TaxTMI Updates e-Newsletter
Dec 04,2019

Advance Ruling - Scope of advance ruling under Section 97(2) - Non-admission under Section 98(2) - Payment under wrong tax head - Interest on reclassification of tax payment

Scope of advance ruling under Section 97(2) - Payment under wrong tax head - Interest on reclassification of tax payment - Non-admission under Section 98(2) - Application for advance ruling on whether interest is payable for the intervening period where tax was first paid under the cess head and later under the CGST head is not admissible under Section 97(2) and is therefore not admitted under Section 98(2). - HELD THAT: - The Authority examined the subject-matter of the applicant's questions against the enumerated categories in Section 97(2) of the CGST Act, 2017, which restrict advance rulings to specified topics such as classification, applicability of notifications, time and value of supply, admissibility of input tax credit, determination of liability to pay tax, registration requirement and whether a particular transaction amounts to a supply. The applicant sought a ruling on the applicability of Section 77(2) to the Compensation Cess Act and on whether interest is payable for the period between payment under one head (cess) and subsequent payment under another head (CGST). These queries concern the liability for interest arising from payment under a wrong head and do not fall within the matters listed in Section 97(2). Consequently, the Authority concluded that the application does not seek a question permissible for advance ruling and must be rejected at the admission stage under Section 98(2).

The application is not admitted and is rejected under Section 98(2) of the CGST Act, 2017 (and corresponding provision under the APGST Act, 2017); no advance ruling is issued on the questions raised.

Final Conclusion: The Authority declined to admit the application for advance ruling because the questions on interest liability arising from payment under an incorrect tax head are outside the scope of matters enumerated in Section 97(2); the application is rejected under Section 98(2).

Summary order. Application under Section 97/98 GST Act disposed of on the applicant's request for withdrawal; application accordingly disposed off and the fee paid shall not be refunded as declared by the applicant.

Summary order. Application withdrawn by the applicant and dismissed as withdrawn; no advance ruling is given.

Provisional release of seized goods on execution of bond and furnishing of security - release and disposal procedure for perishable or hazardous goods under Section 67(8) and Rule 141 - requirement to comply with statutory mechanism under Section 67(6) and Rule 140 - inadmissibility of High Court directions contrary to statutory provisions

Provisional release of seized goods on execution of bond and furnishing of security - requirement to comply with statutory mechanism under Section 67(6) and Rule 140 - Whether assessees discharged from statutory compliance by High Court orders exempting cash payment or bank guarantee could be permitted to retain goods without following the release mechanism prescribed under the Act and Rules. - HELD THAT: - The Court held that Section 67(6) of the Act and Rule 140 prescribe a complete mechanism for provisional release of seized goods, which requires execution of a bond and furnishing of security (including bank guarantee) or payment of applicable tax, interest and penalty. The High Court's interim orders that released goods while excusing payment in cash or other prescribed securities contravened these statutory stipulations. Where the statute prescribes the manner and quantum of bond and security for provisional release, the High Court ought not to have permitted deviation from those requirements. Consequently, authorities are directed to disregard any contrary High Court directions and to process claims afresh strictly in accordance with Section 67(6) read with the relevant rules.

High Court orders excusing assessees from complying with the statutory provisional-release requirements are not to be given effect; authorities shall process release only in accordance with Section 67(6) and Rule 140.

Release and disposal procedure for perishable or hazardous goods under Section 67(8) and Rule 141 - inadmissibility of High Court directions contrary to statutory provisions - Whether the High Court should have exercised writ jurisdiction to order release of perishable or hazardous seized goods instead of directing compliance with the statutory procedure for such goods. - HELD THAT: - The Court observed that Section 67(8) together with Rule 141 provides a specific regime for goods of a perishable or hazardous nature, permitting release on payment of market price or prescribed amounts and prescribing disposal where payment is not made. Given this comprehensive statutory scheme, the High Court should have referred assessees to the prescribed procedure rather than issuing directions for release that deviate from Section 67(8) and Rule 141. The pension of writ relief in such cases is improper where the statute furnishes an exclusive and detailed remedial mechanism.

High Court must not bypass or override the statutory release/disposal procedure for perishable or hazardous goods under Section 67(8) and Rule 141; assessees must be directed to follow the statutory route.

Inadmissibility of withdrawal of writ petitions to render State's remedy futile - Whether writ petitioners may be permitted to withdraw petitions after obtaining release of goods pursuant to interim High Court orders while a challenge to those interim orders is pending before this Court. - HELD THAT: - The Court recalled its earlier direction that the State's claim should not be rendered a fait accompli by allowing writ petitioners to withdraw petitions after obtaining release under interim orders that were themselves under challenge before this Court. That practice cannot be permitted because it thwarts the appellate or supervisory remedy available to the State. The High Court must, when appropriate, consider representations from the Department about pending higher forum proceedings before permitting withdrawal that would preclude further adjudication of the legality of its interim orders.

High Court should not allow withdrawal of writ petitions to render challenged interim orders a fait accompli; the State may draw the High Court's attention to pending challenges in higher forum before withdrawal is permitted.

Final Conclusion: The appeals are disposed by directing that all High Court orders inconsistent with the statutory provisions in Section 67 and the relevant Rules shall not be given effect; authorities shall process release of seized goods strictly in accordance with the Act and Rules and complete the prescribed formalities within four weeks, and the listed writ petitions are deemed disposed accordingly.

Detention of goods under Section 129 of the CGST/SGST Act - Validity of detention notice - Insufficient reasons for detention - Release of detained goods and vehicle - Forwarding of files to adjudicating authority for adjudication

Detention of goods under Section 129 of the CGST/SGST Act - Validity of detention notice - Insufficient reasons for detention - Exts.P8 and P11 detention notices were not supported by sufficient reasons to justify detention of the goods and vehicle. - HELD THAT: - The detaining authority relied on a perceived discrepancy between the value shown in the invoice (Ext.P1) and the value in the e-way bill, and on an allegation of undervaluation by the vendor. The court examined the stated reasons in Exts.P8 and P11 and found them inadequate for the purposes of detaining goods under the statutory scheme governing detention. The minimal discrepancy in the values and the manner in which the allegation of undervaluation was recorded did not amount to sufficient reasons to continue detention. Consequently, the court held that detention could not be lawfully sustained on the basis of the reasons shown in the impugned notices. [Paras 3]

Goods and vehicle detained under Exts.P8 and P11 are to be released forthwith on production of this judgment, and the detaining authority shall forward the files for adjudication to the adjudicating authority.

Final Conclusion: The writ petition is allowed to the extent that the impugned detention notices are set aside for want of sufficient reasons; the detained goods and vehicle are directed to be released and the matter is to be forwarded to the adjudicating authority for adjudication.

Summary order. Notice issued returnable 04th December, 2019; direct service permitted.

Treatment of unexplained credits under Section 68 - onus on assessee to prove genuineness of creditors once departmental material casts doubt - verification by departmental officer and its evidentiary value - relevance of assessee's failure to rebut departmental inquiries

Treatment of unexplained credits under Section 68 - verification by departmental officer and its evidentiary value - onus on assessee to prove genuineness of creditors once departmental material casts doubt - Validity of the addition under Section 68 on unsecured loans treated as unexplained cash credits where departmental verification indicated creditor companies were not genuine. - HELD THAT: - The Assessing Officer carried out inquiries and the Inspector reported that the two creditor companies disclosed by the assessee shared the same address, were not found at the disclosed premises, there were no signboards or letter-boxes in their names, rooms were locked and local enquiries did not corroborate their existence or business activity. Those factual findings cast doubt on the genuineness of the creditors and the loans. Once such departmental material was produced, the burden shifted to the assessee to controvert it. The assessee failed to place contrary material before the Tribunal to rebut the verification report. Reliance on authorities where the Revenue did not pursue available leads was held inapplicable because here the Revenue did undertake verification and produced adverse evidence. In these circumstances the Tribunal and the Commissioner (Appeals) concluded rightly that the loans were not established as genuine and the additions under Section 68 were justified.

Addition under Section 68 sustained; assessment upheld for AY 2012-13.

Final Conclusion: The High Court dismissed the appeal; the Tribunal's order upholding the addition under Section 68 for Assessment Year 2012-13 was affirmed as the departmental verification negatived the existence/genuineness of the creditor companies and the assessee failed to rebut that material.

Authority to file income-tax returns - single PAN per entity - cancellation of PAN and rejection of unauthorised returns - opportunity of hearing and reasoned order - Assessing Officer's determination of authorised management

Single PAN per entity - authority to file income-tax returns - Legal principle that only one Permanent Account Number (PAN) is issued to an entity and only one return can be filed for a financial year; the factual question of which group holds the original PAN must be ascertained by the Income Tax authorities. - HELD THAT: - The Court noted as an undisputed legal position under the Income Tax Act, 1961 that only one PAN is issued to an entity and therefore only one return can be validly filed for a particular financial year. Given the competing filings by rival groups, the Court observed that the factual determination of which group was issued the original PAN and thereby authorised to file the returns falls within the remit of the Income Tax authorities and must be ascertained by them before any consequential action is taken. The Court therefore framed this legal principle as the governing norm for resolution of the competing submissions. [Paras 6]

The court affirmed that only one PAN and one return per entity are permissible and that the Income Tax authorities must ascertain which group was issued the original PAN.

Assessing Officer's determination of authorised management - opportunity of hearing and reasoned order - cancellation of PAN and rejection of unauthorised returns - Direction to the Assessing Officer to determine which group is authorised to file the return, after hearing both parties, and to cancel the PAN and reject returns of the unauthorised party; timeline for reasoned order and completion of proceedings. - HELD THAT: - The Court directed respondent no.6, the Assessing Officer, to grant both the petitioners and respondent no.7 an opportunity of hearing and to examine the material, including title-suit documents or other evidence of control over the society, to determine which group is authorised to file returns under the PAN. After such enquiry and hearing, the Assessing Officer is to pass a reasoned order, and if a party is found unauthorised, to cancel the PAN issued to that party and reject the returns filed by them. The reasoned order is to be communicated to both parties within two weeks of its passing, and the Assessing Officer was requested to complete the proceedings within eight weeks from the date of communication of the Court's order. These directions remand the factual and consequential determinations to the Assessing Officer for fresh consideration and decision. [Paras 7, 8]

Proceedings remitted to the Assessing Officer to decide, after hearing both parties, which group is authorised; the Assessing Officer shall pass a reasoned order, cancel the PAN of any unauthorised party and reject their returns, communicating the order within the specified timelines.

Final Conclusion: The writ petition is disposed of by directing the Assessing Officer to determine, after hearing both parties and within the prescribed timelines, which group is authorised to file returns under the PAN, and to cancel the PAN and reject returns of any unauthorised party; no affidavit called for and the usual certified copy directions were given.

Jurisdiction to assess pursuant to notice under search and seizure - ownership of seized documents as determinative of jurisdiction - use of documents found in third party search to make additions - additions made dehors the seized document - precedential application of Pepsico India Holding Pvt. Ltd. on jurisdiction of AO

Jurisdiction to assess pursuant to notice under search and seizure - ownership of seized documents as determinative of jurisdiction - precedential application of Pepsico India Holding Pvt. Ltd. on jurisdiction of AO - Whether the Assessing Officer had jurisdiction to assume assessment jurisdiction over the respondent on the basis of an agreement unearthed during a search at a third party's premises. - HELD THAT: - The High Court upheld the Tribunal's conclusion that the Assessing Officer could not validly assume jurisdiction on the premise that the agreement found in the search belonged to the assessee. The court applied the legal position reflected in the cited precedent to hold that ownership of the seized document is determinative of the jurisdictional premise; on this short ground the Tribunal's order sustaining deletion was liable to be upheld. The court therefore found no substantial question of law arising from the Revenue's challenge to the Tribunal's conclusion on jurisdiction. [Paras 3]

Jurisdictional assumption by the Assessing Officer on the basis of the agreement seized from the third party was not sustainable; the Tribunal's deletion on this ground is upheld.

Use of documents found in third party search to make additions - additions made dehors the seized document - Whether additions sought to be made by the Assessing Officer were based on the seized agreement, and whether additions made otherwise were justified. - HELD THAT: - The court noted that, in any event, the Assessing Officer did not make additions on the basis of the agreement dated 05.09.2006 attributed to the assessee. Instead the Assessing Officer proceeded to make additions dehors the said agreement; the court observed that such additions were in any event not justified. This reinforced the view that the Tribunal's deletion of the additions was correct and that no substantial question of law arises requiring interference. [Paras 3, 4]

Additions were not founded on the seized agreement and the alternative additions made dehors the agreement were not justified; the Tribunal's deletion of those additions is sustained.

Final Conclusion: The appeals are dismissed; the Income Tax Appellate Tribunal's order dated 05.01.2018 is sustained insofar as it deleted the additions, and no substantial question of law is found to merit interference.

Approval to sell assets and sub-lease land subject to departmental no objection - deposit of sale proceeds to meet existing liabilities of the assessee - modification of earlier court order to permit transaction on conditions stated by Revenue

Approval to sell assets and sub-lease land subject to departmental no objection - deposit of sale proceeds to meet existing liabilities of the assessee - Application for approval to sell the building, fixtures and equipment and to sub-lease land in terms of communications dated 21.11.2019 granted subject to conditions stated by the Income Tax Department. - HELD THAT: - The Assistant Commissioner of Income Tax, Circle-18(2), communicated dated 21.11.2019 recorded a no objection to the proposed sale under Schedule B and to the proposed sub-lease under Schedule C, provided the sale proceeds are deposited with the Income Tax Department to meet Nokia India Pvt. Ltd.'s existing liabilities in accordance with this Court's earlier decision dated 12.12.2013. The respondents' counsel accepted notice and confirmed that the Court may grant approval in terms of that communication. Having regard to the departmental no objection and the stated condition, the Court allowed the petitioner to proceed with the transactions strictly in terms of the communication dated 21.11.2019. [Paras 2]

Application allowed in terms of the Income Tax Department's communication dated 21.11.2019; petitioner permitted to proceed with the sale and sub-lease subject to deposit of sale proceeds to meet existing liabilities as directed.

Final Conclusion: The petitioner's application for permission to sell specified assets and to sub-lease the land is allowed in accordance with the Income Tax Department's no-objection communication dated 21.11.2019, on the condition that the sale proceeds be deposited with the Department to meet existing liabilities as per this Court's earlier order.

Validity of Declaration made under Income Declaration Scheme, 2016 (‘IDS’) - whether such declaration to be void for being in contravention of Section 193 of the FA, 2016? - as per petitioner no prior notice was issued to either of the Petitioners before passing the impugned order rejecting the declarations of undisclosed income under the IDA scheme -

The writ petitions were dismissed by HC [2019 (8) TMI 1069 - DELHI HIGH COURT]. The Court upheld the Principal Commissioner's order voiding the petitioners' IDS declarations under Section 193 of the Finance Act, 2016 for misrepresentation and suppression of material facts, holding that no prior notice was required, the Delhi authority had jurisdiction, Form-4 did not confer immunity, and reliance on PBPT-related material was permissible - HELD THAT:- Special Leave Petitions are dismissed.

Reopening of assessment u/s 147 - admissibility of deduction u/s 80IB(10) in respect of Tans Residency Project - AO had rejected the claim inter alia on the ground that the development and construction of housing project had commenced prior to 01.10.1998 (which was the crucial date for claiming the benefits u/s 80IB(10)) - High Court [2018 (12) TMI 43 - BOMBAY HIGH COURT] dismissed the Revenue's appeal, holding that the reassessment for Assessment Year 2004-05 was invalid because there was no failure by the assessee to disclose material facts and the reassessment amounted to a mere change of opinion; consequently no interference or remand on the merits of the Section 80IB(10) deduction was warranted.

HELD THAT:- Special Leave Petition is dismissed on the ground of low tax effect.

Reopening proceedings under Section 148 read with Section 147 - sanction under Section 151(2) - jurisdiction to reopen assessment - requirement of satisfaction by designated officer - non-delegability of statutory satisfaction to superior officer

HELD THAT:- No reason to interfere in the matter[2018 (8) TMI 135 - BOMBAY HIGH COURT]. The special leave petition is dismissed.

Taxability of interest - accrual of interest - Transaction on behalf of the Government and interest accrued on the deposit - HC [2018 (11) TMI 1722 - HIMACHAL PRADESH HIGH COURT] noted that the respondent Board carried on transactions on behalf of the Government and that the determination of whether interest accrued on the deposit gave rise to taxable income is fact-specific. Having examined the record, the Court found that the factual conclusion reached by the lower authority was correct and required no interference - HELD THAT:- SLP Dismissed.

Pre-emptive purchase under Section 269UD - valuation of immovable property for compulsory acquisition - appraisal of fair market value versus apparent consideration - scope of judicial review - error apparent on the face of the record - finality of concurrent factual findings

Pre-emptive purchase under Section 269UD - appraisal of fair market value versus apparent consideration - finality of concurrent factual findings - scope of judicial review - error apparent on the face of the record - Validity of the order for compulsory purchase under Section 269UD and whether the Court should reopen its earlier decision on review. - HELD THAT: - The appropriate authority, after obtaining the Valuation Officer's report and hearing the parties, recorded a categorical finding that the fair market value of the property exceeded the apparent consideration fixed by the parties by about 15%, and accordingly passed an order for compulsory purchase. That conclusion involved primary findings of fact which were examined at four successive stages - by the appropriate authority, by a Single Judge of the High Court, by the Division Bench of the High Court in intra-court appeal, and on review by the Division Bench - and finally by this Court in the earlier appeal. Given that the questions are largely factual and that concurrent findings were reached at multiple fora, there was no error apparent on the face of the record warranting reconsideration. The settled scope of review does not justify reopening such concurrent factual determinations in the absence of a demonstrable patent error, and therefore the review petitions seeking reconsideration of the earlier dismissal were not maintainable.

Review petitions dismissed; earlier order declining interference with the compulsory purchase upheld.

Final Conclusion: The Court found no error apparent on the face of the record in the findings supporting compulsory purchase under Section 269UD, declined to reopen concurrent factual conclusions already examined at multiple stages, and dismissed the review petitions.

Jurisdiction of Assessing Officer - Limitation on challenging jurisdiction under Section 124(3)(a) - Effect of restructuring of jurisdiction - Transfer of case under Section 127 - Transfer by Principal Commissioner under Section 120(3)

Jurisdiction of Assessing Officer - Effect of restructuring of jurisdiction - Validity of the notice issued under Section 143(2) by the Assessing Officer of Circle 51(1) in view of departmental restructuring and the address recorded in the return. - HELD THAT: - The Court found that the petitioner had described her address as being in the locality of "Karol Bagh" and, following the departmental restructuring w.e.f. 15.11.2014, jurisdiction over the Karol Bagh area lay with Circle 51(1). On the material on record the notice dated 13.08.2018 under Section 143(2) issued from Circle 51(1) therefore fell within the jurisdictional ambit appropriate after restructuring. The earlier transfer under Section 127 to Circle C-33(1) was reflected in the file history, but the restructuring and re-designation of circles determined which circle had territorial jurisdiction at the relevant time, and the notice issued by Circle 51(1) was held to be competent. [Paras 2, 3, 7]

The notice under Section 143(2) issued by Circle 51(1) was valid and within the jurisdiction of the relevant Assessing Officer.

Limitation on challenging jurisdiction under Section 124(3)(a) - Whether the petitioner's objection to jurisdiction was barred by the time-limit prescribed in Section 124(3)(a). - HELD THAT: - The Court noted that the Section 143(2) notice was dated 13.08.2018 and that the petitioner raised objection to jurisdiction only on 20.02.2019. Applying the limitation in Section 124(3)(a), which precludes calling in question the jurisdiction of an Assessing Officer after the prescribed period following service of the relevant notice, the Court held that the objection was belated. The purpose of the limitation is to prevent objections being timed so as to defeat the revenue's right to issue notices by allowing time to lapse; accordingly the belated objection could not be entertained. [Paras 5, 7]

The petitioner's objection to jurisdiction was time-barred under Section 124(3)(a).

Final Conclusion: The petition was dismissed: the Section 143(2) notice issued by Circle 51(1) was valid in view of the post-restructuring territorial jurisdiction over Karol Bagh, and the petitioner's jurisdictional objection was time barred under Section 124(3)(a); the subsequent administrative transfer by the Principal Commissioner under Section 120(3) was noted but did not alter the outcome.

Show cause notice requirement - natural justice - best judgment assessment under Section 144 - addition under unexplained money / Section 69A - addition on account of business income estimated on turnover - remand for fresh consideration - opportunity of personal hearing

Show cause notice requirement - addition under unexplained money / Section 69A - best judgment assessment under Section 144 - Validity of the addition under Section 69A in respect of cash deposits made during the demonetisation period - HELD THAT: - The Assessing Officer issued a show cause notice specifically in respect of cash deposits made in the petitioner's bank account during the demonetisation period and proceeded to make an addition under Section 69A treating such deposits as unexplained money. The Court noted that, although the petitioner did not file a reply to that notice, the petitioner subsequently filed a belated return with details explaining the cash deposits. The Court did not adjudicate the merits of the addition; instead it found that the matter should be reconsidered by the Assessing Officer after affording the petitioner an opportunity to file a reply and be heard. Consequently the assessment in respect of the Section 69A addition was set aside and remitted for fresh consideration on merits by the Assessing Officer. [Paras 6, 9, 10, 11]

The addition under Section 69A is set aside and remitted to the Assessing Officer for fresh adjudication after receipt of the petitioner's reply and opportunity of hearing.

Show cause notice requirement - addition on account of business income estimated on turnover - natural justice - remand for fresh consideration - opportunity of personal hearing - Consent and validity of the addition made by estimating business income at 8% of turnover without prior notice or hearing - HELD THAT: - The Assessing Officer, without issuing any show cause notice on that specific issue, rejected the declared net profit as abnormally low and assessed business income at 8% of turnover. The Court held that the addition on account of business income was not referred to in the show cause notice and that proceeding to make that addition without any notice or opportunity to explain violated principles of natural justice. The Court did not express any view on the correctness of assessing business income at 8% of turnover; instead it set aside the assessment insofar as this addition is concerned and remitted the issue to the Assessing Officer to redo the assessment after obtaining the petitioner's reply. The Court directed that a fresh show cause notice for this issue need not be issued but mandated that the petitioner be afforded a personal hearing and that the Assessing Officer decide the matter on merits within the prescribed timeframe. [Paras 6, 7, 9, 10, 11]

The addition on account of business income is set aside and remitted to the Assessing Officer for fresh adjudication after receipt of the petitioner's reply and after affording a personal hearing; no view expressed on merits.

Final Conclusion: The impugned assessment order dated 26.09.2019 is set aside. The matter is remitted to the Assessing Officer to redo the assessment on both issues after the petitioner files its reply within two weeks, the Assessing Officer affords personal hearing and passes a fresh order on merits in accordance with law within eight weeks; the Court expresses no opinion on the merits of the additions.

Violation of principles of natural justice - opportunity of hearing - reasonable opportunity to reply - show cause notice - survey proceedings under Section 133A(2A) of the Income Tax Act, 1961 - order under Section 201(1) & 201(1A) of the Income Tax Act, 1961

Violation of principles of natural justice - opportunity of hearing - show cause notice - Validity of the order at Annexure D in view of alleged denial of sufficient opportunity to the assessee to respond to the show cause notice issued in relation to FY 2011-12. - HELD THAT: - The Court found that the hearing was fixed for 22.03.2019 but the show cause notice and e mail intimation reached the petitioner on 23.03.2019, with contradictory communications about dates and an enlargement only up to 25.03.2019 while the impugned order was passed on 26.03.2019. These facts establish that the petitioner was not afforded a reasonable and effective opportunity to submit a reply or to be heard. In view of this breach of the principles of natural justice, the Court set aside the impugned order passed under the provisions invoked and directed that the authority afford a fresh opportunity of hearing to the petitioner. The Court further directed the petitioner to file the reply to the show cause notice within one week from receipt of the certified copy of the order and to avail the hearing within a week thereafter, after which the authority shall pass an appropriate order. [Paras 3, 4, 5]

Impugned order at Annexure D set aside for breach of natural justice; matter remitted to the authority to decide afresh after affording the petitioner a fresh opportunity of hearing and compliance with the timeline directed by the Court.

Final Conclusion: The petition is disposed of by setting aside the order calling upon the assessee to pay the demand for FY 2011-12; the authority is directed to afford a fresh opportunity of hearing and decide the matter afresh after the petitioner files his reply within the stipulated time.

Deduction under Section 80P(2)(d) - scope of Section 80P after insertion of sub section (4) - revisional power under Section 263 - error and prejudice to revenue - plausible view of Assessing Officer supported by tribunal precedents - treatment of co operative banks as co operative societies for Section 80P(2)(d)

Deduction under Section 80P(2)(d) - treatment of co operative banks as co operative societies for Section 80P(2)(d) - scope of Section 80P after insertion of sub section (4) - Claim for deduction under Section 80P(2)(d) in respect of interest earned by a co operative society from investments/deposits with co operative banks - HELD THAT: - The Tribunal examined Section 80P(2)(d) which permits deduction of income by way of interest or dividends derived by a co operative society from its investments with any other co operative society. It accepted that insertion of sub section (4) (Finance Act, 2006 w.e.f. 01.04.2007) excluded co operative banks from claiming deduction under Section 80P in their own right, but held that this amendment did not alter the statutory meaning of "co operative society" for purposes of Section 80P(2)(d). Since a co operative bank remains a co operative society within the definition of Section 2(19), interest received by an assessee co operative society from investments with a co operative bank falls within Section 80P(2)(d). The Tribunal relied on consistent tribunal and High Court decisions favourable to the assessee and distinguished the Supreme Court decision relied upon by the revisional authority as not being on point with respect to clause (2)(d). Applying the principle that a plausible view taken by the Assessing Officer and supported by jurisdictional tribunal precedent cannot be displaced by a revisional order under Section 263, the Tribunal held that the deduction was rightly allowed by the AO. [Paras 6, 7, 8, 9]

Deduction under Section 80P(2)(d) on interest from co operative banks is allowable to the assessee co operative society.

Revisional power under Section 263 - error and prejudice to revenue - plausible view of Assessing Officer supported by tribunal precedents - Validity of the Principal Commissioner of Income tax's exercise of revisional jurisdiction under Section 263 to set aside the assessment order allowing the deduction - HELD THAT: - The Tribunal observed that the Assessing Officer, after verification, had taken a plausible view in allowing the deduction under Section 80P(2)(d), a view that was in conformity with the jurisdictional ITAT's decision in Land and Cooperative Housing Society Ltd. and other favorable authorities. Section 263 can be invoked only where an order is erroneous so as to be prejudicial to the revenue. Where the AO has taken a reasonable and supportable view, especially one backed by tribunal precedent, the revisional power cannot be exercised to substitute the Revisional Authority's opinion. Having found the AO's view tenable and supported by precedent, the Tribunal concluded that the Principal CIT erred in dislodging that view under Section 263. [Paras 3, 4, 9]

Order under Section 263 setting aside the AO's assessment is unsustainable and is set aside; the AO's assessment is restored.

Final Conclusion: The Tribunal allowed the appeal of the assessee for A.Y. 2014 15, holding that interest earned by the co operative society from deposits with co operative banks is deductible under Section 80P(2)(d) and that the Principal CIT erred in exercising revisional jurisdiction under Section 263 to overturn the Assessing Officer's plausible view; the assessment order dated 14.09.2016 is restored.

Exemption under Section 54EC - limit of investment per financial year - Interpretation of the proviso to Section 54EC(1) - Six-month investment period following transfer - temporal scope across financial years - Legislative intent and clarificatory amendment effective 01.04.2015

Exemption under Section 54EC - limit of investment per financial year - Six-month investment period following transfer - temporal scope across financial years - Interpretation of the proviso to Section 54EC(1) - Assessee entitled to claim exemption of Rs. 1 crore under Section 54EC where investments of Rs. 50 lakhs were made within six months of transfer in two different financial years - HELD THAT: - The Tribunal examined whether the proviso to Section 54EC(1) restricting investment "during any financial year" to Rs. 50 lakhs bars aggregation of investments made within the statutory six month window if those investments fall in two financial years. Relying on earlier Tribunal decisions and the Madras High Court view that the first proviso as it stood did not negate the six month investment period even if it spanned two financial years, the Tribunal held that if the assessee made investments within six months of transfer the claim cannot be denied merely because part of the six month period fell in the next financial year. The Tribunal noted that the legislature subsequently inserted a second proviso effective 01.04.2015 to remove ambiguity for assessment year 2015 16 onwards, but that clarificatory amendment did not foreclose entitlement for earlier years. Following persuasive decisions (including ACIT v. Akshay Sobti and others) which permitted aggregation where investments were made within six months despite spanning two financial years, the Tribunal set aside the lower authorities' restriction and directed allowance of the exemption as claimed. [Paras 6, 7]

Lower authorities' restriction to Rs. 50 lakhs was set aside and the assessment officer was directed to allow the deduction of Rs. 1 crore under Section 54EC as claimed by the assessee.

Final Conclusion: Appeal allowed: deduction under Section 54EC permitted for the full investment of Rs. 1 crore where investments of Rs. 50 lakhs each were made within the six month period following transfer though falling in two financial years; reliance on later legislative clarification (w.e.f. 01.04.2015) did not preclude allowance for the year in issue.

Arm's Length Price - Transfer Pricing - Transaction Net Margin Method (TNMM) - Comparable company selection - Use of segmental data for comparability - Remand for fresh consideration - Section 92CA reference to Transfer Pricing Officer - Deduction under section 10A - exclusion from export turnover and total turnover

Arm's Length Price - Transfer Pricing - Transaction Net Margin Method (TNMM) - Comparable company selection - Use of segmental data for comparability - Remand for fresh consideration - Determination of ALP in respect of international software development (SWD) services and treatment of specific comparable companies - HELD THAT: - The Tribunal examined the comparability of companies used by the TPO/DRP in applying TNMM to the assessee's SWD international transactions. For certain companies (Infosys Ltd., Larsen & Toubro Infotech Ltd., Persistent Systems Ltd.) the Tribunal directed exclusion from the comparable set following earlier Tribunal reasoning that such entities were functionally dissimilar (giant brand/turnover, substantial onsite revenue, diverse activities/IPRs). For other companies (Acropetal Technologies Ltd., E Zest Solutions Ltd., Persistent Systems & Solutions Ltd., Sasken Communication Technologies Ltd.) the Tribunal found that the TPO/DRP had not recorded sufficient factual findings on filters such as revenue mix, functional profile, employee cost and segmental details, and therefore set aside their inclusion/remained decisions and remanded the question of comparability to the TPO/AO for fresh consideration with directions to verify segmental/functional details. Similarly, LGC Global Ltd. was directed to be reconsidered for inclusion by the TPO/AO. The Tribunal emphasised that the AO/TPO should apply appropriate filters and consider segmental data and other functional aspects before finalising the comparable set, and thereafter determine ALP in the SWD segment after giving the assessee an opportunity of being heard. [Paras 12, 13, 14, 15, 16]

Order set aside in part and remitted: certain comparables excluded, certain others remanded to the TPO/AO for fresh factual consideration; ALP in SWD segment to be determined thereafter.

Arm's Length Price - Transfer Pricing - Transaction Net Margin Method (TNMM) - Comparable company selection - Remand for fresh consideration - Use of section 133(6) powers to obtain segmental details - Determination of ALP in respect of international ITES transactions and treatment of specified comparable companies - HELD THAT: - The Tribunal reviewed the TPO's comparable set for the ITES segment and directed specific actions: exclusion of Acropetal Technologies Ltd. (held non comparable following precedent), remand of Jeevan Scientific Technology Ltd. for verification of segmental BPO details in line with earlier directions, remand of ICRA Online Ltd. to the TPO/AO for fresh consideration of comparability, and remand of iGate Global Solutions Ltd. to the TPO/AO to obtain segmental details (including exercise of powers under section 133(6)) and then reassess comparability. The Tribunal required the AO/TPO to apply the directions emerging from prior Tribunal decisions and to afford the assessee an opportunity of being heard before finalising ALP for the ITES segment. [Paras 19, 20, 21, 22, 23]

Order set aside in part and remitted: specified comparables to be excluded or re examined; TPO/AO directed to reconsider comparability and compute ALP in the ITES segment after obtaining and examining segmental data and hearing the assessee.

Deduction under section 10A - exclusion from export turnover and total turnover - Whether amounts excluded from export turnover should also be excluded from total turnover while computing deduction under section 10A - HELD THAT: - The Tribunal held that amounts excluded from export turnover (for example, telecommunication charges and travel and other expenses attributable to delivery outside India) must also be excluded from total turnover when computing the deduction under section 10A. The Tribunal relied on the binding judicial precedent applying the same principle and therefore directed that telecommunication charges be excluded from both export turnover and total turnover and that deduction under section 10A be computed accordingly. [Paras 24, 25, 26]

Telecommunication and similar charges to be excluded from both export turnover and total turnover for computing section 10A deduction; deduction to be recomputed accordingly.

Final Conclusion: Assessee's appeal partly allowed and revenue's appeal dismissed. The matters relating to comparability in both SWD and ITES segments are set aside in part and remitted to the TPO/AO with directions to examine segmental and functional details, exclude specified comparables and reconsider others, and to determine ALP after affording the assessee an opportunity of hearing; deduction under section 10A to be recalculated after excluding the specified expenses from both export and total turnover.

Competence of authority under Article 24 of Appendix 'D' to the Treaty dated 30.08.2009 between India and ASEAN - show cause-cum-demand notice under Section 28 of the Customs Act, 1962 - efficacious alternative remedy - writ jurisdiction and judicial review by High Court - setting aside and remittal for fresh adjudication

Competence of authority under Article 24 of Appendix 'D' to the Treaty dated 30.08.2009 between India and ASEAN - efficacious alternative remedy - writ jurisdiction and judicial review by High Court - Whether the High Court erred in disposing of writ petitions on the ground of availability of efficacious alternative remedy without adjudicating the appellants' challenge to the competence of the adjudicating authority under Article 24 of Appendix 'D' to the Treaty. - HELD THAT: - The Supreme Court found that the appellants had raised a foundational question going to the competence of the concerned authority to proceed, grounded on Article 24 of Appendix 'D' to the Treaty. That treaty-based competence cannot appropriately be adjudicated by the administrative authority whose actions are challenged; it calls for judicial consideration in the writ proceedings. The High Court noted the plea but nevertheless disposed of the writ petitions on the basis that an efficacious alternative remedy was available. The Supreme Court held that such disposal was inappropriate in the circumstances because the competence issue required examination by the High Court on the merits. Consequently, the impugned order was set aside and the writ petitions were restored to their original numbers for fresh decision in accordance with law. All substantive questions were left open for determination by the High Court.

Impugned judgment and order set aside; writ petitions restored and remitted to the High Court for decision on merits; all questions left open.

Final Conclusion: The Supreme Court allowed leave, set aside the High Court's order that dismissed the writ petitions on the ground of alternative remedy, restored the writ petitions to their original numbers and remitted them to the High Court to be decided on merits in accordance with law; appeals and pending applications disposed of with no costs.

Appeal against acquittal - Burden of proof beyond reasonable doubt - Double presumption in favour of the accused - Admissibility of statement under Section 108 of the Customs Act - Reliability of panchanama and panch witnesses - Search, seizure and chain of custody in airport operations - Interference by appellate court in findings of acquittal

Interference by appellate court in findings of acquittal - Double presumption in favour of the accused - Burden of proof beyond reasonable doubt - Whether the appellate court should interfere with the trial court's order of acquittal. - HELD THAT: - The court applied the settled principles governing appeals against acquittal, including the double presumption in favour of the accused and the requirement that if two reasonable conclusions are possible the appellate court should not disturb an acquittal. Having examined the evidence and the trial court's conclusion that prosecution failed to prove its case, the High Court found multiple material doubts (as discussed below) which sustain the trial court's view. In consequence, the appellate court declined to overturn the acquittal and dismissed the appeal against accused nos.2 & 3 and the separately reserved appeal as to accused no.1 (whose presence was dispensed with), observing that its findings would equally benefit accused no.1. [Paras 16, 19, 20, 21]

Appeal against acquittal dismissed; acquittal upheld.

Admissibility of statement under Section 108 of the Customs Act - Burden of proof beyond reasonable doubt - Whether a statement recorded under Section 108, Customs Act, by itself dispenses with the prosecution's obligation to prove the case. - HELD THAT: - The Court acknowledged that statements under Section 108 are admissible in evidence but held that admissibility does not relieve the prosecution of its burden to prove guilt beyond reasonable doubt. The Court accepted respondents' submission that mere production of a Section 108 statement and admitted signatures would not automatically terminate the trial; the prosecution still had to prove the case by evidence and meet the standards of criminal jurisprudence. [Paras 5, 11]

Statement under Section 108 is admissible but does not obviate the prosecution's duty to prove the charge beyond reasonable doubt.

Reliability of panchanama and panch witnesses - Search, seizure and chain of custody in airport operations - Whether the circumstances of apprehension, search, seizure and the panchanama support safe conviction. - HELD THAT: - The Court identified significant infirmities in the prosecution case undermining the reliability of the seizure and panchanama: uncertainty whether apprehension occurred before or after immigration (absence of immigration endorsement on boarding passes/passports); lack of panch witnesses at the spot of apprehension; unexplained transfer of suspects to a distant city office without vehicle records or involvement of competent airport units; absence of hand-baggage tags; contradictions between panch witness testimony and other witnesses; the panch witness examined disclaimed understanding of English and disowned independent knowledge of the seized currency; discrepancies in description and tallying of seized property and annexures (including Exh.P-2 showing multiple balloon pieces contrary to statements of a single balloon); absence of corroborative procedures such as X-ray for internal concealment and failure to produce all panch witnesses or to show precise matching of deposited currency records with seized items. These procedural and evidentiary defects generated reasonable doubt on the truthfulness and chain of custody of the alleged seized currency. [Paras 17, 18]

Material discrepancies and procedural lapses in search, seizure and panchanama vitiate the prosecution case and sustain acquittal.

Final Conclusion: The High Court dismissed the appeal against the acquittal, holding that admissible Section 108 statements do not absolve the prosecution of its burden to prove guilt beyond reasonable doubt, and that multiple material discrepancies in apprehension, search, seizure, panchanama and witness evidence created reasonable doubt; acquittal accordingly stands and the appeal is dismissed with no order as to costs.

Applicability of the Customs Act to domestic possession and trade of exotic species - Power of seizure under reason to believe standard - No statutory presumption of smuggling of exotic species - Distinction between international trade regulation and domestic possession/breeding - Jurisdictional limits on issuing seizure and investigatory directions - Concurrent application of the Prevention of Cruelty to Animals Act to welfare violations

Applicability of the Customs Act to domestic possession and trade of exotic species - Power of seizure under reason to believe standard - No statutory presumption of smuggling of exotic species - Distinction between international trade regulation and domestic possession/breeding - Jurisdictional limits on issuing seizure and investigatory directions - Whether directions could be issued to Customs to register a case, investigate and seize exotic birds held by a domestic trader under the Customs Act, 1962 - HELD THAT: - The petition sought directions to respondent customs authorities to register an investigation under the Customs Act and to seize exotic birds from the premises of a domestic trader alleged to lack import documentation. The Court examined the statutory scheme and observed that import regulation and the Foreign Trade Policy govern international trade, whereas domestic possession, sale and in captivity breeding of exotic species are not per se prohibited under the Wildlife Protection Act. Section 110 empowers seizure only where officers have 'reason to believe' goods are liable for confiscation; Section 123 does not impose a presumption that possession of exotic species equates to smuggling. In the absence of evidence that the species were imported in violation of law, and given there is no statutory requirement compelling domestic keepers to produce proof of importation, issuance of directions to seize or investigate under the Customs Act would exceed the authorities' jurisdiction and be contrary to the statutory scheme. The Court also noted that allegations of animal welfare or cruelty fall within the domain of the Prevention of Cruelty to Animals Act and appropriate authorities under that Act may act if violations are established, but that does not validate the requested customs action under the Customs Act.

Petition dismissed: no direction to Customs to register a case or seize exotic birds could be granted as such relief would be without jurisdiction under the Customs Act; alleged violations under the Prevention of Cruelty to Animals Act remain for the appropriate authority.

Final Conclusion: The petition was dismissed at the admission stage for want of merit: the Customs Act does not permit automatic seizure or investigation of domestic keepers of exotic species in the absence of materials showing illegal importation, there is no statutory presumption of smuggling, and the relief sought would be without jurisdiction; welfare concerns, if any, are for authorities under the Prevention of Cruelty to Animals Act.

Redemption fine under Section 125 of the Customs Act - Valuation of seized goods at the time of seizure - Imposition of penalty under Section 112(a) of the Customs Act - De novo adjudication - Finality of unchallenged adjudication

Redemption fine under Section 125 of the Customs Act - Valuation of seized goods at the time of seizure - De novo adjudication - Whether the redemption fine of Rs. 21,00,000/- imposed under Section 125 is legally sustainable having regard to the valuation adopted by the Commissioner in de novo proceedings. - HELD THAT: - The Tribunal found that the value of the seized gold must be seen as at the time of seizure and that the Commissioner's enhancement of value in the de novo proceedings (from the seizure valuation to a higher figure) was not legally sustainable for the purpose of fixing the redemption fine. Applying the established normative approach to fixation of redemption fines and having regard to the market value at seizure, the Tribunal held that the redemption fine originally fixed at Rs. 21,00,000/- was excessive and reduced the fine to Rs. 7,50,000/-, being approximately 25% of the market value at the time of seizure. The Tribunal recorded that this reduction accords with the principles and precedents relied upon in submissions before it. [Paras 6]

Redemption fine reduced from Rs. 21,00,000/- to Rs. 7,50,000/-; enhancement of value in de novo proceedings held not legally sustainable for fixing the fine.

Imposition of penalty under Section 112(a) of the Customs Act - Finality of unchallenged adjudication - De novo adjudication - Whether imposition of an increased penalty of Rs. 2,10,000/- in the de novo order is sustainable when a prior penalty of Rs. 1,00,000/- imposed earlier was not challenged. - HELD THAT: - The Tribunal observed that the penalty of Rs. 1,00,000/- imposed by the predecessor authority in the first adjudication was not appealed against and had therefore attained finality. In the de novo proceedings the Commissioner imposed a higher penalty without recording reasons to justify departure from the earlier, unchallenged penalty. The Tribunal held that such imposition of an increased penalty in de novo proceedings was not sustainable and set aside the enhanced penalty, leaving the earlier unchallenged penalty effective. [Paras 6]

Penalty of Rs. 2,10,000/- imposed in de novo proceedings set aside; earlier unchallenged penalty of Rs. 1,00,000/- remains effective.

Final Conclusion: The appeal is partly allowed: the redemption fine is reduced to Rs. 7,50,000/- and the enhanced penalty imposed in the de novo order is set aside, the earlier unchallenged penalty standing.

Amendment of Bill of Entry under Section 149 - Finality of assessment and bar on indirect modification - Classification as part of assessment - Claiming exemption post-finalisation cannot reopen assessment

Amendment of Bill of Entry under Section 149 - Classification as part of assessment - Finality of assessment and bar on indirect modification - Whether Section 149 could be used to amend finally assessed Bills of Entry to alter classification and to claim retrospective exemption and deletion of EPCG benefit after clearance - HELD THAT: - The Tribunal held that once assessment of the Bill of Entry attains finality the assessment order cannot be altered by way of amendment under Section 149 so as to change classification or to claim an exemption not allowed at the time of assessment. The tribunal applied the settled principle that classification and determination of rate of duty form part of the assessment and cannot be treated as a clerical mistake amenable to amendment under Section 149. What cannot be done directly (modification of an assessment) cannot be done indirectly by authorising an amendment of the Bill of Entry. The decision relied on the consistent line of authority that an appeal or review under the statutory appellate/revisional mechanism is the proper remedy to challenge or modify an assessment (Priya Blue Ltd ; Flock India Pvt Ltd ; and subsequent pronouncements including M/s ITC ). Earlier decisions holding classification to be part of assessment and not a mere clerical error (Grasim Indus Ltd ; L M Glass Fiber (India) Pvt Ltd ) and the High Court view on the limits of Section 149 (Thiru Arooran Sugars Ltd ) were noted. The Tribunal found no merit in attempts to use Section 149 to reopen finalized assessments and observed that relief based on a later judicial or administrative development (such as Board Circular withdrawal) cannot be availed of by amending a final assessment under Section 149 but must be pursued through the appropriate appellate remedy.

Amendment under Section 149 cannot be used to alter a final assessment by changing classification or to claim exemption/deletion of EPCG benefit; the appeal is without merit.

Final Conclusion: The appeal is dismissed; the Tribunal upholds the principle that finalised assessments cannot be reopened by amendment of the Bill of Entry under Section 149 and such modifications, if permissible at all, must be pursued by invoking the statutory appellate or review remedies.

Maintainability of petitions under Section 73(4) of the Companies Act, 2013 - applicability of Sections 73 and 74 to deposits accepted before commencement of the Companies Act, 2013 - entitlement to interest from date of maturity till actual payment - regularization of belated payment under Section 74(2) of the Companies Act, 2013 - doctrine of merger where special leave petition is converted into an appeal - principle of natural justice and equality under Article 14 of the Constitution

Maintainability of petitions under Section 73(4) of the Companies Act, 2013 - applicability of Sections 73 and 74 to deposits accepted before commencement of the Companies Act, 2013 - Petitions filed under Section 73(4) of the Companies Act, 2013 by depositors whose deposits were accepted before 01.04.2014 are maintainable. - HELD THAT: - The Tribunal considered Rule 19 of the Companies (Acceptance of Deposits) Rules, 2014 and persuasive NCLT precedent holding that the remedies under Sections 73 and 74 apply mutatis mutandis to earlier deposits. Guided by the principle of natural justice and the explanation in Rule 19, the Tribunal rejected the respondent's contention that petitions under Section 73(4) apply only to deposits accepted on or after 01.04.2014 and held the petitions maintainable under Section 73(4).

The petitions are maintainable under Section 73(4) of the Companies Act, 2013.

Entitlement to interest from date of maturity till actual payment - regularization of belated payment under Section 74(2) of the Companies Act, 2013 - principle of natural justice and equality under Article 14 of the Constitution - Deposit-holders are entitled to interest at the rate of 12/12.5% per annum from the date of maturity until actual payment, notwithstanding prior orders regularizing belated payment under Section 74(2). - HELD THAT: - The Tribunal found as an admitted fact that matured FDR amounts were paid after their due dates. It held that an earlier order regularizing belated payment under Section 74(2) does not bar depositors from claiming interest for the delayed period. Applying Article 14 and the tribunal's duty to follow principles of natural justice, and having found no satisfactory explanation from the respondent for differential treatment, the Tribunal relied on the Supreme Court's order in the Jaiprakash Associates appeal (where interest at 12/12.5% p.a. from maturity to payment was directed) and concluded depositors in the present petitions are similarly entitled to that rate of interest.

Petitioners are entitled to interest at 12/12.5% p.a. from maturity until actual payment; respondent directed to pay within twelve weeks.

Doctrine of merger where special leave petition is converted into an appeal - The Supreme Court's order in Jaiprakash Associates (where SLP was converted into a civil appeal) is binding on this Tribunal. - HELD THAT: - Relying on the principle that once leave to appeal is granted and the appellate jurisdiction of the Supreme Court is invoked the doctrine of merger applies, the Tribunal treated the Supreme Court's directions in Jaiprakash Associates as binding. The Tribunal distinguished reliance on prior consent orders where facts differed, and held that the Supreme Court's order-issued after conversion of SLP into appeal-must be followed by subordinate fora.

The Supreme Court's order in Jaiprakash Associates is binding and supports directing payment of interest at 12/12.5% p.a. to depositors.

Final Conclusion: All listed petitions are allowed. Deposit-holders are entitled to interest at 12/12.5% per annum from the date of maturity until actual payment; the respondent is directed to make payment to the petitioners within twelve weeks, failing which petitioners may enforce recovery with costs.

Moratorium under the Insolvency and Bankruptcy Code - Duties of Interim Resolution Professional to take control and custody of assets - Interaction between moratorium and statutory power to dispose of uncleared imported goods - Ownership rights of the corporate debtor in imported goods - Overriding effect of the Insolvency and Bankruptcy Code

Moratorium under the Insolvency and Bankruptcy Code - Interaction between moratorium and statutory power to dispose of uncleared imported goods - Whether the moratorium declared under the I&B Code prohibited the Customs Authority from proceeding with e-auction and sale of the corporate debtor's imported goods. - HELD THAT: - The Adjudicating Authority had by order dated 8th January, 2018 declared moratorium under Section 14 of the I&B Code, which prohibits transferring, encumbering, alienating or disposing of the corporate debtor's assets during the corporate insolvency resolution process. The customs authorities issued an e-auction notice on 15th January, 2018 for auction on 19th January, 2018 despite having been intimated about initiation of the CIRP. Section 48 of the Customs Act permits sale of uncleared imported goods after notice, but where moratorium has been declared the assets of the corporate debtor cannot be alienated or sold to a third party. The Tribunal found that, in these circumstances, proceeding with the e-auction was impermissible and the Adjudicating Authority rightly directed that the Customs Authority be prohibited from selling the assets of the corporate debtor. [Paras 21, 22, 23, 24]

The moratorium operated to prohibit the Customs Authority from proceeding with the e-auction and sale of the corporate debtor's imported goods and the Adjudicating Authority's prohibition was upheld.

Duties of Interim Resolution Professional to take control and custody of assets - Overriding effect of the Insolvency and Bankruptcy Code - Whether the Interim Resolution Professional was entitled to take control and custody of the imported machineries which were in the possession of the Customs Authority. - HELD THAT: - Section 18(1)(f) of the I&B Code empowers the interim resolution professional to take control and custody of any asset over which the corporate debtor has ownership rights as recorded in its balance sheet or in registries, including assets that may not be in the corporate debtor's possession. The Tribunal found that the machineries were owned by the corporate debtor and not by a third party; the explanatory exclusions to Section 18 did not apply. Given ownership by the corporate debtor and the statutory duty of the IRP under Section 18, the IRP was entitled to take control and custody of the assets notwithstanding that the Customs Authority had physical possession. [Paras 18, 19]

The Interim Resolution Professional was entitled to take control and custody of the imported machineries despite their being in the possession of the Customs Authority.

Ownership rights of the corporate debtor in imported goods - Procedure under Section 48 of the Customs Act - Whether the imported goods ceased to be assets of the corporate debtor by virtue of Section 48 of the Customs Act prior to any sale under that provision. - HELD THAT: - Section 48 enables the Customs Authority to sell goods not cleared within the prescribed period or where title is relinquished, after notice and with permission of the proper officer. The Tribunal found that although the goods were in the custody of the Customs Authority, no step had been taken to sell the goods under Section 48 and title had not been transferred. Therefore, the ownership of the machineries remained with the corporate debtor. [Paras 16, 17]

Since no sale was effected under Section 48, the imported machineries remained assets of the corporate debtor.

Final Conclusion: The Adjudicating Authority correctly prohibited the Customs Authority from selling the corporate debtor's imported machineries after commencement of the CIRP; the Interim Resolution Professional was entitled to take control of the assets and the appeal is dismissed.

Levy of service tax on composite works contracts - works contract on turnkey basis - segregation of value of goods from service component - measure of tax to be on the service element of works contracts - works contract made liable by entry (zzzza) in section 65(105) from 1st June, 2007

Levy of service tax on composite works contracts - works contract on turnkey basis - segregation of value of goods from service component - Validity of the order charging service tax on the petitioner's turnkey works contract - HELD THAT: - The Authority found on facts that the petitioner's contract was a composite works contract consisting of supply and service. The Court applied the legal principle declared by the Supreme Court in Commissioner, Central Excise and Customs v. Larsen & Toubro Limited (paras 14, 23, 41, 42) that, prior to the amendment operative from 1st June, 2007, the Finance Act did not provide a mechanism to segregate the value of goods from the service component and that the charging provisions therefore applied to service contracts simpliciter and not to composite indivisible works contracts. Since the contract before the Authority was a composite contract and the relevant legal position has been declared by the Supreme Court, the impugned adjudication charging service tax on that composite turnkey contract cannot stand.

Impugned order charging service tax on the petitioner's composite turnkey works contract is set aside.

Final Conclusion: The writ petition is allowed; the adjudication imposing service tax on the composite turnkey works contract is set aside and the petition is disposed of.

Eligibility for input tax credit on club or association membership - eligibility for input tax credit on event management/training services - distinction between personal consumption and business purpose - classification of event management service vis-a -vis outdoor catering and input services - precedential reliance on earlier Tribunal decisions

Eligibility for input tax credit on club or association membership - distinction between personal consumption and business purpose - precedential reliance on earlier Tribunal decisions - Credit on membership of club or association services availed by the appellant is allowable as input service and was wrongly disallowed as personal use. - HELD THAT: - The appellants acquired memberships in NASSCOM, American Chamber of Commerce and International Market Assessment India (P) Ltd. for business purposes such as remaining updated with market trends and augmenting business, and not for personal consumption of employees. The Tribunal has earlier considered identical facts in BNY Mellon Technology Private Ltd. and decided in favour of the assessee; following that decision and on appreciation of facts, the disallowance on this ground is unjustified. Therefore the impugned rejection of credit on club or association services is set aside. [Paras 6]

Disallowance of credit on club or association membership services set aside; credit held allowable.

Eligibility for input tax credit on event management/training services - distinction between personal consumption and business purpose - classification of event management service vis-a -vis outdoor catering and input services - precedential reliance on earlier Tribunal decisions - Credit on event management services used to organise a training programme is allowable as input service and was wrongly disallowed as personal consumption or outdoor catering. - HELD THAT: - Invoice particulars show the event was a training programme for designing and installing automatic sprinkler systems to FM Global Standards, conducted for employees. Such service is for training and business purpose, not for personal consumption or food and beverages. Consequently the event management service cannot be equated with Out Door Catering Service and does not fall outside the definition of input services. Relying on relevant Tribunal precedents and examination of the invoices, the disallowance is unsustainable and is therefore set aside. [Paras 7]

Disallowance of credit on event management/training services set aside; credit held allowable.

Final Conclusion: The impugned order is set aside insofar as it disallowed credit on club or association membership services and event management services (training); the appeal is allowed with consequential reliefs as per law.

Condonation of delay - sufficient cause - liberal approach to delays in filing appeals - restoration of appeal

Condonation of delay - sufficient cause - liberal approach to delays in filing appeals - restoration of appeal - The 1309 days' delay in filing the appeal was condoned and the appeal was restored for adjudication on merits. - HELD THAT: - The appellants explained the delay by stating that the DGM (Taxation) resigned on 31.01.2015, after which they were unable to trace the file and were unaware whether the second appeal had been filed before the Tribunal; this explanation was accepted as constituting sufficient cause. The Tribunal's conclusion that the reasons were not logical, reasonable or sufficient was reversed. The High Court applied the established principle that matters of delay must be considered liberally when sufficient cause is shown and found the appellants' explanation adequate to justify condonation of delay. Consequently, the Tribunal's order rejecting the condonation application was set aside and the appeal was restored for consideration on merits.

Application for condonation of delay allowed; delay of 1309 days condoned and appeal restored for decision on merits.

Final Conclusion: The Tribunal's order rejecting condonation of delay is set aside; the delay of 1309 days is condoned and the appeal is restored for consideration on its merits by the Tribunal.

Special Leave Petition - interference with High Court judgment - dismissal of petition

Special Leave Petition - interference with High Court judgment - Whether the Court should interfere with the impugned judgment and order passed by the High Court. - HELD THAT: - The Supreme Court recorded that it was not inclined to interfere with the impugned judgment and order of the High Court. No separate legal principle was articulated or further reasoned in the order; the court disposed of the petition by refusing to grant the special leave sought.

The Special Leave Petition was dismissed and the Supreme Court declined to interfere with the High Court's judgment and order.

Final Conclusion: The Special Leave Petition was dismissed and the impugned High Court judgment and order upheld; pending applications, if any, were disposed of.

Summary order. Permission granted to withdraw the Special Leave Petitions and pending applications; the Special Leave Petitions and pending application(s) are dismissed as withdrawn to enable petitioners to pursue the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Clandestine removal - admission - corroborative evidence - cenvat credit on supplementary invoices - recurring issue - penalty under Section 11AC(1)(c) of the Central Excise Act

Clandestine removal - admission - corroborative evidence - No case of clandestine removal was established against the appellant. - HELD THAT: - The Tribunal examined the statement recorded from the Director and the physical verification report and found no categorical admission of clandestine removal. The Director explained that stock and production are maintained on approximate/volume basis and variations can occur due to the nature of hot-stage products and bulk handling; such explanation, coupled with absence of independent corroborative evidence of clandestine sales or removal, precludes a conclusive finding of clandestine removal. An admission, while material, is not conclusive by itself where the factual matrix and lack of corroboration do not support clandestine activity. Applying these principles, the Tribunal held that the charge of clandestine removal was not sustained. [Paras 10]

Charge of clandestine removal not sustained for lack of categorical admission and corroborative evidence.

Cenvat credit on supplementary invoices - recurring issue - Cenvat credit taken on supplementary invoices raised by South Eastern Coalfields Limited was allowable to the appellant. - HELD THAT: - The Tribunal followed its precedent in Jaypee Rewa Plant and related orders concerning similar supplementary invoices issued by South Eastern Coalfields Ltd., noting the recurring nature of the controversy and absence of fraud or suppression by the appellant. In view of those precedents and the factual findings in the present case, the Tribunal held that the appellant was entitled to take cenvat credit on the supplementary invoices in question. [Paras 8, 10]

Cenvat credit on the supplementary invoices is allowable; appeal on this ground allowed.

Final Conclusion: Both appeals allowed: the finding of clandestine removal is set aside for lack of conclusive admission and corroboration; entitlement to cenvat credit on the supplementary invoices is upheld following Tribunal precedent, with consequential relief.

CENVAT credit entitlement for supplies to SEZ developers - application of CENVAT Credit Rules, 2004 - rule 6(3) liability for inputs used in exempt clearances - exclusion of SEZ-related clearances from duty-liability procedures under rule 6 - treatment of clearances to SEZ developers as export under Special Economic Zones Act, 2005 - prevailing effect of SEZ Act over inconsistent provisions of other laws

CENVAT credit entitlement for supplies to SEZ developers - application of CENVAT Credit Rules, 2004 - rule 6(3) liability for inputs used in exempt clearances - treatment of clearances to SEZ developers as export under Special Economic Zones Act, 2005 - Whether clearances by the assessee to developers of Special Economic Zones between 16th May 2008 and 10th December 2008 are to be treated as exports and therefore fall within the exclusions from liability under the procedures in rule 6 of the CENVAT Credit Rules, 2004, permitting retention of CENVAT credit. - HELD THAT: - Rule 6 of the CENVAT Credit Rules, 2004 prescribes procedures, including discharge of liability under rule 6(3), to ensure CENVAT credit attributable to inputs/input services used commonly for excisable and exempt goods conforms with the principle in rule 3. The exclusions to the liability under rule 6 are limited to clearances that escape duty liability due to circumstances peculiar to the recipient; clearances to SEZ units were expressly excluded. The Special Economic Zones Act, 2005 defines "exports" to include clearances by units in the domestic tariff area to developers and units, and section 51 gives the SEZ Act precedence in case of inconsistency with other laws. Consequently, clearances to SEZ developers qualify as exports under the SEZ Act and are therefore within the exclusions contemplated by rule 6, so that the discharge of liability under rule 6(3) is not a precondition to retain CENVAT credit for such clearances. The Tribunal followed earlier decisions reaching the same conclusion and, on that basis, set aside the recovery upheld by the lower authority.

Impugned order setting recovery was set aside and the appeal allowed, holding clearances to SEZ developers to be exports excluded from the rule 6(3) liability procedure and permitting CENVAT credit.

Final Conclusion: The Tribunal allowed the appeal, holding that clearances to developers of Special Economic Zones are to be treated as exports under the SEZ Act and thus fall within the exclusions of rule 6 of the CENVAT Credit Rules, 2004; the recovery in the impugned order was set aside.

Entertainment of writ despite alternative remedy - abandonment of constitutional challenge - exercise of alternative statutory remedy - condonation of delay in filing appeal - remand for decision on merits

Entertainment of writ despite alternative remedy - abandonment of constitutional challenge - Validity of the High Court entertaining and deciding the writ petition on merits after the petitioner abandoned the challenge to constitutionality of the statutory provision. - HELD THAT: - The High Court entertained C.W.P. No.298 of 1997 notwithstanding the availability of an alternative statutory remedy because the writ petitioner initially questioned the constitutional validity of Section 5A of the Himachal Pradesh General Sales Tax Act, 1968. The petitioner subsequently gave up the question of constitutional validity. Once that foundational ground was abandoned, the High Court had no justification to proceed to decide the matter on merits instead of leaving the dispute to the appropriate statutory appellate forum. The impugned judgment dated 14.03.2008 in the writ petition is therefore not sustainable.

The High Court's judgment allowing the writ petition on merits is set aside to the extent it proceeded after the constitutional challenge was abandoned.

Condonation of delay in filing appeal - exercise of alternative statutory remedy - Whether the respondent should be permitted to file the statutory appeal notwithstanding delay and whether such appeal may be time-barred. - HELD THAT: - Counsel for the respondent stated the respondent would file the appeal under the Act and the State did not oppose the filing. The Court directed that if the appeal is filed within ten weeks, it shall not be dismissed on the ground of limitation and shall be decided as early as possible in accordance with law. This is a discretionary direction to enable the statutory appellate process to determine the merits without being foreclosed by limitation, subject to the appellate forum's consideration in accordance with law.

If filed within ten weeks by the respondent, the appeal shall not be dismissed for limitation and shall be decided on merits as early as possible in accordance with law.

Remand for decision on merits - exercise of alternative statutory remedy - Disposition of the remaining substantive points arising from the dispute between the parties. - HELD THAT: - The Supreme Court recorded that all points except the constitutional validity of Section 5A of the Act are left open. By setting aside the High Court's merits decision and directing that the statutory appeal (if filed within the time permitted) be adjudicated, the Court has effectively left the substantive issues to be considered afresh by the appropriate appellate authority under the Act. The Supreme Court did not decide those substantive points on the merits and remitted them for determination in the statutory appeal process.

All substantive points other than the constitutional validity of Section 5A are left open for decision in the statutory appeal process.

Final Conclusion: The High Court's judgment dated 14.03.2008 is set aside insofar as it decided the matter on merits after the constitutional challenge was abandoned; the respondent may file the statutory appeal within ten weeks which shall not be dismissed on limitation and shall be heard and decided on merits, and all other issues (except the constitutional validity of Section 5A) are left open for determination in that appeal.

Deemed sale in course of export - last sale preceding export - non-obstante clause - requirement of agreement or order for export - identity of goods purchased and exported - remand for production of agreement and fresh adjudication

Deemed sale in course of export - last sale preceding export - requirement of agreement or order for export - identity of goods purchased and exported - Whether the last sale/purchase preceding the export could be treated as a sale in the course of export under section 5(3) of the Central Sales Tax Act, 1956 in the absence of the agreement or order governing the purchases and exports. - HELD THAT: - Section 5(3) operates notwithstanding subsection (1) and deems the last sale or purchase preceding the export to be in the course of export where that last sale/purchase took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export. The Court found that there was no material on record to determine whether the goods purchased from growers were identical to the goods exported, and that the agreements under which purchases and exports were made were not placed before the Court or the High Court. Because the statutory test in section 5(3) requires consideration of the agreement or order and of whether the last sale was for the purpose of complying with that agreement, the absence of the agreements made it impossible for the Court to decide the question on the record before it. The High Court's decision proceeded without taking into account that the agreements were not before it; accordingly, the matter required fresh consideration by the assessing authority upon production of the agreements.

High Court judgments set aside and the matter remanded for the respondents to produce the agreement(s) before the assessing officer, who shall decide whether section 5(3) applies after examining identity of goods and the agreements.

Final Conclusion: The appeals are allowed; the impugned High Court judgments are set aside and the respondents are directed to produce the agreement(s) before the assessing authority in Karnataka, which shall decide the matter expeditiously and in accordance with law whether the last sale/purchase is a deemed sale in the course of export under section 5(3).

Principles of natural justice - effective notice and right to be heard - restriction on input tax credit for capital goods used exclusively for exempted turnover (Section 19(6) of the TNVAT Act) - pro rata entitlement to input tax credit on capital goods used for both taxable and exempt supplies (proviso to Section 19(6) introduced by Tamil Nadu Act 21 of 2007) - setting aside assessment and remand for de novo assessment with opportunity to be heard

Principles of natural justice - effective notice and right to be heard - Whether the pre-assessment notices and opportunity afforded were effective notice sufficient to enable the assessee to meet the proposed modification to returned turnover. - HELD THAT: - The Court found that although factual details were called for and furnished, the Department did not reveal its mind as to the specific modification it proposed to make to the returned turnover until the assessment order itself. Specific queries were answered by the assessee, but those pre-assessment notices did not crystallise the issue for rebuttal; the Assessing Officer first disclosed the precise contention in the impugned order. On that basis the opportunity afforded, though formal, was not effective in the sense required by the principles of natural justice and an assessee could not be said to have been put on notice so as to meet the specific proposal. [Paras 1, 6, 7, 8]

The assessment is vitiated for want of effective opportunity; the impugned order is set aside on this ground.

Restriction on input tax credit for capital goods used exclusively for exempted turnover (Section 19(6) of the TNVAT Act) - pro rata entitlement to input tax credit on capital goods used for both taxable and exempt supplies (proviso to Section 19(6) introduced by Tamil Nadu Act 21 of 2007) - Whether ITC on capital goods used for both exempt and taxable manufacture is allowable pro rata and whether the Assessing Officer had adjudicated that question. - HELD THAT: - The Court noted that Section 19(2)(iv) permits availment of ITC for capital goods used in the manufacture of taxable goods while Section 19(6) denies ITC for capital goods used exclusively in manufacture of exempt goods; the proviso (introduced by Tamil Nadu Act 21 of 2007) provides for prorata allowance where capital goods are used for both exempt and taxable supplies. The prevailing legal position is that ITC on capital goods used in manufacture of both exempt and taxable commodities must be allowed on a pro rata basis. The Court observed that this question required adjudication by the Assessing Officer and that the impugned order had failed to effectively capture or deal with this position. [Paras 10, 11]

The question of pro rata entitlement to ITC on capital goods used for both exempt and taxable manufacture remains to be adjudicated by the Assessing Officer and cannot be sustained on the basis of the impugned order as it stands.

Setting aside assessment and remand for de novo assessment with opportunity to be heard - Relief to be granted to the assessee in view of the procedural defect and outstanding substantive issue. - HELD THAT: - Having found the opportunity to be ineffective and the substantive question of pro rata ITC undecided, the Court set aside the impugned assessment. The Court directed the assessee to appear before the Assessing Officer with written submissions, quantification of the proportionate ITC claim and supporting details on the specified date; held that no further notice need be issued; and directed the Officer to pass an order of assessment de novo within four weeks from the conclusion of the personal hearing, on merits and in accordance with law. [Paras 12, 13]

Impugned assessment set aside and remitted for de novo assessment with specified directions for hearing, filing of quantification and supporting details, and time-bound disposal.

Final Conclusion: Writ petition allowed: the impugned assessment order is set aside for want of effective notice and for failure to adjudicate the pro rata ITC entitlement; matter remitted to the Assessing Officer for de novo assessment after hearing the assessee and considering quantification and supporting details, in accordance with the directions and time limits fixed by the Court.

Penalty under the U.P. VAT Act for omission in statutory return - intention to evade tax - assessment and deletion of penalty on merits

Penalty under the U.P. VAT Act for omission in statutory return - intention to evade tax - assessment and deletion of penalty on merits - Validity of deletion of penalty imposed under Section 54(1)(14) of the U.P. VAT Act in respect of omitted columns in Form-38 for imported floor cleaning machinery. - HELD THAT: - The Tribunal and the first appellate authority found as a matter of fact that the omission in vital columns of Form-38 related to machinery imported from Italy was not accompanied by any intention to evade tax. The authorities accepted the assessee's explanation that the machinery was brought into the State only for demonstration purposes and that the goods were properly accounted for in Haryana after import. Those findings were supported by material on the record and were adopted by the Tribunal, which confirmed deletion of the penalty. In the revision, the High Court examined the record prima facie and observed that the factual conclusions reached by the Tribunal as to absence of evasive intent were founded on evidence, thereby rendering interference with the Tribunal's order unnecessary.

Tribunal's confirmation of deletion of the penalty upheld; revision dismissed.

Final Conclusion: Revision by the revenue dismissed: the Tribunal's factual finding of no intention to evade tax and consequent deletion of the penalty for A.Y. 2008-09 is accepted as supported by the record, and no interference is warranted.

Rebate of tax on certain purchases or sale - Rescission of notification - Retrospective or retroactive effect of subordinate legislation - Promissory estoppel against the State - Supervening public interest (burden of proof) - Accrued/enforceable rights - Unjust enrichment in refund claims

Rescission of notification - Retrospective or retroactive effect of subordinate legislation - Rebate of tax on certain purchases or sale - Validity of notification dated 14th October, 2004 insofar as it seeks to withdraw the rebate granted by notification dated 27th February, 1998 with retrospective effect in respect of industrial units which had commenced commercial production before 14th October, 2004. - HELD THAT: - Section 5(1) of the Uttar Pradesh Trade Tax Act, 1948 empowers the State to allow a rebate subject to conditions; subsection (2) permits allowance of rebate with effect from a date prior to the notification but contains no express authority to withdraw an already granted rebate with retrospective effect. The General Clauses provision relied upon does not supply an implicit power to rescind with retrospective operation. The impugned notification explicitly rescinds the earlier notification with effect from the date of issuance; it does not manifest an intention to withdraw the rebate from a date prior to that issuance. Consequently, construing the rescinding notification to cut down accrued rebate entitlements of industrial units which had set up and commenced production after 27th February, 1998 but before 14th October, 2004 would amount to giving retrospective effect to subordinate legislation, which is not authorised by the statutory scheme. The Court therefore held that such units continue to qualify for rebate for the period specified in the original notification, subject to fulfilment of other conditions. [Paras 25, 27, 28]

The notification dated 14th October, 2004 cannot be given retrospective effect to curtail rebate rights of industrial units which commenced commercial production before that date; such units remain entitled to rebate for the period prescribed in the notification dated 27th February, 1998.

Supervening public interest (burden of proof) - Promissory estoppel against the State - Accrued/enforceable rights - Whether the State justified the rescission of the earlier notification by pleading supervening public interest such that it would be inequitable to hold the State bound by its earlier promise to grant rebate. - HELD THAT: - The executive may rescind or change policy, but when it seeks to resile from a promise relied upon by private parties the State bears a heavy burden to establish overwhelming supervening public interest with rigid proof. The principal reasons advanced by the State-effect of judicial interpretation extending benefit to units outside the State, logistical verification difficulties, and prospective revenue loss-do not show that the dominant purpose underlying the earlier notification (utilisation of fly ash from State thermal power stations and promotion of industry in backward areas) had ceased qua the industrial units that had already been established and were using fly ash. The Court found these contentions to be afterthoughts and insufficient to overcome accrued rights of those units. Accordingly, the plea of supervening public interest was rejected insofar as it was invoked to deny rebate to units already in production before 14th October, 2004. [Paras 29, 30, 31]

The State failed to establish supervening public interest of such magnitude as would justify applying the rescinding notification retrospectively to industrial units that had commenced production prior to 14th October, 2004; the rescission cannot be invoked to defeat their accrued rights.

Unjust enrichment in refund claims - Rebate of tax on certain purchases or sale - Entitlement to refund of rebate amounts claimed by respondents and the manner of adjudication of such claims. - HELD THAT: - Although the respondents are held to be entitled to rebate for the relevant periods prescribed by the original notification (BCL up to 13th December, 2008; JPAL up to 17th September, 2014), the actual grant or refund of amounts claimed remains subject to routine verification by the competent authority. The authority must ensure compliance with the conditions of the notification and guard against unjust enrichment; refund will be ordered only if the claimant establishes that the claimed rebate amount was not passed on to consumers. The competent authority may also consider interest and other consequences in accordance with law. [Paras 34]

Respondents are prima facie entitled to rebate for the prescribed periods, but the quantum and refund are subject to verification and adjustment to prevent unjust enrichment; claims to be decided by the competent authority in accordance with law.

Final Conclusion: The appeals are dismissed. Industrial units which commenced commercial production after 27th February, 1998 but before 14th October, 2004 remain entitled to the rebate under the notification dated 27th February, 1998 for the prescribed periods (BCL up to 13th December, 2008; JPAL up to 17th September, 2014); entitlement to actual refund is subject to verification by the competent authority and prevention of unjust enrichment.

Remand for de novo adjudication - setting aside tribunal order - scope of appellate interference - assessment as inter-state sale versus sale in course of import - requirement to scrutinize movement records and Form XXA - direction to levy appropriate penalty

Remand for de novo adjudication - setting aside tribunal order - scope of appellate interference - Order of the Sales Tax Appellate Tribunal dated 07.12.2001 in STA.135/01 set aside and matter restored to the first appellate authority for de novo disposal. - HELD THAT: - The petitioner challenged the Tribunal's approach of partly allowing the State's appeal and partly remanding limited aspects to the assessing authority instead of directing a complete fresh enquiry by the first appellate authority. The High Court found merit in the petitioner's contention that the matter ought to be remanded for passing a de novo order by the First Appellate Authority. The Court did not adjudicate the merits of the disputed turnovers or the correctness of the Tribunal's findings on whether particular transactions amounted to inter-state sales or sales in the course of import; rather, it concluded that appellate interference should be exercised by directing a fresh adjudication at the first appellate level. Consequently, the Tribunal's order was set aside and the matter was restored for fresh consideration. The Court also noted the existing interim stay and directed the First Appellate Authority to decide the matter afresh within six months, with the petitioner to appear on a specified date. No determination was made on the substantive controversies (including scrutiny of movement records, Form XXA or levy of penalty), which remain for the first appellate authority to decide de novo.

Impugned Tribunal order set aside and matter remitted to the first appellate authority for de novo disposal within six months; interim directions and appearance date recorded.

Final Conclusion: Writ petition allowed; the Sales Tax Appellate Tribunal's order of 07.12.2001 is set aside and the case is restored to the First Appellate Authority for fresh, de novo adjudication within six months.

Rejection of books of accounts - estimation of turnover / best judgment assessment - presumption and conjecture insufficient to overturn accounts - cogent material requirement for rejecting accounts - role of excise monitoring and credit notes as corroborative evidence

Rejection of books of accounts - presumption and conjecture insufficient to overturn accounts - cogent material requirement for rejecting accounts - role of excise monitoring and credit notes as corroborative evidence - Whether the Tribunal was justified in rejecting the assessee's books of accounts and estimating turnover on the basis of presumed sale of raw material due to low production yield despite the assessee's explanation and excise records. - HELD THAT: - The Court found that the Tribunal's conclusion to reject the books rested on presumption and conjecture, without cogent material to impugn correctness or completeness of the accounts. The Tribunal itself had recorded the industrial accident, the subsequent closure of the factory, the excise authority's regular monitoring which disclosed no clandestine removals, and the existence of credit notes evidencing poor quality of raw material. Those factual findings undermined the sole basis relied upon for rejection-apparent excess electricity consumption-so that there was no reliable evidence of sale of raw material in the same condition or of excess production. In absence of such material, the statutory practice of estimation of turnover and rejection of books could not be sustained merely on suspicion or inference. The Court therefore applied the principle that books cannot be rejected without demonstrable and cogent material and that corroborative administrative records (excise monitoring, credit notes) negate the inference of clandestine sales or manipulated production figures. [Paras 7, 8, 9, 10, 11]

Tribunal's rejection of the books and related estimation of turnover set aside; books must not be rejected on mere suspicion where excise monitoring and credit notes corroborate the assessee's explanation.

Final Conclusion: Revision allowed. The question of law is answered in the negative - the Tribunal was not justified in rejecting the books of accounts or sustaining an estimated turnover on the facts; decision rendered in favour of the assessee and against the revenue.

Advances as part of turnover - vires of the Explanation to Rule 3 of the Karnataka Value Added Tax Rules, 2005 - treatment of mobilization/advance payments under works contracts - deeming provision for transfer of property in goods in works contracts - reassessment and opportunity of hearing

Advances as part of turnover - vires of the Explanation to Rule 3 of the Karnataka Value Added Tax Rules, 2005 - treatment of mobilization/advance payments under works contracts - Lawfulness of taxing advance payments received for a works contract by including them in turnover under the Explanation to Rule 3 of the KVAT Rules for the tax periods 2013-14. - HELD THAT: - The Explanation to Rule 3 seeks to include amounts paid as advance to a dealer as part of total turnover in the month execution of a works contract commences. This Court held that such a deeming provision cannot be applied to treat mobilisation or advance payments as turnover unless there is a sale, transfer of title, delivery of possession or incorporation of goods into the works contract. Relying on the decisions in M/s. Nagarjuna Construction Company Limited and State of Karnataka v. Reddy Structures Private Limited, the Explanation to Rule 3[a]-[g] was held to be contrary to the statutory scheme and constitutionally untenable insofar as it levies tax on advance receipts which do not amount to transfer or incorporation of goods. Applying those precedents, the liability fastened on the petitioner to tax advances received in 2013-14 cannot be sustained. [Paras 5, 6]

Levy of tax and penalty on the advance payments received by the petitioner under the impugned re-assessment is not justifiable and the re-assessment cannot be sustained.

Reassessment and opportunity of hearing - Disposition of the impugned reassessment order and further course of action. - HELD THAT: - The Court quashed the reassessment order and remitted the matter to the assessing authority for fresh consideration in light of the observations in the judgment. The authority is directed to re-consider and conclude the reassessment expeditiously after affording the petitioner an opportunity of hearing. All rights and contentions of the parties are left open for determination on reconsideration. [Paras 7]

Impugned reassessment quashed; matter remitted to respondent No.2 to re-consider and conclude the reassessment after hearing the petitioner.

Final Conclusion: The reassessment relating to advance payments received in tax period 2013-14 is quashed as unsustainable in law; the matter is remitted to the assessing authority for reconsideration in the light of the Court's observations and to be concluded expeditiously after providing the petitioner an opportunity of hearing, with all rights and contentions left open.

Compounding of offence under the Negotiable Instruments Act - Power under Section 147 of the Negotiable Instruments Act - Effect of compromise on conviction under Section 138 - Quashing of conviction and sentence on compounding - Release of deposited amount with interest - Damodar S. Prabhu precedent

Compounding of offence under the Negotiable Instruments Act - Power under Section 147 of the Negotiable Instruments Act - Effect of compromise on conviction under Section 138 - Damodar S. Prabhu precedent - Acceptance of the parties' compromise and exercise of power under Section 147 to compound the offence despite prior conviction under Section 138. - HELD THAT: - The Court recorded that the parties represented they had settled the dispute amicably and the complainant, on oath, stated he had voluntarily entered into the compromise and had no objection to compounding, subject to release of the deposited amount. Applying the principle in Damodar S. Prabhu, the Court held that the power under Section 147 can be exercised even where the accused stands convicted. In view of the recorded compromise and the precedent, the Court found no impediment to compound the offence and accepted the prayer for quashing the conviction and sentence. [Paras 7, 8]

Impugned judgments of conviction and sentence were quashed, the petitioner was acquitted of the offence under Section 138 and his bail bonds were discharged.

Release of deposited amount with interest - Direction for release of the amount deposited by the accused to the complainant following compounding. - HELD THAT: - The complainant had expressly stated he would not object to compounding provided the amount deposited in the trial court was released to him. Having allowed the petition and set aside the convictions, the Court directed the trial court to release the deposited sum, along with up-to-date interest, to the complainant upon his making a formal application. [Paras 9]

Trial Court directed to release the deposited amount, with interest, in favour of the complainant on his application.

Final Conclusion: The revision petition was allowed; convictions and sentences under Section 138 were quashed pursuant to the parties' compromise and exercise of power under Section 147, the petitioner was acquitted and bail bonds discharged, and the trial court was directed to release the deposited amount with interest to the complainant on application.

Concurrent findings of fact - perversity test under Section 100 CPC - presumption under Sections 118 and 139 of the Negotiable Instruments Act - civil suit for recovery notwithstanding remedy under section 138 of the Negotiable Instruments Act - re-appreciation of evidence

Concurrent findings of fact - perversity test under Section 100 CPC - re-appreciation of evidence - Whether the High Court should interfere with the concurrent factual findings recorded by the trial Court and the first appellate Court under Section 100 CPC on the ground of perversity. - HELD THAT: - The Court examined the record and found that the trial Court and the first appellate Court had appreciated oral and documentary evidence and recorded concurrent findings of fact. The High Court noted that an appellate exercise under Section 100 CPC permits interference only where concurrent findings are shown to be perverse. The appellant was unable to point out any perversity or misappreciation warranting re-appreciation of evidence by this Court. In view of the recorded concurrent findings and absence of demonstrated perversity, there was no scope for upsetting the judgments of the courts below. [Paras 8, 16, 18]

Concurrent findings of fact are not perverse and do not warrant interference under Section 100 CPC; appeal on that ground fails.

Presumption under Sections 118 and 139 of the Negotiable Instruments Act - civil suit for recovery notwithstanding remedy under section 138 of the Negotiable Instruments Act - Whether the plaintiff was entitled to decree on the cheque claim in view of the presumption under the Negotiable Instruments Act and the defendant's plea that the amount had been paid in cash. - HELD THAT: - The plaintiff produced the cheque and related postal acknowledgment and proved issuance and dishonour. The defendant asserted payment of the claimed sum in cash but failed to produce cogent documentary or consistent oral evidence to probabilise that defence. The Court observed that the statutory presumptions in favour of the cheque-holder under Sections 118 and 139 of the Negotiable Instruments Act operate unless successfully rebutted; here no sufficient evidence was led to rebut those presumptions. The argument that the plaintiff should have pursued remedy under Section 138 did not bar a civil suit for recovery. On such appraisal, both courts below rightly decreed recovery in favour of the plaintiff. [Paras 9, 15]

Plaintiff entitled to decree; defendant failed to rebut presumptions under the Negotiable Instruments Act and civil suit for recovery was maintainable.

Final Conclusion: The High Court found no illegality or perversity in the concurrent findings of the courts below, upheld the decree in favour of the plaintiff, and dismissed the appeal; interim directions are vacated and miscellaneous applications disposed of.