Income Tax Law – Revision of Returns – Limitation – Appellant filed revised returns multiple times for the assessment year 1989-90, the last of which was submitted on 29th October 1991 – Assessing Officer refused to consider the return, citing Section 139(5) of the Income Tax Act, which barred the revised return due to the lapse of the one-year time limit – Appeals were filed but the High Court upheld the decision, stating that the revised return could not be entertained as it was barred by limitation – Held: Assessing Officer had no jurisdiction to consider claims made in a time-barred revised return [Paras 1-3].

Appellate Powers of Tribunal – Section 254 of the IT Act – Appellant contended that the Tribunal could consider claims omitted from the original return during assessment proceedings – Reliance placed on Wipro Finance Ltd. v. Commissioner of Income Tax – However, Tribunal did not invoke its powers under Section 254 and instead remanded the case to the Assessing Officer, who had no authority to consider the time-barred return – High Court upheld the decision, finding no fault in the Tribunal's approach [Paras 5-7].

Judgment: Appeal dismissed – High Court's decision affirmed – Revised return filed after the time limit could not be considered by the Assessing Officer – Tribunal erred in remanding the matter for reconsideration by the Assessing Officer, as it lacked the jurisdiction to entertain the claim [Paras 9-11].

Service Law – Recruitment Process – Eligibility Criteria – Quashing of Selection Process – The appellant and others challenged the cancellation of the recruitment process for Junior Engineer (Civil) posts in Bihar, initiated through an advertisement dated 08.03.2019 – The State Government canceled the process following litigation on the eligibility of candidates with diplomas from universities not approved by AICTE – The High Court allowed the cancellation without fully adjudicating the issues – The Supreme Court held that altering the rules after the selection process violates established principles – Fresh merit list ordered with age relaxation provisions [Paras 1-30].

Doctrine of Acquiescence – Participation in Selection Process – Appellants argued that the writ petitioners, having participated in the recruitment process, could not challenge the eligibility criteria after being unsuccessful – The Supreme Court cited established precedents that altering criteria post-selection is impermissible, affirming the vested rights of successful candidates in the selection process [Paras 27-32].

Rule of Law – Arbitrary State Action – The cancellation of the recruitment process, despite completion and the preparation of a final select list, was deemed arbitrary and unjustified – The Court ordered the preparation of a fresh select list considering prior High Court directions and AICTE’s stand on eligibility, providing relief to candidates who were previously disqualified under the 2017 rules [Paras 30, 32].

Decision – Appeal allowed – Cancellation of the recruitment process set aside – Fresh select list to be prepared within three months, and appointments to follow within 30 days thereafter – Provision for age relaxation as a one-time measure for candidates affected by the delayed recruitment process [Paras 30-32].

Criminal Law – Bail Application – Charges under IPC and POCSO Act – Appellant arrested under Sections 354(D), 506, 363, 366, 376, 511, and 34 IPC, and Sections 7/8 and 11/12 of the POCSO Act – High Court rejected bail due to seriousness of the charges and age of the victim – Supreme Court grants bail considering the appellant’s young age and fact that the victim was in a consensual relationship – Held: Trial will be prolonged, and the appellant has been in jail since May 2024 – Bail granted with strict conditions to ensure compliance.

Consensual Relationship – Alleged Offences under POCSO Act – Appellant contends that the victim and he were in a consensual relationship – Prosecution disputes this, stating the victim was a minor (16 years old) at the time – Supreme Court grants bail based on the prolonged nature of the trial and the age difference between the parties, subject to conditions, including prohibition on re-associating with the victim .

Bail Conditions – Risk of Flight or Influence – Supreme Court emphasizes that the appellant must not misuse his liberty or attempt to influence witnesses – Strict conditions imposed: Appellant must not contact the victim in any manner, and any violation will lead to cancellation of bail.

Decision:

Appeal allowed – Bail granted to the appellant – Supreme Court directs the trial court to release the appellant on bail with appropriate conditions to ensure his compliance and presence during the trial.

Money Laundering – Scheduled Offence Requirement – Absence of Scheduled Offence at Time of Complaint – Bail Granted – The appellants were detained for prolonged periods in a PMLA case initiated based on an ECIR and FIR which initially did not include a scheduled offence. The Court noted that when the complaint was filed under Section 44 of the PMLA, there was no scheduled offence in existence as per the Supreme Court’s decision in Pavana Dibbur vs The Directorate Of Enforcement, and subsequent addition of Section 384 IPC did not justify their continued detention. Held: Prolonged custody in the absence of a scheduled offence at the time of the complaint was a violation of Article 21, and the appellants were entitled to bail [Paras 2-8].

Article 21 – Right to Liberty – Prolonged Incarceration in Absence of Scheduled Offence – Bail Granted – The appellants, having undergone incarceration for 2 years and 1 year 9 months respectively, were held to have suffered a violation of their rights under Article 21 of the Constitution due to the absence of a scheduled offence when the PMLA complaint was filed. The Court granted bail, directing the Special Court to release the appellants on appropriate terms and conditions [Paras 8-11].

Scope of Observations – Limited to Bail Proceedings – Not Affecting Merits of Complaint – The Court clarified that the observations made in granting bail were limited to the consideration of bail applications and should not influence the outcome of the underlying PMLA proceedings on their merits [Para 12].

Decision:

The appeals were allowed, and the appellants were directed to be produced before the Special Court for bail. The Special Court was instructed to set appropriate bail conditions after hearing the Enforcement Directorate. The Court specified that its observations were solely for bail purposes and would not affect the merits of the complaint.

Criminal Law – Bail Application – Prolonged Detention – PMLA Case – Bail Granted – The appellant had been in custody for over two years, facing charges under the PMLA based on an FIR that initially alleged non-scheduled offenses. With the addition of Section 384 IPC, the Enforcement Directorate filed a complaint under Section 44 of the PMLA. The Supreme Court, considering the prolonged detention and the lack of a scheduled offense at the time of filing the complaint, granted bail – Held: Continuation of custody would violate the appellant’s rights under Article 21 of the Constitution of India [Paras 6-10].

Scheduled Offense Requirement under PMLA – FIR Analysis – The Court observed that the initial FIR registered under IPC Sections 186, 204, 353, and 120-B did not contain scheduled offenses. Even after the addition of Section 384 IPC, the charge-sheet failed to establish the commission of a scheduled offense, and therefore, the appellant’s detention under PMLA was unjustified [Paras 5-7].

Constitutional Rights – Article 21 – Right to Liberty and Prolonged Custody – The Court emphasized that prolonged detention without trial, especially when no scheduled offense was established at the time of filing the PMLA complaint, infringed upon the appellant's right to personal liberty under Article 21 [Para 8].

Decision:

Appeal allowed – Bail granted to the appellant with conditions to be determined by the Special Court.

Constitutional Law – Validity of Legislation – Khalsa University (Repeal) Act, 2017 – Challenge to the repeal of Khalsa University established under the 2016 Act – Appellant argued the repeal act was discriminatory, arbitrary, and violated Article 14 of the Constitution – Respondent State of Punjab justified repeal, citing protection of the heritage character of Khalsa College – Held: The Khalsa University (Repeal) Act, 2017 was discriminatory and arbitrary, lacking a reasonable classification – The Act failed to prove an intelligible differentia for singling out Khalsa University – Appeal allowed, the repeal Act struck down as unconstitutional – Khalsa University Act, 2016 restored [Paras 1, 24, 56-66].

Legislation – Single Entity Law – Discrimination – The Khalsa University was singled out for repeal while 16 other private universities established under the 2010 policy continued to operate – Appellants contended that there was no justification for the discriminatory treatment – Court found that the State had not provided material to support its classification and no compelling or emergent situation justified such an action – Held: Repeal Act violated Article 14 as it was discriminatory against the Khalsa University without reasonable basis [Paras 56-59].

Arbitrariness – Manifest Arbitrariness – Khalsa University (Repeal) Act, 2017 was enacted to protect the heritage status of Khalsa College, but the University had no direct impact on Khalsa College’s heritage – Appellants provided a specific undertaking to not affect Khalsa College – Court found the basis for the repeal Act was non-existent and thus manifestly arbitrary – Held: The repeal Act was enacted irrationally without adequate determining principle, rendering it unconstitutional under Article 14 of the Constitution [Paras 64-65].

Decision: The appeal is allowed – The impugned judgment of the High Court is quashed – The Khalsa University (Repeal) Act, 2017 is struck down as unconstitutional – Khalsa University Act, 2016 restored – No costs imposed [Paras 66].

Criminal Law – Cheating and Forgery – Quashing of Criminal Proceedings – The appellants, accused of cheating and forgery in a loan fraud involving forged mortgage documents submitted to a bank, sought to quash the proceedings after a settlement was reached – High Court dismissed the plea, citing that the offenses affected public interest, and could not be quashed due to a private settlement – Supreme Court quashed the proceedings, holding that the case was civil in nature with criminal facets and that a settlement had been reached, rendering further prosecution unjustified [Paras 1-39].

Loan Fraud – Role of Appellants – The appellants, wives of Accused Nos. 1 and 2, were involved only as co-guarantors in the loan and had no active role in the alleged forgery and conspiracy – The principal accused had settled the outstanding dues with the bank, closing the loan account – Continuation of criminal proceedings was held to be oppressive and futile given the settlement [Paras 5, 14, 36].

Private Settlement – Impact on Criminal Liability – Supreme Court noted that the offenses, although non-compoundable, predominantly bore a civil character arising from financial transactions – Following precedents, including Gian Singh and Nikhil Merchant, the Court held that private settlements in cases with civil overtones could lead to quashing of criminal charges when conviction seemed unlikely and continuation would be oppressive [Paras 17, 23, 29].

Decision: Appeal allowed – Criminal proceedings quashed – Appellants acquitted from all charges​.

Constitutional Law – Validity of Legislation – Khalsa University (Repeal) Act, 2017 – Challenge to the repeal of Khalsa University established under the 2016 Act – Appellant argued the repeal act was discriminatory, arbitrary, and violated Article 14 of the Constitution – Respondent State of Punjab justified repeal, citing protection of the heritage character of Khalsa College – Held: The Khalsa University (Repeal) Act, 2017 was discriminatory and arbitrary, lacking a reasonable classification – The Act failed to prove an intelligible differentia for singling out Khalsa University – Appeal allowed, the repeal Act struck down as unconstitutional – Khalsa University Act, 2016 restored [Paras 1, 24, 56-66].

Legislation – Single Entity Law – Discrimination – The Khalsa University was singled out for repeal while 16 other private universities established under the 2010 policy continued to operate – Appellants contended that there was no justification for the discriminatory treatment – Court found that the State had not provided material to support its classification and no compelling or emergent situation justified such an action – Held: Repeal Act violated Article 14 as it was discriminatory against the Khalsa University without reasonable basis [Paras 56-59].

Arbitrariness – Manifest Arbitrariness – Khalsa University (Repeal) Act, 2017 was enacted to protect the heritage status of Khalsa College, but the University had no direct impact on Khalsa College’s heritage – Appellants provided a specific undertaking to not affect Khalsa College – Court found the basis for the repeal Act was non-existent and thus manifestly arbitrary – Held: The repeal Act was enacted irrationally without adequate determining principle, rendering it unconstitutional under Article 14 of the Constitution [Paras 64-65].

Decision: The appeal is allowed – The impugned judgment of the High Court is quashed – The Khalsa University (Repeal) Act, 2017 is struck down as unconstitutional – Khalsa University Act, 2016 restored – No costs imposed [Paras 66].

Taxation Law - Input Tax Credit – Section 17(5)(c) & (d) CGST Act – Exclusion of Input Tax Credit (ITC) – The appellants challenged the constitutional validity of Section 17(5)(c) and (d) of the CGST Act which restricts ITC on goods and services used for the construction of immovable property – The respondents contended that such exclusion is arbitrary, particularly when GST is charged on renting or leasing out the property, and sought to avail ITC for the construction of a shopping mall – High Court held Section 17(5)(d) must be read down, allowing ITC where the constructed property is used for leasing or renting purposes – Held: Interpretation of “plant or machinery” in Section 17(5)(d) is distinct from “plant and machinery” as per the explanation – Further, the question of whether a mall or other buildings can be classified as a “plant” depends on the functionality test – Appeal partly allowed, and matter remanded to High Court to determine if the mall qualifies as a "plant" [Paras 1-5, 42-45, 53-56, 66].

Constitutional Validity – Tax Legislation – Classification Under Section 17(5) – The appellants argued that clauses (c) and (d) of Section 17(5) violate Articles 14 and 19(1)(g) of the Constitution by arbitrarily excluding ITC for construction of immovable property – Held: In taxation matters, the legislature enjoys wide latitude, and exclusions under Section 17(5) are rational to ensure that the State’s power over land and buildings under List II is not encroached upon – The classification of immovable property for exclusion from ITC is reasonable and serves the object of the statute – Therefore, clauses (c) and (d) of Section 17(5) are constitutionally valid and do not infringe fundamental rights [Paras 57-60].

Interpretation of Tax Statutes – Meaning of “Plant or Machinery” – Section 17(5)(d) uses the phrase “plant or machinery,” while other sections refer to “plant and machinery” – The court held that the legislature’s use of “or” in Section 17(5)(d) is intentional and not a drafting error – The term “plant” must be understood in its commercial sense, and buildings, including malls and warehouses, can be treated as plants if they fulfill the functionality test, i.e., if they are essential for carrying out the business of renting or leasing – Each case must be decided on its facts to determine if a building qualifies as a “plant” [Paras 42-53].

Decision – Appeals partly allowed – The High Court judgment reading down Section 17(5)(d) is set aside – The matter is remanded to the High Court for determining whether the mall qualifies as a “plant” for the purposes of availing ITC under Section 17(5)(d) – Constitutional validity of Section 17(5)(c) and (d) upheld – Petitioners in other writ petitions are free to initiate appropriate proceedings to determine if their constructions qualify as “plant” [Paras 65-68].