TaxTMI Updates e-Newsletter
Nov 04,2024

Regular bail - pre-trial liberty under Article 21 - investigation complete - offence punishable up to five years - recovery procedure under Chapter XV of the Central Goods and Services Tax Act, 2017 - deposit as condition for bail - risk of tampering with evidence

Regular bail - investigation complete - offence punishable up to five years - recovery procedure under Chapter XV of the Central Goods and Services Tax Act, 2017 - deposit as condition for bail - pre-trial liberty under Article 21 - Application for grant of regular bail to the accused-director in connection with FIR F. No. GEXCOM/SAI/MISC/199/2022-SI. - HELD THAT: - The Court exercised discretionary jurisdiction to enlarge the accused on regular bail after considering established bail principles and the facts of the case. The investigation is complete and nothing further requires seizure or discovery from the accused. The alleged offences attract a maximum sentence of five years and do not involve life sentence or death; there is no apparent flight risk. The Court noted the accused's cooperation during search and investigation, earlier deposit made before the authority, and his undertaking to deposit 10% of the alleged tax liability. The statutory scheme for recovery where tax is collected but not paid is governed by Chapter XV of the CGST Act, and civil recovery remedies are available. Having regard to the nature of the accusation, the material on record, the likelihood of prolonged trial and the principle that bail is the norm while pre-trial incarceration is exception under Article 21, the matter was considered fit for enlargement on bail subject to stringent conditions. The Court cautioned that it did not embark upon a detailed appraisal of evidence and that trial Court must not be influenced by preliminary observations made in the order. [Paras 7, 8, 9]

Bail granted on executing personal bond and one surety of like amount and subject to conditions including surrender of passport, monthly reporting, prohibition on leaving the State without permission, compliance with investigative directions and deposit of Rs. 90,00,000 within seven days.

Final Conclusion: The High Court allowed the petition for regular bail, directing release on specified bond and conditions and mandating deposit of the stated amount within seven days; the trial Court may modify conditions and is not to be influenced by preliminary observations in this order.

Quashing of administrative order - judicial restraint pending statutory appeal - direction to appellate authority to decide appeal expeditiously - discharge of notice

Quashing of administrative order - judicial restraint pending statutory appeal - direction to appellate authority to decide appeal expeditiously - Disposition of the writ petition seeking quashal of the impugned Form GST MOV-11 order and release of goods where a statutory appeal against that order is pending before the appellate authority. - HELD THAT: - The petition challenged the respondent No.2 order dated 09.01.2023 in Form GST MOV-11 and sought release of goods. The record shows the petitioner filed an appeal before respondent No.3 (Deputy Commissioner of State Tax Appeals), which remained pending and for which multiple hearing opportunities were recorded. The petitioner informed the Court that no further personal hearing was sought before the appellate authority, having already filed written submissions on 26.09.2024. Rather than adjudicating the merits of the impugned order under Article 226, the High Court exercised judicial restraint and directed that the pending statutory appeal be decided by respondent No.3 in accordance with law. Consequently, the Court disposed of the petition to enable the appellate authority to pass an appropriate order on the appeal, and discharged the notice issued in the writ petition. [Paras 6]

Petition disposed of to enable respondent No.3 to decide the pending appeal in accordance with law; notice discharged.

Final Conclusion: The writ petition is disposed of without adjudication of the merits; the appellate authority (respondent No.3) is directed to decide the pending appeal in accordance with law and the notice in the petition is discharged.

Show cause notice for fraud, wilful mis-statement or suppression under section 74 of the CGST Act, 2017 - independent initiation of proceedings under section 74 notwithstanding earlier proceedings under section 73 - sufficiency of allegations in a show cause notice to disclose concealment of tax - parallel inquiries by DGGI, State GST intelligence and CGST authorities - maintainability of writ petition challenging pending adjudicatory proceedings

Independent initiation of proceedings under section 74 notwithstanding earlier proceedings under section 73 - Whether issuance of a show cause notice under section 74 was barred by earlier proceedings under section 73 that were dropped. - HELD THAT: - The Court held that initiation of proceedings under section 74 is not precluded merely because earlier proceedings under section 73 were issued and subsequently dropped. The Court observed that issuance and dropping of a notice under section 73 does not prevent the authorities from independently initiating proceedings under section 74, and accepted the same proposition as recognised by the Allahabad High Court in the cited authority relied upon by the petitioner. Consequently, the pendency or earlier disposal of section 73 proceedings did not render the impugned section 74 notice invalid. [Paras 5]

The show cause notice under section 74 was not barred by earlier proceedings under section 73.

Parallel inquiries by DGGI, State GST intelligence and CGST authorities - Whether concurrent or parallel inquiries by the DGGI, Haryana State GST Intelligence Unit and Assistant Commissioner, CGST prevented issuance of the section 74 notice by the State. - HELD THAT: - The Court examined the record and found that while the Assistant Commissioner, CGST had requested deposit of tax and the DGGI had issued queries, none of those authorities had initiated proceedings under section 74. The impugned section 74 notice was issued only by the Haryana State Tax (SGST). In those circumstances the existence of parallel inquiries or notices seeking information did not amount to a bar on the State issuing a section 74 show cause notice. [Paras 6, 7]

Parallel inquiries by other authorities did not preclude the Haryana State from issuing the section 74 show cause notice.

Show cause notice for fraud, wilful mis-statement or suppression under section 74 of the CGST Act, 2017 - sufficiency of allegations in a show cause notice to disclose concealment of tax - Whether the impugned show cause notice adequately specified the nature of alleged concealment, fraud or suppression so as to be legally sustainable. - HELD THAT: - The Court considered the terms of the impugned notice which set out a summary and grounds drawn from review of GSTR-9 and GSTR-2A, alleging excess input tax credit claimed by the taxpayer and non-appearance of corresponding vendor declarations in GSTR-2A, thereby creating an impression of non-deposit of tax by vendors and non-fulfilment of conditions under section 16(2)(c). The Court found that the notice specifically reflected the allegations which the tax authorities considered indicative of fraud, and that the petitioner's contention that the notice failed to point out the manner of concealment was misplaced. The Court rejected the petitioner's reliance on the cited precedents as factually distinguishable and concluded that the notice sufficiently delineated the incriminating allegations to proceed under section 74. [Paras 3, 7, 8, 10]

The show cause notice sufficiently specified the allegations of concealment/fraud and was not vitiated for want of particulars.

Final Conclusion: Writ petition dismissed; the impugned show cause notice under section 74 is held legally sustainable and the tax authorities may proceed with the adjudicatory process under the Act.

Absence of personal hearing - violation of principles of natural justice - quashing and remand for fresh consideration - conditional remand upon payment - attachment and de-freezing of bank account - opportunity of personal hearing and fresh assessment

Absence of personal hearing - violation of principles of natural justice - opportunity of personal hearing and fresh assessment - Impugned assessment order passed without affording personal hearing was contrary to principles of natural justice and liable to be quashed. - HELD THAT: - The Court found that the assessment order was passed without providing the petitioner an opportunity of personal hearing despite his having filed a reply to the show cause notice. For that reason the order was held to be procedurally vitiated and not in conformity with the requirements of natural justice. The appropriate remedy, in the facts and circumstances, was to quash the assessment order and to direct the authority to consider the petitioner's submissions afresh after affording personal hearing and passing orders on merits in accordance with law. [Paras 8, 9]

Assessment order quashed and matter remanded for fresh consideration after affording personal hearing to the petitioner.

Attachment and de-freezing of bank account - quashing and remand for fresh consideration - Communication directing bank to freeze petitioner's account and the resulting attachment could not survive once the assessment order was quashed and was ordered to be lifted. - HELD THAT: - The Court observed that the communication by the tax authority to the bank, relying on the impugned assessment order, led to the freezing of the petitioner's bank account. Since the assessment order has been quashed and remanded for fresh consideration, the attachment based on that order cannot subsist. The Court directed that the bank account be de-frozen upon production of proof of compliance with the conditional direction (payment proof) as specified by the Court. [Paras 9]

Communication to bank quashed; attachment of bank account ordered to be lifted and bank to de-freeze account on production of prescribed proof.

Conditional remand upon payment - quashing and remand for fresh consideration - Matter remanded to the assessing authority on the condition that the petitioner deposit 10% of the disputed tax amount and file his reply, failing which the protective effect of quashing would not commence. - HELD THAT: - Balancing the interests of revenue and the petitioner, the Court directed a conditional remand: the assessment order and the communication are quashed but their effect shall be suspended until the petitioner pays 10% of the disputed tax within the stipulated time and furnishes proof. Thereafter the authority must consider the petitioner's reply, afford personal hearing and decide the matter expeditiously on merits. The Court made clear that the quashing takes effect only from the date of payment of the specified amount. [Paras 9]

Matter remanded for fresh consideration on condition of payment of 10% of the disputed tax and compliance with directions; quashing effective from date of such payment.

Final Conclusion: The assessment order dated 25.04.2024 and the communication dated 25.09.2024 are quashed; the matter is remanded to the assessing authority to decide afresh after affording personal hearing, subject to the petitioner depositing 10% of the disputed tax within the period directed, and the petitioner's bank account is ordered to be defrozen on production of proof of payment.

Set aside of assessment orders and remand for fresh consideration - conditional interim payment as precondition for relief - opportunity to be heard and right to file reply with supporting documents - quash of recovery notices and bank attachment - mismatch between GSTR-3B and GSTR-2A - bill trading allegation dropped by department

Set aside of assessment orders and remand for fresh consideration - conditional interim payment as precondition for relief - mismatch between GSTR-3B and GSTR-2A - Impugned assessment orders dated 19.12.2023 pertaining to the specified Assessment Years set aside and remanded to the State Tax Officer for fresh consideration on conditions. - HELD THAT: - The Court found that the department had initially issued show cause notices on two allegations, namely bill trading and mismatch between GSTR-3B and GSTR-2A; proceedings on bill trading were dropped by the respondent. The petitioner produced a certificate and explained that an error had occurred in filing Form GSTR-3B, a position which the learned Government Advocate accepted. In view of the acceptance and in the interest of permitting the petitioner to establish its case, the Court considered it just to set aside the four assessment orders and remit the matters to the 1st respondent for fresh consideration. The Court conditioned the setting aside on the petitioner making an interim payment of 10% of the disputed tax amount in each assessment order within four weeks; the benefit of the setting aside takes effect from the date of such payment. [Paras 8]

Assessment orders set aside and remanded to the State Tax Officer for fresh consideration on condition that the petitioner pays 10% of the disputed tax amount in each assessment order within four weeks.

Opportunity to be heard and right to file reply with supporting documents - set aside of assessment orders and remand for fresh consideration - Procedure to be followed on remand, including timelines for filing reply and for the respondent to issue notice and decide afresh. - HELD THAT: - The Court directed that upon receipt of a copy of the order the petitioner must file its reply/objection with required documents within three weeks. Thereafter the 1st respondent must serve a clear 14-day notice fixing a date for personal hearing and, after affording an opportunity, decide the matter on merits and in accordance with law expeditiously. These procedural directions implement the Court's view that the petitioner be given an opportunity to establish its case before the authority on the remand. [Paras 8]

Petitioner to file reply within three weeks; respondent to issue 14-day personal hearing notice and decide afresh on merits expeditiously.

Quash of recovery notices and bank attachment - conditional interim payment as precondition for relief - Validity of impugned recovery notices dated 14.06.2024 and bank attachment notice dated 27.05.2024 and relief for release of attachment. - HELD THAT: - Having set aside the assessment orders, the Court held that the recovery notices and bank attachment could not subsist. Consequently, those recovery notices and the bank attachment notice were quashed. The Court ordered that the 1st respondent shall instruct the respective banks to release the attachment and defreeze the petitioner's bank account immediately upon production of proof of payment of the stipulated 10% of the disputed tax amount. [Paras 8]

Impugned recovery notices and bank attachment quashed; banks to release attachment and defreeze account on production of proof of the 10% payment.

Final Conclusion: The writ petitions are disposed by setting aside the four assessment orders dated 19.12.2023 and remitting the matters to the State Tax Officer for fresh consideration on the petitioner making a 10% interim payment in each assessment; the petitioner to file its reply and be afforded a personal hearing; impugned recovery notices and bank attachment are quashed and bank accounts to be released on proof of payment.

Utilisation of Electronic Credit Ledger for pre-deposit under Section 107(6)(b) - payment of output tax in proceedings by debiting Electronic Credit Ledger - CBIC clarification dated 6th July 2022 on utilisation of electronic ledgers - quashing of direction to deposit pre-deposit from Electronic Cash Ledger

Utilisation of Electronic Credit Ledger for pre-deposit under Section 107(6)(b) - payment of output tax in proceedings by debiting Electronic Credit Ledger - CBIC clarification dated 6th July 2022 on utilisation of electronic ledgers - quashing of direction to deposit pre-deposit from Electronic Cash Ledger - Validity of petitioner's payment of the pre-deposit for appeal by utilising the Electronic Credit Ledger and validity of the respondent's letter directing payment through Electronic Cash Ledger - HELD THAT: - The Court applied the reasoning in its earlier order and the ratio of the Bombay High Court reproduced therein, holding that sub section (6) of Section 107 requires payment of 10% of the tax in dispute as a precondition but does not preclude utilisation of amounts available in the Electronic Credit Ledger for that purpose. The Court further relied on the statutory scheme embodied in Section 49(4) and the related rules permitting debiting of the Electronic Credit Ledger for payment of output tax, and on the CBIC circular dated 6th July 2022 which clarified that amounts in the Electronic Credit Ledger can be used to make payments towards output tax arising from proceedings under the GST laws. In view of these authorities and clarifications, the petitioner's utilisation of the Electronic Credit Ledger to make the pre deposit required under Section 107(6)(b) is a sufficient compliance and the administrative direction requiring payment from the Electronic Cash Ledger was arbitrary and unsustainable. The consequence is that the appeal must be heard on merits treating the Electronic Credit Ledger payment as valid. [Paras 6]

The impugned letter directing payment from the Electronic Cash Ledger is quashed and set aside; the petitioner's payment by debiting the Electronic Credit Ledger is to be treated as sufficient compliance with Section 107(6)(b) and the appeal is restored for hearing on merits.

Final Conclusion: The writ petition is allowed to the extent that the letter dated 25.04.2023 directing deposit through the Electronic Cash Ledger is quashed; the pre deposit made by debiting the Electronic Credit Ledger is valid for compliance with Section 107(6)(b) and the appeal shall proceed on merits.

Service by upload on common portal - Opportunity of hearing - Mismatch between GSTR-2A and GSTR-3B - Inability to access e-portal and technical glitches - Conditional setting aside of assessment order - Deposit as precondition for reconsideration - Remand for fresh consideration on filing of objections

Service by upload on common portal - Opportunity of hearing - Inability to access e-portal and technical glitches - Validity of assessment order impugned for want of effective service and for denial of opportunity to explain alleged discrepancies. - HELD THAT: - The Court found that the assessment order and show cause notices were uploaded on the common portal and not served by tender or registered post, and the petitioner was unable to access the portal to participate in adjudication. Given the central adjudicatory issue being an alleged mismatch between GSTR-2A and GSTR-3B, the petitioner ought to be afforded an opportunity to explain the discrepancies. In light of admitted portal difficulties and the petitioner's expressed willingness to cooperate, the Court set aside the impugned order subject to conditions to ensure fair adjudication rather than allowing a final assessment to stand without a hearing. [Paras 3, 5]

Impugned order set aside and the petitioner granted an opportunity to be heard on the alleged discrepancies.

Conditional setting aside of assessment order - Deposit as precondition for reconsideration - Remand for fresh consideration on filing of objections - Terms on which the assessment order is to be reconsidered and the consequences of non-compliance. - HELD THAT: - The Court directed that the impugned order shall be treated as a show cause notice if the petitioner deposits 25% of the disputed tax within two weeks of receipt of this order. Upon such deposit, the petitioner is required to file objections with supporting material within four weeks, which the respondent must consider and pass orders after affording a reasonable opportunity of hearing. If the deposit is not made or objections are not filed within the stipulated periods, the impugned assessment order shall stand revived. This constitutes a remand to the respondent for fresh consideration limited to adjudication after hearing and verification, conditioned on the deposit and filing of objections. [Paras 6]

Respondent to reconsider the assessment after deposit of 25% and on receipt of objections; failure to comply results in revival of the impugned order.

Final Conclusion: Writ petition disposed by setting aside the assessment order dated 26.12.2023 relating to assessment year 2017-2018 on the terms that the petitioner deposits 25% of the disputed tax within two weeks and files objections within four weeks; upon compliance the respondent shall reconsider the matter after hearing, otherwise the assessment order shall stand revived.

Violation of principles of natural justice - Non-application of mind - Remand for fresh consideration and opportunity of hearing - Rectification/reversal of excess input tax credit in subsequent returns

Violation of principles of natural justice - Non-application of mind - Rectification/reversal of excess input tax credit in subsequent returns - Impugned orders suffer from lack of application of mind and breach of principles of natural justice and are liable to be set aside. - HELD THAT: - The Court found that the respondent issued DRC-01 for the tax period April, 2018 to March, 2019 and, without considering that the petitioner had already rectified/reversed the excess ITC in subsequent monthly returns (and filed GSTR-3B), passed orders fixing tax liability with equivalent penalty/interest. The petitioner was unable to reply initially for reasons of illness of its authorised person and subsequently filed applications with supporting documents which were rejected without application of mind and without hearing. The impugned orders therefore reflect a failure to consider material facts and a denial of the right to be heard, rendering them unsustainable. [Paras 6]

Impugned orders are set aside on the ground of non-application of mind and violation of principles of natural justice.

Remand for fresh consideration and opportunity of hearing - Rectification/reversal of excess input tax credit in subsequent returns - Matter remanded to the respondent for fresh consideration after giving the petitioner an opportunity to file reply and to be heard, with specified timelines. - HELD THAT: - Having set aside the impugned orders, the Court directed that the petitioner file its reply with supporting documents within three weeks of receipt of certified copy of the order. The respondent must thereafter issue a clear 14-day notice affording an opportunity of personal hearing and, after hearing the petitioner in full, decide the matter in accordance with law. The remand is for fresh consideration of the claim, including the petitioner's contention that excess ITC was rectified in subsequent returns; the Court has not adjudicated the merits of the tax liability itself but requires the respondent to apply mind and follow principles of natural justice before passing any fresh order. [Paras 6]

Proceedings remanded for fresh consideration; petitioner to file reply within three weeks and respondent to issue 14-day personal hearing notice and decide afresh in accordance with law.

Final Conclusion: Writ petition allowed; impugned orders dated 23.04.2024 and rejection orders dated 10.05.2024 and 27.08.2024 are set aside; matter remanded to the respondent for fresh consideration in accordance with the directions given; no costs.

Natural justice - right to personal hearing - consideration of reply to show cause notice - factual correctness of administrative findings - setting aside administrative order and remand for reconsideration - judicial scrutiny

Consideration of reply to show cause notice - natural justice - right to personal hearing - factual correctness of administrative findings - setting aside administrative order and remand for reconsideration - Impugned Order in Original dated 25.04.2024 set aside and matter remitted for consideration of the reply filed to the show cause notice dated 27.12.2023 on account of breach of principles of natural justice. - HELD THAT: - The High Court found on the record (portal entry reproduced at page 36) that the petitioner had furnished a reply and the portal recorded the status as 'Reply furnished, pending for order by tax officer'. The authority's finding in the impugned order that the petitioner failed to submit his reply is therefore factually incorrect. Because the authority proceeded without taking that reply into account, the petitioner was deprived of the opportunity of personal hearing and the decision makers failed to observe the requirements of natural justice. The factual error in the authority's finding vitiates the impugned order and, for that singular reason, the order cannot be sustained and must be set aside. The appropriate remedy is to remit the matter to the authority to consider the reply and proceed further in accordance with law from that stage. [Paras 5, 6]

Impugned order dated 25.04.2024 set aside; authority directed to consider the petitioner's reply to the show cause notice dated 27.12.2023 and proceed further in accordance with law.

Final Conclusion: Writ petition allowed; impugned Order in Original dated 25.04.2024 quashed and matter remitted to the Authority to consider the reply filed to the show cause notice dated 27.12.2023 and proceed in accordance with law; no order as to costs.

Refund of pre-deposit/input tax credit - adjustment versus refund of excess input tax credit - compliance with court direction by debiting input tax credit - validity of departmental circular as a bar to refund - transitional provision under the TNGST Act, 2017 (Section 142(6))

Refund of pre-deposit/input tax credit - adjustment versus refund of excess input tax credit - transitional provision under the TNGST Act, 2017 (Section 142(6)) - Impugned intimations dated 25.11.2021 denying refund of amounts debited from input tax credit pursuant to the Court's order are not sustainable and are quashed; petitioner entitled to refund or adjustment in accordance with law. - HELD THAT: - The Court held that the substantial question of law on inclusion of freight and pumping charges had been decided in the petitioner's favour and that the Revision Orders dated 14.09.2021 recorded entitlement to refund of the pre-deposit made by debiting input tax credit. The Department could not, at a belated stage, invoke the earlier circular to deny refund where the pre-deposit had been accepted through returns and the revision proceedings had culminated in release of the deposit. Further, the transitional scheme under the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017, specifically Section 142(6)(a) and (b), contemplates that amounts of credit found admissible under the existing law are to be refunded in cash and that recoveries, if any, are to be treated under transitional provisions; thus the intimations seeking to deny refund were contrary to the statutory transitional mandate and liable to be quashed with consequential reliefs. [Paras 32, 34, 35, 36, 37]

Impugned intimations dated 25.11.2021 quashed; respondents directed to refund the amount within 30 days or adjust as authorised by law.

Compliance with court direction by debiting input tax credit - refund of pre-deposit/input tax credit - Petitioner's deposit by debiting input tax credit pursuant to the Court's order of 25.03.2015 constituted compliance with that order and could not be treated as non-compliance to refuse refund. - HELD THAT: - The Court found there was no dispute that the petitioner complied with the directions in the writ petitions of 2015 by making the pre-deposit through debiting its input tax credit and by filing the requisite reply. Having accepted the pre-deposit in the VAT returns and having the subsequent revision orders in favour of the petitioner, the Department was not entitled to contend that the mode of pre-deposit rendered the petitioner ineligible for refund. The respondents could not now allege non-compliance with the earlier order to avoid refund. [Paras 6, 29, 33]

Deposit by debiting input tax credit satisfied the Court's direction and cannot be used as a basis to deny refund.

Validity of departmental circular as a bar to refund - refund of pre-deposit/input tax credit - The departmental circular (Circular No.05/2015) cannot be invoked at a belated stage to deny refund where the statutory and transitional provisions and the Court's orders require refund or adjustment. - HELD THAT: - The Court examined the respondents' reliance on the Circular issued pursuant to an earlier order in W.P.No.7094 of 2013 and concluded that reliance on that circular to deny refund after acceptance of the pre-deposit in returns and after revision orders favorable to the petitioner was untenable. The circular could not override the statutory transitional scheme under Section 142(6) of the TNGST Act, 2017, which mandates refund of amounts of credit found admissible under the existing law, subject to the limited proviso regarding carried-forward balances. [Paras 12, 20, 32, 36]

Departmental circular cannot be used to deny refund; intimations based on it are quashed.

Final Conclusion: Writ petitions allowed; impugned intimations dated 25.11.2021 quashed and respondents directed to refund the amounts debited from input tax credit (or adjust as permissible) within thirty days, with no order as to costs.

Mandamus - rectification of clerical mistake in GST returns - mis-reporting of supply as B2C instead of B2B - availability of Input Tax Credit reconciliation mechanism - application of Board Circular No.183/15/2022-GST - remand for fresh consideration in accordance with administrative circular

Application of Board Circular No.183/15/2022-GST - mis-reporting of supply as B2C instead of B2B - rectification of clerical mistake in GST returns - Representation for correction of supplies wrongly reported under Column B2C instead of Column B2B in GSTR-1 for October 2017 and September 2018 to be re-submitted and decided strictly in accordance with Circular No.183/15/2022-GST dated 27.12.2022. - HELD THAT: - The Court found that the petitioner's grievance - that supplies to a registered person containing the recipient's GSTIN were wrongly reported as B2C instead of B2B in FORM GSTR-1 for the specified periods - falls within the scope of paragraph 3(c) of Circular No.183/15/2022-GST dated 27.12.2022. The respondents were directed to allow the petitioner to resubmit the representation conforming to the procedure prescribed in the Circular. The Court noted that the prescribed procedure had not been followed earlier and therefore did not decide the merits of the correction itself but ordered the respondents to consider the revised representation and pass an appropriate order on merits strictly in accordance with the Circular, giving the respondents an administrative opportunity to apply the Board's clarified procedure. [Paras 6, 7]

Petitioner permitted to resubmit representation; respondents directed to consider and decide the revised representation on merits in accordance with Circular No.183/15/2022-GST within three months.

Final Conclusion: Writ petition disposed by directing the petitioner to resubmit the representation in conformity with CBIC Circular No.183/15/2022-GST dated 27.12.2022 and directing respondents to consider and pass appropriate orders on merits within three months.

Non-speaking order - Right to reasoned order - Quashing of order for failure to consider objections - Direction to afford personal hearing - Reconsideration and speaking order on remand - Input Tax Credit mismatch between GSTR-3B and GSTR-2A / GSTR-5 - Discrepancy between GSTR-1 and e-way bills

Non-speaking order - Right to reasoned order - Quashing of order for failure to consider objections - Direction to afford personal hearing - Impugned order dated 21.05.2024 is non-speaking and set aside; respondent directed to reconsider objections and pass a speaking order after affording personal hearing within twelve weeks. - HELD THAT: - The Court found that despite an earlier direction to reconsider the petitioner's explanation and to pass a speaking order, the respondent proceeded to pass an order which merely extracted the petitioner's reply without any discussion of the objections. That failure to deal with the explanations rendered the impugned order non-speaking and vulnerable to interference. In view of the respondent's omission to articulate reasons and to apply mind to the objections, the order was quashed and a direction was issued to afford personal hearing and to pass a reasoned speaking order within a specified time-frame. [Paras 3, 7]

Impugned order quashed; respondent to reconsider objections, grant personal hearing and pass speaking order within twelve weeks.

Input Tax Credit mismatch between GSTR-3B and GSTR-2A / GSTR-5 - Discrepancy between GSTR-1 and e-way bills - Reconsideration and speaking order on remand - Objections concerning ITC mismatch and e-way bill discrepancies are remitted to the respondent for fresh consideration and adjudication in a speaking order. - HELD THAT: - The petitioner had explained the alleged ITC mismatch by stating that purchases were effected in the earlier period and ITC was claimed in the assessment year 2019-2020, supported by statements and that suppliers had discharged tax in their returns. The petitioner also explained non-generation of e-way bills for supplies beneath statutory threshold limits. These explanations were recorded but not examined or addressed in the impugned order. Given the absence of adjudication on these objections, the Court remitted the matters to the respondent to consider the explanations, verify supporting material and then decide the issues by a reasoned order after hearing the petitioner. [Paras 4, 7]

Objections on ITC mismatch and e-way bill discrepancies remitted for fresh consideration and decision in a speaking order after personal hearing.

Final Conclusion: The writ petition is allowed in part: the impugned order dated 21.05.2024 is set aside for being non-speaking; the assessing authority is directed to grant personal hearing, reconsider the petitioner's objections (including ITC and e-way bill issues) and pass a reasoned speaking order in accordance with law within twelve weeks; no order as to costs.

Suspension of registration - Blocking of Input Tax Credit - Consequential relief on revocation of suspension - Representation for administrative action

Suspension of registration - Consequential relief on revocation of suspension - The challenge to the order of suspension of registration has become academic as the suspension has been revoked. - HELD THAT: - The petition sought quashing of the order of suspension in Form GST-REG-17 dated 07.05.2024. Learned counsel for the petitioner informed the Court that the suspension has been revoked. The State also acknowledged revocation. In view of the revocation, the grievance against the suspension order is redressed and no further adjudication on the merits of the suspension order is required. [Paras 2]

The relief seeking quashal of the suspension order is rendered academic by the revocation and need not be adjudicated.

Blocking of Input Tax Credit - Representation for administrative action - The blocked Input Tax Credit, which arose as a consequence of the suspension, is to be considered for unblocking by the competent authority upon receipt of a representation by the petitioner; the authority must decide in accordance with law within two weeks. - HELD THAT: - The petitioner sought directions to the respondents to unblock the Input Tax Credit blocked consequent to the suspension. The State submitted that revocation of suspension will entail consequential follow-up action and that the petitioner should bring the matter to the attention of the concerned authority. The Court, accepting these submissions, disposed of the writ petition while granting the petitioner liberty to make a representation requesting unblocking of the Input Tax Credit. The authority is required to take a decision in accordance with law upon such representation and within the time stipulated by the Court. [Paras 3, 4, 5, 6, 7]

Petitioner granted liberty to make a representation; upon receipt the concerned authority shall decide the issue of unblocking the Input Tax Credit in accordance with law within two weeks.

Final Conclusion: Writ petition disposed of: challenge to suspension rendered academic by revocation; petitioner permitted to make a representation for unblocking the Input Tax Credit and the authority directed to decide the same in accordance with law within two weeks.

Condonation of delay - Proviso to Rule 23 of the Odisha Goods and Services Tax Rules (revocation of cancellation) - Acceptance of GSTR-3B/Form 3B return subject to payment of taxes, interest, late fee and penalty - Duty of proper officer to open portal for filing returns upon compliance

Condonation of delay - Proviso to Rule 23 of the Odisha Goods and Services Tax Rules (revocation of cancellation) - Delay in invoking the proviso to Rule 23 of the OGST Rules was condoned - HELD THAT: - The Court, on the basis of the statement made by the Standing Counsel for CT & GST that the revocation application would be entertained if delay is condoned and statutory dues are paid, exercised its discretion to condone the delay in invoking the proviso to Rule 23. The condonation is made subject to the Petitioner fulfilling the condition of depositing all taxes, interest, late fee and penalty and complying with other formalities required for consideration of the revocation application. [Paras 2, 3]

Delay in invoking the proviso to Rule 23 is condoned subject to payment of statutory dues and compliance with formalities

Acceptance of GSTR-3B/Form 3B return subject to payment of taxes, interest, late fee and penalty - Duty of proper officer to open portal for filing returns upon compliance - Petitioner's Form 3B/return shall be accepted and the portal opened by the proper officer provided the Petitioner deposits all dues and complies with formalities - HELD THAT: - The Standing Counsel for the department stated that upon condonation of delay and subject to the Petitioner depositing all taxes, interest, late fee, penalty and completing other formalities, the Form 3B already filed by the Petitioner will be accepted. The Court recorded this undertaking and directed that the Petitioner shall produce a copy of the order before the proper officer, who shall thereafter open the portal to enable filing of the GST return once the stated conditions are satisfied. [Paras 2, 4]

Subject to payment of taxes, interest, late fee, penalty and compliance with formalities, the proper officer shall accept the return and open the portal for filing

Final Conclusion: The writ petition is disposed of by condoning the delay in invoking the proviso to Rule 23 and directing that, upon the Petitioner depositing all statutory dues and complying with formalities, the revocation application/return shall be considered and the portal opened by the proper officer.

Condonation of delay in invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules - revocation of cancellation of GST registration - acceptance of Form GSTR-3B subject to payment of taxes, interest, late fee and penalty - direction to reopen GST portal for filing return upon compliance with conditions

Condonation of delay in invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules - revocation of cancellation of GST registration - Delay in invoking the proviso to Rule 23 of the OGST Rules is condoned and the revocation application is to be considered. - HELD THAT: - The Court, having noted the concession by the Opposite Party, condoned the delay in the Petitioner invoking the proviso to Rule 23 of the OGST Rules. The condonation is subject to the Petitioner depositing all taxes, interest, late fee, penalty and complying with other formalities; upon such compliance the Petitioner's application for revocation will be considered in accordance with law. The order thus allows the Petitioner to invoke the proviso belatedly and directs onward consideration rather than finally deciding the revocation on merits. [Paras 3]

Delay condoned; revocation application to be considered upon compliance with payment and formalities.

Acceptance of Form GSTR-3B subject to payment of taxes, interest, late fee and penalty - direction to reopen GST portal for filing return upon compliance with conditions - The Opposite Party shall accept the Petitioner's Form GSTR-3B and open the portal to enable filing, provided the Petitioner deposits dues and fulfils formalities. - HELD THAT: - On an advance statement by the Opposite Party's Senior Standing Counsel, the Court directed that so long as the delay is condoned and the Petitioner complies with payment of taxes, interest, late fee, penalty and other formalities, the Form GSTR-3B filed by the Petitioner will be accepted. The Court further ordered that a copy of the order be produced before the proper officer and, subject to the stated conditions being met, the proper officer will open the portal to permit filing of the GST return. The direction requires compliance before administrative action is taken; it does not adjudicate the correctness of the returns or the revocation on merits. [Paras 2, 4]

Proper officer to accept Form GSTR-3B and open portal for filing upon the Petitioner's compliance with payment and formalities.

Final Conclusion: The writ petition is disposed of by condoning the delay in invoking the proviso to Rule 23 OGST Rules and directing that, upon payment of all taxes, interest, late fee, penalty and compliance with formalities, the revocation application will be considered and the portal reopened to enable filing of the GSTR-3B.

Faceless assessment - faceless reassessment scheme - automated allocation - risk management strategy - concurrent jurisdiction - jurisdictional Assessing Officer - formation of opinion under Section 148A - faceless assessment procedure under Section 144B - information for reassessment (Explanations 1 and 2 to Section 148)

Jurisdictional Assessing Officer - faceless reassessment scheme - concurrent jurisdiction - Validity of notices under Section 148 issued by the jurisdictional Assessing Officer after promulgation of the Faceless Reassessment Scheme 2022 - HELD THAT: - The Court held that notices under Section 148 issued by the JAO are not invalid merely because a faceless reassessment scheme exists. The statutory scheme and notifications confer concurrent powers on faceless assessing authorities and the JAO rather than effecting a complete ouster of the JAO's jurisdiction. The faceless framework contemplates situations where cases may be processed centrally, transferred back, or otherwise handled by the JAO; the legislative design preserves the JAO's role, particularly where information is placed in the JAO's hands and requires local consideration. Consequently, the writ petitions challenging Section 148 notices solely on the ground that they were issued by the JAO were dismissed. [Paras 82, 86, 104, 105]

Challenge to Section 148 notices solely because they were issued by the JAO is rejected; the JAO is not completely denuded of jurisdiction.

Automated allocation - risk management strategy - formation of opinion under Section 148A - Construction of Clause 3 of the Faceless Reassessment Scheme, 2022 and the sequencing of pre-issuance enquiry and faceless assessment - HELD THAT: - The Court construed Clause 3 as reflecting a two-stage process: (i) the RMS/Insight process places information before the JAO and the JAO conducts pre-issuance consideration (including Section 148A procedure and formation of opinion); and (ii) if reassessment proceeds, the records are transmitted to the NFAC and the actual assessment is conducted by automated allocation/faceless units. Punctuation and scheme structure were read to separate the stage of initiation/formation of opinion from the subsequent faceless assessment, producing a harmonious construction that preserves the JAO's role in preliminary evaluation while implementing faceless assessment for final determination. [Paras 56, 99, 101, 102]

Clause 3 contemplates initial evaluation by the JAO on information furnished through RMS, followed by faceless randomized allocation for the assessment stage.

Faceless assessment procedure under Section 144B - information for reassessment (Explanations 1 and 2 to Section 148) - Whether Section 144B operates as a substantive ouster of other reassessment modes or is primarily procedural - HELD THAT: - The Court held that Section 144B is principally procedural, prescribing how faceless assessments are to be conducted (randomized allocation, units, electronic communications, review, etc.) and does not itself supply the substantive basis for reassessment. Explanations 1 and 2 to Section 148 identify multiple independent sources of 'information' (including RMS, audit objections, search/survey material and information under schemes) that may justify reassessment and which often come to the JAO. Reading Section 144B as the exclusive route would render these provisions and the JAO's statutory functions otiose; a harmonious construction treats 144B as a procedural mechanism complementing, not supplanting, other statutory reassessment triggers. [Paras 72, 73, 76, 77]

Section 144B is procedural; it does not extinguish other statutory modes of initiation of reassessment nor the role of the JAO in acting on information described in Explanations 1 and 2 to Section 148.

Final Conclusion: Writ petitions challenging reassessment notices solely because they were issued by the jurisdictional Assessing Officer are dismissed; the Faceless Reassessment Scheme and Section 144B prescribe procedural modes for faceless assessment but do not ipso facto oust the JAO's concurrent jurisdiction or preclude the JAO from initiating proceedings where information (including RMS, audit objections, search/survey material or information under Section 135A schemes) supports formation of opinion under the statutory reassessment provisions.

Full and true disclosure - cooperation in proceedings before the Settlement Commission - computation of income under Section 245D(4) - grant of immunity under Section 245H - finality and conclusiveness of Settlement Commission orders under Section 245I - severability of statutory orders - limited scope of judicial interference with Settlement Commission

Severability of statutory orders - grant of immunity under Section 245H - computation of income under Section 245D(4) - Whether the grant of immunity by the Income tax Settlement Commission can be severed and impeached independently of the computation of income accepted in the settlement order. - HELD THAT: - The Court held that the prerequisites for an order under Section 245D(4) and for grant of immunity under Section 245H are not distinct or separable: both rest on the applicant having made a full and true disclosure and having cooperated in the proceedings. Interfering with the immunity granted would in effect re open or re examine the acceptance of the application itself, which the petitioner has not challenged in entirety. The statutory scheme contemplates the Settlement Commission exercising computation and immunity contemporaneously and on identical foundational tests; therefore a partial challenge directed only at the immunity cannot be maintained where the commission has held the disclosure and cooperation conditions satisfied and has proceeded to compute income. [Paras 21, 22, 28, 29]

Partial quashing of the settlement to strike down only the grant of immunity was not permissible; the challenge confined solely to the immunity must fail.

Full and true disclosure - cooperation in proceedings before the Settlement Commission - grant of immunity under Section 245H - Whether the test of 'full and true disclosure' and 'cooperation' for grant of immunity under Section 245H is different from the test applied for acceptance of settlement and computation under Section 245D(4). - HELD THAT: - Relying on the statutory text and binding exposition in Kotak Mahindra, the Court concluded that the two statutory provisions invoke identical necessary ingredients: (a) cooperation with the Settlement Commission and (b) making a full and true disclosure of income and its derivation to the satisfaction of the Commission. Consequently, once the Settlement Commission has found those conditions satisfied for proceeding under Section 245D(2)/(2C) and has computed income after joint verification, the same finding governs the discretionary exercise under Section 245H and cannot be treated as a separate, independently challengeable determination. [Paras 21, 22, 23, 26]

The test for grant of immunity under Section 245H is the same as the test for the Settlement Commission's acceptance and computation; the findings of full and true disclosure and cooperation apply equally to both.

Finality and conclusiveness of Settlement Commission orders under Section 245I - limited scope of judicial interference with Settlement Commission - Whether the High Court could, under Article 226, interfere with the Settlement Commission's order granting settlement and immunity where the petitioner confined its challenge to the immunity alone. - HELD THAT: - The Court observed that Chapter XIX A confers wide powers on the Settlement Commission and that Section 245I gives finality to its orders, precluding reopening of concluded matters except on the limited grounds provided by the Act. Judicial interference is accordingly confined to established bases such as grave procedural defect, lack of nexus between reasons and decision, or similar exceptional grounds. On the facts, the ITSC had conducted joint verification based on primary records, the applicants had cooperated and accepted that course, and the ITSC did not reject the applications; no procedural infirmity or lack of nexus was made out to warrant interference. Consequently the petition seeking partial relief failed. [Paras 24, 25, 27]

The High Court will not interfere with the Settlement Commission's order in the absence of jurisdictionally recognised grounds; the petitioner's restricted challenge to immunity does not meet that threshold.

Final Conclusion: The writ petition seeking to quash only the immunity granted by the Income tax Settlement Commission was dismissed. The Court held that the findings of full and true disclosure and cooperation underpin both computation under Section 245D(4) and grant of immunity under Section 245H, and that the Settlement Commission's order, having been reached after joint verification and within its statutory powers, does not warrant interference under Article 226.

Reopening of assessment under section 147/148 - reasons to believe - identity and creditworthiness of investor - genuineness of share capital/share application money - acceptance in subsequent assessments and finality - quashing of reassessment notice

Reopening of assessment under section 147/148 - reasons to believe - identity and creditworthiness of investor - genuineness of share capital/share application money - acceptance in subsequent assessments and finality - Validity of notices issued under Section 148/147 for AY 2008-09 and AY 2011-12 in view of subsequent acceptance of the same investor transactions by the Department in later assessments - HELD THAT: - The Court examined the recorded reasons for reopening and the subsequent assessment history. The reasons for reopening relied on information from DIT (Intell. & Cr. Inv.) and doubts as to the identity, creditworthiness and genuineness of investments routed through a foreign entity. The Court noted that identical or similar reasons had been used to reopen AY 2012-13, and that ultimately the Department, while framing the assessment for AY 2012-13 (assessment order dated 22.04.2021), accepted the identity and creditworthiness of the foreign investor and accepted the transactions without making additions. Further, the Department accepted similar investments in other assessment years (including acceptance after scrutiny and deletion of additions on appeal in respect of AY 2015-16). On this factual matrix the Court held that the very basis for initiating reassessment for the impugned years no longer survives because the identity/creditworthiness and genuineness of the transactions had been satisfactorily examined and accepted by the Department in subsequent completed assessments. In those circumstances there remained no valid reasons to believe that income chargeable to tax had escaped assessment for the impugned years, and the reopening notices and consequential proceedings could not be sustained. [Paras 36, 37]

Notices under Section 148/147 and proceedings pursuant thereto quashed for AY 2008-09 and AY 2011-12

Final Conclusion: The writ petitions are allowed; the impugned notices issued under Section 148 of the Income-tax Act and the reassessment proceedings initiated thereunder for Assessment Years 2008-09 and 2011-12 are quashed and the petitions stand disposed of.

Maintainability of writ petition in presence of alternate statutory remedies - Stay of assessment pending appellate and revisionary proceedings - Binding effect of High Court precedents on appellate and revisionary authorities - Challenge to validity of notice under Section 148 as contrary to Section 151/151A

Maintainability of writ petition in presence of alternate statutory remedies - Whether the writ petition under Article 226 is maintainable when statutory appellate and revisionary remedies have been availed - HELD THAT: - The Court held that where the assessee has already availed the statutory remedies under the Income Tax Act by filing an appeal before the Commissioner (Appeals) and a review/revision application before the Revisional Authority, the extraordinary jurisdiction under Article 226 should not ordinarily be invoked to decide matters which can be adjudicated by those statutory fora. The Court observed that the appellate and revisionary authorities are bound to take into account and apply the legal position declared by this High Court in earlier decisions and that the petitioner is not precluded from raising all contentions, including those based on such decisions, before those authorities. In view of these considerations, the petition seeking to directly impeach the assessment order was not entertained on merits and the petitioner was directed to pursue the pending statutory remedies. [Paras 6, 7, 9, 10]

Writ petition not entertained as maintainable relief when appeal and revision are pending; petitioner directed to pursue those statutory remedies.

Binding effect of High Court precedents on appellate and revisionary authorities - Challenge to validity of notice under Section 148 as contrary to Section 151/151A - Whether the appellate and revisionary authorities should consider the petitioner's contention that the Section 148 notice and consequent assessment are illegal in light of this Court's decisions (Hexaware and Siemens) - HELD THAT: - The Court directed that the appellate authority and the Revisional Authority must decide the pending proceedings while considering the petitioner's contentions that the notice under Section 148 and the assessment are illegal when tested against the law as declared by this Court in Hexaware and Siemens. The Court emphasised that those authorities are bound by the jurisdictional High Court's decisions and must adjudicate the legality of the notice and assessment accordingly, keeping all contentions of the petitioner open for determination in the statutory proceedings. [Paras 4, 7, 8, 11]

Appellate and Revisional Authorities to decide the pending proceedings while considering and applying the High Court's decisions regarding the legality of the Section 148 notice and assessment; all contentions kept open.

Stay of assessment pending appellate and revisionary proceedings - Whether the impugned assessment order should be stayed pending disposal of the appeal before the CIT(A) and the revisionary proceedings - HELD THAT: - Although the writ was not entertained on merits, the Court found prima facie merit in the petitioner's contention that the assessment and the Section 148 notice may be illegal under the law as declared by this Court. In order to preserve the subject-matter pending adjudication by the statutory fora, the Court ordered an interim protective measure: the impugned assessment order was directed to remain stayed until the appellate and revisionary proceedings are decided. This interim relief leaves the substantive controversies to be finally adjudicated by the competent statutory authorities. [Paras 11]

Impugned assessment order stayed until disposal of the pending appeal and revisionary proceedings.

Final Conclusion: Writ petition not entertained since statutory appellate and revisionary remedies are available and have been availed; petitioner directed to pursue those proceedings, which must consider the petitioner's contentions based on this High Court's precedents; meanwhile the impugned assessment order is stayed and all contentions are kept open.

Reopening of assessment - reason to believe - change of opinion - quashing of notice under section 148 - disposal of objections to reassessment

Reopening of assessment - reason to believe - change of opinion - Jurisdiction of the Assessing Officer to reopen assessment for Assessment Year 2017-2018 by issuing notice under section 148 - HELD THAT: - The Court found that the Assessing Officer assumed jurisdiction to reopen the assessment on the basis of perusal of the assessment record and reasons that did not disclose any fresh tangible material which had not been considered during the original assessment. Relying on the principle in Kelvinator of India Ltd., the Court held that a reopening founded on material already available and considered at the time of regular assessment amounts to a mere change of opinion and cannot constitute a valid "reason to believe" to reopen. Reopening must be predicated on material which gives the Assessing Officer a bona fide reason to believe that income has escaped assessment beyond a mere reconsideration of the same material which led to the original assessment. [Paras 28]

Assessing Officer lacked jurisdiction to reopen the assessment; the notice dated 31.03.2021 under section 148 is quashed and set aside.

Disposal of objections to reassessment - quashing of notice under section 148 - Validity of the order disposing objections to reassessment dated 12.06.2023 in consequence of the quashing of the reopening notice - HELD THAT: - Although an order disposing of the objections was placed on record, the Court held that once the reopening notice itself is quashed for want of jurisdiction, the disposal order cannot survive. The disposal of objections being consequential upon and dependent on a void reopening is therefore also unsustainable. [Paras 25, 29]

Order dated 12.06.2023 disposing of the objections is quashed and set aside as consequential to the quashed reopening.

Final Conclusion: Petition allowed; notice under section 148 dated 31.03.2021 for AY 2017-2018 quashed and set aside; consequential order disposing objections dated 12.06.2023 also quashed; no order as to costs.

Penalty under Section 271(1)(c) for concealment or furnishing incorrect particulars of income - requirement of recorded satisfaction specifying which limb of clause (c) is attracted - principles of natural justice and the right to a clear opportunity to explain before imposition of penalty - invalidity of a composite notice conflating concealment and furnishing incorrect particulars

Penalty under Section 271(1)(c) for concealment or furnishing incorrect particulars of income - requirement of recorded satisfaction specifying which limb of clause (c) is attracted - principles of natural justice and the right to a clear opportunity to explain before imposition of penalty - invalidity of a composite notice conflating concealment and furnishing incorrect particulars - Whether penalty proceedings under Section 271(1)(c) are vitiated where the assessing authority's satisfaction and the notice to the assessee are ambiguous as to whether concealment or furnishing incorrect particulars is alleged, thereby denying a clear opportunity to explain. - HELD THAT: - The Court held that initiation of penalty under Section 271(1)(c) requires the assessing authority (or appellate authorities where applicable) to record a clear satisfaction that either the particulars of income were concealed or incorrect particulars were furnished. Before concluding penalty proceedings the assessee must be put on notice and afforded a clear opportunity to offer explanation specific to the limb alleged. A composite notice which conflates both limbs without indicating which limb the authority has satisfied creates confusion and deprives the assessee of an appropriate opportunity to be heard, thereby violating the principles of natural justice. The Tribunal correctly found that the notice in the present case was not clear and unambiguous and that the assessing authority had not recorded requisite satisfaction as to either limb, and therefore the imposition of penalty was vitiated. The High Court concurred with the Tribunal's conclusions but observed that the Tribunal did not expressly grant the Revenue liberty to issue a fresh notice in accordance with law. [Paras 4, 5, 6]

The penalty order was vitiated for want of a clear recorded satisfaction and for issuing a composite, ambiguous notice that denied the assessee a proper opportunity to explain; the Tribunal's order setting aside the penalty is upheld.

Final Conclusion: Appeal dismissed; the Tribunal's setting aside of the penalty is sustained for the reasons given, and the Revenue is left free to proceed afresh strictly in accordance with law if so required.

Exception to administrative circular based on monetary limit - litigation arising out of disputes related to TDS/TCS in domestic and international taxation - Double Taxation Avoidance Agreement - precedential effect of Supreme Court decision - dismissal of review petition on delay and merits

Exception to administrative circular based on monetary limit - litigation arising out of disputes related to TDS/TCS in domestic and international taxation - Double Taxation Avoidance Agreement - Whether the present appeal falls within the exception in clause l(ii) of para 3.1 of Circular No.5/2024 and therefore outside the ambit of Circular No.9/2024. - HELD THAT: - The Court accepted the respondent's submission that clause l(ii) of para 3.1 of Circular No.5/2024 pertains only to litigation arising out of disputes related to TDS/TCS matters in domestic and international taxation. The Court held that the exception is confined to such TDS/TCS disputes and does not extend to the present case. In any event, the Court observed that the questions of law raised by the appellant have been adequately answered by the Supreme Court in Engineering Analysis Centre of Excellence Private Limited v. Commissioner of Income Tax and Anr., and therefore the matter does not fall outside the administrative dispensation under the impugned circulars. [Paras 1, 2, 6]

The appeal does not fall within the exception in clause l(ii) of para 3.1 of Circular No.5/2024 and hence is within the ambit of Circular No.9/2024.

Precedential effect of Supreme Court decision - dismissal of review petition on delay and merits - Whether further adjudication is warranted in view of the Supreme Court's decision in Engineering Analysis and the dismissal of the review petitions. - HELD THAT: - On a court query, the appellant informed that a review petition had been filed against the Supreme Court decision; the respondent produced the order dismissing the review petitions and interlocutory applications both on grounds of delay and on merits (order dated 23.04.2024). Having regard to the binding nature of the Supreme Court's pronouncement and the dismissal of the review, the Court found no reason to keep the present case pending for adjudication and accepted that the legal questions raised are covered by the Apex Court view. [Paras 3, 4, 6, 7, 8]

In view of the Supreme Court decision and dismissal of the review petitions, the appeal requires no further adjudication and is dismissed.

Final Conclusion: The High Court held that the appeal does not fall within the exception to Circular No.5/2024 and, since the legal questions are answered by the Supreme Court (with review petitions dismissed), dismissed the appeal and disposed of all pending applications.

Revision under Section 263 of the Income Tax Act - scrutiny assessment under Section 143(3) - cryptic assessment order / non-application of mind - verification of sources of cash deposits and share premium - prejudice to the Revenue

Revision under Section 263 of the Income Tax Act - cryptic assessment order / non-application of mind - verification of sources of cash deposits and share premium - prejudice to the Revenue - Validity of the revisional order under Section 263 setting aside the scrutiny assessment passed under Section 143(3) on the ground that the assessment was cryptic and the assessing officer failed to verify substantial cash deposits and a large increase in share premium. - HELD THAT: - The Court examined the assessment order dated 30.12.2019 and found it to be cryptic, containing no record of what documents were called for, received, perused or verified by the assessing officer before confirming the returned income. The revisional authority observed substantial matters-undisclosed or unverified cash deposits during the demonetisation period and a significant unexplained increase in share premium-which had not been addressed or verified in the assessment despite their potential to cause prejudice to the Revenue. Because the assessment order lacked reasons and did not reflect application of mind to these material transactions, the revisional authority was justified in invoking its power under Section 263 to set aside the assessment and remit the matter for detailed enquiry and an opportunity of hearing. The Court rejected the appellant's reliance on the principle that revisional power cannot be exercised where the matter was already scrutinised, holding that where the original scrutiny order is cryptic and fails to record verification of critical issues, Section 263 may properly be exercised to prevent prejudice to the Revenue. The Tribunal's affirmation of the revisional order was held to be correct and required no interference. [Paras 4, 9, 10, 11, 12]

The revisional order under Section 263 setting aside the assessment under Section 143(3) was valid; the Tribunal's order upholding that revisional order is affirmed and the appeal is dismissed.

Final Conclusion: Appeal dismissed. The revisional order dated 29.03.2022 under Section 263 and the Tribunal's order dated 12.06.2024 upholding it are affirmed; questions of law noted by the appellant may be considered in an appropriate future case.

Stay of demand - non-speaking order - prima facie case - financial stringency - balance of convenience - discretion to vary deposit quantum - remand for fresh consideration - abeyance of recovery proceedings - pass fresh order after hearing

Non-speaking order - remand for fresh consideration - Impugned order rejecting the stay petition is set aside as non-speaking and remitted for fresh disposal. - HELD THAT: - The court held that the impugned order rejecting the stay petition lacks requisite reasons and is therefore a non speaking order. Relying on precedent, the court observed that the assessing authority must record consideration of the relevant factors and pass a reasoned order. For these reasons the impugned order was set aside and the matter remitted to the first respondent to pass a fresh order de novo after hearing the petitioner. [Paras 8, 9]

Impugned order set aside and matter remitted for fresh disposal by the first respondent.

Prima facie case - financial stringency - balance of convenience - discretion to vary deposit quantum - pass fresh order after hearing - abeyance of recovery proceedings - Assessing officer must consider the trinity of prima facie case, financial stringency and balance of convenience, apply CBDT guidance with discretion to vary deposit, and recovery proceedings are to be kept in abeyance pending fresh disposal. - HELD THAT: - The court reiterated the settled law that grant of stay requires consideration of (i) existence of a prima facie case, (ii) demonstration of financial stringency, and (iii) the balance of convenience. While CBDT instructions suggest a deposit of 20% as a guideline, the authority retains discretion to increase or decrease the quantum based on these factors. The court directed the assessing officer to hear the petitioner, apply these parameters and the Board's guidance in a reasoned order. Meanwhile, the respondents were directed to keep all recovery proceedings in abeyance until the fresh disposal of the stay application. [Paras 6, 10, 11]

Assessing officer to re decide stay petition after hearing and applying the threefold test and CBDT guidance; recovery proceedings stayed pending fresh decision.

Final Conclusion: The writ petition is allowed to the extent that the impugned non speaking order rejecting the stay petition is set aside and remitted for fresh disposal; the assessing authority is directed to hear the petitioner, apply the prima facie case, financial stringency and balance of convenience test while exercising discretion under the CBDT guidance, to pass a reasoned order preferably within three months, and respondents shall keep recovery proceedings in abeyance meanwhile.

Late fee under section 234E - processing of TDS statements under Section 200A - computation of late fee while processing TDS statements under Section 200A - prospective operation of Section 200A(1)(c)

Late fee under section 234E - processing of TDS statements under Section 200A - prospective operation of Section 200A(1)(c) - Imposition of late fee under Section 234E while processing TDS statements under Section 200A for the assessment years 2012-2013 and 2013-2014 - HELD THAT: - The Court applied the reasoning in M/s. True Blue Voice India Private Ltd. and another v. Chief Commissioner of Income Tax - TDS, Chennai and others, holding that although Section 234E was inserted with effect from 01.07.2012 to provide for levy of fee for late furnishing of TDS statements, the statutory mechanism to compute such fee at the time of processing TDS statements was introduced only by the insertion of clause (c) to sub-section (1) of Section 200A with effect from 01.06.2015. Prior to that amendment there was no provision in Section 200A to determine the fee under Section 234E at the stage of processing TDS statements. Consequently, for assessment years 2012-2013 and 2013-2014 (periods in issue), the authorities lacked power to impose the Section 234E late fee while processing returns under Section 200A, and such imposition is not sustainable. The Court rejected the respondents' contention of retrospective application of Section 200A(1)(c) and noted that in absence of the pre 2015 mechanism, the imposition under Section 234E during processing cannot be sustained.

Impugned demand intimations imposing late fee under Section 234E while processing TDS returns under Section 200A for AYs 2012-2013 and 2013-2014 are set aside.

Final Conclusion: The Demand Intimation Letters dated 27.03.2019 imposing late fee under Section 234E during processing of TDS statements for assessment years 2012-2013 and 2013-2014 are quashed and the writ petition is disposed of.

Faceless assessment - setting aside assessment orders for non-consideration of documents - remand for fresh consideration - activation of department portal - uploading of documents - personal hearing as contemplated under Section 144B

Faceless assessment - setting aside assessment orders for non-consideration of documents - Impugned assessment orders passed by the faceless assessing officer were liable to be set aside because documents submitted physically at the assessing officer's office were not perused prior to passing the orders. - HELD THAT: - The Court found that pursuant to its earlier order the petitioner had appeared for personal hearing and had submitted voluminous documents physically before the assessing authority in Chennai, but those documents were not uploaded to the Department Portal and therefore the faceless assessing officer had no occasion to peruse them before passing the assessment orders. In these circumstances, the Court concluded that the impugned orders could not stand and were to be set aside and remitted for fresh consideration so that the documents are available to the faceless assessing authority and the petitioner's case can be decided after hearing.

Impugned assessment orders set aside and matters remanded for fresh consideration.

Activation of department portal - uploading of documents - remand for fresh consideration - Procedure and timeline for enabling the petitioner to make the documents available to the faceless assessing authority were to be directed by the Court. - HELD THAT: - The Court directed the respondents to open/activate the Department Portal within three months from receipt of the order and directed the petitioner to upload the documents sought by the respondents within three months from activation. The remand contemplated activation of the portal and uploading so that the faceless assessing officer can consider the materials on record before adjudication.

Respondents to activate portal within three months; petitioner to upload documents within three months of activation.

Personal hearing through video conferencing - personal hearing as contemplated under Section 144B - On receipt and consideration of uploaded documents the faceless assessing officer must afford a further opportunity of personal hearing by fixing a clear 14 days' notice and provide video-conferencing facility before passing fresh orders. - HELD THAT: - The Court directed that after uploading of documents the respondent shall issue a 14 days clear notice fixing the date for personal hearing, and the faceless assessing officer shall provide personal hearing through video conferencing. Thereafter the faceless assessing officer shall pass appropriate orders on merits and in accordance with law, after hearing the petitioner, as expeditiously as possible, consistent with the scheme under Section 144B of the Income Tax Act, 1961.

On uploading, respondent to issue 14 days' clear notice for personal hearing by video conferencing and then decide the matter on merits in accordance with law.

Final Conclusion: The High Court set aside the faceless assessment orders for A.Y.s 2003-04 to 2006-07, remitted the matters for fresh consideration after activation of the Department Portal and uploading of documents within prescribed timelines, and directed that a 14 days' clear notice be given for personal hearing by video conferencing under the procedure contemplated by Section 144B before fresh orders are passed.

Reassessment under Section 147 read with Section 144 - capital gains exemption under Section 54 - principles of natural justice - limitation and time-barred reassessment - service of notices through online portal - non-receipt/ignorance of notices and reliance on Power of Attorney

Reassessment under Section 147 read with Section 144 - capital gains exemption under Section 54 - principles of natural justice - non-receipt/ignorance of notices and reliance on Power of Attorney - Validity of the impugned reassessment and penalty orders insofar as they were passed without effective opportunity and without proper consideration of the petitioner's contention that sale proceeds were invested for purposes of Section 54. - HELD THAT: - The Court found on the record that the petitioner and his sister sold vacant land in the relevant year and the petitioner's share of the sale proceeds was utilised for construction within the limitation period under Section 54, negating liability to capital gains tax on that ground. The impugned notice alleged a higher sale consideration and proceeded to assessment and penalty; but the petitioner, being unlettered and having entrusted a Power of Attorney who failed to respond to online notices, was unaware of the proceedings. The Court held that passing substantive orders without affording the petitioner an effective opportunity in those circumstances violated the principles of natural justice. The plea of ignorance of law raised by the revenue was insufficient to defeat the factual finding of non-receipt/awareness by the petitioner and the resultant breach of fair opportunity to be heard. In consequence, the impugned assessment and penalty orders were set aside on grounds of denial of natural justice and lack of opportunity to establish applicability of Section 54. [Paras 6, 7, 8]

Impugned orders dated 26.05.2023 and 12.03.2024 set aside for violation of principles of natural justice, subject to condition of payment to Advocate Clerk Association.

Service of notices through online portal - limitation and time-barred reassessment - reassessment under Section 147 read with Section 144 - Whether the matter should be remitted to the assessing authority for fresh consideration and hearing. - HELD THAT: - Having set aside the impugned orders for want of a fair hearing, the Court directed a limited remand: upon compliance with the condition of payment, the petitioner is to file a reply within three weeks of certified copy of the order; the revenue must then afford a clear 14 days' notice for personal hearing and thereafter decide the matter in accordance with law. The Court did not finally adjudicate evidential or quantification issues but required the Assessing Officer to hear the petitioner and pass fresh orders after giving opportunity and considering the claim of exemption under Section 54 and other contentions. The order thus effectuates a fresh adjudicatory opportunity rather than an appellate substitution of fact-finding. [Paras 8, 9]

Matter remitted to the respondent for fresh hearing and decision after the petitioner files reply and is given a 14-day personal hearing; conditional payment directed before relief is available.

Final Conclusion: Writ petition allowed: impugned reassessment and penalty orders set aside for violation of natural justice; petitioner to make specified token payment, file reply within three weeks of certified copy, and thereafter be afforded 14 days' personal hearing before the assessing authority which shall pass fresh orders in accordance with law.

Interest on securities - accrual basis versus due-date (mercantile accounting for banks) - Deduction for bad debts under Section 36(1)(vii) and limitation under proviso to Section 36(1)(vii) read with Section 36(2)(v) and Section 36(1)(viia) - Valuation and depreciation of investments on shifting from Available-for-Sale to Held-to-Maturity - Amortisation loss on Government securities classified as Held-to-Maturity - allowance as revenue expense - Unclaimed bank balances held for more than three years - not assessable as income - Share listing fees - characterisation as capital expenditure

Interest on securities - accrual basis versus due-date (mercantile accounting for banks) - Assessee-bank need not include interest on securities on an accrual basis as income; interest on securities is taxable only on specified due-dates. - HELD THAT: - The Court accepted the view in earlier decisions of this Court and the Supreme Court that for the relevant assessment years the third proviso to section 145(1) requires that interest on securities held by a bank be charged to tax only when it becomes due on the specified (half-yearly) dates. Given the conformity of authorities cited, the Tribunal's conclusion that the assessee need not offer interest on an accrual basis for those years is upheld. [Paras 6, 8]

Answered in favour of the assessee and against the revenue.

Deduction for bad debts under Section 36(1)(vii) and limitation under proviso to Section 36(1)(vii) read with Section 36(2)(v) and Section 36(1)(viia) - Whether the Tribunal was correct in allowing bad-debt related deductions claimed by the assessee-bank without restricting the claim in accordance with the proviso applicable to debts covered by clause (viia) is to be re-examined. - HELD THAT: - The Court recognised the distinction between the general deduction in clause (vii) and the special treatment under clause (viia) and observed that the proviso to clause (vii) (read with section 36(2)(v)) limits deduction in respect of debts for which provision under clause (viia) is made to the difference between the debt written off and the credit balance in the provision account. In view of the Supreme Court's articulation in Catholic Syrian Bank Ltd. v. CIT about the separate operation of these provisions, the matter was not finally adjudicated on merits but remitted to the Assessing Officer for fresh determination of whether the assessee correctly computed the deduction under clause (vii)(a)/proviso on the relevant facts and accounts. [Paras 14, 15, 16]

Remitted to the Assessing Officer for fresh adjudication on merits and in accordance with law.

Unclaimed bank balances not taxable after three years - Balances lying unclaimed with the bank for more than three years cannot be treated as the assessee's income. - HELD THAT: - The Court recorded that this issue was covered by precedent of this Court and other High Courts, and accordingly sustained the Tribunal's view that unclaimed balances standing for more than three years are not assessable as income of the bank for the assessment years in question. [Paras 6, 9]

Answered in favour of the assessee and against the revenue.

Valuation and depreciation of investments on shifting from Available-for-Sale to Held-to-Maturity - Amortisation loss on Government securities classified as Held-to-Maturity - allowance as revenue expense - Depreciation or diminution in value arising on valuation of investments (including on reclassification from AFS to HTM) and amortisation losses on HTM securities are allowable as claimed by the assessee under the accepted accounting principles and precedents relied upon. - HELD THAT: - Relying on established authorities, including the Supreme Court and this Court's precedents, the Court endorsed the principle that where investments are valuated in accordance with recognised accounting practice and statutory requirements, notional or carrying losses by way of depreciation or amortisation in respect of investments may be allowed for income-tax purposes. The Court noted that the issues raised under Questions Nos.5, 6 and 7 are answered against the revenue in favour of the assessee, following the cited precedents. [Paras 17, 18, 19]

Answered in favour of the assessee and against the revenue.

Share listing fees - characterisation as capital expenditure - Share listing fees incurred in connection with expansion of the capital base are to be treated as capital expenditure and not allowable as revenue expenditure. - HELD THAT: - Following the reasoning of the Supreme Court in Brooke Bond India Ltd. and related authority, the Court held that expenditure incurred in connection with enhancement of the capital base retains the character of capital expenditure even if incidentally it may aid business or profit-making. The Tribunal's acceptance of the capital character of the listing fee was affirmed. [Paras 10, 11, 12]

Answered in favour of the assessee and against the revenue.

Final Conclusion: All substantial questions of law were answered against the revenue and in favour of the assessee except that claims under Section 36(1)(vii) and Section 36(1)(vii)(a) (and the proviso/read with Section 36(2)(v)) require re-examination; those matters are remitted to the Assessing Officer for fresh decision on merits and in accordance with law.

Principles of natural justice - Opportunity of personal hearing - Remand for fresh consideration - Residential status determination - Taxability of transfers on death - Tax treatment of deposits in NRO account and effect of TDS

Principles of natural justice - Opportunity of personal hearing - Impugned assessment order was passed without affording a personal hearing and thereby violated the principles of natural justice. - HELD THAT: - The Court found that the draft assessment was issued and the final order was passed without providing the petitioner an opportunity of personal hearing. The petitioner furnished a plausible explanation for inability to reply within the earlier time - the demise of his wife and consequent personal commitments - and claimed matters (classification of residential status, deposits in NRO account and transfer of shares on death) that required consideration. In these circumstances, the absence of a personal hearing amounted to a breach of natural justice and rendered the assessment order unsustainable. [Paras 7, 8]

Impugned order dated 21.05.2024 set aside for violation of principles of natural justice and remitted for fresh consideration.

Remand for fresh consideration - Residential status determination - Taxability of transfers on death - Tax treatment of deposits in NRO account and effect of TDS - Matter remanded to the assessing officer to permit filing of reply, hold a personal hearing and decide on merits including residential status and tax consequences of NRO deposits and transfers on death. - HELD THAT: - Rather than adjudicating the substantive contentions, the Court directed that the petitioner be allowed to file his reply/objections with supporting documents within three weeks of receipt of the order. The assessing officer is required to issue a clear 14 days' notice fixing a date for personal hearing and thereafter consider the petitioner's submissions and decide the assessment on merits and in accordance with law. The remand contemplates fresh consideration of the classification of the petitioner's residential status and the tax treatment of deposits in the NRO account and of shares transferred upon the death of the petitioner's wife, rather than any final adjudication by this Court. [Paras 8]

Assessment remitted to the 1st respondent for fresh consideration after hearing the petitioner and deciding the issues on merits.

Final Conclusion: Impugned assessment order dated 21.05.2024 set aside for lack of personal hearing; petitioner permitted to file reply within three weeks and the assessing officer directed to afford a 14 day personal hearing and thereafter decide the assessment on merits in accordance with law.

Compounding of offences - limitation for filing compounding application - interpretation of Section 279(2) of the Income Tax Act - validity of CBDT circular fixing time limit for compounding - habitual offender criterion for compounding - remand for fresh decision on merits of compounding application

Compounding of offences - limitation for filing compounding application - interpretation of Section 279(2) of the Income Tax Act - validity of CBDT circular fixing time limit for compounding - Whether a compounding application can be rejected solely on the ground that it was filed beyond the time limit prescribed in the CBDT circular. - HELD THAT: - The Court held that Section 279(2) of the Act does not prescribe any time limit for filing a compounding application and that the explanatory power of the CBDT is for implementation of the Act, not for creating a substantive limitation contrary to the statutory scheme. Relying on this Court's earlier decision in Jayshree's case, the Court concluded that clause 7(ii) of the CBDT circular insofar as it fixes a time limit for filing compounding applications is beyond the scope of the Act and cannot be enforced to deny compounding. Consequently, rejection of the petitioner's compounding application solely on the ground of delay under the circular was unsustainable. [Paras 5, 9]

Impugned rejection of the compounding application on the ground of delay under the CBDT circular set aside; CBDT time limit cannot defeat statutory compounding power under Section 279(2).

Habitual offender criterion for compounding - compounding of offences - Whether the petitioner is a habitual offender so as to render the offences non compoundable under the issued guidelines. - HELD THAT: - The Court examined the guideline criterion that a person committing the offence on more than three occasions is to be treated as a habitual offender. The petitioner was alleged to have defaulted in two assessment years, namely 2013 2014 and 2014 2015, and the Court noted that the offence for 2013 2014 had already been compounded. On that basis, the petitioner could not be treated as a habitual offender under the stated guideline and the habitual offender bar did not apply to deny compounding in the present case. [Paras 6, 8]

Petitioner not to be treated as a habitual offender for the purpose of denying compounding under the guidelines.

Remand for fresh decision on merits of compounding application - compounding of offences - What remedial direction should follow after holding the CBDT time limit invalid and the petitioner not a habitual offender? - HELD THAT: - Having set aside the impugned order which rejected the compounding application on the ground of delay, the Court directed that the compounding application be taken on record and decided on merits in accordance with law. The matter was remanded to the respondent to consider and pass appropriate orders on the application within a specified timeframe, thereby leaving substantive adjudication of compoundability and quantum of compounding to the authority in accordance with statutory power and applicable guidelines (subject to the invalidity of the time limit provision). [Paras 9, 10]

Matter remitted to respondent to take the application on record and decide the compounding application on merits and in accordance with law within eight weeks.

Final Conclusion: Writ petition allowed; the order rejecting the compounding application for being filed beyond the CBDT time limit is set aside as contrary to Section 279(2); petitioner is not a habitual offender under the guidelines on the facts; matter remanded to respondent to decide the compounding application on merits in accordance with law within eight weeks.

Anti-Dumping Duty investigation - Product under consideration - preliminary scope determination - premature adjudication - non-interference with ongoing investigation

Amendment of petition - Draft amendment to the petition permitted and to be carried out forthwith. - HELD THAT: - Learned Senior Advocate tendered a draft amendment which the Court allowed in terms of the draft and directed that the same be carried out immediately. The Court granted the procedural relief without entering into merits of the substantive controversy. [Paras 2]

Amendment allowed and to be carried out forthwith.

Premature adjudication - non-interference with ongoing investigation - investigation under the Anti-Dumping Rules - Petition seeking prohibition on initiation or imposition of provisional anti-dumping duty and challenge to final scope of product under consideration dismissed as premature; Court will not interfere with authority conducting investigation. - HELD THAT: - The petitioners challenged the inclusion of the product imported by them within the product under consideration and sought interim reliefs restraining further proceedings and notification of provisional duty. The Court recorded that the designated authority is in the process of investigation under the Anti-Dumping Rules and that the contentions raised by the petitioners concern the merits of scope determination. Interference at this stage would jeopardize the ongoing investigatory process. The Court declined to examine the detailed merits of the scope determination or the objections raised, observing that para 4 of the communication did not warrant judicial intervention pre-empting the statutory process and that the petitioners could raise their contentions before the authority at the appropriate stage. [Paras 13, 14]

Petition dismissed as premature; no interference with the ongoing investigation. No order as to costs.

Final Conclusion: The Court allowed the tendered amendment to the petition and dismissed the petition on merits as premature, refusing to interfere with the authority's ongoing anti-dumping investigation; the petitioners may pursue their objections before the investigating authority.

Classification of imported goods - burden of proof on the taxing authority - genus-species principle in tariff interpretation - description in Advance Authorization vs ITC (HS) code - reliability of expert opinion and discard of unreasoned opinion - requirement that NGL must be extracted from natural gas

Description in Advance Authorization vs ITC (HS) code - genus-species principle in tariff interpretation - Whether clearance under the Advance Authorization was permissible when the authorization described the imported item as "Naphtha" though the Revenue contended the product was classifiable as NGL under a different ITC (HS) code. - HELD THAT: - The Tribunal accepted the appellants' contention that the broad description in the Advance Authorization controls admissibility of import under the authorization so long as the description of the imported goods matches the authorization. Applying the genus-species approach, the Tribunal held that Naphtha is a genus and NGL a species; therefore imports of NGL fall within the generic import authorization for Naphtha. The Tribunal relied on IS specifications and other authoritative glossaries to show that Naphtha is a generic term covering various light petroleum fractions and noted legislative changes (substitution of tariff items) that indicate an intention to cover different types of naphtha within the heading. The Tribunal further followed precedents that a mismatch of ITC (HS) code does not defeat entitlement under an Advance Authorization when the description corresponds to the authorized item. Consequently, even if the Revenue's classification contention were correct, the clearance under the Advance Authorization could not be impugned on account of differing ITC (HS) codes where the description in the authorization covered the imported goods. [Paras 4]

Clearance under the Advance Authorization was lawful because the authorization described the imported goods as Naphtha and NGL falls within the genus Naphtha; therefore differing ITC (HS) codes did not vitiate admissibility.

Classification of imported goods - burden of proof on the taxing authority - reliability of expert opinion and discard of unreasoned opinion - requirement that NGL must be extracted from natural gas - Whether the goods imported by the appellant were classifiable as Naphtha under TI 27101290 or as Natural Gasoline Liquid (NGL) under TI 27101220, and whether the Revenue discharged its burden to prove classification as NGL. - HELD THAT: - The Tribunal found that the Revenue's case largely depended on the opinion of the Joint Director of Customs House Laboratory. On a joint reading of that opinion and the record of cross-examination, the Tribunal held the Joint Director's opinion to be cryptic, unreasoned, internally inconsistent and unsupported by technical literature, and thus carrying no evidentiary value. The Chemical Examiner's opinion, based on the appellant's in-house analysis, stated that it was not possible to determine whether the product was extracted from natural gas; the IIP stated that the requested investigative analysis was not available. The Tribunal emphasised that classification under TI 27101220 (NGL) requires that the product be a low boiling liquid petroleum product and be extracted from natural gas, and that these conditions must be cumulatively satisfied. Because the Revenue failed to establish that the product was extracted from natural gas and failed to discharge the burden of proof, its proposed classification as NGL could not be sustained. The Tribunal also noted that supporting documents relied upon by Revenue were only ancillary to the primary, but discarded, opinion of the Joint Director and thus became inconsequential. [Paras 4]

The Revenue failed to discharge the burden of proof to classify the imports as NGL; the classification declared by the appellant as Naphtha under TI 27101290 is upheld.

Final Conclusion: The impugned adjudication order confirming demand, interest, fine and penalty was not sustainable. The appeals are allowed and the impugned order is set aside with consequential relief in accordance with law.

Exemption under Notification No.23/98-Cus dated 02.06.1998 - Sr. No.108(1) - condition of production of end-use certificate - no additional conditions can be read into a notification - ultra vires of board circular - evidence of imports being for use in the leather industry - legislative primacy of notification over circular

Exemption under Notification No.23/98-Cus dated 02.06.1998 - Sr. No.108(1) - condition of production of end-use certificate - no additional conditions can be read into a notification - evidence of imports being for use in the leather industry - Whether denial of exemption under Sr. No.108(1) of Notification No.23/98-Cus for non-production of an end-use certificate was justified - HELD THAT: - The Tribunal found that the description at Sr. No.108(1) grants exemption to goods "for use in the leather industry" and that the entry contains no express condition requiring production of an end-use certificate. While the revenue may require evidence that imported goods were meant for use in the leather industry, the court observed that nowhere does the Notification prescribe that such evidence must be furnished only in the form of an end-use certificate issued by excise officers. Insisting on production of that specific certificate would amount to introducing a condition not provided by the Notification. The Tribunal followed earlier decisions which hold that proof that goods were imported for use in the leather industry may be furnished by relevant evidence (such as invoices and certificates of sale) and that a presumption that goods sold to leather manufacturers are for use in that industry is reasonable. Consequently, denial of exemption solely on the ground of non-production of an end-use certificate was unsustainable.

Denial of exemption under Sr. No.108(1) solely for non-production of an end-use certificate set aside; exemption restored where no such condition is prescribed by the Notification.

Ultra vires of board circular - legislative primacy of notification over circular - no additional conditions can be read into a notification - Whether CBIC Circular No.74/1998-Cus could validly impose the requirement of an end-use certificate for the Notification entry - HELD THAT: - The Tribunal held that a board circular cannot introduce a substantive condition into a Notification that the Notification itself does not contain. A Notification issued under the Customs Act is a legislative instrument published in the Gazette and subject to parliamentary scrutiny; an executive circular cannot rewrite or add conditions to such a Notification. Therefore, to the extent Circular No.74/1998-Cus sought to make production of an end-use certificate a precondition for claiming the exemption under Sr. No.108(1), that requirement was ultra vires and could not be enforced to deny the benefit conferred by the Notification.

Circular No.74/1998-Cus cannot be relied upon to impose the end-use certificate requirement for Sr. No.108(1); the circular is ultra vires insofar as it adds a condition absent from the Notification.

Final Conclusion: The appeal was allowed: the adjudication and Commissioner (Appeals) order denying exemption for non-production of an end-use certificate were set aside and the exemption under Sr. No.108(1) of Notification No.23/98-Cus restored, on the ground that no such condition is prescribed in the Notification and a Board circular cannot validly impose it.

Refund of customs duty - benefit of exemption under Notification No. 46/2011-Cus. - rectification under Section 154 of the Customs Act, 1962 - unjust enrichment - scope of show cause notice - finality of appellate order and its implementation

Refund of customs duty - benefit of exemption under Notification No. 46/2011-Cus. - finality of appellate order and its implementation - Validity of sanctioning refund by the Assistant Commissioner in implementation of the Commissioner (Appeals) order allowing rectification under Section 154. - HELD THAT: - The Tribunal found that the appellant had claimed exemption under Notification No. 46/2011-Cus. which was initially disallowed on reassessment but subsequently allowed by the Commissioner (Appeals) by re-assessment under Section 154. The Tribunal rejected the department's stay application and the appellate order attained finality; consequent to that, the Assistant Commissioner was bound to implement the appellate order and sanction the refund. Having sanctioned the refund in accordance with the Commissioner (Appeals) order, the Assistant Commissioner committed no infirmity. The Tribunal also records that the Department's subsequent appeal against the Commissioner (Appeals) order was dismissed, reinforcing the finality of the entitlement and the correctness of the refund sanction. [Paras 7]

The sanctioning of the refund by the Assistant Commissioner in implementation of the Commissioner (Appeals) order was lawful and there is no infirmity in the refund having been granted.

Unjust enrichment - scope of show cause notice - Whether the Commissioner (Appeals) was justified in setting aside the Order-in-Original and remanding the matter to re-examine unjust enrichment when that issue was not raised in the show cause notice and had already been decided by the Assistant Commissioner. - HELD THAT: - The Tribunal observed that the show cause notice issuing on limitation grounds did not raise the question of unjust enrichment. The Assistant Commissioner, nonetheless, examined unjust enrichment in the Order-in-Original and found no unjust enrichment. The Commissioner (Appeals) in the impugned order introduced the unjust enrichment angle afresh and remanded the matter for re-examination despite there being no adverse observation against the Assistant Commissioner's finding. The Tribunal held that bringing in an issue outside the scope of the show cause notice and ordering re-examination where the subordinate authority had already given a finding was beyond the Commissioner (Appeals)'s remit in the circumstances, and therefore legally untenable. [Paras 8]

The impugned remand to re-examine unjust enrichment is not tenable and is set aside.

Final Conclusion: The impugned order of the Commissioner (Appeals) setting aside the Order-in-Original and remanding the matter for re-examination of unjust enrichment is quashed; the Assistant Commissioner's sanction of the refund in implementation of the Commissioner (Appeals) order under Section 154 was valid and the appeal is allowed.

Dissolution of corporate debtor - Liquidation versus dissolution under the Insolvency and Bankruptcy Code - Power to apply for dissolution vested in the liquidator under Section 54 - Early dissolution under Regulation 14 of the IBBI (Liquidation Process) Regulations, 2016 - Direction for transaction audit - Registrar of Companies' power to strike off company name under Companies Act - Commercial wisdom of the Committee of Creditors

Direction for transaction audit - Commercial wisdom of the Committee of Creditors - Validity of the Adjudicating Authority's direction to the Resolution Professional to undertake a transaction audit from 01.04.2020 to the CIRP commencement date. - HELD THAT: - The Adjudicating Authority directed a transaction audit in view of perceived gaps (paragraphs 16(e) and 16(f)) and recorded that a Transaction Audit Report had not been filed (paragraph 18). The CoC, however, had earlier resolved against conducting a transaction/forensic audit at its second meeting on the ground that the company had not been carrying on business for years and a look back would be of limited utility (paragraph 14). The Tribunal found that CIRP had already concluded on 06.05.2024 with no extension sought, the liquidation value was negligible and no assets or business activity existed, rendering the transaction audit direction unnecessary. For these reasons the direction for transaction audit was held unsustainable and was set aside. [Paras 14, 15, 16, 18]

Direction to carry out the transaction audit is set aside.

Dissolution of corporate debtor - Power to apply for dissolution vested in the liquidator under Section 54 - Early dissolution under Regulation 14 of the IBBI (Liquidation Process) Regulations, 2016 - Liquidation versus dissolution under the Insolvency and Bankruptcy Code - Registrar of Companies' power to strike off company name under Companies Act - Whether the Resolution Professional could file an application under Section 54 for dissolution of the corporate debtor when liquidation had not been ordered or completed. - HELD THAT: - Section 54 contemplates that an application for dissolution is made by the liquidator after the assets have been completely liquidated (paragraph 9). Regulation 14 permits early dissolution by a liquidator after preparation of a preliminary report and consultation committee advice where realizable properties are insufficient to cover liquidation costs and no further investigation is required (paragraph 10). The Adjudicating Authority relied on these provisions to reject the RP's application, noting that liquidation had not been initiated and that only a liquidator is empowered to apply under Section 54 (paragraph 16). The Tribunal held that, under the statutory scheme, dissolution under Section 54 presupposes liquidation or a liquidator acting under Regulation 14; the RP could not invoke Section 54 in the absence of liquidation proceedings. Given that the sole CoC (the financial creditor) declined to fund liquidation and CIRP had ended without a resolution plan, the Tribunal directed an alternative administrative route: the RP may intimate the Registrar of Companies seeking strike off under the Companies Act. Consequently no further CIRP steps were required and the CIRP may be treated as closed. [Paras 10, 16, 19, 20, 21]

Application for dissolution under Section 54 could not be entertained in absence of liquidation; RP permitted to intimate Registrar of Companies for striking off and CIRP may be treated as closed.

Final Conclusion: The appeal is allowed in part: the direction for transaction audit is set aside; the RP cannot seek dissolution under Section 54 absent liquidation or a liquidator's application, but may approach the Registrar of Companies for strike off; CIRP is closed and no further steps are required of the RP. Parties to bear their own costs.

Development rights as property - power of the resolution professional to take custody and control under Sections 18 and 25 of the IBC - jurisdiction of the Adjudicating Authority to decide possession of assets forming part of CIRP - exclusion of assets from CIRP - effect of revocation of power of attorney on inclusion of development rights in CIRP - protection of development rights - Victory Iron Works precedent

Jurisdiction of the Adjudicating Authority to decide possession of assets forming part of CIRP - power of the resolution professional to take custody and control under Sections 18 and 25 of the IBC - The Adjudicating Authority's finding that the Resolution Professional could not place evidence of physical possession and therefore could not be granted relief was unsustainable. - HELD THAT: - The Tribunal examined the pleadings, interim order dated 24.08.2020 restoring possession to the RP, the affidavit filed by the RP in compliance with queries dated 29.08.2023, the Consent Award and subsequent arbitration findings (including handover of possession on 12.10.2010), and agreements assigning development rights to the corporate debtor. Those documents together constituted sufficient material to show that the corporate debtor/RP had possession of the Canary Greens project land. The Adjudicating Authority's conclusion that no evidence of possession was placed on record ignored these materials and was therefore erroneous. [Paras 28, 53, 57, 60]

The observation in the Adjudicating Authority's order that the RP could not place evidence of possession is unsustainable.

Development rights as property - protection of development rights - Victory Iron Works precedent - effect of revocation of power of attorney on inclusion of development rights in CIRP - There are sufficient materials to conclude that the corporate debtor/RP had development rights and possession of the 10.81 acres and those rights/assets formed part of the CIRP and could not be excluded merely on the basis of the owners' revocation of the power of attorney. - HELD THAT: - The Tribunal held that development rights constitute 'property' under Section 3(27) of the IBC and fall within the assets the RP is required to take custody of under Sections 18(1)(f) and 25(2)(a). The record contained the development agreement (03.03.2007), the consent arbitration award, registered powers of attorney, the agreement of assignment between developer and corporate debtor (30.07.2010) and arbitration findings that possession was handed over on 12.10.2010. Reliance was placed on the Supreme Court's decision in Victory Iron Works that development rights are assets protectable in CIRP. The owners' contention of revocation of the POA on 30.08.2019 does not, without further adjudication, oust the RP's statutory duty and entitlement to custody and control of such development-rights assets in CIRP. [Paras 43, 44, 46, 56, 60]

Sufficient materials exist to conclude the corporate debtor/RP had development rights and possession of the 10.81 acres; the land was properly part of the CIRP.

Jurisdiction of the Adjudicating Authority to decide possession of assets forming part of CIRP - power of the resolution professional to take custody and control under Sections 18 and 25 of the IBC - The Adjudicating Authority was competent to decide the question of possession and rights in respect of land in which development rights were claimed by the corporate debtor; the issue was not required to be relegated to a civil court. - HELD THAT: - The Tribunal held that where development rights constitute property of the corporate debtor and are included in the resolution process, the Adjudicating Authority has jurisdiction to decide issues of possession and inclusion/exclusion from CIRP. The conclusion that such disputes must be decided exclusively by a civil court conflicted with the Supreme Court's authority (Victory Iron Works) recognizing NCLT/NCLAT jurisdiction to protect development-rights assets and to issue directions (including protective directions) in CIRP. Consequently, the Adjudicating Authority erred in declining to adjudicate the possession and related rights. [Paras 28, 58, 60]

Adjudicating Authority was competent to determine possession and associated rights in the CIRP; relegation to a civil court was erroneous.

Exclusion of assets from CIRP - development rights as property - The subject land measuring 10.81 acres was not required to be excluded from the CIRP and the owners' application for exclusion was rejected. - HELD THAT: - Given that development rights over the 10.81 acres were established on the record (development agreement, assignment, arbitration awards and the construction of the Canary Greens project with allotments to homebuyers), the Tribunal found no basis for excluding that land from the corporate debtor's CIRP. The owners' prayer for exclusion (IA No.5001/2021 and similar prayers in related IAs) was accordingly rejected. [Paras 38, 52, 60]

The 10.81 acres need not be excluded from the CIRP; the owners' exclusion applications are dismissed.

Power of the resolution professional to take custody and control under Sections 18 and 25 of the IBC - jurisdiction of the Adjudicating Authority to decide possession of assets forming part of CIRP - Reliefs granted and consequential directions in the appeals. - HELD THAT: - Applying the conclusions on possession, development rights and jurisdiction, the Tribunal set aside the Adjudicating Authority's orders dated 05.12.2023 and 22.12.2023 to the extent they declined jurisdiction or disposed of RP's applications. IA No.3356/2020 and IA No.4876/2020 filed by the RP were allowed; IA No.3629/2020, IA No.5001/2021 and IA No.987/2021 filed by the owners/respondents were rejected. The appeals filed by the RP were allowed and the appeal filed by the owners (seeking exclusion) was dismissed. Parties were left to bear their own costs. [Paras 61, 62, 69, 70]

The appeals by the RP are allowed; the Adjudicating Authority's orders declining to decide possession and disposing the RP's applications are set aside and the RP's IAs are allowed; the owners' exclusion petitions are rejected.

Final Conclusion: The Tribunal held that development rights over the 10.81 acres constituted property protectable in CIRP, that sufficient material established the corporate debtor/RP's possession, and that the Adjudicating Authority had jurisdiction to decide those questions. Orders of the Adjudicating Authority declining to decide possession and disposing the RP's possession/exclusion applications were set aside; the RP's applications for restoration/possession were allowed and the owners' applications for exclusion were rejected.

Bail is the rule and jail is the exception - right to speedy trial - Article 21 supremacy over statutory bail conditions - Section 45 of the PMLA is not an absolute prohibition on bail - existence of scheduled offence as sine qua non for proving proceeds of crime - delay in trial attributable to accused v. delay not attributable - parity in grant of bail - Section 436A Cr.P.C. does not preclude earlier grant of bail

Bail is the rule and jail is the exception - right to speedy trial - Article 21 supremacy over statutory bail conditions - Section 45 of the PMLA is not an absolute prohibition on bail - existence of scheduled offence as sine qua non for proving proceeds of crime - Grant of bail under the PMLA in view of prolonged pre-trial incarceration and delay in trial - HELD THAT: - The Court applied the settled constitutional principle that liberty is the norm and detention the exception, and that Article 21 may prevail over statutory bail restrictions where trial cannot be completed in a reasonable time. Section 45 of the PMLA imposes additional conditions but does not operate as an absolute bar to bail. Where the PMLA prosecution depends on the trial of a scheduled offence, and there is no realistic prospect of conclusion of the scheduled-offence trial in the foreseeable future, the rigours of Section 45 must yield to the right to speedy trial. The Court relied on the ratio in recent Supreme Court decisions (including Senthil, Manish Sisodia and Prem Prakash) to hold that prolonged incarceration when delay is not attributable to the accused and the trial is unlikely to conclude within a reasonable time justifies judicial relaxation of statutory conditions and grant of bail. [Paras 11, 12, 13, 19, 21]

Applicants entitled to regular bail notwithstanding Section 45 PMLA, having regard to prolonged incarceration, unlikelihood of trial concluding soon, and constitutional right under Article 21.

Delay in trial attributable to accused v. delay not attributable - Whether the delay in commencement and progress of trial was attributable to the applicants - HELD THAT: - On the material placed before the Court the trial remained at the stage of arguments on charge, the presiding officer demitted office and no replacement had been appointed, CBI's further investigation and prospect of a supplementary challan remained pending. The Court found that the delay in the present case could not be said to be attributable to the applicants, who had cooperated with investigation and had not misused interim liberties previously granted. [Paras 18, 19]

Delay in trial not attributable to the applicants.

Parity in grant of bail - Applicability of parity with main accused who was granted bail - HELD THAT: - The Court observed that parity is a recognized ground even in PMLA matters. The main accused, Satyendra Jain, had been enlarged on regular bail by the Sessions Judge on 18.10.2024. In the circumstances of prolonged custody and similarity of positions, parity supported granting bail to the applicants. [Paras 20]

Parity with the main accused favoured grant of bail to the applicants.

Section 436A Cr.P.C. does not preclude earlier grant of bail - Whether Section 436A Cr.P.C. bars grant of bail till the accused has undergone a specified period of detention - HELD THAT: - The Court held that Section 436A cannot be read as mandating denial of bail until half the maximum sentence is undergone. Section 436A is intended to effectuate the right to speedy trial, but does not operate as a prohibition on granting bail earlier where constitutional considerations justify release. The Supreme Court's decisions cited in the judgment support that Section 436A is not a fetter on exercising constitutional jurisdiction to grant bail in appropriate cases. [Paras 20]

Section 436A Cr.P.C. does not preclude the present grant of bail.

Final Conclusion: In view of prolonged incarceration (over 24 months), the unlikelihood of the predicate trial concluding in the foreseeable future, absence of delay attributable to the applicants, and parity with the main accused, the High Court relaxed the rigours of Section 45 PMLA and granted regular bail subject to specified bonds and conditions; no opinion was expressed on merits.

Service tax on unified credit card service - Merchant Discount Rate - interchange fee - MDR subsuming acquiring bank fee, interchange fee and platform fee - interpretation of Clause (iii) of Section 65(33a) of the Finance Act, 1994 - avoidance of double taxation - ease of collection of tax

Service tax on unified credit card service - Merchant Discount Rate - interchange fee - MDR subsuming acquiring bank fee, interchange fee and platform fee - interpretation of Clause (iii) of Section 65(33a) of the Finance Act, 1994 - avoidance of double taxation - Whether service tax is separately payable by the issuing bank on the interchange fee where the acquiring bank has paid service tax on the full Merchant Discount Rate (MDR) - HELD THAT: - The Court accepted the reasoning in the earlier judgment of S. Ravindra Bhat, J., applying Clause (iii) of Section 65(33a) of the Finance Act, 1994, that creditcard related services constitute a unified service for the cardholder and merchant. MDR is charged first by the acquiring bank and, in substance, comprises the acquiring bank's fee, the issuing bank's interchange fee and the platform fee; consequently MDR, as a service, has been made taxable and service tax has been paid. The conjunctive use of 'and' in the provision supports taxing the unified service rendered by both issuing and acquiring banks together, and the later bifurcation for accounting between banks does not create a fresh taxable event. The Court observed that principles favouring ease of tax collection and the prevention of double taxation apply where there is no loss of revenue. While an alternative view in the judgments considered required the issuing bank to prove that tax on the entire MDR had been paid by the acquiring bank, the factual finding here is that service tax on the MDR has in fact been paid. In that factual matrix, there is no obligation on the issuing bank to pay service tax again on the interchange fee. [Paras 6, 7, 8, 9, 10]

Service tax is not separately payable on the interchange fee where service tax has been paid on the full MDR by the acquiring bank; the appeals and reference are disposed accordingly.

Final Conclusion: The Reference and appeals are disposed of holding that, as service tax has been paid on the full Merchant Discount Rate by the acquiring bank, no separate service tax is payable on the interchange fee by the issuing bank; there is no loss of revenue.

Summary order. Civil appeal dismissed; delay condoned; pending applications, if any, disposed of.

Refund proceedings are in the nature of execution proceedings - self-assessment amounts to an order of assessment - refund cannot be allowed so as to modify or reopen an accepted self-assessment unless it is amended/reassessed - requirement of modification/reassessment before entertaining refund claims - application of ITC Limited principle to service tax refunds - exemption for transportation of chemical fertilisers under Notification No.3/2013 [S.No.21(e)]

Refund proceedings are in the nature of execution proceedings - self-assessment amounts to an order of assessment - refund cannot be allowed so as to modify or reopen an accepted self-assessment unless it is amended/reassessed - application of ITC Limited principle to service tax refunds - Whether the appellant's refund claim for service tax paid under reverse charge can be entertained despite unchallenged self-assessments - HELD THAT: - The Tribunal held that the appellant had self-assessed and paid service tax in its returns and did not get those self-assessments modified or challenged by appropriate proceedings. Relying on the Supreme Court's reasoning in ITC Limited and the Delhi High Court's decision in BT (India) Pvt. Ltd., the court reaffirmed that refund proceedings are akin to execution proceedings and are not a forum to reopen, vary or modify an assessment or self-assessment. Consequently, conditions entitling an assessee to exemption cannot be adjudicated in refund proceedings unless the original assessment/self-assessment is modified in accordance with the statutory procedure; authorities considering refund claims cannot reassess liability or alter accepted self-assessments. Applying these principles to the present facts, the Tribunal found that because the self-assessments remained unchallenged and unmodified, the refund claim could not be allowed even if the appellant contended that transportation of rock phosphate was covered by the exemption notification.

Claim for refund rejected because the appellant's self-assessments were not modified or reopened and refund proceedings cannot be used to alter an accepted self-assessment; ITC Limited principle applies to service tax refunds.

Final Conclusion: The impugned order upholding rejection of the refund claim is affirmed and the appeal is dismissed, since the appellant did not seek modification of its self-assessments and refund proceedings cannot be used to vary accepted assessments.

Mandap-keeper service - valuation of taxable services - service tax v. sales tax (VAT) - predominant purpose / primary use test - invocation of extended period of limitation for suppression - suppression with intent to evade

Mandap-keeper service - valuation of taxable services - service tax v. sales tax (VAT) - predominant purpose / primary use test - Liability of the appellant under Mandap-keeper service for amounts charged in respect of use of banquet halls and related facilities - HELD THAT: - The Tribunal held that the Mandap-keeper service definition comprehensively covers the making available of premises and the facilities and services provided in relation to such use, including catering. Reliance on the decision in Tamil Nadu Kalyana Mandapam Association establishes that the transaction is in substance a service and that the service aspect may predominate over the supply of food. The invoices and banquet order forms showed that, when functions were held, food was served at per-head rates and the appellant provided lights, fittings and staff in relation to use of the halls. Consequently, the Commissioner was justified in confirming service tax liability under Mandap-keeper service. The appellant's argument that provision of halls was merely ancillary to catering and that remittance of VAT precluded a service tax levy was rejected insofar as classification: the statutory definition and judicial precedent support taxation as a service rather than a pure sale of goods. [Paras 12, 13, 14, 15, 16]

Demand under Mandap-keeper service confirmed on merits.

Invocation of extended period of limitation for suppression - suppression with intent to evade - service tax v. sales tax (VAT) - Whether the extended period of limitation could be invoked and penalties sustained for alleged suppression - HELD THAT: - The Tribunal accepted the appellant's unchallenged contention that it had collected and remitted sales tax (VAT) on food charges and that there was a bona fide belief that the transactions were subject only to VAT. Suppression, in law, requires failure to disclose full information with intent to evade duty; where remittance of VAT was made and bona fides were not doubted, the facts did not establish deliberate suppression to evade service tax. Relying on the legal test of suppression and intent, the Tribunal held that extended limitation could not be invoked. Accordingly, interest and service tax liability were restricted to the normal limitation period, and penalties under the relevant provisions were set aside. [Paras 17, 18]

Extended period of limitation disallowed; demand confined to the normal period, interest limited accordingly and penalties set aside.

Final Conclusion: The appeal is partly allowed: service tax demand under Mandap-keeper service is upheld on merits for the disputed period, but the demand is restricted to the normal limitation period (interest accordingly) and the penalties imposed are set aside.

Service tax liability on manpower supply services - allowability of deduction of provident fund from taxable value - deduction of amount collected as service tax from gross receipts - exclusion of services rendered prior to 16.06.2005 from taxable value - invocation of extended period of limitation for suppression - imposition of penalty for failure to comply with statutory provisions and for concealment/retention of tax collected - interest payable on unpaid tax

Service tax liability on manpower supply services - allowability of deduction of provident fund from taxable value - deduction of amount collected as service tax from gross receipts - exclusion of services rendered prior to 16.06.2005 from taxable value - Determination of taxable value and quantification of service tax demand after allowing specified deductions and rejecting claimed provident fund deduction. - HELD THAT: - The adjudicating authority accepted the appellant's uncontested claim that receipts relating to services rendered prior to 16.06.2005 (when the services became taxable) and the element of service tax collected from M/s Hindalco were to be excluded from the gross receipts. The authority, however, disallowed the claimed deduction for Provident Fund on the ground that no invoice or documentary disclosure identified any amount as provident fund and, on the construction of the statutory definition of value of taxable services, the amounts claimed as PF formed part of the consideration for the taxable services. Those factual findings and the appellant's failure to challenge the disallowance before the first appellate authority were treated as binding. On that basis the confirmed demand was computed after deducting the service-element collected from Hindalco and amounts attributable to services prior to 16.06.2005 but without allowing the PF deduction. [Paras 4]

Service tax demand confirmed after excluding receipts for services prior to 16.06.2005 and the service tax element collected from Hindalco, and after rejecting the provident fund deduction.

Invocation of extended period of limitation for suppression - Validity of invoking the extended period of limitation under the proviso to Section 73(1) for the demand. - HELD THAT: - The adjudicating authority found on the facts that the appellant had rendered taxable services, received payment, and failed to disclose the gross receipts to the department with the clear intent to evade payment of service tax. The authority recorded that the appellant had obtained registration and charged service tax but did not disclose or deposit the tax as required. These findings of conscious non-disclosure and suppression supported invocation of the extended period of limitation under the proviso to Section 73(1). The Tribunal recorded that these factual findings were not successfully disputed on appeal. [Paras 4]

Extended period of limitation correctly invoked on the finding of suppression.

Imposition of penalty for failure to comply with statutory provisions and for concealment/retention of tax collected - interest payable on unpaid tax - Imposition of interest and penalties under the relevant provisions for failure to pay service tax and for retention/concealment of tax collected. - HELD THAT: - The adjudicating authority held that interest under the relevant provision is payable automatically once tax non-payment is established. The authority declined to impose penalty under the obsolete provision that was rendered redundant by amendment, but imposed penalty under the provision dealing with failure to comply with statutory obligations and under the provision applicable where tax was collected and not deposited. The finding that the appellant had collected service tax from the recipient and retained only part of it, thereby exhibiting deliberate suppression and bad intent, justified levy of penalty under the provision addressing concealment/retention. The Tribunal accepted these conclusions and the reliance on precedent noting that when tax collected by a service provider is established, penalty is warranted. [Paras 4]

Interest confirmed and penalties under the statutory provisions for failure to comply and for concealment/retention of collected tax upheld.

Final Conclusion: The appeal is dismissed; the demand for service tax (after allowed deductions and disallowance of the provident fund claim), invocation of the extended period of limitation, interest and penalties as imposed by the authorities are sustained.

Declared service - agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act - consideration versus compensation (liquidated/penalty) - provision of service by an employee to the employer - service tax on notice pay/recovery from employees

Declared service - agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act - consideration versus compensation (liquidated/penalty) - provision of service by an employee to the employer - service tax on notice pay/recovery from employees - Amounts recovered by the employer from employees as 'notice pay' for premature resignation are not exigible to service tax as a declared service under Section 66E(e) of the Finance Act, 1994. - HELD THAT: - The Tribunal held that the sums recovered as notice pay constitute compensation/liquidated damages for failure to perform contractual obligations and are not consideration for a service. The essence of Section 66E(e) is agreements whose primary purpose is to tolerate or refrain from an act in return for consideration; where the contract's purpose is otherwise and a pre agreed penalty operates as a fall back on non performance, that payment remains compensation and not consideration for a declared service. The CBEC guidance and the Madras High Court's decision in GE T&D (as followed by this Tribunal) support the conclusion that notice pay arising from employment contracts does not give rise to rendition of service by either party and is therefore outside the charge to service tax. Applying these precedents and reasoning to the facts (amounts recovered during financial years 2015 16 to 2016 17), the Tribunal found the departmental demand unsustainable and set aside the impugned orders. [Paras 4, 5]

The departmental demand of service tax on notice pay recovered from employees is set aside and the appeal is allowed.

Final Conclusion: Following earlier decisions and CBEC clarification, amounts recovered as notice pay from employees for premature resignation are compensation/liquidated damages and not consideration for a declared service under Section 66E(e); the impugned demand and orders are set aside and the appeal is allowed.

Summary order. Special Leave Petition dismissed for delay of 282 days for which no plausible explanation was found in the condonation application.

CENVAT Credit - exempted goods - exempted services - duty of excise - cess as duty of excise - input service distributor - Rule 6 of the CENVAT Credit Rules 2004 - Rule 7 of the CENVAT Credit Rules 2004 - precedent reliance and applicability

CENVAT Credit - Rule 7 of the CENVAT Credit Rules 2004 - cess as duty of excise - exempted goods - exempted services - precedent reliance and applicability - Whether the CESTAT was correct in applying the Court's decision in M/s Mahindra and Mahindra Ltd to hold that cesses paid on goods or services preclude characterisation of those goods or services as exempted for purposes of Rule 7. - HELD THAT: - The Court examined the reasoning in M/s Mahindra and Mahindra Ltd which treated certain cesses (including auto cess and education cess) as levies that are in substance duties of excise, and held that where such cesses are payable and paid on goods or services they cannot be regarded as exempted goods or exempted services. Although those observations were made in the context of Rule 6, the Court found no reason why the same construction would not apply to Rule 7(b) which bars distribution of credit attributable to services used in units exclusively engaged in manufacture of exempted goods or provision of exempted services. The Tribunal's reliance on the decision in M/s Mahindra and Mahindra Ltd was therefore upheld as correctly informing the construction of Rule 7(b), and the distinction between Rules 6 and 7 did not raise any substantial question of law warranting interference. [Paras 4, 8, 9, 11, 12]

Tribunal correctly relied on M/s Mahindra and Mahindra Ltd; the decision applies to Rule 7(b) and supports disallowance of distribution of credit where cesses paid render goods/services non-exempt.

Precedent reliance and applicability - cess as duty of excise - overruling and scope - Whether the decision in Unicorn Industries overruled M/s Mahindra and Mahindra Ltd such that the Tribunal's reliance on Mahindra would be erroneous. - HELD THAT: - The Court observed that Unicorn Industries dealt with a different controversy where the assessee contested liability to pay cess or other duties; by contrast, in the present case the respondent had paid the cesses. Unicorn Industries was not relied upon before the Tribunal and, on the facts and legal issues before this Court, did not operate to overrule or render inapplicable the Mahindra decision. The Court therefore rejected the contention that Mahindra was overruled for purposes of the present dispute. [Paras 4, 5, 13, 14]

Unicorn Industries does not displace Mahindra in the facts of this case; the Tribunal's reliance on Mahindra is not vitiated by Unicorn Industries.

CENVAT Credit - cess as duty of excise - fact-finding - Whether there was a live dispute or material before the Court that the respondent had not paid the cess. - HELD THAT: - The appellants' contention that the respondent had not paid the cess was not raised before the Tribunal and was unsupported by the record. The fact-finding authorities did not hold that the respondent had not paid the cess. The Court found no basis in the material on record to entertain a contrary factual contention at this stage. [Paras 15]

No basis established for disputing payment of the cess; no substantial question of law arises from that contention.

Final Conclusion: The appeal is dismissed. The CESTAT's order, which upheld the Tribunal's reliance on M/s Mahindra and Mahindra Ltd and applied its reasoning to Rule 7(b) of the CENVAT Credit Rules 2004, is affirmed; Unicorn Industries does not affect that result on the facts, and no viable dispute exists regarding payment of the cess.

Substantial question of law - patent error of law - failure to consider material evidence - remand for de novo consideration - new industrial unit - commencement of production - expansion by at least 25 per cent - entitlement to exemption under notification No.20/2007

New industrial unit - failure to consider material evidence - Whether the respondent is a new industrial unit - HELD THAT: - The High Court found that the Tribunal set aside the orders of the adjudicating authorities without properly addressing the factual question whether the respondent was a new industrial unit. The Court held that the Tribunal did not consider some vital and material evidence and acted upon irrelevant materials when reaching its conclusion. Because the question is factual and the Tribunal's order displaces findings based on factual determinations, the High Court concluded that the matter requires fresh, threadbare consideration by the Tribunal. [Paras 3, 6, 7, 9]

Remanded to CESTAT for de novo consideration and determination of whether the respondent is a new industrial unit.

Commencement of production - failure to consider material evidence - Whether the respondent commenced production prior to 31st March, 2017 - HELD THAT: - The Court noted the Revenue's contention that the respondent's registration and stated date of commencement of production is 31st March, 2017, and that the respondent could not have commenced production prior to that date. The High Court observed that the Tribunal did not properly address the factual matrix and omitted consideration of material evidence relevant to the date of commencement. Given the factual nature of the dispute, the Court directed that the Tribunal should examine the evidence afresh. [Paras 5, 6, 7, 9]

Remanded to CESTAT for de novo consideration and determination of the date of commencement of production.

Expansion by at least 25 per cent - failure to consider material evidence - Whether, alternatively, the unit made an expansion of at least 25 per cent and commenced production before 31st March, 2017 - HELD THAT: - One of the factual questions before the Tribunal was whether the industrial unit, in the alternative, had effected an expansion of production by at least 25 per cent and thereby satisfied the relevant condition for benefit. The High Court found that the Tribunal did not undertake the necessary detailed factual inquiry and failed to consider material evidence on this point. Since this is a matter requiring assessment of evidence and factual findings, the Court remanded it for fresh adjudication by the Tribunal. [Paras 4, 6, 9]

Remanded to CESTAT for de novo consideration and determination whether there was an expansion of at least 25% and commencement before 31st March, 2017.

Entitlement to exemption under notification No.20/2007 - substantial question of law - Whether the respondent is entitled to exemption under notification No.20/2007 dated 25th April, 2007 - HELD THAT: - The entitlement to the claimed exemption under the notification turns on factual questions of newness, location in the designated area, and commencement of production prior to the specified date. The High Court held that the Tribunal set aside earlier orders granting adverse findings without properly considering material evidence, thereby raising a substantial question of law. The Court directed that the Tribunal should re-examine entitlement on the basis of evidence and reasoned findings. [Paras 3, 4, 9]

Remanded to CESTAT for de novo consideration of the respondent's entitlement to exemption under notification No.20/2007, with a reasoned determination on the facts.

Final Conclusion: The impugned CESTAT order dated 31st March, 2023 is set aside. The matter is remanded to CESTAT to be heard afresh and decided by a reasoned order within three months from communication of this order. Appeal disposed.

Cenvat credit on motor vehicles/dumpers - inputs - capital goods - integrated unit / captive mines - extended period of limitation - requirement of specific averments in show cause notice to invoke extended period - burden of proof of mala fide lies on the Revenue

Cenvat credit on motor vehicles/dumpers - inputs - capital goods - integrated unit / captive mines - Dumpers falling under Chapter 87 are not eligible for Cenvat credit as inputs or as capital goods under the Cenvat Credit Rules, 2004. - HELD THAT: - The Tribunal examined the definitions of "input" and "capital goods" as in force during the relevant period. The dumpers were not used within the factory or in the manufacture of final products and therefore do not fall within the definition of "input". The appellant itself accounted for the dumpers as fixed assets and claimed depreciation, indicating they are capital assets and not inputs. The definition of "capital goods" applicable at the relevant time expressly did not include goods classifiable under Chapter 87; accordingly dumpers are excluded from the definition of capital goods. The decision in Vikram Cement regarding availability of credit for capital goods used in mines applies only where the mines are captive and constitute an integrated unit with the factory; that condition is not satisfied here. For these reasons the Tribunal held that the appellant is not entitled to Cenvat credit on the dumpers either as inputs or as capital goods. [Paras 5]

Credit on dumpers under Chapter 87 denied; not eligible as inputs or as capital goods.

Extended period of limitation - requirement of specific averments in show cause notice to invoke extended period - burden of proof of mala fide lies on the Revenue - Extended period of limitation could not be invoked against the appellant and the demand beyond the normal period was set aside. - HELD THAT: - The Tribunal applied the principle that the Revenue must specifically aver in the show cause notice which omission or commission (fraud, collusion, wilful misstatement or suppression of facts) is relied upon to extend the limitation period and that the burden of proving mala fide lies on the Revenue. The show cause notice and impugned orders contained no specific averments or evidence demonstrating wilful misstatement or suppression of facts. In the absence of such specific allegations and proof, the proviso to the relevant limitation provision could not be invoked and the demand raised beyond the normal period could not be sustained. [Paras 6, 7]

Extended period not invokable; demand beyond normal period set aside.

Final Conclusion: Appeal allowed: Cenvat credit on dumpers under Chapter 87 disallowed as neither inputs nor capital goods; additionally, the demand is time barred as the Revenue failed to plead or prove specific averments warranting the extended period of limitation.

Manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 - incidental and ancillary to manufacture - two-fold test in J.G. Glass to determine manufacture (different commercial commodity; commodity serves no purpose but for the process) - PVD (Physical Vapour Deposition) coating as a transformative/functional process - kitting / sub-assembly producing a distinct finished product - branding/laser marking, packing and labeling not amounting to manufacture

Kitting / sub-assembly producing a distinct finished product - manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 - incidental and ancillary to manufacture - Processes of assembling/kitting and related operations on bought-out components in respect of EOLIA SHOWER ONLY TRIM, HEALTH FAUCET W/WHITE SDSPRAY, M HOSE and INLINE STOP VALVE TRIM amount to manufacture. - HELD THAT: - The Tribunal found that the appellant procured disparate parts/components from various suppliers and, by performing laser branding, quality testing, packing with batch code/MRP and assembling/kitting into units in unassembled/disassembled form, a finished product with a different identity, nomenclature and enduse emerges. Those activities were held to be incidental and ancillary to the manufacture of the final products and therefore fall within the definition of "manufacture" under Section 2(f) of the Central Excise Act. The Tribunal applied the established tests for manufacture and concluded that the resultant marketed goods under the Kohler brand are distinct from the individual components and not merely unchanged buyouts; hence excise liability is sustained for these categories. [Paras 6]

Demand upheld in respect of categories I to III (EOLIA SHOWER ONLY TRIM; HEALTH FAUCET W/WHITE SDSPRAY, M HOSE; INLINE STOP VALVE TRIM).

PVD (Physical Vapour Deposition) coating as a transformative/functional process - two-fold test in J.G. Glass to determine manufacture (different commercial commodity; commodity serves no purpose but for the process) - manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 - PVD coating and associated processes performed on parts (e.g., for BOTTLE TRAP, FLOOR DRAIN and similar items) amount to manufacture. - HELD THAT: - Applying the twofold test from J.G. Glass, the Tribunal found that the PVD process undertaken by the appellant is not merely cosmetic colour change but is necessary to render the articles usable and to prevent corrosion in watercontact applications; without the process the articles would have practically no shelf life. The process therefore goes beyond mere enhancement of visual appeal and adds substantiality to the article's utility, visual appeal and marketability. Consequently the PVD and related operations were held to be incidental and ancillary to manufacture and within Section 2(f). [Paras 6]

Demand upheld in respect of categories IV and V (BOTTLE TRAP; FLOOR DRAIN; and similar items).

Branding/laser marking, packing and labeling not amounting to manufacture - manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 - Sole act of laser branding/engraving, packing and affixing MRP/batch details on items such as LOURE DOUBLE ROBE HOOK does not amount to manufacture. - HELD THAT: - The Tribunal held that mere engraving/laser printing of the brand name and packaging/labeling do not bring about any material change in the character, function or identity of the goods. Such activities were treated as insufficient to constitute manufacture under Section 2(f) and therefore cannot sustain a demand for excise duty. [Paras 6]

Demand dropped in respect of category VI (LOURE DOUBLE ROBE HOOK and similar items).

Final Conclusion: The appeal is partly dismissed and partly allowed: demands confirmed for the categories involving subassembly/kitting and PVD coating (categories I to V) and demand set aside for items where only branding/packing was done (category VI).

Refund of excise duty under section 11B - exemption for goods supplied to Mega Power Projects - compliance with condition No. 28 of Notification No. 31/2010-CE - certification by an officer not below Chief Engineer and undertaking by project CEO - entitlement to refund upon fulfillment of notification conditions - construction of exemption-liberal application once applicability established

Compliance with condition No. 28 of Notification No. 31/2010-CE - refund of excise duty under section 11B - entitlement to refund upon fulfillment of notification conditions - Appellant's entitlement to refund of excise duty paid on EOT cranes supplied to a Mega Power Project upon satisfaction of condition No. 28 of Notification No. 31/2010-CE. - HELD THAT: - The Tribunal examined the record and found that the EOT cranes were supplied to the Amrawati Mega Power Project and that the requisite undertaking by the Chief Executive Officer of the project was furnished to the Deputy/Assistant Commissioner of Central Excise as required by condition No. 28. The condition requires certification by an officer not below the rank of Chief Engineer and an undertaking that the goods will be used only for the specified project and that duty will be paid in case of non-compliance. Having verified the invoice and the CEO's undertaking, the Tribunal held that the appellant had complied with condition No. 28 and therefore was entitled to the refund claimed under section 11B. The Tribunal applied settled principles on exemption notifications, relying on the Supreme Court's reasoning in Bonanzo Engineering Chemicals Pvt Ltd (and earlier authorities cited therein) that while exemption provisions are construed strictly to determine applicability, once applicability is established the exemption should be given full and liberal effect; an inadvertent payment of duty does not foreclose the benefit of the notification. On that basis the impugned order denying refund was set aside. [Paras 5, 6]

Impugned order denying refund set aside; appeal allowed and refund entitlement recognised on compliance with condition No. 28.

Final Conclusion: The Tribunal allowed the appeal, holding that the appellant complied with condition No. 28 of Notification No. 31/2010-CE and is entitled to refund of the excise duty paid; the impugned order-in-appeal was set aside.

Quashing of FIR - second complaint/second FIR on same cause of action - magistrate's power to order investigation under Section 156(3) Cr.P.C. - registration of FIR by the SHO under Section 154 Cr.P.C. - procedure where complaint case and police investigation co-exist (Section 210 Cr.P.C.) - exercise of inherent jurisdiction under Article 226/Section 482 Cr.P.C.

Second complaint/second FIR on same cause of action - magistrate's power to order investigation under Section 156(3) Cr.P.C. - registration of FIR by the SHO under Section 154 Cr.P.C. - procedure where complaint case and police investigation co-exist (Section 210 Cr.P.C.) - Whether the impugned FIR could be quashed on the ground that an earlier complaint by the same complainant was withdrawn/dismissed and the allegations in both complaints were identical - HELD THAT: - The Court found as a fact that the present FIR was registered on 18.10.2016 while the application under Section 156(3) Cr.P.C. had been dismissed as withdrawn and the complaint under Section 200 Cr.P.C. was dismissed as withdrawn only thereafter; no adjudication on merits was recorded by the Magistrate. The Code recognises two modes of initiating police investigation - direct registration under Section 154 by the SHO and Magistrate-ordered investigation under Section 156(3) at the pre-cognizance stage. Section 210 provides for the procedure where a complaint case and a police investigation relate to the same offence. The settled principles (including the distinction drawn in Tula Ram and later authorities) permit a second complaint or police action in circumstances where the earlier disposal was not on merits; a second complaint or FIR is impermissible only where the earlier complaint was dismissed on merits after full consideration. Applying those principles to the facts, because the earlier complaint/application was withdrawn without merits being adjudicated and the FIR was registered while the complaint process remained non-adjudicatory, there was no legal bar to registration of the impugned FIR and the precedents relied upon by petitioners were not attracted. [Paras 23, 24, 25, 26, 30]

The FIR cannot be quashed merely because an earlier complaint/application was withdrawn; registration of the FIR was not legally barred on that ground.

Quashing of FIR - exercise of inherent jurisdiction under Article 226/Section 482 Cr.P.C. - Whether the High Court should exercise its jurisdiction under Article 226/Section 482 to quash FIR No. 273/2016 and the consequent chargesheet on merits - HELD THAT: - The Court reviewed the investigative material placed on record including the chargesheet, the fact that a forensic/expert report was obtained and a supplementary chargesheet filed, and the disputed factual contentions of the parties. The investigation concluded that signatures on the cheques differed from the admitted specimen signatures and the Investigating Officer found sufficient material to charge the accused under Section 420 IPC; Petitioner No. 2 admitted signatures/thumb impressions on certain documents but asserted different factual defences. The Court reiterated that inherent jurisdiction to quash is to be exercised sparingly and that where allegations and evidence raise triable issues of fact, the High Court should not supplant the trial court by deciding contested factual questions. Given the existence of investigative findings and contested factual disputes requiring trial, the Court declined to exercise its extraordinary jurisdiction to quash the FIR and chargesheet. [Paras 32, 33, 34, 35, 36]

The petition invoking Article 226/Section 482 is refused; the FIR and the chargesheet against Petitioner No. 2 are not quashed.

Final Conclusion: The writ petition seeking quashing of FIR No. 273/2016 and attendant proceedings is dismissed; the Court declined to quash the FIR on the ground of the earlier withdrawn complaint and refused to exercise inherent jurisdiction to quash the FIR/chargesheet on merits. No observations have been made on Petitioner No. 1 who was not charge-sheeted.

Presentation of cheque to drawee bank within period of validity - stale/outdated cheque defeats criminal liability under Section 138 - collecting bank must present to drawee bank within prescribed period - proviso (a) to Section 138: presentation within six months or period of validity - revisional jurisdiction under Section 397 Cr.P.C. limited to patent error, jurisdictional defect or perversity

Presentation of cheque to drawee bank within period of validity - stale/outdated cheque defeats criminal liability under Section 138 - collecting bank must present to drawee bank within prescribed period - Validity of proceedings under Section 138 where the cheque was presented to payee's/collecting bank after expiry of its period of validity and was dishonoured as 'instrument outdated/stale'. - HELD THAT: - The Court held that presentation before the payee's bank does not substitute presentation at the drawee bank; to attract criminal liability under Section 138 the cheque must be presented to the bank on which it is drawn (or presented by the collecting bank to the drawee bank) within the period of validity stipulated by proviso (a) to Section 138. The cheque in question was drawn on 21.10.2017 and, excluding the date of drawing, had to be presented to the drawee bank on or before 21.01.2018. The memo of dishonour dated 23.01.2018 records return as 'instrument outdated/stale' because presentation occurred after the period of validity. A cheque returned as stale/outdated is invalid for the purpose of initiating penal proceedings under Section 138, and non-presentation within the prescribed period deprives the criminal court of jurisdiction to proceed under Section 138. The Courts below erred in treating presentation before the complainant's bank as sufficient and in ignoring the dishonour endorsement and its legal effect. [Paras 21, 22, 23, 26, 27]

Proceedings under Section 138 were not maintainable because the cheque was presented to the drawee bank after its period of validity and was rightly returned as stale/outdated; complaint dismissed and accused acquitted.

Revisional jurisdiction under Section 397 Cr.P.C. limited to patent error, jurisdictional defect or perversity - Whether interference in criminal revision was permissible despite concurrent convictions by trial and appellate courts. - HELD THAT: - The Court reiterated the narrow scope of revisional jurisdiction - confined to correcting patent defects, errors of law or jurisdiction or perversity - and noted that concurrent findings of fact are not ordinarily to be reappreciated. However, where a jurisdictional defect exists (here, absence of a cause of action because the cheque was stale), revision is justified. The defect identified is not a mere factual misappreciation but goes to the jurisdiction to try under Section 138, thereby warranting interference in revision. [Paras 13, 14, 15, 26]

Revisional interference was justified on the ground of jurisdictional defect, and the concurrent convictions were set aside.

Final Conclusion: Revision allowed; judgments and orders of the trial and appellate courts set aside for want of jurisdiction as the cheque was presented after its period of validity and returned as stale/outdated; complaint dismissed and accused acquitted; directions given regarding refund of fines/compensation and furnishing of bonds under Section 437-A Cr.P.C.

Judicial review of tender process - arbitrariness under Article 14 - decision making process standard of reasonableness - contracting authority's discretion in accepting or rejecting bids - past unsatisfactory performance as ground for disqualification - non payment of statutory dues as ground for disqualification - clause permitting rejection based on past performance

Judicial review of tender process - arbitrariness under Article 14 - decision making process standard of reasonableness - contracting authority's discretion in accepting or rejecting bids - Validity of judicial interference with the tender committee's rejection of the petitioner's bid on grounds of past performance and statutory non compliance - HELD THAT: - The Court examined whether the tendering authority's decision making process was arbitrary, mala fide or so irrational that it warranted interference under Article 14. Applying settled principles on judicial review of contractual/state procurement decisions, the Court confined itself to review of the decision making process and not substitute its own commercial judgment. The RFP expressly reserved the right to reject any or all bids on the basis of past unsatisfactory performance (clause 6.10) and reiterated that the authority was not bound to accept the lowest bid. On the materials placed before the tender committee - including reports/appraisals from RTOs - the committee reached a definite conclusion that the petitioner's past performance was unsatisfactory. The Court found no infirmity, perversity or mala fides in that process and concluded that judicial interference was not warranted. [Paras 19, 20, 21, 26, 31]

No interference; rejection did not amount to arbitrary action violative of Article 14 and was within the contracting authority's discretion.

Past unsatisfactory performance as ground for disqualification - non payment of statutory dues as ground for disqualification - clause permitting rejection based on past performance - Whether the petitioner's reliance on an EPF clearance certificate and denial of outstanding statutory dues negated the authority's reason for non consideration of its financial bid - HELD THAT: - The Court analysed the EPF communication relied upon by the petitioner. That communication recorded that the establishment could not produce inspection documents in stipulated time and, upon verification, the petitioner had deposited EPF and allied dues only up to June 2023 while being advised to facilitate e nomination and deposit outstanding dues to avoid penalties under the Act. The court treated these observations as indicating non compliance with statutory requirements and, together with RTO reports about poor past performance, as a valid basis for the tender committee to decline consideration of the petitioner's financial bid under clause 6.10 of the RFP. The Court held that the mere fact of being lowest in price did not entitle the petitioner to acceptance when qualification and performance concerns legitimately influenced the committee's decision. [Paras 9, 10, 29, 31]

Petitioner's EPF related material did not nullify the committee's finding; non consideration on grounds of past performance and statutory non compliance was justified.

Final Conclusion: The writ petition challenging rejection of the petitioner's lowest financial bid is dismissed. The tender committee acted within the RFP's reserved discretion (clause 6.10) and there was no demonstrable arbitrariness or mala fide in the decision making process to warrant judicial interference.