TaxTMI Updates e-Newsletter
Oct 09,2024

Appellate order binding on subordinate authority - insubordination of revenue officer - departmental disciplinary action for non-compliance - hierarchy in CGST administration - remand for fresh merits adjudication of refund claim - principles of natural justice

Appellate order binding on subordinate authority - insubordination of revenue officer - hierarchy in CGST administration - Whether the Assistant Commissioner could ignore the Joint Commissioner's appellate direction and again reject the refund application as time barred. - HELD THAT: - The Court found that the Joint Commissioner had allowed the appeal and remanded the matter to the proper officer to examine the refund application afresh and on merits, with directions to pass a detailed speaking order and to adhere to the principles of natural justice. Despite that appellate direction, the Assistant Commissioner again dismissed the refund application as time barred. The Court held that a subordinate officer cannot arrogate to himself a decision inconsistent with the appellate order, observing that such refusal to comply amounts to insubordination and signifies a failure of the hierarchical administrative system under the CGST. The Court emphasised that non-compliance with appellate orders by subordinate officers undermines public faith in the appellate process and leads to unnecessary litigation, and therefore requires strict departmental response. [Paras 6, 7]

The Assistant Commissioner's repeated dismissal of the refund application despite the Joint Commissioner's order was set aside as an act of insubordination; the Commissioner was directed to initiate appropriate departmental proceedings against the Assistant Commissioner for major penalty.

Remand for fresh merits adjudication of refund claim - principles of natural justice - What is the appropriate remedy for the petitioner's refund claim following the appellate direction and the Assistant Commissioner's non-compliance. - HELD THAT: - In view of the appellate order that the refund claim should be examined on merits and the Assistant Commissioner's failure to do so, the Court set aside the Assistant Commissioner's order dated 24.01.2024. The Court directed the Commissioner to appoint another officer to deal with the petitioner's refund application afresh, requiring the newly appointed officer to decide the application purely on merits and to adhere to principles of natural justice. The Court stipulated a fixed timeline for this fresh adjudication to ensure expeditious disposal. [Paras 2, 9]

The order of the Assistant Commissioner dated 24.01.2024 was set aside and the matter was remanded for fresh adjudication on merits by a differently appointed officer, to be decided within two months.

Final Conclusion: The writ petition was allowed: the Assistant Commissioner's order rejecting the refund was set aside; the Commissioner was directed to initiate major penalty proceedings against the Assistant Commissioner for insubordination and to appoint another officer to decide the refund claim on merits within two months.

Input Tax Credit - restriction on availment of input tax credit under Section 16(4) - retrospective entitlement to input tax credit under amended Section 16(5) - remand for reconsideration of assessment in view of statutory amendment - garnishee proceedings-withdrawal limited to specific demand

Input Tax Credit - retrospective entitlement to input tax credit under amended Section 16(5) - remand for reconsideration of assessment in view of statutory amendment - Assessment set aside and remitted for fresh adjudication in light of the amendment inserting sub section (5) to section 16 - HELD THAT: - The Court found that the assessing authority disallowed input tax credit solely on the ground that claims were lodged beyond the period prescribed by the pre amendment provision. Subsequent statutory amendment by the Finance (No. 2) Act, 2024 inserted sub section (5) to section 16, which entitles registered persons to take ITC in returns filed up to 30 November 2021 for invoices/debit notes pertaining to Financial Year 2017 18 (among other years). In consequence, the reasons relied on in the impugned order no longer survive. The Court accordingly set aside the assessment order and directed the respondent to re do the assessment taking the cited amendment into account, permitting the petitioner to file objections by way of reply within three weeks and requiring the authority to consider any such reply and afford a reasonable opportunity of personal hearing before passing fresh orders. [Paras 5]

Impugned assessment order dated 31.01.2024 is set aside and remitted for fresh adjudication in accordance with the amendment; petitioner to file reply within three weeks and to be afforded personal hearing.

Garnishee proceedings-withdrawal limited to specific demand - restriction on availment of input tax credit under Section 16(4) - Garnishee proceedings to be withdrawn insofar as they relate to the demand arising from denial of ITC under Section 16(4) for 2017 2018; other garnishee demands may continue - HELD THAT: - Having set aside the assessment to enable reconsideration in light of the amendment, the Court directed that garnishee proceedings initiated subsequent to the impugned order be withdrawn to the extent they relate to the demand premised on denial of ITC under Section 16(4) for the period 2017 2018 covered by that order. The respondent was, however, granted liberty to continue garnishee proceedings in respect of any other demand that formed part of the same garnishee action. [Paras 5]

Garnishee proceedings withdrawn only insofar as they relate to the denial of ITC for 2017 2018; garnishee may proceed in respect of other demands.

Final Conclusion: Writ petition disposed by setting aside the assessment dated 31.01.2024 and remitting the matter for fresh adjudication in accordance with the amendment inserting sub section (5) to section 16; petitioner permitted to file objections within three weeks and to be heard; garnishee proceedings withdrawn only in respect of the ITC denial for 2017 2018, other demands unaffected.

Condonation of delay in filing appeal - dismissal for delay without considering condonation application - remand for fresh adjudication on merits - pre-deposit requirement where tax already recovered - appeal under Section 107 of the WBGST/CGST Act, 2017 - order under Section 73 of the WBGST/CGST Act, 2017

Condonation of delay in filing appeal - dismissal for delay without considering condonation application - remand for fresh adjudication on merits - Appellate authority's rejection of the appeal on the ground of delay without considering the application for condonation of delay and the consequent remand for fresh consideration. - HELD THAT: - The appellate authority dismissed the appeal filed against an order passed under Section 73 of the WBGST/CGST Act, 2017 on the ground of delay, without adjudicating the application for condonation of the 53-day delay. The High Court noted there was no adjudication on merits by the appellate authority and, in view of the Appellate Tribunal not being constituted, found it necessary to remit the matter to the appellate authority so that the records may be scrutinized and the appeal heard on its merits. The appellate authority is directed to hear and dispose of the appeal on merits expeditiously, preferably within six weeks from communication of the order. The remand is for fresh consideration and merits adjudication rather than for mere mechanical rejection of the condonation application. [Paras 4, 5, 6]

Matter remanded to the appellate authority for fresh adjudication on merits, with a direction to decide the appeal expeditiously preferably within six weeks.

Pre-deposit requirement where tax already recovered - appeal under Section 107 of the WBGST/CGST Act, 2017 - Whether the petitioner is required to make any further pre-deposit in view of recovery of the entire tax component prior to filing the appeal. - HELD THAT: - The court recorded the concession/acknowledgement that the entire tax component had already been recovered from the petitioner and observed that reconciliation was required. Having regard to the recovery of the tax, the court held that the petitioner shall not be required to make any further pre-deposit while the appellate authority proceeds to adjudicate the appeal on merits. This direction removes the immediate financial compliance barrier to the appeal's adjudication in light of the factual position regarding recovery. [Paras 2, 3, 7]

No further pre-deposit shall be required from the petitioner since the entire tax component has already been recovered.

Final Conclusion: Writ petition disposed by remitting the appeal to the appellate authority for fresh merit adjudication; appellate authority directed to decide the appeal expeditiously (preferably within six weeks) and the petitioner exempted from making any further pre-deposit as the tax has already been recovered.

Jurisdiction of Central GST authorities - avoidance of parallel investigation - application of Section 6(2) of the Central Goods and Services Tax Act, 2017 - scope of summons issued by Directorate General of GST Intelligence

Jurisdiction of Central GST authorities - application of Section 6(2) of the Central Goods and Services Tax Act, 2017 - avoidance of parallel investigation - Whether the Central authority (Respondent No.3) has jurisdiction to continue investigation where the State unit has already investigated the same subject-matter - HELD THAT: - The Court noted the petitioner's contention that parallel proceedings cannot be maintained and recorded the submission of the learned Standing Counsel for CGST that, where matters investigated by the State GST have been approved, the Central authority would close its proceedings in accordance with Section 6(2) of the CGST Act to avoid parallel investigation. Having considered the record including the State officer's communication of 09.08.2024, the Court directed that, insofar as transactions with M/s Ridhi Industries and M/s Amazonite Steels Pvt. Ltd. relate to the period covered by that communication, the Central authority shall not carry out any further investigation. The Court therefore gave effect to the principle of avoiding parallel investigations by restraining the Central authority from further probing those specific transactions for the period indicated in the State communication. [Paras 4, 8]

Respondent No.3 shall not carry out any further investigation in respect of the petitioner's transactions with M/s Ridhi Industries and M/s Amazonite Steels Pvt. Ltd. for the period covered by the communication dated 09.08.2024.

Scope of summons issued by Directorate General of GST Intelligence - jurisdiction of Central GST authorities - Whether the Respondent No.3 may proceed with investigation pursuant to the summons dated 21.06.2024 and 05.07.2024 in respect of M/s IESA Sales Pvt. Ltd. - HELD THAT: - The Court recorded the parties' submissions that no other authority except the DGGI, Guwahati Zonal Unit, had initiated investigation into the ITC availed from M/s IESA Sales Pvt. Ltd. The petitioner confirmed no objection to investigation into the IESA matter. On that basis the Court granted liberty to Respondent No.3 to carry out the investigation pursuant to the impugned summons insofar as they relate to M/s IESA Sales Pvt. Ltd., distinguishing that matter from the transactions already addressed by the State authority. [Paras 4, 8]

Respondent No.3 is at liberty to carry out the investigation pursuant to the summons dated 21.06.2024 and 05.07.2024 in respect of M/s IESA Sales Pvt. Ltd.

Final Conclusion: Writ petition disposed: DGGI permitted to continue investigation in respect of M/s IESA Sales Pvt. Ltd.; DGGI restrained from further investigating the petitioner's transactions with M/s Ridhi Industries and M/s Amazonite Steels Pvt. Ltd. for the period covered by the State communication dated 09.08.2024, in order to avoid parallel investigations under Section 6(2) of the CGST Act.

Anticipatory bail - prima facie evidence - demand of bribe by a public servant - custodial interrogation - corroboration by visitors' register and recorded conversation - flight risk and tampering with evidence - refusal of anticipatory bail

Anticipatory bail - prima facie evidence - corroboration by visitors' register and recorded conversation - demand of bribe by a public servant - flight risk and tampering with evidence - Petition for anticipatory bail under Section 438 CrPC refused. - HELD THAT: - The Court examined the prosecution material and found prima facie evidence connecting the petitioner to the alleged demand of bribe. The complainant stated that he was telephonically summoned by the petitioner and thereafter met him; this visit is corroborated by entry No. 18 in the visitors' register which records the complainant's visit and phone number. The prosecution also relies on a recorded conversation handed over by the complainant and an inventory indicating that the petitioner fled from the office with currency notes. The factual narrative that the petitioner used a less-lit secret passage and slipped away was accepted by the Court as consistent with the prosecution case. On the basis of these materials the Court concluded that the petitioner had not made out a case for anticipatory bail, and further discussion was avoided so as not to prejudice trial proceedings. [Paras 8, 9]

Anticipatory bail refused and petition dismissed.

Final Conclusion: The application for anticipatory bail is dismissed; interim orders, if any, are recalled and all pending applications are disposed of.

Refund under Section 54 of CGST Act - Rejection of refund for failure to produce assessment/provisional assessment/appeal or order - Requirement of opportunity of personal hearing before rejection - Validity of CBIC Circular No.151/07/2021-GST dated 17.06.2021 - Remand for fresh consideration

Refund under Section 54 of CGST Act - Rejection of refund for failure to produce assessment/provisional assessment/appeal or order - Requirement of opportunity of personal hearing before rejection - Remand for fresh consideration - Impugned refund rejection orders dated 29.06.2022 and 28.10.2022 set aside and matter remanded for fresh consideration - HELD THAT: - The Court found that the refund application filed under Section 54 of the CGST Act for Financial Year 2019-20 was rejected without due consideration of the petitioner's submissions and without granting a date-specific personal hearing. The rejection relied on the absence of any supporting assessment/provisional assessment/appeal or other order, but the impugned orders were recorded without affording the procedural opportunity of a hearing. This petition was heard along with the lead matter W.P.(C) No.1298/2023 and the questions raised are covered by the decision in that lead matter. In view of the observations in the lead matter, the Court set aside the impugned rejection orders and remanded the matter to the appropriate authority for reconsideration afresh, directing that the authority take into account the petitioner's submissions and the guidance given in the lead decision. [Paras 8, 10]

Impugned orders set aside; matter remanded to the appropriate authority for fresh consideration in light of observations in the lead matter.

Validity of CBIC Circular No.151/07/2021-GST dated 17.06.2021 - Remand for fresh consideration - Challenge to Circular No.151/07/2021-GST treated in the light of the lead matter and disposed by remand rather than independently decided in this petition - HELD THAT: - The petitioner challenged the validity of Circular No.151/07/2021-GST dated 17.06.2021 as ultra vires relevant notifications. This petition was heard with other connected matters and the Court recorded that the questions raised, including the challenge to the Circular, are covered by the decision rendered in the lead petition W.P.(C) No.1298/2023. Rather than adjudicating the Circular afresh in this petition, the Court disposed of the present petition by setting aside the impugned orders and remanding the matter to the appropriate authority for reconsideration in view of the observations made in the lead matter. [Paras 3, 9, 10]

Challenge to the Circular not independently decided here; matter disposed and remanded for fresh consideration in light of the lead decision.

Final Conclusion: The Court set aside the impugned refund rejection orders and remanded the matter to the appropriate authority for fresh consideration of the petitioner's refund claim for Financial Year 2019-20, directing that the authority act in accordance with the observations in the lead matter, including consideration of the petitioner's submissions and procedural fairness.

Interest under Article 12(5) of the Indo UK DTAA - taxability of income arising or accruing in India u/s 5(2) of the Income tax Act - definition of interest as income from debt claims and the requirement of privity of contract - guarantee commission / guarantee fee as remuneration for services - business profits and permanent establishment under Article 7 of the DTAA - Section 2(28A) - statutory meaning of interest

High Court [2024 (5) TMI 1415 - DELHI HIGH COURT] affirms the Tribunal: the parental guarantee charges are not 'interest' under Article 12(5) of the Indo UK DTAA or Section 2(28A) of the Act, but the guarantee charges accrued and arose in India and are therefore taxable in India under Section 5(2); the question whether such receipts constitute business profits under Article 7 is left open for determination in an appropriate case. Appeals dismissed.

HELD THAT:- We do not find any reason to interfere with the impugned order.

The special leave petition is hence, dismissed.

Conditional stay - interim payment obligation - instalment facility - relief on grounds of financial hardship - judicial interference with administrative orders

HELD THAT:- We dispose of this Special Leave Petition by reserving liberty to the petitioner herein to file a review petition before the Division Bench of the High Court.

At this stage, petitioner submitted that till the initial consideration of the review petition for any interim or final order, there may be stay of the impugned directions.

It is needless to observe that the review petition shall be filed on or before 15.10.2024 before the High Court, which shall then take up the review petition for the purpose of considering the interim prayers on or before 04.11.2024.

Both parties are directed to maintain status quo till 04.11.2024.

De-tagging and restoration of appeal for limited issue - finality of earlier common judgment - allowability of varied license fee as capital expenditure - nature of royalty payment-revenue v. capital expenditure

HELD THAT: - The Court observed that the earlier common judgment has attained finality on the question of treating the varied license fee as capital expenditure and that that aspect is applicable to the present assessee. However, the specific question whether the royalty payment to the Wireless Planning Commission for spectrum usage is deductible as revenue expenditure was neither argued nor decided in the common judgment. For that limited and unadjudicated issue, the Court ordered that this appeal be segregated (de-tagged) from the batch and restored on the file of this Court so that the royalty question may be considered independently. The detagging is expressly for the purpose of deciding the nature of the royalty payment; other issues already concluded by the common judgment remain final as to this assessee. [Paras 2, 3, 4, 5, 6]

Final Conclusion: The miscellaneous application is allowed: delay is condoned, and C.A. No.153/2021 is de-tagged and restored solely for adjudication of whether the royalty payment to the Wireless Planning Commission is revenue or capital expenditure; the earlier decision on varied license fee remains final as to this assessee.

Carry forward of unabsorbed depreciation under Section 32(2) - Set off of business losses and allowances under Section 72 - Interaction between carry forward provisions and set off hierarchy in computation of income from profits and gains of business or profession - Rectification under Section 154 and judicial review by writ under Article 226

Carry forward of unabsorbed depreciation under Section 32(2) - Set off of business losses and allowances under Section 72 - Computation of income from profits and gains of business or profession - Whether unabsorbed depreciation carried forward under Section 32(2) can be set off against income under heads other than "profits or gains of business or profession" - HELD THAT: - The Court held that Section 32 (depreciation) is part of the statutory scheme for computing income from profits and gains of business or profession and that the right to carry forward under Section 32(2) is expressly made subject to the provisions of Section 72. Section 72 prescribes the order and scope of carry forward and set off of business losses, and sub section (2) of Section 72 requires that effect be first given to the provisions of Section 72 where any allowance is to be carried forward under Section 32(2). On a plain reading, a depreciation allowance carried forward and deemed to be a business loss can be set off only against profits or gains of business or profession and not against other heads of income. The petitioner's contention that Section 72 is subordinate to Section 71 was rejected on the footing that the statutory scheme confines the set off of such carried forward depreciation to business income. The Court thus concluded that the carry forward under Section 32(2) does not permit set off against income from other heads. [Paras 7, 8, 9, 10, 11]

Carried forward unabsorbed depreciation under Section 32(2) is to be set off only against profits or gains of business or profession in accordance with Section 72, and cannot be set off against other heads of income.

Rectification under Section 154 and judicial review by writ under Article 226 - Scope of interference with tax department's order on merits - Whether the order rejecting the petitioner's rectification application under Section 154 (Ext.P6) required quashing by the High Court - HELD THAT: - Having found that the assessment and the intimation were in accordance with the statutory scheme governing depreciation carry forward and set off, the Court held there was no error in the order passed under Section 154. The petitioner failed to establish any legal infirmity or mistake warranting rectification. In the absence of any demonstrable illegality or breach of statutory provision in Ext.P6, exercise of writ jurisdiction under Article 226 was not justified. [Paras 11, 12]

The order rejecting the Section 154 rectification petition (Ext.P6) is not liable to be set aside; the writ petition is dismissed.

Final Conclusion: The petition is dismissed: the Court upheld the tax authorities' application of the carry forward and set off regime for depreciation under the Income tax Act and declined to quash the order rejecting the rectification petition.

Natural justice / right to be heard - Quashing for failure to grant hearing - Service of notice by email - Remand for fresh adjudication with directed opportunity to reply and be heard - Requirement to intimate hearing on recorded email addresses

Natural justice / right to be heard - Quashing for failure to grant hearing - Impugned order dated 16 October, 2023 cancelling provisional registration was quashed for denial of opportunity of hearing. - HELD THAT: - The Court found that the petitioner was not granted an opportunity to reply or a personal hearing before the order rejecting the application was passed. The record and the portal copy annexed to the rejoinder affidavit established the petitioner's correct email addresses. An erroneous communication of the show-cause notice resulted in the petitioner receiving the notice after the scheduled hearing date, and therefore the petitioner was effectively deprived of hearing. In these circumstances the impugned order could not stand and was set aside to vindicate the petitioner's right to be heard. [Paras 6, 7]

Impugned order dated 16 October, 2023 quashed and set aside for failure to afford opportunity of hearing.

Service of notice by email - Remand for fresh adjudication with directed opportunity to reply and be heard - Requirement to intimate hearing on recorded email addresses - Proceedings remanded for fresh consideration with directions to permit reply and to grant hearing with intimation by email to recorded addresses. - HELD THAT: - The Court remanded the matter to the Assessing Officer for fresh consideration so that the petitioner may reply to the show-cause notice dated 8 August, 2023 and be heard. The petitioner was permitted two weeks from the date of the order to file its reply. Thereafter respondent no.1 is directed to grant an opportunity of hearing, giving at least seven days' advance intimation by forwarding an email to both email addresses recorded for the petitioner on the portal. The Court left all other contentions open for determination in accordance with law after providing the directed opportunity. [Paras 7]

Proceedings remanded; petitioner permitted two weeks to reply; respondent to grant hearing with at least seven days' intimation by email to both recorded addresses; matters to be decided thereafter on merits.

Final Conclusion: The petition succeeds to the extent the order dated 16 October, 2023 is quashed for denial of hearing; the matter is remanded to the Assessing Officer for fresh consideration after the petitioner files a reply within two weeks and is afforded a hearing with email intimation to both recorded email addresses.

Condonation of delay - substantial question of law - appellate jurisdiction under Section 260A - acceptance of books of account and rejection of additions based on negative stock - reliance on factual findings of lower authorities

Condonation of delay - Application for condonation of delay of 10 days in filing the appeal. - HELD THAT: - The Court allowed the application for condonation of delay of 10 days after considering the averments and affidavit filed in support of the application. The delay was therefore condoned and the connected miscellaneous application disposed of. [Paras 1, 2, 3]

Delay of 10 days in filing the appeal is condoned and the miscellaneous application is disposed of.

Substantial question of law - appellate jurisdiction under Section 260A - acceptance of books of account and rejection of additions based on negative stock - reliance on factual findings of lower authorities - Whether any substantial question of law arises for entertaining the appeal under Section 260A and whether the orders of the Commissioner (Appeals) and the Tribunal upholding deletion of the addition are amenable to interference. - HELD THAT: - The Court examined the record and the substantial questions of law proposed by the Revenue but concluded that the appeal was founded on disputes of fact. The authorities below had examined documents, stock registers, reconciliation charts, delivery challans and monthly trading accounts, found no negative stock, and concluded that there was no justification for the Assessing Officer's adoption of a 0.54% profit rate or for rejecting the assessee's books. In view of the factual examination and reasoned findings of the Commissioner (Appeals) and the Tribunal, the High Court found no substantial question of law requisite for invoking Section 260A and no ground to interfere with the well-reasoned concurrent findings of the two fact-finding authorities. [Paras 6, 7, 8, 9, 10]

No substantial question of law arises; the orders of the Commissioner (Appeals) and the Tribunal deleting the addition are upheld and the appeal is dismissed.

Final Conclusion: The miscellaneous application for condonation of delay is allowed; on merits the appeal is dismissed for lack of any substantial question of law and for concurrence with the factual findings and reasoned orders of the Commissioner (Appeals) and the Income Tax Appellate Tribunal.

Deemed gift under section 56(2)(vii)(b)(ii) - proviso to section 56(2)(vii)(b) - stamp duty valuation on date of agreement - allotment letter as agreement to sale - payments by banking channel evidencing agreement - CBDT Circular treating allotment/allotment letter as agreement

Deemed gift under section 56(2)(vii)(b)(ii) - proviso to section 56(2)(vii)(b) - stamp duty valuation on date of agreement - allotment letter as agreement to sale - payments by banking channel evidencing agreement - CBDT Circular treating allotment/allotment letter as agreement - Whether the difference between stamp duty valuation and declared consideration could be treated as a deemed gift when the assessee produced an allotment letter and payments made before registration through banking channels, thereby invoking the proviso to section 56(2)(vii)(b)(ii). - HELD THAT: - The proviso to sub-clause (ii) permits taking the stamp duty value as on the date of the agreement where the date of the agreement and the date of registration differ, provided that the consideration or part thereof has been paid by a mode other than cash on or before the date of the agreement. The tribunal examined the allotment letter and the ledger of payments showing instalment payments by account payee cheques beginning in June 2010 and continuing through September 2010. On this material the allotment letter was held to be an agreement to purchase and its genuineness was supported by payments through banking channels. The Assessing Officer erred in treating the valuation date as the date of registration in October 2014; applying the proviso the stamp duty valuation as at the date of the agreement (mid 2010) must be taken. The tribunal also noted the settled administrative view in CBDT circulars recognising allotment letters as constituting agreements in comparable contexts, which reinforces construing the developer's allotment letter as an agreement for the present purpose. Consequently, the addition under section 56(2)(vii)(b)(ii) could not be sustained and was deleted. [Paras 6, 7, 8, 9]

Addition under section 56(2)(vii)(b)(ii) deleted as the allotment letter, supported by payments through account payee cheques before registration, qualified as an agreement and the stamp duty value as on the date of that agreement must be taken.

Final Conclusion: Appeal allowed; addition under section 56(2)(vii)(b)(ii) deleted because the developer's allotment letter supported by pre-registration payments through banking channels was treated as an agreement, and the stamp duty valuation as of the agreement date governs valuation.

Requirement of filing audit certificate/Form 10DA - Claim of deduction under Chapter VIA - Filing before completion of assessment suffices - Distinction between exemption provisions (Chapter III) and deduction provisions (Chapter VIA) - Claim under section 80JJAA

Requirement of filing audit certificate/Form 10DA - Filing before completion of assessment suffices - Claim under section 80JJAA - Claim of deduction under Chapter VIA - Late filing of Form 10DA after the due date but before completion of assessment does not disentitle the assessee from claiming deduction under section 80JJAA. - HELD THAT: - The Tribunal applied the ratio of the Hon'ble Supreme Court in CIT, Maharashtra v. G. M. Knitting Industries Pvt. Ltd., holding that where a certificate required for claiming a deduction under Chapter VIA was filed before the final order of assessment, the assessee is entitled to the deduction even though the certificate was not filed with the return. The Tribunal rejected reliance on Pr. CIT-III, Bangalore v. M/s. Wipro Ltd. as inapposite because that decision concerned strict compliance for exemption provisions under Chapter III; Chapter III (exemptions) and Chapter VIA (deductions) operate in different realms and the strict literal compliance required for exemptions does not automatically apply to deduction claims. Applying these principles, since Form 10DA was available to the Assessing Officer during assessment proceedings, the late filing did not preclude allowance of the deduction under section 80JJAA.

Impugned order of the Commissioner (Appeals) set aside and the AO directed to allow the deduction under section 80JJAA as claimed.

Final Conclusion: The appeal is allowed; the order of the Commissioner (Appeals) is set aside and the Assessing Officer is directed to grant the deduction under section 80JJAA since the required Form 10DA was filed prior to completion of assessment.

Cost of improvement eligible for indexation - allocation of improvement between residential and depreciable portions - exemption under section 54/54F for capital gains arising from depreciable assets held over 36 months - residential character based on capability of use despite municipal commercial notification

Cost of improvement eligible for indexation - The costs of improvement claimed by the assessee are eligible for deduction in computing long-term capital gain with indexation. - HELD THAT: - The Tribunal accepted that the assessee obtained a bank loan of Rs. 7.36 lakhs for construction in 2003-04 and applied market practice to infer that the loan represented approximately 70-80% of total project cost. On that basis the Tribunal held it reasonable to accept that the assessee incurred the balance cost and therefore the claimed improvement of Rs. 12.52 lakhs is eligible for indexation while computing long-term capital gain. [Paras 13]

Allowed the claimed cost of improvement of Rs. 12.52 lakhs for indexation in computing long-term capital gain.

Allocation of improvement between residential and depreciable portions - Half of the claimed cost of improvement is attributable to the residential portion and is eligible for indexation. - HELD THAT: - The assessee produced municipal property tax receipts showing two of the four units were used for residential purposes; the receipts were not disputed. On that factual basis the Tribunal held that 50% of the improvement cost relates to the residential units and is eligible for inclusion as indexed cost while computing capital gain. [Paras 14]

50% of the cost of improvement is allowed as indexed cost attributable to the residential portion.

Exemption under section 54/54F for capital gains arising from depreciable assets held over 36 months - Capital gain arising from depreciable assets is not excluded from exemption under sections 54/54F if the period of holding exceeds 36 months. - HELD THAT: - The Tribunal noted that while depreciable assets attract short-term capital gain treatment under section 50, sections 54/54F and the statutory definition of long-term capital asset do not categorically exclude gains from depreciable assets where the holding period exceeds 36 months. Applying that legal position, the Tribunal held that the assessee cannot be denied exemption under sections 54/54F with respect to gains from depreciable assets held beyond 36 months. [Paras 15]

Gains on depreciable assets held for more than 36 months are eligible for exemption under sections 54/54F.

Residential character based on capability of use despite municipal commercial notification - exemption under section 54/54F for investment in predominantly residential property - The investment in the new property qualifies as investment in residential property for the purpose of exemption under sections 54/54F notwithstanding municipal classification of part of the property as commercial, because the property was predominantly used and capable of being used as residence. - HELD THAT: - On the facts the Tribunal accepted that although part of the new property bore a commercial notification, the property as a whole was primarily used for residential purposes, was not let out for commercial activity, and part was used for storage of household goods. Relying on the factual record and precedent reasoning that a property capable of being used as a residence qualifies as a residential house, the Tribunal held the investment satisfies the condition for exemption under sections 54/54F. The assessee's concession to exclude any commercial portion in written submissions was not pressed at hearing; taking a holistic view, the Tribunal allowed the exemption. [Paras 16, 17]

Investment in the new property held to be in residential property and eligible for exemption under sections 54/54F.

Final Conclusion: The appeal is allowed: the Tribunal accepted the claimed cost of improvement (with 50% allocated to residential portion) for indexation, held gains from depreciable assets held over 36 months can qualify for exemption under sections 54/54F, and found the new property qualifies as residential for the purpose of the exemption; accordingly the addition confirmed below is set aside and the assessee's grounds are allowed.

Interest under section 28 of the Land Acquisition Act forms part of enhanced compensation - taxability of interest on enhanced compensation under section 145A(b) read with section 56(2)(viii) of the Income tax Act - exemption under section 10(37) of the Income tax Act - treatment of such interest as income from other sources - application of Ghanshyam (HUF) precedent on characterisation of section 28 payments

Interest under section 28 of the Land Acquisition Act forms part of enhanced compensation - taxability of interest on enhanced compensation under section 145A(b) read with section 56(2)(viii) of the Income tax Act - exemption under section 10(37) of the Income tax Act - Interest received under section 28 of the Land Acquisition Act on enhanced compensation is not taxable as income from other sources and is part of the compensation eligible for exemption. - HELD THAT: - The facts are undisputed that the assessee received enhanced compensation under the Land Acquisition Act along with amounts computed under section 28. Applying the law in CIT v. Ghanshyam (HUF) and the subsequent considered reasoning of the Gujarat High Court in Movaliya Bhikhubhai Balabhai v. ITO TDS, interest payable under section 28 partakes the character of enhanced compensation and is an accretion to the compensation, not 'interest' in the sense contemplated by section 145A(b). The amendment introducing section 145A(b) and clause (viii) to section 56 was intended to address hardship from accrual basis taxation and does not alter the characterisation laid down by the Supreme Court that section 28 payments form part of compensation. Following the Gujarat High Court's exposition and the Supreme Court authority, the Tribunal held that such interest cannot be taxed as 'income from other sources' under section 56(2)(viii) read with section 145A(b), and therefore the addition made by the AO (and confirmed by the CIT(A)) was not sustainable. [Paras 9, 10]

Delete the addition; amount of interest under section 28 is not chargeable as income from other sources and the appeal is allowed.

Final Conclusion: Assessee's appeal allowed; interest received under section 28 of the Land Acquisition Act held to be part of enhanced compensation and not taxable as income from other sources, and the addition made by the Assessing Officer is directed to be deleted.

Validity of reassessment proceedings under section 147 - Requirement of prior approval of the specified authority for issuance of notice under section 148 - Meaning and scope of "specified authority" under section 151 - Order under section 148A(d) and effect of its approval - Notice under section 148 void ab initio if sanction by specified authority is invalid - Effect of TOLA vis-a -vis amendment by Finance Act, 2021

Validity of reassessment proceedings under section 147 - Requirement of prior approval of the specified authority for issuance of notice under section 148 - Meaning and scope of "specified authority" under section 151 - Order under section 148A(d) and effect of its approval - Notice under section 148 issued on 22/04/2022 and consequent reassessment under section 147 r/w section 144B is valid or void for lack of proper sanction by the specified authority. - HELD THAT: - The Tribunal examined the scheme of sections 148, 148A and 151 and held that where more than three years have elapsed from the end of the relevant assessment year the Statute mandates that the sanction for issuance of a notice under section 148 (and for an order under section 148A(d)) must be granted by the authorities specified in section 151(ii) (Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General). In the present case the order under section 148A(d) and the purported approval were given by the Principal Commissioner (Principal CIT-27), whereas the period for reopening exceeded three years. Relying on the jurisdictional High Court decision reproduced in the record, the Tribunal concluded that approval by the Principal Commissioner was not in conformity with the amended section 151 and therefore was invalid. The Tribunal rejected reliance on TOLA for validating the sanction, observing that the Finance Act, 2021 amendment to section 151 governs the sanction requirement w.e.f. 1st April 2021 and subordinate notifications or extensions under TOLA cannot override the statutory amendment. Because the mandatory pre-condition of valid sanction was not satisfied, the notice under section 148 issued on 22/04/2022 was held to be void ab initio and the entire reassessment proceedings and the assessment order under section 147 r/w section 144B were quashed. As the relief was granted on this jurisdictional ground, other substantive grounds were left open as academic. [Paras 11, 12, 13]

Notice under section 148 dated 22/04/2022 was void ab initio for lack of sanction by the specified authority as required by section 151(ii); consequent reassessment and assessment order quashed.

Final Conclusion: The appeal is allowed: the reassessment notice dated 22/04/2022 and the assessment completed under section 147 r/w section 144B are quashed for want of valid sanction by the specified authority under section 151(ii); other grounds left open as academic.

Applicability of section 269SS to receipt of sale consideration for immovable property - Levy of penalty under section 271D for alleged contravention of section 269SS - Second proviso to section 269SS - agricultural transactions exemption - Distinction between loans/deposits and sale consideration (specified sum) for purposes of section 269SS

Applicability of section 269SS to receipt of sale consideration for immovable property - Levy of penalty under section 271D for alleged contravention of section 269SS - Validity of penalty under section 271D for alleged receipt of cash as sale consideration in relation to transfer of immovable property - HELD THAT: - The Tribunal examined the scope of section 269SS and the consequent levy of penalty under section 271D. Although section 269SS prohibits taking certain loans or deposits otherwise than by account payee cheque, bank draft or electronic mode when specified monetary thresholds are met, the Tribunal observed that the provision fundamentally regulates the mode of taking or accepting loans or deposits. While the definition of "specified sum" in section 269SS includes sums receivable in relation to transfer of an immovable property, the Tribunal interpreted the statutory scheme as addressing loans or deposits rather than routine receipt of sale consideration for immovable property. On that basis the authorities below erred in invoking section 269SS read with section 271D to impose penalty for alleged receipt of cash as sale consideration. The Tribunal concluded that the Assessing Officer wrongly applied section 269SS/271D in the facts of this case and that the penalty so imposed could not stand. [Paras 7]

Penalty imposed under section 271D, confirmed by the CIT(A), quashed; appeal allowed.

Final Conclusion: The Tribunal held that the Assessing Officer erred in invoking section 269SS read with section 271D to impose penalty for the alleged receipt of cash as sale consideration for immovable property and accordingly quashed the penalty and allowed the appeal.

Acceptance of returned income - CBDT Circular No. 549 - assessed income not less than returned income - reopening of assessment under section 148 - acceptability of capital account as evidence of source - proof of gift by confirmation and PAN - explanation of cash deposits by reference to opening cash balance and declared income

Acceptance of returned income - CBDT Circular No. 549 - assessed income not less than returned income - acceptability of capital account as evidence of source - Acceptance of the returned income and the capital account filed by the assessee for AY 2011-12 - HELD THAT: - The Assessing Officer had determined the total income as NIL contrary to CBDT Circular No.549 which provides that assessed income should not be less than the returned income; the Tribunal held that the Circular is binding on Assessing Officers and that the AO was therefore not justified in treating assessed income as NIL. The Tribunal found no defect in the capital account submitted for AY 2011-12 and accepted it as sufficient to support the returned income, setting aside the order of the Ld.CIT(A) and directing the AO to accept the income returned and the capital account for that year. [Paras 5]

Returned income and the capital account for AY 2011-12 are accepted and the AO directed to adopt the returned income.

Proof of gift by confirmation and PAN - explanation of cash deposits by reference to opening cash balance and declared income - reopening of assessment under section 148 - Deletion of the additions of the unexplained cash deposits of Rs.10 lakhs each made in the years relevant to AYs 2015-16 and 2016-17 - HELD THAT: - The Tribunal examined the capital account entries, a confirmation from the assessee's son evidencing a gift (including his PAN), and the assessee's opening cash balances and declared incomes across the relevant years. The Tribunal accepted that contributions by the son to the joint bank account could be treated as gifts and that the opening cash balance together with declared income and accepted gifts adequately explained the cash deposits made in the years relevant to AYs 2015-16 and 2016-17. On this basis the Tribunal set aside the Ld.CIT(A)'s rejection and directed deletion of the additions of Rs.10 lakhs in each of the two years. [Paras 6, 7]

Additions of Rs.10 lakhs each for AYs 2015-16 and 2016-17 deleted; AO directed to give effect.

Final Conclusion: All three appeals are allowed: the returned income and capital account for AY 2011-12 are accepted and the additions of Rs.10 lakhs each for AYs 2015-16 and 2016-17 are deleted; the matters are remitted to the AO for compliance with these directions.

Applicability of provision of section 56(2)(viib) regarding consideration received on issuance of shares - Power of Principal Commissioner to revise assessment under section 263 - Assessing Officer's adequacy of enquiry in assessment under section 143(3) - Condonation of delay in filing appeal due to COVID-19 extension

Condonation of delay in filing appeal due to COVID-19 extension - Delay in filing the appeal was condoned. - HELD THAT: - The appeal was filed with an initial delay of 432 days. Relying on the Supreme Court's ruling extending limitation for the COVID-19 period (period from 15-03-2020 to 28-02-2022 with 90 days from 01-03-2022), the effective delay was reduced to 44 days. The Revenue raised no serious objection to condonation. On this basis the Tribunal exercised its discretion to condone the delay and take the appeal on record.

Delay condoned and the appeal admitted for hearing.

Applicability of provision of section 56(2)(viib) regarding consideration received on issuance of shares - Power of Principal Commissioner to revise assessment under section 263 - Assessing Officer's adequacy of enquiry in assessment under section 143(3) - The revision order passed by the Principal Commissioner under section 263 setting aside the assessment was quashed as unsustainable. - HELD THAT: - The Principal Commissioner held that the Assessing Officer failed to examine applicability of section 56(2)(viib) because the assessee received consideration exceeding face value on issue of shares. The Tribunal found that the Assessing Officer had issued notices under section 143(2), called for details regarding increase in share capital, and considered the assessee's reply that shares were allotted to the holding company at face value of Rs.10 each, supported by the holding company's annual report. The AO accepted the returned loss after such enquiries. The Tribunal concluded that section 56(2)(viib) did not arise where shares were issued at face value to the holding company, and that the Principal Commissioner misconstrued the provision and had no valid basis to invoke revision. Consequently the exercise of revisionary jurisdiction was unwarranted.

Revision order under section 263 quashed; grounds of appeal allowed and the assessment order restored.

Final Conclusion: The Tribunal condoned the delay and allowed the appeal; the Principal Commissioner's revision order under section 263 was quashed as misconceived for AY 2015-16, and the assessment order was restored.

Deeming of issue price as fair market value under Rule 11UA with 10% tolerance - Income u/s. 56(2)(viib) on consideration in excess of fair market value - Exercise of revisional power under section 263 - twin condition of erroneous order and prejudicial to the interest of revenue - Retrospective/curative effect of amendment to Rule 11UA

Exercise of revisional power under section 263 - twin condition of erroneous order and prejudicial to the interest of revenue - Validity of the Principal Commissioner of Income Tax's order under section 263 setting aside the assessment order. - HELD THAT: - The Tribunal examined whether the conditions for invoking section 263 were satisfied. The PCIT held that the AO's assessment was erroneous and prejudicial to the revenue because the AO allegedly did not make complete verification regarding consideration received in excess of fair market value. The Tribunal found that the AO had issued a specific notice under section 142(1) seeking details on determination of fair market value under Rule 11UA, received the assessee's submissions and valuation, and chose not to make an addition. As the second limb of the twin condition - that the order is prejudicial to the interest of revenue - was not satisfied in view of the valuation and the statutory deeming provided by Rule 11UA, the Tribunal concluded that the PCIT was not justified in invoking section 263 and set aside the PCIT's order. [Paras 7]

PCIT's order under section 263 set aside as the condition of being prejudicial to revenue was not fulfilled.

Deeming of issue price as fair market value under Rule 11UA with 10% tolerance - Income u/s. 56(2)(viib) on consideration in excess of fair market value - Retrospective/curative effect of amendment to Rule 11UA - Whether the difference between issue price and fair market value of compulsory convertible preference shares gave rise to income chargeable under section 56(2)(viib). - HELD THAT: - The assessee issued compulsory convertible preference shares at a price marginally higher than the fair market value determined under Rule 11UA (difference of 0.65%). Rule 11UA was amended to provide that where the consideration does not exceed ten per cent of the valuation price, the issue price shall be deemed to be the fair market value. The Tribunal accepted the view, relying on the reasoning that the amendment is curative/retrospective to mitigate unintended invocation of section 56(2)(viib), and held that the 0.65% difference falls within the 10% tolerance. Consequently, the issue price is to be treated as the fair market value and there is no scope for making an addition under section 56(2)(viib). [Paras 6, 7]

No addition under section 56(2)(viib) is warranted because Rule 11UA deems the issue price to be the fair market value where the difference is within the 10% tolerance.

Final Conclusion: The Tribunal allowed the assessee's appeal for AY 2018-19, set aside the PCIT's order passed under section 263, and held that no addition under section 56(2)(viib) was warranted because the issue price of the compulsory convertible preference shares is deemed to be the fair market value under Rule 11UA given the difference was within the 10% tolerance.

Withdrawal of writ petition - disposal of Special Leave Petition on non-pressing - compliance with statutory mandate of Section 104 of the Customs Act, 1962 - application of principles and ratio in Arvind Kejriwal vs. Directorate of Enforcement - contentions and issues left open for adjudication

Withdrawal of writ petition - Writ Petition (Criminal) No.378/2024 was withdrawn and dismissed on the petitioner's request. - HELD THAT: - Learned counsel for the petitioner sought permission to withdraw the writ petition filed under Article 32. The Court recorded the statement and dismissed the writ petition as withdrawn. The order records the voluntary withdrawal and disposes of the petition accordingly. [Paras 1, 2]

Writ petition dismissed as withdrawn.

Disposal of Special Leave Petition on non-pressing - compliance with statutory mandate of Section 104 of the Customs Act, 1962 - application of principles and ratio in Arvind Kejriwal vs. Directorate of Enforcement - contentions and issues left open for adjudication - Special Leave Petition (Criminal) No.12364/2024 was not pressed and was disposed of with a clarification concerning future arrests by customs authorities. - HELD THAT: - After arguments, senior counsel for the petitioner declined to press the petition but sought a clarification that, if the respondent-customs authorities seek to arrest the petitioner, they must comply with the statutory mandate of Section 104 of the Customs Act, 1962, and give effect to the principles and ratio set out in the Court's judgment in Arvind Kejriwal vs. Directorate of Enforcement. The Court recorded this statement, disposed of the Special Leave Petition, and expressly left all contentions and issues open for adjudication, without deciding those contentions on merits. [Paras 3, 4]

Special Leave Petition disposed of as not pressed; directive that any arrest by customs must comply with Section 104 and the principles in Arvind Kejriwal, while all contentions remain open for adjudication.

Final Conclusion: The writ petition is dismissed as withdrawn. The Special Leave Petition is disposed of as not pressed with a clarification that any arrest by customs must comply with Section 104 of the Customs Act, 1962 and the principles in Arvind Kejriwal; all other contentions are left open for adjudication and pending applications are disposed of.

Article 142 of the Constitution - pre-deposit requirement - recall of orders - restoration of appeals - consideration on merits - notice to respondent

Article 142 of the Constitution - pre-deposit requirement - recall of orders - restoration of appeals - consideration on merits - notice to respondent - Permission granted to file application(s) for recall of impugned order(s) and seek restoration of appeals before the CESTAT in view of payment of the pre-deposit. - HELD THAT: - The Court, exercising jurisdiction under Article 142 of the Constitution, permitted the appellant to file necessary applications for recall of the impugned order(s) and to seek restoration of their appeals before the Customs, Excise & Service Tax Appellate Tribunal, Hyderabad. The Court recorded that the appellant has made the required pre-deposit before the CESTAT and noted that no issue was raised by the appellant regarding limitation. The CESTAT, when considering any such application for recall, is to take into account the fact of payment of the pre-deposit and issue notice to the respondent. If the CESTAT recalls the impugned order(s), the appeals shall be considered on their merits and in accordance with law.

Appellant permitted to file applications for recall and restoration; CESTAT to consider such applications in light of the pre-deposit, issue notice to respondent, and if recall is ordered, decide the appeals on merits.

Final Conclusion: By exercise of Article 142 of the Constitution, the appellant is permitted to apply for recall and restoration before the CESTAT in view of the pre-deposit; CESTAT shall consider the application, issue notice to the respondent, and if it recalls the impugned order(s), adjudicate the restored appeals on merits.

Merchandise Exports from India Scheme - Electronic Data Interface declaration - inadvertent omission in shipping bill entry - remand for fresh consideration - personal hearing - speaking order

Merchandise Exports from India Scheme - Electronic Data Interface declaration - inadvertent omission in shipping bill entry - remand for fresh consideration - personal hearing - speaking order - Petitioner's entitlement to MEIS reward where EDI shipping bills were left blank and recorded as 'No' by default, and consequent direction for fresh examination. - HELD THAT: - The Court found that the petitioner had, by inadvertent omission of the relevant entry in the EDI-generated shipping bills, resulted in those bills being recorded as 'No' and thereby not being examined for MEIS reward. Respondents had not examined the petitioner's claims on merits because the electronic record assumed 'No'. In light of this inadvertent error and the absence of examination on merit, the Court remanded the matter for fresh consideration. The Respondent is directed to treat the petitioner's submissions as indicating 'Yes' for the specified EDI shipping bills, afford the petitioner or its authorised representative a personal hearing, allow production of relevant documents and clarifications, and thereafter pass a reasoned speaking order deciding entitlement to MEIS rewards in accordance with law within 12 weeks. The speaking order is to be communicated to the petitioner within one week by acknowledged post and e-mail. All other rights and contentions are kept open for determination by the authority on re-examination.

Directed respondents to re-examine the specified EDI shipping bills treating the submissions as 'Yes', grant a personal hearing, and pass and communicate a speaking order on MEIS entitlement within the stipulated timelines.

Final Conclusion: Petition disposed by remanding the specified shipping bills for fresh adjudication on merits: respondents to treat the submissions as 'Yes', hold a personal hearing, and pass and communicate a reasoned order on MEIS entitlement within the timelines directed; other rights left open.

Export obligation - advance import licence - export obligation period - requirement of original shipping bills and documentary proof - conversion of drawback shipping bills to DEEC - penalty under Section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 - review under Section 16 of the Foreign Trade (Development and Regulation) Act, 1992 - judicial review under Article 226 of the Constitution of India - Denied Entry List and denial of export benefits

Export obligation - requirement of original shipping bills and documentary proof - export obligation period - Whether the petitioner had fulfilled the export obligation under the Advance Import Licence by producing requisite documentary proof within the Export Obligation Period or its valid extension. - HELD THAT: - The Court recorded that the petitioner submitted only photocopies of seven shipping bills and failed to produce original shipping bills or logged DEEC books acceptable to the authorities. Two of the submitted shipping bills were dated after the expiry of the extended Export Obligation Period and the petitioner did not produce evidence of any competent authority having further extended the EOP. Two other submitted bills were Drawback (DBK) shipping bills and the Customs Authority had rejected conversion of those DBK bills into DEEC bills; no subsequent conversion was shown. The Appellate Authority had specifically identified discrepancies and invited clarification which was not satisfactorily furnished. On these facts, the authorities found that requisite documentary proof to establish fulfilment of the export obligation was absent and the Court found no basis to disturb that factual conclusion. [Paras 4, 5, 6, 7]

Petitioner did not establish fulfilment of the export obligation by producing the required original documents within the EOP or by evidence of valid extension; documentary non-compliance justified the authorities' conclusion.

Conversion of drawback shipping bills to DEEC - requirement of original shipping bills and documentary proof - Whether Drawback shipping bills submitted by the petitioner could be accepted as DEEC shipping bills for regularisation in absence of Customs conversion. - HELD THAT: - The record shows that the petitioner submitted two Drawback shipping bills and that the Customs Authority had formally rejected requests for conversion to DEEC shipping bills. The petitioner failed to produce any subsequent document evidencing that Customs had agreed to convert those DBK bills into DEEC bills. The Appellate and Reviewing Authorities therefore correctly treated DBK bills as not acceptable for fulfilment of DEEC-linked export obligation. [Paras 5, 6, 7]

Drawback shipping bills could not be treated as DEEC shipping bills in absence of conversion by Customs; such bills were rightly excluded from acceptance towards export fulfilment.

Penalty under Section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 - review under Section 16 of the Foreign Trade (Development and Regulation) Act, 1992 - judicial review under Article 226 of the Constitution of India - Whether the orders of the Adjudicating Authority, the Appellate Authority and the DGFT in review (including imposition of penalty and direction to pay customs duty with interest and to regularize the licence) are arbitrary or liable to be set aside by this Court under Article 226. - HELD THAT: - The Adjudicating Authority imposed penalty for non-compliance after observing absence of prescribed documents; the Appellate Authority, after granting opportunities and identifying discrepancies, dismissed the appeal; the DGFT in review heard the petitioner, examined records including the inability to convert DBK bills and the lack of proof of extension of EOP, and rejected the review while directing payment of customs duty with interest and regularisation of the licence. The High Court found that these decisions were founded on the absence of essential documentary proof and the authorities' reasoned communications. There was no demonstration of arbitrariness or legal error in the authorities' exercise of power requiring interference under Article 226. [Paras 6, 7, 8]

The appellate and review orders upholding the adjudication and directing payment/regularisation are not arbitrary; the High Court declines to interfere under Article 226.

Final Conclusion: The petition is dismissed. The authorities' findings that the petitioner failed to produce required original documents, that certain shipping bills fell outside the Export Obligation Period or were non-convertible Drawback bills, and their consequent directions for payment of customs duty with interest and regularisation of the Advance Licence are upheld; no interference under Article 226 is warranted.

Advance Authorization Scheme - actual user condition - diversion of duty free inputs - Standard Input Output Norms (SION) / process loss - retrospective application of beneficial administrative norms - Export Obligation Discharge Certificate (EODC) and discharge of bond - conversion of drawback shipping bills to Advance Authorization - weight of administrative interpretation by DGFT

Advance Authorization Scheme - actual user condition - diversion of duty free inputs - Whether the imported raw sesame seeds were diverted into the domestic market in breach of the actual user condition of Advance Authorisations - HELD THAT: - The Tribunal accepted the findings of the adjudicating authority that the evidence relied upon by the investigating agency was insufficient to establish clandestine diversion. Contract notes and broker statements were examined and their probative value was found to be limited; specific entries were capable of being explained as commercial quality descriptions rather than proof of origin or diversion. The recorded shortages were explained by the respondent as process loss and/or procurement of indigenous material to meet export obligations; the adjudicating authority accepted a higher actual process loss and/or the use of domestic inputs, and issued reasons why the DRI's shortfall calculation did not constitute conclusive proof of diversion. In absence of direct evidence showing removal to identifiable buyers in DTA or clear documentary trail of sale of imported inputs as such, the allegation of diversion was held to be founded on assumption and not legally sustainable. Consequently the proposal for confiscation and duty demand based on alleged diversion could not be sustained. [Paras 17, 18, 19, 23]

Allegation of diversion and breach of actual user condition not established; confiscation and duty demand on that ground unsustainable.

Standard Input Output Norms (SION) / process loss - retrospective application of beneficial administrative norms - Whether revised SION/process loss norms (as reflected in Public Notice) could be given retrospective effect for the relevant period and whether claimed higher process loss could explain the shortfall - HELD THAT: - The Tribunal accepted the adjudicating authority's view that the actual process loss claimed by the respondent (around 13%) was reasonable in the industry context and that the DGFT's later revision of SION norms (to a higher permissible loss) represented a corrective, beneficial administrative standard. The Tribunal held that such a beneficial revision in norms-being pragmatic and industry oriented-could be applied retrospectively for the purpose of assessing whether exports and export obligations were fulfilled and to avoid imposing undue hardship. It further noted that use of indigenous material to make up shortfall, permitted by DGFT clarification, corroborated the explanation that deficiency did not demonstrate diversion of imported inputs. [Paras 11, 17]

Revised SION/norms and the industry wide administrative correction were entitled to weight; claimed higher process loss and sourcing of indigenous material negated the inference of diversion.

Export Obligation Discharge Certificate (EODC) and discharge of bond - weight of administrative interpretation by DGFT - conversion of drawback shipping bills to Advance Authorization - Whether issuance of EODC by DGFT, discharge of bonds by Customs and DGFT interpretations precluded Revenue from sustaining the departmental demand - HELD THAT: - The Tribunal upheld the adjudicating authority's reliance on DGFT actions and clarifications. It observed that administrative determinations by DGFT regarding operation of the Advance Authorization scheme, including issuance of EODC and the Policy Interpretation Committee's clarification on use of domestic inputs, carry significant weight in understanding and implementing the scheme. While Customs may investigate, the existence of EODC and bond discharge, together with DGFT clarification that an authorization holder may export resultant product using duty paid domestic materials subject to actual user conditions, materially undercut the Department's case. The Tribunal also noted that the respondent had pursued conversion of drawback shipping bills as an alternate remedy and had sought DGFT clarification prior to the adjudication outcome. [Paras 11, 20, 21, 22]

DGFT's EODC, discharge of bonds and its interpretation materially supported respondent's position and weighed against sustaining the departmental demand.

Burden of proof - evidentiary standard for proving clandestine removal - Standard of proof required to establish clandestine removal/diversion of duty free inputs and whether the Department met that standard - HELD THAT: - The Tribunal stressed that the Department must produce clear and specific evidence of clandestine removal-such as documentary trail showing sale to identified buyers in DTA or incontrovertible transactional records-before treating shortages as diversion. Vague broker statements and contract notes whose descriptions could be commercially interpreted did not satisfy this standard. In absence of such clear evidence, allegations remain presumptive and cannot sustain confiscation, duty demand or penalties. [Paras 11]

Department failed to produce evidence meeting the requisite standard to prove clandestine diversion; assertions based on presumption rejected.

Final Conclusion: The departmental appeals are dismissed as devoid of merits and the adjudicating authority's Order in Original upholding no diversion and declining confiscation/duty/penalty is affirmed; the respondent's protective appeal seeking conversion of drawback shipping bills to Advance Authorization is rendered infructuous and is dismissed.

Classification of goods under Customs Tariff headings - interpretation of Chapter Note 2(c) to Chapter 70 - absorbent, reflecting or non-reflecting layer (tin side) as tariff determinant - entitlement to preferential FTA exemption on basis of Certificate of Origin - burden of proof for re-classification on Department - invocation of extended period of limitation under Section 28(4) - confiscation, redemption fine and penalty in re-classification cases

Classification of goods under Customs Tariff headings - interpretation of Chapter Note 2(c) to Chapter 70 - absorbent, reflecting or non-reflecting layer (tin side) as tariff determinant - burden of proof for re-classification on Department - Imported Clear Float Glass is classifiable under CTH 7005 1090 and not under CTH 7005 2990 - HELD THAT: - A conjoint reading of the tariff entries, Chapter Note 2(c) and the manufacturing/test evidence establishes that Clear Float Glass (CFG) has a microscopically thin metal (tin) layer which is an absorbent/non-reflective layer as contemplated by Note 2(c). The tribunal accepted the Government laboratory (CSIR-CGCRI) test reports and relevant coordinate tribunal and appellate findings holding that presence of such tin layer satisfies the requirement for sub-heading 7005 10 90. The Revenue's contention that the layer must be a conscious post-manufacture coating or must be on a specific side (air side) is not mandated by the tariff or chapter note and cannot be read into the entry. As the Department relied on audit objection but failed to discharge the burden to justify re-classification when tests and prior administrative positions supported the 7005 10 90 classification, the re-classification to 7005 29 90 was held without basis and set aside. [Paras 10, 11, 12]

Classification under CTH 7005 1090 is correct and re-classification to CTH 7005 2990 is unsustainable

Entitlement to preferential FTA exemption on basis of Certificate of Origin - classification of goods under Customs Tariff headings - Appellant is entitled to benefit of Notification No. 46/2011-Cus (Sl. No. 934) subject to fulfillment of origin documentation - HELD THAT: - Having held that the imported CFG is properly classifiable under CTH 7005 10 90, the tribunal concluded that the goods meet the tariff requirement for the exemption and therefore the appellant is eligible for the FTA benefit under Sl. No. 934 of Notification No. 46/2011-Cus., provided the importer produces the requisite evidence of origin in terms of the applicable Rules. The decision also notes that the Department had earlier taken a contrary view to the audit objection in communications with CAG, which reinforces entitlement where classification is upheld. [Paras 12]

Benefit of Notification No. 46/2011-Cus. (Sl. No. 934) is available to the appellant subject to production of valid origin documents

Invocation of extended period of limitation under Section 28(4) - confiscation, redemption fine and penalty in re-classification cases - burden of proof for re-classification on Department - Extended period, confiscation, redemption fine and penalty were not sustainable and are set aside - HELD THAT: - The tribunal found no finding of positive suppression or deliberate mis-declaration by the appellant. The imports had been provisionally assessed and finalised over several years with classification under 7005 10 90 for identical products, and the Department itself had earlier indicated that 7005 10 90 was correct in responses to audit. In these circumstances the ledger of long-standing provisional acceptance and the failure of the Department to establish wilful mis-declaration made invocation of the extended period under Section 28(4) unsustainable. Consequentially, orders of confiscation, imposition of redemption fine and mandatory penalty founded on extended-period demand were set aside. [Paras 11]

Extended period cannot be invoked; confiscation, redemption fine and penalty are set aside

Final Conclusion: The appeal is allowed: the imported Clear Float Glass is held classifiable under CTH 7005 10 90; the appellant is entitled to the FTA exemption under Notification No. 46/2011-Cus. (Sl. No. 934) subject to origin proof; and the extended-period demand, confiscation, redemption fine and penalty imposed in the impugned order are set aside.

Classification between Heading 7409 and Heading 7419 - essential character / assumption of character of articles - Chapter Note 1(g) to Chapter 74 - Section Note 6 to Section XVI (blank as a definite article) - General Rules of Interpretation (Rule 1 and Rule 3(a)) - Para 6.8(a) of FTP 2009-14 - DTA entitlement for similar products - commercial interchangeability test for similarity - education cess - aggregation under proviso to Section 3(1) of the Central Excise Act - penalty under Rule 25 of the Central Excise Rules - exercise of discretion where issue is interpretation of law

Classification between Heading 7409 and Heading 7419 - essential character / assumption of character of articles - Chapter Note 1(g) to Chapter 74 - Section Note 6 to Section XVI (blank as a definite article) - Classification of the coin blanks was under CETH 7419 and not under CETH 7409 - HELD THAT: - The Tribunal examined Chapter Note 1(g) to Chapter 74, the competing tariff headings and HSN Explanatory Notes and applied the principle that plates, sheets and strips remain under Heading 7409 only so long as they have not assumed the character of articles of other headings. The coin blanks were manufactured to specific sizes and shapes for the mint, were punched out, annealed, upset, struck and finished to dimensions and outline of coins and thus possess the essential character of a coin (a definite article). Section Note 6 to Section XVI (definition of 'blank' as an article having approximate shape of the finished article) and the manufacturing process show that the blanks have attained the characteristics of the finished article save for embossing. For these reasons the Tribunal held that the coin blanks cannot be treated as raw plates/strips and are classifiable under Heading 7419, affirming the impugned classification and confirming the duty demand based on that classification. [Paras 11, 13, 14, 15]

Classification of the impugned coin blanks under Chapter 7419 is upheld and the related duty demand confirmed.

Para 6.8(a) of FTP 2009-14 - DTA entitlement for similar products - commercial interchangeability test for similarity - Coin blanks and copper strips are 'similar products' for the purpose of Para 6.8(a) of FTP 2009-14 and the appellants' DTA entitlement is to be considered accordingly - HELD THAT: - The Tribunal considered the FTP provision permitting 100% EOU units manufacturing multiple products to clear any of those products into DTA up to a specified percentage of FOB value of the specific exported products, subject to overall entitlement. Relying on precedent and the plain language of Para 6.8(a), the Tribunal accepted that strips and blanks, though classified differently for tariff purposes, are similar for FTP entitlement because they arise from similar production processes and have similar physical characteristics; 'similar' was not read down to require identity or strict commercial interchangeability. Applying earlier Tribunal decisions (including the appellant's own earlier ruling), the Tribunal held the claimed DTA clearances were within the unit's entitlement and set aside the demand raised in respect of the contested DTA clearances. [Paras 16, 17]

Confirmation of demand on DTA clearances (challenged under FTP entitlement) is set aside; the appellants' DTA entitlement in respect of strips and blanks is accepted.

Education cess - aggregation under proviso to Section 3(1) of the Central Excise Act - Imposition/confirmation of Education Cess was not sustainable as charged in the impugned demand - HELD THAT: - The Tribunal accepted the legal position that once Education Cess is added to customs duties to arrive at the aggregate (by operation of the proviso to Section 3(1) of the Central Excise Act), it should not be charged again in the manner adopted by the adjudicating authority. Relying on Tribunal precedent, the Tribunal found that the method of calculating and recharging the cess as applied by the Department was not correct in the facts of this case and therefore set aside the confirmation of the cess demand. [Paras 18]

Confirmation of the Education Cess demand is set aside.

Penalty under Rule 25 of the Central Excise Rules - exercise of discretion where issue is interpretation of law - Penalty imposed under Rule 25(1) is not sustainable and is set aside - HELD THAT: - The Tribunal noted that the central dispute was one of legal interpretation (classification) and that the appellants relied on some advance rulings and reported decisions supporting their view. Given that the main controversy involved interpretation of law and there was no finding of deliberate suppression or evasion, the Tribunal concluded that the Department had not made out a case for imposing the monetary penalty. In exercise of its discretion the Tribunal set aside the penalty imposed by the Commissioner. [Paras 19]

Penalty of Rs.50,00,000 imposed under Rule 25(1) is set aside.

Final Conclusion: The Tribunal upheld classification of the coin blanks under Chapter 7419 and confirmed the corresponding duty demand, but allowed the appeal in part by accepting the appellants' FTP/DTA entitlement for strips and blanks (setting aside the DTA-related demand), setting aside the Education Cess demand as wrongly charged, and quashing the penalty imposed under Rule 25(1).

Prohibited goods - Cognizable and non-cognizable offences - Power to arrest under the Customs Act - Section 155 Cr.P.C. requirement for Magistrate's order - Power to summon under Section 108 of the Customs Act - Constitutional validity of Sections 104, 105 and 108 of the Customs Act

Prohibited goods - Cognizable and non-cognizable offences - Power to arrest under the Customs Act - Section 155 Cr.P.C. requirement for Magistrate's order - Prima facie finding that the allegations against the petitioners fall within the category of prohibited goods and are therefore cognizable, so that Section 155 Cr.P.C. does not bar arrest without a magistrate's order. - HELD THAT: - The Court examined the definition of prohibited goods and the statutory framework under the Customs Act, including the classification of offences and the power of arrest. Noting that import of gold is subject to restrictions under foreign trade notifications and RBI circulars, the Court held that where goods are imported or dealt with in contravention of applicable restrictions they fall within the ambit of prohibited goods. A combined reading of Section 104(1), (4) and (5) of the Customs Act and Schedule II of the Cr.P.C. indicates that only specified categories (prohibited goods or evasion above a monetary threshold) are cognizable; where the factual allegations prima facie bring the conduct within those categories, the arresting power under the Customs Act is exercisable and the restraint in Section 155 Cr.P.C. does not apply. Applying this to the facts alleged (seizure from an arrested third party and statements implicating the petitioners), the Court was satisfied prima facie that the allegations fall within the parameters of prohibited goods and cognizable offences, and that Section 155 Cr.P.C. is therefore inapplicable to bar arrest in the present factual matrix. [Paras 11, 12, 16, 17, 20]

Prima facie the alleged acts fall within prohibited goods and are cognizable; Section 155 Cr.P.C. has no application on the present facts.

Power to summon under Section 108 of the Customs Act - Interim relief against coercive action - Application for interim protection restraining coercive action (stay applications) was rejected. - HELD THAT: - The petitioners sought interim protection to restrain respondents from taking coercive action under the Customs Act, invoking reliance on interim orders in Radhika Aggarwal. The Court contrasted the reliefs and factual basis in that matter (which focused on alleged non-compliance with Section 155 Cr.P.C.) with the present petitions and observed that the Supreme Court's interim protection in Radhika Aggarwal did not turn on the constitutional validity of the provisions now challenged. In view of the Court's prima facie conclusion that the allegations against the petitioners concern prohibited goods (cognizable offences), and given the lack of a compelling prima facie case to disturb enforcement steps, the Court declined to grant interim relief. [Paras 6, 7, 18, 20, 21]

Stay applications dismissed; interim protection refused.

Constitutional validity of Sections 104, 105 and 108 of the Customs Act - The constitutional challenge to Sections 104, 105 and 108 of the Customs Act has not been decided on merits and remains to be adjudicated in the main writ petitions. - HELD THAT: - The Court recorded that the principal writ petitions press constitutional objections to the specified provisions, but emphasised the presumption of constitutionality and that those challenges require full consideration in the main proceedings. The present order addressed only the interim applications; substantive constitutional questions were explicitly reserved for determination when the main petitions are heard. [Paras 2, 18, 21]

Constitutional validity of Sections 104, 105 and 108 left open for adjudication in the main writ petitions.

Final Conclusion: The Court dismissed the interim stay applications and refused interim protection against coercive action, holding prima facie that the allegations fall within prohibited goods (cognizable offences) so that Section 155 Cr.P.C. is inapplicable; the substantive constitutional challenges to Sections 104, 105 and 108 of the Customs Act are reserved for decision in the main petitions.

Resolution Professional's locus to continue post CIRP proceedings - Inherent power to recall judicial orders - Distinction between recall and review - Mistake of the court prejudicing a party as ground for recall - Adjudicating Authority's power to correct factual inaccuracies

Resolution Professional's locus to continue post CIRP proceedings - Resolution Professional not functus officio in respect of certain proceedings - Resolution Professional was entitled to file the application for recall of the order dated 04.12.2023. - HELD THAT: - The Tribunal applied the reasoning in Tata Steel BSL Ltd. and related authorities to hold that the Resolution Professional (RP) was not rendered functus officio so as to be deprived of locus to pursue the application. The RP had filed the interlocutory application during CIRP and was subsequently authorized by the Monitoring Committee to act in relation to the implementation/related proceedings; the scheme and purpose of the Code allow continuation of such proceedings to protect creditors' interests. Accordingly, the Adjudicating Authority did not err in holding the RP had locus to seek recall. [Paras 53, 55]

Respondent No.1 (the Resolution Professional) had locus and was entitled to file the recall application.

Inherent power to recall judicial orders - Mistake of the court prejudicing a party as ground for recall - Adjudicating Authority's power to correct factual inaccuracies - The Adjudicating Authority did not commit error in recalling and amending its earlier order dated 04.12.2023; the amendments amounted to a permissible recall to correct mistakes. - HELD THAT: - Relying on precedents (including Budhia Swain and this Tribunal's jurisprudence), the Tribunal reiterated that NCLT/NCLAT possess inherent power to recall orders where a court's mistake has prejudiced a party, fraud exists, a necessary party was not before the court, or there is patent lack of jurisdiction. The record showed factual inaccuracies in the original order (confusion between parties, incorrect statements about possession of engines/APUs and which items were sent for repair). The Adjudicating Authority corrected those factual mistakes and made consequential directions (return of the CD's engine/APU and entitlement to make certain claims). Those corrections fell within the recognised scope for recall and were not a rehearing on merits. [Paras 64, 75, 83, 84]

The recall and corrective amendments in the Impugned Order dated 09.05.2024 were valid and not vitiated by illegality.

Distinction between recall and review - Power to review requires statutory conferment; power to recall is inherent - The Impugned Order dated 09.05.2024 was a recall (to rectify mistakes) and not a prohibited review of the earlier order. - HELD THAT: - The Tribunal set out the established distinctions: review is a statutory remedy addressing errors apparent on the record; recall is an inherent power to correct procedural errors, fraud, absence of necessary parties, or mistakes of the court that prejudice a party. Applying those principles to the amendments made (which corrected factual inaccuracies and restored omitted reliefs/claims), the Tribunal concluded the Adjudicating Authority exercised permissible recall and did not impermissibly re open or rehear the merits as a review. [Paras 56, 57, 64, 76, 82]

The Impugned Order is a valid exercise of recall power and does not amount to an impermissible review.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the Adjudicating Authority's jurisdiction to entertain the recall application, found the amendments to the earlier order to be permissible corrections of factual mistakes (i.e., a valid recall), and concluded that the Impugned Order dated 09.05.2024 did not amount to an unlawful review; the Adjudicating Authority's order stands. No costs.

Interpretation of unambiguous contract terms - contractual allocation of taxes and duties - inadmissibility of external aid where contract is unambiguous - patent illegality - fundamental policy of Indian law and basic notions of justice - challenge under Section 34 of the Arbitration and Conciliation Act, 1996 - obligation under Section 28(3) to take into account terms of contract

Interpretation of unambiguous contract terms - contractual allocation of taxes and duties - obligation under Section 28(3) to take into account terms of contract - Whether Clause 2.2 of the contract obligated the tenderer to quote rates inclusive of Service Tax and thus precluded the Arbitral Tribunal from awarding reimbursement of Service Tax to the respondent. - HELD THAT: - Clause 2.2, read as a whole, required that the rates quoted by the tenderer include "all incidental charges" and expressly appended the phrase "and other taxes and duties, etc.", thereby covering taxes not specifically enumerated. As Service Tax was re-imposed and in force as on the dates of bid opening, LoA and agreement, the expression "and other taxes and duties, etc." necessarily included Service Tax. The clause is unambiguous and requires no external aid for its construction. The bidders were expected to factor applicable taxes into their quoted rates; the statutory incidence of Service Tax does not negate the contractual allocation of the incidence in rates where the statute separates impact and incidence. Accordingly, the Tribunal's award directing reimbursement was contrary to the explicit contractual allocation and to the obligation of an Arbitral Tribunal to take into account the terms of the contract under Section 28(3). [Paras 27, 28, 29, 30, 31]

Clause 2.2 includes Service Tax and the Arbitral Tribunal erred in awarding reimbursement contrary to the unambiguous contractual allocation.

Inadmissibility of external aid where contract is unambiguous - patent illegality - fundamental policy of Indian law and basic notions of justice - challenge under Section 34 of the Arbitration and Conciliation Act, 1996 - Whether the Arbitral Tribunal's reliance on the Railway's internal Estimate (not part of the contract) to hold the petitioner liable for Service Tax constituted patent illegality warranting interference under Section 34. - HELD THAT: - The Estimate relied upon by the Tribunal was an internal wage calculation dated prior to the reinstatement of Service Tax and was not communicated to or incorporated in the tender or the contract. It was limited to wage computation under the Minimum Wages framework and was not intended as or reflective of the final prices to be quoted by bidders. Resort to such an external document to override an unambiguous contractual clause was patently perverse. Rewriting the contract or substituting the internal Estimate for the express contractual allocation would contravene the fundamental policy of Indian law and basic notions of justice. These errors satisfy the tests of Section 34 (including sub-sections dealing with patent illegality and fundamental policy), and therefore the award could be set aside on those grounds. [Paras 42, 43, 44, 45, 47]

Reliance on the internal Estimate, which was not part of the contract, was patently perverse and amounted to patent illegality and contravention of fundamental policy, warranting setting aside of the award.

Final Conclusion: The petition under Section 34 succeeds: the award directing reimbursement of Service Tax and interest is set aside for being contrary to the unambiguous contractual allocation of taxes and vitiated by patent illegality and violation of fundamental policy; consequentially the execution proceedings stand dismissed and there is no order as to costs.

Exemption for educational services - commercial training or coaching - taxable service by commercial training centre - recognized by any law - retrospective explanation of 'commercial' - proof of affiliation or statutory empowerment to grant degrees/diplomas

Exemption for educational services - recognized by any law - proof of affiliation or statutory empowerment to grant degrees/diplomas - Whether the petitioner was entitled to the exemption for educational services in respect of courses/diplomas it awarded - HELD THAT: - The Court accepted the CESTAT's conclusion that the exemption notifications apply only to courses which lead to a certificate, diploma or degree that is "recognized by any law". A qualification is "recognized by law" only if it is granted by an authority empowered and recognized in law to confer such qualification. The petitioner failed to establish that it was affiliated to or recognized by a university or deemed university, or that it itself was empowered by statute to grant the diplomas/certificates. The petitioner also conceded that the university under whose aegis it claimed to operate had been deprived of recognized university status by the Supreme Court's order. On this conspectus, the petitioner could not derive benefit of the exemption notifications and the departmental demands therefore stood rightly sustained.

Petitioner's claim to exemption was negatived; exemption not available as the diplomas/certificates were not shown to be "recognized by any law".

Commercial training or coaching - taxable service by commercial training centre - retrospective explanation of 'commercial' - Whether the CESTAT correctly interpreted and applied the statutory definitions making training/coaching by commercial centres taxable - HELD THAT: - The CESTAT's analysis of the statutory scheme was upheld. Sectional definitions treat services by a "commercial training or coaching centre" as taxable. The Finance Act, 2010 inserted an explanation (with retrospective effect from 1 July 2003) clarifying that "commercial" means services provided for consideration irrespective of profit motive. The Court noted the Board's circular clarifying that only courses approved or recognized by entities established under Central or State legislation qualify as "recognized by any law" for exemption purposes. Applying these definitional and explanatory provisions, the Tribunal correctly concluded that the petitioner, which provided courses for consideration and lacked the requisite statutory recognition or affiliation, fell within the taxable ambit and could not invoke the exemption notifications.

CESTAT's interpretation and application of the statutory definitions and retrospective explanation was affirmed; the services were taxable.

Final Conclusion: The writ petition is dismissed; the CESTAT order dated 30 July 2018 is affirmed and the departmental appeals allowing tax demand are sustained.

Renting of immovable property service - Negative List - aggregate value for threshold exemption - Small Scale Service Provider exemption - strict construction of exemption notification

Renting of immovable property service - Negative List - service tax liability - Liability to service tax for letting out shops/aaraths and other premises - HELD THAT: - The Tribunal and the Apex Court decisions cited establish that activities of letting out shops and other premises by Agricultural Produce Market Committees constitute "renting of immovable property service" and are not covered by the Negative List where the activity is undertaken for furtherance of business or commerce. Applying those decisions, the appellant is held liable to service tax for the normal period falling in the post-negative regime. The adjudicatory finding records liability for the post-negative period from 1.10.2012 to 31.03.2014 because the activities did not fall within the Negative List entry as interpreted in the cited authorities. [Paras 4]

Appellant liable to service tax for the period w.e.f. 1.10.2012 to 31.03.2014.

Aggregate value for threshold exemption - Small Scale Service Provider exemption - strict construction of exemption notification - Claim to SSI exemption under Notification No.06/2005-ST by segregating rents and applying threshold per premises - HELD THAT: - The authorities correctly evaluated entitlement to the small scale service provider exemption by applying the notification as a whole. Notification No.33/2012-ST and the Explanation define "aggregate value" to include the sum of taxable services provided from one or more premises and require that the aggregate value in the preceding financial year not exceed the threshold. The appellant failed to produce documentary proof to show that the aggregate taxable value was within the limit for the relevant years; records show aggregate rent receipts crossed the threshold (including earlier evidence from 2008-09). The notification conditions must be strictly complied with and cannot be selectively applied; accordingly the adjudicating and appellate authorities rightly held the appellant ineligible for SSI exemption for the subsequent years. [Paras 8]

Claim to SSI exemption rejected; aggregate receipts exceed threshold and exemption not available for the relevant years.

Final Conclusion: Appeal dismissed; service tax liability on renting of immovable property affirmed for the post-negative period (1.10.2012-31.03.2014) and the claim to Small Scale Service Provider threshold exemption rejected on the ground that aggregate receipts exceeded the statutory limit.

Liquidated damages not taxable as declared service under Section 66E(e) of the Finance Act, 1994 - requirement of 'obligation to tolerate an act' for service under Section 66E(e)

Liquidated damages not taxable as declared service under Section 66E(e) of the Finance Act, 1994 - requirement of 'obligation to tolerate an act' for service under Section 66E(e) - Taxability of amounts received as liquidated damages/compensation for short lifting of electricity under the declared service in Section 66E(e). - HELD THAT: - The Appellate Tribunal found that the amounts received by the appellant as compensation/liquidated damages for failure to supply the contracted capacity did not constitute a service under Section 66E(e). The Tribunal held that such compensation arises from a breach of contractual obligation and is not paid as consideration for any activity of tolerating an act; therefore it does not satisfy the essential requirement of an 'obligation to tolerate an act' which would attract the declared service. The Tribunal applied the reasoning of the precedents cited by the appellant and concluded that there was no justification to confirm service tax demand, interest and penalty imposed by the Adjudication authority.

Impugned order confirming service tax demand on liquidated damages set aside.

Final Conclusion: The appeal is allowed; the adjudication confirming service tax, interest and equal penalty on liquidated damages received for short lifting of power is set aside with consequential relief in accordance with law.

Reimbursement / out of pocket expenses not part of "gross amount charged" for valuation prior to change in law - rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 ultra vires section 67 of the Finance Act - valuation under section 67 - service tax leviable only on value of the taxable service actually rendered - extended period of limitation under proviso to section 73(1) - requires deliberate suppression with intent to evade - self assessment and bona fide belief - limits invocation of extended period where interpretation dispute exists

Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 ultra vires section 67 of the Finance Act - reimbursement / out of pocket expenses not part of "gross amount charged" for valuation prior to change in law - valuation under section 67 - service tax leviable only on value of the taxable service actually rendered - Inclusion of reimbursed expenditure in the value of taxable service for periods prior to 14.05.2015 - HELD THAT: - The adjudicating authority relied upon rule 5(1) of the 2006 Rules to include reimbursed costs in value. The Tribunal observed that the Supreme Court in Intercontinental held that section 67 permits valuation only of the gross amount charged "for such" taxable service and that rule 5(1) went beyond the mandate of section 67 by bringing reimbursable expenses within valuation. The legal position is that inclusion of reimbursable expenditure as part of the taxable value is not permissible for transactions prior to the date from which the law was changed (w.e.f. 14.05.2015). Applying that principle to the facts, the appellant's reimbursements cannot be treated as consideration for the taxable service for the relevant earlier periods, and therefore cannot be subjected to service tax on that basis. [Paras 11, 14, 15, 16]

Reimbursed expenditure cannot be included in the taxable value for the periods in question; reliance on rule 5(1) to tax reimbursements for those periods was impermissible.

Extended period of limitation under proviso to section 73(1) - requires deliberate suppression with intent to evade - self assessment and bona fide belief - limits invocation of extended period where interpretation dispute exists - Invocability of the extended period of limitation for recovery of service tax in respect of the assessment periods before the show cause notices - HELD THAT: - The Commissioner applied the proviso to section 73(1) on the basis that the assessee had "abused" self assessment and had suppressed taxable value. The Tribunal followed binding precedents which require a deliberate act to suppress facts with intent to evade payment (Pushpam Pharmaceuticals, Anand Nishikawa, Uniworth and later authorities). Mere non payment or an erroneous view on interpretation, especially where returns were filed and the matter involves interpretation of law, does not by itself establish suppression with intent to evade. The Department also had a duty to scrutinize returns. In the facts, there was no positive evidence of deliberate suppression to evade tax; the extended period could not be invoked. [Paras 23, 24, 26, 27, 28]

Extended period of limitation was not invocable; demands confirmed for the extended period could not be sustained.

Final Conclusion: The adjudicating order dated 10.10.2012 is set aside: reimbursements cannot be included in taxable value for the periods in dispute and the extended period of limitation was not invocable; the appeals are allowed.

Renting of Immovable Property Services - benefit of Notification No. 06/2005-S.T. - treatment of co-owners for service tax liability - pre-negative list and post-negative list liability - definition of "person" under Section 65B(37) - service to oneself - limitation / relevant date for issuance of SCN

Renting of Immovable Property Services - benefit of Notification No. 06/2005-S.T. - treatment of co-owners for service tax liability - Sustainability of service-tax demand for periods prior to 30.06.2012 - HELD THAT: - The Tribunal applied the reasoning in Commissioner of Central Excise, Nasik v. Deoram Vishrambhai Patel and held that where property is jointly owned and lease agreements/receipts are in the names of individual co-owners, tax liability must be determined on individual receipts. For the relevant pre-negative list years, each co-owner's share fell within the exemption limits under Notification No. 06/2005-S.T. for specified years and, for subsequent years where tax was payable, the co-owners had paid tax with interest before issuance of notice. The appellate authority's finding that co-owners could not be clubbed as a single taxable person for imposition of service tax or penalties was upheld. On these grounds the Tribunal held that the demand prior to 30.06.2012 is not sustainable. [Paras 6]

Demand prior to 30.06.2012 does not sustain and is set aside.

Definition of "person" under Section 65B(37) - post-negative list liability - service to oneself - limitation / relevant date for issuance of SCN - Sustainability of service-tax demand for the period after 01.07.2012 (including 1.7.2012 to 31.03.2013) - HELD THAT: - The Tribunal acknowledged that Section 65B(37) expressly included a firm within the definition of "person" with effect from 01.07.2012 but examined the factual matrix and statutory ambit. It found that the firm was not functional post 2009-10, rental agreements were in the individual partners' names and there was no evidence that the firm rendered services to itself. Applying the legal concept that a service must be provided by one person to another and noting absence of contrary evidence from Revenue, the Tribunal concluded that there was no taxable service by the firm post 01.07.2012. The Tribunal also accepted that the show-cause notice for the period 1.7.2012 to 31.03.2013 was within the limitation period, but held that substantive liability did not arise because of the absence of a service relationship by the firm. [Paras 7, 8]

Demand for the post-01.07.2012 period is unsustainable; impugned order set aside and appeal allowed.

Final Conclusion: The Tribunal set aside the impugned order: the service-tax demand prior to 30.06.2012 was held unsustainable by application of Notification No. 06/2005-S.T. to individually owned shares; the demand for the post-01.07.2012 period (including 1.7.2012-31.03.2013) was also held unsustainable on the facts, since the firm was not functional, the rental agreements were in individual partners' names and there was no service by the firm to another person.

Interest on delayed refund - refund of amount deposited under protest - pre-deposit under Section 35F - distinction between Section 11B/11BB and Section 35FF - commencement of interest after expiry of three months from receipt of refund application - Proviso to Section 35FF in relation to pre-2014 deposits - unjust enrichment and Section 11B

Interest on delayed refund - commencement of interest after expiry of three months from receipt of refund application - Section 11BB - Entitlement to interest on the refunded amounts - HELD THAT: - The Tribunal held that entitlement to interest on delayed refund is governed by the statutory scheme of Section 11B/11BB (as applied to service tax matters). Interest under that scheme commences after the expiry of three months from the date of receipt of the application for refund. Relying on precedent and statutory interpretation, the Tribunal found that where refund was sanctioned within one month of receipt of the refund applications (applications received 29.05.2019 and 21.07.2019; refunds paid 11.06.2019 and 15.07.2019), no interest under Section 11BB was payable. Consequently, the appellant was not entitled to interest on the refunded amounts in the facts of this case. [Paras 4]

No interest payable because refunds were made within three months of receipt of the refund applications.

Refund of amount deposited under protest - pre-deposit under Section 35F - distinction between Section 11B/11BB and Section 35FF - Proviso to Section 35FF in relation to pre-2014 deposits - Legal characterisation of deposits and applicability of Section 35FF - HELD THAT: - The Tribunal recognised the legal distinction between an amount deposited under protest and a statutory pre-deposit under Section 35F. It observed that Section 35FF provides for interest where an amount deposited under Section 35F is required to be refunded consequent to an appellate order, and that Section 35FF (including its proviso) governs the timing and rate of interest for such pre-deposits. However, even if Section 35FF were to apply, the proviso to Section 35FF (as it stood for amounts deposited prior to the Finance (No. 2) Act, 2014) constrains the commencement of interest and the applicable regime. On the facts the Tribunal concluded that the statutory scheme (whether under Section 11BB or Section 35FF) precluded payment of interest in the present case because refunds were made within the statutory three-month window from receipt of the refund applications. [Paras 4]

Declaration that the characterisation of the deposit (under protest vs pre-deposit) does not afford interest where the statutory timelines under Section 11BB/Section 35FF are met; here refunds within the statutory period preclude interest.

Unjust enrichment and Section 11B - Applicability of unjust enrichment doctrine to interest on refund in this case - HELD THAT: - The Tribunal noted that unjust enrichment principles (as encapsulated in Section 11B) are relevant to refund of duty to ensure that any refund does not result in enrichment where the tax burden has been passed on. The original authority had held that unjust enrichment provisions were not attracted to the interest claimed here. The Tribunal did not disturb the conclusion that unjust enrichment did not operate to deny the refund of interest where the statutory refund provisions applied, but found no entitlement to interest on the facts because of timely refunds under the statutory scheme. [Paras 4]

Unjust enrichment did not prevent refund in principle, but no interest was payable as refunds were timely under the statutory provisions.

Final Conclusion: The appeals are dismissed: although the appellant was entitled to interest if refunds had been delayed beyond the statutory period, the refunds were granted within three months of receipt of the refund applications and therefore no interest was payable under the applicable provisions (Section 11BB as applied to service tax or Section 35FF where relevant).

Refund of accumulated cenvat credit - reverse charge mechanism - cash refund under section 142(3) read with section 174(2)(f) of the CGST Act - treatment of pre-existing law for transitional credits - non obstante clause - doctrine of necessity - jurisdiction of CESTAT to grant refund

Refund of accumulated cenvat credit - reverse charge mechanism - cash refund under section 142(3) read with section 174(2)(f) of the CGST Act - Refund in cash of cenvat credit paid towards service tax on reverse charge after implementation of CGST is admissible. - HELD THAT: - The Tribunal accepted the appellant's contention that payments of service tax on input services made under reverse charge after 01.07.2017, which could no longer be transitioned as input tax credit, are refundable in cash by invoking section 142(3) read with section 174(2)(f) of the CGST Act. The Tribunal noted earlier decisions of the Judicial President and the Larger Bench in M/s. Brose India Automotives Systems Private Limited endorsing that such payments are refundable in cash and that the Tribunal is competent to grant relief. Contrary High Court decisions cited by the Department did not contain an express contrary finding that would preclude the Tribunal's conclusion; some earlier orders themselves treated section 142(3) as enabling relief by invoking the doctrine of necessity where express provision in pre-existing law was lacking. The Tribunal further relied on the statutory mandate in section 142(6) to dispose claims in accordance with pre-existing law and to refund admissible credit in cash notwithstanding anything contrary in the pre-existing law, thereby supporting cash refund despite absence of an express provision under earlier law. [Paras 5, 6, 7]

Appellant entitled to cash refund of the claimed cenvat credit with applicable interest.

Jurisdiction of CESTAT to grant refund - treatment of pre-existing law for transitional credits - non obstante clause - CESTAT is competent to adjudicate and grant cash refund of transitional cenvat credit and must apply the non-obstante mandate to allow cash refund where credit is found admissible. - HELD THAT: - The Tribunal held that it has jurisdiction to decide claims for refund of cenvat credit under the transitional provisions and to order cash payment where credit is admissible. The decision emphasised section 142(6)'s instruction to dispose of cenvat claims in accordance with pre-existing law and to refund admissible credit in cash 'notwithstanding anything to the contrary' in that law. This non-obstante formulation was applied to validate granting cash refund even if earlier statutes or rules did not expressly provide for cash refund, thereby vesting the Tribunal with power to direct cash payment of the admissible credit. [Paras 6, 7]

CESTAT empowered to grant cash refund of admissible transitional cenvat credit and to enforce the non-obstante mandate.

Final Conclusion: Appeal allowed; the Commissioner (Appeals) order is set aside and the Department directed to pay the claimed cenvat credit for April 2016 to June 2017 in cash with applicable interest within two months.

Exemption under Para-4(c) of Notification No.8/2003-CE dated 01.03.2003 - specified goods bearing a brand name or trade name of another person - interpretation of exceptions in Para-4(b) and Para-4(c) - strict construction of exemption notifications - Commissioner of Central Excise, Trichy Vs. Rukmani Pakkwell Traders

Exemption under Para-4(c) of Notification No.8/2003-CE dated 01.03.2003 - specified goods bearing a brand name or trade name of another person - interpretation of exceptions in Para-4(b) and Para-4(c) - strict construction of exemption notifications - Commissioner of Central Excise, Trichy Vs. Rukmani Pakkwell Traders - Appellant entitled to SSI exemption under Para-4(c) despite goods bearing brand names of another person; impugned demand and orders set aside. - HELD THAT: - Para-4 excludes exemption for specified goods bearing a brand name or trade name of another person but then sets out independent exceptions in sub-clauses (a) to (e). Clause (b) is entity-based and applies to goods bearing the brand/trade name of specified institutions; clause (c) is area-based and grants exemption where the specified goods are manufactured in a factory located in a rural area. The language of clause (c) is clear and unambiguous and does not incorporate the qualifier "brand name or trade name" used in clause (b). Reading the words "brand name or trade name" into clause (c) would amount to re-writing the Notification, which is impermissible. Exemption notifications must be strictly construed and interpreted on their own wording. Reliance on the Apex Court decision in Commissioner of Central Excise, Trichy Vs. Rukmani Pakkwell Traders supports the principle that one cannot add words to a notification to limit its clear scope. Applying these principles, the Tribunal held that goods manufactured in the appellant's factory situated in a rural area fall within Para-4(c) and are eligible for SSI exemption even though they bore brand names belonging to another manufacturer. [Paras 9, 10, 11, 12]

Appeal allowed; benefit of exemption under Para-4(c) granted and impugned order set aside.

Final Conclusion: The Tribunal allowed the appeal, holding that Para-4(c) of Notification No.8/2003-CE grants SSI exemption to goods manufactured in a factory located in a rural area notwithstanding that the goods bore the brand names of another person; the demand and appellate orders were set aside.

Penalty under Rule 26 of the Central Excise Rules, 2002 - Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - Section 9D of the Central Excise Act, 1944 - relevance of statements and requirement of cross-examination - Liability for aiding and abetting evasion - Confiscation requirement for applicability of Rule 26

Penalty under Rule 26 of the Central Excise Rules, 2002 - Liability for aiding and abetting evasion - Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - Sustainability of penalty under Rule 26 against J. M. Joshi and Sachin J. Joshi - HELD THAT: - The Tribunal held that there is no evidence of involvement of J. M. Joshi or Sachin J. Joshi in acts constituting clearance, possession, transport, removal, deposit, concealment, sale or purchase of excisable goods with knowledge or reason to believe they were liable to confiscation. The Tribunal relied on its earlier decision in Meenakshi Food Products (P) Ltd v CCE (2019) which reached the same conclusion on identical facts and recorded that the statements relied upon did not implicate these appellants. The Show Cause Notice made the appellants parties to a demand founded on interpretation of the PMPM Rules and not to a confiscation proceeding; Rule 26, the Tribunal observed, applies to persons involved in ways of dealing with goods capable of attracting confiscation, a factual ingredient absent here. In view of absence of evidence of participation in the relevant acts and the incorrect application of provisions of the Companies Act by the adjudicating authority, the penalty under Rule 26 could not be sustained and was set aside. [Paras 4]

Penalty imposed under Rule 26 on J. M. Joshi and Sachin J. Joshi is set aside.

Section 9D of the Central Excise Act, 1944 - relevance of statements and requirement of cross-examination - Admissibility of statements recorded during investigation - Admissibility and evidentiary weight of third party statements recorded in investigation without cross examination - HELD THAT: - The Tribunal applied Section 9D and relevant precedents to hold that statements recorded during investigation are relevant in adjudication only if the person is examined in the adjudication proceedings; where cross examination was denied despite specific requests, those statements could not be relied upon to record adverse findings against the appellants. The departmental case was based largely on such statements, and denial of cross examination precluded their use as dependable evidence against the appellants. [Paras 4]

Statements recorded in investigation, relied upon by the department but not subjected to cross examination in adjudication, are not admissible for arriving at adverse findings against the appellants.

Penalty under Rule 26 of the Central Excise Rules, 2002 - Liability for aiding and abetting evasion - Sustainability of penalty under Rule 26 against Vinayak Kashiram Sawant - HELD THAT: - On the record the Tribunal found that Vinayak K. Sawant looked after the Silvassa plant and was not concerned with the activities at the Gandhinagar unit where the contravention occurred; Dilip Jani was found to be the person supervising production and clearance at Gandhinagar. There is thus no material to show Sawant's involvement in the acts enumerated under Rule 26 or in aiding evasion at the Gandhinagar unit. Accordingly the penalty imposed under Rule 26 could not be sustained. [Paras 4]

Penalty imposed under Rule 26 on Vinayak Kashiram Sawant is set aside.

Penalty under Rule 26 of the Central Excise Rules, 2002 - Authorized signatory's responsibility for excise formalities - Sustainability and quantum of penalty under Rule 26 against Balraj Maurya - HELD THAT: - The Tribunal accepted that Balraj Maurya, as authorized signatory, handled day to day excise matters, including filing declarations and returns, and admitted mistakes in declarations. However, it also found that he acted on instructions of the person managing production (Dilip Jani) and was not shown to have been a beneficiary of any duty evasion. Considering the factual matrix, the admitted mistakes, the conduct of the company in paying duty and interest on the day of search, and principles of proportionality, the Tribunal reduced the penalty to a lower sum that would meet the interest of justice. [Paras 4]

Penalty on Balraj Maurya is reduced to a lesser amount (as recorded by the Tribunal).

Final Conclusion: The appeals are allowed in part: penalties under Rule 26 are set aside as against J. M. Joshi, Sachin J. Joshi and Vinayak Kashiram Sawant; the penalty against Balraj Maurya is reduced as recorded by the Tribunal, with consequential reliefs to follow as per law.

Classification of prepared adhesives under Chapter Heading 35.06 versus Chapter 39.09 - Area based exemption under Notification No.50/2003 CE - Captive consumption and non marketability as test for excisability - Onus on Revenue to prove marketability - CBEC Circular No.464/30/99 CX and administrative clarification - Bar of limitation / time bar to assessment beyond December, 2010 - Violation of principle of natural justice for non production of test report and denial of cross examination - Doctrine of finality/estoppel where Revenue has accepted classification in earlier decisions

Classification of prepared adhesives under Chapter Heading 35.06 versus Chapter 39.09 - Area based exemption under Notification No.50/2003 CE - CBEC Circular No.464/30/99 CX and administrative clarification - Doctrine of finality/estoppel where Revenue has accepted classification in earlier decisions - Captive consumption and non marketability as test for excisability - Onus on Revenue to prove marketability - Mixtures of Melamine Formaldehyde and Phenol Formaldehyde prepared in house and used as glue/adhesive for manufacture of laminates are classifiable as prepared adhesives under Chapter Heading 35.06 and, being captively consumed and not shown to be marketable, are entitled to exemption under Notification No.50/2003 CE. - HELD THAT: - The Tribunal followed coordinate decisions holding that the resinous mixtures, after addition of hardeners and other inputs and being transferred to glue kitchen for bonding, emerge as "prepared glue" falling under Chapter 35.06 and not as primary resins under Chapter 39.09. The reasoning relied upon HSN explanatory notes and Chapter Note 6, the Ministry clarification that such adhesives qualify under Heading 3506, and the CBEC Circular No.464/30/99 CX which recognises that specially developed binders made for captive consumption with short shelf life are not chargeable to excise if not marketable. The Tribunal observed that Revenue failed to establish marketability or comparability by chemical analysis, and that reliance on website entries or purchase order descriptions was insufficient. As the Department has accepted the classification in prior appeals and has not pursued further appeal, Revenue cannot adopt a contrary stance; permitting it to do so would create legal confusion. Applying these principles, the Tribunal held the impugned demand unsustainable and set aside the orders.

Allowance of appeal; exemption under Notification No.50/2003 CE sustained for the mixtures treated as prepared adhesives classified under Chapter 35.06; impugned orders set aside.

Bar of limitation / time bar to assessment beyond December, 2010 - Substantial part of the demand up to December, 2010 is time barred and therefore not maintainable. - HELD THAT: - The Tribunal found that the Department had knowledge of use of Melamine and Formaldehyde from the declarations filed and unit verifications in 2006 and that the appellants had disclosed the raw materials in the declarations. The Department accepted the declarations and allowed the exemption for an extended period without objection until later. In these circumstances, and following precedent that disclosure in statutory records negates suppression, the Tribunal held that the Department's demands for periods up to December, 2010 are barred by limitation.

Portion of demand up to December, 2010 held time barred; corresponding relief granted to the appellants.

Violation of principle of natural justice for non production of test report and denial of cross examination - Impugned adjudication is vitiated for breach of natural justice by not furnishing the test report to the appellants and denying opportunity for cross examination of witnesses relied upon in the show cause notice. - HELD THAT: - The Tribunal recorded that the Department produced the test report only at the hearing and did not provide it earlier despite requests, and that appellants were thereby deprived of an opportunity to seek re tests or to cross examine. Given the centrality of the test report and oral statements to the Department's case, the failure to allow fair opportunity to challenge those materials rendered the impugned order legally infirm.

Impugned orders set aside on grounds of breach of natural justice; appellants entitled to consequential relief.

Final Conclusion: Appeals allowed; impugned orders set aside - the in house mixtures used as adhesives are classified under Chapter 35.06 and entitled to exemption under Notification No.50/2003 CE, substantial demand up to December 2010 is time barred, and the adjudication was vitiated by denial of natural justice; consequential relief to follow as per law.

Doctrine of merger - Finality of appellate order - Reliance on an order set aside by the appellate authority

Doctrine of merger - Finality of appellate order - Reliance on an order set aside by the appellate authority - Whether the Revenue could rely upon observations made in an earlier order which had been set aside on appeal and remanded for de novo consideration. - HELD THAT: - The Tribunal held that observations contained in the earlier order, which was set aside by the Appellate Authority when the matter was remanded, cease to have operative effect and cannot be relied upon by the Revenue. Applying the doctrine of merger, the appellate decision supersedes and merges the earlier order so that the order set aside "does not exist in law" for purposes of supporting subsequent action. The Tribunal referred to the principle that once a superior forum disposes of the lis, its decision is the final and operative order and the lower authority's order merges into it. Consequently, the Revenue's reliance on the vacated observations was legally impermissible and could not sustain the appeal. [Paras 6, 7, 8, 9]

Observations in the earlier order set aside on appeal cannot be used as a ground for the present appeal; appeal dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, concluding that observations in an order set aside on appeal are not operative and cannot be relied upon, applying the doctrine that the appellate order is the final and binding decision.

Presumption that cheque is issued for debt or liability - presumption as to negotiable instruments - onus on accused to rebut statutory presumption - conviction under Section 138 of Negotiable Instruments Act - revisional jurisdiction - interference only if findings are perverse

Presumption that cheque is issued for debt or liability - presumption as to negotiable instruments - onus on accused to rebut statutory presumption - The respondent-Bank proved issuance and dishonour of cheque and the statutory presumption in favour of the holder applies, which the accused failed to rebut. - HELD THAT: - The Bank examined its branch manager who proved the account opening and loan documents and produced the cheque (Exh. P/10) and ancillary documents including the notice and its receipt. In view of the statutory presumptions under Section 118 and Section 139 of the Negotiable Instruments Act, the Court was required to presume that the cheque was issued for discharge of a debt or liability unless the accused proved otherwise. The petitioner did not lead any evidence to controvert the signature, issuance, purpose of the cheque, or to rebut the presumption. Mere contention that an earlier manager was transferred and the witness lacked personal knowledge did not vitiate the Bank's case because the witness proved the relevant documents and transaction. On the record, nothing contrary was established to overturn the statutory presumption, and therefore the ingredient of issuance and dishonour in support of an offence under Section 138 stood proved. [Paras 8, 9, 10, 11]

Findings that the cheque was issued for a debt or liability and that the Bank proved issuance and dishonour, which the accused failed to rebut, are upheld.

Conviction under Section 138 of Negotiable Instruments Act - The courts below properly held that the statutory notice was served and that the notice requirement for prosecution under Section 138 was satisfied. - HELD THAT: - The appellate court relied on the acknowledgment (Exh. P/12) and the receipt of notice (Exh. P/13). The petitioner did not challenge the receipt of notice during cross-examination of the Bank's witness. In absence of any contrary evidence, the courts below rightly concluded that the demand notice had been received and that the statutory pre-condition to initiate complaint proceedings under Section 138 was fulfilled. [Paras 12]

The finding that the notice was served and received is affirmed.

Revisional jurisdiction - interference only if findings are perverse - The revisional petition does not warrant interference because concurrent findings of fact by two courts below are not perverse. - HELD THAT: - While exercising revisional jurisdiction, this Court may interfere with findings of fact only if they are perverse. The lower courts recorded concurrent findings on the essential ingredients of the offence under Section 138 after appreciating oral and documentary evidence. The petitioner failed to establish any perversity or legal error in the appreciation of evidence that would justify reappraisal. Consequently, there is no scope for the revisional court to re-evaluate the evidence afresh. [Paras 13]

No interference in the concurrent findings of the courts below; revision dismissed.

Final Conclusion: Concurrent findings of the trial and appellate Courts that the Bank proved issuance, dishonour of the cheque and service of notice, and that the accused failed to rebut statutory presumptions, are affirmed; the criminal revision is dismissed.

Section 138 of the Negotiable Instruments Act - dishonour of cheque due to bank account attachment - account maintained by the drawer - insufficient funds - liability under Section 138

Section 138 of the Negotiable Instruments Act - dishonour of cheque due to bank account attachment - account maintained by the drawer - insufficient funds - Whether drawing a cheque and its dishonour consequent to the bank account being frozen/attached by the Income Tax Department attracts liability under Section 138 of the NI Act. - HELD THAT: - The Court applied the established ingredients of Section 138 and held that criminal liability arises only where the cheque is returned unpaid because the amount standing to the credit of the account is insufficient or the cheque exceeds the amount arranged to be paid from that account. The complaint here expressly records dishonour on account of the bank account being blocked/frozen by an attachment order of the Income Tax Department. Documentary and testimonial material - the bank's return memo endorsing "account blocked", deposition of the bank official (CW I) stating the cheque was dishonoured as "account blocked", the IT Department's attachment order and the bank's letter confirming freeze - corroborate that the account could not be operated by the drawer. Once the account was attached and could not be operated, it could not be said to have been an account "maintained" by the drawer in the sense required by Section 138; the attachment was not a voluntary act of the drawer nor plausibly designed to avoid penal consequences. Following the principle in Kusum Ingots and allied decisions, dishonour for reasons beyond the drawer's control (such as attachment by statutory authority) does not satisfy the third ingredient of Section 138, and therefore does not attract penal liability under that provision. [Paras 12, 13, 16, 17, 19]

The complaint under Section 138 of the NI Act (CC No. 29073/2016) and consequential proceedings are quashed as the cheque was dishonoured due to the account being frozen/attached and the account could not be said to have been maintained by the drawer for the purposes of Section 138.

Final Conclusion: The High Court allowed the petition, holding that dishonour of the cheque caused by the bank account being frozen/attached by the Income Tax Department does not sustain liability under Section 138 of the NI Act; the complaint and consequential proceedings are quashed.

Maintainability of petition for cancellation of design - exclusive jurisdiction of the Controller under Section 19 of the Designs Act, 2000 - appeal to High Court from Controller's order under Section 19(2) - ouster of jurisdiction by implication

Maintainability of petition for cancellation of design - exclusive jurisdiction of the Controller under Section 19 of the Designs Act, 2000 - ouster of jurisdiction by implication - Original Petition in the High Court for cancellation of registration of a design is not maintainable and the petitioner must approach the Controller under Section 19 of the Designs Act, 2000. - HELD THAT: - The Court examined the contrast between the earlier Indian Patents and Designs Act, 1911 (which enabled petitions for cancellation to be presented to the High Court) and the statutory scheme enacted by the Designs Act, 2000. Section 19(1) of the Designs Act mandates that any person interested present a petition for cancellation of registration to the Controller, and Section 19(2) provides that an appeal lies from any order of the Controller to the High Court and that the Controller may refer any such petition to the High Court. On a plain reading, these provisions displace the prior route of presenting a cancellation petition directly to the High Court and concentrate initial jurisdiction with the Controller. The Court rejected the submission that, absent an express ouster of the High Court's jurisdiction, the High Court may still entertain original petitions for cancellation; the specific statutory direction in Section 19 was held to effect that change. The Court further distinguished other intellectual property statutes (Trademarks Act, Patents Act, Copyright Act, Geographical Indications Act) where the enactments themselves expressly permit applications to the High Court, noting that no similar provision exists in the Designs Act, 2000. Reliance on the Letters Patent or on general principles against inferring ouster was held to be insufficient in the face of the clear phraseology of Section 19. Consequently, the petition filed before the High Court could not be entertained and the petitioner must file the cancellation petition before the jurisdictional Controller. [Paras 10, 11, 12, 13, 14]

Original Petition dismissed as not maintainable; petitioner to approach the Controller under Section 19 of the Designs Act, 2000.

Appeal to High Court from Controller's order under Section 19(2) - High Court's role is appellate in relation to Controller's orders under Section 19(2) and the Controller may refer petitions to the High Court for decision. - HELD THAT: - The Court observed that Section 19(2) expressly provides an appeal to the High Court from any order of the Controller and empowers the Controller to refer any petition to the High Court, thereby preserving the High Court's appellate and referral functions but removing original adjudicatory competence in cancellation proceedings from the High Court. That statutory scheme indicates that initial adjudication is to be done by the Controller, with the High Court exercising appellate jurisdiction thereafter or deciding matters referred by the Controller. [Paras 2, 9, 19]

High Court may hear appeals from the Controller under Section 19(2) and decide petitions referred by the Controller; but it cannot entertain original cancellation petitions under Section 19(1).

Final Conclusion: The Original Petition for cancellation of the Design is dismissed as not maintainable; the petitioner is granted liberty to file the cancellation petition before the jurisdictional Controller within 60 days (for which delay/limitation shall not be taken against the petitioner) and the Controller must decide the matter on merits; the High Court remains the appellate forum against the Controller's orders under Section 19(2).

Definition of ganja - Excluded weight of leaves, stalks and seeds in quantification - Heterogeneous mixture rule for contraband quantification - Applicability of Section 37 NDPS Act - Prima facie discrepancy in seized and weighed quantity as ground for bail

Definition of ganja - Excluded weight of leaves, stalks and seeds in quantification - Heterogeneous mixture rule for contraband quantification - Whether the seized material falls within the definition of 'ganja' for purposes of determining commercial quantity and whether the weight of leaves/stalks/seeds must be excluded in quantification. - HELD THAT: - The Court examined the statutory definition of 'ganja' and observed that it covers the flowering or fruiting tops of the cannabis plant and that leaves, seeds and stalks do not fall within that definition unless accompanied by the tops. The judgment distinguishes homogenous mixtures of only flowering tops (Category A) and only leaves/stalks/seeds (Category B), and recognises Category C as heterogeneous mixtures containing both. For heterogeneous mixtures the non-narcotic placebo material (stalks/leaves/seeds) should be excluded and only the actual weight of the flowering/fruiting tops is relevant for determining small or commercial quantity. The Court noted that in the present case the seized material is a heterogeneous mixture and the entire substance, including stems and dried leaves, appears to have been weighed together; therefore the precise weight of actual 'ganja' is a matter for trial and the recorded total weight may overstate the quantity of contraband. [Paras 23, 24, 25, 26, 30]

The weight of leaves, stalks and seeds must be excluded when quantifying 'ganja' in a heterogeneous mixture; the actual quantity of flowering/fruiting tops is a trial issue and the recorded total weight may not establish commercial quantity.

Prima facie discrepancy in seized and weighed quantity as ground for bail - Applicability of Section 37 NDPS Act - Whether the petitioner is entitled to regular bail despite the allegation of recovery of commercial quantity under the NDPS Act. - HELD THAT: - The Court found a prima facie discrepancy between what was seized and how the quantity was recorded and noted authorities holding that such unexplained discrepancy, where FSL and seizure indicate mixture with material not covered by the definition of ganja, can negate the applicability of the stringent bail bar under Section 37 for commercial quantity. The petitioner has clean antecedents, no prior involvement in crime, and there is no material suggesting a likelihood of tampering with evidence, influencing witnesses or flight. On the combined factual and legal matrix-especially the unresolved quantification of actual 'ganja'-the Court concluded that the rigours of Section 37 would not necessarily apply at this stage and bail can be granted subject to conditions. [Paras 28, 29, 30, 31, 32]

Petitioner admitted to regular bail subject to furnishing bond and surety and compliance with specified conditions; applicability of Section 37's bar is negated on the present prima facie discrepancy and is left open for trial.

Final Conclusion: The petition is allowed: regular bail is granted to the petitioner in FIR No. 146/2023 (NDPS) on furnishing bond and surety and subject to enumerated conditions; the final determination of whether the seized quantity constitutes commercial quantity is left to trial, with exclusion of weight of leaves/stalks/seeds to be considered in that process.