TaxTMI Updates e-Newsletter
Nov 06,2024

Summary order. Special Leave Petition under Article 136 of the Constitution of India dismissed; pending applications, if any, disposed of.

Show Cause Notice under Section 73(1) - Summary of Show Cause Notice in FORM GST DRC-01 is not a substitute for Show Cause Notice - Statement of determination under Section 73(3) cannot replace Show Cause Notice - Requirement of issuance and authentication by the Proper Officer - Compliance with Rule 142(1) of the AGST Rules and conditions precedent for a valid order under Section 73(9) - Quashing of order for non-compliance and liberty to initiate de novo proceedings with exclusion of time

Summary of Show Cause Notice in FORM GST DRC-01 is not a substitute for Show Cause Notice - Summary of Show Cause Notice in FORM GST DRC-01 does not fulfil the requirement of a Show Cause Notice under sub-section (1) of Section 73 of the AGST Act. - HELD THAT: - The Court applied the analysis in the common judgment dated 26.09.2024 and held that issuance of only a Summary of Show Cause Notice in FORM GST DRC-01 does not put the machinery of Section 73(1) in motion. The statutory mandate requires a proper Show Cause Notice to be issued in terms of sub-section (1); a summary is only a prescribed annexure and cannot substitute the substantive notice required to initiate proceedings under Section 73(1). Non-issuance of a proper Show Cause Notice therefore vitiates subsequent action taken under Section 73. [Paras 10]

Summary in FORM GST DRC-01 is not a substitute for the Show Cause Notice mandated by Section 73(1); non-issuance of the proper Show Cause Notice renders the proceedings unsustainable.

Statement of determination under Section 73(3) cannot replace Show Cause Notice - An attachment or statement of determination issued under Section 73(3) cannot be treated as the Show Cause Notice under Section 73(1). - HELD THAT: - Relying on the reasoning in the batch judgment, the Court distinguished the functions of the statement under sub-section (3) and the Show Cause Notice under sub-section (1). The Attachment to the Determination of Tax corresponded to a statement under Section 73(3) and not to a notice under Section 73(1). The statute contemplates separate issuance of the notice and the statement where applicable; treating the statement or its attachment as the notice defeats the procedural safeguards and requirements of Section 73. [Paras 10]

The statement under Section 73(3) (or its attachment) cannot substitute for the Show Cause Notice required by Section 73(1).

Requirement of issuance and authentication by the Proper Officer - Compliance with Rule 142(1) - Show Cause Notice, the statement under Section 73(3) and the order under Section 73(9) must be issued by the Proper Officer and comply with authentication requirements; compliance with Rule 142(1) does not dispense with these requirements. - HELD THAT: - The Court emphasised that issuance of notice, statement and order are statutory acts to be performed by the Proper Officer as defined in the Act. The mere issuance of summaries (FORM GST DRC-01, DRC-02, DRC-07) does not obviate the need for substantive notices, statements and authenticated orders by the Proper Officer. These conditions are treated as conditions precedent to the validity of any order under Section 73(9). The Court also noted the requirement of authentication as per the Rules (including Rule 26(3) as observed in the common judgment) and concluded that non-compliance with these statutory/formal requirements vitiates the order. [Paras 11]

The Show Cause Notice, statement and order must be issued by the Proper Officer and comply with the statutory/authentication requirements; issuance of summaries alone does not satisfy these conditions precedent.

Quashing of order for non-compliance and liberty to initiate de novo proceedings with exclusion of time - The impugned order dated 30.12.2023 is quashed for failure to issue a proper Show Cause Notice; respondent authorities are granted liberty to initiate de novo proceedings and the period from service of the summary till certified copy of the judgment is served is to be excluded for computation of time under Section 73(10). - HELD THAT: - Applying the conclusions in the common judgment and on the facts that only summaries and an attachment under Section 73(3) were served without a Show Cause Notice under Section 73(1), the Court found the impugned order unsustainable and set it aside. The Court, mindful that the defect was procedural/technical, granted leave to the authorities to commence fresh proceedings under Section 73 after issuing a valid Show Cause Notice and complying with ancillary provisions. Consistent with paragraph 29[F] of the co-ordinate Bench's order, the Court directed exclusion of the period from issuance of the summaries to the date a certified copy of the judgment is served on the Proper Officer for computing the limitation under Section 73(10). [Paras 12, 14]

Impugned order quashed; respondent authorities permitted to initiate de novo proceedings in accordance with law and the period specified in the judgment is to be excluded while computing time under Section 73(10).

Final Conclusion: The order dated 30.12.2023 is quashed for failure to issue the Show Cause Notice in terms of Section 73(1) of the AGST Act; summaries in prescribed FORM GST DRC-01/DRC-02/DRC-07 and an attachment under Section 73(3) do not cure that defect. The respondent authorities have liberty to initiate fresh proceedings in accordance with law, and the period from issuance of the summaries until service of a certified copy of this judgment is to be excluded for computation of the time-limit under Section 73(10).

Time-bar under Section 73(10) of the CGST Act - erroneous refund and recovery proceedings under Section 73(1) of the CGST Act - separate three-year limitation from date of erroneous refund - maintainability of writ petition where alternative statutory remedy is available - interest under Section 50 and penalty under Section 122(2)(a) of the CGST Act

Time-bar under Section 73(10) of the CGST Act - separate three-year limitation from date of erroneous refund - erroneous refund and recovery proceedings under Section 73(1) of the CGST Act - Whether the show-cause notice dated 20.08.2024 is barred by limitation prescribed under Section 73(10) of the CGST Act - HELD THAT: - The Court examined sub-section (10) of Section 73 which prescribes a three-year period for issuance of the order either from the due date for furnishing the annual return for the relevant financial year or alternatively from the date of erroneous refund. It noted that the petitioner had not disclosed a single uniform date of the refund in the petition and that the Special Intelligence and Investigation Branch had initiated scrutiny for the period FY 2017-18 to 2020-21. The petitioner refunded the integrated tax amounts between 23.11.2021 and 23.10.2022 and Rule 86(4B) permitting recredit was introduced on 05.07.2022. Having regard to the separate three-year limb running from the date of erroneous refund and the investigative steps taken prior to issuance of the show-cause notice, the Court found that the adjudicating authority could lawfully issue the notice dated 20.08.2024 and that the notice could not be held to be time-barred on the basis advanced in the petition. [Paras 7, 8, 10]

The show-cause notice dated 20.08.2024 is not barred by limitation under Section 73(10) of the CGST Act.

Maintainability of writ petition in presence of alternative statutory remedy - maintainability of writ petition where alternative statutory remedy is available - Whether the writ petition under Article 226 is maintainable when statutory remedies and appeal provisions are available and have not been exhausted - HELD THAT: - The respondents relied on precedent establishing that statutory remedy must be availed before approaching the High Court under Article 226. The Court referred to the authorities cited by respondents and observed that the petitioner had bypassed the statutory route and could raise its contentions before the proper officer and thereafter by appeal. In light of the availability of an alternative statutory remedy and binding precedent, the Court held that the writ petition was not maintainable. [Paras 5, 11]

The writ petition is not maintainable and is dismissed.

Final Conclusion: The petition is dismissed as not maintainable; the impugned show-cause notice dated 20.08.2024 is not held to be time-barred under Section 73(10) of the CGST Act and the petitioner must pursue available statutory remedies.

Violation of principles of natural justice - opportunity of hearing - appeal not a bar to relief where original order is vitiated - setting aside order and remand for fresh adjudication - exclusion of period for computation of limitation

Violation of principles of natural justice - opportunity of hearing - Ext.P4 order is liable to be set aside as it was passed before the expiry of time granted to the petitioner to file a reply, thereby violating principles of natural justice. - HELD THAT: - The Court found that Ext.P2 granted the petitioner time until 21.07.2023 to file a reply to the show cause notice, whereas Ext.P4 order was passed on 11.07.2023, i.e., before the expiry of that period. For that reason the original order was held to be issued in breach of the petitioner's right to be heard. The fact that the petitioner had pursued an appeal against Ext.P4 (which was later rejected as time-barred) did not negate the fundamental defect in the original order and therefore could not preclude the grant of relief under Article 226. [Paras 4, 5]

Ext.P4 order set aside and assessment restored to the file of the 2nd respondent for fresh adjudication after affording the petitioner an opportunity of hearing.

Setting aside order and remand for fresh adjudication - appeal not a bar to relief where original order is vitiated - exclusion of period for computation of limitation - Consequential reliefs: Ext.P7 (the appellate order) is set aside and the matter is remanded to the 2nd respondent to adjudicate afresh after hearing; time from passing of Ext.P4 till date of order is excluded for limitation purposes. - HELD THAT: - Because Ext.P4 was set aside for want of compliance with principles of natural justice, the consequent appellate order Ext.P7, which arose from a voidable original order and which had been rejected as time-barred, also stood set aside. The Court directed that the assessment be restored to the 2nd respondent for fresh adjudication after giving the petitioner an opportunity to file a reply (within two weeks if not already filed) and be heard. The Court further directed that the period from the date of passing Ext.P4 until the date of the present order shall be excluded when computing any period of limitation relevant to issuance of the fresh order by the 2nd respondent. [Paras 6]

Ext.P7 set aside; matter remitted to the 2nd respondent to adjudicate afresh after hearing, with exclusion of the period from Ext.P4 to the present order for limitation purposes.

Final Conclusion: Writ petition allowed: Ext.P4 set aside for breach of natural justice; assessment restored to the 2nd respondent for fresh adjudication after hearing the petitioner; Ext.P7 also set aside; period from Ext.P4 till date of this order excluded for limitation.

Violation of principles of natural justice - opportunity of personal hearing - remand for fresh consideration on payment of a portion of disputed tax - lifting of bank attachment and revocation of garnishee on compliance

Violation of principles of natural justice - opportunity of personal hearing - Impugned assessment order dated 18.04.2024 was passed without affording the petitioner an opportunity of personal hearing and thereby in breach of principles of natural justice. - HELD THAT: - The Court noted that the show cause notice and subsequent reminder notices were uploaded on the GST portal but the petitioner was unaware of those uploads and was not given a personal hearing prior to passing of the assessment order. In view of absence of an opportunity to file reply and absence of personal hearing, the impugned order was held to be in violation of principles of natural justice. The Court set aside the impugned order and remanded the matter for fresh consideration so that the petitioner may be afforded an opportunity to be heard and to place on record the materials in support of his case.

Impugned order dated 18.04.2024 set aside and matter remanded for fresh consideration with direction to afford personal hearing.

Remand for fresh consideration on payment of a portion of disputed tax - Conditional remand terms governing further proceedings on remand. - HELD THAT: - The Court conditioned the setting aside of the impugned order on the petitioner making an interim payment of 10% of the disputed tax within four weeks from receipt of the order. Thereafter the petitioner was directed to file reply/objection with documents within two weeks, and the respondents were directed to consider the reply, issue a clear 14 days notice fixing a date for personal hearing and thereafter pass appropriate orders on merits and in accordance with law, expeditiously.

Remand ordered subject to petitioner paying 10% of disputed tax and complying with timelines for filing reply; respondents to provide 14 days' personal hearing notice and decide afresh.

Lifting of bank attachment and revocation of garnishee on compliance - Validity and continuation of attachment on petitioner's bank account and any garnishee order issued to third parties. - HELD THAT: - Since the impugned assessment order was set aside, the Court found that the attachment on the petitioner's bank account could not continue. The Court directed immediate release of the bank attachment upon production of proof of the interim payment of 10% of the disputed demand. Similarly, any garnishee order issued to the Ministry of Defence, Heavy Vehicles Factory, Avadi, Chennai, was directed to stand revoked upon payment of the said 10%.

Bank attachment lifted and garnishee order to stand revoked on proof of payment of 10% as directed.

Final Conclusion: The impugned assessment order dated 18.04.2024 is set aside and the matter is remanded for fresh consideration; remand is subject to the petitioner paying 10% of the disputed tax within four weeks, filing his reply within the prescribed timelines, respondents to grant a 14-day personal hearing and decide afresh; bank attachment released and any garnishee revoked upon compliance.

Release of goods on bank guarantee - delegation of adjudicatory power - appeal against orders of Adjudicating Authority under Section 107 - orders under Section 129(1)(A) and Section 129(3) of the UPGST Act - application of Rule 140(1) of the Uttar Pradesh Goods and Service Tax Rules, 2017

Release of goods on bank guarantee - application of Rule 140(1) of the Uttar Pradesh Goods and Service Tax Rules, 2017 - orders under Section 129(1)(A) and Section 129(3) of the UPGST Act - Direction for provisional release of goods upon furnishing of bank guarantee - HELD THAT: - The Court directed that, although orders under Section 129(1)(A) and 129(3) of the Act have been passed, the petitioner is willing to furnish security in accordance with law for release of goods. Pursuant thereto the respondent authorities were directed to release the goods to the petitioner on his furnishing a bank guarantee as per Rule 140(1) of the UPGST Rules, 2017, and to effect such release within one week from the date of furnishing of the bank guarantee. This order is procedural and interlocutory, aimed at interim relief pending adjudication of the petitioner's substantive contentions. [Paras 6]

Respondents shall release the goods on the petitioner furnishing a bank guarantee in terms of Rule 140(1), and effect release within one week of such furnishing.

Delegation of adjudicatory power - appeal against orders of Adjudicating Authority under Section 107 - Requirement of further consideration on challenge to competency of the order making authority and availability of appeal - HELD THAT: - The Court observed that the writ petition challenges the character of the authority that passed orders under Section 129 of the UPGST Act and contends that appeals under Section 107 lie only against orders passed by the Adjudicating Authority and not by a 'Proper Officer'. The Court found these contentions require consideration and therefore directed exchange of affidavits: respondent authorities to file a counter affidavit within four weeks and the petitioner to file any rejoinder within three weeks thereafter. The Court did not adjudicate these legal questions on the merits but reserved them for determination after receipt of affidavits. [Paras 4, 5]

The challenge to the delegation/competency and the question of maintainability of appeal are to be considered after exchange of affidavits; the matter is listed for further hearing.

Final Conclusion: Interim relief granted for release of goods on furnishing a bank guarantee under Rule 140(1); parties directed to file affidavits for contested questions regarding delegation of adjudicatory power and availability of appeal, and the matter posted for further hearing on January 6, 2025.

Cancellation of GST registration - Non speaking order - Right to be heard - Setting aside administrative order and remand for fresh decision - Benefit of precedent

Cancellation of GST registration - Non speaking order - Right to be heard - Benefit of precedent - Validity of the order dated 10.03.2023 cancelling the petitioner's GST registration - HELD THAT: - The High Court found that the cancellation order did not assign any reason and was passed without affording the petitioner an opportunity to be heard. Relying on the principle expounded in the earlier decision in Writ Tax No.145 of 2022 (Technosum India Pvt. Ltd.), the Court treated a cancellation order which is non speaking and prima facie passed without application of mind as susceptible to judicial review. In view of those considerations the cancellation order was set aside and the petitioner was held entitled to the benefit of the said precedent so as to permit fresh consideration after affording a hearing. [Paras 5, 6]

Order dated 10.03.2023 cancelling GST registration is set aside and the petitioner is granted benefit of the precedent; petitioner to be permitted to file reply and be heard.

Setting aside administrative order and remand for fresh decision - Right to be heard - Validity of the appellate order dated 10.09.2024 rejecting the petitioner's appeal on the ground of limitation and the consequent relief - HELD THAT: - The appellate rejection on limitation resulted in denial of effective adjudication of the merits. The Court accordingly set aside the appellate order and remitted the matter to the respondents for fresh decision. The petitioner was permitted to appear within a stipulated period with a reply to the show cause notice and certified copies of the Court's order and the cited precedent; on such appearance the respondents are directed to pass a fresh order in accordance with law after considering the reply and affording opportunity of hearing. [Paras 8]

Appellate order dated 10.09.2024 is set aside and the matter is remitted for fresh adjudication after giving the petitioner an opportunity to file reply and be heard.

Final Conclusion: Writ petition allowed; both the cancellation order dated 10.03.2023 and the appellate order dated 10.09.2024 are set aside and the matter remitted to the respondents for fresh decision after the petitioner files a reply and is afforded a hearing within the time directed by the Court.

Challenge to show cause notice - GST liability on royalty/seigniorage under reverse charge - adjudication subject to outcome of Nine Judge Constitution Bench on nature of royalty - suspension of recovery pending decision - opportunity of hearing and right to submit objections/representations - preservation of contentions and post-decision remedies

Challenge to show cause notice - opportunity of hearing and right to submit objections/representations - adjudication subject to outcome of Nine Judge Constitution Bench on nature of royalty - suspension of recovery pending decision - preservation of contentions and post-decision remedies - Writ petition disposed of in terms of the directions contained in paragraph 9 of A.Venkatachalam v. Assistant Commissioner (ST), Palladam II Assessment Circle, Palladam , resulting in specified procedural directions and suspension of recovery. - HELD THAT: - The High Court directed that the petitioner shall submit objections/representations to the show cause notice within four weeks of receipt of this order and that upon receipt the authority shall proceed to adjudicate the matters on merits after affording reasonable opportunity of being heard. The Court ordered that orders of adjudication shall be kept in abeyance until the Nine Judge Constitution Bench determines the issue concerning the nature of royalty (seigniorage). Pending that decision, there shall be no recovery of GST on royalty. The Court clarified that challenges to the notification and circular may be pursued after the Constitution Bench's outcome and that all contentions are preserved for the petitioner to raise in appropriate proceedings, including appeals, after the decision of the Constitution Bench. [Paras 3]

Writ petition disposed of in terms of paragraph 9 of A.Venkatachalam v. Assistant Commissioner ; petitioner to submit objections; adjudication to proceed but kept in abeyance; no recovery of GST on royalty until Constitution Bench decision; rights preserved.

Final Conclusion: The writ petition is disposed of by directing the petitioner to file representations within four weeks, permitting adjudication on merits subject to a stay of enforcement and recovery until the Nine Judge Constitution Bench decides the nature of royalty, and preserving all contentions and appellate remedies for consideration after that decision.

Reverse charge mechanism - seigniorage - nature of royalty - submission of objections/representations - adjudication on merits - orders to be kept in abeyance pending Constitution Bench decision - stay on recovery - challenge to notification and circular

Reverse charge mechanism - seigniorage - submission of objections/representations - adjudication on merits - orders to be kept in abeyance pending Constitution Bench decision - stay on recovery - Disposal of writ petition by directing submission of objections and regulated adjudication with stay on recovery pending the Nine Judge Constitution Bench's decision on the nature of royalty. - HELD THAT: - The writ petition challenging imposition of GST under the reverse charge mechanism on seigniorage is disposed of by applying the directions recorded in paragraph 9 of A.Venkatachalam v. Assistant Commissioner. The petitioner is directed to file objections/representations within four weeks. On receipt, the assessing authority must proceed to adjudicate the matter on merits after affording a reasonable opportunity of hearing, but any orders of adjudication shall be kept in abeyance until the Nine Judge Constitution Bench determines the issue of the nature of royalty. Meanwhile, there shall be no recovery of GST on the royalty/seigniorage until that decision is rendered. These procedural directions govern the course of further proceedings between the parties. [Paras 3]

Writ petition disposed by directing objection/representation filing and merit adjudication, with adjudication orders kept in abeyance and recovery stayed until the Constitution Bench decides the nature of royalty.

Challenge to notification and circular - adjudication on merits - Treatment of challenges to the notification and circular and preservation of other contentions. - HELD THAT: - The court left open challenges to the impugned notification and circular, permitting the petitioner to act upon those challenges after the outcome of the Nine Judge Constitution Bench matter. All other contentions raised by the petitioner are preserved and may be urged in appropriate proceedings, including on appeal, after the Constitution Bench delivers its decision. [Paras 3]

Challenges to the notification and circular are not finally decided and may be pursued after the Constitution Bench's decision; all other contentions are left open for appropriate proceedings.

Final Conclusion: The writ petition is disposed of in terms of the directions issued in paragraph 9 of A.Venkatachalam v. Assistant Commissioner: objections to be filed, adjudication on merits to follow but kept in abeyance, recovery stayed until the Nine Judge Constitution Bench decides the nature of royalty; challenges to the notification/circular and other contentions are left open for proceedings thereafter.

Modification of interim order - permission to complete assessment proceedings - stay on enforcement of adverse assessment - contentions reserved for final adjudication - impleadment of party

Permission to complete assessment proceedings - modification of interim order - stay on enforcement of adverse assessment - contentions reserved for final adjudication - Application to modify the order of 3.12.2020 to permit the State to complete assessment for the year 2019-20 - HELD THAT: - The Court allowed the interim application to modify the earlier order so as to permit the State Tax Department to proceed with and complete the assessment for the tax period 2019-20. The permission is subject to the important condition that any assessment completed which is adverse to the petitioner shall not be enforced and shall remain stayed pending the final disposal of the writ petition. All substantive and legal contentions of the parties on the assessment proceedings are expressly kept open for determination in the main petition. [Paras 3]

Permission granted to complete the assessment for 2019-20, subject to non-enforcement of any adverse assessment and reservation of all contentions.

Impleadment of party - Direction to amend the petition to implead Karmaveer Shankarrao Kale Sahakari Sakhar Karkhana Ltd. as a respondent - HELD THAT: - The Court directed the petitioners to carry out amendments to implead the specified party as respondent. The amendment is to be effected within two weeks from the date of the order, thereby adding the represented party to the proceedings for determination in the writ petition. [Paras 5]

Petitioners directed to effect the impleadment within two weeks.

Final Conclusion: The interim application is allowed: the State may complete the assessment for 2019-20 but any adverse assessment shall not be enforced pending final orders in the petition; all contentions are reserved. The petition is to be amended to implead the specified respondent within two weeks. No costs.

Event of taxation - supply of goods or services - liability to tax - assessment of liability to tax - payment of tax not subject to realisation - GST Act is a complete code - remedies against contractee

Event of taxation - supply of goods or services - liability to tax - assessment of liability to tax - payment of tax not subject to realisation - GST Act is a complete code - Assessment of tax liability on the petitioner upheld despite non-realisation of payment from the contractee - HELD THAT: - The Division Bench's reasoning, adopted by this Court, explains that under the GST scheme the event of taxation is the supply of goods or services and once that event has occurred liability to tax arises. The court noted that the petitioner accepted there was no illegality in the assessment insofar as determination of tax liability is concerned. The GST Act being a self-contained code means payment of tax by an assessee is not conditional upon realisation of amounts due from a contractee; accordingly the assessing authority was entitled to assess and recover tax from the petitioner even if the contractee had not paid the contract value. The Court declined to interfere with the impugned assessment and appellate orders on this ground, while leaving open the petitioner's civil or administrative remedies against the contractee/government department for recovery of unpaid dues.

Assessment and recovery of tax from the petitioner sustained; non-payment by contractee does not preclude tax liability or its recovery from the assessee.

Final Conclusion: The writ petition is dismissed as withdrawn. The Division Bench's view that supply gives rise to tax liability and that payment is not contingent on realisation under the GST code is endorsed; petitioner may pursue independent remedies against the contractee or submit representations as permissible in law.

Charitable purpose - proviso to Section 2(15) of the Income Tax Act, 1961 - exemption under Section 10(23C)(iv) of the Income Tax Act, 1961 - delay of 247 days in filing this Review Petition

HELD THAT:- There is an inordinate delay of 247 days in filing this Review Petition which has not been satisfactorily explained.

Even otherwise, having carefully gone through the Review Petition, the order under challenge and the papers annexed therewith, we are satisfied that there is no error apparent on the face of the record or any merit in the Review Petition, warranting reconsideration of the order impugned. [2022 (1) TMI 544 - DELHI HIGH COURT] AND [2023 (6) TMI 1044 - SC ORDER]

Accordingly, the Review Petition is dismissed both on the ground of delay as well as on merits.

Mercantile system of accounting - real income principle - hypothetical income cannot be taxed - income determined by law not book entries - exemption from excise duty not a subsidy or income under Section 2(24)(xviii)

Mercantile system of accounting - hypothetical income cannot be taxed - income determined by law not book entries - Deletion of the addition of Rs. 3,29,76,575/- (64% of excise duty entry) as notional income for AY 2016-17 - HELD THAT: - The assessee maintained accounts on the mercantile basis and had recorded notional excise refund entries for quantification before the Supreme Court. Under mercantile accounting, accruals may be reflected in books even though amounts are not realized. The Court reaffirmed the principle that income tax can be levied only on real income and not on hypothetical or notional entries; consequently, book entries alone are not conclusive for taxation. Applying this principle, the Tribunal correctly held that the 64% amount reflected in the books did not represent income that had actually accrued in the relevant year and therefore the addition was rightly deleted. [Paras 8, 9]

Addition of Rs. 3,29,76,575/- as income was deleted.

Exemption from excise duty not a subsidy or income under Section 2(24)(xviii) - real income principle - Whether the 36% exemption from excise duty (treated as Rs. 1,85,49,324/-) constitutes income under the amended definition in Section 2(24)(xviii) - HELD THAT: - The Department relied on the Finance Act, 2015 insertion of clause (xviii) to Section 2(24) to contend that subsidies, grants, duty drawbacks and similar concessions are to be treated as income. The Court examined the nature of the excise concession and, adopting definitions of 'exemption' and 'subsidy', held that the relief (exemption from paying 36% of excise duty) is not a grant of money by government to meet project cost but an exemption from payment. Therefore the concession does not amount to a subsidy or income as envisaged by clause (xviii). On this basis the Tribunal correctly characterised the 36% as a non-taxable capital receipt rather than taxable income. [Paras 10, 11, 12]

The amount corresponding to the 36% excise exemption is not taxable as income and was held to be a non-taxable capital receipt.

Final Conclusion: The High Court dismissed the Revenue's appeal and upheld the Tribunal's orders: the notional 64% excise entry did not constitute taxable income and was deleted, and the 36% excise exemption was held to be a non-taxable capital receipt rather than income under Section 2(24)(xviii) for AY 2016-17.

Accounting Standards - mercantile system of accounting - cash system of accounting - revenue recognition - Proportionate Completion Method - Completed Service Contract Method - matching principle - true and fair view - distortion of profits - method of accounting under Section 145

Revenue recognition - mercantile system of accounting - Proportionate Completion Method - Completed Service Contract Method - Accounting Standards - Taxability of Annual Maintenance Charges (AMC) received in advance by the assessee - HELD THAT: - The Court held that where amounts for services under AMC are received in advance and there is no significant uncertainty as to the consideration, Accounting Standard (AS) 9 requires revenue recognition when performance can be regarded as achieved. AS 9 contemplates either the proportionate completion method or the completed service contract method and specifies that, when amounts are received in advance with no uncertainty, performance is regarded as achieved and revenue is recognised. An assessee following the mercantile (accrual) system cannot, by showing advance receipts as a current liability, postpone recognition where AS 9 shows no uncertainty. The Court observed that the amounts received by the respondent-assessee were non-refundable, there was no uncertainty as to consideration, and indirect tax rules also treated the amount as taxable at receipt; consequently the AMC receipts were revenue in the hands of the assessee in the year of collection and chargeable to tax for the relevant assessment year. [Paras 78, 80, 86, 88, 111]

Amounts collected in advance as AMC are revenue taxable in the year of receipt; the Tribunal's deletion is set aside.

Matching principle - Accounting Standards - distortion of profits - method of accounting under Section 145 - Validity of the Tribunal's reliance on matching principle and Section 41(1) to justify treating advances as liability - HELD THAT: - The Court held that the Appellate Tribunal's emphasis on the matching principle and its reference to Section 41(1) were misplaced. The matching principle is not an absolute rule and, in light of AS 9 and later authorities, fair-value and revenue-recognition principles govern whether accounting income equals taxable income. Section 41(1) applies where an allowance or deduction had been previously made and later a benefit is received; it does not apply to advance receipts which are not previously claimed as a deduction. Further, where the method of accounting produces distortion of profits the Assessing Officer may invoke Section 145(3) and proceed by best judgment for the year; however, here the central question was recognition under AS 9 and not revival of deduction under Section 41(1). [Paras 100, 101, 103, 112]

Tribunal's reliance on matching principle and Section 41(1) rejected; Section 41(1) not applicable to the facts and the Tribunal's approach is set aside.

Final Conclusion: The Tax Case Appeal is allowed: the Appellate Tribunal's order deleting the addition of AMC receipts is set aside and the amounts received in advance are held to be revenue taxable in the year of receipt; the Tribunal's reliance on the matching principle and Section 41(1) is rejected.

Scope of appellate adjudication - jurisdiction to decide only grounds raised in appeal - decision beyond pleadings and suo motu determination - transfer within meaning of section 2(47) read with section 45 - remand for de novo adjudication

Scope of appellate adjudication - jurisdiction to decide only grounds raised in appeal - decision beyond pleadings and suo motu determination - Whether the Tribunal exceeded its jurisdiction by adjudicating an issue not raised by the Revenue (date of transfer as 04.11.2004) instead of deciding the specific grounds pleaded in the appeal. - HELD THAT: - The Court found that the memo of appeal before the Tribunal challenged conversion of tenancy into ownership as per the consent decree dated 28.05.1999 and/or by registration of the confirmation deed on 22.02.2007. The Tribunal, however, did not adjudicate those specific grounds and instead proceeded to decide that the transfer occurred on 04.11.2004 - an issue not raised by the Revenue and not the subject-matter of the appeal. Citing settled authority, the Court held that the Tribunal cannot suo motu go into or decide questions of fact or law which were not challenged before it and which were not the subject of the appeal; adjudication must be confined to the grounds pleaded and argued on appeal. Consequently the Tribunal's departure from the course of adjudication and decision on an unpleaded issue constituted an apparent error of law. The Court answered the admitted substantial question in favour of the assessee and against the Revenue on this limited ground. [Paras 16, 17, 19]

Tribunal acted beyond its jurisdiction by deciding an issue not raised in the appeal; such adjudication is vitiated and cannot stand.

Remand for de novo adjudication - scope of appellate adjudication - Whether the matter should be remitted to the Tribunal for proper adjudication of the grounds actually raised by the Revenue. - HELD THAT: - Given the Tribunal's failure to decide the specific grounds raised in the memo of appeal (i.e., whether conversion occurred by operation of the consent decree dated 28.05.1999 or by registration of the Deed of Confirmation on 22.02.2007), the Court concluded that the proper course is to set aside the impugned order and remand the proceedings to the Tribunal for fresh adjudication. The remand was ordered with liberty to the parties to advance all contentions on facts and law, and the Tribunal was directed to decide the issue concerning Assessment Year 2007-08 expeditiously within four months of receipt of the copy of this order. [Paras 19, 20]

Impugned order set aside and the matter remitted to the Tribunal for de novo adjudication of the grounds actually raised in the appeal, to be decided within four months.

Final Conclusion: The Tribunal erred in deciding an unpleaded issue (date of transfer as 04.11.2004); its order is set aside and the matter is remanded to the Tribunal for fresh adjudication of the grounds actually raised by the Revenue in respect of AY 2007-08, with liberty to the parties to urge all contentions and with a direction to decide the matter within four months.

Revisionary powers under section 264 of the Income-tax Act - Rectification under section 154-no fresh claim in rectification but separate remedies - Entitlement to relief where omission in ITR due to technical error - Commissioner's duty to consider merits in a revision petition - Remand for de novo consideration and reasoned order with personal hearing

Revisionary powers under section 264 of the Income-tax Act - Commissioner's duty to consider merits in a revision petition - Validity of the Commissioner's rejection of the revision application under section 264 and obligation to decide the petition on merits - HELD THAT: - The Court found that the Commissioner was obliged to apply his mind to the merits of the revision petition under section 264 and could grant relief where law permits, including situations where an assessee's claim was omitted due to error. Reliance was placed on earlier High Court decisions interpreting section 264 as conferring wide powers to correct errors and to provide relief to an assessee unable to obtain redress by appeal. The impugned order dismissing the revision without addressing the substantive contention that income had been applied for charitable purposes was therefore not in accordance with that duty. The Court concluded that the revision order required reconsideration de novo, with an opportunity for personal hearing and a reasoned order dealing with the assessee's submissions. [Paras 20, 21, 22]

Impugned order dated 22.03.2019 passed under section 264 is quashed and set aside; matter remitted to respondent for de novo consideration of the revision petition on merits.

Entitlement to relief where omission in ITR due to technical error - Rectification under section 154-no fresh claim in rectification but separate remedies - Effect of a technical omission in the ITR (non-reflection of income applied) and whether that fact must be considered in recomputing income and tax - HELD THAT: - The Court accepted that it was not in dispute that the petitioner had applied income for charitable purposes in the year under consideration and that the auditor's Form No. 10B and the computation recorded the application of income of Rs. 16,09,553/-. The Court observed that although the rectification request under section 154 was rejected by CPC on the ground that fresh claims cannot be made in rectification, the factual position of omission due to a technical glitch in the XML upload is material and must be taken into account while computing taxable income. Consequently, the Commissioner, on reconsideration under section 264, is required to take that undisputed fact into account when recomputing income and tax for the Assessment Year 2014-2015. [Paras 6, 7, 20, 22]

The undisputed fact of omission due to technical glitch and the application of income shown in Form 10B must be considered in the recomputation of income and tax; the matter is remanded for such consideration.

Final Conclusion: The petition is allowed to the extent that the orders passed under section 154 and section 264 are quashed and set aside; the matter is remitted to the Commissioner for de novo consideration of the revision petition on merits, including consideration of the undisputed omission due to technical glitch, and for recomputation of income and tax for Assessment Year 2014-2015 within 12 weeks with opportunity of personal hearing.

Reopening of assessment under section 148 of the Income Tax Act - Reasons to believe / recorded reasons - Application of mind by Assessing Officer - Borrowed satisfaction - Approval of competent authority for reopening - Accommodation entries / paper or dummy company

Reopening of assessment under section 148 of the Income Tax Act - Reasons to believe / recorded reasons - Application of mind by Assessing Officer - Accommodation entries / paper or dummy company - Borrowed satisfaction - Validity of the notice dated 30.03.2021 under section 148 for A.Y. 2015-16 - HELD THAT: - The Court examined the reasons recorded which relied on information that the petitioner had received accommodation entries from M/s. Orange Tradex Pvt. Ltd. during the year relevant to A.Y. 2015-16. The petitioner produced ledger accounts showing that the amounts alleged as accommodation entries were repayments of an opening balance effected by account-payee cheques in January 2015 and that there were no transactions with the said entity in the relevant previous year. The recorded reasons, as quoted in the order, were therefore contrary to the material on record. The Court found that the Assessing Officer had issued the reopening notice based on the information without applying independent mind to the petitioner's contemporaneous ledger evidence and thus had acted on a borrowed satisfaction. The fact that approval was obtained from the competent authority did not cure the absence of an independent reasoned satisfaction by the Assessing Officer when the material on record undermined the information relied upon. On these conclusions the notice for A.Y. 2015-16 was held to be invalid.

Impugned notice dated 30.03.2021 under section 148 quashed for A.Y. 2015-16.

Reopening of assessment under section 148 of the Income Tax Act - Reasons to believe / recorded reasons - Application of mind by Assessing Officer - Accommodation entries / paper or dummy company - Borrowed satisfaction - Validity of the notice dated 30.03.2021 under section 148 for A.Y. 2016-17 - HELD THAT: - For A.Y. 2016-17 the reasons recorded similarly referred to an amount which the petitioner's ledger showed as having been repaid in the earlier financial year and which did not reflect any transaction in the relevant previous year to A.Y. 2016-17. The Court observed that the Assessing Officer had not applied mind to reconcile the information with the ledger evidence and had issued the reopening notice on the basis of information without any material establishing a live nexus for the year under consideration. Although the objections for A.Y. 2016-17 had not been disposed of due to interim proceedings, the absence of material connecting the information to the assessment year demonstrated that the reasons recorded did not sustain assumption of jurisdiction. Consequently the reopening notice for A.Y. 2016-17 was also found to be without jurisdiction.

Impugned notice dated 30.03.2021 under section 148 quashed for A.Y. 2016-17.

Final Conclusion: The petitions are allowed: the notices dated 30.03.2021 issued under section 148 of the Income Tax Act for A.Y. 2015-16 and A.Y. 2016-17 are quashed and set aside as the Assessing Officer acted without applying independent mind to the ledger evidence, relying on information that did not support a reasoned belief of escapement of income.

Cessation of liability attracting income under Section 41(1) read with Section 28(iv) - benefit or enjoyment of advance as determinative for taxable income - colourable device and conduit transactions - attribution of benefit - investment in group company shares as capital transaction not constituting remission of liability

Cessation of liability attracting income under Section 41(1) read with Section 28(iv) - benefit or enjoyment of advance as determinative for taxable income - Whether the advance of Rs. 11,23,64,705/- is exigible to tax by reason of cessation of liability under Section 41(1) read with Section 28(iv). - HELD THAT: - The Tribunal and the CIT(A) found as facts that the assessee received the advance for a project which was not implemented, did not appropriate or enjoy the amount, and continued to show the liability in its books; the Assessing Officer himself recorded that the amounts were reinvested in shares of the group and later sold at a loss. On these concurrent findings, the courts held there was no event in the year under consideration amounting to a remission or cessation of liability nor any appropriation or benefit enjoyed by the assessee that would convert the advance into taxable income. The factual conclusion that the assessee did not derive benefit and the liability stood subsisting therefore precluded invocation of Section 41(1) read with Section 28(iv).

Addition under Section 41(1) read with Section 28(iv) deleted; provisions not attracted on the facts.

Colourable device and conduit transactions - attribution of benefit - investment in group company shares as capital transaction not constituting remission of liability - Whether the allegation of a colourable device and the assessee's reinvestment of the advances in group shares warranted treating the assessee as the beneficiary for taxability. - HELD THAT: - The Tribunal accepted the Assessing Officer's finding that amounts received were invested in group-company shares and that sales of those shares resulted in losses; it nevertheless concluded that, even assuming a colourable device, the assessee did not enjoy or retain the monies but rather acted, at most, as a conduit. The Tribunal further treated the reinvestment as a capital transaction in the assessee's hands and refused to treat such transactions as constituting remission or income of the assessee for the year. On this basis the allegation of colourable device did not lead to an addition in the assessee's hands.

Assessee held to be a conduit and not the beneficiary; no addition could be sustained on the colourable device theory.

Final Conclusion: On concurrent findings that the liability continued to be admitted in the books, that the assessee neither enjoyed nor appropriated the advance and that investments in group shares were capital transactions subsequently resulting in losses, the Tribunal rightly deleted the addition under Section 41(1) read with Section 28(iv). The Revenue's appeal is dismissed.

Development of infrastructure facility - Eligibility for deduction under Section 80-IA(4) - Works contract versus development - Financial and entrepreneurial risk of a developer - Concurrent findings of fact

Development of infrastructure facility - Eligibility for deduction under Section 80-IA(4) - Works contract versus development - Financial and entrepreneurial risk of a developer - Concurrent findings of fact - Respondent-assessee qualifies as a 'developer' and is eligible to claim deduction under Section 80-IA(4) for the contract relating to construction of the New Domestic Arrival Block at Ahmedabad. - HELD THAT: - The High Court recorded that both the CIT(Appeals) and the Tribunal found on concurrent facts that the assessee was entrusted with bringing into existence a new infrastructural facility (the New Domestic Arrival Block at Sardar Vallabhbhai Patel International Airport) and was not engaged merely in repairs, maintenance or a simple works contract. The appellate authorities analysed the scope of work (civil construction together with systems such as AC, electrification, flight information display, CCTV, public address, and related facilities), design and drawings prepared by the assessee, furnishing of bank guarantees, procurement of materials at its cost, indemnity obligations and training of airport staff, and concluded that the assessee undertook requisite financial and entrepreneurial risks associated with development. The Tribunal endorsed the CIT(A)'s conclusion that the threshold requirement of 'development' of a new infrastructure facility was satisfied and that the other conditions of Section 80-IA(4) were fulfilled. The High Court held that these concurrent findings of fact are not open to reappraisal in the present tax appeal and therefore no substantial question of law arises. The Court noted reliance by the lower authorities on precedents applying the principle that contracts involving supply, installation, commissioning and continued obligation to make a facility operable may amount to 'development' for the purposes of Section 80-IA, and that the character of the activity, not its label as a works contract, is determinative. [Paras 3, 4]

Appeal dismissed; concurrent findings that the assessee is a developer eligible for deduction under Section 80-IA(4) are upheld and no substantial question of law arises.

Final Conclusion: The High Court dismissed the Revenue's appeal, holding that the Tribunal and CIT(A) correctly found on facts that the assessee undertook development of a new infrastructure facility and bore financial and entrepreneurial risks entitling it to deduction under Section 80-IA(4); no substantial question of law is made out.

Re-opening of assessment on grounds of escapement of income - Notice under section 148 of the Income Tax Act, 1961 - Failure to disclose fully and truly all material facts - Borrowed satisfaction / change of opinion - Proviso to section 147 - time limit for reopening beyond four years

Failure to disclose fully and truly all material facts - Re-opening of assessment on grounds of escapement of income - Whether there was any failure on the part of the assessee to disclose fully and truly all material facts during original scrutiny assessment for AY 2013-14 - HELD THAT: - The Court found on the material on record that the assessee had responded to the notice under section 142(1) during the course of the regular scrutiny assessment and had furnished detailed particulars regarding the purchase of immovable property and payment of advance. The assessing officer accepted the return and passed the assessment order under section 143(3). The reasons recorded for reopening relied on an alleged immovable property transaction figure which did not tally with the assessee's audited balance-sheet and the documents already on file. On these facts the Court concluded that there was no failure by the assessee to disclose material facts and that the subject transaction had been gone into during the original assessment proceedings. [Paras 8, 9]

There was no failure to disclose fully and truly all material facts in the original assessment for AY 2013-14.

Notice under section 148 of the Income Tax Act, 1961 - Borrowed satisfaction / change of opinion - Proviso to section 147 - time limit for reopening beyond four years - Whether the notice issued under section 148 for AY 2013-14 was valid where it was issued beyond four years and based on the assessing officer's reasons - HELD THAT: - The reasons recorded for issuance of the notice contained an incorrect transaction figure and the assessing officer subsequently, in communications and the show-cause draft, accepted a different correct figure that was already reflected in the assessee's audited accounts. The Court observed that the impugned notice was issued on the basis of borrowed satisfaction and lacked a live nexus with the facts on record, particularly when the transaction was already examined in the scrutiny assessment. In view of the absence of any failure to disclose and the fact that the notice was issued beyond the four-year period stipulated by the proviso to section 147, the Court held that the notice was without jurisdiction. The Court therefore quashed the notice and set it aside. [Paras 10, 11]

The notice under section 148 issued beyond four years was without jurisdiction as it was predicated on borrowed satisfaction/change of opinion and there was no failure to disclose; the notice is quashed.

Final Conclusion: The petition is allowed to the extent that the notice dated 23.03.2020 issued under section 148 for Assessment Year 2013-14 is quashed and set aside on the ground that there was no failure to disclose material facts and the notice, issued beyond four years, was based on borrowed satisfaction; rule made absolute accordingly.

Credit for tax deducted at source where employer deducted but failed to deposit - protection of assessee from recovery where tax was deducted at source - applicability of Section 205 in relation to TDS deductions - invalidity of adjustment of subsequent refunds against demands on account of employer's default - rectification and implementation of appellate order giving credit of TDS

Credit for tax deducted at source where employer deducted but failed to deposit - protection of assessee from recovery where tax was deducted at source - applicability of Section 205 in relation to TDS deductions - Entitlement of the assessee to credit of TDS deducted by the employer notwithstanding the employer's failure to deposit the deducted tax, and consequent protection against recovery proceedings from the assessee. - HELD THAT: - The Court accepted the ratio in earlier decisions dealing with identical facts and held that where tax has been deducted at source from the assessee's income, the assessee is entitled to the benefit of that deduction and cannot be made liable to suffer recovery measures in respect of the same amount merely because the deductor failed to deposit the sum with the Government. The Court observed that Section 205 operates to protect the assessee so far as tax has been deducted, and while credit under Section 199 may await proof of payment to the Government, that does not justify recovering the same tax again from the assessee. The proper remedy against a deductor who has failed to deposit the tax is recovery proceedings against that deductor (who may be treated as an assessee in default), not coercive measures against the deductee who has parted with the amount. The Court applied these principles to the facts before it and, relying on precedent, directed that credit of tax already deducted by the employer be given to the petitioner.

The petitioner is entitled to credit of the tax deducted at source by the employer and cannot be subjected to recovery for the same; respondents directed to give credit of the TDS deducted by the employer.

Invalidity of adjustment of subsequent refunds against demands on account of employer's default - rectification and implementation of appellate order giving credit of TDS - Validity of the intimation under section 143(1) and of the adjustment of refunds of subsequent assessment years against the demands for AY 2009-10 and AY 2011-12, and requirement to give effect to the CIT(A)'s direction for rectification. - HELD THAT: - Applying the legal principle that an assessee who has had tax deducted at source should not be doubly saddled where the deductor failed to deposit the sum, the Court quashed the impugned intimations under section 143(1) for the assessment years in question. The Court noted that the CIT(A) had earlier directed rectification to verify and give credit of TDS and that no effective compliance had been made; consequently the Court directed the respondents to pass consequential orders reversing adjustments already made of later years' refunds against the earlier demands and to give credit of the tax already deducted by the employer as directed by the appellate order. The Court left open the departmental remedy against the deductor for recovery from the deductor himself.

Impugned intimations under section 143(1) for the specified assessment years quashed and set aside; respondents directed to reverse refund adjustments made against those demands, give credit of the TDS already deducted by the employer, and pass consequential orders in accordance with the appellate direction.

Final Conclusion: Petition allowed; intimations under section 143(1) for AY 2009-10 and AY 2011-12 quashed. Respondents directed to give credit to the petitioner for TDS deducted by the employer, to reverse adjustments of subsequent refunds made against the earlier demands and to pass consequential orders; departmental remedy against the deductor remains open.

Bar against direct demand on assessee - Credit for Tax Deducted at Source - Non-enforcement of demand for TDS not deposited by deductor - Binding nature of CBDT instructions issued under section 119 - Obligation to rectify taxpayer-facing software to implement statutory provisions

Bar against direct demand on assessee - Credit for Tax Deducted at Source - Non-enforcement of demand for TDS not deposited by deductor - Validity of intimation under section 143(1) creating demand against petitioners where employer deducted TDS but failed to deposit it with the Government - HELD THAT: - The Court found as an undisputed fact that the petitioners' employer deducted tax at source from their salary for the relevant years but did not deposit the deducted tax with the Government. Section 205 of the Income-tax Act bars calling upon the assessee to pay tax to the extent tax has been deducted at source. The Court noted the CBDT Instruction No. 275 dated 01.06.2015 and the Office Memorandum dated 11.03.2016 reiterating that demands created on account of credit mismatch arising from non-deposit of TDS by the deductor should not be enforced coercively against the deductee. Applying these provisions and instructions, the Court concluded that the respondent could not properly raise or seek to enforce a demand against the petitioners by issuing the impugned intimation under section 143(1). [Paras 8, 10]

Impugned intimations under section 143(1) and consequent demands raised against the petitioners are quashed and set aside.

Binding nature of CBDT instructions issued under section 119 - Obligation to rectify taxpayer-facing software to implement statutory provisions - Duty of the Department to comply with CBDT instructions and to rectify computer/software processes so that demands are not raised against deductees on account of deductor's failure to deposit TDS - HELD THAT: - The Court held that the CBDT's Instruction and Office Memorandum are binding on departmental officers and must be implemented, including by the computer centre responsible for automated processing. The technology in use cannot cause inconvenience to taxpayers by producing demands contrary to statutory provisions and binding directions; where software-created mismatches result in improper demands, the department must correct the software and associated processes. Consequently, the respondents were directed to ensure strict compliance with section 205 and the CBDT instructions and to pass necessary orders to rectify the software which creates mismatch between claimed TDS and deposits by the deductor. The Court further directed the respondents to give effect to the order and report compliance within four weeks. [Paras 9, 10, 11]

Respondents must comply with section 205 and the CBDT instructions, rectify the software/processes to prevent future wrongful demands on deductees, pass necessary orders giving effect to this direction and report compliance to the Court within four weeks.

Final Conclusion: Petitions allowed: intimations under section 143(1) and consequential demands raised against the petitioners for A.Y. 2020-21 and A.Y. 2021-22 are quashed; respondents directed to implement section 205 and CBDT instructions, rectify automated systems to prevent such demands, and report compliance within four weeks.

Definition of "relative" under explanation (e) to proviso to Section 56(2)(vii) of the Income Tax Act - taxability of gifts received from uncle by nephew - validity of notice under Section 148 and proceedings under Section 148A(d) of the Income Tax Act - escape of income by acquisition of immovable property through gift

Definition of "relative" under explanation (e) to proviso to Section 56(2)(vii) of the Income Tax Act - taxability of gifts received from uncle by nephew - validity of notice under Section 148 and proceedings under Section 148A(d) of the Income Tax Act - Whether the gift from the donor who is brother of the assessee's father falls within the definition of "relative" under explanation (e) to proviso to Section 56(2)(vii) and whether, on that basis, the notice issued under Section 148/148A is valid. - HELD THAT: - The Court examined the language of explanation (e) to the proviso to Section 56(2)(vii) and noted that the expression "brother or sister of either of the parents of the individual" plainly covers a donor who is the brother of the assessee's father. The absence of the word "nephew" in the definition is immaterial; the statutory list expressly includes the donor (uncle) by reference to his relationship to the parents of the individual. Since the donor falls within the statutory definition of "relative", receipt of the immovable property by way of gift is not taxable under Section 56(2)(vii) on that ground. The Assessing Officer's conclusion that the gift was taxable and that income had escaped assessment was therefore unsustainable, rendering the impugned proceedings under Section 148/148A unwarranted. Applying this interpretive conclusion to the facts before it, the Court set aside the impugned order and the notice issued pursuant thereto. [Paras 8, 9]

Donor being brother of the assessee's father is a "relative" under explanation (e) to proviso to Section 56(2)(vii); consequently the gift is not taxable on that basis and the notice and order under Sections 148/148A are set aside.

Final Conclusion: The impugned order dated 31.08.2024 and the notice under Section 148 are quashed on the ground that the donor is a "relative" within explanation (e) to proviso to Section 56(2)(vii), and the petition is disposed of accordingly.

Inclusion of disputed interest within "tax arrears" under the Direct Tax Vivad Se Vishwas Act, 2020 - Definition of "disputed interest" and entitlement to file declaration under Sections 3 and 4 of the Vivad Se Vishwas Act - Writ petition pending on the "specified date" to be treated as an "appeal" for purposes of the Vivad Se Vishwas Act - Purposive construction of a beneficial/statutory disputeresolution scheme - Nonbinding character of CBDT FAQ/clarification where it conflicts with statutory scheme

Inclusion of disputed interest within "tax arrears" under the Direct Tax Vivad Se Vishwas Act, 2020 - Definition of "disputed interest" - The petitioner's disputed interest (including interest under Sections 234A, 234B and 234C) falls within the expression "tax arrears" under Section 2(1)(o) of the Direct Tax Vivad Se Vishwas Act, 2020 and therefore the petitioner was eligible to file a declaration under the Act. - HELD THAT: - The Court examined the statutory definitions in Sections 2(1)(o), 2(1)(h) and 2(1)(j) of the Vivad Se Vishwas Act and concluded that "tax arrears" expressly includes "disputed interest" as defined. The definition of "disputed interest" contemplates interest determined under the Incometax Act in respect of which an appeal has been filed by the appellant. Reading these provisions purposively and in harmony with the Act's object of resolving disputed tax, interest and penalties, the Court held that disputed interest (including interest charged under Sections 234A, 234B and 234C) is capable of being settled under the Vivad Se Vishwas scheme. The Court relied on the reasoning of the Bombay and Delhi High Courts which interpret the Act expansively to include disputes relating solely to interest, and found that the scheme's intent and Statement of Objects and Reasons favour inclusion rather than exclusion. [Paras 16, 17, 18, 24, 25]

The petitioner's disputed interest for the assessment years in question is covered by the definition of "tax arrears" and the petitioner was entitled to file a declaration under Sections 3 and 4 of the Vivad Se Vishwas Act, 2020.

Writ petition pending on the "specified date" to be treated as an "appeal" for purposes of the Vivad Se Vishwas Act - Definition of "appellant" and "appeal" - W.P.No.12500 of 2010, which challenged the denial of waiver and was pending on the specified date (31.01.2020), is to be regarded as an "appeal" for the purposes of the Vivad Se Vishwas Act and thus renders the petitioner an "appellant" eligible under the Act. - HELD THAT: - Although the Act does not define "appeal", the Court referred to authorities on the nature of an appeal and observed that a writ petition that challenges a departmental order and exercises the revisional jurisdiction of the writ court may partake the character of an appeal. The statutory definition of "appellant" in Section 2(1)(a)(i) of the Act expressly includes a person in whose case a writ petition has been filed and is pending on the specified date. Given that W.P.No.12500 of 2010 challenged the Chief Commissioner's order dated 16.03.2010 and was pending on 31.01.2020, the petitioner fell within the class of persons entitled to opt for settlement under the scheme. [Paras 22, 26, 29, 30, 31]

W.P.No.12500 of 2010 was in the nature of an appeal and was pending on the specified date; consequently the petitioner qualified as an "appellant" and was eligible to file a declaration under the Vivad Se Vishwas Act.

Nonbinding character of CBDT FAQ/clarification - Limits on departmental FAQs when inconsistent with statute - The CBDT FAQ/Circular answer (FAQ13) stating that pending departmental waiver applications are not covered by the Vivad Se Vishwas Act is not tenable in law and is not binding on the Court where it conflicts with the statutory scheme. - HELD THAT: - The Court distinguished between a pending departmental waiver application and a proceeding arising from a departmental decision which gives rise to a "dispute". FAQ13 addresses pending waiver applications before the Department, whereas the petitioner had a decided order (denial of waiver) which was the subjectmatter of a writ petition pending on the specified date. The Court held that such circular clarifications cannot override the statutory definitions and intent of the Vivad Se Vishwas Act and observed that reliance on FAQ13 to reject the petitioner's declaration was misconceived. [Paras 9, 16, 32]

The respondents could not validly rely on FAQ13/CBDT clarification to reject the petitioner's declaration; such clarifications are not binding where inconsistent with the statutory scheme and facts.

Final Conclusion: Writ petitions allowed. The respondents are directed to process the petitioner's declaration filed on 29.01.2021 under Sections 3 and 5 of the Direct Tax Vivad Se Vishwas Act, 2020 in accordance with law and as expeditiously as possible, preferably within six months from receipt of a copy of this order; file to be closed thereafter.

Rectification under Section 154 - Mistake apparent from record - Computation of book profit for MAT under Section 115JB - Deduction of revenue expenditure from book profits - No introduction of new facts - Assessing Officer's power to amend suo-moto

Rectification under Section 154 - Mistake apparent from record - Computation of book profit for MAT under Section 115JB - Deduction of revenue expenditure from book profits - No introduction of new facts - Whether the Assessing Officer could, in exercise of powers under Section 154, rectify the assessment to allow deduction of the whole revenue expenditure shown in the books for computation of book profits under Section 115JB where the original return reflected only part write off due to misinterpretation of law - HELD THAT: - The Court accepted the ITAT's factual and legal conclusion that the expenditure in question was revenue expenditure clearly disclosed in the assessee's balance sheet and profit & loss account and that only a part had been written off in the P&L while the remaining amount was shown in the balance sheet. The error arose from a misinterpretation in the original return and did not involve introduction of new facts or alteration of the books of account. Section 154 empowers the income tax authority to amend an order to rectify a mistake apparent from the record and permits amendment even where a matter has been considered on appeal, so long as the amendment relates to a matter other than that which was decided on appeal. The Assessing Officer therefore had jurisdiction to correct the earlier computation and to determine book profit in accordance with the true presentation of accounts, allowing deduction of the whole revenue expenditure for computation of MAT under Section 115JB. The Court found no substantial question of law arising for its consideration and endorsed the ITAT's reasoning in paras 30-31 that the facts as reflected in the books entitled the assessee to the deduction for the purpose of computing book profits. [Paras 10, 11, 30, 31]

The rectification under Section 154 to allow deduction of the whole revenue expenditure for computing book profit under Section 115JB was permissible as a correction of a mistake apparent from the record; no new facts were introduced and the ITAT order directing recomputation is upheld.

Final Conclusion: The appeals are dismissed; the High Court finds no substantial question of law and upholds the ITAT's direction to compute book profits after allowing deduction of the whole revenue expenditure by way of rectification under Section 154.

Exemption under charitable trusts and retrospective effect of registration for claiming benefit under sections 11/12 - scope of enhancement powers of the first appellate authority under section 251(1)(a) - prohibition on introduction of a new source of income by the Commissioner (Appeals) - inapplicability of section 13(3) to manager/administrator or their spouses for trusts/institutions - limits on appellate 'advice' to Assessing Officer and expunction of observations beyond the assessment year

Exemption under charitable trusts and retrospective effect of registration for claiming benefit under sections 11/12 - deemed registration on subsequent grant of registration - Assessee entitled to exemption under sections 11/12 for A.Y. 2015-16 by virtue of registration subsequently granted under section 12AA - HELD THAT: - The Tribunal accepted the assessee's submission that the trust was formed on 02.09.2014 and registration under section 12AA was granted subsequently w.e.f. AY 2016-17. Applying the view of coordinate benches and the CBDT Circular No.01/2015, the Tribunal held that where registration is granted during the pendency of appeal, its retrospective effect entitles the assessee to claim exemption for earlier year(s). The Assessing Officer was therefore not justified in denying exemption for the year under consideration and the addition of the surplus was reversed. [Paras 10, 12]

Addition of Rs. 10,74,513/- on account of denial of exemption under sections 11/12 is reversed and deleted.

Inapplicability of section 13(3) to manager/administrator or their spouses for trusts/institutions - Observations in the first appellate order treating advances as falling within mischief of section 13(3) are erroneous and are expunged - HELD THAT: - The Tribunal examined the CIT(A)'s observations that advances to certain persons were covered by section 13(3). Relying on authorities distinguishing 'trusts' and 'institutions' and the role of a manager/administrator (and their spouses), the Tribunal found that section 13(3)(cc) would not extend to the manager (or her spouse) of the Trust. Consequently the adverse observations in the CIT(A) order on applicability of section 13 were struck down and expunged. [Paras 11, 12]

Observations in the CIT(A) order regarding applicability of section 13 to the advances are expunged and do not survive.

Scope of enhancement powers of the first appellate authority under section 251(1)(a) - prohibition on introduction of a new source of income by the Commissioner (Appeals) - Enhancement by CIT(A) of receipts credited to Building Fund and Amalgamation Fund is not permissible and is set aside - HELD THAT: - The Tribunal reviewed the jurisprudence limiting the CIT(A)'s enhancement powers and reiterated that the first appellate authority cannot introduce a new source of income not considered by the AO. On the facts, the CIT(A) enhanced income by treating amounts credited to Building Fund and Amalgamation Fund as taxable revenue receipts. The Tribunal found that the CIT(A) ignored the assessee's demonstration that more than 85% of receipts were applied to charitable objects and therefore the conditions for exemption under section 11 were satisfied. Since the enhancement effectively introduced a new source and overlooked the corresponding application of income, the exercise of enhancement was beyond permissible limits and was quashed. [Paras 13, 14, 15]

Enhancement of income aggregating to amounts credited to Building Fund and Amalgamation Fund is set aside and quashed.

Limits on appellate 'advice' to Assessing Officer and expunction of observations beyond the assessment year - Advice in the first appellate order to the AO to reconsider other assessment years (A.Y. 2013-14 and A.Y. 2014-15) is beyond statutory power and is expunged - HELD THAT: - The CIT(A)'s para offering 'advice' to the AO to revisit adjustments for other assessment years was examined. The Tribunal held that those figures relate to different years and the CIT(A)'s statement was neither a finding nor a statutory direction under section 250. Such advice has no statutory effect, exceeds the appellate remit under section 250(1)(a), and amounts to overreach in respect of other assessment years. Accordingly, the observations advising action for A.Y.2013-14 and A.Y.2014-15 were struck down. [Paras 28, 29, 30, 31]

The advice in para 23 of the CIT(A) order concerning other assessment years is set aside and expunged.

Final Conclusion: The Tribunal allowed the assessee's appeals for A.Y. 2015-16: deletion of addition for denial of exemption under sections 11/12, expunction of erroneous observations under section 13, quashing of CIT(A)'s enhancement with respect to Building and Amalgamation Funds, and removal of the appellate 'advice' relating to other assessment years.

Preventive detention - COFEPOSA detention order - subjective satisfaction - ordinary law versus preventive detention - live link between incident and detention - supply of relied documents to detenu - single incident sufficiency for detention - vagueness of grounds of detention - procedural safeguards under Article 22

Ordinary law versus preventive detention - preventive detention - subjective satisfaction - Validity of the detention order under the COFEPOSA Act despite the detenu having been granted bail under ordinary criminal process - HELD THAT: - The Court held that preventive detention may be resorted to even where prosecution under ordinary law is pending and bail has been granted, provided the detaining authority records subjective satisfaction that detention is necessary to prevent future prejudicial activity. Applying settled precedents, the Court found the Detaining Authority had considered the bail and proximate chronology and was satisfied that release on bail created a real possibility of the detenu re-activating a well-organized smuggling network. On the material placed before it, the Detaining Authority's subjective satisfaction was permissible and the detention order could not be quashed on the ground that ordinary law remedies (including bail conditions) were available. [Paras 40, 42, 43, 50]

Detention under COFEPOSA Act was valid notwithstanding the bail order; petition dismissed on this ground.

Supply of relied documents to detenu - procedural safeguards under Article 22 - Whether non-supply to the Detaining Authority of the Sponsoring Authority's application for cancellation of bail or other documents vitiated the detention order - HELD THAT: - The Court found that an updated proposal placing the bail order and the intention to seek cancellation of bail was sent to the Detaining Authority prior to passing the detention order, whereas the actual cancellation application was filed after the detention order was passed. Relying on precedent, the Court held that non-supply of documents does not automatically vitiate a detention order unless the detaining authority relied upon those documents in forming its satisfaction. Here, the cancellation application was not before the Detaining Authority when the order was passed and no suppression of vital material was established. [Paras 43, 45, 46]

Failure to place the later-filed cancellation application before the Detaining Authority did not invalidate the detention order.

Live link between incident and detention - single incident sufficiency for detention - Whether there was a live link and reasonable temporal nexus between the incident(s) of smuggling and the passing of the detention order - HELD THAT: - The Court recorded factual findings of substantial recoveries from multiple locations, contemporaneous statements implicating the detenu, and a close sequence of events (raid in March, arrest in March, detention proposal in April, bail in mid-April, detention on 9 May). The Detaining Authority's proposal was moved proximate to the bail application and order. The Court reiterated that detention can validly be based on a single incident if surrounding circumstances support a reasonable inference of future illegal activity. On these facts the Court held that a live-link and timely nexus existed between the incident and the detention order. [Paras 39, 43, 44]

Nexus and live-link between the incident(s) and detention established; timing of detention not vitiated by delay.

Vagueness of grounds of detention - COFEPOSA detention order - Whether the grounds of detention were impermissibly vague for failing to specify which sub-clause of Section 3(1) of COFEPOSA was invoked - HELD THAT: - The Court examined the grounds which recited facts and concluded the detenu's role in smuggling and disposal of foreign origin gold. The detention order referred to the activities covered by sub-clauses (i)-(iv) of Section 3(1) and set out factual material bringing the case within those limbs; the order did not simply reproduce statutory text with 'or' between grounds as was disapproved in earlier authority. On this basis the Court found the grounds sufficiently specific and not vitiated by vagueness. [Paras 47]

Grounds of detention were not vague; specification was adequate and did not invalidate the order.

Procedural safeguards under Article 22 - subjective satisfaction - Whether procedural requirements and safeguards for preventive detention were complied with and whether the Detaining Authority had recorded adequate satisfaction - HELD THAT: - Having assessed the record, the Court concluded that the Detaining Authority applied its mind to the material, noted antecedents, contemporaneous recoveries, statements, and conduct (including alleged destruction of evidence), and articulated reasons for preventive detention. The Court observed that statutory and constitutional safeguards were followed and the Detaining Authority's subjective satisfaction was reflected in the grounds. Consequently, no procedural infirmity was made out. [Paras 41, 42, 50]

Statutory and constitutional procedural safeguards were complied with; the subjective satisfaction of the Detaining Authority was adequately recorded.

Final Conclusion: The Detaining Authority's order of preventive detention dated 09.05.2024 under the COFEPOSA Act was held to be valid on the record before the Court; challenges based on sufficiency of ordinary law, non-supply of documents, absence of live nexus, vagueness of grounds and procedural infirmity were rejected and the petition was dismissed.

Conversion of shipping bills between export incentive schemes - Advance Authorisation Scheme - fulfillment of export obligation - duty drawback refund and interest to rectify misclassification - reliance on earlier customs examination for scheme eligibility - judicial direction for administrative remand and verification

Conversion of shipping bills between export incentive schemes - duty drawback refund and interest to rectify misclassification - reliance on earlier customs examination for scheme eligibility - Whether the Customs Authorities were justified in refusing the appellant's request to treat six shipping bills (filed under the Drawback Scheme) as shipping bills under the Advance Authorisation Scheme and in declining conversion under Ext.P6 Circular No.36/2010-Customs dated 23.09.2010 - HELD THAT: - The Court found that the essential facts - import of inputs duty free under Advance Authorisation and export of finished products under six shipping bills - were undisputed and supported by customs records. While different schemes envisage different levels of export examination, the Court held that the earlier examination that resulted in sanction of drawback can be relied upon for Advance Authorisation purposes unless it is shown that the earlier examination omitted aspects crucial to the Advance Authorisation Scheme. The respondents failed to identify any such missing aspects. Given the appellant's undertaking to refund the drawback amount with up-to-date interest and produce proof of payment, the Court directed that Customs must accept the refund, issue a receipt, and not treat the conversion request as barred by mere delay or by the Circular where the conditions for verification and remedy are satisfied. [Paras 9, 10, 11]

Customs shall accept the appellant's refund of drawback with interest, issue a receipt, and facilitate treatment of the six shipping bills as under the Advance Authorisation Scheme for further administrative action.

Advance Authorisation Scheme - fulfillment of export obligation - judicial direction for administrative remand and verification - Whether the DGFT must consider the six shipping bills (once Customs receipt for refund is produced) for determining discharge of export obligation under the Advance Authorisation Scheme and, if satisfied, issue an Export Obligation Discharge Certificate - HELD THAT: - The Court directed that upon receipt of the customs-issued receipt evidencing refund of drawback with interest, the DGFT shall treat the six shipping bills as having been filed under the Advance Authorisation Scheme and examine whether the exports satisfy the Advance Authorisation requirements. The Court specifically permitted the DGFT to consider the Chartered Engineer's certificate produced by the appellant (Ext.P5) as part of the verification. The Court imposed an outer time-limit for DGFT consideration to prevent undue delay, while leaving the determination on merits to the administrative authority in accordance with the record and the certificate produced. [Paras 10, 11]

DGFT shall, on production of the customs receipt, consider the six shipping bills as under the Advance Authorisation Scheme, verify compliance (including Ext.P5), and if satisfied, issue the Export Obligation Discharge Certificate within the time directed.

Final Conclusion: The Writ Appeal is allowed in part: Customs is directed to communicate the drawback-plus-interest payable within one week, accept the appellant's payment and issue a receipt within a further week; on production of that receipt the DGFT shall treat the six shipping bills as under the Advance Authorisation Scheme, verify compliance (including the Chartered Engineer's certificate) and, if satisfied, issue the Export Obligation Discharge Certificate within the stipulated time-limits.

Principles of natural justice - coercive recovery during pendency of appeal - deemed stay on appeal after acceptance on Tribunal file upon pre-deposit - ex parte disposal for non prosecution - remand for fresh adjudication after opportunity of hearing

Principles of natural justice - ex parte disposal for non prosecution - Validity of the First Appellate Authority's order allowing the department's appeal and directing recovery of the refund without affording an effective opportunity of personal hearing to the appellant. - HELD THAT: - The Tribunal held that the impugned appellate order was cryptic and did not reflect application of mind to the merits. Although the First Appellate Authority could, in appropriate cases, decide matters ex parte for non prosecution, it should not have closed the appeal at the first instance on the ground that the intimation letter was returned with the remark 'left and moved' without making a serious attempt to reach the appellant or his representative. Denial of a personal hearing in such circumstances amounted to a breach of the principles of natural justice. The appellate order therefore could not stand and merited being set aside. [Paras 6]

Impugned appellate order set aside for failure to accord effective hearing in breach of natural justice.

Coercive recovery during pendency of appeal - deemed stay on appeal after acceptance on Tribunal file upon pre-deposit - Permissibility of initiation of recovery proceedings by the department before expiry of the period for filing an appeal or while the appellate remedy remained capable of being invoked. - HELD THAT: - The Tribunal observed that Section 129A(3) permits filing of an appeal before the Tribunal within three months of communication of the order and noted administrative guidance restraining field officers from taking coercive action while appellate remedies or stay applications are pending. The Tribunal further noted judicial authority recognising that recovery proceedings should not be initiated where a stay application remains pending for reasons beyond the control of the assessee, and that in the revised pre deposit regime a stay is effectively operative once the appeal is accepted on the Tribunal file after depositing the prescribed amount. Coercive action taken before crystallisation of appellate rights adversely affected the appellant's chance of obtaining relief and was therefore impermissible in the circumstances. [Paras 5]

Recovery initiated prior to completion of the appeal period and crystallisation of appellate rights was improper and prejudicial to the appellant.

Remand for fresh adjudication after opportunity of hearing - Consequent direction for further proceedings before the First Appellate Authority following setting aside of the impugned order. - HELD THAT: - Because the impugned order was set aside for lack of adjudication on merits and failure to afford a hearing, the Tribunal remitted the matter to the First Appellate Authority for fresh disposal. The remand requires the Authority to decide the appeal afresh after giving the appellant an opportunity to be heard and permits the parties to advance arguments on merits. All contentions were left open for fresh consideration and the appellant was directed to furnish a correct address and cooperate in the hearing. [Paras 8]

Matter remanded to the First Appellate Authority for fresh adjudication after affording the appellant an opportunity of hearing; all contentions left open.

Final Conclusion: The impugned appellate order directing recovery of the refund was set aside for want of an effective hearing and because coercive recovery was initiated prematurely; the demand based on that order is rendered infructuous and the matter is remitted to the First Appellate Authority for fresh decision after giving the appellant an opportunity to be heard.

Rejection of transaction value under Valuation Rule 12 - re-determination of value under Valuation Rule 5 - assessment on goods actually imported - confiscation under section 111(m) of the Customs Act, 1962 - redemption fine under section 125 of the Customs Act, 1962 - penalty under section 112 of the Customs Act, 1962 - penalty for use of false or incorrect material under section 114AA of the Customs Act, 1962 - admissibility and reliance on CRCL test report

Rejection of transaction value under Valuation Rule 12 - re-determination of value under Valuation Rule 5 - assessment on goods actually imported - admissibility and reliance on CRCL test report - Validity of rejecting the declared transaction value and re-determining value based on similar imports after laboratory confirmation that goods imported differed from those declared. - HELD THAT: - The goods declared in the invoice and Bill of Entry were for 0.30 mm thickness but CRCL testing confirmed actual imported thickness of 0.38 mm to 0.45 mm, a fact not disputed by the appellant. Where documents do not correspond with the goods actually imported, duties must be assessed on the goods actually imported and the invoice produced does not correspond to those goods. The discrepancy furnished the proper officer with a reason to doubt the truth and accuracy of the transaction value under Rule 12; the owner admitted the mistake in his recorded statement. As there were no imports of identical goods, Rule 4 was inapplicable and the adjudicating authority correctly proceeded to determine value under Rule 5 based on contemporaneous similar imports. The Commissioner (Appeals) correctly upheld rejection under Rule 12 and re-determination under Rule 5. [Paras 11, 14, 15, 16, 17]

The rejection of the declared transaction value under Valuation Rule 12 and re-determination of value under Valuation Rule 5 are upheld.

Confiscation under section 111(m) of the Customs Act, 1962 - redemption fine under section 125 of the Customs Act, 1962 - penalty under section 112 of the Customs Act, 1962 - penalty for use of false or incorrect material under section 114AA of the Customs Act, 1962 - Lawful confiscation of goods, imposition of redemption fine, and imposition of penalties for mis-declaration and intentional use of false documents. - HELD THAT: - Section 111(m) covers goods that do not correspond with the entry made; the imported goods did not correspond in thickness with the Bill of Entry and thus were liable to confiscation. The adjudicating authority allowed redemption on payment of a fine under section 125, which the Tribunal found fair in view of the re-determined value. Penalty under section 112 is permissible for acts rendering goods liable to confiscation and was properly imposed for mis-declaration. Section 114AA penalises knowing or intentional use of false material; the appellant's conduct-filing the Bill of Entry with invoice particulars not matching the actual goods, seeking provisional release rather than re-exporting the allegedly wrongly supplied goods, and the owner's admission-permitted an inference of intent. On these facts the penalties under sections 112 and 114AA and the redemption fine under section 125 were correctly imposed and sustained on appeal. [Paras 18, 19, 20, 21, 22]

The confiscation under section 111(m), the redemption fine under section 125, and penalties under sections 112 and 114AA are upheld.

Final Conclusion: The Tribunal dismissed the appeal, upholding the Commissioner (Appeals) and the adjudicating authority: the declared transaction value was rightly rejected and re-determined; the goods were correctly held liable to confiscation with redemption fine; and penalties under sections 112 and 114AA were properly imposed.

Refund of countervailing duty - Advance Authorization Scheme - retrospective applicability of exemption notification - administrative rectification by subsequent notification - precedential effect of High Court decisions on retrospective exemption - interest on refunded duty

Refund of countervailing duty - Advance Authorization Scheme - retrospective applicability of exemption notification - precedential effect of High Court decisions on retrospective exemption - interest on refunded duty - Entitlement to refund of CVD paid on imports made under Advance Authorization Scheme in view of Notification No. 79/2017-Cus dated 13.10.2017 and applicable High Court precedents. - HELD THAT: - The appellant imported stainless steel coils under the Advance Authorization Scheme and paid CVD under protest. Government initially imposed CVD by Notification No. 1/2017-Cus dated 07.09.2017 and subsequently issued Notification No. 79/2017-Cus dated 13.10.2017 exempting CVD on goods imported under the Advance Authorization Scheme; DGFT issued a corresponding notification. Several High Courts have held that Notification No. 79/2017 has retrospective application in circumstances where importers had fulfilled the Advance Authorization conditions and discharged export obligations. The Tribunal, after considering the judgments relied upon and the material on record, found that the appellant had imported under the Advance Authorization Scheme and discharged export obligations, and that the law as laid down by the cited High Court decisions entitled the appellant to the benefit of the retrospective exemption. Consequently the refund claim for CVD paid was allowed, with interest as prescribed by law. [Paras 9, 10]

The appellant is entitled to refund of the CVD paid under protest along with interest; appeal allowed.

Final Conclusion: The appeal is allowed: the appellant is entitled to refund of the CVD paid on imports under the Advance Authorization Scheme, with interest, in view of Notification No. 79/2017 and the applicable High Court decisions.

Duty chargeability for improperly accounted imported goods under Section 65(2)(b) and Section 72(1)(d) of the Customs Act - treatment of excess wastage over SION (Standard Input Output Norms) - effect of ad hoc norms/approvals by Development Commissioner and Board of Approval on computation of consumption - presumption of diversion from non compliance with SION norms - concurrence of Development Commissioner before concluding demand - option to destroy waste under Foreign Trade Policy/EXIM Policy (Para 6.8(f))

Duty chargeability for improperly accounted imported goods under Section 65(2)(b) and Section 72(1)(d) of the Customs Act - treatment of excess wastage over SION (Standard Input Output Norms) - effect of ad hoc norms/approvals by Development Commissioner and Board of Approval on computation of consumption - presumption of diversion from non compliance with SION norms - Whether duty could be confirmed under the impugned provisions for raw material consumption in excess of SION norms when excess waste was available in the EOU and ad hoc/Board approvals had been obtained - HELD THAT: - The Tribunal found as an admitted fact that the appellant imported raw material for manufacture and fulfilled its export obligations. The Development Commissioner conveyed adhoc approval of higher wastage (20.34%) for six months and the Board of Approval directed that the adhoc norms continue until regular norms were fixed. On these facts, and having regard to precedent relied upon, the Tribunal held that mere excess generation of waste beyond SION norms, without more, does not permit the adjudicating authority to conclude that imported goods were not used for manufacture for export. Where the unit can demonstrate use of material for manufacture and the excess waste remains within the EOU, non satisfaction of SION norms does not give rise to a presumption of diversion or improper accounting sufficient to attract demand under the cited provisions. The Tribunal accordingly rejected the adjudicating authority's characterisation of the shortfall as not duly accounted goods and found that demand under Section 65(2)(b) and Section 72(1)(d) could not be sustained on that basis. [Paras 16]

Demand of customs duty and interest confirmed under the impugned orders set aside; appeals allowed.

Final Conclusion: Appeals allowed. Recovery of duty and interest confirmed by the adjudication and appellate authorities set aside, since mere excess wastage over SION norms - where export obligations are met, excess waste remains in the EOU, and adhoc/Board approvals existed - does not justify a finding of improper accounting or diversion warranting demand under the cited provisions.

Classification of goods by tariff heading - parts suitable for use solely or principally with apparatus - interpretation of HSN explanatory notes - use of foreign Harmonized Tariff Schedule (HTS) classification for Indian Customs Tariff - demand of duty under Section 28 and interest under Section 28AB of the Customs Act, 1962

Classification of goods by tariff heading - interpretation of HSN explanatory notes - parts suitable for use solely or principally with apparatus - Classification of the imported '6 Port Connector Assembly' is under Customs Tariff Item Entry 85177090 and not under Customs Tariff Item Entry 85389000. - HELD THAT: - The Tribunal examined whether the imported item is a part of network/telecommunication equipment falling under chapter heading 8517 or a part suitable for use with apparatus of headings 8535-8537. The court found that the item functions as an interface between telecommunication/network cabling and computer network cabling for transmission of voice, video and data, and is not a relay, switching equipment or an apparatus for the transmission or distribution of electricity. The HSN exclusions relied upon by the Department (referring to relay and switching equipment under headings 8535/8536/8537) are therefore inapplicable. The Tribunal also held that reliance on the supplier's US HTS classification is not determinative for Indian tariff purposes because HTS and Indian HSN headings are not fully aligned. Applying the foregoing, the Tribunal concluded that classification under heading 8538 (parts for apparatus of 8535-8537) is not correct and the declared classification under tariff entry 85177090 as parts of the Patch Panel is sustainable, allowing the appeal. [Paras 12, 13, 16, 17, 18]

Appeal allowed; the imported '6 Port Connector Assembly' is classifiable under Customs Tariff Item Entry 85177090.

Demand of duty under Section 28 and interest under Section 28AB of the Customs Act, 1962 - There is no bar to the Department demanding differential duty under Section 28 and interest under Section 28AB notwithstanding prior assessment of the Bills of Entry. - HELD THAT: - The Tribunal considered the contention that once Bills of Entry had been assessed and not challenged, the Department could not revisit classification and demand differential duty. Referring to the Apex Court authority cited in the record, the Tribunal noted that modification of an assessment or self-assessment must follow the appropriate statutory proceedings and that Section 27 does not preclude reassessment for recovery of duty. On this legal footing the Tribunal held that the demand of differential duty under Section 28 together with interest under Section 28AB was legally permissible. [Paras 11]

The demand under Section 28 and interest under Section 28AB is legally maintainable.

Final Conclusion: The Tribunal allowed the appeal by holding that the imported '6 Port Connector Assembly' is classifiable under Customs Tariff Item Entry 85177090 (as declared by the appellant) and rejected the Department's classification under 85389000; the Tribunal further held that the Department could lawfully demand differential duty under Section 28 with interest under Section 28AB.

Exemption from anti-dumping duty - Interpretation of exemption notification - Strict interpretation of exemption in taxation - Temporal effect of amendment to exemption notification - Burden of proof on claimant for exemption

Exemption from anti-dumping duty - Temporal effect of amendment to exemption notification - Interpretation of exemption notification - Strict interpretation of exemption in taxation - Burden of proof on claimant for exemption - Whether imports of dark blue and dark green reflective glass are exempt from anti-dumping duty for the period 06.01.2009 to 22.05.2009 under Notification No.4/2009 as amended by Notification No.51/2009. - HELD THAT: - The Tribunal examined the sequence of notifications. Notification No.165/2003 excluded reflective glass from ADD, but Notification No.4/2009 dated 06.01.2009 did not include reflective glass within its exclusion. Notification No.51/2009 dated 22.05.2009 subsequently excluded reflective glass from ADD. The Tribunal held that the plain language of Notification No.4/2009 governs the period from 06.01.2009 until 22.05.2009 and that the later Notification No.51/2009 cannot be read into Notification No.4/2009 with retrospective effect absent an express provision. Reliance was placed on the principle that exemption notifications are to be interpreted strictly and that the claimant bears the onus of proving applicability of an exemption; ambiguities in exemption provisions are construed in favour of the revenue, as reflected in the Supreme Court authority considered by the Tribunal. The Tribunal also noted its prior consideration of the same issue in Glass House (supra) and the decisions cited, concluding that reflective glass was not covered by the exemption in Notification No.4/2009 for the period in question. Applying these principles to the facts - the imported goods being dark blue and dark green reflective glass - the Tribunal found that the exemption was not available for imports made between 06.01.2009 and 22.05.2009 and that the anti-dumping duty demand therefore stood confirmed.

Exemption under Notification No.4/2009 (as in force from 06.01.2009) did not extend to reflective glass until Notification No.51/2009 took effect on 22.05.2009; consequently the claimed exemption for imports between 06.01.2009 and 22.05.2009 is not available and the appeal fails.

Final Conclusion: The appeal is dismissed: imports of dark blue and dark green reflective glass made between 06.01.2009 and 22.05.2009 are not entitled to the exemption from anti-dumping duty under Notification No.4/2009, and the demand for anti-dumping duty as upheld below is sustained.

Validity and effect of a Power of Attorney executed as nominee of the corporate debtor - scope of NCLT/NCLAT residuary jurisdiction under Section 60(5)(c) of the IBC - overriding effect of Section 238 of the IBC on instruments executed before CIRP - judicial review of commercial wisdom of Committee of Creditors in approving a Resolution Plan - conditionality of a Resolution Plan and enforceability of withdrawal clauses

Validity and effect of a Power of Attorney executed as nominee of the corporate debtor - PoA executed in favour of the appellant as nominee of the corporate debtor had served only to facilitate development and did not confer independent rights in the land; the Adjudicating Authority rightly held that the PoA had outlived its purpose and could be rendered ineffective for implementation of the Resolution Plan. - HELD THAT: - The Development Agreement and the registered General Power of Attorney show that the PoA was given to enable the developers (the corporate debtor) to obtain permissions and carry out development; it was granted in the capacity of nominees of the corporate debtor and did not vest proprietary rights in the appellant personally. Once CIRP commenced and the corporate debtor was represented by the Resolution Professional and thereafter to be taken over by the successful resolution applicant, the PoA had served its limited purpose. The Adjudicating Authority examined the agreement clauses and found no material to show the appellant exercised substantive rights under the PoA; accordingly it concluded the PoA was a spent instrument and the challenge to clause 7.33 could not invalidate the Resolution Plan. The Tribunal affirmed that the appellant's application was a vexatious attempt to obstruct revival of the corporate debtor and upheld the imposition of costs. [Paras 5, 6, 17, 21]

The order rejecting IA No.3689 of 2022 was correct; clause 7.33 cancelling the PoA did not unlawfully affect vested proprietary rights of the appellant and the application was rightly dismissed with costs.

Scope of NCLT/NCLAT residuary jurisdiction under Section 60(5)(c) of the IBC - overriding effect of Section 238 of the IBC on instruments executed before CIRP - Adjudicating Authority possessed jurisdiction under the Code to issue directions necessary for effective implementation of the Resolution Plan, including rendering ineffective instruments which are inconsistent with the commercial resolution and the statutory scheme. - HELD THAT: - Relying on the reasoning in Gujarat Urja Vikas Nigam Ltd., the Tribunal noted Section 238 gives the Code overriding effect over instruments and that the residuary jurisdiction in Section 60(5)(c) is wide enough to decide questions arising in insolvency proceedings so as to preserve value and ensure the corporate debtor's revival. The Court observed that this jurisdiction is subject to statutory limits and cannot be employed to decide matters wholly dehors the insolvency process, but on the facts the PoA was an instrument tied to the corporate debtor's development rights and could be dealt with in the resolution process. Therefore, the Adjudicating Authority did not usurp civil court powers but exercised its statutory jurisdiction to give directions for implementation of the plan. [Paras 18, 19, 20]

The Adjudicating Authority had competence under the Code to issue directions affecting the operative effect of the PoA for implementing the approved Resolution Plan; there was no jurisdictional error.

Conditionality of a Resolution Plan and enforceability of withdrawal clauses - judicial review of commercial wisdom of Committee of Creditors in approving a Resolution Plan - The Resolution Plan was not rendered unapprovable by the clauses on eco-sensitive zone; the conditional language was clarified, the condition stood satisfied in light of subsequent clarification, and clauses contemplating termination/withdrawal could not be allowed to defeat approval where Section 30(2) compliance was not impeached. - HELD THAT: - The Adjudicating Authority examined clause 8.4 and the emails amending its reading, noted the Supreme Court's subsequent clarification on the eco-sensitive zone issue in T.N. Godavarman Thirumulpad, and applied settled law that NCLT/NCLAT's role is limited to checking compliance with Section 30(2) and not re-appraising commercial wisdom of the CoC. The Tribunal further recalled precedent that a Resolution Plan cannot be withdrawn merely because it contains a clause contemplating termination; on the facts the condition was either satisfied or appropriately clarified and no ground under Section 30(2) was established to fault the approval. [Paras 23, 24, 25, 26, 27]

The Adjudicating Authority correctly approved the Resolution Plan dated 09.08.2024; the challenge that the plan was conditional and unimplementable fails.

Final Conclusion: Both appeals are dismissed: the Adjudicating Authority correctly rejected the interlocutory application challenging clause 7.33 cancelling the PoA, rightly found the PoA to be a spent nominee instrument and imposed costs, and correctly approved the Resolution Plan (including the clarified clause on eco-sensitive zone) within the statutory jurisdiction and scope of judicial review under the Code.

Binding effect of Committee of Creditors' approval of a resolution plan - prohibition on withdrawal or modification of an approved resolution plan - legal status and limits of a Letter of Intent vis-a -vis an approved resolution plan - commercial wisdom of the Committee of Creditors and limited judicial review - power of Committee of Creditors to decide liquidation before confirmation of a resolution plan - Section 33 - initiation of liquidation where no resolution plan filed/approved within CIRP period

Binding effect of Committee of Creditors' approval of a resolution plan - prohibition on withdrawal or modification of an approved resolution plan - legal status and limits of a Letter of Intent vis-a -vis an approved resolution plan - Whether the LoIs issued by the Resolution Professional (with CoC approval) imposed conditions alien to the resolution plan and whether the SRA could object to those conditions after CoC approval - HELD THAT: - The Tribunal held that the resolution plan submitted by the SRA had been deliberated and approved by the CoC with knowledge that certain third party IAs were pending, and that the voting and subsequent communications expressly recorded that the approval was subject to the outcome of the Adjudicating Authority's reserved orders. The LoIs issued reflected CoC decisions and the corrections (Clauses 7.10.6 and 12.6.1) discussed in CoC meetings; these conditionalities were not a later, unexpected imposition but derived from the approved plan and addendum and earlier CoC deliberations in which the SRA participated. Once a resolution plan is approved by the CoC, the resolution applicant is precluded from withdrawing or modifying the plan; accordingly the Adjudicating Authority properly refused to entertain the SRA's objections to conditions in the LoI on the ground that entertaining them would amount to impermissible modification/withdrawal of an approved plan. The Tribunal found the Adjudicating Authority's reliance on Ebix and its conclusions on this point to be correct. [Paras 25, 26]

Objections to the conditions in the LoI were rightly rejected - the alleged conditionalities were not alien to the approved resolution plan and the SRA was precluded from challenging them after CoC approval.

Power of Committee of Creditors to decide liquidation before confirmation of a resolution plan - commercial wisdom of the Committee of Creditors and limited judicial review - Section 33 - initiation of liquidation where no resolution plan filed/approved within CIRP period - Whether there was infirmity in the Adjudicating Authority's order approving liquidation of the Corporate Debtor - HELD THAT: - The Tribunal upheld the Adjudicating Authority's decision. It found that no resolution plan, approved by the CoC and filed under Section 30(6), was available before expiry of the permissible CIRP period; the CoC, by an overwhelming majority, resolved to liquidate in its 33rd meeting. The statutory scheme (Section 33 and its Explanation) permits the CoC to decide liquidation any time before confirmation of a resolution plan, and such a commercial decision is subject to only limited judicial review. Given the prolonged delay, the SRA's failure to give formal unconditional acceptance, and the risk of asset value erosion, the CoC's choice of liquidation was a valid exercise of commercial wisdom and the Adjudicating Authority committed no error in directing liquidation. [Paras 27, 28, 29, 30]

No infirmity in the liquidation order - CoC validly resolved to liquidate before confirmation of any plan and the Adjudicating Authority correctly passed the liquidation order under Section 33.

Final Conclusion: All three appeals are dismissed; the Adjudicating Authority's orders dismissing IAs challenging the LoI and EMD forfeiture and allowing the liquidation petition are upheld, and the liquidator is directed to proceed with liquidation in accordance with the e auction notice.

Right to personal liberty under Article 21 - grant of bail in PMLA cases - scheduled offence under the Prevention of Money Laundering Act - maintainability of complaint under Section 44 of the PMLA Act - effect of absence of a scheduled offence at the time of filing of complaint/charge-sheet

Right to personal liberty under Article 21 - grant of bail in PMLA cases - effect of absence of a scheduled offence at the time of filing of complaint/charge-sheet - Whether the appellants are entitled to bail in proceedings under the PMLA having regard to the absence of any scheduled offence at the time the complaint under Section 44 of the PMLA Act was filed and the period of pre-trial incarceration - HELD THAT: - The Court noted that when the Enforcement Directorate filed the complaint under Section 44 of the PMLA Act in 2022 there was no scheduled offence alleged in the FIR or in the charge-sheet dated 8th June 2023. The Court observed that Section 120-B had been dropped from the charge-sheet and, in light of the preceding decision in Pavana Dibbur v. Directorate of Enforcement, conspiracy under Section 120-B did not render it a scheduled offence for purposes of the PMLA. A later FIR/charge-sheet in Chhattisgarh alleging Section 384 of the IPC was registered much after the filing of the PMLA complaint. Having regard to the peculiar facts, including prolonged incarceration of the appellants (about two years in one case and one year and nine months in the other), the Court held that continued custody would amount to violation of their right to personal liberty under Article 21

Appeals allowed; appellants to be produced before the Special Court which shall enlarge them on bail on appropriate terms and conditions after hearing the Enforcement Directorate; observations confined to bail and do not affect the merits of the complaint.

Final Conclusion: In view of the absence of any scheduled offence at the time the PMLA complaint was filed and the extended pre-trial incarceration, continuation of custody would violate Article 21; appellants are directed to be produced before the Special Court which shall grant bail on appropriate terms after hearing the Enforcement Directorate.