TaxTMI Updates e-Newsletter
Oct 09,2021

Bail - Prima facie satisfaction - Reformative theory of punishment - Article 21 - Verification of sureties - Conditions of bail including surrender of passport - Dataram Singh v. State of U.P.

Bail - Prima facie satisfaction - Reformative theory of punishment - Article 21 - Verification of sureties - Conditions of bail including surrender of passport - Dataram Singh v. State of U.P. - Grant of bail to the applicant arrested in proceedings under the CGST regime during pendency of trial. - HELD THAT: - The Court considered the nature of the accusation, the severity of punishment on conviction, the nature of the supporting evidence, and recorded a prima facie satisfaction in support of the charge. Applying the reformative theory of punishment and the constitutional mandate of Article 21, and having regard to the dictum in Dataram Singh v. State of U.P., the Court concluded that, without expressing any opinion on merits, the matter was fit for bail. The applicant's custodial status since 01.01.2021, absence of criminal history as asserted in the affidavit, completion of investigation and filing of charge-sheet, and the fact that interim bail had earlier been granted were noted. Bail was ordered on furnishing a personal bond and two sureties of like amount to the satisfaction of the concerned court, with a requirement that the sureties be verified prior to release. The release was made subject to specified conditions that include prohibition on inducement, threat or promise to witnesses or persons acquainted with the case, obligation to attend court on hearing dates or seek prior permission, not disputing identity as accused, surrender of passport or execution of an affidavit where applicable, and liberty to the prosecution to seek modification or recall of the order on breach of conditions. The Court clarified that its observations were confined to the bail application and do not reflect on the ultimate merits of the case.

Applicant Jagat Singh @ Jaggi is granted bail on furnishing a personal bond and two sureties in the like amount to the satisfaction of the concerned court, subject to verification of sureties and the stated conditions including surrender of passport and other standard bail conditions; prosecution has liberty to apply for modification or recalling the order on breach.

Final Conclusion: Bail granted to the applicant subject to execution of personal bond and two sureties with verification and compliance with specified conditions; observations confined to the bail order and not to merits.

Entitlement to refund of tax - interest liability for delayed refund - manual filing under Rule 97A - Section 54(7) and statutory 60 day period for refund - Section 56 - interest for delayed refund - administrative circular cannot override delegated legislation

Entitlement to refund of tax - Petitioner is entitled to refund of the admitted amount directed by respondent no.6. - HELD THAT: - The Court found as an admitted fact that respondent no.6 had awarded a refund of Rs. 1,28,50,535/- for the month of July, 2019 by order dated 06.01.2020 and that the petitioner's refund application filed manually on 27.09.2019 had been processed. The respondents have not paid the refund despite the order having been passed and attaining finality; consequently the petitioner is entitled to the admitted refund and the respondents cannot avoid compliance because of inter se procedural differences between authorities. [Paras 2, 5, 12, 14]

Refund of Rs. 1,28,50,535/- is payable to the petitioner.

Interest liability for delayed refund - Section 54(7) and statutory 60 day period for refund - Section 56 - interest for delayed refund - Interest at 6% is payable from the date of expiry of the 60 day period contemplated under Section 54(7) until actual payment. - HELD THAT: - The petition for refund was filed on 27.09.2019 and, under the statutory regime, the order should have been passed within sixty days. The Court held that by operation of Section 56 read with the time prescribed by Section 54(7), interest at 6% became payable from 27.11.2019 (expiry of sixty days) onwards until payment. No payment or interest has been paid to date, and the continuing non payment attracts continuing interest liability which the respondents must discharge. [Paras 3, 6, 12, 14]

Interest at 6% is payable from 27.11.2019 until the date of issuance of the demand draft or actual payment.

Manual filing under Rule 97A - administrative circular cannot override delegated legislation - Rule 97A permits manual filing and processing despite the later administrative circular prescribing online filing; the circular cannot defeat rights accrued under Rule 97A. - HELD THAT: - The Court examined Rule 97A (introduced by amendment) which expressly allowed manual filing/processes to be treated as equivalent to electronic filing for the transitional problems arising on GST introduction. The subsequent Circular No.125/44/2019-GST dated 18.11.2019 prescribing online mode w.e.f. 26.09.2019 could not override the statutory effect of Rule 97A. Further, the circular was issued after the petitioner had filed the application on 27.09.2019. The Court therefore rejected respondents' contention that non uploading on the portal disentitled the petitioner to refund or interest, noting that respondents themselves processed the application and passed the refund order. [Paras 3, 9, 10, 11]

Manual filing under Rule 97A was valid and the administrative circular cannot negate the petitioner's entitlement to refund or interest.

Final Conclusion: Writ petition allowed; respondent no.6 to refund the admitted amount together with interest at 6% from 27.11.2019 until payment. Respondents may pay by online transfer or bank draft within one month; inter se differences between respondents left to be resolved by them.

Reversion from regular levy to composition levy - registration as interstate supplier - consideration of representation for change of nature of levy - recommendation to GSTN for effecting change in levy status - rescission of show cause notice

Reversion from regular levy to composition levy - consideration of representation for change of nature of levy - recommendation to GSTN for effecting change in levy status - Direction to respondent to consider and decide the petitioner's representation for reversion from regular levy to composition levy and, if eligible, to recommend the change to GSTN for effectuation within specified timeframes. - HELD THAT: - The Court recorded that the show cause notice dated 08th February, 2021 had been rescinded by respondent No. 2 and that the petitioner's representation for reversion from regular to composition levy remained pending. In view of these facts, the Court directed respondent No. 2 to consider the pending representation within two weeks and, upon finding that the petitioner satisfies the eligibility criteria for composition levy, to recommend the petitioner's case to the GSTN forthwith. The Court further directed that if such recommendation is made, the GSTN shall give effect to it within a further period of two weeks. The directions are procedural and limited to expeditious consideration and implementation where eligibility is established; no substantive adjudication on eligibility was undertaken by the Court.

Respondent No. 2 to decide petitioner's representation within two weeks and, if eligibility for composition levy is found, to recommend change to GSTN, which shall give effect within two weeks.

Final Conclusion: The petition was disposed of by recording rescission of the show cause notice and directing respondent No. 2 to consider the representation for reversion to composition levy within two weeks and, if eligible, to forward a recommendation to GSTN for effectuation within a further two weeks; compliance to be listed on 6 December 2021.

Interim restraint on recovery - refund of integrated tax on exported goods - writ of mandamus - issue notice - exchange of written submissions - service by speed post

Interim restraint on recovery - refund of integrated tax on exported goods - Interim protection against coercive recovery in respect of integrated tax paid and refunded for exported goods up to 26.11.2020 was granted. - HELD THAT: - Petitioner challenged Rule 96(10) and sought various writs including a declaration of entitlement to pay IGST on exports and claim refund. The Court noted the petitioner has not claimed refund for goods exported after 26.11.2020 and has not exported such goods on payment of integrated tax after that date. In the exercise of its discretion on an interim application and having issued notice, the Court restrained respondents from effecting any recovery in respect of tax paid for goods exported and refunded up to 26.11.2020 until the next date of hearing. The order is an interim protection limited to the tax already paid and refunded up to the specified date and does not decide the substantive challenge to Rule 96(10).

Recovery in respect of integrated tax paid for goods exported and refunded up to 26.11.2020 shall not be effected until the next date of hearing.

Issue notice - exchange of written submissions - service by speed post - Procedural directions for continuation of proceedings were issued. - HELD THAT: - The Court issued notice returnable on 20.10.2021 and directed that all pending matters raising identical issues be posted for hearing on that date. The parties were directed to exchange written submissions and authorities to be relied upon. The petitioner was permitted to approach the Court earlier if necessary. Direct service was allowed and, in addition to regular modes, service by speed post was permitted. These directions structure the further adjudication of the petition but do not decide the merits of the substantive challenge.

Matter listed for hearing on 20.10.2021; written submissions and authorities to be exchanged; direct service including by speed post permitted.

Final Conclusion: Notice issued returnable on 20.10.2021; interim protection granted restraining recovery of integrated tax paid and refunded up to 26.11.2020 until the next date of hearing; procedural directions issued for exchange of submissions and service.

Reimbursement of GST paid - adjustment of pre-GST tax component against post-GST liability - statutory tax component not part of contract profit - direction for compliance with administrative clarification - interest under Section 50 of the CGST Act, 2017

Reimbursement of GST paid - adjustment of pre-GST tax component against post-GST liability - direction for compliance with administrative clarification - statutory tax component not part of contract profit - Respondent to make good the GST paid by the petitioner after adjusting the sales tax component provided in the contract, in accordance with the clarification of KUIDFC and the Finance Department - HELD THAT: - The contracts were entered into after the commencement of the GST regime. The respondent had sought clarification from KUIDFC, which recommended a methodology to compute tax differences by deducting the earlier VAT/KVAT and service tax components from the relevant items, adding the applicable GST, and accounting for input tax credit against output GST. The Finance Department's subsequent clarification, approving reconciliation of pre GST and post GST tax treatment and the methodology, was noted. The Court held that the tax component represents a statutory payment that the contractor does not retain as profit and, therefore, the respondent is obliged to honour the GST amounts claimed by the petitioner after making the appropriate adjustment for the sales tax component provided for in the contract, and in accordance with the stated administrative clarifications.

Respondent to consider and make good the GST claimed by the petitioner, after adjusting the sales tax component as per the KUIDFC/Finance Department clarifications, and to act on the claim within twelve weeks from the date of release of the order.

Interest under Section 50 of the CGST Act, 2017 - The petitioner's claim for interest at 18% per annum under Section 50 of the CGST Act, 2017 was not directed to be granted by the Court - HELD THAT: - Although the petitioner sought payment of interest at the statutory rate under Section 50 of the CGST Act, 2017 on the tax dues, the Court disposed of the petition by directing reimbursement of the GST after adjustment as per administrative clarifications and did not grant the claimed interest. The Court expressly recorded the relief of reimbursement and stipulated a timeline for compliance without ordering interest.

No order granting the petitioner's claim for interest was made.

Final Conclusion: The petition is disposed of by directing the respondent to reimburse the GST claimed by the petitioner after adjusting the sales tax component in accordance with the KUIDFC and Finance Department clarifications, with compliance to be effected within twelve weeks from the date of this order; the claim for interest under Section 50 of the CGST Act, 2017 was not granted.

Cancellation or suspension of registration - opportunity of hearing - mandatory time limit for decision on cancellation - functus officio on expiry of prescribed period - remand for fresh decision after hearing

Opportunity of hearing - cancellation or suspension of registration - Impugned cancellation order is invalid for failure to afford opportunity of hearing as mandated by law. - HELD THAT: - The Court held that Sub-section (2) of Section 29 creates a statutory obligation to afford the person an opportunity of being heard before cancellation of registration. Rule 22 and its sub-rule (3) of the Uttarakhand GST Rules reinforce the procedure to be followed on an application for cancellation. The impugned order contains no recital or record of any opportunity having been given to the petitioner prior to cancellation. In view of the mandatory language of the statute and rules, the absence of a hearing renders the cancellation legally infirm and liable to be quashed. [Paras 2, 3, 6, 7]

Order of cancellation quashed for failure to provide the mandatory opportunity of hearing.

Mandatory time limit for decision on cancellation - functus officio on expiry of prescribed period - remand for fresh decision after hearing - Whether, having regard to the 30 day period under the Rules, the authority was functus officio and the matter should be remitted for fresh consideration after hearing. - HELD THAT: - The Court noted sub-rule (3) of Rule 22 prescribes that an order on an application for cancellation shall be issued within thirty days from the date of application or from the date of reply to a showcause. The petitioner filed an application for cancellation and, according to the petitioner, no decision was taken within the prescribed period. The Court accepted that if no decision is taken within that period the office becomes functus officio to pass a subsequent order on that application. Accordingly, rather than adjudicating the merits afresh on the record before it, the Court remitted the matter to the respondent for fresh decision after affording the petitioner an opportunity of hearing and directed that such decision be taken within thirty days from service of the certified copy of the order. [Paras 3, 5, 8]

Matter remitted to respondent No.2 for fresh decision after affording opportunity of hearing; decision to be taken within thirty days from service of certified copy of this order.

Final Conclusion: Writ petition allowed; impugned cancellation order quashed and the matter remitted to the proper officer to decide the petitioner's application afresh after giving an opportunity of hearing, with the decision to be rendered within thirty days from service of the certified copy of this order.

Supply - Leasing of land as supply of services - Business (inclusive definition) - Doctrine/principle of mutuality - Exemption under Entry No.41 (Heading 9972) of Notification No.12/2017-Central Tax(Rate) - Reimbursement to members / Entry No.77 (Heading 9995) of Notification No.12/2017-Central Tax(Rate) - Retrospective liability and statutory interest

Supply - Leasing of land as supply of services - Business (inclusive definition) - Whether the contribution paid by members towards development cost amounts to a supply liable to GST - HELD THAT: - The Authority examined the statutory definition of "supply" and the inclusive definition of "business" under the CGST scheme. GHB is a company incorporated under Section 8 (erstwhile Section 25) and therefore a "person" under the Act. The activity of allotting/sub-leasing plots to members falls within provision of facilities to members and other commercial activity encompassed by the definition of business. The deeds between GIDC and GHB are leases for 99 years; the legal character of the underlying transaction is lease and not sale. On these foundations the Authority concluded that the amounts recovered by GHB from industrial units for allotment/sub-lease of plots are consideration for leasing services and therefore constitute "supply" liable to GST. [Paras 13, 14, 15]

The contribution received by GHB from its members for development/allotment of plots is a supply of services liable to GST.

Exemption under Entry No.41 (Heading 9972) of Notification No.12/2017-Central Tax(Rate) - Strict interpretation of exemption notifications - Entry No.77 (reimbursement to members) - Whether the contribution is exempt under Entry No.41 of Notification No.12/2017-Central Tax(Rate) or otherwise covered by Entry No.77 as reimbursement - HELD THAT: - Entry No.41 grants nil rate only where a State Government Industrial Development Corporation or an entity with 50% or more government ownership grants long-term leases to industrial units. The exemption therefore applies to the service provider being the specified government-owned entity (e.g., GIDC) and not to an intermediate developer such as GHB which lacks the requisite government ownership. The Authority applied the clear and unambiguous language of the notification and refused to extend the exemption to GHB. It further considered Entry No.77 which exempts reimbursement by a non-profit entity to its members only where the amount is limited to reimbursement of charges actually paid; here GHB charged amounts substantially in excess of what it paid to GIDC, so the conditions of Entry No.77 were not met. [Paras 16, 17, 18]

The contribution is not exempt under Entry No.41 and does not qualify for exemption under Entry No.77.

Retrospective liability and statutory interest - Whether liability to GST and interest arises with retrospective effect from 1-7-2017 - HELD THAT: - The Authority observed that the statutory provisions render tax and interest liabilities automatic by operation of law. While noting the insertion of clause (aa) in Section 7(1) by the Finance Act, 2021 (stated to have retrospective effect from 1-7-2017), the Authority held that the position of law as to supply remained intact and that liability to tax arises from 1-7-2017. Interest on the tax liability accrues by operation of the statutory provisions and is payable accordingly. [Paras 19, 21, 22]

Liability to GST arises from 1-7-2017 and statutory interest is payable on the accrued tax liability.

Final Conclusion: The Authority ruled that the one time contributions collected by GHB from industrial units for allotment/sub lease of plots constitute a supply of services liable to GST; such consideration is not exempt under Entry No.41 (Heading 9972) nor under Entry No.77, and the tax liability arises from 1-7-2017 with statutory interest payable.

Supply - Supply of service under Schedule II(5)(e) - Import of services - Place of supply / location of recipient - Reverse charge mechanism (IGST payable by recipient) - Time of supply - Cost Petroleum

Supply - Supply of service under Schedule II(5)(e) - Cost Petroleum - Whether the settlement payment made pursuant to the Deed of Settlement and Release constitutes a 'supply' taxable under the GST law - HELD THAT: - The Authority examined the nature of the Deed of Settlement and Release dated 15-7-2020 and the ICC Order of 16-9-2020 and concluded that the settlement was an independent agreement under which ANP agreed to perform or refrain from certain acts and to tolerate certain situations in favour of GSPC(J). The Authority rejected the applicant's characterization of the payment as 'Cost Petroleum' or as a mere reimbursement of exploration costs because (i) the applicant was not receiving any petroleum or Cost Petroleum from ANP, (ii) the payment arose from the Deed of Settlement and Release and not from the expired PSC, and (iii) the settlement involved ANP agreeing to release performance guarantees and to forbear from pursuing arbitration in respect of the respondent on payment of the settlement sum. Having regard to the inclusive definition of 'supply' in Section 7 of the CGST Act and the specific entry in Schedule II(5)(e) treating 'agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act' as a supply of service, the Authority held that the activities undertaken by ANP pursuant to the Deed amount to a supply of service and the settlement payment is consideration for that supply. [Paras 21, 26]

The settlement payment pursuant to the Deed of Settlement and Release is a consideration for a supply of service and therefore falls within the scope of 'supply' under the GST law.

Time of supply - GST era from 1-7-2017 - Whether the identified supply falls within the GST era and when the time of supply arises - HELD THAT: - The Authority observed that the Deed of Settlement and Release and the ICC Order are dated in 2020, which is after the commencement of the GST regime on 1-7-2017. Consequently, the activities constituting the supply occur in the GST era. Relying on Section 12(3)(b) of the CGST Act, the Authority held that the time of supply is the date of payment of the subject amount (the applicant's proportionate share of the settlement sum) as per the ICC Order, noting there was no requirement for ANP to issue an invoice for that purpose. The Authority therefore rejected the applicant's contention that the obligation related to a pre-GST period and was outside the GST net. [Paras 21, 23, 24]

The supply falls within the GST era and the time of supply is the date of payment of the settlement amount pursuant to the ICC Order / Deed of Settlement.

Import of services - Place of supply / location of recipient - Reverse charge mechanism (IGST payable by recipient) - Whether IGST is payable and on whom the liability arises (ANP or GSPC(J)) - HELD THAT: - The Authority noted that ANP is located in a non-taxable territory while GSPC(J) is located in Gujarat (a taxable territory). Applying Section 13 of the IGST Act and Entry No.1 to Notification No.10/2017-Integrated Tax(Rate), the Authority treated the transaction as import of service by a person located in taxable territory from a supplier in non-taxable territory. The notification brings such supplies within the reverse charge mechanism, obliging the recipient in the taxable territory to pay the IGST. On this basis the Authority concluded that the recipient (GSPC(J)) is liable to discharge IGST under reverse charge on the imported service represented by the settlement. [Paras 22]

IGST is chargeable on the imported supply of service and liability to pay IGST arises on the recipient, GSPC(J), under the reverse charge mechanism.

Final Conclusion: The Authority ruled that the settlement payment pursuant to the Deed of Settlement and Release is a taxable supply of service arising in the GST era and that GSPC (JPDA) Ltd., as the recipient located in taxable territory, is liable to pay IGST on such imported service under the reverse charge mechanism.

Exemption for pure services to Governmental authorities in relation to functions entrusted to Panchayat under Article 243G or Municipality under Article 243W - exemption for services to educational institutions upto higher secondary under Entry 66(b) of Notification No.12/2017 CT(R) - interpretation of the phrase 'in relation to' in exemption notifications - binding effect of an Advance Ruling under Section 103 of the CGST Act

Exemption for services to educational institutions upto higher secondary under Entry 66(b) of Notification No.12/2017 CT(R) - security, cleaning and housekeeping services - Whether manpower supply of security, cleaning and housekeeping services to specified Government schools are exempt from GST under Notification No.12/2017 CT(R) entry 66(b). - HELD THAT: - The Authority examined the work orders and found that entry 66(b) to Notification No.12/2017 CT(R) specifically exempts services provided to educational institutions providing pre school education and education up to higher secondary or equivalent, and that the exempted services expressly include security, cleaning and housekeeping (and catering/mid day meals). On the facts, services supplied to Girls Literacy Residential School, Government Secondary Schools of Chhotaudepur district and Model School, Naswadi fall within that category and the services of peons, sweepers and security guards furnished there are covered by the exemption. The Authority therefore applied the specific exemption entry to those school recipients and held the services exempt. (See paras 14, 14.1-14.3) [Paras 14]

Security, cleaning and housekeeping services supplied to the cited Government schools are exempt from GST.

Exemption for services to educational institutions upto higher secondary under Entry 66(b) of Notification No.12/2017 CT(R) - Whether manpower supply services provided to Government colleges (education above higher secondary) are exempt from GST under Notification No.12/2017 CT(R). - HELD THAT: - The Authority held that entry 66(b) is expressly confined to institutions providing pre school education and education up to higher secondary. Colleges providing education above higher secondary are excluded from that exemption. Having examined the submitted contracts, the Authority concluded that services supplied to the cited Government colleges (including degree and higher education institutions and certain teacher training institutes delivering B.Ed/M.Ed courses) do not fall within entry 66(b) and are therefore taxable. (See para 15) [Paras 15]

Services supplied to the cited Government colleges (education above higher secondary) are subject to GST.

Exemption for health care services and clinical establishments under Notification No.12/2017 CT(R) - Whether manpower supply services provided to Government hospitals/clinical establishments are exempt from GST under the relevant entries of Notification No.12/2017 CT(R). - HELD THAT: - The Authority noted that Notification No.12/2017 CT(R) contains entries (such as those dealing with health care services by clinical establishments and veterinary clinics) that exempt certain services by such establishments, but these entries do not extend to cover supplies of manpower/services provided to those establishments. On the facts, the contracts for supply of peons, drivers, laboratory technicians, data entry operators, watchmen and sweepers to the cited hospitals do not fall within the exemption entries and are therefore taxable. (See para 16) [Paras 16]

Services supplied to the cited Government hospitals/clinical establishments are subject to GST.

Exemption for pure services to Governmental authorities in relation to functions entrusted to Panchayat under Article 243G or Municipality under Article 243W - interpretation of the phrase 'in relation to' - Whether manpower services supplied to Government offices generally qualify as 'pure services... in relation to' Panchayat/Municipality functions under Sr. No.3 of Notification No.12/2017 CT(R). - HELD THAT: - The Authority interpreted the notification language and held that eligibility under Sr. No.3 depends on whether services are provided 'in relation to' a Panchayat/Municipality function - read in plain terms as services 'in relation to a Panchayat/Municipality function'. It rejected the applicant's broader submission that any service supplied to or consumed in a Government office should be equated with services in relation to Panchayat/Municipality functions. The Authority observed that adopting such a wide meaning would render many services to Government offices exempt, contrary to the absence of any specific exemption entry for Government offices. On the facts, the manpower services (computer operators, peons, sweepers, drivers, watchmen, etc.) are supplied, utilised and consumed within Government offices/hospitals/institutions and cannot be equated with services in relation to Panchayat/Municipality functions; therefore Sr. No.3 does not apply and the supplies are taxable. (See paras 17-18) [Paras 17, 18]

Services supplied to the cited Government offices are not exempt under Sr. No.3 and are subject to GST.

Binding effect of an Advance Ruling under Section 103 of the CGST Act - Whether prior Advance Rulings relied upon by the applicant determine the present dispute in favour of exemption. - HELD THAT: - The Authority observed that an Advance Ruling under Section 103 CGST Act is binding only on the applicant who sought it and the concerned officer in respect of that applicant. It therefore declined to treat prior Advance Rulings as determinative for the present applicant; further, having found that the services here are consumed within offices and not 'in relation to' Panchayat/Municipality functions, the Authority held that the cited precedents (and the judicial authority invoked concerning the phrase 'in relation to') did not change the result. (See para 19) [Paras 19]

Prior Advance Rulings relied upon are not binding on the present applicant and do not alter the conclusion reached in this case.

Final Conclusion: The Authority ruled that the applicant's supply of security, cleaning and housekeeping services to the specified Government schools is exempt from GST under entry 66(b) of Notification No.12/2017 CT(R); supplies to the cited Government colleges (above higher secondary), Government offices and Government hospitals do not qualify for the claimed exemptions and are subject to GST. Prior Advance Rulings relied upon are not binding on this applicant.

Protection from arrest in GST investigation - arrest in offences under Section 132 of the CGST Act involving issuance of invoices without supply and wrongful availing of input tax credit - prosecution or arrest prior to completion of assessment - risk of tampering with evidence as justification for arrest - public interest and protection of State revenue vis-a -vis personal liberty in fiscal offences

Protection from arrest in GST investigation - risk of tampering with evidence as justification for arrest - public interest and protection of State revenue vis-a -vis personal liberty in fiscal offences - Application for protection from arrest was refused and the applicant was not granted anticipatory protection. - HELD THAT: - The Court found that the investigating authority's specific contention that 12 alleged suppliers were found nonexistent during physical verification had not been controverted by the applicant, and that substantial further interrogation and verification of nearly 100 remaining suppliers remained necessary. The Court regarded the suspected large-scale wrongful availment of input tax credit as a serious offence that could cause direct loss to the State exchequer. Given the possibility that the applicant, who alone knew the details of those entities, could tamper with evidence if afforded protection, granting protection from arrest would impede the ongoing investigation. Allegations by the applicant of prior detention, coercion, and bribery demands by an investigating officer were not promptly brought as complaints and were considered by the Court to be insufficient to outweigh the need for continued investigation. Balancing individual liberty against the interest of protection of revenue and the integrity of the investigation, the Court concluded that arrest was necessary and denied protection. [Paras 8, 9]

Application for protection from arrest rejected; no anticipatory protection granted.

Arrest in offences under Section 132 of the CGST Act involving issuance of invoices without supply and wrongful availing of input tax credit - prosecution or arrest prior to completion of assessment - The contention that prosecution or arrest cannot be initiated before completion of assessment was rejected. - HELD THAT: - Relying upon precedent cited by the respondent and the Court's view of binding authority, the Court held that offences such as issuing invoices without supply and availing input tax credit by using such invoices are offences under Section 132 and may give rise to investigation and arrest without waiting for completion of assessment or adjudication. Consequently, the applicant's submission that action was bad for lack of prior assessment or demand was not accepted. [Paras 6, 7]

Prosecution or arrest need not await completion of assessment; the argument that action was premature was rejected.

Final Conclusion: The application for protection from arrest was dismissed: the Court refused anticipatory protection, holding that (i) arrest and further investigation were justified in view of the suspected wrongful availment of input tax credit and risk of tampering with evidence, and (ii) initiation of prosecution/arrest does not require prior completion of assessment.

Obligation to join investigation pursuant to court order - right of access to legal counsel during departmental enquiries - investigating officer's power to exclude counsel to prevent hindrance - maintainability and locus to seek monitoring of investigation

Obligation to join investigation pursuant to court order - Petitioner directed to join the ongoing departmental investigation in compliance with the High Court order. - HELD THAT: - The court observed that whether the petitioner was joining the investigation as directed by the High Court was a matter of fact, and emphasised that undergoing and joining the investigation procedure as directed by the High Court is a foremost requirement. Considering the totality of circumstances, the court directed that the petitioner shall personally appear before the Competent Officer of the respondent department tomorrow at 4:00 PM to join the investigation. The court thereby required compliance with investigatory process while disposing of the application seeking monitoring.

Petitioner ordered to join the investigation in person at the specified time before the Competent Officer.

Right of access to legal counsel during departmental enquiries - Petitioner permitted access to his counsel during the course of the departmental enquiries. - HELD THAT: - Relying on submissions that the petitioner sought to have his counsel assist during enquiries, and noting the respondent raised no objection to counsel's presence, the court allowed the petitioner to have access to his counsel while being enquired. The permission was granted to facilitate a smooth conduct of the enquiry and to assist the petitioner during attendance before the investigating authority.

Petitioner entitled to have his counsel present during the enquiries.

Investigating officer's power to exclude counsel to prevent hindrance - Investigating officer authorised to require the counsel to be absent if the counsel's presence hinders the smooth conduct of enquiry. - HELD THAT: - While permitting access to counsel, the court qualified that such access shall not create any hindrance in the smooth conduct of the enquiry. If the investigating officer finds that the presence of the counsel obstructs the enquiry, he is entitled to ask the counsel to let the enquiry proceed in the counsel's absence. This qualification balances the petitioner's access to legal assistance with the investigatory authority's need to conduct unhindered enquiries.

Investigating officer may direct counsel to be absent if counsel's presence hinders the enquiry.

Maintainability and locus to seek monitoring of investigation - Contentions on maintainability and locus were noted but the application was disposed by issuing directions for attendance and counsel access rather than being dismissed for want of maintainability. - HELD THAT: - The respondent contended that the application was not maintainable and that the applicant lacked locus, and that no relevant provision was cited. The court nonetheless proceeded to consider the factual assertions about attendance and harassment and disposed of the application by directing personal appearance and permitting access to counsel. The application was not dismissed solely on grounds of maintainability; instead limited directions were issued in the interest of justice.

Application disposed by issuing directions for attendance and counsel access despite contentions on maintainability.

Final Conclusion: Application disposed: petitioner directed to personally join the departmental investigation at the specified time and permitted access to his counsel during enquiries subject to the investigating officer's power to require the counsel's absence if their presence hinders the smooth conduct of the enquiry.

Revision u/s 263 by CIT - limit limit to pass the order - whether order barred by limitation? - Order "Made" versus Order "Served" - interpretation of the word 'made' in a statute - dispatch of order irrelevant to limitation - end of financial year as the limiting date

Whether the order passed by the Commissioner under Section 263 was barred by limitation prescribed in Section 263(2), and whether the relevant date for limitation is the date the order is made or the date it is received by the assessee? - HELD THAT: - Subsection (2) of Section 263 provides that no order shall be made under subsection (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. The statute uses the word "made", not "received" or "dispatched", and does not refer to service or receipt as the triggering event for limitation. Consequently, the temporal limit is governed by the date on which the revisional order is actually made/passed. Applying that principle, the revisional order was made on 26.03.2012 (and dispatched on 28.03.2012), which falls within two years from the end of the financial year relevant to AY 2008-09 (last date being 31.03.2012). Receipt of the order by the assessee on a later date (29.11.2012) is not material for computing the period of limitation under Section 263(2). Reading "received" or "dispatched" into the statute would amount to adding words not found in the provision, contrary to the cardinal rule of statutory construction to give effect to the text as enacted. The High Court [2019 (7) TMI 1041 - MADRAS HIGH COURT] and the Tribunal [2013 (4) TMI 933 - ITAT CHENNAI] erred in treating receipt as the relevant date and holding the order time-barred. [Paras 4, 5]

The revisional order passed on 26.03.2012 was within the limitation period under Section 263(2) and therefore not barred by limitation; the appeal is allowed.

Final Conclusion: The Supreme Court allowed the revenue's appeal, holding that the date on which the Commissioner 'made' the order under Section 263 governs limitation under Section 263(2), and that the revisional order dated 26.03.2012 fell within the prescribed period and was not time barred.

Interpretation of Section 54F(1) - cost of new asset includes cost of land - Section 54F(1) - purchase within one year, purchase within two years, or construction within three years - Three limbs of Section 54F(1) are distinct and not to be intermingled - Benevolent-tax provision to be interpreted liberally

Interpretation of Section 54F(1) - cost of new asset includes cost of land - Three limbs of Section 54F(1) are distinct and not to be intermingled - Benevolent-tax provision to be interpreted liberally - Whether, where a residential house is constructed within three years of transfer (third limb of Section 54F(1)), the cost of the new asset includes the cost of the land even though the land was purchased more than one year prior to the date of transfer, and whether the first limb can be applied to disallow the land cost. - HELD THAT: - The Court examined the language and object of Section 54F(1) and relevant precedents, notably C. Aryama Sundaram (Madras) and coordinate decisions of this Court, and held that the three alternatives in Section 54F(1) operate as distinct and separate limbs. The condition for claiming exemption under the third limb is that a new residential house is constructed within three years of the date of transfer; there is no requirement that construction must not have commenced earlier or that the cost of land be excluded because it was acquired prior to one year. The cost of the "new asset" is to be read as the cost of the residential house in its entirety, which inherently includes the cost of the land and all costs relatable to acquisition and construction. Intermingling or applying the temporal restriction of the first limb to negate the third limb would defeat the statutory object of encouraging investment in residential houses and would be an impermissibly narrow interpretation of a benevolent provision. Where two plausible views exist, the one beneficial to the assessee must be adopted. Applying these principles to the facts, the Court found the Tribunal erred in denying exemption attributable to the land merely because it was purchased earlier than one year prior to transfer. [Paras 9, 13, 14, 15]

The cost of the new residential house for the purposes of Section 54F(1) includes the cost of the land even if the land was purchased more than one year before the transfer, and the first limb cannot be invoked to deny land cost when the third limb (construction within three years) is satisfied; benefit granted to the assessee.

Final Conclusion: The appeal is allowed; the Tribunal's order is set aside and the substantial questions of law are answered in favour of the assessee, holding that where the third limb of Section 54F(1) is satisfied by construction of a residential house within three years, the cost of the new asset includes the cost of the land notwithstanding that the land was purchased more than one year prior to transfer.

Reopening of assessment under Section 147 - reason to believe - change of opinion - tangible material - transfer pricing - Arm's Length Price and reference to Transfer Pricing Officer - Form No.3CEB submission and its effect on adjudication - instruction No.3/2016 (para 3.7) and non-examination of TP issue

Reopening of assessment under Section 147 - reason to believe - change of opinion - tangible material - Validity of the notice dated 31.03.2018 reopening assessment for A.Y. 2013-14 under Section 147 - HELD THAT: - The Court examined whether the Assessing Officer had a legally sustainable "reason to believe" that income chargeable to tax had escaped assessment. Section 147 permits reassessment only where such a reason exists and must not be a mere change of opinion; there must be "tangible material" forming a live link with the belief. The record establishes that the assessee had furnished the original Form No.3CEB and transfer pricing materials within the statutory time and had supplied revised reports during scrutiny before the assessment was framed on 18.03.2016. The AO, relying on instruction No.3/2016 (para 3.7), consciously did not examine the transfer pricing issue nor refer it to the TPO, and the reasons recorded incorrectly stated delay in submission. As the AO had access to the materials and elected not to adjudicate the TP issue, the reopening amounts to a change of opinion absent any new tangible material; the AO also failed to explain the arithmetic basis of the alleged escapement figure. Applying the principles in Kelvinator and related authority, the Court concluded the prerequisites of Section 147 were not satisfied and the reassessment notice is unsustainable. [Paras 10, 12, 15, 17, 18]

Notice dated 31.03.2018 reopening assessment for A.Y. 2013-14 quashed as based on change of opinion without tangible material and on factually incorrect reasons.

Final Conclusion: Writ allowed; impugned notice dated 31.03.2018 under Section 148/147 quashed for lack of jurisdiction as the reassessment manifested a mere change of opinion and was not supported by fresh tangible material.

Ex parte disposal for non-appearance and lack of opportunity - restoration to the first appellate authority for fresh hearing - remand for fresh adjudication - levy of fee under Section 234E as a charging provision - processing of TDS statements and Section 200A as a machinery provision - constitutional and jurisdictional challenge to pre-amendment levy

Ex parte disposal for non-appearance and lack of opportunity - restoration to the first appellate authority for fresh hearing - Whether the ex parte dismissal by the CIT(A) (for non-appearance) was vitiated by want of proper opportunity and required restoration. - HELD THAT: - The Tribunal found on the record that the notice of hearing had been fixed for 20.03.2018 but, according to the assessee, the notice was received after that date, and the CIT(A) had given only a single opportunity before deciding the appeal ex parte. In the interest of justice and considering the totality of facts, the Tribunal held that the assessee was not afforded proper opportunity and that the matter should be restored to the file of the CIT(A) with directions to grant one further opportunity to the assessee to substantiate its case. The assessee was directed to appear before the CIT(A) and prosecute the appeal without seeking adjournment, failing which the CIT(A) may pass an appropriate order according to law. [Paras 7, 8]

Ex parte order set aside; appeals restored to the file of the CIT(A) for fresh hearing with a direction to grant one more opportunity to the assessee.

Levy of fee under Section 234E as a charging provision - processing of TDS statements and Section 200A as a machinery provision - constitutional and jurisdictional challenge to pre-amendment levy - remand for fresh adjudication - Whether the levy/adjustment of fee under Section 234E for periods prior to insertion of clause (c) in Section 200A(1) could be sustained, and whether the matter should be adjudicated on merits. - HELD THAT: - Although conflicting contentions and precedents were placed before the Tribunal on whether fees under Section 234E could be levied or adjusted in communications issued prior to the amendment of Section 200A(1) (w.e.f. 01.06.2015), the Tribunal did not decide the substantive merits of that controversy. Instead, having restored the appeals for lack of proper opportunity before the CIT(A), the Tribunal directed that the CIT(A) shall adjudicate the issues on merits in accordance with law. The Tribunal therefore remanded the question of validity/levy of Section 234E (including its interplay with Section 200A and any contention about pre-amendment periods) to the CIT(A) for fresh consideration and decision. [Paras 10, 11]

Substantive challenge to levy under Section 234E remanded to the CIT(A) for fresh adjudication; no final decision on the merits by the Tribunal.

Final Conclusion: Both appeals were allowed for statistical purposes: the ex parte orders of the CIT(A) were set aside and the matters restored to the CIT(A) for fresh adjudication; the assessee is directed to appear and contest the appeals, and the question of levy under Section 234E (including its interplay with Section 200A for pre-amendment periods) is to be decided afresh by the CIT(A).

Reopening of assessment - reliance on data seized from e-mail/tally backups as basis for additions - statement recorded under Section 132(4) of the Act - additions based on presumption, conjecture or surmise - burden of proof on revenue to produce corroborative evidence - reliance on confessional/adverse statement without cross-examination - violation of principles of natural justice for non-provision of cross-examination - deletion of additions for lack of corroborative evidence

Reliance on data seized from e-mail/tally backups as basis for additions - statement recorded under Section 132(4) of the Act - additions based on presumption, conjecture or surmise - burden of proof on revenue to produce corroborative evidence - Sustainability of additions made on the basis of seized e-mail attachments and the statement of a third party in absence of corroborative material linking the seized data to the assessee. - HELD THAT: - The Tribunal examined the evidentiary value of the seized e-mail attachments and the statement of Shri Suraj Parmar. It was noted that the seized data did not expressly name the assessee and used ambiguous abbreviations ("RJ") susceptible to multiple interpretations. Shri Parmar's statement itself indicated that cash generated was distributed among partners of another entity and did not clearly attribute receipt of on-money to the assessee. The assessee and its director denied receipt of any cash component and one person alleged to be a recipient (Shri Bharat Jhunjhunwala) also denied receipt in his statement. In this factual matrix the Tribunal held that the onus lay on the Revenue to establish, by corroborative evidence, that the assessee actually received the cash receipts attributed to it. Absent such corroboration, additions founded on the seized data and the third-party statement amounted to conjecture and could not be sustained. [Paras 5, 6]

Additions could not be sustained for lack of corroborative evidence directly linking the seized data and the third-party statement to the assessee; additions deleted on this ground.

Reliance on confessional/adverse statement without cross-examination - violation of principles of natural justice for non-provision of cross-examination - deletion of additions for lack of corroborative evidence - Whether making additions based on an adverse statement without affording the assessee an opportunity to cross-examine the maker of that statement violated principles of natural justice and rendered the additions unsustainable. - HELD THAT: - The Tribunal observed that the statement of Shri Suraj Parmar formed the primary basis for the additions against the assessee but the assessee was not afforded an opportunity to cross-examine him. Relying on authoritative principle that when an adverse statement is the foundation of an order the affected party must be allowed to test that statement, the Tribunal held that denial of such opportunity is a serious procedural infirmity and amounts to violation of natural justice. Because the statement was central to the impugned additions, failure to permit cross-examination rendered the additions unsustainable. [Paras 7, 8]

Additions were untenable for breach of natural justice due to non-provision of cross-examination; additions deleted on this ground.

Final Conclusion: The Tribunal deleted the impugned additions made by the Assessing Officer for AY 2015-16, holding that the Revenue failed to furnish corroborative evidence linking the seized data and third-party statement to the assessee and that denial of opportunity to cross-examine the declarant violated principles of natural justice; the appeal was partly allowed.

Penalty under section 271(1)(c) read with Explanation 1(A) - omnibus show-cause notice - non-application of mind in penalty proceedings - prejudice and principles of natural justice - penalty for concealment versus furnishing inaccurate particulars - deletion of penalty on defective notice

Penalty under section 271(1)(c) read with Explanation 1(A) - omnibus show-cause notice - non-application of mind in penalty proceedings - deletion of penalty on defective notice - Validity of levy of penalty under section 271(1)(c) read with Explanation 1(A) in respect of additions made on account of notional interest and whether the penalty proceedings were vitiated by an omnibus/defective notice. - HELD THAT: - The Tribunal examined whether the penalty could be sustained where the assessing officer did not strike off inapplicable portions of the printed show-cause notice and thereby did not specify whether the charge was concealment of particulars of income or furnishing of inaccurate particulars. The Bench noted that the assessing officer had not explicitly determined either limb though, if at all, the case related to furnishing of inaccurate particulars. Applying the ratio of the Full Bench of the Hon'ble Bombay High Court as discussed in the reproduced coordinate-bench decision, the Tribunal held that omnibus show-cause notices betray non-application of mind and are vulnerable to challenge; a penal provision must be construed strictly and ambiguity resolved in favour of the assessee. Following the coordinate Bench decision which, relying on the Full Bench, deleted penalty where the notice was defective, the Tribunal found it fit to delete the penalty levied for the assessment years before it. The Tribunal therefore did not adjudicate other grounds on the merits and proceeded to allow the appeals by deleting the penalty following the binding approach identified. [Paras 7, 9]

Penalty levied under section 271(1)(c) read with Explanation 1(A) in respect of the additions was deleted for assessment years 2005-06, 2010-11, 2011-12 and 2012-13.

Final Conclusion: Following the reasoning that an omnibus/defective show-cause notice indicated non-application of mind and in view of the coordinate-bench reliance on the Full Bench decision of the Hon'ble Bombay High Court, the Tribunal deleted the penalty under section 271(1)(c) read with Explanation 1(A) for the assessment years 2005-06, 2010-11, 2011-12 and 2012-13 and allowed the appeals.

Reopening of assessment under section 147 read with section 148 - client code modification and determination of bogus trading - onus on assessing officer to demonstrate failure to disclose material facts - requirement of independent verification and examination of broker records - materiality of tax effect for sustaining reassessment

Reopening of assessment under section 147 read with section 148 - onus on assessing officer to demonstrate failure to disclose material facts - materiality of tax effect for sustaining reassessment - Validity of reopening the completed assessment after four years - HELD THAT: - The Tribunal examined the reasons recorded by the Assessing Officer and the information received from the Investigation Wing alleging client code modifications. The reasons did not allege any specific failure by the assessee to disclose material facts in the original assessment and merely recited that client code modifications can be misused. The AO had not shown possession of corroborative evidence establishing that the assessee had concealed income or failed to disclose material facts; nor had the AO examined the broker or pointed to analysis (such as digit-edit analysis) to demonstrate non-genuine modifications. The Tribunal noted that the alleged contrived loss was small relative to the assessed loss position of the assessee, which militated against an inference of intention to evade tax. Considering the absence of tangible material showing failure to disclose and the lack of independent verification, the reopening beyond four years was not sustainable. [Paras 3, 9, 10]

Reopening of the assessment was invalid and is set aside; the appeal is allowed on this ground.

Client code modification and determination of bogus trading - requirement of independent verification and examination of broker records - Sustainability of the addition of the claimed shifted loss on merits - HELD THAT: - On the merits, the AO treated net figures from client code modifications as an escapement of income without distinguishing profits and losses or producing evidence to show that the modifications were non-genuine. The AO did not examine the broker or adduce analysis to demonstrate manipulative replacement of client codes; the reasons recorded acknowledged that genuine rectifications are permissible and did not identify specific indicia of bogus transactions. Given that both profit and loss arose from the cited client code modifications and absence of corroborative evidence, the addition could not be sustained. [Paras 4, 9, 10]

The addition imposed on account of alleged client code modification is quashed and the appeal is allowed on the merits.

Final Conclusion: For Assessment Year 2009-10 the Tribunal set aside the reopening under section 147/148 and deleted the addition based on alleged client code modification; the appeal of the assessee is allowed.

Fees for technical services - make available technical knowledge, experience, skill, know how or processes - development and transfer of a technical plan or technical design - India Singapore DTAA Article 12(4) - section 40(a)(i) disallowance for failure to deduct tax at source

Fees for technical services - India Singapore DTAA Article 12(4) - make available technical knowledge, experience, skill, know how or processes - section 40(a)(i) disallowance for failure to deduct tax at source - Whether payments made to non resident Singapore entities for architectural, GFC and MEP drawings/designs qualify as 'fees for technical services' under Article 12(4) of the India Singapore DTAA and, consequently, whether the amount was rightly disallowed under section 40(a)(i) for failure to deduct tax at source. - HELD THAT: - Article 12(4) treats as FTS only those managerial, technical or consultancy services which (inter alia) 'make available' technical knowledge, experience, skill, know how or processes enabling the recipient to apply the technology independently, or consist of development and transfer of a technical plan/design that so enables. The contracts and scope of work show that the services supplied were project specific drawings and designs; the intellectual property, electronic files and derived materials remained the service providers' property and were restricted to use for the specific project. The terms precluded the assessee from applying the designs or know how independently for other projects or for completion by third parties. There is no material on record to demonstrate any transfer of technology or know how that would enable the assessee to apply the technology independently. In the absence of such make available element, the conditions of Article 12(4) are not fulfilled and the payments do not qualify as FTS; consequently, the disallowance under section 40(a)(i) based on non deduction of tax at source cannot be sustained. The Assessing Officer's conclusion lacks supporting material and does not overturn the finding of the Commissioner (Appeals). [Paras 11, 12]

The Tribunal upholds the order of the Commissioner (Appeals) deleting the disallowance; the payments do not qualify as FTS under Article 12(4) and the section 40(a)(i) disallowance is not sustained.

Final Conclusion: Revenue's appeal is dismissed on the substantive issue: payments for project specific architectural, GFC and MEP drawings furnished by Singapore residents do not amount to 'fees for technical services' under Article 12(4) of the India Singapore DTAA, and the consequent disallowance under section 40(a)(i) is not justified.

Genuineness of claimed payments to vendors - onus of proof and reconciliation of receipts and payments - classification of receipts as business income where payments not established - compliance with provisions of Sec. 40A(3) - admission of additional evidence under Appellate Tribunal Rules, 1963 - electronic record admissibility and Section 2(t) of the Information Technology Act

Genuineness of claimed payments to vendors - onus of proof and reconciliation of receipts and payments - classification of receipts as business income where payments not established - compliance with provisions of Sec. 40A(3) - Whether the assessee proved that Rs.72,00,000 paid out of Rs.90,00,000 received were genuine payments to land owners and thus deductible rather than taxable business receipts. - HELD THAT: - The Tribunal upheld the findings of the AO and the CIT(A) that although receipts of Rs.90,00,000 were explained as received from companies for arranging land transactions, the assessee failed to produce a detailed reconciliation linking amounts received from the companies to payments to specific land owners. Material evidentiary defects noted include absence of sale deeds, inadequate particulars of lands and parties, use of bearer cheques for payments, and mismatches between amounts and land holdings. In view of these lacunae and non-compliance with the requirement to discharge the onus of proof, the receipts were properly characterised as business receipts. Further, having treated the receipts as business income, the Tribunal found that the assessee failed to comply with the requirements contemplated by Sec. 40A(3) (payment by crossed cheques and TDS) to substantiate deductible expenses, rendering the claimed payments disallowable and the balance of Rs.72,00,000 rightly added to income. [Paras 5, 6]

Addition of Rs.72,00,000 confirmed as income of the assessee.

Admission of additional evidence under Appellate Tribunal Rules, 1963 - electronic record admissibility and Section 2(t) of the Information Technology Act - Whether the assessee's request to admit additional evidence (including a hard disk) and to remit the matter to the department for verification should be allowed. - HELD THAT: - The Tribunal rejected the request to admit the additional evidence because the proffered material did not establish the necessary threefold nexus between vendors, companies and the assessee, and the assessee failed to provide the detailed reconciliation and corroborative documents required. The Tribunal also observed that the hard disk was not certified to meet the statutory definition/parameters of electronic records under Section 2(t) of the Information Technology Act and, therefore, could not be treated as admissible evidence for remand purposes. Given these deficiencies and the absence of a valid application under Rules 29-31 of the Appellate Tribunal Rules, 1963, there was no basis to order a remand or admit the material. [Paras 3, 5, 6]

Application for admission of additional evidence and for remand denied; no remand ordered.

Final Conclusion: The Tribunal dismissed the appeal for AY. 2008-09, confirmed the addition of Rs.72,00,000 to the assessee's income for failure to prove payments to vendors and refused to admit the additional evidence or direct a remand.

Managerial services not constituting fees for technical services under Article 13(4) of the India-UK DTAA - Ancillary and subsidiary test for services incidental to enjoyment of licensed rights - Section 40(a)(ia) disallowance for failure to deduct tax at source - Obligation to deduct tax at source under section 195 and relevance of DTAA for determining chargeability

Managerial services not constituting fees for technical services under Article 13(4) of the India-UK DTAA - Section 40(a)(ia) disallowance for failure to deduct tax at source - Obligation to deduct tax at source under section 195 and relevance of DTAA for determining chargeability - Whether management fees paid to Lloyd's Register UK are deductible and not liable to be disallowed under section 40(a)(ia) as payment for fees for technical services. - HELD THAT: - The Tribunal examined the nature of services listed in the Management Services Agreement (corporate communications, HR, IT, internal audit, legal, operational management, risk management, taxation and treasury, etc.) and held that these are managerial in nature and do not fall within the definition of 'fees for technical services' under Article 13(4) of the India-UK DTAA. The DRP's sole reason - that the management services were ancillary and subsidiary to enjoyment of rights under the License Agreement - was tested against the DTAA Memorandum of Understanding criteria (extent of facilitation of enjoyment, customary provision in royalty arrangements, insubstantiality of the service payment, single or related contracts, and identity/relationship of service provider and royalty recipient). None of these conditions were satisfied on the facts. The Tribunal further distinguished the reliance on PILCOM (precluding DTAA consideration for certain withholding obligations) by noting that obligation under section 195 arises only if payment is chargeable to tax and therefore DTAA reference is necessary to determine chargeability; this distinction (and reliance) is consistent with subsequent authority. Applying these legal tests and facts, the Tribunal concluded the management fees were not taxable as fees for technical services and therefore no disallowance under section 40(a)(ia) was warranted; the disallowance was deleted. [Paras 11, 12, 13, 14]

Disallowance under section 40(a)(ia) in respect of management fees deleted; assessee not liable to deduct TDS on those management fees.

Allowability of business expenditure under section 37(1) - Relevance of Unilateral Advance Pricing Agreement (UAPA) / arm's length acceptance - Allowability of management fees and IT charges under section 37(1) of the Act. - HELD THAT: - Both parties agreed that the question of allowability had been accepted in other years and that the Unilateral APA (UAPA) recognition of the payments as at arm's length is material. The Tribunal did not decide the deductibility on merits; instead it restored the issue to the file of the Assessing Officer for verification whether the payments are accepted by the UAPA as arm's length, and for consequential consideration by the AO. [Paras 16, 17]

Issue remitted to the Assessing Officer for verification (including acceptance under UAPA) and consequent adjudication.

Claim for short credit of TDS and verification of certificates - Claim of the assessee for short grant of TDS credit. - HELD THAT: - Both parties agreed the matter required factual verification. The Tribunal directed that the question be sent back to the Assessing Officer for verification and directed the assessee to produce the relevant TDS certificates before the AO, who will thereupon allow the claim if established. [Paras 18]

Issue remitted to the Assessing Officer for verification and grant of TDS credit upon production/verification of certificates.

Consequential interest under sections 234B and 234D - Charging of interest under sections 234B and 234D consequential to the tax adjustments. - HELD THAT: - The Tribunal recorded that the interest issue was consequential upon other findings and, given the disposals/remand, treated the question as academic. [Paras 19]

Interest issue dismissed as academic.

Final Conclusion: Appeals allowed in part: the disallowance under section 40(a)(ia) in respect of management fees was deleted on the finding that the services were managerial and not 'fees for technical services' under the India-UK DTAA (applicable to all specified assessment years mutatis mutandis); the question of allowability under section 37(1) (management fees and IT charges) and the short grant of TDS credit were remitted to the Assessing Officer for verification (including UAPA/arm's length acceptance and production/verification of TDS certificates); consequential interest issues were held academic.

Deduction of expenses against income from house property - 30% statutory deduction under section 24(a) subsuming repairs and maintenance - set off of brought forward business losses under section 72 - classification of interest as income from other sources - remand for fresh adjudication on substantiation of electricity and insurance expenses

Remand for fresh adjudication on substantiation of electricity and insurance expenses - deduction of expenses against income from house property - Claim for electricity and insurance expenses forming part of deductions against income from house property restored to the file of the CIT(A) for fresh consideration. - HELD THAT: - The Tribunal found that the Assessing Officer and the CIT(A) reached differing conclusions on the allowance of electricity and insurance expenses and that relevant material had been placed on record which the CIT(A) had not had the benefit of fully examining. In respect of electricity expenses the assessee relied on the rent agreement (clause 9(c)) and ledger entries; the CIT(A) observed absence of electricity bills and proof of the electricity connection being in the assessee's name. The Tribunal directed re-adjudication by the CIT(A), permitting the assessee to be heard and to produce substantiation; it also directed the CIT(A) to consider the ITAT Delhi Bench decision in M/s Texaco Overseas Pvt. Ltd. concerning reduction of annual rental value by expenses for additional services where quantification is not readily available. The Tribunal additionally noted that the insurance policy does appear in the paper book and ordered that the insurance claim be reconsidered and allowed proportionately if supported by evidence. The remand is for fresh consideration and quantification after giving the assessee proper opportunity to substantiate the claims. [Paras 5]

Electricity and insurance expense claims restored to the file of the CIT(A) for fresh adjudication on production of substantiating evidence and in accordance with the guidance given.

30% statutory deduction under section 24(a) subsuming repairs and maintenance - deduction of expenses against income from house property - Claim for repairs and maintenance expenses in addition to the statutory 30% deduction under section 24(a) rejected. - HELD THAT: - The Tribunal agreed with the CIT(A) that civil and electrical repairs claimed by the assessee are subsumed by the statutory 30% deduction available under section 24(a) and that allowing the claimed repairs in addition would amount to double benefit. On that basis the Tribunal found no merit in the assessee's contention and dismissed the ground seeking allowance of repairs and maintenance over and above the 30% deduction. [Paras 5]

Repairs and maintenance claim disallowed; the 30% deduction under section 24(a) subsumes such expenses.

Set off of brought forward business losses under section 72 - classification of interest as income from other sources - Set off of brought forward business losses against the interest income disallowed; interest taxed as income from other sources. - HELD THAT: - The Tribunal held that under section 72 brought forward business losses are permissible to be set off only against business income. The assessee itself had shown the interest receipts in the computation as income from other sources; the interest comprised interest on income tax refund, interest from an electricity company and interest on fixed deposits. There was no record to demonstrate that the fixed deposits were maintained out of business necessity rather than from savings of rental receipts (already offered as income from house property). Accordingly, the Tribunal found no error in the CIT(A)'s disallowance of set off and sustained the classification of the interest as income from other sources. [Paras 5]

Set off of brought forward business losses against the interest income disallowed; interest treated as income from other sources.

Final Conclusion: The appeal is partly allowed: the Tribunal confirmed the disallowance of repairs and the denial of set off of brought forward business losses, but restored the claims for electricity and insurance expenses to the file of the CIT(A) for fresh consideration after affording the assessee an opportunity to substantiate those expenses.

Preclusion on making additions in a search assessment where the original assessment stood concluded - limitation under Section 263(2) of the Income Tax Act - revisional jurisdiction under Section 263 of the Income Tax Act - legitimacy of Long Term Capital Gain claimed as exempt under Section 10(38)

Limitation under Section 263(2) of the Income Tax Act - revisional jurisdiction under Section 263 of the Income Tax Act - The show-cause notice issued under Section 263(1) was time-barred because the period of limitation under Section 263(2) is to be reckoned from the date of the original assessment and not from the subsequent assessment under Section 153A. - HELD THAT: - The Tribunal accepted the assessee's additional ground that where an assessment had already been concluded prior to search, any attempt to question that concluded issue in a post-search assessment under Section 153A cannot be the basis for fresh revision under Section 263. The limitation under Section 263(2) therefore begins to run from the date of the original assessment order in respect of the concluded issue. Applying this principle to the present facts, the Tribunal found that the show-cause notice dated 10.03.2021 was issued after the expiry of the limitation period calculated from the original assessments for AY 2012-13 and AY 2013-14, rendering the notice and consequent proceedings non est. [Paras 6, 10]

The show-cause notice under Section 263(1) was time-barred and non est; the revisional proceedings founded on it cannot survive.

Preclusion on making additions in a search assessment where the original assessment stood concluded - legitimacy of Long Term Capital Gain claimed as exempt under Section 10(38) - In the absence of any incriminating material found in the search, the Assessing Officer was precluded from making additions/disallowances in the post-search assessment on the concluded issue of legitimacy of LTCG arising from sale/purchase of certain shares. - HELD THAT: - The Tribunal noted that both assessments for the years in question had stood concluded before the search and that no incriminating documents relating to the purchase and sale of the relevant shares were found during the search. The Assessing Officer had recorded contract notes, mode of payments and other documentary details in earlier proceedings and had accepted the transactions as bona fide. Given these facts and settled law that additions on a concluded issue cannot be made in a Section 153A assessment absent incriminating material, the Tribunal held that the Assessing Officer had no jurisdiction in the post-search proceedings to reopen the concluded question of the legitimacy of the LTCG claimed exempt under Section 10(38). Consequently, the revisional exercise directed by the PCIT on this ground was unsupported. [Paras 10]

The Assessing Officer was precluded from making additions/disallowances in the Section 153A assessment on the concluded issue; the revisional direction to reframe the assessment in respect of the LTCG could not be sustained.

Final Conclusion: Both appeals are allowed: the show-cause notice under Section 263 was held time-barred and non est, and the consequent revisional orders quashed; the Assessing Officer could not, in the absence of incriminating material, reopen the concluded issue of legitimacy of the LTCG in the post-search assessments for AY 2012-13 and AY 2013-14.

Profit on transfer of DEPB - DEPB as cash assistance falling under clause (iiib) of section 28 - face value of DEPB versus sale consideration - computation of deduction under section 80HHC - remand to the Assessing Officer for fresh computation

Profit on transfer of DEPB - DEPB as cash assistance falling under clause (iiib) of section 28 - face value of DEPB versus sale consideration - computation of deduction under section 80HHC - remand to the Assessing Officer for fresh computation - Whether the entire sale proceeds of DEPB or only the excess of sale consideration over the face value of DEPB is taxable as profit on transfer under clause (iiid) of section 28 and how deduction under section 80HHC is to be computed accordingly. - HELD THAT: - The Tribunal, following the ratio in the Hon'ble Supreme Court in Topman Exports, held that DEPB has the character of cash assistance and its face value falls under clause (iiib) of section 28 as business income when the credit accrues, whereas the profit on transfer of DEPB is the excess of the sale consideration over the face value and falls under clause (iiid). The Supreme Court explained that the face value of DEPB represents a cost element to the exporter and therefore the whole sale proceeds cannot be treated as profits; only the difference between sale price and face value constitutes profit on transfer. The Court further observed that this approach is consistent with the scheme of section 80HHC, including Explanation (baa) and the provisos, and does not result in double taxation where accrual and transfer occur in the same or different previous years. Applying that precedent, the Tribunal set aside the impugned treatment that taxed the entire sale proceeds as profit and directed that the Assessing Officer be furnished with the Supreme Court's ratio to recompute the quantum and the deduction under section 80HHC in accordance therewith. [Paras 11]

Issue set aside to the file of the Assessing Officer for fresh decision in conformity with the Supreme Court's ratio in Topman Exports; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes and remitted the matter to the Assessing Officer to recompute the tax treatment of DEPB-treating face value as income under clause (iiib) and only the excess as profit under clause (iiid)-and to determine the deduction under section 80HHC in accordance with the Supreme Court's decision in Topman Exports.

Supervisory jurisdiction under section 263 of the Income Tax Act - Erroneous and prejudicial to the interests of revenue test for exercise of revisional power - Deduction under section 80IA(4) - qualifying as an infrastructure facility (private railway sidings) - Finality of allowance in initial assessment years - Requirement of adequate enquiries and conscious application of mind by the Assessing Officer - Vague directions and remand for verification without specific findings

Supervisory jurisdiction under section 263 of the Income Tax Act - Erroneous and prejudicial to the interests of revenue test for exercise of revisional power - Deduction under section 80IA(4) - qualifying as an infrastructure facility (private railway sidings) - Finality of allowance in initial assessment years - Requirement of adequate enquiries and conscious application of mind by the Assessing Officer - Validity of the Principal Commissioner's exercise of revisional jurisdiction under s.263 to set aside the assessment for AY 2015-16 insofar as deduction under s.80IA(4) was allowed - HELD THAT: - The Tribunal found that the Assessing Officer had carried out specific and repeated enquiries into the claim under s.80IA(4), including issuance of notices, examination of Form No.10CCB, undertaking wise audited P&L and separate books of account and consideration of earlier assessment orders where identical claims had been allowed. The deduction related to private railway sidings, operations for which commenced in earlier initial assessment years, and the tax holiday period had not expired for AY 2015 16. No change in circumstances or specific error in the AO's reasoning was pointed out by the Principal Commissioner; merely alleging inadequate enquiry without identifying any concrete mistake does not satisfy the twin requirements for exercise of s.263. A superior officer under s.263 cannot supplant a plausible or debatable view legitimately taken by the AO or reappraise matters exclusively within the AO's quasi judicial domain. The revisional order merely directed re verification of Form 10CC and initial years' assessment orders without stating how the AO erred, and therefore the interference was held to be without jurisdiction and liable to be set aside. [Paras 10, 11, 12]

Revisional action under s.263 insofar as it set aside the assessment on the s.80IA(4) claim for AY 2015-16 is unjustified and is set aside; the AO's order is not shown to be erroneous and prejudicial to revenue.

Supervisory jurisdiction under section 263 of the Income Tax Act - Erroneous and prejudicial to the interests of revenue test for exercise of revisional power - Vague directions and remand for verification without specific findings - Validity of the Principal Commissioner's direction to the AO to verify the assessee's claim under section 80G (donation) during revisionary proceedings - HELD THAT: - The Tribunal noted that the assessee had produced the donation receipt before the Principal Commissioner, but the revisional order contained only a generic direction that the AO 'may consider the deduction after proper verification' without specifying the nature of any defect or the grounds for withholding the deduction. Such directionless and mundane observations in revision proceedings, absent elaboration of why the deduction was not acceptable, do not amount to the demonstrable error required to exercise s.263. Consequently, the revisional direction was held to be unsustainable. [Paras 13]

The revisional direction to re verify the s.80G claim is set aside as being vague and without jurisdiction.

Final Conclusion: The appeal is allowed: the order under section 263 setting aside the assessment for AY 2015 16 is quashed insofar as it concerns the s.80IA(4) deduction and the s.80G direction, the revisional interference being without jurisdiction for want of any shown error prejudicial to revenue.

Revisional jurisdiction under section 263 - Erroneous and prejudicial to the interest of the Revenue - Plausible view of the Assessing Officer - Distinction between lack of enquiry and inadequate enquiry - Duty of revisional authority to establish error by independent verification

Revisional jurisdiction under section 263 - Erroneous and prejudicial to the interest of the Revenue - Plausible view of the Assessing Officer - Distinction between lack of enquiry and inadequate enquiry - Validity of the Commissioner's exercise of revisional powers under section 263 in setting aside the assessment and directing de novo assessment. - HELD THAT: - The Tribunal held that the Commissioner was not justified in invoking section 263 because the assessment record showed that the Assessing Officer had raised specific queries during the assessment (relating to partner capital, shop-wise rent and licence particulars, quantitative stock details, expenses ledgers, employee details and licence/processing fees) and the assessee had filed detailed replies and supporting material. The Assessing Officer accepted a plausible view after considering those replies and passed the assessment. The revisional jurisdiction under section 263 requires that the original order be both erroneous and prejudicial to the revenue; mere possibility that more or further enquiries could have been made, or that the inquiry was imperfect or could have been more extensive, does not establish jurisdiction. Citing the distinction between lack of enquiry and inadequate enquiry, and precedents holding that the revisional authority must itself carry out independent verification before concluding that an order is erroneous and prejudicial, the Tribunal found that the Commissioner failed to demonstrate either error or prejudice arising from the AO's order. Consequently, the condition precedent for initiation of action under section 263 was not satisfied and the order setting aside the assessment for framing de novo was unsustainable. [Paras 4, 12, 13, 14]

Order passed by the Commissioner under section 263 cancelling the assessment and directing a de novo assessment is set aside; the CIT's action was unjustified.

Final Conclusion: The appeal is allowed: the order passed by the Commissioner under section 263 cancelling the assessment and directing reassessment de novo is quashed because the Assessing Officer had taken a plausible view after making enquiries and considering the assessee's replies, and the Commissioner did not establish that the assessment order was both erroneous and prejudicial to the Revenue.

Benami transaction - benamidar - beneficial owner - provisional attachment under Section 24(4) of the Benami Act, 1988 - confirmation of attachment under Section 26(3) of the Benami Act, 1988 - company as a juristic person and separate ownership - requirement of strict proof in benami proceedings - laches and delay in initiating benami proceedings

Company as a juristic person and separate ownership - benamidar - beneficial owner - Whether a company holding property in its name can be treated as a benamidar and its shareholders as beneficial owners merely by virtue of shareholding and subsequent transfer of shares. - HELD THAT: - The Court held that a company is a separate juristic person and properties held in the name of the company are the company's assets; monies received by way of investment, shares, gifts or deposits form part of the company's net worth and are available for the company to invest. Mere change of shareholding or the fact that promoters/shareholders financed the company does not convert the company's property into benami property nor render the shareholders 'beneficial owners' within the meaning of the Benami Act, 1988. Treating ordinary corporate transactions (including lawful transfer of shares) as benami would unduly extend the Act to routine corporate affairs; shareholders do not acquire ownership of company property simply by holding or acquiring shares. The Court emphasised that benami transactions require that consideration for property be provided by one person while the property is transferred to or held by another, and that strict proof (not surmise or conjecture) is required for a penal statute. On these foundations the Court concluded that the company could not be treated as benamidar and the shareholders as beneficial owners in the present case. [Paras 32, 35, 39, 40, 41]

Company cannot be treated as benamidar and its shareholders cannot be treated as beneficial owners merely by virtue of shareholding; the transactions do not constitute benami within the Benami Act, 1988.

Provisional attachment under Section 24(4) of the Benami Act, 1988 - confirmation of attachment under Section 26(3) of the Benami Act, 1988 - laches and delay in initiating benami proceedings - requirement of strict proof in benami proceedings - Whether the provisional attachment orders dated 12.01.2018 and the confirmation order dated 30.01.2019 were sustainable in law in the facts of this case. - HELD THAT: - The Court found the attachment proceedings to be legally unsustainable. The proceedings were initiated belatedly (about ten years after the purchase) and the Court observed that benami proceedings ought to be taken promptly, with ordinary limitation and reasonableness applying; long delay and laches weighed against the respondents. The Initiating Officer's case was founded largely on a statement of the erstwhile director recorded in income-tax proceedings which the Court found unreliable and not accepted in income-tax adjudications; the Court held that reliance on such inconsistent affidavits and statements, without strict proof, was impermissible in a penal and confiscatory regime. Further, the Court noted that the land had been subjected to Section 90B proceedings, resumed and converted by the JDA with leased rights granted to the company, and that subsequent official acts (conversion and registered lease deed) made it inappropriate to treat the commercial complex as benami. For these reasons the provisional attachment and its confirmation were quashed and the property ordered to be handed back to the company. [Paras 42, 43, 45, 46, 47]

Provisional attachment and the confirming order set aside; attachment found illegal and without jurisdiction and property to be handed over to the company.

Benami transaction - retrospectivity of Benami Act amendments - Whether the amended provisions of the Benami Act (brought into force w.e.f. 01.11.2016) apply retrospectively. - HELD THAT: - The Court refrained from adjudicating the question of retrospectivity of the 2016 amendments to the Benami Act, noting that the issue is pending before the Supreme Court in related proceedings and that some authorities have observed non-retrospective application. Given the pending higher court proceedings and interim orders in connected matters, this Court left the question open for adjudication by the Supreme Court and limited its decision to the facts of the present case. [Paras 30]

Question of retrospectivity left open for adjudication by the Supreme Court; not decided in this petition.

Final Conclusion: The High Court held that the company is not a benamidar and its shareholders are not beneficial owners merely by virtue of shareholding; on the facts (including delay, unreliable statements relied upon and subsequent JDA actions converting and leasing the land) the provisional attachment dated 12.01.2018 and the confirmation dated 30.01.2019 were quashed and the property was directed to be handed back to the company; the question of retrospective application of the 2016 amendments was left open for the Supreme Court.

Statutory notifications cannot be amended or whittled down by administrative circulars - refund of 4% CVD/SAD paid through DEPB scrips - applicability of Section 27 of the Customs Act, 1962 to refund claims - limitation for claiming refund under an exemption notification

Statutory notifications cannot be amended or whittled down by administrative circulars - refund of 4% CVD/SAD paid through DEPB scrips - Whether the Tribunal was justified in following the Delhi High Court decision in Allen Diesels and holding that Board circulars cannot deny refund of SAD paid through DEPB scrips contrary to Notification No.102/2007-Cus. - HELD THAT: - The Court agreed with the Tribunal's reliance on Allen Diesels. Administrative circulars issued by the Board which purport to restrict, curtail or withdraw benefits conferred by a statutory exemption notification cannot alter or curtail the scope of that notification. The decisions of the Apex Court in Sandur Micro Circuits and the Delhi High Court in Pioneer India Electronics were held to support the principle that circulars cannot impose conditions that have the effect of whittling down the statutory exemption. Consequently, the Tribunal correctly treated the circulars relied upon by the Revenue as ineffective to defeat the entitlement to refund under Notification No.102/2007-Cus. [Paras 15, 16, 19]

Tribunal correctly relied on Allen Diesels; circulars cannot negate or restrict the statutory exemption in Notification No.102/2007-Cus and cannot be used to deny refund of SAD paid through DEPB scrips.

Applicability of Section 27 of the Customs Act, 1962 to refund claims - limitation for claiming refund under an exemption notification - Whether the limitation period under Section 27/Notification No.93/2008-Cus applies so as to bar the assessee's refund claims where deficiencies in the refund applications were cured after the DEPB scheme had lapsed. - HELD THAT: - The Court held that Section 27 and the amendment imposing a time limit cannot be invoked to curtail the right to claim refund arising under Notification No.102/2007-Cus for SAD refundable on subsequent sale. Relying on the Delhi High Court's decision in Sony India and authority of the Apex Court in Ranbaxy/Hamdard context, the Court observed that where a refund claim is defective the Revenue must promptly inform the claimant to cure defects or proceed to adjudicate within a short time; it cannot permit curing of defects after allowing the process to languish and then reject claims as time-barred because the DEPB scheme lapsed. Given that refund under the exemption arises upon completion of subsequent sale (an event not wholly within the importer's control), imposition of the limitation by administrative or later amendment cannot defeat the statutory entitlement. Therefore Section 27/Notification No.93/2008-Cus was held not to be applicable to deny the claims on limitation grounds in the facts of the present case. [Paras 20, 21]

Limitation under Section 27/Notification No.93/2008-Cus cannot be applied to bar the refund claims where the conditions of Notification No.102/2007-Cus are fulfilled and defects were not promptly dealt with by the Revenue; the claims are not time-barred on the stated grounds.

Refund of 4% CVD/SAD paid through DEPB scrips - statutory notifications cannot be amended or whittled down by administrative circulars - Whether 4% SAD paid through DEPB scrips can be refunded in cash where the DEPB scheme has lapsed. - HELD THAT: - Applying the foregoing conclusions, the Court held that where the DEPB scheme has lapsed the assessee is nonetheless entitled to the benefit of Notification No.102/2007-Cus and may claim refund in cash. The administrative instruction to re-credit DEPB scrips cannot be allowed to defeat the statutory entitlement to refund in cash once the conditions of the exemption notification are satisfied. [Paras 22]

Even if the DEPB scheme has lapsed, the assessee is entitled to claim and receive refund of 4% SAD in cash where Notification No.102/2007-Cus conditions are fulfilled; re-crediting to DEPB scrips cannot be enforced to deny a cash refund.

Final Conclusion: All three substantial questions of law were answered in favour of the assessee: the Tribunal rightly followed Allen Diesels; limitation under Section 27/Notification No.93/2008-Cus could not be applied to defeat the refund claims; and SAD paid through DEPB scrips is refundable in cash where the exemption notification's conditions are met. The Revenue's appeal is dismissed.

Exemption from Special Additional Duty (SAD) under Notification No. 29/2010-Cus. - eligibility for concessional Countervailing Duty (CVD) under Notification No. 04/2006-C.E. - retail sale price (RSP) declared on pre-packaged goods - requirement of evidence to displace declared RSP for valuation - invocation of extended period of limitation under Section 28(4) of the Customs Act - confiscation, redemption and penalty under Sections 111, 125 and 114A of the Customs Act

Exemption from Special Additional Duty (SAD) under Notification No. 29/2010-Cus. - retail sale price (RSP) declared on pre-packaged goods - Whether exemption from SAD under Notification No. 29/2010-Cus. could be denied because the importer had not yet paid VAT or was alleged to intend captive consumption - HELD THAT: - The Tribunal held that Notification No. 29/2010-Cus. requires declaration of the RSP on pre-packaged goods as per the Standards of Weights and Measures Act/Rules and contains no condition that exemption is contingent upon actual payment of VAT at the time of import. At the stage of import the declared RSP on the package satisfies the only condition specified in the Notification; the Department cannot, at assessment, assume future events (such as non-payment of VAT or captive consumption) to deny the exemption. The seizure and denial of SAD on the premise that VAT would not be discharged or that goods were for captive consumption was therefore premature and unsupported by the Notification's text or evidence (paras 17-19, 31). [Paras 17, 18, 19, 31]

Exemption from SAD under Notification No. 29/2010-Cus. cannot be denied merely because VAT was not yet paid or on suspicion of captive consumption where RSP was properly declared; denial and related seizure set aside.

Eligibility for concessional Countervailing Duty (CVD) under Notification No. 04/2006-C.E. - requirement of evidence to displace declared RSP for valuation - re-determination of assessable value on basis of MRP/RSP - Whether the Department could deny concessional rates of CVD by rejecting the declared RSP and enhancing value on the basis of market invoices (e.g., of a domestic manufacturer) without direct evidence connecting higher sale prices to the imported consignments - HELD THAT: - The Tribunal found the Adjudicating Authority misinterpreted the definition and effect of declared RSP: once RSP is declared on pre-packaged goods, that price is the transaction value unless positive evidence shows otherwise. The authority's speculation that additional charges ought to be added to the declared RSP and that the importer sold at higher prices was unsupported by sale invoices or reliable evidence linking higher retail realisations to the impugned imports. Documents and invoices of a domestic manufacturer (M/s. India Cements Ltd.) cannot be superimposed to enhance value of imports from another country in absence of connecting evidence or reliance on the Customs Valuation Rules. Accordingly, the denial of concessional CVD rates premised on such valuation adjustments was unsustainable (paras 20-23, 26, 30-31). [Paras 22, 23, 26, 30, 31]

Denial of concessional CVD by rejecting declared RSP and enhancing value on unrelated market invoices lacks evidentiary basis and is set aside.

Invocation of extended period of limitation under Section 28(4) of the Customs Act - requirement of cogent evidence of suppression or mis-statement to invoke extended period - Whether the extended period of limitation could be invoked against earlier imports in absence of cogent evidence of suppression or mis-declaration linking sales at higher rates to the impugned imports - HELD THAT: - The Tribunal applied its earlier decisions and observed that the Department relied largely on statements and lacked invoices or documentary evidence connecting alleged higher retail sales to the specific imports. Many earlier imports occurred before self-assessment regimes and no incontrovertible evidence of suppression or mis-statement was produced to justify invoking the extended period. On these grounds, demands based on extended limitation were held unsustainable (paras 25-29). [Paras 25, 27, 28, 29]

Proceedings invoking the extended period are hit by limitation in absence of cogent evidence of suppression or mis-declaration; extended period invocation unsustainable.

Confiscation, redemption and penalty under Sections 111, 125 and 114A of the Customs Act - requirement of legal and factual basis for confiscation and penalty - Whether confiscation of the seized consignments, levy of redemption fine and imposition of penalty could be sustained where the foundational demands for differential duty and denial of exemptions were unsupported - HELD THAT: - Having set aside the demands of SAD and CVD for lack of legal and evidentiary basis and having held that extended limitation could not be invoked, the Tribunal concluded that consequential measures-confiscation, redemption fine and penalty imposed under Sections 111, 125 and 114A-could not stand. The impugned order's findings were internally inconsistent and not supported by admissible evidence; consequently, the confiscation, redemption option and penalty were quashed as arising from the unsustainable demands (paras 30-33). [Paras 30, 32, 33]

Confiscation, redemption fine and penalty set aside as they flow from unsustainable demands; impugned order vacated.

Final Conclusion: The Tribunal allowed the appeal: demands for enhanced CVD and denial of SAD were set aside for lack of evidentiary and legal basis, invocation of the extended period was held unsustainable, and consequential confiscation, redemption fine and penalty were quashed. The matter is disposed with consequential reliefs, if any, in accordance with law.

Inherent power under Rule 11 of NCLAT Rules, 2016 - withdrawal/settlement of petition before constitution of committee of creditors - prescribed procedure under Section 12-A of the IBC read with Regulation 30-A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations - proceeding in rem and necessity of consulting committee of creditors - abuse of process

Inherent power under Rule 11 of NCLAT Rules, 2016 - withdrawal/settlement of petition before constitution of committee of creditors - Whether this Appellate Tribunal could, in exercise of its inherent power under Rule 11 of the NCLAT Rules, record the settlement and set aside the Adjudicating Authority's order admitting the Section 7 petition and quash the CIRP. - HELD THAT: - The Tribunal held that the Supreme Court's observation in Swiss Ribbons permitting an application to the Adjudicating Authority under Rule 11 of the NCLT Rules before constitution of the committee of creditors cannot be read as authorising this Appellate Tribunal to exercise inherent powers under Rule 11 of the NCLAT Rules to allow withdrawal or record settlement. Inherent power is to be exercised only where no effective statutory remedy exists and not to bypass a prescribed procedure. The Tribunal observed that the remedy for withdrawal/settlement where applicable is provided under Section 12-A of the IBC read with Regulation 30-A, and that accepting the parties' request to record settlement at the appellate stage would amount to abuse of process in the presence of the statutory procedure. [Paras 7, 10, 11, 12, 14]

Application to take on record the settlement and to set aside the impugned order under Rule 11 of the NCLAT Rules was rejected; the Appellate Tribunal will not exercise inherent power to quash the CIRP where a statutory procedure exists.

Prescribed procedure under Section 12-A of the IBC read with Regulation 30-A of the Regulations - abuse of process - Whether the parties should be directed to invoke the statutory procedure for withdrawal of the petition before the Adjudicating Authority instead of seeking relief before this Appellate Tribunal. - HELD THAT: - The Tribunal noted that the law prescribes a mechanism for withdrawal of petitions filed under Sections 7, 9 or 10 of the IBC both before and after constitution of the committee of creditors. Where a settlement is reached at the appellate stage, the applicant may file the statutory application (Form-FA) under Section 12-A read with Regulation 30-A before the Adjudicating Authority. The parties did not explain why they failed to use the prescribed remedy. Given the availability of this effective alternative, the invocation of inherent jurisdiction by this Tribunal was inappropriate and would amount to an abuse of process. [Paras 12, 13, 14]

Parties are required to follow the statutory procedure and approach the Adjudicating Authority under Section 12-A/Regulation 30-A for withdrawal; appellate inherent jurisdiction will not be exercised to bypass that route.

Authority of prior judgments - limits of appellate inherent jurisdiction - Whether the relied upon precedents (including Swiss Ribbons, Brilliant Alloys and Kamal Singh) support exercise of inherent appellate power by this Tribunal to record settlement and set aside the CIRP. - HELD THAT: - The Tribunal examined the cited authorities and concluded that Swiss Ribbons permits the Adjudicating Authority (NCLT) to exercise inherent powers before constitution of the CoC, but does not empower the Appellate Tribunal to exercise its inherent jurisdiction for the same purpose. Brilliant Alloys was held to recognise that certain regulatory requirements may be directory in exceptional facts, but those facts differ from the present case. Kamal Singh affirmed that a petitioning creditor may seek withdrawal before the Adjudicating Authority under Rule 11 of NCLT Rules when settled, but it does not establish a precedent for the Appellate Tribunal to act in place of the Adjudicating Authority. Thus, none of the judgments supported the parties' request to bypass the statutory procedure. [Paras 6, 7, 8, 9]

Cited precedents do not justify this Appellate Tribunal exercising its inherent power to record settlement and quash the CIRP; the precedents distinguish between powers of the Adjudicating Authority and the Appellate Tribunal.

Final Conclusion: I.A. No. 2122 of 2021 is dismissed. The Appellate Tribunal declined to exercise inherent jurisdiction to record the settlement or set aside the impugned order; the parties must seek withdrawal under the statutory procedure before the Adjudicating Authority under Section 12-A read with Regulation 30-A.

Dispute under Insolvency and Bankruptcy Code - Prima facie case - Interim stay of Corporate Insolvency Resolution Process - Mobilox Innovations test for pre-existing dispute - Spurious dispute

Dispute under Insolvency and Bankruptcy Code - Prima facie case - Existence of a pre existing dispute such as to defeat admission under Section 9 of the IBC and whether a prima facie case lies in favour of the Corporate Debtor. - HELD THAT: - The Corporate Debtor repeatedly sought reconciliation and production of work completion reports for the invoices in question, while the Operational Creditor contends it has produced documents proving completion of work and that payment was only deferred under a 'payable when able' position. The Tribunal noted the Corporate Debtor began pressing for reconciliation only after demand letters were sent on 2.8.2019 and 6.2.2020, and that prior to February 2018 invoices had been regularly paid. Balancing these facts, and having perused the record and submissions, the Tribunal concluded that the alleged dispute appears to have been raised late and may be spurious; on the present record a prima facie case in favour of the Corporate Debtor is not established. [Paras 4, 5, 8]

No prima facie case is made out in favour of the Appellant; the alleged dispute does not presently defeat the Operational Creditor's claim.

Interim stay of Corporate Insolvency Resolution Process - Spurious dispute - Whether an interim stay of the CIRP should be granted to the Corporate Debtor pending final disposal of the appeal. - HELD THAT: - The Appellate Tribunal considered whether irreparable harm would follow if stay was refused and whether the balance of convenience favoured the Appellant. Having found no prima facie case and noting the parties' readiness for early final hearing, along with the IRP having refrained from further CIRP steps pursuant to earlier directions, the Tribunal held there was insufficient cogent reason to grant a stay. The Tribunal emphasised that its refusal to grant interim relief is without prejudice to the final adjudication on merits. [Paras 8, 10, 11]

Application for interim stay is refused; CIRP is not stayed by this order.

Mobilox Innovations test for pre-existing dispute - Whether the Mobilox Innovations principle applies to determine the existence and effect of a pre existing dispute in the admitted Section 9 application. - HELD THAT: - The Tribunal recorded the binding ratio in Mobilox that a bona fide pre existing dispute defeats an application under Section 9 and observed that the applicability of that judgment (and whether any dispute is not false or spurious) is a question more appropriately examined at the final hearing of the appeal. The Tribunal therefore did not apply Mobilox finally at the interim stage but noted its relevance for the merits. [Paras 9]

Applicability of the Mobilox test is left for final hearing; not finally determined at the interim stage.

Final Conclusion: The Tribunal refused the application for interim stay of the CIRP, finding no prima facie case in favour of the Corporate Debtor and leaving the question of the bona fides and applicability of the Mobilox test to be decided at the final hearing; the appeal was listed for final hearing on 9th November 2021.

Pre-existing dispute under Section 5(6) of IBC, 2016 - Applicability of Mobilox test for existence of dispute - Indemnity and custody bond liability for losses - Rejection of Section 9 application on plausible contention standard

Pre-existing dispute under Section 5(6) of IBC, 2016 - Applicability of Mobilox test for existence of dispute - Indemnity and custody bond liability for losses - Existence of a pre existing dispute between the operational creditor and the corporate debtor and consequent maintainability of the Section 9 application. - HELD THAT: - Applying the test in Mobilox Innovations, the Tribunal examined whether there was a plausible, non spurious contention requiring further investigation such that the Section 9 petition was not maintainable. The contract and the custody and indemnity bond entrusted the service provider with responsibility for safe custody, protection and indemnity against loss, damage or shortages in respect of goods while in its custody. Communications between the parties (including letters dated 01.11.2012 and 10.12.2012), records of a joint meeting involving FCI, and the subsequent Settlement Agreement of 13.08.2014 (which regularised storage losses up to 0.5% and addressed transit losses and their apportionment) furnished material showing an ongoing controversy about shortages and allocation of losses. The Tribunal held that these documents together constituted a plausible contention that went beyond a patently feeble or illusory defence and therefore met the Mobilox standard of a pre existing dispute. The Tribunal also noted that the corporate debtor's failure to reply to the Section 8 notice did not preclude it from pleading existence of a dispute before the Adjudicating Authority. On that basis the Adjudicating Authority's rejection of the Section 9 application was affirmed as in accordance with the applicable law and precedent. [Paras 14, 15, 16, 18, 19]

There existed a pre existing dispute between the parties; the Section 9 application was rightly dismissed and the Adjudicating Authority's order is confirmed.

Final Conclusion: The Appeal is dismissed; the Adjudicating Authority rightly found a pre existing dispute (on the basis of the contract, indemnity bond, communications and the Settlement Agreement) and correctly dismissed the Section 9 petition under the Mobilox standard. No order as to costs.

Liquidation under Section 33 of the Insolvency and Bankruptcy Code - Commercial wisdom of the Committee of Creditors - Appointment of liquidator under Section 34 of the Insolvency and Bankruptcy Code - Liquidation process under Chapter III and IBBI (Liquidation Process) Regulations - Powers of the liquidator and cessation of board and KMP functions - Entitlement of the liquidator to fees under the Liquidation Process Regulations - Bar on suits and legal proceedings during liquidation subject to the Code - Public notice and filing of the liquidation order with the Registrar of Companies

Liquidation under Section 33 of the Insolvency and Bankruptcy Code - Commercial wisdom of the Committee of Creditors - Whether the corporate debtor should be ordered into liquidation based on the Committee of Creditors' decision - HELD THAT: - The Tribunal recorded that the Committee of Creditors (CoC) decided, by a voting share of 93.31% following e-voting, to liquidate the corporate debtor. The Tribunal found the reasons recorded in the minutes-lack of business prospects, inadequate assets for repayment, and impracticability of a viable resolution plan-to be genuine and convincing. Relying on the settled principle recognising the commercial wisdom of the CoC, the Tribunal allowed the application for liquidation under Section 33 of the Code.

Application for liquidation of the corporate debtor allowed and liquidation ordered.

Appointment of liquidator under Section 34 of the Insolvency and Bankruptcy Code - Entitlement of the liquidator to fees under the Liquidation Process Regulations - Appointment of the proposed liquidator and his entitlement to fees - HELD THAT: - The Tribunal accepted the written consent of the proposed liquidator and appointed him under Section 34(1) of the Code. The Tribunal directed that the liquidator would be entitled to fees as provided in the relevant provision of the IBBI (Liquidation Process) Regulations and authorised him to conduct the liquidation proceedings in accordance with Chapter III of the Code and the Liquidation Process Regulations.

Proposed liquidator appointed and entitled to fees as per the Liquidation Process Regulations; directed to initiate liquidation proceedings.

Powers of the liquidator and cessation of board and KMP functions - Liquidation process under Chapter III and IBBI (Liquidation Process) Regulations - Effect of liquidation order on powers of board, KMP and other officers and vesting of powers in the liquidator - HELD THAT: - The Tribunal directed that upon initiation of liquidation, all powers of the board of directors, key managerial personnel and partners of the corporate debtor shall cease and shall vest in the liquidator. The liquidator was directed to follow the statutory liquidation process and given the powers necessary for carrying out the Chapter-III liquidation regime.

Powers of board, KMP and partners cease and vest in the liquidator; liquidator to follow statutory liquidation process.

Public notice and filing of the liquidation order with the Registrar of Companies - Requirement to issue public notice and to send the liquidation order to the Registrar of Companies - HELD THAT: - The Tribunal directed that the corporate debtor be liquidated in the manner prescribed, including issuance of a public notice stating that the corporate debtor is in liquidation. The liquidator was directed to send the liquidation order to the Registrar of Companies under which the company is registered, as part of the statutory steps in the liquidation process.

Public notice to be issued and liquidation order to be sent to the Registrar of Companies.

Bar on suits and legal proceedings during liquidation subject to the Code - Effect of liquidation on institution of suits and legal proceedings by or against the corporate debtor - HELD THAT: - The Tribunal directed that, subject to the Code, no suit or other legal proceeding shall be instituted by or against the corporate debtor after initiation of liquidation, except that the liquidator may institute proceedings on behalf of the corporate debtor with the prior approval of the Adjudicating Authority. This follows the statutory limitation on litigations during liquidation to centralise and regulate legal actions through the liquidator.

Post-liquidation, suits by or against the corporate debtor are barred except as permitted through the liquidator with prior approval of the Adjudicating Authority.

Liquidation process under Chapter III and IBBI (Liquidation Process) Regulations - Direction to corporate debtor's personnel to cooperate and effect of liquidation order as notice of discharge - HELD THAT: - The Tribunal directed that personnel of the corporate debtor shall extend all cooperation to the liquidator in managing the liquidation process. It further held that the liquidation order shall be deemed to be a notice of discharge to the officers, employees and workmen of the corporate debtor, except insofar as the liquidator continues the business during the liquidation process.

Corporate debtor's personnel to cooperate; liquidation order to be treated as notice of discharge to employees subject to continued business.

Final Conclusion: The Tribunal allowed the application for liquidation of the corporate debtor, appointed the proposed liquidator, and issued directions consistent with Chapter III of the Code and the IBBI Liquidation Process Regulations regarding the liquidator's powers, fees, public notice, filing with the Registrar of Companies, cooperation by corporate personnel, and the bar on suits during liquidation.

Refund under Rule 5 of CENVAT Credit Rules, 2004 - debit from CENVAT credit account - compliance with Para 2(h) of Notification No.27/2012-CE (NT) dated 18.06.2012 - ST-3 Returns - remand for verification

Refund under Rule 5 of CENVAT Credit Rules, 2004 - debit from CENVAT credit account - compliance with Para 2(h) of Notification No.27/2012-CE (NT) dated 18.06.2012 - ST-3 Returns - remand for verification - The appellant's refund claim was remanded to the Adjudicating Authority to verify whether the amount claimed as refund had been debited in the CENVAT credit account as reflected in subsequent ST-3 Returns and, if so, to treat such reversal as compliance with Para 2(h) and process the refund in accordance with law. - HELD THAT: - The Adjudicating Authority rejected the refund on the ground that the appellant had not debited the amount claimed from its CENVAT credit account, contrary to Para 2(h) of Notification No.27/2012-CE (NT). The appellant asserted that the debit was made and is reflected in its ST-3 Return for the period ended 30.06.2017, but the adjudicating officer had no opportunity to verify the asserted reversal in the subsequent period. While noting precedents relied upon by both parties and the High Court's pronouncement on computation of limitation, the Tribunal found that the factual question whether the reversal is reflected in the ST-3 Returns could not be resolved on the record before it. Consequently the Tribunal remanded the matter to the Adjudicating Authority with directions to examine the appellant's subsequent ST-3 Returns, and if the reversal is shown, to treat that as compliance with Para 2(h) and proceed to adjudicate and process the refund claim in accordance with law. [Paras 3, 6, 7]

Appeal allowed by way of remand directing the Adjudicating Authority to verify the ST-3 Returns for the reversal; if established, to treat it as compliance with Para 2(h) and process the refund in accordance with law.

Final Conclusion: The Tribunal allowed the appeal by remanding the refund claim to the Adjudicating Authority with directions to verify the appellant's ST-3 Returns for the reversal; upon establishing the reversal, the authority shall treat it as compliance with Para 2(h) of Notification No.27/2012-CE (NT) and process the refund in accordance with law.

Refund of service tax - limitation under Section 11B of the Central Excise Act, 1944 - tax paid by mistake - rejection of refund claims as time-barred - Article 265 of the Constitution

Refund of service tax - limitation under Section 11B of the Central Excise Act, 1944 - tax paid by mistake - Article 265 of the Constitution - Whether refund claims for service tax that were rejected as time-barred under Section 11B could be sustained where the tax was paid by mistake - HELD THAT: - The Tribunal found facts undisputed that service tax had been paid and refund claims were filed, but the adjudicating authorities rejected parts of the claims solely on the ground of limitation under Section 11B. Relying on the reasoning of the High Court of Madras in 3E Infotech, which considered precedent of the Supreme Court and other High Courts, the Tribunal accepted the principle that a claim for refund of tax paid by mistake cannot be defeated merely because the period of limitation under Section 11B has expired. The Tribunal observed that permitting the Revenue to retain excess tax paid would conflict with the mandate of Article 265 of the Constitution that tax shall be levied or collected only by authority of law. Since the authorities below did not adjudicate the appellant's contention that limitation should be reckoned from the date of cause of action in certain claims and rejected the claims as time-barred, the Tribunal held those rejections unsustainable and set aside the impugned orders to the extent of the time-barred denials, allowing the appeals with consequential reliefs as per law.

The rejections of the appellant's refund claims as barred by limitation under Section 11B are set aside; appeals allowed and the claims are to be considered on merits consistent with the principle that refunds of tax paid by mistake are not to be barred merely by expiry of Section 11B.

Final Conclusion: The Tribunal allowed the appeals, set aside the impugned orders insofar as refund claims were rejected as time-barred, and directed that the refund claims be considered in accordance with the principle that tax paid by mistake cannot be retained by the Revenue merely because the limitation period under Section 11B has expired.

Condonation of delay - prescribed period of limitation for filing first appeal - grace period for condonation of delay - binding precedent of the Supreme Court

Condonation of delay - prescribed period of limitation for filing first appeal - grace period for condonation of delay - binding precedent of the Supreme Court - Whether the first appeal filed on 14.08.2019 was time barred and whether the First Appellate Authority could condone the delay beyond the one month condonable period. - HELD THAT: - The statutory scheme permits filing the first appeal within two calendar months from communication of the order and empowers the First Appellate Authority to condone delay, if satisfied, only for an additional one calendar month. The order in original was communicated on 14.05.2019. The two month period plus the one month condonable grace expired on 13.08.2019. The appeals were filed on 14.08.2019, which is beyond the condonable period. The Supreme Court's decision in M/s Singh Enterprises precludes condonation of delay beyond the prescribed grace period and therefore is binding. In view of these facts and binding precedent, the First Appellate Authority was correct in treating the appeals as time barred and had no power to condone the delay that extended beyond the one month grace period. [Paras 5, 6]

Appeals dismissed as time barred; delay beyond the one month condonable period could not be condoned.

Final Conclusion: The Tribunal declined to interfere with the First Appellate Authority's rejection of the appeals as time barred because the appeals were filed after expiry of the two month period plus the one month condonable grace, and the Supreme Court's ruling prohibits condonation beyond that grace period.

Appropriation of deposited sums towards confirmed demands - disallowance and recovery of Cenvat Credit on the basis of alleged bogus invoices - dropping of proceedings against a noticee - appeal under section 35G of the Central Excise Act - application of an earlier judgment to dispose of a subsequent appeal

Appropriation of deposited sums towards confirmed demands - dropping of proceedings against a noticee - application of an earlier judgment to dispose of a subsequent appeal - Whether the Revenue's appeal against the Tribunal's common order (which rejected the Revenue's appeals and reversed the Commissioner's appropriation of amounts deposited by the respondent) could be sustained or must be disposed of in terms of this Court's earlier judgment in Central Excise Appeal No. 1 of 2020. - HELD THAT: - The High Court noted that the impugned CESTAT order is a common order disposing a series of connected appeals, including the present appeal by the Revenue under section 35G of the Central Excise Act. All material aspects and issues raised in the present appeal were held to have been dealt with by this Court in Central Excise Appeal No. 1 of 2020. Because the proceedings and the questions decided are common, the Court applied the reasoning and result of its earlier judgment dated 23.09.2021 in Central Excise Appeal No. 1 of 2020 to the instant appeal and disposed of the present appeal accordingly. No separate or additional adjudication was undertaken in the present order; the appeal was disposed of by following the earlier decision which addressed the same controversies, including the reversal of the Commissioner's appropriation of the sums deposited by the respondent and the dropping of proceedings against the respondent arising from the show-cause notice.

The present appeal is disposed of in terms of this Court's judgment dated 23.09.2021 in Central Excise Appeal No. 1 of 2020; the Tribunal's common order is affirmed as disposed of in accordance with that judgment.

Final Conclusion: The Revenue's appeal is disposed of by applying and following this Court's earlier judgment in Central Excise Appeal No. 1 of 2020 (dated 23.09.2021); the impugned common order of the Tribunal stands dealt with and the appeal is disposed accordingly.

Personal hearing - Revisional order - De novo consideration - Judicial direction - Setting aside for non-compliance with earlier court order

Personal hearing - Revisional order - Judicial direction - Setting aside for non-compliance with earlier court order - De novo consideration - Validity of the revisional/re-assessment order dated 23.02.2021 in light of an earlier judicial direction to afford personal hearing - HELD THAT: - The Court examined whether the impugned revisional order could stand where an earlier order of this Court (dated 22.07.2019 in W.P.No.9288 of 2015) had directed that the petitioner be given an opportunity of personal hearing. Although the Court noted its earlier view that personal hearing is not a statutory imperative for a revision under the TNVAT Act, the present case required compliance with the specific judicial direction previously issued by another Single Judge. The records did not demonstrate that a personal hearing had been afforded before passing the impugned order. For that reason the impugned order was vulnerable for non-compliance with the earlier judicial direction and therefore had to be set aside. By consent of the parties the Court directed that a personal hearing be granted on the fixed date and that the respondent shall redo the revision/re-assessment afresh (de novo) after the personal hearing and pass final orders within the specified timeframe. [Paras 5, 6]

Impugned order dated 23.02.2021 set aside for failure to give personal hearing as directed; personal hearing ordered and revisional/re-assessment to be done de novo with time-bound directions.

Final Conclusion: The revisional order for Assessment year 2013-14 dated 23.02.2021 was quashed solely for non-compliance with an earlier judicial direction to grant personal hearing; the matter is remitted for fresh personal hearing and de novo revision/re-assessment with time-bound directions to the respondent.

Service of pre order notice in accordance with prescribed procedure - affixture at last known place of business or residence under Rule 52(1)(d) - applicability of TNGST Rules to proceedings under the CST Act - setting aside of orders for want of valid service - remand for fresh proceedings and direction for expeditious conclusion

Service of pre order notice in accordance with prescribed procedure - affixture at last known place of business or residence under Rule 52(1)(d) - setting aside of orders for want of valid service - Impugned revision orders set aside because the pre order notice dated 11.12.2020 was not served in accordance with the TNGST Rules. - HELD THAT: - The Court accepted the uncontested factual position that the first personal hearing notice dated 11.12.2020 was not served on the writ petitioner and that there was no affixure at the writ petitioner's last known place of business or residence as envisaged by Rule 52(1)(d) of the Tamil Nadu General Sales Tax Rules, 1959. The Court noted that TNGST Rules apply to proceedings under the CST Act for purposes of service. Because the prescribed modes of service were not followed, there was no valid service of the pre order notice. For that reason alone the impugned orders dated 30.06.2021 were set aside. The Court expressly refrained from expressing any opinion on the merits of the assessments or revisions. [Paras 6]

Impugned orders dated 30.06.2021 set aside solely on ground of non service of pre order notices in accordance with TNGST Rules.

Remand for fresh proceedings and direction for expeditious conclusion - applicability of TNGST Rules to proceedings under the CST Act - Respondent directed to recommence proceedings afresh, serve notices in accordance with prescribed procedure and conclude the proceedings within a stipulated time. - HELD THAT: - Having set aside the impugned orders for defective service, the Court directed the respondent to initiate fresh proceedings, ensuring service of notices in accordance with the TNGST Rules (noting their applicability to CST proceedings for service). The Court mandated expeditious disposal and gave a timeline of twelve weeks from the date of the order for completion of the proceedings, while clarifying that no view had been taken on the merits. [Paras 6, 7]

Proceedings to be recommenced and concluded as expeditiously as the respondent's business permits and in any event within twelve weeks; writ petitions disposed of accordingly.

Final Conclusion: The revisional orders of 30.06.2021 (references CST:676385/2004-05 and TNGST:3261190/2004-05) were set aside solely for want of valid pre order service under the TNGST Rules; the department is directed to recommence proceedings with proper service and conclude them within twelve weeks, with no expression of opinion on merits.

Proclamation for person absconding under Section 82 Cr.P.C. - publication modes under Section 82(2) Cr.P.C. are conjunctive - requirement of court's reason to believe and application of mind before issuing warrants - non-application of mind vitiates proceedings under Sections 82/83 Cr.P.C. - attachment of property under Section 83 Cr.P.C. as an extraordinary remedy - consequential quashing of proceedings/FIRs initiated pursuant to defective proclamation

Proclamation for person absconding under Section 82 Cr.P.C. - requirement of court's reason to believe and application of mind before issuing warrants - publication modes under Section 82(2) Cr.P.C. are conjunctive - Validity of the Trial Court's declaration of the petitioner as an 'absconder' and publication of proclamation under Sections 82/83 Cr.P.C. - HELD THAT: - The Court held that Section 82 Cr.P.C. requires that issuance of proclamation be preceded by a warrant and by the court recording a 'reason to believe'-i.e., sufficient cause-that the person is absconding or concealing himself so that the warrant cannot be executed. The modes of publication in Section 82(2)(i) are mandatory and conjunctive; publication in a newspaper is optional. The Trial Court failed to apply judicial scrutiny at multiple stages: it issued non-bailable warrants without awaiting the report on bailable warrants; ignored the fresh address placed on record and did not attempt service at that address; acted mechanically on the process-server's report despite indications that the registered address had been vacated years earlier; and did not record the requisite satisfaction or reasons before declaring the petitioner an absconder. For these reasons the declaration of absconding was held to be vitiated by non-application of mind and non-compliance with the statutory procedure. [Paras 11, 14, 15, 16, 22]

Declaration of the petitioner as an 'absconder' under Sections 82/83 Cr.P.C. was set aside for failure to record reasons and for non-compliance with the mandatory procedure.

Attachment of property under Section 83 Cr.P.C. as an extraordinary remedy - exhaustion of processes under Section 82 Cr.P.C. before attachment - Lawfulness of the Trial Court's order directing attachment of the petitioner's properties. - HELD THAT: - The Court reiterated that attachment of a person's property under Section 83 is an exceptional remedy which may be resorted to only after the processes under Section 82 have been properly exhausted. In the present case the Trial Court directed attachment without having complied with or exhausted the mandatory steps prescribed in Section 82-nor having recorded the necessary satisfaction that the accused was deliberately evading process-thereby rendering the attachment order unsustainable. [Paras 21, 22, 24]

Order for attachment of the petitioner's properties was set aside as passed without exhausting the processes under Section 82 and without proper application of mind.

Consequential quashing of proceedings/FIRs initiated pursuant to defective proclamation - Validity of FIR No. 338/2018 and FIR No. 231/2019 registered under Section 174A IPC consequent to the declaration of absconder. - HELD THAT: - Because the declaration of the petitioner as an absconder and the attendant processes were held to be vitiated by non-application of mind and procedural non-compliance, the Court found that criminal proceedings initiated on the basis of that declaration could not stand. The second FIR was noted to have been registered inadvertently as the impugned order was received twice at the police station. In consequence, both FIRs registered pursuant to the defective proclamation and directions were quashed. [Paras 17, 23, 24]

FIR No. 338/2018 and FIR No. 231/2019 registered under Section 174A IPC were quashed as consequential to the set-aside proclamation and related orders.

Final Conclusion: The petition was allowed: the Trial Court's orders under Sections 82/83 Cr.P.C. declaring the petitioner an absconder and directing attachment of his property were set aside for want of application of mind and non-compliance with statutory procedure, and the FIRs registered under Section 174A IPC arising from those orders were consequently quashed; the petitioner's undertaking to appear before the Trial Court was accepted.

Section 37 NDPS Act - bail barred unless court satisfied there are reasonable grounds for believing the accused is not guilty - Section 50 NDPS Act - right to be searched before a Gazetted Officer or Magistrate and effect of waiver - Section 67 NDPS Act - recorded disclosure leading to discovery - commercial quantity under the NDPS Act - presumptions under Sections 35 and 54 of the NDPS Act - retraction of disclosure statement and its evidentiary consequences

Section 37 NDPS Act - bail barred unless court satisfied there are reasonable grounds for believing the accused is not guilty - commercial quantity under the NDPS Act - Whether the petitioner should be enlarged on regular bail under the NDPS Act. - HELD THAT: - The Court applied the twin conditions of Section 37 NDPS Act and concluded that the petitioner was found in possession of a chemically verified commercial quantity of Methamphetamine and that her disclosure led to the discovery and arrest of other accused in whose possession further narcotics were recovered. The material indicates the petitioner formed part of a network involved in supply/sale of narcotics and the prosecution has prima facie evidence against her. Given the statutory scheme, the seriousness of the offence, and the quantitative and contextual evidence on record, the petitioner does not satisfy the requirement of reasonable grounds for believing she is not guilty; accordingly bail is not warranted. [Paras 14, 21, 22]

Bail is refused; the petition is dismissed.

Section 50 NDPS Act - right to be searched before a Gazetted Officer or Magistrate and effect of waiver - Section 67 NDPS Act - recorded disclosure leading to discovery - Whether alleged non-compliance with Section 50 and the manner/timing of witness examination under Section 67 disentitle the prosecution to rely on the seizure and disclosure for the purposes of bail. - HELD THAT: - The Court examined the contention that a lady officer did not accompany initial NCB officials and that searches and witness recordings were delayed. It found the petitioner was apprised of her Section 50 rights and waived the presence of a Gazetted Officer/Magistrate, electing search by NCB lady officers; the search and seizure and subsequent Section 67 disclosures resulted in discovery of other accused and further seizures. The Court treated delay in recording witness statements as a matter for trial and observed that notices had been issued contemporaneously; the alleged non-compliance did not, at bail stage, negate the prosecution material relied upon. [Paras 8, 14, 15, 17]

Alleged procedural lapses under Section 50 and timing of statements do not justify granting bail at this stage.

Retraction of disclosure statement and its evidentiary consequences - Section 67 NDPS Act - recorded disclosure leading to discovery - Whether the petitioner's subsequent retraction of her recorded statement under Section 67 vitiates the use of that statement for purposes of opposing bail. - HELD THAT: - The Court held that the petitioner's retraction is immaterial for the limited purpose of bail because the original disclosure led to the discovery and arrest of co-accused and recovery of substantial narcotics, thereby advancing the investigation and establishing a prima facie link. Retraction does not erase the operative consequences of the earlier disclosure which weigh against bail. [Paras 14]

Retraction of the Section 67 statement does not entitle the petitioner to bail; the disclosure's consequences remain operative.

Presumptions under Sections 35 and 54 of the NDPS Act - Section 37 NDPS Act - bail barred unless court satisfied there are reasonable grounds for believing the accused is not guilty - Whether statutory presumptions and the nature of NDPS offences affect the grant of bail. - HELD THAT: - The Court noted the NDPS Act contains statutory presumptions regarding possession and culpability which, together with the Act's object to curb drug trafficking and the penalties prescribed for commercial quantity offences, render the grant of bail exceptional. These legal features inform the stringent approach under Section 37 and, on the facts, weigh against enlargement of the petitioner on bail. [Paras 12, 20, 21]

Statutory presumptions and the seriousness of NDPS offences support refusal of bail in the present case.

Final Conclusion: The High Court refused regular bail to the petitioner under Section 37 of the NDPS Act on the view that she was found in possession of a chemically verified commercial quantity of methamphetamine, her disclosure led to further recoveries and arrests indicating involvement in a narcotics network, alleged procedural deficiencies and retraction do not afford entitlement to bail at this stage, and none of the observations affect the merits of the case which remain for trial.