TaxTMI Updates e-Newsletter
Oct 07,2023

Detention, seizure and release of goods under section 129 of the CGST Act - intention to evade payment of tax as a sine qua non for proceedings under sections 129 and 130 - reading section 129 with section 130 of the CGST Act - penalty under section 129 vis-a -vis penalty under section 122 - compliance with Rule 138 / validity of e-way bill - overriding effect of section 129

Detention, seizure and release of goods under section 129 of the CGST Act - intention to evade payment of tax as a sine qua non for proceedings under sections 129 and 130 - penalty under section 129 vis-a -vis penalty under section 122 - compliance with Rule 138 / validity of e-way bill - Validity of initiation of proceedings under section 129(3) and levy of penalty when e-way bill accompanying goods was cancelled by the purchaser but no finding of intention to evade tax was recorded. - HELD THAT: - The Court examined the material and found that the goods were accompanied by tax invoice, consignment note and an e-way bill generated by the purchaser which had been cancelled by the purchaser without intimating the petitioner. On interception the authorities observed that the e-way bill was "not OK", yet there was no recorded finding of any intention on the part of the petitioner to evade tax. The Court held that proceedings under section 129 must be read purposively with section 130 which makes intention to evade tax a mandatory element for initiation of proceedings under those provisions. In the absence of any observation or finding of intent to evade tax, the detention, seizure and demand under section 129(3) and the levy of penalty under section 129 were not justified on the facts of the case. The Court noted that in such circumstances, where the breach was a collateral or minor one and the dealer promptly explained the attending circumstances and produced documents, the appropriate remedy could be proceedings under section 122 (penalties for certain offences) rather than invocation of section 129/130. The Court relied on the Apex Court's conclusion in Assistant Commissioner (ST) & Others Vs. M/s Satyam Shivam Papers Private Limited that where there is no intent to evade tax, confiscation/penalty under sections providing for seizure/confiscation is inappropriate, and applied that principle to quash the impugned orders. The Court further observed that the goods were ultimately released and sold in the regular course, reinforcing the absence of evasive intent. [Paras 9, 10, 11, 12, 14]

Impugned detention, seizure, demand and penalty orders under section 129(3) and the appellate dismissal are quashed for want of any found intention to evade tax; the alternative remedy under section 122 would have been the appropriate course in the circumstances.

Final Conclusion: Writ petition allowed; impugned orders dated 25.11.2021 and 18.06.2022 are quashed on the ground that proceedings under sections 129/130 were initiated without any recorded intent to evade tax, contrary to the legal requirement established by higher authorities.

Opportunity of personal hearing - principle of natural justice - adjudication under Section 74 of the M.P.G.S.T. Act and Section 20 of the IGST Act - show cause notice - quashing and remand for fresh adjudication - availability of alternative remedy not a bar where natural justice violated

Opportunity of personal hearing - show cause notice - adjudication under Section 74 of the M.P.G.S.T. Act and Section 20 of the IGST Act - Whether the adjudicating authority afforded the requisite opportunity of personal hearing before passing the final order and whether absence of such hearing vitiates the order. - HELD THAT: - The show cause notice expressly stated that the petitioner "may appear before the undersigned for personal hearing" but the table titled "Details of personal hearing etc." recorded "NA" against Date, Time and Venue. The Court held that Section 75(4) requires that an opportunity of hearing be granted where an adverse decision is contemplated, and therefore the absence of a scheduled personal hearing in the notice demonstrates that the petitioner was not afforded the mandated opportunity. Following the co-ordinate Bench decision of the Allahabad High Court, the impugned adjudication which was passed without giving the personal hearing indicated in the notice is unsustainable. The matter is accordingly quashed and remitted for fresh consideration after affording personal hearing to the petitioner. [Paras 5, 7]

Impugned order quashed and matter remitted to the Deputy Commissioner, Audit Wing, Jabalpur for fresh adjudication after giving personal hearing.

Principle of natural justice - availability of alternative remedy not a bar where natural justice violated - Whether the existence of an alternative remedy of appeal precludes exercise of writ jurisdiction where the adjudication proceeded in breach of the principles of natural justice. - HELD THAT: - The respondents relied on availability of an appeal as an alternative remedy. The Court observed that where due opportunity of hearing as required by law has not been afforded and the principles of natural justice are breached, the availability of an alternative statutory remedy does not preclude the High Court from entertaining writ jurisdiction under Article 226. Consequently, the plea based on alternative remedy did not prevent interference. [Paras 6]

Availability of appeal did not bar exercise of writ jurisdiction in view of breach of natural justice; therefore interference was justified.

Final Conclusion: Writ petition allowed; the adjudication order dated 24.08.2022 is quashed and the matter is remitted to the Deputy Commissioner, Audit Wing, Jabalpur for fresh decision after affording the petitioner a personal hearing; no order as to costs.

Input Tax Credit - course or furtherance of business - Corporate Social Responsibility - entitlement to credit under section 16(1) - blocked credits under section 17(5) - taxable supply - GST Council / Law Committee recommendation - legislative clarification by amendment to block ITC on CSR

Input Tax Credit - course or furtherance of business - Corporate Social Responsibility - entitlement to credit under section 16(1) - taxable supply - blocked credits under section 17(5) - ITC on inputs and input services procured for mandatory CSR activities under the Companies Act, 2013 - HELD THAT: - The Appellate Authority examined whether inputs and input services used for mandatory CSR activities qualify as being "used or intended to be used in the course or furtherance of business" so as to be eligible for ITC under section 16(1). The Authority held that CSR outputs are provided free of cost and are not leviable to GST as "taxable supplies"; therefore inputs used for such activities are not used in the course or furtherance of business for purposes of section 16(1). The Authority also noted that, under income tax jurisprudence, CSR expenditure is not deductible as business expenditure under section 37, supporting the view that such spending is not in furtherance of business. The Authority further relied on the recommendation of the Law Committee and the GST Council favouring non allowance of ITC for CSR expenditure and observed that the legislature subsequently clarified the position by amending the CGST Act to expressly block credit on goods or services used for CSR obligations, effective 1.10.2023. On these bases the Authority concluded that ITC cannot be availed in respect of inputs and input services procured for mandatory CSR activities and upheld the GAAR ruling disallowing ITC. [Paras 15, 16, 17, 18, 20]

ITC in respect of inputs and input services used for mandatory CSR activities is not available and the appeal is rejected.

Final Conclusion: The appeal against GAAR Ruling No. GUJ/GAAR/R/44/2021 is dismissed; inputs and input services procured for mandatory CSR activities do not qualify for ITC as they are not used in the course or furtherance of business, and the legislative and GST Council positions support blocking such credit.

TP adjustment - benchmarking international transactions of sale of Valves - aggregation of its transactions with the A.E. vs aggregation of its transactions with Non AE - HC confirmed [2019 (5) TMI 694 - BOMBAY HIGH COURT] Tribunal order upholding the order of CIT (A) benchmarking international transactions of sale of Valves to its Associated Enterprise (AE) by aggregating all its transactions with the A.E. and comparing it with aggregation of all comparable Non AE transactions and deleting the TPA on export of Valves and Valves in Kit form to its AE in USA viz. Flow Serve Sulphur Spring (Flow Serve) by holding the benchmarking of international transactions by comparing controlled (AE) transactions with uncontrolled (NonAE) transactions

HELD THAT:- This Court is of the opinion that the impugned order does not call for interference. The special leave petition is accordingly dismissed.

All pending applications are disposed of.

Registration under Section 12AA - charitable objects - objects related to the protection of the environment -proposed activities at registration stage - per se charitable purpose - general public utility / residuary clause - distinction between registration and cancellation under section 12AA

Validity of the Commissioner's grant of registration to the respondent-institute under Section 12AA as an institution carrying on charitable objects relating to water and land management and protection of the environment - HELD THAT: - The Court applied the principle from M/s. Ananda Social and Educational Trust [2020 (2) TMI 1293 - SUPREME COURT] that, at the registration stage under Section 12AA, a Commissioner must consider the objects and the proposed activities of the trust and that the term 'activities' includes 'proposed activities'. The Court found that the Commissioner below failed to appreciate that the category under which the assessee sought registration (activities relating to water and land management and protection of the environment) is regarded as a per se charitable purpose and not merely a residuary or general public utility activity. The impugned order correctly recognised this error and granted registration accordingly. The Court saw no infirmity in that conclusion and upheld the impugned order.

The grant of registration to the respondent under Section 12AA was upheld; the special leave petition is dismissed.

Final Conclusion: The Supreme Court dismissed the special leave petition, holding that the impugned order granting registration under Section 12AA to the institute (whose objects relate to water and land management and protection of the environment) was correct: proposed activities can be considered at the registration stage and the activities claimed constitute a per se charitable purpose rather than a residuary public utility, so no infirmity was found in the impugned order.

Revision u/s 263 - whether the order of the AO is erroneous on the ground of not being in accordance with law? - as per HC [2017 (1) TMI 252 - BOMBAY HIGH COURT] AO has not taken into account the relevant consideration of absence of actual business activity of the appellant for the purpose of treating the expenditure claimed as an allowable expenditure and notional tax effect is directly attributable to the error in the assessment order.

HELD THAT: On the request made by learned counsel for respondent, the matter is adjourned by two weeks to ascertain the position pursuant to the impugned order passed under Section 263 of the Income Tax Act, 1961.

Most appropriate method (MAM) in transfer pricing - internal Transactional Net Margin Method (internal TNMM) - change of transfer pricing method by appellate authorities - internal comparability and FAR (functions, assets and risks) analysis

Internal Transactional Net Margin Method (internal TNMM) - most appropriate method (MAM) in transfer pricing - change of transfer pricing method by appellate authorities - The legality of the Tribunal directing application of internal TNMM (and requiring internal FAR and identification of revenues/costs) even though internal TNMM was not adopted by the assessee or the Assessing Officer in original proceedings. - HELD THAT: - The Court upheld the Tribunal's conclusion that the appellate authority is not precluded from directing a different method than that adopted by the assessee if satisfied that such method is the most appropriate method for determining the arm's length price. The Tribunal had recorded reasons why internal TNMM would be appropriate and directed the assessee to carry out internal FAR and identify revenues and costs to establish internal comparability; it also gave a fallback direction that external comparables under TNMM be filed if internal comparability could not be demonstrated. The Court relied on the principle that the ultimate aim of transfer pricing exercise is to determine an accurate arm's length price and that tax authorities and adjudicating forums are entitled and obliged to apply the correct legal principle even where it differs from the method selected by the assessee. The Court found the Tribunal's reasoning robust and without flaw and observed that the revenue did not demonstrate how a change in MAM would yield a more appropriate arm's length price in the present facts. [Paras 10, 11]

Tribunal's direction to consider internal TNMM and to require internal FAR and cost/revenue identification was valid and justified; appellate authority may adopt a method different from that in the assessee's transfer pricing report.

Remand for fresh determination - external TNMM applied on remand - Effect of the Tribunal's remand and subsequent proceedings in which the TPO applied external TNMM on remand. - HELD THAT: - The Court noted that following the Tribunal's order the matter was remanded and, in the subsequent proceedings, the TPO applied external TNMM and computed a reduced transfer pricing adjustment. The revenue sought to quash both the Tribunal's order and the later TPO order, but the Court observed that the Tribunal's directions had been given effect to and that no infirmity was shown in the Tribunal's approach. Given the remand process and the TPO's decision on remand, the Court found no substantial question of law surviving for its determination. [Paras 5, 6, 11, 12]

Remand and subsequent TPO determination applying external TNMM do not vitiate the Tribunal's order; no substantial question of law remains for the Court to decide.

Final Conclusion: Appeal dismissed; no substantial question of law answered as the Tribunal's directions regarding application of TNMM and remand for FAR were upheld and its reasoning was found sound.

Reopening of assessment based on information from investigation wing - accommodation entries / bogus purchases - onus on assessee to prove genuineness of purchases - addition limited to a percentage of disputed purchases to reflect the income component - appreciation of evidence and findings of fact

Reopening of assessment based on information from investigation wing - appreciation of evidence and findings of fact - Validity of reopening the assessment on the basis of information received from the Investigation Wing regarding accommodation-entry operators - HELD THAT: - The Court reviewed the material relied upon by the assessing officer and the Tribunal's consideration of the Investigation Wing's findings that certain group concerns were operating as entry providers and that the assessee was a beneficiary. Following the reasoning accepted by the Tribunal and consistent with the jurisdictional High Court precedents relied upon, the reopening under the relevant provisions was held to be justified where the assessing officer received such information; the factual nexus and the report from the investigation formed sufficient basis for assuming jurisdiction to reopen the assessment.

Reopening was valid and the ground challenging reopening is dismissed.

Accommodation entries / bogus purchases - onus on assessee to prove genuineness of purchases - addition limited to a percentage of disputed purchases to reflect the income component - appreciation of evidence and findings of fact - Sustenance and quantum of addition made in respect of alleged bogus purchases shown to have been made from entities of the entry-provider group - HELD THAT: - The Court noted that the assessing officer concluded purchases from the identified group were accommodation entries and that the assessee had relied on invoices, bank records and stock registers. The Tribunal, after examining the accounts and earlier decisions, found that while the AO's 100% disallowance was not justified, some disallowance was warranted to account for the income component and risk of revenue leakage. Applying appellate discretion in the factual matrix, the Tribunal sustained a partial disallowance and fixed the addition as a percentage of the impugned purchases to reflect the taxable element rather than taxing the entire transaction. The High Court treated these determinations as findings of fact on appreciation of evidence.

Findings that the purchases were accommodation entries and the reduction of the AO's disallowance to a limited percentage stand as factual conclusions; no substantial question of law arises warranting interference.

Final Conclusion: The High Court dismissed the appeals, holding that the reopening based on Investigation Wing information was valid and that the Tribunal's factual findings on bogus purchases and the limited percentage addition to reflect the income component were conclusions of fact which did not raise any substantial question of law.

Scheme of amalgamation and appointed date - amalgamating/transferor company ceases to exist post appointed date - notice under Section 148 / order under Section 148A(d) issued to a non-existent entity - Section 170 - succession to business otherwise than on death - active PAN of a dissolved/merged entity does not confer jurisdiction to issue reassessment notices

Notice under Section 148 / order under Section 148A(d) issued to a non-existent entity - scheme of amalgamation and appointed date - Validity of notice dated 20.03.2023 under Section 148 and order dated 20.03.2023 under Section 148A(d) issued to the transferor company for assessment year 2019-20 after the appointed date of amalgamation - HELD THAT: - The Court found that the scheme of amalgamation, with appointed date 01.04.2018 and sanction by the NCLT, effected transfer of the transferor company's business to the transferee and, from the appointed date, the existence of the transferor had merged into the transferee. The impugned notice and order were addressed to the transferor-company post the appointed date and therefore were directed at a non-existent entity. Mere activation of the PAN after the appointed date did not confer jurisdiction on the revenue to proceed against the transferor company. Applying the settled principles in Marshall and subsequent decisions, the Court held that issuance of the jurisdictional notice and the order under Section 148A(d) to the amalgamating/transferor company in these circumstances was not warranted in law. [Paras 22, 24, 26]

The notice dated 20.03.2023 and the order dated 20.03.2023 under Section 148 / Section 148A(d) addressed to the transferor company are invalid and quashed.

Section 170 - succession to business otherwise than on death - amalgamating/transferor company ceases to exist post appointed date - active PAN of a dissolved/merged entity does not confer jurisdiction to issue reassessment notices - Legal effect of the appointed date and succession under Section 170 on the liability to assessment for income arising after the appointed date - HELD THAT: - The Court applied Section 170 and the scheme's terms to hold that the predecessor (transferor) is assessable only up to the date of succession and the successor (transferee) is assessable thereafter. The sanctioned scheme and NCLT observations confirming undertakings regarding statutory dues reinforced that post-appointed-date transactions were to be treated as carried out for and on behalf of the transferee. Consequently, the revenue's contention that an active PAN of the transferor justified reopening proceedings against the transferor was rejected; the proper legal position is governed by succession under the scheme and Section 170. [Paras 22, 24, 26]

From the appointed date the transferor's existence and liabilities merge into the transferee; assessments for the post-appointed-date period lie against the successor in accordance with Section 170 and the sanctioned scheme.

Final Conclusion: The writ petition is allowed; the impugned notice dated 20.03.2023 under Section 148 and the order dated 20.03.2023 under Section 148A(d) for assessment year 2019-20, insofar as issued to the transferor company post the appointed date of amalgamation, are quashed.

Scope of Section 148A(d) - reopening of assessment under Section 148 - information suggesting income chargeable to tax has escaped assessment - limited adjudication at preliminary stage - challenge under Article 226 - principles of natural justice

Reopening of assessment under Section 148 - challenge under Article 226 - Validity of the order dated 31.03.2023 passed under Section 148A(d) and the consequential notice dated 31.03.2023 issued under Section 148 for Assessment Year 2019-20 - HELD THAT: - The High Court held that the assessing authority considered the petitioner's objections under Section 148A(b) and concluded that information exists which requires verification and which strongly suggests that income chargeable to tax may have escaped assessment. The Court observed that the statutory scheme contemplates issuance of a notice under Section 148 whereafter the assessing officer must determine, in the proceedings under Section 147, whether income has escaped assessment, with all defenses of the assessee remaining open at that stage and subject to appellate remedy. Given this scheme, the Court found no ground to interfere with the order under Article 226, since any challenge to the merits of the information relied upon is available to the assessee during the reassessment proceedings and thereafter by appeal.

The writ challenge to the order under Section 148A(d) and the notice under Section 148 for Assessment Year 2019-20 is dismissed; no interference under Article 226.

Scope of Section 148A(d) - limited adjudication at preliminary stage - principles of natural justice - Extent of enquiry and adjudication permissible at the stage of passing an order under Section 148A(d) - HELD THAT: - The Court stated that Section 148A(d) does not contemplate a detailed adjudication on the correctness of the information forming the basis for reopening; its scope is limited to ascertaining whether information exists which suggests escapement of income. Detailed verification and determination of whether income has actually escaped assessment are to be undertaken in reassessment proceedings under Section 148 and Section 147, where the assessee may raise all permissible defenses. The Court accordingly treated objections alleging procedural defects, absence of enquiry results or approval, or shorter notice-periods as matters that can be agitated in the reassessment proceedings rather than grounds for quashing the preliminary order under Section 148A(d).

The limited scope of Section 148A(d) was affirmed: no requirement for detailed adjudication at that stage and procedural or merit objections are to be addressed during reassessment proceedings.

Final Conclusion: The High Court dismissed the writ petition challenging the order under Section 148A(d) and the notice under Section 148 for Assessment Year 2019-20, holding that the preliminary decision to reopen was within the limited scope of Section 148A(d) and that issues on merits or procedural objections are to be ventilated in the subsequent reassessment proceedings and available appeals.

Reliance on statements recorded under Section 133A of the Income Tax Act - assessment proceedings and issuance of notice under Section 148 - prematurity of writ petitions challenging assessment notices - jurisdiction of assessing officer to make assessment solely on the basis of a statement - right to be heard / reasonable opportunity in assessment proceedings

Prematurity of writ petitions challenging assessment notices - reliance on statements recorded under Section 133A of the Income Tax Act - right to be heard / reasonable opportunity in assessment proceedings - Writ petitions challenging notices under Section 148 as being based solely on statements recorded under Section 133A are premature and not maintainable at this stage. - HELD THAT: - The Court observed that the correctness and evidentiary value of statements recorded under Section 133A and the jurisdictional contention that an assessment cannot be made solely on such a statement are matters which can be agitated before the assessing authority during the assessment proceedings. It directed that the petitioner is entitled to raise all objections, including reliance on precedent and circulars cited, before the assessing officer who shall consider them while completing the assessment and shall afford reasonable opportunity in accordance with law. In view of prematurity, the Court declined to adjudicate the substantive contention at the writ stage and disposed of the petitions with directions for adjudication during assessment. [Paras 8, 9]

Writ petitions dismissed as premature; matter remitted to the assessing authority to consider objections (including reliance on statements recorded under Section 133A) during assessment and to afford reasonable opportunity; petitions disposed of.

Final Conclusion: The writ petitions attacking notices under Section 148 for AYs 2015-16, 2016-17 and 2017-18 were dismissed as premature; the petitioner may raise the contention that assessment cannot rest solely on statements recorded under Section 133A before the assessing officer, who shall consider the objections and afford a reasonable opportunity while completing the assessment.

Reopening of assessment under Section 148 read with Section 144B - Notice under Section 148A(b) and Section 148A(d) - Interaction between Section 153A/Section 153C and reopening under Section 148 - Denial of benefit of Section 10(38) of the Income tax Act - Classification as trading in penny stocks and its tax consequences - Remand for fresh consideration on merits

Reopening of assessment under Section 148 read with Section 144B - Notice under Section 148A(b) and Section 148A(d) - Interaction between Section 153A/Section 153C and reopening under Section 148 - Validity of the notice issued under Section 148A(b)/Section 148 and whether invocation of provisions consequent to a search (Section 153A/153C) precluded reopening under Section 148A(b). - HELD THAT: - The Court examined the statutory scheme and precedents relied upon by the petitioner. The fourth proviso to Section 153A was noted to have the abatement effect when machinery under Section 153A is invoked. However, Section 153C was held to be an enabling provision permitting issuance of notices notwithstanding provisions like Sections 139, 147 and 148, and it does not operate so as to preclude the Department from issuing a notice under Section 148A(b) for reopening an assessment under Section 148 read with Section 147. On this basis the contention that the notice was vitiated because of the search-related proceedings was rejected. The Court referred to the authorities relied upon but concluded that the Department was not barred from proceeding under Section 148A(b) and Section 148 in the facts of this case. [Paras 16, 18, 19, 20, 21]

The reopening notice under Section 148A(b)/Section 148 was held to be valid and not barred by the invocation of Section 153A/153C.

Denial of benefit of Section 10(38) of the Income tax Act - Classification as trading in penny stocks and its tax consequences - Remand for fresh consideration on merits - Whether the Assessment Order properly denied the benefit of Section 10(38) by characterising the receipts as trading income from penny stocks and the consequent addition under Section 68/Section 115BBE. - HELD THAT: - The Court observed that the impugned Assessment Order lacked discussion on how the benefit of Section 10(38) could be denied, particularly when the petitioner asserted acquisition of the shares from M/s. Monotype India Private Limited on 30.03.2011 and sale in the relevant financial year. The absence of reasoned consideration on whether the gains were long term capital gains entitled to Section 10(38) relief or were taxable as trading income required fresh adjudication. Consequently, the Court found it necessary to set aside the assessment on this ground and remit the matter to the Assessing Officer for a fresh decision on merits, with directions to consider and discuss the entitlement to Section 10(38) and the characterisation of the transactions in accordance with law. [Paras 22, 23]

Impugned Assessment Order set aside; matter remitted to the Assessing Officer to decide on merits, including entitlement to Section 10(38) and classification of the transactions, within six weeks.

Final Conclusion: The challenge to the validity of the reopening notice under Section 148A(b)/Section 148 was rejected; however, the assessment was set aside and remitted for fresh consideration on merits as to denial of Section 10(38) and the characterisation of the transactions, with the Assessing Officer directed to decide the matter in accordance with law within six weeks.

Reopening of assessment beyond four years - failure to disclose fully and truly all material facts - change of opinion - reasons to believe/information received from DIT (I & CI) - applicability of jantri value / Section 50C in case of stock-in-trade - quashing of notice under Section 148

Reopening of assessment beyond four years - failure to disclose fully and truly all material facts - reasons to believe/information received from DIT (I & CI) - quashing of notice under Section 148 - Validity of the notice dated 28.03.2019 under Section 148 for AY 2012-13 where the material/information relied upon pre-dated the original assessment and the assessee had made specific disclosures during assessment proceedings - HELD THAT: - The Court examined the reasons supplied for reopening and found the foundational information-communication from DIT (I & CI), dated 16.02.2015-was on record prior to passing of the assessment order dated 19.03.2015. During scrutiny under Section 143(3), specific queries about the sale were raised and the assessee furnished details (including replies dated 12.01.2015 and 24.02.2014) explaining that the land was held as stock-in-trade and that Section 50C / jantri rates were inapplicable. The reasons for reopening therefore did not disclose any fresh tangible material which was not already known to the Assessing Officer; the notice proceeded on information that was already available and explained during the original assessment. In such circumstances there was no failure to disclose fully and truly all material facts which would justify assumption of jurisdiction under Section 148/147 beyond the four-year period, and the reopening was held impermissible. The impugned notice and consequential disposal of objections were quashed. [Paras 5, 6]

Notice dated 28.03.2019 under Section 148 and the consequential order dated 15.11.2019 are quashed and set aside insofar as AY 2012-13 is concerned.

Change of opinion - applicability of jantri value / Section 50C in case of stock-in-trade - Assessing Officer's formation of opinion during scrutiny - Whether the reassessment could be sustained on the ground of a mere change of opinion when the Assessing Officer had previously queried and examined the same transaction and accepted the assessee's explanation in the scrutiny assessment - HELD THAT: - The Court applied the established principle that where the Assessing Officer, during scrutiny, notices a claim, raises queries and thereafter does not make an addition in the final assessment, an opinion on that claim is treated as having been formed; a subsequent attempt to reopen the same issue on the basis of a different treatment amounts to impermissible change of opinion. In the present case the Assessing Officer had made inquiries into the identical land transaction and the issue of Section 50C applicability, and had before him the assessee's explanation that the land was stock-in-trade. The reopening to give a different treatment to the same issue therefore amounted to a change of opinion and could not sustain reassessment. [Paras 5]

Reopening on the basis of a change of opinion in relation to the applicability of Section 50C / jantri value is impermissible and supports quashing of the reassessment notice and consequent order.

Final Conclusion: The petition is allowed: the notice dated 28.03.2019 under Section 148 issued for AY 2012-13 and the order dated 15.11.2019 disposing of objections are quashed and set aside, the reopening being unjustified by fresh material and amounting to an impermissible change of opinion.

Writ of Mandamus - Attachment under Section 281B of the Income Tax Act, 1961 - Indemnity bond/undertaking to secure tax dues - Direction to lift attachment on furnishing assurance - Sale of attached property subject to payment of tax from proceeds

Writ of Mandamus - Attachment under Section 281B of the Income Tax Act, 1961 - Indemnity bond/undertaking to secure tax dues - Direction to lift attachment on furnishing assurance - Prayer for direction to lift attachment of the petitioner's property on condition that the petitioner furnishes an affidavit/indemnity undertaking to pay tax dues from sale proceeds. - HELD THAT: - The High Court accepted the respondents' recorded willingness to lift the attachment if the assessee furnished an affidavit or indemnity bond undertaking to pay the tax dues immediately after sale of the property. Exercising writ jurisdiction, the Court directed the petitioner to submit the said affidavit/indemnity bond within one week of receipt of the order; directed respondents 1 and 2 to lift the attachment within one week thereafter and communicate the same to the sub-registrar (respondent 3); and directed respondent 3 to reverse the entry of attachment. The Court conditioned permission to sell the property on adherence to the undertaking/indemnity bond given by the petitioner and thereby provided a remedial mechanism to enable realization of tax dues without prejudicing the department's recovery rights.

Writ petition allowed by directing the petitioner to furnish an affidavit/indemnity bond and directing respondents to lift the attachment and enable sale subject to the petitioner adhering to the undertaking.

Final Conclusion: The petition is allowed; the petitioner must furnish an affidavit/indemnity bond within one week, upon which the respondents shall lift the attachment and the sub-registrar shall reverse the attachment entry, enabling the petitioner to sell the property while being bound to pay the tax dues from the sale proceeds.

Jurisdictional fact - fourth proviso to Section 153A - Section 153C assumed jurisdiction - incriminating material found on search - income represented in the form of asset - unexplained cash credit under Section 68 - reassessment of extended assessment years (7th to 10th)

Jurisdictional fact - fourth proviso to Section 153A - Section 153C assumed jurisdiction - Validity of assumption of jurisdiction under Section 153C read with the fourth proviso to Section 153A in respect of Assessment Year 2011-2012. - HELD THAT: - The Court examined whether the Assessing Officer had in his possession, prior to issuance of notice, material revealing that income represented in the form of an 'asset' valued at Rs. 50 lakhs or more had escaped assessment (the jurisdictional fact) so as to permit invocation of the extended reassessment period (7th to 10th years) under the fourth proviso to Section 153A and issue notices under Section 153C. The tribunal and the Commissioner (Appeals) found, and this Court agrees, that the satisfaction note and the seized pages (SST-01, pages 61-69) did not disclose any such undisclosed asset; the material consisted of journal and bank ledgers and entries from the assessee's computerized books recording sale of investments and receipt into bank accounts, and were not incriminating of income represented as undisclosed assets escaping assessment. Absent the specified jurisdictional fact the AO had no authority to invoke Section 153C for AY 2011-12, and the subsequent exercise of extended reassessment jurisdiction was therefore without jurisdiction.

Assumption of jurisdiction under Section 153C read with the fourth proviso to Section 153A for Assessment Year 2011-2012 was invalid for want of the requisite jurisdictional fact; the AO lacked jurisdiction to reassess the said year.

Incriminating material found on search - income represented in the form of asset - unexplained cash credit under Section 68 - Validity of the addition under Section 68 for unexplained cash credit representing sale proceeds in AY 2011-12 in the absence of incriminating material/undisclosed asset found on search. - HELD THAT: - The Assessing Officer made an addition u/s 68 on the premise that sale proceeds received by the assessee were not genuine and represented undisclosed monies. The AY was reopened under Section 153C premised on seized material. The Court, following the concurrent findings of the Commissioner (Appeals) and the ITAT, held that the seized pages merely showed disclosed sales of investments reflected in regular books and banking channels; no incriminating material or undisclosed asset was found to justify invoking the extended period. As the AO had not made any finding or addition of an undisclosed asset of the requisite value, the subsequent addition as unexplained cash credit under Section 68 was made without jurisdiction and is unsustainable.

The addition under Section 68 for the sale proceeds in AY 2011-12 is untenable, being made after an invalid assumption of jurisdiction; deletion of the addition was lawful.

Reassessment of extended assessment years (7th to 10th) - incriminating material found on search - Whether the concurrent factual findings of the Commissioner (Appeals) and the ITAT - that no incriminating material/undisclosed asset was found in the seized material and that the AO's additions were without jurisdiction - can be interfered with. - HELD THAT: - The High Court reviewed the tribunal's and the appellate authority's scrutiny of the seized material and the AO's satisfaction note. The concurrent findings that the seized documents did not reveal any undisclosed asset and that the assessment for AY 2011-12 stood unabated on the date of search were held to be supported by the record and not perverse. The Court noted binding precedents emphasising that correlation between seized material and the assessment years is essential to establish jurisdiction under Section 153C. Given the concurrent, reasoned conclusions below, there was minimal scope for interference.

Concurrent factual findings upholding deletion of the addition and holding the reassessment void for want of jurisdiction are sustained; the Revenue's appeal is dismissed.

Final Conclusion: The appeal is dismissed. The Assessing Officer had no jurisdiction under Section 153C read with the fourth proviso to Section 153A to reopen Assessment Year 2011-2012 as the requisite jurisdictional fact (incriminating material showing income represented as an undisclosed asset of Rs.50 lakhs or more) was absent; consequent additions under Section 68 were therefore without jurisdiction and were rightly deleted by the lower authorities.

Deductibility of interest under section 36(1)(iii) - Proviso to section 36(1)(iii) regarding interest disallowance till asset is put to use - Distinction between set up of business and commencement of business

Deductibility of interest under section 36(1)(iii) - Proviso to section 36(1)(iii) regarding interest disallowance till asset is put to use - Distinction between set up of business and commencement of business - Whether interest paid on loan taken for construction of a new mandapam is allowable as deduction when the asset was completed and ready for use though revenue generation (bookings/inauguration) commenced in a subsequent year. - HELD THAT: - The Tribunal examined the factual finding that the new mandapam was constructed, completed and ready for use in the relevant year, and noted that the Assessing Officer did not dispute that the asset was ready and put to use. The proviso to section 36(1)(iii) disallows interest only for the period beginning from borrowing until the date on which the asset is put to use. The Tribunal applied the established legal principle distinguishing the 'set up of business' from the 'commencement of business', holding that once an asset has been set up and is ready for use in the business, expenditures relatable to that business - including interest on borrowed capital - are allowable, even if receipts or bookings commence later. The Tribunal found the Assessing Officer's reliance on the date of inauguration and start of bookings to be irrelevant to the question whether the business (or the asset for use in the business) had been set up. On this basis, the Tribunal concluded that the disallowance under section 36(1)(iii) was unsustainable and directed deletion of the addition. [Paras 7, 8]

Disallowance of interest under section 36(1)(iii) set aside and interest allowed as deduction; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that interest on borrowed capital for the newly constructed mandapam is deductible for AY 2015-16 because the asset was completed and ready for use (business set up), rendering the proviso to section 36(1)(iii) inapplicable to deny the deduction.

Unexplained cash credits - burden of proof under section 68 of the Income-tax Act - taxation under section 115BBE of the Income-tax Act - acceptance of books of account as evidence of cash balances - addition based on surmise and conjecture - double taxation of the same income

Unexplained cash credits - burden of proof under section 68 of the Income-tax Act - acceptance of books of account as evidence of cash balances - Whether the cash deposits of SBNs during the demonetisation period constituted unexplained cash credits taxable under section 68 and chargeable under section 115BBE - HELD THAT: - The Tribunal held that where the nature of the assessee's business involves substantial cash transactions and the books of account have been maintained, audited and accepted by the tax authorities, the assessee need not establish cash flow with mathematical precision; it suffices on the preponderance of probabilities that the business generated the surplus cash deposited. The Assessing Officer's disbelief based on broad comparisons and conjecture, without evidence of manipulation or discrepancy in sales, purchases, stocks or cash withdrawals, was held unsustainable. The Tribunal agreed with the CIT(A)'s extensive factual examination of sales, cash sales, cash-in-hand occurrences and stock/creditor trends which showed the cash figures were in line with business trends; consequently, the characterisation of the deposits as unexplained cash credits was rejected and the additions were deleted. [Paras 10, 11, 13]

Addition treating the SBN deposits as unexplained cash credits and taxable under section 68 read with section 115BBE is not sustainable and is deleted.

Addition based on surmise and conjecture - taxation under section 115BBE of the Income-tax Act - double taxation of the same income - Whether the partial addition of Rs. 38.25 lakhs sustained by the CIT(A) on an estimated basis for alleged inflation of cash sales during 1-8 November 2016 was justified - HELD THAT: - The Tribunal found that the CIT(A) accepted the major part of the cash deposits after detailed scrutiny but sustained a limited addition by estimating inflated sales for the 1-8 November period on a hypothesis that some sales may have been booked to cover undisclosed SBNs. The Bench emphasised that such an inference, made without direct evidence of manipulation, amounted to surmise and conjecture. Further, it noted that sustaining an addition against sales already reflected in the profit and loss account risked double taxation of the same income. In absence of cogent evidence to show that the deposits originated from undisclosed sources rather than the accepted books, the limited estimated addition could not be upheld. [Paras 11, 12, 14]

The CIT(A)'s restricted addition of Rs. 38.25 lakhs, being founded on conjectural inference and producing double taxation, is not sustainable and is deleted.

Final Conclusion: Revenue appeal dismissed; assessee's appeal allowed; the additions made in respect of SBN/cash deposits during demonetisation deleted and the partial addition sustained by the CIT(A) also deleted.

Revisionary jurisdiction under section 263 of the Income Tax Act - Reassessment under section 147 - adequacy of inquiries and application of mind - Assessment order being 'erroneous and prejudicial to the interests of revenue' - Limits on substituting one opinion for another in revision proceedings - Prudence of Assessing Officer in deciding need for further inquiry

Revisionary jurisdiction under section 263 of the Income Tax Act - Reassessment under section 147 - adequacy of inquiries and application of mind - Assessment order being 'erroneous and prejudicial to the interests of revenue' - Limits on substituting one opinion for another in revision proceedings - Validity of the Principal Commissioner's order under section 263 setting aside the assessment completed under section 143(3) r.w.s.147 for AY 2013-14 on the ground that the assessment order was erroneous and prejudicial to the revenue. - HELD THAT: - The Tribunal found on the record that the Assessing Officer had issued notices under section 142(1) and had reproduced and considered the assessee's replies and documentary evidence (including bank statements, confirmations, satakhat agreement, 7/12 extract, cancellation agreement, passports, power of attorney and confirmations/returns of the parties who withdrew cash). The assessing officer's examination of these materials was reflected in the assessment order; thus the AO had made enquiries and applied his mind (paras 11-16). The Principal Commissioner's conclusion that the AO failed to verify or make enquiries was therefore a mere difference of opinion as to the weight of evidence and not a case where the assessment was made without application of mind. Jurisprudence was cited to underscore that section 263 cannot be used to substitute the Commissioner's view for that of the AO where the AO has carried out enquiries and formed an opinion; variations in perception between the AO and Commissioner do not per se render an order erroneous and prejudicial (paras 16-20). The Tribunal held that giving the AO another opportunity to enquire through section 263 amounted to impermissible substitution of opinion, and accordingly quashed the revision order. [Paras 16, 17, 18, 19, 20]

Order passed by the Principal Commissioner under section 263 was quashed; the assessment order under section 143(3) r.w.s.147 for AY 2013-14 was not held to be erroneous or prejudicial to the revenue.

Final Conclusion: The appeal is allowed - the Principal Commissioner's revision under section 263 was quashed as the Assessing Officer had conducted inquiries, considered the assessee's explanations and materials, and the matter amounted to a permissible difference of opinion rather than an assessment rendered erroneous and prejudicial to the revenue.

Arbitrariness - bio-security and quarantine risk - administrative discretion in policy-making - phytosanitary inspection and specialized technical manpower - principle of reasonableness under Article 14

Arbitrariness - principle of reasonableness under Article 14 - administrative discretion in policy-making - Validity of the Notification dated 09.07.2020 and the order dated 02.03.2021 which restricted import of cut flowers to Chennai airport and whether those measures arbitrarily discriminated against Delhi-NCR traders or violated Articles 14 and 19. - HELD THAT: - The Court examined the materials and affidavits filed by the Respondents and the contentions of the Petitioner. The Respondents produced evidence of increased volume and complexity of phytosanitary inspections, the concentration of specialized instrumentation and trained personnel at RPQS Chennai, and interception records identifying quarantine pests (notably Thrips) on imported cut flowers. The decision to designate a single port was explained as an administrative measure intended to ensure rapid clearance and rigorous phytosanitary scrutiny while managing limited technical manpower and laboratory resources. The Court observed that bio-security concerns and the prevention of entry of exotic pests involve technical assessments and policy judgments best left to the executive and expert agencies; courts should not supplant specialized administrative decision-making in matters of quarantine policy and resource allocation. Given the stated risks, specialized facilities and trained manpower at Chennai, the ongoing phased upgradation of facilities at other ports, and the Respondents' rationale to centralize operations for operational efficiency and national bio-security, the impugned measures were not found to be arbitrary or unreasonable. The Court also noted the Respondents' commitment to strengthen capabilities at other airports in a phased manner and urged prompt implementation, but did not convert that into a judicial timetable. [Paras 31, 32, 33, 34, 35]

The Notification and the order are not arbitrary or violative of Articles 14 or 19; judicial interference is unwarranted and the petition is dismissed.

Final Conclusion: The Court upheld the executive decision to restrict importation of cut flowers to Chennai airport as a non-arbitrary administrative measure taken in the interest of national bio-security and technical efficiency, declined to interfere, noted the respondents' undertaking to upgrade facilities at other ports in a phased manner and disposed of the petition.

Penalty under Section 112(a) of the Customs Act - penalty under Section 114AA of the Customs Act - abetment - mis-declaration and undervaluation - reliance on statements under Section 108 - burden of proof in quasi criminal penal proceedings

Penalty under Section 112(a) of the Customs Act - penalty under Section 114AA of the Customs Act - abetment - mis-declaration and undervaluation - Validity of imposition of penalties under Section 112(a) and Section 114AA on the appellant for alleged abetment in import mis-declaration and undervaluation. - HELD THAT: - The Tribunal examined the material relied upon by the adjudicating authority and found that the evidence did not establish the appellant's active role in the import, mis-declaration or undervaluation. Although emails, a common telephone number and the appellant's address appeared in records, those facts were shown to arise from the importer's use of the appellant's office email/phone and the importer having given the appellant's address for his PAN while employed by the appellant. The importer repeatedly did not implicate the appellant in statements and there was no direct or corroborative evidence proving that the appellant caused or connived in the wrong declaration or undervaluation. The adjudicating order rested on assumptions and inferences rather than positive, tangible proof of the appellant's complicity. In these circumstances, penal action under Section 112(a) and Section 114AA, which are quasi criminal in character, could not be sustained absent cogent evidence of abetment or causation of the false declaration.

Penalties imposed on the appellant under Section 112(a) and Section 114AA are set aside; the appeal is allowed insofar as the appellant is concerned.

Final Conclusion: The Tribunal allowed the appeal of the appellant, set aside the penalties imposed under Section 112(a) and Section 114AA for lack of evidence of abetment or active involvement in mis-declaration/undervaluation, and directed that the appellant shall be entitled to consequential benefits in accordance with law.

Failure to prove ownership of imported goods and consequent confiscation - penalty liability under the Customs Act for a person held liable under Section 112 - forged or disputed signatures on documents accompanying bills of entry and their probative consequence - self clearance claim without recordal/evidence and absence of CHA engagement - investigation by Special Intelligence and Investigation Branch (SIIB) and effect of complainant's inconsistent statements

Failure to prove ownership of imported goods and consequent confiscation - Assessee failed to prove that the goods imported under the specified air way bills/bills of entry belonged to it, justifying confiscation. - HELD THAT: - The Tribunal found that the assessee's own conduct - initial complaint about misuse of its IEC followed by subsequent assertions of ownership - created confusion and undermined its claim. The adjudicating authority and the Tribunal placed the evidential burden on the assessee to prove ownership; on the record the assessee did not discharge that burden. The Tribunal accepted the Revenue's position that when the claimant fails to establish ownership beyond reasonable doubt, confiscation of the goods is justified and it is not incumbent on the Revenue to identify an alternate actual owner. [Paras 11, 13]

Confiscation of the goods was upheld as the assessee did not prove ownership.

Penalty liability under the Customs Act for a person held liable under Section 112 - Assessee could be held to be 'any person' within the meaning of the Customs Act and liable to penalty under the provision invoked by the Revenue. - HELD THAT: - The Tribunal concluded that because the assessee's inconsistent statements initiated and then frustrated the investigation, and because it failed to prove ownership, the assessee fell within the class of persons on whom penalty could be imposed. The finding that the assessee had not discharged the evidential burden supported imposing penalty on the assessee as 'any person' under the statutory provision relied upon by the Revenue. [Paras 13]

Penalty on the assessee was justified and sustained.

Forged or disputed signatures on documents accompanying bills of entry and their probative consequence - Discrepancies in signatures on documents, and the manager's denial of some signatures, were material and not mere minor variations; these discrepancies undermined the assessee's claim of lawful importation. - HELD THAT: - The Tribunal accepted the manager's categorical denial that he had signed all documents and his admission that some signatures differed from his own. The assessee did not explain these differences, did not seek cross examination of the manager, and did not otherwise rebut the implication of forgery or unauthorised signing. The Tribunal held that such unexplained discrepancies, originating in the assessee's own complaint, are not minor variations and legitimately weaken the claim that the consignments belonged to the assessee. [Paras 11, 12]

Disputed signatures were material; absence of explanation or rebuttal supported the view that documents were not reliably attributable to the assessee.

Self clearance claim without recordal/evidence and absence of CHA engagement - Assessee's admitted claim of having filed for self clearance was not supported by any record; investigation established that no request for self clearance in the assessee's name was on file. - HELD THAT: - Although the assessee contended that the goods were cleared on self clearance without engaging a Customs House Agent, the SIIB investigation, as accepted by the Tribunal, showed no record of any self clearance request by the assessee or its firm. The assessee furnished no documentary evidence to corroborate its asserted procedure. The absence of supporting records for the asserted self clearance weighed against the assessee's credibility and its ownership claim. [Paras 5, 12]

Claim of self clearance was unsupported by records and was rejected.

Final Conclusion: The appeals are dismissed; the Tribunal upheld confiscation of the goods and imposition of penalty on the assessee, the adjudication resting on the assessee's failure to prove ownership, unexplained disputed signatures, and absence of evidence for self clearance.

Confiscation of seized goods and currency under the Customs Act - imposition and quantum of penalty under Section 112 of the Customs Act - confessional statements under Section 108 of the Customs Act as substantive evidence - requirement of serving show cause notice before confirming duty under Section 28 - reduction of excessive penalty as appellate power

Confiscation of seized goods and currency under the Customs Act - confessional statements under Section 108 of the Customs Act as substantive evidence - Absolute confiscation of the recovered gold bar weighing 995.5 grams was upheld. - HELD THAT: - The Tribunal accepted the confessional statements recorded under Section 108 and documentary evidence concerning purchase and concealment of the gold. The impugned findings that the appellants participated in a networked smuggling operation and that the recovered gold was liable to confiscation were sustained. The Tribunal noted that the statements were not shown to be obtained by coercion and that the factual matrix and admissions established the smuggling and concealment in the bus cavity, justifying absolute confiscation. [Paras 7]

Confiscation of the gold bar upheld.

Requirement of serving show cause notice before confirming duty under Section 28 - Demand of customs duty and interest confirmed under Section 28/28AA against Shri Narayan Sharma was set aside for want of statutory show cause notice. - HELD THAT: - The Tribunal found that the demand of duty on Shri Narayan Sharma was confirmed without issuing the statutory show cause notice required to be served on the person chargeable with duty. For that procedural failure the duty demand and interest were held unsustainable and accordingly set aside, despite other findings on involvement in smuggling. [Paras 7]

Demand of duty and interest against Shri Narayan Sharma set aside.

Imposition and quantum of penalty under Section 112 of the Customs Act - confessional statements under Section 108 of the Customs Act as substantive evidence - Penalty of Rs. 1,00,000 on Shri Narayan Sharma was upheld. - HELD THAT: - Although the duty demand on Shri Narayan Sharma was annulled for procedural infirmity, the Tribunal accepted the voluntariness and evidentiary value of his confessional statement under Section 108, finding his role as a carrier established. In exercise of appellate power, the Tribunal sustained the penalty imposed under Section 112 read with Section 114 on the basis of his admitted participation. [Paras 7]

Penalty on Shri Narayan Sharma upheld.

Confiscation of seized goods and currency under the Customs Act - Absolute confiscation of Indian currency recovered from the premises of Shri Pardeep Saini was upheld. - HELD THAT: - The Tribunal accepted the departmental finding that the currency detained at the residential premises of the noticee was connected to the smuggling activities. Having found the factual link on the basis of statements and recovery, the Tribunal sustained the absolute confiscation under the Customs Act. [Paras 7]

Confiscation of the detained Indian currency upheld.

Imposition and quantum of penalty under Section 112 of the Customs Act - reduction of excessive penalty as appellate power - Penalties of Rs. 15,00,000 imposed on Shri Pardeep Saini and Shri Rakesh Rai were reduced to Rs. 5,00,000 each. - HELD THAT: - While the Tribunal found both noticees materially involved in the smuggling network on the basis of confessional statements and other evidence, it exercised appellate discretion to moderate the quantum of penalty which it considered excessive. The Tribunal therefore reduced each penalty from the figure imposed by the original authority to a lower sum in the exercise of its revisional jurisdiction. [Paras 7]

Penalties on Shri Pardeep Saini and Shri Rakesh Rai reduced to Rs. 5,00,000 each.

Imposition and quantum of penalty under Section 112 of the Customs Act - confessional statements under Section 108 of the Customs Act as substantive evidence - Penalty of Rs. 5,00,000 on Shri Vaibhav Rai was upheld. - HELD THAT: - On the material including the confessional admissions and the findings that Vaibhav Rai was an active participant and beneficiary in the purchase and delivery of gold, the Tribunal sustained the penalty originally imposed under Section 112. [Paras 7]

Penalty on Shri Vaibhav Rai upheld.

Imposition of penalty under Section 117 of the Customs Act - confessional statements under Section 108 of the Customs Act as substantive evidence - Penalty of Rs. 50,000 on Smt. Sreet Saini was upheld. - HELD THAT: - Although Smt. Sreet Saini denied involvement, the Tribunal accepted the prosecutorial case that the vehicle registered in her name was used in the smuggling scheme and that material on record and statements established her liability for the penalty under the Act. The appellate authority therefore sustained the penalty imposed under Section 117. [Paras 5, 7]

Penalty on Smt. Sreet Saini upheld.

Final Conclusion: The Tribunal upheld absolute confiscation of the seized gold and the confiscation of detained Indian currency; set aside the demand of customs duty and interest against Shri Narayan Sharma for lack of a statutory show cause notice while upholding his penalty; sustained penalties on other appellants where liability was established on the basis of confessional statements, and exercised appellate discretion to reduce the penalties on Shri Pardeep Saini and Shri Rakesh Rai to moderated sums. All appeals disposed accordingly.

Regulation 10(d) of CBLR, 2018 - Regulation 10(n) of CBLR, 2018 - Suspension under Regulation 16(1) and revocation under Regulation 16(2) of CBLR, 2018 - Revocation procedure under Regulation 17 of CBLR, 2018 - Obligation of Customs Broker to verify KYC and advise clients - Liability of Customs Broker for acts of importer / beneficial owner - Principles of natural justice - notice and opportunity

Suspension under Regulation 16(1) and revocation under Regulation 16(2) of CBLR, 2018 - Revocation procedure under Regulation 17 of CBLR, 2018 - Validity of initiating revocation proceedings under Regulation 17 after an earlier suspension had been revoked under Regulation 16(2). - HELD THAT: - The Tribunal held that Regulation 16(1) empowers immediate suspension to prevent consequences pending the procedure under Regulation 17, and Regulation 16(2) provides for prompt hearing and possible revocation of such suspension. Revocation of a suspension under Regulation 16(2) does not preclude initiation of revocation proceedings under Regulation 17; Regulation 16 is procedural and analogous to interim orders in criminal trials. Accordingly, the later show cause notice under Regulation 17 was not barred merely because the suspension had earlier been revoked. The reasoning reflects that the statutory scheme contemplates suspension as an interim protective measure distinct from substantive adjudication under Regulation 17. [Paras 6, 7, 8]

Proceedings under Regulation 17 could validly be initiated despite earlier revocation of the suspension under Regulation 16.

Regulation 10(d) of CBLR, 2018 - Obligation of Customs Broker to advise clients and bring non-compliance to authority - Principles of natural justice - notice and opportunity - Whether the appellant violated Regulation 10(d) by failing to advise clients to comply with law or to bring non-compliance to departmental notice. - HELD THAT: - The Tribunal examined the investigation record and noted that the DRI show cause notice did not make the CB a co-noticee and that evidence showed the appellant supplied documents to investigating authorities and had earlier disclosed facts to them. The adjudicating authority's conclusion rested on observations about non-appearance of certain importers, but the Tribunal found those observations to be incorrect or inapplicable to impose a duty on the CB to ensure attendance. There is no provision within CBLR or the Customs Act that places on a CB the burden of securing the attendance of importers before investigators. Reliance was placed on earlier Tribunal precedent to support that a CB is not liable merely because importers failed to cooperate when the CB had otherwise provided documents and assistance. Reading the statements as a whole, the Tribunal concluded absence of intent or knowledge on part of the CB to facilitate mis-declaration. [Paras 10, 11, 12, 13]

Appellant did not violate Regulation 10(d) of CBLR, 2018.

Regulation 10(n) of CBLR, 2018 - Obligation of Customs Broker to verify KYC and identity of client - Liability of Customs Broker for acts of importer / beneficial owner - Whether the appellant failed to comply with Regulation 10(n) by not verifying correctness of IEC/GSTIN/identity and functioning of clients at declared addresses. - HELD THAT: - The Tribunal reviewed statements of importers, the beneficial owner and the appellant. The appellant had incontrovertibly met four IEC holders in person, verified original documents (IEC, GST, Aadhaar, PAN, bank evidence) and produced those documents to authorities; importers themselves introduced and authorised Shri Sandeep Jain as their representative. The adjudicating authority had selectively relied on parts of statements to conclude non-traceability, but a holistic reading showed that IECs were validly issued and the arrangement between importers and the beneficial owner was consensual. There was no evidence that the CB benefitted or participated in the alleged mis-declarations. Therefore the CB had complied with KYC obligations and could not be held liable merely because a beneficial owner used the IEC-holders. [Paras 17, 18, 19, 20, 21]

Appellant did not violate Regulation 10(n) of CBLR, 2018.

Final Conclusion: The Tribunal found no breach of Regulations 10(d) or 10(n) by the customs broker and held that invocation of revocation proceedings after revocation of an interim suspension was permissible; the adjudicating authority had erred in its appreciation of the record. The Order-in-Original confirming revocation of the licence was set aside and the appeal was allowed.

Refund claim limitation - jurisdictional filing - transfer of proceedings to competent authority - procedural compliance and substantive compliance - legitimate expectation - procedural law as servant

Refund claim limitation - jurisdictional filing - transfer of proceedings to competent authority - procedural compliance and substantive compliance - legitimate expectation - Whether a refund claim filed within the statutory time-limit before a wrong jurisdictional Customs authority, and thereafter forwarded to the proper jurisdictional authority, is to be treated as timely for purposes of limitation. - HELD THAT: - The Tribunal accepted that the claimant had filed the refund claim within one year from payment of duty before a Customs authority that was not the competent jurisdictional officer. The incorrect filing was rectified by transferring the claim to the proper jurisdictional Deputy Commissioner of Customs (Refunds), Air Commissionerate, Chennai. The Court held that processual prescriptions are intended to facilitate, not defeat, substantive rights and that an authority who receives a claim within time but lacks competence should transfer it to the competent authority rather than treat the filing as barred by limitation. Relying on the principle that procedural compliance which is substantive in effect should be interpreted liberally and on the concept of legitimate expectation that authorities act reasonably and in good faith, the Tribunal upheld the lower appellate authority's direction to process the claim on merits and not to disallow it solely on the ground that it was initially filed before the wrong jurisdictional office. Consequently, the period during which the claim remained with the wrong authority was not to be counted against the claimant for limitation purposes, and mere filing before a wrong jurisdiction-followed by transfer-could not justify outright rejection of the refund on time-bar grounds. [Paras 5, 6]

Appeal dismissed; the refund claim filed in the wrong jurisdiction but within time and forwarded to the competent authority is to be treated as timely and must be processed on merits.

Final Conclusion: The Revenue's appeal is dismissed; the adjudicating authority was directed to process the refund claim on merits and sanction the refund expeditiously as per law since the claim was filed within time albeit initially before a wrong jurisdictional office and thereafter transferred to the proper authority.

Obligations of Customs Broker - Regulation 10(n) of CBLR, 2018 - KYC duty - Liability for violations even without intent - Revocation of licence as disciplinary penalty - Forfeiture of security deposit - Imposition of penalty under Regulations 17 and 18 of CBLR, 2018

Regulation 10(n) of CBLR, 2018 - KYC duty - Obligations of Customs Broker - Liability for violations even without intent - Appellant failed to verify KYC and identity of importer and thereby violated obligations under Regulation 10(n) of CBLR, 2018. - HELD THAT: - The Tribunal recorded that the G-card holder employed by the appellant admitted he had not obtained any KYC documents from the actual importer and that documents, including purported KYC, were provided to him by an inspector. The conduct showed absence of verification of IEC, GSTIN, identity and functioning of the client by use of reliable, independent, authentic documents. Applying the settled principle that a Customs Broker occupies a position of trust and that violations even without intent attract disciplinary action, the Tribunal found the appellant breached the obligations placed on a Customs Broker under Regulation 10(n) and related parts of the Regulations. [Paras 16, 17]

Violation of Regulation 10(n) established; appellant did not perform required KYC and related obligations.

Revocation of licence as disciplinary penalty - Imposition of penalty under Regulations 17 and 18 of CBLR, 2018 - Whether revocation of the appellant's Customs Broker licence was warranted by the proven misconduct. - HELD THAT: - Although the Tribunal found misconduct and breach of Regulation 10(n), it exercised its evaluative discretion as to proportionality of punishment. The Tribunal recognised that the appellant's acts and the conduct of its employee justified disciplinary action, but concluded that the extreme consequence of revocation, which deprives an individual of livelihood, was not warranted by the facts. The Tribunal accepted the gravity of the breach but held that revocation was disproportionate in the circumstances and therefore set aside the revocation order. [Paras 19, 20]

Revocation of Customs Broker licence set aside as disproportionate punishment.

Forfeiture of security deposit - Imposition of penalty under Regulations 17 and 18 of CBLR, 2018 - Whether imposition of penalty and forfeiture of security deposit were justified given the appellant's misconduct. - HELD THAT: - Having found breach of the Regulations and connivance by the G-card holder in clearing illicit consignments, the Tribunal held that disciplinary measures short of revocation were appropriate. It concluded that the forfeiture of the security deposit and the monetary penalty imposed by the adjudicating authority were commensurate with the misconduct and lawful under the Regulations. The Tribunal therefore confirmed the penalty and forfeiture while setting aside the revocation. [Paras 19, 20, 21]

Penalty and forfeiture of security deposit confirmed; monetary punishment upheld.

Final Conclusion: The Tribunal held that the appellant breached the KYC and related obligations under Regulation 10(n) of CBLR, 2018 and is liable for disciplinary action; however, revocation of the Customs Broker licence was disproportionate and was set aside, while the imposition of the penalty and forfeiture of the security deposit were upheld.

Extension of period of limitation by exercise of powers under Article 142 - exclusion of period for computing outer limit for condoning delay - outer limit for filing written statement in commercial suits - effect of suo motu orders in In Re: Cognizance for Extension of Limitation - application of extraordinary orders to protect remedies and defences during pandemic

Outer limit for filing written statement in commercial suits - exclusion of period for computing outer limit for condoning delay - effect of suo motu orders in In Re: Cognizance for Extension of Limitation - Whether the High Court was justified in refusing to take the written statements on record on the ground that the period for filing them (including the outer limit) had expired prior to the suo motu order of this Court of 15.03.2020 and therefore the appellants could not avail of the subsequent extension orders. - HELD THAT: - The Court held that the suo motu series of orders in In Re: Cognizance for Extension of Limitation, including the orders of 08.03.2021 (and the subsequent orders of 27.04.2021 and 23.09.2021), excluded the period from 15.03.2020 to 14.03.2021 for the purpose of computing limitation and expressly extended that exclusion to "outer limits (within which the court or tribunal can condone delay)". That expansion removed the basis of Sagufa Ahmed (which had relied on the earlier orders of 23.03.2020 etc. and held only the period of limitation was extended and not the period for condonation). Applying the orders of 08.03.2021 and thereafter to the facts, the period between service of summons and the applicants' filing fell within the excluded period and the protection afforded by the later suo motu orders. Consequently the applications filed on 20.01.2021 for taking the written statements on record were within the time made available by the exclusion and should have been allowed. The Court therefore set aside the High Court's order and directed that the written statements filed on 20.01.2021 be taken on record. [Paras 16, 17, 21, 22]

The High Court's refusal was erroneous; the appellants are entitled to benefit of the exclusion under the later suo motu orders and their written statements filed on 20.01.2021 are to be taken on record.

Final Conclusion: Appeals allowed. The written statements filed on 20.01.2021 are directed to be taken on record and the suit shall proceed; no order as to costs.

Inherent jurisdiction - recall of judgment - ancillary or incidental powers - natural justice - commercial wisdom of the Committee of Creditors - rehearing after recall - impleadment of financial creditors

Inherent jurisdiction - recall of judgment - ancillary or incidental powers - This Tribunal has inherent jurisdiction to entertain and allow an application for recall of its judgment on sufficient grounds. - HELD THAT: - A five member bench examined prior coordinate bench decisions and authoritative precedents, concluding that while the Tribunal lacks power of review, it is vested with inherent power to recall judgments where appropriate. The Tribunal relied on the principle that a statutory tribunal possesses ancillary or incidental powers necessary to discharge its functions effectively and cited Grindlays Bank (as discussed in the five member bench order) to support that incidental powers include the power to recall judgments in circumstances such as procedural error, failure to serve a necessary party, fraud on the Court, or other sufficient grounds. The five member bench overruled earlier contrary observations of three member benches to the extent they held that the Tribunal had no power to recall its judgments, while maintaining that express power of review is absent. [Paras 16, 18, 27]

Held that NCLAT can, in exercise of its inherent jurisdiction, recall its judgment on sufficient grounds; the earlier three member bench observations denying recall are not correct law.

Natural justice - commercial wisdom of the Committee of Creditors - party not heard - The impugned judgment dated 27.1.2022 was recalled because the Financial Creditors (the CoC) were not before the Tribunal and were not heard before an order was made that varied the commercial decision of the CoC. - HELD THAT: - On examination of the record, the Tribunal found that the order dated 27.1.2022 directed the Resolution Professional not to deduct the disputed amount and thereby varied a decision which had been adopted as part of the approved resolution plan - a decision reached by the CoC as its commercial wisdom. The Financial Creditors, who comprised the CoC and had taken the commercial decision regarding the deduction, were not impleaded or heard before the earlier order; this failure to hear the affected party amounted to a breach of the principle that no one shall be condemned unheard and constituted sufficient ground to recall the order. [Paras 26, 27]

Recalled the three member bench judgment dated 27.1.2022 on the ground that Financial Creditors were not heard before an order was made that varied the CoC's commercial decision.

Rehearing after recall - impleadment of financial creditors - CA(AT)(Insolvency) No. 729 of 2020 is to be reheard after recalling the order dated 27.1.2022, and the Financial Creditors of M/s Amtek Auto Limited shall be impleaded as a party for the rehearing. - HELD THAT: - In exercise of the power to recall the earlier order, the Tribunal directed that the matter be placed for fresh hearing with the Financial Creditors impleaded, so that the commercial decision taken by the CoC and related issues (including treatment of the disputed amount) can be adjudicated with all necessary parties before the Tribunal. The Tribunal clarified that any observations made while disposing of the recall application shall not influence the merits of the reheard appeal. [Paras 27]

Ordered recall of the judgment dated 27.1.2022, impleadment of the Financial Creditors and rehearing of CA(AT)(Insolvency) No. 729 of 2020.

Final Conclusion: The NCLAT held that it possesses inherent power to recall its judgments on sufficient grounds; applied that principle to recall its order dated 27.1.2022 because the Committee of Creditors (Financial Creditors) had not been heard before a direction was made that varied their commercial decision; directed impleadment of the Financial Creditors and ordered a rehearing of CA(AT)(Insolvency) No. 729 of 2020.

Compliance with Section 19(1) of the Prevention of Money Laundering Act, 2002 - Obligation to inform arrested person of grounds of arrest under Article 22(1) of the Constitution - Furnishing of written grounds of arrest to the arrestee - Magistrate's duty under Section 167 Cr.P.C. to verify compliance with Section 19 - Remand order cannot validate an unlawful arrest - Abuse of process / colourable exercise of power by investigating agency

Compliance with Section 19(1) of the Prevention of Money Laundering Act, 2002 - Obligation to inform arrested person of grounds of arrest under Article 22(1) of the Constitution - Furnishing of written grounds of arrest to the arrestee - Arrest of the appellants under Section 19 of the Act of 2002 did not comply with the mandate to inform the arrested person of the grounds of arrest and a copy of the written grounds must be furnished to the arrested person as a matter of course. - HELD THAT: - The Court examined the text and constitutional purpose of Section 19(1) together with Article 22(1) and the practical consequences of merely reading out grounds of arrest. Noting inconsistency in practice and the risk of disputed oral communication, the Court held that the statutory requirement to record reasons in writing by the authorized officer requires that a copy of those written grounds be furnished to the arrested person without exception. The Court accepted that limited redaction of truly sensitive material would be permissible but rejected authorities holding mere oral informing as adequate. This interpretation was held necessary to enable the arrestee to seek legal counsel and to avail statutory remedies such as bail under Section 45, which require knowledge of the basis for the officer's "reason to believe" that the person is guilty. [Paras 31, 32, 33, 34, 35]

A copy of the written grounds of arrest recorded under Section 19(1) must be furnished to the arrested person as a matter of course; mere oral reading does not satisfy Article 22(1) or Section 19(1).

Magistrate's duty under Section 167 Cr.P.C. to verify compliance with Section 19 - Remand order cannot validate an unlawful arrest - A Magistrate exercising power under Section 167 Cr.P.C. in respect of a remand must verify and be satisfied that the conditions of Section 19 have been complied with; failure to do so renders the remand order unsustainable and does not cure defects in the arrest. - HELD THAT: - Relying on this Court's precedents, the Court reiterated that Section 167 Cr.P.C. operates to ensure judicial oversight of arrests under Section 19 and that the Magistrate must peruse the order and material to satisfy himself about compliance with the statutory safeguards. The Court held that earlier authorities which treated remand as validating an arrest were inapplicable to a challenge that the remand itself proceeded without proper satisfaction of Section 19. Where the Magistrate does not record independent satisfaction after perusal of grounds and material, the remand order cannot cure constitutional or statutory infirmities in the arrest. [Paras 14, 15, 16, 17, 18]

The remand order must be preceded by the Magistrate's independent satisfaction as to compliance with Section 19; absent such satisfaction the remand does not validate an unlawful arrest.

Abuse of process / colourable exercise of power by investigating agency - Remedial consequence of non-compliance with Section 19 - The ED's conduct in recording a fresh ECIR and effecting arrests immediately after interim protection in another investigation, and the failure to comply with Section 19(1), amounted to arbitrary exercise of power such that the arrests, the arrest memos and the remand and consequential custody orders could not be sustained. - HELD THAT: - Having found that the appellants had interim protection in a connected matter and that the second ECIR was recorded and acted upon in rapid succession, the Court treated the sequence as demonstrating lack of bonafides. Coupled with the non-furnishing of written grounds and the Magistrate's failure to record satisfaction as required, the Court concluded that the arrests and subsequent remands were not in conformity with statutory and constitutional safeguards and therefore had to be set aside. The Court emphasised that investigatory agencies must act with probity and within statutory limits, and that colourable or vindictive conduct will vitiate consequent orders. [Paras 22, 23, 24, 35, 36]

The arrests, arrest memos, and remand/judicial custody orders arising therefrom were unsustainable on account of procedural non-compliance and arbitrary conduct by the ED and are set aside.

Final Conclusion: Appeals allowed. Impugned High Court orders, the arrest orders and arrest memos, and the remand and consequential custody orders are set aside; appellants to be released forthwith unless legitimately required in connection with any other case.

Summary order. Delay in filing the civil appeal was condoned and the civil appeal was dismissed; pending applications, if any, are disposed of.

Auctioneer's Service - Business Support Service - Renting of Immovable Property Service - Storage and warehousing services - Exemption of services connected with agricultural produce - Threshold-based exclusion from taxable service - Definition of "agricultural produce" including copra - Exemption under Notification No. 13/2003-S.T.

Auctioneer's Service - Auction vs. Tender distinction - Whether the services rendered by the assessee fall within Auctioneer's Service - HELD THAT: - The Tribunal accepted the assessee's case that the society organised sales where actual sale prices were fixed by owners and buyers and that the society merely acted as commission agent facilitating the sale process. Reliance was placed on earlier co ordinate Bench decisions which held that services in comparable cooperative societies did not constitute "Auctioneer's Service", particularly where the process resembled tender/agency and the society did not itself fix sale prices. In view of those consistent decisions and absence of contrary binding orders, the demand under Auctioneer's Service was held unsustainable and set aside. [Paras 5, 7, 8]

Demand under Auctioneer's Service set aside.

Business Support Service - Exemption under Notification No. 13/2003-S.T. - Whether the charges for appraising jewels and related activities amount to Business Support Service liable to service tax - HELD THAT: - The Tribunal accepted the factual finding that the society borrowed funds on its own account and re-lent to members, and that appraising charges were internal costs related to sanctioning loans to members rather than services rendered to a separate commercial recipient (such as the bank). Following earlier decisions of the same Bench, such charges were not held to be Business Support Service and thus not liable to service tax; consequential interest and penalties were also set aside. [Paras 2, 5, 8]

Demand under Business Support Service set aside.

Renting of Immovable Property Service - Storage and warehousing services - Definition of "agricultural produce" including copra - Threshold-based exclusion from taxable service - Whether the storage charges collected for keeping copra amount to Renting of Immovable Property Service liable to service tax - HELD THAT: - The Tribunal found that the charges related to storage of copra (an agricultural produce expressly identified in the relevant definition), collected at nominal rates and below the statutory threshold for taxable storage/warehousing services. The character of the amounts as storage charges for agricultural produce, the specific inclusion of copra within the definition of "agricultural produce", and the threshold limits applicable at the time led the Tribunal to conclude that classification as "renting of immovable property" was a misnomer. Consequently, the demand under this head was held unsustainable and set aside. [Paras 3, 9]

Demand under Renting of Immovable Property Service set aside.

Final Conclusion: The Tribunal allowed the appeal, setting aside the impugned order insofar as demands were confirmed under Auctioneer's Service, Business Support Service and Renting of Immovable Property Service, and granted consequential relief as per law.

Wrong availment and reversal of CENVAT credit - double availing of CENVAT credit - rule that interest is compensatory and not payable where credit is reversed before utilisation - levy of interest under compensatory principle - penal liability for erroneous CENVAT availment

Wrong availment and reversal of CENVAT credit - double availing of CENVAT credit - Whether the appellant had availed CENVAT credit twice and remained liable to reverse the credit again - HELD THAT: - The Tribunal found on the record that the appellant had initially taken CENVAT credit on advance payments and subsequently again on the invoices, but thereafter adjusted their CENVAT account by availing less credit equivalent to the earlier advance credit. This factual position was not disputed by the parties and, on that basis, the Tribunal concluded that the appellant effectively reversed the excess CENVAT credit and therefore was not liable to reverse the same again. The finding rests on the admitted adjustment in the CENVAT credit account which precludes treating the entries as a continuing double availment. [Paras 4]

The excess CENVAT credit was treated as reversed by the appellant and no further reversal is required.

Rule that interest is compensatory and not payable where credit is reversed before utilisation - levy of interest under compensatory principle - Whether interest is payable by the appellant for the period of the wrong availment - HELD THAT: - Relying on the compensatory character of interest as explained in the cited authority, the Tribunal held that interest under the statutory provision arises only where duty has been withheld or not paid when due. Where the erroneous CENVAT credit was reversed before it was taken or utilized to the revenue's detriment, no liability to pay interest arises from the date of the book entry of wrong availment. Further, the record showed ample CENVAT credit in the appellant's account; consequently, no interest was exigible in the facts of the case. [Paras 5]

No interest is payable in view of the reversal and the compensatory nature of interest.

Penal liability for erroneous CENVAT availment - Whether penalty is imposable on the appellant for the inadvertent availment - HELD THAT: - Having found that the excess credit was reversed and that there was no consequential loss to revenue warranting interest, the Tribunal further concluded that the circumstances did not justify imposition of penalty. The appellant's prompt adjustment and absence of benefit from the wrong entry led to the conclusion that penal consequences were not called for. [Paras 6]

No penalty is imposable on the appellant.

Final Conclusion: The impugned order disallowing CENVAT credit is set aside: the excess credit was held to have been reversed, no interest is payable, and no penalty is imposable; the appeal is allowed with consequential reliefs, if any.

Construction of residential complex service - residential complex - personal use exclusion - works contract service - service tax liability under the Finance Act - exemption/non taxability of construction under JnNURM/Government schemes

Construction of residential complex service - residential complex - personal use exclusion - exemption/non taxability of construction under JnNURM/Government schemes - Liability to service tax of works contract/construction services employed in construction of residential complexes under the JnNURM/GnRUM scheme for Surat Municipal Corporation (and for GSPHCL). - HELD THAT: - The Tribunal, after considering earlier decisions of the same Bench and other Benches, held that construction of residential complexes undertaken under the Jawaharlal Nehru National Urban Renewal Mission (JnNURM/GnRUM) and similar Government sponsored schemes is not commercial in nature and does not attract service tax. The statutory definition of "residential complex" and its Explanation excludes complexes constructed where the owner directly engages another for design/planning and the construction is intended for "personal use", which includes permitting residence by others on rent or without consideration. The Tribunal applied that exclusion and relied on prior orders and Board clarifications holding that construction for public welfare schemes or for Government bodies (including projects for allotment to beneficiaries such as urban poor or Government personnel) falls within the non taxable category. On the same reasoning and by following the cited precedents, the impugned demand was held unsustainable. [Paras 4, 5]

The impugned order confirming service tax demand is set aside and the appeal is allowed; the construction services under the JnNURM/GnRUM scheme (and as provided to GSPHCL) are not leviable to service tax.

Final Conclusion: Following earlier Tribunal precedent and the statutory exclusion for "personal use" in the definition of "residential complex", the demand of service tax on construction of residential complexes under the JnNURM/GnRUM scheme (and similar Government projects) was quashed; the impugned order is set aside and the appeal is allowed.

Intellectual Property Service - Export of Service - Taxability of technical know how - Requirement of protection under law for classification as Intellectual Property Right - Levy not retrospective to services rendered before introduction of taxing entry

Intellectual Property Service - Requirement of protection under law for classification as Intellectual Property Right - Whether the transfer of technical know how to M/s Scigen, Singapore is taxable as an Intellectual Property Service - HELD THAT: - The Tribunal found that for a service to qualify as an "intellectual property service" the underlying right must be an "intellectual property right" - i.e., a right to intangible property that exists "under any law for the time being in force" in India. Where the technical know how or similar undisclosed information is not recognized or protected by any Indian law or registered with Indian patent/trademark authorities, it does not fall within the statutory definition of an "intellectual property right" and consequently cannot attract tax as an "intellectual property service." The Tribunal relied on its earlier reasoning in Munjal Showa Ltd., and subsequent appellate authority, holding that unregistered or non statutorily protected know how/undisclosed information is not taxable under the IPR service head. Applying that principle to the facts, Revenue did not point to any law under which the transferred technical know how was protected in India; hence the transfer could not be taxed as an IPR service.

The transfer of technical know how to M/s Scigen, Singapore does not qualify as an "intellectual property service" for service tax purposes and is not taxable as such.

Export of Service - Taxability of technical know how - Levy not retrospective to services rendered before introduction of taxing entry - Whether the demand of service tax arising from the transfer of know how is sustainable - HELD THAT: - Because the transaction does not fall within the scope of "intellectual property service," the demand premised on that head is unsustainable. The Tribunal also noted the settled principle that taxability is to be determined with reference to the time the service was rendered; where services were rendered prior to the statutory introduction of a taxing entry, the levy cannot be invoked retrospectively merely because payments occurred later. Applying these principles, the impugned demand (including extended period invocation) cannot be sustained.

The demand of service tax (and consequential rejection of the refund) is unsustainable and is set aside.

Final Conclusion: The impugned demand of service tax framed on account of the transfer of technical know how is set aside because the transferred know how is not an "intellectual property right" protected under Indian law and therefore not taxable as an "intellectual property service;" accordingly the appellants are entitled to relief in law.

Definition of service requiring consideration under the negative list regime - taxability of issuance of corporate guarantees as a service - non-monetary consideration and valuation under Rule 3(b) read with Section 67

Definition of service requiring consideration under the negative list regime - taxability of issuance of corporate guarantees as a service - non-monetary consideration and valuation under Rule 3(b) read with Section 67 - Whether issuance of corporate guarantees to related/associate enterprises without any consideration amounts to a taxable service and whether valuation under Rule 3(b)/Section 67 can be employed to create taxability where no consideration is shown to have been received. - HELD THAT: - The Tribunal applied the Supreme Court's decision in Commissioner of CGST & Central Excise v. M/s Edelweiss Financial Services Ltd, which construed the post negative list regime to require a flow of consideration for an activity to qualify as a 'service'. The adjudicating authority's conclusion that non monetary benefits could be imputed and that valuation rules (Rule 3(b) read with Section 67) could be used to determine an assessable value was held to be misplaced where there is no finding or proof that the assessee received any consideration, monetary or non monetary, for issuance of corporate guarantees. The Supreme Court reasoning endorsed by the Tribunal distinguishes between the existence of 'consideration' (a prerequisite to establish a service) and the subsequent quantification of assessable value; absent consideration, valuation provisions cannot be used to manufacture taxability. Applying that principle to the facts before it - where the appellant's unchallenged position was that no consideration was received - the Commissioner's finding that service had been provided and valued under Rule 3(b)/Section 67 could not be sustained.

The Commissioner's order holding the appellant liable to service tax on corporate guarantees (and determining value under Rule 3(b)/Section 67) is set aside; the appeals are allowed.

Final Conclusion: The impugned adjudication holding issuance of corporate guarantees to related/associate enterprises as a taxable service (and valuing it under Rule 3(b)/Section 67) is reversed in view of the Supreme Court's ruling that absence of consideration precludes classification as a taxable service; the appeals are allowed.

Precedential value of tribunal observations - fact-specific findings - extended period of limitation - contextual interpretation of impugned order

Precedential value of tribunal observations - fact-specific findings - contextual interpretation of impugned order - Whether the observations made by the Tribunal in paragraph 12 of the impugned order constitute a general precedent applicable to other cases. - HELD THAT: - The Court held that the observations in paragraph 12 of the Tribunal's order are made in the factual context recorded in paragraph 13 of that order, which notes details of five audits for the relevant periods. Because paragraph 12 is relatable to those peculiar facts, the observations cannot be construed as general pronouncements to be applied in other cases de hors the facts of the particular matter. The determinative reasoning is that factual specificity limits the precedential scope of the Tribunal's observations; general application would be inappropriate where the statement arises from and depends upon distinct factual findings.

Observations in paragraph 12 are fact-specific and do not operate as a general precedent for other cases.

Extended period of limitation - fact-specific findings - Whether the Department could claim the benefit of the extended period of limitation in the case before the Tribunal. - HELD THAT: - The Court noted that the Tribunal, having recorded particulars of multiple audits for the relevant periods, concluded that the Department could not claim the benefit of the extended period of limitation in those facts. The Supreme Court found no error in that conclusion, observing that the Tribunal's finding was rooted in the specific factual matrix (including the audits) and thereby sustained the Tribunal's reasoning on limitation in the present case.

The Tribunal's conclusion that the Department could not avail the extended period of limitation is upheld on the facts of the case.

Final Conclusion: The civil appeal is dismissed: the Tribunal's observations in paragraph 12 are confined to the peculiar facts of that case and do not constitute a general precedent; the Tribunal's conclusion denying the Department the benefit of the extended period of limitation on the recorded facts is sustained.

Exemption under general exemption notifications for export oriented units (EOUs) - nil rate of duty on cotton waste produced in a 100% EOU - clearance of goods from EOU to Domestic Tariff Area (DTA) under EXIM policy - condition "on payment of duty of excise leviable thereon" in exemption notifications - applicability of the decision in Collector of Central Excise v. Dhiren Chemical Industries - binding effect of Central Board circulars on interpretation of exemption condition

Exemption under general exemption notifications for export oriented units (EOUs) - nil rate of duty on cotton waste produced in a 100% EOU - clearance of goods from EOU to Domestic Tariff Area (DTA) under EXIM policy - The assessee was entitled to exemption and nil rate of duty on cotton waste generated in its 100% EOU and cleared into the Domestic Tariff Area in accordance with the notifications and EXIM policy. - HELD THAT: - The court found it undisputed that the assessee is a 100% Export Oriented Unit and that cotton waste generated in the manufacture of cotton yarn falls under Heading 52.02. Notification No. 23/2003-CE (General Exemption No. 32) and Notification No. 52/2003-Cus (General Exemption No. 46) permit EOUs to clear specified goods, including by-products, rejects and waste, into the DTA subject to the Foreign Trade Policy and relevant conditions. Those notifications, read together with the tariff classification, resulted in cotton waste being chargeable at Nil rate. The tribunal correctly held that where the exemption notifications and Customs Tariff provide for Nil duty on such waste, no excise is leviable on clearance to DTA; treating incidental waste as excisable goods does not defeat the clear grant of Nil duty under the applicable notifications. Reliance on precedents where different facts obtained was considered; the Tribunal's approach was supported by earlier Tribunal and Supreme Court decisions in similar factual matrices, and by the absence of any reversal of those decisions by higher authority. The court therefore upheld the Tribunal's conclusion that the demand for duty, interest and penalty was unsustainable. [Paras 12, 14, 15, 20, 21]

Demand for excise/customs duty, interest and penalty in respect of cotton waste cleared by the 100% EOU into DTA was not sustainable; the assessee was entitled to exemption at Nil rate.

Applicability of the decision in Collector of Central Excise v. Dhiren Chemical Industries - condition "on payment of duty of excise leviable thereon" in exemption notifications - binding effect of Central Board circulars on interpretation of exemption condition - The decision in Dhiren Chemical Industries was not applicable to the facts of this case and did not invalidate the exemption enjoyed by the assessee. - HELD THAT: - The court observed that Dhiren Chemicals arose in a different factual context and turned on reconciliation of conflicting earlier decisions; it was not a case concerning an export oriented unit with the specific notifications and tariff entries now relied upon. Further, subsequent Supreme Court authority had held that where Central Board circulars place a different interpretation on the phrase "on which the appropriate amount of duty of excise has already been paid," such circulars are binding on the revenue. In the present case, the notifications and tariff provided for Nil duty on cotton waste generated by EOUs and the Tribunal properly distinguished Dhiren Chemicals. The Tribunal's discussion of that decision was sufficient and not cryptic; reliance on Dhiren Chemicals by the revenue was thus misplaced in these facts. [Paras 16, 17, 18]

Dhiren Chemicals does not apply to this case; the Tribunal rightly held the decision inapplicable and the revenue's reliance on it was misplaced.

Final Conclusion: The appeals are dismissed. The CESTAT's order allowing the assessee's appeals and holding that the cotton waste cleared by the 100% EOU to the DTA was exempt at Nil rate is upheld; no substantial question of law arises.

Eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Effect of prior proceedings before the Settlement Commission on eligibility - Interpretation of Section 125(1)(g) of the Finance (No. 2) Act, 2019 - Clarification in Circular dated 27.08.2019 (para 10(f)) regarding cases outside the purview of the Settlement Commission - Mandate to accept declarations and issuance of Form SVLDRS-3 and Form SVLDRS-4

Interpretation of Section 125(1)(g) of the Finance (No. 2) Act, 2019 - Effect of prior proceedings before the Settlement Commission on eligibility - Application of Section 125(1)(g) does not render the petitioner ineligible where the Settlement Commission proceedings had been finally disposed and the case was therefore outside the purview of the Commission. - HELD THAT: - The Designated Committee rejected the petitioner's SVLDRS application on the ground that an application had been filed before the Settlement Commission and thus the petitioner was ineligible under Section 125(1)(g). The Court examined the factual position that the petitioner's matter before the Settlement Commission had been finally disposed by a Final Order dated 24.05.2002 and a subsequent disposal of a miscellaneous application on 20.07.2004, so that no proceedings remained pending. The Court relied on the Board's clarification in Circular dated 27.08.2019 (para 10(f)) which states that cases which are outside the purview of the Settlement Commission (including where the Commission's order was passed or proceedings abated) and arrears emerging out of Settlement Commission orders are eligible under the Scheme. Applying that clarification to the admitted facts, the Court held that the petitioner's earlier filing before the Settlement Commission did not attract the disqualification in Section 125(1)(g) because the matter was not pending before the Commission and thereby fell within the ambit of eligible cases under the Scheme. [Paras 5, 6, 7]

Petitioner no. 1 was not ineligible under Section 125(1)(g) and was entitled to seek relief under the SVLDR Scheme.

Eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Mandate to accept declarations and issuance of Form SVLDRS-3 and Form SVLDRS-4 - Respondents are directed to accept the declarations filed under the SVLDR Scheme and to issue consequential statements and discharge certificates on compliance. - HELD THAT: - Having found that the petitioner's case was not barred by Section 125(1)(g) and that the Board's circular extended eligibility to cases outside the Settlement Commission's purview (including arrears emerging from Settlement Commission orders), the Court concluded that the Designated Committee's rejection was without jurisdiction. The Court further observed that once petitioner no. 1 is held entitled to the benefit of the Scheme, co-noticees who filed declarations (petitioners nos. 2 to 4) are likewise entitled to the benefit. In view of these findings the Court directed the respondents to accept the declarations, issue the statement of estimated amount payable in Form SVLDRS-3 and, upon payment of the estimated amount by petitioner no.1, to issue discharge certificates in Form SVLDRS-4 to petitioners nos. 1 to 4. [Paras 7, 8]

Designated Committee's rejection set aside; respondents directed to accept declarations and issue Form SVLDRS-3 and, on payment, Form SVLDRS-4 to petitioners 1-4.

Final Conclusion: Writ petition allowed; the Designated Committee's rejections under the SVLDR Scheme are quashed and respondents are directed to accept the petitioners' declarations, issue the statement of estimated amount payable in Form SVLDRS-3 and, upon payment, issue discharge certificates in Form SVLDRS-4 to petitioners nos. 1 to 4.

Penalty for delayed payment of excise duty - use of CENVAT credit to discharge duty during default period - application of proviso to section 11A for suppression, fraud or mis-declaration - penalty under Central Excise Rules for late ER 1 filing (contravention of Rule 12) - imposition of interest for delayed duty payment

Penalty for delayed payment of excise duty - use of CENVAT credit to discharge duty during default period - application of proviso to section 11A for suppression, fraud or mis-declaration - imposition of interest for delayed duty payment - Whether penalties under Section 11AC of the Central Excise Act, Rule 25 of the Central Excise Rules, 2002 and Rule 15(2) of the Cenvat Credit Rules, 2004 are sustainable where admitted monthly duty was paid belatedly, largely by utilization of CENVAT credit, and interest for delay was paid. - HELD THAT: - The Tribunal found that the appellant had admitted the excise liability, recorded transactions in books and cleared goods under invoices; there was delay in monthly payment but no evasion, suppression, fraud or mis declaration as contemplated by the proviso to section 11A. Reliance on the Gujarat High Court decision in Indsur Global (allowing utilisation of CENVAT credit for payment of duty during default period) and other precedents was held directly applicable. Rule 8 (monthly payment) prescribes interest for delay but contains no specific provision mandating penal consequences of the type invoked. Given that the major amount was discharged by CENVAT credit, a small amount by cash, and interest was paid for the delay, the ingredients for invoking penal provisions under Section 11AC, Rule 25 and Rule 15(2) were absent and such penalties could not be sustained. [Paras 4]

Penalties under Section 11AC, Rule 25 and Rule 15(2) are set aside.

Penalty under Central Excise Rules for late ER 1 filing (contravention of Rule 12) - penalty under Rule 27 of Central Excise Rules, 2002 - Whether penalty under Rule 27 of the Central Excise Rules, 2002 is sustainable for the appellant's admitted failure to file ER 1 returns by the prescribed due date under Rule 12. - HELD THAT: - The Tribunal observed an admitted lapse by the appellant in filing ER 1 returns belatedly (returns due by the 10th of the following month), thereby contravening Rule 12. This procedural contravention, distinct from any evasion of duty, renders the appellant liable to the penal provision under Rule 27. In view of the foregoing, the Tribunal deemed maintenance of the penalty under Rule 27 appropriate and proportionate to that contravention. [Paras 4]

Penalty imposed under Rule 27 is maintained.

Final Conclusion: The appeal is partly allowed: penalties under Section 11AC, Rule 25 and Rule 15(2) are quashed, but the penalty under Rule 27 of the Central Excise Rules, 2002 for late filing of ER 1 (contravention of Rule 12) is upheld and maintained.

CENVAT credit - Jurisdiction to question supplier's duty payment - Duty paid on exempted goods

CENVAT credit - Recipient's entitlement to credit - Jurisdiction to question supplier's assessment - Denial of CENVAT credit to the recipient on the ground that the supplier ought to have cleared the goods under an exemption notification was not sustainable. - HELD THAT: - The Tribunal held that the sole basis of denial was the departmental view that the supplier was not required to pay duty because the goods were exempt. That basis failed in view of the clarification issued by the supplier's jurisdictional officers, communicating the Chief Commissioner's decision, that duty on the rotogravure printing cylinders had been correctly paid and that clearance should continue on payment of duty without availing the exemption notification. Once the supplier's jurisdictional authority had accepted the duty payment as correct, the appellant's jurisdictional officer could not reopen or question the supplier's assessment or the correctness of such payment. On that footing, the appellant, as recipient of the goods, was entitled to the credit taken on the duty so paid. [Paras 4]

The appellant was held to have rightly availed CENVAT credit, and the demand was set aside.

Final Conclusion: The Tribunal held that the recipient's CENVAT credit could not be denied on the footing that the supplier should have availed exemption, once the supplier's jurisdictional authorities had clarified that duty was correctly payable. The impugned order was therefore set aside and the appeal was allowed.

Place of removal - assessable value - treatment of freight charges - application of valuation principles to timing of transfer of property - requirement of a speaking order

Requirement of a speaking order - Impugned order suffers from absence of stated contractual clauses or evidence to support factual findings and is therefore not a speaking order. - HELD THAT: - The Tribunal examined the impugned order and found that the adjudicating authority reached specific conclusions about the parties' contractual intention and the timing of transfer of ownership without referring to the exact provisions or clauses of the purchase orders from which those conclusions were derived. The order recorded conclusions (including responsibility for transit loss, timing of payment, and acceptance on delivery) but did not identify the contractual basis or evidentiary support for these findings. For these reasons the Tribunal held that the impugned order does not constitute a speaking order and is unsustainable. [Paras 5]

Impugned order set aside for want of adequate reasoning and evidence

Place of removal - assessable value - treatment of freight charges - application of valuation principles to timing of transfer of property - Determination of whether freight shown separately is includible in assessable value and whether the place of removal is factory gate or buyer's premises is not finally adjudicated and is remanded for fresh consideration. - HELD THAT: - The Tribunal noted that the central substantive dispute concerns whether the contracts (all FOR/door delivery) effect transfer of property at the factory gate or at the buyer's premises, which in turn determines whether separately charged freight is to be excluded from assessable value under valuation principles tied to the time of transfer. While the original order concluded that ownership remained with the appellant until delivery and acceptance at site, those conclusions were not supported by citation to specific contractual clauses or evidence. Given the lack of a speaking order and absence of explicit reasoning linking contractual terms to the findings, the Tribunal did not decide the valuation/place-of-removal issues on merits but remanded them to the Commissioner (Appeals) for fresh adjudication with directions to record exact reasons and evidence and to afford the appellant an opportunity of natural justice. [Paras 5]

Matter remanded to Commissioner (Appeals) for fresh adjudication on place of removal and valuation (including treatment of freight), with full reasons and opportunity of natural justice

Final Conclusion: The impugned order is set aside for failure to record the contractual basis and evidence for its factual findings; the substantive questions regarding place of removal and inclusion of freight in assessable value are remanded to the Commissioner (Appeals) for fresh, reasoned adjudication after affording the appellant an opportunity of natural justice.

Manufacture - assembly versus manufacture - marketability - twin tests - extended period of limitation - penalty under Rule 26 of Central Excise Rules, 2002

Manufacture - assembly versus manufacture - marketability - twin tests - Whether fitting prescription lenses into spectacle frames by the appellant amounts to 'manufacture' attracting central excise duty. - HELD THAT: - The Tribunal examined the nature of the activity carried out at the appellant's premises - selection of frame and lens by the customer, procurement of duty-paid lenses and frames, resizing/edging/fitting of lenses by technicians and separate billing for lens and frame. Applying the established principle that excise liability requires manufacture in the sense of bringing into existence a commercially distinct, marketable commodity, the Tribunal followed the reasoning in the jurisdictional High Court decision in Titan and other precedents which treat mere assembly/fitting and attendant fine-tuning as not amounting to manufacture. Although the processes involve skill and specialised machinery, the end result is an assembly tailored to a specific customer's prescription and not a marketable stock good; the lenses and frames were purchased as duty-paid inputs. On these facts, the activity is assembly/fitment and does not satisfy the 'twin tests' of manufacture and marketability required to attract central excise duty. [Paras 12]

The activity of fitting lenses into frames does not amount to manufacture; demand for excise duty is unsustainable and answered in favour of the assessee.

Extended period of limitation - Whether the department was entitled to invoke the extended period of limitation for the duty demand. - HELD THAT: - The Tribunal noted that the figures underlying the demand were drawn from the appellant's disclosed records (income-tax returns and audited accounts) and that the issue was essentially interpretational. There was no evidence of suppression with intent to evade duty. Given the disclosures made in statutory filings and service-tax audits, the Tribunal held that invocation of the extended period was not justified and accordingly the demand for the periods covered by the extended period could not be sustained. [Paras 13]

Invocation of the extended period of limitation is not sustainable; limitation issue decided in favour of the assessee.

Penalty under Rule 26 of Central Excise Rules, 2002 - Validity of the penalties and related orders confirmed by the authorities (including the separate penalty imposed under Rule 26) insofar as they flowed from the excise demand. - HELD THAT: - The impugned adjudicatory order confirmed duty, interest and imposed penalties (including a penalty under Rule 26 on an individual). Having held that the activity did not constitute manufacture and that the extended period could not be invoked, the Tribunal set aside the impugned order in its entirety. The consequence is that the demands and penalties confirmed by the authorities, being founded on an unsustainable demand, cannot stand. [Paras 14]

The penalties and related confirmations in the impugned order are set aside along with the demand.

Final Conclusion: The Tribunal allowed the appeals, holding that fitting prescription lenses into frames is assembly and not manufacture for central excise purposes, that the extended period of limitation was improperly invoked, and accordingly set aside the impugned order including the confirmed duty, interest and penalties.

Provisional assessment - finalisation of provisional assessment - adjudication of show cause notice - demand for differential duty on discounts - passing on of discounts to buyers

Provisional assessment - finalisation of provisional assessment - adjudication of show cause notice - Whether the Adjudicating Authority erred in adjudicating the show cause notice without first finalising the provisional assessment. - HELD THAT: - The Tribunal found that the request for provisional assessment was initially rejected and that the show cause notice was issued after that rejection. Although this Tribunal subsequently allowed the request for provisional assessment, no provisional assessment proceedings had been initiated prior to the Adjudicating Authority adjudicating the show cause notice. The Revenue's contention that the Adjudicating Authority was obliged to first finalise the provisional assessment and thereafter decide the show cause notice was held to be misconceived, having misunderstood the sequence of proceedings in the record. The Tribunal therefore concluded that there was no procedural infirmity in the Adjudicating Authority proceeding to adjudicate the show cause notice in the circumstances of this case. [Paras 5, 7]

No error in adjudicating the show cause notice without prior finalisation of provisional assessment; the objection on this ground is misconceived.

Demand for differential duty on discounts - passing on of discounts to buyers - Whether the Adjudicating Authority rightly confirmed part of the demand and dropped demand where discounts were passed on to buyers. - HELD THAT: - The Adjudicating Authority examined the records and confirmed part of the demand where discounts were not passed on to customers. Where it found that the respondent had legitimately passed on discounts to buyers/dealers, the Adjudicating Authority dropped the demand after verification. The Tribunal, on perusal of the record, found no infirmity in this factual and adjudicatory conclusion and accepted that the adjudicating authority had verified records before confirming or dropping the demand as appropriate. [Paras 6, 8]

The confirmation and partial dropping of the demand by the Adjudicating Authority were justified on the record; no interference is warranted.

Final Conclusion: The appeal filed by the Revenue is dismissed; the impugned order confirming part of the demand and dropping the remainder was upheld as free from infirmity.

Admission to an entertainment - entertainment - payment for admission - levy of entertainment tax - assessment of tax

Entertainment - admission to an entertainment - payment for admission - Whether entry tickets charged for admission to trade fairs at Pragati Maidan fall within the meaning of "entertainment" and attract entertainment tax under the Act - HELD THAT: - The Court examined the statutory definitions in Section 2(a) and Section 2(i) (unamended version applicable here) and applied binding principles laid down by the Supreme Court and earlier High Court decisions. The term "entertainment" is to be understood in its popular sense and the Act contains inclusive definitions which enlarge scope. Authorities establish tests including public character of the show, presence of amusement or diversion, and that monetary benefit to an exhibitor converts the activity into entertainment even if admission is free. Applying these principles, the Court observed that entry to Pragati Maidan was on payment, the complex hosted exhibitions, films, fashion shows and similar events and the general public was admitted; visitors could access activities providing gratification, amusement or entertainment (distinct from separately ticketed shows). Consequently, entry tickets to the trade fair grounds fall within the statutory concept of admission connected with entertainment and may attract the levy of entertainment tax. [Paras 8, 9, 11, 16, 17]

Entry tickets to the trade fair grounds at Pragati Maidan are capable of being treated as admission connected with "entertainment" under the Act and thus may attract entertainment tax.

Levy of entertainment tax - assessment of tax - Whether the impugned order of the Financial Commissioner setting aside tax on entry tickets is sustainable and the consequent relief - HELD THAT: - The Court found the impugned order deficient for not analysing why entry tickets were exempt from entertainment tax as distinct from separately ticketed film and fashion shows; having applied the statutory definitions and precedents, the High Court held that the Financial Commissioner's decision could not be sustained. The Court concluded that the respondent (organiser) is liable to pay entertainment tax for the assessment years in question and permitted the petitioners to proceed in accordance with law. The writ petition was therefore allowed and the FC's order quashed to the extent it set aside tax on entry tickets. [Paras 7, 16, 18, 19]

The impugned order of the Financial Commissioner is unsustainable; respondent is liable to pay entertainment tax for the assessment years in question and the writ petition is allowed.

Final Conclusion: The High Court set aside the Financial Commissioner's order insofar as it relieved the organiser of tax on entry tickets, held that entry to the Pragati Maidan trade fairs can amount to admission connected with "entertainment" under the Act, and allowed the writ petition leaving the parties to proceed in accordance with law.

Onus on dealer to prove claim for concessional rate of tax - Verification of Form C by corresponding State authority - Assessing Authority's power to scrutinize and inquire into documentary certificates - Distinction between original assessment and reassessment regarding burden of proof - Concurrent findings of fact

Onus on dealer to prove claim for concessional rate of tax - Verification of Form C by corresponding State authority - Concurrent findings of fact - Entitlement to concessional central sales tax against a single Form C when verification by the corresponding State confirms only one purchase entry out of multiple invoices claimed by the seller. - HELD THAT: - The revisionist produced one Form C purporting to cover sales against 23 invoices to a purchasing dealer. Correspondence with the Rajasthan authority established that the purchasing dealer had disclosed only one purchase (invoice no. 45) corresponding to the Form C; concession was granted for that transaction. For the remaining 22 invoices the corresponding State did not verify purchases. In original assessment proceedings the onus lies on the dealer claiming the concessional rate to prove the claim beyond doubt. Given that the verification report contradicted the revisionist's claim and concurrent findings of fact recorded by the authorities were unrebutted by cogent material, the claim to concessional rate for the unverified invoices could not be sustained. [Paras 8, 9, 12, 13, 14]

Benefit of concessional rate under the Form C was confined to the single verified sale; benefit for the other 22 invoices was disallowed as the dealer failed to discharge the onus.

Assessing Authority's power to scrutinize and inquire into documentary certificates - Distinction between original assessment and reassessment regarding burden of proof - Whether authorities were entitled to disbelieve the unverified portions of the Form C claim and whether the decisions cited by the revisionist aided its case. - HELD THAT: - The Court held that the Assessing Authority is competent to scrutinize certificates and to inquire into their contents to satisfy itself about verifiability of declared purchases; if verification shows the declaration to be untrue, concession cannot be granted. The Star Paper Mills decision relied upon by the revisionist was distinguished on facts because it arose in the context of reassessment proceedings where the burden shifts to the Revenue. In the present original assessment the burden remained on the dealer and the cited precedent did not assist. [Paras 10, 11]

Assessing Authority rightly disbelieved the unverified claims and the precedent relied on by the revisionist was inapplicable to the facts of original assessment.

Final Conclusion: The revision is dismissed: concession under the Form C was allowed only for the single sale verified by the corresponding State; for other alleged sales the dealer failed to discharge the onus and the higher rate was rightly imposed.

Classification of goods for value added tax - treatment of bakery shortening as vanaspati (hydrogenated vegetable oil) - burden of proof on the taxing authority to displace assessee's classification - benefit of doubt in favour of the assessee where two views are possible - relevance of statutory definitions under the Vegetable Oil Products (Regulation) Order / Essential Commodities Act to classification - relevance of central tariff/customs classification and notifications in determining classification for state VAT

Treatment of bakery shortening as vanaspati (hydrogenated vegetable oil) - classification of goods for value added tax - burden of proof on the taxing authority to displace assessee's classification - benefit of doubt in favour of the assessee where two views are possible - relevance of statutory definitions under the Vegetable Oil Products (Regulation) Order / Essential Commodities Act to classification - Bakery shortening is one and the same as Vanaspati (hydrogenated vegetable oil) and is covered by Entry No.130, Part-A, Schedule II of the U.P. VAT Act for Assessment Year 2008-09. - HELD THAT: - The Court accepted the concurrent factual findings of the authorities below that bakery shortening and vanaspati are manufactured from the same raw material (crude vegetable oil), employ the same machinery and manufacturing processes, and possess comparable chemical and physical properties as evidenced by laboratory test reports and expert certificates placed on record. Definitions and notifications under the Vegetable Oil Products (Regulation) Order (Essential Commodities Act) expressly define 'Bakery Shortening' as vanaspati meant for bakery use and define hydrogenation and vanaspati, supporting that bakery shortening must conform to vanaspati. Central tariff and customs classification treat bakery shortening and vanaspati under the same tariff entry, and Government of India notifications describe the products as commonly known equivalents; these materials further reinforce the common identity of the goods for taxation purposes. The Revenue failed to produce material to displace the assessee's evidence; thus the burden on the taxing authority was not discharged. Where divergent views are possible, the Court followed the principle of preferring the view favourable to the assessee as recognised by the Apex Court. The Kerala High Court decision relied on by Revenue was held distinguishable on the basis of differing entries and context. Applying these conclusions, the Tribunal's holding that bakery shortening is vanaspati and liable to the rate under Entry No.130 was affirmed. [Paras 15, 17, 18, 20, 21]

Revision dismissed; Tribunal correctly held bakery shortening to be vanaspati and taxable under Entry No.130, Part-A, Schedule II for Assessment Year 2008-09.

Final Conclusion: The revision is dismissed. The question of law is answered by upholding the Tribunal's finding that bakery shortening is vanaspati (hydrogenated vegetable oil) and is taxable under Entry No.130, Part-A, Schedule II for Assessment Year 2008-09; the Revenue failed to discharge the burden of proof to classify it otherwise.

Deeming under Section 22(2) of the TNVAT Act - Limitation for reassessment under Section 27 of the TNVAT Act - Reassessment beyond the period of limitation is a nullity - Consent, waiver or acquiescence cannot confer jurisdiction

Deeming under Section 22(2) of the TNVAT Act - Limitation for reassessment under Section 27 of the TNVAT Act - Reassessment beyond the period of limitation is a nullity - Whether the reassessment proceedings initiated by notice dated 01.03.2021 are barred by limitation having regard to the deemed assessment for assessment year 2011-12. - HELD THAT: - The Court held that by virtue of the deeming provision in Section 22(2) of the TNVAT Act the petitioner must be treated as having been assessed on 31.10.2012 for assessment year 2011-12. The order dated 25.01.2016 is therefore a reassessment traceable to Section 27. Section 27 prescribes a six year period (as extended by Act 23 of 2012) for exercise of the power of reassessment which must be reckoned from the date of original or deemed assessment. While Section 27 may be exercised on more than one occasion, every exercise must occur within six years from the date of original/deemed assessment; it cannot be extended by subsequent reassessment dates. Since the deemed assessment date is 31.10.2012, any reassessment power had to be exercised within six years from that date; the notice dated 01.03.2021 falls outside that period and is therefore beyond the statutory limitation and a nullity. [Paras 6]

The reassessment proceedings founded on the notice dated 01.03.2021 are barred by limitation and therefore void.

Consent, waiver or acquiescence cannot confer jurisdiction - Reassessment beyond the period of limitation is a nullity - Whether the petitioner's earlier conduct in the assessment proceedings, including having earlier reckoned limitation differently, operates as waiver or estoppel to contest limitation now. - HELD THAT: - The Court rejected the respondent's contention that the petitioner's prior statement, which reckoned limitation from the order dated 25.01.2016, precludes the petitioner from contending that limitation must be reckoned from the deemed assessment date. The Court emphasised the settled principle that statutory limitation which goes to jurisdiction cannot be waived, consented to or enlarged by the parties; participation in proceedings cannot confer jurisdiction where it is otherwise lacking. Reliance on authorities was made to show that jurisdictional limits imposed by statute cannot be extended by consent or acquiescence. [Paras 7]

The petitioner's prior conduct does not estop it from raising the limitation objection; waiver or acquiescence cannot confer jurisdiction where statute restricts the period.

Final Conclusion: The reassessment proceedings impugned by the writ petition are barred by limitation when limitation is correctly reckoned from the deemed assessment on 31.10.2012; the impugned proceedings are therefore set aside and the writ petition is disposed of.

Time of payment and confirmation under Rule 9 of the Security Interest (Enforcement) Rules, 2002 - Forfeiture and resale on default under Rule 9(5) - Issuance of certificate of sale on compliance under Rule 9(6) - Statutory mandatory procedure - when a statute prescribes a particular mode it must be followed - Limits on exercise of Article 142 powers where substantive statutory provision governs - Section 148 CPC - limits on extending court-fixed time - Maintainability of miscellaneous applications filed in a disposed final judgment

Time of payment and confirmation under Rule 9 of the Security Interest (Enforcement) Rules, 2002 - Forfeiture and resale on default under Rule 9(5) - Issuance of certificate of sale on compliance under Rule 9(6) - Whether the applicant complied with the time and payment conditions required by Rule 9 so as to entitle it to a sale certificate. - HELD THAT: - The Court examined sub-rules (4), (5) and (6) of Rule 9 and noted that the balance purchase price was required to be paid on or before the fifteenth day of confirmation of sale or within an agreed extension not exceeding three months. The auction purchaser was permitted by this Court to deposit the balance by 20.03.2020 and subsequently by order dated 12.05.2020 until two months after lifting of the lockdown; however, there is no material establishing when the lockdown was lifted or that the deposits made on 22.07.2022 and 26.08.2022 complied with the court orders and the statutory time-limits under Rule 9. The Court held that the extension granted was self limiting and, even assuming the limitation extension applicable due to Covid orders ran till February 2022, the purchaser was required to deposit the full balance with interest by 30.04.2022, which was not done. Consequently the statutory conditions for issuance of the sale certificate under Rule 9(6) were not shown to have been satisfied. [Paras 7, 11, 15, 16]

Applicant did not comply with the time and payment conditions prescribed by Rule 9 and therefore was not entitled to the sale certificate.

Statutory mandatory procedure - when a statute prescribes a particular mode it must be followed - Limits on exercise of Article 142 powers where substantive statutory provision governs - Section 148 CPC - limits on extending court-fixed time - Whether this Court could, by exercising powers under Article 142 or Section 148 CPC, treat the post-30.04.2022 deposits as compliance with the order dated 12.05.2020 and thereby validate an effective extension beyond what Rule 9 permits. - HELD THAT: - The Court reiterated the settled principle that where a statute prescribes a mode it must be followed. Rule 9(4) permits an extension only by written agreement between purchaser and secured creditor not exceeding three months; the court observed no order granted any further extension beyond the self limiting extension and held that neither Article 142 nor Section 148 CPC permits overriding or ignoring substantive statutory provisions. Article 142, though plenary, cannot be used to build rights or departures contrary to an express statutory mandate; Section 148 CPC likewise does not permit extension beyond thirty days of a previously fixed time where substantive statutory constraints apply. [Paras 8, 17]

The Court could not, and would not, rely on Article 142 or Section 148 CPC to validate compliance or extend time in a manner contrary to the statutory scheme in Rule 9.

Maintainability of miscellaneous applications filed in a disposed final judgment - Whether the miscellaneous application filed in the disposed Civil Appeal seeking directions to the bank to issue the sale certificate was maintainable. - HELD THAT: - The Court observed that filing substantive applications styled as miscellaneous applications after pronouncement of a final judgment to seek modification or to pursue strategies to avoid compliance is a practice lacking legal foundation and discouraged by precedent. Given that the applicant had not established compliance with the statutory and court-imposed timelines, and in absence of material showing appellate remedies pursued by other parties, the Court held that the substantive relief sought by way of a miscellaneous application in the disposed appeal was not maintainable. The Court, however, noted that the applicant remained free to pursue other remedies permissible in law, including seeking refund where appropriate. [Paras 18, 19, 20]

The miscellaneous application was not maintainable and therefore dismissed.

Final Conclusion: The miscellaneous application seeking a direction to the bank to issue the sale certificate was dismissed: the applicant failed to show compliance with the time and payment conditions under Rule 9, the Court could not override statutory limits by invoking Article 142 or Section 148 CPC, and a substantive prayer filed as a miscellaneous application in a disposed appeal was held not maintainable; the applicant remains at liberty to pursue other remedies as may be permissible in law.

Transfer of lease upon amalgamation - exception for amalgamation among group companies - waiver of prior approval by subsequent consideration - claim for transfer fees versus processing fee - obligation of a public authority to act transparently and reasonably - Wednesbury unreasonableness and proportionality - requirement of prior consent of lessor for change of identity/character of lessee

Transfer of lease upon amalgamation - exception for amalgamation among group companies - claim for transfer fees versus processing fee - The respondent cannot claim full transfer charges where leasehold rights vested in petitioner by amalgamation among group companies having identical shareholding and directorship; only the processing fee is payable. - HELD THAT: - The Court examined the General Policy and the Agenda Notes of the respondent which exclude mergers, arrangements and amalgamations among group companies from the definition of "transfer" provided there is prior intimation. The petitioners proved commonality of shareholding and directorship between the transferor and the transferee companies. The respondent itself treated the petitioners' post-amalgamation application as a matter to be considered (thereby taking the transaction on file). In those circumstances the respondent acted contrary to its own policy in treating the amalgamation as a chargeable transfer and demanding full transfer fees. Accordingly the demand for transfer charges was set aside and the respondent directed to accept the mutation upon receipt of the prescribed processing fee only. [Paras 41, 46, 47, 63, 64]

Demand for transfer charges set aside; respondent must accept and ratify transfer on payment of processing fee only.

Waiver of prior approval by subsequent consideration - obligation of a public authority to act transparently and reasonably - The requirement of prior approval for transfer under the respondent's policy was effectively waived when the respondent, after the amalgamation, took up the petitioners' request for consideration. - HELD THAT: - Although the General Policy contemplates prior intimation and written approval before a transfer, the Court found that the respondent, by inviting, receiving and considering the petitioners' documents and meeting their representatives, treated the post-amalgamation request as an application for approval. That conduct amounted to waiver of the prior approval pre-condition. As a public authority, the respondent is bound to act consistently with its own guidelines and to exercise its discretion reasonably; it could not turn around and penalize the petitioners after having put the transaction on its files for consideration. [Paras 38, 39, 40, 41, 42]

Precondition of prior approval deemed waived by respondent's post-transfer consideration; respondent must proceed consistently with its policy and accept processing fee.

Final Conclusion: WPO No. 764 of 2022 allowed: respondent's claim for full transfer charges and attendant GST set aside; respondent directed to accept and ratify the lease transfer in favour of petitioner no.1 upon receipt of the processing fee of Rs.10,000/-. No order as to costs.

Compounding of offence under Section 147 of the Negotiable Instruments Act - Effect of post-conviction compromise/settlement - Non-obstante provision overriding Section 320 Cr.P.C. - Release of court-deposited amount pursuant to settlement - Imposition and judicial reduction of compounding fee guided by K. Subramanian

Compounding of offence under Section 147 of the Negotiable Instruments Act - Effect of post-conviction compromise/settlement - Non-obstante provision overriding Section 320 Cr.P.C. - Acceptance of the parties' mediated settlement and compounding of the offence under Section 147 of the Negotiable Instruments Act, resulting in quashing of conviction and sentence. - HELD THAT: - The Court recorded that during pendency of the revision petition the parties effected an amicable settlement before a mediator whereby the complainant abandoned all rights in respect of the cheque except the deposited amount. Applying Section 147 of the Negotiable Instruments Act and the guidance in Damodar S. Prabhu and K. Subramanian, the Court held that offences under the NI Act are compoundable and a compromise can be accepted even after recording of conviction. Given the complainant's explicit abandonment and election not to pursue the complaint, the Court found no impediment to compounding the offence, quashing the judgment of conviction and order of sentence and acquitting the accused in accordance with the recorded settlement. [Paras 11, 13, 14]

The mediated settlement is accepted; the offence is compounded under Section 147 of the NI Act and the conviction and sentence are quashed and set aside; the accused is acquitted.

Release of court-deposited amount pursuant to settlement - Direction for release of the amount deposited in Court to the complainant in terms of the settlement. - HELD THAT: - The Court noted that the petitioner had deposited a sum in the Registry and that the settlement envisages release of that deposit to the complainant as full satisfaction of his claims. In view of the recorded compromise and the complainant's consent, the Registry was directed to release the deposited amount to the complainant's bank account after due verification. [Paras 15]

The Registry is directed to release the deposited amount to the complainant in his bank account after verification.

Imposition and judicial reduction of compounding fee guided by K. Subramanian - Fixing a reduced/token compounding fee to be deposited with the State Legal Services Authority in view of the accused's financial condition and the Court's discretion under the cited guidelines. - HELD THAT: - Relying on the graded scheme of costs in K. Subramanian and the Court's power to reduce compounding fees having regard to specific facts, the Court considered the accused's poor financial condition and exercised discretion to reduce the compounding fee. The Court directed deposit of a token amount with the H.P. State Legal Services Authority within a specified time, while recording that courts may reduce the fee on reasons in specific cases. [Paras 16, 17, 18]

The accused is directed to deposit a token compounding fee of Rs.5,000/- with the H.P. State Legal Services Authority within four weeks.

Final Conclusion: The Court accepted the mediated settlement, compounded the offence under Section 147 of the Negotiable Instruments Act, quashed and set aside the conviction and sentence, directed release of the court-deposited amount to the complainant after verification, and imposed a reduced token compounding fee to be paid to the State Legal Services Authority.