TaxTMI Updates e-Newsletter
Dec 02,2022

Regular bail - Cognizable and non-bailable offence - Alleged availment of input tax credit from non-existent suppliers - Custodial detention and delay in trial - Pre-charge evidence - Section 132 offences under CGST

Regular bail - Custodial detention and delay in trial - Pre-charge evidence - Alleged availment of input tax credit from non-existent suppliers - Application for grant of regular bail by the petitioner in proceedings under Section 132 of the CGST Act, 2017. - HELD THAT: - The High Court granted regular bail to the petitioner while expressly refraining from commenting on the merits of the allegations. The court noted that the petitioner had been in custody for approximately nine months and that conclusion of trial was likely to be protracted because a large number of prosecution witnesses had been cited but, at the stage of pre-charge evidence, only 2 of 37 prosecution witnesses had been examined. The court also recorded that the department had recovered a portion of the allegedly fraudulently availed input tax credit, which had the effect of scaling down the amount in controversy, but treated that as part of the factual background rather than as determining the merits. Balancing the prolonged detention and the likelihood of continuing delay against the absence of a final adjudication on guilt, the court held that further detention would not serve any useful purpose and ordered release on bail subject to furnishing bonds/sureties to the satisfaction of the trial court. [Paras 6]

Petitioner released on regular bail on furnishing bail/surety bonds to the satisfaction of the learned trial Court/Chief Judicial Magistrate/Duty Magistrate, without adjudication on merits.

Final Conclusion: The petition for regular bail is allowed; the petitioner is directed to be released on bail on furnishing appropriate bonds/sureties to the satisfaction of the trial court, the court having declined to examine merits and having been influenced by the petitioner's prolonged custody and the delay in completion of pre-charge evidence.

Revision of GST Tran-1 under Rule 120A - transitional credit - administrative circular cannot override statutory provision - one-time portal opening pursuant to Supreme Court order

Revision of GST Tran-1 under Rule 120A - administrative circular cannot override statutory provision - one-time portal opening pursuant to Supreme Court order - Whether the petitioner is entitled to a one-time opportunity to revise the GST Tran-1 declaration under Rule 120A despite clause 4.6.2 of the Departmental circular dated 09.09.2022 which disallows revision. - HELD THAT: - The Court found that Rule 120A of the Central GST Rules, 2017 expressly permits every registered person who has submitted a declaration electronically in Form GST Tran-1 to revise such declaration once and empowers revision within the time specified or such further period as the Commissioner may extend. The Supreme Court's orders opening the portal for filing Tran-1/Tran-2 (and extending the portal period) were one-time facilitative measures to enable submission of transitional declarations and did not, by themselves, exclude the statutory entitlement to revise under Rule 120A. A departmental circular of clarificatory nature (circular dated 09.09.2022, clause 4.6.2) which purports to deny any further opportunity to file or revise Tran-1/Tran-2 cannot have the effect of overriding or nullifying the statutory provision contained in Rule 120A. Applying these principles to the petitioner's case - where an inadvertent entry resulted in the form freezing during submission and the portal remains open pursuant to the Supreme Court's order - the petitioner is entitled to avail the one-time revision permitted by Rule 120A. The Court therefore directed the respondents to instruct the GSTN to open the portal for the petitioner once to permit revision and completion of filing, subject to the limitation that no further revision shall be allowed, and directed that necessary steps be taken as far as possible by the Supreme Court's deadline. [Paras 13, 14, 15, 16]

Respondents directed to arrange for the portal to be opened once for the petitioner to revise and submit Form GST Tran-1 in terms of Rule 120A and to take necessary steps, as far as possible, by 30.11.2022; no further revision to be permitted.

Final Conclusion: Writ petition allowed to the extent that the petitioner is granted a one-time opportunity to revise and complete filing of Form GST Tran-1 under Rule 120A; respondents directed to facilitate opening of the portal for this purpose and to act promptly, with no further revision permitted.

Attachment notice / withholding order - direction to third-party bank to withhold funds - determination of tax liability by assessment or order - statement recorded under Section 70 not equivalent to assessment - matching, reversal and re-claiming of input tax credit procedure under Section 42 - coercive recovery without statutorily mandated procedure unsustainable - statutory sanction under Section 83 for issuance of recovery notice

Attachment notice / withholding order - direction to third-party bank to withhold funds - determination of tax liability by assessment or order - statement recorded under Section 70 not equivalent to assessment - statutory sanction under Section 83 for issuance of recovery notice - Validity of the attachment notice in Form GST DRC-13 directing the bank to withhold funds in absence of any assessment or other order determining the amount as 'due'. - HELD THAT: - The Court found that no assessment order under the statutory provisions had been passed and there was no other order making a determination that the impugned sum was 'due' from the petitioner. A statement recorded during an inquiry under Section 70 cannot substitute for a statutory determination of liability. In the absence of any such determination or order, issuance of a notice directing a third party to withhold and remit funds lacks the requisite statutory foundation and is therefore unsupportable. The court relied on these conclusions to assess the legal competence of the impugned notice under the recovery provisions. [Paras 3, 4, 8]

Impugned attachment notice dated 27.12.2019 is invalid and set aside for lack of statutory basis.

Matching, reversal and re-claiming of input tax credit procedure under Section 42 - coercive recovery without statutorily mandated procedure unsustainable - statutory sanction under Section 83 for issuance of recovery notice - Whether recourse to coercive recovery by directing third-party withholding is sustainable where the prescribed procedure for matching, reversal and re-claiming of input tax credit has not been undertaken. - HELD THAT: - The Court observed that the statutory scheme provides for a procedure to be followed for matching and, where appropriate, reversal of input tax credit so as to arrive at a proper determination of liability. That procedure under Section 42 was not initiated or completed by the officer. Having failed to follow the mandated procedural mechanism for determining credit and liability, resort to coercive recovery measures alone was held to be untenable. The absence of compliance with the statutory procedure meant there was no statutory sanction for the recovery notice under the relevant provision invoked by the respondents. [Paras 6, 7, 8]

Coercive recovery in the form of the bank withholding direction is unsustainable where the matching/reversal procedure has not been undertaken; the recovery notice is set aside.

Final Conclusion: Writ petition allowed; impugned notice in Form GST DRC-13 dated 27.12.2019 set aside for lack of statutory sanction and failure to follow the prescribed input tax credit procedure; no costs.

Advance Ruling under GST - Classification under heading 4808 - GST rate determination for goods

Classification under heading 4808 - GST rate determination for goods - Rate of GST applicable on supply of paper based corrugated sheets manufactured by the applicant. - HELD THAT: - The Authority examined the nature of goods, the sample provided and the tariff entries in Notification No. 1/2017 which enumerate "Paper and paperboard, corrugated (with or without glued flat surface sheets)..." under chapter heading 4808. On verification of the sample sheet and having regard to the description in the relevant tariff item, the Authority concluded that the paper based corrugated sheet falls within heading 4808. Consequently, the supply is taxable at the rate specified for that heading in the Notification. The Authority therefore applied the rate specified for corrugated paper under the entry for chapter/heading 4808. [Paras 8, 9]

The rate of tax on supply of corrugated paper sheets is 6% under CGST and 6% under SGST.

Final Conclusion: Advance Ruling: paper based corrugated sheets supplied by the applicant are classifiable under heading 4808 and taxable at 6% CGST and 6% SGST.

Bogus purchases and disallowance of expenditure - exercise of revisional power under Section 263 - requirement of inquiry and verification by Assessing Officer - addition of unexplained expenditure under Section 69C - Explanation 2 to Section 263 - order passed without inquiry

Exercise of revisional power under Section 263 - requirement of inquiry and verification by Assessing Officer - Validity of the Principal Commissioner's exercise of jurisdiction under Section 263 to set aside the assessment where the Assessing Officer disallowed only a part of established bogus purchases without adequate inquiry. - HELD THAT: - The Court held that where incriminating information established that claimed purchases were bogus and the Assessing Officer, after offering an opportunity, had neither conducted adequate inquiry nor reached a logical conclusion but made only a partial disallowance, the revisional jurisdiction under Section 263 was correctly exercised. Explanation 2 to Section 263 (as inserted) was noted to support the position that an assessment order passed without proper inquiry or verification can be deemed erroneous and prejudicial to revenue. The Tribunal's reliance on decisions distinguishable on facts was rejected because, in the present case, the assessee effectively admitted the allegation by offering a token addition (2%) and produced no documents; consequently the Assessing Officer was obliged to probe further and determine the correct tax effect, failure of which justified revision by the Principal Commissioner.

Order under Section 263 setting aside the assessment and directing reassessment was restored.

Bogus purchases and disallowance of expenditure - addition of unexplained expenditure under Section 69C - Whether, once expenditure is established to be bogus, only a part thereof can be disallowed or the entire amount must be added back to the income under Section 69C. - HELD THAT: - The Court accepted the Principal Commissioner's conclusion that when expenditure is held to be unexplained or bogus, the statutory scheme (including Section 69C) requires the entire amount to be added to the assessee's income. The Assessing Officer's ad hoc allowance of a small percentage (3%) was held to be contrary to law and to the binding principle that bogus expenditure cannot be partially sustained; reliance on Supreme Court authority and appropriate precedents was recorded to support full addition where genuineness is not proved.

Entire bogus expenditure was to be disallowed and added to the total income; the Principal Commissioner's direction for reassessment to give effect to such addition was upheld.

Final Conclusion: The appeals by the revenue are allowed; the Tribunal's order interfering with the Principal Commissioner's revision was set aside and the revision order dated 5 March 2018 restoring full disallowance of established bogus purchases (and directing reassessment) is restored for the assessment years 2009-10, 2010-11 and 2011-12.

Validity of notice under Section 148A(b) of the Income Tax Act - Order under Section 148A(d) of the Income Tax Act - Notice under Section 148 of the Income Tax Act - Right to receive incriminating material and to file a reply - Fresh adjudication in accordance with law

Validity of notice under Section 148A(b) of the Income Tax Act - Order under Section 148A(d) of the Income Tax Act - Notice under Section 148 of the Income Tax Act - Right to receive incriminating material and to file a reply - Fresh adjudication in accordance with law - Impugned order under Section 148A(d) and notice under Section 148 set aside for material mistakes; direction to issue amended Section 148A(b) notice with incriminating material, allow reply and decide afresh. - HELD THAT: - The Court recorded that the Section 148A(b) notice attributed certain transactions to named entities but the subsequent order under Section 148A(d) contained swapped and incorrect attributions. The Assessing Officer admitted that the order under Section 148A(d) is riddled with mistakes and that the details in the Section 148A(b) notice were not correct. In view of these admissions and the incorrect material, the Court set aside the impugned order under Section 148A(d) and the notice issued under Section 148. The Assessing Officer was directed to issue an amended notice under Section 148A(b) supplying the incriminating material in his possession to the assessee within two weeks, to grant the assessee four weeks to file a reply, and thereafter to decide the matter afresh within a further period of four weeks in accordance with law. The rights and contentions of the parties were left open for determination during the fresh adjudication. [Paras 3, 4]

Impugned order under Section 148A(d) and notice under Section 148 set aside; Assessing Officer to issue amended Section 148A(b) notice with incriminating material, allow reply within four weeks and decide afresh within four weeks thereafter.

Final Conclusion: Writ petition disposed of by setting aside the impugned order and notice on account of admitted material errors; directions issued for issuance of an amended Section 148A(b) notice with disclosure of incriminating material, opportunity to the assessee to reply and fresh decision within the specified timelines; parties' substantive rights reserved.

Reopening assessment under Section 148 - Prematurity of petition challenging notice - Disposal of objections before judicial adjudication - Interim protection against implementation of assessment order - No expression on merits

Prematurity of petition challenging notice - Petition under Article 226 challenging the notice dated 31.03.2021 under Section 148 was premature and not entertainable at this stage. - HELD THAT: - The Court found that objections filed by the petitioner had not been disposed of by the income-tax authority and, therefore, judicial interference by way of writ petition was premature. The Court noted that similar matters in the same group had been dealt with, but held that nothing could be presumed in advance and that the authority must be afforded the opportunity to dispose of the objections before the petition is adjudicated. In view of prematurity, the petition was declined for interim adjudication and the matter was directed back to the authority for disposal of objections. [Paras 7]

Petition not entertained as premature; authority to be given opportunity to dispose of objections.

Disposal of objections before judicial adjudication - The authority was directed to dispose of the objections raised by the petitioner within two weeks from receipt of the order, on availing opportunity in accordance with law. - HELD THAT: - Rather than adjudicating the writ at this stage, the Court ordered the tax authority to examine and decide the objections filed by the petitioner on their merits in a time-bound manner. The direction was to ensure the administrative process is completed expeditiously so that any further judicial challenge, if necessary, proceeds on a decided record. [Paras 7]

Objections to be disposed of by the authority within two weeks from receipt of copy of the order.

Interim protection against implementation of assessment order - If any adverse order is passed by the revenue on disposal of objections, it shall not be given effect to for two weeks, and the petitioner shall have the liberty to pursue legal remedies within that period. - HELD THAT: - To protect the petitioner pending any consequential action following disposal of objections, the Court granted limited interim protection by restraining the Revenue from giving effect to any adverse order for a further period of two weeks, thereby providing the petitioner time to seek appropriate legal recourse. [Paras 8]

Revenue restrained from giving effect to any adverse order for two weeks; petitioner at liberty to take legal course in that period.

Final Conclusion: Writ petition dismissed as premature; objections to the reopening notice are directed to be disposed of by the income-tax authority within two weeks, subject to a two-week interim protection against implementation of any adverse order; no opinion expressed on the merits.

Penalty under section 271D - Prohibition on acceptance of cash loans/deposits (section 269SS) - Reasonable cause defence - Genuine family transactions and pooling of family funds

Penalty under section 271D - Prohibition on acceptance of cash loans/deposits (section 269SS) - Reasonable cause defence - Genuine family transactions and pooling of family funds - Whether penalty under section 271D is leviable for cash sums accepted from the assessee's mother and brother aggregating Rs. 5,21,300 for purchase of residential property - HELD THAT: - The Tribunal examined the admitted facts that the assessee, a salaried person, received cash from his mother and brother to make an urgent payment for purchase of a residential property and produced the purchase deed and bank statements showing deposit and payment. Applying the established principle that genuine transactions and family pooling of funds, accompanied by a reasonable cause for receiving cash, fall outside the mischief of section 269SS and cannot attract penalty under section 271D, the Tribunal found no material to show that the amounts were loans repayable with or without interest or that the transactions lacked genuineness. The Tribunal relied on precedents holding that urgent personal or family transactions (including funds from relatives or spouse) giving rise to a reasonable cause for acceptance of cash are not caught by section 269SS and therefore do not warrant penalty under section 271D: Dr. Rajaram L. Akhani ; ACIT v Vardaan Fashion ; Smt. Kusum Dhamani ; ITO v. Tarlochan Singh ; Smt. Meera Devi Kumawat v. JCIT . Having regard to those decisions and the facts that the assessee had declared the unsecured receipts during assessment and had used the funds for the stated residential purchase, the Tribunal concluded that section 269SS / 271D were not attracted and that there was a reasonable cause for the acceptance of cash in the instant case. [Paras 6, 7]

The appeal is allowed and penalty under section 271D is not leviable in respect of the cash amounts received from the mother and brother.

Final Conclusion: On the facts and following judicial precedents, the Tribunal held that the cash amounts received from family members for purchase of a residential property constituted genuine family pooling with reasonable cause for accepting cash; accordingly, sections 269SS and 271D do not apply and the penalty is set aside.

Revisionary jurisdiction under section 263 - Penalty under section 271(1)(c) - Explanation 5A to section 271(1) - Non-application of mind - Requirement of demonstrable erroneous and prejudicial order for exercise of revisionary power - Finality of reasoned administrative decision and impermissibility of re litigation by revisional authority

Revisionary jurisdiction under section 263 - Penalty under section 271(1)(c) - Explanation 5A to section 271(1) - Non-application of mind - Requirement of demonstrable erroneous and prejudicial order for exercise of revisionary power - Legitimacy of the Principal Commissioner of Income Tax's exercise of revisionary jurisdiction under section 263 to set aside the Assessing Officer's order dropping penalty proceedings under section 271(1)(c). - HELD THAT: - The Tribunal found that the Assessing Officer had considered the assessee's written submissions, including reliance on judicial precedent, and after inquiry reached a plausible, reasoned conclusion to drop the penalty proceedings. The revisional power under section 263 can be validly exercised only where the AO's order is shown to be erroneous and prejudicial to the revenue on the basis of evidential material; it is not competent for the revisional authority to re open or re try the same question merely because it prefers a different view. The Principal Commissioner based his revisionary order on a single line finding and on the applicability of Explanation 5A without first demonstrating that the AO's conclusion was erroneous and prejudicial; that amounted to re litigation on the same materials and was impermissible in view of the authoritative principle that the department cannot multiply litigation by substituting its view for a plausible view taken by the AO. Applying these principles and the precedents cited, the Tribunal concluded that there was no infirmity in the AO's order dropping the penalty and that the revisional order was without jurisdiction. The revisional order was therefore quashed and the AO's order reinstated.

The revisional order under section 263 setting aside the AO's order dropping penalty under section 271(1)(c) is quashed; the order dropping the penalty is upheld.

Final Conclusion: Appeal allowed; the Principal Commissioner's order under section 263 is quashed and the Assessing Officer's order dropping penalty proceedings under section 271(1)(c) for AY 2008-09 is sustained.

Deduction under section 80P of Chapter VI-A - Effect of delayed return on allowance of deductions - Condonation of delay in filing return - Power to condone delay for small claims under CBDT Circular No. 9/2015 - Application of section 80-AC in respect of late-filed returns

Deduction under section 80P of Chapter VI-A - Effect of delayed return on allowance of deductions - Application of section 80-AC in respect of late-filed returns - The confirmation of disallowance of deduction claimed under section 80P on account of return filed after the due date. - HELD THAT: - The Tribunal examined the impugned order of the CIT(A) which sustained the disallowance because the return was not filed on or before the due date. Having regard to the prescription in section 80-AC, the Bench found no infirmity in the CIT(A)'s confirmation of the disallowance of the section 80P claim where the return was late. The Tribunal therefore upheld the legal consequence of a late-filed return insofar as it sustains the disallowance under section 80P in the facts before it. [Paras 3]

The disallowance of the deduction under section 80P as affirmed by the CIT(A) is not found to be infirm.

Condonation of delay in filing return - Power to condone delay for small claims under CBDT Circular No. 9/2015 - Whether the matter should be remitted for determination of condonation of delay and, if condoned, for fresh adjudication on merits of the section 80P claim. - HELD THAT: - The Tribunal noted that the assessee had filed an application before the Pr. CIT for condonation of delay (received 9-11-2022) in terms of CBDT Circular No. 9/2015, and that the competent authority had yet to decide that application. Because the condonation application remains pending, the Tribunal considered it appropriate to restore the matter to the file of the first appellate authority so that the question of condonation may be decided by the competent authority and, in the event of condonation, the deduction under section 80P can be considered on merits. The Bench directed that the first appellate authority may call for a remand report from the AO and hear the parties, or decide the matter itself after hearing both sides, thereby avoiding time limitation complications. [Paras 3]

Matter remanded to the first appellate authority to permit determination of the condonation application by the competent authority and, if delay is condoned, to decide the section 80P claim on merits (or call for a remand report from the AO).

Final Conclusion: The Tribunal upheld the CIT(A)'s confirmation of disallowance of the section 80P deduction where the return was filed late, but restored the matter to the first appellate authority because the assessee's pending application for condonation of delay before the Pr. CIT falls to be decided; if the delay is condoned, the deduction claim is to be reconsidered on merits.

Jurisdiction of Assessing Officer - challenge to jurisdiction to be raised under the administrative route / section 124 - validity of notice u/s. 143(2) - shortage/unaccounted sale treated as income - treatment of debit notes and year of deduction under mercantile/accrual system - reasonableness of hamali (handling) expenses and effect of reimbursement - valuation of sales to related party and application of section 40A(2)(a) principles - disallowance under section 43B for payments not made by date of filing return - apportionment of interest disallowance on amounts and period

Jurisdiction of Assessing Officer - challenge to jurisdiction to be raised under the administrative route / section 124 - The challenge to the competence of the Addl. CIT, Range Chhindwara to act as Assessing Officer - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the transfer order and subsequent authorisation vested jurisdiction in the Addl. CIT. The Court noted the CBDT notification and the amendment bringing Jt./Addl. CIT within the definition of AO (Finance Act, 2007 retrospective from 01/06/1994) and that the transfer order under section 127 was within administrative power. Crucially, the Court held that jurisdictional objections to the authority of an AO cannot be agitated in appellate proceedings under the Act because section 124 requires such challenges to be pursued via the administrative route (writ jurisdiction being the alternate remedy). The assessee had not established mala fides or any territorial defect warranting interference. [Paras 4]

The objection to the Assessing Officer's jurisdiction is without merit and dismissed; such jurisdictional challenges are not maintainable in appeal under the Act.

Validity of notice u/s. 143(2) - Validity of the notice issued under section 143(2) (or alleged absence of notices after 30/11/2006) for AY 2004-05 - HELD THAT: - The Tribunal accepted the CIT(A)'s conclusion that the notice dated 17/03/2005 issued by the then incumbent Asstt. CIT, and served on 18/03/2005, was within time and valid to assume jurisdiction to frame assessment under section 143(3). The absence of any fresh notice after the administrative authorisation dated 30/11/2006 does not invalidate the earlier valid notice. The alleged relevance of notice under section 142(1) was rejected as non-jurisdictional and not relied upon by the assessee. [Paras 5]

The notice under section 143(2) dated 17/03/2005 is valid; the ground alleging invalidity on account of no notice after 30/11/2006 is dismissed.

Shortage/unaccounted sale treated as income - Addition on account of shortage in soybean seed account (claimed shortage representing unaccounted sale) - HELD THAT: - The AO found, and the Tribunal agreed, that the claimed shortage (40.96 qtls) represented unaccounted sales adjusted in accounts by recording purchases at nil cost. Survey evidence and the scheme of transactions (goods delivered directly to buyers, debit notes raised by buyers) demonstrated that the shortage was not a genuine shrinkage but a concealment of sale. The assessee failed to rebut this factual finding at any stage and the CIT(A)'s confirmation of the addition was sustained. [Paras 6]

Addition on account of shortage in soybean seed account is confirmed.

Treatment of debit notes and year of deduction under mercantile/accrual system - Disallowance of debit notes amounting to expenditure that related to the earlier year (entered in books on 01/04/2003) for AY 2004-05 - HELD THAT: - The AO held that debit notes reflected liabilities pertaining to supplies made from May 2002 to 27 March 2003 and thus related to the earlier year; no evidence of a bona fide settlement during the current year was produced. Applying mercantile/accrual principles and established authorities on the correct year of assessment, the Tribunal agreed that in absence of proof that the liability crystallised only in the current year, the disallowance was justified. The CIT(A)'s confirmation of the addition was sustained. [Paras 7]

Disallowance in respect of the debit notes is confirmed.

Shortage/unaccounted sale treated as income - Addition for shortage of 1.32 qtls (valued at the small sum) treated same as soybean shortage issue - HELD THAT: - The Tribunal observed that the facts and reasoning applicable to the larger soybean shortage applied equally to this smaller shortage. As the same factual foundation and findings supported the addition, no separate justification for interference was shown. [Paras 8]

Addition for shortage of 1.32 qtls is confirmed.

Reasonableness of hamali (handling) expenses and effect of reimbursement - Disallowance of hamali expenses on account of alleged excessive rate claimed by the assessee - HELD THAT: - The AO compared claimed hamali rates with trade evidence and allowed expenditure at a computed rate; the CIT(A) confirmed a large disallowance for lack of supporting evidence. The Tribunal noted the assessee had reported marginal net income under the head in the preceding year and had received reimbursements; acceptance of reimbursement and the AO's allowed rate implied an effective accepted expense per bag. The assessee produced no evidence to justify the higher claimed rate, and the finding of unreasonableness was upheld. [Paras 9]

Disallowance of hamali expenses is confirmed.

Valuation of sales to related party and application of section 40A(2)(a) principles - Adjustment to loss on ginned cotton for AY 2005-06 by revaluing sales to sister concern (Navkar Impex Pvt. Ltd.) at an estimated market rate - HELD THAT: - On review of sale rates, quantities and absence of evidence that goods sold to the sister concern were of cheaper quality, the Tribunal concluded the price to NIPL should be estimated at the average rate realised from third parties (Rs. 5976.02 per qtl). Applying that rate reduced the claimed loss; the Tribunal computed and confirmed the addition as adjusted, giving the assessee partial relief. [Paras 10]

Addition confirmed but reduced to reflect valuation of sales to the related party at the average market rate; part relief to the assessee.

Apportionment of interest disallowance on amounts and period - Computation and partial relief in respect of interest disallowance (basis: loss disallowed and personal investments) - HELD THAT: - The Tribunal accepted the principle of disallowance but adjusted the AO's computation: interest attributable to the portion of loss disallowed as relating to the preceding year required proportionate treatment (yielding relief of Rs. 75,600), and interest on personal investments was to be computed on the assumption they were made uniformly through the year (halving the AO's amount for that head, yielding relief of Rs. 1,30,233). Overall relief of Rs. 2,05,833 was allowed. [Paras 11]

Interest disallowance reduced by the apportioned relief; the assessee given total relief as computed by the Tribunal.

Disallowance under section 43B for payments not made by date of filing return - Disallowance under section 43B for entry tax and disallowance of penalties under commercial/sales/entry tax - HELD THAT: - The Tribunal noted absence of evidence of payment of entry tax by the due date of filing return; disallowance under section 43B was therefore upheld. Separately, amounts characterized as penalties under various taxes could not be allowed as business deductions under section 37(1); the assessee failed to produce material to show they were not penal in nature or were compensatory. [Paras 12]

Both disallowances (entry tax under section 43B and amounts treated as penalties) are upheld.

Jurisdiction of Assessing Officer - Challenge to AO's jurisdiction for AY 2005-06 (parallel to AY 2004-05 decision) - HELD THAT: - The Tribunal treated the ground as pari materia with the jurisdictional ground decided for AY 2004-05 and noted no objection under section 124 had been taken in the assessment proceedings for this year. A ground not verified by the appellant was held invalid. Therefore the jurisdictional plea was dismissed for AY 2005-06 as well. [Paras 13]

Jurisdictional objection is dismissed for AY 2005-06.

Procedural maintainability of claimed refund of excess appeal fee - Claim for refund of excess appeal fees paid (procedural/maintainability) - HELD THAT: - The Tribunal found the claim did not arise out of the assessment order or impugned order and was not clearly part of the appealed assessment; accordingly it was held not maintainable in these proceedings. [Paras 14]

Claim for refund of excess appeal fee is dismissed as not maintainable.

Final Conclusion: The appeals for AY 2004-05 are dismissed in entirety; the appeal for AY 2005-06 is partly allowed as set out above, with specified adjustments to certain additions and interest disallowances and other additions and disallowances upheld.

Addition under section 69 - Deduction under section 80-IA - eligibility for profits from captive power generation - Market value / arm's length principle for inter-unit transfers - Natural justice - remand for verification and adjudication

Addition under section 69 - Natural justice - Validity of addition made under section 69 in respect of alleged unsubstantiated acquisition of plant and machinery - HELD THAT: - The Tribunal examined whether the assessee had failed to substantiate acquisition of plant and machinery so as to attract section 69. The record shows that the assessee's investment was reflected in audited regular accounts and that purchase bills and vouchers were submitted online and placed on record (paper-book). The Revenue did not substantiate its claim of non-submission despite being given opportunity and the Assessing Officer did not record adverse findings in the accounts. In these circumstances there was no foundation for invoking section 69; the only statutory consequence of non-substantiation would be disallowance of depreciation, which the Revenue did not establish. The Tribunal also noted the need to observe principles of natural justice where documents were said to be furnished online, but found on the material that bills had in fact been filed and verified. [Paras 3]

Addition under section 69 is not sustainable; Revenue's ground in respect of section 69 fails.

Deduction under section 80-IA - eligibility for profits from captive power generation - Market value / arm's length principle for inter-unit transfers - Remand for determination of quantum - Whether the assessee's power division qualifies as an 'eligible business' under section 80-IA for profits from power generated from bagasse and captively consumed by the sugar division - HELD THAT: - On the facts the assessee had in-principle approval for a renewable-energy power plant, operated the plant below capacity for captive consumption (5 MW) during the relevant crushing season, and produced supporting operational evidence which was not rebutted. The Tribunal held that the power division thereby constituted an eligible business under section 80-IA(1). However, computation of the quantum of deduction was not examined or decided by the authorities. The Tribunal explained that the quantum must be determined by reference to market value/arm's length principles in sections 80-IA(8) and 92F: inter-unit transfers must be valued at market price or arm's length price, sales and cost of sales must be determined accordingly (including direct and indirect costs and allocation of common assets and depreciation), and prudence requires reliance on actual realisations or a market-based valuation rather than a hypothetical incentivised tariff that did not materialise. Given the absence of findings on quantum, the Tribunal directed that the matter be restored to the Assessing Officer for determination of the quantum of deduction, with opportunity to the assessee and in accordance with law. [Paras 5]

Assessee is eligible in principle for deduction under section 80-IA for profits from captive power generation; matter remitted to the Assessing Officer to determine the quantum of deduction applying market/arm's length principles and observing natural justice.

Final Conclusion: The Revenue's appeal is partly allowed. The addition under section 69 is set aside; the assessee is held eligible in principle for deduction under section 80-IA for captive power generation, but the quantum of deduction is remitted to the Assessing Officer for determination in accordance with law and after affording the parties opportunity to be heard.

Revision under section 263-scope and limits - Assessing Officer's duty to examine particulars in scrutiny assessment - Closing stock valuation-consistency of method and reliance on auditor's statement/Form 3CD - Variation between month-wise purchases and profit & loss account-treatment of consumables and non-sale purchases - Cash deposits during demonetisation-explanation by withdrawals and bank transactions

Closing stock valuation-consistency of method and reliance on auditor's statement/Form 3CD - Assessing Officer's duty to examine particulars in scrutiny assessment - Revision under section 263-scope and limits - Whether the Pr. CIT was justified in invoking revision under section 263 on the ground that the Assessing Officer had not examined the basis of valuation of closing stock. - HELD THAT: - The Tribunal found that the assessee had placed before the Assessing Officer documents showing the method of valuation, including certified copies for earlier years and the Form 3CD which recorded no change in method. Those materials were in the paper book and were considered in assessment. The fact that the assessing officer did not narrate every aspect of his examination in the assessment order does not imply lack of inquiry where the requisite details were submitted and verification is reflected in the record. No specific defect in consistency of method was pointed out by the Pr. CIT. Therefore the revision on the sole premise of non-examination was unsustainable. [Paras 5]

Revision under section 263 in respect of valuation of closing stock quashed; AO had examined and accepted the consistent method of valuation.

Variation between month-wise purchases and profit & loss account-treatment of consumables and non-sale purchases - Assessing Officer's duty to examine particulars in scrutiny assessment - Revision under section 263-scope and limits - Whether the Pr. CIT was justified in invoking revision under section 263 on the ground of unexplained variation between month-wise purchases and purchases shown in the profit and loss account. - HELD THAT: - The paper book contained month-wise breakups and details showing that the higher purchase figures included non-sale items such as explosives, tools and tackles, repairs, consumables and entry tax. Those particulars were before the Assessing Officer and were examined; no adverse conclusion or addition was made. The Pr. CIT's revision proceeded on presumption despite absence of a specific finding that the AO had not made any inquiry. Given that the AO had accepted the explanations, the exercise of revision was unwarranted. [Paras 6]

Revision under section 263 in respect of alleged variation in purchases quashed; AO had verified and accepted the consumables/non-sale composition of purchases.

Cash deposits during demonetisation-explanation by withdrawals and bank transactions - Assessing Officer's duty to examine particulars in scrutiny assessment - Revision under section 263-scope and limits - Whether the Pr. CIT was justified in invoking revision under section 263 on the ground that cash deposits during the demonetisation period were unexplained and the AO had not examined the matter. - HELD THAT: - The chart and bank-related documents in the paper book showed closing cash in hand immediately prior to the demonetisation deposit and indicated that the amount deposited in bank during the period was comprised of cash withdrawn from the bank (i.e., existing cash on hand arising from prior bank withdrawals). These explanations and accompanying documents were examined by the AO in the course of scrutiny under CASS and no addition was made. The Pr. CIT's action was therefore based on presumption of non-enquiry rather than on record establishing lack of examination, rendering the revision unsustainable. [Paras 7]

Revision under section 263 in respect of demonetisation-period cash deposits quashed; AO had considered and accepted the explanation that deposits were from prior bank withdrawals.

Final Conclusion: The Tribunal held that the three grounds on which the Pr. CIT invoked revision under section 263-valuation of closing stock, variation in purchases, and cash deposits during demonetisation-had been considered and verified by the Assessing Officer in the scrutiny assessment; the revision was founded on presumptions of non-enquiry and is quashed, and the assessee's appeal is allowed.

Deduction under section 80P(2)(a)(i) - Deduction under section 80P(2)(d) - Income from other sources vs profits and gains of business - Deduction under section 57 - Statutory investment requirement under Karnataka Co operative Societies Act - Remand to Assessing Officer for verification

Deduction under section 80P(2)(a)(i) - Income from other sources vs profits and gains of business - Whether interest earned on deposits with co-operative banks is deductible under section 80P(2)(a)(i) or is taxable as income from other sources. - HELD THAT: - The Tribunal reviewed the authorities including the Supreme Court and the jurisdictional High Court and held that interest earned on deposits with co operative banks is in the nature of income chargeable under the head 'income from other sources' and is not eligible for deduction under section 80P(2)(a)(i). The Tribunal observed that the assessments and appellate orders below were in line with the later binding pronouncement of the jurisdictional High Court distinguishing earlier coordinate bench views. Accordingly, the CIT(A)'s confirmation of the Assessing Officer's treatment of the interest as income from other sources was affirmed, subject to a limited remand on separate factual contentions relating to statutory investment requirements (grounds 5-7). [Paras 7]

Confirmed that interest from deposits with co operative banks is taxable as income from other sources and not deductible under section 80P(2)(a)(i), subject to the limited remand on statutory investment issues.

Deduction under section 80P(2)(d) - Income from other sources vs profits and gains of business - Whether interest earned from investments with co operative societies/banks is deductible under section 80P(2)(d). - HELD THAT: - The Tribunal held that deduction under section 80P(2)(d) is available only in respect of interest or dividends derived from investments made with other co operative societies. Interest earned from investments made with co operative banks (which are governed by banking law and excluded by the legislative and judicial treatment) does not qualify for deduction under section 80P(2)(d). The Tribunal applied the reasoning of the jurisdictional High Court that distinguishes co operative banks from co operative societies for the purposes of section 80P and relied on the binding effect of those decisions. [Paras 7]

Interest from investments with co operative societies is deductible under section 80P(2)(d); interest from co operative banks is not deductible under section 80P(2)(d).

Deduction under section 57 - Statutory investment requirement under Karnataka Co operative Societies Act - Remand to Assessing Officer for verification - Whether (a) interest assessed as income from other sources is eligible for deduction of expenditure under section 57, and (b) whether interest arising from investments made in compliance with statutory requirements under the Karnataka Co operative Societies Act should be treated as business income. - HELD THAT: - Having regard to the principle that only net income is taxable and to the jurisdictional High Court's decision, the Tribunal restored two distinct factual aspects to the Assessing Officer for fresh examination. First, although the assessee had not raised it before lower authorities, the Tribunal directed the AO to examine and allow under section 57 any expenditure proved to have been incurred for earning interest which has been assessed as income from other sources. Second, in respect of the assessee's grounds (5-7) that certain deposits were statutorily mandated (under the Karnataka Co operative Societies Act/Rules) and thus interest thereon may constitute business income attributable to the activity of providing credit to members, the Tribunal remanded those specific grounds to the AO for fresh consideration and factual verification. [Paras 7]

Remanded to the Assessing Officer (a) the question of allowance of expenditure under section 57 in respect of interest taxed as other sources, and (b) the specific factual contentions (grounds 5-7) whether statutory investment obligations render the interest business income; AO to examine and decide afresh.

Final Conclusion: The appeal is partly allowed: the Tribunal confirms that interest earned on deposits with co operative banks is taxable as income from other sources and not deductible under section 80P(2)(a)(i) (and that section 80P(2)(d) applies only to investments with co operative societies), but it remands specified factual issues concerning statutorily mandated investments (grounds 5-7) and the question of deduction under section 57 to the Assessing Officer for fresh examination.

Disallowance under Section 40A(3) read with Rule 6DD of the Income-tax Rules - exception for purchase of agricultural produce under Rule 6DD(e) - treatment of amounts under Section 68 as cash credits - requirement that sums be credited in the relevant previous year for invocation of Section 68

Disallowance under Section 40A(3) read with Rule 6DD of the Income-tax Rules - exception for purchase of agricultural produce under Rule 6DD(e) - Deletion of addition made by the Assessing Officer under Section 40A(3) in respect of cash purchases of sugarcane. - HELD THAT: - The Tribunal examined the statutory bar in Section 40A(3) and the corresponding non- disallowance carve-outs in Rule 6DD. Rule 6DD(e) explicitly exempts payments made for the purchase of agricultural produce to the cultivator, grower or producer. The assessee's purchases were of sugarcane directly from farmers, which falls within the specified exception. The CIT(A) recorded that the assessee's explanation and the available records made the claim plausible and noted that Revenue had previously accepted this claim. In view of the specific statutory exception for agricultural produce, the disallowance of cash purchases of sugarcane was held not warranted and the addition was deleted. [Paras 8, 9, 10]

Addition under Section 40A(3) in respect of cash purchases of sugarcane deleted; Revenue's ground rejected.

Treatment of amounts under Section 68 as cash credits - requirement that sums be credited in the relevant previous year for invocation of Section 68 - Deletion of addition made under Section 68 in respect of unsecured loans shown in the assessee's balance sheet. - HELD THAT: - The CIT(A) found as a factual matter that the unsecured loans reflected in the balance sheet were not received in the year under assessment but had been received in earlier years and were carried forward in the audited financial statements. Section 68 applies to sums found credited in the books for the relevant previous year; amounts not credited in that year cannot be taxed under Section 68. The CIT(A) further examined the commercial context of the assessee's business, the modus operandi of bank disbursements to farmers routed through the assessee, and records including bank communications, which supported the assessee's explanation. The Revenue did not place any contrary material disputing these findings of fact. On that basis the addition under Section 68 was deleted. [Paras 12, 13]

Addition under Section 68 deleted; Revenue's ground rejected.

Final Conclusion: Both additions-under Section 40A(3) in respect of cash purchases of sugarcane and under Section 68 in respect of unsecured loans-were deleted by the CIT(A) and the Tribunal, and the Revenue's appeal is dismissed.

Commencement of telecommunication services - deduction under section 80IA(4)(ii) - start of telecommunication services versus commencement of business - reliance on findings of closed assessment - non-obstante clause in section 80IA(2A) - admission of additional evidence - maintenance of separate books of account for eligible undertaking - interest under section 234B

Commencement of telecommunication services - start of telecommunication services versus commencement of business - reliance on findings of closed assessment - Date when the assessee started providing telecommunication services for the purpose of section 80IA(4)(ii). - HELD THAT: - The Tribunal examined documentary record including assessment orders for AY 1995-96 and 1996-97, DoT/WPC interface/service approval and frequency assignment letters, auditors' report for FY 1994-95, and other approvals. The Assessing Officer's earlier findings in AYs 1995-96 and 1996-97 that commercial telecommunication services (paging and cellular) commenced after 01/04/1995 were final and not disturbed by any valid revision or reopening; those findings are therefore binding for later proceedings. The statutory requirement under section 80IA(4)(ii) focuses on the start of telecommunication services (assignment of frequency and technical/interface approvals), not merely on initial commercial acts such as purchase or sale of handsets. Documentary evidence shows interface/service approvals and frequency assignments for paging and cellular were granted after 01/04/1995 (dates in April-November 1995), and auditors' report for FY 1994-95 records that commercial service had not commenced as on 31/03/1995. The Department's late-filed additional evidences would not alter these concluded findings and their admission was refused. On the facts and in law the Tribunal upheld the CIT(A)'s conclusion that the assessee started providing telecommunication services after 01/04/1995. [Paras 17, 18, 19, 20, 21]

Assessee started providing telecommunication services after 01/04/1995; the finding of CIT(A) is confirmed.

Deduction under section 80IA(4)(ii) - reliance on findings of closed assessment - maintenance of separate books of account for eligible undertaking - Whether the assessee is eligible to claim deduction under section 80IA(4)(ii) for AY 2005-06. - HELD THAT: - Given the Tribunal's finding that telecommunication services commenced after 01/04/1995, the assessee meets the temporal condition of section 80IA(4)(ii). The Tribunal further held that non-maintenance of separate books for paging and cellular segments is not a statutory bar to the deduction in the facts of this case, distinguishing authorities relied upon by Revenue where separate books were necessary by reason of the nature of activities. The CBDT Circular No.5 of 2005 was held to permit deduction even where an undertaking results from reconstruction/split where services started before 01/04/2004; hence the Revenue's merger/reconstruction objection did not defeat eligibility. On these bases the Tribunal confirmed CIT(A)'s allowance of deduction under section 80IA(4) for AY 2005-06. [Paras 11, 19, 20, 21]

Assessee is eligible to claim deduction under section 80IA(4)(ii) for AY 2005-06; CIT(A)'s order allowing the deduction is confirmed.

Admission of additional evidence - reliance on findings of closed assessment - Whether additional evidences filed by Revenue at tribunal stage should be admitted to prove commencement prior to 01/04/1995. - HELD THAT: - The Tribunal observed that the matter had been litigated through four assessment cycles and ample opportunity existed for Revenue to place factual documents on record earlier. The additional documents related to facts that existed at the time of the original assessments and were not shown to be newly discovered. Even if admitted, the Tribunal held they would not materially change the position given the admitted sale of pagers in FY 1994-95 and the decisive requirement of frequency assignment and DoT/interface approvals which were granted after 01/04/1995. The application for admission of additional evidence was therefore rejected. [Paras 22]

Revenue's application for admission of additional evidence is rejected.

Non-obstante clause in section 80IA(2A) - deduction under section 80IA(4)(ii) - Whether interest income and miscellaneous income (other incomes) of the assessee are eligible for deduction under section 80IA for AY 2005-06. - HELD THAT: - Following the Tribunal's and the Delhi High Court's rulings in BSNL (as discussed in the judgment), sub-section (2A) - by virtue of its non-obstante clause and specific language - permits deduction in respect of the 'profits of eligible business' and is not confined to amounts 'derived from' the eligible business as in sub-section (1). The Tribunal applied that binding approach and directed that interest income and miscellaneous income, being part of profits of the eligible undertaking, should be allowed deduction under section 80IA. The DRP's contemporaneous directions in later years accepting this position were noted. [Paras 27]

Interest income and miscellaneous income are eligible for deduction under section 80IA for AY 2005-06; Assessing Officer to allow the deduction accordingly.

Interest under section 234B - Whether interest under section 234B should be charged beyond the date of the original assessment order. - HELD THAT: - The Tribunal treated levy of interest under section 234B as consequential and mandatory once tax liability is determined but refrained from deciding computation or period issues in the appellate order. Instead, the Tribunal restored the matter to the file of the Assessing Officer with direction to charge interest in accordance with the statutory provisions of section 234B. [Paras 29]

Issue of interest under section 234B is restored to the Assessing Officer for computation and charging in accordance with law.

Final Conclusion: Revenue's appeal is dismissed. The CIT(A)'s allowance that the assessee commenced telecommunication services after 01/04/1995 and is eligible for deduction under section 80IA(4)(ii) for AY 2005-06 is confirmed; Revenue's application to admit additional evidence is rejected. In the assessee's appeal, deduction under section 80IA is directed to be allowed in respect of interest and miscellaneous income; the question of interest under section 234B is remitted to the Assessing Officer for charging in accordance with law. Assessee's appeal is otherwise partly allowed.

Allowability of expenditure under section 37(1) of the Income-tax Act - wholly and exclusively test - distinction between personal and professional expenditure - advertisement expenses and professional ethics under governing medical association guidelines - reliance on tax audit report for quantification of personal use and disallowance of telephone/vehicle expenses

Allowability of expenditure under section 37(1) of the Income-tax Act - wholly and exclusively test - distinction between personal and professional expenditure - Professional development expenses claimed (musical programme, sponsorship of garba, gifts to fellow doctors) held to be personal and not allowable under section 37(1). - HELD THAT: - The Tribunal applied the statutory 'wholly and exclusively' test under section 37(1) and agreed with the authorities below that the expenditures were primarily social in nature. The musical programme and garba sponsorship were found to serve social/religious or localized community purposes (the garba benefited society residents and permitted hoarding in the hospital's name) and gifts on marriages/Diwali arose from social obligations. Incidental or indirect professional publicity did not establish that these outlays were incurred wholly and exclusively for the assessee's profession. The Tribunal distinguished precedents relied upon by the assessee where the expenditure had been held to be wholly and exclusively for business (brand advertisement cases) and rejected the contention that incidental benefit to third parties negated allowability where the primary purpose was not exclusively professional. Accordingly the disallowance of the claimed professional development expenses was upheld. [Paras 12, 13, 14]

Claim for professional development expenses of Rs.7,49,560/- disallowed and ground of appeal dismissed.

Allowability of expenditure under section 37(1) of the Income-tax Act - advertisement expenses and professional ethics under governing medical association guidelines - distinction between personal and professional expenditure - Advertisement expenses (advertising in society directory and sponsorship of medical college event) held to be personal/unallowable under section 37(1) and contrary to professional ethics, therefore disallowed. - HELD THAT: - The Tribunal treated the advertisement claim through the same legal lens as the professional development expense - the payments for advertising in a society directory and for sponsoring a college event were not incurred wholly and exclusively for the assessee's profession. The factual matrix showed limited/localised benefit and similarity to previously disallowed expenditures. In addition, the Tribunal noted that the controlling professional body's ethics prohibit self-promotion by advertising, which further militated against allowing such outlays as deductible business expenses. The CIT(A)'s disallowance was therefore sustained. [Paras 15, 17, 18]

Advertisement expenses of Rs.61,000/- are personal/unallowable and ground of appeal dismissed.

Reliance on tax audit report for quantification of personal use and disallowance of telephone/vehicle expenses - reasonableness of disallowance and requirement of basis for addition - AO's disallowance of telephone and vehicle expenses was excessive and unjustified; Tribunal deleted the disallowance of Rs.1,19,838/- made by the AO and confirmed a limited addition of Rs.20,000 as affirmed by CIT(A). - HELD THAT: - The assessee had already made a suo moto disallowance (10%) in respect of telephone and vehicle expenses and the tax audit report recorded that no personal expenses were debited to profit and loss account and that one car used personally had its expenditure excluded from books. The AO nevertheless disallowed 20% of the entire claimed expenses without adequate basis or reason for rejecting the assessee's explanation. The Tribunal found this disallowance to be unwarranted and not in accordance with law, deleted the AO's addition of Rs.1,19,838/-, and therefore allowed the appeal on this ground (noting that CIT(A) had sustained a lump-sum addition of Rs.20,000). [Paras 21, 23, 24]

Disallowance of telephone and vehicle expenses of Rs.1,19,838/- deleted; ground of appeal allowed in part.

Final Conclusion: The appeal is partly allowed: disallowances of professional development and advertisement expenses are upheld as personal and not deductible under section 37(1); the AO's excessive disallowance of telephone and vehicle expenses is deleted and the appeal is allowed on that ground, with the overall result that the appeal succeeds in part.

Validity of reassessment in absence of notice under section 143(2) - assessment under section 147 read with section 143(3) - legal fiction treating return filed under section 148 as return under section 139 - applicability of section 292BB to cure non issuance of statutory notice - condonation of delay and sufficiency of cause for extension of limitation

Condonation of delay and sufficiency of cause for extension of limitation - Delay of 2337 days in filing the appeals to the Tribunal was condoned. - HELD THAT: - The Tribunal applied settled principles that 'sufficient cause' must be liberally construed to advance substantial justice and examined the explanations and affidavit filed by the assessee regarding family and personal difficulties. The Revenue filed no counter affidavit and did not allege deliberate or mala fide delay. Relying on judicial precedents and the guiding principles in Collector, Land Acquisition v. Katiji, the Tribunal held that when reasonable cause exists the length of delay is not determinative and substantial justice warrants condonation. Consequently the delay of 2337 days was condoned and the appeals admitted for adjudication on merits. [Paras 12]

Delay condoned and appeals admitted for hearing on merits.

Validity of reassessment in absence of notice under section 143(2) - assessment under section 147 read with section 143(3) - legal fiction treating return filed under section 148 as return under section 139 - Assessments framed under section 143(3) read with section 147 without issuance of the mandatory notice under section 143(2) are void ab initio. - HELD THAT: - The Tribunal held that a return filed in response to a notice under section 148 is to be treated as a return under section 139 and, therefore, procedural provisions applicable to assessments under section 143 must be followed when framing assessments under section 147. Citing binding and persuasive authorities, the Tribunal concluded that issuance of notice under section 143(2) is a mandatory precondition for making an assessment under section 143(3) read with section 147. On the facts, the Revenue failed to produce the statutory notice despite an earlier direction to do so and the assessee's order sheet entries did not evidenceservice; consequently the Tribunal found that the mandatory notice was not issued and that the reassessments were not sustainable, rendering them void ab initio. [Paras 13]

Assessments for the stated years are invalid for want of notice under section 143(2) and are held void ab initio; grounds on merits dismissed as infructuous.

Applicability of section 292BB to cure non issuance of statutory notice - Section 292BB does not cure or validate the absence of issuance of the mandatory notice under section 143(2). - HELD THAT: - The Tribunal analysed section 292BB and concluded it operates only where a notice has in fact been issued but suffers defects in service, timing or manner; it does not apply where no notice at all was issued. Reliance was placed on High Court decisions holding that non issuance of the statutory notice under section 143(2) is not a mere procedural irregularity curable under section 292BB. Applying that principle to the facts, the Tribunal held that section 292BB affords no benefit to the Revenue where the mandatory notice under section 143(2) was not issued. [Paras 13]

Section 292BB is not attracted and cannot cure the non issuance of the notice required under section 143(2).

Final Conclusion: The Tribunal condoned the delay in filing the appeals and, on the merits of the procedural challenge, held that assessments for AYs 1992-1993 to 1995-1996 framed under section 143(3) read with section 147 are invalid for want of a statutory notice under section 143(2); section 292BB does not cure non issuance, and consequentially the merits were left infructuous.

Penalty under Section 271(1)(c) for furnishing of inaccurate particulars of income - capital receipt versus revenue receipt (interest income on pre commencement/earmarked/borrowed funds) - full disclosure of facts and bona fide belief as defence to penalty - civil liability of penalty and mens rea not essential - admission of substantial question of law by High Court as indicium of debatable issue

Penalty under Section 271(1)(c) for furnishing of inaccurate particulars of income - capital receipt versus revenue receipt (interest income on pre commencement/earmarked/borrowed funds) - full disclosure of facts and bona fide belief as defence to penalty - admission of substantial question of law by High Court as indicium of debatable issue - Sustainability of penalty under Section 271(1)(c) for interest income which the assessee treated as a capital receipt but which assessing officer assessed as revenue - HELD THAT: - The Tribunal examined whether the levy of penalty under Section 271(1)(c) was justified where the assessee had disclosed the transactions, the funds were invested in fixed deposits from borrowings and earmarked accounts during pre commencement/project period, and the assessee treated interest as capital receipt relying on Supreme Court precedents. Although penalties under fiscal statutes are civil liabilities and do not require mens rea, the determinative consideration was that the issue - whether interest on temporarily deployed/earmarked/borrowed funds is a capital receipt or taxable as revenue - was genuinely debatable. The assessee had made complete disclosure of facts and advanced a bona fide legal view; moreover, a substantial question of law arising from the Tribunal's quantum order had been admitted by the High Court. Given the existence of a real controversy on the legal characterisation of the receipts and the pending High Court admission, the Tribunal held that imposition of penalty was not appropriate and exercised its discretion to delete the penalty for both assessment years.

Penalty under Section 271(1)(c) deleted for assessment years 2011-12 and 2012-13

Final Conclusion: On the facts, where the assessee fully disclosed the transactions and advanced a debatable legal view as to whether interest on temporary/earmarked/borrowed funds was a capital receipt, and where the High Court has admitted substantial questions of law, the Tribunal deleted the penalties under Section 271(1)(c) for AY 2011-12 and AY 2012-13 and dismissed the Revenue appeals.

Doctrine of proportionality - judicial review of quantum of punishment - revocation of Customs Broker Licence - KYC obligations of a Customs Broker under CBLR, 2013 - forfeiture of security deposit and imposition of penalty as disciplinary measures

Doctrine of proportionality - revocation of Customs Broker Licence - judicial review of quantum of punishment - KYC obligations of a Customs Broker under CBLR, 2013 - forfeiture of security deposit and imposition of penalty as disciplinary measures - Whether the CESTAT was justified in setting aside the Adjudicating Authority's order of revocation of the respondent's Customs Broker licence on grounds of proportionality while upholding forfeiture of security deposit and penalty. - HELD THAT: - The High Court confined its review to the proportionality of revocation because the CESTAT had otherwise upheld the findings that the broker did not fully discharge KYC obligations under the CBLR, 2013 and there was no appeal by the broker against the CESTAT's order. Applying the recognised doctrine of proportionality in judicial review, the Court noted that while the choice and quantum of punishment lie within the domain of the decision-maker, such discretion is amenable to interference where the punishment is disproportionate, irrational or perverse. Reliance was placed on precedent holding that punishment must suit the offence and the offender and that extreme or grossly excessive penalties may be corrected on judicial review. Having regard to the facts that the respondent had discharged part of its statutory obligations, that the mis-declaration was made good by the importer, and that CESTAT found revocation to be highly disproportionate, the Court agreed with CESTAT's assessment that revocation would be excessive in the circumstances. The Court therefore sustained CESTAT's interference with the revocation while noting that forfeiture of the security deposit and imposition of penalty were confirmed by CESTAT.

The High Court upheld the CESTAT's order setting aside the revocation of the Customs Broker licence as disproportionate while leaving intact the forfeiture of the security deposit and the penalty.

Final Conclusion: No substantial question of law arises; the appeal is dismissed as the Court agrees with CESTAT's application of the doctrine of proportionality in setting aside revocation of the Customs Broker licence while confirming forfeiture and penalty.

Proper officer - show-cause notice under Section 124 of the Customs Act, 1962 - delegation of customs functions by notification - powers of Joint Director, DRI equivalent to Joint Commissioner of Customs

Proper officer - show-cause notice under Section 124 of the Customs Act, 1962 - powers of Joint Director, DRI equivalent to Joint Commissioner of Customs - delegation of customs functions by notification - Validity of the show-cause notice dated 23.09.2022 issued by the Joint Director, DRI under Section 124 of the Customs Act, 1962 - HELD THAT: - The Court considered the statutory definition and allocation of functions to a 'proper officer' under Section 2(34) read with Sections 5 and 6 of the Customs Act, 1962 and examined Notification No.25/2022 and Notification No.26/2022 dated 31.03.2022. Notification No.25/2022 vested the Joint Director, DRI with all powers of a Joint Commissioner of Customs, and Notification No.26/2022 designated Deputy Commissioner or Assistant Commissioner of Customs and officers above them in rank as the officers in relation to functions specified therein, including issuance of notices under the second proviso to Section 124. Section 124 requires that a show-cause notice be issued with the prior approval of an officer of customs not below the rank of Assistant/Deputy Commissioner; the combined effect of the notifications and the statutory scheme shows no bar to a Joint Director, DRI (being above the relevant rank) issuing a notice under Section 124. On these grounds the Court held that issuance of the impugned notice by the Joint Director, DRI did not suffer from any infirmity. The Court nevertheless granted the petitioner liberty to file a reply to the show-cause notice before the Joint Director, who was directed to transmit the reply to the adjudicating authority for further proceedings. [Paras 6, 7, 8, 9, 10]

The show-cause notice dated 23.09.2022 issued by the Joint Director, DRI is valid; petitioner permitted two weeks to file reply before the Joint Director, who shall transmit it to the adjudicating authority.

Final Conclusion: Writ petition dismissed; the Court upheld the competence of the Joint Director, DRI to issue the Section 124 show-cause notice and granted the petitioner two weeks' time to file his reply to be forwarded to the adjudicating authority.

Onus of proof for smuggling - confiscation under Section 111(d) of the Customs Act - jurisdiction under Standard Weights and Measures Act for goods in the domestic market - Customs jurisdiction limited to Customs area - violation of principles of natural justice / nemo judex in causa sua - liability to duty in lieu of confiscation under Section 125(2)

Onus of proof for smuggling - confiscation under Section 111(d) of the Customs Act - Confiscation of the seized goods was set aside for want of proof of smuggling. - HELD THAT: - The Tribunal found this to be a town seizure and accepted the appellant's evidence that the goods were purchased in the open domestic market from named suppliers, some of whom corroborated supply to the appellant. Documents in support of the appellant's case had been resumed by DRI prior to the Customs search, and the Revenue did not produce independent evidence establishing that the goods were smuggled or not duty-paid. On this basis the Tribunal held that the statutory onus to prove smuggling was not discharged and that confiscation under the impugned order could not be sustained. [Paras 20, 21]

Impugned confiscation of goods set aside for lack of evidence proving smuggling.

Jurisdiction under Standard Weights and Measures Act for goods in the domestic market - Customs jurisdiction limited to Customs area - Customs officers had no jurisdiction under the SWM Act to inspect, search or seize packaged goods in the open domestic market outside the Customs area. - HELD THAT: - The Tribunal held that the powers and functions under the Standard Weights and Measures Act (and the Packaged Commodity Rules) form a separate code for goods in the domestic market and that jurisdiction to inspect and enforce those provisions outside the Customs area vests in the Director appointed under the SWM Act. Consequently, the Revenue's assertion of violation of SWM Act provisions by exercising Customs powers in the town seizure was held to be without jurisdiction. [Paras 15, 22]

Allegation of SWM Act/Rules violation by Customs in respect of goods in the domestic market rejected for lack of jurisdiction.

Violation of principles of natural justice / nemo judex in causa sua - The adjudication was vitiated by breach of the principles of natural justice because the investigating authority performed adjudicatory functions. - HELD THAT: - The Tribunal found that the investigation, seizure and show-cause proceedings were conducted by the Customs (Preventive) office which also adjudicated the matter, giving rise to the vice that no one should be judge in his own cause. This procedural defect contributed to invalidating the impugned order. [Paras 16, 22]

Impugned order held vitiated by breach of natural justice.

Liability to duty in lieu of confiscation under Section 125(2) - Revenue's cross-appeal for demand of duty under Section 125(2) was dismissed. - HELD THAT: - Revenue contended that duty should have been demanded in addition to confiscation. The Tribunal, having set aside confiscation on merits and found jurisdictional and procedural infirmities, dismissed the Revenue's appeal seeking such a demand. [Paras 19, 23]

Revenue's appeal for demand of duty in lieu of confiscation dismissed.

Final Conclusion: The appeal of the appellant is allowed and the impugned order of confiscation and penalty is set aside; the Revenue's cross-appeal is dismissed and the appellant is entitled to consequential reliefs, including refund of amounts seized/confiscated.

Confiscation of exported goods - requirement of availability of goods for confiscation - penalty under Section 114(iii) - penalty under Section 114AA - unauthorised amendment of shipping bill

Confiscation of exported goods - requirement of availability of goods for confiscation - penalty under Section 114(iii) - Validity of confiscation order under Section 113 and consequential imposition of penalty under Section 114(iii) - HELD THAT: - The Tribunal found that the goods in question had admittedly been exported and therefore were not available for confiscation at the time of adjudication. In those circumstances the order of confiscation under Section 113 could not be sustained. Because the penalty under Section 114(iii) is predicated on confiscation, the Tribunal held that that penalty could not be imposed in the absence of a valid confiscation order and accordingly set aside the penalty under Section 114(iii). [Paras 17]

Order of confiscation set aside; penalty under Section 114(iii) set aside.

Penalty under Section 114AA - unauthorised amendment of shipping bill - Imposability and quantum of penalty under Section 114AA for unauthorised modification of shipping bills - HELD THAT: - The Tribunal accepted that there were unauthorised manual amendments in the shipping bills after they had been passed by the proper officer, amounting to a violation of the provisions covered by Section 114AA. On that basis the Tribunal sustained liability under Section 114AA but applied judicial mitigation of quantum in view of the factual matrix and earlier repayments by the appellant. The penalty under Section 114AA was therefore reduced to Rs.2,00,000. [Paras 17]

Penalty under Section 114AA upheld but reduced to Rs.2,00,000.

Final Conclusion: The appeal is allowed: the confiscation order is set aside and the penalty under Section 114(iii) is quashed; penalty under Section 114AA is sustained but reduced to Rs.2,00,000; the impugned order is modified accordingly.

Liquidation under IBC - effect of NCLT liquidation on recovery of departmental dues - infructuous appeal - tribunal's competence vis-a -vis insolvency proceedings - departmental duty to determine recoverability in light of NCLT order - liberty to revive appeal - administrative guideline for revenue in IBC-related cases

Liquidation under IBC - effect of NCLT liquidation on recovery of departmental dues - infructuous appeal - tribunal's competence vis-a -vis insolvency proceedings - Appeals dismissed as infructuous in view of the NCLT order of liquidation without adjudication on merits. - HELD THAT: - The Tribunal recorded the NCLT order directing liquidation of the corporate debtor and appointed a liquidator, and held that in view of that order the revenue must re-examine recoverability of the adjudged dues. Relying on the approach adopted in Ultratech Nathdwara (as reproduced), the Tribunal observed that where an NCLT order affects the status of liabilities the Tribunal is not the proper forum to finally decide whether dues can be recovered; that determination falls to the department in the context of the insolvency process. Accordingly, since the liquidation order rendered the departmental recovery question to be reconsidered, the Tribunal declined to decide the merits and dismissed the appeals as infructuous while preserving liberty for the parties to seek revival and adjudication on merits if necessary. [Paras 1]

Appeals disposed of as infructuous in view of the NCLT liquidation order; merits not decided and liberty granted to revive the appeals if required.

Departmental duty to determine recoverability in light of NCLT order - liberty to revive appeal - The Tribunal directed that the revenue should review and determine recoverability of dues in light of the NCLT liquidation, and permitted parties to approach the Tribunal to revive the appeals if no amicable resolution is reached. - HELD THAT: - The Tribunal emphasised that the department must assess whether adjudged dues remain recoverable given the NCLT's liquidation order and the implications of any approved resolution plan; the Tribunal expressly refrained from making a final determination on recoverability. The order preserves the right of aggrieved persons to apply to the Tribunal for revival of the appeals and adjudication on merits should the departmental review not lead to resolution. [Paras 1]

Department to determine recoverability in light of NCLT order; parties granted liberty to seek revival of appeals for adjudication on merits.

Administrative guideline for revenue in IBC-related cases - tribunal's competence vis-a -vis insolvency proceedings - The Tribunal recommended that the Central Board of Indirect Taxes & Customs consider issuing guidelines for departmental handling of matters where IBC proceedings are pending against parties in appeals before the Tribunal. - HELD THAT: - Noting recurring initiation of IBC proceedings against parties in appeals and observed uncertainty among departmental representatives about the appropriate stance in such matters, the Tribunal suggested that CBIC may issue procedural guidance for dealing with appeals involving companies subject to IBC proceedings. This recommendation is administrative and advisory in nature and does not constitute binding legal adjudication. [Paras 1]

Copy of the order to be sent to the Chairman, CBIC recommending issuance of guidelines for handling IBC-related cases before the Tribunal.

Final Conclusion: The Tribunal dismissed the appeals as infructuous in view of the NCLT liquidation order, declined to decide the merits or the recoverability of dues (leaving that to the department in the context of insolvency proceedings), granted liberty to revive the appeals for adjudication on merits if required, and recommended that CBIC issue guidelines for handling appeals involving IBC proceedings.

Related party - pre-existing dispute - admissibility of Section 9 application notwithstanding arbitration clause - application of Section 21 of the Arbitration and Conciliation Act limited to domestic arbitrations - error in factual appreciation by the Adjudicating Authority

Related party - error in factual appreciation by Adjudicating Authority - The Appellate Tribunal reversed the Adjudicating Authority's finding that the appellant was a related party and thereby barred from initiating proceedings under Section 9 of the Code. - HELD THAT: - The Adjudicating Authority had disallowed the Section 9 application on the ground that the appellant was a related party in terms of Section 5(24)(j) and relied on a prior decision in Zoom Communications Pvt. Ltd. The Tribunal held that Zoom Communications was distinguishable because that case involved a finding of a sham transaction, a finding absent in the present record. The Tribunal concluded that the Adjudicating Authority erred in its appreciation of facts and law in treating the appellant as a related party that would preclude initiation of the Section 9 process. The Tribunal further noted that even if related-party consequences (such as exclusion from the Committee of Creditors or bar under Section 29A to be a resolution applicant) exist, those consequences do not ipso facto prohibit presentation of a Section 9 application, and no factual finding equivalent to a sham transaction was recorded here.

Finding that the appellant was a related party was not sustained; the Adjudicating Authority's conclusion on this ground was set aside.

Pre-existing dispute - admissibility of Section 9 application notwithstanding arbitration clause - application of Section 21 of the Arbitration and Conciliation Act limited to domestic arbitrations - error in factual appreciation by Adjudicating Authority - There was no pre-existing dispute that would bar admission of the Section 9 application; the presence of an arbitration clause (invoking foreign forum) did not preclude the Section 9 proceeding. - HELD THAT: - The Tribunal examined the record and found that the respondent did not raise the complaint of substandard goods in its reply to the pre-trial notice but raised it only in response to the subsequent demand notice, indicating an afterthought. The emails relied upon by the Adjudicating Authority concerned operational and sales improvement and did not evidence a pre-existing dispute over quality of goods. As to arbitration, the Tribunal accepted the appellant's submission that the invoked forum related to foreign (St. Petersburg) proceedings and that Section 21 of the Arbitration and Conciliation Act applies to domestic arbitrations only (as held by the Delhi High Court in Raffles Design), so the mere existence of an arbitration clause and invocation of a foreign arbitral or quasi-judicial forum did not automatically disentitle the appellant from seeking relief under Section 9. For these reasons the Adjudicating Authority's conclusion that a pre-existing dispute or arbitration bar prevented admission of the Section 9 application was an error of appreciation.

No pre-existing dispute was proved that would bar the Section 9 application; arbitration clause (referring to foreign forum) did not preclude admission.

Final Conclusion: The appeal is allowed; the impugned order dismissing the Section 9 application is set aside for errors in factual appreciation and law. The matter is remitted to the Adjudicating Authority with a direction to admit the appellant's Section 9 application in accordance with law; no order as to costs.

Availability of alternative remedy of appeal to Appellate Tribunal under Section 37A(5) of the FEMA Act - doctrine of exhaustion of statutory remedy and writ jurisdiction under Article 226 - attachment of property under Section 37A(1) of the FEMA Act - interim relief pending filing of statutory appeal - hierarchy of forums under the FEMA Act and further appeal to the High Court under Section 35 - court-accepted undertaking as basis for interim protection

Availability of alternative remedy of appeal to Appellate Tribunal under Section 37A(5) of the FEMA Act - doctrine of exhaustion of statutory remedy and writ jurisdiction under Article 226 - hierarchy of forums under the FEMA Act and further appeal to the High Court under Section 35 - Whether the writ petitions could be entertained instead of availing the statutory appeal to the Appellate Tribunal once the Tribunal became functional - HELD THAT: - The Court found that when the writ petitions were filed the Appellate Tribunal was not functioning, which justified invocation of writ jurisdiction at that time. However, the Tribunal became functional from 26.09.2022 with the appointment and assumption of charge by its Chairman. Given that the FEMA Act provides a statutory appeal to the Tribunal under Section 37A(5) and further appeal to the High Court under Section 35, the Court held that the availability of the effective statutory forum displaces continuation of writ adjudication and the parties should resort to the statutory appeal route. Allowing the writs to proceed would circumvent the statutory hierarchy of forums and result in loss of the appellate forum's opportunity to adjudicate the matter first. [Paras 17, 18, 21, 22, 23]

Writ petitions cannot be proceeded with on merits now that the Tribunal is functioning; petitioner must prefer appeal before the Appellate Tribunal under Section 37A(5) of the FEMA Act.

Interim relief pending filing of statutory appeal - court-accepted undertaking as basis for interim protection - attachment of property under Section 37A(1) of the FEMA Act - Extent of interim protection and timeline for seeking statutory appeal pending before the Tribunal - HELD THAT: - Recognising that the petitioner filed the writ petitions within the 45-day limitation applicable for appeals and that the petitioner can still file the statutory appeal, the Court granted liberty to prefer an appeal to the Tribunal within 45 days from receipt of the order, with leave to seek interim relief before the Tribunal. Meanwhile, the existing interim protection shall continue but conditioned on the undertaking given on behalf of the alleged contravener that the attached movable and immovable properties will not be encumbered or meddled with. The Court noted it may extend the limitation if the petitioner requires more time to prefer appeals in the prescribed format. [Paras 19, 20, 24, 25, 27]

Petitioner granted 45 days from receipt of this order to prefer appeal before the Tribunal; interim protection continued till petitioner approaches the Tribunal, subject to the undertaking given by the alleged contravener.

Attachment of property under Section 37A(1) of the FEMA Act - interim relief pending filing of statutory appeal - Permissibility of renewal of existing mortgages and prohibition of fresh encumbrances during interim period - HELD THAT: - The Court clarified that if any immovable properties are already mortgaged for working capital by the alleged contravener, such mortgages may be renewed in view of the time lapse, but no fresh mortgage or encumbrance shall take place during the interim period. This clarification is subject to the attachment orders made by the petitioner department and is aimed at balancing commercial necessity with the protection of attached assets. [Paras 27]

Renewal of pre-existing mortgages permitted; no fresh mortgage or encumbrance to be created during the interim period, subject to the existing attachments.

Final Conclusion: Both writ petitions are dismissed on the ground that the petitioner should invoke the statutory appeal to the Appellate Tribunal under Section 37A(5) of the FEMA Act within 45 days from receipt of this order (with liberty to seek extension and interim relief before the Tribunal); interim protection is continued till the petitioner approaches the Tribunal on the basis of the undertaking by the alleged contravener, and renewals of existing mortgages are permitted but no fresh encumbrances shall be made.

Anticipatory bail under Section 438 CrPC - applicability of the Code of Criminal Procedure to proceedings under the PMLA - distinction between arrest and custody - default bail under Section 167(2) CrPC - embargo on bail under Section 45 of the PMLA and its reasonable application - Article 21 right to personal liberty and fair and expeditious trial - Ranjitsingh Sharma principle on bail under special statutes

Anticipatory bail under Section 438 CrPC - Article 21 right to personal liberty and fair and expeditious trial - Grant of anticipatory bail to the petitioner in respect of Complaint Case (PMLA) No.40 of 2018 on the facts and subject to conditions. - HELD THAT: - On a conspectus of the materials, factual background and applicable law, the High Court exercised its discretionary power under Section 438 CrPC to grant pre-arrest bail. The court applied established bail principles (including those in Gurbaksh Singh Sibbia and Sanjay Chandra), and observed that petitioner had already undergone prolonged custody in related vigilance proceedings, custodial interrogation by the Enforcement Directorate was complete, and no new incriminating material was shown to justify further custodial interrogation. The court further noted the constitutional imperative of Article 21 to protect personal liberty and ensure fair and expeditious trial and held that conditions could be imposed to safeguard prosecution interests. Accordingly the petitioner was directed to be released on bail in the event of his arrest in the PMLA complaint, subject to enumerated conditions and with the trial court left free to proceed on merits. [Paras 48, 50, 51, 52, 53]

Anticipatory bail granted subject to conditions including appearance on all dates, non-tampering with evidence or witnesses, cooperation with investigation, surrender/non-possession of travel documents and updating ED of whereabouts; violation to invite cancellation.

Applicability of the Code of Criminal Procedure to proceedings under the PMLA - embargo on bail under Section 45 of the PMLA and its reasonable application - Ranjitsingh Sharma principle on bail under special statutes - CrPC procedures apply to PMLA matters insofar as they are not inconsistent with the PMLA and the restrictive bail-embargo in Section 45 must be applied reasonably; the court may grant bail on materials showing prima facie that conviction is unlikely and that accused is not likely to offend while on bail. - HELD THAT: - The court held that Section 65 PMLA and settled precedents (including Ashok Munilal Jain) establish that CrPC provisions apply to PMLA proceedings unless inconsistent. While Section 45 places a statutory restriction, the court must apply the restriction reasonably and can grant bail if satisfied on available materials (on probabilities) that the accused may not be ultimately convicted and is not likely to commit an offence under the Act while on bail. The court relied on the approach in Ranjitsingh Sharma and Vijay Madanlal Choudhary to record only tentative, reasoned satisfaction based on materials without delving into trial evidence. [Paras 35, 36, 37, 48, 401]

CrPC applies to PMLA; Section 45's embargo does not preclude reasonable exercise of judicial discretion to grant bail where materials permit a prima facie view that conviction is unlikely and conditions can safeguard prosecution interests.

Distinction between arrest and custody - default bail under Section 167(2) CrPC - The petitioner was not 'formally arrested' by the Enforcement Directorate in the enforcement proceedings; he was taken on remand for interrogation and later found not to be required in ED custody, hence Section 167(2) default-bail benefit was not available on the facts pleaded. - HELD THAT: - After scrutinising the remand orders and relevant authorities, the court concluded that ED officials availed remand (orders dated 03.07.2014, 10.07.2014 and 24.07.2014) under the procedure for production/remand and did not effect a formal arrest in the enforcement case. The court reviewed the law distinguishing custody and formal arrest (including Niranjan Singh, Sundeep Bafna, Joginder Kumar and related authorities) and held that Section 167(2) (default bail) applies to situations of formal arrest and detention where investigation continues beyond prescribed periods; those provisions could not be invoked by the petitioner on the present factual matrix because ED had not effected formal arrest and had itself stated custody was no longer required. [Paras 30, 31, 41, 42, 43]

Petitioner was not formally arrested by ED; remands were under production/remand procedure and Section 167(2) CrPC default-bail entitlement was not available on these facts.

Article 21 right to personal liberty and fair and expeditious trial - anticipatory bail under Section 438 CrPC - Prolonged pre-trial detention and the absence of necessity for further custodial interrogation were material considerations favouring grant of anticipatory bail under Section 438, particularly where investigation is substantially complete and trial may be protracted. - HELD THAT: - The court emphasised the Article 21 requirement of fair and expeditious trial and observed that indefinite or prolonged detention without justification violates this right. Given petitioner's long prior custody in related proceedings, the completion of ED interrogation, the absence of new incriminating materials and the possibility of protracted trial, the court found that safeguarding liberty warranted anticipatory bail subject to conditions designed to protect the prosecution's case. [Paras 4, 44, 45, 50, 51]

Article 21 considerations militated in favour of anticipatory bail where custodial interrogation had concluded and prolonged detention would otherwise continue.

Final Conclusion: The High Court granted anticipatory bail to the petitioner in respect of the PMLA complaint, holding that CrPC procedures apply to PMLA matters, that the petitioner had not been formally arrested by the Enforcement Directorate (having been remanded for interrogation), that Section 167(2) default-bail was not available on the facts, and that, applying the Ranjitsingh Sharma/Vijay Choudhary approach and Article 21 considerations, the court was prima facie satisfied that bail could be granted subject to specific protective conditions; the trial court remains free to decide the case on merits.

Regular bail under PMLA with reference to Section 45 - Non-bailable and cognizable nature of offences under the PMLA - Rigors of Section 45 in economic offences / money-laundering cases - Diversion of bank funds as proceeds of crime - Cooperation in investigation not automatically entitling accused to bail

Regular bail under PMLA with reference to Section 45 - Rigors of Section 45 in economic offences / money-laundering cases - Diversion of bank funds as proceeds of crime - Cooperation in investigation not automatically entitling accused to bail - Whether the petitioner is entitled to regular bail in the ECIR/PMLA prosecution. - HELD THAT: - The Court examined the material on record and found that the petitioner is a director of multiple companies and that the investigation alleges large-scale diversion of bank loans ultimately pooled into companies controlled by the petitioner. The complaint and related CBI FIRs disclose allegations that loans were taken in the names of persons described as employees or close relatives and were diverted, the total alleged quantum being significantly large. Section 45 of the PMLA imposes additional stringent conditions for grant of bail in money-laundering cases and requires the court, when opposed by the Public Prosecutor, to be satisfied that there are reasonable grounds for believing the accused is not guilty and is not likely to commit an offence while on bail. The Court observed that economic offences and money laundering are to be viewed seriously given their grave impact on public finances and that cooperation in investigation or prolonged custody does not, by itself, satisfy the statutory threshold for bail under Section 45. Having regard to the nature of allegations, the role of the petitioner as director of entities implicated, and the quantum and character of the alleged diversion, the Court was not satisfied that the conditions of Section 45 were met.

Prayer for regular bail rejected; petition dismissed.

Final Conclusion: On the facts and material before it - including the petitioner's alleged role as director of implicated companies, the allegation of diversion of substantial bank funds, and the statutory rigors of Section 45 of the PMLA - the Court declined to grant regular bail and dismissed the bail application.

Grant of bail - limited effect of High Court's observations in a bail order - non-interference with merits of trial

Grant of bail - Special Leave Petition against the High Court's grant of bail to the respondent was not entertained. - HELD THAT: - The Supreme Court recorded its unwillingness to entertain the petition challenging the High Court's order granting bail to the first respondent and dismissed the Special Leave Petition. The Court thereby declined to exercise its supervisory jurisdiction to disturb the High Court's exercise of discretion in admitting the respondent to bail. [Paras 1, 3]

Special Leave Petition dismissed; the Court declined to interfere with the High Court's grant of bail.

Limited effect of High Court's observations in a bail order - non-interference with merits of trial - Observations made by the High Court in the bail order are to be read as confined to the question of bail and shall not be used to affect the merits of the trial or in collateral proceedings. - HELD THAT: - The Supreme Court clarified that the observations contained in the impugned High Court order relate solely to the entitlement to bail and must be construed only for that limited purpose. The Court expressly prohibited reliance upon those observations in any manner that would affect the substantive merits of the underlying trial or in other collateral proceedings, thereby preserving the trial court's and appellate forums' competence to decide merits unaffected by interim bail reasoning. [Paras 2]

High Court's observations confined to bail; they shall not affect the merits of the trial or be pressed in collateral proceedings.

Final Conclusion: The Special Leave Petition challenging the High Court's grant of bail was dismissed; the Supreme Court confined the effect of the High Court's observations to the question of bail and precluded their use to influence the merits of the trial or other collateral proceedings.

Discounts/incentives not consideration for service - Business Auxiliary Service - principal to principal sale - service tax not leviable on trade discounts

Discounts/incentives not consideration for service - principal to principal sale - Business Auxiliary Service - Whether discounts/incentives granted by the vehicle manufacturer to the dealer are taxable as consideration for Business Auxiliary Service and liable to service tax. - HELD THAT: - The Tribunal found on the undisputed facts that the appellant purchased vehicles from the manufacturer and resold them to customers on a principal to principal basis. The yearly discounts granted by the manufacturer were held to be trade discounts in the sale value of vehicles and thus part of the sale transaction, not consideration for any service. The Tribunal followed its earlier decisions and those of other benches holding that incentives/discount support extended by manufacturers to authorized dealers cannot be treated as consideration for services under the category of Business Auxiliary Service where the dealer acts as a principal. The departmental orders for other periods accepting the same position were also noted. On these grounds the levy of service tax on the discounts/incentives was held unsustainable.

Demand of service tax on the discounts/incentives is set aside and the appeal is allowed.

Final Conclusion: The impugned order demanding service tax on manufacturer discounts/incentives granted to the dealer is set aside; the appeal is allowed.

Sale of goods - incidental services - erection, installation and commissioning service - works contract service - composite contract / lump-sum contract - no bifurcation of value where entire value has suffered excise/customs duty - substance and intention of the contract

Sale of goods - incidental services - erection, installation and commissioning service - no bifurcation of value where entire value has suffered excise/customs duty - substance and intention of the contract - Whether service tax is payable on erection, installation and commissioning where the supplier manufactured and sold machinery for a lump-sum price that already suffered central excise duty and no separate charge for services was shown - HELD THAT: - The Tribunal found that the respondent manufactured textile machinery and supplied it to buyers under lump-sum contracts which included erection, installation and commissioning without any separate bifurcation of value. The entire contract value was treated as sale and had been subjected to central excise duty. Reliance was placed on consistent Tribunal and High Court decisions holding that where activities of erection/installation are incidental to the manufacture and delivery of excisable goods and the whole invoice/contract value has suffered excise/customs duty, those incidental activities cannot be separately subjected to service tax. The Tribunal applied the well-settled test that substance and intention of the contract determine whether the transaction is a sale or a works contract and, on the facts, concluded the predominant object was transfer of finished goods. In these circumstances there is no separate service value to tax, and the show-cause demands based on erection/installation services were rightly dropped. [Paras 4, 5]

Demand of service tax on erection, installation and commissioning is not sustainable where the entire value was the sale price of machinery and has suffered excise duty; the impugned order is upheld in favor of the respondent and the revenue's appeals are dismissed.

Final Conclusion: Where a manufacturer-supplier charges a lump-sum price for machinery (including erection/installation/commissioning), treats the whole amount as sale and pays excise/customs duty on that total value, incidental erection/installation services will not attract separate service tax; accordingly the revenue's appeal is dismissed.

Allowance of Cenvat credit on production of invoices and payment proofs - proviso to Rule 9 regarding sufficiency of particulars in support of Cenvat credit - verification report of the jurisdictional Revenue Officer cannot substitute reasoned rejection under Rule 9(1) - mandatory pre-deposit under Section 35F of the Central Excise Act, 1944 - invocation of extended period of limitation requires proof of suppression of facts

Allowance of Cenvat credit on production of invoices and payment proofs - proviso to Rule 9 regarding sufficiency of particulars in support of Cenvat credit - verification report of the jurisdictional Revenue Officer cannot substitute reasoned rejection under Rule 9(1) - Cenvat credit claimed for the period was wrongly disallowed where voluminous invoices, payment vouchers and month-wise details were in fact produced and verified, and the adjudicating authority failed to apply the proviso to Rule 9(1). - HELD THAT: - The Tribunal found on perusal of the Order in Original that copies of payment vouchers, official bills and month wise details of Cenvat credit availed from October, 2014 to June, 2017 were furnished to and acknowledged by the Adjudicating Authority and were verified by the jurisdictional Revenue Officer. The Original Authority nonetheless relied on the verifying officer's report that the documents did not meet the ostensible requirements of Rule 9(1) and Rule 11, chiefly because month wise bifurcation was not provided. The Tribunal held that Rule 9(1) requires invoices with particulars and that the proviso allows credit where submitted documents contain the required particulars; the adjudicating authority gave no reasoned explanation why the documents were deficient. The reliance on the RO's verification, without applying the statutory test and the proviso, was held to be a wrongful basis for denial of credit. [Paras 6, 7, 8]

The disallowance of the Cenvat credit on the stated grounds was held to be incorrect and unreasonable; the documents furnished satisfied the statutory requirement and credit was to be allowed.

Mandatory pre-deposit under Section 35F of the Central Excise Act, 1944 - Whether non deposit of the mandatory pre deposit before the Commissioner (Appeals) warranted dismissal of the appeal to the Tribunal. - HELD THAT: - The Tribunal noted that 10% of the confirmed demand had been deposited by the appellant prior to filing the appeal before the Tribunal, which, read with the requirement that 7.5% be deposited before the Commissioner (Appeals) and the remaining 2.5% before the Tribunal, satisfied the aggregate mandatory deposit under Section 35F. Further, the Commissioner (Appeals) had adjudicated the appeal on merits. In these circumstances the Tribunal declined to remit the matter for remand on the preliminary ground of lack of pre deposit. [Paras 9]

Pre deposit irregularity did not preclude consideration on merits; no remand to the Commissioner (Appeals) was required.

Invocation of extended period of limitation requires proof of suppression of facts - Whether the show cause notice issued by invoking the extended period of limitation was sustainable in absence of evidence of suppression by the appellant. - HELD THAT: - The show cause notice (dated 18.10.2019) invoked the extended period for the period October, 2014 to June, 2017 but did not allege or demonstrate suppression of material facts by the appellant; it merely asserted nondisclosure regarding the nature and place of receipt of input services. The Tribunal observed that the appellant had produced requisite documents to the department and there was no evidence that service tax was unpaid or that there was an intent to evade liability. Mere contention that documents were improper does not constitute proof of suppression. Given these findings, invocation of the extended period was not justified and the notice was time barred. [Paras 10]

The extended period of limitation was improperly invoked in the absence of suppression; the show cause notice was held to be barred by time.

Final Conclusion: For the reasons stated, the order under challenge is set aside and the appeal is allowed; the denial of Cenvat credit and the invocation of extended limitation were found unsustainable, and the matter did not require remand on pre deposit grounds.

Remand for fresh adjudication - interim suspension of Tribunal order by Supreme Court - pendency of identical issue before the Supreme Court - opportunity of hearing to the assessee on remand

Remand for fresh adjudication - pendency of identical issue before the Supreme Court - interim suspension of Tribunal order by Supreme Court - opportunity of hearing to the assessee on remand - Whether the appeal should be remitted to the Adjudicating Authority for fresh decision in view of the identical issue pending before the Hon'ble Supreme Court where the Tribunal's order has been stayed, and whether the Adjudicating Authority should be directed to afford opportunity of hearing. - HELD THAT: - The Tribunal noted that the identical legal question concerning taxability of services provided by security guards is pending adjudication before the Hon'ble Supreme Court and that the Supreme Court has suspended the operation of the Tribunal's order in the related proceeding. Having regard to an earlier decision of this Tribunal which, in similar circumstances, remanded the matter to the adjudicating authority for fresh decision after the Supreme Court's determination, the Tribunal considered there was no purpose in retaining the matter on its own docket. The Tribunal therefore concluded that the appropriate course is to remit the case to the Adjudicating Authority to decide the issue afresh after the Supreme Court delivers its final judgment. The Tribunal further directed that the Adjudicating Authority shall afford the appellant proper opportunity of hearing while deciding the matter anew. [Paras 5, 6]

Appeal allowed by way of remand to the Adjudicating Authority for fresh decision after the final outcome of the pending Civil Appeal before the Hon'ble Supreme Court, with a direction to give the appellant proper opportunity of hearing.

Final Conclusion: The appeal is allowed by way of remand; the matter is sent back to the Adjudicating Authority to decide afresh after the Hon'ble Supreme Court's decision in the pending Civil Appeal, and the Adjudicating Authority shall afford the appellant a proper opportunity of hearing.

Full and true disclosure - Settlement Commission's jurisdictional pre-conditions - remit to the Central Excise Officer under Section 32-L - no power of the Settlement Commission to adjudicate show cause notices on merits where disclosure is not full and true - use of materials produced before the Settlement Commission by the Central Excise Officer

Full and true disclosure - Settlement Commission's jurisdictional pre-conditions - no power of the Settlement Commission to adjudicate show cause notices on merits where disclosure is not full and true - Whether the Settlement Commission could proceed to adjudicate and settle duty liability on the merits after recording that applicants had not made full and true disclosure and had not cooperated. - HELD THAT: - The court held that where the Settlement Commission concludes that the applicant has not made a full and true disclosure and has not cooperated, it lacks jurisdiction to adjudicate the liability on merits. The statutory scheme requires satisfaction of the jurisdictional pre-conditions in Section 32E before the Commission can proceed; if those conditions are not met the Commission must remit the case to the statutory adjudicating authority. The judgment of the coordinate bench in SDL Auto Pvt. Ltd. was applied to emphasise that the Settlement Commission may not act as an adjudicating authority in place of the Central Excise Officer when disclosures are incomplete, and that the Commission cannot waive the pre-conditions for settlement or pass an order in original adjudicating the show cause notice on merits in such circumstances. [Paras 8]

Settlement Commission cannot adjudicate the show cause notices on merits after finding lack of full and true disclosure; matter must be remitted.

Remit to the Central Excise Officer under Section 32-L - use of materials produced before the Settlement Commission by the Central Excise Officer - Relief to be granted where Settlement Commission has proceeded despite absence of full and true disclosure. - HELD THAT: - Applying the statutory scheme and the authoritative precedent, the court set aside the impugned settlement orders and quashed the consequential demand. The matter was remitted to the concerned statutory authority (Central Excise Officer) for initiation of steps in accordance with law. The court noted that on remand the Central Excise Officer is entitled to use materials and information produced before the Settlement Commission as provided by the statutory provisions. [Paras 10, 11]

Impugned Settlement Commission orders set aside, demand quashed and matter remitted to the concerned statutory authority for further action in accordance with law.

Final Conclusion: Impugned orders of the Settlement Commission set aside; demand arising therefrom quashed; matter remitted to the concerned Central Excise authority for fresh action in accordance with law because the Commission proceeded despite finding lack of full and true disclosure.

Liability for central excise dues of predecessor - purchase of land versus purchase of entire unit/business - statutory liabilities arising out of land and plant and machinery - proviso to Section 11 of the Central Excise Act regarding recovery from purchaser - priority of secured creditor over excise dues

Liability for central excise dues of predecessor - purchase of land versus purchase of entire unit/business - statutory liabilities arising out of land and plant and machinery - Validity of notices issued to subsequent purchaser of land seeking recovery of central excise dues of the erstwhile owner. - HELD THAT: - Following the Supreme Court's decision in Rana Girders Limited, this Court held that excise liabilities arise from the manufacturing of excisable goods by the erstwhile owner and are not liabilities that "arise out of" the land, building or plant and machinery. Consequently, where a purchaser acquires only the land (and not the entire business/unit), he cannot be fastened with the predecessor's central excise dues unless the purchaser has bought the entire unit as a going concern or there is a statutory provision creating a first charge on the purchaser. The proviso to Section 11 relied upon by the excise authorities was not applicable to the facts of these petitions. The Court therefore concluded that the impugned recovery notices issued to the purchasers were unsustainable and liable to be set aside, while leaving the excise authorities free to pursue other remedies permissible in law against the debtor. [Paras 10, 11, 13]

Impugned notices issued to the purchasers for recovery of the erstwhile owner's excise dues are quashed; authorities may pursue other lawful remedies against the former owner.

Final Conclusion: Writ petitions allowed; notices seeking recovery of central excise dues from purchasers of land (who did not acquire the entire business/unit) set aside, without prejudice to recovery action permissible in law against the original debtor.

Definition of 'manufacture' - by-product/waste not being goods - application of Rule 6(2) and Rule 6(3) of Cenvat Credit Rules - liability under amended Rule 6 for sale of exempted goods - excisability of by-products - binding precedent of the Hon'ble Supreme Court - judicial discipline in following higher court decisions

Definition of 'manufacture' - by-product/waste not being goods - application of Rule 6(2) and Rule 6(3) of Cenvat Credit Rules - liability under amended Rule 6 for sale of exempted goods - Whether amended Rule 6(2)/6(3) of the Cenvat Credit Rules, 2004 attracts liability to pay a percentage of the sale value on disposal of pressmud, bagasse and boiler ash where separate accounts for inputs used in manufacture of dutiable and exempt goods were not maintained - HELD THAT: - The Tribunal applied the binding principle laid down by the Hon'ble Supreme Court in DSCL Sugar Ltd. that pressmud, bagasse and boiler ash emerge as unavoidable agricultural waste or residue during crushing of sugarcane and are not produced by any manufacturing process; hence they are not 'manufactured' goods. The amendment to Rule 6 w.e.f. 01.03.2015 extends Rule 6 to inputs used in relation to manufacture of exempted goods, but its scope presupposes a manufacturing activity producing final products. Since the impugned by-products are wastes/by-products (not final manufactured goods) the amended Rule 6 cannot be invoked to impose liability under Rule 6(3). The Tribunal further noted that subordinate authorities are bound to follow the Supreme Court's decision and could not distinguish it to sustain demand. Consistent decisions of the Tribunal were also relied upon to confirm that sale of such waste/by-products falls outside Rule 6. Applying these principles to the facts for the period December, 2015 to June, 2017, the demand confirmed by lower authorities could not be sustained. [Paras 6, 7, 9, 10]

Demand under amended Rule 6(2)/6(3) on sale of pressmud, bagasse and boiler ash is unsustainable as these are agricultural waste/by-products and not manufactured goods; appeals allowed.

Final Conclusion: Appeals allowed; demand under Rule 6(2)/6(3) confirmed by lower authorities set aside for the periods December, 2015 to June, 2017, with consequential relief as per law.

Actual user condition - Admissibility and verification of documentary evidence produced at adjudication - Principles of natural justice in adjudication - Remand for fresh adjudication

Actual user condition - Admissibility and verification of documentary evidence produced at adjudication - Principles of natural justice in adjudication - Whether the documents produced by the appellant at the adjudication stage could be rejected because they were not available during the investigation and whether such rejection without verifying authenticity violated principles of natural justice - HELD THAT: - The Tribunal held that it is not necessary that all documentary evidence relied upon in defence must have been produced during the investigation; documents produced at the adjudication stage are admissible for the noticee's defence. The adjudicating authority erred in discarding the documentary material merely because it was produced for the first time at adjudication and was not available during the DRI investigation. Where the adjudicating authority has doubts about authenticity, it is obliged to verify the documents (for example by checking books of account or other means) rather than reject them summarily. By rejecting the documents and payment particulars without ensuring their authenticity and without verification from the appellant's books of account, the adjudicating authority acted in gross violation of the principles of natural justice. [Paras 6, 7, 8]

Findings of the adjudicating authority to the effect that documents produced at adjudication could be discarded for not being available during investigation are set aside; the rejection without verification was contrary to principles of natural justice.

Remand for fresh adjudication - Admissibility and verification of documentary evidence produced at adjudication - Whether the matter should be remanded to the adjudicating authority for fresh consideration after verification of the documents and payment records - HELD THAT: - Given the appellate finding that relevant documentary evidence was prima facie supportive of delivery to the vessels and that the adjudicating authority failed to verify authenticity or inspect books of account, the Tribunal directed that the impugned order be set aside and the matter remanded to the adjudicating authority. The adjudicating authority is required to consider all documents submitted by the appellant (whether produced during investigation or at adjudication), verify their authenticity and correctness (including from books of account if necessary), and pass a de novo order observing principles of natural justice. A timeline of preferably two months from the date of the appellate order was indicated for the fresh adjudication. [Paras 7, 8]

Impugned order set aside and matter remitted to the adjudicating authority for fresh adjudication after verification of documents and payment records; de novo order to be passed preferably within two months.

Final Conclusion: The Tribunal set aside the adjudicating authority's order, held that rejection of documents produced at adjudication without verification violated natural justice, and remanded the matter for fresh adjudication after authentication of the documentary and account records, directing a de novo order preferably within two months.

Reversal of proportionate Cenvat credit for exempted goods - Applicability of 10% payment under Rule 6(3)(a) of Cenvat Credit Rules - Precedential effect of High Court and Supreme Court orders on Cenvat liability - Territorial/departmental binding effect of a High Court decision on a Tribunal within its jurisdiction

Reversal of proportionate Cenvat credit for exempted goods - Applicability of 10% payment under Rule 6(3)(a) of Cenvat Credit Rules - Precedential effect of High Court and Supreme Court orders on Cenvat liability - Whether, having reversed proportionate Cenvat credit attributable to exempted goods, the assessee was liable to pay 10% under Rule 6(3)(a) for the relevant period - HELD THAT: - The Tribunal noted that the Commissioner had remanded the matter only for verification whether the assessee had not availed Cenvat credit or, if availed, had proportionately reversed it, following earlier Tribunal directions. The Commissioner further observed that the dispute was covered by the Gujarat High Court decision in the case of Maize Products, which the High Court dismissed in favour of the assessee, and that the subsequent challenge to that High Court order in the Supreme Court was dismissed. Given this binding development, the Tribunal held that the Maize Products ruling prevails over the conflicting view in Nicholas Piramal (as relied upon by Revenue) and, because the present Tribunal is subject to the jurisdiction of the Gujarat High Court, that decision is controlling. On that basis the Tribunal found no infirmity in the Commissioner's order dropping the demand for payment under Rule 6(3)(a). [Paras 6, 7]

Impugned order of the Commissioner dropping the demand is upheld and the Revenue's appeal is dismissed

Final Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the Commissioner's order that dropped the demand for 10% under Rule 6(3)(a) for January 2006 to March 2006, on the ground that the Gujarat High Court decision in Maize Products (and the Supreme Court dismissal of the departmental challenge) governs and is binding on the Tribunal within that jurisdiction.

Limitation of labour and service charges to contractual percentage - acceptance of books of account as conclusive for assessment - remand for verification of alleged receipts - burden on revenue to produce prima facie material

Limitation of labour and service charges to contractual percentage - acceptance of books of account as conclusive for assessment - Whether the Tribunal was justified in limiting deductions towards labour and service charges to 34% of gross bills in the first year of a five-year project. - HELD THAT: - The Tribunal's conclusion that labour and service charges should be limited to 34% was based on a misconstruction of Clause VII(e) of the agreement, which merely indicated permissible escalation percentages and did not establish actual expenditure. The Assessing Officer and the Assistant Commissioner both examined and accepted the assessee's books of account - including labour payment register, vouchers, cash book, muster rolls and audited trial balance - without reservation. Where statutory officers have accepted and acted upon the accounts and supporting records produced by the assessee, there was no basis for the Tribunal to substitute its own notional percentage in place of the accounted figures. The Court therefore declined to endorse the mechanical limitation imposed by the Tribunal and answered the question against the Department. [Paras 10, 11]

Tribunal's limitation to 34% set aside; deduction not to be mechanically restricted where books of account and supporting records were accepted.

Remand for verification of alleged receipts - burden on revenue to produce prima facie material - Whether the Tribunal was correct to remit the question of alleged hire charges to the Assessing Officer for re-computation and determination of receipt of hire charges by the assessee. - HELD THAT: - The additional ground raised by the State before the Tribunal-alleging receipt by the assessee of hire charges-was unsupported by any material produced to establish even a prima facie basis for that allegation. The assessee expressly disputed receipt of such amounts. In the absence of any material to justify the new allegation, remanding the matter to the Assessing Officer for fresh determination was unnecessary and unwarranted. The Court therefore found the remand unjustified and answered the questions in favour of the assessee. [Paras 12]

Remand regarding alleged hire charges quashed; no occasion to re-open or re-compute in absence of prima facie material from the revenue.

Final Conclusion: Impugned order of the Tribunal is set aside; revision petition allowed and the Tribunal's directions to limit labour and service charges and to remit the alleged hire charges issue are negatived.

Right to personal hearing - audi alteram partem - pre-assessment notice - personal hearing to be effective must specify date and time and follow receipt of objections - quash and remit for fresh decision after effective hearing

Right to personal hearing - pre-assessment notice - personal hearing to be effective must specify date and time and follow receipt of objections - Validity of the pre-assessment notice and adequacy of opportunity of hearing afforded to the petitioner prior to completion of assessment for the period 2014-15. - HELD THAT: - The Court examined the sole pre-assessment notice dated 30.07.2019 and found it procedurally defective as an effective opportunity of personal hearing. Although the notice invited written objections and offered the possibility of personal hearing, it did not specify a definite date and time for such hearing and did not make the hearing contingent upon receipt of the objections such that both parties would be aware of respective stands. The Court held that a personal hearing, to be meaningful, must be fixed with date and time and ordinarily follow the receipt of objections so that the Authority and the assessee are each apprised of contentions before finalizing assessment. In view of the inadequacy, the impugned order (to the extent not appealed) cannot stand without affording an effective hearing. [Paras 5, 6, 7, 8, 9]

Pre-assessment notice and manner of hearing held inadequate; the impugned order is set aside insofar as not under appeal and the matter is remitted for fresh consideration after affording the petitioner an effective personal hearing fixed for 24.11.2022 at 10.30 a.m., with direction to decide afresh within four weeks of that hearing; failure to avail the opportunity will revive the impugned order.

Final Conclusion: Writ petition allowed to the extent of setting aside the assessment order for 2014-15 insofar as not appealed; matter remitted for fresh decision after an effective personal hearing on 24.11.2022 at 10.30 a.m., and the Authority directed to pass a fresh order within four weeks of that hearing; if the petitioner fails to appear the impugned order will stand revived.