TaxTMI Updates e-Newsletter
Sep 02,2024

Opportunity of personal hearing - reasoned order on objection - deposit under protest - writ under Article 226

Opportunity of personal hearing - reasoned order on objection - deposit under protest - Direction to respondent to hear petitioner, consider the objection to the GST demand and pass a reasoned order within a fixed time-frame - HELD THAT: - The Court noted that the petitioner had deposited the amount under protest and had raised an objection to the demand. Rather than adjudicating on the correctness of the asserted GST liability or on which authority may levy such demand, the Court directed that the respondent No.2 shall afford the petitioner a personal hearing, consider the objection filed by the petitioner and thereafter pass a reasoned order. The direction is procedural and confined to ensuring that the objection is considered on merits after giving the petitioner an opportunity of personal hearing. The Court imposed a time-frame of eight weeks from the date of the order for compliance. [Paras 5, 6]

Petitioner to be granted personal hearing and respondent No.2 to consider the objection and pass a reasoned order within eight weeks; writ petition disposed of accordingly.

Final Conclusion: Writ petition disposed of by directing respondent No.2 to grant personal hearing, consider the petitioner's objection to the demand (the amount having been deposited under protest) and pass a reasoned order within eight weeks; no substantive determination made on the correctness of the GST demand.

Natural justice - show cause notice - opportunity of hearing - failure to file reply to statutory notice - notice under Section 73 of the GST Act - writ jurisdiction and interference with administrative procedure - remedy by appeal under Section 107 of the GST Act

Natural justice - opportunity of hearing - show cause notice - failure to file reply to statutory notice - Whether the impugned assessment order dated 18.04.2024 is vitiated for breach of the principles of natural justice by not specifying date, time and place for personal hearing in the show cause notice under Section 73. - HELD THAT: - The Court found that notices were issued (initially under Section 61 and subsequently under Section 73) and that the petitioner did not file any reply to either notice, nor sought time, nor requested a personal hearing. The assessing officer recorded that no reply was received and concluded that the petitioner had nothing to say, thereafter passing the assessment order imposing tax, interest and penalty. The petitioner's grievance that the column mentioning date, place and time in the notice carried 'NA' was considered in the factual context that the assessee neither responded to the show cause notice nor sought a hearing or adjournment. In these circumstances the Court held that there was no such denial of opportunity which would justify exercise of writ jurisdiction to quash the order; interference in the administrative procedure was not warranted where the statutory notice was ignored by the petitioner and available statutory remedies remain open.

Petition dismissed on merits in respect of alleged breach of natural justice; no quashing of the impugned order.

Writ jurisdiction and interference with administrative procedure - remedy by appeal under Section 107 of the GST Act - Appropriate remedy and direction following dismissal of writ petition. - HELD THAT: - The Court directed that the petitioner is required to avail the statutory remedy of appeal under Section 107 of the GST Act as an effective and available remedy. The Court recorded instructions produced by the respondents and noted that the petitioner has the option of pursuing the appellate remedy provided by the statute rather than seeking intervention by writ jurisdiction in the facts of this case.

Petitioner directed to avail statutory remedy under Section 107; petition disposed of accordingly and instructions were kept on record.

Final Conclusion: Writ petition dismissed; no interference with the impugned assessment order on the ground of breach of natural justice where the petitioner did not respond to notices, and petitioner directed to avail the statutory remedy of appeal under Section 107 of the GST Act; instructions placed on record.

Authorization of proper officer under cross-empowerment - prohibition on initiation of proceedings by another proper officer on same subject matter - judicial nature of inquiry under GST - subject matter construed as the nature of proceedings - administrative transfer of judicial proceedings impermissible

Prohibition on initiation of proceedings by another proper officer on same subject matter - authorization of proper officer under cross-empowerment - Validity of initiation or transfer of proceedings by DGGI where proceedings had already been initiated by the State Tax Officer under the HGST Act - HELD THAT: - The Court held that Section 6(2)(b) prohibits initiation of proceedings by another proper officer on the same subject matter once a proper officer has issued process. The GST scheme authorises both State and Central officers as proper officers but contemplates that where a State proper officer has initiated proceedings, another proper officer cannot initiate proceedings on that same subject matter. The Court treated inquiries under the GST Acts as judicial in nature and observed that administrative steps cannot be used to transfer such judicial proceedings from the officer who has initiated them to another officer or agency. The circular and internal communications relied upon by the respondents were construed to permit cross-empowerment for investigative assistance but not to transfer the primary proceedings already initiated by the State proper officer. [Paras 24, 25, 27, 28, 29]

DGGI/Central authorities cannot initiate or appropriate proceedings already initiated by the State Tax Officer on the same subject matter; the State proceedings prevail.

Subject matter construed as the nature of proceedings - judicial nature of inquiry under GST - Interpretation of the phrase 'subject matter' in Section 6(2)(b) of the CGST Act / HGST Act - HELD THAT: - The Court construed 'subject matter' to refer to the nature of the proceedings - here, proceedings for wrongful availment of input tax credit by fraudulent means. Because such proceedings are judicial in character (issuance of summons, inquiries deemed judicial), the State officer who has initiated those proceedings retains exclusive competence to continue them on that subject matter and another proper officer cannot lawfully commence separate proceedings on the same subject. [Paras 18, 29]

'Subject matter' in Section 6(2)(b) means the nature of the proceedings; once initiated by a proper officer, other officers cannot initiate proceedings on that same nature.

Administrative transfer of judicial proceedings impermissible - authorization of proper officer under cross-empowerment - Validity of the specific transfer orders dated 08.07.2020 and 15.03.2022 transferring the petitioner's proceedings to DGGI Meerut Zonal Unit - HELD THAT: - Applying the foregoing legal principles to the facts, the Court found no occasion to uphold the transfer of proceedings from the Excise & Taxation Officer, Shahbad to the DGGI. The State authority had already initiated proceedings and possessed the record, summons and warrants. Administrative transfer of those proceedings to the Central agency was held contrary to Section 6(2)(b) and the scheme of the Acts. The Court quashed and set aside the transfer orders and directed the State proper officer to continue and conclude the proceedings, including examining aspects revealed after 22.07.2019. [Paras 30, 32, 33]

The transfer orders dated 08.07.2020 and 15.03.2022 are quashed; the Excise & Taxation Officer, Shahbad shall continue and conclude the proceedings under Section 74(1) of the HGST Act.

Final Conclusion: The High Court held that once a State proper officer has initiated judicial proceedings relating to alleged fraudulent availment of ITC, another proper officer (including DGGI/Central authorities) cannot initiate or appropriate those proceedings on the same subject matter; the transfer orders sending the petitioner's proceedings to DGGI Meerut are quashed and the State Excise & Taxation Officer, Shahbad is directed to continue and conclude the proceedings, including examination of matters after 22.07.2019.

Exhaustion of statutory remedy - jurisdictional restraint on writ jurisdiction - relegation to appellate remedy - remand to appellate authority - principles of natural justice - limitation as preliminary objection - leviability of service tax and exemption claim under Notification No. 25/2012 Clause-13 - interim relief pending appeal

Exhaustion of statutory remedy - jurisdictional restraint on writ jurisdiction - relegation to appellate remedy - remand to appellate authority - interim relief pending appeal - Whether the writ petition is maintainable or the petitioner must first exhaust the statutory appellate remedy and have the appellate authority decide the disputed questions of fact and law. - HELD THAT: - The Court found that the contentions raised by the petitioner involve both questions of law and fact and that the petitioner had already availed the appellate forum earlier. In these circumstances, the High Court exercised jurisdictional restraint and held that the petitioner should first resort to the statutory appellate remedy rather than seek writ relief at this stage. The Court granted liberty to the petitioner to present all grounds of law and fact before the appellate authority, directed that the appeal be filed within ten days, and requested the appellate authority to endeavour to decide the appeal preferably within three months from filing (with a copy of this order). The Court also recorded that it has not examined the merits of the controversy and that the petitioner may apply to the appellate authority for interim protection, which the authority shall consider in accordance with law. [Paras 7, 8, 9, 11]

Writ petition dismissed with liberty to approach the appellate authority within ten days; appellate authority to consider all grounds and endeavour to decide preferably within three months; petitioner may seek interim protection; merits not adjudicated.

Final Conclusion: The writ petition is disposed of by relegating the petitioner to the statutory appellate forum with liberty to file the appeal within ten days; the appellate authority is directed to consider all grounds and to endeavour to decide the appeal preferably within three months, while the High Court has declined to go into the merits.

Cancellation of GST registration without application of mind - absence of reasons vitiates quasi-judicial order - opportunity of hearing and service of show cause notice - remand for fresh adjudication after hearing - doctrine of merger - limitation bar under section 107(4) of the UPGST Act

Cancellation of GST registration without application of mind - absence of reasons vitiates quasi-judicial order - Cancellation of the petitioner's registration was quashed because the cancellation order contained no reasons and showed no application of mind. - HELD THAT: - The Court found on perusal of the impugned order dated 15.02.2023 that no reasons were recorded for cancellation. Citing established precedents of this Court, the judgment reaffirms that reasons are the "heart and soul" of any judicial or administrative order and that an order cancelling registration without assignment of reasons does not satisfy the requirements of Article 14 or the standards of a quasi judicial decision. Consequently the cancellation order was set aside and quashed, with the matter directed to be reconsidered in accordance with law. [Paras 9, 14]

Impugned cancellation order dated 15.02.2023 is quashed for want of reasons and absence of application of mind.

Remand for fresh adjudication after hearing - opportunity of hearing and service of show cause notice - The matter was remanded for fresh adjudication with directions to permit the petitioner to file reply to the show cause notice and for the adjudicating authority to pass a fresh order after hearing. - HELD THAT: - The Court emphasised the purpose of Rule 23 (service of notice and opportunity to file revocation application) and directed that the petitioner shall file a reply to the show cause notice within three weeks. The Assistant Commissioner was directed to afford an opportunity of hearing to the petitioner, consider the defence and documents relied upon, and pass a fresh adjudicatory order with expedition. [Paras 12, 15]

Petitioner to file reply within three weeks; Assistant Commissioner to hear the petitioner and pass fresh order after considering the defence.

Doctrine of merger - limitation bar under section 107(4) of the UPGST Act - The Court held that the doctrine of merger would have no application in the facts of the present case where the cancellation order is being set aside; the appellate dismissal on limitation was noted but the cancellation order's invalidity required fresh adjudication. - HELD THAT: - Although the appeal had been dismissed by the Appellate Authority as barred by limitation under section 107(4) of the UPGST Act, the Court observed that because the cancellation order was devoid of reasons and set aside, the doctrine of merger does not operate to preclude reconsideration. The matter of limitation in the appeal was noted in context but the principal relief granted related to the defective cancellation order and remand for fresh decision. [Paras 9]

Doctrine of merger will not apply in the present circumstances; cancellation set aside and fresh adjudication directed despite earlier appellate dismissal on limitation.

Final Conclusion: The writ petition is allowed: the cancellation order dated 15.02.2023 is quashed for want of reasons; the petitioner is directed to file reply to the show cause notice within three weeks and the Assistant Commissioner shall, after hearing the petitioner, pass a fresh adjudicatory order with expedition.

Violation of principles of natural justice - right to personal hearing in adjudication proceedings - non-availability of personal hearing vitiates adjudication order - self-imposed bar/alternative remedy not applicable where natural justice is violated - quashing of order and remand for fresh adjudication

Right to personal hearing in adjudication proceedings - non-availability of personal hearing vitiates adjudication order - violation of principles of natural justice - Impugned adjudication order passed without offering effective personal hearing is unsustainable. - HELD THAT: - The Court applied the principle that before any adverse order in an adjudication proceeding is passed, the noticee must be afforded an opportunity of personal hearing; absent waiver or failure by the noticee to avail the opportunity, denial of such hearing amounts to a gross violation of fundamental principles of natural justice. Reliance was placed on a coordinate Bench decision which criticised practices where personal hearing particulars were recorded as N.A., or where deadlines for replies were set on or after the date of personal hearing, and which held that an order passed in such circumstances could not be sustained. In the present facts the record disclosed the same infirmity as noted in the coordinate decision, and no reason existed to take a different view. The defect therefore vitiated the impugned order.

Impugned order quashed as passed in violation of principles of natural justice.

Quashing of order and remand for fresh adjudication - self-imposed bar/alternative remedy not applicable where natural justice is violated - Appropriate remedial course is to remit the matter for fresh opportunity to file reply, personal hearing and reasoned decision within a specified timeframe. - HELD THAT: - The Court held that where an order is set aside for denial of personal hearing, the appropriate remedy is to direct the adjudicating officer to afford the noticee a fresh opportunity to file a reply, fix a date for personal hearing and thereafter pass a reasoned order. The Court observed that invoking a self-imposed bar of alternative remedy would be unhelpful and counter-productive in such circumstances. Consequently the matter was remitted to the officer concerned with a clear mandate and time-bound direction to complete the exercise.

Matter remitted for fresh adjudication: petitioner to be allowed to file fresh reply, personal hearing to be fixed and a reasoned order to be passed within two months.

Final Conclusion: The writ petition is allowed: the impugned order dated 21.06.2024 is quashed for violation of natural justice and the matter is remitted with directions to grant a fresh opportunity to file reply, hold personal hearing and pass a reasoned order within two months.

Setting aside ex-parte assessment order - remand for fresh consideration - opportunity of personal hearing - right to file reply/objection to show cause notice - treatment of Input Tax Credit as discharge of tax liability - consequential recovery notice set aside - lifting of bank attachment - effect of proposed amendment to Section 128(A) extending time limit

Setting aside ex-parte assessment order - remand for fresh consideration - right to file reply/objection to show cause notice - Impugned ex-parte order dated 19.07.2021 in respect of assessment year 2017-2018 set aside and matter remanded for fresh consideration - HELD THAT: - The Court found that the petitioner had not been afforded an effective opportunity to file a reply or obtain personal hearing because the show cause notice was uploaded only in the 'Additional Notices Column' on the GST portal and the petitioner was unaware of it, resulting in an ex-parte order. The petitioner has, however, discharged the tax demand. In view of these facts and the circumstances surrounding non-supply of a personal hearing opportunity, the impugned order is set aside and the matter is remanded to the respondent for reconsideration on merits. The petitioner is directed to file reply/objection with supporting documents within four weeks of receipt of the order, and upon such filing the respondent must issue a clear 14 days notice fixing the date for personal hearing and thereafter decide the matter expeditiously and in accordance with law. [Paras 9, 10]

Order dated 19.07.2021 set aside; matter remanded for fresh consideration with directions to permit filing of reply and to afford personal hearing, and for fresh adjudication on merits.

Consequential recovery notice set aside - treatment of Input Tax Credit as discharge of tax liability - effect of proposed amendment to Section 128(A) extending time limit - Consequential recovery notice dated 05.05.2023 set aside and assessment adjusted in light of tax discharge by reversal of ITC and proposed extension under Section 128(A) - HELD THAT: - The Court recorded that the tax demand has been discharged by the petitioner, reportedly by reversal of wrongly availed Input Tax Credit, leaving only penalty and interest in dispute. The Court noted the decision in the 53rd GST Council meeting to extend the time limit (by a proposed amendment to Section 128(A)) and observed that applying the proposed amendment and the availability of sufficient ITC, the petitioner is not liable to pay the outstanding amount as a consequence of the impugned order. Consequently, the consequential recovery notice arising from the set aside order is also set aside and the respondent is directed to reconsider liabilities (penalty/interest) afresh after permitting the petitioner to be heard. [Paras 5, 6, 9, 10]

Final recovery notice dated 05.05.2023 set aside; respondent to reconsider the matter in light of tax discharge by ITC reversal and the proposed amendment extending time limit.

Lifting of bank attachment - treatment of Input Tax Credit as discharge of tax liability - Attachment of petitioner's bank account ordered to be lifted and bank account de-frozen upon production of this order - HELD THAT: - Having taken into account that the tax liability has been discharged by reversal of ITC and that the proposed amendment to Section 128(A) extends time limits, the Court directed that any attachment of the petitioner's bank account be lifted. The respondent is ordered to de-freeze the bank account immediately upon production of a copy of this order, recognizing that sufficient ITC is available and that the petitioner has remitted the tax demand. [Paras 9, 10]

Bank attachment, if any, to be lifted and petitioner's bank account de frozen forthwith on production of a copy of this order.

Final Conclusion: Writ petitions disposed of by setting aside the ex parte assessment order dated 19.07.2021 for AY 2017 2018 and the consequential recovery notice dated 05.05.2023; matter remanded for fresh consideration after permitting the petitioner to file reply and be heard, and any bank attachment directed to be lifted; no costs.

Holding of shares by a holding company is not a supply of service - services by way of extending loans/advances where consideration is represented only by interest are exempt from GST - Circulars and Notifications clarifying taxability are binding for uniform implementation - quashing of show cause notice insofar as it proceeds on an erroneous view of supply - remand for reconsideration after giving opportunity in light of relevant exemption notification and clarification

Holding of shares by a holding company is not a supply of service - Circulars and Notifications clarifying taxability are binding for uniform implementation - quashing of show cause notice insofar as it proceeds on an erroneous view of supply - Impugned Show Cause Notice insofar as it proposes levy/demand of GST under Table No. VII (Continuous Equity Share holding) is unsustainable and liable to be quashed. - HELD THAT: - The Court held that the issue covered by this portion of the Show Cause Notice is directly and squarely governed by earlier decisions of this Court (M/s. Yonex India Pvt. Ltd. and M/s. Metro Cash and Carry Pvt. Ltd.) which accepted the Circulars issued by the Central and State Governments clarifying that mere holding of shares by a holding company in its subsidiary cannot be treated as a "supply" of services under GST. Securities (including shares) are neither goods nor services for the purposes of GST classification, and a SAC entry alone does not convert mere shareholding into a taxable supply unless there is a supply as defined in the Act. In view of those binding clarifications and the Court's precedents applying them, the impugned demand in Table No. VII proceeded on an incorrect legal premise and is quashed as illegal and without jurisdiction.

Impugned Show Cause Notice dated 04.02.2023 is quashed insofar as it relates to Table No. VII (Continuous Equity Share holding).

Services by way of extending loans/advances where consideration is represented only by interest are exempt from GST - Circulars and Notifications clarifying taxability are binding for uniform implementation - remand for reconsideration after giving opportunity in light of relevant exemption notification and clarification - Proposal in the Show Cause Notice relating to Table No. IX (Value of the Credit Grant in Service determined as a service fee @1%) is not finally adjudicated and is remitted for fresh consideration in light of Notification dated 28.06.2017 and CBIC Circular dated 26.06.2024. - HELD THAT: - The Court observed that Notification No. 12/2017 (rate) (Sl. No. 28) exempts services by way of extending loans, deposits or advances insofar as consideration is represented by interest or discount, and that the CBIC Circular dated 26.06.2024 clarifies that loans/credit between related parties where only interest is charged are exempt; only additional processing/administrative fees (if charged) attract GST. The petitioner had specifically relied on the notification in its response, but the respondents did not consider that material in issuing the Show Cause Notice. Accordingly, the Court did not decide the substantive question on merits but remitted the matter to respondent No.3 for reconsideration after affording the petitioner an opportunity to file its response and produce documents; the respondents must consider such materials bearing in mind the Notification and the Circular and decide in accordance with law.

Matter remitted for fresh consideration of the proposal in Table No. IX; petitioner granted four weeks to file response and liberty to produce documents, with respondents to reconsider in light of the Notification dated 28.06.2017 and Circular dated 26.06.2024.

Final Conclusion: Petition allowed: Show Cause Notice dated 04.02.2023 quashed insofar as it seeks to tax continuous equity shareholding (Table No. VII); the portion relating to loans/credit valuation (Table No. IX) is remitted to the assessing authority for reconsideration after giving the petitioner an opportunity and applying the exemption notification and the CBIC clarification in accordance with law.

Principles of natural justice - opportunity to be heard / personal hearing - remand for fresh consideration - assessment order set aside - input tax credit reconciliation between GSTR-3B and GSTR-2A

Principles of natural justice - opportunity to be heard / personal hearing - The impugned assessment order was passed without affording the petitioner adequate opportunity to produce supplier self-declarations and to be heard. - HELD THAT: - The Court accepted the petitioner's contention that discrepancies between GSTR-3B and GSTR-2A could arise from supplier filing errors and that the petitioner had filed a reply on the GSTN portal and sought further time to produce self-declarations. The respondent proceeded to pass the assessment appropriating tax, penalty and interest without allowing the petitioner time to furnish the remaining declarations. Having regard to the settled expectation that a party must be given an adequate chance to be heard before an adverse decision is taken, the Court found that the order was arbitrary in the relevant respect and contrary to the principles of natural justice. The petitioner was also found to be in possession of the supplier declarations which it sought to produce. [Paras 6]

The Court set aside the impugned order insofar as it was passed without affording adequate opportunity to the petitioner to produce self-declarations and to be heard.

Remand for fresh consideration - assessment order set aside - input tax credit reconciliation between GSTR-3B and GSTR-2A - The appropriate remedial directions for reconsideration of the claim and the procedure to be followed on remand. - HELD THAT: - In the exercise of supervisory jurisdiction the Court remitted the matter to the respondent for fresh consideration on merits after permitting the petitioner to produce the supplier self-declarations. The petitioner was directed to file all such declarations within two weeks from receipt of the order. The respondent was directed, upon receipt, to issue a clear 14 days notice fixing the date of personal hearing and thereafter to consider the declarations and pass appropriate orders on merits and in accordance with law, expeditiously. The learned counsel for the respondent raised no serious objection to this course. [Paras 7]

The matter is remanded to the respondent with directions to accept the declarations filed within two weeks, issue a 14 days notice fixing a personal hearing, and decide the assessment afresh on merits and in accordance with law.

Final Conclusion: Writ petition allowed in part; impugned order set aside and matter remanded for reconsideration on the terms directed, with no order as to costs.

Input Tax Credit - invocation of Section 18(2) for expiry of Input Tax Credit - regularisation of belated filing of Input Tax Credit by legislative amendment - remand for fresh adjudication after legislative amendment - cancellation and restoration of registration - quashing of assessment order where legislative change awaited

Input Tax Credit - invocation of Section 18(2) for expiry of Input Tax Credit - regularisation of belated filing of Input Tax Credit by legislative amendment - remand for fresh adjudication after legislative amendment - quashing of assessment order where legislative change awaited - Impugned assessment order confirming demand by invoking the expiry of Input Tax Credit consequent to belated return filing, and whether it should be quashed and remitted pending legislative amendment. - HELD THAT: - The Court noted that the assessee's registration had been cancelled and later restored, and that belated returns were filed on 07.07.2020 after which part of the Input Tax Credit had expired; consequently Section 18(2) was invoked by the department to confirm the demand. The Court observed that the impugned order preceded notices issued to the petitioner and that replies to those notices had been filed. The Parliament has proposed, by Clause 114 of the Finance (No.2) Bill, 2024 (presented on 23.07.2024), insertion of provisions to regularise belated filing of Input Tax Credit by adding Sections 16(5) and 16(6) to the CGST Act, 2017, and a similar amendment is expected in the State GST Act. Applying its consistent view in similar cases where a statutory amendment to cure the defect is pending, the Court quashed the impugned order and remitted the matter to the assessing authority to pass a fresh order on merits and in accordance with law after the Finance Act is passed and the amendment to Section 16 is enacted; the respondents were directed to await the passage of the Finance Act before proceeding. [Paras 2, 3, 4, 5, 6]

Impugned Order dated 16.10.2020 set aside; matter remitted to the 2nd Respondent to pass fresh order on merits and in accordance with law after the Finance Act is enacted; Writ Petition allowed.

Final Conclusion: The High Court set aside the assessment order dated 16.10.2020 confirming demand on account of expired Input Tax Credit following belated return filing, and remitted the matter to the assessing authority to decide afresh on merits after the proposed legislative amendment regularising belated ITC claims is enacted; the writ petition was allowed.

Revocation of cancellation of GST registration - bona fide delay due to COVID-19 pandemic - restoration of registration subject to conditions - prohibition on utilisation or adjustment of Input Tax Credit pending scrutiny - duty to file returns and pay tax, interest and fees for prior and subsequent periods - lifting of bank attachment upon compliance - direction to modify GSTN portal to permit compliance

Revocation of cancellation of GST registration - bona fide delay due to COVID-19 pandemic - Cancellation of the petitioner's GST registration was revoked on judicial review in view of the petitioner's bona fide explanation for delayed compliance. - HELD THAT: - The court found that the petitioner had, from the inception of the GST regime, been filing returns and paying taxes but suffered significant disruption due to the COVID-19 pandemic and consequent lockdown, which led to delayed filing. The petitioner also made an immediate part-payment towards the admitted demand after becoming aware of the cancellation order. Having regard to the explanation and conduct of the petitioner, the reason for non-compliance within the prescribed time was held to be bona fide. On that basis the court exercised its discretionary jurisdiction to set aside the cancellation order and restore registration, subject to specified conditions intended to ensure compliance and protect revenue. [Paras 6, 7]

Cancellation dated 24.11.2023 revoked subject to conditions

Restoration of registration subject to conditions - prohibition on utilisation or adjustment of Input Tax Credit pending scrutiny - duty to file returns and pay tax, interest and fees for prior and subsequent periods - lifting of bank attachment upon compliance - direction to modify GSTN portal to permit compliance - The registration shall be revived only upon the petitioner filing outstanding returns and paying tax, interest and fees within forty five days, with restrictions on use of Input Tax Credit until departmental scrutiny and approval; on compliance the bank attachment shall be lifted and GSTN portal changes shall be effected by the respondent. - HELD THAT: - The court imposed specific, enforceable conditions as the basis for revocation. The petitioner must file prior-period returns, pay outstanding tax, interest and the fee for belated filing within forty five days of receipt of the order. Any payment towards such liabilities shall not be made from or adjusted against unutilised Input Tax Credit; unutilised ITC must remain unutilised until scrutinised and approved by a competent officer, and only approved ITC may thereafter be used for future liabilities. The petitioner is also required to file returns and discharge GST for periods subsequent to cancellation by declaring correct values of supplies. Upon payment of tax, penalty and uploading of returns, the registration will stand revived forthwith and the attachment on the bank account will be lifted. The respondent is directed to instruct GSTN to make necessary portal changes to permit filing and payment, to be completed within forty five days of receipt of the order. Non-compliance with any condition will automatically terminate the benefit granted by the order. [Paras 7]

Restoration conditional on compliance with filing, payment, ITC scrutiny, and portal-modification directives; bank attachment to be lifted on compliance

Final Conclusion: Writ petition allowed: cancellation of GST registration set aside and registration restored subject to the court-prescribed conditions (filing of returns, payment of tax/interest/fees, restrictions and scrutiny of ITC, lifting of bank attachment on compliance, and GSTN portal modifications); failure to comply will terminate the relief. No costs.

Principles of natural justice - requirement to afford reasonable opportunity to be heard - condonation of delay - appeal under Section 107(1) of the TNGST Act - appellate authority to decide appeal on merits without raising limitation

Principles of natural justice - requirement to afford reasonable opportunity to be heard - Impugned order was passed without affording reasonable opportunity to the petitioner and thereby violated principles of natural justice. - HELD THAT: - The Court found that the respondent confirmed the proposal by order dated 17.08.2023 without providing the petitioner a reasonable opportunity to substantiate its claim or to file objections within the prescribed period. The petitioner explained that it was unaware of the notice issued through the GST Portal and thus could not file timely objections, and sought an opportunity to be heard. Having regard to the material and submissions, the Court recorded that the passing of the order without affording such opportunity amounted to a breach of natural justice and required remedial relief in the form of consideration of the appeal after affording a hearing. [Paras 5]

Impugned order set aside to the extent that it was passed without affording reasonable opportunity; petitioner to be afforded a hearing.

Condonation of delay - appeal under Section 107(1) of the TNGST Act - appellate authority to decide appeal on merits without raising limitation - Delay in filing the appeal before the Appellate Authority was condoned and the Appellate Authority directed to decide the appeal on merits without raising limitation. - HELD THAT: - The Court noted that the appeal against the order dated 17.08.2023 was filed with a delay of two months and twenty-seven days and was dismissed by the Appellate Authority solely on the ground that there was no provision to condone delay. In the interest of justice and having found that the impugned order was passed without affording an opportunity of hearing, the Court exercised its remedial jurisdiction to condone the delay. The Deputy Commissioner (ST) (GST)(Appeal) / Appellate Authority was directed to take up the appeal without raising any limitation objection and to dispose of it on merits after affording a reasonable opportunity of hearing to the petitioner. [Paras 6]

Delay condoned; Appellate Authority directed to adjudicate the appeal on merits after granting hearing, without raising limitation.

Final Conclusion: Writ petition allowed in part: delay in filing the appeal is condoned and the appellate authority is directed to decide the appeal on merits after affording the petitioner a reasonable opportunity of hearing; writ petition disposed of with no costs.

Validity of service by uploading on GST portal - compliance with Section 169 of the CGST Act - insufficiency of posting under "View Additional Notices & Orders" as effective notice - setting aside administrative order and remand for fresh adjudication

Validity of service by uploading on GST portal - compliance with Section 169 of the CGST Act - insufficiency of posting under "View Additional Notices & Orders" as effective notice - Impugned show cause notice uploaded under the portal heading 'View Additional Notices & Orders' did not constitute valid service in terms of Section 169 and the consequent adjudication was vitiated. - HELD THAT: - The Court, applying its earlier decision, rejected the contention that mere uploading of notices under the separate heading 'View Additional Notices & Orders' satisfied the statutory requirement of service under Section 169 of the CGST Act. The High Court noted that the portal had two distinct menus and that placement in the 'Additional Notices' category rendered the notices not easily accessible as required for effective intimation. Although the GST portal has since been re designed to place 'View Notices' and 'View Additional Notices' adjacent under one heading, the impugned show cause notice was uploaded prior to that redesign. For these reasons the impugned adjudication founded on that notice was held to be vitiated and could not be sustained. [Paras 5, 6, 7]

Impugned order dated 14.03.2024 set aside on account of defective service of the show cause notice.

Setting aside administrative order and remand for fresh adjudication - Remand of the matter for fresh adjudication after affording the petitioner opportunity to respond and be heard. - HELD THAT: - Having set aside the impugned order, the Court remitted the matter to the concerned authority for fresh adjudication of the impugned show cause notice. The petitioner was granted liberty to file a response within two weeks from the date of the order. The authority was directed to consider the petitioner's response and afford an opportunity of hearing before completing adjudication. The remit is for fresh consideration and adjudication in accordance with law, taking into account that the portal has since been redesigned. [Paras 8, 9]

Matter remanded for fresh adjudication; petitioner permitted to file response within two weeks and to be heard before final adjudication.

Final Conclusion: The petition is allowed: the impugned order dated 14.03.2024 is set aside because the show cause notice was not validly served by upload under the 'View Additional Notices & Orders' heading; the matter is remanded to the concerned authority for fresh adjudication after the petitioner files a response within two weeks and is afforded an opportunity of hearing.

Show cause notice under the Central Goods and Services Tax Act, 2017 - principles of natural justice - opportunity to file reply and hearing - setting aside adjudication order and remand for fresh consideration - adjournment and availability of authorised representative

Show cause notice under the Central Goods and Services Tax Act, 2017 - principles of natural justice - opportunity to file reply and hearing - adjournment and availability of authorised representative - Impugned order set aside and matter remanded for fresh adjudication after affording opportunity to file reply and hearing. - HELD THAT: - The petitioner alleged denial of opportunity to contest the SCN dated 30.05.2024 because adjournment requests were refused on grounds that the petitioner and his Chartered Accountant were unavailable on the scheduled dates. The respondents, through learned counsel, conceded that the petitioner should be given one further opportunity to file a reply. In view of this concession and the petitioner's request, the Court set aside the impugned order passed pursuant to the SCN and remanded the matter to the adjudicating authority for fresh consideration. The Court directed that the petitioner may file a reply to the SCN within two weeks and that the adjudicating authority shall consider the reply and pass an appropriate order after affording an opportunity of hearing. The Court clarified that the order is passed in the peculiar circumstances of the case and should not be construed as an acceptance of the petitioner's contention that the earlier order violated principles of natural justice. [Paras 5, 7, 8, 9, 10]

Impugned order set aside; matter remanded for fresh consideration after permitting petitioner to file reply within two weeks and after affording an opportunity of hearing; order confined to the peculiar facts and not an endorsement on merits regarding violation of natural justice.

Final Conclusion: The High Court allowed a further opportunity to the petitioner to reply to the SCN, set aside the impugned adjudication order and remanded the matter to the adjudicating authority for fresh consideration after hearing; the Court's direction is confined to the circumstances of the case and is not a finding on breach of natural justice.

Grant of bail in economic offences - weight of third party statements and evidence - necessity of custodial interrogation - gravity of offence vis a vis maximum sentence - risk of tampering or influencing investigation as ground for denial of bail

Grant of bail in economic offences - weight of third party statements and evidence - necessity of custodial interrogation - gravity of offence vis a vis maximum sentence - risk of tampering or influencing investigation as ground for denial of bail - Bail application of Navin Jain allowed subject to conditions. - HELD THAT: - The Court examined competing precedents on bail in economic offence cases and applied the settled principle that economic offences are not a separate class excluding bail; the grant or refusal must be determined case by case having regard to gravity, attendant circumstances and likelihood of prejudice to investigation or trial. Although the prosecution alleges large scale clandestine supplies and tax evasion for the period January, 2019 to November, 2022, the court noted that trial had not commenced, key allegations and complicity were yet to be adjudicated, and incriminating material and evidence remained under departmental control. The court also observed that statements of third parties relied upon by the prosecution do not automatically bind the accused and that custodial interrogation was not shown to be necessary by the department. Regard was had to the maximum statutory sentence (five years) and to the fact that the applicant had been in custody since 20.6.2024. Balancing these factors, and finding no material to demonstrate that enlargement on bail would imperil the investigation or trial, the Court held that the applicant had made out a case for bail while expressly reserving final adjudication on merits to the trial forum. [Paras 25, 26, 27, 28, 29]

Bail allowed on furnishing personal bond and two heavy sureties with specified conditions; sureties to be verified and standard conditions (appearance, non interference with witnesses/evidence, surrender of passport, etc.) imposed; prosecution at liberty to move for cancellation on breach.

Final Conclusion: Bail application of the accused was allowed after applying established bail jurisprudence in economic offence cases: the court granted bail subject to verification of sureties and enumerated conditions, without expressing any opinion on the merits of the prosecution's allegations.

Condonation of delay under Section 264(3) of the Income Tax Act - revisional jurisdiction under Section 264 of the Income Tax Act - sufficient cause - substantial justice - treatment of subsidy as capital receipt and not revenue receipt - liberal construction of genuine hardship in condonation cases

Condonation of delay under Section 264(3) of the Income Tax Act - liberal construction of genuine hardship - revisional jurisdiction under Section 264 of the Income Tax Act - Whether the Commissioner was justified in rejecting the revision application for Assessment Year 2015-16 as time barred without condoning the delay. - HELD THAT: - The High Court held that the Commissioner ought to have applied a liberal, justice oriented approach in considering the petitioner's plea for condonation under the proviso to Section 264(3). The court observed that the question of the nature of the subsidies (capital and not revenue) was supported by the Supreme Court decision in Chaphalkar Brothers and by the Tribunal's order in the petitioner's own appeal, and that the petitioner filed the revision application within five months of the Tribunal's order. Reliance was placed on precedents emphasising that authorities exercising condonation powers should not adopt a pedantic approach, must give a liberal meaning to 'genuine hardship' or 'sufficient cause', and prefer substantial justice over technical bar where delay is non deliberate. Applying those principles to the facts, the Court found no imputable negligence or mala fides on the petitioner and concluded that the Commissioner erred in refusing to condone the delay and in declining to exercise revisional jurisdiction to consider the application on merits. [Paras 8, 9]

Impugned order dated 20th March, 2020 rejecting the revision application as barred by limitation is quashed; delay in filing the revision application is condoned and the matter is remanded to the Commissioner for fresh decision on merits after giving opportunity of hearing.

Treatment of subsidy as capital receipt and not revenue receipt - reliance on judicial pronouncements determining nature of receipts - Whether the subsidies received by the petitioner are capital receipts and not revenue receipts. - HELD THAT: - The Court recorded that, in light of the Supreme Court decision in Chaphalkar Brothers and the Tribunal's order in the petitioner's own appeal for Assessment Year 2012 13, it was not in dispute that the subsidies are capital receipts. That conclusion formed the factual and legal basis for granting condonation and remitting the matter to the Commissioner to consider the revision application on merits in light of the accepted characterisation of the subsidies. [Paras 7]

The subsidies are to be treated as capital receipts for the purpose of adjudication on the remand.

Final Conclusion: The writ petition is allowed to the extent that the order dated 20th March, 2020 is quashed; the delay in filing the revision application for Assessment Year 2015 16 is condoned and the matter is remitted to the Commissioner to decide the revision on merits after hearing the petitioner, the subsidies being regarded as capital receipts.

Principle of natural justice - show-cause notice - faceless assessment - transfer under section 144B(8) to jurisdictional Assessing Officer - personal hearing in E-proceedings - CBDT instructions and circulars governing conduct of assessments

Show-cause notice - principle of natural justice - CBDT instructions and circulars governing conduct of assessments - Whether the assessment order was vitiated for want of issuance of a show-cause notice indicating reasons for proposed additions and thereby breaching the principles of natural justice. - HELD THAT: - The Court examined the mandate in Instruction No.20/2015, Instruction No.3/2018, the prescribed draft for notice under section 143(2) and Circular No.27/2019 as well as the Circular dated 06.09.2021, which together require that where an Assessing Officer proposes additions or disallowances a show-cause notice indicating reasons and the basis for proposed additions be issued and that personal hearing may follow where an adverse view is contemplated and requested by the assessee through E-filing. Though notices under section 142(1) had been issued on multiple occasions, those notices relate to inquiry and requisition of documents and do not substitute for a show-cause notice detailing the reasons for proposed additions. The Court found that the Assessing Officer did not issue a show-cause notice indicating reasons for the proposed additions before passing the final order and that absence of such a notice deprived the petitioner of the opportunity of hearing guaranteed by the principle of natural justice. This failure amounts to a breach requiring interference. [Paras 14, 15, 16]

Assessment order quashed for failure to issue show-cause notice and breach of the principle of natural justice; matter remanded for issuance of show-cause notice and opportunity for hearing.

Transfer under section 144B(8) to jurisdictional Assessing Officer - faceless assessment - personal hearing in E-proceedings - Whether the procedural protections under the CBDT instructions and circulars continue to apply when a faceless assessment is transferred to the jurisdictional Assessing Officer under section 144B(8). - HELD THAT: - Section 144B(8) permits transfer of a case from the faceless assessment unit to the jurisdictional Assessing Officer. The Court held that while the specific faceless-assessment procedure in sub-sections (1) and (2) may not apply once a case is transferred under sub-section (8), the CBDT's instructions and Circular No.27/2019 and related guidance governing issuance of show-cause notices and entitlement to personal hearing in E-proceedings must be read harmoniously and continue to apply to transferred cases. In particular, when assessment proceedings are to be conducted electronically (including transferred cases covered by E-proceeding guidance), a show-cause notice contemplating an adverse view is a prerequisite to affording the assessee an opportunity for personal hearing as per the Board's directions. [Paras 8, 14, 15]

CBDT instructions and circulars governing issuance of show-cause notices and personal hearings apply to cases transferred under section 144B(8); transfer does not dispense with the requirement to issue a show-cause notice before finalizing adverse additions.

Remand for issuance of show-cause notice - personal hearing in E-proceedings - The appropriate relief and further course of action where the assessment is quashed for failure to issue a show-cause notice. - HELD THAT: - Given the identified breach, the Court directed that the impugned assessment order be set aside and the matter remanded to the Assessing Officer to issue a show-cause notice specifying the reasons and evidence forming the basis for proposed additions/disallowances. The assessee must be permitted to file written submissions and, if requested, seek personal hearing in accordance with the applicable CBDT circulars on E-proceedings. The Court imposed a timeline for completion of this exercise to ensure finality. [Paras 16]

Assessment order quashed and matter remanded for issuance of show-cause notice with opportunity for submissions and personal hearing if sought; exercise to be completed within 12 weeks.

Final Conclusion: The assessment order dated 29.12.2022 for Assessment Year 2021-22 is quashed and set aside for failure to issue a show-cause notice and consequent breach of the principle of natural justice; the matter is remanded to the Assessing Officer to issue the requisite show-cause notice specifying reasons and basis for proposed additions, permit written submissions and personal hearing in accordance with the applicable CBDT instructions and circulars, and complete the exercise within 12 weeks.

Arm's length price - statutory prohibition under Section 92(3) on application of arm's length principle that reduces taxable income - computation of income on arm's length basis - transfer pricing provisions / Chapter X - cost-plus pricing and effect of adjustments to cost base - aggregation of international transactions

Arm's length price - statutory prohibition under Section 92(3) on application of arm's length principle that reduces taxable income - ITAT's conclusion that Section 92(3) prohibits determining the arm's length price of intra-group services in a manner that reduces the assessee's income chargeable to tax - HELD THAT: - The Court upheld the ITAT's finding that where application of the arm's length principle to intra-group services results in a lower income (or increased loss) than that shown in the books, Section 92(3) operates to preclude computation of income on the basis of arm's length price. The ITAT's reasoning - that treating the ALP of intra-group services as NIL would reduce the assessee's revenue from IT-enabled services (and thereby lower taxable income by more than the standalone adjustment because of lost mark-up) - was accepted. Given the undisputed factual position that the appellant's challenge, if accepted, would reduce income chargeable to tax, the statutory bar in Section 92(3) applies and precludes the transfer pricing adjustment sought by the revenue authorities.

The ITAT was legally justified in holding that Section 92(3) prohibits application of arm's length pricing to intra-group services where such application would reduce the income chargeable to tax.

Cost-plus pricing and effect of adjustments to cost base - computation of income on arm's length basis - ITAT's finding that an ALP adjustment to intra-group service charges which is included in the cost base must be considered in light of its effect on the cost-plus remuneration, and cannot be applied where it causes a net reduction of taxable income - HELD THAT: - The Court agreed with the ITAT's analysis that intra-group service charges form part of the cost base for computing the assessee's cost-plus remuneration (charged at the ALP mark-up). Removing part of that cost (by treating the intra-group service ALP as NIL) reduces the revenue from IT-enabled services and, due to the mark-up, produces a larger reduction in income than the initial ALP disallowance. Since the Dispute Resolution Panel deleted the upward mark-up adjustment earlier made by the TPO, no compensating increase in margin was available; consequently the net effect would be erosion of the tax base. In such circumstances Chapter X adjustments cannot be invoked to achieve a result prohibited by Section 92(3).

The ITAT was justified in holding that the ALP adjustment to intra-group services cannot be applied when inclusion of that adjustment in the cost base would result in a downward revision of declared profit and thereby reduce taxable income.

Transfer pricing provisions / Chapter X - corresponding adjustment - ITAT's conclusion that transfer pricing adjustments in respect of one category of international transactions cannot be used to reduce profit in another category where such cross-adjustment would result in lower taxable income and no corresponding adjustment mechanism is available - HELD THAT: - The Court endorsed the ITAT's view that an ALP adjustment made for one category of international transactions (intra-group services) cannot be permitted to produce a compensatory reduction in income from a different category (IT-enabled services) if that outcome reduces the income chargeable to tax. The reasoning rests on the statutory scheme which does not permit computation on an arm's length basis where it would lower income compared to book entries, and on the factual matrix where no corresponding upward adjustment remained (the DRP having deleted the higher mark-up). Therefore, a consequential downward revision of declared profit across transaction categories is impermissible under Section 92(3).

The ITAT correctly held that transfer pricing adjustments in one category cannot be allowed to reduce profits in another category where such cross-adjustment would lower the taxable income, and no corresponding adjustment is provided under the transfer pricing provisions.

Aggregation of international transactions - computation of income on arm's length basis - ITAT's decision to reject the appellant's contention that separate reporting of transactions required refusal to aggregate those international transactions for transfer pricing purposes in the circumstances of this case - HELD THAT: - The Court accepted the ITAT's approach that, on the facts, aggregation or consideration of the interplay between distinct international transactions (intra-group services and IT-enabled service revenues) was necessary to assess the net effect on taxable income. Because the ALP adjustment to intra-group services, when considered together with the disallowance of an increased mark-up, would reduce the assessee's income, the statutory prohibition in Section 92(3) precluded application of transfer pricing adjustments even if transactions had been reported separately. The ITAT's treatment was therefore sustainable.

The ITAT was justified in treating the transactions together for purposes of determining the net tax effect and in holding that aggregation, in the given circumstances, did not permit transfer pricing adjustments that would lower taxable income.

Final Conclusion: The High Court dismissed the appeal, upholding the ITAT's conclusions that the transfer pricing adjustments sought could not be applied because their net effect would reduce the income chargeable to tax; no substantial question of law arises and the appellant's challenge is dismissed.

Nil Withholding Tax Certificate under Section 197 of the Income Tax Act - prima facie examination of chargeability for TDS - obligation to consider chargeability under the machinery provisions of Section 195 - cost-to-cost reimbursement is not royalty - Draft assessment order is inchoate and not a conclusive determination - Rule 28AA of the Income-tax Rules: estimation of existing and estimated tax liability

Draft assessment order is inchoate and not a conclusive determination - prima facie examination of chargeability for TDS - obligation to consider chargeability under the machinery provisions of Section 195 - Rule 28AA of the Income-tax Rules: estimation of existing and estimated tax liability - Validity of the respondent's refusal to grant Nil Withholding Tax Certificates by relying on a Draft Assessment Order without prima facie examination of chargeability and without applying the statutory parameters for estimating liability - HELD THAT: - The Court held that an authority considering an application under Section 197 must undertake a prima facie evaluation of whether the sums claimed are chargeable to tax and must apply the statutory parameters for estimating existing and estimated tax liability. Rule 28AA requires the Assessing Officer to take into account tax payable on estimated income, tax on assessed or returned income of previous years, existing liabilities and advance tax/TDS while determining existing and estimated liability. A draft assessment order framed under Section 144C is inchoate; it does not constitute a final determination and cannot, by itself, justify denial of a Nil withholding certificate. Reliance solely on the draft assessment, without engaging the Rule 28AA factors or addressing the assessee's contention (including authority of Engineering Analysis and analogous decisions), was held to be legally unsustainable. [Paras 16, 17, 18, 19, 20]

Impugned orders and certificates issued by the respondent for FY 2022-23 and FY 2023-24 quashed insofar as they rest on the Draft Assessment Order; the authority erred in failing to undertake the requisite prima facie chargeability and Rule 28AA enquiry.

Cost-to-cost reimbursement is not royalty - Nil Withholding Tax Certificate under Section 197 of the Income Tax Act - Whether the receipts by the petitioner representing cost-to-cost reimbursement of third party software licences could be treated as 'royalty' and justify withholding at source - HELD THAT: - The Court noted the ITAT's appellate conclusion that the assessee had purchased software licences from third parties and merely cross charged cost to group entities on a cost basis, and that departmental authorities had not produced material to show that reimbursements included mark up. On that basis the ITAT held that cost to cost reimbursement could not be treated as royalty. The High Court observed that the assessee's contention-following Engineering Analysis and consistent decisions that non proprietary license arrangements which do not transfer copyright do not amount to royalty-was not negated merely by reference to a draft assessment. That conclusion undermines the basis for denying a Nil withholding certificate. [Paras 11, 18, 21]

Having regard to the ITAT's findings that reimbursements were cost to cost and lacking material of mark up, the receipts could not be treated as royalty for the purpose of withholding; the impugned denial grounded on contrary preliminary findings was set aside.

Nil Withholding Tax Certificate under Section 197 of the Income Tax Act - Rule 28AA of the Income-tax Rules: estimation of existing and estimated tax liability - Remand for fresh consideration of the petitioner's application for Nil Withholding Tax Certificates - HELD THAT: - The Court quashed the impugned orders and certificates and directed that the petitioner's application under Section 197 be examined afresh in accordance with law. The fresh consideration must bear in mind that a draft assessment order is not a conclusive finding, must address the assessee's submissions including precedents on the characterisation of software reimbursements, and must apply the Rule 28AA factors to form an opinion as to existing and estimated tax liability before granting, denying or modifying a certificate. [Paras 17, 19, 23]

Application for Nil Withholding Tax Certificates remitted for fresh disposal in accordance with law, bearing in mind the observations on chargeability, Rule 28AA and the inchoate nature of draft assessment orders.

Final Conclusion: The writ petitions are allowed: the impugned orders dated 13 January 2023 and 08 March 2023 and the withholding certificates dated 24 February 2023 and 10 May 2023 are quashed, and the petitioner's applications for Nil Withholding Tax Certificates shall be reconsidered afresh in accordance with law taking into account prima facie chargeability, Rule 28AA parameters and relevant precedents.

Conditional immunity from penalty and prosecution - Automatic cessation of immunity on non-compliance with settlement conditions - Limits of Central Government's power to withdraw Settlement Commission's immunity - Enforcement consequences of non-compliance with settlement directions - Effect of interim judicial undertaking and its failure - Statutory consequences: interest, interest on interest and penalty

Conditional immunity from penalty and prosecution - Automatic cessation of immunity on non-compliance with settlement conditions - Validity of withdrawal of immunity granted by the Settlement Commission where the payment condition in the settlement order was not complied with - HELD THAT: - The Settlement Commission granted immunity from penalty and prosecution subject to the condition that specified payments be made within the time-frame prescribed in its order. The court held that where those conditions are not satisfied within the stipulated period the immunity 'works itself out' and automatically ceases to operate; the cessation occurs by operation of the condition in the settlement order rather than by a separate act of withdrawal. Consequently, further proceedings become permissible once the condition of payment is not met. The court found that the petitioner had not made the payments within the prescribed time and therefore the immunity had ceased on that ground. [Paras 4, 5]

Immunity ceased by operation of the settlement order on the petitioner's non-compliance with the payment condition; no interference warranted.

Limits of Central Government's power to withdraw Settlement Commission's immunity - Conditional immunity from penalty and prosecution - Whether the Central Government's communication operated as a withdrawal of the immunity granted by the Settlement Commission - HELD THAT: - The court observed that the Central Government's communication merely authorised the department to proceed and could not be treated as an independent order withdrawing the Settlement Commission's immunity where the conditions of the settlement were satisfied. The power of the Central Government does not operate to revoke an immunity which continues to subsist by compliance with the settlement conditions; conversely, where the conditions are not complied with the immunity ceases by the terms of the Commission's order and the Government's communication only permits further proceedings consequent to that cessation. [Paras 4]

Central Government's communication did not itself effect a withdrawal of immunity; the immunity ceased on non-compliance with the settlement conditions.

Effect of interim judicial undertaking and its failure - Enforcement consequences of non-compliance with settlement directions - Effect of the earlier interim order based on an undertaking and consequence of petitioner's failure to comply with that undertaking - HELD THAT: - An earlier Division Bench admitted the petition and recorded an undertaking by the petitioner to deposit the remaining amount within a specified period. The court noted that although a partial payment was made in compliance with the interim order, the petitioner failed to fulfil the full undertaking within the time stipulated. As a result, the interim order's protections also lapsed by reason of non-compliance. The court declined to examine whether a judicial order could nullify statutory consequences of non-compliance because factual non-fulfilment rendered that question academic. [Paras 6, 7, 10]

The interim order's protections lapsed on the petitioner's failure to comply with the recorded undertaking; the interim order therefore worked itself out.

Statutory consequences: interest, interest on interest and penalty - Enforcement consequences of non-compliance with settlement directions - Consequences payable and set-off treatment where payments are delayed or made after cessation of immunity - HELD THAT: - The court accepted the department's contention that statutory consequences, including interest, compounded interest and penalty, arise on delayed payment as provided by the statute. It further directed that any delayed payments ultimately made would be applied against the demands (whether interest or principal) in accordance with the statutory scheme and the terms of the settlement which allowed year wise and inter-applicant adjustments. [Paras 8, 11]

Statutory consequences for delayed payment follow; delayed payments will be set off against demands in the order prescribed by statute and the settlement.

Final Conclusion: Writ petition dismissed; the Settlement Commission's order and the interim order have ceased to operate on the petitioner's non-compliance with the payment conditions, permitting the department to proceed and statutory consequences (including interest and penalties) to follow.

Penalty under Section 271B - failure to furnish tax audit report - Reasonable cause defence under Section 273B - Assessment of mala fide intention to evade tax

Assessment of mala fide intention to evade tax - Penalty under Section 271B - failure to furnish tax audit report - Validity of the Assessing Officer's conclusion that belated submission of the tax audit report demonstrated a mala fide intention to evade tax. - HELD THAT: - The Assessing Officer recorded that the audit report was filed only after issuance of notice under section 148 and thereby inferred a mala fide intention to evade tax (recorded at paragraph 5 of the impugned order). The High Court observed that the gross income disclosed in the return was subsequently accepted by the Assessing Officer and the total tax liability shown in the return was also accepted. On these facts, the Court held that the conclusion of mala fides drawn solely from belated filing was not sustainable and amounted to a speculative finding contrary to the material on record. [Paras 7, 8]

The finding that the belated filing evinced a mala fide intention to evade tax is unsustainable and set aside.

Reasonable cause defence under Section 273B - Reliability of medical evidence in penalty proceedings - Sustainability of the Assessing Officer's conclusion that the petitioner's illness was a fabrication and hence not a reasonable cause for delay. - HELD THAT: - The Assessing Officer rejected the petitioner's claim of severe lower back pain as a fabrication because the return and audit report were prepared by a chartered accountant (paragraph 5(iii)). The petitioner had produced photocopies of medical prescriptions. The Court held that, in light of the medical documentation and the factual matrix regarding the return, the Assessing Officer's adverse credibility finding could not be sustained. The conclusion was characterized as speculative and contrary to the record. [Paras 7, 8]

The conclusion that the illness was a fabrication is not sustainable and is quashed.

Penalty under Section 271B - reconsideration in light of Section 273B - Remand for fresh adjudication and reasoned order - Whether the penalty order should be maintained or reconsidered by the Assessing Officer. - HELD THAT: - Because the Assessing Officer recorded speculative findings contrary to the material on record, the Court quashed the impugned penalty order and remanded the matter. The Assessing Officer is directed to afford the petitioner a reasonable opportunity, take into account all material facts and applicable provisions including section 273B, and pass a reasoned order. The Court prescribed a timeline for this exercise. [Paras 9]

Impugned order quashed; matter remanded for fresh, reasoned consideration by the Assessing Officer within two months, taking into account Section 273B and providing opportunity to the petitioner.

Final Conclusion: Speculative and factually contrary findings in the penalty order were quashed; the penalty order under Section 271B is set aside and the matter is remanded to the Assessing Officer for fresh, reasoned consideration (including Section 273B) after giving the petitioner opportunity to be heard, to be completed within two months.

Classification of an agreement as a new independent agreement or an extension of an earlier agreement - Applicability of tax rate under Section 115A and treaty rate versus domestic rate - Interference with concurrent factual findings - perversity standard

Classification of an agreement as a new independent agreement or an extension of an earlier agreement - Applicability of tax rate under Section 115A and treaty rate versus domestic rate - Agreement dated 1st April 2008 is an independent and distinct agreement and not merely an extension of the agreement dated 26th March 1998, with the consequence that the lower tax rate applied by the Tribunal is appropriate. - HELD THAT: - The Tribunal undertook a comparative analysis of the two agreements and recorded factual differences: scope of trademark/license (old agreement limited to Ape 501 and Ape 601; new agreement licensed manufacture and sale under the broader Ape brand), the launch by the assessee of new products under the Ape mark which would not have been permissible under the old agreement, and differences in territorial scope among other distinctions. The High Court treated these conclusions as findings of fact; it held them to be possible findings based on the materials and not vitiated by perversity. Because the characterization of the 2008 instrument as a separate agreement determines the applicable tax treatment under Section 115A (treaty rate rather than the higher domestic rate), the Tribunal's factual conclusion led to the application of the lower rate, and the High Court declined to disturb those findings. [Paras 5, 6]

Tribunal's finding that the 2008 agreement is an independent agreement is sustained; the lower tax rate as applied by the Tribunal stands.

Interference with concurrent factual findings - perversity standard - No substantial question of law arises for the High Court because the Tribunal's conclusions rest on factual findings which are possible and not perverse. - HELD THAT: - The High Court examined whether the Tribunal's decision involved any legal error or perversity in its factual conclusions. Finding the Tribunal had addressed relevant comparative features of the two agreements and reached possible conclusions thereon, the Court held that such concurrent findings of fact cannot be overturned on the present petition. The absence of perversity or legal error in the Tribunal's reasoning meant there was no substantial question of law warranting interference. [Paras 6]

No interference with the Tribunal's factual conclusions; petition dismissed for lack of any substantial question of law.

Final Conclusion: The High Court dismissed the appeal, upholding the Tribunal's factual finding that the 1st April 2008 agreement was a separate agreement and, consequently, declined to disturb the tax treatment adopted by the Tribunal for AY-2011-12.

Deduction under section 80P(2)(d) in respect of interest or dividends from investments made with another co-operative society - Definition of "co-operative society" under section 2(19) as inclusive of co-operative banks registered under State Co-operative Societies Acts - Proviso in section 80P(4) excluding only co-operative banks functioning as commercial banks from 80P benefits - Applicability of Tribunal coordinate-bench precedents on identical factual and legal issues

Deduction under section 80P(2)(d) in respect of interest or dividends from investments made with another co-operative society - Definition of "co-operative society" under section 2(19) as inclusive of co-operative banks registered under State Co-operative Societies Acts - Proviso in section 80P(4) excluding only co-operative banks functioning as commercial banks from 80P benefits - Applicability of Tribunal coordinate-bench precedents on identical factual and legal issues - Assessee entitled to deduction under section 80P(2)(d) for interest earned on deposits with co-operative banks for the A.Y. 2015-16 and 2018-19. - HELD THAT: - The Assessing Officer denied the deduction on the ground that interest was earned from co-operative banks/multi-state scheduled banks and therefore did not qualify under section 80P(2)(d). The Tribunal examined the definition of "co-operative society" and noted that a co-operative bank registered under the relevant State Co-operative Societies Act falls within that definition. The Tribunal also observed that section 80P(4) operates as a proviso excluding only those co-operative banks which, by virtue of RBI licence and their functioning, operate at par with commercial banks; that proviso does not categorically exclude all co-operative banks. In view of consistent decisions of coordinate benches (including the reproduced reasoning in Shah and Nahar Industrial Premises A2 Co-op. Soc. Ltd. and related decisions) and authoritative treatment of section 80P(4), the facts of the present appeals are squarely covered by those decisions. Following those precedents, the Tribunal held that interest on deposits with co-operative banks is eligible for deduction under section 80P(2)(d) unless the co-operative bank is specifically excluded by operation of section 80P(4) on the ground that it functions as a commercial bank. The AO was accordingly directed to allow the claimed deduction for the stated assessment years. [Paras 11, 13, 14]

Allowed; directs Assessing Officer to allow deduction under section 80P(2)(d) for interest from deposits with co-operative banks for A.Y. 2015-16 and 2018-19.

Final Conclusion: Both appeals are allowed: deduction under section 80P(2)(d) was held to be admissible in respect of interest earned on deposits with co-operative banks for the A.Y. 2015-16 and 2018-19, and the Assessing Officer is directed to grant the claimed deduction.

Remand report under Rule 46A - Adjudication on the basis of documents on record in absence of AO's comments - Business purpose and deductibility of sampling/design expenses - Deductibility of foreign travel expenses incurred for business promotion - Revenue expenditure versus capital expenditure in respect of website upkeep - Reasonableness and allowability of managerial remuneration

Remand report under Rule 46A - Adjudication on the basis of documents on record in absence of AO's comments - Whether the learned CIT(A) was obliged to insist on the AO's remand report under Rule 46A before deciding the appeal. - HELD THAT: - The Tribunal examined the record and found that the learned CIT(A) had requested the AO to furnish comments/report under Rule 46A in respect of submissions and documentary evidence filed by the assessee. The AO did not furnish any remand report. Rule 46A does not impose a legal obligation on the learned CIT(A) to insist on the AO's comments; it only provides for seeking such comments. Having given the AO a reasonable opportunity to respond and in the absence of any remand report, the learned CIT(A) was entitled to adjudicate the appeal on the basis of the material on record. The Revenue's contention that the learned CIT(A) erred in relying on the assessee's appellate submissions without the AO's comments was therefore rejected. [Paras 4]

The learned CIT(A) was not obliged to insist on the AO's remand report and correctly proceeded to decide the appeal on the documents on record; Revenue's grounds A and B dismissed.

Business purpose and deductibility of sampling/design expenses - Whether sampling/designing expenses debited in the profit and loss account are deductible as business expenditure. - HELD THAT: - The Tribunal considered the assessee's business model of procuring/developing designs and samples to secure orders from foreign buyers and thereafter coordinating production by Indian manufacturers. The assessee had filed during assessment and appellate proceedings the ledger details, payment vouchers, sample reimbursement statements and other supporting documents showing teams engaged in sampling/design and associated out of pocket expenses. The Revenue produced no material to controvert the detailed documentary evidence. Considering that sampling/design expenses are integral to the assessee's marketing/support services and that these expenses facilitated the earning of commission income, the Tribunal held such expenditure to be incurred wholly and exclusively for business and therefore allowable. [Paras 9]

Sampling/design expenses allowed; ground C dismissed.

Deductibility of foreign travel expenses incurred for business promotion - Whether foreign travel expenses incurred by an employee for overseas business meetings are deductible. - HELD THAT: - The assessee produced documentary evidence including ledger accounts, expense charts and invoices to show that the employee travelled to UK cities to meet a major client, negotiated prices and secured further orders, and that boarding, lodging and local travel were authorised by management. The Revenue did not adduce material to rebut the genuineness or business purpose of the claimed expenditure. On the factual matrix and documentary proof on record, the Tribunal found no infirmity in the learned CIT(A)'s acceptance of the expenses as business expenditure. [Paras 12]

Foreign travel expenses allowed; ground D dismissed.

Revenue expenditure versus capital expenditure in respect of website upkeep - Whether website designing/upkeep expenses are revenue expenditures or capital in nature. - HELD THAT: - The assessee demonstrated that it maintained an operational website for business (www.miragefg.com) and had outsourced continuous development, hosting, content, SEO and related services to an independent developer, producing an invoice for website content/design. Given the assessee's intermediary business profile and the need for an updated digital catalogue, the Tribunal held that expenditure to keep the website operational and current did not confer an enduring benefit akin to capital asset creation and was therefore revenue in nature. The Revenue's mere doubt as to genuineness was not supported by evidence, and the fact that the website remained functional further supported the revenue character of the expense. [Paras 16]

Website designing expenses allowed as revenue expenditure; ground E dismissed.

Reasonableness and allowability of managerial remuneration - Whether remuneration paid to directors and key employees was excessive and rightly disallowed by the AO. - HELD THAT: - The Tribunal observed that the AO's disallowance rested on simplistic comparison of salaries without examining the nature and extent of services rendered. The assessee furnished detailed resumes, profiles and evidence of roles and responsibilities showing substantial experience and distinct functions performed by the respective directors and employees (for example, founding/managing director with long experience and executives handling day to day operations, sales, logistics and sample management). On this material, the learned CIT(A) was justified in accepting that the remuneration was commensurate with services rendered. The Tribunal found no reason to interfere with the deletion of the disallowance made by the learned CIT(A). [Paras 23]

Disallowance of excess salaries deleted; ground F dismissed.

Final Conclusion: All grounds in the Revenue's appeal were dismissed and the appeal is accordingly dismissed.

Condonation of delay - transfer pricing adjustment for corporate/bank guarantee - functional and risk analysis (FAR) in transfer pricing - depreciation on written down value where asset is capitalised though purchased by principal - business expenditure - professional fees for arbitration - book profit computation under section 115JB - treatment of income-tax paid by employer on employee's behalf - interpretation of Explanation 1(a) to section 115JB

Condonation of delay - Admission of cross-objections filed by the assessee despite limitation - HELD THAT: - The assessee furnished an affidavit explaining cause for delay in filing cross-objections. Having considered the reasons on record and the factual history of the assessee, the Tribunal found that the delay was caused by reasonable and sufficient cause and, in the interest of justice, condoned the delay and admitted both cross-objections. [Paras 2]

Delay in filing cross-objections condoned and cross-objections admitted.

Transfer pricing adjustment for corporate/bank guarantee - functional and risk analysis (FAR) in transfer pricing - Validity of transfer pricing adjustments levied on account of bank/corporate guarantee provided in relation to overseas joint-venture contracts - HELD THAT: - On facts where the assessee, in substance, performed the contract work and the associated enterprise performed negligible functions, the Tribunal followed coordinate-bench precedent which treated the guarantee as not conferring a benefit to the associated enterprise. The Tribunal applied FAR reasoning: assets, functions, risks and rewards predominantly lay with the assessee, so no arm's length adjustment was warranted. In light of earlier coordinate-bench decisions on substantially similar facts, the Tribunal directed the deletion of the TPO/AO adjustments and allowed the assessee's cross-objections. [Paras 6, 7, 8]

Transfer pricing adjustments on account of corporate/bank guarantee deleted; cross-objections allowed and revenue appeals rendered infructuous to that extent.

Depreciation on written down value where asset is capitalised though purchased by principal - Allowability of depreciation on written down value for plant and machinery capitalised in assessee's books though purchased by principal - HELD THAT: - The Tribunal applied coordinate-bench precedent in assessee's own case: where the principal purchased machinery but the assessee had possession, capitalised the cost in its books and used the machinery in its business, depreciation claimed on WDV is allowable. The earlier ratio and findings were held applicable to the assessment year under consideration, and the Tribunal declined to interfere with the CIT(A)'s allowance of depreciation. [Paras 9, 10]

Depreciation on WDV allowed; Revenue ground dismissed.

Business expenditure - professional fees for arbitration - Deductibility of professional fees incurred for arbitration proceedings where corresponding arbitration award income is not offered in earlier years - HELD THAT: - The Tribunal followed coordinate-bench precedents which held that professional fees incurred for arbitration relate to the business of the assessee and are deductible. The AO's disallowance, motivated to 'keep the issue alive' by following disallowances in earlier years, was rejected because the expenditure was incurred for business purposes and earlier Tribunal orders supported deduction. [Paras 11, 12]

Addition of professional fees disallowed by AO deleted; expenditure held deductible.

Book profit computation under section 115JB - treatment of income-tax paid by employer on employee's behalf - interpretation of Explanation 1(a) to section 115JB - Whether income-tax paid by the employer on behalf of employees in respect of ESOP perquisites must be added back in computing book profit under section 115JB - HELD THAT: - The Tribunal examined Clause (a) of Explanation 1 to section 115JB and Explanation 2, noting that the definition of 'income-tax' for book-profit adjustments enumerates specific taxes and cesses and does not include tax payments made by an employer on behalf of employees. Further, Section 40(a)(v) separately disallows such payments in computing taxable income under normal provisions, indicating that employer-borne tax is not to be treated as the company's own income-tax for section 115JB purposes. Applying these interpretative conclusions, the Tribunal upheld the CIT(A)'s deletion of the addition of tax paid on ESOP when computing book profit. [Paras 14, 16, 18, 19]

Tax on ESOP paid by employer excluded from addition to book profit under section 115JB; CIT(A)'s deletion upheld and revenue ground dismissed.

Final Conclusion: The revenue appeals are dismissed; the assessee's cross-objections are allowed - delay in filing cross-objections condoned; transfer pricing adjustments on corporate/bank guarantee deleted; depreciation on WDV and professional fees for arbitration allowed; and tax paid by employer on ESOP excluded from book profit computation under section 115JB.

Deduction under section 80P(2)(d) of the Income-tax Act (investment income from other co-operative societies) - co-operative society - co-operative banks as co-operative societies - interest income on fixed deposits and savings bank accounts as investment income - distinction between section 80P(2)(a) and section 80P(2)(d)

Deduction under section 80P(2)(d) of the Income-tax Act (investment income from other co-operative societies) - co-operative banks as co-operative societies - interest income on fixed deposits and savings bank accounts as investment income - distinction between section 80P(2)(a) and section 80P(2)(d) - Assessee entitled to deduction under section 80P(2)(d) in respect of interest earned from deposits placed with co-operative banks. - HELD THAT: - The assessee is a co-operative housing society which placed funds in fixed deposits and savings accounts with co-operative banks and earned interest thereon. Section 80P(2)(d) permits deduction in respect of income by way of interest or dividends derived by a co-operative society from its investments with any other co-operative society. The statutory definition of "co-operative society" and the definition of "co-operative bank" under the State Act establish that co-operative banks are co-operative societies carrying on banking business. Accordingly, interest earned on fixed deposits and savings bank balances maintained with co-operative banks constitutes income from investments with another co-operative society and falls within the ambit of section 80P(2)(d). The Supreme Court decision relied on by the lower authority concerned section 80P(2)(a) and is therefore not germane to the present claim under section 80P(2)(d). The Revenue did not controvert that the banks were registered as co-operative societies. Consequently, the assessing officer is directed to allow the deduction under section 80P(2)(d) for the interest in question for both assessment years. [Paras 8, 9, 10, 13, 14]

Appeals allowed; deduction under section 80P(2)(d) to be granted in respect of interest from co-operative banks for the assessment years 2020 - 21 and 2021 - 22 and assessing officer directed to give effect.

Final Conclusion: The Appellate Tribunal reversed the orders of the lower authorities and allowed the assessee's appeals for assessment years 2020 - 21 and 2021 - 22, holding that interest earned on deposits with co-operative banks qualifies for deduction under section 80P(2)(d) and directing the assessing officer to grant the deduction.

Penalty under section 271(1)(c) for furnishing inaccurate particulars - deletion of penalty where issue is debatable or covered by earlier orders - willful furnishing of inaccurate particulars versus inadvertent mistake - application of judicial precedents on penalty for undisclosed income

Penalty under section 271(1)(c) for furnishing inaccurate particulars - deletion of penalty where issue is debatable or covered by earlier orders - Whether the penalty levied in respect of alleged furnishing of inaccurate particulars relating to payments under cost sharing arrangements, service charges and sales commission was liable to be sustained. - HELD THAT: - The Tribunal noted that the CIT(A) deleted penalty in respect of payments under cost sharing arrangements and service charges because those additions had been deleted by the Tribunal in earlier ITA proceedings dated 30/10/2019. The CIT(A) deleted penalty relating to sales commission on the further basis that the assessee's appeal had been admitted by the High Court by framing substantial questions of law and analogous penalties in assessee's own earlier assessment years had been deleted by the Tribunal. The Revenue did not dispute these factual aspects before the Tribunal. On this basis the Tribunal held that the CIT(A) rightly took note of these circumstances and appropriately deleted the penalty; no interference was warranted. [Paras 2]

Appeal of the Revenue dismissed; deletion of penalty on these counts sustained.

Penalty under section 271(1)(c) for furnishing inaccurate particulars - willful furnishing of inaccurate particulars versus inadvertent mistake - application of judicial precedents on penalty for undisclosed income - Whether penalty for allegedly willfully furnishing inaccurate particulars by not adding back part of provision for sales tax concession was sustainable. - HELD THAT: - The AO made an addition by disallowing part of the provision for sales tax concession on the basis that the liability had not crystallized and imposed penalty under section 271(1)(c). The CIT(A) sustained the penalty relying on the assessee's failure to appeal the disallowance and applying authorities which hold that incorrect claims and absence of voluntary disclosure can attract penalty. On examining the record the Tribunal found no evidence of intent to submit inaccurate particulars; the omission was capable of being an inadvertent mistake and, despite the assessee being a large organisation, malice could not be attributed merely on that basis. The Tribunal also observed that the assessee had reported correct facts at other places in the return, and therefore the presumption of deliberate inaccuracy was not warranted. Applying this reasoning, the Tribunal concluded that the penalty should not have been sustained. [Paras 3, 4, 5]

Appeal of the assessee allowed; penalty in respect of the sales tax concession addition deleted.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal: penalties imposed under section 271(1)(c) were deleted - those linked to cost sharing, service charges and sales commission were set aside as covered or debatable, and the penalty for non addition of part of provision for sales tax concession was deleted on the basis that there was no evidence of willful furnishing of inaccurate particulars.

Fees for Technical Services / Fees for Included Services - make available - taxability under DTAA - principles of natural justice

Fees for Technical Services / Fees for Included Services - make available - taxability under DTAA - Receipts of the assessee from pre-clinical laboratory services are not to be characterized as Fees for Technical Services / Fees for Included Services chargeable to tax in India under the India-Canada DTAA. - HELD THAT: - The Tribunal examined the master service agreements and sample test reports which showed that studies were conducted on a non exclusive, study by study basis according to protocols provided by the sponsors, with sponsors supplying study material and acquiring proprietary rights in data generated. The reports furnished by the assessee did not transfer technical knowledge, know how or enable the Indian clients to conduct such testing independently in the future; the benefit of the services was limited and ephemeral, and clients continued to depend on the assessee for recurring services. Applying the settled test of 'make available' (which requires transmission of technical knowledge or enabling the recipient to apply the technology independently), and following the decision in the sister concern case and other consistent precedents, the Tribunal found that the twin requirement of rendering services and making technical knowledge available was not satisfied. Consequently, the receipts did not qualify as FTS/FIS under Article 12(4) of the DTAA and were not taxable in India. [Paras 5, 6]

Appeal allowed on merits; receipts not taxable as FIS/FTS under the India Canada DTAA.

Principles of natural justice - Draft assessment proceedings were deficient for want of adequate opportunity and required reconsideration by the assessing officer. - HELD THAT: - The DRP had noted that the AO passed the draft order without recording consideration of the assessee's prior submissions and without recording adjournment requests, thereby failing to follow principles of natural justice. The AO was directed to consider all submissions, verify factual contentions and pass a reasoned, speaking order. The Tribunal, having examined the record and the reassessment process undertaken in compliance with DRP directions, proceeded to decide the substantive controversy in favour of the assessee. [Paras 2]

DRP's direction to the AO upheld; procedural infirmity remedied and substantive adjudication in favour of the assessee.

Final Conclusion: The appeal is allowed: the receipts from pre clinical laboratory services for AY 2019 20 do not constitute Fees for Technical Services/Fees for Included Services under the India Canada DTAA and are not taxable in India; the DRP's procedural directions were rightly invoked and the assessment is set aside with consequential effects.

Make available - fees for included services - Article 12(4)(b) of the India USA DTAA - cost-to-cost reimbursement - continuous/recurring services and the test for transfer of technical knowledge - Master Inter Company Service Agreement (MSA) and allocation keys

Make available - fees for included services - Article 12(4)(b) of the India USA DTAA - continuous/recurring services and the test for transfer of technical knowledge - Whether the IT management and support services provided by the assessee amounted to fees for included services under Article 12(4)(b) by virtue of making available technical knowledge, experience, skill or know how - HELD THAT: - The Tribunal applied the Protocol's explanation that technology is "made available" only where the recipient is enabled to apply the technology independently after the contract. The recurring, continuing nature of the agreement (services provided year after year since 2018) was treated as significant: if technical knowledge had been made available, the recipients would not have required the same contracted services repeatedly. The Tribunal relied on the Tribunal and High Court decisions emphasizing that incidental advantages or recurring support do not equate to transfer of technology; technical knowledge must be imparted and absorbed so the recipient can deploy the technology without the provider. The AO/DRP's reliance on training and incidental technical inputs was found insufficient: there was no material showing training imparted such specialized knowledge that enabled independent application of technology by the recipients. Consequently the make available condition in Article 12(4)(b) was not satisfied on the facts. [Paras 3, 7]

The IT services did not satisfy the make available requirement and therefore did not constitute fees for included services under Article 12(4)(b).

Cost-to-cost reimbursement - Master Inter Company Service Agreement (MSA) and allocation keys - Whether the receipts from Indian associated enterprises were mere cost-to-cost reimbursements (without mark up) and hence not taxable as income - HELD THAT: - The Tribunal examined the MSA, its compensation clause and Annex II which stipulated that the service fee was determined using allocation keys and methodologies to reflect benefit and proportionate usage; external subcontracting recharges were to be at cost without markup. The AO had not made enquiries to rebut the assessee's claim that charges were allocations of costs without profit. Citing authority that cost only reimbursements lacking a profit element are not chargeable to tax, the Tribunal found that the authorities below erred in treating the receipts as taxable income without establishing a profit element or disputing the factual cost allocation mechanism under the MSA. [Paras 2, 9, 10]

The receipts from Indian AEs were cost to cost reimbursements under the MSA and not taxable income of the assessee.

Final Conclusion: The Tribunal held that the services did not "make available" technical knowledge under Article 12(4)(b) and that the amounts charged were cost to cost reimbursements under the MSA; accordingly the additions were set aside and the appeals were allowed.

Revisionary jurisdiction under section 263 - erroneous and prejudicial to the interest of revenue for lack of enquiry - Explanation 2 clauses (a) and (b) to section 263 - order passed without making enquiries or allowing relief without enquiry - treatment of surrendered excess stock as business income - unexplained expenditure under section 69C and special tax rate under section 115BBE - plausible view taken by Assessing Officer - bar on exercise of jurisdiction under section 263

Revisionary jurisdiction under section 263 - erroneous and prejudicial to the interest of revenue for lack of enquiry - Explanation 2 clauses (a) and (b) to section 263 - order passed without making enquiries or allowing relief without enquiry - treatment of surrendered excess stock as business income - unexplained expenditure under section 69C and special tax rate under section 115BBE - plausible view taken by Assessing Officer - bar on exercise of jurisdiction under section 263 - Validity of the Principal CIT's revisional order under section 263 setting aside the assessment on the ground that the Assessing Officer failed to verify surrendered excess stock and should have applied section 115BBE instead of taxing at normal rates, and whether such exercise of revisionary jurisdiction was justified. - HELD THAT: - The Tribunal examined the record of the survey, the assessee's statements and the assessment proceedings. The Assessing Officer considered the survey findings, the assessee's statement that the excess stock arose from regular business activity, the incorporation of the surrendered amount in the profit and loss account and the return where the amount was offered as business income, and accepted that view after application of mind. The Principal CIT's revisional order recorded a generalized contention that the excess stock was unexplained expenditure chargeable under the special rate and that the AO had not made necessary verifications, but did not explain why the AO's conclusion was unsustainable in law nor identify any lack of enquiry of a nature envisaged by Explanation 2 clauses (a) and (b) to section 263. Where the Assessing Officer has made enquiries and adopted a plausible view - namely, that the surrendered stock related to regular business and was taxable as business income - mere disagreement by the Principal CIT, without demonstrating that the AO's view is untenable or that requisite enquiries were omitted, does not furnish valid grounds for invoking the revisional jurisdiction. In the present case no specific finding was recorded by the Principal CIT showing that the AO had failed to make enquiries which ought to have been made or had allowed relief without enquiry; consequently the exercise of jurisdiction under section 263 was unwarranted. [Paras 2, 3]

The revisional order passed by the Principal CIT under section 263 setting aside the assessment is set aside; the Assessing Officer's order is not held to be erroneous or prejudicial to the revenue on the facts of this case.

Final Conclusion: The assessee's appeal is allowed: the Tribunal cancels the Principal CIT's order under section 263 for A.Y. 2018-19 and upholds the Assessing Officer's treatment of the surrendered excess stock as business income taxed at normal rates, since the AO had made enquiries and taken a plausible view which the Principal CIT failed to demonstrate was unsustainable.

Interim order - representation to jurisdictional officer - consideration in light of Circular dated 07.06.2023 - fixed time-frame for disposal of representation - stay on coercive action pending disposal - dismissal of Special Leave Petition

Interim order - The Supreme Court declined to interfere with the interim order passed by the High Court. - HELD THAT: - The Court observed that the impugned order is interim in nature and, for that reason, declined to exercise its jurisdiction to disturb the High Court's interlocutory ruling. No alteration of the High Court's interim direction was made by this Court, and the matter was directed back for final disposal at the High Court level. [Paras 1]

The interim order passed by the High Court is not interfered with.

Representation to jurisdictional officer - consideration in light of Circular dated 07.06.2023 - fixed time-frame for disposal of representation - Direction to petitioner to file representation and to the Jurisdictional Officer to consider it with reference to Circular dated 07.06.2023 and dispose of the same within three weeks. - HELD THAT: - The Court directed that, in the interim, the petitioner may submit a representation to the competent Jurisdictional Officer enclosing all necessary material. The Jurisdictional Officer is mandated to consider the representation taking into account the Circular dated 07.06.2023 and to decide the representation within a period of three weeks from filing. This provides an administrative route for resolution pending the High Court's adjudication. [Paras 2]

Petitioner to file representation; Jurisdictional Officer to decide it in light of Circular dated 07.06.2023 within three weeks.

Stay on coercive action pending disposal - Prohibition on initiation of coercive steps against the petitioner until the High Court disposes of the writ petition. - HELD THAT: - The Court ordered that no coercive measures shall be taken against the petitioner during the pendency of the writ petition before the High Court. This protective injunction remains operative only until the High Court renders its decision. [Paras 3]

No coercive steps shall be initiated against the petitioner till the High Court disposes of the writ petition.

Dismissal of Special Leave Petition - Final disposal of the Special Leave Petition by dismissal. - HELD THAT: - After recording the foregoing directions and observations, the Court concluded the proceedings by dismissing the Special Leave Petition. Ancillary pending applications were also disposed of. [Paras 4, 5]

Special Leave Petition dismissed; pending applications disposed of.

Final Conclusion: The Supreme Court refused to disturb the High Court's interim order, directed the petitioner to submit a representation and the Jurisdictional Officer to decide it in light of Circular dated 07.06.2023 within three weeks, restrained coercive action until the High Court disposes of the writ petition, and dismissed the Special Leave Petition, disposing of pending applications.

Form X import licence - ex post facto licence as admission - permission under Rule 57(4) of the Arms Rules, 2016 - delegation of licensing powers to DGFT - inclusive definition of "parts and components" (Rule 2(37)) - burden to prove violation of an import permission

Form X import licence - ex post facto licence as admission - burden to prove violation of an import permission - The unqualified Form X issued to Syndicate covers the import of 'frames' and 'slides' with pre fitted sub components and precludes the appellants from insisting on separate import licences for those embedded parts. - HELD THAT: - The Court observed that the Form X issued on 14 September 2022 granted an unqualified licence to import parts of handguns described as 'frames' and 'slides' and contained no reservation that such items could not be pre fitted with sub components or that separate licences were required for embedded parts. The appellants, aware of the pending lis and the fact of pre fitting, did not object when issuing Form X; the ex post facto issuance therefore amounted to an admission that no separate import licence was required for the pre fitted sub components. The Court further noted that the appellants failed to place material showing that 'frames' and 'slides' are not commercially known to be supplied with pre fitted operational parts and that the burden to prove a violation of the import permission rested on the appellants, which they did not discharge. For these reasons the Court upheld the writ court's conclusion that the consignments did not violate the import licence. [Paras 26, 28, 33, 38, 46]

The objection that separate licences were required for pre fitted sub components is rejected and the Form X licence covers the imported 'frames' and 'slides' with embedded parts.

Permission under Rule 57(4) of the Arms Rules, 2016 - Form X import licence - Permission under Rule 57(4) was not required as a precondition for permitting the imports in the present case once the competent authority issued an unconditional Form X licence. - HELD THAT: - The Court accepted the writ court's interpretation that Rule 57(4) obliges an importer to obtain MHA permission only where the article proposed to be imported is not being manufactured or cannot be manufactured locally. It rejected the appellants' contrary construction that Rule 57(4) prohibits import of parts that can be manufactured locally. The Court further held that the issuance of an unconditional Form X by the competent authority during the pendency of proceedings operates as a deemed clearance under Rule 57(4). The appellants had not applied Rule 57(4) at the inception and first raised it in the MHA advisory dated 3 August 2022; no separate application process under Rule 57(4) was shown to exist or to have been followed. [Paras 34, 35, 36, 58, 59]

Requirement of permission under Rule 57(4) does not survive once an unconditional Form X licence has been granted and the Rule is not to be read as an absolute prohibition on import of parts that can be manufactured locally.

Delegation of licensing powers to DGFT - Form X import licence - Rule 88(2) compliance - Delegation of licensing powers to DGFT means there was no separate mandatory requirement for an importer to approach the MHA under Rule 88(2) once DGFT had issued the import licence; the DGFT licence was treated as reiteration of earlier DGFT authorisation. - HELD THAT: - The Court noted the MHA's delegation of its powers under Section 10 to the DGFT by notification dated 1 November 2018 and found it illogical to require a separate application to MHA for import licences when DGFT was the delegated authority. The Form X issued by DGFT reiterated the earlier DGFT import authorisation and bore the same licence number and description. The absence of a prior Form X application was not pressed by the appellants earlier and was raised orally for the first time before the writ court; the Court found the contention to be an afterthought. Consequently, the appellants' plea that Rule 88(2) mandatory pre filing (21 days) was not complied with did not invalidate the Form X in these proceedings. [Paras 31, 32, 40, 41, 42]

The licence issued by DGFT under delegated power is effective; there was no requirement for the importer to separately obtain licence from MHA under Rule 88(2) once DGFT had issued Form X.

Final Conclusion: The appeal is dismissed; the judgment of the writ court ordering release of the import consignments is upheld, the restraint on disposing of the imported goods is dissolved, and the appellants are directed to streamline and publicise a harmonised licensing process for the arms industry.

Criminal conspiracy - discharge of accused - prima-facie case / grave suspicion - prosecution sanction and its effect - abuse of process of law - maintainability of prosecution against private persons after discharge of public servants

Prima-facie case / grave suspicion - discharge of accused - Whether sufficient material exists to show grave suspicion and justify framing of charge against the petitioners - HELD THAT: - The court examined the chargesheet, the CBI auditor's report and the CMD of SCI's sanction-refusal order. The CMD recorded that the disputed claims for FY 2005-06 and FY 2006-07 were never authorised, settled or paid by SCI and that the agent had issued credit notes reversing those claims. The CMD also noted that certain practices (such as escorting customs officers) were recognised and that reliance on isolated statements to discredit claims was unsafe. On a prima-facie sift, the material relied upon by the prosecution fell short of establishing a grave suspicion against the petitioners: the principal accused public servants have been discharged and there is no evidence of wrongful payment to the petitioners in respect of the impugned invoices. In light of Union of India v. Prafulla Kumar Samal, if only suspicion and not grave suspicion is raised, discharge is appropriate. Applying that test here, the court found no case to proceed to trial against the petitioners. [Paras 21]

No sufficient material to raise grave suspicion; petitioners entitled to discharge.

Prosecution sanction and its effect - maintainability of prosecution against private persons after discharge of public servants - abuse of process of law - Whether, in absence of prosecution of the public servants against whom the conspiracy was alleged, continuation of prosecution against the private petitioners is maintainable - HELD THAT: - The court noted that CBI initially charged four SCI officials along with the petitioners, but the competent authority refused sanction for prosecution and the public servants have since been discharged by this Court. The CMD's order refusing sanction emphasised that no payments were made to the agent and that there was no wrongful loss to SCI. The court observed authority holding that once the charge against the principal public servant is dropped, proceedings against others in the same conspiracy may not be maintainable. Given the discharge of the SCI officials and the absence of material showing wrongful gain or loss, continuing prosecution solely against the private persons would be pointless and amount to abuse of process. The court concluded that permitting the prosecution to proceed in such circumstances would be an exercise in futility. [Paras 22, 23]

Prosecution against the petitioners is not maintainable in the circumstances and continuing it would be an abuse of process; petitioners discharged.

Final Conclusion: The Special Judge's order rejecting the petitioners' discharge application is set aside; having found no grave suspicion and, in view of the discharge/refusal of sanction in respect of the public servants, continuation of prosecution would be an abuse of process, the petitioners are discharged in Special Case No. 60/2010.

Provisional release of goods - Release of goods on execution of bond and security where goods are seized - Validity of departmental circular vis-a -vis statutory requirement for seizure - Quashing of conditional provisional release imposed without seizure - Back to Town return of goods from customs area

Provisional release of goods - Release of goods on execution of bond and security where goods are seized - Validity of departmental circular vis-a -vis statutory requirement for seizure - Back to Town return of goods from customs area - Legality of imposing bond and cash security as conditions for permitting goods to be taken 'back to town' where there has been no seizure under the Customs Act, and validity of the impugned communication dated 18th June 2024. - HELD THAT: - The court held that the scheme in Section 110A operates where goods have been seized under Section 110, permitting release to the owner on execution of bond with such security as the adjudicating authority may require. In the present case there was no seizure under any provision of the Act; consequently the conditions imposed in the impugned communication (requiring execution of a bond equivalent to the FOB value and furnishing of cash security/bank guarantee) could not be sustained on the basis of Section 110A. Reliance upon the Board Circular to justify imposing those conditions in the absence of seizure was not acceptable; the circular contemplates provisional release in specific circumstances tied to seizure or to provisional exportation pending tests/enquiries, but it cannot displace the statutory requirement that Section 110A follows a seizure under Section 110. The court further observed that permitting goods to be returned 'back to town' after cancellation of the export order is not meaningfully different from provisional clearance for exportation for the purpose of imposing conditions, and therefore the impugned communication was quashed. In exercise of its remedial powers the court directed release of the goods for 'back to town' within two weeks subject to limited and specific safeguards to secure attendance and financial solvency: (i) a bond in the department's prescribed format, (ii) a solvency certificate from the petitioner's bank, and (iii) an undertaking from the petitioner's director to remain available when summoned with reasonable notice together with annexure of identity documents. The order substituted these safeguards for the impugned requirement of a bond equal to total FOB and a separate cash security/bank guarantee demanded by the respondents. [Paras 3, 9, 10, 11]

Impugned communication dated 18th June 2024 quashed; goods to be released 'back to town' within two weeks on submission of prescribed bond, bank solvency certificate and an undertaking by the petitioner's director with identity documents.

Final Conclusion: The petition is allowed: the departmental letter dated 18th June 2024 imposing bond and cash security in the absence of any seizure is quashed and the goods are ordered released for 'back to town' subject to narrowly tailored safeguards (prescribed bond, bank solvency certificate and an undertaking by the petitioner's director).

Revocation of Customs House Agent license - time-limits under Regulation 17(7) of CBLR, 2018 - directory versus mandatory nature of statutory time-limits - vicarious liability for acts of an H-card holder employee - proportionality of penalty - restoration of licence and reduction of penalty

Time-limits under Regulation 17(7) of CBLR, 2018 - directory versus mandatory nature of statutory time-limits - Whether the delay in issuance of the show cause notice and in passing the adjudication order vitiates the proceedings - HELD THAT: - The Tribunal applied the ratio of the High Court holding that the prescribed time-limits are for performance of a public duty and are not mandatory where the regulation does not prescribe prejudicial consequences for non-compliance. Relying on that precedent, the Tribunal held that non-adherence to the 90-day timelines in the Regulations does not automatically vitiate the proceedings. The Tribunal nevertheless noted that the Department took unduly long time to issue the show cause notice and to finalise the order after receipt of the Enquiry Report, but concluded that such delays, being directory in nature, did not invalidate the adjudication. [Paras 9]

Delays in issuing show cause notice and in passing the order do not vitiate the proceedings because the time-limits are directory, not mandatory, though the delays are noted.

Revocation of Customs House Agent license - vicarious liability for acts of an H-card holder employee - proportionality of penalty - restoration of licence and reduction of penalty - Whether the revocation of the CHA licence and imposition of penalty on the appellant was sustainable on the merits - HELD THAT: - The Tribunal found no direct allegation or material in the show cause notices to establish active connivance or direct involvement of the appellant in the misconduct of the H-card holder who filed the two Bills of Entry at Chennai. Consideration was given to the appellant's long unblemished record, operation during the COVID period with limited supervision, and that the show cause notices to the importers did not implicate the appellant. While complete absence of negligence could not be established, the lapse was treated as supervisory in nature. Applying the principle of proportionality, and having regard to the appellant's sufferance of loss due to being out of business, the Tribunal set aside the revocation of the licence, restored the CHA licence, and reduced the penalty to a nominal amount. [Paras 10, 12]

Revocation set aside and licence restored; penalty reduced as proportionate disciplinary measure.

Final Conclusion: Appeal partially allowed: revocation of CHA licence set aside and licence restored; penalty reduced to a nominal amount, while delays in proceedings, though noted, do not vitiate adjudication as the statutory time-limits are directory.

Classification of imported goods on examination - Contemporaneous valuation - Misdeclaration for confiscation and penalty

Classification of imported goods on examination - Contemporaneous valuation - Reassessment on importer's request - The classification and valuation of the portion of the consignment found on examination to be iron rods were rightly accepted. - HELD THAT: - The Tribunal held that the examination report clearly established that the consignment consisted partly of heavy melting scrap and partly of iron rods, and that this factual position was not disputed. The appellant had, on that basis, sought reassessment and had not asked for mutilation. At the stage of reassessment, the classification and valuation adopted by the Revenue were also not disputed. Having cleared the goods on that basis and having admitted that the supplier might inadvertently have sent rods along with scrap, the appellant could not thereafter challenge the classification of the goods or the valuation based on contemporaneous prices. Following the view taken in M/s. Minar Alloys and Forgings Pvt. Ltd. Vs. Commissioner of Customs , the demand of duty was sustained. [Paras 5, 6]

The duty demand based on classification of the goods as iron rods and valuation on contemporaneous prices was confirmed.

Misdeclaration for confiscation and penalty - Bona fide declaration based on shipping documents - Confiscation, redemption fine and penalty could not be sustained in the absence of misdeclaration by the appellant. - HELD THAT: - The Tribunal found that all documents accompanying the consignment described the goods as heavy metal scrap and that the appellant had also placed the purchase order only for heavy melting scrap. The presence of iron rods came to light only upon examination of the goods. In these circumstances, the discrepancy could not be treated as misdeclaration on the part of the appellant so as to justify confiscation under Section 111(l) and (m) and penalty under Section 112(a). [Paras 6, 7]

The confiscation of goods was set aside, and the redemption fine and penalty were deleted.

Final Conclusion: The Tribunal upheld the reassessed classification, valuation and consequential duty demand in respect of the goods found to be iron rods. It, however, held that there was no misdeclaration by the appellant and accordingly set aside the confiscation, redemption fine and penalty.

Entrenched articles under Section 5(3)-(4) of the Companies Act, 2013 - alteration of articles by special resolution - representative of a body corporate bound by board directions under Section 113 of the Companies Act, 2013 - limited scope of interim/miscellaneous application in a pending company petition - judicial non-interference with validly passed EOGM/AGM resolutions pending adjudication of main petition

Entrenched articles under Section 5(3)-(4) of the Companies Act, 2013 - Whether Articles 59 and 60, as adopted in the AGM of 30.09.2014, are 'entrenched articles' requiring unanimity of all members for amendment. - HELD THAT: - Section 5(3)-(4) permits entrenchment only where the articles so provide and, for a private company, such entrenchment must be made 'by an amendment in the articles agreed to by all the members of the company'. The AGM of 30.09.2014 (notice dated 03.09.2014) showed thirteen members on the register but only four members attended and voted. The 30.09.2014 resolution therefore was not 'agreed to by all the members' and cannot qualify as an entrenchment under Section 5(4). Consequently Articles 59 and 60 cannot be treated as entrenched provisions that demand unanimity for amendment. [Paras 25, 26, 27, 28, 29]

Articles 59 and 60 adopted on 30.09.2014 are not entrenched articles within the meaning of Section 5(3)-(4) and do not require agreement of all members to be amended.

Alteration of articles by special resolution - judicial non-interference with validly passed EOGM/AGM resolutions pending adjudication of main petition - Whether the amendment of Article 59 and deletion of Article 60 could be effected by the Special Resolution passed at the EOGM on 03.05.2019, and whether the Adjudicating Authority erred in approving that EOGM. - HELD THAT: - Having held that Articles 59 and 60 were not entrenched, alteration falls to be considered under Section 14 and the rules for special resolution. The Scrutinizer's report for the EOGM of 03.05.2019 records the special resolutions for substitution of Article 59 and deletion of Article 60 being carried with requisite majority (votes in favour c.91.74% and against c.8.26%). Form MGT-14 was filed thereafter. The NCLT's limited adjudication of MA No.1449/2019 was to determine whether interim relief was warranted and not to decide the merits of the main petition; on the material before it the Adjudicating Authority correctly concluded that no interference with the EOGM was required. Therefore the amendment/deletion was permissible by special resolution and the Adjudicating Authority did not err in approving the EOGM. [Paras 31, 33, 34, 35, 36]

The amendment of Article 59 and deletion of Article 60 could be validly effected by the Special Resolution passed at the EOGM on 03.05.2019, and the Adjudicating Authority did not commit error in approving that EOGM.

Representative of a body corporate bound by board directions under Section 113 of the Companies Act, 2013 - Whether a representative/nominee authorised to represent a corporate member under Section 113 is bound to exercise voting rights in accordance with the decisions of the board of the corporate member. - HELD THAT: - Section 113(2) entitles a person authorised by resolution to exercise the same rights as the body corporate would exercise. The representative acts as the agent of the corporate member and, where the board of that corporate member has given directions as to voting, the authorised representative is bound to act in accordance with those board directions. If the board has not given any specific instruction, the representative may exercise discretion in casting votes. [Paras 37, 41, 42]

A representative under Section 113 is bound to exercise his representation in accordance with directions of the board of the corporate member; absent such directions the representative may exercise discretion.

Judicial non-interference with validly passed EOGM/AGM resolutions pending adjudication of main petition - limited scope of interim/miscellaneous application in a pending company petition - Whether the Tribunal should interfere with the result of the AGM held on 29.09.2023 (Resolution No.4) or set aside the impugned NCLT order dated 31.12.2019 in respect of MA No.1449/2019. - HELD THAT: - The Supreme Court vacated an interim status quo direction previously issued by this Tribunal and provided that any action taken on Resolution No.4 at FCL's AGM would be subject to the outcome of the appeal. The AGM of 29.09.2023 proceeded; the consolidated Scrutinizer's Report (filed 13.10.2023) records that votes against reappointment of the appellant exceeded votes in favour (72.34% against). The Supreme Court later set aside this Tribunal's earlier judgment that was delivered in breach of its directions. On the material before this Tribunal and having regard to the limited scope of MA No.1449/2019 (which must not prejudice the main petition), there is no reason to interfere either with the NCLT order refusing interim relief or with the AGM result of 29.09.2023. [Paras 3, 43, 44, 45, 46]

No interference is warranted with the impugned NCLT order dated 31.12.2019 or with the AGM result dated 29.09.2023 (Resolution No.4).

Limited scope of interim/miscellaneous application in a pending company petition - What relief, if any, should be granted in this appeal and the procedural direction for the main company petition. - HELD THAT: - The Appellant's main grievance arises under Company Petition No.47/2016 which remains pending on merits. MA No.1449/2019 was a miscellaneous application seeking interim measures and the NCLT correctly confined its adjudication to that limited scope without prejudicing the main petition. Given prolonged pendency despite completed pleadings, the Tribunal directed that the NCLT should endeavour to decide Company Petition No.47/2016 expeditiously, preferably within six months from production of a certified copy of this order. Parties will bear their own costs. [Paras 11, 12, 48, 49]

Impugned order dated 31.12.2019 is not interfered with; NCLT is requested to decide Company Petition No.47/2016 expeditiously (preferably within six months from production of this order).

Final Conclusion: The Tribunal affirmed that Articles 59 and 60 (adopted on 30.09.2014) are not entrenched under Section 5(3)-(4); the amendments effected by special resolution at the EOGM on 03.05.2019 were valid and the NCLT did not err in refusing interim relief in MA No.1449/2019; a corporate representative under Section 113 must follow board directions (or exercise discretion if none given); the AGM result of 29.09.2023 (Resolution No.4) is left undisturbed; and the NCLT is directed to decide Company Petition No.47/2016 expeditiously, preferably within six months.

Leasehold rights as assets of the corporate debtor - subsistence of rights on the insolvency commencement date - duties of the interim/resolution professional under Section 18(1)(f) and Section 25(2)(a) of the IBC - moratorium under Section 14(1)(d) of the IBC - no automatic or deemed renewal of lease where renewal requires fresh act by lessor - validity of renewal executed and registered despite later statutory demands - salami under Schedule F of the West Bengal Estates Acquisition Rules, 1954 - limitation on mechanical reliance upon earlier orders where facts differ

Leasehold rights as assets of the corporate debtor - duties of the interim/resolution professional under Section 18(1)(f) and Section 25(2)(a) of the IBC - Subsisting leasehold rights in favour of the corporate debtor where they exist on the insolvency commencement date are assets which the resolution professional is duty-bound to take into custody and control. - HELD THAT: - The Tribunal followed the principle that 'assets' for purposes of Section 18(1)(f) and Section 25 include intangible interests arising out of property. Citing precedent that a bundle of rights over immovable property constitutes 'property' and therefore an asset under the Code, the court held that leasehold rights subsisting on the CIRP commencement date (05.03.2020) fall within the RP's duty to take custody and control. The court confined this conclusion to leasehold rights that were subsisting on the insolvency commencement date and made clear that the determinative question is whether the leasehold interest existed on that date.

Subsisting leasehold rights of the corporate debtor on the CIRP commencement date are assets which the RP must take control of under Section 18(1)(f) and Section 25.

No automatic or deemed renewal of lease where renewal requires fresh act by lessor - subsistence of rights on the insolvency commencement date - An application for renewal filed before expiry, with no decision by the State, does not give rise to an automatic or deemed renewal; leases whose terms expired before the CIRP commencement date must be treated as expired. - HELD THAT: - The Tribunal applied settled authorities holding that renewal, where contemplated by a lease, requires compliance with the terms of renewal in the lease and ordinarily execution of a fresh instrument; mere filing of a renewal application or inaction by the lessor does not create an automatic renewed lease. On the assumed premise that renewal applications had been filed, the court held that those leases that had expired before 05.03.2020 cannot be treated as deemed renewed merely because no decision was communicated by the State.

Leases whose period expired before commencement of CIRP are not automatically deemed renewed by mere pendency of renewal applications.

Validity of renewal executed and registered despite later statutory demands - salami under Schedule F of the West Bengal Estates Acquisition Rules, 1954 - Renewal deeds executed and registered in favour of the corporate debtor for Kilcott, Garganda and Bagracote Division I were valid renewals and conferred subsisting leasehold rights on the CIRP commencement date. - HELD THAT: - The court examined the original and renewal deeds and the statutory regime (including the 1994 Schedule F amendments introducing 'salami'). Noting that the renewal indentures for Kilcott (15.11.1995), Garganda (08.11.1996) and Bagracote I (19.06.1998) were executed and registered by authorities on behalf of the State, the Tribunal held these renewals to be valid. The subsequent demand letters or contentions about non-payment of salami did not render the executed and registered renewals void or inoperative in the absence of any cancellation or valid order by the State annulling the renewals.

The registered renewal deeds for Kilcott, Garganda and Bagracote I are valid and the corporate debtor had subsisting leasehold rights in these three gardens on 05.03.2020.

Salami under Schedule F of the West Bengal Estates Acquisition Rules, 1954 - validity of renewal executed and registered despite later statutory demands - Non-payment of salami under the Rules does not ipso facto render an already executed and registered renewal void or inoperative; the State's subsequent demand does not automatically annul a registered renewal in the absence of formal cancellation. - HELD THAT: - While recognising the State's statutory power to demand salami on fresh grants or renewals (upheld by the Supreme Court), the Tribunal differentiated between a renewal formally executed and registered and a later demand for salami. The renewal deeds in question invoked 'salami' language but did not specify an amount; having been executed and registered by competent authority and not cancelled on record, they could not be held void merely because salami was later claimed to be unpaid. The court observed the State remained free to pursue remedies to realise salami or seek other lawful measures, but that did not invalidate the registered renewals.

Non-payment of salami, by itself, does not vitiate a duly executed and registered renewal deed.

Limitation on mechanical reliance upon earlier orders - duties of the interim/resolution professional under Section 18(1)(f) and Section 25(2)(a) of the IBC - The Adjudicating Authority erred in mechanically relying on its earlier order in IA No.1256/KB/2020 to reject subsequent IAs where the factual matrix (subsisting renewals or different timings of dispossession) differed; each IA required individual consideration. - HELD THAT: - The Tribunal noted that several subsequent IAs were dismissed by relying on the earlier order in IA No.1256/KB/2020 without examining distinct factual submissions (notably that certain renewals subsisted and that dispossession in some cases occurred after the CIRP commencement). Because the earlier order itself was unsustainable insofar as it failed to consider the valid renewal of Garganda, the Adjudicating Authority could not summarily apply it to other applications that raised separate factual and legal issues. The court emphasized that the order in IA No.1256/KB/2020 could not be used mechanically where different grounds (such as valid renewals) were nonetheless pleaded.

Reliance on the earlier order to dismiss other IAs without fresh consideration was not sustainable where the subsequent applications raised distinct factual and legal issues.

Moratorium under Section 14(1)(d) of the IBC - subsistence of rights on the insolvency commencement date - Taking possession of tea gardens after the CIRP commencement date violated the moratorium of Section 14(1)(d) only insofar as those gardens in which the corporate debtor had subsisting leasehold rights (Kilcott and Bagracote I); possession of gardens in which no subsisting leasehold rights existed did not engage the moratorium bar. - HELD THAT: - The Tribunal applied the moratorium provision prohibiting recovery of property by an owner or lessor where such property is occupied by the corporate debtor. Because Kilcott and Bagracote I had subsisting registered renewals at the CIRP commencement date, subsequent possession by third parties (Sammelan/Merico) after 05.03.2020 constituted breach of the moratorium and could not stand. By contrast, gardens whose leases had expired before CIRP and in which no subsisting rights existed did not attract the Section 14(1)(d) bar, and the State's hand in managing or reassigning those gardens was not found to violate moratorium.

Moratorium breach was established only for the gardens where subsisting leasehold rights existed on the CIRP commencement date (Kilcott and Bagracote I); other gardens were not covered by the moratorium bar.

Leasehold rights as assets of the corporate debtor - duties of the interim/resolution professional under Section 18(1)(f) and Section 25(2)(a) of the IBC - Remedial relief: the Tribunal set aside the impugned orders insofar as they rejected the RP's applications in respect of Garganda, Kilcott and Bagracote Division I and directed that the RP shall be deemed to be in possession and that operation of these three gardens shall be under the RP's supervision and control during the CIRP. - HELD THAT: - Applying its findings that valid renewals subsisted in Garganda, Kilcott and Bagracote I and that the RP has duty to take custody of subsisting assets, the Tribunal partially allowed the appeals: IA No.1256/KB/2020 was set aside insofar as Garganda; IA No.1111/KB/2021 set aside insofar as Kilcott; IA No.665/KB/2021 set aside insofar as Bagracote I. The court framed relief sensitive to on-ground realities-recognising ongoing operations and large workforce-by deeming the RP to be in possession and placing operations under the RP's supervision during the CIRP. Other appeals were dismissed or affirmed where leases had expired pre-CIRP.

Impugned orders set aside in part: RP entitled to custody/possession (deemed in possession) and supervision/control during CIRP of Garganda, Kilcott and Bagracote I; other rejections affirmed.

Final Conclusion: The Tribunal held that subsisting leasehold rights on the CIRP commencement date are assets the RP must take into custody; leases whose terms expired before CIRP are not deemed renewed merely by pendency of renewal applications; the registered renewals for Garganda, Kilcott and Bagracote I are valid despite subsequent salami demands; consequent orders rejecting the RP's IAs were set aside insofar as those three gardens, and the RP is to be deemed in possession with supervision and control of their operation for the duration of the CIRP; other rejections relating to gardens whose leases had expired pre CIRP were affirmed.

Admissibility of statements under Section 50 PMLA vis-a -vis Section 25 Indian Evidence Act - Scope of inquiry under Section 45 PMLA - twin conditions and "reasonable grounds for believing" - Foundational facts under Section 24 PMLA and legal presumption - Confessions of co-accused and probative value under Section 30 Evidence Act - Bail is the rule and jail is the exception - Article 21 proportionality in PMLA bail

Admissibility of statements under Section 50 PMLA vis-a -vis Section 25 Indian Evidence Act - Statement(s) of the appellant recorded under Section 50 PMLA while he was in judicial custody in another ECIR are inadmissible against him under Section 25 of the Indian Evidence Act. - HELD THAT: - The Court held that where an accused is in judicial custody pursuant to proceedings by the same Investigating Agency, statements recorded by that agency under Section 50, if relied upon as incriminating, would be hit by Section 25 of the Evidence Act. Vijay Madanlal Choudhary was examined and, applying the tests in Rajaram Jaiswal and Nandini Satpathy, the Court concluded that a person taken from custody to record statements is not operating with a free mind and a reasonable inference of a conducive atmosphere for confession exists. In these circumstances admission of such statements against the maker would be unsafe and contrary to principles of fair play and Article 21. The Court therefore excluded the appellant's Section 50 statements recorded while he remained in custody under a different ECIR from being read against him in ECIR No.5 of 2023. [Paras 27, 29, 32, 34]

Appellant's statements recorded under Section 50 while he was in judicial custody in another proceeding cannot be read against him in ECIR No.5 of 2023.

Scope of inquiry under Section 45 PMLA - twin conditions and "reasonable grounds for believing" - Bail is the rule and jail is the exception - Article 21 proportionality in PMLA bail - The Court applied Section 45 PMLA principles and concluded that the twin conditions were satisfied and bail should be granted to the appellant. - HELD THAT: - Reiterating that Section 45 imposes twin conditions but does not impose absolute restraint, the Court applied the principle that bail is generally the rule and prolonged pre-trial incarceration cannot become punishment without trial. Relying on Vijay Madanlal Choudhary and subsequent authorities, the Court confined its inquiry to probabilities based on available material and foundational facts. Having excluded the appellant's custodial statements and on examination of other material and co-accused statements, the Court found no prima facie material to indicate the appellant's involvement in creation of the forged deed or in money-laundering. The Court was satisfied there were reasonable grounds for believing the appellant was not guilty and that he was not likely to commit an offence on bail, and therefore granted bail subject to conditions. [Paras 12, 13, 45, 48, 49]

Impugned High Court order refusing bail set aside; appellant granted bail in ECIR No.5 of 2023 subject to conditions.

Confessions of co-accused and probative value under Section 30 Evidence Act - Statements of co-accused (notably Afshar Ali, Md. Saddam Hussain and others) cannot operate as substantive evidence against the appellant and can only be used, if at all, to lend assurance to other independent evidence. - HELD THAT: - The Court observed that statements of co-accused, even where incriminating, do not constitute substantive evidence against another accused; Section 30 principles require the prosecution to first marshal independent evidence against the accused. If the remaining evidence is insufficient, such confessions may at best be used to corroborate or lend assurance to other material. On the facts, the Court found the co-accused statements did not prima facie implicate the appellant in forgery or money-laundering and added little to the prosecution's case. [Paras 35, 37, 41, 42]

Co-accused statements do not constitute substantive evidence against the appellant and, on the present record, do not prima facie implicate him.

Foundational facts under Section 24 PMLA and legal presumption - The Court emphasised that prosecution must establish the foundational facts under Section 24 PMLA at the bail stage and that the counter/response in the trial court should crystallise material to prima facie establish those facts. - HELD THAT: - Relying on Vijay Madanlal Choudhary, the Court explained that the legal presumption under Section 24 arises only after the prosecution establishes three foundational facts: commission of scheduled offence, derivation of property from that activity, and involvement of the person in processes connected with the proceeds of crime. The counter to a bail application in the trial court must therefore set out the material relied upon to show these foundational facts so that the presumption and consequent burden-shift on the accused can be appropriately considered at the Section 45 stage. The Court noted that in the present case the prosecution had not made out these foundational facts against the appellant on the record before it. [Paras 14, 15]

Prosecution must prima facie establish Section 24 foundational facts in its counter; such facts were not established against the appellant on the record before the Court.

Final Conclusion: The appeal is allowed; the High Court order refusing bail is set aside. Having found the appellant's custodial statements inadmissible and no prima facie material otherwise establishing his involvement in forgery or money laundering, the Trial Court is directed to release the appellant on bail in ECIR No.5 of 2023 subject to the conditions imposed by this Court.

Special treatment for women in bail under the proviso to Section 45(1) of the Prevention of Money Laundering Act, 2002 - requirement of specific reasons to deny a statutory bail benefit - pre trial incarceration must not become punishment without trial - bail is the rule and refusal an exception - custody unnecessary once investigation is complete and charge sheet/complaint has been filed - imposition of conditional terms to prevent tampering with evidence and to secure attendance at trial

Custody unnecessary once investigation is complete and charge sheet/complaint has been filed - Custody of the appellant was not necessary for the purpose of investigation once charge sheet/complaint was filed. - HELD THAT: - The Court noted that in the CBI matter the charge sheet had been filed and in the ED matter a complaint had been filed; accordingly, further custody for investigation was not necessary. This factual-legal conclusion supported release on bail despite opposition based on investigative need. The Court therefore treated continued detention as unnecessary for investigation. [Paras 10]

Appellant's custody was not required for investigation.

Pre trial incarceration must not become punishment without trial - bail is the rule and refusal an exception - Prolonged pre trial incarceration should not be permitted to operate as punishment and militate in favour of bail where trial completion in near future is unlikely. - HELD THAT: - Relying on this Court's precedents and observing the enormity of the material (numerous witnesses and voluminous documents) that made early conclusion of trial improbable, the Court reiterated the principle that bail is the rule and its restraint should not convert into punishment without trial. This consideration weighed in favour of granting bail to avoid prolonged incarceration prior to conviction. [Paras 11, 12, 13]

Prolonged incarceration before conviction militates in favour of bail; bail preferred where trial delay is inevitable.

Special treatment for women in bail under the proviso to Section 45(1) of the Prevention of Money Laundering Act, 2002 - requirement of specific reasons to deny a statutory bail benefit - The proviso to Section 45(1) PMLA entitles a woman to special consideration for grant of bail and a Court denying that statutory benefit must record specific reasons; the proviso is not confined to 'vulnerable' women only. - HELD THAT: - The Court examined the proviso to Section 45(1) and the Single Judge's reasoning which equated entitlement to the proviso with being a 'vulnerable woman.' The Supreme Court held that the proviso provides special treatment to categories including women and that denial of such statutory benefit requires specific reasons. The Court clarified that Saumya Chaurasia does not confine the proviso's application only to a 'vulnerable woman' and that being educated or prominent does not automatically oust the proviso; thus the High Court's characterization was a misdirection and inadequate to refuse the statutory relief. [Paras 24, 25, 26, 27, 28]

Proviso to Section 45(1) PMLA entitles women to special treatment in bail consideration; denial requires specific, adequate reasons and cannot be premised on the accused's prominence or education alone.

Imposition of conditional terms to prevent tampering with evidence and to secure attendance at trial - Grant of bail was made subject to conditions to prevent tampering, secure passport deposit and ensure attendance/cooperation at trial. - HELD THAT: - Although the Court granted bail, it imposed conditions directed at preventing interference with evidence or witnesses, required deposit of passport, and mandated regular attendance and cooperation for expeditious disposal of the trial. These conditions addressed prosecution concerns about tampering while allowing release. [Paras 29, 30]

Bail granted subject to conditions including prohibition on tampering, passport deposit, bail bonds, and regular attendance.

Final Conclusion: Impugned High Court order denying bail is quashed; appellant ordered released on bail in the ED and CBI matters with specified conditions (bail bonds, prohibition on tampering/influencing witnesses, deposit of passport, and regular attendance/cooperation), the proviso to Section 45(1) PMLA entitles women to special consideration and denial of that benefit requires specific reasons; custody was unnecessary once complaint/charge sheet was filed.

Grant of bail under Section 45 of the PMLA, 2002 - twin satisfaction test for bail under Section 45 (reasonable grounds for believing accused is not guilty and not likely to commit offence) - right to speedy trial and long incarceration as ground for bail - influence on witnesses and tampering of evidence as factor against bail in economic offences - parity with co-accused and interim bail orders

Grant of bail under Section 45 of the PMLA, 2002 - twin satisfaction test for bail under Section 45 (reasonable grounds for believing accused is not guilty and not likely to commit offence) - right to speedy trial and long incarceration as ground for bail - influence on witnesses and tampering of evidence as factor against bail in economic offences - Whether the applicant is entitled to regular bail under Section 45 of the PMLA, 2002 - HELD THAT: - The Court examined the ECIR, the findings recorded by the Supreme Court on the applicant's earlier bail challenge and the progress of the trial. The Supreme Court had earlier observed that there is sufficient evidence collected by the Enforcement Directorate to prima facie conclude the applicant's active involvement in money laundering, and that nothing on record entitled the applicant to the special benefit in the proviso to Section 45. The present application was considered in light of the statutory twin satisfaction test in Section 45-whether the Public Prosecutor was heard and whether the court was satisfied there are reasonable grounds for believing the accused is not guilty and is not likely to commit any offence while on bail. The applicant relied on delay in trial and parity with co-accused interim bail orders; however the trial record showed substantial non-cooperation by other accused, issuance and non-service of warrants and adjournments attributable to their absence, so the delay could not be attributed to the prosecution's inactivity. The Court also considered authority recognising long incarceration and delay as a ground for bail, but found that the applicant's incarceration of about 1 year and 8 months did not, in the circumstances of this case, amount to such undue delay as to merit bail. Further, the nature and extent of evidence, the alleged role of the applicant in facilitating the syndicate and the risk of influencing witnesses or tampering with evidence weighed against release. Applying these factors, the Court concluded that the applicant had not discharged the burden under Section 45 and that no change of circumstances justified revisiting earlier rejection of bail. [Paras 27, 28, 31]

The third bail application is rejected.

Final Conclusion: The High Court dismissed the third bail petition: on consideration of the ECIR, prior Supreme Court observations, the statutory twin satisfaction test under Section 45 PMLA, the progress of trial and risk of influence/tampering, the applicant was not found entitled to regular bail and the application was rejected.

Real Estate Agent service - service tax liability on trading in land - consideration as essential ingredient for service tax - absence of quantified remuneration negates contract of service - taxable value not reached finality

Real Estate Agent service - service tax liability on trading in land - consideration as essential ingredient for service tax - absence of quantified remuneration negates contract of service - taxable value not reached finality - Whether the appellant's activity of purchasing and reselling land for profit is taxable as a 'Real Estate Agent' service under service tax law. - HELD THAT: - The Tribunal found that the appellant's transactions constituted trading in land rather than the provision of a taxable 'Real Estate Agent' service. Following earlier decisions reproduced in the order, the court emphasised that a defined quid pro quo is an essential ingredient of a taxable service; where remuneration is not specifically quantified and the arrangement operates more as a profit margin or partnership in the deal, there is no clear contract for provision of a service. In such circumstances the nexus between any monetary flow and an identifiable service is lacking, and the taxable value has not attained finality. Applying these principles to the facts, the Tribunal concluded that the levy of service tax under the 'Real Estate Agent' category could not be sustained.

Impugned demand under the 'Real Estate Agent' service is unsustainable; impugned order set aside and appeals allowed with consequential relief as per law.

Final Conclusion: The Tribunal allowed the appeals, holding that the appellant's purchase-and-resale transactions in land did not attract service tax under the 'Real Estate Agent' category because there was no identified contractual consideration or quantified remuneration constituting a taxable service; the demand was therefore set aside with consequential relief.

Exemption for construction, repair and maintenance of road for public use - no service element / purchase of application form - pure agent under Explanation 1 to rule 5(2) of Service Tax (Determination of Value) Rules, 2006 - extended period of limitation and requirement of suppression for its invocation - requirement to identify category of service for levy of service tax on differential value

Exemption for construction, repair and maintenance of road for public use - Whether amounts received as 'road cutting charges' are liable to service tax or are covered by the exemption for services relating to roads used by the general public - HELD THAT: - The Tribunal accepted the appellant's factual explanation and ledger evidence that the amounts labelled as 'road cutting charges' were for construction or repair of public roads within the industrial area. Clause 13(a) of the exemption notification (as quoted) covers services provided by way of construction, repair or maintenance of a road for use by the general public. The Revenue's objection rested on absence of documentary proof that the receipts were actually used for road works, but no reason exists to deny the benefit of the exemption where the roads are for public use and the ledger supports the claim. Accordingly the demand of service tax on road cutting charges was held unsustainable. [Paras 8]

Demand of service tax on 'road cutting charges' set aside as covered by the exemption.

No service element / purchase of application form - Whether 'Land Application Processing Fees' constitute a taxable service or are not a service because they represent purchase of application form or similar non-service receipt - HELD THAT: - The Tribunal agreed with the appellant that the so-called 'processing fees' were in substance fees for obtaining or submitting land application forms (linked to allotment/purchase of land) and did not relate to any distinct service of processing. The Revenue's reliance on the nomenclature 'processing fees' was held to be a mischaracterisation of the nature of activity. As there is no service element, service tax could not be levied on these receipts. [Paras 9]

'Land Application Processing Fees' held not to be taxable as no service element exists; demand set aside.

Pure agent under Explanation 1 to rule 5(2) of Service Tax (Determination of Value) Rules, 2006 - Whether the appellant acted as a 'pure agent' in respect of 'Street Light Charges' and thereby avoided service tax liability - HELD THAT: - The Tribunal examined Explanation 1 to rule 5(2) which requires, inter alia, a contractual agreement with the service recipient, absence of title to the procured goods or services, non-use of such goods or services by the agent, and receipt only of actual amounts incurred. The appellant failed to produce any contract/agreement with the industry or MPEB, and did not produce proof of payments or expenses to MPEB showing receipt of only actual amounts. In absence of these mandatory conditions being established, the appellant could not be treated as a pure agent and the authorities below were right to confirm service tax on the street light charges. [Paras 10, 11]

'Street Light Charges' not covered by 'pure agent' treatment; service tax demand upheld.

Requirement to identify category of service for levy of service tax on differential value - Whether service tax can be sustained on the differential amount taken from financial statements without specifying the category of service - HELD THAT: - The Tribunal observed that the Revenue included a differential taxable value by taking figures from the balance sheet (Note 16) whereas the appellant relied on ledger records. The Revenue did not clarify the category of service to which the differential amount related. The Tribunal held that service tax cannot be determined or sustained on an unexplained differential sum absent identification of the category of service under which it is chargeable. [Paras 12]

Demand based on the unspecified differential value cannot be sustained and is set aside.

Extended period of limitation and requirement of suppression for its invocation - Whether invocation of the extended period of limitation was justified where the Revenue relied on figures disclosed in the appellant's balance sheet and profit and loss account - HELD THAT: - Relying on precedents (as cited by the Tribunal), the Tribunal reiterated that where the Revenue picks up figures disclosed in public documents such as the balance sheet and profit and loss account, invocation of the extended period requires evidence of suppression, fraud or wilful mis-statement. In the present case the valuation/figures were taken from the appellant's published accounts and there was no material to show suppression or mala fide conduct. Therefore the extended period of limitation could not be invoked and demands raised by invoking the extended period were unsustainable. [Paras 13, 14]

Invocation of the extended period of limitation held not permissible; demands raised under the extended period set aside.

Final Conclusion: The Tribunal allowed the appeal: demands in respect of road cutting charges and land application processing fees were set aside; street light charges were held taxable as the appellant failed to establish 'pure agent' treatment; the differential value demand was unsustainable for lack of service identification; and invocation of the extended period of limitation was unjustified, rendering the impugned demands liable to be set aside.

Reimbursable expenditure not includible in valuation under Section 67 - pure agent exclusion under Rule 5(2) of the Valuation Rules - ultra vires of Rule 5(1) of the Valuation Rules vis-a -vis Section 67 - extended period of limitation not invokable without suppression/mala fide - penalty not imposable absent mala fide or contumacious conduct

Reimbursable expenditure not includible in valuation under Section 67 - pure agent exclusion under Rule 5(2) of the Valuation Rules - ultra vires of Rule 5(1) of the Valuation Rules vis-a -vis Section 67 - Reimbursed amounts recovered on cost to cost basis for consumables do not form part of the taxable value of MMR services and the appellant qualifies as a pure agent for those recoveries. - HELD THAT: - The Tribunal found on examination of the agreements and invoices that consumables were procured on behalf of the service recipient, rebilled on actuals without profit, received and possessed by the recipient and separately invoiced, and the appellant did not own or use the goods as part of providing the taxable management service. Under Section 67 the taxable value is the gross amount charged 'for such service provided' and therefore amounts charged which have no nexus as consideration for the taxable service cannot be included. The Tribunal applied the Supreme Court and High Court rulings (including Bhayana Builders and Intercontinental) holding that Rule 5(1) of the Valuation Rules could not be used to include reimbursable expenses within the value of taxable services prior to the statutory amendment of Section 67 in 2015. Having found that the Explanation 1(c) requirement that a pure agent 'does not use such goods or services so procured' was satisfied (and other Rule 5(2) conditions were not controverted), the Tribunal held that the reimbursed consumable costs were not consideration for the taxable service and thus not taxable. [Paras 23, 27, 28, 29, 30]

Demand confirmed on reimbursed consumable amounts set aside; appellant held to qualify as pure agent for those recoveries and no service tax arises on them.

Extended period of limitation not invokable without suppression/mala fide - penalty not imposable absent mala fide or contumacious conduct - Extended limitation period was wrongly invoked and penalty could not be imposed in the absence of suppression or mala fide on the part of the appellant. - HELD THAT: - The Tribunal found that because reimbursed expenses were not taxable under Section 67, there was no obligation to disclose them as taxable amounts in returns and therefore no suppression or dishonest intention to evade tax. The Department's sole ground for invoking extended limitation was the non disclosure of non taxable reimbursable amounts, which the Tribunal held cannot constitute suppression. Reliance was placed on Supreme Court authorities (as discussed in the judgment) establishing the heavy burden to prove mala fide and that penalty requires deliberate, contumacious or dishonest conduct. In view of these findings the invocation of extended period for the relevant earlier years was unsustainable and consequentially penalties were not attracted. [Paras 32, 33, 34, 35, 36]

Extended period invocation set aside and penalty held not imposable.

Final Conclusion: The appeal is allowed: the service tax demand premised on reimbursement of consumable costs is set aside as not forming part of taxable value (appellant qualifies as pure agent), the extended period of limitation was wrongly invoked, and penalties are not sustainable; the order under challenge is set aside with consequential benefits.

Transitional provision for CENVAT credit under Section 140 of CGST Act - Saving clause and jurisdiction under Section 174 of CGST Act - Refund entitlement under Section 142(6)(a) of CGST Act and Section 11B of the Central Excise Act - Applicability of Explanation 3 to Section 140 and requirement of notification

Saving clause and jurisdiction under Section 174 of CGST Act - Transitional provision for CENVAT credit under Section 140 of CGST Act - Maintainability of appeal before CESTAT and competence of the Tribunal to decide refund claims arising under transitional provisions. - HELD THAT: - The Tribunal held that proceedings relating to claims for CENVAT credit initiated before, on or after the appointed day are to be disposed of in accordance with the provisions of the existing law and that the saving clause in Section 174(2)(f) preserves proceedings under the repealed or amended Acts as if the CGST Act had not come into force. Reliance was placed on earlier pronouncements of the Tribunal and a Larger Bench decision holding that appeals under Section 142 lie before CESTAT. Consequently, the challenge to the Tribunal's jurisdiction to interpret Section 140 as amended and to adjudicate refund claims under the transitional regime was rejected and the appeal was held maintainable before CESTAT. [Paras 4, 5, 6, 7]

Appeal is maintainable before CESTAT and this Bench is competent to decide the refund claim arising under the transitional provisions.

Refund entitlement under Section 142(6)(a) of CGST Act and Section 11B of the Central Excise Act - Applicability of Explanation 3 to Section 140 and requirement of notification - Entitlement of the assessee to cash refund of accumulated Krishi Kalyan Cess (KKC) which was not transited to the Electronic Credit Ledger. - HELD THAT: - The Tribunal found that Section 142(6)(a) contemplates that proceedings relating to claims for CENVAT credit shall be disposed of under the existing law and any admissible credit shall be refunded in cash, subject to the proviso that no refund is available where the balance has been carried forward. Since the appellant's KKC balance was not carried forward and the Cess could not be transited, the statutory scheme permits cash refund. The Tribunal also held that Explanation 3 to Section 140 (which excludes unspecified Cesses from "eligible duties and taxes") could not be read so as to deny refund because the relevant parts of the amendments (Explanations 1 and 2) had not been brought into force by notification and Explanation 3 cannot be applied in isolation; therefore the departmental FAQ and reliance on Explanation 3 were insufficient to deny refund. Having applied these principles, the Tribunal allowed the refund claim and directed payment with interest. [Paras 5, 7, 8, 9]

Appellant entitled to cash refund of the accumulated Krishi Kalyan Cess; the impugned appellate order is set aside and refund with applicable interest is directed to be paid.

Final Conclusion: The appeal is allowed: the Tribunal is competent to adjudicate the transitional refund claim under the saved provisions and, applying Section 142(6)(a) and the fact that the explanatory amendments were not brought into force, the appellant is entitled to a cash refund of the accumulated Krishi Kalyan Cess with interest; the Commissioner (Appeals) order is set aside and payment is directed.

Taxability of cash discount / early payment incentive under Business Auxiliary Service - Characterisation of incentive as discount and not consideration for service - Del Credere agent relationship and treatment of incentives received by agent - Applicability of Tribunal precedents in identical factual matrix

Taxability of cash discount / early payment incentive under Business Auxiliary Service - Characterisation of incentive as discount and not consideration for service - Del Credere agent relationship and treatment of incentives received by agent - Whether the early payment incentive / cash discount retained by the appellant, a Del Credere agent, is liable to Service Tax as consideration under Business Auxiliary Service - HELD THAT: - The Tribunal examined the contractual role of the appellant as Del Credere agent for M/s. Reliance Industries Ltd., noting that the appellant received commission for sales and, separately, retained early payment incentives payable by the principal where the agent made payments on behalf of purchasers. Relying on and following coordinate-bench decisions (including Tradex Polymers and Khanna Polymers), the Tribunal accepted the principle that such incentives are cash discounts linked to the timing of payment and the number of days of early payment, and therefore constitute discounts or incentives rather than consideration for a service rendered to the purchaser or principal. The reasoning emphasises that the amounts retained as early payment incentive are not charges for providing a Business Auxiliary Service but are discounts/incentives incidental to the commercial arrangement; thus they do not attract Service Tax under the Business Auxiliary Service classification. Applying those precedents to the identical factual matrix of the present case, the Tribunal found the departmental demand unsustainable and set aside the impugned order.

Demand of Service Tax on early payment incentive / cash discount retained by the Del Credere agent is set aside; such amounts are discounts/incentives and not taxable consideration under Business Auxiliary Service.

Final Conclusion: Appeal allowed; the demand of service tax on early payment incentives/cash discounts retained by the Del Credere agent is unsustainable and the impugned order is set aside.

Reverse charge mechanism - liability to pay service tax where recipient is a body corporate and supplier is non-body corporate - prohibition of double taxation - cenvat credit entitlement where service tax has already been discharged by the service provider

Reverse charge mechanism - prohibition of double taxation - Sustainability of demand against the service recipient under RCM where the service provider has already discharged the service tax - HELD THAT: - The Tribunal accepted the undisputed fact that the service provider discharged the service tax on manpower supply. Although the statutory liability under the Notification and section framed the recipient as liable to pay 75% under the reverse charge mechanism, the Tribunal held that recovery of the same tax again from the recipient would amount to double taxation. The reasoning, following earlier decisions of the Tribunal, is that where the exchequer has already received the tax by acceptance of payment from the service provider and there has been no reversal, the Department cannot demand the same tax again from the recipient. On these facts the demand was held not sustainable and the impugned order confirming the demand was set aside. [Paras 5, 6]

Demand under RCM set aside as it would result in recovery of the same service tax twice; appeal allowed.

Cenvat credit entitlement where service tax has already been discharged by the service provider - prohibition of double taxation - Availability of cenvat credit to the recipient where the service provider has paid service tax on the same services - HELD THAT: - The Tribunal held that the amount paid by the service provider constituted payment of service tax and not merely a deposit; consequently, the recipient was not liable to be debited again and was entitled to claim cenvat credit of that tax. The Tribunal relied on its consistent earlier decisions which recognise that where tax on a service has already been accepted by the Revenue as paid by the provider, the recipient cannot be mulcted again and retains entitlement to input credit in accordance with law. [Paras 5, 6]

Recipient entitled to cenvat credit for service tax already discharged by the provider; impugned disallowance set aside.

Final Conclusion: The impugned order confirming demand and disallowing cenvat credit is set aside; appeal allowed, since recovery from the recipient would effect double taxation where the service tax has already been discharged by the service provider and the recipient is entitled to cenvat credit.

Service tax liability cannot be fastened on unidentified service - classification of cargo handling service - manpower supply service versus cargo handling service - inadmissibility of demand based solely on comparison of Balance Sheet/Profit & Loss/other statutory returns with ST-3 - requirement of quantification and categorisation in show cause notice - exemption under Notification No. 25/2012-S.T. for commercial or industrial construction service - consequential unsustainability of interest and penalties when principal demand is unsustainable

Service tax liability cannot be fastened on unidentified service - requirement of quantification and categorisation in show cause notice - inadmissibility of demand based solely on comparison of Balance Sheet/Profit & Loss/other statutory returns with ST-3 - Sustainability of demands raised in the show cause notice which did not specify or classify the services and relied on comparisons of accounts with ST-3 returns. - HELD THAT: - The Tribunal held that the Show Cause Notice raised the entire demand only under the head of 'cargo handling service' and did not specify or quantify liabilities under distinct categories such as construction service. It reiterated the settled principle that service tax can be levied only upon clear identification of the service provider, service recipient, classification of service and consideration, and that demands based merely on figures culled from balance sheets, profit & loss accounts or other statutory returns without proper inquiry and admissible evidence are unsustainable. Reliance was placed on cited precedents to the effect that a 'bare bones' enquiry cannot be covered up by after the fact demands. Consequently, confirmations in the impugned order which did not specify the category under which tax was demanded were held unsustainable. [Paras 11]

The demands confirmed in the impugned order are unsustainable for having been raised without identification, categorisation and quantification of the taxable service; accordingly those demands are set aside.

Classification of cargo handling service - manpower supply service versus cargo handling service - Whether supply of manpower for loading of cement bags at the customer's plant is classifiable as 'cargo handling service' or as 'manpower supply service'. - HELD THAT: - On the facts, and following this Tribunal's earlier decision in the assessee's own case as well as higher authority, the Tribunal observed that the contractors were engaged to supply manpower to supervise and supplement mechanised packing and loading carried out by the customer's machinery; no independent agency activity of loading/unloading as cargo after acceptance for carriage was shown. The twin conditions for cargo handling service (existence of cargo accepted for carriage and independent involvement in loading/unloading) were not satisfied. Where the activity was already subjected to service tax as manpower supply service, it could not be reclassified and taxed again as cargo handling service. [Paras 12]

The activity of supplying manpower for loading of cement is not classifiable as 'cargo handling service'; the demand under that category is set aside, and duplicate taxation is disallowed.

Exemption under Notification No. 25/2012-S.T. for commercial or industrial construction service - requirement of linkage between show cause notice and contested demand - Whether construction services rendered to IIT Kharagpur, NIT Durgapur and BIT, Mesra were correctly treated with the benefit of Notification No. 25/2012 S.T. and whether the Revenue's appeal against extending benefit to BIT, Mesra was maintainable. - HELD THAT: - The Tribunal noted that the Show Cause Notice contained demand only under 'cargo handling service' and did not separately raise demand for construction services or specifically challenge services rendered to BIT, Mesra. The adjudicating authority's worksheet (reproduced in the record) in fact excluded values of construction services to IIT, NIT and BIT when computing taxable value. In absence of any specific proposal in the Notice or separate quantification regarding BIT, Mesra, the Revenue's challenge was unsustainable. The Tribunal therefore treated the exclusion in the worksheet and the impugned order as effectively extending the notification's benefit to BIT, Mesra. [Paras 13, 15]

The dropping of demands in respect of construction services to IIT Kharagpur, NIT Durgapur and BIT, Mesra is upheld; the Revenue's appeal against extension of the notification's benefit to BIT, Mesra is rejected.

Consequential unsustainability of interest and penalties when principal demand is unsustainable - Whether interest and penalties imposed in consequence of the impugned demand are maintainable. - HELD THAT: - Having held that the principal demands under the impugned order are not sustainable (both for lack of identification/quantification and for misclassification), the Tribunal concluded that interest and penalties imposed under the relevant provisions cannot survive. The Tribunal specifically set aside penalties imposed under Sections 77(1)(a), 77(1)(b), 77(1)(c) and Rule 7C, because the services were held not liable to service tax under the category contended by the Department. [Paras 13, 16]

Interest and penalties imposed in the impugned order are set aside as consequential on the unsustainable principal demand.

Final Conclusion: The impugned Order in Original is set aside: the demand confirmed as 'cargo handling service' is quashed, the adjudicator's dropping of demands (including application of Notification No. 25/2012 S.T. to IIT, NIT and BIT) is upheld, and consequential interest and penalties are annulled; the Revenue's appeal is dismissed.

Exemption under Notification No.67/1995-CE for captively consumed intermediate products - obligation under Rule 6(3)(a)(i) of the Cenvat Credit Rules - reversal of CENVAT credit attributable to inputs used in the manufacture of molasses - eligibility for refund of duty paid on captively consumed molasses used in manufacture of exempted final products - precedential application of Tribunal decisions (Godavari Sugar Mills, Shri Chamundeswari, NSL Sugars and the appellant's earlier orders)

Exemption under Notification No.67/1995-CE for captively consumed intermediate products - obligation under Rule 6(3)(a)(i) of the Cenvat Credit Rules - reversal of CENVAT credit attributable to inputs used in the manufacture of molasses - Entitlement to refund of excise duty paid on molasses captively consumed for manufacture of Rectified Spirit/Extra Neutral Alcohol where CENVAT credit attributable to inputs used in manufacture of molasses was reversed. - HELD THAT: - The Tribunal examined whether compliance with the obligation in Rule 6(3)(a)(i) enables claim of Notification No.67/1995-CE on molasses captively consumed for manufacture of exempted final products. Following earlier decisions of the Tribunal (including Godavari Sugar Mills Ltd., Shri Chamundeswari Sugar Mills Ltd., NSL Sugars Ltd. and the appellant's own prior order), the Tribunal held that where the manufacturer reverses the CENVAT credit attributable to the inputs used in the manufacture of molasses (an intermediate input), such reversal satisfies the Rule 6 obligation applicable to goods falling under the relevant heading and, accordingly, permits the benefit of Notification No.67/1995-CE. The revenue's contention that the credit to be reversed must be the credit attributable to inputs used in the manufacture of the exempted final product was rejected because non-compliance with Rule 6 was not specifically alleged in the show-cause notice and on merit the Tribunal found the prior consistent ratio applicable. Applying those precedents to the facts for the period in question, the Tribunal concluded that the appellant was entitled to the refund claimed. [Paras 6, 7, 8]

Impugned order set aside; appeal allowed and refund claim sustained subject to consequential relief as per law.

Final Conclusion: Appeal allowed: tax paid on captively consumed molasses for April 2008 to March 2010 is refundable where the assessee reversed CENVAT credit attributable to inputs used in manufacture of molasses, such reversal being held sufficient compliance with Rule 6(3)(a)(i) to claim Notification No.67/1995-CE, following Tribunal precedents.

Pre-deposit requirement for entertaining an appeal - maintainability of an appeal under Section 35G of the Central Excise Act, 1944 - prospective operation of administrative circulars - use of Electronic Credit Ledger / input tax credit for making statutory pre-deposit

Maintainability of an appeal under Section 35G of the Central Excise Act, 1944 - comparative interpretive approach with Section 260A of the Income-tax Act, 1961 - Whether the present appeal under Section 35G is maintainable against an interlocutory or non-final order of the Appellate Tribunal - HELD THAT: - The Division Bench's earlier reasoning in Chem Amit v. Assistant Commissioner of Income Tax, relied upon by the court, construes the expression 'an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal' as referring to orders disposing of an appeal. If the legislature intended to permit appeals from each and every order passed by the Tribunal it would have used distinct language. Applying that interpretive principle (noting parity in scheme with Section 260A of the Income-tax Act), the court observed that an appeal against an interlocutory or non-final order of the Tribunal is not maintainable under Section 35G. The court recorded this as a ground that, standing alone, renders the present appeal not maintainable.

Appeal is not maintainable on the ground that Section 35G does not permit an appeal to the High Court from every order of the Tribunal but only from orders disposing the appeal.

Pre-deposit requirement for entertaining an appeal - use of Electronic Credit Ledger / input tax credit for making statutory pre-deposit - prospective operation of administrative circulars - Whether a pre-deposit made by utilising the Electronic Credit Ledger (input tax credit) is a valid compliance of the pre-deposit requirement where the appeal was filed before issuance of the CBIC circular dated 28 October 2022 - HELD THAT: - The court examined the CESTAT's conclusion that the CBIC circular of 28 October 2022 could not be applied retrospectively to invalidate pre-deposits made before the circular came into force. Relying on the principle that administrative circulars operate prospectively unless the contrary intention is clearly indicated, and on precedent treating such circulars as prospective in operation, the court endorsed the CESTAT's view. The court also noted High Court authority recognising the use of amounts in the Electronic Credit Ledger to make statutory pre-deposits under analogous statutory provisions, and referenced a Karnataka High Court view treating pre-deposit under Section 35F similarly. Applying these principles, the court concluded that the respondent's pre-deposit made by utilising the Electronic Credit Ledger prior to the circular's issuance was valid.

The pre-deposit made by utilising the Electronic Credit Ledger before the CBIC circular of 28 October 2022 is valid; the circular applies prospectively and does not invalidate earlier pre-deposits.

Final Conclusion: Appeal dismissed. The court held that (a) the appeal under Section 35G is, on principle, not maintainable against every interlocutory order of the Tribunal, and (b) in any event the CESTAT correctly held that the CBIC circular of 28 October 2022 operates prospectively and does not vitiate pre-deposits made from the Electronic Credit Ledger prior to the circular.

Calculation of duty on cum-duty price - Cenvat credit on inputs - remand for verification of documentary evidence - penalty under Section 11AC

Calculation of duty on cum-duty price - benefit of area based exemption (rejection by higher forum) - Appellant entitled to benefit of recalculation of duty on a cum-duty basis. - HELD THAT: - The Tribunal noted that a Division Bench of the Tribunal in the appellant's own case had held that where the appellant had not collected central excise duty in addition to the sale price because of a bona fide claim of area based exemption, the appellant is entitled to recalculation of demand on a cum-duty basis. The impugned order had already allowed the benefit of cum-duty calculation. Having considered the precedent in the appellant's own case, the Tribunal accepted entitlement to cum-duty recalculation and did not disturb that aspect of the impugned order. [Paras 6, 7]

Benefit of recalculation of duty on cum-duty basis is accepted and upheld.

Cenvat credit on inputs - remand for verification of documentary evidence - Claim for Cenvat credit on duty-paid inputs is remanded to the adjudicating authority for verification and substantiation. - HELD THAT: - The impugned order had denied Cenvat credit on inputs. In view of the Tribunal's earlier Division Bench decision recognising entitlement to Cenvat credit in similar circumstances, the Tribunal directed that the matter be remitted to the original authority for re-examination. The remand is limited to verification of the appellant's claim: the adjudicating authority is to give the appellant an opportunity to produce all relevant invoices, ledgers and other documents to substantiate that inputs were duty-paid and that credit is admissible under the relevant law. The Tribunal thereby partially modified the impugned order and allowed the appeals to that extent. [Paras 8, 9]

Matter remanded for verification of documents and re-working of duty liability with opportunity to substantiate the claim for Cenvat credit.

Final Conclusion: The Tribunal upheld entitlement to recalculation of duty on a cum-duty basis and partially modified the impugned order by remanding the Cenvat credit claim to the original authority for documentary verification; appeals are allowed to that extent.

Cenvat credit admissibility on inputs used in fabrication of plant and machinery - precedential effect of High Court setting aside Tribunal Larger Bench decision - reliance on Vandana Global (Tri.-LB) held not to be good law - interest and penalty not leviable when demand is unsustainable - extended period of limitation not invokable on basis of audit objection

Cenvat credit admissibility on inputs used in fabrication of plant and machinery - reliance on Vandana Global (Tri.-LB) held not to be good law - Entitlement to Cenvat credit on HR plates, shapes & sections, channels and welding electrodes used in fabrication of plant and machinery - HELD THAT: - The Tribunal examined whether credit availed on goods falling under Chapters 72, 73 and tariff heading 8311 for use in fabrication of structures/plant and machinery is admissible. The Original Authority and Commissioner (Appeals) had confirmed demands relying on the Larger Bench decision in Vandana Global. The Tribunal noted that the Larger Bench decision has been set aside by the High Court (following the view in Mundra Ports) and thereafter held that the Vandana Global ratio is no longer good law. Applying the decisions of the High Courts and the Tribunal cited by the appellant, the Tribunal concluded that steel items and welding electrodes used for fabrication of plant and machinery, ultimately employed in manufacture of excisable goods, qualify as inputs and Cenvat credit thereon is admissible. The Tribunal therefore set aside the impugned orders confirming the demand and allowed the appeals. [Paras 10, 11]

Appellant entitled to Cenvat credit on the specified steel items and welding electrodes; impugned orders confirming the demand set aside.

Interest and penalty not leviable when demand is unsustainable - extended period of limitation not invokable on basis of audit objection - Consequences on interest, penalty and invocation of extended period where demand is held unsustainable - HELD THAT: - The Tribunal observed that if the foundational demand is unsustainable, interest and penalty consequential to that demand do not survive. The appellant also contended that invocation of the extended period of limitation based solely on an audit objection is not permissible. Having allowed the appeals by holding the demand inadmissible, the Tribunal granted consequential reliefs as per law, which necessarily encompasses relief from interest and penalty linked to the set-aside demands. [Paras 11]

Interest and penalty linked to the disallowed demand do not survive; consequential reliefs, including on limitation contentions, granted as per law.

Final Conclusion: Both appeals are allowed; the impugned orders confirming demands are set aside and the appellant is entitled to Cenvat credit on the specified items, with consequential reliefs as may be admissible under law.

Cenvat credit reversal under Rule 3(5) of the Cenvat Credit Rules, 2004 - amount collected representing excise duty under Section 11D - no double payment where equivalent amount debited to Cenvat account - distinction between amounts retained by manufacturer and amounts adjusted by debiting credit

Cenvat credit reversal under Rule 3(5) of the Cenvat Credit Rules, 2004 - amount collected representing excise duty under Section 11D - no double payment where equivalent amount debited to Cenvat account - Whether demand under Section 11D can be sustained in respect of SAD/CVD amounts shown in invoices where the assessee has reversed equivalent Cenvat credit under Rule 3(5) of the Cenvat Credit Rules, 2004 - HELD THAT: - The Tribunal found that the appellant had availed Cenvat credit of CVD and SAD at the time of receipt of inputs and, upon clearing those inputs as such, reversed the equivalent credit in terms of Rule 3(5) while issuing invoices under Rule 9. Section 11D requires deposit of amounts collected from buyers as representing excise duty where such amounts have not been paid to the Government. The determinative question is whether any amount collected remains unpaid to the revenue. Applying the scheme explained in the precedents (including the Larger Bench decision in Unison Metals and subsequent authorities), where the amount recovered from the buyer has been discharged to the revenue by debiting the Cenvat/credit account, no sum remains retained by the manufacturer and Section 11D does not apply. The Tribunal therefore held that the SAD/CVD element shown in the invoice, having been reversed and accounted for by debiting the Cenvat account, cannot be treated as an amount collected and retained so as to attract Section 11D. The adjudicating authority's reliance on the absence of specific wording in the invoice was held to be insufficient to sustain the demand when the fact of reversal and payment by debit to Cenvat account was admitted. [Paras 4, 5]

Demand under Section 11D in respect of the SAD/CVD shown in the invoice is not sustainable where equivalent credit has been reversed by debiting the Cenvat account under Rule 3(5); the impugned order is set aside and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that where the assessee has reversed equivalent Cenvat credit under Rule 3(5) and thus discharged the amounts to the revenue, Section 11D is not attracted and the demand confirmed by the lower authority is set aside.

Remission of duty under Rule 21 of the Central Excise Rules, 2002 - Unavoidable accident / fire as ground for remission - Cenvat credit on inputs contained in finished goods destroyed - Reversal of Cenvat credit prior to insertion of sub rule (5C) of Rule 3 of the Cenvat Credit Rules, 2004 - Reversal of Cenvat credit on inputs destroyed as such

Remission of duty under Rule 21 of the Central Excise Rules, 2002 - Unavoidable accident / fire as ground for remission - Appellant entitled to remission of excise duty on finished goods destroyed in fire. - HELD THAT: - The Tribunal found as undisputed fact that the finished goods were destroyed in an unavoidable fire and that there was no evidence of mischief or mala fide conduct by the appellant. The Insurance Company processed and sanctioned the claim, reinforcing that the incident was an unavoidable accident. Rule 21 empowers the Commissioner to remit duty where goods are lost or destroyed by natural causes or unavoidable accident before removal, subject to conditions. Applying the plain language and purpose of Rule 21 to the facts on record, the Tribunal held that the appellant's case falls squarely within the remit of Rule 21 and that the demand of duty on the finished goods destroyed in the fire is not sustainable. [Paras 4]

Remission of duty on finished goods destroyed in fire allowed; demand in respect of those finished goods set aside.

Reversal of Cenvat credit on inputs destroyed as such - Reversal of Cenvat credit already reversed by the appellant (inputs destroyed as such) is maintained. - HELD THAT: - The Tribunal recorded that the appellant had itself reversed the Cenvat credit attributable to inputs destroyed as such and was not contesting that reversal. Accordingly, the adjudicating authority's action in relation to that reversed credit was upheld. [Paras 4]

Reversal of Cenvat credit in respect of inputs destroyed as such maintained.

Cenvat credit on inputs contained in finished goods destroyed - Reversal of Cenvat credit prior to insertion of sub rule (5C) of Rule 3 of the Cenvat Credit Rules, 2004 - No requirement to reverse Cenvat credit in respect of inputs contained in finished goods destroyed in fire for the period prior to introduction of sub rule (5C) of Rule 3. - HELD THAT: - The Tribunal applied Rule 3 of the Cenvat Credit Rules and found that the statutory ingredients for entitlement to credit (use in manufacture, duty paid by supplier, receipt under duty paying documents and non dispute as to utilization) were satisfied. It noted that prior to the amendment introducing sub rule (5C) (effective 07.09.2007) there was no provision mandating reversal of credit where finished goods were written off or destroyed and that established precedents (including the Larger Bench decision in Grasim and various High Court and Tribunal decisions) held that credit need not be reversed in such circumstances. Consequently, for the period involved (January 2006) the appellant was not required to reverse Cenvat credit on inputs contained in the destroyed finished goods and the related demand was unsustainable. [Paras 4]

No reversal of Cenvat credit required for inputs contained in finished goods destroyed in fire for the period in issue; demand relating to that credit set aside.

Final Conclusion: The appeals are allowed: remission of excise duty on finished goods destroyed in the unavoidable fire is granted; the appellant's own reversal of credit for inputs destroyed as such is maintained; and the demand requiring reversal of Cenvat credit on inputs contained in the finished goods destroyed (period January 2006) is set aside as there was no statutory requirement to reverse such credit prior to the insertion of sub rule (5C) of Rule 3.

Manufacture - process incidental or ancillary to the completion of a manufactured product - packing or repacking - cenvat credit on inputs which are also final products - marketable condition / character or use test - extended period of limitation by reason of suppression or wilful misstatement

Manufacture - process incidental or ancillary to the completion of a manufactured product - marketable condition / character or use test - cenvat credit on inputs which are also final products - Printing and repacking of jumbo bags by the appellant does not amount to manufacture under Section 2(f) of the Central Excise Act, 1944 - HELD THAT: - The Tribunal examined whether printing the supplier's name and repacking transformed the jumbo bags into a different product or effected a change in character or use such that the process could be regarded as incidental or ancillary to completion of a manufactured product. The jumbo bags remained jumbo bags after printing and were marketable even without printing; no transformation giving the product a new character or use was shown. Clauses (ii) and (iii) of Section 2(f) were inapplicable on the facts, and the character or use test as explained by the Supreme Court (illustrated in Brakes India Ltd.) was applied to conclude that mere printing/repacking which does not change the essential character of the goods is not manufacture. Accordingly, availing cenvat credit treating such jumbo bags as inputs was irregular on the legal premise that the process was not manufacture. [Paras 5]

Printing and repacking of the jumbo bags does not amount to manufacture; cenvat credit on such goods as inputs was irregular.

Extended period of limitation by reason of suppression or wilful misstatement - cenvat credit on inputs which are also final products - Extended period of limitation under the proviso could not be invoked because there was no clear evidence of wilful suppression and the Revenue was aware of the matter during earlier audit - HELD THAT: - The Tribunal considered whether the Department could invoke the extended limitation period by alleging suppression. The record showed an earlier internal audit in August 2008 which brought the irregular availment to the Department's notice and no show-cause notice was issued at that time. Relying on authority requiring specific averments of fraud, collusion, willful misstatement or suppression to invoke the proviso, the Tribunal held that absent clear pleadings and evidence of wilful suppression the extended period could not be applied. Therefore the demand could not be sustained beyond the normal limitation period. [Paras 6, 7]

Demand set aside as time-barred; extended period not invokable for lack of proof of wilful suppression.

Final Conclusion: The appeal is allowed; the order under challenge is set aside on limitation as the printing/repacking did not amount to manufacture and the extended period of limitation cannot be invoked for want of proof of wilful suppression.

Valuation on MRP under Section 4A - Assessment under Section 4 - Retail package versus wholesale pack - Individual piece weight principle - Rule 34(b) of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 - Section 11D duties collected from the buyer

Valuation on MRP under Section 4A - Assessment under Section 4 - Retail package versus wholesale pack - Individual piece weight principle - Rule 34(b) of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 - Whether confectionery articles, individual pieces weighing less than 10 grams but packed in wholesale packs of 500 grams, are liable to valuation on MRP under Section 4A or to assessment under Section 4. - HELD THAT: - The Tribunal held that where individual pieces of confectionery are below the 10 gram threshold, the product does not fall within the ambit of Section 4A even though such pieces are bundled into wholesale packs of 500 grams. The decision follows the Tribunal's earlier view in the appellant's own case and the approval of that view by the Hon'ble Supreme Court. Rule 34(b) of the SWM (PC) Rules, 1977 - which exempts packages where the net weight of the commodity is ten grams or less from the requirement of affixing retail sale price - remains operative for the period in question and is not negated by the substitution of Rule 2(j). Consequently, the weight of the individual article, not the wholesale pack, governs the applicability of the MRP-based valuation under Section 4A, and confectionery pieces below 10 grams are not liable to be assessed under Section 4A on the basis of the wholesale pack. [Paras 4, 5, 6]

The Tribunal set aside the impugned orders and held that the confectionery pieces under 10 grams packed in 500 gram wholesale packs are not liable to valuation on MRP under Section 4A; assessment under Section 4 cannot be predicated on the wholesale pack for such pieces.

Section 11D duties collected from the buyer - Whether demand confirmed under Section 11D is sustainable where invoices showed duty under Section 4A but the assessee issued credit notes and the alleged differential duty was not collected. - HELD THAT: - The Tribunal examined Section 11D and held that its application is confined to situations where the assessee has actually collected duty from the buyer and has not deposited the same with the Central Government. In the present facts, although invoices reflected duty under Section 4A, the assessee issued credit notes in respect of the differential duty and the amount was not collected from customers; the duty was also paid under protest. On these facts, the Court concluded that there was no collection of duty that remained undisposed to the Government, and therefore Section 11D does not apply. Consequently, the demand confirmed under Section 11D could not be sustained. [Paras 5]

The demand confirmed under Section 11D was held unsustainable and was set aside because the alleged duty was not collected from buyers.

Final Conclusion: Following the appellant's own precedents and the Supreme Court's approval, the Tribunal held that individual confectionery pieces below 10 grams packed in 500 gram wholesale packs are not liable to MRP-based valuation under Section 4A and that a Section 11D demand cannot be sustained where the duty alleged to have been collected was not in fact collected owing to issuance of credit notes; the impugned orders are set aside and the appeals are allowed.

Classification of goods - Diagnostic kits vs antisera - Interpretation of HSN explanatory notes - Classification under Chapter Heading 30.02 vs 38.22 - Precedent in appellant's own case / issue estoppel

Classification of goods - Diagnostic kits vs antisera - Classification under Chapter Heading 30.02 vs 38.22 - Interpretation of HSN explanatory notes - Product 'Salmonella Antigens Sets' is classifiable under Chapter Heading 30.02 (Tariff Heading 3002) and not under Chapter Heading 38.22 (Tariff Heading 3822). - HELD THAT: - The Tribunal held that the product in question falls within the scope of antisera and other blood fractions covered by Chapter Heading 30.02. Reliance was placed on earlier orders in the appellant's own case and on the ratio in the Span Diagnostics line of authority, which explains that when a diagnostic or laboratory reagent such as antisera is covered by Chapter Heading 30.02 it is excluded from Chapter Heading 38.22. The HSN explanatory note concerning diagnostic kits was examined and applied: where the essential character of the kit/component is that of an antisera (governing the specificity of the test), classification under Chapter 30.02 follows. Having regard to the Tribunal's prior decisions in the appellant's own cases (including orders dated 03.10.2011, 17.10.2013, 27.09.2023 and 17.11.2023), the issue was treated as settled and not res integra.

Classification of the product is under Chapter Heading 30.02 (Tariff Heading 3002); the appellant's contention is accepted.

Precedent in appellant's own case / issue estoppel - Earlier Tribunal orders in the appellant's own case determine the present dispute and render the classification issue no longer res-integra. - HELD THAT: - The Tribunal relied on its consistent earlier orders in the appellant's own matter, which had applied the same legal reasoning and reached the conclusion that the product is classifiable under Chapter 30.02. Given those prior decisions, the Tribunal treated the classification issue as settled; consequently, there was no need for fresh adjudication on the merits and the impugned order was set aside in accordance with the settled position.

The issue is settled by the appellant's earlier Tribunal decisions and is no longer res-integra; the appeal is allowed.

Final Conclusion: The impugned order is set aside and the appeal is allowed; the product 'Salmonella Antigens Sets' is held classifiable under Chapter Heading 30.02 (Tariff Heading 3002) in accordance with the Tribunal's prior decisions and applicable HSN interpretation.

Retrospective effect of judicially imposed levy - inclusion of additional levy in assessable value under Rule 8 - extended period of limitation - show cause notice within normal period of limitation - penalty under section 11AC(1) of the Central Excise Act

Retrospective effect of judicially imposed levy - show cause notice within normal period of limitation - extended period of limitation - Date relevant for invoking section 11A is the date of the Supreme Court judgment and the show cause notice was issued within the normal period of limitation - HELD THAT: - The Tribunal endorsed the view that the determinative date for computation under section 11A is the date on which the Supreme Court delivered its judgment (24.09.2014). Once that date is accepted as the relevant date, the demand notice issued thereafter fell within the normal limitation period and there was no need to invoke the extended period of limitation. The finding that the notice was therefore time barred if measured from any other date was rejected, and the extended period was unnecessary in the facts of the case. [Paras 6]

The show cause notice was within the normal period of limitation as the relevant date is the Supreme Court judgment date; invocation of the extended period was unnecessary.

Inclusion of additional levy in assessable value under Rule 8 - retrospective effect of judicially imposed levy - The additional levy of Rs. 295 per M.T. affects cost of production and is to be included in assessable value for the entire period of extraction, thereby altering valuation under Rule 8 - HELD THAT: - The Tribunal accepted the Commissioner (Appeals)'s reasoning that the additional levy imposed by the Supreme Court altered the cost structure of the captively consumed coal for the whole period of extraction. Consequently, the valuation adopted under Rule 8 would change retrospectively to reflect the additional levy, and the period for demand of differential excise duty would be coterminous with the period during which the additional levy operated. [Paras 10]

The additional levy is includible in assessable value from the period of extraction and the differential duty period is coterminous with the period of the additional levy.

Penalty under section 11AC(1) of the Central Excise Act - show cause notice within normal period of limitation - Extent and quantum of penalty where demand was raised within the normal period and appellant acted under a bona fide belief as to prospectivity of the judgment - HELD THAT: - Although the adjudicating authority imposed penalty under section 11AC(1)(c), the Tribunal held that because the notice was issued within the normal limitation period (see finding above), the appropriate statutory penalty falls under section 11AC(1), which is subject to prescribed caps. Having regard to the peculiar facts - namely that the duty arose pursuant to the Supreme Court's directions and the appellant had an impression that the judgment was prospective - the Tribunal exercised its discretion to mitigate the penalty. Rather than sustaining the mandatory higher penalty originally levied, the Tribunal reduced the penalty to an amount considered appropriate in the circumstances. [Paras 7, 8]

Penalty sustained only under section 11AC(1) and reduced in exercise of discretion to a mitigated amount.

Final Conclusion: Appeal partly allowed: the demand was held to be within the normal period of limitation (relevant date being the Supreme Court judgment), the additional levy was held to affect assessable value for the extraction period, and the penalty was reduced by the Tribunal to a mitigated amount in the facts of the case.

Appropriation of refund - refund of excess Input Tax Credit - application of excess Input Tax Credit against Central Sales Tax liability - no lapsing of refund - credit to Electronic Cash Register under Section 142(8)(b) of the CGST Act

Appropriation of refund - refund of excess Input Tax Credit - no lapsing of refund - Appropriation of amounts due and payable (excess ITC) by the Respondent was unsustainable and such amounts must be refunded to the Petitioner - HELD THAT: - The Court examined the Impugned Order which had appropriated the balance of excess ITC against the Petitioner's tax liabilities for specified periods and under the Central Sales Tax Act, 1956. While the challenge to the Impugned Order in general was not upheld, the Court found that the specific appropriation of amounts that were due and payable to the Petitioner was unsustainable. The Court held that there was no question of lapse of the refundable amount which could justify Government appropriation; amounts due to the Petitioner after adjustment of tax liability must be refunded rather than retained or appropriated by the Government. [Paras 7, 8]

Appropriation set aside and the balance refundable to the Petitioner directed to be returned

Credit to Electronic Cash Register under Section 142(8)(b) of the CGST Act - refund of excess Input Tax Credit - Mode of refund: respondent directed to refund the refundable amount by crediting the Electronic Cash Register in terms of Section 142(8)(b) of the CGST Act - HELD THAT: - Having found that a sum remained due and payable to the Petitioner after adjustments, the Court prescribed the manner of refund. The Court directed the Respondent to refund the specified balance by crediting the amount in the Electronic Cash Register, invoking the mechanism provided by Section 142(8)(b) of the CGST Act for refundable amounts that are due. The direction follows from the conclusion that the amount is refundable and must be returned through the statutory credit mechanism. [Paras 9]

Respondent to refund the refundable amount to the Petitioner by crediting the Electronic Cash Register as directed

Final Conclusion: Writ petition disposed of: the appropriation of the Petitioner's refundable balance was quashed and the Respondent is directed to refund the balance by crediting the Electronic Cash Register in terms of Section 142(8)(b) of the CGST Act; no costs.

Mortgage by deposit of title-deeds - Equitable mortgage - Intention that deeds shall be security for the debt - Proof of coercion or duress and evidentiary burden - Vakalatnama and representation in appellate proceedings - Condonation of delay and exercise of discretion - Reduction of excessive contractual interest as discretionary relief - Imposition of costs for misuse of process or delay

Mortgage by deposit of title-deeds - Equitable mortgage - Intention that deeds shall be security for the debt - Proof of coercion or duress and evidentiary burden - Whether the Agreement dated 24.06.2000 constituted a mortgage by deposit of title deeds and entitled the plaintiff to a decree of mortgage - HELD THAT: - The Single Judge correctly found that the Agreement, read with the surrounding facts, disclosed a mortgage by deposit of title deeds under Section 58(f) of the Transfer of Property Act: there was a debt, delivery/possession of title deeds and an intention that the deeds were security for the debt. The Division Bench erred in treating the plaint averments as self-contradictory and in concluding that no mortgage was created. The respondent's plea of coercion was not supported by any contemporaneous or subsequent legal steps to rescind the Agreement and no evidence was led to substantiate coercion; having admitted execution, the burden lay on him to prove duress. The Single Judge's factual appreciation on the creation and non-redemption of the equitable mortgage is upheld and restored, subject to the other modifications made by this Court. [Paras 24, 25, 26, 29, 30]

First Impugned Order set aside; the Single Judge's decree holding that the Agreement created an equitable mortgage by deposit of title deeds is restored.

Vakalatnama and representation in appellate proceedings - Condonation of delay and exercise of discretion - Imposition of costs for misuse of process or delay - Whether the Division Bench correctly refused to set aside its order dismissing the appellant's application to restore the appeal (CMP No.10107 of 2017) on the ground that the appellant's counsel was authorised only for the condonation petition and not for the main appeal - HELD THAT: - The Division Bench correctly rejected the appellant's contention that his counsel was engaged only for the condonation petition; that plea was found to be unrealistic and was properly dealt with by the High Court. Although this Court found no legal infirmity in the Second Impugned Order on its own merits, quashing of the First Impugned Order necessarily nullified the practical effect of the Second Impugned Order. Nonetheless, the appellant's pleaded explanation for non-appearance was rejected. In view of the overall disposition this Court annulled both impugned orders but imposed substantial costs on the appellant to compensate for the misuse/wastage of judicial time. [Paras 31, 32, 34]

Second Impugned Order effectively nullified as consequential upon setting aside the First Impugned Order; appellant's plea about limited vakalatnama rejected; costs imposed on appellant.

Reduction of excessive contractual interest as discretionary relief - Condonation of delay and exercise of discretion - Imposition of costs for misuse of process or delay - Whether the rate of interest allowed by the Single Judge required modification, and whether delays in filing the petitions to this Court should be condoned - HELD THAT: - This Court considered the equities and concluded that the contractual rate of 36% p.a. was excessive; in the interest of justice the rate of interest awarded is pared down to 12% p.a. as simple interest running from 24.06.2000 till realisation. Applying settled principles on condonation of delay and preferring substantial justice, the Court condoned delays in filing the petitions to this Court (I.A. No.16203/2019) but subjected condonation to payment of costs. Additionally, for the appellant's litigation conduct which resulted in avoidable consumption of judicial time, this Court imposed and directed deposit of specified costs to be disbursed for juvenile welfare, advocate-clerks welfare and legal aid; further costs were imposed to be paid to the respondent for condonation. [Paras 33, 36, 38]

Rate of interest reduced to 12% p.a. from 24.06.2000 till realisation; delays in filing petitions condoned subject to payment of costs; specified costs directed to be deposited and utilised as ordered.

Final Conclusion: Both impugned orders of the High Court are set aside; the Single Judge's decree finding an equitable mortgage by deposit of title deeds is restored (with interest reduced to 12% p.a. from 24.06.2000 until realisation). Delays in approaching this Court are condoned subject to payment of costs; the appellant is directed to deposit the prescribed costs within the time ordered.

Consumer - commercial purpose - dominant purpose test - deficiency in service - unfair trade practice - double allotment - forfeiture of deposits - refund with delay compensation

Consumer - commercial purpose - dominant purpose test - The complainant-company was a 'consumer' within the meaning of Section 2(7) of the Consumer Protection Act, 2019 and the complaint was maintainable. - HELD THAT: - The Court applied the established principle that whether a purchase by a legal entity is for a commercial purpose depends on the facts and circumstances and the dominant purpose of the transaction. Ordinarily, 'commercial purpose' denotes a transaction having a close and direct nexus with profit-generating activity such as manufacturing or business-to-business dealings; whereas a purchase for personal use of a beneficiary may fall within the definition of 'consumer'. The respondent had specifically averred that the flat was purchased for the residence of one of its directors and his family, and there was no evidence on record to show that the purchase was connected with the respondent's real estate business or was for resale. The burden lay on the appellant to prove that the acquisition was for commercial purposes, which it failed to discharge. In those circumstances the NCDRC's finding that the purchase was for personal use and that the respondent is a consumer was upheld. [Paras 13, 14, 15, 16, 17]

Complaint was maintainable because the purchase was for personal use and not a commercial purpose.

Deficiency in service - unfair trade practice - double allotment - forfeiture of deposits - refund with delay compensation - There was deficiency in service and unfair trade practice in respect of the allotment and subsequent cancellation, and the forfeiture of the deposit was not justified; refund with delay compensation was directed. - HELD THAT: - The Court found as an undisputed fact that two conflicting allotments/reservations of the same or confusingly numbered flats existed until the confusion was rectified by a deed of rectification. Given that the controversy regarding allotment persisted until its resolution by the rectification deed, the appellant could not lawfully insist on transferring possession or validly terminate the respondent's allotment prior to resolving that controversy. Consequently, the cancellation of allotment and the subsequent forfeiture of the amounts deposited were unjustified. The NCDRC's conclusion that the appellant adopted unfair trade practices and rendered deficient service by cancelling the allotment and forfeiting deposits before the allotment dispute was resolved was affirmed. The Court upheld directions to refund the forfeited amount with delay compensation at the rate directed by the NCDRC and endorsed the remedial timelines and enforcement mechanism ordered below. [Paras 18, 19, 20, 21]

Cancellation and forfeiture were unlawful; refund with delay compensation was directed and enforcement measures affirmed.

Final Conclusion: Appeal dismissed. The NCDRC's order holding the respondent to be a consumer, finding deficiency in service and unfair trade practice in respect of the double allotment, and directing refund of the forfeited amount with delay compensation is affirmed; immediate partial payment and specified timelines for balance repayment, with recovery measures in case of default, were upheld.

Compounding of offence under Section 138, N.I. Act - Consent of complainant for compounding - Section 147, N.I. Act-offence to be compoundable - Inherent powers under Section 482, Cr.P.C. - Abuse of process of court - Quashing under Article 142 of the Constitution

Compounding of offence under Section 138, N.I. Act - Consent of complainant for compounding - Section 147, N.I. Act-offence to be compoundable - An offence under Section 138 of the N.I. Act can be compounded under Section 147 of the N.I. Act only with the consent of the complainant. - HELD THAT: - This Court reviewed prior decisions including Damodar S. Prabhu, JIK Industries Ltd., Kanchan Mehta and Raj Reddy Kallem and concluded that although Section 147 makes offences under the N.I. Act compoundable, compounding is not permissible without the complainant's consent. The Court held that earlier strands of authority permitting court closure in the absence of consent do not displace the settled position that compounding under Section 147 requires consent of the person entitled to compound; the question is no longer res integra and compounding sans complainant consent is impermissible. [Paras 14, 16, 17]

Compounding under Section 147 of the N.I. Act must be with the consent of the complainant; the High Court's contrary articulation could not be sustained.

Inherent powers under Section 482, Cr.P.C. - Abuse of process of court - The High Court erred in invoking Section 482 Cr.P.C. together with Section 147 N.I. Act to compound the offence without complainant's consent; Section 482 is to be exercised sparingly and not to override statutory preconditions for compounding. - HELD THAT: - The Court emphasised that the inherent jurisdiction under Section 482 Cr.P.C. is available to give effect to Code orders, to prevent abuse of process, or to secure ends of justice, but it cannot be used to circumvent a specific statutory requirement - here, the complainant's consent for compounding under the N.I. Act. Reliance on principles in Bhajan Lal and related authorities establishes that Section 482 cannot be invoked where a specific efficacious remedy or statutory condition exists. Accordingly, the High Court's use of Section 482 to compound the offence despite absence of consent was held to be legally impermissible, and that portion of the impugned order was quashed and set aside. [Paras 11, 19]

High Court's order compounding the offence by invoking Section 482 Cr.P.C. and Section 147 N.I. Act without complainant's consent is quashed and set aside.

Quashing under Article 142 of the Constitution - Despite setting aside the High Court's compounding order, the Supreme Court, invoking Article 142, quashed the complaint and all proceedings in the exercise of its plenary power, in view of the deposit and other circumstances. - HELD THAT: - The Court noted that the respondents had deposited the sums ordered by the High Court (amount plus interest and an additional sum) and that on service of summons they had expressed readiness to settle. While the power to compound could not be exercised without complainant consent by the High Court, the Supreme Court exercised its extraordinary jurisdiction under Article 142 to do complete justice between the parties and quashed Complaint Case No. 5564 of 2022 and all proceedings arising therefrom, permitting the complainant to withdraw the deposited amount in accordance with law. [Paras 21]

Proceedings in Complaint Case No. 5564 of 2022 are quashed under Article 142; the complainant may withdraw the deposited amount with interest and additional sum.

Final Conclusion: The High Court's order compounding the offence under Section 138, N.I. Act by invoking Section 482 Cr.P.C. and Section 147 N.I. Act without the complainant's consent is quashed; however, exercising its power under Article 142, the Supreme Court quashed the complaint and all proceedings in view of the payment deposited and permitted the complainant to withdraw the deposited amounts in accordance with law. Appeals disposed of on these terms.

Conviction under Section 138 of Negotiable Instruments Act - presumption under Section 139 of Negotiable Instruments Act - liability of partner for cheque issued on behalf of firm - proof of dishonour and cheque return memo - service of legal notice and limitation under Section 138 - standard of proof on preponderance of probabilities

Conviction under Section 138 of Negotiable Instruments Act - Impugned conviction under Section 138 N.I. Act sustained - HELD THAT: - The Court examined the trial and appellate findings and concluded that the learned Magistrate and the learned ASJ correctly found that the cheque had been issued in discharge of legal liability and that the defence did not raise cogent evidence to displace the complainant's case. Reliance on precedents establishing the standard of proof in complaints under Section 138 was noted, and the factual matrix (booking, payment, cancellation and issuance/presentation of the cheque) supported the finding of guilt. The Court found no jurisdictional error in upholding the conviction. [Paras 21, 29, 31, 39]

Conviction under Section 138 N.I. Act upheld

Presumption under Section 139 of Negotiable Instruments Act - standard of proof on preponderance of probabilities - Presumption under Section 139 attracted and not rebutted by the accused - HELD THAT: - The Court held that even if a blank cheque defence were accepted in principle, the statutory presumption under Section 139 would be attracted once the cheque is shown to have been issued and presented. The revisionists failed to lead cogent and corroborative evidence (for example, bank statements or credible explanation) to rebut that presumption; their assertions remained bald and inconsistent, and hence did not meet the preponderance standard required to displace the presumption. [Paras 29, 30, 31]

Presumption under Section 139 applies and was not successfully rebutted

Liability of partner for cheque issued on behalf of firm - Non-signatory partner held liable for cheque issued by authorised partner on behalf of partnership firm - HELD THAT: - The Court observed that the cheque was issued by Bhavna Chopra as an authorised partner of M/s A & B Tour & Travels and that both revisionists were admitted partners of the firm. Liability for a cheque issued for and on behalf of the firm binds the firm and, consequently, the other partner; therefore Amit Chopra could not avoid liability merely because he was not a signatory. The judgments relied upon by the revisionists were found inapplicable to these facts where a partner signed on behalf of the firm. [Paras 32]

Amit Chopra liable as partner of the firm for the cheque issued on behalf of the firm

Proof of dishonour and cheque return memo - Record sufficed to prove dishonour despite return memo not mentioning cheque number or date explicitly - HELD THAT: - The Court inspected the evidence showing deposit by pay-in slip and the bank's rejection memo bearing the bank stamp. While the rejection memo did not specify the cheque number or date, the sequence of deposit and the complainant's testimony as to the date of dishonour, corroborated by the legal notice, were held adequate to establish dishonour. The Court accepted that deposit on 11.06.2014 and consequent dishonour on 12.06.2014 were sufficiently proved. [Paras 33, 34]

Dishonour of the cheque proved on the evidence placed before the Court

Service of legal notice and limitation under Section 138 - Legal notice service and limitation requirement satisfied; complaint within prescribed period - HELD THAT: - The Court found that the legal notice was dispatched by registered post and the registered receipt dated 09.07.2014 supported service attempts; even if service were imperfect, filing of the complaint gave sufficient notice to the accused. The complaint filed on 07.08.2014 was therefore within the one-month period prescribed, and nothing was shown to establish that the complaint was barred by limitation. [Paras 34, 35, 36, 38]

Legal notice and limitation requirements met; complaint is timely

Final Conclusion: The Revision Petition is dismissed. The conviction under Section 138 N.I. Act and the appellate modification of sentence by the learned ASJ are upheld; the revisionists are granted one month to pay the compensation in terms of the ASJ's order, failing which sentence shall be executed. Copy of the order is to be sent to the Magistrate for compliance.