TaxTMI Updates e-Newsletter
Dec 17,2020

Natural justice - show cause notice requirements - opportunity of hearing - refund under inverted duty structure - quasi-judicial financial adjudication

Natural justice - show cause notice requirements - quasi-judicial financial adjudication - Whether the rejection of the petitioner's refund application and the appellate order are vitiated for want of a show cause notice meeting the requirements of natural justice. - HELD THAT: - The Court held that in quasi judicial proceedings concerning financial adjudication the authority must communicate specific reasons in the show cause notice so that the person proceeded against can make an effective defence. The show cause notice in this case did not disclose any ascertainable reason (stating only 'Other' and containing unclear remarks about turnover figures) and therefore fell short of the requirements of natural justice. Reliance on the principle that at the stage of a show cause notice the charges must be clearly spelt out so that the affected party can answer them was affirmed. Because the rejection order and the appellate order proceeded on the basis of that silent and indeterminate show cause notice, the orders were held to be vitiated by breach of natural justice.

The rejection order dated 07.04.2020 and the appellate order dated 14.09.2020 are set aside as violative of natural justice.

Opportunity of hearing - refund under inverted duty structure - show cause notice requirements - Relief to be granted and the course of reconsideration required from the authority on remand. - HELD THAT: - The Court directed that the respondent shall reconsider the refund application already filed in Form RFD 01 after supplying to the petitioner all requisite documents and specifying the grounds on which rejection is proposed, and after affording an adequate opportunity of hearing in accordance with law. The reconsideration is to be carried out afresh and expeditiously; the Court indicated a preferred timeframe of three months from service/filing of the copy of this order. The direction ensures that the petitioner is given the factual and legal basis to respond before any adverse conclusion is reached.

Matter remitted to respondent No.2 for fresh adjudication of the refund claim in Form RFD 01 with reasons and an opportunity of hearing, to be decided expeditiously, preferably within three months.

Final Conclusion: Writ petition allowed: the orders rejecting the refund claim and dismissing the appeal were quashed for breach of natural justice; the refund application is remitted for fresh decision after furnishing reasons and affording an opportunity of hearing.

Constitutional validity - Rule 117 of the Central Goods and Services Tax Rules, 2017 - requirement of online submission of Form GST TRAN-1 within a specified period - Section 140 of the Central Goods and Services Tax Act, 2017 - retrospective amendment by the Finance Act, 2020 with effect from 01.07.2017 - Article 19(1)(g) of the Constitution of India - prima facie view

Constitutional validity - Rule 117 of the Central Goods and Services Tax Rules, 2017 - Section 140 of the Central Goods and Services Tax Act, 2017 - retrospective amendment by the Finance Act, 2020 with effect from 01.07.2017 - requirement of online submission of Form GST TRAN-1 within a specified period - Article 19(1)(g) of the Constitution of India - prima facie view - Prima facie validity of Rule 117 insofar as it prescribes a time frame for online submission of Form GST TRAN-1 vis-a -vis Section 140 as amended by the Finance Act, 2020. - HELD THAT: - The Court recorded a prima facie finding that Rule 117 of the Central Goods and Services Tax Rules, 2017, which mandates online submission of Form GST TRAN-1 within a specified time, is in consonance with Section 140 of the Central Goods and Services Tax Act, 2017 as amended by the Finance Act, 2020 with retrospective effect from 01.07.2017. The Court noted that judgments relied upon by the petitioner (including decisions of the Delhi, Punjab & Haryana and Gujarat High Courts) did not consider the amended provisions of Section 140 and therefore, on the preliminary view taken, are not determinative of the present controversy. The Court invited production of contrary authorities by respondents for fuller consideration on the next date.

On a prima facie consideration, Rule 117 is not found to be ultra vires Section 140 as amended; the petition's challenge to Rule 117 is not accepted at the prima facie stage.

Constitutional validity - prima facie view - Adjournment for final disposal and opportunity to place relevant authorities. - HELD THAT: - The Court recorded that rival and supporting judgments would be placed by the parties for fuller consideration. The matter was directed to be listed as a fresh case for hearing on 16th December, 2020 so that the Court may examine the relevance of earlier decisions and the effect of the retrospective amendment in detail.

Matter adjourned and listed for fresh hearing on 16th December, 2020 with liberty to place relevant judgments.

Final Conclusion: The High Court expressed a prima facie view that Rule 117, insofar as it prescribes a time frame for online filing of Form GST TRAN-1, accords with the retrospectively amended Section 140 of the CGST Act, 2017; the petition was not finally adjudicated and the matter was listed for further hearing on 16th December, 2020 for fuller consideration after production of authorities.

Requirement to mention pendency of proceedings in attachment directions under Section 83 (attachment of bank accounts) - validity of attachment of bank accounts where GST registration has been cancelled and order records no amount due - judicial notice and interim procedural direction to file counter-affidavit

Requirement to mention pendency of proceedings in attachment directions under Section 83 (attachment of bank accounts) - validity of attachment of bank accounts where GST registration has been cancelled and order records no amount due - Whether the attachment direction issued to the bank without mentioning the pendency of proceedings as required under Section 83 and in the face of a cancellation order recording that no amount is due calls for examination. - HELD THAT: - The Court recorded the petitioner's grievance that the respondent's communication directing attachment of amounts in the petitioner's bank account did not mention any pendency of proceedings as envisaged by the statutory requirement under Section 83, and noted the petitioner's reliance on the cancellation order which states that no amount is due. The order does not adjudicate the merits of the contention but recognises that the procedural compliance and the apparent inconsistency with the cancellation order raise triable questions. Consequently the respondents were directed to file counter-affidavits addressing these contentions so that the matters can be examined on the merits at the next hearing.

Notice issued; respondents directed to file counter-affidavits within two weeks and rejoinder, if any, within a further two weeks; matter listed for further hearing.

Final Conclusion: Writ petition issued notice; interim directions limited to filing of counter-affidavits and listing for further consideration-no final adjudication on the validity of the attachment has been made.

Mandamus - access to GST portal - acceptance of revised GST returns - composition scheme filing - GSTR-4 - burden of proof

Access to GST portal - acceptance of revised GST returns - composition scheme filing - GSTR-4 - burden of proof - Whether the respondents should be directed to grant portal access enabling the petitioner to upload returns and to accept revised returns for the period 2017 to March 2018 - HELD THAT: - The petitioner sought a writ of mandamus directing respondents to enable portal access and to accept revised returns from the implementation of GST up to March 2018. The Court noted that the departmental communications established that the common portal permits filing of GSTR-4 but does not permit composition (as the petitioner contended), and that the petitioner had been informed of this position by letter dated 16.1.2020. The petitioner produced no proof that his GST portal had been blocked after 31.3.2018, no evidence of having opted for the portal, and no documentary or photographic material explaining why returns could not be uploaded or accepted. In the absence of such proof and explanation, the petitioner failed to discharge the burden of proof necessary to obtain the mandatory relief sought. The Court found the contention baseless and without merit and declined to direct the respondents to grant access or accept revised returns.

Petition dismissed for want of merit; no direction to respondents to enable portal access or accept revised returns for 2017 to March 2018.

Final Conclusion: The writ petition seeking mandamus to compel portal access and acceptance of revised returns for 2017 to March 2018 is dismissed for lack of proof that the portal was blocked or that the petitioner was entitled to composition filing on the portal; the departmental communication that only GSTR-4 could be filed was relied upon and communicated to the petitioner.

Regular bail - offence under Section 132(1)(i) of the CGST Act - issuance of invoices without supply of goods - wrongful availment or utilisation of input tax credit - pending investigation and risk of tampering with evidence

Regular bail - offence under Section 132(1)(i) of the CGST Act - issuance of invoices without supply of goods - wrongful availment or utilisation of input tax credit - pending investigation and risk of tampering with evidence - Application for regular bail by the petitioner is dismissed. - HELD THAT: - The petitioner, managing director of the Company, is accused of causing wrongful availment and utilisation of input tax credit by issuing and procuring GST invoices, e-way bills and passing on input tax credit without actual supply of goods, conduct which the respondent alleges constitutes offences under Clause (b) and (c) of Sub-Section (1) of Section 132 and punishable under Section 132(1)(i) of the CGST Act. The remand material and investigation disclose alleged absence of the registered office and factory premises, an admitted practice of generating invoices and related documents from a laptop and mobile, and recovery of an amount in the electronic credit ledger; forensic examination of the laptop and further tracing of the forward chain recipients remain outstanding. The GST-related operations for the period 01.07.2017 to 31.08.2020 are alleged to involve Rs. 10.89 crores, and provisional steps including attachment and blocking of ITC have been taken. Having regard to the seriousness of the allegations, the magnitude of the tax amount involved, ongoing investigation (including forensic examination and tracing of downstream beneficiaries), and the risk of interference with evidence, the Court was not inclined to release the petitioner on regular bail. [Paras 16, 17, 18, 19]

Criminal petition for grant of regular bail is dismissed.

Final Conclusion: The petition for regular bail is refused on the grounds of serious allegations of fraudulent issuance of invoices and wrongful availing/utilisation of ITC, the substantial tax amount implicated for the period 01.07.2017 to 31.08.2020, and ongoing investigation with a real risk of tampering; the criminal petition is dismissed.

Invalidity of reassessment proceeding - adjudication on merits after setting aside reassessment - remand to Assessing Officer for computation - finality of unchallenged Tribunal finding

Adjudication on merits after setting aside reassessment - invalidity of reassessment proceeding - remand to Assessing Officer for computation - finality of unchallenged Tribunal finding - Whether the Tribunal, having set aside the reassessment order as without jurisdiction, was justified in adjudicating the merits and remanding the matter to the Assessing Officer for computation under section 35(1)(iv). - HELD THAT: - The Court held that once the Tribunal set aside the reassessment order as being without jurisdiction (a finding not challenged by the revenue and thus having attained finality), the Tribunal ought not to have proceeded to decide the substantive issues on merits or remanded the matter for fresh computation. The unchallenged jurisdictional finding rendered subsequent adjudication on merits and the order of remand unnecessary and impermissible; accordingly the first substantial question of law was answered in favour of the assessee and against the revenue. [Paras 6]

The Tribunal was not justified in adjudicating the merits or remanding the matter after setting aside the reassessment; the first substantial question is answered for the assessee.

Final Conclusion: The appeal is disposed of by answering the first substantial question in favour of the assessee; in view of that answer the remaining substantial questions were not considered.

Notional rent - annual value of property - building under construction - occupancy certificate - allowability of regularization fee as business expenditure - regularization fee treated as penalty - perverse finding

Notional rent - annual value of property - building under construction - occupancy certificate - perverse finding - Determination of notional rent/annual value for a building alleged to be in part completion and let out during the Assessment Year 2010-11 - HELD THAT: - The Court held that, under the BBMP building bye laws (clause 5.7), a new building or part thereof cannot be legally occupied until an occupancy certificate is granted; consequently a building legally comes into existence only on issuance of the occupancy certificate. The Assessing Officer and the Tribunal proceeded to compute and tax notional rent for the Assessment Year despite (a) the assessee denying receipt of any rent during that year and (b) the assessee declaring rent for the subsequent Assessment Year. The Tribunal's acceptance of the revenue position was characterized as cursory and based on surmise and conjecture rather than on evidence. The Court concluded that the factual findings recorded by the revenue authorities and sustained by the Tribunal - to the effect that notional rent ought to be brought to tax for the year in question - were perverse and could not be sustained. [Paras 8, 9, 10]

The determination of notional rent/annual value for the Assessment Year 2010-11 is quashed and answered in favour of the assessee.

Regularization fee treated as penalty - allowability of regularization fee as business expenditure - Treatment and tax allowability of the fee paid towards regularization of additional construction as penalty or as allowable business expenditure - HELD THAT: - The Court observed that the second substantial question had been answered against the assessee by a coordinate Bench in a prior order dated 23.11.2020 in ITA No.428/2016 and by reference to the decision of the Bombay High Court in Sharan Hospitality (P) Ltd. v. Deputy Commissioner of Income-Tax. Having regard to that precedent, the present Bench answered the point against the assessee. The Court recorded that this answer is subject to any outcome of a special leave petition pending before the Supreme Court. [Paras 6, 9]

The contention that the regularization fee is allowable as business loss is rejected; the fee is treated as not allowable in the assessee's favour (answer against the assessee), subject to any decision in the pending special leave petition.

Final Conclusion: The appeal is allowed insofar as the Tribunal's order sustaining computation of notional rent for Assessment Year 2010-11 is quashed; the challenge to treatment of the regularization fee is answered against the assessee in view of existing precedent, subject to the outcome of a pending special leave petition.

Computation of book profit under Section 115JB - applicability of Section 115JB to insurance companies - reserve for unexpired risk / IBNR and IBNER provisions - disallowance under Section 14A read with Rule 18 - TDS on payments to surveyors and on commission - remand for fresh consideration

TDS on payments to surveyors and on commission - Substantial questions of law relating to tax deduction at source on payments to surveyors and on commission were decided against the Revenue following the Court's earlier decision in the assessee's own case. - HELD THAT: - The Court recorded that substantial questions of law Nos.2 and 4, pertaining to tax at source on payments to surveyors and tax at source on commission, had been decided against the Revenue by the Court in TCA No.341 of 2019 dated 14.6.2019 and, following that decision, those questions are decided against the Revenue in these appeals.

Questions relating to TDS on payments to surveyors and on commission are decided against the Revenue.

Issue does not arise / left open - Substantial question of law No.1 was recorded as not arising for consideration for Assessment Year 2013-2014 and left undecided. - HELD THAT: - On instructions, the learned Senior Standing Counsel for the Revenue conceded that the question framed as Substantial Question No.1 does not arise for the assessment year under consideration. The Court therefore left that question undecided and open.

Substantial Question No.1 does not arise for Assessment Year 2013-2014 and is left undecided.

Reserve for unexpired risk / IBNR and IBNER provisions - disallowance under Section 14A read with Rule 18 - addition for infra payments to car dealers - Deletion of addition relating to infra payments made to car dealers was upheld in favour of the assessee; the Assessing Officer's disallowance based on a non-final show-cause notice of the Service Tax Department was held to be unsustainable. - HELD THAT: - The Court affirmed the findings of the CIT(A) and the Tribunal that the Assessing Officer had relied on a prima facie show-cause notice of the Service Tax Department which had not reached finality. The CIT(A) found no conclusive evidence that services were not rendered, recorded that supporting documents were produced by the assessee, noted absence of adverse findings by C&AG or IRDAI, and observed that the Assessing Officer had not proved procedural violation or legal prohibition to invoke the Explanation to Section 37(1). The Court observed that the assessee's interest was protected by the CIT(A)'s remark that the Assessing Officer retained power to reopen assessment under Section 147 if conclusive adverse evidence emerges.

The addition disallowing infra payments to car dealers was deleted; the decision is against the Revenue, subject to the Assessing Officer's power to reopen the assessment on receipt of conclusive fresh evidence.

Computation of book profit under Section 115JB - applicability of Section 115JB to insurance companies - remand for fresh consideration - reserve for unexpired risk / IBNR and IBNER provisions - disallowance under Section 14A read with Rule 18 - Whether the Tribunal erred in holding that Section 115JB is not applicable to insurance companies and whether the assessing officer was right in computing, as part of book profit, additions for reserve for unexpired risk (including IBNR/IBNER) and disallowance under Section 14A read with Rule 18 - remanded to the Tribunal for fresh consideration for Assessment Year 2013-2014. - HELD THAT: - The Court found that the Tribunal erred by observing that Section 115JB was not applicable to insurance companies for the relevant period, despite the provision having been made applicable to insurance companies with effect from 01.04.2003. Because the Tribunal's conclusion on applicability was incorrect and the issue was therefore not decided on merits for Assessment Year 2013-2014, the Court set aside the Tribunal's observations insofar as they related to that year and remitted the matter to the Tribunal. The Tribunal is directed to decide, on merits and in accordance with law, (a) whether Section 115JB applies to the assessee for the assessment year and (b) whether the Assessing Officer was right in his computation of book profit, including any addition for reserve for unexpired risk (IBNR/IBNER) and any disallowance under Section 14A read with Rule 18.

Matter remitted to the Tribunal for fresh consideration on applicability of Section 115JB to the insurance company and on the correctness of the Assessing Officer's computation of book profit (including reserves for unexpired risk and Section 14A/Rule 18 disallowance) for Assessment Year 2013-2014; Substantial Question No.3 left open.

Final Conclusion: Appeals partly allowed: questions on TDS were decided against the Revenue and the deletion of addition relating to infra payments to car dealers was affirmed in favour of the assessee; the Tribunal's finding that Section 115JB does not apply to insurance companies was set aside and the matter remanded to the Tribunal for fresh adjudication on applicability of Section 115JB and on the computation of book profit (including reserves for unexpired risk and Section 14A/Rule 18 disallowance) for Assessment Year 2013-2014; Substantial Question No.1 does not arise and remains open.

Validity of penalty notice under Section 271(1)(c) - Concealment of particulars of income - Furnishing inaccurate particulars of income - Burden of proof and onus shift under Explanation to Section 271(1) - Penalty under Section 271(1)(c) - requirement of mens rea/animus

Validity of penalty notice under Section 271(1)(c) - The show cause notice dated 30.3.2016 which did not specify whether proceedings were for concealment of particulars or for furnishing inaccurate particulars is legally defective and vitiates the penalty proceedings. - HELD THAT: - The notice failed to specify which limb of Section 271(1)(c) was invoked. Earlier High Court decisions treating such non specific notices as bad in law were applied. Because the notice ambiguously alleged both limbs without specification, the defect is inherent and vitiates the entire penalty proceedings. The Revenue's submission that both limbs applied could not cure the absence of requisite specificity in the notice; accordingly the initiation of penalty proceedings is invalid. [Paras 13, 14, 15, 25, 39]

Notice held legally invalid; penalty proceedings under the defective notice vitiated.

Burden of proof and onus shift under Explanation to Section 271(1) - Concealment of particulars of income - Furnishing inaccurate particulars of income - Penalty under Section 271(1)(c) - requirement of mens rea/animus - On merits, imposition of penalty was unjustified because the assessee offered a cogent explanation and the Revenue failed to discharge the onus to prove concealment or furnishing of inaccurate particulars. - HELD THAT: - The assessee consistently explained the source of deposits (banking channels, sale proceeds, development cost) from the earliest stage. Applying the principle that once the assessee discharges the initial onus by offering a cogent explanation the burden shifts to the Revenue, the Court found that the Revenue did not prove conscious concealment or inaccurate particulars. Rejection of the assessee's explanation and an assessment addition does not, by itself, amount to furnishing inaccurate particulars; there must be material showing animus or deliberate concealment. Absent such proof, the penalty cannot be sustained. [Paras 31, 36, 37, 38, 39]

Penalty quashed on merits; Revenue failed to meet shifted burden and prove concealment or inaccurate particulars.

Validity of penalty notice under Section 271(1)(c) - The finding by the CIT(A) and the Tribunal that the assessee raised a new stand was incorrect; the assessee's stand was consistent from the assessment stage through appeals. - HELD THAT: - A review of the assessee's communications shows the same explanation was given in response to the scrutiny notice, the penalty notice reply, before the CIT(A) and before the Tribunal. Therefore, the conclusions that a new stand was taken were erroneous and cannot sustain the penalty proceedings. Distinctions with precedents relied upon by the Revenue were noted on the factual matrix. [Paras 31, 33]

CIT(A) and Tribunal erred in holding that a new stand was taken; that conclusion does not support upholding penalty.

Final Conclusion: The tax appeal is allowed: the show cause notice dated 30.3.2016 under Section 271(1)(c) is defective and vitiates the penalty proceedings; on merits the penalty is unsustainable as the assessee discharged the initial onus and the Revenue failed to prove concealment or furnishing of inaccurate particulars; the impugned order of the Tribunal is set aside.

Lower withholding certificate - effectivity of withholding tax certificate - nil rate of withholding tax - Section 197(1) of the Income Tax Act, 1961 - Article 8 of the India UK Double Taxation Avoidance Agreement - electronic Form 13 (TRACES) - TRACES system technical inadequacy / offline utility mode - interim relief made absolute

Lower withholding certificate - effectivity of withholding tax certificate - electronic Form 13 (TRACES) - TRACES system technical inadequacy / offline utility mode - Whether the withholding tax certificates issued to the petitioner should be made effective from 1st April, 2019 for FY 2019-20 despite being issued on later dates due to constraints in the TRACES filing process. - HELD THAT: - Petitioner, a U.K. resident airline claiming exemption under Article 8 of the India UK DTAA and seeking nil withholding under Section 197(1), filed applications on 18.03.2019 via TRACES but was initially able to insert only three TANs in the online form and uploaded the remaining list as annexure. Certificates for some TANs were issued on later dates after system upgrades. Although the Revenue's internal communication states Form 13 functionality was available and an offline utility existed for more than 50 TANs, the Court accepted that the petitioner was effectively incapacitated from making the requisite entries in the designated fields at the relevant time and that the Revenue ultimately issued certificates for the same TANs for which earlier-year certificates had been granted. Given the prejudice to the petitioner from higher TDS being deducted and the fact that applications were made within time, the Court found it just and equitable to treat the certificates as effective from the beginning of the financial year. The interim direction earlier granted was continued and made absolute pending disposal, and the respondents' technical objections did not outweigh the demonstrated hardship and subsequent issuance of certificates covering the same parties. [Paras 5, 6, 8, 9]

Withholding tax certificates issued to the petitioner are declared effective from 1st April, 2019 for FY 2019-20; the interim order is made absolute and the writ petition is allowed.

Final Conclusion: Writ petition allowed: certificates that were issued subsequently by the Revenue are declared effective from 1st April, 2019 for FY 2019-20 on the grounds of demonstrated incapacity to complete TRACES entries and to avoid hardship from higher TDS; interim relief made absolute.

Exemption under Section 10(23-C)(vi) - educational institution existing solely for educational purposes and not for purposes of profit - quash and remand - speaking order - principles of natural justice

Quash and remand - speaking order - The impugned order dated 26.09.2012 was quashed and set aside and the matter remitted to the competent authority for fresh consideration. - HELD THAT: - The High Court found that the authority below, in concluding that the petitioner was not an educational institution, did not have complete material-specifically material as to whether the petitioner generated profit by taking fees for conducting the examination. The parties agreed that the matter be reconsidered afresh. In view of these deficiencies, the Court quashed the impugned order and remanded the petitioner's application to the appropriate/competent authority for fresh consideration, directing that the authority pass a speaking order after affording an adequate hearing and full compliance with the principles of natural justice. The Court also provided procedural directions including a date for filing additional material, allowance for digital proceedings, and a request for expedition. [Paras 8, 9, 10]

Impugned order quashed; matter remitted to the competent authority for fresh consideration with directions to afford opportunity, receive additional material, apply principles of natural justice and pass a speaking order.

Exemption under Section 10(23-C)(vi) - educational institution existing solely for educational purposes and not for purposes of profit - principles of natural justice - Whether the petitioner is entitled to exemption under Section 10(23-C)(vi) was not finally decided on merits and was remanded for fresh consideration. - HELD THAT: - Although the primary controversy concerned the petitioner's entitlement to exemption under Section 10(23-C)(vi), the Court observed that the record before the authority was incomplete to adjudicate that question-particularly regarding profit generation from fees. The Court therefore left all issues open and remitted the matter to the nominated authority (Principal Commissioner of Income Tax (Exemption), Patna) to consider the petitioner's claim afresh on merits, after allowing the parties to place relevant material and after affording adequate opportunity of hearing. The Court emphasised that the authority should decide the matter by a speaking order and comply with natural justice, and expressed expectation of an expeditious decision preferably within the current financial year. [Paras 3, 8, 9, 10]

Entitlement under Section 10(23-C)(vi) remitted for fresh consideration; no substantive adjudication on merits by the Court.

Final Conclusion: The impugned order of 26.09.2012 is quashed and the petitioner's claim for exemption under Section 10(23-C)(vi) is remitted to the competent authority for fresh, expeditious consideration with full opportunity to place material, compliance with principles of natural justice and issuance of a speaking order.

Assumption of jurisdiction under section 148 - Procedure for reassessment after Section 148 notice - Furnishing reasons and disposal of objections before proceeding on merits - Premature issuance of Section 143(2) notice

Assumption of jurisdiction under section 148 - Furnishing reasons and disposal of objections before proceeding on merits - Premature issuance of Section 143(2) notice - Validity of notices under Section 143(2) issued prior to disposal of objections to the assumption of jurisdiction and the procedural obligation of the Assessing Officer after issuance of a notice under Section 148. - HELD THAT: - The Court applied the procedure articulated in GKN Driveshafts that upon issuance of a notice under Section 148 the assessee may file a return and seek reasons for issuance of the notice; the Assessing Officer must furnish reasons within a reasonable time and, on receipt of objections by the assessee challenging assumption of jurisdiction, the Assessing Officer is obliged to dispose of those objections by a speaking order before proceeding to assess on merits. In the present matters, for the four assessment years within the range 2013-14 to 2016-17 notices under Section 143(2) were issued prior to disposal of the petitioner's objections to assumption of jurisdiction, which the Court held to be contrary to the procedure in GKN and therefore premature and not tenable. The Court accordingly kept those Section 143(2) notices in abeyance and directed the Assessing Authority to hear and dispose of the objections within two weeks (by hearing the petitioner physically or virtually), after which, if jurisdiction is upheld adverse to the petitioner, reassessment proceedings may continue in accordance with law. The Court also noted that for AY 2017-18 objections remain undisposed and directed disposal in the same manner. The decision emphasises that issuance of a notice to proceed on merits is subject to first determining the question of assumption of jurisdiction. [Paras 5, 6, 7, 8, 9]

Notices under Section 143(2) issued before disposal of objections to the assumption of jurisdiction are premature; those notices are kept in abeyance and the Assessing Officer is directed to furnish reasons (if not already furnished), hear the petitioner and dispose of the objections within two weeks, after which reassessment may proceed if jurisdiction is upheld.

Final Conclusion: Writ petitions disposed by directing the Assessing Officer to dispose the petitioner's objections to assumption of jurisdiction within two weeks (hearing to be held on or about 7 December 2020 as directed); Section 143(2) notices issued prior to such disposal are kept in abeyance; no costs.

Fees for technical services - deduction of tax at source under Section 195 - assessee in default under Section 201(1) - interest under Section 201(1A) - secondment agreement and reimbursement of costs - provision of services of technical or other personnel - DTAA - service / permanent establishment

Fees for technical services - deduction of tax at source under Section 195 - provision of services of technical or other personnel - secondment agreement and reimbursement of costs - Whether the payments made by the assessee to Abbey National Plc, UK constituted 'fees for technical services' liable to deduction of tax at source under Section 195 or were reimbursements under a secondment arrangement not chargeable as FTS. - HELD THAT: - The court examined the terms of the secondment agreement and the nature of the services actually rendered. The arrangement constituted an independent contract of services whereby the seconded employees worked at and under the control, direction and supervision of the assessee and in accordance with the assessee's policies, rules and guidelines. The employees functioned as the assessee's employees, supervised activities of the local contractor and were, for practical purposes, to be treated as employed by the assessee. Consequently, the sums reimbursed by the assessee for expenses of the seconded employees did not amount to consideration for rendering managerial, technical or consultancy services by the non-resident so as to fall within the statutory definition of 'fees for technical services'. There is no legal obligation to deduct tax at source on payments which are reimbursements of costs incurred by a non-resident enterprise in such a secondment arrangement, and therefore the payments were not liable to deduction under Section 195. The court distinguished the decision relied on by the revenue (M/s. Centrica) as addressing service permanent establishment issues which are not raised in the present facts. [Paras 11]

Payments in question were reimbursements under a secondment agreement and not 'fees for technical services'; no obligation to deduct tax under Section 195.

Assessee in default under Section 201(1) - interest under Section 201(1A) - deduction of tax at source under Section 195 - Whether the assessee could be treated as an 'assessee in default' under Section 201(1) and be liable for interest under Section 201(1A) for not deducting tax on the payments to Abbey UK. - HELD THAT: - The Assessing Officer had held portions of the payments to be FTS and treated the assessee as an 'assessee in default', but the High Court, applying the factual finding that the payments were reimbursements under a secondment agreement (and therefore not FTS), concluded there was no obligation to deduct tax at source. Since there was no liability to withhold under Section 195, the foundation for declaring the assessee an 'assessee in default' under Section 201(1) and levying interest under Section 201(1A) was absent. The tribunal's conclusion (quashing the order levying interest and holding the assessee not to be in default) was affirmed. [Paras 11, 12]

Assessee cannot be held an 'assessee in default' under Section 201(1) nor be liable to interest under Section 201(1A) in respect of the disputed payments.

Final Conclusion: The substantial questions of law framed on admission are answered against the revenue and in favour of the assessee for Assessment year 2005-06; the appeal is dismissed.

Vivad Se Vishwas Scheme - declaration under Section 4 - disputed tax - immunity from initiation of proceedings and penalty - restoration of appeals without condonation of delay - expeditious processing of declaration

Vivad Se Vishwas Scheme - declaration under Section 4 - disputed tax - Assessee permitted to avail the Vivad Se Vishwas Scheme by filing a declaration in Form No.I and to have the declaration processed under the Act. - HELD THAT: - The Court noted the enactment of the Direct Tax Vivad Se Vishwas Act, 2020 and the statutory framework enabling a declarant to file a declaration under Section 4 in respect of disputed tax. In view of the assessee's stated intention to seek relief under the scheme, the Court directed the assessee to file Form No.I by the specified date and required the competent authority to process the declaration in accordance with the Act. The Court left the substantive substantial questions of law open pending the outcome of the declaration process. [Paras 3, 4, 5, 8, 9]

Assessee directed to file Form No.I by 21.12.2020 and the competent authority directed to process the declaration under the Act.

Restoration of appeals without condonation of delay - expeditious processing of declaration - Liberty granted to restore the appeals if the declaration outcome is adverse, with the Registry to entertain restoration without insisting on a condonation application and to place such petitions before the Division Bench. - HELD THAT: - Recognising that the assessee may seek to withdraw from the scheme if the declaration is not favourable, the Court granted liberty to restore the tax appeals. The Registry was directed to accept miscellaneous petitions for restoration and to place them before the Division Bench without requiring a separate condonation of delay application. The Court further directed that the declaration be processed expeditiously, preferably within six weeks of filing in proper form. [Paras 7, 8, 9]

Liberty to restore appeals granted; Registry to entertain restoration petitions without condonation of delay and place them before the Division Bench; competent authority to process the declaration preferably within six weeks.

Final Conclusion: The tax appeals are disposed of by permitting the assessee to file a declaration under the Vivad Se Vishwas Act, 2020 (Form No.I) by 21.12.2020 and directing expeditious processing of the declaration; the Court grants liberty to restore the appeals without imposing a requirement of condonation of delay and leaves the substantial questions of law open.

Waiver of loan as taxable income - benefit or perquisite under Section 28(iv) - remission of trading liability under Section 41(1) - burden to produce books and particulars - remand for fresh adjudication

Waiver of loan as taxable income - benefit or perquisite under Section 28(iv) - remission of trading liability under Section 41(1) - burden to produce books and particulars - Whether the principal amount of loan waived by the bank is chargeable to tax as income under Section 28(iv) or as deemed income under Section 41(1), and whether the matter can be finally adjudicated on the existing record. - HELD THAT: - The court observed that the Supreme Court decision in CIT v. Mahindra & Mahindra holds that waiver of a loan may not be taxable under Section 28(iv) or Section 41(1) where factual matrix shows the loan to be a capital borrowing and there was no prior deduction of a trading liability. However, the present cases lacked the requisite contemporaneous books, earlier-year particulars and bank records to permit application of that decision. The Assessing Officer and later authorities concluded waiver to be a receipt and taxable after the assessees failed to furnish the prior years' accounts and the bank did not provide details called for under Section 133(6). Given this factual vacuum, the High Court held it was inappropriate to apply Mahindra & Mahindra on the existing record and that the correct course is to remit the matter to the Assessing Officer. The Assessing Officer is directed to call for and consider the assessees' complete books of accounts for 2003-04 and prior years and the ICICI Bank's particulars regarding the loan, to give reasonable opportunity to the parties and to decide the tax consequences in accordance with law. The court further provided that if the assessees fail to produce the required particulars within one month, the Tribunal's order (which had confirmed taxability) shall stand confirmed. [Paras 31, 32]

The Tribunal's order is set aside and the matter is remitted to the Assessing Officer for fresh adjudication after production of the assessees' prior years' books and the bank's particulars; failure to furnish particulars within one month will result in confirmation of the Tribunal's order.

Final Conclusion: Appeals disposed of by setting aside the Tribunal order and remitting the issue of taxability of the waived loan to the Assessing Officer for fresh adjudication on production of the assessees' prior years' books and bank particulars; if assessees fail to furnish particulars within one month, the Tribunal's order shall stand confirmed.

Valuation of closing stock - transfer of business with stock - continuity of stock for valuation - mixed question of fact and law - remand for fresh consideration

Valuation of closing stock - transfer of business with stock - continuity of stock for valuation - mixed question of fact and law - Whether an addition for valuation of closing stock could be made where the assessee's business along with stock was transferred to a company on 08.01.2012, or whether valuation arises only when stock continues to be held by the assessee in the next year - HELD THAT: - The Tribunal did not address the specific contention that valuation of closing stock for addition arises only if the stock continues to be held by the assessee in the next year, whereas in the present case the assessee's business together with its assets and liabilities, including stock, was taken over by a company on 08.01.2012. The revenue does not dispute the factual position of takeover. The court treated the question as a mixed question of fact and law requiring fresh examination by the Assessing Officer, and therefore did not decide the substantive merits. Instead, the court set aside the Tribunal's order and remanded the matter to the Assessing Officer to verify and consider the applicability of a valuation addition in the specific factual context of transfer of business with stock, after affording the assessee an opportunity to be heard. [Paras 7, 9]

Remanded to the Assessing Officer for fresh consideration of whether a closing-stock valuation addition is permissible where the business and stock were transferred to a company on 08.01.2012; substantial question of law left open.

Final Conclusion: The appeal is allowed; the Tribunal's order is set aside and the matter is remanded to the Assessing Officer to examine, after due opportunity to the assessee, whether the addition for valuation of closing stock is warranted when the business and stock were transferred to a company on 08.01.2012; the substantial question of law is left open.

Reassessment for escaped income under Section 147 - requirement of 'reason to believe' supported by tangible material beyond records - Validity of reassessment where original proceedings culminated in an intimation under Section 143(1) - Proviso to Section 147 - extended six year limitation where escapement is due to failure to disclose fully and truly - Distinction between impermissible review/change of opinion and permissible reassessment - Reassessment within four years based on unexplained discrepancies in returns and accompanying financials

Reassessment for escaped income under Section 147 - requirement of 'reason to believe' supported by tangible material beyond records - Validity of reassessment where original proceedings culminated in an intimation under Section 143(1) - Proviso to Section 147 - extended six year limitation where escapement is due to failure to disclose fully and truly - Distinction between impermissible review/change of opinion and permissible reassessment - Validity of reopening assessment for AY 2000-2001 issued beyond four years where reasons relied solely on material already furnished with the return (intimation under Section 143(1)). - HELD THAT: - The proviso to Section 147 is attracted because the notice was issued beyond four years for AY 2000-2001; therefore the extended limitation applies only if escapement is due to failure to make a return or to disclose fully and truly all material facts. The Assessing Officer's reasons for reopening were based entirely on the notes and financial statements that accompanied the original return/intimation and no new material extraneous to the record was discovered. Where reopening is founded only on material already on file, it amounts to a disguised review or a mere change of opinion, which is impermissible. Consistent authorities require that the 'reason to believe' be founded on tangible material coming to the officer's notice beyond what was already available in the return and its annexures; absent such material, the assumption of jurisdiction for reopening beyond four years is invalid. Applying these principles to the facts, the escapement, if any, could not be attributed to nondisclosure by the assessee and the reopening based solely on existing documents was held unsustainable. [Paras 18, 19, 20, 24, 26]

Reopening for AY 2000-2001 (W.P.Nos.12300 of 2007 and 27987 of 2006) was held invalid and the writ petitions in those matters were allowed.

Reassessment within four years based on unexplained discrepancies in returns and accompanying financials - Reassessment for escaped income under Section 147 - requirement of 'reason to believe' supported by tangible material beyond records - Validity of reopening assessment for AY 2015-2016 initiated within four years where reassessment was based on alleged discrepancies in the computation and financial statements. - HELD THAT: - Proceedings initiated within four years are governed by the general power under Section 147 and do not engage the proviso's extended limitation. The reasons recorded identify specific discrepancies between the provision for bad and doubtful debts debited to profit and loss account and the larger deduction claimed under Section 36(1)(viia), as well as an asserted incorrect method of computing aggregate average rural advances under the Rules. These notations raised issues going beyond mere reiteration of material already accepted by CPC processing and amounted to relevant grounds for forming a 'reason to believe.' On the material before the officer and the explanation given in the reasons, there was no legal infirmity in initiating reassessment proceedings within the four year period. [Paras 14, 15, 16, 21]

Reopening for AY 2015-2016 (W.P.No.9353 of 2018) was held valid and the writ petition was dismissed; reassessment may proceed.

Final Conclusion: The Court allowed the writ petitions challenging the reopening for AY 2000-2001 on the ground that the reasons relied solely on material already on record and thus did not satisfy the 'reason to believe' standard for reopening beyond four years; conversely, the Court dismissed the petition relating to AY 2015-2016, holding the reopening within four years founded on identifiable discrepancies to be valid, and directed completion of reassessment in accordance with law.

Depreciation on non-compete fee - treatment of non-compete fee as intangible asset - application of Section 40(a)(ia) in relation to TDS provisions - rectification under Section 254(2) - binding effect of jurisdictional High Court precedent

Rectification under Section 254(2) - Typographical error in the Tribunal's order dated 30.08.2019 was to be rectified. - HELD THAT: - The Tribunal found a clerical/typographical error in paragraph 4 of its earlier order where the order incorrectly recorded that the CIT(A) dismissed the assessee's appeal. The correct factual position was that the CIT(A) had partly allowed the assessee's appeal. The Tribunal amended paragraph 4 to read that the CIT(A) partly allowed the appeal of the assessee. This modification was effected under the rectification power invoked in the Miscellaneous Application. [Paras 4]

Paragraph 4 of the order dated 30.08.2019 is modified to state that the CIT(A) partly allowed the appeal of the assessee.

Depreciation on non-compete fee - treatment of non-compete fee as intangible asset - binding effect of jurisdictional High Court precedent - application of Section 40(a)(ia) in relation to TDS provisions - Whether depreciation on the non-compete fee paid by the assessee is allowable. - HELD THAT: - The Tribunal considered the authorities cited by the assessee but distinguished the decision in Areva T & D India Ltd. (which dealt with specified intangible assets and goodwill acquired under a slump sale) as factually different because the present payment was a non-compete fee and the assessee itself treated it as capital in nature. The Tribunal observed that the jurisdictional High Court decision in Sharp Business System was binding and had held that non-compete fee did not confer any exclusive right to carry on the primary business activity; accordingly, the Tribunal followed the jurisdictional High Court's view. On that basis the Tribunal declined to allow depreciation on the claimed non-compete fee and dismissed that limb of the Miscellaneous Application seeking reconsideration of the substantive decision. [Paras 4, 5]

The claim for depreciation on the non-compete fee is not allowed; the Tribunal applies the jurisdictional High Court precedent and dismisses the substantive challenge in the Miscellaneous Application.

Final Conclusion: The Miscellaneous Application is partly allowed to correct a typographical error in paragraph 4 of the Tribunal's order; the substantive contention for allowing depreciation on the non-compete fee is rejected and that part of the application is dismissed.

Commercial activity versus charitable activity test - charitable purpose as defined in section 2(15) of the Income-tax Act - registration under section 12AA of the Income-tax Act - opportunity of hearing / audi alteram partem - receipt of fees and rent affecting charitable status

Opportunity of hearing / audi alteram partem - Whether the assessee was denied proper opportunity of hearing before rejection of registration under section 12AA. - HELD THAT: - The Tribunal examined the procedural record and the submissions. The assessee filed Form No.10A and responded to notices by producing the trust deed; the case was posted for hearing on 11.9.2019 and the authorised representative attended and discussed the matter. The assessee's contention that no reasonable opportunity was afforded was therefore negatived by the Tribunal on the basis of the record showing notices, filing of reply dated 3.9.2019 and attendance at the hearing. [Paras 8]

Assessee was afforded proper opportunity of hearing; the plea of denial of hearing is rejected.

Commercial activity versus charitable activity test - charitable purpose as defined in section 2(15) of the Income-tax Act - receipt of fees and rent affecting charitable status - registration under section 12AA of the Income-tax Act - Whether the activities of the trust qualify as charitable under section 2(15) and whether registration under section 12AA should be granted. - HELD THAT: - The Tribunal considered the nature of activities as recorded by the CIT(E): long-term and vocational trainings tailored to the needs of specific companies, simulator and skill-based trainings, correspondence evidencing payment for training by corporates, and material showing the trust let out part of its premises and received rent during FY 2018-19. The CIT(E) concluded these were conducted on a commercial/contract basis to meet the needs of particular companies, involved the collection of fees, and included arrangements that favoured a company linked to a trustee. Applying the definition of charitable purpose in section 2(15), the Tribunal found no charitable element in these commercial receipts and rental activity and agreed with the CIT(E)'s conclusion that the objects, as pursued, did not constitute charitable purposes attracting registration under section 12AA. [Paras 9, 11]

Activities held to be commercial and not charitable; application for registration under section 12AA rejected and the assessee's appeal dismissed.

Final Conclusion: The Tribunal dismisses the assessee's appeal: the assessee was given adequate opportunity of hearing, but its training activities and rental receipts were held to be commercial and not charitable under section 2(15), warranting rejection of registration under section 12AA (appeal dismissed).

International transaction of AMP expenditure - rectification under Section 154(1A) of the Income-tax Act - assessment void ab initio - transfer pricing adjustment - Bright Line Test - onus to prove existence of agreement for incurrence of AMP expenditure

Rectification under Section 154(1A) of the Income-tax Act - assessment void ab initio - transfer pricing adjustment - Validity of the TPO's subsequent order purporting to rectify the earlier order dated 10.11.2016 and the consequential validity of the assessment order for AY 2011-12. - HELD THAT: - The Tribunal had set aside the earlier assessment and remitted the question whether AMP expenses constituted an international transaction for fresh consideration, and on that basis the TPO passed an order dated 10.11.2016 giving effect to the Tribunal's directions by deleting the adjustment. Thereafter the TPO issued a show-cause/rectification notice and passed a later order purporting to amend the 10.11.2016 order. Section 154(1A) permits amendment of an order only in relation to matters other than those which have been considered and decided in appeal or revision. Once the appellate authority (the Tribunal) had considered and decided the question and the matter stood finally disposed, the Revenue could not, by invoking section 154, re-open or re-agitate that decided issue in the guise of rectification. The TPO's assumption of jurisdiction to rectify the earlier order in respect of the matter remitted and decided by the Tribunal was therefore impermissible. The subsequent rectification/variation of the order and the assessment predicated upon it were held to be without jurisdiction and void ab initio. Because this legal defect went to the root of the assessment order, the Tribunal allowed Ground No. 3 and set aside the assessment order without adjudicating the remaining merits of the transfer pricing adjustments. [Paras 8]

The TPO's rectification made under section 154 was invalid; the assessment order for AY 2011-12 is set aside as void ab initio and the appeal is allowed.

Final Conclusion: The transfer pricing rectification undertaken by the TPO was impermissible under section 154(1A) where the matter had been considered and decided on appeal; the consequent assessment for Assessment Year 2011-12 is void ab initio and is set aside, and the assessee's appeal is allowed.

Penalty adjudication without recorded findings - violation of principles of natural justice - invocation of Rule 26 of the Central Excise Rules, 2002 - invocation of Section 112(a) of the Customs Act, 1962 - failure to specify the sub clause of a penal provision - denial of cross examination of material witnesses - obligation to follow co ordinate bench directions

Penalty adjudication without recorded findings - Appellate Tribunal passed order without any findings and reasoning on penalties. - HELD THAT: - The High Court admitted the tax appeal on the substantial question whether the Appellate Tribunal was correct in passing an order disposing of penalty issues without recording findings or giving reasons. The court framed this question for adjudication and issued notice; no merits determination was made in the order under review.

Question admitted for consideration; notice issued.

Violation of principles of natural justice - Whether the Appellate Tribunal's order amounted to a violation of principles of natural justice by disregarding points urged before it without giving findings. - HELD THAT: - The Court treated the contention that the Appellate Tribunal disregarded points raised before it and failed to give findings as a substantial question of law fit for admission. The order records admission of that question and issuance of notice; no final adjudication on the alleged natural justice breach was undertaken at this stage.

Question admitted for consideration; notice issued.

Invocation of Rule 26 of the Central Excise Rules, 2002 - Whether the Appellate Tribunal was correct in invoking Rule 26 when the appellant had not dealt with, nor received, the goods at its factory. - HELD THAT: - The High Court formulated and admitted the question whether Rule 26 was properly invoked in the factual matrix where the appellant allegedly had not received the goods. The court confined itself to admitting the substantial question and issuing notice without deciding the legal correctness of invoking Rule 26.

Question admitted for consideration; notice issued.

Invocation of Section 112(a) of the Customs Act, 1962 - Whether the Appellate Authority was right in invoking Section 112(a) when the appellant was not concerned with the import of the goods in question. - HELD THAT: - The Court accepted this as a substantial question of law and admitted the appeal to consider whether Section 112(a) was rightly invoked against the appellant who, it is contended, was not connected with the import. The order does not resolve the question on merits but proceeds to issue notice.

Question admitted for consideration; notice issued.

Failure to specify the sub clause of a penal provision - Whether the Appellate Tribunal was correct in confirming penalty under Section 112 of the Customs Act and Rule 26 of the Central Excise Rules without specifying which sub clause was alleged to have been violated. - HELD THAT: - The High Court admitted the substantial question whether confirmation of penalty was flawed for failure to identify the particular sub clause breached, noting that the sub clauses implicated are different. The question was framed and notice issued; no adjudication on this legal contention was made in the order.

Question admitted for consideration; notice issued.

Denial of cross examination of material witnesses - Whether the Appellate Tribunal erred in not allowing cross examination of the panchas and other witnesses whose evidence formed the basis of the Tribunal's findings. - HELD THAT: - The Court regarded the refusal to permit cross examination of key witnesses as raising a substantial question of law and admitted the appeal to consider this grievance. The order confines itself to admission and issuance of notice without expressing any view on the merits.

Question admitted for consideration; notice issued.

Violation of principles of natural justice - denial of cross examination of material witnesses - Whether denial of cross examination of witnesses constituted a violation of the principles of natural justice. - HELD THAT: - The High Court admitted this overlapping question to examine whether procedural denial of cross examination amounted to a natural justice violation. The court did not decide the issue on the merits in the oral order but proceeded to issue notice for detailed adjudication.

Question admitted for consideration; notice issued.

Obligation to follow co ordinate bench directions - Whether the Appellate Tribunal was right in ignoring the direction of a co ordinate bench to refer matters to the Development Commissioner in cases of 100% EOU before taking action, and in accepting the Learned Commissioner's explanation for not following that direction. - HELD THAT: - The Court framed and admitted the question whether directions given by a co ordinate bench required adherence and whether the Tribunal erred in not following such direction in the appellant's case. The order admits the substantial question and issues notice; no determination on the correctness of the approach was made.

Question admitted for consideration; notice issued.

Violation of principles of natural justice - Whether the Appellate Tribunal's order amounted to a violation of natural justice by disregarding points urged before it without giving findings (reiterated). - HELD THAT: - The Court repeated admission of the question concerning alleged disregard of points urged and absence of findings, treating it as a substantial legal question for adjudication. The oral order records admission and issuance of notice but contains no merits adjudication.

Question admitted for consideration; notice issued.

Final Conclusion: The High Court admitted the tax appeal and framed the above substantial questions of law (A)-(I), issued notice to the respondent, and directed that no coercive steps for recovery shall be taken until the next listed date of hearing.

Confirmation of Customs/Central Excise duty forgone - Confiscation of goods - Denial of cross-examination - Violation of principles of natural justice - Compliance with earlier coordinate bench direction - Allegation of willful evasion of duty - Extension of demand to larger/earlier periods - Findings on penalties and interest - Admission of tax appeal on substantial questions of law - Interim stay of coercive recovery - Issue of notice to respondent

Admission of tax appeal on substantial questions of law - Admission of the tax appeal on specified substantial questions of law and issuance of notice to the respondent. - HELD THAT: - The High Court ordered the tax appeal under the Customs Act, 1962 and the Central Excise Act, 1944 to be admitted for hearing on a set of substantial questions of law enumerated in the order (concerning confirmation of duty forgone, confiscation, denial of cross-examination, natural justice, compliance with a coordinate bench direction, characterization as willful evasion, enlargement of demand period, and absence of findings on penalties and interest). The Court directed that notice be issued to the respondent and fixed a returnable date for the matter to be heard further.

The appeal was admitted on the listed substantial questions of law and notice was issued to the respondent.

Interim stay of coercive recovery - Interim restraint on coercive steps for recovery of the demand until the next date of hearing. - HELD THAT: - Pending further hearing on the admitted substantial questions of law, the Court ordered that no coercive steps shall be taken towards recovery of the demand until the next date of hearing fixed by the Court. A returnable date was fixed for 19.01.2021, and the interim direction operates until that date.

No coercive recovery steps to be taken until 19.01.2021.

Final Conclusion: The High Court admitted the tax appeal on the enumerated substantial questions of law, issued notice to the respondent returnable on 19.01.2021, and granted an interim stay restraining coercive recovery measures until that date.

Penalties - principles of natural justice - invocation of provisions of Section 112(a) and Section 112(b) of the Customs Act, 1962 - liability of a company director - denial of cross-examination - reference to Development Commissioner in case of 100% EOU - invocation of Rule 26 of the Central Excise Act, 2002 - stay of recovery

Penalties - principles of natural justice - Admission of the tax appeal and formulation of substantial question whether the Appellate Tribunal gave findings and reasoning on penalties and whether its order violated principles of natural justice by disregarding points without giving findings. - HELD THAT: - The High Court admitted the tax appeal under Section 130 of the Customs Act, 1962 and Section 35G of the Central Excise Act, 1944 and framed substantial questions of law for determination. Among the questions framed are whether the Appellate Tribunal passed an order without any findings and reasoning on the penalties and whether the Tribunal's order amounted to a violation of the principles of natural justice by disregarding points urged before it without giving findings. The court did not decide these questions on merits but directed that they be canvassed and adjudicated in the appeal.

Tax appeal admitted and the stated substantial questions regarding penalties and natural justice have been framed for adjudication.

Invocation of provisions of Section 112(a) and Section 112(b) of the Customs Act, 1962 - liability of a company director - Formulation of substantial questions whether the Appellate Tribunal was right in invoking Section 112(a) and Section 112(b) simultaneously and in invoking those provisions against the appellant as an individual director. - HELD THAT: - The High Court framed questions to examine the propriety of simultaneously invoking Section 112(a) and Section 112(b) of the Customs Act, 1962, and whether such provisions were properly invoked against the appellant in his personal capacity as a director of the company. These questions were admitted for hearing; no determination on the merits was recorded in the present order.

Questions on the invocation of Section 112(a) and 112(b), and on personal liability of the director, are framed for adjudication in the appeal.

Denial of cross-examination - principles of natural justice - Framing of substantial questions whether the Appellate Tribunal erred in not allowing cross-examination of key witnesses and whether such denial violated natural justice. - HELD THAT: - The court identified and admitted for consideration the appellant's contention that the Appellate Tribunal declined to allow cross-examination of the panchas and other witnesses whose evidence formed the basis of the Tribunal's findings, and whether that denial offended the principles of natural justice. These contentions were not decided on the present order but are to be argued in the appeal.

Issue as to refusal to permit cross-examination and its impact on fairness is framed for determination.

Reference to Development Commissioner in case of 100% EOU - Framing of a question whether the Appellate Tribunal ignored a coordinate bench's direction to refer matters to the Development Commissioner in relation to a 100% EOU and whether acceptance of the Learned Commissioner's explanation for non-compliance was proper. - HELD THAT: - The High Court framed for adjudication the appellant's contention that the Appellate Tribunal failed to follow a direction given by a coordinate bench to refer the matter to the Development Commissioner before taking action in respect of a 100% Export Oriented Unit, and that the Tribunal improperly accepted the departmental explanation for not following the earlier direction. The court admitted the appeal on this question without deciding it on merits.

Question regarding compliance with the coordinate bench's direction and the Tribunal's acceptance of departmental explanation is framed for hearing.

Invocation of Rule 26 of the Central Excise Act, 2002 - Framing of a question whether the Appellate Tribunal was right in invoking Rule 26 of the Central Excise Act, 2002. - HELD THAT: - The High Court included as a substantial question the correctness of the Appellate Tribunal's invocation of Rule 26 of the Central Excise Act, 2002. The matter was admitted for consideration in the appeal and remains undecided on the present order.

Question on the Tribunal's invocation of Rule 26 is framed for adjudication.

Stay of recovery - Interim relief on application: direction that no coercive steps shall be taken for recovery of demand until the next date of hearing. - HELD THAT: - In the connected civil application the court issued notice returnable on the listed date and granted interim protection by directing that no coercive measures shall be taken towards recovery of the demand until the next date of hearing. This is an interim procedural direction ancillary to admission of the appeal.

Interim restraint on coercive recovery measures granted until the next hearing date; notice issued in the civil application.

Final Conclusion: The High Court admitted the tax appeal under the cited statutes, framed multiple substantial questions of law (as listed) for adjudication, issued notice to the respondent and granted interim protection by restraining coercive recovery until the next date of hearing.

Anti-dumping investigation - disclosure statement - Designated Authority - Rule 16 of the Customs Tariff (Identification, Assessment and Collection of Duty or Additional Duty on dumped Articles and for Determination of Injury) Rules, 1995 - opportunity to present case / right to be heard

Disclosure statement - Designated Authority - opportunity to present case / right to be heard - Whether the alleged insufficiency of particulars in the disclosure statement dated 02.12.2020 justified judicial intervention or required further consideration by the Designated Authority. - HELD THAT: - The Court recorded that the disclosure statement dated 02.12.2020, issued under Rule 16 of the Customs Tariff Rules, 1995 in the on-going anti-dumping investigation concerning imports of pyrazolone from China, is said by the writ applicant to lack certain particulars necessary to effectively present its case. Rather than adjudicating the sufficiency of the disclosure on merits, the Court directed the writ applicant to appear before the Designated Authority at the meeting convened on 09.12.2020 and to specify the further information or details required. The Court instructed the Designated Authority to consider any such request and to endeavour to furnish the necessary details unless there is a legal impediment to doing so. The Court observed that prima facie the controversy did not call for serious judicial determination and could be resolved by the parties and the Authority through the process of hearing and clarification. The Court also noted the procedural timeline for the Authority's report and the Government's subsequent consideration, and adjourned the writ petition to 16.12.2020 for reporting of further developments.

Directed the writ applicant to appear before the Designated Authority on 09.12.2020 to identify deficiencies; directed the Designated Authority to consider and, if not legally impeded, furnish the required particulars; adjourned the matter for further reporting on 16.12.2020.

Final Conclusion: The Court did not decide the merits of the sufficiency of the disclosure statement; it directed the writ applicant to seek necessary particulars before the Designated Authority, directed the Authority to consider and supply the information if legally permissible, and adjourned the matter for further reporting and consideration on 16.12.2020.

Provisional release of seized goods - burden to prove foreign origin and smuggled character - perishability and delayed adjudication - non-notified goods under section 123 of the Customs Act - condition of cash security / bank guarantee for release

Provisional release of seized goods - burden to prove foreign origin and smuggled character - condition of cash security / bank guarantee for release - perishability and delayed adjudication - non-notified goods under section 123 of the Customs Act - Whether provisional release of seized betel nuts on condition of furnishing bond and 25% cash security was justified where seizure rested on belief of foreign origin and no direct evidence was produced, and whether release without such condition should be directed given delay and perishability. - HELD THAT: - The Tribunal found that the seizure was effected on a mere belief that the betel nuts appeared to be of foreign origin and that no direct evidence was produced by the Revenue to establish foreign origin or smuggling. The Court noted that betel nuts are commonly indigenously grown and their foreign origin cannot be sustained on mere visual examination. As the goods are not notified under section 123 of the Customs Act, the legal burden to prove foreign origin and smuggled character rests heavily on the Revenue. In these circumstances, imposing a heavy condition of deposit of 25% of the seized value for provisional release was not justified, particularly where the appellant had already furnished a bond for the full value. The Tribunal also took into account the perishable nature of the consignment and the lapse of time since seizure, directing that the goods be released at the earliest and preferably within a fixed short period. [Paras 8, 9]

Impugned order imposing 25% cash security set aside; Revenue directed to release the betel nuts without the challenged deposit condition, as soon as possible and preferably within two months, having regard to perishability and absence of proof of foreign origin.

Final Conclusion: The appeal is allowed; the order requiring 25% cash security for provisional release is quashed and the seized betel nuts are to be released forthwith (preferably within two months) in view of absence of evidence of foreign origin, the non-notified character of the goods and their perishable nature.

Transfer of winding-up proceedings to NCLT under the 5th proviso to section 434(1)(c) - Discretion of the Company Court to transfer post-admission winding-up petitions - Irreversible steps in winding up as the limiting principle for transfer - Prohibition of parallel proceedings and supremacy of the Insolvency and Bankruptcy Code (section 238) - Custodia legis of assets during winding up

Transfer of winding-up proceedings to NCLT under the 5th proviso to section 434(1)(c) - Discretion of the Company Court to transfer post-admission winding-up petitions - Whether a Company Court may, in exercise of its discretion under the 5th proviso to section 434(1)(c), transfer a winding-up petition to the NCLT even after admission of the petition. - HELD THAT: - The Court held that the 5th proviso to section 434(1)(c) is not restricted to any particular stage of winding-up and vests discretion in the Company Court to transfer pending winding-up proceedings to the NCLT. The legislative and regulatory evolution - Transfer Rules, 2016 and the 2018 amendment to section 434(1)(c) - demonstrate that transfers were intended to avoid parallel proceedings and to permit the Code's resolution framework to apply even post-admission. The Court explained that Chapter XX of the Companies Act contemplates stages where the Tribunal retains control post-admission, and that transfer post-admission is permissible so long as the Company Court properly exercises its discretion in the facts and circumstances of the case. [Paras 11, 12]

Discretion to transfer a post-admission winding-up petition to the NCLT exists and was correctly exercised by the Company Court in the present case.

Irreversible steps in winding up as the limiting principle - Custodia legis of assets during winding up - What factual threshold (if any) limits the Company Court's discretion to transfer post-admission winding-up proceedings to the NCLT. - HELD THAT: - The Court identified the limiting principle: transfer should not be ordered where the winding-up has progressed to an irreversible stage making it impossible to set the clock back. The statutory scheme (sections 279, 281, 283, 290 and related provisions) shows that a Company Liquidator may take custody of assets, carry on business for beneficial winding up and even sell the company as a going concern; nevertheless, so long as no irreversible acts (such as completed sales or other actions that cannot be undone) have taken place, transfer remains open. Whether the stage is irreversible is a fact-sensitive inquiry for the Company Court or NCLT. [Paras 22, 23]

Transfer was permissible here because, although the Official Liquidator had taken possession and control, no irreversible steps towards winding up had been taken; therefore the Company Court rightly transferred the petition.

Prohibition of parallel proceedings and supremacy of the Insolvency and Bankruptcy Code (section 238) - Whether parallel proceedings under the Companies Act and the Insolvency and Bankruptcy Code should be allowed to continue and the effect of section 238. - HELD THAT: - The Court reiterated that permitting parallel proceedings - one for winding up in the Company Court and another under the Code before the NCLT - would frustrate the objectives of the Code. Section 238 gives the Code overriding effect over inconsistent provisions of other laws, and the statutory scheme (as interpreted in earlier precedents) supports continuation of independent IBC proceedings instituted by creditors. Consequently, transfer of winding-up proceedings is a tool to avoid incongruous parallel processes and to allow resolution under the Code to proceed. [Paras 8, 11]

Parallel proceedings are undesirable; the Code (section 238) prevails over inconsistent Company Court proceedings, and the transfer in this case avoids such incongruity.

Final Conclusion: The appeals are dismissed. The High Court and Company Judge properly exercised the discretion under the 5th proviso to section 434(1)(c) to transfer the winding-up petition to the NCLT because no irreversible steps in the winding up had occurred; transfer avoids parallel proceedings and permits the IBC regime to operate in accordance with section 238.

Business Auxiliary Service - brand promotion / endorsement as a distinct taxable service - Business Support Service - composite contract and segregation of taxable component - extended period of limitation under the proviso to section 73(1) - penalty under section 78 - entitlement to interest on amounts deposited

Business Auxiliary Service - brand promotion / endorsement as a distinct taxable service - Whether amounts received for brand endorsement/brand promotion prior to 01-07-2010 were taxable as Business Auxiliary Service or were not taxable until brought within a separate entry w.e.f. 01-07-2010 - HELD THAT: - The Tribunal accepted the appellant's submission that services which consist of promotion or marketing of a brand or endorsement of name/logo by appearance in advertisements or promotional events fall within the newly introduced entry (section 65(105)(zzzzq)) which came into force w.e.f. 01-07-2010 and are not liable to tax as BAS prior to that date. Contracts placed on record show the appellant was engaged to promote trade names/brands and to act as brand ambassador; the show cause notice does not identify any difference in the nature of services before and after 01-07-2010. Relying on the principle that introduction of a new taxable entry presumes the service was not covered earlier, and on precedent treating brand promotion as distinct from BAS, the Tribunal held the activity could not be subjected to BAS for the period 01-05-2006 to 30-06-2010 and was taxable only from 01-07-2010 under the new entry. [Paras 40, 41, 42, 43, 44]

Demand confirmed under BAS for brand endorsement for the period 01-05-2006 to 30-06-2010 set aside; such activity is taxable only w.e.f. 01-07-2010 under section 65(105)(zzzzq).

Business Auxiliary Service - Whether fees for anchoring television shows were chargeable as Business Auxiliary Service when not specifically alleged in the show cause notice - HELD THAT: - The Tribunal accepted the appellant's contention that the show cause notice did not make any allegation in respect of anchoring fees. As the show cause notice is the foundation for levy and recovery, confirming a demand not raised in the notice exceeds its scope. The Commissioner's finding was based on material supplied by the appellant in reply and not on a charge contained in the SCN; therefore the confirmation of this demand cannot stand. [Paras 45, 46, 47, 48, 50]

Demand in respect of anchoring fees set aside as it was not raised in the show cause notice.

Business Auxiliary Service - Whether fees for article writing were chargeable as Business Auxiliary Service when not specifically alleged in the show cause notice - HELD THAT: - For the same reasons as to anchoring, the Tribunal held that the show cause notice did not allege liability in respect of article writing fees. A demand confirmed without having been put to the appellant in the SCN is beyond the scope of the proceedings and cannot be sustained. [Paras 48, 49, 50]

Demand in respect of article writing fees set aside as it was not raised in the show cause notice.

Business Support Service - composite contract and segregation of taxable component - Whether remuneration received from the IPL franchise (KKR) was taxable under Business Support Service as a composite fee for playing and promotional activities - HELD THAT: - The appellant had specifically answered investigational queries stating payments from KKR were 'only for playing cricket' in terms of the agreement. The Commissioner nevertheless inferred a promotional component and relied on departmental instructions that, if segregation is not possible, tax may be levied on the composite amount. The Tribunal observed that where the service received is playing fees (non taxable) and no machinery exists in law to fairly exclude the non taxable component, taxing a composite contract is impermissible; further, the factual finding that the appellant received only playing fees was not rebutted by collected evidence. On these bases the confirmation of demand under BSS could not be sustained. [Paras 55, 56, 57, 58, 59]

Demand in respect of amounts received from KKR confirmed under BSS set aside.

Extended period of limitation under the proviso to section 73(1) - penalty under section 78 - Whether the extended period of limitation under the proviso to section 73(1) and penalty under section 78 could be invoked - HELD THAT: - The show cause notice invoked the proviso to section 73(1) alleging 'suppression of material facts' but did not specify factual particulars of suppression nor did the Commissioner adjudicate the limitation issue in the substantive part of the order. The Tribunal reiterated settled law that suppression must be deliberate and proved with intent to evade tax; mere omission or failure to pay is insufficient. The Department delayed issuance of the SCN after investigation and has not shown requisite deliberate suppression. Since the ingredients for extended limitation and for penalty under section 78 are coextensive, the inability to sustain invocation of the proviso also undermines the imposition of penalty under section 78. [Paras 74, 75, 76, 77, 78]

Invocation of the extended limitation period and imposition of penalty under section 78 are unsustainable on the facts; extended period could not be invoked.

Entitlement to interest on amounts deposited - Whether the appellant was entitled to interest on amounts deposited with the Department from the date of deposit until transfer to the Registrar General of the Calcutta High Court - HELD THAT: - The Tribunal allowed the appeal and set aside the confirmed demand; accordingly, the appellant was held entitled to interest on the amounts deposited (the confirmed demand and the additional deposit towards penalty) from the respective dates of deposit up to the date those amounts were transferred to the Registrar General of the Calcutta High Court. The Tribunal directed payment of interest at 10% per annum within one month, with further interest at the same rate in case of default. [Paras 79, 80, 81, 82, 83]

Appellant entitled to interest at 10% p.a. on amounts deposited from date of deposit until transfer to the Registrar General; payment directed within one month with further interest on default.

Final Conclusion: The appeal is allowed. The demand of service tax confirmed by the Commissioner for the period 01-05-2006 to 30-06-2010 is set aside: (i) amounts for brand endorsement are not taxable as BAS prior to 01-07-2010 and are taxable, if at all, only under the separate entry w.e.f. 01-07-2010; (ii) demands in respect of anchoring and article writing are set aside as not raised in the show cause notice; (iii) the BSS demand in respect of payments from KKR is unsustainable; (iv) invocation of the extended period under the proviso to section 73(1) and penalty under section 78 cannot be sustained. The appellant shall be paid interest at 10% p.a. on the amounts deposited from the respective dates of deposit up to the date of transfer to the Registrar General of the Calcutta High Court; payment to be made within one month, failing which interest at the same rate shall run from the date of this order until payment.

Export of service - Business Auxiliary Service - interpretation of "used outside India" - place of use versus place of performance - benefit accrual test - effect of amendment to Export of Service Rules, 2005 w.e.f. 27.02.2010

Export of service - Business Auxiliary Service - interpretation of "used outside India" - benefit accrual test - place of use versus place of performance - Whether the services rendered by the appellant to foreign principals during the period prior to 27.02.2010 qualify as export of service under the Export of Service Rules, 2005 and are therefore not liable to service tax. - HELD THAT: - The Tribunal accepted the appellant's factual case that it represented foreign companies (which had no establishment in India), procured orders in India on their behalf, and received commission in convertible foreign exchange. Applying Rule 3(1)(iii) read with Rule 3(2)(a) as it stood prior to 27.02.2010, and construing the phrase "used outside India" in harmony with the category of service, the Court held that for Category III services the relevant test is accrual of benefit to the recipient located abroad. The Court relied on CBEC Circular No.111/05/2009 (24.02.2009) and on consistent decisions of Tribunals and High Courts which treat marketing/ procurement/ promotion services rendered in India for foreign principals as exported so long as the benefit accrues to the foreign recipient. The Commissioner's conclusion that because the activities were performed in India they could not be "used outside India" was rejected as inconsistent with the statutory scheme and the circular clarifications; where the recipient abroad is the user and beneficiary of the services, the services qualify as export of service despite performance in India.

Services rendered by the appellant prior to 27.02.2010 qualified as export of service and were not liable to service tax.

Effect of amendment to Export of Service Rules, 2005 w.e.f. 27.02.2010 - Export of service - Business Auxiliary Service - Whether, for the period from 27.02.2010 onwards, the appellant was liable to service tax in respect of commission receipts where Rule 3(2)(a) was omitted and the only statutory conditions were that the recipient be located outside India and payment be received in convertible foreign exchange. - HELD THAT: - The Court noted that Rule 3(2) was amended w.e.f. 27.02.2010 removing the condition that the service be "used outside India," leaving as requirements that the recipient be located outside India and consideration be received in convertible foreign exchange. Those two conditions were satisfied on the material on record. The Commissioner had sustained the demand for the post-amendment period on the ground that the appellant failed to correlate the commission receipts to services rendered after 27.02.2010. The Tribunal observed that, because the Court had held that the services for the earlier period were exports, and because the amended rule requires only recipient abroad and foreign consideration (both of which were present), inability to segregate quantum of services for the short post-amendment period did not sustain the demand. Accordingly the demand could not be upheld for the post-amendment period.

For the period from 27.02.2010 onwards the statutory requirements for export of service were met and the appellant was not liable to pay service tax on the commission; the Commissioner's demand for that period could not be sustained.

Final Conclusion: The Commissioner's order confirming service-tax demand was set aside. The Tribunal allowed the appeal, holding that the appellant's business-auxiliary services to foreign principals (2006-07 to 2010-11) qualified as export of service under the Export of Service Rules, 2005 (including after the 27.02.2010 amendment), and therefore no service tax was payable on the commission received in convertible foreign exchange.

Summary order. Notice issued to the respondents on the petition challenging non-acceptance of the SVLDRS-1 declaration (on the ground that the pending appeal before the Textile Committee (Cess) Tribunal is not an 'Appellate Forum' under the Scheme); matter listed on 20.01.2021.

Correction of clerical or arithmetical mistake - rectification under Rule 60 of A.P. VAT Rules - Special Economic Zones Act, 2005 - applicability to tax exemption - finality of assessment order - reopening or review of assessment in absence of statutory power - enforcement of demand - Article 226 writ jurisdiction

Correction of clerical or arithmetical mistake - rectification under Rule 60 of A.P. VAT Rules - Special Economic Zones Act, 2005 - applicability to tax exemption - enforcement of demand - Whether the petitioner's post-finality representation alleging SEZ status and seeking exemption falls within 'clerical or arithmetical mistake' under Rule 60 so as to permit rectification of the assessment order. - HELD THAT: - The Court examined Rule 60 which permits rectification of 'clerical or arithmetical mistake apparent from the record' within four years of an order. The petitioner, two years after the assessment order became final, filed a representation asserting that its unit is situated in an SEZ and that the CST demand is not enforceable. The averments in the representation raise a substantive legal contention about applicability of SEZ exemptions and the necessity of Form H, not a mere clerical or arithmetic slip. Allowing such a representation to be treated as a mistake would amount to revisiting the merits of the assessment or reopening it. The Court held that the grounds advanced cannot be construed as clerical or arithmetical errors within the scope of Rule 60 and therefore do not warrant rectification under that provision (paras. 6, 8, 9, 11). [Paras 6, 8, 9, 11]

The representation does not disclose a clerical or arithmetical mistake under Rule 60 and cannot be entertained as a ground for rectification of the assessment order.

Finality of assessment order - reopening or review of assessment in absence of statutory power - Article 226 writ jurisdiction - Whether the assessing authority may review or reopen its final assessment order by entertaining the petitioner's representation in absence of an express statutory power of review. - HELD THAT: - The Court noted that the assessment order had attained finality as no appeal was filed against it. The petitioner's later request sought effectively to alter or nullify that demand by re-urging legal contentions about SEZ applicability. The Court reiterated the settled principle that review is a creature of statute and an order of review can be exercised only where an express statutory power exists. In the absence of such provision, clarification, modification or correction cannot be used as a cloak to review the merits of a concluded assessment. Reliance was placed on the established principle that exercise of review in the garb of correction is impermissible (paras. 11, 12). Consequently, the writ petition under Article 226 does not furnish a basis to compel the authority to reopen the final assessment on those grounds (paras. 11-13). [Paras 11, 12, 13]

Reopening or review of the final assessment by the authority is not permissible in the absence of an express statutory power; the petitioner's attempt to achieve that result must fail.

Final Conclusion: Writ petitions dismissed; the Court held that the petitioner's post-finality representation alleging SEZ entitlement is not a clerical or arithmetical mistake under Rule 60 and that the assessing authority cannot review or reopen its final assessment in absence of statutory power, accordingly the challenge fails.

Validity of application under Section 52A of the NDPS Act - Competence of officer to move application under Section 52A - Compliance with statutory notifications and standing orders governing seizure, inventory, sampling and disposal - Certification of inventory and drawing of representative samples as primary evidence

Validity of application under Section 52A of the NDPS Act - Competence of officer to move application under Section 52A - Application under Section 52A(2) moved by Insp. Manoj Narwal was not competent and the orders passed thereon are liable to be set aside. - HELD THAT: - The Court found that the seizure, inventory and sampling in the present case were carried out by Insp. Praveen Dhull, and the application under sub section (2) of Section 52A was moved by Insp. Manoj Narwal who neither prepared the inventory nor was the officer in charge of a police station nor an officer empowered under Section 53 of the NDPS Act. The Court relied on the statutory scheme and the notifications (including G.S.R. 339(E) dated 10.05.2007 and G.S.R. 38(E) dated 16.01.2015) which identify the officer required to forward seized contraband, prepare inventory, and apply to the Magistrate under Section 52A(2). In view of the material on record showing that Manoj Narwal was not the competent officer to move the application and that the prescribed procedure was not followed, the Court concluded that the orders founded on that application were legally infirm. [Paras 18, 19, 23, 24]

Orders passed by the Magistrate dated 09.07.2020 and by the ASJ/Spl. Judge dated 02.09.2020, being founded on an application under Section 52A(2) moved by an officer not competent under the Act and notifications, are set aside.

Compliance with statutory notifications and standing orders governing seizure, inventory, sampling and disposal - Certification of inventory and drawing of representative samples as primary evidence - Non compliance with prescribed notifications and standing orders in the procedure of seizure, inventory and application under Section 52A rendered the impugned orders bad in law. - HELD THAT: - The Court examined the notifications and standing orders that prescribe the manner of forwarding seized narcotic drugs, preparation of inventory, drawing of samples and the officer competent to apply under Section 52A. It noted that the procedure adopted (preparation of lists and panchnama away from the spot; involvement of officers not empowered under the statutory scheme) did not conform to the requirements of the notifications and standing orders. Reliance was placed on the principles in Union of India v. Mohanlal regarding the roles and procedures to be followed, and on the notification supplanting earlier standing instructions where applicable. The cumulative non compliance with the prescribed procedure vitiated the process of certification and sampling required to constitute primary evidence. [Paras 19, 20, 21, 22, 23]

The impugned certification and consequential orders are quashed for failure to comply with the statutory notifications and standing orders governing seizure, inventory, sampling and disposal.

Final Conclusion: The petition is allowed: the order dated 09.07.2020 of the Magistrate and the order dated 02.09.2020 of the ASJ/Special Judge, NDPS, New Delhi are set aside for want of competence of the officer who moved the Section 52A application and for non compliance with the applicable notifications and standing orders; the petition is disposed of and pending applications stand disposed.