TaxTMI Updates e-Newsletter
Sep 07,2021

Rectification of mistake - mistake apparent on record - maintainability of review/rectification application under Section 161 - intimation under DRC-01A versus initiation of proceedings by show cause notice - inadmissibility and dismissal of ROM application

Rectification of mistake - mistake apparent on record - maintainability of review/rectification application under Section 161 - Whether the application for rectification of mistake under Section 161 (ROM) is maintainable where the applicant challenges the correctness and legality of the earlier AAR ruling instead of pointing out a mistake apparent on the face of the record. - HELD THAT: - The Authority examined the ROM application and the material placed on record and found that the applicant sought substantive reconsideration of the correctness and legality of Order No. KAR ADRG 57/2020 dated 16/12/2020 rather than identifying any obvious or patent error in that order. The Authority applied the established test for a 'mistake apparent on the record', noting that such a mistake must be glaring, obvious and self-evident and not a question that requires elaborate argument, investigation or long-drawn reasoning. Reliance was placed on the principle noted in CIT v. Bhagwati Developers P. Ltd. that a decision on a debatable point cannot be treated as a mistake apparent from the record. As the applicant's contentions amounted to disputing the correctness of the ruling (including submissions regarding DRC-01A being an intimation and the role of show cause notice in initiating proceedings) rather than pointing to any patent clerical or arithmetic error or an obvious legal misstatement, there was no error apparent on the face of the record. Consequently, the ROM application did not satisfy the statutory threshold for rectification under Section 161 and was held to be not maintainable. [Paras 5]

The ROM application is not maintainable for want of any mistake apparent on the record and is dismissed as inadmissible under Section 98(2) of the CGST/KGST Act, 2017.

Intimation under DRC-01A versus initiation of proceedings by show cause notice - inadmissibility and dismissal of ROM application - Whether the contention that issuance of DRC-01A (an intimation) cannot initiate proceedings and therefore the earlier ruling requires rectification was a ground for rectification. - HELD THAT: - The Authority considered the applicant's submission that DRC-01A is merely an intimation and that only a show cause notice can initiate proceedings, and observed that this contention was advanced as a challenge to the correctness of the earlier ruling rather than as a demonstration of an obvious mistake in it. Given that the issue raised was debatable and required consideration of legal correctness rather than identification of a patent error, it did not fall within the scope of rectification for mistakes apparent on the record. Therefore, this contention did not render the earlier order amenable to rectification in a ROM proceeding. [Paras 2, 3, 5]

The submission concerning DRC-01A vis-a -vis show cause notice does not constitute a mistake apparent on the record; the contention cannot be remedied through a ROM application and the plea is rejected.

Final Conclusion: The application for rectification under Section 161 of the CGST/KGST Act, 2017 was dismissed as inadmissible because no mistake apparent on the face of the record was shown; the applicant's challenge amounted to disputing the correctness of the earlier AAR ruling rather than identifying an obvious patent error, and therefore the ROM application could not be maintained.

Pre-deposit requirement under Section 107(6)(b) of the Central Goods and Services Tax Act, 2017 - condonation of delay under Section 107(4) of the Central Goods and Services Tax Act, 2017 - deduction from cash ledger as satisfaction of pre-deposit - appeal maintainability linked to compliance with pre-deposit

Pre-deposit requirement under Section 107(6)(b) of the Central Goods and Services Tax Act, 2017 - deduction from cash ledger as satisfaction of pre-deposit - appeal maintainability linked to compliance with pre-deposit - Validity of dismissal of the appeal solely on the ground that the 10% pre-deposit under Section 107(6)(b) had not been made when the entire tax liability had already been deducted from the petitioner's cash ledger. - HELD THAT: - The Court examined the material showing that the appeal was pending and that the tax liability subject to the appeal was deducted from the petitioner's cash ledger on 15/01/2020. Where the amount challenged in the appeal has been recovered by deduction, that deduction satisfies the requirement of making the pre-deposit for purposes of maintainability of the appeal. Consequently, dismissal of the appeal solely on the technical ground of non-payment of the 10% pre-deposit, without regard to the fact of deduction, was not justified. The Court therefore set aside the order of dismissal and directed the authority to proceed in accordance with the observations made, so that the appellate process is not foreclosed by a purely technical construction when the statutory monetary requirement has effectively been met by deduction. [Paras 4, 5]

Order dismissing the appeal only on the ground of non-deposit of 10% was set aside and the respondents were directed to proceed in accordance with the observations made.

Condonation of delay under Section 107(4) of the Central Goods and Services Tax Act, 2017 - appeal maintainability linked to compliance with pre-deposit - Requirement to adjudicate the pending application for condonation of delay and, if allowed, to hear the appeal on merits. - HELD THAT: - The Court noted that an application for condonation of delay was pending when the tax liability was deducted. The appellate authority is empowered under Section 107(4) to consider sufficient cause and extend the period for filing the appeal. In light of the deduction satisfying the pre-deposit requirement, the authority must first decide the condonation application and, if condonation is granted, proceed to adjudicate the appeal on merits. The Court directed the respondents to hear and decide the condonation application and thereafter hear the appeal in accordance with these observations. [Paras 4, 5]

The appellant's application for condonation of delay must be heard and decided; if allowed, the appeal shall be heard on merits.

Final Conclusion: The impugned order dated 17/06/2020 dismissing the appeal for non-deposit of 10% is set aside; the respondents are directed to decide the pending condonation application and, if condonation is allowed, hear the appeal on merits in accordance with the observations of the Court.

Withdrawal of writ petition with liberty to file statutory appeal - extension of limitation by the Supreme Court - pre-deposit and automatic stay under Section 107 - lifting of bank attachment upon filing appeal and pre-deposit

Withdrawal of writ petition with liberty to file statutory appeal - Petition for withdrawal of writ petitions granted with liberty to file statutory appeals. - HELD THAT: - The petitioner sought permission to withdraw the writ petitions and to be allowed to pursue statutory appeals under Section 107(1) of the Tamil Nadu Goods and Services Tax Act, 2017. The Court accepted the request and dismissed the writ petitions as withdrawn while expressly granting liberty to the petitioner to file appeals within the timeframe directed by the Court. [Paras 1, 3]

Writ petitions dismissed as withdrawn and liberty granted to file statutory appeals within two weeks.

Extension of limitation by the Supreme Court - Delay in filing statutory appeals excused by reference to the Supreme Court's extension of limitation orders. - HELD THAT: - Although the statutory period for filing appeals is three months from receipt of the order (December, 2020), the Court relied on the series of Supreme Court orders extending limitation (cited collectively) and treated the extended limitation as current, thereby permitting the petitioner to proceed despite the initial expiry of the limitation period. [Paras 2]

Extension of limitation as granted by the Supreme Court was recognised and applied to permit filing of the appeals.

Pre-deposit and automatic stay under Section 107 - lifting of bank attachment upon filing appeal and pre-deposit - Filing of appeal with 10% pre-deposit triggers automatic stay of balance and mandates immediate lifting of bank account attachment upon intimation to Assessing Authority. - HELD THAT: - The Court recorded that upon filing the statutory appeals along with the prescribed pre-deposit of 10%, the operation of Section 107 will automatically stay the balance of the demand. The Court directed that upon filing the appeals with the pre-deposit and communicating the same to the Assessing Authority, the existing attachment of the petitioner's bank account shall be lifted forthwith. The Court also denied costs and dismissed connected miscellaneous petitions. [Paras 3]

Upon filing appeals with 10% pre-deposit and intimation to the Assessing Authority, automatic stay applies and the bank account attachment shall be lifted immediately.

Final Conclusion: The writ petitions are dismissed as withdrawn with liberty to file statutory appeals within two weeks; the Supreme Court's extensions of limitation were applied to permit filing; filing the appeals with 10% pre-deposit will automatically stay the balance and the Assessing Authority must lift the bank account attachment on being intimated.

Notice under Section 122(1)(2) of the Goods and Services Tax Act, 2017 - Detention and seizure of goods and conveyance in transit - Section 129 of the Goods and Services Tax Act, 2017 - Right to be heard - Interim judicial interference

Notice under Section 122(1)(2) of the Goods and Services Tax Act, 2017 - Interim judicial interference - Right to be heard - Petitioner must comply with the notice issued under Section 122(1)(2) and the court will not interdict the enquiry at this stage. - HELD THAT: - The Court held that Ext.P6 is a notice under Section 122(1)(2) of the Act and that adjudicatory proceedings under that notice have not yet commenced to a stage warranting judicial interference. The petitioner was therefore directed to appear before the competent Authority at the time specified in Ext.P6. The Court declined to stay or quash the notice or the ongoing enquiry, but ordered protective safeguards to allay the petitioner's apprehensions. [Paras 6]

Petitioner directed to comply with Ext.P6 and appear before the competent Authority; no injunction against the enquiry under Section 122(1)(2).

Detention and seizure of goods and conveyance in transit - Section 129 of the Goods and Services Tax Act, 2017 - Right to be heard - Respondents must not initiate action under Section 129 without proper notification and specific consideration of the petitioner's explanation that the vehicle carried no consignment. - HELD THAT: - Although the Court did not finally adjudicate the legality of the detention notices (Exts.P3/P3(a)), it directed that before any action under Section 129 is taken the respondents must give the petitioner proper notice and specifically advert to the explanation furnished in Ext.P5 - in particular the contention that the vehicle had no consignment loaded and therefore Section 129 may not apply. This is a protective direction requiring the Authority to consider the petitioner's explanation before initiating detention/seizure proceedings under Section 129. [Paras 6]

Respondents to ensure proper notification and to specifically consider Ext.P5 explanation before initiating any action under Section 129.

Final Conclusion: Writ petition disposed by directing the petitioner to appear in response to the notice under Section 122(1)(2); no interim interference with the enquiry, and respondents ordered to afford proper notice and to advert to the petitioner's explanation before commencing any Section 129 proceedings.

Striking off defence for non-compliance with interlocutory deposit order - Order XV-A CPC - tenant's liability to pay GST on rent

Order XV-A CPC - striking off defence for non-compliance with interlocutory deposit order - Whether the defence of the respondents should be struck off for non-compliance with the interlocutory deposit directions passed under Order XV-A CPC. - HELD THAT: - The Court found that the respondents were directed by the trial Court in I.A.No.451 of 2019 (as modified by this Court in C.R.P.No.263 of 2020) to deposit specified arrears of rent and to continue monthly payments, and that this order was further clarified to include rent for November, 2018 and payment of GST thereon. The record (as reflected in the table referred to by the Court below) shows deposits by respondents for certain months but persistent defaults for an extended period; the lower Court itself recorded that the respondents remained due for monthly rent plus GST for 14 months. Given that clear non-compliance with the interlocutory directions was established, Rule (2) of Order XV-A CPC - which permits striking off the defence where required deposits are not made as directed - was applicable. The High Court, finding considerable force in the petitioners' contention and noting the admitted defaults, held that the defence was liable to be struck off and directed the trial Court to proceed accordingly. [Paras 36, 37, 38, 39, 40]

The three revision petitions are allowed; the defence of the respondents in O.S.No.230 of 2019 is struck off for non-compliance with the deposit directions and the trial Court is directed to proceed further.

Tenant's liability to pay GST on rent - Whether the liability to pay Goods and Services Tax on the rent specified in the interlocutory order rests on the tenants/respondents. - HELD THAT: - This Court in C.R.P.No.263 of 2020 modified the interlocutory direction to require the respondents to deposit arrears of GST on rent from November, 2018 till 12.03.2020 and to pay GST @18% on the monthly rent going forward. The present order records that by virtue of that modification the liability to pay GST lies on the tenants. The trial Court's subsequent findings noted that GST had not been paid to the Competent Authority as directed. The High Court treated the GST liability as part of the obligations the respondents failed to discharge when assessing non-compliance under Order XV-A CPC. [Paras 28, 29, 30, 35, 36]

The Court confirmed that the liability to pay GST on the rent is that of the respondents and that their non-payment of GST formed part of the non-compliance leading to striking off of defence.

Costs for successful application - Whether costs should be imposed on the respondents for the revisions. - HELD THAT: - Having allowed the three revision petitions on the ground of non-compliance with interlocutory deposit orders, the High Court directed costs to be paid by the respondents to the petitioners. The court exercised its discretion to award costs concomitantly with allowing the revisions and striking off the defence. [Paras 40]

Costs of Rs. 1,00,000/- are imposed on the respondents to be paid to the petitioners.

Final Conclusion: The High Court allowed the three revisions, held that the respondents had not complied with the interlocutory deposit directions (including GST obligations) and, invoking Rule (2) of Order XV-A CPC, struck off the respondents' defence in O.S.No.230 of 2019; the trial Court was directed to proceed and costs were awarded to the petitioners.

Bail under Section 439 Cr.P.C. - Investigation likely to be hampered - Judicial custody - Forgery and illegal cross-border export/import - GST evasion and forged e-way bills - Expedition of investigation

Bail under Section 439 Cr.P.C. - Investigation likely to be hampered - Judicial custody - Forgery and illegal cross-border export/import - GST evasion and forged e-way bills - Application for bail by the accused in Karimganj P.S. Case No. 535/2021 - HELD THAT: - The Court examined the case diary and the materials on record, including statements recorded under Section 164 Cr.P.C., which prima facie indicate that the accused was engaged in export/import of coal to Bangladesh using forged documents, forged e-way bills, transporting coal in excess of declared quantities or without payment of GST, illegal stocking without license, and potentially moving coal from banned stocks. The investigation was described as being in a preliminary stage and a grant of bail at this stage would, in the Court's view, be likely to hamper the ongoing inquiry. The accused has been in judicial custody since 02.06.2021. Balancing the prima facie gravity of the allegations and the stage of investigation, the Court concluded that continued custody was necessary to protect the integrity of the investigation.

Bail application rejected and investigating officer directed to expedite investigation.

Final Conclusion: Bail refused on the ground that prima facie material discloses offences involving forgery, illegal cross-border export/import and GST-related irregularities, and release at the preliminary stage would likely hamper investigation; investigation to be expedited.

Unexplained cash credit under section 68 - burden of proof on assessee to prove identity, genuineness and creditworthiness - deeming provision construed as "may" not "shall" - amendment to section 68 prospective from AY 2013-14 - assessment on credited sum as income

Unexplained cash credit under section 68 - burden of proof on assessee to prove identity, genuineness and creditworthiness - amendment to section 68 prospective from AY 2013-14 - Whether the addition of Rs. 1,00,00,000 made by the Assessing Officer as unexplained cash credit under section 68 was sustainable. - HELD THAT: - The Tribunal found that the assessee had furnished detailed documentary evidence to discharge the primary onus under section 68 by establishing the identity of the investor companies, the genuineness of the transactions and the creditworthiness of the investors, including share application forms, returns, audited accounts, bank statements, share certificates and affidavits of directors. The Assessing Officer himself issued notices under section 133(6) to the investor companies and received their replies and supporting documents, which demonstrated existence of the investors and records of the transactions. The Tribunal observed that the amended provision of section 68 (requiring proof of source of source) is prospective and did not apply to AY 2012-13. The Tribunal emphasised that the wording of the deeming provision uses "may" and not "shall", so unsatisfactoriness of explanation does not automatically convert the credited sum into assessable income. Reliance was placed on earlier authorities to the effect that when the assessee establishes identity of creditors and production of documents, the burden shifts to the Department to pursue enquiries against the creditors themselves, and mere non-appearance of creditors (or findings irrelevant to the assessee) is not a ground to treat the receipts as non-genuine; the proper course would be to examine and, if necessary, assess the creditors. The Tribunal further noted that the Assessing Officer's adverse inquiry findings were not supported as they related to some other assessee and not to the assessee before the Tribunal. In the facts of the case, having regard to the documents on record and responses to notices, the assessee's onus stood discharged and the addition under section 68 was not sustainable. [Paras 10, 11, 12, 13, 14]

Addition of Rs. 1,00,00,000 treated as unexplained cash credit under section 68 deleted and appeal allowed.

Final Conclusion: The Tribunal held that the assessee had discharged the onus under section 68 for AY 2012-13, the Assessing Officer's adverse findings were not sustainable (including findings said to pertain to another assessee), the prospective amendment to section 68 did not apply, and accordingly the addition was deleted and the appeal allowed.

Reopening of assessment on reason to believe - reassessment based on information received from investigation wing - additions for unsubstantiated/bogus purchases - estimation of unexplained purchases by applying a percentage

Reopening of assessment on reason to believe - reassessment based on information received from investigation wing - Validity of reassessment/reopening of assessment for A.Y. 2012-13 - HELD THAT: - The reopening was predicated on information from the Directorate General of Income Tax (Inv.) that the assessee had made suspicious purchases in earlier years which had given rise to additions accepted by the assessee, together with discrepancies in TDS figures. At the stage of issuance of notice what is required is material on which a reasonable person could form the requisite belief that income had escaped assessment; an established escapement is not necessary. The Tribunal found that the AO had relevant material and accordingly formed the requisite opinion to reopen proceedings; the assessee's objections were considered and disposed of. On these facts the reassessment proceedings were held to be valid and the legal challenge to reopening was dismissed. [Paras 3, 4]

Reopening and reassessment for A.Y. 2012-13 upheld as valid.

Additions for unsubstantiated/bogus purchases - estimation of unexplained purchases by applying a percentage - Quantum of addition in respect of disputed purchases - HELD THAT: - During assessment the AO found purchases from specified parties which the assessee failed to satisfactorily substantiate, and made additions accordingly. Having regard to consistency with earlier years (where a 15% estimation of such purchases was accepted), the Tribunal applied the same consistent approach and directed the AO to estimate the addition at 15% of the total disputed purchases, deleting the balance addition. The Tribunal adopted a uniform percentage estimation as a pragmatic and consistent method of quantification. [Paras 3, 5]

Addition confirmed in part and restricted to 15% of the disputed purchases; remaining addition deleted.

Final Conclusion: Appeal partly allowed: reassessment proceedings for A.Y. 2012-13 sustained; on merits the addition in respect of unsubstantiated purchases is restricted to an estimation of 15% of the disputed purchases, with the balance deleted.

Pre-requisite enquiry under Section 148A before issuance of notice under Section 148 - validity of executive notifications deferring applicability of amended statutory provisions - delegation of legislative power by Parliament to the Central Government to extend or specify commencement dates - conditional legislation under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - saving of pre-amendment reassessment mechanism by notification

Pre-requisite enquiry under Section 148A before issuance of notice under Section 148 - saving of pre-amendment reassessment mechanism by notification - validity of executive notifications deferring applicability of amended statutory provisions - Validity of notice dated 30.06.2021 issued under Section 148 for Assessment Year 2015-2016 notwithstanding insertion of Section 148A effective 01.04.2021. - HELD THAT: - The Court held that the Finance Act, 2021 inserted Section 148A, which prescribes pre-issue enquiry and opportunity of hearing before issuing a notice under Section 148. However, the central issue was whether the notice dated 30.06.2021 was vitiated by non compliance with Section 148A. The Court examined notifications issued under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and observed that the Central Government, exercising powers under section 3 of that Act, issued notifications dated 31.03.2021 and 27.04.2021 which extended the time-limits for actions under the Income tax Act and expressly provided that for the purposes of notices under Section 148 the provisions of Sections 148, 149 and 151 as they stood on 31.03.2021 would apply. In the circumstances of the pandemic and lockdown, Parliament had delegated conditional power to the Executive to defer applicability of amended provisions to enable administrative flexibility. The Court found such delegation to be a permissible exercise of conditional legislation and not an unconstitutional abdication of legislative power, referring to the principle that execution of temporal deferment by notification is within the legislative scheme. Consequently, the pre amendment operation of Section 148 was insulated and saved up to 30.06.2021 by the notifications, and the notice issued on 30.06.2021 was not invalid for want of compliance with Section 148A. [Paras 7, 8, 9, 10, 11]

The notice dated 30.06.2021 issued under Section 148 is valid and the petitions are dismissed.

Final Conclusion: In view of notifications issued under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 deferring the applicability of the amendment and saving the pre-amendment provisions, the notice under Section 148 dated 30.06.2021 is upheld and the writ petitions are dismissed.

Notice under Section 148 - section 148A - pre-issuance enquiry and hearing - executive notification extending time limits under the Taxation & Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - delegation to the Central Government for conditional commencement of amended provisions - validity of reassessment notice during pandemic related extensions

Notice under Section 148 - section 148A - pre-issuance enquiry and hearing - executive notification extending time limits under the Taxation & Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - validity of reassessment notice during pandemic related extensions - Validity of the notice dated 30.06.2021 issued under Section 148 for Assessment Year 2014-15 in view of insertion of Section 148A and subsequent executive notifications extending pre amendment provisions. - HELD THAT: - The court considered that the Finance Act, 2021 inserted Section 148A with pre issuance obligations but the Parliament had empowered the Central Government under the Taxation & Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 to specify consequential dates. In exercise of that delegated power the Ministry of Finance issued notifications which (i) treated 31.03.2021 as the end date for the earlier regime and (ii) extended the time limit for actions such as issuance of notice under Section 148 first to 30.04.2021 and thereafter to 30.06.2021, with express clarification that for issuance of notice under Section 148 the provisions as they stood on 31.03.2021 would apply. The deferment of the operation of the amended regime was held to be a permissible instance of conditional legislation and administrative delegation necessitated by pandemic lockdowns which impeded statutory compliance and departmental functioning. The notifications therefore insulated the pre amendment reassessment mechanism up to 30.06.2021 and preserved the authority to issue notices under Section 148 as it existed prior to insertion of Section 148A. Relying on these notifications and the legislative scheme, the court concluded that the notice dated 30.06.2021 was issued within the extended period when the pre amendment provisions applied and was not vitiated for failure to follow Section 148A procedures.

The notice dated 30.06.2021 under Section 148 for Assessment Year 2014-15 is valid; the petition is dismissed.

Final Conclusion: In the exceptional circumstances of the pandemic and pursuant to valid notifications issued under the Taxation & Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the pre amendment regime governing issuance of notices under Section 148 was extended up to 30.06.2021; the impugned notice of 30.06.2021 is therefore lawful and the writ petition is dismissed.

Reopening of assessment - reason to believe supported by tangible material and live link - disclosure fully and truly of all material facts - change of opinion v. new material - Explanation 1 to Section 147 - production of books not amounting to disclosure - Explanation 2(c) to Section 147 - deemed cases of under assessment/excess relief/excess allowance - Proviso to Section 147 - conditions for reopening beyond four years - assessing officer's subjective satisfaction and limited scope of judicial review in writ proceedings

Proviso to Section 147 - conditions for reopening beyond four years - Explanation 2(c) to Section 147 - deemed cases of under assessment/excess relief/excess allowance - reason to believe supported by tangible material and live link - Validity of reopening the assessment for Assessment Year 2009-10 beyond four years under the proviso to Section 147/notice under Section 148. - HELD THAT: - The court examined the reasons recorded for reopening and held that the Assessing Officer had 'reason to believe'-based on materials in the assessee's annual report and the assessment record-that under-assessment and excessive relief/allowances had been made, bringing the case within Explanation 2(c) (deemed cases). The proviso to Section 147 requires satisfaction of any one of the stated conditions for reopening beyond four years; the presence of a traced under-assessment supplies the requisite live link between the material and the belief. The court also reiterated that 'reason to believe' must be supported by tangible material and a live link to formation of belief, but once such prima facie connection exists the assessing authority is entitled to proceed with reassessment for adjudication on merits.

Reopening beyond four years was lawful as the case fell within Explanation 2(c) and the Assessing Officer possessed a prima facie 'reason to believe' supported by material enabling reassessment proceedings to continue.

Disclosure fully and truly of all material facts - Explanation 1 to Section 147 - production of books not amounting to disclosure - change of opinion v. new material - Whether the reopening was barred as a mere change of opinion or was prompted by new/findings of under assessment despite production of books and accounts. - HELD THAT: - The court found that although the assessee produced accounts and disclosed accounting policy changes in its annual report, the original assessment order was cryptic and did not deal with the specific inferences later relied upon by the Assessing Officer. Explanation 1 clarifies that mere production of books does not necessarily constitute disclosure of every material fact; where the assessing authority discovers or discerns from the material an under assessment or excessive allowance, reopening is not defeated as a mere change of opinion. The court concluded that the reassessment was founded on fresh factual inferences traceable to the material, not merely a retrospective change of opinion from the original assessment.

Reopening was not a mere change of opinion; the Assessing Officer's action was based on identified under assessment/inferences from the material and therefore not vitiated on that ground.

Assessing officer's subjective satisfaction and limited scope of judicial review in writ proceedings - reason to believe supported by tangible material and live link - Extent to which High Court may examine sufficiency of reasons for reopening in writ jurisdiction and whether it should re open accounting/arithmetical issues. - HELD THAT: - The court emphasised that in writ proceedings the High Court is not an expert forum to re compute accounting or re investigate arithmetic; its role is limited to testing whether there is a prima facie reason and a live link between the material and the Assessing Officer's belief. If objective satisfaction is recorded that such prima facie connection exists, the assessing authority may be permitted to continue reassessment so that the assessee can be heard and the matter adjudicated. Detailed accounting scrutiny and assessment on merits must be left to the reassessment process.

The High Court will not delve into technical accounting computations; having found a prima facie material basis for the Assessing Officer's belief, the court declined to interfere and allowed reassessment proceedings to continue.

Final Conclusion: Writ petition dismissed. The reopening under Section 147/148 for Assessment Year 2009-10 was held to be permissible on the basis that the Assessing Officer had a prima facie 'reason to believe' grounded in materials amounting to deemed under-assessment under Explanation 2(c); reassessment proceedings may continue and the assessee shall have opportunity to contest the merits.

Reopening of assessment after four years - requirement of failure to disclose fully and truly all material facts - reasons to believe recorded under Section 148 - to be tested on the basis of the reasons recorded at the time of notice and not to be supplemented - proviso to Section 147 - limitation on reopening beyond four years conditioned on nondisclosure of material facts

Reopening of assessment after four years - requirement of failure to disclose fully and truly all material facts - Validity of notice under Section 148 to reopen assessment for A.Y. 2012-13 where reasons recorded do not specify what material facts were not disclosed - HELD THAT: - The Court held that where an assessment is sought to be reopened after the expiry of four years from the end of the relevant assessment year, the proviso to Section 147 requires that the income sought to be assessed to have escaped assessment must be by reason of the assessee's failure to disclose fully and truly all material facts necessary for assessment. The reasons recorded for reopening must indicate what material facts were not disclosed; a general recital that there was such failure is insufficient. In the present case the reasons recorded merely alleged that capital gain had been included in gross total income and that deduction under Section 10A/10AA was allowed against such income, but did not identify any specific material fact which the assessee failed to disclose. The assessment order itself and the computation show that the short term capital gain was brought on record and set off. On this basis the impugned notice dated 29th March 2019 lacked jurisdiction and was invalid. [Paras 8, 11, 12]

Notice dated 29th March 2019 to reopen assessment for A.Y. 2012-13 quashed for failure to record specific material nondisclosure as required by proviso to Section 147; consequential order set aside.

Reasons to believe recorded under Section 148 - to be tested on the basis of the reasons recorded at the time of notice and not to be supplemented - Whether the assessing officer's reasons for reopening can be supplemented or cured by affidavit or subsequent explanation - HELD THAT: - The Court reiterated the settled principle that the validity of reopening must be tested on the basis of the reasons recorded at the time of issuing the notice under Section 148; those reasons cannot be improved, supplemented or substituted by later affidavits or oral submissions. Reliance on post hoc affidavits claiming that certain facts 'came to the notice' of the assessing officer did not cure the deficiency in the recorded reasons. As the recorded reasons themselves did not identify any undisclosed material fact, supplementation by affidavit could not validate the reopening. [Paras 8, 10]

Affidavit or subsequent explanations cannot cure inadequacy in the reasons recorded; recorded reasons alone must justify reopening and here they do not.

Final Conclusion: The notice dated 29th March 2019 under Section 148 and the order dated 16th September 2019 rejecting objections are set aside because the reasons recorded do not specify any material fact allegedly not disclosed, and the recorded reasons cannot be supplemented by affidavit; hence reopening after four years was without jurisdiction.

Deduction under Section 10B - manufacture - processing - resultant article having a different character - 100% export oriented unit - precedential weight of Gem Granites and Arihant Tiles

Deduction under Section 10B - 100% export oriented unit - manufacture - The assessee was eligible to claim deduction under Section 10B for the Assessment Year 2010-11. - HELD THAT: - The High Court recorded that the substantial questions were already decided against the Revenue in earlier Tax Case Appeals and that those decisions - applying the principle that activities which convert quarried rough stone through processes resulting in a different character amount to manufacture - support the assessee's entitlement to deduction. The Court relied on the reasoning in prior decisions which held that cutting, polishing and related processes that change the character of granite qualify as manufacture and therefore the activities of the export-oriented unit fell within the scope of entitlement under Section 10B. Consequently, the Tribunal's finding in favour of the assessee was upheld. [Paras 4, 6]

The Tribunal's conclusion that the assessee was entitled to deduction under Section 10B is upheld and the assessee is eligible for the claimed deduction.

Manufacture - processing - resultant article having a different character - precedential weight of Gem Granites and Arihant Tiles - Sculpturing, carving and dimensional working of granite blocks were held to amount to manufacture for the purposes of the statute. - HELD THAT: - The Court accepted the line of authority which interprets 'manufacture' to include processes that produce a resultant article which no longer retains the original character of the raw material. Differentiating earlier decisions which were contextually distinct, the Court observed that where cutting, polishing, sculpturing or other processes effect a change in character (as established in Gem Granites and Arihant Tiles), such activity constitutes manufacture. On that basis, the Tribunal's finding that the assessee's activities amounted to manufacture was affirmed. [Paras 4, 6]

The finding that sculpturing, carving and dimensional processing of granite blocks amount to manufacture is affirmed.

Final Conclusion: The Tax Case Appeal is dismissed; the substantial questions of law are answered against the Revenue, affirming that the assessee's processing of granite (including sculpturing and carving) amounts to manufacture and that the assessee is entitled to deduction under Section 10B for Assessment Year 2010-11, following the cited precedents.

Transfer under Section 2(47) of the Income Tax Act - reopening of assessment under Section 148 - change of opinion - income escaping assessment

Transfer under Section 2(47) of the Income Tax Act - Whether the transfer of the immovable property took place in the previous year relevant to AY 2004-05 so as to attract capital gains in that year. - HELD THAT: - The Court examined the executed sale agreement dated 15.12.2003, the registered General Power of Attorney dated 19.12.2003 irrevocably empowering the attorney to sell the property, admission of receipt of full sale consideration, and delivery of possession to the purchaser. Those facts, together with the assessee's disclosure in the return for AY 2004-05, deposit of the capital gains amount in the bank and the assessments and intimations earlier issued and acted upon, satisfy the elements of 'transfer' as envisaged by Section 2(47). The Assessing Officer had earlier scrutinised the transaction, summoned the purchaser and examined records before completing assessment for the relevant year. On these findings the Court held that the transfer occurred in the previous year relevant to AY 2004-05 and was properly dealt with in that assessment. [Paras 7]

The transfer is held to have occurred in the previous year relevant to AY 2004-05 and was correctly assessed in that year.

Reopening of assessment under Section 148 - change of opinion - income escaping assessment - Whether the reopening of the assessment for AY 2010-11 by notice dated 31.03.2017 was valid or was a mere change of opinion and therefore invalid. - HELD THAT: - The Court considered the reasons furnished for reopening and the materials available to the Assessing Officer at the time of the earlier assessment process: the assessee's disclosures, bank certificate evidencing deposit of capital gains, responses to queries, and the earlier scrutiny assessment conclusions. There was no new or tangible material adduced by the Revenue to show that particulars were not fully and truly disclosed or that income had escaped assessment for AY 2010-11. The reopening was based on the same facts already examined and on audit objections copied into reasons, rather than fresh tangible material. Applying the principle that a reassessment cannot be founded on a mere change of opinion, the Court concluded that the reopening was impermissible. [Paras 7, 8]

The notice under Section 148 and the consequential proceedings for AY 2010-11 are quashed as the reopening amounted to a change of opinion and was invalid.

Final Conclusion: Writ appeal allowed; impugned reassessment proceedings under Section 148 for AY 2010-11 quashed on the ground of change of opinion, and the transfer was held to have been effected in the previous year relevant to AY 2004-05; consequent writ petition allowed.

Capital expenditure versus revenue expenditure - repairs and renovation of leased premises - interpretation of Explanation 1 to section 32(1) - disallowance under section 43B - powers of appellate authority coterminous with assessing officer

Capital expenditure versus revenue expenditure - repairs and renovation of leased premises - interpretation of Explanation 1 to section 32(1) - Deductibility as revenue expenditure of Rs. 12,95,867 spent on repairs and renovation of leased premises. - HELD THAT: - The assessee incurred Rs. 12,95,867 on repairs, civil, carpentry, electrical, painting, false ceiling, architect fees and related items for a leased branch premises. Invoices and the lease (leave and licence) were on record, the lease barred structural alteration and there was no increase in premises. Reliance on precedents of the jurisdictional High Court holding analogous expenditures in leased premises to be revenue in nature was accepted. Explanation 1 to section 32(1), which permits depreciation on capital expenditure on leased premises, does not convert otherwise revenue expenditure into capital expenditure; it merely permits depreciation where capital expenditure exists. The tribunal held the CIT(A)'s reliance on Explanation 1 to be a misinterpretation. Applying these principles to the facts and invoices, the expenditure was held to be revenue in nature and allowable as deduction. [Paras 6]

Expenditure of Rs. 12,95,867 is revenue expenditure and deductible.

Disallowance under section 43B - powers of appellate authority coterminous with assessing officer - Whether ex-gratia payment of Rs. 56,94,720 is liable to disallowance under section 43B and whether the Appellate Tribunal should remit the issue for consideration by the Assessing Officer. - HELD THAT: - The assessee stated that the ex-gratia payments are non-statutory and therefore not caught by section 43B; it submitted a revised computation and notified the Assessing Officer during assessment proceedings, but the AO did not deal with the claim in the assessment order. The CIT(A) rejected the ground on the basis that the assessee had not filed a revised return. The tribunal noted that the powers of the appellate authority are coterminous with those of the Assessing Officer and that an appellate authority may independently consider claims even if the AO has not adjudicated them, relying on controlling precedents. The tribunal observed that the question whether the ex-gratia is exigible to disallowance under section 43B requires examination by the Assessing Officer and accordingly restored the issue to the AO for fresh adjudication after affording the assessee a reasonable opportunity of hearing. [Paras 7, 8, 9, 10]

Issue remitted to the Assessing Officer for fresh consideration and decision in accordance with law after hearing the assessee.

Final Conclusion: The appeal is partly allowed: the expenditure of Rs. 12,95,867 on repairs and renovation of the leased premises is held to be revenue expenditure and allowed as deduction; the question of disallowance of the ex-gratia payment under section 43B is restored to the Assessing Officer for fresh consideration after affording the assessee an opportunity of hearing.

Weighted deduction under section 35(2AB) - approval of in house R&D facility by the prescribed authority (DSIR) - role and effect of Form No.3CL and its amendment by the IT (Tenth Amendment) Rules, 2016 - power of Assessing Officer to restrict deduction where DSIR had not quantified expenditure (pre 2016)

Weighted deduction under section 35(2AB) - approval of in house R&D facility by the prescribed authority (DSIR) - role and effect of Form No.3CL and its amendment by the IT (Tenth Amendment) Rules, 2016 - Deletion of disallowance made by AO in respect of excess weighted deduction claimed over the amount approved by DSIR (pre amendment period). - HELD THAT: - The Tribunal followed its earlier decision in Cummins India Ltd. addressing identical pre 2016 facts. As enacted, section 35(2AB) requires approval of the in house R&D facility by the prescribed authority; prior to the IT (Tenth Amendment) Rules, 2016 (w.e.f. 01.07.2016) the Rules did not empower DSIR to quantify year to year expenditure in Form No.3CL. The 2016 amendment introduced a separate part in Form No.3CL for quantification of eligible expenditure, thereby post 2016 prescribing a procedure for DSIR to certify amounts. For the period relevant here (FY 2013 14 / AY 2014 15), no such methodology existed and once the facility was approved by DSIR, the assessee was entitled to claim weighted deduction on the expenditure incurred. In that factual and legal matrix, the Assessing Officer's curtailment of the claim on the ground that DSIR had not quantified the expenditure in Form No.3CL lacks merit. Applying this determinative reasoning to the present case, the CIT(A)'s deletion of the disallowance was sustained and the Revenue's challenge was dismissed. [Paras 10, 11]

Findings of CIT(A) deleting the disallowance are sustained; Revenue's appeal dismissed.

Final Conclusion: The Tribunal dismisses the Revenue's appeal and upholds the CIT(A)'s deletion of the disallowance: for the pre 01.07.2016 period, approval of the R&D facility by DSIR (without DSIR quantified annual expenditure in Form No.3CL) sufficed for allowing weighted deduction under section 35(2AB).

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - Unexplained cash credit under section 68 - Books of account and accounting entries as evidence against penalty - mere acceptance of assessment addition not conclusive proof of furnishing inaccurate particulars - Condonation of delay in filing appeal

Condonation of delay in filing appeal - Delay of 109 days in filing appeal was condoned and the appeal admitted. - HELD THAT: - The Tribunal considered the assessee's petition for condonation of delay, noting the explanation of the Managing Director's ill health and medical treatment. On the material before it the Tribunal found the cause to be reasonable and bonafide within the meaning of the Act and accordingly exercised discretion to condone the delay and admit the appeal for adjudication on merits. [Paras 3]

Delay condoned and appeal admitted for hearing.

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - Unexplained cash credit under section 68 - Books of account and accounting entries as evidence against penalty - mere acceptance of assessment addition not conclusive proof of furnishing inaccurate particulars - Penalty under section 271(1)(c) levied for alleged furnishing of inaccurate particulars in respect of unexplained credit was set aside. - HELD THAT: - The assessee had shown purchases from a group concern by debiting purchase/stock and crediting a sundry creditor, and correspondingly increased closing stock so that there was no effect on profit or loss for the assessment year. The AO treated the creditor entry as unexplained cash credit under section 68 and levied penalty under section 271(1)(c), but the Tribunal found that the assessee furnished explanation and ledger extracts demonstrating the accounting entries and that the explanation was bona fide and not shown to be false. The Tribunal held that the AO had mis-stated facts and failed to appreciate accounting principles; mere acceptance of the addition without prosecuting a challenge does not by itself establish furnishing of inaccurate particulars when a bona fide explanation and evidence have been placed on record. On that basis the Tribunal disagreed with the CIT(A) and deleted the penalty. [Paras 8, 9, 10]

Penalty under section 271(1)(c) deleted and the appeal allowed on this ground.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and, on merits, allowed the appeal by deleting the penalty imposed under section 271(1)(c) in respect of the unexplained credit; the assessment addition remained uncontested before the Tribunal but did not, in the circumstances, justify levy of penalty.

Mistake apparent from record under section 254(2) of the Income-tax Act - residential status under section 6(1) of the Income-tax Act - applicability of clause (a) and clause (c) of section 6(1) - remand to Assessing Officer for factual verification

Mistake apparent from record under section 254(2) of the Income-tax Act - Whether the Tribunal's order of restoration constituted a mistake apparent from record warranting rectification under section 254(2). - HELD THAT: - The Tribunal had taken a view and restored the question of the assessee's residential status to the Assessing Officer for examination. The application under section 254(2) sought correction on the ground that the Tribunal should have held the assessee to be non-resident under clause (a) of section 6(1). The Appellate Tribunal's act of remanding the matter for factual verification is a substantive exercise of judicial discretion and does not amount to a mistake apparent from the record. The bench observed that the Tribunal's decision to remit the issue for verification cannot be corrected by way of a miscellaneous application under section 254(2). [Paras 4, 5]

Miscellaneous application under section 254(2) dismissed; the Tribunal's restoration order is not a mistake apparent from record.

Residential status under section 6(1) of the Income-tax Act - applicability of clause (a) and clause (c) of section 6(1) - remand to Assessing Officer for factual verification - Whether the question of applicability of section 6(1)(c) (and by implication section 6(1)(a)) was to be examined afresh and left to the Assessing Officer. - HELD THAT: - The Tribunal recorded that the twin factual conditions for applying section 6(1)(c) - in particular the assessee's stay aggregating 365 days in the four preceding years - had not been raised or examined below and that the Assessing Officer's computation in this regard required verification. In those circumstances the Tribunal remitted the matter to the Assessing Officer for factual examination. The High Court (Accountant Member) declined to treat that remand as an error and thereby left the factual enquiry into residential status to be undertaken by the Assessing Officer as directed by the Tribunal. [Paras 2, 4]

The Tribunal's remand for verification of the factual matrix relevant to section 6(1)(c) stands and the Assessing Officer is to examine the matter; no adjudication on merits of section 6(1)(a) or (c) was made by the Court.

Final Conclusion: The miscellaneous application seeking rectification was dismissed; the Tribunal's order remanding the question of the assessee's residential status to the Assessing Officer for factual verification remains operative, with no appellate correction by way of section 254(2).

Accumulation under section 11(1)(a) - calculation on gross receipts versus net income - mistake apparent on the face of the record - rectification under section 154 - intimation under section 143(1) - binding effect of Supreme Court decisions on assessment

Accumulation under section 11(1)(a) - calculation on gross receipts versus net income - intimation under section 143(1) - Whether the 15% accumulation under section 11(1)(a) is to be computed on gross receipts and whether the adjustment made in the intimation under section 143(1) by computing it on net income was erroneous. - HELD THAT: - The assessee's return and Form 10B claimed accumulation at 15% on gross receipts of Rs. 15,94,43,856/-, supported by the receipts and payments account. The AO, in the intimation under section 143(1), computed 15% on net income after application (Rs. 4,62,26,127/-), and refused rectification under section 154, treating the matter as not a mistake apparent on the face of the record. The Tribunal applied settled law that the 15% accumulation under section 11(1)(a) must be computed on income before application (gross receipts) and not on the balance after application; the approach of computing it on net income was contrary to the Supreme Court decisions cited and to CBDT guidance. Given the return, audited statements and Form 10B supporting the claim on gross receipts, the Tribunal found the AO's adjustment to be a mistake apparent on the face of the record which ought to have been rectified under section 154. [Paras 11, 12]

The Tribunal allowed the appeal, directed the AO to permit accumulation under section 11(1)(a) at 15% on gross receipts as claimed by the assessee, and set aside the disallowance made in the intimation under section 143(1).

Mistake apparent on the face of the record - rectification under section 154 - binding effect of Supreme Court decisions on assessment - Whether the error in computing the 15% accumulation on net income in the intimation constituted a 'mistake apparent on the face of the record' rectifiable under section 154. - HELD THAT: - The Tribunal held that the AO's computation contradicted established judicial interpretation that the 15% accumulation under section 11(1)(a) is to be allowed on gross receipts. Reliance on Supreme Court authorities and CBDT circulars established that such a contrary computation in the intimation amounted to an apparent error. Consequently, the refusal to rectify under section 154 was unjustified and the error warranted correction without need for extended factual investigation. [Paras 11]

The Tribunal directed rectification under section 154 to allow the claimed accumulation, holding the error to be a mistake apparent on the face of the record.

Final Conclusion: Appeal allowed. The Tribunal directed the AO to allow accumulation under section 11(1)(a) at 15% on gross receipts for Assessment Year 2014-15 as claimed by the assessee, and set aside the contrary computation made in the intimation under section 143(1).

Recognition under Section 80-G (5)(vi) - principles of natural justice - proposed activities as basis for registration - non-speaking order - remand for fresh consideration

Recognition under Section 80-G (5)(vi) - principles of natural justice - proposed activities as basis for registration - non-speaking order - remand for fresh consideration - Whether the order of the CIT(E) refusing recognition under Section 80G(5)(vi) should be set aside and remitted for fresh consideration for want of opportunity to the assessee and for being a non-speaking order - HELD THAT: - The Tribunal found that the CIT(E) rejected the application on the ground that there were "no noticeable charitable activities" without affording the assessee an opportunity to explain the absence of activities or to place on record proposed activities. The Tribunal noted binding and persuasive authorities referred to by the assessee that proposed activities may be relevant for grant of registration and that additional information can be furnished for examination. The impugned order was also characterised as non-speaking. In these circumstances the Tribunal held that the matter requires fresh consideration by the CIT(E) after affording the assessee a hearing and considering such evidence or explanations (including proposed activities) as the assessee may file; the earlier order is therefore set aside and the matter remanded for a speaking, reasoned decision in light of the law and authorities cited. [Paras 5]

Order of the CIT(E) set aside; matter remanded to the CIT(E) for fresh, reasoned consideration of the application for recognition under Section 80G(5)(vi) after affording the assessee an opportunity of hearing and permitting production of additional material; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the CIT(E)'s order refusing recognition under Section 80G(5)(vi) as passed without affording the assessee an opportunity and as non speaking, and remanded the matter to the CIT(E) to decide afresh on the merits after hearing the assessee and considering proposed activities and any additional evidence; the appeal is allowed for statistical purposes.

Assessment under section 153C read with section 153A - burden of proof under Section 68 regarding identity, creditworthiness and genuineness - application of proviso to Section 68 w.e.f. 01.04.2013 - remand for fresh adjudication - double addition - treatment of Auto Sweep/contra bank entries

Assessment under section 153C read with section 153A - remand for fresh adjudication - Whether the assessments framed consequent to search under the provisions invoked should be sustained or require fresh adjudication - HELD THAT: - The Tribunal found that the Assessing Officer had made extensive additions on account of unexplained bank credits, share application money, share premium and share capital, and the Commissioner (Appeals) had granted only part relief after admitting additional evidence and obtaining a remand report. Considering the totality of facts and the assessee's contention that detailed explanations and documents (including cheque evidence) were on record, the Tribunal considered it appropriate in the interest of justice to restore the matters to the file of the AO for fresh adjudication. The AO is directed to grant one more opportunity to the assessee to substantiate each transaction, to consider the additional material already filed, and to decide the issues afresh in accordance with law after giving due opportunity of being heard. The Tribunal cautioned that the assessee must appear and produce requisite details without seeking adjournments, failing which the AO may proceed to decide as per law. [Paras 6]

All appeals restored to the file of the AO for fresh adjudication with directions to grant opportunity and decide in accordance with law.

Burden of proof under Section 68 regarding identity, creditworthiness and genuineness - application of proviso to Section 68 w.e.f. 01.04.2013 - Whether additions under Section 68 (share capital/application money/premium) were sustainable without the assessee discharging the statutory onus and whether proviso to Section 68 requires application - HELD THAT: - The Tribunal noted that the AO and the CIT(A) sustained additions where the assessee had not, in their view, discharged the initial onus of proving identity, creditworthiness of contributors and genuineness of transactions. However, rather than finally adjudicating against the assessee, the Tribunal directed the AO on remand to give the assessee an opportunity to substantiate the claimed transactions and to consider, upon satisfaction, deletion of additions. The Tribunal specifically directed the AO to consider the application of the proviso to Section 68 effective from 01.04.2013 in respect of share application money received from family members and relatives of directors, and to apply the legal test in fact and law while deciding the matter afresh. [Paras 6]

Additions under Section 68 to be re-examined by the AO on remand after permitting the assessee to substantiate transactions and considering the proviso effective 01.04.2013 where applicable.

Double addition - treatment of Auto Sweep/contra bank entries - Whether certain bank credits (including Auto Sweep entries) and amounts already offered to tax (interest/dividend/share application money) were wrongly subjected to addition leading to double taxation - HELD THAT: - The Tribunal accepted the assessee's contention that some entries (such as Auto Sweep credits which are contra entries between fixed deposit and current/savings account) and amounts already declared as income (bank interest, dividend, share application money received through banking channels) may have been added twice. Rather than resolving these contentions on the papers, the Tribunal directed the AO on remand to re-examine the bank entries, permit the assessee to explain each entry, delete any double additions upon satisfaction and treat Auto Sweep/contra entries appropriately, in accordance with the evidence produced. [Paras 6]

AO to verify bank transactions afresh on remand, treat Auto Sweep entries as contra where established and delete any double additions if satisfactorily demonstrated.

Final Conclusion: The Tribunal allowed the appeals for statistical purposes and restored the assessments for A.Y. 2006-07 to 2012-13 to the file of the Assessing Officer with directions to grant the assessee one final opportunity to substantiate bank credits, share transactions and related entries, to consider the proviso to Section 68 w.e.f. 01.04.2013 where applicable, and to correct any double additions, deciding the matters afresh in accordance with law.

Validity of departmental communication vis-a -vis Government notification on customs security - Effect of Reserve Bank of India Master Circular on acceptance of bank guarantees by Customs - Auto-renewal clause in bank guarantees - Writ remedy and requirement of an established right for relief

Validity of departmental communication vis-a -vis Government notification on customs security - Communication dated 02.07.2014 directing option for auto-renewal in bank guarantees is not rendered invalid by the Government of India notification dated 17.03.2012. - HELD THAT: - The petition challenged the legal validity of the Communication dated 02.07.2014 on the ground that it conflicted with the Ministry of Finance notification of 17.03.2012 prescribing security by fixed deposit receipt where mega power project certificate was provisional. The Court noted that the impugned Communication was issued during the subsistence of the notification but was consequent to the Reserve Bank of India Master Circular and the Central Board of Excise and Customs Circular. The petitioners did not demonstrate that the Communication, as applied to them, violated a legally enforceable right under the 2012 notification. On the material placed (including petitioners' own correspondence accepting auto-renewal in future guarantees), the Court found no basis to declare the departmental Communication invalid or unenforceable in the manner contended. [Paras 6, 9, 10]

The challenge to the validity of the 02.07.2014 Communication on the basis of the 17.03.2012 notification is rejected.

Effect of Reserve Bank of India Master Circular on acceptance of bank guarantees by Customs - The Customs Department acted in consonance with the Reserve Bank of India Master Circular of 01.07.2009 and the petitioner, if aggrieved by that Circular, must seek relief against the RBI rather than the Customs Department. - HELD THAT: - The Court observed that the impugned Communication was issued in accordance with the RBI Master Circular and the Central Board of Excise and Customs Circular. The Customs Department is bound to follow RBI instructions regarding bank guarantee practices. The petitioners' remedy for any grievance arising solely out of the RBI Master Circular lies against the Reserve Bank of India and not by way of writ against the Customs Department. The Court therefore declined to intervene in respect of matters arising from the RBI Master Circular. [Paras 3, 6]

No relief against the Customs Department on grounds predicated solely on the RBI Master Circular; petitioners must approach RBI for such grievances.

Auto-renewal clause in bank guarantees - Writ remedy and requirement of an established right for relief - Petitioners are not entitled to writ relief because they either accepted or did not demonstrate prejudice from the option of auto-renewal and no established right was shown to be infringed. - HELD THAT: - The Court relied on the petitioners' own letters dated 28.02.2014 and 18.06.2014 in which they accepted or stated no objection to auto-renewal clauses subject to banks' acceptance. The auto-renewal facility is a bank-provided option and, as recorded, the petitioners did not show that opting for auto-renewal would affect any legally enforceable right or their business agreements. A writ petition requires demonstration of an existing right being infringed; that condition was not satisfied. Given these facts and that banks offer the facility on request, the Court found no merit in granting the relief sought. [Paras 7, 8, 9, 10]

Writ petition fails on merits; petitioners are at liberty to opt for auto-renewal as agreed in their communications.

Final Conclusion: Writ petition dismissed. Petitioners' challenge to the Communication dated 02.07.2014 is rejected; petitioners remain free to opt for the auto-renewal facility as agreed with their banks. No costs.

Revocation of licence or imposition of penalty - Suspension of licence - Procedure for revoking licence or imposing penalty - Summary power under suspension versus full inquiry for revocation - Findings under regulation 16(2) not binding on subsequent proceedings under regulations 14 and 17

Suspension of licence - Procedure for revoking licence or imposing penalty - Summary power under suspension versus full inquiry for revocation - Whether revocation proceedings under regulations 14 and 17 can be proceeded with after suspension under regulation 16(1) has been revoked under regulation 16(2). - HELD THAT: - The Tribunal held that proceedings for revocation of a customs broker's licence under regulations 14 and 17 are independent of suspension proceedings under regulation 16. Revocation of a suspension under regulation 16(2) does not divest the Commissioner of Customs of the power to initiate or continue revocation proceedings under regulations 14 and 17. Regulation 16(2) merely prescribes the procedure to be followed where the Commissioner elects to continue suspension; it does not bar separate or subsequent action under regulations 14 and 17. The power exercised under regulation 16(2) is summary in nature and limited to deciding whether to continue or revoke suspension after an opportunity of hearing, whereas regulation 17 contemplates a full inquiry with notice, submission of written defence, inquiry by a Deputy/Assistant Commissioner, evidence, cross-examination, submission of an inquiry report and consideration of representations before a final order is passed. Consequently, findings recorded in a regulation 16(2) order cannot preclude or supplant the separate findings reached after the full inquiry envisaged by regulation 17. [Paras 9, 10, 11]

Proceedings under regulations 14 and 17 for revocation may be validly instituted or continued even after suspension under regulation 16 has been revoked; findings under regulation 16(2) do not restrict or determine the outcome of a full inquiry under regulation 17.

Revocation of licence or imposition of penalty - Findings under regulation 16(2) not binding on subsequent proceedings under regulations 14 and 17 - Whether the findings recorded while revoking a suspension under regulation 16(2) operate to bar revocation of the licence under regulations 14 and 17 in the absence of additional facts. - HELD THAT: - The Tribunal rejected the contention that findings recorded in the order revoking suspension under regulation 16(2) preclude later revocation proceedings under regulations 14 and 17 unless additional facts emerge. The court explained that the nature and purpose of the two processes differ: regulation 16(2) is a prompt, summary determination about suspension, whereas regulation 17 provides for a detailed adversarial inquiry. Therefore, conclusions reached under the summary procedure cannot be treated as determinative of the separate inquiry or as estopping the authority from arriving at independent findings after a full inquiry. [Paras 11]

Findings in a regulation 16(2) order do not bar initiation or continuation of revocation proceedings under regulations 14 and 17, nor do they operate as an estoppel in the absence of fresh adjudication under regulation 17.

Revocation of licence or imposition of penalty - Whether the factual findings recorded by the Commissioner in the impugned order (attempt to export restricted items by mis-declaration and failure to exercise due diligence) support the revocation and related measures. - HELD THAT: - The Tribunal noted that the Commissioner, after the inquiry under regulation 17, recorded findings that the appellant attempted to export restricted items by mis-declaring the Customs Tariff Heading and failed to exercise due diligence when filing the shipping bill, and that both exporter and broker conceded the goods were restricted at the time of filing. On consideration of the inquiry report, representation and hearings, the Tribunal found no reason to interfere with the Commissioner's factual findings or the consequent order of revocation, forfeiture of security and imposition of penalty. [Paras 12, 13]

The factual findings upholding revocation, forfeiture and penalty were sustained and the impugned order warranted no interference.

Final Conclusion: The appeal is dismissed; the order revoking the customs broker's licence, forfeiting the security and imposing penalty is affirmed.

Dispensing with meetings of shareholders by unanimous written consent - Dispensing with meetings of creditors where no secured or unsecured creditors exist - Compliance with notice requirement under Section 230(5) of the Companies Act, 2013 - Filing of affidavit of service and presumption of no representation if none received

Dispensing with meetings of shareholders by unanimous written consent - Meetings of equity shareholders of the applicant companies were dispensed with. - HELD THAT: - The Tribunal accepted the applicants' record that all equity shareholders of the Applicant Companies had given written consent to the Scheme of Amalgamation by way of affidavits annexed to the application (collectively marked as Annexure "A-10"). In view of those unanimous written consents, the Tribunal dispensed with convening and holding of meetings of the equity shareholders for the purpose of considering the Scheme of Amalgamation and made the corresponding order. [Paras 21]

Meetings of the equity shareholders of the Applicant Companies are dispensed with.

Dispensing with meetings of creditors where no secured or unsecured creditors exist - Meetings of secured and unsecured creditors of the applicant companies were dispensed with. - HELD THAT: - The Tribunal relied on the auditors' certificates annexed to the application (marked as Annexure "A-11") certifying that there are no secured or unsecured creditors of the Applicant Companies. On that basis the Tribunal found that convening separate meetings of secured and unsecured creditors was unnecessary and dispensed with such meetings. [Paras 21]

Convening and holding of separate meetings of secured and unsecured creditors of the Applicant Companies are dispensed with.

Compliance with notice requirement under Section 230(5) of the Companies Act, 2013 - Filing of affidavit of service and presumption of no representation if none received - Directions were given for service of notice and documents under Section 230(5), for filing affidavit of service, and for treating absence of representations as no objection. - HELD THAT: - Although meetings were dispensed with, the Tribunal directed the Applicant Companies to serve notice, the application and accompanying documents (including the Scheme) on the Central Government through the Regional Director, Registrar of Companies, the concerned Assessing Officer together with the Chief Commissioner of Income-Tax with PAN numbers, the Official Liquidator having jurisdiction, and other relevant sectoral regulators/authorities as applicable. Service was ordered by E-mail and Speed Post (or hand delivery through special messenger/registered post) within fourteen days from the date of the order, allowing those authorities 30 days from the date of notice to file representations. The Applicant Companies were directed to file an affidavit of service with the Tribunal confirming compliance. The Tribunal further declared that if no representation is received within the prescribed period it shall be presumed that such authorities have no representation to make on the Scheme of Amalgamation. [Paras 21]

Applicant Companies to serve prescribed notices and documents as directed, file affidavit of service, and absence of representation within the stipulated period will be treated as no objection.

Final Conclusion: The Tribunal allowed the application under Sections 230-232 and ordered that meetings of equity shareholders and of secured and unsecured creditors be dispensed with for the reasons recorded, directed service of notices and documents as per Section 230(5) with filing of affidavit of service, and disposed of Company Application CA (CAA) No. 77/KB/2021 accordingly.

Preliminary finding of "default" at the stage of Section 95/97 proceedings - limited notice to Personal Guarantor prior to appointment of Resolution Professional - role and report of Resolution Professional under Section 99 - remand for fresh report and procedural compliance

Preliminary finding of "default" at the stage of Section 95/97 proceedings - Validity of the Adjudicating Authority recording a finding of default at the stage of considering an application under Section 95 read with Section 96/97 instead of after receipt of the report under Section 99 and consideration under Section 100. - HELD THAT: - The Tribunal held that the Adjudicating Authority erred in recording in advance that there was a "default" when the matter was at the stage of acting on an application under Section 95 read with Section 96/97. The correct stage for adjudicating whether there exists a default and for admitting or rejecting the application is after the Resolution Professional's report and when the matter is taken up under Section 100. A premature finding of default at the appointment stage is impermissible because the appointment and collection of material under Section 99 precede any adjudication on merits under Section 100. Consequently, the observations in para 12 of the first impugned order characterising the personal guarantor as having committed default were set aside and the consequential report premised on that premature finding was also set aside. [Paras 6, 10]

The Adjudicating Authority's premature finding of default was set aside and the related report was set aside; the matter is remitted for fresh consideration after compliance with Section 99.

Limited notice to Personal Guarantor prior to appointment of Resolution Professional - role and report of Resolution Professional under Section 99 - Whether notice to the Personal Guarantor is required before appointment of the Resolution Professional and the manner in which the Personal Guarantor should be afforded an opportunity to respond under Section 99. - HELD THAT: - Relying on this Tribunal's decision in Mr. Ravi Ajit Kulkarni v. State Bank of India, the Bench held that principles of natural justice require that a limited notice be given to the Personal Guarantor so as to secure his presence and enable the Resolution Professional, once appointed, to require and receive material under Section 99(2). While a full hearing and adjudication on disputes is not contemplated prior to the Resolution Professional's report, limited notice is appropriate to prevent abuse of process and to facilitate collection of necessary evidence. In the present case the Adjudicating Authority's observation in the second impugned order that notice was not necessary was set aside. The Tribunal noted that the Personal Guarantor has appeared, and therefore formal notice in this instance was unnecessary, but directed that the procedure indicated in the earlier precedent be followed: the Resolution Professional must give the Personal Guarantor an opportunity in terms of Section 99 and thereafter furnish a fresh report. [Paras 9, 10]

The finding that notice was unnecessary was set aside; the matter is remitted so the Resolution Professional may comply with Section 99 by giving the Personal Guarantor an opportunity to respond and by submitting a fresh report.

Remand for fresh report and procedural compliance - Consequences of setting aside the premature observations and the steps to be taken following remand. - HELD THAT: - The Tribunal did not disturb the appointment of the Resolution Professional but set aside the RP's earlier report that flowed from the premature finding. The matter was remitted to the Adjudicating Authority with directions: parties to appear on the specified date, the Resolution Professional to afford opportunity to the Personal Guarantor in terms of Section 99 and submit a fresh report, and the Adjudicating Authority to proceed thereafter in accordance with law and the guidance given in the Tribunal's earlier decision. The statutory timeline for the RP's 10-day compliance under Section 99(1) was directed to commence from the date specified for appearance. [Paras 10, 11]

Appointment of the Resolution Professional left undisturbed; earlier report set aside; matter remitted for fresh compliance with Section 99 and onward adjudication as per law.

Final Conclusion: Appeal partly allowed: premature findings of default and the conclusion that notice was unnecessary were set aside; the RP's report founded on those observations was set aside; the appointment of the RP is retained and the matter is remanded to the Adjudicating Authority for the RP to afford the Personal Guarantor an opportunity under Section 99 and to submit a fresh report, after which the Adjudicating Authority will proceed in accordance with law.

Maintainability of writ petition in presence of alternative statutory remedy - condition of deposit as prerequisite for grant of relief in prolonged litigation - balancing approach between protection of revenue and rights of litigant

Maintainability of writ petition in presence of alternative statutory remedy - Whether a writ petition challenging an Order in Original is maintainable when an appeal to the statutory appellate authority is available and was not availed of by the petitioner. - HELD THAT: - The Court noted that the preamble to the impugned Order in Original expressly informed aggrieved persons of the remedy of appeal to the Commissioner (Appeals) and explained the procedure for filing such appeal. Instead of invoking the statutory appellate remedy, the petitioner filed the present writ petition. The Court emphasised that writ petitions which bypass available statutory remedies amount to an attempt to prolong litigation and cannot be encouraged. Having regard to the availability of the alternative remedy and the petitioner's choice not to pursue it, the Court treated the proceedings in the light of the proper forum for contesting the Order in Original and the need to avoid undue prejudice to the revenue from protracted litigation. [Paras 2, 3, 5]

The writ petition was not entertained as an alternative to the statutory appeal; the Court proceeded on the basis that the petitioner had not availed the available appellate remedy.

Condition of deposit as prerequisite for grant of relief in prolonged litigation - balancing approach between protection of revenue and rights of litigant - Whether, in the circumstances of long pending litigation where the petitioner has not availed the appellate remedy, the Court should require deposit of the demanded service tax as a condition for adjudication or continuation of the writ, and what relief should follow. - HELD THAT: - Observing that the writ petition had been pending for more than nine years and that multiplicity and delay could cause serious hardship to the revenue (for example by enabling claim of interim stays extending indefinitely), the Court adopted a balancing approach. In the interest of justice and to prevent prejudice to the revenue while not finally deciding the merits, the Court directed the petitioner to deposit the entire service tax amount demanded in the impugned Order in Original within four weeks from receipt of the order. The direction for deposit was imposed as a condition for disposing of the writ petition and to achieve parity between protecting the revenue and allowing judicial scrutiny of the order. [Paras 4, 6, 7]

The writ petition was disposed of on the condition that the petitioner deposit the entire service tax amount demanded in the Order in Original within four weeks; compliance to be reported on the listed date.

Final Conclusion: Writ petition dismissed in substance by way of conditional disposal: petitioner directed to deposit the entire service tax amount demanded in the Order in Original within four weeks from receipt of the order; writ petition disposed of and compliance to be reported on the appointed date.

Delayed refund attracts interest - direction to pay belated refund - withdrawal of appeal subject to condition - conditional compliance pending decision of the Supreme Court

Withdrawal of appeal subject to condition - Writ appeal dismissed as withdrawn subject to the condition agreed between parties. - HELD THAT: - The appellant (Revenue) applied to withdraw the writ appeal after conceding that the matter is covered by a Division Bench decision and seeking leave to make the withdrawal subject to the outcome of a pending Special Leave Petition before the Supreme Court. The Court permitted withdrawal on that condition, noting the appellant's assurance and the respondent's lack of objection.

Writ appeal dismissed as withdrawn, subject to the stated condition.

Direction to pay belated refund - delayed refund attracts interest - Revenue directed to pay the amount of the refund to the respondents within three months. - HELD THAT: - Relying on the Division Bench precedent accepted by the parties and the Single Judge's order, the Court directed the Revenue to make the payment as earlier ordered by the learned Single Judge. The Court recorded the Revenue's assurance to comply and fixed a three-month timeline for payment.

Revenue to pay the refund amount within three months from the date of the order.

Conditional compliance pending decision of the Supreme Court - Question of payment of interest on the delayed refund is left subject to the outcome of the pending Special Leave Petition in the Supreme Court. - HELD THAT: - Although the Single Judge relied on the Division Bench position that interest is payable on belated refunds, the Court accepted the Revenue's request to condition the liability for interest on the decision in the related SLP before the Supreme Court. Consequently, the obligation to pay interest was not finally adjudicated and remains dependent on the Supreme Court's determination in SLP (C) No.016322/2018.

Interest payable on delayed refund to be determined in accordance with the outcome of the pending SLP before the Supreme Court.

Final Conclusion: The appeal is dismissed as withdrawn on the parties' agreed condition; the Revenue is directed to pay the refund within three months, while the question of interest on the delayed refund is reserved and will be governed by the result of the pending Special Leave Petition before the Supreme Court.

Labelling and relabelling amount to deemed manufacture under note 3 to Chapter 18 - repacking and labelling of imported and inter unit goods constituting manufacture - denial and recovery of CENVAT credit on goods treated as manufactured - imposition of interest and penalty for wrongful availment of CENVAT credit - binding effect of earlier adjudicatory precedent in the appellants' own case

Labelling and relabelling amount to deemed manufacture under note 3 to Chapter 18 - repacking and labelling of imported and inter unit goods constituting manufacture - denial and recovery of CENVAT credit on goods treated as manufactured - Whether the activities of labelling, relabelling and repacking carried out by the assessee at its Taloja unit amount to manufacture (deemed manufacture) attracting denial and recovery of CENVAT credit, interest and penalty. - HELD THAT: - The Tribunal held that labelling/relabeling and repacking fall squarely within the scope of note 3 to Chapter 18 and therefore amount to deemed manufacture. The factual material - including admissions in the show cause notice, the seized cartons and labels, the appellant's statement recorded at the factory visit, differences in tare weight of imported cartons and the appellant's packing lists - established repacking and affixation of labels on new cartons. Reliance was placed on the earlier judicial exposition reproduced in the judgment which explains that note 3 treats labelling, relabelling or repacking as independent activities amounting to manufacture and that the label's contents are not decisive where repacking and relabelling are otherwise established. Applying that precedent to the admitted and recorded facts, the Tribunal concluded that the activities undertaken by the appellant amount to manufacture and therefore the impugned demands for wrongful CENVAT credit, interest and penalty as recorded in the impugned orders cannot be sustained. [Paras 3]

Impugned findings that labelling/repacking at Taloja amount to manufacture are upheld by application of the precedent to the admitted and recorded facts; consequential demands for wrongful CENVAT credit, interest and penalty cannot stand and the impugned orders are to be set aside.

Binding effect of earlier adjudicatory precedent in the appellants' own case - effect of pending proceedings before the Hon'ble Supreme Court on disposal of appeals - Whether these appeals should be kept pending in view of an appeal before the Hon'ble Supreme Court in cases involving similar issues. - HELD THAT: - The Tribunal considered the Revenue's request to keep the appeals pending because of a Supreme Court appeal in related matters. It observed that the issue before the Tribunal is already decided in the appellants' own earlier proceedings in their favour and that no stay had been granted by the Supreme Court. The Tribunal also noted that the Supreme Court had condoned delay and issued notice but had not stayed the operation of the relevant orders and had dismissed the Revenue's early hearing application. The Tribunal distinguished the circumstances relied upon by Revenue (including the Cargill order) and, having given the Revenue an opportunity to distinguish the earlier tribunal judgment, declined to keep the matters pending. [Paras 3]

The appeals are not to be kept pending on account of other proceedings before the Supreme Court and are to be disposed of on the basis of the binding earlier decision in the appellants' own case.

Final Conclusion: Appeals allowed; following the earlier adjudicatory precedent in the appellants' own case, the impugned orders holding labelling/repacking to be manufacture and demanding recovery of CENVAT credit, interest and penalty are set aside and the appeals disposed of.

Priority of secured creditors under Section 26E of the SARFAESI Act and Section 31B of the RDDB&FI Act - priority of Government revenue / tax dues and the doctrine of priority of Crown/State debts - doctrine of constitutional priority - voidness of transfers during pendency of tax proceedings under the Income Tax / taxation enactments - limited role of writ jurisdiction under Article 226 in adjudicating disputed factual claims - entertainment of statutory appeals notwithstanding delay

Priority of secured creditors under Section 26E of the SARFAESI Act and Section 31B of the RDDB&FI Act - priority of Government revenue / tax dues and the doctrine of priority of Crown/State debts - doctrine of constitutional priority - voidness of transfers during pendency of tax proceedings under the Income Tax / taxation enactments - Conflict between statutory priorities claimed by secured creditors and by the Revenue in respect of tax arrears - HELD THAT: - The court examined competing provisions that confer priority on secured creditors (Section 26E of SARFAESI Act and Section 31B of the RDDB&FI Act) and provisions in taxation laws which render transfers during the pendency of tax proceedings void and recognise priority for tax dues. It emphasised the constitutional importance of taxation and the established common law and judicial principle that State tax claims enjoy special priority rooted in constitutional recognition. Where transfers are shown to have been made during pendency of tax proceedings, taxation provisions which declare such transfers void will intervene and preclude invocation of statutory priority by secured creditors. However, the determination of whether tax proceedings were pending at the relevant time and the genuineness or timing of transfers are questions of fact requiring evidence and appropriate adjudication. The court therefore declined to pronounce a final factual determination on priority in the writ jurisdiction and applied the doctrine that constitutional recognition of tax collection guides resolution of conflicting statutory priorities, while leaving factual questions to the competent fact finding authority.

No final declaration on competing priorities; legal principle stated that constitutionally recognised tax claims have overriding weight where facts show pendency of tax proceedings, but factual adjudication is required before priority can be finally determined.

Limited role of writ jurisdiction under Article 226 in adjudicating disputed factual claims - investigation / adjudication by statutory appellate / quasi judicial authorities - Appropriateness of entertaining the petitioner's claim by writ under Article 226 where disputed factual issues regarding pendency of tax proceedings and timing of mortgage exist - HELD THAT: - The High Court held that disputed factual questions-such as which proceedings were pending at which time, the chronological antecedence of actions, and the genuineness of transfers-cannot be conclusively resolved in writ proceedings under Article 226. Those matters require scrutiny of original documents, evidentiary enquiries and factual findings which are within the jurisdiction of the designated appellate or quasi judicial authorities under the taxation statutes (and related recovery provisions). Accordingly, the court refused to adjudicate those disputed facts in the writ petition and directed that the competent statutory forum must decide them.

Writ petition not the proper forum to decide disputed factual issues on pendency and validity of transfers; such disputes must be adjudicated by the competent appellate/quasi judicial authorities.

Entertainment of statutory appeals notwithstanding delay - obligation of appellate authorities to afford opportunity and decide appeals on merits - Relief and procedural directions as to forum and manner of redress for the petitioner - HELD THAT: - The court rejected the substantive relief sought in the writ petition but granted relief of a procedural nature: the petitioner was directed to approach the appellate authority under the relevant taxation statute and, if an appeal is filed, the appellate authority is to entertain it without reference to delay, hear the parties, and decide the matter on merits after affording opportunity to all concerned. This direction recognises the appellate authority as the proper forum for resolving the factual and legal disputes between the bank and the Revenue.

Writ petition dismissed; petitioner permitted to file appeal before the statutory appellate authority which must entertain the appeal notwithstanding delay and decide it expeditiously on merits.

Final Conclusion: The writ petition seeking removal of tax attachment and declaration of the bank's priority was dismissed. The High Court stated the controlling legal principles on competing priorities-noting the constitutional primacy of tax claims where transfers are made during pendency of tax proceedings-but declined to decide disputed factual issues in writ jurisdiction and directed the petitioner to pursue statutory appeals, which the appellate authority is to admit despite delay and decide on merits.

Entitlement to issuance of C-Form for inter-State purchase of high speed diesel - validity of CST registration post-migration to GST regime - high speed diesel outside the sweep of the CGST Act as not notified by the Central Government - interim direction subject to final adjudication with liability for penalty and higher tax if C-Form wrongly obtained - rectification of official portal and issuance of C-Form on online application

Entitlement to issuance of C-Form for inter-State purchase of high speed diesel - validity of CST registration post-migration to GST regime - high speed diesel outside the sweep of the CGST Act as not notified by the Central Government - Petitioners entitled to interim issuance of C-Form for inter State purchase of high speed diesel used in manufacture, pending final adjudication. - HELD THAT: - The court, relying on the coordinate bench judgment reproduced at para 39, accepted that the petitioners continue to hold valid registration under the CST Act for goods as defined therein (including high speed diesel) despite migration to the GST regime, since high speed diesel had not been brought within the CGST Act by notification. On that basis and in view of the petitioners' submission that withholding C Forms would render the petition infructuous, the State was directed to issue the C Form and to rectify any error on the official website so as to entertain the petitioners' online applications. The direction to issue C Form is interlocutory and expressly made subject to final adjudication on entitlement; if it is ultimately found that C Form was wrongly issued or obtained, the petitioners remain liable to payment of higher tax and penal consequences as provided by law.

Respondents directed to issue C Form to the petitioners in respect of high speed diesel purchased for use in manufacture, with the issuance being provisional and subject to consequences if final adjudication finds the petitioners were not entitled.

Final Conclusion: Interim relief granted: State directed to issue C Form to the petitioners for inter State purchase of high speed diesel used in manufacture, subject to final determination of entitlement; if C Form is ultimately found to have been wrongly issued or obtained, statutory liabilities including higher tax and penalty will follow.

Binding effect of advance rulings - revisional power of the Commissioner over advance rulings - applicability of advance ruling where factual matrix remains unchanged - period of limitation for re-assessment - retrospective amendment and protection of vested rights - sales in the course of import - assessing authority's duty to examine individual transactions - remand for factual adjudication

Authority for Clarification and Advance Ruling - binding effect of advance rulings - revisional power of the Commissioner over advance rulings - Validity and finality of the advance ruling dated 31.03.2006 by the Authority for Clarification and Advance Ruling (ACAR). - HELD THAT: - The Court examined the statutory scheme under Section 4 of the KST Act and Section 22-A(2) which leaves orders of the Authority binding on officers other than the Commissioner and simultaneously confers suo motu revisional power on the Commissioner. The ACAR had issued an advance ruling on 31.03.2006 that purchases made for delivery to customers were in the course of import and not exigible to tax under the KST Act. That order stood unchallenged before this Court and was subsequently affirmed by the Commissioner on 19.07.2011 after review. In these circumstances the advance ruling is in existence, has attained finality and is not shown to be without jurisdiction or non est; the respondent cannot now contend to the contrary. [Paras 11, 12, 14, 15]

The advance ruling dated 31.03.2006 is not without jurisdiction or non est and binds the parties; question answered in the negative.

Change in factual matrix - applicability of advance ruling - Whether there was any change in law or facts rendering the ACAR ruling inapplicable to the petitioner's transactions. - HELD THAT: - The Assessing Authority purported to examine voluminous transactions and relied on an intercompany purchase agreement to contend that facts before ACAR were insufficient. The Court found that the Assessing Authority in fact examined only a tiny fraction of transactions (60 out of 51,435) and that the Commissioner had considered the intercompany agreement and affirmed the ACAR ruling on 19.07.2011. On that basis the Court held there was no material change in law or facts to displace the advance ruling. [Paras 16]

There is no change in law or facts so as to render the ACAR ruling inapplicable.

Period of limitation for re-assessment - retrospective amendment and protection of vested rights - Whether the re-assessment proceedings initiated against the petitioner were barred by limitation for the tax periods in question. - HELD THAT: - The Court reviewed the earlier and amended formulations of Section 40 and the temporal effect of amendments. The disputed periods are April 2006-March 2007 and April 2007-March 2008. Taking the law and the dates of re-assessment into account, the Court concluded that re-assessment completed on 04.01.2012 was time-barred insofar as it sought to reopen transactions falling between April 2006 to December 2006 and April 2007 to December 2007. The Court applied the principle that a vested right barred by limitation under the law in force cannot be taken away by a subsequent retrospective amendment enlarging limitation. [Paras 17, 18]

Re-assessment is barred by limitation in respect of transactions for the periods April 2006 to December 2006 and April 2007 to December 2007; those parts of re-assessment cannot be sustained.

Sales in the course of import - assessing authority's duty to examine individual transactions - remand for factual adjudication - Whether the transactions in question are exigible to tax under the KST Act and the appropriate course where factual adjudication was not undertaken. - HELD THAT: - The Assessing Authority assessed the entire set of transactions after examining only 60 sample transactions and without individual adjudication of the large body of transactions. The Appellate Authority and the Tribunal affirmed those findings without conducting independent fact-finding. Because the nature of the transactions (whether sales are in the course of import) is essentially a question of fact and the authorities below failed to undertake adequate individual examination, the Court found it appropriate to remit the matter for fresh adjudication. The remand is limited: transactions that have become final and are time-barred (as identified above) are excluded from re-assessment. The Assessing Authority is permitted to examine the remaining transactions in the light of the ACAR ruling and Sections 4(9)(iii) and 4(10) of the KST Act and to invoke re-assessment only if a change in factual or legal matrix is found. [Paras 19, 21]

Matter remitted to the Assessing Authority for fresh factual adjudication of transactions beyond those periods held to be time-barred; Assessing Authority to act in light of the ACAR ruling and only invoke re-assessment if change in fact or law is found.

Final Conclusion: The orders of the Assessing Authority dated 04.01.2012, the Appellate Authority dated 27.12.2012 and the Tribunal dated 31.07.2017 are quashed. The ACAR ruling of 31.03.2006 is valid and binding. Re-assessment is time barred for the specified earlier parts of the disputed tax periods; the balance of transactions are remitted to the Assessing Authority for fresh consideration in accordance with this judgment and the ACAR ruling, subject to re assessment only upon a demonstrable change in factual or legal matrix.

Annual return under Rule 7(7) - assessment under Section 25(1) - notice under Section 22(4) - purchase omission leading to tax under Section 3(2) - rectification under Section 84 - remedial availability of appeal under Section 51 and revision under Section 54

Annual return under Rule 7(7) - assessment under Section 25(1) - notice under Section 22(4) - Validity of the assessment orders dated 10.07.2015 and 10.03.2016 in the light of the dealer's asserted filing and acknowledgment of an annual return under Rule 7(7). - HELD THAT: - The Court accepted the factual position that the petitioner filed a return with an acknowledgement. The core dispute is whether that filing was a monthly return or a yearly return under Rule 7(7). The assessing authority treated the matter as one requiring assessment and issued proceedings; notice under Section 22(4) was issued to address alleged non-reporting of purchases. Although the initial order dated 10.07.2015 cited Section 25(1) instead of Section 22(4), the respondent later issued a rectification order on 10.03.2016 under Section 84 changing the provision cited. The Court found no material on record establishing that the respondent ignored the existence of the filed return such that the orders are vitiated for that reason. Given the respondent's factual stance that purchase turnover exceeded the threshold and the petitioner did not respond to the notice, the Court held the impugned orders do not warrant interference on the ground that the return was allegedly disregarded.

The challenge to the assessment orders on the basis that the return was ignored is rejected and the orders are not set aside.

Purchase omission leading to tax under Section 3(2) - notice under Section 22(4) - Whether the alleged purchase omission justified invoking Section 22(4) and proceeding to assess the dealer. - HELD THAT: - The respondent relied on unreported purchases from registered dealers amounting to a turnover beyond the threshold, treating those as purchase omissions subject to tax under Section 3(2). In that context, issuance of notice under Section 22(4) to catch escaped tax was held to be a permissible step. The petitioner did not respond to the statutory notice. On these facts the Court found that invocation of Section 22(4) and consequential assessment activity was supported by the material placed before the authority and, therefore, was not amenable to being set aside in writ jurisdiction.

Invocation of Section 22(4) on the basis of alleged purchase omissions is sustainable on the record and does not invalidate the assessment orders.

Rectification under Section 84 - remedial availability of appeal under Section 51 and revision under Section 54 - Effect of the mis-citation of statutory provision in the original order and appropriate remedy for the petitioner. - HELD THAT: - The Court noted that the original order erroneously cited Section 25(1) instead of Section 22(4), but that error was rectified by the subsequent order passed under Section 84. The Court held that mere citation of an incorrect provision, corrected thereafter, did not vitiate the assessment so as to justify interference by writ. The Court observed that if the petitioner has substantive grievances against the impugned orders, statutory remedies in the form of appeal under Section 51 or revision under Section 54 remain available and should be pursued.

The mis-citation was rectified and does not render the orders void; the petitioner is directed to pursue statutory remedies of appeal or revision if aggrieved.

Final Conclusion: The writ petition is dismissed. The High Court found no ground to quash the assessment or rectification orders on the contention that the annual return was ignored or that the initial mis-citation vitiated the orders; the petitioner remains at liberty to pursue appeal under Section 51 or revision under Section 54.

Finality of High Court order - modification of suspension order under Section 424 read with Section 389 Cr.P.C. - quashing of appellate modification where High Court has confirmed earlier order - suspension of sentence in proceedings under Section 138 of the Negotiable Instruments Act, 1881

Finality of High Court order - quashing of appellate modification where High Court has confirmed earlier order - modification of suspension order under Section 424 read with Section 389 Cr.P.C. - Impugned order of the Appellate Court dated 13.08.2019 modifying its earlier suspension order after this Court had dismissed the petition challenging that earlier order is liable to be set aside. - HELD THAT: - The Appellate Court had earlier allowed suspension of sentence subject to deposit of 20% of the compensation amount and that order was challenged in Crl.P. No.101047/2018 which this Court dismissed, thereby upholding the Appellate Court's order dated 15.05.2018. Thereafter the Appellate Court, by order dated 13.08.2019, modified its earlier order permitting release of the accused on deposit of the entire fine amount. Once this Court had disposed of the criminal petition dismissing the challenge and thereby affirmed the position, the Appellate Court was not competent to revisit and modify that suspension order in a manner inconsistent with the disposal by this Court. The modification after the High Court's dismissal of the petition was improper and cannot be sustained. In these circumstances the impugned order requires quashing and setting aside. The matter of final adjudication on the appeal itself is not decided on merits here; the Appellate Court is directed to expedite hearing and decide the appeal within a limited time-frame. [Paras 11, 12, 13, 14]

Impugned order dated 13.08.2019 passed by the Appellate Court in Crl.A.No.196/2019 is set aside; Appellate Court directed to expedite hearing and dispose of the appeal within three months.

Final Conclusion: Criminal petition allowed; the Appellate Court's modification of its earlier suspension order, made after this Court had dismissed the challenge to that earlier order, is quashed and set aside, and the appeal before the Appellate Court is directed to be disposed of within three months.