TaxTMI Updates e-Newsletter
Dec 13,2024

Condonation of delay - Dismissal of petition as infructuous - Effect of subsequent adjudicatory order on pending petition - Disposition of pending applications

Condonation of delay - Delay in filing the Special Leave Petition was condoned. - HELD THAT: - The Court recorded satisfaction with the explanation for the delay and allowed the petition to proceed by condoning the delay. No further reasoning or qualification was required in the order beyond the formal grant of condonation. [Paras 1]

Delay condoned.

Dismissal of petition as infructuous - Effect of subsequent adjudicatory order on pending petition - The Special Leave Petition was dismissed as infructuous because the Advance Ruling Authority had, after institution of the petition, passed an order which was under challenge before the Appellate Authority for Advance Ruling. - HELD THAT: - The Court noted that an order by the Advance Ruling Authority had been passed subsequent to the impugned order and that the respondents had challenged that subsequent order before the Appellate Authority of Advance Ruling. In view of this subsequent adjudicatory step rendering the issues in the Special Leave Petition moot, the Court concluded that the petition no longer warranted adjudication and dismissed it as infructuous. [Paras 2, 3]

Special Leave Petition dismissed as infructuous.

Disposition of pending applications - All pending applications arising in the Special Leave Petition were disposed of. - HELD THAT: - Having condoned the delay and dismissed the petition as infructuous, the Court directed that any applications pending before it in the petition stand disposed of, completing the procedural closure of the matter. [Paras 4]

Pending applications disposed of.

Final Conclusion: Delay in filing was condoned; however, because the Advance Ruling Authority subsequently passed an order now under challenge before the Appellate Authority, the Special Leave Petition was dismissed as infructuous and all pending applications were disposed of.

Exhaustion of alternate statutory remedies - efficacy of alternative remedy - pre-deposit requirement for appeal - breach of principles of natural justice - appellate adjudication on merits without pleading limitation - liberty to institute appeal

Exhaustion of alternate statutory remedies - efficacy of alternative remedy - Writ petitions seeking to challenge Orders-in-Original were not entertained in view of the availability of an alternative statutory remedy of appeal. - HELD THAT: - The Court declined to depart from the settled practice that alternative statutory remedies must ordinarily be exhausted. The petitions averring absence of an equally efficacious remedy were rejected because an appeal against the Orders-in-Original is available. The Court kept open all contentions for the appellate forum but held that neither the existence of the appeal remedy nor the requirement of a pre-deposit in itself justified entertaining the writ petitions. The petitions were therefore relegated to the appellate remedy with liberty to the petitioners to file appeals. [Paras 7, 9, 10, 12]

Petitions declined; petitioners relegated to file appeal against the Orders-in-Original.

Pre-deposit requirement for appeal - efficacy of alternative remedy - The requirement of a pre-deposit for maintaining the statutory appeal does not, on the facts of these cases, render the alternate remedy ineffectual so as to warrant interference by writ jurisdiction. - HELD THAT: - Although the petitioners pointed to the financial burden of the pre-deposit (10% of the tax demand), the Court held that this circumstance does not, in the facts of the matter, dilute the efficacy of the appellate remedy. The Court found no sufficient ground to treat the statutory pre-deposit requirement as making the appeal remedy inadequate for purposes of entertaining a writ petition. [Paras 6, 8]

Pre-deposit requirement does not justify bypassing the statutory appeal; writ petitions not entertained on this ground.

Breach of principles of natural justice - appellate adjudication on merits without pleading limitation - liberty to institute appeal - Allegation that certain documents listed in Exhibit-J were not considered was not held to be a complete breach of natural justice warranting writ relief; the Appellate Authority is the appropriate forum to examine such contentions on merits. - HELD THAT: - The Court observed that the complaint amounted, at most, to an allegation of 'no adequate opportunity' rather than total absence of notice or opportunity. Such factual and evaluative matters are better examined by the Appellate Authority on appeal. Accordingly, while keeping the petitioner's contentions about non-consideration and failure of natural justice open, the Court declined to adjudicate them in writ jurisdiction and granted liberty to file appeals. The Court further directed that if appeals are filed within four weeks, the Appellate Authority should decide them on merits without raising limitation, since the writs were instituted within the limitation period and pursued bona fide. [Paras 5, 8, 9, 11]

Alleged non-consideration of documents and related natural justice grievance left open for appellate determination; liberty granted to file appeal and appellate authority directed to decide on merits without invoking limitation if appeals are instituted within the stipulated time.

Final Conclusion: Writ petitions dismissed for non-entertainment; petitioners relegated to the statutory appeal, granted liberty to file appeals within four weeks and directed that the Appellate Authority decide the appeals on merits without raising limitation; no order as to costs.

Natural justice - fair play - right to know evidence relied upon - opportunity to be heard - duty to furnish documents relied upon in adjudication - remand for fresh adjudication

Natural justice - right to know evidence relied upon - opportunity to be heard - Impugned order violated principles of natural justice by relying on documents not referred to in the show cause notice and not furnished to the petitioner. - HELD THAT: - The impugned order expressly relied extensively upon three documents (References 1, 2 and 3) which were neither mentioned in the show cause notice nor supplied to the petitioner. The petitioner only became aware that those documents were being used against it upon receipt of the final order. Because those documents formed a substantial basis of the adjudication, the petitioner was deprived of a fair opportunity to meet the material relied upon against it. The Court concluded that this amounted to a failure of natural justice and fair play, and the contention of the respondents based on an affidavit and oral assertions did not cure the defect insofar as those three documents are concerned. [Paras 11, 12, 14]

Impugned order set aside on account of failure of natural justice; rival contentions on merits left open.

Remand for fresh adjudication - duty to furnish documents relied upon in adjudication - opportunity to be heard - Matter remanded to the adjudicating authority with directions to furnish relied-upon documents, permit explanation and hearing, and pass a reasoned final order. - HELD THAT: - Having quashed the impugned order solely for the procedural defect, the Court remanded the matter to the Adjudicating Officer for fresh decision in accordance with law. The respondents are directed to furnish to the petitioner copies of the documents at References 1, 2 and 3 and any other material they propose to rely upon; the petitioner must be given a reasonable opportunity to explain or rebut such material and to be heard; and the Adjudicating Officer must pass a reasoned final order. The Court expressly left all merits-based contentions open, as it has not adjudicated them. [Paras 15, 16, 17]

Proceedings remitted for fresh consideration after supplying the material relied upon and affording hearing; final order to be reasoned.

Final Conclusion: The Rule is made absolute: the impugned order dated 30 April 2024 is quashed for failure of natural justice and the matter is remanded to the Adjudicating Officer with directions to supply the relied-upon documents, afford the petitioner a reasonable opportunity to respond and be heard, and thereafter pass a reasoned decision; all merits are left open and the petition is disposed of without costs.

Error apparent on the face of the record - recall of order - exhaustion of alternate remedy - relegation to alternate remedy/appeal - principles of natural justice - no adequate hearing - appellate review on merits - limitation not to be gone into by Appellate Authority

Error apparent on the face of the record - recall of order - Whether the Court should recall its earlier order dated 12 November 2024 and restore the writ petition for admission/disposal. - HELD THAT: - The Court found that the disposal of the petition dated 12 November 2024 was founded on a mistaken premise because the referenced Writ Petition No. 4500 of 2024 concerned different subject matter. This mistake constituted an error apparent on the face of the record. Consequentially, the Court recalled its earlier order and restored Writ Petition No. 3714 of 2024 for admission/disposal, issuing Rule and making it returnable immediately with the parties' consent. [Paras 2, 3, 4, 5]

Earlier order dated 12 November 2024 recalled; Writ Petition No. 3714 of 2024 restored for admission/disposal and Rule issued.

Exhaustion of alternate remedy - relegation to alternate remedy/appeal - principles of natural justice - no adequate hearing - Whether the writ petition should be entertained despite the availability of an alternate remedy of appeal, in light of the petitioner's contention of denial of hearing. - HELD THAT: - The Court observed that although the petitioner alleged non-compliance with principles of natural justice after filing its final reply, the grievance was at best arguable and amounted to an allegation of inadequate hearing rather than total no notice/no hearing. The Roznama of proceedings before the assessing authority bore the petitioner's representative's signatures, and the petitioner had not produced the Roznama as part of its petition. The Court held that such contentions-whether on merits or alleging failure of natural justice-are suitable for determination by the Appellate Authority and that the established practice of requiring exhaustion of alternate remedies should not be departed from in the present case. Accordingly, without deciding the merits or the natural justice issue, the Court declined to entertain the petition and relegated the petitioner to pursue the statutory appeal if it so chooses. [Paras 9, 10, 11, 12, 15]

Writ petition declined; petitioner relegated to the alternate remedy of appeal and petition dismissed with liberty to appeal.

Appellate review on merits - limitation not to be gone into by Appellate Authority - Directions as to treatment of the appeal and outstanding contentions (including natural justice and constitutional challenge) by the Appellate Authority. - HELD THAT: - The petitioner undertook to file an appeal within four weeks of uploading the order. The Court directed that if the appeal is instituted within that period, the Appellate Authority must entertain it on merits, including consideration of the ground of failure of natural justice. The Appellate Authority was instructed that it need not examine the question of limitation because the Court found the petition had been instituted within the limitation period for filing an appeal. All substantive contentions, including the constitutional validity issue pleaded in the petition, were left open for determination by the Appellate Authority at the first instance. [Paras 12, 13, 14]

If appeal filed within four weeks, Appellate Authority to decide it on merits (including natural justice) and refrain from deciding limitation; all contentions left open for appellate determination.

Final Conclusion: The High Court recalled its earlier order of 12 November 2024 for error apparent on the face of the record, restored the petition for admission, but declined to entertain the writ on merits because an alternate statutory remedy of appeal is available; the petitioner is relegated to file an appeal (undertaken to be filed within four weeks), which the Appellate Authority must hear on merits (including alleged failure of natural justice) without going into limitation; petition dismissed with liberty to appeal and no costs.

Rejection of unpressed reliefs - exhaustion of alternate remedies - principles of natural justice - inadequate notice and opportunity - delay and explanation for delay in writ petitions - vagueness of pleadings and prayer clauses - role of appellate authority in factual investigations

Rejection of unpressed reliefs - Prayers (a) and (b) were not pressed and are rejected. - HELD THAT: - Counsel for the petitioner expressly disclaimed pursuing reliefs in prayer clauses (a) and (b) at the hearing on 8 October 2024. Having received no submissions in support of those prayers, the Court declined to consider them and rejected the reliefs sought under those clauses. [Paras 2]

Prayers (a) and (b) are rejected as not pressed.

Exhaustion of alternate remedies - principles of natural justice - role of appellate authority in factual investigations - inadequate notice and opportunity - The writ petition under Article 226 will not be entertained because the petitioner has an alternate statutory remedy of appeal and has not made out sufficient grounds to depart from the rule of exhaustion of alternate remedies. - HELD THAT: - Although the petitioner alleged violation of principles of natural justice and non-supply of documents, the Court found these averments vague and general and held that issues such as adequacy of notice, scope of show-cause, non-supply of documents, and alleged collusion with vendors involve factual inquiries best addressed by the Appellate Authority in the appellate forum. Relying on the Court's recent survey of precedent in Oberoi Constructions Ltd., the Court declined to bypass the alternate remedy merely on the basis of the present allegations; at best the petition, if the allegations were accepted, disclosed inadequate notice/opportunity, which is not a sufficient ground to entertain the writ in the face of an effective appellate remedy. [Paras 4, 6, 8, 11]

Petition dismissed for non-exhaustion of alternate remedies; matters better suited for the Appellate Authority.

Delay and explanation for delay in writ petitions - vagueness of pleadings and prayer clauses - The petition is dismissed also because it was filed after significant delay without satisfactory explanation and the petition's pleadings and prayer clauses were vague and confusing. - HELD THAT: - The impugned Order-in-Original was dated 12 January 2023, and the petition was filed almost a year later, well after the statutory period for filing an appeal; no explanation for the delay was furnished. While there is no strict limitation for an Article 226 petition, such petitions must be instituted within a reasonable period and delay should be explained. Further, the petition's amendments and prayer clauses lacked necessary specificity (precise orders, dates, authorities), impeding proper adjudication. The Court noted these defects though they were not the sole basis for dismissal. [Paras 9, 11]

Petition dismissed for unexplained delay and for vagueness/deficiencies in pleadings and prayers.

Final Conclusion: The writ petition is dismissed: prayers (a) and (b) are rejected as not pressed; the petition is not entertained because the petitioner failed to exhaust the alternate statutory remedy and the matters raised are fit for the Appellate Authority; additionally, the petition is dismissed for unexplained delay and for vague/defective pleadings. Interim orders, if any, stand vacated.

Anticipatory bail - cancellation of bail - economic offences and gravity of offence - possibility of tampering with evidence as ground for denying bail - conditions to secure presence of accused (passport surrender; travel restriction) - distinction between criminal prosecution and recovery proceedings - investigative safeguards for tracing and recovery of proceeds of crime

Anticipatory bail - cancellation of bail - economic offences and gravity of offence - possibility of tampering with evidence as ground for denying bail - conditions to secure presence of accused (passport surrender; travel restriction) - investigative safeguards for tracing and recovery of proceeds of crime - distinction between criminal prosecution and recovery proceedings - Anticipatory bail granted to accused Nos. 1 and 2 will not be cancelled. - HELD THAT: - The court examined the complainant's challenge to anticipatory bail granted to accused Nos. 1 and 2 for alleged offences under IPC and the I.T. Act and found that, although the allegations involve substantial sums and misuse of GST credentials, the offences are not of the category of heinous crimes warranting automatic denial of bail. The court observed that the maximum punishments for the principal offences (misappropriation and cheating) do not mandate refusal of bail per se and that traditional grounds for refusing bail-risk of absconding, tampering with witnesses or evidence, or thwarting recovery-must be applied to the facts. The court noted that the investigating authorities have already proceeded with investigation and arrest in related proceedings and that online tampering, if repeated, would expose the accused to further prosecution; this prospect reduces the risk that bail would allow obstruction of justice. The court emphasised that tracing of alleged investments and recovery of proceeds is primarily a matter for the Investigating Officer to pursue through appropriate investigative steps and that criminal prosecution is distinct from recovery proceedings. It further held that the trial court may impose stringent conditions to secure the presence of the accused-such as surrender of passports and restrictions on travel-and that such conditions have been or can be imposed to mitigate risks. Having regard to these considerations, the High Court found no justifiable grounds to interfere with the exercise of discretion by the Sessions Court in granting anticipatory bail subject to conditions. [Paras 20, 21, 22, 23, 24]

Petitions seeking cancellation of anticipatory bail are rejected; the anticipatory bail granted to accused Nos. 1 and 2 shall stand subject to the conditions imposed by the trial court.

Final Conclusion: The High Court dismissed the petitions under Section 439(2) read with Section 482 Cr.P.C., refusing to interfere with the Sessions Court's grant of anticipatory bail to the two accused, noting that investigative safeguards and bail conditions adequately address risks of tampering, absconding and recovery-related concerns.

Consolidated show cause notice for multiple financial years - different cause of action for each financial year - time barred notices - show cause notice under Section 74 of the CGST Act - liberty to issue separate show cause notices for each financial year

Consolidated show cause notice for multiple financial years - different cause of action for each financial year - time barred notices - Validity of a single show cause notice issued for the period January-2018 to August-2022 - HELD THAT: - The Court held that liability for each financial year constitutes a distinct cause of action because rate of tax, interest and penalty and the question of limitation may vary year to year. Relying on the Coordinate Bench's reasoning in W.P.No.15810/2024 (T-RES), a consolidated show cause notice spanning multiple financial years is impermissible in the circumstances explained, and therefore the impugned single notice covering January-2018 to August-2022 cannot be sustained. The segregation in a subsequent summary did not cure the vice of issuing one notice for several years. [Paras 6, 7, 8]

The consolidated show cause notice for the entire period January-2018 to August-2022 is set aside.

Show cause notice under Section 74 of the CGST Act - liberty to issue separate show cause notices for each financial year - Consequent relief and directions regarding fresh proceedings - HELD THAT: - The Court, after setting aside the impugned consolidated show cause notice and its summary, preserved the respondent's right to proceed afresh. The respondent is granted liberty to issue appropriate separate show cause notices for each financial year and to proceed in accordance with law, thereby permitting re adjudication on a year by year basis subject to applicable legal limits including limitation. [Paras 8]

Impugned show cause notice and its summary are quashed, with liberty to the respondent to issue separate show cause notices for each financial year and proceed according to law.

Final Conclusion: The writ petition is allowed in part: the consolidated show cause notice dated 22.07.2024 and its summary dated 03.08.2024 are set aside; liberty is reserved to the respondent to issue separate show cause notices for each financial year and proceed in accordance with law; the writ petition is disposed of.

Cancellation of GST registration for non-filing of returns - Revocation of cancellation under Section 30(2) of the CGST Act, 2017 - Filing of belated GST returns and payment of tax, interest, penalty and late fee - Direction to adjudicatory authority to consider application within fixed time - Reliance on earlier decision in WPMS No.2285 of 2024

Cancellation of GST registration for non-filing of returns - Revocation of cancellation under Section 30(2) of the CGST Act, 2017 - Filing of belated GST returns and payment of tax, interest, penalty and late fee - Direction to adjudicatory authority to consider application within fixed time - Petitioner permitted to seek revocation of cancellation of GST registration subject to filing of outstanding returns and payment of dues; authority directed to consider the application within a specified timeframe. - HELD THAT: - The Court, noting the parties' consensus and that the petition is covered by the earlier order in WPMS No.2285 of 2024, did not adjudicate the merits of the cancellation. Instead the Court allowed the petitioner two weeks to move an application under Section 30(2) of the CGST Act, 2017 for revocation of the cancellation. The petitioner is directed, along with such application, to furnish all outstanding GST returns and deposit outstanding tax, interest, penalty and any late fee. Upon receipt of a timely application complying with these requirements, the competent authority is directed to consider the application and pass an appropriate order according to law within four weeks thereafter. The order is procedural and interlocutory in nature and does not decide the substantive validity of the cancellation on merits. [Paras 8, 9, 10]

Writ petition disposed by permitting petitioner to apply for revocation under Section 30(2) within two weeks on furnishing returns and paying dues; competent authority to decide the application within four weeks.

Final Conclusion: The petition is disposed of by directing the petitioner to apply for revocation of the GST registration cancellation within two weeks after filing all outstanding returns and depositing tax, interest, penalty and late fee, and by directing the competent authority to consider and decide such application within four weeks; no adjudication on merits of the cancellation was made.

Statutory stay pending determination by Goods and Service Tax Appellate Tribunal - deposit of 20% of disputed tax for grant of stay - requirement to file appeal upon constitution of the Tribunal - extension of limitation owing to non-constitution of the Tribunal - stay to remain operative until disposal of appeal on merits

Statutory stay pending determination by Goods and Service Tax Appellate Tribunal - deposit of 20% of disputed tax for grant of stay - stay to remain operative until disposal of appeal on merits - Grant of statutory stay under Section 112(9) of the Act of 2017 on deposit of 20% of the remaining disputed tax and its operation until disposal of the appeal. - HELD THAT: - The Court, having regard to non-constitution of the GST Appellate Tribunal and following precedents relied upon by the parties, directed that the petitioner shall deposit 20% of the amount claimed in the demand notice (or that amount already deposited shall be verified and adjusted). On such deposit, the statutory stay as available under Section 112(9) of the Act of 2017 shall operate and any recovery steps already taken shall be deemed stayed. The direction balances the equities by preserving the petitioner's statutory benefit of stay where the Tribunal has not been made functional by the authorities who are responsible for its constitution. [Paras 9]

Petitioner to deposit 20% of the claimed demand (or have prior deposit verified and adjusted); on such deposit statutory stay under Section 112(9) will operate until the appeal is decided on merits.

Requirement to file appeal upon constitution of the Tribunal - extension of limitation owing to non-constitution of the Tribunal - Obligation to file the appeal before the GST Appellate Tribunal within the period directed by the Court once the President or State President enters office, and consequences of non-filing. - HELD THAT: - Because the Tribunal is not yet functional, the Court permitted the petitioner to file the appeal and directed that the appeal shall be filed within 30 days from today; further, when the President or State President enters office the appeal shall be heard and decided on its merits. The order recognises the statutory scheme which provides second appeal to the Tribunal and accepts that limitation/filing timelines are to be observed once the Tribunal is constituted; if the petitioner fails to file the appeal within the prescribed period thereafter, the State is at liberty to proceed with recovery of the remaining tax, interest and penalty. [Paras 9]

Petitioner to file the appeal within 30 days and to present the appeal before the Appellate Tribunal once constituted; failure to file within the prescribed period will permit the State to proceed with recovery.

Final Conclusion: Writ petition disposed of: petitioner directed to deposit 20% of the disputed demand (or have earlier deposit adjusted), statutory stay under Section 112(9) to operate until the appeal is decided; petitioner to file the appeal within 30 days and the appeal shall be heard once the GST Appellate Tribunal is constituted; non-filing will entitle the State to recover the remaining dues.

Taxability of interest accrued but not due - accrual of income - requirement to give reasons in quasi-judicial orders - retrospective effect of judicial decisions

As decided by HC [2023 (7) TMI 135 - BOMBAY HIGH COURT] Settlement Commission's order taxing interest not due on 31st March for AY 1997-98 is set aside for being contrary to law and for want of reasons; the matter is remitted to the Interim Board for Settlement to decide afresh after hearing the parties.

HELD THAT:- We do not find any merit in the present special leave petition and, hence, the same is dismissed.

Pending application(s), if any, shall stand disposed of.

Validity of notice under Section 148/Section 147 - Reopening assessment - reason to believe and requirement of tangible material as distinct from mere change of opinion - Additional reasons cannot be recorded or supplemented after issuance of notice under Section 148 - Requirement of information in possession of the Assessing Officer and prior approval under the First Proviso to Section 148 - Requirement of full and true disclosure as precondition for reopening under the proviso to Section 147

Validity of notice under Section 148/Section 147 - Reopening assessment - reason to believe and requirement of tangible material as distinct from mere change of opinion - Validity of the reassessment notice dated 31 March 2019 under Section 148 insofar as it pertains to AY 2012-13. - HELD THAT: - The Court confined its review to the reasons that existed at the time the Section 148 notice was issued and held that the reassessment could only be sustained if those original reasons furnished a live link to a belief that income had escaped assessment. The solitary allegation in the original reasons was that the petitioner had received Rs. 24,80,29,000/- from the DSNE CGHS; the respondents later conceded that no amounts were received by the petitioner directly and that funds, if at all, reached the petitioner indirectly through entities in which he held shareholding. Because the foundational factual premise in the reasons recorded at the time of issuing the notice was shown to be untenable, the bedrock for formation of opinion was effaced. Applying the principle that reassessment may not proceed on the basis of a mere change of opinion and that tangible material must exist at the relevant time, the Court found the Section 148 proceedings unsustainable. [Paras 9, 10, 12, 15, 16]

The Section 148 notice dated 31 March 2019 is quashed and the consequential assessment order dated 31 December 2019 is set aside; respondents may initiate fresh proceedings if permissible in law.

Requirement of full and true disclosure as precondition for reopening under the proviso to Section 147 - Requirement of information in possession of the Assessing Officer and prior approval under the First Proviso to Section 148 - Whether the Proviso to Section 147 (full and true disclosure) and the First Proviso to Section 148 (existence of information with AO and prior approval) justified initiation of reassessment for AY 2012-13. - HELD THAT: - A reassessment after four years of the relevant assessment year required satisfaction of the proviso to Section 147 that income had escaped assessment due to failure to disclose fully and truly all material facts. The Court observed that since the respondents conceded the petitioner had not directly received the remittances from DSNE CGHS, there was no occasion for the petitioner to have made a disclosure in his return. Further, the First Proviso to Section 148 ties initiation of action to information already in the possession of the AO; therefore only the information available to the AO at the time of issuing the notice could be relied upon. On these grounds the Court held that the preconditions in the proviso to Section 147 and the First Proviso to Section 148 were not satisfied. [Paras 5, 6, 11, 13, 14]

Reassessment could not be sustained on the basis of the Proviso to Section 147 or the First Proviso to Section 148; the invocation of Section 148 was invalid.

Additional reasons cannot be recorded or supplemented after issuance of notice under Section 148 - Reopening assessment - reason to believe and requirement of tangible material as distinct from mere change of opinion - Whether the Assessing Officer could rely upon or introduce additional reasons or altered rationale in the final assessment order to sustain the reassessment initiated under the original Section 148 notice. - HELD THAT: - The Court reiterated the settled principle that the validity of proceedings under Section 148 must be judged by the reasons that existed at the moment the notice was issued and that the Assessing Officer cannot supplement or improve those reasons thereafter. Reliance on subsequent or different reasoning in the final order to justify the same reopening notice was impermissible. The Court relied on earlier decisions to emphasise that permitting after-the-fact augmentation of reasons would amount to permitting a change of opinion and would defeat the statutory safeguards requiring tangible material at the relevant time. [Paras 11]

The Assessing Officer was not entitled to rely on additional or different reasons recorded after issuance of the Section 148 notice; the reassessment could not be sustained on such supplemented reasoning.

Final Conclusion: Writ petition allowed; the Section 148 notice dated 31 March 2019 and the consequential assessment order dated 31 December 2019 are quashed and set aside as unsustainable on the basis of the original reasons; liberty granted to respondents to initiate fresh proceedings if otherwise permissible in law.

Adjustment of refunds against stayed demand - stay of recovery under section 220(6) of the Incometax Act - predeposit condition of 20% of disputed demand - Office Memorandum dated 29.02.2016 - reservation of right to adjust refunds subject to section 245

Adjustment of refunds against stayed demand - predeposit condition of 20% of disputed demand - Office Memorandum dated 29.02.2016 - Whether the Revenue was entitled to adjust refunds due for earlier assessment years against a demand for AY 2015-16 which had been stayed on payment of a specified predeposit. - HELD THAT: - The Court found that the stay of recovery granted under the departmental orders was conditional and governed by the CBDT instructions which prescribe that stay normally be granted on payment of 20% of the disputed demand. The Assessing Officer may reserve the right to adjust refunds, but such reservation is confined to adjustment only to the extent required for granting stay and is subject to the provisions of section 245. In the absence of any material or reasons showing that payment in excess of the standard 20% predeposit was warranted under paragraph 4(B) of the Office Memorandum dated 29.02.2016, the Department's action in adjusting the petitioner's refunds for AY 200809 and AY 201718 against the stayed demand was arbitrary. The Court relied on its earlier decision in Eko India Financial Services (P.) Ltd. to the effect that the Government must follow the standards laid down in its own instructions and that excess adjustments over the prescribed predeposit are impermissible unless justified by the criteria in the Memorandum. Applying these principles, the Court held that the excess adjustment should be refunded with applicable interest and directed expeditious refund. [Paras 16, 17, 18]

The Revenue's adjustment of refunds for AY 200809 and AY 201718 against the stayed demand for AY 201516 was arbitrary; the petitioner is entitled to refund of the amounts so adjusted (with interest), and the petition is allowed.

Final Conclusion: Petition allowed; Revenue directed to refund the amounts adjusted against the petitioner's refunds for AY 200809 and AY 201718 with applicable interest, preferably within eight weeks; adjustments beyond the prescribed 20% predeposit under the CBDT Office Memorandum dated 29.02.2016 were held arbitrary.

Disallowance under Section 14A of the Income Tax Act - Recourse to Rule 8D of the Income Tax Rules - Assessing Officer's satisfaction before invoking Rule 8D - Assessee's suo moto apportionment of expenses - Ad hoc disallowance in absence of recorded satisfaction - Obligation on Revenue to examine accounts before rejecting assessee's computation

Disallowance under Section 14A of the Income Tax Act - Recourse to Rule 8D of the Income Tax Rules - Assessing Officer's satisfaction before invoking Rule 8D - Assessee's suo moto apportionment of expenses - Whether, in the absence of the Assessing Officer recording satisfaction after examination of accounts, the AO could invoke Rule 8D and compute disallowance in excess of the amount suo moto apportioned by the assessee. - HELD THAT: - The Court held that Rule 8D may be applied by the Assessing Officer only after recording satisfaction, arrived at by examination of the assessee's accounts, that the assessee's own computation of expenditure attributable to exempt income is incorrect or inadequate. In the present case neither the AO nor the appellate authorities found the assessee's computation to be erroneous; the AO did not record the requisite satisfaction under Section 14A(2) read with Rule 8D before applying the prescribed methodology. Reliance on the coordinate decisions (as discussed in the judgment) established that where the assessee has itself apportioned expenses, the onus shifts to Revenue to examine accounts and record satisfaction before rejecting that apportionment. Consequently, in absence of such recorded satisfaction the AO was not entitled to compute disallowance under Rule 8D and make an ad hoc addition beyond the amount the assessee had itself disallowed. The ITAT correctly restricted the disallowance to the amount suo moto allocated by the assessee and set aside the further ad hoc disallowance made by the CIT(A). [Paras 12, 15, 16]

ITAT's restriction of the disallowance under Section 14A to the amount suo moto apportioned by the assessee (Rs. 7,50,000) is upheld because the AO did not record the mandatory satisfaction before invoking Rule 8D.

Final Conclusion: Appeal dismissed; High Court upholds the ITAT's order restricting disallowance under Section 14A to the amount apportioned by the assessee for AY 2008-09, on the ground that the Assessing Officer had not recorded the requisite satisfaction before invoking Rule 8D.

Reopening of assessment - limitation under Section 149(1) of the Act - non-obstante clause in Section 150 of the Act - reassessment under Sections 147/148 of the Act - requirement of incriminating material in search assessments - ratio that observations in Abhisar Buildwell do not override statutory limitation

Reopening of assessment - limitation under Section 149(1) of the Act - non-obstante clause in Section 150 of the Act - reassessment under Sections 147/148 of the Act - ratio that observations in Abhisar Buildwell do not override statutory limitation - Validity of the notices issued under Section 148A(b)/Section 148 read with Section 147 for AY 2015-16 in view of the time-bar under Section 149(1) and the Revenue's reliance on Section 150 and the Supreme Court's observations in Abhisar Buildwell. - HELD THAT: - The Court examined whether the impugned notices for reassessment could be treated as within time by invoking the non-obstante clause in Section 150 and the Supreme Court's observations in Principal Commissioner of Income Tax v. Abhisar Buildwell. The judgment records that Abhisar Buildwell affirmed that where no incriminating material is found in a search, reassessment under Sections 147/148 remains available, but that affirmation is expressly subject to fulfilment of the statutory conditions and limitation prescribed by the reassessment chapter. The Court held that Abhisar Buildwell does not constitute a finding or direction under Section 150 that would nullify or extend the outer time-limit in Section 149(1), and that earlier appellate orders dismissing the Revenue's appeals could not be read as directions enabling issuance of notices beyond the statutory period. Reliance on authorities and prior orders could not be interpreted as a carte blanche to override the limitation; the power to reassess remains constrained by the statutory scheme and time-bars. Applying these principles to the facts, the impugned notices were found to be issued beyond the period prescribed by Section 149(1) and could not be validated by the Revenue's interpretation of Section 150 or Abhisar Buildwell. [Paras 11, 12, 13, 14]

The impugned order dated 24.09.2024 under Section 148A(3) and the notice dated 25.09.2024 under Section 148 for AY 2015-16 are set aside as time barred.

Final Conclusion: The petition is allowed; the reassessment notices and the order under Section 148A(3) for AY 2015-16 are quashed on the ground that they were issued beyond the period prescribed by Section 149(1) and Abhisar Buildwell/Section 150 do not permit overriding that statutory limitation.

Depreciation under Section 32 - asset "put to use" for business purpose - generation of electricity as commencement of use - synchronisation with the grid not determinative of use - CEIG certification as evidentiary confirmation - acceptance of receipts in profit & loss as corroborative evidence

Depreciation under Section 32 - asset "put to use" for business purpose - generation of electricity as commencement of use - synchronisation with the grid not determinative of use - CEIG certification as evidentiary confirmation - acceptance of receipts in profit & loss as corroborative evidence - Whether the solar plant was put to use in financial year 2012-13 so as to entitle the assessee to claim depreciation for that year - HELD THAT: - The court accepted the factual findings that the respondent commenced generation of electricity from 20.03.2013 and supplied power locally (invoices dated 30.03.2013 and 31.03.2013), with CEIG approval recorded on 30.03.2013 and evacuation works completed subsequently. The Assessing Officer had treated the same receipts as income but rejected depreciation on the ground that synchronisation with the grid on 22.04.2013 was the relevant date of 'use'. The CIT(A) correctly held that an asset is 'put to use' when used by the assessee for business and that generation of electricity itself, including supply to the workers' colony pending grid evacuation, constituted use. The CEIG's clarification corroborated generation from 20.03.2013 (and that the plant generated from 30.03.2013 though synchronisation occurred later). The Tribunal upheld these findings. The court observed that reliance on an earlier decision was unnecessary to sustain the factual conclusion and found the Assessing Officer's approach contradictory in accepting income but disallowing depreciation. On these findings of fact, the depreciation claim (including additional depreciation) was allowable for 2012-13. [Paras 9, 10, 11, 12]

Depreciation on the solar plant is allowable for the financial year 2012-13 because the plant was put to use in that year by virtue of commencement of generation and supply of electricity, corroborated by CEIG certification and accounting of receipts.

Final Conclusion: The appeal filed by Revenue is dismissed; the High Court upholds the Tribunal's and CIT(A)'s finding that the solar plant was put to use in 2012-13 and the claim for depreciation for that year is allowable.

Power of Central Board of Direct Taxes to condone delay under Section 119(2)(b) - condonation of delay for avoiding genuine hardship - duty of subordinate income-tax authorities to refer applications to the Board - consideration of medical/COVID-19 hardship in condonation requests

Power of Central Board of Direct Taxes to condone delay under Section 119(2)(b) - duty of subordinate income-tax authorities to refer applications to the Board - Whether the power to condone delay in filing claims under the Act vests with the CBDT and whether subordinate income-tax authorities were justified in rejecting the petitioner's application instead of referring it to the Board - HELD THAT: - The Court found that the statutory power to condone delay under Section 119(2)(b) is vested in the Central Board of Direct Taxes and that where the statute designates the Board as the appropriate authority to consider condonation, subordinate authorities lack the competence to finally dispose of such applications. In such circumstances a subordinate authority presented with an application for condonation is required to redirect or place the matter before the Board for its exercise of discretion after due consideration of facts and materials. It was therefore improper for the authority which rejected the petitioner's application to decline to refer the matter to the CBDT and to reject the Form 10-IC on the ground that no power was prescribed to that subordinate authority. [Paras 14]

The Court held that the power to condone delay vests with the CBDT and that the subordinate authority ought to have referred the petitioner's application to the Board instead of rejecting it.

Condonation of delay for avoiding genuine hardship - consideration of medical/COVID-19 hardship in condonation requests - Whether the petitioner's plea of medical hardship (COVID-19 related quarantine) should be considered and whether the petitioner is entitled to have the CBDT decide the condonation request - HELD THAT: - Having noted the petitioner's averments of quarantine and medical hardship during the COVID-19 pandemic and the approach of other High Courts in similar cases, the Court declined to decide the merits of condonation itself but observed that the claimed hardship prima facie appeared to be beyond the petitioner's control and therefore merited consideration by the competent authority. The Court directed that the CBDT be called upon to consider the petitioner's claim for condonation of the delay on the stated ground of hardship and to pass an appropriate order after placing on record the necessary materials furnished by the Commissioner of Income Tax. The matter was remitted to the Board for decision on merits within a specified time-frame. [Paras 15, 16, 17]

The Court directed the CBDT to consider the petitioner's claim for condonation of the delay on the ground of medical/COVID-19 hardship and to pass appropriate orders within 60 days; the merits were remitted for the Board's decision.

Final Conclusion: Writ petition disposed by directing the CBDT to consider and decide the petitioner's application for condonation of delay (claimed on medical/COVID-19 grounds) and the option under Section 115BAA, the Commissioner to place records before the Board, and the Board to pass orders expeditiously within 60 days from receipt of certified copy of this order.

Comparable Uncontrolled Price (CUP) method as Most Appropriate Method - Transactional Net Margin Method (TNMM) - consistency in choice of transfer pricing method - invoice by invoice comparison - uniformity of rates/hours across related and unrelated parties

Comparable Uncontrolled Price (CUP) method as Most Appropriate Method - Transactional Net Margin Method (TNMM) - consistency in choice of transfer pricing method - invoice by invoice comparison - uniformity of rates/hours across related and unrelated parties - Tribunal correctly upheld the CUP method as the Most Appropriate Method for assessment year 2018-19 and the TPO was not entitled to adopt TNMM. - HELD THAT: - The Tribunal's conclusion that the CUP method was the appropriate benchmark for AY 2018-19 was upheld. The Tribunal took into account that the CUP had been allowed as the Most Appropriate Method in earlier assessment years for the same assessee and that the assessee had consistently followed the CUP method. The TPO's rejection of the CUP in favour of TNMM was unwarranted where the rate charged (amount per hour) was uniform and the same employee provided services both to associated enterprises and to independent third parties; under those circumstances an invoice by invoice comparison proposed by the TPO was not material to displace the CUP. The court concurred with the ITAT's reasoning, including its reliance on precedents applying comparable price principles, and found no justification for the TPO to adopt a different method for the year under consideration. [Paras 5, 6]

Appeal dismissed; the ITAT's acceptance of the CUP as the Most Appropriate Method for AY 2018-19 is affirmed.

Final Conclusion: The High Court dismissed the Revenue's appeal and affirmed the Tribunal's finding that the CUP method was the Most Appropriate Method for assessment year 2018-19; no substantial question of law arises.

Arm's length price - internal comparison of profitability - transfer pricing remand - recomputation of net profit margin - exceeding remit by Transfer Pricing Officer - no substantial question of law

Exceeding remit by Transfer Pricing Officer - recomputation of net profit margin - internal comparison of profitability - Whether the Transfer Pricing Officer exceeded the directions of remand by recomputing the net profit margin instead of limiting the exercise to the internal comparison directed by the Tribunal. - HELD THAT: - The Tribunal recorded that the TPO, contrary to the limited remit given on earlier remand, proceeded to recompute the net profit margin by substituting employee and outsourced-work costs in the unrelated party segment to match levels in the related party segment. The High Court accepted the Tribunal's observation that the TPO had gone beyond the Tribunal's directions to undertake an impermissible recomputation rather than carrying out the internal comparison of profitability as directed. [Paras 2]

The TPO proceeded beyond the remit of the Tribunal by undertaking a recomputation of net profit margin instead of restricting the exercise to the directed internal comparison.

No substantial question of law - transfer pricing remand - Whether the High Court should entertain the appeal against the Tribunal's order dated 31 July 2017. - HELD THAT: - Having considered the Tribunal's findings, including the limited remit on remand and the TPO's conduct, the High Court found no ground to entertain the petition and concluded that no substantial question of law arose from the matters raised. The Court accordingly declined to interfere with the Tribunal's order. [Paras 3]

The appeal is not entertained; no substantial question of law arises and the appeal stands dismissed.

Final Conclusion: The High Court dismissed the petition challenging the Tribunal's order for Assessment Year 2006-07, upholding the Tribunal's finding that the TPO had exceeded the remit on remand and holding that no substantial question of law warranted interference.

Arm's Length Price - Adjustment under transfer pricing reference under section 92CA(3) of the Income-tax Act - Corporate guarantee valuation - Voluntary adjustment based on actual cost - Principle of terminating litigation where disputed amount is small

Arm's Length Price - Adjustment under transfer pricing reference under section 92CA(3) of the Income-tax Act - Voluntary adjustment based on actual cost - Deletion of the adjustment made by the Assessing Officer by applying the average rate of comparable banks instead of the assessee's voluntary adjustment based on actual bank guarantee cost. - HELD THAT: - The Assessing Officer computed an adjustment by applying an average corporate guarantee rate of 2.22% derived from comparable banks and arrived at a higher notional cost, while the assessee had made a voluntary adjustment of 0.94% corresponding to the actual cost incurred for a bank guarantee charged by the bank for a shorter period. The Tribunal, having noted the assessee's adjustment was based on the actual cost and, considering the smallness of the disputed amount and the objective of putting an end to litigation, accepted the assessee's stand without undertaking a detailed inquiry into the comparability or other issues. Consequently the addition computed on the higher average rate was deleted and the assessee's voluntary adjustment was sustained. The Tribunal expressly refrained from adjudicating the other grounds raised by the assessee. [Paras 6, 7]

The adjustment made by the Assessing Officer was deleted and the assessee's voluntary adjustment based on actual cost was accepted.

International Transaction - Selection of comparable sample under transfer pricing - Grounds 1, 3 and 4 were not adjudicated by the Tribunal. - HELD THAT: - Having allowed the relief under Ground No. 2 and in view of the limited contested amount, the Tribunal did not examine the contentions relating to the nature of the instrument (whether it constituted an international transaction) or the correctness of the sample of comparables selected by the Assessing Officer. Those grounds were left unadjudicated and not decided on merits by the Tribunal. [Paras 7]

Grounds 1, 3 and 4 remain unadjudicated by the Tribunal.

Final Conclusion: For Assessment Year 2016-17 the appeal is partly allowed: the transfer-pricing adjustment imposed by the Assessing Officer was deleted and the assessee's voluntary adjustment based on actual bank guarantee cost accepted; other grounds were left unadjudicated.

Erroneous order prejudicial to the interests of the revenue - Section 263 - scope of suo motu revision by Commissioner - Explanation 2 to Section 263 - order passed without making inquiries or verification - Distinction between lack of inquiry and inadequate inquiry - Application of mind by the Assessing Officer - Appraisal report and seized/impounded material as internal guidance - Appropriate remedy under Section 147/154 versus revision under Section 263

Section 263 - scope of suo motu revision by Commissioner - Erroneous order prejudicial to the interests of the revenue - Explanation 2 to Section 263 - order passed without making inquiries or verification - Validity of the Principal Commissioner's invocation of section 263 to set aside the assessment order for A.Y. 2017-18 - HELD THAT: - The Tribunal examined whether the PCIT rightly held the AO's assessment for A.Y. 2017-18 to be "erroneous in so far as prejudicial to the interests of the revenue" and therefore amenable to revision under section 263. The PCIT's conclusion rested on the allegation that Annexures A 3 and A 23 were not verified by the AO at assessment and that those transactions pertained to F.Y. 2016 17 and escaped assessment. The Tribunal noted that the AO had recorded an office note stating that documents and financial statements found during survey were recorded in the regular books and were verified during assessment. It was also found on record that the impounded Annexures A 3 and A 23 came into the AO's possession after completion of the assessment for A.Y. 2017 18 and were subsequently considered and adjusted in the assessment for A.Y. 2018 19. The PCIT did not invoke Explanation 2 to section 263 expressly, nor did she place on record the specific part of the seized material or appraisal report demonstrating a concrete prejudicial impact or a total lack of inquiry by the AO; instead the order proceeded on appraisal report material and generalized assertions of non verification. The Tribunal applied the settled principles that (i) section 263 requires satisfaction of the twin conditions of an erroneous order and prejudice to revenue, (ii) mere difference of opinion or an inadequate inquiry is not sufficient - only a lack of inquiry or an order unsustainable in law attracts revision, and (iii) appraisal reports are internal guidance and do not bind the AO. On these grounds the Tribunal held that the PCIT's action was founded on surmise and conjecture, failed to demonstrate the requisite error prejudicial to revenue, and improperly substituted the Commissioner's view for the AO's co judicial discretion.

The PCIT's revision under section 263 was quashed; the assessment order for A.Y. 2017 18 was not held to be erroneous and prejudicial to revenue so as to warrant revision under section 263.

Distinction between lack of inquiry and inadequate inquiry - Application of mind by the Assessing Officer - Appraisal report and seized/impounded material as internal guidance - Appropriate remedy under Section 147/154 versus revision under Section 263 - Whether, on the facts, the proper course was to invoke some other statutory remedy instead of section 263 - HELD THAT: - The Tribunal observed that the PCIT herself used the term 'escaped' in her order, indicating that if income had escaped assessment the statutory remedy would ordinarily lie under sections 147/148; section 263 cannot be used to overlap or supplant other specific statutory provisions. The Tribunal reiterated that where documents or appraisal material merely indicate possible escapement, the proper course is to identify the legal basis and procedure to be followed rather than invoking section 263 on speculative grounds. Given that the AO later examined the impounded annexures in the subsequent year and adjusted amounts accordingly, and because the PCIT did not demonstrate a total absence of inquiry or an error of law unsustainable in law, the Tribunal concluded that section 263 was not the appropriate tool in the circumstances.

Section 263 was not the correct provision to be invoked on the material before the PCIT; the Commissioner's reliance on appraisal report material and absence of invocation of Explanation 2 did not justify revision.

Final Conclusion: The Principal Commissioner's order under section 263 setting aside the assessment for A.Y. 2017 18 is quashed. The Tribunal found no established error prejudicial to the revenue warranting revision under section 263, noting the AO's recorded verification, the subsequent consideration of the annexures in the next year's assessment, the absence of invocation of Explanation 2, and that mere suspicion or an appraisal report cannot supply the requisite basis for revision.

Explanation under section 68 - unexplained cash credit in respect of share capital/share premium - Burden of proof on the assessee to establish genuineness of share subscription with corroborative documentary evidence - Effect of non-compliance with summons under section 131 when corroborative evidence is on record - Deletion of addition where authorities fail to apply mind and rely solely on non-production despite documentary corroboration - Disallowance under section 14A read with Rule 8D limited by quantum of exempt income

Explanation under section 68 - unexplained cash credit in respect of share capital/share premium - Burden of proof on the assessee to establish genuineness of share subscription with corroborative documentary evidence - Effect of non-compliance with summons under section 131 when corroborative evidence is on record - Addition made under section 68 in respect of share capital/share premium amounting to Rs. 1,85,30,000/- was incorrect and was to be deleted - HELD THAT: - The assessee raised funds by issuance of equity shares to four subscribers and placed on record valuation report, subscriber confirmations, bank statements, audited financials, ITRs and assessment orders of the subscribers. The assessing officer and the CIT(A) recorded the addition primarily on the ground that summons under section 131 were not complied with and on perceived improbability of high share premium, but failed to make any independent enquiry or apply mind to the documentary material furnished. The Tribunal held that non-compliance with summons, when corroborative evidence establishing identity, creditworthiness and source of funds of subscribers is available on record, does not permit sustaining an addition under section 68. The tribunal noted that part of the amount had been accounted for in earlier assessment years and that the authorities below erred in treating the receipts as unexplained merely for non-production to summons without testing the documents furnished. The Tribunal relied upon earlier decisions in support of the principle that additions under section 68 cannot be sustained where the assessee discharges the onus by producing credible and verifiable material and the authorities do not undertake appropriate enquiry (CIT Vs. Orissa Corporation Pvt. Ltd. , CIT Vs. Orchid Industries Ltd. , Crystal Networks Pvt. Ltd. Vs. CIT , ITO Vs. M/s. Cygnus Developers India Pvt. Ltd. , Joy Consolidated Pvt. Ltd. Vs. ITO ). Applying these principles to the facts, the Tribunal set aside the orders of the authorities below and directed deletion of the addition. [Paras 5]

Addition under section 68 deleted and ground of appeal allowed; matter remitted to AO only for deletion in accordance with the order.

Disallowance under section 14A read with Rule 8D limited by quantum of exempt income - Addition/disallowance made under section 14A read with Rule 8D(2)(iii) cannot exceed the amount of exempt dividend income and was to be deleted - HELD THAT: - The assessee earned dividend income of a nominal amount during the year. Applying the principle that disallowance under section 14A cannot exceed the exempt income, as laid down by higher authority, the Tribunal found the disallowance excessive and not sustainable. In view of the cited ratio, the Tribunal set aside the disallowance and directed deletion. [Paras 6]

Disallowance under section 14A read with Rule 8D deleted and ground of appeal allowed.

Final Conclusion: The appeal is allowed in full: the addition under section 68 in respect of share capital/share premium is deleted and the disallowance under section 14A read with Rule 8D is deleted; the Assessing Officer is directed to give effect to this order.

Depreciation on goodwill / intangible assets - Scope of limited scrutiny / Computer-Assisted Scrutiny Selection (CASS) - Revision under Section 263 of the Income-tax Act - Assessment order erroneous and prejudicial to the interests of Revenue - Explanation 2(a) to Section 263

Scope of limited scrutiny / Computer-Assisted Scrutiny Selection (CASS) - Revision under Section 263 of the Income-tax Act - Assessment order erroneous and prejudicial to the interests of Revenue - Whether the Principal Commissioner of Income-tax could set aside the limited-scrutiny assessment under Section 263 for not specifically verifying the excess depreciation claimed when the Assessing Officer had examined and accepted the investment and asset valuation within the limited scrutiny scope. - HELD THAT: - The Tribunal found that the assessment was framed under limited scrutiny (CASS) and the Assessing Officer had examined and verified the investments and valuation of the intangible assets within that limited scope, as recorded in the assessment order. The Principal CIT invoked Explanation 2(a) to Section 263 to hold the assessment erroneous and prejudicial for lack of verification of excess depreciation, but the Tribunal held that the revisional power under Section 263 is confined to matters which were not appropriately considered and must respect the boundaries of the scrutiny selected. Relying on co-ordinate precedents and the CBDT instruction principles reflected in Mind Sports League (Bench-B) and subsequent High Court authority, the Tribunal held that the PCIT cannot invoke Section 263 to re-open or introduce issues that were either considered and accepted by the AO within limited scrutiny or were outside the reasons for which the case was picked up, unless conditions for expanding limited scrutiny were satisfied. Because the AO had conducted verification and accepted the records within the limited scrutiny, the two prerequisites for exercise of revisional jurisdiction-(i) the assessment being erroneous and (ii) prejudicial to the revenue-were not satisfied. [Paras 5, 7]

Revisional order under Section 263 quashed for exceeding the limited-scrutiny boundaries; appeal allowed on this ground.

Depreciation on goodwill / intangible assets - Revision under Section 263 of the Income-tax Act - Whether the claim of depreciation on intangible assets (goodwill) was correctly allowable and whether the revisional order could be sustained in light of binding precedent upholding such depreciation. - HELD THAT: - The Tribunal noted that the issue of allowability of depreciation on goodwill was squarely covered by the decision of the Hon'ble Supreme Court in Smifs Securities Limited, which recognised depreciation on goodwill as an allowable claim under the relevant provision. The Assessing Officer, after verification in the limited scrutiny, had accepted the claimed depreciation. The PCIT's revisional order did not establish that the assessment was erroneous or prejudicial in law having regard to the binding Apex Court authority. In absence of any contrary precedent or persuasive argument from Revenue, the Tribunal held that the revisional order could not be sustained to deny an allowance that had been examined and accepted by the AO and supported by Supreme Court precedent. [Paras 4, 7]

Claim of depreciation on goodwill upheld; revisional order set aside insofar as it sought to disallow or re-open the accepted depreciation.

Final Conclusion: The revisional order under Section 263 was set aside and the assessee's appeal allowed: the Assessing Officer had verified and accepted the investments and valuation of intangible assets within the limited-scrutiny framework, and the claimed depreciation on goodwill was covered by binding precedent, so the conditions for valid exercise of revisional jurisdiction were not met.

Treatment of collections as liabilities versus business income - treatment of work-in-progress (WIP) and recognition of development fees on completion - inapplicability of Accounting Standard-7 to a developer functioning as contractor - estimation of hypothetical profit on WIP by assessing officer - substitution of actual sale consideration by deemed/estimated value for shares - necessity of evidence to prove receipt of consideration exceeding disclosed bank realizations - precedential value of coordinate-bench decisions in identical facts

Treatment of collections as liabilities versus business income - treatment of work-in-progress (WIP) and recognition of development fees on completion - estimation of hypothetical profit on WIP by assessing officer - precedential value of coordinate-bench decisions in identical facts - Deletion of additions made by AO aggregating to business income of Rs. 9,42,29,188/- computed by treating alleged collections and WIP as assessee's income - HELD THAT: - The Tribunal accepted the assessee's factual and legal characterisation of its role as a developer rendering services to cooperative societies and collecting booking amounts on behalf of the societies, rather than owning the projects. The assessee consistently treated collections as liabilities and recognised development fees on completion; documentary evidence and ledger details supported that the booking amounts and project costs were transferred to societies on allotment. The AO's approach treated WIP and collections as the assessee's income and applied a hypothetical 8% profit on WIP invoking Accounting Standard-7, but the Tribunal found AS-7 inapplicable where the assessee is a developer (not a contractor/owner) and rejected the AO's estimation as purely hypothetical. Relying on coordinate-bench decisions in the assessee's own cases for subsequent years and earlier years where identical additions were deleted, the Tribunal held there was no infirmity in the CIT(A)'s deletion of the additions made by the AO. [Paras 2, 6, 9, 10, 11]

Addition of Rs. 9,42,29,188/- deleted; Revenue appeal on this ground dismissed.

Substitution of actual sale consideration by deemed/estimated value for shares - necessity of evidence to prove receipt of consideration exceeding disclosed bank realizations - precedential value of coordinate-bench decisions in identical facts - Deletion of addition of Short Term Capital Gain of Rs. 6,99,65,000/- computed by AO by imputing a deemed value to shares on the basis of project valuation - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the AO's replacement of the actual sale consideration with an estimated fair market value was impermissible in the absence of evidence proving receipt of consideration in excess of the amount reflected in the assessee's bank records. The AO had not produced the transfer agreement or other material to show that consideration over and above the disclosed sale proceeds was received. The addition rested on presumption and an imputed valuation exercise (deriving per-share deemed value from an estimated project surplus), which the Tribunal found unsustainable in law. Reliance was placed on coordinate-bench decisions in similar facts where such additions were deleted. [Paras 7, 10]

Addition of Rs. 6,99,65,000/- as short-term capital gain deleted; Revenue appeal on this ground dismissed.

Final Conclusion: Both grounds of Revenue appeal against the CIT(A)'s deletions-(i) additions treating alleged collections/WIP as business income and estimating profit thereon, and (ii) addition of deemed capital gains by imputing higher consideration for share transfer-are without merit and dismissed; the assessee's cross-objection supporting the CIT(A) is also dismissed.

Disallowance under doctrine of employer's late deposit of statutory employee contributions and its tax treatment - scheme of amalgamation approved by High Court is sacrosanct - depreciation on intangible assets acquired pursuant to a court sanctioned amalgamation - acknowledgement in balance sheet amounts to continuation of liability for limitation purposes

Disallowance under doctrine of employer's late deposit of statutory employee contributions and its tax treatment - application of the ratio of the Hon'ble Supreme Court in Checkmate Services - The addition made by the Assessing Officer on account of late deposit of statutory employee contributions was upheld. - HELD THAT: - The Tribunal followed the binding ratio of the Hon'ble Supreme Court in Checkmate Services and accepted the Department's submission. Applying that precedent, the Tribunal concluded that the deletion by the CIT(A) could not stand and the Assessing Officer's addition falling within the tax treatment of late deposit of employee contributions was restored. The Tribunal therefore allowed the Revenue's ground in respect of the disallowance made by the AO under the applicable provision authorising such addition. [Paras 7]

Allow the Revenue's ground and uphold the addition made by the AO in respect of late deposit of statutory employee contributions.

Acknowledgement in balance sheet amounts to continuation of liability for limitation purposes - treatment of sundry creditors shown in books and effect of subsequent write off - The deletion of the addition on account of sundry creditors was sustained and the Revenue's appeal in respect thereof was dismissed. - HELD THAT: - The Tribunal agreed with the reasoning of the CIT(A), relying on the line of authority that an entry in the balance sheet constitutes an acknowledgement under the Limitation Act and indicates that liability subsisted and was enforceable. The assessee had written off the credit balances in the subsequent year and had offered the amounts to tax in that year; accordingly, reversing the CIT(A)'s deletion would amount to impermissible double taxation. On the facts and in light of the authorities applied by the CIT(A), the Tribunal found no infirmity in deleting the addition made by the AO. [Paras 11]

Dismiss the Revenue's ground and uphold the CIT(A)'s deletion of the addition relating to sundry creditors.

Scheme of amalgamation approved by High Court is sacrosanct - depreciation on intangible assets acquired pursuant to a court sanctioned amalgamation - The deletion of the disallowance of depreciation claimed on the opening WDV of the intangible (patented) technology was sustained. - HELD THAT: - The Tribunal accepted the CIT(A)'s conclusion that the High Court had sanctioned the scheme of amalgamation and had approved the valuation of the patented technology, and that once such scheme and valuation are approved by the High Court they cannot be reopened by revenue authorities in subsequent assessment proceedings. The Tribunal also recorded that the asset's utility to the business was supported by turnover and profit data and that the earlier scrutiny assessment had accepted the valuation. Applying the authorities relied upon, the Tribunal held that the AO erred in rejecting the depreciation claim and directed deletion of the impugned disallowance. [Paras 18]

Dismiss the Revenue's ground and uphold the CIT(A)'s deletion of the disallowance of depreciation on the intangible asset acquired under the court approved amalgamation.

Final Conclusion: Although the Tribunal allowed the Revenue's challenge in respect of the late deposit of employee contributions, it sustained the CIT(A)'s deletions in respect of sundry creditors and depreciation on the court approved intangible; overall the appeal filed by the Revenue was dismissed.

Appeal under Section 15 of the Foreign Trade (Development and Regulation) Act, 1992 - adjudicating authority - appeal under Section 9 read with Section 15 - competent appellate authority - speaking order - quash and set aside - remand for fresh consideration

Appeal under Section 15 of the Foreign Trade (Development and Regulation) Act, 1992 - appeal under Section 9 read with Section 15 - adjudicating authority - Whether a letter rejecting an application for issuance of MEIS scrip is an appealable decision under Section 15 read with Section 9 of the 1992 Act. - HELD THAT: - Section 9(2) contemplates that the authority processing applications for issuance of licences, certificates or scrips makes inquiries and records reasons for refusal; Section 9(5) provides that an appeal against refusal shall lie in like manner as an appeal under Section 15. The Court held that the authority deciding an application under Section 9 need not be an "adjudicating authority" as narrowly defined in Section 2(a) read with Section 13 for penalties/confiscation, but for purposes of appeals under Section 15 read with Section 9 it must be treated as an authority whose decision is appealable. Alternatively, construing the definition's opening words "unless the context otherwise requires", the authority deciding the claim for scrip must be regarded as an adjudicating authority for the limited purpose of Section 15. Consequently, a rejection letter refusing grant of MEIS scrip is a decision/order appealable under Section 15 read with Section 9. [Paras 11, 12, 13, 14]

Rejection letter refusing MEIS scrip is an appealable decision under Section 15 read with Section 9 and the Appellate Authority erred in holding otherwise.

Competent appellate authority - appeal under Section 15 of the Foreign Trade (Development and Regulation) Act, 1992 - Whether the appeal filed before the Additional Director General of Foreign Trade (ADGFT) was maintainable as against the rejection by the Joint Director General of Foreign Trade (JDGFT). - HELD THAT: - Section 15(1)(b) permits appeals where the decision has been made by an officer subordinate to the Director General to be preferred to the Director General or to any officer superior to the adjudicating authority authorised by the Director General. The ADGFT is an authority superior to the JDGFT. Further, Notification No. 101 (RE-2013)/2009-2014 dated 5 December 2014 authorises the ADGFT to function as appellate authority against orders passed by the JDGFT. The Court therefore held that the appeal before ADGFT was filed with the correct appellate authority and the respondents' contention that the appeal ought to have been only before the Director General is contrary to the plain reading of Section 15(1)(b) and to the notification authorising ADGFT. [Paras 15, 16, 17, 18]

Appeal to the ADGFT against the JDGFT's rejection was maintainable and the ADGFT erred in rejecting the appeal on the ground that it was filed before an incorrect authority.

Speaking order - remand for fresh consideration - quash and set aside - Whether the JDGFT's rejection letter dated 9 December 2022 was a speaking order and whether the matter requires fresh consideration. - HELD THAT: - The rejection letter dismissed the petitioner's claim by referring to paragraph 3.06 of the Foreign Trade Policy and noting lack of co-relation, but did not specify the basis or relate the documents filed to the conclusion; it thereby failed to "speak" its mind in a manner required of a quasi-judicial order. The Court emphasised that an authority exercising quasi-judicial functions must record reasons and address the applicant's contentions and documents. In consequence, the Court quashed and set aside the rejection letter and directed remand of the application to respondent no.4 (JDGFT) for fresh consideration after giving the petitioner an opportunity of hearing and for passing a speaking order within the stipulated time. [Paras 19, 20, 21]

The rejection letter is non-speaking, quashed; the application is remanded to JDGFT for fresh consideration with opportunity of hearing and a speaking order.

Final Conclusion: The ADGFT's order dated 10 November 2023 rejecting the appeal as non-admissible is quashed and set aside; the JDGFT's rejection dated 9 December 2022 is quashed and the petitioner's application dated 27 January 2022 is remanded to respondent no.4 for fresh consideration after hearing and for a speaking order to be passed by 31 March 2025.

Reasonableness of time for administrative adjudication - inordinate delay as ground for quashing show-cause notices and orders - placement of matters in the call book and entitlement to notice/periodic review - statutory timetable for determination under Section 28 and analogous provisions - extension and cessation consequences under provisos to time-limits - operation and effect of validating/amending provisions and saving explanations

Reasonableness of time for administrative adjudication - inordinate delay as ground for quashing show-cause notices and orders - Whether adjudication proceedings and resulting orders can be quashed on account of inordinate delay and failure to decide within a reasonable period - HELD THAT: - The Court held that where no specific outer limitation is prescribed the authority must exercise its adjudicatory power within a reasonable period; statutory language allowing action "where it is possible to do so" confers only limited flexibility and does not license indefinite inaction. The respondents failed to demonstrate any insurmountable or legally cognisable constraint that genuinely prevented timely adjudication. Repeated delays, mechanical use of the call book, lack of periodic review and absence of meaningful explanation for long interregna (in many matters spanning years or decades) amounted to a breach of procedural fairness and justified quashing. The Court applied established principles that authorities must act without undue delay, having regard to prejudice caused by stale proceedings and public interest in finality, and rejected contentions that mere passage of time or voluminous records suffice to sustain stale adjudication. [Paras 85, 86, 87]

Adjudication proceedings and any impugned final orders in the batch were quashed for inordinate delay; delay alone (where unexplained by insurmountable factors) is a sufficient ground for annulment.

Placement of matters in the call book and entitlement to notice/periodic review - placement in call book not a carte blanche to defer adjudication - Whether the practice of placing show-cause notices in the call book, and Board instructions to do so, justified long pendency of adjudication without notifying affected parties or undertaking periodic review - HELD THAT: - The Court found the call-book practice, as applied in these matters, insufficient to justify prolonged inaction. Board instructions do not absolve adjudicating authorities of the statutory obligation to proceed with reasonable expedition; where cases were placed in the call book the field formations were obliged to inform the noticees and to conduct periodic reviews as required by the Board's own circulars. The record evidenced mechanical, repetitive transfers to and from the call book, lack of prior approval or periodic review, and failure to notify noticees - defects the Court treated as material and prejudicial, undermining any explanation based on the call-book regime. [Paras 80, 81, 82, 83, 84]

The call-book procedure (as applied) did not excuse the inordinate delay; absence of intimation and lack of periodic review rendered the deferment unjustifiable and contributed to quashing of the proceedings.

Statutory timetable for determination under Section 28 and analogous provisions - operation and effect of validating/amending provisions and saving explanations - extension and cessation consequences under provisos to time-limits - Whether intervening statutory amendments, explanatory or validating provisions, or the unsettled jurisprudence about identity of the "proper officer" justified continuation or revival of adjudication despite delay - HELD THAT: - The Court reviewed the legislative scheme (including Section 28, its provisos, sub section (9A), Explanation 2 and Explanation 4, the 2011 Validation/Amendment measures and subsequent legislative provisions) and the judicial developments (Sayed Ali, Mangali Impex, Canon I and Canon II). It concluded that those statutory amendments and explanations were intended to empower and validate adjudication in appropriate cases, but they do not operate as a licence for lethargy. The respondents had statutory mechanisms (extensions, reasons under sub section (9A), information to parties) available to them and subsequent validating legislation did not relieve them of the obligation to proceed reasonably. The Court found that the respondents did not establish that the delays were caused by insurmountable legal uncertainties or properly invoked statutory exceptions; legislative interventions therefore did not salvage the prolonged inaction. [Paras 64, 65, 68, 71, 72]

Statutory amendments and validating provisions do not justify unexplained prolonged inaction; they do not absolve the authorities of the duty to adjudicate within a reasonable time and therefore do not prevent quashing where delay is inordinate and unexplained.

Final Conclusion: The writ petitions are allowed. The Court interdicted continuation of the challenged adjudication proceedings and quashed the show-cause notices and any impugned final orders in this batch on the ground that the respondents failed to conclude adjudication within a reasonable time, and that the call book practice and intervening statutory or administrative developments did not justify the inordinate and unexplained delay.

Unlawful detention of goods - release of detained goods upon compliance with prior order - prohibition on withholding release pending payment of warehouse/ground rent - right to recover ground rent/warehouse charges by separate legal action - liberty to revive petition in case of non-compliance

Unlawful detention of goods - release of detained goods upon compliance with prior order - prohibition on withholding release pending payment of warehouse/ground rent - Respondents directed to release the detained gold chains to the petitioners within one week without insisting on payment of ground rent/warehouse charges. - HELD THAT: - The Court examined the earlier Division Bench directions and found that the continued detention of the goods was not in consonance with legal provisions, such that the Customs Department could not refuse release on the ground that warehouse charges must be paid first. The respondents conceded that if their right to recover ground rent/warehouse charges was preserved, they would effect release without further delay, and the Customs official on record undertook to ensure release within one week. On that basis the Court ordered immediate release within one week without insisting on payment of such charges prior to release. [Paras 7, 8, 10, 11, 12]

The gold chains shall be released to the petitioners within one week from the date of the order without insisting on payment of any ground rent or warehouse charges.

Right to recover ground rent/warehouse charges by separate legal action - liberty to revive petition in case of non-compliance - Respondents permitted to pursue separate lawful proceedings to recover ground rent/warehouse charges; petitioners may revive the petitions if release does not occur within the stipulated period. - HELD THAT: - While mandating immediate release, the Court expressly left open the respondents' legal right to recover any ground rent or warehouse charges by permissible separate action in accordance with law. The Court also provided that, should the goods not be released within the one week period, the petitioners would be at liberty to revive the petitions. [Paras 10, 13]

Respondents retain liberty to recover warehouse/ground rent by separate proceedings; petitioners may revive the present petitions if release is not effected within one week.

Final Conclusion: Petitions disposed directing release of the gold chains within one week without insisting on payment of warehouse/ground rent, while preserving the respondents' right to recover such charges separately and permitting revival of the petitions in case of non compliance.

Violation of principles of natural justice - Requirement of issuance of show cause notice and opportunity of hearing before revocation of licence/NOC - Requirement of reasoned administrative order - Quashing of administrative order for non-compliance with natural justice - Liberty to decide show cause notice afresh - Claim for damages to be pursued by ordinary civil remedy

Violation of principles of natural justice - Requirement of issuance of show cause notice and opportunity of hearing before revocation of licence/NOC - Requirement of reasoned administrative order - Impugned revocation communication dated 16 January 2024 is untenable for non-compliance with principles of natural justice and for want of reasons. - HELD THAT: - The Court found that before issuing the revocation communication the respondents had not afforded the petitioner a show cause notice and an opportunity of hearing; the respondent was unable to produce any pre-existing show cause notice and the notice relied upon by respondent was dated after the revocation. Further, the revocation merely records a conclusion that the NOC was revoked for alleged violations of the Customs Act, 1962 and the rules thereunder, without stating the factual or legal basis constituting reasons. Such absence of pre-decisional hearing and absence of reasons renders the impugned action a breach of the principles of natural justice. On these grounds the Court concluded that the impugned communication suffers from legal infirmity and cannot stand. [Paras 5, 6, 7, 8]

Impugned order/communication dated 16 January 2024 quashed and set aside for breach of natural justice and for want of reasons.

Liberty to decide show cause notice afresh - Respondents permitted to proceed with the subsequently issued show cause notice dated 23 August 2024 and to decide it in accordance with law. - HELD THAT: - Having quashed the earlier revocation for procedural infirmity, the Court left open the respondents' right to proceed with the show cause notice that was in fact issued on 23 August 2024. The respondents are at liberty to consider and dispose of that notice following the applicable legal principles and after affording the petitioner appropriate opportunity of hearing and reasons in any consequent order. [Paras 9]

Respondents permitted to proceed with the show cause notice dated 23 August 2024 and dispose of it in accordance with law.

Claim for damages to be pursued by ordinary civil remedy - Petitioner's claim for damages/compensation was not adjudicated in writ proceedings and petitioner granted liberty to pursue such relief in a suit or other appropriate remedy. - HELD THAT: - The Court declined to entertain the claim for damages in the exercise of its writ jurisdiction in these proceedings. Recognising that claims for compensation for loss of business arising from the revocation may require separate consideration, the Court granted the petitioner liberty to institute a suit or seek other suitable remedies, keeping all contentions open for such proceedings. [Paras 10]

Prayer for damages not considered; petitioner granted liberty to pursue compensation by instituting a suit or other appropriate remedy.

Final Conclusion: The revocation communication dated 16 January 2024 is quashed and set aside for breach of natural justice and lack of reasons; respondents may proceed with the show cause notice dated 23 August 2024 and decide it in accordance with law; the petitioner's claim for damages was not adjudicated and may be pursued by ordinary civil remedy.

Right to be heard - natural justice - requirement of hearing under the Foreign Trade Policy - quashing for lack of hearing - remand for fresh hearing and reasoned decision - administrative decision-making on merits

Right to be heard - requirement of hearing under the Foreign Trade Policy - quashing for lack of hearing - remand for fresh hearing and reasoned decision - Impugned orders of the Policy Relaxation Committee dated 4 April 2024 were quashed for having been passed without affording the petitioners an opportunity of hearing; matters remitted to the PRC for fresh hearing and decision. - HELD THAT: - The PRC rejected the petitioners' applications for deletion/removal of actual user conditions without hearing them. Paragraph 2.59 of FTP, 2023 (substantively continued in paragraph 2.60 of the current FTP), contemplated a hearing before the PRC decided on relaxation requests. Because the petitioners were not heard, the impugned decisions dated 4 April 2024 were set aside. The petitions were restored to the PRC with directions that the PRC must hear the petitioners or their representatives, consider contentions on merits, and pass a reasoned order. The court expressly did not decide the merits of the applications and left all merits-contentions open for the PRC's determination. The petitioners were directed to comply with any procedural or form requirements within four weeks, and the PRC was directed to dispose of the applications as expeditiously as possible and, in any event, within three months, granting an opportunity of hearing and issuing a reasoned decision. [Paras 6, 8, 9, 10, 11]

Impugned orders quashed and set aside for failure to afford hearing; applications restored to PRC for fresh hearing and reasoned decision within three months, with petitioners to complete procedural formalities within four weeks.

Final Conclusion: The court allowed the petitions on the ground of breach of the right to be heard, set aside the PRC's orders dated 4 April 2024, and remitted the matters to the PRC for fresh hearing and a reasoned decision within the stipulated time, leaving merits open.

Pre-deposit requirement under Section 129E of the Customs Act - Doctrine of judicial review under Article 226 and limits to waiver of statutory pre-deposit - Binding effect of Supreme Court precedent on High Court's exercise of writ jurisdiction - Waiver of statutory pre-deposit only in rare and deserving cases

Pre-deposit requirement under Section 129E of the Customs Act - Doctrine of judicial review under Article 226 and limits to waiver of statutory pre-deposit - Binding effect of Supreme Court precedent on High Court's exercise of writ jurisdiction - Prayer for waiver of the statutory pre-deposit and restoration/admission of the appeal dismissed for non-deposit was refused. - HELD THAT: - The Court declined to entertain the petition seeking direction to the appellate authority to admit the appeal without the minimum pre-deposit mandated by Section 129E of the Customs Act. The High Court held that contentions on merits were not sufficient to justify relief from the statutory pre-deposit requirement and observed that it was unnecessary to decide the merits. Reliance was placed on the Supreme Court's decision in Kotak Mahindra, which precludes a High Court in exercise of Article 226 jurisdiction from directing admission of an appeal in contravention of a mandatory statutory pre-deposit. A coordinate-bench decision of this Court (Manjit Singh) denying waiver of the minimum pre-deposit was noted as considering similar contentions. The Court observed that decisions of the Delhi High Court cited by petitioners did not consider Kotak Mahindra, and that the limited class of 'rare and deserving cases' permitting waiver was not made out here. The petitioners' prior writ proceedings, wherein it was recorded that statutory pre-deposit requirements must be satisfied, were also noted as making the present relief impermissible. For these reasons the Court dismissed the petition without granting waiver of the pre-deposit or restoring the appeal. [Paras 7, 8, 9, 11, 12]

Petition dismissed; no waiver of the statutory pre-deposit under Section 129E granted and no direction to admit or restore the appeal.

Final Conclusion: The writ petition seeking waiver of the statutory pre-deposit under Section 129E and restoration/admission of the appeal is dismissed; the High Court will not direct admission of an appeal contrary to the mandatory pre-deposit requirement in view of the Supreme Court's ruling that Article 226 cannot be used to override such statutory mandates.

Seizure memo under Section 110 of the Customs Act, 1962 - reasons to believe - panchnama cannot be read into seizure memo (CBEC Instruction No. 01/2017) - mandatory compliance of Section 110(1A),(1B),(1C) for specified goods/conveyance - alternative remedy under Section 128 of the Customs Act, 1962 - writ jurisdiction despite availability of alternative remedy where statutory provisions are not complied with or principles of natural justice are violated

Locus to challenge seizure - Second petitioner has locus to challenge the seizure memo along with the first petitioner. - HELD THAT: - The Court found that documentary evidence (Tax Invoice, transportation note and E-Way Bill) established transaction between the petitioners and that the omission in the supporting affidavit to expressly state that the affidavit was also for the second petitioner was an inadvertent, technical error. The Court therefore rejected the respondents' contention that the second petitioner lacked locus and held that the second petitioner may join in assailing the seizure memo. [Paras 17]

Second petitioner has locus to file the petition with the first petitioner.

Alternative remedy under Section 128 of the Customs Act, 1962 - writ jurisdiction despite alternative remedy where statutory provisions are not complied with or principles of natural justice are violated - Petitioners were not required to exhaust the alternative remedy under Section 128 before invoking writ jurisdiction. - HELD THAT: - Applying the settled exceptions to the rule of exhaustion of statutory remedies, the Court held that where a statutory provision (Section 110) has not been complied with so as to deny an effective remedy or where principles of natural justice are violated, the High Court may entertain a writ petition. The seizure memo inadequately recited reasons for seizure and the vehicle seizure engaged Notification No. 31/86 (conveyance), thereby raising statutory non-compliance rendering the alternative remedy ineffective. The Court relied on Supreme Court and coordinate-bench authorities recognising these exceptions and concluded relegation to appellate remedy was inappropriate. [Paras 18]

Petitioners need not be relegated to the remedy under Section 128; writ jurisdiction is rightly exercised.

Panchnama cannot be read into seizure memo (CBEC Instruction No. 01/2017) - seizure memo under Section 110 of the Customs Act, 1962 - Contents of the panchnama cannot be read into the seizure memo to supply reasons for seizure; the seizure memo must disclose minimal reasons. - HELD THAT: - Having regard to the Delhi High Court decision and the Board's Instruction No. 01/2017, the Court held that a panchnama is a statement by witnesses and cannot be treated as the proper officer's order under Section 110. The chronological record showed the seizure memo was prepared before the panchnama, and thus the panchnama cannot retrospectively furnish the reasons that the seizure memo itself was required to record. Consequently, the Seizing Officer was obliged to state minimal reasons in the seizure memo so as to enable an effective appeal. [Paras 19, 20]

Seizure memo cannot be supplemented by reading the panchnama into it; minimal reasons must appear in the seizure memo itself.

Reasons to believe - seizure memo under Section 110 of the Customs Act, 1962 - The seizure memo did not disclose adequate reasons to believe as required to enable effective appellate remedy. - HELD THAT: - The Court examined the seizure memo which merely listed statutory provisions alleged to be violated without stating the factual or material basis constituting the 'reasons to believe.' Merely quoting provisions was held insufficient; the Seizing Officer must record minimal reasons so that the aggrieved person can prefer an effective appeal. The inadequacy of reasons in the seizure memo contributed to the Court's conclusion that statutory compliance was lacking. [Paras 18]

Seizure memo fails to record adequate reasons to believe and is legally deficient.

Mandatory compliance of Section 110(1A),(1B),(1C) for specified goods/conveyance - seizure memo under Section 110 of the Customs Act, 1962 - Section 110(1A),(1B),(1C) procedures apply to the seized truck (conveyance) and were not complied with. - HELD THAT: - Notification No. 31/86 identifies 'Conveyance' as an item requiring the protections of sub-section (1A). The Court noted that the Seizing Officer had seized not only the goods but also the truck, and therefore compliance with Section 110(1A),(1B),(1C) was required in relation to the conveyance. The record showed those procedural safeguards were not observed, contributing to the Court's finding of statutory non-compliance. [Paras 21]

Statutory requirements of Section 110(1A),(1B),(1C) in relation to the seized conveyance were not complied with.

Final Conclusion: Impugned seizure memo dated 14.08.2020 was quashed for failure to record adequate reasons to believe and non-compliance with statutory procedural requirements (including Section 110(1A)-(1C) in relation to the conveyance); the writ petition is allowed and the matter was remitted for further proceedings consistent with this judgment.

Classification of goods - General Rules for the Interpretation of Import Tariff (GIR) - GIR 2(b) and GIR 3 - heading which provides the most specific description - Chapter 25 vs Chapter 28 distinction - exclusion of calcium oxide and hydroxide from heading 2522 - quicklime versus chemically defined calcium oxide - precedential effect of the Supreme Court decision in Viraj Profiles

Classification of goods - quicklime versus chemically defined calcium oxide - exclusion of calcium oxide and hydroxide from heading 2522 - GIR 2(b) and GIR 3 - Chapter 25 vs Chapter 28 distinction - Imported quicklime is classifiable under Customs Tariff Item 25221000 and not under Customs Tariff Item 28259090. - HELD THAT: - The Tribunal examined the competing scope of Chapter 25 (mineral products including lime) and Chapter 28 (inorganic chemicals including metal oxides) and the applicable General Rules for the Interpretation of the Import Tariff. Heading 2522 expressly covers "Quicklime, Slaked lime and Hydraulic lime" and excludes "Calcium oxide and hydroxide of heading 2825." That exclusion shows that mineral products remaining as quicklime fall within Chapter 25, whereas separate chemically defined compounds such as purified calcium oxide belong to Chapter 28. There was no factual basis of a mixture or composite good requiring application of GIR 2(b) or GIR 3; the imported goods are plain quicklime. Accordingly, the rule preferring the heading which provides the most specific description applies and the quicklime is properly classifiable under 25221000. The Tribunal also relied on consistent appellate decisions, including the Supreme Court's ruling in the Viraj Profiles matter, affirming that quicklime obtained by calcining limestone remains within Chapter 2522. For these reasons the Revenue's contention that calcination converted the product into a chemical (CTH 2825) was rejected and GIR 3 was held inapplicable. [Paras 19, 20, 21, 22, 23]

Classification under CTH 25221000 is correct; the impugned order sustaining classification under CTH 28259090 is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the imported "Quick Lime" is classifiable under Customs Tariff Item 25221000 rather than under 28259090, and set aside the impugned order with consequential reliefs as per law.

Violation of principles of natural justice - right to cross-examine witnesses in adjudication proceedings - relevancy of statements under Section 138B of the Customs Act - statements recorded under Section 108 as material evidence - remand for fresh adjudication after allowing cross-examination

Right to cross-examine witnesses in adjudication proceedings - violation of principles of natural justice - relevancy of statements under Section 138B of the Customs Act - statements recorded under Section 108 as material evidence - remand for fresh adjudication after allowing cross-examination - Whether the first appellate authority rightly set aside the order in original as having been passed in violation of principles of natural justice and properly directed remand for fresh adjudication after affording opportunity to cross examine Shri Anurag Garg. - HELD THAT: - The Tribunal considered the factual position that the adjudication proceeded in part on the basis of the statement of Shri Anurag Garg (recorded under Section 108) who denied the sale to the respondent, and that the respondent had specifically sought his cross examination which was not allowed by the adjudicating authority. Applying the statutory scheme embodied in Section 138B and the authorities discussed in the impugned order, the first appellate authority held that when a case is founded on statements recorded during investigation, fairness and the interests of justice require that those deponents, if relied upon, be made available for cross examination at adjudication so that the voluntariness, relevancy and truth of their statements can be tested. The Tribunal examined competing precedents relied upon by the revenue and the factual distinctions (including that the deponent was available and not a co noticee in the same footing as others) and concluded that the appellate authority's direction to set aside the O in O and remit the matter to the adjudicating authority for fresh consideration after granting the requested opportunity of cross examination was legally sustainable. The Tribunal found no error in the appellate authority's application of the principles of natural justice and its reliance on the relevancy framework under Section 138B where statements relied upon in adjudication have not been tested by cross examination, and therefore upheld the remand direction. [Paras 4, 5]

The first appellate authority correctly set aside the order in original for breach of natural justice and rightly remitted the matter for fresh adjudication after permitting cross examination of Shri Anurag Garg.

Final Conclusion: Revenue's appeal is dismissed; the order of the Commissioner (Appeals) setting aside the adjudicating authority's order and directing fresh adjudication after allowing the cross examination of the deponent is upheld and the matter is remitted for reconsideration accordingly.

Quasi-partnership - oppression and mismanagement - just and equitable winding up - legitimate expectation of minority shareholders - continuing cause of action and limitation - exit on fair valuation / buyout of shares - remedy under Sections 397/398 (Companies Act)

Quasi-partnership - just and equitable winding up - Whether the respondent company is a quasi-partnership and/or a just and equitable case for winding up exists - HELD THAT: - The petitioners alleged that the company evolved from an HUF and partnership and retained partnership characteristics (equal shareholding, family-only membership, participation in management) so as to qualify as a quasi-partnership. The Tribunal examined the incorporation records, shareholding history and conduct: the company had unequal shareholding since 1997, initial subscribers included a non-family professional, transfers to non-family entities occurred, and no cogent evidence of an enforceable family settlement or continuing equality of shareholding was shown. On the authorities, mere family origin or past partnership does not convert a company into a quasi-partnership absent sustained equality of shareholding, participation and deadlock; winding up on just and equitable grounds is a drastic remedy. Applying these principles to the facts, the petitioners failed to establish that the company was a quasi-partnership or that circumstances warranted winding up on just and equitable grounds. [Paras 92]

The company is not a quasi-partnership and there is no ground to wind up the company on just and equitable grounds.

Oppression and mismanagement - remedy under Sections 397/398 (Companies Act) - Whether the acts alleged by the petitioners constitute oppression and mismanagement warranting relief under Sections 397/398 - HELD THAT: - The Tribunal considered allegations of improper transfers, siphoning through related companies, denial of inspection, defective accounts and statutory non-compliance. It applied settled precedents that statutory non-compliance, isolated accounting irregularities or denial of information do not necessarily amount to oppression unless material prejudice to shareholder rights is shown. The petitioners failed to prove illegal acquisition of shares, misuse of company assets or a pattern of conduct amounting to oppression; many allegations were historical, unsupported by contemporaneous challenge, or suitable for other statutory/administrative remedies. Thus the bulk of the complaints did not establish oppression or mismanagement warranting the extraordinary reliefs sought. [Paras 98, 99]

Majority of the allegations do not constitute actionable oppression or mismanagement under Sections 397/398.

Continuing cause of action and limitation - Whether the petition is barred by limitation for historic acts complained of - HELD THAT: - The Tribunal reviewed the chronology and authorities on limitation. Many core complaints (alleged family settlement breach, share acquisitions in late 1980s, rights issue in 1997 and other events) gave rise to causes of action long before filing; petitioners had not challenged those acts within the applicable limitation period and produced no convincing evidence of a continuing cause of action. The Tribunal held that those historical acts are time-barred and cannot be agitated in this petition. [Paras 102, 104, 106]

Allegations relating to historical events are barred by limitation and cannot be entertained.

Exit on fair valuation / buyout of shares - equitable relief - Whether, despite failure to establish oppression/mismanagement, an equitable exit (buyout) should be granted - HELD THAT: - Although the petitioners did not strictly prove oppression, the Tribunal observed the family nature of the company, the long-standing intra-family disputes and that the petitioners' holdings are now a small minority. Relying on equitable precedents permitting relief to do substantial justice in exceptional cases, the Tribunal concluded that ordering a buyout on fair valuation would fairly and finally resolve the long-standing familial dispute. It therefore directed Respondents No.1-5 to purchase the petitioners' shares at fair value determined by an independent registered valuer to be agreed within one month, with recourse to the Tribunal to appoint a valuer if parties cannot agree. [Paras 110, 112, 113]

Petition partly allowed: Respondents No.1-5 to buy out petitioners' shareholding at fair value determined by an independent valuer; other reliefs declined.

Misjoinder / impleading of auditors and group companies - Maintainability of the petition as against Respondents No.6-9 (auditors and alleged group companies) - HELD THAT: - The Tribunal found that the petitioners failed to establish necessary grounds against the auditors and the two group companies, and that many allegations against them were not proper or necessary for adjudication under Sections 397/398. Consequently, the claims insofar as they related to Respondents No.6-9 were not sustained. [Paras 113]

Petition dismissed as against Respondents No.6-9; claims against them declined.

Final Conclusion: The petition is partly allowed: the Tribunal rejected the characterisation of the company as a quasi-partnership, found that most oppression/mismanagement allegations were not established and that many historic complaints are time-barred, declined all other reliefs sought, dismissed the petition as against Respondents No.6-9, and directed Respondents No.1-5 to buy out the petitioners' shareholding at a fair value to be fixed by an independent registered valuer (by consensus within one month or, failing agreement, upon Tribunal appointment). Parties to bear their own costs.

Private communications - opinion of regulator - writ petition against non-binding communications - application of other laws not barred under Section 37 of the SARFAESI Act - appeal under Section 15-T of the SEBI Act - relegation to alternate remedy - discretion of SAT to admit appeal beyond limitation

Private communications - opinion of regulator - writ petition against non-binding communications - application of other laws not barred under Section 37 of the SARFAESI Act - SEBI's impugned communications are private opinions and not orders; a writ petition simpliciter challenging such communications is not maintainable. - HELD THAT: - The impugned letters merely state SEBI's view on the interplay between the SARFAESI Act and other laws, including the application of Section 37 of the SARFAESI Act, and are styled by SEBI as private communications conveying its opinion. The Court accepted the respondent's position that such communications do not contain findings, directions or penalties characteristic of enforceable orders and therefore have no binding effect. Consequently, a writ petition seeking to test the correctness of a mere opinion contained in private letters will not be entertained; only when such an opinion is acted upon in an order would the opinion and the consequential order be amenable to challenge by appropriate proceedings. [Paras 4, 5, 6, 7]

No writ petition to challenge SEBI's private communications expressing opinion; such communications are not orders and are not directly justiciable.

Appeal under Section 15-T of the SEBI Act - relegation to alternate remedy - discretion of SAT to admit appeal beyond limitation - Petitioner is relegated to the alternate remedy of filing an appeal under Section 15-T of the SEBI Act against SEBI's order dated 11 January 2023; liberty granted to file the appeal within a limited period and SAT is requested to decide the appeal on merits without raising limitation. - HELD THAT: - Although the communications themselves are not amenable to writ challenge, SEBI has issued an order dated 11 January 2023 which incorporates or reiterates the opinion communicated earlier; that order is capable of being challenged by way of appeal under Section 15-T of the SEBI Act. In the interests of justice, the High Court granted the petitioner liberty to institute the statutory appeal within four weeks of upload of the order and recorded that the parties will not press the limitation point before the Securities Appellate Tribunal. The proviso to Section 15-T(3) (permitting SAT to admit appeals beyond forty-five days for sufficient cause) was noted and the Court directed that the SAT dispose of the appeal on merits without raising the limitation issue. [Paras 11, 13, 16, 17]

Liberty granted to file appeal under Section 15-T within four weeks; SAT requested to decide the appeal on merits and not to raise the limitation issue.

Final Conclusion: The petition is disposed by declining to entertain a writ against SEBI's private opinion-communications and by granting the petitioner liberty to pursue the statutory appeal under Section 15-T against SEBI's order dated 11 January 2023 within a limited time; all merits are left open for adjudication by the SAT and the parties shall not raise limitation in that forum.

Feasibility and viability of a resolution plan - commercial wisdom of the Committee of Creditors - roll-over of non-fund based facilities - harmonious construction of resolution plan and implementation agreements - limits on re-opening viability after plan approval - direction for release of NFB limits subject to project appraisal - precautions for averting frauds in issuing bank guarantees

Feasibility and viability of a resolution plan - commercial wisdom of the Committee of Creditors - limits on re-opening viability after plan approval - Whether lenders are entitled to reassess the viability/financial capacity of the corporate debtor as a pre-condition to release roll over NFB facilities contrary to the approved Resolution Plan and CoC decision. - HELD THAT: - The Tribunal held that feasibility and viability of the Resolution Plan and the capability of the Resolution Applicant are matters to be considered and determined by the CoC at the approval stage. Once the Plan is approved by the requisite majority, the commercial wisdom of the CoC in finding the Plan feasible and viable precludes stakeholders from re-opening the question of overall viability of the corporate debtor as a condition precedent to implement specific aspects of the Plan. The judgment refers to Section 30(4) and Regulation 38 and relies on settled authority that the CoC's commercial decision binds stakeholders. The RBI Master Circular and safeguards for issuing guarantees aimed at averting fraud do not permit lenders to convert project specific appraisal into a fresh, comprehensive re appraisal of the corporate debtor that effectively thwarts the Plan. Refusal to operationalise roll over NFB limits on the ground of re assessing the corporate debtor's overall viability would frustrate the Plan's purpose and impede the company's ability to perform contracts and generate cash flows necessary for repayments. [Paras 7, 19, 26]

Lenders are not entitled to re open a fresh viability assessment of the corporate debtor as a precondition to releasing roll over NFB facilities where the Resolution Plan, approved by the CoC, contemplates such roll over; the CoC's finding on feasibility and viability is conclusive for implementation.

Roll-over of non-fund based facilities - direction for release of NFB limits subject to project appraisal - harmonious construction of resolution plan and implementation agreements - Whether the Adjudicating Authority's direction in paragraph 7.9 - that lenders should release NFB limits at the first instance subject to project level appraisal and that the corporate debtor furnish documents for lenders' subsequent monitoring - was justified and within jurisdiction. - HELD THAT: - The Tribunal found that paragraph 7.9 struck a permissible balance between enforcing the approved Resolution Plan's roll over obligation and protecting lenders' right to evaluate specific projects. The clause in the Plan and the NFB Agreement contemplates project level appraisal and requires production of project details prior to issuance; the Adjudicating Authority's direction merely required initial release consistent with the Plan while preserving lenders' ability to monitor business performance and raise flags on deviations thereafter. The Tribunal observed that the direction did not rewrite commercial terms but gave effect to the Plan, noting that non release of NFB limits could prevent the company from executing contracts and generating the cash flows necessary under the Plan. The RBI safeguards aimed at fraud prevention were not a basis to withhold implementation where no allegation of fraud or prior BG/LC breach existed. On these bases the Adjudicating Authority's limited direction was upheld. [Paras 2, 7, 20, 24, 27]

The direction in paragraph 7.9 is valid and proportionate: lenders must release NFB limits in accordance with the approved Resolution Plan subject to project level appraisal, and may thereafter monitor the company's performance; the Adjudicating Authority did not exceed its jurisdiction.

Final Conclusion: Appeals dismissed; the Tribunal upheld the Adjudicating Authority's direction that roll over NFB limits be released in accordance with the approved Resolution Plan subject to project appraisal and ongoing lender monitoring, and held that lenders cannot re open a fresh viability assessment of the corporate debtor to frustrate implementation of the Plan.

Article 21 right to speedy trial - Section 45 PMLA bail conditions - Section 24 PMLA presumption and foundational facts - evidentiary value of co-accused statement under section 50 of the PMLA - hospitalisation during custody deemed judicial custody

Article 21 right to speedy trial - Section 45 PMLA bail conditions - Grant of bail to the petitioner in view of prolonged pre trial incarceration and absence of necessity for further custodial interrogation - HELD THAT: - The Court applied the established bail principles and recognised that prolonged incarceration before trial engages Article 21 and may warrant bail even in serious offences. The petitioner had been in custody for a considerable period, was last interrogated about eleven months prior to the order, and further custodial interrogation was unnecessary. The prosecution relies upon voluminous documentary and electronic material (180 witnesses and 438 documents) which are in the custody of the Enforcement Directorate and hence there is limited prospect of tampering. Delay in commencement and conclusion of trial, not wholly attributable to the petitioner, together with the constitutional right to speedy trial, led the Court to exercise its discretion under Section 45 of the PMLA and constitutional powers to grant bail despite the seriousness of allegations, subject to stringent conditions to allay risk of abscondence or witness tampering. [Paras 33, 34, 35, 37, 38]

Bail allowed and petitioner ordered released on furnishing bond and sureties subject to stringent conditions.

Evidentiary value of co-accused statement under section 50 of the PMLA - principle that prosecution cannot commence with co-accused statement - The admissibility and weight of statements of co-accused recorded under section 50 of the PMLA at the bail stage - HELD THAT: - The Court held that statements of co-accused recorded under section 50 are not substantive evidence for the purpose of deciding bail and cannot form the sole or conclusive basis for prosecution at the bail stage. The veracity and weight of such statements must be tested at trial; only broad probabilities can be considered at bail. Established authorities indicate that a conviction cannot safely be based solely on co-accused confession/statements and such statements may only be used at trial to lend assurance to other independent evidence after careful evaluation. [Paras 23, 24, 26]

Statements of co-accused under section 50 cannot be treated as conclusive evidence at the bail stage; their truth must be weighed at trial.

Section 24 PMLA presumption and foundational facts - prosecution must establish foundational facts before presumption shifts - Whether the prosecution had established the foundational facts under Section 24 of the PMLA so as to shift the onus to the accused - HELD THAT: - The Court reiterated the principle that before the statutory presumption under Section 24 operates, the prosecution must establish foundational facts: (i) commission of criminal activity relating to a scheduled offence, (ii) that the property in question was derived or obtained as a result of such activity, and (iii) the person is involved in processes connected with such property. The Court observed that the petitioner was not named in the FIR, charge sheet or supplementary charge sheets of the predicate offence and that whether the seized material discloses an unbroken money trail linking proceeds of crime to the petitioner is a factual question to be decided at trial. [Paras 19, 20, 21, 22, 28]

Foundational facts required by Section 24 were not treated as finally established for the purpose of denying bail; determination of the money trail and applicability of the presumption is left to trial.

Hospitalisation during custody deemed judicial custody - Effect of petitioner's prolonged hospitalisation during detention on custody calculation - HELD THAT: - The Court held that periods of hospitalisation during incarceration are to be regarded as judicial custody for purposes of considering the length of pre trial detention. Although the Enforcement Directorate emphasised that the petitioner was in formal judicial custody only for a part of the detention period, the Court treated hospitalisation during custody as part of the custodial period, thereby strengthening the conclusion that the petitioner had been detained for a substantial time. [Paras 36]

Hospitalisation during the period of detention is deemed judicial custody for purposes of assessing prolonged pre trial incarceration.

Conditions of bail to prevent tampering and abscondence - Imposition of bail conditions to safeguard investigation and trial - HELD THAT: - Given the Court's grant of bail, it imposed stringent conditions tailored to address the prosecution's concerns about witness intimidation, tampering with evidence and abscondence. Conditions included surrender of passport, territorial restriction without court permission, appearance on every trial date, prohibition on tampering or contacting witnesses, provision and maintenance of mobile number, and bond with sureties (half local). The trial Court was empowered to cancel bail on violation of conditions. [Paras 40, 41]

Bail granted subject to specified stringent conditions; violation permits cancellation of bail by trial Court.

Final Conclusion: The petition for bail is allowed; the petitioner is ordered released on bail on furnishing the prescribed bond and sureties and subject to stringent conditions (passport surrender, territorial restriction, attendance at trial, no tampering or contact with witnesses, provision of mobile number), with the trial Court empowered to cancel bail on breach. Observations are limited to the bail application and do not prejudice trial proceedings.

Twin conditions for bail under section 45 of the PMLA - presumption under section 24 of the PMLA - inadmissibility of custodial statement under section 50 of the PMLA - foundational facts for establishing proceeds of crime - flight risk and tampering-with-evidence considerations on bail - Article 21 protection against prolonged pre-trial incarceration

Twin conditions for bail under section 45 of the PMLA - Article 21 protection against prolonged pre-trial incarceration - Grant of bail to the petitioner in a PMLA prosecution subject to satisfaction of statutory conditions and imposition of stringent terms - HELD THAT: - The Court applied the statutory twin conditions enunciated under section 45 of the PMLA and the guidance of the Supreme Court in Vijay Madanlal Choudhary that bail determination under the Act requires assessment on broad probabilities as to mens rea and the likelihood of reoffending. Balancing the right to personal liberty under Article 21 with the statutory scheme, the Court found that continued detention was not required for custodial interrogation, that concerns about flight risk and tampering could be addressed by conditions, and accordingly ordered release on bail subject to specified stringent conditions including bond, surrender of passport and territorial restrictions. The Court emphasised that its observations were limited to the bail application and would not influence trial. [Paras 38, 39, 40, 41, 42]

Bail allowed subject to stringent conditions including bond, adequate sureties, surrender of passport, non-departure without leave, attendance at trial, prohibition on tampering or contacting witnesses and furnishing mobile number

Presumption under section 24 of the PMLA - foundational facts for establishing proceeds of crime - Whether the statutory presumption under section 24 is attracted on the materials before the Court - HELD THAT: - The Court reiterated that the presumption under section 24 arises only after the Enforcement Directorate establishes three foundational facts: commission of a scheduled offence, derivation of property from such activity, and the accused's involvement in processes connected with that property. The Court observed that the ED had not prima facie established these foundational facts to the requisite degree on the record before it - in particular, allegations of large cash payments relied upon largely on an excel sheet from a third person's laptop were not satisfactorily substantiated - and that it is for the ED to establish those facts at trial after which the onus would shift to the accused to rebut the presumption. [Paras 23, 24, 34, 35]

Foundational facts for attracting the presumption under section 24 were not demonstrated on the material before the Court for the purpose of denying bail

Inadmissibility of custodial statement under section 50 of the PMLA - Weight to be accorded to statements recorded under section 50 of the PMLA in the bail exercise - HELD THAT: - Relying on binding precedent, the Court held that statements recorded under section 50 while the maker is in custody pursuant to proceedings by the same investigating agency are inadmissible against the maker and, in any event, such statements cannot be treated as substantive evidence but may only lend corroboration to other material. The Court noted that much of the prosecution case rested on statements recorded under section 50 of the PMLA and that such statements, and statements of co-accused, require careful scrutiny at trial rather than being treated as conclusive in the bail proceedings. [Paras 27, 28, 29, 30]

Section 50 statements recorded in custody are of limited evidentiary value for the present bail determination and cannot be treated as conclusive against the petitioner

Flight risk and tampering-with-evidence considerations on bail - Whether the petitioner posed a real risk of flight or tampering with evidence/witnesses such as to preclude bail - HELD THAT: - The Court considered the ED's apprehensions that the petitioner could tamper with evidence or influence witnesses and that he was a flight risk. It observed that the core documentary evidence was already in custody of the ED and witnesses cited were official witnesses, reducing scope for tampering or influence. The Court held that concerns could be addressed by imposing stringent bail conditions (including surrender of passport and territorial limits) and therefore these apprehensions did not outweigh the petitioner's right to liberty in the present factual matrix. [Paras 35, 36]

Apprehensions regarding flight risk and tampering were not of such weight as to deny bail; they can be mitigated by stringent bail conditions

Final Conclusion: The High Court allowed the petition for pre-trial bail under the PMLA, applying the statutory twin conditions and relevant precedents, observed that the ED had not prima facie established foundational facts to attract the presumption under section 24, treated custodial section 50 statements as of limited evidentiary value for bail, and imposed stringent conditions to address flight and tampering concerns while clarifying that observations are confined to the bail order and will not influence trial.

Right to speedy trial - bail is the rule and jail is the exception - twin conditions under Section 45 of PMLA can be relaxed where trial is not likely to conclude within a reasonable time - existence of scheduled offence as condition precedent for proving proceeds of crime - advocate shall not communicate or negotiate on the subject matter of controversy with a party represented by an advocate

Right to speedy trial - twin conditions under Section 45 of PMLA can be relaxed where trial is not likely to conclude within a reasonable time - bail is the rule and jail is the exception - Whether the applicant should be released on bail in the PMLA proceedings - HELD THAT: - The Court found that the applicant has been in custody since 07.02.2024, that the predicate offence has not seen a charge sheet and the PMLA trial cannot practically proceed to conclusion until the scheduled/predicate proceedings are in a state to be tried together. In view of the prolonged incarceration, absence of need for custodial interrogation, the applicant's being on bail in the predicate offence and settled constitutional precepts that bail is the norm and prolonged pre-trial detention violates Article 21, the rigours of the statutory twin conditions under Section 45 of the PMLA can be relaxed. Reliance was placed on recent Supreme Court jurisprudence holding that where there is no likelihood of trial concluding within a reasonable time and detention has already consumed a substantial part of the prescribed sentence, constitutional courts may grant bail despite restrictive statutorily prescribed thresholds. Applying those principles to the facts, the Court concluded the case is fit for bail. [Paras 8, 11]

The bail application is allowed and the applicant is directed to be released on bail.

Bail is the rule and jail is the exception - Terms and conditions to be imposed while enlarging the applicant on bail - HELD THAT: - In granting bail, the Court imposed conditions intended to protect the integrity of the trial and ensure the applicant's attendance. Conditions include furnishing personal bond and sureties, prohibition on tampering with prosecution evidence, undertaking not to seek adjournments when witnesses are present, requirement to remain personally present on specified stages of trial (opening, framing of charge, recording of Section 313 statement), deposit of passport and not leaving the country without prior permission, and verification of sureties' identity and residence. The trial court was directed to endeavour expeditious disposal following the applicant's release. [Paras 9]

Bail subject to specified conditions as set out by the Court.

Advocate shall not communicate or negotiate on the subject matter of controversy with a party represented by an advocate - Competency of counsel to send e-mails directly to the Investigating Officer in a matter pending before the Court - HELD THAT: - The Court considered emails sent by counsel for the applicant directly to the Investigating Officer requesting compliance with an earlier court direction. Observing the Standards of Professional Conduct and Etiquette framed by the Bar Council of India (duty to opponent), and that the investigating agency was represented by counsel from the first day, the Court held that direct communication with the Investigating Officer in relation to sub judice proceedings was improper. The proper remedy for non-compliance with a court direction is to place the matter before the Court, not to pressurise or solicit action from the investigating officer by direct communication from opposing counsel. The conduct was disapproved. [Paras 18, 20]

The Court does not appreciate the emails sent directly to the Investigating Officer and upholds the objection thereto.

Final Conclusion: The High Court allowed the applicant Padam Singhee's bail application in the PMLA proceedings, subject to detailed conditions aimed at safeguarding the trial; the Court also disapproved counsel's direct emails to the Investigating Officer as improper conduct and directed adherence to professional standards.

Leave to prefer appeal against an order of acquittal - admissibility of electronic records / forensic audit report under Section 65-B of the Evidence Act - restricted right of the prosecution to appeal against acquittal - PMLA as a special enactment and code with distinct procedural features - economic offences as a class requiring appropriate judicial approach

Leave to prefer appeal against an order of acquittal - restricted right of the prosecution to appeal against acquittal - Grant of leave to the Enforcement Directorate to prefer an appeal against the Special Court's order of acquittal dated 20.09.2023 in C.C.No.13 of 2018. - HELD THAT: - The High Court examined whether the prosecution had made out sufficient grounds to obtain leave to appeal against an acquittal. While acknowledging the general principle that the prosecution's right of appeal against acquittal is restricted, the Court applied the established tests for entertaining an application for leave to appeal in criminal matters and economic offences. The Court found that the prosecution raised compelling grounds going to the core of the trial court's conclusion-notably that vital documentary evidence relied upon by the Enforcement Directorate had been treated as inadmissible-and that these grounds warranted deeper scrutiny by the appellate forum. Having considered the nature of the offence (a large scale economic offence) and the special features and objectives of the PMLA, the Court formed the view that leave should be granted so that the questions of admissibility and appreciation of material can be re-examined on appeal. [Paras 14, 15, 16, 17]

Leave is granted to the petitioner to file an appeal against the order of acquittal dated 20.09.2023 in C.C.No.13 of 2018.

Admissibility of electronic records / forensic audit report under Section 65-B of the Evidence Act - PMLA as a special enactment and code with distinct procedural features - economic offences as a class requiring appropriate judicial approach - Whether the Special Court's treatment of the Forensic Audit Report (Ex.P3) as inadmissible solely because it was not originally certified required reconsideration on appeal. - HELD THAT: - The High Court identified that the Trial Court excluded or considered Ex.P3 inadmissible on the ground that it was neither original nor accompanied by a certificate under Section 65-B, and that the report was thereafter certified by bank officials. Relying on principles laid down by the Supreme Court regarding certificates for electronic records, and having regard to the distinct purpose and procedures under PMLA and the special character of economic offences, the High Court held that the question of admissibility and the Trial Court's conclusion that the bank statements were wholly inadmissible are matters that merit further adjudication by the appellate court. The High Court did not decide the ultimate admissibility on merits but directed that these vital issues be considered afresh in the appeal. [Paras 12, 14, 16]

The Trial Court's exclusion of Ex.P3 and its treatment of the bank statements as wholly inadmissible is to be examined in the appeal; the question of admissibility is remitted for reconsideration on appeal rather than finally decided by this order granting leave.

Final Conclusion: The Criminal Original Petition is allowed; leave is granted to the Enforcement Directorate to file an appeal against the Special Court's judgment of acquittal dated 20.09.2023 in C.C.No.13 of 2018, and the Registry is directed to number and list the Criminal Appeal for admission so that the admissibility and appreciation of the forensic audit/bank records may be examined on appeal.

Summary order. Matter adjourned for two weeks at the request of learned counsel for the petitioners.

Exemption under Notification No. 6/2005-ST as amended - proviso excluding services rendered under the brand name or trade name of another person - registration of trade mark as determinative of entitlement to exemption - evidentiary primacy of certificate of registration issued by the Registrar of Trade Marks - inadmissibility of reliance on unauthorised third party website for trade mark ownership

Exemption under Notification No. 6/2005-ST as amended - proviso excluding services rendered under the brand name or trade name of another person - registration of trade mark as determinative of entitlement to exemption - evidentiary primacy of certificate of registration issued by the Registrar of Trade Marks - inadmissibility of reliance on unauthorised third party website for trade mark ownership - Entitlement of the appellants to exemption under the Notification in light of ownership/registration of the trade marks 'Texla' and 'Texlavision'. - HELD THAT: - The only disputed question was whether the appellants were excluded from the benefit of Notification No. 6/2005 ST by the proviso which disqualifies taxable services provided under the brand or trade name of another person. The Commissioner (Appeals) relied on information from a commercial website to conclude that the trade marks were registered only in the name of the co appellant, and therefore denied them the exemption. The appellants produced certificates of registration issued by the Registrar of Trade Marks showing that the trade marks Texla and Texlavision were registered in the names of all three brothers. The Tribunal accepted the certificates issued by the Registrar as determinative on the question of ownership of the trade marks and held that reliance on the third party website was incorrect. Because the trade marks were registered in the names of the appellants, they did not fall within the proviso's exclusion and were entitled to the exemption under the Notification. The appeals were allowed insofar as they pertained to the two appellants and consequential relief was granted. [Paras 11, 12]

Appeals allowed; appellants entitled to benefit of the exemption notification as the trade marks were registered in their names; impugned order set aside insofar as it pertains to these two appellants with consequential relief.

Final Conclusion: The Tribunal allowed the appeals of Shri Satnam Singh Oberoi and Shri Harvinder Singh Oberoi, holding that certificates of registration issued by the Registrar of Trade Marks establish their entitlement to the exemption under Notification No. 6/2005 ST as amended; reliance on a third party website was rejected and the impugned order was set aside insofar as it related to these two appellants.

Transfer of right to use - deemed sale - possession and effective control - service of supply of tangible goods without transfer of right of possession and effective control - declared service - VAT payment as indicium of sale

Transfer of right to use - deemed sale - possession and effective control - service of supply of tangible goods without transfer of right of possession and effective control - declared service - VAT payment as indicium of sale - Leasing of scaffolding items on which VAT was paid as deemed sale is not liable to service tax as either a declared service or as supply of tangible goods without transfer of possession and effective control. - HELD THAT: - The lease contracts transferred to the lessees the right to use and placed possession and effective control of the scaffolding materials with the lessees (clauses reproduced in the Order in Original). The lessees were required to insure the materials and to bear risk of theft or damage while the materials remained with them, and they were obligated to return the material to the appellant's workshop on expiry of the lease; the appellant had no direct or indirect control during the lease term (paras 4, 4.1). These features establish transfer of the right to use and possession/effective control in favour of the lessees, and the transactions were accordingly treated and taxed as deemed sale under Article 366(29A)(d), as reflected by VAT invoices (para 4.2). Where a transaction is a deemed sale on which VAT has been discharged, it does not qualify as a declared service under the post July 2012 provision nor as a service of supply of tangible goods without transfer of possession/effective control under the pre July 2012 provision (para 4.3). The Tribunal distinguished the State of Andhra Pradesh v Rashtriya Ispat Nigam Ltd decision relied upon by the Revenue on the factual ground that, unlike that case, here the lessee was free to use the equipment and the lease was not confined to the owner's project (para 4.5). The Tribunal relied on several precedents where payment of VAT on lease rentals and transfer of use/possession led to the conclusion that the transaction was a deemed sale and not taxable as service (para 4.3). The Revenue's contention that absence of change of ownership precludes transfer of right to use was held to be legally misconceived because deemed sale by definition involves no transfer of ownership while effecting transfer of right to use (para 4.4). [Paras 4, 5]

Impugned demand for service tax set aside; lease transactions treated as deemed sale on which VAT was paid and not exigible to service tax.

Final Conclusion: Appeal allowed; the levy of service tax on leasing of scaffolding items for the period 2012-13 to 2016-17 is set aside on the view that the transactions constituted deemed sale (transfer of right to use, possession and effective control) on which VAT was discharged.

Cenvat credit on service tax paid on reverse charge - refund under Section 142(3) of CGST Act, 2017 - inapplicability of Section 142(8) to Cenvat credit refund - payment under Section 73(3) of the Finance Act, 1994 does not bar Cenvat refund - Rule 9(1)(bb) of Cenvat Credit Rules, 2004 inapplicable to reverse charge payments

Cenvat credit on service tax paid on reverse charge - refund under Section 142(3) of CGST Act, 2017 - Entitlement to cash refund under Section 142(3) of the CGST Act, 2017 in respect of service tax paid on reverse charge for periods prior to 01.07.2017 - HELD THAT: - The Tribunal held that service tax paid after 01.07.2017 but relating to the period prior to 01.07.2017 is eligible as Cenvat credit for that pre-GST period, and because such credit could not be utilized after transition to GST, a specific remedy of cash refund is provided by Section 142(3) of the CGST Act, 2017. The adjudicating authority's rejection of the refund claim on the basis that the payment was made after 01.07.2017 was incorrect because eligibility is determined by the period to which the tax pertains, not by the date of payment. Consequently the refund claim under Section 142(3) is maintainable. [Paras 1, 2, 4, 5]

Refund under Section 142(3) is allowable for service tax paid on reverse charge pertaining to periods prior to 01.07.2017; impugned orders rejecting refund are set aside.

Inapplicability of Section 142(8) to Cenvat credit refund - Applicability of Section 142(8) of the CGST Act, 2017 to the appellant's refund claim - HELD THAT: - The Tribunal construed Section 142(8) as addressing the treatment of amounts paid or recoverable in respect of prior-law liabilities for the purpose of input tax credit under the CGST Act. It concluded that Section 142(8) speaks to input tax credit and not to Cenvat credit refunds under Section 142(3). Since the appellants did not claim input tax credit under the CGST Act for the service tax paid for pre-01.07.2017 periods, invocation of Section 142(8) to reject the refund claim was misplaced. [Paras 4]

Section 142(8) does not preclude a cash refund under Section 142(3) of Cenvat credit in respect of service tax relating to periods prior to 01.07.2017.

Payment under Section 73(3) of the Finance Act, 1994 does not bar Cenvat refund - Effect of payment under Section 73(3) Finance Act, 1994 on admissibility of Cenvat credit refund - HELD THAT: - The Tribunal noted that the appellants paid service tax under Section 73(3) and that the department accepted this proposal without invoking Section 73(4). Acceptance of payment under Section 73(3) indicates no adjudicated finding of suppression, fraud, collusion or willful misstatement. Consequently, mere admission of liability and payment under Section 73(3) does not affect admissibility of Cenvat credit or the right to seek refund under Section 142(3). The adjudicating authority's reliance on Section 73(3) to deny refund therefore exceeded the scope of the show cause notice and was unsustainable. [Paras 1, 2, 4]

Payment under Section 73(3) does not bar refund of Cenvat credit where no adjudicated finding of suppression, fraud or similar ingredients exists.

Rule 9(1)(bb) of Cenvat Credit Rules, 2004 inapplicable to reverse charge payments - Whether Rule 9(1)(bb) of the Cenvat Credit Rules, 2004 precludes the refund claimed where service tax was paid on reverse charge by the recipient - HELD THAT: - The Tribunal examined Rule 9(1)(bb) and observed that it refers to supplementary invoices, bills or challans issued by a provider of output service and disallows credit where additional tax became recoverable from the provider due to fraud, collusion or wilful misstatement. In the present case the service tax was paid by the appellant on reverse charge by its own bank challan, not on a document issued by the service provider. Further, there was no allegation or adjudication of suppression, fraud or collusion. Therefore Rule 9(1)(bb) does not apply to bar the Cenvat credit refund claimed by the recipient in respect of reverse charge payments. [Paras 2, 4]

Rule 9(1)(bb) is not attracted where service tax was paid by the recipient under reverse charge and no adjudicated fraud or suppression exists; it cannot be the basis to deny the refund.

Final Conclusion: The appeals are allowed: the Tribunal set aside the impugned orders and directed that the appellant is eligible for refund under Section 142(3) of the CGST Act, 2017 in respect of service tax paid on reverse charge for periods prior to 01.07.2017 (including April-2017 to June 2017), holding that Section 142(8), payment under Section 73(3) and Rule 9(1)(bb) do not bar the refund in the circumstances of this case.

Provision of service by an employee to the employer in the course of or in relation to his employment - employer-employee relationship - reverse charge mechanism - Business Auxiliary Service - management consultancy service - binding effect of CBEC Circular No.115/9/2009 ST

Provision of service by an employee to the employer in the course of or in relation to his employment - employer-employee relationship - Business Auxiliary Service - reverse charge mechanism - Commission paid to the Managing Director and Executive Director by the company is liable to service tax under reverse charge as per Sr. No.5A of Notification No.30/2012 ST as amended. - HELD THAT: - The Tribunal held that the payments described as 'commission' to the directors were made to whole time directors who are employees of the company and were treated as salary in the books and for Income tax purposes (TDS under Section 192). Consequently, such payments fall within the exclusion in the definition of service-provision of service by an employee to the employer in the course of employment-and are not taxable as Business Auxiliary Service under the reverse charge notifications. The Tribunal further relied on the clarification in CBEC Circular No.115/9/2009 ST that remunerations paid to Managing Directors/Directors for discharge of their duties as directors are not chargeable to service tax under Business Auxiliary or Management Consultancy categories, unless separate consultancy/advisory services are provided and compensated distinctly. Following consistent decisions of the Tribunal in the appellant's own earlier order and several precedents applying the same legal principle, the impugned demand under reverse charge was held unsustainable and was set aside. [Paras 4, 5, 6]

Demand of service tax under reverse charge on commission paid to the directors is not sustainable; impugned order set aside and appeal allowed.

Final Conclusion: Following the exclusion of employee provided services from the definition of 'service', the CBEC clarification and consistent Tribunal precedents, the commission/remuneration paid to the whole time directors was held not liable to service tax under the reverse charge notifications; the impugned order is set aside and the appeal allowed.

Extended period for service tax recovery - suppression and mala fide intention - reverse charge and revenue neutrality - EA-2000 audit and discoverability of transactions

Extended period for service tax recovery - suppression and mala fide intention - Sustainability of demand under extended period - HELD THAT: - The Tribunal examined whether the extended period could be invoked for the impugned demands. It was found that the departmental EA-2000 audits conducted in April 2009 and May 2010 had access to the books from which the disputed entries were taken, and the audit party could have raised objections at that stage. In these circumstances the adjudicating authority could not attribute suppression with mala fide intent to the appellant. Reliance was placed on the principle that where transactions were discoverable in departmental audit and no deliberate concealment is shown, the extended period is not invokable. The Tribunal therefore held that the demands based on the extended period are not sustainable. [Paras 4, 5]

The extended period invocation is not sustainable and the impugned order is set aside.

Reverse charge and revenue neutrality - Effect of reverse charge liability and availability of Cenvat credit on intention to evade - HELD THAT: - The Tribunal accepted that the appellant was liable to discharge service tax on certain foreign commission and advertisement expenses on reverse charge basis and, simultaneously, was eligible to take Cenvat credit of such tax. The Tribunal applied the established principle that where the transaction is revenue neutral (tax paid but creditable), mala fide intention to evade revenue cannot be attributed to the assessee. That consideration weighed against sustaining demand under extended period. [Paras 4]

Revenue neutrality arising from reverse charge liability and simultaneous Cenvat credit negates an inference of mala fide concealment.

EA-2000 audit and discoverability of transactions - Relevance of departmental EA-2000 audits to discoverability and time bar - HELD THAT: - The Tribunal noted that mandatory EA-2000 audits conducted by the department had extracted the data relevant to the present demand from the appellant's books. Since the information was available to the department during those audits, the transactions were discoverable by the revenue earlier. The Tribunal concluded that the existence of departmental audits and their failure to raise objections at that stage undermined the case for invoking the extended limitation period. [Paras 4]

Because the transactions were discoverable through EA-2000 audits, the extended period cannot be invoked to sustain the demand.

Final Conclusion: The appeal is allowed; the impugned order upholding demands under the extended period is set aside because departmental audits had revealable data and the transactions involved reverse-charge liability with Cenvat credit, negating any finding of mala fide suppression and rendering invocation of the extended period unsustainable.

Refund of service tax paid on specified services used for authorised operations of SEZ - extension of time for filing refund under clause 3(III)(e) of Notification No.12/2013 ST - time bar and discretionary extension - duty to give reasoned order and disclosure of mind when exercising discretion - breach of natural justice by adjudicating authority - appellate authority not to substitute discretion of original authority

Extension of time for filing refund under clause 3(III)(e) of Notification No.12/2013 ST - time bar and discretionary extension - Whether rejection of refund claims as time barred could stand without the Original Authority considering extension under clause 3(III)(e) of Notification No.12/2013 ST. - HELD THAT: - The Tribunal noted that clause 3(III)(e) expressly permits the Assistant/Deputy Commissioner to extend the one year period for filing refund claims. The Original Authority did not record any decision on the appellants' request for extension and the orders rejecting refund claims as time barred showed no exercise of the delegated discretion. A discretionary power so conferred must be exercised reasonably, transparently and with reasons; silence or failure to examine an extension request renders the order arbitrary. The appeals concerning rejection on the ground of time bar are therefore set aside and remanded to the Original Authority for fresh consideration of the appellants' request for extension in terms of clause 3(III)(e), with directions to decide after affording opportunity of hearing and to pass a reasoned order. [Paras 7, 10, 12]

Set aside the portion of impugned orders rejecting refunds as time barred and remanded to the Original Authority to consider extension under clause 3(III)(e) afresh, with a reasoned, time bound decision.

Refund of service tax paid on specified services used for authorised operations of SEZ - refund eligibility where payments made beyond the relevant quarter - Whether denial of refund on the ground that payments were made beyond the relevant quarter was sustainable. - HELD THAT: - The Tribunal recorded the view of the Commissioner (Appeals) that paragraph 3(III)(d) requires payment to the service provider but does not condition eligibility on payment having been made within the relevant quarter. The adjudicating authority had taken a contrary view without grounds in the show cause notice; accordingly that aspect had been remanded by the Commissioner (Appeals) for re examination. The Tribunal applies the same reasoning to the other periods and remands the issue to the Original Authority to re examine eligibility where payments to the service provider were made prior to filing the refund, in accordance with the earlier remand. [Paras 5, 12]

Remanded to the Original Authority to re examine eligibility on account of payments alleged to be made beyond the relevant quarter, in line with the remand recorded by the Commissioner (Appeals).

Breach of natural justice by adjudicating authority - duty to give reasoned order and disclosure of mind when exercising discretion - appellate authority not to substitute discretion of original authority - Whether orders passed without notice/personal hearing and without reasoned consideration require remand. - HELD THAT: - The Tribunal found that some Original Authority orders were passed without notice and personal hearing, constituting a breach of natural justice. Separately, where discretionary power to extend time exists, the authority must disclose its mind and give reasons; the appellate body should not substitute its discretion for that of the proper officer. In the interest of justice and to cure the procedural defects, the matters are remanded for fresh adjudication by the Original Authority, which must afford reasonable, time bound opportunity for oral and written submissions and pass speaking orders. [Paras 8, 11, 13]

Matters remanded to the Original Authority for fresh hearing and reasoned disposal, after affording natural justice and without the appellate authority substituting its discretion.

Final Conclusion: The Tribunal set aside the portions of the impugned orders rejecting refund claims as time barred and remanded the matters to the Original Authority to (i) consider extension of time under clause 3(III)(e) of Notification No.12/2013 ST afresh, (ii) re examine eligibility where payments were held to be beyond the relevant quarter, and (iii) remedy breaches of natural justice by affording opportunity of hearing and passing reasoned, time bound speaking orders; the Original Authority to complete the process within ninety days of receipt of this order.

Refund of service tax - services consumed in Special Economic Zone - Information Technology Software Services - Banking and Financial Services - Business Auxiliary Services - nexus between input services and authorized operations - claiming refund despite taxable procurement - approval by SEZ Committee and estoppel of Revenue

Refund of service tax - services consumed in Special Economic Zone - Information Technology Software Services - Banking and Financial Services - Business Auxiliary Services - claiming refund despite taxable procurement - nexus between input services and authorized operations - approval by SEZ Committee and estoppel of Revenue - Admissibility of refund of service tax paid on ITSS, Banking and Financial Services and Business Auxiliary Services wholly consumed in SEZ. - HELD THAT: - The Tribunal applied its earlier decisions, including its own order and the view taken in M/s. Tata Consultancy Services Ltd. v. CCE (LTU), that where services are utilized entirely within an SEZ the service recipient may have discharged tax at the time of procurement and is nevertheless entitled to claim a refund. The Tribunal further relied on the principle that once input services are specified and approved for authorized operations by the Committee which includes a Revenue representative, Revenue cannot subsequently deny nexus or usage in authorized operations to refuse refund. Having regard to these precedents and earlier orders in the appellant's own case where similar refund claims were allowed, the impugned order denying refund was found to be without merit.

Impugned order set aside and the appeal allowed; refund held admissible as per the Tribunal's precedents and reasoning.

Final Conclusion: The appeal is allowed; the Commissioner of (Appeals)'s order denying refund is set aside and refund of service tax paid on the said services wholly consumed in SEZ is held admissible in view of the Tribunal's precedents and the approval-based nexus reasoning.

Supply of Tangible Goods for Use Service - Job Work - Deemed Sale (Article 366(29A)) - Consideration for supply of goods for use

Supply of Tangible Goods for Use Service - Job Work - Consideration for supply of goods for use - Whether the transactions between the respondent and its principals constituted 'supply of tangible goods for use service' or were job work services for which no service tax on supply of tangible goods for use could be levied - HELD THAT: - The Tribunal examined the contractual rate schedule and the invoices which charged amounts for discrete production processes (moulding, tray forming, bristling, handle making) performed by the respondent on machines installed at the principals' premises. The machines, though placed in the clients' factories, were used by the respondent to carry out its own production activity and the consideration charged corresponds to job-work rates for production operations. There was no separate consideration shown or collected as lease rent or for transfer of right to use the machines. Consequently, the factual matrix did not establish a transaction of supplying tangible goods for use; the activity falls within job work performed on the respondent's machines in the client's premises. The Commissioner (Appeals)'s alternative conclusion treating the transaction as a deemed sale under Article 366(29A) was considered but the Tribunal found no basis to treat the arrangement as a deemed sale in the circumstances since the core characterisation on the record is of job work and there was no consideration for supply-for-use.

The transactions are job work and not 'supply of tangible goods for use service'; demand of service tax under that head is unsustainable and the revenue appeal is dismissed.

Final Conclusion: The Tribunal dismissed the Revenue appeal, holding that the activity was job work carried out by the respondent on its own machines at the clients' premises and not a taxable 'supply of tangible goods for use service'; the service-tax demand under that head was set aside.

Classification of online information and database access or retrieval (OIDAR) services - distinction between information technology infrastructure/services and OIDAR involving remote database access and data warehousing - liability of recipient under Section 66A read with Rule 2(1)(d)(iv) (reverse charge mechanism) - online data warehousing and remote access to application databases as taxable OIDAR activity - penalty dispensed with under Section 80 for bona fide/reasonable belief on interpretation of law

Classification of online information and database access or retrieval (OIDAR) services - distinction between information technology infrastructure/services and OIDAR involving remote database access and data warehousing - online data warehousing and remote access to application databases as taxable OIDAR activity - Services provided under the agreement between the appellant and its holding company fall within the definition of OIDAR and are not merely information technology services. - HELD THAT: - The Tribunal examined statutory definitions of OIDAR, data and information and the terms of the IT services agreement (hardware, application software, remote use of production and pilot environments, business support systems, data warehouse, electronic mail, intranet/Internet servers, global network management, PC software distribution, disaster recovery, technical support and access to product libraries). The agreement granted the appellant remote access to databases and application environments used for manufacturing, supply chain, finance, quality/laboratory systems and product libraries over a computer network. Those features constitute provision of information and database access/retrieval through a computer network and therefore squarely attract OIDAR, distinguishing the facts from cases confined to mere infrastructure or intra-group connectivity and IT-support services. The Tribunal agreed with the Commissioner that the services include access to worldwide data and retrieval essential for day-to-day operations and hence are classifiable as OIDAR services. [Paras 5]

Classification as OIDAR services upheld.

Liability of recipient under Section 66A read with Rule 2(1)(d)(iv) (reverse charge mechanism) - The appellant, as recipient of services provided from outside India, is liable to pay service tax on the said OIDAR services for the disputed periods. - HELD THAT: - The Tribunal relied on the statutory scheme introduced by insertion of Section 66A w.e.f. 18.04.2006 and the amended Rule 2(1)(d)(iv), and on authoritative decisions recognizing that after Section 66A taxable services received from abroad are taxable in the hands of Indian recipients. Applying that principle to the established classification of the services as OIDAR, the Tribunal held the appellant liable to service tax for the periods confirmed by the Commissioner (Appeals). Interest under the relevant provision was also upheld as directed by the Commissioner. [Paras 6]

Appellant liable to pay service tax (and interest) for 01.10.2006 to 28.02.2008 and March 2008 under reverse charge.

Penalty dispensed with under Section 80 for bona fide/reasonable belief on interpretation of law - Penalties imposed under Sections 76 and 77 are not sustainable and are set aside. - HELD THAT: - The Tribunal noted that the Commissioner (Appeals) had found no suppression of facts and had confined the demand to the normal period, and that there existed a reasonable/bonafide belief that the services constituted IT services as opposed to OIDAR (a matter on which differing views exist). Relying on earlier Tribunal reasoning that where demands arise from interpretational issues and the appellant would in any event be eligible for cenvat credit, invocation of penal provisions is inappropriate, the Tribunal concluded that penalties should be waived. [Paras 7, 8]

Penalties under Sections 76 and 77 set aside.

Final Conclusion: The appeals are partly allowed: the classification of the services as OIDAR and the appellant's liability to pay service tax with interest for 01.10.2006 to 28.02.2008 and March 2008 are upheld, but the penalties under Sections 76 and 77 are set aside.

Works contract services - treatment as work contract for service tax valuation - composition scheme and partial reverse charge mechanism - valuation of taxable services on basis of FORM 26AS and profit & loss records - extended period of demand invoked - penalty under Section 78 of the Finance Act recomputed on reassessment - remand for recomputation of demand and penalty

Treatment as work contract for service tax valuation - Findings in the impugned order in respect of services provided to M/s Ramky Infrastructure are upheld. - HELD THAT: - The appellant did not contest or press the findings recorded in para 4.4 of the impugned order concerning services rendered to M/s Ramky Infrastructure. In the absence of any challenge during the appeal, those findings are maintained by the Tribunal and accepted without further consideration. [Paras 4]

Findings regarding services to M/s Ramky Infrastructure are upheld.

Works contract services - composition scheme and partial reverse charge mechanism - valuation of taxable services on basis of FORM 26AS and profit & loss records - penalty under Section 78 of the Finance Act recomputed on reassessment - remand for recomputation of demand and penalty - Services provided to Dakshinanchal Vidyut Vitran Nigam Ltd (DVVNL) are to be treated as work contract services; demand and penalty require recomputation and remand to original authority. - HELD THAT: - The Tribunal concluded that, insofar as the services to DVVNL are concerned, the record indicates that goods were consumed and property in those goods passed to the service recipient; therefore the services qualify as work contract services. Applying settled law (as discussed in the judgment extracts relied upon), where a works contract involves transfer of property in goods the goods component can be separated for taxation purposes and the service provider may be eligible for benefits under the composition scheme and partial reverse charge as per Notification No.30/2012-ST. Consequently, the Tribunal directed that the demand be recomputed treating the DVVNL transactions as works contract services; the penalty under Section 78 was set aside for recomputation after the demand is recomputed. For this limited purpose the matter is remanded to the original adjudicating authority for reassessment and recomputation within three months. [Paras 4, 5]

Demand and penalty in respect of services to DVVNL remanded to the original authority for recomputation treating those services as work contract services and allowing composition/partial reverse charge benefits; penalty under Section 78 to be recomputed thereafter.

Final Conclusion: Appeal partially allowed: findings as to services to M/s Ramky Infrastructure are upheld; matters relating to services supplied to DVVNL are held to be works contract services and remanded to the original authority for recomputation of demand and recomputation of penalty under Section 78, to be decided within three months.

Cenvat credit reversal for wheeled out electricity - Proportionate reversal under Rule 6(3) of the Cenvat Credit Rules - Applicability of Maruti Suzuki ratio on captive generation and sale of electricity - Penalty not leviable where conflict of judicial views - Remand for verification of reversal amount

Cenvat credit reversal for wheeled out electricity - Applicability of Maruti Suzuki ratio on captive generation and sale of electricity - Entitlement to Cenvat credit for inputs/input services used in generation of electricity which is partly consumed captively and partly wheeled out. - HELD THAT: - The Tribunal applied the ratio of the Hon'ble Supreme Court in Maruti Suzuki Ltd. to hold that inputs/input services used in generation of electricity qualify as inputs to the extent the produced electricity is used within the factory for manufacture of final products, but not to the extent excess electricity is cleared outside the factory for a price. The Tribunal observed that where electricity is wheeled out and sold, the nexus between the generation process and manufacture is broken and Cenvat credit in respect of inputs attributable to such wheeled out electricity is not admissible. The Tribunal therefore upheld the principle that credit is allowable only for the proportion consumed captively and disallowable for the portion sold/wheeled out. [Paras 4]

Credit allowable for captive consumption; not allowable for electricity wheeled out and sold, in accordance with Maruti Suzuki.

Proportionate reversal under Rule 6(3) of the Cenvat Credit Rules - Penalty not leviable where conflict of judicial views - Effect of non-compliance with procedural requirements of Rule 6(3) and imposition of penalty for proportionate reversal not made strictly as per procedure. - HELD THAT: - The Tribunal held that failure to follow the procedural mechanism prescribed under Rule 6(3) does not ipso facto disentitle the assessee from the benefit of proportionate reversal where the substantive entitlement is otherwise governed by settled law. Reliance was placed on Tribunal and Supreme Court decisions (including Mercedes Benz and the Maruti Suzuki observations) that the option under Rule 6(3) cannot be imposed by the authorities and that in view of conflicting judicial views penalty should not be imposed. The Tribunal noted that the appellant had reversed an amount prior to issuance of the show cause notice and observed that had the reversal been correctly attributable in terms of Rule 6(3) and the Maruti Suzuki ratio, penalty would not have been sustainable. [Paras 4]

Non-compliance with Rule 6(3) procedure will not automatically deny proportionate reversal; penalty is not inexorably leviable where conflicting judicial views exist and reversal has been made.

Remand for verification of reversal amount - Whether the amount confirmed as demand corresponds to the credit already reversed by the appellant. - HELD THAT: - The Tribunal observed that the impugned order confirmed demand by applying 6% of the value of electricity wheeled out but did not record any finding on correctness of the amount actually reversed by the appellant. Consequently the Tribunal remanded the matter to the Original Authority for verification and ascertainment of the credit amount that required reversal. The Tribunal directed that if the amount found due on verification is within the amount already reversed by the appellant, the proceedings should be closed without further liabilities. [Paras 4]

Matter remanded to the Original Authority to verify quantification; if demand falls within already reversed amount, proceedings to be closed.

Final Conclusion: Appeal partly allowed; the Tribunal applied the Maruti Suzuki principle to restrict credit to captive consumption, held that procedural non-compliance under Rule 6(3) does not automatically defeat proportionate reversal and that penalty is not inexorably leviable in face of conflicting judicial views, and remanded the matter to the Original Authority for verification of the amount reversed and further action as indicated.

Time-barred demand - interest on tax demand - Cenvat credit reversal - rectification of order (Review/ROM)

Time-barred demand - interest on tax demand - Cenvat credit reversal - Liability to pay interest on the reversed Cenvat credit where the original demand is time-barred - HELD THAT: - The Tribunal had earlier held that the entirety of the demand was prima facie time-barred and, on that basis, set aside the penalty while noting that the appellant had reversed the proportionate Cenvat credit and had not contested that payment. The earlier order nonetheless directed payment of interest on the reversed credit. The Tribunal in the present ROM application found this to be an apparent error: where the demand is held to be time-barred, consequential interest on that demand is not payable. Applying that principle to the facts - namely that the demand was time-barred and the penalty was set aside on that ground - the direction for payment of interest on the reversed Cenvat credit was inconsistent with the finding of time-bar and therefore required rectification. The Tribunal accordingly modified the earlier order and set aside the demand for interest. [Paras 4]

Interest on the reversed Cenvat credit is not payable because the underlying demand is time-barred; the earlier order is rectified to that extent.

Rectification of order (Review/ROM) - time-barred demand - Permissibility of raising time-bar defence in a rectification/ROM application and rectification of an apparent error in the earlier order - HELD THAT: - The ROM application was entertained to correct an apparent error in the Tribunal's prior order. The Tribunal accepted the submission that a time-bar contention bearing directly on consequential liabilities can be considered for rectification where the earlier order contained an inconsistent direction (here, directing payment of interest despite holding the demand to be time-barred). Relying on the record and the reasoning in paragraph 4 of the earlier order, the Tribunal found a manifest inconsistency and allowed the ROM to the limited extent of removing the interest direction, thereby rectifying the prior order. [Paras 4]

ROM application allowed in part to rectify the apparent error by setting aside the order for payment of interest; the earlier order is modified accordingly.

Final Conclusion: The Tribunal allowed the ROM application in part and rectified its earlier order by setting aside the direction to pay interest on the reversed Cenvat credit because the underlying demand was held to be time-barred; the penalty remained set aside.

Interest on delayed refunds under Section 11BB - Computation of period for payment of interest - commencement after three months from date of receipt of refund application - Binding effect of appellate/tribunal remand directions on subsequent adjudication - Strict construction of fiscal legislation

Interest on delayed refunds under Section 11BB - Computation of period for payment of interest - commencement after three months from date of receipt of refund application - Ranbaxy Laboratories principle on commencement of interest - Entitlement to interest under Section 11BB and the period from which interest is payable on the refund claim filed on 30.04.2010. - HELD THAT: - The Tribunal applied the established interpretation that Section 11BB operates only after an order for refund under Section 11B has been made and that interest becomes payable from the expiry of three months from the date of receipt of the refund application. Relying on the Supreme Court's decision in Ranbaxy Laboratories, the court held that the statutory mandate is to compute interest from three months after the date of receipt of the original refund application; nothing in Section 11BB permits shifting the computation period to a later revised claim filed after remand where the proceedings themselves arose from the original application. Consequently, the appellant is entitled to interest from three months after 30.04.2010, i.e., from 30.07.2010, until payment of the refund. [Paras 4]

Appellant entitled to interest under Section 11BB calculated from 30.07.2010 (three months after filing the refund application dated 30.04.2010) until the date of refund.

Binding effect of appellate/tribunal remand directions on subsequent adjudication - Duty to follow earlier Tribunal directions on provisional assessment and consequential interest - Whether the adjudicating authority could confine interest to the period after the revised refund claim filed post-finalization instead of following earlier Tribunal directions. - HELD THAT: - The court noted that the present proceedings stemmed from the original refund claim filed on 30.04.2010 and that the matter was remanded by the Tribunal with directions (following an earlier Tribunal order) concerning finalisation of provisional assessment and grant of interest from specified dates. The adjudicating authority's approach of treating the revised claim filed after finalisation as the triggering event for computing delay was contrary to the Tribunal's directions. The CESTAT's earlier order and remand directions required interest to be computed from the date determined by reference to the original application; deviation from those directions rendered the impugned order unsustainable. [Paras 4]

Impugned order set aside for failing to follow the Tribunal's remand directions; interest computation must follow the Tribunal's earlier directions and commence from the date ascertained from the original refund application.

Final Conclusion: Appeal allowed. The impugned order is set aside and the appellant is held entitled to interest under Section 11BB from 30.07.2010 (three months after filing the refund application dated 30.04.2010) until payment of the refund.

Cancellation of lease for non-payment of premium - service of notice of resumption - locus standi of purported tenant / proxy litigation - exercise of writ jurisdiction under Article 226

Cancellation of lease for non-payment of premium - exercise of writ jurisdiction under Article 226 - Validity of cancellation of the allotment and correctness of the High Court's interference with the statutory authorities' orders. - HELD THAT: - The Court found that the allotment in favour of the allottees was cancelled by the Assistant Estate Office after issuance of show cause notice and after affording repeated opportunities to clear outstanding dues, and that the Chief Administrator had given the allottees a final opportunity to liquidate the liability which they did not avail. The revision filed before the Advisor was dismissed as time barred. Having regard to the statutory process followed and the allottees' failure to comply with the conditions of the auction sale, the High Court erred in setting aside the resumption/cancellation orders. The Supreme Court concluded that interference under Article 226 was not justified in the circumstances and set aside the impugned High Court order restoring the plot. [Paras 10, 11, 12]

The cancellation of the allotment for non payment was valid and the High Court's order restoring the plot is set aside; the appeals are allowed.

Locus standi of purported tenant / proxy litigation - service of notice of resumption - Whether M/s. Mohit Medicos had locus standi to challenge the resumption and whether want of service on the tenant vitiated the resumption proceedings. - HELD THAT: - The Court noted that the alleged tenant did not place any document on record to show tenancy from the original allottees. There was no material to establish that M/s. Mohit Medicos was the tenant, and the Court treated the proceedings instituted by them as proxy litigation on behalf of the defaulting allottees. In that factual matrix, there was no requirement to serve resumption notice on a person who had not established tenancy, and the High Court's conclusion that the tenant was not served was erroneous. [Paras 8, 9, 11, 12]

The writ petition filed by the alleged tenant lacked locus and could not vitiate the cancellation; the High Court's reliance on non service on the tenant was misplaced.

Final Conclusion: The High Court's order quashing the resumption/cancellation and restoring the allotment was set aside; the cancellation for non payment stood valid and the writ petitions filed by the allottees and the purported tenant were not maintainable as decided.