TaxTMI Updates e-Newsletter
Sep 03,2019

Seizure and release of goods and vehicle under Section 129 and confiscation proceedings under Section 130 of the Central/Gujarat Goods and Services Tax Act, 2017 - Interim release upon payment of tax and penalty determined under seizure provisions - Continuation of confiscation proceedings subject to interim order and final adjudication

Seizure and release of goods and vehicle under Section 129 and confiscation proceedings under Section 130 of the Central/Gujarat Goods and Services Tax Act, 2017 - Interim release upon payment of tax and penalty determined under seizure provisions - Release of seized goods and vehicle upon deposit of tax and penalty determined by the authority under seizure provisions. - HELD THAT: - The court recorded that the vehicle and goods were seized under the statutory seizure provisions and proceedings under the confiscation provision had been initiated. The authority had determined tax and penalty under the seizure provision and the assessed amount was deposited on 29/08/2019, with the payment receipt placed as an annexure to the petition. In view of the deposit of the amount determined by the authority under the seizure provision, the court directed immediate release of the goods and the vehicle as an interim measure.

Goods and vehicle seized under the statutory seizure provision shall be released immediately in view of the deposit of the tax and penalty determined by the authority.

Continuation of confiscation proceedings subject to interim order and final adjudication - Proceedings under Section 130 to proceed notwithstanding interim release - Whether the authority may continue with confiscation proceedings after interim release of goods and vehicle. - HELD THAT: - While ordering interim release, the court made clear that the authority is not precluded from continuing with the confiscation proceedings under the confiscation provision. The continuation of those proceedings is permitted but they will remain subject to the final outcome of the writ petition. Thus, the interim release does not finally determine or foreclose the confiscation adjudication.

The authority is permitted to proceed with confiscation proceedings, but such proceedings shall be subject to the final adjudication of the writ-application.

Final Conclusion: On deposit of the tax and penalty determined by the authority, the court ordered immediate release of the seized goods and vehicle while permitting the authority to continue confiscation proceedings; such proceedings shall remain subject to the final outcome of the writ petition.

Late fee for delayed filing of return - Form GSTR-3B - Section 47 of the CGST Act - waiver under Notification No.76/2018-Central Tax - interim stay of recovery proceedings - separate writ petitions

Separate writ petitions - Consolidation of thirty-one writ applicants and applicability of the proposed order to all applicants - HELD THAT: - The Court held that although the cause of action may be common, each of the writ applicants (Nos. 2 to 31) ought to have preferred a separate one page petition. Consequently, learned counsel was directed to file a one page petition for writ applicants Nos. 2 to 31, and the order proposed to be passed on the date of hearing was to be construed as having been passed only in the case of writ applicant No.1.

Applicants Nos. 2 to 31 directed to file separate one page petitions; the present order is operative only in respect of writ applicant No.1.

Late fee for delayed filing of return - Form GSTR-3B - Section 47 of the CGST Act - waiver under Notification No.76/2018-Central Tax - interim stay of recovery proceedings - Grant of ad interim relief staying recovery proceedings for late fees in respect of delayed filing of Form GSTR 3B for the specified period - HELD THAT: - The writ applicants challenged the legality of levy of late fees under Section 47 of the CGST Act and sought complete waiver in terms of the second proviso to Notification No.76/2018 Central Tax dated 31.12.2018 for returns up to September 2018. Having heard counsel and on the materials placed before it, the Court found that the applicants had made out a strong prima facie case and accordingly granted an ad interim order in the terms of the prayer for a stay of recovery proceedings (prayer (d)). The Court issued notice to the respondents returnable on the listed date and permitted direct service; it did not adjudicate the merits of the challenge to Section 47 or the entitlement to waiver under the Notification, which remain for final hearing.

Ad interim stay granted against recovery proceedings for late fees (in terms of prayer (d)) for the stated period; notice issued and matter listed for further hearing.

Final Conclusion: The Court directed separate filings for writ applicants Nos. 2-31 and confined the operative effect of the present order to writ applicant No.1; it issued notice to respondents and granted an ad interim stay of recovery proceedings in respect of late fees for delayed filing of Form GSTR 3B for the stated period, without deciding the substantive challenge to the levy or the claimed waiver.

Summary order. Petition adjourned to 11th September, 2019 at 3.00 p.m.; ad interim relief, if any, granted earlier to continue until the next date.

Compounding of offences under Section 279 - jurisdiction to compound non-technical offences by Committee - binding nature of CBDT Guidelines under Section 119 - DGIT exceeding jurisdiction in compounding matters - effect of reduction of penalty under Section 273A and entitlement under Section 279(1A) - remand for fresh consideration by prescribed Committee

Jurisdiction to compound non-technical offences by Committee - DGIT exceeding jurisdiction in compounding matters - binding nature of CBDT Guidelines under Section 119 - Whether the DGIT (Investigation) had jurisdiction to reject the compounding petition where the revised CBDT Guidelines vest power to compound non-technical offences in a Committee. - HELD THAT: - The revised CBDT Guidelines (dated 16.05.2008) classify Section 276C(1) as a non-technical offence and vest authority to compound such non-technical offences in a Committee comprising CCIT(CCA), DGIT(Inv.) and CCIT/DGIT having jurisdiction. Instructions of the Board issued under Section 119 are binding on income-tax authorities and cannot be ignored. Consequently, the DGIT lacked jurisdiction to finally reject the compounding application at the preliminary stage or to assume powers properly vested in the Committee. The attempt to treat the accompanying offence under Section 277 as 'technical' so as to retain the matter with the DGIT does not cure the absence of Committee consideration, particularly where the Guidelines do not define 'technical' and 'non-technical' offences. For these reasons the impugned order is held to be without jurisdiction. [Paras 8, 11]

Impugned order of DGIT dated 15.01.2014 set aside insofar as it rejected the compounding petition; DGIT had exceeded jurisdiction and the matter must be referred to the prescribed Committee.

Effect of reduction of penalty under Section 273A and entitlement under Section 279(1A) - compounding of offences under Section 279 - Whether the petitioner is entitled to the benefit of Section 279(1A) because the penalty was reduced on appeal. - HELD THAT: - Section 279(1A) provides that a person shall not be proceeded against for offences under Sections 276C or 277 where the penalty imposed or imposable under clause (iii) of sub-section (1) of Section 271 has been reduced or waived by an order under Section 273A. The Supreme Court in Prem Dass has held that where the Commissioner (Appeals) reduces the penalty, prosecution for such offences cannot be continued. The Commissioner (Appeals) reduced the penalty to 100% and that reduction was confirmed by the ITAT. A departmental challenge to the appellate orders does not by itself keep the reduction in abeyance; the mere filing of appeals does not negate the entitlement under Section 279(1A). In view of the statutory language and binding precedent, the petitioner is entitled to the benefit of Section 279(1A). [Paras 9, 11]

Petitioner is entitled to the protection conferred by Section 279(1A) in light of the reduction of penalty on appeal; there is no impediment to compounding on this ground.

Remand for fresh consideration by prescribed Committee - compounding of offences under Section 279 - Whether other contentions raised by the petitioner (authenticity of documents and legality/limitation of notice under Section 148) were finally adjudicated or require fresh consideration by the Committee. - HELD THAT: - The Court has determined that the appropriate forum to decide the compounding application is the Committee prescribed by the CBDT Guidelines and that the petitioner is entitled to benefit under Section 279(1A). Consequently, the Court has not adjudicated upon the separate contentions concerning the legal validity of documents relied upon by the respondents, or the challenge to the Section 148 notice (including limitation and satisfaction issues). Those matters were not decided on merits by this Court and are to be considered afresh by the Committee when it adjudicates the compounding petition in accordance with law. [Paras 10, 11]

Contentions regarding authenticity of documents and legality/limitation of the Section 148 notice remitted to the Committee for fresh consideration in the compounding proceedings.

Final Conclusion: The DGIT's order dated 15.01.2014 rejecting the compounding petition is set aside as beyond jurisdiction; the matter is remanded to the Committee prescribed under CBDT Guideline No.7.1(c) dated 16.05.2008 for fresh consideration, permitting the petitioner to file a fresh compounding application within 30 days, and directing the Committee to decide the application in accordance with law within 60 days.

Arm's Length Price - Transfer Pricing adjustments - rendition of services - cost contribution arrangement - comparables and filters - substantial question of law - perversity of findings - scope of Section 260-A

Substantial question of law - scope of Section 260-A - perversity of findings - Whether the appeal under Section 260 A discloses a substantial question of law permitting interference with the Tribunal's deletion of transfer pricing adjustments. - HELD THAT: - The Court held that entry to the High Court under Section 260 A is limited to cases involving a substantial question of law. In transfer pricing matters the Tribunal is the final fact finding body and its conclusions about comparables, filters and resulting ALP determinations will not be interfered with unless shown to be ex facie perverse. The Court applied established principles (including Sir Chunilal V. Mehta, Santosh Hazari, Vijay Kumar Talwar) and the guidance in the Karnataka High Court decision discussed in the judgment, observing that mere dissatisfaction with the Tribunal's factual conclusions or a dispute about choice or application of filters/comparables does not raise a substantial question of law. The Court found no demonstrated perversity in the Tribunal's findings and emphasised that fact driven comparability exercises are unsuited to High Court re weighing under Section 260 A. [Paras 44, 45, 55, 56, 57]

No substantial question of law was found and the appeal under Section 260 A could not be entertained to re examine the Tribunal's fact based transfer pricing findings.

Arm's Length Price - Transfer Pricing adjustments - rendition of services - cost contribution arrangement - comparables and filters - Whether the Tribunal's deletion of upward adjustments made by the TPO/DRP in respect of management fees and insurance allocation was legally unsustainable. - HELD THAT: - On the merits the Court found that the Tribunal had considered voluminous documentary material (including emails and correspondence) corroborating rendition of services and had applied reasoned analysis in concluding that the payments fell within a cost sharing/cost contribution framework and that allocation was on a fair and reasonable basis. The Tribunal also followed a coordinate bench decision in the assessee's own case for AY 2008 09 on similar facts in relation to insurance allocation. The High Court held that the Tribunal's view - that whether the assessee derived substantial commercial benefit was a matter of commercial judgment and that the primary questions were (i) whether services were rendered and (ii) whether allocation was reasonable - was sustainable and not perverse. [Paras 9, 11, 20, 22, 23]

The Tribunal's deletion of the TPO/DRP upward adjustments in respect of management fees and insurance allocation is sustained; the Tribunal's findings are not perverse or unsupportable on the record.

Final Conclusion: The High Court dismissed the revenue appeal under Section 260 A, upholding the Tribunal's deletion of the transfer pricing adjustments in respect of management fees and insurance allocation for AY 2010 11, and held that no substantial question of law was made out to justify interference.

Appeal under Section 260-A - interpretation of the expression "any order passed" - maintainability of appeal - substantial question of law - application under Rule 27 of the Income Tax Appellate Tribunal Rules - perversity in appellate fact finding - inference drawn under Section 153C - remand for fresh consideration on merits

Appeal under Section 260-A - interpretation of the expression "any order passed" - maintainability of appeal - Objection to maintainability of appeals under Section 260 A against the Tribunal's order rejecting an application under Rule 27. - HELD THAT: - The Court examined whether the appeals under Section 260 A were maintainable against the Tribunal's order refusing relief under Rule 27. Relying on the Supreme Court's interpretation of wide words such as "any decision or order of the appellate authority" (as applied in Raj Kumar Shivhare), the court held that the expression "any order passed" is broad enough to bring within appealable scope orders rejecting applications under Rule 27. Consequently the objection to maintainability was rejected and the appeals were held maintainable, subject to the statutory condition that a substantial question of law arises from the order in appeal.

Objection to maintainability rejected; appeals under Section 260 A held maintainable.

Application under Rule 27 of the Income Tax Appellate Tribunal Rules - perversity in appellate fact finding - inference drawn under Section 153C - substantial question of law - remand for fresh consideration on merits - Whether the Tribunal's rejection of the Rule 27 application was perverse for failing to consider specific grounds raised by the assessee and whether the matter required remand. - HELD THAT: - The Court compared the CIT(A)'s order, the assessee's Rule 27 application and the Tribunal's impugned order. It found that the assessee had specifically identified grounds (challenging adverse inferences drawn under Section 153C and reliance on documents not seized from the assessee) in the Rule 27 application and that those grounds were manifest from the CIT(A)'s findings. The Tribunal, however, dismissed the application solely on the factual premise that counsel at the hearing could not point out grounds decided against the assessee, without addressing the grounds as raised in the application or the CIT(A)'s findings. The Court concluded that this constituted perversity in the Tribunal's approach because the merits of the stated grounds were not considered despite their being apparent on the record. Having reached that conclusion the Court answered the framed substantial question of law in favour of the assessee and directed that the Tribunal's order be set aside and the matter remitted for fresh consideration on merits, to decide the Rule 27 application after taking into account the averments in the application and the CIT(A)'s decision.

Impugned Tribunal order set aside as perverse; matter remitted to the Tribunal for fresh consideration and decision on the Rule 27 application on merits.

Final Conclusion: The appeals are allowed: the objection to maintainability is rejected and the Tribunal's order dated 8 5 2019 is set aside; the matter is remitted to the Tribunal for fresh adjudication of the application under Rule 27 on merits.

Revision under Section 264 of the Income-tax Act - limitation for revision applications - condonation of delay - no condonation where no delay exists - discretion to afford personal hearing - enquiry before passing revision order - set aside and remand for fresh disposal

Revision under Section 264 of the Income-tax Act - limitation for revision applications - The revision application filed by the assessee on 25.06.2018 was within the statutory period for seeking revision of the assessment order dated 29.12.2017. - HELD THAT: - The Court recorded that Section 264 permits revision either on the authority's own motion or on an application by the assessee and that Sub section (3) prescribes that an application must be made within one year from communication of the assessment order. Although the precise date of service was not on record, even if the date of the order (29.12.2017) is taken as the date of communication, the revision application dated 25.06.2018 fell within one year. The Court therefore held there was no delay in filing the revision application and that a prayer for condonation was unnecessary. [Paras 5, 8]

Revision application held to be within time; no delay to condone.

Condonation of delay - no condonation where no delay exists - enquiry before passing revision order - The revisional authority erred in treating the assessee's reply as a petition for condonation of delay, condoning a non existent delay and proceeding to decide the revision on merits. - HELD THAT: - The Court found that the communication from the revisional authority required the assessee to file an affidavit and attend personal hearing, and that the assessee's subsequent letter (which explained illness and sought condonation) was unnecessary because the revision application was already within time. The revisional authority nevertheless recorded acceptance of delay condonation and proceeded to decide the matter on merits. The Court treated this as an obvious error - the authority had taken up and acceded to a condonation prayer that was not warranted and then passed orders on merits without correctly dealing with the procedurally proper course. [Paras 6, 9, 12]

Impugned order set aside on the ground that it erroneously condoned a non existent delay and decided the matter on merits; no opinion expressed on the merits.

Discretion to afford personal hearing - set aside and remand for fresh disposal - The matter was remitted for fresh disposal with a direction to afford a personal hearing and to decide the revision application afresh within a specified time. - HELD THAT: - Although a personal hearing is not statutorily mandatory under Section 264, the revisional authority may, in his discretion, choose to afford one. Given the error in the impugned order, the Court directed that a fresh personal hearing be fixed (specifying date, time and venue in the order), that the assessee file the affidavit regarding not filing an appeal, written submissions and prescribed fee, and that the revisional authority dispose of the revision application expeditiously and in any event within four weeks of the personal hearing. The Court also permitted the authority to proceed without further hearing if the assessee fails to avail the fixed date, and required communication of the fresh order within seven working days of its passing. [Paras 12, 13, 14]

Matter remitted for fresh personal hearing and disposal with directions as to conduct and timetable.

Final Conclusion: Impugned revisional order dated 04.03.2019 set aside because the revisional authority erroneously treated and condoned a non existent delay and decided the revision on merits; the revision application was within time and the matter is remitted for a fresh personal hearing and expeditious disposal in accordance with the directions given.

Exemption under sections 11 and 12 - Registration of trust under section 12AA and applicability of section 12A(2) - Proviso to section 12A(2) and its interpretation vis-a -vis the main provision - Pendency of assessment proceedings before the Assessing Officer - Construction of exemption provisions - ambiguity to be resolved in favour of Revenue

Exemption under sections 11 and 12 - Registration of trust under section 12AA and applicability of section 12A(2) - Whether benefit of exemption under sections 11 and 12 can be extended retrospectively to an assessment year prior to the financial year in which the application for registration under section 12AA was made. - HELD THAT: - The Court held that sub-section (2) of Section 12A governs trusts which made applications for registration on or after 1 June 2007 and plainly provides that the benefit of sections 11 and 12 applies from the assessment year immediately following the financial year in which the application for registration was made. Applying the statutory text to the facts, the assessee applied for registration on 15.12.2014 (financial year 2014-15); consequently, exemption could only apply from the assessment year following that financial year and not to the earlier assessment year 2011-12. The Tribunal's construction, which effectively conferred retrospective exemption for years prior to the year following the application, rendered the main provision redundant and was therefore impermissible. The proviso cannot be read so as to nullify the clear scope of subsection (2). [Paras 13, 14, 17, 18]

Benefit of sections 11 and 12 could not be extended to AY 2011-12 when the application for registration was made in financial year 2014-15; exemption applies only from the assessment year immediately following the financial year in which the application was made.

Proviso to section 12A(2) and its interpretation vis-a -vis the main provision - Pendency of assessment proceedings before the Assessing Officer - Whether the proviso to section 12A(2) permits applying sections 11 and 12 to earlier assessment years merely because assessment-related proceedings were pending before the Tribunal at the time of registration. - HELD THAT: - The Court found that the proviso must be construed harmoniously with the principal provision and cannot be read in isolation to override subsection (2). The proviso applies only where registration has been granted and assessment proceedings for a preceding assessment year are pending "before the Assessing Officer" as on the date of registration. The Tribunal's extension of the proviso to situations where appeal proceedings were pending before the Tribunal (i.e., not pending before the Assessing Officer) misreads the statutory language. Reading the proviso to include appeals before the Tribunal would produce anomalous results and would effectively negate the temporal limitation established by subsection (2). [Paras 15, 18, 19]

The proviso does not allow retrospective application of sections 11 and 12 for earlier assessment years where the only pendency is an appeal or proceedings before the Tribunal; the proviso refers to pendency before the Assessing Officer.

Construction of exemption provisions - ambiguity to be resolved in favour of Revenue - Burden of proof for claiming exemption - Whether the principle favouring the assessee in charging provisions applies to interpretation of exemption provisions under section 12A, and relatedly whether ambiguity should be resolved in assessee's favour. - HELD THAT: - The Court observed that the settled principle of construing charging provisions liberally in favour of the taxpayer does not apply to exemption clauses. For exemptions, ambiguity is to be resolved in favour of the Revenue and the assessee bears the burden of proving that it falls squarely within the exemption. The Tribunal failed to apply this principle and thereby gave an unwarranted benefit to the assessee by construing the proviso so as to expand the scope of the exemption beyond the clear words of subsection (2). The Court cited the appropriate authority for this interpretative approach and applied it to hold against the Tribunal's liberal construction. [Paras 16]

Exemption provisions must be strictly construed in favour of the Revenue; ambiguity does not automatically benefit the assessee, and the Tribunal's contrary approach was incorrect.

Final Conclusion: The appeal is allowed. The Tribunal's order granting retrospective application of sections 11 and 12 to AY 2011-12 is set aside; the exemption under sections 11 and 12 is not available for assessment years prior to the assessment year immediately following the financial year in which the application for registration under section 12AA was made, and the proviso to section 12A(2) does not extend that benefit where proceedings are pending only before the Tribunal.

Prosecution under section 276B - Deemed assessee in default under section 201 - Interest and liability under section 201(1A) - Reasonable cause defence under section 278AA - Binding effect of departmental circulars/instructions

Prosecution under section 276B - Deemed assessee in default under section 201 - Whether prosecution under section 276B can be sustained without prior adjudication under section 201. - HELD THAT: - The Court held that failure to deduct or to pay tax within the statutory period renders the person a deemed assessee in default and that such failure may give rise independently to criminal prosecution under section 276B, without being controlled by section 201(1A) or section 221. Reliance is placed on the reasoning in Madhumilan Syntex Ltd. and Rayala Corporation to the effect that statutory obligation to pay within the stipulated period creates a default which may be visited by prosecution; treating prosecution as dependent on prior adjudication would render the criminal provision nugatory. The court further observed that where no dispute is raised as to the liability, the question of adjudication for penalty arises only if liability is disputed; in the present facts the petitioners did not dispute deduction but delayed payment, and the amounts were credited only after departmental action. [Paras 11, 13, 14, 17]

Criminal prosecution under section 276B may be sustained notwithstanding absence of prior adjudication under section 201 where defaults in TDS remittance are prima facie established.

Binding effect of departmental circulars/instructions - Interest and liability under section 201(1A) - Whether reliance on the CBDT circular permitting deposit within 12 months bars prosecution for delayed remittance of TDS in the facts of this case. - HELD THAT: - The Court acknowledged the legal proposition that departmental instructions may have binding effect in appropriate circumstances (as noted in authorities referred to by petitioners). However, it found no material before the Court to show that the petitioners had in fact deposited the amounts within any extended time under the circular; on the contrary, the material suggested deposits were made only after the departmental survey. Consequently, the circular could not be relied upon by the petitioners to defeat prosecution on the present facts. The court also observed that the circular does not extend the statutory time for deposit nor purport to exonerate from criminal liability where defaults are otherwise established. [Paras 5, 18]

The circular/instruction relied upon does not avail the petitioners on the material before the Court and does not bar prosecution in the present facts.

Reasonable cause defence under section 278AA - Whether availability of the defence of 'reasonable cause' under section 278AA precludes commencement or continuation of prosecution. - HELD THAT: - The Court noted that section 278AA, by its non obstante opening, preserves the right of an accused to prove reasonable cause to avoid penal consequences. However, the provision allocates the burden of proof to the accused and does not preclude initiation of prosecution where prima facie material discloses failure to remit TDS. Thus the existence of a possible defence does not, by itself, warrant quashing of criminal proceedings in the absence of persuasive material showing reasonable cause. [Paras 8, 15, 16]

The defence of reasonable cause under section 278AA is available to the accused but does not prevent prosecution; the onus to prove reasonable cause lies on the accused.

Final Conclusion: The petition challenging initiation of prosecution was dismissed: on the prima facie materials the petitioners' defaults in remittance of TDS were established, the departmental circular did not assist them on the facts before the Court, and statutory defences under section 278AA are matters for trial; the trial court is to decide the merits unaffected by this order.

Penalty under section 271D - Prohibition on acceptance of cash loans under section 269SS - Onus on assessee to prove transaction pertains to company - Reliance on seized documents and books of account

Penalty under section 271D - Prohibition on acceptance of cash loans under section 269SS - Onus on assessee to prove transaction pertains to company - Reliance on seized documents and books of account - Penalty imposed under section 271D for violation of section 269SS in respect of cash loan of Rs. 2,00,000 accepted on 28.06.2001 is sustainable. - HELD THAT: - The Assessing Officer and the authorities found, on the basis of seized promissory note, that the assessee accepted cash loan and executed a promissory note. The assessee claimed the transaction related to the company and produced a sale deed and other ledger entries. The Tribunal examined the sale deed and company books and found no entry recording the impugned transaction in the company's accounts, no recital in the sale deed showing any promissory note given by the managing director on company's behalf, and no corroborative evidence to establish that the loan was for the company. Given the absence of tangible corroboration in the seized material and company's books, the assessee failed to discharge the onus to show the transaction related to the company; therefore the acceptance of cash loan violated section 269SS and penalty under section 271D was correctly levied and confirmed.

Appeal dismissed and penalty under section 271D upheld for A.Y. 2002-03.

Penalty under section 271D - Prohibition on acceptance of cash loans under section 269SS - Onus on assessee to prove transaction pertains to company - Reliance on seized documents and books of account - Penalty imposed under section 271D for violation of section 269SS in respect of cash loans of Rs. 60,000 each received on 12.01.2004 from Mr. T.P.S. Rao and Ms. T. Shravani is sustainable. - HELD THAT: - Seized material established that cash amounts were received by the assessee. The assessee relied on ledger copies of the company showing later refunds, but those ledger entries related to a different financial year and were not supported by contemporaneous seized documents or corroborative evidence linking the specific 2004-05 receipts to company transactions. The Assessing Officer's remand verification found no record of these transactions in the company's books for the relevant year. The ledger excerpts alone did not reconcile with the amounts and timing of the seized promissory notes. Consequently, the assessee failed to prove the transactions were on behalf of the company and did not provide reasonable cause for accepting cash; the penalty under section 271D was rightly confirmed.

Appeal dismissed and penalty under section 271D upheld for A.Y. 2004-05.

Penalty under section 271D - Prohibition on acceptance of cash loans under section 269SS - Onus on assessee to prove transaction pertains to company - Reliance on seized documents and books of account - Penalties imposed under section 271D for violation of section 269SS in respect of cash loans of Rs. 1,00,000 from K. Mallesh and Rs. 11,00,000 from P. Rayappa during 2005 are sustainable. - HELD THAT: - Promissory notes in the seized material acknowledged receipt of the cash amounts by the assessee. The assessee contended the loans were for the company and pointed to a cheque allegedly issued by the company for repayment, but failed to produce bank account evidence showing clearance through the company's account or entries in the company books corroborating the loans. The sale deed relied on did not record any outstanding due to be paid by the managing director on company account. The Assessing Officer's remand report and seized material did not support the contention that these transactions pertained to the company. In absence of tangible corroboration or reasonable cause for accepting cash instead of account-payee cheque, the imposition of penalties was justified and properly confirmed by the CIT(A).

Appeal dismissed and penalties under section 271D upheld for A.Y. 2006-07.

Final Conclusion: All appeals are dismissed; the Tribunal upholds the penalties levied under section 271D for the Assessment Years 2002-03, 2004-05 and 2006-07 on the basis that the assessee accepted cash loans in contravention of section 269SS and failed to establish, with corroborative seized material or company books, that the transactions were on behalf of the company.

Proviso to section 56(2)(vii)(b) of the Income Tax Act, 1961 - date of agreement versus date of registration for immovable property - deemed gift under section 56(2)(vii)(b) - payment by mode other than cash on or before the date of agreement - reopening of assessment under section 147

Proviso to section 56(2)(vii)(b) of the Income Tax Act, 1961 - date of agreement versus date of registration for immovable property - payment by mode other than cash on or before the date of agreement - deemed gift under section 56(2)(vii)(b) - Whether the difference between stamp duty valuation and consideration stated in the registered sale deed is taxable under section 56(2)(vii)(b) where an earlier genuine agreement fixing the consideration existed and part of the consideration was paid otherwise than in cash on or before the date of that agreement. - HELD THAT: - The assessee had executed an MoU dated 15.12.2006 with an addendum dated 19.03.2007 fixing the consideration and taking delivery/possession of the property, but registration occurred on 31.10.2013. Payments as per the agreement were made partly in cash and partly by cheque, including a cheque payment to discharge the vendor's bank liability, and the assessee instituted civil proceedings leading to a court order directing registration in his favour. The proviso to section 56(2)(vii)(b), which took effect w.e.f. 01.10.2009, excludes application of the deemed-gift provision where there exists an agreement fixing the consideration prior to the date of insertion and, where the date of agreement and registration differ, the date of agreement governs; the second proviso further applies when consideration or part thereof was paid by a mode other than cash on or before the date of agreement. The Tribunal accepted the genuineness of the pre-existing agreement, the payments made in accordance with it (including non-cash payment to clear the vendor's debt as evidenced in court pleadings), and the subsequent judicial direction for registration. Applying the proviso and its second proviso, the Tribunal held that the deemed-gift mischief under section 56(2)(vii)(b) does not arise and there was no justification to treat the difference between SRO value and the consideration as income from other sources. [Paras 7, 8]

The addition under section 56(2)(vii)(b) was set aside and the appeal allowed, holding the proviso to section 56(2)(vii)(b) applicable on the facts.

Final Conclusion: The Tribunal held that the assessee was covered by the proviso to section 56(2)(vii)(b) on account of a genuine pre-existing agreement and non-cash payments made in accordance therewith; the addition made by the authorities was deleted and the appeal allowed.

Royalty-use of copyright - Fees for technical services-make available - More beneficial rule-DTAA versus domestic law

Royalty-use of copyright - Explanation 4 to section 9(1)(vi) - retrospective inclusion of software - More beneficial rule-DTAA versus domestic law - Taxability of CAD/CAM monthly charges of Rs. 1,48,54,717 as 'Royalty' under the Act and under the DTAA - HELD THAT: - The Tribunal accepted that Explanation 4 inserted retrospectively into section 9(1)(vi) makes consideration for use or right to use computer software taxable as 'Royalty' under the Act, and therefore the amount would prima facie be chargeable as royalty under domestic law. However, Article 12(3)(a) of the DTAA with Sweden requires that royalties be payments as consideration for the use of, or the right to use, a copyright. On the facts the assessee only granted a limited right to use the CAD/CAM software for internal business purposes; there was no transfer of copyright or of the right to use the copyright. Applying the more beneficial rule in section 90(2), the Tribunal followed the view of the Delhi High Court in Infrasoft and its own earlier orders in the assessee's case that such limited use does not constitute 'Royalty' under Article 12 of the DTAA. Consequently, notwithstanding the operation of Explanation 4 for domestic taxation, the DTAA provision more favourable to the assessee governs for AY 2014-15 and the receipt cannot be treated as royalty under the Treaty; there was no claim or finding of a permanent establishment in India to bring the receipt within business profits under Article 7. [Paras 9, 13, 16]

The CAD/CAM monthly charges are not 'Royalties' under the DTAA and therefore are not taxable in India for AY 2014-15 (DTAA governs as the more beneficial provision).

Fees for technical services-make available - Fees for technical services under domestic law - More beneficial rule-DTAA versus domestic law - Taxability of GSS maintenance charges of Rs. 38,97,417 as 'Fees for technical services' under the Act and under the DTAA - HELD THAT: - Under Explanation 2 to section 9(1)(vii) the amount paid for rendering technical or consultancy services would constitute 'fees for technical services' for domestic tax purposes; on the facts the AO's characterisation of the payment as consideration for maintenance services fits within that definition. The DTAA's Article 12(3)(b), read with the Protocol and the MFN-linked provision borrowing the Portuguese wording, requires that to qualify (as 'fees for included services') the services must 'make available' technical knowledge, experience, skill or know how so that the recipient can independently apply the technology in future. Applying the judicial and AAR interpretation of 'make available', the Tribunal found the maintenance services here did not transfer enduring technical know how and were services whose benefit was exhausted on provision. As the DTAA's narrower scope is more beneficial to the assessee, that Treaty treatment applies for AY 2014-15. There was no allegation of a permanent establishment to bring the receipts within business profits under Article 7. [Paras 20, 21, 23]

The GSS maintenance charges do not constitute 'fees for technical services' under the DTAA and therefore are not taxable in India for AY 2014-15 (DTAA governs as the more beneficial provision).

Final Conclusion: The Tribunal allowed the appeal for AY 2014-15: the CAD/CAM charges and the GSS maintenance charges are not taxable in India under the DTAA with Sweden (the DTAA provision being more beneficial prevails over the domestic characterisation).

Transfer pricing adjustment - comparability analysis - Transactional Net Margin Method (TNMM) - arm's length price - functionality and business model - service income filter - related party transaction filter - reliability of financial statements - remand for factual verification

Comparability analysis - functionality and business model - transfer pricing adjustment - Vishal Information Technologies Ltd. is not a valid comparable for benchmarking the assessee's ITeS transactions - HELD THAT: - The Tribunal examined the financial statements and observed a negligible personnel cost percentage for Vishal Information Technologies Ltd. compared to the assessee, indicating that the company outsourced a major portion of its work and did not perform ITeS services in-house. The Tribunal found that the Transfer Pricing Officer and the DRP failed to appreciate the assessee's objections and the material differences in business model. Reliance was placed on earlier judicial decisions and the assessee's own precedents where the company was rejected as a comparable. Given the distinct outsourcing-based business model and consistent judicial exclusion in other matters, the Tribunal held that Vishal Information Technologies Ltd. cannot be treated as a comparable for the purpose of determining arm's length price. [Paras 10]

Vishal Information Technologies Ltd. excluded as a comparable

Service income filter - related party transaction filter - remand for factual verification - Datamatics Financial Services Ltd. prima facie fails the filters applied by the Transfer Pricing Officer and requires factual verification before being treated as a comparable - HELD THAT: - The Tribunal noted that the Transfer Pricing Officer had applied filters including more than 75% service income and less than 25% related party transactions. The assessee's material showed that Datamatics had only 22% ITeS revenue and related party transactions amounting to about 49% of sales, thereby prima facie failing both filters. Judicial precedents were cited where substantial related party transactions led to exclusion of the company as a comparable. The Tribunal did not finally decide acceptability on merits but directed the Assessing Officer to factually verify these aspects and exclude the company if the filters are not met. [Paras 14, 15]

Assessing Officer to verify facts regarding ITeS revenue and related party transactions and, if filters are not met, exclude Datamatics Financial Services Ltd. as a comparable

Reliability of financial statements - comparability analysis - Maple E-Solutions Ltd. cannot be treated as a comparable due to unreliability of its financial statements - HELD THAT: - The Tribunal noted materials indicating that the promoters/directors of Maple E-Solutions Ltd. were involved in serious past fraud and that the company's financials exhibited abnormal margin variations. Several Benches of the Tribunal and High Courts, including the jurisdictional High Court, have held that the company's financials are unreliable and therefore it is not a suitable comparable. The Tribunal admitted the additional ground raised by the assessee and, applying the relevant precedents, concluded that Maple E-Solutions Ltd. must be excluded from the comparable set. [Paras 20]

Maple E-Solutions Ltd. excluded as a comparable

Functionality and business model - comparability analysis - Asit C. Mehta cannot be treated as a comparable because it is functionally different (provides GIS/KPO services and has mixed segments) and experienced extraordinary business events - HELD THAT: - On review of the annual report and other materials, the Tribunal observed that Asit C. Mehta had multiple business segments with the ITeS segment including software development and GIS (a KPO activity). Segmental break-up of expenses and profits was not available and the nature of services differed from the assessee's operations. Judicial precedents for the same assessment year showed exclusion of the company on grounds such as KPO nature, low employee cost, and extraordinary activities like mergers/acquisitions. Accordingly, the Tribunal held that the company is functionally dissimilar and cannot be a comparable. [Paras 23]

Asit C. Mehta excluded as a comparable

Arm's length price - Transactional Net Margin Method (TNMM) - risk adjustment - Assessing Officer to determine arm's length price afresh for ITeS transactions excluding the invalid comparables and considering assessee's claim of risk adjustment - HELD THAT: - Having excluded certain comparables and directed factual verification in respect of another, the Tribunal directed the Assessing Officer to re-determine the arm's length price for the provision of ITeS in accordance with the Tribunal's observations. The Assessing Officer was also specifically directed to consider the assessee's claim for risk adjustment in accordance with law while working out the ALP using TNMM or the selected comparable set. [Paras 23]

Assessing Officer to re-determine ALP excluding the invalid comparables and considering risk adjustment

Procedural outcome - Certain appeal grounds disposed of as infructuous or premature, and interest/penalty issues left to Assessing Officer as consequential or premature - HELD THAT: - Grounds no.14 and 17 were dismissed as infructuous due to rectification orders. Grounds no.15 and 16, concerning levy of interest under sections 234B and 234D, were held to be consequential and the Assessing Officer was directed to apply the provisions as per law after re-computation. Ground no.18 challenging initiation of penalty under section 271(1)(c) was dismissed as premature at this stage. [Paras 25, 26, 27, 28]

Grounds 14 and 17 dismissed as infructuous; Assessing Officer to apply interest provisions in law; penalty challenge premature and dismissed

Final Conclusion: The assessee's appeal is partly allowed: four comparables (Vishal Information Technologies Ltd., Maple E-Solutions Ltd., Asit C. Mehta and Datamatics Financial Services Ltd. subject to verification) are excluded or ordered verified, and the Assessing Officer is directed to re-determine the arm's length price for ITeS transactions in accordance with the Tribunal's observations and to consider the assessee's claim for risk adjustment; certain grounds are dismissed as infructuous or premature and interest/penalty consequences are left to be applied by the Assessing Officer as per law.

Penalty under section 271(1)(c) of the Income-tax Act - requirement of recording satisfaction before initiating penalty proceedings - distinction between concealment of income and furnishing inaccurate particulars of income - levy of penalty where income is estimated by applying net profit rate

Requirement of recording satisfaction before initiating penalty proceedings - penalty under section 271(1)(c) of the Income-tax Act - Validity of penalty where Assessing Officer did not record satisfaction before initiating proceedings under section 271(1)(c). - HELD THAT: - The Tribunal held that initiation of penalty proceedings under section 271(1)(c) requires the Assessing Officer to record a satisfaction that the assessee has concealed income or furnished inaccurate particulars of income. The assessment order in the present case contains no such recorded satisfaction; issuance of a notice under section 274 read with section 271(1)(c) is not a substitute for the statutory requirement. In the absence of recorded satisfaction, the assessee could not be properly called on to meet the requirements of the section, rendering the penalty initiation and levy unsustainable. [Paras 5, 6]

Penalty proceedings and levy are invalid for want of recorded satisfaction by the Assessing Officer.

Distinction between concealment of income and furnishing inaccurate particulars of income - penalty under section 271(1)(c) of the Income-tax Act - Validity of penalty where the Assessing Officer failed to specify which limb of section 271(1)(c) (concealment or furnishing inaccurate particulars) was alleged to have been breached. - HELD THAT: - The Tribunal noted that the Assessing Officer levied penalty both for concealment and for furnishing inaccurate particulars without arriving at any conclusion as to which limb applied. Section 271(1)(c) requires clarity as to the basis of penalty; failure to identify the specific limb renders the penalty decision defective. The lack of adjudication on which limb was attracted undermines the validity of the penalty order. [Paras 7]

Penalty set aside for failure to specify and adjudicate which limb of section 271(1)(c) was contravened.

Levy of penalty where income is estimated by applying net profit rate - penalty under section 271(1)(c) of the Income-tax Act - Whether estimation of income by applying a net profit rate attracts penalty under section 271(1)(c). - HELD THAT: - On the merits the Tribunal held that where the Assessing Officer has estimated income by applying a net profit rate (after rejecting books or on account of lack of records), imposition of penalty for concealment under section 271(1)(c) is not justified. In the present case income was determined by estimation and the Tribunal found no basis for levying penalty on that estimate; accordingly the penalty was directed to be deleted. [Paras 8]

Penalty deleted on merits as estimation of income by application of net profit rate does not sustain penalty for concealment.

Final Conclusion: The appeal is allowed; the penalty under section 271(1)(c) for assessment year 2012-13 is set aside because the Assessing Officer did not record the requisite satisfaction, failed to specify which limb of the section applied, and, on merits, penalty is not attracted where income was estimated by applying a net profit rate.

Interest income from bank deposits treated as profits and gains of business - deduction under Section 80P(2)(a)(i) for cooperative societies - classification of receipts as income from other sources versus business income - attributability of income to business activity - precedential scope of Totgars Co-operative Sale Society Ltd. confined to its facts

Interest income from bank deposits treated as profits and gains of business - deduction under Section 80P(2)(a)(i) for cooperative societies - classification of receipts as income from other sources versus business income - Whether interest earned by the cooperative society on deposits placed with banks is taxable as income from other sources or as profits and gains of business and hence eligible for deduction under Section 80P(2)(a)(i). - HELD THAT: - The Tribunal held that where a cooperative society's core business is providing credit to members, amounts representing surplus business funds temporarily not required for lending and placed on deposit so as to earn interest are attributable to the business of providing credit. The Tribunal distinguished the Supreme Court decision in Totgars Co-operative Sale Society Ltd. as confined to its facts (where the retained amounts were liabilities payable to members), and relied on earlier High Court and Tribunal decisions which treated interest on parked funds of credit societies as business income. Applying that principle, the interest earned on deposits by the assessee (a cooperative credit society) was held to form part of profits and gains of business and therefore eligible for deduction under Section 80P(2)(a)(i). The appellate orders denying the benefit were set aside and the Assessing Officer was directed to allow the deduction on the impugned interest income for both years. [Paras 5, 6, 7]

Interest on bank deposits of the cooperative credit society is assessable as profits and gains of business and deduction under Section 80P(2)(a)(i) is allowable for assessment years 2014-15 and 2015-16.

Final Conclusion: Both appeals are allowed: the interest income earned on bank deposits by the cooperative society is held to be business income attributable to its credit activities and is eligible for deduction under Section 80P(2)(a)(i); the orders of the CIT(A) are set aside and the AO is directed to allow the deduction for AYs 2014-15 and 2015-16.

Admission of additional evidence under Rule 46A - treatment of unexplained cash credits under section 68 - cessation/remission of trading liability under section 41(1) - disallowance for failure to deduct tax at source under section 40(a)(ia) - characterisation of receipt as capital or revenue

Admission of additional evidence under Rule 46A - Admissibility of confirmations filed before CIT(A) as additional evidence under Rule 46A - HELD THAT: - The Tribunal found that the assessee was not afforded sufficient time during assessment proceedings to obtain and file confirmations which were sought for the first time by notice dated 15.02.2016 and hearing was fixed shortly thereafter. The confirmations related to parties to whom interest and rent were paid and the Assessing Officer had not drawn adverse inference as to genuineness of those expenditures in the assessment order. On these facts the Tribunal held that the CIT(A) erred in declining admission of the confirmations as additional evidence and set aside the CIT(A)'s order under Rule 46A(2), directing the CIT(A) to admit and consider the confirmations in adjudicating the appeal. [Paras 7]

Order under Rule 46A(2) set aside and matter remitted to CIT(A) with direction to admit and consider the confirmations as additional evidence.

Cessation/remission of trading liability under section 41(1) - Validity of addition under section 41(1) in respect of long-outstanding creditors - HELD THAT: - The Tribunal held that mere long-standing nature of a liability in books does not, by itself, justify treating it as ceased or remitted under section 41(1). The Assessing Officer failed to indicate any benefit obtained by the assessee in respect of those liabilities in the year under consideration or to link cessation to that year. Reliance was placed on authorities to the effect that mere passage of time is not sufficient to invoke section 41(1). In consequence the addition was vacated. [Paras 3]

Addition under section 41(1) of Rs. 7,51,308/- vacated.

Disallowance for failure to deduct tax at source under section 40(a)(ia) - treatment of linked issues pending adjudication under section 68 - Disallowance under section 40(a)(ia) in respect of payments to parties that are also subject to addition under section 68 - HELD THAT: - The Tribunal observed that the disallowance under section 40(a)(ia) for four parties is inextricably linked to the addition under section 68 in respect of the same parties. Because the section 68 issue was remitted to the CIT(A) for fresh adjudication after admission of confirmations, the Tribunal restored the section 40(a)(ia) disallowance issues to the file of the CIT(A) for reconsideration in that context and noted discrepancies in amounts credited and amounts disallowed which the CIT(A) should take cognisance of. [Paras 4]

Disallowance under section 40(a)(ia) restored to CIT(A) for fresh adjudication along with the section 68 issue.

Treatment of unexplained cash credits under section 68 - Addition under section 68 in respect of cash credits from 19 parties - HELD THAT: - In view of the direction to admit and consider the confirmations filed as additional evidence, the Tribunal remitted the section 68 additions to the CIT(A) for fresh adjudication. The Tribunal did not decide the merits of the genuineness of the cash credits but required the CIT(A) to examine the confirmations and related facts in the appellate proceedings. [Paras 5]

Section 68 additions restored to CIT(A) for fresh adjudication after considering the admitted additional evidence.

Characterisation of receipt as capital or revenue - Addition of credited amount to capital account treated as revenue and included in income - HELD THAT: - The Assessing Officer added the amount credited to capital account to income in the absence of any explanation as to its nature and source. The Tribunal, finding no infirmity in the CIT(A)'s view, confirmed the addition as revenue receipt because the assessee failed to satisfactorily explain its character and source. [Paras 6]

Addition treating the credited amount as revenue confirmed.

Final Conclusion: The Tribunal allowed the appeal in part: it set aside the CIT(A)'s refusal to admit additional evidence under Rule 46A and remitted the section 68 additions (and linked section 40(a)(ia) issues) to the CIT(A) for fresh adjudication after considering the admitted confirmations; it vacated the section 41(1) addition relating to long-outstanding creditors; and it confirmed the addition treating the credited amount as revenue.

Revision under section 263 - prejudicial to the interests of revenue - reopening under section 147 - verification of sale consideration and capital gains tax - acceptance of explanation without evidence - section 53A of Transfer of Property Act

Revision under section 263 - prejudicial to the interests of revenue - acceptance of explanation without evidence - section 53A of Transfer of Property Act - Whether the Pr. Commissioner (revision u/s 263) was justified in holding the assessment to be erroneous and prejudicial to the interests of revenue and in setting aside the assessment. - HELD THAT: - The Tribunal found that the assessment had been reopened under section 147 to verify receipt of Rs. 8,00,000 from Shri Sastry, but the Assessing Officer accepted the assessee's explanation that the sum was a repayment of advance without obtaining supporting evidence or confirmations, and without examining relevant documents such as the settlement deed or subsequent sale deed. The registered agreement cum possession dated 21.04.1999 recited a total consideration of Rs. 30,000 and indicated completion of the transaction for that amount pursuant to section 53A of Transfer of Property Act. Given the absence of contemporaneous evidence for the alleged payments of Rs. 8,00,000 and the lack of enquiries by the AO into the true nature of the receipt and the actual consideration, the Tribunal held that the AO failed to apply her mind and that the assessment was vitiated as erroneous and prejudicial to the revenue. On that foundation the Pr. CIT was justified in invoking revision jurisdiction under section 263.

The Pr.CIT's action in taking up the assessment for revision under section 263 is upheld; the assessment was held to be erroneous and prejudicial to the interests of revenue.

Verification of sale consideration and capital gains tax - reopening under section 147 - acceptance of explanation without evidence - Whether the matter should be remanded for fresh examination and computation of long term capital gains and related enquiries. - HELD THAT: - While upholding the revision, the Tribunal did not decide the merits of taxability or the quantum of capital gains. Instead it directed the Assessing Officer to re-examine afresh all issues mentioned in the revision order, including verification of the true sale consideration, the nature of the Rs. 8,00,000 receipt (repayment/consideration/settlement), the existence and impact of any settlement deed or subsequent sale deed, admissibility of claimed improvements, and to allow indexed cost of acquisition if established. The AO is to provide the assessee reasonable opportunity and decide these matters on merits after making necessary enquiries and verification.

The assessment is set aside for fresh consideration by the AO who is directed to verify and decide the taxability and computation of capital gains on merits after making necessary enquiries.

Final Conclusion: The Tribunal upheld the Pr.CIT's revision under section 263 as justified, held that the assessment was erroneous and prejudicial to the revenue, set aside the assessment for fresh examination on the specified points by the Assessing Officer with opportunity to the assessee, and recorded the appeal as allowed for statistical purposes.

Reopening of assessment under section 147 - reason to believe - section 68 unexplained credit - onus of assessee (identity, genuineness and creditworthiness) - requirement on Assessing Officer to carry out further investigation once initial onus is discharged - third party information and right to production/cross examination - principles of natural justice - prospective operation of proviso to section 68 and section 56(2)(viib)

Section 68 unexplained credit - onus of assessee (identity, genuineness and creditworthiness) - requirement on Assessing Officer to carry out further investigation once initial onus is discharged - Whether additions made by the Assessing Officer under section 68 in respect of share capital and share premium were sustainable - HELD THAT: - The Tribunal found that the assessee had filed extensive documentary material - share application forms, declarations, board resolutions, bank statements of investors, PAN details, ITR acknowledgements, Form No.2 for allotment and valuation report - which discharged the initial onus under section 68 as to identity, genuineness and creditworthiness. Once the initial onus shifted to the AO, it was incumbent on him to undertake further verification (e.g. summons under section 131 or effective enquiries under section 133(6)) to rebut the claim. The AO did not carry out any meaningful further enquiries and relied instead on third party survey findings and later statements; he also failed to place adverse material showing that the amounts were the assessee's undisclosed income. Applying precedents (including Lovely Exports and others discussed), the Tribunal held that in these facts additions under section 68 could not be sustained and accordingly upheld the CIT(A)'s deletion of the addition. [Paras 13, 15, 20, 21]

Additions under section 68 in respect of share capital and share premium deleted; the CIT(A)'s order in favour of the assessee is upheld.

Third party information and right to production/cross examination - principles of natural justice - Whether reliance by the Assessing Officer on statements of third parties (recorded during survey/proceedings) without furnishing copies and without allowing cross examination rendered the additions unsustainable - HELD THAT: - The Tribunal accepted that the AO relied upon statements obtained during survey and from third parties to impugn the genuineness of the transactions. The authorities relied upon establish that where adverse inference is sought to be drawn from third party statements, those statements must be placed on record and the assessee allowed an opportunity to cross examine the maker of such statements when requested. In the present case the AO did not furnish copies of the relied upon statements nor permit cross examination when sought; this violated principles of natural justice and materially prejudiced the assessee. For that reason alone the additions could not be sustained. [Paras 15]

Reliance on third party statements without furnishing them and without permitting cross examination vitiated the additions.

Prospective operation of proviso to section 68 and section 56(2)(viib) - Whether the amendments effected by Finance Act, 2012 (proviso to section 68 and section 56(2)(viib)) are applicable to Assessment Year 2009-10 - HELD THAT: - The Tribunal noted that the proviso to section 68 and clause (viib) of section 56(2) were introduced w.e.f. 01.04.2013 and are applicable from AY 2013 14 onwards. The amendments are prospective and cannot be applied retrospectively to AY 2009 10. Even on merits, the Tribunal observed that the factual matrix showed the assessee had furnished evidence, including a valuation report, and the AO had not discharged the burden of proving the amended tests for that earlier year. [Paras 16, 17, 20]

The amendments (proviso to section 68 and section 56(2)(viib)) do not apply to AY 2009 10 and thus do not sustain the AO's invocation of those provisions.

Final Conclusion: The Tribunal upheld the deletion of additions made under section 68 in respect of share capital and share premium for Assessment Year 2009 10, holding that the assessee discharged the initial onus, the AO failed to carry out requisite further enquiries and unlawfully relied on third party statements without affording production/cross examination; the prospective amendments (proviso to section 68 and section 56(2)(viib)) were held inapplicable to the year under consideration. Revenue's appeal is dismissed and the assessee's cross objection is treated as infructuous.

Summary order. Appeals dismissed; the impugned order dated 10-3-2005 of the Customs, Excise and Service Tax Appellate Tribunal, Southern Regional Bench, Chennai is not interfered with; the question of law is left open.

Summary order. Appeals dismissed as devoid of any merit; delay condoned.

Summary order. Delay condoned; leave granted; matters directed to be listed along with Civil Appeal arising out of Special Leave Petition (C) No. 11646 of 2017; in the meantime parties permitted to exchange pleadings.

Summary order. Delay condoned; leave granted; matter tagged with Diary No. 7547/2019.

Summary order. Notice issued on the prayer for interim relief, the application for condonation of delay and the Special Leave Petition; returnable within three weeks. Dasti permitted.

Benefit under Section 80 of the Customs Act - Benefit under Section 79 of the Customs Act - Illegal import of third country goods - Mens rea in prosecution under Section 135 of the Customs Act - Distinction between confiscation proceedings and criminal prosecution - Exercise of power under Section 357 Cr.P.C. as alternative to imprisonment

Benefit under Section 80 of the Customs Act - Benefit under Section 79 of the Customs Act - Illegal import of third country goods - Mens rea in prosecution under Section 135 of the Customs Act - Distinction between confiscation proceedings and criminal prosecution - Validity of the lower appellate court's acquittal by conferring benefit of Section 79/80 and whether the respondent committed an offence under Section 135(1)(i)/(b) of the Customs Act by clandestinely bringing gold of third country origin into India. - HELD THAT: - The Court found on the material that the respondent was apprehended with gold concealed in his person (clothes and shoes) and not in baggage, and that he did not make any declaration at the relevant time or in his Section 108 statement to show an intention to declare the goods to customs authorities. Those facts negatived a bona fide intention to avail the statutory reliefs relied upon by the respondent. Consequently, the benefit of Section 79/80, which depends on the statutory scheme and declared intention in the confiscation context, could not be extended to defeat criminal liability where concealment and lack of declaration indicate culpable conduct. Having examined the record and earlier connected proceedings, the Court held that the lower appellate court's grant of benefit under Section 79 (and by implication Section 80) was contrary to law and set aside that order, thereby confirming the conviction recorded by the trial court for the offence alleged under the Customs Act. [Paras 13, 16]

The Additional Sessions Judge's order granting benefit of Section 79 and acquitting the respondent is set aside; the trial Court's conviction is confirmed.

Exercise of power under Section 357 Cr.P.C. as alternative to imprisonment - Whether the remaining period of sentence should be converted to a fine and the conditions for respondent's release. - HELD THAT: - Applying the guiding principles established by the Supreme Court on the use of Section 357 Cr.P.C. - including the duty to consider compensation/alternative measures and to record reasons - and having regard to the respondent's period already spent in custody, deposition of a confiscation fine, his personal hardship, and proportionality, the Court exercised its discretion to convert the remaining two months of imprisonment into a monetary penalty. The Court directed deposit of the converted fine and dealt with the consequences of payment or default, while ordering release of passport and discharge of bond/surety upon compliance. [Paras 17, 24]

Remaining two months of sentence converted into a fine of Rs. 15,000; on deposit (along with previously imposed fine, if not already paid) respondent to be released forthwith, bond and surety discharged, and passport returned; failure to deposit will result in undergoing the remaining sentence.

Final Conclusion: Appeal partly allowed: the acquittal by the lower appellate court is set aside and the trial court's conviction is upheld; the unserved two months' imprisonment is converted into a fine with directions for release, payment and return of passport subject to compliance.

Penalty under Section 114 of the Customs Act - abettal or act/omission rendering goods liable to confiscation - standards of evidence to attribute knowledge or participation in fraud - Penalty under Section 117 of the Customs Act - prohibition on simultaneous imposition of penalties under Sections 114 and 117 - judicial reduction of penal quantum in exercise of appellate powers

Penalty under Section 114 of the Customs Act - abettal or act/omission rendering goods liable to confiscation - standards of evidence to attribute knowledge or participation in fraud - Sustainability of penalties imposed under Section 114 on the appellants who were not the exporters/owners and against whom no material established acts or omissions rendering the goods liable to confiscation. - HELD THAT: - The Tribunal held that Section 114 applies only where a person does or omits an act in relation to goods which would render those goods liable to confiscation under Section 113 or abets such an act. On the material on record, including the show cause notice and the original order, there was no evidence attributing knowledge of, or active participation in, the fraud to the appellants. The appellants were not the actual exporters/owners and the impugned order did not record any positive finding of commission or omission by them that made the goods liable to confiscation. The Tribunal relied on precedents where penalties under Section 114 were held unsustainable in the absence of material showing connivance, knowledge, or acts facilitating the illegal export. Applying that standard, the Tribunal set aside the penalties imposed under Section 114 on the appellants before it. [Paras 4, 5]

Penalties under Section 114 imposed on the appellants are set aside.

Penalty under Section 117 of the Customs Act - prohibition on simultaneous imposition of penalties under Sections 114 and 117 - judicial reduction of penal quantum in exercise of appellate powers - Validity and quantum of penalties imposed under Section 117 on certain appellants and whether those penalties should be sustained or moderated. - HELD THAT: - The Tribunal observed that once penalties under Section 114 were set aside, the question of penalties under Section 117 required fresh appraisal. Section 117 applies where no other express penalty is provided. The Commissioner found negligence on part of some appellants in discharging statutory responsibilities and considered a deterrent penalty appropriate. The Tribunal held that while a penalty under Section 117 could be warranted to signal caution, the amount imposed by the Commissioner should be moderated. Exercising appellate jurisdiction, the Tribunal reduced each penalty imposed under Section 117 to Rs. 20,000, finding this amount adequate for deterrence and justice. [Paras 4, 5]

Penalties under Section 117 are sustained in principle but reduced to Rs. 20,000 for each affected appellant.

Final Conclusion: The appeals succeed in part: penalties imposed under Section 114 are set aside for the appellants before the Tribunal; penalties imposed under Section 117 are maintained in principle but reduced to Rs. 20,000 each; no finding is recorded by the Tribunal on confiscation or as to the actual exporters/owners of the prohibited goods.

Self-assessment under Section 17 of the Customs Act - claim for refund under Section 27 of the Customs Act - requirement to challenge an assessing officer's order before claiming refund (Priya Blue ratio) - deletion of 'in pursuance of an order of assessment' by Finance Act, 2011 - customs EDI clearance leading to absence of an assessment order

Self-assessment under Section 17 of the Customs Act - claim for refund under Section 27 of the Customs Act - requirement to challenge an assessing officer's order before claiming refund (Priya Blue ratio) - deletion of 'in pursuance of an order of assessment' by Finance Act, 2011 - customs EDI clearance leading to absence of an assessment order - Whether an importer may claim refund of customs duty for imports made after the 2011 amendments without first challenging an assessing officer's order of assessment. - HELD THAT: - The Tribunal held that the legal position differs across three periods. Prior to the Finance Act, 2011 the Supreme Court in Priya Blue Industries required that a refund claim premised on payment made pursuant to an assessing officer's order could not be entertained unless that assessment order was challenged, because a refund sanctioning officer cannot effectively modify an assessing officer's order. However, post the 2011 amendments Section 17 shifted to a scheme of self-assessment by the importer and Section 27 was amended to remove the qualification 'in pursuance of an order of assessment', permitting any person who paid or bore duty to apply for refund. The practical operation of the Customs EDI system earlier had often meant there was no assessing officer's order to challenge; the High Courts of Delhi and Madras have applied the amended statutory scheme (and the EDI reality) to permit refund claims without prior challenge to an assessment order where no such order exists or where self-assessment governs. Applying those principles to the present appeal (which pertains to the post-2011 regime), the Tribunal concluded that Priya Blue's ratio does not apply and the appellant was entitled to the refund sanctioned by the Assistant Commissioner, so the First Appellate Authority's reversal was in error for ignoring the statutory amendments and relevant High Court precedents. [Paras 6, 8, 9]

The First Appellate Authority's order was set aside and the refund sanctioned by the Assistant Commissioner restored, since under the post-2011 self-assessment regime and the amended Section 27 a refund claim is maintainable without first challenging an assessing officer's order where no such assessment order exists.

Final Conclusion: Appeal allowed; impugned order of the First Appellate Authority set aside and the refund granted by the Assistant Commissioner restored, applying the post 2011 self assessment regime and amended refund provision.

Valuation of imported goods - acceptance of assessed value by importer - market enquiry and principles of natural justice - confiscation for import in violation of Foreign Trade Policy - redemption fine on confiscated goods - penalty under Section 112(a) of the Customs Act

Valuation of imported goods - acceptance of assessed value by importer - market enquiry and principles of natural justice - The contention that the department should have conducted a market enquiry and furnished its details before finalising value. - HELD THAT: - The customs authorities doubted the declared value, examined the goods in presence of the importer's representative and a Chartered Engineer, and assessed the value with assistance of the Chartered Engineer. The importer accepted the assessed value by letter dated 16-4-2008 and the assessment was completed on that basis. Given this acceptance at the time of assessment, the Tribunal found no merit in the argument that a market enquiry must have been conducted or provided to the appellant before finalising value; the appellant did not dispute the value at assessment and therefore could not complain of lack of opportunity to challenge any market enquiries thereafter. [Paras 6]

The claim that market enquiry and additional opportunity were required is rejected; assessed value stands as accepted by the importer.

Confiscation for import in violation of Foreign Trade Policy - Whether the goods were liable to confiscation for being imported in violation of Para 2.17 of the Foreign Trade Policy without a licence. - HELD THAT: - It was undisputed that the goods (old and used photocopiers) were restricted for import under Para 2.17 of the FTP during the relevant period and could be imported only against a valid licence. The appellant did not possess a licence and therefore the import was in breach of the FTP. On that basis the Tribunal held that confiscation under the Customs Act was justified. [Paras 6]

Confiscation of the goods for import in violation of FTP is upheld.

Redemption fine on confiscated goods - Whether the redemption fine imposed on the confiscated goods was excessive and required interference. - HELD THAT: - The redemption fine originally imposed amounted to about 33% of the estimated market value. The Tribunal noted that in confiscation cases it usually adopts a value about 10% and, applying that principle, found that reduction of the redemption fine was warranted. Having regard to the assessed value and customary approach to redemption fines, the Tribunal reduced the redemption fine to a specified lower amount. [Paras 6]

Redemption fine reduced (appeal partly allowed on this ground).

Penalty under Section 112(a) of the Customs Act - Whether the penalty imposed under Section 112(a) required interference. - HELD THAT: - The penalty imposed amounted to approximately 5% of the value of the goods. The Tribunal found that, on the facts and in relation to the value, the penalty was reasonable and did not call for interference. [Paras 6]

Penalty under Section 112(a) is upheld.

Final Conclusion: The appeal is partly allowed solely to reduce the redemption fine; otherwise the impugned order of assessment, confiscation and penalty is upheld and the appeal is disposed of accordingly.

Approval of sale of shares - transfer free from encumbrances - implementation of the resolution framework - public solicitation through EoI and RFP - right of first offer / ROFO - assumption of liabilities and Category I classification - role of Creditors' Committee in asset-level resolution - valuation to determine fair value and liquidation value - supervision/approval by an independent monitor (Justice D. K. Jain, Retd.) - escrow of sale proceeds and prohibition on set-off

Approval of sale of shares - transfer free from encumbrances - escrow of sale proceeds and prohibition on set-off - Approval granted for sale and direct transfer of 51% shareholding in each Specified Wind SPV by IWEL to ORIX on the terms of the SPA, and directions regarding deposit of proceeds into an escrow account. - HELD THAT: - The Tribunal examined the application seeking sanction to consummate the sale of IWEL's 51% shareholding in seven Specified Wind SPVs to ORIX on the terms of the Share Purchase Agreement dated 7.8.2019. Having regard to the resolution process undertaken under the Resolution Framework, the approvals given by the IWEL Board and its Creditors' Committee, the valuation exercise conducted by registered valuers, the disclosure of GAIL's bid to ORIX and ORIX's exercise of its option under the Second MOU, and the supervisory approval given by Justice (Retd.) D. K. Jain, the Tribunal found the process compliant with the Resolution Framework and in furtherance of maximisation of asset value. The Tribunal therefore allowed the application, subject to ORIX making the payments specified in the SPA. The Tribunal also directed that the amounts payable to IWEL and IEDCL under the SPA be credited into a designated escrow account, maintained as an interest-bearing fixed deposit, and clarified that such funds shall not be adjusted or set off against other dues and shall be distributed subject to further orders of the Tribunal.

MA 2756/2019 allowed; sale to ORIX approved and transfer free from encumbrances permitted upon payment as per the SPA; proceeds to be deposited in designated escrow account and not subject to set-off.

Implementation of the resolution framework - public solicitation through EoI and RFP - role of Creditors' Committee in asset-level resolution - assumption of liabilities and Category I classification - valuation to determine fair value and liquidation value - supervision/approval by an independent monitor (Justice D. K. Jain, Retd.) - The resolution process followed for the Specified Wind SPVs-comprising public EoI/RFP, valuation by registered valuers, categorisation as Category I, Creditors' Committee approval and supervisory sign-off by Justice (Retd.) D.K. Jain-was in conformity with the Resolution Framework and approved orders. - HELD THAT: - The Tribunal reviewed the steps taken by the New Board under the First Progress Report and the Resolution Framework: public advertisement for EoIs, issuance of RFPs to qualified applicants, access to an Information Memorandum and data room, valuation by two registered valuers to determine fair market and liquidation values, categorisation of the SPVs as Category I companies (due to bids assuming all liabilities), constitution of a Creditors' Committee for IWEL, and the sequential approval process culminating in oversight by Justice (Retd.) D.K. Jain as directed by the NCLAT. The Tribunal found that ORIX's exercise of rights under the Second MOU and the subsequent finalisation of the SPA followed the prescribed process and the approvals required under the Resolution Framework and orders of the appellate forum. On that basis the Tribunal endorsed the procedural compliance and the transparency of the sale process.

The Tribunal held the sale process to be compliant with the Resolution Framework and the supervisory directions, and accordingly approved consummation of the transaction.

Final Conclusion: The application for sanctioning the sale of IWEL's 51% shareholding in the seven Specified Wind SPVs to ORIX is allowed; the transfer is directed to be free from encumbrances upon receipt of payments as per the SPA, with sale proceeds to be deposited in a designated escrow account as directed, and the Tribunal recorded that the resolution process followed was in conformity with the Resolution Framework and supervisory approvals.

Financial debt and default - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - real estate allottees as financial creditors - priority of IBC over inconsistent laws by virtue of a non-obstante clause - appointment of Interim Resolution Professional and imposition of moratorium

Financial debt and default - real estate allottees as financial creditors - There existed a financial debt owing to the applicants (home buyers) and a continuing default by the corporate debtor. - HELD THAT: - The applicants had executed flat buyers agreements during 2011-13 and paid substantial amounts towards purchase of flats; possession was contractually due by about 2016 and remained undelivered. The corporate debtor admitted receipt of payments but failed to refund amounts or pay agreed compensation. The Tribunal applied the statutory definition of "default" and the amended definition of "financial debt" which treats amounts raised from allottees in real estate projects as having the commercial effect of a borrowing, and concluded that the debt became due when possession was contractually required but not handed over; the period of default therefore commenced by 2016-17 and subsisted when the petition was filed in July 2018. [Paras 5, 6, 11, 15, 16]

Default in repayment of a financial debt by the corporate debtor was established.

Priority of IBC over inconsistent laws by virtue of a non-obstante clause - application of RERA and existence of alternative remedy - The existence of RERA and proceedings or time extensions under RERA did not bar admission of the Section 7 application under the Code. - HELD THAT: - The corporate debtor's contention that registration and extended timelines under RERA precluded initiation under the Code was rejected. The Tribunal held that the IBC's overriding provision operates in case of conflict and, while RERA and IBC regulate different fields, the Code applies to statutory financial debts arising out of allottee payments. Reliance on RERA as an exclusive remedy was thus found to be misplaced and did not absolve the corporate debtor of its contractual liabilities or prevent initiation of insolvency proceedings under Section 7. [Paras 7, 12, 17, 19, 22]

RERA does not operate to bar the Section 7 petition; IBC provisions prevail where inconsistency exists and the petition is maintainable.

Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - appointment of Interim Resolution Professional and imposition of moratorium - The application under Section 7 was admitted; an Interim Resolution Professional was appointed and moratorium declared. - HELD THAT: - Having found that default had occurred, that the application was complete as per Section 7(2) and Rule 4 and that no disqualification affected the proposed IRP, the Tribunal proceeded to admit the petition. Consequent to admission, an Interim Resolution Professional was appointed and directed to make the public announcement; the moratorium under Section 14 was declared with the statutory prohibitions set out in the order. [Paras 21, 23, 24, 25]

The Section 7 petition is admitted; IRP appointed and moratorium imposed.

Duties of Interim Resolution Professional - costs and interim funding for insolvency process - Directions were issued as to the IRP's duties and the applicants were directed to deposit interim funds to meet IRP expenses. - HELD THAT: - The Tribunal specified that the IRP must perform all functions under the Code (including preservation of assets and obtaining cooperation from erstwhile management) with integrity and independence. The financial creditor was directed to deposit a specified interim sum with the IRP within three days to meet initial expenses, subject to adjustment by the Committee of Creditors and accounting by the IRP. [Paras 17, 18]

IRP duties were defined and the financial creditor was directed to provide interim funding for IRP expenses.

Final Conclusion: The petition under Section 7 is admitted: the Tribunal found a continuing default in respect of amounts paid by allottees, held that RERA does not bar initiation under the Code where inconsistency arises, appointed an Interim Resolution Professional, declared the moratorium and directed interim funding to the IRP.

Application under Section 9 of the I&B Code - withdrawal of insolvency application pursuant to settlement - setting aside admission of corporate insolvency resolution process - appointment of Interim Resolution Professional - moratorium - closure of corporate insolvency proceedings - payment of IRP fees and resolution costs - release of corporate debtor from rigours of insolvency law

Application under Section 9 of the I&B Code - withdrawal of insolvency application pursuant to settlement - setting aside admission of corporate insolvency resolution process - closure of corporate insolvency proceedings - release of corporate debtor from rigours of insolvency law - Settlement between the parties entitles the Operational Creditor to withdraw the Section 9 application and the admission and consequential orders are to be set aside with closure of proceedings. - HELD THAT: - The Appellate Tribunal noted that the parties reached a settlement and that no Committee of Creditors had been constituted and no claims (other than the Operational Creditor, which itself did not pursue a claim in view of the settlement) had been received. In view of the settlement and absence of any functioning CoC or competing claims, the Tribunal set aside the Adjudicating Authority's order admitting the Section 9 application dated 10th April, 2019 and directed that the Operational Creditor be permitted to withdraw its application. Consequential orders passed pursuant to admission, including appointment of the Interim Resolution Professional and the moratorium, were also set aside and the Adjudicating Authority was directed to close the proceedings, with the Corporate Debtor released to function independently through its Board of Directors from immediate effect.

Impugned order admitting the Section 9 application and all consequential orders are set aside; the Section 9 application is treated as withdrawn and the Adjudicating Authority will close the proceedings, releasing the Corporate Debtor from the rigours of insolvency law.

Appointment of Interim Resolution Professional - payment of IRP fees and resolution costs - The Corporate Debtor is to pay the Interim Resolution Professional's approved fee and incurred expenses. - HELD THAT: - Although the admission and consequent processes are set aside due to settlement, the Tribunal recognised the Interim Resolution Professional's services and directed that the Corporate Debtor pay the IRP a consolidated amount for fees and costs. The Tribunal specified that the Corporate Debtor shall pay the IRP a sum of Rs. 1,20,000 within three weeks to cover his fee and expenses incurred in publication and related activities.

Corporate Debtor to pay the Interim Resolution Professional Rs. 1,20,000 within three weeks.

Final Conclusion: The appeal is allowed: the Section 9 application is permitted to be withdrawn pursuant to settlement; the admission and all consequential orders (including appointment of IRP and moratorium) are set aside and the Adjudicating Authority shall close the proceedings; the Corporate Debtor shall pay the IRP Rs. 1,20,000 within three weeks; no costs.

Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - debt and default - operational creditor - pre-existing dispute - adjudicating authority's duty to ascertain default - remand for fresh consideration - settlement between parties

Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - debt and default - adjudicating authority's duty to ascertain default - Whether the Adjudicating Authority was justified in rejecting the Section 9 application solely because there was no written contract between the parties. - HELD THAT: - The Tribunal held that the Adjudicating Authority erred in rejecting the Section 9 application on the ground that there was no written agreement. Relying on the principles in Innoventive Industries Ltd., the Adjudicating Authority's role is limited to ascertaining whether a debt and default exist from the records furnished; it is not competent to reject an application merely because the parties did not execute a formal contract. The corporate debtor may contend that no debt is payable in law or fact or that a pre-existing dispute exists, but absent such a pleaded and established contention the Adjudicating Authority must examine the evidence of debt and default and not reject the application for lack of a written agreement. The Tribunal found that the Adjudicating Authority did not apply its mind to whether debt and default were made out and therefore its conclusion was unsustainable. [Paras 7, 9, 10]

Impugned rejection set aside; rejection on ground of absence of written contract held improper because the Adjudicating Authority must ascertain existence of debt and default from record.

Pre-existing dispute - operational creditor - remand for fresh consideration - settlement between parties - Whether the matter should be remitted to the Adjudicating Authority for fresh consideration of the existence of debt and default in light of the record and the Supreme Court's guidance, and what interim liberty should be afforded to the parties. - HELD THAT: - The Tribunal remitted the matter to the Adjudicating Authority to pass appropriate orders after giving notice and hearing the corporate debtor, directing that the Adjudicating Authority should consider the record submitted by the operational creditor in light of the Supreme Court's decision in Innoventive Industries Ltd. The Tribunal noted that the respondent had not pleaded a pre-existing dispute nor shown that no debt or default existed; consequently the Adjudicating Authority must now determine whether a debt and default are established on the materials before it. Meanwhile, the Tribunal recorded that the corporate debtor remains free to settle the claim with the operational creditor. The remand is for fresh adjudication on the limited question of debt and default based on the available record, not for re-litigation of collateral factual minutiae. [Paras 11]

Matter remitted to the Adjudicating Authority for fresh consideration of debt and default after notice and hearing; respondent permitted to settle the claim in the interim; appeal allowed to this extent.

Final Conclusion: The Tribunal set aside the Adjudicating Authority's order rejecting the Section 9 application for want of a written contract, remitted the matter for fresh consideration on whether a debt and default exist in accordance with Innoventive Industries Ltd., and granted liberty to the corporate debtor to settle the claim; appeal allowed with no costs.

Summons under Section 50(2) and (3) of the Prevention of Money Laundering Act - money laundering under Section 3 as an independent offence - proceeds of crime and predicate/scheduled offence - criminal conspiracy (Section 120B IPC) as a stand alone scheduled offence - judicial restraint in interference with pre investigation show cause notices - separation between investigation procedure and adjudicating authority regulations

Judicial restraint in interference with pre investigation show cause notices - summons under Section 50(2) and (3) of the Prevention of Money Laundering Act - Maintainability of writ petitions challenging summons issued by the Enforcement Directorate under the PML Act and scope for interference at pre investigation stage - HELD THAT: - The Court held that writ jurisdiction under Articles 226/227 is available and the petitions are not to be dismissed as non maintainable; however, constitutional courts must exercise restraint and ordinarily should not quash or stifle investigative steps such as show cause notices or summons at the pre investigation stage unless jurisdictional vires is demonstrably absent. Interference is inappropriate where the challenge merely disputes facts or seeks to prevent the authorities from investigating; the recipient of a show cause summons must ordinarily raise jurisdictional objections before the issuing authority and only approach the Court against an adverse decision. The Court therefore rejected the contention that mere issuance of summons infringed Article 21 or warranted summary quashing absent clear lack of jurisdiction. [Paras 19, 29, 30, 31]

Writ petitions are maintainable but the Court will not ordinarily interfere with pre investigation summons; the petitions cannot be allowed merely to block investigation.

Money laundering under Section 3 as an independent offence - proceeds of crime and predicate/scheduled offence - Whether proceedings under the PML Act require a prior or concomitant finding of a scheduled (predicate) offence before investigation or prosecution under Section 3 can be initiated - HELD THAT: - The Court held that the offence of money laundering under Section 3 is independent of the predicate scheduled offence. The definitions and statutory scheme (use of terms like 'whosoever' and 'any person' in Sections 3, 5 and 2(u)) demonstrate Parliament intended a separate, stand alone offence; possession, concealment, acquisition or projection of 'proceeds of crime' may give rise to PML proceedings even if the person has not been charged with or convicted of the scheduled offence. Investigation by ED to ascertain whether monies are 'proceeds of crime' is therefore permissible without a prior adjudication or prosecution for the predicate offence. [Paras 22, 23, 24, 26, 27]

Proceedings under the PML Act can be independently initiated; a scheduled offence is not a precondition for investigation or prosecution under Section 3.

Criminal conspiracy (Section 120B IPC) as a stand alone scheduled offence - proceeds of crime and predicate/scheduled offence - Whether inclusion of Section 120B IPC in the Schedule to the PML Act makes criminal conspiracy an independent predicate offence and whether Section 120B can be treated as a standalone basis for PML proceedings - HELD THAT: - Relying upon authoritative precedent, the Court accepted that criminal conspiracy (Section 120B IPC) is a substantive, independent offence and its inclusion in Part A of the Schedule makes it a scheduled offence for the purposes of the PML Act. Consequently, allegations invoking Section 120B may independently trigger PML proceedings. The Court rejected the submission that 120B must always be read only with a separate predicate offence and held that 120B itself, as incorporated in the Schedule, can be a basis for PML investigation. [Paras 35, 36, 37, 38, 40]

Section 120B IPC is a schedule offence under the PML Act and may serve as an independent predicate for PML investigation.

Separation between investigation procedure and adjudicating authority regulations - summons under Section 50(2) and (3) of the Prevention of Money Laundering Act - Whether summons issued under Section 50(2) must comply with the Adjudicating Authority (Procedure) Regulations, 2013 and disclose detailed material particulars at pre adjudication/investigation stage - HELD THAT: - The Court held that the Regulations framed under Section 6(15) pertain to the adjudicating authority and the adjudication process, not to the investigatory powers of the authorities. Section 50(2) summons are investigative in nature and do not make the addressee an accused; therefore, there is no requirement at the summons stage to disclose the full particulars or the nature of material relied upon. Requiring production of detailed particulars at the investigation stage would frustrate the purpose of investigation. [Paras 41, 42, 43]

Summons under Section 50(2)/(3) need not comply with adjudication stage regulations or disclose detailed particulars during investigation.

Effect of interim stay in separate Income Tax proceedings on PML investigation - summons under Section 50(2) and (3) of the Prevention of Money Laundering Act - Whether an interim stay of proceedings under the Income Tax Act enjoins or precludes the Enforcement Directorate from issuing summons or pursuing investigation under the PML Act - HELD THAT: - The Court held that an interim stay of further proceedings in proceedings under the Income Tax Act relates to and is confined to those IT Act proceedings; it does not automatically extend to or bar distinct proceedings under other statutes such as the PML Act. Given the independence of PML proceedings and that Section 120B is a scheduled offence in its own right, the stay in the IT matter did not preclude ED from issuing summons under Section 50(2)/(3). [Paras 33, 34, 35]

Stay in Income Tax proceedings does not operate to bar independent PML investigation or issuance of summons by ED.

Final Conclusion: The writ petitions challenging summons issued by the Enforcement Directorate under Sections 50(2) and (3) of the PML Act are dismissed. The Court reaffirmed that money laundering under Section 3 is an independent offence (and Section 120B IPC is a valid scheduled offence), that pre investigation summons ordinarily should not be quashed absent clear lack of jurisdiction, that adjudication stage procedural regulations do not constrain investigatory summons, and that a stay in separate Income Tax proceedings does not preclude ED investigation.

Summary order. Delay condoned; notice issued; matter tagged with C.A. Nos. 573-574/2016.

Summary order. Notice issued in the civil appeals and on the question of limitation, returnable on any Tuesday in September, 2019; service on the respondent waived as counsel appeared for it.

Summary order. Notice issued on the application for condonation of delay and on the Civil Appeal; matter to be listed within four weeks; dasti permitted.

Ad interim stay - deposit as condition for grant of interim relief - security to be furnished to the satisfaction of the Jurisdictional Commissioner - liberty to respondent to withdraw deposited amount

Ad interim stay - deposit as condition for grant of interim relief - security to be furnished to the satisfaction of the Jurisdictional Commissioner - Grant of ad interim stay of the impugned Tribunal judgment subject to conditional deposit and security. - HELD THAT: - The Court admitted the matter and granted an ad interim stay of the impugned judgment of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The stay was made conditional on the appellant depositing a specified sum in Court and, in addition, furnishing security to the satisfaction of the Jurisdictional Commissioner. The order implements the established practice of conditioning interim relief on a monetary deposit and security tailored to the subject-matter, with satisfaction of the security left to the competent departmental authority.

Ad interim stay granted on condition that the appellant deposits Rs. 20 crores in Court and furnishes security of Rs. 132 crores to the satisfaction of the Jurisdictional Commissioner.

Liberty to respondent to withdraw deposited amount - Whether the respondent may withdraw the amount deposited under the conditional stay order. - HELD THAT: - Concomitant with the conditional stay, the Court expressly granted the respondent liberty to withdraw the amount deposited in Court. This provides the respondent an immediate procedural right to access the deposited funds subject to the terms of the order, preserving the respondent's ability to secure the monetary component of the relief while the appeal proceeds.

Liberty granted to the respondent to withdraw the deposited amount.

Final Conclusion: The appeal was admitted and an ad interim stay was granted subject to a deposit of Rs. 20 crores and furnishing of security of Rs. 132 crores to the satisfaction of the Jurisdictional Commissioner; the respondent was granted liberty to withdraw the deposited amount.

Summary order. Delay condoned; notice issued on the special leave petition and on the prayer for interim relief; dasti service permitted.

Classification of synthetic woven fabrics under Central Excise Tariff (Chapter 54.06 v. Chapter 59.11) - availability of SSI exemption on goods classifiable under Chapter 59.11 - invocation of extended period of limitation based on suppression of facts - treatment of principal as assessee where manufacture is by job-worker (Rule 12B) - entitlement to CENVAT credit and redetermination of assessable value

Classification of synthetic woven fabrics under Central Excise Tariff (Chapter 54.06 v. Chapter 59.11) - availability of SSI exemption on goods classifiable under Chapter 59.11 - Synthetic woven fabrics cleared by the appellant are classifiable under Chapter 54.06 and not under Chapter 59.11; consequently SSI exemption under Notification No. 08/2003-CE was not available for such clearances. - HELD THAT: - The Tribunal accepted the Commissioner (Appeals)'s finding that Heading 59.11 is a residual entry covering textile products and articles already in their final form for technical use and that woven fabrics normally require further processing to become textile articles for technical use. The buyers' certificates showing use in filter-bag manufacture did not establish that the fabrics were final products falling under Chapter 59.11. On the facts, synthetic woven fabrics manufactured/cleared by the appellant are properly classifiable under Chapter 54.06 and therefore the appellant was not entitled to SSI exemption under Notification No. 08/2003-CE for the clearances in dispute. [Paras 5]

Classification under Chapter 54.06 affirmed and SSI exemption denied for the goods in question.

Treatment of principal as assessee where manufacture is by job-worker (Rule 12B) - The appellant is to be treated as the assessee for central excise purposes notwithstanding manufacture through job workers by virtue of Rule 12B. - HELD THAT: - The Tribunal upheld the Commissioner (Appeals)'s application of Rule 12B (inserted vide Notification No. 24/2003-CE(NT)), which treats the principal as the assessee even when manufacture is effected through job-workers. The appellant's plea that it was not the manufacturer was rightly rejected for the purpose of invoking excise liability. [Paras 5]

Invocation of Rule 12B to treat the appellant as assessee sustained.

Entitlement to CENVAT credit and redetermination of assessable value - The question of appellant's entitlement to CENVAT credit and re-determination of assessable value was not adjudicated by the lower authority and therefore requires consideration. - HELD THAT: - The Tribunal noted that the Order-in-Appeal did not deal with the appellant's contention that, if the products are classifiable under Chapter 54.06, the appellant would be eligible to avail and utilize CENVAT credit and seek re-determination of assessable value (relying on the principles in Maruti Udyog Ltd. and Board circular). Because this aspect was not addressed below, it was not decided on the merits in the impugned order and remains to be considered afresh. [Paras 5]

Matter of CENVAT credit and redetermination of assessable value left open for fresh consideration.

Invocation of extended period of limitation based on suppression of facts - Extended period of limitation cannot be invoked because there was no suppression of facts or mens rea to evade duty; mere wrong classification or claim of benefit does not constitute suppression. - HELD THAT: - Although the Commissioner (Appeals) treated the proprietor's admission of mistaken classification as suppression and confirmed extended period invocation and equivalent penalty, the Tribunal found this approach inconsistent with other material on record. The appellant had earlier intimated classification and claim of exemption to the department (letter dated 29.04.2004) and the proprietor's statement that classification was 'mistaken' does not amount to deliberate suppression. Relying on Tribunal precedent that a claim of wrong classification or claim of notification benefit by itself is not suppression, the Tribunal held there was no case of suppression justifying extended period or penalty. [Paras 5]

Invocation of extended period and imposition of penalty on the ground of suppression set aside.

Final Conclusion: The appeal is allowed; the Commissioner (Appeals) order is set aside: classification under Chapter 54.06 is affirmed for the goods, Rule 12B treatment as assessee is sustained, extended period and penalty on suppression are quashed, and the unresolved claim for CENVAT credit/redetermination of value is left for fresh consideration.

Rule 6 of CENVAT Credit Rules, 2004 - "exempted goods" as defined in rule 2(d) of CENVAT Credit Rules, 2004 - duty of excise - National Calamity Contingent Duty (NCCD) - proportionate reversal of CENVAT credit - limitation / extended period for recovery

Rule 6 of CENVAT Credit Rules, 2004 - "exempted goods" as defined in rule 2(d) of CENVAT Credit Rules, 2004 - duty of excise - National Calamity Contingent Duty (NCCD) - Whether payment of NCCD on GSM mobile handsets removes those goods from the definition of "exempted goods" and thus avoids operation of rule 6. - HELD THAT: - The Tribunal held that the expression "duty of excise" in rule 2(d) is to be understood with reference to the levy under the Central Excise Act, 1944 and the scheme of the CENVAT Credit Rules, 2004. NCCD, although an excise-type levy, is treated separately within the CENVAT scheme (see rule 3 and provisos) and its segregation from the general CENVAT credit pool demonstrates that discharge of NCCD liability does not convert goods into non-exempted goods for the purpose of rule 2(d). Allowing CENVAT credit of inputs/input services on account of payment of NCCD would in effect permit refund of tax collected at an earlier stage, which is contrary to the CENVAT scheme. Applying this reasoning to the facts, the Tribunal concluded that the respondent falls within the ambit of rule 6 and is therefore subject to reversal/liability under that provision. [Paras 5, 6, 7]

Respondent's payment of NCCD does not exclude GSM mobile handsets from the definition of "exempted goods"; the respondent is within the ambit of rule 6 of the CENVAT Credit Rules, 2004.

Proportionate reversal of CENVAT credit - limitation / extended period for recovery - Whether the adjudicating authority properly considered the respondent's claim of proportionate reversal of credit and the bar of limitation before making the demand. - HELD THAT: - The Tribunal found that the impugned order did not examine the respondent's submissions that proportionate reversal of CENVAT credit (and payment of interest) had already been made prior to issuance of the show cause notice, nor did it consider whether the extended period of limitation for recovery was justified by requisite material. Because these aspects were not addressed, the Tribunal could not adjudicate these contentions on the record before it and set aside the original order for fresh consideration limited to these two aspects. [Paras 9, 10]

Matter remitted to the original authority to decide afresh whether proportionate reversal of credit (and payment of interest) was effected before the show cause notice and whether recovery is barred by limitation.

Final Conclusion: The Tribunal held that payment of NCCD does not exclude the goods from the definition of "exempted goods" and accordingly the respondent falls within the scope of rule 6; however, the matter is remitted to the original authority to determine (i) whether the respondent had reversed proportionate CENVAT credit and paid interest prior to issuance of the show cause notice, and (ii) whether recovery is barred by limitation, and to pass a fresh order on these points.

Refund of unutilised CENVAT credit on closure of business - Monetisation of CENVAT credit versus refund of tax collected without authority - Scheme and purpose of the CENVAT Credit Rules - Distinction between discharge of duty liability and availability of credit by suppliers

Refund of unutilised CENVAT credit on closure of business - Monetisation of CENVAT credit versus refund of tax collected without authority - Scheme and purpose of the CENVAT Credit Rules - Legality of rejection of claims for cash refund of unutilised CENVAT credit on surrender of registration and closure of business. - HELD THAT: - The Tribunal examined whether unutilised CENVAT credit remaining on closure of business and surrender of registration is refundable in cash. It distinguished earlier decisions allowing cash refund where duties were collected without authority or where the dispute related to discharge of duty liability; those cases involved ongoing business or findings that duty was collected without authority. The Tribunal followed the analysis in Voltas Ltd that the CENVAT scheme is not an exemption or refund scheme but a mechanism to prevent tax-on-tax by permitting set-off of credit against output duty. Allowing conversion of accumulated CENVAT credit into cash would amount to refunding a tax collected under authority of law and would improperly monetise a credit intended only for adjustment against duty on manufacture/clearance. Where an assessee has no duty liability (for example, on closure and absence of manufacture or possession of excisable goods), the balance credit cannot be set off and the legislative scheme did not envisage monetisation or cash refund of such credit. The Tribunal therefore held that the appellants were not entitled to cash refund of the unutilised CENVAT credit in the circumstances of these cases. [Paras 6, 7, 8]

Appeals dismissed; rejection of refund claims upheld.

Final Conclusion: The Tribunal upheld the rejection of the appellants' claims for cash refund of unutilised CENVAT credit on closure and surrender of registration, holding that the CENVAT Credit Rules do not permit monetisation of accumulated credit and that refund is not permissible in the facts of these cases.

Summary order. Special Leave Petition dismissed; impugned judgment and order of the High Court not interfered with; pending applications disposed of.

Entertainment of appeal without 25% pre-deposit - appeal to Appellate Deputy Commissioner under Section 51 of TNVAT Act - pre-deposit requirement - exclusion of period spent in writ petition for computation of limitation - payment of tax as circumstance for relaxing pre-deposit requirement

Entertainment of appeal without 25% pre-deposit - payment of tax as circumstance for relaxing pre-deposit requirement - Whether the Appellate Deputy Commissioner should be directed to entertain the statutory appeal without insisting on 25% pre-deposit. - HELD THAT: - The Court noted that the impugned revised assessment order records that the writ petitioner has paid the entire tax liability for the year 2016-17. Having regard to these peculiar facts and the undisputed payment of tax, the Court exercised judicial discretion to permit an alternate remedy by directing the jurisdictional Appellate Deputy Commissioner to entertain any statutory appeal without insisting on the 25% pre-deposit. The direction is limited to the particular factual matrix and to the relief of waiving the pre-deposit condition so that the appeal may be heard on merits in accordance with law. The Court observed that the Appellate Authority was not arrayed as a respondent and directed the revenue to communicate this order to that authority. [Paras 10, 13, 14]

Appellate Deputy Commissioner to entertain the appeal without insisting on 25% pre-deposit; appeal to be heard on merits.

Exclusion of period spent in writ petition for computation of limitation - appeal to Appellate Deputy Commissioner under Section 51 of TNVAT Act - pre-deposit requirement - Whether the period during which the writ petition was pending should be excluded while computing limitation for filing the statutory appeal. - HELD THAT: - The Court applied the principle underlying Section 14 of the Limitation Act by excluding the period from presentation of the instant writ petition (16.08.2019) to the date on which a copy of this order is made available to the petitioner, while computing limitation for any appeal to the Appellate Authority. The Court recorded that the exact date of service of the impugned order on the petitioner is not available; hence any appeal will remain subject to the limitation provisions in Section 51 of the TNVAT Act read with the exclusion ordered by this Court. This exclusion is directed to ensure that the time during which the petitioner pursued writ remedy in this Court does not prejudice the petitioner's statutory right of appeal. [Paras 11, 12]

Period from 16.08.2019 to the date copy of this order is made available shall be excluded for computing limitation for filing the statutory appeal.

Final Conclusion: Writ petition disposed by permitting the petitioner to file a statutory appeal to the jurisdictional Appellate Deputy Commissioner without the 25% pre-deposit and by excluding the period from 16.08.2019 to the date this order is made available from computation of limitation; appeal to be adjudicated on merits and revenue to intimate the Appellate Authority of this order.

Condonation of delay beyond statutory cap - power of appellate authority to condone delay - statutory limitation as absolute and unextendable - exclusion of Section 5 of the Limitation Act - appeal time-limit under the Tamil Nadu Value Added Tax Act, 2006

Condonation of delay beyond statutory cap - exclusion of Section 5 of the Limitation Act - appeal time-limit under the Tamil Nadu Value Added Tax Act, 2006 - Whether the High Court can direct TNSTAT to condone an appeal filed beyond the total statutory period of 120 days permitted under the TNVAT Act. - HELD THAT: - The Court held that the time-limit scheme under Section 58 of the TNVAT Act fixes 60 days for preferring an appeal and permits condonation only for a further period subject to a cap of 60 days in aggregate; consequently the total permissible period is 120 days. Where the statute prescribes such a cap, the appellate authority has no power to condone delay beyond that extendable period and the courts cannot invoke Section 5 of the Limitation Act to enlarge the time. The decision follows and applies the principles laid down by the Supreme Court in Singh Enterprises and Hongo India (as discussed in the earlier order of this Court), that statutory time-limits with an express cap are absolute and unextendable and that Section 5 is excluded in such cases. Applying these principles to the facts, the petition seeking a mandamus to direct TNSTAT to condone delay beyond the statutory cap was unsustainable.

Petition dismissed; Court will not direct TNSTAT to condone delay beyond the statutory cap of the TNVAT Act.

Final Conclusion: The writ petition seeking a mandamus to compel TNSTAT to entertain an appeal beyond the statutory extendable period under the TNVAT Act is dismissed; statutory caps on delay cannot be extended by invoking Section 5 of the Limitation Act.

Alternate remedy - revised assessment under Section 27(1)(a) of TNVAT Act - penalty under Section 27(3)(c) of TNVAT Act - principles of natural justice - exercise of writ jurisdiction in fiscal matters - prohibition on bypassing statutory remedy in revenue matters

Alternate remedy - exercise of writ jurisdiction in fiscal matters - prohibition on bypassing statutory remedy in revenue matters - Maintainability of writ petition in view of availability of statutory appeal under Section 51 of the TNVAT Act. - HELD THAT: - The Court held that the writ petitioner has an alternate statutory remedy by way of appeal to the Appellate Deputy Commissioner under Section 51 of the TNVAT Act and there is no contention that such remedy is ineffectual or that the respondent acted without jurisdiction. The Court found no exceptional circumstance warranting exercise of discretionary writ jurisdiction in a fiscal matter and applied the principle that alternate remedies must be treated with rigour in revenue cases, as expounded in the cited precedents. Therefore the rule of alternate remedy precludes interference by writ petition in the present facts; the petitioner was permitted to pursue the statutory remedy and all questions on merits were left open for that forum. [Paras 9, 10, 11, 12, 13]

Writ petition is not maintainable in view of the available alternate remedy; petitioner directed to pursue appeal under Section 51 of the TNVAT Act and the petition is dismissed.

Principles of natural justice - revised assessment under Section 27(1)(a) of TNVAT Act - Whether the impugned revised assessment complied with principles of natural justice. - HELD THAT: - The Court examined the impugned order and the record of proceedings and found that the revisional notice afforded the petitioner an opportunity to show cause and that objections were filed on 05.12.2017. On this basis the Court concluded that the proviso to Section 27(1)(a) requiring reasonable opportunity to be given was complied with and there was no violation of principles of natural justice. [Paras 3, 4, 6]

The revised assessment was made after giving reasonable opportunity to show cause; there is no breach of principles of natural justice.

Final Conclusion: The writ petition challenging the revised assessment is dismissed as not maintainable in view of the available statutory appeal under Section 51 of the TNVAT Act; the petitioner is at liberty to pursue that remedy and questions on merits are left open; no order as to costs.

Penalty under Section 27(4) of TNVAT Act - proviso to Section 27(4) - requirement of reasonable opportunity to show cause - natural justice - personal hearing before imposition of penalty - setting aside assessment orders for non adherence to mandatory procedure and remand for fresh decision - revival of assessment orders if taxpayer fails to avail personal hearing

Penalty under Section 27(4) of TNVAT Act - proviso to Section 27(4) - requirement of reasonable opportunity to show cause - natural justice - personal hearing before imposition of penalty - Impugned assessment orders imposing 100% penalty under Section 27(4) were passed without giving the writ petitioner an opportunity to show cause; validity of such imposition. - HELD THAT: - The Court observed that the proviso to Section 27(4), as it stands, mandates that no penalty under that provision shall be levied without giving a reasonable opportunity to show cause. The Court recorded that, on the material before it, although a provisional notice was issued, there was nothing to demonstrate that the writ petitioner was afforded a reasonable opportunity of showing cause specifically against the imposition of penalty under Section 27(4). In view of the statutory requirement and the principles of natural justice, the Court concluded that penalty had been imposed without adherence to the mandatory procedural safeguard and therefore the orders could not be sustained on that ground alone.

Impugned assessment orders imposing penalty under Section 27(4) are set aside for non adherence to the proviso requiring an opportunity to show cause.

Setting aside assessment orders for non adherence to mandatory procedure and remand for fresh decision - reassessment / redetermination after hearing - revival of assessment orders if taxpayer fails to avail personal hearing - Appropriate remedy and procedure following setting aside of the impugned orders - directions for personal hearing, further objections, reassessment timeframe and consequence of non appearance. - HELD THAT: - The Court directed that the impugned revised assessment orders for the two assessment years be set aside solely on the ground of failure to afford the opportunity mandated by the proviso to Section 27(4), without expressing any opinion on the merits. By consent, a personal hearing before the respondent was fixed; the writ petitioner was to file any further objections (particularly on imposition of penalty) and, if the petitioner availed the hearing, the respondent was to consider all objections, redo the assessment and pass fresh revised assessment orders expeditiously and in any event within eight weeks from the personal hearing. The Court further directed that if the writ petitioner did not avail the personal hearing, the impugned revised assessment orders would stand revived automatically. The redone orders were to be communicated to the petitioner under the statutory rules and due acknowledgement.

Matter remanded for fresh consideration: personal hearing to be granted; assessment to be redone within eight weeks if hearing is availed; impugned orders to revive if the petitioner fails to appear.

Final Conclusion: The writ petitions were allowed to the extent that the revised assessment orders for AY 2013 14 and AY 2014 15 imposing penalty under Section 27(4) were set aside for failure to afford the opportunity to show cause; the matter was remanded for personal hearing and fresh decision within a fixed timeframe, with revival of the impugned orders if the petitioner does not avail the hearing.

Purchase suppression - misuse of Import Export Code - claim for production of bills of entry and import particulars - domain of Customs Commissionerate - alternate statutory remedy - relegation to statutory appeal under Section 51 of TNVAT Act - Article 226 - rule of alternate remedy in revenue matters - condonation of delay and exclusion of time under Section 14 of Limitation Act

Misuse of Import Export Code - claim for production of bills of entry and import particulars - domain of Customs Commissionerate - Whether the respondent was obliged to furnish bills of entry and import particulars to meet the writ petitioner's plea that its IEC had been misused and that purchases were not effected by it. - HELD THAT: - The Court recorded that the writ petitioner had alleged misuse of its IEC and had lodged a complaint with the Customs Commissionerate on 11.12.2017. The Court found no material showing that the writ petitioner pursued that complaint to its conclusion over the subsequent period of about two and a half years. The Court held that examination of the alleged misuse of the IEC was within the domain of the Customs Commissionerate and, therefore, the respondent could not be faulted for passing the revised assessment on the ground of purchase suppression. The Court observed that if the writ petitioner pursues the complaint to a favourable conclusion before the Customs authority, documents such as bills of entry and import particulars could then be produced before the Appellate Authority in the statutory appeal to support the writ petitioner's case. [Paras 9, 15, 16]

Respondent was not obliged in writ jurisdiction to furnish the bills of entry; the issue of alleged IEC misuse lies with the Customs Commissionerate and may be pursued by the assessee and placed before the Appellate Authority.

Purchase suppression - alternate statutory remedy - relegation to statutory appeal under Section 51 of TNVAT Act - Article 226 - rule of alternate remedy in revenue matters - condonation of delay and exclusion of time under Section 14 of Limitation Act - Whether the writ petitions were maintainable or should be relegated to the statutory appeal under Section 51 of the TNVAT Act. - HELD THAT: - The Court applied the well settled principle that writ jurisdiction under Article 226 should not ordinarily bypass effective statutory remedies, particularly in revenue matters. Noting that the impugned revised assessment orders were not shown to be passed without jurisdiction, without an opportunity to show cause, or in circumstances constituting an exception to the alternate remedy rule, the Court held that the writ petitions were not a proper vehicle to adjudicate the challenge. The Court therefore exercised its discretion to relegate the writ petitioner to pursue the statutory appeal to the jurisdictional Appellate Deputy Commissioner under Section 51 of the TNVAT Act. The Court also observed that the writ petitioner may seek condonation of delay and/or exclusion of time spent in the writ proceedings before the Appellate Authority by invoking Section 14 of the Limitation Act, which the Appellate Authority shall consider on merits. [Paras 17, 20, 21, 22, 23]

Writ petitions dismissed; petitioner relegated to file statutory appeals under Section 51 of the TNVAT Act (with liberty to seek condonation of delay/exclusion of time under Section 14 of the Limitation Act).

Final Conclusion: Writ petitions challenging the revised assessment orders for Assessment Years 2013-14 and 2015-16 dismissed; petitioner relegated to the statutory appellate remedy under Section 51 of the TNVAT Act and permitted to pursue its complaint before the Customs Commissionerate and to obtain and place any consequent import documents before the Appellate Authority; no order as to costs.

Fixed dose combination (FDC) - classification of a package versus classification of a drug - therapeutic justification for combination therapy - prohibition under Section 26A of the Drugs and Cosmetics Act - regulation of packaging versus prohibition of a drug

Fixed dose combination (FDC) - classification of a package versus classification of a drug - Whether the Combikit is a drug or a fixed dose combination (FDC). - HELD THAT: - The Court found that the Combikit comprises three separately licensed tablet formulations (Fluconazole, Azithromycin and Secnidazole) packaged together in a single strip but retaining separate batch numbers, manufacture and expiry dates, and instructions indicating that the tablets are to be administered at different times. The DCGI had earlier communicated that the combi kit was not an FDC and separate licences were required. On these material facts the Court concluded that the Combikit is not a single drug and does not constitute an FDC, so that the statutory regime applicable to a drug/FDC under the Act does not apply to the mere packaging of separately licensed drugs. [Paras 14, 15, 16, 18]

The Combikit is not a drug or an FDC.

Prohibition under Section 26A of the Drugs and Cosmetics Act - therapeutic justification for combination therapy - regulation of packaging versus prohibition of a drug - Whether a notification under Section 26A could lawfully proscribe the Combikit (i.e., proscribe packaging or a prescribed therapy) on grounds of lack of therapeutic justification or risk to human beings. - HELD THAT: - Section 26A empowers the Central Government to regulate, restrict or prohibit the manufacture, sale or distribution of a drug or cosmetic where the drug is likely to involve risk to human beings or lacks the therapeutic value claimed. Because the Court concluded that the Combikit is not a drug or FDC but a packaging of three separate drugs to be taken at different times, the Court held that the statutory power under Section 26A could not be invoked to proscribe such packaging or to proscribe a therapy prescribed by a medical practitioner. The Court noted that if the therapy itself is irrational, action lies against the prescribing practitioner, and packaging concerns should be addressed under packaging regulations, but Section 26A is not available to prohibit packaging or prescription of a therapy. Consequently the sub committee's recommendation and the ensuing notification under Section 26A were held to be inapplicable to the Combikit. [Paras 12, 13, 22, 23, 24]

Notification under Section 26A could not lawfully be used to proscribe the Combikit; the provisions of Section 26A are inapplicable to the packaging/therapy in question.

Final Conclusion: The impugned notification proscribing the Combikit is set aside on the ground that the Combikit is not a drug or FDC and Section 26A could not be invoked to prohibit the packaging or prescribed therapy; pending applications disposed of and parties to bear their own costs.