TaxTMI Updates e-Newsletter
Nov 03,2020

Power to arrest under Section 69 of the CGST Act - reason to believe - requirement of credible material to form belief - no requirement of prior adjudication/assessment before arrest - distinction between arrest (Chapter XIV) and punishment (Chapter XIX) - applicability of provisions of the Code of Criminal Procedure to arrests under Section 69 - status of authorised GST officers vis-a -vis police officers - default bail for non-cognizable and bailable offences under Section 69(3) - D.K. Basu safeguards (arrest memo, communication, medical check etc.) applicable - obligation to record and communicate reasons and to prepare a meaningful arrest memo

Power to arrest under Section 69 of the CGST Act - no requirement of prior adjudication/assessment before arrest - distinction between arrest (Chapter XIV) and punishment (Chapter XIX) - Whether the Commissioner can invoke power to arrest under Section 69 of the CGST Act prior to completion of adjudication/assessment - HELD THAT: - The Court held that Section 69 (Chapter XIV) and Section 132 (Chapter XIX) operate in different fields and that reference to Section 132 in Section 69 is only to identify the nature of offences for which arrest may be authorised. The power to arrest may be exercised when the Commissioner has reason to believe that a person has committed offences specified in clauses (a)-(d) of Section 132 punishable under the clauses (i) or (ii) of Section 132(1) or Section 132(2), without waiting for the completion of adjudication/assessment under Chapter VIII. Arrest under Section 69 is a measure during inspection, search or investigation and does not itself impose the punishment prescribed in Section 132. The Court rejected the contention that adjudication must precede any arrest, stressing that adjudication and criminal processes are independent and may proceed simultaneously. [Paras 61, 62, 65, 71, 77]

Power to arrest under Section 69 can be exercised on formation of reason to believe without prior completion of adjudication/assessment.

Reason to believe - requirement of credible material to form belief - obligation to record and communicate reasons and to prepare a meaningful arrest memo - Nature and requisites of the 'reason to believe' and the recording/communication of reasons for arrest under Section 69 - HELD THAT: - The Court held that 'reason to believe' is a statutory requirement and, though the formation of opinion is subjective, it must be founded on credible material and a rational nexus between material and belief; it cannot be based on conjecture or extraneous considerations. While the statute does not mandate that the reasons be set out in the arrest order itself, reasons must be recorded in the file. The authorised officer must form a prima facie opinion based on cogent materials; the power is drastic and must be exercised sparingly. The Court emphasised the importance of a proper arrest memo containing the grounds and some prima facie material so that a Magistrate can satisfy himself about lawfulness of arrest on production. [Paras 59, 79, 81, 82, 83]

The Commissioner must form a reasoned belief based on credible material; reasons should be recorded (in file) and a meaningful arrest memo prepared and communicated when arrest is effected.

Applicability of provisions of the Code of Criminal Procedure to arrests under Section 69 - status of authorised GST officers vis-a -vis police officers - default bail for non-cognizable and bailable offences under Section 69(3) - Whether CrPC provisions (e.g., Sections 154-157) apply and whether GST officers are 'police officers' for purposes of arrest under Section 69 - HELD THAT: - Relying on precedents concerning Customs/Central Excise, the Court held that authorised officers under the CGST Act are not police officers in the conventional sense and therefore are not required to follow provisions such as Sections 154-157 of the CrPC when exercising Section 69 powers. Section 69 itself contemplates different consequences depending on whether the offence is cognizable/non-bailable (Section 132(5)) or non-cognizable/bailable (Section 132(4)). For non-cognizable bailable offences the authorised officers (Deputy/Assistant Commissioner) have powers akin to an officer in charge of a police station for the limited purpose of granting bail as provided in Section 69(3)(b). Arrest without a Magistrate's warrant in appropriate cases is permissible under Section 69; the authorised officer need not register FIR but may lodge complaint before the Magistrate as per statute. [Paras 69, 70, 74, 75, 76]

CrPC investigatory provisions are not strictly applicable to arrests under Section 69; GST authorised officers are not police officers for all purposes, but Section 69 provides mechanisms (including bail powers) to deal with cognizable and non-cognizable offences.

D.K. Basu safeguards (arrest memo, communication, medical check etc.) applicable - obligation to record and communicate reasons and to prepare a meaningful arrest memo - Applicability of constitutional safeguards (as in D.K. Basu) to arrests under the CGST Act and requirements as to arrest memo and related procedures - HELD THAT: - The Court held that the constitutional safeguards articulated in D.K. Basu apply to officers of the GST department exercising arrest powers. The judgment reiterated the need for transparency and accountability (identification of arresting officers, arrest memo attested by witness and counter signed by arrestee, informing a relative, diary entries, medical examination, periodic medical checks, and communication to magistrate/control room) and stressed that mere oral communication of grounds is insufficient. The arrest memo must contain prima facie material to enable the Magistrate to form subjective satisfaction about lawfulness of arrest; the GST department should prescribe a standard arrest memo format. [Paras 79, 81, 82, 83]

D.K. Basu safeguards apply; the authorised officer must ensure preparation, attestation and meaningful content of an arrest memo and follow the identified procedural safeguards.

Maintainability of pre arrest writs under Article 226 - power to grant pre arrest protection (extraordinary jurisdiction) - Whether writ petitions seeking pre arrest protection are maintainable and whether relief should be granted in the facts of these petitions - HELD THAT: - The Court noted that petitions were not premature where petitioners showed a genuine apprehension of arrest upon compliance with summons under Section 70; Article 226 jurisdiction can be invoked for pre arrest protection. However, after examining the facts of these petitions, the Court found no case for grant of relief in these particular matters. The ad interim protection earlier granted was vacated and the writ petitions were dismissed on merits, with rule discharged. [Paras 50, 68, 78, 85]

Pre arrest writs under Article 226 are maintainable in appropriate cases, but no relief was granted on the facts of these petitions; earlier interim protection is vacated.

Final Conclusion: The Court held that Section 69 empowers arrest when the Commissioner has 'reason to believe' a person committed offences specified in Section 132 (clauses (a)-(d)) punishable under the identified heads, and such power may be exercised without awaiting completion of adjudication; the belief must be founded on credible material and recorded in the file, arrest memos must be meaningful and the constitutional safeguards in D.K. Basu apply to GST arrests. CrPC investigatory provisions are not strictly applicable and GST authorised officers are not classical police officers, though Section 69 prescribes procedures (including bail mechanisms) for cognizable and non cognizable offences. The writ petitions seeking pre arrest protection were held maintainable but, on the facts presented, no relief was granted and interim protection was vacated.

Summary order. Delay condoned; notice issued; matter listed along with Diary No. 38404 of 2019.

Liability to pay interest under Section 50 of the CGST Act confined to net tax liability - Interest chargeable on net cash tax liability - Administrative Instruction for recovery of interest - Retention of show-cause notices in Call Book pending retrospective amendment - Refund of amount forfeited from pending refund application

Interest chargeable on net cash tax liability - Administrative Instruction for recovery of interest - Liability to pay interest under Section 50 of the CGST Act confined to net tax liability - Application of the Administrative Instruction dated 18.09.2020 directing recovery of interest only on the net cash tax liability for the period 01.07.2017 to 31.08.2020. - HELD THAT: - The Court noted the Administrative Instruction issued by the Central Board of Indirect Taxes and Customs which records the GST Council's recommendation to charge interest on the net cash tax liability and directs field formations to recover interest only on that net cash tax liability for the period 01.07.2017 to 31.08.2020. The Instruction also directs that where show-cause notices have been issued on gross tax liability, those matters may be kept in the Call Book pending a retrospective legislative amendment to section 50. In view of this administrative directive, the Court treated the grievance of the petitioner concerning interest liability as obviated and disposed of the petition accordingly. The Court did not pronounce a substantive legal determination altering the statutory text of Section 50; rather it gave effect to the stated administrative arrangement communicated by the Board.

The petition is disposed of in accordance with the Administrative Instruction dated 18.09.2020, which directs recovery of interest only on the net cash tax liability for 01.07.2017 to 31.08.2020 and the placement of show-cause notices issued on gross liability in the Call Book pending retrospective legislative amendment.

Refund of amount forfeited from pending refund application - Administrative Instruction for recovery of interest - Claim for refund and challenge to the notice rejecting the refund application in light of the Administrative Instruction. - HELD THAT: - The petitioner sought direction to refund the amount alleged to have been wrongly forfeited and a declaration limiting interest liability to net tax. Having placed the Administrative Instruction on record, the Court observed that the Board's direction addresses the petitioner's grievance. Consequently, the Court disposed of the writ petition by directing disposal in accordance with the Administrative Instruction, without separately adjudicating the declaratory plea on Section 50.

The petitioner's challenge to the rejection of the refund application is disposed of in accordance with the Administrative Instruction dated 18.09.2020; no separate declaration on Section 50 was granted.

Final Conclusion: The writ petition is disposed of in accordance with the Central Board's Administrative Instruction dated 18.09.2020: for the period 01.07.2017 to 31.08.2020 interest shall be recovered only on the net cash tax liability and existing show-cause notices framed on gross liability are to be kept in the Call Book pending retrospective amendment; the petitioner's grievance is accordingly treated as no longer subsisting.

Refund of unutilised input tax credit - zero-rated supplies - refund claim in respect of supplies to SEZ unit/developer - declaration from SEZ unit regarding non-availment of input tax credit - interpretation of Rule 89(1) and Rule 89(2)(f) - Section 54(3) - eligibility for refund of ITC

Refund of unutilised input tax credit - zero-rated supplies - Section 54(3) - eligibility for refund of ITC - Rule 89(1) - proviso for supplies to SEZ - Rule 89(2)(f) - declaration from SEZ unit - Whether the appellant (SEZ unit) was entitled to the refund of unutilised input tax credit claimed in respect of supplies received from non SEZ suppliers for the tax period July, 2017 to March, 2018. - HELD THAT: - The Appellate Authority examined Section 54(3) together with Rule 89(1) and Rule 89(2)(f). Rule 89(1) (second proviso) prescribes that in respect of supplies to a Special Economic Zone unit or developer the refund shall be filed by the supplier of goods/services after endorsement by the specified officer of the Zone. Rule 89(2)(f) requires a declaration (as applicable) regarding non availment/non collection of input tax credit by the SEZ unit in cases where refund arises on account of supplies made to a SEZ unit/developer. A conjoint reading of these provisions shows that the legislative scheme contemplates refund of tax paid on supplies to SEZ units to be claimed by the suppliers (where tax has been paid) subject to prescribed safeguards (including the requisite declaration), and not by the SEZ unit claiming refund of ITC for supplies received from non SEZ suppliers. The Appellate Authority applied these provisions and found the appellant's contention that the SEZ unit itself could claim refund against zero rated supplies made without payment of tax to be not tenable. On this basis the Authority upheld the assessing authority's rejection of the refund claim. [Paras 19, 20, 21, 22]

The refund claim by the appellant was not maintainable under the cited provisions and the assessing authority's rejection of the refund was upheld.

Final Conclusion: The Appellate Authority affirmed the assessing authority's rejection of the refund claim for the period July, 2017 to March, 2018; the appeal is dismissed and the refund rejection is confirmed.

Deduction of interest on borrowed capital under section 36(1)(iii) - Commercial expediency of advancing funds to sister/group concerns - Cash system of accounting and inapplicability of the matching principle to an investment company - Factual finding versus substantial question of law

Deduction of interest on borrowed capital under section 36(1)(iii) - Commercial expediency of advancing funds to sister/group concerns - Whether the Tribunal was right in deleting the disallowance under section 36(1)(iii) where the assessee had advanced borrowed funds to group concerns without charging commercial rate of interest. - HELD THAT: - The Court held that the question whether advances of borrowed funds to sister or group concerns were for the purpose of the assessee's business or commercially expedient is essentially a finding of fact. The earlier coordinate-bench decision in the assessee's own cases and Supreme Court authority were relied upon to the effect that section 36(1)(iii) requires enquiry only whether interest was paid on capital borrowed for the purpose of the assessee's business; the object for which the loaned funds were ultimately used is not determinative of entitlement to deduction. Where advances to related concerns are made in the ordinary course and there is commercial expediency, interest on borrowed funds is not to be disallowed merely because the rate charged is lower or nil. Consequently no substantial question of law arose for interference under Section 260A on these factual findings.

Tribunal's deletion of the disallowance under section 36(1)(iii) upheld; no substantial question of law made out against the factual finding of commercial expediency.

Cash system of accounting and inapplicability of the matching principle to an investment company - Matching principle versus cash method in allowability of expenditure - Whether the matching principle (nexus between income and expenditure) applies where the assessee, an investment company, follows the cash system of accounting. - HELD THAT: - The Court agreed with the Tribunal that for an investment company whose business is borrowing and lending or investing and which adopts the cash system of accounting, the conventional 'matching principle' applied by the Assessing Officer is not the sine qua non for allowability of interest expenditure under sections 36 and 37. It is not open to Revenue to substitute its view as to an appropriate rate of interest agreed between parties; adoption of the cash system and the nature of the assessee's business makes the matching principle inapplicable in the facts of the case.

Tribunal's conclusion that the matching principle did not disqualify the interest deduction under the cash system was sustained; Revenue's contention rejected.

Final Conclusion: The Revenue's appeal is dismissed: the Tribunal's order deleting the disallowance under section 36(1)(iii) is upheld on the basis that the matters raised are factual (commercial expediency of advances to group concerns) and that the matching principle does not defeat the deduction where the assessee is an investment company following the cash system of accounting.

Incriminating material unearthed during search - Reliance on retracted statements recorded under Section 132(4) - Corroborative evidence requirement for additions under Section 153A - Retraction of statement dilutes evidentiary value of confession - Presumption under Section 292C is rebuttable and limited to correctness of documents - Documents seized must be shown to relate to assessee before treating them as income

Incriminating material unearthed during search - Reliance on retracted statements recorded under Section 132(4) - Corroborative evidence requirement for additions under Section 153A - Retraction of statement dilutes evidentiary value of confession - Deletion of addition of Rs. 12,74,700 made as 'undisclosed income' in assessment for A.Y. 2014-15 - HELD THAT: - The Tribunal found that the only seized papers relied upon were income-tax returns and computation sheets of female family members which were already in the possession of the Department prior to search and therefore could not be treated as 'incriminating material' unearthed during the search. The assessee had retracted the statement recorded under Section 132(4) by an affidavit and reiterated the retraction in a statement under Section 131; in the absence of any corroborative seized material connecting the seized documents or the retracted confession to undisclosed income of the assessee, the Assessing Officer's addition was held to be mechanical and unsupportable. The Tribunal applied settled authorities and CBDT instruction to hold that a retracted confession cannot be the sole basis for an addition and that completed assessments under Section 153A can be reopened only on the basis of incriminating material relating to the assessment year which was not earlier disclosed. For these reasons the addition was deleted. [Paras 8, 9, 11]

Addition of Rs. 12,74,700 deleted and appeal for A.Y. 2014-15 allowed.

Presumption under Section 292C is rebuttable and limited to correctness of documents - Documents seized must be shown to relate to assessee before treating them as income - Deletion of addition of Rs. 2,92,867 as unexplained expenditure and deletion of addition based on alleged boundary/construction expenses for A.Y. 2015-16 - HELD THAT: - The Tribunal held that the seized bills and challans (Exhibit 6) clearly bore the name of 'Mehta Kirana Store' and were admitted by the assessee to belong to his nephew, Manoj Kumar Yadav, supported by an affidavit. The presumption under Section 292C was noted to be rebuttable and limited to the correctness of the seized documents themselves; it does not, without more, convert a document into the assessee's income. There was no corroborative material to connect the seized documents to any construction activity of the assessee in the year under consideration, and the Assessing Officer had misread printed bills as handwritten construction vouchers and erroneously related them to boundary expenses of a different year. In view of the rebuttal and absence of nexus between documents and the assessee, the addition was unsustainable and deleted. [Paras 14, 17, 18]

Addition of Rs. 2,92,867 and related additions on the same footing deleted and appeal for A.Y. 2015-16 allowed.

Final Conclusion: Both appeals are allowed: the Tribunal deleted the additions made for A.Y. 2014-15 and A.Y. 2015-16 on the grounds that the seized documents did not constitute incriminating material relating to the assessee and there was no corroborative material connecting the documents or retracted statements to undisclosed income or expenditures of the assessee.

Revisionary jurisdiction under Section 263 of the Income tax Act - order erroneous and prejudicial to the interests of the Revenue - twin condition test for exercise of Section 263 jurisdiction - failure to make inquiry/verification renders an assessment order erroneous - assessment accepted after inquiry not to be disturbed on mere suspicion - requirement to record reasons before invoking revisionary power - distinction between lack of inquiry and inadequate inquiry in Section 263 cases

Revisionary jurisdiction under Section 263 of the Income tax Act - order erroneous and prejudicial to the interests of the Revenue - assessment accepted after inquiry not to be disturbed on mere suspicion - Validity of the Principal Commissioner's exercise of revisionary jurisdiction under Section 263 to set aside the Assessing Officer's assessment which accepted the assessee's long term capital gain/ loss on sale of shares of Kailash Auto Finance Ltd. - HELD THAT: - The Tribunal held that Section 263 can be invoked only when the order of the Assessing Officer is both erroneous and prejudicial to the interests of the Revenue. In the present case the Assessing Officer had conducted scrutiny proceedings, issued queries and the assessee had placed on record contract notes, demat statements and bank evidence which formed part of the assessment record; there was no material on record implicating the assessee in share rigging or sham transactions. The Principal Commissioner's conclusion rested on suspicion arising from investigation inputs about manipulation in the scrip generally, but no specific material was produced to show the assessee's transactions were not genuine. The Tribunal applied the settled principles that an assessment made after inquiry cannot be set aside merely because a revising authority entertains a different view or desires deeper probing; mere suspicion or the existence of investigation inputs, without prima facie material against the assessee or a recorded finding that the AO's order is unsustainable in law, does not satisfy the twin conditions for invoking Section 263. In these circumstances the PCIT's setting aside of the assessment and remand for fresh adjudication was unsustainable and the assessment framed on 29.07.2016 was restored.

PCIT's order under Section 263 quashing the assessment dated 29.07.2016 is set aside and the assessment restored; the assessee's appeal is allowed.

Final Conclusion: The Tribunal reversed the Principal Commissioner's revisionary order under Section 263 - holding that the Assessing Officer had examined relevant material and accepted the LTCG/ loss on the basis of documents on record, and that the PCIT could not, on mere suspicion and without specific material showing the AO's order to be erroneous and prejudicial, set aside the assessment; the assessment dated 29.07.2016 is restored and the appeal is allowed.

Allowability of education cess as deduction - treatment of state/local taxes paid overseas under section 40(a)(ii) - advertisement expenditure: revenue expenditure v. capitalisation - foreign tax credit for income exempt under section 10A/10AA under section 90/91 - disallowance under section 40(a)(i) for failure to deduct tax at source on payments to non residents - disallowance under section 14A and computation under Rule 8D - computation of deduction under section 10A/10AA (treatment of foreign software costs and turnover) - transfer pricing: selection of Profit Level Indicator (OP/OC v. OP/VAE) and comparability - provision of corporate guarantees as international transactions and benchmark guarantee commission - treatment of interest free loans to associated enterprises as quasi equity and remand for factual examination - transfer pricing adjustment on valuation of share subscriptions as capital transaction

Allowability of education cess as deduction - Admission of additional ground relating to deduction of education cess and restoration to Assessing Officer for reconsideration in accordance with Bombay High Court decision in Sesa Goa Ltd. - HELD THAT: - The Tribunal admitted the assessee's additional ground that education cess is deductible, holding that the issue is settled by the jurisdictional High Court decision in Sesa Goa Ltd. and is no longer res integra. The Tribunal rejected the revenue's objection that the ground was not raised earlier, observed no new facts were necessary, and directed that the Assessing Officer examine the claim and allow appropriate relief in accordance with law and the binding High Court precedent. The Tribunal declined the revenue's contention that Sesa Goa is per incuriam, noting that higher court authorities had been considered by the Rajasthan High Court. The ground was admitted and restored to the file of the AO for fresh adjudication. [Paras 5, 9, 10]

Additional ground admitted; issue restored to Assessing Officer for fresh decision in accordance with Bombay High Court precedent.

Treatment of state/local taxes paid overseas under section 40(a)(ii) - Allowability of state/local taxes paid overseas-such taxes not covered by Explanation to section 40(a)(ii) where not eligible for relief under section 90/91; directed AO to verify eligibility under section 90 and, if not eligible, allow deduction. - HELD THAT: - Following a coordinate-bench decision in the assessee's earlier year and consistent with the view that the statutory definition of 'tax' in section 2(43) refers to taxes under the Income-tax Act, the Tribunal held that state/local taxes levied overseas which are not eligible for relief under section 90/91 do not fall within the prohibition in section 40(a)(ii). The Tribunal directed the AO to verify whether the overseas state taxes qualify for relief under section 90; if not, the deductions claimed by the assessee are to be allowed. The Tribunal found no variation in facts or contrary law warranting deviation from the earlier coordinated decision. [Paras 12, 14, 15]

Assessee's claim allowed subject to AO's verification whether such taxes are eligible for relief under section 90; if not eligible, deduction to be granted.

Advertisement expenditure: revenue expenditure v. capitalisation - Whether certain advertisement/experience certainty campaign expenses are capital in nature or revenue; restored limited part of issue to AO for verification of additional evidence. - HELD THAT: - Relying on the coordinate bench decision in the assessee's earlier year, the Tribunal agreed that routine advertising expenses promoting the assessee's products are revenue in nature. However, for the specific 'experience certainty' expenditure (as to which additional evidence was furnished before the Tribunal but not before lower authorities), the Tribunal admitted the additional evidence and restored that portion to the AO for de novo adjudication so the Department may verify authenticity and the nature of the expenditure. Other advertisement disallowances were held in favour of the assessee. [Paras 16, 18, 19]

General advertising expenditures treated as revenue; specific experience certainty expenditure remanded to AO for fresh adjudication after verification of additional evidence.

Foreign tax credit for income exempt under section 10A/10AA under section 90/91 - Availability of foreign tax credit for taxes paid abroad in respect of income exempt under section 10A/10AA-allow credit where treaty or section 90 permits even if income is exempt in India, except for countries whose treaties require taxation in both countries. - HELD THAT: - Following the Tribunal's coordinate bench reasoning and the Karnataka High Court in Wipro, the Tribunal held that foreign tax credit under section 90(1)(a)(ii) is available in cases where the relevant tax treaty permits credit even if the income is exempt in India; applicability depends upon treaty language. The Tribunal directed the AO to grant credit except in respect of countries (notably Canada and Finland as identified in the reasoning) whose treaties do not allow credit unless the income is taxed in both jurisdictions. The decision of the earlier coordinate bench was followed as there was no contrary law or factual variation. [Paras 20, 22, 23]

Foreign tax credit to be allowed as per treaty provisions and section 90/91; AO to grant credit accordingly (subject to exceptions under specific treaties).

Disallowance under section 40(a)(i) for failure to deduct tax at source on payments to non residents - Payments to non resident vendors/agents for software or commission not chargeable to tax in India (no business connection/PE) do not attract section 40(a)(i) disallowance for failure to deduct TDS; remanded where factual enquiry required for software acquisition transactions. - HELD THAT: - On payments to non resident agents for obtaining export contracts, the Tribunal followed its earlier coordinate bench finding that services were rendered outside India and agents had no business connection or PE in India; therefore, their income was not taxable in India and no withholding under section 195 was required-disallowance under section 40(a)(i) rejected. As to payments for imported software, the Tribunal noted factual complexity (whether sale of a copyrighted article or transfer/licence attracting 'royalty') and remanded that issue to the AO for factual verification and fresh adjudication in line with earlier directions. [Paras 24, 26, 27, 36, 37]

Disallowance under section 40(a)(i) dismissed where non residents' receipts not chargeable to tax in India; issues concerning imported software remitted to AO for factual determination.

Disallowance under section 14A and computation under Rule 8D - Disallowance under section 14A and Rule 8D - AO's computation under Rule 8D(2)(iii) (0.5% of average investments) not sustained where AO failed to examine assessee's detailed suo moto working; deletion of disallowance affirmed. - HELD THAT: - The AO made Rule 8D disallowances including 0.5% of average investments, but failed to scrutinise or demonstrate error in the assessee's detailed computation of expenses incurred to earn exempt dividend income. The Tribunal found no material to take a different view and affirmed the CIT(A)'s deletion of the disallowance, applying binding precedents and concluding revenue did not discharge onus to displace the assessee's claim. [Paras 28, 29, 30]

Disallowance under section 14A/Rule 8D deleted; CIT(A)'s order affirmed.

Computation of deduction under section 10A/10AA (treatment of foreign software costs and turnover) - Computation of section 10A/10AA deduction - excluding certain foreign software costs from turnover and treatment of turnover for deduction follows coordinate bench and High Court precedent; AO directed to follow those principles. - HELD THAT: - The Tribunal followed its coordinate bench precedent and the Bombay High Court in HCL Technologies: foreign currency expenditure related to exports is to be excluded both from export turnover and total turnover for computation under section 10A. The Tribunal also upheld the application of CBDT circulars permitting deemed export treatment for software developed abroad where direct nexus with Indian eligible units is established. Consequently the CIT(A)'s allowance was sustained and the AO directed accordingly. [Paras 40, 41, 65, 71]

Deduction under section 10A/10AA to be computed excluding specified foreign costs as per precedents; CIT(A)'s decision upheld.

Transfer pricing: selection of Profit Level Indicator (OP/OC v. OP/VAE) and comparability - Adoption of OP/OC (operating profit to operating cost) as the appropriate PLI and acceptance of comparables selected by assessee-TPO's OP/VAE approach and exclusion of certain pass through costs rejected; CIT(A) and coordinate bench decisions upheld. - HELD THAT: - After applying functional analysis and examining activities, risks and functions of the AEs, the Tribunal concurred with the CIT(A) that AEs bore significant marketing and distribution risks, justifying a return measured on gross margin (OP/OC). The TPO's exclusion of outsourcing/sub contracting costs distorted comparability because comparables' margins were computed on different bases; the Tribunal found CIT(A)'s detailed comparability exercise and selection of comparables acceptable. No material warranted departing from the earlier coordinate bench affirmed results; revenue's TP grounds were dismissed. [Paras 42, 44, 45]

PLI OP/OC and comparables accepted; TPO's adjustments on OP/VAE and exclusion of pass through costs set aside.

Provision of corporate guarantees as international transactions and benchmark guarantee commission - Provision of guarantees to AEs constitutes an international transaction; guarantee commission benchmarked at the lower rate applied in precedent (0.5% per annum) and related adjustments modified accordingly. - HELD THAT: - The Tribunal held that, in light of Explanation 1(c) to section 92B and coordinate and High Court authority, provision of guarantees to AEs is an international transaction. Applying the Tribunal's and Bombay High Court precedent (Everest Kanto Cylinders and coordinate bench decisions), the Tribunal directed AO/TPO to restrict guarantee commission to 0.5% per annum (with corresponding application to performance/lease/financial guarantees) and confirmed that fee should not be charged on self occupied portion of lease where applicable. The Tribunal found no basis to treat the prior-year determinations as non binding for the year under consideration. [Paras 47, 49, 50, 76]

Guarantee transactions recognised as international transactions; guarantee commission limited to 0.5% p.a. and related adjustments directed accordingly.

Treatment of interest free loans to associated enterprises as quasi equity and remand for factual examination - Interest free loans to AEs: remanded to AO for de novo adjudication to examine whether advances are quasi equity/shareholder activity and whether TP adjustment is warranted. - HELD THAT: - The Tribunal noted substantial factual matrix-advances for downstream acquisitions, subsequent conversion to equity, and varying commercial purposes-and observed that the assessee's detailed submissions were not properly addressed by lower authorities. Applying its coordinate bench reasoning, the Tribunal concluded that the question whether advances are quasi equity (shareholder activity) or loans requires fuller factual and legal scrutiny and therefore restored the matter to the AO for fresh consideration after affording the assessee opportunity to be heard and in light of relevant case law (including DLF Hotels Holdings). [Paras 51, 53, 54]

TP issue remitted to Assessing Officer for fresh adjudication on nature of advances and applicability of interest adjustments.

Transfer pricing adjustment on valuation of share subscriptions as capital transaction - Share subscription/valuation of shares in AEs is a capital account transaction and not subject to transfer pricing adjustment; CIT(A)'s reliance on Bombay High Court Vodafone India Services decision affirmed. - HELD THAT: - The Tribunal upheld the CIT(A)'s approach following the jurisdictional High Court in Vodafone India Services and CBDT instruction accepting that subscription to shares is a capital account transaction and does not attract transfer pricing adjustment. No contrary facts or law were presented to justify deviation, so revenue's plea on excessive valuation of shares was dismissed. [Paras 52, 55]

No transfer pricing adjustment on share subscription; transaction treated as capital and revenue's ground dismissed.

Final Conclusion: The Tribunal partly allowed both the assessee's and the revenue's appeals for A.Y. 2008 09 and A.Y. 2010 11. Key outcomes: the assessee's additional ground on education cess was admitted and remitted to the AO; overseas state taxes not eligible for relief under section 90/91 are not covered by section 40(a)(ii) and may be deductible subject to AO verification; most advertising and foreign tax credit issues were decided in favour of the assessee following earlier coordinate bench and High Court precedent; several transfer pricing additions were set aside or remitted (including adoption of OP/OC as PLI, restriction of guarantee commission to precedent rates, remand on interest free loans); disallowances under section 14A were deleted; and issues requiring factual examination were restored to the Assessing Officer for fresh adjudication in accordance with the Tribunal's directions and binding precedents.

Summary order. Petition under Article 226 challenging the validity of certain provisions of the Income-tax Act, 1961 and Income-tax Rules, 1962 - notice issued returnable within four weeks; office of the Attorney General directed to be served; liberty to engage special counsel for Respondents recorded; matter stood over to 26th November 2020.

Treatment of capital grants and subsidies - reduction of grants from cost of fixed assets - assessment of grants as income - estimation of grant as income - concurrent finding of fact

Treatment of capital grants and subsidies - reduction of grants from cost of fixed assets - assessment of grants as income - concurrent finding of fact - Addition made by the Assessing Officer treating a portion of capital grants as income (estimated at 15% of total grant) was not sustainable where the assessee had not acquired fixed assets on which depreciation was claimed and the grants could not be reduced from cost of fixed assets. - HELD THAT: - The Tribunal and the CIT(A) recorded concurrent findings of fact that the assessee had not acquired any fixed assets during the year on which depreciation was claimed and that the grants/subsidies in question pertained to earlier years and had been apportioned among distribution companies pursuant to State Government decisions. On those findings the CIT(A) had deleted the addition and the Tribunal affirmed that such grants could not be treated as income by estimating 15% of the total grant or by reducing them from the cost of non-existent fixed assets. This Court, noting its earlier decision in a related appeal involving the same question, accepted the concurrent factual conclusion and found no infirmity in the Tribunal's order. The appeal was therefore dismissed. [Paras 6, 7]

The addition treating a portion of the capital grant as income was upheld as unsustainable and the Tribunal's order deleting/setting aside that addition is affirmed; the tax appeal is dismissed.

Final Conclusion: The High Court affirmed the Tribunal's concurrent factual and legal conclusion that the grants could not be treated as income or reduced from cost of fixed assets where no fixed assets were acquired; the Revenue's appeal is dismissed.

Deduction under Section 10A - carry forward and set off of business losses - revision under Section 263 - assessment under Section 143(3) read with Section 144C - appellate review by Income Tax Appellate Tribunal

Deduction under Section 10A - carry forward and set off of business losses - revision under Section 263 - Validity of the Principal Commissioner's suo motu revision under Section 263 setting aside the assessment completed under Section 143(3) read with Section 144C, insofar as it re-opened the allowance of deduction and set off for A.Y. 2009-10. - HELD THAT: - The Tribunal had held that the Assessing Officer had applied the correct legal principle that the deduction under Section 10A must be allowed before giving effect to the set off of unabsorbed business loss and depreciation of non eligible business units, and that the Principal Commissioner failed to take that aspect into account when invoking Section 263. The High Court, on examination of the record and the Tribunal's reasoning, found no infirmity in the Tribunal's conclusion that the AO's order was neither erroneous nor prejudicial to the revenue and that none of the conditions for exercise of revisional power under Section 263 were satisfied. The Court therefore declined to interfere with the Tribunal's setting aside of the revisional order and upheld the Tribunal's view that the order of the Principal Commissioner was without merit and rightly quashed.

The Tribunal's order quashing the Principal Commissioner's Section 263 revision was upheld and the revisional order set aside.

Final Conclusion: Revenue's appeal under Section 260A is dismissed; the Income Tax Appellate Tribunal's order allowing the assessee's appeal and quashing the revisional order under Section 263 is sustained for A.Y. 2009-10.

Rejection of books of account for want of verifiable bills and vouchers - estimation of income by application of a prescribed net profit rate - use of historical declared net profit as relevant benchmark for estimation - remand for de novo assessment with direction on limited estimation - condonation of delay in filing statutory appeal for sufficient cause

Condonation of delay in filing statutory appeal for sufficient cause - Application for condonation of delay in filing the appeals was allowed. - HELD THAT: - The assessee explained that the appeals were filed 107 days late due to severe and persisting back problems following a road accident which prevented normal activities and timely filing. Having considered the explanation and the limited nature of the issue in controversy, the Tribunal found that the assessee was prevented by sufficient cause and exercised discretion to condone the delay. [Paras 4, 5, 6]

Delay in filing the three appeals is condoned.

Rejection of books of account for want of verifiable bills and vouchers - estimation of income by application of a prescribed net profit rate - use of historical declared net profit as relevant benchmark for estimation - Books of account were liable to be rejected for want of verifiable vouchers, but application of an 8% net profit rate for estimation was excessive; a 2% net profit rate was directed. - HELD THAT: - The Assessing Officer, on remand, found that the assessee produced only certain bills (diesel and bitumen) and failed to produce complete bills and vouchers to verify expenses, therefore justifying rejection of the book results. However, the A.O. did not rely on comparable cases or a rational basis for applying an 8% net profit rate. The Tribunal considered the assessee's historical declared net profit percentages-which never approached 8% and included an accepted 1.54% in A.Y. 2001-02-and authorities stressing fair estimation. On these facts and given the low profit margin characterising government civil-construction contracts, the Tribunal held that 8% was not justified and directed the A.O. to apply a 2% net profit rate in place of 8% for determining income in the appeals for A.Y. 2003-04, 2004-05 and 2008-09. [Paras 7, 8, 9, 11, 12]

Books may be rejected for want of vouchers; where books are rejected, profit is to be estimated at 2% (not 8%) for A.Y. 2003-04, 2004-05 and 2008-09.

Withdrawal of statutory appeal by the assessee - The assessee's appeal against the section 263 order for A.Y. 2006-2007 was dismissed as withdrawn on request. - HELD THAT: - The assessee expressly informed the Tribunal that the appeal would not be pressed and submitted a written request for withdrawal. The Tribunal recorded the withdrawal and dismissed the appeal accordingly. [Paras 14, 15, 16]

ITA.No.869/Del./2012 dismissed as withdrawn.

Remand for de novo assessment with direction on limited estimation - estimation of income by application of a prescribed net profit rate - Assessment for A.Y. 2006-2007 at Karnal was set aside and remanded for fresh adjudication; if book results are rejected, the A.O. must restrict estimation to a 2% net profit rate. - HELD THAT: - Conflicting assessment orders existed: an assessment at Delhi accepting books (with a small addition) preceded an ex parte assessment at Karnal under section 144 which resulted in a much higher income determination. Although the Delhi order was later set aside under section 263, at the time the Karnal A.O. passed the ex parte order he ought to have had regard to the existing Delhi assessment. Given these peculiar facts, the Tribunal found that the matter required fresh consideration. The Tribunal directed the A.O. at Karnal to rehear the matter de novo, afford reasonable opportunity to the assessee, and, if not satisfied with books, to refrain from applying an 8% net profit rate and instead limit estimation to 2% in line with directions given for the other assessment years. [Paras 17, 18, 19, 21]

Orders set aside and matter remanded for de novo assessment with the instruction that, if books are rejected, profit be estimated at 2%.

Final Conclusion: The Tribunal condoned the delay in filing the appeals; upheld rejection of books where vouchers were not produced but held the 8% net profit estimate to be excessive and substituted a 2% net profit rate for A.Y. 2003-04, 2004-05 and 2008-09; recorded the withdrawal of the appeal against the section 263 order for A.Y. 2006-07; and set aside and remanded the Karnal assessment for A.Y. 2006-07 for de novo adjudication with the express direction that any estimation, if books are rejected, be limited to a 2% net profit rate.

Condonation of delay - sufficient cause - pragmatic approach under the Limitation Act - negligence of counsel - ex-parte assessment - opportunity of being heard

Condonation of delay - sufficient cause - pragmatic approach under the Limitation Act - negligence of counsel - opportunity of being heard - Whether the delay of 47 days in filing the appeal before the Commissioner of Income Tax (Appeals) ought to be condoned and the appeal restored for adjudication on merits. - HELD THAT: - The Tribunal found on the record that the assessee's director filed an affidavit explaining the delay as resulting from the unprofessional conduct of the earlier counsel and the time taken to engage new counsel. Those facts were not disputed by the CIT(A). Applying the settled principle that delay may be condoned if there is sufficient cause and adopting the pragmatic approach required under the Limitation Act, the Tribunal treated the 47-day delay as nominal and attributable to reliance on counsel rather than mala fide inaction by the assessee. The Tribunal observed that in such a short delay, considerations of prejudice to the Revenue are unlikely to arise. In view of these findings the Tribunal held that the assessee had a bona fide explanation constituting sufficient cause to condone the delay and that the appeal should be decided on merits after affording reasonable opportunity of hearing to both parties.

Delay of 47 days condoned; orders below set aside and the appeal restored to the file of the CIT(A) for fresh adjudication on merits after giving reasonable opportunity of hearing to the assessee and the Assessing Officer.

Final Conclusion: The Tribunal condoned the 47-day delay, set aside the orders below and restored the appeal to the CIT(A) for fresh disposal on merits after affording reasonable opportunity to both parties; the appeal is allowed for statistical purposes.

Applicability of conditions of one fiscal exemption provision to another by specific legislative omission - Interpreting applicability of prescribed auditor's report requirements to claim of deduction - Admissibility of belated or revised statutory auditor's report in assessment proceedings - Duty of assessing officer to verify eligibility and call for information before rejecting claim

Applicability of conditions of one fiscal exemption provision to another by specific legislative omission - Reference, by statute, to selected subsections only and effect of omission of a subsection - Whether the requirement in subsection (3) of section 10A of the Act (bringing export proceeds into India in convertible foreign exchange within six months) applies to claims under section 10AA by virtue of subsection (8) of section 10AA. - HELD THAT: - The Tribunal examined the text of section 10AA(8), which makes certain subsections of section 10A applicable to section 10AA but does not refer to section 10A(3). The omission of subsection (3) from the list of applied provisions manifests a legislative intent that the specific condition contained in section 10A(3) is not to be made applicable to section 10AA. Therefore the Assessing Officer erred in treating the condition in section 10A(3) as mandatorily applicable to claims under section 10AA. The court drew the conclusion that absent express statutory incorporation, the condition in section 10A(3) cannot be imposed on an assesse claiming benefit under section 10AA. [Paras 9, 12]

Section 10A(3) is not applicable to claims made under section 10AA and the Assessing Officer cannot treat the condition in section 10A(3) as automatically applicable to section 10AA claims.

Admissibility of belated or revised statutory auditor's report in assessment proceedings - Duty of assessing officer to verify eligibility and call for information before rejecting claim - Objective of assessment proceedings to determine correct tax liability - Whether the authorities were justified in refusing to consider a revised/statutory auditor's report filed belatedly and whether the assessing officer should have made enquiries when the auditor's report indicated certain columns were not applicable. - HELD THAT: - The Tribunal noted there is no provision in the Act expressly prohibiting the filing or consideration of a revised auditor's report. In the present case the revision was clarificatory and did not alter substantive financials. The object of assessment proceedings is to determine the correct tax liability, and therefore relevant material submitted, even belatedly, ought not to be mechanically rejected unless a statute bars it. Further, where the auditor's report stated certain prescribed particulars as 'not applicable', that statement did not ipso facto establish non-compliance with conditions; the Assessing Officer ought to have inquired into the reason for such a statement before disallowing the claim. Accordingly the Tribunal held that refusal to consider the revised auditor's report and to make any enquiry rendered the assessment flawed. [Paras 10, 11, 13]

The CIT(A)'s and Assessing Officer's refusal to consider the revised auditor's report was not justified; the Assessing Officer must verify entitlement and may call for information and make enquiries rather than mechanically rejecting the claim.

Final Conclusion: Impugned order set aside and matter remanded to the Assessing Officer to verify whether the assessee is entitled to deduction under section 10AA of the Act; Assessing Officer may call for any necessary information and make enquiries, and the appeal is allowed for statistical purposes.

Addition based on presumed bogus purchases - application of gross profit ratio - reliance on binding precedent - remand for verification and fresh consideration by Assessing Officer - notice under section 148 for reassessment

Addition based on presumed bogus purchases - application of gross profit ratio - reliance on binding precedent - remand for verification and fresh consideration by Assessing Officer - Whether the addition of 12.5% on alleged bogus purchases can be sustained or requires fresh verification and application of the assessee's gross profit ratio in light of precedent. - HELD THAT: - The Tribunal noted that the Assessing Officer made an addition by applying a flat rate of 12.5% on purchases alleged to be bogus and the CIT(A) confirmed that estimate. The assessee maintained that purchases were genuine, payments were routed through banking channels and that its declared gross profit (GP) ratio was 7.58%, which should be applied instead of the AO's estimated percentage. The Tribunal observed that in a related assessment year the Coordinate Bench and the Bombay High Court decision in Pr.CIT v. Md. Haji Adam & Co. had been followed and that those precedents bear on computation in such cases. In view of the legal position established by those decisions, the Tribunal found it appropriate to set aside the appellate order and remit the matter to the Assessing Officer for verification and fresh consideration. The AO is directed to examine the assessee's submissions, verify the genuineness of purchases and the banking evidence, apply the relevant ratio or methodology consistent with the cited precedent, and grant the assessee adequate opportunity of hearing. The Tribunal did not decide the addition on merits but required the AO to re-examine and apply the ratio in accordance with law and precedent. [Paras 4, 5]

Order of the CIT(A) set aside and the matter restored to the file of the Assessing Officer for verification, application of the relevant ratio in accordance with precedent, and fresh consideration after giving the assessee opportunity of hearing; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the CIT(A)'s confirmation of the addition and remitted the issue to the Assessing Officer to verify the purchases, consider the assessee's GP ratio and apply the ratio/methodology in accordance with the relevant precedent, granting the assessee adequate hearing; appeal allowed for statistical purposes.

Penalty for concealment or furnishing inaccurate particulars of income u/s 271(1)(c) - additions sustained on estimate - penalty not leviable on estimated income - principles of natural justice - reassessment initiated on information from investigatory agency

Penalty for concealment or furnishing inaccurate particulars of income u/s 271(1)(c) - additions sustained on estimate - penalty not leviable on estimated income - principles of natural justice - Validity of levy of penalty under section 271(1)(c) in assessment year 2010-11 when addition was sustained on an estimated basis - HELD THAT: - The Tribunal examined whether penalty under section 271(1)(c) could be sustained where the assessing officer disallowed alleged bogus purchases in full but the appellate authority had estimated the income by accepting sales and restricting the addition to 12.5% of purchases. The Tribunal agreed with the assessee that where the addition is sustained only on an estimated basis, the levy of penalty for concealment or furnishing inaccurate particulars cannot be sustained on that estimated income. The Tribunal also noted deficiencies in opportunity and address-related notice service raised by the assessee and, applying principles of natural justice and the settled approach that penal consequences should not follow where the assessment is founded on estimation accepted on appeal, set aside the confirmation of penalty and directed deletion of the penalty order. [Paras 5, 6]

Penalty confirmed by the CIT(A) for A.Y. 2010-11 set aside; assessing officer directed to delete the penalty and allow the grounds of appeal.

Penalty for concealment or furnishing inaccurate particulars of income u/s 271(1)(c) - additions sustained on estimate - penalty not leviable on estimated income - Applicability of the AY 2010-11 decision to assessment year 2011-12 - HELD THAT: - The Tribunal found the facts and legal issues in A.Y. 2011-12 to be similar and identical to those in A.Y. 2010-11. Applying the reasoning rendered in the earlier part of the order mutatis mutandis, the Tribunal set aside the CIT(A)'s confirmation of penalty for A.Y. 2011-12 and directed deletion of the penalty by the assessing officer. [Paras 7]

Order of the CIT(A) for A.Y. 2011-12 set aside; assessing officer directed to delete the penalty and allow the grounds of appeal.

Final Conclusion: Both appeals are allowed: the Tribunal set aside the CIT(A)'s confirmation of penalty for A.Y. 2010-11 and A.Y. 2011-12, directed deletion of the penalty by the assessing officer, and allowed the grounds of appeal on the ground that penalty cannot be sustained where additions are accepted on an estimated basis.

Penalty under Section 271(1)(c) for concealment of particulars or furnishing of inaccurate particulars - Validity of show cause notice under Section 274 when twin charges are not struck off - Effect of inclusion of escaped income in return filed pursuant to notice under Section 148 - Precedent requirement to cancel or strike off twin charges in the notice under Section 274

Penalty under Section 271(1)(c) for concealment of particulars or furnishing of inaccurate particulars - Validity of show cause notice under Section 274 when twin charges are not struck off - Precedent requirement to cancel or strike off twin charges in the notice under Section 274 - Whether penalty under Section 271(1)(c) is sustainable where the notice under Section 274 initiating penalty proceedings did not strike off either of the twin charges. - HELD THAT: - The Tribunal found that the show cause notice under Section 274 read with Section 271(1)(c) was issued without striking off any of the twin charges specified in the provision. Reliance was placed on the decision of the Hon'ble Delhi High Court in Pr. CIT v. Sahara India Life Insurance Co. Ltd., and on the Karnataka High Court decision referred to in the record, which hold that initiation of penalty proceedings is not sustainable where none of the twin charges in the Section 274 notice are cancelled or struck off. Applying those precedents to the facts - namely that the assessor issued the Section 274 notice without cancelling any charge - the Tribunal concluded that the penalty could not be sustained in law and therefore the orders of the lower authorities confirming the penalty were liable to be reversed. The Tribunal further observed that in view of this legal defect, other contentions on the merits became academic and were not adjudicated. [Paras 8]

The penalty imposed under Section 271(1)(c) is cancelled and the orders of the lower authorities confirming the penalty are reversed.

Final Conclusion: The appeal is allowed; the penalty levied under Section 271(1)(c) is set aside because the Section 274 notice initiating penalty proceedings did not strike off any of the twin charges, rendering the penalty unsustainable in law; other grounds were not decided as they were rendered academic.

Assessment under Section 153C in respect of an "other person" - Requirement of incriminating material / assessee specific documents for invoking Section 153C - Annulment of assessment where no incriminating material is found - Search and seizure as trigger for Section 153C proceedings

Assessment under Section 153C in respect of an "other person" - Requirement of incriminating material / assessee specific documents for invoking Section 153C - Annulment of assessment - Validity of assessment framed under Section 153C when no incriminating, assessee specific documents were found during search in respect of the searched person. - HELD THAT: - The Tribunal examined the material seized (identified as BNAH 01, BNAH 02 and BNRO 18) and the reasons recorded by the Assessing Officer and found no assessment year specific incriminating material linking the seized documents to the assessee. The CIT(A) had carefully considered the documents and relevant judicial precedent, including the decisions culminating in the Hon'ble Supreme Court's treatment of similar facts, and concluded that Section 153C jurisdiction arises only where the seized books/documents/assets are incriminating in nature and relate to the other person for whose assessment proceedings are sought to be initiated. The Tribunal noted that the AO's satisfaction was general and did not disclose any incriminating information specific to the assessee or any pending assessment year requirement. In absence of such incriminating material, framing of assessment under Section 153C was held to be legally unsustainable and liable to be annulled. The Revenue failed to place any cogent contrary material before the Tribunal to displace the factual and legal conclusion reached by the CIT(A).

Assessment framed under Section 153C was annulled for want of incriminating material relating to the assessee; Revenue's appeal dismissed.

Final Conclusion: The Tribunal upholds the CIT(A)'s order annulling the assessment framed under Section 153C for AY 2011-2012 on the ground that no incriminating, assessee specific documents were seized; the Revenue's appeal is dismissed.

Applicability of subsequent customs notification to earlier-presented bills of entry - rate of duty determined at the time of electronic presentation/generation of bill of entry - non-retrospective operation of delegated legislation - electronic record as determinative of customs formalities

Applicability of subsequent customs notification to earlier-presented bills of entry - rate of duty determined at the time of electronic presentation/generation of bill of entry - electronic record as determinative of customs formalities - non-retrospective operation of delegated legislation - Whether Notification No.5/2019 imposing enhanced duty at 200% could be applied to goods for which the bill of entry was electronically presented and the goods had entered India prior to issue/upload of the notification on 16.02.2019. - HELD THAT: - The Court applied the principle that where the bill of entry is electronically presented and customs formalities are completed prior to the issuance/upload of a later notification, the rate of duty applicable is the rate prevailing at the time of such presentation/generation on the electronic system. Relying on the reasoning in the Division Bench decision in M/s Rasrasna Food Pvt. Ltd. (paras. 12-14), the Court observed that the notification in question came into force after normal working hours on 16.02.2019 and therefore could not be applied retrospectively to bills presented and goods entered prior to its issuance. The Court further treated the electronic record of presentation as constituting completion of the determinative events for fixation of duty. In these circumstances a subsequent delegated instrument that effectively prohibits import (by imposing a 200% duty) cannot be given retrospective effect against such completed electronic presentations. [Paras 12, 13, 14]

Notification No.5/2019 shall be ignored insofar as it is sought to be applied to bills of entry presented and goods entered prior to its issuance on 16.02.2019; duty is to be paid at the rate applicable at time of electronic presentation/generation of the bill of entry and goods are to be released on payment of that duty.

Final Conclusion: Writ petition allowed; petitioner entitled to have duty assessed at the rate applicable at the time of electronic presentation/generation of the bill of entry and having regard to entry of goods into India prior to issuance of Notification No.5/2019; respondents directed to release the goods within seven days upon payment of duty so assessed.

Refund of excess duty - mandamus - direction to process refund application - final orders on merits - effect of appellate order setting aside demand - disclosure of any operative stay

Refund of excess duty - mandamus - effect of appellate order setting aside demand - Petition for a mandamus directing respondents to refund the excess duty and to give effect to the appellate order in Appeal No.221/2013 (TTN) dated 20.12.2013. - HELD THAT: - The Court examined the order dated 20.12.2013 passed by the Commissioner of Customs and Central Excise (Appeals) which set aside the demand under which the excess duty was collected. In view of that appellate order and the absence of any record before the Court that the department had in fact preferred an appeal against it, the Court held that no useful purpose would be served by keeping the writ petition pending. The petitioner is entitled to pursue the refund claim arising from the order in Appeal No.221/2013 (TTN) and the Court exercised its writ jurisdiction to direct administrative action rather than decide disputed factual or quantification issues itself. [Paras 5, 6]

Writ petition allowed insofar as a direction is issued to consider and settle the refund application in consequence of the appellate order.

Direction to process refund application - final orders on merits - disclosure of any operative stay - Requirement and scope of administrative action to be taken by the Assistant Commissioner of Customs (Refunds) on the petitioner's refund application dated 11.02.2014. - HELD THAT: - The Court directed the third respondent to consider the petitioner's refund application and to pass final orders on merits and in accordance with law within four weeks from receipt of a copy of the order. The Court qualified the direction by requiring that if any stay has been granted by any appellate forum or Court against the petitioner, that fact must be disclosed in the final order passed pursuant to the Court's directions. The Court did not itself undertake quantification or adjudication of contested facts but remitted the matter for administrative determination consistent with the appellate order. [Paras 6, 7]

Third respondent directed to process and pass final orders on the refund application within four weeks, with disclosure of any operative stay.

Final Conclusion: Writ petition disposed of by issuing a mandamus directing the Assistant Commissioner of Customs (Refunds) to consider and finally dispose of the refund application dated 11.02.2014 within four weeks in accordance with law, and to record any appellate stay; no order as to costs.

Refund of Special Additional Duty (SAD) under Notification No. 102/2007-Cus. - requirement of sale "as such" versus "subsequent sale" - deeming fiction of "manufacture" by packing/repacking/labeling - application of Central Excise Chapter/Sub heading notes to Customs notifications - limitation for filing SAD refund claims - penalty under Section 114AA of the Customs Act, 1962

Refund of Special Additional Duty (SAD) under Notification No. 102/2007-Cus. - requirement of sale "as such" versus "subsequent sale" - Whether Notification No. 102/2007-Cus. requires the imported goods to be sold "as such" to be eligible for refund of SAD. - HELD THAT: - The Tribunal examined the text of Notification No. 102/2007-Cus. and noted that the notification grants exemption to goods "imported into India for subsequent sale" and prescribes conditions for refund, but does not require that the goods be sold "as such". Earlier notifications had used the phrase "as such", but Notification No. 102/2007 omits it and uses "subsequent sale". Relying on Tribunal and High Court precedents which held that mere packing/repacking, sterilization/fumigation or labeling that do not effect a fundamental change in the identity of the goods do not disentitle an importer to refund, the Tribunal held that no extraneous condition of sale "as such" can be read into the notification. The Tribunal therefore rejected the Revenue's contention that the exemption was limited to sales in the original import packing when the product remained the same. [Paras 6]

Rejection of refund on the ground that the imported oats were not sold "as such" is unsustainable; Notification No. 102/2007 does not impose a requirement of sale "as such".

Deeming fiction of "manufacture" by packing/repacking/labeling - application of Central Excise Chapter/Sub heading notes to Customs notifications - Whether processes undertaken on imported oats (fumigation, repacking, affixation of brand) amount to "manufacture" under the deeming provision and thereby disentitle the importer to SAD refund. - HELD THAT: - The Tribunal analysed the nature of the processes performed and precedents dealing with sterilization/fumigation, repacking and labeling. It observed that decisions (including the Supreme Court in Servo Med and various Tribunal/High Court decisions) hold that processes which do not effect a fundamental change in the identity of the goods do not amount to manufacture in the ordinary sense and that the legal fiction in Excise Chapter notes or the deeming clause cannot be invoked to read a different meaning into a Customs notification which, on its wording, requires only "subsequent sale". Applying those principles, the Tribunal held that repacking, fumigation and affixation of brand name which did not change the character of oats do not disentitle the appellant to refund under Notification No. 102/2007. [Paras 6]

Processes of fumigation, repacking and branding that do not effect a fundamental change in the product do not constitute manufacture for the purpose of denying SAD refund under Notification No. 102/2007; the denial on this ground is unsustainable.

Limitation for filing SAD refund claims - refund of Special Additional Duty (SAD) under Notification No. 102/2007-Cus. - Whether refund claims filed beyond one year from the date of payment of SAD are barred by limitation under Notification No. 102/2007-Cus. - HELD THAT: - Notification No. 102/2007-Cus. contains a clause prescribing filing within one year from the date of payment. The Tribunal considered conflicting High Court decisions (Delhi and Bombay) and the Principal Bench decision which followed the Delhi High Court view in M/s. Sony India Pvt. Ltd. that limitation should be read in the context that a refund claim can be filed only after subsequent sale has occurred and relevant documents are available. Observing judicial discipline and the Principal Bench reasoning, the Tribunal held that rejection of refund claims on the ground of limitation could not be sustained in the facts of the present case. [Paras 7]

Refund claims filed beyond one year from payment of SAD cannot be summarily rejected as time barred in the circumstances considered; the limitation ground for denial is not sustained.

Penalty under Section 114AA of the Customs Act, 1962 - Validity of imposition of penalty under Section 114AA of the Customs Act, 1962 in the refund proceedings. - HELD THAT: - The Tribunal noted that penalty under Section 114AA was imposed though there was no proposal for penalty in the Show Cause Notice and questioned the rationale of imposing such a penalty in an application for refund. Observing that the imposition was without any ground and that the penalty provision is directed to deliberate falsification or forgery of export documents (as contended), the Tribunal found no justification for penalty in the present refund proceedings and set aside the penalty. [Paras 9]

Penalty imposed under Section 114AA is set aside as without basis.

Final Conclusion: The Tribunal allowed the appeal: the denial of SAD refund on the grounds that the imported oats were not sold "as such" and that refund claims were time barred was reversed; the penalty under Section 114AA was set aside; the appellant's refund claim as recorded in the appeal papers is to be considered with consequential reliefs, while the appellant's belated contest regarding the aggregate amount was not permitted.

Classification of goods by reference to the Rules of Interpretation and Chapter/Section Notes - reliance on exemption notifications cannot alter tariff classification absent change in Customs Tariff - non-retrospective applicability of subsequently issued notification - precedent, administrative rulings and consistent past practice as relevant evidence for classification - General Rules of Interpretation - Rule 3(c) (preference where two headings apply)

Classification of goods by reference to the Rules of Interpretation and Chapter/Section Notes - precedent, administrative rulings and consistent past practice as relevant evidence for classification - Classification of imported items described as access points, enterprise class Ethernet switches and networking appliances under CTH 85176290. - HELD THAT: - The Tribunal found that classification must be determined by applying the Customs Tariff Act, its Rules of Interpretation, and the Section and Chapter Notes. The appellants had historically classified the goods under CTH 85176290 and produced evidence that the same classification has been accepted at various customs locations and in an order by ADG (Adjudication), DRI. Foreign rulings (US and German Customs) at the six digit level and the past and present administrative practice were held to support the appellants' claimed classification. The department had not made out a case to reopen or change the classification on meritorious grounds, nor adduced evidence that the ADG order was stayed by a competent authority. On these bases the Tribunal upheld classification under CTH 85176290. [Paras 4, 5]

Impugned goods are classifiable under CTH 85176290.

Reliance on exemption notifications cannot alter tariff classification absent change in Customs Tariff - non-retrospective applicability of subsequently issued notification - General Rules of Interpretation - Rule 3(c) (preference where two headings apply) - Whether the department could reclassify the imported goods as CTH 85176990 on the basis of Notification No.57/2017 and whether Notification No.2/2019 could be applied retrospectively to alter classification or exemption entitlement. - HELD THAT: - The Tribunal held that the department sought to change classification from CTH 85176290 to CTH 85176990 relying on a notification without demonstrating any change warranted in classification under the Tariff Act. The court emphasised that an exemption notification cannot be used to revise statutory tariff classification where there has been no amendment to the Customs Tariff. Further, reliance on Notification No.2/2019 issued subsequently was held to be misplaced because it cannot be given retrospective effect to affect the present facts. The Tribunal also noted that Rule 3(c) was invoked by the lower authority but the Commissioner (Appeals) had not explained competing classification claims adequately; however, the primary conclusion was that classification cannot be altered merely on the basis of an exemption notification. [Paras 4, 5]

Department's attempt to reclassify goods on basis of the notification was not permissible; Notification No.2/2019 not applicable retrospectively.

Final Conclusion: The appeal is allowed: the imported access points, enterprise class Ethernet switches and networking appliances are held classifiable under CTH 85176290; the departmental reclassification based on the exemption notification and retrospective application of a subsequently issued notification are rejected; consequential relief, if any, to follow as per law.

Writ jurisdiction - discretionary relief - Moratorium under RBI COVID-19 circulars - Classification as Non-Performing Asset and challenge thereto - Pendency of criminal and regulatory investigations affecting civil relief - Laches and delay in invoking public law remedies - Commercial prudence and bona fides in large-scale transactions - NCLAT embargo on proceedings involving IL&FS group

Moratorium under RBI COVID-19 circulars - Classification as Non-Performing Asset and challenge thereto - Writ jurisdiction - discretionary relief - Pendency of criminal and regulatory investigations affecting civil relief - Laches and delay in invoking public law remedies - Whether the petitioner is entitled to a direction requiring respondent No.1 to grant the COVID-19 moratorium in respect of Loan Transaction Nos. I and II and whether the classification of Loan Transaction No.III as an NPA should be set aside in the exercise of writ jurisdiction. - HELD THAT: - The Court examined the petitioner's claim that Loan Transaction No.III was a bona fide back-to-back arrangement and that the petitioner was an innocent third party; it noted that the petitioner seeks, in effect, a judicial declaration of innocence to secure the moratorium. The petition was held to be belied by the contemporaneous records and the ongoing investigations: forensic and SFIO material, interim forensic-audit findings and the cognizance of wide-scale mismanagement in the IL&FS group all indicate the transactions were part of a broader questionable modus operandi. The SFIO investigation and related criminal/regulatory processes remain pending and the SFIO report does not exonerate the petitioner; the Court observed that differing standards of proof and the continuing nature of the inquiries preclude the Court from making a conclusive factual finding of the petitioner's innocence on the record before it. The petitioner's delay in approaching the writ court (raising the challenge only after respondent refused moratorium) and the absence of any urgent request for expedition of investigations were relevant to the exercise of discretion. The Court further applied commercial common-sense: a prudent commercial entity would have made necessary enquiries before entering a large interposed transaction, and the petitioner's pleaded explanations were not found to be satisfactorily credible. For these reasons the Court declined to exercise its equitable writ jurisdiction to set aside the NPA classification or to direct grant of moratorium, observing that the petitioner's claims remain subject to adjudication in the ongoing proceedings (NCLT/NCLAT, claim admission process and regulatory/criminal investigations) and that determinations in those fora may afford appropriate remedies. [Paras 20, 28, 29, 30, 32]

Writ relief refused; the Court declined to direct grant of moratorium or to set aside the NPA classification and refused to exercise its discretionary writ jurisdiction.

Final Conclusion: The petition seeking extension of the COVID-19 moratorium and challenge to the NPA classification of Loan Transaction No.III is rejected; the High Court declined to exercise equitable writ jurisdiction in view of the ongoing investigations, available forensic material, delay and doubts as to the petitioner's bona fides, leaving the petitioner to pursue remedies in the pending processes.

Right of secured creditor to enforce security without the intervention of the court or tribunal - Proviso to sub-section (4) of Section 13 of the SARFAESI Act permitting secured creditor to stand out of winding up proceedings - Harmonisation of the SARFAESI Act with the Companies Act in respect of distribution of sale proceeds under Section 529A - Liquidator's right to seek redress under Sections 17 and 18 of the SARFAESI Act

Right of secured creditor to enforce security without the intervention of the court or tribunal - Proviso to sub-section (4) of Section 13 of the SARFAESI Act permitting secured creditor to stand out of winding up proceedings - Harmonisation of the SARFAESI Act with the Companies Act in respect of distribution of sale proceeds under Section 529A - Liquidator's right to seek redress under Sections 17 and 18 of the SARFAESI Act - Applicant permitted to continue auction and enforcement proceedings under Sections 13 and 14 of the SARFAESI Act in respect of secured assets of a company in liquidation, subject to statutory safeguards. - HELD THAT: - The court applied the principle laid down by the Apex Court in Pegasus Assets Reconstruction Pvt. Ltd. v. Haryana Concast Ltd. that Section 13 of the SARFAESI Act manifests Parliament's intention to enable a secured creditor to enforce its security without court or tribunal intervention and that the SARFAESI Act itself incorporates safeguards to harmonise with the Companies Act, particularly regarding distribution of sale proceeds under Section 529A. The judgment notes that where a secured creditor elects to stand out of winding up proceedings, the proviso to sub-section (4) of Section 13 and related provisions ensure protection of workmen's dues and the liquidator's functions, and that the liquidator retains the right to seek redress under Sections 17 and 18 of the SARFAESI Act. Applying that ratio, the court held that the applicant may proceed with the auction process concerning the specified immovable properties and continue actions under Sections 13 and 14 of the SARFAESI Act, subject to the statutory scheme governing deposit and distribution of sale proceeds as envisaged by Section 529A and the SARFAESI Act's remedial provisions for the liquidator. [Paras 6, 7, 8]

Company Application allowed; applicant permitted to continue auction and enforcement under Sections 13 and 14 of the SARFAESI Act in respect of the specified secured assets, in terms of the proviso to sub-section (4) of Section 13.

Final Conclusion: The application is allowed and the secured creditor (applicant) is permitted to continue with the auction and enforcement proceedings under the SARFAESI Act in relation to the specified properties of the company in liquidation, subject to the statutory safeguards harmonising the SARFAESI Act with the Companies Act (including the mechanism under Section 529A) and the liquidator's rights under the SARFAESI Act.

Restoration of company struck off - Section 252(1) Companies Act, 2013 discretionary restoration - Striking off under Section 248(1) - Justness test for restoration - Restoration subject to filing pending statutory documents and payment of fees - Conditional restoration requiring payment to Prime Minister's Relief Fund

Restoration of company struck off - Section 252(1) Companies Act, 2013 discretionary restoration - Justness test for restoration - Restoration subject to filing pending statutory documents and payment of fees - The company's name struck off under Section 248(1) was to be restored on the ground that the company was in operation and it was just to restore its name. - HELD THAT: - The Tribunal found that the appellant produced sufficient material - audited financial statements for the periods up to 31.03.2018, bank statements and income tax returns for the relevant assessment years - demonstrating that the company was functioning during the period preceding the striking off. Applying the discretionary jurisdiction vested by Section 252(1) of the Companies Act, 2013, the Tribunal concluded that it was just to restore the company's name. The Registrar of Companies had indicated no objection to restoration provided outstanding statutory documents were filed with requisite late filing fees. Accordingly, the Tribunal exercised its discretion to set aside the public notice of striking off and ordered restoration, while attaching lawful conditions aimed at protecting statutory compliance and stakeholders' interests. [Paras 11, 12]

The appeal is allowed; the strike off order is set aside and the company's name is restored subject to filing all outstanding statutory documents with payment of applicable fees and charges and payment of Rs. 25,000 to the Prime Minister's Relief Fund.

Final Conclusion: The Tribunal allowed the appeal and ordered restoration of the company's name to the Register as if it had not been struck off, subject to compliance with filing of outstanding statutory returns, payment of all applicable late fees and charges and the specified payment to the Prime Minister's Relief Fund.

Sanction of scheme of amalgamation under Sections 230 and 232 of the Companies Act, 2013 - Compliance with procedural requirements for compromise and arrangement (notice, publication, service on regulators) - Effect of outstanding income tax demand on corporate amalgamation and undertaking by transferee - Transfer of assets, liabilities and employees on amalgamation and dissolution without winding up - Registrar of Companies' registration and consequential consolidation of records - Non derogation from statutory liabilities, taxes and other dues notwithstanding sanction

Sanction of scheme of amalgamation under Sections 230 and 232 of the Companies Act, 2013 - Compliance with procedural requirements for compromise and arrangement (notice, publication, service on regulators) - Approval of the scheme of amalgamation of the transferor companies into the transferee company - HELD THAT: - The Tribunal considered the First and Second Motion compliance, the affidavit of service and publication, statutory auditor certificates as to accounting treatment, the Regional Director's report, the Official Liquidator's report and the Income Tax Department's report. The petitioners filed affidavits evidencing publication in the prescribed newspapers and service upon the Registrar of Companies, Regional Director and other authorities. Certificates from statutory auditors were placed on record. No pending inspections, inquiries or prosecutions against the petitioners were reported. On this basis the Tribunal found that there was no impediment to sanctioning the scheme and that the statutory requirements under Sections 230 and 232 read with the applicable rules had been complied with so as to permit approval of the scheme. [Paras 4, 5, 9, 10]

Scheme sanctioned and approved; petitioners bound to continue compliance with statutory requirements.

Obligation to file BEN 2 / declaration under Section 90 and remedial compliance - Whether the Regional Director's observation regarding non filing of prescribed beneficial ownership declarations prevented sanction - HELD THAT: - The Regional Director's report noted absence of filings of the declaration required by Section 90 read with the significant beneficial owner rules. The petitioners filed an affidavit stating that the respective forms had been filed with challan references. The Tribunal recorded the filing and treated the matter as complied with for the purpose of sanctioning the scheme. [Paras 5]

Observation noted; remedial filings furnished and taken into account - not an impediment to sanction.

Effect of outstanding income tax demand on sanction and adequacy of undertaking by transferee - Whether an outstanding income tax demand affects approval of the scheme - HELD THAT: - The Income Tax Department reported an outstanding demand. The petitioners furnished an undertaking that, if the demand crystallises and an order is passed by the Income Tax Authority, the transferee company shall discharge such demand. The Tribunal recorded the undertaking and observed that, subject to such obligations and without prejudice to the rights of the tax authorities, there was no objection to sanctioning the scheme. The sanction thus does not extinguish or waive any tax liability; liabilities remain enforceable in accordance with law. [Paras 6, 10, 11]

Outstanding tax demand does not preclude sanction; undertaking accepted and sanction granted subject to tax liabilities being payable in accordance with law.

Transfer of assets, liabilities, pending proceedings and employees on amalgamation - Dissolution of transferor companies without winding up - Legal consequences of the sanctioned scheme in respect of transfer of properties, liabilities, proceedings and employees and dissolution of transferor companies - HELD THAT: - The Tribunal directed that on the effective date all properties, rights, liabilities and duties of the transferor companies shall stand transferred to and vest in the transferee company without further act or deed; pending proceedings shall continue against or by the transferee company; employees in service immediately prior to the effective date shall become employees of the transferee company on terms not less favourable; and the transferor companies shall stand dissolved without winding up upon filing the certified copy of the order with the Registrar of Companies. These directions implement the statutory effect envisaged under Section 232. [Paras 13]

Assets, liabilities, proceedings and employees to be transferred to transferee; transferor companies to be dissolved without winding up upon registration.

Registrar of Companies' registration and consolidation of records - Non preclusion of enforcement action and non exemption from taxes, stamp duty and other statutory charges - Consequences as to registration with the Registrar of Companies and preservation of rights of authorities to take action for any statutory non compliance - HELD THAT: - The Tribunal directed that a certified copy of the order be delivered to the Registrar of Companies within thirty days for registration; upon registration the Registrar shall consolidate files and the transferor companies shall be dissolved. The Tribunal also clarified that the sanction does not amount to exemption from stamp duty, taxes, GST or other charges and that the order will not impede action, in accordance with law, against persons for any deficiency or contravention of enactments, rules or regulations. [Paras 11, 12, 13]

Registrar to register order and consolidate records; sanction does not confer exemptions and does not bar lawful action for non compliance.

Final Conclusion: The Tribunal, having found that statutory and procedural requirements were complied with and after recording the reports and undertakings from relevant authorities, sanctioned the scheme of amalgamation under Sections 230 and 232 of the Companies Act, 2013; provided directions for transfer of assets, liabilities, employees and registration with the Registrar of Companies; and clarified that the sanction is subject to payment of taxes or other liabilities and does not preclude lawful enforcement action.

Jurisdiction of Adjudicating Authority under the Insolvency and Bankruptcy Code - power of the liquidator to form and realise the liquidation estate - absence of jurisdiction of NCLT to order eviction or recovery of rent - sale of liquidation estate subject to taking possession by due process of law - distinction between "assets" and "property" in insolvency proceedings

Absence of jurisdiction of NCLT to order eviction or recovery of rent - jurisdiction of Adjudicating Authority under the Insolvency and Bankruptcy Code - Whether the Adjudicating Authority (NCLT) can entertain claims for eviction of tenant and recovery of rent. - HELD THAT: - Applying the ratio of the Hon'ble Supreme Court in Embassy Property Developments Pvt. Ltd. and the NCLAT decision in K.L. Jute Products Pvt. Ltd., the Tribunal held that the Adjudicating Authority's jurisdiction is confined to the powers expressly conferred by the Code and does not extend to matters such as eviction and recovery of money which fall within the domain of civil courts. The Code's scheme, and the distinction drawn between duties in Sections dealing with resolution professionals and the scope of assets, supports the conclusion that eviction and rent-recovery proceedings must be pursued before the appropriate civil or rent forum and cannot be adjudicated under Section 60(5) of the Code by the NCLT. [Paras 16, 17, 18, 21, 22]

Proceedings for eviction and recovery of rent are to be pursued in the appropriate Civil Court/Rent Control Court; NCLT lacks jurisdiction to grant such reliefs.

Power of the liquidator to form and realise the liquidation estate - sale of liquidation estate subject to taking possession by due process of law - Whether the liquidator can include the disputed immovable property in the liquidation estate and take steps for its sale. - HELD THAT: - Relying on Section 36 and Section 35(1)(k) of the Code, the Tribunal found that the liquidator is entitled to include immovable property in the liquidation estate where the corporate debtor has ownership rights and to hold the liquidation estate as fiduciary for creditors. While eviction and rent recovery must be sought in civil fora, the liquidator may take steps to secure the property and, if advised, register a sale deed in his favour and sell the property, provided possession is obtained by due process of law. Thus inclusion in the liquidation estate is proper where ownership is established or under processes permitted by the Code. [Paras 10, 11, 18, 23, 24]

The immovable property may be included in the liquidation estate and the liquidator may effect sale after obtaining possession by due process of law.

Jurisdiction of Adjudicating Authority under the Insolvency and Bankruptcy Code - Disposition of the pending applications before the Tribunal seeking eviction, rent recovery and quashing of eviction notices. - HELD THAT: - Given that eviction and rent recovery fall outside the adjudicatory jurisdiction of the Tribunal and must be pursued before civil courts, and that the liquidator retains powers to administer and realise liquidation assets, the Tribunal dismissed both MA 1512 of 2018 and MA 47 of 2019. The applicants are directed to seek the reliefs of eviction and rent recovery before the appropriate civil forum; the liquidator alone retains the ability to proceed with sale of the property following lawful acquisition of possession. [Paras 22, 23, 24, 25]

Both applications are dismissed; parties must approach the civil courts for eviction and rent claims, while the liquidator may pursue sale after taking possession by due process.

Final Conclusion: The Tribunal dismissed the applications seeking eviction and recovery of rent as beyond its jurisdiction, directed the parties to approach the appropriate civil forum for those remedies, and confirmed that the liquidator may include the immovable property in the liquidation estate and proceed to sell it after obtaining possession by due process of law.

Bail in economic offences - Presumption as to proceeds of crime under Section 24 of PMLA - Twin stringent conditions for bail under Section 45 of PMLA and post-Nikesh Tarachand Shah approach - Factors to be weighed in grant of bail (nature of accusation, severity, evidence, risk of tampering, apprehension of absconding, character and public interest) - Prima facie satisfaction for refusal of bail - RBI inspection and regulatory framework applicable to non-banking financial companies - Parity with co-accused

Bail in economic offences - Factors to be weighed in grant of bail (nature of accusation, severity, evidence, risk of tampering, apprehension of absconding, character and public interest) - Prima facie satisfaction for refusal of bail - Application for bail under the PMLA by the applicant was considered and refused on prima facie grounds. - HELD THAT: - The Court examined the nature and gravity of allegations against the applicant, including his role as Managing Director of ITNL and membership of approval/committee bodies implicated in the lending and financing schema within the IL&FS group. Having regard to settled principles applicable to economic offences, the Court applied the relevant factors to be weighed when considering bail - nature of accusation and severity of punishment, character and role of the accused, material relied upon by prosecution, reasonable apprehension of tampering with evidence or witnesses, and larger public interest. The complaint, forensic audit excerpts and recorded statements prima facie implicated the applicant in the scheme whereby loans were routed and group exposures were concealed contrary to regulatory advice, and alleged receipt of performance related payments and sitting/deputation fees which the ED treats as proceeds of crime. In light of the magnitude of the alleged economic offence, its impact on investors and the financial system, and the material on record, the Court was not persuaded to grant bail and declined to disturb the custodial position at the prima facie stage. [Paras 16, 17, 21, 22, 23]

Bail application rejected on prima facie assessment of the seriousness of the economic offence and the material placed by the Enforcement Directorate.

Presumption as to proceeds of crime under Section 24 of PMLA - Twin stringent conditions for bail under Section 45 of PMLA and post-Nikesh Tarachand Shah approach - The Court held that the presumption under Section 24 of the PMLA operates at the stage of bail and that the accused carries the burden to rebut that presumption; the approach to bail applications under Section 45 must be read in light of authoritative decisions and the seriousness of the offence. - HELD THAT: - The Court noted that Section 24 of the PMLA casts a statutory presumption relating to records or property and interconnected transactions, placing the burden on the accused to prove that the monies or properties are not proceeds of crime. The Court acknowledged authoritative precedents which explain that the burden to show proceeds are untainted shifts to the accused once relevant material is placed before the Court. The Court further observed that following the Apex Court's guidance in Nikesh Tarachand Shah, bail applications under the PMLA require reconsideration on merits but must account for the severity of the accusation; where the facts disclose serious economic offences with substantial alleged proceeds of crime and material suggesting complicity, the stringent statutory framework and presumption under Section 24 weigh against grant of bail unless rebutted. On the material before it, the applicant had not discharged that burden at this stage. [Paras 16, 19, 21]

Presumption under Section 24 applies and the accused has the burden to rebut it; having regard to the material and the post-Nikesh Tarachand Shah framework, the burden was not discharged and militated against bail.

RBI inspection and regulatory framework applicable to non-banking financial companies - Parity with co-accused - Regulatory advisories issued to IFIN by the RBI and comparative treatment of co-accused were considered but did not merit grant of bail to the applicant. - HELD THAT: - The Court rejected the applicant's contention that the RBI communication was merely advisory and not applicable because IFIN was a listed company: IFIN held an NBFC licence and was subject to RBI inspection powers, and the RBI's directions to revisit group exposure and related frameworks were germane. The Court also considered parity submissions noting that some co-accused had obtained bail, but observed that differences in facts and the state of investigation (including arrests by SFIO and custodial status of others) prevented mechanical application of parity. The overall factual matrix and incriminating material against the applicant led the Court to conclude that parity did not support bail in this case. [Paras 4, 15, 16]

RBI regulatory findings and distinctions in the factual matrix meant parity with some co-accused did not justify grant of bail to the applicant.

Final Conclusion: On a prima facie appraisal of the complaint, forensic audit material and statements collected by the Enforcement Directorate, and applying the statutory presumption under Section 24 of the PMLA together with the factors governing bail in serious economic offences, the High Court refused the applicant's prayer for bail; the rejection is premised on the gravity of allegations, the material on record and the applicant's alleged role, and the order records that these observations are prima facie and not final findings on merits.

Exemption from service tax for Developers and Units under the SEZ Act - overriding effect of the SEZ Act over inconsistent provisions of other laws - terms and conditions for SEZ exemptions to be prescribed by SEZ Rules - inapplicability of Notifications issued under section 93 of the Finance Act for determining SEZ exemptions - classification of signage charges as renting of immovable property versus sale of space or time for advertisement - determination of service classification under section 65A of the Finance Act

Exemption from service tax for Developers and Units under the SEZ Act - overriding effect of the SEZ Act over inconsistent provisions of other laws - terms and conditions for SEZ exemptions to be prescribed by SEZ Rules - inapplicability of Notifications issued under section 93 of the Finance Act for determining SEZ exemptions - Entitlement of the appellant to exemption from service tax on services provided to SEZ units under the SEZ Act and whether the Notification dated March 3, 2009 issued under the Finance Act could govern that entitlement. - HELD THAT: - Section 26(1)(e) of the SEZ Act expressly grants exemption from service tax on taxable services provided to a Developer or Unit for authorized operations in a Special Economic Zone. Section 26(2) empowers the Central Government to prescribe the manner and terms of such exemptions, and the SEZ Act defines "prescribed" as prescriptions by rules made under the SEZ Act. Rule 31 of the SEZ Rules implements the SEZ Act's exemption scheme. Section 51 gives the SEZ Act overriding effect over inconsistent provisions in other laws. The Notification dated March 3, 2009 was issued under section 93 of the Finance Act and prescribes conditions (including proviso (c) requiring refund route prior to May 20, 2009) under the Finance Act; therefore it cannot be read as the governing source for entitlement where the SEZ Act and SEZ Rules confer the exemption and prescribe its terms. Reliance on the Finance Act Notification to deny exemption is thus inconsistent with the SEZ Act and the SEZ Rules and was not justified. [Paras 13, 16, 17, 18, 21]

The appellant is entitled to exemption under the SEZ Act/SEZ Rules for services rendered to SEZ units and the Notification dated March 3, 2009 issued under the Finance Act is not applicable to determine that entitlement.

Classification of signage charges as renting of immovable property versus sale of space or time for advertisement - determination of service classification under section 65A of the Finance Act - Whether signage charges charged by the appellant fall outside the SEZ exemption because they are sale of space or time for advertisement, or whether they are covered as renting of immovable property and thus exempt when used for authorized SEZ operations. - HELD THAT: - The services in question (permission to display the lessee's name on premises) were used by SEZ units for their authorized operations; accordingly they fall within the SEZ exemption for services provided to Developers or Units. Independently, classification must follow section 65A of the Finance Act. The activity of permitting the lessee to display its name on the building's facade is part of renting immovable property services rather than providing space/time for advertisement. The statutory definition of "sale of space or time for advertisement" contemplates display/advertising or showcasing of products or services; allowing a lessee to put its name for identification does not amount to advertising or showcasing as contemplated by that definition. Therefore the signage charges are properly classifiable as renting of immovable property and are covered by the SEZ exemption. [Paras 22, 23, 24, 25]

The signage charges are exempt: they are either covered by the SEZ Act exemption as services used for authorized SEZ operations or, in any event, are correctly classified as renting of immovable property and not as sale of space or time for advertisement.

Final Conclusion: The Commissioner's order confirming service tax demands on rent and signage charges is set aside; the appellant's services to SEZ units are exempt under the SEZ Act/SEZ Rules and the Finance Act Notification relied upon does not govern entitlement to that exemption, and the signage income is in any event classifiable as renting of immovable property and exempt.

Includability of goods supplied free of cost in value of taxable services - valuation rule 5(1) of the Service Tax (Determination of Value) Rules struck down - binding effect of Supreme Court precedent in Bhayana Builders on valuation of free supplies - CENVAT credit admissibility on tippers as inputs under rule 2(k) of the CENVAT Credit Rules, 2004 - suo-moto reversal of CENVAT credit and liability to pay interest - remand for fresh enquiry/verification where clerical error and documentary reconciliation are disputed

Includability of goods supplied free of cost in value of taxable services - binding effect of Supreme Court precedent in Bhayana Builders on valuation of free supplies - Whether diesel, explosives and other materials supplied free of cost by the service recipient are includible in the taxable value of services provided by the appellant. - HELD THAT: - The contract unequivocally recorded that explosives, accessories and diesel would be supplied by the service recipient (SCCL) to the appellant. The Tribunal applied the Supreme Court's decision in Bhayana Builders, which holds that where goods/materials are received free of cost from the service recipient and no amount is charged by the service provider for such goods/materials, their value cannot be included in the gross amount charged for the service under section 67 and the Valuation Rules. Further, reliance in the show cause notice on rule 5(1) of the Valuation Rules is misplaced because that provision has been struck down by the Supreme Court in Intercontinental Consultancy. On these bases the confirmed demand for service tax on free materials was set aside. [Paras 15, 16, 18, 19, 20]

Demand of service tax on the value of diesel, explosives and similar materials supplied free of cost set aside.

Remand for fresh enquiry/verification where clerical error and documentary reconciliation are disputed - Whether CENVAT credit of Rs. 30,05,484/- shown as excess availment due to a difference between September and October 2009 balances is admissible. - HELD THAT: - The Commissioner disallowed the credit because of an alleged mismatch between the closing balance for September 2009 and the opening balance for October 2009 and observed that invoices did not add up to the claimed credit. The appellant explained that the discrepancy arose from a clerical error in the returns which was rectified in subsequent returns and is supported by the CENVAT register. The Tribunal found that the adjudicating authority did not adequately consider the appellant's explanation and certain invoices were examined selectively. Given the factual nature of the dispute and the need for documentary reconciliation, the matter is remitted to the Commissioner for fresh adjudication in light of the show cause notice and the appellant's explanations. [Paras 21, 22, 23]

Issue remitted to the Commissioner for fresh consideration and determination.

CENVAT credit admissibility on tippers as inputs under rule 2(k) of the CENVAT Credit Rules, 2004 - Whether CENVAT credit availed on 'tippers' prior to June 22, 2010 was admissible as input credit. - HELD THAT: - The Tribunal examined precedent where it was held that 'tippers' qualify as inputs used by the service provider in rendering taxable services and thus credit was admissible even for periods prior to the June 22, 2010 amendment. Applying that view, the Tribunal concluded that the credit availed by the appellant on tippers was correctly taken and the demand and appropriation confirmed by the Commissioner are unsustainable. [Paras 24, 25, 26]

Disallowance of CENVAT credit on tippers set aside.

Suo-moto reversal of CENVAT credit and liability to pay interest - Whether interest is payable where the assessee has suo-moto reversed CENVAT credit without utilization. - HELD THAT: - An audit objection led to the appellant reversing credit and the appellant computed and paid interest from the date of availment to the date of reversal. The Tribunal applied its consistent view that where credit is reversed by the assessee without utilization, no further interest is recoverable from the assessee. Reliance was placed on several Tribunal decisions to support this principle. Accordingly, the demand for interest beyond the amount already deposited was held unsustainable. [Paras 27, 28]

Demand of interest in excess of the amount paid by the appellant on suo-moto reversal set aside.

Final Conclusion: Appeal partly allowed: demands and penalties confirmed by the Commissioner set aside except the disallowance of CENVAT credit of Rs. 30,05,484/-, which is remitted to the Commissioner for fresh decision after verification; demand of service tax on free supplies, disallowance of credit on tippers and demand of interest on suo-moto reversal are set aside.

Summary order. Civil appeals/special leave petitions dismissed as withdrawn; question of law kept open.

Affidavit of valuation - withdrawal of affidavit of valuation - financial liability as determinant for court-fee - appeal under Section 35L of the Central Excise Act, 1944

Affidavit of valuation - withdrawal of affidavit of valuation - financial liability as determinant for court-fee - Registrar rightly refused the appellant's request to withdraw the affidavit of valuation accompanying the appeals. - HELD THAT: - The Court examined the operative portion of the CESTAT order under challenge and found that it imposed a financial liability on the appellant by confirming demands under the relevant provisions and by confirming reversal of ineligible CENVAT credit and interest under the rules. Because the appealed order subjects the appellant to monetary liability, the affidavit of valuation filed with the Civil Appeals under Section 35L of the Central Excise Act, 1944 was held to be properly in order and necessary for determination of court-fee. Consequently, the appellant's attempt to withdraw the affidavit so as to confine the Court Fee to a fixed minimal amount was not legally sustainable, and the Registrar's rejection of that request was upheld.

The Registrar's order refusing permission to withdraw the affidavit of valuation is upheld and the request to limit court-fee by withdrawing the affidavit is rejected.

Final Conclusion: The appeal against the Registrar's order is dismissed; the affidavit of valuation accompanying the appeals remains effective because the CESTAT order under challenge imposes financial liability on the appellant.

Supply of tangible goods - service tax - transfer of right to use goods - effective control - leasing versus sale - mutually exclusive levy of VAT and service tax - deemed sale

Supply of tangible goods - service tax - transfer of right to use goods - effective control - leasing versus sale - deemed sale - Whether the activity of work wear rental carried out by the appellant amounts to supply of tangible goods so as to attract service tax. - HELD THAT: - The Tribunal examined the contractual terms governing the work-wear arrangements, noting that the appellant retained ownership while leasing work-wear to clients, retained exclusive rights of washing, maintenance and repair, collected garments for periodic servicing, and that on termination the work-wear remained the appellant's property. The Bench applied the test of transfer of the right to use goods (as articulated in BSNL v. Union of India) and accepted the view adopted by the Chandigarh Bench in a closely similar matter and by the Hyderabad Commissioner (Appeals) in the appellant's own case that, on the contractual matrix and factual operation, exclusive possession and effective control lay with the users/clients during the lease period. On that basis the Tribunal held that the transactions did not constitute a taxable service under the Finance Act but fell within the characterisation accepted for purposes of turnover tax (deemed sale), and accordingly the demand of service tax could not be sustained. [Paras 7, 9]

Impugned order confirming service tax, interest and penalty set aside; appeal allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeal, holding that the work-wear rental transactions, viewed in light of the agreement and precedents, did not attract service tax as supply of tangible goods and accordingly set aside the demand.

Return of bank guarantee - restoration of writ petition - consequential relief - withdrawal of writ petition - discharge certificate under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - interim application

Restoration of writ petition - consequential relief - Restoration of Writ Petition No. 8922 of 2014 for the limited purpose of directing return of the bank guarantee - HELD THAT: - The Court examined whether it was necessary to restore the withdrawn writ petition solely to secure return of the bank guarantee. Having regard to the factual matrix - including the petitioner's withdrawal of the writ and subsequent issuance of a discharge certificate under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - the Court held that restoration was not necessary because the relief sought was consequential. The Court therefore declined to restore the writ petition and treated the relief as capable of being granted without revival of the main petition. [Paras 9]

Restoration of the writ petition is not necessary; the relief sought is consequential and need not await revival of the petition.

Return of bank guarantee - interim application - discharge certificate under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - Directive to the Registry to return Bank Guarantee No.0999514BG0001982 dated 03.12.2014 (as amended) to the petitioner - HELD THAT: - On the interim application for restoration/return of the bank guarantee and on consideration of the record, including the petitioner's withdrawal of the writ and the issuance of the discharge certificate under the Sabka Vishwas Scheme, the Court concluded that the Registry should directly return the bank guarantee to the petitioner. The Court disposed of the interim application by directing the Registry to effect the return without requiring revival of the writ petition, thereby providing the consequential relief sought by the petitioner. [Paras 9, 10]

Registry directed to return the specified bank guarantee to the petitioner; interim application disposed of.

Final Conclusion: The Court refused to restore the withdrawn writ petition as unnecessary and directed the Registry to return the bank guarantee to the petitioner; the interim application is disposed of.

Applicability of Rule 6(3) of the Central Excise Rules, 2002 (CCR, 2004) - Status of clearances under Served From India Scheme (SFIS) / Notification No.34/2006-CE - Whether debiting duty credit scrip (SFIS) amounts to exemption or discharge of duty - Binding effect of CBEC circulars on revenue interpretation - Principle that taxing statute must be interpreted according to clear expression

Applicability of Rule 6(3) of the Central Excise Rules, 2002 (CCR, 2004) - Status of clearances under Served From India Scheme (SFIS) / Notification No.34/2006-CE - Whether debiting duty credit scrip (SFIS) amounts to exemption or discharge of duty - Goods cleared under Notification No.34/2006-CE (SFIS) are not exempted clearances and Rule 6(3) CCR, 2004 is not applicable to such clearances. - HELD THAT: - The Tribunal found it is an admitted fact that the appellant manufactured dutiable goods under Chapter 85 and cleared those goods under SFIS by debiting duty credit scrips issued under Notification No.34/2006-CE. Prior decisions of the Tribunal (M/s Voltamp Transformers Ltd. and Kirloskar Chillers) and the Gujarat High Court held that debits under SFIS/DEPB-type scrips amount to discharge of duty liability and do not transform the clearance into an exempted clearance. The Court relied on the principle that a taxing statute must be construed according to what is clearly expressed and that one cannot read in an exemption by implication. The CBEC Circular relied upon by the Revenue did not specifically refer to Notification No.34/2006-CE; the Tribunal held that the Revenue's assumption that the circular excludes that notification was a misinterpretation. Further, binding precedents establish that a CBEC circular is binding on the Revenue's administration, but the circular relied upon did not support treating SFIS debits as exemption. Applying these legal principles to the facts, the Tribunal concluded that clearances under Notification No.34/2006-CE are duty-paid (discharged by debit of scrip) and not exempted, and therefore Rule 6(3) CCR, 2004-which applies to exempted clearances-is not attracted. [Paras 7, 8, 9, 10, 11]

Demand, interest and penalty based on applicability of Rule 6(3) CCR, 2004 were set aside and the appeal was allowed.

Final Conclusion: The Tribunal held that clearances effected under Notification No.34/2006-CE (SFIS) during the period April 2012 to January 2016 amount to discharge of duty by debiting duty credit scrips and are not exempted clearances; consequently Rule 6(3) CCR, 2004 does not apply and the demands, interest and penalties based thereon were unsustainable, leading to allowance of the appeal.

Limitation for reopening assessment - assessment treated as pending under Section 42(3) for failure to file audited accounts - retrospective operation of amendment and its effect on limitation - principles of natural justice - protective effect of Rule 58(20) relating to retention of books

Limitation for reopening assessment - principles of natural justice - Validity of CST assessment orders dated March 2014 and consequent recovery notices for assessment years 2005-06 and 2006-07 in view of limitation and absence of opportunity of hearing. - HELD THAT: - The assessment orders dated March 2014 relate to assessment years 2005-06 and 2006-07 and were passed well after the statutory period fixed for completion of regular assessments. The Court noted that the orders were issued without compliance with principles of natural justice. On the question of limitation, the statutory scheme envisages fixed time-limits for assessment and reopening; assessments completed or sought to be reopened after the prescribed period cannot be sustained. The Court examined the effect of subsequent amendments and case-law but held that the assessment orders challenged are hopelessly barred by limitation and, coupled with denial of opportunity of hearing, are not sustainable. Consequently the assessment orders and recovery notices based thereon were set aside.

Assessment orders Exts.P1 and P2 and the recovery notices Exts.P5 and P6 set aside as barred by limitation and lacking compliance with principles of natural justice.

Assessment treated as pending under Section 42(3) for failure to file audited accounts - retrospective operation of amendment and its effect on limitation - protective effect of Rule 58(20) relating to retention of books - Whether retrospective operation of the amendment to Section 42(3) permitting assessment to be treated as pending (where audited accounts/annexures are not filed) authorises reopening of assessments beyond ordinary limitation in a manner prejudicial to the assessee. - HELD THAT: - The Court considered the retrospective operation attributed to the amendment to Section 42(3) and the consequences of allowing reopening of long completed assessments where the assessee may no longer have books or records. While Section 42(3) treats assessment as pending in cases of failure to file prescribed accounts/documents, the Court read that power in the light of safeguards built into the statutory scheme, including Rule 58(20) which prescribes retention periods for books. The Court held that retrospective application of the provision cannot be allowed to operate so as to produce unfairness or arbitrariness by enabling reopening when the assessee is unable to defend the allegation for want of records. Accordingly, the protective effect of Rule 58(20) and the need to avoid unreasonable and prejudicial consequences limits the ambit of reopening under Section 42(3), and the assessments in question could not be validly reopened on that basis.

Retrospective application of Section 42(3) cannot be used to reopen the impugned assessments in a manner that prejudicially affects the assessee; reopening on that basis was not sustainable.

Final Conclusion: Writ petition allowed; the assessment orders for AY 2005-06 and 2006-07 and consequential recovery notices were quashed as barred by limitation and unsustainable in view of non-compliance with principles of natural justice and the limited ambit of retrospective reopening under Section 42(3).

Applicability of the Rajasthan Value Added Tax Act, 2003 to orders under the Rajasthan Investment Promotion Scheme, 2003 - Power of reopening/escaped assessment under Section 26 of the RVAT Act, 2003 - Rectification of mistake under Section 33 of the RVAT Act, 2003 - Effect and temporal scope of statutory amendment (limited retrospectivity) - Doctrine that subsequent legislative enlargement of assessment power does not revive past barred jurisdiction

Applicability of the Rajasthan Value Added Tax Act, 2003 to orders under the Rajasthan Investment Promotion Scheme, 2003 - Effect and temporal scope of statutory amendment (limited retrospectivity) - Whether, at the relevant time when the assessing officer issued notices and passed orders, the provisions of the RVAT Act, 2003 applied to RIPS, 2003 - HELD THAT: - The Court held that RIPS, 2003 originally contained no provision making the provisions of the RVAT Act, 2003 applicable to orders under the Scheme. The 2008 amendment to RIPS, 2003 incorporated only a power of rectification of mistake under Section 33 and did not confer power to reopen assessments under Section 26. Subsequent Schemes (RIPS, 2010 and RIPS, 2014) expressly made the RVAT Act applicable to those Schemes, but such provisions cannot be read into the original RIPS, 2003. The 2018 amendment to RIPS, 2003 inserted Clause 9A making the RVAT Act (and RGST Act) applicable, but that insertion was expressly limited in temporal scope to operate w.e.f. 01.07.2017. In these circumstances the Court applied the settled principle that a later enlargement of statutory power cannot revive or create jurisdiction retrospectively except by express words or necessary intendment, and that the limited retrospectivity stated in the 2018 amendment precludes applying RVAT Act provisions to orders made prior to 01.07.2017.

The Court upheld the Tax Board's conclusion that the RVAT Act, 2003 did not apply to RIPS, 2003 at the relevant time and that the 2018 amendment could not be invoked to confer retrospective reopening powers prior to 01.07.2017.

Power of reopening/escaped assessment under Section 26 of the RVAT Act, 2003 - Doctrine that subsequent legislative enlargement of assessment power does not revive past barred jurisdiction - Whether the assessing officer had jurisdiction to reopen orders under RIPS, 2003 by invoking Section 26 of the RVAT Act, 2003 - HELD THAT: - The Court found that because RIPS, 2003 did not make the provisions of the RVAT Act, 2003 (including Section 26) applicable to orders under the Scheme at the time the notices and orders were issued, the assessing officer lacked jurisdiction to exercise powers of escaped assessment under Section 26. The 2008 amendment only authorised rectification under Section 33, and the later 2018 amendment could not be relied upon to revive a jurisdiction that was absent at the time. Authorities recognising that reopening powers are not mere procedure but substantive powers that cannot be retrospectively conferred except by express provision were applied.

The Court held that the exercise of power under Section 26 to reopen the orders under RIPS, 2003 cannot be sustained for lack of enabling provision at the relevant time.

Rectification of mistake under Section 33 of the RVAT Act, 2003 - Applicability of modified procedural provisions in later Schemes - Extent and effect of the 2008 amendment to RIPS, 2003 which incorporated Section 33 powers - HELD THAT: - The Court examined the 2008 amendment which added a provision authorising the assessing authority to rectify mistakes apparent on the record under Section 33 of the RVAT Act, 2003. It concluded that this amendment merely conferred a limited rectification power and did not import broader powers of reassessment or escaped assessment. The existence of that limited power in 2008 reinforces that more extensive RVAT Act provisions were not originally applicable to RIPS, 2003.

The 2008 amendment only empowered rectification under Section 33 and did not confer jurisdiction to reopen assessments under Section 26.

Doctrine that authorities need not decide merits once jurisdictional bar is found - Determination on merits by tribunal left open for future litigation - Whether the Court should adjudicate the Tax Board's merits decision that 'partial exemption' under the CST Act is not part of 'tax payable', thereby invalidating the reassessment - HELD THAT: - Although the Tax Board addressed the merits (including that the amount of 'partial exemption' under the CST Act was not 'tax payable'), the Court observed that once it upheld the Tax Board's jurisdictional finding, deciding merits was unnecessary. The Court therefore treated the Tax Board's merits determination as losing significance for the present litigation and noted that the department remains free to agitate the merits issue in an appropriate future proceeding.

The Court did not decide the merits afresh; the Tax Board's merits determination was recorded but its significance is obviated by the jurisdictional conclusion and the department may pursue the merits issue in an appropriate case.

Final Conclusion: The revision petitions are dismissed. The Rajasthan Tax Board's finding that RVAT Act, 2003 was not applicable to RIPS, 2003 at the relevant time and that the assessing officer therefore had no jurisdiction to reopen the Scheme orders under Section 26 is upheld; the Tax Board's merits determination was not required for disposal and its substantive significance is left open for future adjudication.

Remand for de novo consideration - reconciliation of Transit Pass - setting aside of assessment order - rectification order set aside

Reconciliation of Transit Pass - remand for de novo consideration - Reconciliation of Transit Pass for Assessment Year 2014-15 was to be reconsidered by the assessing authority afresh. - HELD THAT: - The Court observed that the controversy in respect of Assessment Year 2014-15 was similar to earlier writ petitions relating to Assessment Year 2015-16 in which, following production of documents by the petitioner, a reconciliation exercise had materially reduced the tax exposure and the matter had been remanded for fresh consideration. Applying the same approach, the Court found it appropriate to remit the 2014-15 matter to the respondent for a fresh de novo exercise of reconciliation, so that the assessing authority may take into account the outcome of reconciliation and reconsider the proceedings on merits. [Paras 3]

Matter remanded to the respondent to undertake a fresh de novo reconciliation of Transit Pass for AY 2014-15 and to reconsider the proceedings.

Setting aside of assessment order - rectification order set aside - Impugned assessment order dated 27.12.2016 and rectification order dated 18.01.2017 were set aside pending the fresh consideration. - HELD THAT: - In consequence of ordering fresh consideration, the Court set aside the impugned assessment order and the subsequent rectification order to permit the respondent to pass fresh orders in light of the reconciliation exercise. The Court directed expeditious completion of the exercise but did not adjudicate the merits of the assessment itself. [Paras 4]

Impugned order dated 27.12.2016 and rectification order dated 18.01.2017 set aside; respondent directed to complete fresh proceedings expeditiously.

Final Conclusion: Writ petitions allowed; impugned assessment and rectification orders set aside and matter remanded for fresh de novo consideration by the respondent, to be completed expeditiously; no costs.

Bail under Section 439 CrPC - regular bail - exercise of discretion - trial examination of allegations and counter-allegations - conditions of bail - anticipatory bail

Bail under Section 439 CrPC - regular bail - exercise of discretion - trial examination of allegations and counter-allegations - conditions of bail - Grant of regular bail to the applicant in connection with FIR No.11210002201869 of 2020. - HELD THAT: - The Court noted competing allegations and counter-allegations between the parties, including that a notice under Section 138 of the Negotiable Instruments Act was issued and replied to by the applicant and that the applicant had filed a complaint against a third person. The prosecutor relied on the police report and contended deliberate intent to cheat, pointing to stop-payment instructions and e-payment messages; however, the Court held that these factual contentions and alleged suppression are matters to be examined at trial. Applying its discretion under Section 439 CrPC and having regard to the totality of the material on record, the Court found it to be a fit case to exercise discretion in favour of the applicant and to grant regular bail subject to conditions. The order prescribes execution of a personal bond with one surety and specific conditions including surrender of passport, restrictions on travel, furnishing residential address, and adherence to COVID-19 release protocols, with liberty for the trial court to act on any breach. [Paras 5, 6, 7, 8]

Application allowed; applicant released on regular bail on executing a personal bond with one surety and subject to specified conditions and supervision by the trial court.

Final Conclusion: The High Court allowed the regular bail application, directing release of the applicant on furnishing a personal bond with one surety and imposing enumerated conditions, while observing that disputed facts will be examined at trial and preserving the trial court's power to act on any breach.

High Court's revisional jurisdiction - suspension of sentence pending revision - requirement of custody for filing revision - deemed custody - power of Sessions Judge to suspend sentence - Section 389(3) CrPC - release on bail

Requirement of custody for filing revision - High Court's revisional jurisdiction - deemed custody - Whether a revision application can be dismissed solely on the ground that the accused has not surrendered or is not in custody. - HELD THAT: - The Court held that there is no statutory requirement in the Cr.P.C. that a revision must be filed only after the accused has surrendered and undergone custody; where High Court rules to the contrary are absent, a revision cannot be rejected solely because the accused has not surrendered. The judgment relies on earlier authorities holding that some High Courts have rules requiring surrender but that in their absence dismissal on that sole ground is unjustified. The Court therefore rejected the proposition that non-surrender is a per se bar to entertain a revision petition and recognised the principle of 'deemed custody' as a relevant consideration in appropriate cases. [Paras 15]

Revision cannot be dismissed merely because the accused has not surrendered; absence of specific High Court rules makes non-surrender alone an insufficient ground for rejection.

Suspension of sentence pending revision - power of Sessions Judge to suspend sentence - Section 389(3) CrPC - release on bail - Whether the High Court may suspend execution of sentence and enlarge the accused on bail pending exercise of revisional jurisdiction, particularly where there are concurrent convictions by lower courts and the accused is not in custody. - HELD THAT: - The Court analysed Sections 397 and 401 read with Section 389 Cr.P.C. and observed that while Section 397 empowers a revisional court to direct suspension of execution and release on bail when calling for records, the Sessions Judge is not empowered to suspend sentence where there are concurrent findings of conviction by two courts. The Court further noted that Section 389(3) affords scope for release on bail where the convicted person satisfies the convicting court of intention to appeal and other statutory conditions are met. Applying these principles to the facts - summary-triable offence under Section 138 N.I. Act, sentence less than three years, substantial deposit towards compensation, advanced age and health of accused, and contemporary constraints - the High Court exercised its discretion to suspend execution of sentence and enlarge the applicant on bail subject to furnishing bond and surety, while expressly not entering into the merits of the conviction. [Paras 11, 13, 16, 17]

The High Court may suspend the execution of sentence and grant bail pending revision under its revisional powers; the Sessions Judge lacks power to suspend sentence when concurrent convictions exist, and on the facts the Court suspended sentence and granted bail on conditions.

Final Conclusion: The High Court held that a revision petition cannot be rejected solely because the accused has not surrendered; exercising its revisional powers, the Court suspended the execution of the sentence confirmed by the lower courts and enlarged the applicant on bail subject to bond and surety, while not adjudicating the merits of the conviction.