TaxTMI Updates e-Newsletter
Nov 09,2024

Principles of natural justice - right to be confronted with documents and to cross-examine witnesses - adjudication under the CGST and IGST framework involving allegations of fraud - remand for fresh adjudication to comply with earlier judicial directions - availability of alternative remedy not a bar where a jurisdictional or procedural defect is established

Principles of natural justice - right to be confronted with documents and to cross-examine witnesses - adjudication under the CGST and IGST framework involving allegations of fraud - Whether the order imposing tax demand was passed in violation of principles of natural justice by failing to provide further opportunity of hearing after documents were supplied to the petitioner. - HELD THAT: - The Court recorded that its earlier order expressly left it open to the petitioner to be confronted with all documents and oral statements relied upon and to be allowed opportunity to cross-examine witnesses and to lead evidence in defence. The record establishes that documents were supplied to the petitioner on 30.07.2024, but no further date of hearing was fixed and the impugned order was passed on 16.08.2024. The directions contained in the Court's order were therefore not followed and the petitioner was not afforded the opportunity mandated by that order. In those circumstances the finding on fraud in the impugned order was treated as ipse dixit and the adjudication was vitiated for want of compliance with the required procedural protections. [Paras 11, 13]

The order dated 16.08.2024 was quashed on the ground that the petitioner was not given the opportunity of hearing after supply of documents, contrary to the Court's earlier directions.

Availability of alternative remedy not a bar where a jurisdictional or procedural defect is established - Whether the existence of an alternative remedy of appeal under Section 107 precluded entertainment of the writ petition. - HELD THAT: - The Court held that because the impugned order was found to have been passed without providing the opportunity directed by the Court, the plea of availability of alternative remedy could not operate to bar the writ petition. The procedural defect identified by the Court removed the respondent's contention that the writ should be dismissed in limine on account of the alternative statutory remedy. [Paras 14]

Alternative remedy under Section 107 does not preclude the writ petition in view of the procedural defect found.

Remand for fresh adjudication to comply with earlier judicial directions - adjudication under the CGST and IGST framework involving allegations of fraud - Whether the matter should be remitted to the adjudicating authority for fresh consideration in accordance with the Court's earlier directions. - HELD THAT: - Having quashed the impugned order for failure to afford the mandated opportunity, the Court remanded the matter to the Joint Commissioner (Adjudication) with clear directions to provide the petitioner an opportunity of hearing, to follow the directions contained in the Court's order dated 30.05.2024, and to deal appropriately with the allegation of fraud in accordance with law before passing a fresh order. The remand is for fresh adjudication and compliance with the prior directions rather than for mere quantification. [Paras 15]

The matter was remanded to the Joint Commissioner (Adjudication) for fresh hearing and disposal in accordance with the Court's directions; the petitioner was directed to appear before the authority on 26.11.2024.

Final Conclusion: Writ petition allowed; the order dated 16.08.2024 is quashed and set aside for failure to comply with the Court's earlier directions to confront the petitioner with documents and permit cross-examination, and the matter is remitted for fresh adjudication in accordance with those directions.

Appropriate penal provision - penalty under Section 129(1)(a) versus Section 129(1)(b) - Application of CBIC clarification dated 31.12.2018 - Reliance on factual finding of non-existence based on external communication - Remand for fresh consideration where factual record is absent

Appropriate penal provision - penalty under Section 129(1)(a) versus Section 129(1)(b) - Application of CBIC clarification dated 31.12.2018 - Whether penalty was correctly imposed under Section 129(1)(b) instead of Section 129(1)(a) in view of the CBIC clarification and precedents - HELD THAT: - The court noted that the authority imposed penalty under Section 129(1)(b) but that the CBIC clarification dated 31.12.2018 and earlier decisions of this Court indicate the penalty in the present circumstances should have been considered under Section 129(1)(a). The respondents did not dispute the applicability of the clarification and the Court observed that the authority's contrary approach rested upon a factual finding that the firm was non-existent, a finding which itself derived solely from a communication received from the Deputy Commissioner, CGST, Delhi. The record before Respondent No.2 did not disclose initiation of cancellation proceedings, whereas the petitioner produced a GSTIN status showing filing of the return on 20.10.2024. Because the authority's denial of the clarification and of the earlier decisions was founded on an unverified factual premise, the Court concluded that the impugned application of Section 129(1)(b) could not be sustained. [Paras 7, 8]

Impugned penalty to the extent it is predicated on applying Section 129(1)(b) was set aside and the matter remanded for fresh consideration consistent with the CBIC clarification and relevant precedents.

Reliance on factual finding of non-existence based on external communication - Remand for fresh consideration where factual record is absent - Whether the authority's factual finding that the firm was non-existent and that cancellation proceedings had been initiated was sustainable on the record - HELD THAT: - The Court examined the basis of the authority's factual finding and found it rested only on a communication from CGST, Delhi without supporting material on the file of Respondent No.2. The petitioner produced a GSTIN status report indicating return filing, undermining the claim of non-existence or pending cancellation. Given the absence of evidence on the record to justify the adverse factual finding, the Court held that the finding could not be sustained and directed that the competent authority reconsider the matter afresh after verifying the factual position. [Paras 7, 9]

Finding of non-existence/cancellation initiation set aside and matter remanded to competent authority to pass a fresh order after verification within two months.

Final Conclusion: The impugned penalty order dated 27.09.2024 is set aside; the writ petition is allowed and the matter is remitted to the competent authority to pass a fresh order within two months, having regard to the CBIC clarification and the verified factual position.

Due communication of assessment proceedings - validity of service by upload on GST portal - effect of uploading notices under 'Additional Notices and Orders' tab - benefit of doubt where statutory portal does not show order under 'View Notices and Orders' - remand for fresh notice and proceedings

Validity of service by upload on GST portal - effect of uploading notices under 'Additional Notices and Orders' tab - due communication of assessment proceedings - Impugned demand order was not validly communicated where it appeared under the 'Additional Notices and Orders' tab instead of the 'View Notices and Orders' tab on the GST portal and therefore could not be the basis for limiting the assessee's opportunity to reply. - HELD THAT: - The Court accepted the petitioner's unchallenged contention that the notices and impugned order had been uploaded under the 'Additional Notices and Orders' tab rather than the 'View Notices and Orders' tab on the GST portal, which resulted in the petitioner being unaware of the issuance and unable to respond within limitation. Following the reasoning in Ola Fleet Technologies Pvt. Ltd., the Court held that in the absence of material to show that the order was properly reflected under the tab prescribed for notices and orders, the petitioner is entitled to the benefit of doubt. The Court noted the departmental concession that the portal's design (maintained by GSTN) may affect how orders are displayed and that no useful purpose would be served by retaining the impugned order when the assessee's opportunity to be heard was thereby compromised. Consequently the impugned order was quashed and the matter remitted for fresh notice and proceedings, with directions for the assessing officer to issue a fresh notice in the manner prescribed and allow the petitioner an opportunity to reply. [Paras 5, 6, 7]

Impugned order dated 23.08.2024 quashed and set aside; assessing officer directed to issue a fresh notice with at least fifteen days' clear notice and proceed in accordance with law.

Final Conclusion: Writ petition allowed; order creating demand quashed on grounds of defective communication via the GST portal and the matter remitted for issuance of a fresh statutory notice and fresh proceedings in accordance with law.

Violation of principles of natural justice - service of notice by uploading on common portal - opportunity of hearing by treating assessment order as show cause notice - conditional interim relief on deposit of disputed tax - remand for fresh consideration after filing objections

Violation of principles of natural justice - service of notice by uploading on common portal - Impugned assessment order was set aside on the ground that it was passed in violation of principles of natural justice because the show cause notice and assessment order were uploaded on the common portal and not served, and the petitioner was unable to access the portal to participate in adjudication. - HELD THAT: - The Court found that neither the show cause notice nor the impugned order was served on the petitioner by tender or RPAD; both were uploaded under "Additional Notices/Orders" on the common portal. The petitioner averred inability to access the portal and had filed a prior representation with documentary evidence. In these circumstances the adjudication proceeded without a meaningful opportunity to be heard, constituting a breach of violation of principles of natural justice. The Court, therefore, set aside the impugned order and directed remedial steps. [Paras 3, 6]

Impugned order set aside for breach of natural justice; petitioner to be afforded an opportunity to be heard.

Conditional interim relief on deposit of disputed tax - opportunity of hearing by treating assessment order as show cause notice - remand for fresh consideration after filing objections - Court granted interim relief on conditions: deposit of 25% of disputed tax and filing of objections, and remanded the matter to the respondent for fresh consideration after affording a reasonable opportunity of hearing. - HELD THAT: - Balancing the need for protection of revenue with the petitioner's inability to access the portal, the Court directed the petitioner to deposit 25% of the disputed tax within two weeks of receipt of the order. Upon such deposit the impugned order of assessment would be treated as a show cause notice; the petitioner was permitted four weeks from receipt of the order to submit objections with supporting documents. The respondent was directed to consider any objections filed and pass orders in accordance with law after affording a reasonable opportunity of hearing. Failure to comply with the timelines would result in revival of the impugned assessment order. [Paras 6]

Petitioner to deposit 25% within two weeks and may file objections within four weeks; respondent to reconsider and pass orders after hearing; non-compliance will revive the impugned order.

Final Conclusion: Writ petition disposed by setting aside the impugned assessment order for breach of natural justice; conditional interim relief granted subject to deposit of 25% of disputed tax and filing of objections, with direction to the respondent to reconsider the matter and pass orders after affording a reasonable opportunity of hearing.

Show cause notice - principles of natural justice - GSTR-2A and GSTR-3B discrepancy - disallowance of input tax credit - opportunity of hearing - remand for fresh consideration - deposit as condition for reconsideration

Show cause notice - principles of natural justice - GSTR-2A and GSTR-3B discrepancy - disallowance of input tax credit - Impugned adjudication insofar as it disallowed the entire input tax credit by traversing beyond the scope of the show cause notice was set aside as violative of principles of natural justice. - HELD THAT: - The Court found that the assessment order in respect of the primary dispute arising from the GSTR-2A vis-a -vis GSTR-3B discrepancy-constituting the major part of the liability-went beyond the scope of the DRC-01 show cause notice and thereby denied the petitioner an opportunity to meet the case against it. Relying on the settled proposition that a show cause notice forms the foundation of an adjudication and that an order which traverses beyond that notice breaches natural justice, the Court concluded that the portions of the order which exceeded the notice could not stand and therefore required setting aside to afford the petitioner an opportunity to be heard on the matters actually raised in the notice. [Paras 6]

Portions of the assessment order disallowing ITC beyond the scope of the show cause notice were set aside for violation of principles of natural justice.

Disallowance of input tax credit - opportunity of hearing - remand for fresh consideration - deposit as condition for reconsideration - Denial of input tax credit in respect of discounts, finance charges and depreciation was remanded to the adjudicating authority for reconsideration after compliance with specified conditions and after affording a reasonable opportunity of hearing. - HELD THAT: - The Court observed that the impugned order rejected the petitioner's replies on these three issues on the ground of lack of supporting documentary evidence. The petitioner was allowed a final opportunity to place documentary proof before the adjudicating authority. The respondents offered that they would reconsider the objections if the tax liability attributable to these three issues was deposited. Consequently, the Court set aside the impugned order and directed that the petitioner deposit the tax liability in respect of these issues within four weeks. Upon such deposit, the impugned order would be treated as a show cause notice; the petitioner was to file objections with supporting documents within four weeks of receipt of the order; the respondents were to consider those objections and pass orders after affording a reasonable hearing. If the deposit is not made or objections are not filed within the stipulated period, the assessment order would stand revived. [Paras 7, 8, 9]

The findings on discounts, finance charges and depreciation were remanded for fresh consideration; reconsideration is conditional upon deposit of the tax liability and filing of objections with supporting documents within the specified timelines, failing which the impugned order shall revive.

Final Conclusion: The assessment order was set aside insofar as it exceeded the show cause notice (GSTR-2A vs GSTR-3B dispute). Issues relating to denial of ITC on discounts, finance charges and depreciation were remitted for reconsideration after the petitioner deposits the specified tax liability and is afforded a reasonable opportunity to file supporting documents and be heard; failure to comply will revive the impugned order.

Mandatory opportunity of personal hearing under Section 75(4) of CGST Act - violation of principles of natural justice - setting aside of impugned order for failure to afford hearing - remand for fresh consideration with direction to issue 14 days notice

Mandatory opportunity of personal hearing under Section 75(4) of CGST Act - violation of principles of natural justice - setting aside of impugned order for failure to afford hearing - Impugned order dated 29.04.2024 set aside for failure to afford personal hearing in breach of statutory mandate and principles of natural justice. - HELD THAT: - The Court found that the respondent issued a show cause notice for the year 2018-19 and received the assessee's reply dated 16.04.2024, but proceeded to confirm the demand without affording any opportunity of personal hearing. In view of the mandatory requirement of an opportunity of hearing under Section 75(4) of the CGST Act and the concomitant rule of audi alteram partem, the impugned order suffers from illegality and contravention of natural justice. The absence of a personal hearing after receipt of the reply rendered the adverse order unsustainable and necessitated its setting aside. [Paras 8, 9]

Impugned order dated 29.04.2024 is set aside on account of failure to afford a personal hearing.

Remand for fresh consideration with direction to issue 14 days notice - Matter remanded to respondent for fresh consideration with directions to afford personal hearing and decide afresh in accordance with law. - HELD THAT: - Having set aside the impugned order for procedural non-compliance, the Court directed remand for fresh adjudication. The respondent is required to issue a clear 14 days notice affording an opportunity of personal hearing, consider the reply already filed by the petitioner, hear the petitioner in full, and thereafter decide the matter in accordance with law. The direction confines the remand to rectifying the procedural defect and conducting a fresh, reasoned decision after hearing the assessee. [Paras 9]

Proceedings remitted to the respondent with direction to issue 14 days notice, afford personal hearing, consider the existing reply and decide afresh in accordance with law.

Final Conclusion: Writ petition allowed: impugned order set aside and matter remitted for fresh consideration with directions to issue a 14 days notice, afford personal hearing, consider the already-filed reply and decide in accordance with law; no costs.

Classification of goods - exemption from GST - statutory appeal under Section 107 of the GST enactments - stay of recovery proceedings - appeal kept in abeyance pending higher court decision

Classification of goods - exemption from GST - appeal kept in abeyance pending higher court decision - Appellate authority directed to keep the appeal in abeyance and await the Supreme Court's decision in S.L.P.(C) No.5573 of 2024 concerning the classification and taxable status of fish meal. - HELD THAT: - The petitioner, engaged in manufacture and supply of fish meal, challenged a notice while the question whether fish meal is exempt under the relevant notification is pending before the Supreme Court in S.L.P.(C) No.5573 of 2024. This Court noted earlier orders in related writ petitions which had (a) stayed recovery proceedings and (b) directed filing of statutory appeals under Section 107, with appellate fora to pass orders subject to the final outcome of the pending SLPs. The department raised no objection to keeping the appeal in abeyance. Balancing the competing interests and having regard to the pendency of the higher court proceedings on the classification of fish meal, the Court directed the first respondent/Appellate Commissioner to keep the appeal in abeyance and await the Supreme Court's decision. [Paras 6]

Appeal to be kept in abeyance by the appellate authority and await the outcome of S.L.P.(C) No.5573 of 2024.

Final Conclusion: Writ petition closed with direction that the appellate authority keep the appeal in abeyance pending the Supreme Court's decision on classification of fish meal in S.L.P.(C) No.5573 of 2024; no costs.

Principles of natural justice - personal hearing - remand for fresh consideration - lifting of bank attachment - proviso to Rule 86B of the GST Rules

Principles of natural justice - personal hearing - proviso to Rule 86B of the GST Rules - remand for fresh consideration - Impugned order dated 26.03.2024 was passed without providing opportunity of personal hearing and is vitiated for non-compliance with principles of natural justice; matter remitted for fresh consideration. - HELD THAT: - The Court found that the petitioner, falling within the exception in the proviso to Rule 86B of the GST Rules, was unaware of the show cause notice and was not afforded a personal hearing prior to passing of the impugned order. In these circumstances the order was passed in violation of the principles of natural justice. The Court concluded that it is just and necessary to permit the petitioner to establish its case on merits and therefore set aside the impugned order and remanded the matter to the 1st respondent for fresh consideration. The Court directed that the petitioner shall file its reply/objection with documents within three weeks of receipt of the order, and on receipt the 1st respondent shall issue a clear 14 days notice fixing a date for personal hearing and thereafter pass appropriate orders on merits and in accordance with law, after hearing the petitioner, as expeditiously as possible. [Paras 8]

Impugned order set aside and matter remanded for fresh consideration with directions to receive petitioner's reply, afford 14 days notice fixing personal hearing and thereafter decide on merits.

Lifting of bank attachment - remand for fresh consideration - Bank attachment issued pursuant to the impugned order is unsustainable once the impugned order is set aside and is ordered to be released. - HELD THAT: - Having set aside the impugned order, the Court held that the consequential attachment of the petitioner's bank account could not survive. The Court directed the second respondent to release the attachment and de-freeze the bank account immediately upon production of a copy of the order. [Paras 8]

Bank attachment lifted and the bank directed to release and de-freeze the petitioner's account on production of this order.

Final Conclusion: Impugned order dated 26.03.2024 set aside; matter remanded for fresh consideration with directions to file reply within three weeks, to be afforded a 14-day notice for personal hearing and fresh adjudication on merits; bank attachment lifted and account to be released on production of this order.

Electronic commerce operator - electronic commerce - services supplied through electronic commerce operator - deeming of e commerce operator as supplier - liability to collect and pay tax by e commerce operator under Section 9(5)

Electronic commerce operator - electronic commerce - Applicant qualifies as an electronic commerce operator for the proposed business model. - HELD THAT: - The Authority examined the statutory definitions of electronic commerce and electronic commerce operator and the facts of the proposed model. The applicant owns, operates and manages a digital platform that facilitates the supply of passenger transportation services over a digital network. On that basis the Authority concluded that the applicant squarely fits within the definition of an electronic commerce operator and therefore qualifies as an ECO for the purposes of the GST provisions governing electronic commerce. [Paras 16, 22, 24]

Applicant satisfies the definition of an electronic commerce operator.

Services supplied through electronic commerce operator - deeming of e commerce operator as supplier - liability to collect and pay tax by e commerce operator under Section 9(5) - Supply of passenger transportation services by drivers under the proposed model is supplied through the applicant and the applicant is liable to collect and pay GST under Section 9(5). - HELD THAT: - The Authority analysed whether the notified category of services (transportation of passengers by motorcab/motorcycle etc.) is supplied "through" the applicant's platform. Having considered the operational flow and app functionality recorded in the application and responses, the Authority found that the platform does more than mere listing or identification: it onboards drivers, provides the user interface, enables selection of start and end points, calculates and displays fares, shares pick up and driver details, tracks the ride, and notifies start and end of trip. These functions demonstrate that the contract for and completion of the passenger transportation service is effected by means of and during the entire period through the applicant's digital platform. Consequently, the conditions in Section 9(5) (including that the services are notified and supplied through the ECO) are satisfied and, by the deeming provision, the ECO is to be treated as the supplier liable for paying tax on such supplies. [Paras 19, 20, 21, 22, 24]

Applicant is liable to collect and pay GST on the supply of passenger transportation services supplied through its platform by drivers under the proposed business model.

Final Conclusion: The Authority ruled that Uber India Systems Private Limited qualifies as an electronic commerce operator and, because the transportation services by drivers are supplied through its digital platform as described, the applicant is liable to collect and pay GST on those supplies under the deeming mechanism of Section 9(5).

Classification of goods - specificity principle in tariff classification - Chapter 21 - heading 2106 (miscellaneous edible preparations) - classification of ready-to-eat packaged food - interpretation of Customs Tariff - General Rules (Rule 3(a), Rule 3(c)) - preparation and preservation of vegetables

Classification of goods - specificity principle in tariff classification - Chapter 21 - heading 2106 (miscellaneous edible preparations) - classification of ready-to-eat packaged food - Appropriate classification of the pre-packed ready-to-eat items listed at Sl. Nos. 1-26. - HELD THAT: - The Authority examined whether the items proposed by the applicant were to be classified under various headings in Chapter 20 or under Chapter 21. Applying the rule that the Rules for interpretation of the Customs Tariff, including Section and Chapter Notes and General Explanatory Notes, govern classification, and applying the specificity principle (Rule 3(a)), the Authority found that headings in Chapter 21 (notably 2106) provide a more specific description for ready-to-eat packaged food than the broader headings in Chapter 20 or the specific meat/fish sub-headings invoked by the applicant. For items such as vegetable- and curry-based preparations, meat, poultry and fish preparations that are in ready-to-eat packaged form, the description "food preparations not elsewhere specified or included" under HSN 2106 90 99 is the more specific and appropriate classification. The Authority therefore held that all items other than Sl. No. 27 merit classification under HSN 2106.90.99; the applicant's classification for items already shown under 2106.90.99 (Sl. Nos. 22-26) is accepted, while other classifications proposed by the applicant are incorrect and are superseded by classification under 2106.90.99. [Paras 7]

All items at Sl. Nos. 1-26 are to be classified under HSN 2106.90.99; the applicant's differing classifications for these items are incorrect except insofar as the applicant had already given 2106.90.99 for Sl. Nos. 22-26.

Classification of cooked vegetables - preparation and preservation of vegetables - interpretation of Customs Tariff - Rule 3(c) - Appropriate classification of item at Sl. No. 27 (Boiled Chinese Potato / Koorka). - HELD THAT: - The Authority considered whether the boiled potato product, described as cooked by boiling and preserved through retort processing, should be classified under headings for frozen or provisionally preserved vegetables or under headings for prepared/preserved vegetables. Applying the rules for interpretation of the Tariff, and in particular Rule 3(c) which directs classification under the heading which occurs last in numerical order where headings equally merit classification, together with the finding that both preparation and preservation are applicable, the Authority concluded that HSN 2004 10 10 (other vegetables prepared or preserved otherwise than by vinegar or acetic acid - potatoes) is the apt classification for the product. [Paras 7]

Boiled Chinese Potato (Koorka) merits classification under HSN 2004.10.10.

Final Conclusion: The Advance Ruling holds that, except for the boiled Chinese potato (Sl. No. 27), all the listed ready-to-eat or ready-to-cook products are classifiable as "food preparations not elsewhere specified or included, other" under HSN 2106.90.99; the boiled Chinese potato is classifiable under HSN 2004.10.10.

Transfer of the right to use any goods - leasing or rental services without operator - classification under SAC 9973 versus SAC 9966 - five tests in BSNL for transfer of the right to use - substantial control versus mere physical possession

Classification under SAC 9973 versus SAC 9966 - leasing or rental services without operator - Services rendered by the applicant are classifiable under chapter 99, heading 9973 and service code 997311. - HELD THAT: - The Authority examined whether the applicant's supply of vehicles without operators falls within SAC 9966 or SAC 9973. Notification No. 20/2019 restricted SAC 9966 to rental services 'with operator', thereby excluding rental without operator. The applicant supplies cars without operators and the service description therefore squarely falls under the broader heading 9973 which covers leasing or rental services with or without operator. The Authority accordingly held that the apt SAC for the service rendered by the applicant is 9973. [Paras 7]

Yes. Services rendered by the applicant fall under chapter 99, heading 9973 and service code 997311.

Transfer of the right to use any goods - five tests in BSNL for transfer of the right to use - substantial control versus mere physical possession - leasing or rental services without operator - The applicant's car-rental contracts do not amount to 'transfer of the right to use' and therefore attract the rate applicable to leasing or rental services without operator under Sl. No. 17 (viii) of Notification No. 11/2017. - HELD THAT: - Applying the five tests laid down in BSNL (availability of goods for delivery; consensus ad idem as to identity; transferee's legal right to use including legal consequences; exclusion of transferor's rights during the period; and inability of owner to transfer same rights to others), the Authority found that the contracts do not satisfy the requirement of transfer of effective control. Although physical possession is handed to the user, substantial control remains with the applicant: insurance, repairs and regulatory responsibilities remain with the applicant; use is subject to conditions including permitted places; the vehicles are monitored and controlled by the applicant; and replacement/assistance obligations rest with the applicant. On this basis and consistent with subsequent Supreme Court guidance, the transactions are licensing/rental arrangements where substantial control is retained by the owner and therefore are not transfers of the right to use goods under Article 366(29A)(d). Consequently the service falls under Sl. No. 17 (viii) of the Notification and is taxable as leasing/rental without operator. [Paras 7]

Yes. The contracts do not amount to transfer of the right to use; the services are leasing or rental services without operator under Sl. No. 17 (viii) and attract GST at 18%.

Final Conclusion: The Authority ruled that the applicant's self drive car rental services are classifiable under SAC 997311 (heading 9973) and, applying the established tests for 'transfer of the right to use', held that the transactions are leasing/rental without operator falling under Sl. No. 17 (viii) of Notification No. 11/2017 (as amended), attracting GST at 18%.

Classification under Heading 2106 90 - sweetmeats covered by Schedule I - distinct application of Schedule I over Schedule II where an item is expressly named - taxability under Entry 46 of Schedule II

Classification under Heading 2106 90 - taxability under Entry 46 of Schedule II - sweetmeats covered by Schedule I - Whether packed halwa purchased from an outsourced manufacturer and marketed under the applicant's brand name is classifiable as 'Namkeens etc.' and taxable under Entry 46 of Schedule II of Notification No. 1/2017 Central Tax (Rate). - HELD THAT: - The Authority found that Entry No. 101 in Schedule I of Notification No. 1/2017 specifically covers sweetmeats under HSN 2106 90. Although HSN 2106 90 also appears in Schedule II for items like namkeens, where a sweetmeat is expressly named and covered by Schedule I it must be classified under that Schedule. Accordingly, packed halwa marketed under the applicant's brand, while falling within HSN 2106 90, is not to be treated as 'Namkeens etc.' for the purpose of taxation under Entry 46 of Schedule II. [Paras 6, 7]

No; packed halwa sourced from an outsourced manufacturer is covered by HSN 2106 90 but is not classifiable as 'Namkeens etc.' and is not taxable under Entry 46 of Schedule II.

Classification under Heading 2106 90 - sweetmeats covered by Schedule I - distinct application of Schedule I over Schedule II where an item is expressly named - Whether halwa purchased from a supplier, packed at the applicant's facility and marketed under the applicant's brand name, is classifiable as 'Namkeens etc.' and taxable under Entry 46 of Schedule II of Notification No. 1/2017 Central Tax (Rate). - HELD THAT: - The Authority applied the same principle to halwa packed at the applicant's facility: since sweetmeats are specifically covered by Schedule I under HSN 2106 90, that classification governs. The mere fact that the same HSN appears in Schedule II for namkeen-like preparations does not warrant classifying an expressly named sweetmeat under Schedule II. Therefore halwa packed and marketed by the applicant falls under the Schedule I coverage for sweetmeats and not under Entry 46 of Schedule II. [Paras 6, 7]

No; halwa purchased and packed at the applicant's facility is covered by HSN 2106 90 but is not classifiable as 'Namkeens etc.' and is not taxable under Entry 46 of Schedule II.

Final Conclusion: The Authority ruled that both packed halwa sourced from an outsourced manufacturer and halwa purchased and packed at the applicant's facility, though falling under HSN 2106 90, are sweetmeats covered by Schedule I and therefore are not classifiable as 'Namkeens etc.' nor taxable under Entry 46 of Schedule II of Notification No. 1/2017 Central Tax (Rate).

Intermediary services as defined in Section 2(13) of the IGST Act, 2017 - Export of services under Section 2(6) of the IGST Act, 2017 - Place of supply rule for intermediary services under Section 13(8)(b) of the IGST Act, 2017 - Place of supply for services requiring goods to be made physically available (Section 13(3)(a) of the IGST Act, 2017) - Exemption for intermediary services where location of both supplier and recipient of goods is outside the taxable territory - Notification No 20/2019-Integrated Tax (Rate) dated 30-09-2019

Intermediary services as defined in Section 2(13) of the IGST Act, 2017 - Place of supply rule for intermediary services under Section 13(8)(b) of the IGST Act, 2017 - Exemption for intermediary services where location of both supplier and recipient of goods is outside the taxable territory - Notification No 20/2019-Integrated Tax (Rate) dated 30-09-2019 - Taxability and export character of intermediary services rendered by the applicant to foreign principals. - HELD THAT: - The applicant's canvassing, promotion, liaison and related activities on behalf of foreign principals were held to constitute "intermediary services" within the meaning of Section 2(13) of the IGST Act, 2017 because the applicant arranges or facilitates supplies between the principal and customers and does not supply on its own account. For intermediary services Section 13(8)(b) provides that the place of supply is the location of the supplier; since the applicant is located in India the place of supply is India and such intermediary services cannot be treated as export even when performed in India or in Sri Lanka. Separately, where both the supplier and recipient of goods are located outside the taxable territory, the supply may be eligible for exemption under Notification No 20/2019-Integrated Tax (Rate) subject to the conditions specified in the notification; that exemption is a grant of relief from GST but does not convert the service into an "export of service." [Paras 7]

Intermediary services provided by the applicant are taxable; they are not exports because the place of supply is the supplier's location in India. Intermediary services rendered in Sri Lanka remain taxable but may be exempt under Notification No 20/2019 if its conditions are satisfied.

Place of supply for services requiring goods to be made physically available (Section 13(3)(a) of the IGST Act, 2017) - Export of services under Section 2(6) of the IGST Act, 2017 - Whether the installation services performed by the applicant qualify as export of services or are taxable supplies. - HELD THAT: - Installation services fall within Service Code Heading 9987 (maintenance, repair and installation). Section 13(3)(a) provides that for services supplied in respect of goods which must be made physically available to the supplier (or a person acting on behalf of the supplier), the place of supply is the location where the services are actually performed. Accordingly, installation services performed in India have their place of supply in India and are not exports and are taxable. Installation services performed in Sri Lanka have their place of supply outside India and, provided all conditions of Section 2(6) (including receipt of payment in convertible foreign exchange and that the recipient is located outside India and other conditions) are satisfied and the recipient is not merely a distinct establishment, such supplies would qualify as export of services and be treated accordingly (either on payment of IGST or without payment on the basis of a letter of undertaking). [Paras 7]

Installation services done in India are taxable (not exports). Installation services done in Sri Lanka qualify as export of service only if all conditions in Section 2(6) are satisfied; otherwise they will be taxable.

Final Conclusion: The Authority rules that the applicant's receipts comprise different services with distinct tax consequences: (a) intermediary services are not exports because the place of supply is the supplier's location in India and are therefore subject to GST, although intermediary services where both supplier and recipient of goods are outside the taxable territory may be exempt under Notification No 20/2019 if its conditions are met; and (b) installation services performed in India are taxable, whereas installation services performed in Sri Lanka qualify as export of service only if all statutory conditions for export are satisfied.

Disciplinary proceedings for quasi judicial functions - Negligence or recklessness in exercise of judicial/quasi judicial powers as ground for disciplinary action - Delay and laches in initiation of disciplinary proceedings causing prejudice - Remedial effect of appellate remand on disciplinary premise - Prejudice as determinative test for quashing disciplinary proceedings

Disciplinary proceedings for quasi judicial functions - Negligence or recklessness in exercise of judicial/quasi judicial powers as ground for disciplinary action - Whether disciplinary proceedings can be initiated for actions taken by an officer in the exercise of judicial or quasi judicial functions, and whether that principle justified the charge sheet in the present case. - HELD THAT: - The Court accepted the settled proposition that disciplinary proceedings may be initiated against an officer for negligence or recklessness in the exercise of judicial or quasi judicial powers, recognising the principle that such functionaries are not immune from disciplinary action. However, the Court emphasised that the mere fact that an appellate authority's decision is later reversed does not, without more, supply a sustainable basis for disciplinary action. In the present case, the factual underpinning for the charge - deletion of an addition by the respondent - was subsequently altered by appellate proceedings which remanded the matter for fresh consideration, thereby removing the original premise relied upon by the Department for initiating disciplinary steps. [Paras 15, 17]

Principle permitting disciplinary action for judicial/quasi judicial misconduct affirmed, but that principle did not sustain the present charge once the appellate process remanded the matter and altered the premise for discipline.

Delay and laches in initiation of disciplinary proceedings causing prejudice - Remedial effect of appellate remand on disciplinary premise - Prejudice as determinative test for quashing disciplinary proceedings - Whether the long delay in issuing the memorandum of charges and the subsequent remand by the appellate authority rendered the disciplinary proceedings unsustainable. - HELD THAT: - The Court applied the established test that delay in initiating disciplinary proceedings will not automatically quash them unless such delay causes prejudice to the delinquent or otherwise renders prosecution unfair. Having regard to the sequence of events, the ITAT's later order remanding the issue to the Assessing Officer for fresh decision diluted the gravity of the charge and removed the foundational premise for the memorandum of charges. The Department was aware of the contested decision from the outset but awaited action only in 2017; that unexplained delay, coupled with the altered appellate posture, inflicted prejudice and made initiation of proceedings untenable. The Court also relied on precedent recognising that inordinate or unexplained delay may justify quashing disciplinary proceedings where fairness is compromised. [Paras 16, 17, 18, 19, 20]

Delay and laches in the circumstances were fatal to the disciplinary proceedings; the charge sheet was liable to be set aside.

Final Conclusion: The writ petition is dismissed. The High Court upheld the setting aside of the memorandum of charges, holding that although disciplinary action for quasi judicial misconduct is permissible in law, the unexplained delay and the appellate remand that removed the charge's premise rendered the disciplinary proceedings unsustainable.

Retention of books of account and other documents seized under search - Mandatory time-limit and pre-conditions for extended retention under section 132(8) - Obligation to communicate recorded reasons and approval to the person entitled - Right to apply to the Board under section 132(10) on non-communication of reasons - Return of originals where extended retention is not lawfully authorised - Permissible retention of copies subject to undertaking

Mandatory time-limit and pre-conditions for extended retention under section 132(8) - Obligation to communicate recorded reasons and approval to the person entitled - Validity of continued retention of seized books and documents where reasons and approval were not communicated to the petitioner within the statutory scheme of section 132(8). - HELD THAT: - The Court examined section 132(8) and the statutory scheme including the remedial right under section 132(10). The provision requires that books and documents not be retained beyond the specified period unless the authorised officer records reasons in writing and obtains the prescribed higher authority's approval. The scheme, read with authorities cited by the parties, establishes a statutory obligation on the department to communicate both the recorded reasons and the approval to the person entitled, so that an effective objection under section 132(10) can be made. Non-communication of the reasons and approval defeats the statutory right to object and, therefore, any further retention becomes unlawful. Applying these principles to the facts, the Court found that reasons were supplied to the petitioner only after nearly two years (pursuant to an RTI reply), thereby depriving the petitioner of the opportunity to object as envisaged by section 132(10); consequently the asserted extension of retention (even though an approval had been recorded purportedly until 30.04.2025) could not be sustained. [Paras 15, 16, 17, 21]

Further retention of the seized books of account and other documents was unlawful for want of timely communication of the recorded reasons and approval; the petitioner is entitled to return of the originals forthwith.

Return of originals where extended retention is not lawfully authorised - Permissible retention of copies subject to undertaking - Relief and directions as to return of original seized documents and the department's ability to retain copies. - HELD THAT: - Having found the extended retention unlawful, the Court directed immediate return of the original books of account and other documents seized under section 132(1). The Court allowed the respondent-authorities, if they so desired, to retain copies of the documents but required the petitioner to provide such copies and to file an undertaking to produce the originals when called for. This balances the petitioner's right to possession of originals with the department's legitimate need to preserve evidentiary material in copy form. [Paras 21, 22]

Respondents directed to return the original books and documents forthwith; respondents may retain copies if provided by the petitioner and supported by an undertaking to produce originals when required.

Right to apply to the Board under section 132(10) on non-communication of reasons - Whether ancillary reliefs such as lifting of attachments over bank/DMAT accounts are decided by the Court. - HELD THAT: - The Court observed that the question of lifting attachments over bank and DMAT accounts is consequential to the appellate order passed by the CIT(A) which reduced the demand, and therefore, those reliefs were not decided on merits in the petition. The petitioner was left at liberty to pursue appropriate proceedings before the respondent-authority for such reliefs. [Paras 23]

Reliefs regarding lifting of attachments were not adjudicated; petitioner may seek appropriate proceedings before the authority as these matters are consequential to the CIT(A)'s order.

Final Conclusion: Writ petition allowed to the extent that the respondent-authorities are directed to return the original books of account and other documents seized under section 132(1) forthwith; respondents may retain copies if provided by the petitioner with an undertaking. Ancillary reliefs relating to lifting of attachments remain open for appropriate proceedings before the authority.

Extinguishment of claims upon approval of resolution plan - effect of moratorium under the Insolvency and Bankruptcy Code - operational creditor classification and admitted claim in CIRP - reopening assessment under Section 148 of the Income Tax Act - order under Section 148A(d) rejecting objections

Extinguishment of claims upon approval of resolution plan - effect of moratorium under the Insolvency and Bankruptcy Code - reopening assessment under Section 148 of the Income Tax Act - order under Section 148A(d) rejecting objections - Validity of notices issued under Section 148 and the order under Section 148A(d) for Assessment Year 2015-16 after approval of a resolution plan in CIRP - HELD THAT: - The Court found that a resolution plan dated 14.10.2021 was approved by the NCLT under Section 30(6) of the Code and that the Deputy Commissioner of Income Tax's claim had been verified and admitted in the CIRP. Applying the principle in Ghanashyam Mishra & Sons (as cited in the judgment), the Court observed that once the moratorium under the Code is in place and a resolution plan is approved, liabilities relating to the period prior to approval stand extinguished and no person is entitled to initiate or continue proceedings in respect of such claims. In light of this legal position, the reopening notices issued under Section 148 and the order rejecting objections under Section 148A(d) could not be sustained after approval of the resolution plan, and therefore required quashing.

Notices dated 05.04.2021 and 29.07.2022 under Section 148 and order dated 29.07.2022 under Section 148A(d) are quashed and set aside.

Final Conclusion: The petition is allowed; the reopening notices and the order rejecting objections for Assessment Year 2015-16 are quashed in view of the approval of the resolution plan and the consequent extinguishment of pre-approval liabilities under the Insolvency and Bankruptcy Code.

Quashing of reassessment, penalty and demand orders - notice under Section 148 - ex-parte assessment order - remand for opportunity to file additional reply - opportunity of personal hearing - surrendered PAN / notice addressed to old PAN

Quashing of reassessment, penalty and demand orders - ex-parte assessment order - Assessment, penalty and demand orders passed in respect of Assessment Year 2015-16 were quashed. - HELD THAT: - The Court found that the reassessment order dated 20.03.2022 was an ex-parte order passed by referring to an old PAN number which the petitioner had surrendered and replaced with a new PAN. In these circumstances the petitioner contended it could not effectively reply to the notice. The High Court held that fairness required that the petitioner be given an opportunity to reply before continuation of proceedings and therefore set aside the reassessment order, the consequential demand notices and the penalty order. The Court expressly refrained from expressing any opinion on the merits of the tax liability. [Paras 5, 6]

The reassessment order, the penalty order and the demand notices for AY 2015-16 are quashed.

Notice under Section 148 - remand for opportunity to file additional reply - opportunity of personal hearing - surrendered PAN / notice addressed to old PAN - Matter remanded for fresh consideration to permit filing of additional reply to the Section 148 notice and to grant a personal hearing before passing any further orders. - HELD THAT: - Noting that the departmental records showed the notice was addressed to the PAN available with the department and that the petitioner had asserted surrender of the old PAN and filing under the new PAN, the Court considered it proper to remit the matter. The remand directs the assessing officer to allow the petitioner to file an added/additional reply to the Section 148 notice, afford a personal hearing, and thereafter pass orders in accordance with law. The Court limited its intervention to procedural fairness and did not adjudicate the substantive tax question. [Paras 5, 6]

The matter is remanded to the assessing officer to the stage of permitting an additional reply to the Section 148 notice, to grant personal hearing, and thereafter to pass orders as per law.

Final Conclusion: Writ petition allowed: the assessment order dated 20.03.2022, the related demand notices and the penalty order for Assessment Year 2015-16 are quashed; the matter is remanded for the assessing officer to permit an additional reply to the Section 148 notice, to provide a personal hearing and to decide afresh in accordance with law; no observation made on merits.

Quashing of assessment order - Writ of Certiorari - remand for fresh consideration of reply to Section 142(1) notice - right to file additional reply - non-consideration of replies by the assessing officer - claim of exemption under Section 10(23C)(iiiad)

Quashing of assessment order - non-consideration of replies by the assessing officer - claim of exemption under Section 10(23C)(iiiad) - Assessment order dated 05.05.2021 and demand notice dated 20.10.2021 set aside on ground that the respondent failed to consider the petitioner's reply and documents submitted in response to notices. - HELD THAT: - The society filed returns for Assessment Year 2018-19 claiming exemption under Section 10(23C)(iiiad) and furnished a reply dated 26.02.2021 to the notices issued under Section 142(1). The High Court examined Annexure-J (the reply) and found that the petitioner specifically asserted non-applicability of Sections 11 to 13 and claimed exemption under Section 10(23C)(iiiad), relying on precedent. The Court concluded that the assessing authority passed the assessment order mechanically without properly considering the petitioner's reply and filed documents. Because the assessment order and consequential demand notice proceeded without such consideration, they were liable to be quashed. The Court did not decide the substantive merit of the exemption claim but restricted its intervention to the procedural failure to consider the reply. [Paras 5, 6]

Order dated 05.05.2021 and notice dated 20.10.2021 quashed for non-consideration of the petitioner's reply and documents.

Remand for fresh consideration of reply to Section 142(1) notice - right to file additional reply - Writ of Certiorari - Matter remanded to the respondents to the stage of reply to the Section 142(1) notice and petitioner permitted to file an added/additional reply; respondents directed to consider any such reply carefully and decide as per law. - HELD THAT: - Having quashed the impugned orders on procedural grounds, the Court remitted the matter to the assessing authority to the stage of the Section 142(1) proceedings so that the petitioner may file an added or additional reply. The respondents are directed to consider any such further reply and the documents afresh and thereafter take a proper decision in accordance with law. The High Court expressly refrained from expressing any view on the merits of the petitioner's substantive claim, limiting its order to remedial and procedural directions under the writ jurisdiction. [Paras 7, 8]

Writ petition allowed; matter remanded to the stage of reply to the Section 142(1) notice with liberty to file additional reply and for respondents to decide afresh.

Final Conclusion: The High Court allowed the writ petition by issuing a Writ of Certiorari, quashed the assessment order dated 05.05.2021 and the demand notice dated 20.10.2021 for Assessment Year 2018-19, and remanded the matter to the respondents to permit filing and careful consideration of any added/additional reply to the Section 142(1) notice; no opinion was expressed on the merits of the claim for exemption.

Reassessment time limit under Section 153(2) - proviso substituting twelve months for notices served on or after 1 April 2019 - validity of reassessment where notice under section 148 issued on 29.03.2021 - applicability of the Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020 (TOLA)

Reassessment time limit under Section 153(2) - proviso substituting twelve months for notices served on or after 1 April 2019 - validity of reassessment where notice under section 148 issued on 29.03.2021 - Whether the reassessment and consequential proceedings initiated after issuance of notice under Section 148 on 29.03.2021 were time-barred under sub section (2) of Section 153 read with its proviso - HELD THAT: - The Court examined sub section (2) of Section 153 and its proviso which prescribes that where a notice under section 148 is served on or after 1 April 2019 the period for completion of assessment/reassessment/recomputation is twelve months from the end of the financial year in which the notice was served. The notice in the present case was served on 29.03.2021, thereby engaging the proviso and requiring completion of reassessment within twelve months. The reassessment order impugned was passed on 12.05.2023, which is beyond the twelve month period mandated by the proviso. On this basis the Court found the reassessment and all consequential actions to be non est and liable to be quashed. [Paras 9]

Reassessment and consequential proceedings pursuant to the notice dated 29.03.2021 are time barred under Section 153(2) proviso and are quashed.

Applicability of the Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020 (TOLA) - effect of statutory limitation extension during COVID period - Whether the reliefs under TOLA operate to validate or extend the time for completion of reassessment in the present case - HELD THAT: - The Court considered the respondents' contention that the Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020 applied. TOLA provided limited temporal relief for the period 01.04.2020 to 30.06.2021. The Court held that because the notice under Section 148 was issued on 29.03.2021 and the proviso to Section 153(2) (twelve months for notices served on or after 1 April 2019) governs the time for completion, the respondents' reliance on TOLA does not cure the defect. Consequently TOLA could not be invoked to validate the reassessment completed beyond the statutory period. [Paras 10]

The contention that TOLA validates or extends time for the reassessment is rejected; TOLA does not save the reassessment impugned.

Final Conclusion: Writ petition allowed; notices/orders dated 26.05.2022, 21.07.2022, 12.05.2023 and penalty orders dated 11.01.2024 for Assessment Year 2013-14 are quashed because the reassessment was completed beyond the twelve month period prescribed by the proviso to Section 153(2), and TOLA does not validate the delayed proceedings.

Exclusion of comparables in transfer pricing - Arm's length price determination - Comparability analysis under TNMM - Inapplicability of mega entities as comparables - Precedential application of prior decision

Exclusion of comparables in transfer pricing - Inapplicability of mega entities as comparables - Precedential application of prior decision - Validity of excluding Infosys BPO Ltd. and TCS E-Serve Ltd. from the comparable set for determining the arm's length price - HELD THAT: - The appeal was confined to the question of whether Infosys BPO Ltd. and TCS E-Serve Ltd. could be included as comparables. The Court followed its earlier reasoning in Transcend MT Services Pvt. Ltd. and the precedent in CIT v. Agnity India Technologies Pvt. Ltd., which recognised that 'mega' entities with disparate commercial scale, risk profiles, service mix and branded/proprietary assets cannot be treated as valid comparables for benchmarking a smaller, full service or offshore provider. Applying that principle, the exclusion of Infosys BPO Ltd. and TCS E Serve Ltd. from the comparable list was held to be justified. As the dispute raised no substantial question of law in view of the settled precedent, no further adjudication on the remaining contentions was entertained. [Paras 4, 5]

Exclusion of Infosys BPO Ltd. and TCS E Serve Ltd. as comparables upheld; appeal dismissed for lack of any substantial question of law.

Final Conclusion: The Court, applying its earlier reasoning and the Agnity India precedent that large 'mega' entities are not suitable comparables for materially smaller and different taxpayers, found no substantial question of law in the exclusion of Infosys BPO Ltd. and TCS E Serve Ltd.; the appeal is dismissed.

Reopening of assessment - survey proceedings - tangible material - onset and discharge of onus of proof in survey material - unexplained expenditure - addition under section 69C and section 68 (foreign credit card expenditures) - protective addition

Reopening of assessment - survey proceedings - tangible material - Validity of reopening assessment under section 147/148 based on material seized during survey and information from the Investigation Wing. - HELD THAT: - Tribunal found that the survey was conducted in the assessee's own case and credit card details were physically present in the assessee's mobile. Those details constituted tangible material which the jurisdictional Assessing Officer was entitled to verify and investigate before forming belief of escapement of income. The Tribunal distinguished precedents relied upon by the assessee which dealt with third party information passed by the Investigation Wing; here the material arose from a survey of the assessee himself and thus warranted reopening and issuance of notices. The Tribunal also noted that notice under section 143(2) was in fact issued and proceedings taken for collection of information. [Paras 19]

Reopening of assessment sustained.

Unexplained expenditure - addition under section 69C and section 68 (foreign credit card expenditures) - onset and discharge of onus of proof in survey material - Whether additions in respect of foreign currency credit card expenditures detected from the assessee's mobile could be treated as unexplained expenditure and added to the assessee's income. - HELD THAT: - The Tribunal accepted the factual finding that multiple credit card details (in US$ and UK ) were found in the assessee's mobile and that the assessee was able to use those cards without presence of the cardholders. The assessee's assertions that cards belonged to family or friends, and that payments were made by his NRI wife, were not supported by affidavits or documentary proof from those purported owners. Given the assessee's possession and control of the cards and failure to produce corroborative evidence, the onus to prove non ownership and independent source of funds was not discharged. In absence of such proof, the Assessing Officer was justified in treating the expenditures as unexplained and making additions under the relevant provisions. The Tribunal found no reason to disturb the CIT(A)'s confirmation of these additions. [Paras 20]

Additions on account of credit card expenditures sustained.

Protective addition - protective addition - Whether protective addition in the hands of the assessee in respect of share application money received by Ananda Heritage Hotels P. Ltd. through Wilton Investment Ltd. should be sustained. - HELD THAT: - The Tribunal observed the record showed the investments were made through Wilton Investment Ltd. and that substantive additions had been made in the hands of Ananda Heritage Hotels P. Ltd. The Assessing Officer had made a protective addition in the hands of the assessee, but the CIT(A) deleted that protective addition after considering the facts. The Tribunal found no reason to interfere with the appellate adjudication and upheld deletion of the protective addition against the assessee. [Paras 21]

Protective addition in assessee's hands deleted; Revenue's appeal dismissed.

Final Conclusion: Tribunal dismissed both appeals: upheld reopening and the additions relating to unexplained foreign currency credit card expenditures against the assessee, and upheld deletion of the protective addition relating to investments in Ananda Heritage Hotels P. Ltd.

Disallowance of business expenditure as personal versus personnel expenditure under section 37 - Ad hoc disallowance without issuance of queries or giving opportunity to produce evidence - Mistake apparent on record as ground for deletion of addition

Disallowance of business expenditure as personal versus personnel expenditure under section 37 - Ad hoc disallowance without issuance of queries or giving opportunity to produce evidence - Mistake apparent on record as ground for deletion of addition - Whether the ad hoc disallowance of personnel expenditure by the Assessing Officer could be sustained - HELD THAT: - The Assessing Officer treated the assessee's claimed personnel expenditure as personal expenditure and made an ad hoc disallowance of 10% without calling for any documentary evidence or raising a query. The assessee produced the profit and loss account showing the expenditure as personnel expenditure and details of salary and wage payments with PANs. The Tribunal found the disallowance to be an elementary and mistaken presumption by the Assessing Officer, made without following basic procedures of seeking information or giving the assessee an opportunity to substantiate the claim. In these circumstances the addition was held to be a mistake apparent on the record and not sustainable as a valid disallowance under section 37, warranting deletion. [Paras 7, 8]

Addition deleted and appeal allowed.

Final Conclusion: The Tribunal held that the ad hoc 10% disallowance of the assessee's personnel expenditure was based on a mistaken presumption and was made without giving opportunity to produce evidence; the addition was deleted and the appeal allowed.

Validity of reopening assessment beyond four years - Requirement of failure to disclose fully and truly all material facts for invoking reopening beyond four years - Change of opinion as impermissible basis for reassessment - Territorial jurisdiction of Assessing Officer governed by CBDT notification under section 120 - Invalidity of notice issued by a nonjurisdictional Assessing Officer

Validity of reopening assessment beyond four years - Requirement of failure to disclose fully and truly all material facts for invoking reopening beyond four years - Change of opinion as impermissible basis for reassessment - Reopening of assessment after four years is invalid where the reasons recorded do not show failure by the assessee to disclose fully and truly all material facts and the AO's action amounts to change of opinion. - HELD THAT: - The Tribunal examined the reasons recorded for reopening beyond four years and the material on record, including the assessee's detailed replies to the AO's inquiries under section 142(1). There is no whisper in the reasons of any omission or failure by the assessee to disclose material facts; the AO had raised queries in the original assessment and received detailed responses and supporting documents. In the absence of any allegation or evidence of suppression or nondisclosure, the conditions precedent for reopening beyond four years are not satisfied and the reassessment amounts to a change of opinion, which is impermissible. [Paras 3]

Reopening after four years quashed; assessment proceedings set aside on this ground.

Territorial jurisdiction of Assessing Officer governed by CBDT notification under section 120 - Invalidity of notice issued by a nonjurisdictional Assessing Officer - Notice issued by ITO, Ward2(1), Patna is invalid because the Assessing Officer did not have territorial jurisdiction over the assessee as per the jurisdictional scheme; PAN allotment or transfer error in departmental system does not confer jurisdiction. - HELD THAT: - The Tribunal considered the assessee's return and address showing its operations from Kolkata and the objection filed promptly to the notice disputing jurisdiction. The jurisdictional allocation is determined by the CBDT's scheme (section 120), not by the place of PAN allotment or software transfer errors. The AO in Patna issued notice despite the assessee's records placing jurisdiction elsewhere; on that basis the notice and consequent proceedings are without jurisdiction and therefore void. [Paras 4]

Notice by AO, Patna held invalid; assessment and appellate orders founded on that notice set aside.

Final Conclusion: The appeal is allowed: the reassessment proceedings and consequential orders for AY 2015-16 are quashed because (i) reopening beyond four years was without satisfaction of the statutory preconditions and amounted to change of opinion, and (ii) the notice was issued by an AO lacking territorial jurisdiction; both orders are set aside.

Fees for technical services - tax deduction at source - disallowance under section 40(a)(ia) of the IT Act - application of DTAA benefit over domestic law - interpretation of Article 12(4)(a) of the DTAA - scope of 'royalty' under the DTAA and section 9(1)(vi)

Fees for technical services - tax deduction at source - disallowance under section 40(a)(ia) of the IT Act - interpretation of Article 12(4)(a) of the DTAA - scope of 'royalty' under the DTAA and section 9(1)(vi) - application of DTAA benefit over domestic law - Whether the payment of Rs. 9,06,53,035 made as software maintenance charges to the parent company constituted fees for technical services/royalty attracting TDS and disallowance under section 40(a)(ia), or was immune from Indian taxation by virtue of the DTAA. - HELD THAT: - The Tribunal examined the terms of Article 12 of the DTAA (Portuguese) and the prior co-ordinate-bench findings in the assessee's own cases. The CIT(A) and the Pune Benches held that paragraph 3 (defining 'royalties') was not attracted because the payments did not constitute consideration for the use of, or right to use, any copyright in software; consequently clause (a) of Article 12(4) (which applies to services ancillary to such use) could not be invoked. As paragraph 3 was not attracted, the payments fell outside the DTAA definitions of royalty/fees for included services, and therefore the DTAA's beneficial provisions operated to negate the requirement to deduct tax at source. The present appeal involved identical facts and there was no change in circumstances; the Tribunal, therefore, respectfully followed the co-ordinate-bench decisions and accepted that the payments were not taxable as fees for technical services/royalty in India and did not attract disallowance under section 40(a)(ia). [Paras 8, 9]

The deletion of the addition of Rs. 9,06,53,035 made under section 40(a)(ia) is upheld; the payment is not chargeable as fees for technical services/royalty in India and no TDS was required.

Final Conclusion: Following co-ordinate-bench decisions and an interpretation of Article 12 that paragraph 3 (royalties) is not attracted, the Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s deletion of the disallowance; the assessment stands restored in favour of the assessee.

Requirement of independent corroborative evidence for on-money additions - addition assessed as unexplained money under the doctrine of section 69 read with section 115BBE - evidentiary value of seized electronic records and necessity of nexus to assessee - reliance on statements recorded under section 132(4) and their probative weight - onus on revenue to establish connection between seized material and the assessee's transactions - distinction from cases where assessee's own admission forms basis for taxability

Requirement of independent corroborative evidence for on-money additions - evidentiary value of seized electronic records and necessity of nexus to assessee - reliance on statements recorded under section 132(4) and their probative weight - addition assessed as unexplained money under the doctrine of section 69 read with section 115BBE - Deletion of addition of Rs. 3,80,05,000/- as alleged on money paid by the assessee for purchase of land - HELD THAT: - The Tribunal found that the Assessing Officer relied solely on an Excel sheet seized from the premises of third party sellers and on the sellers' returns/statements, without producing any independent corroborative material linking the seized entries to the assessee or to the property purchased by him. The seized Excel sheet did not record the assessee's name, property details or any direct nexus to the transaction; no incriminating material was seized from the assessee's premises and the AO did not conduct independent enquiries to connect the seized material to the assessee or to demonstrate transfer of cash by the assessee. The Tribunal held that mere entries in a third party book or electronic record and admissions in sellers' returns, absent nexus and corroboration, cannot displace the burden on the revenue to prove that the assessee paid on money. The decision in B. Kishore Kumar was distinguished on facts because there the assessee himself had admitted undisclosed income, whereas in the present case the assessee denied payment in his statement. The Tribunal applied the principle in K.V. Lakshmi Savitri Devi that presumption of payment cannot be drawn from entries in third party records that do not refer to the buyer, and concluded that the CIT(A) was correct in deleting the addition for lack of proof and nexus. [Paras 7, 8]

Addition of Rs. 3,80,05,000/- as on money held unsustainable for want of independent corroborative evidence and nexus; deletion upheld.

Final Conclusion: Revenue appeal dismissed; the addition of Rs. 3,80,05,000/- made under section 69 read with section 115BBE was deleted for lack of corroborative evidence linking the seized material to the assessee.

Allowability of prior period expenses - depreciation on capitalised estimate of future costs - recognition of income on accrual versus receipt basis in respect of Non-Performing Assets - deductibility of administrative charges and project-related income - deductibility of grants-in-aid as business expenditure - change of accounting policy and recognition of loan processing/application/front-end fees - application of Section 14A and Rule 8D; disallowance not to exceed exempt income - treatment of financial/bond issue expenses - revenue v. capital - allowability of Corporate Social Responsibility (CSR) expenditure prior to 01.04.2015 - taxability of interest on deposit/refund vis-a -vis agency/Government

Allowability of prior period expenses - Claim of prior period expenses of Rs. 3,00,000 for AY 2010-11 - HELD THAT: - The Tribunal found no challenge to the genuineness of the expenditures and observed that no specific findings were recorded by the Assessing Officer as to whether each item had been claimed in earlier years. In the interest of a factual verification the Tribunal restored the issue to the file of the Assessing Officer to examine whether the said items were claimed earlier; if not so claimed the expenditure would be allowable. The ground was allowed for statistical purposes and remitted for verification. [Paras 3]

Restored to the Assessing Officer for factual verification; allowed for statistical purposes.

Depreciation on capitalised estimate of future costs - Addition on account of depreciation claimed on estimated increase in cost of properties for AY 2010-11 - HELD THAT: - The Tribunal noted the question was the subject of a remittal by the Jurisdictional High Court in the assessee's own case for an earlier year and that the High Court had directed de novo verification by the Assessing Officer. In light of those directions and to secure consistent adjudication, the Tribunal restored the issue to the Assessing Officer for fresh consideration. [Paras 4]

Restored to the Assessing Officer for de novo verification; allowed for statistical purposes.

Recognition of income on accrual versus receipt basis in respect of Non-Performing Assets - Tax treatment of interest income derecognised in books on account of NHB guidelines (NPA) for AY 2010-11 - HELD THAT: - The Tribunal examined precedents relied upon by both sides and concluded that the Supreme Court decision relied upon by Revenue (Southern Technologies Ltd.) did not decide derecognition of NPA income; further the law on point has favourable authority for the assessee (Vashisht Chay Vyapar approved by the Supreme Court). Given that the assessee had filed a maintainable application under section 158A(1) seeking reference to the Supreme Court outcome in the assessee's own case, the Tribunal considered it appropriate to restore the issue to the Assessing Officer to decide after the final outcome in the assessee's pending proceedings before the Supreme Court. The ground was allowed for statistical purposes. [Paras 5]

Restored to the Assessing Officer to decide in light of the final outcome of the assessee's proceedings before the Supreme Court; allowed for statistical purposes.

Deductibility of administrative charges and project-related income - Addition in respect of administrative charges for Andrews Ganj Project for AY 2010-11 - HELD THAT: - The Tribunal followed the Jurisdictional High Court's factual conclusion that the minutes and subsequent verification showed overhead/administrative charges at 1.5% were leviable only in relation to the community centre and not the residential quarters, and that the assessee had not received such administrative charges for residential quarters. Applying that reasoning, the Tribunal allowed the ground in favour of the assessee. [Paras 6]

Addition deleted; ground allowed.

Deductibility of grants-in-aid as business expenditure - Disallowance of expenditure on grants-in-aid (Rs.1,69,91,000) for AY 2010-11 - HELD THAT: - The Tribunal rejected the CIT(A)'s approach that the assessee was merely a pass-through for government grants and found no evidence that grants/subsidies had been received. The payments promoted the assessee's business of financing housing and urban development by supporting capacity building; judicial precedents recognise that even a remote nexus to business suffices for allowability under Section 37(1). On that basis and following relevant case law, the Tribunal held the grants were wholly and exclusively for business and allowed the deduction. [Paras 7]

Disallowance deleted; expenditure allowed as business deduction.

Change of accounting policy and recognition of loan processing/application/front-end fees - Addition of Rs.1.50 crores by taxing loan application/front-end/processing/administrative fees on accrual basis for AY 2010-11 - HELD THAT: - The Tribunal accepted the assessee's contention that such fees become payable only when disbursement occurs and there is no reasonable certainty of realisation at the date of signing; Accounting Standard (AS-9) supports recognition only when reasonably certain of ultimate collection. The Tribunal further relied on Jurisdictional High Court precedent in the assessee's own case (AY 2007-08) which accepted recognition on realization. The ad hoc addition lacked a basis and was deleted. [Paras 8]

Addition deleted; income to be recognised on realization where there is lack of reasonable certainty of collection.

Application of Section 14A and Rule 8D; disallowance not to exceed exempt income - Disallowance under Section 14A in AY 2010-11 - HELD THAT: - The Tribunal noted that the assessee had declared and offered to tax the exempt income in question and therefore no Section 14A disallowance was warranted. Reliance was placed on the Jurisdictional High Court authority. The ground was allowed. [Paras 9]

Disallowance under Section 14A deleted; ground allowed.

Treatment of TDS credit claims - Claim for correct TDS credit for AY 2010-11 - HELD THAT: - The Tribunal held that the issue required factual verification and directed the Assessing Officer to decide the claim after considering explanations and supporting documents. The ground was allowed for statistical purposes. [Paras 10]

Remitted to the Assessing Officer for factual adjudication.

Consequential adjustment of Special Reserve - Claim for incremental Special Reserve consequential to additions/disallowances for AY 2010-11 - HELD THAT: - The Tribunal treated the point as consequential to final income and restored it to the Assessing Officer to be dealt with after computation of income pursuant to this order. [Paras 11]

Restored to the Assessing Officer for consequential computation; allowed for statistical purposes.

Allowability of prior period expenses - Prior period expenses claimed (Rs.8,13,00,000) for AY 2004-05 - HELD THAT: - The Tribunal admitted additional evidence proffered by the assessee but found the records and correspondence did not establish that the liabilities had crystallized in the relevant year; authorisations dated later undermined the claim. The Assessing Officer's disallowance, upheld by CIT(A), was found to be in order and the ground was dismissed. [Paras 20]

Disallowance sustained; ground dismissed.

Application of Section 14A prior to Rule 8D; quantification heuristic - Disallowance under Section 14A for AY 2004-05 - HELD THAT: - Year under consideration predates Rule 8D; Tribunal, following Calcutta High Court authority, directed AO to apply a 1% thumb-rule on exempt dividend income as the reasonable estimate of expenditure attributable to exempt income. Accordingly the AO was directed to disallow 1% of declared dividend income. [Paras 21]

Disallowance partly allowed; AO to disallow 1% of dividend income.

Allowability of Corporate Social Responsibility (CSR) expenditure prior to 01.04.2015 - Claim of CSR expenditure (Rs.4,98,75,665) for AY 2011-12 - HELD THAT: - The Tribunal held Explanation 2 to Section 37(1) (which disallows CSR deduction) was prospective from 01.04.2015 and not applicable to AY 2011-12. Applying established authorities, the Tribunal accepted that CSR payments made pursuant to regulatory mandate and directed at welfare and capacity building have at least a remote nexus to the assessee's business of housing/urban development and are deductible under Section 37(1), subject to nexus and scrutiny. The ground was allowed. [Paras 25]

CSR expenditure allowed as business deduction for the year; ground allowed.

Allowability of prior period expenditure - Prior period expenditure Rs.4,26,772 for AY 2011-12 - HELD THAT: - No arguments were advanced before the Tribunal and the Assessing Officer/CIT(A)'s disallowance was left undisturbed. The Tribunal did not interfere with the appellate order. [Paras 26]

Disallowance sustained; ground dismissed.

Editorial consolidation of issues decided for consistency across years - Applicability of decisions for AY 2010-11 to corresponding grounds in AY 2011-12 - HELD THAT: - The Tribunal directed that several grounds in AY 2011-12 be decided mutatis mutandis by applying the reasoning and results reached for AY 2010-11 and accordingly mapped outcomes for those grounds to the earlier findings. [Paras 27]

Decisions on identified grounds for AY 2010-11 applied mutatis mutandis to AY 2011-12.

Application of Section 14A and Rule 8D; disallowance not to exceed exempt income - Computation of Section 14A disallowance for AY 2011-12 and correctness of excluding taxable-yielding investments from Rule 8D computation - HELD THAT: - The Tribunal accepted CIT(A)'s direction that while computing disallowance under Rule 8D the AO should consider only investments yielding exempt income; investments yielding taxable interest should be excluded. It also applied the Supreme Court principle that disallowance cannot exceed exempt income. Consequently, the AO's disallowance was curtailed and reassessed. [Paras 28]

AO's computation corrected; disallowance limited and direction given to recompute excluding taxable-yielding investments; disallowance cannot exceed exempt income.

Taxability of interest on deposit/refund vis-a -vis agency/Government - Addition of accrued interest receivable from MCD on refund of disputed property tax for AY 2011-12 - HELD THAT: - The Tribunal noted that in an earlier assessment year the same subject-matter had been accepted by the Revenue (deletion by CIT(A) in AY 2006-07 without appeal). Applying consistency principles, the Tribunal held that the interest income could not be taxed in the assessee's hands for the year under consideration and allowed the ground. [Paras 29]

Addition deleted on consistency grounds; ground allowed.

Treatment of financial/bond issue expenses - revenue v. capital - Revenue appeal challenging deletion of deduction for financial charges written off (capitalisation v. immediate deduction) for AY 2010-11 (Revenue appeal ITA No.3904) - HELD THAT: - The Tribunal followed Jurisdictional High Court precedents holding that expenses incurred in connection with procurement of finance (bond issue expenses) are revenue in nature and allowable. The AO's attempt to disallow similar items was dismissed; the CIT(A)'s grant of relief was upheld. [Paras 17]

Revenue appeal dismissed; deduction sustained.

Final Conclusion: The Tribunal partly allowed the assessee's appeals for AYs 2010-11, 2011-12 and 2004-05, restoring several factual issues to the Assessing Officer for verification, allowing specific heads of expenditure (administrative charges, grants-in-aid, loan fees recognition where realisation is uncertain, CSR pre-2015, and certain Section 14A claims), directing limited recomputations under Rule 8D consistent with case law, and dismissing the revenue appeals challenging the favourable appellate deletions; consequential and factual matters were remitted for compliance with the directions given.

Unexplained cash credit u/s 68 - onus to explain identity, creditworthiness and genuineness of creditors - verification under section 133(6) and admissibility of remand evidence - disallowance under section 14A and computation under Rule 8D - allocation of interest and use of interest-free funds - allowability of expenditure on abandonment of project as business loss

Unexplained cash credit u/s 68 - onus to explain identity, creditworthiness and genuineness of creditors - verification under section 133(6) and admissibility of remand evidence - Deletion of addition of Rs. 8.50 crore made under section 68 was upheld. - HELD THAT: - Tribunal examined the documentary evidence placed on record (confirmations showing PAN and addresses, bank statements, audited financial statements and responses to notices issued under section 133(6)) and the remand report prepared by the AO. The assessee had produced voluminous legal evidence and repayment of the loans (mostly within the relevant year and one in the subsequent year) was established and accepted by revenue authorities. Following binding precedents (including Orissa Corporation and related High Court authorities), once identity, genuineness and prima facie creditworthiness of creditors are established and corroborated by independent verification, the initial onus under section 68 is discharged and the burden shifts to the Revenue to impeach the evidence. The Tribunal found no contrary material to discredit the creditors or the banking-channel transactions and accordingly concluded that the CIT(A) rightly admitted the additional evidence, considered the remand report and correctly deleted the addition under section 68. [Paras 8, 9, 11, 15]

Revenue grounds attacking deletion of the addition under section 68 are dismissed; deletion is sustained.

Disallowance under section 14A and computation under Rule 8D - allocation of interest and use of interest-free funds - Disallowance of Rs. 10,09,988 under section 14A was deleted by CIT(A) and the deletion was sustained. - HELD THAT: - It was an undisputed factual position that the assessee had sufficient own funds/non-interest bearing funds (stated at Rs. 62.55 crore) to meet the investments complained of (investments computed at Rs. 31.79 crore). Applying the factual approach endorsed by the Supreme Court in Reliance Industries and the jurisdictional authority (HDFC Bank v. DCIT), the Tribunal held that investments could reasonably be presumed to have been made from interest-free funds and that the CIT(A) was correct in deleting the disallowance computed under Rule 8D. The Revenue did not establish that interest-bearing funds were necessarily applied to earn exempt income. [Paras 16, 20, 21]

Ground challenging deletion of the section 14A disallowance is dismissed; deletion is upheld.

Allocation of interest and use of interest-free funds - disallowance under section 14A and computation under Rule 8D - Addition of Rs. 5,37,962 disallowing part of interest expense was deleted and that deletion was sustained. - HELD THAT: - Assessing Officer computed disallowance by applying a ratio of borrowed funds to available interest-free funds, but the factual record showed availability of substantial own/non-interest funds (Rs. 62.55 crore) and advances given interest-free could be explained from those funds. Applying the Supreme Court's factual approach in Reliance Industries and relevant High Court precedent, the Tribunal held that the CIT(A) rightly deleted the AO's estimated disallowance since the AO did not demonstrate that interest-bearing funds funded the exempt income. [Paras 22, 26, 27]

Revenue's challenge to the deletion of interest disallowance is dismissed; deletion is sustained.

Allowability of expenditure on abandonment of project as business loss - Deletion of addition of Rs. 9,99,999 (sundry balances written off) was upheld as allowable business expenditure. - HELD THAT: - Assessee produced contemporaneous ledger entries, bank statements and correspondence showing that the amount was an advance made in the course of its business for a proposed investment/project which was subsequently abandoned. The CIT(A) relied on Calcutta High Court authority (Binani Cement) holding that expenditure written off on abandonment of a project arises in the year of abandonment and may be allowable under section 37. Tribunal found the facts and documentary record sufficient to show the payment was wholly and exclusively for business purposes and that the AO's disallowance was not justified. [Paras 28, 33]

Revenue's ground attacking deletion of the sundry balances written off is dismissed; deletion is sustained.

Final Conclusion: For Assessment Year 2014-15, the Tribunal dismissed the Revenue's appeal in entirety: the deletions made by the CIT(A) of the addition under section 68, the disallowances under section 14A (including interest allocation), and the disallowance of sundry balances written off were upheld on the facts and applicable precedent.

Assessing Officer's power to rectify/issue corrigendum - Assessment as an integrated process - Computation sheet and demand notice as part of assessment - Rectification of apparent clerical or copy paste errors in assessment order

Assessing Officer's power to rectify/issue corrigendum - Computation sheet and demand notice as part of assessment - Rectification of apparent clerical or copy paste errors in assessment order - Validity of corrigendum dated 21.12.2019 and whether the Assessing Officer could withdraw, modify or substitute the assessment order of 20.12.2019 by issuing the corrigendum. - HELD THAT: - The Tribunal found that the original assessment order dated 20.12.2019 contained material inconsistencies (wrong date of filing and returned income) that appeared to be the result of a mistaken insertion of another assessee's text. The computation sheet and demand notice generated on 20.12.2019 correctly recorded the additions and tax demand, and the corrigendum dated 21.12.2019 reproduced those correct particulars. Applying the principle that assessment is an integrated process and that computation sheets/demand notices form part of the assessment exercise, the Tribunal held that the AO's corrigendum, issued within the limitation period and matching the computation sheet and demand notice, legitimately rectified the apparent clerical/technical error in the assessment order. The Tribunal relied on the reasoning in Kalyankumar Ray (assessment is an integrated process and computation/demand forms part of assessment) and relevant High Court/Tribunal decisions recognising corrigenda to rectify apparent errors in the preamble or record of assessment. On that basis the Tribunal reversed the CIT(A)'s conclusion that the AO had no power to make the corrigendum and held the corrigendum to be a valid part of the assessment process. [Paras 7]

The Tribunal reversed the CIT(A)'s finding and held that the corrigendum dated 21.12.2019 validly rectified the clerical/mistaken entries in the assessment order of 20.12.2019 and forms part of the assessment process.

Remand for adjudication on merits - Whether the additions reflected in the corrigendum were adjudicated on merits by the CIT(A). - HELD THAT: - The Tribunal observed that the CIT(A) did not adjudicate the disputed additions on merits but quashed the corrigendum on the limited ground that the AO lacked power to substitute/modify the assessment order. Because the merits of the additions were not considered, the Tribunal restored the matter to the file of the CIT(A) for fresh adjudication on merits after affording the assessee a reasonable opportunity of hearing. [Paras 8]

Matter remanded to the CIT(A) for adjudication on merits with a direction to hear the assessee and decide afresh.

Final Conclusion: The Tribunal allowed the Revenue's appeal insofar as it held the corrigendum dated 21.12.2019 to be a valid rectification of apparent clerical errors in the assessment order of 20.12.2019, reversed the CIT(A)'s order on that point, and remitted the case to the CIT(A) for fresh adjudication on the merits of the additions after giving the assessee a reasonable opportunity of hearing.

Summary order. Appeals dismissed in view of the enhanced monetary threshold and low tax effect; pending applications disposed of.

Knowledge or conscious possession - confessional statement by co-accused as foundation for proceedings - goods handed over by police not 'goods seized' within Section 123 of the Customs Act - presumption of possession absent proof of knowledge - confiscation and penalty liability requires substantive evidence of culpability

Goods handed over by police not 'goods seized' within Section 123 of the Customs Act - confiscation and penalty liability requires substantive evidence of culpability - Whether the appellant could be held liable to confiscation and penalties where the seized gold and vehicle were handed over to Customs by police and there was no substantive evidence against him. - HELD THAT: - The Tribunal accepted that the police intercepted a vehicle and handed the seized goods to Customs, and observed the Bombay High Court holding that goods handed over to Customs by police after seizure are not "goods seized" within the meaning of Section 123 of the Customs Act; accordingly Section 123 could not be invoked against the appellant. The adjudicatory findings against the appellant rested on his presence in the intercepted vehicle, but the Tribunal found no substantive evidence connecting him to the concealment or possession of the gold. In the absence of any confessional statement by the appellant, and with the appellant consistently denying knowledge of the seized items, mere presence in the vehicle or choice of route could not support confiscation or penalties. Applying the principle that confiscation and penalty require proof of knowledge or conscious possession and cannot rest on conjecture, the Tribunal concluded that the impugned orders lacked the necessary evidentiary foundation and could not be sustained. [Paras 7, 8, 9, 10, 11]

Impugned order upholding confiscation and penalties set aside in respect of the appellant; penalties waived.

Final Conclusion: Appeal allowed; for want of substantive evidence of knowledge or conscious possession and because goods handed over by police do not fall within Section 123 as applied here, the Tribunal set aside the impugned order and waived the penalties imposed on the appellant.

Limitation under section 28(9) of the Customs Act - retrospective operation of statutory amendment - explanation preserving prior law for notices issued before commencement - deemed conclusion of proceedings where extended period lapses - possibility to adjudicate within prescribed period

Retrospective operation of statutory amendment - explanation preserving prior law for notices issued before commencement - Applicability of the amended proviso to section 28(9) to the show cause notice dated 17.10.2017 - HELD THAT: - The Tribunal accepted the Commissioner's conclusion that Explanation 4, as substituted with retrospective effect, preserves the pre-amendment regime for show cause notices issued prior to 29.03.2018. Having regard to the substitution of Explanation 4 on 27.03.2020 (with retrospective effect from 29.03.2018), the show cause notice dated 17.10.2017 continued to be governed by the unamended section 28(9). The Tribunal relied on the legislative intent reflected in the substituted Explanation and on the consistent judicial treatment discussed in the decision of the Delhi High Court, which held that notices issued prior to commencement of the Finance Act, 2018 remain subject to the unamended provision. The Tribunal therefore rejected the appellant's contention that the amended timing provisions operated retrospectively to terminate proceedings in respect of the 2017 notice. [Paras 11, 16, 17]

The show cause notice dated 17.10.2017 is governed by the unamended section 28(9) of the Customs Act.

Limitation under section 28(9) of the Customs Act - possibility to adjudicate within prescribed period - Whether the adjudication of the 17.10.2017 show cause notice was barred by the time limits in the unamended section 28(9) - HELD THAT: - The Tribunal upheld the Commissioner's factual and legal finding that it was not possible to determine the amount of duty within the period prescribed by the unamended section 28(9). The Commissioner recorded that the appellant had not filed any substantive reply for a long period, sought annexures only in December 2019 and July 2020, the file was transferred for adjudication, and COVID-related restrictions delayed proceedings until early 2021; copies and personal hearings were provided thereafter. On those recorded facts, the Commissioner concluded that the adjudication could not reasonably have been completed within the earlier statutory period. The Tribunal found these reasons to be good and cogent, and noted that the appellant had not challenged the merits and had not drawn the Commissioner's attention to the substituted Explanation before filing its interim reply relying on contrary case law. [Paras 11, 19, 20]

The adjudication was not time-barred under the unamended section 28(9); the Commissioner validly proceeded to decide the show cause notice on merits.

Final Conclusion: The substituted Explanation to section 28 preserves the pre-amendment regime for SCNs issued before 29.03.2018, and on the facts recorded the Commissioner rightly held that adjudication of the 17.10.2017 notice was not barred by time; the appeals are dismissed.

Maintainability of appeal - interpretation of Rule 6A of the CESTAT Procedure Rules, 1982 - requirement of separate appeals where multiple orders-in-original exist - effect of a common order in appeal on number of appeals - monetary threshold under Ministry of Finance (Litigation Policy) applies to each appeal

Maintainability of appeal - interpretation of Rule 6A of the CESTAT Procedure Rules, 1982 - requirement of separate appeals where multiple orders-in-original exist - effect of a common order in appeal on number of appeals - monetary threshold under Ministry of Finance (Litigation Policy) applies to each appeal - Whether a single departmental appeal is maintainable against a common order in appeal disposing of separate orders in original in respect of multiple Bills of Entry - HELD THAT: - The Tribunal examined Rule 6A which allows one Memorandum of Appeal against the order or decision of the authority below but, by Explanation, requires that where the impugned order in appeal has been passed with reference to more than one orders in original, the Memoranda of Appeal must be as many as the number of orders in original. The Tribunal held that where each Bill of Entry gives rise to an assessment order (orders in original), the department must file a separate appeal for each such order even though the Commissioner (Appeals) disposed of the importer's separate appeals by a common order in appeal. The bench followed the Ahmedabad CESTAT decision in CMR Nikkie India Pvt Ltd interpreting Rule 6A to require appeals corresponding to the number of Bills of Entry, and the Jammu & Kashmir High Court decision in CGST & CE, Jammu vs. M/s Narbada Industries which construed the Ministry of Finance Litigation Policy's monetary limits as applicable to each individual appeal rather than to an aggregate of multiple appeals. Applying these authorities and the plain wording of Rule 6A and its Explanation, the Tribunal concluded that a single departmental appeal against multiple orders in original is not maintainable and that the department must file separate appeals for each order in original if so advised. [Paras 7, 8, 9, 10, 11]

The departmental appeal filed as one memorandum against 13 Bills of Entry is not maintainable; Revenue directed to file separate appeals corresponding to each order in original.

Final Conclusion: Appeal dismissed as not maintainable; Revenue directed to file separate appeals in respect of each of the 13 assessment orders if so advised.

Transaction value - rejection of declared value - re-determination under Customs Valuation Rules - speaking order - obligation of appellate authority to consider grounds of assessing officer - remand for fresh adjudication

Obligation of appellate authority to consider grounds of assessing officer - speaking order - Whether the Commissioner (Appeals) considered the reasons recorded by the Assessing Officer before setting aside the re-determination of value. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) did not advert to or examine the reasons given by the Assessing Officer in the speaking order which formed the basis for rejection of the declared transaction value and for re-determination under the Valuation Rules. The appellate order addressed issues and authorities not considered by the Assessing Officer and failed to engage with the contemporaneous import data, LME-based methodology and the DGOV guidance relied upon in the assessment orders. For these reasons the Tribunal held that the Commissioner (Appeals) materially failed in the duty to consider the AO's determinative reasoning before setting aside the assessments. [Paras 12]

The Commissioner (Appeals)'s order is unsustainable for failure to consider the Assessing Officer's reasons and is set aside to that extent.

Remand for fresh adjudication - re-determination under Customs Valuation Rules - transaction value - Whether the matter should be remitted for fresh consideration and, if so, the scope and timetable for such reconsideration. - HELD THAT: - Having set aside the appellate order for want of proper consideration of the assessment reasoning, the Tribunal remitted the matter to the Commissioner (Appeals) to examine the contentions raised by both the respondent and the department and to pass a fresh speaking order. The Tribunal directed that the Commissioner (Appeals) should undertake examination of the Assessing Officer's findings, the contemporaneous import data relied upon, and the submissions of the parties, and dispose of the matters expeditiously. The Tribunal gave a preferential timeframe for completion to ensure prompt adjudication. [Paras 13]

The impugned appellate order is set aside insofar as it concerns the specified appeals and the matter is remanded to the Commissioner (Appeals) to pass a fresh order after considering the Assessing Officer's reasons; the Commissioner (Appeals) should preferably decide the matter within four months from production of a copy of this order.

Final Conclusion: The Commissioner (Appeals)'s order was set aside for failure to consider the Assessing Officer's reasons; the matters were remanded to the Commissioner (Appeals) for fresh, reasoned adjudication of valuation issues with a direction to decide preferably within four months.

Exigibility of stamp duty on a court sanctioned scheme of amalgamation - definition of "conveyance" and instruments chargeable to stamp duty - applicability of Notification No.13 dated 25.12.1937 (remission/exemption) - suo motu power under section 47A(3) - limitation and scope - availability of alternative statutory remedies vs. writ jurisdiction under Article 226 - chargeability of dematerialised shares and section 8A

Availability of alternative statutory remedies vs. writ jurisdiction under Article 226 - Whether the writ petition is maintainable despite availability of alternative statutory remedies under the Stamp Act. - HELD THAT: - The Court held that availability of alternative statutory remedies does not in itself bar exercise of High Court's jurisdiction under Article 226. The Court applied established principles that writ jurisdiction may be invoked where the authority has no jurisdiction or has usurped jurisdiction or where other recognised contingencies exist. The respondent's contention that sections 56 or 47A(4) provided an efficacious alternative remedy was rejected and the objection to maintainability was overruled. [Paras 7]

Writ petition is maintainable and the objection based on availability of alternative statutory remedies is rejected.

Suo motu power under section 47A(3) - limitation and scope - Whether the Collector could exercise suo motu powers under section 47A(3) in March 2014 in respect of the merger order registered on 07.12.2011. - HELD THAT: - Section 47A(3) confers suo motu power on the Collector to call for and examine an instrument within two years from the date of its registration. The Court observed that the merger order was registered on 07.12.2011 and the show cause notice was issued on 20.03.2014, which falls beyond the two year limitation prescribed by section 47A(3). Accordingly the exercise of suo motu power in the present case was, on that footing, time barred. [Paras 8]

Exercise of suo motu power under section 47A(3) in the facts of this case was barred by limitation.

Definition of "conveyance" and instruments chargeable to stamp duty - exigibility of stamp duty on a court sanctioned scheme of amalgamation - Whether an order sanctioning a scheme of amalgamation under section 394 of the Companies Act is an instrument falling within the definition of "conveyance" and thus exigible to stamp duty. - HELD THAT: - After examining the decision in Delhi Towers Ltd. and related authorities, the Court concluded that an approved scheme of amalgamation which operates to transfer rights, title and interest (in present) of the transferor company to the transferee company falls within the inclusive definition of "conveyance" in the Stamp Act and is therefore an instrument chargeable to stamp duty. The Court noted there is no principled distinction for this purpose between movable and immovable property and relied on precedent holding that court orders sanctioning amalgamation can attract stamp duty. [Paras 9]

An approved scheme of amalgamation that effects transfer inter vivos is a conveyance within the Stamp Act and, generally, exigible to stamp duty.

Chargeability of dematerialised shares and section 8A - Whether transfer of shares in dematerialised form pursuant to the merger is separately exigible to stamp duty so as to defeat exemption under Notification No.13/1937. - HELD THAT: - The Court considered the parties' rival contentions and the statutory scheme, but in the dispositive reasoning it accepted the applicability of Notification No.13/1937 to the merger between companies that are wholly owned subsidiaries of a common parent. Consequently, the question whether separate chargeability on dematerialised shares under other provisions (and scope of section 8A) did not defeat the exemption where the Notification applied; the Court followed precedent recognising applicability of the 1937 Notification in analogous circumstances. [Paras 10]

The transfer pursuant to the sanctioned scheme is covered by Notification No.13 dated 25.12.1937 in the facts of this case and is exempt from stamp duty.

Applicability of Notification No.13 dated 25.12.1937 (remission/exemption) - Whether Notification No.13 dated 25.12.1937 was repealed or inapplicable by reason of extension of Schedule IA, and if not, whether the present merger fell within its exemption. - HELD THAT: - The Court examined the contention that the 1937 Notification stood repealed when Schedule IA was extended to Delhi. Relying on precedent (including the Coordinate Bench decision in Delhi Towers Ltd.), the Court rejected the respondent's contention of repeal and held that the Notification remained applicable. On the facts, both transferor and transferee were wholly owned subsidiaries of the same parent (Holderind), satisfying the Notification's condition, and therefore the merger order was within the scope of the exemption. [Paras 10]

Notification No.13/1937 is applicable and the merger order is exempt from payment of stamp duty under that Notification.

Final Conclusion: The writ petition is allowed: the show cause notice dated 20.03.2014 and the impugned order dated 07.08.2014 are quashed and set aside, and all consequential proceedings are disposed of in accordance with the Court's findings.

Scheme of Arrangement and demerger of undertaking - transfer of employees on demerger with continuity of service - appointed date and effective date in scheme implementation - prohibition on substantial modification of a court sanctioned scheme - limitation on belated challenge to scheme implementation

Scheme of Arrangement and demerger of undertaking - transfer of employees on demerger with continuity of service - appointed date and effective date in scheme implementation - Whether the union (Respondent No.1) was aware of the Scheme and whether the Scheme was published and implemented so as to put the union on notice and lead to implementation of transfers identified under the Scheme. - HELD THAT: - The Tribunal found that the Scheme petition's hearing date had been published in local newspapers and public notices were issued in compliance with Chapter XV, placing the Scheme in the public domain. Subsequent correspondence and meetings between the transferor, transferee and Respondent No.1 in 2011 were held and details of implementation were communicated. Respondent No.1 thereafter signed and executed multiple memoranda of settlement and MOUs (across Mumbai, Pune and Chandigarh) and continued to negotiate on behalf of employees, deriving benefits under those settlements. The record shows acknowledgements, meetings and conduct consistent with awareness and acquiescence to implementation; the transferor's Board identified specific employees on the Effective Date and those employees were treated as transferred while others remained on the transferor's payroll. [Paras 11, 12, 13, 16, 19]

Respondent No.1 was aware of the Scheme and its implementation; the Scheme was published and implemented and Respondent No.1 accepted and acquiesced to the transfer of the identified employees.

Transfer of employees on demerger with continuity of service - appointed date and effective date in scheme implementation - Proper interpretation of Clause 7.1 of the Scheme-whether it effectually transferred all employees of the transferor or only those identified and in service on the Effective Date, and the operative dates for such transfer. - HELD THAT: - Clause 7.1, read in its terms, applies to staff, workmen and employees of the ATM and Cash Management Division as identified by the Board of Directors of the transferor who are in service on the Effective Date and who shall be deemed to have become employees of the transferee with effect from the Appointed Date without break in service and with continuity. The Board of Directors of the transferor passed a resolution on 1.4.2011 identifying employees for transfer; those identified employees were consequently treated as transferred while other employees continued in the transferor's service. The impugned NCLT interpretation-construing the clause to effect transfer of all employees irrespective of identification or timing-modifies the clear import of Clause 7.1 by imposing additional, unintended requirements. [Paras 15, 16, 20, 24, 26]

Clause 7.1 applies only to employees of the demerged division as identified by the transferor's Board who were in service on the Effective Date; the NCLT's broader interpretation was erroneous.

Prohibition on substantial modification of a court sanctioned scheme - Whether the National Company Law Tribunal was entitled to modify the Scheme in the manner it did by directing a broader transfer of employees than provided in the Scheme. - HELD THAT: - Section 231 (as contextualised in the judgment) does not permit the Tribunal to make substantial modifications to a Scheme which has been approved by the members and sanctioned by the High Courts. The impugned order effectively altered the express terms of the Scheme by directing the Board to take employees as on the Appointed Date (with additional conditions) contrary to the Scheme's unambiguous drafting and the parties' intention. The Regional Director's affidavit cannot be read so as to override the clear wording of the Scheme. [Paras 21, 24, 25]

The NCLT erred in modifying the sanctioned Scheme; it could not direct a transfer broader than the Scheme's terms.

Limitation on belated challenge to scheme implementation - Whether the miscellaneous application challenging implementation of the Scheme was barred by limitation. - HELD THAT: - The miscellaneous application raising objections to implementation was filed after about five years of the Scheme's implementation and after repeated acknowledgements and settlements by Respondent No.1. The Court observed the belatedness and the conduct of Respondent No.1 in negotiating settlements post implementation, concluding the application was time barred. [Paras 23, 27]

The miscellaneous application was barred by limitation and was not maintainable.

Final Conclusion: The impugned NCLT order is set aside; the appeal is allowed, MA No.560/2016 in CP(CAA) No.306/MB/2010 is dismissed, and the NCLT's modification of the sanctioned Scheme and its interpretation of Clause 7.1 were held erroneous, the Scheme having been published, implemented and acquiesced to and the challenge being time barred.

Repayment plan under Section 105 - Effect of rejection/non-submission of repayment plan and entitlement to file for bankruptcy under Section 115(2) - Natural justice and opportunity to be heard - Filing of repayment plan and provision of documents under Regulation 19(2) of the IBBI Regulations - Discharge of the resolution professional consequent to termination/completion of the resolution process

Repayment plan under Section 105 - Effect of rejection/non-submission of repayment plan and entitlement to file for bankruptcy under Section 115(2) - Non-submission of a repayment plan by the debtor is to be treated as akin to rejection and entitles creditors to file an application for bankruptcy under Chapter IV pursuant to Section 115(2). - HELD THAT: - The statutory scheme requires the debtor to prepare a repayment plan in consultation with the resolution professional (Section 105) and the resolution professional to submit a report within the prescribed time (Section 106). Where no meeting of creditors is summoned, the Adjudicating Authority acts on the basis of the report under Section 106 (Section 114 proviso). Section 115(2) expressly provides that where the Adjudicating Authority rejects a repayment plan, debtor and creditors are entitled to file an application for bankruptcy under Chapter IV. In the present case no repayment plan was prepared or submitted by the appellant despite repeated requests from the RP; therefore the Adjudicating Authority correctly applied the consequence envisaged by Section 115(2) and granted liberty to creditors to initiate bankruptcy proceedings. The I.A. filed by the RP seeking termination of the resolution process and discharge of the RP was in consonance with this statutory consequence. [Paras 12, 13, 14, 15, 16]

The Adjudicating Authority correctly treated non-submission of a repayment plan as attracting the consequence under Section 115(2) and correctly granted liberty to creditors to file for bankruptcy.

Natural justice and opportunity to be heard - The contention that the Adjudicating Authority violated principles of natural justice by not affording the appellant an opportunity in I.A. No. 449/2024 is untenable on the facts of the case. - HELD THAT: - The appellant had repeatedly challenged earlier steps (appointment of RP and admission) unsuccessfully before the Tribunal and the Supreme Court, and after admission failed to submit any repayment plan or to raise grievances before the Adjudicating Authority despite multiple communications and reminders from the RP. The appellant's only ground in this appeal was that he was not heard in respect of I.A. 449/2024; however, having remained silent and not advanced any grievance or sought interim relief during the period when repayment plan was to be prepared, the appellant cannot now complain of non-hearing when the statutory consequence under Section 115 was invoked. The Tribunal found no persuasive ground of prejudice or violation of natural justice warranting interference with the impugned order. [Paras 4, 7, 17, 21]

No breach of natural justice is established; the challenge to the impugned order on that ground fails.

Filing of repayment plan and provision of documents under Regulation 19(2) of the IBBI Regulations - Regulation 19(2) (obligation to provide copies of documents filed with the Adjudicating Authority to guarantor and creditors) is inapplicable where no repayment plan or report under Sections 106/112 has been filed. - HELD THAT: - Regulation 19(2) requires the resolution professional to provide copies of documents filed with the Adjudicating Authority when the repayment plan (approved by creditors) and the accompanying report under Sections 106 or 112 are filed. The regulation therefore contemplated transmission of documents filed along with the report approving or considering a repayment plan. In this case no repayment plan was prepared or finalized and no report under Section 106/112 was placed before the Adjudicating Authority; consequently there were no documents falling under Regulation 19(2) to be furnished to the guarantor. The Adjudicating Authority did not err in holding Regulation 19 inapplicable on these facts. [Paras 18, 19, 20]

Regulation 19(2) did not entitle the appellant to service of documents or to require a separate hearing in the absence of any repayment plan or report being filed.

Final Conclusion: The Tribunal found no merit in the appeal: the Adjudicating Authority correctly applied the statutory consequences of non-submission of a repayment plan under Section 115(2), Regulation 19(2) was not applicable in the absence of any repayment plan or report, and no breach of natural justice was made out. The appeal is dismissed.

Applicability of Section 197(1) CrPC to proceedings under the PMLA - Protection of public servants from prosecution requiring previous sanction - Reasonable connection between the alleged act and discharge of official duty - Incorporation of Code of Criminal Procedure into a special statute subject to inconsistency - Overriding provision in a special statute cannot negate incorporated procedural provisions

Applicability of Section 197(1) CrPC to proceedings under the PMLA - Incorporation of Code of Criminal Procedure into a special statute subject to inconsistency - Overriding provision in a special statute cannot negate incorporated procedural provisions - Section 197(1) of the Code of Criminal Procedure applies to complaints under Section 44(1)(b) of the PMLA. - HELD THAT: - Section 65 of the PMLA makes the provisions of the CrPC applicable to proceedings under the PMLA insofar as they are not inconsistent with the PMLA, and Section 71 gives the PMLA overriding effect only over provisions inconsistent with it. The Court found no provision in the PMLA inconsistent with Section 197(1) CrPC. Therefore, a provision of the CrPC made applicable by Section 65 cannot be read down or rendered otiose by invoking Section 71; Section 197(1) applies to complaints under Section 44(1)(b) of the PMLA. [Paras 16, 17, 18]

Section 197(1) CrPC is applicable to complaints under Section 44(1)(b) of the PMLA.

Protection of public servants from prosecution requiring previous sanction - Reasonable connection between the alleged act and discharge of official duty - Applicability of the sanction requirement to officers appointed on deputation - Both respondents satisfied the conditions of Section 197(1) CrPC - they were public servants removable by or with the sanction of the Government and the alleged acts were committed while purporting to act in the discharge of official duty. - HELD THAT: - Two conditions must be met for Section 197(1) to apply: (i) the accused is a public servant removable only by or with the sanction of the Government; and (ii) the offence is alleged to have been committed while acting or purporting to act in the discharge of official duty. The Court examined the Memorandum of the Corporation and found governmental power to appoint and remove the first respondent; the second respondent was undisputedly removable by the Government. Taking the averments in the complaints at face value, the acts alleged (allotment of land and allocation of additional water) were connected to duties entrusted to them and were alleged to have been done while purporting to discharge official functions. The authorities cited establish that the question of sanction may be considered at stages after cognizance and that a reasonable connection between the act and official duty suffices to attract Section 197(1). [Paras 9, 10, 11, 13, 15]

The two respondents fall within Section 197(1) CrPC as public servants removable by the Government and the alleged offences are shown on the complaint to have been committed while purporting to discharge official duties.

Final Conclusion: The appeals are dismissed. The Special Court's orders taking cognizance are set aside only insofar as they relate to the two respondents; cognizance against other accused remains unaffected. The Enforcement Directorate may seek fresh cognizance against the two respondents if and when previous sanction under Section 197(1) CrPC is granted, subject to available legal and factual objections.

Summary order. Special Leave Petition dismissed as withdrawn; permission to withdraw granted; Special Court directed to proceed with the trial expeditiously; petitioner at liberty to file bail application afresh in case of change of circumstances or if the trial is not proceeded with expeditiously as directed.

Beneficial provision of Section 436A of the Cr.P.C. applying to PMLA prosecutions - application of Section 479(1) of the BNSS to prosecutions under the PMLA - release on bond for first-time offenders upon detention for one-third of the maximum sentence - court's discretion to continue detention for reasons to be recorded - exclusion of detention period caused by delay attributable to the accused in computing custody period

Application of Section 479(1) of the BNSS to prosecutions under the PMLA - release on bond for first-time offenders upon detention for one-third of the maximum sentence - First proviso to sub section (1) of Section 479 of the BNSS applies to the appellant and entitles him to release on bond. - HELD THAT: - The Court observed that the beneficial provision of Section 436A Cr.P.C. may be applied to PMLA prosecutions and, correspondingly, Section 479(1) of the BNSS governs maximum pre trial detention. The appellant is undisputedly a first time offender and has undergone detention exceeding one third of the maximum sentence prescribed for the scheduled offence. The maximum sentence for the charged offences under the Customs Act is three years, and on these facts the first proviso to sub section (1) of Section 479 applies. Consequently the appellant is entitled to be enlarged on bond under that proviso.

Appellant to be released on bond in terms of the first proviso to sub section (1) of Section 479 of the BNSS.

Court's discretion to continue detention for reasons to be recorded - Second proviso to sub section (1) of Section 479 of the BNSS is not to be invoked to deny the benefit of the first proviso in the present facts. - HELD THAT: - The respondent sought invocation of the second proviso permitting continued detention after hearing the Public Prosecutor and for reasons to be recorded. The Court found no justification on the facts of this case to exercise that discretion to refuse the statutory benefit afforded to a first time offender who has already undergone detention exceeding one third of the maximum sentence. There being no sufficient reasons recorded to outweigh the statutory entitlement, the discretion under the second proviso was not exercised.

Court declined to invoke the second proviso; benefit of first proviso granted.

Final Conclusion: Appeal allowed; appellant to be produced before the Special Court within one week and enlarged on bail on appropriate terms and conditions (including attendance and cooperation with proceedings) pending disposal of the case; pending applications disposed of.

Grant of bail - Custodial period/incarceration as factor for bail - Conditions of bail including cooperation and non-influence of witnesses - Restriction on foreign travel without court leave - Expedited trial

Grant of bail - Custodial period/incarceration as factor for bail - Conditions of bail including cooperation and non-influence of witnesses - Restriction on foreign travel without court leave - Bail was granted to the appellant and the impugned order was set aside subject to conditions to be imposed by the Trial Court. - HELD THAT: - The Court, having considered the peculiar facts and circumstances and the period of incarceration of the appellant, set aside the impugned order and granted bail. The grant of bail is subject to such terms and conditions as the Trial Court may impose. In addition, the Supreme Court directed that the Trial Court shall impose specific conditions that the appellant shall fully cooperate with the trial, shall not attempt to influence witnesses, and shall not leave the country without the leave of the Trial Court. These additional conditions are imposed as part of the bail regime fashioned by the Court in the exercise of its discretionary jurisdiction. [Paras 3]

Impugned order set aside and bail granted to the appellant subject to conditions to be imposed by the Trial Court, including cooperation with trial, non-influence of witnesses and prohibition on leaving the country without leave of the Trial Court.

Expedited trial - Direction issued to the Trial Court to expedite the trial. - HELD THAT: - The Court noted that the trial had recently commenced and two witnesses out of forty-six had been examined. In light of the limited progress and the grant of bail, the Supreme Court requested that the Trial Court expedite the trial to ensure timely completion of proceedings. [Paras 4]

Trial Court directed to expedite the trial.

Final Conclusion: The appeal is allowed: the impugned order is set aside and bail is granted on terms to be imposed by the Trial Court (including cooperation, no attempt to influence witnesses, and not leaving the country without leave), and the Trial Court is directed to expedite the trial; pending applications are disposed of.

Special leave petition dismissed - provisional attachment order - confirmation of attachment - right to statutory appeal

Special leave petition dismissed - confirmation of attachment - right to statutory appeal - Dismissal of the special leave petitions while recording that the provisional attachment order has been confirmed and leaving open the remedy of appeal. - HELD THAT: - The Court recorded the statement of the petitioner's counsel that the provisional attachment order has been confirmed. In consequence, the special leave petitions were dismissed. The Court expressly permitted the petitioner to challenge the confirmation of the attachment by filing an appeal as provided by law, thereby leaving the substantive contestation of the confirmed attachment to the appropriate appellate process rather than deciding the merits in the special leave petitions. No further adjudication on the merits of the attachment was undertaken by this Court.

Special leave petitions dismissed; petitioner may challenge the confirmed provisional attachment order by way of appeal as provided by law; pending applications disposed of.

Final Conclusion: The Supreme Court dismissed the special leave petitions after recording that the provisional attachment order had been confirmed, and directed that the petitioner is free to seek relief by pursuing the statutory appeal; all pending applications are disposed of.

Business auxiliary service - intermediary - principal-to-principal transaction - de novo adjudication - remand for fresh consideration - precedential effect of tribunal decision

Remand for fresh consideration - de novo adjudication - precedential effect of tribunal decision - business auxiliary service - intermediary - principal-to-principal transaction - Impugned order set aside and matter remitted to the adjudicating authority for fresh de novo adjudication in light of a subsequent Tribunal decision favourable to the appellant. - HELD THAT: - The Tribunal observed that identical show-cause cases were initiated in multiple jurisdictions against the appellant and noted that a subsequent decision of the Tribunal (Hyderabad Bench) held that a freight forwarder who purchases cargo space from shipping lines and sells it on principal-to-principal basis to exporters does not act as an intermediary and that profit from such transactions is not leviable as business auxiliary service. The Hyderabad decision relied upon CBEC guidance distinguishing cases where the freight forwarder acts as an agent (intermediary) from cases where he undertakes transportation on his own account (principal). Recognising that the Hyderabad decision was rendered after the adjudication in the present matter and that parallel proceedings exist at other jurisdictions, the Tribunal concluded that the present adjudication should be reconsidered afresh. For these reasons the impugned order was set aside and the matter remitted to the adjudicating authority to decide de novo in the light of the subsequent Tribunal ruling and after examining the status of related proceedings. [Paras 4, 5]

Impugned order set aside; matter remanded to the adjudicating authority for fresh de novo adjudication in view of the subsequent Tribunal decision and related proceedings.

Final Conclusion: The appeal succeeds to the extent that the impugned order is set aside and the matter is remitted for fresh de novo adjudication in light of the subsequent Tribunal (Hyderabad Bench) decision which found that buying and selling of cargo space on principal-to-principal basis does not attract service tax as business auxiliary service.

Demand based on comparison of Trial Balance and ST-3 Returns - reverse charge mechanism and revenue neutrality - extended period of limitation invoked on account of departmental audit discovery - presumption against intention to evade tax in respect of Public Sector Undertakings - penalty under Section 78 of the Finance Act, 1994

Demand based on comparison of Trial Balance and ST-3 Returns - Service tax demand cannot be sustained solely by comparing Trial Balance figures with ST-3 Returns in the absence of corroborative evidence that the difference represents consideration for taxable services. - HELD THAT: - The Tribunal held that demands premised only on disparities between ledger/trial balance figures and ST-3 returns are unsupportable unless the Revenue adduces evidence establishing that the entries in the Trial Balance represent receipt or provision of taxable services. The onus lies on the Revenue to prove that the balance-sheet entries reflect consideration for taxable services; mere numerical mismatch, without examination of the nature of ledger entries or corroborative documentation, does not permit confirmation of service tax demand. Following the principle reiterated in earlier Tribunal pronouncements, the impugned demand based on such comparison alone was set aside.

Demand based solely on difference between Trial Balance and ST-3 Returns quashed for want of corroborative evidence.

Reverse charge mechanism and revenue neutrality - extended period of limitation invoked on account of departmental audit discovery - The extended period of limitation could not be invoked where the demand was revenue-neutral (arising under reverse charge) and the Department's reliance on audit-discovery did not justify extension of limitation. - HELD THAT: - The Tribunal applied the principle that where a demand is revenue-neutral because the taxpayer could have availed equivalent credit (as in reverse charge cases), the extended limitation period is not invocable. It further observed that invoking extended limitation on the ground that non-payment would not have come to light but for an audit is unsustainable when the alleged discrepancies could have been detected by scrutiny of returns or by calling for records; audit-discovery alone does not validate the extended period. Consequently, demands falling beyond the normal period were held barred by limitation.

Extended period of limitation rejected and the demand held barred by limitation in view of revenue neutrality and absence of justification for extension.

Presumption against intention to evade tax in respect of Public Sector Undertakings - penalty under Section 78 of the Finance Act, 1994 - Penalty under Section 78 could not be sustained against the appellant, a Public Sector Undertaking, in view of the presumption against intent to evade tax. - HELD THAT: - The Tribunal accepted the position that Public Sector Undertakings are entitled to a presumption that they lack intent to evade tax. Applying that principle, and having set aside the demand on other grounds, the imposition of penalty under Section 78 was held unjustified in the facts of the case. The absence of evidence of deliberate evasion and the appellant's status precluded sustaining penal consequences under the provision.

Penalty under Section 78 set aside as not liable to be imposed on the appellant in the circumstances.

Final Conclusion: The impugned adjudication confirming service tax, interest and penalty is set aside: the demand grounded solely on Trial Balance-ST-3 discrepancies is quashed for lack of corroboration, the extended period of limitation cannot be invoked in the revenue neutral reverse charge context for the period April 2015 to June 2017, and the penalty under Section 78 is not sustainable against the Public Sector Undertaking; the appeal is allowed.

Service of orders under Section 37C - Deemed date of service - Limitation for filing appeal - Remand for consideration on merits - Opportunity of hearing and principles of natural justice

Limitation for filing appeal - Remand for consideration on merits - Validity of dismissal of the appeal by the Commissioner (Appeals) as barred by limitation - HELD THAT: - The Tribunal found that the Order in Original dated 24.02.2023 was dispatched by registered post but returned undelivered and that a copy was later sent through the GSTIN registered email and a photocopy furnished on request. Relying on earlier Tribunal decisions which held that the service regime under Section 37C must be followed in letter and spirit, the Tribunal held that the Commissioner (Appeals) ought not to have dismissed the appeal on the ground of limitation without affording the appellant an opportunity to have the merits considered. Consequently the impugned order dismissing the appeal as time barred is set aside and the matter is remanded to the Commissioner (Appeals) for fresh adjudication on merits, leaving the question of limitation aside for the appellate authority to decide only insofar as necessary after providing an opportunity of hearing. [Paras 9, 11]

Impugned order set aside; appeal allowed by way of remand to the Commissioner (Appeals) to decide on merits after hearing the appellant.

Service of orders under Section 37C - Deemed date of service - Opportunity of hearing and principles of natural justice - Whether service by GSTIN registered email and later supply of photocopy cured the service requirements under Section 37C - HELD THAT: - The Tribunal noted that Section 37C prescribes service by tender or by registered post/speed post/courier and that alternate modes such as affixing are permissible only if service in the primary mode is not possible. Citing earlier Tribunal precedents, the Bench observed that strict compliance with Section 37C is required and that consequential dates of communication must be determined in accordance with that provision. In view of these principles and the factual sequence of dispatch, return, email service and subsequent provision of photocopy, the Tribunal did not finally adjudicate the limitation issue but directed the Commissioner (Appeals) to reconsider the matter on merits and to ensure that the appellant is afforded an opportunity of hearing in accordance with the principles of natural justice. [Paras 9, 10, 11]

Matter remanded to Commissioner (Appeals) to determine service and related consequences under Section 37C and to decide the appeal on merits after affording hearing.

Final Conclusion: The impugned order dismissing the appeal as time barred is set aside and the appeal is remitted to the Commissioner (Appeals) to be decided on merits; the Commissioner (Appeals) shall afford the appellant an opportunity of hearing and apply the service provisions of Section 37C in accordance with the Tribunal's precedents.

Extended period of limitation - inclusion of cost of raw materials in value of taxable services - bona fide conflict between tribunal benches as a defence to invocation of extended period - classification of activity as manufacture versus taxable service - precedential effect of earlier tribunal and Supreme Court decisions

Extended period of limitation - inclusion of cost of raw materials in value of taxable services - bona fide conflict between tribunal benches as a defence to invocation of extended period - Whether the department could invoke the extended period of limitation to demand service tax by including the cost of materials consumed in providing photographic services - HELD THAT: - The Tribunal noted that different benches had taken divergent views on whether the cost of materials used in photography is includable in the value of taxable services, with some decisions holding exclusion and a Larger Bench holding inclusion. Given those conflicting precedents, the appellant had bona fide grounds to believe the cost of materials was not includable. In those circumstances the extended period could not be invoked. The appellate bench also took into account the appellant's contention that, on aggregate, the service tax paid exceeded the demand. Without adjudicating the substantive question on merit, the bench concluded that reliance on conflicting tribunal opinions and the excess payment weighed against applying the extended period and sustained the appeal on limitation grounds (paragraph 7). [Paras 7]

Extended period of limitation cannot be invoked; appeal ST/58178/2013 allowed on limitation.

Classification of activity as manufacture versus taxable service - precedential effect of earlier tribunal and Supreme Court decisions - Whether the activities of printing photographs and creating photo books/albums constitute manufacturing (and are not taxable as 'Photography Services') - HELD THAT: - The Tribunal held that the question was no longer open in view of the Tribunal's decision in Venus Albums Co Pvt Ltd, which was affirmed by the Supreme Court, and noted that this Bench had recently decided an identical factual issue in favour of the assessee. Applying those precedents and the consistent reasoning that the relevant activities amount to manufacture (and thus fall outside service tax), the bench allowed the appeal on merits (paragraph 8). [Paras 8]

Activities of printing photographs and creating photo books/albums held to amount to manufacture; appeal ST/61058/2019 allowed on merits.

Final Conclusion: Both appeals are allowed: ST/58178/2013 is allowed on limitation because extended period could not be invoked in view of bona fide conflict of tribunal decisions and the appellant's excess payment; ST/61058/2019 is allowed on merits as the activities in question amount to manufacture and not taxable 'Photography Services'. Miscellaneous application to change the respondent's name and address is allowed.

Taxability of services provided outside the taxable territory - place of provision of service - taxation of foreign bank charges and finance cost - reverse charge mechanism and entitlement to CENVAT credit - invocation of extended period of limitation requiring suppression/fraud - show cause notice based solely on audit objections - Circular No.180/06/2014-ST and its clarificatory effect

Taxability of services provided outside the taxable territory - place of provision of service - taxation of foreign bank charges and finance cost - Circular No.180/06/2014-ST and its clarificatory effect - Foreign bank charges and finance costs deducted by the buyer's foreign bank are not taxable in India as services provided to the appellant because the service provider and recipient were both located outside India. - HELD THAT: - The Tribunal found that the foreign bank acted for and charged its own client (the buyer located in a non-taxable territory) and there was no service-provider/service-recipient relationship between the foreign bank and the appellant. The appellant's Indian banker negotiated documents and any service, if provided, was from the Indian bank. Where both provider and recipient are outside India, the place of provision is outside the taxable territory and such services fall outside the charging provision. The Tribunal relied on the Circular No.180/06/2014-ST which states that remittance of money and related conversion charges by parties located outside India do not constitute taxable services in India. Earlier decisions holding similarly were also followed. The Tribunal further observed that even if liability arose under reverse charge the appellant would be entitled to CENVAT credit of service tax paid, citing established authority. [Paras 17, 18, 19, 20, 21]

Demand for service tax on foreign bank charges and finance cost is untenable because the services were provided outside India and not taxable in India.

Invocation of extended period of limitation requiring suppression/fraud - show cause notice based solely on audit objections - penalty not imposable where only interpretation of law is involved - The show cause notice invoking the extended period is time barred and penalties are not sustainable because there was no evidence of deliberate suppression or fraud and the demand was based on audit objections without independent departmental investigation. - HELD THAT: - The Tribunal observed that the SCN covered the period 2010-11 to 2014-15 and that the normal limitation precludes demands prior to 31.03.2014; demands in respect of finance cost and bank charges for earlier years are therefore time barred. The Court applied the principle that extended limitation requires proof of suppression, fraud or deliberate withholding of information; mere omission or reflection of payments in financial statements does not constitute suppression. The Tribunal noted that the SCN was issued primarily on audit objections without independent departmental inquiry and that settled authorities require strict proof of deliberate concealment before invoking extended period or imposing penalties. Consequently penalties could not be sustained, particularly where the issue involved interpretation of law. [Paras 22, 23, 24]

The SCN invoking the extended period is barred by time and the penalties cannot be imposed; the impugned order is set aside.

Final Conclusion: The appeal is allowed: the demand of service tax on foreign bank charges and finance cost is rejected as services provided outside taxable territory, the extended period invocation is disallowed for lack of suppression, penalties are not sustainable, and the impugned order is set aside.

Suppression of facts - extended period of limitation - reverse charge mechanism - benefit of voluntary deposit under section 73(3) of the Finance Act, 1994 - onus on revenue to prove wilful suppression - penalty for deliberate evasion

Suppression of facts - extended period of limitation - onus on revenue to prove wilful suppression - reverse charge mechanism - Whether the extended period of limitation could be invoked on the ground of alleged suppression of liability for service tax on Guarantee Fee paid during 01.04.2016 to 30.06.2017. - HELD THAT: - The appellant, a fully Stateowned company, admitted liability under the reverse charge mechanism but asserted ignorance of that liability until communicated by the Department. The Tribunal applied settled precedent that misstatement or suppression must be wilful to justify invocation of an extended period; mere omission to pay tax does not establish intent to evade. The Department bears the burden to prove conscious and deliberate withholding of information. The record contained only verbal allegations and no evidence of a positive act showing malafide intent. Further, Departmental guidance requires the ingredients justifying extended period to be spelled out in the show cause notice with supporting evidence. The appellant made prompt payment in instalments after the Department's letter dated 17.03.2020, leaving only a small residual amount unpaid, which demonstrates lack of intent to evade. On these grounds the Tribunal held that the extended period was wrongly invoked and the show cause notice should not have been issued under the extended period principle. [Paras 6, 7, 8, 9, 10]

Extended period of limitation was not invocable; the show cause notice wrongly relied on extended limitation.

Penalty for deliberate evasion - benefit of voluntary deposit under section 73(3) of the Finance Act, 1994 - Whether penalty for suppression/deliberate evasion could be validly imposed on the appellant. - HELD THAT: - Penalty under the relevant provisions is punitive and can be imposed only where the Department proves deliberate deception or intent to avoid duty. The Tribunal noted that the appellant promptly deposited the demanded service tax with interest upon being informed, and being a Stateowned entity, the presumption of bonafide applies and was not rebutted by evidence. Reliance on authorities and departmental clarifications supporting closure of proceedings on voluntary deposit strengthened the conclusion that penalty was not warranted. In absence of proof of wilful suppression, imposition and confirmation of penalty could not be sustained. [Paras 10, 11]

Penalty confirmed by the authorities is set aside for want of proof of deliberate evasion; benefit of voluntary deposit applications and conduct of appellant preclude penalty.

Final Conclusion: The appeal is partly allowed: the order is set aside insofar as imposition and confirmation of penalty and the invocation of the extended period are concerned; the balance of the adjudication (recognition of liability and demand, noting appellant's payment) is upheld and no further consequential relief is granted.

Pre-deposit requirement - interim relief - disposal on merits - statutory provision unaffected - order not to be treated as precedent

Pre-deposit requirement - interim relief - disposal on merits - Confirmation of interim order directing disposal of the appeal on merits despite the pre-deposit requirement. - HELD THAT: - The Court noted that notice in this appeal was issued subject to the appellant depositing 15% of the duty amount within four weeks, and that the appellant complied with that direction. Having heard the Additional Solicitor General and considering the matter in the peculiar facts and circumstances of the case, the Court confirmed its interim order and directed the Customs, Excise and Service Tax Appellate Tribunal to dispose of the appeal on merits. The Court expressly clarified that this direction is given without any implication on the statutory provision governing pre-deposit and that the order is not to be cited as a precedent. [Paras 5]

Interim order confirmed; CESTAT directed to dispose of the appeal on merits, without affecting the statutory provision and not to be cited as precedent.

Final Conclusion: Leave granted; appeal disposed by confirming the interim order and directing the CESTAT to decide the appeal on merits after noting compliance with the conditional pre-deposit, with the clarification that the order does not affect the statutory provision and is not a precedent.

Repeal and savings - procedure under Section 45 of the Delhi Sales Tax Act - appeal to High Court under Section 81 of the DVAT Act - substantial question of law - retrospective savings clause - continuation of accrued rights under repeal (General Clauses principle) - interpretation of Section 106(4) of the DVAT Act

Appeal to High Court under Section 81 of the DVAT Act - substantial question of law - repeal and savings - Maintainability of appeals instituted under Section 81 of the DVAT Act in respect of orders relating to periods ending before 1st April 2005 - HELD THAT: - The Court held that the DVAT Act repealed the DST Act but preserved rights, entitlements and liabilities by way of its savings clauses. Section 81 of the DVAT Act provides a direct remedy of appeal to the High Court where a substantial question of law is involved. Applying principles of repeal and the General Clauses doctrine, the Court concluded that the right of appeal was preserved and the DVAT Act changed only the procedure by which the preserved right could be exercised. The earlier decisions (including Shiv Shakti Kirana Kendra and Jupitor Exports) recognizing a direct appeal under the DVAT Act remain apposite. On this basis the preliminary objection to maintainability was negatived and the appeals instituted under Section 81 were held maintainable (para 28). [Paras 28]

Appeals instituted before the High Court under Section 81 of the DVAT Act are maintainable even when they relate to periods ending before 1st April 2005.

Interpretation of Section 106(4) of the DVAT Act - procedure under Section 45 of the Delhi Sales Tax Act - continuation of accrued rights under repeal (General Clauses principle) - retrospective savings clause - Whether Section 106(4) of the DVAT Act requires adherence to the Section 45 DST Act procedure (statement of case) for appeals relating to pre-1 April 2005 periods - HELD THAT: - The Court interpreted Section 106(4) in light of the Statement of Objects and Reasons and settled principles on repeal and savings. Section 106(4) was held to be a specific savings provision primarily intended to preserve substantive rights such as revisionary powers and other liabilities under the DST Act, not to resurrect or mandate erstwhile procedural requirements. The obligation to seek a statement of case under Section 45 DST Act was characterized as procedural and not as a liability 'accrued or incurred' which the savings clause was meant to protect. Consequently, sub-section (4) does not compel appeals filed after the DVAT Act to follow the Section 45 procedure; the procedural route provided by Section 81 governs such appeals (paras 16, 19, 23-27). [Paras 16, 19, 23, 26, 27]

Section 106(4) does not oblige parties to follow the DST Act's Section 45 statement-of-case procedure for appeals; it preserves substantive rights and liabilities but does not resurrect prior procedural formalities.

Final Conclusion: The preliminary objection on maintainability was rejected; appeals filed under Section 81 of the DVAT Act are maintainable notwithstanding that they relate to periods ending before 1 April 2005, and Section 106(4) does not revive the Section 45 DST Act procedure requiring a statement of case.

Ex parte reassessment - Violation of principles of natural justice - Appeal barred by limitation - Remand for fresh hearing - Disallowance of input tax credit for non-production of books

Ex parte reassessment - Violation of principles of natural justice - Validity of the reassessment order passed without service/hearing of the petitioner - HELD THAT: - The Assistant Commissioner recorded that the VAT Form-275 call could not be served and proceeded to pass an order disallowing the claimed input credit for October 2010. The High Court found that the reassessment order was thus passed without hearing the petitioner and amounted to an ex parte assessment in breach of the principles of natural justice. In view of that procedural infirmity the Court held the original reassessment order unsustainable and quashed it, concluding that the matter must be remitted for fresh adjudication after affording the dealer an opportunity to be heard.

Reassessment order quashed and matter remitted to the Assistant Commissioner for fresh hearing and appropriate adjudication.

Appeal barred by limitation - Remand for fresh hearing - Sustainability of the appellate order dismissing the appeal as time-barred in circumstances where the original order was ex parte - HELD THAT: - The Appellate Authority dismissed the appeal as barred by limitation, recording that the reassessment order and demand were served on 30-03-2017 and the appeal was filed in October 2023. The High Court accepted the petitioner's contention that because the original order was passed ex parte without service/hearing, the appeal being belated could not be strictly relied upon to deny the petitioner a forum to challenge the merits. For that reason the Court quashed the appellate order and remitted the matter to the Assistant Commissioner for fresh disposal on merits. The Court expressly permitted the Assistant Commissioner to regulate procedure and directed that the matter be decided on merits without reference to delay.

Appellate order dismissed as barred by limitation set aside; appellate order quashed and proceedings remitted for fresh disposal on merits without regard to delay.

Final Conclusion: Writ petition allowed: the reassessment order dated 24.03.2017 and the appellate order dated 28.05.2024 are quashed; matter remitted to the Assistant Commissioner for fresh hearing and disposal on merits (petitioner to appear on the date directed), with liberty to the Assistant Commissioner to regulate procedure and to decide the matter without reference to delay.

Construction of exemption notifications (specific versus general) - application of Section 11A power to grant and vary exemptions - liability to pay entry tax rests on the dealer who brings or takes delivery - contractual allocation of tax liability and effect on statutory obligation - requirement of production of exemption certificate by an entrepreneur - benefit of ambiguity in exemption construed against assesseee in absence of compliance

Construction of exemption notifications (specific versus general) - application of Section 11A power to grant and vary exemptions - entitlement to exemption under Notification No. FD 37 CET 2000(1) dated 31.03.2000 was rejected and Notification No. FD 10 CET 2010 dated 18.12.2010 held applicable to the petitioner - HELD THAT: - The Court examined both notifications and the statutory power under Section 11A. Notification dated 31.03.2000 conferred exemption to "dealers" on windmills and parts; Notification dated 18.12.2010 granted exemptions to "entrepreneurs" for plant and machinery and inputs for renewable energy projects subject to specified procedural conditions. The petitioner had obtained project sanction under the State Energy Policy during 2016 and acknowledged applicability of the 18.12.2010 notification in earlier correspondence. The petitioner failed to produce the requisite certificate from the Department of Energy showing registration, dates of commencement and eligibility as required by the 18.12.2010 notification. On these facts the Court rejected the claim that the 2000 notification applied to the petitioner and held the 18.12.2010 notification to be the relevant exemption scheme for the petitioner's project. The ancillary arguments that the 2000 notification was not rescinded or that it should prevail as more specific were held inconsequential in the absence of the statutory certificate and in view of the project being approved under the later policy and notification. [Paras 40, 48, 49]

Petitioner's claim to exemption under notification dated 31.03.2000 is rejected; notification dated 18.12.2010 is applicable.

Liability to pay entry tax rests on the dealer who brings or takes delivery - contractual allocation of tax liability and effect on statutory obligation - contract terms allocating payment of taxes to the contractor (Gamesa) did not relieve the petitioner of statutory obligation when it failed to comply with the exemption procedure - HELD THAT: - Section 3(2) of the KTEG Act places liability to pay entry tax on every dealer who brings or takes delivery of goods. The supply contract between the parties expressly stated that the supply price was inclusive of all taxes and contained indemnity and change in law clauses shifting tax risk. The Court found that the parties were in consensus about the contractual allocation of tax risk but that such commercial allocation does not supplant statutory requirements or the petitioner's obligation to follow the exemption procedure under the 18.12.2010 notification. Because the petitioner had earlier relied on the 2010 notification in official replies and failed to produce the statutory certificate when called upon, it could not resile from that position and claim total exemption under the 2000 notification. [Paras 29, 30, 31, 32, 50]

Contractual provisions allocating tax to the contractor do not excuse the petitioner from statutory compliance; petitioner cannot repudiate earlier acknowledgement of the 18.12.2010 notification to claim exemption under the 31.03.2000 notification.

Requirement of production of exemption certificate by an entrepreneur - benefit of ambiguity in exemption construed against assesseee in absence of compliance - failure to produce the Department of Energy certificate mandated under the 18.12.2010 notification disentitled the petitioner from claiming the exemption at the adjudicatory stage - HELD THAT: - Notification dated 18.12.2010 conditions exemption on production of the original certificate from the Department of Energy certifying project registration, dates of commencement of implementation and commercial generation and eligibility. The Court observed that despite an order directing production of those documents, the petitioner did not furnish them. Given the procedural preconditions for claiming exemption and the petitioner's prior acknowledgement of the 2010 notification, the Court concluded that the petitioner was not entitled to the exemption in the assessment proceedings. [Paras 9, 34, 48]

Petitioner's entitlement to exemption was defeated by non-production of the certificate required under the 18.12.2010 notification.

Remedial opportunity for compliance and limited verification - petitioner granted limited time to comply with the procedural requirements to claim exemption; respondents may proceed to recover tax and interest if petitioner fails to avail the opportunity - HELD THAT: - Although the petition was dismissed on merits, the Court recognised the policy objective of promoting renewable energy and granted the petitioner a three month period from receipt of the order to comply with the prescribed procedure and produce the requisite certificate to claim exemption under the 18.12.2010 notification. This relief is procedural and limited: if the petitioner does not complete the compliance within the stipulated period the respondents are at liberty to recover tax and interest in accordance with law. [Paras 51]

Petition dismissed; petitioner given three months to complete statutory procedure to claim exemption, failing which recovery may proceed.

Final Conclusion: Writ petition dismissed. The Court holds that the exemption regime under Notification dated 18.12.2010 (not the 31.03.2000 notification) governed the petitioner's renewable energy project for the relevant period; the petitioner's failure to produce the Department of Energy certificate and its earlier acknowledgment of the 2010 notification precluded the claimed exemption in assessment. The petitioner is granted three months to comply with the prescribed procedure to claim exemption; if it fails to do so, respondents may recover tax and interest as per law.

Interpretation of Entry 8 (List II) - scope of 'intoxicating liquors' - denatured/industrial alcohol versus potable alcohol - industry versus product distinction in the Seventh Schedule - Entry 52 (List I) and parliamentary control of scheduled industries - doctrine of occupied field and Section 18G of the IDRA - harmonious construction of overlapping entries - quid pro quo regulatory fees and State regulatory competence

Entry 52 (List I) and parliamentary control of scheduled industries - interpretation of Entry 8 (List II) - scope of 'intoxicating liquors' - industry versus product distinction in the Seventh Schedule - Whether Entry 52 of List I overrides Entry 8 of List II - HELD THAT: - The Court held that Entry 8 (List II) is a distinct, specific head dealing with "intoxicating liquors" and that it cannot be displaced by a general declaration under Entry 52 (List I) so as to convert the State's exclusive field into a Parliamentary one. The Seventh Schedule differentiates industry-entries and product-entries; special entries (like Entry 8) exclude the sweep of general entries (like Entry 24). Accordingly Parliament cannot, by a declaration under Entry 52 alone, take over the field of "intoxicating liquors" as contemplated by Entry 8. The judgment therefore preserves State legislative competence over intoxicating liquors as so interpreted, while recognising that Entry 52 denudes State power only to the extent of the field covered by a valid Parliamentary law enacted under that entry. [Paras 140]

Parliament cannot occupy the field of intoxicating liquor (Entry 8, List II) merely by invoking Entry 52 (List I); State competence under Entry 8 remains unimpaired.

Interpretation of Entry 8 (List II) - scope of 'intoxicating liquors' - denatured/industrial alcohol versus potable alcohol - harmonious construction of overlapping entries - Whether the expression 'intoxicating liquors' in Entry 8 of List II includes alcohol other than potable alcohol - HELD THAT: - The Court construed Entry 8 as both industry-based and product-based: the phrase "that is to say" is illustrative, not exhaustive, and Entry 8 extends beyond only the popular notion of potable beverages. The term "intoxicating liquor" covers alcohol that can be noxiously used to the detriment of public health, and therefore includes rectified spirit, ENA and denatured spirit insofar as they are capable of being misused as intoxicants; it does not, however, include downstream final products (e.g. a finished hand sanitizer) whose inclusion would unduly trench on other entries. On this basis the Court overruled the earlier seven-Judge Synthetics (7J) holding to the extent that it confined Entry 8 to potable alcohol. [Paras 140]

The expression 'intoxicating liquors' in Entry 8 includes non potable forms of alcohol (such as rectified spirit, ENA and denatured spirit) insofar as they can be noxiously used, and Entry 8 is both industry- and product-based.

Doctrine of occupied field and Section 18G of the IDRA - Entry 33 (List III) - concurrent powers over products of scheduled industries - harmonious construction of overlapping entries - Whether a notified order under Section 18G of the IDRA is necessary for Parliament to occupy the field under Entry 33 of List III - HELD THAT: - The Court observed that because Entry 33(a) (List III) and Section 18G of the IDRA arise from Parliament's power under Entry 52 (List I), the insertion of Section 18G manifests Parliamentary control over products of scheduled industries. Having interpreted Entry 8 to cover denatured/industrial alcohol, the Court declined to decide the full correctness of earlier observations about Section 18G occupying Entry 33; nonetheless it held that, in any event, the question of Section 18G occupying the field need not be adjudicated for denatured alcohol because denatured alcohol falls within Entry 8 as interpreted. The judgment therefore leaves open broader Section 18G/Entry 33 issues but records that, given the Entry 8 conclusion, the notified-order issue does not arise for denatured alcohol. [Paras 139, 140]

No necessity to adjudicate the requirement of a notified order under Section 18G for Parliament to occupy Entry 33 in respect of denatured alcohol because denatured alcohol is covered by Entry 8 as interpreted.

Final Conclusion: The Reference is answered: Entry 8 (List II) is to be read as both an industry based and product based entry whose illustrative phrase "that is to say" does not exhaust its scope; "intoxicating liquors" includes alcohol forms (rectified spirit, ENA, denatured spirit) capable of noxious use, though not downstream final products. Parliament cannot, by a declaration under Entry 52 alone, displace the field of "intoxicating liquors"; because denatured/industrial alcohol falls within Entry 8 as construed, questions about occupation of the field under Section 18G/Entry 33 do not arise for denatured alcohol in this reference. The earlier seven Judge Synthetics (7J) passage limiting Entry 8 is modified in the terms stated.

Vicarious liability of directors under Section 138 read with Section 141 of the Negotiable Instruments Act - quashing of criminal complaint under Section 482 Cr.P.C. for abuse of process - requirement of specific averments to attribute liability to company officers - liability of a Chairman/non-executive director not to be presumed from designation alone - standards for furnishing sterling incontrovertible material to obtain quashing

Vicarious liability of directors under Section 138 read with Section 141 of the Negotiable Instruments Act - requirement of specific averments to attribute liability to company officers - quashing of criminal complaint under Section 482 Cr.P.C. for abuse of process - Whether the criminal complaints under Section 138 NI Act, and the summons framed against the petitioner (accused No.3), should be quashed for lack of specific averments and as an abuse of process - HELD THAT: - The Court applied the settled principle that mere designation as a director or chairman does not suffice to attract vicarious liability under Section 141; the complaint must disclose that the person was "in charge of and responsible" for conduct of the company's business at the relevant time. Reliance was placed on S.M.S. Pharmaceuticals and later precedents which require specific averments; and on S.P. Mani which held that a director seeking quashing must produce sterling, incontrovertible material or acceptable circumstances to show non-involvement so as to demonstrate that proceeding would be an abuse of process. On the facts, the complaint contained only general and bald averments naming accused Nos.3-8 as directors and alleging they were in charge; there were no particulars of the petitioner's role. The petitioner was not a signatory to the cheques, the Managing Director (accused No.2) had signed the cheques and was shown to be actively in charge, and other similarly placed directors had been dropped from the array of accused. The designation of the petitioner as "Chairman" in the annual report, without additional material showing he participated in day-to-day management, could not support vicarious liability. In these circumstances, continuation of proceedings against the petitioner would amount to an abuse of process and could be quashed under Section 482 Cr.P.C. [Paras 15, 16, 17]

Complaint Nos. 31528/2016, 31517/2016 and 31829/2016 and all consequential proceedings are quashed insofar as they relate to the petitioner (accused No.3).

Final Conclusion: The petitions are allowed to the extent indicated: in view of the absence of specific averments establishing that the petitioner was in charge of and responsible for the conduct of the company's business at the relevant time, and the lack of sterling incontrovertible material to the contrary, the proceedings against the petitioner are quashed as an abuse of process.