that suspension or revocation of registration may be counterproductive to revenue recovery because it prevents the assessee from issuing invoices and thereby impedes tax recovery, the Court adopted a pragmatic approach. The petitioner, through counsel, undertook to file all outstanding returns for the period of default and to pay tax, interest, fine and penalty as may be found due. Having regard to these undertakings and the Division Bench directions cited, the Court set aside the cancellation order subject to the condition that the petitioner complies with the requirement to file returns and make requisite payments within the stipulated time, failing which the writ petition will stand dismissed and the benefit will not accrue to the petitioner. [Paras 11, 14, 15, 16, 17]

Order cancelling registration is set aside and registration shall be restored if the petitioner files returns for the period of default and pays requisite tax, interest, fine and penalty within the time directed; failure to comply will result in automatic dismissal of the writ petition.

Activation of portal to enable compliance - Whether ancillary directions are required to enable the petitioner to comply with the condition for restoration of registration - HELD THAT: - To enable timely compliance, the Court directed the respondents to activate the portal within one week from communication of the order so that the petitioner may file outstanding returns and pay the requisite amounts. The Court specified a four-week period from receipt of the server copy of the order for the petitioner to comply; if compliance occurs within that period the jurisdictional officer shall restore registration. The Court accordingly set aside the appellate order which had dismissed the belated appeal as time-barred, as a sequel to the conditional restoration order. [Paras 17, 18, 19]

Respondents to activate the portal within one week; petitioner given four weeks from receipt of server copy to file returns and make payments, upon which registration shall be restored; appellate order dismissing the appeal is set aside.

Final Conclusion: The cancellation of the petitioner's registration is set aside and shall be restored on the petitioner's compliance with filing outstanding returns and payment of tax, interest, fine and penalty within four weeks of receipt of the server copy; respondents to activate the portal within one week to enable compliance; failure to comply will result in automatic dismissal of the petition; the appellate order is also set aside.

Appeal under Section 129(3) of the Goods and Services Tax Act - electronic filing of appeal - non-filing of certified copy as technical error - dismissal of appeal on technical ground - remand for decision on merits by reasoned and speaking order - amendment of Rule 108 dispensing with filing of certified copy

Electronic filing of appeal - non-filing of certified copy as technical error - dismissal of appeal on technical ground - Impugned appellate order dismissing appeal for non-filing of certified copy despite electronic filing within limitation was unsustainable. - HELD THAT: - The Court found that the appeal was filed electronically on 12.11.2022 within the limitation period and that the appellate authority dismissed the appeal without considering its merits solely on the ground that a certified copy of the impugned order was not filed along with the appeal. The Court relied on its prior decisions which hold that mere non-filing of the certified copy in appeals filed electronically constitutes a technical error and is not a ground for dismissal. The amendment to Rule 108 which dispenses with filing of the certified copy was noted, and the Court observed that the appellate authority ought not to have rejected the appeal on such a technicality without adjudicating the substantive contentions. [Paras 11, 12, 13]

Impugned appellate order dated 31.5.2023 set aside; dismissal for non-filing of certified copy held to be improper and the appeal must be decided on merits.

Remand for decision on merits by reasoned and speaking order - appeal under Section 129(3) of the Goods and Services Tax Act - Whether the matter should be remanded to the appellate authority for fresh consideration on merits. - HELD THAT: - Having set aside the impugned order, the Court directed that the appeal be remitted to the appellate authority for fresh consideration on merits. The appellate authority is required to decide the appeal by a reasoned and speaking order after production of the certified copy of this order. The Court emphasised expedition in disposal and gave a preferable time-frame for compliance. [Paras 14]

Matter remanded to the appellate authority to decide the appeal on its merits by a reasoned and speaking order expeditiously, preferably within three months from production of the certified copy of this order.

Final Conclusion: Writ petition partly allowed: the appellate order dismissing the appeal for non-filing of a certified copy is quashed and the appeal is remitted for fresh, reasoned consideration on merits within a stated timeframe.

Violation of principles of natural justice - opportunity of personal hearing - quashing and remand - conditional remand requiring deposit - fresh consideration on merits - lifting of bank attachment

Violation of principles of natural justice - opportunity of personal hearing - Impugned order dated 20.07.2023 was passed without providing opportunity of personal hearing and is vitiated for contravening principles of natural justice. - HELD THAT: - The Court found on the record that no opportunity of personal hearing was afforded to the petitioner prior to passing the impugned order. In view of the absence of any personal hearing and the respondent's admission that no such hearing was provided, the impugned order was held to have been passed in violation of the principles of natural justice and therefore could not stand. [Paras 6]

Impugned order dated 20.07.2023 is set aside for being vitiated by want of personal hearing.

Quashing and remand - conditional remand requiring deposit - fresh consideration on merits - Matter remanded to respondent for fresh consideration on merits subject to condition of payment of 10% of disputed amount and opportunity for the petitioner to file reply. - HELD THAT: - Rather than finally deciding the controversy afresh, the Court set aside the impugned order and remitted the matter for reconsideration. The remand was made conditional on the petitioner depositing 10% of the disputed amount within two weeks, after which the setting aside would take effect. The petitioner was directed to file reply/objections with documents within two weeks of the deposit, and the respondent was directed to consider those submissions and pass orders on merits after providing personal hearing, as expeditiously as possible. [Paras 6]

Matter remanded for fresh adjudication on condition that petitioner pays 10% of disputed amount; petitioner to file reply and respondent to provide personal hearing and decide on merits.

Lifting of bank attachment - Bank attachment notice dated 15.02.2024 is quashed and the attachment on the petitioner's bank account is ordered to be released. - HELD THAT: - Since the impugned order was quashed, the Court held that the consequential bank attachment could not subsist. The Court directed the respondent to release the attachment on the petitioner's bank account held with the bank within two weeks from receipt of a copy of the order. [Paras 6]

Bank attachment dated 15.02.2024 is lifted and the respondent directed to release the attachment within two weeks of receipt of the order.

Final Conclusion: Impugned order dated 20.07.2023 set aside for want of personal hearing; matter remanded for fresh consideration on merits on condition that petitioner deposits 10% of disputed amount and files reply, respondent to provide personal hearing and decide; consequential bank attachment lifted and directed to be released.

Violation of principles of natural justice - setting aside administrative order - remand for fresh consideration - opportunity of personal hearing - lifting of bank attachment

Violation of principles of natural justice - setting aside administrative order - remand for fresh consideration - Impugned order dated 14.06.2023 was passed without hearing the petitioner and is set aside; matter remanded for fresh consideration. - HELD THAT: - The High Court recorded that notices/communications had been uploaded on the GST portal but the petitioner was unaware of them and was not afforded an opportunity to be heard before the respondent passed the impugned order. In view of the admitted absence of hearing, the court concluded that the impugned order was in breach of the principles of natural justice. Consequently, the order dated 14.06.2023 was quashed and the matter remanded to the respondent for fresh consideration on merits.

Impugned order set aside and matter remanded for fresh consideration.

Opportunity of personal hearing - remand for fresh consideration - Petitioner permitted to file reply/objection and respondent directed to provide personal hearing and decide the matter on merits. - HELD THAT: - Pursuant to the remand, the court directed that the petitioner file its reply/objection along with supporting documents within two weeks. On receipt of the reply/objection the respondent is required to consider the material and pass an appropriate order on merits and in accordance with law after affording the petitioner an opportunity of personal hearing, and to do so as expeditiously as possible.

Petitioner to file reply within two weeks; respondent to grant personal hearing and decide on merits.

Lifting of bank attachment - setting aside administrative order - Attachment on the petitioner's bank account is lifted and the bank directed to defreeze the account upon production of the order. - HELD THAT: - The court observed that since the impugned order has been set aside, the consequent attachment on the petitioner's bank account could not be permitted to continue. The 3rd respondent (bank) was therefore directed to defreeze the petitioner's bank account immediately on production of a copy of this order. The court noted that the disputed tax had already been recovered, but nevertheless proceeded to set aside the impugned order and lift the attachment.

Bank attachment lifted; bank directed to defreeze account on production of this order.

Final Conclusion: Writ petition allowed in part: impugned order of 14.06.2023 set aside and remanded for fresh consideration; petitioner given two weeks to file reply; respondent directed to afford personal hearing and decide on merits; bank attachment lifted and bank directed to defreeze account on production of this order; no order as to costs.

Violation of principles of natural justice - failure to record reasons in show-cause notice and order - cancellation of registration under the Central Goods and Services Tax regime - restoration of registration - administrative limitation of online issuance formats not a defence to procedural fairness

Failure to record reasons in show-cause notice and order - violation of principles of natural justice - The cancellation of the petitioner's GST registration was set aside because the show-cause notice and the cancellation order did not state any reasons, constituting a breach of natural justice. - HELD THAT: - The Court examined the show-cause notice dated 13.10.2023 and the cancellation order dated 27.10.2023 and found that neither document recorded any reasons for seeking or imposing cancellation of registration. The absence of stated reasons deprived the petitioner of a meaningful opportunity to know and answer the case against him. The respondents' explanation that the departmental online system restricts the textual content of notices and orders was considered but rejected as it cannot cure or justify a procedural defect that results in denial of natural justice. The Court also noted that specific factual allegations (the mahazar and its witnesses) were not denied in the counter-affidavit, reinforcing the conclusion that the procedural lapse was material. For these reasons, the process of issuing the show-cause notice and the consequent cancellation order without assigning reasons amounted to a clear violation of principles of natural justice and required quashing of the cancellation order.

The cancellation order is quashed and the petitioner's GST registration is restored.

Administrative limitation of online issuance formats not a defence to procedural fairness - restoration of registration - The respondents' plea that the departmental online system permits only limited pre-determined options and that full reasons could not be downloaded does not validate the cancellation in the face of a natural justice breach; registration is to be restored albeit without prejudice to future action. - HELD THAT: - Respondents contended that technical constraints of the online show-cause notice format prevent full recording or downloading of reasons and that the petitioner had access to view remarks on the portal. The Court held that such systemic or administrative limitations cannot operate as a substitute for legally mandated procedural fairness; inability or failure to record and communicate reasons cannot be countenanced as a defense to denial of opportunity to be heard. However, the Court clarified that setting aside the impugned order and restoring registration does not preclude the authorities from taking fresh action in accordance with law, observing that the respondents remain free to initiate fresh proceedings consistent with procedural requirements.

The respondents' contention based on online system limitations is rejected; the cancellation is set aside and registration restored, subject to respondents' right to take further lawful action.

Final Conclusion: The writ petition is allowed: the cancellation order dated 27.10.2023 is set aside and the petitioner's GST registration is restored. The respondents remain at liberty to initiate fresh proceedings in accordance with law; no costs.

Continuous supply of goods - time of supply - invoice date as determinative relevant period - proof of export - Regional Energy Account (REA) - retrospective applicability of amendment to Rule 89

Continuous supply of goods - time of supply - invoice date as determinative relevant period - proof of export - Regional Energy Account (REA) - Whether, in case of continuous supply of electricity invoiced periodically, the REA of the preceding month can be treated as the "relevant period" for processing a refund application made in the succeeding month. - HELD THAT: - The Court held that for continuous supplies the point of taxation is fixed by the time of supply, which is the earlier of the date of issue of the invoice or the date of receipt of payment; and for continuous supplies invoices are issued on a regular or periodic basis in accordance with the contractual obligation. Where the supplier is contractually required to raise an invoice for a particular month's supply in the succeeding month, the legal fiction created by the Act makes the invoice-date the point of supply for that period. Consequently, when the invoice for a month's supply is raised in the succeeding month, the REA corresponding to the month covered by that invoice (i.e., the preceding month) is the appropriate proof of export to be considered for the refund application submitted in the succeeding month. The Court found the view of the authorities-insisting on REA strictly for the calendar month in which refund is claimed regardless of invoice timing-to be inconsistent with the statutory scheme governing time of supply and issuance of invoice for continuous supplies. [Paras 13, 14, 15]

The REA of the previous month may be accepted as the proof of export for refund applications filed in the succeeding month where the invoice for the prior month's continuous supply is raised in the succeeding month.

Direction to consider refund applications - remand for consideration - Disposition of the petitioner's pending refund applications rejected for want of production of REA for the 'relevant period'. - HELD THAT: - Having concluded that the REA of the preceding month could validly amount to proof of export for refund applications made in the succeeding month, the Court set aside the orders of rejection (and the appellate orders upholding them) and directed the assessing authority to reconsider the petitioner's refund applications. The reconsideration is to be undertaken permitting the petitioner to produce the REA of the previous month as proof of export and to decide the applications afresh if other requirements are satisfied. [Paras 16]

Orders of rejection and appellate orders are set aside and the 2nd respondent is directed to consider the petitioner's refund applications permitting production of the previous month's REA, and to grant refund if all other requirements are met.

Final Conclusion: Writ petitions allowed; orders in original and in appeal set aside and respondents directed to reconsider the refund applications for January 2022 to October 2022 permitting the petitioner to produce the REA of the previous month as proof of export; no order as to costs.

Violation of principles of natural justice - service of notice by registered E-Mail - effect of cancellation of registration on notice receipt - remand for fresh adjudication - pre-condition of deposit for filing objections

Violation of principles of natural justice - service of notice by registered E-Mail - Whether the impugned assessment order suffers from violation of principles of natural justice for want of valid service of statutory notices - HELD THAT: - The Court recognised that show cause and subsequent notices were sent both physically and to the taxpayer's registered E Mail ID. Physical notices were returned with the postal notation "Left". Although notices were sent to and received in the registered E Mail ID, the registration had been cancelled earlier on the ground of non filing of returns and proceedings leading to the impugned order commenced only after cancellation. The Court held that cancellation of registration could reasonably have resulted in the taxpayer not monitoring the registered E Mail account, creating an ambiguity as to whether the taxpayer had actual notice of the proceedings. In view of that ambiguity and the constitutional requirement of fair opportunity, the Court found that adjudication should not be allowed to stand without giving the taxpayer an opportunity to be heard.

Impugned order set aside and matter remanded for fresh adjudication to cure the lapse in the observance of principles of natural justice.

Remand for fresh adjudication - Nature and scope of the remand and procedural directions to effect fresh adjudication - HELD THAT: - The Court directed that the show cause notice dated 22.04.2022 and the impugned order dated 21.12.2022 be treated as notices of the pending assessment and granted the petitioner three weeks to file a response. The 3rd respondent was directed to afford a personal hearing to the petitioner on the specified date thereafter. If additional time is sought by the petitioner, it must be sought by providing an E Mail ID and an address for service to ensure effective communication. The remand is for fresh adjudication on merits after affording the taxpayer notice and opportunity to be heard.

Remanded to the 3rd respondent for fresh adjudication; procedural timetable and conditions for representation prescribed.

Pre-condition of deposit for filing objections - Whether the petitioner must comply with any pre-condition before being permitted to file objections on remand - HELD THAT: - Having noted the belated approach to the Court, the Court imposed a limited protective measure as a pre condition to balance the revenue's interest with the taxpayer's right to be heard. The Court required the petitioner to pay 10% of the disputed tax as a pre condition to being permitted to file objections before the assessing authority. No costs were awarded between the parties.

Petitioner permitted to file objections subject to payment of 10% of the disputed tax as a pre condition.

Final Conclusion: Writ petition allowed; the assessment order dated 21.12.2022 is set aside and remitted to the assessing authority for de novo adjudication after giving the petitioner three weeks to file responses and a personal hearing, subject to the petitioner depositing 10% of the disputed tax as a pre condition.

Interim stay - invocation of section 16(2)(c) for denial of input tax credit - section 74 of the Central/Gujarat Goods and Services Tax Act, 2017 - conditions for grant of interim relief: prima facie case, balance of convenience, irreparable injury - requirement of deposit as condition for stay

Interim stay - section 74 of the Central/Gujarat Goods and Services Tax Act, 2017 - invocation of section 16(2)(c) for denial of input tax credit - conditions for grant of interim relief: prima facie case, balance of convenience, irreparable injury - requirement of deposit as condition for stay - Stay of operation and execution of the order dated 27.10.2023 passed under section 74 of the GST Act during pendency of the petition, on specified deposit condition. - HELD THAT: - The High Court, on the petitioner's challenge to the impugned order under section 74, observed that the authority had reproduced but not dealt with the petitioner's detailed reply and had invoked section 16(2)(c) without recording any inquiry or reasons addressing the petitioner's contentions. The petitioner had also shown delivery acknowledgements and payment through banking channels and demonstrated risk of immediate hardship by attachment of bank accounts and a garnishee order. Applying the settled interim-relief principles, the Court found a strong prima facie case, balance of convenience in favour of the petitioner, and likelihood of irreparable injury if the order were executed pending adjudication. In view of these findings and the petitioner's offer to show bona fides, the Court granted an interim stay of the impugned order subject to the petitioner depositing a specified sum with the GST authority within two weeks. The order is interlocutory and does not decide the merits of the contentions on applicability of section 16(2)(c) or the validity of the authority's findings on input tax credit; it only imposes the conditional stay as recorded.

Impugned order dated 27.10.2023 passed under section 74 is stayed during pendency of the petition on condition that the petitioner deposits Rs. 20 Lakh with the GST authority within two weeks.

Final Conclusion: Interim relief granted: the operation and execution of the order dated 27.10.2023 under section 74 of the GST Act is stayed during the pendency of the petition on the condition that the petitioner deposits Rs. 20 Lakh with the GST authority within two weeks; the Court's order is interlocutory and does not adjudicate the merits of the dispute on section 16(2)(c) or the underlying entitlement to input tax credit.

Principles of natural justice - right to personal hearing - setting aside order-in-original for breach of natural justice - remand for fresh consideration and hearing - statutory limit on opportunities of personal hearing under Section 75(5) proviso

Principles of natural justice - right to personal hearing - setting aside order-in-original for breach of natural justice - OIO set aside because the petitioner was effectively denied a real opportunity of personal hearing where notice for the third scheduled hearing was served on the date of hearing and the petitioner's prompt request for another opportunity was not considered. - HELD THAT: - The Court found that although the adjudicating authority had issued a third notice for personal hearing, that notice dated 13.03.2024 was served on the petitioner only on 19.03.2024, the very date fixed for hearing. The petitioner promptly informed the respondents on 19.03.2024 that the notice was received on the date of hearing and requested another opportunity to be heard. The Order-in-Original was passed without considering this communication. The court held that service of the hearing notice on the date fixed rendered the opportunity illusory and, coupled with failure to consider the petitioner's timely communication, amounted to denial of a meaningful hearing in breach of the principles of natural justice. Consequently, the OIO was set aside and a fresh personal hearing was directed to afford the petitioner an effective opportunity to be heard. The Court made no observation on the merits of the underlying adjudication. [Paras 4, 8, 9, 10]

OIO set aside and matter remanded for a fresh personal hearing, which was directed to be provided on 08.08.2024 at 11:00 AM as the last opportunity, without expressing any opinion on merits.

Remand for fresh consideration and hearing - statutory limit on opportunities of personal hearing under Section 75(5) proviso - The adjudicating authority to afford one final personal hearing date as directed by the Court, notwithstanding that the authority had relied on the proviso to sub Section 5 of Section 75 of the Act regarding opportunities of hearing. - HELD THAT: - Respondent relied on the statutory provision envisaging the maximum number of hearings. The Court accepted that the provision had been followed in form, but held that formal compliance did not cure the practical denial of hearing when a notice is served on the date fixed and the petitioner's request for an adjournment or fresh date was not considered. In the exercise of supervisory jurisdiction, the Court set aside the OIO and directed the authority to provide a final personal hearing on the agreed date of 08.08.2024 at 11:00 AM; the authority may, if genuinely inconvenient, fix a further date. The matter was remitted only for providing an effective opportunity to be heard, and not for reconsideration of merits by the Court. [Paras 6, 8, 9]

Adjudicating authority directed to grant a final personal hearing on 08.08.2024 at 11:00 AM (subject to appropriate rescheduling if necessary); statutory limit on hearings did not validate the practical denial of hearing.

Final Conclusion: The Order in Original dated 23.04.2024 is set aside for denial of a meaningful personal hearing; the matter is remitted to the adjudicating authority to afford the petitioner a final personal hearing on 08.08.2024 at 11:00 AM (or another convenient date if the authority cannot comply), and no opinion is expressed on the merits.

Concessional rate under notification No.24/2017 - composite supply of works contract - government entity - use predominantly for commerce, industry or any other business or profession - passing on incidence of indirect tax

Government entity - Status of M/s. APIIC as a government entity - HELD THAT: - The 4th respondent stated that 99.99% of its shares are held by the State Government, and this factual position is not denied by the petitioner. On that basis the Court held that the 4th respondent is a State entity and therefore qualifies as a government entity for the purposes of consideration under the notification. [Paras 8]

M/s. APIIC is a State/government entity.

Concessional rate under notification No.24/2017 - composite supply of works contract - use predominantly for commerce, industry or any other business or profession - Applicability of the concessional 6% rate under notification No.24/2017 to the works executed for the 4th respondent - HELD THAT: - Notification No.24/2017 grants a concessional rate for composite works contracts provided to government entities where the works fall within one of the specified sub-conditions (a), (b) or (c). The works in dispute consist of internal and approach roads and related infrastructure created to develop Electronic Manufacturing Clusters, Industrial Parks and a Mega Industrial Hub so as to assist entrepreneurs and units that will operate from these areas. The Court found that conditions (b) and (c) are clearly inapplicable, and that condition (a) (original civil works meant predominantly for use other than commerce, industry or any other business or profession) does not apply because the roads and infrastructure are intended for and will be used by industrial/commercial units and the 4th respondent itself conducts the business of developing industrial areas and recovers development costs from entrepreneurs. Therefore the works are not predominantly for non-commercial/non-industrial use and the concessional rate cannot be invoked. [Paras 3, 11, 12, 13, 14]

Concessional rate under notification No.24/2017 is not available for the disputed works; assessment at the standard rate (18% for the period) is valid.

Passing on incidence of indirect tax - Liability to bear and remit the differential tax and interest between petitioner and the 4th respondent - HELD THAT: - Though the petitioner is primarily liable to discharge the GST, the contractual/arrangemental position between the parties, evidenced by the letter of the 4th respondent, shows that the 4th respondent agreed to bear and remit the tax through the petitioner. The Court noted that where such an arrangement exists in indirect taxation, the person primarily liable may pass on the burden to the purchaser. Given there is no denial by the 4th respondent of liability to pay, the Court directed the 4th respondent to pay the differential tax for the period to the petitioner so the petitioner can remit the same to the Department, and to bear any interest recoverable from the petitioner for late payment. [Paras 15, 16]

4th respondent shall pay the differential tax and any interest recoverable from the petitioner to enable the petitioner to remit the same to the GST Department.

Final Conclusion: Writ petition dismissed; impugned assessment dated 04.08.2023 for the tax period 01.04.2021 to 30.11.2022 is affirmed. Direction issued to the 4th respondent to pay the differential tax (and any interest payable by the petitioner) to the petitioner within two months to enable remittance to the GST Department; no order as to costs.

Seizure and confiscation of cash under GST enactments - Appropriation of seized funds towards tax liability - Effect of appellate tribunal order on initiation of show cause proceedings - Maintainability of writ to preclude departmental proceedings - Voluntary payment of tax during investigation and DRC-03 procedure

Maintainability of writ to preclude departmental proceedings - Effect of appellate tribunal order on initiation of show cause proceedings - Whether the petitioner can maintain the writ petition to quash the impugned backdated show cause notice dated 28.12.2023 issued for the period July 2017 to October 2020 in view of the Tribunal's favourable order dated 20.03.2024. - HELD THAT: - The High Court considered the petitioner's contention that the show cause notice was issued to defeat rights accrued under the Tribunal's final order dated 20.03.2024. The Court observed that a favourable order in appeal does not automatically bar initiation or continuance of departmental proceedings under the respective GST enactments. The impugned notice, though backdated, seeks adjudication of tax liability and does not propose confiscation. The Court held that the petitioner cannot use the Tribunal's order to preclude participation in show cause proceedings and that the proper course is to file a reply and have the departmental authority decide on merits. The Court therefore declined to quash the show cause notice and required the petitioner to participate in the proceedings. [Paras 17, 18, 20]

Writ petition dismissed; petitioner directed to file reply within 30 days and participate in impugned show cause proceedings.

Seizure and confiscation of cash under GST enactments - Appropriation of seized funds towards tax liability - Whether the impugned show cause notice proposes confiscation of the cash seized on 08.10.2020 or only seeks appropriation of the seized amount towards tax liability. - HELD THAT: - The Court examined the contents of the show cause notice and the departmental stand. It noted the Tribunal's observation that the seized cash had been ordered to be refunded if not already done, but also recorded the respondents' submission that the notice does not propose confiscation; instead it proposes appropriation of the amount (which is invested in a fixed deposit) towards any tax liability of the petitioner. The Court accepted that confiscation is not proposed in the notice and that appropriation towards tax liability is permissible under the respective GST enactments subject to the petitioner's explanation and adjudication on merits. [Paras 14, 15, 19]

Show cause notice does not propose confiscation; it proposes appropriation of the seized amount towards tax liability and the petitioner must explain why appropriation should not be made.

Appropriation of seized funds towards tax liability - Voluntary payment of tax during investigation and DRC-03 procedure - Whether the seized amount must be refunded forthwith or may be appropriated towards tax liability, and the process by which such refund or appropriation is to be considered. - HELD THAT: - While the Tribunal had directed refund of the seized cash if not already done, the High Court recorded the departmental position that the amount has not been confiscated and can be appropriated against any tax liability of the petitioner. The Court directed the petitioner to file a proper reply and the respondents to consider and decide the show cause notice on merits. The Court also noted the CBIC clarification permitting voluntary payment through DRC-03 during investigation but did not treat that clarification as extinguishing the department's right to adjudicate appropriation. The Court observed that if the petitioner succeeds in the departmental adjudication, the seized amount will have to be refunded. [Paras 6, 12, 16, 20, 21]

Matter stands for adjudication by the respondents on merits as to appropriation or refund; respondents to consider the petitioner's reply and decide, and if petitioner succeeds, the seized amount is to be refunded.

Final Conclusion: Writ petition dismissed. The petitioner is directed to file a reply within 30 days and participate in the show cause proceedings; the respondents shall decide the matter on merits and, if the petitioner succeeds, refund the seized amount.

Bail under Section 439 CrPC - Maintainability of direct regular bail petition - Concurrent jurisdiction under Section 439 CrPC - Judicial custody and custodial necessity - Prima facie case and factors for grant of bail - Conditions of bail (surety, fixed deposit, bond, mobility restriction) - Prevention of tampering with evidence and witness intimidation - Proportionality of bail conditions

Bail under Section 439 CrPC - Judicial custody and custodial necessity - First offender - Prima facie case and factors for grant of bail - Conditions of bail (surety, fixed deposit, bond, mobility restriction) - Prevention of tampering with evidence and witness intimidation - Proportionality of bail conditions - Petitioner released on regular bail in the FIR subject to specified conditions - HELD THAT: - The Court, applying established principles on grant of bail and weighing the cumulative circumstances, held that continued pre-trial incarceration was not justified. The petitioner is a first offender in judicial custody since 11.04.2024 and the remand is judicial; continued detention would not assist the investigation. References to precedents (including the guiding principles in Gurbaksh Singh Sibbia, Kalyan Chandra Sarkar, State of Rajasthan v Balchand and other authorities) underline that bail is to be granted unless negative criteria (risk of flight, tampering, intimidating witnesses, repeating offences) are established. The possibility of interference with investigation can be mitigated by imposing calibrated and proportional conditions rather than continued detention. Accordingly, the Court prescribed detailed conditions to secure attendance and prevent tampering: personal bond and surety or, alternatively, a fixed deposit/blocking of funds; an attendance bond; prohibition on influencing witnesses or tampering with evidence; restriction to one prepaid mobile SIM linked to Aadhaar, with directions to telecom providers for deactivation of other prepaid SIMs; and liberty to the State to move for cancellation if conditions are breached or the petitioner commits further serious offences. The Court emphasized that bail conditions must be proportional and not so onerous as to be illusory, and permitted modification of conditions if shown to violate fundamental rights or be socially/economically onerous. [Paras 20, 22, 23, 24, 29]

Petitioner to be released on bail subject to the specified bonds, surety or fixed-deposit alternative, attendance bond, prohibition on multiple prepaid SIMs and other conditions; breach or commission of further serious offences may invite cancellation of bail

Maintainability of direct regular bail petition - Concurrent jurisdiction under Section 439 CrPC - Article 227 incidental reference - Filing the regular bail petition directly before the High Court did not render the petition liable to dismissal on maintainability grounds - HELD THAT: - The Court considered the petitioner's explanation for approaching the High Court directly and held that coming straight to the High Court under its concurrent jurisdiction under Section 439 CrPC is not a ground to refuse bail or to continue detention as a matter of technicality. The Court noted that an accused who first approaches the High Court may, in effect, forfeit the statutory right to have the Sessions Court first adjudicate bail, and that a concession not to claim prejudice in case of dismissal could be made; accordingly, the mere fact of filing directly before the High Court cannot be treated as a bar to entertaining the bail petition. [Paras 3, 10, 11]

Petition maintainable in the High Court and not to be dismissed solely because it was filed directly before this Court

Final Conclusion: Bail granted to the petitioner in the FIR on furnishing the specified bonds or fixed deposit and subject to enumerated conditions (including single prepaid SIM, prohibition on influencing witnesses and other restrictive but proportional measures); the petition was maintainable despite being filed directly in the High Court.

Exercise of jurisdiction under Section 263 - erroneous and prejudicial to the interest of the revenue - due date for filing return in cases involving international transactions - Form 3CEB compliance and its effect on return filing due date - carry forward of losses - reference to Transfer Pricing Officer and its relevance to extended return due date

Exercise of jurisdiction under Section 263 - erroneous and prejudicial to the interest of the revenue - carry forward of losses - Validity of the Principal Commissioner of Income-tax's invocation of revisional jurisdiction under Section 263 and whether the assessment order was erroneous and prejudicial to the revenue - HELD THAT: - The Tribunal examined the PCIT's notice and conclusions and found that the PCIT's objection centred on the date of filing of the original return and the consequent allowability of carry forward of loss. The Tribunal held that the AO's assessment order dated 23/04/2021, which accepted the returned loss and allowed carry forward, was not shown to be erroneous or prejudicial to the revenue on the material before the PCIT. The Tribunal observed that the carry forward was merely recorded for the year under consideration and any scrutiny of set-off would arise only in subsequent assessment years when the assessee seeks to claim the set-off. On this basis the Tribunal concluded that the conditions for exercise of revisional jurisdiction under Section 263 were not satisfied and set aside the PCIT order, restoring the AO's assessment order. [Paras 5, 6, 7]

PCIT's exercise of jurisdiction under Section 263 quashed and assessment order dated 23/04/2021 restored; appeal allowed.

Due date for filing return in cases involving international transactions - Form 3CEB compliance and its effect on return filing due date - reference to Transfer Pricing Officer and its relevance to extended return due date - Whether the assessee's filing date was within the extended due date applicable because of international transactions and submission of Form 3CEB - HELD THAT: - The Tribunal considered the fact that the assessee had entered into international transactions, had obtained and furnished the accountant's report in Form 3CEB under Section 92E, and that the Assessing Officer was proceeding towards reference to the Transfer Pricing Officer (TPO) before the assessee objected to such reference. The Tribunal held that the presence of international transactions and furnishing of Form 3CEB demonstrated that the extended due date applied and that the PCIT could not treat the assessee as having accepted an earlier due date by virtue of its objection to a TPO reference. Consequently, the Tribunal concluded that the return filing date relied upon by the PCIT did not justify disallowance of the carry forward on that ground. [Paras 5, 6]

Assessee's return filing was within the extended due date applicable on account of international transactions and Form 3CEB; PCIT's contention on due date rejected.

Final Conclusion: The Tribunal set aside the PCIT's order dated 26/03/2024 under Section 263, held that the assessment order dated 23/04/2021 was not erroneous or prejudicial to the revenue, accepted that the extended due date applied because of international transactions and filing of Form 3CEB, and allowed the assessee's appeal.

Validity of criminal liability under Section 72(c) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 vis-a -vis Article 20 of the Constitution - Constitutionality of penal provision under Article 20 - Stay of High Court's declaration of invalidity - Grant of leave and interim notice

Validity of criminal liability under Section 72(c) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 vis-a -vis Article 20 of the Constitution - Constitutionality of penal provision under Article 20 - Stay of High Court's declaration of invalidity - Stay granted against the High Court's observation that criminal prosecution under Section 72(c) is contrary to Article 20 - HELD THAT: - The Supreme Court, after hearing counsel, stayed the portion of the High Court's order (paragraph 15) which had concluded that criminal liability under Section 72(c) of the Black Money Act fails to pass muster under Article 20 of the Constitution. The impugned observation in paragraph 15, wherein the High Court held that the Special Act's provision would be obliterated for being violative of the protections in Chapter III, will remain stayed pending further proceedings. The Court recorded that in the Criminal Petition there was no prior challenge to the validity of Section 72(c), but nevertheless stayed the High Court's declaration. The stay preserves the status quo as to the High Court's constitutional conclusion without deciding the merits of the challenge to Section 72(c). [Paras 15]

Paragraph 15 of the impugned judgment is stayed.

Grant of leave and interim notice - Procedure for filing of documents and interim relief - Procedural applications disposed of and interim steps ordered - HELD THAT: - The Court allowed the application for exemption from filing a certified copy of the impugned judgment and granted leave to file the petition. The application for permission to file a lengthy list of dates was rejected. The Court issued notice on the prayer for interim relief and fixed the returnable date as 20th September, 2024. These orders relate to case-management and interlocutory directions and do not adjudicate the substantive constitutional challenge.

Exemption from filing a certified copy allowed; leave granted; application to file lengthy list of dates rejected; notice on interim relief issued returnable on 20th September, 2024.

Final Conclusion: The Supreme Court granted leave, allowed exemption from filing a certified copy, rejected the application to file a lengthy list of dates, issued notice on interim relief returnable on 20th September 2024, and stayed paragraph 15 of the High Court's judgment which had held that prosecution under Section 72(c) offended Article 20; the constitutional validity of Section 72(c) was not finally adjudicated.

Reopening of assessment after four years under Section 147 requiring failure to disclose fully and truly all material facts - jurisdictional fact for reassessment - change of opinion versus failure to disclose - sanction for reassessment under Section 151 - arbitrariness in exercise of sanctioning power

Reopening of assessment after four years under Section 147 requiring failure to disclose fully and truly all material facts - change of opinion versus failure to disclose - jurisdictional fact for reassessment - The jurisdictional requirement that the assessee must have failed to disclose fully and truly all material facts during the original assessment so as to permit reopening after four years was not satisfied. - HELD THAT: - The Court examined the assessment record and reasons recorded for reopening and found that the reassessment was sought five years after the end of the relevant assessment year. The original assessment had been the product of scrutiny proceedings with notices under Sections 143(2) and 142(1), detailed written replies, and personal hearings. Each of the four matters relied upon for reopening (leasehold improvements, amortisation of investments, donations/Section 80G treatment, and an auditor-noted interest item) had been disclosed and considered during the original scrutiny assessment. The reasons recorded by the Revenue therefore only reflected a changed opinion on facts already on record rather than any failure by the assessee to disclose material facts. In these circumstances the vital jurisdictional fact mandated by the proviso to Section 147 was absent and the reassessment could not be validly initiated. [Paras 16, 17, 18, 19, 20]

Reopening under Section 147 (after four years) quashed for lack of the requisite failure to disclose material facts.

Sanction for reassessment under Section 151 - arbitrariness in exercise of sanctioning power - The sanction accorded under Section 151 was arbitrary and vitiated for non-application of mind, and therefore invalid. - HELD THAT: - The Court reviewed the internal proposal, recommendation and the sanctioning note and concluded that the approval by the Principal Commissioner merely recorded satisfaction without disclosing application of mind to the statutory ingredients of Section 147. The chronology showed initiation and sanction in March 2021, one year after expiry of the four-year period; yet the material did not disclose any undisclosed fact by the assessee. The sanctioning mechanism is a statutory check and must reflect reasonable application of mind; absence of valid reasons or mechanistic approval renders the sanction arbitrary. Consequently, sanction under Section 151 could not stand. [Paras 21, 22, 23]

Sanction under Section 151 set aside as arbitrary and without valid reasons.

Final Conclusion: The sanction under Section 151, the notice issued under Section 148/147 and the order rejecting objections are quashed as arbitrary and unlawful; all consequential reassessment proceedings in respect of AY 2015-16 are set aside.

Power to transfer cases under Section 127 - reasonable opportunity of being heard - recording of reasons for transfer - centralization for coordinated investigation - administrative nature of transfer - prejudice requirement for breach of natural justice - acquiescence and waiver

Power to transfer cases under Section 127 - reasonable opportunity of being heard - recording of reasons for transfer - centralization for coordinated investigation - administrative nature of transfer - Validity of the order dated 14.06.2021 transferring the petitioner's case from Mumbai to Delhi under Section 127 - HELD THAT: - The Court held that material existed to justify exercise of power under Section 127 - notably search and seizure by Delhi authorities, post-search investigative material linking the petitioner with persons whose cases were centralized in Delhi, and disclosure of those grounds in the show cause notice. The show cause notice was received and replied to by the petitioner. Section 127 requires a reasonable opportunity to be given "wherever it is possible to do so" and reasons to be recorded; the statute does not mandate a personal hearing in every case. The record shows disclosure of substantive grounds in the show cause notice, and the transfer order recorded reasons for centralization for coordinated investigation. The petitioner failed to demonstrate any real or substantial prejudice resulting from the method of hearing or from any alleged defects in the order. The administrative character of transfer and the legitimate object of clubbing related assessments at one place weighed in favour of the transfer. Delay in challenging the order and subsequent actions taken by Delhi authorities further undercut the petitioner's case. Consequently, the transfer order could not be set aside on the pleaded grounds. [Paras 37, 38, 46, 47, 50]

The transfer order dated 14.06.2021 under Section 127 is lawful and is not vitiated by breach of natural justice or absence of a personal hearing; the petition challenging it is rejected.

Prejudice requirement for breach of natural justice - acquiescence and waiver - prejudice exception - Whether any breach of natural justice occurred that caused prejudice warranting setting aside the transfer or remand - HELD THAT: - The Court applied the established test that mere infraction of audi alteram partem does not automatically invalidate an order unless prejudice is shown. The petitioner admitted transactions with the centralized parties and, after transfer, received and acted upon multiple notices from Delhi (including assessment and special audit notices) and did not promptly challenge the transfer, indicating acquiescence. Authorities relied upon binding precedents that remand or setting aside is unwarranted where no real prejudice is shown or where the exercise would be a futile formality. On the facts - admitted transactional links, disclosure of reasons in the show cause notice, petitioner's delay in approaching the Court, and subsequent departmental action - no prejudice was established that would justify interference or remand. [Paras 35, 38, 39, 40, 41]

No breach of natural justice causing prejudice was made out; remand or setting aside of the transfer is unnecessary.

Final Conclusion: The writ petition challenging the transfer of the petitioner's assessments to Central Circle 20, New Delhi under Section 127 is dismissed; the transfer order is upheld and no remand is directed. No costs are awarded.

Reopening of assessment - reason to believe - change of opinion - failure to disclose material facts - Explanation 2 to Section 147 read with proviso - assessment at too low a rate

Reopening of assessment - reason to believe - change of opinion - assessment at too low a rate - failure to disclose material facts - Explanation 2 to Section 147 read with proviso - Validity of notices issued under Section 148 and consequent reassessment orders for the stated assessment years - HELD THAT: - The Court examined whether the Assessing Officer possessed a legally sustainable 'reason to believe' that income chargeable to tax had escaped assessment so as to reopen assessments after four years. The petitioner had filed returns and disclosed both recorded and unrecorded transactions, furnished computation sheets and books, and the Assessing Officer had originally estimated gross profit on unrecorded sales at 8% after scrutiny. The Department later sought reassessment on the ground that a higher GP rate (12.5%) should have been applied. The Court held that mere disagreement with the rate adopted in the original assessment amounts to a change of opinion and cannot by itself constitute a ground for reopening. Explanation 2 (deeming under-assessment where income has been assessed at too low a rate) cannot be read in isolation; it must be applied together with the proviso to Section 147 which requires failure by the assessee to disclose fully and truly all material facts. As there was no allegation or material showing that the petitioner failed to disclose material facts, the Assessing Officer lacked the requisite foundation for forming a reason to believe that income had escaped assessment. Reliance on the principle that reassessment cannot be used as a vehicle for review of a concluded assessment underpinned the conclusion that the reopening was impermissible. [Paras 7, 8, 9, 10, 11]

Notices under Section 148 and the consequent reassessment orders for the specified assessment years are invalid and are set aside.

Final Conclusion: Writ petitions allowed; the notices dated 30.03.2006 under Section 148 and the consequential reassessment orders for Assessment Year - 1999 - 2000 and Assessment Year - 2000 - 2001 are quashed.

Explanation of cash credits under section 68 - identity, genuineness and creditworthiness of share subscribers - related party share subscription and intra group funding - remand for verification and reliance on remand report - summons and production under section 131 - appellate scrutiny of factual findings by Commissioner (Appeals) and Tribunal

Explanation of cash credits under section 68 - identity, genuineness and creditworthiness of share subscribers - related party share subscription and intra group funding - remand for verification and reliance on remand report - Deletion of addition under section 68 in respect of share capital/premium received from the holding company was justified. - HELD THAT: - The Court recorded that the Commissioner (Appeals) undertook an elaborate fact finding exercise and that the Tribunal examined those findings. The Tribunal noted that the entire share subscription was received from the holding company which had common directors with the assessee and a commercial interest in the assessee's real estate project; the project's nature, registration and funding needs were considered. The CIT(A) had called for and considered a remand report from the Assessing Officer and examined evidence relating to the investing company's funds and creditworthiness before allowing the appeal. The Tribunal also took note of relevant precedents relied upon by the authorities. On that factual and legal appraisal the addition under section 68 was deleted and upheld on appeal to the Tribunal. [Paras 4, 5, 6]

The deletion of the addition under section 68 was sustained; the Tribunal correctly upheld the CIT(A)'s finding that the identity, genuineness and creditworthiness of the share subscriber were established.

Summons and production under section 131 - failure of directors to respond to summons - appellate scrutiny of factual findings by Commissioner (Appeals) and Tribunal - The Tribunal was justified in upholding the CIT(A)'s order despite non appearance/ non response by the assessee's directors to notices issued under section 131. - HELD THAT: - Although it was recorded that the assessee's directors did not respond to notices under section 131, the CIT(A) had considered the remand report and the material submitted by the assessee and the Tribunal reviewed those factual findings. The High Court found that the authorities had addressed the question of genuineness, identity and creditworthiness on the basis of evidence and the remand proceedings; no legal error was demonstrated that would warrant interference with those factual conclusions. [Paras 4, 6]

The Tribunal's upholding of the CIT(A)'s order despite the non response to section 131 notices does not raise a substantial question of law.

Final Conclusion: The appeal is dismissed for lack of any substantial question of law: the Tribunal rightly upheld the CIT(A)'s deletion of the addition under section 68 after remand and factual consideration, and the non appearance of directors in response to section 131 notices did not render those appellate factual conclusions legally unsustainable.

Agricultural land not a capital asset under section 2(14) of the Income Tax Act, 1961 - remand to the Tribunal for adjudication on the nature of land - claim of exemption under section 54B of the Income Tax Act, 1961 - allowance of draft amendment

Allowance of draft amendment - Draft amendment was permitted and to be carried out forthwith. - HELD THAT: - The Court recorded its order allowing the draft amendment, directing that it be carried out immediately. This is a procedural direction disposing of the application to amend the pleadings as prayed by the appellant. [Paras 1]

Draft amendment allowed and to be carried out forthwith.

Agricultural land not a capital asset under section 2(14) of the Income Tax Act, 1961 - remand to the Tribunal for adjudication on the nature of land - claim of exemption under section 54B of the Income Tax Act, 1961 - Whether the land at Motera is agricultural land such that it does not constitute a "capital asset" within the definition in section 2(14) and thereby not chargeable to tax. - HELD THAT: - The Tribunal's impugned order addressed the nature of the Nardipur land but did not decide the additional ground raised by the assessee in relation to the Motera land - namely that the Motera land was agricultural and therefore not a capital asset under the statutory definition. The High Court examined the record and the Tribunal's orders and concluded that the question as to the nature of the Motera land remains undecided. Given that a finding on whether Motera land is agricultural would determine the taxability of the gain (and the applicability of exemption under section 54B), the Court found it appropriate to remit that discrete issue to the Tribunal for decision. The remand is limited to deciding the nature of the Motera land under the definition in section 2(14); other aspects adjudicated by the Tribunal remain intact. [Paras 11]

Matter remanded to the Tribunal to decide solely whether the Motera land is agricultural land within the meaning of section 2(14) of the Income Tax Act, 1961.

Final Conclusion: The appeal is disposed of by allowing the draft amendment and remitting the limited question of whether the Motera land is agricultural (and thus not a capital asset) to the Income Tax Appellate Tribunal for decision.

Agricultural income exemption - failure to substantiate claimed exemption - assessment on best judgment basis - quashing of assessment and penalty orders - opportunity to produce evidence on remand - penal precondition for fresh assessment - service of notices under Section 282 of the Income Tax Act

Agricultural income exemption - failure to substantiate claimed exemption - assessment on best judgment basis - quashing of assessment and penalty orders - opportunity to produce evidence on remand - penal precondition for fresh assessment - Whether assessment additions and penalty orders made without considering documents now produced should be sustained, and what relief is appropriate. - HELD THAT: - The petitioners had disclosed the entire income, including alleged agricultural receipts, in their returns for Assessment Year 2020-2021 but failed to produce documents during scrutiny to substantiate the claim of agricultural income. The assessing officer, on that basis, made additions of the gross agricultural receipts to the returned income and imposed penalties. The High Court observed that the documents now placed on record in the writ petitions (purchase bills and bank statements) were not considered by the assessing officer for want of earlier production. Although the court expressed reservation about the petitioners' explanation of non-receipt of notices, it found that the assessment and penalty orders were passed without considering the newly produced material; if genuine, those documents could affect the correctness of the assessment. Exercising supervisory jurisdiction, the court quashed the impugned assessment and penalty orders and directed that the assessing officer afford a reasonable opportunity to the petitioners to produce and have those documents considered. To ensure accountability for prior non-cooperation, the court required payment of a specified penalty as a precondition to remand and imposed timelines for compliance and for completion of fresh assessment. [Paras 6, 7, 8]

Impugned assessment and penalty orders quashed; petitioners to pay a penalty of Rs.40,000 each within two weeks as precondition to fresh assessment; on receipt, assessing officer to grant a reasonable opportunity, consider the documents, and pass a fresh reasoned assessment order within six weeks; petitioners to cooperate.

Final Conclusion: Writ petitions allowed on terms: assessment and penalty orders set aside, conditional remand directed for fresh assessment after prescribed precondition of penalty payment and within specified timelines; no order as to costs.

Condonation of delay - Technical glitches on Income Tax portal - Directory nature of filing audit report/Form 10CCB - Deduction under Section 80IA - Authority under CBDT Circular for condonation

Condonation of delay - Technical glitches on Income Tax portal - Directory nature of filing audit report/Form 10CCB - Deduction under Section 80IA - Delay of 1 hour 22 minutes in filing Form 10CCB was condoned and the deduction under Section 80IA allowed. - HELD THAT: - The Tribunal found on the evidence (screenshots, UDIN generation and attempts to upload) that the assessee repeatedly attempted to upload Form 10CCB on the night of 31.10.2022 and succeeded at 01:22 on 01.11.2022. Taking judicial notice of portal malfunction and last hour rush, and relying on precedent favouring a justice oriented approach rather than a pedantic one, the Tribunal held that the short delay was occasioned by circumstances beyond the assessee's control and not by negligence. The Tribunal also treated the filing requirement as procedural/directory in character; since the Form was in departmental records when the return was processed under section 143(1), condonation was appropriate and the assessing officer was directed to allow the claim of deduction under Section 80IA. The Tribunal therefore upheld the First Appellate Authority's decision to condone the delay and grant the deduction. [Paras 4, 21, 25, 26]

Delay in filing Form 10CCB was condoned and deduction under Section 80IA directed to be allowed.

Authority under CBDT Circular for condonation - Strict interpretation of exemption provisions - Applicability of CBDT Circular No.9/2015 and related delegation objections were not accepted as a basis to disturb the condonation; strict interpretation arguments relied upon by revenue were held inapplicable on facts. - HELD THAT: - The revenue contended that the Addl./JCIT(A) lacked jurisdiction under CBDT Circular 9/2015 and that exemption/deduction provisions must be strictly interpreted. The Tribunal observed that the delay was due to portal malfunction and that the Circular and the strict interpretation line of authorities relied upon by the revenue did not assist in the factual matrix of this case. Given the short delay, the attempts and evidence of portal errors, and precedents condoning minimal delays caused by such glitches, the Tribunal found no infirmity in the First Appellate Authority's exercise of discretion and rejected the contention that the condonation was void for want of authority or because of strict construction of exemption rules. [Paras 9, 10, 25, 26]

Objection based on CBDT Circular delegation and strict interpretation principle was not accepted; condonation upheld.

Final Conclusion: The departmental appeal is dismissed. The Tribunal upheld the Addl./JCIT(A)'s condonation of the slight delay in filing Form 10CCB caused by technical glitches and directed that the deduction under Section 80IA be allowed; other consequential directions in the appellate order remain undisturbed.

Deduction under section 80IA - Notional brought forward losses cannot be set off against profits of eligible business for computation of deduction under section 80IA - Doctrine of merger following dismissal of Special Leave Petition - Precedential application where later High Court decision favourable to assessee applies in presence of conflicting High Court views - Remand for factual verification of commissioning, eligibility and computation

Deduction under section 80IA - Notional brought forward losses cannot be set off against profits of eligible business for computation of deduction under section 80IA - Doctrine of merger following dismissal of Special Leave Petition - Precedential application where later High Court decision favourable to assessee applies in presence of conflicting High Court views - Legality of allowing deduction under section 80IA where earlier losses of the assessee had been absorbed against other income in prior years - HELD THAT: - The Tribunal upheld the view adopted by the lower authority that the assessee is legally entitled to claim deduction under section 80IA for the impugned year because the principle laid down by the Hon'ble Madras High Court in Velayudhaswamy (that losses absorbed against other income in years prior to the initial assessment year cannot be notionally brought forward and set off against profits of the eligible business for computing deduction under section 80IA(5)) is applicable. The Tribunal noted that the Hon'ble Supreme Court dismissed the SLP against the Madras High Court decision, so the doctrine of merger does not operate to displace that High Court view. The Tribunal also observed that the later decision of the Hon'ble Delhi High Court favouring the assessee reinforces the applicability of the Madras High Court principle in the presence of conflicting High Court decisions. Since no contrary binding Supreme Court decision was placed before the Tribunal, the legal position as applied by the CIT(A) in allowing the deduction was upheld. [Paras 6]

The legal position adopted by the CIT(A) in allowing the deduction under section 80IA is upheld.

Remand for factual verification of commissioning, eligibility and computation - Deduction under section 80IA - Requirement of factual verification of the assessee's claim (commissioning, eligibility and computation) before allowing the deduction under section 80IA for the impugned assessment year - HELD THAT: - Although the Tribunal accepted the legal principle favorable to the assessee, it observed that the CIT(A) did not examine or verify material factual aspects: the commissioning dates of specific windmills, whether the impugned year was the initial year for particular installations, and the correctness of the computation of the deduction claimed. Those factual determinations are within the co-terminus powers of the CIT(A) and the Assessing Officer and require examination on record and appropriate verification. Consequently, the Tribunal remitted the matter to the file of the CIT(A) for verification of the factual matrix and recomputation/verification of the claim for the impugned assessment year. [Paras 6, 7]

Matter remitted to the CIT(A) for factual verification of commissioning, eligibility and computation of the deduction; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal upheld the legal principle that notional brought forward losses already absorbed against other income cannot be set off against profits of the eligible business for computing deduction under section 80IA, but remitted the matter to the CIT(A) for factual verification of commissioning, eligibility and computation of the claim for AY 2017-18; the appeal is allowed for statistical purposes.

Cancellation of registration for specified violations under Section 12AB(4) - jurisdiction of the prescribed authority / CIT(Exemption) to grant or withdraw registration - reference by Assessing Officer under the second proviso to section 143(3) - temporal application and non-retrospectivity of Section 12AB(4) and Section 12AA(5) - transfer of case under Section 127 does not confer power to cancel registration - colourable exercise of power and bias in administrative orders - reliance on seized electronic material and procedural opportunity / natural justice

Jurisdiction of the prescribed authority / CIT(Exemption) to grant or withdraw registration - transfer of case under Section 127 does not confer power to cancel registration - Whether the Principal Commissioner of Income-tax (PCIT), Central-3 had jurisdiction to cancel the appellant's registration for AY 2015-16 to AY 2021-22 - HELD THAT: - The Tribunal held that the power to grant or withdraw registration in exemption cases lies with the 'prescribed authority' (CIT(Exemption)) as specified by CBDT notifications. A transfer under Section 127 for coordinated assessment does not, in the absence of specific Board authorisation, transfer the territorial/subject-matter jurisdiction vested in CIT(Exemption) to another Commissioner. Consequently, the PCIT-3 acted without jurisdiction in cancelling the registration on the basis of the transfer order and communications relied upon by the Revenue. [Paras 16, 17, 18]

PCIT-3 lacked jurisdiction to cancel the registration; the cancellation order is flawed on jurisdictional grounds and is quashed.

Reference by Assessing Officer under the second proviso to section 143(3) - temporal application and non-retrospectivity of Section 12AB(4) and Section 12AA(5) - Whether the reference made by the Assessing Officer after completion of assessment and the invocation of Section 12AB(4)/Section 12AA were permissible for Assessment Years 2015-16 to 2021-22 - HELD THAT: - The Tribunal found that the second proviso to section 143(3), empowering the AO to send a reference to PCIT upon satisfaction of specified violation, is effective only from 01.04.2022 and is intended to operate during the pendency of assessment proceedings so the AO can give effect to any cancellation in the assessment order. In the present case assessments had been completed on 29.03.2022 and the statutory amendments relied upon were not in force at the relevant time; therefore the post completion reference and invocation of Section 12AB(4) for years prior to 01.04.2022 was not permissible. The Tribunal applied the principle that a provision cannot be invoked retrospectively to validate a reference or cancellation when it did not exist at the material time. [Paras 11, 19, 21, 22]

The AO's reference and the PCIT's reliance on Section 12AB(4)/Section 12AA for cancellation of registration for AY 2015-16 to AY 2021-22 are unsustainable and are quashed.

Colourable exercise of power and bias in administrative orders - reliance on seized electronic material and procedural opportunity / natural justice - Whether the impugned order was vitiated by procedural infirmity, bias or colourable exercise of power - HELD THAT: - The Tribunal noted that the PCIT's observation that the consequential cancellation would operate even if specified violations were found not to exist amounted to a colourable exercise of power and indicated bias. Coupled with the earlier-noted jurisdictional and temporal defects in initiating the cancellation proceedings, the Tribunal concluded that the impugned order was arbitrary and unsustainable. Although the assessment evidence and issues of admissibility or cross examination were argued, the Tribunal found it unnecessary to adjudicate those factual or evidentiary questions once jurisdictional and procedural defects were established. [Paras 21, 23]

The impugned order is vitiated by colourable exercise of power and procedural infirmity and is quashed.

Final Conclusion: The appeal is allowed. The order of the PCIT dated 31.03.2024 cancelling the society's registration for Assessment Year 2015-16 to Assessment Year 2021-22 is quashed as issued without jurisdiction, impermissibly founded on provisions not operative for the relevant years, and tainted by a colourable exercise of power; other grounds were left open as academic.

Unexplained cash credit - bogus or fictitious share transactions - modus operandi of penny stock manipulation - reliance on information from Investigation Wing - independent enquiry requirement - burden of proof to establish sham transactions

Unexplained cash credit - reliance on information from Investigation Wing - independent enquiry requirement - Validity of addition of the entire sale consideration as unexplained cash credit on the basis of investigation information without independent enquiry - HELD THAT: - The Tribunal held that the Assessing Officer set aside the assessee's declared position by adding the entire sale consideration as unexplained cash credit essentially on the basis of information received from the Investigation Wing about alleged penny-stock manipulation. The Tribunal found that the AO and the first appellate authority relied on the narrated modus operandi in the investigation report but did not conduct any independent enquiry or produce corroborative material to show manipulation or sham transactions in the assessee's case. Coordinate decisions on the same scrip and higher court treatment were noted, and in the absence of independent factual material or inquiry by the tax authorities, mere information from the investigation unit and suspicion were insufficient to sustain an addition under the unexplained cash credit principle. Applying this reasoning, the Tribunal concluded that the addition could not be upheld where the authorities had not discharged the requirement of independent verification of the alleged dubious nature of the transactions.

Addition of the entire sale consideration as unexplained cash credit is not justified where it is based solely on Investigation Wing information without independent enquiry; the addition is therefore deleted.

Bogus or fictitious share transactions - burden of proof to establish sham transactions - modus operandi of penny stock manipulation - Whether the transactions in VAS Infrastructure Ltd. can be treated as fictitious in the absence of evidence of manipulation - HELD THAT: - The Tribunal examined the factual matrix and earlier decisions of coordinate benches addressing trades in the same scrip and observed that mere characterization of a scrip as a penny stock or recitation of a generic modus operandi does not by itself establish that particular transactions were fictitious. The Tribunal emphasized that the authorities failed to bring corroborative evidence showing manipulation of the specific scrip or that the assessee's transactions were part of a sham. Having regard to the documentary material placed on record and the lack of independent inquiry or material contradicting the genuineness of the transactions, the Tribunal held that the transactions could not be termed fictitious merely on the basis of suspicion arising from the investigation report.

Transactions in VAS Infrastructure Ltd. cannot be treated as fictitious in the absence of evidence of manipulation; findings of fictitiousness are reversed.

Final Conclusion: Following the reasoning of coordinate benches and on examination of the material on record, the Tribunal allowed the appeal, holding that additions based solely on Investigation Wing information and modus operandi without independent enquiry or corroborative evidence could not be sustained and that the contested VAS Infrastructure Ltd. transactions could not be treated as fictitious.

Penalty under section 271(1)(c) of the Income Tax Act - Estimate-based addition and difference of opinion - Levy of penalty not warranted where addition is founded on non-conclusive assessment estimate

Penalty under section 271(1)(c) of the Income Tax Act - Estimate-based addition and difference of opinion - Whether the penalty levied under section 271(1)(c) could be sustained where the assessing officer made an addition by estimating commission at a higher rate without any conclusive or scientific basis - HELD THAT: - The Tribunal noted that the Assessing Officer did not dispute the assessee's activity of earning commission from providing accommodation entries but altered the commission rate from 0.5% (as declared) to 1% by way of estimation. The revision was held to be an estimate founded on a difference of opinion as to the appropriate commission rate rather than a conclusive finding of concealment or deliberate suppression. In these circumstances the Tribunal held that the imposition of penalty under section 271(1)(c), which presupposes culpable concealment or furnishing of inaccurate particulars, was not justified. Consequently, where an addition arises from an estimate or difference of opinion without any scientific or conclusive determination of tax evasion, penalty cannot be sustained. [Paras 3, 5]

Penalty under section 271(1)(c) deleted and the assessee's appeal allowed.

Final Conclusion: The Tribunal deleted the penalty confirmed by the CIT(A) because the addition was based on an estimate and a mere difference of opinion regarding the appropriate rate of commission, and therefore the levy of penalty under section 271(1)(c) was not warranted.

Penalty under section 271(1)(c) for concealment of income and furnishing inaccurate particulars - Addition by estimation on alleged non-genuine purchases - Burden on the Assessing Officer to establish concealment - Estimate-based additions not constituting concealment warranting penalty

Penalty under section 271(1)(c) for concealment of income and furnishing inaccurate particulars - Addition by estimation on alleged non-genuine purchases - Burden on the Assessing Officer to establish concealment - Estimate-based additions not constituting concealment warranting penalty - Deletion of penalty imposed under section 271(1)(c) in respect of estimated additions on purchases treated as non-genuine. - HELD THAT: - The Tribunal held that the Assessing Officer did not establish that the assessee concealed income or filed inaccurate particulars merely because purchases from certain suppliers were treated as non-genuine and a gross profit of 12.5% was estimated on such purchases. Mere estimation of income, and the assessee's decision not to litigate the quantum further, does not equate to concealment. The Tribunal relied on judicial authority to the effect that where additions are made on an estimate basis without a finding of concealment in the assessment, penalty under section 271(1)(c) is not warranted; these precedents were referred to in the order as CIT vs. Aarkey Saree Museum and CIT vs. Modi Industrial Corporation . Applying that principle to the facts, the Tribunal found no merit in imposing the impugned penalty and directed its deletion for the assessment years in question. [Paras 5, 6]

Penalty under section 271(1)(c) deleted and appeals allowed.

Final Conclusion: The Tribunal held that estimate-based additions on alleged non-genuine purchases did not establish concealment; accordingly the penalty under section 271(1)(c) was deleted for Assessment Years 2009-10, 2010-11 and 2011-12 and the appeals were allowed.

Principles of natural justice - insufficient time to comply with notice - Standard Operating Procedure of CBDT requiring minimum 15 days - remand for de novo consideration

Principles of natural justice - insufficient time to comply with notice - Standard Operating Procedure of CBDT requiring minimum 15 days - Validity of rejection of application for registration on the ground of non-compliance with notice and adequacy of time afforded to the appellant to respond. - HELD THAT: - The Tribunal examined the sequence of notices and compliance dates and found that the appellant was directed on 04.03.2024 to furnish clarifications on or before 11.03.2024, leaving less than one week for compliance. The appellant had sought a short adjournment through the ITBA portal on 11.03.2024, which was not considered before the order rejecting registration was passed on 13.03.2024. The Tribunal held that giving such an unreasonably short period for compliance contravened the CBDT's Standard Operating Procedure dated 19.11.2020, which contemplates a minimum period of 15 days to respond to notices under the Act. Reliance was placed on the view in Dauphin Travel Marketing Private Limited v. ITO, where similar insufficiency of time was held to violate the principles of natural justice. In light of these findings, the Tribunal concluded that the approach of the CIT(Exemptions) was unreasonable and amounted to a denial of natural justice, warranting further consideration rather than a final rejection on the existing record. [Paras 5]

The matter is remitted to the file of the CIT(Exemptions) for de novo consideration in accordance with law.

Final Conclusion: The Tribunal set aside the rejection of the application for registration and remanded the matter to the CIT(Exemptions) for fresh consideration, holding that the denial of adequate time to respond violated the principles of natural justice.

Classification of imported goods as Heavy Melting Steel scrap versus specific headings for iron rods and channels - validity and evidentiary weight of pre shipment inspection certificate issued by accredited agency - mutilation under Section 24 of the Customs Act as remedial measure to convert goods into scrap - adoption of contemporaneous import prices for valuation - appealability of assessment/self assessment where enhanced value was accepted

Classification of imported goods as Heavy Melting Steel scrap versus specific headings for iron rods and channels - Note 8 to Section XV distinguishing scrap from usable metal goods - Whether the imported consignment declared as Heavy Melting Steel (HMS) scrap is classifiable as scrap under CTH 7204 49 00 or, as found by the adjudicating authority, partly as iron rods under CTH 7215 90 90 and channels under CTH 7308 90 10 - HELD THAT: - On physical examination the consignment contained identifiable quantities of channels (approx. 22.920 MT) and iron rods of assorted lengths (approx. 47.200 MT). The majority reasons accept that Note 8 of Section XV and the Chapter headings of Chapter 72 distinguish waste and scrap from metal goods which remain usable as such. The Member (Technical) applied those chapter/headings to hold that the rods and channels are classifiable under their specific headings rather than as scrap. The Member (Judicial) emphasised that, in the absence of a request or order for mutilation under Section 24, the presence of such usable items cannot be treated as scrap. The majority accepted this approach and upheld the reclassification to CTH 7215 (rods) and CTH 7308 (channels). [Paras 14, 16, 18, 23, 25]

Imported iron rods and channels are not to be treated entirely as HMS scrap and are classifiable under CTH 7215 90 90 (iron rods) and CTH 7308 90 10 (channels).

Adoption of contemporaneous import prices for valuation - effect of change of classification on assessable value - Whether, after reclassification of part of the consignment as rods and channels, the assessable value should be determined on the basis of contemporaneous import prices adopted by the adjudicating authority - HELD THAT: - Once the goods were reclassified as rods and channels, the tribunal held that valuation could no longer be at the declared scrap price. The adjudicating authority adopted the lowest contemporaneous import price available for the relevant items (Rs. 20 per kg as applied by the authority) to determine the assessable value of the 70.120 MT which consisted of rods and channels. The appellant's alternative contemporaneous price was for an earlier period and no documentary evidence was produced to support the lower rate for the import date. The majority found no infirmity in adopting the contemporaneous price applied by the adjudicating authority to compute differential duty. [Paras 14, 18, 24]

Valuation of the reclassified rods and channels is to be determined on the contemporaneous import price adopted by the adjudicating authority; the enhancement in value is upheld.

Validity and evidentiary weight of pre shipment inspection certificate issued by accredited agency - mutilation under Section 24 of the Customs Act as remedial measure to convert goods into scrap - Whether the pre shipment inspection certificate certifying the consignment as metallic scrap binds the Customs and whether the appellant was entitled to have the goods mutilated instead of facing reclassification and demand - HELD THAT: - The Tribunal noted that the appellant relied upon a pre shipment inspection certificate issued by an accredited agency certifying the cargo as metallic scrap following 100% visual inspection. The Member (Judicial) gave weight to that certificate and observed that, if Customs considered the goods to be usable items, the option of mutilation under Section 24 should have been afforded so as to render the items scrap; absence of such opportunity was a ground to favour the appellant. The Member (Technical) and the majority, however, placed decisive weight on the physical examination which disclosed rods and channels and held that, where usable items are present and no mutilation was sought or ordered, classification must follow their true character. The Tribunal therefore did not treat the pre shipment certificate as conclusive in the face of the physical findings and the lack of a mutilation request. [Paras 7, 8, 14, 23]

Pre shipment inspection certificate does not conclusively preclude physical reclassification where usable rods and channels are found; absence of a request for mutilation means reclassification and corresponding action on valuation are justified.

Final Conclusion: By majority the Tribunal upheld the adjudicating authority's reclassification of portions of the imported consignment as iron rods (CTH 7215 90 90) and channels (CTH 7308 90 10), affirmed valuation on the basis of contemporaneous import prices for those items, and dismissed the appellant's appeal; the pre shipment certificate and pleas for mutilation did not alter the majority's conclusion.

Service of show cause notice by e-mail - Manner of service under Section 153 - Return of seized goods under Section 110(2) - Presumption of service where e-mail does not bounce - Validity of service notwithstanding Government e-mail policy

Service of show cause notice by e-mail - Manner of service under Section 153 - Presumption of service where e-mail does not bounce - Service of the show cause notice on the petitioner by e-mail was valid. - HELD THAT: - The Court found that the SCN was sent to the e-mail address provided by the petitioner in her statement under Section 108 and that the e-mail address is the correct one. Section 153(1)(c) permits service by sending to the e-mail address provided by the person concerned. The respondents' contention that the e-mail did not bounce gives rise to a presumption of due service under the statutory scheme. Consequently, the attempt to impugn service merely because the petitioner asserts non-receipt, without reliable contrary electronic evidence, was rejected. [Paras 13, 16]

The SCN served by e-mail on the petitioner's address was validly served.

Validity of service notwithstanding Government e-mail policy - Manner of service under Section 153 - Use of a non-NIC e-mail service for official communication did not invalidate service of the SCN. - HELD THAT: - Para 2.1 of the Government's e-mail Policy prescribes use of NIC e-mail for official communication, but the policy does not override the statutory provision inserted in Section 153 permitting service by e-mail. The Finance Act, 2018 introduced e-mail as a mode of service and did not restrict it to government-provided e-mail services. Therefore, forwarding the SCN from a non-NIC (gmail) account does not render the service invalid where the statutory mode of service is otherwise satisfied. [Paras 17]

Service by e-mail through a non-NIC provider did not vitiate the SCN's validity.

Return of seized goods under Section 110(2) - The SCN was issued within six months of seizure; therefore, the seized goods are not liable to be returned under Section 110(2). - HELD THAT: - Section 110(2) mandates return of seized goods if no notice under clause (a) of Section 124 is given within six months of seizure. The goods were seized on 21.01.2023 and the SCN was sent by e-mail on 04.07.2023, which falls within the six-month period. Since service was held valid, the condition for return under Section 110(2) is not satisfied and the petitioner is not entitled to release of the gold on that ground. [Paras 10, 19]

Because the SCN was served within six months, the petitioner is not entitled to return of the seized gold under Section 110(2).

Admissibility of electronic evidence - The screenshot of the petitioner's inbox produced to show non-receipt of the e-mail is not a reliable electronic record for disproving service. - HELD THAT: - The petitioner relied on a screenshot of an inbox, but the Court noted that the certificate under Section 65-B of the Evidence Act indicated the digital record was extracted from a computer and not from a mobile phone, undermining the probative value of the screenshot. On that basis, the Court did not accept the screenshot as trustworthy evidence to rebut service. [Paras 18]

The screenshot evidence purporting to show non-receipt of the e-mail was not accepted as reliable proof.

Final Conclusion: The writ petition is dismissed: the SCN was validly served by e-mail (use of non NIC mail did not invalidate service), it was issued within six months of seizure, the petitioner's screenshot evidence was unreliable, and therefore she is not entitled to return of the seized gold under Section 110(2).

Maintainability of review petition - error apparent on the face of the record - new and important matter or evidence - limitation as a jurisdictional bar - relegation to the remedy of an appeal - deposit requirement on filing an appeal

Maintainability of review petition - error apparent on the face of the record - new and important matter or evidence - Review petition dismissed as not maintainable. - HELD THAT: - The Court applied the settled test for entertaining a review: review is permissible only upon discovery of new and important matter or evidence not within the party's knowledge despite due diligence, or upon an error apparent on the face of the record. The Petitioners did not contend that any new evidence had been discovered nor that any error apparent on the face of the record existed when the earlier order was passed. Consequently, the statutory and doctrinal prerequisites for review were not satisfied and the review could not be allowed. The Court declined to permit belated amendment to raise grounds that were not taken in the original writ petitions. [Paras 12, 13, 14]

Review petition dismissed for want of maintainability; no order as to costs.

Limitation as a jurisdictional bar - relegation to the remedy of an appeal - deposit requirement on filing an appeal - Ground of limitation could not be entertained in the review and Petitioners were properly relegated to raise limitation in the appeal under Section 129-A of the Customs Act, 1962. - HELD THAT: - Although the Petitioners asserted that the show cause notice was time-barred, that ground was not pleaded in the original writ petitions and was not relied upon when the earlier order was passed. The Court held that a contention of limitation, particularly where it raises mixed questions of fact and law, may be more appropriately considered on appeal; relegation to the statutory appellate remedy was therefore appropriate. The Court further held that the prospect of having to deposit sums while pursuing an appeal does not justify entertaining a review of the earlier order. [Paras 3, 4, 6, 7, 16]

Limitation ground not admitted in review; Petitioners to raise limitation and other contentions in the appeal under Section 129-A; review dismissed.

Final Conclusion: The Review Petition is dismissed as not maintainable for lack of new evidence or error apparent on the record; the Petitioners are relegated to pursue their contentions, including limitation, by way of appeal under Section 129-A of the Customs Act, 1962; no order as to costs.

RoSCTL Scheme benefits - amendment of shipping bill under Section 149 of the Customs Act - technical glitch in EDI system not to defeat substantive rights - export entitlement once substantive conditions satisfied cannot be denied for technical error - application of coordinate Bench precedent

RoSCTL Scheme benefits - amendment of shipping bill under Section 149 of the Customs Act - technical glitch in EDI system not to defeat substantive rights - Entitlement to RoSCTL benefits could not be denied merely on account of the electronic system (EDI) not permitting online amendment after export where amendment under Section 149 had been permitted and export and receipt of foreign exchange were admitted. - HELD THAT: - The Court treated the determinative question as whether a right accruing under law or a scheme can be defeated by a technical or electronic-system lacuna. The coordinate Bench decision in Bombardier Transportation India Pvt. Ltd. was held to be squarely applicable: where substantive conditions for entitlement are satisfied and the competent authority has permitted amendment under Section 149 of the Customs Act, denial of benefits on the ground that the EDI/system does not permit online amendment is impermissible. The respondent did not dispute the factual matrix that exports were effected, foreign exchange was realised and the competent authority had issued permission to amend the shipping bills. Applying the settled principle that procedural or technical deficiencies in electronic systems cannot override substantive rights, the Court directed grant of RoSCTL benefits in respect of the specified shipping bills within eight weeks. [Paras 8, 9, 10]

Petition allowed; respondents directed to grant RoSCTL benefits in respect of Shipping Bill Nos. 6448377 and 6791033 within eight weeks.

Final Conclusion: Writ petition allowed; benefit under the RoSCTL Scheme must be granted in relation to the two specified shipping bills notwithstanding the EDI/system technical impediment, since amendment under Section 149 had been permitted and substantive entitlement was established.

Rejection of transaction value - residual method of valuation - Rule 10A shifting burden of proof - use of foreign customs data/Public Ledger for redetermination - confiscation, redemption fine and penalties for undervaluation - binding effect of coordinate-bench precedent

Rejection of transaction value - Rule 10A shifting burden of proof - use of foreign customs data/Public Ledger for redetermination - residual method of valuation - Validity of redetermination of declared import value of poppy seeds by relying on data received from Turkish customs and Public Ledger and consequent rejection of transaction value. - HELD THAT: - The Tribunal found that the differential duty demand was founded solely on documents obtained from Turkish Customs and comparative data such as Public Ledger. Following the Coordinate Bench decision in Ajay Exports, the rejection of declared transaction value and resort to international price data was held to be without authority where the conditions for departure from transaction value were not established. Rule 10A is a procedural device to put an importer on notice and to shift the burden only upon satisfaction of the specific circumstances contemplated by the valuation Rules; mere suspicion of cartelisation or reliance on foreign price lists/Public Ledger, without admissible factual foundation and compliance with the procedural safeguards, does not justify rejection of the transaction value or application of the residual method. In these facts, the statutory prerequisites for invoking the alternate valuation methods were not satisfied and the department did not discharge the onus to demonstrate non-conformity with the transaction value. [Paras 7, 8, 9]

Redetermination of value by relying on Turkish customs data and Public Ledger and rejection of declared transaction value is unsustainable.

Confiscation, redemption fine and penalties for undervaluation - binding effect of coordinate-bench precedent - Sustainability of confirmation of differential duty, confiscation and penalties imposed by the Commissioner in light of the Tribunal's precedent and the Supreme Court's disposition. - HELD THAT: - On review, the Tribunal concluded that confirmation of differential duty, confiscation and imposition of fines/penalties were predicated on an erroneous legal premise of lawful rejection of transaction value. The Coordinate Bench in Ajay Exports set aside similar demands and ancillary penal consequences where valuation departure was not lawfully established; the Revenue's Civil Appeal against that decision was dismissed by the Supreme Court on 03.11.2023, reinforcing the precedent. Given the identical factual and legal matrix, the impugned order confirming demands and imposing penalties could not be sustained. [Paras 8, 9, 10]

The impugned order confirming differential duty, confiscation and penalties is set aside and the appeal is allowed with consequential relief.

Final Conclusion: The Tribunal set aside the Commissioner's order of 20.01.2014 confirming differential duty, confiscation and penalties in respect of imports of white and yellow poppy seeds from Turkey for September, 2004 to February, 2007, holding that rejection of declared transaction value based on Turkish customs data and Public Ledger was not legally sustainable; the appeal is allowed with consequential relief.

Reduction of share capital under Section 66 of the Companies Act, 2013 - Selective reduction of share capital - Tribunal confirmation of capital reduction - Compliance with National Company Law Tribunal (Procedure for Reduction of Share Capital of Company) Rules, 2016 - Creditors' objections and maintainability of reduction petition - Valuation and fairness opinion for exit price - Accounting treatment in accordance with Indian Accounting Standards - Statutory post-sanction formalities (filing of e Form INC 28 and publication of order)

Reduction of share capital under Section 66 of the Companies Act, 2013 - Tribunal confirmation of capital reduction - Selective reduction of share capital - Reduction of the petitioner's issued, subscribed and paid up equity share capital by cancelling 4,044 equity shares held by specified non promoter shareholders is confirmable - HELD THAT: - The Tribunal examined compliance with Section 66 and the NCLT Rules, noted that the scheme of reduction was approved by the Board and by a special resolution of shareholders, that necessary notices and publications were made as directed, and that none of the creditors (other than the objecting creditor) opposed the reduction. The tribunal applied the established principle that reduction of capital is ordinarily a domestic/commercial decision of the company and that selective reduction is permissible where statutory requirements are satisfied and the scheme is not shown to be mala fide or prejudicial to stakeholders. On the facts, the Tribunal found statutory requirements satisfied and no merit in interfering with the commercial decision, and therefore confirmed the reduction as set out in the special resolution and the subsequent board circular. [Paras 25, 26, 28]

Tribunal confirmed the proposed reduction of share capital as approved by the shareholders and board resolutions.

Creditors' objections and maintainability of reduction petition - Tribunal confirmation of capital reduction - Objection by a creditor (Zenith Metaplast Pvt. Ltd.) did not preclude confirmation of the capital reduction or render the petition non maintainable - HELD THAT: - The Tribunal considered the creditor's statement of objections alleging unpaid dues and pendency of arbitration. It observed that the creditor's counterclaim is pending before an arbitral tribunal and that the proposed reduction does not affect the creditor's rights or the course of the arbitration. The Tribunal also noted that the petitioner had provided creditor notices as directed and that, save for the objecting creditor, no objections were received from other creditors whose aggregate claims represent the overwhelming majority of debt. On these bases the Tribunal held the creditor's objections did not vitiate the petition or its maintainability. [Paras 23, 24, 25, 28]

Tribunal held that the creditor's objections did not bar confirmation; the petition was maintainable and the reduction could be sanctioned.

Valuation and fairness opinion for exit price - Accounting treatment in accordance with Indian Accounting Standards - Valuation, fairness opinion and accounting treatment relating to the pay out for extinguished shares were acceptable on the record - HELD THAT: - The Tribunal noted that the petitioner obtained an independent valuation and a fairness opinion and that the approved consideration per share included a premium over the valuer's fair value. A certificate from the petitioner's auditors (Deloitte Haskins & Sells LLP) confirmed that the accounting treatment for the reduction complies with the Indian Accounting Standards. Queries raised by ROC/RD about accounting entries and asset side treatment were addressed by the petitioner, which stated the pay out would be met from cash and cash equivalents and produced the proposed accounting entry. The Tribunal treated these filings as satisfying the ROC/RD concerns recorded in their report. [Paras 15, 19, 20, 28]

Tribunal accepted the valuation/fairness process and the audit certificate and record of accounting treatment as satisfactory for sanctioning the reduction.

Compliance with National Company Law Tribunal (Procedure for Reduction of Share Capital of Company) Rules, 2016 - Statutory post-sanction formalities (filing of e Form INC 28 and publication of order) - Directions as to compliance with post sanction formalities were issued - HELD THAT: - Having confirmed the reduction, the Tribunal directed the petitioner to file the copy of the minutes with the Registrar of Companies by filing e Form INC 28 within 30 days of receipt of the order and directed the petitioner to publish the order of confirmation in the specified newspapers in accordance with Section 66(4) of the Companies Act, 2013. The Registry was directed to prepare Form RSC 6 and issue it to the petitioner. [Paras 29]

Tribunal directed compliance with filing and publication formalities within specified timelines.

Final Conclusion: The Tribunal, after considering statutory requirements, ROC/RD observations and the lone creditor objection, confirmed the petitioner company's reduction of paid up equity share capital by extinguishing 4,044 equity shares held by specified non promoter shareholders, subject to compliance with filing of e Form INC 28 and publication of the confirmation order.

Quashing of criminal proceedings - abuse of process - effect of settlement/consent order by SEBI on criminal prosecution - jurisdiction of Single Judge versus Division Bench under High Court Rules - remand for fresh consideration - interim stay of trial proceedings

Quashing of criminal proceedings - abuse of process - effect of settlement/consent order by SEBI on criminal prosecution - Validity of the Single Judge's order quashing the criminal proceedings in Special CBI Case Nos. 47 and 48 of 2007 - HELD THAT: - The Single Judge had quashed and set aside the criminal proceedings on the ground that continuation would amount to an abuse of the process of court in view of the consent order passed by SEBI. This Court has not adjudicated the merits of whether the SEBI consent order extinguishes or bars criminal prosecution. Instead, the Court set aside the impugned Single Judge order and remitted the matter for fresh consideration by an appropriate Division Bench. The Court expressly refrained from commenting on the substantive question whether quashing was warranted on merits and directed that the Division Bench decide the matter independently and uninfluenced by prior orders. [Paras 16, 21, 23]

Impugned quashing order set aside and matter remitted for independent decision by a Division Bench; no adjudication on merits of effect of SEBI consent order.

Jurisdiction of Single Judge versus Division Bench under High Court Rules - remand for fresh consideration - Whether the Writ Petitions ought to have been heard by a Division Bench and the appropriate forum for adjudication - HELD THAT: - The Court noted that under the High Court Rules applications for quashing an FIR or charge-sheet fall within the jurisdiction of a Division Bench. Having regard to the earlier Division Bench order and this Court's grant of liberty to file a fresh petition, the Second Round petitions should have been placed before a Division Bench. While the Court refrained from expressing whether there was any deliberate manipulation of prayers, it concluded that the proper course is remand to the High Court to place the matter before an appropriate Division Bench for fresh hearing. [Paras 13, 14, 20, 23, 26]

Matter remitted to the High Court with direction to place papers before an appropriate Division Bench for fresh adjudication.

Interim stay of trial proceedings - remand for fresh consideration - Grant of interim relief in the form of stay of further proceedings in the Special CBI cases pending remand - HELD THAT: - In view of remitting the matter to the High Court for fresh hearing by a Division Bench, this Court granted an interim stay of further proceedings in Special Case Nos. 47 and 48 of 2007 for a limited period to preserve the status quo pending placement before the Division Bench. The parties were given liberty to seek extension or modification from the Division Bench hearing the matter. [Paras 24, 25]

Interim stay granted for four weeks from the date of the order; parties may approach the Division Bench for extension or modification.

Remand for fresh consideration - Direction as to manner of fresh adjudication by the Division Bench - HELD THAT: - The Court directed that the Division Bench shall independently decide the petitions on merits and in accordance with law, and shall not be influenced by the observations of the prior Division Bench, this Court's earlier order granting liberty, the Single Judge's order, or the present remand order. The Division Bench was requested to dispose of the petitions expeditiously and, if possible, within three months. [Paras 23, 24, 26]

Division Bench to hear afresh, uninfluenced by prior orders, and to endeavor to decide expeditiously (requested within three months).

Final Conclusion: The Supreme Court allowed the appeals, set aside the Single Judge's order quashing the criminal proceedings, remitted the petitions to the High Court to be placed before an appropriate Division Bench for fresh and independent adjudication, granted a limited interim stay of proceedings for four weeks, and directed the Division Bench to decide the matter expeditiously.

Freezing of demat accounts - freezing of promoter/promoter group holdings - SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 - Regulation 98 - procedure for imposing penalty / adjudication under SEBI Act and Depositories Act - principles of natural justice and audi alteram partem in administrative actions entailing civil consequences - compulsory delisting and attendant obligations under Delisting Regulations - liability of promoter - de jure and de facto position; termination of promoter status - limits of circulars and subordinate instruments vis a vis substantive statute and regulations - Article 14, Article 21 and Article 300A - deprivation of property and arbitrariness

Freezing of demat accounts - SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 - Regulation 98 - freezing of promoter/promoter group holdings - Validitiy of freezing the petitioner Dr. Pradeep Mehta's demat accounts pursuant to SEBI circulars and stock exchange directions - HELD THAT: - Court held that the freezing of all shares in the petitioner's demat accounts was unwarranted and illegal. Regulation 98(1) permits stock exchanges to take actions including freezing of promoter/promoter group holding of designated securities of the non compliant listed entity, but on a plain reading it applies to holdings in the listed company that is non compliant and cannot be extended to freeze unrelated holdings of the promoter. The petitioner's status as a promoter for purposes of liability could not be assumed merely from his being named at incorporation decades earlier; no material was shown that he continued to discharge promoter obligations or exercised control such as would attract statutory duties. The circulars dated 7 September 2016 and 26 October 2016 cannot be read so as to authorise freezing of a promoter's holdings in other companies without statutory backing. A circular cannot confer or expand substantive powers beyond what the statute and regulations permit. In the facts, respondents failed to show that the statutory prerequisites or any targeted determination of petitioner's promoter liability were made before freezing his accounts. The freezing was therefore arbitrary and without legal foundation. [Paras 67, 70, 71, 83, 84]

Freezing of the petitioner's demat accounts pursuant to the impugned communications is declared illegal and invalid; petitioner is free to deal with all shares held in the demat accounts.

Procedure for imposing penalty / adjudication under SEBI Act and Depositories Act - principles of natural justice and audi alteram partem in administrative actions entailing civil consequences - limits of circulars and subordinate instruments vis a vis substantive statute and regulations - Whether the impugned freezing amounted to imposition/recovery of penalty without following statutory adjudicatory procedure and without hearing - HELD THAT: - Court found that the freezing operated as a mechanism to recover fines/penalties imposed on the listed company and thus had penal character. Sections governing imposition and adjudication of penalties in the SEBI Act, the Depositories Act and the SCR Act (including provisions requiring an adjudication procedure and that sums by way of penalty be credited to public funds) were not complied with. Administrative actions that entail civil consequences (deprivation of property rights in dematerialised securities) require adherence to the rules of natural justice; no prior notice, show cause process or opportunity of hearing was afforded to the petitioner before the freeze. The respondents could not rely on circulars to bypass statutorily prescribed adjudication and procedural safeguards. Consequently, the impugned action violated audi alteram partem and relevant statutory procedure. [Paras 74, 75, 76, 80, 81]

Freezing effected without complying with statutory adjudication and natural justice is illegal; respondents cannot recover penalties from petitioner's demat accounts by invoking circulars in absence of prescribed procedure.

Liability of promoter - de jure and de facto position; termination of promoter status - compulsory delisting and attendant obligations under Delisting Regulations - Whether the petitioner could be treated as a promoter liable for company's defaults when his association had ended and no active control was shown - HELD THAT: - Court applied company law and authoritative expositions on 'promoter' to hold that promoter status is a question of fact and ordinarily terminates when the board takes over management. Clause (a) of section 2(69) (Companies Act) is a de jure marker, while clauses (b)/(c) denote de facto control. SEBI/stock exchanges were required to examine the company's latest filings (annual return) and facts to determine promoter status at the relevant time; they could not rely on initial incorporation records from decades earlier. There was no evidence that the petitioner exercised control or had obligations under the Regulations at the time of the alleged defaults; therefore the obligation to pay or to have accounts frozen could not properly be fastened on him. [Paras 60, 61, 62, 63, 65]

Petitioner could not be treated as liable promoter for Shrenuj's defaults on the available record; promoter status was not established so as to justify freezing.

Freezing of demat accounts - principles of natural justice and audi alteram partem in administrative actions entailing civil consequences - Reliefs and costs ordered in respect of both petitions (Dr. Pradeep Mehta and Neil Pradeep Mehta) - HELD THAT: - On the cumulative illegalities, arbitrary conduct and prolonged deprivation of property, Court exercised writ jurisdiction to (i) declare the impugned communications freezing the respective demat accounts illegal and invalid; (ii) permit both petitioners to deal with their shares; and (iii) direct joint payment of costs by SEBI, BSE and NSE - Rs. 30 lakhs to Dr. Pradeep Mehta and Rs. 50 lakhs to his son - payable within two weeks. The Court refused interim stay applications of respondents. The Court also observed that issues concerning international accounting of penalty receipts to Consolidated Fund of India are left to the appropriate Ministry to examine. [Paras 85, 86, 101, 103, 104]

Both writ petitions allowed in the terms set out: demat freezes quashed; petitioners free to deal with shares; SEBI/BSE/NSE to jointly pay specified costs within two weeks; other legal challenges to regulations left open for consideration by appropriate fora or authorities.

Final Conclusion: The High Court held that the freezing of the petitioners' demat accounts pursuant to SEBI circulars and stock exchange directions was illegal, arbitrary and violative of principles of natural justice and statutory procedure; the freezes were quashed, the petitioners were permitted to deal with their shares, and SEBI, BSE and NSE were directed to jointly pay compensatory costs to the petitioners. Issues concerning broader statutory accounting of penalties were left to the appropriate Ministry and other legal challenges to the regulations were kept open.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Continuation of pending suits or proceedings against the corporate debtor - Counter-claim under Order VIII Rule 6 of the Code of Civil Procedure, 1908 - Recording of evidence during moratorium - Interaction between moratorium and counter-claims

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Counter-claim under Order VIII Rule 6 of the Code of Civil Procedure, 1908 - Recording of evidence during moratorium - Effect of the moratorium under Section 14 IBC on continuation of suit proceedings and recordal of evidence, particularly in respect of a counter-claim filed by the corporate debtor. - HELD THAT: - The Court examined the scope of the moratorium declared by the NCLT under Section 14(1) IBC, which prohibits institution or continuation of suits or proceedings against the corporate debtor. The court held that the plain language of Section 14(1)(a) prohibits continuation of proceedings insofar as they are proceedings brought by or against the corporate debtor, but does not, by its terms, preclude a defendant's counter-claim as defined under Order VIII Rule 6 CPC. A counter-claim is a separate cause of action that accrues to a defendant and can be prosecuted within the suit framework; therefore continuation of recordal of evidence solely in respect of the counter-claim does not fall within the moratorium's prohibition. The court rejected the contrary position as laid down in SSMP to the extent it treats counter-claims as barred by the moratorium, relying on authoritative decisions cited by the appellant and on the statutory text. Applying that reasoning to the impugned order, the court found the direction to record evidence in the suit (which would include the plaintiff's claim) flawed, because the moratorium must operate against the plaintiff's claim while permitting recordal of evidence insofar as it relates exclusively to the counter-claim of the corporate debtor. [Paras 19, 20, 21, 22, 23]

Impugned direction to record evidence in the suit insofar as it would continue the plaintiff's claim is set aside; recordal of evidence may continue only in respect of the counter-claim filed by the corporate debtor, while the moratorium operates in relation to the plaintiff's claim.

Final Conclusion: Appeal disposed of by varying the impugned order: recordal of evidence to continue only for the corporate debtor's counter-claim; the moratorium under Section 14 IBC remains operative in respect of the plaintiff's claim; the respondent may approach the NCLT to place on record any claims it wishes the NCLT to consider.

Expiry of CIRP period and validity of Committee of Creditors decisions - extension and exclusion of period of CIRP by the Adjudicating Authority - functus officio of the Committee of Creditors - res judicata and abuse of process in successive challenges to the same CoC decision

Expiry of CIRP period and validity of Committee of Creditors decisions - extension and exclusion of period of CIRP by the Adjudicating Authority - functus officio of the Committee of Creditors - Approval of the Resolution Plan by the CoC on 27.07.2023 was not void for being beyond the CIRP period. - HELD THAT: - The Adjudicating Authority had before it IA No.1529 of 2023 filed for extension of 30 days and by order dated 18.10.2023 allowed that application while excluding the period during which IA No.1529/2023 remained pending. The Tribunal held that because the period from 30.06.2023 to 18.10.2023 was excluded and a further 30 days extension was granted from the date of the order, the CoC approval dated 27.07.2023 falls within the extended CIRP period. If the application for extension had been rejected, the approval on 27.07.2023 would have been vulnerable, but in the factual matrix the extension operates to validate the CoC decision. The Tribunal also relied on precedent where subsequent orders granting exclusion/extension were held to cover the date on which a plan was approved, and treated the Form-H notation of a pending application as not determinative when read with subsequent exclusion orders. [Paras 7, 8, 9, 11]

CoC approval dated 27.07.2023 is within the extended CIRP period and is not illegal for having been taken after 30.06.2023.

Res judicata and abuse of process in successive challenges to the same CoC decision - The Appellant could not re-agitate the legality of the CoC minutes dated 27.07.2023 after unsuccessfully challenging the same in IA No.1748 of 2023 and subsequent appeals. - HELD THAT: - The Appellant had earlier filed IA No.1748 of 2023 on 29.07.2023 seeking setting aside of the CoC minutes dated 27.07.2023; that application was dismissed by the Adjudicating Authority on 22.12.2023, the Tribunal dismissed the ensuing Company Appeal on 23.02.2024, and the Appellant's challenge before the Supreme Court was also dismissed. The Tribunal held that having unsuccessfully pursued those remedies, the Appellant cannot be permitted to challenge the same CoC decision again by filing IA No.1420 of 2024. The Adjudicating Authority correctly rejected the later application as a re-agitation of the settled grievance. [Paras 12, 13]

IA No.1420 of 2024 was rightly rejected as impermissible re-agitation of a matter already adjudicated.

Final Conclusion: The Appeal is dismissed; the impugned order rejecting IA No.1420 of 2024 is upheld and the parties shall bear their own costs.

Proof of debt and default - reliance on balance sheet as evidence of acknowledgment - acknowledgement under Section 18 of the Limitation Act - maintainability of an application under Section 7 of the IBC - prematurity of insolvency petition - false or misleading affidavit and imposition of costs

Proof of debt and default - reliance on balance sheet as evidence of acknowledgment - Whether the Financial Creditor proved disbursement of loan and existence of debt and default - HELD THAT: - Bank statements filed by the Financial Creditor showed disbursement of Rs.2 crores on 23.06.2010 and the Corporate Debtor never denied that disbursement. The Corporate Debtor's balance sheet for 2010-11 (filed in the record) recorded an unsecured loan in favour of the Financial Creditor, and subsequent balance sheets continued to reflect the borrowing with increasing amounts consistent with interest being added. The Appellant's attempt to attribute the long term borrowing figure to a separate loan from Romell Real Estates Pvt. Ltd. was examined: no contemporaneous documents proving a loan from Romell to the Corporate Debtor were produced, and the asserted Romell payments occurred after the relevant balance sheet entries that already reflected the borrowing. On these bases the Tribunal concluded that the Financial Creditor had satisfactorily proved disbursement, the existence of the debt, and default. [Paras 9, 11, 14, 15, 16]

Disbursement, debt and default were proved and accepted by the Tribunal.

Acknowledgement under Section 18 of the Limitation Act - reliance on balance sheet as evidence of acknowledgment - Whether entries in successive balance sheets constituted acknowledgement under Section 18 sufficient to save the Section 7 application from being time barred - HELD THAT: - The balance sheet for 2010-11 expressly named the Financial Creditor and reflected the loan; successive balance sheets continued to record the liability (long term borrowings) up to 2017-18. Although the creditor's name did not appear in some later sheets, the Tribunal held that the continuous reflection of the same borrowing across balance sheets amounted to acknowledgement of the debt within the meaning and effect relied upon, preventing the application filed on 22.04.2020 from being barred by limitation. The Appellant's contention that lack of the creditor's name in later sheets negated acknowledgment was rejected in light of the continuity of entries from 2010-11 onwards. [Paras 18, 19, 21]

Balance sheet entries constituted continuing acknowledgment, and the Section 7 application was not time barred.

Maintainability of an application under Section 7 of the IBC - prematurity of insolvency petition - Whether the Section 7 application was premature because the Loan Agreement purportedly made the debt repayable only on expiry of ten years - HELD THAT: - The Loan Agreement clauses relied upon by the Appellant were pleaded by the Corporate Debtor in the Tribunal as forged; a party cannot assert premature filing when it has denied the very agreement on which prematurity is based. Moreover, clauses permitting pre payment within the first five years showed that the borrower had a right to repay earlier than the ten year maturity. Given the admitted disbursement, continuing reflection of debt in balance sheets, and the pleading that the agreement was fabricated, the Tribunal found no merit in the contention that the petition was premature. [Paras 22, 23, 24]

The Section 7 application was not premature and was maintainable.

False or misleading affidavit and imposition of costs - Whether the Appellant filed misleading affidavits and whether costs should be imposed - HELD THAT: - The Tribunal directed the Appellant to file documents explaining the long term borrowing entry. The additional affidavit filed by the Appellant purported to ascribe the entry to payments by Romell Real Estates Pvt. Ltd., but the dates and documents did not support that assertion and in some instances post dated the balance sheet entries. The Tribunal found the affidavit to contain false averments and held that this alone could have warranted dismissal. In the circumstances, and having rejected the Appellant's substantive pleas, the Tribunal imposed costs for filing false and misleading affidavits. [Paras 16, 17, 26]

Appellant's additional affidavit was found misleading; appeal dismissed and costs ordered.

Final Conclusion: Appeal dismissed. The NCLT order admitting the Section 7 application is upheld. Costs of Rs.1,00,000 are imposed on the Appellant to be paid to the Financial Creditor within four weeks.

Exemption for construction of road for use by general public - taxability of construction of railway sidings rendered to railways - extended period of limitation - suppression with intent to evade - reverse charge mechanism - GTA service

Exemption for construction of road for use by general public - Construction of the road between NH2 and Aerotropolis Township is exempt from Service Tax as a road for use by the general public. - HELD THAT: - The Tribunal examined the certification of the local authority (Andal Gram Panchayat) that the constructed road is meant for use by the general public and applied the exemption contained in Sl. No. 13(a) of Notification No. 25/2012 S.T. The notification exempts services relating to construction of a road for use by the general public. Having regard to the local authority's certification and the scope of the exemption, the Tribunal held that the demand confirmed in the impugned order on this count is not sustainable. [Paras 7]

Demand in respect of construction of the road set aside as exempt.

Taxability of construction of railway sidings rendered to railways - Services in relation to construction of railway sidings rendered to the Railways are not liable to Service Tax. - HELD THAT: - Relying on the decision affirmed by the Hon'ble Supreme Court in the Konkan Railway matter and Tribunal precedents, the Tribunal concluded that services relating to construction and erection of railway sidings rendered to railways fall within the exclusion/exemption applicable to 'railways' and are therefore not taxable. The Tribunal applied the reasoning that the statutory scheme and precedents do not permit a narrow or artificial restriction excluding such railway works from the exemption, and accordingly held the demands relating to construction of railway sidings and related services to M/s. Bridge & Roof Company (India) Ltd. unsustainable. [Paras 8]

Demand in respect of construction of railway sidings and related works set aside as not liable to Service Tax.

Extended period of limitation - suppression with intent to evade - The demand for the period 2013-14 raised by invoking the extended period of limitation is not sustainable because suppression with intent to evade tax was not established. - HELD THAT: - The Tribunal noted that the Show Cause Notice was issued on the basis of discrepancies between ITR, 26AS and returns, but the adjudicating authority made no finding of suppression with intent to evade payment of tax. In the absence of such a finding, the extended period of limitation could not be invoked. Consequently, the demand for the period 2013 14 confirmed by invoking the extended period was held to be barred by limitation and was set aside. [Paras 9]

Demand for 2013-14 set aside on limitation grounds.

Reverse charge mechanism - GTA service - extended period of limitation - suppression with intent to evade - The demand confirmed under the category of GTA service on reverse charge basis, raised by invoking the extended period of limitation, is not sustainable for want of established suppression with intent to evade. - HELD THAT: - Applying the same limitation reasoning as for the earlier demand, the Tribunal observed that suppression with intent to evade tax by the appellant was not established. Therefore the extended period of limitation was not invokable for the GTA reverse charge demand. The Tribunal also noted that the matter was revenue neutral in terms of credit entitlement but decided the issue on limitation grounds. [Paras 10]

GTA reverse charge demand set aside on limitation grounds.

Final Conclusion: The appeal is allowed in part: demands in respect of construction of the road and construction of railway sidings (and related services) are set aside as not taxable; the demands for the period 2013 14 and the GTA reverse charge demand are set aside on limitation grounds. The appeal is disposed of accordingly.

Works Contract Service - vagueness of show cause notice - jurisdictional competence despite erroneous statutory reference - negative list regime - exemption Notification No. 25/2012-ST entry 12 - retrospective exemption under Section 98 - Management, Maintenance and Repair services - composite contracts taxable from 01.06.2007

Vagueness of show cause notice - Works Contract Service - jurisdictional competence despite erroneous statutory reference - Whether the show cause notice was vitiated for vagueness and whether the classification of the appellant's activity as Works Contract Service was impermissibly beyond the scope of the SCN - HELD THAT: - The Tribunal examined the SCN, the appellant's non-cooperation in the investigation and the contents of the record. It held that the department had gathered intelligence, sought documents specific to various service heads and that the appellant repeatedly failed to furnish full details; consequently the SCN could not be treated as void for vagueness. The Tribunal further applied the settled principle that an order is not vitiated by reference to a wrong provision if the authority had power to pass the order under law. On facts and in the absence of full contract documents, the Tribunal found the appellate authority was entitled to classify the activities as Works Contract Service in light of the statutory definition which expressly includes erection, commissioning and installation. The Tribunal also noted the principle that composite contracts have been exigible to service tax from 01.06.2007 and that the classification adopted by the appellate authority was therefore correct. [Paras 10]

The contention that the SCN/OIO/impugned order were vague or beyond the SCN is rejected; the finding that Works Contract Service was provided is upheld.

Negative list regime - exemption Notification No. 25/2012-ST entry 12 - Works Contract Service - Whether the services of installation, erection and commissioning of firefighting systems supplied to PWD/CPWD for government buildings for the period 01.07.2012 to 31.03.2013 are exempt under Notification No.25/2012-ST entry 12 - HELD THAT: - The Tribunal observed that the case spans the pre- and post-negative list periods. It analysed the definition of Works Contract Service and the scope of the exemption under Notification No.25/2012-ST and concluded that services provided to PWD/CPWD for government buildings fall within the exemption entry for the post-negative list period. The Tribunal accepted the appellant's contention that the demand for the period from 01.07.2012 to 31.03.2013 is covered by the notification and therefore not exigible to service tax. [Paras 11]

Demand for the period 01.07.2012 to 31.03.2013 is dropped as exempt under Notification No.25/2012-ST entry 12.

Management, Maintenance and Repair services - retrospective exemption under Section 98 - Whether maintenance charges received for maintenance of firefighting equipment in government buildings for the pre-negative list period are chargeable to service tax or covered by retrospective exemption - HELD THAT: - Having held that installation services for government buildings were not exigible for the relevant periods, the Tribunal addressed maintenance services. It accepted the appellant's submission and precedent relied upon that maintenance services rendered in respect of non-commercial government buildings are covered by the retrospective amendment effected by Section 98 for the specified period. Consequently, maintenance receipts for government buildings are not exigible to service tax for the period in question. [Paras 12]

Demand in respect of Management, Maintenance and Repair services for government buildings is exempted by virtue of the retrospective provision and is therefore set aside.

Final Conclusion: The appeal is allowed; the impugned order is set aside and the appellant is held not liable to service tax on the provision of the relevant services to PWD/CPWD for the periods under consideration, leading to discharge of the confirmed demands.

Construction of complex services - real estate agent services - reverse charge mechanism - exemption for governmental authority - absence of statutory machinery for valuation/abatement in composite contracts - extended period of limitation - fraud/suppression requirement - taxability of composite contracts vs. outright sale of immovable property

Construction of complex services - absence of statutory machinery for valuation/abatement in composite contracts - taxability of composite contracts vs. outright sale of immovable property - Service tax not leviable on construction-and-sale of complexes/houses/flats by the Housing Board - HELD THAT: - The Tribunal examined the statutory nature and activities of the appellant and the statutory scheme for levy and valuation of service tax. It held that the 2010 explanation to the definition expands the scope of taxable service by deeming certain constructions to be services, but that neither the Act nor the Rules provide the statutory machinery to segregate service component from land and goods in composite contracts. Reliance was placed on the Orissa High Court/Supreme Court line of authority and the Delhi High Court decision in Suresh Kumar Bansal, which set aside the explanation insofar as composite contracts are included without appropriate valuation machinery. The Tribunal followed those precedents and earlier CESTAT decisions, concluding that service tax cannot be validly levied on the appellant's construction-and-sale transactions in the absence of statutory valuation mechanisms and because such composite contracts fall outside taxable service. [Paras 7]

Demand of service tax on construction-and-sale of complexes/houses/flats is not sustainable and is set aside.

Real estate agent services - service - principal-to-principal transfers - Amounts charged by the Housing Board are not taxable as real estate agent services - HELD THAT: - Applying the statutory definition of a real estate agent and real estate consultant, the Tribunal found that the Housing Board did not render advisory, consultancy or agent services in relation to sale, purchase, leasing or renting of real estate. The charges (transfer/processing fees, miscellaneous receipts, forfeited earnest money) arise from the Board's statutory functions in effecting transfers and maintaining records and are either not consideration for a "service" or fall within exclusions to the definition. The Tribunal observed consistent precedents that transfer/authorization charges collected by a builder or statutory custodian on a principal-to-principal basis are not taxable as real estate agent services, and accordingly rejected the demand. [Paras 8]

Demand under the head of real estate agent services is not sustainable and is set aside.

Reverse charge mechanism - business entity - exemption for governmental authority - Housing Board not liable to pay service tax under reverse charge on legal fees, manpower supply and works contract services - HELD THAT: - The Tribunal analysed Notification No. 30/2012 and the definition of "business entity" and concluded that the Housing Board, though a body corporate, is a governmental authority constituted by statute and does not qualify as a "business entity" registered as a body corporate for purposes of the Notification. Accordingly, the reverse charge liability does not apply. Further, works contract services provided to the Board fall within the exemption in Notification No. 25/2012 where the recipient is a governmental authority and the works are predominantly for non commercial use; the Tribunal relied on the Punjab & Haryana High Court holding that the Housing Board is a governmental authority. Accordingly, reverse-charge demands and related demands for works contract and manpower supply services were held unsustainable. [Paras 9]

Reverse charge demands for legal charges, manpower supply and works contract services are not sustainable; works contract services are exempt when provided to the governmental authority.

Extended period of limitation - fraud/suppression requirement - statutory audits and disclosure by governmental authority - Extended period of limitation cannot be invoked; demands are barred by limitation - HELD THAT: - Considering the appellant's status as a statutory governmental authority required to maintain audited accounts and to furnish audited financial statements, the Tribunal found no evidence of fraud, collusion, wilful mis statement or suppression of facts with intent to evade tax - ingredients necessary to invoke the extended limitation period. Reliance was placed on Supreme Court and Tribunal precedents holding that such an intent cannot ordinarily be attributed to government authorities. In the absence of such culpability, demands for periods beyond the normal limitation are barred. [Paras 10]

Extended period of limitation is not invokable; the entire demand is barred by limitation.

Final Conclusion: Impugned orders confirming service-tax demands (including under construction-of-complex, real-estate-agent and reverse-charge heads) are set aside and the appeals of the Housing Board are allowed with consequential relief; departmental appeals against the dropped demands are dismissed.

Passing on fraudulent Cenvat Credit - Demand and recovery of Cenvat credit - Extended period under proviso to Section 11A(4) of the Central Excise Act, 1994 - Burden of proof and chain of evidence - Reliability of testimonial evidence without cross-examination - Rebuttal of documentary evidence

Demand and recovery of Cenvat credit - Burden of proof and chain of evidence - Rebuttal of documentary evidence - Sustainability of the demand for recovery of Cenvat credit against the appellants where department relied on findings that suppliers did not possess or supply goods - HELD THAT: - Tribunal examined the evidentiary matrix and found that although the investigation showed deficiencies in the books and receipts at the end of certain suppliers, the department failed to establish the crucial second link that M/s Ridhi Sidhi did not supply the goods to the appellants. The appellants produced transport receipts, weighment slips, goods receipt notes, ledger entries and proof of payments and outputs indicating receipt and use of the material. The departmental case rested on presumptions and testimonial statements which were not corroborated by credible documentary evidence negating the appellants' proof. In the absence of independent evidence rebutting the appellants' documentary records and showing non-receipt by the appellants, the demand could not be sustained. The Tribunal therefore set aside the impugned order and allowed the appeals.

Demand for recovery of Cenvat credit set aside and appeals allowed for lack of adequate evidence establishing non-supply to the appellants.

Reliability of testimonial evidence without cross-examination - Burden of proof and chain of evidence - Permissibility of relying on statements of third parties (suppliers) as decisive evidence where cross-examination was refused despite the appellants' request - HELD THAT: - The Tribunal noted that the department relied significantly on statements of third-party suppliers who denied dealings with M/s Ridhi Sidhi, but the adjudicating authority refused the appellants' request to cross-examine those witnesses. The refusal rendered those testimonial statements less reliable, particularly where the appellants had produced documentary proof of movement and payment for goods. The Tribunal held that reliance on such untested testimonial evidence, without addressing the appellants' opportunity to challenge it, was improper and contributed to the failure of the departmental case.

Testimonial statements relied upon by the department could not be treated as decisive in the face of denial of cross-examination and unrebutted documentary evidence; finding based on such statements unsustainable.

Final Conclusion: On the record before it the Tribunal found the departmental case to be based on assumptions and uncorroborated testimonial statements while the appellants had produced credible documentary evidence of receipt and payment; refusal to allow cross-examination further weakened the departmental case. The impugned order confirming recovery of Cenvat credit was set aside and the appeals allowed.

Samples drawn for in-house testing not excisable goods until cleared from factory - destruction/consumption of samples within factory prevents chargeability of excise duty - maintenance of internal records for samples as surrogate for prescribed accounts - non-invocation of extended period of limitation in absence of suppression - applicability of CBEC Supplementary Instructions on samples confined to cleared excisable goods

Samples drawn for in-house testing not excisable goods until cleared from factory - destruction/consumption of samples within factory prevents chargeability of excise duty - Liability to excise duty on samples drawn for internal testing and control purposes - HELD THAT: - The Tribunal held that where samples are drawn prior to completion of manufacture (bottling/labeling) and are consumed or destroyed within the factory in the course of testing, they do not attain the character of marketable excisable goods and are not chargeable to excise duty. The decision relied on the appellants' Standard Operating Procedures and internal records showing destruction/consumption of samples, prior Tribunal and High Court precedents, and the Larger Bench view that control samples kept in factory and not cleared are not leviable to duty. The Tribunal distinguished ITC Ltd. on facts (cigarettes and different circumstances) and found no evidence that samples were cleared outside the factory; accordingly the general ratio that only samples cleared from the factory attract duty was applied. [Paras 10, 11, 12]

No excise duty payable on samples drawn for internal testing or control so long as they are consumed/destroyed and not cleared outside the factory.

Maintenance of internal records for samples as surrogate for prescribed accounts - applicability of CBEC Supplementary Instructions on samples confined to cleared excisable goods - Sufficiency of the appellants' record-keeping to preclude duty demand under Supplementary Instructions - HELD THAT: - The Tribunal found that although no specific statutory form may be prescribed for such samples, the appellants' internal records and entries in excise returns (for control samples) and the Standard Operating Procedures demonstrating destruction/consumption are acceptable evidence that the samples were not cleared from the factory. In the absence of contrary proof from Revenue that samples were cleared or that records were inadequate to show non-clearance, the Tribunal held the Department's contention that duty was exigible due to lack of prescribed accounts was not made out. [Paras 9, 12]

The appellants' internal records and SOPs suffice to show samples were not cleared and therefore the demand based on alleged non-maintenance of accounts under the Supplementary Instructions cannot be sustained.

Non-invocation of extended period of limitation in absence of suppression - Permissibility of invoking extended period of limitation for the periodic show cause notices - HELD THAT: - The Tribunal held that the Department could not invoke the extended period of limitation in successive Show Cause Notices in the absence of any evidence of suppression or fraud by the appellants. Noting the appellants filed returns regularly and the controversy involved settled points of legal interpretation, the Tribunal followed precedents that disfavour piecemeal invocation of extended limitation for the same transactions and concluded Revenue failed to justify extended period invocation. [Paras 13]

Extended period of limitation cannot be invoked; demands issued invoking extended period are not sustainable.

Final Conclusion: All appeals allowed: demands confirmed by the lower authorities are set aside insofar as they relate to internal testing and control samples not cleared from the factory, and invocation of the extended period of limitation is held unsustainable.

CENVAT credit admissibility on belated availment - Availability of CENVAT credit on capital goods under Rule 4(2)(a) and 4(2)(b) of the CENVAT Credit Rules, 2004 - Condition of first utilising CENVAT credit under Notification No. 20/2007-C.E. (Clause 2B) - Refund neutrality and alleged excess refund due to belated credit availment - Applicability of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 for recovery and penalty

CENVAT credit admissibility on belated availment - Availability of CENVAT credit on capital goods under Rule 4(2)(a) and 4(2)(b) of the CENVAT Credit Rules, 2004 - Whether belatedly availed CENVAT credit (including CVD/AED on imported capital goods and inputs) is permissible under the CENVAT Credit Rules, 2004 - HELD THAT: - The Tribunal found no dispute as to the eligibility of the credits. Rule 4(2)(a) restricts CENVAT credit on capital goods to not exceed 50% of duty in the same financial year and Rule 4(2)(b) permits taking the balance in subsequent years. The Tribunal held that these provisions do not mandate immediate availment on receipt of capital goods and do not bar a manufacturer from taking credit at a later date. Consequently, the belated availment of credit in September 2011 did not contravene the CENVAT Credit Rules, 2004. [Paras 6]

Belatedly availed CENVAT credit was not in contravention of the CENVAT Credit Rules, 2004; the credits were admissible.

Condition of first utilising CENVAT credit under Notification No. 20/2007-C.E. (Clause 2B) - Refund neutrality and alleged excess refund due to belated credit availment - Whether the respondent's belated availment of CENVAT credit resulted in receipt of excess refund in breach of Clause 2B of Notification No. 20/2007-C.E. - HELD THAT: - The Tribunal noted that the respondent had begun paying duty in cash from November 2010 by utilising the CENVAT credit available in their books and paid the balance in cash for November 2010 to August 2011, claiming refunds for those months. The belatedly availed credit was utilised for payment of duty after September 2011, which caused lesser refunds after that date rather than larger refunds earlier. On this factual and legal basis the Tribunal concluded there was no breach of Clause 2B and no excess refund was obtained by the respondent as a consequence of the belated credit availment. [Paras 6]

No violation of Clause 2B of Notification No. 20/2007-C.E.; no excess refund resulted from the belated availment of credit.

Applicability of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 for recovery and penalty - Whether alleged irregular credits availed in September 2011 could be recovered under Rule 14 read with Section 11A and whether interest and penalty were exigible - HELD THAT: - The proposed recovery under Rule 14 read with Section 11A presupposes that the credit taken was irregular or taken in contravention of the CENVAT Credit Rules. Having held that the credits were admissible and not irregular, the Tribunal concluded that the provisions relied upon by Revenue for recovery, interest and penalty could not be invoked in the present case. Consequently, demand, interest and penalty were not sustainable. [Paras 6]

Recovery under Rule 14 read with Section 11A, and imposition of interest and penalty, cannot be sustained as the credit availed was held eligible.

Final Conclusion: The impugned order allowing the belatedly availed CENVAT credit is upheld; the Revenue's appeal is dismissed and no demand, interest or penalty is sustainable.

Summary order. Special Leave Petitions dismissed; delay condoned.

Priority of secured creditor - valid order of attachment and proclamation under the Maharashtra Land Revenue Code and the 1967 Rules - priority under Section 26E of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act - communication to Talathi and its legal effect - registration of security interest with CERSAI

Priority of secured creditor - valid order of attachment and proclamation under the Maharashtra Land Revenue Code and the 1967 Rules - communication to Talathi and its legal effect - priority under Section 26E of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act - Whether the communication dated 7th September 2013 by the Sales Tax Department to the Talathi precludes the Bank from enforcing its security and whether the Sales Tax Department has priority over the secured creditor. - HELD THAT: - The Court applied the principle in Jalgaon Janta Sahakari Bank Ltd. (paragraphs 153-154) that attachment of immovable property under the Maharashtra Land Revenue Code must be followed by a proclamation made public in the manner prescribed by the Code and the 1967 Rules to confer priority. On the material before it there was no evidence that an order of attachment had been duly passed and proclaimed in accordance with the Code and the 1967 Rules prior to the dates on which priority-conferring provisions (including Section 26E of the Securitization Act and related enactments) came into force. Mere issuance of a communication to the Talathi requesting that no sale be recorded does not constitute a valid attachment or proclamation and is therefore insufficient to override the secured creditor's rights. The Bank's security interest having been enforced pursuant to the Court's earlier direction and its claim registered with CERSAI, and in absence of a valid prior attachment and proclamation by the Sales Tax Department, the secured creditor must be accorded priority in respect of the secured assets. [Paras 7, 9]

The communication dated 7th September 2013 does not preclude the Bank from enforcing its security interest and the Bank has priority over the Sales Tax Department in respect of the secured assets referred to in that communication.

Registration of security interest with CERSAI - priority of secured creditor - Whether the Bank is entitled to withdraw the sale proceeds deposited in Court pursuant to the auction of the mortgaged properties. - HELD THAT: - The Court found that, in view of its conclusion that the secured creditor has priority over the Sales Tax Department with respect to the secured assets, the Bank's interim application for withdrawal of the sale proceeds deposited in Court pursuant to the earlier auction should be allowed. The deposited amount was the fruit of the sale undertaken under the Court's earlier permission; having determined entitlement to priority, the Court directed withdrawal in accordance with rules. [Paras 8, 9]

The Bank is permitted to withdraw the sale proceeds (and accrued interest) deposited in Court in accordance with the rules; Interim Application (Stamp) No.92490 of 2020 is allowed.

Final Conclusion: The writ petition is allowed: the Sales Tax Department's communication of 7th September 2013 does not bar the Bank from enforcing its security; the Bank is held to have priority over the Sales Tax Department in respect of the secured assets and is permitted to withdraw the deposited sale proceeds in accordance with the rules. The petition is disposed of with no order as to costs.

Violation of principles of natural justice - service of notice - mode of service under Rule 64 of A.P. VAT Rules - adequate opportunity to be heard - remand for fresh assessment

Violation of principles of natural justice - service of notice - mode of service under Rule 64 of A.P. VAT Rules - adequate opportunity to be heard - Assessment order set aside for want of adequate notice and opportunity where prescribed modes of service were not shown to have been complied with. - HELD THAT: - The Court found that Rule 64 of the A.P. VAT Rules prescribes personal service, registered post with acknowledgement due or E-Mail as valid modes of service. The dispatch register produced by the assessing authority showed postage of Rs.5/-, indicating ordinary post, and the respondents failed to produce material to show service by E-Mail. The show-cause notice dated 16.06.2021 granted seven days to reply but, on the material placed, the notice was dispatched only on 25.06.2021 and an assessment order was passed on 28.06.2021. In these circumstances the period of seven days was not afforded and the petitioner was not granted adequate opportunity to set forth its case. The Court therefore held that principles of natural justice were violated and the assessment could not stand. [Paras 11, 12, 14, 15, 16]

Assessment order dated 28.06.2021 set aside insofar as it was passed without giving adequate notice and opportunity.

Remand for fresh assessment - adequate opportunity to be heard - Matter remitted to the assessing authority for fresh completion of assessment after giving due notice and opportunity to the petitioner. - HELD THAT: - Having concluded that the earlier assessment was vitiated by defective service and denial of opportunity, the Court directed that the matter be returned to the authority now having the registration of the petitioner to complete assessment for the year 2017-2018. The reassessment is to be carried out after issuing proper notice in accordance with the prescribed modes and after affording the petitioner an opportunity to be heard. No adverse conclusion was drawn on other contentions which were not finally adjudicated. [Paras 17]

Assessment remanded to the 2nd respondent for completion of assessment for 2017-2018 after giving due notice and opportunity.

Final Conclusion: Writ petition allowed; assessment order dated 28.06.2021 set aside for failure to accord adequate notice and opportunity; matter remitted to the assessing authority to complete assessment for 2017-2018 after issuing notice and affording the petitioner an opportunity to be heard; no order as to costs.

Cancellation of bail - exercise of discretion under Section 439 CrPC - factors for grant and cancellation of bail - judicial review of perverse or unreasoned bail orders - supervening circumstances - economic offences and risk of dissipation of property - prima facie satisfaction at bail stage

Cancellation of bail - exercise of discretion under Section 439 CrPC - factors for grant and cancellation of bail - economic offences and risk of dissipation of property - judicial review of perverse or unreasoned bail orders - Validity of the High Court's grant of bail to respondent no.1 and whether that bail should be cancelled. - HELD THAT: - The Court held that the Single Judge's exercise of discretion under Section 439 CrPC in releasing respondent no.1 was unsustainable. While recognizing that bail jurisprudence requires caution before interfering with orders of lower courts, the Court found that the High Court had proceeded on an insufficient and legally flawed basis by treating the material against respondent no.1 as merely allegations and expressing a prima facie view that conspiracy was 'extremely debatable' without proper application of relevant principles. The record, including the charge-sheet, forensic audit material and witness statements, indicated a money trail between respondent no.1 and the Society's president, withdrawals disproportionate to the deposits made by respondent no.1, and alleged subsequent investments in properties by relatives, all of which implicated respondent no.1 in an economic offence affecting numerous victims. Given these circumstances and the special risk in economic offences of dissipation of properties acquired from allegedly misappropriated funds, the High Court ought to have applied stricter judicial scrutiny and imposed more stringent conditions if it were to grant bail. The appellate jurisdiction to set aside bail is available where the impugned order is illegal, perverse or premised on irrelevant material; applying that standard, the Court concluded the bail order was not in tune with established principles and must be set aside. The observations were confined to testing the legality of the impugned order and not to a final adjudication on guilt; the trial Court is to proceed uninfluenced and in accordance with law. The Court also noted the respondent's medical condition and permitted future bail applications to be considered on merits if circumstances change. [Paras 22, 23, 24, 26, 27]

Impugned bail order set aside; respondent no.1 directed to surrender within three weeks, failing which the trial Court shall proceed in accordance with law; trial Court to proceed uninfluenced; respondent permitted to seek bail later or if circumstances change.

Final Conclusion: The appeal is allowed; the High Court's order granting bail to respondent no.1 is set aside on the ground that the discretion under Section 439 CrPC was exercised without due application of relevant principles and despite material indicating his involvement in an economic offence with risk of dissipation of properties; directions issued for surrender and continuation of trial.

Closing down of a recognised school without prior approval - Liability of managing committee for salaries and service benefits upon illegal closure - Absorption of surplus staff on lawful closure of a school - Interpretation of Rule 46 and Rule 47 of the Delhi Education Rules - Reimbursement by managing committee to grantor authority for amounts paid - Limitation defence to recovery where reimbursement was left open by court - Enforcement of court directions and contempt proceedings for non-compliance

Closing down of a recognised school without prior approval - Liability of managing committee for salaries and service benefits upon illegal closure - Interpretation of Rule 46 and Rule 47 of the Delhi Education Rules - Whether the Delhi Sikh Gurdwara Management Committee (DSGMC) could avoid liability to pay salaries, pensionary and other service benefits to school staff on the ground that NDMC ought to have absorbed surplus staff under Rule 47 - HELD THAT: - The Court held that the defence based on Rule 47 fails because the provision for absorption of surplus staff applies only where the closure of a recognised school is carried out validly and with prior approval of the Director as mandated by Rule 46. Here the school, which received 95% grant from NDMC, was closed and substantially demolished by DSGMC without prior approval and in breach of an interim stay; consequently the closure was de hors Rule 46. Since the closure was unlawful, DSGMC cannot invoke Rule 47 to shift the burden of re-employment and payment of salaries and retiral benefits to NDMC. The High Court's direction that NDMC pay and then recover from DSGMC accordingly stands unimpeached in respect of DSGMC's primary liability to the staff. [Paras 16, 17, 18, 19, 20]

Appeals by DSGMC dismissed; DSGMC is liable to pay the salaries and service benefits since the school was closed without prior approval and therefore Rule 47 cannot be invoked to transfer that burden to NDMC.

Reimbursement by managing committee to grantor authority for amounts paid - Limitation defence to recovery where reimbursement was left open by court - Enforcement of court directions and contempt proceedings for non-compliance - Whether NDMC must pay the staff the arrears and interest and whether NDMC's right to seek reimbursement from DSGMC is barred by limitation - HELD THAT: - This Court directed NDMC to pay all remaining dues, including interest, to the respondents within eight weeks, noting that NDMC had already paid the principal amounts pursuant to this Court's earlier order. The Court observed that the High Court had expressly provided that NDMC could seek reimbursement from DSGMC and that this question was left open by the order dated 7th July, 2010; therefore a limitation defence by DSGMC to bar reimbursement would be unfounded. The Court also permitted NDMC to seek impleadment in the pending contempt proceedings to pursue recovery from DSGMC if DSGMC fails to reimburse. [Paras 23, 24, 25, 26, 27]

NDMC directed to pay remaining dues including interest to the staff; NDMC entitled to seek reimbursement from DSGMC and limitation will not bar such recovery given the earlier order leaving reimbursement open; leave granted to NDMC to seek impleadment in contempt proceedings.

Final Conclusion: The appeals of DSGMC are dismissed: DSGMC is liable for salaries and benefits because the school was closed without prior approval under Rule 46, so Rule 47 cannot be invoked to shift liability to NDMC. NDMC is directed to pay remaining dues including interest to the staff within eight weeks, and may seek reimbursement from DSGMC (limitation not a bar) and may be impleaded in pending contempt proceedings to pursue recovery.

Vicarious liability under Section 141 of the Negotiable Instruments Act - specific averments as to being in charge of and responsible for the conduct of the company's business - liability of independent and non-executive directors - magistrate's duty to scrutinize complaints at the pre-summoning stage - components of the offence under Section 138 and the relevant time for liability

Vicarious liability under Section 141 of the Negotiable Instruments Act - specific averments as to being in charge of and responsible for the conduct of the company's business - Whether the complaint and summons insofar as they arraign the Petitioners under Section 141 read with Section 138 of the Negotiable Instruments Act disclose the necessary specific averments to fasten vicarious criminal liability on the Petitioners - HELD THAT: - The Court held that Section 141 creates a penal fiction of vicarious liability and must be strictly construed; consequently the complainant bears the primary responsibility to make clear, specific and unambiguous averments showing how and in what manner the accused was in charge of and responsible for the conduct of the company's business at the relevant time. Mere reproduction of statutory language or bald allegations that the persons were directors or that they attended Board/Audit meetings is insufficient. Reliance on precedents (including S.M.S. Pharmaceuticals and subsequent authorities) establishes that liability arises from actual control or responsibility at the time any component act constituting the Section 138 offence occurred, and that managing directors or signatories occupy distinct positions where less particularity may be required. On the facts, the complaint contained only general and conclusory averments against the Petitioners without ascribing any specific role or conduct linking them to the issuance, presentation or dishonour of the cheque; there was no allegation of their signing the cheque, of knowledge, consent, connivance or neglect attributable to them, nor factual particulars enabling a prima facie inference of being in charge of day to day business. Applying these principles, the Court found the mandatory requirements of Section 141(1) were not met and quashed the summons insofar as they related to the present Petitioners. [Paras 30, 31, 33, 34, 35]

The summons and complaint insofar as they arraign the Petitioners under Section 138 read with Section 141 are quashed for failure to plead requisite specific averments establishing that the Petitioners were in charge of and responsible for the company's business at the relevant time.

Liability of independent and non-executive directors - magistrate's duty to scrutinize complaints at the pre-summoning stage - Whether documents and facts relied upon for the first time (including Forms MGT 7 and other RoC filings) could be treated so as to uphold summons at the pre summoning stage and whether attendance at board or committee meetings, by itself, establishes culpability of independent/non-executive directors - HELD THAT: - The Court reiterated that at the pre summoning stage the Magistrate must examine the averments in the complaint and the material put forth before him to form a prima facie view; however, the Court will not permit a roving inquiry or permit fresh factual averments or documents to be introduced in the challenge to a summoning order. Even if additional RoC filings (such as Form MGT 7) are taken into account, mere attendance at Board or committee meetings does not, without more, establish that independent or non executive directors were in charge of or responsible for day to day business; such attendance is ordinarily expected and does not displace the requirement to aver specific conduct or control. On the facts, the complainant's belated reliance on such documents and the contention that mere meeting attendance created vicarious liability could not cure the absence of specific averments required by Section 141(1). [Paras 6, 11, 32, 33]

The Court declined to sustain the summons on the basis of fresh or belated reliance on RoC filings or mere attendance at Board/committee meetings; such material does not, without specific averments of control or responsibility, satisfy Section 141(1).

Final Conclusion: The High Court allowed the petitions and set aside the impugned summoning order dated 14.12.2017 insofar as it issued process against the present Petitioners under Section 138 read with Section 141 of the Negotiable Instruments Act, holding that the complaint lacked the specific, unambiguous averments required to fasten vicarious liability on independent/non executive directors.