TaxTMI Updates e-Newsletter
Sep 14,2023

Regular bail - parity with co-accused - investigation complete and complaint filed - custody not necessary where further custody serves no purpose - economic offence involving fraudulent Input Tax Credit under CGST Act - conditions of bail including surrender of passport and reporting obligations

Regular bail - parity with co-accused - investigation complete and complaint filed - custody not necessary where further custody serves no purpose - conditions of bail including surrender of passport and reporting obligations - Grant of regular bail to the petitioner in FIR COMA/86 dated 16.7.2022 under the CGST Act - HELD THAT: - The Court granted regular bail to the petitioner after noting that the investigation into the alleged economic offence involving fraudulent availing of Input Tax Credit was complete and a complaint had been filed. The petitioner sought parity with a co-accused who had already been released on regular bail; the respondent was unable to distinguish the petitioner's case from that of the co-accused. The Court observed that further custody would not serve any useful purpose, custody having continued since 26.05.2022 and the matter being triable before the Magistrate. Reliance on precedents was considered but the determinative factors were completion of investigation, filing of complaint/charge-sheet and parity with co-accused who had earlier been granted bail. Accordingly bail was allowed subject to furnishing bail/bond and specified conditions. The Trial Court was left free to impose additional conditions and to cancel bail in case of default.

Petitioner released on regular bail subject to furnishing bail/bond (as directed) to the satisfaction of the trial Court/Duty Magistrate, surrender of passport, registration of mobile number with the Trial Court, prior intimation of any change of residence, appearance on each date of hearing and other usual conditions; Trial Court may impose further conditions or cancel bail on default.

Final Conclusion: The petition under Section 439 Cr.P.C. is allowed and the petitioner is granted regular bail on the stated terms and conditions; the Trial Court to ensure compliance and to proceed independently on merits.

Remedy under Article 226 of the Constitution - jurisdiction to exercise powers under Section 83 of the MGST Act - quashing of communication issued under the MGST Act - withdrawal of adjudicatory communication

Jurisdiction to exercise powers under Section 83 of the MGST Act - withdrawal of adjudicatory communication - Impugned communication dated 21 April 2023 issued by the State Tax Officer was withdrawn on the ground that the officer lacked jurisdiction to issue it, and the petition was disposed of in view of that withdrawal. - HELD THAT: - The State conceded through the Advocate General (paragraph 3) that the State Tax Officer did not have jurisdiction to issue the communication under Section 83 of the MGST Act and accordingly the officer who issued the communication has withdrawn Exhibit 'A'. The court accepted the statement of withdrawal. The court directed that an intimation of the withdrawal be sent immediately to the Officer In Charge of Central Depository Services (India) Ltd and that the petitioner shall inform CDS (India) Ltd of the withdrawal and provide a copy of the order (paragraph 4). In view of the withdrawal of Exhibit 'A' further adjudication of the petition was not called for and the writ petition was disposed of on that basis, without costs (paragraph 5). The court expressly refrained from expressing any opinion on any recovery proceedings that respondents might institute against the company and its directors (paragraph 6). [Paras 3, 4, 5, 6]

Accepted statement of withdrawal of the impugned communication for want of jurisdiction; directed intimation to CDS (India) Ltd and petitioner; writ petition disposed of in view of withdrawal; no opinion on separate recovery proceedings.

Final Conclusion: The impugned communication issued by the State Tax Officer was withdrawn on the ground of lack of jurisdiction; the High Court accepted the withdrawal, directed intimation to the Central Depository Services (India) Ltd and the petitioner, and disposed of the writ petition in view of the withdrawal, without expressing any opinion on independent recovery proceedings.

Duty to cooperate in investigation - Quashing of summons - Desealing of premises - Production of documents from sealed premises - Protection of revenue pending desealing

Duty to cooperate in investigation - Quashing of summons - Petition for quashing of summons and relief from investigative process - HELD THAT: - The petitioner, a registered dealer, sought quashing of summons issued by revenue authorities and desealing of business premises. The Court held that the petitioner is duty bound to cooperate with the investigation and, having failed to appear pursuant to the summons dated 31.05.2023 or to provide the requested information, is not entitled to have the summons quashed. The summons required appearance on 27.05.2023 and therefore, insofar as that specific date is concerned, it no longer subsists. The petition for quashing the summons was thus dismissed on the ground that no case was made out for interference with the investigatory process. [Paras 7]

Writ petition seeking quashing of the summons dismissed; no quashing granted as petitioner failed to cooperate.

Desealing of premises - Production of documents from sealed premises - Protection of revenue pending desealing - Request for desealing of sealed premises and procedure for retrieval of documents - HELD THAT: - The Court directed the petitioner to appear before the third respondent on a specified date with a written request for desealing and supporting materials. The Court remitted the question of desealing to the third respondent to consider that request, after hearing the petitioner and on the basis of the materials produced, while ensuring that the interests of the revenue are protected by means available under the Act and Rules. Where documents necessary for compliance are inside the sealed premises, the Court permitted, upon written request, desealing for procurement of necessary documents in the presence of the third respondent followed by re-sealing, so as to protect the interests of both parties. [Paras 8, 9, 10]

Petition dismissed but request for desealing remitted to respondent for fresh consideration on petitioner appearing with written request; procedure for limited desealing and re-sealing prescribed to protect revenue.

Final Conclusion: The writ petition is dismissed. The petitioner must appear before the third respondent with a written request for desealing and supporting materials; the third respondent shall consider the request and decide on desealing or limited retrieval of documents with appropriate safeguards to protect the revenue.

Revision under Section 263 - Pendency of appeal does not oust revisional power - Doctrine of merger (limited application) - Patent illegality / order prejudicial to revenue

Revision under Section 263 - Pendency of appeal does not oust revisional power - Doctrine of merger (limited application) - Patent illegality / order prejudicial to revenue - Validity of exercise of revisional jurisdiction by the Principal Commissioner under Section 263 during pendency of appeal against the assessment order. - HELD THAT: - The Court held that Section 263 empowers the Commissioner to call for and examine the record and to revise an assessing officer's order if it is erroneous and prejudicial to the revenue, and that this power is not inhibited merely because an appeal against the assessment order is pending. Reliance was placed on this Court's decision in Kelpunj Enterprises and on Supreme Court authorities including Commissioner of Income Tax v. Shri Arbuda Mills Ltd and EIMCO K.C.P. Ltd, which interpret Explanation I(c) to permit revision in respect of matters not considered and decided in the pending appeal. Where an assessing officer has applied an incorrect rate of tax or committed a patent illegality, the revisional power under Section 263 may be exercised during the pendency of the appeal. The Court also noted that no prejudice is occasioned because the assessee retains the statutory remedy to challenge any fresh order passed in compliance with the revisional direction. The determinative reasoning appears in the judgment at paragraphs 14, 15, 16 and 17. [Paras 14, 15, 16, 17]

The revisional order passed by the Principal Commissioner under Section 263 during the pendency of the appeal is legally sustainable; the writ petition is dismissed while preserving the petitioner's right to challenge any consequent order.

Final Conclusion: Writ petition dismissed; revisional exercise under Section 263 during the pendency of the appeal upheld, with liberty to the petitioner to challenge any order subsequently passed in compliance with the revisional direction.

Assessee-in-default under Section 201(1) - taxability of payment in hands of payee as prerequisite for TDS liability - time-bar for assessing payee and effect on validity of Section 201(1) order - assessment of non-resident payee as condition precedent to treating payer as assessee-in-default - Mahindra & Mahindra Special Bench principle

Assessee-in-default under Section 201(1) - time-bar for assessing payee and effect on validity of Section 201(1) order - Order under Section 201(1) against the payer was unsustainable because no assessment was lawfully made on the non-resident payee and the payee's tax liability could not be established within permissible time. - HELD THAT: - The Court concurred with the ITAT's conclusion that to treat the payer as an assessee-in-default under Section 201(1) it is essential that the income paid or credited to the payee be capable of being lawfully brought within the tax net and that an assessment could be made on the payee. Relying on the principle articulated by the Special Bench in Mahindra & Mahindra [2009 (4) TMI 207 - ITAT BOMBAY-H], if the payee has no liability or the time-limit to create and determine such liability has expired, collection of tax from the payer by invoking Section 201(1) would be futile and unlawful. The ITAT recorded that no assessment had been made in the hands of the non-resident payee for the relevant years; therefore the order passed against the payer under Section 201(1) read with Section 201(1A) could not stand. [Paras 8, 9, 10]

Order under Section 201(1) read with Section 201(1A) was unsustainable and liable to be set aside insofar as it sought to fasten liability on the payer without a lawful assessable liability being determined in the hands of the payee.

Mahindra & Mahindra Special Bench principle - taxability of payment in hands of payee as prerequisite for TDS liability - Reliance on the Special Bench decision in Mahindra & Mahindra was correct and its legal principle on the necessity of assessability in the payee's hands was approved. - HELD THAT: - This Court noted that the law laid down by the Special Bench of the ITAT in Mahindra & Mahindra [2009 (4) TMI 207 - ITAT BOMBAY-H] - that deduction provisions presuppose taxability of the sum in the hands of the payee and that absent such liability or where the time-limit to tax the payee has expired, the payer cannot be treated as an assessee-in-default - has the Court's approval. The High Court applied that principle to the facts where no assessment was made in the payee's hands, endorsing the ITAT's application of the Special Bench view. [Paras 9]

The Special Bench principle in Mahindra & Mahindra was correctly relied upon and approved.

Final Conclusion: Appeal dismissed. The High Court upheld the ITAT's view that an order under Section 201(1) against the payer is impermissible where the income is not capable of being lawfully assessed in the hands of the payee (or no assessment has been made within the permissible period); the Special Bench decision in Mahindra & Mahindra was approved and applied.

Condonation of delay - no substantial question of law - preclusion for failure to raise issue before statutory authorities - Functions, Assets and Risks (FAR) analysis - attribution of profit to permanent establishment

Condonation of delay - Application for condonation of delay of 170 days in re-filing the appeals was considered and allowed. - HELD THAT: - The applications filed by the appellant/revenue sought condonation of delay in re-filing the appeals. The respondent/assessee raised no objection to condonation. Having regard to the reasons set out in the applications, the Court exercised its discretion to condone the 170-day delay and disposed of the applications accordingly. [Paras 2, 3, 4, 5, 6]

Delay of 170 days in re-filing the appeals is condoned and the condonation applications are disposed of.

No substantial question of law - Questions framed in paragraphs 2.1 to 2.3 are covered by an earlier decision and do not raise any substantial question of law warranting fresh adjudication. - HELD THAT: - Counsel for the appellant accepted that the proposed questions 2.1 to 2.3 are governed by the Court's earlier order dated 04.05.2023 in a connected batch of appeals, one being ITA 254/2023 (The Commissioner of Income Tax-International Taxation-1 v. Amadeus IT Group SA). In view of that prior decision, the Court held that no substantial question of law arises in respect of those questions and therefore no further adjudication was required on those points. [Paras 11, 12]

Questions 2.1 to 2.3 are held to be covered by the earlier decision and do not raise substantial questions of law.

Preclusion for failure to raise issue before statutory authorities - Functions, Assets and Risks (FAR) analysis - attribution of profit to permanent establishment - Questions set out in paragraphs 2.4 to 2.7 relating to the applicability of FAR analysis and the method of attributing profit to a PE cannot be entertained because they were not urged before the statutory authorities. - HELD THAT: - The appellant sought to challenge the Tribunal's attribution of profit to the permanent establishment and contended that FAR analysis should not have been applied. However, counsel conceded that this contention was not advanced before the statutory authorities. The Court declined to entertain these questions of law in the present appeals on the ground that they were not urged before the authorities whose orders are under challenge, and consequently closed the appeals. [Paras 13, 14, 15, 16]

Questions 2.4 to 2.7 are not entertained for being not raised before the statutory authorities; the appeals are closed.

Final Conclusion: The applications for condonation of delay are allowed; questions 2.1-2.3 are held to be covered by an earlier decision and raise no substantial question of law; questions 2.4-2.7 are not entertained for having not been raised before the statutory authorities and the appeals are closed.

Validity of notice under Section 148 read with Section 149(1)(b) of the Income tax Act - Availability of alternative efficacious statutory remedy and restrain on exercise of writ jurisdiction under Article 226 - Direction to appellate authority to admit and decide appeal on merits notwithstanding limitation

Validity of notice under Section 148 read with Section 149(1)(b) of the Income tax Act - Impugned notice dated 31-03-2019 is within the period of limitation prescribed by Section 149(1)(b) and not time barred. - HELD THAT: - The Court examined the limitation period applicable to issuance of a re assessment notice and concluded that, having regard to Section 149(1)(b), the notice dated 31-03-2019 fell within the six year window permitted for reassessment. The petitioner's contention that the notice was time barred was rejected as incorrect on the statutory timeline explained by the respondents and accepted by the Court. [Paras 9]

Notice is valid and not time barred.

Availability of alternative efficacious statutory remedy and restrain on exercise of writ jurisdiction under Article 226 - Writ petition under Article 226 seeking to challenge the reassessment notice/assessment order is not maintainable where an alternative statutory appellate remedy exists and should not be entertained in the first instance. - HELD THAT: - The Court applied settled principle that extraordinary constitutional jurisdiction under Article 226 is to be exercised sparingly and ordinarily should not substitute or eclipse the statutory appellate remedy. Since the Income tax Act provides an appeal route to the statutory appellate authority, the petitioner ought to have availed that remedy; accordingly the writ jurisdiction was declined and the petition disposed by relegating the petitioner to the statutory appeal mechanism. [Paras 7, 8]

Writ jurisdiction declined; petitioner to pursue statutory appeal.

Direction to appellate authority to admit and decide appeal on merits notwithstanding limitation - Petitioner permitted to file appeal before the CIT(A) within 30 days and the appellate authority directed to decide the appeal on merits without insisting on limitation. - HELD THAT: - In view of the expiry of the period of limitation and the petitioner's plea, the Court exercised its discretion to allow the petitioner a 30 day window from uploading of the order to prefer an appeal to the CIT(A). The Court directed that the appellate authority shall, without pressing the question of limitation, decide the appeal on merits including any interim protection applications. The Court expressly refrained from expressing any opinion on the merits of the underlying assessment. [Paras 10, 11, 12, 13]

Petitioner may file appeal within 30 days; CIT(A) to decide appeal on merits without insisting on limitation; interim protection to continue for 30 days.

Final Conclusion: Writ petition dismissed by relegating the petitioner to the statutory appeal; the notice dated 31-03-2019 held within limitation under Section 149(1)(b), and the petitioner permitted to file an appeal to the CIT(A) within 30 days with the appellate authority directed to decide the appeal on merits without insisting on limitation; no opinion expressed on merits.

Sanction by specified authority under Section 151 - validity of notice under Section 148 after amendment and TOLA - procedure under Section 148A prior to issuance of notice under Section 148 - reopening assessment on account of change of opinion - requirement of information suggesting escapement of income

Sanction by specified authority under Section 151 - validity of notice under Section 148 after amendment and TOLA - procedure under Section 148A prior to issuance of notice under Section 148 - Approval for reopening granted by Principal Commissioner (PCIT-8) was not the prescribed specified authority and therefore the order under Section 148A(d) and notice under Section 148 are invalid. - HELD THAT: - The Court held that Section 151 prescribes different specified authorities depending on whether three years or less, or more than three years, have elapsed from the end of the relevant assessment year. For A.Y.-2016-2017 the three year period expired on 31st March 2020, and the sanction required for reopening issued on 31st July 2022 therefore had to be obtained in terms of Section 151(ii) (Principal Chief Commissioner/Principal Director General or, where none, Chief Commissioner/Director General). The impugned sanction was obtained from the Principal Commissioner (PCIT-8), i.e., under Section 151(i), and is therefore not the sanction contemplated by Section 151(ii). The Assessing Officer could not rely on TOLA or subsequent CBDT instructions to treat the incorrect sanction as valid because TOLA only extended limitation periods and does not amend the substantive prescription in Section 151; amended Sections 147-151 are applicable with effect from 1st April 2021 and the sanction must comply with the law prevailing when sanction was obtained. The Court applied precedents of this Court and the Apex Court (including the principle that validity of a notice is judged by law on the date of issuance) to conclude that the sanction was jurisdictionally defective and vitiates the subsequent order and notice. [Paras 28, 29, 30, 31, 32]

Impugned order under Section 148A(d) and consequent notice under Section 148 dated 31st July 2022 quashed and set aside for want of valid sanction under Section 151(ii).

Reopening assessment on account of change of opinion - requirement of information suggesting escapement of income - Reopening was based on a mere change of opinion regarding classification of software consumables and therefore impermissible. - HELD THAT: - The Court examined the reasons recorded and the material relied upon and found that the Assessing Officer had earlier raised the issue during the original assessment and received detailed break up/response which was considered when completing the assessment under Section 143(3). The reasons recorded for reopening replicate the same material and amount to a change of opinion by the Assessing Officer-treating an item earlier allowed as revenue expenditure as capital expenditure. The Court reiterated the settled distinction between power to reassess and absence of power to review, observing that reassessment cannot be used as a vehicle to review issues already considered and concluded in the original assessment. Relying on precedent (including Kelvinator and Aroni Commercials) the Court held that a reopening grounded on mere change of opinion is not a valid justification for invoking Section 147 and Section 148, and that where the query was raised and answered and the Assessing Officer accepted the explanation in the course of original assessment, reopening on that basis is impermissible. [Paras 34, 36, 37, 38, 41]

Reopening on the basis of change of opinion quashed; notice under Section 148 and order under Section 148A(d) cannot be sustained on that ground.

Final Conclusion: Writ petition allowed: the order passed under Section 148A(d) and the notice under Section 148 dated 31st July 2022 are quashed and set aside because the requisite sanction under Section 151(ii) was not obtained and the reassessment proceeded on the basis of an impermissible change of opinion.

Revisionary jurisdiction under Section 263 of the Income Tax Act - remand for de novo consideration - classification of income as business income or income from other sources - causal link between expenditure and income - scope of enquiry by assessing authority after section 263 remand

Revisionary jurisdiction under Section 263 of the Income Tax Act - remand for de novo consideration - scope of enquiry by assessing authority after section 263 remand - Whether the Principal Commissioner, while setting aside the assessment and remanding the matter, was justified in deciding the claim for interest expenses on merits thereby precluding further enquiry by the assessing authority. - HELD THAT: - The Court found that although the Principal Commissioner was entitled to invoke revisionary jurisdiction and to remit the question of classification of the interest income for fresh consideration, he ought not to have made conclusive findings on the entitlement to set off interest expenses which effectively prevented the assessing authority from examining the causal link between the expenditure and the interest income. The exercise of powers under Section 263 to set aside the assessment and remit for de novo consideration does not permit the revising authority to decide the merits of the issue in a manner that forecloses the assessing officer's independent enquiry. Consequently, the portions of the Principal Commissioner's order that decide the issue on merits and leave no scope for enquiry were set aside. [Paras 4]

The Court set aside those findings of the Principal Commissioner that decided the entitlement to set off interest expenses on merits and thereby precluded further enquiry; the remand itself was upheld but must allow the assessing authority to determine the issue afresh.

Classification of income as business income or income from other sources - causal link between expenditure and income - remand for de novo consideration - Whether the matter should be remitted to the assessing authority for fresh consideration of (a) the proper head of income and (b) the existence of a causal link between expenditure and interest income. - HELD THAT: - The Court directed that the assessing authority must re-examine, on merits, whether the interest earned constituted business income or income from other sources and whether the appellant was entitled to set off the interest expenses by verifying the causal relationship between the expenditure and the income. The Court accordingly set aside the consequential assessment order and the tribunal order insofar as they upheld the Principal Commissioner's determinations that had been set aside, and required the assessing authority to proceed untrammelled by the vacated findings. [Paras 4]

Remand to the assessing authority for de novo consideration of the classification of income and the causal link between expenditure and interest income; consequential orders that treated the vacated findings as binding were set aside.

Final Conclusion: The Court upheld the remand to the assessing authority but set aside those findings of the Principal Commissioner that decided the entitlement to set off interest expenses on merits and thereby obstructed further enquiry; the assessing authority and the Appellate Tribunal's consequential orders are set aside to the extent they are bound by those vacated findings, and the issue is remitted for fresh consideration.

Revision under Section 263 - final opinion to deem an order prejudicial and erroneous - allowability of deduction under Section 57 - limited scrutiny under CASS - examination under section 143(2) - precedent treatment in preceding year

Revision under Section 263 - final opinion to deem an order prejudicial and erroneous - allowability of deduction under Section 57 - examination under section 143(2) - Validity of the Principal Commissioner's order under Section 263 quashing the assessment to disallow part of the interest deduction claimed under Section 57. - HELD THAT: - The Tribunal found that the assessment had been subjected to limited scrutiny under CASS and that the Assessing Officer issued a notice under section 143(2) specifically querying the Section 57 claim; the AO had examined the claim and recorded findings. In these circumstances the Tribunal concluded that the PCIT's view that the assessment was erroneous and prejudicial to the revenue was unsustainable. The Tribunal also noted that a similar interest deduction had been allowed in the immediately preceding year, which supported the reasonableness of the deduction. On this basis the Tribunal reversed the PCIT's order under Section 263. The High Court, upon review of paragraphs 4, 5 and 6 of the Tribunal's order, found no ground to interfere with that conclusion. [Paras 4, 5, 6]

Tribunal's quashing of the Section 263 order upheld; PCIT's revision order set aside.

Limited scrutiny under CASS - examination under section 143(2) - Whether any substantial question of law arises warranting interference with the Tribunal's decision. - HELD THAT: - The High Court observed that the Tribunal had examined the factual matrix including selection under CASS, the specific 143(2) notice, and the AO's treatment, and concluded that no substantial question of law was made out by the Revenue. The High Court found no reason to entertain the appeal on legal grounds and therefore declined to disturb the Tribunal's order.

No substantial question of law arises; appeal dismissed.

Final Conclusion: The High Court dismissed the Revenue's appeal, upholding the Tribunal's reversal of the PCIT's order under Section 263 and finding no substantial question of law warranting interference.

Quashing of assessment order - reopening of assessment under Section 148 - opportunity to be heard - G.K.N. Driveshafts procedure - exclusion of period for Section 153

Opportunity to be heard - quashing of assessment order - reopening of assessment under Section 148 - Validity of the assessment order passed without enabling the petitioner to participate in proceedings arising from notice under Section 148 for AY 2014-2015. - HELD THAT: - The petitioner was issued a notice under Section 148 on 31.03.2021 but could not file a reply or upload returns because access to the e filing account was unavailable and the password reset was effected only on 07.04.2022, after the impugned assessment order dated 26.03.2022 was passed. The Court found the petitioner's inability to access the internet facility and thereby participate in the proceedings to be genuine. In exercise of its constitutional jurisdiction under Article 226, the Court quashed the impugned assessment order and remitted the matter to the respondents for fresh consideration, directing that the petitioner be permitted to upload the reply/returns and be afforded an opportunity to participate in the proceedings in accordance with law. [Paras 10, 12]

Impugned assessment order quashed; matter remitted to allow the petitioner to upload reply/returns and to participate afresh in proceedings arising from the Section 148 notice.

G.K.N. Driveshafts procedure - exclusion of period for Section 153 - Procedure to be followed by the respondents on remand and treatment of time limits under Section 153. - HELD THAT: - The Court directed the respondents to follow the procedure laid down in G.K.N. Driveshafts (India) Ltd. v. Income Tax Officer and Others when dealing with objections to reopening, and to thereafter dispose of the petitioner's objections if any. It further held that the period from the date the impugned order was passed until communication of the certified copy of this order shall be excluded for the purpose of computing time under Section 153 of the Income Tax Act. The respondents were also directed to facilitate the petitioner to upload the reply/returns within thirty days from receipt of this order. [Paras 11, 12]

Respondents to follow G.K.N. Driveshafts procedure on remand, exclude specified period for Section 153, and permit the petitioner to upload reply/returns within thirty days.

Final Conclusion: Writ petition allowed in part: the assessment order for AY 2014-2015 dated 26.03.2022 is quashed and the matter is remitted to the respondents to permit the petitioner to upload reply/returns, to follow the G.K.N. Driveshafts procedure when considering objections, and to exclude the period specified for the purpose of Section 153; respondents to facilitate upload within thirty days.

Admission of additional evidence - Rule 46A of the Income-tax Rules, 1962 - Principles of natural justice and legitimate expectation - Powers of first appellate authority under Section 250(4) of the Income-tax Act, 1961 - Withholding obligation under Section 195 of the Income-tax Act, 1961

Admission of additional evidence - Rule 46A of the Income-tax Rules, 1962 - Principles of natural justice and legitimate expectation - Powers of first appellate authority under Section 250(4) of the Income-tax Act, 1961 - The first appellate authority erred in refusing to admit additional evidence (TRCs and no-PE certificates) on procedural/technical grounds and the matter was remitted for fresh adjudication. - HELD THAT: - The Tribunal found that the CIT(A) rejected critical external documents on technical grounds without giving the assessee an effective opportunity to explain or cure defects, thereby infringing principles of natural justice and legitimate expectation. The Tribunal observed that Rule 46A is founded on these principles and that the powers of the CIT(A) are not fettered by the rule; Section 250(4) empowers the first appellate authority to admit evidence where appropriate. Given the evidential materials' potential to be determinative on the question whether withholding under Section 195 was required, judicial propriety required admission of such documents to secure substantial justice over mere technicality. Consequently, the Tribunal set aside the CIT(A)'s order and directed de novo adjudication by the Assessing Officer after admission and consideration of the additional evidence and after affording the assessee a reasonable opportunity to be heard. [Paras 11, 12, 13]

CIT(A)'s refusal to admit additional evidence set aside; appeal restored to Assessing Officer for fresh adjudication in accordance with law after admission and consideration of evidence and after giving the assessee a reasonable opportunity.

Final Conclusion: The CIT(A)'s order is set aside for failure to admit crucial evidence; the issues are remitted to the Assessing Officer for de novo adjudication after admission and consideration of the additional documents and after affording the assessee a reasonable opportunity. The appeal is allowed for statistical purposes.

Deduction under section 80P(2)(d) - Revisionary jurisdiction under section 263 - Assessing Officer's application of mind and enquiry - Prejudice to revenue test for exercise of section 263 - Treatment of interest from co operative banks as income eligible for 80P deduction

Revisionary jurisdiction under section 263 - Assessing Officer's application of mind and enquiry - Prejudice to revenue test for exercise of section 263 - Whether the Principal Commissioner of Income Tax was justified in revising the assessment under section 263 by holding the assessment order erroneous and prejudicial to the interests of revenue. - HELD THAT: - Tribunal held that the Assessing Officer had issued notices under sections 143(2)/142(1), received detailed replies from the assessee and, after examining the submissions, allowed the deduction under section 80P(2)(d). Where the Assessing Officer has made enquiries and taken a plausible view after application of mind, the Commissioner cannot invoke section 263 merely because he holds a different opinion. The test for exercise of revisionary power requires the order to be not only erroneous but also prejudicial to revenue; both limbs were not satisfied here. Reliance was placed on binding and persuasive decisions holding that a revision is impermissible where the AO's view is one of the plausible views and where proper enquiry was made. Applying these principles, the Tribunal found the revision order unjustified and quashed it. [Paras 8, 9, 11, 12]

Revision under section 263 was wrongly exercised; the revision order is quashed and the assessment order is restored.

Deduction under section 80P(2)(d) - Treatment of interest from co operative banks as income eligible for 80P deduction - Whether interest/dividend income received by the co operative societies from co operative banks is eligible for deduction under section 80P(2)(d). - HELD THAT: - Tribunal examined jurisprudence including coordinate bench and jurisdictional High Court decisions holding that interest earned from deposits with co operative banks falls within the scope of section 80P(2)(d). The Tribunal noted contrary decisions from other jurisdictions but followed the view of the jurisdictional High Court and coordinate benches which treat interest from co operative banks as income eligible for deduction under section 80P(2)(d). On that basis, and having found that the Assessing Officer had applied his mind and allowed the deduction after enquiries, the Tribunal concluded that the assessment order allowing the deduction was not erroneous. [Paras 10, 11]

Interest/dividend income from co operative banks is eligible for deduction under section 80P(2)(d) and the assessment allowance of the claim is sustained.

Final Conclusion: Appeals allowed: the Tribunal set aside the PCIT's revision orders under section 263 and restored the Assessing Officer's allowance of deduction under section 80P(2)(d) in respect of interest/dividend from co operative banks for A.Y. 2018 19.

Addition under Section 68 of the Income-tax Act (unexplained cash credit) - cash withdrawals immediately before search and seizure - search and seizure cash reconciliation - onus/burden of proof of the assessee - deletion of addition where withdrawals explain seized cash

Addition under Section 68 of the Income-tax Act (unexplained cash credit) - cash withdrawals immediately before search and seizure - search and seizure cash reconciliation - onus/burden of proof of the assessee - Whether the addition of Rs. 3,00,000 made under Section 68 could be sustained in view of prior cash withdrawals and the assessee's statement recorded during search. - HELD THAT: - The Tribunal noted that the assessee had withdrawn cash of Rs. 8,50,000, Rs. 9,00,000 and Rs. 9,00,000 on 15.12.2017, 18.12.2017 and 26.12.2017 respectively, totalling Rs. 26,50,000 immediately before the search dated 22.01.2018. In the second part of his statement recorded during the search (reply to question No.24), the assessee stated that cash withdrawals from the bank of Rs. 26,50,000 together with Rs. 3,00,000 from a contract (total Rs. 29,50,000) were available with him and that the cash had been used for renovation work at his factory. During the search only Rs. 10,00,710 (noted as Rs. 10,00,750 in part of the record) was found and seized. The Tribunal held that where pre-search withdrawals far exceed the cash actually seized and the assessee has explained the source and use of the cash in his statement, the addition under Section 68 could not be sustained. Applying that reasoning, the Tribunal concluded that the addition of Rs. 3,00,000 was not justified and directed its deletion. [Paras 4, 5]

Addition of Rs. 3,00,000 under Section 68 deleted and the assessee's appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal for Assessment Year 2018-19, directing deletion of the addition of Rs. 3,00,000 made under Section 68, on the ground that pre-search cash withdrawals and the assessee's statement adequately explained the cash found during search.

Addition under section 68 - identity, creditworthiness and genuineness of shareholders - onus of proof under section 68 and shift of burden on revenue - reliance on precedents - Lovely Exports and Venkateshwar Ispat

Addition under section 68 - identity, creditworthiness and genuineness of shareholders - onus of proof under section 68 and shift of burden on revenue - Deletion by CIT(A) of the addition of Rs. 3,07,00,000/- made by the AO under section 68 was justified. - HELD THAT: - The Tribunal examined whether the Assessing Officer had legitimately treated share capital and share premium as unexplained credit under section 68. The assessee produced documentary evidence (ROC certificates, PAN, audited accounts, bank statements, confirmations and share documents) in respect of all subscriber companies and thereby discharged the initial onus cast upon it. The CIT(A) found, and the Tribunal recorded, that the AO failed to point to any specific defect in the documents received, did not demonstrate any contemporaneous inquiry establishing that the investors were paper companies, and had not adduced cogent material to show that the monies flowed from the assessee. The remand report of the AO reiterated the AO's adverse view but did not identify fresh or specific evidence contradicting the documentary proof furnished by the assessee. Applying the settled principle that once the assessee proves identity and the fact of receipt, the burden shifts to the revenue to disprove genuineness and creditworthiness, the Tribunal held that the AO's general allegations and reliance on extraneous information (not confronted to the assessee) were insufficient to sustain the addition. The Tribunal followed the binding ratio in Lovely Exports and the jurisdictional authority of Venkateshwar Ispat, which preclude treating share application money as the assessee's unexplained income where the subscriber particulars and documentary evidence are on record and the revenue has not independently established the contrary. [Paras 12, 13, 15]

The Tribunal sustained the CIT(A)'s deletion of the addition under section 68; the revenue's appeal is dismissed.

Final Conclusion: The appeal filed by the revenue is dismissed and the order of the CIT(A) deleting the addition under section 68 is sustained; the cross-objection filed by the assessee is rendered academic and is dismissed.

Capitalization of interest for pre put to use period - proviso to section 36(1)(iii) concerning interest on capital borrowed - depreciation on capitalised interest - depreciation under section 32 read with definition of asset in section 43(1) - application of section 14A where investments have potential to yield exempt income - application of Rule 8D for computation of disallowance under section 14A - Explanation to section 14A (Finance Act, 2022) and its prospective effect

Capitalization of interest for pre put to use period - proviso to section 36(1)(iii) concerning interest on capital borrowed - Disallowance of interest claimed as revenue expenditure which, by reason of portions of the building not being put to use, fell to be capitalized under the proviso to section 36(1)(iii). - HELD THAT: - The Tribunal examined lease commencement dates and the assessee's own calculation of interest to be capitalized. Different units of the building were put to use on different dates during the year; portions not put to use during the relevant periods attracted the operation of the proviso to section 36(1)(iii). The assessee had earlier capitalized interest in prior years for units not completed or not put to use but in the impugned year treated the same interest as revenue expenditure. The proviso is clear that interest for the period from borrowing until first put to use shall not be allowed as deduction; on the facts the assessee did not satisfy the proviso's condition for the entire building and the Assessing Officer's disallowance of the proportionate interest is supported. [Paras 12]

The disallowance of interest claimed as revenue expenditure is sustained; grounds 1.1 and 1.2 are rejected.

Depreciation on capitalised interest - depreciation under section 32 read with definition of asset in section 43(1) - Whether the assessee is entitled to depreciation on the amount of interest which is to be capitalized. - HELD THAT: - A portion of the leased area (2,35,579 sq.ft.) was put to use on various dates during the year and invoices for rent indicate dates on which units commenced yielding income; notably some units were let out (including a small portion on 11.07.2017). Having held that interest for parts was to be capitalised, the Tribunal found that those capitalised amounts were part of assets put to use for business and therefore eligible for depreciation. The Tribunal directed the Assessing Officer to grant depreciation on the capitalized interest in accordance with law and for subsequent years. [Paras 13]

Assessee is entitled to depreciation on the capitalised interest of Rs. 3,28,69,300; ground 1.3 is allowed to that extent and AO is directed to grant depreciation as per law.

Application of section 14A where investments have potential to yield exempt income - application of Rule 8D for computation of disallowance under section 14A - Explanation to section 14A (Finance Act, 2022) and its prospective effect - Whether disallowance under section 14A and computation under Rule 8D can be sustained where the assessee did not actually receive exempt income in the year. - HELD THAT: - The Tribunal reviewed the financial statements (Note No.21) and found that the assessee had not reported any exempt income such as dividend in the year. The coordinate decisions and the jurisdictional High Court authority cited for the proposition that no disallowance can be made in absence of exempt income were considered; the Tribunal also noted that the statutory amendment (Explanation to section 14A by Finance Act, 2022) and the question of its retrospective effect did not aid the revenue for the year under appeal. In view of these considerations and the assessee's own factual position that no exempt income was earned in the year, the Tribunal concluded that the section 14A disallowance should not be sustained. [Paras 14]

Grounds 2.1 to 2.4 are allowed and the disallowance under section 14A is deleted.

Final Conclusion: The appeal is partly allowed: the Assessing Officer's disallowance of interest as revenue expenditure under the proviso to section 36(1)(iii) is sustained in respect of portions not put to use, but the assessee is entitled to depreciation on the capitalised interest; the disallowance under section 14A is deleted as no exempt income was received in AY 2017-18.

Comparability of independent enterprises - Transactional Net Margin Method (TNMM) - segmental results from consolidated financial statements - aggregation of international and specified domestic transactions - remand for verification and fresh consideration - MAT credit verification

Comparability of independent enterprises - segmental results from consolidated financial statements - Transactional Net Margin Method (TNMM) - Inclusion of HSIL Ltd. in the final set of comparables for benchmarking. - HELD THAT: - The Tribunal upheld the DRP/TPO approach to include HSIL Ltd. as a comparable. The DRP had identified two broad divisions in HSIL Ltd., and extracted the building products (tiles and allied products) segmental performance from consolidated financials showing a margin of 19.47%. The Tribunal accepted that consolidated segmental results reliably reflect divisional performance where standalone segmental disclosure is absent, noting that functional profiles of the assessee and HSIL Ltd. broadly align in core activity of tiles and sanitaryware and that product descriptions on websites cannot override financial and functional correlation. The Tribunal rejected the assessee's contention that differences in ancillary products, raw materials or in-house R&D establish functional incomparability, holding that TNMM tolerates some product diversity where core functions and financials are comparable. [Paras 10, 22, 23, 24]

HSIL Ltd. retained in the list of comparables.

Comparability of independent enterprises - use of standalone vs consolidated segmental data - Transactional Net Margin Method (TNMM) - Exclusion of Cera Sanitaryware Ltd. from the final set of comparables. - HELD THAT: - On review of the financial statements and note on consumption of raw materials, the Tribunal found that Cera Sanitaryware Ltd.'s activities and raw material consumption indicate significant operations (notably in faucet production) that could materially distort margin comparison with the assessee. Unlike HSIL Ltd., reliable segmental sales and profit figures attributable to the sanitaryware/vitrified tiles activity could not be extracted for Cera from the available accounts. In the absence of sufficiently reliable segmental information to apportion revenues and profits, the Tribunal concluded it was unsafe to use Cera as a comparable and directed its exclusion. [Paras 25, 26]

Cera Sanitaryware Ltd. excluded from the list of comparables.

Segmental results for comparable analysis - vitrified tiles segmental results - direction to give effect to DRP findings - Direction to adopt the vitrified tiles segmental results of Murudeshwar Ceramics Limited for benchmarking. - HELD THAT: - The DRP had directed that the vitrified tiles segmental results of Murudeshwar Ceramics Limited be used for comparable analysis. The Tribunal observed that the AO/TPO had not given full effect to that direction and accordingly directed the Assessing Officer/TPO to implement the DRP's direction and adopt the vitrified tiles segmental results for margin computation. [Paras 5, 27]

AO/TPO directed to give effect to DRP's direction and use the vitrified tiles segmental results.

Aggregation of international and specified domestic transactions - remand for verification - Transactional Net Margin Method (TNMM) - Question of computation of transfer pricing adjustment arising from aggregation of purchases (international and specified domestic) remanded to AO/TPO for reconsideration and opportunity to assessee. - HELD THAT: - While TNMM and the aggregation approach were not disputed, the Tribunal held that the Assessing Officer/TPO must give the assessee an opportunity and take a view according to law on the computation aspect where aggregation and the choice of PLI interact with the comparables. The issue was accordingly restored to the file of the AO/TPO for verification and fresh consideration; the order treated this ground as allowed for statistical purposes. [Paras 28, 29]

Matter remanded to the Assessing Officer/TPO for verification and fresh decision after affording opportunity to the assessee.

MAT credit verification - remand for verification - Verification and grant of accumulated MAT credit where demand was raised. - HELD THAT: - In respect of the assessment year 2016-17 the Tribunal directed the Assessing Officer to verify the factual position regarding accumulated MAT credit and, if found due, allow the credit. The matter was remitted for factual verification rather than decided on merits. [Paras 30]

AO directed to verify and grant the MAT credit if found admissible.

Final Conclusion: Both appeals are partly allowed: HSIL Ltd. retained as a comparable; Cera Sanitaryware Ltd. excluded; DRP direction to adopt Murudeshwar Ceramics' vitrified tiles segment to be given effect by the AO/TPO; the computation issue relating to aggregation of purchases is remanded to the AO/TPO for reconsideration after affording opportunity to the assessee; MAT credit verification directed for AY 2016-17.

Mixed stock treated as regular business stock - unexplained investment under section 69B - unexplained expenditure under section 69C - income from business and profession - taxation under section 115BBE - onus on assessee to substantiate source of undisclosed amounts

Mixed stock treated as regular business stock - unexplained investment under section 69B - income from business and profession - taxation under section 115BBE - Whether excess stock found during survey is assessable as business income or as unexplained investment under section 69B - HELD THAT: - The Tribunal found that the excess physical stock discovered during the survey was mixed with the assessee's regular trading stock and was not separately identified as distinct investment. The assessee's sole source of income is trading in jewellery and the excess stock was available for trade at the business premises. In such circumstances, it is a permissible inference that the excess stock was acquired out of business income and reinvested in stock, and therefore is assessable under the head 'income from business and profession' rather than as an 'unexplained investment' under section 69B. The Tribunal relied on co-ordinate Bench decisions and the principle in Bajargan Traders that where stock is part of regular business stock and there is corresponding accounting treatment, it should be treated as business income; it distinguished the facts of M/s SVS Oil Mills where there was no corresponding credit in books. Consequently, the AO and the CIT(A) erred in treating the excess stock as unexplained investment and taxing it under section 115BBE. [Paras 7, 8]

Direct AO to assess the excess stock as income from business and profession as declared by the assessee.

Unexplained expenditure under section 69C - unexplained investment under section 69B - income from business and profession - Whether admitted expenditure on son's marriage is assessable as unexplained investment under section 69B or as unexplained expenditure under section 69C / business income - HELD THAT: - The Tribunal held that unexplained expenditure is not an investment; therefore, the AO and CIT(A) were incorrect to assess the admitted marriage expenditure under section 69B. The assessee has no source of income other than the business and had offered the amount as business income. Absent any other source, the legitimate conclusion is that the expenditure was met from business receipts. Accordingly, the amount should be assessed as income from business and profession (and, if considered unexplained expenditure, under section 69C), but not as unexplained investment under section 69B or taxed under section 115BBE on that basis. [Paras 9]

Direct AO to assess the admitted marriage expenditure as income from business and profession (and not as unexplained investment under section 69B).

Final Conclusion: The appeal is allowed: the Tribunal set aside the AO's and CIT(A)'s classification of the amounts as unexplained investments under section 69B and directed assessment of the excess stock and the admitted marriage expenditure under the head 'income from business and profession' for AY 2018-19.

Re-testing of samples under Circular 30/2017-Customs - confiscation under Section 111(d) and 111(m) of the Customs Act, 1962 - principles of natural justice in sample testing and adjudication - classification and mis-declaration of imported goods - release of seized goods subject to further action by the authority

Re-testing of samples under Circular 30/2017-Customs - principles of natural justice in sample testing and adjudication - Whether the petitioner was entitled to re-testing of seized samples and whether refusal to permit re-testing amounted to legal infirmity. - HELD THAT: - The Court found that the petitioner's grievance about denial of re-testing under Circular 30/2017-Customs was well-founded. While the show cause notice was originally issued on the basis of the Vadodara Laboratory report, the Court directed re-testing in accordance with the Circular and permitted subsequent retests (Mumbai Laboratory and CRCL, New Delhi). The initial refusal to allow re-testing was without legal basis and offended the procedural expectations underlying sample-testing and the adjudicatory process; accordingly, the Court entertained the writ petition because this infirmity went to the root of the matter and warranted judicial intervention. [Paras 7, 9]

The petitioner was entitled to re-testing; the refusal to permit re-testing was legally flawed.

Confiscation under Section 111(d) and 111(m) of the Customs Act, 1962 - classification and mis-declaration of imported goods - Whether the show cause notice and the order confiscating the goods could be sustained in light of subsequent laboratory reports. - HELD THAT: - The show cause notice and the adjudication were based solely on the Vadodara Laboratory report which classified the samples as kerosene. Subsequent testing (Mumbai Laboratory) and re-testing (CRCL, New Delhi) consistently found the samples to be base oil/mineral hydrocarbon oil (more than 70% mineral hydrocarbon oil). On this factual and evidentiary basis the foundational premise for confiscation under Section 111(d) and (m) collapsed. The Court held that the show cause notice in its present form and the consequent order could not survive when testing and re-testing in accordance with the prescribed Circular produced contrary and consistent results. [Paras 8, 10, 11]

The show cause notice and the confiscation order are not sustainable and are set aside.

Release of seized goods subject to further action by the authority - classification and mis-declaration of imported goods - Whether the seized goods should be released and whether the Directorate of Revenue Intelligence may pursue further proceedings on classification or mis-declaration. - HELD THAT: - Given the consistent findings of the Mumbai Laboratory and CRCL, New Delhi that the samples comprise base oil/mineral hydrocarbon oil, the Court concluded the goods were neither restricted nor prohibited and ordered their release subject to requisite procedure. However, the Court expressly left open the limited question of possible mis-classification or mis-declaration for the Directorate of Revenue Intelligence to pursue under the Act; liberty was reserved to take further steps in accordance with law. [Paras 10, 11]

Seized goods to be released subject to procedure; authority permitted to take further lawful action on classification/mis-declaration.

Final Conclusion: The writ petition is allowed: the show cause notice and the order of confiscation are set aside; in view of consistent re-testing reports the seized goods shall be released subject to formal procedure, the deposit made by the petitioner shall be refunded with interest, and the Directorate of Revenue Intelligence may still pursue any lawful action on classification/mis-declaration.

Anticipatory bail - Proclamation under Section 82 Cr.P.C. - Declared proclaimed offender - Preliminary objection based on proclamation barring anticipatory bail - Non-cognizable and bailable offence - Delay in lodging the F.I.R. - Applicability of precedents in factual matrix (Lavesh and Sanatan Pandey) - Allegations under Prevention of Corruption Act against a non-public servant

Proclamation under Section 82 Cr.P.C. - Declared proclaimed offender - Preliminary objection based on proclamation barring anticipatory bail - Validity and effect of the proclamation issued under Section 82 Cr.P.C. and whether it operates to bar grant of anticipatory bail to the applicant. - HELD THAT: - The Court recorded that a proclamation under Section 82(1) Cr.P.C. was issued on 01.08.2023 requiring the applicant to appear on 02.09.2023, but there is no material on record to show publication in any of the modes mandated by Section 82(2) Cr.P.C. and no written statement under Section 82(3) was produced by the issuing Court to prove such publication. Because the proclamation has not been shown to have been duly published, the prerequisite for invoking the consequences under Section 82(4) - including declaration as a proclaimed offender - has not arisen. The Court therefore held that the legal bar articulated in Lavesh, which applies where the accused has been declared a proclaimed offender, is not attracted in the present factual situation, and the preliminary objection relying on Section 82 was rejected. [Paras 6, 7, 8, 10, 13]

Preliminary objection that the proclamation under Section 82 Cr.P.C. precludes grant of anticipatory bail is rejected because the proclamation was not shown to have been duly published and the applicant has not been declared a proclaimed offender.

Anticipatory bail - Non-cognizable and bailable offence - Delay in lodging the F.I.R. - Applicability of precedents in factual matrix (Lavesh and Sanatan Pandey) - Allegations under Prevention of Corruption Act against a non-public servant - Whether, on merits and in view of the factual matrix, the applicant is entitled to anticipatory bail. - HELD THAT: - The Court noted the material facts: the alleged recovery dated 19.12.2019 but the F.I.R. was lodged only on 10.08.2022 without explanation for delay; the substantive offence under the Customs Act is non-cognizable and bailable with maximum prescribed imprisonment up to three years; the C.B.I. has alleged offences under the Prevention of Corruption Act though the applicant is not a public servant; a co-accused has already been granted anticipatory bail; and the applicant has no other criminal history. The Court observed that Sanatan Pandey was decided on its particular facts where the accused had been absconding despite directions to surrender, and that precedent does not dictate refusal here. Weighing these factors, the Court found them sufficient to make out a case for grant of anticipatory bail and proceeded to grant relief subject to conditions. [Paras 15, 16, 17, 18, 19]

Anticipatory bail is allowed; upon arrest or appearance the applicant shall be released on bail on furnishing personal bond and two solvent sureties to the satisfaction of the concerned Officer/Court, subject to specified conditions regarding attendance, non-tampering with evidence and non-intimidation of witnesses.

Final Conclusion: The Court rejected the preliminary objection based on issuance of a proclamation under Section 82 Cr.P.C. because publication and declaration as a proclaimed offender were not shown; on merits, having regard to delay in lodging the F.I.R., the non-cognizable and bailable nature of the substantive offences, absence of public-servant status for the applicant, and other circumstances, anticipatory bail was granted subject to bond, sureties and specified conditions.

Transaction value - transaction value cannot be rejected without cogent reasons - enhancement of assessable value based on contemporaneous imports - reliance on a single contemporaneous import - evidence of commercial comparability (quality, quantity, manufacturer) - confiscation and imposition of redemption fine under the Customs Act, 1962 - penalty under section 112(a) of the Customs Act, 1962

Transaction value - transaction value cannot be rejected without cogent reasons - reliance on a single contemporaneous import - evidence of commercial comparability (quality, quantity, manufacturer) - Whether the transaction value declared in the Bills of Entry could be rejected and enhanced by the department on the basis of a single contemporaneous import without assigning cogent reasons and demonstrating commercial comparability. - HELD THAT: - The Tribunal found that the Order-in-Original did not record proper or cogent reasons for rejecting the declared transaction value. The original authority discussed legal provisions relating to transaction value but failed to explain why the appellant's declared unit price was unacceptable. The department enhanced value relying on a single Bill of Entry dated 25.11.2010 of a direct import from Uzbekistan, whereas the appellant's imports were from Dubai though of Uzbek origin; no comparison was made on commercial parameters such as quality, quantity or manufacturer. The appellant produced data of contemporaneous imports from Uzbekistan during the relevant period showing declared values in the same range as the appellant's declaration, and the department had accepted those values. Absent specific, satisfactory reasons to doubt the transaction value and absent evidence of comparability between the cited import and the appellant's consignments, the rejection of transaction value was unsustainable. The Tribunal applied the principle that transaction value cannot be discarded without cogent reasons and followed its earlier decision in Sree Rajendra Textiles to that effect. [Paras 6, 7]

The rejection of the declared transaction value and the enhancement of value on the basis of the single contemporaneous import was not justified and is set aside.

Confiscation and imposition of redemption fine under the Customs Act, 1962 - penalty under section 112(a) of the Customs Act, 1962 - Whether the demand of duty, order of confiscation, redemption fine and penalty imposed could be sustained in view of the incorrect enhancement of assessable value. - HELD THAT: - Having held that the transaction value could not be rejected on the record before the original authority, the Tribunal concluded that consequential measures founded on that enhanced valuation - namely the demand of differential duty, confiscation of goods, imposition of redemption fine and penalty under section 112(a) - could not be sustained. The Tribunal therefore allowed the appeals and set aside the demand, confiscation, redemption fine and penalty. [Paras 7]

The demand of duty, confiscation, redemption fine and penalty are set aside and the appeals are allowed with consequential relief, if any.

Final Conclusion: The Tribunal allowed the appeals, holding that the transaction value declared could not be rejected without cogent reasons or demonstration of commercial comparability with the relied contemporaneous import; accordingly the enhanced demand, confiscation, redemption fine and penalty were set aside.

Enhancement of declared value - re-assessment contrary to self-assessment - speaking order under Section 17 (5) of the Customs Act, 1962 - payment under protest - unsustainability of reassessment without reasons

Enhancement of declared value - re-assessment contrary to self-assessment - speaking order under Section 17 (5) of the Customs Act, 1962 - payment under protest - Validity of enhanced assessed value where reassessment was made contrary to the importer's self-assessment but no speaking order under Section 17(5) was passed and duty was paid under protest. - HELD THAT: - The Tribunal held that where a re-assessment is contrary to the importer's self-assessment, the proper officer is required to pass a speaking order on the re-assessment within fifteen days under Section 17(5) unless the importer confirms acceptance of the re-assessment in writing. The mere payment of duty on the enhanced value under protest to obtain delivery does not constitute written acceptance of the re-assessment. In the absence of any speaking order giving reasons for enhancement and rejection of the declared value, the enhancement cannot be sustained. Applying this principle to the facts, since no order under Section 17(5) was passed although the goods were cleared after payment under protest, the reassessment was unsustainable and the appellate authority correctly set aside the enhancement.

Enhancement of the declared value was held unsustainable for want of a speaking order under Section 17(5); the impugned order setting aside the enhancement is sustained.

Final Conclusion: The Revenue's appeal is dismissed; the enhancement of declared value is unsustainable in the absence of a speaking order under Section 17(5) despite payment of duty under protest, and the impugned order is upheld.

Penalty under Section 114(iii) of the Customs Act, 1962 - Abetment and connivance - Over-valuation of exports and cancellation of DEPB benefits - Standard of proof by preponderance of probabilities - Role and scope of market enquiry conducted by inspecting officer

Penalty under Section 114(iii) of the Customs Act, 1962 - Abetment and connivance - Role and scope of market enquiry conducted by inspecting officer - Whether penalty under Section 114(iii) could be sustained against the appellant officer for alleged facilitation/abetment in over-valuation of exports. - HELD THAT: - The Tribunal found no evidence of deliberate connivance or abetment by the appellant. The findings of the adjudicating authority that the appellant accepted vague descriptions, did not verify values, or omitted certain procedural acts were examined against the material produced by the appellant showing full realisation of the shipping bill values by the exporter and that the market enquiry was conducted by the Inspector authorised to do so. The appellant's brief posting at the ICD and absence of specialized appraiser at that location, together with the Inspector's conduct of market enquiry and lack of proof of any intentional omission or wrongful act by the appellant, led the Tribunal to conclude that the allegations were unfounded. On these facts, the imposition of penalty for abetment under Section 114(iii) was not warranted. [Paras 13]

Penalty imposed under Section 114(iii) set aside in respect of the appellant; appeal allowed with consequential benefits.

Final Conclusion: The Tribunal held that the Revenue failed to establish connivance or abetment by the appellant and, in view of the material showing realisation of export proceeds and that market enquiry was conducted by the Inspector, the penalty under Section 114(iii) could not be sustained; the impugned order is set aside as to the appellant and the appeal is allowed with consequential benefits.

Amendment of documents under Section 149 - Shipping bill post-export amendment - Conversion of shipping bill - Time limit prescribed by Board Circular - Shipping Bill (Post Export Conversion in relation to Instrument Based Scheme) Regulations, 2022 - Merchandise Export from India Scheme (MEIS) - Board Circular No. 36/2010-Cus

Amendment of documents under Section 149 - Time limit prescribed by Board Circular - Board Circular No. 36/2010-Cus - Validity of refusal to entertain post-export amendment on the ground that the application was not made within the time limit prescribed by Board Circular No.36/2010-Cus. - HELD THAT: - The Tribunal held that at the relevant time Section 149 did not prescribe any time limit for authorising amendments to shipping bills and related documents; therefore a Board circular prescribing a time limit cannot override the statutory position. The court relied on precedents, including the Gujarat High Court decision in Principal Commissioner of Customs, Mundra vs. Lykis Ltd., which concluded that a time limit cannot be fixed by circular where none exists in the statute. The Tribunal further observed that subsequent regulations prescribing time limits (the 2022 Regulations) came into force after the appellant had filed its application, and hence could not be applied retrospectively to deny the application. On these grounds the impugned communication denying the amendment solely for being outside the circular's time limit was set aside. [Paras 3, 5, 6]

The refusal to entertain the amendment application on the sole ground of non-compliance with the time limit in Board Circular No.36/2010-Cus was not justified and is set aside.

Shipping bill post-export amendment - Shipping Bill (Post Export Conversion in relation to Instrument Based Scheme) Regulations, 2022 - Conversion of shipping bill - Merchandise Export from India Scheme (MEIS) - Entitlement of the appellant to have its application dated 04.02.2022 for amendment/conversion of shipping bills considered despite subsequent issuance of formal regulations prescribing conversion procedure and time limits. - HELD THAT: - The Tribunal noted that the appellant filed its application for post-export amendment before the 2022 Regulations were notified, and therefore there was no statutory time limit applicable at the time of filing. Applying the legal position that amendments under Section 149 are permissible unless barred by statute, and having found no statutory prohibition, the Tribunal directed the Department to consider the appellant's application dated 04.02.2022 for amendment of the shipping bills. The Tribunal relied on earlier orders which allowed conversion of shipping bills in similar circumstances and concluded that the appellant is entitled to have its request considered on merit. [Paras 4, 6, 7]

The appeal is allowed and the Department is directed to consider the appellant's application dated 04.02.2022 for amendment/conversion of the shipping bills.

Final Conclusion: The impugned communication denying post-export amendment solely on the basis of delay under Board Circular No.36/2010-Cus is set aside; the appeal is allowed and the Department is directed to consider the appellant's application dated 04.02.2022 for amendment/conversion of the shipping bills.

Change of corporate name does not amount to transfer of assets - Certificate of Incorporation not an 'instrument' under the Indian Stamp Act and the Registration Act - stamp duty and registration fee chargeable only on instruments of transfer - permission under Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act and recording of title in revenue records - statutory vesting on conversion/alteration in corporate identity does not require separate conveyance

Change of corporate name does not amount to transfer of assets - permission under Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act and recording of title in revenue records - Whether change of name of a company with Registrar of Companies' approval amounts to transfer of land/assets attracting stamp duty and registration fee under the Himachal Pradesh Tenancy and Land Reforms Act, 1972. - HELD THAT: - The Court held that mere change of corporate name pursuant to statutory procedure (special resolution and issuance of Certificate of Incorporation by the Registrar of Companies) does not constitute a transaction of sale or transfer of the company's property. The facts were undisputed that the corporate identity (CIN) remained the same and that the subject land continued to be used for the same industrial purpose for which permission under S.118 had earlier been granted. Relying on the Division Bench precedent in JSTI Transformers and other authorities cited therein, the Court accepted the legal proposition that acquisition of shareholding or alteration of corporate name does not effectuate transfer of the company's assets or leasehold interests and therefore does not attract transfer charges merely on account of recordal of name change in revenue records. The Court observed that permission under S.118 and the Land Records Manual allow change of name entries where no transfer of property has occurred, and that respondents erred in treating the recordal of name-change as a transfer of land. [Paras 16, 17, 22, 23, 27]

Change of name effected by Registrar of Companies and consequent recordal in revenue documents does not amount to transfer of assets under S.118 and therefore does not, by itself, attract stamp duty or registration fee.

Certificate of Incorporation not an 'instrument' under the Indian Stamp Act and the Registration Act - stamp duty and registration fee chargeable only on instruments of transfer - Whether the Certificate of Incorporation issued on change of name or the act of recording change of name in revenue records is an 'instrument' attracting stamp duty and registration fee under the Indian Stamp Act, 1899 and the Registration Act, 1908. - HELD THAT: - The Court found that the Certificate of Incorporation issued upon alteration of name under the Companies Act and the consequent entry effected under Rule 29 or the corresponding provisions is not an instrument of transfer within the meaning of the Stamp Act or the Registration Act. The Court emphasised that stamp duty and registration charges are leviable only upon specified instruments of transfer; where the change is statutory (change of name or conversion) and no instrument effecting transfer of property is executed, levy of stamp duty/registration fee is not warranted. Applying the settled precedents cited (including authorities dealing with conversion/vesting and prior Division Bench pronouncements), the Court concluded that the impugned conditions imposing stamp duty and registration fee on recordal of name-change were legally untenable. [Paras 18, 23, 25]

Certificate of Incorporation and recordal of corporate name-change are not instruments attracting stamp duty or registration fee; consequently, conditions imposing such charges are invalid.

Final Conclusion: The writ petition was allowed: Conditions 1 and 2 of the impugned approval letter dated 28.03.2019, which required payment of stamp duty and registration fee on account of change of company name and change in constitution, were quashed and set aside; respondents were directed to take further action accordingly.

Winding up petition - Prima facie inquiry - Substantial dispute as to liability - Bona fide defence - Admission in balance sheet - Umbrella bank guarantee - Suspicion about document authenticity - Tripartite guarantee requirement - Appellate restraint on interference with discretion

Winding up petition - Prima facie inquiry - Appellate restraint on interference with discretion - Whether the Single Judge erred in rejecting the petition for winding up and whether this Court should interfere with that exercise of discretion. - HELD THAT: - The Court applied settled principles that an intra court appeal against the exercise of judicial discretion will not be interfered with unless the impugned finding is arbitrary, capricious or perverse. The limited scope on appeal is to examine whether the Single Judge's prima facie conclusion-after considering material on record and possible suspicion about documents-was one reasonably open on the material. The Division Bench concluded the Single Judge's findings were neither perverse nor based on extraneous material and therefore not susceptible to appellate interference. [Paras 27, 28, 54, 55]

The Single Judge's exercise of discretion in refusing admission of the petition for winding up was not shown to be arbitrary or perverse and the appellate court will not substitute its view; the appeal is rejected on this ground.

Umbrella bank guarantee - Tripartite guarantee requirement - Suspicion about document authenticity - Whether the bank guarantee dated 20.12.2004 produced by the appellant in fact secured the loan sanctioned to the respondent and whether the annexure relied upon was reliable. - HELD THAT: - The Court examined the umbrella guarantee dated 20.12.2004 and the annexures produced subsequently. The guarantee itself did not refer to the respondent or the loan; the annexure purporting to link the respondent's loan to the umbrella guarantee bore internal inconsistencies given that the Mumbai sanction letter post dates the guarantee. The appellant and the bank initially refused to produce annexures and later filed translated copies, which gave rise to legitimate suspicion. On that record the Single Judge's conclusion that the annexure's reference to the respondent's loan was doubtful was a tenable prima facie finding. [Paras 41, 42, 44, 46, 47]

The connection between the umbrella guarantee and the respondent's loan was not satisfactorily established and the annexure's authenticity was legitimately doubtful; the Single Judge's findings on these points were upheld.

Admission in balance sheet - Substantial dispute as to liability - Bona fide defence - Whether references in the respondent's balance sheets and accounts constituted an admission sufficient to establish that the specific guarantee dated 20.12.2004 secured the loan and defeated the respondent's defence. - HELD THAT: - The Court accepted that while balance sheets may contain entries referring to guarantees, such entries must be read in context and linked to the specific instrument claimed. The learned Single Judge found that the so called admissions did not refer specifically to the umbrella guarantee dated 20.12.2004 and therefore did not negate the respondent's defence. Applying authorities that a winding up petition must be dismissed where a bona fide substantial dispute exists, the Court held the respondent's defence could not be classified as moonshine and was a substantial dispute requiring adjudication in an appropriate forum. [Paras 30, 49, 50, 51, 52]

The references in the balance sheets did not amount to conclusive admission regarding the specific guarantee; the respondent raised a bona fide substantial defence and the petition was correctly rejected on that basis.

Final Conclusion: The Division Bench declined to disturb the Single Judge's order refusing admission of the winding up petition: the appellant failed to establish that the umbrella guarantee dated 20.12.2004 indisputably secured the respondent's loan, genuine suspicion existed as to the annexures, and the respondent raised a bona fide substantial defence; the appeal is dismissed and parties shall bear their own costs.

Exclusion of financial service providers from the definition of corporate person under Section 3(7) - definition of financial service and financial service provider under Section 3(16)-(17) - power of Central Government to notify financial service providers for insolvency proceedings under Section 227 - SEBI-registered stock-brokers as financial service providers - harmonious reading of the exclusion of financial service providers and inclusion of stock broking activities under Section 5(8)(g) - maintainability of an application under Section 7 against a corporate debtor

Definition of financial service and financial service provider under Section 3(16)-(17) - SEBI-registered stock-brokers as financial service providers - exclusion of financial service providers from the definition of corporate person under Section 3(7) - power of Central Government to notify financial service providers for insolvency proceedings under Section 227 - Whether the Corporate Debtors (Simandhar Broking Ltd. and Astitva Capital Market Pvt. Ltd.), being SEBI-registered stock-brokers and trading members of NSE, are financial service providers and thereby excluded from the definition of "corporate person" for the purposes of initiation of CIRP under Section 7 of the Code. - HELD THAT: - The Tribunal examined the Memoranda of Association of the two companies, their registration with SEBI and status as trading members of NSE, and the statutory definitions in Section 3(15)-(17) of the Code. The activities of the companies-buying, selling and broking of securities, and other services described in their objects-fall within the inclusive definition of "financial service" (notably clause (e)) and, being registered with SEBI, bring them within the definition of a "financial service provider." Section 3(7) expressly excludes any financial service provider from the definition of a "corporate person," and Section 227 contemplates that only categories of FSPs notified by the Central Government may be subjected to insolvency proceedings under the Code in the manner prescribed. The statutory scheme, the Sub Committee Report and the 2019 Notification and Rules demonstrate that regulated financial firms (including stockbrokers) are treated as FSPs for these purposes. A stock-broker's being subject to SEBI/NSE grievance and regulatory mechanisms further supports that such entities are FSPs and ordinarily outside the scope of Section 7 proceedings unless specifically notified under Section 227. The Tribunal rejected the Adjudicating Authority's contrary reading that Section 5(8)(g) brings stock broking within CIRP; that provision must be read harmoniously and does not override the specific exclusion of FSPs from "corporate person." [Paras 31, 32, 33, 34, 42]

Simandhar Broking Ltd. and Astitva Capital Market Pvt. Ltd., being SEBI registered stock-brokers and trading members of NSE, are financial service providers and thus excluded from the definition of "corporate person"; they are not amenable to initiation of CIRP under Section 7 unless covered by a valid Notification under Section 227.

Maintainability of an application under Section 7 against a corporate debtor - harmonious reading of the exclusion of financial service providers and inclusion of stock broking activities under Section 5(8)(g) - power of Central Government to notify financial service providers for insolvency proceedings under Section 227 - Validity of the NCLT orders admitting Section 7 applications against the two Corporate Debtors and the consequent reliefs. - HELD THAT: - Having concluded that the Corporate Debtors are financial service providers excluded from the definition of a corporate person, the Tribunal held that the Adjudicating Authority erred in admitting the Section 7 petitions. The Tribunal found that the Adjudicating Authority misconstrued Section 5(8)(g) and failed to consider the statutory exclusion and the regulatory framework (SEBI/NSE grievance mechanisms and the role of Section 227). In the second matter, the Tribunal also noted that the Section 7 petition filed by an ex-director appeared to be used to obtain moratorium and stall regulator-initiated proceedings. In consequence, the admissions under Section 7 were unsustainable; the CIRPs must be closed and the RPs/IRPs discharged. The Tribunal left open appropriate avenues for claims for RP/IRP fees and for intervenors (such as the applicant seeking possession) to pursue remedies in the competent civil forum now that CIRP is closed. [Paras 40, 41, 43, 44, 45]

The orders of the Adjudicating Authority admitting the Section 7 applications are set aside; the CIRPs are closed and the RPs/IRPs stand discharged, subject to the adjudicating authority dealing with any applications for RP/IRP fees and costs and the preservation of intervenors' rights to pursue relief in ordinary civil forums.

Final Conclusion: Both appeals are allowed: the Tribunal held that the two Corporate Debtors are financial service providers (SEBI registered stock brokers) and thus not "corporate persons" under the Code for purposes of Section 7; the NCLT orders admitting Section 7 petitions are set aside, the CIRPs are closed and the RPs/IRPs are discharged, with liberty to seek RP/IRP fees and for affected parties to pursue civil remedies.

Inclusion of belated claims in CIRP after approval of resolution plan - contingent claims in resolution plans - duty of resolution professional to procure corporate debtor's records - deemed knowledge from public announcement under IBC - time-bound nature of CIRP and condonation of delay - protection of successful resolution applicant from undecided claims

Inclusion of belated claims in CIRP after approval of resolution plan - protection of successful resolution applicant from undecided claims - Whether a belated claim arising from an arbitral award (then pending in appeal) can be entertained and included after the Committee of Creditors has approved the resolution plan. - HELD THAT: - The Court held that permitting a belated claim at the stage after the COC has approved the resolution plan would undermine the finality of the CIRP and expose a successful resolution applicant to uncertain, undecided liabilities, thereby defeating the object of a time bound insolvency process. Reliance was placed on the principle articulated in Essar Steel that a successful resolution applicant cannot be faced with 'undecided' claims after acceptance of the resolution plan, since all claims must ordinarily be submitted to and decided by the resolution professional so that a prospective resolution applicant knows the liabilities it is assuming. Allowing the appellant's belated claim would risk reopening the process and encourage similar late claims, making CIRP prolonged and inefficacious. On these grounds the Court found no merit in reopening the COC-approved plan to entertain the appellant's claim at a belated stage. [Paras 16, 21, 22]

Belated claim not liable to be included after COC approval; NCLAT's conclusion upholding rejection of the claim cannot be faulted.

Duty of resolution professional to procure corporate debtor's records - Whether the Resolution Professional was at fault for not locating or verifying the Corporate Debtor's records concerning the arbitral award. - HELD THAT: - The Court examined the RP's actions and found that the RP had taken steps to procure records, including filing an application under Section 19 of the IBC to obtain the ex management's records. That the attempt did not yield material was attributable to the corporate debtor's non cooperation and not to any procedural flaw on the part of the RP. It was therefore not established that the RP failed in his duty in a manner that would justify allowing the belated claim. [Paras 17, 18]

Resolution Professional was not at fault for inability to locate records; no basis to fault the claims process on this ground.

Deemed knowledge from public announcement under IBC - time-bound nature of CIRP and condonation of delay - Whether the appellant's claimed ignorance of the public announcement excused its failure to file the claim within the prescribed period and whether the delay ought to be condoned. - HELD THAT: - The Court held that Section 15 of the IBC and Regulation 6 of the IBBI Regulations require a public announcement of the CIRP through newspapers, which constitutes deemed knowledge, particularly for a commercial entity engaged in litigation with the corporate debtor. Given the commercial status of the appellant and the availability of the prescribed public notice mechanism, the appellant's plea of unawareness of the newspaper announcement was rejected. The Court emphasised the time bound character of the IBC and observed that allowing condonation of the appellant's 287 day delay would jeopardise the finality and efficacy of the insolvency process. [Paras 19, 20]

Appellant's ignorance of the public announcement does not excuse the delay; delay not liable to be condoned.

Final Conclusion: The appeal is dismissed; the NCLAT's decision upholding rejection of the belated claim is sustained, the Resolution Professional was not at fault in his conduct, the appellant cannot rely on ignorance of the public announcement to excuse substantial delay, and the CIRP's finality and protection of the successful resolution applicant preclude reopening the approved plan.

Entitlement to refund with interest - effect of interim stay on liability to pay interest - interest on refunded sums from specified date until realisation - distinction between proceedings before the Court and subsequent departmental adjudication

Entitlement to refund with interest - effect of interim stay on liability to pay interest - distinction between proceedings before the Court and subsequent departmental adjudication - Whether the Department is liable to pay interest on the sums ordered to be refunded by the Delhi High Court (as affirmed by this Court) despite an interim stay issued on the High Court judgment and ongoing departmental adjudication. - HELD THAT: - This Court observed that its interim order dated 27.09.2016 stayed the operation of the Delhi High Court judgment while permitting the Department to continue adjudication but protecting the assessees from coercive steps, and expressly stated that if the respondents succeed they shall be entitled to refund with interest. The Court held that the question of entitlement to refund with interest was referable to the proceedings pending before this Court and not to any subsequent departmental adjudication commenced thereafter. Consequently, the interim stay did not negate the assessees' entitlement to interest as directed by the Division Bench of the High Court and affirmed by this Court. Applying that conclusion, the Department was held liable to pay interest at the rate directed by the High Court, from 01.10.2016 until the date of realisation, on the sums ordered to be refunded.

The Department is liable to pay interest at 6% per annum on the sums ordered to be refunded from 01.10.2016 until realisation.

Final Conclusion: Miscellaneous Applications allowed; Department directed to pay interest at 6% per annum on the specified refunded sums from 01.10.2016 until the date of realisation in accordance with the High Court order as affirmed by this Court.

Adjustment of pre-deposit under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - treatment of amounts paid prior to issuance of show cause notice as pre-deposit - deduction of pre-deposit while issuing statement indicating amount payable - interpretation of Section 124(2) of the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019

Adjustment of pre-deposit under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - treatment of amounts paid prior to issuance of show cause notice as pre-deposit - deduction of pre-deposit while issuing statement indicating amount payable - interpretation of Section 124(2) of the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - Whether amounts deposited by the petitioner towards duty and interest prior to issuance of the Show Cause Notice dated 02.12.2019 qualify as pre-deposit under the SVLDRS and must be adjusted while issuing the statement of amount payable under the Scheme. - HELD THAT: - The Court examined the language and effect of Section 124(2) of the Sabka Vishwas Scheme and held that the relief granted under Sub section (1) is subject to deduction of amounts paid as pre deposit at any stage of appellate proceedings or as deposit during enquiry, investigation or audit when issuing the statement indicating the amount payable by the declarant. The proviso to the sub section only deals with excess pre deposits and does not prevent adjustment. In the present case the tax proposed in the show cause notice dated 02.12.2019 included excise duty and interest; prior to that notice the petitioner had paid sums towards duty and interest on 12.04.2019 and 09.04.2019 respectively. Those payments corresponded to the amounts that were proposed to be recovered in the show cause notice and therefore constituted pre deposits within the meaning of the provision. The Department's contention that such payments were not made 'under protest' or otherwise not to be treated as pre deposits was rejected as contrary to the clear statutory scheme which mandates deduction of such amounts when computing the payable under SVLDRS. Consequently, the Designated Authority was directed to adjust the pre deposited amounts against the liability and to issue Form SVLDR 4 to the petitioner within the time stipulated by the Court. [Paras 10, 11, 12, 13, 14]

Pre deposits made by the petitioner prior to issuance of the show cause notice are to be deducted in computing the amount payable under the SVLDRS; the respondents are directed to adjust the sum pre deposited and issue Form SVLDR 4 within 45 days.

Final Conclusion: Writ petition allowed; the Designated Authority must adjust the pre deposited amounts paid by the petitioner and issue Form SVLDR 4 in accordance with the Scheme within 45 days, as directed by the Court.

Classification of services as Mining Service v. Business Auxiliary Service - Applicability of section 65A precedence among sub-clauses - Taxability of mining-related services from 1.6.2007 - Setting aside penalties where levy not leviable for earlier period

Classification of services as Mining Service v. Business Auxiliary Service - Applicability of section 65A precedence among sub-clauses - Activity of collection, cleaning, segregation and stacking of blasted raw magnesite is classifiable as a 'Mining Service' and not as a 'Business Auxiliary Service'. - HELD THAT: - The Tribunal found that the appellant's activities-collection, cleaning, segregation and stacking of blasted raw magnesite-are provided in relation to mining and form part of mining operations, and are therefore more appropriately classified as 'Mining Service'. The impugned order's approach that the activity could be equally classifiable under both heads and the appellate authority's adoption of 'Business Auxiliary Service' was rejected. The Tribunal concurred with a Coordinate Bench decision and earlier authorities considering similar facts, holding that the activity falls within mining services rather than business auxiliary services. [Paras 7]

Classified as 'Mining Service' under section 65(105)(zzzy) of the Finance Act, 1994.

Taxability of mining-related services from 1.6.2007 - Setting aside penalties where levy not leviable for earlier period - Service tax demand is leviable only from 01/06/2007; duty and interest to be worked out from that date and penalties/late fee set aside for the earlier period. - HELD THAT: - The Tribunal observed that mining activities were made taxable by legislation effective from 1.6.2007. Since the disputed period runs from 6.10.2006 to 11.6.2007, a major part of the period predates the levy of service tax on mining activities. Consequently, the demand must be restricted to the period from 01/06/2007 onwards; duty and interest are to be computed accordingly. As duty was payable only from 01/06/2007, the penalties and late fee imposed for the earlier period were set aside. [Paras 7]

Demand restricted to period from 01/06/2007 onwards; compute duty and interest from that date; penalties and late fee set aside.

Final Conclusion: Appeal allowed in part: the services are held to be 'Mining Service', the demand is confined to the post-01/06/2007 period with duty and interest to be computed accordingly, and penalties/late fee imposed for the pre-01/06/2007 period are set aside; appellant entitled to consequential relief as per law.

Liability of sub-contractor to pay Service Tax where main contractor has discharged tax - extended period of limitation for Service Tax demands - time-bar (limitation) in tax demands - absence of mala fide intention as precluding invocation of extended period - precedential effect of a larger bench resolving conflicting judgments

Liability of sub-contractor to pay Service Tax where main contractor has discharged tax - extended period of limitation for Service Tax demands - absence of mala fide intention as precluding invocation of extended period - time-bar (limitation) in tax demands - Whether the demand for Service Tax from the sub-contractor could be sustained by invoking the extended period of limitation when the main contractor had earlier discharged Service Tax on the full contract value. - HELD THAT: - The Tribunal noted that the substantive question of the sub-contractor's liability had been the subject of conflicting decisions but was ultimately settled by a larger bench in Melange Developers (supra) holding the sub-contractor liable. However, where contradictory precedents existed during the relevant period and the taxpayer acted in that legal environment, the Tribunal followed its earlier decisions holding that no mala fide intention could be attributed to the assessee. In such circumstances the requirement for invoking the extended period was not satisfied. Having regard to comparable facts and periods dealt with in the Tribunal's cited decisions, the demand insofar as it was sought to be sustained beyond the normal period of limitation could not be sustained and was time-barred. The impugned order was therefore set aside solely on the ground of limitation. [Paras 4, 5]

Demand beyond the normal period of limitation is time-barred and the impugned order is set aside on that ground.

Final Conclusion: The appeal is allowed and the impugned order is set aside solely on the ground that the demand is barred by limitation; the question of substantive liability was noted as settled by the larger bench but extended period could not be invoked in the absence of mala fide conduct.

Service tax liability on computer-to-computer linkage/CTCL charges of stock brokers - Non-includible statutory pass-through recoveries in assessable value of brokerage - Burden on Revenue to prove receipts are commission or brokerage - No implied power to tax - charging provision must clearly cover receipt - Service tax on commission for distribution of mutual funds and sale of bonds - effect of quashed Board circular - Tax exemption for commission on sale of Government/RBI securities as sovereign function - Consequences for penalties where underlying demand is set aside

Service tax liability on computer-to-computer linkage/CTCL charges of stock brokers - Non-includible statutory pass-through recoveries in assessable value of brokerage - Burden on Revenue to prove receipts are commission or brokerage - No implied power to tax - charging provision must clearly cover receipt - Computer-to-computer linkage (CTCL) charges collected by the appellant stock broker do not form part of the value of taxable service and are not liable to service tax. - HELD THAT: - The Tribunal applied its earlier reasoning in the appellant's own preceding order and related precedents that charges collected separately and payable to statutory bodies (such as CTCL fees, depository/demat charges) are pass-through recoveries and not retained as remuneration by the broker; accordingly they are not commission or brokerage. The Court reiterated the settled rule that taxing statutes must be strictly construed, there is no implied power to tax, and the burden rests on Revenue to show that a receipt bears the character of commission or brokerage. Absent evidence that such recoveries are in the nature of remuneration for stock-broking services, they cannot be included in the assessable value under the charging provisions.

Demand of service tax on CTCL/computer-to-computer linkage charges is not sustainable and is set aside.

Service tax on commission for distribution of mutual funds and sale of bonds - effect of quashed Board circular - Prohibition on adjudicating beyond show cause notice (change of category to Business Auxiliary Service) - Service tax demand on income from distribution of mutual funds and commission from banks/companies for investment in their bonds is unsustainable and set aside. - HELD THAT: - The Tribunal noted that the departmental demand was founded on Board Circular No. 66/15/2003 but that circular has been quashed by the High Court (and the position affirmed by the Supreme Court), and that in any event the adjudication confirmed services under a category not raised in the show cause notice (Business Auxiliary Service), which is beyond the notice. Applying the precedent relied upon, the Tribunal held the departmental case untenable and allowed the appeals on this head.

Demand of service tax on distribution of mutual funds and related commissions is set aside.

Tax exemption for commission on sale of Government/RBI securities as sovereign function - Commission received on sale of RBI/Government bonds is not liable to service tax. - HELD THAT: - Relying on earlier decisions of the Tribunal, the RBI bonds were held to be Government securities issued as part of the Government's borrowing programme and the sale/related brokerage falls within sovereign/public-debt functions. The Tribunal applied the ratio that transactions in Government securities, and brokerage for such transactions, do not attract service tax and thus set aside the impugned demands.

Demand of service tax on commission from sale of RBI bonds is not sustainable and is set aside.

Consequences for penalties where underlying demand is set aside - Penalties imposed insofar as they rest on the service-tax demands set aside do not survive and are set aside. - HELD THAT: - The Tribunal observed that where the substantive service-tax demands in respect of CTCL charges, income from public issues/RBI bonds and distribution commissions have been quashed, any penalties imposed on the basis of those demands cannot subsist. Therefore, penalties founded on the set-aside demands were also set aside.

Penalties imposed consequential to the set-aside demands are quashed.

Final Conclusion: Following earlier consistent Tribunal precedents and applying the principles that pass-through statutory recoveries are not includible in brokerage value, that taxing provisions must be expressed and cannot be extended by implication, and that commissions on Government/RBI securities are not taxable, the impugned demands and consequential penalties are set aside and the appeals are allowed.

Extended period of limitation for recovery of service tax under the proviso to Section 73(1) of the Finance Act, 1994 - suppression or misrepresentation with intent to evade tax - imposition of penalty for fraud, mis-statement or suppression under Section 78 of the Finance Act, 1994 - classification of services as 'Construction Service (Painting)' for claim of abatement under Notification No. 1/2006 ST

Extended period of limitation for recovery of service tax under the proviso to Section 73(1) of the Finance Act, 1994 - classification of services as 'Construction Service (Painting)' for claim of abatement under Notification No. 1/2006 ST - suppression or misrepresentation with intent to evade tax - Whether demand of service tax could be sustained under the extended time proviso having regard to the ST-3 returns filed and the classification/abatement declared by the appellant. - HELD THAT: - The Tribunal examined the ST-3 returns submitted by the appellant (filed for the period 2008-09 to 2012-13 and specifically 04/2011 to 06/2013) and found that the appellant had consistently declared the activity as "Construction Service (Painting)" and claimed abatement under Notification No.1/2006 ST. The Adjudicating Authority's finding of suppression was factually incorrect on the record of returns. In the absence of any concealment or mis declaration in the returns, the essential element required to invoke the extended period under the proviso to Section 73(1) - namely suppression or fraud with intent to evade tax - is not established. Consequently the demand raised under the extended time proviso is unsustainable and was set aside, while the demand for the normal period remains intact. [Paras 5, 7]

Demand under the extended period proviso to Section 73(1) set aside; demand for the normal period confirmed.

Imposition of penalty for fraud, mis-statement or suppression under Section 78 of the Finance Act, 1994 - suppression or misrepresentation with intent to evade tax - Whether penalty under Section 78 is imposable where there is no fraud, mis statement or suppression with intent to evade service tax. - HELD THAT: - The Tribunal held that because the ST-3 returns show correct classification and declaration of abatement, there is no material on record to demonstrate fraud, mis statement or suppression with intent to evade tax. As the statutory preconditions for imposing penalty under Section 78 are not satisfied, the penalty imposed by the Adjudicating Authority cannot be sustained and is liable to be set aside. [Paras 6]

Penalty under Section 78 set aside.

Final Conclusion: The appeal is partly allowed: the demand raised under the extended time proviso to Section 73(1) is set aside for the periods covered by the returns, and the penalty under Section 78 is quashed; the demand for the normal period is, however, confirmed.

Classification of services as management, maintenance and repair service - liability as provider versus recipient of service - classification of club or association service vis-a -vis health and fitness service - service tax on amounts collected by developer under Maharashtra Ownership of Flats Act, 1963

Classification of services as management, maintenance and repair service - liability as provider versus recipient of service - service tax on amounts collected by developer under Maharashtra Ownership of Flats Act, 1963 - Whether the deposits/amounts collected by the developer (RUPL) from purchasers constitute consideration for providing management, maintenance or repair service such that RUPL is taxable as a provider - HELD THAT: - The Tribunal applied its earlier reasoning that amounts collected by the developer under the statutory regime of the Maharashtra Ownership of Flats Act, 1963 are for operation of common use facilities and that the developer procures management/maintenance/repair services from organisations possessing requisite proficiency. The developer therefore acts as a recipient of those services rather than as a provider; it is not logical to tax the developer as provider on collections made from owners. Following the earlier final order reproduced in the record, the Tribunal held that service tax liability as provider under the category of management, maintenance and repair service is not sustainable. [Paras 6]

Held that RUPL is not liable to service tax as provider of management, maintenance or repair service in respect of the deposits collected under the Maharashtra Ownership of Flats Act, 1963

Classification of club or association service vis-a -vis health and fitness service - service tax on amounts collected by developer under Maharashtra Ownership of Flats Act, 1963 - Whether the services/charges collected by RUPL for access to clubhouses fall within 'health and fitness service' rather than 'club or association service' - HELD THAT: - The Tribunal noted that RUPL had constructed clubhouses and had paid service tax under the head 'club or association service'. Revenue placed no evidence showing that the services provided fell within 'health and fitness service' instead of 'club or association service'. Relying on the earlier appellate finding reproduced in the record, the Tribunal held that the services are correctly classified as club or association service and are not health and fitness services. [Paras 6]

Held that the services/charges for clubhouse access are club or association services and not health and fitness services; classification by RUPL upheld

Final Conclusion: Appeal of the Revenue dismissed; appeal of M/s Raheja Universal Pvt. Ltd. allowed to the extent that the impugned order is set aside and the classification/levy challenged is rejected, consistent with the Tribunal's earlier findings.

Works Contract Service - Commercial or Industrial Construction Services - classification of composite works contracts and bifurcation of service element - taxability of works contracts from 01.06.2007 as per Larsen & Toubro

Works Contract Service - Commercial or Industrial Construction Services - classification of composite works contracts and bifurcation of service element - Classification of the appellant's construction activities for service tax purposes - HELD THAT: - The Tribunal examined the nature of the appellant's activities, which involved construction of buildings and allied civil and electrical works for industrial clients, and found them to be composite works contracts involving both service and supply of materials. Relying on the decision of the Hon'ble Apex Court in Larsen & Toubro, the Tribunal held that such composite contracts fall within the category of Works Contract Service, and not within Commercial or Industrial Construction Services. The Tribunal applied the principle that composite works contracts require bifurcation of the service element and observed that the correct merit classification on the facts is Works Contract Service, which (as noted) is the taxable category applicable from 01.06.2007 under the cited authority. Consequently, the demand confirmed under the category of Commercial or Industrial Construction Services was held to be unsustainable. [Paras 4, 5, 6]

The appellant's activities are classified as Works Contract Service; the demand confirmed under Commercial or Industrial Construction Services is set aside.

Final Conclusion: The impugned demand confirming service tax under the category of Commercial or Industrial Construction Services is set aside and the appeal is allowed; consequential relief, if any, to follow.

Credit of duty on goods brought to the factory - Rule 16(2) - process not amounting to manufacture - Reversal of Cenvat credit where no manufacture - Payment of duty equal to Cenvat credit on second removal - Scope of the phrase 'in any other case' in Rule 16(2) - Penalty under section 11AC and Rule 25 - extended period not invocable

Rule 16(2) - process not amounting to manufacture - Reversal of Cenvat credit where no manufacture - Payment of duty equal to Cenvat credit on second removal - Whether Rule 16(2) requires payment of duty equal to the Cenvat credit where returned duty-paid final products are cleared without having been subjected to any process amounting to manufacture. - HELD THAT: - The Tribunal held that Rule 16(2) contains two distinct situations: (i) where the process to which goods are subjected before removal does not amount to manufacture, and (ii) 'in any other case'. A plain reading shows that the second part does not apply if the first part is applicable. Where returned duty-paid final products have not been subjected to any process amounting to manufacture and are cleared (for example as scrap) without such process, the first part of Rule 16(2) applies and the manufacturer must pay an amount equal to the Cenvat credit previously taken. The Tribunal agreed with the coordinate Bench decision in Hindalco Industries and held that the appellant, having brought back defective containers and cleared them without undergoing any manufacturing process, was liable to reverse/pay duty equal to the Cenvat credit. [Paras 7]

Demand for duty equal to the Cenvat credit on the returned goods is upheld; the impugned adjudication does not require interference on merits.

Penalty under section 11AC and Rule 25 - extended period not invocable - Limitation - normal period for demand - Whether extended period and penalty under section 11AC and Rule 25 were properly invoked against the appellant. - HELD THAT: - The Tribunal noted that the wording of Rule 16 permits differing interpretations and that there was no affirmative finding of deliberate suppression or intention to evade duty by the appellant. Given the interpretative nature of the dispute and absence of positive suppression, the Tribunal found no grounds for invocation of the extended time limit or for imposing penalty under section 11AC and Rule 25. Consequently, the demand was confined to the normal period, with interest as applicable by law. [Paras 8, 9]

Invocation of extended period and imposition of penalty under section 11AC and Rule 25 set aside; duty to be demanded only for the normal period with interest as per law.

Final Conclusion: Appeal disposed: the Tribunal upholds the duty demand equal to the Cenvat credit for goods returned and cleared without any process amounting to manufacture, but confines the demand to the normal period and sets aside invocation of extended period and penalties under section 11AC and Rule 25; interest, if any, to be payable as per law.

Eligibility of CENVAT credit on capital goods - integral part of the manufacturing process - scope of "factory" under the Central Excise Act - "but for" test for integral connection with manufacture - jetty/single point mooring and connected equipment as capital goods

Eligibility of CENVAT credit on capital goods - integral part of the manufacturing process - jetty/single point mooring and connected equipment as capital goods - scope of "factory" under the Central Excise Act - Capital goods installed or laid in the Marine Terminal Facility (MTF) used for receipt, unloading and transfer of raw materials to the factory are eligible for CENVAT credit. - HELD THAT: - The Tribunal followed its earlier reasoning in the appellant's own case, observing that the MTF (jetty, unloading and transfer facilities and pipelines) was constructed solely to receive essential liquid raw materials and to convey them to the on-shore storage and manufacturing facility. Applying the established principle that goods used in a process which is so integrally connected with production that but for that process manufacture would be impossible or commercially inexpedient, such goods fall within the scope of goods used "in the manufacture of goods", the Tribunal held the capital goods at the MTF to be part of the manufacturing process. The Tribunal relied on precedents recognizing that offshore berthing/receiving systems and connected equipment (including single point mooring systems and jetties) used for discharge and transport of liquid raw materials are admissible as capital goods for credit, and on a prior decision treating a jetty as part of the premises falling within the definition of "factory". Applying those authorities and following the appellant's own earlier order, the Tribunal concluded that denial of credit was not sustainable and set aside the impugned orders. [Paras 6, 7, 8, 9, 10]

Impugned orders denying CENVAT credit on capital goods in the MTF are set aside and the appeals are allowed with consequential relief.

Final Conclusion: The Tribunal, following its earlier decision in the appellant's case and consistent authorities, held that capital goods installed/laid in the MTF are integrally connected with manufacture and eligible for CENVAT credit; the impugned demand and related orders were set aside and the appeals allowed.

Entitlement to area based exemption under Notification No. 50/2003-CE - commencement of commercial production by the sunset date - burden of proof on the assessee to establish commencement of commercial production - reliance on contemporaneous records (intimation, invoices, stock registers, electricity consumption) - inconsistency of invoices and physical infrastructure with claimed production - confirmation of duty demand and imposition of penalty for incorrect claim of exemption

Entitlement to area based exemption under Notification No. 50/2003-CE - commencement of commercial production by the sunset date - burden of proof on the assessee to establish commencement of commercial production - reliance on contemporaneous records (intimation, invoices, stock registers, electricity consumption) - inconsistency of invoices and physical infrastructure with claimed production - Assessee was not entitled to benefit of the area based exemption as it had not commenced commercial production on or before 31.03.2010. - HELD THAT: - The Tribunal examined the contemporaneous intimation dated 29.03.2010 in which the assessee indicated that commercial production would start in the "last week of March" but left the column specifying the date on which the option was exercised blank, stating that the date would be intimated separately; this indicates production had not in fact commenced by 31.03.2010. The industrial furnace purchased by invoice dated 26.03.2010 entered the State on 29.03.2010; the Tribunal found it unreasonable that such heavy equipment could have been transported, installed, commissioned, tested and put into commercial production by 31.03.2010. Recorded stock movements showed consumption of only 136.31 kg of scrap between 29.03.2010 and 31.03.2010, inconsistent with the invoiced outward quantity of aluminium sections claimed to be 430.20 kg; the assessee failed to produce the promised supporting records. The nature of the invoiced goods (extruded aluminium sections) was incompatible with the absence of extrusion equipment on the premises. Electricity records showed nil consumption prior to April 2010 and the preventive officers' panchnama of 22.10.2010 recorded that the furnace and associated hydraulic and electrical panels were still under installation, supporting the conclusion that commercial production had not commenced by the sunset date. The assessee's contention of use of small "moose" (karahai) furnaces was not persuasive to show large-scale production or extrusion capability. In view of these contemporaneous records and the assessee's failure to discharge the evidential burden, the Tribunal accepted the Revenue's case that commercial production had not commenced on or before 31.03.2010, and therefore the exemption claim was not allowable.

Impugned order denying exemption, confirming duty demand, interest and imposing penalty is upheld and the appeal is dismissed.

Final Conclusion: The Tribunal affirmed the Commissioner's order: the appellant did not establish commencement of commercial production by 31.03.2010 and therefore was not entitled to the Notification No. 50/2003-CE exemption; the confirmed demand for the period April'2010 to March'2015, the interest and the penalty are sustained.

Cenvat credit on inputs destroyed during manufacturing process - Inputs issued for manufacture and destroyed by accident - Reversal of credit permissible only for inputs not issued for manufacture - Proviso to Rule 49-loss or destruction by unavoidable accident

Cenvat credit on inputs destroyed during manufacturing process - Inputs issued for manufacture and destroyed by accident - Reversal of credit permissible only for inputs not issued for manufacture - Whether cenvat credit can be denied on inputs which were issued for manufacture but got destroyed during the manufacturing process due to a power outage and were thereafter disposed as scrap on payment of duty - HELD THAT: - The Tribunal examined the admitted factual position that inputs had been issued for manufacture and were destroyed due to an unavoidable power failure during the manufacturing process. Reliance was placed on earlier decisions where the consistent view is that when inputs have actually been issued for manufacture and are subsequently destroyed by accident (such as fire or other unavoidable causes), the cenvat/modvat credit already availed cannot be reversed. The Tribunal noted the reasoning in Indchem Electronics and related decisions which applied the proviso to Rule 49 (requiring duty only where goods are not shown to have been lost or destroyed by natural causes or unavoidable accident) and held that credit need not be denied where destruction occurred after issuance for manufacture and there was no allegation of diversion. Applying that principle to the present facts - including the undisputed power failure, the destruction of pots/bath and molten metal during manufacture, and the appellant's disposal of scrap after payment of duty - the Tribunal concluded that the revenue was not entitled to disallow the cenvat credit. The Tribunal further observed that the ground that some inputs were procured after the outage does not justify denial of credit for inputs actually used and destroyed during manufacture, and that the extended period of limitation was not pressed as determinative in the order under challenge. [Paras 6, 9, 10]

Cenvat credit on inputs issued for manufacture and destroyed due to the power outage cannot be denied; impugned order set aside and appeal allowed

Final Conclusion: The appeal is allowed; the impugned order denying cenvat credit on inputs destroyed during the manufacturing process due to a power outage is set aside and the credit is held not to be deniable.

Rebuttable legal presumption of passing on of duty under section 11B - refund of pre-deposit under section 35F and interest under section 35FF - distinction between duty and deposit (deposit not being excise duty) - unjust enrichment - onus of proof for collection as duty under section 11D - consequential relief

Rebuttable legal presumption of passing on of duty under section 11B - refund of pre-deposit under section 35F and interest under section 35FF - distinction between duty and deposit (deposit not being excise duty) - unjust enrichment - onus of proof for collection as duty under section 11D - Applicability of the legal presumption in section 11B and requirement to examine unjust enrichment before sanctioning refund of amounts deposited towards an excise demand which was set aside. - HELD THAT: - The Tribunal held that the presumption in section 11B that the burden of duty has been passed on to buyers applies only to duties of excise and not to amounts deposited towards a demand, fine or penalty. Amounts deposited under protest, during investigation or on filing an appeal under section 35F are deposits and not duty; when the demand is set aside those deposits must be refunded and cannot be retained by Revenue. Accordingly, the question of unjust enrichment as envisaged in section 11B is irrelevant to refund of such deposits. If Revenue seeks to rely on collection by the assessee (so as to invoke unjust enrichment-type relief) it must invoke and prove collection under section 11D; there is no legal presumption under section 11D corresponding to section 11B and the burden to prove collection rests on Revenue. In the present case, the Tribunal's earlier final order granted consequential relief and Revenue was therefore obliged to refund the deposit with interest under section 35FF; the lower authorities' consideration limited to section 11B was misplaced but the ultimate sanctioning of refund was correct. The Tribunal thus sustained the Commissioner (Appeals) order dismissing Revenue's challenge to the refund sanction. [Paras 7, 8, 9, 10, 11]

The presumption under section 11B does not apply to deposits made towards a demand; refund of such deposits (with interest as applicable) is due when the demand is set aside and Revenue must prove any collection under section 11D if it contends unjust enrichment; the impugned order upholding the refund is sustained.

Final Conclusion: The Tribunal dismissed Revenue's appeal and upheld the Commissioner (Appeals) order sanctioning refund; section 11B's presumption is inapplicable to deposits and Revenue must refund pre-deposits (with interest under section 35FF) when the demand is set aside, subject to proof under section 11D if collection is alleged.

Inclusion of freight in sale price - service tax versus value added tax (mutually exclusive fields) - exclusion of separately charged freight from taxable turnover - scope of suo-motu revision and revisional power under Section 47 - finality of appellate authority's order

Inclusion of freight in sale price - exclusion of separately charged freight from taxable turnover - Freight charged separately from the buyer does not form part of the sale price and is not includable in the taxable turnover under CST/VAT where it is shown separately in invoice and delivery terms indicate sale completion prior to transportation. - HELD THAT: - Relying on the reasoning in M/s Utkal Moulders (Orissa High Court) and consistent Supreme Court precedents cited therein, the Court accepted that the contract terms and place of delivery determine whether freight forms part of the sale price. Where sale is complete at seller's premises (or at the site of inspection) and freight for subsequent transportation is invoiced separately as a uniform per unit charge, that freight is not part of the sale price. The Court held that the Tribunal erred in including separately shown freight in sale price and affirmed that such freight is excludable while computing taxable turnover.

Freight shown separately is not includable in sale price and must be excluded from taxable turnover; question answered in favour of the petitioner.

Service tax versus value added tax (mutually exclusive fields) - inclusion of freight in sale price - The activity of transportation, being a service taxable under the Central law, cannot be taxed as part of sale of goods under the CST/VAT where the freight is a distinct service component and separately charged. - HELD THAT: - The Court adopted the view endorsed in M/s Utkal Moulders that transportation, when separately billed, represents a service and falls within the ambit of service taxation rather than forming part of the sale consideration under the CST/VAT. The Court rejected the revenue's approach of treating separate freight as part of the sale price for CST/VAT purposes, holding that service tax and sales tax/VAT operate in their respective domains and a separately charged transportation component need not be included in goods turnover.

Transportation charges, when separately collected, are service in nature and are not taxable under the CST/VAT as part of sale price; question answered in favour of the petitioner.

Exclusion of separately charged freight from taxable turnover - Freight charges collected separately by the carrier cannot be included in the sales turnover for computing sales tax/VAT and are deductible from taxable turnover. - HELD THAT: - Following the Orissa High Court's analysis, the Court noted that invoices showing freight separately and contract clauses indicating completion of sale prior to carriage support exclusion. The Court also found the Tribunal's factual and legal conclusions to be erroneous where it treated uniform per-unit freight as intrinsically part of sale price. The determinative principle applied is that what is separately charged for transportation, and identifiable as such, is not part of the taxable sale consideration.

Separately collected freight is deductible from the taxable turnover; question answered in favour of the petitioner.

Scope of suo-motu revision and revisional power under Section 47 - finality of appellate authority's order - An appellate order passed by the Appellate Authority appointed under Section 3A (Dy. Commissioner rank) is final and not amenable to suo-motu revision under Section 47; the Appellate Authority cannot invoke Section 47 to revise its own appellate order. - HELD THAT: - Relying on the Division Bench decision in Goldie Glass Industries, the Court observed that legislative amendments which created an Appellate Authority under Section 3A removed the appellate officer from the cadre of officers subject to revisional jurisdiction contemplated by Section 47. The statutory scheme shows that orders of the Dy. Commissioner (Appeal) are final and not subject to further suo-motu revision, and taxing statutes must be construed according to their natural meaning; hence the impugned exercise of revisional power was impermissible.

Appellate Authority cannot exercise suo-motu revisional power under Section 47 to revise its appellate order; question answered in favour of the petitioner.

Finality of appellate authority's order - scope of suo-motu revision and revisional power under Section 47 - The interpretation and mandates in Goldie Glass Industries apply to the present case and render the impugned revisional action legally unsustainable. - HELD THAT: - The Court examined applicability of Goldie Glass Industries and, noting that the Supreme Court had not stayed that decision, concluded that the reasoning therein governs the facts before it. No material was shown to demonstrate distinguishing features that would render Goldie Glass inapplicable. Consequently, the Court held that the impugned show-cause and revisional orders fail to survive scrutiny in light of the binding coordinate-bench interpretation.

Goldie Glass Industries governs the present case; the impugned revisional action is unsustainable and question answered in favour of the petitioner.

Final Conclusion: All five substantial questions of law are answered in favour of the petitioner. The impugned orders of the Assessing Officer, the appellate authority and the Commercial Tax Appellate Board are set aside. Execution of this order is made subject to the outcome of SLA(C) No.16541/2018 (State of M.P. v. Goldie Glass Industries) and any future order of the Apex Court concerning the Orissa High Court decision in M/s Utkal Moulders.

Anticipatory bail - interim anticipatory bail made absolute - conditions for grant of anticipatory bail - applicability of Prevention of Corruption Act to conspiracy with public servants - bailability under Section 104 of the Customs Act

Anticipatory bail - interim anticipatory bail made absolute - conditions for grant of anticipatory bail - Interim anticipatory bail granted on 16.03.2023 is confirmed and made absolute. - HELD THAT: - The Court noted that after issuance of the interim order the opposite party filed a counter affidavit but nothing in that affidavit or submissions persuaded the Court to revisit the view taken earlier. The A.G.A. did not point out any violation of the conditions of interim bail by the applicant. In these circumstances the Court concluded that there was no ground to recall the interim relief and therefore made the interim anticipatory bail order dated 16.03.2023 absolute. The bail is continued subject to the same personal bond, sureties and conditions specified in the interim order, including availability for interrogation, prohibition on inducement/threat/promise to witnesses, restriction on leaving India without permission, and appearance before the trial court on dates fixed.

Interim anticipatory bail is made absolute and the application is allowed in terms of the interim order dated 16.03.2023.

Applicability of Prevention of Corruption Act to conspiracy with public servants - bailability under Section 104 of the Customs Act - Court recorded the contentions on applicability of corruption provisions and bailability of alleged customs offence but did not disturb the interim order on those grounds. - HELD THAT: - The record shows the FIR invoked provisions of the Prevention of Corruption Act alleging conspiracy with public servants, and counsel for the applicant relied on the bailable nature of the customs-related offence under the Customs Act and its punishment ceiling. Those contentions were noted by the Court during earlier consideration of interim bail. On the present return date no material was placed to contradict the reasons for granting interim relief and the Court therefore declined to reopen those determinations while confirming the earlier order.

Contentions regarding applicability of corruption provisions and bailability under the Customs Act were noted but did not lead to recall of interim bail; interim order stands affirmed.

Final Conclusion: The interim anticipatory bail order dated 16.03.2023 is affirmed and made absolute; the applicant shall continue on bail subject to the personal bond, sureties and conditions specified in the interim order.