TaxTMI Updates e-Newsletter
Jan 06,2021

Advance ruling - requirement of prescribed fee under section 97(1) for advance ruling - prescribed fee under CGST/HPGST rules for admission of advance ruling - fee under CGST and SGST heads - rejection of application for non-payment of fee - opportunity of hearing before rejection - authority's power to admit or reject application after examination and hearing

Requirement of prescribed fee under section 97(1) for advance ruling - prescribed fee under CGST/HPGST rules for admission of advance ruling - rejection of application for non-payment of fee - opportunity of hearing before rejection - Application for advance ruling rejected for non-deposit of the requisite fee. - HELD THAT: - The Authority observed that the application for an advance ruling was not accompanied by the prescribed fee. The applicant was given a direction (21 October 2020) to deposit the fee and was afforded a personal hearing (15 December 2020), at which the applicant's representative sought time to set off the fee but failed to do so. The applicable fee structure requires payment separately under CGST and SGST heads for matters concerning both Central and State GST; accordingly the prescribed fee was Rs.5,000 under each head, totaling Rs.10,000. Section 98(2) empowers the Authority to admit or reject an application after examining records and hearing the parties, and further provides that no application shall be rejected without giving an opportunity of hearing. Having given the required opportunity and after noting non-payment of the prescribed fee, the Authority exercised its power to reject the application. The order also records that the rejection does not prejudice the applicant's right to file a fresh application in compliance with the statutory fee requirement.

Application rejected for non-deposit of the requisite fee; applicant may file a fresh application on payment of the prescribed fee.

Final Conclusion: The Authority rejected the advance ruling application for failure to deposit the prescribed CGST and SGST fees after affording an opportunity of hearing; the applicant remains free to submit a fresh application on payment of the requisite fees.

Advance ruling application fee - requirement of fee under Rule 104 - admission or rejection of advance ruling application - opportunity of hearing before rejection - date of submission linked to fee deposit

Advance ruling application fee - requirement of fee under Rule 104 - admission or rejection of advance ruling application - opportunity of hearing before rejection - date of submission linked to fee deposit - Application for advance ruling filed without deposit of the prescribed fee and consequent effect on admissibility of the application. - HELD THAT: - Section 97(1) requires an application for advance ruling to be made in the prescribed form and accompanied by the fee as prescribed. Rule 104 prescribes a fee of Rs. 5,000 under the CGST head and Rs. 5,000 under the SGST head where advance ruling is sought under both CGST and HPGST statutes; accordingly the prescribed fee in the present case is Rs. 5,000 each under CGST and SGST. Section 98(2) empowers the Authority to admit or reject an application after examining records and hearing the applicant and the concerned officer, and further mandates that no application shall be rejected under that sub section unless an opportunity of hearing has been given. The Authority afforded a personal hearing, during which the applicant's representative conceded inability to effect the fee payment through the portal. The Authority also recorded that the date of submission will be counted from the date on which the full applicable fee is deposited. As the application was not accompanied by the requisite fee totaling Rs. 10,000 (Rs. 5,000 each under CGST and SGST), the Authority exercised its power under section 98(2) to reject the application, while preserving the applicant's right to file a fresh application compliant with section 97(1). [Paras 2, 4, 5, 6]

Application rejected for non deposit of the prescribed fee; applicant may file a fresh application upon payment of the requisite fee.

Final Conclusion: The Authority rejected the advance ruling application for want of the prescribed fee (Rs. 5,000 under CGST and Rs. 5,000 under SGST), having afforded an opportunity of hearing; the applicant remains entitled to file a fresh application after depositing the requisite fee and the date of submission will be counted from the date of full payment.

Distinction between "inquiry" under Section 70 and "proceedings" under Section 6(2)(b) - prohibition on initiation of proceedings on the same subject-matter - meaning of "subject-matter" for the purpose of Section 6(2)(b) - scope of Chapter XIV powers of inspection, search, seizure and inquiry

Distinction between "inquiry" under Section 70 and "proceedings" under Section 6(2)(b) - scope of Chapter XIV powers of inspection, search, seizure and inquiry - Whether an "inquiry" under Section 70 is equivalent to a "proceeding" under Section 6(2)(b) so as to prohibit initiation of parallel action. - HELD THAT: - The Court held that the term "inquiry" in Section 70 bears a specific connotation: it confers power on the proper officer to summon persons to give evidence or produce documents as part of Chapter XIV's inspection, search, seizure and related powers. An "inquiry" is a process of collecting evidence and is not synonymous with "proceedings" envisaged by Section 6(2)(b). The latter denotes adjudicatory processes - assessment, demands, recovery, penalties or other proceedings that arise after inquiry and involve determination on the cause of action. Consequently, invocation of Section 70 for securing evidence does not, by itself, attract the prohibition in Section 6(2)(b). [Paras 11, 12, 16, 17, 19]

Inquiry under Section 70 is distinct from a proceeding under Section 6(2)(b) and is not prohibited by Section 6(2)(b) merely because an inquiry by another authority exists.

Meaning of "subject-matter" for the purpose of Section 6(2)(b) - prohibition on initiation of proceedings on the same subject-matter - What constitutes the "subject-matter" for applying the prohibition in Section 6(2)(b). - HELD THAT: - Relying on precedent and textual interpretation, the Court construed "subject-matter" as the same cause of action or the same dispute - the bundle of facts giving rise to the relief sought. Mere overlap of some issues does not make two actions identical in subject-matter. Section 6(2)(b)'s bar applies where a proper officer under one Act has initiated adjudicatory proceedings on the same cause of action and for the same dispute; it does not extend to preliminary inquiries under Chapter XIV which are directed to collection of evidence preparatory to any such proceedings. [Paras 13, 14, 15, 18, 19]

"Subject-matter" in Section 6(2)(b) means the same cause of action and dispute; the prohibition applies to adjudicatory proceedings on that cause of action, not to preliminary inquiries for evidence.

Prohibition on initiation of proceedings on the same subject-matter - distinction between "inquiry" under Section 70 and "proceedings" under Section 6(2)(b) - Whether, on the facts, the summons issued under the C.G.S.T. Act are barred by Section 6(2)(b) because of the prior inquiry by the State authority. - HELD THAT: - Applying the legal distinctions to the facts, the Court found that the actions by the State authority amounted to inquiries under Section 70 and related Chapter XIV powers and that there was no adjudicatory proceeding on the same subject-matter that would engage Section 6(2)(b). The summons issued by the Central authority under Section 70 were therefore not barred by the prohibition, since no prior proceeding constituting an adjudication on the same cause of action had been shown to exist. [Paras 7, 17, 18, 19, 20]

On the material before the Court, no adjudicatory proceeding on the same subject-matter had been initiated by the State authority; thus the summons under the Central Act were not barred by Section 6(2)(b).

Final Conclusion: The petition was dismissed. The Court concluded that inquiry powers under Section 70 (Chapter XIV) are distinct from adjudicatory "proceedings" barred by Section 6(2)(b); "subject-matter" means the same cause of action and, on the facts, no prior proceeding existed to prohibit the summons issued under the Central Act.

Violation of Section 171(1) - failure to pass on benefit of tax reduction - imposition of penalty for anti profiteering contravention - penalty under Section 122(1)(i) not attracted for failure to pass on tax benefit - penalty introduced by insertion of Section 171(3A) by Finance Act, 2019 - non retroactivity of penal provisions

Violation of Section 171(1) - failure to pass on benefit of tax reduction - Respondent's failure to pass on the benefit of GST rate reduction from 28% to 18% on specified products for the period 15.11.2017 to 31.03.2018 and consequent contravention of Section 171(1). - HELD THAT: - The Authority considered the DGAP's investigation report and the Respondent's submissions and found that the Respondent did not pass on the benefit of the reduction in GST rate on the specified products for the period 15.11.2017 to 31.03.2018. On that basis the Respondent was held to have violated the obligation under Section 171(1) of the CGST Act, 2017. This conclusion reiterates the finding recorded by the Authority in its earlier order determining the profiteered amount for the same period. [Paras 6]

Respondent breached Section 171(1) by not passing on the tax rate reduction benefit for 15.11.2017 to 31.03.2018.

Penalty under Section 122(1)(i) not attracted for failure to pass on tax benefit - Whether the penalty under Section 122(1)(i) of the CGST Act can be imposed for the Respondent's failure to pass on the benefit of tax reduction. - HELD THAT: - The Authority examined the scope of Section 122(1)(i) and the nature of the contravention under Section 171(1). It concluded that Section 122(1)(i) does not prescribe penalty for not passing on benefits of tax reduction or input tax credit; accordingly, the violation of Section 171(1) is not covered by Section 122(1)(i) and penalty under that provision cannot be validly imposed for the anti profiteering contravention identified. [Paras 7]

Penalty under Section 122(1)(i) is not attracted for failure to pass on the benefit mandated by Section 171(1).

Penalty introduced by insertion of Section 171(3A) by Finance Act, 2019 - non retroactivity of penal provisions - Whether the penalty provision inserted as Section 171(3A) by the Finance Act, 2019 (w.e.f. 01.01.2020) can be applied retrospectively to contraventions occurring during 15.11.2017 to 31.03.2018. - HELD THAT: - The Authority noted that specific penalty provisions for violation of Section 171(1) were introduced by amendment (Section 171(3A)) effected by the Finance Act, 2019, which came into force from 01.01.2020. Since no penalty provision for contraventions of Section 171(1) existed during the period 15.11.2017 to 31.03.2018, the Authority held that the penal provision could not be applied retrospectively to that earlier period. Consequently, the notice seeking imposition of penalty under Section 122(1) was withdrawn and the penalty proceedings were dropped. [Paras 8, 9]

Penalty under the provision inserted by Finance Act, 2019 (Section 171(3A)) cannot be imposed retrospectively for contraventions occurring in 15.11.2017 to 31.03.2018; penalty proceedings withdrawn.

Final Conclusion: The Authority reaffirmed that the Respondent violated Section 171(1) by not passing on the GST rate reduction benefit for the period 15.11.2017 to 31.03.2018, but held that neither Section 122(1)(i) nor the penalty provision later inserted as Section 171(3A) (effective 01.01.2020) can be applied to impose penalty for that earlier period; the notice for penalty under Section 122(1) is withdrawn and the penalty proceedings are dropped.

Failure to pass on benefit of tax rate reduction - anti-profiteering - Section 171(1) of the CGST Act, 2017 - penalty under Section 122(1)(i) of the CGST Act, 2017 - non-retrospective application of penalty provisions - Section 171(3A) - penalty for violation of Section 171(1)

Failure to pass on benefit of tax rate reduction - anti-profiteering - Section 171(1) of the CGST Act, 2017 - Respondent did not pass on the benefit of reduction in the rate of tax to customers in respect of the product "Gamier Nat Shade 3" for the period 15.11.2017 to 31.03.2018 and thereby violated the provisions of Section 171(1). - HELD THAT: - The Authority considered the DGAP's investigation and report and, after hearing the parties, found that no commensurate reduction in the price was passed on to customers for the specified product and period. On that basis the Authority determined the profiteered amount and held that the Respondent had violated the statutory obligation to pass on the benefit arising from the tax rate reduction under Section 171(1). [Paras 6]

Violation of Section 171(1) established for the period 15.11.2017 to 31.03.2018 and profiteered amount determined.

Penalty under Section 122(1)(i) of the CGST Act, 2017 - non-retrospective application of penalty provisions - Section 171(3A) - penalty for violation of Section 171(1) - Whether penalty could be imposed for the Section 171(1) violation for the period 15.11.2017 to 31.03.2018 under Section 122(1)(i), or retrospectively under the later inserted Section 171(3A). - HELD THAT: - The Authority examined the statutory scheme and observed that no penalty specific to breach of Section 171(1) existed at the time of the violation. Section 122(1)(i) does not cover failure to pass on the benefit under Section 171(1) and thus could not be applied to impose penalty for that breach. Although Section 171(3A) (inserted by Section 112 of the Finance Act, 2019) prescribes a penalty for violation of Section 171(1), that provision came into force from 01.01.2020 and cannot be applied retrospectively to conduct occurring between 15.11.2017 and 31.03.2018. Accordingly the show-cause notice issued under Section 122(1)(i) was withdrawn and the penalty proceedings were dropped. [Paras 7, 8, 9]

Penalty proceedings withdrawn and cannot be imposed for the 15.11.2017 to 31.03.2018 period; notice under Section 122(1)(i) withdrawn.

Final Conclusion: The Authority upheld that the Respondent failed to pass on the benefit of tax-rate reduction for the product in the period 15.11.2017 to 31.03.2018 and determined the profiteered amount, but directed withdrawal of penalty proceedings because no applicable penalty provision existed at the relevant time and subsequently inserted penalty provisions are not retrospective.

Violation of Section 171(1) (anti profiteering) - Penalty under Section 122(1)(i) for issuance of incorrect or false invoices - Insertion of Section 171(3A) by Finance Act, 2019 and non retrospective operation of penal provisions

Violation of Section 171(1) (anti profiteering) - The Respondent failed to pass on benefit of GST rate reduction to customers for the period 15.11.2017 to 31.07.2018 and thereby violated Section 171(1). - HELD THAT: - The Authority accepted the DGAP's investigation report and, upon consideration of the material and the Respondent's submissions, found that the Respondent did not extend the reduced tax benefit on the supply of the specified product during the stated period. The Authority reaffirmed its earlier determination that the benefit was not passed on and that the statutory mandate in Section 171(1) was violated. [Paras 6]

Respondent held to have violated Section 171(1) for the period 15.11.2017 to 31.07.2018.

Penalty under Section 122(1)(i) for issuance of incorrect or false invoices - Penalty under Section 122(1)(i) cannot be imposed for mere non passing of rate reduction under Section 171(1) because the former does not prescribe penalty for that specific violation. - HELD THAT: - The Authority examined the scope of Section 122(1)(i) and concluded that it does not cover the failure to pass on benefits mandated by Section 171(1). Although a show cause notice for penalty was issued on the basis that excess consideration and incorrect invoices had been issued, the statutory language of Section 122(1)(i) does not encompass non compliance with Section 171(1), and therefore the penalty under Section 122(1)(i) could not be sustained for that ground. [Paras 7]

Notice for imposition of penalty under Section 122(1)(i) withdrawn insofar as it was based on the Section 171(1) violation.

Insertion of Section 171(3A) by Finance Act, 2019 and non retrospective operation of penal provisions - The specific penalty provision for violation of Section 171(1) (Section 171(3A)), introduced by Finance Act, 2019 with effect from 01.01.2020, cannot be applied retrospectively to conduct occurring between 15.11.2017 and 31.07.2018. - HELD THAT: - The Authority noted that Section 112 of the Finance Act, 2019 inserted a specific penal provision (Section 171(3A)) effective from 01.01.2020. Because no specific penalty for breach of Section 171(1) existed during the period when the violation occurred, the newly introduced penal provision could not be imposed retrospectively. Consequently, the penalty proceedings initiated earlier were not maintainable and were dropped. [Paras 8, 9]

Penalty proceedings under the newly inserted provision cannot be applied retrospectively; the penalty notice dated 28.03.2019 is withdrawn and penalty proceedings dropped.

Final Conclusion: The Authority affirmed that the Respondent did not pass on the benefit of the GST rate reduction for the period 15.11.2017 to 31.07.2018 and therefore violated Section 171(1); however, penalty could not be imposed-neither under Section 122(1)(i) nor retrospectively under the Section 171(3A) inserted by the Finance Act, 2019-and the penalty proceedings initiated against the Respondent were withdrawn and dropped.

Allowance of deduction under Section 36(1)(viia) contingent on creation of reserve in books - deduction under Section 36(1)(viia) restricted to amount of provision for bad and doubtful debts created in the relevant previous year - whether shortfall in a year may be met by provisions created in a subsequent year for deduction in the earlier year

Allowance of deduction under Section 36(1)(viia) contingent on creation of reserve in books - Creation of the requisite reserve in the books of account is a condition precedent for allowance of the claim under Section 36(1)(viia) for the assessment year in question. - HELD THAT: - The Court recorded that the substantial question whether creation of the reserve in the books is a precondition for claiming the deduction under Section 36(1)(viia) has been answered against the assessee by earlier decisions of this Court. The counsel for the assessee conceded that those decisions dispose of the question adversely to the assessee, and for the reasons given in those judgments the condition of creation in the books must be satisfied before the deduction can be allowed. [Paras 4]

Answered against the assessee; creation of the reserve in the books is a condition precedent to allowance.

Deduction under Section 36(1)(viia) restricted to amount of provision for bad and doubtful debts created in the relevant previous year - The amount deductible under Section 36(1)(viia) is to be restricted to the extent of the provision for bad and doubtful debts actually created in the books during the relevant previous year. - HELD THAT: - The Court accepted the position, following the precedent relied upon and noted by the Bench, that the statutory deduction cannot exceed the quantum of provision reflected in the books for that previous year. The assessee conceded that the cited authorities govern the question and the Court applied those conclusions to the assessment year under appeal. [Paras 4]

Answered against the assessee; deduction limited to the provision created in the relevant previous year.

Whether shortfall in a year may be met by provisions created in a subsequent year for deduction in the earlier year - The alternate contention that a shortfall between the statutory upper limit and the actual provision in the present year can be met by provisions created in a subsequent year was rejected. - HELD THAT: - The Court noted the assessee's alternate plea but observed that the prior decisions of this Court dispose of that contention unfavourably to the assessee. On that basis and for the reasons given in those earlier judgments, the tribunal's rejection of the contention was upheld and the shortfall could not be compensated by subsequent year provisions for the earlier assessment year. [Paras 4]

Answered against the assessee; shortfall in the year cannot be made good by subsequent year provisions.

Final Conclusion: The appeal is dismissed; the substantial questions of law framed were answered against the assessee in favour of the revenue, in accordance with earlier decisions of this Court, and the order under appeal is upheld.

Permanent establishment - dependent agent - agent of independent status - arm's length price - attribution of profits to PE - distribution rights vs copyright - royalty - broadcast reproduction right - tax deduction at source under section 195 - interest under section 234B

Permanent establishment - dependent agent - agent of independent status - arm's length price - attribution of profits to PE - Taxability of advertisement revenue and whether SIPL constituted a PE of the non-resident assessee; if SIPL was PE, whether further profits were attributable to the assessee after payment of arm's length commission. - HELD THAT: - The Tribunal found that SIPL was remunerated at a commission rate of 15% which the authorities did not dispute and which was recognised by CBDT Circular No.742 and subsequently accepted by the TPO for later assessment years. The Tribunal accepted precedents holding that where an agent is remunerated at an arm's length price, nothing further remains to be attributed to the foreign principal even if a PE is found to exist; the Tribunal relied on judicial authorities (including decisions of the jurisdictional High Court and the Supreme Court) that equate a correct arm's length remuneration with full attribution for the functions/risks covered by that remuneration. The Tribunal also examined facts relevant to independence of the agent (SIPL carried on other business and commissions from the assessee formed a very small part of its overall receipts) and concluded SIPL acted in the ordinary course of business and was not wholly or almost wholly devoted to the assessee. Having found that the commission was at arm's length and that SIPL satisfied the conditions of an independent agent, the Tribunal held that there was no need for further attribution of profits to the assessee in India.

Grounds challenging taxability of advertisement revenue are allowed; no further profits attributable in India once arm's length commission was paid and SIPL is not a dependent-agent PE (A.Y.2000-01; applied similarly to other years).

Distribution rights vs copyright - royalty - broadcast reproduction right - Whether lump sum consideration for grant of distribution rights to the Indian distributor (NGC India) constituted 'royalty' or was in the nature of business income (commercial/broadcast reproduction right) taxable as royalty under the India-USA DTAA and the Income-tax Act. - HELD THAT: - The Tribunal analysed the distribution agreement and found that NGC India was not granted rights to copy, modify, reproduce or exploit the underlying programme content or any copyright; it was obliged to transmit the channel 'as is' and had no licence to alter or make copies. The Tribunal therefore held the right granted to be a commercial/distribution (broadcast reproduction) right and not a transfer or licence of copyright as defined in the Copyright Act and as contemplated under Explanation 2 to section 9(1)(vi) or the DTAA's definition of 'royalty'. The Tribunal rejected reliance on the technical explanation invoked by Revenue (not being a mutually agreed official protocol) and followed precedent of the jurisdictional High Court and Tribunal decisions holding distribution fees are not royalty.

Grounds challenging treatment of distribution receipts as royalty are allowed; distribution consideration is commercial/broadcast reproduction right and not royalty under the Act or DTAA (A.Y.2001-02; applied similarly to other years).

Tax deduction at source under section 195 - interest under section 234B - Whether interest under section 234B could be levied on the non-resident assessee whose income for the years in question was wholly subject to tax deduction at source. - HELD THAT: - The Tribunal accepted that the assessee's entire income was subject to deduction of tax at source under the statutory scheme and noted the proviso relied upon by Revenue was inserted with effect from a later year and was not applicable. Relying on binding jurisdictional precedent, the Tribunal held that where the payer is under a duty to deduct tax at source and the payor's failure to deduct taxes cannot be converted into a liability of the non-resident payee to pay advance tax or interest under section 234B for the years in issue.

Ground challenging charge of interest under section 234B is allowed for the years under adjudication.

Final Conclusion: The Tribunal allowed the assessee's appeals: A.Y.2000-01, 2001-02, 2003-04 and 2004-05 were allowed and A.Y.2002-03 was partly allowed; advertisement income was not taxable beyond arm's length commission paid to SIPL, distribution receipts were not royalty but commercial/broadcast reproduction receipts, and interest under section 234B could not be charged where income was wholly subject to TDS.

Delay in realization of receivables as separate international transaction - arm's length pricing of inter-company receivables - imputation of notional interest on overdue receivables - benchmarking using LIBOR plus spread - allowance of normal credit period in benchmarking - disallowance under section 14A in absence of exempt income

Delay in realization of receivables as separate international transaction - imputation of notional interest on overdue receivables - Delay in realization of receivables from Associated Enterprises beyond the agreed/normal credit period constitutes a separate international transaction and may be benchmarked by imputing notional interest. - HELD THAT: - The Tribunal held that the Finance Act, 2012 amended the explanation to Section 92B with retrospective effect from 01.04.2002 to include capital financing and deferred payments within the definition of international transactions. Realisation of receivables after abnormal delay therefore amounts to indirect funding to the AE and falls within Chapter X. The fact that the assessee's primary transactions were benchmarked at entity level using TNMM and that the assessee earned higher-than-comparable margins does not bar independent benchmarking of delayed receivables. Nor does an internal policy of not charging interest to AEs or non AEs excuse the assessee from adjustment where an inter-company arrangement results in an outcome adverse to the revenue and outside the scheme of Chapter X. [Paras 12]

Delay in realization of receivables from AE is an international transaction capable of being benchmarked and the imputing of notional interest on such overdue receivables is permissible.

Benchmarking using LIBOR plus spread - allowance of normal credit period in benchmarking - arm's length pricing of inter-company receivables - The appropriate benchmark rate for imputing notional interest on overdue receivables from a non resident AE is LIBOR with an appropriate spread; however, normal or agreed credit periods must be allowed when computing the notional interest (remitted for computation). - HELD THAT: - The Tribunal reasoned that where the AE is non resident the benefit to the AE should be evaluated by reference to international borrowing rates applicable to the AE, and LIBOR is the suitable international benchmark. Applying this principle, the Tribunal directed that LIBOR plus 200 basis points be adopted as the appropriate rate for imputation. The Tribunal also observed that a normal credit period should be allowed-if an agreed credit period exists between the parties it must be applied; absent such agreement the industry standard credit period shall be applied. The direction to the AO/TPO to adopt LIBOR + 200 bps and to allow the normal/agreed/industry credit period requires them to recompute the notional interest and consequent TP adjustment accordingly. [Paras 13]

AO/TPO to recompute notional interest using LIBOR + 200 basis points and after allowing the agreed or standard credit period; computation remitted to AO/TPO for quantification.

Disallowance under section 14A in absence of exempt income - Disallowance under Section 14A cannot be made for the assessment year where no exempt income has been earned. - HELD THAT: - The Tribunal followed binding decisions of the Madras High Court and other higher authorities holding that if no exempt income is earned in the relevant year there is no basis for levying a disallowance under Section 14A. On the facts, the assessee had not earned any exempt income for AY 2014 15; the CIT(A) deleted the disallowance computed under Rule 8D and the Tribunal found no error in that conclusion. [Paras 15]

The disallowance under Section 14A deleted by the CIT(A) is upheld; the Revenue's ground against that deletion is rejected.

Final Conclusion: The Tribunal held that delayed realisation of receivables from AEs is a separate international transaction amenable to transfer pricing adjustments; directed recomputation of notional interest using LIBOR + 200 bps after allowing agreed/normal/industry credit period; upheld deletion of Section 14A disallowance. The assessee's appeal is partly allowed and the Revenue's appeal is dismissed.

Validity of reopening proceedings under section 147/148 based on information from investigation wing - Pre requisites of section 68: identity, creditworthiness and genuineness of investor - Scope of reassessment proceedings and limits of Explanation 3 to section 147 (no roving/fishing inquiry) - Requirement of application of mind in recording reasons to believe for reopening - Power of appellate authority under section 250(4) to summon and record statements for verifying investor credentials

Validity of reopening proceedings under section 147/148 based on information from investigation wing - Requirement of application of mind in recording reasons to believe for reopening - Reopening of assessment for AY 2010-11 by issuance of notice under section 148 was valid. - HELD THAT: - The Tribunal examined whether the Assessing Officer had jurisdictional satisfaction to reopen the assessment. It held that reasons must rest on tangible material and an application of mind, but that the threshold for recording reasons is not unduly high so as to handicap the department. The AO had received detailed information from DCIT (CC 2(2), Mumbai) arising out of search/seizure indicating that the investor (M/s. Prraneta Industries Ltd.) featured in impounded material as a beneficiary/provider of accommodation entries and that the assessee showed share premium consistent with the investigative information. The AO also matched that information with the assessee's return before recording reasons. While a preliminary enquiry of the investor would have been desirable, its absence did not vitiate the recorded reasons. Accordingly, the Tribunal upheld the jurisdictional requirement of section 147 and sustained validity of the notice under section 148. [Paras 14]

Notice under section 148/assumption of jurisdiction under section 147 is upheld.

Pre requisites of section 68: identity, creditworthiness and genuineness of investor - Power of appellate authority under section 250(4) to summon and record statements for verifying investor credentials - Addition under section 68 in respect of share capital allegedly received from M/s. Prraneta Industries Ltd. (now Aadhaar Ventures India Ltd.) was deleted as the assessee discharged onus under section 68. - HELD THAT: - The Tribunal analysed the three limbs of section 68: identity, creditworthiness and genuineness. It found identity of the investor was not disputed (a listed company) and the assessee produced ITRs, incorporation certificate, audited financials and bank records. On creditworthiness, the investor's financial statements showed adequate profits and reserves to justify the investment. As to genuineness, although the AO relied on statements recorded earlier (notably of a director who later retracted), subsequent inquiry and judicial decisions on co ordinate facts (Tribunal and Madhya Pradesh High Court orders in related matters, with SLP dismissal) established that statements relied on by the AO lacked evidentiary value and that the investor had explained source of funds. The appellate process under section 250(4) which enabled recording of statements and production of books corroborated the genuineness. In these circumstances the assessee satisfied the onus under section 68 and the addition of the amount attributable to this investor was deleted. [Paras 20, 21, 27]

Addition under section 68 in respect of the share capital from M/s. Prraneta Industries Ltd. is deleted.

Scope of reassessment proceedings and limits of Explanation 3 to section 147 (no roving/fishing inquiry) - Requirement of fresh notice/approval for issues beyond recorded reasons - Additions made in respect of share capital from other investors (aggregate amount) raised during reassessment proceedings-beyond the reasons recorded-were deleted. - HELD THAT: - The reassessment was originally initiated only in respect of share capital alleged to have been received from M/s. Prraneta Industries Ltd. during AY 2010 11. During reassessment the AO expanded inquiry to other subscribers and made additions. The Tribunal reiterated that Explanation 3 to section 147 does not permit unlimited expansion of scope; the AO cannot convert reassessment into a routine scrutiny by making roving inquiries on matters already available on record at the time reasons were recorded. For other investor subscriptions the AO had no fresh tangible material, did not record fresh reasons nor obtain fresh approval under section 151, and gathered information by calling bank statements and conducting ad hoc inquiries-a course found to be impermissible. Consequently, those additions lacked foundational basis and were deleted. [Paras 29, 30, 36]

Additions in respect of the other investor subscriptions (aggregate additions) are deleted.

Requirement of fair opportunity of hearing before appellate authority - Power of appellate authority under section 250(4) to summon and record statements for verifying investor credentials - Complaint that CIT(A) decided appeal without proper opportunity was rejected; CIT(A)'s conduct in summoning witnesses and recording statements was permissible and the appellant was not deprived of hearing. - HELD THAT: - The Tribunal reviewed the record of the appellate proceedings and found that detailed written submissions were considered and reproduced by the CIT(A). Further, the appellate authority exercised powers under section 250(4) to summon and record statements, provided opportunities for cross examination in related matters, and addressed objections. No specific instance of denial of opportunity was established. Accordingly, the grievance about lack of hearing before the CIT(A) was dismissed. [Paras 8, 15]

Ground alleging denial of proper opportunity before CIT(A) is dismissed.

Final Conclusion: The appeal is partly allowed: the reassessment notice under section 148/assumption of jurisdiction under section 147 was upheld, but additions under section 68 relating to share capital from M/s. Prraneta Industries Ltd. and the further additions based on expanded/re opened inquiries into other subscriber companies were deleted; the CIT(A) did not err in the appellate procedure.

Rejection of books of accounts - estimation of income - additions for unexplained cash deposits - use of rejected books for independent additions - acceptance of explanation for cash deposits from disclosed bank accounts - condonation of delay

Rejection of books of accounts - estimation of income - Whether the Assessing Officer was justified in rejecting the assessee's audited books and estimating business income at Rs. 60,00,000 instead of the declared income supported by audited accounts. - HELD THAT: - The Tribunal accepted the finding recorded by the Assessing Officer and affirmed by the Commissioner (Appeals) that the assessee failed to produce books of account and supporting proofs despite several opportunities. The assessee did not contend before the Tribunal that it could produce the books if the matter were restored to the file of the Assessing Officer. In these circumstances the Tribunal found no ground to interfere with the rejection of the books and the consequent estimation of income by the Assessing Officer, and therefore rejected the grounds challenging that estimation. [Paras 7]

Grounds challenging rejection of books and estimation of income are rejected; the assessment and CIT(A)'s confirmation on this point are upheld.

Additions for unexplained cash deposits - use of rejected books for independent additions - acceptance of explanation for cash deposits from disclosed bank accounts - Whether the addition made by the Assessing Officer of the cash deposits of Rs. 1,07,27,000 as unexplained cash deposits in bank is sustainable. - HELD THAT: - The Tribunal, following the ratio of the Karnataka High Court in CIT v. Bahubali Neminath Muttin, held that once books of account are rejected by the Assessing Officer the same rejected books cannot be relied upon to make independent additions. Applying that principle, the Tribunal deleted the addition. Independently on facts, the Tribunal examined bank statements and the audited balance sheet which showed disclosed bank accounts. The assessee furnished a reconciliation showing total cash deposits in the disclosed accounts and explained a substantial portion by cash sales and cash withdrawals from the same accounts; the Tribunal also noted the confirmed estimation-related amount available to explain the source. On the factual matrix the Tribunal found the cash deposits explained and therefore, on merits as well, the addition was not justified. [Paras 12, 13, 14]

Addition of Rs. 1,07,27,000 treated as unexplained cash deposits is deleted.

Final Conclusion: Delay in filing the appeal was condoned; the appeal is partly allowed - the rejection of books and estimation of income is upheld, whereas the addition for unexplained cash deposits is deleted and the appeal is otherwise disposed accordingly.

Application of CBDT Circular No. 3/2018 monetary limits for filing departmental appeals - scope of assessment under section 153A following search and seizure - exception for appeals where constitutional validity of a provision is under challenge - recall of Tribunal order under section 254(2) - power of appellate authority to admit fresh evidence in appeal

Application of CBDT Circular No. 3/2018 monetary limits for filing departmental appeals - monetary limit for filing appeals before the Tribunal - Whether the CBDT Circular No.3/2018 disentitles the Department from filing appeals before the Tribunal where the 'tax effect' is below the prescribed monetary limit. - HELD THAT: - The Tribunal applied CBDT Circular No.3/2018 which prescribes retrospective monetary limits and directs that appeals should not be filed where the tax effect is below the specified limit for the ITAT (Rs. 20 lakhs). The Tribunal found that the tax effect in the present appeals was below the threshold and that none of the exceptions in paragraph 10 of the Circular were shown to apply. Consequently the Tribunal dismissed the Department's appeals while granting liberty to file a Miscellaneous Petition if it could show applicability of any exception or that the tax effect exceeded the monetary limit. The present Miscellaneous Petitions challenging that application were examined and the Tribunal's approach in applying the Circular was upheld. [Paras 4, 7, 8]

The Tribunal correctly applied CBDT Circular No.3/2018 and the Department is, in the absence of any shown exception or higher tax effect, disentitled to prosecute the appeals; the appeals were dismissed.

Scope of assessment under section 153A following search and seizure - exception for appeals where constitutional validity of a provision is under challenge - Whether the Department had raised a challenge to the constitutional validity of section 153A (or related provisions) so as to bring the cases within the exception to the Circular and permit filing of appeals despite the monetary limit. - HELD THAT: - The record shows that in earlier rounds the Department framed questions before the High Court about the correctness of the Tribunal's interpretation of section 153A and sought remand for fresh consideration of those questions. However, on the present Miscellaneous Petitions the Tribunal found that the Department had not raised the constitutional validity of section 153A before the Tribunal in the first round of litigation and that this Tribunal is not competent to adjudicate the constitutional validity of statutory provisions. The Tribunal therefore held that the present cases do not fall within the Circular's exception for matters where constitutional validity of a provision is under challenge. [Paras 7]

The Department did not establish that constitutional validity of section 153A (or related provisions) was raised so as to trigger the Circular's exception; the Tribunal was therefore correct in treating the Circular as applicable.

Recall of Tribunal order under section 254(2) - power of appellate authority to admit fresh evidence in appeal - Whether there was a 'mistake apparent from record' warranting recall of the Tribunal's common order dated 26/06/2019 under section 254(2) so as to permit decision on merits despite the monetary limits. - HELD THAT: - The Department sought recall on the ground that the Tribunal erred in holding the Department disentitled to file appeals because the cases allegedly fell under the Circular's exceptions. The Tribunal examined that contention, observed that the Department had not established applicability of any exception or raised constitutional validity before the Tribunal originally, and noted that the Tribunal is not the forum to decide constitutional questions. Finding no mistake apparent on the face of the record that would justify recall under section 254(2), the Tribunal refused to reopen its order. [Paras 7, 8]

Miscellaneous Petitions under section 254(2) to recall the Tribunal's order are dismissed for want of any mistake apparent on the record.

Power of appellate authority to admit fresh evidence in appeal - High Court remand of specified cases to the Tribunal for fresh consideration of the question on merits. - HELD THAT: - The Kerala High Court, while entertaining review petitions in respect of 21 of the 84 cases, set aside the Tribunal's order and remanded those cases to the Tribunal to re-consider the questions raised taking into account principles laid down by competent courts and to decide on merits. The High Court clarified that its direction to remand did not disturb the common question on appellate authorities' power to receive evidence, which it left undisturbed. [Paras 2, 7]

The High Court remanded the identified 21 cases to the Tribunal for fresh consideration on merits; that remand stands as recorded.

Final Conclusion: The Tribunal dismissed the Department's Miscellaneous Petitions seeking recall of its order. It held that CBDT Circular No.3/2018 applied to these cases (tax effect below the prescribed limit), that the Department had not established applicability of any exception (including any valid challenge to constitutional validity) and that there was no mistake apparent on record justifying recall; accordingly the Miscellaneous Petitions are dismissed, subject to liberty to the Department to file a Miscellaneous Petition if it can show an exception or a tax effect exceeding the monetary limit.

Forfeiture of advance - allowability as revenue loss v. capital loss - business of purchase and sale of real estate - remand for fresh verification of evidence - principle of natural justice - opportunity of hearing

Forfeiture of advance - allowability as revenue loss v. capital loss - business of purchase and sale of real estate - Whether the advance forfeited by the assessee in relation to an Agreement of Sale should be treated as an allowable business loss or as a disallowable capital loss - HELD THAT: - The Tribunal noted that the assessee is a partnership firm whose objects include purchase and sale of land and other real estate and that the assessee produced material (partnership deed, agreement of sale, correspondence, legal opinion and notices) indicating an intention to resell the property rather than to hold it as a fixed asset. The Assessing Officer and the CIT(A) upheld the addition treating the forfeited advance as capital in nature, but the Tribunal found that the lower authorities did not consider or record the sequence of events and the evidence of attempts to recover the advance. In view of the omission to deal with material evidence and in the interest of natural justice, the Tribunal did not decide the question on merits; instead it remitted the matter to the Assessing Officer for a limited purpose - to verify and examine the evidence submitted by the assessee, to consider the claim in accordance with law, and to afford the assessee adequate opportunity of hearing. The Tribunal recognised relevant precedents relied upon by the assessee but did not rest its decision on them, preferring remand for fact finding and application of law by the AO. [Paras 5, 6]

Remitted to the Assessing Officer for verification and fresh consideration of the evidence and claim; assessee to be given adequate opportunity of hearing.

Final Conclusion: The Tribunal found that material facts and evidence relating to the forfeited advance were not considered by the lower authorities, remitted the issue to the Assessing Officer for limited re examination and verification (with opportunity of hearing to the assessee), and allowed the appeal for statistical purposes.

Legality of stamp duty on Bills of Entry - interpretation of "delivery order" under Article 24 of Schedule I to the Bombay Stamp Act - non-applicability of stamp duty under Article 24 to bill of entry - refund of unlawfully collected stamp duty - reliance on preceding Division Bench judgment

Legality of stamp duty on Bills of Entry - interpretation of "delivery order" under Article 24 of Schedule I to the Bombay Stamp Act - non-applicability of stamp duty under Article 24 to bill of entry - Validity of charging and collection of stamp duty on Bills of Entry filed under the Customs Act. - HELD THAT: - The Court held that the question is no longer res integra in view of the Division Bench decision cited in the judgment, which concluded that presentation of a 'bill of entry' merely gives clearance for home consumption or warehousing and is distinct from a document which constitutes a 'delivery order' for the purposes of Entry 24 of Schedule I to the Bombay Stamp Act. Relying on the reasoning reproduced from that decision (paras 76-78 of the cited judgment), the Court concluded that authorities cannot charge stamp duty under Article 24 on the 'bill of entry'. Applying that principle to the facts, the communication dated 25.08.2020 which directed or recorded levy/collection of stamp duty on the Bills of Entry was quashed and set aside, and the amounts collected as stamp duty were ordered to be refunded to the petitioners. The petitioners' claim for interest was not pressed before the Court and therefore was not adjudicated. [Paras 4, 5]

Impugned communication dated 25.08.2020 quashed; amounts collected as stamp duty on Bills of Entry ordered to be refunded to the writ applicants within four weeks; interest claim not pressed and not decided.

Final Conclusion: The writ petition succeeds: charging of stamp duty on Bills of Entry under Article 24 was held impermissible on the stated precedent; the impugned communication is set aside and the amounts collected as stamp duty are to be refunded to the petitioners within four weeks; the claim for interest was not canvassed and remains undecided.

Prohibited goods under section 2(33) of the Customs Act - confiscation for import without mandatory certification - Duty Free Import Authorisation (DFIA) entitlement - distinction between prohibited and restricted goods - option to redeem non-prohibited seized goods on payment of redemption fine - mandatory Indian Standards/BIS certification and Appendix-III of EXIM Policy - FSSAI clearance and domestic food-safety standards

Prohibited goods under section 2(33) of the Customs Act - confiscation for import without mandatory certification - Duty Free Import Authorisation (DFIA) entitlement - distinction between prohibited and restricted goods - Whether skimmed milk powder imported under DFIA without production of BIS certificate becomes "prohibited goods" and is liable to absolute confiscation and penalty under the Customs Act. - HELD THAT: - The Tribunal held that a commodity cannot be treated as "prohibited goods" under section 2(33) unless the import of that commodity is subject to a prohibition under the Customs Act or any other law. Skimmed milk powder is freely importable under the ITC(HS) classification and is allowable under the DFIA issued in this case. Non-production of a BIS certificate, which imposes a condition or restriction, does not convert a freely importable item into "prohibited goods." The absence of BIS certification therefore did not justify absolute confiscation under section 111(d) or imposition of penalty under section 112(a). The Tribunal relied on the distinction between prohibited and restricted goods and analogous precedent reasoning to reject the Department's characterization of the goods as prohibited. The Tribunal further noted that the DFIA had been issued and that no statutory provision made the goods intrinsically prohibited by reason only of non-production of BIS certification. [Paras 5, 6, 7]

Skimmed milk powder imported under DFIA without production of BIS certificate is not "prohibited goods" and is not liable to absolute confiscation or penalty on that sole ground.

Option to redeem non-prohibited seized goods on payment of redemption fine - mandatory Indian Standards/BIS certification and Appendix-III of EXIM Policy - FSSAI clearance and domestic food-safety standards - Whether, in the absence of BIS certificate, the authorities should have offered redemption or verification measures and whether compliance with domestic food-safety standards (FSSAI) affects the outcome. - HELD THAT: - The Tribunal observed that where goods are not "prohibited," section 125(1) principles require that the person from whose custody goods were seized be given the option to redeem goods on payment of a redemption fine; complete confiscation without offering redemption was inappropriate. The Tribunal noted that Para 2 of Chapter 1A of the EXIM Policy obliges exporters to obtain BIS license, and that FSSAI testing and clearance in this case showed compliance with domestic food-safety standards; FSSAI and BIS standards are complementary. The Tribunal also observed that the Department could have got the goods tested at the importer's cost to ascertain conformity but had not done so. On these considerations the course of absolute confiscation and penalty was not warranted. [Paras 5, 6]

Authorities should have considered redemption or verification; FSSAI clearance and lack of statutory prohibition defeat the case for confiscation and penalty, and the impugned confiscation and penalty are therefore not justified.

Final Conclusion: The appeal is allowed; the imported skimmed milk powder is not "prohibited goods" by reason of non-production of a BIS certificate and is not liable to absolute confiscation or penalty under the Customs Act; consequential relief to follow as per law.

Anticipatory bail under Section 438 Cr.P.C. - forgery of valuation certificate - criminal colour to civil dispute - custodial interrogation - embezzlement and inducement of investors

Anticipatory bail under Section 438 Cr.P.C. - forgery of valuation certificate - custodial interrogation - criminal colour to civil dispute - Whether anticipatory bail to the petitioner should be granted in FIR No.99 dated 27.10.2020. - HELD THAT: - The petition for anticipatory bail was considered in the context of allegations that the accused induced investors by a purportedly forged valuation certificate and thereafter large sums were embezzled from the company. The Court observed multiple disputed factual contentions concerning the genuineness of the valuation certificate, alleged forged consents and other documents, and conflicting assertions about the petitioner's involvement and resignation from directorship. Noting the prosecutrix's and investigating agency's case that substantial funds were transferred out and that the signature on the valuation certificate was denied by the purported author, the Court refrained from adjudicating the veracity of documentary evidence at the bail stage so as not to prejudice the trial. Given the nature and seriousness of the allegations relating to forged documents and the need to investigate the manner of transfer of funds, the Court concluded that custodial interrogation of the petitioner was appropriate and that no indulgence of anticipatory bail should be granted. [Paras 19]

Anticipatory bail petition dismissed; custodial interrogation of the petitioner directed and no comment made on merits or genuineness of the documents.

Final Conclusion: The High Court dismissed the petition for anticipatory bail on the grounds that allegations of forgery and embezzlement warranted custodial interrogation; the Court declined to express any opinion on the merits of the allegations.

Dispensing with convening and holding meetings of shareholders and sole secured creditor - convening meeting of unsecured creditors - compliance with the Companies Act, 2013 and Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - appointment of chairperson and scrutinizer for creditors' meeting - publication of notice of meeting in newspapers - filing of chairperson's and scrutinizer's reports and subsequent petition for sanction

Dispensing with convening and holding meetings of shareholders and sole secured creditor - compliance with the Companies Act, 2013 and Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Whether meetings of the Shareholders and the Sole Secured Creditor of the Transferor Company and the Shareholders of the Transferee Company could be dispensed with - HELD THAT: - The Tribunal recorded that the applicant companies had followed the statutory procedure in framing the scheme, the boards had approved the scheme, statutory auditors/chartered accountants had certified the details of shareholders and creditors and compliance of accounting treatment, and all material facts and necessary documents were placed before the Tribunal. On that basis the Tribunal concluded that the statutory conditions for dispensing with convening those meetings were satisfied and no further meetings of those classes were necessary. [Paras 5, 6]

Meetings of the Shareholders and the Sole Secured Creditor of the Transferor Company and the Shareholders of the Transferee Company are dispensed with.

Convening meeting of unsecured creditors - appointment of chairperson and scrutinizer for creditors' meeting - Whether a meeting of the Unsecured Creditors of the Transferor Company should be convened and the manner of conducting that meeting - HELD THAT: - The Tribunal directed that the meeting of Unsecured Creditors (including trade payables) of the Transferor Company be convened by video conference on the specified date and time for considering the scheme. The Tribunal appointed a Chairperson and a Scrutinizer for the meeting and fixed the quorum (30% of total value of unsecured creditors for the meeting) and instructed the applicants to follow extant statutory rules in convening the meeting. [Paras 5, 6]

The meeting of Unsecured Creditors is to be convened by video conference on the specified date; Chairperson and Scrutinizer are appointed and quorum and procedural compliance are directed.

Publication of notice of meeting in newspapers - filing of chairperson's and scrutinizer's reports and subsequent petition for sanction - Directions as to notice publication, compliance with rules, filing of reports and further steps after the creditors' meeting - HELD THAT: - The Tribunal directed publication of the meeting notice in specified English and Kannada newspapers and required the Chairperson and Scrutinizer to file their reports with the Tribunal registry within two weeks of the meeting's conclusion. Thereafter the applicant companies were granted two weeks to file the appropriate petition for sanction of the scheme, subject to all statutory compliances. The Tribunal also preserved the right of any aggrieved person to seek interim relief by filing an application. [Paras 6]

Notice publication, filing of the Chairperson's and Scrutinizer's reports within two weeks, and filing of the sanction petition within two further weeks are directed; aggrieved parties may file interim applications.

Final Conclusion: The Tribunal, being satisfied with statutory compliance and certifications, dispensed with certain class meetings, directed convening the unsecured creditors' meeting by video conference with appointed Chairperson and Scrutinizer, ordered publication of notice and filing of reports, and permitted the applicants to file the petition for sanction thereafter, while preserving remedies for aggrieved parties.

Rectification of Order - clerical or arithmetical mistakes - error apparent on the face of the record - accidental slip or omission - power to amend vs power to modify

Rectification of Order - clerical or arithmetical mistakes - accidental slip or omission - Whether the interlocutory application under Rule 154 NCLT Rules, 2016 for rectification of the order dated 05.03.2020 is maintainable to correct the alleged errors - HELD THAT: - The Tribunal examined Rule 154 of the National Company Law Tribunal Rules, 2016 and the limited scope of rectification powers which permit correction only of clerical or arithmetical mistakes or errors arising from an accidental slip or omission. The Bench observed that the present application sought correction of a substantive or factual conclusion reached in the order of 05.03.2020 and amounted to an attempt to substitute the Tribunal's view rather than to correct a manifest clerical/arithmetic error. Reliance was placed on the principle that rectification under Rule 154 (and Section 420(2) as explained in cited authority) is confined to mistakes apparent on the face of the record which are self-evident and do not require travel beyond the record or re-appraisal of evidence or reasoning. The Tribunal found that the applicants had not demonstrated any accidental slip, omission, or an error so patent as to fall within the narrow rectification jurisdiction, and that entertaining the IA would be tantamount to permitting a review or modification of substantive findings, which the rule does not allow. [Paras 11, 12, 13, 14]

IA/68/KOB/2020 dismissed as not maintainable under Rule 154; no rectification warranted

Final Conclusion: The application for rectification under Rule 154, seeking correction of substantive or factual conclusions in the order dated 05.03.2020, is rejected because rectification is limited to clerical or arithmetical mistakes or errors apparent on the face of the record and cannot be used to modify substantive findings.

Interim injunction - prima facie case and balance of convenience - irreparable injury - registration of lease and retrospective effect - possession pending proceedings - vacation of office of director under Section 167 - disclosure of interest and related party transactions

Interim injunction - prima facie case and balance of convenience - irreparable injury - Whether interim reliefs claimed by the petitioners should be granted during pendency of the main application - HELD THAT: - The Tribunal confined itself to the three established interlocutory tests - existence of a prima facie case, balance of convenience in favour of the applicant, and likelihood of irreparable harm. After hearing contentions and examining the materials, the Tribunal found that the petitioners failed to establish a prima facie case: at the time of filing there was no registered lease and the petitioners' asserted possession (by deputing a security guard and photographs) did not amount to possession recognised for injunctive protection. The Tribunal further held that the balance of convenience did not favour the petitioners and that irreparable loss was not shown which could not be compensated in money. On these bases the prayer for interim reliefs was rejected. [Paras 39, 44, 46, 47]

Interim reliefs claimed by the petitioners are refused.

Possession pending proceedings - registration of lease and retrospective effect - Whether the petitioners were in possession of the land on behalf of the company and whether the registered lease could be given retrospective effect to vest possession in the lessee from an earlier date - HELD THAT: - The Tribunal held that deputing a security guard and filing photographs did not constitute possession sufficient for interim protection; therefore the petitioners' claim to be in possession on behalf of the company was not accepted. The Tribunal also observed that a lease which was unregistered at the time of filing could not confer possession on the lessee, and a subsequently registered lease cannot be given retrospective effect so as to validate possession from an earlier date. Consequently, the respondents' plea that registration conferred retrospective possession was rejected. [Paras 44, 45, 46]

The petitioners are not accepted to be in possession on behalf of the company; the registered lease does not operate retrospectively to vest prior possession in the lessee.

Possession pending proceedings - interim injunction - Whether any interim protective measure should be directed to preserve the company's interest in the land during the pendency of the application - HELD THAT: - Although the petitioners' substantive interim pleas were refused, the Tribunal formed an opinion that certain acts of the respondents were prejudicial to the company's interest. To protect those interests during pendency of the main application, the Tribunal directed that no construction work or installation of new things shall be carried out on the land pursuant to either the unregistered or the registered lease, and that possession shall remain with the company. Further, neither party (respondents 2 to 7 nor the petitioners) shall interfere with the possession of the company while the matter proceeds to final hearing. [Paras 48]

Directed preservation measures: no construction or installations and possession to remain with the company; no party shall interfere with such possession during pendency.

Vacation of office of director under Section 167 - disclosure of interest and related party transactions - Whether questions relating to directors' disqualification under Section 167 and non disclosure of interest would be adjudicated at the interlocutory stage - HELD THAT: - Parties relied on competing contentions under Section 167 and Section 184 concerning disqualification and non disclosure of interest. The Tribunal observed that these assertions go to the merits of the main application and are to be considered at final hearing. Consequently, the Tribunal did not decide the substantive questions of directors' vacation or related party culpability in the interlocutory order and left them for determination on merits. [Paras 41, 42]

Questions of directors' disqualification and disclosure of interest reserved for final adjudication in the main hearing.

Final Conclusion: The petitioners' application for interim reliefs is dismissed for lack of a prima facie case, balance of convenience and irreparable injury; the petitioners' asserted possession is not recognised and the registered lease cannot be given retrospective effect to confer prior possession on the lessee. However, as a protective measure, no construction or installation shall be undertaken on the land and possession shall remain with the company during pendency of the main application; substantive disputes including directors' disqualification and related party issues are left for final hearing.

Sanction of Scheme of Arrangement - Reduction of Share Capital with cancellation to set off accumulated losses - Amalgamation and vesting of assets and liabilities by operation of law - Continuity of employment on amalgamation - Change of corporate name consequent to sanction - Service of notice to statutory/regulatory authorities and treatment of objections - Preservation of revenue's right of recovery despite sanction - Compliance with accounting standards and procedural requirements for sanction

Sanction of Scheme of Arrangement - Compliance with procedural requirements - Sanction of the Scheme of Arrangement submitted by the Transferor and Transferee companies - HELD THAT: - The Tribunal examined the petition, the First Motion directions, the Chairman's report, service and publication of notices to statutory authorities, and statutory reports. The Regional Director filed a report and raised no objection after noting protections for employees and the proposed reduction under the Scheme; the Official Liquidator and his chartered accountant reported adversely nothing that would prevent sanction. The Petitioner furnished the statutory auditor's certificate regarding accounting standards and stated that no investigations under the Companies Act were pending. In the absence of any other objection on record and having found that requisite statutory compliances were fulfilled, the Tribunal sanctioned the Scheme and recorded that sanction does not preclude action in accordance with law for any deficiency or violation subsequently discovered. [Paras 9, 15, 16, 17, 18]

Scheme of Arrangement sanctioned subject to the Tribunal's observations and without prejudice to subsequent lawful action for any deficiency or violation

Reduction of Share Capital with cancellation to set off accumulated losses - Accounting entries for cancellation and set off - Reduction of the Transferee Company's equity share capital and cancellation of shares to write off accumulated losses as provided in the Scheme - HELD THAT: - The Tribunal recorded the proposal in the Scheme for proportionate reduction of paid-up share capital of the Transferee Company and that no consideration was payable on cancellation. The Regional Director had noted the proposed reduction under the Scheme and the corresponding accounting treatment to utilize the cancelled share capital to write off accumulated losses; no objection was raised. The Tribunal therefore ordered the reduction of equity capital and directed the Transferee Company to pass the accounting entries effecting cancellation and set-off as per the Scheme. [Paras 6, 7, 17, 19]

Reduction of equity share capital sanctioned and accounting entries to cancel shares and write off accumulated losses to be effected as directed

Amalgamation and vesting of assets and liabilities by operation of law - Vesting of all properties, rights, liabilities and proceedings of the Transferor Company in the Transferee Company upon sanction - HELD THAT: - Pursuant to Section 232(3) as invoked in the Scheme, the Tribunal held that all assets, rights and interests of the Transferor Company shall, without further act or deed, stand transferred and vested in the Transferee Company and that all liabilities, obligations and pending proceedings by or against the Transferor Company shall continue by or against the Transferee Company. The appointed date for parts of the Scheme was fixed as 1 January 2019. [Paras 17, 19]

Assets, rights and liabilities of the Transferor Company shall vest in the Transferee Company and pending proceedings shall continue against the Transferee Company

Continuity of employment on amalgamation - Employees of the Transferor Company shall continue in service with the Transferee Company without break - HELD THAT: - The Scheme provided, and the Tribunal ordered, that all employees of the Transferor Company in service immediately preceding the effective date shall become employees of the Transferee Company without any break or interruption in service. This direction was sanctioned as part of the Scheme's terms. [Paras 17, 19]

Employees to be absorbed by the Transferee Company with continuity of service

Change of corporate name consequent to sanction - Change of the Transferee Company's name as provided in the Scheme - HELD THAT: - The Tribunal ordered that the Transferee Company's name be changed from 'Takata India Private Limited' to 'Joyson Anand Abhishek Safety Systems Private Limited' and directed the filing of requisite forms with the Registrar of Companies to effect the change. [Paras 19]

Name change of the Transferee Company sanctioned and Registrar filings directed

Service of notice to statutory/regulatory authorities and treatment of objections - Preservation of revenue's right of recovery - Noting of Income Tax Department's objections and confirmation that sanction does not preclude revenue from pursuing recovery proceedings - HELD THAT: - The Tribunal recorded that notice had been served on statutory authorities; the Income Tax Department had filed a memo of objections although no representative attended. The Tribunal considered the NCLAT and Supreme Court authorities (as referred in the order) holding that sanction of a scheme does not preclude the revenue from taking appropriate proceedings for recovery of statutory dues from transferor, transferee or other persons liable. On that basis and in light of absence of other objections, the Tribunal proceeded to sanction the Scheme while expressly noting that the sanction would not impede lawful action by authorities to recover dues. [Paras 11, 12, 13, 17, 18]

Income Tax objections noted; sanction granted subject to the reservation that revenue may pursue recovery proceedings as permitted by law

Official Liquidator's report and consequential directions - Acceptance of the Official Liquidator's report and direction to pay remuneration to auditor appointed by the Official Liquidator - HELD THAT: - The Official Liquidator reported that the Transferor Company's affairs were not conducted prejudicially and the chartered accountant's verification supported the swap ratio, accounting policies and regularity of statutory filings. The Tribunal accepted these reports and directed the Transferor Company to pay a specified remuneration to the Official Liquidator for the auditor who investigated the Transferor Company's affairs. [Paras 8, 9, 10]

Official Liquidator's report accepted and directed payment of auditor's remuneration as ordered

Final Conclusion: The Tribunal, having considered statutory reports, service on regulators, the auditors' and Official Liquidator's findings and compliance with accounting and procedural requirements, sanctioned the Scheme of Arrangement including reduction of share capital, amalgamation with vesting of assets and liabilities, continuity of employees and change of name, while preserving the rights of statutory authorities (including revenue) to pursue any lawful action for recovery or to remedy any deficiency.

Settlement between parties - disposal of company petition on settlement - strict adherence to settlement terms - revival of petition on breach of settlement - liberty to file fresh company petition

Settlement between parties - disposal of company petition on settlement - strict adherence to settlement terms - Company petition disposed of pursuant to a settlement executed between the parties and recorded before the Tribunal. - HELD THAT: - The parties informed the Tribunal that they have mutually settled the dispute by executing a Memo of Settlement dated 21.12.2020, which sets out payment instalments, consequences of default and a finality clause. Having considered the pleadings and the settlement placed on record, the Tribunal accepted the settlement and disposed of C.P.(IB) No.182/BB/2020, directing the parties to strictly adhere to the settlement terms. The Tribunal recorded that failure to comply with the instalment schedule would entitle the petitioner to enforce his rights, including by filing appropriate proceedings and reviving the company petition without further steps. The Tribunal made no order as to costs. [Paras 1, 4, 5, 6]

C.P.(IB) No.182/BB/2020 disposed of in terms of the settlement dated 21.12.2020; parties directed to comply with settlement and petitioner granted liberty to approach the Adjudicating Authority to revive the petition on default; no order as to costs.

Final Conclusion: The company petition is disposed of by consent in terms of the settlement dated 21.12.2020; compliance with the settlement is directed and the petitioner may file a fresh/company petition to revive the proceedings if the settlement is breached.

Voluntary liquidation - Compliance with Section 59 of the Insolvency and Bankruptcy Code, 2016 - IBBI (Voluntary Liquidation Process) Regulations, 2017 - Final report and liquidation accounts - Dissolution of corporate person

Voluntary liquidation - Compliance with Section 59 of the Insolvency and Bankruptcy Code, 2016 - IBBI (Voluntary Liquidation Process) Regulations, 2017 - Final report and liquidation accounts - Dissolution of corporate person - Whether the voluntary liquidation process of the corporate person was completed in accordance with law and whether the corporate person should be dissolved. - HELD THAT: - The Tribunal found that the board of the Company resolved to commence voluntary liquidation and that the special resolution for liquidation and appointment of the liquidator were passed and communicated to the Registrar of Companies and the IBBI. The liquidator made the requisite public announcement, prepared the preliminary and final reports, maintained the liquidation account, caused the liquidation accounts to be audited and addressed statutory claims (including payment of an Income Tax demand). The liquidator declared that there were no outside liabilities at commencement, no claims were received in response to the public announcement, the waterfall distribution was effected, surplus funds were distributed to contributories (including repatriation as required), and there were no undistributed assets. The Final Report and audited statement of accounts were submitted to the ROC and the IBBI, and an affidavit of compliance was filed. On these findings the Tribunal concluded that the liquidator complied with the requirements of Section 59 of the Code and the IBBI Regulations and that the affairs of the Company have been wound up in accordance with law. [Paras 4, 5]

The petition was allowed and M/s Flocare Labs India Private Limited was ordered to be dissolved with immediate effect; the Registry and the liquidator were directed to forward copies of the order to the Registrar of Companies and other statutory authorities.

Final Conclusion: The Tribunal held that the voluntary liquidation was conducted in compliance with the Code and the IBBI Regulations, the liquidation accounts and final report were in order, there were no undistributed assets or unresolved claims, and accordingly the Company was dissolved forthwith with directions to communicate the order to the Registrar of Companies and other statutory authorities.

Limitation and acknowledgment of debt - financial debt arising from advance under commercial agreement - scope of Insolvency and Bankruptcy Code limited to existence of debt and default - tribunal not to adjudicate validity of underlying commercial contracts in Section 7 proceedings - moratorium and appointment of Interim Resolution Professional

Limitation and acknowledgment of debt - Application under Section 7 is not barred by limitation because the corporate debtor acknowledged the debt on 28.11.2018. - HELD THAT: - The Tribunal found that the corporate debtor, by its letter dated 28.11.2018, acknowledged its obligation to refund the advance and communicated that it was attempting to sell property to settle the liability. That acknowledgment revived or rendered the claim actionable within limitation, and therefore the Section 7 application filed on 21.01.2020 was held to be within time. [Paras 10]

Limitation plea rejected; application held within limitation.

Tribunal not to adjudicate validity of underlying commercial contracts in Section 7 proceedings - Objections regarding non-registration of the share purchase agreement and absence of common seal were not adjudicated by the Tribunal in the Section 7 proceeding. - HELD THAT: - The Tribunal observed that challenges to the validity or enforceability of the underlying agreement (including alleged non-registration and absence of common seal) fall outside the scope of jurisdiction in a Section 7 insolvency petition. The Tribunal therefore declined to probe those contentions and noted, alternatively, that acts of company directors binding the company would render the company liable irrespective of the common seal technicality. [Paras 11]

Objections on registration and common seal not entertained in Section 7; validity of agreement not decided.

Scope of Insolvency and Bankruptcy Code limited to existence of debt and default - Section 7 proceedings are confined to determining whether a financial debt exists and whether default has occurred, not to deciding the broader validity of contractual arrangements. - HELD THAT: - The Tribunal reiterated that the IBC's scope in a Section 7 petition is limited to establishing the existence of a debt and default. Detailed adjudication of contractual validity or ancillary disputes is not the function of the insolvency adjudicating process under Section 7. [Paras 12]

IBC scope limited to existence of debt/default; substantive contract validity issues are beyond Section 7 adjudication.

Financial debt arising from advance under commercial agreement - The advance paid under the Share Purchase Agreement qualifies as a financial debt and the applicant is a financial creditor for the purposes of the Code. - HELD THAT: - Applying the definition of 'financial debt', the Tribunal treated the advance payment made under the share purchase agreement as an amount disbursed against consideration for the time value of money and therefore within the statutory definition. On the basis of documentary material and acknowledgments, the applicant was held to be a financial creditor and the petition was complete in terms of Section 7 requirements. [Paras 14, 15]

Advance held to be a financial debt; applicant recognized as Financial Creditor and application complete.

Moratorium and appointment of Interim Resolution Professional - The Section 7 petition was admitted; moratorium under Section 14 was declared and an Interim Resolution Professional was appointed. - HELD THAT: - Upon finding default and that the Section 7 application was complete, the Tribunal admitted the application and ordered the moratorium to operate from the date of the order until completion of the CIRP or further orders. The Tribunal appointed the named insolvency professional as Interim Resolution Professional and directed public announcement and communication of the order to the parties and the IRP. [Paras 16]

Application admitted; moratorium imposed and IRP appointed; requisite directions issued.

Final Conclusion: The Section 7 petition was admitted: the advance was held to constitute a financial debt, the application was within limitation by reason of the corporate debtor's acknowledgment, objections as to registration and common seal were not adjudicated in the Section 7 proceeding, and a moratorium was directed with appointment of an Interim Resolution Professional.

Withdrawal of application under Section 12A - Regulation 30A and FORM-FA - Filing through the Interim Resolution Professional - Maintainability of withdrawal application filed by the Corporate Debtor/suspended board - Discretion of the Adjudicating Authority in terms of Swiss Ribbons

Withdrawal of application under Section 12A - Regulation 30A and FORM-FA - Filing through the Interim Resolution Professional - Maintainability of withdrawal application filed by the Corporate Debtor/suspended board - Whether the withdrawal application filed by the suspended board of directors of the Corporate Debtor complies with Section 12A and Regulation 30A and is maintainable. - HELD THAT: - The Tribunal examined the statutory scheme introduced by Section 12A (allowing withdrawal of an admitted application by the applicant) and the procedural requirements set out in Regulation 30A (including submission in FORM-FA through the Interim Resolution Professional and furnishing of a bank guarantee). FORM-FA expressly contemplates submission by the original applicant (through the IRP/RP). The amended Regulation 30A distinguishes withdrawal routes before and after constitution of the Committee of Creditors and prescribes that applications before constitution must be filed by the applicant through the IRP and submitted by the IRP to the Adjudicating Authority within three days. In the present case the application was filed by the suspended board of directors of the Corporate Debtor and not by the applicant who had filed the original Section 9 petition; it was therefore not in the manner envisaged by Section 12A read with Regulation 30A and FORM-FA. While the Tribunal noted the Supreme Court's recognition of the Adjudicating Authority's discretion in Swiss Ribbons, the statutory and regulatory procedure for withdrawal under Section 12A/Regulation 30A must be complied with. For these reasons the Tribunal held the impugned application to be not maintainable and liable to be dismissed. [Paras 17, 18, 19]

The withdrawal application filed by the suspended board of directors is not maintainable under Section 12A read with Regulation 30A and FORM-FA and is dismissed.

Final Conclusion: The application to terminate the corporate insolvency resolution process, filed by the suspended board of directors rather than by the original applicant through the IRP in the manner prescribed by Section 12A and Regulation 30A (FORM-FA), is not maintainable and is dismissed.

Assignment of debt - financial creditor - Committee of Creditors (CoC) - related party - registration of document - genuineness of transaction / transaction of accommodation - resolution professional's administrative powers - Regulation 28 of the CIRP Regulations - Section 5(7) of the Code

Registration of document - assignment of debt - resolution professional's administrative powers - Reliance on an unregistered assignment deed for admission of a claim before the Resolution Professional - HELD THAT: - The Tribunal held that an Assignment Agreement which was not registered on the date the claim was filed before the Resolution Professional could not be relied upon for admitting the claim. While noting that the Registration Act permits registration within four months and that registration relates back to the date of execution, the Tribunal emphasised that, for the purpose of admission of the claim, the document must be registered when the claim is made. Consequently the Resolution Professional did not err in declining to act on the unregistered Assignment Agreement when adjudicating the administrative admission of the claim. [Paras 15, 17]

Unregistered Assignment Agreement filed with the claim could not be looked into and the Resolution Professional rightly declined to admit the claim on that basis.

Related party - financial creditor - Committee of Creditors (CoC) - Section 5(7) of the Code - Whether the assignee can be treated as a member of the CoC when the assignor has been held to be a related party - HELD THAT: - The Tribunal accepted the Resolution Professional's position and prior finding of the Tribunal (in IA 677/2019) that the assignor is a related party of the corporate debtor. Applying the principle that an assignee stepping into the shoes of an assignor who is a related party acquires that status, the Tribunal held that the assignee cannot be included in the CoC as an independent financial creditor. Reliance was placed on precedent where an assignee of a related-party financial creditor was treated as a related party for the purposes of committee membership. [Paras 16, 17]

Assignee derives the related-party status of the assignor and therefore cannot be admitted as a separate member of the CoC.

Genuineness of transaction / transaction of accommodation - assignment of debt - resolution professional's administrative powers - Regulation 28 of the CIRP Regulations - Whether the Resolution Professional erred in rejecting the claim on grounds of suspicious circumstances and inadequate supporting material - HELD THAT: - The Tribunal found multiple circumstances casting doubt on the genuineness of the alleged assignment - the late-stage timing of the transaction during CIRP, the very small consideration relative to the debt assigned, the assignment by a creditor already declared a related party, discrepancies in documentary and banking records and the absence of the registered assignment when the claim was filed. Given these factors, and the Resolution Professional's administrative role in scrutinising claims under the Code and Regulations (including Regulation 28 regarding transfer of debt), the Tribunal concluded that the Resolution Professional acted within his powers in refusing to admit the claim and in treating the assignment as doubtful. [Paras 12, 13, 17, 18]

No error in the Resolution Professional's rejection of the claim; the transaction raised sufficient suspicion to justify non-recognition.

Final Conclusion: The interlocutory application seeking recognition of the assignee as financial creditor and inclusion in the CoC was dismissed: the Assignment Agreement was not registered when the claim was filed and could not be relied upon; the assignee steps into the shoes of an assignor already held to be a related party and therefore could not be admitted to the CoC; and the Resolution Professional permissibly rejected the claim in view of suspicious circumstances surrounding the transaction.

Interlocutory injunction restraining holding of extraordinary general meeting - corporate autonomy in calling and holding general meetings - removal of director by ordinary resolution - right of a director to make representation at the meeting and subsequent remedy for restoration - oppression and mismanagement as a matter of fact inquiry under sections 397/398

Interlocutory injunction restraining holding of extraordinary general meeting - corporate autonomy in calling and holding general meetings - The application for an injunction to restrain the convening and holding of the EGM was refused. - HELD THAT: - The Tribunal held that courts do not have jurisdiction to grant an injunction restraining the holding of an extraordinary general meeting where the majority shareholders exercise their corporate rights to call and conduct the meeting. Reliance was placed on precedent treating restraint of an EGM as a strong interference with corporate liberty and management, and the Tribunal observed that reasons for proposed resolutions need not be disclosed in the notice and are not ordinarily subject to judicial review. The Tribunal therefore declined to stay the EGM scheduled for 07.08.2020 and directed the applicants to present their grievances at the meeting.

Application for injunction against holding the EGM dismissed; EGM not stayed.

Removal of director by ordinary resolution - right of a director to make representation at the meeting and subsequent remedy for restoration - Relief restraining removal of the applicants as directors could not be granted. - HELD THAT: - The Tribunal observed that the Companies Act contemplates removal of a director by ordinary resolution and that such removal is a corporate decision. Consequently, the Tribunal declined to grant an order preventing removal of the applicants as directors; it noted that if removal occurs the affected persons retain statutory remedies, including making representations and seeking restoration or other relief under the law. The power of the shareholders to remove directors was treated as inherent and not amenable to pre-emptive judicial restraint in the interlocutory forum.

Prayer to restrain removal of the applicants as directors refused; statutory remedies remain available if removal occurs.

Oppression and mismanagement as a matter of fact inquiry under sections 397/398 - The contention that the EGM was improper and that the call to meeting was an afterthought was rejected. - HELD THAT: - The Tribunal found that the applicants' assertion that the EGM was improper amounted to an afterthought and was not a ground for interlocutory relief. While the applicants may raise grievances and allegations of oppressive conduct, such contentions implicate factual inquiries under the provisions dealing with oppression and mismanagement and are not a basis to restrain an imminent EGM in the absence of a demonstrated legal ground for interlocutory intervention. The Tribunal expected the applicants to present their grievances at the meeting and for requisitionists to facilitate representation as offered.

Allegation of impropriety in calling the EGM rejected for purposes of interlocutory relief; applicants directed to raise their grievances at the meeting.

Final Conclusion: The interlocutory application is dismissed. No injunction was granted to restrain the EGM or to prevent removal of the applicants as directors; the applicants were directed to present their grievances at the EGM and retain available statutory remedies thereafter.

Liquidation under the Insolvency and Bankruptcy Code - commercial wisdom of the Committee of Creditors - moratorium under the Insolvency and Bankruptcy Code - appointment of liquidator - powers and duties of the liquidator - bar on institution of suits subject to Section 52 - public announcement of liquidation

Liquidation under the Insolvency and Bankruptcy Code - commercial wisdom of the Committee of Creditors - Liquidation of the Corporate Debtor was ordered following the Committee of Creditors' resolution. - HELD THAT: - The Adjudicating Authority found that no viable resolution plan was received, the Corporate Debtor lacked significant assets and available bank balance was inadequate to meet professionals' fees. The Committee of Creditors in its Fourth meeting resolved to liquidate the Corporate Debtor. The Tribunal declined to interfere with the commercial wisdom of the CoC, observing the principle that neither the Adjudicating Authority nor the Appellate Authority is entitled to reverse the commercial decision of the CoC, as recognized in K. Sasidhar's case and affirmed by the Supreme Court in the Essar Steel proceedings. On this basis the application for liquidation under the Code was allowed and liquidation was initiated.

IA 311 of 2020 in CP(IB) 312 of 2018 is allowed and an order for initiation of liquidation of Aditya Exim Limited is passed.

Appointment of liquidator - powers and duties of the liquidator - moratorium under the Insolvency and Bankruptcy Code - bar on institution of suits subject to Section 52 - public announcement of liquidation - Consequential directions flowing from liquidation including appointment of the RP as Liquidator and operational directions were issued. - HELD THAT: - The Tribunal directed that the moratorium under the Code shall cease from the date of the liquidation order and that the Resolution Professional, Shri Gordhanbhai Ratnabhai Godhani, shall act as the Liquidator. The Liquidator was directed to issue a public announcement of liquidation and to send a certified copy of the order to the authority where the Corporate Debtor is registered. The order declared that, subject to Section 52, no suits or proceedings shall be instituted by or against the Corporate Debtor except that the Liquidator may institute proceedings with prior approval of the Authority. The order deemed the liquidation order to be a notice of discharge to officers, employees and workmen except where business is continued by the Liquidator, and vested all powers of the board and KMP in the Liquidator who shall exercise powers and duties as enumerated under the Code and the Liquidation Regulations. Personnel of the Corporate Debtor were directed to cooperate with the Liquidator, the Liquidator's entitlement to charge fee was recognised, and the Registry was directed to communicate the order to relevant authorities for compliance.

The RP is appointed as Liquidator and the specified consequential directions for conducting the liquidation are issued.

Final Conclusion: The Tribunal allowed the application for liquidation, accepted the CoC's resolution for liquidation without interfering in its commercial wisdom, appointed the RP as Liquidator, and issued the standard consequential directions (cessation of moratorium, public announcement, notification to registrar, bar on suits subject to Section 52, transfer of management powers to the Liquidator and related administrative directions).

Exclusion of CIRP period - extension beyond 330 days - interest of stakeholders - Committee of Creditors' approval by email - completion of CIRP as preferable to liquidation - effect of COVID-19 on insolvency timelines - Essar Steel principle on timelines

Exclusion of CIRP period - extension beyond 330 days - Essar Steel principle on timelines - Exclusion of 54 days from computation of the Corporate Insolvency Resolution Process period was permissible and is approved. - HELD THAT: - The Tribunal applied the guidance in the Supreme Court's Essar Steel decision that, although 330 days is the ordinary outer limit, the Adjudicating Authority may in appropriate cases permit time beyond that limit where a short period is needed to secure a resolution that is in the interest of stakeholders and delays are not attributable to the litigants. Having considered the factual matrix - including the period lost earlier in the CIRP, prior exclusions already granted, the receipt of a fresh resolution plan and related deposits, the CoC's approval by email for exploring the plan, and the economic disruption caused by the COVID 19 pandemic - the Tribunal found that excluding a further period would facilitate completion of the CIRP and better serve stakeholders than immediate liquidation. For these reasons the Tribunal exercised its power to exclude a further 54 days from the CIRP computation to enable deliberation and voting on the new resolution plan. [Paras 4, 5, 6]

A period of 54 days is excluded from the computation of the CIRP period; IA No. 334 of 2020 is disposed of accordingly.

Committee of Creditors' approval by email - completion of CIRP as preferable to liquidation - effect of COVID-19 on insolvency timelines - The Tribunal accepted the CoC's email approval and the RP's steps as sufficient basis to grant the exclusion in the circumstances to enable completion of the CIRP rather than initiation of liquidation. - HELD THAT: - The Tribunal noted that the Resolution Professional had obtained 74.05% approval from CoC members via email to explore and deliberate the newly received resolution plan and had taken requisite procedural steps (including receipt of earnest money). Coupled with the current stage of CIRP and the adverse economic impact of the pandemic, these factors were held to justify permitting the additional exclusion so that the CIRP may be completed instead of moving to liquidation, which the Code regards as a last resort. [Paras 5, 6]

The CoC's email approval and the RP's actions furnish a sufficient foundation to grant the exclusion and allow completion of the CIRP process.

Final Conclusion: The Tribunal allowed IA No. 334 of 2020 and directed exclusion of 54 days from the CIRP period to enable deliberation and voting on the newly received resolution plan, disposing of the application on that basis.

Definition of "amount in arrears" under the SVLDR Scheme - definition of "amount of duty" under the SVLDR Scheme - definition of "tax dues" under the SVLDR Scheme - applicability of voluntary disclosure and arrears categories - designated committee's power to verify and reject declarations - Sabka Vishwas (Legacy Dispute Resolution) Scheme as a complete statutory code

Definition of "amount in arrears" under the SVLDR Scheme - definition of "amount of duty" under the SVLDR Scheme - definition of "tax dues" under the SVLDR Scheme - applicability of voluntary disclosure and arrears categories - Construction and application of Sections 121 and 123 of the Finance (No.2) Act, 2019 (SVLDR Scheme) to determine what constitutes "tax dues" and whether the petitioner's case falls within clauses (c), (d) or (e) of Section 123. - HELD THAT: - The Court examined the statutory definitions. Section 121(c) defines "amount in arrears" and Section 121(d) defines "amount of duty"; Section 123 commences with the word "means", thereby prescribing a closed definition of "tax dues" for the Scheme. Clause (c) of Section 123 applies only where an enquiry, investigation or audit is pending and the duty has been quantified on or before 30.6.2019; clause (d) applies where the amount has been voluntarily disclosed and the amount of duty (central excise, service tax and cess) is stated in the declaration; clause (e) applies where an amount in arrears relating to the declarant is due, the amount in arrears being as defined in Section 121(c). Because the Scheme's definitions are not expansive, eligibility must fall squarely within one of these statutory categories to constitute "tax dues" under the Scheme. [Paras 6, 9, 10, 11, 12]

Sections 121 and 123 must be read strictly; the categories in Section 123 are exhaustive and the clauses (c), (d) and (e) have the limited applications as interpreted by the Court.

Designated committee's power to verify and reject declarations - Sabka Vishwas (Legacy Dispute Resolution) Scheme as a complete statutory code - Whether the designated committee was justified in rejecting the petitioner's declarations and whether the petitioner was eligible to have the declarations processed under the SVLDR Scheme. - HELD THAT: - The designated committee rejected the declarations on the ground that no duty amount was declared in the return as payable but not paid, and therefore the matter did not fall under arrears. The petitioner conceded that clauses (a) and (b) of Section 123 did not apply and relied on clauses (c),(d) and (e). The Court found none of those clauses applicable on the admitted facts: the petitioner had filed returns and deposited the amount of duty (albeit belatedly), so no duty remained payable under the service tax law, ruling out clause (d); clause (c) was inapplicable because no enquiry, investigation or audit was pending; clause (e) was inapplicable because the admitted facts did not bring the case within the definition of "amount in arrears" under Section 121(c)(iii). The Court observed that the Scheme is a self-contained statutory code intended to settle arrears and related disputes, and a declaration must conform to the statutory categories to be accepted by the designated committee. [Paras 10, 11, 12, 13, 15]

The designated committee's rejection was upheld as correct on the statutory construction and admitted facts; the petitioner was not eligible for processing of the declarations under the Scheme.

Final Conclusion: The writ petition is without merit. On statutory construction of the SVLDR Scheme and on the admitted facts that the petitioner had filed returns and deposited the duty (albeit belatedly), the declarations did not fall within the statutory categories of "tax dues" under Section 123 and the designated committee rightly rejected them; the petition is dismissed.

Exclusive fiscal jurisdiction under the Seventh Schedule - Article 366(29A) "deemed sale" in relation to lease transactions - territorial/legislative limitation on Centre's power to tax services that are in substance sales - negative list regime and levy of tax on services - separation of service and sale elements in composite transactions

Article 366(29A) "deemed sale" in relation to lease transactions - territorial/legislative limitation on Centre's power to tax services that are in substance sales - negative list regime and levy of tax on services - Whether the consideration received as rentals for lease of motor vehicles, being taxable as "deemed sale" under Article 366(29A), is leviable to service tax under the Finance Act, 1994 in the negative list regime. - HELD THAT: - The Tribunal held that where an agreement of lease is, by constitutional provision, a "deemed sale" and the entire rental is subject to tax as a sale, there is no scope for any portion of that consideration to be separately leviable to service tax by the Union. The reasoning draws on constitutional exclusivity of taxation entries in the Seventh Schedule and precedents requiring segregation of service and sale elements in composite transactions; if the transaction in substance falls within a field exclusively assigned to the States (sale or deemed sale), a non specific description in the Finance Act cannot be used to appropriate that field. Applying those principles to the facts, the impugned demands sought to tax amounts that, on the admitted characterisation, were wholly "deemed sale" and thus beyond the Union's power to tax as services in the negative list regime.

The impugned demands insofar as they seek to tax the entire rentals for lease of motor vehicles as service are not sustainable and were set aside.

Application of earlier adjudicatory finding and precedent effect of Tribunal decision - scope of assessment under show cause notice and consequential periodical statements - Whether the impugned order confirming demands (issued under section 73(1A) by reference to facts in the earlier show cause notice) should be upheld in view of the Tribunal's earlier decision in the assessee's favour. - HELD THAT: - The Tribunal noted that the present demands were founded on the same facts and evidence set out in the earlier show cause notice which the Tribunal had already examined and in respect of which it had set aside the demand. The adjudicating authority's confirmation did not differ in principle from the earlier order that was negatived. Given the determinative legal conclusion that the transactions were within the category of "deemed sale" and not leviable as services, the impugned confirmations could not stand. The appellant's reliance on the earlier favourable decision was accepted and the impugned order was therefore set aside.

The appeal is allowed and the impugned order confirming the demands is set aside.

Final Conclusion: The Tribunal allowed the appeal, setting aside the impugned order: rentals for lease of motor vehicles characterised as "deemed sale" under Article 366(29A) cannot be taxed as services under the Finance Act, 1994 in the negative list regime, and the confirmations of demand founded on the earlier show cause notice were therefore set aside.